Book Recommended ------ Ultimate Book of Accountancy Class 12th

Sample paper- 1 (Target Term -2)

Answers
1. (i) Club should receive subscription for the current year Rs. 4,00,000

i.e., 3,20,000 x 100/80 = 4,00,000

but received only 3,20,000

so, subscription in arrears for the current year 4,00,000 – 3,20,000 = 80,000

(ii) Subscription in arrears for the previous year = 42,000 x 100/75 = 56,000

Arrears were 56,000 out of which received 42,000

56,000 – 42,000 = 14,000

Out of 14,000 some amount is written off i.e., 6,000

Still in arrears for previous year = 14,000 – 6,000 = 8,000

Total Subscription in arrears at the end of the year 2020-21 = 80,000 + 8,000 = 88,000

2. Difference between Dissolution of Partnership and Dissolution of Partnership Firm

Basis Dissolution of Partnership Dissolution of Partnership Firm

Closure of Does not require because the business is The books of account are closed.
Books not closed.

Court Court does not intervene because A firm can be dissolved by

intervention partnership is dissolved by mutual the court’s order.
agreement.

3. (i) Gain of X and Z = 1:2

(ii) Journal

Date Particulars L.F. Debit (Rs.) Credit (Rs.)

General Reserve Dr. 36,000
To Investment Fluctuation Reserve A/c 36,000
(Being transfer to Investment Fluctuation Reserve
90,000 x 40/100)

X’s Capital A/c Dr.

Z’s Capital A/c Dr. 3,600
To Y’s Capital A/c 7,200
(Being Y’s share in that part of General Reserve 10,800
which is transferred to IFR)
 Book Recommended ------ Ultimate Book of Accountancy Class 12th

General Reserve Dr.

To X’s Capital A/c 54,000
To Y’s Capital A/c 27,000
To Z’s Capital A/c 16,200
(Being remaining part of General Reserve 10,800
distributed among the partners)
Note: Y’s share in General Reserve is 90,000 x 3/10 = 27,000 so he should get Rs. 27,000 i.e., 10,800
+ 16,200

4. Income and Expenditure Account (Extract)

Expenditure Amount Income Amount

To Sports material Consumed 4,97,500
Note: 4,00,000 + 45,000 + 60,000 – 1,05,000 – 15,000 + 1,35,000 – 22,500 = 4,97,500

Balance Sheet (Extract) at the end

Liabilities Amount Assets Amount

Creditors for Sports Material 60,000 Advance to suppliers 15,000
Closing stock of Sports Material 22,500
OR

Balance Sheet (Extract)

Liabilities Amount Assets Amount

Capital Fund: Pavilion 22,00,000
Opening Balance 30,00,000
Add: Transfer from Pavilion Fund 23,00,000 53,00,000

Pavilion Fund:
Opening Balance 18,00,000
Add: Donation 5,00,000
23,00,000
Less: Expenditure amount
transfer to Capital fund 22,00,000
1,00,000
Less: Transfer to Capital Fund 1,00,000 Nil

Note: Pavilion Fund is closed so balance Rs. 1,00,000 will be transferred to the Capital Fund.

5. Journal

Date Particulars L.F. Debit Credit

Ana’s Capital A/c Dr. 18,000
Pranjal’s Capital A/c Dr. 12,000
To Danish’s Capital A/c 30,000
(Being Danish’s share of goodwill adjusted in
capital Accounts of Ana and Pranjal)

Profit and Loss Suspense A/c Dr. 5,400

To Danish’s Capital A/c 5,400
Book Recommended ------ Ultimate Book of Accountancy Class 12th

(Being Danish’s share of profit up to date of his

death transferred to his capital account)

Working Notes:- Sales = 2,00,000 + 20% of 2,00,000 = 2,00,000 +40,000

Profit % = 10% - 1% = 9%

Danish’s Share of Profit =₹ 2,40,000 X 9/100 X 5/10 X 6/12 = ₹ 5,400

6. Journal

Date Particulars L.F. Debit Credit

Land & Building A/c Dr. 6,00,000
Machinery A/c Dr. 3,50,000
Furniture A/c Dr. 1,50,000
Trademarks A/c Dr. 1,00,000
To Satish Ltd. 11,70,000
To Capital Reserve (Balancing Figure) 30,000
(Being assets purchased)

Satish Ltd. Dr. 11,70,000

Discount on Issue of Debentures A/c Dr. 60,000
To Bills Payable A/c 70,000
To Bank A/c 1,60,000
To 9% Debentures A/c 10,00,000
(Being issue of debentures at discount)

Capital Reserve Dr. 30,000

Statement of Profit & Loss Dr. 30,000
To Discount on issue of Debentures A/c 60,000
(Being discount written off)
Note: No. of Debentures issued = 11,70,000 – 70,000 – 1,60,000 = 9,40,000/94 = 10,000

OR

Journal

Date Particulars L.F. Debit (Rs.) Credit (Rs.)

