PRACTICE PAPER-2

SOLUTIONS

I. (c) Dr. Jim's Capital A/c, Cr. Kim's Capital Afe by 24,000

[Kim's Sacrifice --Sacrifice)

Jim's Sacrifce--Gaining
5 3 partncr)l
2. (b) Both (A) and (R) are correct but (R) is not the corect explanation of (A).
3, (c) ? 3,500 [500 ?71

(d) No lnterest will be paid

4, Dr. Revaluation A/c and Cr. Mohan's Capital A'c by ? 7,500
Or

(b) Loss of ? 7,200 ( 1,20,000 - 7,200]

6 6
[Divisible Loss 9,300 +( 90,000 x 100 12)9,300 + 2,700 = 12,000]
5. (a) Scetion 4
6. (b) S.000 [? 2.75,0002 55 - 5,000 shares]
Or

(d) A dcbenture is an oral acknowledgement of debt by a company

7. (b) Both (A) and (R) are correct hbut (R) is not the correct explanation of (A).
8. (h) Sahil

Or

(b) Shall be paid to firm

9. (b) ? 6,000 (Remaining amount afier one year = 75,000 25,000 = 50,000
Interest in 2nd year S0,0000x 12
-6,000]

12
10. (e) 28,000 25,000 - 25,000 I00 -t 20,00
I1. (a) 10,00,000
12. (a) 2,47,500 [(80,000 ×? 3) -(0,500 × 3) + (3,000 x ? 4)
13. (c) 1,000
14. (4) ? 40,000 Debited to Investment Fluctuation Reserve Aie
15, (h) 40,000 [Comnission 7 4.40.000 40,000]

(d) 75.000 (Share of loss oft 45,000 t minimum guarantee of 30,000)

1Zetka wk Phygital Accountancy-12
l6. (c) Partner's Wife's Loan
Journal

Date Particulars Dr. () Cr. (?)

() Nisha's Capital Ac Dr 45,000
To Ishu's Capital Ac 45,000
(Being adjustment entry for goodwill)
(ii) Ishu's Capital Afe Dr 2,00,000
To Bank Afe 80,000
To Ishu's Loan Ae 1.20.000
(Being 40% of Ishu's claim paid by cheque
and balance transferred to her loan A/c)

Working Note:
T00
Ishu's total claim =? 80,000 x 40
2,00,000

Share of Ishu in hidden goodwill -2,00,000 - 1,55,000- 3 45,000

Nistha sCGain
Tisha's Gain 3
0
Journal
Date Particulars L.E. Dr. () Cr. ()
Sona's Capital A'c Dr. 1,620
To Bina's Capital A 1,260
To Piya's Capital Ac 360

(Being rectify entry passed for mising interest

on drawings)
Workig Notes:

Interest on Drawings of Piya =3,000 12 * =2,160

6
Interest on Drawings of Bina -4,000 x 12 72,880

(As per annum suffix is not given, time period is ignored.)

Table of Adjustment

Particulars Piya () Bina () Sona () Total )

Amount to be debited for interest on drawings (2.160) (2,880) (5,040))
Amount to be eredited 2,520 1260 1260 5.040

Cr. 360 Cr. I260 Dr. 1,620

2 Tagetka witt Phygital Accountancy-12

 Or

In the books of Anirudh And Vogesh

Journal
Date Particulars LE. Dr. () Cr. ()
() (a) Interest on Capital A/c Dr. 25,000
To Anirudh's Current A/c 15,000
To Yogesh's Current Alc 10,000
(Being interest on capital allowed)
(h) Profit and Loss Appropriation Ac Dr. 25,000
To Interest on Capital Ae 25,000
(Being interest on capital transferred to Profit
and Loss Appropriation Aic)
(i) (a) Aninudh's Current Als Dr. 4,000
Yogesh's Current Ale 5,000
To Interest on Drawings A/e 9.000

(Being intereat on drawings charged)

