Kendriya Vidyalaya
Sangathan,Kolkata Region
1. Accounting for Partnership Firm- Basics
One Mark Questions
IMORTANT QUESTIONS(Repeated 3 or more time)
1. Where would you record drawing when capital accounts are fixed?
(CBSE 2010)
2. Give the average period in months for charging interest on drawings for the same amount
withdrawn in the beginning of each quarter.
(CBSE 2011)
3.
State any two elements of Partnership Deed.
(CBSE 2009)
4. If the partnership deed does not specify the profit-sharing ratio,in what ratio is the profit or loss
shared by the partner?
(CBSE 2013)
IMORTANT QUESTIONS(Repeated 1 or 2 time)
1. Give two circumtances under which the fixed capital of paetners may change? (CBSE 2009)
2. State the provisions of Partnership Act 1932, in the absence of a partnership deed
regarding (i) Interest on drawing (ii) Interest on advances other than capital (CBSE 2011)
3. Ram and Mohan are partners in a firm without any partnership deed. Their capital are Ram Rs 8,00,000
and Mohan Rs 6,00,000. Ram is an active partner and look after the business. Ram wants that profit
should be shared in proportion of capitals. State with reason whether-his claim is valid or not.
(CBSE 2008)
Three or four marks Questions
IMORTANT QUESTIONS(Repeated 3 or more time)
1. K and P were partners in a firm sharing profits in 4:3 ratio.Their capitals on 1.4.2009 were: K Rs 80,000
and P Rs 60,000. The partnership deed provided as follows:
(1) Interest on capital and drawings will be allowed and charged @ 12% p.a. and 10% p.a. respectively.
(2) K and P will be entitled to get monthly salary of Rs 2,000 and Rs 3,000 respectively.
The profits for the year ended 31.3.2010 were Rs 1,00,300. The drawings of K and P were Rs 40,000 and
Rs 50,000 respectively. Interest on K’s drawings was Rs 2,000 and P’s drawings Rs 2,500.
Prepare Profit and Loss Appropriation A/C assuming that the capitals of the partners were fluctuating.
(CBSE 2011)
2. Ahmad, Bheern and Daniel are partners in a firm. On lst April. 2011 the balance in their capital accounts
stood at Rs 8,00,000 Rs6,00,000 and 4,00,000 respectively. They shared profits in the proportion of 5:3:2
respectively. Partners are entitled to interest on capital @ 5% per annum and salary to Bheem @ Rs 3,000
per month and a commission of Rs 12,000 to Daniel as per the provisions of the partnership deed.
Ahmad’s share of proiit, excluding interest on capital, is guaranteed at not less than Rs 25,000 pa.
Bheem’s share of proiit, including interest on capital but excluding is guaranteed at not less than Rs
55,000 p.a. Any deficiency arising on that account shall be met by Daniel. The profit of the firm for the
year ended 3lst March, 2012 amounted to Rs 2,16,000. Prepare ‘Profit and Loss Appropriation Account’
for the year ended 3 lst March, 2012.
{CBSE (AI) 2013}
3. G, H, and R were partners in a firm sharing profits in the ratio of 7 : 4 : 9. The fixed capitals were G—
2,00,000; H— 75,000 and R --4 3,50,000.
Partnership Deed provided for the following:
(i) Interest on capital @ 9% p.a.
(ii) Salary of Rs 6,000 per month to H.
(iii) Interest on drawing @ 6% p.a.
During the year ended 31st December, 2009, the firm earned a profit of Rs 1,70,000. Interest on G’s
drawings was Rs 750, on H’s drawings Rs 450 and on R’s drawings Rs 1,250.
Prepare the Profit and Loss Appropriation Account for the year ended 315t December, 2009. (CBSE Delhi
2010)
IMORTANT QUESTIONS(Repeated 1 or 2 time)
1. A, B and C are partners in a firm. On 1.4.2005 their capitals stood at Rs 50,000; 25,000 and 25,000
respectively. As per the provisions of the Partnership Deed:
(i) C was entitled for a salary of Q Rs 5,000 p.a.
(ii) Partners were entitled to interest on capital @ 5% p.a.
(iii) Profits were to be shared in the ratio of partners’ capitals.
The net profit for the year 2005—06 of Rs 33,000 was distributed equally without providing for the
above terms.
Pass an adjustment entry in Journal to rectify the above error.
(CBSE Delhi 2007 C)
2. Kumar and Raja were partners in a firm sharing profits in the ratio of 7 : 3. Their fixed capitals
were: Kumar - 9,00,000 and Raja - 4,00,000. The Partnership Deed provided the following but the
profit for the year was distributed without providing for:
(i) Interest on capital @ 9% pa.
(ii) Kumar’s salary - 50,000 per year and Raja’s salary - 3,000 per month.
The profit for the year ended 31st March, 2007 was Rs 2,78,000. Pass adjustment entry.
(CBSE 2008)
3
A and B are partners in a firm sharing profits and losses in the ratio of 3 : 2. following was the Balance
Sheet of the firm as on 31-3-2010: ’
Capitals: A
B
60,000
20,000
Sundry Assets
80,000
80,000
80,000
The profits Rs 30,000 for the year ended 31-3-2010 were divided between the partners without
without allowing interest on capital @ 12% p.a and salary to A @ Rs 1,000 per month. During the year, A
withdrew Rs 10,000 and B Rs 20,000.
Pass the necessary adjustment journal entry and show your working clearly. (CBSE Delhi 2011 )
2. Change in Profit Sharing Ratio
One mark Question
IMORTANT QUESTIONS(Repeated 3 or more time)
1. What is Sacrificing Ratio?
(CBSE 2008, 2011)
2. Sacrificing Vs Gaining Ratio
(CBSE 2012)
IMORTANT QUESTIONS(Repeated 1 or 2 time)
1. Define Goodwill.
2. Define hidden Goodwill.
3. What is the nature of Revaluation A/C
(CBSE 2008)
(CBSE 2011)
(CBSE 2009)
Three or four marks Questions
IMORTANT QUESTIONS(Repeated 3 or more time)
1. A partnership firm earned net profit during the last three years as follows:
Net Profit 2007—2008 1,90,000 2008—2009 2,20,000 2009—2010 2,50,000
The capital employed in the firm throughout the above mentioned period has been Rs 4,00,000. Having
regard to the risk involved, 15% is considered to be a fair return on the capital. Theremuneration of all
the partners during this period is estimated to be Rs 1,00,000 per annum. Calculate the value of
goodwill on the basis of (i) two years' purchase of super profits earned on average basis during the
above mentioned three years and (ii) by Capitalisation Method.
( CBSE AI 2011)
2. Anita, Asha and Amrit are partners sharing profltS in the ratio 0f 3 : 2 : 1 respectively. From 1st January,
2010, they decided to share profits in the ratio of 2 : 3 : 1. The Partnership Deed provides that in the
event of any change in profit- sharing ratio, the goodwill should be valued at three years’ purchase of the
average of five years’ profits. The profits and losses of the preceding five years are: Profits: 2005—
1,20,000; 2006— 3,00,000; 2007— 3,40,000; 2008— 3,80,000; Loss: 2009— 1,40,000.
Showing the working clearly, give the necessary Journal entry to record the above change.
(CBSE Delhi 2010 C)
3. J and K are partners in a firm. Their capitals are: J -3,00,000 and K -2,00,000. During the year ended 31
3.2010 the firm earned a profit of Rs 1,50,000. Assuming that the normal rate of returns 20%, calculate the
value of goodwill of the firm:
(i) By capitalisation method and
(ii) By super profit method if the goodwill is valued at 2 years’ purchase of super profits.
[CBSE (F) 20111]
IMORTANT QUESTIONS(Repeated 1 or 2 time)
1. Suman and Poonam were partners in a firm sharing profits in 5: 3 : 2 ratio. From lst March. 2006 they
decided to change it to 3 : 1. For this purpose the goodwill of the firm was valued at Rs 1,20,000.
Pass the necessary Journal entry for the treatment of goodwill.
(AI 2006 C)
2. X Yand Z were sharing profits and losses in the ratio of 5 : 3 : 2. They decided to share future profits and
losses in the ratio of 2 : 3 : 5 with effect from lst April, 2007. They decided to record the effect of the
following, without affecting their book values:
(i) Profit and Loss Account - 24,000
(ii) Advertisement Suspense Account - 12,000
Pass the necessary adjusting entry.
( 2009)
3. Admission of New partner
One Mark Questions
IMORTANT QUESTIONS(Repeated 3 or more time)
1. On 1st March, 2006, A and C admitted D into the partnership, their Pofit sharing ratio being 5 : 4 : 3
respectively. Assuming before admission the profit sharing ratio of A and C was equal, find the
sacrificmg ratlo.
(CBSE 2006)
2. A and B are partners in the ratio of 5 : 4. They admit C for 1/ 10th share, which he acquires equal
proportion from both. Find the new profit-sharing ratio.
(CBSE 2009)
3. A and B are partners sharing profits in the ratio of 5 : 4. They admit C for 1/3 share, which he
acquires in equal proportion from both. Find out new profit- sharing ratio.
(CBSE 2011 )
IMORTANT QUESTIONS(Repeated 1 or 2 time)
1. State two rights that a newly admitted partner acquires in the firm.
2. Give two rights acquired by new partner.
(CBSE 2011)
(CBSE 2014)
Three or Four Marks Question
IMORTANT QUESTIONS(Repeated 3 or more time)
1. A and B were partners in a firm sharing profits in the ratio of 3 : 2. They admitted C and D as new
partners. The new profit-sharing ratio will be 2 : 2:1:1. C and D brought-in Rs 2,75,000 each for their
respective capitals and also necessary amount of premium for goodwill in cash. Goodwill was valued at
Rs 2,40,000 for the firm. Calculate the sacrificing ratio of A and B and pass the necessary Journal
entries for the above transactions in the books of the firm.
(CBSE 2005)
2. (i) A and B are partners in a firm sharing profits in the ratio of 3 : 2. C is admitted as a partner. A and B
surrender 1/2 of their respective share in favour of C. Find the new prom-sharing ratio and also the
sacrificing ratio.
(ii) C is to bring his share of premium for goodwill in cash. The goodwill of the firm is estimated at Rs
40,000. Pass the necessary Journal entries for the record of goodwill in the above case.
(CBSE 2006)
3. Hari, Ravi and Kavi were partners in a firm sharing profits in the ratio of 3 : 2 : 1. They admitted Guru as a
new partner for 1/7th share in the profits. The new profit-sharing ratio will be 2 : 2 : 2 : 1 respectively.
Guru brought in Rs 3,00,000 for his capital and Rs 45,000 for his 1/7th share of goodwill. Showing your
working clearly. pass the necessary Journal entries in the books of the firm for the above mentioned
transactions.
(CBSE 2007)
IMORTANT QUESTIONS(Repeated 1 or 2 time)
1. Saloni and Shrishti were partners in a firm sharing profits in the ratio of 7 :3. Their capitals were
2,00,000 and 1,50,000 respectively. They admitted Aditi on lst April, 2013 as a new partner for 1/6th
share in future profits. Aditi brought Rs 1,00,000 as her capital. Calculate the value of goodwill of the
firm and record necessary journal entries for the above transaction on Aditi's admission.
[CBSE Delhi 2014]
2. Mamta and Seema are partners in a lirm, sharing profits in the ratio of 3:2. They admit Rakhi a partner
with l/4th share in the profits of the firm. Rakhi brings -8,00,000 as per share of capital. The value of the
total assets of the firm was Rs 16,00,000 and outside liabities were vlued at Rs 2,00,000 on that date.
Give the necessary journal entry to record goodwill with your workings.
