Thursday, February 01, 2018

AHSEC Class 12: Accountancy Solved Question Papers' 2014

AHSEC SOLVED QUESTION PAPERS
2014 (ACCOUNTANCY)
Full Marks: 100
Pass Marks: 30, Time: Three Hours
1. (a) Fill in the blanks with appropriate word:
(i) Life membership fee is a capital receipt.
(ii) Interest on Partner’s loan is to be credited to his partner’s loan Account.
(iii) If there is any profit on revaluation of assets and liabilities, the same will be shared by old partners in their old ratio.
(iv) The amount due to the retiring partner is transferred to his loan account in case it is not paid immediately.
(b) Choose the correct alternative:
(i) If the business is sold as a going concern, cash balance is also transferred to ___________ Account.
(1) Revaluation
(2) Realisation
(ii) Rate of Interest on calls in arrears charged according to Table ‘A’ is _____________.
(1) 5%
(2) 6%
(3) 7%
(4) 8%
Ans. Rates of Interest on calls in arrear and calls in advance as per table ‘A’ are 10% and 12% respectively.
(c) State whether the following statements are true or false:
(i) Debenture holders are the owners of the company.                  Ans. False
(ii) Company’s shares are generally transferable.                                              Ans. True.
2. What is a capital fund?             2
Ans: In case of non trading organisations, excess of assets over liabilities is called “Capital Fund”. The capital fund is built up out of surplus derived from income and expenditure account. It also includes donation, legacy and entrance fees to the extent capitalised.
3. Mention any two rights of a partner. 2
Ans. Rights of a Partner:
a)      Every partner has a right to part in the conduct and management of the business.
b)      Every partner has a right to be consulted in the matters of the partnership.
c)       Every partner has a right to share profits (or losses) with others in the agreed ratio.
d)      Partners have a right of free access to all records, books of accounts and also to examine and copy them.
4. What is hidden goodwill?       2
Ans: Hidden goodwill means that amount of goodwill which is not known at the time of admission of a new partner but which is calculated on the basis of new partner’s capital.
5. What is Reserve capital?         2
Ans. Reserve Capital: A company may by special resolution determine that any portion of its share capital which has not been already called up shall not be capable of being called-up, except in the event of winding up of the company. Such type of share capital is known as reserve-capital.
6. Give any two distinctions between shares and debentures.  2
Ans. Difference between Shares and Debentures
Shares
Debentures
Shareholders are the owners of the Company.
Debenture holders are the Creditors of the Company.
Normally, the amount of share is not returned during the life of the company.
Debentures are issued for a definite period.
Shares cannot be converted into debentures.
Debentures can be converted into shares.
7. Mention any six statutory books to be maintained by a company.       3
Ans: Statutory book: Such books are those which a limited company is under statutory obligation to maintain at its registered office with a view to safeguard the interests of shareholders and creditors. Main statutory books are:
1. Register of investments held and their names, 2. Register of charges, 3. Register of members, 4. Register of debenture holders, 5. Annual returns, 6. Minute books, 7. Register of contracts, 8. Register of directors.
8. Explain the accounting treatment of loss on issue of debentures in the books of a company.                3
Ans. The amount of debenture discount/Loss on issue of debenture can be written off in two ways:
1. All debentures are to be redeemed after a fixed period: When the debentures are to be redeemed after a fixed period, the amount of discount will be distributed equally within the number of years spreaded between the issue of debentures and their redemption. The amount of discount on issue of debentures to be written off each year is calculated as: Amount of discount to be written off annually = Amount of Discount / No of Years
2. Debentures are redeemed in installments: Debentures may also be redeemed in installments but over a fixed period. In that case the amount of debenture discount will be written off each year in proportion to the amount of debentures redeemed.
Journal Entry for Writing of Discount on issue of Debentures/Loss on issue of Debentures is:
Profit and Loss Account                 Dr.
To Discount on issue of Debentures Account
To Loss on Issue of Debentures Account
9. Give the major heads on the “Equity and Liabilities” side of a company’s Balance Sheet.        3 (Similar Question asked in 2012 exam)
