MOST EXPECTED AND IMPORTANT TOPICS

FOR XII ACCOUNTS CBSE BOARD 2022

2022-23
23

Chapter: Partnership Fundamentals:

 Conceptual Theory Question (In absence of deed)

 Calculation of Interest on Capital (when closing capital is given)
 Preparation of Profit and Loss Appropriation
ppropriation Account (includes adjustment of salary, 10C, 10D and General
Reserve)
 Past Adjustment (I0C and 10D not allowed)
 Past Adjustment (10C & 10D not allowed + guarantee of profits)
 Past Adjustment (more than 1 year)
 Guarantee of Profit (by Partnerr to Firm)
 Guarantee of Profit (in case of loss)

Chapter: Goodwill - Nature and Valuation

 Average Profit Method - with adjustments of:
o Partner’s Remuneration
o Insurance not provided
o Undervaluation/overvaluation of stock
o Management Cost.
 Super Profit Method
 Calculation of Average Profit or Capital Employed (when goodwill is given)
 Capitalisation of Average Profit method.

Chapter: Change in PSR:

 Treatment of Valued Goodwill (Raise and write off method)
 Treatment of Reserves and Losses (when partners don’t want to distribute them)

Chapter: Admission of a Partner:

 Calculation of New Ratio.
 Journal Entry when Goodwill is brought only in part.
 Treatment of Hidden Goodwill.
 Preparation of Revaluation A/c. and Partner’s Capital A/c (with capital adjustment)

Chapter: Retirement of a Partner:

 Calculation of New Ratio.
 Treatment of Hidden Goodwill.
 Preparation of Revaluation A/c. and Partner’s Capital A/c (with capital adjustment)
 Preparation of Partner’s Loan A/c.

Chapter: Death of a Partner:

 Calculation
ulation of Deceased Partner’s Share of Profit.
 Preparation of Deceased Partner’s Capital A/c.
 Preparation of Executor's A/c.

Chapter: Dissolution of a Partnership Firm:

 Journal Entries relating to
 o Settlement of Partners’ Loan
o Realisation from debtors and Bill Receivable (like Sundry Debtors of $100,000
due after 2 months were settled now at a discount of 12% p.a.)
o Asset Taken over by partner.

o Wife's loan taken over by partner.

o Realisation expenses

 Preparation of Realisation A/c.

 Missing Value Questions

Chapter: Issue of Share Capital:

 Issue of shares for consideration other than cash
 Forfeiture and Reissue of Shares
 Forfeiture and Reissue of shares issued on Pro-Rata
Pro basis.
 Preparation of Balance Sheet showing share capital.
 Share Forfeited Account

Chapter: Issue of Debentures

 Issue of Debentures for consideration ather than cash.
 Issue of Debentures as collateral security.
 Issue of Debentures with terms of redemption.
 % Debenture A/c. and Discount/Loss on Issue of Debenture A/c.

Chapter:
r: Financial Statements of Company:
 Heads and Sub-heads
heads of the following items:

o Provision for Employee o Debentures with Maturity in

Benefits current financial year

o Outstanding Salary o Term Loan from Bank

o Unpaid Matured Deposits o Bank Overdraft

o Prelimimary Expenses o Share Forfeited Account

Written off Balance

o Sales of Services o Capital Redemption Reserve

o Sales of Scrap o Stores and Spares

o Trade Payables o Current Investments

o Unclaimed Dividend o Premium on Redemption of

Debentures
o Calls in Advance o Livestock
o Interest Accrued o Matured Debentures
o Securities Premium Reserve o Mining Rights
o Public Deposits o Provident Fund
Chapter: Analysis of Financial Statements:
 Limitations of Financial Statement Analysis
 Vertical Analysis - Read it completely
 Horizontal Analysis - Read it completely

Chapter: Ratio Analysis:

 Current Ratio
 Quick Ratio
 Calculation of Current Assets, Current Liabilities, and Quick Assets
 Debt-Equity Ratio
 Proprietary Ratio
 Inventory Turnover Ratio
 Fixed Asset Turnover Ratio
 Interest Coverage Ratio
 Operating Ratio
 Return on Capital Employed
 Effects on these ratios of certain transactions.

Chapter: Cash Flow Statement:

 Full Cash Flow Statement with adjustments relating to:
o Depreciation/Accumulated Depreciation
o Interest on Debentures/Bank Loan
o Provision for Tax
o Proposed Dividend

LAST TIME REVISION QUESTIONS

Partnership Fundamentals:

1. A andd B were partners in a firm sharing profits in the ratio 2:1. During the year ended
31.03.2023, A had withdrawn 50,000. Interest on his drawings amounted to 31,500.
Pass necessary Journal Entry for charging interest on drawings assuming that the capitals of
the partners were fixed.

2. Ajay, Binod and Chandar entered into partnership in as on 01.04.2022 with capitals of
Rs.300,000; Rs.200,000 and Rs.100,000 respectively. In addition to capital, Chandar has
advanced a loan of Rs.100,000 on 1st October, 2022. Since they had no agreement to guide
them, they faced the following issues.

(a) Ajay wanted interest on capitals to be provided @ 8%p.a. but Binod and Chandra did
not agree.
(b) Chandra wanted that Interest on loan to be paid to him @10% p.a. but Ajay and Binod wanted to pay him
Interest @5%p.a.
(c) Ajay and Binod demanded to share profits and losses in the ratio of their capital, but
Chandar want that profits andd losses shall be distributed equally.
You are required to resolve the matter.

3. A and B were partners in a firm. Profits and Losses were to be shared among them equally.
It was agreed among themselves that Interest on Drawings will be ccharged @ 10% p.a. A
 and B withdrew Rs.15,000 and Rs.25,000 respectively during the year ended 31.03.2023. Their
firm incurred a Loss of Rs.150,000. Whether Interest on Drawings will be charged or not? If
yes, Calculate amount of Interest.
st. If No, Give Reasons.

4. Read the following hypothetical text and answer the given questions: Amit and Mahesh
were partners in a fast-food
food corner sharing profits and losses in ratio 3:2. They sold fast
food items across the counter andd did home delivery too. Their initial fixed capital
contribution was Rs.1,20,000 and 80,000 respectively.

At the end of first year their profit was Rs.1,20,000 before allowing the remuneration of

Rs.3,000 per quarter to Amit and Rs.2,000 per half year to Mahesh. Such a promising
performance for first year was encouraging; therefore, they decided to expand the area of
operations.

