CLASS-XIl (2022-23) SAMPLE QUESTION PAPER - 5 SUBJECT ACCOUNTANCY 055 TIME 3 HOURS MAX. MARKS 80 GENERAL INSTRUCTIONS: % paonayu This question paper contains 34 questions. All questions are compulsory. 2. This question paper is divided into two parts, Part A and B. 3. 4. Part - B has two options i.e. (i) Analysis of Financial Statements and (ii) Computerised Part - Ais compulsory for all candidates. Accounting. Students must attempt only one of the given options. Question 1 to 16 and 27 to 30 carries 1 mark each, Questions 17 to 20, 31and 32 carries 3 marks each. Questions from 21 ,22 and 33 carries 4 marks each Questions from 23 to 26 and 34 carries 6 marks each There is no overalll 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. Page 1 of 30Part A:- Accounting for Partnership Firms and Companies Assertion (A): It is necessary to ascertain new profit sharing ratio for old partners. [1] When a new partner is admitted Reason (R): New partner acquires his share from old partners which reduces old partners’ share in profits. a) Both A and Rare true and Ris _b) Both Aand R are true but R is the correct explanation of A. not the correct explanation of A. ©) Ais true but R is false. d) Ais false but R is true. Goodwill of the firm is not affected by ty a) Location of the firm b) None of these ) Better customer service d) Favourable contracts OR Under the Capitalisation of Super Profit, the formula for calculating the goodwill is a) Average profit divided by the _b) Super profit divided by the rate rate of return of return ) Super profit multiplied by the d) Average profit multiplied by the rate of return rate of return Which of the following statement is true? i) A. a minor cannot be admitted as a partner B. a minor can be admitted as a partner, only into the benefits of the partnership Page 2 of 30CC. a minor can be admitted as a partner but his rights and liabilities are the same of an adult partner D. none of these a) Only A b) Only B ©) Only C d) Only D The debentures are issued under the of company ti a) Section 12 of Companies Act _b) Registration, c) Rules & Principles ) Common seal Discount on Reissue of shares cannot be more than the . ty a) Called up amount b) Forfeited Amount ©) Face value of share 4) Bank amount received OR When shares issued are 10,000 but applied shares are 8,000 then it is a case of: a) None of the above b) pro-rata ) under subscription d) Over-subseription Which of the following account is not prepared at the time of dissolution? ty a) Cash Account b) Partners Capital Account c) Realisation Account d) Revaluation Account OR If the firm is dissolved, the partner's personal assets are first used for payment of the: a) firm's liabilities b) Any of firm's liabilities and Personal liabilities. ) First applied towards payment —_d) Personal liabilities of private debt and surplus towards firm's debt Ifprincipal security is already issued then additionally which security is tobe [1] issued? a) Collateral security and Principal _b) Principal security security ¢) Personal security d) Collateral security OR Page 3 of 30Debentures can be issued through various modes other than cash, one such is through collateral security When does company issue debentures as collateral security? a) When the lender does not gives b) When a lender demands additional security additional or secondary security c) When lender does not demands _—_d) When a lender gives additional additional or secondary security security 8. Which capital should be stated in the Memorandum of Association of a company? [1] a) Subscribed capital b) Issued Capital c) Authorised Capital d) Paid-up capital Question No. 9 to 10 are based on the given text. Read the text carefully and 2.0 answer the questions: X, Y and Z are partners sharing profits and losses in the ratio of From Ist April, 2018, they decided to share profits and losses equally. The profit and loss account showed a debit balance of & 10,000. The Parmership Deed provides that in the event of any change in the profit-sharing ratio, the goodwill should be valued at two years’ purchase of the average profit of the preceding five years. The profits and losses of the preceding years ended 31st March, are: Year 2013-14 [2014-15 |2015-16 {2016-17 {2017-18 Profits (2) {70,000 85,000 [45,000 __[35,000 10,000 (Loss) 9. Change in the existing agreement of profit sharing ratio is considered as: a) None of these b) Reconstitution of a partnership firm ¢) Dissolution of a partnership d) Revaluation of a partnership firm firm 10. State the ratio in which the partners share the accumulated profits when there is a change in the profit-sharing ratio amongst existing partners: a) Sacrificing ratio b) New ratio ©) Old ratio d) Equal ratio Il, Aand B are partners in a firm sharing profits and losses in the ratio of 3: 5 They [1] admit a new partner C. A surrenders $ of his share and B 2 of his share in favour of C. For purpose of C's admission, goodwill of the firm is valued at & 75,000 and C brings his share of goodwill in cash which is retained in the firm’s books. Calculate sacrificing ratio of A and B. a)3:4 b)4:3 2:1 7:3 Page 4 of 3013. 