Students must start practicing the questions from CBSE Sample Papers for Class 12 Accountancy with Solutions Set 10 are designed as per the revised syllabus.
CBSE Sample Papers for Class 12 Accountancy Set 10 with Solutions
Time : 3 Hr.
Max. Marks : 80
General Instructions:
- This question paper contains 34 questions. All questions are compulsory.
- This question paper is divided into two parts, Part A and B.
- Part – A is compulsory for all candidates.
- Part – B has two options i.e.
- Analysis of Financial Statements and
- Computerised Accounting. Students must attempt only one of the given options.
- Question 1 to 16 and 27 to 30 carries 1 mark each.
- Question 17 to 20, 31 and 32 carries 3 marks each.
- Question from 21, 22 and 33 carries 4 marks each.
- Question from 23 to 26 and 34 carries 6 marks each. .
- There is no overall choice. However, an internal choice has been provided in 7 questions of one mark, 2 questions of three marks, 1 question of four marks and 2 questions of six marks.
PART – A (60 Marks)
(Accounting For Partnership Firms & Companies)
Question 1.
Vaibhav and Vibhor are partners sharing profits and losses in the ratio of 2 : 1. They admit Sumit into the partnership and the new profit sharing is 2 : 2 : 1. The extract of Balance Sheet on admission of Sumit showed as follows:
Balance Sheet (Extract only)
| Liabilities | Amount (₹) | Assets | Amount (₹) |
| Goodwill | 30,000 |
The treatment of goodwill on admission of Sumit will be:
(a) Debited to old partner’s capital account in old profit sharing ratio.
(b) Debited to all partner’s capital account in new profit sharing ratio.
(c) Credited to old partner’s capital in sacrificing ratio.
(d) Credited to old partner’s capital in old profit sharing ratio. (1)
Answer:
(a) Debited to old partner’s capital account in old profit sharing ratio.
Explanation: At the time of admission of a partner, goodwill already appearing in the books of the firm is distributed amongest the old partners in their old profit sharing ratio.
Question 2.
Given below are two statements, one labelled as Assertion (A) and the other labelled as Reason (R):
Assertion (A): There is no difference between ‘Patents be reduced by 25%’ and ‘Patents be reduced to 25%’.
Reason (B): In both the circumstances value of Patents will reduce by the same amount.
In the context of the above two statements, which of the following is correct?
Codes:
(a) Both (A) and (R) are correct and (R) is the correct explanation for (A).
(b) Both (A) and (R) are correct, but (R) is not the correct explanation for (A).
(c) (A) is correct, but (R) is incorrect.
(d) Both (A) and (R) are incorrect. (1)
Answer:
(d) Both (A) and (R) are incorrect.
Explanation: When the value of patents will be reduced by 25%, the amount for that will be calculated by multiplying the amount of patents by 25% and its value will become 75% as compare to original value; but when value of patents will be reduced to 25%, then the total value of the patents will being brought down equal to 25%.
Question 3.
Glanco Limited acquired machinery and building worth ₹ 30,00,000 from Jinco Limited. The amount was paid by issue of equity shares of ₹ 100 each at a premium 25%. What number of shares will be issued by Glanco Limited to Jinco Limited to settle down the purchase consideration?
(a) 24,000 shares
(b) 30,000 shares
(c) 36,000 shares
(d) 40,000 shares
OR
A shareholder failed to pay share allotment money on 12,000 shares @ ₹ 30 per share. Which one of the following account will be taken into account?
(a) Debited to Share Capital Account
(b) Debited to Calls-in-Arrears Account
(c) Credited to Calls-in-Arrears Account
(d) Credited to Share Capital Account (1)
Answer:
(a) 24,000 shares
Explanation:
No. of shares issued by Glanco Limited
= Amount Payable Issue Price
= \(\frac { 30,00,000 }{ 100 + 25 }\)
= 24,000
OR
(b) Debited to Calls-in-Arrears Account
Explanation: If a shareholder failed to pay money of any call, the amount is debited to Calls-in-Arrears Account.
Question 4.
At the time of admission of new partner for ascertaining the true value of assets and liabilities of the partnership firm, revaluation of assets and liabilities is to be done, what will be the correct journal entry for increase in the value of assets:
| S. No. | Particulars | Amount | Amount |
| (a) | Assets A/c Dr.
To Revaluation A/c |
– | – |
| (b) | Revaluation A/c Dr.
To Partner’s Capital A/c . |
– | – |
| (c) | Revaluation A/c Dr.
To Assets A/c |
– | – |
| (d) | None of the above | – | – |
OR
Sanjay, Rahul and Amit are partners sharing profits and losses equally. Their capital balances on March 31, 2021 are ₹ 1,00,000, ₹ 80,000 and ₹ 60,000 respectively.
Their personal assets are worth as follows:
Sanjay – ₹ 20,000, Rahul – ₹ 15,000 and Amit – ₹ 10,000.
The extent of their liability in the firm would be:
(a) Sanjay – ₹ 80,000 ; Rahul – ₹ 60,000 and Amit – ₹ 40,000
(b) Sanjay – ₹ 20,000 ; Rahul – ₹ 15,000 and Amit – ₹ 10,000
(c) Sanjay – ₹ 1,00,000 ; Rahul – ₹ 75,000 and Amit – ₹ 50,000
(d) Equal (1)
Answer:
Explanation: The following Journal entries are recorded in the Revaluation Account on the date of admission of a new partner.
For increase in value of assets:
Related Theory
It is advisable to revalue the assets and liabilities at the time of admission of a new partner for ascertaining the true and fair value of the assets and liabilities. This is done because the value of assets and liabilities may have increased or decreased and consequently their corresponding figures in the old balance sheet may either be understated or overstated.
