ACCOUNTANCY

TIME -3 HRS                                                                                                                                                        M.M.80

General Instructions:

  (i) This question paper contains two parts A and B.

 (ii) All parts of a question should be attempted at one place.

PART – A

(Accounting for Partnership Firms and Companies)

Q-1 Can a partner be exempted from sharing the losses of a firm? If yes under what circumstances?      1

Q-2 A and B are equal partners. C is admitted for 1/8^th share of profits. C brings 50,000 as capital and ₹15,000 being half of the premium for goodwill. Ascertain the value of the goodwill of the frim.              1

Q-3 X and Y have capital of 1,00,000 and 80,000 respectively. Interest is payable @ 5% p.a. Profits for the year were 6,000. Amount of interest on capital is charged against the profits. State the amount of interest payable to X and Y.                                                                                                                                                                                1

Q-4 Name the debentures that are repaid at the end of specified time or by instalments during the lifetime of the company.                                                                                                                                                                            1

Q-5 If a Share of ₹ 10 on which ₹8 is called-up and ₹ 6 is paid as forfeited. State with what amount the Share Capital account will be debited.                                                                                                                                1

Q-6 State the right of a partner other than right to share the assets of a partnership firm at the time of his/her admission in a partnership firm.                                                                                                                                 1

Q-7 Kairn Ltd. converted its 200, 8% debentures of ₹100 each issued at a discount of 6% into equity shares of ₹10 each, issued at a premium of 25%. Discount on issue of 8% debentures has not yet been written off.  Showing your working notes clearly. Pass necessary Journal Entries on conversion of 8% debentures into equity shares.                                                                                                                                                                                               3

Q-8 P, Q and R are partners in a firm sharing profits and losses in the ratio of 5:3:2. Q retires and the goodwill of the firm is valued at 9,000. Goodwill already appearing in the books of the firm at 10,000. P and R will share the future profits in the ratio of 4:1. Pass the necessary journal entries for the treatment of goodwill.3

Q-9 J J Limited obtained a loan of Rs. 20,00,000 from Punjab National Bank @ 9 % interest. The company issued Rs. 25,00,000, 9 % debentures of Rs. 100/- each, in favour of Punjab National Bank as collateral security. Pass necessary Journal entries for the above transactions:

(i)                  When company decided not to record the issue of 9 % Debentures as collateral security.

(ii)                When company decided to record the issue of 9 % Debentures as collateral security.                3

Q-10 Abhishek Ltd. is registered with an authorized Capital of  ₹ 8,00,00,000 divided into equity shares of      ₹ 10 each. Subscribed and fully paid up share capital of the company was  ₹ 4,00,00,000. For providing employment to the local youth and for the development of the rural areas of the Jharkhand State.The company decided to set up a food processing unit. The Company also decided to open skill development centres in different districts of the State. To meet its new financial requirements the company decided to issue 1,00,000 equity shares of  ₹ 10 each and 10,000, 9% debentures of ₹100 each. The debentures were redeemable after five years. The issue of equity shares and debentures was fully subscribed. A shareholder holding 1,000 shares failed to pay the final call of  ₹ 2 per share.   Present the share capital in the Balance Sheet of the company as per the provisions of Schedule III of the Companies Act, 2013. Also, identify any two values that the company wishes to propagate.                                                                                                                   3

Q-11 A and B are partners sharing profits and losses in the ratio of 3:2. On 1.4.2014 C was admitted as a partner paying 30,000 as capital and the necessary amount of goodwill which was valued at 54,000 for the firm. His share of profits is 1/6^th which he acquires equally from A and B. The profit for the year ended 31^st March 2015 was 36,000.

 Journalise the above transactions.                                                                                                                                           4

Q-12 Calculate the amount of goodwill and complete the Balance Sheet of the firm:

Liabilities	Amount	Assets	Amount
Creditors -------------	90,000 ----------	Tangible Assets Goodwill	------------------ ------------------
	-------------------		-----------------

Firm earns a profit of  ₹ 45,000 per year. The rate of normal profit being 10%. The net tangible assets of the firm are  ₹ 4,00,000.                                                                                                                                                                              4

Q-13 Ram, Shyam and Hari were in partnership sharing profits in the ratio of 3:2:1. Their Balance Sheet as at 31.3.2015 was as follows:

Liabilities	Amount	Assets	Amount
Bills Payable Creditors General reserve Capitals: Ram Shyam Hari	20,000 20,000 30,000 50,000 30,000 25,000	Cash Bills Receivables Debtors Stock Furniture Machinery goodwill	40,000   5,000 15,000 50,000 20,000 30,000 15,000
	1,75,000		1,75,000

