MODEL SPECIMEN PAPER-4

Transcription

1 MODEL SPECIMEN PAPER-4 SECTION A PART I Answer 1. (a) Difference between Sacrificing and Gaining Ratio. (b) Basis Sacrificing Ratio Gaining Ratio Meaning Object In this, old partners sacrifice in favour of the incoming partner. New partner s share of goodwill divided between sacrificing partners. SOLUTION In this, remaining partners have acquired from the outgoing partner. Outgoing partner s share of goodwill distributed between gaining partner. Method Sacrificing Ratio = Old Ratio New Ratio. Gaining Ratio = New Ratio Old Ratio. Effect It will decrease the old partners share of profit. Difference between over-subscription and under-subscription It will increase the remaining partners share of profits. Basis Over-subscription Under-subscription Meaning In this, the number of shares applied for is more than the shares offered to the public. the public. Allotment In this, some of the applications are accepted in full or partly and others are rejected. (c) Rights of an incoming partner : (i) Right to receive share in the future profit or losses of the firm. (ii) Right to receive share in the assets of the firm. (d) Utilisation of Securities Premium A/c : (i) To issue fully paid bonus shares to the existing shareholders. (ii) To write off preliminary expenses of the company. (e) (f) In this, the number of shares applied for is less than the share offered to In this, normally all the applications for shares are accepted. Interest on drawings is charged against profit at an agreed rate of interest, only if it is provided in the partnership deed. Pro-rata allotment means smaller number of shares are alloted to each applicant against the actual number of shares applied by him. PART II Answer 2. Date L.F. (i) Bank A/c Dr. 30,000 To Neha s Capital A/c 30,000 (Being amount of capital brought in) (ii) Seema Capital A/c Dr. 6,000 Suchita Capital A/c Dr. 4,000 To Revaluation A/c 10,000 (Being loss on revaluation transferred) (iii) Seema Capital A/c Dr. 14,000 To Seema s Current A/c 14,000 (Being excess capital transferred to Current A/c) (iv) Suchita Current A/c Dr. 14,000 To Suchita Capital A/c 14,000 (Being Suchita s deficiency of capital charged to Current A/c)

2 2 ISC Model Specimen Papers, XII Working note : (i) Old Ratio of Seema : Suchi = 3 : 2 (ii) New Ratio of Seema : Suchita : Neha = 2 : 2 : 1 (iii) New Capital of Neha = 30,000 (iv) Total Capital of Firm = 30,000 [1/(1/5)] = 1,50,000 (v) So, New Capital of : Seema = 1,50,000 (2/5) = 60,000 Suchita = 1,50,000 (2/5) = 60,000 Neha = 1,50,000 (1/5) = 30,000 (vi) Seema Suchita Old Capital 80,000 50,000 Less : Loss on Revaluation in [3 : 2] 6,000 4,000 Old adjusted capital 74,000 46,000 New Capital 60,000 60,000 Difference 14,000 14,000 Answer 3. (a) REVALUATION A/C To Plant 7,000 By Stock A/c 5,000 To Motor Car 2,000 By Building A/c 9,000 To Liabilities for Gratuity 10,000 By Provision for Bad Debt A/c 5,000 Total 19,000 Total 19,000 PARTNERS CAPITAL A/C A B C A B C To B s Cap. A/c 6,000 4,500 By Balance b/d 80,000 60,000 50,000 To B s loan A/c 78,000 By Reserve A/c 10,000 7,500 7,500 To Balance c/d 84,000 53,000 By A s Cap. A/c 6,000 By C s Cap. A/c 4,500 Total 90,000 78,000 57,000 Total 90,000 78,000 57,500 BALANCE SHEET (RE-CONSTITUTED) (as at 1st April, 2005) Liabilities Assets Creditors 40,000 Building [90, ,000] 99,000 Bills Payables 10,000 Plant [70,000 7,000] 63,000 Liabilities for gratuity 10,000 Motor Car [20,000 2,000] 18,000 B s Loan A/c 78,000 Stock [50, ,000] 55,000 Capital A/c Debtors 35,000 A 84,000 Cash at Bank 5,000 B 53,000 1,37,000 Total 2,75,000 Total 2,75,000 B S LOAN A/C Date J.F. Date J.F Apr. 1 To Bank A/c 26,000 Apr. 1 By B s Capital A/c 78,000 Mar. 31 To Balance c/d 52,000 Total 78,000 Total 78,000

3 Accounts Apr. 1 To Bank A/c 31,200 Apr. 1 By Balance b/d 52,000 [26, ,200] Apr. 1 By Interest A/c 5,200 Mar. 31 To Balance c/d 26,000 [52,000 10%] Total 57,200 Total 57, Apr. 1 To Bank A/c 28,600 Apr. 1 By Balance b/d 26,000 By Interest A/c 2,600 [26,000 10%] Total 28,600 Total 28,600 (b) (i) Each partner sacrifices = 1 20 share in favour of C A s old share of profit = 5 9 A s new share = = = B s Old share of profit = 4 9 B s new share = = = C s share of profit in the new firm = 1 18 or Thus, new profit sharing ratio of A, B and C = : : 18 = 91 : 71 : (ii) B s share is profit was = 4 15 A has taken over B s share = = 4 30 C has taken over B s share = = 4 30 Therefore, total share of A will be = = = and Total share of C will be = = = Therefore, new profit sharing ratio of A and C = : = 2 : 1 Answer 4. (a) Date L.F. (i) Bank A/c Dr. 2,000 To Share Application A/c 2,000 (Being amount of share application received) (ii) Share Application A/c Dr. 2,000 To Share Capital A/c 2,000 (Being amount of share application due) (iii) Share Allotment A/c Dr. 3,000 To Share Capital A/c [1,000 2] 2,000 To Securities Premium Reserves A/c [1,000 1] 1,000 (Being amount of allotment with premium due)

4 4 ISC Model Specimen Papers, XII (iv) Bank A/c Dr. 3,000 To Share Allotment A/c 3,000 (Being amount of share allotment receive) (v) Share First Call A/c Dr. 3,000 To Share Capital A/c 3,000 (Being amount of share first call due) (vi) Share Capital A/c [1,000 7] Dr. 7,000 To Share forfeiture A/c 4,000 To Share First call A/c 3,000 (Being shares forfeited) (vii) Bank A/c [1,000 6] Dr. 6,000 Share forfeiture A/c [1,000 4] Dr. 4,000 To Share Capital A/c 10,000 (Being re-issue of forfeited shares) Note : Transfer to capital reserve = Shares Forfeited = [4,000 4,000] = Balance = Nil (b) Date L.F. (i) Bank A/c [40, ] Dr. 40,00,000 14% fully sec. Debenture Application & Allotment A/c 40,00,000 (Being the application and allotment money on 40,000 debentures received) (ii) 14% fully sec. Debenture Application & Allotment A/c Dr. 40,00,000 Loss on Issue of 14% Debenture A/c [20,000 5] Dr. 1,00,000 To 14% Fully Sec. Debenture A/c 20,00,000 To Prem. on Redemption of Debenture A/c 1,00,000 To Bank A/c [(40,000 20,000) 100] 20,00,000 (Being the issue of 20,00,000; 14% Debenture of 100 each, redeemable at a premium of 5% and 20,00,000 excess applications refunded.) BALANCE SHEET S. No. Note No. I. Equity and Liabilities 1. Shareholders Fund (a) Reserves and Surplus Nil 2. Non-current Liabilities (a) Long-term Borrowings 1 20,00,000 (b) Long-term Provisions 2 1,00,000 Total Equity and Liabilities 21,00,000 II. Assets 1. Non-current Assets (a) Other non-current Assets 3 1,00, Current Assets (a) Cash & Cash Equivalents 4 20,00,000 Total Assets 21,00,000

