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12th Accountancy Paper Solutions Set 3 : CBSE Delhi Previous Year 2015


General Instructions:
1) This question paper contains two parts A and B.
2) Part A is compulsory for all.
3) Part B has two options-Financial statement Analysis and Computerised Accounting.
4) Attempt only one option of Part B.
5) All parts of a question should be attempted at one place.Section A
i. This section consists of 18 questions.
ii. All the questions are compulsory.
iii. Question Nos. 1 to 6 are very short-answer questions carrying 1 mark each.
iv. Question Nos. 7 to 10 carry 3 marks each.
v. Question Nos. 11 and 12 carry 4 marks each.
vi. Question Nos. 13 to 15 carry 6 marks each.
vii. Question Nos. 16 and 17 carry 8 marks each.Section B
i. This section consists of 6 questions.
ii. All questions are compulsory
iii. Question Nos. 18 and 19 are very short-answer questions carrying 1 mark each.
iv. Question Nos. 20 to 22 carry 3 marks.
v. Question No. 23 carries 6 marks.


Q1 :On the retirement of Hari from the firm of ‘Hari, Ram and Sharma’ the balance-sheet showed a debit balance of Rs 12,000 in the profit and loss account. For calculating the amount payable to Hari this balance will be transferred
(a) to the credit of the capital accounts of Hari, Ram and Sharma equally
(b) to the debit of the capital accounts of Hari, Ram and Sharma equally
(c) to the debit of the capital accounts of Ram and Sharma equally
(d) to the credit of the capital accounts of Ram and Sharma equally

Answer :
At the time of retirement of a partner, the balance of accumulated profits and losses is transferred among all the partners (including the retiring partner) in the old ratio. Here, debit balance of Rs 12,000 in the Profit and Loss Account will be debited (being a loss) to the capital accounts of Hari, Ram and Sharma equally.
Hence, the correct answer is option (b).


Q2 :Kumar, Verma and Naresh were partners in a firm sharing profit & loss in the ratio of 3 : 2 : 2. On 23rd January, 2015 Verma died. Verma’s share of profit till the date of his death was calculated at Rs 2,350.
Pass necessary journal entry for the same in the books of the firm.

Answer :
The Journal entry for transferring Verma”™s share of profit to his capital account is given below


Journal


Date


Particulars


L.F.


Debit


Amount


(Rs)


Credit


Amount


(Rs)


Profit and Loss Suspense A/c


Dr.


2,350


To Verma”™ Capital A/c


2,350


(Verma”™s share of profit dispensed
through his Capital Account)


Q3 :Give the meaning of forfeiture of shares.

Answer :
Cancellation of shares on non-payment of due calls is known as forfeiture of shares.


Q4 : Joy Ltd. issued 1,00,000 equity shares of Rs 10 each. The amount was payable as follows :
On application − Rs 3 per share
On allotment − Rs 4 per share.
On 1st and final call − balance
Applications for 95,000 shares were received and shares were allotted to all the applicants. Sonam to whom 500 shares were allotted failed to pay allotment money and Gautam paid his entire amount due including the amount due on first and final call on the 750 shares allotted to him along with allotment. The amount received on allotment was
(a) Rs 3,80,000
(b) Rs 3,78,000
(c) Rs 3,80,250
(d) Rs 4,00,250
Answer :


Details


Amount (Rs)


Amount due on allotment (95,000 × 4)


3,80,000


Less
:
Allotment not received on 500 shares


2,000


Add
:
First and final call money received on 750 shares (750
× 3)


2,250


Net Amount Received on Allotment


3,80,250

Hence, the correct answer is option (c).


Q5 : In the absence of partnership deed the profits of a firm are divided among the partners :
(a) In the ratio of capital
(b) Equally
(c) In the ratio of time devoted for the firm’s business
(d) According to the managerial abilities of the partners

Answer :
In the absence of partnership deed, the provisions of Indian Partnership Act, 1932 applies. According to the Partnership Act, the profits and losses are to be shared equally among the partners.
Hence, the correct answer is option (b).


