CBSE Sample Papers for Class 12 Accountancy Set 11 with Solutions

Students must start practicing the questions from CBSE Sample Papers for Class 12 Accountancy with Solutions Set 11 are designed as per the revised syllabus.

CBSE Sample Papers for Class 12 Accountancy Set 11 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.
Rohan and Mohan were partners in a firm sharing profits or losses equally. With effect from 1st April, 2021 they agreed to share profits in the ratio of 4 : 3. Due to change in profit sharing ratio, Mohan’s gain or sacrifice will be:
(a) Gain \(\frac { 1 }{ 14 }\)
(b) Sacrifice \(\frac { 1 }{ 14 }\)
(c) Gain \(\frac { 4 }{ 7 }\)
(d) Sacrifice \(\frac { 3 }{ 7 }\) (1)
Answer:
(b) Sacrifice \(\frac { 1 }{ 14 }\)
Explanation: Old Profit Shoring Ratio = 1 : 1
New Profit Sharing Ratio = 4 : 3
Sacrificing Ratio = Old Share – New Share
Rohan = \(\frac { 1 }{ 2 }\) – \(\frac { 4 }{ 7 }\) = \(\frac { 1 }{ 14 }\) (Gain)
Mohan = \(\frac { 1 }{ 2 }\) – \(\frac { 3 }{ 7 }\) = – \(\frac { 1 }{ 14 }\) (Sacrifice)

Question 2.
Given below are two statements, one labelled as Assertion (A) and the other labelled as Reason (R):
Assertion (A): In the absence of date of drawings, interest on drawings is calculated for the yearon the total drawings for an average period of six months.

Reason (R): In the absence of date of drawings, the interest on total drawings for the year is calculated on the total drawings @ 6% p.a. for an average period of six months. 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:
(c) (A) is correct, but (R) is incorrect.

Explanation: Interest on drawings is to be calculated with reference to the time period for which the money was withdrawn. In the absence of date of drawings, interest on drawings is calculated for the year on the total drawings for an average period of six months at agreed rate of interest

Question 3.
Alpha Limited issued 30,000 shares of ₹ 10 each. The called-up value per share was ₹ 8. The company forfeited 600 shares of Mr. Bean for non-payment of first call money of ₹ 2 per share. He paid for application and allotment money. On forfeiture of shares the share capital account will be:
(a) Debited by ₹ 4,800
(b) Debited by ₹ 6,000
(c) Debited by ₹ 3,600
(d) Debited by ₹ 2,400

A shareholder, Suhana who had applied for 1,440 shares of ₹ 100 each, failed to pay Allotment money of ₹ 30 per share and First & Final Call money of ₹ 30 per share. The company issued 50,000 shares to the applicants of 60,000 shares on pro-rata allotment basis. What will be the amount of Calls-in-Arrears on First & Final Call?
(a) ₹ 26,400
(b) ₹ 36,000
(c) ₹ 43,200
(d) None of the above (1)
Answer:
(a) Debited by ₹ 4,800

Explanation: To calculate amount of Share Capital Account: (Share Capital A/c = No. of Shares x Called-up Amount)
Called – up amount on shares = ₹ 8
Amount of Share Capital Account
= 600 x ₹ 8 = ₹ 4,800

(b) 36,000

Explanation:
Shares Allotted to Suhona = \(\frac { 50,000 x 1.440 }{ 60,000 }\)
= 1,200
Calls-in-Arrears on First & Final Call
= 1,200 x ₹ 30 = ₹ 36,000

Question 4.
If goodwill already appears in the books of old firm (before the admission of new partner), then this should be written off among the old partners in their old profit sharing ratio. What will be the Journal entry?

S. No.	Particulars	Amount	Amount
(a)	Goodwill A/c Dr. To Old Partner’s Capital A/c	–	–
(b)	Old Partner’s Capital A/c Dr. To Goodwill A/c	–	–
(c)	Partner 1 A/c Dr. To Goodwill A/c	–	–
(d)	None of the above	–	–

X and Y are partners sharing profits in the ratio of 2 : 1. They admit Z into partnership for \(\frac { 1 }{ 4 }\) th share for which he brings in ₹ 20,000 as his share of capital. Hence on the basis of new profit sharing ratio, the adjusted capitals of X and Y will be:
(a) ₹ 40,000 and ₹ 20,000 respectively
(b) ₹ 32,000 and ₹ 16,000 respectively
(c) ₹ 60,000 and ₹ 30,000 respectively
(d) ₹ 35,000 and ₹ 25,000 respectively (1)
Answer:

S. No.

Particulars

Amount

Old Partner’s Capital A/c Dr.

To Goodwill A/c

–

Explanation: If goodwill already appears in the books of old firm (before the admission of new partner), then this should be written off among the old partners in their old profit sharing ratio. The following Journal entry is passed.

S. No.

Particulars

Amount

(b)

Old Partner’s Capital A/c Dr.

