TOPPER Sample Papers 237 TOPPER SAMPLE PAPER 4 ACCOUNTANCY XII Time Allowed - 3 Hrs. Max. Marks - 80 General Instructions:- 1. This question paper contains two parts A & B only. 2. All parts of questions should be attempted at one place. 3. There is internal choice in some questions. PART A Q 1. How & where would you record Match expenses if Match fund is maintained in the books of Not- for- profit organisation? (1) Q 2. In the absence of any provision in the partnership deed, at what rate, interest on capital and interest on loan will be allowed? (1) Q 3. Give the circumstances, when there is a need to change the profit sharing ratio. (1) Q 4. Explain the accounting treatment of goodwill when a new partner brings his share of goodwill in cash. (1) Q 5. What is meant by issue of debentures as collateral security? (1) Q 6. On the basis of the following information calculate the amount that will be shown against the item sports material used in the income and expenditure account of the sports club for the year ended 31-03-02. 1-4-01 31-03-02 Stock of sports material 1 5,200 Creditors of sports material 8,000 Amount paid for the sports material during the year 2001-2002= Rs 43,200 (3) Q 7. State the exceptions to the creation of Debentures Redemption Reserve as per SEBI guidelines. (3) Q 8. 300 equity shares of Rs 100 each (Rs 80 called up) were forfeited for the non payment of allotment money of Rs 40 per share. The forfeited shares were reissued for Rs 90 as fully paid up. (3) Q 9. A,B and C have fixed capital of Rs 36,000, Rs 27,000 and Rs 18,000 respectively. For the year 2006 profit amounting to 36000 were distributed but interest on capital was credited to them @12% instead of 10%. Give necessary adjusting entry. Show your workings clearly. (4) Q 10. X, Y and Z are partners in the firm sharing profits in the ratio of 3:2:1. Z retired and the new profit sharing ratio between X and Y was 1:2. On Z s retirement the goodwill of the firm was valued at Rs. Pass the necessary journal entry for the treatment of goodwill on Z s retirement and also calculate the gaining ratio Of remaining partners. (4) Q 11. Y ltd. with an authorised capital of Rs 1,00,000 in Shares of Rs 100 each,issued 500 of such shares, payable Rs 25 per share on application, Rs 25 on allotment, Rs 20 on first call and balance payable as and when required. All money payable on application and allotment was duly received but when the call of Rs 20 per share was made, one shareholder holding 25 shares failed to pay the amount due and another shareholder holding 50 shares paid the entire amount due on shares along with the first call. Journalise. (4)
238 Accounts XII Q 12. (a) R Ltd acquired assets of RS 20,00,000 and took over creditors of Rs 2,00,000 from K Ltd. R Ltd issued 8% debentures of 100 each at a premium of 25%, as purchase consideration. Journalise. (b) What journal entries should be made for the issue and redemption of debentures if X ltd issued,12% debentures of Rs 100 each at par redeemable at a premium of 5%. (3+3) Q 13. From the following Receipts & Payment A/c of Ronic club and additional information, prepare Income & Expenditure A/c for the year ending 31 st December 2006 and balance sheet as on that date: RECEIPTS AMT () PAYMENT AMT () To balance b/d 14,350 By salaries 20,280 To subscription 61,450 By sports Equipment 46,785 To Interest on 9,000 By balance c/d 17,735 Investment @ 9%p.a. 84,800 84,800 (6) Q 14. A, B and C were partners in a firm sharing profits in a ratio of 5:3:2. On 31.03.06 their balance sheet was as under: LIABILITIES AMT () ASSETS AMT Creditors 11000 Buildings 20000 Reserves 6000 Machinery 30000 A s capital 30000 Stock 10000 B s capital 25000 Patents 11000 C s capital 15000 Debtors 8000 Cash 8000 87000 87000 A died on October 1,2006. It was agreed between his executors and the remaining partners that a) goodwill of the firm valued at Rs 37500. b) patents be valued at Rs 8000; machinery at Rs 28000 and Building at Rs 25000. c) profits for the year 2006-07 be taken as having accrued at the same rate as that of the previous year which was Rs 15000. d) interest on capital @ 10%p.a. Prepare A s capital a/c & Revaluation a/c. (6) Q 15. R Ltd offered 20,000 shares of Rs 10 each at 10% discount payable as On application Rs 6 On allotment Rs3 Public has applied for 32500 shares. Shares were allotted on pro-rata basis to the applicants of 25000 shares.money overpaid on application was adjusted against sum due on allotment. All the shareholders have paid the amount due except Mohan, the allotee of 4000 shares. His shares were forfeited, all the forfeited shares were reissued for Rs 3 as fully paid up. Journalise the above transactions.
