196 Accounts XII TOPPER SAMPLE PAPER 1 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. Why is it that the capital account of a partner does not show a Debit Balance in spite of regular and consistent losses year after year? (1) Q 2. Why is goodwill considered an intangible asset but not a fictitious asset? (1) Q 3. Who should compensate whom in case of a change in the profit sharing ratio of the existing partner? (1) Q 4. Where will you record the Life Membership Fee while preparing the final accounts of not for profit organization? (1) Q 5. What s meant by surrender of shares? (1) Q 6. Young India Club gives the following information during the year 2008 09: (3) Particulars Amnt. Rs Environment Fund 600000 Environment Fund Investment @ 7% p.a interest 400000 Expenses incurred during the year on Environment Awareness Movement 150000 Donations received towards the Environment Fund 75000 Interest received on fund investment during the year 20000 How will you deal with the above in the books of the club? Q 7. Bharat Ltd. Issued 8000, 8% Debentures of Rs.100 each. Pass the necessary Journal entries for issue of debentures in the following cases:- i) When debentures are issued at par and are redeemable at 5% premium. ii) When debentures are issued at 5% premium and are redeemable at par. iii) When debentures are issued at 5% premium and are redeemable at 5% premium. (3) Q 8. A Ltd. Took over Assets of Rs.10,00,000 and creditors of Rs.1,00,000 from B Ltd. and issued Equity Shares of Rs.100 each at a premium of 25% as purchase consideration. Pass necessary Journal entries in the books of A Ltd. (3) Q 9. X and Y are partners with capital of Rs.1,00,000 and 1, respectively. On 1 st January 09, X gives a loan of Rs. to the firm and Y introduced Rs. as additional capital. Profit for the year ended 31 st March 09 was Rs.30,400. there is no Partnership Deed. Both X and Y expect interest @ 10% p.a. on the loan and additional capital advanced by them. Show how the profits would be divided. Give reason. (4) Q 10. State the provision of section 78 of Companies Act 1956. (4) Q 11. A & B are in Partnership sharing profits in the ratio of 3:2. They decide to change their profit sharing ratio to 2:3. The capital accounts of A & B after all adjustments are Rs.80,000 and
TOPPER Sample Papers 197 Rs.60,000.The Capital Account of Partners are to be adjusted on the basis of their new profit sharing ratio. Calculate the amount of actual cash to be paid off or brought in by the partners for adjustment of capital and pass the necessary journal entries. (4) Q 12. (a) X Ltd. Forfeited 100 shares of Rs.10 each, issued at discount of 10% to Mahesh on which he had paid Rs2 per share. Out of these, 80 shares were reissued at Rs.6 per share to Suresh, Rs.8 paid up. Pass the Journal entries. (b) On 1 st April 07, X Ltd. had 1,000 12% Debenture of Rs. 100 each. Interest on debentures is payable half yearly on 30 th September and 31 st March. On 1 st October 07 the company purchased 300 own debentures at Rs.93 for immediate cancellation. Record the necessary Journal entries on date of purchase. (3+3) Q 13. Journalize the following transactions relating to realization expenses in connection with the dissolution of partnership of A and B. (a) Realisation expenses Rs.2500. (b) Realisation expenses Rs.2500 paid by B. (c) B was asked to look after the dissolution work for which he was allowed a commission of Rs.2500. (d) B to borne actual realisation expenses for which he will get Rs.2500. The actual expenses paid by B out of his private funds were Rs.1600. (e) B agreed to take over the responsibility of completing the dissolution work at an agreed remuneration of Rs.1500 and to bear all realization expenses. Actual realisation expenses amounted to Rs.1000 were paid by the firm. (f) An unrecorded computer realised Rs.7000. (6) Q 14. From the following Receipts and Payment Accounts, prepare the final accounts of National club for the year ended 31 st March, 2009: (6) Receipts and Payments Account for the year ended 31.3.09 Receipts Amnt.