(b) Interest on Drawings Ae Dr, 9,000
To Protit and Loss Apptopriation A/e 9,000

(Being interest on drawings transferred to

Profit and Loss Appropriation Ac)
Profit and Loss Appropriation Ae Dr. 20,000
To General Reserve A/e 20,000
(Being a part of profit transferred to general
reserve)

19 Jouraal

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

Share First Call Ae D 6.40,00O
To Share Capital A/e (l,69,000(s) 4) 6,40.000
(Being tirst call money due)
Bank A/e D. 6,45.20O
Calls-in-Arrears Ac (5004s) 2) Dr. 2,000
To
lo Share
S Eit
Fist ecall
6,40,000
To Calls in-Advance A/e (2,4000s) × 3) 7,200
(Being first call moncy reccived)
Share Sccond and Final Call A/c Dr 4,80,000
(0.60,000(s) 3)
To Share C'apital Ae 4,80,000
(Being Necond call moncy duc)
Bank A/e (4,80,000 - 7.200 - 1,500) Dr 4,71.300
Calls-in-Arrears Ae 1.500
Calls-in-Advance A/e 7,200
To Share Second and Final Call A/e 4,80,000
(Being Second Call money received)

3 ayctka wet Phygital Acountancy-12

 Or
Journal

Date Particulars LE Dr. () Cr. ()

(/) Goodwill Ae Dr 4.20,000
Plant A/e Dr I6,50,000
Stock Ae Dr I1,50,000

Debtors A/e 12,50,000

To Creditors A/c 4,70,000
To Vendor's Ae 40,00,000

(Being business purchascd and the excess

consideratton transferred to goodwill account)
Vendor's Ae Dr 40,00,000
To Bank A/e 8,00,000
To 8"% Debentures Ac 25,60,000
To Securities Premium Al 6,40,000
(Being akount paid to vendor by cheque and by
issuing debentures)
Working Note:
No of Debentures iSsued - 32,00,00oR125 25.600 debentures

30. Vear Adjustment () Net Profit ()

2018-19 4.25,.000 25,000 4,00,000
2019-20 S.00,000 S,00,000
2020-21 60,000 3,00,000 70,000 1,70,000

2021-22 L.50,000

2022-23 2.50,000 80,000 1,70,000

Total 13,90,000
Total Adiusled Profits ? 13,90,000
Average Profit 13,90,0005- 2,78,000

Goodwill Average Profit No. of years' purchase

Goodwill-2.78.000 x3- 8.34,000

21. Balance Sheet (Etruc)

Particulars Note No. Amount ()

EQUITY and LIABILITIES
. Shareholders Fund
(a) Share Captal 9,97,000

4 Togethes wtk Phygital Accountancy-12

 Note No. Particulars Amount ()
Share Capital:
Authorised Capital
ates la ? j0
8,00,000 shares cach 80,00,000
Issucd Capital:
6.00,000 shares (a ? 0 cach 60,00,000
Subseribed Capital:
Subscribcd but not fully paid-up
5.98,800 cquity sharcs of 10 cach 59,88,000
Add: Share Forfciture A'e (.200 shares) (1.320x 2) 2,640 59,90,640

Journal

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

Bank Ae Dr. 1,30,000
To Realisation A/c 1,30,000
(Being ayment receivcd from debtors)
Realisation A/e Dr. 16,000
To N's Capital A/e 16,000
(Being remuneration paid for dissolution work)
(ii) Realisation Ale Dr. 4,000
To N's Cap1tal A'e 4,000
(Being amount provided for being dissolution
expenses)
N's Capital Ale Dr. 6,500
To Bank A/c 6.500
(Being dissolution expenses paid by fin on
behalf of the partner)
M's Capital A'c Dr. 14.800
N's Capital A/c Dr. 18.500
0's Capital Ac Dr. 3.700
To Rcalisation Ac 37.000
(Being loss on realisation transferred to
partners capital accounts)

Jouraal

Date Particulars LE Dr. () Cr. ()

i) Bank A/e 1,60,000
To Equity Share Application Ac 1,60,000
(Being application money received on 40.000
shares @4)
Equity Share Application Alc D 1,60,000
To Equity Share Capital Ae (40,000 x ? 3) 1,20,000
To Securities Premium A/ec (40,000 ) 40,000
(Being application moncy iransferred)