[CBSE (F) 2013]
Six or Eight Marks Question
IMORTANT QUESTIONS(Repeated 3 or more time)
1. On 31st December, 2004, the Balance Sheet of A and B, who are partners in a firm sharing profits in the
ratio of 3 : 2 was:
Liabilities
Capital A/cs
Assets
A
10,000
B
8,000
General Reserve
Workmen’s Compensation Fund
Creditors
15,000
5,000
12,000
50,000
Plant and Machinery
10,000
Land and Building
Debtors
8,000
12,000
Less: Provision for
Doubtful Debts
1,000
11,000
Stock
12,000
Cash
9,000
50,000
They agreed to admit C into partnership for 1/5th share of its profits on the following terms:
(i) Provision for Doubtful Debts would be increased by Rs 2,000.
(ii) The value of Land and Building would be increased to Rs 18,000.
(iii) The value of Stock would be increased by Rs 4,000.
(iv) The liability against Workmen’s Compensation Fund is determined at Rs 2,000. ‘
(v) C brought in as his share of goodwill Rs 10,000 in cash.
(vi) C would bring further cash as would make his capital equal to 20% of the total capital of the new firm,
after the above revaluation and adjustments are carried out.
Prepare Revaluation, Capital and Balance sheet of firm after admission of C.
(CBSE 2005 c)
2. On 31st March, 2009, the Balance Sheet of Ram and Shyam, who were sharing profits in the ratio of 3 :
1 was as follows:
Liabilities
Creditors
Employees’ Provident Fund
General Reserve
Capital A/c
Ram
Shyam
2,800
1,200
2,000
6,000
4,000
16,000
Assets
Cash at Bank
Debtors
6,500
Less: Reserve for Bad Debts 500
Stock
Investments
2,000
6,000
3,000
5,000
16,000
They decided to admit Mohan on lst April, 2009 for 1/ 5th share on the following terms:
(i) Mohan shall bring - 6,000 as his share of premium.
(ii) That unaccounted accrued income of - 100 be provided for.
(iii)
The market value of investments was - 4,500.
(iv) A debtor Whose dues of - 500 were written off as bad debts paid -400 in full settlement.
(v) Mohan to bring capital to the extent of 1/5th of the total capital of the new firm.
Prepare the Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of the new firm.
(CBSE Delhi, AI and Foreign 2010)
3. X and Y were partners sharing profits in the ratio of 2:1. Their Balance Sheet as on 31st march 2011
Was as fallowsLiabilities
Assets
Provision for bad debts
250
Cash
18,250
Sundry Creditors
59,000
Debtors
15,000
Capital A/cs:
Stock
32,000
X
27,000
Land and Building
30,000
Y
18,000
45,000
Profit and Loss Account
9,000
1,04,250
1,04,250
Z was admitted to the partnership with effect from lst April, 2011 on the following terms:
(a) He will bring Rs 15,000 as his capital for one-fourth share and pay Rs 6,000 for goodwill, half of which
was to be withdrawn by X and Y.
(b) There is likely to be a claim against the firm for damages, a provision of Rs 1,500 was to be made for
the same.
(c) A bill for Rs 1,300 for electric charges has been omitted, now it is to be provided for.
(d) A provision of 5% on Debtors was to be created for doubtful debts.
(e) Included in Sundry Creditors was an item of Rs 1,200 which was not to be paid and therefore had to be
written back.
After making the above adjustments, the capital accounts of X and Y were to be adjusted on the basis of
2’s capital. Actual cash was to be brought in or to be paid off as the case may be.
Prepare Revaluation Account, Capital Accounts of the partners and the Balance Sheet of the new firm.
[CBSE (F) 2012]
IMORTANT QUESTIONS(Repeated 1 or 2 time)
1. S and T were Partners in a firm sharing profits in the ratio of 7 : 3. Their Balance Sheet on 3lst
March, 2010 was as follows:
Liabilities
Creditors
Bank Overdraft
General Reserve
Capital Accounts:
S
50,000
T
40,000
Assets
40,000
20,000
10,000
Bank
Debtors
Less: Provision
Stock
Machinery
36,000
46,000
2,000
44,000
50,000
30,000
90,000
1,60,000
1,60,000
On lst April, 2010, they admitted R as a new partner for 1/4th share in profits on the following
terms:
(1) R will bring Rs 30,000 for his capital and Rs 10,000 for goodwill premium.
(ii) 20% of General Reserve will be transferred to provision for bad and doubtful debts.
(iii) Stock and Machinery will be depreciated by 40%.
(iv) Capital of S and T will be adjusted on the basis of R’s Capital, for this purpose actual cash be
brought in or paid off to S and T as the case may be.
Prepare Revaluation Account ,Partners’ Capital Accounts and Balance Sheet of the firm.
(CBSE –F-2011)
2. X and Y were partners in a firm sharing profits in 3:2 ratio. Z was admitted as a new partner for 1/4th
share in the profits on 1st April, 2005. The Balance Sheet of the firm as at 31st March, 2005 was:
Libilities
Assets
Ceditors
10,000
Cash
10,000
Genera Reserve
8,000
Debtors
9,000
X; Capital
48,000
Stock
10,000
y's Capital
34,000
Furniture
6,000
Machinery
20,000
Building
45,000
1,00,000
1,00,000
The terms of agreement on Z’s admission were:
(i) Z will bring Rs 30,000 for his capital and Rs 15,000 for his share of goodwill.
(ii) Building was valued at Rs 50,000 and Machinery at Rs 18,000.
(iii) The Capital Accounts of X and Ywere to be adjusted in the profit-sharing ratio. Necessary cash was
to be brought in or paid to them as the case may be.
Prepare the Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of X, Yand Z.
(CBSE Delhi 2006 C)
DEATH OF A PARTNER:
1. In the death of a partner, his share in the profit of the firm till the date of his death is
transferred to the:
[CBSE 2015] [1]
a. debit of p & l account
b .credit of p & l account
c. debit of p & l suspense account
d. credit of p & l suspense account
2. A, B and C are partners in a firm whose books are closed on 31st march each year. B died
on 30th june 2009 and according to the agreement, the share of profits of a deceased
Partner up to the date of death is to be calculated on the basis of the average profits for
the last five years. The net profit for the last 5 years have been 2005, Rs 14000, 2006, Rs
18000, 2007, Rs 16000, 2008 Rs 10000(loss) and 2009,Rs 16000
[CBSE 2010]
Calculate B’s share of profits up to the death and pass necessary journal entry. [3]
3. Ali and Arib were partners in a firm sharing profits in the ratio 4:1.They had insured their
lives jointly for Rs 5, 00,000. Ali died three months after the date of last balance sheet.
According to the partnership deed, legal representatives of deceased partner were entitled
to the following payments:
[CBSE 2006 Compt.][4]
i> his share Rs 1, 50,000 as per the last balance sheet.
ii> Interest on capital @ 15% p.a upto the date of death.
iii> his share of profits to the date of death calculated on the basis of the average profits of
the last three years. The net profits of the last three years were Rs 1, 00,000, Rs1, 50,000
and Rs2, 00,000.
Prepare Ali’s capital account to be rendered to his representatives and the executors
account.
4. A,B,C were partners in a firm sharing profits in proportion of their capitals. On 31 st march,
2006their balance sheet was as follows:
[CBSE 2007][4]
LIABILITIES
Rs
ASSETS
RS
Creditors
16,000
General reserve
Capital a/c :
A
40,000
B
60,000
C
1,00,000
12,000
Building
Machinery
Stock
Debtors
Cash
1,40,000
60,000
8,000
12,000
8,000
2,00,000
2,28,000
2,28,000
B died on 30th june,2006 under the partnership agreement the executors of a deceased
partner were entitled to:
i> Amount standing to the credit of deceased partner’s capital account.
ii> Interest on capitals at 12% p.a
iii> Share of goodwill. The goodwill of the firm on B’s death was valued at Rs 2, 40,000.
iv> Share of profit from the closing of last financial year to the date of death on the basis of
last year’s profit. Profit of the year ended 31st march, 2006 was Rs15, 000.
Prepare B’s capital account to be rendered to his executors.
5. P, Q and R were partners in a firm sharing profits in 2:2:1 ratio. The firm close it’s books
on 31st march every year. P died three months after the last accounts were prepared. On
that date the goodwill of the firm was valued at Rs 90,000. On the death of a partner his
share of profits in the year of death was to be calculated on the basis of the average profit
of the last four years. The profits of last four years were:
[CBSE 2008] [4]
Year ended 31.3.2007 Rs 2, 00,000
31.3.2006 Rs 1, 80,000
31.3.2005 Rs 2, 50,000
31.3.2004 Rs 1, 70,000 (loss)
Pass necessary journal entries for the treatment of goodwill and P’s share of profit on his
death. State clearly the calculation of P’s share of profits.
6. Priya , Riya and Siya are partners sharing profits in the ratio of 4:3:1 respectively. It is
provided in the partnership deed that on the death of any partner, her share of goodwill
was to be valued at half of the profits credited to her account during the four previous
completed years.
Riya died on 1st jan 2012. The firms profit for the last four years were: 2008 Rs. 1,20,000, 2009 Rs
80,000, 2010 Rs. 40,000 and 2011 Rs 80,000. Determine the amount that should be credited to Riya
in respect of her share of goodwill. On the date of Riya’s death ,one of the old debtors whose
account was closed last year by transferring his debt amounting to Rs 8,000 to bad debts account
has now promised to pay the amount fully Pass the necessary journal entries for the above
mentioned transactions at the time of Riya’s death.
[CBSE 2012 Compt.] [4]
7. Jag Pravesh and Chander are partners in a firm sharing profits in the ratio 5:3:2 respectively. Firm
close its accounts on 31st march every year. Jag died on 30th September 2012. There was a balance of
Rs 47000 in Jag’s capital account in the beginning of the year. In the event of death of any partner,
the partnership deed provides for the following:
[CBSE 2013 compt.][4]
1> interest on capital will be calculated at the rate of 12% p.a
2> the deceased partner’s representative will be paid Rs 16000 for his share of goodwill.
3 > His share of Reserve fund which is Rs 50000, shall be paid to his executor
4> his share of profit till the date of death will be calculated on the basis of sale. It is also
specified that the sale during the year 2011-12 were Rs 10, 00,000. The sales from 1st april
2012 to 30 th September 2012 were Rs 200000. The profit of the firm for the year ending
31st march,2012 were Rs 1,00,000.
Prepare Jag’s capital accounts to be presented to his representative.
8 . Manika , Sanika and Mansha were partners in a firm sharing profits in the ratio of 2:2:1
respectively on 31st march,2013 their balace sheet was as under:
[CBSE 2014]
[4]
Balance sheet as on 31st March, 2013
liabilities
Rs.
Capitals:
Assets
Rs
Fixed assets
3,60,000
Manika
1,80,000
Stock
60,000
Sanika
1,50,000
Debtors
1,20,000
Mansha
90,000
Cash
2,70,000
4,20,000
Reserve fund
1,50,000
Creditors
2,40,000
810000
810000
Sanika died on 30th June 2013 .it was agreed between her executors and the remaining
partners that:
1>
2>
3>
Goodwill of the firm be valued at 3 years purchases of average profits for the last
4 years. The average profits were Rs 200000
Interest on capital be provided at 12% p.a
Her share in the profits up to the date of death will be calculated on the basis of
a average profits for the last 4 years
Prepare Sanika’s capital account as on 30th june 2013.
9. The following of the balance sheet of ABC as on 31-03-2014
LIABILITIES
Sundry creditors
Reserve fund
Capital :
A 15000
B
7500
C
7500
Rs
300
7500
9000
9000
12000
30000
1500
39300
39300
th
‘C’ died on 30 June 2014 under the terms of partnership deeds, the executors of the
deceased partner were entitled to :
a.
b.
c.
d.
