CBSE Sample Paper Accountancy - 12 EAD Sample

sample Paper 1 [Easy Concept] Time Allowed : 3 hrs.] [Max. Marks : 80 General Instructions: (i) This question paper comprises two parts – A and B. There are 32 questions in the question paper. All questions are compulsory. (ii) Part A is compulsory for all candidates. (iii) Part B has two options, i.e., Analysis of Financial Statements and Computerized Accounting. You have to attempt only one of the given options. (iv) Question nos. 1 to 13 and 23 to 29 are very short answer type questions carrying 1 mark each. (v) Question nos. 14 and 30 are short answer type–I questions carrying 3 marks each. (vi) Question nos. 15 to 18 and 31 are short answer type–II questions carrying 4 marks each. (vii) Question nos. 19, 20 and 32 are long answer type–I questions carrying 6 marks each. ( viii) Question nos. 21 and 22 are long answer type–II questions carrying 8 marks each. (ix) There is no overall choice. However, an internal choice has been provided in 2 questions of three marks, 2 questions of four marks and 2 questions of eight marks. Part–A Accounting for Not-For-Profit Organisations, Partnership Firms and companies 1. The profits earned by a business over the last 5 years are as follows: ` 12,000; ` 13,000; ` 14,000; ` 18,000 and ` 2,000 (loss). Based on two years purchase of the last 5 years profits, value of goodwill will be: (a) ` 23,600 (b) ` 22,000 (c) ` 1,10,000 (d) ` 1,18,000 2. What do you mean by Fund based Accounting? 3. X and Y are the partners in a firm sharing profits and losses in the ratio of 5:3. Z is admitted who acquires 1/3rd of Y’s share. The new ratio among partners will be: (a) 5 : 4 : 1 (b) 4 : 5 : 1 (c) 1 : 4 : 5 (d) 5 : 2 : 1 4. In the absence of agreement to contrary, the profit sharing ratio will be: (d) none of these (a) in ratio of capital (b) in ratio of work done (c) equally 5. At the time of dissolution of partnership firm, why is the payment of partner’s loan not done through capital account? Give reason. 6. X, Y and Z were three partners sharing profits in the ratio of 3:2:1. At the end of the year, they distributed the profits equally. The profit for the year was ` 1,20,000. Pass the adjustment entry to rectify the error. Sample Papers 55

7. In a partnership firm, a partner withdrew ` 5,000 per month on the first day of every month during the year for personal expenses. If interest on drawings is charged @ 6% p.a., the interest charged will be: (a) ` 3,600 (b) ` 1,950 (c) ` 1,800 (d) ` 1,650 8. Complete the following statement. Gaining ratio is calculated on retirement of a partner to determine ____________. 9. If a loan from C, a partner, ` 65,000 appears on the liabilities side of the Balance Sheet of the firm and C’s Capital A/c has a debit balance of ` 15,000, pass journal entry to pay C’s loan on dissolution of the firm. 10. A Ltd. took over machinery costing ` 1,80,000 of B limited at an agreed price of ` 1,62,000 and payment made to B Ltd. by the issue of ____________ 6% debentures of ` 100 each at premium of 20%. The number of debentures issued in favour of B Ltd. will be: (a) 1800 (b) 1300 (c) 1350 (d) None of the above 11. X and Y are partners in a firm sharing profits in the ratio of 5 : 3. They admitted Z as a new partner. The new profit sharing ratio will be 4 : 3 : 2. The firm’s goodwill on Z’s admission was valued at ` 1,26,000. But Z could not bring any amount of goodwill in cash. Credit will be given to: (a) X ` 17,500; Y ` 10,500 (b) X ` 16,000; Y ` 12,000 (c) X ` 22,750; Y ` 5,250 (d) X ` 1,02,375; Y ` 23,625 12. If total assets are ` 2,00,000; total liabilities are ` 40,000; amount realised on sale of assets is ` 1,75,000 and realisation expenses are ` 3,000, the profit or loss on realisation will be: (a) Profit ` 12,000 (b) Loss ` 68,000 (c) Loss ` 28,000 (d) Loss ` 25,000 13. ____________ is the maximum amount of share capital that a company can raise in its life time. 14. Shweta Trust runs a charitable hospital. Following is the information given: Particulars 1st April 2019 31st March 2020 (`) (`) S tock of Medicines Creditors for Medicines 30,000 54,000 17,000 8,000 The amount paid for medicines during the year is ` 3,07,000. Calculate the amount to be debited to Income and Expenditure A/c for the year ended 31st March, 2020. Or Following is an extract of Receipts and Payments Account for the year ended 31st March 2020 of Friends Club, Delhi. Receipts (`) Payments (`) To Subscription 1,43,000 2018 - 19 18,000 2019 - 20 1,00,000 2020 - 21 25,000 The club has 1,450 members each paying an annual subscription of ` 100. Show how the above will appear in the Balance Sheet as on 31st March 2020. 56 Together with® EAD Accountancy—12

