CBSE

Class 12 Accountancy
Sample Paper - 1 (solved)
For CBSE Examination March 2019

Time allowed: 3 hours

Maximum Marks: 80

General Instructions:

1. This question paper contains Two parts A & B.

2. Both the parts are compulsory for all.
3. All parts of questions should be attempted at one place.
4. Part A contains 17 Questions of which. Question 1 to 6 are carry 1 marks each. Question 7
to 10 are carry 3 marks each. Question 11 and 12 are carry 4 marks each. Question 13 to
15 are carry 6 marks each. Question 16 to 17 are carry 8 marks each. Part B 18 to 23
question of which. Question 18 and 19 are carry 1 marks each. Question 20 and 21 are
carry 4 marks each. Question 22 and 23 are carry 6 marks each.
5. All parts of a question should be attempted at one place.

Part – A
NPO, Partnership, Share Capital and Debentures

1. Vinod and Keshav were partners in a firm sharing profits in the ratio of 5:3. During the
year ended 31st March, 2018 Vinod had withdrawn Rs.50,000 for his personal use.
Interest on his drawings amounted to Rs.3,000. Pass necessary journal entry for charging
interest on his drawings assuming that capitals are fixed.
2. Does the change in profit sharing ratio result into dissolution of the partnership firm?
Give reason in support of your answer.

OR

Give any two situations where Gain Ratio can be applied.

3. Vinod, Chirag and Devan were partners sharing profits in the ratio of 1/2, 3/10 and 1/5.
Vinod retired from the firm. Calculate the gaining ratio of the remaining partners.
4. Differentiate between ‘Dissolution of Partnership’ and ‘Dissolution of a Partnership Firm’

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 on the basis of ‘Continuity of business.
5. Vinod Sports Club sells an old Billiard Table (Book Value Rs.10,000) for Rs.11,000. Show
how the sale would be shown in the Receipts and Payments Account.

OR

What is meant by Honorarium?

6. State any two rights acquired by a newly admitted partner.
7. From the following information, show the treatment of subscription in the Income and
Expenditure Account and Balance Sheet:
Subscription Received during the year ended 31st March, 2018 are:

For the year ended 31st March, 2017 6,000

For the year ended 31st March, 2018 3,16,500

For the year ended 31st March, 2019 12,000

There are 450 members, each paying Rs.750 as annual subscription. Rs.6,750 were in arrear for

the year ended 31st March, 2017.

8. On March 31, 2013 after the close of accounts, the capitals of Mountain, Hill and Rock
stood in the books of the firm at Rs. 4,00,000, Rs.3,00,000 and Rs. 2,00,000, respectively.
Subsequently, it was discovered that the interest on capital @ 10% p.a. had been omitted.
The profit for the year amounted to Rs. 1,50,000 and the partner’s drawings had been
Mountain: Rs. 20,000, Hill Rs. 15,000 and Rock Rs. 10,000. Calculate interest on capital.
9.
a. Vinod Ltd. purchased the Assets of Keshav Ltd. for Rs.90,000. Payment was made by
issue of Equity Shares of Rs.10 each at 20% premium. Pass necessary journal entries
in the books of Vinod Ltd.
b. What is meant by Debentures redeemed out of the profits?

OR

Give the two sources of finance for Redemption of Debentures.

10. Aditya and Balan are partners sharing profits and losses in 3:2 ratio. They admitted
Christopher for 1/4 share in the profits. The new profit sharing ratio agreed was 2:1:1.
Christopher brought Rs. 50,000 for his capital. His share of goodwill was agreed to at Rs.
15,000. Christopher could bring only Rs. 10,000 out of his share of goodwill. Record

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 necessary journal entries in the books of the firm?
11. B. Ltd. issued 1,000, 12% debentures of Rs 100 each on April 01, 2014 at a discount of 5%
redeemable at a premium of 10%.
Give journal entries relating to the issue of debentures and debentures interest for the
period ending March 31, 2015 assuming that interest is paid half-yearly on September 30
and March 31 and tax deducted at source is 10%.

