Guess Paper – 2007

ACCOUNTANCY

CLASS -XII

Time Allowed:Three Hours                        Maximum Marks: 80 PART-A

Q. 1.  What is meant by Profit and Loss Appropriation Account?                                                                       (2)

Q. 2.        Ram, Shyam and Mohan are partners in a firm sharing profits and losses in the ratio of 2 : 1 : 2. Their fixed capitals were Rs. 3,00,000; Rs. 1,00,000 and Rs. 2,00,000 respectively. Interest on capital for the year 2004 was credited to them @ 9% p.a. instead of 10% p.a. The profit for the year before charging interest was Rs. 2,50,000. Prepare necessary adjustment.                                                                                                                             (2)

Ans. Debit: Shyam’s  Current A/c Rs. 200 and Mohan’s Current A/c Rs. 400; Credit Ram’s Current A/c Rs. 600.

Q. 3.        What is Authorized Capital? What is its significance?                                                                                 (2)

Q. 4.        A Company had Rs. 10,00,000, 12% Debentures outstanding as on 1st Jan., 2004. During the year company took a loan of Rs. 2,00,000 from the State Bank of India for which the Company placed with the bank debentures for Rs. 2,50,000 as Collateral Security. Pass journal entries, if any. Also show how the Debentures and Bank Loan will appear in the Company's Balance Sheet.                                                                                         (2)

Q. 5.         A and B are partners. They do not have any partnership agreement (partnership deed). What should be done in the following cases:

(i) A spends twice the time that B devotes to business. A claims that he should get a salary of Rs. 3,000 per month for his extra time spent.

(ii) B has provided a capital of Rs. 25,000 whereas A has provided Rs. 5,000 only as capital. A however, has provided Rs. 10,000 as loan to the firm. What interest (if any) will be given to A and B.

(iii) B wants that profit should be distributed in the ratio of capitals but A wants that it should be distributed equally.                                                                                                                                                         (3)

Q. 6.        What are the functions of trustees in the context of Trust Deed of debentures?                                    (3)

Q. 7.        Define goodwill. Mention any six occasions which need the valuation of goodwill.                              (4)

Q. 8.        A and B were partners in a business sharing profits and losses in the ratio of 3 : 1. They decided to dissolve the partnership on March 31, 2003. On that date, their Capitals stood at Rs. 1,00,000 and Rs. 50,000 respectively. Amount owing by A to the firm was Rs. 42,000 and the amount owed by the firm to B was Rs. 15,000; Creditors were Rs. 25,000 and Cash Rs. 5,000. The assets other than the amount owing by A to the firm realised Rs. 64,000. The expenses of realisation amounted to Rs. 1,000.

Prepare the Balance Sheet of the firm immediately prior to dissolution and necessary ledger accounts to close the books of the firm.                                                                                                                                       (4)

Ans. Assets Rs. 1,43,000; Loss on Realisation Rs. 80,000; Cash brought by A Rs. 2,000, Cash paid to B Rs. 30,000; Total Cash balance Rs. 71,000

Q. 9.        D The books of Modi Rubber Ltd. disclosed the following information on 31st March, 2003 :

5% Debentures                                                                             Rs. 15,00,000

Debenture Redemption Fund                                                    Rs. 11,63,600

Debenture Redemption Fund Invest merits

(5% Government Securities)                                                      Rs. 11,63,600

Contribution to the Debenture Redemption Fund was Rs. 1,30,800 per annum for the years ending 31st March 2004 and 2005. The debentures fell due for payment on 31st March, 2005.

Prepare appropriate accounts in the books of the company, assuming that the securities were realised on 31st March, 2005 for a sum of Rs. 13,52,000 and interest on securities was immediately invested.                    (4)

Ans. Amount transfer to General Reserve Rs. 15,50,429; Loss on sale Rs. 580

Q. 10.    On 1st January, 2004, a company made an issue of 1,000, 12% Debentures of Rs. 1,000 each at Rs. 960 per debenture. The terms of issue provided for the redemption of Rs. 20,000 debentures every year commencing from 2005 either by purchase or by drawings at par at the Company's option. Rs. 10,000 was also written off the Debentures Discount Account in each of the year 2004 and 2005.

