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Board Paper of Class 12-Commerce 2017 Accountancy MeritNation(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 12 marks from Part I is compulsory.
iii. Attempt any 4 questions from question nos. 2 to 8 carrying 12 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 briefly each of the following questions:        [6 × 2 = 12 Marks]
     
    (i) Name the account which is prepared to find the profit and loss of a join venture, if;
     
    (a) One co-venturer records all transactions.

    (b) All co-ventures record their own transactions.

    (ii) What will be the treatment of loan given to a partner by the firm at the time of its dissolution?
     
    (iii) Give the adjusting entry for interest on capital allowed to a partner, when the firm follows the fixed capital method.
     
    (iv) State, with reason, whether securities premium reserve can be used to write off bad debts.
     
    (v) Give any two differences between a Company's Balance Sheet and a Firm's Balance Sheet.
     
    (vi) State where will the non-cash transactions be recorded at the time of issue of shares, if all cash transactions are entered in the Cash Book. VIEW SOLUTION
  • Question 2
    Karan, Ali and Deb are partners in a firm sharing profits and losses in the ratio of 3 : 2 : 1. On 31st March, 2016, their Balance Sheet was as under:     [12 Marks]
     
    Balance Sheet of Karan, Ali and Deb
    as at 31st March, 2016
    Liabilities
    Amount
    (Rs)
    Assets
    Amount
    (Rs)
    Capital A/c
     
     
     
     Karan
    1,00,000
     
    Building
    1,00,000
     Ali
    75,000
     
    Furniture
    40,000
     Deb
    50,000
    2,25,000
    Investments
    50,000
    Investment Fluctuation Reserve
    30,000
    Debtors
    30,000
     
    Bills Payable
    10,000
    Less: Provision for Doubtful Debts
    (1,000)
    29,000
     
     
     
     
     Creditors
    15,000 
    Cash at Bank
    43,000
     
     
    Goodwill
    18,000
     
    2,80,000
     
    2,80,000
     
     
     
     

    Karan died on 1st July, 2016. An agreement was reached amongst Ali, Deb and Karan's legal representatives that :

    (a) Building be revalued at Rs 93,500.

    (b) Furniture be appreciated by Rs 10,000.

    (c) To write off the Provision for Doubtful Debts since all debtors were good.

    (d) Investments be valued at Rs 38,000.

    (e) Goodwill of the firm be valued at Rs 1,20,000.

    (f) Karan's share of profit to the date of his death, to be calculated on the basis of previous year's profit which was Rs 25,000.

    (g) Interest on capital to be allowed on Karan's capital @ 6% per annum.

    (h) Amount payable to Karan's legal representative to be transferred to his legal representative's loan account.

    You are required to :

    (i) Pass journal entries on the date of Karan's death.

    (ii) Prepare the Interim Balance Sheet of the reconstituted firm.
    VIEW SOLUTION
  • Question 3
    Cargo Ltd. invited applications for the issue of 20,000 Equity shares of Rs 10 each at a premium of Rs 1 per share, payable as follows:      [12 Marks]
     
    On Application Rs 3
    On Allotment The balance (including premium Rs 1)
     
    Applications were received for 30,000 shares and pro-rata allotment was made to the remaining applicants after refunding application money to 5,000 share applicants.

    Nicholas, who was allotted 3,000 shares, failed to pay the allotment money and his shares were forfeited.

    Out of these forfeited shares, 1,000 shares were reissued as fully paid-up @ Rs 8 per share.

    You are required to:

    (i) Pass Journal entries in the books of the company.

    (ii) Prepare Calls-in-arrears Account.

