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# Board Paper of Class 12-Commerce 2017 Accountancy All India(SET 3) - Solutions

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-Option-I Analysis of Financial Statements and Option-II Computerized 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 17 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 4 marks.​

(v) Question No. 23 carries 6 marks.​

• Question 1
P and Q were partners in a firm sharing profits and losses equally. Their fixed capitals were Rs 2,00,000 and Rs 3,00,000 respectively. The partnership deed provided for interest on capital @ 12% per annum. For the year ended 31st March, 2016, the profits of the firm were distributed without providing interest on capital.
Pass necessary adjustment entry to rectify the error. VIEW SOLUTION

• Question 2
X Ltd. invited applications for issuing 500, 12% debentures of Rs 100 each at a discount of 5%. These debentures were redeemable after three years at par. Applications for 600 debentures were received. Pro-rata allotment was made to all the applicants.
Pass necessary journal entries for the issue of debentures assuming that the whole amount was payable with application. VIEW SOLUTION

• Question 3
Z Ltd. forfeited 1,000 equity shares of Rs 10 each for the non-payment of the first call of Rs 2 per share. The final call of Rs 3 per share was yet to be made.
Calculate the maximum amount of discount at which these shares can be reissued. VIEW SOLUTION

• Question 4
Durga and Naresh were partners in a firm. They wanted to admit five more members in the firm. List any two categories of individuals other than minors who cannot be admitted by them. VIEW SOLUTION

• Question 5
Distinguish between 'Fixed Capital Account' and 'Fluctuating Capital Account' on the basis of credit balance. VIEW SOLUTION

• Question 6
A and B were partners in a firm sharing profits and losses in the ratio of 5 : 3. They admitted C as a new partner. The new profit sharing ratio between A, B and C was 3 : 2 : 3. A surrendered $\frac{1}{5}\mathrm{th}$ of his share in favour of C. Calculate B's sacrifice. VIEW SOLUTION

• Question 7
Kavi, Ravi, Kumar and Guru were partners in a firm sharing profits in the ratio of 3 : 2: 2: 1. On. 1.2.2017, Guru retired and the new profit sharing ratio decided between Kavi, Ravi and Kumar was 3: 1: 1. On Guru's retirement the goodwill of the firm was valued at Rs 3,60,000.
Showing your working notes clearly, pass necessary journal entry in the books of the firm for the treatment of goodwill on Guru's retirement. VIEW SOLUTION

• Question 8
Disha Ltd. purchased machinery from Nisha Ltd. and paid to Nisha Ltd. as follows:
(i) By issuing 10,000, equity shares of Rs 10 each at a premium of 10%.
(ii) By issuing 200, 9% debentures of Rs 100 each at a discount of 10%.
(iii) Balance by accepting a bill of exchange of Rs 50,000 payable after one month.

Pass necessary journal entries in the books of Disha Ltd. for the purchase of machinery and making payament to Nisha Ltd. VIEW SOLUTION

• Question 9
Ganesh Ltd. is registered with an authorised capital of Rs 10,00,00,000 divided into equity shares of Rs 10 each. Subscribed and fully paid up capital of the company was Rs 6,00,00,000. For providing employment to the local youth and for the development of the tribal areas of Arunachal Pradesh the company decided to set up a hydro power plant there. The company also decided to open skill development centres in Itanagar, Pasighat and Tawang. To meet its new financial requirements, the company decided to issue 1,00,000 equity shares of Rs 10 each and 1,00,000, 9% debentures of Rs 100 each. The debentures were redeemable after five years at par. The issue of shares and debentures was fully subscribed. A shareholder holding 2,000 shares failed to pay the final call of Rs 2 per share.
Show the share capital in the Balance Sheet of the company as per the provisions of Schedule III of the Companies Act, 2013. Also identify any two values that the company wishes to propagate. VIEW SOLUTION

• Question 10
BPL Ltd. converted 500, 9% debentures of Rs 100 each issued at a discount of 6% into equity shares of Rs 100 each issued at a premium of Rs 25 per share. Discount on issue of 9% debentures has not yet been written off.
Showing your working notes clearly, pass necessary journal entries for conversion of 9% debentures into equity shares. VIEW SOLUTION