(Rs.) Payments Amnt(Rs.) Balance b/d 15000 Furniture 18000 Sale of old furniture(book value Rs.6000) 4000 Library Books 10000 Subscription: Salaries 72000 2007-08 18000 General Expenses 18000 2008-09 60000 Electricity charges 12000 2009-10 12000 90000 Newspapers 33800 Sale of waste papers 5000 Postage 3000 Donations(General) 5800 Stationary 40000 Receipts From Advertisement 44000 Audit Fees 8000 Ground Rent 84000 Balance c/d 33000 2,47,800 2,47,800 Balance sheet as on 31 st March 08 Liabilities Amt.(Rs.) Assets Amt.(Rs.) Outstanding Salary 6000 Cash 15000 Capital Fund 6,94,000 Subscription Due 18000
198 Accounts XII Additional Information:- (i) Library Books 30000 Furniture 37000 Land & Building 600000 7,00,000 7,00,000 The club had 750 members each paying an annual subscription of Rs.100. (ii) On 31 st March, 2009 Salaries outstanding amounted to Rs.1200. (iii) Provide 5% Depreciation on Land and Building. Q 15. A and B are partners in a firm sharing profits in 2:1 ratio. They admitted C for 1/4 th share in profits. C was to bring Rs.30000 as capital and capitals of A and B were to be adjusted in the profit sharing ratio on the basis of C s capital. The Balance sheet of A and B as on 31 st March 2009(before C s admission) was as under: (8) Liabilities Rs.(Amnt.) Assets Rs.(Amnt.) Creditors Cash 2,000 Bills Payable 19,000 Debtors 50,000 General Reserve 6,000 Stock 10,000 Capitals A/c s Machinery 25,000 A 50000 Building B 32000 82,000 Other terms of agreement were as under: (i) C will bring Rs.12000 for his share of goodwill. 1,27,000 1,27,000 (ii) Building was valued at Rs.45000 and Machinery at Rs.23000. (iii) A provision of Bad debts was created @ 6% on Debtors. (iv) Capital Accounts of A and B were adjusted by opening current Accounts. Prepare the Revaluation A/c, Partner s capital A/c and Balance Sheet of A,B and C OR P,Q,R were partners in a firm sharing profits in the ratio of 3:2:1. On 31 st March, 2009 Q retired from the firm. On the date of Q s retirement the Balance Sheet of the firm was as follows: Balance sheet of P,Q and R as on 31.3.09 Liabilities Amt.(Rs) Assets Amt.(Rs) Creditors 27,000 Bank 27,600 Bills Payable Debtors 6000 Outstanding Salary 2,200 Less Prov. 400 5,600 Provision for legal claims 6,000 Stock 9,000 Capital A/c s: Furniture 4,100 P 46000 Premises 96,900 Q 30000 R 20000 96,000
TOPPER Sample Papers 199 On Q s retirement it was agreed that: 1,43,200 1,43,200 (i) Premises will be appreciated by 2% and furniture will be appreciated by Rs.1700. Stock will be depreciated by 10%. (ii) 5% Provision for Doubtful Debts was to be made on Debtors and Rs.7200 for legal damages. (iii) Goodwill of the firm was Valued at Rs.24000. (iv) Rs.20000 from Q s Capital Account will be transferred to his loan A/c and the balance will be paid to him by cheque. Prepare the revaluation A/c s, Partner s Capital A/c and the Balance Sheet of P and Q after Q s retirement. Q 16. Seema Ltd. invited applications for issuing 2,00,000 Equity Shares of Rs.10 each at a premium of Rs.3 per share. The amount was payable as follows: (8) On Application Rs.5 