Or
What is trend analysis? Mention its usefulness.               3
Ans. Trend Analysis: Trend analysis is an important tool of horizontal financial analysis. This is helpful in making a comparative study of the financial statements for several years. Under this method trend percentages are calculated for each item of the financial statements taking the figure of base year as 100. The starting year is taken as the base year. The trend percentages show the relationship of each item with its preceding year’s percentages.
Merits of Trend analysis:
(i)        Trend percentages can be presented in the form of Index Numbers showing relative change in the financial statements during a certain period.
(ii)      Trend analysis will exhibit the direction to which the concern is proceeding.
(iii)    The trend ratio may be compared with the industry, in order to know the strong or weak points of a concern.
10. How would you calculate the amount payable to the executor of a deceased partner?          3
Ans: Calculation of profit upto the date of death of a partner
If the death of a partner occurs during the year, the representatives of the deceased partner are entitled to his/her share of profits earned till the date of his/her death. Such profit is ascertained by any of the following methods:
(i) Time Basis:
(ii) Turnover or Sales Basis
(i) Time Basis: In this case, it is assumed that profit has been earned uniformly throughout the year. Profit taken here is either Last year’s profit Or Average profits of last few years. For example:
The total profit of Last year is Rs. 2, 25,000 and a partner dies three months after the close of previous year, the profit of three months is Rs. 31,250 i.e. 1, 25,000 × 3/12, if the deceased partner took 2/10 share of profit, his/her share of profit till the date of death is Rs. 6,250 i.e. Rs. 31,250 × 2/10.
Again, the profits of last three years is Rs. 100000, Rs. 75000 and Rs. 125000 and partner dies three months after the close of previous year, the his share of profit upto date of death is calculated as follows:
1.       Average profit of last three years = (100000+75000+125000)/3 = 100000
2.       Profit of last three years = 100000x3/12 = 25000
3.       Deceased partner’s share of profit = 25000 x 2/10 = 5000, if the deceased partner took 2/10 share of profit.
(ii) Turnover or Sales Basis: In this method, we have to take into consideration the profit and the total sales of the last year. Thereafter the profit upto the date of death is estimated on the basis of the following formula:
(Sales upto date of death/Sales of last year) x profit of previous year
 Profit is assumed to be earned uniformly at the same rate. For example: 
A, B and C were partners in a firm sharing profits in the ratio of 2:2:1. C dies on 31st July, 2007. Sales during the previous year upto 31st march, 2007 were Rs. 6, 00,000 and profits were Rs. 150000. Sales for the current year upto 31st July were Rs. 250000. Calculate C’s share of profits upto the date of his death and pass necessary journal entry.
Here, Profit upto date of death (upto 31st July, 2007) = (250000/600000) x 150000 = 62500 And C’s Share of profit = 62500x1/5 = 12500.
Journal entry for Crediting Deceased Partner’s share of profit upto date of death is:
Profit and Loss Suspense A/c                      Dr.
To Deceased Partner’s Capital A/c
11. Mention three situations under which a firm may be dissolved without intervention by court.                          3
Ans. Dissolution by Court: A court may order a partnership firm to be dissolved in the following cases:
i.         When a partner becomes of unsound mind
ii.       When a partner becomes permanently incapable of performing his/her duties as a partner,
iii.      When partner deliberately and consistently commits breach of agreements relating to the management of the firm;
Or
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
12. Calculate Acid-Test Ratio from the following:                                                             5
Current Assets Rs.50000.
Current assets include the following:
Stock Rs.14000.
Pre-paid Expenses Rs. 1000.
Current liabilities Rs.20000. Current liabilities include Bank overdraft Rs.5000.
Solution:
Acid Test Ratio = Liquid Assets/ Current Liabilities
Liquid Assets = Current Assets – Stock – Prepaid Expenses
= 50,000 – 14,000 – 1,000
= 35,000
Current Liabilities = 20,000
\ Acid Test Ratio = 35,000/20,000 = 1.75:1
13. From the following information, calculate cash flow from operating activities using Direct Method:                               5
Particulars (Dr.)
Amount
Particulars (Cr.)
Amount
To Cost of goods sold
To Gross Profit c/d