TOPPER Sample Papers 239 OR K ltd invited applications for 20,000 shares of Rs 10 each, payable Rs 3 on application & balance on allotment. Applications were received for 25000 shares. It was decided a) to refuse allotment to the applicants of 1000 shares. b) to allot in full to the applicants of 4000 shares. c) to allot balance of the available shares pro rata among the other applicants. d) to utilise excess application money in part payment of allotment money. Ramesh, holder of 100 shares to whom shares was allotted on pro rata basis failed to pay the allotment money. His shares were forfeited and subsequently reissued as fully paid up for Rs 9 per share. Journalise. (8) Q 16. The balance sheet of A,B and C who were partners sharing profits in ratio 2:1:1 as on 31.03.03 was as follows: LIABILITIES AMT ASSETS AMT Creditors 21000 Buildings 100000 reserves 20000 Machinery 50000 A s capital 80000 Stock 18000 B s capital 40000 Debtors 20000 C s capital 40000 Less P/D/D 1000 19000 Cash 14000 201000 201000 On that date B decided to retire from the firm on the following terms: a) Buildings to be appreciated by 20%. b) P/D/D to be increased to 15% on debtors. c) Machinery to be depreciated by 20%. d) Goodwill of the firm valued at Rs 72000. e) The capital of the new firm be fixed at Rs 1,20,000. Prepare Revaluation A/c, Capital A/c s of the partners and Balance sheet after B s retirement. OR A & B were partners in a business sharing profits & losses in the ratio of 3:1. They decided to dissolve the partnership on 31.03.03. On that date, their capital stood at 1,00,000 and 50,000 respectively. Amount owing by A to the firm was 4 and the amount owed by the firm to B was 1; Creditors were 2 and cash. The assets other than the amount owing by A to the firm realized 64,000. The expenses of realization amounted to 1,000. Prepare Memorandum Balance Sheet. Realisation A/c, Partners Capital A/c s and Cash A/c. (8) PART B ANALYSIS OF FINANCIAL STATEMENT Q 17. The Quick Ratio of a company is 2:1, State giving reasons whether the ratio will improve, decline or will have no change in case of purchase of goods for cash. (1)
240 Accounts XII Q 18. Mention the net amount of Source or Use of cash when Rs19000 was received from a debtor and discount allowed to him was Rs 1000. (1) Q 19. Payment of income tax is classified under which activity while preparing cash flow statement? (1) Q 20. What is a contingent liability? Where is it shown in the Balance sheet? Give two examples. (3) Q 21. Prepare a comparative income statement from the following: (Rs) 2005 (Rs) 2006 Sale 800000 1000000 Cost of goods sold 480000 620000 Indirect expenses 80000 110000 Income tax 50% 50% (3) Q 22. A) Calculate Total Assets to Debt ratio Total Debts : Rs 900000, Capital employed : Rs 1100000, Current liabilities: Rs 100000. B) Calculate stock if: Current Ratio = 4, Quick Ratio = 3 and Working capital Rs 108000. (4) Q 23. From the following Balance Sheets, prepare a Cash Flow Statement. Liabilities 2005 2006 Assets 2005 2006 Eq. share capital Profit& Loss A/c General Reserve Loan Creditors 4 --- 18,700 6 1 7,500 20,000 11,000 Fixed Assets Stock Debtors Bank Preliminary Exp. Profit& Loss A/c 46,000 6,000 18,000 1,700 83,000 13,000 19,500 2,500 500 78,700 1,18,500 78,700 1,18,500 Additional Information: During the year depreciation on fixed assets was 11,700 1. Match expenses will be deducted from Match Fund in Liabilities side of the closing Balance Sheet. (1) 2. No interest is allowed on capital and interest is allowed on partner s loan @ 6% p.a. (1) 3. (a) At the time of admission of a partner (b) At the time of retirement or death of a partner (1/2 x 2) 4. Journal Entries Date Particulars L.F. () (Cr.) Cash A/c To Premium A/c (Being cash brought in by new partner for his share of goodwill)
