Select Board & Class


  • Question 1
    Answer briefly each of the following questions: [6 × 2 = 12 Marks]
    (i)  What is the accounting treatment when realization expenses are paid by the partner on behalf of the firm?
    (ii)   Apart from issuing shares to the general public for cash, list two other groups to whom a company could issue shares for consideration other than cash.
    (iii)  Give the adjusting and closing entry for recording interest on drawings charged from the partners when the firm follows the fixed capital method.
    (iv)  Give any two points of difference (without examples) between tangible and intangible fixed assets.
    (v)  What is meant by ‘Capitalized value of Average profits’? Give the formula for determining it.
    (vi)  Under what circumstances are no separate set of books kept for joint venture?
  • Question 2
    Anil and Sunil are partners sharing profits and losses in the ratio of 3: 2.They admit Charan as a new partner from 1st April, 2013. Anil gives 1/3rd of his share while Sunil gives 1/10th from his share to Charan. Their Balance Sheet as on 31st March, 2013, is given below:  [12 Marks]
    Liabilities Amount Rs Assets Amount Rs
    Anil’s Capital 32,600 Land & Building 6,000
    Sunil’s Capital 40,400 Investments  
    Workmen Compensation Fund 2,000 (Market Value 4,500) 5,000
    Investment Fluctuation Fund 1,000 Debtors 30,000
    Employees’ Provident Fund 1,000 Stock 10,000
    Provision for Doubtful Debts 1,000 Bank 27,000
      78,000   78,000

    Terms of Charan’s admission are as follows:
    (a) Charan’s brings in 30,000 as his capital. His share of Goodwill was determined to be Rs 18,000. He could bring in only 60% of his share.
    (b) Land and Building was found to be undervalued by Rs 10,000, stock was found overvalued by 7,000 and provision for doubtful debts is to be made equal to 5% of the debtors.
    (c) Capital accounts of the old partners to be re-adjusted in the new profit sharing arrangement on the basis of Charan’s capital, any excess or deficiency to be adjusted in cash.

    You are required to:

    (i) Pass journal entries
    (ii) Prepare partners’ Capital Accounts
    (iii) Balance Sheet of the new firm.
    Show your workings clearly.
  • Question 3
    Hiren, Suren and Chaman were partners sharing profits and losses in the ratio of 2:1:1.    [12 Marks]
    They closed their books on 31st March each year. Hiren died on 31st August, 2013, when their Balance Sheet was as follows:
    Liabilities Amount
    Assets Amount
    Creditors 4,550 Bank 22,000
    General Reserve 6,400 Sundry Debtors 6,600
    Profit for 5 months – from 1.4.13 to 31.8.13 (before interest and salaries) 4,050 Advertisement Suspense A/c 6,400
    Capital Accounts      
    Hiren 6,000      
    Suren 10,000      
    Chaman 4,000 20,000    
      35,000   35,000

    According to the partnership deed:
    (i) Interest on capital was allowed to all partners @ 6% p.a.
    (ii) Hiren and Chaman were entitled to salaries at Rs 100 and Rs 50 per month respectively.
    (iii) In the event of death of a partner goodwill was to be valued at 3 years’ purchase of the average net profits of 2 completed years preceding death. The net profits for the years 2011-12 and 2012-13 were Rs 4,000 and Rs 6,000 respectively.  Hiren’s share was paid to his executors.

    You are required to prepare:
    (i) Hiren’s Capital Account.
    (ii) Hiren’s Executors’ Accounts.
  • Question 4
    Moonlight Ltd. issued 50,000 Equity shares of Rs Rs 10 each at a discount of  Rs 1 per share payable:    [12 Marks]
    On application - Rs 3
    On allotment - Rs 3
    On first and Final Call - The balance
    The public applied for 65,000 shares. Pro-rate allotment was made to the applicants of 60,000 shares. Where no allotment was made, money was to be refunded in full. Shyam, who had applied for 600 shares failed to pay the allotment money and on his subsequent failure to pay the call money, his shares were forfeited. Suren, who was allotted 400 shares failed to pay the call money and his shares were forfeited after the call. Later the company reissued 700 of the forfeited shares at Rs 8 per share credited as fully paid up, the whole of Suren’s shares being included. You are required to pass journal entries in the books of Moonlight Ltd. VIEW SOLUTION
  • Question 5
    Thread and Needle sharing profits and losses equally, entered into a Joint Venture to purchase and supply teak wood to Tips Builders Ltd. They opened a joint bank account each paying Rs 8,00,000.