To Goodwill A/c

(Goodwill written off in old ratio among the old partners)

–

(a) ₹ 40,000 and ₹ 20,000 respectively
Explanation: Capital brought in by Z = 20000
Total Capital of the firm based on Z’s share
= 20000 x \(\frac { 4 }{ 1 }\) = 80000
Hence, Capital remaining after Z
= 80000 – 20000 = 60000
X’s adjusted Capital
\(\frac { 2 }{ 3 }\) x 60000 = 40000
Y’s adjusted Capital
= \(\frac { 1 }{ 3 }\) x 60000 = 20000

Question 5.
MK and KK were partners in a firm, sharing profits and losses in the ratio of 2 : 3. Their fixed capitals were ₹ 10,00,000 and ₹ 5,00,000 respectively. They were entitled to an interest on capital @10% p.a. The firm earned a profit of ₹ 1,20,000 during the year. The amount of interest on capital credited to KK will be:
(a) ₹ 40,000
(b) ₹ 80,000
(c) ₹ 72,000
(d) ₹ 48,000 (1)
Answer:
(a) ₹ 40,000
Explanation: ₹ 1,20,000 x \(\frac { 1 }{ 3 }\) = ₹ 40,000
Interest on Capital is distributed in Capital Ratio

Question 6.
Which of the following is not a condition that must be fulfilled by a Company to issue share at a discount as per Section 79?
(a) The shares are of a class already issued.
(b) At least two years must have elapsed since the company became entitled to commence business.
(c) Issue of shares is authorized by a resolution passed by the company in its general meeting and sanctioned by Central Government.
(d) Resolution should specify the max rate of discount at which the shares are to be issued.

ABC Limited purchased a Machinery from XYZ Limited for ₹ 4,50,000. ABC Limited immediately paid ₹ 90,000 by Bank Draft and the balance by issue of equity shares of ₹ 100 each at 20% premium for the purchase consideration of Machinery to XYZ Limited. How many equity shares were issued by ABC Limited?
(a) 3,000 Equity Shares
(b) 30,000 Equity Shares
(c) 3,600 Equity Shares
(d) 36,000 Equity Shares (1)
Answer:
(b) At least two years must have elapsed since the company became entitled to commence business

Explanation: In normal condition as a general rule a company cannot ordinarily issue shares at a discount. It can do so only in cases such as ‘reissue of forfeited shares’ and in accordance with the provisions of Section 79 of the Companies Act.

(a) 3,000 Equity Shares

Explanation:
Total Amount Payable = ₹ 4,50,000
Paid by Bank Draft = ₹ 90,000 Amount of Equity Shares Issued
= ₹ 4,50,000 – ₹ 90,000 = ₹ 3,60,000
Number of Equity Shares Issued
= \(\frac { 3,60,000 }{ 100 + 20 }\)
= 3,000 shares

Question 7.
Raghuvir Shoes Ltd. issued 10,000, 7% Debentures of ₹ 100 each at a discount of ₹ 4. It has a balance in Securities Premium Reserve of ₹ 25,000. it will write off Discount on Issue of Debentures.
(a) ₹ 40,000 from, Securities Premium Reserve
(b) ₹ 40,000 from Statement of Profit and Loss
(c) ₹ 25,000 from Securities Premium Reserve and ₹ 15,000 from Statement of Profit and Loss (Finance Cost)
(d) ₹ 15,000 from Securities Premium Reserve and ₹ 25,000 from Statement of Profit and Loss (Finance Cost) (1)
Answer:
(c) ₹ 25,000 from Securities Premium Reserve and ₹ 15,000 from Statement of Profit and Loss (Finance Cost)

Explanation: The discount/loss on issue of debentures is a capital loss or a fictitious asset and, therefore, must be written-off during the life time of debentures. The amount of discount/ loss on issue of debentures should normally not be written-off in the year of issue itself since the benefit of the debentures would accrue to the company till their redemption.

The discount/ loss on it is, therefore, treated as capital loss. The discount may be charged to Securities Premium A/c or may be written-off over 3 to 5 years through statement of profit and loss as per guidelines issued by ICAI. Section 78 of the Companies Act, 1956 also permits the utilisation of ‘Securities Premium Account’ and other capital profits for writing-off the discount/ loss on issue of debentures. In case, however, there are no capital profits or if the capital profits are not adequate, the amount of such discount/ loss can be written-off against the revenue profits every year.

Question 8.
Ram, Shyam and Ghanshyam are partners sharing profits in the ratio of 5 : 3 : 2. Shyam retires,and the new profit sharing ratio between Ram and Ghanshyam is 1 : 1. The goodwill of the firmis valued at ₹ 1,00,000. Shyam’s share of goodwill will be adjusted by:
(a) Debiting Ram’s Capital A/c and Ghanshyam’s Capital A/c with ₹ 15,000 each.
(b) Debiting Ram’s Capital A/c with ₹ 21,429 and Ghanshyam’s Capital A/c with ₹ 8,571.
(c) Debiting Ghanshyam’s Capital A/c with ₹ 30,000
(d) Debiting Shyam’s Capital A/c with ₹ 30,000 (1)
Answer:
(c) Debiting Ghanshyam’s Capital A/c with ₹ 30,000
Explanation: Shyam’s share of Good will = \(\frac { 3 }{ 4 }\)
of ₹ 1,00,000 = ₹ 30,000
Ram’s Gain = New share – Old share
= \(\frac { 1 }{ 2 }\) – \(\frac { 5 }{ 10 }\)= 0
Ghanshyam’s Gain = New share – Old share
= \(\frac { 1 }{ 2 }\) – \(\frac { 2 }{ 10 }\) = \(\frac { 3 }{ 10 }\)
Therefore, Ghanshyam’s share of goodwill
= \(\frac { 3 }{ 10 }\) x 1,00,000 = 30,000

