Thursday, February 01, 2018

AHSEC Class 12: Accountancy Solved Question Papers' 2016

AHSEC SOLVED QUESTION PAPERS
2016 (ACCOUNTANCY)
Full Marks: 100
Pass Marks: 30, Time: Three Hours
The figures in the margin indicate full marks for the questions.
1. (a) Fill in the blanks with appropriate word:                     1x4=4
a)      In the absence of Partnership Deed, a Partner who advances money to the firm beyond the amount of his / her capital is entitled to get interest thereon at the rate of 6 % per annum as per Partnership Act, 1932.
b)      The members of a Partnership business are collectively known as firm.
c)       The amount due to the retiring partner is transferred to his / her loan Account in case it is not paid immediately.
d)      In case of fixed capital, a partner’s Capital Account always shows a credit balance.
(b) Choose the correct alternative:                          1x2=2
                     i.         Financial Statements of a company include:
1)      Balance Sheet.
2)      Profit and Loss Account.
3)      Cash flow Statement.
4)      All of the above.
                   ii.         Profit and Loss Account is also known as Income statement statement.
(c) State whether the following statements are true or false:                      1x2=2
a)      Interest on Partner’s capital is debited to Partner’s Capital Account.                Ans. False
b)      Debenture holders are creditors of the company.    Ans. True
2. State the meaning of Not-for-Profit organization.                        2
Ans: Not-For-Profit Organisation: A Not-For-profit organisation is a voluntary association of persons, set up and operated not for the purposes of earning profit but, for the welfare of the society or promotion of art, culture, sports and general public utility. Examples of these are schools, hospitals, club and sports association. These organisations provide services to their members and to the public in general. Their main source of income is membership fees, subscription, donation, grant-in-aid, etc.
3. A and B are partners sharing profits in the ratio 3: 2. C is admitted as a new partner for 1/5th share in the future profits. Calculate the new profit sharing ratio.                                    2
Solution:
Let the total share be 1
\C’s share = 1 – 1/5 = 4/5
\A’s new share = 4/5 x 3/5 = 12/25
\B’s new share = 4/5 x 2/5 = 8/25
\New Profit sharing ratio = 12/25 : 8/25 : 4/5
= 12 : 8 : 20
4. Mention any two distinctions between shares and debentures.          2
Ans: Refer Q.N. 22 (Or), asked in 2017 exam (Last page of the note)
5. A Ltd. forfeited 500 shares of Rs. 10/- each, Rs. 8/- paid, for non-payment of final call of Rs. 2/- each. Give Journal entry of forfeiture of share.                   2
Solution:
Journal Entries
In the books of A Ltd.
Particulars
L/f
Amount Dr.
Amount Cr.
Equity Share Capital A/c                                                              Dr.
To Forfeited share A/c
To Share Final call A/c
(Being the 500 shares forfeited due to non-payment of final call)

