Answers to Sample Paper 2 1. (6) % 32,400 2 (d) Statement (i) and (iii) are True. 3. @) %3,00,000 4 (6) 20,00 10 debentures (@ % 23,000 (©) % 69,000 (©) Nakei . (a) (A) is correct but (R) is wrong. . (a) unpaid value of shares d debentures (©) © 47,700 . (d) 8 (6) Cred ited by & 22,500 9 (@) © 3,500 10. (c) % 3,95,000 UL. (©) 34,800 12. (@) (@) and (¢) both (©) % 70,000 (@) © 1,12,500 (@) Mohan’s Capital Ave 1B. 14, 15, 16. 7. To Realisation Ale (®) Bank Ave To Realisation Ale or 25,000 (6) Akash brings € 44,000 and Gagan withdraws & 44,000, Journal 25,000 Date Particulars LE De® cr ® Case“ Profit and Loss Suspense Ale To Ls Capital Ale dk (For share of profit of deceased partner transferred Dr. EAD Accountancy—12 0 7,500 7,50018, 19. Case-2 T Capital Ale K's Capital Ale Dr. 6,000) De, 1,500 ‘To Share Capital Ale (Gor first call money due) To Es Capital Ale 7,500 (For share of profits of deceased partner adjusted through capitals of gaining partners) Working Note: 45,000 + 65,000 + 75,000, 3s Us profit = ee 7,500 Ls profit Phe F750 Profit and Loss Appropriation A/c Dr for the year ending 31st March, 2023 cr Particulars Amount (%) Particulars Amount (2) To Salary By Profit and Loss Ale (Net Profit) 9,000 x 6,000 (€ 60,000 + & 6,000 + € 3,000) y 3,000 9,000 To Commission: 10 x Goo + 60,000) 6,000, 10,000 ¥ Xx 54000) 4.000 05 To Profit transferred to: | X’s Capital Ale 25,000 50,000 Y's Capital Ale 25,000 9.000 000 or Calculation of Opening Capital: Particulars Giri (®) Golu (@) Closing Capital 90,000 70,000 Add: Drawings 24,000 15,000 Less: Profits eredited (@ 84,000 ~ & 24,000) (60,000) (30,000) Opening Capital 34,000 55,000 Interest on Capital @ 5% pa ts4o00 x <5 = « 4200] €55000 x = # 2.950 Interest on Drawings Too 5 £420 100 $8! e 15,000 & e400 x 35 x 88 «xg = £650 = 375 Journal Date Particulars LE Dr. (®) Cr ® @ Share First Call A/c Dr. 2,50,000 2,50,000 EAD Aceountaney—12, @20. (i) [Bank Ae Dr. 2,54,500 To Share First Call Ale 2,50,000 To Calls in Advance Ale 4,500 (For first call money received) (i) [Share Second and Final Call Ale Dr. 1,50,000 To Share Capital A’e 1,50,000 (For second and final call money due) () [Bank Ale Dr. 1,45,500 Calls in Advance Ale Dr. 4,500 To Share Second and Final Call Ale 1,50,000 (For second and final call money received) Or Journal Date Particulars LE De® ce ® 2022 Sep. 30 | Interest on Debentures Ale Dr, 1,60,000 ‘To Debentureholders’ Ale 1,60,000 (For interest on debentures due) Sep.30 | Debenturcholders’ Ale Dr. 1,60,000 To Bank A/c 160,000 (For interest on debentures paid) 2023 March 31. | Interest on Debentures Alc Dr. 1,60,000 To Debentureholders’ Ale 1,560,000 (For interest on debentures due) March 31, [Debentureholders’ Ale Dr. 1,560,000 To Bank Ale 1,560,000 (For interest on debentures paid) March 31 [Statement of Profit and Loss Ale Dr. 3,20,000 To Interest on Debentures Ale 3,20,000 (For interest on debentures written off) Journal Date Particulars LE Dr @ ce @ 2023 April 1 | Investment Fluctuation Fund A/c Dr. 45,000 To Investment Alc 15,000 To Pooja’s Capital Ale 10,000 To Seema's Capital Alc 10,000 To Meenu’s Capital Ale 10,000 (For surplus in investment fluctuation fund transferred to partners’ Aies in old ratio) April 1 | Pooja’s Capital Aie Dr. 7,000 Meenu’s Capital Ale Dr. 7,000 Seema’s Capital Ae Dr. 7,000 To Profit and Loss Ale 21,000 (For loss transferred to partners’ capital A/es in heir old EAD Accountancy—12 @24. April i] Pooja’s