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Board Paper of Class 12-Commerce 2014 Accountancy (SET 1) - Solutions

General Instructions
1) This question paper contains three sections: A, B and C.
2) Section A contains two parts- Part I and Part II.
3) Part I of Section A is compulsory and attempt any 4 questions from Part II of Section A.
4) Attempt only 2 questions from either Section B or from Section C.

Section A
i. This section consists of 8 questions.
ii. Question No. 1 carrying 20 marks from Part I is compulsory.
iii. Attempt any 4 questions from question nos. 2 to 8 carrying 10 marks each.
iv. This whole section is of 60 marks in total.

Section B
i. This section consists of 3 questions.
ii. Attempt any 2 questions from question nos. 9 to 11 carrying 10 marks each.
iv. This whole section is of 20 marks in total.

  • Question 1
    Answer each of the following questions briefly:                                        [10 × 2 = 20 Marks]
     
    (i) Name the two accounts prepared to show the results of a joint venture when each co-venturer records all transactions.

    (ii) Give any two differences between fixed capital method and fluctuating capital method.

    (iii) What is the accounting treatment when debentures are issued as a collateral security?

    (iv) Give any two differences between Revaluation Account and Realization Account.

    (v) State with reason whether a company can issue a share having a face value of Rs 20 at Rs 17.

    (vi) Give the adjusting and closing entry for interest on calls in arrears due from a share holder.

    (vii) State the provisions of the Indian Partnership Act, 1932, regarding charging of interest on drawings from a partner when:
     
    (a) The firm has a partnership deed.

    (b) The firm does not have a partnership deed.
     
    (viii) What is meant by number of years’ purchase in the valuation of a firm’s goodwill?

    (ix) List any four items that may have to be deducted from a deceased partner’s capital account while computing the amount payable to his legal representatives.

    (x) Why is premium received on the issue of debentures considered a capital profit?
    VIEW SOLUTION
  • Question 2
    Ronnie and Annie entered into a Joint Venture to sell coal, sharing profits and losses in the ratio of
    1: 1. Annie purchased 100 tonnes of coal @ Rs 5,400 per tonne and paid Rs 30,000 as freight for
    sending the coal to Ronnie to be sold on joint account                                            [10 Marks]                           

    During transit, 10 tonnes of coal was lost due to breaking in bulk (normal loss). Ronnie received the remaining tonnes of coal and paid Rs 6,000 as landing charges. He accepted a bill drawn by Annie for Rs 2,00,000.

    Ronnie then sold 60% of the coal received by him for Rs 4,21,200. His selling expenses amounted to Rs 12,000.

    The remaining stock, valued at original cost plus proportionate direct expenses, was shared equally by both the co-venturers. They settled their accounts by means of a bank draft.

    You are required to prepare:

    (i) Memorandum Joint Venture Account.

    (ii) Ronnie’s Account in the books of Annie. VIEW SOLUTION
  • Question 3
    Mitra Ltd. invited applications from the public for the issue of 60,000 shares of Rs 10 each, at a discount of 10% payable as:

    Rs 3 per share on application

    Rs 5 per share on allotment

    Balance on call
     
    The public subscribed for 50,000 shares. Rs 2,49,000 were received by the company on allotment and Rs 49,400 on call. The company forfeited those shares on which both, allotment and call money was not received. 70% of the forfeited shares were reissued at Rs 7 per share, fully called up.
     
    The company had Rs 45,000 in its Security Premium Reserve Account which it used to write off any miscellaneous expenditure incurred during the year.

    You are required to pass the necessary journal entries to record the above transactions.                      [10 Marks] VIEW SOLUTION
  • Question 4
    Angad, Kunal and Nitin were partners sharing profit and losses in the proportion of 2 : 2 : 1 respectively. The Balance Sheet of their firm as on 31st March, 2013, stood as follows:
     
    Liabilities
    Amount
    Rs
    Assets
    Amount
    Rs
    Capital Accounts:                                      
     
    Stock
    12,500
       Angad
    12,500
     
    Machinery
    17,500
       Kunal
    15,000
     
    Motor Van
    4,000
       Nitin
    20,000
    47,500
    Buildings
    22,500
    Creditors
    10,000
    Bank
    1,250
    Bills Payable
    2,000
    Debtors
    8,000
     
    General Reserve
    6,000
      Less: Prov. for DD
    (250)
    7,750
     
    65,500
     
    65,500
           

    Kunal retires on 1st April, 2013, subject to the following adjustments:

    (a) Provision for bad and doubtful debts to be increased by Rs 975.