On 1.4.2015 partners decided to share profits equally. For this purpose, it was further agreed that:

a.       Goodwill of the firm should be valued at  ₹ 30,000.

b.       Furniture and Machinery is to be revalued at  ₹ 25,000 and  ₹ 35,000 respectively.

c.       Value of stock is to be reduced by  ₹ 4,000.

d.       Pass necessary journal entries.                                                                                                                         6

Q-14 On April 1, 2013, XY Limited issued Rs. 9,00,000 10% debentures at a discount of 9%. The debentures were to be redeemed in three equal annual instalments starting from March 31, 2015. Prepare ‘Discount on Issue of Debenture Account’ for the first three years starting from April 1, 2013. Also show your workings clearly.                                                                                                                                                                         6

Q -15 Aisha and Afreen are partners sharing profits and losses equally. They decided to dissolve their firm . Give journal entries for settlement of the following alternative cases assuming that accounts of assets and liabilities are already closed:

a.       Abeer a creditor for  ₹ 25,000 accepted furniture at  ₹ 36,000 in full settlement of his claim.

b.       Azarya a creditor of  ₹ 25,000 accepted furniture at ₹  20,000 in full settlement of her claim.

c.       Ayaan a creditor for  ₹ 30,000 agreed to take Machinery at  ₹ 48,000, book value  ₹ 50,000 in full settlement of his claim.He paid balance amount to the firm.

d.       Aabidah a creditor of  ₹ 20,000 (unrecorded)agreed to accept computer (unrecorded) at  ₹ 15,000 plus  ₹ 2,000 in full settlement of her claim.                                                       

e.       Loss on dissolution ₹  12,000.

f.        Abeeda a creditor for 70,000 accepted 30,000 in cash and investments of the book value of 45,000 in full settlement of his claim.                                                                                                                                  6

Q-16 The Balance Sheet of Madan and Mohan sharing profits and losses in the ratio of 3:2 was  as follows :

Liabilities	Amount	Assets	Amount
Creditors Workmen Compensation Reserve General Reserve Capitals: Madan Mohan	28,000 12,000 20,000 60,000 40,000	Cash Debtors               65,000 Less: provision     5,000 Stock Investments Patents	10,000 60,000 30,000 50,000 10,000
	1,60,000		1,60,000

They decided to admit Gopal for 1/4^th share on the following terms:

a.       Gopal shall bring  ₹ 25,000 as his share of premium for goodwill.

b.       That unaccounted accrued income of  ₹ 500 be provided for.

c.       The market value of investments was  ₹ 45,000.

d.       A debtor whose dues of  ₹ 1,000 were written off as bad debts paid  ₹ 800 in full settlement.

e.       A claim of  ₹ 2,000 on account of workmen compensation is to be provided.

f.        Patents are undervalued by  ₹ 5,000.

g.       Gopal to bring in capital equal to 1/4^th of the total capital of the new firm after all adjustments.

h.       Prepare Revaluation Account, Partners Capital Account and Balance Sheet of reconstituted firm. 8

OR

X, Y and Z were partners in a firm whose Balance Sheet as on 31^st March 2017 was as under:

Liabilities	Amount	Assets	Amount
Creditors General Reserve Capitals: X Y Z	18,240   7,500 20,000 14,500 10,000	Cash Debtors Stock Furniture	28,740 10,000 26,500    5,000
	70,240		70,240

Y retired on that date in this connection it was decided to make the following adjustments:

a.       To reduce stock and furniture by 5% and 10% respectively.

b.       To provide for doubtful debts at 1,125.

c.       A long dispute with the creditors was settled and firm has to pay 8,050. In anticipation₹ 5,000 have already been included in sundry creditors for this purpose.

d.       Goodwill was valued at ₹12,000 and Y’s share of the same be adjusted into the account of X and Z.

e.       To share profits and losses in 5:3 respectively.

f.        Y should be paid off and the adjusted capitals of the partners should be in their new profit sharing ratio. Adjustments to be made through cash.

g.       Prepare Revaluation Account, Partners Capitals Accounts and Balance Sheet of new firm.

Q-17 JK Ltd offered to public 40,000 ordinary shares of . 10 each at . 12 per share payable . 3 with application; . 5 on allotment (including . 2 premium) and . 4 on first & final call.

