Accounts Official 2019-2020 ISC (Commerce) Class 12 Question Paper Solution

Why is goodwill considered to be an intangible asset and not a fictitious asset?

How will a firm deal with a situation when its partnership deed provides for interest on capital, but the profit earned by it is not enough to do so at the rate mentioned in the deed?

State, with reason, whether securities premium can be used to write off bad debts.

List any four items that are shown under the sub-head ‘Other Current Assets’ in the balance sheet of a company prepared as per Schedule III of the Companies Act, 2013.

What is the maximum limit of debentures which companies, other than banking companies and All India Financial Institutions, can redeem out of capital?

Mention any two circumstances which can lead to dissolution of partnership.

What is the status of the firm upon the dissolution of partnership?

From the following information, calculate goodwill of the firm of Anmol and Sujay at the time of admission of Dhruv:

(i) At three years’ purchase of Super Profit.

(ii) On the basis of Capitalisation of Super Profit.

(a) Actual Average Profits of the firm for the last three years are ₹ 25,000.

(b) Normal Rate of Return is 10%.

(c)

Manoj, Hari and Karan are partners in a firm sharing profits and losses in the ratio 4:2:1. Their Balance Sheet as at 31^st March, 2019, was as follows:

Hari retired from the business on 1^st April, 2019. The remaining partners decided to carry on the business. The terms of retirement provided the following:

1. Out of the total insurance premium paid, ₹ 7,000 to be treated as prepaid insurance. The amount was earlier debited to Profit & Loss Account.
2. General Reserve not to be distributed.
3. Hari to be paid ₹ 24,400 in full settlement.

You are required to prepare Partners’ Capital Accounts.

Sudesh Ltd. was registered with an authorised capital of ₹ 40,00,000 divided into 4,00,000 Equity Shares of ₹ 10 each.

The company offered 50,000 shares to the public at a premium of ₹ 2 per share, payable as follows:

₹ 3 on application

₹ 6 on allotment (including premium)

₹ 3 on first and final call (due two months after allotment)

Applications were received for 60,000 shares and pro-rata allotment was made as follows:

Category A: The applicants of 40,000 shares were allotted 30,000 shares.

Category B: The applicants of 20,000 shares were allotted in full.

Excess money paid on application was utilized towards allotment.

Nobby, a shareholder from Category A, who had applied for 1,200 shares failed to pay the allotment and call money.

Vineet, a shareholder from Category B, who had been allotted 1,000 shares, paid the call money due, along with allotment.

The company forfeited Nobby’s shares after the first and final call and paid interest on Calls-in-advance to Vineet @ 12% per annum on the day of the final call.

You are required to:

1. Pass journal entries to record the above transactions in the books of the company (including entries for interest on Calls-in-advance).
2. Prepare Calls-in-arrears Account.

Mike and Ajay are partners sharing profits and losses in proportion to their capitals, which on 31st March, 2019, stood at ₹ 6,00,000 and ₹ 4,00,000 respectively. On this date, the firm had ₹ 1,00,000 in its Workmen Compensation Reserve and its outside liabilities amounted to ₹ 6,00,000, which included Creditors of ₹ 2,00,000 and Bills Payable of ₹ 60,000.

The firm was dissolved on 31st March, 2019, on which date, the assets, apart from Cash of ₹ 70,000, realised ₹ 14,00,000 and the liabilities were discharged as follows:

1. Creditors due on 31st May, 2019, were paid off at a discount of 3% per annum.
2. Bills Payable were discharged at a rebate of ₹ 1,000.
3. Workmen Compensation Claim of ₹ 40,000 was met.
4. Expenses of dissolution amounting to ₹ 30,000 were paid.

You are required to prepare:

1. Realisation Account.
2. Partner’s Capital Accounts.

Xen, Sam and Tim are partners in a firm. For the year ended 31^st March, 2019, the profits of the firm ₹ 1,20,000, were distributed equally amongst them, without providing for the following provisions of the partnership deed:

1. Sam’s guarantee to the firm that the firm would earn a profit of at least ₹ 1,35,000. Any shortfall in these profits would be personally met by him.
2. Profits to be shared in the ratio of 2:2:1.

You are required to pass the necessary journal entries to rectify the error in accounting.

Zee Ltd. purchased a running business from Rainbow Ltd. for a sum of ₹ 6,60,000. Zee Ltd. paid 5% of the purchase consideration by drawing a Promissory Note in favour of Rainbow Ltd. and the balance by the issue of fully paid 7% Debentures of ₹ 100 each at a premium of 10%. The assets and liabilities of Rainbow Ltd. consisted of:

You are required to pass the necessary journal entries in the books of Zee Ltd.

On 1^st April, 2016, the following balances appeared in the books of Shikhar Ltd.

The debentures were to be redeemed at a premium of 10% in two equal annual instalments beginning from 31^st March, 2018. To meet the requirements of the Companies Act, 2013, the company transferred the balance amount to Debenture Redemption Reserve on 31^st March, 2017. On 30^th April, 2017, it met the requirements of the Companies Act, 2013 regarding Debenture Redemption Investment and redeemed the debentures on the scheduled dates.

