CBSE Class 12 Accountancy

Sample Paper 02 (2019-20)

Maximum Marks: 80
Time Allowed: 3 hours

General Instructions:

i. This question paper contains two parts – A and B.

ii. Part A is compulsory for all.
iii. Part B has two options – Analysis of Financial Statements and Computerised Accounting.
iv. Attempt only one option of Part B.
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v. All parts of a question should be attempted at one place.

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Section A
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1. Give some examples of non profit organisation.

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2. When balance is paid in installment to the executor and rate of interest is not given:
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a. Rate of Interest will be 6% p.a.

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b. Rate of Interest will be 12% p.a.

c. Rate of Interest will be 10% p.a.

d. Rate of Interest will be 5% p.a.

3. Identify a situation for compulsory dissolution of a partnership firm.

4. A, B and C are partners sharing profits in the ratio of 3:2:1. They admit D for 1/6 share.
C would retain his old share. Calculate C’s sacrifice

a. 1/12

b. 1/15
 c. NIL

d. 1/10

5. Ritesh and Hitesh are childhood friends. Ritesh is a consultant whereas Hitesh is an
architect. They contributed equal amounts and purchased a building for Rs.2 crores.
After a year, they sold it for Rs.3 crores and shared the profits equally. Are they doing
the business in a partnership? Give reason in support of your answer.

6. State the ratio in which the partners share profits or losses on the revaluation of
assets and liabilities when there is a change in profit sharing ratio amongst the
existing partners.

7. Why are ‘reserves and surplus’ distributed at the time of reconstitution of the firm?
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8. Give the meaning of ‘reconstitution of a partnership firm’.

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9. A, B and C are sharing profits in the ratio of 3 : 2 : 2. C retires on 1st April 2012 and C’s
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son D is admitted to partnership in his place and the new profit-sharing ratio of A, B
and D is 3 : 3 : 2. Do you think that in spite of the fact that C’s son D is admitted in his
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place, still, goodwill will have to be valued and why?

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10. Fill in the blanks:

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Revaluation account is a ________ account.

11. Varun and Arun are partners in a firm sharing profits and losses equally. On the date
of dissolution of the partnership firm, Varun’s wife’s loan was Rs.45,000, whereas
Arun’s loan was Rs.65,000. Which loan will be paid first and why?

12. Debentures are shown in the Balance Sheet of a company under the head of

a. Share capital

b. None of these

c. Non current liabilities

d. Current liabilities
13. Fill in the blanks:

Part of issued capital applied by public for subscription is known as ________ capital.

14. Calculate the amount of stationery to be posted to Income and Expenditure Account of

Indian Cultural Society for the year ending 31st March, 2018 from the following
information :

Particulars 1.4.2017 (Rs.) 31.3.2018 (Rs.)

Stock of stationery 21,000 18,000

Creditors for stationery 11,000 23,000

Stationery purchased during the year ended 31st March 2018 was Rs.75,000. Also,
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present the relevant items in the Balance Sheet of the society as at 31st March 2018.
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OR
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From the following information, calculate the amount of subscriptions outstanding as

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at 31st March, 2009.

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A club has 250 members each paying an annual subscription of Rs. 1,000. The receipts
and payments account for the year showed a sum of Rs. 2,65,000 received as
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subscriptions. The following additional information is provided

Amt (Rs)

Subscriptions outstanding on 31st March, 2008 40,000

Subscriptions received in advance on 31st March, 2009 30,000

Subscriptions received in advance on 31st March,208 12,000

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

i. Balance in his capital account. On 1st April, 2016, there was a balance of Rs 90,000
 in Ashok’s capital account.
ii. Interest on capital @ 12% per annum.
iii. His share in the profits of the firm in the year of his death will be calculated on the
basis of rate of net profit on sales of the previous year, which was 25%. The sales
of the firm till 30th December, 2016 were Rs 4,00,000.
iv. His share in the goodwill of the firm. The goodwill of the firm on Ashok’s death
was valued at Rs 4,50,000. The partnership deed also provided for the following
deductions from the amount payable to the executor of the deceased partner.
v. His drawings in the year of his death. Ashok’s drawings till 31st December, 2016
were Rs 15,000.
vi. Interest on drawing @ 12% per annum which was calculated as Rs 1,500.

The accountant of the firm prepared Ashok’s capital account to be presented to the
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executor of Ashok but in a hurry he left it incomplete. Ashok’s capital account as

prepared by the firm’s accountant is given below
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Ashok's Capital Account

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Dr Cr
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Date Particulars Amt. (Rs.) Date Particulars Amt. (Rs.)

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2016 2016

Dec 31 ........................... 15,000 Apr 1 ................. 90,000

Dec 31 .......................... ..................... Dec 31 ................. 8,100

Dec 31 .......................... ..................... Dec 31 ................. 40,000

Dec 31 ................. 90,000

Dec 31 ................. 90,000

3,18,100 3,18,100

You are required to complete Ashok’s capital account.

16. A firm earns Rs 10,000 as its annual profits, the rate of normal profit being 10%. The
assets of the firm amounted to Rs 80,000. The value of Goodwill is Rs .45,000. Find the
 value of outsiders’ Liabilities.

OR

Vikas and Vivek were partners in a firm sharing profits in the ratio of 3 : 2. On 1st
April, 2014, they admitted Vandana as a new partner for 1/8th share in the profits
with a guaranteed profit of Rs 1,50,000. The new profit sharing ratio between Vivek
and Vikas will remain the same but they decided to bear any deficiency on account of
guarantee to Vandana in the ratio 2: 3. The profit of the firm for the year ended 31st
March, 2015 was Rs 9,00,000.
Prepare profit and loss appropriation account of Vikas, Vivek and Vandana for the
year ended 31st March, 2015.