Rs
4500
4800
[CBSE 2015][4]
ASSETS
Cash in hand
Cash at bank
Stock
Debtors
Furniture
Tools
Amount standing to the credit of partner’s Capital account
Interest on capital @ 6% P.A
Share of good will on the basis of twice the average of past three years profits
Share of profit from the closing of last financial year to the date of death on the basis
of last year’s profit. The profits of last 03 years were as follows :
Years
Profit
2011-12
9000
2012-13
10500
2013-14
12000
st
The firms close its books on 31 March every year. The Partners shared profits in the
ratio of their capitals.
Prepare C’s Capital account to be presented to his executors.
10. X, Y and Z were partners sharing profits in the ratio of 3:2:1 on 31 st march 2008 their
balance sheet stood as under:
[CBSE 2009][6]
LIABILITIES
Capital’s A/C
X 75000
Y 70000
Z 50000
creditors
General reserve
Rs
1,95000
72000
24000
ASSETS
Cash at bank
Rs
70000
Investments
50000
patents
15000
stock
Building
25000
75000
machinery
36000
291000
291000
X died on 31st may 2008.it was agreed that
a> Goodwill was valued at 3 years purchase of the average profits of the last 5 years, which
were 2003-RS 40000, 2004- RS 40000, 2005-Rs 30000, 2006-Rs40000 and 2007-Rs50000.
b> Machinery was valued at Rs 70000 patent Rs 20000 and building at Rs 66000.
c> For the purpose of calculating x’s share of profits till the date of death, it was agreed that
the same be calculated based on the average profits for the last 2 years
d> The executor of the deceased partner is to be paid the entire amount due by means of a
cheque prepare x’s capital account to be rendered to his executor and also a journal entry
for the settlement of the amount due to the executor.
11. The balance sheet of Sindhu, Rahul, and Kamlesh who were sharing profits in the Ratio
3:3:4 respectively as on 31st march ,2012 was as follows:
[CBSE 2013][6]
Liabilities
General reserves
Bills Payable
Loan
Capitals :
Sindhu 120000
Rahul
100000
Kamlesh 80000
Amt .
10000
20000
24000
300000
354000
Assets
Cash
Stock
Investment
Amt .
32000
88000
94000
Land and building
Sindhu’s Loan
120000
20000
354000
Shindhu died on 31st July 2012.The partnership deed provided for the following on the death
of a partner:
(a) Goodwill of the firm be valued at two years purchases of average profits for the last
three years which were Rs 80000.
(b) Sindhu’s share of profits till the date of his death was to be calculated on the basis of
sales. Sales for the year ended 31st march 2012, amounted to Rs 800000 and that from 1st
april to 31st july 2012 Rs 300000. The profit for the year ended 31 st march 2012 was Rs
200000.
(c) Interest on capital was to be provided @6%p.a
(d) According to Sindhu’s will, the executor should donate his share to Matrichayya-an
orphanage for girls.
Prepare Sindhu’s capital account to be rendered to his executor. Also identify the value
being highlighted in the question.
12. A, B,C were partners sharing profits in the ratio of 5:3:2 on 31 st march 2005 their balance
sheet was under
[CBSE 2006][6]
LIABILITIES
Creditors
Reserve
A’s capital 30,000
B’s capital 25,000
C’s capital 15000
Rs
7,000
10,000
70,000
87,000
ASSETS
Building
Machinery
Stock
Patents
Rs
20,000
30,000
10,000
6,000
Debtors
cash
8,000
13,000
87,000
B died on 1st October 2005. It was agreed between his executors and the remaining
partners that:
i) goodwill to be valued at 2 years purchase of the average profit of the previous five years
which were :
2001: RS 15000; 2002: Rs 13000; 2003:Rs 12000 2004: Rs 15000 ; and 2005 : Rs 20000
ii) patent to be valued at Rs 8000; Machinery at Rs28000, Building at Rs 30000
iii> profits for the year 2005-06 be taken as having accrued at the same rate as that of the
previous year.
iv> Interest on capital to be provided at 10% p.a
v> A sum of Rs 4250 to be paid immediately to the executor
Prepare B’s capital a/c and B’s executor’s account at the time of his death.
13.
X, Y and Z were partners in a firm sharing profit and losses in the ratio of 5:3:2 on
31st march 2010
[CBSE 2011][8]
Their balance sheet was as found:
LIABILITIES
Capital a/c
X: 75,000
Y:
62500
Z:
37500
Sundry creditors
Rs
1,75000
42500
217500
st
X died on 31 July, 2010. It was agreed that:-
ASSETS
Building
Patents
Machinery
Stock
Debtors
Cash at bank
Rs
50000
15000
75000
37500
20000
20000
217000
a> goodwill be valued at 2 ½ years purchase of the average profits of the last four years,
which was as follows
Yearprofits
2006-07 32500
2007-0830000
2008-0940000
2009-2010- 37500
b> Machinery be valued at Rs 70000, patents at Rs 20000and building at Rs 62500.
c> For the purpose of calculating z’s share of profit in the year of his death the profit in
2010-2011 should be taken to have been accrued on the same scale as in 2009-10.
d>A sum of Rs 17500 was paid immediately to the executor of z and the balance was paid in
04 half yearly installments together with interest at 2% p.a starting from 31.01.2011.
Give necessary journal entries to record the above transactions and z’s executors account
till the payment of installment due on 31st January,2011.
Note:
I.
Type and pattern of most of the question are same but all are not the
same questions.
II.
Most of the year (10 year’s) one or two questions either from short
answer or long answer is asked by the CBSE Board paper.
RETIREMENT OF A PARTNER
1. Give the Journal entry to distribute workmen compensation reserve of Rs 70,000 at the
time of retirement of Neeti, when there is a claim of Rs 25,000 against it. The firm has three
partners Raveena, Neeti & Rajat.
[CBSE 2013][1]
2. On the retirement of a partner how is the profit sharing ratio of remaining partners
decided?
[CBSE 2013]Comp [1]
3. X, Y, Z are partners in a firm sharing profits in the ratio 3:2:1. On 1 st april, 2009,Y retires
from the firm . X and Z agree that the capital of the new firm shall be fixed at Rs 2, 10,000 in
the profit sharing ratio. The capital accounts of X and Z after all adjustments on the date of
retirement showed balances of Rs 145000 and Rs 63000 respectively. State the amount of
actual cash to be brought in or to be paid off to the partners.
[CBSE 2010] [3]
4. X Y and Z were partners sharing profits in the ratio of 1/2,3/10,and 1/5 . X retired from
the firm. Calculate the gaining ratio of the remaining partners.
[CBSE 2014][1]
5. A,B and C are partners in a firm sharing profits in the ratio 6:5:4.Their capitals were A,
Rs 100000; B, Rs 80000; C Rs 60,000 respectively. on 1st april,2009,C retired from the firm
and the new profit sharing ratio between A and B was decided as 11:4.on C’s retirement ,
the goodwill of the firm was valued at Rs 90000.
[CBSE 2010] [4]
Showing your calculations clearly, pass necessary journal entry for the treatment of goodwill
on C’s retirement.
6. A, B,C and D are partners sharing profits in the ratio of 3:3:2:2 respectively. D retires
and A,B and C decide to share the future profits in the ratio 3:2:1. Goodwill of the firm is
valued at Rs 600000. Goodwill already appears in the books at Rs 450000. The profits for the
1st year after D’s retirement amount to Rs 12, 00,000. Give necessary
Journal entries to record goodwill and to distribute the profits. Show your calculations
clearly.
[CBSE 2012] [4]
7. Nandan, John and Rosa are partners sharing ratio 4:3:2.on 1st april 2012, john gave a
notice to retire from the firm .Nandan and Rosa decided to share future profits in the ratio
1:1. The capital account of Nandan and Rosa after all adjustment showed a balance of
Rs43000 and Rs 80500 respectively. The total amount to be paid to john was Rs 95500. This
amount was to be paid by nandan and Rosa in such a way that their capitals become more
proportionate to their new profit sharing ratio.
Pass necessary journal entries in the books of the firm for the above transactions .show your
working clearly.
[CBSE 2013][4]
8. X,Y,Z are in partnership sharing profits in the ratio of 5:3:2. Their balance sheet as at 1st
January, 2006, the day Y decided to retire was:
[CBSE 2006] [8]
Liabilities
Amount Rs.
Assets
Amount Rs.
X’s cpital A/C
30,000
Building
25,000
Y’s capital
20,000
Plant & Machinary
15,000
Z’s capital
20,000
Investment
10,000
General Reserve
10,000
Joint life policy
15,000
Sundry Creditors
7000
Debtors
10,000
Bills Payable
3000
Stock
5000
Cash
10,000
90,000
90,000
The terms of retirement were :
1234-
Y sells his share of goodwill to X for Rs 3,000 & to Z for Rs 4,000.
Stock to be appreciated by 20% & Buildings by Rs 5,000.
Joint life policy was surrenderd to the insurance company for Rs 5,000 .
Y is paid off in cash.
Prepare the revaluation A/C , partners capital accounts & the Balance Sheet of the new
firm.
9. R,S,T were partners in a firm sharing profits in the ratio 2:2:1. On 1.4.2004 their balance
sheet were as follows:
[CBSE 2008] [8]
Liabilities
Rs
Assets
Rs
Bank’s loan
Sundry creditors
Capital
R
80,000
S
50,000
T
40,000
P&L Account
12800
25,000
Cash
Stock
Bills receivables
Debtors
Furniture
Plant & Machinery
Building
51300
44,600
10,800
35,600
7,000
19,500
48,000
1,70,000
9,000
2,16,800
2,16,800
S retired from the firm on 1.4.2004 and his share was ascertained on the revaluation of
assets as follows:
Stock Rs 40,000; Furniture Rs 6,000; plant and machinery Rs 18,000; building Rs 40,000 Rs
1,700 were provided for doubtful debts. The goodwill of the firm was valued at Rs 12,000. S
was to be paid Rs 18,000 in cash on retirement and the balance in three equal yearly
installments.
Prepare revaluation account, partner’s capital accounts S’s loan account and balance sheet
on 1.4.2004.
10. A,B and C were in partnership sharing profits in proportion to their capitals. Their
balance sheet on 31st march 2008 was as follows:
[CBSE 2009 ][8]
Liabilities
Rs
Assets
Rs
creditors
15,600
Building
1,00,000
Reserve
6,000
Machinery
48,000
A’s capital
90,000
stock
18,000
B’s capital
60,000
Debtors
C’s capital
30,000
Less: provision for
doubtful debts 400
Cash
2,01,600
20000
19,600
16000
2,01,600
On the above date B retired owing to ill health and the following adjustments were agreed upon:
a- Building be appreciated by 10%
b- Provision for doubtful debts be increased to 5% of debtors
c- Machinery be depreciated by 15%
d- goodwill of the firm be valued at Rs 36000 and be adjusted into capital account of A and C who
will share profits in future in the ratio of 3:1.
e- A provision be made for outstanding repairs bill for Rs 3000
f- Included in the value of creditors is Rs 1800 for an outstanding legal claim, which is not likely to
arise.
g- out of the insurance premium paid this year Rs 2000 is for next year. The amount was debited to
P&L account.
h- The partners decide to fix the capital of the new firm as Rs 120000 in the profit-sharing ratio.
B to be paid Rs 9000 in cash and the balance to be transferred to his loan account.
Prepare the revaluation account, partner’s capital accounts and the balance sheet of the new firm
after B’s retirement.