Read the following hypothetical situation, Answer Question No. 9 and 10.
Anoop and Ajay were college friends; they completed their graduation and post-graduation together from the same institute and now started business in partnership. After some years Anoop and Ajay want to expand their business but due to insufficient cash they are not able to do so.

So they decided to admit a new partner in the partnership firm. The capitals of Anoop and Ajay stand at ₹ 2,40,000 and ₹ 3,20,000 respectively. On 1st April, 2022 they admitted their common friend Ajit as a new partner for one-fourth share in profits on his payment of ₹ 4,00,000 as his capital and ₹ 1,80,000 for his share of good will On that date, Creditors were ₹ 1,20,000 and Bank Overdraft ₹ 30,000.

The assets of the firm apart from cash included Machinery ₹ 1,60,000; Stock ₹ 20,000; Debtors ₹ 80,000; Land & Building ₹ 4,00,000. On Ajit’s admission partners decided that:

Stock of the firm should be reduced by ₹ 4,000.
Machinery be depreciated by 20%.
Land & Building should be appreciated – by 25%.
₹ 10,000 should be written off as bad debts.

Question 9.
What is the value of the goodwill of the partnership firm?
(a) ₹ 16,00,000
(b) ₹ 7,20,000
(c) ₹ 5,40,000
(d) None of the above (1)
Answer:
(b) ₹ 7,20,000
Explanation: Ajit is admitted as a new partner for one-fourth share in profits and his share of goodwill is ₹ 1,80,000. Therefore, Goodwill of the Firm = ₹ 1,80,000 x 4 = ₹ 7,20,000

Question 10.
On the admission of Ajit, the sacrifice for providing his share of profits would be done by:
(a) Anoop only
(b) Ajay only
(c) Anoop and Ajay in their capital contribution ratio
(d) Anoop and Ajay equally (1)
Answer:
(d) Anoop and Ajay equally

Explanation: In the absence of any information regarding the sacrifice for providing new partner’s share of profits would be done the old partners in their old profit sharing ratio

Question 11.
What will be the correct sequence of events?
(I) Determination of new proportionate capital of each partner.
(II) Finding surplus capital or deficit capital.
(III) Ascertaining present capital (after all adjustments) of old partners.
(IV) Calculation of total capital of the firm on new partner’s capital basis.
Options:
(a) (IV), (I), (III), (II)
(b) (I), (II), (III), (IV)
(c) (III), (I), (II), (IV)
(d) (IV), (III), (I), (II) (1)
Answer:
(a) (IV), (I), (III), (II)

Explanation: When Old Partner’s Capital Accounts are adjusted on the basis of New or Incoming Partner’s Capital, following steps are taken:

Calculation of total capital of the firm on the basis of new partner’s capital.
Determination of new capital of each partner (proportionate capital)
Ascertaining present capital of old partners after all adjustments.
Finding surplus capital or deficit capital by comparing the proportionate capital and the present capital.

Question 12.
Agarwal Ltd. forfeited 1,000 equity shares of ₹ 10 each for the non payment of first and final call of ₹ 3 per share. The maximum discount at which these shares can be reissued is:
(a) ₹ 3 per share
(b) ₹ 10 per share
(c) ₹ 7 per share
(d) ₹ 13 per share (1)
Answer:
(b) ₹ 7 per share

Explanation: The discount on re-issue of forfeited shares should not exceed the balance of Share Forfeiture Account.

Related Theory
The profit, if any, on the re-issue of forfeited shares is transferred to Capital Reserve.

Question 13.
Which of the following statement is/are
(I) A company can issue redeemable Equity shares.
(II) A company can issue Preference shares. redeemable
(III) A company can issue Debentures. redeemable
(a) Both 1 & II are correct
(b) Both II & III are correct
(c) Both 1 & III are correct
(d) All of the above (1)
Answer:
(b) Both II & III are correct.

Explanation: A company can issue redeemable preference shares and redeemable debentures.