For this purpose, they needed a delivery van, a few Scotties and an ad
additional person to
support. Six months into the accounting year they decided to admit Sundaram as a new
partner and offered him 20% as a share of profits along with monthly remuneration of
Rs.2,500. Sundaram was asked to introduce Rs.1,30,000
Rs.1,30,000 for capital and Rs.70,000 for premium
For goodwill. Besides this Sundaram was required to provide Rs.1,00,000 as loan for two
years. Sundaram readily accepted the offer. The terms of the offer were duly executed and
he was admitted as a partner.

i. Remuneration will be transferred to of Amit and Mahesh at the end of

the accounting period.

a) Capital account.
b) Loan account
c) Currentaccount.
d) None of the above.

ii. Upon the admission of Sundaram the sacrifice for providing his share of profits
would be done:
a) By Amit only.
b) By Mahesh only.
c) By Amit and Mahesh equally.
d) By Amit and Mahesh in the ratio of 3:2.

iii. Sundaram will be entitled to a remuneration of at the end of the year

5. Yadu, Vidu and Radhu were partners in a firm sharing profits in the ratio of 4 : 3 : 3. Their
Fixed Capitals on 1st April, 2022 were Rs.9,00,000, Rs.5,00,000 and Rs.4,00,000 respectively. On
1st November, 2022, Yadu gave a loan of Rs.80,000 to the firm. As per the partnership
agreement:
(i) The partners were entitled to an interest on capital @6% p.a.
(ii) Interest on partner’s drawings was to be charged @8% p.a.
The firm earned profits
rofits of 32,53,000 (after interest on Yadu's loan) during the year 2022-
2022
23. Partners’ drawings for the year amounted to Yadu: Rs.80,000, Vidu: Rs.70,000 and Radhu:
Rs.50,000. Prepare Profit and Loss Appropriation Account for the year ending 31st March,
2023.
6. A, B and C were partners in a firm. On 1st April, 2022, the balance in their capital account
stood at Rs.8,00,000, Rs.6,00,000 and Rs.4,00,000 respectively. As per the provisions of
partnership deed, partners were entitled to interest on capital @5% p.a., Salary to B Rs.3,000
per month and a Commission of Rs.12,000 to C.
A’s share of profit (excluding interest on capital) was guaranteed at Rs.25,000. B's share of
profit (including interest
st on capital but excluding salary) was guaranteed at Rs.55,000 p.a.
Any deficiency arising on that account will be borne by C.
The profits of the firm for the year ending 31st March, 2023 amounted to Rs.2,16,000.
Prepare Profit and Loss Appropriation A/c for the year ending 31st March, 2023

7. Neena and Sara were partners in a firm with fixed capitals of Rs.5,00,000 and Rs.4,00,000
respectively. It was discovered that interest on capital @ 6% p.a. was credited to the

partners for the two years ending 31st March, 2023 and 31st March, 2022 whereas there
was no such provision in the partnership deed. Their profit sharing ratio during the last two

years was:
2023-22 4:5
2022-21 5:1
Showing your workings clearly, pass the necessary adjustment entry to rectify the error.

8. A, B and C are partners sharing profits and losses in the ratio of 5: 3: 2. After the final
accounts have been prepared, it was discovered that iinterest on capital @ 8% per annum
was debited to the partners instead of crediting them. The opening capital of the partners
was:
A: Rs.4,00,000, B: Rs.2,00,000, C: Rs.1,00,000.
Give necessary adjusting journal entry with pro
proper working notes.

9. On 1st April, 2022, Vibha and Shivi entered into partnership to construct toilets in
government schools in the remote areas of Uttar Pradesh. They contributed capitals of
Rs.20, 00,000 and Rs.30, 00,000 respectively.
Their profit-sharing
sharing ratio was 2:3 and interest allowed on capital as provided in the
Partnership Deed was 12% per annum. During the year ended 31st March, 2022, the firm
earned a profit of Rs.5, 40,000.
Prepare Profit and Loss
ss Appropriation Account of Vibha and Shivi for the year ended 31s
March, 2023.

10. A, B and C are in partnership sharing profits in the ratio 5:3:2. Their fixed capitals as on
31.03.2023 were %2,00,000; %2,00,000 and 100,000 respectively while w their drawings
were $10,000 each. After distribution of annual profits 90,000, it was discovered that
Interest on Capital was credited to all partners @ 12% instead of 10% p.a. and interest on
drawings @10% p.a. was omitted in respectpect of B. Pass single journal entry to rectify the
errors and show your workings clearly.

11. M, B and K are partners sharing profits in the ratio of 6:4:1. K is guaranteed a minimum
profit of Rs.2,00,000. The firm incurred a loss of Rs.22,00,000
Rs.22,00,000 for the year ended 31st March
2023. Pass necessary journal entry regarding deficiency borne by M and B and prepare
Profit & Loss Appropriation A/c.
Goodwill: Nature and Valuation
12. A, B and C are partners sharing profitss and losses in the ratio of 4:3:2. With effect from 1st
April, 2023 they agree to share profits 2:2:1. For this purpose, goodwill is to be valued at
two year’s purchase of the average profit of last three years which were as follows:
Year ending on 31st March, 2021 Rs.3,00,000 (Profit)
Year ending on 31st March, 2022 Rs.5,00,000 (Profit)
Year ending on 31st March, 2023 Rs.%7,00,000 (Profit)
Scrutiny of book of account revealed that there was
1) an abnormal loss of 370,000 in 2021
2) an abnormal gain of 330,000 in 2022
3) Repair to car amount to 340,000 wrongly debited to Vehicle A/c on 31st March 2023.
Depreciation was charged @ 10% p.a WDV method.
Calculate the value of Goodwill
ill of the firm.

13. The net assets of the firm including fictitious assets of Rs.5,000 are Rs.85,000.The net liabilities
of the firm are Rs.30,000.The normal rate of return is 10% and the average profits of the firm

are Rs.8,000. Calculate

ate the Goodwill as per Capitalization of Super Profits.

14. Average profit earned by a firm is 500,000 (which includes undervaluation of closing stock

50000). Capital Accounts of the partners showed Balance of Rs.120000 and Current
account showed balances of 300,000. Normal rate of return in similar industry is 20%.
Calculate the goodwill of the firm on the basis of 3 years’ purchase of super profits of the
firm.