16. ‘When a company purchases some assets and not paying cash instead is: 1) debentures as a payment for the purchase, from the vendors it is known as the issue of: a) Debentures issued for cash b) Debentures issued for consideration other than cash c) Debentures issued as collateral d) Debenture issued in security consideration of asset When the business is taken over by another business, the excess of purchase uy) consideration over its net value asset is referred to as___. a) Generated Goodwill b) Super Goodwill ©) Average Goodwill d) Purchase Goodwill Is outgoing partner entitled to a share of goodwill of the firm? i) a) Yes Goodwill eamed by the b) Yes Goodwill eared by the firm is the effort of retired firm is the effort of all the partners partners of firm. ) No Goodwill earned by the firm — d) No Goodwill earned by the firm is the effort of only one the is the effort of new partners. partners OR Methods of calculation of profit share up to date of death will be: a) Yearly basis b) Time basis c) Turnover basis d) Bott Time basis and Turnover ais When the value of goodwill is not given at the time of admission of a new partner, [1] it is inferred from the capital of the new firm and profit-sharing ratio. This concept is called a) Purchased Goodwill b) Premium for Goodwill c) Average Goodwill d) Hidden Goodwill For calculation of capital in the beginning what should be added in the capital at [1] the end of the year: a) Drawing b) Additional capital ©) Salary d) Profit P, Qand R were partners sharing profits in the ratio of 2 : 2 : 1, The firm closes its. [3] books on March 31 every year. On June 30, 2017, R died. The following information is provided on R’s death: Page 5 of 3018. 20. X, Y and Z are sharing profits and losses in the ratio of 5 : 21. i, The balance in his capital account in the beginning of the year was % 6,50,000. ii, He withdrew % 60,000 on May 15, 2017 for his personal use. On the date of death of'a partner the partnership deed provided for the following: a, Interest on capital @ 10 % per annum, b, Interest on drawings @ 12 % per annum. cc. His share in the profit of the firm till the date of death, to be calculated on the basis of the rate of Net Profit on Sales of the previous year, which was 25 %. The Sales of the firm till June 30, 2017 were @ 6,00,000. Prepare R’s Capital Account on his death to be presented to his executors. Average net profit of Home Depot expected in the future is 54,000 per year. The [3] average capital employed in the business is % 3,00,000. Normal profit expected from capital invested in this class of business is 10%. The remuneration of the partners is estimated to be = 9,000 p.a. Find out the value of goodwill on the basis of two years’ purchase of super profit. F Ltd. issues 27,00,000; 10% Debentures of 2100 each at a premium of 5% B31 redeemable at 110% after 5 years. Journalise. 22. With effet from — [3] Ist April, 2019, they decide to share profits and losses equally. Calculate each partner's gain or sacrifice due to the change in ratio. What journal entries would be recorded for the following transactions on the 14] dissolution of a firm of Arti and Karim after various assets (other than cash) on the third party liabilities have been transferred to Reliasation account. i, Atti took over the Stock worth % 80,000 at % 68,000, ii, There was an unrecorded Bike of & 40,000 which was taken over by Mr. Karim, iii, The firm paid % 40,000 as compensation to employees. iv. Sundry creditors amounting to = 36,000 were settled at a discount of 15%. y. Loss on realisation = 42,000 was to be distributed between Arti and Karim in the ratio of 3 : 4. Page 6 of 3022. 23. X Ltd. forfeited 1,500 shares of 210 each (originally issued at a premium of 33 [4] per share which was payable along with application money) on which allotment money of 23 and first call money of 22 were not received; the final call money of 33 is not yet called, These shares were originally allotted on pro-rata basis in the ratio of 3: 2. These shares were subsequently reissued at a discount of 21 per share, credited as 27 paid up. Pass necessary Journal entries for forfeiture and reissue of shares. X Lid invited applications for issuing 50,000 equity shares of 10 each. The {61 amount was payable as follows. (On application 2 2 per share (On allotment % 2 per share ‘On first call % 3 per share (On second and final call Balance amount Applications for 70,000 shares were received. Applications for 10,000 shares were rejected and the application money was refunded. Shares were allotted to the remaining applicants on a pro-rate basis and excess money received with applications was transferred towards sums due on allotment and calls if any. Gopal, who applied for 600 shares, paid his entire share money with the application. Ghosh, who had applied for 6,000 shares, failed to pay the allotment money and his shares were immediately forfeited. These forfeited shares were re~ issued to Sultan for & 20,000; 2 4 per share paid-up. The first call money and the second and final call money was called and duly received. Pass