Q6 : A, B, C and D were partners in a firm sharing profits in the ratio of 4 : 3 : 2 : 1. On 1-1-2015 they admitted E as a new partner for share in the profits. E brought Rs 10,000 for his share of goodwill premium which was correctly recorded in the books by the accountant. The accountant showed goodwill at Rs 1,00,000 in the books. Was the accountant correct in doing so? Give reason in support of your answer.

Answer :
Accounting Standard 26 (AS-26) prescribes that goodwill is recorded in the books only when it is purchased. Thus, at the time of admission of a partner, if the incoming partner (here E) contributes some amount towards his share of goodwill (Rs 10,000), then such goodwill should be immediately distributed among the sacrificing partners in their sacrificing ratio (since no consideration is paid by the firm for the share of goodwill brought in by E).
In this case, the accountant has shown the goodwill of the firm (Rs 1,00,000) as an asset in the books of the firm. This is certainly violating the rules contained in the AS-26, as goodwill cannot be shown in the books until it is purchased. Thus, here the accountant has adopted the wrong accounting treatment.


Q7 :Securities premium can also be utilized for three other purposes besides (i) ‘Issuing fully paid bonus shares’ and (ii) ‘Buy back of shares’. State those purposes.

Answer :
The Companies Act, 1956 imposes certain restrictions on utilisation of amount received as securities premium. As per the Section 78 of the Companies Act 1956, the amount of securities premium received can be utilised for following purposes:
i. For writing off preliminary expenses of the company.
ii. For writing off the expenses of, or the commission paid or the discount allowed on, any issue of share or debenture of the company.
iii. For paying up premium payable on redemption of redeemable preference shares or debentures of the company.


Q8 : On 1-4-2013 Jay and Vijay, entered into partnership for supplying laboratory equipments to government schools situated in remote and backward areas. They contributed capitals of Rs 80,000 and Rs 50,000 respectively and agreed to share the profits in the ratio 3 : 2. The partnership deed provided that interest on capital shall be allowed at 9% per annum. During the year the firm earned a profit of Rs 7,800.
Showing your calculations clearly, prepare ‘Profit and Loss Appropriation Account’ of Jay and Vijay for the year ended 31-3-2014.

Answer :

Profit and Loss Appropriation Account


for the year ended March 2014


Dr.


Cr.


Particulars


Amount


Rs


Particulars


Amount


Rs


Interest on Capital A/c:


Profit and Loss A/c


7,800


Jay


4,800


Vijay


3,000


7,800


7,800


7,800

Working Notes:

WN1: Calculation of Interest on CapitalWN2: Calculation of Proportionate Interest on Capital


Q9 :Sun Pharma Ltd. is registered with an authorized capital of Rs 1,00,00,000 divided into 1,00,000 equity shares of Rs 100 each. The company issued 50,000 shares at a premium of Rs 40 per shares. A shareholder holding 500 shares did not pay the final call of Rs 20 per share. His shares were forfeited.

Present the ‘Share Capital’ in the Balance Sheet of the Company as per Schedule VI Part I of the Companies Act, 1956. Also prepare notes to accounts.
Answer :


Sun Pharma India Ltd.


Balance Sheet


Particulars


Note


No.


Amount


Rs


I. Equity and Liabilities


1. Shareholders”™ Funds


a. Share Capital


1


49,90,000


b. Reserves and Surplus


2


20,00,000


69,90,000


II. Assets


1. Current Assets


a. Cash and Cash Equivalents


3


69,90,000


69,90,000


NOTES TO ACCOUNTS


Note No.


Particulars


Amount 


(Rs)


1


Share Capital


Authorised Capital


1,00,000 shares of Rs 100


1,00,00,000


Issued Capital


50,000 shares of Rs 100


50,00,000


Subscribed, Called-up and Paid-up Capital


49,500 shares of Rs 100


49,50,000


Add
:
Shares Forfeited (500 shares × Rs
80)


40,000


49,90,000


2


Reserves and Surplus


Securities Premium (50,000 × 40)


20,00,000


3


Cash and Cash Equivalents


Cash at Bank


69,90,000


Q10 : ‘Sangam Woollens Ltd.’, Ludhiana, are the manufactures and exporters of woollen garments. The company decided to distribute free of cost woollen garments to 10 villages of Lahaul and Spiti District of Himachal Pradesh. The company also decided to employ 50 young persons from these village in its newly established factory. The company issued 40,000 equity shares of Rs 10 each and 1,000 9% debentures of Rs 100 each to the vendors for the purchase of machinery of Rs 5,00,000.
Pass necessary Journal Entries. Also identify any one value that the company wants to communicate to the society.

