MM:- 80

Section – A [60 Marks]

1. A partnership deed provides for the payment of interest on capital but there was a loss instead of
profit during the year 2021-22. At what rate will interest on capital be allowed? [1]
(a) 6% (b} 12% (c) 10% (d) No interest on capital will be allowed
2. Partners' capital account always shows a credit balance under fluctuating capital method. [1]
(a) Partially true (b) True (c) False (d) Can't say
3. E, F and G are partners sharing profits in the ratio of 3:3:2. As per the partnership agreement, G is
to get a minimum amount of ₹80,000 as his share of profits every year and any deficiency on this
account is to be personally borne by E. The net profit for the year ended 31st March, 2020 amounted
to ₹3,12,000. Calculate the amount of deficiency to be borne by E. [1]
(a) ₹ 1,000 (b) ₹4,000 (c) ₹ 8,000 (d) ₹2,000
4. On the basis of the following data, how much final payment will be made to a partner on firm's
dissolution? Credit balance of capital account of the partner was ₹50,000. Share of loss on realisation
amounted to 10,000. Firm's liability taken over by him was for ₹8,000. [1]
(a) ₹32,000 (b) ₹48,000 (c) ₹40,000 (d) ₹52,000
5. Give any two points of difference between calls-in-arrears and calls-in-advance. [1]
6. Give two examples of contingent liabilities. [1]
7. Give the formula for calculation of goodwill by capitalisation of super profits. [1]
8. Distribute general reserve of ₹80,000 at the time of admission of Z. When 25% of general reserve
is to be transferred to provision for doubtful debts. The firm has two partners X and Y. [1]
9. Journalise the following in case of dissolution Partner Z's loan was appearing on the liabilities side
of the balance sheet ₹96,000. He accepted an unrecorded asset of ₹80,000 at ₹72,000 and the
balance was paid to him in cash. [1]
10. What share of profit would a sleeping partner, who has contributed 75% of the total capital, get
in the absence of a deed? [1]
11. Nischal Ltd. Company purchased furniture ₹4,40,000 from Vindhyachal Ltd. 50% of the amount
was paid to Vindhyachal Ltd. by accepting a bill of exchange and for the balance the company issued
9% debentures of ₹100 each at a premium of 10% in favour of Vindhyachal Ltd. Pass necessary
journal entries in the books of Nischal Ltd. Company for above transactions. [3]
Or Nand Ram Ltd, issued 1,00,000, 8% debentures of ₹10 each at 12 on 1st April, 2021. The issue
was fully subscribed. In terms of the issue of debentures, interest was payable at the end of the
financial year. Pass the journal entries for the above transactions.
12. A, B and C are sharing profits in the ratio of 3: 2: 1. C dies on 30th June, 2021, Accounts are closed
on 31st March every year, Sales for the year ending 31st march 2021, amounted to ₹7,20,000
Sales from 1st April, 2021 to 30th June, 2021 amounted to ₹2,88,000. The profit for the year ending
31st March, 2021 amounted to ₹36,000. Calculate the deceased partner's share in the current year's
profits and pass journal entry for the same. [3]
Or M, N and O were partners in a firm sharing profits and losses equally. Their balance sheet at
31st December, 2021 was as follows
BALANCE SHEET
AS AT 31ST DECEMBER,2021
LIABILITIES AMT ASSETS AMT
CAPITAL A/CS PLANT AND MACHINERY 60,000
M 70,000 STOCK 30,000
N 70,000 SUNDRY DEBTORS 95,000
O 70,000 2,10,000 CASH AT BANK 40,000
CENERAL RESERVE 30,000 CASH IN HAND 35,000
CREDITORS 20,000

2,60,000 2,60,000
th
N died on 14 march 2022. According to the partnership deed, executors of the
deceased partner are entitled to
 i. Balance of partners capital accounts.
ii. Interest on capital @ 5% per annum

(iii)Share of goodwill calculated on the basis of twice the average of past 3 years' profits.
(iv) Share of profits from the closure of the last accounting year till the date of death on the basis of
twice the average of three completed years' profits before death.
Profits for 2019, 2020 and 2021 were ₹80,000, ₹90,000 and ₹1,00,000 respectively. Show the
working for deceased partner's share of goodwill and profits till the date of his death. Pass the
necessary journal entries.
13. From the following information extracted from the books of Z Ltd. prepare Balance Sheet of the
company as at 31st March, 2022 as per Schedule III of the Companies Act, 2013. [3]
Paritculars AMT particulars AMT
Long term borrowings 20,000 Property , plant and equipment 60,000