To Salary
To Insurance
To Depreciation
To Income Tax
To Net Profit
130000
70000
By Sales


By Gross Profit b/d
200000
200000
200000
20000
2000
5000
8000
35000
70000

70000

70000
Additional Information:
(1)    Debtors – Opening Balance Rs.15000, Closing Balance Rs.20000.
(2)    Creditors – Opening Balance Rs.10000, Closing Balance Rs.12000.
(3)    Stock – Opening Balance Rs.7000, Closing Balance Rs.10000.
(4)    At the end of the year, outstanding salary Rs.2000 pre-paid insurance Rs.400 and Income tax outstanding Rs.1000.
Solution:
Calculation of Cash Flow from Opening Activities
Particulars
Amount
Collection From Debtors
(2,00,000 + 15,000 – 20,000)
Payment to Creditors
(1,33,000 + 10,000 – 12,000)
Salary Paid (20,000 – 2,000)
Insurance Premium paid (2,000+400)

1,95,000

(1,31,000)

(18,000)
(2,400)

Less: Payment of taxes (8,000 – 1,000)
43,600
7,000
Cash Flow From Operating activities
36,600

Working Note: Calculation of Purchases
Cost of goods sold = Opening Stock + Purchases – Closing stock
=>1,30,000 = 7,000 + Purchases – 10,000
=>Purchases = 1,40,000 – 7,000 = 1,33,000
14. From the following items of Receipt and Payment Account of South India Club, prepare moan Income and Expenditure Account for the year ended 31.03.2013:                5
Salaries Paid
Lighting Expenses
Stationery (Including Rs.400 for the previous year)
Subscription received (Including Rs.1000 received in advance and Rs. 750 for previous year)
Net proceeds of refreshment room
Miscellaneous Expenses
Interest paid on loan for 3 months
Rent and Rates (Including Rs.500 prepaid)
Locker’s Rent received
55000
5500
4000
44000
30000
3000
1200
4500
4900
Additional Information: On 31.3.2013, subscription in arrear was Rs. 4700 and interest on loan was outstanding for 9 months.
Solution:
Income & Expenditure of South India Club
For the year ended 31-03-2013
Expenditure
Amount
Income
Amount
To Salaries paid
To Lighting Expenses
To Stationery                                  4,000
Less: For previous year                    400
To Misc. Expenses
To Interest on Loan                       1,200
Add: Interest due (1,200 x 9/3)  3,600
To Rent & Taxes                             4,500
Less: Prepaid                                      500
To Surplus (Excess of incomes over expenditure)
55,000
5,500

3,600
3,000

4,800

4,000
5,950
By Subscription                     44,000
Less: Advance                          1,000
43,000
Less: For Provisions year           750
42,250
Add: Subscription arrear        4,700
By Net proceeds of refreshment room
By Lockers rent received    





46,950
30,000
4,900


81,850

81,850

15. What is Partnership Deed? Mention its four principal clauses.                           5
Ans: Partnership deed: Meaning: A partnership is formed by an agreement. This agreement may be oral or in writing. Though the law does not expressly require that the partnership agreement should be in writing, it is desirable to have it in writing. A document, which contains the terms of partnership, as agreed to by the partners is called ‘Partnership Deed.’
Contents (Clauses) of the Deed:                                                                                                                           
a)      Name and address of the firm.
b)      Names and addresses of the partners.
c)       Nature of Business.
d)      Amount of capital to be contributed by each partner.
e)      Profit or loss sharing ratio.
16. Neer and Sameer are partners in a firm sharing profits in the ratio of 5:3. On 1st January 2012, their capitals were Rs.35000 and Rs.25000 respectively. On that date, they admitted Varun as a new partner for 1/5th share in the profit. Varun brought in Rs. 20000 as capital and Rs.8000 for his premium for goodwill. Pass necessary Journal Entries in the books of the firm on Varun’s admission. The new profit sharing ratio will be 3:1:1.       5
Solution:
Journal Entries
In the books of firm
Particulars
L/f
Amount Dr.
Amount Cr.
Cash A/c                                                                                          Dr.
To Varun’s Capital A/c
To Premium for goodwill A/c
(Being the capital and goodwill brought in cash by Varun’s)

