SOLUTION : PRACTICE PAPER 5

Q. 1. (A) (1) Dividend

(2) Capital fund

(3) Sole proprietorship

(4) Noting

(5) Equity shares

Q. 1. (B) (1) Liability

(2) Super profit

(3) Dissolution

(4) Limited

(5) Ready to use

Q. 1. (C) (1) (i) Surplus = Income – Expenditure

1,000 = 5,500 – 4,500

 
 Expenditure = ` 4,500
(ii) Deficit = Expenditure – Income

2,500 = 19,500 – 17,000

 
 Expenditure = ` 19,500

(2) (i) Goodwill = Average profit × No. of years of purchase

(ii) Sacrifice ratio = Old ratio – New ratio

(3) Legal due date = 22nd March, 2020

[19-01-2020 + 60 days = 12 days of Jan. + 28 days of Feb. + 20 days of March

+ 3 days of grace]

(4) Issued capital – Subscribed capital = Unsubscribed capital

Absolute change
(5) Percentage change = × 100
Amount of previous year

Q. 1. (D) (1) Capital / Current Account

(2) General Reserve / Reserve fund

(3) Endorsee

(4) Liquid assets

(5) Ctrl + A

SOLUTIONS TO NAVNEET PRACTICE PAPERS : STD. XII (B.K.) 1

Q. 2.
Dr. Profit and Loss Adjustment Account Cr.

Amount Amount
Particulars Particulars
(`) (`)
To Furniture A/c 420 By Land and Buildings A/c 10,500
To Stock A/c 4,200
To Profit on Revaluation Transferred to
Partners’ Capital A/c
  Hemant4,410
  Shiva 1,470 5,880
10,500 10,500

Dr. Partners’ Capital Accounts Cr.

Hemant Shiva Aum Hemant Shiva Aum

Particulars Particulars
(`) (`) (`) (`) (`) (`)
To Bank A/c – 5,670 – By Balance b/d 63,000 33,600 –
To Balance c/d 1,26,000 42,000 42,000 By Bank A/c – – 42,000
By Goodwill A/c 31,500 10,500 –
By General Reserve
A/c 6,300 2,100 –
By Profit and Loss
Adjustment A/c 4,410 1,470
(Profit)
By Bank A/c 20,790 – –
1,26,000 47,670 42,000 1,26,000 47,670 42,000

Dr. Bank Account Cr.

Amount Amount
Particulars Particulars
(`) (`)
To Balance b/d 21,000 By Shiva’s Capital A/c 5,670
To Aum’s Capital A/c 42,000 By Balance c/d 78,120
To Hemant’s Capital A/c 20,790
83,790 83,790

2 NAVNEET PRACTICE PAPERS : STD. XII (COMMERCE)

 Balance Sheet as on 1st April, 2023
Amount Amount Amount Amount
Liabilities Assets
(`) (`) (`) (`)
Capital Accounts : Land and Building 52,500
Hemant 1,26,000 Add : Appreciation (20 %) 10,500 63,000
Shiva 42,000 Furniture 4,200
Aum 42,000 2,10,000 Less : Depreciation (10 %) 420 3,780
Creditors 84,000 Stock 42,000
Less : Depreciation (10 %) 4,200 37,800
Debtors 42,000
Goodwill 42,000
Bills Receivable 27,300
Cash at Bank 78,120
2,94,000 2,94,000

Working notes :
(1) Calculation of new profit sharing ratio : New Ratio = (Balance of 1) × (Old ratio)

Hemant’s New ratio = (1 – )× = × =

1 3 4 3 3
5 4 5 4 5

Shiva’s New ratio = (1 – )× = × =

1 1 4 1 1
5 4 5 4 5
1 3 1 1
Aum’s share = \ New ratio of partners = : : =3 : 1 : 1
5 5 5 5
(2) Total capital of the firm = (Reciprocal of Aum’s ratio) × (Aum’s capital contribution)
5
= × 42,000= ` 2,10,000
1
3
Hemant’s new closing capital balance = 2,10,000 × = ` 1,26,000
5
1
Shiva’s new closing capital balance = 2,10,000 × = ` 42,000
5
Aum’s capital balance = ` 42,000
OR
Q. 2. In the books of Partnership Firm
Dr. Profit and Loss Adjustment Account Cr.