15. Complete the following journal entries for issue of Debentures in the following cases: Date Particulars L.F. Dr. (`) Cr. (`) (a) Bank A/c Dr. ......... To Debenture Application and Allotment A/c (Being money received on 200, 7% Debentures at ` 165 each ......... including ` 15 premium) Debenture Application and Allotment A/c Dr. ......... 10,000 ..............................................A/c Dr. To 7% Debenture A/c 30,000 ......... To .............................................. A/c 10,000 To Premium on Redemption of Debentures A/c (Being issue of 200 Debentures of ` 150 each at a premium of 10%, redeemable at a premium of ` 50) (b) Bank A/c Dr. ......... To Debenture Application and Allotment A/c (Being application and allotment money received on 900 debentures ......... @ ` 95 each) .............................................. A/c Dr. ......... .............................................. A/c Dr. ......... To 15% Debenture A/c To Premium on Redemption of Debenture A/c ......... (Being issue of debentures at discount of 5%, redeemable at 9,000 premium of 10%) 16. The Balance Sheet of Karizma and Yasmin who were sharing profits and losses in the ratio of 3:2 as at 31st March, 2020 was: Liabilities (`) Assets (`) Sundry Creditors 1,00,000 Cash at Bank 10,000 Profit and Loss A/c 85,000 Debtors 50,000 Karizma’s Capital A/c 48,000 Stock 70,000 Yasmin’s Capital A/c 32,000 Furniture 20,000 Plant and Machinery 1,00,000 Advertisement Suspense 15,000 2,65,000 2,65,000 They admit Zeenat as a partner from 1st April, 2020 with 1/5th share in the profits of the firm. Zeenat brings in ` 50,000 as her capital. Calculate the amount of goodwill and pass necessary journal entries on admission of new partner. Sample Papers 57

Or Xavier and Yame are partners in a firm sharing profits in the ratio of 2:1. Their capitals were ` 4,00,000 and ` 2,00,000 respectively. On 1st April, 2019 they admit Zombi as a new partner. The new profit sharing ratio of Xavier, Yame and Zombi is decided to be 4:2:1. Zombi brings ` 1,20,000 as his capital and ` 60,000 for his share of goodwill. Partners are allowed interest on capitals @ 10% p.a. and are charged interest on drawings @ 12% p.a. Profits for the year ending 31st March, 2020 before allowing or charging interest was ` 2,40,000. The drawings of the partners were Xavier ` 5,000 per month in the beginning of each month, Yame ` 15,000 at the end of each quarter and Zombi ` 60,000. Prepare Partner’s Capital accounts for the year ending 31st March, 2020. 17. A, B and C are partners in a firm. On 1st April, 2019 the balance in their capital accounts stood at ` 6,00,000, ` 5,00,000 and ` 4,00,000 respectively. They shared profits in proportion of 4:2:3. Partners are entitled to interest on capital at 7% p.a. and salary to B and C at ` 10,000 per quarter and ` 2,000 per month respectively as per the provisions of the partnership deed. B’s share of profit excluding interest on capital and salary, is guaranteed at not less than ` 30,000 p.a. C’s share of profit including interest on capital but excluding salary is guaranteed at a minimum of ` 60,000 p.a. Any deficiency arising on that account shall be met by A. The profits of the firm for the year ended 31st March, 2020 amounted to ` 2,59,000. Prepare Profit and Loss Appropriation Account for the year ended 31st March, 2020. 18. Pass necessary journal entries for the following at the time of dissolution of partnership firm of A and B who are sharing profits and losses in the ratio of 3 : 2. (a) Machinery costing ` 40,000 were taken over by B at 10% less than the book value. (b) There were unrecorded investment costing ` 30,000 which were taken over by creditors of ` 75,000 in part payment, rest creditors were paid at 10% discount. (c) A agreed to take ` 3,800 in full settlement of his loan of ` 4,000 given to the firm. (d) Expenses of realisation ` 15,000 were paid by partner B, of which ` 12,000 were borne by firm. 19. From the following Receipts and Payments Account of Rotary Sports Club, prepare Income and Expenditure Account for the year ended 31st March, 2020 and Balance Sheet as on that data: Receipts (`) Payments (`) To Balance b/d 1,20,000 By Salary 1,32,000 To Donations To Subscription 15,000 By Repair Expenses 8,000 To Entrance Fees 2,30,000 By Sports Equipments 75,000 To Interest on Investments 32,000 To Sale of old newspaper 40,000 By Match Expenses 80,000 To Sale of match tickets 13,000 By Expenses on Teams 8,200 4,000 By Insurance Premium 12,500 12,300 By Miscellaneous Expenses 86,600 4,34,300 By Balance c/d 4,34,300 Additional Information: (a) Half of the donation received is for the construction of tennis court. 58 Together with® EAD Accountancy—12