17. A Company forfeited Rs 100 Equity Shares of 100 each issued at a premium of 50% (to
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be paid at the time of allotment) on which first call money of Rs. 30 per equity share
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was not received, final call of Rs. 20 is yet to be made. These equity shares were
subsequently reissued at Rs. 70 per share at Rs. 80 paid-up.
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Give the necessary Journal entries regarding forfeiture and reissue of shares.
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18. X Ltd has Rs. 10,00,000, 9% debentures due to be redeemed out of profits on 1st
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October, 2009 at a premium of 5%. The company had a debenture redemption reserve
of Rs. 4,14,000. Pass necessary journal entries at the time of redemption.
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19. From the following Reciepts and Payments Accounts of Cricket Club and the
additional information given, prepare the Income and Expenditure Account for the
Year ending 31-12-2018 and Balance sheet as on that date:

RECEIPTS AND PAYMENTS ACCOUNT

for the year ending 31-12-2018

To bal. b/d Rs. Rs.

-Cash 3520 By Maintenance 6820

-Bank 27380 By Crockery Purchased 2650

-Fixed Deposit @ 6% 30000 By Match Expenses 13240

 To Subscription (including Rs. 6000 for 40000 By Salaries 11000
2017)

TO Entrance fees 2750 By Conveyance 820

To Donation 5010 By Upkeep of Lawns 4240

To Interest on Fixed Deposits 900 By postage stamps 1050

By Purchase Of cricket
To Tournament Fund 20000 9720
goods

To Sale of Crockery(book value Rs.

2000 By Sundry expenses 2000
1200)

By Investments 5700
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By Tournament Expenses 18800

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By balance c/d:

-Cash 2200
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-Bank 23320
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Fixed Deposits 30000

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131560 131560
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Additional Information:

i. Salary outstanding is Rs. 1000.

ii. Opening Balance of Stock of Postage and Stationery and Cricket gods is Rs. 750 and
Rs. 3210 respectively. Closing stock of the same is Rs. 900 and Rs. 2800
respectively.
iii. Outstanding subscription for 2017 and 2018 is Rs. 6600 and Rs. 8000 respectively.

20. ‘Ananya Ltd’ had an authorised capital of Rs.10,00,00,000 divided into 10,00,000 equity
shares of Rs.100 each. The company had already issued 2,00,000 shares. The dividend
paid on share for the year ended 31st March, 2007 was Rs.18,000.
The management decided to export its products to African countries. To meet the
requirements of additional funds, the finance manager put up the following three
 alternate proposals before the Board of Directors.

a. Issue 47,500 equity shares at a premium of Rs.100 per share.

b. Obtain a long-term loan from bank which was available at 12% per annum.
c. Issue 9% debentures at a discount of 5%.
After evaluating these alternatives the company decided to issue 1,00,000, 9%
debentures on 1st April, 2008. The face value of each debenture was Rs.100. These
debentures were redeemable in four installments starting from the end of third
year, which was as follows

Year Amt (Rs)

III 10,00,000

IV 20,00,000
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V 30,00,000
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VI 40,00,000
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Prepare 9% debentures account from 1st April, 2008 till all the debentures were
redeemed.
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OR
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SSS Ltd. issued 25,000,10% debentures of 100 each. Give journal entries and the
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Balance Sheet in each of the following cases when :

i. The debentures were issued at a premium of 20%

ii. The debentures were issued as a collateral security to bank against a loan of
Rs.20,00,000.
iii. The debentures were issued to a supplier of machinery costing Rs.28,00,000 as his
full and final payment.

21. C and D are partners in a firm sharing profits in the ratio of 4: 1. On 31st March, 2016,
their balance sheet was as follows

Balance Sheet
as at 31 st March, 2016
 Liabilities Amt (Rs) Assets Amt(Rs)

Sundry Creditors 40,000 Cash 24,000

Provision for Bad Debts 4,000 Debtors 36,000

Outstanding Salary 6,000 Stock 40,000

General Reserve 10,000 Furniture 80,000

Capital A/cs Plant and Machinery 80,000

C 1,20,000

D 80,000 2,00,000

2,60,000 2,60,000
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On the above date, E was admitted for th share in the profits on the following terms
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i. E will bring Rs1,00,000 as his capital and Rs 20,000 for his share of goodwill
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premium, half of which will be withdrawn by C and D.

ii. Debtors Rs 2,000 will be written off as bad debts and a provision of 4% will be
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created on debtors for bad and doubtful debts.

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iii. Stock will be reduced by Rs 2,000, furniture will be depreciated by Rs 4,000 and
10%, depreciation will be charged on plant and machinery.
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iv. Investments Rs 7,000 not shown in the balance sheet will be taken into account.
v. There was an outstanding repairs bill of ^ 2,300 which will be recorded in the
books.
Pass necessary journal entries for the above transactions in the books of the firm
on E’s admission.

OR

A and B were partners in a firm sharing profits in the ratio as 11 : 4. C was admitted as
a new partner for 1/5th share in the profits on 1.3.2010. The balance sheet of A and B
on 1.3.2010 was as follows :

Liabilities (Rs) Assets (Rs)

Machinery 38,000
 Capital Accounts:

Pradip 60,000 Furniture 15,000

Subal 40,000 1,00,000 Investments 21,000

Profit and Loss A/c 20,000 Stock 19,000

Sundry Creditors 18,000 Sundry Creditors 27,000

Less: Provision 3,000 24,000

Cash at Bank 21,000

1,38,000 1,38,000

It was agreed that :

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a. C to bring in capital to the extent of 1/5th of the total capital of the new firm and Rs
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1,50,000 for his share of goodwill, half of which was withdrawn by A and B.
b. Building and plant were to be depreciated by 20%.
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c. Provision for bad debt was to be increased by Rs 200.

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d. Claim on account of workmen compensation is Rs 10,000.

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Prepare revaluation account, partners’ capital account and balance sheet of a new
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firm.

22. DF Ltd. invited applications for issuing 50,000 shares of Rs.10 each at a premium of
Rs.2 per share. The amount was payable as follows:
On Application: Rs.3 per share (including premium Rs.1)
On Allotment: Rs.3 per share (including premium Rs.1)
On First call: Rs.3 per share
On Second and Final Call: Balance amount
Application for 70,000 shares were received. Allotment was made on the following
basis.
Applications for 5,000 shares - Full
Applications for 50,000 shares - 90%
Balance of the applications were rejected. Rs.1,11,000 were received on account of
allotment. The amount of allotment due from the shareholders to whom shares were
 allotted on prorata basis was fully received. A few shareholders to whom shares were
allotted in full, failed to pay the allotment money. Rs.1,20,000 were received on first
call. Directors decided to forfeit those shares on which allotment and call money was
due. Half of the forfeited shares were re-issued @ Rs.8 per share fully paid up. Final
call was not made.
Pass the necessary journal entries for the above transactions in the book of DF Ltd.