Amount Amount
Particulars Particulars
(`) (`)
To Furniture A/c 4,500 By Freehold Property A/c 4,500
To Goodwill – Loss 2,250 By Machinery A/c 1,500
To Partners’ Capital A/cs : (Profit) By R.D.D. A/c 1,500
Snehal 300
Samir 300
Shera 150 750

7,500 7,500

SOLUTIONS TO NAVNEET PRACTICE PAPERS : STD. XII (B.K.) 3

Dr. Partners’ Capital Accounts Cr.
Snehal Samir Shera Snehal Samir Shera
Particulars Particulars
(`) (`) (`) (`) (`) (`)
To Bank A/c – – 4,500 By Balance b/d 60,000 45,000 22,500
To Shera’s Loan A/c – – 19,650 By General
To Balance c/d 63,300 48,300 – Reserve A/c 3,000 3,000 1,500
By Profit and Loss
Adjustment A/c 300 300 150
(Profit)
63,300 48,300 24,150 63,300 48,300 24,150

Balance Sheet as on 1st April, 2023

Amount Amount Amount Amount

Liabilities Assets
(`) (`) (`) (`)
Partners’ Capital A/cs : Bank 3,000
Snehal 63,300 Debtors 30,000
Samir 48,300 1,11,600 Furniture 22,500
Shera’s Loan A/c 19,650 Less : Depreciation 4,500 18,000
Creditors 12,000 Machinery 6,000
Bills Payable 3,000 Add : Appreciation 1,500 7,500
Freehold Property 40,500
Add : Appreciation 4,500 45,000
Goodwill 42,750
1,46,250 1,46,250

Working Notes :
Total profit of given no. of years
(1) Average profit =
No. of years given
1,500 + 15,750 + 15,000 + 24,000 + 15,000
=
5
71,250
= = ` 14,250
5

Goodwill = Average profit × No. of years given = 14,250 × 3 years = ` 42,750

Goodwill value given in the Balance Sheet = ` 45,000

New value arrived at = ` 42,750

Loss due to revaluation `   2,250

To be recorded in Profit and Loss Adjustment A/c – Dr. Side.

In Assets side of Balance sheet, write ` 42,750 for Goodwill.

(2) Balance of Bank A/c = Opening Balance – Cheque given to Dinu = 7,500 – 4,500 = ` 3,000

4 NAVNEET PRACTICE PAPERS : STD. XII (COMMERCE)

Q. 3. In the books of Umang, Urmil and Urvi

Dr. Realisation Account Cr.

Amount Amount Amount Amount
Particulars Particulars
(`) (`) (`) (`)
To Sundry Assets A/c By Sundry Liabilities A/c
Machinery 75,000 Creditors 60,000
Investments 36,000 Bills Payable 21,000
Debtors 82,500 R.D.D. 4,500 85,500
Stock 30,000 2,23,500 By Bank A/c
To Bank A/c Machinery 67,500
Dissolution Expenses 4,500 Stock 27,000
Creditors 60,000 Investments 31,500
Bills Payable 21,000 85,500 Debtors 67,500
To Partners’ Capital A/cs Goodwill 36,000 2,29,500
(Profit on Realisation
transferred)
Umang 2,400
Urmil 2,400
Urvi 1,200 6,000
3,15,000 3,15,000

Dr. Partners’ Capital Accounts Cr.

Umang Urmil Urvi Umang Urmil Urvi

Particulars Particulars
(`) (`) (`) (`) (`) (`)
To Profit and Loss A/c 10,800 10,800 5,400 By Balance b/d 90,000 30,000 30,000
To Balance c/d 85,200 25,200 27,600 By Realisation A/c 2,400 2,400 1,200
By General Reserve A/c 3,600 3,600 1,800
96,000 36,000 33,000 96,000 36,000 33,000

Dr. Bank Account Cr.