    (iii) Prepare Share Forfeiture Account.
    VIEW SOLUTION
  • Question 4
    (A) Following balances have been extracted from the books of Universe Ltd. as at 31st March, 2016:        [8 Marks]
     
    Particulars Amount
    (Rs)
    Equity Share Capital (Fully paid shares of Rs 100 each) 4,00,000
    Unclaimed Dividend 10,000
    Bank Balance 40,000
    Security Premium Reserve 75,000
    Statement of Profit and Loss (Dr) 50,000
    Tangible Fixed Assets (at cost) 3,50,000
    Accumulated Depreciation till date 25,000
    Trade Marks 70,000

    You are required to prepare as at 31st March, 2016:

    (i) The Balance Sheet of Universe Ltd. as per Schedule III of the Companies Act, 2013.

    (ii) Notes to Accounts.

    (B) Chrome Ltd. took over assets of Rs 6,00,000 and liabilities of Rs 40,000 of Polymer Ltd. at an agreed value of Rs 6,30,000. Chrome Ltd. issued 10% Debentures of Rs 100 each at a discount of 10% to Polymer Ltd. in full satisfaction of the price. Chrome Ltd. writes off any capital losses incurred during a year, at end of that financial year.     [4 Marks]

    You are required to pass the necessary journal entries to record the above transactions in the books of Chrome Ltd. VIEW SOLUTION
  • Question 5
    Juliet and Rabani are partners in a firm, sharing profits and losses in the ratio of 3:1. On 31st March, 2016, their Balance Sheet was as under:       [12 Marks]
     
    Balance Sheet of Juliet, and Rabani
    as at 31st March, 2016
    Liabilities Amount (Rs) Assets Amount (Rs)
    Sundry Creditors 70,000 Plant and Machinery 1,76,000
    General Reserve 30,000 Inventory 26,000
    Provident Fund 40,000 Sundry Debtors 57,000  
    Capital A/c     Less: Provision for Doubtful Debts (3,000) 54,000
    Juliet 1,10,000   Cash at Bank 68,000
    Rabani 90,000 2,00,000 Profit & Loss A/c 16,000
           
      3,40,000   3,40,000
           

    Mike was taken as a partner for 14th share, with effect from 1st April, 2016, subject to the following adjustments:

    (a) Plant and Machinery was found to be overvalued by Rs 16,000. It was to be shown in the books at the correct value.

    (b) Provision for Doubtful Debts was to be reduced by Rs 2,000.

    (c) Creditors included an amount Rs 2,000 received as commission from Malini. The necessary adjustment was required to be made.

    (d) Goodwill of the firm was valued at Rs 60,000. Mike was to bring in cash, his share of goodwill along with his capital of Rs 1,00,000.

    (e) Capital Accounts of Juliet and Rabani were to be readjusted in the new profit sharing arrangement on the basis of Mike's capital, any surplus to be adjusted through current account and any deficiency through cash.

    You are required to prepare:

    (i) Revaluation Account.

    (ii) Partners' Capital Accounts.

    (iii) Balance Sheet of the reconstituted firm.
    VIEW SOLUTION
  • Question 6
    (A) Rashi and Runa jointly undertake to complete the construction of an auditorium for Pascal Ltd. They agreed to share profits and losses in the ratio of 3:2.   [8 Marks]
     
    The contract price was Rs 8,00,000 of which Rs 5,00,000 was to be payable to them in cash and the balance in fully paid shares of the company.

    A joint bank account was opened in which Rashi contributed Rs 2,00,000 while Runa contributed Rs 3,00,000.

    The following expenses were incurred to complete the contract:
     
    Salaries and Wages Rs 1,25,000
    Purchase of material from a supplier on credit Rs 2,00,000
    Material supplied by Rashi Rs 1,00,000
    Legal fees paid by Runa Rs 85,000

    The contract price was duly received after the completion of the project and the accounts of the venture were closed after the supplier was paid Rs 1,98,000 in full and final settlement.

    Runa took over the shares at Rs 2,80,000.

    Rashi took over the remaining material at Rs 45,000.

    You are required to prepare:

    (i) Joint Venture Account.

    (ii) Joint Bank Account.

    (iii) Shares Account.