OR

Dogra Ltd. had an authorised capital of Rs. 10,00,000 divided into equity shares of Rs.
100 each. The company offered 84,000 shares to the public at premium. The amount
was payable as follows:
On application — Rs. 30 per share
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On allotment — Rs. 40 per share (including premium)

On first and final call — Rs. 50 per share
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Applications were received for 80,000 shares. All sums were duly received except the
following. Lakhan, a holder of 200 shares did not pay allotment and call money.
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Paras, a holder of 400 shares did not pay call money. The company forfeited the
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shares of Lakhan and Paras. Subsequently, the forfeited shares were reissued for
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Rs. 80 per share fully paid-up.

Show the entries for the above transaction in the cash book and journal of the
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company.

Section B

23. Which of the following is not part of shareholders’ funds?

a. Balance i.e. Surplus in Statement of P/L

b. Share Capital

c. Proposed Dividend

d. General Reserve

24. The current ratio of a company is 3: 1. The state with reason whether the payment of
the dividend would improve, reduce or not change the ratio.
25. Why liquid ratio is considered more dependable than the current ratio?

26. Give two areas of interest for bankers/lenders while analysing the Financial
Statements.

27. Under which type of activity will you classify ‘Cash Receipts from Debtors’ while
preparing Cash Flow Statement?

28. State true or false:

Capital Reserve recorded under Share Capital (subhead) in Shareholders fund (major
head).

29. Match the following:

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(a) Cash budget is prepared for (i) Marketable security

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(b) cash flow statement is prepared for (ii) cash payment of wages
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(c) cash equivalents include (iii) Future period

(d) cash flow from operating activity (iv) Past period

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30. A company has to transfer Rs. 50,000 to Debenture Redemption Reserve out of
Surplus, i.e., Balance in Statement of Profit and Loss. Explain how it will be shown in
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the financial statements.

OR

Under what main heads and sub-heads, will the following items appear in the balance
sheet of a company as per Schedule III, Part I of the Companies Act, 2013

i. Mining rights
ii. Encashment of employees earned leave payable on retirement
iii. Vehicles

31. From the following information provided, prepare a comparative statement for the
period 2008 and 2009.

Particulars 2008 Amt (Rs.) 2009 Amt (Rs.)

 Revenue from
6,00,000 8,00,000
Operations

40% on Revenue 50% on Revenue

Gross Profit
from Operations from Operations

Administrative
20% of Gross Profit 15% of Gross Profit
Expenses

Income Tax 50% 50%

OR

From the following information extracted from the books of PQ Ltd., prepare a
Balance Sheet of the company as at 31st March, 2012 as per Schedule-Ill of the Indian
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Companies Act, 2013:

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Particulars (Rs.)
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Long-term Borrowings 500

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Trade Payables 30
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Share Capital 400

Reserve and Surplus 90

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Fixed Assets(tangible) 800

Inventories 20

Trade receivables 80

Cash and Cash Equivalents 120

32. From the following Balance Sheet of Vehalna Steel Ltd. as at 31st March 2017 and 31st
March 2016. Prepare Cash Flow Statement:

Particulars Note No. 31st March 2017 31st March 2016

I EQUITY AND LIABILITY

Share holders fund

Share Capital 1 700000 500000

Reserves and surplus 2 250000 325000

Non Current Liabilities

Long Term Borrowings 3 200000 250000

Current Liabilties

Short Term Provisions 4 74000 49000

1224000 1124000

Assets

Non Current asset

Fixed Asset
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MAchinery 500000 300000

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Non current investments 200000 140000

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Current asset
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Invesntories 150000 200000

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Trade receivables 204000 174000

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Cash 170000 310000

1224000 1124000

Share capital

Equity Share capital 600000 300000

12% preferance share capital 100000 200000

700000 500000

Reserve and surplus

General Reserve 135000 375000

Surplus 115000 -50000

Long Term Borrowings

 9% Debenturs 200000 250000

Short Term Provisions

Proposed Dividend 24000 24000

Provision for Tax 50000 25000

74000 49000

Additional Information

i. Machinery Costing 100000 on which Depreciation charged was 70000 was sold at a
profit of 20% on book value. dep charged during the year amounted to 70000.
ii. Preference shares redeemed at par on 31st march 2017
iii. Debentures were redeeemed on Jan 1 , 2017 and equity shares were issued on
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april 1,2016
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iv. Income tax 45000 was provided

v. Non current investments costing 60000 were sold at a profit of 20%
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vi. The company declares and paid interim dividend on equity shares 40 per share
out of generl reserve. It did not propose final dividend on equity shares.
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 CBSE Class 12 Accountancy
Sample Paper 02 (2019-20)

Solution
Section A

1. Clubs
Public Hospitals
Public Educational Institutions
Temple etc.
2. (a) Rate of Interest will be 6% p.a.
Explanation: When amount due to the retirement is paid in instalments instead of
paying it in lump sum and rate of interest on partner’s loan is not given in the
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question, in such a case interest will be paid at the rate of 6% p.a.

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3. A firm is compulsorily dissolved on the insolvency of all the partners or all the
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partners except one partner.

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4. (c) NIL
Explanation:
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Calculation of C’s Sacrifice:

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Old Share = 3:2:1

New Share = 12 : 8 : 5 : 5
C’s Sacrifice = 1/6 – 5/30 = Nil

5. No, they are not doing the business in partnership. Business is a continue process of
earning.

6. At the time of change in profit sharing ratio among the existing partners,Gain or loss
on revaluation are distributed in existing partners in old profit sharing ratio,

7. New partner is not entitled to any share in Reserves and surplus at the time of
reconstitution of the firm because they are earned/accrued by the old partners so
undistributed profits or losses are always distributed among old partners in old
Profit-sharing ratio.
 8. Any change in the existing agreement of partnership is reconstitution of a
partnership firm. As a result, the existing agreement comes to an end and the new
agreement comes into existence. But, the firm continues its business as earlier and
Reconstituion of a firm always leads to change in profit-sharing ratio amomg
partners.