28,000

20,000
8,000

Premium for goodwill A/c                                                             Dr.
To Neer’s Capital A/c
To Sameer’s Capital A/c
(Being the premium for goodwill distributed between sacrificing partners)

8,000

1,000
7,000

Working Note:
Sacrificing Ratio (Neer : Sameer) = (5/8 – 3/5) : (3/8 – 1/5)
= (25 /40 – 24/40) : (15/40 – 8/40)
= 1/40 : 7/40
=1 : 7
17. S, T and U were partners in a firm sharing profits in the ratio of 1:2:2. On 15.2.2013, S died and new profit sharing ratio of T and U was agreed to be 3:2. On S’s death, the goodwill of the firm was valued at Rs.60000. Calculate the gaining ratio and pass the necessary Journal Entries on S’s death for treatment of goodwill without opening goodwill account.      5
Solution:
Journal Entries
In the books of firm
Particulars
L/f
Amount Dr.
Amount Cr.
T’s Capital A/c                                                                                Dr.
To S’s Capital A/c
(Being the deceased share of goodwill adjusted)

12,000

12,000


Working Note:
Gaining Ratio (T : U) = 3/5 – 2/5 : 2/5 – 2/5
 = 1/5 : 0
\Goodwill of T = 1/5 x 60,000 = 12,000
Or
State the legal requirements for issuing shares at a discount.    5
Ans: As per sec. 53 of the Companies Act, 2013, issue of shares at a discount is prohibited. This prohibition applies to all companies, public or private. Any issue of share at a discount shall be void. But a company can issue sweat equity shares to its directors or employees as a reward to them for their contributions. Sweat equity shares are those which are issued by a company at a discount or for consideration other than cash.
According to Section 54 of company act 2013, a company is permitted to issue sweat equity shares provided the following conditions are satisfied:
a)      The issue of shares at a discount is authorised by a resolution passed by the company in its general meeting and sanctioned by the Central Government.
b)      The resolution must specify the maximum rate of discount at which the shares are to be issued but the rate of discount must not exceed 10 per cent of the nominal value of shares. The rate of discount can be more than 10 per cent if the Government is convinced that a higher rate is called for under special circumstances of a case.
c)       At least one year must have elapsed since the company was entitled to commence the business.
d)      The shares are of a class, which has already been issued.
e)      The shares are issued within two months from the date of sanction received from the Government.
18. Guwahati Engineering Limited issued 10000 6% Debentures of Rs.10 each at a discount of 5% but repayable after 5 years at a premium of 10%. Show the entries in the books of the company and also the accounting treatment of loss on issue of debentures for 5 years.                               5
Solution:
Journal Entries
In the books of Guwahati Engineering Ltd.

Particulars
L/f
Amount Dr.
Amount Cr.

Bank A/c                                                                                                                  Dr.
Loss on issue of debentures A/c                                                                         Dr.
To 6% Debentures A/c
To Premium on redemption of debentures A/c
(Being the 10000 6% Debentures issued at a discount of 5%, but redeemable at a discount of 10%)

95,000
15,000


1,00,000
10,000
Loss on issue of Debentures A/c
Date
Particulars
Rs.
Date
Particulars
Rs.
Year 1
To 6% Debenture A/c
To Premium on redemption A/c
5,000
10,000
Year 1
By Profit and Loss A/c
By Balance c/d
3,000
12,000


