# 12th Accountancy Paper Solutions Set 1 : CBSE All India Previous Year 2011

General Instructions:
(i) This question paper contains three parts A, B and C.
(ii) Part A is compulsory for all candidates.
(iii) Candidates can attempt only one part of the remaining parts B and C.
(iv) All parts of the questions should be attempted at one place.
(v) Questions Nos. 1-5 and 17-19 carries 1 mark each.
(vi) Questions Nos. 6-8 and 20 carries 3 marks each.
(vii) Questions Nos. 9-11 and 27-22 carries 4 marks each.
(viii) Questions Nos. 12-14 and 23 carries 6 marks each.
(ix) Questions Nos. 15-16 carries 8 marks each.
Q1 :

What is the basis of preparing Receipt and Payment Account?

Receipts and Payments Account is prepared on Cash Basis of Accounting. As per this basis, all receipts are debited and all payments are credited to Receipts and Payments Account.

Q2 :

Give the average period in months for charging interest on drawings for the same amount withdraws at the beginning of each quarter.

When equal amount is drawn at the beginning of each quarter, the interest on drawings will be charged on total drawings for an average period of 7.5 months.

The formula for interest on drawings will be

Q3 :

State the meaning of sacrificing ratio.

Sacrificing ratio refers to the ratio in which the old partners of a partnership firm surrender their share of profit in favour of the new partner/s. It is calculated as a difference between the old ratio and the new ratio of the old partners.

Q4 :

How does the nature of business affect the value of goodwill of a firm?

Q5 :

Give the meaning of “Issue of Debentures as a collateral security.

Q6 :

From the following information of a club, show the amounts of Prize awarded and Price Fund in the Financial Statements of the club for the year ended on 31st March 2009 and 31st March 2010:

 Details Rs Prize Fund as on 1.4.2009 20,000 Prize Fund donations received during the year 2009-2010 40,000 Prizes awarded during the year 2009-2010 69,000

Q7 :

Goodluck Ltd. purchased machinery costing Rs 10,00,000 from Fair Deals Ltd. The company paid the price by issue of Equity shares of Rs 10 each at a premium of 25%. Pass necessary journal entries for the above transaction in the books of Goodluck Ltd.

Q8 :

X Ltd. redeemed 1,000 6% Debentures of Rs 100 each by converting them into equity shares of Rs 100 each. The 6% Debentures were redeemable at a premium of 5% for which the Equity shares were issued as a premium of 25%. Pass the necessary journal entries for the redemption of the above mentioned debentures in the books of X Ltd.

Q9 :

A and B entered into partnership of 1st April 2009 without any partnership deed. They introduced capitals of Rs 5,00,000 and Rs 3,00,000 respectively. On 31st October 2009, A advanced Rs 2,00,000 by way of loan to the firm without any agreement as to interest. The Profit and Loss Account for the year ended 31.3.2010 showed a profit of Rs 4,30,000 by the partners could not agree upon the amount of interest on loan to be charged and the basis of division of profits. Pass a journal entry for the distribution of the profit between the partners and prepare the Capital A/cs of both the partners and Loan A/c of “A”™.

Q10 :

A Partnership firm earned net profits during the last three years as follows:

 Years Net Profit Rs 2007-2008 1,90,000 2008-2009 2,20,000 2009-2010 2,50,000

The capital employed in the firm throughout the above mentioned period has been Rs 4,00,000. Having regard to the risk involved,

15% is considered to be a fair return on the capital. The remuneration of all the partners during this period is estimated to be Rs 1,00,000 per annum.

Calculate the value of goodwill on the basis of (i) two year”™s purchased of super profits earned on a average basis during the above mentioned three years and (ii) by capitalization method.

Q11 :

Pass the necessary journal entries for the issue and redemption of Debentures in the following cases:

(i) 15,000, 9% Debentures of Rs 250 each issued at 5% premium, repayable at 15% premium.

(ii) 2,00,000, 12% Debentures of Rs 10 each issued at 8% premium, repayable at par.

Q12 :

From the following items of Receipts and Payments A/c of South India Club, prepare an Income and Expenditure Account for the year ended 31.3.2010:

 Particulars Rs Salaries Paid 55,000 Lighting expenses 5,500 Stationery (Including Rs 400 for the previous year) 4,000 Subscription received (including 1,000 received in advance 44,000 and Rs 750 for the previous year) Net Proceeds of Refreshment Room 30,000 Miscellaneous Expenses 3,000 Interest paid on loan for three months 1,200 Rent and Rates (Including Rs 500 pre-paid) 4,500 Lockers Rent received 4,900

Subscriptions in arrears on 31.3.2010 were Rs 4,700 and nine months interest on loan was also outstanding.

Q13 :

Pass the necessary journal entries for the following transaction of the dissolution of the firm of James and Haider who were sharing profits and losses in the ratio of 2 : 1.

The various assets (other than cash) and outside liabilities have been transferred to Realisation Account:

(i) James agreed to pay off his brother”™s loan Rs 10,000

(ii) Debtors realized Rs 12,000

(iii) Haider took over all investment at Rs 12,000

(iv) Sundry creditors Rs 20,000 were paid at 5% discount

(v) Realisation expenses amounted to Rs 2,000

(vi) Loss on realization was Rs 10,200.

Q14 :

On 1.1.2007 a Public Limited Company issued 15,000, 10% Debentures of Rs 100 each at par which were repayable at a premium of 15% on 31.12.2011. On the date of maturity, the company decided to redeem the above mentioned 10% Debentures as per the terms of issue, out of profits. The Profit and Loss A/c shows a credit balance of Rs 20,00,000 on this date. The offer was accepted by all the Debentures holders and all the Debentures were redeemed.