TOPPER Sample Papers 241 Premium A/c To Sacrificing partners capital A/c (Being new partner s share of goodwill distributed by the sacrificing partners in sacrificing ratio) (1/2 x 2) 5. Collateral Security means secondary(additional) security in addition to the principal security. (1) 6. Income & Expenditure A/c for the year ended 31 st March, 2002 Expenditure Income Amount paid for sports material 43,200 Add: Opening stock 1 Add: Closing creditors Less: Closing stock (5,200) Less: Opening creditors (8,000) 44,000 (1/2 x 6) 7. (a) Company which has issued debentures with a maturity period of 18 months or less. (b) Infrastructure companies are exempted from creating Debenture Redemption Reserve. (3) 8. Journal Entries Date Particulars L.F. () (Cr.) Share Capital A/c 24,000 To Share Forfeited A/c To Calls in Arrears A/c 1 1 (being shares forfeited) 27,000 Share Forfeited A/c 3,000 To Share Capital A/c (being 80 shares reissued) Share Forfeited A/c 9,000 To Capital Reserve A/c 9,000 (being balance of shares forfeited A/c transferred to capital reserve A/c ) (1 x 3) 9. Amt. already credited (2%) Amt. to be credited (1:1:1) A 720 540 B 540 540 C 360 540 Total 1,620 1,620 Difference (/Cr.) 180 () ---- 180 (Cr. ---
242 Accounts XII Journal Entry Date Particulars L.F. () (Cr.) A s current A/c 180 To C s current A/c 180 (Being the interest wrongly charged, now rectified) (2+2) 10. Calculation of Gaining Ratio i.e. New Ratio- Old ratio New ratio Old ratio X Y Z 1/3 3/6 Difference -1/6 2/6 2/3 2/6 1/6 Y is gaining, but X is sacrificing Goodwill of the firm = X s sacrifice. = x 1/6 =, Y gains = x 2/6 = Z s share of goodwill = x 1/6 = Journal Entry Date Particulars L.F. () (Cr.) Y s capital A/c To X s capital A/c To Z s capital A/c (Being the compensation of Y to Z for his share of goodwill and to X for the sacrifice made by him on Z s retirement) (2+2) 11. Journal Entries Date Particulars L.F. () (Cr.) To Share application A/c (Being share application money received on 500 shares) Share Application A/c To Share Capital (Being allotment made ) Share Allotment A/c To share capital A/c (Being allotment due ) To share allotment A/c (Being allotment money received) Share First call A/c To share capital A/c (Being First call due )
TOPPER Sample Papers 243 Calls in arrears A/c To share First call A/c To calls in advance A/c (Being First call money received on 475 shares@ 20 per share and 30 per share on 50 shares received in advance)) 12. (a) Journal Entries 11,000 500 1,500 (4) Date Particulars L.F. () (Cr.) Assets A/c 20,00,000 To Creditors A/c To K Ltd. 2,00,000 18,00,000 (Being R ltd. took over the assets & liabilities of K ltd.) K Ltd. 18,00,000 To 8% Debentures A/c To Securities Premium A/c (Being 8% debentures issued to K Ltd. at premium) Note: Debentures issued at premium= 18,00,000/125= 14,400 Debentures (b) Journal Entries 14,40,000 3,60,000 Date Particulars L.F. () (Cr.) 30,00,000 To Debenture application & allotment A/c 30,00,000 (Being Debenture application money received) Debenture application & allotment A/c 30,00,000 Loss on issue of debenture A/c 1,50,000 To 12% Debentures A/c To Premium on Redemption A/c 30,00,000 1,50,000 (Being application money transferred to Debenture A/c.) Profit & Loss Appropriation A/c 15,00,000 To Debenture Redemption Reserve A/c 15,00,000 (being Debenture Redemption Reserve created) 12% Debentures A/c 30,00,000 Premium on redemption of debenture A/c 1,50,000 To Debentures holders A/c 31,50,000 (Being debentures redeemed) Debentures holders A/c 31,50,000 To 31,50,000 (Being Debentures holders paid) Debenture Redemption Reserve A/c 15,00,000 To general reserve (Being D.R.R. transferred to general reserve) (3+3) Income & Expenditure A/c
