Board Paper of Class 12-Commerce 2013 Accountancy (SET 1) - Solutions

General Instructions
1) This question paper contains two sections: A and B.
2) Section A is compulsory.

Section A
i. This section consists of 2 compulsory questions.
ii. Question No. 1 carries 20 marks.
iii. Question No. 2 carries 10 marks.
iv. This whole section is of 30 marks in total.

Section B
i. This section consists of 8 questions.
ii. Attempt any 5 questions from question nos. 3 to 10 carrying 14 marks each.
iv. This whole section is of 70 marks in total.

Question 1

Answer briefly each of the following questions :                                 [10 × 2] = [20 Marks]

(i) Give two differences between Net Profit and Cash from Operations.

(ii) When does Loss on Issue of Debentures arise ?

(iii) Give two differences between Authorized Capital and Issued Capital.

(iv) Why is the word memorandum affixed to the Memorandum Joint Venture Account ?

(v) How is double entry completed in the General Ledger when ledgers are kept under the
Self Balancing System ?

(vi) What is the accounting treatment of Employees' Provident Fund appearing in the
Balance Sheet of a partnership firm at the time of its dissolution ?

(vii) Give the formula for computing Price Earning Ratio.

(viii) Give two differences between Reserve Capital and Capital Reserve.

(ix) How will the firm show the amount payable to the retiring partner, if it is not in a
position to immediately pay the amount due to him on his retirement?

(x) What accounting steps are taken by a partnership firm when a new partner is unable to
bring the business guaranteed by him ?

VIEW SOLUTION

Question 2

Alex, John and Sam are partners in a firm. Their capital accounts on 1^st April, 2011, stood at Rs 1,00,000, Rs 80,000 and Rs 60,000 respectively. [10 Marks]

Each partner withdrew Rs 5,000 during the financial year 2011-12.
As per the provisions of their partnership deed :

(a) John was entitled to a salary of Rs 1,000 per month.

(b) Interest on capital was to be allowed @ 10% per annum.

(c) Interest on drawings was to be charged @ 4% per annum.

(d) Profits and losses were to be shared in the ratio of their capitals.

The net profit of Rs 75,000 for the year ended 31^st March, 2012, was divided equally amongst the partners without providing for the terms of the deed.
You are required to pass a Single Adjusting Journal Entry to rectify the error.
(Show the working clearly).

VIEW SOLUTION

Question 3

Reliable Ltd. was registered with an authorised capital of Rs 20,00,000 in Rs 10 per equity share. It invited applications for issuing 1,00,000 equity shares at a premium of Rs 2 per share. The amount was payable as follows:                 [14 Marks]

On application Rs 4 per share (including premium)

On allotment Rs 3 per share

Balance on 1st and Final Call

Applications were received for 1,30,000 shares. Applications for 10,000 shares were rejected and the application money received on them was refunded. Pro-rata allotment was made to the remaining applications. Amount overpaid on these applications was adjusted towards the amount due on allotment. Sameer, who had applied for 1,200 shares, failed to pay the allotment and call money. The company forfeited his shares, out of which 800 shares were reissued to Sanjay at Rs 9 per share fully paid.

You are required to :
(i) Pass the Journal Entries in the books of the company through Calls in Arrears Account.
(ii) Prepare the Share Allotment Account.
VIEW SOLUTION

Question 4
Arthur Ltd. reported a profit of Rs 90,000 for the year ended March 31, 2012, after considering the following:       [14 Marks]

Rs

(a) Tax provided during the year 3,000

(b) Amortisation of goodwill 12,000

(c) Profit on sale of land 5,000

(d) Writing off preliminary expenses 2,000

(e) Machinery costing Rs 40,000 (accumulated depreciation thereon being Rs 18,000) was sold during the year at a loss of Rs 17,000

Extracts of its Balance Sheets at the beginning and at the end of the year are given below:

01.04.2011 31.03.2012

Account Receivable 16,000 20,000

Stock 15,000 12,000

Cash at Bank 10,000 8,000

Account Payable 11,000 9,000

Expenses Payable 5,000 6,000

Provision for Taxation 6,000 4,000

Investments (short-term) 2,000 5,000

Plant and Machinery (net value) 1,30,000 94,000

Proposed Dividend 10,000 12,000

You are required to calculate Cash from Operating Activities as per Accounting Standard-3. (Show your working clearly.) VIEW SOLUTION

Question 5
Following is the Balance Sheet of Ravi and Prakash as on 31^st March, 2012 :                [14 Marks]