During 2005, the company purchased for Cancellation Debentures of the face value of Rs. 8,000 at Rs. 950 per Debenture and of Rs. 12,000 at Rs. 900 per Debenture.

Journalise the above transactions and show how the profit on redemption would be treated. Ignore entries relating to Debenture Redemption Reserve.                                                                                                                         (4)

Q. 11.    X Ltd. purchased the business of Y Ltd. for Rs. 90,000 payable in fully paid shares of Rs. 10 each. What entries will be made in the books of X Ltd. if such issue is: (i) at par, (ii) at a premium of 25%, and (iii) at a discount of 10%?                                                                                                                                                          (4)

Q. 12.    The following is the Balance Sheet of A and B as on 31st December, 2005:

The firm was dissolved on 31st December, 2005 on the following terms:

(a)     A promised to pay Mrs. A's loan and took away stock in-trade at Rs. 4,000.

(b)     B took away half of the investments at 10% discount.

(c)     Debtors realized Rs. 19,000.

(d)     Creditors and bills payable were due on an average basis of one month after 31st December, but they were paid immediately on 31st December at 6% discount, p.a

(e)     Plant realised Rs. 25,000, building Rs. 40,000, goodwill Rs. 6,000 and remaining investments at Rs. 4,500.

(f)      There was an old typewriter in the firm which had been written off completely from the books, it was estimated to realize Rs. 300, it was taken away by B at this estimated price.

You are required to prepare the (a) realisation A/c (b) partners' capital A/cs and (c) cash A/c to close books of the firm.                                                                                                                                                                    (6)

Ans. Profit on realisation Rs. 32,490; Final Payment to A Rs. 30,495 and B Rs. 24,695; Total Cash A/c Rs. 1,03,000.

Or

A, B and C are three partners sharing profits in the ratio of 3 : 1 : 1. On 31st March, 2005, they decided to dissolve their firm. On that date their balance sheet was as under:

It is agreed that:

(i)                   A is to take over Furniture at Rs. 800 and Debtors amounting to Rs. 20,000 at Rs. 17,200; the Creditors of Rs. 6,000 to be paid by him at this figure.

(ii)                 B is to take over all the Stock in Trade at Rs. 7,000 and some of the Sundry Assets at Rs. 7,200 (being 10% less than book value).

(iii)                C is to take over the remaining Sundry Assets at 90% of the book value, less Rs. 100 as discount and assume the responsibility for the discharge of the loan together with accrued interest of Rs. 30 which has not been recorded in the books.

(iv)               The expense of dissolution were Rs. 270. The remaining debtors were sold to a debt-collecting agency for 50% of the book value.

Prepare necessary accounts to close the books of the firm.

Ans. Loss on Realisation Rs. 6,800; Cash brought in by B Rs. 5,560 and C Rs. 830, Final Payment to A Rs. 11,420; Total Cash A/c Rs. 11,690.

Q. 13.    A and B are in partnership, sharing profits in proportion of 4/7 and 3/7 respectively. Their Balance Sheet is as follows

C is admitted into partnership on the following terms:

(i) The new profit-sharing ratio will be 3 : 2 : 1 between A, B and C respectively.

(ii) C's Loan should be treated as his Capital.

(iii) C is not to bring goodwill in cash. Goodwill is valued on the basis of 2 years' purchase of the average profits of the last three years.

(iv) Average Profits of the last three years are Rs. 6,000.

(v) Rs. 7,000 of Investments were to be taken over by A and B in their profit sharing ratios.

(vi) Stock be reduced by 10%.

