CBSE Sample Paper 6 For Accounts

Posted on - 27-05-2017

CBSE Accounts

CBSE

Q.1

State any two occasions when reconstitution of a partnership firm can happen.

Solution

(i) Change in profit sharing ratio.

(ii) Admission of a partner.

Q.2

At the time of reconstitution of a partnership firm, if partners decide to retain assets and liabilities at their existing values and not at the revalued amounts, how will they record the adjustment in such a situation?

Solution

At the time of reconstitution of a partnership firm, if partners decide to retain assetsand liabilities at their existing values and not at the revalued amounts, the adjustment is made through a single adjusting entry through Capital Accounts or Current Accounts by debiting the gaining partner and crediting the sacrificing partner.

Q.3

Where would you record "Interest on Drawings" when capitals are fluctuating?

Solution

When capitals are fluctuating, we would record "Interest on Drawings" in Partners' Capital Accounts.

Q.4

State any two deductions that may have to be made from the amount payable to the legal representative of a deceased partner.

Solution

(i) Drawings.

(ii) Share of accumulated loss.

Q.5

The total assets of a firm were Rs. 5,00,000 and outsiders Liabilities were Rs. 80,000. Actual profits earned by the firm were Rs. 60,000. Calculate the total capitalized value of the business if the normal rate of return is 10%.

Solution

Total capitalized value = Rs. 60,000 X 100/10 = Rs. 6,00,000.

Q.6

Give the meaning of ‘calls-in-Arrears’.

Solution

Sometimes, some of the shareholders may fail to pay the amount due from them on allotment or on call. The amount remaining unpaid on allotment or on calls call-in-arrear.

Q.7

Akshay Ltd. issued 1,00,000 shares of Rs. 10 each, payable as follows :.

Rs. 2 on application payable on 1st March, 2006; .
Rs. 3 on allotment payable on 1st May,2006; .
Rs. 2 on first call payable on 1st August, 2006 and .
Rs. 3 on second and final callpayable on 1st December, 2006. .

All these shares were subscribed for and amounts dulyreceived. Akriti, who had 8,000 shares, paid the amount of both the calls alongwithallotment.

Suniti, who had 4,000 shares, paid the amount of second and final call with the first call.

Calculate the amount of interest on calls-in-advance payable to Akriti and Suniti.

Solution

Interest on calls-in-advance payable to Akriti.

On IstCall = 8000 X 2 X 6/100 X 3/12 = 240 (for three months)

On 2nd Call = 8000 X 3 X 6/100 X 7/12 = 840 (for Seventh months)

Total = Rs. 1080.

Smriti

On 2nd Call = 4000 X 3 X 6/100 X 4/12 = 240 (for Four months)

Q.8

Pass the necessary journal entries for the issue of debentures in the following cases:

(a)Rs. 40,000, 12% debentures of Rs. 100 each issued at a premium of 5% redeemable at par.

(b)Rs. 70,000, 12% debentures of Rs. 100 each issued at a premium of 5% redeemable at Rs. 100.

Solution

Q.9

On 1-4-2014 Jay and Vijay, entered into partnership for supplying laboratory equipment to government schools situated in remote and backward areas. .

They contributed capitals of Rs. 90,000 and Rs. 50,000 respectively and agreed to share the profits in the ratio of 3 : 2. .

The partnership deed providedthat interest on capital shall be allowed at 9% per annum. .

During the year the firm earneda profit ofRs. 11,700.Showing your calculations clearly, prepare 'Profit and Loss Appropriation Account' of Jay andVijay for the year ended 31-3·2015.

Solution

In the books of firm

Profit and Loss Appropriation Account

for the year ended 31st March 2015

Working Note :

Interest on Jay's Capital = Rs. 90,000 X 9/100 = Rs. 8,100.

Interest on Vijay's Capital = Rs. 50,000 X 9/100 = Rs. 4,500.

Total interest on capital payable to both the partners =Rs. 8,100 + Rs. 4,500 =Rs. 12,600.

Since the available net profit of Rs. 7,800 is less than the interest on capital payable to partners, the availableprofit of Rs. 7,800 will be distributed in the ratio of interest on capitals i.e., 8,100 : 4,500 or 9 : 5.