Answer :


Journal


In the books of Sangam Woollens Ltd.


Date


Particulars


L.F.


Debit Amount


Rs


Credit Amount


Rs


Machinery A/c


Dr.


5,00,000


To Vendor


5,00,000


(Purchased machinery)


Vendor


Dr.


5,00,000


To Equity Share Capital A/c


4,00,000


To 9% Debentures A/c


1,00,000


(Issued 40,000 equity shares and 1,000 debentures to the
vendor)

Values involved in the above scenario:
(i) Creation of employment opportunities
(ii) Working for social welfare


Q11 :Sunny, Honey and Rupesh were partners in a firm. On 31-3-2014 their Balance Sheet was as follows :

Liabilities Amount
Rs
Assets Amount
Rs
Creditors 10,000 Plant and machinery 40,000
General Reserve 30,000 Furniture 15,000
Capitals : Investments 20,000
   Sunny 30,000 Debtors 20,000
   Honey 30,000 Stock 25,000
   Rupesh 20,000 80,000
1,20,000 1,20,000

Honey dies on 31-12-2014. The partnership deed provides that the representatives of the deceased partner shall be entitled to :
(i) Balance in the capital account of the deceased partner.
(ii) Interest on capital @ 6% p.a. upto the date of his death.
(iii) His share in the undistributed profits or losses as per the balance sheet.
(iv) His share in the profit of the firm till the date of his death, calculated on the basis of rate of net profit on sales of the previous year. The rate of net profit on sale of previous year was 20%. Sales of the firm during the year till 31-12-2014 was Rs 6,00,000.
Prepare Honey’s Capital Account to be presented to his executors.
Answer :


Honey”™s Capital A/c


Dr.


Cr.


Particulars


Amount


Rs


Particulars


Amount


Rs


Executor”™s A/c


81,350


Balance b/d


30,000


Interest on Capital


1,350


Profit and Loss Suspense A/c


40,000


General Reserve


10,000


81,350


81,350

Working Notes:
WN1 Calculation of Interest on Honey”™s CapitalWN2 Calculation of Honey”™s share in profits
WN3 Calculation of Honey”™s Share in General Reserve


Q12 :Kumar, Gupta and Kavita were partners in a firm sharing profits and losses equally. The firm was engaged in the storage and distribution of canned juice and its godowns were located at three different places in the city. Each godown was being managed individually by Kumar, Gupta and Kavita. Because of increase in business activities at the godown managed by Gupta, he had devote more time. Gupta demanded that his share in the profits of the firm be increased, to which Kumar and Kavita agreed. The new profit sharing ratio was agreed to be 1 : 2 : 1. For this purpose the goodwill of the firm was valued at two years purchase of the average profits of last five years. The profits of the last five years were as follows :

Year Profit (Rs)
I 4,00,000
II 4,80,000
III 7,33,000
IV (Loss) 33,000
V 2,20,000

You are required to :
(i) Calculate the goodwill of the firm.
(ii) Pass necessary Journal Entry for the treatment of goodwill on change in profit sharing ratio of Kumar, Gupta and Kavita,

Answer :


Journal


Date


Particulars


L.F.


Debit Amount


Rs


Credit Amount


Rs


Gupta”™s Capital A/c


Dr.


1,20,000


To Kumar”™s Capital A/c


60,000


To Kavita”™s Capital A/c


60,000


(Goodwill adjusted at the time of change in profit
sharing ratio)

Working Notes:
WN1 Calculation of Gaining Ratio
Old Ratio = 1 : 1 : 1
New Ratio = 1 : 2 : 1
Gaining Ratio = New Ratio – Old Ratio
Only Gupta is gaining; Kumar and Kavita are sacrificing in the ratio of 1 : 1
WN2 Calculation of Goodwill of the firm
Goodwill is calculated on the basis of two years purchase of last 5 years average profit

Goodwill = 2 × Average Profit
= 2 × 3,60,000 = 7,20,000


Q13 : Bora, Singh and Ibrahim were partners in a firm sharing profits in the ratio of 5 : 3 : 1. On 2-3-2015 their firm was dissolved. The assets were realized and the liabilities were paid off. Given below are the Realisation Account, Partners’ Capital Account and Bank Account of the firm. The accountant of the firm left a few amounts unposted in these accounts. You are required to complete these accounts by posting the correct amounts.