Question 14.
Vinod and Sunita were partners sharing profits in the ratio of 3: 2. They admitted Simran as a new partner for 3/10th share which she acquired 2/10th from Vinod and l/10th from Sunita. The new profit sharing ratio of Vinod, Sunita and Simran will be …………….
(a) 3 : 3 : 3
(b) 4 : 3 : 3
(c) 2 : 3 : 3
(d) 4 : 3 : 2 (1)
Answer:
(b) 4 : 3 : 3
Old Profit sharing ratio of Vinod and Sunita
= 3 : 2
Simran s share = \(\frac { 3 }{ 10 }\)
Vinod’s New Share = Ol.d Share – Share Sacrificed
= \(\frac { 3 }{ 5 }\) – \(\frac { 2 }{ 10 }\) = \(\frac { 4 }{ 10 }\)
Sunita’s New Share = Ol.d Share – Share Sacrificed
\(\frac { 2 }{ 5 }\) – \(\frac { 1 }{ 10 }\) = \(\frac { 3 }{ 10 }\)
New Profit Sharing Ratio of Vinod, Sunita and
Simran = \(\frac { 4 }{ 10 }\) : \(\frac { 3 }{ 10 }\) : \(\frac { 3 }{ 10 }\) or 4: 3: 3

Question 15.
The firm of sandeep and Kuldeep was dissolved on 31st March 2020. According to the agreement, realisation expenses of ₹ 10,000 were to be borne and paid by Sandeep. Journal entry to be recorded for the payment of realisation expenses will be:
(a) Debit Realisation Account and credit Bank Account with ₹ 10,000
(b) Debit Realisation Account and credit SOndeep’s Capital Account with ₹ 10,000
(c) Debit Sandeep’s Capital Account and Credit Bank Account with ₹ 10,000
(d) No entry

Rohit, Mohit and Shobhit are partners sharing profits in the ratio of 5 : 3 : 2. Rohit withdraws ₹ 4,000 per quarter on the first day of quarter for first 9 months of the year. Calculate interest on drawings made by Rohit, if interest on drawings is chargeable @ 10% p.a.
(a) ₹ 300
(b) ₹ 900
(c) ₹ 600
(d) ₹ 1,200 (1)
Answer:
(d) No entry

Explanation: Since the realisation expenses are borne and paid by Sandeep, no entry for realisation expenses will be made in the books of the firm.

Related Theory
At the time of dissolution of firm, the amount realised from any unrecorded assets should be recorded on the credit side of the realisation account.

(b) ₹ 900

Total drawings of Rohit = 4,000 x 3 = ₹ 12,000

= \(\frac { 12+6 }{ 2 }\) = 9 months
Interest on drawings = 12,000 x \(\frac { 10 }{ 100 }\) x \(\frac { 9 }{ 12 }\) = ₹ 900

Related Theory
If the drawings are made on the first day of every month throughout the year. the average period would be:

= \(\frac { 12+1 }{ 2 }\) = 6.5 months

Question 16.
X and Y are partners sharing profits in the ratio of 2 : 1. They admit Z into partnership for \(\frac { 1 }{ 4 }\) th share for which he brings in ₹ 20,000 as his share of capital. Hence on the basis of new profit sharing ratio, the adjusted capitals of X and Y will be:
(a) ₹ 40,000 and ₹ 20,000 respectively
(b) ₹ 32,000 and ₹ 16,000 respectively
(c) ₹ 60,000 and ₹ 30,000 respectively
(d) ₹ 35,000 and ₹ 25,000 respectively (1)
Answer:
(a) ₹ 40,000 and ₹ 20,000 respectively
Explanation:
Capital brought in by Z = 20000
Total Capital of the firm based on Z’s share
= 20,000 x = 80000
Hence, Capital remaining after Z
= 80000 – 20000 = 60000
X’s adjusted Capital
= \(\frac { 2 }{ 3 }\) x 60000 = 40000
Y’s adjusted Capital
= \(\frac { 1 }{ 3 }\) x 60000 = 20000

Question 17.
Anju, Manju and Reema were partners in a firm sharing profits in the ratio of 4 : 3 : 1. The firm closes its books on 31st March every year. On 01.02.2022, Manju died and it was decided that the new profit sharing ratio between Anju and Reema will be equal. The partnership deed provided for the following on the death of a partner.
(i) His share of goodwill be calculated on the basis of half of the profits credited to his account during the previous four completed years. The firm’s profit for the last four years was: 2017-2018 – ₹ 1,20,000, 2018-2019 – ₹ 80,000, 2019-2020 – ₹ 40,000, 2020 – 21 – ₹ 80,000.

(ii) His share -of profit in the year of his death

death was to be computed on the basis of average profits of past two years. Pass necessary journal entries relating to goodwill and profit to be transferred to Manju’s Capital Account. Also show your working clearly (3)
Answer:

Working notes:
(i) Calculation of gaining ratio
Anju’s gain = New share – Old Share = \(\frac { 1 }{ 2 }\) – \(\frac { 4 }{ 8 }\)= O
Reemasgain = \(\frac { 1 }{ 2 }\) – \(\frac { 1 }{ 8 }\) = \(\frac { 3 }{ 8 }\)

(ii) Calculation of Manju’s share of good will = \(\frac { 1 }{ 2 }\) x (\(\frac { 3 }{ 8 }\) x 3,20,000) = ₹ 60,000

(iii) Calculation of Manju’s share of profit till death.
Average profit of the for past two years = ₹ \(\frac { 80,000 + 40,000 }{ 2 }\) = ₹ 60,000
Manju’s share of profit till. death = ₹ 60,000x \(\frac { 3 }{ 8 }\) x \(\frac { 10 }{ 12 }\) = ₹ 18,750

Question 18.
Sonu, Monu andTonu entered into partnership on 1st April, 2021 to share profits in the ratio of 3 : 1 : 1. It was provided in the deed that Tonu’s share of profit will not be less than ₹ 25,000 per annum and Sonu will be allowed a salary of ₹ 10,000 per annum. The losses of the firm for the year ended 31st March, 2022 were ₹ 1,00,000 before allowing salary to Sonu. Prepare Profit and Loss Appropriation Account for the year ended 31st March, 2022.