15,000


15,000
Year 2
To Balance b/d

12,000
Year 2
By Profit and Loss A/c
By Balance c/d
3,000
9,000


12,000


12,000
Year 3
To Balance b/d
9,000

Year 3
By Profit and Loss A/c
By Balance c/d
3,000
6,000


9,000


9,000
Year 4
To Balance b/d
6,000

Year 4
By Profit and Loss A/c
By Balance c/d
3,000
3,000


6,000


6,000
Year 5
To Balance b/d
3,000

By Profit and Loss A/c
3,000


3,000


3,000
Working Note:
Amount to be written off each year
= 15,000/5 = 3,000
19. Amal and Bimal are two partners in a firm. They share profits in the ratio of 3:2. Following is their Balance Sheet as on 31.12.2012 on which date they dissolved their partnership firm:                                               8
Balance Sheet
As on 31.12.2012
Liabilities
Amount
Assets
Amount
Capital:
Amal  - 20000
Bimal – 15000
Reserve Fund
Creditors


35000
5000
20000
Fixed Assets
Stock
Debtors
Cash
Profit and Loss Account
30000
10000
15000
3000
2000






Assets are realised as: Fixed Assets Rs.28000, Stock Rs.8000 and Debtors Rs.13000. Creditors were paid at a discount of 10%. Expenses of realisation were Rs.1500. Pass Journal Entries in the books of the firm.
Solution:
Journal Entries
In the books of firm
Particulars
L/f
Amount Dr.
Amount Cr.
Realisation A/c                                                                                Dr.
To Fixed Assets A/c
To Stock A/c
To Debtors A/c
(Being the Sundry assets transferred to realisation A/c)

55,000

30,000
10,000
15,000
Creditors A/c                                                                                  Dr.
To Realisation A/c
(Being the creditors transferred to realisation A/c)

20,000

20,000
Cash A/c                                                                                          Dr.
To Realisation A/c
(Being the sundry assets realised: Fixed assets = 28,000; stock = 8,000 and debtors = 13,000)

49,000

49,000
Realisation A/c                                                                               Dr.
To Cash A/c
(Being the creditors paid off)

18,000

18,000
Realisation A/c                                                                               Dr.
To Cash A/c
(Being the realisation expenses paid)

1,500

1,500
Reserve Fund A/c                                                                           Dr.
To Amal’s Capital A/c
To Bimal’s Capital A/c
(Being the reserve fund distributed between the partners)

5,000

3,000
2,000
Amal’s Capital A/c                                                                         Dr.
Bimal’s Capital A/c                                                                        Dr.
To Profit & Loss A/c
(Being the debit balance of P/L A/c distributed)

1,200
800


2,000
Amal’s Capital A/c                                                                         Dr.
Bimal’s Capital A/c                                                                        Dr.
To Realisation A/c
(Being the loss on realisation distributed between the partners)

3,300
2,200


5,500
Amal’s Capital A/c                                                                         Dr.
Bimal’s Capital A/c                                                                        Dr.
To Cash A/c
(Being the final payment made to the partners)

18,500
14,000


32,500

20. Jugmug Limited has an authorized capital of Rs.1000000 divided into 100000 equity shares of Rs.10 each. The directors decided to issue 50000 shares to the public at a premium of 10% payable as follows:                        8
On Application: Rs.3
On Allotment: Rs. 5 (Including Premium) and the Balance on 1st and final call.
The company received application for 60000 shares. The directors decided to reject the excess application and the money thereon was refunded. The calls were made and call money duly received. Give Journal Entries; prepare a Cash Book and a Balance Sheet in the books of the company.
Solution:
Cash Book
Particulars
Amount
Particulars
Amount
To Share Application A/c
(60,000 shares @ Rs. 3 each)
To Share Allotment A/c
To Share 1st & Final Call A/c
1,80,000

2,50,000
1,50,000
By Share Application
(10,000 shares @ Rs. 3)
By Balance c/d
30,000

5,50,000

5,80,000

5,80,000
Journal Entries
In the books of Jugmug Ltd.
Particulars
L/f
Amount Dr.
Amount Cr.
Equity Share Application A/c                                                              Dr.
To Equity Share Capital A/c
(Being the application money of 50,000 shares transferred to share capital)