Realisation Account
Dr. Cr.
Particulars Amount
Rs
Particulars Amount
Rs
To Stock 10,000 By Provision of bad debts 5,000
To Debtors 25,000 By Sundry Creditors 16,600
To Plant and Machinery 40,000 By Bills Payable 3,400
To Bank: By Mortgage Loan 15,000
  Sundry Creditors 16,000 By Bank-assets realized : 30,600
  Bills Payable 3,400   Stock 6,700
  Mortgage Loan 15,000 34,400   Debtors 12,500
To Bank (Outstanding repairs) 400 Plant & Machinery 36,000 55,200
To Bank (Exp.) 620 By Bank-unrecorded assets realized 6,220
By ________
1,10,420 1,10,420
Capital Accounts
Dr. Cr.
Particulars Bora
Rs
Singh
Rs
Ibrahim
Rs
Particulars Bora
Rs
Singh
Rs
Ibrahim
Rs
By Balance b/d 22,000 18,000 10,000
By General Reserve 2,500 1,500 500
24,500 19,500 10,500 24,500 19,500 10,500
Bank Account
Dr. Cr.
Particulars Amount
Rs
Particulars Amount
Rs
To Balance b/d 19,500 By Relaisation (liabilities) 34,400
To Realisation (assets realized) 55,200 By Realisation (unrecorded liabilities) 400
________________ ____ By ____________ ____
By ____________ ____
80,920 80,920

Answer :


Realisation Account


Dr.


Cr.


Particulars


Amount


Rs


Particulars


Amount


Rs


Stock


10,000


Provision for Bad Debts


5,000


Debtors


25,000


Sundry Creditors


16,600


Plant and Machinery


40,000


Bills Payable


3,400


Bank:


Mortgage Loan


15,000


Sundry Creditors


16,000


Bank (assets realised)


Bills Payable


3,400


Stock


6,700


Mortgage Loan


15,000


34,400


Debtors


12,500


Bank (outstanding repairs)


400


Plant and Machinery


36,000


55,200


Bank (exp.)


620


Bank (unrecorded assets realised)


6,220


Loss transferred to:


Bora”™s Capital A/c


5,000


Singh”™s Capital A/c


3,000


Ibrahim”™s Capital A/c


1,000


9,000


1,10,420


1,10,420


Partners”™ Capital
Account
s


Dr.


Cr.


Particulars


Bora


Singh


Ibrahim


Particulars


Bora


Singh


Ibrahim


Realisation A/c


5,000


3,000


1,000


Balance b/d


22,000


18,000


10,000


General Reserve


2,500


1,500


500


Bank A/c


19,500


16,500


9,500


24,500


19,500


10,500


24,500


19,500


10,500


Bank Account


Dr.


Cr.


Particulars


Amount


Rs


Particulars


Amount


Rs


Balance b/d


19,500


Realisation A/c (liabilities)


34,400


Realisation A/c (assets realised)


55,200


Realisation A/c (outstanding repairs)


400


Realisation A/c (unrecorded assets
realised
)


6,220


Realisation A/c (exp.)


620


Q14 :On 1-4-2010 Sahil and Charu entered into partnership for sharing profits in the ratio of 4 : 3. They admitted Tanu as a new partner on 1-4-2012 for share which she acquired equally from Sahil and Charu. Sahil, Charu and Tanu earned profits at a higher rate than the normal rate of return for the year ended 31-3-2013. Therefore, they decided to expand their business. To meet the requirements of additional capital they admitted Puneet as a new partner on 1-4-2013 for share in profits which he acquired from Sahil and Charu in 7 : 3 ratio.
Calculate:
(i) New profit sharing ratio of Sahil, Charu and Tanu for the year 2012-13.
(ii) New profit sharing ratio of Sahil, Charu, Tanu and Puneet on Puneet’s admission.