5,000

4,000
1,000
6. A and B are partners in a firm sharing profits in the ratio of 3: 2. Their capitals as on April, 1, 2014 were Rs. 2, 00,000/- and Rs. 1, 80,000/- respectively. On October 1, 2014, A introduced an additional capital of Rs. 50,000 and on January, 1, 2015, B introduced Rs. 70,000/-. Interest on capital is allowed at 10% p.a. Calculate interest on capital for both the partners for the year ending March, 31, 2015.                                      2
Solution:
Calculation of Interest on Capital of A
1-4-2014             = 2,00,000 x 10% x 1 = 20,000
Add: 1-10-2014 = 50,000 x 10% x 6/12 = 2,500
22,500
Calculation of Interest on Capital of B
1-4-2014             = 1,80,000 x 10% x 1 = 18,000
Add: 1-10-2014 = 70,000 x 10% x 3/12 = 1,750
19,750
7. Explain any three objectives of preparing a Cash Flow statement.                      1x3=3
Ans. Refer Question No. 18 (or), of 2012
Or
From the following details, calculate Current Ratio and Liquid Ratio:                                         3
Machinery
8% Debenture
Bank Overdraft
Sundry Creditors
Prepaid Expenses
Stock
Sundry Debtors
1,00,000/-
80,000/-
20,000/-
76,000/-
4,000/-
80,000/-
1,00,000/-
Solution:
Current Ratio = Current Assets/Current Liabilities
Liquid Ratio = Liquid Assets/Current Liabilities
Current Assets = Prepaid Exp. + Stock + Sundry Debtors
= 4,000 + 80,000 + 1,00,000
= 1,84,000
Current Liabilities = Bank Overdraft + Sundry Creditors
= 20,000 + 76,000
= 96,000
\ Current Ratio = 1,84,000/96,000 = 23 : 12
Liquid Assets = Debtors = 1,00,000
\ Liquid Ratio = 1,00,000/96,000 = 1.042 : 1
8. Mention any three items that can be shown under the heading “Reserves & Surplus” in a company’s Balance Sheet. 1x3=3
Ans: Reserves and Surplus: Under this head the following items are shown:
a)      Capital Reserve
b)      Securities Premium (Reserve)
c)       Capital Redemption Reserve.
d)      Debenture Redemption Reserve
e)      Revaluation Reserve
Or
Give three objectives of financial statement analysis.                   1x3=3
Ans. Objectives of Financial Statements:
a)      To provide information about economic resources and obligations of a business.
b)      To provide information about earning capacity of the business.
c)       To provide information about cash Flows.
d)      To judge effectiveness of management.
9. What is meant by Comparative Statements? What do they show?                      1+2=3
Ans. Comparative Financial Statements: Comparative Financial Statements is primarily an analytical study of the different items shown in the Income Statement and Balance Sheet over a period of time. The Financial Statements reveals the trading results and financial statement of a concern. But the Comparative Statement presents a review of two or more years. It shows the absolute change and changes in terms of percentage from one period to another. Comparison to data can be done in two ways:
(i) Financial statements of an enterprise for two or more accounting years (Inter-period Comparison)
(ii) Financial statements of different enterprises for the same accounting year (Inter-firm Comparison).
Comparative statements are of two types – “Comparative balance sheets and Comparative income statements”.
Or
Explain the Capitalization method of valuation of Goodwill.
Ans. Capitalization Method: Under this method, the value of goodwill is obtained by capitalizing the average profit or super profit of the basis of normal rate.
Value of goodwill under capitalization of average profit is
Goodwill = (Average normal profit of the business/ rate of return) – capital employed
Value of goodwill under capitalization of super profit is
Goodwill = Super profit/ rate of return
10. Mention any three distinctions between Fund-based Accounting and Non-fund based Accounting.                  1x3=3
Ans. Difference between fund based and non fund based accounting
Basis
Fund Based Accounting
Non fund based Accounting
Accounting base
It is based on cash basis.
It is based on accrual basis.
Funds
Specific funds are used for specific purposes except for general fund.
Funds can be used for any profit earning purpose.
Economic interest
Owners have no economic interests.
Owners have economic interest in the form of profit.
Accountability
Accountability is towards law, regulations, legislature, parliament contributors and donors of fund.
Accountability is towards all stock holders, viz, owners creditors, government regulations etc.
Or
Mention three features of a non-trading organization.                   3
Ans: Following are the main features of Receipts and Payments Account:          
a)      It is prepared at the end of the year taking items from the cash book.
b)      It is the summary of all cash transactions of a year put under various heads.
c)       It records cash transactions both of revenue nature and capital nature.
11. Mention any three limitations of Financial Statements.        1x3=3
Ans: Refer Q.N. 16 (or), Asked in 2012 exam
12. From the following Receipts and Payments Account for the year ended 31st December, 2015 and other details of the Sankardev Club, prepare an Income and Expenditure Account for the year ended 31st December, 2015:      5
Receipts
Rs.
Payments
Rs.
Cash in hand on 1.1.15
Subscriptions:
        2014=900
        2015=20,000
        2016=2,000
Sale of Newspapers
Life Membership Fees
Donation
Donation for Buildings
Interest
Maintenance Grant
12,000



22,900
100
5,000
6,000
8,000
200
3,000
Salaries
Honorarium
Travelling Expenses
Sport Expenses
Investments
Construction of Buildings
Rent
Scholarship
Cash in hand on 31-12-15
14,000
3,000
2,000
5,000
10,000
7,000
2,000
1,000
13,200

57,200

57,200
Additional Information:
a)      Outstanding Subscription Rs. 2,500/-
b)      Outstanding Salaries Rs. 1,000/-
c)       Subscription for 2015 Rs. 400/- received in 2014.
Solution:
Income & Expenditure A/c of Sankardev Club
For the year ended 31-12-2015
Expenditure
Amount
Income
Amount
To Salary                     14,000
Add: Outstanding        1,000
To Honorarium
To Travelling Expenses
To Sports Expenses
To Rent
To Scholarship
To Surplus (Bal. fig)

15,000
300
2,000
5,000
2,000
1,000
8,700
By Subscription                                       20,000
Add: Subscription due at the end          2,500
Add: For 2015 received in 2014                400
By Sale of newspaper
By Donation
By Interest
By Maintenance grant


22,900
100
6,000
2,000
3,000

34,000

34,000
Or
Mention any five distinctions between Receipts and Payments Account and Income and Expenditure Account.     5
Ans: Refer Q.N. 12 (or), Asked in 2012 exam
13. From the following details, calculate cash from Investing and Financing Activities:                      5
Particulars
1-4-2014
31-3-2015
Machinery at Cost
Accumulated Depreciation
Capital
Bank Loan
60,000
15,000
45,000
15,000
75,000
18,000
52,500
---
During the year, machinery costing Rs. 15,000/- was sold at a loss of Rs. 3,000. Depreciation on machinery charges during the year amounted to Rs. 9,000.
Calculation of cash flow from Investing Activities
Purchase of Machinery
Sale of Machinery
(30,000)
6,000
Cash used in Investing Activities
(24,000)