Q.10

A partnership firm earned net profits during the last three years as follows:

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. The remuneration of all the partners during this period is estimated to be Rs. 1,00,000per annum. Calculate the value of goodwill on the basis of (i) two year's purchase of super profits earned on average basis during the above mentioned three years and (ii) by capitalization method.

Solution

Average Profit = 6,60,000/3 = 2,20,000

Adjusted Average Profit = Average Profit - Fair Remuneration of Partners

= Rs. 2,20,000 - Rs. 1,00,000.

= Rs. 1,20,000.

Note:Goodwill is to be estimated on the basis of expected (future) maintainable profit. Hence, fairremuneration of all the partners has been deducted from average profit.

Capital Employed = Rs. 4,00,000.

Normal Rate of Return = 15%.

Normal Profit = Capital Employed X normal Rate of Return/100

= Rs. 4,00,000 X 15/100.

= Rs. 60,000.

Super Profit = Adjusted Average Profit - Normal Profit

= Rs. 1,20,000 - Rs. 60,000.

=Rs. 60,000.

(i) Goodwill as per Super Profit Method

Goodwill = Super Profit x Number of Years of Purchase

=Rs. 60,000 x 2.

=Rs. 1,20,000.

(ii) Goodwill as per Capitalisation Method

Goodwill = Super Profit X 100/ Normal Rate of Return

= 60,000 X 100/15

= Rs. 4,00,000.

Alternate to part (ii)

Total capitalised va1ue = Actual/Average Profit/ Normal rate X 100

= 1,20,000 X 100/15

= Rs. 8,00,000.

Goodwill = Rs. 8,00,000 - Rs. 4,00,000.

=Rs. 4,00,000.

Q.11

P, Q and R are partners sharing profits and losses in the ratio of 5 : 3 : 2. From 1st January,2013, they decide to share profits and losses in equal proportions. The partnership deed provides that inthe event of any change in profit sharing ratio, the goodwill should be valued at three years' purchase ofthe average of five years' profits. The profits and losses of the preceding five years are:Profits: 2011 - Rs. 60,000; 2012 - Rs. 1,50,000; 2013 - Rs. 1,70,000; 2014 - Rs. 1,90,000;.

Loss: 2015 - Rs. 70,000.

Give the necessary Journal entry to record the above change.

Solution

Old ratio of P, Q and R =5 : 3 : 2

New ratio of P, Q and R = I : 1 : 1

Sacrifice (or Gain) = Old Ratio - New Ratio

P= 5/10 -1/3

=15-10/30 =5/30 (Sacrifice)

Q = 3/10-1/3

=9-10/30 = (-1/30) (gain)

R = 2/10-1/3

= 6-10/30 =(-4/30) (gain)

Gaining ratio of Q and R =1 : 4

Average profits = 5,00,000/5 = Rs. 1,00,000

Goodwill of the firm =1,00,000 x 3 =Rs. 3,00,000

Goodwill payable to P =3,00,000 X 5/30 = Rs. 50,000

Q.12

A company took a loan of Rs. 5,00,000 from State Bank of India and issued 10% debentures of Rs. 8,00,000 of Rs. 100 each as a collateral security. Explain how will you deal with issue of debentures in the books of company.

Solution

There are 2 methods to deal with issue of debentures as collateral security. They are givenbelow:.

Note : No entry in the books of accounts.

Second Method

Note : No entry in the books of accounts.

Q.13

Pass the necessary journal entries for the following transactions on the dissolution of the firm of Sudha and Shiva after the various assets (other than cash) and outside liabilities have been transferred to Realisation Account :

Sudha agreed to pay off her husband's loan Rs. 19,000.
A debtor whose debt of Rs. 9,000 was written off in the books paid Rs. 7,500 in full settlement.
Shiva took over all investments at Rs. 13,300.
Sundry creditors Rs. 10,000 were paid at 9% discount.
Realisation expenses Rs. 3,400 were paid by Sudha for which she was allowed Rs. 3,000.
Loss on realization Rs. 9,400 was divided between Sudha and Shiva in 3: 2 ratio.

Solution

Q.14

Shyam died on 30th June, 2014. The partnership deed provided for the following on the death of apartner:.

