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4 acc cbse_2011-12_12th_15-03-12 4 acc cbse_2011-12_12th_15-03-12 Document Transcript

  • Studymate Solutions to CBSE Board Examination 2010-2011 Series : SMA/1 Code No. 67/1/1 Candidates must write the Code onRoll No. the title page of the answer-book.  Code number given on the right hand side of the question paper should be written on the title page of the answer-book by the candidate.  Please check that this question paper contains 23 questions.  Please write down the Serial Number of the questions before attempting it.  15 minutes time has been allotted to read this question paper. The question paper will be distributed at 10.15 a.m. From 10.15 a.m. to 10.30 a.m., the student will read the question paper only and will not write any answer on the answer script during this period. ACCOUNTANCY[Time allowed : 3 hours] [Maximum marks : 80]General Instructuions:(i) This question paper contains three parts A, B and C.(ii) Part A is compulsory for all candidates.(iii) Candidates can attempt only one part of the remaining parts B and C.(iv) All parts of the questions should be attempted at one place. 1 P.T.O.
  • STUDYmate Accountancy Class XII PART-A (Accounting for Not for Profit Organisations, Partnership Firms and Companies)1. Name the financial statement prepared by a Not-For-Profit Organisation on accrual basis. [1]Ans. Income and Expenditure A/c2. State the provisions of Indian Partnership Act regarding the payment of remuneration to a partner for the services rendered. [1]Ans. If deed is present, as per the deed. If deed is absent, no remuneration to any partner.3. For which share of Goodwill a partner is entitled at the time of his retirement? [1]Ans. The retiring partner is entitled to his share of goodwill valued at the time of retirement.4. State any two occasions on which a firm can be reconstituted. [1]Ans. Any two of the following: (a) Change in profit sharing ratio among existing partners. (b) Admission of a partner (c) Retirement of a partner (d) Death of a partner5. Give any one advantage for the redemption of debentures by purchase in the open market? [1]Ans. Any one of the following: (a) Reduction in Principal liability. (b) Reduction in interest burden. (c) Saving equal to amount of discount. (d) Saving equal to premium payable on redemption.6. From the following information, calculate the amount of income from subscriptions to be shown in the Income and Expenditure Account for the year ended 31-3-2011: [3] Subscriptions received during the year 2010-2011 ` 3,40,000 Subscriptions outstanding as on 31-3-2011 ` 47,000 Subscriptions received in advance as on 31-3-2011 ` 35,000 Subscriptions outstanding as on 1-4-2010 ` 28,000 Subscriptions received in advance as on 1-4-2010 ` 25,000Ans. Statement showing Calculation of Subscription for the year 2010-11. Particulars ` Subscription received during the year 3,40,000 Less: Subscription outstanding as on 1-4-2010 (28,000) Add: Subscription outstanding as on 31-3-2011 47,000 Less: Subscription in advance as on 31-3-2011 (35,000) Add: Subscription in advance as on 1-4-2010 25,000 Subscription for the year 2010-11 3,49,000 2 P.T.O.
  • STUDYmate Accountancy Class XII Income & Expenditure A/c (Extract) For the year ended 31-3-2011 Expenditures ` Incomes ` By Subscription 3,49,0007. Jain Ltd. purchased Building for ` 10,00,000 from Gupta Ltd. 10% of the payable amount was paid by a cheque drawn in favour of Gupta Ltd. The balance was paid by issue of Equity Shares of ` 10 each at a discount of 10%. [3]Ans. In the books of Jain Ltd. Journal Date Particulars LF Debit (`) Credit (`) Building A/c Dr. 10,00,000 To Gupta Ltd. A/c 10,00,000 (Being Building Purchased from Gupta Ltd.) Gupta Ltd. A/c Dr. 1,00,000 To Bank A/c 1,00,000 (Being 10% payment made by cheque) Gupta Ltd. A/c Dr. 9,00,000 Discount on issue of shares A/c Dr. 1,00,000 To Equity shares A/c 10,00,000 (Being 1,00,000 shares issued at a discount of 10%) Working Notes: Calculation of Number of Equity shares: 9,00,000 = 1,00,000 shares 10  18. Narain Laxmi Ltd. invited applications for issuing 7,500, 12% Debentures of ` 100 each at a premium of ` 35 per Debenture. The full amount was payable on application. Applications were received for 10,000 Debentures. Applications for 2500 Debentures were rejected and the application money was refunded. Debentures were allotted to the remaining applicants. Pass necessary Journal Entries for the above transactions in the books of Narain Laxmi Ltd. [3] 3 P.T.O.
  • STUDYmate Accountancy Class XIIAns. In the books of Narain Laxmi Ltd. Journal Date Particulars LF Debit (`) Credit (`) Bank A/c Dr. 13,50,000 To Debenture Application A/c 13,50,000 (Being application amount received on 10,000 debentures with Securities Premium) Debenture Application A/c Dr. 13,50,000 To 12% Debentures A/c 7,50,000 To Securities Premium A/c 2,62,500 To Bank A/c 3,37,500 (Being Debentures Allotted to 7500 shares and excess being refunded)9. Arun and Arora were partners in a firm sharing profits in the ratio of 5 : 3. Their fixed capitals on 1-4-2010 were: Arun ` 60,000 and Arora ` 80,000. They agreed to allow interest on capital @ 12% p.a. and to charge on drawings @ 15% p.a. The profit of the firm for the year ended 31-3-2011 before all above adjustments were ` 12,600. The drawings made by Arun were ` 2,000 and by Arora ` 4,000 during the year. Prepare Profit and Loss Appropriation Account of Arun and Arora. Show your calculations clearly. The interest on capital will be allowed even if the firm incurs loss. [4]Ans. Profit & Loss Appropriation A/c Particulars ` Particulars ` To Interest on Capital By Net Profit 12,600 Arun 7,200 By Interest on Drawing A/c Arora 9,600 16,800 Arun   15  2, 000  6  150  100 12   450 Arora   15  4, 000  6  300  100 12   By Loss transferred to Arun’s capital A/c 2344 Arora’s capital A/c 1406 3,750 16,800 16,80010. Arjun, Bhim and Nakul are partners sharing profits & losses in the ratio of 14 : 5 : 6 respectively. Bhim retires and surrenders his 5/25th share in favour of Arjun. The goodwill of the firm is valued at 2 years purchase of super profits based on average profits of last 3 years. The profits for the last 3 years are ` 50,000, ` 55,000 and ` 60,000 respectively. The normal profits for the similar firm are ` 30,000. Goodwill already appears in the books of the firms at ` 75,000. The profit for the first year after Bhim’s retirement was ` 1,00,000. Give the necessary Journal Entries to adjust Goodwill and distribute profits showing your workings. [4] 4 P.T.O.
