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THE NAVODAYA ACADEMY SENIOR SECONDARY SCHOOL CBSE, NAMAKKAL PRE BOARD EXAM (2015-2016) Class: XII Marks: 80 Subject: ACCOUNTANCY Time: 3 hours DATE: Subject code: 055 General Instructions: 1) This question paper contains two parts A and B. 2) Part A is compulsory for all. 3) Part B has two options-Financial statements Analysis and Computerized Accounting. 4) Attempt only one option of Part B. 5) All parts of a question should be attempted at one place. Please check that this question paper contains 23 questions. Please write down the serial number of the question before attempting it. 15 minutes time has been allotted to read the question paper -----------------------------------------------------------------------------------------------------------------------------------PART A: ACCOUNTING FOR PARTNERSHIP FIRMS AND COMPANIES 1. Any change in the relationship of existing partners which results in an end of the existing agreement and enforces making of a new agreement is called [1] (a) Revaluation of partnership. (b) Reconstitution of partnership. (c) Realization of partnership. (d) None of the above. 2. Karan, Nakul and Asha were partners in a firm sharing profits and losses in the ratio 3:2:1. At the time of admission of a partner, the goodwill of the firm was valued at `2,00,000. The accountant of the firm passed the entry in the books of accounts and thereafter showed goodwill at `2,00,000 as an asset in the Balance Sheet. Was he correct in doing so? Why? [1] 3. Anu, Bina and Charan are partners. The firm had given a loan of `20,000 to Bina. They decided to dissolve the firm. In the event of dissolution, the loan will be settled by: [1] (a) Transferring it to debit side of Realization account. (b) Transferring it to credit side of Realization account. (c) Transferring it to debit side of Bina s capital account. (d) Bina paying Anu and Charan privately. 4. Differentiate between Capital Reserve and Reserve Capital . [1] 5. Metacaf Ltd. issued 50,000 shares of ` 100 each payable `20 on application (on 1st May 2012); `30 on allotment (on 1st January 2013); `20 on first call (on 1st July 2013) and the balance on final call (on 1st February 2014). Shankar, a shareholder holding 5,000 shares did not pay the first call on the due date. The second call was made and Shankar paid the first call amount along with the second call. All sums due were received. Total amount received on 1st February was: [1] (a) `15,00,000 (b) `16,00,000 (c) `10,00,000 (d) `11,00,000 6. Abha and Beena were partners sharing profits and losses in the ratio of 3:2. On April 1 st 2013, they decided to admit Chanda for 1/5th share in the profits. They had a reserve of `25,000 which they wanted to show in their new balance sheet. Chanda agreed and the necessary adjustments were made in the books. On October 1st 2013, Abha met with an accident and died. Beena and Chanda decided to admit Abha s daughter Fiza in their partnership, who agreed to bring `2,00,000 as capital. Calculate Abha s share in the reserve on the date of her death. [1] 7. State any three purposes for which securities premium can be utilized. [3] 8. Ankur and Bobby were into the business of providing software solutions in India. They were sharing profits and losses in the ratio 3:2. They admitted Rohit for a 1/5 share in the firm. Rohit, an alumni of IIT, Chennai would help them to expand their business to various South African countries where he had been working earlier. Rohit is guaranteed a minimum profit of `2,00,000 for the year. Any deficiency in Rohit s share is to be borne by Ankur and Bobby in the ratio 4:1. Losses for the year were `10,00,000. Pass the necessary journal entries [3] 9. Newbie Ltd. was registered with an authorized capital of `5,00,000 divided into 50,000 equity shares of `10 each. Since the economy was in robust shape, the company decided to offer to the public for subscription 30,000 equity shares of `10 each at a premium