244 Accounts XII 13. For the year ending 31.12.06 Particulars Particulars To salaries 20,280 By Subscription 61,450 To sports Equipment used Add: O/s (end) 560 Opening stock 21,800 Less: O/s (Beg) 480 Add: purchases 46,785 Add: Adv.(Beg.) 80 Less: Closing stock 29,700 Less: Adv. (End) 40 38,885 To surplus 11,405 By interest on investment 61,570 9,000 70,570 70,570 Balance Sheet As on 31.12. 2006 Liabilities Assets Advance subscription Capital Fund Balance Sheet As on 31.12. 2007 80 1,36,550 Cash O/S Subscription Sports Equipment Investment (9,000 x 100/9) 14,350 480 21,800 1,00,000 1,36,630 1,36,630 Liabilities Assets Advance subscription 40 Cash Capital Fund 1,36,550 O/S Subscription Add: Surplus 11,405 1,47,955 Sports Equipment Investment (9,000 x 100/9) 14. A s Capital A/c 17,735 560 29,700 1,00,000 1,47,995 1,47,995 (6) Particulars Particulars To A s executor A/c 57,000 By balance b/d By General reserve By B s capital A/c By C s capital A/c By P & L suspense A/c By Interest on capital ( x 10/100 x 6/12) Revaluation A/c 3,000 11,250 7,500 3,750 1,500 57,000 57,000 Particulars Particulars Patents 3,000 Buildings Machinery
TOPPER Sample Papers 245 Goodwill = 37,500 A s share of goodwill = 37,500 x 5/10 = 18,750 A s share of profit = 1 x 5/10 x 6/12 = 3,750 (6) 15. Journal Entries Date Particulars L.F. () (Cr.) 1,9 To Share application A/c 1,9 (Being share application money received on 32,500 shares) Share Application A/c 1,9 To Share Capital To Share Allotment To Bank 1,20,000 4 (Being allotment made to 20,000 shares) Share Allotment A/c 60,000 Discount of issue of shares A/c 20,000 To share capital A/c 80,000 (Being allotment due on 20,000 shares @ Rs3 at a discount of 1) 44,000 Calls in arrears A/c 6,000 To share allotment A/c 50,000 (Being allotment money received) Share Capital A/c 40,000 To Share Forfeited A/c To Calls in arrears A/c To Discount on issue of shares (Being shares forfeited) Discount on issue of shares A/c Share Forfeited A/c To Share Capital A/c (Being forfeited shares reissued) Share Forfeited A/c To Capital Reserve A/c (Being balance of the forfeited A/c transferred to Capital Reserve) Working notes: Calculation of amount not paid by Mohan on allotment: i) No. of shares applied by Mohan: 2/20,000 x 4,000 = shares 3 4,000 1,000 29,000 ii) Mohan paid application money @ 6 on shares = Less: Application adjusted @ 6 on 4,000 shares = (24,000) Money adjusted in allotment 6,000 6,000 4,000 40,000 29,000
246 Accounts XII iii) Money due on allotment (1 6,000) = Rs 6,000 Calculation of amount due on allotment: Total amount due on allotment @Rs 4 on 20,000 shares = 80,000 Less adjusted from application = () 50,000 Less money due form Mohan (6000) Total money received on allotment 44,000 Journal Entries OR Date Particulars L.F. () (Cr.) 7 To Share application A/c 7 (Being share application money received on 2 shares) Share Application A/c 7 To Share Capital To Share Allotment To Bank 60,000 1 3,000 (Being application money transferred) Share Allotment A/c 1,40,000 To share capital A/c 1,40,000 (Being allotment due on 20,000 shares ) 1,27,375 Calls in arrears 625 To share allotment A/c 1,28,000 (Being allotment money received) Share capital A/c 1,000 To Share forfeiture A/c To Calls in arrears A/c (Being shares forfeited) Share Forfeited A/c To Share capital A/c (Being shares reissued) Share forfeited A/c To Capital Reserve A/c ( Being share forfeited A/c transferred to capital reserve A/c) Working notes: Calculation of amount not paid by Ramesh on allotment: ii) No. of shares applied by Mohan: 20,000/16,000 x 100 = 125 shares 900 100 275 375 625 1,000 275 (8)
TOPPER Sample Papers 247 ii) Ramesh paid application money @ 3 on 125 shares = 375 Less: Application adjusted @ 3 on 100 shares= (300) Money adjusted in allotment 75 Money due on allotment (100x7-75) = Rs 625 75 16. Revaluation A/c Calculation of amount due on allotment: Total amount due on allotment @Rs 7 on 20,000 shares = Rs 1,40,000 Less adjusted from application = (1) 1,28,000 Less money due form Mohan (625) Total money received on allotment 1,27,375 Particulars Particulars To Provision for doubtful debts By Buildings 20,000 To Machinery To profit transferred to A- 4,000 B- C- 8,000 20,000 20,000 Particulars Partners Capital A/c To B s capital To B s Loan A/c To Cash To balance c/d Balance Sheet A 1 80,000 As on 31.03. 2008 B 6 C 6,000 1,000 40,000 Particulars By balance b/d By revaluation Profit By A s capital By C s capital By Reserves By Cash (B/fig) A 80,000 4,000 B 40,000 1 6,000 C 40,000 94,000 6 47,000 94,000 6 47,000 Liabilities Assets Creditors A s capital C s capital B s Loan A/c Working Notes: 21,000 80,000 40,000 6 Cash Debtors 20,000 Less: P/D/D 3,000 Stock Machinery Building 11,000 17,000 18,000 40,000 1,20,000 2,06,000 2,06,000