  • STUDYmate Accountancy Class XIIAns. In the books of _______________ Journal Date Particulars LF Debit (`) Credit (`) Arjun’s Capital A/c Dr. 42,000 Bhim’s Capital A/c Dr. 15,000 Nakul’s Capital A/c Dr. 18,000 To Goodwill A/c 75,000 (Being old goodwill written off in old ratio) Arjun’s Capital A/c Dr. 10,000 To Bhim’s Capital A/c 10,000 (Being share of goodwill adjusted) Profit & Loss A/c Dr. 1,00,000 To Arjun’s Capital A/c 76,000 To Nakul’s Capital A/c 24,000 (Being Profit for Ist year after retirement distributed in new ratio) Working Note: Normal Profit = ` 30,000 50,000  55,000  60,000 Average Profit = = ` 55,000 3 Super Profit = ` 55,000 – ` 30,000 = ` 25,000 Goodwill = 2 × 25,000 = 50,000 5 Bhim’s share =  50,000 = 10,000 25 New Ratio among Arjun and Nakul. 14 5 19 Bhim’s share taken by Arjun only, i.e.   25 25 25 6 Nakul = 25 New Ratio = 19 : 6.11. Shakti Ltd. decided to redeem its 750, 12% Debentures of ` 100 each. The company purchased 500 Debentures at ` 94 per Debenture from the open market. The remaining debentures were redeemed out of profits. The company had already made a provision for Debenture Redemption Reserve in its books. Pass necessary Journal Entries in the books of the company for the above transactions. [4] 5 P.T.O.
  • STUDYmate Accountancy Class XIIAns. In the books of Shakti Ltd. Journal Date Particulars LF Debit (`) Credit (`) Own Debentures A/c Dr. 47,000 To Bank 47,000 (Being 500 own debentures purchased from open market) 12% Debentures A/c Dr. 50,000 To Own Debentures A/c 47,000 To Profit on redemption of deb. A/c 3,000 (Being debentures redeemed) 12% Debentures A/c Dr. 25,000 To Debenture-holder’s A/c 25,000 (Being 250 debentures redeemed and amount made due to debenture holders) Debenture-holder’s A/c Dr. 25,000 To Bank A/c 25,000 (Being payment made to debenture-holder) Profit on redemption of Debenture A/cDr. 3,000 To Capital Reserve A/c 3,000 (Being Profit on redemption transferred to capital reserve)12. Pass necessary Journal Entries for the following transactions in the books of Sudarshan Ltd. (i) Redeemed 750, 12% Debentures of ` 75 each by converting into Equity Shares of ` 100 each. The Equity Shares were issued at a discount of 10%. (ii) Converted 550, 12% Debentures of ` 1,000 each into New 13% Debentures of ` 100 each. The New Debentures were issued at premium of 10%. [6]Ans. In the books of Sudarshan Ltd. Journal Date Particulars LF Debit (`) Credit (`) A. (i) 12% Debentures A/c Dr. 56,250 To Debenture-holders A/c 56,250 (Being 750 debentures of ` 75 each redeemed and payment made due to debenture-holders) (ii) Debenture-holders A/c Dr. 56,250 Discount on issue of shares A/c Dr. 6,250 To Equity share capital A/c 62,500 (Being 625 equity shares issued at a discount of 10%) 6 P.T.O.
  • STUDYmate Accountancy Class XII B. (i) 12% Debentures A/c Dr. 5,50,000 To Debenture-holder’s A/c 5,50,000 (Being 550 debentures of ` 1,000 each redeemed and payment made due to debenture-holders) (ii) Debenture-holder’s A/c Dr. 5,50,000 To 13% Debentures A/c 5,00,000 To Securities Premium A/c 50,000 (Being 50,000 13% debentures issued at a premium of 10%) Working Notes: 56,250 (i) = 625 shares 100  10 5,50,000 (ii) = 50,000 13% debentures 11013. Verma and Sharma were partners sharing profits in the ration of 3 : 1. On 31-3-2011 their Balance Sheet was as follows: Balance Sheet of Verma and Sharma as on 31-3-2011 Liabilities ` Assets ` Capitals: Land and Building 70,000 Verma 1,20,000 Machinery 60,000 Sharma 80,000 2,00,000 Debtors 80,000 Creditors 70,000 Bank 60,000 2,70,000 2,70,000 The firm was dissolved on 1-4-2011 and the Assets and Liabilities were settled as follows: (i) Creditors of ` 50,000 took over Land and Building in full settlement of their claim. (ii) Remaining Creditors were paid in cash. (iii) Machinery was sold at a depreciation of 30%. (iv) Debtors were collected at a cost of ` 500. (v) Expenses of realization were ` 1,700. Pass necessary Journal Entries for dissolution of the firm. [6]Ans. In the books of Verma and Sharma Journal Date Particulars LF Debit (`) Credit (`) (i) Realisation A/c Dr. 2,10,000 To Land & Building A/c 70,000 To Machinery A/c 60,000 To Debtors A/c 80,000 7 P.T.O.