5 Notes to Accounts : Note No. Accounts 5 1. Long-term Borrowings (a) 14% Fully Secured Debenture of 100 each 20,00, Long-term Provisions Premium on Redemption of 14% Debenture 1,00, Other non-current Assets Loss on issue of 14% Debentures due to Premium 1,00, Cash and Cash Equivalents Cash at Bank 20,00,000 Answer 5. Date L.F. (i) Revaluation A/c Dr. 4,300 To Outstanding Repairs bill 4,000 To Provision for Bad debts[ ] 300 (Being loss on revaluation of liabilities) (ii) Land & Building A/c [50,000 20%] Dr. 10,000 Unexpired Insurance A/c Dr. 1,500 ToRevaluation A/c 11,500 (Being profit on revaluation of assets) (iii) Revaluation A/c [11,500 4,300] Dr. 7,200 To A s Capital A/c [7,200 (3/6)] 3,600 To B s Capital A/c [7,200 (2/6)] 2,400 To C s Capital A/c [7,200 (1/6)] 1,200 (Being profit on revaluation transferred] (iv) Goodwill A/c Dr. 21,600 To A s Capital A/c 10,800 To B s Capital A/c 7,200 To C s Capital A/c 3,600 (Being goodwill A/c opened at full value) (v) B s Capital A/c [(30, , ,400)] Dr. 39,600 To B s Executor s A/c 39,600 (Being balance of B s Capital transferred) BALANCE SHEET (After B s Death) Liabilities Assets Sundry Creditors 13,800 Cash at Bank 11,000 Outstanding Repairs Bill 4,000 Sundry Debtors 10,000 B s Executors A/c : 39,600 Less : P.B.D ,500 Capital A/c Stock 16,000 A 59,400 Plant & Machinery 17,000 C 19,800 79,200 Land & Building 60,000 Goodwill A/c 21,600 Unexpired Insurance 1,500 Total 1,36,600 Total 1,36,600 Working Note : (i) Balance of Remaining Partners Capital A/c A C Balance (Opening) 45,000 15,000 Add : Revaluation Profit 3,600 1,200 Goodwill 10,800 3,600 Balance (Closing) 59,400 19,800

6 6 ISC Model Specimen Papers, XII Answer 6. (a) REALISATION A/C To Sundry Assets By Sundry Creditors 12,000 Debtors 16,000 By Bank A/c Stock 15,000 Debtors 14,000 Loose Tools 7,000 Stock 18,000 Goodwill 8,000 46,000 Goodwill 10,000 To Bank A/c : Loose Tools 6,000 48,000 Creditors 11,400 Real. Exp ,200 To Realisation Profit : [3 : 2] Seema 1,080 Rekha 720 1,800 Total 60,000 Total 60,000 PARTNERS CAPITAL A/C Seema Rekha Seema Rekha To Bank A/c 21,080 10,720 By Balance b/d 20,000 10,000 By Realisation A/c 1, Total 21,080 10,720 Total 21,080 10,720 SEEMA S LOAN A/C To Bank A/c 8,000 By Balance b/d 8,000 Total 8,000 Total 8,000 BANK A/C To Balance b/d 4,000 By Realisation A/c 12,200 To Realisation A/c 48,000 By Seema s Loan A/c 8,000 By Seema s Capital A/c 21,080 By Rekha s Capital A/c 10,720 Total 52,000 Total 52,000 (b) Statement showing adjustment between A, B and C. A B C Total Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Profit already credited in [3 : 2 : 1] 15,000 10,000 5,000 30,000 Int. on Capital at 5% 1,500 1, ,000 Comm. to C [(30,000 3,000) 5%] 1,350 1,350 Salary to B [500 12] 6,000 6,000 Balance Profit dist. in 2 : 2 : 1 7,860 7,860 3,930 19,650 Gross Total 15,000 9,360 10,000 14,860 5,000 5,780 30,000 30,000 Balance to be adjusted 5,640 4, Dr. Cr. Cr.

7 Accounts 7 ADJUSTMENT ENTRY Date L.F. A s Current A/c Dr. 5,640 To B s Current A/c 4,860 To C s Current A/c 780 (Being adjustment entry made) Answer 7. Date L.F. (i) For Purchase of Machinery : Machinery A/c Dr. 1,98,000 To Supplier s Ltd. 1,98,000 (Being purchase of machine from Supplier Ltd.) (ii) For Debenture issued at par : Supplier Ltd. Dr. 1,98,000 To 8% Debentures A/c 1,98,000 (Being issue of 8% Debenture at Par) (iii) For Debentures issued at Dis. of 10% Supplier Ltd. Dr. 1,98,000 Discount on issue of Deb. A/c Dr. 22,000 To 8% Debentures A/c 2,20,000 (Being issue of 8% Debenture at a discount of 10%) (iv) For Debentures issued at a Premium of 10% Supplier Ltd. Dr. 1,98,000 To 8% Debentures A/c 1,80,000 To Securities Premium Reserve A/c 18,000 (Being issue of 8% Debentures at a Premium of 10%) Working Note : At Par : No. of Debentures = = 1,980 Deb. (b) At Discount of 10% : No. of Debentures = [100 10%] = 2,200 Deb. (c) At Premium of 10% : No. of Debentures = [ %] = 1,800 Debenture Answer 8. (a) Date L.F Mar. 31 Bank A/c Dr. 11,00,000 To 8% Debentures Application & Allotment A/c 11,00,000 (Being debenture application and allotment money received) 8% Debentures Application & Allotment A/c Dr. 11,00,000 To 8% Debentures A/c 10,00,000 To Securities Premium Reserve A/c 1,00,000 (Being the issue of 10,00,000; 8%. Debentures at a premium of 10%)