11. Following is the balance sheet of kusum, sneha and usha as on 31st march, 2009, who have
agreed to share profits and losses in proportion of their capitals. [CBSE 2010] Comp[8]
Balance sheet of kusum, sneha and usha
As on 31st march, 2009
Liabilities
Capital:
Kusum 400000
Sneha 600000
Usha 400000
Employees’ provident
fund
Workmen compensation
fund
Sundry creditors
Rs
Assets
Rs
400000
600000
200000
140000
Land and building
Machinery
Closing stock
Sundry debtors 220000
Less provision for doubtful
debts
20000
Cash at bank
70000
3000
100000
1600000
2,00,000
2,00,000
1600000
On 31st march, 2009, Kusum desired to retire from the firm and the remaining partners
decided to carry on the business. It was agreed to revalue the assets and re-assess the
liabilities on that date, on the following basis:
(i) Land and building to be appreciated by 30%.
(ii) Machinery be depreciated by 30%.
(iii) There were bad debts of Rs 35000.
(iv) The claim on account of workmen compensation fund was estimated at Rs 15000
(v) Goodwill of the firm was valued at Rs 280000 and Kumar’s share of goodwill was adjusted against
the capital accounts of the continuing partners’ sneha and usha who have decided to share future
profits in the ratio 3:4 respectively
(vi) Capital of the new firm in total will be the same as before the retirement of Kusum and will be in
the new profit sharing ratio of continuing partners.
(vii) Amount due to Kusum be settled by paying Rs 100000 in cash and balance by transferring to her
loan account which will be paid later on .
Prepare revaluation account, capital accounts of partners and balance sheet of the firm after
Kusum’s retirement. (8)
12. The balance sheet of Lalit,punit and Rahul who are partners in a firm sharing profits according
to their capital as on 31st march,2012 was as follows:
[CBSE 3]Compt[8]
st
Balance sheet of Lalit, Puneet and Rahul As at 31 march, 2012
Liabilities
Rs
Assets
Rs
Lalit’s capital
320000
building
400000
Puneet’s capital
Rahul’s capital
160000
160000
General reserve
80000
creditors
84000
804000
Machinery
200000
stock
72000
Debtors
80000
less :provision for bad
debts 4000
Cash in bank
76000
56000
804000
On that date Puneet decided to retire from the firm and was paid for his share in the firm
subject to the following:
1- Building was to be appreciated by 20%
2- Provision for bad debts to be increased to 15% on debtors.
3- Machinery to be depreciated by 20%
4- Goodwill of the firm to be valued at Rs 280000 and the retiring partner’s share is adjusted
through the capital accounts of remaining partners.
5- The capital of the new firm be fixed at Rs 4, 80,000.
Prepare revaluation account, capital accounts of the partners, bank account and the balance
sheet after Puneet’s retirement.
13. L, M and N were partners in a firm sharing ratio in 2:1:1. On 1 st April, 2013 their balance
sheet was as follows:
[CBSE 2014] [8]
BALANCE SHEET OF L, M AND N
As at 1st April, 2013
Liabilities
Rs
Assets
Rs
Capitals:
Land
800000
L 600000
Building
600000
M 480000
Furniture
240000
N 480000
Debtors 400000
1560000
General reserve
Workmen’s
Compensation fund
creditors
440000
3,60,000
Less:
provision 20000
380000
Stock
440000
Cash
140000
240000
2600000
2600000
On the above date N retired.
The following were agreed:
1- Goodwill of the firm was valued at Rs 600000.
2- Land was to be appreciated by 40% and building was to be depreciated by 100000.
3- Furniture was to be depreciated by Rs 30000
4- The liabilities for workmen’s compensation fund was determined at Rs 100000.
5- Amount payable to N was transferred to his loan account.
6- Capitals of L and M were to be adjusted in their new profit sharing ratio and for this
purpose current accounts of the partners will be opened.
Prepare revaluation account, partner’s capital account and the balance sheet of the new
firm.
14. Xavier, Yusuf and Zaman were partners in a firm sharing profits in the ratio of 4:3:2.On
1.4.2014 their balance sheet was as follows:
[CBSE 2015] [8]
Liabilities
Rs
Assets
Rs
Sundry creditors
41400
Cash at bank
33000
Capital accounts:
Sundry debtors 30450
Xavier 120000
Less: provision for bad 29400
debts
Rs1050
48000
Stock
51000
plant and machinery
1,50,000
Land and building
Yusuf RS 90000
Zaman Rs60000
2,70,000
311400
311400
Yusuf had been suffering from ill health and thus gave a notice of retirement from the firm.
An agreement was, therefore, entered into as on 1.4.2014, the terms of which were as
follows:
(i) That land and building be appreciated by 10%
(ii) The provision for bad debts is no longer necessary
(iii) That stock be appreciated by 20%
(iv) That goodwill of the firm be fixed at Rs 54000. Yusuf’s share of the same be adjusted
into Xavier’s and Zaman’s Capital accounts, who are going to share future profits in the ratio
of 2:1.
(v) The entire capital of the newly constituted firm be readjusted by bringing in or paying
necessary cash so that the future capitals of Xavier and Zaman will be in their profit sharing
ratio.
Prepare revaluation account and partner’s capital accounts.
Note:
I.
II.
III.
IV.
Most of the year retirement questions are always choice with admission
Out of 10 year’s one question must be asked from the retirement chapter either for
8 marks or 4 marks
The pattern and type of the Board question more or less same but the same
question in all together are not asked.
The students may benefited if they go for practice with this 10 year’s question
papers for their Board examination.
Chapter-1 Accounting for partnership- Dissolution of Partnership
1. Distinguish between ‘Dissolution of partnership’ and ‘Dissolution of partnership firm’ on the
basis of Court’s intervention.
(CBSE, 2014)
1
2. Give any one difference between reconstitution of a firm and dissolution of a firm.
(CBSE, 2011)
1
3. Mala, Neela and Kala were partners sharing profits in the ratio of 3 : 2 : 1. On 1.3.2015 their
firm was dissolved. The assets were realized and liabilities were paid off. The accountant
prepared Realisation Account, Partners’ Capital Accounts and Cash Account, but forgot to
post few amounts in these accounts. You are required to complete these below given
accounts by posting correct amounts.
Particulars
Amount
(Rs.)
To sundry assets
Machinery
10000
Stock
21000
Debtors
20000
Prepaid insurance
400
Investments
3000
To Mala’s capital A/C
-Sheela’s loan
To cash
-creditors paid
To cash
dishounered bill paid
To cash
-expenses
Particulars
15000
By provision for bad debts
By sundry creditors
By Sheela’s loan
By repairs and renewal reserve
By cash assest sold:
Machinery
8000
Stock
14000
Debtors
16000
By Mala’s capital
- investments
5000
………………………………
54400
13000
Amount(R
s.)
1000
15000
13000
1200
38000
2000
…………
800
88,200
88,200
REALISATION ACCOUNT
(CBSE, 2015)
6
PARTNERS’ CAPITAL ACCOUNT
Dr.
Particulars
................
................
To cash
Cr.
Mala
(Rs.)
............
...
............
...
12000
23000
Neela
(Rs.)
.............
...
.............
..
9000
15000
Kala
(Rs.)
............
..
............
.....
Particulars
...............
..............
Mala
(Rs.)
............
...
............
...
Neela
(Rs.)
............
..
............
..
23000
15000
By cash
3000
Kala
(Rs.)
...........
...
...........
...
1000
3000
Cash Account
Particular
To Balance b/d
To Realisation Account
-Sale of assets
To kala’s capital Acount
Amount
(Rs.)
2,800
38,000
1,000
Particular
Amount (Rs.)
By Realisation A/c
- Creditors paid
By Dishonoured bill
………………………..
By Mala’s capital
By Neela capital
15,000
41,800
5,000
………
12,000
9,000
41,800
4. Sanjay and Sameer were partners in a firm sharing profit in the ratio of 2:3. On 31.3.2011
their Balance sheet was as follows:
Balance Sheet of sanjay and sameer as on 31st March, 2011
Liabilities
Creditors
Workmen’s Compensation Fund
Capitals :
Sanjay
2,00,000
Sameer
3,00,000
Amount (Rs.)
1,05,000
1,00,000
Bank
Debtors
Stock
Land and building
Amount (Rs.)
1,55,000
1,50,000
1,00,000
3,00,000
5,00,000
7,05,000
7,05,000
The firm was dissolved on 1.4.2011 and the assets and liabilities were settled as follows:
a. Sanjay agreed to take over Land and building as Rs.3,50,000 by paying cash.
b. Stock was sold for Rs.90,000.
c. Creditor accepted Debtors in full settlement of their claim.
Pass necessary journal entries for dissolution of the firm.
(CBSE, 2012)
6
5. Pass the necessary journal entries on the dissolution of the firm of R and L after the various
assets ( other than cash) and outside liabilities have been transferred to Realisation Account:
(i)
R paid creditors Rs.17,000 in full settlement of their claim of Rs 20,000
(ii)
L agreed to pay his wife’s loan Rs.70,000.
(iii)
Stock Rs.40,000 was taken over by R for Rs.39,000.
(iv)
Other assets realized Rs.39,000.
(v)
Expenses of realization Rs.4,900 were paid by L.
(vi)
Loss on dissolution Rs.9,000 was divided between R and L in the ratio of 3:1.
(CBSE, 2011)
6
6. Pass the necessary journal entries for the following transactions on the dissolution of the
firm of James and Haider who were sharing profits and losses in the ratio of 2:1. The various
assets
( other than cash) and liabilities have been transferred to Realisation account:
(i)
James agreed to pay off his brother’s loan Rs.10,000.
(ii)
Debtors Realised Rs.12,000.
(iii)
Haider took over all investment at Rs.12,000
(iv)
Sundry creditor Rs.20,000 were paid at 5% discount.
(v)
Realisation Expenses amounted to Rs.2,000
(vi)
Loss on Realisation was Rs.10,200.
(CBSE, 2007)
6
7.
Hanif and Jubed were partners in a firm sharing profits in the ratio of their capitals. On 31st
March, 2013 their Balance Sheet was as follows :
Balance Sheet of Hanif and Jubed as on 31st March, 2013
Liabilities
Creditors
Workmen’s Compensation Fund
General Reserve
Hanif’s Current Account
Capitals :
Hanif
10,00,000
Jubed
5,00,000
Amount (Rs.)
1,50,000
3,00,000
75,000
25,000
Bank
Debtors
Stock
Furniture
Machinery
Jubed’s current account
Amount (Rs.)
2,00,000
3,40,000
1,50,000
4,60,000
8,20,000
80,000
15,00,000
20,50,000
20,50,000
On the above date the firm was dissolved.
(i) Debtors were realised at a discount of 5%. 50% of the stock was taken over by Hanif at 10% less
than the book value. Remaining stock was sold for Rs. 65,000.
(ii) Furniture was taken over by Jubed for Rs. 1,35,000. Machinery was sold as scrap for Rs.74,000.
(iii) Creditors were paid in full.
(iv) Expenses on realisation Rs. 8,000 were paid by Hanif.
Prepare Realisation Account.
(CBSE, 2014)
8
8. Prachi,Ritika and Ishita were partners in a firm sharing profits and losses in the ratio of 5:3:2.
Inspite of repeated reminders by the authorities, they kept dumping hazardous material into
a nearby river. The court ordered for the dissolution of their partnership firm on 31st March
2012. Prachi was deputed to realize the assets and pay the liabilities. She was paid Rs.1,000
as commission for her services. The financial position of the firm was as follows:
Liabilities
Creditors
Investment Fluctuation Fund
Capitals :
Prachi
40,000
Ritika
30,000
Amount (Rs.)
10,000
4,500
Furniture
Stock
Investments
Cash
Ishita’s Capital
Amount (Rs.)