Calculation of cash flow from Financing Activities
Issue of Share
Bank Loan repaid
7,500
(15,000)
Cash used in Financing Activities
(7,500)
Working Note:
(1)
Machinery A/c (WDV)
To Opening Balance
To Cash (Purchase)
45,000
30,000
By Cash (Sale)
By Depreciation
By P/L A/c
By Closing Stock
6,000
9,000
3,000
57,000

75,000

75,000

(2) Depreciation on Machinery sold = 9,000 – 3,000 = 6,000
(3) Calculation of Sale Value:
Calculation of cash flow from Investing Activities
Cost of machinery sold
Less: Depreciation on Machinery sold
15,000
6,000

Less: Loss on sale
9,000
3,000
Sale Value
6,000
Or
Explain any five advantages of Cash Flow Statement.                      1x5=5
Ans. ADVANTAGES of Cash Flow Statement                                              
Ø   Helps in devising the cash requirement:  Cash flow statement is helpful in devising the cash requirement for repayment of liabilities and replacement of fixed assets.
Ø  Helps the Management in Making Future Financial Policies: The management can make its future financial policies and is in a position to know about surplus or deficit of cash with the help of projected cash flow statement.
Ø  Efficient Cash Management: It helps in efficient management of cash resources which helps a company to maintain adequate cash balance to meet its liabilities.
Ø  Supplement to funds flow statement: Cash flow statement supplements the analysis provided by the funds flow statement as cash is a part of the working capital.
Ø  Test for the Management Decisions: Comparison of actual and budgeted cash flow statement will disclose the failure or success of management in managing cash resources.
14. From the following details, calculate Gross Profit and Sales:                               2 ½ x2=5
Average Stock = 60,000/-
Stock Turnover Ratio = 6 times.
Selling Price is 20% above cost.
Solution:
Stock Turnover Ratio = 6 Times
Þ Cost of goods sold/Average Stock = 6
Þ Cost of goods sold/60,000 = 6
Þ Cost of goods sold= 3,60,000
And, GP = 20% of Cost of goods sold
= 20/100 x 3,60,000
= 72,000
\ Sales = Cost of goods sold + GP
= 3,60,000 + 72,000
= 4,32,000
Or
Name any five ratios used for analyzing the liquidity position of a Firm.                  1x5=5
Ans:   A) Types of ratio according to traditional classification:
1. Income Statement Ratio: A ratio of two variables from the income statement is known as Income Statement Ratio. For example: gross profit ratio, net profit ratio, operating ratio, operating profit ratio, stock turnover ratio etc.
2. Balance Sheet Ratio: In case both variables are from balance sheet, it is classified as balance sheet ratio. For example: Debt-equity ratio, total asset to debt ratio, Proprietory ratio, current ratio, liquid ratio/acid-test ratio etc.
3. Composite Ratio: If a ratio is computed with one variable from income statement and another variable from balance sheet, it is called Composite Ratio. For example: Return on investment ratio, return on capital employed, Fixed assets turnover ratio, working capital turnover ratio etc.

B) Functional classification of ratio: Under this classification, ratios may be grouped in the following types:
a) Liquidity Ratios: Liquidity ratios are calculated to have indications about the short term solvency of the business, i.e. the firm’s ability to meet its current obligations. For example: Current ratio, liquid ratio and absolute liquid ratio falls under this group.
b) Solvency Ratios or leverage ratios: Solvency ratios are calculated to determine the ability of the business to service its debt in the long Run. For example: Debt-equity ratio, total asset to debt ratio, Proprietory ratio and capital gearing ratio are covered under this group.
c) Efficiency or turnover or activity Ratios: These ratios are calculated to study the efficiency with which the resources of the unit have been used. For example: Inventory turnover ratio, debtor’s turnover ratio, creditor’s turnover ratio and fixed assets turnover ratios are covered under this group.       
d) Profitability Ratios: These ratios measure the operating efficiency i.e. the financial result of the unit during the accounting period. For example: gross profit ratio, net profit ratio, operating ratio, operating profit ratio and return on investment are covered under this group.
15. Partha, Pranoy and Prasanna are partners sharing profits and losses in the ratio of 3: 2: 1. On 31st March, 2015, their Balance Sheet stood as follows:
Balance Sheet
Liabilities
Rs.
Assets
Rs.
Capitals :
    Partha :         80,000/-
    Pranoy :        60,000/-
    Prasanna :    50,000/-
General Reserve
Sundry Creditors



1,90,000
24,000
48,000
Buildings
Plant & Machinery
Inventory
Debtors
Bank
90,000
86,000
50,000
31,000
5,000

2,62,000

2,62,000
Pranoy retires on that date under the following terms:
a)      The Goodwill of the firm is valued at Rs. 36,000/-
b)      Plant & Machinery is to be depreciated by 10%.
c)       Inventory and Buildings are to be appreciated by 20% and 10% respectively.
Give necessary Journal entries in the books of the firm.                                                                                5
Solution:
Journal Entries
In the books of firm
Particulars
L/f
Amount Dr.
Amount Cr.
General Reserve A/c                                                                      Dr.
To Partha’s Capital A/c
To Pranoy’s Capital A/c
To Prasanna’s Capital A/c
(Being General reserve transferred to partner’s capital a/c)