Khatri and Pandit are partners sharing profits and losses equally. They decided to admit Bansal for an equal share in the profits. For this purpose the goodwill of the firm was to be valued at four years’ purchase of super profits. The Balance Sheet of the firm on Bansal’s admission was as follows: The normal rate of return is 12% per annum. Average profit of the firm for the last four years was ₹ 30,000. Calculate Bansal’s share of goodwill. (3)
Answer:
Profit and Loss Appropriation Account

Working notes:
(i) No salary is to be paid in case of loss.
(ii) Loss to be shared between Sonu and Monu after providing minimum guaranteed profit to Tonu.

Normal Profits = Capital employed x Normal rate of return/ 100
Normal Profits = ₹ 1,60,000 x \(\frac { 12 }{ 100 }\) = ₹ 19,200
Average Profit = ₹ 30,000
Super Profit = ₹ 30,000 – ₹ 19,200 = ₹ 10,800
Good will = ₹ 10,800 x 4 = ₹ 43,200
Bansal’s Share of Goodwill = ₹ 43,200 x \(\frac { 1 }{ 3 }\)
= ₹ 14,400

Working Notes:
Calculation of Capital employed
Capital emplyed = Capitals of partners + General Reserve
= ₹ 90,000 + ₹ 50,000 + ₹ 20,000
= ₹ 1,60,000

Question 19.
On 1st April, 2021, Jasmine Limited issued 10,000, 8% Debentures of ₹ 100 each at a discount of 5% redeemable at a premium of 15% at the end of five years. All the debentures were subscribed and allotment was made. The company had balance in Securities Premium Reserve of ₹ 80,000.

Malvika Limited purchased furnither worth ₹ 6,60,000 from Sunaina Limited and paid to Suniana Limited as follows:

50% of the amount by accepting a bill of exchange payable after one month.
Balance by issuing 8% debentures of ₹ 100 each at a premium of 10%.

Pass necessary journal entries in the books of Malvika Limited for the purchase of furniture and making paymnt to Sunaina Limited. (3)
Answer:
In the Books of Jasmine Limited
Balance Sheet (An Extract)
as at 31st March, 2022

Notes to Accounts:

OR
In the Books of Malvika Limited
Journal

Working Note:
Purchase consideration = ₹ 6,60,000
Amount paid b Bilis PayabIe
= 50% of ₹ 6,60,000
= ₹ 3,30,000
Amount paid b issuing debentures
= ₹ 6,60,000 – ₹ 3,30,000
= ₹ 3,30,000
Number of debenture issued

= \(\frac { ₹ 3,30000 }{ (₹ 100 + ₹ 10) }\)
= \(\frac { ₹ 3,30000 }{ (₹ 110) }\)
= 3,000

Question 20.
On April 1, 2022, a firm had assets of ₹ 1,0, 000 excluding stock of ₹ 20,000. The current liabilities were ₹ 10,000 and the balance constituted Partner’s Capital Accounts. If the normal rate of return is 8%, the Goodwill of the firm is valued at ₹ 60,000 at four years purchase of super profit, find the actual profits of the firm. (3)
Answer:
Total Assets = ₹ 1,20,000
Capital Employed = Total Assets – Current Liabilities
= ₹ 1,20,000 – ₹ 10,000
= ₹ 1,10,000
Normal Profits = Capital Employed x Normal rate of return/l00
= ₹ 1,10,000 x \(\frac { 8 }{ 100 }\) = ₹ 8,800
Good will = Super Profits x No. of year purchase
Super Profits = Actual Average Profits – Normal. Profits
Given Goodwill = ₹ 60,000
₹ 60,000 = 4 (Average Actual – Normal Profits)
₹ 15,000 = Average Actual Profits – ₹ 8,800
Average Actual. Profits = 15,000 + ₹ 8,800
= ₹ 23,800

Question 21.
On 1st April, 2021, Pacific Overseas Ltd. Was formed with an authorised capital of ₹ 1,00,00,000 divided into 2,00,000 equity shares of ₹ 50 each. The company issued prospectus inviting applications for 1,80,000 shares. The issue price was payable as under:
On Application : ₹ 15
On Allotment : ₹ 20
On Call : Balance amount
The issue was fully subscribed and the company allotted shares to all the applicants. The company did not make the call during thr year.