(b) Subscription in arrears for the year ended 31st March 2020 and 31st March 2019 are ` 32,000 and ` 28,000 respectively. Subscription in advance for next year received during the year is ` 12,000. (c) Insurance premium is paid for 6 months in advance in the beginning and at the end of the year. (d) On 1st April 2019, the club owns the following assets: Building ` 1,30,000, Sports Equipments ` 1,40,000 and Investment of ` 80,000. The club has a match fund of ` 30,000. 20. (a) Prakash Ltd. took over assets of ` 7,00,000 and liabilities of ` 2,00,000 from Savita Ltd. for a purchase consideration of ` 4,59,500. ` 8,500 were paid through a bank draft of three months and balance by the issue of equity shares of ` 10 each at a premium of 10%. Pass necessary journal entries for the above transaction. (b) X Ltd. issued 7,500 equity shares of ` 100 each at a premium of 50%. The whole of the amount was payable on application. Applications for 20,000 shares were received. Applications for 5,000 shares were rejected and shares were alloted to the remaining applicants on prorata basis. Pass necessary journal entries for the above transactions. 21. A, B and C were partners sharing profits and losses in the ratio of 5:3:2. Their Balance Sheet as on 31st March, 2020 was as under: Liabilities (`) Assets (`) Capital Account: Plant and Machinery 30,000 A 30,000 Premises 20,000 B 30,000 Investment 10,000 C 20,000 80,000 Goodwill 5,000 Contingency Reserve 8,000 Patent 6,000 Employee Provident Fund 4,000 Stock 13,000 Sundry Creditors 10,000 Sundry Debtors 6,000 Cash at Bank 10,000 Advertisement Suspense A/c 2,000 1,02,000 1,02,000 C died on 31-5-2020. The agreement between the executor of C and the partners stated that; Goodwill of the firm was to be valued at 2½ times of the average profits of last four years. The profits of four years were: 2016-2017 ` 13,000; 2017-2018 ` 12,000, 2018-2019 ` 16,000 and 2019-2020 ` 15,000. The patents are to be valued at ` 8,000, Machinery at ` 25,000 and Premises ` 25,000. The share of profit of C should be calculated on the basis of the profit of last year. Calculate C’s share of: (a) profit for the period till the time of his death. (b) goodwill. (c) profit or loss on revaluation of assets and liabilities. (d) accumulated profits and losses Also pass necessary journal entries for the above settlement along with amount payable to C’s executor. Sample Papers 59

Or Mridul and Vanshika were partners in a firm with capital of ` 1,20,000 and ` 1,60,000 respectively. On 1st April, 2020 they admitted Gurleen as a partner for 1/4th share in profits on his payment of ` 2,00,000 as his capital and ` 90,000 as his share of goodwill. On that date the creditors of the firm were ` 60,000 and Bank overdraft was ` 15,000. Their assets apart from Cash included Stock ` 10,000, Debtors ` 40,000, Plant and Machinery ` 80,000, Land and Building ` 2,00,000. It was agreed that Stock should be depreciated to ` 8,000, Plant and Machinery by 20%, ` 5,000 should be written off as bad debts and Land and Building should be appreciated by 25%. Prepare the Revaluation Account and Capital Accounts of Partners. 22. Julies Ltd. issued for public subscription 50,000 shares of the value of ` 10 each at a premium of ` 2 per share payable as ` 3 on application, ` 5 including premium on allotment and balance on call. The company received applications for 92,000 shares. The allotment was done as under: (a) Applicants of 40,000 shares were allotted 30,000 shares. (b) Applicants for 30,000 shares were allotted 20,000 shares. (c) Remaining applicants were sent letter of regret. Money in excess of allotment was returned. Raman, a shareholder who was allotted 1,500 shares out of the group (a) did not pay any money other than application money. Krishna, a shareholder who had applied for 600 shares out of group (b) paid the call money along with the allotment. Raman's shares were forfeited after calls and later reissued at ` 12 per share. Pass the journal entries to record the above transactions in the books of the company. Or Galaxy Ltd. issued for public subscription 75,000 shares of ` 10 each payable as ` 2 on application, ` 4 on allotment and ` 4 on call. The company received applications for ` 1,50,000 shares. The allotment was done as under: (a) Applicants of 15,000 shares were allotted 5,000 shares. (b) Applicants for 70,000 shares were allotted 40,000 shares. (c) Remaining applicants were allotted 30,000 shares. Money in excess of allotment was returned. Raghav, a shareholder who was allotted 2,000 shares out of the group (b) failed to pay allotment and call money. Rohan, a shareholder who had applied for 3,250 shares out of group (c) paid the call money along with the allotment. Raghav’s shares were forfeited after calls and reissued at ` 9 per share. Pass the journal entries to record the above transactions in the books of the company. Part–B Analysis of Financial statements 23. Raphael Ltd. is carrying on a mutual fund business. It invested ` 10,00,000 in shares of a company and received a dividend of 10%. Find out Cash Flow from Investing Activities. 24. Issue of equity shares is shown under ____________ in Cash Flow Statement. 25. Which of the following ratios is not a solvency ratio? (a) Debt to Equity Ratio (b) Current Ratio (c) Total Assets to Debt Ratio (d) Proprietary Ratio 60 Together with® EAD Accountancy—12