  • STUDYmate Accountancy Class XII (Being Assets transferred to Realisation A/c) (ii) Creditors A/c Dr. 70,000 To Realisation A/c 70,000 (Being Creditors transferred to Realisation A/c) (iii) No entry for Land and Building taken over creditors. (iv) Realisation A/c Dr. 20,000 To Bank A/c 20,000 (Being payment of creditors) (v) Bank A/c Dr. 42,000 To Realisation A/c 42,000 (Being machine sold at depreciation of 30%) (vi) Bank A/c Dr. 79,500 To Realisation A/c 79,500 (Being debtors collected at a cost of 500, i.e., 80,000 – 500) (vii) Realisation A/c Dr. 1,700 To Bank A/c 1,700 (Being payment of realisation expenses) (viii) Verma’s Capital A/c Dr. 30,150 Sharma’s Capital A/c Dr. 10,050 To Realisation A/c 40,200 (Being distribution of loss on realisation) (ix) Verma’s Capital A/c Dr. 89,850 To Bank A/c 89,850 (Being Verma’s Capital A/c settled) (x) Sharma’s Capital A/c Dr. 69,950 To Bank A/c 69,950 (Being Sharma’s capital A/c settled) Working Note: Partners Capital A/c’s Dr. Cr. Particular Verma Sharma Particular Verma Sharma To Realisation A/c 30,150 10,050 By bal. b/d 1,20,000 80,000 To Bank 89,850 69,950 1,20,000 80,000 1,20,000 80,000 8 P.T.O.
  • STUDYmate Accountancy Class XII14. From the following ‘Receipt and Payment’ of ‘Green Delhi Club’ for the year ended 31- 3-2011. Prepare ‘Income and Expenditure Account’. Receipts and Payments Account of ‘Green Delhi Club’ for the year ended 31-3-2011 Receipts ` Payments ` To Balance b/d 13,200 By Salary (paid for 11 To Subscriptions 25,500 months) 2,200 To Entrance Free 2,000 By Rent 800 To Donations (includes ` 1,000 By Electricity 3,500 for buildings) 3,000 By Taxes 2,600 To Hall rent 2,500 By Printing & stationary 800 To Sale of investments (Book To Books 10,000 value ` 4,000) 3,500 By 9% Fixed deposits (on 31-1-2011) 13,000 By Balance c/d 16,800 49,700 49,700Ans. Income and Expenditure A/c For the Year ending 31st March 2011 Dr. Cr. Expenditure Amount Incomes Amount (`) (`) To Salary 2,200 By Subscriptions 25,500 (+) O/s salary 200 2,400 By Entrance Fees 2,000 To Rent 800 By Donations 2,000 To Electricity 3,500 By Hall Rent 2,500 To Taxes 2,600 By Accrued Interest on To Printing & Stationery 800 investment 195 To Loss on sale of Investments 500 To Surplus 21,595 32,195 32,19515. ‘B’ and ‘C’ were partners sharing profits in the ratio of 3 : 2. Their Balance Sheet as on 31-3-2011 was as follows: Balance Sheet of Band C as on 31-3-2011 Liabilities Amount Assets Amount Capitals: Land and Building 80,000 ‘B’ 60,000 Machinery 20,000 ‘C’ 40,000 1,00,000 Furniture 10,000 Provision for bad debts 1,000 Debtors 25,000 Creditors 60,000 Cash 16,000 Profit and Loss Account 10,000 1,61,000 1,61,000 9 P.T.O.
  • STUDYmate Accountancy Class XII ‘D’ was admitted to the partnership for l/5th share in the profits on the following terms: (i) The new profit sharing ratio was decided as 2 : 2 : 1. (ii) D will bring ` 30,000 as his capital and ` 15,000 for his share of goodwill. (iii) Half of goodwill amount was withdrawn by the partner who sacrificed his share of profit in favour of ‘D’. (iv) A provision of 5% for bad and doubtful debts was to be maintained. (v) An item of, ` 500 included in Sundry Creditors was not likely to be paid; (vi) A provision of ` 800 was to be made for claims for damages’ against the firm. After making the above adjustments the Capital Accounts of ‘B’ and ‘C’ were to be adjusted on the basis of D’s Capital. Actual cash was to be brought in or to be paid off as the case may be. Prepare Revaluation Account, Partner’s Capital Accounts and Balance Sheet of the new firm. OR ‘G’, ‘E’ and ‘F’ were partners in a firm sharing profits in the ratio of 7 : 2 : 1. The Balance Sheet of the firm as on 31st March, 2011 was as follows: Balance Sheet of ‘G’, ‘E’ and ‘F’ as on 31st March, 2011 Amount Amount Liabilities Assets ` ` Capitals: Goodwill 40,000 ‘G’ 70,000 Land & Buildings 60,000 ‘E’ 20,000 Machinery 40,000 ‘F’ 10,000 1,00,000 Stock 7,000 General Reserve 20,000 Debtors 12,000 Loan from ‘E’ 30,000 Cash 5,000 Creditors 14,000 1,64,000 1,64,000 ‘E’ died on 24th August 2011. Partnership deed provides for the settlement of claims on the death of a partner in addition to his capital as under: (i) The share of profit of deceased partner to be computed upto the date of death on the basis of average profits of the past three years which was ` 80,000. (ii) His share in profit/loss on revaluation of assets and re-assessment of liabilities which were as follows: Land and Buildings were revalued ·at ` 94,000, Machinery at ` 38,000 and Stock at ` 5,000. A provision of 2½ % was to be created on debtors for bad and (iii) The net amount payable to ‘E’s executors was transferred to his Loan Account, to be paid later on. Prepare Revaluation Account, Partner’s Capital Accounts E’s Executor A/c. and Balance Sheet of ‘G’ and ‘F’ who decided to continue the business keeping their capital balances in their new profit sharing ratio. Any surplus or deficit to be transferred to current accounts of the partners. 10 P.T.O.