              Applications totalled for 76,000 shares. Of these 6,000 applications are rejected and for the balance a                         pro-rata allotment was made. All money due were received except the allotment and call money from a shareholder to whom 2,000 were allotted. These shares forfeited and re-issued at .  25,000 fully paid up. Give Journal entries in the books of the company. Also state the value missed by the company by rejecting applications.                                                                                                                                                                                               8

Or

(a) Adhar Limited forfeited 6,000 shares of   ₹ 10 each for non-payment of First call of  ₹ 2 per share. The Final call of  ₹ 3 per share was yet to be made. The Final call was made after Forfeited of these shares. Of the forfeited shares, 4,000 shares were reissued at ₹ 9 per share as fully paid up.Assuming that the company maintains ‘Calls in Advance Account’ and ‘Calls in Arrears Account’, prepare “Share Forfeited Account” in the books of Adhar  Limited.

(b) Bajrang Limited issued 2,00,000 equity shares of ₹ 20 each at a premium of ₹ 5 per share. The shares were allotted in the proportion of 5 : 4 of shares applied and allotted to all the applicants. Deepak, who had applied for 900 shares, failed to pay Allotment money of Rs. 7 per share (including premium) and on his failure to pay ‘First & Final Call’ of ₹ 2 per share, his shares were forfeited. 400 of the forfeited shares were reissued at ₹15 per share as fully paid up.Showing your working clearly, pass necessary Journal entries for the Forfeited and reissue of Deepak’s shares in the books of BG Limited. The company maintains ‘Calls in Arrears’ Account’.

(c) Malkhan  Limited forfeited 1,200 shares of ₹. 10 each allotted to Ravi for Non-payment of ‘Second & Final Call’ of ₹. 5 per share (including premium of ₹ 2 per share). The forfeited shares were reissued for ₹ 10,800 as fully paid up. Pass necessary Journal entries for reissue of shares in the books of Malkhan  Limited.

Part B

Option I

(Analysis of Financial Statements)

Q-18 State why cash flow statement is not a substitute for Income Statement?                                                1

Q-19 Give any one example of an activity which is classified as operating activity in case of all enterprises.1

Q-20 State the objectives of ‘Analysis of Financial Statements’.                                                                                   4

Q-21 Assuming that the Debt-Equity Ratio is 2:1. State giving reasons whether this ratio will increase, decrease or remain unchanged in the following cases:

a.       Purchase of fixed asset on a credit of 2 months.

b.       Sale of fixed assets at a loss of  ₹ 3,000.

c.       Purchase of fixed assets on long term deferred basis.

d.       Issue of bonus shares.                                                                                                                                                  4

Q-22 From the following information prepare a Comparative statement of Profit and Loss for the period given:                                                                                                                                                                                                    4

	2015-16	2016-17
Revenue from operations Employees benefit expenses Other expenses Income tax	9,00,000 4,50,000 15% of Employee benefit expenses 50%	6,00,000 3,60,000 20% of Employee benefit expenses 50%

Q-23 From the following Balance Sheet of Wadhwa Limited as on 31.3.2016 and 31.3.2017 prepare a cash flow statement:

particulars	Note No	31.3.2017	31.3.2016
I.                    Equity and Liabilities Shareholders Funds Share capital Reserve and Surplus Current Liabilities Trade Payables Total II.                  Assets Non Current Assets Fixed Assets Tangible Assets Current Assets Trade Receivables Cash and cash equivalents Total	1 2 3 4 5 6	1,00,000   50,000   20,000 1,70,000 90,000 25,000 55,000 1,70,000	50,000 30,000 10,000 90,000 55,000 20,000 15,000 90,000

Notes to Accounts:

Particulars	31.3.2017	31.3.2016
Note No 1 Share Capital Equity Share Capital Note No 2 Reserve and Surplus General Reserve Surplus i.e. Balance in Statement of Profit and Loss Note No 3 Trade creditors Note No 4 Tangible Assets Machinery Note no 5 Trade Receivables Debtors Note No 6 Cash and Cash equivalents Cash at Bank	1,00,000 --------------------------------------------- 30,000 20,000 --------------------------------------------- 50,000 --------------------------------------------- 20,000 90,000 25,000 55,000	50,000 --------------------------------------------- 20,000 10,000 -------------------------------------------- 30,000 --------------------------------------------- 10,000 --------------------------------------------- 55,000 20,000 15,000

Additional Information:

a.       Depreciation on Machinery for the year 2016 was 15,000.

b.       Interim dividend 7,000 has been paid to the shareholders during the year 2016.                             6