Model Paper 4 Accountancy - Model Paper 4

At the time of dissolution, Loan to Partner is

The incoming partner cannot acquire his share of profits:

What is the nature of rent paid to a partner?

Elpis Ltd. Is registered with authorised capital of ₹ 10,00,000 divided into 1,00,000 Equity share of ₹ 10 each. Out of which 80,000 shares are offered to the public and applications were received for 75,000 shares only. Company called ₹ 8 per share till now.

(a) Authorised share capital	(i) 8,00,000
(b) Issued share capital	(ii) 6,00,000
(c) Subscribed share capital	(iii) 10,00,000
(d) Called up capital	(iv) 7,50,000

Average profit of Sharma & Co. is ₹ 50,000 per year. Average capital employed in the business is ₹ 3,00,000. If the normal rate of return on capital employed is 10%,
calculate goodwill of the firm by:
i. Super Profit Method at three years' purchase; and
ii. Capitalisation of Super Profit Method.

Complete the following journal entries:

Journal Entries in the books of Sundram Ltd.
Date	Particulars		L.F.	Dr.(Rs.)	Cr.(Rs.)
	Furniture A/c	Dr.		3,00,000
	To Ravindram Ltd. (Being furniture purchased)				3,00,000
	………………………..	Dr.		….
	……………………….. (Being a part payment made to Ravindram Ltd. by an issue of a promissory note of Rs. 1,00,000)				….
	………………………..	Dr.		….
	………………………..				….
	……………………….. (Being the balance of payment made by issue of 16,000 equity shares of Rs. 10 each at a premium of 25%)				….

X Ltd. has 4,000 12% debentures of ₹ 100 each on 1st April 2018. According to the terms of issue interest on debentures is payable half-yearly on 30th September and 31st March and the rate of tax deducted at source is 10%. Pass necessary journal entries for interest on debentures for the year 2018-19.

Ananya, Bhavi and Chandni were partners in a firm with capitals of ₹ 3,00,000, ₹ 2,00,000 and ₹ 1,00,000 respectively.
According to the provisions of the partnership deed:
i. Ananya and Chandni were each entitled to a monthly salary of ₹ 1,500.
ii. Bhavi was entitled to a salary of ₹ 4,000 per annum.
The profit for the year ended 31^st March, 2022, ₹ 80,000 was divided between the partners in their profit sharing ratio of 3 : 3 : 2 without providing for the above adjustments.
Pass the necessary adjustment entry to rectify the above omissions in the books of the firm. Show your working notes clearly.

C and D are partners in a business and their capitals at the end of the year were ₹ 7,00,000 and ₹ 6,00,000 respectively. Calculate their opening capitals from the following information:
a. Drawings of C and D for the year were ₹ 75,000 and ₹ 50,000 respectively.
b. D introduced capital of ₹ 1,00,000 during the year.
c. Interest on capital credited to the Capital Accounts of C and D were ₹ 15,000 and ₹ 10,000 respectively.
d. Interest on drawings debited to the Capital Accounts of C and D were ₹ 7,500 and ₹ 5,000 respectively.
e. Share of loss debited to Capital Account of each Partner was ₹ 20,000

Anju, Manju and Sanju sharing profit in the ratio of 3 : 1 : 1 decided to dissolve their firm. On March 31, 2014 their position was as follows:

Balance Sheet Anju, Manju and Sanju
as on March 31, 2017
Liabilities		Amount ₹	Assets		Amount ₹
Creditors		60,000	Cash at Bank		55,000
Loan		15,000	Stock		83,000
Capitals:			Furniture		12,000
Anju	2,75,000		Debtors	2,42,000
Manju	1,10,000		Less: Provision for doubtful debts	12,000	2,30,000
Sanju	1,00,000	4,85,000	Buildings		2,00,000
Manju's loan		20,000
		5,80,000			5,80,000

It is agreed that:
i. Anju takes over the Furniture at ₹ 10,000 and Debtors amounting to ₹ 2,00,000 at ₹ 1,85,000. Anju also agrees to pay the creditors,
ii. Manju is to take over Stock at book value and Buildings at book value less 10%,
iii. Sanju is to take over remaining Debtors at 80% of book value and responsibility for the discharge of the loan,
iv. The expenses of dissolution amounted to ₹ 2,200.
Prepare Realisation Account, Bank Account, and Capital Accounts of the partners.