  • STUDYmate Accountancy Class XIIAns. Revaluation A/c Dr. Cr. Particular Amount Particular Amount (`) (`) To Provision for Bad Debts 250 By Creditors 500 To Claim for damages 800 By Loss on Revaluation B 330 C 220 550 1,050 1,050 Partners Capital A/c’s Dr. Cr. Particular B C D Particular B C D To P & L A/c 6,000 4,000 By bal. b/d 60,000 40,000 To Revaluation A/c 330 220 By Cash A/c 30,000 To Cash A/c 7,500 By Premium A/c 15,000 To Cash A/c 1,170 By Cash A/c 24,220 To Bal. c/d 60,000 60,000 30,000 75,000 64,220 30,000 75,000 64,220 30,000 Balance sheet of B, C & D as on 01.04.2011 Liabilities Amount (`) Assets Amount (`) Capital A/c’s Land & Buildings 80,000 B 60,000 Machinery 20,000 C 60,000 Furniture 10,000 D 30,000 1,50,000 Debtors 25,000 Creditors 59,500 (–) Provision 1,250 23,750 Claim for damages 800 Cash (16,000 + 30,000 + 15,000 + 24,220 – 7,500 – 1,170) 76,550 2,10,300 2,10,300 D’s share of capital = ` 30,000 1 D’s share in profit = 5 5 Capital of the new firm = ` 30,000 × = ` 1,50,000 1 2 B’s share = ` 1,50,000 × = ` 60,000 5 2 C’s share = ` 1,50,000 × = ` 60,000 5 OR 11 P.T.O.
  • STUDYmate Accountancy Class XIIAns. Revaluation A/c Dr. Cr. Particulars Amount Particulars Amount (`) (`) To Machinery 2,000 By Land & Buildings 34,000 To Stock 2,000 To Provision for Bad Debts 300 To Profit on Revaluation G 20,790 E 5,940 F 2,970 29,700 34,000 34,000 Partners Capital A/c’sDr. Cr. Particular G E F Particular G E FTo Goodwill 28,000 8,000 4,000 By bal. b/d 70,000 20,000 10,000To E’s Executors - 58,340 - By Gen. Reserve 14,000 4,000 2,000To Balance c/d 1,27,837.50 - 18,262.50 By Revaluation 20,790 5,940 2,970 By P & L Suspense 6,400  146 2   80, 000     365 10  By E’s Loan A/c 30,000 By Current A/c 51,047.50 – 7,292.50 155,837.50 66,340 22,262.50 155,837.50 66,340 22,262.50 Dr. E’s Executors A/c Cr. Amount Amount Particulars Particulars (`) (`) To E’s Executors Loan A/c 58,340 By E’s Capital A/c 58,340 58,340 58,340 Balance sheet of G & F as on 24th August, 2011 Amount Amount Liabilities Assets (`) (`) Capital A/c’s Land & Buildings 94,000 G 1,27,837.50 Machinery 38,000 F 18,262.50 146,100 Stock 5,000 Creditors 14,000 Debtors 12,000 E’s Executors Loan A/c 58,340 (–) Prov. 300 11,700 Cash 5,000 P & L Suspense A/c 6,400 G’s Current A/c 51,047.50 F’s Current A/c 7,292.50 2,18,440 2,18,440 12 P.T.O.
  • STUDYmate Accountancy Class XII16. Shyam Ltd invited applications for issuing 80,000 Equity Shares of ` 10 each at a premium of ` 40 per share. The amount was payable as follows: On Application ` 35 per share (including ` 30 Premium) On Allotment ` 8 per share (including ` 4 Premium) On First and Final Call – Balance Applications for 77,000 shares were received. Shares were allotted to all the applicants. Sundram to whom 7,000 shares were allotted failed to pay the allotment money. His shares were forfeited immediately after allotment. Afterwards the first and final call was made. Sat yam the holder of 500 shares failed to pay the first and final call. His shares were also forfeited. Out of the forfeited shares 1,000 shares were re- issued at ` 50 per share fully paid up. The re-issued shares included all the shares of Satyam. OR Jain Ltd. invited applications for issuing 35,000 Equity Shares of ` 10 each at a discount of 10%. The amount was payable as follows: On Application ` 5 per share. On Allotment ` 3 per share. On First and Final Call – Balance. Applications’ for 50,000 shares were received. Applications for 8,000 shares were rejected and the application money of these applicants was refunded. Shares were allotted on pro-rata basis to the remaining applicants and the excess money received with applications from these applicants was adjusted towards sums due on allotment. Jeevan who had applied for 600 share’s failed to pay allotment and first and final call money. Naveen the holder of 400 shares failed to pay first and final call money. Shares of Jeevan and Naveen were forfeited. Of the forfeited 800 shares were, re-issued at ` 15 per share fully paid up. The re-issued shares included all the shares of Naveen.Ans. In the Books of Shyam Ltd. Journal Date Particulars LF Debit Credit Bank A/c Dr. 26,95,000 To Share Application A/c 26,95,000 (For share application money received) Share Application A/c Dr. 26,95,000 To Share Capital A/c 3,85,000 To Securities Premium A/c 23,10,000 (For Application money adjusted) Share Allotment A/c Dr. 6,16,000 To Share Capital A/c 3,08,000 To Securities Premium A/c 3,08,000 (For allotment money made due) Bank A/c Dr. 5,60,000 To Share Allotment A/c 5,60,000 (For allotment money received) Share Capital A/c Dr. 63,000 Securities Premium A/c Dr. 28,000 To Share Allotment A/c 56,000 To Share Forfeiture A/c 35,000 (Being 7000 shares forfeited) 13 P.T.O.
  • STUDYmate Accountancy Class XII Share First & Final Call A/c Dr. 4,90,000 To Share Capital A/c 70,000 To Securities Premium A/c 4,20,000 (For first & final call made due) Bank A/c Dr. 4,86,500 To Share First & Final Call A/c 4,86,500 (For first & final call money received) Share Capital A/c Dr. 5,000 Securities Premium A/c Dr. 3,000 To Share First & Final Call A/c 3,500 To Share Forfeiture A/c 4,500 (For 500 shares forfeited) Bank A/c Dr. 50,000 To Share Capital A/c 10,000 To Securities Premium A/c 40,000 (For 1000 Shares re-issued) Share Forfeiture A/c Dr. 7,000 To Capital Reserve A/c 7,000 (For amount of share forfeiture transferred to capital reserve) ORAns. In the Books of Jain’s Ltd. Journal Date Particulars LF Debit Credit Bank A/c Dr. 2,50,000 To Share Application A/c 2,50,000 (For share application money received) Share Application A/c Dr. 2,50,000 To Share Capital A/c 1,75,000 To Share Allotment A/c 35,000 To Bank A/c 40,000 (For Application money adjusted) Share Allotment A/c Dr. 1,05,000 Discount on issue of Shares A/c 35,000 To Share Capital A/c 1,40,000 (For allotment money made due) Bank A/c Dr. 69,000 To Share Allotment A/c 69,000 (For allotment money received) Share First & Final Call A/c Dr. 35,000 To Share Capital A/c 35,000 (For first & final call made due) Bank A/c Dr. 34,100 14 P.T.O.