necessary journal entries for the above transactions in the books of X Ltd. Open Calls-in-advance account and calls-in-arrears account wherever necessary, Page 7 of 305. A, Band C are in partnership sharing profits in the ratio of 3 : 2: 1. On 28th {6 February, 2017 C retires from the firm. Their Balance Sheet on this date was as follows: Liabilities z Assets z Sundry Creditors 1,20,000 [Bank 25,000 (Outstanding Expenses 10,000 [Debtors 1,65,000 Profit & Loss Account 150,000 [Stock 2,500,000 (Capital Accounts: Investments —_|3,00,000 A 5,00,000 Fixed Assets _|5,40,000 B 10,000 c 2,00,000 ]10,00,000 12,80,000 12,80,000 ‘The following was agreed upon : i. Goodwill of the firm is valued at Z 1,50,000. C sells his share of goodwill to A and B in the ratio of 4: 1. ii, Stock is revalued at = 3,00,000 and debtors are revalued at @ 1,50,000. ili, Outstanding expenses be brought down to & 3,000, iv, Investments are sold at a loss of 10%. v. Cis paid off in full Prepare Revaluation Account, Capital Accounts and the Balance Sheet of the new firm. A, B and C were partners in a firm sharing profits in the ratio of 2: 2: 1. Their [6] Balance Sheet as at March 31, 2019 was as follows BALANCE SHEET OF FIRM A, B and C as at March 31, 2019 Liabilities z Assets g Creditors 30,000 [Land 85,000 Bill Payable 20,000 [Building [50,000 Outstanding Expenses 25,000 [Plant 1,00,000 General Reserve 50,000 [Stock 40,000 Capital: Debtors [25,000 A 50,000 Cash 5,000 B 60,000 c 70,000 3,05,000 Page 8 of 30From April 1, 2019 the partners decided to share profits in the ratio of 1: 2: 3. For this purpose it was agreed that: i, The goodwill of the firm should be valued at 2 60,000. ii. Land should be revalued at 2 1,00,000. Building should be depreciated by 6%. iii. Creditors amounting to % 3,000 were not to be paid. You are required to: i, Record the necessary journal entries to give effect to the above agreement. ii, Prepare the capital accounts of the partners. iii, Prepare the balance sheet of the reconstituted firm. Partners decide that General Reserve will be transferred to Capital Accounts whereas revised values of assets and liabilities are not to be recorded in the books. Part B :- Analysis of Financial Statements 26. On 1-4-2015, K.K. Ltd. issued 500, 9% Debentures of 2500 each at a 4%, 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 31-3-2016 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. scountof [6] 27. While calculating the cash flow statement from investment activities following [1] items should be added except? a) Cash paid for purchase of Non- _) Interest received current Investment ¢) Cash received from sale of 4) Cash received from sale of fixed assets investments OR As pet Accounting Standard-3, Cash Flow is classified into a) Operating activities and b) Investing activities and financing activities financing activities ¢) Operating activities and d) Operating activities, financing investing activities activities and investing activities Page 9 of 3028. 29. 30. 31. 32. Cash Flow Statement is based upon a) Credit basis of accounting ) Cash basis of accounting b) None of these d) Accrual basis of accounting OR Following are the unamortized expenses except a) Issue of share capital ) Share issue expenses 'b) Loss on issue of debentures: d) Discount on issue of debentures Main limitation of analysis of financial statements is: a) Affected by window dressing ©) Difficulty in forecasting price level d) All of these The financial analysis becomes significant because it: a) ignores price level changes c) measures the efficiency of business ) Do not reflect changes in the b) is affected by personal bias d) lacks qualitative analysis A company had a liquid ratio of 1.5: | and a current ratio of 2: 1. Its inventory ‘tumover ratio was 6 times. It had total current assets of € 2,00,000 Find out revenue from operations if the goods are sold at 25 % profit on cost. Rearrange the following items under assets according to Schedule III: (i) Office Equipment, (ii) Loose Tools, (iii) Goodwill, (iv) Trademarks, (v) Bills Receivable, (vi) Debtors, (vii) Land, (viii) Building (ix) Stock-in- Trade, (x) Stores and Spare Parts, (xi) Furniture, (xii) Vehicles, (xiii) Advance to Subsidit (xiv) Cash at Bank, (xv) Cash in Hand, (xvi) Work-in-Progress (Machinery), (xvii) Plant, (xviii) Interest Accrued on Investments, and (xix) Deposits with Electricity Supply Company, Page 10 of 30 fl (t ul1 33. Assuming that the current ratio is 1.5 : 1, state giving reasons, which of the [4] lb following transactions would (i) improve, (ii) reduce, (iii) not alter the current ratio: ' 1 i. Realisation of current assets ' f ii, Payment of current liabilities 1 ft iii, B/R dishonoured 1 ' iv. Sale of goods at par 1 ' v. Sale of goods at profit 1 ' vi. Sale of goods at loss le vii. Purchase of goods for cash : le viii. Purchase of goods on credit of 3 months ' le ix, Sale of furniture for cash ‘ lb x. Sale of machinery on a credit of 5 months LU h xi, Sale of land on long-term deferred payment basis. 