12 Accountancy Lyp 2017 Foreign Set3

Question
Paper 2017 Foreign set 3

CBSE Class 12 ACCOUNTANCY
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-Option-I Analysis of Financial Statements and Option-II
Computerized Accounting.
4) Attempt only one option of Part B.
5) All parts of a question should be attempted at one place.
Section A
(i) This section consists of 17 questions.

(ii) All the questions are compulsory.
(iii) Question Nos. 1 to 6 are very short-answer questions carrying 1 mark each.
(iv) Question Nos. 7 to 10 carry 3 marks each.
(v) Question Nos. 11 and 12 carry 4 marks each.
(vi) Question Nos. 13 to 15 carry 6 marks each.
(vii) Question Nos. 16 and 17 carry 8 marks each.
Section B
(i) This section consists of 6 questions.

(ii) All questions are compulsory
(iii) Question Nos. 18 and 19 are very short-answer questions carrying 1 mark each.
(iv) Question Nos. 20 to 22 carry 4 marks.
(v) Question No. 23 carries 6marks.
Q1. Suman and Sudha were partners in a firm sharing profits equally. Their fixed
capitals were Rs 50,000 and Rs 25,000 respectively. The partnership deed provided
interest on capital at the rate of 12% per annum. For the year ended 31st March, 2016,
the profits of the firm were distributed without providing interest on capital.
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Pass necessary adjustment entry to rectify the error.
Ans. Adjusting Journal Entry
Journal
Debit Credit
Date Particulars L.F. Amount Amount
(Rs) (Rs)
Sudha’s Current A/c Dr. 1,500
To Suman’s Current A/c 1,500
(Interest on capital omitted, now adjusted.)
Working Notes:
Statement Showing Adjustment
Particulars Suman Sudha Total
Interest on Capital @ 12% 6,000 3,000 (9,000)
Less: Profits wrongly distributed to the extent of interest

(4,500) (4,500) 9,000
amount
Net Effect 1,500 (1,500) NIL
Q2. Z Ltd. forfeited 1000 equity shares of Rs 10 each for the non-payment of the final
call of Rs 2 per share. Calculate the maximum amount of discount at which these shares
can be reissued.
Ans. The maximum discount at which these shares can be re-issued is the credit balance in
the Share Forfeiture A/c i.e. Rs 8,000 (1,000 × 8).
Q3. State the two situations in which interest on partner's capital is generally provided.
Ans. (a) When the partnership deed contains a clause in respect of provision of interest on
capital.
(b) When there is a credit balance in the partners' capital accounts.

Q4. List the categories of individuals other than the minors who cannot become the
members of a partnership firm.
Ans. The individuals other than minors who cannot be admitted by a partnership firm are:
(a) Persons of unsound mind
(b) Persons disqualified by any law
Q5. Reena and Raman are partners in a firm sharing profits in the ratio of 4 : 3. They
admitted Roma as a new partner. The new profit sharing ratio between Reena, Raman
and Roma was 3: 2: 2. Raman surrendered 13rd of his share in favour of Roma.
Calculate Reena's sacrifice.
Ans. Reena’s share of sacrifice is calculated below.

Reena's Sacrifice = Old Share - New Share =47-37=17
Q6. Y Ltd. invited applications for issuing 2000, 9% debentures of Rs 100 each at a
discount of 10%. The whole amount was payable at the time of application. Applications
for 2400 debentures were received and pro-rata allotment was made to all the
applicants. Pass necessary journal entries for the issue of debenturs.
Ans.
Journal
Debit Credit
(Rs) (Rs)
Bank A/c (2,400 × 90) Dr. 2,16,000
To Debenture Application & Allotment A/c 2,16,000
(Amount received on 2,400 debentures issued at a

discount of 10%, face value Rs 100)
Debenture Application & Allotment A/c Dr. 2,16,000
Discount on Issue of Debentures A/c (2,000 × 10) Dr. 20,000

To 9% Debentures A/c (2,000 × 100) 2,00,000
To Bank A/c (400 × 90) 36,000
(Application and allotment money received transferred to

Debentures A/c and balance refunded)
Q7. C India Ltd. purchased machinery from B India Ltd. Payment to B India Ltd. was
made as follows:
(i) By issuing 10,000 equity shares of Rs 10 each at a premium of 20%.
(ii) By issuing 1000, 9% debentures of Rs 100 each at a discount of 5%.
(iii) Balance by giving a bank draft of Rs 37,000.
Pass necessary journal entries in the books of C India Ltd. for the purchase of
machinery and payment to B India Ltd.
Ans.
Journal
In the books of C Ltd.
Debit Credit
(Rs) (Rs)
Machinery A/c Dr. 2,52,000
To B Ltd. 2,52,000
(Purchased machinery from B Ltd.)
B Ltd. (1,20,000 + 95,000 + 37,000) Dr. 2,52,000
Discount on Issue of Debentures A/c (1,000 × 5) Dr. 5,000
To Equity Share Capital A/c (10,000 × 10) 1,00,000
To Securities Premium A/c (10,000 × 2) 20,000