8 8 ISC Model Specimen Papers, XII Debenture Interest A/c [10,00,000 8%] Dr. 80,000 Mar. 31 To Debentureholders A/c 80,000 (Being Interest on 8% Deb. due) Debentureholders A/c Dr. 80,000 To Bank A/c 80,000 (Being amount of interest paid) Statement of P & L A/c Dr. 80,000 To Debenture Interest A/c 80,000 (Being amount of interest transferred to Profit & Loss A/c) Apr. 30 Debenture Redemption Investment A/c [10,00,000 15%] Dr. 1,50,000 To Bank A/c 1,50,000 (Being 15% of nominal value of 8% Debenture invested) Mar. 31 Debenture Interest A/c Dr. 80,000 To Debentureholders A/c 80,000 (Being interest due to Debentureholders) Statement of P & L A/c Dr. 2,50,000 To Debenture Redemption Reserve A/c 2,50,000 (Being 25% of nominal value of 8% Debenture transfered to DRR) Mar. 31 Bank A/c Dr. 1,50,000 To Debenture Redemtion Investment A/c 1,50,000 (Being investment sold) Mar. 31 8% Debentures A/c Dr. 10,00,000 To Debentureholders A/c 10,00,000 (Being remption amount due to Debentureholders) Mar. 31 Debentureholders A/c Dr. 10,80,000 To Bank A/c 10,80,000 (Being amount of interest and nominal value of debentures paid) Mar. 31 Statement of P & L A/c Dr. 80,000 To Debenture Interest A/c 80,000 (Being amount of interest on Debenture transferred) Mar. 31 Debenture Redemption Reserve A/c Dr. 2,50,000 To General Reserve A/c 2,50,000 (Being balance of DRR transferred to G/R) (b) Date L.F Apr. 1 Statement of P & L A/c Dr. 60,000 To Debenture Redemption Reserve A/c 60,000 (Being balance amount of 25% of nominal value of debentures transfered) Apr. 30 Debenture Redemption Investment A/c [10,00,000 15%] Dr. 1,50,000 To Bank A/c 1,50,000 (Being 15% of debenture redemption value invested in DRI) Mar. 31 Bank A/c Dr. 1,50,000 To Debenture Redemption Investment A/c 1,50,000 (Being investment sold for redemption) 9% Debentures A/c Dr. 10,00,000 To Debentureholders A/c 10,00,000 (Being 9% Debenture amount due to Debentureholders) Debentureholders A/c Dr. 10,00,000 To Bank A/c 10,00,000 (Being amount paid to Debentureholders)

9 Accounts 9 SECTION B Answer 9. (a) Advantages of common-size statements : (i) It shows the changes in various items in relation to net sales or total assets. (ii) It provides a common base for inter or intra firm comparison. (b) COMMON-SIZE STATEMENT OF PROFIT AND LOSS for the year ended March 31, 2013 S. No. Absolute ( ) % charge I. Revenue from operations 18,00, % II. Other Incomes 70, % III. Total Revenue (I + II) 18,70, % IV. Expenses : (a) Cost of materials consumed 9,75, (b) Employees benefit expenses 60, (c) Finance Costs 20, (d) Depreciation & Amortization Expenses 40, (e) Other expenses 50, Total Expenses 11,,45, V. Profit before tax (III IV) 7,25, VI. Less : Tax 50% (3,62,500) (20 14) VII. Profit after tax 3,62, Answer 10. (a) (i) Gross Profit = Revenue from Operations Cost of Revenue from Operations = 18,00,000 10,00,000 = 8,00, ,00,000 12,00,000 = 13,00,000 (a) Gross Profit Ratio = Gross Profit Revenue from Operations 100 Now, For = = 44 44% = = 52% (ii) Net Profit = Gross Profit + Other Income Operating Expenses Finance Cost For = [(8,00, ,50,000) (1,00, ,00,000)] = [9,50,000 3,00,000] = 6,50, = [(13,00, ,50,000) (1,50, ,00,000)] = [15,50,000 4,50,000] = 11,00,000 Net Profit Ratio = Net Profit Revenue from Operations 100 For = = 36 11% = = 44% (iii) Net Profit Before Tax and Interest Interest Coverage Ratio = Fixed Interest Charges For [ ] = = 4 25 times [ ] = = 4 67 times

10 10 ISC Model Specimen Papers, XII (iv) Operating Profit Ratio = Operating Profit Revenue from Operations 100 Operating Profit = Gross Profit + Other Operating Income Operating Exp. For = [(8,00, ,50,000) 1,00,000] = 8,50, = [(13,00, ,50,000) 1,50,000] = 14,00,000 Operating Profit Ratio : For = = 47 22% = = 56% (b) Objectives of Ratio Analysis : (i) To provide information for making inter-firm or intra firm comparison by comparing the performance. (ii) To Know the areas of the business which need more attention. (c) (i) Interest = (4,00,000 15%) = 60,000 (ii) Net profit before Interest and Tax = [1,40, ,000] = 2,00,000 (iii) Capital Employed = [4,00, ,40,000] = 6,40,000 Net Profit Before Interest & tax Return on Capital Employed = 100 Capital Employed = = 31 25% Answer 11. (a) Statement showing Cash from Operating Activities S. No. (A) Operating Activities : Net Profit 15,000 Add : Prov. for Tax 6,000 Proposed Dividend 7,000 13,000 Net Profit Before Tax and Extraordinary Item 28,000 Add : Non-cash/Non operating Item Depreciation 3,000 Goodwill written off 2,500 Provision for Bad Debts 2,000 Loss on Sale of Plant 1,500 9,000 37,000 Less : Profit on Sale of Land (9,000) Cash Generated from Operating Activities 28,000 Less : Tax paid (6,000) Net Cash flow from operating activities 22,000 (b) Cash Equivalents : It includes short-term or highly liquid investments that are readily convertible into cash and are subject to an insignificant risk of changes in value. SECTION C Answer 12. (a) This is a Spreadsheet. (b) Because there is a formula in the total cost cells which automatically calculate the total cost. (c) Make column A wider. (d) Select cell F3 and format to currency. (e) 1. Take a backup copy of the spreadsheet. 2. Protect the spreadsheet with password. 3. Keep the computer locked.

11 Accounts 11 Answer 13. (a) Spreadsheet can be compared to a paper sheet. It consists of rows and columns and their intersection called cells. (b) Microsoft Excel is an electronic spreadsheet application that enables users to store, organise, calculate and manipulate the data with formulas using a spreadsheet system divided into rows and columns. It also provides the flexibility to use an external database to do analysis, make reports, etc., thus saving lots of time. (c) Disadvantages of computerized accounting : (i) Reduction of Manpower : The introduction of computers in accounting work reduces the number of employees in an organisation. Thus, it leads to greater amount of unemployment. (ii) High Cost : A small firm cannot install a computer accounting system because of its high installation and maintenance cost. To be more economical there should be large volume of work. If the system is not used to its full capacity, then it would be highly uneconomical. (d) Ribbon refers to the topmost area of the application that contain menu items and toolbars available in MS-Excel. Ribbon can be shown/hidden using CTRL + F1. The ribbon runs on the top of the application and is the replacement for the toolbars and menus. The ribbons have various tabs on the top and each tab has its own group of commands. (e) By using SUM function, you can get the total sum of the rows and columns, in an Excel worksheet. Answer 14. (a) Database management systems were developed to handle the following difficulties of typical File-processing systems supported by conventional operating systems. (i) Data redundancy and inconsistency (ii) Difficulty in accessing data (iii) Data isolation multiple files and formats (iv) Integrity problems (v) Atomicity of updates (vi) Concurrent access by multiple users (vii) Security problems (b) HAVING is used to specify a condition for a group or an aggregate function used in select statement. The WHERE clause selects before grouping. The HAVING clause selects rows after grouping. Unlike HAVING clause, the WHERE clause cannot contain aggregate functions. (c) Clustered indexes are the index according to which data is physically stored on disk. Therefore, only one clustered index can be created on a given database table. Non-clustered indexes don t define physical ordering of data, but logical ordering. Typically, a tree is created whose leaf point to disk records. B Tree or B + tree are used for this purpose. (d) A stored procedure is like a function that contains a set of operations compiled together. It contains a set of operations that are commonly used in an application to do some common database tasks. (e) Identity (or Auto Number) is a column that automatically generates numeric values. A start and increment value can be set, but most DBA leave these at 1. A GUID column also generates numbers; the value of this cannot be controlled. Identity/GUID columns do not need to be indexed.