37,000
5,500
15,000
9,000
18,000
70,000
84,500
84,500
Following was agreed upon:
Prachi took over investments for Rs.12,500. Stock and furniture realized Rs.41,500. There
was old furniture which has been written off completely from the books. Ritika agreed to
take away the same at the price of Rs.3,000. Compensation paid to the employee amounted
to Rs.8,000. This liability was not provided in the above balance Sheet. Realisation expenses
amounted to Rs.1,000. Prepare Realisation Account. Partner’s Capital accounts and Cash A/c
to close the books of the firm.
(CBSE, 2013)
8
9. A,B and C were partners sharing profit in the ratio of 3:1:1. Their balance sheet as on March
31st 2009, the date on which they dissolve their firm, was as follows:
Liabilities
Amount (Rs.)
Amount (Rs.)
Creditors
6,000
Sundry assets
17,000
Loan
1,500
Debtors
24,200
Capitals :
Less researve for
A
27,500
doubtful debt
1,200 23,000
B
10,000
Stock
7,800
C
7,000
44,500
Bills receivables
1,000
cash
3,200
52,000
52,000
It was agreed that:
a. A to take over bills receivable at Rs.800 debtor amounting to Rs.20,000 at Rs.17,200 and the
creditors of Rs.6,000 were to be paid by him at this figure.
b. B is to take over all stock for Rs.7,000 and some sundry assets at Rs. 7,200 ( being 10% less
than the book value).
c. C is to take over sundry assets at 90% of the book value and assume the responsibility of
discharge of loan together with accrued interest of Rs.300.
d. The expenses of realization were Rs.270.
e. The remaining debtors were sold to a debt collecting agency at 50% of the book value.
Prepare Realisation A/c, Partners Capital a/c and Cash A/c.
(CBSE, 2010)
8
QUESTION BANK (Accounting for Share Capital)
1mark
1)
2)
3)
4)
5)
6)
7)
Give the meaning of registered capital of a company.
What is meant by paid up capital?
What is meant by oversubscription of shares?
What is meant by sweat equity shares?
Give the meaning of Call in Advance?
What is meant by issue of shares for consideration other than cash
What is the maximum amount of discount which may be allowed on reissue
of shares?
8) Explain Private placement of shares.
9) What is meant by forfeiture of shares?
10) YLtd invited applications for issuing 10,00,000 equity shares of Rs 10
each.The public applied for 855000 shares. Can the company proceed for
the allotment of shares? Give reasons.
___________________________________________________________
3 / 4 marks
11) What is minimum subscription?
12) Distinguish between Reserve capital and Capital Reserve.
13) Distinguish between Oversubscription and Undersubscription of shares.
14) What is meant by Issue of Shares at Premium? State the purposes for
which Securities Premium can be utilized as per CA 2013. OR
Xltd has a paid up share capital of Rs 6000000 and a balance of 1500000
in the Securities Premium Reserve account. The company management
does not want to carry over this balance. State the purposes for which
this balance can be utilized.
15) What is meant by forfeiture of shares and surrender of shares?
16) On 1/4/12 Yltd was formed with an authorized capital of Rs 1, 00,
00,000 divided into 200000 shares of Rs 50 each.The company issued
prospectus inviting applications for 180000 shares. The issue price was payable
as : Application Rs 15: Allotment 20 ; Call Balance. The issue was fully
subscribed and the company allotted shares to all the applicants. The company
did not make the call during the year. Show the Share Capital in the Balance
Sheet of the Company as per Sch III , Part I of the Companies Act 2013 and also
prepare Notes to Accounts .
17) On 1/4/12 Xltd was formed with an authorized capital of Rs 10, 00,000
divided into 100000 shares of Rs 10 each. The company issued prospectus
inviting applications for 90000 shares. The company issued prospectus for
85000 shares. During the first year Rs 8 were called. Ram holding 1000 shares
and Shyam holding 2000 shares did not pay first call of Rs 20 .Shyam’s shares
were forfeited after the first call and later on 1500 of the forfeited shares were
reiisued at Rs 6, 8 called up. Show the Share Capital in the Balance Sheet of the
Company as per Sch III , Part I of the Companies Act 2013 and also prepare
Notes to Accounts .
18) Pass necessary journal entries for the following transactions in the
books of Rajan Ltd.
Rajan Ltd purchased a running business from Vikas Ltd for a sum of Rs 250000
payable as Rs 220000 in fully paid equity shares of Rs 10 each and balance by a
bank draft. The assets and liabilities consisted the following:Machinery 90000: Debtors 30000: Stock 50000: Cash 20000 : Creditors 20000.
19) Pass necessary journal entries for the following transactions in the
books of Gopal Ltd;i) Purchased furniture for Rs 250000 from M/s Furniture Mart was made by
issuing equity shares of Rs 10 each at a premium of 25%.
ii) Purchased a running business from Aman Ltd for a sum of Rs 15, 00,000.The
payment of Rs 12, 00,000 was made by issue of fully paid equity shares of Rs
10 each and balance by a bank draft. The assets and liabilities consisted of the
following:Plant 350000: Stock 450000; Building 600000: Creditors 100000.
20) Meena Ltd issued 60000 shares of Rs 10 each at a premium of Rs 2
payable as 3 on application and the balance on 1st and final call. Application
was received for 102000 shares. The directors resolved to allot as follows:
A) Applications of 60000 shares
30000 shares
B) Applicants of 40000 shares
30000 shares
C) Applicants of 2000 shares
Nil
Nikhil who had applied for 1000 shares in Cat A, and Vish who was allotted 600
shares in category B failed to pay the allotment money. Calculate the amount
received on Allotment.
21) Z Ltd issued 40000 shares of Rs 10 each payable as 2 on application,
4 on allotment and the balance in two equal instalments . Application was
received for 80000 shares. The directors resolved to allot as follows:
A) Applications of 50000 shares
B) Applicants of 30000 shares
30000 shares
10000 shares
Neeraj to whom 600 shares were allotted from category (i) failed to pay the
allotment money. Calculate the amount received on Allotment.
22) Xltd forfeited 1000 shares of Rs 10 each ( 8 called up) for non
payment of allotment 5(including 2 premium) .Out of these 800 shares were
reissued at 7 as Rs 8 called up. Journalise
8 marks
23) Petromax Ltd issued 50000 shares of Rs 10 each at a premium of Rs 2 per
share payable as Rs 3 on application ,Rs 5 including premium on allotment and
the balance in equal instalments over two calls .Applications were received
92000 shares and the allotment was done as under:
A) Applicants of 40000 shares
Allotted 30000 shares
B) Applicants of 40000 shares
Allotted 20000 shares
C) Applicants of 12000 shares
Nil
Suresh, who had applied for 2000 shares (Cat A) did not pay any money other
than application money. Chander who was allotted 800 shares (Cat B) paid the
call money due along with allotment. Journalise in the books of Petronas Ltd to
record the above.
24) Moti Ltd invited applications for issuing 10,00,000 shares of 10 each at a
premium of Rs 2 payable as Application 5(including premium) :Allotment 4:
Final call 3 .Application for 1500000 shares were received. Application for
300000 shares were rejected and prorate allotment was made to the
remaining applicants.Excess application money was utilized towards sum due
on allotment. Mr X who applied for 24000 shares failed to pay the allotment
and call money. His shares were forfeited. Out of the forfeited shares 10000
were reissued for Rs 8 fully paid up. Journalise
25)Xltd issued 40000 shares of Rs 10 each at a premium of Rs 2.5 payable as
application 2: allotment 4.5(including premium) and on call 6.Owing to heavy
subscription the allotment was made on pro rata basis as follows:
a) Applicants for 20000 shares were allotted 10000 shares
b) Applicants for 56000 shares were allotted 14000 shares
c) Applicants for 48000 shares were allotted 16000 shares
It was decided to that excess amount received on applications would be
utilized on allotment and the surplus would be refunded.
Ram to whom 1000 shares were allotted, who belongs to category (a) failed to
pay allotment money. His shares were forfeited after the call.
Journalise in the books of Xltd.
Value Based
1) Yltd has made a public issue of 10,00,000 equity shares of 10 each.The
issue is oversubscribed by 100%.The company decides to reject
applications for 500000 Equity shares,250000-750000,and make full
allotment to the remaining applicants. Has the Company in your opinion
not ignored any value?
2) The management of the company adopts the option of writing off
preliminary expenses against Securities Premium Reserve. Do you think
the company has adopted the correct approach and not ignored any
value?
3) The company decides to issue fully paid bonus shares to its shareholders
utilizing the balance in Securities Premium Reserve. Do you think that
the company has adopted the correct approach and just approach and
has not ignored any value.
4) Before forfeiting the shares the Board has deputed a person directing
him to personally visit these two shareholders and serve the forfeiture
notice. What value has been fulfilled by the company in this action?
MARKING SCHEME (NUMERICALS ONLY)
16) Equity & Liability-Shareholders Fund-Share Capital 6300000; Subscribed
but not fully pad up-1800000 x 35
17) Equity & Liability-Shareholders Fund-Share Capital 677000; Subscribed
but not fully pad up 84500 x8 Less Call in arrear 2000 Add share forfeiture
3000
18) Capital Reserve 10000:Vikash Ltd Dr 250000;Equity share capital Cr
220000; Bank Cr 30000
19) i) Securities Premium 50000 ii) Goodwill 200000 ;Aman Ltd Dr
1500000;Equity Share Capital Cr 1200000 Bank Cr 300000
20) Amount Received on allotment 176600; Calls in arrear Nikhil 1000 ;Calls
in arrear Vish 2400
21) Amount received on allotment 78400
22) Capital Reserve 3200
23) Call In Arrear allotment 6000 ; Calls in advance allotment 3200: Call in
arrear (First call 3000; Call in advance 1600 ; Calls in arrear (Final call 3000
Calls in advance 1600
24) Capital Reserve 20000 Amount received on allotment 2940000; Call in
arrear Allotment 60000 ; Calls in arrear 60000 (Final call)
25) Refund 21000 ; Calls in arrear Allotment 2500;Forfeiture 4000
Value Based
1) The company may be legally correct in making allotment in this manner but it has
ignored the value of equal distribution of wealth. It would have been more
appropriate had the company made prorate allotment to all the applicants.
2) The company is legally correct yet it would have been better had it written it off by
debiting it to Statement of PL.I n adopting this approach correct profit or loss for the
year would have been shown for better understanding of users of financial
statements who are not well versed with the analysis.
3) The company has valued the principle of full and fair disclosure for the users of
financial statements and yet kept the interest of the shareholders intact by issuing
them bonus shares.
4) They have fulfilled the value of being just.They ensured that the shareholders get an
opportunity to pay the call money and do not incur the loss.
Chapter-2
Accounting for Debenture
1. What is meant by issue of debentures as collateral security ?
(CBSE, 2014)
2. What is meant by issue of debentures as collateral security ?
(CBSE, 2013)
3. Give any one difference between reconstitution of a firm and dissolution of a firm.
(CBSE, 2011)
4. Why would an investor prefer to invest in the Debenture of a company rather than its
shares?
(CBSE, 2009)
5. Give any one difference between reconstitution of a firm and dissolution of a firm.
(CBSE, 2011)
1
1
1
1
1
6. Tata Ltd. issued 5,000, 10% Debentures of Rs. 100 each on 1st April, 2012. The issue was
fully subscribed. According to the terms of issue, interest on debentures is payable halfyearly on 30th September and 31st March and tax deducted at source is 10%.
Pass the necessary journal entries related to the debenture interest for the halfyearly ending on 31st March, 2013 and transfer of interest on debentures to
Statement of Profit and Loss.