To 9% Debentures A/c (1,000 × 100) 1,00,000
To Bank A/c 37,000
(Issued 10,000 equity shares of Rs 10 each at a

premium of 20%, issued 1,000 9% Debentures of Rs

100 each at a discount of 5% and balance by issuing a
bank draft)
Q8. Raj Motors Ltd. converted its 400, 12% debentures of Rs 100 each issued at a
discount of 6% into equity shares of Rs 10 each issued at a premium of 25%. Discount on
issue of 12% debentures had not yet been written off.
Showing your working notes clearly, pass necessary journal entries for the above
transactions in the books of Raj Motors Ltd.
Ans.
Journal
Debit Credit
(Rs) (Rs)
12% Debentures A/c Dr. 40,000
To Debentureholders’ A/c 40,000
(400, 12% Debentures due for redemption)
Debentureholders’ A/c Dr. 40,000
To Equity Share Capital A/c (3,200 × 10) 32,000
To Securities Premium A/c (3,200 × 2.50) 8,000
(400, 12% Debentures redeemed by converting into 3,200

equity shares of Rs 10 each issued at a premium of 25%)

Securities Premium A/c Dr. 2,400
To Discount on Issue of Debentures A/c 2,400
(Discount on issue of debentures written off against

balance in securities premium account)
Working Notes:
Q9. Gagan Ltd. is registered with an authorised capital of Rs 15,00,00,000 divided into
1,50,00,000 equity shares of Rs 10 each. Subscribed and fully paid up share capital of the
company was Rs 5,00,00,000. For providing employment to the local youth and for the
development of rural areas of Jharkhand State, the company decided to set up a food
processing unit in Hazaribagh. The company also decided to set up skill development
centres at Ranchi, Hazaribagh and Ramgarh. To meet its new financial requirements
the company decidded to issue 2,00,000 equity shares of Rs 10 each and 2000, 12%
debentures of Rs 1,000 each. The issue of shares and debentures was fully subscribed. A
shareholder holding 500 shares failed to pay the final call of Rs 3 per share.
Show the share capital in the Balance Sheet of the company as per the provisions of
Schedule III of the Companies Act, 2013. Also, identify any two values that the company
wants to propagate.
Ans.
Balance Sheet
Amount
Particulars Note No.
(Rs)
I. Equity and Liabilities
1. Shareholders’ Funds

a. Share Capital 1 5,19,98,500
b. Reserves and Surplus
2. Non-Current Liabilities
1. Long-term Borrowings 2 20,00,000
Total
NOTES TO ACCOUNTS
Amount
Note No. Particulars
(Rs)
1 Share Capital
Authorised Capital
1,50,00,000 Equity Shares of Rs 10 each 15,00,00,000
Issued, Subscribed , Called up & Paid up Capital
52,00,000 Equity Shares of Rs 10 each fully called up 5,20,00,000
Less: Calls-in-Arrears (500×3) 1,500 5,19,98,500
2 Long Term Borrowings
2,000, 12% Debentures of Rs. 1,000 each 20,00,000
Values Involved:
(a) Creating employment opportunities
(b) Promoting balance regional growth by contributing to development of rural areas
Q10. P, Q, R and S were partners in a firm sharing profits in the ratio of 5 : 3 : 1 : 1. On 1st
January, 2017, S retired from the firm. On S's retirement the goodwill of the firm was
valued at Rs 4,20,000. The new profit sharing ratio between P, Q and R will be 4 : 3 : 3.
Showing your working notes clearly, pass necessary journal entry for the treatment of

goodwill in the books of the firm on S's retirement.
Ans.
Journal
Debit Credit
(Rs) (Rs)
R’s Capital A/c Dr. 84,000
To P’s Capital A/c 42,000
To S’s Capital A/c 42,000
(Goodwill adjusted through capitals)
Working Notes:
Q11.Pankaj and Naresh were partners in a firm sharing profits in the ratio of 3 : 2. Their
fixed capitals were Rs 5,00,000 and Rs 3,00,000 respectively. On 1.1.2017, Saurabh was
admitted as a new partner for 15th share in the profits. Saurabh acquired his share of
profit from Pankaj. Saurabh brought Rs 3,00,000 as his capital which was to be kept

fixed like the capitals of Pankaj and Naresh.
Calculate the goodwill of the firm on Saurabh's admission and the new profit sharing
ratio of Pankaj, Naresh and Saurabh. Also, pass necessary journal entry for the
treatment of goodwill.
Ans.
Journal
Debit Credit
(Rs) (Rs)
Cash A/c Dr. 3,00,000
To Saurabh’s Capital A/c 3,00,000
(Capital brought in cash)
Saurabh’s Current A/c Dr. 80,000
To Pankaj’s Current A/c 80,000
(Goodwill adjusted through current accounts)
Working Notes:

Q12. X, Y and Z were partners in a firm sharing profits in the ratio of 5 : 3 : 2. The firm
closes its books on 31st March every year. On 30.9.2016, Z died. The partnership deed
provided that on the death of a partner his executors will be entitled to the following:
(i) Balance in his capital account and interest @ 12% per annum. On 1.4.2016 balance in
Z's Capital account was Rs 80,000.
(ii) His share in the profits of the firm in the year of his death, which will be calculated
on the basis of rate of net profit on sales of the previous year which was 25%. The sales
of the firm till 30.9.2016 were Rs 4,00,000.
(iii) His share on the goodwill of the firm. The goodwill of the firm on Z's death was
valued at Rs 3,00,000.
The partnership deed also provided that the following deductions will be made from
the amount payable to the executor of the deceased partner:
(i) His drawing in the year of his death. Z has withdrawn Rs 30,000 till 30.9.2016.
(ii) Interest on drawing @ 12% per annum which was calculated as Rs 2,000.
The accountant of the firm prepared Z's Capital Account to be presented to his executor
but in a hurry did not complete it. Z's Capital Account as prepared by the firm's
accountant is presented below:
Dr. Z’s Capital Account Cr.