12 MODEL SPECIMEN PAPER-8 SECTION A PART I Answer 1. (a) Entry for Commissions to underwriters (i) For Commission Due : Underwriting Commission A/c Dr. To Underwriters A/c (Being Underwriting Commission due) (ii) For issue of shares : Underwriters A/c Dr. To Share Capital A/c (Being Commission due paid in form of shares) (b) As per the mutual agreement of the remaining partners. (c) Difference between Profit & Loss and Profit & Loss Appropriation A/c Basis Profit & Loss A/c P & L App. A/c SOLUTION Objective It is prepared to find net profit earned or net loss incurred. It is prepared to show the distribution of net profit. Nature of items It is debited and credited with expenses and income of revenue nature. It is debited with the items of appropriation of net profit among partners. (d) An asset is termed as Current Asset if it is : (i) Used in the form of working capital. (ii) Converted in cash and cash equivalents within the period of one accounting period say 12 months. The asset which is not a current asset is known as non-current asset. (e) Employees Provident Fund will be treated as current liability at the time of retirement of a partner. (f) Debentures may be redeemed by any of the following modes : (i) Payment after stipulated period. (ii) Conversion into shares or new debentures. (iii) Purchase of own debentures from open market. PART II Answer 2. (a) Case (i) Date L.F. (i) Bank A/c Dr. 5,00,000 To Debenture Application & Allotment A/c 5,00,000 (Being debenture application & allotment money received) (ii) Debenture Application & Allotment A/c Dr. 5,00,000 To 14% Mortage Debenture A/c 5,00,000 (Being the issue of 5,00,000; 14% Mortage Debenture of 100 each at par) BALANCE SHEET (AN EXTRACT) Note No. I. Equity and Liabilities : 1. Long-term Borrowings 1 5,00,000 Total 5,00,000

13 2 ISC Model Specimen Papers, XII II. Assets : 1. Current assets Cash and Cash Equivalents 2 5,00,000 Total 5,00,000 Notes to Accounts : Note No. 1. Long-term Borrowings 5,000, 14% Mortgage Debenture of 100 each 5,00, Cash and Cash Equivalents Cash at Bank 5,00,000 Case (ii) Date L.F. (i) Bank A/c Dr. 6,65,000 To Debenture Application & Allotment A/c 6,65,000 (Being debenture application & allotment received at 5% Discount) (ii) Debenture Application & Allotment A/c Dr. 6,65,000 Dis. on Issue of 15% Debebture A/c Dr. 35,000 To 15% Secured Debenture A/c 7,00,000 (Being issue of 7,00,000; 15% Secured Debentures of 100 each at a discount of 5%) BALANCE SHEET (AN EXTRACT) Note No. I. Equity and Liabilities : 1. Long-term Borrowings 1 7,00,000 Total 7,00,000 II. Assets : 1. Non-current Assets (Other) 2 28, Current Assets (a) Cash and Cash Equivalents 3 6,65,000 (b) Other current Assets 4 7,000 Total 6,72,000 Total Assets 7,00,000 Notes to Accounts : Note No. 1. Long-term Borrowings 7,000, 15% Secured Debenture of 100 each 7,00, Other Non-current Assets Discount on issue of 15% Debenture (Written off after 12 months) 28, Cash and Cash Equivalents (Cash at bank) 6,65, Other current Assets : Discount on issue of 15% Debenture (Written off in 12 months) 7,000

14 Accounts 3 Case (iii) Date L.F. (i) Bank A/c Dr. 10,50,000 To Debenture Application & Allotment A/c 10,50,000 (Being Debenture application & allotment money received) (ii) Debenture Application & Allotment A/c Dr. 10,50,000 To 12% Debentures A/c 10,00,000 To Securities Premium Reserve A/c 50,000 (Being issue of 10,00,000; 12% debentures at a premium of 5%) BALANCE SHEET (AN EXTRACT) Note No. I. Equity and Liabilities : 1. Shareholders Fund (a) Reserves & Surplus 1 50, Long-term Borrowings 2 10,00,000 Total Equity & Liabilities 10,50,000 II. Assets : 1. Current Assets (a) Cash and Cash Equivalents 3 10,50,000 Total Assets 10,50,000 Notes to Accounts : Note No. 1. Reserves and Surplus : Securities Premium Reserve 50, Long-term Borrowings : (a) 10,000 12% Debentures of 100 each 10,00, Cash and Cash Equivalents : Cash at bank 10,50,000 Case (iv) Date L.F. (i) Bank A/c Dr. 4,00,000 To Debenture Application & Allotment A/c 4,00,000 (Being Debenture application & money received) (ii) Debenture Application & Allotment A/c Dr. 4,00,000 Loss on Issue of 13% Debenture A/c Dr. 20,000 To 13% Debentures A/c 4,00,000 To Premium on Redemption A/c 20,000 (Being issue of 4,00,000 13% Deb. at par but redeemable at premium) BALANCE SHEET S. No. L. F. Note No. I. Equity and Liabilities : 1. Non-current Liabilities (a) Long-term Borrowings 1 4,00,000 (b) Other Long-term Liability 2 20,000 Total Equity & Liabilities 4,20,000

15 4 ISC Model Specimen Papers, XII II. Assets : 1. Non-current Assets (a) Other Non-current Assets 3 18, Current Assets Notes to Accounts : Note No. (a) Cash and Cash Equivalents 4 4,00,000 (b) Other Current Assets 5 2, Long-term Borrowings Total Assets 4,20,000 13% Debentures of 100 each 4,00,000 (Charge on Fixed assets) 2. Other Long-term Liability Premium on Redemption A/c 20, Other Non-current Assets Loss on issue of 13% Debentures 18,000 (Written off after 12 months) 4. Cash and Cash Equivalents Cash at bank 4,00, Other current Assets Loss on issue of 13% Debentures 2,000 (Written off within 12 months) Case (v) Date L.F. (i) Bank A/c Dr. 4,75,000 To Debenture Application & Allotment A/c 4,75,000 (Being Debenture application & alltment money received) (ii) Debenture Application & Allotment A/c Dr. 4,75,000 Loss on issue of 14% Debenture A/c Dr. 75,000 To 14% Debentures A/c 5,00,000 To Premium on Redemption A/c 50,000 (Being issue of 5,00,000 Debenture at discount but redeemable at premium) BALANCE SHEET (AN EXTRACT) S. No. Note No. I. Equity and Liabilities : 1. Non-current Liability (a) Long-term Borrowings 1 5,00,000 (b) Other Long-term Borrowing 2 50,000 Total 5,50,000 II. 1. Non-current Assets (a) Other non-current Assets 3 60, Current Assets (a) Cash and Cash Equivalents 4 4,75,000 (b) Other Current Assets 5 15,000 Total 4,90,000 Total Assets 5,50,000

