Board Paper of Class 12-Commerce 2015 Accountancy (SET 1) - Solutions

Answer briefly each of the following questions:                                                [6 × 2 = 12 Marks]

(i) What is meant by an operating cycle?

(ii) State one difference between partner's loan account and partner’s capital account.

(iii) Give the adjusting entry and the closing entry for recording commission allowed to a partner, when the firm follows the fixed capital method.

(iv) How will the firm record the payment of realisation expenses which were to be borne by a partner, but paid by the firm on his behalf?

(v) Give the accounting treatment in the books of a co-venturer under the Memorandum Joint Venture Method, when he takes over the unsold stock.

(vi) What is the minimum price at which a company can reissue its forfeited shares which were originally issued at par?

VIEW SOLUTION

From the given Trial Balance, prepare the Balance Sheet of Moonlight Limited as at 31^st March 2014.                   [12 Marks]

Trial Balance as at 31st March, 2014
Particulars	Debit Amount Rs	Credit Amount Rs
Share Capital (40,000 Equity Shares of Rs 10 each)		4,00,000
Bills receivable	90,000
16% Mortgage Loan		1,70,000
Stores and Spares	1,15,000
Debtors	1,66,000
Plant and Machinery	2,90,000
Goodwill	40,000
Provision for Tax		26,000
General Reserve		1,30,000
Cash in Hand	18,000
Calls in Arrears	2,000
Marketable Securities	5,000
Total	7,26,000	7,26,000

VIEW SOLUTION

Amit and Sumit entered into a joint venture to construct a shopping mail. They agreed to share the profits and losses in the ratio 5:3.          [12 Marks]

The contract price was agreed upon at Rs 50,00,000, payable as Rs 10,00,000 in cash and Rs 40,00,000 in the form of shares of Rs 10 each.

A Joint Bank Account was opened in which the co-venturers, Amit and Sumit, deposited their contributions of Rs 25,00,000 and Rs 10,00,000, respectively.

Amit also contributed bricks worth Rs 4,80,000. Sumit too contributed iron worth Rs 55,000 and timber worth Rs 3,25,000.

They acquired cement for Rs 11,00,000 and plant for Rs 15,40,000, from the funds of the venture.

Construction expenses amounted to Rs 8,25,000.

The contract was completed and the contract price was received. Amit took over the plant at Rs 5,25,000.

The co-venturers sold the shares in the open market at a profit of 10%.

You are required to prepare:

(i) Joint Bank Account.

(ii) JointVenture Account.

(iii) Co-venturers’ Accounts. VIEW SOLUTION

Gautam and Rahul are partners in a firm, sharing profits and losses in the ratio of 2:3. Their Balance Sheet as at 31^st March, 2014, was as follows    :    [12 Marks]
 

Balance Sheet as at 31st March, 2014
Liabilities		Amount Rs	Assets		Amount Rs
Sundry Creditors		5,000	Goodwill		10,000
Bills Payable		15,000	Furniture		25,000
General Reserve		10,000	Stock		15,000
Capital A/c:			Sundry Debtors	12,000
Gautam	30,000		Less: Provision for Doubtful Debts	(2,000)	10,000
Rahul	40,000	70,000	Cash in hand		40,000
		1,00,000			1,00,000

Karim was to be taken as a partner with effect from 1^st April, 2014, on the following terms:

(a) The new profit sharing ratio of Gautam, Rahul and Karim would be 5 : 3 : 2.

(b) Provision for Doubtful Debts would be raised to 20% of debtors.

(c) Karim would bring in cash, his share of capital of Rs 40,000 and his share of goodwill valued at Rs 10,000.

(d) Gautam would take over the furniture at Rs 22,000.

You are required to:

(i) Pass journal entries at the time of Karim’s admission.

(ii) Prepare the Balance Sheet of the reconstituted firm.

VIEW SOLUTION

Ram, Krishna and Mohan are partners in a firm, sharing profits and losses in the ratio of 3 : 5 : 2. On 31^st March, 2014, their Balance Sheet was as under:                      [12 Marks]
 

Balance Sheet as at 31st March, 2014
Liabilities		Amount Rs	Assets	Amount Rs
Creditors		39,200	Land and Building	48,000
General Reserve		16,000	Plant	72,000
Capital A/c:			Inventory	34,000
Ram	76,800		Trade Marks	26,400
Krishna	69,600		Bills Receivables	39,200
Mohan	54,000	2,00,400	Cash in Hand	24,000
			Advertisement Suspense	12,000
		2,55,600		2,55,600

Krishna died on 30^th September, 2014. An agreement was reached amongst Ram, Mohan and Krishna’s legal representative that:

(a) Goodwill to be valued at 2 years purchase of the average profits of the previous three years, which were:

Year:	2011-12	2012-13	2013-14
Profit:	Rs 31,200	Rs 28,800	Rs 36,000

(b) Trade marks to be revalued at Rs 19,200; plant at 80% of its book value and land & building at Rs 57,600.

(c) Krishna’s share of profit to the date of his death to be calculated on the basis of previous year’s profit.

(d) Interest on capital to be provided @10% per annum.

(e) Rs 60,080 to be paid in cash to Krishna’s legal representative and balance to be transferred to the legal representative’s loan account.

You are required to prepare:

(i) Revaluation Account.

(ii) Krishna’s Capital Account.

(iii) Krishna’s Legal Representative’s Account. VIEW SOLUTION

Pluto Ltd. issued 20,000 Equity shares of Rs 10 each, payable as follows:                     [12 Marks]
 

On Application	Rs 4
On Allotment	Re 1
On 1st Call	Rs 3
On 2nd and Final Call	Rs 2

Applications were received for 30,000 shares and pro-rata allotment was made to all the applicants.

Excess money received on application was utilised towards allotment and subsequent calls. One shareholder holding 100 shares did not pay the final call and his shares were forfeited. Of the forfeited shares, the company reissued 70 shares as fully paid up at Rs 12 per share.

You are required to pass journal entries in the books of the company for the year ending 31^st March, 2014.

VIEW SOLUTION

(a) The partnership agreement of Rohit, Ali and Sneh provides that:                                                  [10 Marks]
 
(b) Veera and Sia are partners, sharing profits in the ratio of 3 : 2. Profit for the year 2013-14, amounting to Rs 18,000 was distributed wrongly in the ratio of 2 : 3.

You are required to rectify the error by passing an adjusting journal entry.                                [2 Marks] VIEW SOLUTION

On 1^st April, 2013, Sunshine Ltd. issued Rs 10,00,000, 15% Debentures of Rs 100 each at 8% discount payable:                    [12 Marks]

Rs 40 on application

The balance on allotment.

These debentures were to be redeemed at a premium of 5% after five years. All the debentures were subscribed for by the public.

Interest on these debentures was to be paid half-yearly which was duly paid by the company.

Your are required to:

(i) Pass journal entries in the first year of debenture issue (including entries for debenture interest.)

(ii) Prepare the 15% Debenture Account for the year ending 31^st March, 2014. VIEW SOLUTION