OR

Vinod Limited issued 5,00,000, 7% Debentures of Rs.50 each. Pass necessary journal
entries in the books of the company for the issue of debentures when debentures were:
i. Issued at Par, redeemable at 8% premium
ii. Issued at 4% premium, redeemable at 5% premium
iii. Issued at 5% premium, redeemable at par
12. Ram, Shyam and Vrinda were partners in a firm sharing profits in the ratio of 4:3:1. The
firm closes its books on 31st March every year. On 1st February, 2018 Ghanshyam died
and it was decided that the new profit sharing ratio between Ram and Varinda will be
equal. The partnership deed provided for the following on the death of a partner:
i. His share of goodwill be calculated on the basis of half of the profits credits to his
account during the previous four completed years.
2010-11 Rs.1,20,000; 2011-12 Rs.80,000; 2012-13 Rs.40,000; 2013-14 Rs.80,000
ii. His share of profit in the year of his death was to be computed on the basis of average
profits of past two years.
Pass necessary journal entries relating to goodwill and profit to be transferred to
Ghanshyam’s Capital Account. Show your working clearly.

OR

Arun, Boby and Chintu are partners in a firm sharing profit in the ratio or 2:2:1.
According to the terms of the partnership agreement, Chintu has to get a minimum of Rs.
60,000, irrespective of the profits of the firm. Any Deficiency to Chintu on Account of such
guarantee shall be borne by Arun. Prepare the profit and loss appropriation account
showing distribution of profits among partners in case the profits for year 2013 are: (i) Rs.
2,50,000; (ii) 3,60,000.

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13. Given below is the Receipts and Payments Account of Vinod Citizen Club for the year
ending 31st Dec. 2011:

Receipts Amount Payments Amount

Cash in hand 1-1-2011 2,250 Salaries 24,750

Cash at Bank 1-1-2011 63,000 Stationery 975

Subscriptions 76,200 Repair Expenses 3,510

Donation 36,000 Billiard Table 29,025

Interest on Investment 900 Investment 30,990

Entrance Fee 9,000 Misc. Expenses 3,300

Bank Interest 3,150 Furniture 61,500

Sale of old newspapers 450 Insurance Premium paid 1,350

Cash in hand 31st Dec. 2011 2,100

Cash at Bank 31st Dec. 2011 33,450

1,90,950 1,90,950

Prepare the club’s Income and expenditure account for the year ended 31st December
2011 and the Balance sheet after taking the following information into account:

i. Subscription is in arrear for 2011 Rs.6,750 and subscription received in advance for
year 2012 Rs.1,950.
ii. Insurance premium prepaid Rs.150.
iii. Misc. Expenses outstanding Rs.450.
iv. 50% of donation is to be capitalized.

14. Mohan, Vijay and Anil are partners, the balance on their capital accounts being Rs.
30,000, Rs. 25,000 and Rs. 20,000 respectively. In arriving at these figures, the profits for
the year ended March 31, 2007 amounting to Rupees 24,000 had been credited to partners
in the proportion in which they shared profits. During the tear their drawings for Mohan,
Vijay and Anil were Rs. 5,000, Rs. 4,000 and Rs. 3,000, respectively. Subsequently, the
following omissions were noticed:

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 a. Interest on Capital, at the rate of 10% p.a., was not charged.
b. Interest on Drawings: Mohan Rs. 250, Vijay Rs. 200, Anil Rs. 150 was not recorded in
the books.
Record necessary corrections through adjustment entry.

15. What journal entries would be recorded for the following transactions on the dissolution
of a firm after various assets (other than cash) on the third party liabilities have been
transferred to Reliasation account?

i. Arti took over the Stock worth Rs. 80,000 at Rs. 68,000.
ii. There was unrecorded Bike of Rs. 40,000 which was taken over By Mr. Karim.
iii. The firm paid Rs. 40,000 as compensation to employees.
iv. Sundry creditors amounting to Rs. 36,000 were settled at a discount of 15%.
v. Loss on realisation Rs. 42,000 was to be distributed between Arti and Karim in the
ratio of 3:4.