    (b) Stock to be appreciated by 20% and Building by 10%.

    (c) Machinery to be depreciated by 10% and Motor Van by 15%.

    (d) Goodwill of the firm to be valued at Rs 9,000.

    (e) The capitals of the continuing partners are to be adjusted according to the new profit sharing ratio which is agreed between Angad and Nitin as 3 : 2 respectively.

    (f) Excess or shortfall in Angad’s and Nitin’s Capital Accounts to be transferred to their respective Current Accounts.

    You are required to prepare:

    (i) Revaluation Account.

    (ii) Partners’ Capital Accounts.

    (iii) Balance Sheet of the reconstituted firm.                          [10 Marks] VIEW SOLUTION
  • Question 5
    Rahim and Sudesh, the two partners of a business firm, agreed to appropriate the profits of their firm on the following terms:

    (a) Interest is payable on capital @ 5% per annum.

    (b) Rahim will be entitled to a salary of Rs 500 per month.

    (c) Interest on loan to be given by the firm to the partners @ 10% per annum.

    (d) Interest on drawings to be charged from the partners @ 5% per annum.

    (e) Sudesh will get commission @ 1% on the sales made during the year.

    (f) Rahim is entitled to a rent of Rs 25,000 per annum for allowing the firm to carry on the business in his premises.
     
    The Net profit of the firm for the year ended 31st March, 2013, was Rs 1,80,000 before taking into account any of the above terms.
     
     
    Rahim
    Rs
    Sudesh
    Rs
    Capital Balances on 1st April, 2012
    1,50,000
    1,40,000
    Loan advanced on 1st October, 2012
    1,00,000
    Drawing made during the year
    40,000
    30,000
    During the year 2012-13, sales of the firm amounted to Rs 7,00,000.    

    From the above information prepare:

    (a) Profit and Loss Appropriation Account.

    (b) Partners’ Capital Accounts.
                          [10 Marks] VIEW SOLUTION
  • Question 6
    You are required to pass journal entries for the issue of debentures in the following conditions:                                                [10 Marks]

    (a) Ben Ltd. issued 5,000, 12% Debentures of Rs 100 each at par, redeemable at 5% premium after five years.

    (b) Rex Ltd. issued Rs 2,00,000, 12% Debentures of Rs 100 each at a discount of 2%, redeemable at a premium of 5% after 10 years.

    (c) Josh Ltd. issued 6,000, 12% Debentures of Rs 100 each at a premium of 5%, redeemable at a premium of 10% after 6 years.

    (d) Oxygen Ltd. issued Rs 30,000, 7% debentures of Rs 100 each to a Creditor for Rs 25,000 in full satisfaction of his claim. The company had purchased machinery from him. VIEW SOLUTION
  • Question 7
    (a) Sharp Ltd. was formed on 1st December, 2013, with a capital of Rs 5,00,000 divided into shares of Rs 10 each. It offered 80% of the shares to the public.                      [5 Marks]
     
    The issue price was payable as follows:

    30% of the face value per share was payable with application.

    20% of the face value per share was payable with allotment.

    The balance as and when required. The company did not call for the balance during the year.

    All the shares offered by the company were subscribed for. The company did not receive the allotment money on 3,000 shares.

    You are required to:
     
    (i) Show the Share Capital in the Balance Sheet of the Company (prepared as per Revised Schedule VI of the Companies Act, 1956) at the end of the financial year.

    (ii) Prepare Notes to Accounts.
              
    (b) Under which heads and sub heads will the following items appear in the Balance sheet of a company as per Revised Schedule VI of the Companies Act, 1956:                [5 Marks]
     
    (i) Bills Receivable

    (ii) Interest accrued and due on debentures

    (iii) Trade Creditors

    (iv) Provision for Taxation

    (v) Stores and Spares
    VIEW SOLUTION
  • Question 8
    Aman and Harsh were partners in a firm. They decided to dissolve their firm. Pass necessary journal entries for the following after various assets (other than Cash and Bank) and third party liabilities have been transferred to Realisation A/c.