Capital Alc Dr. 8,000) Meenu’s Capital Ale Dr 8,000 To Scema’s Capital Ale 16,000 (For Seema's share of goodwill transferred to sacrificing partners) Aprit 1 [Revaluation Ale Dr 39,000 ‘To Pooja’s Capital Ale 13,000 ‘To Scema’s Capital Ale 13,000 ‘To Meenu's Capital Ale 13,000 (For profit of revaluation transferred to partners’ capital Alcs in their old ratio) Meenu => z (Gain) Journal Date Particulars De® ce ®) (| Realisation Ale Dr. 1,500 To Y's Capital Ale (For remuneration allowed to Y) Y's Capital Ale De 1,800 To Bank Alc 1,800 (For cash paid for realisation expenses on bebalf of Y) (i) [Realisation Ale De 3,700 ‘To Bank Ale 3,700 (For a creditor was paid the amount) (ii) [XS Capital Ave Dr 16,000 Bank Ale Dr. 26,000 To Realisation Ale 42,000 (For half stock was taken by X at 209% discount) (o) | Realisation Ale Dr 10,000 To Bank Alc 10,000 (For claim against bill dishonoured paid) Bank Ale Dr 5,000 To Realisation Ale 5,000 (For 50% due amount received in full setllement from drawee) EAD Accountaney—12 “2. 2. Extract of Balance Sheet Particulars Note No, | Amount @ EQUITY AND LIABILITIES 1. Shareholders’ funds a Share Capital 1 Note No. Particulars ‘Amount ®) 1. | Share Capital Authorised Capital: 200,000 Equity Shares @ ¥ 10 each 20,00,000 Issued Capital 200,000 Equity Shares @ & 10 each 20,00,000 Subseribed Capital: Subscribed but not fully paid up 2,00,000 Equity shares @ % 10 each; 75 called up 15,00,000 Less: Calls in arrears 2.250) 14,97,750 Dr Revaluation Ale ce “Amount ; Amount " Particulars " To Stock 1,060] By Land and Building 16,500 To Profit transferred to By Provision for bad debts 3800 (Balancing Figure) By Prepaid insurance 7,000 Tara 104% | 26,240 Lara 15,744 [77300] 27,300 Dr. Partners’ Capital A/c cr Tara | tara | Kala Tara | tara | Kala Particular Partick “~ ®|e|e = © |e] To Investment Ale | 22,000] 33,000] — | By Balance bid 1,85,000 [125,000 Te Balance cid 1.77821 | 1,22,669] 80,000 | By Investment (Balancing Figure) Fluctuation Fund Alc | 3,200] 4,800] — By Revaluation Ale | 10496] 15,748) — By Kala’s Loan ae | - | | s0,000 By Kal's Current Ale | a.12s{ ro,2s] — 1,99,821 | 155,669 80,000 1.99.81 [155,669 80,000 EAD Accountancy—12 °Balance Sheet ‘Amount ‘Assets ‘Amount Capital Ales: Patents 47,000 Tara 1,77,821 Land and Building 1,81,500 Lara 122,669 Investment 55,000 Kala 80,000 | 3,80,490 Debtors 76,000 Outstanding Expeneses 12,000 | Stock 31,640 Employees Provident Fund 200 | Bank 14,300 Kala’s Current Ave 11.250 Prepaid Insurance 7,000 417,690 417,650 Working Notes: () Calculation of Sacrificing Ratio: Sacrifice = Old Share ~ New Share Tara => Lara > 3 (ii) Kala’s Share of Goodwill = & 45,000 x } 11,250 Kala’s Current Ale Dr. 11,250 ‘To Tara’s Capital Ale 1,125 To Lara's Capital Ale 10,125 or Dr. Qs Capital Account cr Particnlars cas Partcaars re To Q's Executors’ Ale 341,466 | By Balance bid 1,60,000 (Balancing Figure) By General Reserve Ae 30,000 By Interest on Capital Ale By Profit and Loss Suspense A/e 13,333 By P's Capital A/c (Goodwill) 32,400 By R's Capital Ale (Goodwill) 97,200 31466 3.41 466 EAD Accountaney—12 oWorking Notes: 8 (i) Interest on Capital = & 1,60,000 x SxS = ¢ 3,533 100" 12 (iii) Adjustment of Q's Share of Goodwill: Profit of previous 3 Years = % 62,000 + % 72,000 + % 82,000 = % 2,16,000 (ii) Q’s share of profit till the date of his death = % 4,00,000 x in % 13,333 Y's Share of goodwill (€2,16,000%22) = (10% of & 1,44,000) = & 1,29,600 2. In