15. The firm earned average profits of Rs.450,000 during

d the past few years. Remuneration of
partners was Rs.50,000 p.a. Net Assets of the firm amounted to Rs.30,00,000 and Market rate of

Interest is 10%. Calculate the value of goodwill of the firm on the basis of Capitalisation of
average profits.

16. Goodwill of the firm is valued at Rs.100,000 and is valued at 5 years’ purchase of super
profits. Firm earned profits of Rs.60,000 during the year. Normal Rate of Return is 8%.
Calculate the amount of capital employed
loyed in the firm.

17. Total Assets of a Firm are Rs.500,000 (including stock Rs.100,000). The Partners’ Capital
Account showed balances of Rs.400,000 and balance constitute the reserves. Market Rate of
Interest is 10%. Goodwill of the firm
m is valued at 2 years purchase of super profits
amounted to Rs.700,000. Calculate the Average Profit of the firm.

Death of a Partner:
18. A, B and C are partners in a firm whose books are closed on March 31 each year. A died died-on
30th June, 2022 and according to the agreement, the share of profits of a deceased partner
up to the date of the death is to be calculated on the basis of the average profits for the last
five years.
The net profits for the last 5 years ended 31
31st March were: 2018- Rs. 14,000; 2019- Rs.18,000;
2020- Rs.16,000; 2021- Rs.10,000 (Loss) and 2022 2022- Rs.16,000. Calculate A's share of the profit
up-to
to the date of death and pass necessary journal entry.
19. A, B and C were partners sharingg profits and losses in the ratio of 3:2:1. B died on 30th June,
2022. For the year ended 31st March, 2023, proportion profit of 2022 is to be taken into
consideration. During the year ended 31st March 2022, bad debts of Rs. 2,000 had to be
adjusted. Profit for the year ended 31st March, 2022 was Rs.14,000 before adjustment of bad
debts. Calculate B's share of profit till the date of his death.

20. X and Y are in partnership sharing profits and losses in the ratio of 3:2. Y di
died three months
after the date of the last Balance Sheet (prepared on 31.03.2022). According to the
Partnership Deed, Y's representative is entitled to the following payments:
 His capital as per the last Balance Sheet.
 Interest on above capital al @ 6% p.a. till the date of death.
 His share of insurance money.
 His share of profits till the date of death calculated on the basis of last yearâ
year’s profits.
 His drawings are to bear interest at an average rate of 2% on the amount irrespective of period.
period
Y's capital as per the last Balance Sheet was Rs. 40,000 and his drawings till the date of death
were Rs.5,000. The last year’s profits were Rs.30,000 Draw Y's Account to be rendered to his
legal representative. The representative is paid Rs.8,500 immediately and the balance is
payable in two equal instalments carrying interest @ 12% p.a.

21. Nirmala, Divisha and Sara were partners in a firm sharing profits and losses in the ratio of
3:4:3. Books were closed on 31st March every year. Sara died on 1st February, 2023. As per
the Partnership Deed Sara's executors are entitled to her share of profit till the date of death
on the basis of Sales turnover. Sales for the year ended 31st March 2022 was Rs.10,0
Rs.10,00,000
0,000 and

profit for the same year was Rs.120,000. Sales show a positive trend of 20% and percentage
of profit earning is reduced by 2%.
Journalise the transactions along with the working notes.

22. A, B and C are partners sharing

aring profits and losses in the ratio of 2:2:1. On 31st March, 2023,
their Balance Sheet was as follows:
Balance Sheet
As on 31.03.2023
Liabilities Amount Assets Amount

Trade Creditors 32,000 Bank 12,000

Bills Payable 16,000 Stock 30,000
Outstanding Expenses 4000 Sundry Debtors 20000
General Reserve 50000 Building 130000
Capitals: Machinery 70000
A: 80000 Profit and Loss A/c. 80000
B: 80000
C: 80000 240000
Total 342000 Total 342000

B died on 30th June, 2023. The following terms were settled between the remaining
partners after the death of B.
a) Goodwill of the firm calculated on the basis of 2 times the average profit of the past 5
years.
Profits for the years ended: 31st March, 2022, 31st March, 2021, 31st March, 2020 and 31st
 March, 2019 were 340,000; 360,000; %1,00,000; 31,20,000 respectively.
b) B's share of profit or loss from 1st April, 2023 to 30 June, 2023 was to be calculated on
the basis of the profit or loss for the year ended 31st March, 2023
You are required to prepare B's Capital account at the time of his death.

Change in Profit Sharing Ratio:

23. Avisha, Ranu and Khushi were partners in a firm sharing profits in the ratio 5:3:2. From 01st
April, 2023, they decided to share the profits equally. For this purpose, the goodwill of the
firm was valued at 480,000. Also, Books of Accounts of the firm showed a Goodwill
amounting to Rs. 90,000.
Pass necessary Journal Entry foror the treatment of Existing Goodwill and Valued Goodwill by
raising and writing it off on change in the Profit-Sharing
Profit Ratio of Avisha, Ranu and Khushi.

24. A, B and C were partners in a firm sharing profits and losses in ratio 5:3:2. They decided
decid to
share profits and losses in ratio 2:3:5, on which date they decided to adjust the following
accumulated profits, reserves and losses without affecting their book values by passing an
adjustment entry:
Profit and Loss A/c. 150,000
General Reserve 600,000
Advertisement Suspense A/c. 300,000

Admission of a Partner:

25. Amit and Beena were partners in a firm sharing profits and losses in the ratio of 3 : 1. Chaman was
admitted as a new partner for 1/6 share
hare in profits. Chaman acquired 2/5% of
hi share from Amit. How much share did Chaman acquired from Beena.

26. X and Y are partners in a firm sharing profits and losses in the ratio 4:3. On 01st April, 2023,
they admitted as Z as a new partner
rtner for 1/3rd share in profits. Z brought Rs.200,000
immediately as capital and Rs.21,000 as Goodwill Premium. This goodwill was raised and
written off immediately. On Z's admission, goodwill appeared in the books at Rs.35,000.
Pass necessary Journal entries.