Amount Amount
Particulars Particulars
(`) (`)
To Balance b/d 6,000 By Realisation A/c (Liabilities) 85,500
To Realisation A/c (Assets) 2,29,500 By Umang’s Loan A/c 12,000
By Umang’s Capital A/c 85,200
By Urmil’s Capital A/c 25,200
By Urvi’s Capital A/c 27,600
2,35,500 2,35,500

SOLUTIONS TO NAVNEET PRACTICE PAPERS : STD. XII (B.K.) 5

 OR
Q. 3. In the books of Mitali
Journal Entries
Date/ Debit Credit
Particulars L.F.
No. Amount (`) Amount (`)
1 Manoj’s A/c Dr. 36,000
To Bills Payable A/c 36,000
(Being our acceptance is given)
2 Bills Payable A/c Dr. 36,000
To Manoj’s A/c 36,000
(Being bill cancelled on our request)
3 Manoj’s A/c Dr. 12,000
To Bank A/c 12,000
(Being part payment made)
4 Interest A/c Dr. 1,100
To Manoj’s A/c 1,100
(Being the interest due on balance amount to be paid)
5 Manoj’s A/c Dr. 25,100
To New Bills Payable A/c 25,100
(Being the acceptance given for balance amount plus
amount of interest)
6 New Bills Payable A/c Dr. 25,100
To Manoj’s A/c 25,100
(Being new bill dishonoured)
7 Manoj’s A/c Dr. 25,100
To Cash/Bank A/c 8,785
To Deficiency A/c 16,315
(Being 35 % of the amount due paid and balance
credited to deficiency A/c)
Total 1,60,400 1,60,400

Working Notes :

(1) Amount of New bill = (Amount of old bill) + (Interest) – (Part payment)
= 36,000 + 1,100 – 12,000
= ` 25,100
35
(2) Amount recovered by Manoj = 25,100 × = ` 8,785
100
Bad debts incurred = Amount due – Amount recovered
= 25,100 – 8,785
= ` 16,315

6 NAVNEET PRACTICE PAPERS : STD. XII (COMMERCE)

Q. 4. In the books of Parth Company Limited
Balance Sheet as on ----------------------
Amount Amount
Liabilities Assets
(`) (`)
Authorised Capital : Cash at Bank 15,97,000
3,00,000 equity shares of ` 10 each 30,00,000
Issued Capital :
2,00,000 equity shares of ` 10 each 20,00,000
Subscribed Capital :
1,60,000 equity shares of ` 10 each 16,00,000
Called-up Capital :
1,60,000 equity shares of ` 8 each 12,80,000
Paid-up Share Capital :
(1,60,000 equity shares at
  ` 8 per share) 12,80,000
   Less : Calls-in-Arrears
   (1,000 shares at
  ` 3 per share) 3,000 12,77,000
Share Premium/Securities A/c 3,20,000
   (1,60,000 shares at ` 2 per share)
15,97,000 15,97,000

Working Notes :
(1) Bank balance at the end = Amount received on application 
Amount received on allotment + Amount received on first call + Premium amount received
= 1,60,000 × 3 + 1,60,000 × 2 × 1,59,000 × 3 + 1,60,000 × 2
= 4,80,000 + 3,20,000 + 4,77,000 + 3,20,000 = ` 15,97,000
(2) Directors have not made final call of ` 2 per share means total called-up amount = ` 10 – ` 2 = ` 8
(3) Calls-in-Arrears ® on 1,000 shares at ` 3 = ` 3,000 of first call
(4) Share premium on 1,60,000 shares @ ` 2 received at allotment stage i.e. share premium amount
= 1,60,000 × ` 2 = ` 3,20,000
OR
Q. 4. Sourcing of Accounting Software :