Moreover, it may also be possible that some of the assets and liabilities are left unrecorded. Thus, in order to record the increase and decrease in the market value of the assets and liabilities, Revaluation Account is prepared and any profits or losses associated with this increase or decrease are distributed among the old partners of the firm.
OR
(b) Sanjay – ₹ 20,000; Rahul – ₹ 15,000 and Amit – ₹ 10,000
Explanation: Reason why they are liable to the firm up to the amount of their personal assets is each individual partner is personally liable for all the debts and judgments against the partnership as whole.
Question 5.
E, F and G are partners sharing profits in the ratio of 3 : 3 : 2. As per the partnership agreement, G is to get a minimum amount of ₹ 80,000 as his share of profits every year and any deficiency on this account is to be personally borne by E. The net profit for the year ended 31st March, 2022 amounted to ₹ 3,12 ,000. Calculate the amount of deficiency to be borne by E?
(a) ₹ 1,000
(b) ₹ 4,000
(c) ₹ 8,000
(d) ₹ 2,000 (1)
Answer:
(d) ₹ 2,000
Explanation:
G’s share of profit = ₹ 3,12,000 x \(\frac { 2 }{ 8 }\)
= ₹ 78,000
Minimum guaranteed profit of G = ₹ 80,000
Deficiency in G’s profit
= ₹ 80,000 – ₹ 80,000
= ₹ 2,000
Amount of deficiency to be borne by E is ₹ 2,000
Question 6.
Vinod Ltd. forfeited a share of ₹ 50 issued at a premium of 20% for non-payment of first call of ₹ 15 per share and final call of ₹ 5 per share. At what minimum price it can be reissued?
(a) ₹ 50
(b) ₹ 30
(c) ₹ 40
(d) ₹ 20
OR
Which account will be debited, if 5,000 equity shares of ₹ 100 each were issued @ 5% premium to the promoters of a company for their services.?
(a) Capital Reserve Account
(b) Goodwill Account or Incorporation Cost Account
(c) Securities Premium Reserve Account
(d) Share Capital Account (1)
Answer:
(d) ₹ 20
Explanation: ₹ 50 – ₹ 30 = ₹ 20
OR
(b) Good will Account or Incorporation Cost Account
Explanation: When company issue shares to the promoters of a company Goodwill Account or Incorporation Cost Account is debited.
Question 7.
A company issued 40,000 preference shares of ₹ 100 per share at par payable as under:
On Application : 20%
On Allotment: 40%
On First & Final Call: balance
Applications were received for 50,000 shares. Allotment was made on pro-rata basis. How much amount will be received in cash on allotment?
(a) ₹ 14,00,000
(b) ₹ 16,00,000
(c) ₹ 18,00,000
(d) ₹ 20,00,000 (1)
Answer:
(a) ₹ 14,00,000
Explanation:
Amount received on Application
= 50,000 x ₹ 20 = ₹ 10,00,000
Amount due on Application
= 40,000 x ₹ 20 = ₹ 8,00,000
Amount adjusted on Allotment
= ₹ 10,00,000 – ₹ 8,00,000 = ₹ 2,00,000
Amount due on Allotment
= 40,000 x ₹ 40 = ₹ 16,00,000
Amount received on Allotment
= ₹ 16,00,000 – ₹ 2,00,000 = ₹ 14,00,000
Question 8.
M, N and O are sharing profits and losses in the ratio of 5 : 3 : 2. Who will be debited and who will be credited, when they have decided to share profits equally in future?
(a) N will be Debited and M & O will be Credited
(b) N & O will be Debited and M will be Credited
(c) M & O will be Debited and N will be Credited
(d) N & M will be Debited and O will be Credited (1)
Answer:
(b) N & O will be Debited and M will be Credited
Explanation: Adjustment of partners’ capital accounts:
(I) M will be credited because of his sacrifice \(\frac { 5 }{ 30 }\)
(II) N will be debited because of his gain \(\frac { 1 }{ 30 }\)
(III) O will be debited because of his gain \(\frac { 4 }{ 30 }\)
Now, N & O will be debited and M will be credited.
Read the hypothetical situation, Answer Question No. 9 and 10
Sameer Enterprises Limited purchased Machiney for ₹ 3,00,000 from Shivay Limited. ₹ 1,00,000 were paid by Sameer Enterprises Limited by drawing a promissory note in favour of Shivay Limited. The balance was paid by Sameer Enterprises Limited by issue of equity shares of ₹ 10 each. Also, considering the market standing of the company these shares were issued at a premium of 25%.
9. What amount would be transferred to Securities Premium Reserve Account?
(a) ₹ 20,000
(b) ₹ 30,000
(c) ₹ 40,000
(d) ₹ 50,000 (1)
Answer:
(c) ₹ 40,000
Explanation:
Number of shares issued
= \(\frac { 2,00,000 }{ 10+2.5 }\)
= 16,000
Premium per share = 25% of ₹ 10 = ₹ 2.50
Amount transferred to Securities Premium Reserve Account
= 16,000 x ₹ 2.50 = ₹ 40,000
Question 10.
How many shares were issued by Sameer Enterprises Limited ?
(a) 15,000
(b) 26,667
(c) 16,000
(d) 20,000 (1)
Answer:
(c) 16,000
Explanation:
Number of shares issued
= \(\frac { 2,00,000 }{ 10+2.5 }\)
= 16,000
Question 11.
What will be the correct sequence of the following?