1 xii, Purchase of motor car for cash 1 1 hk OR ' h State with reason, whether the Proprietary Ratio will improve, decline or will not ' change because of the following transactions if Proprietary Ratio is 0.8 : 1: 1 f i, Obtained a loan of 2 5,00,000 from State Bank of India payable after five years. 1 # Purchased machinery of 2 2,00,000 by cheque. 1 " iii, Redeemed 7% Redeemable Preference Shares 2 3,00,000. 1 ' iv. Issued equity shares to the vendor of building purchased for 2 7,00,000. 1 ' v. Redeemed 10% redeemable debentures of % 6,00,000. 1 1 " 1 r 1 ' 1 ' ' ' ' 1 ° ' 1 ' 1 ' ' ' r ' ' ' 1 Page 11 of 30h 34. Prepare a cash flow statement from the following: i ot STATEMENT OF PROFIT AND LOSS ' r (for the year ended 31st March, 2018) 1 r Note No. z 1 f [. Revenue from Operations 25.40,000 1 t Il. Expenses: ' [Cost of Materials Consumed 20,60,000 ' r Employee Benefit Expenses 1.36,000 1 t Finance Costs 1 20,000 ' t Depreciation and Amortization Expenses 2 70,000 ' t ‘Total Expenses 22,86,000 ' h IIL, Profit before Tax (-I) 2,54,000 ' h Provision for Tax 34,000 uy le Profit after Tax 2,20,000 ' hk Notes: ' he (1) [Finance Costs: ' h Interest on Debentures 20,000 7 h (2) [Depreciation and Amortization Expenses: ' h Depreciation 54,000 ' h Goodwill written off 16,000 ' 70,000 ' N BALANCE SHEETS ' ke as at ' " Particulars Note No, | 3132018 | 313.2017 ' t 1. EQUITY AND LIABILITIES: ' h (1) Shareholder’s Funds: ' h (a) Share Capital 5,00,000 1 h (b) Reserves & Surplus 7 3,96,000 | 1,66,000 ' h (2) Non-Current Liabilities: ' le Long-term Borrowings 2 1,50,000 | 2,00,000 ' h (3) Current Liabilities: . h (a) Short-term Borrowings 3 18,000 | 15,000 ' lk (b) Trade Payables 1,06,000 | 74,000 7 l (©) Short term Provision 4 32,000 | 25,000 ' TOTAL 12,02,000 | 880,000 ' Page 12 of 301, ASSETS: ' le (1) Non-Current Assets: ' (a) Fixed Assets: — ' lb (i) Tangible Assets 5 6,18,000 | 3,60,000 : ls (ii) Intangible Assets 6 24,000 | 40,000 I le (b) Long-term Investments 76,000 | 50,000 : ls (2) Current Assets: ’ . (a) Current Investments 8,000 10,000 s ls (b) Inventory 2,80,000 | 2,33,000 ' 1 (©) Trade Receivables 1,36,000 | _1,50,000 ' \(d) Cash & Bank Balances 60,000 37,000 ‘ TOTAL 12,02,000 | 8,80,000 ' / Note : I t (1) [Reserve & Surplus: 348.2018 | 313.2017 1 h Securities Premium 10,000 = ' h Reserve 3,86,000 1,66,000 ' 3,96,000 1,66,000 ' h (2) [Long-term Borrowings: 1 r 12% Debentures 1,50,000 2,00,000 1 ' (3) [Short-term Borrowings: i h Bank Overdraft 18,000 15,000 1 hn (4) [Short term Provision: ; ' Provision for Tax 32,000 25,000 1 ' (5) | Tangible Assets: 1 " Building 1,88,000 — i ' Machinery 430,000 3,60,000 1 f 6,18,000 3,60,000 1 e (6) |Intangible Assets: 1 # Goodwill 24,000 40,000 1 1 Page 13 of 30SOLUTION Part A:- Accounting for Partnership Firms and Companies 1, (a) Both A and R are true and R is the correct explanation of A. Explanation: Both A and R are true and R is the correct explanation of A. 2. (b) None of these Explanation: None of these OR (b) Super profit divided by the rate of return Explanation: Super profit divided by the rate of retum 3. (b) Only B Explanation: Minor can be admitted for profit shares only. 4, d) Common seal Explanation: A debenture is a document issued by a company as evidence of a debt to the holder usually arising out ofa loan and most commonly secured by a charge. A company issue its debentures under the Common Seal of the company. Otherwise, it will not be issued to the public. 5. (b) Forfeited Amount Explanation: A company can reissue its shares (forfeited shares) at a discount but discount should not exceed the forfeited amount i.e. the amount credited to the forfeited shares OR (c) under subscription Explanation: under subscription 6. (d) Revaluation Account Explanation: The main reason is that the revaluation account is prepared at the time of reconstitution of partnership when the values of assets and liabilities change. in case of dissolution of the business, assets are sold off and liabilities are paid off so revaluation account cannot be made. in case of Dissolution of Partnership firm Realisation A/c is prepared not revaluation A/c. OR (c) First applied towards payment of private debt and surplus towards firm's debt Explanation: Debts which the firm owes to outsiders are known as firm's debt whereas the debts which a partner owes in his personal capacity are known as private debts. 7. (d) Collateral security Explanation: Sometimes a company issue its debentures as a subsidiary or secondary security when primary security is already given. Such an issue is known as the issue of debentures as collateral security. OR (b) When a lender demands additional or secondary security Explanation: A company issue its debentures through collateral security when the lender demands additional security in addition to the prime or principal security. 8. (c) Authorised Capital Explanation: The authorised capital is to be stated in the Memorandum of association Page 14 of 3013, 14. 