(vii) Provision for doubtful debts should be @ 5% on Debtors and a provision for discount @ 2% should also be made on Debtors.

(viii) B is to withdraw Rs. 8,000 in cash.

Give journal entries to record the above and prepare the Balance Sheet of the new firm.                           (6)

Ans. Loss on Revaluation Rs. 7,000; Partners’ Capital Account balances A Rs. 40,000, B Rs. 25,000, C Rs. 28,000; Balance Sheet Total Rs. 1,21,600; Sacrificing ratio Rs. 3:4.

Or

The following is the Balance Sheet of A and B who share profits in the ratio of 2 : 1

They admitted C into partnership on this date. New profit sharing ratio is agreed as 3:2:1. C brings in proportionate capital after the following adjustments:

(l) C brings in Rs. 10,000 in cash as his share of Goodwill.

(2) Provision for doubtful debts is to be reduced by Rs. 2,000.

(3) There is an old typewriter valued Rs. 2,600. It does not appear in the books of the firm. It is now to be recorded.

(4) Patents are valueless.

(5) 2 % discount is to be received from creditors.

(6) Bank Overdraft Paid.

Prepare Revaluation A/c, Capital A/cs and the opening Balance Sheet.

Ans. Profit on Revaluation Rs. 3,000; Partner’ Capital Balances A Rs. 60,000, B Rs. 35,000; Capital Brought in by C Rs. 19,000; Balance Sheet Total Rs. 1,33,600.

Q. 14.    X Ltd. issued 60,000 shares of Rs. 10 each at a premium of 20% payable as follows: On Application Rs. 5 (including premium); On Allotment Rs. 3; and On First and Final Call Rs. 4.

The company received applications for 75,000 shares and allotment was made as follows:

List I Applicants for 40,000 shares were allotted in full.

List II Applicants for 25,000 shares were allotted 20,000 shares.

List III Applicants for 10,000 shares were allotted Nil shares.

A shareholder to whom 200 shares were allotted under List I paid full amount due on shares alongwith allotment money. Another shareholder holding 600 snares failed to pay the amount due on call. His shares were forfeited and 500 of these shares were subsequently re-issued as fully paid @ Rs. 11 per share.     .

Expenses of issue came to Rs. 20,000 which were fully written off against securities premium ale.

Pass journal entries and give balance sheet of the company.                                                                            (6)

Ans. Capital Reserve Rs. 3,000; Balance Sheet Total Rs. 7,03,100.

Q. 15.    On March 31, 2003, the balance sheet of Pawan, Qatir and Ram, who were sharing profits in proportion to their capitals stood as follows:

BALANCE SHEET

As at March 31. 2003

Qatir retires and the following readjustments of the assets and liabilities have been agreed upon before the ascertainment of the amount payable to Qatir:

(i) That out of the amount of insurance which was debited entirely to profit and loss account, Rs. 1,292 be carried forward as unexpired insurance.

(ii) That the land and building be appreciated by 10%.

(iii) That the provision for doubtful debts be brought upto 5% on debtors.

(iv) That machinery be depreciated by 6%.

(v) That a provision of Rs. 1,500 be made in respect of any outstanding bill for printing and stationery.

(vi) That the goodwill of the firm will be valued at Rs. 18,000.

(vii) That the entire capital of the firm as newly constituted be fixed at Rs. 60,000 between Pawan and Ram in the proportion of three-fourth and one-fourth after passing entries in their accounts for adjustment, i.e. actual cash to he paid off or to be brought in by the continuing partners as the case may be.

(viii) That Qatir be paid Rs. 5,000 in cash and the balance be transferred to his loan account payable in two equal annual instalments alongwith interest @ 8% p.a.

Prepare necessary accounts and the balance sheet of the firm of Pawan and Ram. Also prepare Qatir's loan till it is finally settled.                                                                                                                                                                                                                                         (8)

Ans. Profit on Revaluation Rs. 4,000; Capital balances Pawan Rs. 45,000; Ram Rs. 15,000; Qatir’s loan A/c Rs. 33,800; Balance Sheet Total Rs. 1,32,300.