Trade paybles 1200 Inventories 800

Share capital 16000 Trade receivables 3200
Reserves and surplus 3600 Cash and cash equivalents 4800

14. Name the major heads and sub-heads under which the following items will be presented in the
balance sheet of a company as per Schedule III of the Companies Act, 2013. [3]
(i) Forfeited Shares Account (ii) mining rights
(iii) Debentures (iv) interest accrues and due on secured loans
(v) Sundry Debtors (vi) livestock
(vii) Outstanding Salary (viii) preliminary expenses
(ix) Tax Reserve
15. On 1st April, 2021, Fast Computers Ltd. issued ₹20,000, 6% debentures of ₹100 each at a
discount of 4% redeemable at a premium of 5% after 3 years. The amount was payable as follows
On application 50 per debenture
Balance on allotment
Record the necessary journal entries for issue of debentures. Fast Computers Ltd. has a balance of
₹50,000 in securities premium reserve and ₹1,00,000 in general reserve. How will loss on issue be
written-off? [6]
16. Sohan and Mohan, the two partners of a business firm, agreed to appropriate the profits of their
firm on the following terms
(i) Interest is payable on capital @ 5% per annum.
(ii) Sohan to get a salary of ₹1.000 per month.
(iii) Interest on loan provided @ 10% per annum.
(iv) Interest and drawings to be charged @ 5% per annum.
(v) Mohan will get commission @ 1% on the sales made during the year.
(vi) Sohan is entitled to a rent of ₹50,000 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, 2021, was ₹ 3,60,000 before taking into
account any of the above terms
Paritculars Sohan Mohan
Capital balance on 1st April 2020 3,00,000 2,80,000

Loan advance on 1st October 2020 - 2,00,000

Drawing made during the year 80,000 60,000

During the year 2020-2021, sales of the firm amounted to rs 14,00,000. Prepare profit and loss
appropriation account and partner’s capital accounts.
 17. Arnab, Ragini and Dhrupad are partners sharing profits in the ratio of 3:1:1. On 31 March, 2015
they decided to dissolve their firm. On that date their balance sheet was as under
BALANCE SHEET AS AT 31ST MARCH, 2015
LIABILITIES AMT₹ ASSETS AMT₹
CREDITORS 60,000 BANK 50,000
ARNAB'S BROTHER'S LOAN 95,000 DEBTORS 1,70,000
DHRUPAD'S LOAN 1,00,000 (-) PROVISION FOR BAD DEBTS (20,000) 1,50,000
INVESTMENT FLUCTUATION FUND 50,000 STOCK 1,50,000
CAPITAL A/CS INVESTMENT 2,50,000
ARNAB 2,75000 BUILDING 3,00,000
RAGINI 2,00,000 PROFIT AND LOSS A/C 50,000
DHRUPAD 1,70,000 6,45,000
9,50,000 9,50,000