You are required to pass necessary journal entries to record the above transactions in the books of Shikhar Ltd. (Ignore interest on Debentures).

Anita and Tony, each doing business as sole proprietors, started a partnership on 1^st April, 2018. Anita brought in Plant and Machinery valued at ₹ 5,00,000 whereas Tony brought in furniture costing ₹ 50,000 and ₹ 7,00,000 in cash.

Since the business needed more funds, Tony gave a loan of ₹ 2,00,000 to the firm on 30^th June, 2018.

Their partnership deed provided for:

1. Interest on capital to be allowed @ 10% per annum.
2. Interest on drawings to be charged @ 6% per annum.
3. Anita to be given a commission of 4% on the corrected net profits before charging commission.
4. Tony to be given a salary of ₹ 12,000 per annum.

Tony withdrew ₹ 5,000 at the end of every month and Anita withdrew ₹ 30,000 on 1^st August, 2018.

The net profit of the firm, for the year 2018-19, after debiting Tony’s salary of ₹ 12,000 per annum but before considering any interest due to and due from the partners, was ₹ 4,00,000.

You are required to prepare for the year 2018-19:

1. Profit and Loss Appropriation Account.
2. Partner’s Capital Accounts.

Smita and Punita are partners in a firm sharing profits and losses in the ratio of 3 : 2. Their Balance Sheet as at 31st March, 2019, is as follows:

On 1^st April, 2019, Mita is admitted as a new partner on the following terms:

1. The new profit-sharing ratio of Smita, Punita and Mita to be 5 : 3 : 2.
2. Provision for doubtful debts to be raised to 10% of the debtors.
3. Punita to take over the firm’s investments (not recorded in the books) at ₹ 3,000.
4. Goodwill of the firm is to be valued at ₹ 50,000. Mita is to bring in cash for her share of goodwill.
5. 50% of the goodwill is to be withdrawn by the old partners.
6. Mita is to pay off the Bank Loan on behalf of the firm. The amount due to her by the firm is to be considered as part of her capital contribution.
7. Mita is to bring in the balance of her capital in cash so as to make her capital equal to `1/5`th of the total capital of the firm.

You are required to:

1. Pass journal entries at the time of Mita’s admission.
2. Prepare the balance sheet of the reconstituted firm.

Xylo Ltd. was formed on 1^st April, 2017, with an authorized capital of ₹ 12,00,000 divided into Equity Shares of ₹ 10 each. It issued a prospectus inviting applications for 30,000 shares to be issued at par. The issue was fully subscribed and the amount due on the shares was received by the company.

On 1^st April, 2018, the company issued another 60,000 shares at a premium of ₹ 2 per share to be received with allotment. Applications for 55,000 shares were received which were duly allotted.

All the amounts due on these shares were received except the final call ₹ 2 per share on 1,000 shares.

On 1^st October, 2018, the company also issued 2,000 6% debentures of ₹ 100 each at par, to be redeemed at par in five equal annual instalments beginning from 1^st October, 2019. The entire issue price of these debentures was received by the company with application.

Half yearly interest on the debentures of ₹ 6,000 was paid by the company to the debenture holders on 31^st March, 2019.

You are required to show the relevant items under:

1. Equity and Liabilities in the Balance Sheet of the Company as at 31^st March, 2019 (prepared as per Schedule III of the Companies Act, 2013).
2. Notes to Accounts.

Under which heads and sub-heads will the following items appear in the Balance Sheet of a company as per Schedule III of the Companies Act, 2013:

1. Trade Debtors
2. Marketable Securities
3. Finished Goods
4. Patents

Assuming that the current ratio of a company is 0.7 : 1, mention whether this ratio would increase, decrease or not change after the following transactions:

1. Payment of ₹ 15,000 made to a creditor.
2. Purchase of inventory worth ₹ 1,00,000 on credit.

Prepare a comparative statement of profit and loss of Cosmos Ltd. from the following information:

From the following extract of the Balance Sheet of Regal Ltd., taking into consideration the additional information, you are required to calculate the amounts of the following items to be shown in the company’s Cash Flow Statement for the year 2018-19:

1. Fixed asset purchased.
2. Fixed asset sold.
3. Profit/Loss on sale of fixed asset.
4. Depreciation charged on fixed assets.

Additional information:

1. The provision for depreciation on fixed assets stood at ₹ 1,40,000 on 31^st March, 2018 and ₹ 1,80,000 on 31^st March, 2019.
2. During the year 2018-19, a fixed asset costing ₹ 60,000 (book value ₹ 30,000) was sold for ₹ 20,000.

You are required to prepare a Cash-Flow Statement (as per AS-3) for the year 2018-19 from the following Balance Sheets.

Notes to Accounts:

Additional Information:

During the year 2018-19:

1. A tangible fixed asset costing ₹ 50,000 was purchased.
2. Tax paid ₹ 15,000.
3. Interest of ₹ 1,000 was paid on the bank overdraft.

State the objective of calculating liquidity ratios.

From the following information, calculate earnings per share (up to two decimal places):

From the following information, calculate the following ratios (up to two decimal places):

1. Debt to Total Assets Ratio
2. Proprietary Ratio
3. Inventory Turnover Ratio