(CBSE, 2014)
3
7. Pass the necessary journal entries for issue of 1,000, 7% debenture of Rs.100 each in the
following cases:
a) Issued at 55 premium and redeemable at 10% premium.
b) Issued at a discount of 5% and redeemable at par.
(CBSE, 2013)
3
8. Nav Lakshmi Ltd. Invited application for issuing 3,000, 12% debenture of Rs.100 each at a
premium of Rs.50 per debenture. The full amount was payable on application. Application
were received for 4,000 debenture. Application for 1,000 debentures were rejected and
application money was refunded. Debenture were allotted to the remaining applicants.
Pass necessary journal entries for the above transaction in the books of Nav Lakshmi
Ltd.
(CBSE, 2012)
3
9. Sarvottam Ltd. Decided to redeem its 1250,12% Debenture of rs.100 each. It purchased 850
Debentures from the open market at Rs.96 per debenture. The remaining Debentures were
redeemed out of profit. The company has already made a provision for debenture
Redemption Reserve in its books.
Pass necessary journal entries for the above transaction in the books of Nav Lakshmi Ltd.
(CBSE, 2012)
3
10. X Ltd. Obtained a loan of Rs.4,00,000 from IDBI Bank. the company issued 5,000,9%
Debenture of Rs.100 each as a collateral security for the same. Show how these item will be
presented in the Balance Sheet of the company.
(CBSE, 2010)
3
11. X Ltd had Rs.10,00,000, 9% debentures due to be redeemed out of profits on October 2009
at a premium of 5%. The Company had a Debenture Redemption Reserve of Rs.4,14,000.
Pass necessary journal entries at the time of redemption.
(CBSE, 2010)
3
12. Why would an investor prefer to invest in the Debenture of a company rather than its
shares?
(CBSE, 2009)
3
13. A) Maneesh Ltd. Took over assets of Rs. 9,40,000 and liabilities of Rs.1,40,000 of Ram Ltd, at
an agreed value of Rs. 7,80,000. Maneesh Ltd. Paid to Ram Ltd. By issue of 9% debentures of
Rs.100 each at apremium of 20%.
Pass journal entries to record the above transaction in the books of mohit Ltd.
B) Give journal entries in each of the following cases if the face value of debenture is Rs.100:
i) A debenture issued at Rs.105 repayable at Rs.100
ii) A debenture issued at Rs.100 repayable at Rs.105
iii) A debenture issued at Rs.110 repayable at Rs.105
(CBSE, 2009)
3
14.
Deepak Ltd purchased furniture Rs.2,20,000 from M/s Furniture mart 50% of
amount was paid to furniture mart by accepting a bill of exchange and for the balance the
company issued 9% debenture of Rs.100 each at a premium of 10% in favour of furniture
mart.
Pass the necessary journal entries in the books of Deepak Ltd. For the above transaction.
(CBSE, 2008)
3
15. ‘Good Blankets Ltd.’ are the manufacturers of woollen blankets. Blankets of the company
are exported to many countries. The company decided to distribute blankets free of cost to
five villages of Kashmir Valley destroyed by the recent floods. It also decided to employ 100
young persons from these villages in their newly established factory at Solan in Himachal
Pradesh. To meet the requirements of funds for starting its new factory, the company issued
50,000 equity shares of Rs. 10 each and 2,000 8% debentures of Rs.100 each to the vendors
of machinery purchased for Rs.7,00,000.
Pass necessary journal entries for the above transactions in the books of the company. Also
identify any one value which the company wants to communicate to the society.
(CBSE, 2015)
4
16. Pass the necessary journal entries for the issue and redemption of debentures in the
following cases:
a) 15,000, 10% debenture of Rs.100 each issued at 10 % premium, repayable at par.
b) 6,00,000,12% debenture of Rs.500 each issued at 5% premium, repayable at 10%
premium.
(CBSE, 2011)
4
17. Pass the necessary journal entries in the books of Varun Ltd. For the following transaction:
a. Issued 58,000,9% debenture of Rs.1,000 each at a premium of 10%
b. Redeemed 450,9% debenture of Rs.100 each by draw of lots.
(CBSE, 2008)
4
18. Pass the necessary journal entries for the issue and redemption of debentures in the following
cases:
a) 15,000, 9% debenture of Rs.250 each issued at 5 % premium, repayable at 15%
premium.
b) 2,00,000,12% debenture of Rs.10 each issued at 8% premium, repayable at par.
(CBSE, 2007)
4
19. Ananya Ltd.’ had an authorized capital of Rs. 10,00,00,000 divided into 10,00,000 equity
shares of Rs.100 each. The company had already issued 2,00,000 shares. The dividend paid
per share for the year ended 31.3.2007 was Rs. 30. The management decided to export its
products to African countries. To meet the requirements of additional funds, the finance
manager put up the following three alternate proposals before the Board of Directors :
(i)
Issue 47,500 equity shares at a premium of Rs. 100 per share.
(ii)
(iii)
Obtain a long-term loan from bank which was available at 12% per annum.
Issue 9% debentures at a discount of 5%. After evaluating these alternatives the
company decided to issue 1,00,000, 9% debentures on 1.4.2008. The face value of each
debenture was Rs. 100. These debentures were redeemable in four instalments starting
from the end of third year, which was as follows :
Year
Amount Rs.
III
10,00,000
IV
20,00,000
V
30,00,000
VI
40,00,000
Prepare 9% debenture account from 1.4.2008 till all the debentures were redeemed.
(CBSE, 2015)
6
Analysis of Financial Statement
Topic:- Companies Balance Sheet as Per Schedule VI of Co.Act 1956(Questions repeated 2 to 3
times)
Q1. Show the major headings on the Liabilities Side of the Balance sheet of a Company as per
schedule VI part I of Companies Act 1956.
(3 marks/CBSE
2008)
Q2. Under what Head and Sub Head the following items will appear in the Balance Sheet of a
company as per revised Schedule VI, part-I of Companies Act 1956.
i) Premium on redemption of debentures
ii) Loose Tools
iii) Balances with Bank.
(3 marks/CBSE 2013)
Q3. State under which major headings the following items will be shown in the Balance Sheet of a
company as per Schedule VI part I of the Companies Act 1956:Interest accrued on investments; Bills receivables; proposed dividend; Unclaimed dividends; Work –
in –progress; Bills payable; Stores and spares parts; provident fund .
(4 marks/CBSE 2010)
Q4. Under Which sub headings will the following items be placed in the Balance Sheet of a company
as per revised Schedule VI part I of the Companies Act, 1956:
1. Capital Reserve
2. Bonds
3. Loans repayable on demand
4. Vehicles
5. Goodwill
6. Loose tools
(3 marks/CBSE 2014)
Q5. Under which major headings and sub-headings the following items will be shown in the Balance
Sheet of a company as per schedule III part I of the Companies Act, 2013:.
(i) Loans provided repayable on demand
(ii) Loose tools
(iii) Goodwill
(iv) Copyrights
(v) Cheques
(vi) general reserve
(vii) stock of finished goods
(viii) 9% debentures repayable after three years
(4 marks/CBSE 2015)
Q5. Under Which Heads and sub headings will the following items be placed in the Balance Sheet of
a company as per revised Schedule III part I of the Companies Act, 2013:
1. Mining Rights
2. Encashment of employee earned leave payable on retirement
3. Loans repayable on demand
4. Vehicles
5. Subsidy reserve
6. Provision for doubtful debts.
(3 marks/CBSE 2013)
---------------------------------------------------------------------------------------------------------------------
Topic:- Tools for Analysis of Financial Statement( Comparative and Common Size Balance Sheet and
Income Statement) (Questions repeated 2 to 3 times)
Q1. State the significance of Analysis of financial statements to the Lenders.
Q2.What is common size statement
2011)
Q3. State the significance of analysis of financial statement to creditors.
(1 mark/CBSE 2009)
(1 mark /CBSE
(1 mark/CBSE 2012)
Q4. State the interest of Trade unions in analysis of financial statement
(1 mark/CBSE 2010)
Q5. List any one objective of analyzing the financial statement (1 mark/CBSE 2013 & 2014)
Q6. State any one objective of financial statement analysis.
State the objective of Financial statement Analysis
(1 mark/CBSE 2013)
(3 Mark/CBSE 2009)
Q7. Which item is assumed as 100 while preparing common size statement of profit and loss?
(1 mark/CBSE 2014)
Q8. from the following information prepare a comparative income statement of Victor Ltd.:
Particulars
31.3.2006
31.3.2007
Sales
Rs.15,00,000
Rs. 18,00,000
Cost of Goods sold
Rs.11,00,000
Rs14,00,000
Indirect Expenses
20% of Gross profit
25% of Gross profit
Income Tax
50%
50%
(3 mark/CBSE 2010)
Q9. With the help of the following information obtained from the books of Raj Silk Mills prepare a
Comparative Income Statement for the year ended 31.03.2010
Particulars
31.3.2009
31.3.2010
Sales
200% of cost of goods sold
300% of cost of goods sold
Cost of Goods sold
Rs.10,00,000
Rs12,00,000
Operating Expenses
10% of cost of goods sold
20% of cost of goods sold
Tax
50%
50%
(3 mark/CBSE 2010)
Q10. From the following statement of Profit and loss of Ajanta Ltd. for the year ended 31.03.2013
prepare a comparative statement of profit and loss:
Particulars
Note No.
2012-2013(Rs.)
2011-2012(Rs.)
Revenue from operations
20,00,000
18,00,000
Other Income
4,00,000
6,00,000
Expenses
19,00,000
17,00,000
Rate of Income Tax
50%
50%
(4 marks/CBSE 2013)
Q11. Following is the income statement of Raj ltd. for the year ended 31-3-2011
Particulars
Income:Sales
Other Income
Amount
Total Income
Expenses:Cost Of goods Sold
Operating Expenses
Total Expenses
2,15,000
2,00,000
15,000
1,10,000
5,000
1,15,000
Tax
40,000
Prepare a common size Income statement of Raj Ltd for the year ending 31-03-2011
(4 marks/CBSE 2011)
Q12. Nishit was the Managing Director of ‘Lalita Electronics Ltd’. He had been earning good revenues
and profits for the company. He believed in giving respect to his subordinates as his moral
responsibility. He was the one who recognized the need to find eco friendly ways to treat waste.
Following is the Comparative Statement of Profit and Loss of ‘Lalita Electronics Ltd.’ for the years
ended 31st March, 2013 and 2014.
Particulars
Note
No.
Revenue from operations
Less: Employee benefit
expenses
Profit Before tax
Tax @30%
Profit after tax
2012-13(Rs.)
2013-14(Rs.)
18,00,000
5,00,000
Absolute
Change
4,00,000
1,00,000
Percentage
Change
28.5
25
14,00,000
4,00,000
10,00,000
3,00,000
7,00,000
13,00,000
3,90,000
9,10,000
3,00,000
90,000
2,10,000
30
30
30
(a) Calculate net profit for the year ending 31st march 2013 and 2014.
(b) Identify any two values which are being communicated to the society in the above case.
(4 marks/CBSE 2015)
Q13. Prepare a Comparative Statement from the following:Particulars
Sales(Revenue from Operations)
Cost Of Goods Sold
Operating expenses
31st March 2007(Rs.)
12,00,000
6,00,000
90,000
31st March 2008
17,50,000
7,50,000
80,000
Interest on Investment Rs.60,000 and Tax payable 50%
(4 Marks/CBSE 2009)
Topic:- Accounting ratios (Same pattern of Questions repeated 2 to 3 times)
Q1. The current ratio of a company is 2.1: 1.2. State with reasons which of the following transactions
will increase, decrease or not change the ratio:(1) Redeemed 9% debentures of Rs. 1,00,000 at a premium of 10%.