26. What is the importance of financial statements analysis for creditors? 27. The Proprietary Ratio of ABC Ltd. is 1.8 : 1. State with reason whether purchase of machinery for cash ` 70,000 will increase, decrease or not change the ratio. 28. What will be the effect of Issue of Bonus shares on Debt to Equity Ratio? 29. Match the following expenses to the heads under which they are depicted in Statement of Profit and Loss. (i) Interest paid (a) Cost of material consumed (ii) Carriage inwards (b) Other Expenses (iii) Audit fee (c) Finance costs 30. Prepare a Common-size Income Statement of Jayant Ltd. from the following information for the year ended 31st March, 2020: Particulars 2019-20 2018-19 (`) (`) Revenue from Operations Other Income 2,00,000 1,50,000 Cost of materials consumed 15,000 25,000 Finance Cost 70,000 Tax 1,10,000 5,000 5,000 40,000 40,000 Or (a) One of the objectives of Financial Statement Analysis is to judge the ability of the firm to repay its debts and assessing the short-term as well as the long-term liquidity position of the firm. State two more objectives of this analysis. (b) List any two items presented under the head ‘Other Current Assets’ as per Schedule III of the Companies Act, 2013. 31. From the following information, Compute Debt Equity Ratio and Current ratio. Long-term Borrowings ` 3,00,000 Current Liabilities ` 50,000 Inventory ` 6,000 Prepaid Expenses ` 4,000 Non-current Assets ` 3,60,000 Current Assets ` 90,000 Or Under which of the major heads will the following items be shown while preparing Balance Sheet of a company as per Schedule III of the Companies Act 2013: (a) Stores and spares (b) Unclaimed dividend (c) Interest accrued but not due on borrowings (d) Calls-in-advance (e) Loose tools (f) Provision for tax (g) Computer software under development (h) Outstanding salaries Sample Papers 61

32. From the following Balance Sheets of GPL Industries Ltd. as on 31st March, 2020 and 31st March, 2019, prepare Cash Flow Statement as per AS-3 (Revised). Particulars Note 31 March 31 March No. 2020 2019 I. Equity and Liabilities (`) (`) 1. Shareholders’ Funds: (a) Equity Share Capital 1 12,00,000 8,00,000 (b) Reserves and Surplus 4,00,000 3,50,000 2. Non-Current Liabilities: 2 (a) Long-term Borrowings 4,40,000 3,50,000 3. Current Liabilities: Total (a) Short-term Borrowings (Bank Overdraft) 30,000 45,000 (b) Trade Payables 60,000 50,000 (c) Short-term Provisions 84,000 60,000 22,14,000 16,55,000 I I. Assets 1. Non-Current Assets: 12,00,000 9,00,000 (a) Fixed Tangible Assets 2. Current Assets: 84,000 60,000 (a) Current Investments (Marketable) 2,00,000 1,00,000 (b) Inventories 3,10,000 2,30,000 (c) Trade Receivables 4,20,000 3,65,000 (d) Cash and Cash Equivalents 22,14,000 16,55,000 Total Notes to Accounts: Particulars 31st March 2020 31st March 2019 (`) (`) 1. Reserves and Surplus: Surplus i.e. Balance in Statement of Profit and Loss 3,50,000 3,10,000 General Reserve 50,000 40,000 2. Short-term Provisions: 4,00,000 3,50,000 Provision for Tax 84,000 60,000 84,000 60,000 Additional Information: (a) Depreciation charged on tangible fixed assets was ` 1,20,000. (b) During the year, company paid interest ` 36,000 on its long term borrowings. 62 Together with® EAD Accountancy—12

Solutions 1. (b) ` 22,000 2. Fund based Accounting refers to accounting whereby receipts/income related to a particular fund are credited to it and payments/expenses related to that fund are debited to it. If the fund has a credit balance it is shown in the balance sheet on the liabilities side. If the fund has a debit balance, it is transferred to income and expenditure account. 3. (d) X : Y = 5 : 3 Z’s share = 1/3 × 3/8 = 1/8 X’s share = 5/8 Y’s share = 2/3 × 3/8 = 2/8 New ratio of X, Y and Z = 5 : 2 : 1 4. (c) equally 5. As per Section 48 of Indian Partnership Act 1932, advances made by the partners to the firm are to be paid before the payment of amounts due towards the capital. 6. Journal Date Particulars L.F. Dr. (`) Cr. (`) Z’s Capital A/c Dr. 20,000 To X’s Capital A/c (For profit wrongly distributed, now rectified) 20,000 7. (b) ` 1,950 8. the amount of compensation to be paid by each gaining partner to the retiring partner. 9. Journal Date Particulars L.F. Dr. (`) Cr. (`) C’s Loan A/c Dr. 65,000 15,000 To C’s Capital A/c 50,000 To Bank A/c (For C’s loan transferred to his capital a/c and balance paid) 10. (c) 1350 11. (c) X ` 22,750; Y ` 5,250 12. (c) Loss ` 28,000 13. (a) Authorised Capital Sample Papers 63