Date Particulars Amount Date Particulars Amount
(Rs) (Rs)
2016 2016
Sep. 30 …………… 30,000 April 1 …………… 80,000
Sep. 30 …………… 2,000 Sep. 30 …………… 4,800
Sep. 30 …………… ……... Sep. 30 …………… 20,000
Sep. 30 …………… ……...
Sep. 30 …………… ……...
1,64,800 1,64,800
You are required to complete Z's Capital Account.
Ans.
Dr. Z’s Capital Account Cr.
Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)
2016 2016
Sep.
Drawings A/c 30,000 April 1 Balance b/d 80,000
30
Sep. Interest on Drawings Sep.

2,000 Interest on Capital 4,800
30 A/c 30
Sep. Sep. Profit and Loss Suspense

Balance c/d 1,32,800 20,000
30 30 A/c
Sep.
X's Capital A/c 37,500
30
Sep.
Y's Capital A/c 22,500
30

1,64,800 1,64,800
Q13. Singh, Jain, Sharma and Gupta were partners in a firm sharing profits in the ratio
of 4:3: 2:1. On 1.4.2016 their Balance Sheet was as follows:
Balance Sheet of Singh, Jain, Sharma and Gupta

as at 1.4.2016
Amount Amount
Liabilities Assets
(Rs) (Rs)
Capitals: Fixed Assets 1,60,000
Singh 50,000 Current Assets 90,000
Jain 40,000
Sharma 40,000
Gupta 40,000 1,70,000
Sundry Creditors 45,000
Workmen Compensation Reserve 35,000
2,50,000 2,50,000
From the above date the partners decided to share the future profits equally. For this
purpose the goodwill of the firm was valued at Rs 60,000. Partners also agreed that:
(i) Claims against Workmen Compensation Reserve was estimated at Rs 40,000 and
depreciation of Rs 15,000 will be charged on fixed assets.
(ii) Capitals of the partners will be adjusted according to the new profit sharing ratio
for which current accounts will be opened.
Prepare Revaluation Account, Partners Capital Accounts and the Balance Sheet of the

reconstituted firm.
Ans.
Revaluation Account
Dr. Cr.
Amount Amount
Particulars Particulars
(Rs) (Rs)
Depreciation on Fixed Assets A/c 15,000 Revaluation Loss
Provision for Claim against WCF 5,000 Singh 8,000
Jain 6,000
Sharma 4,000
Gupta 2,000 20,000
20,000 20,000
Partners’ Capital Account
Dr. Cr.
Particulars Singh Jain Sharma Gupta Particulars Singh Jain Sharma Gupta
Revaluation
8,000 6,000 4,000 2,000 Balance b/d 50,000 40,000 40,000 40,000
A/c
Singh's Sharma’s
2,250 6,750 2,250 750
Capital A/c Capital A/c
Jain's Gupta’s
750 2,250 6,750 2,250
Capital A/c Capital A/c
Current Current

A/c’s 13,500 A/c’s 500 4,500 8,500
Balance c/d 37,500 37,500 37,500 37,500
59,000 43,500 44,500 48,500 59,000 43,500 44,500 48,500
Balance Sheet
Amount Amount
Liabilities Assets
(Rs) (Rs)
Capital A/c Fixed Assets (less dep.) 1,45,000
Singh 37,500 Current Assets 90,000
Jain 37,500 Singh's Current A/c 13,500
Sharma 37,500
Gupta 37,500 1,50,000
Current A/c
Jain 500
Sharma 4,500
Gupta 8,500 13,500
Claim against WCF 40,000
Sundry Creditors 45,000
2,48,500 2,48,500
Working Notes
WN1: Calculation of Gaining/Sacrificing Ratio

Journal entry for Goodwill
Sharma’s Capital A/c Dr. 3,000
Gupta’s Capital A/c Dr. 9,000
To Singh’s Capital A/c 9,000
To Jain’s Capital A/c 3,000
(Gaining partners compensate sacrificing partners)
WN2: Calculation of Adjusted Capital
Singh = 59,000 – 8,000 = Rs 51,000
Jain = 43,000 – 6,000 = Rs 37,000
Sharma = 40,000 – 7,000 = Rs 33,000
Gupta = 40,000 – 11,000 = Rs 29,000
Total Combined Capital = 1,50,000
WN3: Calculation of New Capital

Q14. On 1.4.2015, Neena Ltd. issued 800, 9% debentures of Rs 100 each at a discount of
5%, redeemable at a premium of 8% after five years. The company closes its books on
31st March every year. Interest on 9% debentures is payable on 30th September and 31st
March. Rate of tax deducted at source is 10%. Pass necessary journal entries for the
issue of 9% debentures and payment of interest on 9% debentures for the year ended
31st March, 2016.
Ans.
Journal
Debit Credit
(Rs) (Rs)
Apr.01 Bank A/c (800 × 95) Dr. 76,000
To Debenture Application and Allotment A/c 76,000
(Received application money on 800 Debenture)
Apr.01 Debenture Application and Allotment A/c Dr. 76,000
Discount on Issue of Debenture A/c (800 × 5) Dr. 4,000
Dr. 6,400
Loss on Issue of Debenture A/c (800 × 8)
To 9% Debentures A/c (800 × 100) 80,000
To Premium on Redemption of Debentures A/c

6,400
(800 × 10)