(2) Received from debtors Rs. 17,000.
(3) Issued Rs 2,00,000 equity shares to the vendors of Machinery.
(4) Accepted bills of exchange drawn by the creditors Rs.7000.
(4 marks/CBSE 2015)
Q2. Calculate Current Ratio of a company from the following information:
Inventory Turnover Ratio 4 times.
Inventory in the end was Rs. 20,000 more than inventory in the beginning.
Revenue from operation Rs. 6, 00,000
Gross Profit Ratio 25%
Current Liabilities Rs 60,000
Quick Ratio 0.75:1
(4Marks/CBSE 2010)
Q3. Z ltd has a current ratio of 3.5:1 and quick ratio of 1.5 :1 .If the excess of current assets over
quick assets as represented by stock is Rs.60,000, calculate Current Assets and Current liabilities.
(4 Marks/CBSE 2012)
Q4. From the following information , calculate any two of the following ratios:
(a)Debt Equity ratio
(b) Working capital turnover ratio
(c ) Return on investment
Information:- equity share capital Rs.50,000, general reserve Rs 5,000, profit an Loss Account after
tax and interest Rs 15,000, 9% debentures Rs. 20,000,Creditors Rs 15,000, Land and Buildings Rs
65,000, Equipments Rs. 15,000, Debtors Rs. 14,500 and Cash Rs 5,500. Discopunt on issue of shares
Rs 5,000.
Sales for the year ended 31.3.2011 was Rs. 1,50,000. Tax rate 50%.
(4 Marks/CBSE 2011)
Q5. From the following information , calculate any two of the following ratios:
(a)Debt Equity ratio
(b) Net Profit ratio
(c ) Quick ratio
Information:Item
Rs.
Paid up capital
20,00,000
Capital Reserve
2,00,000
9% debenture
8,00,000
Net sales
14,00,000
Gross profit
8,00,000
Indirect Expenses
2,00,000
Current Assets
4,00,000
Current Liabilities
3,00,000
Opening Stock
50,000
Closing Stock is 20% more than the opening stock.
(4 Marks/CBSE 2008)
Q6. (a) Compute ‘ Working Capital Turnover ratio” from the following:Cash sales Rs.1,30,000; Credit sales Rs 3,80,000; Sales return Rs 10,000 ; Liquid Assets Rs 1,40,000;
Current Liablities Rs 1,05,000 and Inventories Rs 90,000.
(b) Calculate ‘ Debt Equity Ratio” from the following information:Total Assets Rs 3,50,000; Total Debts Rs 2,50,000 and Current Liabilities Rs 80,000.
(4 Marks/CBSE 2013)
Q7. (a)Net Profit before interest and Tax is Rs. 1,40,000; 15% long term debenture Rs 4,00,000;
Shareholders fund Rs 2,40,000; Tax Rate 50%. Calculate Return on Capital Employed.
(b) Opening Stock 60,000; Closing Stock Rs 1,00,000; Stock turnover 8 times; Selling Price 25% above
Cost. Calculate Gross Profit Ratio.
(2+2=4 marks/CBSE 2009)
2005
(ANALYSIS OF FINANCIAL STATEMENTS)
CASH FLOW STATEMENT
Q16. What is meant by a ‘Cash Flow Statement’?
2
Q17. State whether the following transactions will result into inflow, outflow or no flow of funds a)
Purchased machinery for cash Rs. 80,000.
b) Paid to creditors Rs. 40,000.
c) Converted Rs. 10,000 equity shares into 9% debentures.
d) Issued equity shares Rs. 10, 00,000 for cash.
2
Q18. Briefly explain the limitations of analysis of financial statements.
3
Q19. The current liabilities of a company are Rs. 3,50,000. Its current ratio is 3.00 and liquid ratio is
1.75. Calculate the amount of current assets, liquid assets and inventory.
3
Q20. On the basis of Information given below, calculate any two of the following ratios: 4 a)
Gross Profit Ratio;
b) Debt Ratio and
c) Working Capital Turnover Ratio.
Information:
Rs.
Rs.
Net Sales 3,75,000 Current assets 4,25,000
Cost of goods sold 2,50,000 Equality share Capital 1,90,000
Current liabilities 1,20,000 Debentures 75,000 Loan 60,000
Q21. Following are the Balance Sheets of XY Ltd. As on 31st March, 2003 and 2004:
2003 2004 2003 2004
Liabilities
Assets Rs.
Rs.
Rs.
Rs.
Share capital
1,20,000 8.000
1,40,000 Good will
20,000
General reserve
7,200 11,200
12,000 Building
76,000
Profit & loss A/c
14,000
6,200 Investments
4,000
Proposed Dividend
14,400
20,200 Debtors
30,000
Bills payable
_________
21,200 Stock
34,000
Outstanding Expenses
1,74,800
15,200 Cash
6,800__4,000
________ Preliminary
Expenses2,14,800
16,000
96,400
14,000
43,200
31,200
11,200
__2,800
1,74,8002,14,800
You are required to:
a) Prepare schedule of changes in working DIPRIL:
b) Calculate funds from operations, and
c) Prepare a Funds Flow Statement.
Or
6
The following balances appeared in Plant Account and Accumulated Depreciation Account In the
books of Bharat Ltd:
31.3.2003Rs.
31.3.2004 Rs.
Balances as a
Plant
7,50,000
9,70,000
Accumulated Depreciation
1,80,000
2,40,000
Addition Information:
Plant costing Rs. 1,45000; accumulated depreciation thereon Rs. 70,000, was sold for Rs. 35,000.
You are required to:
a) Compute the amount of Plant purchased, depreciation charged for the year and loss on sale of
plant.
b) Show how each of the Items related to the plant will be shown in the cash flow statement.
2006
PART - B
Q. 16. What is a Cash Flow Statement? List any two objectives of preparing the statement.
(2)
Q. 17. Classify the following into cash flows from investing activities/Financing activities while
preparing a Cash Flow Statement:
(2)
(a) Redemption of Preference Shares (c) Receipt of Dividend
(b) Sale of Fixed Assets (d) Interest Received
Q. 18. List any three items that can be shown under the heading ‘Reserves & Surplus’ in a Company’s
Balance Sheet.
(3)
Q. 19. From the following data prepare a Statement of Profits in the comparative form:
Particulars
31.3.2004
31.3.2005
Sales
Gross Profit Ratio
Administrative Expenses
Income Tax
Rs. 6,00,000
30%
Rs. 40,000
50%
Rs. 8,00,000
40%
Rs. 1,00,000
50%
Q. 20.
i.
From the given information calculate the stock turnover ratio:
Sales: Rs. 2,00,000 ; GP: 25% on cost; Opening Stock was 1/3rd of the value of Closing Stock.
Closing Stock was 30% of sales.
ii. A business has a current ratio of 3:1 and a quick ratio of 1.2:1. If the working capital is Rs.
1,80,000, calculate the total Current Assets and Stock.
(2 + 2 = 4)
Q. 21. From the following summarised Balance Sheets of a company, calculate the Cash Flow From
operating activities:
(6)
Liabilities
2004 Rs.
Creditors
Bills Payable
Other Current
Liabilities
6% Debentures
Profit & Loss A/c
20,000
25,000 Cash
20,000
5,000 Investments
40,000
45,000 Stock
60,000 80,0001,10,000 Debtors
_80,000
2,65,000 Gross Block
2,20,000
OR
2005 Rs. Assets
2004 Rs
2005 Rs.
20,000
40,000
30,000
30,000
1,00,000
2,20,000
10,000
30,000
45,000
40,000
1,40,000
2,65,000
From the following statement calculate the cash generated from operating activities: (6)
Statement of profit for the year ending March 31st, 2005
Particulars
To Salaries
To Rent
To Depreciation
To Loss on Sale of Building
To Goodwill Written off
To Proposed Dividend
To Provision for Tax
To Net Profit
Rs. Particulars
10,000
5,000
20,000
5,000
8,000
10,000
15,000
_24,000
97,000
Rs.
By Gross Profit
By Profit on Sale of
Machinery
By Dividend Received
By Commission Accrued
85,000
5,000
3,000
4,000
____
_
97,000
2007
Part’B’
(Analysis of Financial Statements)
16.
17.
State any two objectives of preparing a cash flow
statement.
Fine Garments Ltd. is engaged in the export of readymade garments. The company
purchased a machinery of Rs. 10,00,000 for the use in packaging of such garments.
State giving reason whether the cash flow due to the purchase of machinery will be
cash flow from operating activities, investing activities or financial activities
2
2
18.
Hashu Ltd.
Profit and Loss Account for the years ended 31st March, 2005 and 2006
2005
2006
Rs.
Rs.
Sales revenue
25,000
32,500
Less cost of goods sold
11,850
16,590
Gross profit
13,150
15,910
1,150
4,910
12,000
11,000
—
—
Less indirect expenses
Profit before tax
Less tax 50%
Compute percentage changes from 2005 to 2006.
3
19. Explain the meaning of analysis of financial statements. 3
20. The Profit and Loss account of Surya Ltd. for the year ended 31.3.2006 and the Balance
Sheet of the Company as on 31.3.2006 is given below :
Profit and Loss Account for the year ended 31.3. 2006
Debit Credit
Particulars
Amount
Particulars
Rs.
Opening Stock
Purchases
Direct Expenses
40,000
2,50,000
Amount
Rs.
Sales
Closing Stock
4,40,000
20,000
30,000
1,40,000
Gross Profit
Salary
4,60,000
32,000
Loss on sale of building
8,000
4,60,000
Gross Profit
1,40,000
Net Profit
1,00,000
1,40,000
1,40,000
Balance Sheet as on 31.3.2006
Liabilities
Amount Assets
Amount
Rs.
Equity Share Capital
3,00,000
Rs.
Land
4,00,000
Stock
20,000
Profit and Loss Account
1,00,000
Debtors
Creditors
1,50,000
Cash
Outstanding Salary
1,00,000
80,000
50,000
6,00,000
6,00,000
On the basis of the informations given in these two statements, calculate any two
of the following ratios :
(i) Current Ratio,
(ii) Stock Turnover Ratio, and
(iii)Proprietary Ratio. 4
21. Raj Ltd. had a profit of Rs. 17,50,000 for the year ended 31.3.2006 after considering
the following :
Depreciation on building
Rs. 1,30,000
Depreciation on plant and machinery
Rs. 40,000
Goodwill written off
Rs. 25,000
Loss on sale of machinery
Rs. 9,000
Following was the position of current assets and current liabilities of the
company as on 31.3. 2005 and 31.3.2006.
31.3.2005
Rs.
31.3.2006
Rs.
Stock
70,000
87,000
Bills Receivable
67,000
58,000
Cash
60,000
75,000
Creditors
68,000
77,000
7,000
4,000
Outstanding Salary
Bills Payable
43,000
29,000
Calculate cash flow from operating activities. 6
Or
With the help of the following Profit and Loss Account for the year ended
31.3.2006 and Balance Sheets as on 31.3.2005 and 31.3.2006 of Janta Ltd.,
calculate cash flow
from operating activities :
6
Profit and Loss Account of Janta Ltd. for the year ended 31.3.2006
Debit Credit
Particulars
Amount
Particulars
Amount
Rs.
Rs.
Gross Profit
Depreciation
17,000
Salary
35,000
Rent
72,000
Commission
23,000
Other Expenses
43,000
Net Profit
Proposed Dividend
3,10,000
5,00,000
1,50,000
Retained Profit
5,00,000
5,00,000
3,10,000
Net Profit
1,60,000
3,10,000
3,10,000
Balance Sheets of Janta Ltd. as on 31.3.2005 and 31.3.2006
Liabilities
2005
2006
Rs.