14. Calculation of amount to be debited to Income and Expenditure Account: ` 3,07,000 Particulars 30,000 Amount paid for medicines during the year 8,000 Add: Opening stock of medicines 3,45,000 Closing creditors of medicines (54,000) (17,000) Less: Closing stock of medicines 2,74,000 Opening creditors of medicines Amount to be debited to Income and Expenditure Account ` 45,000 Or In the books of Friends Club Liabilities Subscription received in advance Balance Sheet as on 31st March 2020 ` Assets 25,000 Subscription in arrears 15. In the books of... Journal Date Particulars L.F. Dr. (`) Cr. (`) (a) 33,000 33,000 Bank A/c Dr. (b) To Debenture Application and Allotment A/c (Being money received on 200, 7% Debentures at ` 165 each including ` 15 premium) Debenture Application and Allotment A/c Dr. 33,000 10,000 Loss on Issue of Debentures A/c Dr. To 7% Debenture A/c 30,000 3,000 To Securities Premium Reserve A/c 10,000 To Premium on Redemption of Debentures A/c (Being issue of 200 Debentures of ` 150 each at a premium of 10%, redeemable at a premium of ` 50) Bank A/c Dr. 85,500 To Debenture Application and Allotment A/c 85,500 (Being application and allotment money received on 900 debentures @ ` 95 each) Debenture Application and Allotment A/c Dr. 85,500 Loss on Issue of Debentures A/c Dr. 13,500 To 15% Debenture A/c To Premium on Redemption of Debenture A/c 90,000 (Being issue of debentures at discount of 5%, redeemable at 9,000 premium of 10%) 64 Together with® EAD Accountancy—12

16. In the books of Karizma, Yasmin and Zeenat Journal Date Particulars L.F. Dr. (`) Cr. (`) 50,000 50,000 2020 Bank A/c Dr. 1st April To Zeenat’s Capital A/c (For cash brought by Zeenat as her capital) Zeenat’s Capital A/c Dr. 10,000 To Karizma’s Capital A/c 6,000 4,000 To Yasmin’s Capital A/c (For Karizma and Yasmin capitals credited with their share of goodwill in sacrificing ratio of 3 : 2) Profit and Loss A/c Dr. 85,000 To Karizma’s Capital A/c To Yasmin’s Capital A/c 9,000 51,000 (For profit and loss transferred in old ratio) 6,000 34,000 Karizma’s Capital A/c Dr. 15,000 Yasmin’s Capital A/c Dr. To Advertisement Suspense A/c (For advertisement suspense written off) Working Notes: Based on Zeenat’s share, the total capital of the firm ought to be (50,000 × 5) = ` 2,50,000 Less: Net worth of a new firm (adjusted capitals of the old partners + incoming = ` 2,00,000 = ` 50,000 partner) i.e. (48,000 + 32,000 + 85,000 – 15,000 + 50,000) Cr. Hidden Goodwill Or Dr. Partner’s Capital A/cs Particulars Xavier Yame Zombi Particulars Xavier Yame Zombi (`) (`) (`) (`) (`) (`) To Drawings A/c 60,000 60,000 60,000 By Balance b/d 4,00,000 2,00,000 – To Interest on 3,900 2,700 3,600 By Bank A/c – – 1,20,000 By Premium for Goodwill Drawings A/c 5,18,500 2,28,500 93,000 40,000 20,000 – To Balance c/d A/c By Interest on Capital 44,000 22,000 12,000 A/c 98,400 49,200 24,600 By P & L App A/c 5,82,400 2,91,200 1,56,600 5,82,400 2,91,200 1,56,600 Interest on drawings : Xavier : 60,000 × 12/100 × 6.5/12 = 3,900, Yame : 60,000 × 12/100 × 4.5/12 = 2,700, Zombi : 60,000 × 12/100 × 6/12 = 3,600 Profit and Loss Appropriation = ` 2,40,000 – IOC (` 78,000) + IOD (` 10,200) = ` 1,72,200 divided among Xavier, Yame and Zombi in 4 : 2 : 1 ratio. Sample Papers 65

17. Profit and Loss Appropriation A/c Cr. Dr. for the year ending 31st March, 2020 (`) 2,59,000 Particulars (`) Particulars By Profit and Loss A/c 2,59,000 To Interest on Capital A/c : Cr. (`) A 42,000 36,000 40,500 B 35,000 3,800 200 C 28,000 1,05,000 12,000 To Salary A/c B 40,000 C 24,000 64,000 To Profit transferred to Capital A/c A 40,000 Less: Deficiency of B (10,000) Less: Deficiency of C (2,000) 28,000 B 20,000 Add: Deficiency borne by A 10,000 30,000 C 30,000 Add: Deficiency borne by A 2,000 32,000 2,59,000 Working notes: B C ` 30,000 ` 60,000 Minimum guarantee ` 20,000 ` 58,000   Less: Amount actually received ` 10,000 ` 2,000 Deficiency to be borne by A 18. Journal Date (a) Particulars L.F. Dr. (`) 36,000 (b) B’s Capital A/c Dr. 40,500 4,000 (c) To Realisation A/c 12,000 (d) (Being machinery taken over by B at 10% less than book value) Realisation A/c Dr. To Bank A/c (Being creditors settled at 10% discount) A’s Loan A/c Dr. To Bank A/c To Realisation A/c (Being A’s loan settled at ` 3,800) Realisation A/c Dr. B’s Capital A/c (Being expenses of realisation paid by B and borne by firm) 66 Together with® EAD Accountancy—12