per Share (including premium) On Allotment Rs.4 per share. On First and Final calls- the balance. Applications for 2,60,000 shares were received. Applications for shares were rejected. To the remaining applicants shares were allotted on pro rata basis. Excess money received on applications was adjusted with sum due on allotment. All calls were made and were duly received except the First and Final calls of Mr. Sudhir who applied for 2400 shares. His shares were forfeited. The forfeited shares were reissued for Rs.28000 fully paid-up. Pass the necessary Journal entries for the above transactions in the books of the company. OR National Electronics Ltd. Issued 40000 Equity shares of Rs.50 each at a discount of 10%. On these shares payments are to be made as follows: Rs.15 on application, Rs.10 on Allotment(including discount) and Rs.25 on first and final calls. All the amounts have been received but Ashok who is the holder of 600 shares has not paid the first and final calls. Hence his shares have been forfeited. Pass the journal entries in the books of National Electronics Ltd. PART B Analysis of financial Statement Q 17. Analysis of financial Statement ignores price level changes. Comment. (1) Q 18. Dividend paid by a trading company is classified under which activity while preparing the cash flow Statement? (1) Q 19. The current Ratio of a company is 2:1 state, giving reasons, which of the following would improve, reduce or not change the ratio: (1) (i) Purchase of land by issuing debentures (ii) Payment of outstanding liabilities. Q 20. List any three items that can be shown as contingent liabilities in the company s Balance Sheet. (3) Q 21. From the following information prepare a comparative Income statement of Blue Bell Ltd.(4) Particulars 2007 2008 Sales(Rs.) 150% of cost of goods sold 200% of cost of goods sold
200 Accounts XII Cost of goods sold 10,00,000 Indirect Expenses 5% of Gross profit 10% of Gross Profit Rate of Income tax 50% of Net profit before tax 50% of Net profit before tax Q 22. Calculate any two of the following ratio on the basis of information given below: (4) (i) Liquid Ratio (ii) Proprietary Ratio Information: (iii) Operating Ratio Sales Rs.3,; Cost of goods sold Rs.1,; Selling Expenses Rs.80,000; Administrative Expens es Rs.; Current Assets Rs.1,50,000; Current Liabilities Rs.1,05,000;Closing Stock Rs.10,000; Fixed Assets Rs.2,80,000; Equity Share Capital Rs.2,75,000 and General Reserve Rs.2,00,000. Q 23. (a) From the following information, calculate Net cash Flow from Financing Activities: (3+3) Particulars 2006(Rs) 2007(Rs) Equity share capital 4,00,000 5,00,000 10% Debentures 1,50,000 1,00,000 Securities Premium 50,000 Additional Information: Interest paid on debentures Rs.15,000. (b) Following are the extract from the Balance sheet of XYZ Ltd. Liabilities 31.3.06(Rs.) 31.3.07(Rs.) Assets 31.3.06(Rs.) 31.3.07(Rs.) Profit & Loss A/c 1,60,000 2,00,000 Provision for tax Additional Information: Tax paid during the year Rs.24,000. Show how the related items will appear while preparing the cash flow statement. 1. When the capital accounts of partners are fixed, they always show a Credit Balance. (1) 2. Goodwill cannot be seen or touched, it can only be felt. Hence it is treated as an intangible asset. But it is not a fictitious asset because it can be purchased or sold like any other asset. (1) 3. The gaining partner(s) should compensate the sacrificing partner(s). (1) 4. It will be added to capital fund on the liabilities side of the Balance Sheet. (1) 5. It is voluntary return of shares by a shareholder for the purpose of cancellation. (1) 6. Balance Sheet Liabilities Rs. Assets Rs. Environment fund 6,00,000 Add: Donation received for Environment fund 75,000 Add: Interest received Add: Accrued Interest Less: Expenses (1,50,000) 5,53,000 Environment fund Investment Accrued interest on Environment fund investment 4,00,000 (3)