24,000

12,000
8,000
4,000
Revaluation A/c                                                                               Dr.
To Plant & Machinery A/c
(Being P/M revalued)

8,600

8,600

Building A/c                                                                                     Dr.
Inventory A/c                                                                                  Dr.
To Revaluation A/c
(Being Inventory & Building revalued)

9,000
10,000


19,000
Revaluation A/c                                                                              Dr.
To Partha’s Capital A/c
To Pranoy’s Capital A/c
To Prasanna’s Capital A/c
(Being Revaluation Profit transferred to Capital A/c)

10,400

5,200
3,467
1,733
Partha’s Capital A/c                                                                        Dr.
Prasanna’s Capital A/c                                                                    Dr.
To Pranoy’s Capital A/c
(Being G/W adjusted in Gaining Ratio)

9,000
3,000


12,000
Pranoy’s Capital A/c                                                                       Dr.
To Pranoy’s Loan A/c
(Being Pranoy’s capital transferred to his loan A/c)

83,467

83,647

Working Note:
Gaining Ratio = 3/4 – 3/6 : 1/4 – 1/6
=( 9/12 – 6/12) : (3/12 – 2/12)
=3/12 : 1/12
\Partha’s share = 3/12 x 36,000 = 9,000
Prasanna’s share = 1/12 x 36,000 = 3,000
Or
Explain the procedure of forfeiture of shares.                    5
Ans: Forfeiture of shares: Cancellation of shares due to non-payment of allotment and call money is called forfeiture of shares. A company has no inherent power to forfeit shares. The power to forfeit shares must be contained in the articles. Where a share holder fail to pay the amount due on any call, the directors may, if so authorized by the articles, forfeit his shares. Shares can only be forfeited for non-payment of allotment and calls. An attempt to forfeit shares for other reasons is illegal. Thus where the shares are declared forfeited for the purpose of reliving a friend from liability, the forfeiture may be set aside.
Before the shares are forfeited the shareholder:
i) Must be served with a notice requiring him to pay the money due on the call together with interest;
ii) The notice shall specify a date, not being earlier than the expiry of 14 days from the date of service of notice, on or before which the payment is to be made and must also state that in the event of non-payment within that date will make the shares liable for forfeiture;
iii) There must be a proper resolution of the board;
iv) The power of forfeiture must be exercised bonafide and for the benefit of the company.
A person, whose shares have been forfeited, ceases to be a member of the company. But he shall remain liable to pay to the company all moneys which at the date of forfeiture were payable by him to the company in respect of the shares. The liability of such a person shall cease as and when the company receives payment in full in respect of the shares.
Reissue of the forfeited shares:
            The directors of the company have the power to re-issue the forfeited shares on such terms as it think fit. Thus the forfeited shares can be reissued at par, or at premium or at discount. However, if the forfeited shares are reissued at discount, the amount of discount should not exceed the amount credited to the share forfeiture A/c. If the discount allowed on reissue is less than the forfeited amount there will be the surplus left in the share forfeited A/c. This surplus will be of the nature of capital profits so it will be transferred to the Capital Reserve A/c.
Procedure for reissue of forfeited shares
a)      The forfeited shares may then be disposed by sale or in any other manner as directed by the Board.  
b)      Short particulars of reissued shares will be advised to the stock exchange concerned.  
c)       To give effect to the sale of forfeited shares, the Board will authorise some person, preferably the director or Secretary, to transfer the shares sold to the purchaser thereof and to make a declaration in connection therewith.  
d)      The defaulting members will be asked to return the share certificates. If they fail to do so fresh certificates will be issued.  
e)      Public and stock exchange will be advised not to deal with the old certificates.  
f)       Any surplus arising out of sale after adjusting the amount due to the company in respect of the shares will be refunded to the member concerned.
16. Anupam, Binoy and Chandan were partners in a firm sharing profits in the ratio of 2: 3: 5. On 31st March, 2014, their Balance Sheet was as follows:
Balance Sheet
Liabilities
(Rs.)
Assets
(Rs.)
Capitals :
    Anupam   =      60,000/-
    Binoy        =      50,000/-
    Chandan  =     30,000/-
Reserve
Creditors
Bills Payable