The assets were realised and the liabilities were paid as under
(1) Arnab agreed to pay his brother's loan.
(2) Investments realised 20% less.
(3)Creditors were paid at 10% less.
(4) Building was auctioned for₹ 3,55,000. Commission on auction was ₹ 5,000.
(5) 50% of the stock was taken over by Ragini at market price which was 20% less than the book
value and the remaining was sold at market price.
(6) Dissolution expenses were ₹ 8,000. ₹3,000 were to be borne by the firm and the balance by
Dhrupad. The expenses were paid by him.
Prepare realisation account, bank account and partners' capital accounts. [6]
Or
Hanif and Jubed were partners in a firm sharing profits in the ratio of their capitals. On 31st March,
2021, their balance sheet was as follows
BALANCE SHEET AS AT 31ST MARCH, 2021
LIABILITIES AMT ₹ ASSETS AMT₹
CREDITORS 1,50,000 BANK 2,00,000
WORKMEN'S COMPENSATION FUND 3,00,000 DEBTORS 3,40,000
GENERAL RESERVE 75,000 STOCK 1,50,000
HANIF'S CURRENT A/C 25,000 FURNITURE 4,60,000
CAPITAL A/C S MACHINERY 8,20,000
HANIF 10,00,000 JUBED'S CURRENT A/C 80,000
JUBED 5,00,000
15,00,000
20,50,000 20,50,000
On the above date, the firm was dissolved.
(i) Debtors were realised at a discount of 5%. 50% of the stock was taken over by Hanif at 10% less
than the book value. Remaining stock was sold for ₹ 65,000.
(ii) Furniture was taken over by Jubed for ₹1.35,000 Machinery was sold as scrap for ₹74,000
(iii) Creditors were paid in full.
(iv) Expenses on realisation ₹8,000 were paid by Hanif.
Prepare realisation account.
18. Sudarshan Ltd invited applications for ₹1,00,000 equity shares of ₹ 10 each. The shares were
issued at a premium of ₹5 per share. The amount was payable as follows On application and
allotment ₹8 per share (including premium 3).
Balance including premium on the first and final call.
Applications for ₹1,50,000 shares were received. Applications for ₹10,000 shares were rejected and
pro-rata allotment was made to the remaining applicants on the following basis
(i) Applicants for ₹80,000 shares were allotted 60,000 shares.
(ii) Applicants for ₹60,000 shares were allotted 40,000 shares.
Excess share application and allotment money could be utilised for calls. X, who belonged to the
category (i) and was allotted 300 shares, failed to pay the first call money. Y, who belonged to the (ii)
 category and was allotted 200 shares also failed to pay the first call money. Their shares were
forfeited. The forfeited shares were re-issued @ ₹12 per share fully paid-up.
Pass necessary journal entries and prepare cash book. [10]
Or
VXN Ltd. invited applications for issuing 50,000 equity shares of 10 each at a premium of ₹ 8 per
share. The amount was payable as follows
On application ₹4 per share (including ₹2 premium)
On allotment ₹6 per share (including ₹3 premium)
On first call ₹5 per share (including ₹1 premium)
On second and final call - Balance amount.
The issue was fully subscribed. Gopal, a shareholder holding 200 shares, did not pay the allotment
money and Madhav, a holder of 400 shares, paid his entire share money along with the allotment
money. Gopal's shares were immediately forfeited after allotment. Afterwards, the first call was
made. Krishna, a holder of 100 shares, failed to pay the first call money and Girdhar, a holder of 300
shares, paid the second call money also along with the first call. Krishna's shares were forfeited
immediately after the first call. Second and final call was made afterwards and was duly received. All
the forfeited shares were reissued at ₹9 per share fully paid up. Pass necessary journal entries for
the above transactions in the books of the company.
19. The balance sheet of Madan and Mohan, who were sharing profits and losses in the ratio of 3:2,
on 31st march, 2021 was as follows

BALANCE SHEET AS AT 31ST MARCH, 2021

LIABILITIES AMT ₹ ASSETS AMT₹
CREDITORS 28,000 CASH AT BANK 10,000
WORKMEN'S COMPENSATION FUND 12,000 DEBTORS 65,000
GENERAL RESERVE 20,000 (-) PROVISION FOR DOUBTFUL DEBTS (5,000) 60,000
CAPITAL A/C S STOCK 30,000
MADAN 60,000 INVESTMENTS 50,000
MOHAN 40,0000 PATENTS 10,000
1,00,000
1,60,000 1,60,000
They decide to admit Gopal on 1st April, 2021 for 1/4th share on the following terms

(i)Gepat shall bring ₹25,000 as his share of premium for goodwill.

(ii)That unaccounted accrued income of ₹500 be provided for.
(iii) The market value of investments was ₹45,000.
(iv) A debtor whose dues of₹ 1,000 were written-off as bad debts paid ₹800 in full settlement.
(v) A claim of ₹2,000 on account of workmen compensation to be provided for.
(vi) Patents are undervalued by ₹ 5,000.
(vii) Gopal to bring in capital equal to 1/4th of the total capital of a new firm after all adjustments.
Prepare the revaluation account, capital account of the partners and the balance sheet of the new
firm. [10]
Or Devi, Bhajan and Mohan were partners in a firm sharing profit and loss in the ratio of
4:3:3. On 31st March, 2022 their balance sheet was as follows:

BALANCE SHEET AS AT 31ST MARCH, 2022

LIABILITIES AMT ₹ ASSETS AMT₹
CAPITAL A/C S CASH 96,000
DEVI 3,60,000 DEBTORS 1,08,000
BHAJAN 3,00,000 (-) PROVISION FOR DOUBTFUL DEBTS (12,000) 96,000
MOHAN 1,80,000 8,40,000 STOCK 1,20,000
GENERAL RESERVE 72,000 MACHINERY 3,60,000
CREDITORS 1,32,000 BUILDING 2,40,000
PATENTS 72,000
PROFIT AND LOSS A/C 60,000
 10,44,000 10,44,000