TOPPER Sample Papers 201 7. (i) Journal Entries Date Particulars L.F. Rs.() Rs.(Cr.) To Debenture application & allotment A/c (Being Debenture application money received) Debenture application & allotment A/c Loss on issue of debenture A/c To 8% Debentures A/c To Premium on Redemption A/c (Being application money transferred to Debenture A/c.) (ii) Date Particulars L.F. Rs.() Rs.(Cr.) 8, To Debenture application & allotment A/c (Being Debenture application money received) 8, Debenture application & allotment A/c 8, To 8% Debentures A/c To Securities Premium A/c (Being application money transferred to Debenture A/c.) (iii) Date Particulars L.F. Rs.() Rs.(Cr.) 8, To Debenture application & allotment A/c 8, (Being Debenture application money received) Debenture application & allotment A/c 8, Loss on issue of debenture A/c To 8% Debentures A/c To Securities Premium A/c To Premium on Redemption A/c (Being application money transferred to Debenture A/c.) (1/2 x 6) 8. Journal Entries Date Particulars L.F. Rs.() Rs.(Cr.) Assets A/c 10,00,000 To Creditors A/c 1,00,000 To B Ltd. 9,00,000 (Being A ltd. took over the assets & liabilities of B ltd.) B Ltd. 9,00,000 To Equity shares capital A/c To Securities Premium A/c (Being 7,200 shares issued to B Ltd. at premium) 7, 1,80,000 (1+2)
202 Accounts XII 9. Profits to be divided between X & Y = 30,400 ( x 6/100) = 30,400 1,200 = 29,200 As the partnership deed is silent, the profits should be shared equally among the partners after deducting interest on partner s loan @ 6% p.a. X s share of profit = 29,200/2 = Rs.14,600 Y s share of profit = 29,200/2 = Rs.14,600 (3) 10. Under provisions of section 78 of Company s Act 1956, the amount of securities premium may be used only for the following purposes: (i) In writing off the preliminary expenses of the company (ii) For writing off the expenses, commission or discount allowed on issue of shares or debentures of company (iii) For issuing fully paid bonus shares to the shares holders of the company. (iv) For buy back of its own shares (1 x 4) 11. Partners Capital A/c Particulars A B Particulars A B To cash To balance c/d 24,000 56,000 Journal Entries --- 84,000 By balance b/d By cash 80,000 --- 60,000 24,000 80,000 84,000 80,000 84,000 Date Particulars L.F. Rs.() Rs.(Cr.) A s capital A/c 24,000 To cash A/c 24,000 (Being cash withdrawn by A) Cash A/c 24,000 To B s capital A/c 24,000 (being cash brought in by B) A s new (adjusted) capital = (80,000 + 60,000) x 2/5 = 1, 2/5 = 56,000 B s new (adjusted) capital = (80,000 + 60,000) x 3/5 = 1, 3/5 = 84,000 (2+2) 12. (a) Journal Entries Date Particulars L.F. Rs.() Rs.(Cr.) Share Capital A/c 1,000 To Share Forfeited A/c 200 To Calls in Arrears A/c 700 To Share Discount A/c 100 (being shares forfeited) 480 Share Forfeited A/c 80 Share Discount A/c 80 To Share Capital A/c (being 80 shares reissued) 640