Balance Sheet
as on 31^st March, 2012

Liabilities Amount
(Rs) Assets Amount
(Rs)

Sundry Creditors 60,000 Cash 25,000

Ravi’s Loan 15,000 Debtors 42,000

General Reserve 15,000
Less: Prov. of D/D
(6,000) 36,000

Invest. Fluctuation Fund 2,000 Stock 12,000

Ravi’s Capital 30,000 Investments 18,000

Prakash’s Capital 10,000 Plant and Machinery 41,000

1,32,000 1,32,000

The firm was dissolved on 31^st March, 2012, on the following terms:
(a) Ravi took over stock at Rs 8,000.
(b) Creditors payable after two months were paid immediately at a discount of 6% per annum.
(c) Debtors realized Rs 35,000.
(d) Plant and Machinery and Investments realized Rs 60,000.
(e) An old computer completely written off was taken over by Prakash at Rs 1,200.
(f) Realization expenses of Rs 2,000 were paid by Ravi.

You are required to prepare:
(i) Realisation Account.
(ii) Partners’ Capital Account.
(iii) Cash Account.
VIEW SOLUTION

Question 6
Neha and Tara are partners in a firm sharing profits and losses in the ratio of 3 : 2. Their Balance Sheet on 31st March, 2012, stood as follow:    [14 Marks]

Balance Sheet
as on 31^st March, 2012

Liabilities Amount (Rs) Assets Amount (Rs)

Capital Accounts: Plant & Machinery 12,000

Neha
8,000 Land and Building 14,000

Tara
10,000 18,000
Debtors
19,000

General Reserve 12,000
Less: Prov. for D/D
(4,000) 15,000

Workmen’s Compensation Fund 5,000 Stock 6,000

Creditors 15,000 Cash 3,000

50,000 50,000

They agreed to admit Prachi into partnership for 1/5^th share of profits on 1^st April, 2012, on the following terms:
(a) All debtors to be considered as good and therefore, the provision for doubtful debts to be written back.
(b) Value of land and building to be increased to Rs 18,000.
(c) Value of plant and machinery to be reduced by Rs 2,000.
(d) The liability against Workmen’s Compensation Fund is determined at Rs 2,000 which is to be paid later in the year.
(e) Prachi to bring in her share of Goodwill of Rs 10,000 in cash.
(f) She will further bring in cash so as to make her capital equal to 20% of the total capital of the new firm. (Show your working clearly)
You are required to prepare:

(i) Revaluation Account
(ii) Partners' Capital Accounts.
(iii) Balance Sheet of the reconstituted firm.
VIEW SOLUTION

Question 7
(a) The following information is available from the books of Greg Foods Limited:           [14 Marks]

Rs

Equity Share Capital
1,00,000

8% Preference Share Capital
40,000

Reserves and Surplus
60,000

Investments
30,000

Current Assets
70,000

Proprietary Ratio is 0.8 : 1.

Assuming that there are no fictitious assets, calculate the value of the fixed assets of the company.

(b) The following figures have been extracted from the records of Allen Cosmetics Limited:

Rs

Cost of goods sold
4,00,000

Current liabilities
90,000

Profit margin is equal to 20% on selling price.

Working Capital Turnover Ratio is equal to 10 times.

Determine the value of the Current Assets of the company

(c) The following details are available from the books of Simon Gadgets Limited:

Rs

Sales
8,00,000

Opening stock
40,000

Closing stock
50,000

Gross Profit Ratio is 20%

Calculate the Stock Turnover Ratio of the company (up to two decimal places).

(d) The following data is available from the records of Johnson and Company Limited:

Particulars Amount
(Rs)

Stock
Sundry debtors
Bills receivable
Advance paid
Cash in hand
Sundry creditors
Bills payable
Bank overdraft
Reserves
10% Preference Share Capital
Equity Share Capital
Net profit after tax 50,000
40,000
10,000
4,000
30,000
40,000
60,000
4,000
70,000
5,00,000
7,00,000
1,40,000

Calculate the following (up to two decimal places) :

(i) Current Ratio.
(ii) Quick Ratio.
(iii) Return on Equity Shareholders’ fund.
VIEW SOLUTION

Question 8

Andrew and Roger entered into a joint venture and agreed to share profits and losses in the ratio of 3 : 2 respectively.