• Question 11
Madhu and Neha were partners in a firm sharing profits and losses in the ratio of 3 : 5. Their fixed capitals were Rs 4,00,000 and Rs 6,00,000 respectively. On 1.1.2016, Tina was admitted as a new partner for $\frac{1}{4}\mathrm{th}$ share in the profits. Tina acquired her share of profit from Neha. Tina brought Rs 4,00,000 as her capital which was to be kept fixed like the capitals of Madhu and Neha. Calculate the goodwill of the firm on Tina's admission and the new profit sharing ratio of Madhu, Neha and Tina. Also, pass necessary journal entry for the treatment of goodwill on Tina's admisson considering that Tina did not bring her share of goodwill premium in cash. VIEW SOLUTION

• Question 12
Ashok, Babu and Chetan were partners in a firm sharing profits in the ratio of 4 : 3 : 3. The firm closes its books on 31st March every year. On 31st December, 2016 Ashok died. The partnership deed provided that on the death of a partner his executors will be entitled to the following :

(i) Balance in his capital account. On 1.4.2016,  there was a balance of Rs 90,000 in Ashok's Capital Account.

(ii) Interest on capital @ 12% per annum.

(iii) His share in the profits of the firm in the year of his death will be calculated on the basis of rate of net profit on sales of the previous year, which was 25%. The sales of the firm till 30st December, 2016 were Rs 4,00,000.

(iv) His share in the goodwill of the firm. The goodwill of the firm on Ashok's detah was valued at Rs 4,50,000.

The partnership deed also provided for the following deductions from the amount payable to the executor of the deceased partner:

(i) His drawings in the year of his death. Ashok's drawings till 31.12.2016 were Rs 15,000.

(ii) Interest on drawing @ 12% per annum which was calculated as Rs 1,500.

The accountant of the firm prepared Ashok's Capital Account to be presented to the executor of Ashok but in a hurry he left in incomplete. Ashok's Capital Account as prepared by the firm's accountant is given below :  (4)
 Dr. Ashok’s Capital Account Cr. Date Particulars Amount (Rs) Date Particulars Amount (Rs) 2016 2016 Dec 31 …………… 15,000 April 1 …………… 90,000 Dec 31 …………… …………… Dec 31 …………… 8,100 Dec 31 …………… …………… Dec 31 …………… 40,000 Dec 31 …………… 90,000 Dec 31 …………… 90,000 3,18,100 3,18,100

You are required to complete Ashok's Capital Account. VIEW SOLUTION

• Question 13

Kapil, Mohit, Roshan and Rakesh were partners in a firm sharing profits in the ratio of 5 : 2 : 2 : 1. On 1.4.2016 their Balance Sheet was as follows:   (6)

 Balance Sheet of Kapil, Mohit, Roshan and Rakesh as on 1.4.2016 Liabilities Amount (Rs) Assets Amount (Rs) Capitals: Fixed Assets 8,00,000 Kapil 3,50,000 Current Assets 4,00,000 Mohit 3,00,000 Roshan 2,50,000 Rakesh 2,00,000 11,00,000 Sundry Creditors 50,000 Workmen Compensation Reserve 50,000 12,00,000 12,00,000

From the above date the partners decided to share the future profits equally. For this purpose the goodwill of the firm was valued at Rs 72,000. It was also agreed that:

(i) Fixed assets will be depreciated by 10% and the claim against Workmen Compensation Reserve will be estimated at Rs 70,000.

(ii) The capitals of the partners will be adjsuted according to their new profit sharing ratio. For this, Partners' Current Accounts will be opened.

Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet of the reconstituted firm.

VIEW SOLUTION

• Question 14
On 1.4.2015, MKM Ltd. issued 12,000, 11% debentures of Rs 100 each at a discount of 8%, redeemable at a premium of 10% after three years. The company closes its books on 31st March every year. Interest on 11% debentures is payable on 30th September and 31st March every year. The rate of tax deducted at source is 10%.
Pass necessary journal entries for the issue of 11% debentures and debenture interest for the year ended 31.3.2016. VIEW SOLUTION

• Question 15
Pass necessary journal entries on the dissolution of a partnership firm in the following cases:    (6)

(i) Expenses of dissolution Rs 500 were paid by John, a partner.

(ii) Joney, a partner, agreed to bear the dissolution expenses for a commission of Rs 750. Actual dissolution expenses Rs 650 were paid by Joney.

(iii) Bony, a partner, agreed to look after the dissolution work for a remuneration of Rs 3,700. He also agreed to bear the dissolution expenses. Actual dissolution expenses Rs 4,200 were paid by Bony from the firm's cash.

(iv) Sony, a partner, was appointed to look after the dissolution work for a remuneration of Rs 10,000. Sony agreed to bear the dissolution expenses. Sony took away stock worth Rs 10,000 as his remuneration. Stock had already been transferred to realisation account.