TOPPER Sample Papers 203 Share Forfeited A/c To Capital Reserve A/c (being balance of shares forfeited A/c transferred to capital reserve A/c ) (b) Journal Entries 80 80 Date Particulars L.F. Rs.() Rs.(Cr.) Own Debentures A/c 27,900 1.10.07 To bank A/c (being 300 own debentures purchased from open 27,900 market for immediate cancellation) 12% Debentures A/c To Own Debentures A/c 27,900 To profit on cancellation 2,100 (being debentures cancelled ) Profit on cancellation A/c 2,100 To Capital Reserve A/c (being profit on cancellation transferred to capital 2,100 reserve A/c ) (3+3) 13. Journal Entries Date Particulars L.F. Rs.() Rs.(Cr.) Realisation A/c (a) To (being realisation expenses paid) Realisation A/c (b) To B s capital A/c (being realisation expenses paid by partner B) Realisation A/c (c ) To B s capital A/c (being B was allowed commission) Realisation A/c (d) To B s capital A/c (being actual realization expenses were borne by B) Realisation A/c 1,500 (e) i To B s capital A/c (being remuneration allowed to B for dissolution 1,500 proceedings) B s capital A/c 1,000 ii To cash A/c (being actual realization expenses paid by the firm) 1,000 7,000 (f) To realization A/c (being unrecorded computer realized) 7,000 (1x6 = 6)
204 Accounts XII 14. Income & Expenditure A/c For the year ending 31.03.08 Particulars Rs. Particulars Rs. To salaries 72,000 Less O/s (Beg.) 6,000 Add O/s (End) 1,200 To General expenses To Electricity charges To Newspapers To Postage To Stationery To Audit fees To Depreciation on Land & Building To Loss on sale of furniture Balance Sheet 67,200 1 33,800 3,000 By Subscription 60,000 Add: O/s (end) 15,000 By sale of waste paper By Donations By Receipts from advertisement By Ground rent By Deficit 75,000 5,000 5,800 44,000 84,000 200 2,000 2,14,000 2,14,000 Liabilities Rs. Assets Rs. Capital Fund 6,94,000 Less deficit 200 Outstanding salary Advance Subscriptions 15. Revaluation A/c 6,93,800 1,200 Cash Subscription Due Library Books Furniture Land & Building 6,00,000 Less: Dep. 33,000 15,000 49,000 5,70,000 7,07,000 7,07,000 (6) Particulars Rs. Particulars Rs. To Machinery To Provision for doubtful debts Partners Capital A/c 2,000 3,000 By Buildings 5,000 5,000 5,000 Particulars A B C Particulars A B C 50,000 32,000 To Current A/c To balance c/d 2,000 60,000 Balance Sheet As on 1 st April 2008 By balance b/d By cash A/c By premium A/c By Reserves 4,000 4,000 2,000 62,000 3 62,000 3
TOPPER Sample Papers 205 Liabilities Rs. Assets Rs. Creditors Bills Payable A s capital B s capital C s capital A s current A/c B s current A/c 19,000 60,000 2,000 Cash (2000+30000+12000) Debtors 50,000 Less: Provision for doubtful debts 3,000 Stock Machinery Building 44,000 47,000 10,000 23,000 45,000 1,69,000 1,69,000 Working Notes: C s capital = C s share = ¼ Capital of the firm = x 4/1 = 1, New profit sharing ratio = 2:1:1 A s new capital = 1, x 2/4 = 60,000 B s new capital = 1, x 1/4 = C s new capital = 1, x 1/4 = (2+3+3) OR Revaluation A/c Particulars Rs. Particulars Rs. To Stock To provision for legal charges To profit transferred to P 819 Q 546 R - 273 Partners Capital A/c 900 1,200 By Provision for doubtful debts By Premises By Furniture 100 1,938 1,700 1,638 3,738 3,738 Particulars P Q R Particulars P Q R To Q s capital 4,000 By balance b/d 46,000 To Q s Loan A/c To 26,546 By revaluation Profit By P s capital 819 546 273 To balance c/d 34,819 16,273 By R s capital 4,000 46,819 46,546 20,273 46,819 46,546 20,273 Balance Sheet As on 31.03. 2008