15. of a company. Authorized capital is also known as the nominal capital of the company. The authorised capital is maximum capital to be issued by the company during its lifetime. (b) Reconstitution of a partnership firm Explanation: Reconstitution of a partnership firm . (c) Old ratio Explanation: Old ratio (a)3:4 Explanation: Calculation of sacrificing ratio of A & B Old Share = 3: 5 A’s Sacrifice share B’s Sacrifice share = Sacrificing Ratio of A and B will be = 3:4 .. (b) Debentures issued for consideration other than cash Explanation: When a company purchases some assets and instead of paying cash issue debentures as a payment for the purchase from the vendors it is known as the issue of debentures for consideration other than cash. Asset Ale To vendor A/c Vendor A/c ... Dr. To debentures A/e (a) Purchase Goodwill Explanation: Purchased goodwill is recorded in the books of accounts, when a running business is purchased by another business by paying the extra amount than the actual value of the business. Purchased goodwill is the difference between the value paid for an enterprise as a going concern and the sum of its assets less the sum of its liabilities, each item of which has been separately identified and valued. (b) Yes Goodwill eamed by the firm is the effort of all the partners of firm. Explanation: Goodwill earned by the firm is the effort of all the partners of firm, When a partner retires from the firm, he should get his share of goodwill (Goodwill x share of outgoing partner) other than his capital amount (adjusted) OR (d) Both Time basis and Turnover basis Explanation: Deceased partner’s share will be calculated on the basis of: = Time method - proportionate profit up to date of death based on his share = Turnover method - Z2Atlest veer) 5° sales of the current year till the date of les (last year) - death (@) Hidden Goodwill Explanation: It is known as hidden goodwill Following formula should be used to calculate the value of hidden goodwill: Total Capital of the new firm - Combined capital of all partners (including new partner capital) = Hidden Goodwill (a) Drawing Explanation: To calculate the interest on capital, we must find out the opening capital first. Sometimes opening capital is not given in the question but closing capi Page 15 of 30h given. In such a case following formula should be used to find out the opening capital: Opening Capital = Closing Capital + Drawings during the year - profit during the ' ' year. 1 . 17. R's Capital Account ' I Date | Particulars |r| A™O""'| pate | Particulars |gr| Amount 1 . ®@ @. 2017 2017 ' " ving r . Jun a0 {7 Drawing Ave | |60,000 /27) [By Balance bia 6,50,000 ' " 2017 [To Interest on 2017 [By Interest on 5 ' r jun 30 [Drawing A/c B00 ‘jun 30 [Capital A/c 16,250 1 "] 2017 |To R's Executor's 2017 | By Profit & Loss ' . Jun 30 JA‘ 635,350 Jun 30 |Suspense A/c 30,000 1 " 6,96,250 6,96,250 1 18, For calculation of goodwill first Super Profit is calculated as follows= 1 z z 1 " [Average annual profits 54,000 1 ft Less : Partners’ remuneration 9000 1 f Interest on capital employed (3,00,000 x 24, 30,000 |39,000 1 [ ‘Annual super profit 15,000 ' Goodwill, being two years purchase of super profit = Super Profit x No, of years of ' r Purchase ~ 15000% 2 = & 30,000 1 r 19. JOURNAL OF LTD. ' 1 Date Particulars L.E| Dr.) | Cr @ 1 Bank A/e Dr.| [7.35.00 1 ' To Debentures Application and Allotment A/c 7,35,000 1 i (Being the debentures application money 1 h received) ' 1 Debentures Application and Allotment Ale D:.| _|7.35,000 ' " Loss on Issue of Debentures A/c Dr.| [70,000 ' " To 10% Debentures A/c 7.00000] ' ‘To Securities Premium of Debentures A/e 35,000 1 " ‘To Premium on Redemption of Debentures A/e 70,000 1 " (Being the issue of 7,000; 10% Debentures of 1 . 2100 each at a premium of 5% and redemption at ls a premium of 10%) ' ' ' ' P 1 ' Page 16 of 3020. Calculation of Change in Profit Sharing ratio ' Old Ratio (X, ¥ and Z) = 5: 1 ie New Ratio (X, Y and Z) 1, 1 Sacrificing (or Gaining) Ratio = Old Ratio ~ New Ratio le f-1= bw (Sacrifice ' ' 1 1 r 1 1 30 ' r X's Sacrifice = 5/30 1 y ‘ " 21, Journal ' . Particulars LE Amount | Amount i h z z h 1 | Arti’s Capital A/c Dr. 68,000 ' h To Realisation A/c (68,000 ' i. (Arti took over stock worth @ 80,000 at % 68,000) ' 1 2.|Karim’s Capital A/e Dr. 40,000 ' 1 ‘To Realisation A/c 40,000 1 " (Karim took over an unrecorded bike of & 40,000) i r 3.|Realisation A/c Dr. 40,000 1 . To Bank A/c 40,000. 1 " (Compensation paid to the employees ) 1 ft 4. [Realisation A/c Dr. 30,600 1 ft ‘To Bank A/c 30,600 1 fl (Creditors amounting 2 36,000 were settled at a 1 " discount of 15%) [36,000 x (85/100)] i ' 5. [Arti’s Capital A/e Dr. 18,000 1 ft Karim’s Capital Ale Dr. 24,000 ' f 42,000 1 ' (Loss on Realisation transferred to Partners’ Capital 1 ' Account) 1 1 ' ' ' r ' ' ' 1 ' ' Page 17 of 3022, Date| Particulars LE[Dr. @[Cr. ® ‘Share Capital A/e (1,500 x 27) Dr] ]10,500 ‘To Share Allotment A/c (Note) 750 To Share First Call A/c 3,000 ‘To Forfeited Shares A/e 6,750 (1,500 share forfeited due to non-payment of, allotment & call) Bank A/c (1,500 x %6) Dr.