(v) Vikky, a partner, agreed to look after the dissolution work for a remuneration of Rs 12,000. Vikky also agreed to bear the dissolution expenses. Actual dissolution expenses Rs 12,500 were paid by another partner, Clive, on behalf of Vikky.

(vi) Dissolution expenses were Rs 5,000. VIEW SOLUTION

• Question 16

C and D are partners in a firm sharing profits in the ratio of 4 : 1. On 31.3.2016, their Balance Sheet was as follows :

 Balance Sheet of C and D as on 31.3.2016 Liabilities Amount (Rs) Assets Amount (Rs) Sundry Creditors 40,000 Cash 24,000 Provision for Bad Debts 4,000 Debtors 36,000 Outstanding Salary 6,000 Stock 40,000 General Reserve 10,000 Furniture 80,000 Plant & Machinery 80,000 Capitals: C 1,20,000 D 80,000 2,00,000 2,60,000 2,60,000

On the above date, E was admitted for $\frac{1}{4}$th share in the profits on the following terms:

(i) E will bring Rs 1,00,000 as his capital and Rs 20,000 for his share of goodwill premium, half of which will be withdrawn by C and D.
(ii) Debtors Rs 2,000 will be written off as bad debts and a provision of 4% will be created on debtors for bad and doubtful debts.
(iii) Stock will be reduced by Rs 2,000, furniture will be depreciated by 4,000 and 10%, depreciation will be charged on plant and machinery.
(iv) Investments Rs 7,000 not shown in the Balance Sheet will be taken into account.
(v) There was an an outstanding repairs bill of Rs 2,300 which will be recorded in the books.

Pass necessary journal entries for the above transactions in the books of the firm on E’s admission.

OR

Sameer, Yasmin and Saloni were partners in a firm sharing profits and losses in the ratio of 4 : 3 : 3. On 31.3.2016, their Balance Sheet was as follows:
 Balance Sheet of Sameer, Yasmin and Saloni as on 31.3.2016 Liabilities Amount (Rs) Assets Amount (Rs) Creditors 1,10,000 Cash 80,000 General Reserve 60,000 Debtors 90,000 Capitals: Less: Provision 10,000 80,000 Sameer 3,00,000 Stock 1,00,000 Yasmin 2,50,000 Machinery 3,00,000 Saloni 1,50,000 7,00,000 Building 2,00,000 Patents 60,000 Profit & Loss A/c 50,000 8,70,000 8,70,000

On the above date, Sameer retired and it agreed that :

(i) Debtors of Rs 4,000 will be written off as bad debts and a provision of 5% on debtors for bad and doubtful debts will be maintained.

(ii) An unrecorded creditor of Rs 20,000 will be recorded.

(iii) Patents will be completely written off and 5% depreciation will be charged on stock, machinery and building.

(iv) Yasmin and Saloni will share the future profits in the ratio of 3 : 2.

(v) Goodwill of the firm on Sameer’s retirement was valued at Rs 5,40,000.

Pass necessary journal entries for the above transactions in the books of the firm on Sameer’s retirement.

VIEW SOLUTION

• Question 17
VXN Ltd. invited applications for issuing 50,000 equity shares of Rs 10 each at a premium of Rs 8 per share. The amount was payable as follows:
On Application Rs 4 per share (including Rs 2 premium).
On Allotment Rs 6 per share (including Rs 3 premium).
On First Call Rs 5 per share (including Rs 1 premium).
On Second and Final Call – Balance Amount.

The issue was fully subscribed. Gopal, a shareholder holding 200 shares, did not pay the allotment money and Madhav, a holder of 400 shares, paid his entire share money along with the allotment money. Gopal's shares were immediately forfeited after allotment. Afterwards, the first call was made. Krishna, a holder of 100 shares, failed to pay the first call money and Girdhar, a holder of 300 shares, paid the second call money also along with the first call. Krishna's shares were forfeited immediately after the first call. Second and final call was made afterwards and was duly received. All the forfeited shares were reissued at Rs 9 per share fully paid up.
Pass necessary Journal Entries for the above transactions in the books of the company.