1,50,000

1,50,000
Equity Share Allotment A/c                                                                 Dr.
To Equity Share Capital A/c
To Securities Premium Reserve A/c
(Being the allotment money due on 50,000 shares @ 5 each including premium @ Rs. 1 per share

2,50,000

2,00,000
50,000
Equity Share 1st & Final Call A/c                                                         Dr.
To Equity Share Capital A/c
(Being the First call money due on 50,000 shares @ Rs. 3 each)

1,50,000

1,50,000
Balance Sheet of Jugmug Ltd.
Particulars
Amount
        I.            Equity & Liabilities:
1)      Shareholder’s Fund
a)      Share Capital
Authorized Capital
1,00,000 @ 10 each




10,00,000
Issued Capital
50,000 @ 10 each

5,00,000
Subscribe Capital
60,000 @ 10 each

6,00,000
Called up Capital
50,000 @ 10 each

5,00,000
Paid up Capital
50,000 @ 10 each
b)      Reserves & Surplus
Securities Premium Reserve


5,00,000

50,000
Total
5,50,000
      II.            Assets:
1)      Current Assets
a)      Cash & Cash equivalent


5,50,000
Total
5,50,000

21. The following is the Trial Balance of X and Y firm as on 31.3.2013:                                        8
Trial Balance
Debit
Amount
Credit
Amount
Fixed Assets
Advance Income Tax
Salaries
Taxes
Miscellaneous Expenses
Bills Receivable
Sundry Debtors
Closing Stock
Charity
Investment
Bank Balance
Drawings:
X
Y
453000
200
16000
800
1000
1800
42800
20000
1400
30000
15600

12000
8000
Reserve Fund
Outstanding Wages
Bad Debt Provision
Sundry Creditors
Capital:
X
Y
Profit from Joint Venture
Profit from Branch
Trading Account (Gross Profit)
19000
600
1400
55600

240000
160000
1000
400
124600

602600

602600
Prepare Profit and Loss Account and Profit and Loss Appropriation Account for the year ended 31.3.2013 and a Balance Sheet as on that date after taking into consideration the following adjustments:
(i) The Partners are entitled to Interest on Capital @ 5% and they are charged interest on drawings: X – 300 and Y – 200.
(ii) Transfer 10% of the net profit to Reserve Fund.
(iii) Provide manager’s commission @5% on net profit before charging such commission.
(iv) Bad Debt reserve is to be increased to 5% on debtors.
(v) Interest on investment accrued Rs.500.
Solution:
Profit & Loss A/c
For the year ended 31.03.2013
Particulars
Amount
Particulars
Amount
To Salaries
To Taxes
To Misc. Expenses
To Provision for b/d (New)
To Charity
To Net Profit (Before manager’s commission)
16,000
800
1,000
2,140
1,400

1,06,560
By Gross Profit
By Provision for b/d (Old)
By Profit from Joint Venture
By Profit from Baruah
By Interest Accrued

1,24,600
1,400
1,000
400
500

1,27,900

1,27,900
To Manager’s Commission
(1,06,560 x 5/100)
To Net Profit
(Transferred to P/L Appropriation A/c
5,328


1,01,232
By Net Profit
(Before manager’s Commission)
1,06,560

1,06,560

1,06,560
Profit & Loss Appropriation A/c
For the year ended 31.03.2013
Particulars
Amount (Dr)
Particulars
Amount (Cr)
To Interest on Capital:
X  = 2,40,000 x 5%
Y  = 1,60,000 x 5%
To Transfer to Reserve
(1,01,232 x 10%)
To Share of Profit:
X   = 71,609 x 1/2
Y   = 71,609 x ½

12,000
8,000

10,123

35,804.50
35,804.50
By Net Profit
By Interest on Drawings:
X = 300
Y = 200
1,01,232