16 Note to Accounts : Note No. 1. Long-term Borrowings Accounts 5 14% 5,000 Debentures of 100 each 5,00, Other Long-term Borrowings Premium on Redemption A/c 50, Other Non-current Assets : Loss on issue of 14% Debentures 60,000 (Written off after 12 months) 4. Cash and Cash Equivalents Cash at bank 4,75, Other current Assets : Loss on issue of 14% Debentures 15,000 (Written off within 12 months) Answer 3. (a) Dr. PROFIT & LOSS APPROPRIATION A/C Cr. To Int. on Capital By Profit & Loss A/c 62,000 Hill 4,500 (Net Profit) Vale 4,200 By Interest on Drawing Dale 3,900 12,600 Hill 180 To Vale s Salary 8,000 Vale 120 To Reserve Fund 3,100 Dale To Net Profit transferred : Hill 15,488 Vale 15,488 Dale 7,744 38,720 Total 62,420 Total 62,420 Dr. PARTNERS CURRENT A/C Cr. Hill Vale Dale Hill Vale Dale To Drawings 12,000 8,000 8,000 By Balance b/d 6,400 5,600 4,800 To Interest on Drawings By Interest on Capital 4,500 4,200 3,900 To Balance c/d 14,208 25,168 8,324 By Salary 8,000 By Net Profit 15,488 15,488 7,744 Total 26,388 33,288 16,444 Total 26,388 33,288 16,444 Dr. PARTNERS CAPITAL A/C Cr. Hill Vale Dale Hill Vale Dale To Bank 10,000 By Balance b/d 80,000 70,000 60,000 To Balance c/d 70,000 70,000 70,000 By Bank 10,000 Total 80,000 70,000 70,000 Total 80,000 70,000 70,000 Working Notes : (i) Interest on Drawings : (By Product Method)

17 6 ISC Model Specimen Papers, XII Date Period Hill Vale Dale Product Product Product 30/9/19 6 6,000 36,000 4,000 24,000 4,000 24,000 31/3/11 0 6, , , ,000 24,000 24,000 Int. on Drawing 36,000 (6%) (1/12) 24,000 (6%) (1/12) 24,000 (6%) (1/12) (ii) Interest on Capital : (a) Hill : [80,000 6% (6/12)] + [70,000 6% (6/12)] = 4,500 (b) Vale : [70,000 6%] = 4,200 (c) Dale : [60,000 6%] + [10,000 6% (6,12)] = 3,900 (iii) Vale s Salary = 2,000 4 = 8,000 (iv) Reserve Fund = 62,000 (5%) = 3,100 (b) (i) Total capital of New Firm = 2,10,000 (ii) Share of capital : To Y = 2,10, = 1,40,000 To Z = 2,10, = 70,000 (iii) Actual Cash to be : Paid to Y = [1,45,000 1,40,000] = 5,000 Brought in by Z = [70,000 63,000] = 7,000 Answer 4. (a) Working Notes : (i) Old ratio of A : B : C = 1 2 : 1 3 : 1 6 = 3 : 2 : 1 (ii) New ratio of A : C = 3 : 2 (iii) Gain/Sacrifice of : A = 3 5 (3/6) = (18 15) 30 C= = (12 5) 30 = 7 30 = 3 30 (iv) Share of B s Goodwill = 9, = 3,000 (v) Share of Goodwill charged to : A = 3, = 900 C = 3, = 2,100 Dr. REVALUATION A/C Cr. To Machine 1,750 By Stock 2,500 To Motor Van 600 By Building 2,250 To Provision for Bad debts 975 To Liability for Workmen 825 Compensation To Revaluation Profit : A 300 B 200 C Total 4,750 Total 4,750

18 Accounts 7 PARTNERS CAPITAL A/C A B C A B C To B s Capital 900 2,100 By Balance b/d 20,000 15,000 12,500 To B s Loan A/c 20,200 By Resserve Fund 3,000 2,000 1,000 To Balance c/d 22,400 11,500 By Revaluation Profit By A s Capital A/c 900 By C s Capital A/c 2,100 Total 23,300 20,200 13,600 Total 23,300 20,200 13,600 BALANCE SHEET (After retirement) A/C Liabilities Assets Creditors 9,500 Cash at bank 1,250 Bills Payables 2,500 Debtors 8,000 Workmen Compensation Fund 825 P. B. D. 1,225 6,775 B s Loan A/c 20,200 Stock [12, ,500] 15,000 Capital A/c : Motor Vans [4, ] 3,400 A 22,400 Machinery [17, ] 15,750 C 11,500 33,900 Buildings [ ] 24,750 Total 66,925 Total 66,925 [ (10 000) ] (b) Average Profit = 5 = = 10,800 5 As share of profit upto date of death = 10, = 900 ENTRY Date L.F. June 30 Profit & Loss Suspence A/c Dr. 900 To A s Capital A/c 900 (Being A s share of profit credited) Answer 5. REALISATION A/C To Stock 4,000 By Creditors 4,000 To Plant 4,000 By Bank Loan 1,000 To Debtors 2,000 By Bills Payables 1,000 To Bills Recivable 2,000 By Cash A/c : To Cash A/c : Stock 3,200 Creditors 3,960 Plant 3,000 Bank Loan 1,000 Debtors 1,500 Outstanding Expense 240 Bills Receivable 1,400 Realisation Expenses 460 By Debt Recovered 200 9,300 Bills Payable 1,000 6,660 By Realisation Loss : A 1,120 B 1,120 C 1,120 3,360 Total 18,660 Total 18,660

19 8 ISC Model Specimen Papers, XII Dr. PARTNERS CAPITAL A/C Cr. A B C A B C To Balance b/d 1,000 By Balance b/d 5,000 3,000 To Real. Loss 1,120 1,120 1,120 By Cash A/c 2,120 To Cash A/c 3,880 1,880 Total 5,000 3,000 13,600 Total 5,000 3,000 2,120 Dr. CASH A/C Cr. To Balance b/d 1,000 By Realisation A/c 6,660 To Realisation A/c 9,300 By A s Cap. A/c 3,880 To C s Capital A/c 2,120 By B s Cap. A/c 1,880 Total 12,420 Total 12,420 Answer 6. (a) IN THE BOOKS OF TATA LTD. Date L.F. (i) Bank A/c Dr. 40,000 To Share Application A/c 40,000 (Being amount of share application received) (ii) Share Application A/c Dr. 40,000 To Share Capital A/c 40,000 (Being amount of Share application due) (iii) Share Allotment A/c [40,000 2] Dr. 80,000 To Share Capital A/c 80,000 (Being amount of share allotment due) (iv) Bank A/c [(40, ) 2] Dr. 79,600 Calls in Arrears A/c (200 2) Dr. 400 To Share allotment A/c 80,000 (Being amount of share allotment received) (v) Share First Call A/c [40,000 3] Dr. 1,20,000 To Share Capital A/c 1,20,000 (Being amount of share first call due) (vi) Bank A/c [(40, ) 3] Dr. 1,18,950 Calls in Arrears A/c [350 3] Dr. 1,050 To Share First call A/c 1,20,000 (Being amount of share first call receive) (vii) Share Final Call A/c [40,000 4] Dr. 1,60,000 To Share Capital A/c 1,60,000 (Being amount of share final call due) (viii) Bank A/c [(40, ) 4] Dr. 1,58,400 Calls in Arrears A/c [400 4] Dr. 1,600 To Share Final call A/c 1,60,000 (Being amount of share final call received) (ix) Share Capital A/c [400 10] Dr. 4,000 To Share Forfeiture A/c 950 To Calls in Arrears A/c 3,050 (Being shares forfeited)