19. Income and Expenditure A/c Cr. for the year ended 31st March, 2020 (`) Dr. (`) Income 7,500 Expenditure 1,32,000 By Donation 15,000 2,22,000 To Salary 40,000 To Repair Expenses 8,000 Less: Transferred to 13,000 To Expenses on Teams 4,000 To Insurance Premium 80,000 Tennis court fund (7,500)   Less: Prepaid for NY 2,86,500   Add: Prepaid PY for CY 8,200 By Subscription 2,30,000 To Miscellaneous Expenses (4,100) To Surplus Add: Outstanding 4,100 8,200 at the end of the year 32,000 12,500 Less: Outstanding 45,800 at the beginning of the year (28,000) Less: Received in advance for next year (12,000) By Entrance Fee By Interest on Investments By Sale of Old Newspaper 2,86,500 Closing Balance Sheet Liabilities (`) Assets (`) 1,30,000 Capital Fund 4,72,100 Building 2,15,000   Add: Surplus 45,800 5,17,900 Sports Equipment (` 1,40,000 + ` 75,000) Match Fund 30,000 80,000  Add: R eceipt from sale of Investments 4,100 12,300 Insurance in advance 32,000 match ticket (32,000) Subscription in arrears 86,600   Less: Match Expenses 10,300 Cash at Bank Tennis Court Fund 7,500 5,47,700 Subscription in advance 12,000 5,47,700 Liabilities Opening Balance Sheet (`) Capital Fund (`) Assets 1,30,000   (Balancing figure) 1,40,000 Match Fund 4,72,100 Building Sports Equipment 80,000 28,000 30,000 Investments 4,100 Subscription in arrears 1,20,000 Insurance in advance Cash at Bank 5,02,100 5,02,100 Sample Papers 67

20. (a) In the books of Prakash Ltd. Journal Date Particulars L.F. Dr. (`) Cr. (`) L.F. 7,00,000 (b) Sundry Assets A/c Dr. 2,00,000 To Sundry Liabilities A/c 4,59,500 To Savita Ltd. Date To Capital Reserve A/c 40,500 (For assets and liabilities of Savita Ltd. taken over) Savita Ltd. Dr. 4,59,500 To Bank A/c 8,500 4,10,000 To Equity Share Capital A/c 41,000 To Securities Premium Reserve A/c — (For purchase consideration paid through a bank draft and balance by issue of 41,000 equity shares of ` 10 each at 10% premium) In the books of X Ltd. Journal Particulars Dr. (`) Cr. (`) 30,00,000 30,00,000 Bank A/c Dr. To Equity Share Application and Allotment A/c (For application and allotment money received for 20,000 shares @ ` 150 per share) Equity Share Application and Allotment A/c Dr. 30,00,000 To Equity Share Capital A/c 7,50,000 3,75,000 To Securities Premium Reserve A/c 18,75,000 To Bank A/c (For 5,000 applicants rejected and prorata allotment of 7,500 shares were done to 15,000 applicants) 21. Dr. Journal Cr. Date Particulars L.F. Dr. (`) Cr. (`) Profit and Loss Suspense A/c Dr. 500 To C’s Capital A/c 500 (Being C’s share of profit transferred to his account) A’s Capital A/c Dr. 4,375 2,625 B’s Capital A/c Dr. To C’s Capital A/c 7,000 (Being C’s share of goodwill adjusted through capital accounts) Revaluation A/c Dr. 400 400 To C’s Capital A/c (Being profit on revaluation transferred to C’s capital account) Contingency Reserve A/c Dr. 1,600 To C’s Capital A/c 1,600 (Being contingency reserve distributed) 68 Together with® EAD Accountancy—12

C’s Capital A/c Dr. 1,000 To Goodwill A/c 400 (Being goodwill written off) 1,000 28,100 400 C’s Capital A/c Dr. To Advertisement Suspense A/c 28,100 (Being advertisement suspense is written off) C’s Capital A/c Dr. C’s Executor A/c (Being amount due to C transferred to his executor account) Working Note 1: C’s share in profit = 15,000 × 2 × 2 = ` 500 10 12 Working Note 2: Firm’s Goodwill = 13000 + 12000 + 16000 + 15000 × 2.5 = 35,000 4 C’s Share of Goodwill 35,000 × 2 = ` 7,000 10 Working Note 3: Dr. Revaluation A/c Cr. Particulars ` Particulars ` To Machinery 5,000 By Patents 2,000 To Profit transferred to: By Premises 5,000 A’s Capital A/c 1,000 B’s Capital A/c 600 C’s Capital A/c 400 2,000 7,000 7,000 Or Dr. Revaluation A/c Cr. Particulars ` Particulars ` To Stock A/c 2,000 By Land and Building A/c 50,000 To Plant and Machinery A/c 16,000 To Debtors A/c 5,000 To Profit transferred to Capital A/c’s Mridul 13,500 Vanshika 13,500 27,000 50,000 50,000 Sample Papers 69