Neha Fabrics Ltd. invited applications for issuing 5,00,000 shares of ₹ 10 each at a premium of ₹ 4 per share. The amounts were payable as follows:
On Application and Allotment ₹ 8 per share.
On First & Final Call - Balance (including premium of ₹4)
Applications were received for 6,50,000 shares and allotment was made as follows:
i. To applicants for 1,40,000 shares - 100% shares.
ii. To applicants for 60,000 shares - Nil
iii. Balance of the applicants were allotted shares on pro-rata basis.
Excess money received with applications was adjusted towards sums due on first and final call. Kavita, who belonged to category (i) and was allotted 6,000 shares and Hitesh, who belonged to category (ii) and who had applied for 5,000 shares failed to pay the first and final call money. Their shares were forfeited. 60% of forfeited shares of Kavita and Hitesh were re-issued at a discount of ₹ 1 per share fully paid-up.
Pass necessary journal entries for the above transactions in the books of the company.

On 1st June, 2022, Y Ltd. issued 6,000, 12% Debentures of ₹ 100 each at par redeemable at a premium of 7% at the end of third year.
Pass the Journal entries for issue of Debentures and writing off Loss on Issue of Debentures. Also prepare Loss on Issue of Debentures Account.

X, Y, and Z were partners sharing profits in the ratio 3 : 2 : 1. On 31st March 2008, their Balance Sheet stood as under :

Liabilities		Amt(Rs.)	Assets	Amt(Rs.)
Capitals:			Cash at Bank	70,000
X	75,000		Investments	50,000
Y	70,000		Patents	15,000
Z	50,000	1,95,000	Stock	25,000
Creditors		72,000	Debtors	20,000
General Reserve		24,000	Buildings	75,000
			Machinery	36,000
		2,91,000		2,91,000

Z died on May 31st, 2008. It was agreed that
a. Goodwill was valued at 3 years' purchase of the average profits of the last five years, which were 2003: Rs. 40,000; 2004: Rs. 40,000; 2005: Rs. 30,000; 2006: Rs. 40,000 and 2007: Rs. 50,000.
b. Machinery was valued at Rs. 70,000, Patents at Rs. 20,000 and Buildings at Rs. 66,000.
c. For the purpose of calculating Z's share of profits until the date of death, it was agreed that the same be calculated based on the average profits for the last 2 years.
d. The executor of the deceased partner is to be paid the entire amount due by means of a cheque.
Prepare Z's Capital Accounts to be rendered to the executor and also a journal entry for the settlement of the amount due to Z's executor.

L, M and N were partners in a firm sharing profits in the ratio of 2 : 1 : 1. On 1st April, 2013 their balance sheet was as follows:

Balance Sheet
as at 1st April, 2013
Liabilities	Amount (Rs)	Assets		Amount (Rs)
General Reserve	4,40,000	Land		8,00,000
Workmen's Compensation Fund	3,60,000	Building		6,00,000
Creditors	2,40,000	Furniture		2,40,000
Capital A/cs		Debtors	4,00,000
L 6,00,000		(-) Provision for Doubtful Debts	20,000	3,80,000
M 4,80,000		Stock		4,40,000
N 4,80,000	15,60,000	Cash		1,40,000
	26,00,000 =======			26,00,000 =======

On the above date, N retired. The following were agreed:
i. Goodwill of the firm was valued at Rs 6,00,000.
ii. Land was to be appreciated by 40% and building was to be depreciated by Rs 1,00,000.
iii. Furniture was to be depreciated by Rs 30,000.
iv. The liabilities for workmen's compensation fund was determined at Rs 1,60,000.
v. Amount payable to N was transferred to his loan account.
vi. Capitals of L and M were to be adjusted in their new profit sharing ratio and for this purpose current accounts of the partners will be opened.
Prepare revaluation account, partner's capital accounts and the balance sheet of the new firm.

Petromax Ltd. issued 50,000 shares of Rs. 10 each at a premium of Rs. 2 per share payable as Rs 3 on an application, Rs 5 including premium on an allotment and the balance in equal installments over two calls. Applications were received for 92,000 shares and the allotment was done as under:
A. Applicants of 40,000 shares - Allotted 30,000 Shares
B. Applicants of 40,000 shares - Allotted 20,000 Shares
C. Applicants of 12,000 shares - Nil
Suresh, who had applied for 2,000 shares (Category A) did not pay any money other than application money.
Chander, who was allotted 800 shares (Category B) paid the call money due along with allotment.
All other allottees paid their dues as per schedule. Pass necessary Journal entries in the books of Petromax Ltd. to record the above.

Under which type of activity will you classify the sale of shares of another company while preparing cash flow statement?