(i) Paid-up Capital
(ii) Issued Capital
(iii) Subscribed Capital
(iv) Called-up Capital Options:
(a) (I), (II), (III), (IV)
(b) (II), (IV), (III), (I)
(c) (II), (IV), (I), (III)
(d) (II), (III), (IV), (I) (1)
Answer:
(d) (II), (III), (IV), (I)
Explanation: Kinds of share capital of a company to be provided in Notes to Accounts of Company’s Balance Sheet are shown in following sequence:
- Authorised Capital
- Issued Capital
- Subscribed Capital
- Called-up Capital
- Paid-up Capital
Question 12.
Rao and Swami are partners in a firm sharing profits and losses in 3 : 2 ratio. They admit Ravi as a new partner for \(\frac { 1 }{ 8 }\) share in the profits. The new profit sharing ratio between Rao and Swami is 4 : 3. Calculate new profit sharing ratio?
(a) 3 : 4 : 2
(b) 4 : 3 : 1
(c) 2 : 3 : 1
(d) 2 : 3 : 4 (1)
Answer:
(b) 4 : 3 : 1
Explanation:
Ravisshare = \(\frac { 1 }{ 8 }\)
Combine share of Rao and Swami =1 – \(\frac { 1 }{ 8 }\) = – \(\frac { 7 }{ 8 }\)
New ratio between Rao and Swami = 4 : 3
Raos New Share = \(\frac { 7 }{ 8 }\) x \(\frac { 4 }{ 7 }\) = \(\frac { 28 }{ 56 }\)
Swamis newshare = \(\frac { 7 }{ 8 }\) x \(\frac { 3 }{ 7 }\) = \(\frac { 21 }{ 56 }\)
Question 13.
Premium received on issue of shares is shown on:
(a) Equity and liabilities part of the Balance Sheet
(b) Debit side of the Statement of Profit and Loss
(c) Credit side of Statement of Profit and Loss
(d) Assets part of the Balance Sheet (1)
Answer:
(a) Equity and liabilities part of the Balance Sheet
Explanation: Premium received on issue of shares is transferred to Securities Premium Reserve. It is a capital receipt and shown on Equity and liabilities part of the Balance Sheet under the heading “Reserves and Surplus”.
Related Theory
According to Section 78 of The Companies Act, 1956, Securities Premium Reserve can only be used for:
- to issue fully paid bonus shares;
- to write off preliminary expenses of the company;
- to write off the expenses of issue;
- to pay premium on redemption of preference shares.
Question 14.
A Company may issue the shares:
(a) By Private Placement of Shares
(b) By Public Subscription of Shares
(c) For Consideration other than Cash
(d) By All of the Above (1)
Answer:
(d) By all of the Above
Explanation: A company can issue shares privately, to the general public and can also issue shares for consideration other than cash
Question 15.
Akash and Vikas are partners sharing profits in the ratio of 3 : 2. Their capitals are ₹ 2,00,000 and ₹ 1,00,000 respectively. Interest on capital is allowed @ 8% p.a. Firm incurred a loss of ₹ 60,000 for the year ended 31st March, 2021. Interest on Capital will be:
(a) Akash ₹ 16,000; Vikas ₹ 8,000
(b) Akash ₹ 8,000; Vikas ₹ 4,000
(c) Akash: ₹ 14,400; Vikas ₹ 9,600
(d) No Interest will be allowed.
OR
According to Profit and Loss Account, the net profit for the year is ₹ 4,20,000. Salary of a partner is ₹ 5,000 per month and the commission of another partner is ₹ 10,000. The interest on drawings of partners is ₹ 4,000. The net profit as per Profit and Loss Appropriation Account will be:
(a) ₹ 3,54,000
(b) ₹ 3,46,000
(c) ₹ 4,09,000
(d) ₹ 4,01,000 (1)
Answer:
(d) No Interest will be allowed.
Explanation: If partnership deed provides for interest on capital as appropriation out of profits, then in case of loss no interest is allowed to the partners.
OR
₹ 3,54,000
Explanation:
Distributable Profit = Net Profit – Salary to Partner – Commission to Partner + Interest on Drawings = 4,20,000 – (5,000×12) – 10,000 + 4,000 = ₹ 3,54,000
Question 16.
At the time of dissolution of a firm, there is a loan from partner outstanding in the Balance Sheet. Partner’s loan is paid after payment of outside liabilities. What journal entry is recorded in the books of accounts at the time of dissolution of firm? (1)
Journal
Answer:
Explanation: At the time of dissolution of firm, first of all outside liabilities are paid off from the amount realised by disposing off the assets of the firm and available cash and bank balance. The remaining balance is used to first repay the partner’s loan. Hence, partner’s loan A/c is debited and Bank A/c is credited being the payment made.
Working notes:
Related Theory
In case of dissolution of firm, a Realisation Account is prepared to ascertain the net effect on realisation of assets and payment of liabilities which may be transferred to the partner’s capital accounts in their profit sharing ratio.
Question 17.
Rishi, Gaurav and Jaideep were partners in a firm sharing profits in the ratio of 1 : 2 : 1. The firm cLoses its books on 31st March every year. On 30th September, 2022 Gaurav died. On that date his capital account showed a debit balance of ₹ 5,000.
There was a debit balance of ₹ 30,000 in the Profit and Loss Account. The Goodwill of the firm was valued at ₹ 3,80,000. Gaurav’s share of profit in the year of his death was to be calculated on the basis of average profits of last 5 years, which was ₹ 90,000. Give journal entries on the death of Gaurav. (3)
Answer:
(i) Gaurav’s share of Goodwill = 3,80,000 x \(\frac { 2 }{ 4 }\) = ₹ 1,90,000
(ii) Gaurav’s share of profit = 90,000 x \(\frac { 2 }{ 4 }\) x \(\frac { 6 }{ 12 }\) = ₹ 22,500
(iii) Gaurav’s Capital A/c = (-5,000) + 1,90,000 – 15,000 + 22,500 = ₹ 1,92,500
Question 18.