Dr. Partners’ Capital A/c Cr. Particulars Mridul Vanshika Gurleen Particulars Mridul Vanshika Gurleen To Balance c/d `` ` ``` 1,78,500 2,18,500 2,00,000 By Balance b/d 1,20,000 1,60,000 – By Revaluation A/c 13,500 13,500 – By P remium for 45,000 45,000 Goodwill A/c By Cash A/c 2,00,000 2,18,500 2,00,000 1,78,500 2,18,500 2,00,000 1,78,500 22. In the books of Julies Ltd. Journal Date Particulars L.F. Dr. (`) Cr. (`) 2,76,000 2,76,000 Bank A/c Dr. To Share Application A/c (Being application money received) Share Application A/c Dr. 2,76,000 To Share Capital A/c To Bank A/c 1,50,000 To Share Allotment A/c 66,000 (Being application money adjusted and surplus refunded) 60,000 Share Allotment A/c Dr. 2,50,000 To Share Capital A/c     To Securities Premium Reserve A/c 1,50,000 (Being allotment money due) 1,00,000 Bank A/c Dr. 1,85,600 Calls-in-arrears A/c Dr. 6,000 To Share Allotment A/c To Calls-in-advance A/c 1,90,000 (Being allotment money and calls in advance received) 1,600 Share First and Final Call A/c Dr. 2,00,000 To Share Capital A/c (Being call money due) 2,00,000 Bank A/c Dr. 1,92,400 Calls-in-arrears A/c Dr. 6,000 Calls-in-advance A/c Dr. 1,600 To Share First and Final A/c (Being call money received) 2,00,000 70 Together with® EAD Accountancy—12

Share Capital A/c Dr. 15,000 3,000 Securities Premium Reserve A/c Dr. To Calls-in-arrears A/c 12,000 6,000 To Share Forfeited A/c (Being 1,500 shares forfeited on non-payment of allotment and call money) Bank A/c Dr. 18,000 To Share Capital A/c 6,000 To Securities Premium Reserve A/c 15,000 (Being forfeited shares reissued) 3,000 Share Forfeited A/c Dr. 6,000 To Capital Reserve A/c (Being profit on reissue transferred to capital reserve) Working Notes: (a) No of shares applied by Raman = 1,500/3 × 4 = ` 2,000 Excess application money received from him = 500 × 3 = ` 1,500 (b) Total amount due on allotment = ` 2,50,000 Less: Allotment money already received on application stage = (` 60,000) Add: Call received in advance from Krishna = ` 1,600 Less: Allotment money due but not received from Raman = (` 6,000) ` 1,85,600 Or In the books of Galaxy Ltd. Journal Date Particulars L.F. Dr. (`) Cr. (`) Dr. 3,00,000 3,00,000 Bank A/c To Share Application A/c Dr. 3,00,000 1,50,000 (Being application money received on 1,50,000 share) 1,50,000 Dr. 3,00,000 Share Application A/c 3,00,000 To Share Capital A/c To Share Allotment A/c (Being application money adjusted) Share Allotment A/c To Share Capital A/c (Being allotment money due) Sample Papers 71

Bank A/c Dr. 1,51,000 Calls-in-arrears A/c Dr. 5,000 To Share Allotment A/c To Calls-in-advance A/c 3,00,000 1,50,000 (Being allotment money and calls in advance received) 6,000 2,86,000 Share First and Final Call A/c Dr. 8,000 3,00,000 To Share Capital A/c 6,000 (Being call money due) 3,00,000 20,000 7,000 Bank A/c Dr. 13,000 Calls-in-arrears A/c Dr. 18,000 Calls-in-advance A/c Dr. 2,000 20,000 To Share First and Final A/c 5,000 (Being call money received) 5,000 Share Capital A/c Dr. To Shares Forfeited A/c    To Calls-in-arrears A/c (Being shares forfeited on non-payment of allotment and call) Bank A/c Dr. Shares Forfeited A/c Dr. To Share Capital A/c (Being forfeited shares reissued at ` 9 per share) Shares Forfeited A/c Dr. To Capital Reserve A/c (Being amount remaining in forfeited shares A/c transferred to capital reserve) Working Notes: (a) No. of shares allotted to Raghav = 2,000/4 × 7 = 3,500 Excess application money received from him = 1,500 × 2 = ` 3,000 (b) Allotment money due from Raghav (2000 × ` 4) = ` 8,000 Less: Excess application money received from = ` 3,000 Allotment money due but not received from Raghav = ` 5,000 (c) Total amount due on allotment = ` 3,00,000 Less: Allotment money already received on application stage = (` 1,50,000) Add: Call received in advance from Rohan = ` 6,000 Less: Allotment money due but not received from Raghav = (` 5,000) = ` 1,51,000 23. Cash Flow from investing activities is nil, as Raphael Ltd. is a financing company. 24. Financing Activities 25. (b) Current Ratio 72 Together with® EAD Accountancy—12