27. X and Y are partners sharing profits and losses in the ratio 3:2. They admitted Z into the
firm for 3/10% share of profits which he takes 2/10 from X and 1/10% from Y. He brings
only a part of his share of Goodwill
oodwill Premium in cash. Fill the missing information in the
following journal entries and calculate new ratio of X, Y and Z:
Date Particulars L.F. Amount (Dr.) Amount (Cr.)
Bank A/c Dr. …………..
To Premium for Goodwill A/c …………….
(Being……………………………)
Premium for Goodwill A/c Dr. 120000
Z’s Current A/c 330000
To………………………………. ……………
To………………………………. ……………
(Being……………………………)
28. Sadan and Manan are partners in a firm sharing Profits and Losses in the ratio 3:2. Their
Balance Sheet as at 31st March, 2023 was as under:
Balance Sheet
As on 31.03.2023
Liabilities Amount Assets Amount
Creditors 150,000 Cash at Bank 120,000
Bills Payable 80,000 Sundry Debtors 200,000
Outstanding Rent 20,000 (-) PBD (20,000) 180000
Capitals: Stock 50,000
Sadan :300,000 Plant and Machinery 340,000
Manan : 150.000 450,000 Prepaid Expenses 10,000

TOTAL 700,000 TOTAL 700,000

They admitted
tted Vikas as a new partner on 01st April, 2023 on the following terms:
(i) Vikas will bring 200,000 as capital and the necessary share of his goodwill in cheque.
(ii) The New Profit Ratio among Sadan, Manan and Vikas will be 5:3:2.
(iii) The amount of goodwill
dwill is to be based on Vikas’s share in profits and capital contributed by him.
(iv) Stock to be depreciated by 10%.
(v) Provision for doubtful debts is only to be rs. 5000.
(vi) Plant and Machinery are to be depreciated by 5%.
Prepare Revaluation Account,, Partner’s Capital Account and Balance Sheet of the New Firm.

29. L, M and N were partners in a firm sharing profits and losses in the ratio 3:2:1. On 01st
April, 2023, their Balance Sheet was as follows:
Balance Sheet
As on 31.03.2023
Liabilities Amount Assets Amount
Creditors 168,000 Bank 34,000
General Reserve 42,000 Stock 220,000
Capital A/cs: Debtors 46,000
L 120,000 Investments 60,000
M 80,000 Furniture 20,000
N 40,000 240,000 Plant and Machinery 70,000
TOTAL 450,000 TOTAL 450,000

On the above date, O was admitted as a new partner and it was decided that:
(i) The New Profit Sharing Ratio between L, M, N and O will be 2:2:1:1.
(ii) Goodwill of the firm was valued at Rs. 180,000 and O brought his share of Goodwill Premium in cash
(iii) The market value of Investments is Rs. 35,000.
(iv) The machinery will be reduced to Rs. 58,000.
(v) A creditor of Rs. 5,000 was not likely to claim the amount and hence to be written off.
(vi) O will bring proportionate
portionate capital so as to give him 1/6th share in the profit of the firm.
Prepare Revaluation Account, Partner’s Capital Accounts and Balance Sheet of the new firm.
 30. Vidhi and Sneha were partners in a firm sharing profits and losses in the ratio of 3: 5. Their fixed capitals
were Rs. 4,00,000 and Rs. 6,00,000 respectively. On 1.4.2023, Twinkle was admitted as a new partner for 1/4th
share in the profits. Twinkle acquired her share of profit from Sneha. Twinkle brought Rs. 4,00,000 as her capit
capital
which was to be kept fixed like the capitals of Vidhi and Sneha. Calculate the goodwill of the firm on Twinkle's
admission and the new profit sharing ratio of Vidhi, Sneha and Twinkle. Also, pass necessary journal entry for the
treatment of goodwill on Twinkle's admission considering that Twinkle did not bring her share of goodwill
premium in cash.

Dissolution of a Firm

31. Rohit, Kunal and Sarthak are partners in a firm. They decided to dissolve their firm. Pass
necessary Journal entries for the following after various assets (other than Cash and Bank)
and the third party liability have been transferred to Realisation Account:
a) Kunal agreed to pay off his wife's loan of 6,000.
b) Total Creditors of the firm were 340,000.
340, Creditors worth 310,000 were given a
piece of furniture costing 38,000 in full and final settlement. Remaining Creditors
allowed a discount of 10%.
c) Rohit had given a loan of X70,000 to the firm which
whi was duly paid.
d) A machine which was not recorded in the books was taken over by Kunal at 33,000
whereas its expected value was 35,000.
e) The firm had a debit balance of 15,000 in the Profit and Loss AcAccount on the date
of dissolution.
f) Sarthak paid the realisation expenses of 16,000 out of his private funds, who was
to get a remuneration of 15,000 for completing dissolution process and was
responsible to bear all the realisation expenses.

32. A, B and C were equal partners in a firm. They decided to dissolve the firm. Pass
necessary journal entries for the following after various assets (other than cash and
bank)
k) and the third party liabilities have been transferred to Realisation Account:

(i) There was a Balance of 330,000 in the Workmen Compensation Reserve.

(ii) Dissolution Expenses 35,000 were paid by the firm and was agreed to be
borne by B and C equally.
(iii) A creditor for 150,000 accepted Machinery worth 240,000 in payment of

his debts and paid difference amount to the firm.

(iv) There were debtors of 66,000 and a provision for bad and doubtful debt
debts
also stood at 6,000.%12,000 of debtors proved bad and rest were realised in full.
(v) A's Loan X 6,000 was discharged at 36,200.
(vi) Dissolution Loss amounted to 315,300.

33. The assets other than cash and bank transferred to Realization Account are of
Rs.1,00,000. 50% of the assets are taken by a partner Atul, at a discount of 20%; 40% of
the remaining assets were sold at a profit of 30% on cost; 5% of the balance being
obsolete, realized nothing and remaining assets are handed over to a creditor, in full
settlement of his claim. You are required to record the Journal entries for realization of assets.

34. Kritika and Vritika are partners sharing profits in the ratio of 3: 2. Their partnersh
partnership
firm was dissolved on 1st April, 2023. Kritika was deputed to realise the assets and to
pay the liabilities. For this she was to be paid Rs.1,500 as remuneration for her services.
Balance sheet of the firm on 31st March, 2023 was aas follows:

Liabilities Rs. Assets Rs.