Amitabh and Babul are partners sharing profits in the ratio of 3:2, with capitals of ₹ 50,000 and ₹ 30,000 respectively. Interest on capital is agreed @ 6% p.a. Babul is to be allowed an annual salary of ₹ 2,500. Manager is to be allowed commission ₹ 5,000.
Amitabh has also given a Loan on April 01,2021 of ₹ 50,000 to the firm without any agreement. During the year 2021-22, the profits earned is ₹ 22,250. Prepare Profit and Loss Appropriation account showing the distribution of profits for the year ending March 31, 2022
OR
Deepak, John and Salman were partners sharing profits in the ratio of 3 : 3 : 2. The partnership deed provided for the following:
- Salary of ₹ 2,000 per quarter to Deepak and John.
- Salman was entitled to a commission of ₹ 8,000
- John was guaranteed a profit of ₹ 50,000 p.a.
The profit of the firm for the year ended 31st March, 2022 was ₹ 1,50,000 which was distributed among Deepak, John and Salman in the ratio of 2 : 2 : 1, without taking into consideration the provisions of partnership deed. Pass necessary rectifying entry for the above adjustments in the books of the firm. Show your working clearly. (3)
Answer:
Dr. Profit and Loss Appropriation Account Cr.
Working flotes:
Net profit = Profit – Manager’s salary – Interest on partner’s loan
Interest on Partner s loan = 50,000 x \(\frac { 6 }{ 100 }\) = 3,000
Net Profit = 22,250 – 5,000 – 3,000 = ₹ 14,250
OR
Journal
Adjustment Table
| Particulars | Deepak | John | Salman | Firm |
| Salary (Cr.) | 8,000 | 8,000 | – | 16,000 |
| Commission (Cr.) | – | – | 8,000 | 8,000 |
| Guaranteed Profits (Cr.) | – | 50,000 | – | 50,000 |
| Profits to be distributed (Cr.) | 45,600 | – | 30,400 | 76,000 |
| Profits to be recovered (Dr.) | 60,000 | 60,000 | 30,000 | 1,50,000 |
| Net Effect | 6,400 (Dr.) | 2,000 (Dr.) | 8,400 (Cr.) |
Working notes:
- Profit to be distributed
- Deepak = ₹ 76,000 x \(\frac { 3 }{ 5 }\) = ₹ 45,600
- Salman = ₹ 76,000 x \(\frac { 2 }{ 5 }\) = ₹ 30,400
Question 19.
On 9th April, 2021, Sunshine Ltd. issued 500,10% Debentures of ₹ 1,000 each credited as fully paid – up to the promoters for their services to incorporate the company. On 18th May, 2021, the company issued 100,10% Debentures of ₹ 1,000 each credited as fully paid- up to the underwriters towards their commission. Pass necessary journal entries in the books of the company.
OR
Suhana Limited purchased machinery from Vikrant Manufacturers Limited. The company paid the vendors by issue of some equity shares and debentures and the balance through Bill payable on acceptance in their favour payable after three months. The accountant of the company, while journalising the above mentioned transactions left some items blank. You are required to fill in the blanks.
Answer:
In the Books of Sunshine Limited
Journal
OR
In the Books of Suhana Limited
Journal
Working Notes:
BiU.s Payabl.e Issued = ₹ 14,00,000 – ₹ 13,30,000
= ₹ 70,000
Question 20.
A & B are partners in the ratio of 3 : 2. The firm maintains fluctuating capital accounts and the balance of the same as on 31 – 03 – 2022 amounted to ₹ 1,60,000 and ₹ 1,40,000 for A and B respectively. Their drawings during the year were ₹ 30,000 each. As per partnership deed interest on capital @10% p.a. on opening capitals had been provided to them. Calculate opening capitals of partners given that their profits were ? 90,000. Show your workings clearly. (3)
Answer:
| Particulars | A | B |
| Closing Capital | 1,60,000 | 1,40,000 |
| Add: Drawings | 30,000 | 30,000 |
| Less: Profits | (37,800) | (25,200) |
| 1,52,200 | 1,44,800 | |
| Less: Interest on Capital | 13,836 | 13,164 |
| Opening Capital | 1,38,364 | 1,38,364 |
Working Notes:
(ii) A’s share of profit = 63,000 x = ₹ 37,800
B’s share of profit = 63,000 x = ₹ 25.200
(iii) Interest on Capital
A’s Capital (without interest) ₹ 1,60,000 + 30,000 – 3 7,800 = ₹ 1,52,200
A’s Interest on Capital = 1,52,000 x 100 \(\frac { 100 }{ 110 }\) = ₹ 13,836
B’s Capital (without interest) = ₹ 1,40,000 + 30,000 – 25,200 = ₹ 1,44,800
B’s interest on capital= 1,44,800 x \(\frac { 100 }{ 110 }\) = ₹ 13,164
Question 21.
‘Champion Sports Ltd.’ were registered with an authorised capital of 2,00,000 equity shares of ₹ 100 each. The company offered to the public for subscription 1,00,000 shares. Applications for 1,50,000 shares were received and allotment was made to all the applicants on pro-rata basis.