of `20 per share. Applications for 28,000 shares were received and allotment was made to all the applicants. All calls were made and duly received except the final call of ` 2 per share on 200 shares. Show the Share Capital in the Balance Sheet of Newbie Ltd. as per Schedule VI of the Companies Act 1956. Also prepare Notes to Accounts for the same. [3] 10. Drumbeats Ltd. had a prosperous shoe business. They were manufacturing shoes in India and exporting to Italy. Being a socially aware organization, they wanted to pay back to the society. They decided to not only supply free shoes to 50 orphanages in various parts of the country but also give employment to children from those orphanages who were above 18 years of age. In order to meet the fund requirements, they decided to raise 50,000 equity shares of ` 50 each and 40,000 9% debentures of ` 40 each. Pass the necessary journal entries for issue of shares and debentures. Also identify one value which the company wants to communicate to the society. [3] 11. Following is the Balance Sheet of Punita, Rashi and Seema who are sharing profits in the ratio 2:1:2 as on 31st March 2013. [4] Liabilities Creditors Bills Payable Capitals: Punita 1,44,000 Rashi 92,000 Seema 1,24,000 Amount(`) 38,000 2,000 3,60,000 Assets Building Stock Debtors Cash at bank Profit and Loss Account Amount(`) 2,40,000 65,000 30,000 5,000 60,000 4,00,000 4,00,000 Punita died on 30th September 2013. She had withdrawn 44,000 from her capital on July 1, 2013. According to the partnership agreement, she was entitled to interest on capital @8% p.a. Her share of profit till the date of death was to be calculated on the basis of the average profits of the last three years. Goodwill was to be calculated on the basis of three times the average profits of the last four years. The profits for the years ended 2009-10, 2010-11 and 2011-12 were `30,000, `70,000 and `80,000 respectively. Prepare Punita s account to be rendered to her executors. 12. Kanika and Gautam are partners doing a dry cleaning business in Lucknow, sharing profits in the ratio 2:1 with capitals `5,00,000 and `4,00,000 respectively. Kanika withdrew the following amounts during the year to pay the hostel expenses of her son. 1st April 10,000 1st June 9,000 1st Nov. 14,000 1st Dec. 5,000 Gautam withdrew `15,000 on the first day of April, July, October and January to pay rent for the accommodation of his family. He also paid `20,000 per month as rent for the office of partnership which was in a nearby shopping complex. Calculate interest on Drawings @6% p.a. [4] 13. (a) A firm earned profits of `80,000, `1,00,000, `1,20,000 and `1,80,000 during 201011, 2011-12, 2012-13 and 2013-14 respectively. The firm has capital investment of `5,00,000. A fair rate of return on investment is 15% p.a. Calculate goodwill of the firm based on three years purchase of average super profits of last four years. (b) Kabir and Farid are partners sharing profits and losses in the ratio of 7:3. Kabir surrenders 2/10th from his share and Farid surrenders 1/10th from his share in favor of Jyoti, a new partner. Calculate new profit sharing ratio and sacrificing ratio. [6] 14. (a) Sunrise Company Ltd. has an equity share capital of `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 `5,00,000 @15% p.a. from a bank payable in four equal quarterly installments starting from the end of the fifth year (ii) Issue `5,00,000, 9% Debentures of Rs. 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. [6] (b) Walter Ltd. issued ` 6,00,000 8% Debentures of ` 100 each redeemable after 3 years either by draw of lots or by purchase in the open market. At the end of three years, finding the market price of debentures at `95 per debenture, it purchased all its debentures for immediate cancellation. Pass necessary journal entries for cancellation of debentures assuming the company has sufficient balance in Debenture Redemption Reserve. 