Andrew purchased goods worth Rs 1,00,000 in cash. He spent Rs 10,000 on freight and insurance and dispatched
the goods to Roger. Roger got the goods released from the transport company and paid Rs 5,000 on carriage up to the
warehouse and Rs 10,000 as rent of the warehouse. Roger sold 80% of the goods for Rs 3,00,000. He was entitled
to receive commission @6% of the sales. He later informed Andew that the remaining goods were destroyed by fire.
Since the goods in the warehouse were not insured, Roger agreed to bear the entire loss which was valued at
original cost plus proportionate expenses. The accounts were settled between the co-ventures by means of a bank draft.

You are required to prepare in the books of Andrew:
(i) Joint Venture Account.
(ii) Roger’s Account.                                                                                                             [14 Marks]

VIEW SOLUTION

Question 9
Sim, Tim and Jim are partners sharing profits and losses equally. Their Balance Sheet as on 31^stMarch, 2012, stood as follows:      [14 Marks]

Balance Sheet

Particulars Amount (Rs)

I. Liability

Sim’s Capital
2,50,000

Tim’s Capital
2,00,000

Jim’s Capital
1,50,000

Creditors
1,40,000

General Reserve
60,000

8,00,000

II. Assets

Building
2,00,000

Plant and Machinery
1,00,000

Patent and Copyright
1,50,000

Stock
1,25,000

Debtors
1,50,000

Bank
75,000

8,00,000

From April 1, 2012, the partners decide to share profits and losses in the ratio 3 : 2 : 1 and for that purpose the following revised value of assets were agreed upon:

Building Rs 2,75,000; Plant and Machinery Rs 90,000; Patents and Copyrights Rs 1,32,500; Stock Rs 2,00,000; Prepaid Insurance Rs 5,000 and Debtors Rs 1,42,500.
Goodwill of the firm was valued at Rs 60,000.

Partners decide not to disturb the reserves. Also they decide not to record the revised value of assets in the books of Accounts.

You are required to prepare:
(i) Partners’ Capital Accounts.
(ii) Balance Sheet of the re-constituted firm.

(Show your workings clearly.) VIEW SOLUTION

Question 10
Peter’s books show the following details for the month of April, 2012:           [14 Marks]

Debit
(Rs) Credit
(Rs)

Creditors Balance (01.04.2012) 4,000 16,000

Creditors Balance (30.04.2012) 10,000 ?

Particulars Amount (Rs) Particulars Amount (Rs)

Purchase (including cash Rs 4,000) 1,04,000 Bills payable renewed 1,000

Cash paid to creditors 30,000 Discount received 4,000

Bills Receivable endorsed 20,000 Returns outward 12,000

Bills Receivable endorsed
dishonoured 4,000 Bills payable accepted
(excluding bills renewed) 30,000

Transfer from debtors ledger to
creditors ledger 5,000 Bills payable matured 5,000

You are required to prepare General Ledger Adjustment Account in the Creditors’ Ledger. VIEW SOLUTION

Answer briefly each of the following questions : [10 × 2] = [20 Marks]
(i)	Give two differences between Net Profit and Cash from Operations.
(ii)	When does Loss on Issue of Debentures arise ?
(iii)	Give two differences between Authorized Capital and Issued Capital.
(iv)	Why is the word memorandum affixed to the Memorandum Joint Venture Account ?
(v)	How is double entry completed in the General Ledger when ledgers are kept under the Self Balancing System ?
(vi)	What is the accounting treatment of Employees' Provident Fund appearing in the Balance Sheet of a partnership firm at the time of its dissolution ?
(vii)	Give the formula for computing Price Earning Ratio.
(viii)	Give two differences between Reserve Capital and Capital Reserve.
(ix)	How will the firm show the amount payable to the retiring partner, if it is not in a position to immediately pay the amount due to him on his retirement?
(x)	What accounting steps are taken by a partnership firm when a new partner is unable to bring the business guaranteed by him ?

Alex, John and Sam are partners in a firm. Their capital accounts on 1^st April, 2011, stood at Rs 1,00,000, Rs 80,000 and Rs 60,000 respectively.		[10 Marks]
Each partner withdrew Rs 5,000 during the financial year 2011-12. As per the provisions of their partnership deed :
(a)	John was entitled to a salary of Rs 1,000 per month.
(b)	Interest on capital was to be allowed @ 10% per annum.
(c)	Interest on drawings was to be charged @ 4% per annum.
(d)	Profits and losses were to be shared in the ratio of their capitals.
The net profit of Rs 75,000 for the year ended 31^st March, 2012, was divided equally amongst the partners without providing for the terms of the deed. You are required to pass a Single Adjusting Journal Entry to rectify the error. (Show the working clearly).