Kritika's Capital 4,00,000 Building 4,50,000
Vritika's Capital 2,45,000 Machinery 1,30,000
Vritika's Brother Loan 30,000 Furniture & Fixtures 75,000
Bank Overdraft 15,000 Equipments 14,000
Sundry Creditors 40,000 Debtors 20,000
Outstanding Rent 20,000 Stock 18,000
Kritika's Loan 43,000

7.50,000 7.50,000

Following was agreed upon:

(a) Creditors were due on 1st May, 2023 but were paid immediately at a discount of
12% per annum.
(b) Out of the total debtors, debtors amounting Rs.4,000 proved bad and cash
realized from remaining debtors after allowing discount of 3%.
(c) Building realized at Rs.5,00,000.
(d) Furniture and fixtures realized Rs.55,000 only whereas
whe equipment was taken by
Kritika at an agreed value of Rs.10,000.
(e) Machinery sold for Rs.90,000.
(f) Stock valuing Rs.10,000 taken up by partners in their old profit-sharing
profit ratio and
remaining stock sold for Rs.3,000.
Prepare Realization Account.
35. Pass journal entries for the following transactions on dissolution in the books of a firm,
where Kamal and Anup were sharing profits in the ratio of 5:3, assuming that the assets
(other than cash) and third-party
party liabilities have been transferred to Realisation
Account:
a) Kamal paid creditors Rs.17,000 in full settlement of their claim of Rs. 20,000.
b) 100 shares of Sajal Ltd. acquired at a cost of Rs.3,600 had been written off
from the books. These were valued at Rs.12 per share, and were divided
amongst the partners in their profit-sharing
profit ratio.
c) Kamal was to be given a commission of 3% of the net cash realised on
dissolution, and he was to meet all realisation
re expenses. The cash realised
from sale of assets was Rs.76,000 and cash paid for liabilities amounted to
Rs.16,000, and actual realisation expenses were Rs.7,400.
d) There was an unrecorded liability of Rs.4,000, which was paid.
Retirement of a Partner:
36. A, B and C were partners in the ratio 4/9: 1/3: 2/9. B retires and A and C decided to share
profits in the ratio 1:2. It was decided to adjust B's share of goodwill in the accounts of the continuing partners.
Fill the missing figures in the following Journal Entry. Also, find out the total Goodwill
Particulars LF. Dr. Amount Cr. Amount
C's Capital A/c.____________________________Dr. ………
To A’s Capital A/c. ……….
To B's Capital A/c. 150,000
(C compensates A and B for the loss in share of
profits)
37. A, B and C are partners sharing profit in the ratio of 3:2:1. C decided to retire and after C's
retirement A and B decided to share profits and losses in the ratio of 1:3. At the time C's
retirement, the goodwill of the firm is valued at Rs.1,80,000. Pass necessary journal entries
for the treatment of goodwill. General Reserve Rs.21,000 and Goodwill Rs. 24,000 appear in the
Balance Sheet on C's retirement.

38. A, B and C are Partners in a firm sharing Profits and Losses in the Ratio 1:2:3. C retires, and
his capital after adjustments of Reserves and Surplus and other adjustments amounted to
220,000. A and B agreed to pay him 250,000 iin full settlement of his claim. Record
necessary journal entry for the treatment of Goodwil), if the New Profit Sharing Ratio is
decided at 1:3

39. J, H and K were partners in a firm sharing profits in the ratio of 5:3:2. On 31
31-3-2023 their
Balance Sheet was as follows:

Balance Sheet of J, H and K as on 31st March, 2023

Liabilities Amount Assets Amount
Creditors 42,000 Land and Building 124,000
Investment Fluctuation 20,000 Motor Vans 40,000
Profit and Loss Account 80,000 Investments 38,000
Capitals: Machinery 24,000
J 100000 Stock 30,000
H 80,000 Debtors 80,000
K 40,000 (-) Provision 6,000 74,000
Cash 32,000
TOTAL 362,000 TOTAL 362,000

On the above date H retired and | and K agreed to continue the business on the following
terms:
a) Goodwill of the firm was valued at 1,02,000.
b) There was a claim of 38,000 for Workmen's Compensation.
c) Provision for bad debts was to be maintained at 5% only.
d) H will be paid Rs. 14,000 inn cash and the balance will be transferred in his loan
account which will be paid in four equal yearly instalments together with interest @
10% p.a.
e) The new profit sharing ratio between j and K will be 3: 2 and their capitals will be in

theirr new profit sharing ratio. The capital adjustments will be done by opening
current accounts.
Prepare Revaluation Account, Partner's Capital Accounts and Balance Sheet of the firm.
40. Complete the missing figures in the following accounts and the Ba
Balance Sheet:

Revaluation A/c.
Particulars Amount Particulars Amount
To Stock 18,000 By Accrued Income A/c. …………
To Outstanding Salaries A/c. ………. By Loss transferred to:
To Provision for Doubtful Debts A/c. 1000 P's Capital A/c. ………….
To Loose Tools A/c. 2,000 Q's Capital A/c. ………….
R's Capital A/c. …………. ………….
46,000 46,000

Partners’ Capital Account

Particulars P Q R Particulars P Q R
To Goodwill A/c. …….. …….. 10,000 By Balance b/d …….. …….. ……..
To Revaluation A/c. 16,000 16,000 8,000 By Workmen 6,000 …….. ……..
Compensation Reserve
A/c.

To R's Capital A/c. 40,000 20,000 …….. By P's Capital A/c. ……..
To R's Loan A/c. …….. …….. 345,000 By Q's Capital A/c. ……..
To Balance c/d. …….. ……..

Balance Sheet As at 01st April, 2023

Liabilities Amount Assets Amount
Sundry Creditors 15,000 Land and Building 700,000
Outstanding Salary ………… Plant and Machinery 200,000
Workmen Compensation Claim 35,000 Loose Tools 8,000

R's Loan A/c. ………… Accrued Income …………

Capital Accounts ………… Stock 175,000
P 430,000 ………… Debtors …………
Q 350,000 780,000 Less: PBD 4,000 76,000

………… Cash at Bank (balancing fig) …………

41. Bakul, Girish and Mayank are partners

artners in a firm sharing profits and losses in the ratio 4:5:6.
On 31st March, 2023, Girish retired. On that date the capitals of Bakul, Girish and Mayank
before the necessary adjustments stood at Rs.200,000; Rs.100,000 and Rs.50,000 respect respectively.
ively.
On Girish’s retirement, goodwill of the firm was valued at Rs.114,000. Revaluation of assets
and re-assessment
assessment of liabilities resulted in a profit of 6,000. General Reserve stood in the
books of the firm at Rs.30,000.
Thee amount payable to Girish was transferred to his loan account. Bakul and Mayank
agreed to pay Girish two yearly instalments of Rs.75,000 each including interest @10%p.a. on
the outstanding balance during the first two years and balance including
inclu interest in the
third year. The firm closes its books on 31st March every year.
Prepare Girish’s loan account till it is finally paid showing your working notes clearly.