1,40,000
12,000
20,000
2,000
Cash at Bank
Debtors
Bills Receivable
Stock
Furniture
Machinery
16,000
30,000
8,000
20,000
60,000
40,000
TOTAL
1,74,000
TOTAL
1,74,000
Anupam died on 1st October, 2014. It was agreed between his executors and the remaining partners that:
a)      Goodwill will be valued at 3 years purchase of the average profits of the last four years which were :
Year
Profit
2010-11
2011-12
2012-13
2013-14
30,000/-
40,000/-
40,000/-
40,000/-

b)      Machinery and Furniture be valued at Rs. 36,000/- and Rs. 56,000/- respectively.
c)       Profit for the year 2014-15 be taken as having accrued at the same rate as that of the previous year.
d)      Interest on capital be provided at 10% p.a.
e)      The amount due to Anupam shall be transferred to his Executor’s Loan Account.
Prepare Anupam’s Capital Account as on the date of his death.                                                                                 5
Solution:
Anupam’s Capital A/c
Particulars
Amount
Particulars
Amount
To Revaluation A/c
To Anupam’s executors A/c
1,600
90,300
By Balance b/d
By Interest on Capital A/c
By Profit & Loss suspense A/c
By Binoy’s Capital A/c
By Chandan’s Capital A/c
By Reserve A/c
60,000
3,000
4,000
8,437.5
14,062.5
2,400

91,900

91,900
Working Note:
Interest on Capital = 60,000 x 10/100 x 6/12 = 3,000
Profit of Anupam’s = 40,000 x 2/10 x 6/12 = 4,000
Goodwill = 30,000 + 40,000 + 40,000 + 40,000/4 x 3
= 1,50,000/4 x 3
= 1,12,500
Gaining Ratio = 3/8 – 3/10 : 5/8 – 5/10
= 15 – 12/40 : 25 – 20/40
= 3/40 : 5/40
\Binoy’s Share = 3/40 x 1,12,500 = 8,437.5
Chandan’s Share = 5/40 x 1,12,500 = 14,062.5
And Reserve of Anupam’s = 12,000 x 2/10 = 2,400
Or
What are the causes of retirement of a Partner from a Partnership firm (any five causes)                              1x5=5
Ans. A partner may retire from the firm for various reasons such as old age, bad health, strain relationship with other partners, financial problems, residence shifting or any other reasons. A partner may quit the firm with the consent of all the partners or when there is an express agreement to this effect.
17. R, M and H were in partnership sharing profits and losses in the ratio of 8: 5: 3 respectively. The firm’s balance sheet as on 31st March, 2015 was as under:
Balance Sheet
Liabilities
(Rs.)
Assets
(Rs.)
Capitals :
    R          =      5,000/-
    M         =     2,000/-
    H          =     1,000/-
Sundry Creditors
Bank Loan



8,000
2,953
5,500
Current Account :
R        =       2,195/-
M       =       1,733/-
H        =       1,520/-
Machinery
Stock
Sundry Debtors
Cash



5,448
1,050
6,059
3,572
324

TOTAL
16,453
TOTAL
16,453
It was resolved to dissolve the partnership as on that date. The assets were realised as follows:
Machinery
Stock
Sundry Debtors
600/-
5,230/-
3,555/-
Prepare Realisation Account.                                                                                                    5
Solution:


Realisation A/c
Particulars
Amount
Particulars
Amount
To Machinery
To Stock
To Sundry Debtors
To Cash A/c
1,050
6,059
3,572
8,453
By Sundry Creditors
By Bank Loan
By Cash A/c
By Loss on Realisation (to current A/c):
R: 1,296 x 8/16 =  648
H: 1,296 x 5/16 =  405
M: 1,296 x 3/16 = 243
2,953
5,500
9,385
1,296

19,134

19,134
Or
What do you mean by dissolution of a Partnership? State three grounds for dissolution of Partnership.       2+3=5
Ans. The dissolution of partnership between all the partners of a firm is called the "dissolution of the firm". A firm may be dissolved with the consent of all the partners or in accordance with a contract between the partners. The Indian Partnership Act, 1932 provides that a partnership firm may be dissolved in any of the following modes:
i.         Compulsory dissolution;      
ii.       Dissolution on the happening of certain contingencies;
iii.      Dissolution by notice of partnership at will;
i) Compulsory Dissolution: A firm is dissolved compulsorily by the adjudication of all the partners or of all the partners but one as insolvent, or by the happening of any event which makes it unlawful for the business of the firm to be carried on or for the partners to carry it on in partnership.
ii) Dissolution on the Happening of Certain Contingencies: Subject to contract between the partners, a firm is dissolved:
i.      if constituted for a fixed term, by the expiry of that term;
ii.    if constituted to carry out one or more adventures or undertakings, by the completion thereof;
iii.   by the death of a partner; and
iv.  By the adjudication of a partner as an insolvent.
iii) Dissolution by Notice of Partnership at Will: Where the partnership is at will, the firm may be dissolved by any partner giving notice in writing to all the other partners of his intention to dissolve the firm. The firm is dissolved as from the date mentioned in the notice as the date of dissolution or, if no date is so mentioned, as from the date of the communication of the notice.
18. Give the new format of the Balance Sheet of a Company (main headings only) as per the requirements of revised Schedule – VI of the Companies Act, 1956.                                          5
Ans: Refer Q.N. 16 , asked in 2012 exam
Or
How would you compute the amount due to a deceased Partner’s Executor?                     5
Ans: The death may come at any time. On the death of a partner, the legal heirs of the deceased partners are entitled to get the amount due to the deceased partner as per the provisions of partnership deed. On the death of a partner, the legal heirs or representatives are entitled to get the following:
a)      The amount standing to the credit to the capital account of the deceased partner
b)      Interest on capital, if provided in the partnership deed upto the date of death:
c)       Share of goodwill of the firm;
d)      Share of undistributed profit or reserves;
e)      Share of profit on the revaluation of assets and liabilities;
f)       Share of profit upto the date of death;
g)      Share of Joint Life Policy.
The following specimen of deceased partner’s capital will help to find out the amount due to the deceased partner.
Particulars
Amount
Particulars
Amount
To Balance B/d (If there is a debit balance)
To Share in Revaluation loss
To Accumulated losses
To Drawings
To Interest on Drawings
To Profit and Loss Suspense A/c (Share in loss upto death)
To Assets taken over
To Executors Account (Balancing figure)