5 hgctker wtk Phygital Accountancy-12

 Equity Share Allotment A/e Dr 2.00,000
To Equity Share Capital Ae (40,000 x 4) 1,60,000
To Securities Premium A/c (40,000 ) 40.000

(Being share allotment money due)

Bank A/e Dr 2,00,750
Calls-in-Arrears Ac (250 5) D 1250
To Equity Share Allotment A/e 2,00,000
To Calls-in-Advance Ale (500 x 4) 2,000
(Bcing allotment moncy of S received exeept on
250 shares and calls-in-advance of ? 4 received
on 500 shares)
|Fquity Share Capital Ale (250 7) Dr 1,750
Securities Premium Ale (250 x I) 250
To Calls-in-Arrears Ale 1.250

To Shares Forfeited Ac (250 x 3) 75

(Being 250 shares forfeited)

(vi) Equity Share Fist Call Ae(39,750 4) Dr. $9.000

To Equity Share Capital A/e (39,750 x 3) 1.19.250

To Sccurities Premium A/c (39,750 x? ) 39,750

(Being first call money @4 duc on 39,750 shares)

(vii Bank A/e Dr. 1,56,400
Calls-in-Arrears Ac (150 x4) D 600

Callk-ineAdvance Alc Dr 2.000

To Equity Share First Call Aic I,59,000

(Being finst call mnoney of 4 received except
on 150 shares)
(vii) Equity Shure Capital Ac (150 x 10) Dr 1,500
Sccuritics Premiun Ale (I50 ) Dr 150
To Calls-in-Arrears Ae 600

To Shares Forfeited Ac 2 ( 50 x7) 1,050

(Being 150 shares forfeted)
(ix Bank A/e (300 2 7) Dr. 2,100
Shares Forfeited A/c Dr. 900

To Equity Share Capital Alc 3.000

(Being 300 forfeited shares reissued a, 7)
Shares Forfeited Ae D 600

To Capital Reserve Ae 600

(Being gain on reissuc of forfeited shares transferred

to capital reserve)

6 ogetka witk Phygital Accountancy-12

Working Netes:
(R)

() Amount to be received on Allotment 40.000 x 5) 2,00,000

Less: Money not paid by Rishi en Allotment (250 x5) (1,250)

Add: Advance received from Rai (500 x 4) 2.000

Amount received on Allotment 2,00,750

(0) Amount to be received on First Call (39,750 x 4) 1,59,000

Less: Money not paid by Gupta on First Call (150 x 4) (600)

Less: Amount received with Allotment as calls-in-advance (500x4) (2,000)

Amount revcived on First Call 1,$6,400

750
(ii) Amnount transferred to Capital Reserve - 250 x|50 1,050 -900- 600

Journal

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

() Bank Ae Dr I,90,000
To Share Application Ae 1.90,000
(Being application noney on 95,000 shares
( a 2 received)
(0 Share Application A Dr 1,90,000
To Equity Share Capital A/e 1,20,000
To Share Allotment Ale 60,000
To Bank Ac 10,000
(Being application moncy transferred to share
capital A/e)
(iin Equity Share Allotment A/c Dr. 1.20,000
To Equity Share Capital A'c I,20,000
(Being share allotment duc (a 2 on 60,000
shares)
(iv) Bank A/c Dr 50,000
Calls-in-Arrears A/c D 10,000
To Share allotment Ac 60.000
(Being Allotment moncy reccived on
55,000 shares (a 2)
Equity Share First & Final Call Ae Dr 3.60.000
To Equity Share Capital Ae 3,60,000
(Being first call due (a6 on 60,000 shares)

7 ogether witk Phygital Accountancy-12

 (v) Bank Ae Dr 3,18,000
Calls-in-Arrears Ae Dr 42,000

To Equity Share First and Final Call Ae 3,60,000

(Being tirst and final call received on 53,000

shares
(vi) Share Capital Ac Dr 50,000

To Calls-in-Arears Ac 40,000
To Share Forfeiture A'e 10,000

(Bcing 5,000 shares forfeited due to non

payment of allotnent & call)
(vii) Bank A/e Dr 40,000

Share Forfeiture Ae D: 1,000

To Share Capital Ae S0,000
Note: Amount transferred to Capital Reserve - Nil
24 Dr Revaluation Account Cr.