| [9,000 Forfeited Shares A/c (1.500 * 21) pr] [1.500 To Share Capital A/c 10,500 (Re-issue of forfeited shares) Forfeited Shares A/c Dr] [5,250 To Capital Reserve A/c 5,250 (Profit on re-issue transferred to Capital Reserve) Note: No. of Shares applied = 1,500 x 3 Excess application money received: 2,250 Share - 1,500 Shares = 750 Shares x 25 = 3,750 Amount due on Allotment: 1,500 Shares x 23 = 4,500 Less: Excess received on application = 3,750 Allotment mone not received = 750 4250 Page 18 of 30JOURNAL Date Particulars LF] Dr. @ | Cr ®@ Bank A/c Dr] [1.44,800 To Equity Share Application A/c 1,44,800) (Being share application money received.) Equity Share Application A/e Dr] [1.44,800 ‘To Equity Share Capital A/c 1,00,000 To Equity Share Allotment A/c 20,800 ‘To Bank A/c 21,000 To calls-in- advance A/e 3,000 (Being share application money due.) Equity Share Allotment A/c Dr] __[1,00,000 ‘To Equity Share Capital A/c 1,00,000| (Being share allotment money due.) Bank A/c Dr. 71,200 Calls-in-arrears A/c Dr. 8,000 To Equity Share Allotment A/c 79,200 (Being share allotment money received.) Equity Share Capital A/c Dr. 20,000 ‘To Calls-in-arrears A/c 8,000 ‘To Share Forfeiture A/c 12,000 (Being share forfeited.) Bank A/e Dr. 20,000 To Equity Share Capital A/c 20,000 Page 19 of 30,(Being shares issued to sultan.) le Share Forfeiture A/e Dr. 12,000 , le To Capital Reserve A/e 12,000 ' 1 (Being balance of share forfeiture transferred to ' lb capital reserve.) ' hk Equity Shares First Call A/c Dr.| __{1,50,000' ' le ‘To Equity Shares Capital A/e 1,50,000 ' h (Being share first call money due.) ' le Bank A/c Dr {1.48,500 ' " [_ [Calls-in-advance A/e : 1 ‘To Equity Shares First Call A/e 150,000 \ h (Being share first call money received.) 1 " Equity Share Second and Final Call A/e Dr] |1,50,000 1 f To Equity Share Capital A/c 1 ' (Being share second call money due.) 1 rp Bank A/e Dr.| _|1.48,500 1 f Calls-in-advance A/e Dr. 1,500 1 t To Equity Share Second and Final Call A/e 1,50,000 ' t (Being share second and final call money ' f received.) 1 ' Working Note: 1 N Analyse Table 1 h Received [Transferred Calls- h Shares | Shares} on toshare lr vcegs|AHotment] in- [Rering) | applied allotted |application| capital @ @22_|advance ' ' @22 2 @i6 ' r T[10,000[ ...._ | 20,000 ..__|20,000] 20,000] 4 ' 11| 59,400 [ 49,500 | 1,18,800 | 99,000 [19,00] 19,800 |... |. ' t mm} 600 | 500 | 6,000 1,000 [5,000 [ 1,000 | 3,000 | 1,000 ' t 70,000 | 50,000 | 1,40,800 | 1,00,000 [44,800] 20,800 | 3,000 | 21,000 1 r 24 REVALUATION ACCOUNT ' t Dr. cr] 4 t Particulars z Particulars z |] 4 t To Provision for doulas 15,000 By stock Alo 000} F To Investments A/c 30,000|By Outstanding Expenses 7,000 [ 1 . Page 20 of 30,le To Revaluation Profit transferred 4 to: ' [ A's Capital Ae 6,000 ' h B's Capital Ave 4,000 ' k C's Capital A/c 2,000] 12,000 1 h 57,000 57,000 ' h PARTNER'S CAPITAL ACCOUNTS. ' le ' h Particulars] A@® | B@ | C@ [Particulars] A@ | B® | CW ' . canal ‘Ave {20.000 |5,000 ae '5,00,000 3,00,000]2,00,000 ' / lb a 2,52,200 a ron 75,000 |50,000 |25,000 ' t To Bala By ' " cd |5:61.000|3,49,000 Revaluation |6,000 {4,000 |2,000 1 lh Ale \ t eat Ale 20,000 ' t eet Alc 5000 1 h '5,81,000|3,54,000] 2,52,000 '5,81,000|3,54,000|2,52,000 1 BALANCE SHEET OF THE FIRM ' ft as at Ist March, 2017 1 ft Liabilities z Assets z 1 t Sundry Creditors 1,20,000 [Bank 43,000 1 t apenas 3,000 [Debtors 1,65,000 : b ———— | earn Seam [som fisooom | 8 ' A 5,611,000} ‘Stock 3,00,000 1 1 B 3,49,000]9,10,000 [Fixed Assets 5,40,000 i " 10,33,000 10,33,000 a ' WN. 1 h BANK ACCOUNT ls Dr. Cr. ' h Particulars z Particulars z 1 To Balance b/d 25,000 By C’s Capital Ale 2,52,000 ' Page 21 of 3025. 43,000 To Investments '2,70,000 By Balance c/d 2,95,000 2,95,000 Journal Date Particulars L.F.| Dr. (@)|Cr. @) ape 1 |General Reserve Ale Dr.| {50,000 To A’s Capital Ale 20,000 ‘To B's Capital Ale 20,000 To C’s Capital A’e 10,000 (General Reserve transferred to partner's capital accounts duc to change in profit sharing ratio) C’s Capital A/e Dr. 22,500) To A’s Capital A/c (The adjustment for revaluation of assets and liabilities and goodwill on change in profit sharing ratio) CAPITAL ACCOU! Dr. Ce Particulars |A@[B@[C@]_ Particulars [A@®|B@[|C@ wes Capital ls 17,500|By Balance b/d — |50,000| 60,000|70,000 wes Capital - 5,000 [ieee 20,000] 20,000] 10,000 To Balance c/d —|87,500}85.000}57,500| By C's Capital A/c | 17,500] 5,000 |- 87,500 [85,000 [80,000 87,500|85,000|80,000 BALANCE SHEET (as at Ist April 2019) Liabilities z Assets z ‘Creditors 30,000 Land 85,000 Bills Payable 20,000 Building 50,000 Outstanding Expenses 25,000 Plant 1,00,000 Capitals: Stock 40,000. A 87,500. Debtors 25,000. B 85,000. Cash 5,000 G 57,500 |2,30,000 Page 22 of 3026. 27. 