All calls were made and were duly received except the second and final call of ₹ 4,000. The amount payable on second and final call was ₹ 20 per share. Present the Share Capital in the Balance Sheet of the company as per Schedule III, Part I of the Companies Act, 2013. (4)
Answer:
Balance Sheet of Champion Sports Ltd.
As at ……………
Notes to Accounts:
Question 22.
Manoj, Deepak and Ankur are partners sharing profits and losses equally. The Balance sheet as at 31st March 2019 as follows:
Balance Sheet
as at 31st March 2019
- Value of stock to be reduced to ₹ 1,25,000
- Value of machinery to be decreased by 10%
- Land and Building to be appreciated by ₹ 62,000
- Provision for doubtful debts to be made 5% on sundry debtors.
- Deepak was to carry out reconstitution of the firm at a remuneration of ₹ 10,000.
Pass necessary journal entries to give effect to the above. (4)
Answer:
journal
Working Notes:
(i) Distribution of general reserve:
\(\frac { 90,000 }{ 3 }\) = ₹ 30,000 each
(ii) Distribution of advertisement suspense
\(\frac { 6,000 }{ 3 }\) = ₹ 2,000 each
(iii) Profit on revaLuation = 62,000 – (15,000 + 25,000 + 4,000) — 10,000
= 62,000 – 44,000 – 10,000
= ₹ 8,000
(iv) Distribution of profit on revaLuation
\(\frac { 8,000 }{ 3 }\)
= ₹ 2666.67 each.
Question 23.
Hind Co. Ltd. invited applications for issuing 1,00,000 equity shares of ₹ 10 each at a premium of ₹ 10 per share. The amount was payable as follows:
On application – ₹ 10 per share (including ₹ 5 premium)
On allotment – Balance
The issue was fully subscribed. A shareholder holding 300 shares paid the full share money with application. Another shareholder holding 200 shares failed to pay the allotment money. His shares were forfeited. Later on these shares were re-issued for ₹ 4,000 as fully paid up. Pass necessary journal, entries for the above transactions in the books of Hind Co. Ltd.
OR
High Light India Ltd. invited applications for 30,000 shares of ₹ 100 each at a premium of ₹ 20 per share payable as follows:
On application – ₹ 40 (including ₹ 10 premium)
On allotment – ₹ 30 (including ₹ 10 premium)
On First call – ₹ 30 On Second and final call – ₹ 20
Applications were received for 40,000 shares and pro-rata allotment was made on the applications for 35,000 shares. Excess application money is to be utilised towards allotment. Rohan to whom 600 shares were allotted failed to pay the allotment money and his shares were forfeited after allotment.
Aman who applied for 1,050 shares failed to pay first call and his shares were forfeited after first call. Second and final call was made. All the money due on second call was received. Of the shares forfeited, 900 shares forfeited from Aman were re-issued as fully paid up for ₹ 80 per share. Record necessary journal entries in the books of High Light India Ltd. (4)
Answer:
In the books of Hind Co. Ltd.
Journal
OR
In the books of High Light India Ltd.
Journal
Working Notes:
(i) Excess Amount received on application:
Amount received on appLication = 40,000 x 40 = ₹ 16,00,000
Amount refunded = 5,000 x 40 = ₹ 2,00,000
Amount due on application = 30,000 x 40 = ₹ 12,00,000
Amount adjusted on allotment = 16,00,000 – 2,00,000 – 12,00,000 = ₹ 2,00,000
(ii) Amount received on allotment:
Amount due on allotment = 30,000 x 30 = ₹ 9,00,000
Amount adjusted from application = ₹ 2,00,000
Allotment amount not received on 600 shares of Rohan
Shares applied by Rohan = \(\frac { 35,000 }{ 30,000 }\) x 600 = 700 shares
Application money paid by Rohan = 700 x 40 = ₹ 28,000
Application money due on allotted 600 shares of Rohan = 600 x 40 = ₹ 24,000
Application money of Rohan adjusted on allotment = 28,000 – 24,000 = ₹ 4,000
Allotment money on 600 shares of Rohan = 600 x 30 = ₹ 18,000
Amount unpaid by Rohan allotment = 18,000 – 4,000 = ₹ 14,000
Total. amount received on allotment = 9,00,000 – 2,00,000 – 14,000 = ₹ 6,86,000
(iii) First call money due on 29,400 shares = 29,400 x 30 = ₹ 8,82,000
Shares allotted to Aman = \(\frac { 1,050 x 30,000 }{ 35,000 }\) = 900 shares
Amount unpaid by Aman on first call = 900 x 30 = ₹ 27,000
Total. amount received on first call = 8,82,000 – 27,000 = ₹ 8,55,000
(iv) Profit on re-issue of forfeited shares:
Amount received on 900 forfeited shares of Aman = 900 x 50 (excluding premium) = ₹ 45,000
Discount on re-issue of shares = 900 x (100 – 80) = 900 x 20 = ₹ 18,000
Total profit on re-issue of forfeited shares = 45,000 – 18,000 = ₹ 27,000
Question 24.
Rahul and Rohit were partners in a firm sharing profits and losses in the ratio of 2: 3. On 31st March 2019 their Balance Sheet was as follows:
Balance Sheet
On the above date, the firm was dissolved. The assets were realised and liabilities were paid off as follows:
- Debtors of ₹ 6,000 proved bad
- Rahul agreed to pay off his brother’s loan
- Dues of a creditor of ₹ 10,000 was paid only ₹ 3,000 in full settlement of his account.
- Buildings were auctioned for ₹ 1,80,000 and the auctioneer’s commission amounted to ₹ 8,000.
- Rohit took over part of stock at ₹ 4,000 (being 20 % less than book value). Balance of the stock was handed over to the remaining creditors in full settlement of their account.