Amount Amount
Partieulars Particulars
()
To Machincry 4,000 By Building 10,000
To Profit distributed to
G 3.600
D 2,400 6,000
10.000 10.000

Partners Capital Accounts Cr

G D G
Partieulars Particulars

To Cash Ae 19.200 16.800 By Balance bd 96,00068,000

To Balanee e'd I,08,000 12,000 60,000 By General Reserve A. 9.600 6,400

By Cash Afc 60,000

By Premium for

Goodwill A/C 18,000 12,000

By Revaluation Ae 3,600 2.400
127.200 88.800 60.000 1,27,20088.80060,000

8 Tagthes wtk Phygital Accountancy-12

 Balance Sheet of G, D and H
as at April I. 023
Amount Amount
Liabilities ANsets
) (
CreditorN 20,000 Huilding 1,00,00)
Capitals Machincry 36,000
1,08,000 Cash 74,(000
72,(00 (20,000 60,000+30,000 19,200 |6,8(00)
60.000 2,40,000 Debtors I8,000

Stock 20,000

Furniture 12,000
2,60,000 2,60,00H)

Dr Revaluation A/e
Particutars Amount () Particulars Amount (
To Buildings 10,.000 By Loxs distributed to:
To Provision For Doubtful Debts 1,200 Khushbo 8,000
To Salary Outstanding 4.800 Leela 4,800
Teena 3.200 l6,000
16,000 16.000

Leela's Capital Ac Cr.

Particulars Amount () Particulars Amount ()

To Proit and Loss Ac 2,400 By Balance bd 56,000

To Revaluation A'c 4,800 By Khushhoo's Capital Ae 30,000
To Bank Ale 20800 By Teena's Captal Ae 12,(000
To Leela's Loan A 70,000
98.000 98,000

De Leela's Lean Account Cr.

Amount
Date Particuhars Dale Particulars Amount (O
()
2023 2023
Jun, 30 To Bank Ac 36,750 Apr. IBy Leela's Cupital Ac 70,(000

Sep. 30 lo Bank Ac 35,875 Jun, 30By Interest A'c 1.750

Sep. 30By Interest A'e 875

72,625 72.625

9 ogetha wtk Phygital Accountancy-12

 Working Note:
3
Leela's Share in Goodwill - ? 1,40,000 10
42,000

This will be adjusted through capital accounts of Khusboo and Teena in the ratio of 5 : 3. i.e.,
30,000 and 12,000.
25 Arnayak's Capital A/e
Amount Amount
Particulars Particulars

To Drawings Ac 16.000 By Balance bid L.20,000

To Interest on Drawings Ale 320 By Interest on Capital Ae 3,600

(? 16,000 By P&L Suspense Alc (Profit) 3,000

100
To Arnayak's Executors' Ale By Salary Ale 30,000

(Bal. Fig.) 1,62,780By Vinavak'sCapital Ae (Cioodwill) 16,875

By Vanya's Capital Ac (Goodwill) 5,625

1,79.100 1.79,100

Working Notes:

Arnayak's Interest on Capital =? 1,20,000 x 9/100× 412 =? 3,600

Amayak's share of profit =(- 20,000 + 40,000 + 6l,000)F3 x 4/|2 × 2'6 = 3,000
Anayak's share of godwill -(2 9,000- 20,000 + 40,000 +2 61,000)/4 x3 x 2/6 - 22,500
Since thc word p.a. is not given along with rute of interest on drawings, the interest is calculated
for full ycar.
26.