Answer :
(i) Calculation of New Profit Sharing Ratio of Sahil, Charu and Tanu for the year 2012-13

Old Ratio of Sahil and Charu = 4 : 3
Tanu was admitted for 1/5th share, which was acquired by her equally from Sahil and Charu

Sacrificing Share


New Profit Share = Old Share – Sacrificing Share



Therefore, New Profit Sharing Ratio of Sahil, Charu and Tanu = 33 : 23 : 14

(ii) Calculation of New Profit Sharing Ratio of Sahil, Charu, Tanu and Puneet

Old Ratio of Sahil, Charu and Tanu = 33 : 23 : 14

Puneet was admitted for 1/7th share, which he acquired from Sahil and Charu in the ratio of 7 : 3

Sacrificing Share


New Profit Share = Old Share – Sacrificing Share



Therefore, New Profit Sharing Ratio of Sahil, Charu, Tanu and Puneet = 26 : 20 : 14 : 10



Q15 :Bharat Ltd. had an authorized capital of Rs 20,00,000 divided into 2,00,000 equity shares of Rs 10 each. The company issued 1,00,000 shares and the dividend paid per share was Rs 2 for the year ended 31-3-2008. The management of the company decided to export its products to the neighbouring countries Nepal, Bhutan, Sri Lanka and Bangladesh. To meet the requirement of additional funds the financial manager of the company put up the following three alternatives before its Board of Directors :
(i) Issue 54,000 equity shares.
(ii) Obtain a loan from Import and Export Bank of India. The loan was available at 12% per annum interest.
(iii) To issue 9% Debentures at a discount of 10%.
After comparing the available alternatives the company decided on 1-4-2008 to issue 6,000 9% debentures of Rs 100 each at a discount of 10%. These debentures were redeemable in four instalments starting from the end of third year. The amount of debentures to be redeemed at the end of third, fourth, fifth and sixth year was as follows :

Year Profit Rs
III 1,00,000
IV 1,00,000
V 2,00,000
VI 2,00,000

Prepare 9% Debentures Account for the year 2008-09 to 2013-14.

Answer :


9% Debentures A/c


Dr.


Cr.


Date


Particulars


J.F.


Amount


(Rs)


Date


Particulars


J.F.


Amount


(Rs)


2008-09


Balance c/d


6,00,000


2008-09


Debenture Application A/c


5,40,000


Loss on Issue of Debentures A/c


60,000


6,00,000


6,00,000


2009-10


Balance c/d


6,00,000


2009-10


Balance b/d


6,00,000


6,00,000


6,00,000


2010-11


Debentureholders”™ A/c


1,00,000


2010-11


Balance b/d


6,00,000


Balance c/d


5,00,000


6,00,000


6,00,000


2011-12


Debentureholders”™ A/c


1,00,000


2011-12


Balance b/d


5,00,000


Balance c/d


4,00,000


5,00,000


5,00,000


2012-13


Debentureholders”™ A/c


2,00,000


2012-13


Balance b/d


4,00,000


Balance c/d


2,00,000


4,00,000


4,00,000


2013-14


Debentureholders”™ A/c


2,00,000


2013-14


Balance b/d


2,00,000


2,00,000


2,00,000


Q16 :’Wellness Ltd.’ invited applications for issuing 40,000 equity shares of Rs 10 each at a discount of 10%. The amount was payable as follows :
On application and allotment – Rs 4 per share.
On first call – Rs 3 per share.
On second and final call – The balance.
Applications for 39,000 shares were received and allotment was made to all the applicants.
The payment was received as per the following details :
On 30,000 shares – Full amount.
On 6,000 shares – Rs 7 per share.
On 3,000 shares – Rs 4 per share.
The Directors forfeited those shares on which less than Rs 7 per share were received. The forfeited shares were re-issued at Rs 8 per share as fully paid up.
Pass necessary Journal Entries in the books of the company for the above transactions.