    The purchased 6,000 cubic feet timber for Rs 15,00,000 and spent Rs 15,000 on freight and Rs 10,000 as insurance in transit. They also incurred Rs 2,000 as unloading charges.

    It was reported to them by their manager than 500 cubic feet of timber was stolen from the warehouse for which the Insurance Company paid Rs 27,000. Loss due to shrinkage was 100 cubic feet.

    The co-ventures sold 5,000 cubic feet timber @ Rs 500 per cubic feet to Tips Builders Ltd., the consideration money being received by cheque from them.
    The venture was closed after this transaction, the co-venturers taking away the remaining timber in their profit and loss sharing ratio.

    You are required to prepare the necessary ledger accounts in the books of the venture.
    Note: All calculations are to the made to the nearest rupee.
    [12 Marks]
  • Question 6
    (a) Anand, Bihari and Shivin are equal partners in a firm. Bihari retires and his claim including his capital and his share of goodwill is Rs 40,000. He is paid in kind, a vehicle valued at Rs 20,000 which is unrecorded in the books of the firm till the date of retirement and the balance in cash.
    You are required to give the journal entries for recording the payment of Bihari in the books of the firm.
    [4 Marks]
    Rahul, Shiv and Kabir were three partners sharing profits and losses in the ratio of 3 : 2 : 2. As on 1st April, 2013, their capital account balance stood at Rs 80,000, Rs 70,000 and Rs 20,000 (Dr) respectively. On this date they admitted Robert into the partnership with a capital of Rs 40,000. He is to have 1/5th share of the profits with a guaranteed minimum share of distributable profit of Rs 30,000.
    It was decided that Rahul, Shiv and Kabir would suffer any excess over 1/5th going to Robert in the ratio of 2 : 2 : 1 respectively.
    The new profit sharing ratio among partners being Rahul: Shiv: Kabir: Robert = 3: 2: 3: 2.
    The profit of the firm for the year 2013-14 was Rs 1,50,000 before the following adjustments were made:
    • Interest on Capital @ 10% p.a. to be allowed to the partners.
    • Interest on Drawings: Kabir: Rs 2,000; Shiv: Rs 4,000
    • Salary to Partners: Shiv: Rs 7,000; Robert: Rs 10,000
    [8 Marks]

    You are required to:
    (i) Prepare a Profit and Loss Appropriation Account
    (ii) Pass the journal entry to show the guaranteed minimum profits given to Robert by the firm.
  • Question 7
    Newtown Ltd. was formed on 1st April, 2012, with an authorized capital of Rs 10,00,000 divided into equity shares of Rs 10 each. It invited applications for 20,000 shares in the year of its formation, all of which were subscribed for and amount due on them fully received.

    On 1st April, 2013, the company invited applications for another 50,000 shares. Applications for 45,000 shares were received. All calls were made and the amount received on them except the final call of Rs 2 per share on 1,000.

    Out of the shares on which final call was not received, 600 were forfeited.

    On 1st April, 2013, the company also issued 2,000 6% debentures of Rs 100 each at a discount of 4% redeemable at a premium of 5% in four equal annual instalments beginning from the second year of the issue.

    The company had balance of Rs 1,00,000 in its General Reserve on 31st March, 2014.

    You are required to show the items under the heading Equity and Liabilities in the Balance Sheet of the company as on 31st March, 2014 (as per Revised Schedule VI, showing clearly Notes to Accounts). Ignore interest on debentures.
    [12 Marks]
  • Question 8
    On 1st April, 2013, Relaxo Ltd. purchased assets of Rs 5,00,000 and look over liabilities of Rs 90,000 of Greg Ltd. at an agreed value of Rs 3,80,000. It issued to the vendor, 10% Debentures of Rs 100 each at 5% discount, redeemable at par after 5 years, in full satisfaction of the purchase price.

    On the same date, the company issued 500, 11% Debentures of Rs 100 each as a collateral security to a bank who had advanced a loan of Rs 45,000 to it for a period of 3 years and also issued 5,000, 12% Debentures of Rs 100 each at par, redeemable after 3 years at 5% premium.
      [12 Marks]

    Additional information:
    The interest on debentures is paid half yearly on 30th September and 31st March each year. Tax deducted at source @ 20%. The Company had Rs 1,20,000 in its Security Premium Reserve Account at the end of the year. (Ignore interest on bank loan)