15. Ashish and Neha were partners in a firm sharing profits and losses in the ratio 4:3. They decided to dissolve the firm on 1st May 2014. From the information given below, complete Realisation A/c, Partner s Capital Accounts and Bank A/c: [6] Dr. Realisation A/c Cr. Liabilities To sundry assets: -Machinery -Stock -Debtors To Bank: -Creditors To Ashish s Capital A/c: -Ashish s wife s loan To Neha s Capital A/c; -Realisation expenses To profit transferred to: Ashish s capital A/c 4,000 Neha s capital A/c 3,000 Amount(`) 5,60,000 90,000 55,000 ______ 34,000 7,000 7,000 Assets By Sundry liabilities: -Creditors -Ashish s wife s loan By Bank: -Machinery -Debtors By Ashish s Capital A/c: -Stock 1,28,000 -typewriter 70,000 By Neha s Capital A/c -Debtors 7,93,000 Dr. Particulars To Realisation A/c To Bank A/c Dr. Particulars To Balance b/d To Realisation A/c Amount (`) 40,000 25,000 4,80,00 0 10,000 1,98,00 0 40,000 7,93,00 0 Partner s Capital Accounts Ashish(`) _____ 4,00,000 Neha(`) ____ 4,50,000 Particulars By By By Cr. Ashish(`) _____ _____ _____ Bank A/c Amount (`) _______ 4,90,000 Particulars By Realisation A/c By Ashish s Loan A/c By Ashish s Capital A/c By Neha s Capital A/c Neha(`) _____ _____ _____ Cr. Amount(` ) ______ 4,000 4,00,000 _______ 16. A and B are partners in a firm sharing profits and losses in the ratio 3:1. They admit C for a share on 31st March 2014 when their Balance Sheet was as follows: [8] Liabilities Amount( Assets `) Amount( `) Employees Provident Fund Workmen s Compensation Fund Investment Fluctuation Reserve Capitals: A B 17,000 6,000 4,100 54,000 35,000 Stock Debtors 50,000 Less provision for doubtful debts 2,000 Investments Cash Goodwill 1,16,100 The following adjustments were agreed upon: 15,000 48,000 7,000 6,100 40,000 1,16,100 (a) C brings in `16,000 as goodwill and proportionate capital. (b) Bad debts amounted to `3,000. (c) Market value of investment is `4,500. (d) Liability on account of workmen s compensation reserve amounted to `2,000. Prepare Revaluation A/c and Partner s Capital A/cs. OR (b) X, Y and Z are partners in a firm sharing profits in proportion of 1/2, 1/6 and 1/3 respectively. The Balance Sheet as on April 1, 2014 was as follows: Liabilities Employees Provident Fund Sundry Creditors General Reserve Capitals: X Y Z Amount( `) 12,000 18,000 12,000 30,000 30,000 28,000 Assets Freehold Premises Machinery Furniture Stock Debtors 20,000 Less provision for doubtful debts 1,000 Cash 1,30,000 Z retires from the business and the partners agree that: Amount(` ) 40,000 30,000 12,000 22,000 19,000 7,000 1,30,000 (a) Machinery is to be depreciated by 10%. (b) Provision for bad debts is to be increased to ` 1,500. (c) Furniture was taken over by Z for ` 14,000. (d) Goodwill is valued at ` 21,000 on Z s retirement. (e) The continuing partners have decided to adjust their capitals in their new profit sharing ratio after retirement of Z. Surplus or deficit if any, in their capital accounts will be adjusted through their current accounts. Prepare Revaluation A/c and Partners Capital A/c s. 17. (a) Amrit Ltd. issued 50,000 shares of `10 each at a premium of `2 per share payable as `3 on application, `4 on allotment (including premium), `2 on first call and the remaining on second call. Applications were received for 75,000 shares and a pro-rata allotment was made to all the applicants. All moneys due were received except allotment and first call from Sonu who applied for 1,200 shares. All his shares were forfeited. The forfeited shares were reissued for `9,600. Final call was not made. Pass necessary journal entries. [8] OR (b) Velco Ltd. issued 30,000 shares of ` 10 each at a discount of `1 per share payable as `3 on application, `2 on allotment, `2 on first Call and `2 on second call. Applications were received for 40,000 shares and a pro-rata allotment was made to all the applicants. All money due were received except allotment and first call from Mohit who had applied for 2,000 shares. His shares were forfeited after first call. Subsequently, the second call was duly made and duly received. Thereafter, the forfeited shares were reissued for `9 fully paid. Pass the necessary journal entries PART B: ANALYSIS OF FINANCIAL STATEMENTS 18. Cash deposit with the bank with a maturity date after two months belongs to which of the following while preparing cash flow statement: [1] (a) Investing activities (b) Financing activities (c) Cash and Cash equivalents (d) Operating activities. 