the books of Bright Ltd. be Cash Book (Bank Column onl) ce Partiulas “oO, Partita a To Share Applicaton At 7.20000) By Balance eid 21,6800 Te Share Allotment A/c s.900 To Share Fist and Fins! Calle | 75000 To Share Capt A 20000 Tp Secures Premium Ale 3.000 2.000 21,5800 Journal of Bright Ltd. ate Parca i [ b® | a® (Bai Share Apiation At Dr 7.200 To Equity Share Capital Ae 3.nav0 Te Secures Premium Af 3.00 (Forapptcation mone tastrredto share capital and series premiun) (i) [Equity Stare Aloiment Ae rs s.4oc00 T Equity Share Capital Ai s.eo0 (For share amet money de) (i auity Share Fist and Final Calva’ De 2.00000 To Equity Shar Capital A’ 9.00.00 (For ist eal was du) Ge) [calviarrear Av Ds 25,00 to Equity Share First and Final Call Ae 25,000 (For fis and final ell money not recsved on 500 shares) (6) Puig shore Capa Are Be 50.00 To Callsin-atcar Ae 25,000 Tb Shares Frsied A 25,0 (or 300 shares were fered) (od) Shares Forsted Ae Ds 1500 To Capital Reserve Al 15000 (Forgainon ese forte shares transferred to call esens) ” /AD Accountaney—12Or Journal Date Particulars LE Dr. @ ce @ Bank Ale Aie Dr. 1,20,000 To Share Capital Ale 1,20,000 (Application money received on 60,000 shares @ 2 per share) ‘Share Application Ae Dr. 1,20,000 To Share Capital Ale 80,000 ‘To Share Allotment Ale 16,000 To Bank Alc 24,000 (Share application money transferred to share capital, share allotment and the excess money refunded) Share Allotment Ale Dr. 1,20,000 To Share Capital Ale 1,20,000 (Allotment money due on 40,000 shares @ & 3 each) Bank Ale Dr. 69,840 Calls-in-Arrears Ale 4,160 ‘To Share Allotment Ale 64,000 To Class-in-Advance Ale 10,000 (Allotment money received along with calls-in- advance) Or Bank Afe Dr. 69,840 To Share Allotment Ae 59,870 To Class-in-Advance Ale 10,000 (Allotment money and calls-in-advance received) Working Note: (@) Amount due form R on allotment: R was allotted 1,600 shares Share applied by R = 1,600%-p'onyr = 1,920 ® Amount paid on application (1,920 x ® 2) 3.840 Amount used on application 3,200 Excess on application 640 Amount due from R on allotment (1,600 x ® 3) 4,800 Less: Surplus on application 640 Amount not paid on allotment 4160 EAD Aceountaney—12, °28. (ii) Calculation of amount received on allotment: Total amount due on allotment Less: Already received with application Less: Amount not paid by R Add: Calls-i S has applied for 2,400 shares 40,000 was allotted = 2,400 x 24 s tted = 2,400 x “Advance = 2,000 shares He paid all calls in advance (2,000 x % 5) Total amount received on allotment Journal ®@ 80,000 16,000 64,000 4,160 59,840 10,000 Date Particulars LE Dr. @ cr. @) @ [Bank Ale Dr. ‘To 8%Debenture Applicationand Allotment Ale (For application money received for 10,000; 8% debentures @ € 50 each at a premium of & 10 per debenture) {8% Debenture Application and Allotment A Dr Loss on Issue of Debentures A/c Dr ‘To 8% Debentures Ale To Securities Premium Afe To Premium on Redemption of Debentures Ale (For 10,000; 8% debentures of & $0 each issued at a premium of € 10 redeemable at a premium of €5 per share) [Bank Are Dr 199% Debenture Application and Allotment A/c (For application money received for 2,000; 9% debentures @ % 100 each at a discount of 5%) 9% Debenture Application and Allotment A‘e Dr. Loss on Issue of Debentures Alc Dr To 9% Debentures Ale ‘To Premium on Redemption of Debentures Ale (For 2,000; 9% debentures of& 100 each issued at a discount of 5% redeemable at a premium of 5%) (ii) [Bank Ale Dr. To7% Debenture Application and Allotment Alc (For application money received for 5,000; 7% debentures @ € 500 cach at a par) ‘AD Accountaney—12 @ 6,00,000 50,000 1,90,000 1,90,000 20,000 25,00,000 6,00,000 5,00,000 1,00,000 50,000 1,90,000 2,00,000 10,000 25,00,00026. 