9. No doubt C’s son D has been admitted in place of C, still, goodwill will have to be
valued because the profit-sharing ratio has changed from 3 : 2 : 2 to 3 : 3 : 2. B stands
to gain from the change and he will compensate both A and C as we know that if it is
a change in profit & loss ratio than g/w will be distributed accordingly.

10. Nominal

11. Varun's wife's loan will be paid first as it's an External liability.
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12. (c) Non current liabilities

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Explanation: Non current liabilities

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13. Subscribed
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14. Stationery Account

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Dr. Cr.
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Particulars Rs. Particulars Rs.

To Balance b/d 21,000 By Income & Expenditure A/c 78,000

To Bank 75,000 (Balancing figure)

By Balance c/d 18,000

96,000 96,000

Balance sheet
as on 31.03.2018

Liabilities Rs. Assets Rs.

Creditors for stationery 23,000 Stationery's Stock 18,000

 OR

Particulars Amt (Rs)

Subscriptions earned to be shown in income and expenditure account

2,50,000
(250 members 1,000)

(-) Subscriptions received during the year 2008-2009 (2,65,000)

(15,000)

(+) Outstanding on 31st March, 2008 40,000

25,000

(-) Received in advance on 31st March, 2008 (12,000)

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13,000

(+) Received in advance on 31st March, 2009 30,000

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= Outstanding as on 31st March,2009 43,000

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15. Ashok's Capital Account

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Dr. Cr.
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Amt. Amt.
Date Particulars Date Particulars
(₹) (₹)

2016 2016

Dec Apr
To Drawing A/c 15,000 By Balance b/d 90,000
31 1

Dec To interest on Dec

1,500 By Interest on Capital A/c 8,100
31 drawing A/c 31

Dec To Ashok's Executor Dec By Profit and Loss

3,01,600 40,000
31 A/c 31 Suspense A/c

Dec
By Babu's Capital A/c 90,000
31
 Dec By Chetan's Capital A/c 90,000
31

3,18,100 3,18,100

Working Notes:

1. Calculation of Interest on Capital

= 90,000 =₹8,100
2. Calculation of Profit
= 4,00,000 = ₹40,000
3. Calculation of Ashok’s Share of Goodwill
Ashok’s share of goodwill = 4,50,000 = ₹1,80,000. This amount will be
contributed by Babu and Chetan in their gaining ratio i.e., 3 : 3 or 1 : 1.
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Note: Share of profit from the date of the last Balance Sheet till the date of death is
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credited to Deceased Partner's Capital Account and debited to Profit and Loss
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Suspense Account.
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16. The total amount of debts payable by a business to theoutsiders (other than the
owners) are called external liabilities or outsider's Liabilities e.g., creditors, bills
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payable etc. and are calculated as follows:-

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Calculation of Outsider’s Liabilities

Total Capitalised value of the firm :
=

=
= Rs 1,00,000
Goodwill = Total Capitalised Value - Net Tangible
Assets Rs 45,000 = Rs 1,00,000 - Net Tangible Assets
Net Tangible Assets = Rs 55,000
Net Tangible Assets = Total Assets - Outsiders' Liabilities
? 55,000 = Rs 80,000 - Outsider’s Liability
Outsiders’ Liabilities = Rs 25,000

OR
 Profit and Loss Appropriation Account
for the year ended 31st March, 2015

Particulars Amt(Rs) Particulars Amt(Rs)

To Profit Transferred to Capital By Profit and Loss

9,00,000
A/Cs A/c (Net profit)

Vikas Capital A/c [(9,00,000 -

4,72,500
1,12,500) 3/5]

(-) Vandana(Deficiency) (15,000) 4,57,500

Vivek Capital A/c[(9,00,000 -

3,15,000
1,12,500) 2/5]
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(-) Vandana(deficiency) (22,500) 2,92,500

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Vandana Capital A/c (9,00,000

1,12,500
1/8)
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(+) From Vikas 15,000

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(+) From Vivek 22,500 1,50,000

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9,00,000 9,00,000
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Working Note
Minimum profit guaranteed to Vandana = Rs 1,50,000

Vandana’s share in profit = 9,00,000 = Rs 1,12,500

Deficiency = 37,500 (1,50,000 -1,12,500) is to be borne by Vivek and Vikas in 2 : 3 ratio.
Deficiency to be borne by Vivek = 37,500 = Rs 22,500

Deficiency to be borne by Vikas = 37,500 = Rs 15,000

17. In this question first shares are forfieted and than reissued for that the accounting
treatement has been done as shown.

Forfieture of the share means the process where the company forfeits the shares of a
member or shareholder who fails to pay the call on shares or instalments of the issue
 price of his shares within a certain period of time after they fall due.

Journal

Dr. Cr.
Date Particulars L.F.
(Rs.) (Rs.)

Share Capital A/c (100 Rs. 80) Dr. 8,000

To Forfeited Shares A/c (100 Rs. 50) 5,000

To Share First call A/c (100 Rs. 30)

(Being the forfeiture of 100 equity shares on which 3,000
first call money is not received)

Bank A/c (100 Rs. 70) Dr. 7,000

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Forfeited Shares A/c (100 Rs.10) Dr. 1,000

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To Share capital A/c (100 Rs. 80)

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(Being the reissue of 100 equity shares @ 70 per 8,000

share; 80 paid-up)
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Forfeited Shares A/c Dr. 4,000

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To Capital Reserve A/c

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(Being the gain in respect of 100 forfeited shares 4,000

issued transferred to capital reserve)

18. JOURNAL

Date Particulars LF Amt (Dr) Amt (Cr)

2009 Mar Surplus i.e. Balance in Statement of Profit

Dr 5,86,000
31 and Loss

To Debenture Redemption Reserve A/c 5,86,000

(Being the required amount transferred to

DRR)

Debenture Redemption Investment A/c

Apr 30 Dr 1,50,000
 (10,00,000 15%)

To Bank A/c 1,50,000

(Being the investment equal to 15% of the

value of debentures to be redeemed invested)

Oct 1 Bank A/c Dr 15,00,00

To Debenture Redemption Investment A/c 1,50,000

(Being the debenture redemption investment

encashed)

9% Debentures A/c Dr 10,00,000

Premium on Redemption of Debentures

Dr 50,000
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A/c
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To Debentureholders/ A/c 10,50,000

(Being debentures due for redemption)

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Debentureholders/ A/c Dr 10,50,000

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To Bank A/c 10,50,000

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(Being amount paid to debentureholders)

Debenture Redemption Reserve A/c Dr 10,00,000!