16. Azad and Babli are partners in a firm sharing profits and losses in the ratio of 2:1.
Chintan is admitted into the firm with 1/4 share in profits. Chintan will bring in Rs. 30,000
as his capital and the capitals of Azad and Babli are to be adjusted in the profit sharing
ratio. The Balance Sheet of Azad and Babli as on December 31, 2006 (before Chintan’s
admission) was as follows:

Liabilities Amount Assets Amount

Capitals: Azad 50,000 Cash in hand 2,000

Babli 32,000 Cast at bank 10,000

Creditors 8,000 Sundry debtors 8,000

Bills Payable 4,000 Stock 10,000

General Reserve 6,000 Furniture 5,000

Machinery 25,000

Building 40,000

1,00,000 1,00,000

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 It was agreed that:

i. Chintan will bring in Rs. 12,000 as his share of goodwill premium.

ii. Buildings were valued at Rs. 45,000 and Machinery at Rs. 23,000.
iii. A provision for doubtful debts is to be created @ 6% on debtors.
iv. The capital accounts of Azad and Babli are to be adjusted by opening current
accounts.
Record necessary journal entries, show necessary ledger accounts and prepare the
Balance Sheet after admission.

OR

A, B and C are partners in a trading firm. The firm has a fixed total capital of Rs.60,000
held equally by all the partners. Under the partnership deed the partners were entitled
to:
i. A and B to a salary of Rs.1,800 and Rs.1,600 per month respectively.
ii. In the event of the death of a partner, Goodwill was to be valued at 2 years purchase
of the Average profits of the last 3 years.
iii. Profit upto the date of the death based on the profit of the previous year.
iv. Partners were to be charged interest on drawings at 5% p.a. and allowed interest on
capitals at 6% p.a.
B died on 1.1.2011. His drawings to the date of death were Rs.2,000 and the interest
thereon was Rs.60. The profits for the three years ending 31.3.2008, 2009 and 2010
were Rs.21,200; Rs.3,200 (Dr.) and Rs.9,000 respectively.
Prepare A’s Capital Account to calculate the amount to be paid to his executors.
17. Vinod Limited invited applications for issuing 80,000 shares of Rs.10 each at a premium
of Rs.40 per share but applications were received only for 77,000 shares. Complete the
following journal entries.

Date Particulars L.F. Debit Credit

…………….. A/c Dr. ......

To …………………A/c
(Being application money received @ Rs.35 each 26,95,000
including Rs.30 premium)

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 …………………A/c Dr. ......

To …………………A/c 3,85,000

To Securities Premium A/c

......
(Being application money adjusted)

…………………A/c Dr. 6,16,000

To …………………A/c ......

To Securities Premium Reserve

(Being allotment money due @ Rs.8 including ......
premium of Rs.4 each share)

…………………A/c Dr. ......

To …………………A/c
......
(Being allotment received except on 7,000 shares)

…………………A/c Dr. ......

Securities Premium Reserve A/c Dr. ......

To …………………A/c ......

To Share Allotment A/c

......
(Being 7,000 shares forfeited by the Vinod Limited)

…………………A/c Dr. ......

To …………………A/c Dr. ......

To Securities Premium Reserve A/c

4,20,000
(Being first and final call due with premium)

…………………A/c ......

To …………………A/c
4,86,500
(Being first & final call received except 500 shares)

…………………A/c Dr. ......

Securities Premium Reserve A/c Dr. ......

To …………………A/c 3,500

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 To First and Final Call A/c
......
(Being 500 shares forfeited by the Vinod Limited)

…………………A/c Dr. ......

To …………………A/c ......

To Securities Premium Reserve A/c

(Being 1,000 shares reissued @ Rs.50 per share fully
......
paid, including 500 shares, which were forfeited after
the call)

…………………A/c ......