20 Accounts 9 (x) Bank A/c Dr. 3,600 Share Forfeiture A/c [400 (10 10%)] Dr. 400 To Share Capital A/c 4,000 (Being re-issue of forfeited shares at 10% discount) (xi) Share forfeiture A/c [ ] Dr. 550 To Capital Reserve A/c 550 (Being Balance of Share forfeiture A/c transfered) BALANCE SHEET S. No. Note No. I. Equity and Liabilities : 1. Shareholders Fund (a) Share Capital 1 4,00,000 (b) Reserve and Surplus Total Equity and Liabilities 4,00,550 II. Assets : 1. Current Assets (a) Cash and Cash Equivalents 3 4,00,550 Total Assets 4,00,550 Note to Accounts : Note No. 1. Share Capital : (a) Authorised shares of 10 each (b) Issued & Subscribed and Paid-up Capital : 40,000 shares of 10 each 4,00, Reserves and Surplus : (a) Capital Reserve Cash and Cash Equivalents (a) Cash at bank 4,00,550 (b) IN THE BOOKS OF SURESH LTD. Date L.F Apr. 1 Assets A/c Dr. 6,00,000 Goodwill A/c (Bal. fig.) Dr. 20,000 To Sundry Liabilities A/c 70,000 To P & Co. A/c 5,50,000 (Being business purchased) P & Co. A/c Dr. 5,50,000 Loss on Issue of Debenture A/c [(5, ) 5%] Dr. 25,000 To 12% Debentures A/c [5,50,000/( ) 100] 5,00,000 To Securities Premium Reserve A/c 50,000 To Premium on Redemption of Debenture A/c 25,000 (Being 12% debentures issued at 10% Premium) Apr. 1 Statement of P & L A/c Dr. 1,25,000 To Debenture Redemption Reserve A/c 1,25,000 (Being 25% of amount due transferred in DRR)

21 10 ISC Model Specimen Papers, XII Debenture Redemption Investment A/c Dr. 75,000 To Bank A/c 75,000 (Being 15% of amount payable invested) 2015 Mar. 31 Bank A/c Dr. 75,000 To Debenture Redemption Investment A/c 75,000 (Being Investment sold for redemption of Debenture) 12% Debentures A/c Dr. 5,00,000 Premium on Redemption of Debenture A/c Dr. 25,000 To Debentureholders A/c 5,25,000 (Being amount due to 5% Prem.) Debentureholders A/c Dr. 5,25,000 To Bank A/c 5,25,000 (Being amount paid to debentureholders) Answer 7. Debenture Redemption Reserve A/c Dr. 1,25,000 To General Reserve A/c 1,25,000 (Being balance of DRR transfer to G/R) IN THE BOOKS OF SNOW WHITE LTD. BALANCE SHEET S. No. Note No. I. Equity and Liabilities : 1. Shareholders Fund (a) Share Capital 1 10,00,000 (b) Reserve & Surplus 2 50,000 Sub-Total 10,50, Non-current Liabilities (a) Long-term Borrowings 3 5,00, Current Liabilities (a) Short-term Borrowings 4 1,00,000 (b) Trade Payables 5 2,00,000 (c) Other Current Liabilities 6 10,000 Sub-Total 3,10,000 Total Equity and Liabilities 18,60,000 II. Assets : 1. Non-current Assets (a) Fixed Assets (i) Tangible Assets 7 9,00,000 (ii) Intangible Assets 8 40,000 (iii) Capital Work-in-Progress 9 4,00,000 (b) Non-current Investments 10 4,00,000 (c) Other Non-current Assets 11 1,00,000 Sub-total 18,40, Current Assets (a) Trade Receivable 12 20,000 Total Assets 18,60,000 Note to Accounts : Note No. 1. Share Capital 10,00, Reserve and Surplus (a) Securities Premium 1,00,000 (b) Statement of Profit & Loss (Dr.) (50,000) Total 50,000

22 3. Long-term Borrowings Accounts 11 (a) 14% Debentures 5,00, Short-term Borrowings (a) Fixed deposits 1,00, Trade Payables (a) Creditors 2,00, Other Current Liabilities (a) Unclaimed Dividend 10, Tangible Assets (a) Live Stock 9,00, Intangible Assets (a) Patents 40, Capital Work-in-Progress (a) Work-in-Progress 4,00, Non-current Investments (a) Investments in Government Bonds 4,00, Other Non-current Assets (a) Discount on issue of 14% Debentures 1,00, Trade Receivable (a) Accounts Receivables 20,000 Note : 50,000 has been proposed to be distributed as dividend. Answer 8. (a) (i) At 2 years Purchase of average profit : 1. Average Profit = [ ] 3 = 1,90, Adjusted Average Profit = [1,90,000 (30,000 2)] = 1,30, Goodwill = 1,30,000 2 = 2,60,000 Ans. (ii) At 4 years Purchase of Super Profit : 1. Adjusted Average Profit (Calculate above) = 1,30, Normal Profit = Capital Employed Normal Rate of Return 100 = 10,00,000 (11%) = 1,10, Super Profit = [1,30,000 1,10,000] = 20, Goodwill = (20,000 4) = (80,000) Ans. (iii) Capitalisation of Average Profit : Capitalised Value = Adjusted Average Profit Normal Rate of Return = (1,30, ) (11%) = 11,81,818 (Approx.) 2. Actual Capital = 10,00, Goodwill = [11,81,818 10,00,000] = 1,81,818 Ans. (iv) Capitalisation of Super Profit : Goodwill = Super Profit 100 Normal Rate of Return = = 1,81, Ans.

23 12 ISC Model Specimen Papers, XII (b) Working Notes : (i) Calculation of Opening Capital : A = [60, , B = [20, ,000 (30,000 2 )] = 28,000 5 (ii) Interest on Capital : A = 52,000 (12%) = 6,240 B = 28,000 (12%) = 3,360 STATEMENT SHOWING PAST ADJUSTMENTS A B Firm Dr. Cr. Dr. Cr. Dr. Cr. Interest on Capital (Cr.) 6,240 3,360 9,600 A s Salary 12,000 12,000 Loss to be debited in (3 : 2) 12,960 8,640 21,600 Gross Total 12,960 18,240 8,640 3,360 21,600 21,600 Balance to be Adjusted 5,280 5,280 Cr. Dr. ADJUSTMENT ENTRY Date L.F. B s Capital A/c Dr. 5,280 To A s Capital A/c 5,280 (Being adjustment of profit made) SECTION B Answer 9. (a) COMMON-SIZE STATEMENT OF PROFIT & LOSS for the year ended March, 31, 2012 and 2013 Absolute Amount % of Revenue from S. No. Note No. Operations I. Revenue from operations 45,00,000 54,00, II. Less : Expenses : (a) Purchases of Stock-in-Trade 28,80,000 35,10, (b) Change in Inventories (2,25,000) (1,08,000) (5) (2 0) (c) Other Expenses 4,95,000 3,24, ,50,000 37,26, III. Profit Before Tax (I II) 13,50,000 16,74, IV. Less : 50% (6,75,000) (8,37,000) (15) (15 5) V. Profit after Tax 6,75,000 8,37, (b) Advantages or utilities of common-size income statement : (i) It provides a common base for Inter-firm comparison for business enterprise. (ii) It shows the changes in different items of income statement in relation to Revenue from operation. Answer 10. (a) (i) Gross Profit = 3,20,000 (25%) = 80,000 (ii) Cost of Revenue = (3,20,000 80,000) = 2,40,000 (iii) Closing Inventory = [Opening Inv. + Purchase] Cost of Rev. = [29, ,42,000] 2,40,000 = 31,000