(Application money transferred to Debentures A/c)
Sep.30 Debentures Interest A/c Dr. 3,600
To Debentureholders’ A/c 3,240
To TDS Payable A/c 360
(Interest due)
Sep.30 Debentureholders’ A/c Dr. 3,240
TDS Payable A/c Dr. 360
To Bank A/c 3,600
(Interest paid)
2016
Mar
Debenture Interest A/c 3,600
.31
To Debenture holders’ A/c 3,240
To TDS Payable A/c 360
(Interest due)
Mar.31 Debenture holders’ A/c Dr. 3,240
TDS Payable A/c Dr. 360
To Bank A/c 3,600
(Interest paid)
Mar.31 Statement of Profit & Loss A/c Dr. 7,200

To Debentures Interest A/c 7,200
(Interest transferred to P&L)
Q15. Pass necessary journal entries on the dissolution of a firm in the following cases:
(i) Satish, a partner, agreed to do the dissolution work for which he was allowed a
commission of Rs 18,000. He also agreed to bear the dissolution expenses. Actual
dissolution expenses paid by Satish were Rs 9,000.
(ii) Suleman, a partner, paid the dissolution expenses Rs 750.
(iii) Dissolution expenses were Rs 500.
(iv) Sandhya was appointed to look after the dissolution work on a remuneration of Rs
3,000. She agreed to bear the dissolution expenses. Actual dissolution expenses Rs 2,750
were paid by Sunil, another partner on behalf of Sandhya.
(v) Seema, a partner, agreed to do the dissolution work for a commission of Rs 4,500.
She also agreed to bear the dissolution expenses. Seema took away stock of the same
amount as her commission. The stock had already been transferred to realisation
account.
(vi) Santosh, a partner, agreed to bear the dissolution expenses for a commission of Rs
6,000. Actual dissolution expenses Rs 4,500 were paid from the firm's bank account.
Ans.
Journal
Debit Credit
(Rs) (Rs)
(i) Realisation A/c Dr. 18,000
To Satish's Capital A/c 18,000

(Remuneration paid)
(ii) Realisation A/c Dr. 750
To Suleman's Capital A/c 750
(Expenses paid by partner on behalf of firm)
(iii) Realisation A/c Dr. 500
To Bank A/c 500
(Expenses borne and paid by firm)
(iv) Realisation A/c Dr. 3,000
To Sandhya's Capital A/c 3,000
(Remuneration paid)
(iv) Sandhya's Capital A/c Dr. 2,750
To Sunil's Capital A/c 2,750
(Expenses paid by one partner, borne by other)
(v) No Entry
(vi) Realisation A/c Dr. 6,000
To Santosh's Capital A/c 6,000
(Remuneration paid)
(vi) Santosh's Capital A/c Dr. 4,500

To Bank A/c 4,500
(Expenses borne by partner, paid by firm)
Q16. A and Z are partners in a firm sharing profits in the ratio of 7:3. Their Balance
Sheet as on 31.3.2016 was as follows was as follows:
Balance Sheet of A and Z

as on 31.3.2016
Amount Amount
Liabilities Assets
(Rs) (Rs)
Sundry Creditors 60,000 Cash 36,000
Provision for Bad Debts 6,000 Debtors 54,000
Outstanding Wages 9,000 Stock 60,000
General Reserve 15,000 Furniture 1,20,000
Plant & Machinery 120,000
Capitals:
A 1,20,000
Z 1,80,000 3,00,000
3,90,000 3,90,000
On the above date B was admitted for 14th share in the profits on the following terms:
(i) B will bring Rs 90,000 as his capital and Rs 30,000 as his share of goodwill premium,
half of which will be withdrawn by A and Z.
(ii) Debtors Rs 4,500 will be written off and a provision of 5% will be created on debtors
for bad and doubtful debts.
(iii) Outstanding wages will be paid off.

(iv) Stock will be depreciated by 10%, furniture by Rs 1,500 and Machinery by 8%.
(v) Investments of 7,500 not shown in the Balance Sheet will be reccorded.
(vi) A creditor of Rs 6,300 not recorded in the books was to be taken into account.
Pass necessary journal entries for the above transactions in the books of the firm on B’s
admission.
OR
N, S and G were partners in a firm sharing profits and losses in the ratio of 2 : 3 : 5. On
31.3.2016 their Balance Sheet was as under:
Balance Sheet of N, S and G

as on 31.3.2016
Amount Amount
Liabilities Assets
(Rs) (Rs)
Creditors 1,65,000 Cash 1,20,000
General Reserve 90,000 Debtors 1,35,000
Capitals: Less Provision 15,000 1,20,000
N 2,25,000 Stock 1,50,000
S 3,75,000 Machinery 4,50,000
G 4,50,000 10,50,000 Patents 90,000
Building 3,00,000
Profit & Loss Account 75,000
13,05,000 13,05,000
G retired on the above date and it was agreed that:

(i) Debtors of Rs 6,000 will be written off as bad debts and a provision of 5% on debtors
for bad and doubtful debts will be maintained.
(ii) Patents will be completely written off and stock, machinery and building will be
depreciated by 5%.

(iii) An unrecorded creditor of Rs 30,000 will be taken into account.
(iv) N and S will share the future profits in the ratio of 2 : 3 ratio.
(v) Goodwill of the firm on G’s retirement was valued at Rs 90,000.
Pass necessary journal entries for the above transactions in the books of the firm on G’s
retirement.
Ans.
Journal
Debit Credit
(Rs) (Rs)
Cash A/c Dr. 1,20,000
To B’s Capital A/c 90,000
To Premium for Goodwill A/c 30,000
(Capital & goodwill brought in cash)
Premium for Goodwill A/c Dr. 30,000
To A’s Capital A/c 21,000
To Z’s Capital A/c 9,000
(Goodwill shared in sacrificing ratio of 7 : 3)
A’s Capital A/c Dr. 10,500
Z’s Capital A/c Dr. 4,500
To Cash A/c 15,000
(Goodwill withdrawn)

General Reserve A/c Dr. 15,000
To A’s Capital A/c 10,500
To Z’s Capital A/c 4,500
(General reserve shared among old partners in old

ratio)
Outstanding Wages A/c Dr. 9,000
To Cash A/c 9,000
(Outstanding wages paid)
Revaluation A/c Dr. 24,375
To Provision for Doubtful Debts A/c 975
To Stock A/c 6,000
To Furniture A/c 1,500
To Plant & Machinery A/c 9,600
To Creditors A/c 6,300
(Decrease in assets and increase in liabilities debited

to Revaluation A/c)
Investments A/c Dr. 7,500
To Revaluation A/c 7,500
(Assets revalued)
A’s Capital A/c Dr. 11,812.50
Z’s Capital A/c Dr. 5,062.50

(Loss on revaluation debited to old partners in old ratio)
Working Notes:
WN1: Calculation of Excess/Deficit Provision for Doubtful Debts
OR
Journal
Debit Credit
(Rs) (Rs)
General Reserve A/c Dr. 90,000
To N’s Capital A/c 18,000
To S’s Capital A/c 27,000
To G’s Capital A/c 45,000
(Balance in reserve distributed among all partners in

old ratio)
N’s Capital A/c Dr. 15,000
S’s Capital A/c Dr. 22,500
G’s Capital A/c Dr. 37,500
To Profit & Loss A/c 75,000
(Debit balance P&L A/c written off among all partners

in old ratio)

To G’s Capital A/c 45,000
(Goodwill adjusted in gaining ratio)
Revaluation A/c Dr. 1,65,000
To Patent A/c 90,000
To Stock A/c 7,500
To Machinery A/c 22,500
To Building A/c 15,000
To Creditors A/c 30,000
(Decrease in assets and increase in liabilities debited

to Revaluation A/c)
Provision for Doubtful Debts A/c Dr. 2,550
(Excess provision written back)
G’s Capital A/c Dr. 81,225
To Revaluation A/c 1,62,450
(Loss on revaluation debited to partners’ capital

accounts in old ratio)

G’s Capital A/c Dr. 4,21,275
To G’s Loan A/c 4,21,275
(Amount due to G transferred to his loan A/c)
Working Notes:
WN1: Calculation of G’s Share of Goodwill
WN2: Calculation of Excess/Deficit Provision for Doubtful Debts
WN3: Calculation of G’s Loan Balance
Amount due to G = Opening Capital + Credits – Debits
= 4,50,000 + (45,000 + 45,000) – (37,500 + 81,225)
= Rs 4,21,275
Q17. BBG Ltd. invited applications for issuing 2,00,000 equity shares of Rs 10 each at a

premium of Rs 10 per share. The amount was payable as follows:
On Application − Rs 4 per share (including Rs 2 premium)
On Allotment − Rs 5 per share (including Rs 2 premium)
On First call − Rs 5 per share (including Rs 3 premium)
On Second and final call − Balance amount
The issue was fully subscribed. Raghu, a shareholder holding 1000 shares, failed to pay
the allotment money and Rahim, another shareholder holding 1500 shares, paid his
entire share money along with allotment. Raghu's shares were forfeited immediately
after allotment. Afterwards, the first call was made Deenanath, a shareholder holding
500 shares, failed to pay the first call money and Dayal, a shareholder holding 600
shares, paid his second call money along with the first call. Deenanath's shares were
forfeited immediately after the first call. Later on the second call was made which was
duly received.
Pass necessary journal entries for the above transactions in the books of BBG Ltd.
OR
Joy Ltd. invited applications for issuing 20,000 equity shares of Rs 10 each at par. The
amount was payable as follows:
On Application − Rs 3 per share
On Allotment − Rs 4 per share
On First and find call − Balance amount
The issue was oversubscribed by three times. Applications for 20% shares were rejected
and the money was refunded. Allotment was made to the remaining applicants as
follows:
Category No. of Shares Applied No. of Shares Allotted
I 30,000 15,000
II 18,000 5,000
Excess money received with applications was adjusted towards sums due on allotment.
Money in excess to sums due on allotment was adjusted towards sums due on first and
final call and any money in excess to sums due on first and final call was refunded.
Kavi, a shareholder who had applied for 600 shares, failed to pay the remaining

allotment money and his shares were immediately forfeited. Kavi belonged to Category
I.
Afterwards the first and final call was made. Gupta, who had applied for 400 shares,
failed to pay the first and final call. Gupta also belonged to Category I.
Shares of Gupta were also forfeited after the first and final call. The forfeited shares
were reissued at Rs 12 per share fully paid up.
Pass necessary journal entries for the above transactions in the books of Joy Ltd.
Ans.
Journal
Debit Credit
(Rs) (Rs)
Bank A/c (2,00,000 × 4) Dr. 8,00,000
To Equity Share Application A/c 8,00,000
(Received application money on 2,00,000 shares)
Equity Share Application A/c Dr. 8,00,000
To Equity Share Capital A/c 4,00,000
To Securities Premium Reserve A/c 4,00,000
(Transfer of application money to Share Capital)
Equity Share Allotment A/c (2,00,000 × 5) Dr. 10,00,000
(Allotment due on 2,00,000 shares )
Bank A/c (1,99,000 × 5) + (1,500 × 11) Dr. 10,11,500

To Equity Share Allotment A/c (1,99,000 × 5) 9,95,000
To Calls-in-Advance A/c (1,500 × 11) 16,500
(Allotment money received)
Equity Share Capital A/c (1,000 × 5) Dr. 5,000
Securities Premium Reserve A/c (1,000 × 2) Dr. 2,000
To Equity Share Allotment A/c (1,000 × 5) 5,000
To Equity Share Forfeiture A/c (1,000 × 2) 2,000
(Forfeiture of 1,000 shares for non-payment of

allotment money including premium of Rs 2)
Equity Share First Call A/c (1,99,000 × 5) Dr. 9,95,000
(Call money due on 1,99,000 shares)
Bank A/c (1,98,500 × 5) − 7,500 + 3,600 Dr. 9,88,600
Calls-in-Advance A/c (1,500 × 5) Dr. 7,500
To Calls-in-Advance A/c (600 × 6) 3,600
To Equity Share First Call A/c 9,92,500
(Received call money)
Equity Share Capital A/c (500 × 7) Dr. 3,500
Securities Premium Reserve A/c (500 × 3) 1,500
To Equity Share First Call A/c (500 × 5) 2,500

To Equity Share Forfeiture A/c (500 × 5) 2,500
(Forfeiture of 500 shares for non-payment of call

money)
Equity Share Second and Final Call A/c (1,98,500 × 6) Dr. 11,91,000
To Securities Premium A/c 5,95,500
(Call money due on 1,98,500 shares)
Bank A/c Dr. 11,78,400
Calls-in-Advance A/c (9,000 + 3,600) 12,600
To Equity Share Second and Final Call A/c 11,91,000
(Received call money on shares)
OR
Journal
Debit Credit
(Rs) (Rs)
Bank A/c (60,000 × 3) Dr. 1,80,000
To Share Application A/c 1,80,000
(Received application money on 1,50,000 shares)
Share Application A/c Dr. 1,80,000
To Share Capital A/c 60,000

To Share Allotment A/c 65,000
To Share First and Final Call A/c 15,000
To Bank A/c 40,000
(Transfer of application money to Share Capital)
Share Allotment A/c (20,000 × 4) 80,000
(Allotment due on 20,000 shares )
Bank A/c Dr. 14,700
To Share Allotment A/c (WN 2) 14,700
(Allotment money received)
Share Capital A/c (300 × 7) Dr. 2,100
To Share Allotment A/c 300
To Share Forfeiture A/c 1,800
(300 shares forfeited for non-payment of allotment

money)
Share First and Final Call A/c Dr. 59,100
(Call money due on 19,700 shares)
Bank A/c Dr. 58,500

To Share First and Final Call A/c 58,500
(Call money received)
Share Capital A/c Dr. 2,000
To Share First and Final Call A/c 600
To Share Forfeiture A/c 1,400
(200 shares forfeited for non-payment of call money)
Bank A/c (500 × 12) Dr. 6,000
To Security Premium Reserve A/c 1,000
(Reissue of 500 shares at Rs 12 per share)
Share Forfeiture A/c Dr. 3,200
To Capital Reserve A/c 3,200
(Profit on re-issue transferred to Capital Reserve

Account)
Working Notes:
WN1: Computation Table
Money
Money Amount Amount
transferred Excess
Shares Shares received on adjusted adjusted
Categories to Share Application
Applied Allotted Application on on First
Capital money
@ Rs 3 each Allotment Call
@ Rs 3 each

I 30,000 15,000 90,000 45,000 45,000 45,000 -
II 18,000 5,000 54,000 15,000 39,000 20,000 15,000
III 12,000 - 36,000 - - -
60,000 20,000 1,80,000 60,000 84,000 65,000 15,000
WN2: Calculation of Amount Received on Allotment
Amount Due on Allotment 80,000
Less: Excess Received 65,000
Balance to be Received 15,000
Less: Amount not paid by Kavi (300)
Amount received on Allotment 14,700
WN3: Calculation of Shares Applied/Allotted
Shares Allotted to Kavi=15,00030,000×600=300
Amount not paid by Kavi on Allotment
Amount received on Application 1,800
Less: Actual tfd to Sh. Capital (900)
Excess received on Application 900
Amount due on allotment 1,200
Less: Excess adjustment (900)
Amount unpaid by Kavi 300
Shares Allotted to Gupta=15,00030,000×400=200

Amount not paid by Gupta on First & Final Call
Amount received on Application 1,200
Less: Actual tfd to Sh. Capital (600)
Excess received on Application 600
Amount due on allotment 800
Less: Excess adjustment (600)
Amount to be received on Allotment 200
The above table shows that excess money is fully exhausted on application and allotment,
which means that call money is fully unpaid i.e. Rs 600 (200×3)
Q18. Why is separate disclosure of cash flows from 'investing activities' necessary?
State.
Ans. A separate disclosure of cash flows from investing activities is necessary as it helps in
knowing the extent to which cash has been spent or expenditure incurred to generate future
revenues and cash flows.
Q19. What is meant by a non-cash transaction? Give one example of a non-cash

transaction.
Ans. Non-cash transactions that those transactions that do not involve any cash inflow or
outflow.
For example, depreciation charged on fixed assets.
Q20. What is meant by analysis of financial statements? State any two limitations of
such analysis.
Ans. A critical and thorough examination of the financial statements of a company in order
to understand the data contained in it, is known as 'Analysis of Financial Statements'.
Limitations of Financial Analysis

(a) Ignores Changes in the Price level- The financial analysis fails to capture the change in

price level. The figures of different years are taken on nominal values and not in real terms
(i.e. not taking price change into considerations).
(b) Misleading and Wrong Information- The financial analysis fails to reveal the change in
the accounting procedures and practices. Consequently they may provide wrong and
misleading information.
Q21. State with reason whether the following transactions will increase, decrease or not
change the 'Return on Investment':
(i) Purchase of machinery worth Rs 2,00,000 by issue of equity shares.
(ii) Charging depreciation of Rs 5,000 on machinery.
(iii) Redemption of debentures in cash Rs 70,000.
(iv) Converting Rs 50,000, 9% debentures into equity shares.
Ans.
Transaction Implication
Purchase of machinery Increase in capital employed (due to issue of shares) by Rs

worth Rs 2,00,000 by 2,00,000 with fixed amount of profits will lead to a decline in
issue of equity shares. return on investment.
Charging depreciation of Simultaneous decrease in profits and capital employed by Rs

Rs 5,000 on machinery. 5,000 will lead to a decline in return on investment
Redemption of Decrease in capital employed (due to redemption of debentures)

debentures in cash Rs by Rs 70,000 with fixed amount of profits will lead to an
70,000. increase in return on investment.
Converting Rs 50,000, 9% Simultaneous increase and decrease in capital employed (due to

debentures into equity decrease in debentures and increase in share capital) will leave
shares. the return on investment unchanged.
Q22. Financial statements are prepared following the consistent accounting concepts,
principles, procedures and also the legal environment in which the business
organisations operate. These statements are the source of information on the basis of
which conclusions are drawn about the profitability and financial position of a

company so that their users can easily understand and use them in their economic
decisions.
From the above statement identify any two values that a company should observe while
preparing its financial statements. Also, state under which major headings and sub-
headings the following items will be presented in the Balance Sheet of a company as per
Schedule III of the Companies Act, 2013:
(i) Calls-in-arrears
(ii) Calls-in-advance
(iii) Gain on reissue of forfeited equity shares
(iv) Trade payables to be settled beyond 12 months from the date of Balance Sheet
Ans. Values that a company must observe while preparing its financial statements.
(a) The financial statements must be drawn following the accounting concepts, principles,
procedures
(b) The financial statements must be drawn following the ethical and legal framework
Item Major Head Sub-Head
Shareholders’ Subscribed Capital (by

Calls-in-Arrears
Funds way of deduction)
Current
Calls-in-Advance Other Current Liabilities
Liabilities
Shareholders’
Gain on Re-issue of Forfeited Shares Reserves & Surplus
Funds
Other Long-term
Trade Payables to be settled beyond 12 months Non Current
Liabilities (Trade
from the date of Balance Sheet Liabilities
Payables)
Q23. Following is the Balance Sheet of J.M. Ltd. as at 31.3.2016:
J.M. Ltd. Balance Sheet as at 31.3.2016
31.03.2016 31.03.2015
Particulars Note No.
(Rs) (Rs)

I. Equity and Liabilities:
(1) Shareholder's Funds:
(a) Share Capital 2,25,000 1,75,000
(b) Reserves and Surplus 1 62,500 25,000
(2) Non-current Liabilities:
Long-Term Borrowings 2 1,12,500 87,500
(3) Current Liabilities:
(a) Short-term Borrowings 3 37,500 18,750
(b) Short-term Provisions 4 50,000 31,250
Total 4,87,500 3,37,500
II. Assets:
(1) Non-current Assets:
(a) Fixed Assets:
(i) Tangible 5 3,66,250 2,28,750
(ii) Intangible 6 25,000 37,500
(b) Non-current Investments 37,500 25,000
(2) Current Assets:
(a) Current Investments 10,000 17,500
(b) Inventories 7 30,500 18,000
(c) Cash and Cash Equivalents 18,250 10,750
Total 4,87,500 3,37,500

Notes to Accounts:
Note 31.03.2016 31.03.2015

Particulars
No. (Rs) (Rs)
(1) Reserves and Surplus
(Surplus i.e. Balance in the Statement of Profit and Loss) 62,500 25,000
62,500 25,000
(2) Long-term Borrowings
12% Debentures 1,12,500 87,500
1,12,500 87,500
(3) Short-term Borrowings
Bank overdraft 37,500 18,750
37,500 18,750
(4) Short-term Provisions
Proposed Dividend 50,000 31,250
50,000 31,250
(5) Tangible Assets
Machinery 4,18,750 2,63,750
Accumulated Depreciation (52,500) (35,000)
3,66,250 2,28,750

(6) Intangible Assets
Goodwill 25,000 37,500
25,000 37,500
(7) Inventories
Stock in Trade 30,500 18,000
30,500 18,000
Additional Information:
(1) Rs 25,000, 12% Debentures were issued on 31.3.2016.
(2) During the year a piece of machinery costing Rs 20,000 on which accumulated
depreciation was Rs 10,000 was sold at a loss of Rs 2,500.
Prepare a Cash Flow Statement.
Ans.
Cash Flow Statement

for the year ended March 31, 2016
Amount Amount
Particulars
(Rs) (Rs)
A Cash Flow from Operating Activities
Profit as per Statement of Profit and Loss 37,500
Proposed Dividend 50,000 87,500
Profit Before Taxation 87,500
Items to be Added:
Goodwill written off 12,500
Debentures interest 10,500

Depreciation 27,500
Loss on sale of machinery 2,500 53,000
Operating Profit before Working Capital Adjustments 1,40,500
Less: Increase in Current Assets
Inventories (12,500) (12,500)
Cash Generated from Operations 1,28,000
Less: Tax Paid -
Net Cash Flows from Operating Activities 1,28,000
B Cash Flow from Investing Activities
Sale of machinery 7,500
Purchase of machinery (1,75,000)
Purchase of non-current investment (12,500) (1,80,000)
Net Cash Used in Investing Activities (1,80,000)
C Cash Flow from Financing Activities
Proceeds from Issue of Share Capital 50,000
Increase in Bank Overdraft 18,750
Interest on Debentures paid (10,500)
Proceeds from Issue of Debentures 25,000
Proposed Dividend Paid (31,250)
Net Cash Flow from Financing Activities 52,000
D Net ↑/↓ in Cash and Cash Equivalents (A+B+C) -
Add: Cash and Cash Equivalent in the beginning of the period

28,250
(10,750+17,500)

Cash and Cash Equivalents at the end of the period
28,250
(18,250+10,000)
Working Notes:
Machinery Account
Dr. Cr.
Amount Amount
(Rs) (Rs)
Balance b/d 2,63,750 Bank A/c (Sale) 7,500
Bank A/c (Purchase- Bal. Fig.) 1,75,000 Accumulated Depreciation A/c 10,000
Profit and Loss A/c (Loss on Sale) 2,500
Balance c/d 4,18,750
4,38,750 4,38,750
Accumulated Depreciation Account
Dr. Cr.
Amount Amount
(Rs) (Rs)
Machinery
10,000 Balance b/d 35,000
A/c
Profit and Loss A/c (Dep. charged during the year- Bal.
Balance c/d 52,500 27,500
Fig.)
62,500 62,500

12 Accountancy Lyp 2017 Foreign Set3

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Question

Paper 2017 Foreign set 3

(i) This section consists of 17 questions.​

(i) This section consists of 6 questions.​

Material downloaded from myCBSEguide.com. 1 / 41

Ans. Adjusting Journal Entry

Sudha’s Current A/c Dr. 1,500

To Suman’s Current A/c 1,500

(Interest on capital omitted, now adjusted.)

Statement Showing Adjustment

Particulars Suman Sudha Total

Interest on Capital @ 12% 6,000 3,000 (9,000)

Less: Profits wrongly distributed to the extent of interest

Net Effect 1,500 (1,500) NIL

Material downloaded from myCBSEguide.com. 2 / 41

Ans. Reena’s share of sacrifice is calculated below.

Bank A/c (2,400 × 90) Dr. 2,16,000

To Debenture Application & Allotment A/c 2,16,000

(Amount received on 2,400 debentures issued at a

Debenture Application & Allotment A/c Dr. 2,16,000

Discount on Issue of Debentures A/c (2,000 × 10) Dr. 20,000

Material downloaded from myCBSEguide.com. 3 / 41

To Bank A/c (400 × 90) 36,000

(Application and allotment money received transferred to

Machinery A/c Dr. 2,52,000

(Purchased machinery from B Ltd.)

B Ltd. (1,20,000 + 95,000 + 37,000) Dr. 2,52,000

Discount on Issue of Debentures A/c (1,000 × 5) Dr. 5,000

To Equity Share Capital A/c (10,000 × 10) 1,00,000

To Securities Premium A/c (10,000 × 2) 20,000

Material downloaded from myCBSEguide.com. 4 / 41

To Bank A/c 37,000

(Issued 10,000 equity shares of Rs 10 each at a

12% Debentures A/c Dr. 40,000

To Debentureholders’ A/c 40,000

(400, 12% Debentures due for redemption)

Debentureholders’ A/c Dr. 40,000

To Equity Share Capital A/c (3,200 × 10) 32,000

To Securities Premium A/c (3,200 × 2.50) 8,000

(400, 12% Debentures redeemed by converting into 3,200

Material downloaded from myCBSEguide.com. 5 / 41

Securities Premium A/c Dr. 2,400

To Discount on Issue of Debentures A/c 2,400

(Discount on issue of debentures written off against

I. Equity and Liabilities

Material downloaded from myCBSEguide.com. 6 / 41

b. Reserves and Surplus

1. Long-term Borrowings 2 20,00,000

1,50,00,000 Equity Shares of Rs 10 each 15,00,00,000

Issued, Subscribed , Called up & Paid up Capital

52,00,000 Equity Shares of Rs 10 each fully called up 5,20,00,000

Less: Calls-in-Arrears (500×3) 1,500 5,19,98,500

2 Long Term Borrowings

2,000, 12% Debentures of Rs. 1,000 each 20,00,000

Material downloaded from myCBSEguide.com. 7 / 41

R’s Capital A/c Dr. 84,000

To P’s Capital A/c 42,000

To S’s Capital A/c 42,000

(Goodwill adjusted through capitals)

Material downloaded from myCBSEguide.com. 8 / 41

Cash A/c Dr. 3,00,000

To Saurabh’s Capital A/c 3,00,000

(Capital brought in cash)

Saurabh’s Current A/c Dr. 80,000

(i) This section consists of 17 questions.

(i) This section consists of 6 questions.