42. A firm of A, B and C has Workmen Compensation Fund of Rs.30,000.

Rs.3 On retirement of a
partner, how Rs.20,000 will be treated in the following cases:
(a) There is no claim against Workmen Compensation fund.
(b) There is a claim off Rs.12,000 against Workmen Compensation Fund.
Journalise.

43. Radha, Manas and Arnay were partners in a firm sharing profits and losses in the ratio of
3:1:1. Their Balance Sheet as at 31st March, 2023 was as follows:

Balance Sheet of Radha, Manas and Arnav as at 31st March, 2023

Liabilities Amount Assets Amount
Capitals: Furniture 4,60,000
Radha 4,00,000 Investments 2,00,000
Manas 3,00,000 Stock 2,40,000
Arnav 2,00,000 9,00,000 Debtors 2,20,000
Investment Fluctuation Fund 1,10,000 Less Provision 10,000 2,10,000
Creditors 2,50,000 Cash 1,50,000

Total 12,60,000 Total 12,60,000

Manas retired on 1st April, 2023. It was agreed that:

(i) Stock was to bee appreciated by 20%.
(ii) Provision for doubtful debts was to be increased to Rs.15,000.
(iii) Value of furniture was to be reduced by Rs.3,000.
(iv) Market value of investments was Rs.1,90,000.
(v) Goodwill of the firm was valued at Rs.2,00,000 and Manas's share was adjusted in
the accounts of Radha and Arnav.
(vi) Manas was paid Rs.68,000 in cash and the balance was transferred to his loan
account.
(vii) Capitals of Radha and Arnav were to be in proportion to their new profit shar sharing
ratio. Surplus/deficit, if any, in their capital accounts was to be adjusted through
current accounts.
Prepare Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of the
reconstituted firm.

Issue of Shares:
44. Securities
rities premium can also be utilised for three other purposes besides (i) issuing fully
paid bonus shares and (ii) “buy-back
back of shares’. State other purposes.

45. Arnav limited was registered with authorised capital of Rs.120,00,000 divided into 120,000
equity shares of Rs.100 each. The company issued 6,000 equity shares as fully paid to the
vendor for purchase of building and 50,000 equity shares were subscribe for by the public.
All the calls were made and were duly received
receive accept the second and final call of Rs.20 per
share on 700 shares. Show how share capital will appear in the Balance Sheet of the
company. Also prepare 'Notes to accounts’ for the same.
46. Picasa Ltd. Forfeited 200 shares of Rs.100 each
each,, Rs.70 called up, on which the shareholders had
paid application and allotment money of Rs.50 per share. Out of these, 150 shares were

reissued to Namisha at Rs.70 paid up for Rs.80 per share.

47. Kaveri Ltd. Forfeited 180 shares of Rs.10 each, Rs.8 called up, issued at a premium of Rs.2 per
share to Rama for non-payment
payment of allotment money of Rs.5 per share (including premium).

Out of these, 160 shares were reissued to Samita as Rs.8 called up for Rs.10 per share fully paid
up.
48, Abhishek Ltd. is registered with capital of Rs.50,00,000 divided into 50,000 equity shares of
Rs.100 each, The Company issued 25,000 equity shares for subscription. Subscription was
received for 23,750 shares and all the due amount was duly received, except the first and

final call of Rs.20 per share on 600 shares. Show the 'Share Capital’ in the Balance Sheet of the
company.
49. Laxmi Ltd invited applications for issuing 2,00,000 equity shares of Rs. 10 each. The
amounts were payable as follows
On application ------ Rs.3 per share
On allotment ------ Rs.5 per share
On first and final call ------ Rs.2 per share

Applications were received for 3,00,000 shares and pro-rata

pro allotment was made to all the
applicants. Money overpaid on application was adjusted towards allotment. B, who was
allotted 3,000 shares, failed to pay the first and final call money. His shares were forfeited.
Out of the forfeited shares, 2,500 shares
res were reissued as fully paid up @ Rs. 8 per share.
Pass necessary journal entries to record the above transactions in the books of Laxmi Ltd.

50. On 1st April 2022 Aradhana Ltd. was formed with an authorised capital of $90,00,000
divided into 90,000 shares of Rs.100 each. The company invited applications for issuing
75,000 equity shares.
The amount was payable as follows:
On application ------Rs.20 per share
On allotment ------Rs.50 per share
On first and final call ------ Balance amount
The issue was fully subscribed and the company allotted shares to all the applicants. All
money was received except the first and final call on 5,000 shares.
Show the share capital in the Balance Sheet of the company as per Schedule III of the
Companies Act, 2013 as at 31stMarch, 2023 and also show Notes to A/c.

51. Sumit Limited forfeited 200 shares of Rs.10 each, issued at a premium of 10%, face value
called up only X8 per share. Final call of Rs.2 each has not been made on these shares. These
shares were allotted to Mr. Asif, who did not pay the first call of Rs.3. Out of which 120
shares were reissued at Rs.7 per share, as Rs.8 paid up. Give journal entries

52. Deepak Ltd forfeited 200, equity shares of Rs.100 each issued at a premium of 5 per share
for non payment of final call of Rs.30 per share. Out of the forfeited shares, 150 shares were
reissued as fully paid up at maximum discount allowed by the law. Pass necessary journal
entries.
53. AXN limited invited application for issuing 1,00,000 equity shares of ¥ 10 each at a
premium of X 6 per share. The amount was payable as follows:

On application - Rs.4 per share (including Rs.2 premium)

On allotment - Rs.5 per share (including Rs.2 premium)
On first call – Rs.4 per share (including Rs.2 premium]
On Second and final call - Balance amount

The issue was fully subscribed.

Kumar the holder of 400 shares did not pay the allotment money and Ra Ravi the holder of
1,000 shares paid his entire share money along with allotment money. Kumar's shares
were forfeited immediately after allotment. Afterwards, first call was made. Gupta a
holder of 300 shares failed to pay the first cal
call money and Gopal a holder of 600 shares
paid the second call money along with first call. Gupta’s shares were forfeited

immediately after the first call. Second and final call was made afterwards. The whole

amount due on second calll was received. All the forfeited shares were re
re-issued Rs.9
per share fully paid up.
Pass necessary journal entries for the above transactions in the books of the company.