  • STUDYmate Accountancy Class XII To Share First & Final Call A/c 34,100 (For first & final call money received) Share Capital A/c Dr. 9,000 To Discount on issue of Share A/c 900 To Share Allotment A/c 1,000 To Share First & Final Call A/c 900 To Share Forfeiture A/c 6,200 (Being 900 shares forfeited) Bank A/c Dr. 12,000 To Share Capital A/c 8,000 To Securities Premium A/c 4,000 (For 800 Shares reissued) Share Forfeiture A/c Dr. 5,600 To Capital Reserve A/c 5,600 (For amount of share forfeiture transferred to capital reserve) Part B (Financial Statements Analysis)17. State the significance of Analysis of Financial Statements to the ‘Lenders’.Ans. To know the long term solvency of the enterprise.18. State the purpose of preparing a ‘Cash Flow Statement’.Ans. To ascertain the specific inflows/outflows (i.e. operating, investing or financing activities) from which cash and cash equivalents are generated or used by the enterprise.19. While preparing Cash Flow Statement what type of activity is, ‘Payment of cash to acquire Debentures by an Investment company’?Ans. Operating activities.20. O.M. Ltd. Has a Current Ratio of 3.5 : 1 and Quick Ratio of 2 : 1. If the excess of Current Assets over Quick Assets as represented by Stock is ` 1,50,000, calculate Current Assets and Current Liabilities.Ans. Current ratio = 3.5 : 1 15 P.T.O.
  • STUDYmate Accountancy Class XII Current Assets 3.5   Current Liabilities 1  Current Assets = 3.5 Current Liabilities …(i) Quick Ratio = 2 :1 Quick Assets 2   Current Liabilities 1  Quick Assets = 2 Current Liabilities.  Current Assets – Stock = 2 Current Liabilities [ Quick Assets=Current Assets- stock] From equation (i) , we get 3.5 Current Liabilities – 1,50,000 = 2 Current Liabilities = 3.5 Current Liabilities – 2 Current Liabilities = 1,50,000 = 1.5 Current Liabilities = 1,50,000 1,50,000 Current Liabilities = = ` 1,00,000 1.5 Current Assets = 3.5 Current Liabilities = 3.5 × 1,00,000 = ` 3,50,00021. From the following information, calculate any two of the following ratios : (a) Debt-Equity Ratio (b) Working Capital Turnover Ratio and (d) Return on Investment Information : Equity Share Capital ` 50,000, General Reserve ` 5,000; Profit and Loss Account after tax and interest ` 15,000; 9% Debentures ` 20,000; Creditors ` 15,000; Land and Building ` 65,000; Equipments ` 15,000; Debtors ` 14,500 and Cash ` 5,500. Discount on issue of shares ` 5,000. Sales for the year ended 31-3-2011 was ` 1,50,000. Tax rate 50%. DebtAns. (a) Debt – Equity Ratio = Equity 9% Debentures = Equity Share Capital  General Reserve  P & L Account  Discount on issue of Shares 16 P.T.O.
  • STUDYmate Accountancy Class XII 20,000   50,000  5,000  15,000  5,000 20,000    65,000   0.38 : 1 times Net Sales (b) Working capital turnover ratio = Net Working Capital 1,50,000  14,500  5,500  15,000 1,50,000  5,000  30 times Net Profit before Interest, Tax and Dividend (c) Return on investment =  100 Capital Employed 15,000  15,000 (tax)  1,800(Interest)  50,000  5,000  15,000  20,000  5,000 31,800    100 85,000  37.41 %22. Following is the Income Statement of Raj Ltd. for the year ended 31-3-2011 : Particulars Amount ` Income : Sales 2,00,000 Other Incomes 15,000 Total Income 2,15,000 Expenses : Cost of goods sold 1,10,000 Opening expenses 5,000 Total Expenses 1,15,000 Tax 40,000 Prepare a common size Income Statement of Raj Ltd. for the year ended 31-3-2011. 17 P.T.O.
  • STUDYmate Accountancy Class XIIAns. Common Size Income Statement for the year ended 31-3-2011. Particulars Year end Percentage change 31-3-2011 Net Sales 20,0000 100% Less Cost of Goods Sold 1,10,000 (55%) Gross Profit 90,000 45% Less Operating Expenses 5,000 (2.5%) Add Other Incomes 15,000 7.5% Net Profit Before Tax 1,00,000 50% Less Tax 40,000 (20%) Profit After Tax 60,000 30%23. From the following Balance Sheets of Sonam Ltd as on 31-03-2010 and 31-3-2011, prepare a Cash Flow Statement: Liabilities 31-3-2010 31-3-2011 31-3-2010 31-3-2011 Assets (`) (`) (`) (`) Equity Share Patents 12,500 11,250 Capital 1,00,000 1,50,000 Building 1,50,000 1,50,000 Profit & Loss Investment — 18,750 Account 25,000 50,000 Debtors 50,000 63,750 Bank Loan 50,000 25,000 Stock 2,500 3,750 Proposed 20,000 15,000 Cash 5,000 21,250 Divided 10,000 17,500 Provision for tax Creditors 15,000 11,250 2,20,000 2,68,750 2,20,000 2,68,750 Additional Information : During the year a Building having book value ` 50,000 was sold at a loss of ` 2,000 and depreciation charged on Building was ` 4,000Ans. Cash Flow Statement for the year ended 31-3-2011 A. Cash Flow from operating activities Net profit as per P & L A/c 25,000 (+) Proposed dividend 15,000 (+) Provision for tax 17,500 Net Profit before extra-ordinary items 57,500 (+) Non-operating/Non-cash items Patents 1,250 18 P.T.O.