26. Creditors are interested to know the short-term solvency position of the firm which is determined with the help of financial statements analysis. 27. Purchase of machinery for cash will not change the total assets or shareholder’s fund. Thus, it will not affect the Proprietary Ratio. 28. Issue of bonus share will not change the debt to equity ratio as it implies conversion of accumulated profit into share capital, which are a component of shareholder’s fund. 29. (i) → (c), (ii) → (a), (iii) → (b) 30. Common Size Statement of Profit and Loss for the year ending 31st March, 2020 Particulars Note 2018-19 2019-20 % of % of No. (`) (`) Revenue from Revenue from I. Revenue from Operations II. Other Income 1,50,000 Operations Operations I II. Total Revenue (I+II) 25,000 2018-19 2019-20 IV. Less: Expenses Cost of Materials Consumed 1,75,000 2,00,000 100 100 Finance Cost 15,000 16.67 7.5 Total Expenses 116.67 107.5 V. Profit before Tax (III-IV) 2,15,000 VI. Less: Tax V II. Profit after Tax (V – VI) 70,000 1,10,000 46.67 55 5,000 5,000 3.33 2.5 75,000 57.5 1,00,000 1,15,000 50 50 40,000 1,00,000 66.67 20 60,000 26.67 30 40,000 60,000 40 Or (a) Following are the objectives of Financial Statement Analysis: (i) It helps in assessing the earning capacity of the enterprise. (ii) It helps in assessing the managerial efficiency. (b) Two items shown under Other Current Assets are P repaid Expenses and Accrued Incomes. 31. Debt Equity Ratio = Debt/Equity    Debt = Long Term Borrowings = ` 3,00,000     Equity = Current Assets + Non Current Assets – Long Term Borrowings – Current Liabilities = ` 90,000 + ` 3,60,000 – ` 3,00,000 – ` 50,000 = ` 1,00,000 Debt Equity Ratio = Debt/Equity = 3,00,000/1,00,000 = 3 : 1 Current Ratio = Current Assets/Current Liabilities = 90,000/50,000 = 1.8 : 1 Sample Papers 73

Or Items Major head Sub-head Inventories (a) Stores and spares Current Assets Other Current Liabilities Other Current Liabilities (b) Unclaimed dividend Current Liabilities Other Current Liabilities (c) Interest accured but not due on Current Liabilities Inventories borrowings Short-term Provisions Intangible Assets under (d) Calls-in-advance Current Liabilities Development (e) Loose tools Current Assets Other Current Liabilities (f) Provision for tax Current Liabilities (g) Computer software under Non-Current Assets (Fixed Assets) development (h) Outstanding salaries Current Liabilities 32. Cash Flow Statement of GPL Industries Ltd. Details Details for the year ended 31st March, 2020 (`) (`) Sr. Particulars 1,34,000 No. A. Cash flows from (or used in) Operating Activities: 1,20,000 36,000 Net Profit before tax and Extraordinary items Adjustments for non-cash and non-operating items: 2,90,000 A dd: Depreciation on Fixed Tangible Assets Interest on Long Term Borrowings 10,000 Operating profit before change in working capital Add: Increase in current liabilities and Decrease in current assets (1,00,000) 60,000 Trade Payables (80,000) Less: Decrease in current liabilities and Increase in current assets 1,20,000 Inventory (60,000) Trade Receivables 60,000 Cash generated from Operating Activities Less: Income Tax Paid (4,20,000) (4,20,000) Net cash flows from Operating Activities (4,20,000) B. Cash flows from (or used in) from Investing Activities: P urchase of Fixed Tangible Assets N et cash used in Investing Activities 74 Together with® EAD Accountancy—12

C. Cash flows from (or used in) from Financing Activities: 4,00,000 4,39,000 Proceeds from issue of Share Capital 90,000 79,000 Proceeds from issue of Long Term Borrowings Interest paid on Long Term Borrowings (36,000) Repayment of Bank Overdraft (15,000) Net cash flows from Financing Activities 4,39,000 D. Net Increase in Cash and Cash Equivalents (A + B + C) 3,65,000 4,25,000 E. Add: Cash and Cash equivalents at the beginning 60,000 Marketable Securities 84,000 5,04,000 Cash and Cash Equivalents 4,20,000 F. Cash and Cash equivalents at the end Marketable Securities Cash and Cash Equivalents Working Notes: Net Profit before tax and Extraordinary items: Net profit for the current year (` 3,50,000 – ` 3,10,000) = ` 40,000 Transfer to General Reserve = ` 10,000 Provision for Tax = ` 84,000 ` 1,34,000 Dr. Fixed Tangible Assets A/c Cr. Particulars (`) Particulars (`) 9,00,000 By Depreciation A/c 1,20,000 To Balance b/d 4,20,000 By Balance c/d 12,00,000 To Bank A/c 13,20,000 13,20,000 Sample Papers 75