Or

A and B are partners sharing profits in the ratio of A 5/10, B 3/10 and transfer to reserve 2/10. Their balance Sheet on 31st March 1994 was as follows:

B died on 1st April, 1994. Besides his capital and reserves, B's legal representatives are entitled to:

(i)                   His share of goodwill, based on the total profits of the last three years, which were Rs. 10,300; Rs. 15,100 and Rs. 13,600.

(ii)                 His share of insurance policy.

Assets were revalued as follows:

Fixed Assets Rs. 1,20,000; Rs. 2,000 out of debtors are bad and a provision of 5% is to be made for bad debts and 2% for discount on debtors. Prepaid insurance is Rs. 490 and outstanding salaries Rs. 3,000. There is an old typewriter not recorded in the books valued at Rs. 4,000.

Prepare Joint Life Policy A/c; Revaluation A/c and B's A/c to be rendered to his legal representatives.

Ans. Profit on Revaluation Rs. 18,248; Amount transferred to B’s Executor’s A/c Rs. 71,643.

PART-B

Q. 16.    Give the main headings under the following items appear in the balance sheet of a company:

(a)            Live stock

(b)            Preliminary expenses.

(c)            Acceptances

(d)            Securities premium account.                                                                                                             (2)

Q. 17.    Briefly explain two objectives or two limitations of financial statements analysis.                               (2)

Q. 18.    What is meant by Funds From Operations?                                                                                                   (2)

Q. 19.    Calculate the Gross Profit Ratio from the following information:

Rs.

Credit sales                                                                                   3,00,000

Cash Sales (being 25% of total sales)

Purchases                                                                                      3,20,000

Excess of closing stock over opening stock                               40,000                                                        (2)

Ans. 30%

Q. 20.    Calculate the following ratios from the details given below:

(i)                   Current Ratio

(ii)                 Liquid Ratio

(iii)                Operating Ratio

(iv)               Gross Profit Ratio

Details:

Current Assets                                                                         70,000

Net Working Capital                                                              30,000

Investments                                                                             30,000

Sales                                                                                       1,40,000

Cost of Goods Sold                                                                68,000                                                                (6)

Ans. (i) Current Ratio 1.75:1 (ii) Liquid Ratio 1:1 (iii) Operating Ratio 48.57% (iv) Gross Profit Ratio 51.43%

Q. 21.    From the following Balance Sheets of X Ltd., you are required to prepare a Cash Flow Statement:

Additional Information:

(i)                   Machinery whose original cost was Rs. 50,000 was sold for Rs. 10,000 during the year. Accumulated depreciation on this machinery was Rs. 26,000.

(ii)                 Depreciation on Machinery charged during the year Rs. 20,000.

(iii)                Dividend paid during the year @ 10% on Equity share Capital.                                                        (6)

Ans. Cash from operating Activities Rs. 1,09,000; Cash used in operating Activities Rs. 84,000; Cash used in financing Activities Rs. 20,000

Or

X Ltd. made a profit of Rs. 5,00,000 after considering the following items:

Rs.

I. Preliminary Expenses Written off                               5,000

II. Depreciation on fixed assets                                     50,000

III. Loss on sale of Machinery                                       20,000

IV. Provision for Doubtful Debts                                   10,000

V. Gain on sale of Land                                                   7,500

The following is the position of current assets and current liabilities:

	1992 Rs.	1993 Rs.
Debtors	52,000	78,000
Bills Receivable Expenses	15,000	12,000
Prepaid Expenses	2,000	3,000
Creditors	40,000	51,000
Bills Payable	19,000	12,000
Expenses Payable	34,000	20,000

Ans. Cash From Operating Activities Rs. 5,43,500