  • STUDYmate Accountancy Class XII Depreciation 4,000 Loss on sale of Buildings 2,000 64,750 (–) Non-operating incomes NIL Operating profits before changes in working capital 64,750 (+) Decrease in CA/Increase in CL NIL (–) Increase in CA/Decrease in CL Debtors (13,750) Stock (1,250) Creditors (3,750) 46,000 (–) Tax paid during the year 10,000 Cash flow from operating activities 36,000 B. Cash Flow from investing activities Purchase of Building (54,000) Sale of building 48,000 Purchase of Investments (18,750) Cash used in investing activities (24,750) C. Cash Flow from financing activities Issue of shares 50,000 Repayment of Bank Loan (25,000) Proposed dividend (20,000) Cash flow from financing activities 5,000 Increase in cash and cash equipments 16,250 (+) Opening balance of cash and cash equivalents 5,000 Closing balance of cash and cash equivalents 21,250 Building A/c Particulars ` Particulars ` To Balance b/d 1,50,000 By Depreciation 4,000 To cash A/c (Balance figure) 54,000 By Cash A/c 48,000 By P & L A/c 2,000 By Balance c/d 1,50,000 2,04,000 2,04,000 ***** 19 P.T.O.
  • STUDYmate Accountancy Class XII Studymate Solutions to CBSE Board Examination 2011-2012Series : SMA/1 Code No. 67/1/2 UNCOMMON QUESTION ONLY12. Pass necessary Journal Entries for the following transactions in the books of Jay Ltd. (i) Redeemed 1,500, 9% Debentures of ` 150 each by converting into Equity Shares of ` 10 each. The Equity Shares were issued at a discount of 10%. (ii) Converted 1,100, 8% Debentures of ` 1,000 each into 12% New Debentures of ` 100 each. The New Debentures were issued at premium of 10%. [6]Ans. In the books of Sudarshan Ltd. Journal Date Particulars LF Debit (`) Credit (`) A. (i) 9% Debentures A/c Dr. 2,25,000 To Debenture-holders A/c 2,25,000 (Being 1,500 debentures of ` 150 each redeemed and payment made due to debenture-holders) (ii) Debenture-holders A/c Dr. 2,25,000 Discount on issue of shares A/c Dr. 25,000 To Equity share capital A/c 2,50,000 (Being 25,000 equity shares issued at a discount of 10%) B. (i) 8% Debentures A/c Dr. 11,00,000 To Debenture-holder’s A/c 11,00,000 (Being 1,100 debentures of ` 1,000 each redeemed and payment made due to debenture-holders) (ii) Debenture-holder’s A/c Dr. 11,00,000 To 12% Debentures A/c 10,00,000 To Securities Premium A/c 1,00,000 (Being 1,00,000 12% debentures issued at a premium of 10%) Working Notes: 2,25,000 (i) = 25,000 shares 10  1 11,00,000 (ii) = 1,00,000 12% debentures 110 20 P.T.O.
  • STUDYmate Accountancy Class XII13. Raman and Richa were partners in a firm sharing profits in the ration of 7 : 3. On 31-3-2011 their Balance Sheet of the firm was as follows: Balance Sheet of Raman and Richa as on 31-3-2011 Liabilities ` Assets ` Capitals: Land and Building 7,50,000 Raman 7,00,000 Furniture 1,20,000 Richa 3,00,000 10,00,000 Debtors 1,32,000 Sundry Creditors 1,75,000 Stock 1,03,000 Cash 70,000 11,75,000 11,75,000 The firm was dissolved on 1-4-2011 and the Assets and Liabilities were settled as follows: (i) Land and Building was taken over by Raman at a depreciation of 10% for cash. (ii) Creditors of ` 1,25,000 took over stock and debtors in full settlement of their claim. (iii) Remaining Creditors were paid by Richa. (iv) Furniture realized ` 5,000 less than the book value. (v) Expenses of realization were ` 400. Pass necessary Journal Entries for dissolution of the firm. [6]Ans. In the books of Raman and Richa Journal Date Particulars LF Debit (`) Credit (`) (i) Realisation A/c Dr. 11,05,000 To Land & Building A/c 7,50,000 To Furniture A/c 1,20,000 To Debtors A/c 1,32,000 To Stock A/c 1,03,000 (Being Assets transferred to Realisation A/c) (ii) Creditors A/c Dr. 1,75,000 To Realisation A/c 1,75,000 (Being Creditors transferred to Realisation A/c) (iii) Bank A/c Dr. 6,75,000 To Realisation A/c 6,75000 (Being Land & Building taken by Raman for cash at 10% discount) (iv) No entry for stock and debtors taken over by creditors. (v) Realisation A/c Dr. 50,000 To Richa A/c 50,000 (Being creditors taken by Richa) 21 P.T.O.
  • STUDYmate Accountancy Class XII (v) Bank A/c Dr. 1,15,000 To Realisation A/c 1,15,000 (Being furniture realised) (vii) Realisation A/c Dr. 400 To Bank A/c 400 (Being payment of realisation expenses) (viii) Raman’s Capital A/c Dr. 1,33,280 Richa’s Capital A/c Dr. 57,120 To Realisation A/c 1,90,400 (Being distribution of loss on realisation) (ix) Raman’s Capital A/c Dr. 5,66,720 To Bank A/c 5,66,720 (Being Raman’s Capital A/c settled) (x) Richa’s Capital A/c Dr. 2,92,880 To Bank A/c 2,92,880 (Being Richa’s capital A/c settled) Working Note: Partners Capital A/c’s Dr. Cr. Particular Raman Richa Particular Raman Richa To Realisation A/c 1,33,280 57,120 By bal. b/d 7,00,000 3,00,000 To Bank 5,66,720 2,92,880 By Realisation A/c 50,000 7,00,000 3,50,000 7,00,000 3,50,00014. From the following ‘Receipt and Payment’ of ‘Eco Club’ for the year ended 31-3-2011. Prepare ‘Income and Expenditure Account’. Receipts and Payments Account of ‘Eco Club’ for the year ended 31-3-2011 Receipts ` Payments ` To Balance b/d 5,600 By Salary (paid for 9 To Subscriptions 20,000 months) 18,000 To Entrance Free 3,000 By Rent 2,400 To Donations (includes ` 1,000 By Electricity 700 for buildings) 2,100 By Taxes 400 To Hall rent 2,700 By Printing and To Sale of investments (Book stationary 900 value ` 9,000) 8,500 To Books 5,000 By 9% Fixed deposits (on 31-1-2010) 14,000 By Balance c/d 500 41,900 41,900 22 P.T.O.
  • STUDYmate Accountancy Class XIIAns. Income and Expenditure A/c For the Year ending 31st March 2011 Dr. Cr. Expenditure Amount Incomes Amount (`) (`) To Salary 18,000 By Subscriptions 20,000 (+) O/s salary 6,000 24,000 By Entrance Fees 3,000 To Rent 2,400 By Donations 1,100 To Electricity 700 By Hall Rent 2,700 To Taxes 400 By Accrued Interest on To Printing & Stationery 900 investment 315 To Loss on sale of Investments 500 By Deficit 1,785 28,900 28,900 Part B (Financial Statements Analysis)23. From the following Balance Sheets of J.N. Ltd as on 31-03-2010 and 31-3-2011, prepare a Cash Flow Statement: Liabilities 31-3-2010 31-3-2011 31-3-2010 31-3-2011 Assets (`) (`) (`) (`) Equity Share Patents 75,000 62,500 Capital 6,00,000 9,00,000 Building 9,00,000 9,00,000 Profit & Loss Investment — 1,12,500 Account 1,50,000 3,00,000 Debtors 3,00,000 3,82,500 Bank Loan 3,00,000 1,50,000 Stock 15,000 22,500 Proposed 1,20,000 90,000 Cash 30,000 1,32,500 Divided 60,000 1,05,000 Provision for tax Creditors 90,000 67,500 13,20,000 16,12,500 13,20,000 16,12,500 Additional Information : During the year a Building having book value ` 1,25,000 was sold at a loss of ` 8,000 and depreciation charged on Building was ` 20,000 23 P.T.O.
  • STUDYmate Accountancy Class XIIAns. Cash Flow Statement for the year ended 31-3-2011 A. Cash Flow from operating activities Net profit as per P & L A/c 1,50,000 (+) Proposed dividend 90,000 (+) Provision for tax 1,05,000 Net Profit before extra-ordinary items 3,45,000 (+) Non-operating/Non-cash items Patents 12,500 Depreciation 20,000 Loss on sale of Buildings 8,000 3,85,500 (–) Non-operating incomes NIL Operating profits before changes in working capital 3,85,500 (+) Decrease in CA/Increase in CL NIL (–) Increase in CA/Decrease in CL Debtors (82,500) Stock (7,500) Creditors (22,500) 2,73,000 (–) Tax paid during the year 60,000 Cash flow from operating activities 2,13,000 B. Cash Flow from investing activities Purchase of Building (1,45,000) Sale of building 1,17,000 Purchase of Investments (1,12,500) Cash used in investing activities (1,40,500) C. Cash Flow from financing activities Issue of shares 3,00,000 Repayment of Bank Loan (1,50,000) Proposed dividend (1,20,000) Cash flow from financing activities 30,000 Increase in cash and cash equipments 1,02,500 (+) Opening balance of cash and cash equivalents 30,000 Closing balance of cash and cash equivalents 1,32,500 Building A/c Particulars ` Particulars ` To Balance b/d 9,00,000 By Depreciation 20,000 To cash A/c (Balance figure) 1,45,000 By Cash A/c 1,17,000 By P & L A/c 8,000 By Balance c/d 9,00,000 10,45,000 10,45,000 24 P.T.O.
  • STUDYmate Accountancy Class XII Studymate Solutions to CBSE Board Examination 2011-2012Series : SMA/1 Code No. 67/1/3 UNCOMMON QUESTION ONLY12. Pass necessary Journal Entries for the following transactions in the books of N.R. Ltd.: (i) Redeemed 1,200, 9% Debentures of ` 175 each by converting into New 10% Debentures of ` 100 each issued at a premium of 5%. (ii) Redeemed 19,000, 6% Debentures of ` 50 each by converting them into Equity shares of ` 100 each. The Equity Shares were issued at a discount of 5%. [6]Ans. In the books of Sudarshan Ltd. Journal Date Particulars LF Debit (`) Credit (`) A. (i) 12% Debentures A/c Dr. 2,10,000 To Debenture-holders A/c 2,10,000 (Being 1,200 debentures of ` 175 each redeemed and payment made due to debenture-holders) (ii) Debenture-holder’s A/c Dr. 2,10,000 To 10% Debentures A/c 2,00,000 To Securities Premium A/c 10,000 (Being 2,000 10% debentures issued at a premium of 10%) B. (i) 6% Debentures A/c Dr. 9,50,000 To Debenture-holder’s A/c 9,50,000 (Being 19,000 debentures of ` 50 each redeemed and payment made due to debenture-holders) (ii) Debenture-holders A/c Dr. 9,50,000 Discount on issue of shares A/c Dr. 50,000 To Equity share capital A/c 10,00,000 (Being 10,000 equity shares issued at a discount of 10%) Working Notes: 2,10,000 (i) = 2,000 10% debentures 100  5 9,50,000 (ii) = 10,000 shares 100  5 25 P.T.O.
  • STUDYmate Accountancy Class XII13. A and B were partners in a firm sharing profits in the ration of 3 : 2. On 31-3-2011 their Balance Sheet of the firm was as follows: Balance Sheet of A and B as on 31-3-2011 Liabilities ` Assets ` Capitals: Building 2,40,000 A 3,00,000 Furniture 1,75,000 B 2,00,000 5,00,000 Debtors 80,000 Sundry Creditors 1,17,000 Stock 75,000 Cash 47,000 6,17,000 6,17,000 The firm was dissolved on 1-4-2011 and the Assets and Liabilities were settled as follows: (i) Building was taken over by the creditors as their full and final payment. (ii) Furniture was taken over by B for cash payment at 5% less than the book value. (iii) Debtors were collected by a debt collection agency at a cost of ` 5,000. (iv) Stock realized ` 70,500. (v) ‘B’ agreed to bear all realization expenses. For this service B is paid ` 500. Actual expenses on realization amounted to ` 1,000. Pass necessary Journal Entries for dissolution of the firm. [6]Ans. In the books of A and B Journal Date Particulars LF Debit (`) Credit (`) (i) Realisation A/c Dr. 5,70,000 To Building A/c 2,40,000 To Furniture A/c 1,75,000 To Debtors A/c 80,000 To Stock A/c 75,000 (Being Assets transferred to Realisation A/c) (ii) Creditors A/c Dr. 1,17,000 To Realisation A/c 1,17,000 (Being Creditors transferred to Realisation A/c) (iii) No entry for Building taken over creditors. (iv) Bank A/c Dr. 1,66,200 To Realisation A/c 1,66,200 (Being furniture sold at discount of 5%) (v) Bank A/c Dr. 75,000 To Realisation A/c 75,000 (Being debtors collected at a cost of 5,000, i.e., 80,000 – 5000) 26 P.T.O.
  • STUDYmate Accountancy Class XII (vi) Bank A/c Dr. 70,500 To Realisation A/c 70,500 (Being stock realised) (vii) Realisation A/c Dr. 500 To B’s Capital A/c 500 (Being amount paid to B for realisation purpose) (viii) A’s Capital A/c Dr. 1,75,080 B’s Capital A/c Dr. 1,16,720 To Realisation A/c 2,91,800 (Being distribution of loss on realisation) (ix) A’s Capital A/c Dr. 1,24,920 To Bank A/c 1,24,920 (Being A’s Capital A/c settled) (x) B’s Capital A/c Dr. 83,780 To Bank A/c 83,780 (Being B’s capital A/c settled) Working Note: 1. Partners Capital A/c’s Dr. Cr. Particular A B Particular A B To Realisation A/c 1,75,080 1,16,720 By bal. b/d 3,00,000 2,00,000 To Bank 1,24,920 83,780 By Realisation A/c 500 3,00,000 2,00,500 3,00,000 2,00,500 2. It is assumed that actual expenses of realization are paid by B himself.14. From the following ‘Receipt and Payment’ of ‘New Club’ for the year ended 31-3-2011. Prepare ‘Income and Expenditure Account’. Receipts and Payments Account of ‘New Club’ for the year ended 31-3-2011 Receipts ` Payments ` To Balance b/d 3,400 By Salary (paid for 8 To Subscriptions 21,000 months) 24,000 To Entrance Free 5,750 By Rent 3,000 To Donations (includes ` 1,000 By Electricity 2,750 for buildings) 2,100 By Honorarium 5,000 To Hall rent 7,550 By Books 7,500 To Sale of investments (Book By 9% Fixed deposits (on value ` 16,000) 15,400 31-1-2010) 10,000 By Balance c/d 2,9500 55,200 55,200 27 P.T.O.
  • STUDYmate Accountancy Class XIIAns. Income and Expenditure A/c For the Year ending 31st March 2011 Dr. Cr. Expenditure Amount Incomes Amount (`) (`) To Salary 24,000 By Subscriptions 21,000 (+) O/s salary 12,000 36,000 By Entrance Fees 5,750 To Rent 3,000 By Donations 1,100 To Electricity 2,750 By Hall Rent 7,550 To Honorarium 5,000 By Accrued Interest on To Loss on sale of Investments 600 investment 675 By Deficit 11,275 47,350 47,350 Part B (Financial Statements Analysis)23. From the following Balance Sheets of C.P. Ltd as on 31-03-2010 and 31-3-2011, prepare a Cash Flow Statement: Liabilities 31-3-2010 31-3-2011 31-3-2010 31-3-2011 Assets (`) (`) (`) (`) Share Capital 3,00,000 4,50,000 Patents 37,500 31,250 Profit & Loss Building 4,50,000 4,50,000 Account 75,000 1,50,000 Investment — 56,250 Bank Loan 1,50,000 75,000 Debtors 1,50,00 1,91,250 Proposed Stock 7,500 11,250 Divided 60,000 45,000 Cash 15,000 66,250 Provision for tax 30,000 52,500 Creditors 45,000 33,750 6,60,000 8,06,250 6,60,000 8,06,250 Additional Information : During the year a Building having book value ` 1,50,000 was sold at a loss of ` 6,000 and depreciation charged on Building was ` 16,000 28 P.T.O.
  • STUDYmate Accountancy Class XIIAns. Cash Flow Statement for the year ended 31-3-2011 A. Cash Flow from operating activities Net profit as per P & L A/c 75,000 (+) Proposed dividend 45,000 (+) Provision for tax 52,500 Net Profit before extra-ordinary items 1,72,500 (+) Non-operating/Non-cash items Patents 6,250 Depreciation 16,000 Loss on sale of Buildings 6,000 2,00,750 (–) Non-operating incomes NIL Operating profits before changes in working capital 2,00,750 (+) Decrease in CA/Increase in CL NIL (–) Increase in CA/Decrease in CL Debtors (41,250) Stock (3,750) Creditors (11,250) 1,44,500 (–) Tax paid during the year 30,000 Cash flow from operating activities 1,14,500 B. Cash Flow from investing activities Purchase of Building (1,66,000) Sale of building 1,44,000 Purchase of Investments (56,250) Cash used in investing activities (78,250) C. Cash Flow from financing activities Issue of shares 1,50,000 Repayment of Bank Loan (75,000) Proposed dividend (60,000) Cash flow from financing activities 15,000 Increase in cash and cash equipments 51,250 (+) Opening balance of cash and cash equivalents 15,000 Closing balance of cash and cash equivalents 66,250 Building A/c Particulars ` Particulars ` To Balance b/d 4,50,000 By Depreciation 16,000 To cash A/c (Balance figure) 1,66,000 By Cash A/c 1,44,000 By P & L A/c 6,000 By Balance c/d 4,50,000 6,16,000 6,16,000 ***** 29 P.T.O.