Show the following:

Share Capital in the Balance Sheet of the Company as per Schedule III Part I of the Companies Act, 2013
Also prepare Notes to Accounts for the same. (4)

Answer:
(i) Balance Sheet of Pacific Overseas Ltd.
as at 31st March, 2022

(ii) Notes to Accounts

Question 22.
Satish and Taruna were partners in a firm sharing profits and losses in the ratio of 3 : 2. From 1st April, 2021 they decided to share profits equally. On that date their Balance Sheet showed a credit balance of ₹ 35,000 in workmen compensation fund and ₹ 40,000 in 24. general reserve. The goodwill of the firm on that date was valued at ₹ 50,000. The firm accepted a claim of ₹ 40,000 for workmen compensation. Pass necessary journal entries for the above transactions on the reconstitution of the firm. (4)
Answer:
journal

Working Notes:
Calculation of Gain/Sacrifice
Satish’s Gain/Scarifice = New share – Old share
\(\frac { 1 }{ 2 }\) – \(\frac { 3 }{ 5 }\) = – \(\frac { 1 }{ 10 }\) (Sacrifice)
Taruna’s Gain/Sacrifice \(\frac { 1 }{ 2 }\) – \(\frac { 2 }{ 10 }\) = – \(\frac { 1 }{ 10 }\) (Gain)

Question 23.
Sterling Ltd. issued 10,000, 10% debentures of ₹ 100 each at a discount of 5% on 1st April, 2018 payable ₹ 50 on application and balance on allotment. These debentures are to be redeemed at a premium of 5% after 5 years. Interest on debentures is payable half yearly. The company closes its accounts on 31st March every year.

Pass the necessary journal entries for year ending 31st March, 2019.
Prepare Loss on Issue of Debentures Account for the year ending 31st March, 2109.

On 1st April 2019 Roberts Ltd. purchased assets of ₹ 4,30,000 and took over liabilities of ₹ 90,000 of perfect Ltd. at an agreed value of ₹ 3,80,000. It is issued to the vendor, 10% Debentures of ₹ 100 each at 5% discount, redeemable at par after 5 year, in full satisfaction of purchase price.

On the same date, the company issued 500, 11% Debentures of ₹ each as a collateral security to a bank who had advance a loan of ₹ 45,000 to it for a period of 3 years and also issued 5,000 12% debentures of ₹ 100 each at par redeemable after 3 year at 5% premium.

Additional information:
The interest on debentures is paid half yearly on 30th September and 31st March every. Tax deducted at sources @ 20%. The company had ₹ 1,20,000 in its security premium reserve account at the end of the year. (Ignore interest on bank loan). You are required to pass journal entries in the books of Roberts Ltd for the year ended 31st March 2020. (6)
Answer:
In the books of Sterling Ltd.
Journal

Dr. Loss on Issue of Debentures A/c Cr.

OR
In the Books of Roberts Ltd.
Journal

Working Notes:
Ca1cuIation of interest on debenture:
(i) Interest on 4,000, 10% debentures of ₹ 100 each = 4,00,000 x \(\frac { 10 }{ 100 }\) = ₹ 40,000
Interest for 6 months = 40,000 x \(\frac { 6 }{ 12 }\) = ₹ 20,000

(ii) Interest on 5,000, 12% debentures of ₹ 100 each = 5,00,000 x \(\frac { 12 }{ 100 }\) = ₹ 60,000
Interest for 6 months= 60,000 x \(\frac { 6 }{ 12 }\) = ₹ 30,000

Assumption: It is assumed that interest is not pagable on debentures issued as collateral security

Question 24.
(A) Janardhan and Goverdhan were partners in a firm sharing profit in the ratio of 3 : 2. Their capitals were ₹ 1,60,000 and ₹ 1,00,000 respectively. They admitted Sudershan on 1st April. 2019 as a new partner for 1/5th share in the future profits. Sudharshan brought ₹ 1,20,000 as his capital. Calculate the value of goodwill of the firm and record necessary journal entries for the above transactions on Sudharshan’s admission.

(B) Pandit and Purohit are partners in a firm sharing profits in the ratio of 3 : 2. They admit Joshi as a new partner. Pandit Surrenders \(\frac { 1 }{ 4 }\) th of his share and Purohit \(\frac { 1 }{ 3 }\)rd of his shore in favour of Joshi. Calculate new profit sharing ratio of Pandit, Purohit and Joshi.

Bhola and Amar are partners in a firm. They share profits in the ratio of 4 : 1. They decide to dissolve the firm on 31st March, 2019 at which date their Balance Sheet stdod as follows:
Balance Sheet
as at 31st March, 2019

The realisation shows the following results:

Goodwill was sold at ₹ 1,000
Debtors were realised at book value less 10%
Trademarks were realised for ₹ 800
Machinery and Stock-in-trade were taken over by Bhola for ₹ 14,400 and ₹ 3,600 respectively.
An unrecorded asset estimated at ₹ 500 was sold at ₹ 200
Creditors were settled at a discount of ₹ 80. The expenses on realisation were ₹ 800.