To …………………A/c
(Being gain on forfeiture transferred to the capital ......
reserve)

OR

Vinod Limited issued 40,000 Equity Shares of Rs.10 each at a premium of Rs.2.50 per
share. The amount was payable as follows:
On Application ……………………… Rs.2 per share
On Allotment ………………………. Rs.4.50 per share (including premium)
And on Call …………………………...Rs.6 per share
Allotment was made to the applicants as follows:
(i) Applicants for 20,000 shares were allotted 10,000 shares
(ii) Applicants for 56,000 shares were allotted 14,000 shares
(iii) Applicants for 48,000 shares were allotted 16,000 shares
It was decided that excess amount received on applications would be utilised on
allotment and the surplus would be refunded.
Ram, to whom 1,000 shares were allotted, who belongs to category (i), failed to pay
allotment money. His shares were forfeited after the call.
Pass necessary journal entries in the books of Vinod Limited for the above transactions

Part – B
Financial Statement Analysis

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18. Redemption of Debentures would result in inflow, outflow or no flow of cash. Give your
answer with reason.
19. When interest received is considered as financing activity?
20.
a. How will you show the following items in the balance sheet of a company?
i. Capital Reserve
ii. Statement of P/L
iii. Bank Overdraft
iv. Income received in advance
b. State any one objective of Financial Statement Analysis.
21. Following information was extracted from the Statement of Profit and Loss for the years
ended 31st March, 2012 and 2013. Prepare Comparative Statement of Profit and Loss:

Particulars 31.3.2013 31.3.2012

Revenue from operations 10,00,000 8,00,000

Employees benefit expenses 5,00,000 4,00,000

Other expenses 50,000 1,00,000

Tax rate 50% 50%

From the following Statement of Profit and Loss of Star Ltd. for the year ended 31st
March 2012, prepare a Common Size Statement of Profit & Loss:

Particulars Note No. 31.03.2012 (Rs)

Revenue from operation 20,00,000

Employee benefit expenses 10,00,000

Other Expenses 1,00,000

Show your working clearly.

22. Calculate ‘Return on Investment’ and ‘Debt to Equity Ratio’ from the following
information:

Net Profit after Interest and Tax Rs. 3,00,000

10% Debentures Rs. 5,00,000

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 Tax Rate 40%

Capital Employed Rs. 40,00,000

23. Prepare Cash Flow Statement from the following Balance Sheet:

Particular Note No. 31.3.2013 31.3.2012 (Rs)

I Equity and Liabilities

Shareholder's Funds:
1. a) Share Capital 6,30,000 5,60,000
b) Reserve and Surplus 1 3,08,000 1,82,000

Current Liabilities
2. 2,80,000 1,82,000
a) Trade Payables

Total 12,18,000 9,24,000

II Assets:

Non-Current Assets:
1. a) Fixed Assets: 3,92,000 2,80,000
i. Tangible (machinery)

Current Assets:
a) Inventories 98,000 1,40,000
2.
b) Trade Receivables 6,30,000 4,20,000
c) Cash and Cash equivalents 98,000 84,000

Total 12,18,000 9,24,000

Notes to Accounts:

Particulars 31.3.2013 31.3.2012

1. Reserves and Surplus

3,08,000 1,82,000
Surplus i.e. Balance in Statement of P/L

Additional Information:

a. An old machinery having book value of Rs.42,000 was sold for Rs.56,000.
b. Depreciation provided on machinery during the year was Rs.28,000.

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 CBSE Class 12 Accountancy
Sample Paper - 1 (solved)
For CBSE Examination March 2019
Solutions

1.

Vinod Current A/c Dr. 3,000

To Interest on Drawings 3,000

2. Change in the profit sharing ratio results as dissolution of partnership and not the
dissolution of partnership firm. Existing agreement among the partners comes to an end
and a new agreement takes place with the consent of all the partners.

OR

Gain Ratio may be applied in the following situations:

(i) At the time of Retirement of a partner (ii) At the time of Death of a Partner
3. Profit sharing ratio of the partners: 1/2: 3/10; 1/5 = 5:3:2
Gain Ratio of Chirag and Devan = 3:2
4. In case of Dissolution of Partnership, business of the firm will continue. In case of the
Dissolution of the Partnership Firm, business of the firm comes to an end.
5. Debit side of Receipts and Payments Account, Sale of Billiard Table is to be shown with
the amount of Rs.11,000.