To General Reserve A/c 10,00,000

(Being debenture redemption reserve

transferred to general reserve account)

Amount Transferred to Debenture Redemption Reserve (DRR): Section 71 (4) of

the Companies Act 2013 requires that an amount equal to at least 25% of the value of
debentures should be kept as Debenture Redemption Reserve (DRR) before making
payment of Debentures but in the present question Debenture Redemption Reserve
(DRR) balance is already more than 25% of the value of debentures i.e. Rs. 4,14,000. In
other words, the company wants to make redemption of debentures fully out of
profit. So,
 Required DRR (100%of 10,00,000) = 10,00,000

(-) Existing Balance = (4,14,000)

more amount that needs to be transferred to DRR Rs. 5,86,000

Further Rule 18 (7) requires every company that is required to create Debenture
Redemption Reserve (DRR) to invest an amount at least equal to 15% of the amount of
debentures due for redemption before 30 April in the year of redemption in the
specified securities. Such Debenture Redemption Investment (DRI) can be sold at the
time of redemption. So an amount of Rs. 1,50,000 i.e.15% of the amount of debentures
Rs. 10,00,000 has been invested on April 30 in the year of redemption. And
these Debenture Redemption Investments (DRI) have been sold at the time of
redemption i.e. on October 1.
ed

After the debentures are redeemed, the amount standing to the credit of Debenture
us

Redemption Reserve is transferred to General Reserve.

av

19. Cricket Club Income and Expenditure account

io

for the year ended 31-12-2018

r.c

Expenditure Rs. Income Rs.

om

To Maintenance 6820 By Subscription 40000

To Conveyance 820 Less: Rec. for last year 6000

Add: outstanding for

To Upkeep of Lawns 4240 8000 42000
current year

To Match Expenses 13240 By Entrance Fees 2750

To Salaries 11000 By Donations 5010

By Interest on Fixed
Add: Outstanding 1000 12000 900
Deposits

To postage Stamps: Add:Outstanding 900 1800

By Profit on Sale of Crockery

opening balance 750 800
(2000-1200)
Add: Purchases 1050

Less: Closing Stock (900) 900

To Cricket Goods:

opening balance 3210

Add: Purchases 9720

Less: Closing Stock (2800) 10130

To sundry Expenses 2000

To Excess of Income over

2210
Expenditure (balance fig.)

52360 52360
ed
us

Balance sheet
as on 31-12-2018
av

Liabilities Rs. Assets Rs.

io

Tournament Fund 20000 Cash 2200

r.c

Less:Tournament
om

18800 1200 Bank 23320

Expenses

Salary Outstanding 1000 Fixed Deposit 30000

Capital (Balancing Fig.) 72660 Investment 5700

Add: surplus 2210 74870 Crockery 2650

Accrued Interest on Fixed

900
Deposit

Subscription Due:

2017 (6600-6000) 600

2018 8000 8600

Stock of Postage and stationery 900

 Stock of Cricket goods 2800

77070 77070

20.

Dr 9% Debentures Account Cr

Date Particulars Amt (Rs) Date Particulars Amt (Rs)

2009 2008

Mar To Balance By Debenture Application

1,00,00,000 Apr 1 95,00,000
31 c/d And Allotment A/c

Debentures A/c (1,00,00,000

Apr 1 5,00,000
5%)
ed

1,00,00,000 1,00,00,000
us

2010 2009

Mar To Balance
av

1,00,00,000 Apr 1 By Balance b/d 1,00,00,000

31 c/d
io

1,00,00,000 1,00,00,000
r.c

2011 2010
om

Mar
To Bank A/c 10,00,000 Apr 1 By Balance b/d 1,00,00,000
31

Mar To Balance
90,00,000
31 c/d

1,00,00,000 1,00,00,000

2012 2011

Mar
To Bank A/c 20,00,000 Apr 1 By Balance b/d 90,00,000
31

Mar To Balance
70,00,000
31 c/d

90,00,000 90,00,000
 2013 2012

Mar
To Bank A/c 30,00,000 Apr 1 By Balance b/d 70,00,000
31

Mar To Balance
40,00,000
31 c/d

70,00,000 70,00,000

2014 2013

Mar
To Bank A/c 40,00,000 Apr 1 By Balance b/d 40,00,000
31

40,00,000 40,00,000
ed

Note :
us

It is assumed that legal requirement with respect to Debenture Redemption

av

Reserve and Investment have been accomplished before commencing

redemption of debentures.
io

The amount invested or deposited shall not be used for any purpose other than
r.c

for redemption of debentures.

om

Premium payable on redemption is a Capital Loss.

Redemption of Debentures out of capital means that the company redeems
debentures without transferring any amount to D.R.R. out of the profits.
D.R.R. is not required to be created on fully convertible debentures.
Debentures may be redeemed by a company : 1. out of Capital ; 2. out of
Profits.
Interest is ignored.
Method adopted by the company to redeem debenture is known as
Redemption of Debentures in Installments by Draw of Lots.
When on issue of debenture all amount is received in a single installment then
Debenture Application and Allotment account is credited.
Debentures Issued at Discount means Debentures issued at price that is less
than its nominal (face) value.
Discount on issue of Debentures is a Capital Loss . It is written off either from
 Securities Premium Reserve or from Statement of Profit or Loss.