206 Accounts XII Liabilities Rs. Assets Rs. Creditors Bills Payable Outstanding salary provision for legal claims P s capital R s capital Q s Loan A/c 16. Journal Entries 27,000 2,200 7,200 34,819 16,273 Bank (27,600 26,546) Debtors 6,000 Less: Provision for doubtful debts 3,00 Stock Furniture Premises 1,054 5,700 8,100 5,800 98,838 1,19,492 1,19,492 (2+3+3) Date Particulars L.F. Rs.() Rs.(Cr.) 13,00,000 To Share application A/c 13,00,000 (Being share application money received on 2,60,000 shares) Share Application A/c 13,00,000 To Share Capital To Securities premium A/c To Share Allotment To Bank 4,00,000 6,00,000 2,00,000 1,00,000 (Being application money transferred) Share Allotment A/c To share capital A/c (Being allotment due on 2,00,000 shares ) 6,00,000 To share allotment A/c 6,00,000 (Being allotment money received) Share First & final call A/c To share capital A/c (Being share first call due) 7,92,000 Calls in arrears A/c To share first & final call (Being call money received ) Share capital A/c To Share forfeiture A/c To Calls in arrears A/c (Being shares forfeited) To Share capital A/c To securities premium 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) 2 (1 x8 = 8)
TOPPER Sample Papers 207 Journal Entries OR Date Particulars L.F. Rs.() Rs.(Cr.) 60,0000 To Share application A/c 60,0000 (Being share application money received on shares) Share Application A/c 60,0000 To Share Capital 60,0000 (Being application money transferred) Share Allotment A/c 2,00,000 Discount on shares A/c 2,00,000 To share capital A/c 4,00,000 (Being allotment due on shares ) 2,00,000 To share allotment A/c 2,00,000 (Being allotment money received) Share First & final call A/c 10,00,000 To share capital A/c 10,00,000 (Being share first call due) 9,85,000 Calls in arrears A/c 15,000 To share first & final call 10,00,000 (Being call money received ) Share capital A/c To Share forfeiture A/c To Calls in arrears A/c To Discount on shares A/c 15,000 3,000 (Being shares forfeited) 17,000 Discount on shares A/c 2,000 Share forfeited A/c 1,000 To Share capital A/c (Being shares reissued) Share forfeited A/c 7,000 To Capital Reserve A/c 7,000 ( Being share forfeited A/c transferred to capital reserve A/c) Calculation of capital reserve = x 400/600 1,000 = 7,000 (1 x 8 = 8) PART B 17. Figures contained in financial statements do not show the affects of changes in the price level. As a result misleading picture may be obtained by making a comparison of figures of past year with current year figures. (1) 18. Financing Activity (1)
208 Accounts XII 19. (i) No change (ii) Ratio will improve (1/2 x 2) 20. (i) Claim against the company not acknowledged as debt (ii) Uncalled liability on shares partly paid (iii) Arrears of fixed cumulative dividend 21. Comparative Income Statement Particulars 2007(Rs.) 2008(Rs.) Absolute change Percentage Sales Less: Cost of goods sold Gross profit Less: Indirect expenses Net profit before tax Less: Tax payable 15,00,000 10,00,000 5,00,000 25,000 4,75,000 2,37,500 16,00,000 80,000 7, 3,60,000 1,00,000 (2,00,000) 3,00,000 55,000 2,45,000 1,2 (1x3) 6.66 20 60 220 51.5 51.5 Net profit after tax 2,37,500 3,60,000 1,2 51.5 (1x4) 22. (i) Liquid ratio = Liquid assets/current liabilities = 1,50,000 10,000 / 1,05,000 = 1.3 : 1 (ii) Proprietary ratio = Share holders fund / Total assets = 2,75,000+2,00,000 / 2,75,000+2,00,000+1,05,000 = 4,75,000 / 5,80,000 = 0.81 : 1 (iii) Operating Ratio = Cost of goods sold + operating expenses / Net sales x 100 = 1,+80,000+ / 3, x 100 = 2, / 3, x 100 = 70.5% (2+2) 23. (a) Cash flow from financing activities Particulars Issue of Equity share capital ( with securities premium) Redemption of debentures Interest paid on debentures Amount 1,10,000 (50,000) (15,000) Cash flow from financing activities 45,000 (b) Provision for Tax A/c Particulars Rs. Particulars Rs. To cash To balance c/d 24,000 By balance b/d By P & L A/c 34,000 54,000 54,000 Net profit during the year = Add: Tax made during the year = 34,000 N/P before tax = 74,000 (3+3)