By Balance B/d (If there is a credit balance)
By Share in Revaluation Profit
By Accumulated Profits and Reserves
By Interest on Capital
By Profit and Loss Suspense A/c (Share In profits upto death)
By Liabilities taken over by legal heirs

Amount Due to Deceased Partner (Sec. 37 of the partnership act)
The amount due to the deceased partner is transferred to a loan account opened in the name of executor of the deceased partner and payable by the existing partners. The agreement normally provides for the interest payable on the loan and the conditions for the repayment of such loan. In the absence of any agreement, it is provided in sec. 37 of partnership act that the estate of deceased partner has the option either to claim interest on the amount due @6% p.a. or to such a share of the subsequent profits as may be attributable to the use of his share of the property of the firm.
19. Following is the Trial Balance of SUDIP AND PRADIP as on 31st March, 2015:                                                 8
Particulars
(Rs.)
Particulars
(Rs.)
Plant & Machinery
Publicity
Freight on sales
Buildings
Goodwill
Sundry Debtors
Bad debt
Cash at Bank
Investments
Cash in hand
Salaries
Stock
General Expenses
Drawings:
                 Sudip    = 5,000
                 Pradip  = 3,000
35,000
5,000
2,140
69,000
15,000
48,200
1,400
5,620
10,000
170
28,850
10,000
5,500


8,000
Capital Accounts :
             Sudip    =  50,000
             Pradip  =  30,000
Trading Account
--- Gross Profit
Creditors
Bank Loan
Commission
Outstanding Freight
Provision for doubtful debt
Bills Payable


80,000

85,700
44,560
21,000
4,420
200
1,000
7,000
TOTAL
2,43,880
TOTAL
2,43,880
Prepare the Profit & Loss Account and the Profit & Loss Appropriation Account of the firm for the year ended 31st March, 2015 and a Balance Sheet as on that date after taking into consideration the following additional information:
a)      Depreciation Plant & Machinery @ 10% p.a.
b)      Prepaid Publicity Rs. 500/-
c)       Outstanding Salaries Rs. 1,150/-
d)      Provide for doubtful debt @ 5% on Sundry Debtors.
e)      Partners will get interest on capital @ 5% p.a.
Solution:
Profit & Loss A/c
For the year ended 31st March, 2015
Particulars
Amount
Particulars
Amount
To Depreciation on Plant & Machinery
To Publicity                              5,000
Less: Prepaid                               500
To Freight on sales
To Provision for d/d (New)
To B/d
To Salaries                             28,850    
Add: Outstanding                   1,150
To General Expenses
To Net Profit
3,500

4,500
2,140
2,410
1,400

30,000
5,500
41,670
By Gross Profit
By Commission
By Provision for d/d (Old)
85,700
4,420
1,000

91,120

91,120
Profit & Loss Appropriation A/c
For the year ended 31st March, 2015
Particulars
Amount (Dr)
Particulars
Amount (Cr)
To Interest on Capital:
Sudip    = 50,000 x 5%
Pradip  = 30,000 x 5%
To Share of Profit:
Sudip   = 37,670 x 1/2
Pradip = 37,670 x ½

2,500
1,500

18,835
18,835
By Net Profit
41,670

41,670

41,670
Partner’s Capital A/c
Particulars
Sudip
Pradip
Particulars
Sudip
Pradip
To Drawings
To Balance c/d
5,000
66,335
3,000
47,335
By Balance b/d
By Interest on Capital
By P/L Appropriation A/c
50,000
2,500
18,835
30,000
1,500
18,835

71,335
50,335

71,335
50,335
Balance Sheet
As on 31st March, 2015
Liabilities
Amount
Assets
Amount
Outstanding Salaries
Sundry Creditors
Bank Loan
Outstanding Freight
Bills Payable
Capital Accounts:
Sudip
Pradip
1,150
44,560
21,000
200
7,000

66,335
47,335
Plant & Machinery                   35,000
Less: Depreciation @ 10%        3,500
Building
Goodwill
Sundry Debtors                          48,200
Less: Provision for d/d @ 5%     2,410
Cash at Bank
Investment
Cash in hand
Prepaid Publicity
Stock