Before acquiring accounting software, expertise of people responsible in business for accounting
work is to be considered, as people are responsible for accounting and not the computers.
The choice of the accounting software would depend upon the suitability to the organisation or
firm, in terms of accounting and financial needs. From this perspective available accounting
packages are classified into the following categories :
(a) Ready to use (b) Customized (c) Tailored (d) Free and Open Source
(a) Ready to use : Ready to use software is suitable and developed for the need of organisation
or firm whose volume of accounting transactions are less. Ready to use software is cost
effective and relatively easier to learn. Such software have many features and low level of
secrecy. This kind of the software may not have linkage benefits.
(b) Customized : As per the need of the special requirements of customer, when accounting
software is developed, it is known as Customized software, which is suitable for large and

SOLUTIONS TO NAVNEET PRACTICE PAPERS : STD. XII (B.K.) 7

 medium size businesses. Customization includes modification and addition to the software
contents, provision for the specified number of users and other authentication, etc. The cost
of training and installation and maintenance of customized software is relatively high.
Customized software can be linked to the other information system with proper level of
secrecy.
(c) Tailored : When software are designed and developed according to the need of a customer
with multi-users facility and geographically scattered locations, it is known as Tailored
software. This kind of the software form an important part of Organisational Management
Information System (MIS). The Secrecy and authenticity checks are most important things
in such software. This software needs specialized training to the users and they offer high
flexibility in terms of number of users.
(d) Free and Open Source : When small business or firm wants to use accounting software but
do not have enough budget, then they try to get it from open source software available on the
internet, which can be downloaded and installed from the websites.
Q. 5. In the books of the Partnership firm

Dr. Partners’ Capital AccountsCr.

Karma Punya Bandhan Karma Punya Bandhan
Particulars Particulars
(`) (`) (`) (`) (`) (`)
To Drawings A/c – 37,500 – By Balance b/d 30,000 30,000 30,000
To Executor’s Loan By Revaluation A/c 22,500 15,000 7,500
A/c – 73,500 – (Profit)
To Balance c/d 95,250 – 51,750 By General Reserve
A/c 20,250 13,500 6,750
By Goodwill A/c 22,500 15,000 7,500
By 
Profit and Loss
Suspense A/c – 37,500 –
95,250 1,11,000 51,750 95,250 1,11,000 51,750

Working Notes :
(1)
Dr. Revaluation Account Cr.

Amount Amount
Particulars Particulars
(`) (`)
To Stock A/c 7,500 By Land and Building A/c 15,000
To R.D.D. A/c 4,500 By Machinery A/c 30,000
To Patents A/c 18,000 By Investments A/c 30,000
To Partner’s Capital A/cs (Profit)
  Karma 22,500
  Punya 15,000
  Bandhan 17,500 45,000
75,000 75,000

8 NAVNEET PRACTICE PAPERS : STD. XII (COMMERCE)

(2) Firm’s goodwill = ` 45,000. Distribute among partners in their profit and loss ratio 3 : 2 : 1.
Book value 60,000
(3) Revised value of Land and Building = × 100 = × 100 = ` 75,000.
(100 – 20) 80