Issue of Debentures:

1. Sunrise Company Ltd. has an equity sharee capital of Rs.10,00,000. The company earns a
return on investment of 15% on its capital. The company needed funds for diversification.
The finance manager had the following options:

i. Borrow Rs.5,00,000 @15% p.a. from a bank payable in four equal quarterly
instalments starting from the end of the fifth year, or

ii. Issue Rs.5,00,000, 9% Debentures of 100 each redeemable at a premium of 10%

after five years.
To increase the return to the shareholders, the company opted for option (ii). Pass the
necessary Journal entries for issue of debentures

2. Modern Bazaar Ltd. started a new outlet for retailing daily use items. It estimated the
capital requirement at 25,00,000 to re-furbish
furbish the premises and stocking the goods. It had
internal generation of 10,00,000 and decided to use it for the purpose;
Besides, it had partly paid 1,00,000 Equity Shares on which 2 per share was yet to be called.
It decided to call the unpaid amount; and
Balance amount
mount was raised as term loan from State Bank of India payable in 10 equal half
half-
yearly instalments beginning after two years. It issued 9% Debentures of 100 each for
double the amount of loan as Collateral
Questions:
(a) What is the amount
mount of loan taken by the company from the Bank?
(b) What is the number and value of debentures issued as Collateral Security?
(c) How much interest the company will pay on debentures so issued?
(d) How will it show the debentures issued as Collateral Security in the Balance Sheet?
(e) Is the loan taken Long-term
term Borrowing or Short-term
Short Borrowing?
3. A Ltd issued Rs. 300,000 9% Debentures of Rs.100 each @ 10% discount to be redeemed at
20% premium.

Pass Necessary Journal Entries

tries for such an issue.

4. X Ltd purchased assets of Rs.840,000 and took over liabilities of Rs.80,000 of Y Ltd for
Rs.720,000. X Ltd issued 10% debentures of Rs.100 each at 10% discount in full satisfaction of
the price. The company decides
ides to write off Discount on issue of debentures from Securities
Premium Reserve of Rs.100,000. Pass Journal Entries in the books of X Ltd.

5. XYZ Ltd took a loan from Punjab National Bank for Rs.15,00,000 and issued 18,000 10%
debentures off Rs.100 each as collateral security against loan taken. Company decided to
record such an issue of debentures in the books of accounts. How it will be presented in the
books of the firm.

6. Pass the necessary journal entries for the issue of debentures

de for the following
transactions:
(i) Anand Ltd. issued 800, 9% Debentures of 500 each at a premium of 20%, to the
vendors for machinery purchased from them costing Rs.4,80,000.
(ii) Dawar Ltd. issued 5,000, 7% Debentures of Rs.200
Rs.2 each at a premium of 5%,

redeemable at a premium of 10%.

(iii) Novelty Ltd. issued 1,000, 8% Debentures of Rs.100 each at a discount of 5%,
redeemable at a premium of 10%.

7. Arun Ltd purchased machinery from Modern Equipments Manufacturers Ltd. The company
paid the vendors by issue of debentures and balance through an acceptance in their favor
payable after three months. The accountant of the company, while journalizing the above
mentioned transactions, left some items black. You are required to fill in the blanks.

Date Particulars L.F. Dr. Cr.

Machinery A/c. Dr
To _______________________
(Purchased a machinery for Rs. 540,000 from
Modern Equipments Manufacturers Ltd)

Modern Equipments Manufacturers

Ltd A/c. Dr
Loss on issue of Debentures A/c. Dr
To______________________
(Issued __________, 9% debentures of
Rs.100 each at a discount of 10%)

________________________________
_______________________________ Dr
To__________________________________
(______________________________________
_____________________________________)
8. On 1st April, 2021, Human Orient Ltd issued 20,000, 6% debentures of Rs.100
Rs.1 each at a
discount of 4%, redeemable at a premium of 5% after three years. The amount on issue was
payable as follows:
On Application: Rs.50
On Allotment: Balance (after two months)

On that date, balance of Securities Premium Reserve sto

stood at Rs.95,000.
Pass necessary Journal entries for issue of Debentures and writing off discount on issue of
debentures. Also, show Discount on Issue of Debentures Account

9. Kishori Ltd issued Rs.200,000 8% debentures of Rs.100 each on 1st Apr April, 2021 at par
redeemable at 6% premium after three years. Give Journal Entries relating to the issue of
debentures, debenture interest and writing off loss on issue of debentures for the year
ended 31st March, 2022 assuming that Interest wwas paid half yearly on September 30 and
March 31. Also, prepare Interest on Debentures Account for the year ended 31st March,
2022.

Ratio Analysis:
10. From the following information, calculate the inventory turnover ratio:
Revenue fromom Operations: Rs.600,000; Gross Profit 20% on cost; Opening Inventory was
2/3rd of the value of Closing Inventory; Closing Inventory was 25% of Revenue from Operations.

11. From the following information, Calculate ROCE:

Share Capital Rs.200,000
Reserves and Surplus Rs.200,000
10% Debentures Rs.800,000
Net Profit after Interest and Tax Rs.240,000
Tax 40%

12. Calculate proprietary ratio, it total assets to debt ratio is 2:1; Debt is 500,0
500,000; Equity Share
Capital is 0.5 time the debt; Preference Share Capital is 25% of equity share capital. Net
profit before tax is $10,00,000 and rate of tax is 40%.

13. From the following details, calculate Interest Coverage Ratio:

Net Profit after Tax Rs.700,000
6% Debentures Rs.12,00,000
8% Bank Loan Rs.600,000
Tax Rate 30%

14. Cost of goods sold is ¥2,40,000; Inventory Turnover Ratio is 8B times; Stock at beginning is
1.5 times more than the Stock at the end. Calc
Calculate value of Opening and Closing Inventory.