OR

JOURNAL

Date Particulars L.F. Amt (Dr) Amt (Cr)

Bank A/c (25,000*120) Dr 30,00,000

To Debenture
Application and Allotment A/c
30,00,000
(Being application money
received)

Debenture Application and

ed

Dr 30,00,000
Allotment A/c
us

To 10%
25,00,000
av

Debentures A/c (25,000*100)

To Securities
io

Premium Reserve A/c

r.c

(25,000*20)
5,00,000
om

(Being application money

transferred to 10% debentures
account)

Balance Sheet
as at..........

Particulars Note No. Amt (Rs)

I. EQUITY AND LIABILITIES

1 Shareholders' Funds

Reserve and Surplus 1 5,00,000

2 Non-current Liabilities
 Long-term Borrowings 2 25,00,000

Total 30,00,000

II. ASSETS

1 Current Assets

Cash and Cash Equivalents 3 30,00,000

Total 30,00,000

Notes to Accounts

Particulars Amt (Rs)

1 Reserves and Surplus

ed

Securities Premium Reserve 5,00,000

us

2 Non-current Liabilities
av

10% Debentures 25,00,000

io

3 Cash and Cash Equivalents

r.c

Cash at Bank 30,00,000

om

JOURNAL

Date Particulars L.F. Amt (Dr) Amt (Cr)

(i) Bank A/c Dr 20,00,000

To Bank loan A/c

20,00,000
(Being bank loan taken)

(ii) Debenture Suspense A/c Dr 25,00,000

To 10%
Debentures A/c
(Being 25,000, 10%
debentures of Rs.100 each 25,00,000

issued as Collateral
 security)

Balance Sheet

As at ...........................

Particulars Amt (Rs)

1 EQUITY AND LIABILITIES

Non-current Liabilities

Long-term Borrowings 20,00,000

Notes to Accounts
ed

Particulars Amt (Rs)

us

1 Long-term Borrowings
av

Loan from Bank 20,00,000

25,000, 10% Debentures of Par Value of Rs.100

io

25,00,000
each Issued as Collateral Security
r.c

(-)Debenture Suspense (25,00,000)

om

20,00,000

JOURNAL

Date Particulars L.F. Amt (Dr) Amt (Cr)

Machinery A/c Dr 28,00,000

To Vendor's A/c
28,00,000
(Being machinery purchased)

Vendor's A/c Dr 28,00,000

To 10% Debentures A/c

(25,000*100) 25,00,000
 To Securities Premium
Reserve A/c
3,00,000
(Being 25,000, 10% debentures
issued to the supplier of machinery
at premium)

Balance Sheet

As at................................

Particulars Note No. Amt (Rs)

I. EQUITY AND LIABILITIES

1 Shareholders' Funds
ed

Reserves and Surplus 1 3,00,000

us

2 Non-current Liabilities
av

Long-term Borrowings 2 25,00,000

io

Total 28,00,00
r.c

II. ASSETS
om

1. Non-current Assets

Fixed Assets

Tangible Assets 3 28,00,000

Total 28,00,000

Notes to Accounts

Particulars Amt (Rs)

1 Reserves and Surplus

Securities Premium Reserve 3,00,000

2 Long-term Borrowings

25,00,000
 10% Debentures (25,000 debentures @ Rs.100)

3 Tangible Fixed Assets

Machinery 28,00,000

NOTES :

Debentures issued as collateral security being for the loan of the company,
debentures issued as collateral security are shown in the Note to Accounts in
which loan is secured by debentures is shown.
If the company fails to pay the loan along with interest with the time, the
lender may recover the dues from the sale of primary security or by seeking
redemption of collateral security.
ed

21. JOURNAL
us

Amt Amt
Date Particulars LF
av

(Dr) (Cr)
io

2016
r.c

March
Cash A/c Dr 1,20,000
31
om

To E's Capital A/c 1,00,000

To Premium for Goodwill A/c 20,000

(Being cash and premium for goodwill brought

in by E)

premium for Goodwill A/c Dr 20,000

To C's Capital A/c 16,000

To D's Capital A/c 4,000

(Being premium for goodwill shared by old

partners in sacrificing ratio, i.e., 4: 1)

C's Capital A/c Dr 8,000

 D's Capital A/c Dr 2,000

To Cash A/c 10,000

(Being half the goodwill withdrawn by C and D)

General Reserve A/c Dr 10,000

To C's Capital A/c 8,000

To D's Capital A/c 2,000

(Being general reserve distributed among old

partners in old ratio)

Revaluation A/c Dr 16,300

To Outstanding Repair Bill A/c 2,300

ed

To Stock A/c 2,000

us

To Furniture A/c 4,000

av

To Plant and Machinery A/c (80,000 10%) 8,000

io

(Being the decrease in the value of assets and

r.c

increase in the value of liabilities recorded)

Bad Debts A/c Dr 2,000

om

To Debtors A/c 2,000

(Being bad debts charged)

Provision for Doubtful Debts A/c Dr 2,000

To Bad debts A/c 2,000

(Being Bad debts written-off)

Investment A/c Dr 7,000

Provision for Doubtful Debts A/c (WN) Dr 640

To Revaluation A/c 7,640

(Being decrease in the value of liabilities and

increase in the value of assets recorded)
 C's Capital A/c Dr 6,928

D's Capital A/c Dr 1,732

To Revaluation A/c 8,660

(Being loss on revaluation transferred to old

partners in old ratio)

Working Notes

i. Distribution of Goodwill in Sacrificing Ratio

C’s share =
D's Share =
NOTE It has been assumed that the C and D sacrifice ratio is 4:1 as equal to old
ed

profit sharing ratio.

ii. Loss of Revaluation
us

It can be ascertained by preparing revaluation account in the following manner

av

Revaluation
Dr Cr
Account
io

Amt
r.c

Particulars Amt (Rs) Particulars

(Rs)
om

To Outstanding
2,300 By Investment A/c 7,000
Repair Bill A/c

By Provision for Doubtful

To Stock A/c 2,000 640
Debts A/c

By Loss on Revaluation
To Furniture A/c 4,000
Transferred to

To Plant and
8,000 C's Capital A/c 6,928
Machinery A/c

D's Capital A/c 1,732 8,660

16,300 16,300

iii. Provision for Bad Debts Debtors = 36,000

iv. (-) Bad debts = (2,000), which will be adjusted against the provision for bad debts
Rs 34,000
New provision for doubtful debts @ 4% = 34,000
Existing provision after adjusting bad debts (4,000 - 2,000) = 2,000
(-) New provision = (1,360)
Excess Provision = Rs 640

OR

In this question there is a need to make Revaluation Account which means An

increase in an asset's value in order to reflect the current market value of the asset.