500

1,01,732

1,01,732
Partner’s Capital A/c
Particulars
X
Y
Particulars
X
Y
To Drawings
To Interest on Drawings
To Balance c/d
12,000
300
2,75,504.50
8,000.00
200.00
1,95,604.50
By Balance b/d
By Interest on Capital
By P/L Appropriation A/c
2,40,000.00
12,000.00
35,804.50
1,60,000.00
8,000.00
35,804.50

2,87,804.50
2,03,804.50

2,87,804.50
2,03,804.50
Balance Sheet
As on 31.03.2013
Liabilities
Amount
Assets
Amount
Reserve Fund                           19,000
Add: Transfer to Reserve      10,123
Outstanding wages
Sundry Creditors
Manager’s Commission due
Capital Accounts:
X = 2,75,504.50
Y = 1,95,604.50

29,123
600
55,600
5,328


4,71,109
Fixed Assets
Advance Income Tax
Bills Receivable
Sundry Debtors                           42,800
Less: Provision for b/d @ 5%     2,140
Closing Stock
Investments
Interest accrued
Bank balance
4,53,000
200
1,800

40,660
20,000
30,000
500
15,600

5,61,760

5,61,760
22. Swadip Petrochemicals Ltd. issued 10000 12% Debentures of Rs.100 each. Give Journal Entries for issue and redemption of debentures in the books of the company under the following situations:                         8
(i) Issued at par and redeemable after 5 years at par.
(ii) Issued at Par and redeemable after 5 years at a premium of 5%.
(iii) Issued at a premium of 5% and redeemable after 5 years at par.
(iv) Issued at a premium of 5% and redeemable after 5 years at a premium of 10%.

Solution:
Journal Entries
In the books of Swadip Petrochemicals Ltd.

Particulars
L/f
Amount Dr.
Amount Cr.
(a)
At the time of Issue
Bank A/c                                                                                  Dr.
To 12% Debenture A/c
 (Being the 10, 000 12% Debentures issued at par)


10,00,000



10,00,000


At the time of redemption
12% Debentures A/c                                                              Dr.
To Bank A/c
(Being the 10, 000 12% Debentures redeemed at par)


10,00,000


10,00,000
(b)
At the time of Issue
Bank A/c                                                                                      Dr.
Loss on Issue of Debentures A/c                                             Dr.
To 12% Debenture A/c
To Premium on Redemption of Debentures A/c
(Being the 10, 000 12% Debentures issued at par, but redeemable at a premium of 5%)


10,00,000
50,000



10,00,000
50,000

At the time of redemption
12% Debentures A/c                                                              Dr.
Premium on redemption of Debentures A/c                      Dr.
To Bank A/c
(Being the 10, 000 12% Debentures redeemed at a premium of 5%)


10,00,000
50,000



10,50,000

(c)
At the time of Issue
Bank A/c                                                                                       Dr.
To 12% Debenture A/c
To Securities Premium Reserve A/c
(Being the 10,000 12% Debentures issued at a premium of 5%)


10,00,000


10,00,000
50,000

At the time of redemption
12% Debentures A/c                                                                   Dr.
To Bank A/c
(Being the 10,000 12% Debentures redeemed at par)


10,00,000


10,00,000
(d)
At the time of Issue
Bank A/c                                                                                         Dr.
Loss on Issue of Debentures A/c                                                Dr.
To 12% Debenture A/c
To Securities Premium Reserve A/c
To Premium on Redemption of Debentures A/c
(Being the 10,000 12% Debentures issued at a premium of 5% par, but redeemable at a premium of 10%)


10,50,000
1,00,000



10,00,000
50,000
1,00,000

At the time of redemption
12% Debentures A/c                                                                      Dr.
Premium on redemption of Debentures A/c                             Dr.
To Bank A/c
(Being the 10000 12% Debentures redeemed at a premium of 10%)


10,00,000
1,00,000



11,00,000

Or
Explain the different methods of redemption of debentures.                                   8
Ans: Refer Q.N. 15 (or), asked in 2012 Exam

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