    (B) Joseph and Leena entered into a Joint venture to sell edible oil. It was decided that Joseph would record all the transactions of the venture.   [4 Marks]
     
    Joseph supplied 3,000 litres of edible oil costing Rs 4,50,000 to be sold by Leena, incurring carriage and insurance-in-transit amounting to Rs 30,000.

    20 litres of oil was lost in transit due to leakage which was considered to be normal, Leena incurred Rs 2,760 as clearing charges and Rs 2,000 as godown rent. She was entitled to a commission of 2% on the sales made by her.

    Leena was able to sell 2,000 litres of oil at Rs 170 per litre.

    The unsold stock was taken over by Joseph at the original cost plus proportionate non-recurring expenses.

    You are required to:

    (i) Calculate the value of stock taken over by Joseph.

    (ii) Pass the relevant journal entries in the books of Joseph for:

     
    (a) The stock taken over by Joseph.

    (b) Commission due to Leena.
    VIEW SOLUTION
  • Question 7
    Mita, Rita and Sandra were partners in a firm, sharing profits and losses in the ratio of 2:2:1. Mita had personally guaranteed that in any year Sandra's share of profit, after allowing interest on capital to all the partners @ 5% per annum and charging interest on drawing @ 4% per annum, would not be less than Rs 10,000.      [8 Marks]

    The capitals of the partners on 1st April, 2015 were:

    Mita Rs 80,000, Rita Rs 50,000 and Sandra Rs 30,000.

    The net profit for the year ended 31st March, 2016, before allowing or charging any interest amounted to Rs 40,000.

    Mita had withdrawn Rs 4,000 on 1st April, 2015, while Sandra withdrew Rs 5,000 during the year.

    You are required to prepare the Profit and Loss Appropriation Account for the year 2015-16.

    (B) Anita, Asha and Bashir are partners sharing profits and losses in the ratio of 3:2:1 respectively. From 1st April 2016, they decided to change their profit sharing ratio to 2:1:3. Their partnership deed provides that in the event of any change in the profit changing ratio, the goodwill of the firm should be valued at two years' purchase of the average super profits for the past three years.                           [4 Marks]

    The actual profits and losses for the past three years were:
     
    2015-16 Profit Rs 40,000.
    2014-15 Profit Rs 30,000.
    2013-14 Loss Rs 10,000.

    The average capital employed in the business was Rs 1,10,000; the rate of interest expected from capital invested was 10%.

    You are required to:

    (i) Calculate the value of goodwill at the time of change in profit sharing ratio. (Show the workings clearly with the formulae.)

    (ii) Pass the journal entry to record the change.
    VIEW SOLUTION
  • Question 8
    (A) Roshan, Mahesh, Gopi and Jai are partners sharing profits and losses in the ratio of 3:3:2:2.        [4 Marks]
     
    The balance of capital accounts on 1st April, 2015 were: Roshan Rs 8,00,000, Mahesh Rs 5,00,000, Gopi Rs 6,00,000 and Jai Rs 6,00,000.

    After the accounts for the year ended 31st March, 2016 were prepared, it was discovered that interest on capital @ 10% per annum as provided in the  partnership deed had not been credited to the partners' capital accounts before the distribution of profits.

    You are required to rectify the error by passing a single adjusting journal entry.

    (B) Mehta and Menon were partners in a firm, sharing profits and losses in the ratio of 7:3.         [8 Marks]
     
    They decided to dissolve their partnership firm on 31st March, 2016. On that date, their books showed the following ledger account balances:
     
    Sundry Creditors
    Rs
    27,000
    Profit and Loss A/c (Dr.)
    Rs
    8,000
    Cash in Hand
    Rs
    6,000
    Bank Loan
    Rs
    20,000
    Bills Payable
    Rs
    5,000
    Sundry Assets
    Rs
    1,98,000
    Capital A/c
     
     
        Mehta
    Rs
    1,12,000
        Menon
    Rs
    48,000

    Additional information:

    (a) Bills Payable falling due on 31st May, 2016 were retired on the date of dissolution of the firm, at a rebate of 6% per annum.