Goodwill of the firm be valued at two years' purchase of average profits for the last threeyears which were Rs. 90,000.
Shyam's share of profit till the date of his death was to be calculated on the basis of sales. Salesfor the year ended 31st March, 2014 amounted to Rs. 9,00,000 and that from 1st April to 30th June, 2014Rs. 5,40,000. The profit for the year ended 31st March, 2014 was Rs. 2,50,000.
Interest on capital was to be provided @ 8% p,a.
According to Shyam's will, the executors should donate his share to 'MaitriChhaya– anorphanage for girls'.

Prepare Shyam's Capital Account to be rendered to his executor. Also identify the value beinghighlighted in the question.

Solution

Working Notes :

(i) Average Profit =Rs. 90,000

Goodwill = =Rs.90,000 x 2.

=Rs. 1,80,000.

Goodwill payable to Shyam = Rs. 1,80,000 X 4/14 = Rs. 51,429.

(ii) Profit for the year ending 31st March, 2014 = Rs. 2,50,000

Sales for the year ending 31st March, 2014 = Rs. 9,00,000.

Sales for 3 months (1st April to 30th June) = Rs. 5,40,000.

Profit for 3 month on the basis of last year's sales

= 2,50,000/9,00,000 X 5,40,000 = Rs. 1,50,000.

Share of profit payable to Shyam =Rs. 1,50,000 X 4/14 = Rs. 42,857.

(iii) Interest on capital payable to Shyam= Rs. 65,000 X 8/100 X 3/12 = Rs. 1,300

The question highlights the deceased partner's concern for deprived section of society i.e., girls living in an orphanage. By donating his wealth to the orphanage, Shyam has fulfilled his social responsibility. In this way, sympathy and kindness are the values highlighted by the question.

Q.15

(a)

Stephen Ltd. took over the following Assets and Liabilities of Bright Ltd.

Building Rs. 10,00,000; .
Book debts Rs. 6,00,000; .
Stock Rs. 3,50,000; .
Payables Rs. 2,00,000.

at an agreed consideration of Rs. 20,00,000, which was discharged as follows:.

40% by a Bank draft
50% by issue of 9% Debentures of Rs. 100 each @ premium of 25% .
The balance by a Bill of Exchange.

Give the journal entries in the books of Stephen Ltd.

(b)

Arun Ltd. is in the garment business. As its Corporate social responsibility it decided to install 200 cleaningcentres to set up modern sewage systems in the town. The project was named "Swabhiman Bharat". It purchasedthe materials required from Aryan Ltd. for Rs. 2,50,000. It made the payment as follows.

Rs. 50,000 by cheque.
1,000,9% Debentures of Rs. 100 each at par.
500, 12% Preference Shares of Rs. 200 each.

Pass journal entries

Solution

(a)

(b)

Q.16

X, Y and Z were partners sharing profits in the ratio of 2 : 2 : 1. The Balance Sheet as at 31st.

March, 2014, when they dissolved the firm was as follows:

It was agreed that:

X to take over furniture at Rs. 8,000 and debtors amounted to Rs. 1,20,000 at Rs. 1,17,200 and thecreditors of Rs. 16,000 were to be paid by him at this figure.
Y is to take over all stock for Rs. 17,000and some sundry assets at Rs. 72,000 (being 10% less thanthe book value).
Z to take over remaining sundry assets at 80% of the book value and assume the responsibilityof discharge of loan together with accrued interest of Rs. 2,300.
The expenses ofrealisation were Rs. 2,700. .

The remaining debtors were sold to a debt collectingagency at 50% of the value.Prepare the necessary accounts to close the books of the firm.

Solution

Q.17

'Aakash Limited' invited applications for issuing 15,000 equity shares of Rs.10 each. The amount was payable as follows:.

On application - Rs.2 per share.
On allotment - Rs.3 per share.
On first and final call - Rs.5 per share.

Applications for 18,000 shares were received.

Shares were issued proportionately to all applicants.Excess money received with applications was adjusted towards sums due on allotment. .

Ramesh whohad applied for 360 shares failed to pay allotment, and first and final call money. .

Naresh to whom 150shares were allotted failed to pay the first and final call money. .