It is debited with the decrease in the value of assets and the increase in the value of
liabilities. The balance of this account shows a gain or loss on revaluation which is
ed

transferred to the Existing partners' capital account in existing profit sharing ratio.
us

Revaluation of fixed assets is an action that may be required to accurately describe

the true value of the capital goods a business owns. ... The purpose of a revaluation
av

is to bring into the books the fair market value of fixed assets.
io

Books of Pradip, Subal and Kuntal

r.c

Revaluation Account
om

Dr. Cr.

Particulars Amt(Rs) Particulars Amt(Rs)

To Building 2,80,000 By Loss transferred to:

To Plant 60,000 A's Capital A/c 2,49,480

To Provision for Bad Debts 200 B's Capital A/c 90,720 3,40,200

3,40,200 3,40,200

Partner's Capital Accounts

Dr. Cr.

Particulars A B C Particulars A B C
To Bank 55,000 20,000 --- By Balance b/d 20,00,000 5,50,000 ---

To

Revaluation 2,49,480 90,720 -- By Premium 1,10,000 40,000 ---

Loss

By Workmen
To Balance c/d 19,15,520 5,19,280 6,08,700 1,10,000 40,000 --
Compensation Fund

By Bank 6,08,700

22,20,000 6,30,000 6,08,700 22,20,000 6,30,000 6,08,700

Balance Sheet
as at 31st March, 2009
ed

Liabilities (Rs) Assets (Rs)

us

Building(14,00,000 -
av

Capitals: 11,20,000
2,80,000)
io

A 19,15,520 Plant 2,40,000

r.c

B 5,19,280 Debtors 30,000

om

(-) Provision for Bad

C 6,08,700 30,43,500 (1,200) 28,800
Debts

Workmen
10,000 Stock 29,000
Compensation Fund

Creditors 15,000 Land 10,00,000

Bills Payable 30,000 Bank 7,00,700

Employees Provident
20,000
Fund

31,18,500 31,18,500

Working Note:
 Bank Account

Dr. Cr.

Particulars Amt(Rs) Particulars Amt(Rs)

To Balance b/d 17,000 By A's Capital A/c 55,000

To Premium 1,50,000 By B's Capital A/c 20,000

To C's Capital A/c 6,08,700 By Balance c/d 7,00,700

7,75,700 7,75,700

Calculation for Adjustment of Capital

A’s Capital after adjustment = 19,15,520
ed

B’s Capital after adjustment = 5,19,280

(+) = 24,34,800
us

C’s share = th
Remaining share to be shared by A and B =
av

th share capital = Rs 24,34,800

io

Total capital = Rs 24,34,800 = Rs 30,43,500

r.c

C’s share of capital = Rs 30,43,500 = Rs 6,08,700

om

22. Journal Entries

Date Particular Dr. (Rs.) Cr. (Rs.)

Bank A/c Dr. 2,10,000

To Equity Share Application A/c 2,10,000

(Being share application money received.)

Equity Share Application A/c Dr. 2,10,000

To Equity Share Capital A/c 1,00,000

To Securities premium reserve A/c 50,000

To Equity Share Allotment A/c 15,000

To Bank A/c 45,000

 (Being share application money transferred.)

Equity Share Allotment A/c Dr. 1,50,000

To Equity Share Capital A/c 1,00,000

To Securities Premium Reserve A/c 50,000

(Being share Allotment money due.)

Bank A/c Dr.

To Equity Share Allotment A/c

(Being share allotment money received)

Equity Share First call A/c Dr. 1,50,000

To Equity Share Capital A/c 1,50,000

ed

(Being share First call money due.)

us

Bank A/c Dr. 1,20,000

av

To Equity Share First Call A/c 1,20,000

io

(Being share First call money received)

r.c

OR
om

JOURNAL

Amt. Amt.
Date Particulars L.F.
(Dr.) (Cr.)

1. Bank A/c (80,000 30) Dr. 24,00,000 .

To Equity Share Application A/c . 24,00,000

(Being share application money received.) .

2. Equity Share Application A/c Dr. 24,00,000 .

To Share Capital A/c . 24,00,000

(Being share application money transferred.) . .

 3. Equity Share Allotment A/c (80,000 40) Dr. 32,00,000 .

To Share Capital A/c (80,000 20) . 16,00,000

To Securities Premium Reserve A/c (80,000 20) . 16,00,000

(Being share allotment money due.) . .

4. Bank A/c (79,800 40) Dr. 31,92,000 .

To Equity Share Allotment A/c . 31,92,000

(Being share allotment money received, except on

. .
200 shares.)

Equity Share First and Final Call A/c (80,000 50)

5. 40,00,000 .
Dr.
ed

To Share Capital A/c . 40,00,000

us

(Being share first and final call money due.) . .

av

6. Bank A/c (79,400 50) Dr. 39,70,000 .

To Equity Share First and Final Call A/c . 39,70,000

io
r.c

(Being share first and final call money received

. .
except on 600 shares.)
om

7. Equity Share Capital A/c (600 100) Dr. 60,000 .

Securities Premium Reserve A/c (200 20) Dr. 4,000 .

To Equity Share Allotment A/c (200 40) . 8,000

To Equity Share First and Final Call A/c (200

. 30,000
50) + (400 50)

To Share Forfeiture A/c (200 30) + (400 50) . 26,000

(Being 600 shares forfeited.) . .

8. Bank A/c (600 80) Dr. 48,000 .

Share Forfeiture A/c (200 20) + (400 20) Dr. 12,000 .

To Equity Share Capital A/c (600 100) . 60,000

 (Being all forfeited shares reissued @ Rs. 80 fully . .
paid-up.)