On the above date, Devi retired and it was agreed that

(i) Debtors of 4,800 will be written-off as bad debts and a provision of 5% on debtors for bed and
doubtful debts will be maintained.
(ii) An unrecorded creditor of ₹24.000 will be recorded.
(iii) Patents will be completely written-off and 5% depreciation will be charged on stock, machinery
and building.
(iv) Bhajan and Mohan will share the future profits in the ratio of 3:2.
(v) Goodwill of the firm was valued at ₹6,48,000.
Pass necessary journal entries for the above transactions.
Section – B [20 marks]
20. Consider the following information.
Long-term borrowings ₹2,00,000
Long-term provision ₹ 1,00,000
Current liabilities ₹ 50,000
Non-current assets ₹3,60,000
Current assets ₹90,000
Proprietary ratio will be
(i) 22.2% (ii) 21.8% (iii)36% (iv) None of these [1]
21. Which of the following is an operating cash flow?
(a) Purchase of marketable securities for ₹25,000 cash
(b) Sale of land for ₹28,000 cash at a gain
(c) Sale of ₹2,500 shares (held as investment) for ₹15 each
(d) Purchase of equipment for ₹500 cash [1]
22. Why are inventories and prepaid expenses not considered as quick assets? [1]
23. Will 'acquisition of machinery by issue of equity shares' be considered while preparing
cash flow statement? Give reason in support of your answer. [1]
24. how is the financial statement analysis useful to finance manager? [1]
25. from the following particular, prepare a common size balance sheet of Rima Ltd. [3]
31ST
MARCH,202 31ST
PARTICULARS 2₹ MARCH,2021 ₹
SHARE CAPITAL 33,00,000 32,00,000
PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE
ASSETS 40,00,000 35,00,000
6% GOVERNMENT BONDS 6,00,000 6,00,000
5% DEBENTURES 16,00,000 14,00,000
RESERVES AND SURPLUS 2,00,000 5,00,000
SHORT TERM INVESTMENT 4,00,000 5,00,000
INVENTORIES 6,00,000 8,00,000
TRADE PAYABLES 6,00,000 5,00,000
CASH AND CASH EQUIVALENTS 1,00,000 2,00,000
26. from the following calculate the net cash flow from operating activities.

NOT
E 31ST
PARTICULARS NO. 31ST MARCH,2022 ₹ MARCH,2021 ₹
1. EQUITY AND LIABILITIES
I. SHAREHOLDER'S FUNDS
A. SHARE CAPITAL 1 3,75,000 3,75,000
B. RESERVES AND SURPLUS 2 1,55,000 -10,000
II. NON CURRENT LIABILITIES (8% DEBENTURES) 1,30,000 75,000
III. CURRENT LIABILITIES
A. SHORT TERM BORROWINGS ( 8% BANK LOAN) 20,000 25,000
B. TRADE PAYABLES 60,000 55,000
C. SHORT TERM PROVISIONS ( PROVISION FOR TAX) 25,000 20,000
TOTAL 7,65,000 5,40,000

2. ASSETS
I. NON CURRENT ASSETS
A. PROPERTY PLANT AND EQUIPMENT 4,30,000 3,10,000
B. INTANGIBLE ASSETS (GOODWILL) 7,500 20,000
C. NON CURRENT INVESTMENTS 62,500 40,000
II. CURRENT ASSETS
A. CURRENT INVESTMENTS 2,500 7,500
B. INVENTORIES 97,500 50,000
C. TRADE RECEIVABLES 1,00,000 1,00,000
D. CASH AND CASH EQUIPVALENTS 65,000 12,500

TOTAL 7,65,000 5,40,000

NOTES TO ACCOUNTS
PARTICULARS 2022 2021
1. SHARE CAPITAL
EQUITY SHARE CAPITAL 2,75,000 2,25,000
5% PREFERENCE SHARE CAPITAL 1,00,000 1,50,000
3,75,000 3,75,000

2. RESERVES AND SURPLUS

GENERAL RESERVE 75,000 60,000
STATEMENT OF PROFIT AND LOSS 75,000 -70,000
SECURITIES PREMIUM RESERVE 5,000 -
1,55,000 -10,000
Additional Information
During the year, a piece of machinery costing ₹30,000 on which depreciation charged was ₹10,000
was sold for ₹10,000. Depreciation provided on property, plant and equipment ₹30,000. Dividend
on equity shares @ 8% was paid on opening balance. Income tax ₹22,500 was provided. Additional
debentures were issued at par on 1st October, 2021 and bank loan was repaid on the same date. At
the end of the year, preference shares were redeemed at a premium of 5%. [6]
27. The following information is provided to you
Share capital ₹6,00,000
General reserve ₹1,20,000
15% loan ₹3,00,000
Total assets ₹20,00,000
Tax paid during the year ₹1,50,000
Profit after interest and tax ₹3,00,000
From the above information, calculate the following ratios
(1) Debt-equity Ratio (ii) Return on Investment (ii) Interest Coverage Ratio [6]