Shares of both Ramesh and Naresh wereforfeited. Out of the forfeited shares, 200 shares were re-issued at Rs.9 per share as fully paid up. There-issued shares included all the shares of Naresh.

Pass necessary journal entries for the above transactions in the books of 'Aakash Limited'.

Solution

Working Notes:

(i) No. of shares to be issued = 15,000

No. of shares applied for = 18,000.

Ratio of Shares Allotted and Applied for

= 15,000 : 18,000 = 5 : 6

Shares allotted to Ramesh

= 360 X 5/6 = 300

Shares applied by Naresh

= 150 X 6/5 = 180

(ii) Application money paid by Ramesh

= 360 x 2 = Rs. 720.

Application money on 300 shares allotted (300 x 2) Rs. 600.

Excess application money paid by Ramesh adjusted towards share allotment =720 - 600 = Rs. 120.

Amount due from Ramesh on allotment 300 x 3 Rs. 900.

Less: Amount already paid by Ramesh on application = Rs. 120.

Amount not paid by Ramesh on allotment =Rs. 780.

(iii) Amount due on allotment

=15,000 x 3 =Rs. 45,000.

Less: Application money adjusted to allotment =Rs. 6,000.

Amount receivable on allotment =Rs. 39,000.

Less: Allotment money not paid by Ramesh Rs. 780.

Amount received on allotment =Rs. 38,220.

(iv) Amount forfeited on 300 shares issued to Ramesh = Rs. 720

Amount forfeited on 150 shares issued to Naresh =Rs. 750.

Total amount forfeited on 450 Shares = Rs. 1,470.

Total amount forfeited on 200 Shares

Less: Loss on re-issue of shares = Rs. 200.

Amount transferred to Capital Reserve =Rs. 670.

Q.18

State why Cash Flow Statement is not a substitute for Income Statement.

Solution

Cash Flow Statement is not a substitute for Income Statement because income statement shows both cash and non-cash items of revenue nature while cash flow statement shows only cash items of revenue and capital nature.

Q.19

List any two financing activities that result into outflow of cash.

Solution

(i) Redemption of Debentures (ii) Payment of Dividend.

Q.20

From the following Income Statement, prepare a Common-size Income Statement of Jayant

Ltd. for the year ended 31.3.2012:.

Solution

Q.21

Karizma Ltd. is a finance company which recruits its employees through campus placements wherein they give preference to employ the lower income group candidates studying under EWS category. Given below is the Comparative Statement of Profit and Loss of the company for the years ended 31't March 2014 and 31^st March, 2015.

(a) Calculate net profit ratio for the years ending 31st March 2014 and 31st March, 2015.

(b) Inventory Turnover Ratio is 3 Times. Revenue from operations are Rs. 1,80,000, Opening Inventory is Rs. 2,000 more than the Closing Inventory. Calculate Opening and Closing Inventory when goods are sold at a profit of 20% on cost.

Solution

(a) Net Profit Ratio = Net Profit after Tax / Revenue from operations X 100

For the year ended 31St March, 2014 = 4,80,000 X 100 / 10,00,000 = 48%

For the year ended 31st March, 2015 = 6,60,000 X 100 / 15,00,000 = 44%

(b) Inventory Turnover Ratio = Cost of Revenue from Operations / Average Inventory

Cost of Revenue from Operations = Revenue from Operations - Gross Profit

= Rs. 1,80,000 - Rs. 30,000 =Rs. 1,50,000.

Average Inventory = Rs. 50,000.

Let Opening Inventory be x

Closing Inventory =x - 2,000

x + x -2,000 / 2 = Rs. 50,000.

2x - 2,000 = 1,00,000

2x = 1,02,000

x = Rs. 51,000.

Opening Inventory =Rs. 51,000

Closing Inventory =Rs. 49,000.

Q.22

The Current Ratio of a company is 2.5 : 1.5. State with reasons which of the following.

transactions will increase, decrease or not change the ratio :

Discounted a bill receivable of Rs. 10,000 from bank. Bank charged discount of Rs. 200.
A bill receivable Rs. 8,000 discounted with bank was dishonored.
Cash deposited into bank Rs. 7,000.
Paid cash Rs. 5,000 to the creditors.