- Investment realised ₹ 9,000 less.
- Realisation expenses amounted to ₹ 17,000 and were paid by Rohit.
Prepare Realisation Account, Partner’s Capital Account and Bank Account.
OR
Raj, Vivek and Hemant are partners sharing profits and losses in the ratio of 5 : 3 : 2. Hemant retires and on the date of his retirement, the following adjustment were agreed upon:
- The value of furniture to be increased by ₹ 12,000.
- The value of stock to be decreased by ₹ 10,000.
- Machinery of the book value of ₹ 50,000 to be depreciated by 10%.
- A provision for doubtful debts @ 5% is to be created on debtors of book value of ₹ 40,000.
- Unrecorded investment worth ₹ 10,000.
- An item of ₹ 1,000 included in bills is not likely to be claimed, hence should be written back.
Pass necessary journal entries and prepare Revaluation Account. (6)
Answer:
Dr. Realisation Account Cr.
Dr. Partner’s Capital Accounts Cr.
OR
Journal
Dr. Revaluation Accounts Cr.
Question 25.
Following is the Balance Sheet of X and Y, Who share profits and losses in the ratio of 4:1 as at 31st March, 2020.
Balance Sheet
as at 31st March 2020
The firm was dissolved on the above date and the following arrangements were decided upon:
- X agreed to pay of his brother’s loan
- Debtors of ₹ 5,000 proved bad
- Other assets realised: Investments 20 % less; and Goodwill at 60%.
- One of the creditors of ₹ 5,000 was paid only ₹ 3,000.
- Buildings were auctioned for ₹ 30,000 and the auctioneer’s commission amounted to ₹ 1,000.
- Y took over part of stock at ₹ 4,000 (being 20% less than book value) and balance stock realised 50%.
- Realisation expenses amounted to ₹ 2,000.
Prepare Realisation Account, Partner’s Capital Account and Bank Account.
OR
(A) A and B are partners in a firm sharing profits and losses in the ratio of 3 : 2. A new partner C is admitted. A surrenders \(\frac { 1 }{ 5 }\)th of his share and B surrenders \(\frac { 2 }{ 5 }\)th of his share in favour of C. For the purpose of C‘s admission, the goodwill of the firm is valued at ₹ 75,000 and C brings in his share of goodwill in cash which is retained in the firm’s books.
Journalise the above transactions.Vivek and Navin were partners in a firm sharing profits in the ratio of 3 : 2. On 1st April 2019, they admitted Ashish as a new partner for \(\frac { 1 }{ 8 }\)th share in the profits with a guaranteed profit of ₹ 1,50,000.
The new profit sharing ratio between Vivek and Navin will remain the same but they decided to bear any deficiency on account of guarantee to Ashish in the ratio of 2 : 3. The profit of the firm for the year ended 31st March 2020 was ₹ 9,00,000. Prepare Profit and Loss Appropriation Account of Vivek, Navin and Ashish for the year ended 31st March 2020. (6)
Answer:
(A) Journal
Working Notes:
(i) Sacrificing ratio of A and B
Old ratio of A and B = 3 : 2
A sacrifices = \(\frac { 3 }{ 5 }\) x \(\frac { 1 }{ 5 }\) = \(\frac { 3 }{ 25 }\)
B sacrifices = \(\frac { 2 }{ 5 }\) x \(\frac { 2 }{ 5 }\) = \(\frac { 4 }{ 5 }\)
Sacrificing ratio of A and B = \(\frac { 3 }{ 25 }\) : \(\frac { 4 }{ 5 }\) = 3 : 4
(ii) New ratio of A, B and C = Old ratio – sacrificing ratio
As new share = \(\frac { 3 }{ 5 }\) – \(\frac { 3 }{ 25 }\) = \(\frac { 15-3 }{ 25 }\) = \(\frac { 12 }{ 25 }\)
Bsnewshare = \(\frac { 2 }{ 5 }\) – \(\frac { 4 }{ 25 }\) = \(\frac { 10-4 }{ 25 }\) = \(\frac { 6 }{ 25 }\)
C’s share = A’s sacrifice + B’s sacrifice
\(\frac { 3 }{ 25 }\) + \(\frac { 4 }{ 25 }\) = \(\frac { 7 }{ 25 }\)
New profit sharing ratio of A, B and C = 12: 6: 7
(iii) Goodwill, premium brought in b C = 75,000 x \(\frac { 7 }{ 25 }\)
= ₹ 21,000
Distribution of goodwill. premuim
A’s share = 21,000 x \(\frac { 3 }{ 7 }\) = ₹ 9,000
B’s share = 21,000 x \(\frac { 4 }{ 7 }\) = ₹ 12,000
(B) Dr. Profit and Loss Appropriation Accounts Cr.
for the year en3lst March 2020
Working Notes:
(i) New Profit sharing ratio:
Ashish’s share = \(\frac { 1 }{ 8 }\)
Remaining share = 1 – 1 – \(\frac { 1 }{ 8 }\) = \(\frac { 7 }{ 8 }\)
Vivek’s new share = \(\frac { 3 }{ 5 }\) x \(\frac { 7 }{ 8 }\) = \(\frac { 21 }{ 40 }\)
Navin new share = \(\frac { 2 }{ 5 }\) x \(\frac { 7 }{ 8 }\) = \(\frac { 14 }{ 40 }\)
Ashish’s share = \(\frac { 1 }{ 8 }\) or \(\frac { 5 }{ 4 }\)
Newprofitsharing ratio = 21 : 14 : 5
(ii) Distribution of profit
Vivek = 9,00,000 x \(\frac { 21 }{ 40 }\) = ₹ 4,72,500
Navin = 9,00,000 x \(\frac { 14 }{ 40 }\) = ₹ 3,15,000
Ashish’s = 9,00,000 x \(\frac { 5 }{ 40 }\) = ₹ 1,12,500
(iii) Deficiencj of guaranteed profit
Ashish’s guaranteed profit = ₹ 1,50,000
Deficiency = ₹ 1,50,000 – 1,12,500
= ₹ 37,500
Deficiency to be borne by Vivek = 37,500 x \(\frac { 2 }{ 5 }\)
= ₹ 15,000
Deficiency to be borne by Navin = 37,500 x \(\frac { 3 }{ 5 }\)
= ₹ 22,500.