1% Debenture Application and Allotment Afe Dr. Loss on Issue of Debentures A/c Dr To 7% Debentures AJ 25,00,000 2,50,000 25,00,000 To Premium on Redemption of Debentures Ale 2,50,000 (For 5,000; 7% debentures of € 500 each issued at par redeemable at a premium of 10%) Journal Date Particulars Dr. @® ce ®) 2012 March 31 Revaluation Ale Dr. 5,000 To Provision for Doubtful Debts Ave 5,000 (For Provision for doubtful debts created) March 31 | Land Alc Dr. 18,000 To Revaluation Ale 18,000 (For land revalued) March 31. | Revaluation A/e Dr. 10,000 To Machinery Alc 10,000 (For machinery revalued) March 31. [Creditors Ale Dr. 2,350 To Revaluation Ae (For creditors reassessed) March 31. [Revaluation Ale Dr 2,000 To Patents Ale 2,000 (For patents revalued) March 31. | Revaluation Ale Dr. To Mahek’s Capital Ale 1,675 To Sagar’s Capital Alc 1,340 To Karan's Capital Ale 335 (For gain on revaluation transferred to partners) March 31. [General Reserve Ale Dr. 20,000 To Mahek’s Capital Ale 10,000 To Sagar’s Capital Ale 8,000 To Karan’s Capital Ale 2,000 (For general reserve distributed among partners March 31. [Mahek’s Capital Ale Dr. 500 Sagar’s Capital Ale Dr. 10,800 Karan’s Capital Afe Dr. 2,700 To Goodwill Ale 27,000 (For goodwill written off) EAD Accountaney—12 (19)27. 28. 29. 30. 3 "Y'sagar’s Capital Ale Karan’s Capital Ave Dr. To Mahek's Capital Ale (For goodwill adjusted through capital accounts) March 31 [Mahek’s Capital Ale Dr. ‘To Mahek’s Loan Ale (For amount due to Mahek transferred to her Joan account) March 31 42,000 125,175 1,25,175 Working Notes: ( Calculation of Goodwill: Total Profits = % 34,000 + % 42,000 + % 50,000 = @ 1,26,000 average Profit = 226.000 42609 Goodwill = 2 x % 42,000 = % 84,000 5 Amit’s share = > x & 84,000 = % 42,000 i0 Gaining Ratio = 4: 1 (i) Mahek’s Loan = & 85,000 + % 1,675 + % 10,000 + % 42,000 (b) Current Assets or (b) Purchase of goods for cash will reduce the quick ratio. % 13,500 = & 1,25,175 (a) 16 times (@) Outflow of cash © 3,15,000 or (a) & 72,000 . (b) Financing activity Item Major Heads Sub-heads (Debentures Non-current Liabilities _| Long-term Borrowings (ii) Advance received from a customer | Current Liabilities Other Current Liabilities (iii) Motor car Non-current Assets | Property, Plant and Equipment and Intangible Assets: Property, Plant and Equipment (i) Leasehold property Non-current Assets | Property, Plant and Equipment and Intangible Assets: Property Plant and Equipment (®) Public deposit for 12 months Current Liabilities Short-term Borrowings (vi) Encashment of eave payable on retirement | Non-current Liabilities _| Long-term Provisions ‘AD Accountaney—12 ny32. Net Profit before Interest and Tax Profit before Interest Tax and Dividend (@) Return on Investment = ———"> Orr x 100 Capital Employed %1,11,000 EH 00 = 7, ®15,30,000 Capital Employed = Shareholders’ Funds + Long-term Debts % 10,00,000 + & 5,30,000 = 15,30,000 Long-term Debts = Total Assets ~ Shareholders’ Funds ~ Current Liabilities % 18,00,000 ~ % 10,00,000 ~ % 2,70,000 = 5,30,000 % 75,000 + % 36,000 (% 3,00,000 x 12% 2 1,11,000 Revenue from Operations Capital Employed 66,667 (6) Net