19. Finserve Ltd is carrying on a Mutual Fund business. It invested ` 30,00,000 in shares and `15,00,000 in debentures of various companies during the year. It received ` 3,00,000 as dividend and interest. Find out cash flows from investing activities. [1] 20. (a) Name the sub heads under the head Current Liabilities in the Equity and Liabilities part of the Balance Sheet as per Schedule VI of the Companies Act 1956. (b) State any two objectives of Financial Statements Analysis. [4] 21. (a) From the following details, calculate Opening inventory: Closing inventory `60,000; Total Revenue from operations `5,00,000 (including cash revenue from operations `1,00,000); Total purchases `3,00,000 (including credit purchases `60,000). Goods are sold at a profit of 25% on cost. (b) Current Assets of a company are `17,00,000. Its current ratio is 2.5 and liquid ratio is 0.95. Calculate Current Liabilities and Inventory. [4] 22. Nimani Ltd. is into the business of back office operations. Honesty and hard work are the two pillars on which the business has been built. It has a good turnover and profits. Encouraged by huge profits, it decided to give the workers bonus equal to two months salary. Following is the Comparative Statement of Profit and Loss of Nimani Ltd. for the years ended 31st March 2013 and 2014. [4] (a) Calculate Net Profit ratio for the years ending 31st March 2013 and 2014. (b) Identify any two values which Nimani Ltd. wants to communicate to the society Particulars Note No Revenue from operations Less employee benefit expenses Profit before tax Tax rate 40% Profit after tax 20122013 Rs. 2013-2014 Rs. Absolute change 20,00,00 0 8,00,000 30,00,000 10,00,000 Percenta ge change 50 10,00,000 2,00,000 25 12,00,00 0 4,80,000 7,20,000 20,00,000 8,00,000 66.67 8,00,000 12,00,000 3,20,000 4,80,000 66.67 66.67 23. Following are the Balance Sheets of Krishna Ltd. as on 31st March 2013 and 2014: [6] Particulars Note No. EQUITY AND LIABILITIES (1) Shareholders Funds (a) Share capital (b) Reserves and Surplus (2) Non Current Liabilities Long term borrowings (3) Current Liabilities Trade Payables Short term Provisions Total ASSETS (1) Non Current Assets (a) Fixed assets (i) Tangible assets (ii) Intangible Assets (2) Current Assets (a) Inventories (b) Trade Receivables (b) Cash and Cash Equivalents Total Notes to Accounts: 1 2 S.N o. 2013-14 (`) 201213(`) 14,00,000 5,00,000 5,00,000 10,00,000 4,00,000 1,40,000 1,00,000 80,000 25,80,000 60,000 60,000 16,60,000 16,00,000 1,40,000 9,00,000 2,00,000 3 4 Particulars 1. 2,50,000 5,00,000 90,000 25,80,000 As on 31.3.2014 (`) 2,00,000 3,00,000 60,000 16,60,000 As on 31.3.2013 (`) Reserves and Surplus: Surplus (i.e. balance in Statement of Profit and Loss) 5,00,000 4,00,000 Short Term provisions 2. Provision for tax 80,000 60,000 3. Tangible assets: Machinery 17,60,000 10,00,000 Less Accumulated depreciation (1,60,000) (1,00,000) 4. Intangible Assets: Goodwill 1,40,000 2,00,000 Prepare a Cash Flow Statement after taking into account the following adjustment: (i) Tax paid during the year amounted to ` 70,000. Answer Key: (Pre board) Q.1 (b) Reconstitution of partnership Q.2 No, the accountant s decision is not correct because according to AS-26, goodwill should be recorded in the books only when consideration in money or money s worth has been paid for it. [1] Q.3 (c) Transferring it to debit side of Bina s capital account [1] Q. 4. Capital Reserve is the reserve that is created out of capital profits/gains whereas, that part of the share capital which has not yet been called up and has