    (a) There was furniture worth Rs 50,000. Aman took over 50% of the furniture at 10% discount and the remaining furniture was sold at 30% profit on book value.

    (b) Profit and Loss Account was showing a credit balance of Rs 15,000 which was distributed between the partners.

    (c) Harsh’s loan of Rs 6,000 was discharged at Rs 6,200.

    (d) The firm paid realisation expenses amounting to Rs 5,000 on behalf of Harsh who had to bear these expenses.

    (e) There was a bill for Rs 1,200 under discount. The bill was received from Soham who proved insolvent and a first and final dividend of 25% was received from his estate.

    (f) Creditors, to whom the firm owed Rs 6,000, accepted stock of Rs 5,000 at a discount of 5% and the balance in cash.

    (g) The loss on dissolution was Rs 8,000.                [10 Marks] VIEW SOLUTION
  • Question 9
    (a) How does the quality of Ratio Analysis of a business depend upon the accuracy of its financial statements?                           [2 Marks]

    (b) From the following information, calculate Trade Receivables Turnover Ratio:                                                                          [2 Marks]  
     
             Particulars Amount
    Credit Revenue from Operations  9,60,000
    Gross debtors  1,90,000
    Bills Receivable  50,000
    Provision for Doubtful Debts 10,000

    (c) From the following information, calculate the following ratios (up to two decimal places):                                                      [6 Marks]
     
    (i) Debt-Equity Ratio

    (ii) Interest Coverage Ratio

    (iii) Proprietary Ratio
     

     

    Amount
    Rs
    Equity Share Capital
    2,00,000
    5% Preference Share Capital
    60,000
    General Reserve
    1,20,000
    Fixed Assets
    5,05,000
    Current Assets
    1,20,000
    Current Liabilities
    40,000
    Loan @ 10% interest
    5,00,000
    Tax paid during the year
    30,000
    Profit for the current year after interest and tax (available for the shareholders)

    90,000

    VIEW SOLUTION
  • Question 10
    From the following data, prepare a Common Size Balance Sheet of Teak Wood Ltd:                                             [10 Marks]

    (Note: Current year’s figures appear in the first column and the previous year’s figures are in the second column.)
     
    Particulars
    31.03.2013
    Rs
    31.03.2012
    Rs
    Share Capital
    3,00,000
    2,40,000
    Reserves and Surplus
    80,000
    70,000
    Trade Payables
    1,00,000
    1,10,000
    Trade Receivables
    1,90,000
    1,80,000
    Short Term Provision
    40,000
    15,000
    Fixed Assets
    2,90,000
    2,30,000
    Long Term Provision
    80,000
    65,000
    Current Investments
    10,000
    8,000
    Inventory
    1,01,000
    72,000
    Cash and Cash Equivalents
    9,000
    10,000
    VIEW SOLUTION
  • Question 11
    (a) State with reason whether the following would result in inflow, outflow or no flow of cash:                [2 Marks]

    (i) Charging depreciation on furniture.

    (ii) Cash withdrawn for bank for office use.

    (b) From the following extracts of a company’s Balance Sheets, calculate for the year ending 31st March, 2013:
     
    (i) Cash from investing activities

    (ii) Cash from financing activities
     
    (Note: Current year’s figures appear in the first column and the previous year’s figures are in the second column.)
     
    Particulars
    2012-13
    Rs
    2011-12
    Rs
    Equity Share Capital
    13,00,000
    12,00,000
    Long Term Borrowings (10% Bank Loan)
    60,000
    1,00,000
    Proposed Dividend
    20,000
    21,000
    Fixed Assets:
     
     
    Plant and Machinery
    1,70,000
    1,40,000
      Less: Accumulated Depreciation
    (24,000)
    (40,500)
     
    1,46,000
    99,500
    Non-Current Investments
    1,00,000
    20,000
    Land (at cost)
    5,00,000
    7,00,000
    Goodwill
    30,000
    40,000

    Additional information:

    (i) The Loan installment and interest on loan was paid at the end of the financial year.

    (ii) During the year 2012-13:

    (a) Dividend of Rs 17,000 was proposed.

    (b) The company provided depreciation on Plant and Machinery amounting to Rs 13,500.

    (c)  The company sold 70% of its non-current investments which it held at the beginning of the year, at a profit of 20% on its book value.      [8 Marks]
    VIEW SOLUTION
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