1 April Bank A/c Dr. 52,50,000
2020 To Debenture Application and Allotment A/c 52,50,000
(Being application money received)

1 April Debenture Application and Allotment A/c Dr. 52,50,000

Loss on Issue of Debentures A/c Dr. 2,50,000
To 8% Debentures A/c 25,00,000
To Securities Premium Reserve A/c 1,25,000
To Premium on Redemption of Deb. A/c 2,50,000
To Bank A/c 26,25,000
 Book Recommended ------ Ultimate Book of Accountancy Class 12th

(Being issue of 9% Debentures)

31 Securities Premium Reserve A/c Dr. 1,25,000

March Statement of Profit and Loss A/c Dr. 1,25,000
2021 To Loss on Issue of Debentures A/c 2,50,000
(Being loss written off)

7. Entries at the time of Dissolution

Date Particulars L.F. Debit (Rs.) Credit (Rs.)

(i) Satish’s Capital A/c Dr. 7,000
To Realisation A/c 7,000

(ii) Realisation A/c Dr. 9,000

To Bank A/c 9,000

(iii) Realisation A/c Dr. 39,000

To Bank A/c 40,000 x 15/100 x 2/12 39,000

(iv) Ravi’s Capital A/c Dr. 36,000

Bank A/c Dr. 32,000
To Realisation A/c 68,000

(v) Realisation A/c Dr. 6,000

To Arvind’s Capital A/c 6,000

OR

Revaluation Account

Particulars Amount Particulars Amount

To Bad Debt 4,000 By Stock 30,000
To Bad Debts Provision 10,600 By Building 50,000
Distribution of Gain: By Investment 10,000
To X’s Capital A/c 37,700
To Y’s Capital A/c 22,620
To Z’s Capital A/c 15,080
90,000 90,000

Partners’ Capital Account

Particulars X Y Z Particulars X Y Z
To Adv. Suspense 20,000 12,000 8,000 By Bal. b/d 3,00,000 2,00,000 2,00,000
To Y’s Capital A/c 30,000 -- 40,000 By X’s Capital -- 30,000
To Cash -- 1,17,048 -- By Z’s Capital -- 40,000
To Y’s Loan -- 1,75,572 -- By Gen. Res. 20,000 12,000 8,000
To Balance c/d 3,07,700 -- 1,75,080 By Rev. A/c 37,700 22,620 15,080
3,57,700 3,04,620 2,23,080 3,57,700 3,04,620 2,23,080
Book Recommended ------ Ultimate Book of Accountancy Class 12th

8. (i) 21,00,000 (ii) 1,00,000 (iii) 10,50,000

(iv) Securities Premium Reserve A/c Dr. 85,000

Capital Reserve Dr. 10,000
Statement of Profit and Loss Dr. 5,000
To Loss on issue of Debentures A/c 1,00,000

(v) Loss on Issue of Debentures Account

Date Particulars Amount Date Particulars Amount

1 April To Premium on Redemption 31 By Securities Premium
2021 of Debentures A/c March Reserve 85,000
1,00,000 2022 By Capital Reserve 10,000
By Statement of P/L 5,000
1,00,000 1,00,000

9. Income and Expenditure Account

Expenditure Amount Income Amount

To Governor’s Party Exp. 22,000 By Subscription 3,00,000
1,00,000 + 28,000 – 1,50,000 By General Donation 1,25,000
To Office Expense 30,000 By Income from Entertainment 1,00,000
To Salaries 55,000 Show
To Printing and Stationery 20,000
To Surplus 3,98,000
5,25,000 5,25,000

Balance Sheet (Opening)

Liabilities Amount Assets Amount

Bank overdraft 10,000 Subscription in arrears 15,000
Building Fund 12,00,000 Cash 18,000
Capital Fund (Balancing Figure) 11,77,000
12,10,000 12,10,000

Balance Sheet (Closing)