On application	Rs 4 per share (including premium)
On allotment	Rs 3 per share
Balance on 1st and Final Call

		Rs
(a)	Tax provided during the year	3,000
(b)	Amortisation of goodwill	12,000
(c)	Profit on sale of land	5,000
(d)	Writing off preliminary expenses	2,000
(e)	Machinery costing Rs 40,000 (accumulated depreciation thereon being Rs 18,000) was sold during the year at a loss of Rs 17,000

	01.04.2011	31.03.2012
Account Receivable	16,000	20,000
Stock	15,000	12,000
Cash at Bank	10,000	8,000
Account Payable	11,000	9,000
Expenses Payable	5,000	6,000
Provision for Taxation	6,000	4,000
Investments (short-term)	2,000	5,000
Plant and Machinery (net value)	1,30,000	94,000
Proposed Dividend	10,000	12,000

Balance Sheet as on 31^st March, 2012
Liabilities	Amount (Rs)	Assets		Amount (Rs)
Sundry Creditors	60,000	Cash		25,000
Ravi’s Loan	15,000	Debtors	42,000
General Reserve	15,000	Less: Prov. of D/D	(6,000)	36,000
Invest. Fluctuation Fund	2,000	Stock		12,000
Ravi’s Capital	30,000	Investments		18,000
Prakash’s Capital	10,000	Plant and Machinery		41,000
	1,32,000			1,32,000

Balance Sheet as on 31^st March, 2012
Liabilities		Amount (Rs)	Assets		Amount (Rs)
Capital Accounts:			Plant & Machinery		12,000
Neha	8,000		Land and Building		14,000
Tara	10,000	18,000	Debtors	19,000
General Reserve		12,000	Less: Prov. for D/D	(4,000)	15,000
Workmen’s Compensation Fund		5,000	Stock		6,000
Creditors		15,000	Cash		3,000
		50,000			50,000

	Rs
Equity Share Capital	1,00,000
8% Preference Share Capital	40,000
Reserves and Surplus	60,000
Investments	30,000
Current Assets	70,000
Proprietary Ratio is 0.8 : 1.

	Rs
Cost of goods sold	4,00,000
Current liabilities	90,000
Profit margin is equal to 20% on selling price.
Working Capital Turnover Ratio is equal to 10 times.
Determine the value of the Current Assets of the company

	Rs
Sales	8,00,000
Opening stock	40,000
Closing stock	50,000
Gross Profit Ratio is 20%

Particulars	Amount (Rs)
Stock Sundry debtors Bills receivable Advance paid Cash in hand Sundry creditors Bills payable Bank overdraft Reserves 10% Preference Share Capital Equity Share Capital Net profit after tax	50,000 40,000 10,000 4,000 30,000 40,000 60,000 4,000 70,000 5,00,000 7,00,000 1,40,000

Andrew and Roger entered into a joint venture and agreed to share profits and losses in the ratio of 3 : 2 respectively.
Andrew purchased goods worth Rs 1,00,000 in cash. He spent Rs 10,000 on freight and insurance and dispatched the goods to Roger. Roger got the goods released from the transport company and paid Rs 5,000 on carriage up to the warehouse and Rs 10,000 as rent of the warehouse. Roger sold 80% of the goods for Rs 3,00,000. He was entitled to receive commission @6% of the sales. He later informed Andew that the remaining goods were destroyed by fire. Since the goods in the warehouse were not insured, Roger agreed to bear the entire loss which was valued at original cost plus proportionate expenses. The accounts were settled between the co-ventures by means of a bank draft.
You are required to prepare in the books of Andrew: (i) Joint Venture Account. (ii) Roger’s Account. [14 Marks]

Balance Sheet
Particulars	Amount (Rs)
I. Liability
Sim’s Capital	2,50,000
Tim’s Capital	2,00,000
Jim’s Capital	1,50,000
Creditors	1,40,000
General Reserve	60,000
	8,00,000

II. Assets
Building	2,00,000
Plant and Machinery	1,00,000
Patent and Copyright	1,50,000
Stock	1,25,000
Debtors	1,50,000
Bank	75,000
	8,00,000

	Debit (Rs)	Credit (Rs)
Creditors Balance (01.04.2012)	4,000	16,000
Creditors Balance (30.04.2012)	10,000	?