Prepare Realisation, Account, Partner’s Capital Accounts and Bank Account. (6)\
Answer:
Total Capital of the firm = 1,20,000 x 5 = ₹ 6,00,000
Capital of partners = 1,60,000 + 1,00,000 + 1,20,000 = ₹ 3,80,000
Goodwill, of the firm = Total. Capital. of the firm – Total. capitals of partners
= 6,00,000 – 3,80,000 = ₹ 2,20,000
Share of Goodwill = 2,20,000 x \(\frac { 1 }{ 5 }\) = ₹ 44,000
Sacrificing ration of Pandit and Purohit = 3 : 2.
Janardhan’s Share of goodwill = 44,000 x \(\frac { 3 }{ 5 }\) = ₹ 26,400
Journal

(B) Old ratio of Pandit and Purohit = 3 : 2
Share given be Pandit and Joshi = \(\frac { 3 }{ 5 }\) x \(\frac { 1 }{ 4 }\) = \(\frac { 3 }{ 20 }\)
Share given bt Purohit to Joshi = \(\frac { 2 }{ 5 }\) x \(\frac { 1 }{ 3 }\) = \(\frac { 2 }{ 15 }\)
New Share Pandit = \(\frac { 3 }{ 5 }\) – \(\frac { 3 }{ 20 }\)
\(\frac { 12 – 3 }{ 20 }\) = \(\frac { 9 }{ 20 }\)
New Share of Purohit = \(\frac { 2 }{ 5 }\) – \(\frac { 2 }{ 15 }\)
= \(\frac { 6 – 2 }{ 15 }\) = \(\frac { 4 }{ 15 }\)
Joshi s Share = \(\frac { 3 }{ 20 }\) + \(\frac { 2 }{ 15 }\)
= \(\frac { 9+8 }{ 60 }\) = \(\frac { 17 }{ 60 }\)
NewRatio= \(\frac { 9 }{ 20 }\) : \(\frac { 4 }{ 15 }\) : \(\frac { 17 }{ 60 }\)
\(\frac { 27 : 16 : 17 }{ 60 }\)
New ratio of Pandit, Purohit and Joshi is
27 : 16 : 17

Dr. ReaLisation Account Cr.

Dr. Partner’s Capital Account Cr.

Dr. Bank Account Cr.

Question 25.
On 01.04.2019, Jay Ltd. issued 5000, 9% Debentures of ₹ 100 each at a discount of 5%, redeemable at a premium of 5% after three years. Pass necessary journal entries for the issue of debentures and debenture interest for the year ended 31st March, 2020 assuming that interest is payable on 30th September and 31st March and the rate of tax deducted at source is 10%. The company closes its books on 31st March every year. (6)
Answer:
In the books of Jay Ltd.
Journal

Question 26.
On 31st March, 2020, the Balance Sheet of Alka and Sunita, who were sharing profits and losses in the ratio of 3 : 1 was as follows:
Balance Sheet of Alka ands Sunita
as on 31st March 2020

They decided to admit Pooja on 1st April,
2020 for \(\frac { 1 }{ 5 }\) th share on following conditions:

Pooja shall bring ₹ 80,000 as her share of goodwill premium;
Stock was undervalued by ₹ 20,000.
A debtor whose dues of ₹ 5,000 were written off as bad debts, paid ₹ 4,000 in full settlement.
Two months salary @ ₹ 6,000 was outstanding. (6)

Answer:
Journal

PART – B
(Analysis of Financial Statements) Option – I

Question 27.
Which of the following are the objectives of Financial Analysis?
(I) Inter-firm Comparison.
(II) Explainable and Understandable.
(III) Assessing the Managerial Effciency.
(IV) Window Dressing.
Choose the correct option:
(a) I, II & III
(b) I, II & IV
(c) II, III & IV
(d) All of the above

Unpaid DMdends are shown under
(a) Contingent UabiUtles
(b) Other Current UabiLltles
(c) Short term Borrowings
(d) Long term Borrowings (1)
Answer:
(a) I, II & II

Explanation: Window dressing is not an objective of financial statement analysis, it is an effort made by the management to improve the appearance of a company’s financial statements before it is publicly releasesd.

(b) Other Current Liabilities Explanation: Unclaimed dividend is to be paid by the company as and when demanded and hence is a liability for the company. It is a current liability because usually has be met within 12 months.

Question 28.
Assuming that Debt to Equity Ratio is 2 : 1 if machinery is purchased by taking a Long – term Loon, this ratio wilt
(a) Increase,
(b) Decrease,
(c) WIll have no change
(d) Noneoftheabove. (1)
Answer:
(a) Increase

Explanation: Ratio will increase because shareholders’ funds remain unchanged and long-term debts will get increased.

Question 29.
Balance Sheet (Extract)

How much amount, based on above information, shall be shown in cash flow statement for the year ended 31st March 2020 ?
(a) Outflow ₹ 17,500
(b) Outflow ₹ 7,500
(c) Outflow ₹ 10,000
(d) No Flow

Sale of marketable securities will result in:
(a) Inflow of cash
(b) Outflow of cash
(c) No flow of cash
(d) None of these (1)
Answer:

Basic Pay Earned (BPE)
Dearness allowance (DA)

Explanation:

Basic pay earned of an employee is the basic pay calculated with reference to number of effective days present during the month.
Dearness allowance is a cost of living adjustment allowance paid to the employees.