\ Increase in the value of Land and Building = Revised value – Book value
= 75,000 – 60,000 = ` 15,000.
Book value 1,20,000
(4) Revised value of Machinery = × 100 = × 100 = ` 1,50,000.
(100 – 20) 80
\ Increase in the value of Machinery = 1,50,000 – 1,20,000 = ` 30,000.
(5) Patents were valueless means it is loss for business.
(6) 
Punya’s share in profit is ` 37,500 and his drawings is ` 37,500. Punya is allowed to retain his
drawings as his share of profit. Means write ` 37,500 as drawings on debit side and write ` 37,500
as Profit and Loss Suspense A/c on Credit side of Partners’ Capital A/c.
OR
Q. 5. Comparative Balance Sheet of Surya Limited as on
31st March, 2022 and 31st March, 2023
(1) (2) (3) (4)
Particulars 31 – 03 – 2022 31 – 03 – 2023 Absolute Percentage
(`) (`) Change (`) Change
I. Sources of Funds
(a) Equity Share Capital 1,60,000 2,00,000 40,000 25 % Increase
(b) 12 % Preference Shares 64,000 64,000 – –
(c) Reserve and Surplus 80,000 1,12,000 32,000 40 % Increase
(A) Net Worth 3,04,000 3,76,000 72,000 23.68 % Increase
Borrowed Funds
Secured Loan – 15 % Debentures 48,000 40,800 (7,200) (15 %) Decrease
(B) Total Borrowed Funds 48,000 40,800 (7,200) (15 %) Decrease
Total Funds Available (A + B) 3,52,000 4,16,800 64,800 18.41 % Increase
II. Application of Funds
A. Fixed Assets – Land 64,000 80,000 16,000 25 % Increase
A. Fixed Assets – Building 48,000 72,000 24,000 50 % Increase
A. Plant and Machinery 58,400 1,38,400 80,000 137 % Increase
1,70,400 2,90,400 1,20,000 70.42 % Increase
II. B. Working Capital
A. Current Assets – Stock 1,20,000 88,000 (32,000) (26.67) % Decrease
Debtors 1,02,400 1,12,000 9,600 9.375 % Increase
Bank 27,200 29,600 2,400 8.82 % Increase
Less : Current Liabilities
Creditors 40,000 64,000 24,000 60 % Increase
Bills Payable 8,000 4,800 (3,200) (40 %) Decrease
Provision for Taxation 20,000 34,400 14,400 72 % Increase
Working Capital
(Current Assets – Current 1,81,600 1,26,400 (55,200) (30.40 %) Decrease
Liabilities)
Total Funds Applied (A + B) 3,52,000 4,16,800 64,800 18.41 % Increase

SOLUTIONS TO NAVNEET PRACTICE PAPERS : STD. XII (B.K.) 9

Q. 6. In the books of ‘Karnavati Club’
Dr. Income and Expenditure Account for the year ended 31st March, 2023 Cr.

Amount Amount Amount Amount

Expenditure Income
(`) (`) (`) (`)
To Salary 35,000 By Subscription 2,10,000
  Less : Outstanding   Add : Outstanding
salary of 2021 – 22 8,000 27,000 Subscription for
To Insurance Premium 22,000 Current Year 28,000
  Less : Prepaid 2,38,000
Insurance Premium 5,000   Less : Subscription
17,000 Received of 2021 – 22 6,000 2,32,000
  Add : Prepaid Insurance By Locker Rent 3,000
premium of current   Add : Outstanding
year paid in previous Locker Rent 800
year 4,000 21,000 3,800
To Depreciation on   Less : Outstanding
Furniture 6,000 Locker Rent of
To Interest 2,800 Previous Year 1,000 2,800
To Refreshment Expenses 8,400
To Surplus 1,69,600
  (Excess of income over
Expenditure)
2,34,800 2,34,800

Balance Sheet as on 31st March, 2023

Amount Amount Amount Amount

Liabilities Assets
(`) (`) (`) (`)
Capital Fund 1,29,000 Machinery 1,38,000
   Add : Surplus 1,69,600 Outstanding Subscription 10,000
  Add : Entrance Fees 18,600    (2021 – 22)
(Capitalised)    (16,000 – 6,000)
  Add : Donations 1,600 3,18,800 Outstanding Subscription 28,000
(Capitalised)    (2022 – 23)
Prepaid Insurance Premium 5,000
Furniture 30,000
   Add : Purchases 60,000
90,000
   Less : Depreciation 6,000 84,000
Outstanding Locker Rent 800
   (2022 – 23)
Cash in Hand 13,000
Cash at Bank 40,000
3,18,800 3,18,800