OR

Honorarium is the amount paid To the person who is not a permanent employee of the
institution and rendered services to the institution. Amount paid to him is called
honorarium.
6. Two main rights of a newly admitted partner are:
i. Right to share future profits
ii. Right to share in the assets of the business
7. Subscription Receivable = 450 750 = 3,37,500
i. subscription is to be shown in credit side of Income and Expenditure Account 3,16,500
+ 21,000= 3,37,500
ii. Liabilities side 12,000 and Assets side 750 and 21,000.

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 8. Calculation of Opening Capital:
Mountain = 4,00,000 + 20,000 - 50,000 = 3,70,000
Hills = 3,00,000 + 15,000 - 50,000 = 2,65,000
Rock = 2,00,000 + 10,000 - 50,000 = 1,60,000
Calculation of Interest on Capital:
Mountain = 3,70,000 10/100 = 37,000
Hills = 2,65,000 10/100 = 26,500
Rock = 1,60,000 10/100 = 16,000
9.
a. (i) Assets Dr. and Keshav Ltd Cr. By 90,000
(ii) Keshav Ltd. Dr. 90,000; Equity Share Capital A/c Cr 75,000; Securities premium
reserve Cr.15,000.
b. It means that amount required for the redemption of debentures is to be taken out
from the profits of the firm.

OR

(i) Out of Profit (ii) From the proceeds of the fresh issue of share capital OR Debentures.
10.

Date Particulars L.F. Debit Credit

Bank A/c Dr. 60,000

To Christopher's Capital A/c 50,000

To Premium for Goodwill A/c 10,000

(Being capital and premium brought by new partner)

Premium for Goodwill A/c Dr. 10,000

Christopher's Capital/current A/c Dr. 5,000

To Aditya's Capital A/c 6,000

To Balan's Capital A/c 9,000

(Being premium for goodwill adjusted)

11.

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 Journal Entries

Date Particulars L.F. Debit Credit

2014 April Bank A/c Dr. 95,000

To 12% Debenture App. & Allot. A/c

95,000
(Being application money received)

12% Debentures App. & Allot. A/c Dr. 95,000

Loss on issue of debenture A/c Dr. 15,000

To 12% Debentures A/c 1,00,000

To Premium on Redemption
10,000
(Being application money adjusted)

Sept 30, 2014 Debenture interest A/c Dr. 6,000

To Income Tax Payable A/c 600

To Debenture holders A/c

5,400
(Being interest due)

Debenture holders A/c Dr. 5,400

To Bank A/c
5,400
(Being interest paid)

March 2015 Debenture interest A/c Dr. 6,000

To Income Tax Payable A/c 600

To Debenture holders A/c

(Being interest due) 5,400

Debenture holders A/c Dr. 5,400

To Bank A/c
5,400
(Being interest paid)

Income Tax Payable A/c Dr. 1,200

To Bank A/c
1,200

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 (Being income tax deposited with Govt.)

Statement of P/L Dr. 12,000

To Debenture Interest A/c

12,000
(Being transfer of debenture interest to State

OR

Case 1. (i) Bank A/c Dr. 2,50,00,000; Debenture Application & Allotment A/c Cr.2,50,00,000
(ii) Debentures Application & Allotment A/c Cr. 2,50,00,000; Loss on issue Dr.20,00,000; 7%
Debentures Cr.2,50,00,000; Premium on Redemption Cr 20,00,000.
Case 2. (i) Bank A/c Dr. 2,60,00,000; Debenture Application & Allotment A/c Cr.2,60,00,000
(ii) Debenture Application & Allotment A/c Cr.2,60,00,000; Loss on issue Dr.12,50,000; 7%
Debentures Cr 2,50,00,000; Securities Premium Cr.10,00,000; Premium on Redemption Cr
12,50,000
Case 3. (i) Bank Dr 2,62,50,000; Debenture Application & Allotment A/c Cr. 2,62,50,000
(ii) Debenture Application & Allotment A/c Cr. 2,62,50,000; 7% Debentures Cr 2,50,00,000;
Securities Premium Cr 12,50,000

12.