31,500
69,000
15,000

45,790
5,620
10,000
170
500
10,000

1,87,580

1,87,580
20. Assam Tea Ltd. has an authorized capital of Rs. 10, 00,000/- divided into 1, 00,000 equity shares of Rs. 10/- each. The directors decided to issue 50,000 shares to the public at a premium of 10% payable as follows:
On Application Rs. 3/-
On Allotment (including premium) Rs. 5/-
And the balance on 1st and final call.
The company received applications for 60,000 shares. The directors decided to reject the excess applications and the money thereon was refunded. All the shares were duly subscribed for, called up and paid up. Give Journal entries and prepare a Cash Book in the books of the Company.                                                                         8
Solution: Refer Q.N.20, Asked in 2014 exam
Or
Write short notes on:                     2x4=8
a)      Call in Arrear.
b)      Calls in Advance.
c)       Preference Share.
d)      Right Share.
a)      Calls-in-Arrears: The amount which is not paid by shareholders when money is demanded by the company, such amount is known as ‘Calls-in-Arrears’. The maximum rate of interest to be provided on calls in arrear must not exceed 10% per annum.
b)      Calls-in-Advance: Sometimes, it so happens that a shareholder may pay the entire amount on his shares even though the whole amount has not been called up. The amount received in advance of calls from such a shareholder should be credited to "calls in advance". The maximum rate of interest allowed on calls in advance is 12% per annum.
c)       Preference Share: According to Sec. 43 (a) of the Companies Act 2013, a share that carries the following two preferential rights is called ‘Preference Share’ i.e. preferential rigts in respect to payment of dividend and preferential rights in respect to repayment of capital.
d)      Right Issue: Rights Issue is when a listed company which proposes to issue fresh securities to its existing shareholders as on a record date. The rights are normally offered in a particular ratio to the number of securities held prior to the issue.
21. Tata Motors Ltd. invited applications for the issue of 3,000, 10% debentures of Rs. 100/- each at a discount of 10% payable Rs. 30/- on application, Rs. 30/- on allotment (after deducting discount) and the balance on first and final call. All the debentures were subscribed and the debenture money was duly called and paid up. Give Journal entries and show how Debentures Account will be shown in the Balance Sheet of the Company.     8
Solution:
Journal Entries for Tata Motors Ltd.
Particulars
L/f
Amount Dr.
Amount Cr.
Bank A/c                                                                                                                  Dr.
To 10% Debenture Application A/c
( Being application money received)

90,000

90,000
10% Debenture Application A/c                                                                         Dr.
To 10% Debentures A/c
( Being debentures allotted)

90,000

90,000
10% Debenture Allotment A/c                                                                            Dr.
Discount on issue of debentures A/c                                                                 Dr.
To 10% Debentures A/c
(Being Debenture allotment money due)

90,000
30,000


1,20,000
Bank A/c                                                                                                                   Dr.
To 10% Debenture Allotment A/c
( Being allotment money received)

90,000

90,000
10% Debenture 1st & Final Call A/c                                                                      Dr.
To 10% Debentures A/c
Being debenture 1st & Final Call due)

90,000

90,000
Bank A/c                                                                                                                   Dr.
To 10% Debenture 1st & Final Call A/c
( Being  1st & Final Call money received)

90,000

90,000
Balance Sheet
Particulars
Amount
        I.            Equity & Liabilities:
Non-Current Liabilities
Long Term Borrowings
3,000 debentures @ 100 each


3,00,000

3,00,000
      II.            Assets:
1. Non-current assets
Discount on issue of shares
2. Current Assets
Cash and cash equivalents


30,000

2,70,000

3,00,000
Or
Give the accounting entries for issue of debentures under different situations with imaginary figures. (Any four situations)                          2x4=8
Ans:
Journal Entries
In the books of _______________

Particulars
L/f


(a)
At the time of Issue
Bank A/c                                                                           Dr.
To  Debenture A/c
 (Being the ___________  Debentures issued at par)




At the time of redemption
 Debentures A/c                                                               Dr.
To Bank A/c
(Being the ___________  Debentures redeemed at par)



(b)
At the time of Issue
Bank A/c                                                                          Dr.
To  Debenture A/c
To Securities Premium Reserve A/c
(Being the ___________  Debentures issued at a premium of _______)




At the time of redemption
 Debentures A/c                                                             Dr.
To Bank A/c
(Being the ___________  Debentures redeemed at par)



(b)
At the time of Issue
Bank A/c                                                                           Dr.
Discount on issue of Debentures A/c                          Dr.
To  Debenture A/c
(Being the ___________  Debentures issued at par, but redeemable at a premium of ______________)




At the time of redemption
 Debentures A/c                                                                 Dr.
To Bank A/c
(Being the ___________  Debentures redeemed at par)



