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# Question Paper Solutions for Accounts 2017-2018 ISC (Commerce) Class 12

SubjectAccounts
Year2017 - 2018 (March)

Marks: 80
[12]1 |  Answer briefly each of the following questions:
[2]1.1

Answer briefly of the following question:

Give any two differences between Revaluation Account and Realisation Account.

Chapter: [1.03] Reconstitution of Partnership
Concept: Preparation of Revaluation Account and Balance Sheet
[2]1.2

Answer briefly of the following question :

Mention whether the following Trade Payables are current liabilities or non-current liabilities:
Operating Cycle Expected period of Payment
(a) 12 months 14 months
(b) 15 months 12 months

Chapter: [5.03] Activity Ratios
Concept: Activity Ratios - Trade Payables Turnover Ratio
[2]1.3

Answer briefly of the following question :

What is the minimum price at which a company can reissue its forfeited shares which were originally issued
at par?

Chapter: [2.01] Issue of Shares
Concept: Issue of Shares for Consideration Other than Cash
[2]1.4

Answer briefly of the following question :

Give the adjusting entry and closing entry for interest on loan taken by a partner from the firm, when the firm
follows the Fluctuating Capital Method.

Chapter: [1.01] Fundamentals of Partnership
Concept: Methods of Capital Accounts - Fixed and Fluctuating Capital Method
[2]1.5

Answer briefly of the following question :

State any two reasons for a company to purchase its own debentures from the open market.

Chapter: [2.02] Issue of Debentures
Concept: Problems on Issue of Debentures
[4]1.6

Answer briefly of the following question :

Give the formula for valuation of goodwill by the Capitalisation of Average Profit Method.

Chapter: [1.02] Goodwill
Concept: Practical Application of Average Profit Method
[12]2

Saturn Ltd. was registered with an authorized capital of  12,00,000. "divided into"  1,20,000 :equity shares of  10
"each. It issued "40,000" equity shares to the public at a premium of"  5 "per share, payable as follows": [12]
"On application"  6
"On allotment"  9 (including premium of  5)
All the shares were applied for and allotted. One shareholder holding 500 shares did not pay the allotment money
and his shares were forfeited. Out of the forfeited shares, the company reissued 400 shares at 7 per share fully
called up.
You are required to:
(a) Pass journal entries in the books of the company.
(b) Prepare :
(ii) Share Capital Account.

Chapter: [2.01] Issue of Shares
Concept: Issue of Shares for Consideration Other than Cash
[12]3
[8]3.1

On 1st April, 2013, Rayon Ltd. issued 2,000, 9% Debentures of 100 each at a discount of 10%, redeemable
at par on 31st March, 2017. The issue was fully subscribed. To meet the provisions of the Companies Act,
2013, the Board of Directors decided to transfer  30,000 to Debenture Redemption Reserve on 31st March,
2014, and the balance on 31st March, 2015. On 1st April, 2016, the company made the required investment in
government securities.

The investments were encashed and the debentures were redeemed on the due date.
It is the policy of the company to write off capital losses in the year in which they occur.
You are required to pass journal entries for issue and redemption of debentures (ignore interest on
debentures).

Chapter: [2.02] Issue of Debentures
Concept: Accounting Entries at the Time of Issue When Debentures Are Redeemable at Par and Premium
[4]3.2

On 1st April, 2016, Krayon Ltd. issued 8,000. 12% Debentures of Rs. 100 each, redeemable at par after 5 years.
The issue was fully subscribed.
According to the terms of issue, interest on debentures is payable annually on 31st March. Tax deducted at
source is 20%.
You are required to pass journal entries for the year 2016-17, regarding issue of debentures and interest on
debentures.

Chapter: [2.02] Issue of Debentures
Concept: Accounting Entries at the Time of Issue When Debentures Are Redeemable at Par and Premium
[12]4
[8]4.1

Asif and Ravi are partners in a firm, sharing profits and losses in the ratio of 3:2. Their fixed capitals as on 1st
April, 2016, were Rs. 6,00,000 and  4,00,000 respectively.
Their partnership deed provides for the following:.
(a) Partners are to be allowed interest on their capital @ 10% per annum.
(b) They are to be charged interest on drawings @ 4% per annum.
(c) Asif is entitled to a salary of Rs. 2,000 per month.
(d) Ravi is entitled to a commission of 5% of the correct net profit of the firm before charging such commission.
(e) Asif is entitled to a rent of Rs. 3,000 per month for the use of his premises by the firm.
The net profit of the firm for the year ended 31st March, 2017, before providing for any of the above clauses
was Rs. 4,00,000.
Both partners withdrew Rs. 5,000 at the beginning of every month for the entire year.
You are required to prepare a Profit and Loss Appropriation Account for the year ended 31st March, 2017.