                                                                                OR
‘Subham Ltd.’ invited applications for issuing 12,000 equity shares of Rs 10 each at a premium of Rs 3 per share. The amount was payable as follows :
On application and allotment – Rs 6 per share. (Including Premium)
On first call – Rs 4 per share.
On second and final call – The balance.
Applications for 18,000 shares were received and pro-rata allotment was made to all the applicants.
Excess money received with applications was adjusted towards sums due on first call. All calls were made and were dully received except the first call and second and final call on 120 shares allotted to Vibhu. His shares were forfeited. The forfeited shares were reissued at the maximum permissible discount as per the provisions of the Companies Act, 1956.
Pass necessary Journal Entries for the above transactions in the books of the company.

Answer :


In the books of Wellness Ltd.


Journal


Date


Particulars


L.F.


Debit Amount


Rs


Credit Amount


Rs


Bank A/c


Dr.


1,56,000


To Equity Share Application and Allotment
A/c


1,56,000


(Application money received on 39,000 shares)


Equity Share Application and Allotment A/c


Dr.


1,56,000


To Equity Share Capital A/c


1,56,000


(Application money transferred to share capital
account)


Equity Share First Call A/c


Dr.


1,17,000


Discount on Issue of Shares A/c


Dr.


39,000


To Equity Share Capital A/c


1,56,000


(Amount due on first call)


Bank A/c (1,17,000 – 9,000)


Dr.


1,08,000


To Equity Share First Call A/c


1,08,000


(Amount received on first call except on 3,000
shares)


Equity Share Second and Final Call A/c


Dr.


78,000


To Equity Share Capital A/c


78,000


(Amount due on second and final call)


Bank A/c (78,000 – 18,000)


Dr.


60,000


To Equity Share Second and Final Call A/c


60,000


(Amount received on second and final call)


Equity Share Capital A/c


Dr.


30,000


To Discount on Issue of Shares A/c


3,000


To Equity Share Forfeiture A/c


12,000


Q17 : Charu and Harsha were partners in a firm sharing profits in the ratio of 3 : 2. On 1-4-2014 their Balance Sheet was as follows :

Balance Sheet of Charu and Harsha as on 1-4-2014

Liabilities

Amount

Rs

Assets

Amount

Rs

Creditors

17,000

Cash

6,000

General Reserve

4,000

Debtors

15,000

Workmen Compensation Fund

9,000

Investments

20,000

Investment Fluctuation Fund

11,000

Plant

14,000

Provision for bad debts

2,000

Land and Building

38,000

Capitals :

Charu

30,000

Harsha

20,000

50,000

93,000

93,000

On the above date Vaishali was admitted for 1/4th share in the profits of the firm on the following terms :
(a) Vaishali will bring Rs 20,000 for her capital and Rs 4,000 for her share of goodwill premium.
(b) All debtors were considered good.
(c) The market value of investments was Rs 15,000.
(d) There was a liability of Rs 6,000 for workmen compensation.
(e) Capital accounts of Charu and Harsha are to be adjusted on the basis of Vaishali’s capital by opening current accounts.

Prepare Revaluation Account and Partners’ Capital Accounts.
OR
Amit, Balan and Chander were partners in a firm sharing profits in the proportion of respectively. Chander retired on 1-4-2014. The Balance Sheet of the firm on the date of Chander’s retirement was as follows :

Balance Sheet of Amit, Balan and Chander as on 1-4-2014

Liabilities

Amount

Rs

Assets

Amount

Rs

Sundry Creditors

12,600

Bank

4,100

Provident Fund

3,000

Debtors

30,000

General Reserve

9,000

Less : Provision

1,000

29,000

Capitals :

Stock

25,000

Amit

40,000

Investments

10,000

Balan

36,500

Patents

5,000

Chander

2,000

96,500

Machinery

48,000

1,21,100

1,21,100

It was agreed that :
(a) Goodwill will be valued at Rs 27,000.
(b) Depreciation of 10% was to be provided on machinery.
(c) Patents were to be reduced by 20%.
(d) Liability on account of Provident Fund was estimated at Rs 2,400.
(e) Chander took over investments for Rs 15,800.
(f) Amit and Balan decided to adjust their capitals in proportion of their profit sharing ratio by opening current accounts.
Prepare Revaluation Account and Partners’ Capital Accounts on Chander’s retirement.

