Solutions to RSPL/2 1. (c) Debit or Credit balance 2. (d) Both (A) and (R) are correct, and (R) is the correct explanation of (A). 3. (a) In the year of issue of debentures (b) Forfeited Shares 4. (d) Dr. Sudha’s Capital A/e and Cr. Smriti’s Capital A/e by & 50,000. (a) & 2,00,000 5. (ce) € 36,000 6. (2) 6% (d) 20% 7. (b) Subscribed and uncalled capital 8. (d) © 1,75,000 (©) & 6,60,000 9. (c) % 1,50,000 10. (b) & 5,00,000 11. (d) (i), Gv), (ti), Gi) 12, (a) @ 54,000 13. (d) None of these 14, (d) take back % 50,000 15. (c) & 2,00,000 (a) & 42,000 16. (d) Partners’ Capital Ales 17. Dr Or Or Zen’s Executor’s Ale cr 30-9-2022 31-3-2023 31-3-2024 31-3-2024 31-3-2025 To Bank Ave To Balance e/d To Bank Ale (4,00,000 + 32,000 + 66,560) ‘To Balance cfd To Bank Ale 130,000, 8,32,000 9,62,000 4,98,560 4,00,000 8,98,560 4,32,000 4,32,000 30-9-2022, 31-3-2023 1-4-2023 313-2024 1-4-2024 31-3-2025 By Zen’s Capital Ale By Interest A/c By Balance bid By Interest A/c By Balance bid By Interest A/e 930,000 32,000 962,000 8,32,000 66,560 8,098,560 4,00,000 32,000 432,000 Accountancy—12 ”18. Journal 31-3-2022 | Profit and Loss Ale Dr. ‘To Profit and Loss Appropriation A/c (Being net profit transferred to Profit and Loss Appropriation Aic) 31-3.2022 | Profit & Loss Arpropriation Alc Dr. ‘To Raja’s Capital Ale To Meru's Capital Ale ‘To Fahad’s Capital Ale (Being share of profit transferred to Partners? Capital Ales in 5:4: 1) 31-3-2022 | Raja’s Capital Ave Dr. Meru’s Capital Ale Dr. ‘To Fahad’s Capital Ale (Being deficiency of Fahad’s guaranteed profit borne by Raja and Meru in 3 : 2) 3,50,000 3,50,000 9.000 3,50,000 1,75,000 1,40,000 35,000 15,000 Or Journal Rocky’s Capital Ale Dr. To Prince’s Capital Ale (Being interest on drawings not charged, now adjusted) 15,000 15,000 Working Note: Statement showing Adjustments Interest on drawings not charged 10,000) —| 15,000 —| 25,000 —| —| 50,000 More profit to be distributed —| 25,000) —| 15,000} — —| 10,000} 50,000} —| INet effect 15,000 Cr. = 15,000 Dr. = Accountancy—12 @19. Journal @ @) Sundry Assets Ale Dr. To Sundry Liabilities A/e To Birbal Ltd. ‘To Capital Resewve A/c (Being assets and liabilities of Birbal Ltd. taken over) Birbal Ltd, Dr To 17% Proference Share Capital Ale ‘To Securities Premium A/e (Being preference stares issued at 10% to Birbal Ltd. in purchase consideration) 22,50,000 11,00,000 8,00,000 11,00,000 3,50,000 10,00,000 1,00,000 @ w Or Journal Building Aic Dr. Plant and Machinery Ale Dr. Furniture Ave Dr. Goodwill Ale Dr. ‘To Liabilities Ave ‘To Earth Drivers Ltd. (Being purchase of assets and liabilities from Earth Driver Ltd.) Earth Drivers Ltd. Dr. To 10% Debentures Ale ‘To Securities Premium A/e ‘To Bank A/c (Being debentures and cheque issued to Earth Drivers Ltd, in purchase consideration) 15,00,000 14,00,000 6,00,000 2,00,000 35,00,000 2,00,000 35,00,000 30,00,000 150,000 3,50,000 20. Adjusted profit for the year 2021-22 = & 6,60,000 + & 2,00,000 = @ 8,60,000 Average profit © 9,00,000 + %13,00,000 + & 8,60,000 3 = age = @ 10,20,000 Accountancy—12 °21. Goodwill = & 10,20,000 x 2 = & 20,40,000 Kabira’s saci - is in=z 3-1-1 = Pakira’s wn. ice ira's gain = 7 — >= $f Goodwill = 4. x € 20,4,000 = € 5,10,000 1-4-2022 | Fakira’s Capital A/c Dr. ‘To Kabira’s Capital Ale (Being adjustment of goodwill through capital accounts) 5,10,000 5,10,000 Books of Eckost Ltd. Balance Sheet (Extract) as at ..... EQUITY AND LIABILITIES Shareholders’ Funds Share Capital 1 31,62,500 Notes to Accounts: 1. Share Capital Authorised Capital: 12,50,000 Equity Shares @ ¥ 10 each 75,000 10% Preference Shares @ & 100 each Issued Capital: 4,00,000 Equity Shares @%10 each Subscribed Capital: Subscribed but not fully paid up 400,000 Equity Shares @ 88 each Less: Calls in Arrear (7,500 x & 5) 1,25,00,000 75,00,000 2,00,00,000 40,00,000 32,00,000 37,500. 