Chapter: [1.03] Reconstitution of Partnership
Concept: Change in Profit Sharing Ratio
[4]4.2

Rita, Nina and Mita are partners in a firm sharing profits and losses in the ratio of 3:2:1. Mita dies on 1st
April, 2017. On the date of her death, it was decided to value goodwill on the basis of two years' purchase of
weighted average profits of the firm for the last three years.
The profits of the last three years and weights assigned were :

 Year Profit Weights assigned 2014-15 30,000 (including gain from speculation  10,000) 1 2015-16 80,000 2 2016-17 1,00,000 3

(i) Calculate the firms goodwill on the date of Mita's death (show working formula).
(ii) Pass the necessary journal entry to credit Mita's capital account with her share of goodwise.

Chapter: [1.03] Reconstitution of Partnership
Concept: Change in Profit Sharing Ratio
[12]5

Annie and Bonnie are partners in a firm, sharing profits and losses equally. Their Balance Sheet as at 31st March,
2017, was as follows:

Balance Sheet of Annie and Bonnie
As at 31st March, 2017

 Liabilities Amount Rs. Assets AmountRs. Sundry Creditors 21,000 Cash at Bank 20,000 General Reserve 15,000 Sundry Debtors                   22,000 Less Provision for Doubtful Debts                    (1,000) 21,000 Capital A/c Annie 45,000 Bonnie40,000 85,000 Stock 10,000 Plant & Machinery 60,000 Goodwill 10,000 1,21,000 1,21,000

Carl was to be taken as a partner for 1/4 share in the profits of the firm, with effect from 1st April, 2017, on the
following terms:
(a) Bad debts amounting to Rs. 1,500 to be written off.
(b) Stock to be taken over by Annie at Rs.12,000.

(c) Plant and Machinery to be valued at Rs. 50,000.
(d) Goodwill of the firm to be valued at Rs. 20,000.
(e) Carl to bring in Rs. 50,000 as his capital. He was unable to bring his share of goodwill in cash.
(f) General Reserve not to be distributed. For this, it was decided that Carl would compensate the old partners
through his current account.
You are required to:
(i) Pass journal entries on the date of Carl's admission.
(ii) Prepare the Balance Sheet of the reconstituted firm

Chapter: [1.03] Reconstitution of Partnership
Concept: Preparation of Revaluation Account and Balance Sheet
[12]6
[8]6.1

Harish, Paresh and Mahesh were three partners as sharing profits and losses in the ratio of 5:4:1. Paresh retired on 31st March, 2017. His capital on 1st April, 2016, was Rs. 80,000. During the year 2016-17, he made drawings of Rs. 5,000. He was to be charged interest on drawings of  100. The partnership deed provides that on the retirement of a partner, he will be entitled to:

(i) His share of capital.

(ii) Interest on capital @ 10% per annum.

(iii) His share of profit for the year of his retirement.

(iv) His share of goodwill in the firm.

(v) His share in the profit/loss on revaluation of assets and liabilities.

(a) Paresh's share in the profits of the firm for the year 2016-17 was Rs. 20,000.

(b) Goodwill of the firm was valued at Rs. 24,000.

(c) The firm suffered a loss of Rs.12,000 on the revaluation of assets and liabilities.

(d) It was decided to transfer the amount due to Paresh to his loan account bearing interest @ 6% per annum. The loan was to be repaid in two equal annual instalments, the first instalment to be paid on 31st March, 2018.

You are required to prepare:

(i) Paresh's Capital Account.

(ii) Paresh's Loan Account till it is finally closed.

Chapter: [1.03] Reconstitution of Partnership
Concept: Retirement and Death of a Partner - Calculation of New Profit Sharing Ratio
[4]6.2

Parth, Angad and Leesha are partners in a firm sharing profits and losses in the ratio of 3:2:1 respectively. Angad retires and his claim, including his Capital and entitlements from the firm including his share of Goodwill of the firm, is Rs. 50,000. After this amount was determined, it was found that there was an unrecorded piece of furniture valued at Rs.12,000 which had to be recorded. Upon recording this piece of furniture, the revised amount due to Angad was determined and settled by giving him this piece of furniture and the balance in cash. You are required to give the journal entries for recording the payment to Angad in the books of the firm.