Answer :


Revaluation Account


Dr.


Cr.


Particulars


Amount


Rs


Particulars


Amount


Rs


Profit transferred to:


Provision for Bad Debts


2,000


Charu”™s Capital A/c


1,200


Harsha”™s Capital A/c


8,00


2,000


2,000


2,000


Partners”™ Capital
Account


Dr.


Cr.


Particulars


Charu


Harsha


Vaishali


Particulars


Charu


Harsha


Vaishali


Current A/c


5,400


3,600


Balance b/d


30,000


20,000


General Reserve


2,400


1,600


Workmen Compensation Fund


1,800


1,200


Investment Fluctuation Fund


3,600


2,400


Revaluation A/c (Profit)


1,200


800


Cash A/c


20,000


Balance c/d


36,000


24,000


20,000


Premium for Goodwill


2,400


1,600


41,400


27,600


20,000


41,400


27,600


20,000

Working Notes:
WN1 Calculation of New Profit Sharing Ratio
WN2 Calculation of Sacrificing Ratio

WN3 Distribution of Goodwill

WN4 Adjustment of Capital

OR


Revaluation Account


Dr.


Cr.


Particulars


Amount


Rs


Particulars


Amount


Rs


Machinery


4,800


Investments A/c


5,800


Patent


1,000


5,800


5,800


Q18 :Which of the following is not included in cash and cash equivalents ?
(a) Balances with banks
(b) Bank deposits with 100 days of maturity
(c) Cheques and drafts on hand and
(d) Cash on hand

Answer :
Cash and cash equivalents are short term, highly liquid investments that are readily convertible into known amount of cash and which are subject to insignificant market risk. An investment normally qualifies as cash and cash equivalents only if it has maturity period of three months. Thus, ‘Bank deposits with 100 days of maturity’ will not be included in cash and cash equivalents.


Q19 :While preparing Cash Flow statement of Sharda Ltd. ‘Depreciation provided on fixed assets’ was added to net profit to calculate cash flow from operating activities. Was the accountant correct in doing so ? Give reason.

Answer :
Depreciation on fixed assets is non-cash expense. It must have been deducted from Net Profit while preparing Profit and Loss Account. Therefore, in Cash Flow Statement it must be added back to Net Profit before taxation and extraordinary items under Cash Flow from Operating Activities. Thus, the accountant of Sharda Ltd. is correct.


Q20 :Under which heads the following items will be placed in the Balance Sheet of a company as per Schedule VI part I of the Companies Act, 1956 ?
(i) Cash in hand
(ii) Mining Rights
(iii) Short term deposits
(iv) Debenture Redemption Reserve
(v) Income received in advance
(vi) Balance of the Statement of Profit and Loss
(vii) Office Equipments and
(viii) Work-in-progress


S.No.


Items


Head


Sub-head (if any)


i


Cash in hand


Current Assets


Cash and Cash Equivalents


ii


Mining Rights


Non-Current Assets


Intangible Fixed Assets


iii


Short term deposits


Current Assets


Short-Term Loans and Advances


iv


Debenture Redemption Reserve


Shareholder”™s Funds


Reserves and Surplus


v


Income Received in Advance


Current Liabilities


Other Current Liabilities


vi


Balance of Statement of Profit and Loss


Shareholder”™s Funds


Reserves and Surplus


vii


Office Equipments


Non-Current Assets


Fixed Assets


viii


Work-in-progress


Current Assets


Inventories


Q21 :From the following information related to Naveen Ltd. calculate (a) Return on Investment and (b) Total Assets to Debt Ratio.
Information : Fixed Assets Rs 75,00,000; Current Assets Rs 40,00,000; Current Liabilities Rs 27,00,000; 12% Debentures Rs 80,00,000 and Net Profit before Interest, Tax and Dividend Rs 14,50,000.

Answer :
1) Return on Investment


2) Total Assets to Debt to Ratio


Q22 :The motto of Yash Ltd., an advertising company is ‘Service with Dignity’. Its management and work force is hard-working, honest and motivated. The net profit of the company doubled during the year ended 31-3-2014. Encouraged by its performance company decided to give one month extra salary to all its employees. Following is the Comparative Statement of Profit and Loss of the company for the years ended 31st March 2013 and 2014.