24 Accounts 13 (iv) Inventory turnover ratio = Cost of Revenue Average Inventory Here Average Inventory = [29, ,000] 2 = 30,000 Inventory turnover ratio = = 8 times Ans. (b) (i) Gross Loss = [4,00,000 (10%)] = 40,000 (ii) Cost of Revenue = 4,00, ,000 = 4,40,000 (iii) Inventory turnover Ratio = Cost of Revenue Average Investment = = 8 times (iv) Opening Inventory + Closing Investory Average Inventory = 2 Let Closing Inventory = x and Opening Inventory = x 20,000 So, (x ) + x 55,000 = 2 2x 20,000 = 1,10, x = = 65,000 2 So, Closing Inventory = x = 65,000 and Opening Inventory = (x 20,000) = 65,000 20,000 = 45,000. Ans. (c) Limitations of ratio analysis : (i) An individual ratio may itself be meaningless. (ii) Reliability of ratios depends upon correctness of data. Answer 11. (a) CASH FLOW STATEMENT OF X LTD. as at March 31, 2010 S. No. Details (A) Operating Activities : Net Profit as per Statement of P & L [1,00,000 40,000] 60,000 Add : Provision for Tax 72,000 Premium on Redemption of 10% debentures [2,00,000 6%] 12,000 84,000 Net Profit before tax and Extra ordinary items. 1,44,000 Add : Loss on sale of Plant and Machinery (W. Note) 3,000 Net Profit before working capital changes 1,47,000 Add : Decrease in Trade Receivable [1,66,000 1,24,000] 42,000 1,89,000 Less : Increase in Inventory [2,45,000 1,90,000] (55,000) Decrease in Trade Payable [1,25,000 1,05,000] (20,000) (75,000) Net Cash generated from Operating Activities 1,14,000 Less : Tax Paid (55,000) Cash flow from Operating Activities (A) 59,000 (B) Investing Activities : Sale of Land 80,000 Sale of Plant & Machinery 9,000 89,000 Less : Purchase of Plant & Machinery (94,000) Net Cash used in Investing Activities (B) (5,000)

25 14 ISC Model Specimen Papers, XII (C) Financing Activities : Working Note : (i) Issue of Share Capital 2,00,000 Less : Redemption of 10% Debentures 2,00,000 Premium Paid on Redemption 12,000 (2,12,000) Net Cash used in financing Activities (C) (12,000) Total of All Activities (A + B + C) [59,000 + (5,000) + (12,000)] 42,000 Add : Opening Cash & Cash Equivalents [20, ,000] 94,000 Closing Cash and Cash Equivalents [44, ,000] 1,36,000 Land A/c To Balance b/d 4,00,000 By Bank A/c (Sale) (Bal. Fig.) 80,000 To Capital Reserve (Profit on Sale) 30,000 By Balance c/d 3,50,000 Total 4,30,000 Total 4,30,000 (ii) PLANT & MACHINERY A/C To Balance b/d 1,70,000 By Bank (Sale) 9,000 By Statement of P & L (Loss) 3,000 To Bank A/c (Purchase) (Bal. Fig.) 94,000 By Balance c/d 2,52,000 Total 2,64,000 Total 2,64,000 (b) Operating Activities : These are the main source of revenue and expenditure of an enterprise. The amount of cash flow arising from operating activities is a key indicator of the extent to which the activities of the firm have generated sufficient cash flows to maintain the operating capability of the enterprise, to pay dividends, repay loans and other activities. SECTION C Answer 12. (a) = SUM (2C : 2F), = SUM (3C : 3F), = SUM (4C : 4F), = SUM (5C : 5F), = SUM (6C : 6F) (b) = AVERAGE (2C : 2 F), = AVERAGE (3C : 3F), = AVERAGE (4C : 4F), = AVERAGE (5C : 5F), = Average (6C : 6F) (c) = MAX (2D : 6D) (d) = MIN (2F : 6F) (e) Select the column F or a range of column F and right click on it followed by clicking on Insert. Or Select an entire column F and then press Ctrl ++ keys. Answer 13. (a) To enable graphical representation of the data in Excel, charts are provided. A user can use any chart type, including column, bar, line, pie, scatter, etc., by selecting an option from Insert tab s Chart group. (b) By using SUM function, you can get the total sum of the rows and columns, in an Excel worksheet. (c) The red triangle indicates that some comment is associated with the cell. Hover the mouse over it, and you can read the full comment. (d) Name Box is used to return to a particular area of the worksheet by typing the range name or cell address in the name box. (e) A pivot table is a tool that allows for quick summarisation of large data. It automatically performs a sort, count, total or average of the data stored in the spreadsheet and displays result in another spreadsheet. It saves a lot of time. Allows to link external data sources to our Excel.

26 Accounts 15 Answer 14. (a) Advantages of DBMS are as follows : 1. Redundancy is controlled. 2. Unauthorised access is restricted. 3. Providing multiple user interfaces. 4. Enforcing integrity constraints. 5. Providing backup and recovery. (b) Structure Query Language. (c) (i) A super key is a set of attributes of a relation schema upon which all attributes of the schema are functionally dependent. No two rows can have the same value of super key attributes. (ii) A Candidate key is minimal super key, i.e., no proper subset of Candidate key attributes can be a super key. (iii) A Primary key is one of the candidate keys. One of the candidate keys is selected as most important and becomes the primary key. There cannot be more than one primary key in a table. (iv) Foreign key is a field (or collection of fields) in one table that uniquely identifies a row of another table. (d) Procedures that are not part of a package are known as stand-alone procedures because they are independently defined. A good example of a stand-alone procedure is one written in a SQL Forms application. These types of procedures are not available for reference from other Oracle tools. Another limitation of stand-alone procedures is that they are compiled at run time, which slows execution. (e) Disadvantages in file processing system are : 1. Data redundancy and inconsistency. 2. Difficult in accessing data. 3. Data isolation. 4. Data integrity. 5. Concurrent access is not possible. 6. Security Problems.

27 MODEL SPECIMEN PAPER-12 SECTION A PART I Answer 1. (a) Difference between Average profit and Super profit. Meaning Basis Average Profit Super Profit Nornal Rate of Return It is the average of the profits of past number of agreed years. It is not relevant in the calculation of average profit. SOLUTION It is the excess of actual average profit over normal profit. It is considered at the time of calculating super profit. (b) ENTRY New Partner s Capital/Current A/c Dr. To Sacrificing Partners Capital/Current A/c (Being new partner s share of goodwill not brought in, adjusted) (c) Interest on loan given by a partner to the firm be paid if there are losses because it is treated as charge against profit. (d) Old goodwill already appearing in the Balance Sheet at the time of Admission of a partner is accounted for by writing off the Goodwill A/c through the following entry : Old partners Capital/Current A/c Dr. To Goodwill A/c (Being old goodwill A/c written off.) (e) Two other groups are : (i) Promoters for their services rendered. (ii) Underwriters for commission for issue of shares. (f) Uses of Securities Premium Reserve : (i) Writing off preliminary expenses of the company. (ii) Issuing fully paid Bonus Shares to the members. (iii) In purchasing its own shares (Buy-back). PART II Answer 2. IN THE BOOKS OF PRATAP LTD. (i) Own Debenture A/c Dr. 1,42,500 To Bank A/c 1,42,500 (Being 1500 own debentures 95 per debenture) (ii) 11% Debentures A/c Dr. 1,50,000 Premium on Redemption A/c Dr. 15,000 To Own Debentures A/c 1,42,500 To Gain on cancellation of Own Debenture A/c 22,500 (Being 1500 own deb. of 100 each cancelled) (iii) Gain on Cancellation of Own Debenture A/c Dr. 22,500 To Capital Reserve A/c 22,500 (Being the gain transferred to Capital Reserve) Answer 3. (a) Average profit = 1,00,000 Less : Remuneration (15 000)