Liabilities Amount Assets Amount

Advance Subscription 24,000 Capital work in progress 14,00,000
Legacy 3,00,000 (Building)
Capital Fund: Furniture 1,20,000
Opening Balance (11,77,000) Subscription in Arrears 42,000
Add: Life Membership Fee 60,000 Governor’s Party subscription 28,000
Add: Surplus 3,98,000 Cash 9,000
Add: Building Fund Exp. 14,00,000 6,81,000 Bank 6,000

Building Fund:
Opening Balance 12,00,000
Add: Donation 8,00,000
Book Recommended ------ Ultimate Book of Accountancy Class 12th

20,00,000
Less: Transfer to
Capital Fund 14,00,000 6,00,000

16,05,000 16,05,000

10. (i) No Flow (ii) No Flow

11. Comparative Statement of Profit and Loss

Particulars Note 31.3.2020 31.3.2021 Absolute % Change
No. change
(i) Revenue from 10,00,000 20,00,000 10,00,000 100%
operations

(ii) Purchase of 4,00,000 13,00,000 9,00,000 225%

Stock-in-Trade

Change in
Inventories of Stock-
in-Trade 1,00,000 1,20,000 20,000 20%

Other Expenses 1,00,000 1,42,000 42,000 42%

(iii) Total Expense 6,00,000 15,62,000 9,62,000 160.3%

(iv) Profit before Tax 4,00,000 4,38,000 38,000 9.5%

(i- iii)
Less: Tax 1,20,000 1,75,200 55,200 46%
(v) Profit after Tax 2,80,000 2,62,800 (17,200) (6.14%)

Note: Cost of Revenue from operation =

Purchase of Stock in Trade + change in inventories of Stock-in-Trade

OR

Common Size Balance Sheet

Particulars Note 31st March 31st March % 2020 % 2021

No. 2020 2021
I. EQUITY AND LIABILITIES
1. Shareholders’ Funds
(a) Share Capital 9,00,000 20,00,000 45 50
(b) Reserve and Surplus 1,00,000 2,00,000 5 5
2. Non-Current Liabilities
Long-term Borrowings 5,00,000 12,00,000 25 30
3. Current Liabilities
Trade Payable 5,00,000 6,00,000 25 15
Total 20,00,000 40,00,000 100 100
II. ASSETS
1. Non-current Assets
Property, Plant and Equipment
(Fixed Assets):
(i) Tangible Assets 10,00,000 20,00,000 50 50
Book Recommended ------ Ultimate Book of Accountancy Class 12th

2. Current Assets
(a) Inventories 8,00,000 19,00,000 40 47.5
(b) Cash and Cash Equivalents 2,00,000 1,00,000 10 2,5
Total 20,00,000 40,00,000 100 100

12. Cash Flow Statement

Particulars Detail Amount

A. Cash Flow from Operating Activities
Calculation of Profit before tax: Statement of P/L 2,25,000
Provision for tax 52,500
Dividend 1,00,000
Net Profit before tax 3,77,500
Add: Depreciation 60,000
Add: Interest on Bank Loan 1,600
Add: Software Amortised 30,000
Add: Interest on Debentures 13,500 + 3,375 16,875
Less: Gain on sale of Land and Building (22,500)
Operating profit before working capital changes 4,63,475
Less: Trade payables (15,000)
Less: Inventories (1,20,000)
Less: Trade Receivables (1,75,000)
Cash flow from operating activities before tax 1,53,475
Less: Tax (30,000)
Cash Flow from Operating Activities 1,23,475

B. Cash Flow from Investing Activities

Proceeds from sale of land and building 2,47,500
Non-current Investment purchased (9,80,000)
Cash used in Investing Activities (7,32,500)
C. Cash Flow from Financing Activities
Share Capital 7,50,000
Bank Loan 80,000
Redemption of Debentures (50,000)
Dividend (1,00,000)
Interest on Bank Loan (1,600)
Debenture Interest (16,875)
Cash Flow from Financing Activities 6,61,525

D. Decrease in Cash and Cash Equivalents (A + B + C) 52,500

Add: Cash and Cash Equivalents in the beginning 5,10,000

Cash and Cash Equivalents at the end 5,62,500

Land and Building Account

Particulars Amount Particulars Amount

To Balance b/d 12,00,000 By Bank (Sale) 2,47,500
Book Recommended ------ Ultimate Book of Accountancy Class 12th

To Gain on Sale of Land and 22,500 By Balance c/d 9,75,000

Building
12,22,500 12,22,500