248 Accounts XII 1. Firm s capital = 1,20,000 A s capital = 1,20,000 x 2/3 = 80,000 C s capital = 1,20,000 x 1/3 = 40,000 2. Cash balance = 14,000 1,000 = 11,000 P/D/D= Provision for Doubtful Debts (2+3+3) Memorandum Balance Sheet OR Liabilities Assets Creditors A s capital B s capital B s Loan A/c Realisation A/c 2 1,00,000 50,000 1 Cash A s loan A/c Other assets(bal.fig) 4 1,43,000 1,90,000 1,90,000 Particulars Particulars To Sundry assets To Cash (creditors) To cash (real. exp.) Partners Capital A/c 1,43,000 2 1,000 By creditors By cash (Assets realised) By Loss- A 60,000 B 20,000 2 64,000 80,000 1,69,000 1,69,000 Particulars A B Particulars A B To A s loan A/c To realization loss To cash 4 60,000-20,000 By balance b/d By cash 1,00,000 50,000 - Cash A/c 1,0 50,000 1,0 50,000 Particulars Particulars To balance b/d To realization To A s capital 64,000 By realization By realization By B s loan A/c By B s capital 2 1,000 1 71,000 71,000 PART B (8) 17. Quick ratio will decline as cash is going out which decreases current assets. (1) 18. Net amount of Sources will be 19,000. (1) 19. Operating Activity (1)
TOPPER Sample Papers 249 20. Contingent liabilities are liabilities which have not arisen, but may arise upon the happening of a certain event. The amount of contingent liabilities is never shown in the amount column of the liabilities side. These are always stated in the form of a foot-note on the liabilities side. Some examples (i) Claim against the company not acknowledged as debt (ii) Uncalled liability on shares partly paid (iii) Arrears of fixed cumulative dividend (3) 21. Comparative Income Statement Particulars 2005() 2006() Absolute change Sales Less: Cost of goods sold Gross profit Less: Indirect expenses Net profit before tax Less: Tax payable 8,00,000 4,80,000 3,20,000 80,000 2,40,000 1,20,000 10,00,000 6,20,000 3,80,000 1, 2,70,000 1,3 2,00,000 1,40,000 60,000 1 Percentage 25 29.16 18.75 37.5 12.5 12.5 Net profit after tax 1,20,000 1,3 1 12.5 (1 x 4) 22. (a) Total assets to debt ratio = Total assets / debts Debts = Total debts current liabilities = 9,00,000 1,00,000 = 8,00,000 Total assets = Total debts + capital employed = 9,00,000 + 11,00,000 = 20,00,000 Total assets to debt ratio = 20,00,000 / 8,00,000 = 2.5 : 1 (b) Working capital = current assets current liabilities 1,08,000 = C/A C/L C/A = 1,08,000 + C/L Current ratio = C/A / C/L= 1,08,000 + C/L / C/L 4C/L = 1,08,000 + C/L C/L = 1,08,000/3 = 36,000 C/A = 1,08,000 + 36,000 = 1,44,000 Liquid ratio = L/A / C/L 3 = L/A / 36,000 L/A = 1,08,000 Stock = C/A L/A = 1,44,000 1,08,000 = 36,000 (2+2) 23. Calculation of Profit before tax Profit earned during the year = 20,000 Add: Transfer to reserve = 2,500 = 22,500
250 Accounts XII Cash Flow Statement Particulars Amount() Amount() (A) Cash flow from Operating Activities Net profit before tax Add: Non operating expenses Depreciation 11,700 Preliminary Expenses 1,200 Less: Increase in stock Less: Increase in debtors Less: Decrease in creditors Operating profit before tax Less: tax paid Cash flow from Operating Activities 12,900 (7,000) (1,500) (7,700) 22,500 (3,300) 19,200 ------- 19,200 (B) Cash Flow from Investing Activities Purchase of Machinery Cash used in Investing Activities (C) Cash flow from Financing Activities Issue of share capital Bank loan raised Cash used in Financing Activities Net increase in cash ( A+B+C) Add: Opening balance of cash & equivalents Closing balance of cash & equivalents (48,700) 20,000 (48,700) 500 2,500 Machinery A/c Particulars Particulars To Balance b/d To Bank (purchase.) 46,000 48,700 By Depreciation By balance c/d 11,700 83,000 94,700 94,700 (6)