Chapter: [1.03] Reconstitution of Partnership
Concept: Retirement and Death of a Partner - Calculation of New Profit Sharing Ratio
[12]7

The following balances have been extracted from the books of Vanity Ltd. as at 31st March, 2017:

Trial Balance as at 31st March, 2017

 Particulars Debit Credit Equity Share Capital (5,000 shares of  100 each fully paid) 5,00,000 Fixed Assets 7,30,000 Reverses and Surplus 2,00,000 Inventories 50,000 Cash and Bank Balances 1,70,000 Creditors 40,000 Bills Payable 20,000 Underwriting Commission on issue of shares 10,000 5% Debentures (1/5 of the Debentures to be redeemed on 31st March, 2018) 2,00,000 Proposed Dividend 12,000 Interest accrued and due on 5% Debentures 8,000 Trade Receivables 20,000 Total 9,80,000 9,80,000
Chapter: [2.01] Issue of Shares
Concept: Issue of Shares for Consideration Other than Cash
[12]8
[8]8.1

Susan, Geeta and Rashi are partners sharing profits and losses in the ratio of 5:3:2. Their Balance Sheet as at 31st March, 2017, is as under:

Balance Sheet of Susan, Geeta and Rashi As at 31st March, 2017

 Liabilities Amount Assets Amount Sundry Creditors 50,000 Cash at Bank 70,000 Workmen Compensation Reserve 25,000 Sundry Debtor 65,000 Less Provision for Doubtful Debts (5,000 60,000 Employees Provident Fund 5,000 Goodwill 50,000 Bank Loan 55,000 Furniture 1,00,000 Capital A/C Susan                            2,20,000  Geeta                            1,70,000  Rashi                             1,35,000 5,25,000 Building 3,80,000 6,60,000 6,60,000

The partners decided to dissolve their partnership on 31st March, 2017. The following transactions took place at the time of dissolution :

(a) Realization expenses of 2,000 were paid by Susan on behalf of the firm.

(b) Geeta took over the goodwill for her own business at  40,000.

(c) Building was taken over by Rashi at 3,00,000.

(d) Only 80% of the debtors paid their dues.

(e) Furniture was sold for  97,000.

(f) Bank Loan was settled along with interest of 5,000. You are required to prepare the Realization Account.

Chapter: [1.03] Reconstitution of Partnership
Concept: Preparation of Revaluation Account and Balance Sheet
[4]8.2

The capital accounts of Amar and Harsh stood at  20,000 and 30,000 respectively after the necessary
adjustments in respect of drawings and net profit for the year ended 31st March, 2017. lt was subsequently
ascertained that interest on capital @ 12% per annum was not taken into account while arriving at the
divisible profits for the year.
During the year 2016-17, Amar had withdrawn 2,000 and Harsh's drawings were  1,000.
The net profit for the year amounted to  15,000.
The partners shared profits and losses in the ratio of 3:2.
You are required to pass the necessary journal entries to rectify the error in accounting.

Chapter: [1.03] Reconstitution of Partnership
Concept: Adjustment of old partner’s Capital Accounts on the basis of the new partner’s capital
[12]9
[8]9.1

You are required to prepare a Cash-Flow Statement (as per AS-3)
for the year 2016-17 from the following Balance Sheet.
Balance Sheet of Honesty Ltd.
As at 31st March, 2016 and 31st March, 2017

 I Particulars Note No. 31.03.2017 31.03.2017 1. EQUITY AND LIABILITIESShareholders Funds(a) Share Capital (Equity Share Capital)(b) Reserves and Surplus (Statement of P/L) 1. 14,00,000   5,00,000 10,00,000 4,00,000 2. Non-Current LiabilitiesLong Term Borrowing (10% Debentures) 5,00,000 1,40,000 3. Current Liabilities(a) Short Term Borrowings (Bank Overdraft)  (b) Trade Payables (Creditors)(c) Short Term Provisions 20,000 1,00,000 60,000 30,000 60,000 30,000 TOTAL 25,80,000 16,60,000 II 1. ASSETSNon-Current AssetsFixed Assets (i) Tangible (ii) Intangible (Goodwill) 2. 16,00,000 1,40,000 9,00,000 2,00,000 2. Current Assets(a) Inventories(b) Trade Receivables (c) Cash and Bank Balances(Cash at Bank) 2,50,000 5,00,000 90,000 2,00,000 3,00,000 60,000 TOTAL 25,80,000 16,60,000

Notes to Accounts:

 Particulars 31.03.2017 31.03.2016 1. Short term provisionsprovision for taxation 60,000 30,000 2. Fixed Assets (Tangible)Plant and Machinery Less Accumulated Depreciation 17,60,000 (1,60,000) 10,00,000 (1,00,000) 16,00,000 9,00,000

During the year 2016-17:
(i) A part of the machine, costing Rs. 50,000, accumulated depreciation thereon being Rs. 20,000, was sold for
Rs.18,000.
(ii) Tax paid Rs. 20,000.
(iii) Interest of Rs. 50,000 paid on Debentures.

Chapter: [4] Cash Flow Statement (Only for Non-financing Companies)
Concept: Concept of Cash Flow Statement
[2]9.2

State whether the following would result in inflow, outflow or no flow of cash:
(i) Bill Receivable endorsed to Creditors.
(ii) Old vehicle written off.

Chapter: [1.03] Reconstitution of Partnership
Concept: Adjustment of old partner’s Capital Accounts on the basis of the new partner’s capital
[10]10
[2]10.1

Give any two differences between horizontal analysis and vertical analysis of financial statements.

Chapter: [3] Financial Statement Analysis
Concept: Comparative Statements
[2]10.2

The Quick Ratio of a company is 0.8:1. State whether the Quick Ratio will improve, decline or will not change in the
following cases:
(i) Cash collected from Debtors Rs. 50,000.
(ii) Creditors of Rs. 20,000 paid off.

Chapter: [5.03] Activity Ratios
Concept: Activity Ratios - Inventory Turnover Ratio
[6]10.3

From the following information, prepare a Common Size Statement of Profit and Loss of Prudence Ltd. for the
year ending 31st March, 2017:
Particulars                                                        31.03.2017

Revenue from Operations                                  20,00,000

Purchases                                                          15,00,000

Changes in inventories                                      1,00,000

Depreciation and Amortization expenses            60,000

Tax Rate @ 40%

Chapter: [3] Financial Statement Analysis
Concept: Common Size Statements
[10]11
[2]11.1

Calculate the Net Profit Ratio (up to two decimal places) from the following information:
Particulars                                                   Rs.
Gross profit                                                80,000
Salary and rent                                          30,000
Interest on Debentures                             5,000
Gain on sale of furniture                           2,000
Revenue from Operations                        4,00,000

Chapter: [5.04] Profitability Ratios
Concept: Profitability Ratios - Net Profit Ratio
[8]11.2

From the following information calculate the following ratios (up to two decimal places):
(i) Earning per share
(ii) Price Earning Ratio
(iii) Return on Investments
(iv) Working Capital Turnover Ratio
Particulars                                                             Rs.

Net profit after interest and tax                                       2,40,000
Tax                                                                                    1,60,000
Net Fixed Assets                                                               10,00,000
Equity Share Capital (face value  10 per share)               5,00,000
15% Preference Share Capital 1,00,000
Reserves and Surplus (including surplus of the               2,00,000
year under consideration)
10% Debentures                                                              4,00,000
Revenue from Operations                                               10,00,000
Working Capital                                                               1,00,000
Note: The market value of an equity share is Rs. 40.

Chapter: [5.04] Profitability Ratios
Concept: Profitability Ratios - Earning per Share
[10]12

 A B C D E F 1. Particulars Quarter 1 Quarter 2 Quarter 3 Quarter 4 Total 2. Unit sold (in kg) 3500 4300 3100 4700 3. 4. 5. 6. Electricity Expenses 18000 16000 22000 76000 7. Advertisement Expenses 22000 26000 18000 28000 8. Total Cost 9. Net Profit 10. Selling price per unit 50 50 50 50 11. Cost price per unit 35 35 35 35

Based on the information given in the spread sheet above, write the formula for calculating each of the following:

(a) Sales Revenue for Quarter 1 in cell B3.
(b) Cost of Goods Sold for Quarter 2 in cell C4.
(d) Gross Profit for Quarter 4 in cell E5.
(e) Electricity Expenses for Quarter 3 cell D6.

Chapter: [6] Accounting Application of Electronic Spread Sheet
[10]13
[2]13.1

What is meant by cell address?

Chapter: [7] Database Management System (DBMS)
Concept: Concept of Database Management System (DBMS)
[2]13.2

State any one method of removing data from a cell in a spreadsheet.

Chapter: [7] Database Management System (DBMS)
Concept: Concept of Database Management System (DBMS)
[2]13.3

Give the full form of SQL.

Chapter: [7] Database Management System (DBMS)
Concept: Concept of Database Management System (DBMS)
[2]13.4

State the significance of the following in DBMS :
(i) Forms
(ii) Reports

Chapter: [7] Database Management System (DBMS)
Concept: Concept of Database Management System (DBMS)
[2]13.5

What is the use of legends in a chart?

Chapter: [7] Database Management System (DBMS)
Concept: Concept of Database Management System (DBMS)
[10]14
[2]14.1

What is the difference between .importing and exporting of a database?

Chapter: [7] Database Management System (DBMS)
Concept: Concept of Database Management System (DBMS)
[2]14.2

State the main advantages of an Action Query.

Chapter: [7] Database Management System (DBMS)
Concept: Concept of Database Management System (DBMS)
[2]14.3

Mention any two of the available values that are used in indexed property.

Chapter: [7] Database Management System (DBMS)
Concept: Concept of Database Management System (DBMS)
[2]14.4

Write the steps to filter a table.

Chapter: [7] Database Management System (DBMS)
Concept: Concept of Database Management System (DBMS)
[2]14.5

What is meant by freezing panes?

Chapter: [7] Database Management System (DBMS)
Concept: Concept of Database Management System (DBMS)

## CISCE previous year question papers Class 12 Accounts with solutions 2017 - 2018

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