been kept as reserve to be called up in the event of the winding up of the company is called Reserve Capital Q.5 `16,00,000 Q. 6. `12,000 Q.7.The amount received as securities premium can be used for following purposes (any three): (a) In purchasing its own shares. (b) Issuing fully paid bonus shares to the members. (c) Writing off preliminary expenses of the company. (d) Writing off the expenses of, or the commission paid, or discount allowed on any issue of securities or debentures of the company. (e) Providing for the premium payable on the redemption of any redeemable preferences shares or any debentures of the company. Q.8 Journal Date Particulars LF Ankur s Capital A/c Dr. Bobby s Capital A/c Dr. Rohit s Capital A/c Dr. To Profit and Loss A/c (Being loss debited to partners capital accounts) Ankur s Capital A/c Dr. Bobby s Capital A/c Dr. To Rohit s Capital A/c (being the deficiency borne by Ankur and Bobby in the ratio 4:1) Q.9 Balance sheet of Newbie Particulars Equity and Liabilities Debit (`) 4,80,000 3,20,000 2,00,000 Credit (`) 10,00,000 3,20,000 80,000 4,00,000 Ltd. as at: Note No. (`) (1) Shareholders funds Share capital 1 2,79,600 Notes to Accounts: Share capital: Authorized capital 50,000 shares of Rs. 10 each 5,00,000 Issued capital 30,000 shares of Rs 10 each 3,00,000 Subscribed share capital: a) Subscribed and fully paid 27,800 shares of Rs. 10 each fully called up 2,78,000 b) subscribed but not fully paid 200 shares of Rs. 10 each 2,000 less calls in arrears (400)= 2,79,600 Q.10 Journal Particulars Debit (`) Credit (`) LF Bank A/c Dr. 25,00,000 To Share Application and Allotment A/c 25,00,000 (Being the amount of application money received on 50,000 shares @Rs 50 per share) Share Application and Allotment A/c Dr. 25,00,000 To Share Capital A/c 25,00,000 (Being the amount transferred to share capital) Bank A/c Dr. 16,00,000 To 9% Debentures Application and Allotment A/c 16,00,000 (Being the amount received on 9% Debenture application and allotment on 40,000 Debentures @Rs. 40 per debentures) 9% Debenture Application and Allotment A/C Dr. 16,00,000 To 9% Debentures A/C 16,00,000 (Being The amount transferred to Debentures A/c.) Value which the company wants to communicate to the society: (Any one) Social responsibility, generation of employment Q.11 Dr. Punita s Capital Account. Cr. Particulars Amount Particulars Amount(`) (`) To P&L A/c 24,000 By balance b/d 1,00,000 To Punita s executor s A/c 1,22,880 By interest on capital 4,880 By P&L Suspense A/c 6,000 By Rashi s capital A/c 12,000 By Seema s Capital A/c 24,000 1,46,880 1,46,880 Q.12 Calculation of Interest on drawings: Kanika 10,000*12= 1,20,000; 9,000*10= 90,000; 14,000*5= 70,000; 5,000*4=20,000; 3,00,000*6/12*1/12=1.500 Gauvatham; 60,000*6/100*7.5/12= 2,250 Q.13 average profit = 1,20,000; normal profit= 75,000; super profit= 45,000; goodwill= 1,35,000(45,000*3) New profit sharing ratio = 5:2:3; Sacrificing ratio= 2:1; Kabir new share= 5/10, fabir s share = 2/10 Q.14 Date Particulars LF Debit Credit (`) (`) Bank A/c Dr. To 9% Debenture Application and Allotment A/c 5,00,000 5,00,000 (Being Debenture application money received) 9% Debenture Application and Allotment A/c Dr. Loss on issue of Debentures A/c Dr. 5,00,000 To 9% Debenture A/c 50,000 5,00,000, To Premium on redemption of Debentures A/c 50,000 (Being issue of debentures at par, redeemable at a a premium) Own debentures A/c Dr. To Bank A/c 5,70,000 570,000 (Being 60,000 debentures purchased for cancellation @ Rs 75) 8% Debentures a/c Dr. To Own Debentures A/c 6,00,000 5,70,000 To Gain on Cancellation of Debentures A/c 30,000 (Being debentures cancelled) Gain on Cancellation of Debentures A/c Dr. 30,000 To Capital Reserve 30,000 (Being the gain transferred to Capital Reserve) Debenture Redemption Reserve A/c Dr. To General Reserve 3,00,000 3,00,000 (Being the Amount of Debenture Redemption Reserve Transferred to General Reserve) Q.15 Dr. Realisation A/c Liabilities To sundry assets: -Machinery -Stock -Debtors To Bank: -Creditors To Ashish s Capital A/c: -Ashish s wife s loan To Neha s Capital A/c; -Realisation expenses To profit transferred to: Ashish s capital A/c 4,000 Neha s capital A/c 3,000 Dr. Amount(`) Cr Assets By Sundry liabilities: -Creditors -Ashish s wife s loan By Bank: -Machinery -Debtors By Ashish s Capital A/c: -Stock 1,28,000 -typewriter 70,000 By Neha s Capital A/c -Debtors 5,60,000 90,000 55,000 40,000 34,000 7,000 Amount(`) 40,000 25,000 4,80,000 10,000 1,98,000 40,000 7,000 7,93,000 7,93,000 Partner s Capital Accounts Particulars Particulars Ashish( `) To Realisation A/c To Balance b/d Cr. 1,98,000 4,00,000 5,98,000 Neha( `) 40,000 4,50,00 0 By Balance b/d By Realisation A/c By Realisation A/c 4,90,00 0 Dr. Neha(`) Ashish( `) 5,60,00 0 34,000 4,000 5,98,00 0 4,80,000 7,000 3,000 4,90,000 Bank A/c To Balance b/d To Realisation A/c 4,04,000 4,90,000 By Realisation A/c By Ashish s Loan A/c By Ashish s Capital A/c By Neha s Capital A/c 8,94,000 Q.16 (a) Dr. Cr. 40,000 4,000 4,00,000 4,50,000 8,94,000 REVALUATION A/c Cr Particulars To bad debts Amoun t(`) 1,000 Particulars By loss transferred to: A s Capital A/c B s Capital A/c 1,000 Amount(`) 750 250 1,000 Dr. Partner s Capital Accounts Cr. By balance b/d 54,000; 35,000 by cash (c) 23,200; to balance c/d (a) 39,450; (b) 30,150; (c) 23,200 Totals of capital a/c is 70,200, 40,400 and 23,200 Q.16 (b) Dr. Particulars To Machinery To Provision for doubtful debts REVALUATION A/c Amount( `) 3,000 500 3,500 Dr. Partner s Capital Accounts Cr. Particulars By Furniture By Loss transferred to : X s Capital A/c Y s Capital A/c Z s Capital A/c Cr Amount(`) 2,000 750 250 500 3,500 Particular s X (`) Y (`) To Furniture - - 14,000 To Z s Capital A/c 5,250 1,750 - 250 500 - 24,500 15,000 - To 750 Revaluatio n A/c To Z s Loan A/c To Y s Current A/c To Balance c/d 45,000 51,000 Q.17 (a) Date Z (`) 32,000 X (`) Particular s By Balance b/d By General Reserve By X s Capital A/c By Y s Capital A/c By X s Current A/c 15,000 Y (`) Z (`) 30,000 30,000 28,000 6,000 2,000 4,000 - - 5,250 - - 1,750 15,000 - - 39,000 51,000 32,000 IN THE BOOK OF AMRIT LTD. JOURNAL Particulars Dr.(`) Cr. (`) F Bank A/c Dr. To Share Application A/c (Being application money received on 75,000, shares @Rs.3 per share) Share Application A/c Dr. To Share Capital A/c To Share Allotment A/c (Being application money adjusted) Share Allotment A/c Dr. To Share Capital A/c To Securities Premium A/c (Being allotment money due on 50,000 shares) Bank A/c Dr. To Share Allotment A/c (Being allotment money received) OR Bank A/c Dr. Calls in Arrears A/c Dr. To Share Allotment A/c (Being allotment money received) Share First Call A/c Dr. To Share Capital A/c (Being first call due on 50,000 shares) Bank A/c Dr. To Share First Call A/c (Being first call money received) OR Bank A/c Dr. Calls in arrears A/c Dr. To Share First Call A/c (Being first call money received) 2,25,000 2,25,000 2,25,000 1,50,000 75,000 2,00,000 1,00,000 1,00,000 1,23,000 1,23,000 1,23,000 2,000 1,25,000 1,00,000 1,00,000 98,400 98,400 98,400 1,600 1,00,000 39,000 Share Capital A/c Dr. Securities Premium A/c Dr. To Share Forfeiture A/c To Share Allotment A/c To Share First Call A/c (Being 800 shares forfeited for nonpayment of allotment money and first call) OR Share Capital A/c Dr. Securities Premium A/c Dr. To Share Forfeiture A/c To Calls in Arrears A/c (Being 800 shares forfeited for nonpayment of allotment money and first call) Bank A/c Dr. To Share Capital A/c To Securities Premium A/c (Being 800 shares re issued ) Share Forfeiture A/c Dr. To Capital Reserve A/c (Being Share Forfeiture amount transferred to capital reserve) 5,600 1,600 3,600 2,000 1,600 5,600 1,600 3,600 3,600 9,600 5,600 4,000 3,600 3,600 Q.17 (b) OR In The Books of Velco Ltd. JOURNAL Date Particulars Bank A/c Dr. To Share Application A/c (Being application money received on 40,000 Shares @Rs.3 per share) Share Application A/c Dr. To Share Capital A/c To Share Allotment A/c (Being application money adjusted) Share Allotment A/c Dr. Discount on Issue of Shares A/c Dr. To Share Capital A/c (Being allotment money due) Bank A/c Dr. To Share Allotment (Being allotment money received) OR Bank A/c Dr. Calls in Arrears A/c Dr. To Share Allotment A/c (Being allotment money received) Share First Call A/c Dr. To Share Capital A/c (Being first call due) Bank A/c Dr. To Share First Call A/c (Being first call received ) OR Bank A/c Dr. Calls in Arrears A/c Dr. F Dr.