10 NAVNEET PRACTICE PAPERS : STD. XII (COMMERCE)

Working Notes :
(1) Outstanding subscription (2021 – 22) ` 16,000 given in Balance Sheet against that ` 6,000 received
in 2022 – 23. Means still receivable subscription = ` 10,000 (16,000 – 6,000).
(2) 
Prepaid insurance premium (2021 – 22) ` 4,000 is for current year. Therefore, in current year’s
insurance premium, ` 5,000 is to be added and then subtract current year’s prepaid insurance
premium.
(3) Outstanding salary of (2021 – 22), ` 8,000 of previous year is to be subtracted from current year’s
salary.
(4) Total amount of donations and entrance fees are to be capitalised so add entire amount of both the
items to Capital fund.
(5) Outstanding locker’s rent (2021 – 22) ` 1,000 is given in Balance Sheet. It is to be substracted from
current year’s locker’s rent and then add current year’s outstanding locker rent.
Q. 7. In the books of Hira and Manek
Dr. Trading and Profit and Loss Account for the year ended on 31st March, 2023Cr.
Amount Amount Amount Amount
Particulars Particulars
(`) (`) (`) (`)
To Opening Stock 50,000 By Sales 6,50,000
To Purchases 4,17,000    Less : Sales Returns 2,000 6,48,000
   Less : Purchase Returns 2,000 4,15,000 By Closing Stock 64,000
To Carriage Inward 6,000
To Gross Profit c/d 2,41,000
7,12,000 7,12,000

To Carriage Outward 9,000 By Gross Profit b/d 2,41,000

To General Expenses 3,600
To Export Duty 1,800
To Advertisement 9,600
   Less : Prepaid 8,000 1,600
To Printing and Stationery 2,400
  Add : O/s Printing and
Stationery 1,000 3,400
To Written off Leasehold
Premises 20,000
To Provision for Doubtful
   debts (New) 4,000
To R.D.D. (New) 4,710
To Net Profit (Transferred to
   Partners Capital A/c)
  Hira 96,445
  Manek 96,445 1,92,890
2,41,000 2,41,000

SOLUTIONS TO NAVNEET PRACTICE PAPERS : STD. XII (B.K.) 11

 Balance Sheet as on 31st March, 2023

Amount Amount Amount Amount

Liabilities Assets
(`) (`) (`) (`)
Capital Account : Hira Motor Vehicle 1,10,000
Prepaid Advertisement
Opening Balance 1,50,000
Expense 8,000
Add : Net Profit 96,445 Leasehold Premises 2,20,000
Less : Drawings 7,000 2,39,445 Less : Written off 20,000 2,00,000
Closing Stock 64,000
Capital Account : Manek Debtors 1,61,000
Opening Balance 1,50,000 Less : Provision for Doubtful
Add : Net Profit 96,445     Debts (New) 4,000
Less : Drawings 4,000 2,42,445 1,57,000
Bank Overdraft 10,000 Less : R.D.D. (New) 4,710 1,52,290
Bills Payable 25,000 Bills Receivable 20,000
Creditors 1,36,000 Cash at Bank 90,000
O/s Rent 4,000 Furniture 16,600
Unpaid Wages 3,000
O/s Stationery & Printing 1,000
6,60,890 6,60,890

Working Notes :
(1) 
Advertisement expenses written off to Profit and Loss account during the year 2022 – 23 for six
months i.e. from 1/10/22 to 31/03/23.
1 6
Advertisement expenses written off =
 (Advertisement bill paid) × × 
3 12
1 6
= 9,600 × × = ` 1,600.
3 12
Prepaid Advertisement = 9,600 – 1,600 = ` 8,000.
(2) Reserve for Discount on Debtors = 3% (Balance in debtors)
3 3
= (1,61,000 – 4,000) = × 1,57,000 = ` 4,710.
100 100
(3) Difference of opening balance (` 2,20,000) and closing balance (` 2,00,000) for leasehold premises
is to be considered as written off leasehold premises.

________

12 NAVNEET PRACTICE PAPERS : STD. XII (COMMERCE)