    (b) The bankers accepted the furniture (included in sundry assets) having a book value of Rs 18,000 in full settlement of the loan given by them.

    (c) Remaining assets were sold for Rs 1,50,000.

    (d) Liability on account of outstanding salary not recorded in the books, amounting to Rs 15,000 was met.

    (e) Menon agreed to take over the responsibility of completing the dissolution work and to bear all expenses of realization at an agreed remuneration of Rs 2,000. The actual realizaton expenses were Rs 1,500 which were paid by the firm on behalf of Menon.

    You are required to prepare:

    (i) Realisation Account.

    (ii) Partners' Capital Accounts.

    VIEW SOLUTION
  • Question 9
    From the information given below, calculate (up to two decimal places):

    (i) Operating Ratio.

    (ii) Quick Ratio.


    (iii) Debt to Equity Ratio.

    (iv) Proprietary Ratio.

    (v) Working Capital Turnover Ratio.

     
    Particulars Amount
    (Rs)
    Net revenue from operations 12,00,000
    Cost of revenue from operation 9,00,000
    Operating expenses 15,000
    Inventory 20,000
    Other Current Assets 2,00,000
    Current Liabilities 75,000
    Paid up Share Capital 4,00,000
    Statement of Profit and Loss (Dr.) 47,500
    Total Debt 2,50,000
    VIEW SOLUTION
  • Question 10
    From the following information of Purity Ltd, calculate:             [10 Marks]

    (i) Cash from Operating Activities.

    (ii) Cash from Financing Activities

     
    Particulars 31.03.2016
    (Rs)
    31.03.2015
      (Rs)
     Trade Receivables
     Inventories
     Prepaid Expenses
     Expenses Outstanding
     Provisions for Tax
     Cash in Hand
     Furniture (at book value)
     General Reserve
     10% Debentures
     Goodwill
     Trade Payable
     Balance of Statement of Profit and Loss (Cr.)
     Proposed Dividend
     Share Capital
    17,000
    25,000
    12,000
    9,000
    15,000
    50,000
    1,20,000
    50,000
    40,000
    60,000
    21,000
    1,30,000
    5,000
    5,00,000
    20,000
    30,000
    10,000
    7,000
    10,000
    75,000
    1,60,000
    40,000
    30,000
    70,000
    25,000
    1,20,000
    4,000
    3,00,000

    Additional information:

    During  the year 2015-16:

    (a) A piece of furniture costing Rs 30,000 (accumulated depreciation Rs 3,000) was sold for Rs 25,000.

    (b) Tax of Rs 9,000 was paid.

    (c) Interim Dividend of Rs 4,000 was paid.

    (d) The company paid Rs 3,000 as interest on debentures. VIEW SOLUTION
  • Question 11
    (A) What is meant by the term Cash Equivalents as per Accounting Standard 3?       [2 Marks]
     
    (B) The Current Ratio of a company is 2:1. State whether the Current Ratio will improve, decline or will not change in the following cases:    [2 Marks]
     
    (i) Bills Receivable of Rs 2,000 endorsed to a creditor is dishonoured.

    (ii) Rs 8,000 cash collected from Debtors of Rs 8,500 in full and final settlement.

    (C) From the following information, prepare a Comparative Statement of Profit and Loss of Matrix Ltd:        [6 Marks]
     
    Particulars 31.03.2016
    (Rs)
    31.03.2015
      (Rs)
     Revenue from Operations
     Cost of Material consumed
     Interest from Investments
     Employee Benefit Expenses
     Tax Rate
    3,00,000 
    1,70,000 
    20,000 
    10,000 
    50% 
    2,50,000 
    1,50,000 
    20,000 
    10,000 
    50% 
    VIEW SOLUTION
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