Journal Entries

Date Particulars L.F. Debit Credit

Vrinda’s Capital A/c 60,000

To Ghanshyam’s Capital A/c

60,000
(being goodwill adjusted)

Vrinda’s Capital A/c 18,750

To Ghanshyam’s Capital A/c

18,750
(being share of profit adjusted)

OR

Profit and Loss Appropriation Account

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 Particulars Amount Particulars Amount

To Profit transferred to: By Profit & Loss A/c 2,50,000

Arun 1,00,000-10,000 90,000

Boby 1,00,000

Chintu 50,000 + 10,000 60,000

2,50,000 2,50,000

Profit Loss Appropriation Account

Particulars Amount Particulars Amount

To Profit transferred to: By profit & Loss A/c 3,60,000

Arun 1,44,000

Boby 1,44,000

Chintu 72,000

3,60,000 3,60,000

13.

Income and Expenditure Account

Expenditure Amount Income Amount

To Misc. Expenses 3,300 By Subscription 76,200

Add : Outstanding 450 3,750 Add : Outstanding 6,750

To Salaries 24,750 Less : Advance 1,950 81,000

To Stationery 975 By Donation 18,000

To Repair Expenses 3,510 By Interest on investment 900

By Entrance Fee 9,000

To Insurance Premium 1,350

Less : Prepaid 150 1,200 By Bank Interest 3,150

To Surplus 78,315 By Sale of old newspapers 450

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 1,12,500 1,12,500

Liabilities Amount Assets Amount

Capital Fund (65,250 + 78,315) 1,43,565 Billiard Table 29,025

Donations 18,000 Investment 30,990

Advance Subscription 1,950 Furniture 61,500

Outstanding Expense 450 Subscription (not received yet) 6,750

Insurance paid in advance 150

Cash in Hand 2,100

Cash at Bank 33,450

1,63,965 1,63,965

Balance Sheet (1 January 2011)

Liabilities Amount Assets Amount

Cash in Hand 2,250

Capital Fund (Bal. fig.) 65,250
Cash at Bank 63,000

65,250 65,250

14. Adjustment Entry

Date Particulars L.F. Debit Credit

Anil’s Capital A/c Dr. 550

To Mohan’s Capital A/c

550
(Being adjustment entry passed)

Calculation of Opening Capital:

Mohan = 30,000 + 5,000 (Drawings) - 8,000 (Profit) = 27,000
Vijay = 25,000 + 4,000 (Drawings) - 8,000 (Profit) = 21,000
Anil = 20,000 + 3,000 (Drawings) - 8,000 (Profit) = 15,000

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 Adjustment Table

Particulars Mohan Vijay Anil Total

Amount should have been credited

Interest on capital 2,700 2,100 1,500 6,300

Less: Interest on drawings (250) (200) (150) (600)

Total 2,450 1,900 1,350 5,700

Less: Wrongly distributed profit 5,700 (1,900) (1,900) (1,900) (5,700)

550 Cr. Nil. 550 Dr. Nil

15. Journal Entries

Date Particulars L.F. Debit Credit

(1) Arti’s Capital A/c Dr. 68,000

To Realisation A/c
68,000
(Being stock taken over by Arti)

(2) Karim’s Capital A/c Dr. 40,000

To Realisation A/c
40,000
(Being unrecorded Bike taken over by Karim)

(3) Realisation A/c Dr. 40,000

To Bank A/c
40,000
(Being payment of compensation to employee)

(4) Realisation A/c Dr. 30,600

To Bank A/c
30,600
(Being creditors settled)

Arti’s Capital A/c Dr. 18,000

Karim’s Capital A/c Dr. 24,000

To Realisation A/c
42,000
(Being realization loss transferred to partners)

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16. Revaluation Account

Particulars Amount Particulars Amount

To Machinery 2,000 By Building 5,000

To Provision for doubtful debts 480

To Profit transferred to:

Azad 1,680
Babli 840

5,000 5,000

Azad's Capital Account

Particulars Amount Particulars Amount

To Drawings By Balance b/d 50,000

To Azad's Current A/c (Bal. fig.) 3,680 By Premium for goodwill 8,000

To Balance c/d 60,000 By Revaluation A/c 1,680

By General Reserve 4,000

63,680 63,680

Babli's Capital Account

Particulars Amount Particulars Amount

By Balance b/d 32,000

To Babli’s Current A/c (Bal. fig.) 8,840 By Premium for goodwill 4,000

To Balance c/d 30,000 By Revaluation A/c 840

By General Reserve 2,000

38,840 38,840

Chintan’s Capital Account

Particulars Amount Particulars Amount

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 To Balance c/d 30,000 By Cash A/c 30,000

30,000 30,000

Balance Sheet

Liabilities Amount Assets Amount

Capital A/cs: Azad 60,000 Cash in hand 44,000

Babli 30,000 Cast at bank 10,000

Chintan 30,000 Sundry debtors 8,000 - 480 7,520

Current A/cs: Azad 3,680 Stock 10,000

Babli 8,840 Furniture 5,000

Creditors 8,000 Machinery 25,000 - 2,000 23,000

Bills Payable 4,000 Building 40,000 - 5,000 45,000

1,44,520 1,44,520

OR

B's Capital Account

Particulars Amount Particulars Amount

To Drawing 2,000 By Balance b/d 20,000

To Interest on Drawing 60 By Salary 14,400

To B's Executor's A/c (Bal. fig) 41,490 By A's Capital 3,000

By C's Capital 3,000

By P/L Suspense 2,250

By Interest on capital 900

43,550 43,550

17.

Journal Entries

Date Particulars L.F. Debit Credit

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 Bank A/c Dr. 26,95,000
To Equity Share Application A/c

(Being application money received @ Rs.35 each
including Rs.30 premium)

Equity Share Application A/c Dr. 26,95,000

To Equity Share Capital A/c 3,85,000

To Securities Premium A/c 23,10,000
(Being application money adjusted)

Equity Share Allotment A/c Dr. 6,16,000

To Equity Share Capital A/c
3,08,000
To Securities Premium
3,08,000
(Being allotment money due @ Rs.8 including
premium of Rs.4 each share)

Bank A/c Dr. 5,60,000

To Equity Share Allotment
5,60,000
(Being allotment money received except on 7,000
shares)

Equity Share Capital A/c Dr. 63,000

Securities Premium A/c Dr. 28,000
To Share Forfeiture A/c 56,000
To Share Allotment A/c 35,000
(Being 7,000 shares forfeited by the Vinod Limited)

Equity Share First and final call A/c Dr. 4,90,000

To Equity Share Capital A/c 70,000

To Securities Premium A/c 4,20,000
(Being first and final call due with premium)

Bank A/c Dr.

4,86,500
To Equity Share first and final call
4,86,500
(Being first and final call received except on 500

shares)

Equity Share Capital A/c Dr. 5,000

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 Securities Premium A/c Dr. 3,000

To Share Forfeiture A/c 3,500
To First and Final Call A/c 4,500
(Being 500 shares forfeited by the Vinod Limited)

Bank A/c Dr. 50,000

To Share Capital A/c
10,000
To Securities Premium A/c
40,000
(Being 1,000 shares reissued @ Rs.50 per share fully
paid, including 500 shares, which were forfeited after

the call)

Share forfeiture A/c Dr. 7,000

To Capital Reserve
7,000
(Being gain on forfeiture transferred to the capital
reserve)

OR

Journal Entries

Date Particulars L.F. Debit Credit

Bank A/c Dr. 2,48,000

To Equity Share Application A/c 2,48,000
(Being application money received)

Equity Share Application A/c Dr. 2,48,000

To Equity Share Capital A/c
80,000
To Equity Share Allotment A/c
1,47,000
To Bank A/c
21,000
(Being application money adjusted)

Equity Share Allotment A/c Dr. 1,80,000

To Equity Share Capital A/c 80,000

To Securities Premium 1,00,000
(Being allotment money due)

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 Bank A/c Dr. 30,500
To Equity Share Allotment 30,500

(Being allotment money received)

Equity Share First and final call A/c Dr. 2,40,000

To Equity Share Capital A/c 2,40,000
(Being first and final call due)

Bank A/c Dr. 2,34,000

To Equity Share first and final call 2,34,000
(Being first and final call received)