9. Share Forfeiture A/c Dr. 14,000 .

To Capital Reserve A/c . 14,000

(Being share forfeiture transferred to capital

. .
reserve account.)

Dr. Cash Books Cr.

Particulars Amt. (Rs.) Particulars Amt. (Rs.)

To Equity Share Application A/c 24,00,000 By Balance c/d 96,10,000

To Equity Share Allotment A/c 31,92,000

ed

To Equity Share First and Final Call A/c 39,70,000

us

To Equity Share Capital A/c 48,000

av

96,10,000 96,10,000
io

Section B
r.c

23. (c) Proposed Dividend

Explanation: Proposed dividend is an important source of financing temporary
om

working capital, and not the part of shareholders funds.

24. Payment of dividend will reduce the total of current assets and also the current
liabilities by the same amount. Therefore, the current ratio will improve. The current
ratio is the difference between current assets and current liabilities.

25. It is so because liquid ratio includes only those assets which can be vary easily
converted into cash. Inventories and Prepaid Expenses are not included in liquid
assets because it may take a lot of time before to converted into cash.

26. i. To assets the liquidity, solvency, profitability, and efficiency of the business.
ii. To assess whether the company will be able to repay the amount of loan/credit or
not as well as to assess whether the interest on the loan will be received
periodically.
27. Cash received from debtors will be shown under ‘Operating Activities’ because selling
goods on credit to the customers and receiving cash is operating activity of a business.
Decrease in debtors or receivables means inflow of cash while increase in debtors or
receivables means outflow of cash.

28. False

29. (a) - (iii), (b) - (iv), (c) - (i), (d) - (ii)

30. Net profit for the current year will be transferred and added to the existing balance of
Surplus under Reserves and Surplus.

Rs.50,000 transferred to D.R.R. will be shown as appropriation out of Surplus which

will be added to existing balances (if any) under DRR.
ed

Balance under Surplus and D.R.R. will be added and shown against Reserves and
us

Surplus.
av

OR
io

Major
Sl.no Items Sub-headings
r.c

Headings
om

Non-current Fixed Assets

(i) Mining Rights
Assets (Intangible assets)

Encashment of Employees Earned Leave Non-current Long-term

(ii)
Payable on Retirement Liabilities Provisions

Non-current Fixed Assets

(iii) Vehicles
Assets (Tangible assets)

This classification of assets is given as per revised schedule 3 of the company's

act,2013 in order to bring uniformity in classification and to ensure international
standards. This classification is given in part 1 of the schedule.

31. Comparative Statement of Profit and Loss

for the year ended 31st March, 2009
 31st 31st Absolute Change Percentage Change

Particulars March, 2008 March, 2009 (Increase or Decrease) (Increase or Decrease)

(Rs.) (Rs.) (Rs.) (%)

I. Revenue from
6 ,00,000 8,00,000 2,00,000 33.33
Operations (Sales)

II.Total Revenue 6,00,000 8,00,000 2,00,000 33.33

III. Expenses:

(a) Cost of
Revenue from 3,60,000 4,00,000 40,000 11.11

Operations
ed

(b)
us

Administrative 48,000 60,000 12,000 25.00

Expenses
av

IV. Total Expenses

io

4,08,000 4,60,000 52,000 12.74

(a+b)
r.c

V. Profit before Tax

1,92,000 3,40,000 1,48,000 77.08
om

( I I - IV )

VI. Income Tax @

(96,000) (1,70,000) (74,000) (77 08)
50%

VII. Profit after Tax

96,000 1,70,000 74,000 77.08
( V- VI)

Working Note

2008 2009

Revenue from operations 6,00,000 8,00,000

( - ) Gross profit (2,40,000) (4,00,000)

Cost of revenue from

 operations 3,60,000 4,00,000

20% on Gross profit i e 15% on Gross profit i e.

Administrative expenses
48,000 60,000

Comparative statement of P&L A/c is prepared as per Schedule 3, Part 1 of the

Companies Act,2013. A comparative statement is a document that compares a
particular financial statement with prior period statements or with the same financial
report generated by another company. Analysts and business managers use the
income statement, balance sheet and cash flow statement for comparative purposes.
The process reveals trends in the financials and compares one company's
performance with another business.
ed

OR
us

Balance Sheet of PQ Ltd.

as at 31st March 2012 (Extract)
av
io

31st March 2012 31st March 2011

r.c

Particulars Note No. Amount Amount

om

(Rs.) (Rs.)

I. EQUITY AND LIABILITIES

(1) Shareholders’ Funds

(a) Share Capital 400

(b) Reserves and Surpluses 90

(2) Non-Current Liabilities

(a) Long Term Borrowings 500

(3) Current Liabilities

(a) Trade Payables 30

 (a) Trade Payables 30

1,020

II. ASSETS

(1) Non-current Assets

(a) Fixed Assets

Tangible Assets 800

(2) Current Assets

(a) Inventories 20

(b) Trade Receivables 80

(c) Cash and Cash Equivalents 120

ed

1,020
us

There is a legal requirement as per Companies Act 2013 that every company should
av

prepare Profit and Loss account and Balance Sheet as per the format given in
Schedule 3. This requirement is only for companies and not for Partnership or
io

Proprietorship.
r.c

32. Cash Flow Statement

om

I. Cash flow from operating activities : Rs. Rs.

Net Profit before Tax 234000

+ Depreciation 70000

- Profit on sale of machinery -6000

+ Interest on debenture 21375

Operating profit before Working capital changes 307375

+ Inventories 50000

- Trade Receivables -30000

Cash Generated from operating activity 327375

- Tax Paid 20000 307375

II. Cash Flow from Investing activities :

Purchase of machinery -300000

Purchase of non current investment -120000

Sale of machinery 36000

Sale of non current investment 72000 -312000

III. Cash Flow from Financing activities :

Issue of shares 300000

Redemption of preference shares -100000

Redemption of debentures -50000

ed

Preference dividend -24000

us

Equity dividend -240000

av

Interest -21375 -135375

io

Net Cash Flow -140000

r.c

+ Opening 310000
om

Closing 170000