Explanation: Management information system (MIS) deals with generation and processing of reports that are vital for management decision making. The information system should be so flexible as to provide customised reports to support various managerical functions such as planning,

Related Theory
Budget sub system deals with the preparation of budget for the coming financial year as well as comparison with the current budget of the actual performances. Payroll accounting sub system deals with payment of wages and salaries to employees. Cash and bank system deals with the receipt and payment of cash both physical cash and electric fund transfer.

Question 30.
From the following, which is not a part of solvency ratios ?
(a) Debt Equity ratio
(b) Quick ratio
(c) Proprietary ratio
(d) Interest Coverage ratio (1)
Answer:
(b) Quick ratio

Explanation: Solvency ratios are calculated to determine the ability of the business to serve its debt in the long run. Quick ratio is the ratio of quick assets to current liabilities. It is a part of liquidity ratio which are calculated to assess the firm’s ability to meet its current obligations.

Related Theory
The payroll computation includes the calculation of various earning and deduction heads.

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) Trademarks
(ii) Capital Reserve
(iii) Loans repayable on demand
(iv) Balances with Banks
(v) Provision for Tax
(vi) Premium on Redemption of Debentures (3)
Answer:

Particulars	Major Heads	Sub-Heads
(i) Trademarks	Non-Current Assets	Intangible Assets
(ii) Capital Reserve	Shareholders’ Funds	Reserve and Surplus
(iii) Loans repayable on demand	Current Liabilities	Short-term Borrowings
(iv) Balances with Banks	Current Assets	Cash and Cash Equivalents
(v) Provision for Tax	Current Liabilities	Short-term Provision
(vi) Premium on Redemption of Debentures	Non-Current Liabilities	Other Long-term Liabilities

Question 32.
From the following information, calculate Stock Turnover Ratio: (4)

Particulars	Amount (₹)
Opening Stock	18,000
Closing Stock	22,000
Purchases	46,000
Wages	14,000
Sales	80,000
Carriage Inwards	4,000

Answer:

Cost of goods sold = Opening Stock + Purchases – Closing Stock + Direct Expenses
= 18,000 + 46,000 – 22,000 + (14,000 + 4,000)
= ₹ 60,000

\(\frac { 18,000 + 22,000 }{ 2 }\) = ₹ 20,000
Stock Turnover ratio = \(\frac { 60,000 }{ 20,000 }\) = 3 : 1

Question 33.
From the following Statement of Profit and Loss for the year ended 31st March, 2019 prepare a Common Size Statement of Profit and Loss:

Particulars

Note No.

31.03.2019 (₹)

Revenue from Operations

Employee Benefit

Expenses Other Expenses

20,00,000

10,00,000

1,00,000

Prepare a Comparative Statement of Profit and Loss for the year ended 31st March, 2019 from the following information: (4)

Particulars	31.03.2019	31.03.2018
Revenue from Operations	20,00,000	10,00,000
Purchase of Stock-in-Trade	13,00,000	4,00,000
Change in Inventories of stock	1,20,000	1,00,000
Other Expenses	10% of Cost of revenue from operations	20% of Cost of revenue from operations
Tax rate	40%	40%

Answer:
Common Size Statement of Profit and Loss
as on 31.03.2019

Particulars	Amount (₹)	Percentage of Revenue from Operations
I. Revenue from Operations	20,00,000	100
II. Expenses:
(i) Employment Benefit Expenses	10,00,000	50
(ii) Other Expense	1,00,000	5
III. Total Expenses	11,00,000	55
IV. Profit Before Tax	9,00,000	45

Comparative Statement of Profit and Loss

Particulars	Note No.	31.03.2018 (₹)	31.03.2019(₹)	Absolute Change (₹)	Percentage Change (%)
I. Revenue from Operations		10,00,000	20,00,000	10,00,000	100
II. Expenses:
(i) Purchase of Stock-in-Trade		4,00,000	13,00,000	9,00,000	225
(ii) Change in Inventories		1,00,000	1,20,000	20,000	20
(iii) Other Expenses		1,00,000	1,42,000	42,000	42
Total Expenses		6,00,000	15,62,000	9,62,000	160.33
III. Profit before Tax [I – II]		4,00,000	4,38,000	38,000	9.5
IV. Less: Tax @ 40%		1,20,000	1,75,200	55,200	46
V. Net Profit after Tax		2,80,000	2,62,800	(17,200)	(6.14)

Question 34.
The Balance Sheets of Sunlight Ltd. for the years ended 31st March 2019 and 31st March 2020 are as under:
Balance Sheet as at 31st March 2019 and 2020

Notes to Accounts:
Additional Information:

Investment costing ₹ 4,000 were sold during the year ending 31st March 2020 for ₹ 4,250
Provision for taxation made during the year was ₹ 4,500
During the year, part of fixed assets costing ₹ 5,000 was sold for ₹ 6,000 and the profit was included in the statement of profit and loss
Dividend paid during the year amounted to ₹ 20,000 You are required to prepare Cash Flow Statement for the year ending 31st March 2020. (6)

Answer:
(A) Dearness allowance:
= If (B2 > 40,000, 0.25 x B2, 0.2 x B)

(B) Net Sal.ary
= Sum (B2 : C2)
(C) Tax payable:
= 0.3 x D2