GSC Ltd. purchased machinery of ₹ 10,00,000 issuing a cheque of ₹ 2,50,000 and 10% Debentures of ₹ 7,50,000. In the Cash Flow Statement, the transaction will be shown as:
i. Outflow under Investing Activity ₹ 10,00,000, inflow under Financing Activity as Receipt for Debentures ₹ 7,50,000.
ii. Outflow under Investing Activity ₹ 2,50,000.
iii. Inflow of ₹ 7,50,000 as Financing Activity.
iv. None of these.

Paid ₹ 5,00,000 to acquire shares in Neligare Industries and received a dividend of ₹ 30,000 after acquisition. This transaction will result in:

Working Capital 30,000; current ratio 3 : 1 Current liabilities will be:

Financial Statements are prepared on certain basic assumptions (pre-requisites) known as _________

From the following particulars determine the Closing Debtors:-

	₹
Total Revenue from Operations	24,00,000
Cash Revenue from Operations	4,60,000
Revenue from Operations Returns (out of credit revenue from operations)	20,000
Trade Receivables Turnover Ratio	6 Times
Opening Debtors	2,50,000
Opening B/R	14,000
Closing B/R	12,000

Identify the major heads and sub-heads under which the following items will be shown in the Balance Sheet of a company as per Schedule III of Companies Act, 2013:
i. Patents
ii. Patents being developed by the Company
iii. Current Maturities of Long term Debts
iv. Computer and related equipment
v. Goods acquired for trading
vi. 10% Debentures
vii. Debentures with maturity period in current financial period.

From the following particulars obtained from the books of Mark Ltd., prepare a Comparative Statement of Profit and Loss:

Particulars	Note No.	2017-18 (₹)	2016-17 (₹)
Revenue from operations		50,00,000	40,00,000
Purchase of stock-in trade		40,00,000	30,00,000
Changes in inventory		10,00,000	8,00,000
Other expenses		5,00,000	4,00,000
Other incomes		2,50,000	2,00,000

Following information is related to Harsh Ltd.

	( ₹ in Lakhs)
Particulars	31.3.2023 ₹	31.3.2022 ₹
Equity Share Capital	16.00	16.00
Preference Share Capital	2.00	2.00
Reserves and Surplus	5.40	4.00
Non-Current Liabilities	14.40	14.00
Current Liabilities	7.20	4.00
Non-Current Assets
Property, Plant and Equipment and Intangible Assets	30.60	28.00
Current Assets	14.40	12.00

You are required to prepare a Common Size Balance Sheet.

From the following Balance Sheets of XYL limited, prepare Cash Flow Statement:

Particulars	Note No.	31.3.2023 (₹)	31.3.2022 (₹)
I. EQUITY AND LIABILITIES:
(1) Shareholder's Funds:
(a) Share Capital		5,00,000	4,50,000
(b) Reserve and Surplus	1	1,18,000	70,000
(2) Current Liabilities
(a) Trade Payables		1,49,000	1,17,000
(b) Short term Provisions (Provision for Tax)		50,000	40,000
TOTAL		8,17,000	6,77,000
II. ASSETS:
(1) Non-Current Assets:
(a) Property, Plant and Equipment and Intangible Assets
(i) Property, Plant and Equipment	2	3,70,000	2,80,000
(ii) Intangible Assets	3	90,000	1,15,000
(2) Current Assets:
(a) Inventory		1,09,000	77,000
(b) Trade Receivables		2,30,000	1,80,000
(c) Cash & Cash Equivalents		18,000	25,000
TOTAL		8,17,000	6,77,000

Notes: 

	31.3.2023 (₹)	31.3.2022 (₹)
(1) Reserve & Surplus:
General Reserve	70,000	40,000
Profit & Loss Balance	48,000	30,000
	1,18,000	70,000
(2) Property, Plant and Equipment:
Land and Building	1,70,000	2,00,000
Plant	2,00,000	80,000
	3,70,000	2,80,000
(3) Intangible Assets:
Goodwill	90,000	1,15,000

 Additional Information: 
a. 

Contingent Liability	31.3.2023	31.3.2022
Proposed Dividend (₹)	50,000	42,000

b. Depreciation of ₹ 10,000 and ₹ 20,000 has been charged on plant, land and buildings respectively.
c. An interim dividend of ₹ 20,000 has been paid.
d. Income tax of ₹ 35,000 has been paid.
e. Rent Received during the year ₹ 10,000. 

Assertion (A): Shares cannot be allotted unless minimum subscription is received.
Reason (R): SEBI has prescribed that a company issuing shares to public cannot allot shares unless it receives subscription of 90% of the shares issued.

Assertion (A): Each partner is a principal as well as an agent for all the other partners.
Reason (R): As per the definition of Partnership Act, partnership business may be carried on by all the partners or any of them acting for all.