Question 26.
Journalise the following transactions:
- ₹ 10,00,000 8% Debentures of ₹ 100 each issued at a premium of 5% redeemable at a premium of 10%.
- 10% Debentures of ₹ 100 each issued to a vendor at a discount of 10% for the payment of ₹ 27,00,000.
- Issue of 25,000 8% Debentures of ₹ 100 each as collateral security in favour of a finance company. (6)
Answer:
In the books of Hind Co. Ltd.
Journal
PART – B (20 Marks)
(Analysis of Financial Statements) Option – I
Question 27.
Which of the following statement is true, as per Schedule III of the Companies Act, 2013?
(I) Shares Option Outstanding Account is shown under major head ‘Shareholders’ Funds’ and sub-heading ‘Share Capital’.
(II) Provision for tax is shown under major head ‘Current Liabilities’ and sub-heading ‘Short-term Provisions’.
Choose the correct option:
(A) Only I
(B) Only II
(C) Both I & II
(D) None of the above
OR
The two basic measures of liquidity are:
(a) Inventory turnover and current ratio.
(b) Current ratio and quick ratio
(c) Gross profit margin and operating ratio
(d) Current ratio and average collection period (1)
Answer:
(b) Only II
Explanation: According to Schedule III of the Companies Act, 2013, Shares Option Outstanding Account is shown under the head ‘Shareholders’ Funds’ and sub-head ‘Reserves and Surplus’.
OR
(b) Current ratio and Quick ratio
Explanation: The ability of the business to pay the amount due to stakeholders as and when it is due is known as liquidity and the ratios calculated to measure it are known as liquidity ratios. The two rations include in liquidity ratios. The two ratios included in liquidity ratios are current ratio and quick or liquid ratio.
Related Theory
Current ratio provides a measure of degree to which current liabilities. The excess of current assets over current liabilities provides a measure of safety of margin available against uncertainty in realisation of current assets and flow of funds. Quick or liquid ratio provides a measure of the capacity of the business to meet its short term obligations without any flow.
Question 28.
X Ltd. has a Current Ratio of 3 : 1 and Quick Ratio of 2 : 1. If the excess of Current Assets over Quick Assets as represented by inventory is ₹ 40,000, calculate Current Assets and Current Liabilities.
(a) Current Liabilities = ₹ 60,000;
Current Assets = ₹ 1,50,000
(b) Current Liabilities = ₹ 40,000;
Current Assets = ₹ 1,20,000
(c) Current Liabilities = ₹ 50,000;
Current Assets = ₹ 1,60,000
(d) None of the above (1)
Answer:
(b) Current Liabilities = ₹ 40,000;
Current Assets = ₹ 1,20,000
Explanation:
Current Ratio = 3 : 1
Quick Ratio = 2 : 1
Inventory = ₹ 40,000
Or, Current Assets = 3 Current Liabilities
Quick Ratio = Quick Assets
(Current Assets – Inventory)/Current Liabilities
2 = Current Assets – 40,000/Current Liabilities
2 current liabilities
= 3 Current Liabilities – 40,000
Current Liabilities = 40,000
Current Assets = 3 x 40,000 = 1,20,000
(Current Assets = 3 Current Liabilities)
Question 29.
The Debt-Equity ratio is 3 : 1. If Buy back of equity shares is performed, what will be the impact of the mentioned transaction?
(a) Increase,
(b) Decrease
(c) No change in the ratio
(d) Not to be recorded
OR
Balance Sheet (Extract)
| Assets | 31.03.2019 (₹) | 31.03.2020 (₹) |
| Fixed Assets | 46,700 | 83,000 |
Depreciation on fixed assets for the year 2019-2020 was ₹ 14,700. How much amount will be shown in Investing activity for cash flow statement for the year ending 31st March 2020 ?
(a) Inflow ₹ 14,700
(b) Outflow ₹ 36,300
(c) Outflow ₹ 51,000
(d) Inflow ₹ 36,300 (1)
Answer:
(a) In crease
Explanation: Buy back of equity share say ₹ 20,000 It will, reduce the equity shares to ₹ 80,000 and there will be no effect on debt.
Therefore, Debt /Equity ratio = \(\frac { 3,00,000 }{ 80,000 }\)
= 3.75 : 1 (Increases the ratio)
OR
(c) Outflow ₹ 51,000
Explanation:
Dr. Fixed Assets Accounts Cr.
There is a purchase of fixed assets worth ₹ 51,000 during the gear ending 31st March 2020, i.e. outflow of ₹ 51,000 in investing activity.
Question 30.
The debt to equity ratio of a company is 1 : 2. The company issues equity shares of ₹ 2,00, 000. The debt to equity ratio will:
(a) Increases
(b) Decrease
(c) No Change
(d) None of these (1)
Answer:
(b) Decrease
Explanation: Debt to equity ratio is a part of solvency ratios and measures the relationship between long term debt and equity. Here, in this case, the debt to equity ratio will decrease as there is an increase in the equity and the debt remains unchanged.