(`) 1,20,000 Cr. (`) 1,20,000 1,20,000 90,000 30,000 60,000 30,000 90,000 28,500 28,500 28,500 1,500 30,000 60,000 60,000 57,000 57,000 57,000 3,000 60,000 To Share First Call A/c (Being first call received) Share Capital A/c Dr. To Share Forfeiture A/c To Share Allotment A/c To Share First Call A/c To Discount on Issue of Shares A/c (Being 1,500 shares forfeited for nonpayment of allotment money and first call) Share Second and Final Call A/c Dr. To Share Capital A/c (Being second and final call due on 28,500 shares) Bank A/c Dr. To Share Second and Final Call A/c (Being second and final call received ) Bank A/c Dr. Discount on Issue of Shares A/c Dr. To Share Capital A/c (Being 1,500 shares reissued @Rs.9 per share fully paid) Share Forfeiture A/c Dr. To Capital Reserve (Being the balance in Share Forfeiture A/c transferred to capital reserve) 12,000 6,000 1,500 3,000 1,500 57,000 57,000 57,000 57,000 13,500 1,500 15,000 6,000 6,000 PART B ANALYSIS OF FINANCIAL STATEMENTS Q.18 (c) Cash and Cash equivalents Q.19 Cash flows from investing activities - Nil Q.20 (a) CURRENT LIABILITIES (a) Short term borrowings (b) Trade payables (c) Other current liabilities (d) Short term provisions (b) Objectives of Financial Statements Analysis (any two) (i) Helps in assessing the earning capacity or profitability (ii) Helps in assessing managerial efficiency (iii) Helps in assessing the long them and short term solvency of the enterprise. (iv) Helps in inter-firm comparison. (v) Helps in forecasting and preparing budgets. (vi) Helps the users in understanding complicated matter in a simplified manner. Q.21 (a) Total revenue from operations =` 5,00,000 Gross Profit = 1,00,000 Cost of Revenue from operations= Net Revenue from operations-Gross Profit = ` 5,00,000-`1,00,000 = ` 4,00,000 Cost of Revenue from operations = Opening Inventory + Net Purchases Closing inventory ` 4,00,000 = Opening inventory + ` 3,00,000 `60,000 Opening inventory =` 1,60,000 (b) Current liabilities = 6,80,000 Quick assets= 6,46,000 Inventory= 10,54,000; Q.22 (a) net profit ratio for 2012-2013= 36% net profit/net sales *100 Net profit for 2013-2014= 40% (12,00,000/30,00,000*100) (b) Values that Himani Ltd. wants to communicate to the society: Social responsibility. Welfare of employees Q. 23 In the books of Krishna Ltd. Cash Flow Statement For the year ended 31st March 14 Particulars ` ` CASH FLOWS FROM OPERATING ACTIVITIES 1,90,000 Net profit before tax (Working Note 1) 60,000 Add non operating/non cash items: 60,000 Depreciation on machinery 3,10,000 Goodwill Written off 40,000 Operating profit before working capital changes (50,000) Add increase in Trade Payables (2,00,000) Less Increase in Inventories 1,00,000 Increase in Trade Receivables (70,000) Cash generated from operations Less Income Tax paid Cash flow from operating activities 30,000 CASH FLOWS FROM INVESTING ACTIVITIES (7,60,000) Purchase of machinery Cash used in investing activities (7,60,000) CASH FLOWS FROM FINANCING ACTIVITIES 4,00,000 Issue of shares 3,60,000 Long term borrowings Cash flow from financing activities 7,60,000 Net increase in cash and cash equivalents 30,000 Add opening balance of cash and cash equivalents 60,000 Closing balance of cash and cash equivalents 90,000 Working note: balance in P& L a/c 1,00,000 add provision 90,000= 1,90,000Provision for tax a/c tax paid Dr. 70,000, Balance c/d Dr. 80,000, Balance b/d Cr. 60,000; provision during Cr. 90,000 Totals: 1,50,000
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