OR

JJK Ltd. invited applications for issuing 50,000 equity shares of Rs 10 each at par. The amount was payable as follows:
On Application : Rs 2 per share.
On Allotment : Rs 4 per share.
On First and Final Call : Balance Amount

The issue was over-subscribed three times. Applications for 30% shares were rejected and money refunded. Allotment was made to the remaining applicants as follows:
 Category No. of Shares Applied No. of Shares Allotted I 80,000 40,000 II 25,000 10,000

Excess money paid by the applicants who were allotted shares was adjusted towards the sums due on allotment.
Deepak, a shareholder belonging to Category I, who had applied for 1,000 shares, failed to pay the allotment money. Raju, a shareholder holding 100 shares, also failed to pay the allotment money. Raju belonged to Category II. Shares of both Deepak and Raju were forfeited immediately after allotment. Afterwards, first and final call was made and was duly received. The forfeited shares of Deepak and Raju were reissued at Rs 11 per share fully paid up.

Pass necessary Journal entries for the above transactions in the books of the company. VIEW SOLUTION

• Question 18
What is meant by 'Cash Flow Statement'?    (1) VIEW SOLUTION

• Question 19
Will 'Net decrease in working capital' other than cash and cash equivalents, increase, decrease or not change Cash Flow from Operating Activities? Give reason in support of your answer.        (1) VIEW SOLUTION

• Question 20
State any four limitations of 'Analysis of Financial Statements'.     (4) VIEW SOLUTION

• Question 21
The proprietary ratio of M. Ltd. is 0.80 : 1.     (4)
State with reasons whether the following transactions will increase, decrease or not change the proprietary ratio:
(i) Obtained a loan from bank Rs 2,00,000 payable after five years.
(ii) Purchased machinery for cash Rs 75,000.
(iii) Redeemed 5% redeemable preference shares Rs 1,00,000.
(iv) Issued equity shares to the vendors of machinery purchased for Rs 4,00,000. VIEW SOLUTION

• Question 22
Financial statements are prepared following the consistent accounting concepts, principles, procedures and also the legal environment in which the business organisations operate. These statements are the sources of information on the basis of which conclusions are drawn about the profitability and financial position of a company so that their users can easily understand and use them in their economic decisions in a meaningful way.

From the above statement identify any two values that a company should observe while preparing its financial statements. Also, state under which major headings and sub-headings the following items will be presented in the Balance Sheet of a company as per Schedule III of the Companies Act, 2013.    (4)
(i) Capital Reserve
(iii) Loose Tools
(iv) Bank Overdraft VIEW SOLUTION

• Question 23
From the following Balance Sheet of SRS Ltd. and the additional information as on 31.3.2016, prepare a Cash Flow Statement :

 Balance Sheet of SRS Ltd. as on 31.3.2016 Particulars Note No. 31.03.2016 (Rs) 31.03.2015 (Rs) I. Equity and Liabilities : 1. Shareholder's Funds : (a) Share Capital 4,50,000 3,50,000 (b) Reserves and Surplus 1 1,25,000 50,000 2. Non-Current Liabilities : Long-term Borrowings 2 2,25,000 1,75,000 3. Current Liabilities : (a) Short-term Borrowings 3 75,000 37,500 (b) Short-term Provisions 4 1,00,000 62,500 Total 9,75,000 6,75,000 II. Assets : 1. Non-Current Assets : (a) Fixed Assets : (i) Tangible 5 7,32,500 4,52,500 (ii) Intangible 6 50,000 75,000 (b) Non-Current Investments 75,000 50,000 2. Current Assets : (a) Current Investments 20,000 35,000 (b) Inventories 7 61,000 36,000 (c) Cash and Cash Equivalents 36,500 26,500 Total 9,75,000 6,75,000

 Notes to Ac counts Note No. Particulars 31.03.2016 (Rs) 31.03.2015 (Rs) 1. Reserves and Surplus (Surplus i.e., Balance in the Statement of Profit and Loss) 1,25,000 50,000 1,25,000 50,000 2. Long-term Borrowings 12% Debentures 2,25,000 1,75,000 2,25,000 1,75,000 3. Short-term Borrowings Bank Overdraft 75,000 37,500 75,000 37,500 4. Short-term Provisions Proposed Dividend 1,00,000 62,500 1,00,000 62,500 5. Tangible Assets Machinery 8,37,500 5,22,500 Accumulated Depreciation (1,05,000) (70,000) 7,32,500 4,52,500 6. Intangible Assets Goodwill 50,000 75,000 50,000 75,000 7. Inventories Stock in Trade 61,000 36,000 61,000 36,000

(i) Rs 50,000, 12% debentures were issued on 31.3.2016.

(ii)  During the year a piece of machinery costing Rs 40,000 on which accumulated depreciation was Rs 20,000, was sold at a loss of Rs 5,000.

VIEW SOLUTION
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