28 2 ISC Model Specimen Papers, XII Normal profit = 5,00, = 60,000 Super profit = Average profit Normal profit 85,000 60,000 = 25,000. Goodwill = Super profit No. of yr. purchase 25,000 2= 50,000 (b) Average profit = 4 = 45,000 Goodwill = 45,000 3 = 1,35,000 Normal profit = 2,00, = 30,000 Super profit = Average profit Normal profit = 45,000 30,000 = 15, Goodwill = Super profit Normal Rate of Return = = 1,00, Answer 4. (a) Dr. REALISATION A/C Cr. To Sundry Assets A/c By Creditors 12,000 Debtors 8,000 By Provision for Doutful debts 200 Stock 6,000 By Bank A/c Furniture 2,000 Debtors 7,000 Building 22,000 Stock 5,000 To Bank A/c Furniture 1,000 Creditors 11,000 Building 25,000 38,000 Liability for damages 3,000 By Loss transferred to capital A/c Realisation Expenses 1,000 15,000 A 1120 B 1120 C 560 2,800 53,000 53,000 PARTNER S CAPITAL A/C A B C A B C To Realisation A/c By Bal. B/d 15,000 12,000 6,000 To Bank A/c (Final payment) 15,880 12,880 6,440 By General Reserve A/c 2,000 2,000 1,000 17,000 14,000 7,000 17,000 14,000 7,000 BANK A/C To Balance B/d 12,200 By Realisation A/c 15,000 To Realisation A/c 38,000 By A s Capital A/c 15,880 By B s Capital A/c 12,880 By C s Capital A/c 6,440 50,200 50,200

29 Accounts 3 (b) Interest on Loan to A = 2,00,000 (6%) (5/12) = 5,000 Date L.F. Profit & Loss Appropriation A/c [4,30,000 5,000] Dr. 4,25,000 To A s Capital A/c [4,25,000 (1/2)] 2,12,500 To B s Capital A/c [4,25,000 (1/2)] 2,12,500 (Being Profit after interest on loan distributed) PARTNER S CAPITAL A/C A B A B To Balance c/d 7,12,500 5,12,500 By Balanace b/d 5,00,000 3,00,000 By P/L App. A/c 2,12,500 2,12,500 Total 7,12,500 5,12,500 Total 7,12,500 5,12,500 By Balance b/d 7,12,500 5,12,500 A S LOAN A/C Date Date To Balance c/d 2,05, By Balance b/d 2,00,000 Oct. 31 Mar. 31 By Interest on Loan 5,000 Total 2,05,000 Total 2,05,000 Answer 5. Working Note : (i) Analysis Table : Applied Alloted Application money Receive Application money Due Excess Adjusted on allotment Refund 4,800 4,000 19,200 16,000 3,200 3,200 1,200 Nil 4,800 4,800 4,800 6,000 4,000 24,000 16,000 8,000 3,200 4,800 (ii) Harish s applied shares : = = 96 shares (iii) Harish s Calls in Arrears on allotment : = (80 10) [(96 80) 4] = = 736 (iv) Capital Reserve : = = = 864 (i) Bank Dr. 24,000 To Share Application A/c 24,000 (Being application money received) (ii) Share Application A/c Dr. 24,000 To Share Capital A/c 16,000

30 4 ISC Model Specimen Papers, XII To Share Allotment A/c 3,200 To Bank A/c 4,800 (Being application money due and Excess money adjusted and Refunded) (iii) Share Allotment A/c Dr. 40,000 To Share Capital A/c 24,000 To Securities Premium Reserve A/c 16,000 (Being allotment due with Share Premium Reserve) (iv) Bank A/c Dr. 36,064 To Share Allotment A/c 36,064 (Being allotments money due.) (v) Share first call A/c Dr. 24,000 To Share Capital A/c 24,000 (Being call money due) (vi) Bank A/c Dr. 22,800 To Share first call A/c 22,800 (Being call money received) (vii) Share Capital A/c Dr Securities Premium Reserve A/c Dr. 320 To Share Forfeiture A/c 384 To Share Allotment A/c 736 To Share First Call A/c 480 (Being one shareholder did not pay allotment and call) (viii) Share Final call A/c Dr. 15,680 To Share Capital A/c 15,680 (Being call money received) (ix) Bank A/c Dr. 15,200 To Share Final Call A/c 15,200 (Being call money due) (x) Share Capital A/c Dr. 2,400 To Share Forfeiture A/c 1200 To Share First call A/c 720 To Share Final call A/c 480 (Being one shareholder also not pay two calls) (xi) Bank A/c Dr. 2,880 Share Forfeiture A/c Dr. 320 To Share Capital A/c 3,200 (Being share reissued 18 per share paid up) (xii) Share Forfeiture A/c Dr. 864 To Capital Reserve A/c 864 (Being share forfeiture transferred to Capital Reserve A/c) Answer 6. (a) Working Note : No. of Debentures issued = = 11,111 Deb % So, Amount of Debentures = 11, = 11,11,100 Less : Discount 10% = [11,11,100 10%] = Amount Payable in Debentures = 9,99,990 Bal. amount paid in cash = 10 = 10,00,000

31 Accounts 5 (i) Sundry Assets A/c Dr. 15,00,000 To Sundry Liabilities A/c 3,00,000 To Silver Ltd. 10,00,000 To Capital Reserve A/c 2,00,000 (Being purchase the business of Silver Ltd.) (ii) Silver Ltd. Dr. 10,00,000 Discount on Issues of debenture A/c Dr. 1,11,110 To Debenture A/c 11,11,100 To Bank A/c 10 (Being debentures of 100 each issued at a discount of 10% and balance paid in cash) (b) IN THE BOOKS OF JACKS ON LTD. (i) Bank A/c Dr. 2,50,000 To Debentures Application A/c [10,000 25] 2,50,000 (Being amount of debentures application received) (ii) Debentures Application A/c Dr. 2,50,000 To 14% Debentures A/c 2,50,000 (Being amount of Debentures application transferred) (iii) Debentures Allotment A/c Dr. 3,00,000 Discount on issue of Debentures A/c Dr. 50,000 To 14% Debentures A/c [10,000 35] 3,50,000 (Being Debentures allotment due at 5% discount) (iv) Bank A/c Dr. 3,00,000 To Debentures Allotment A/c 3,00,000 (Being Debentures allotment received) (v) Debentures First & Final Call A/c Dr. 4,00,000 To Debentures A/c [10,000 40] 4,00,000 (Being Debentures First & Final call due) (vi) Bank A/c Dr. 4,00,000 To Debentures First & Final Call A/c 4,00,000 (Being First & Final call Received) (vii) Debentures Issue Expenses A/c Dr. 30,000 To Bank A/c 30,000 (Being issue expenses paid)