31,62,500 Accountancy—12 “2, Journ: () | Realisation Ave Dr. 30,000 ‘To Kartik’s Capital Ale 30,000 (Being unrecorded ability paid by Kartik) (@ | Rishabh’s Loan Ale Dr. 1,25,000 ‘To Bank Alc 1,25,000 (Being loan amount paid to Rishabh) (ii) | Realisation Ale Dr. 60,000 ‘To Rahul’s Capital Ale 60,000 (Being expenses on dissolution paid by Rahul) (iv) | Reatisation Ave Dr. 41,000 ‘To Bank Ae 41,000 (Being amount paid to creditors) Journal () [Bank Ave Dr. 280,000 ‘To Share Application and Allotment A/c 2,80,000 (Being application and allotment money received ‘on 40,000 shares) (i [Share Application and Allotment Ae Dr. 2,80,000 ‘To Share Capital Ale 2,10,000 To Calls in Advance A/c 42,000 To Bank A/c 28,000 (Being application and allotment money transferred to share capital, call and balance refunded) (i) | Share First and Final Call Ale Dr 1,80,000 ‘To Share Capital A/c 90,000 ‘To Securities Premium A/e 90,000 (Being first and final call due) @) [Bank ale Dr. 1,33,800 Calls in Arrear A/c Dr. 4,200 Calls in Advance Alc Dr. 42,000 ‘To Share First and Final Call A/c 180,000 (Being first and final call money received) () [Share Capital ave Dr 8,400 Securities Premium A/c Dr. 2520 To Share Forfeited A/c 6,720 To Calls in Arrear A/c 4,200 (Being 400 shares o* Maheshwari forfeited) (i) [Bank ale Dr. 5,880 Share Forfeited Ale Dr. 2,520 To Share Capital Ale 8.400 (Being forfeited sheres issued @ @ 7 per share fully paid up) (vit) [Share Forfeited Ale Dr 4,200 ‘To Capital Resewve A/c (Being gain on reissue of shares transferred to 4,200 capital reserve) Accountaney—12 6Or Journal @ Wi) Gi @) ©) wi) (vii) Bank Alc Dr. To Share Application Afe (Being money received on application) Share Application Ale Dr. To Share Capital Ale ‘To Share Allotment Ale To Bank Alc (Being application money transferred to share capital, allotment and excess refunded) Share Allotment Alc Dr ‘To Share Capital Ale ‘To Securities Premium A/e (Being amount due on allotment) Bank Alc Dr. Calls in Arrear Ale Dr. ‘To Share Allotment Ale (Being allotment money received) Share First and Final Call A/e Dr, ‘To Share Capital Ale (Being first and final call money due) Bank Alc Dr. Calls in Arrear Ale Dr. ‘To Share Firs: and Final Call Ale (Being first and final call money received) Share Capital A/e Dr, Securities Premitm A/c Dr. ‘To Share Forkeited Ale To Calls in Arrear Ale (Being 36,000 shares forfeited) 24,00,000, 24,00,000 20,00,000 16,12,800 67.200 12,00,000 10,92,000 1,08,000 3,60,000 32,00 24,00,000 16,00,000, 3,20,000 4,80,000 12,00,000, +8,00,000 16,80,000, 12,00,000 12,00,000, 2,16,800 1,75,200 Workings Notes: (i) Shares applied by Chetna = 16,000 x £ 19,200 Allotment money due from Chetna (16,000 x 5) Less: Excess money (3,200 x & 4) Allotment amount unpaid by Chetna Accountancy—12. ©(i) Amount due on allotment 20,00,000 Less: Excess application money adjusted 3,20,000 16,80,000 Less: Amount unpaid by Chetna 67,200 Amount received on allotment Revaluation A/c Cr 3,000] By Plant and Machinery A/c 50,000 To Stok Alc 50,000 | By Loss transferred to: Worty’s Capital Ale 1,800 Rest’s Capital A/c 1,200 3,000 53,000 53,000 Dr. Partners’ Capital Aves Cr. ‘To Revaluation A/c 1,800] 1,200] — | By Balance bid 4,00,000] 3.90,000] — ‘To Bank A/c 59,200] 72,800] — |By General Reserve A’e | 90,000] 50,000] — ‘To Balance c/d 495,000] 330,000] 3,00,000| By Bank A/c =| — —[3,00,000] By Premium for Goodwill Ale 65,000] 44,000] — 5,56,000 | 494,000 | 3,00,000 5,56,000] 4,04,000] 3,00,000 ‘Working Notes: (i) Value of Goodwill = & 1,65,000 x 2.5 = % 4,12,500 Bindas’s share in Goodwill = % 4,12,500 x = = 2 1,10,000 Bindas’s share = ¢ Remaining share = ¢ = = Worty’s new share = 1x3 = 3 Rest’s new share = ue = = Thus, total capital of the firm = & 3,00,000 B brought & 3,00,000 for ath share 11,25,000 «+ Worry’s new Capital = € 11,25,000 x 23 = © 4,95,000 22 Rest’s new Capital = & 11,25,000 x 2 = & 3,30,000 Accountancy 12 ”25. Dr. ‘To Provision for doutful debts ‘To Provision for discount on destors ‘To Outstanding expenses Or Revaluation Ale 3,800, 5,000 By Prepaid expenses By Investments, By Provision for discount