Assets Turnover ratio = 226, 715,30,000 1-74 Times event from Operations = € 200000 x 102 = ¥ 25.9667 ital Employed = % 15,30,000 [as calculated in (a)] Common-Size Balance Sheet as at 31st March, 2023 Particulars Note No. Absolute Percentage of Amount Balance Sheet Total 31.03.2023 @) 31.03.2023 (%) I. EQUITY AND LIABILITIES 1 yareholder’s Funds (a) Share Capital 30,00,000 66.7 (b) Reserve and Surplus 4,00,000, 10 2. Non-current Liabiliti Long-term borrowings 10,00,000 20 3. Current Liabilities ‘Trade payables 6,00,000 33 Total 50,00,000 100 IL. ASSETS 1. Non-current Assets (@) Fixed Assets (i) Tangible assets 30,00,000 66.1 Gi) Intangible assets 6,00,000 33 2. Current Assets (@) Inventories 10,00,000, 20 (®) Cash and cash equivalents 4,00,000 10 Total 50,00,000 100 EAD Accountaney—12 (2)or Comparative Statement of Profit and Loss for the year ended 31st March, 2022 and 2023 Sin [Sin [Absolute Change] Percentage Maren, | atareh, |" Gnerease or. | change Uncen , Note| 2022" | 2023" | ‘Decreas) | er Decrease ae No. @ @ @ (%e) w | @ | cw E00) 1. Revenue fom Operaons 00000] snn00] cn.) ey 1 Add: Other Insome soon] sno00| 00) (000) 11, Taal Revenne 80000] 340000) Gano) wn) IN. Less Epenses 2ooa00| soon] Gn000) (eso) Profit before Ta 2.80000] 0000] @0.) Ga) vi tix size] 75000] @s000) (210) V_ Net Profit ater Tax Ta00 | 1r4000| 64000 em) Cash Flow Statement of Tara Ltd. For the year ended 31st, March, 2023 Parole mount @ [Amount ‘A. Cash Flow from Operating Activities Net Profit before Tax and Extraordinary Items Add; Non-cash and Non-operating expenses: 000 Depreciation on machinery 1,20,000 Amortisation of goodwill 15,000 Loss on sale of Machine 6,000 Operating Profit before Working Capital Changes 4,84,000 Adjustment for Current Assets and Current Liabilities: Decrease in Inventories 33,000 Increase in Trade Receivables (80,000) Decrease in Outstanding Expenses (20,000) Decrease in Trade Payables (7,400) Cash genarated from Operating Activities before Tax 39,600 Less: Tax paid (60,000) Net Cash flow from Operating Activities 2,79,600 B, Cash Flow from Investing Activities le of Machinery 143,000 Machinery purchased (3,85,000) Net Cash used is Investing Activities BAz,000) ©, Cash Flow from Financing Activities Cash proceeds from issue of Equity Shares 2,00,000 Repayment of Bank Overdraft (1,15,000) Net Cash flow from Financing Activities 85,000 EAD Accountancy—12 3)D. Net Increase in Cash and Cash Equivalents (A +B + C) | Add: Opening balance of Cash and Cash Equivalents 1,82,000 (,10,000+72,000) E. Closing balance of Cash and Cash Equivalents 3,04,600 (4,54,000 + 1,50,600) Working Notes: (®) Calculation of Net Profit before Tax: z Balance as per Statement of Profit and Loss (Differene 2,80,000 Add: Provision for tax (Current year) Net Profit before tax and extraordinary items (ii) Calculation of Sale of Furniture: Dr. Machinery Ale cr, Particulars ‘Amount @ Particulars ‘Amount @) To Balance b/d 9,80,000 | By Bank AVe (Sale) (Balancing figure) 143,000 To Bank Ave (Purchase) 3,85,000 | By Accumulated Depreciation Ale 65,000 (Balancing figure) By Statement of Profit and Loss (Loss) 6,000 By Balance fd 11,50,000 13,65,000 13,65,000 Dr. cumulated Depreciation A/e cr. Particulars ‘Amount @) Particulars ‘Amount @ ‘To Machinery Ale (Balancing figure) 166,000 | By Balance bya 1,40,000 To Balance cid 1,94,000 | By Statement of Profit and Loss 1,20,000 (Depreciation) 2,60,000 2,60,000 EAD Accountaney—12 a)