3,05,000 3,05,000 Working: Calculation of Net amount to be adjusted : Particulars z Profit due to increase in the value of Land 15,000 Profit due to decrease in Creditors 3,000 18,000 (©) Loss due to decrease in the value of Building (3,000) Profit on Revaluation 15,000 (©) Adjustment for Goodwill (60,000 Net Amount to be adjusted 75,000 Old Ratio of A, B and C New Ratio of A, Band C= 1: 2:3 Sacrifice or Gain: Old Share - New Share 2—1— 2 (Sacrifice) : % (Sacrifice) & (Gain) Share of A= 75,000 x 2 = 17,500 Share of B = 75,000 x & = 5,000 Share of C = 75,000 x2 =% 22,500 (a) Cash paid for purchase of Non-current Investment Explanation: Cash paid for the purchase of investment is deducted in investing activities while preparing a cash flow statement, It showed an outflow of cash in investing activities. But Cash received from the sale of fixed assets. Cash received from the sale of investments, Interest received are inflow hence added. OR (@) Operating activities, financing activities and investing activities Explanation: Operating activities, financing activities and investing activities Part B :- Analysis of Financial Statements Journal of KK Ltd. Date Particulars LE] Dr@® | Cr® ws APT Bank Ale Dr. 2.40.00] To Debentures Application & Allotment Ale 2,40,000. (Amount received on application) April! — |Debenture Application & Allotment A/c |Dr. 2,40,000] Loss on Issue of Debentures A/e Dr] [22,500 | To 9% Debentures Afe [2,50,000 Page 23 of 30ls To Premium on Redemption A/e ' (Issue of debentures at 4% discount and 12,500 1 f redeemable at 5% premium) 1 ft ‘Sept. 30 _ Interest on Debentures A/e Dr. 11,250 1 t To Debentureholders ae 10,125 1 1 To TDS Payable A/c 1 e (Half-yearly interest due on debentures and 1,125 1 1 tax deducted at source) 1 ' Sept. 30 [Debentureholders A/c Dr. 10,125 1 " TDS Payable A/e Dr] [1,125 1 # To Bank A/o 7 1 (Interest paid and TDS deposited in 11,250 le Government Account) ' ' 2016 [ March 31, |!nterest on Debentures A/c Dr} {11,250 1 hk To Debentureholders A/c 10,125 ' he To TDS Payable A/e 1 (Half-yearly interest due on debentures and 1,125 1 f tax deducted at source) 1 ' March 31. |Debentureholders A/c Dr. 10,125 1 # TDS Payable Dr. 1,125 1 f To Bank A/e 1 " (Interest paid and TDS deposited in 11,250 1 1 Government Account) 1 " March 31 [Statement of Profit & Loss Dr.|__|22,500 i 1 To Interest on Debentures A/e 1 ls (Interest transferred to Statement of profit 22,500 h & Loss) ' 28. (© Cash basis of accounting ' ft Explanation: Cash basis of accounting 1 ' OR 1 5 (a) Issue of share capital h Explanation: Issue of share capital is not part of unamortized expenses. Discount on ' issue of debentures, Loss on the issue of debentures, and Share issue expenses are ' ' unamortized expenses. These all are amortised over a period. 7 ' 29, (d) Alll of these l Explanation: All the options are correct. : 30. (©) measures the efficiency of business ' # Explanation: The financial analysis measures the efficiency of the business. 1 ' 31. Current Assets = = 2,00,000 i 5 Current Ratio of the firm = Current Assets/Current Liabilities Page 24 of 30h 2/1 = 2,00,000/Current Liabilities Current Liabilities = 21,00,000 ' f Quick Ratio = Quick Assets/Current Liabilities 7 1 1.5/1 = Quick Assets/1,00,000 Quick Assets = % 1,50,000 ' We know that, Quick Assets ~ Current Assets - Stock ' # Using the above formula, Stock = Current Assets - Quick Assets 1 1 = %(2,00,000 - 1,50,000) le = % 50,000 ’ h Assuming stock to be average stock ' Inventory Turnover Ratio = Cost of goods sold/Average Stock 1 ' 6 = Cost of Goods sold/50,000 1 1 Cost of Goods Sold = 3,00,000 a = 25 ' le Gross Profit = %(3,00,000 x 25) h = 275,000 ' Revenue from Operations = Cost of Goods Sold + Gross Profit 1 " = & (3,00,000 + 75,000) = & 3,75,000 ' 1 32. Classification on the basis of schedule III: le i, Fixed Assets (Tangible): Office Equipment, Land, Building, Furniture, Vehicles, ' Plant 1 rp ii, Fixed Assets (Intangible): Goodwill, Trademarks. 1 1 iii, Capital Work-in-Progress: Work-in-Progress (Machinery). 1 le iv. Long-term Loans and Advances: Advance to Subsidiaries, Deposits with Electricity le Supply Company. i v. Inventories: Loose Tools, Stock-in-Trade, Stores and Spare Parts. 1 " vi, Trade Receivables: Bills Receivable, Debtors. 1 1 vii. Cash and Cash Equivalents: Cash at Bank, Cash in Hand. h viii. Other Current Assets: Interest Accrued on Investments, ' 1 " 1 r 1 ' 1 ' ' ' ' 1 ° ' 1 ' 1 ' " 1 r ' ' ' 1 ' Page 25 of 3033. Statement showing the effect of various transactions on Current Ratio: Tr. | Current Reason No. | Ratio will Neither the current assets not the current liabilities are affected i |Notalter {since there is only a conversion of one current asset into another current asset. . Both the current assets and current liabilities are decreased by the ii Improve same amount. Neither the current assets not the current liabilities are affected Notalter __|since there is only a conversion of one current asset (i.e. B/R) into another current asset (i.e. Trade Receivables). Neither the current assets not the current liabilities are affected iv |Notalter _ |since there is only a conversion of one current asset(i.e., Inventory) into another current asset (i.e., Cash). Current liabilities remain unchanged but current assets are v {Improve decreased by amount of loss. (Current liabilities remain unchanged but current assets are vi |Reduce decreased by amount of loss. Neither the current assets nor the current liabilities are affected vii |Notalter {since there is only a conversion of one current asset(i.e., cash) into another current asset (i.c., Inventory). Reduce [Both the current assets and current liabilities are inereased by the same amount. ; (Current liabilities remain unchanged but current assets are ix |Improve increased. Page 26 of 30(Current liabilities remain unchanged but current assets are increased. Improve Neither the current assets nor the current liabilities are affected xi |Notalter [since the total non-current asset are increases as well as decreased by the same amount. os |Current assets remain unchanged but current liabilities are xii |Reduce be ‘increased, OR ‘Transaction Impact of transactions on proprietary ratio ‘Obtained a loan of Total assets increase by 5,00,000 (as cash increases). However, since shareholders’ funds remain unchanged, therefore proprietary ratio will decrease. 