Equity Share Capital A/c Dr. 10,000

Securities Premium A/c Dr. 2,500
To Share Forfeiture A/c 4,000

To Share Allotment A/c 2,500
To first and final call 6,000
(Being 1,000 shares forfeited by the Vinod Limited)

18. Redemption of debentures is out flow of cash because it is a payment to the debenture
holders and decreases cash.
19. When a company receives interest on calls in arrears it is considered as financing
activity.
20.
a. Items to be shown in the Balance Sheet:
i. Capital Reserve ----------- Shareholders Funds-------------Reserves and Surplus
ii. Statement of P/L --------- Shareholders Funds-------------Reserves and Surplus
iii. Bank Overdraft---------- Current Liabilities -------------- Short-term borrowings
iv. Income received in advance ------ Current Liabilities --- Other current liabilities
b. The main objective of Financial Statement Analysis is to know the long term as well as
short-term solvency of the business firm.

21. Comparative Statement of Profit and Loss

Particulars 31.3.2013 31.3.2012 Absolute change % change

(i) Revenue from operations 10,00,000 8,00,000 2,00,000 25

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 (i) Revenue from operations 10,00,000 8,00,000 2,00,000 25

(ii) Expenses:
a. Employee benefit expenses 5,00,000 4,00,000 1,00,000 25
b. Other expenses 50,000 1,00,000 (50,000) (50)

Total Expenses 5,50,000 5,00,000 50,000 10

Net profit before tax (i –ii) 4,50,000 3,00,000 1,50,000 50

Less: Tax 2,25,000 1,50,000 75,000 50

Net profit after tax 2,25,000 1,50,000 75,000 50

OR

Common Size Statement

Absolute Percentage of Revenue from

Note
Particulars Amount Operations
No.
2011-12 2011-12

i. Revenue from
20,00,000 100
Operations

ii. Employee Benefits

10,00,000 50
Expenses
1,00,000 5
Other Expenses

iii. Total expenses 11,00,000 55

iv. Profit before Tax (i-iii) 9,00,000 45

22.
i. Return on Investment = Net Profit before interest and tax/capital employed 100
= 5,50,000/40,00,000 100 = 13.75%
Working Note:
Net Profit before Interest and Tax = 3,00,000 + 50,000 (Interest) + 2,00,000 Tax =
5,50,000
ii. Debt to Equity Ratio = Debt = 5,00,000 i.e.10% Debentures
Equity = Capital Employed 40,00,000 - Debt 5,00,000 = 35,00,000
Debt/Equity = 5,00,000/35,00,000 = 1:7

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 OR

23.

Cash Flow Statement

Particulars Detail Amount

A. Cash Flow from Operating Activities

Net Profit before tax 1,26,000

Add: Depreciation 28,000
Less: Profit on sale of Machinery (14,000)

Operating profit before working capital changes 1,40,000

Add: Trade payables 98,000

Add: Decrease in Inventories 42,000
Less: Increase in Trade Receivable (2,10,000)

Cash flow from operating activities before tax 70,000 70,000

B. Cash Flow from Investing Activities

Proceeds from the sale of machinery 56,000

Purchase of machinery (1,82,000)

Cash used in Investing Activities (1,26,000)

C. Cash Flow from Financing Activities

Issue of Shares 70,000

Cash Flow from Financing Activities 70,000

D. Decrease in Cash and Cash Equivalents (A + B + C) 14,000

Add: Cash and Cash Equivalents in the beginning 84,000

Cash and Cash Equivalents at the end 98,000

Working Note: Plant and Machinery Account

Plant and Machinery Account

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 Particulars Amount Particulars Amount

To Bal. b/d 2,80,000 By Bank A/c 56,000

To Gain on sale of machinery 14,000 By Depreciation 28,000

To Bank A/c (Bal. fig. purchase) 1,82,000 By Bal. c/d 3,92,000

4,76,000 4,76,000

Source: Ultimate Book of Accountancy for Class 12 CBSE by VISHVAS PUBLICATIONS.

This book is available at Amazon and Flipkart). Contact: authorcbse@gmail.com

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