Jouroal

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

2023
Oet Bank Ae Dr 36,00,000
To Debenture Application and Allotment A/ 36,00,000
(Being debenture application amount received)
Debenture Application and Allotment A/e Dr. 36,00,000
Loss on Issue of Debentures AVe D: 10,00,000
(4,00,000 6,00,000)
To 98% Debentures A/e (40,000 x I00) 40,00,000
To Premium on redemption of Dcbentures Ae 6 00.000

(Being debentures issued at 10% discount

redeemable at 15% premium)

Working Note:
Number of Debentures issued = 36,00,000/ 90 = 40,000 dcbenturcs

10 Zethen wo Phygital Accountancy-12

 Dr Less on Isue of Debentures Account Cr

Amount Amount (
Date Particulars Date Particulars

2023 024

Oct. To 9°% Debentures Ale 4,00,000 Mar. 31 By Securities Premium Ale 6,40,000

Oct To Premnium on Mar. 31 By Statement of Profit

Redemption of and LoSs 3.60.000

Debentures Ale 6,00,000

10,00,00o 10,00,000

(iii) Journal

Date Particulars LE. Dr. () Cr. ()

2023
Mar. 31Debenture Interest Ale D 1,80,000
To Debenturesholders' A/e 1,80,000
(Being interest due on debenturcs)
Mar. 3 Debentureholders' Ale Dr. 1,80,000
To Bank Ale L80.000

(Being interest on debentures paid)

Mar 31 Statement of Proit and Loss Dr. ,80,000
To Debenture Interest Ae L.80,000
(Bcing debenture interest written oft)

27. (u) Inter-fim comparison

Or

(c) Pulice officer

28. (h) Outflow in Investing Activity

29. (d) 8tatement Iis incorrect and Statement Il is correct.

Or

(b) Debt Equity ratio

30. (d) (i) and (iii)

11 Z9ethen wtk Phygital Accountoncy-12

 Item Major Heads Sub-heads

(i) Fixed Deposits from Public Non-current liabil1ties Long-term Borrowings

(ii) Interest accrued and due on borrowings Current Liabilities Other Current Liabilities

(iüi) Copyrights and Patents Non-curent Assets Property. Plant and Equipment and
Intangible Assets-Intangible asscts

(i) Stores and Spares Current Assets |Inventories

(v) Security Deposits (more than 12 months) Non-current Asscts Long-term Loans and Advances
(vi) Acerued Income Current Assets Other Current Assets

32. (a) () Increase, as cost of Revenuc from Operations will increase because of decrease in closing inventory
by 40,000 and average inventory will also decrease.
(in) Increase. as cost of Revenue from Operations will not change because of deerease in purchases and
decrease in closing inventory by the same amount i.e. 35,000.
(b) Net Proft before Interest and Tax = 3.00,000
Capital Employed = Net Fixed Assets+ Net Working Capital
: 10,00,000 + 7 5,00,000
= 15,.00,000
Net Profit before Interest and Tax
Return on Investment x 100
Capital Employed
?3.00,000
100 - 20%
15.00,000
33. Comparative Balance Sheet
as on 3lst March, 2023

3Ist March 31st March Absolute

2022 () change ()
% Change
Particulars 2023 (3)
(D) = CAx 100
(A) (B) (C)=B-A
EQUITY AND LIABILITIES
Shareholders' Funds:

Share Capital 15,00,000 20,00,000 6,00,000 33.33

Reserve & Surplus 3,00,000 4,00,00O 1,00,000 33.33

Non-Current Liabilities:

Long-term Borrowings 6,00.000 4,00,000 (2.00,000) 33.33

Current Liabilities:

Trade Payables S0.000 2,00,000 1,50,000 300

Other Current Liabilities 50.000 (50,000) (100)

25.00.000 30,00,000 5,00,000 20

12 7getker wtt Phygital Accountancy-12

ASSETS

Non-Current Assets:

Property, Plant and Equipment and

Intangible Assets
(a) Property, Plant and Equipment 12.50,000 l6,00,00) 3,50,000 28
(6) Intangible Assets 1,00,00) 2,00,000 1,00,000 100

Current Assets:

Trade Recivable 2.50.000 4,00.000 1,50,000

Inventory 6,50,000 4,50,000(2,00,000) (30.77)

Cash and Cash Equivalents 2.50,000 3.50,000 1,00,(000 40
25,00,000 30,00,00 5,00,000 20

Or
Common-Size Statement of Profit and Loss
for the vvar ending 3ist Muh, 2022 and 2023

2021-22 2023-23%of Revenue from %of Revenue from

Particulars
() Operations (2021-22) Operations (2022-23)
I. Revenue from Operations 1,50,000 2,00,000 100 J00

II Other Income 25.000 15.000 16.67 7.5

III Total Revenue(|+I) I,75,000 2.15,000 116.67 107.5

IV. Expcnses

Cost of Maternals Consumed 70,000 I,10,000 46.67 5

Finanee Cost 5,000 5.000 2.5

Total Expenses 75,000 I.15,000 57.5

V. Protit before Tax (I| -IV) 1,00.000 1,00,000 66.67

VI. Tax 40,000 40,000 26,67 20

VIL, Profit after Tax (V- V) 60.000 60,000 40 30

13 hgetker tk Phygital Accountancy-12

14 Cash Flow Statement
for the vear cnded 3I" March 2023
Particulars Amount (() Amount ()

I. Cash Flow From Operating Activities

Net Protit before Tax and Extraordinary Items I,63,0(H)
Add: Non-C'ash and Non-operating Expenses:
Depreciation 90,000

Loss on Sale of Machine 8,000 98,000

Operating Profit before working capital changes 2,61,000

Add: Decrease in Current Assets and Increase in Current Liabilities
Inventories 22,00H)
2.83,.00H)

Less, Increase in Current ASsets and Decrease in Current Liab1lities

Trade Receivables (3,000)
Trade Payables (68,000) (71,000)
Cash generated fruom Operating Activities 2.12,000

Less: Income Tax paid (16,000)

Cash Flow from Operating Activities 1.96.00)

II. Cash Flow From Investing Activities

Sale of Machinery 2,0)
Purchase of Machinery (3,50,000)
Purchase of Patents (20,000)

Cash used in Investing Activities (3,68,000)

III. Cash Flow From Financing Activities
Proceeds from issuc of Share Capital 1.00.000

Proceeds from Long-tern Borrowings 75,000

Increase in Bank Overdraft 2,000

Cash flow from Financing Activities 1,77,000

IV. Net Inerease In Cash and Cash Equivalents (| + I|+ I ) 5,000

V. Cash and Cash Equivalent In The Beginning of The Year

Current Investments 5,000

Cash and Cash Equivalents 12,000 17,000

VI. Cash and Cash Equivalent at the end of the year

Current Investments 8,000
Cash and Cash Equivalents 14,000 22,000

14 aether it Phygital Accountancy-12

Working Notes:

Surplus (Balance in the Stalement of Profit and Loss (closing) 2,50,(000

Lexs: Surplus (Balance in the Statement of Profit and Loss (beginning) 1,10,000
Net Profit I,40,000
Add: Provision for Tax 23,000

Net Profit before Tax and Extraordinary Itens 1,63,000

Dr Machinery Account Cr

Particulars Amount () Particulars Amount ()

To Balance b'd 17,00,000 By Bank Alc (Sale) 2,000
To Bank Ale (purchase) 3,50,000 By Stalement of Profit and Loss (Loxs) 8,000

By Depreciation AVe 40.000

By Balance cid 20,00,000

20,50,000 20,50,000

Dr Accumulated Depreciation Account Cr

Particulars Amount () Particulars Amount()

To Machinery Ac 40,000 By Balance bid 90,000

To Halance cd 1,40,000By Statement of Profir and Loss 90,000

1,80,000 L80,000
Dr Provision for Tas Account

Particulars Amount ( Particulars Amount (

To Bank Ac (Tax Paid) 16,000 By Balance bid L000

To Balance e'd I8,000 By Statement of Profit and Loss 23,000

34,000 34,000

15 agether awctk Phygital Accountancy--12