15. From the following information related to Sourav Ltd., Calculate Quick Ratio:
Fixed Assets Rs.75,00,000;
 Current Assets Rs.40,00,000;
Current Liabilities Rs.27,00,000;
Inventories Rs.13,00,000:

12% Debentures Rs.80,00,000,

Share Capital Rs.1,05,00,000,
Profit and Loss A/c. (Dr.) Rs.5,00,000

16. When Debt to Equity Ratio is 2 : 1, State Giving Reasons, whether this ratio will increase or
decrease or will have no change in each of the following cases:

 Sale of Landd (Book value Rs.4,00,000) for Rs.5,00,000;

 Issue of Equity Shares for the purchase of Plant and Machinery worth Rs.10,00,000;

17. (i) From the following details, calculate opening inventory:

Closing inventory : Rs.60,000; Total
otal revenue from operations : Rs.5,00,000(including
Rs.
cash revenue from operations : Rs.1,00,0
1,00,000); Total purchase : Rs.3,00,000(including
credit purchases : Rs.60,000).
60,000). Goods are sold at a profit of 25% on cost.

(ii) Current assets of a company are Rs.17,00,000.

17,00,000. Its current ratio is 2.5 and liquid rati
ratio id
0.95. Calculate current liabilities and inventory.

18. Compute the Current Assets from the following:

Particulars Rs.

Bank Overdraft 180,000

Sundry Creditors 160,000

Bills Payable 20,000

Rent Payable 10,000

Provision for Tax 30,000

Public Deposits 200,000

Inventory 250,000

Quick Ratio 1.25

Cash Flow Statement:

19. From the following particulars, calculate Cash flow from Investing Activity:
Particulars 31.03.2022 31.03.2023
Plant and Machinery 850,000 10,00,000
Non Current Investments 40,000 100,000
Land (at Cost) 200,000 100,000
Additional Information:
(i) Depreciation Charged
ged on Plant and Machinery was Rs.
Rs.50,000
(ii) Plant and Machinery with a Book Value of Rs.60,000 was sold for Rs.40,000
(iii) Land was sold at a profit of Rs.60,000
60,000
(iv) No Investments
nvestments were sold during the year.

20. From the following particulars. Calculate cash flow from Financing Activities:
Particulars 31.03.2022 31.03.2023
Equity Share Capital 100,000 600,000
15% Preference Share Capital 500,000 ----------
12% Debentures ---------- 200,000
Additional Information:
(i) Equity Shares were issued at a premium of 10%.
(ii) 15% Preference Shares were redeemed at a premium of 5%.
(iii) 12% Debentures were issued at a discount of 10%.
(iv) Dividend Paid on Old Preference Shares Rs.150,000
(v) Interest Paid on Debentures Rs.24,000
24,000
(vi) Underwriting commission
sion on issue of Equity Shares Rs.25,000
(vii) Interim Dividend paid on Equity Shares 125,000

21. Following is the Balance Sheet of Prestige India Limited as at 31st March, 2023
Particulars Note No. 31.03.2023 31.03.2022
Equity and Liabilities
1. Shareholders’ Funds
(a) Share Capital 225,000 175,000
(b) Reserves and Surplus 1 112,500 56,250
2. Non-Current Liabilities:
(a) Long Term Borrowings 2 112,500 87,500
3. Current Liabilities:
(a) Short Term Borrowings 3 37,500 18,750
Total 487,500 337,500
Assets
1. Non Current Assets:
(a) Property, Plants and Equipments:
(i) Tangible Assets 4 366,250 228,750
(ii) Intangible Assets 5 25,000 37,500
(b) Non-Current Investments 37,500 25,000
2. Current Assets:
(a) Current Investments 10,000 17,500
(b) Inventories 6 30,500 18,000
(c) Cash and Cash Equivalents 18,250 10,750
Total 487,500 337,500
Notes to Accounts:
Note No. Particulars 31.03.2023 31.03.2022
1 Reserves and Surplus 112,500 56,250
(Surplus i.e. Balance inn Statement of Profit
and Loss)
2 Long Term Borrowings: 112,500 87,500
12% Debentures
3 Short Term Borrowings: 37,500 18,750
Bank Overdraft
4 Tangible Assets: 418750 263750
Machinery 418,750 263,750 (52,500) (35,000)
Accumulated Depreciation 366,250 228,750
5 3 Intangible Assets: 25,000 37,500
Goodwill
6 Inventories: 30,500 18,000
Stock-in-Trade
7 Contingent Liabilities: 50,000 31,250
Proposed Dividend
Additional Information:
(i) During the year, a machinery costing 320,000, on which accumulated
Depreciation
preciation was 310,000 was sold at a loss of 32500
(ii) 25,000, 129% Debentures were issued on 31.03.2023
Prepare Cash Flow Statement

22. Following is the Balance Sheet of Gaurav Ltd as on 31.03.2023:

Particulars Note No. 31.03.2023 31.03.2022
I. Equity and Liabilities
1. Shareholders’ Funds
(a) Share Capital 20,00,000 15,00,000
(b) Reserves and Surplus 1 500,000 300,000
2. Non Current Liabilities
(a) Long Term Borrowings 300,000 200,000
3. Current Liabilities
(a) Short Term Borrowings 10,000 10,000
(b) Trade Payables 140,000 190,000
(c) Short Term Provision 2 70,000 60,000
TOTAL 30,20,000 22,60,000
II. Assets
1. Non Current Assets
(a) Fixed Assets
i. Tangible Fixed Assets 3 19,00,000 15,00,000
ii. Intangible Fixed Assets 4 470,000 270,000
2. Current Assets
(a) Inventories 250,000 160,000
(b) Trade Receivables 210,000 210,000
(c) Cash and Cash Equivalents 190,000 120,000
TOTAL 3020,000 22.,60,000
Notes to Accounts:
Note No. Particulars 31.03.2023 (Rs.
(Rs.) 31.03.2022 (Rs.)
1 Reserves and Surplus:
Surplus i.e. Balance in Statement of Profit and Loss 500,000 300,000
2 Short Term Provision:
Provision for Tax 70,000 60,000
3 Tangible Fixed Assets: 27,00,000 2100,000
Machinery (800,000) (600,000)
(-) Accumulated Depreciation 19,00,000 15,00,000
4 Intangible Fixed Assets:
Goodwill 470,000 270,000

Prepare a Cash Flow Statement after taking into account the following adjustments:
 During the year,ar, a piece of machine costing Rs.
Rs.30,000
30,000 on which accumulated depreciation was Rs.6,000 was sold
for Rs.20000.
 Proposedsed Dividend for the year ended 31.03.2023 and 31.03.2022 was Rs.100,000 and Rs.
Rs.140,000.