5,00,000 from State Bank of India payable afier five years Total assets are increasing and decreasing by 2,00,000 simultaneously (as cash decreases and machinery increases). Thus, both numerator and denominator remain unchanged and so proprietary ratio will not change. Redeemed 7% Both shareholders’ funds and total assets decrease by Redeemable Preference |3,00,000 simultaneously and so proprietary ratio will Shares @ 3,00,000. decrease Tssued equity shares to the [Both shareholders’ funds and total assets increase by vendor of building 7,00,000 simultaneously and so proprietary ratio will purchased for & 7,00,000. improve. Purchased machinery of & 2,00,000 by cheque. Redeemed 10% Total assets decrease by 6,00,000 (as cash is going out). redeemable debentures of |However, since shareholders’ funds remain unchanged, 2 6,00,000 therefore proprietary ratio will improve. Page 27 of 301" ad CASH FLOW STATEMENT 1 h for the year ended 31st March, 2018 le Particulars z z ' 5 |. Cash flows from operating activities: ' ' [Net Profit before Tax (Note 1) 2,54,000 ' ' ' Adjustments for non-cash and non-operating item: 1 1 Add: Depreciation \ 1 [Goodwill written off \ e Interest on Debentures ‘ # ‘Operating profit before working capital changes 1 ft Add: Decrease in Current Assets’ i f Trade Receivables 14,000 ' ft Add: Increase in Current Liabilities: 1 t Trade Payables 32,000 46,000 ' h ' h ' h ' ' h ' i h ' ' ' ' h I! / ' . ' 1 ' . ' ' ' i ' i 1 ' 1 ' f 1 r iy 1 ' . Page 28 of 303,90,000 Increase in Current Assets : Inventory 47,000 Cash generated from operating activities 3,43,000 Payment of Tax) (27,000) Net Cash from operating activities 3,16,000 | 3,16,000 B. Cash flows from Investing Activities: Purchase of Building (88,000) Purchase of Machinery(3) (124,000) Purchase of Long-term Investments (26,000) [Net Cash used in investing activities (3,38,000)] (3,38,000) C. Cash flows from Financing Activities: Issue of Share Capital 1,00,000 Securities Premium 10,000, Redemption of Debentures (50,000) Payment of interest on Debentures (20,000) Increase in Bank Overdraft 3,000 Net Cash from financing activities 43,000 | 43,000 Net increase in Cash and Cash equivalents (A+B+C ) 21,000 ‘Add: Cash and Cash equivalents in the beginning of the period 47,000 Cash and Cash equivalents at the end of the period(4) 68,000 Notes : 1 Calculation of Net Profit before Tax : z Reserve Balance on 31st March, 2018 3,86,000 Less: Reserve Balance on 31st March, 2017 1,66,000 2,20,000 |Add: Provision for Tax made during the Current year(2) 34,000 Net Profit before Tax and extraordinary items 2,54,000 2 PROVISION FOR TAX A/C Dr. | c&. Particulars z Particulars | z To Bank (B/f) 27,000 _ [By Balance b/d 25,00034, [To Balance c/d 32,000 _ [By Statement of P & L A/c 34,000 59,000 59,000 3. MACHINERY A/C Dr. Cr. Particulars z Particulars z ‘To Balance b/d |3,60,000 [By Statement of P & L (Depreciation) [54,000 'To Bank (B/f) 1,24,000 |By Balance c/d 4,30,000 4,84,000 4,84,000 4. Cash and Cash Equivalent 13.3.2018 13.3.2017 z z (Cash and Bank Balances 60,000 37,000 [Current Investments 8,000 10,000 Total 68,000 47,000 Statement showing the effect of various transactions on Current Ratio: Tr. | Current No. | Ratio will Reason i |Notalter Neither the current assets not the current liabilities are affected ‘since there is only a conversion of one current asset into another current asset. ii Improve Both the current assets and current liabilities are decreased by the same amount. ‘iii | Not alter Neither the current assets not the current liabilities are affected since there is only a conversion of one current asset (i.e. B/R) into another current asset (i.e. Trade Receivables). iv |Not alter Neither the current assets not the current liabilities are affected since there is only a conversion of one current asset(i. Inventory) into another current asset (i.e., Cash). v— |Improve (Current liabilities remain unchanged but current assets are decreased by amount of loss. vi | Reduce (Current liabilities remain unchanged but current assets are decreased by amount of loss. vii |Notalter Neither the current assets nor the current liabilities are affected since there is only a conversion of one current asset(i.e., cash) into another current asset (i.e., Inventory). viii | Reduce Both the current assets and current liabilities are increased by the same amount. ix Improve |Current liabilities remain unchanged but current assets are increased.