Pass the necessary journal entries in the books of the Company only for the redemption of Debentures, if the Company follows

Sec.117 C of the Companies Act.

Q15 :

Dinesh Ltd. invited application for issuing 10,000 Equity shares of Rs 10 each. The amount was payable as follows:

On Application Rs 1

On Allotment Rs 2

On First call Rs 3

On Second and Final Call − Balance

The issue was fully subscribed. Ram to whom 100 shares were allotted, failed to pay the allotment money and his shares were forfeited immediately after allotment. Shyam to whom 150 shares were allotted failed to pay the first call. His share were also forfeited after the first call. Afterwards the second and final call was made. Mohan to whom 50 shares were allotted failed to pay the second and final call. His shares were also forfeited. All the forfeited shares were re-issued at Rs 9 per share fully paid up. Pass necessary Journal entries in the books of Dinesh Ltd.

OR

Moti Ltd. invited application for issuing 10,00,000 Equity shares of Rs 10 each at a premium of Rs 2 per share. The amount was payable as follows:

On Application Rs 5 (Including premium)

On Allotment Rs 4

On First and Final Call Rs 3

Application for 15,00,000 share were received. Application for 3,00,000 shares were rejected and pro-rata allotment was made to the remaining applicants. Excess application money was utilized towards sums due on allotment. Giri who had applied for 24,000 shares failed to pay the allotment and call money. His shares were forfeited. Out of the forfeited shares 10,000 shares were reissued for Rs 8 per share fully paid up. Pass necessary journal entries in the books of Moti Ltd.

Q16 :

X, Y and Z were partners in a firm sharing profits and losses in the ratio of 5 : 3 : 2. On 31.3.2010 their Balance Sheet was as follows:

 Liabilities Amount Rs Assets Amount Rs Capital Accounts: Building 50,000 X 75,000 Patents 15,000 Y 62,000 Machinery 75,000 Z 37,500 1,75,000 Stock 37,500 Sundry Creditors 42,500 Debtors 20,000 Cash at Bank 20,000 2,17,500 2,17,500

Z died on 31.7.2010. It was agreed that:

(a) Goodwill be valued at 2Â½ year”™s purchased of the average profits of the last four year which were as follows:

 Years Profit Rs 2006 – 2007 32,500 2007 – 2008 30,000 2008 – 2009 40,000 2009 – 2010 37,500

(b) Machinery be valued at Rs 70,000; Patents at Rs 20,000 and Building at Rs 62,500.

(c) For the purpose of calculating Z”™s share of profits on the year of his death the profit in 2010 − 2011 should be taken to have been accrued on the same scale as in 2009 − 2010.

(d) A sum of Rs 17,500 was paid immediately to the executors of Z the balance was paid in four half yearly installments together with interest at 12% p.a. starting from 31.1.2011.

Given necessary journal entries to record the above transaction and Z”™s executor”™s account till the payment of installments due on

31.1.2011

OR

Murari and Vohra were partners in a firm with capitals of Rs 1,20,000 and Rs 1,60,000 respectively. On 1.4.2010 they admitted Yadav

as a partner for non-fourth share in profits on his payment of Rs 2,00,000 as his capital and Rs 90,000 for this one-fourth share of goodwill.

On that date the creditors of Murari and Vohra were Rs 60,000 and Bank Overdraft was Rs 15,000. Their assets apart from cash included Stock Rs 10,000; Debtors Rs 40,000; Plant and Machinery Rs 80,000; Land and Building Rs 2,00,000. It was agreed that stock should be depreciated by Rs 2,000; Plant and Machinery by 20%, Rs 5,000 should be written off as bad debts and Land and

Building should be appreciated by 25%.

Prepare Revaluation Account, Capital Accounts of Murari, Vohra and Yadav and the Balance Sheet of the new firm.

Q17 :

State the interest of tax authorities in the analysis of financial statements.

Q18 :

List any two investing activities which result into outflow of cash.

Q19 :

“Payment of dividend”™ will come under which type of activity while preparing a Cash Flow Statement?

Q20 :

Given the major heading under which the following items will be shown in a Company”™s Balance Sheet as per Schedule VI Part I of companies Act, 1956:

(i) Sundry Creditors; (ii) Provision for tax; (iii) Preliminary Expenses; (iv) Loss Tools; (v) Interest accrued on investment and (vi) Goodwill.

Q21 :

Calculate Current Ratio of a company from the following information:

Stock Turnover Ratio : 4 times

Stock in the end was Rs 20,000 more than stock in the beginning

Sales Rs 3,00,000

Gross Profit Ratio 25%

Current Liabilities Rs 40,000

Quick Ratio 0.75 : 1

Q22 :

Prepare a Comparative Income Statement from the following information:

 Particulars 31.3.2009 Rs 31.3.2010 Rs Sales 40,000 50,000 Cost of goods sold 30,000 35,000 Wages paid 16,000 14,000 Operating Expenses 2,500 3,000 Other Incomes 2,000 3,000 Income tax 4,750 7,500

Q23 :

From the followings Balances Sheet of Vikas Ltd. as on 31.3.2009 and 31.3.2010, prepare a Cash Flow Statement:

 Liabilities 31-3-2009 Rs 31-3-2010 Rs Assets 31-3-2009 Rs 31-3-2010 Rs Share Capital 30,000 1,30,000 Fixed Assets 93,400 1,66,000 General Reserve 30,000 55,000 Stock 22,000 26,000 Profit and Loss Account 20,000 30,000 Debtors 36,000 39,000 Trade Creditors 17,400 22,000 Cash 4,000 5,000 Preliminary Expenses 2,000 1,000 1,57,400 2,37,000 1,57,400 2,37,400