on creditors Cr ‘To Patents 25,000 | By Loss transferred to: Abhi’s Capital Ale Bedi's Capital A/c Charu’s Capital Ale 39,800 Dr. Partners’ Capital A/es cr To Revaluation Ale | 2,400) 2,400] 1,200 [By Balance b/d 310,000] 3,00,000| 2,20,000] To Goodwill Ale 11,600] 11,600] 5,800|By General Reserve Ave | 20,000) 20,000} 10,000] ‘To Abhi's Capital Ae | —| 60,000} 30,000] By Bedi's Capital Ale | 60000 = | — To Investments Ale | 90,000) 20,000] 10,000 |By Charu's Capital A/e | 30000) = | — To Bank Ale 11600} =} To Abhi’s Loan Ale |2,00,000) = | — HT Balance e/d —|2.26,000] 1,83,000 4,20,000] 320,000] 2,30,000 4,20,000] 3,20,000] 2,30,000 Dr. Revaluation Ale Cr a "To Stock Ale 10,175,000 | By Provision for Doutful Debts Ale 5.000 ‘To Debtors Ale 12,15,000 | By Creditors Ale 14,80,000 To Fixed Assets Ale 13,65,000 | By Bank Ave: “To Bunk A/e (Creditors) 14,80,000| Debtors 11,54,250 ‘To Bank Ave (Realisation expenses) 25,000} Stock 12,70,000 ‘To Profit transferred to: Fixed Assets 1420000} 39,44.250 Iatil’s Capital Ale 11,550 Sahaj’s Capital Ale 67,700 | _1,69,250 53,29,250 33,29250, Accountancy—12 @Dr. Partners’ Capital A/es Cr ‘To Bank Ale 15,07,550 | 22,36,700 | By Balance bid 13,05,000 | 21,158,000 By General Reserve Ale 81,000] 54,000 By Realisation Ave (Profit) | 1,01,550| 67,700 15,07,550 | 22,36,700 15,07.550 | 22,36,700 26. (@) % 4,00,000 ') & 40,000 (iti) & 40,000 (i) Nil (v) Statement of Profit and Loss Dr. 40,000, To Interest on Debentures A/e 40,000 (Being interest on debentures written off) (vi) Securities Premium A/c Dr. 40,000 To Loss on Issue of Debentures Ale 40,000 (Being loss on issue of debeatures written off) 27. (b) To know the qualitative adventages. or (d) Only (i) and (i) are correct. 28. (b) % 40,00,000 29. (a) Cash Sales or (b) Decrease in Prepaid Expenses 30. (c) © 11,36,000 31. (i) Non-current Assets, Property, Plant and Equipments and Intangible Assets (Property, Plant and Equipments) (i Non-current Assets, Property, Plant and Equipments and Intangible Assets (Property, Plant and Equipments) (ii) Current Liabilities, Other Current liabilities (wv) Current Assets, Trade Receivables (v) Current Liabilities, Short-term Provisions (vi) Non-current Assets, Non-current Investments Accountaney—12 °32. Efficiency of management of acompany can be easily recognised by thorough analysis of its financial statements. Profitability and financial position of a company indicates how well resources of the ‘company has been used by the management. There are some other ways also to judge the efficiency of management such as comparison of statements of different period etc. 33. Profit before interest and Tax = Profit before Tax + Interest on 10% Debentures = & 1,20,000 + & 40,000 = & 1,60,000 Capital Employed = Non-current Assets + Working Capital = © 4,50,000 + & 40,000) + % 2,00,000 ~ & 1,40,000) = % 4,90,000 + & 60,000 = &5,50,000 Profit before Interest and Tax Capital Employed = ©1,60,000 %5,50,000 Return on Investment x 100 x 100 = 29.09% Or (2) No change as it neither changes long-term debts nor changes shareholders’ funds. (ii) Decrease as shareholders’ funds increased but there is no change in long-term debts. (iii) No change as both long-term debts and shareholders’ funds remain unchanged. (iv) Decrease as long-term debts decreased and shareholders’ funds increased. 34. (@) Cash Flow from Investing Activities Plant sold 100,000 Investment sold 2,00,000 Patents sold 2,00,000 Interest received 120,000 Dividend received 20,000 Rent received 000 7,00,000 Plant purchased (8,80,000) Investment purchased (360,000) Goodwill purchased (4:00,000) (16,40,000) Net Cash used in Investing Activities 9,40,000 Accountancy—12 (10)) Net Profit before Tax Add: Depreciation Loss on sale of furniture Less: Profit on sale of investment Dividend received on investment Operating profit before working capital changes 85,00,000 14,00,000 3,00,000 17,00,000_ 1,02,00,000 2,00,000) (60,000) 2,60,000 940,000 Accountaney—12 mt