Yash Ltd.
Comparative Statement of Profit and Loss
Particulars Note No. 2012-13
Rs
2013-14
Rs
Absolute Change
Rs
% Change
Revenue from operations
Less Employees benefit expenses
Profit before tax
Tax Rate 25%
Profit after tax
10,00,000
6,00,000
4,00,000
1,00,000
3,00,000
15,00,000
7,00,000
8,00,000
2,00,000
6,00,000
5,00,000
1,00,000
4,00,000
1,00,000
3,00,000
50
16.67
100
100
100

(a) Calculate Net Profit Ratio for the years ending 31st March, 2013 and 2014.
(b) Identify any two values which Yash Ltd. is trying to propagate.

Answer :
For 2013


For 2014


Q23 :Following is the Balance Sheets of Thermal Power Ltd. as at 31-3-2014 :

Thermal Power Ltd.
Balance Sheet as at 31-3-2014


Particulars


Note


No.


2013-14


Rs


2012-13


Rs


I. EQUITY AND LIABILITIES


(1) Shareholders Funds


(a) Share Capital


12,00,000


11,00,000


(b) Reserves and Surplus


1


3,00,000


2,00,000


(2) Non-Current Liabilities


Long Term-Borrowings


2,40,000


1,70,000


(3) Current Liabilities


(a) Trade Payables
1,79,000 2,04,000
(b) Short Term Provisions


50,000


77,000


Total


19,69,000


17,51,000


II. ASSETS


(1) Non-current Assets


(a) Fixed Assets


(i) Tangible

2


10,70,000


8,50,000

(ii) Intangible
3 40,000 1,12,000


(2) Current Assets


(a) Current-Investments


2,40,000


1,50,000


(b) Inventories


1,29,000


1,21,000


(c) Trade Receivables


1,70,000


1,43,000


(d) Cash and Cash-equivalents


3,20,000


3,75,000


Total


19,69,000


17,51,000

Notes to Accounts :


S. No.


Particulars


2013-14


Rs


2012-13


Rs


1.


Reserves and Surplus


Surplus (balance in statement of Profit and Loss)


3,00,000


2,00,000


2.


Tangible Assets


Machinery


12,70,000


10,00,000


Less

: Accumulated Depreciation


(2,00,000)


(1,50,000)


3.


Intangible Assets

Answer :


Cash Flow Statement 


for the year ended March 31, 2014


Particulars


Amount


(Rs)


Amount


(Rs)


A


Cash Flow from Operating Activities


Profit as per Statement of Profit and Loss


1,00,000


Profit Before Taxation


1,00,000


Items to be Added
:


Amortisation of Goodwill


72,000


Depreciation


66,000


Loss on Sale of Fixed Assets


2,000


1,40,000


Operating Profit before Working Capital
Adjustments


2,40,000


Less
:
Increase in Current Assets


Inventories      


8,000


Trade Receivables


27,000


Less
:
Decrease in Current Liabilities


Trade
Payables


25,000


Short-Term Provisions


27,000


87,000


Net Cash Generated from Operating
Activities


1,53,000


B


Cash Flow from Investing Activities


Sale of Machinery


6,000


Purchase of Machinery


(2,94,000)


Net Cash Used in Investing
Activities


(2,88,000)


C


Cash Flow from Financing Activities


Proceeds from Issue of Share Capital


1,00,000


Proceeds from Long Term Borrowings


70,000


Net Cash Flow from Financing
Activities


1,70,000


D


Net Increase or Decrease in Cash and Cash
Equivalents


35,000


Add
:
Cash and Cash Equivalent in the beginning of the
period


5,25,000


Cash and Cash Equivalents at the end of the
period


5,60,000

Working Notes:


Machinery Account


Dr.


Cr.


Particulars


Amount


(Rs)


Particulars


Amount


(Rs)


Balance b/d


10,00,000


Bank A/c (Sale)


6,000


Bank A/c (Purchase- Bal. Fig.)


error: