4 acc cbse_2011-12_12th_15-03-12

1 P.T.O.

Series : SMA/1

Roll No.

Code No. 67/1/1Candidates must write the Code onthe 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 ofthe 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 at10.15 a.m. From 10.15 a.m. to 10.30 a.m., the student will read the question paper only and will notwrite 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.

Studymate Solutions to CBSE Board Examination 2010-2011

STUDYmate Accountancy Class XII

2 P.T.O.

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/c

2. 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 partner

5. 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 ` 3,40,000Subscriptions outstanding as on 31-3-2011 ` 47,000Subscriptions received in advance as on 31-3-2011 ` 35,000Subscriptions outstanding as on 1-4-2010 ` 28,000Subscriptions received in advance as on 1-4-2010 ` 25,000

Ans. Statement showing Calculation of Subscription for the year 2010-11.Particulars `

Subscription received during the year

Less: Subscription outstanding as on 1-4-2010

Add: Subscription outstanding as on 31-3-2011

Less: Subscription in advance as on 31-3-2011

Add: Subscription in advance as on 1-4-2010

Subscription for the year 2010-11

3,40,000

(28,000)

47,000

(35,000)

25,000

3,49,000


3 P.T.O.

Income & Expenditure A/c (Extract)For the year ended 31-3-2011

Expenditures ` Incomes `

By Subscription 3,49,000

7. 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.

To Gupta Ltd. A/c

(Being Building Purchased from Gupta Ltd.)

10,00,000

10,00,000

Gupta Ltd. A/c Dr.

To Bank A/c

(Being 10% payment made by cheque)

1,00,000

1,00,000

Gupta Ltd. A/c Dr.

Discount on issue of shares A/c Dr.

To Equity shares A/c

(Being 1,00,000 shares issued at a

discount of 10%)

9,00,000

1,00,000

10,00,000

Working Notes:

Calculation of Number of Equity shares:

9,00,00010 1

= 1,00,000 shares

8. 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]


4 P.T.O.

Ans. In the books of Narain Laxmi Ltd.Journal

Date Particulars LF Debit (`) Credit (`)Bank A/c Dr.

To Debenture Application A/c(Being application amount received on 10,000 debentures with Securities Premium)

13,50,00013,50,000

Debenture Application A/c Dr.To 12% Debentures A/cTo Securities Premium A/cTo Bank A/c

(Being Debentures Allotted to 7500 shares and excess being refunded)

13,50,0007,50,0002,62,5003,37,500

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 CapitalArun 7,200

Arora 9,600 16,800

By Net ProfitBy Interest on Drawing A/c

Arun 15 62,000

100 12

150

Arora 15 64,000

100 12

300

By Loss transferred toArun’s capital A/c 2344Arora’s capital A/c 1406

12,600

450

3,750

16,800 16,800

10. 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]


5 P.T.O.

Ans. In the books of _______________Journal

Date Particulars LF Debit (`) Credit (`)

Arjun’s Capital A/c Dr.

Bhim’s Capital A/c Dr.

Nakul’s Capital A/c Dr.

To Goodwill A/c

(Being old goodwill written off in old ratio)

42,000

15,000

18,000

75,000

Arjun’s Capital A/c Dr.

To Bhim’s Capital A/c

(Being share of goodwill adjusted)

10,000

10,000

Profit & Loss A/c Dr.

To Arjun’s Capital A/c

To Nakul’s Capital A/c

(Being Profit for Ist year after retirement

distributed in new ratio)

1,00,000

76,000

24,000

Working Note:

Normal Profit = ` 30,000

Average Profit = 50,000 55,000 60,000

3

= ` 55,000

Super Profit = ` 55,000 – ` 30,000 = ` 25,000

Goodwill = 2 × 25,000 = 50,000

Bhim’s share = 5

50,00025

= 10,000

New Ratio among Arjun and Nakul.

Bhim’s share taken by Arjun only, i.e. 14 5 1925 25 25

Nakul =625

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]


6 P.T.O.

Ans. In the books of Shakti Ltd.Journal

Date Particulars LF Debit (`) Credit (`)Own Debentures A/c Dr.

To Bank

(Being 500 own debentures purchased from

open market)

47,000

47,000

12% Debentures A/c Dr.

To Own Debentures A/c

To Profit on redemption of deb. A/c

(Being debentures redeemed)

50,000

47,000

3,000

12% Debentures A/c Dr.To Debenture-holder’s A/c

(Being 250 debentures redeemed and

amount made due to debenture holders)

25,00025,000

Debenture-holder’s A/c Dr.

To Bank A/c

(Being payment made to debenture-holder)

25,000

25,000

Profit on redemption of Debenture A/cDr.

To Capital Reserve A/c

(Being Profit on redemption transferred to

capital reserve)

3,000

3,000

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.

JournalDate Particulars LF Debit (`) Credit (`)A. (i) 12% Debentures A/c Dr.

To Debenture-holders A/c

(Being 750 debentures of ` 75 each

redeemed and payment made due to

debenture-holders)

56,250

56,250

(ii) Debenture-holders A/c Dr.


To Equity share capital A/c

(Being 625 equity shares issued at a

discount of 10%)

56,250

6,250

62,500


7 P.T.O.

B. (i) 12% Debentures A/c Dr.

To Debenture-holder’s A/c

(Being 550 debentures of ` 1,000 each


debenture-holders)

5,50,000

5,50,000

(ii) Debenture-holder’s A/c Dr.

To 13% Debentures A/c

To Securities Premium A/c

(Being 50,000 13% debentures issued at a

premium of 10%)

5,50,000

5,00,000

50,000

Working Notes:

(i)56,250100 10

= 625 shares

(ii)5,50,000

110= 50,000 13% debentures

13. 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 31-3-2011Liabilities ` Assets `

Capitals:

Verma 1,20,000

Sharma 80,000

Creditors

2,00,000

70,000

Land and Building

Machinery

Debtors

Bank

70,000

60,000

80,000

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

JournalDate Particulars LF Debit (`) Credit (`)

(i) Realisation A/c Dr.

To Land & Building A/c

To Machinery A/c

To Debtors A/c

2,10,000

70,000

60,000

80,000


8 P.T.O.

(Being Assets transferred to Realisation

A/c)

(ii) Creditors A/c Dr.

To Realisation A/c

(Being Creditors transferred to Realisation

A/c)

70,000

70,000

(iii) No entry for Land and Building taken over

creditors.

(iv) Realisation A/c Dr.

To Bank A/c

(Being payment of creditors)

20,000

20,000

(v) Bank A/c Dr.

To Realisation A/c

(Being machine sold at depreciation of 30%)

42,000

42,000

(vi) Bank A/c Dr.

To Realisation A/c

(Being debtors collected at a cost of 500,

i.e., 80,000 – 500)

79,500

79,500

(vii) Realisation A/c Dr.

To Bank A/c

(Being payment of realisation expenses)

1,700

1,700

(viii) Verma’s Capital A/c Dr.

Sharma’s Capital A/c Dr.

To Realisation A/c

(Being distribution of loss on realisation)

30,150

10,050

40,200

(ix) Verma’s Capital A/c Dr.

To Bank A/c

(Being Verma’s Capital A/c settled)

89,850

89,850

(x) Sharma’s Capital A/c Dr.

To Bank A/c

(Being Sharma’s capital A/c settled)

69,950

69,950

Working Note:Partners Capital A/c’s

Dr. Cr.

Particular Verma Sharma Particular Verma Sharma

To Realisation A/c

To Bank

30,150

89,850

10,050

69,950

By bal. b/d 1,20,000 80,000

1,20,000 80,000 1,20,000 80,000


9 P.T.O.

14. 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 31-3-2011Receipts ` Payments `

To Balance b/d

To SubscriptionsTo Entrance Free

To Donations (includes ` 1,000

for buildings)

To Hall rent

To Sale of investments (Book

value ` 4,000)

13,200

25,5002,000

3,000

2,500

3,500

By Salary (paid for 11

months)By Rent

By Electricity

By Taxes

By Printing & stationary

To Books

By 9% Fixed deposits (on

31-1-2011)

By Balance c/d

2,200800

3,500

2,600

800

10,000

13,000

16,800

49,700 49,700

Ans. Income and Expenditure A/cFor the Year ending 31st March 2011

Dr. Cr.Expenditure Amount

(`)Incomes Amount

(`)

To Salary 2,200

(+) O/s salary 200

To Rent

To Electricity

To Taxes

To Printing & Stationery

To Loss on sale of Investments

To Surplus

2,400

800

3,500

2,600

800

500

21,595

By Subscriptions

By Entrance Fees

By Donations

By Hall Rent

By Accrued Interest on

investment

25,500

2,000

2,000

2,500

195

32,195 32,195

15. ‘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 31-3-2011Liabilities Amount Assets Amount

Capitals:‘B’ 60,000‘C’ 40,000

Provision for bad debtsCreditors

1,00,0001,000

60,000

Land and BuildingMachineryFurnitureDebtorsCashProfit and Loss Account

80,00020,00010,00025,00016,00010,000

1,61,000 1,61,000


10 P.T.O.

‘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

LiabilitiesAmount

`Assets

Amount`

Capitals: ‘G’ 70,000‘E’ 20,000‘F’ 10,000

General ReserveLoan from ‘E’Creditors

1,00,000 20,000 30,000 14,000

Goodwill Land & Buildings Machinery Stock DebtorsCash

40,00060,000 40,000 7,000

12,0005,000

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.


11 P.T.O.

Ans. Revaluation A/cDr. Cr.

Particular Amount(`)

Particular Amount(`)

To Provision for Bad Debts

To Claim for damages

250

800

By Creditors

By Loss on Revaluation

B 330C 220

500

550

1,050 1,050

Partners Capital A/c’sDr. Cr.

Particular B C D Particular B C DTo P & L A/cTo Revaluation A/cTo Cash A/cTo Cash A/cTo Bal. c/d

6,000330

7,5001,170

60,000

4,000220

60,000 30,000

By bal. b/dBy Cash A/cBy Premium A/cBy Cash A/c

60,000

15,000

40,000

24,220

30,000

75,000 64,220 30,000 75,000 64,220 30,000

Balance sheet of B, C & Das on 01.04.2011

Liabilities Amount (`) Assets Amount (`)

Capital A/c’sB 60,000

C 60,000D 30,000

CreditorsClaim for damages

1,50,000

59,500800

Land & BuildingsMachinery

FurnitureDebtors 25,000

(–) Provision 1,250Cash (16,000 + 30,000 + 15,000 + 24,220 – 7,500 – 1,170)

80,00020,000

10,000

23,750

76,550

2,10,300 2,10,300

D’s share of capital = ` 30,000

D’s share in profit = 1

5

Capital of the new firm = ` 30,000 × 5

1= ` 1,50,000

B’s share = ` 1,50,000 × 2

5= ` 60,000

C’s share = ` 1,50,000 × 2

5= ` 60,000

OR


12 P.T.O.

Ans. Revaluation A/cDr. Cr.

Particulars Amount(`)

Particulars Amount(`)

To Machinery

To Stock

To Provision for Bad Debts

To Profit on Revaluation

G 20,790

E 5,940

F 2,970

2,000

2,000

300

29,700

By Land & Buildings 34,000

34,000 34,000Partners Capital A/c’s

Dr. Cr.Particular G E F Particular G E F

To GoodwillTo E’s ExecutorsTo Balance c/d

28,000-

1,27,837.50

8,00058,340

-

4,000-

18,262.50

By bal. b/dBy Gen. ReserveBy RevaluationBy P & L Suspense

146 280,000

365 10 By E’s Loan A/cBy Current A/c

70,00014,00020,790

51,047.50

20,0004,0005,9406,400

30,000–

10,0002,0002,970

7,292.50155,837.50 66,340 22,262.50 155,837.50 66,340 22,262.50

Dr. E’s Executors A/c Cr.

ParticularsAmount

(`)Particulars

Amount(`)

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 & Fas on 24th August, 2011

LiabilitiesAmount

(`)Assets

Amount(`)

Capital A/c’s

G 1,27,837.50

F 18,262.50

Creditors

E’s Executors Loan A/c

146,100

14,000

58,340

Land & Buildings

Machinery

Stock

Debtors 12,000

(–) Prov. 300

Cash

P & L Suspense A/cG’s Current A/c

F’s Current A/c

94,000

38,000

5,000

11,700

5,000

6,40051,047.50

7,292.50

2,18,440 2,18,440


13 P.T.O.

16. 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.

ORJain 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 sharesof Naveen.

Ans. In the Books of Shyam Ltd.Journal

Date Particulars LF Debit CreditBank A/c Dr.

To Share Application A/c(For share application money received)

26,95,00026,95,000

Share Application A/c Dr.To Share Capital A/cTo Securities Premium A/c

(For Application money adjusted)

26,95,0003,85,000

23,10,000

Share Allotment A/c Dr.To Share Capital A/cTo Securities Premium A/c

(For allotment money made due)

6,16,0003,08,0003,08,000

Bank A/c Dr.To Share Allotment A/c

(For allotment money received)

5,60,0005,60,000

Share Capital A/c Dr.Securities Premium A/c Dr.

To Share Allotment A/cTo Share Forfeiture A/c

(Being 7000 shares forfeited)

63,00028,000

56,00035,000


14 P.T.O.

Share First & Final Call A/c Dr.To Share Capital A/cTo Securities Premium A/c

(For first & final call made due)

4,90,00070,000

4,20,000

Bank A/c Dr.To Share First & Final Call A/c

(For first & final call money received)

4,86,5004,86,500

Share Capital A/c Dr.Securities Premium A/c Dr.

To Share First & Final Call A/cTo Share Forfeiture A/c

(For 500 shares forfeited)

5,0003,000

3,5004,500

Bank A/c Dr.To Share Capital A/cTo Securities Premium A/c

(For 1000 Shares re-issued)

50,00010,00040,000

Share Forfeiture A/c Dr.To Capital Reserve A/c

(For amount of share forfeiture transferred to capital reserve)

7,0007,000

OR

Ans. In the Books of Jain’s Ltd.Journal

Date Particulars LF Debit CreditBank A/c Dr.

To Share Application A/c(For share application money received)

2,50,0002,50,000

Share Application A/c Dr.To Share Capital A/cTo Share Allotment A/cTo Bank A/c

(For Application money adjusted)

2,50,0001,75,000

35,00040,000

Share Allotment A/c Dr.Discount on issue of Shares A/c

To Share Capital A/c(For allotment money made due)

1,05,00035,000

1,40,000

Bank A/c Dr.To Share Allotment A/c

(For allotment money received)

69,00069,000

Share First & Final Call A/c Dr.To Share Capital A/c

(For first & final call made due)

35,00035,000

Bank A/c Dr. 34,100


15 P.T.O.

To Share First & Final Call A/c(For first & final call money received)

34,100

Share Capital A/c Dr.To Discount on issue of Share A/cTo Share Allotment A/cTo Share First & Final Call A/cTo Share Forfeiture A/c

(Being 900 shares forfeited)

9,000900

1,000900

6,200

Bank A/c Dr.To Share Capital A/cTo Securities Premium A/c

(For 800 Shares reissued)

12,0008,0004,000

Share Forfeiture A/c Dr.To Capital Reserve A/c

(For amount of share forfeiture transferred to capital reserve)

5,6005,600

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


16 P.T.O.

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

Current Liabilities = 1,50,000

1.5= ` 1,00,000

Current Assets = 3.5 Current Liabilities

= 3.5 × 1,00,000

= ` 3,50,000

21. 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%.

Ans. (a) Debt – Equity Ratio = Debt

Equity

=9% Debentures

Equity Share Capital General Reserve P & L Account Discount on issue of Shares


17 P.T.O.

20,000

50,000 5,000 15,000 5,000

20,000

65,000

0.38 : 1 times

(b) Working capital turnover ratio = Net Sales

Net Working Capital

1,50,000

14,500 5,500 15,000

1,50,000

5,000

30 times

(c) Return on investment = Net Profit before Interest, Tax and Dividend

100Capital Employed

15,000 15,000 (tax) 1,800(Interest)

50,000 5,000 15,000 20,000 5,000

31,800

10085,000

37.41 %

22. Following is the Income Statement of Raj Ltd. for the year ended 31-3-2011 :

Particulars Amount `

Income :SalesOther IncomesTotal Income

Expenses :Cost of goods soldOpening expensesTotal ExpensesTax

2,00,00015,000

2,15,000

1,10,0005,000

1,15,00040,000

Prepare a common size Income Statement of Raj Ltd. for the year ended 31-3-2011.


18 P.T.O.

Ans. Common Size Income Statement

for the year ended 31-3-2011.

Particulars Year end31-3-2011

Percentage change

Net Sales

Less Cost of Goods Sold

20,0000

1,10,000

100%

(55%)

Gross Profit

Less Operating Expenses

Add Other Incomes

90,000

5,000

15,000

45%

(2.5%)

7.5%

Net Profit Before Tax

Less Tax

1,00,000

40,000

50%

(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(`)

Assets31-3-2010

(`)31-3-2011

(`)Equity Share CapitalProfit & Loss AccountBank LoanProposed DividedProvision for taxCreditors

1,00,000

25,00050,00020,00010,000

15,000

1,50,000

50,00025,00015,00017,500

11,250

PatentsBuildingInvestmentDebtorsStockCash

12,5001,50,000

—50,0002,5005,000

11,2501,50,000

18,75063,7503,750

21,250

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 ` 4,000

Ans. Cash Flow Statement

for the year ended 31-3-2011

A. Cash Flow from operating activities

Net profit as per P & L A/c

(+) Proposed dividend

(+) Provision for tax

25,000

15,000

17,500

Net Profit before extra-ordinary items

(+) Non-operating/Non-cash items

Patents

57,500

1,250


19 P.T.O.

Depreciation

Loss on sale of Buildings

4,000

2,000

(–) Non-operating incomes

64,750

NIL

Operating profits before changes in working capital

(+) Decrease in CA/Increase in CL

64,750

NIL

(–) Increase in CA/Decrease in CL

Debtors

Stock

Creditors

(13,750)

(1,250)

(3,750)

(–) Tax paid during the year

46,000

10,000

Cash flow from operating activities 36,000

B. Cash Flow from investing activities

Purchase of Building

Sale of building

Purchase of Investments

(54,000)

48,000

(18,750)

Cash used in investing activities (24,750)

C. Cash Flow from financing activities

Issue of shares

Repayment of Bank Loan

Proposed dividend

Cash flow from financing activities

50,000

(25,000)

(20,000)

5,000

Increase in cash and cash equipments

(+) Opening balance of cash and cash equivalents

16,250

5,000

Closing balance of cash and cash equivalents 21,250

Building A/cParticulars ` Particulars `

To Balance b/d

To cash A/c (Balance figure)

1,50,000

54,000

By Depreciation

By Cash A/c

By P & L A/c

By Balance c/d

4,000

48,000

2,000

1,50,000

2,04,000 2,04,000

*****


20 P.T.O.

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.

JournalDate Particulars LF Debit (`) Credit (`)A. (i) 9% Debentures A/c Dr.

To Debenture-holders A/c(Being 1,500 debentures of ` 150 each


debenture-holders)

2,25,000

2,25,000

(ii) Debenture-holders A/c Dr.



(Being 25,000 equity shares issued at a

discount of 10%)

2,25,000

25,000

2,50,000



(Being 1,100 debentures of ` 1,000 each


debenture-holders)

11,00,000

11,00,000




(Being 1,00,000 12% debentures issued at

a premium of 10%)

11,00,000

10,00,000

1,00,000

Working Notes:

(i)2,25,000

10 1= 25,000 shares

(ii)11,00,000

110= 1,00,000 12% debentures


21 P.T.O.

13. 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 31-3-2011Liabilities ` Assets `

Capitals:

Raman 7,00,000

Richa 3,00,000

Sundry Creditors

10,00,000

1,75,000

Land and Building

Furniture

Debtors

Stock

Cash

7,50,000

1,20,000

1,32,000

1,03,000

70,000

11,75,000 11,75,000


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


(i) Realisation A/c Dr.To Land & Building A/c

To Furniture A/c

To Debtors A/c

To Stock A/c(Being Assets transferred to Realisation A/c)

11,05,0007,50,000

1,20,000

1,32,000

1,03,000

(ii) Creditors A/c Dr.

To Realisation A/c


A/c)

1,75,000

1,75,000

(iii) Bank A/c Dr.

To Realisation A/c

(Being Land & Building taken by Raman for

cash at 10% discount)

6,75,000

6,75000

(iv) No entry for stock and debtors taken over

by creditors.

(v) Realisation A/c Dr.

To Richa A/c

(Being creditors taken by Richa)

50,000

50,000


22 P.T.O.

(v) Bank A/c Dr.

To Realisation A/c

(Being furniture realised)

1,15,000

1,15,000


To Bank A/c

(Being payment of realisation expenses)

400

400

(viii) Raman’s Capital A/c Dr.

Richa’s Capital A/c Dr.

To Realisation A/c


1,33,280

57,120

1,90,400

(ix) Raman’s Capital A/c Dr.

To Bank A/c

(Being Raman’s Capital A/c settled)

5,66,720

5,66,720

(x) Richa’s Capital A/c Dr.

To Bank A/c

(Being Richa’s capital A/c settled)

2,92,880

2,92,880

Working Note:Partners Capital A/c’s

Dr. Cr.

Particular Raman Richa Particular Raman Richa

To Realisation A/c

To Bank

1,33,280

5,66,720

57,120

2,92,880

By bal. b/d

By Realisation A/c

7,00,000 3,00,000

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 31-3-2011Receipts ` Payments `

To Balance b/d

To Subscriptions

To Entrance Free


for buildings)

To Hall rent


value ` 9,000)

5,600

20,000

3,000

2,100

2,700

8,500


months)

By Rent

By Electricity

By Taxes

By Printing and

stationary

To BooksBy 9% Fixed deposits (on

31-1-2010)

By Balance c/d

18,000

2,400

700

400

900

5,000

14,000

500

41,900 41,900


23 P.T.O.



(`)Incomes Amount

(`)To Salary 18,000

(+) O/s salary 6,000

To Rent

To Electricity

To Taxes

To Printing & Stationery


24,000

2,400

700

400

900

500

By Subscriptions

By Entrance Fees

By Donations

By Hall Rent


investment

By Deficit

20,000

3,000

1,100

2,700

315

1,785

28,900 28,900


23. From the following Balance Sheets of J.N. Ltd as on 31-03-2010 and 31-3-2011,



31-3-2011(`)

Assets31-3-2010

(`)31-3-2011

(`)Equity Share CapitalProfit & Loss AccountBank LoanProposed DividedProvision for taxCreditors

6,00,000

1,50,0003,00,0001,20,000

60,000

90,000

9,00,000

3,00,0001,50,000

90,0001,05,000

67,500


75,0009,00,000

—3,00,000

15,00030,000

62,5009,00,0001,12,5003,82,500

22,5001,32,500

13,20,000 16,12,500 13,20,000 16,12,500


During the year a Building having book value ` 1,25,000 was sold at a loss of ` 8,000



24 P.T.O.



A. Cash Flow from operating activitiesNet profit as per P & L A/c(+) Proposed dividend(+) Provision for tax

1,50,00090,000

1,05,000Net Profit before extra-ordinary items(+) Non-operating/Non-cash items

PatentsDepreciationLoss on sale of Buildings

3,45,000

12,50020,0008,000

(–) Non-operating incomes3,85,500

NILOperating profits before changes in working capital(+) Decrease in CA/Increase in CL

3,85,500NIL

(–) Increase in CA/Decrease in CLDebtorsStockCreditors

(82,500)(7,500)

(22,500)

(–) Tax paid during the year2,73,000

60,000Cash flow from operating activities 2,13,000B. Cash Flow from investing activities

Purchase of BuildingSale of buildingPurchase of Investments

(1,45,000)1,17,000

(1,12,500)Cash used in investing activities (1,40,500)C. Cash Flow from financing activities

Issue of sharesRepayment of Bank LoanProposed dividend


3,00,000(1,50,000)(1,20,000)

30,000Increase in cash and cash equipments(+) Opening balance of cash and cash equivalents

1,02,50030,000

Closing balance of cash and cash equivalents 1,32,500

Building A/cParticulars ` Particulars `

To Balance b/d


9,00,000

1,45,000

By Depreciation

By Cash A/c

By P & L A/c

By Balance c/d

20,000

1,17,000

8,000

9,00,000

10,45,000 10,45,000


25 P.T.O.

Studymate Solutions to CBSE Board Examination 2011-2012Series : SMA/1 Code No. 67/1/3

UNCOMMON QUESTION ONLY

12. 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.


A. (i) 12% Debentures A/c Dr.

To Debenture-holders A/c

(Being 1,200 debentures of ` 175 each


debenture-holders)

2,10,000

2,10,000




(Being 2,000 10% debentures issued at a

premium of 10%)

2,10,000

2,00,000

10,000



(Being 19,000 debentures of ` 50 each


debenture-holders)

9,50,000

9,50,000

(ii) Debenture-holders A/c Dr.Discount on issue of shares A/c Dr.


(Being 10,000 equity shares issued at a

discount of 10%)

9,50,00050,000

10,00,000

Working Notes:

(i)2,10,000100 5

= 2,000 10% debentures

(ii)9,50,000100 5

= 10,000 shares


26 P.T.O.

13. 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 31-3-2011Liabilities ` Assets `

Capitals:

A 3,00,000

B 2,00,000

Sundry Creditors

5,00,000

1,17,000

Building

Furniture

Debtors

Stock

Cash

2,40,000

1,75,000

80,000

75,000

47,000

6,17,000 6,17,000


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


(i) Realisation A/c Dr.To Building A/c

To Furniture A/c

To Debtors A/c

To Stock A/c

(Being Assets transferred to Realisation

A/c)

5,70,0002,40,000

1,75,000

80,000

75,000

(ii) Creditors A/c Dr.To Realisation A/c


A/c)

1,17,0001,17,000

(iii) No entry for Building taken over creditors.

(iv) Bank A/c Dr.

To Realisation A/c(Being furniture sold at discount of 5%)

1,66,200

1,66,200

(v) Bank A/c Dr.

To Realisation A/c

(Being debtors collected at a cost of 5,000,

i.e., 80,000 – 5000)

75,000

75,000


27 P.T.O.

(vi) Bank A/c Dr.

To Realisation A/c

(Being stock realised)

70,500

70,500


To B’s Capital A/c

(Being amount paid to B for realisation

purpose)

500

500

(viii) A’s Capital A/c Dr.

B’s Capital A/c Dr.

To Realisation A/c


1,75,080

1,16,720

2,91,800

(ix) A’s Capital A/c Dr.

To Bank A/c

(Being A’s Capital A/c settled)

1,24,920

1,24,920

(x) B’s Capital A/c Dr.

To Bank A/c

(Being B’s capital A/c settled)

83,780

83,780

Working Note:1. Partners Capital A/c’sDr. Cr.

Particular A B Particular A B

To Realisation A/c

To Bank

1,75,080

1,24,920

1,16,720

83,780

By bal. b/d

By Realisation A/c

3,00,000 2,00,000

500

3,00,000 2,00,500 3,00,000 2,00,5002. 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

To Subscriptions

To Entrance Free


for buildings)To Hall rent


value ` 16,000)

3,400

21,000

5,750

2,1007,550

15,400


months)

By Rent

By Electricity

By HonorariumBy Books

By 9% Fixed deposits (on

31-1-2010)

By Balance c/d

24,000

3,000

2,750

5,0007,500

10,000

2,9500

55,200 55,200


28 P.T.O.



(`)Incomes Amount

(`)To Salary 24,000

(+) O/s salary 12,000To Rent

To Electricity

To Honorarium


36,0003,000

2,750

5,000

600

By Subscriptions

By Entrance FeesBy Donations

By Hall Rent


investment

By Deficit

21,000

5,7501,100

7,550

675

11,275

47,350 47,350


23. From the following Balance Sheets of C.P. Ltd as on 31-03-2010 and 31-3-2011,



31-3-2011(`)

Assets31-3-2010

(`)31-3-2011

(`)Share CapitalProfit & Loss AccountBank LoanProposed DividedProvision for taxCreditors

3,00,000

75,0001,50,000

60,00030,00045,000

4,50,000

1,50,00075,000

45,00052,50033,750


37,5004,50,000

—1,50,00

7,50015,000

31,2504,50,000

56,2501,91,250

11,25066,250

6,60,000 8,06,250 6,60,000 8,06,250


During the year a Building having book value ` 1,50,000 was sold at a loss of ` 6,000



29 P.T.O.



A. Cash Flow from operating activitiesNet profit as per P & L A/c(+) Proposed dividend(+) Provision for tax

75,00045,00052,500

Net Profit before extra-ordinary items(+) Non-operating/Non-cash items

PatentsDepreciationLoss on sale of Buildings

1,72,500

6,25016,0006,000

(–) Non-operating incomes2,00,750

NILOperating profits before changes in working capital(+) Decrease in CA/Increase in CL

2,00,750NIL

(–) Increase in CA/Decrease in CLDebtorsStockCreditors

(41,250)(3,750)

(11,250)

(–) Tax paid during the yearCash flow from operating activities

1,44,50030,000

1,14,500B. Cash Flow from investing activities

Purchase of BuildingSale of buildingPurchase of Investments

Cash used in investing activities

(1,66,000)1,44,000(56,250)

(78,250)C. Cash Flow from financing activities

Issue of sharesRepayment of Bank LoanProposed dividend


1,50,000(75,000)(60,000)

15,000Increase in cash and cash equipments(+) Opening balance of cash and cash equivalents

51,25015,000

Closing balance of cash and cash equivalents 66,250Building A/c

Particulars ` Particulars `

To Balance b/d


4,50,000

1,66,000

By Depreciation

By Cash A/c

By P & L A/c

By Balance c/d

16,000

1,44,000

6,000

4,50,000

6,16,000 6,16,000

*****

Business

4 acc cbse_2011-12_12th_15-03-12