Rs.
2,00,000
3,50,000
Reserves
60,000
2,20,000
Loan
20,000
30,000
Share Capital
Assets
Plant
Patents
Proposed Dividend
Creditors
20,000
1,80,000
1,70,000
10,000
Stock
Debtors
2005
2006
Rs.
Rs.
4,75,000
5,40,000
—
50,000
1,05,000
1,20,000
70,000
90,000
Bills Payable
1,70,000
20,000
6,50,000
8,00,000
6,50,000
8,00,000
2008
JKKJJ
HJJKJKJ
2009
2009
2010
Part - B
(Financial Statements Analysis)
17. State anyone objective of Financial Statement Analysis. 1
18. Under which type of activity will you classify ‘Issuing 9% Debentures’ while preparing Cash
Flow Statement?
1
19. Declaration of Final dividend would result in inflow, outflow or no flow of cash.
Give your answer with reason. 1
20. From the following information provided prepare a comparative income statement
for the period 2008 & 2009.
3
2008 2009
Sales (Rs.)
6,00,000
9,00,000
Gross Profit
40% on sales 50% on sales
Administrative expenses
20% of Gross profit
15% of Gross profit
Income tax
50%
50%
21. (a)
A business has a current ratio of 3: 1 and quick ratio of 1.2:1. If the working
capital is Rs. 1,80,000/-, calculate the total Current Assets and value of
Stock. 2
(b) From the given information calculate the Stock turnover ratio. Sales Rs. 2,00,000;
GP : 25% on cost; Stock at the beginning is 1/3 of the stock at
the end which was 30% of sales.
2
22. Assuming that the Debt-Equity ratio is 2. State giving reasons whether this ratio would
increase, decrease or remain unchanged in the following cases: (ANY
FOUR)
(a) Purchase of fixed asset on a credit of 2 months.
(b) Purchase of fixed asset on a long term deferred payment basis.
(c) Issue of New shares for cash.
(d) Issue of Bonus shares.
(e) Sale of fixed asset at a loss of Rs. 3,000. 4
23. From the following Balance Sheets, prepare a Cash Flow Statement as per AS-3
(revised)
Liabilities
2008
2009
Amount
Amount
Rs.
Share capital
P & L Account
Creditors
Rs.
12,000
15,000
5,000
6,000
15,000
Assets
11 ,000
Furniture
Stock
Debtors
2008
2009
Amount
Amount
Rs.
Rs.
5,000
8,000
6,000
4,000
10,000
8,000
Cash
32,000
11,000
32,000
A dividend of Rs. 3,000 was paid during the year 2008-09.
32,000
12,000
32,000
6
2011
PART - B
(Financial Statements Analysis)
17. What is meant by a 'Common Size Statement' ? . 1
18. Give the meaning of 'Cash Flow'. 1
19. State with reason whether deposit of cash into Bank will result into inflow, outflow
or noflow of cash.
20. List the items which are shown under the heading current liabilities and provisions
as per Schedule VI Part-I of the Companies' Act, 1956.
21. Prepare a Comparative Income Statement from the following information. 4
2009
2010
Rs.
Sales
10,00,000
12,50,000
Cost of goods sold
5,00,000
Carriage inwards
30,000
50,000
Operating expenses
50,000
60,000
Income tax
22.
Rs.
50%
6,50,000
50%
On the basis of the following information, calculate:
(i)
Debt-Equity Ratio and
(ii)
Working Capital Turnover Ratio
Information:
Rs.
Net Sales
60,00,000
Cost of goods sold
45,00,000
Other current assets
11,00,000
Current liabilities
4,00,000
Paid up share capital
6,00,000
1
3
6% Debentures
3,00,000
9% Loan
1,00,000
Debenture Redemption Reserve
2,00,000
Closing Stock
1,00,000
23. From the following Balance Sheets of Vijaya Ltd. as on 31-3-2009 and 31-3-2010 prepare
a Cash Flow Statement.
Liabilities
31-3-2009 31-3-2010 Assets
31-3-2009 31-3-2010
Rs.
Rs.
Rs.
Rs.
Share Capital
45,000
65,000
Fixed Assets
46,700
83,000
General Reserve
15,000
27,500
Stock
11,000
13,000
Profit & Loss Account
10,000
15,000
Debtors
18,000
19,500
8,700
11,000
2,000
2,500
1,000
500
Trade Creditors
Cash
Preliminary
Expenses
78,700
1,18,500
78,700
4
1,18,500
Additional Information:
(i) Depreciation on Fixed Assets for the year 2009-2010 was Rs. 14,700.
(ii) An interim dividend Rs. 7,000 has been paid to the shareholders during the
year.
6
2012
JK
LK
2014
PART B
(Financial Statements Analysis)
19. What is meant by ‘Cash Flow Statement’ ? 1
20. Why is separate disclosure of cash flow from investing activities important while
preparing Cash Flow Statement ? 1
21. State any one objective of financial statements analysis. 1
Under which sub-headings will the following items be placed in the Balance
Sheet of a company as per revised Schedule VI Part I of the Companies Act,
1956 : 3
(i) Capital Reserves
(ii) Bonds
(iii) Loans repayable on demand
(iv) Vehicles
(v) Goodwill
(vi) Loose tools
22. From the following Statement of Profit and Loss of Fenox Ltd. for the year ended
31st March, 2013, prepare a Comparative Statement of Profit and Loss :
4
Particulars
Note
No.
2012 – 13 <
2011 – 12 <
Revenue from operations
8,00,000
6,00,000
Other Incomes
1,00,000
50,000
Expenses
5,00,000
4,00,000
Rate of income tax was 40%.
23.
The quick ratio of a company is 1.5 : 1. State with reason which of the
following transactions would (i) increase; (ii) decrease or (iii) not change the
ratio :
4
(1) Paid rent <3,000 in advance.
(2) Trade receivables included a debtor Shri Ashok who paid his entire
amount due <9,700.
(b)
From the following information compute ‘Proprietary Ratio’ :
Long Term Borrowings
2,00,000
Long Term Provisions
1,00,000
Current Liabilities
50,000
Non-Current Assets 3,60,000
Current Assets
90,000
24. Prepare a Cash Flow Statement on the basis of the information given in the
Balance Sheet of Simco Ltd. as at 31.3.2013 and 31.3.2012 :
Note
No.
Particulars
31.3.2013 <
31.3.2012 <
I – Equity and Liabilities : 1.
Shareholder’s Funds :
2,00,000
1,50,000
90,000
75,000
Long Term Borrowings 3.
Current Liabilities :
87,500
87,500
Trade Payables
10,000
76,000
3,87,500
3,88,500
1,87,500
1,40,000
1,05,500
1,02,500
12,500
33,500
4,000
5,500
(a) Share Capital
(b) Reserves and Surplus
2. Non-Current Liabilities :
Total
II – Assets :
1. Non-Current Assets :
(a) Fixed Assets :
(i) Tangible Assets
(b) Non-Current Investments
2. Current Assets :
(a) Current Investments (Marketable)
(b) Inventories
(c) Trade Receivables
(d) Cash and Cash Equivalents
Total
9,500
23,000
68,500
3,87,500
84,000
3,88,500
Notes to Accounts
Note 1
Particulars
2013 <
Reserves and Surplus
Surplus (Balance in Statement of Profit & Loss)
90,000
2012 <
75,000
2015
PART – B
(Option-1)
(Analysis of Financial Statements)
17.‘Koval Ltd.’ is a financing company. Under which activity will the amount of interest paid
on a loan settled in the current year be shown :
1
(a)
(b)
(c)
(d)
Investing activity
Financing activity
Both Financing and Operating activities
Operating activity
18. ‘ ‘Shri Ltd.’ was carrying on a business of packaging in Delhi and earned good
profits in the past years. The company wanted to expand its business and required
additional funds. To meet its requirements the company issued equity shares of `
30,00,000.
It purchased a computerized machine of ` 20,00,000. It also
purchased raw material amounting to ` 2,00,000. During the current year the Net
Profit of the company was
` 15,00,000.
Find out ‘Cash flows from operating activities’ from the above transactions. 3
(a) 20.Under which major headings and sub-headings the following items will
be shown in the Balance Sheet of a company as per schedule VI, Part I of
the Companies Act, 1956.
(i) Long term loans
(ii) Loose tools
(iii)
Trademarks
(iv)
Drafts in hand
(b) State any two objectives of financial statements analysis.
4
19.
From the following information, calculate Total Assets to Debt Ratio : 4
`
Capital Employed
25,00,000
Investment
2,10,000
Land
8,50,000
Trade Receivables
2,75,000
Cash and Cash Equivalents
1,50,000
Equity Share Capital
14,30,000
8% Debentures 4,00,000
Capital Reserve 2,75,000
Surplus i.e., Balance in statement of profit and loss
1,50,000 .
20.Nishit was the Managing Director of ‘Lalita Electronics Ltd’. He had been earning
good revenues and profits for the company. He believed in giving respect to his
subordinates as his moral responsibility. He was the one who recognized the
need to find ecofriendly ways to treat waste. Following is the Comparative
Statement of Profit and Loss of ‘Lalita Electronics Ltd.’ for the years ended 31 st
March, 2013 and 2014.
Particulars
Revenue from Operations
Less : Employee benefit
expenses
Profit before tax
Tax @ 30%
Profit after tax
Note
No.
2012-13
(`)
2013-14
(`)
14,00,000 18,00,000
Absolute Percentage
Chan
Change
ge
(`)
4,00,000
28.5
5,00,000
1,00,000
25
10,00,000 13,00,000
3,00,000
30
4,00,000
3,00,000
3,90,000
90,000
30
7,00,000
9,10,000
2,10,000
30
(a) Calculate Net Profit ratio for the years ending 31st March, 2013 and 2014.
(b) Identify any two values which are being communicated to the society in the
above case.
4
21. Following is the Balance Sheet of Sreshtha Ltd. as on 31st March, 2014.
Note
No.
Particulars
2013-14
(`)
2012-13
(`)
40,00,000
30,00,000
EQUITY AND LIABILITIES
(1)
Shareholders Funds
I.
(a)
Share Capital
(2)
6,00,000
(3)
Long Term Borrowings
Current Liabilities
(a)
Trade Payables
3,00,000
4,00,000
(b)
Short Term Provisions
1,40,000
1,20,000
60,40,000
45,20,000
3
38,00,000
30,00,000
4
9,40,000
5,40,000
1
2
Total
II.
6,00,000
(b)
Reserves and Surplus
Non-Current Liabilities
10,00,000
4,00,000
ASSETS
(1) Non-current Assets (a)
Fixed Assets
(i)
(2)
Tangible assets
(ii)
Intangible assets
Current Assets
(a)
Inventories
5,00,000
3,20,000
(b)
Trade Receivables
4,20,000
4,20,000
(c)
Cash and Cash Equivalents
3,80,000
2,40,000
60,40,000
45,20,000
Total
Notes to Accounts :
S. No.
Particulars
1.
Reserves and Surplus
Surplus (Balance in Statement of Profit
and Loss)
As on 31-3-2014
(`)
10,00,000
As on 31-3-2013
(`)
6,00,000
2.
Short Term provisions
Provision for tax
1,40,000
1,20,000
3.
Tangible Assets
Machinery
42,00,000
33,00,000
Accumulated Depreciation
(4,00,000)
(3,00,000)
4.
Intangible Assets
Goodwill
9,40,000
5,40,000
Prepare a Cash Flow Statement after taking into account the following adjustment :
During the year a piece of machinery costing ` 40,000 on which accumulated depreciation
was ` 30,000, was sold for ` 9,000.