Related Theory
Solvency ratios are calculated to determine the ability of the business to service its debt in the long run. Some other solvency ratios are debt ratio, proprietary ratio, total assets to debt ratio, and interest coverage ratio.
Question 31.
Classify the following items under major Heads and Sub-head (if any) in the Balance Sheet of a Company as per Schedule III of the Companies Act, 2013
(i) Subsidy Reserve
(ii) Provision for Doubtful Debts
(iii) Stores and Spares
(iv) Mining Rights
(v) Proposed Dividend
(vi) Encashment of employees earned leave payable on retirement (3)
Answer:
| Particulars | Major Heads | Sub-Heads |
| (i) Subsidy Reserve
(ii) Provision for Doubtful Debts (iii) Stores and Spares (iv) Mining Rights (v) Proposed Dividend (vi) Encashment of employees |
Shareholders’ Fund
Current Liabilities Current Assets Non-Current Assets Current Liabilities Non-Current Liabilities |
Reserve and Surplus
Short-term Provisions Inventories Intangible Assets Short-term Provision Long-term Provisions |
Question 32.
From the following calculate:
(A) Current ratio
(B) Working Capital Turnover ratio
| Particulars | Amount (₹) |
| (i) Revenue from operations | 1,50,000 |
| (ii) Total Assets | 1,00,000 |
| (iii) Shareholders fund | 60,000 |
| (iv) Non-Current liabilities | 20,000 |
| (v) Non-Current Assets | 50,000 |
Answer:
Current Assets = Total Assets – Non Current Assets
= 1,00,000 – 50,000 = ₹ 50,000
Current Liabilities = Total Assets – Shareholder’s funds – Non Current liabilities
= 1,00,000 – 60,000 – 20,000 = ₹ 20,000
Current ratio = \(\frac { 50,000 }{ 20,000 }\) = 2.5 : 1
Working Capital = Current Assets – Current Liabilities
= 50,000 – 20,000 = ₹ 30,000
Working Capital Turnover Ratio = \(\frac { 1,50,000 }{ 30,000 }\) = 5 times
Question 33.
From the following information of Sandesh Ltd., prepare a comparative statement of profit and loss for the year ended 31st March, 2019 and 31st March, 2020.
| Particulars | Note No. | 31st March 2019 (₹) | 31st March 2020 (₹) |
| (i) Revenue from operations | 19,20,000 | 32,00,000 | |
| (ii) Other Income | 14,40,000 | 19,20,000 | |
| (iii) Expenses | 11,20,000 | 12,80,000 | |
| (iv) Tax Rate | 40% | 40% |
OR
Prepare common size statement of Profit and Loss from the following information:
| Particulars | Note No. | 31st March 2020 (₹) | 31st March 2019 (₹) |
| Revenue from operations (% of materials consumed) | 125% | 200% | |
| Cost of materials consumed | 6,72,000 | 3,00,000 | |
| Other expenses (% of operating revenue) | 10% | 10% | |
| Tax Rate | 30% | 30% |
Answer:
Comparative Statement of Profit and Loss of Sandesh Ltd.
for the years ended 31st March 2019 and 2020
| Items | Note No. | 31st March 2019 | 31st March 2020 | Absolute Change (₹) | Percentage Change (%) | |
| (i) | Revenue from Operations | 19,20,000 | 32,00,000 | 12,80,000 | 66.67 | |
| (ii) | Other Income | 14,40,000 | 19,20,000 | 4,80,000 | 33.33 | |
| (iii) | Total Revenue (i + ii) | 33,60,000 | 51,20,000 | 17,60,000 | 52.38 | |
| (iv) | Expenses | 11,20,000 | 12,80,000 | 1,60,000 | 14.29 | |
| (v) | Profit before Tax [iii – iv] | 22,40,000 | 38,40,000 | 16,00,000 | 71.43 | |
| (vi) | Tax | 9,96,000 | 15,36,000 | 6,40,000 | 71.43 | |
| (vii) | Profit after Tax | 13,44,000 | 23,62,800 | (17,200) | 71.43 |
OR
Comman Size Statement of Profit and Loss
for the years ended 31st March 2019 and 2020
| Particulars | Note | Absolute Amounts | Percentage of Revenue from operations | |||
| No. | 31-3-2019
(₹) |
31-3-2020
(₹) |
31-3-2019
(%) |
31-3-2020
(%) |
||
| (i) | Revenue from Operations | 6,00,000 | 8,40,000 | 100% | 100% | |
| (ii) | Expenses:
Cost of materials consumed |
3,00,000 | 6,72,000 | 50% | 80% | |
| (iii) | Other Expenses | 60,000 | 84,000 | 10% | 10% | |
| (iv) | Profit before Tax [i – ii] | 2,40,000 | 84,000 | 40% | 10% | |
| (v) | Less: Tax @ 30% | 72,000 | 25,200 | 12% | 3% | |
| (vi) | Profit after Tax (iv – v) | 1,68,000 | 58,800 | 28% | 7% | |
Question 34.
From the following Balance Sheet of Hercules Ltd. as on 31.03.2019 and 31.03.2020, prepare a cash flow statement:
Notes to Accounts:
Addition Information:
- Depreciation on Fixed assets for the year 2019-2020 was ₹ 14,700.
- An interim dividend of ₹ 17,000 has been paid to the shareholders during the year.
Answer:
Cash Flow Statement
for the year ended 31st March, 2020
Working Notes:
(2) Dr. Fixed Account Cr.