(d)
At the time of Issue
Bank A/c                                                                                 Dr.
Loss on Issue of Debentures A/c                                        Dr.
To  Debenture A/c
To Premium on Redemption of Debentures A/c
(Being the ___________  Debentures issued at a premium of ____, but redeemable at a premium of ____)




At the time of redemption
 Debentures A/c                                                                    Dr.
Premium on redemption of Debentures A/c                   Dr.
To Bank A/c
(Being the ____________  Debentures redeemed at a premium of ____)




22. A and B are two partners sharing profits and losses in the ratio of 3: 2. Their Balance Sheet as on 31st March, 2015 was as follows:
                                                                                                Balance Sheet
Liabilities
(Rs.)
Assets
(Rs.)
Capital :
     A = 30,000
     B = 25,000
General Reserve
Sundry Creditors


55,000
5,000
15,000
Land & Buildings
Plant & Machinery
Furniture
Stock
Debtors
Cash in Hand
30,000
20,000
10,000
5,000
8,000
2,000
TOTAL
75,000
TOTAL
75,000
On 01-4-2015, C was admitted as a new partner for 1/4th share in the future profits on the following conditions:
a)      C will bring Rs. 20,000/- as Capital and Rs. 6,000/- as premium for goodwill.
b)      The Land & Buildings will be revalued at Rs. 35,000/-
c)       Plant & Machinery and Furniture will be depreciated by 5% and 10% respectively.
d)      Stock will be reduced by Rs. 2,000/-
Give Journal entries and prepare the Balance Sheet of the firm after C’s admission.                                         6+2=8
Solution:
Journal Entries
In the books of firm
Particulars
L/f
Amount Dr.
Amount Cr.
Reserve A/c                                                                                     Dr.
To A’s Capital A/c
To B’s Capital A/c
(Being reserve distributed)

5,000

3,000
2,000
Cash A/c                                                                                          Dr.
To C’s Capital A/c
To Premium for goodwill A/c
(Being goodwill & capital brought in by C)

26,000

20,000
6,000
Premium for goodwill A/c                                                            Dr.
To A’s Capital A/c
To B’s Capital A/c
(Being Premium goodwill distributed)

6,000

3,600
2,400
Revaluation A/c                                                                             Dr.
To Plant & Machinery A/c
To Furniture A/c
To Stock A/c
(Being Assets revalued)

4,000

1,000
1,000
2,000
Land & Building A/c                                                                       Dr.
To Revaluation A/c
(Being L/B  revalued)

5,000

5,000
Revaluation A/c                                                                              Dr.
To A’s Capital A/c
To B’s Capital A/c
( Being revaluation profit transferred to partner’s capital A/c)

1,000

600
400
Balance Sheet
As on 31/3/2015
Liabilities
Amount
Assets
Amount
Capital:
A:                                       30,000
Add: P/G                            3,600
Add: Revaluation                 600
Add: Reserve                     3,000

B: Capital                         25,000
Add: P/G                            2,400
Add: Revaluation                 400
Add: Reserve                     2,000
          C
Sundry Creditors




37,200




29,800
20,000
15,000
Land & Building
Plant & Machinery                     20,000
Less: Depreciation                      (1,000)
Furniture                                      10,000
Less: Depreciation                      (1,000)
Stock                                               5,000
Less: Depreciation                      (2,000)
Debtors
Cash in hand (2,000 + 20,000 + 6,000)
35,000

19,000

9,000

3,000
8,000
28,000

1,02,000

1,02,000
Working Note:
A : B = 3 : 2
C’s share = 1/4
Let the Total share be 1
\C’s share = 1 – 1/4 = 3/4
\A’s share = 3/4 x 3/5 = 9/20
B’s share = 3/4 x 2/5 = 6/20
\New Ratio = 9 : 6 : 5
\Sacrificing Ratio = 3/5 – 9/16 : 2/5 – 6/16
= 48 – 45/80 : 32 – 30/80
= 3 : 2
\A’s share = 3/5 x 6,000 = 3,600
B’s share = 2/5 x 6,000 = 2,400
Or
Give the Accounting entries relating to forfeiture and re-issue of shares with imaginary figures.          8
X Ltd. company forfeited 800 shares of Rs.10 each issued at par for non-payment of 1st call Rs.2 and final call Rs.3 each. Out of these, 500 shares are re-issued at 10% discount. Give journal entries in the books of the company.         3
Solution:
Journal Entries
In the books of X Ltd.
Particulars
L/f
Amount Dr.
Amount Cr.
Equity Share Capital A/c                           Dr.
To Forfeited share A/c
To Share 1st call  A/c
To Share Final call A/c
(Being the 800 share forfeited due to nonpayment of call money)

8,000

4,000
1,600
2,400
Bank A/c                                          Dr.
Forfeited Share A/c                          Dr.
To Equity Share Capital A/c
(Being the forfeited shares re-issued @ Rs. 9 each)

4,500
500


5,000

Forfeited shares A/c                         Dr.
To Capital Reserve A/c
(Being the profit on re-issue of forfeited shares transferred to capital reserve)

2,000

2,000

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