    You are required to show pass journal entries in the books of Relaxo Ltd for the year ending 31st March 2014. VIEW SOLUTION
  • Question 9
    (a) What is a Comparative Balance Sheet?
    [2 Marks]
    (b) From the information given below, prepare a Common Size Income Statement of Relay Ltd.:
    31st March, 2014
    31st March, 2013
    Revenue from Operations 51,73,000 49,70,000
    Other Income 35,000 40,000
    Purchase of Stock-in Trade 40,50,000 33,20,000
    Change in Inventories (90,000) 1,00,000
    Other Expenses 1,70,000 1,50,000
    [2 Marks]


    The following balances appeared in the Plant and Machinery Account and Accumulated Depreciation Account in the books of Piyush Ltd:
    Balance as at 31.3.2014
    Plant and Machinery 9,32,000 8,50,000
    Less Accumulated Depreciation (4,40,000) (4,32,000)

    During the year 2013-14, the company provided depreciation amounting to Rs 80,000 and a machine costing Rs 1,05,000 was sold at a profit of 20% on its book value.

    You are required to calculate Cash from Investing Activities.

    [2 Marks]


    From the following information, calculate (up to two decimal places): 
    (i) Gross Profit Ratio
    (ii) Operating Ratio
    Net Revenue from Operations 14,00,000
    Credit Revenue from Operations 10,00,000
    Gross Profit 5,00,000
    Depreciation on fixed assets 40,000
    Profit on sale of land 10,000
    Selling Expenses 60,000

    [4 Marks]
  • Question 10
    (a) Classify the following into cash flows from Investing activities, Financing activities and Operating activities while preparing a Cash Flow Statement: 
    (i) Receipt of Dividend
    (ii) Purchase of Goodwill
    (iii) Repayment of Public Deposits
    (iv) Payment of Tax
    [2 Marks]
    (b) From the following Balance Sheets of Diamond Limited as on 31st March, 2013, and 31st March, 2014, prepare a Cash Flow Statement (as per Accounting Standard 3). [8 Marks]
    articulars Note No. 31st March,
    31st March, 2013
    (i) Shareholders' Funds
    (a) Share Capital
    1 4,00,000 3,40,000
    (b) Reserves and Surplus
    2 1,60,000 1,20,000
    (ii) Non-Current Liabilities
     Long Term Borrowings
    3 3,50,000 2,60,000
    (iii) Current Liabilities
    (a) Trade Payables
    4 55,000 30,000
    (b) Other Current
    5 2,000 5,000
    TOTAL   9,67,000 7,55,000
    II. ASSETS      
    1. Non-Current Assets
    Fixed Assets (Tangible)
    6 6,00,000 4,80,000
     2. Current Assets
    (a) Inventories
      73,000 50,000
    (b) Trade Receivables
    7 1,55,000 1,30,000
    (c) Cash and Cash
    8 1,39,000 95,000
    TOTAL   9,67,000 7,55,000

    Notes to Accounts:
    Particulars 31st March, 2014
    31st March, 2013
    1.  Share Capital    
    Equity Share Capital
    4,00,000 3,40,000
    2.  Reserves and Surplus    
    General Reserve
    50,000 42,000
    Statement of Profit and Loss
    1,10,000 78,000
    3.  Long Term Borrowing    
    5% Debentures
    3,50,000 2,60,000
    4. Trade Payables    
    45,000 18,000
    Bills Payable
    10,000 12,000
    5.  Other Current Liabilities    
    Outstanding expenses
    2,000 5,000
    6.  Fixed Assets    
    4,40,000 2,90,000
    Plant and Machinery
    1,60,000 1,90,000
    7.  Trade Receivables    
    1,55,000 1,30,000
    8.  Cash and Cash Equivalents    
    Cash at Bank
    1,39,000 95,000

    Additional Information:
    (i) Depreciation charged on building Rs 20,000.
    (ii) A machine with a book value of Rs 10,000 was sold for Rs 8,000.
    (iii) Debentures were issued on 1st April, 2013, at a discount of 10%. The discount was written off from General Reserve.
  • Question 11
    (a) State the formula for computing any one Solvency ratio.
    [2 Marks]
    (b) From the following information, calculate:  [8 Marks]
      (i) Revenue from Operations
    (ii) Cost of Revenue from Operations
    (iii) Working Capital
    (iv) Current Assets

    Trade Receivables Turnover Ratio 4 times
    Current Liabilities Rs 5,000
    Average Debtors Rs 1,80,000
    Working Capital Turnover Ratio 8 times
    Cash Revenue from Operations 25% of Revenue from Operations.
    Gross Profit Ratio 3313%
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