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PART A: PARTNERSHIP AND COMPANY ACCOUNTS Q. 1. Define partnership. What are the essential characteristics of a partnership Q. 2.

L and M are partners in a firm sharing profits and losses in the ratio of 7 : 3. They admit N on 3/7 share, which he takes 2/7 from L and 1/7 from M. Calculate the new profit sharing ratio. Q. 3. XYZ Ltd. offers new shares of Rs. 100 each at 10% premium to the existing shareholders in the ratio of two shares for every five shares held. The market price of share Is Rs. 124. Calculate the value of right. Q. 4. What is zero Coupon Bond? Q. 5. A and B are partners in a firm sharing profits and losses in the ratio of 3 : 2. They admit C into partnership for 1/5th share. C brings Rs. 30,000 as capital and Rs. 10,000 as good will. At the tune of admission of C goodwill appears in the Balance Sheet of A and B at Rs. 3,000. New profit sharing ratio of the partners shall he 5 : 3 : 2. Pass necessary entries. Q. 6. Sachin, Kapil and Rashmi have been sharing profits in the ratio of 3 : 2 : 1 respectively. Rashmi wants that she should share the profits equally with Sachin and Kapil. She further wants that change in profit sharing ratio should b retrospectively for the last three years. Other partners have no objection to this. The profits for the last three years were Rs. 60,000, Rs. 47,000 and Rs. 55,000. Record the adjustment by means of Journal entry. Give working. Q. 7. A Limited Company has Issued Rs. 1,00,000 9 % Debentures at a discount of 6%. These debentures are to be redeemed equally spread over 5 annual instalments. Show Discount on Issue of Debentures A/c for five years. Q. 8. State the conditions under which the shares can be issued at a discount by a limited company. Q. 9. On April 1, 2001 -X Ltd. raised a loan of Rs. 50 crores @ 12% p.a. payable half-yearly on September 30 and March 31 repayable after 3 years and offered its land and building at Mumbai as primary security. 12% of the company for Rs. 30 crores were also pledged as collateral security. The company started facing the financial distress towards the end of the year 2002 and could not pay interest on loan w.e.f. October 2,2002 onwards. The company was not in a position to repay the loan on due date. The Lender took over the possession of land and building In Mumbai at Rs. 48 crores and invoked his right vested in collateral security on 30th June, 2004 after duly following legal process. Required: Record Journal entries to give effect to above transactions. Q. 10. The following balances appeared in the books of a company on 1st January, Rs. 12% Debentures 4,00,000 12% Debentures Sinking Fund 3,00,000 12% Debentures Sinking Fund investment 3,00,000 (represented by 10% Rs. 4,00,000 secured bonds of Govt. of India) 4,00,000 3,00,000 3,00,000

Annual contribution to the Sinking Fund was Ra. 60,000 made on 31st December each year. On 31st December, 2000, balance at Bank was Rs. 3,00,000 after receipt of interest on Debenture Sinking Fund Investment. The company sold the investment at a loss of 18% and the Debentures were paid off. You are required to prepare the following accounts for the year 2000: (i) Debentures Account (ii) Debentures Sinking Fund Account (iii) Debentures Slaking Fund Investment Account (iv) Sank Account Q. 11. A and B are partners sharing profit in the ratio of 3 : 2 with capitals of Rs. 50,000 and Rs. 30,000 respectively. Interest on capital is agreed @ 6% p.a. B is to be allowed an annual salary of Rs. 2,500. During 2004 the profits of the year prior to calculation of interest on capital but after charing Bs salary amounted to Rs. 12,500. A provision of 5% of the profit is to be made In respect of managers commission. Prepare an account showing the allocation of profits and partners capital accounts. Q. 12. The following is the Balance Sheet as on 31st December, 2002 of A and B, who share profits and losses in the ratio of 3 : 2 :

Liabilities Capital Accounts: A B General Reserve Workmen's Compensation Fund Creditors

Rs. Assets Plant & Machinery 10,000 Land and Buildings 10,000 Debtors 15,000 Less: Provision For doubtful debts Stock 5,000 10,000 Cash 50,000 12,000 1,000

Rs. 10,000 8,000

11,000 12,000 9,000 50,000

On 1st January, 2003, they agreed to admit C into partnership on the following terms: (i) Provision of doubtful debts would be increased by Rs. 2,000. (ii) The value of Land and building would be increased to Rs. 18,000. (iii) The value of stock would be increased by Rs. 4,000. (iv) The liability against Workmens Compensation Fund is determined at Rs. 2,000. (v) C brought in as his share of goodwill Rs. 10,000 in cash. (vi) C would bring further cash as would make his capital equal to 20% of the total capital of the new firm after the above revaluation and adjustments are carried out. Prepare Revaluation Account, Partners Capital Accounts and Balance Sheet of the firm after Cs admission. Q. 13. A, B and Care partners sharing profits and loss in the ratio of 3 : 2 : 1 On 31st December, 2004, their Balance sheet stood as under:

Lianilities A's Capital A/c B's Capital A/c

Rs. Assets 16,000 Fixed Assets 12,000 Joint Life policy

Rs. 40,000 6,000

C's Capital A/c A's Current A/c B's Current A/c C's Current A/c Reserve Profit and Loss A/c Opening Balance 6,000 Profit for the year 14,000 Creditors

10,000 Current Assets 4,000 Advertisement Expenditure 3,000 1,000 24,000

68,000 6,000

20,000 30,000 1,20,000 _______ 1,20,000

B died on 31.3.2005. His account has to be settled and paid. For the year 2005, proportionate profits on 2004 basis are to be taken into account. For 2004 a bad debt of Rs. 2,000 has to be adjusted. Goodwill has to be calculated at three time of the four years average profits. A policy is taken on the joint life of partners for Rs. 35,000 and the annual premium of Rs. 2,000 has to be paid on February 1 every year. The profits for 2003 Rs. 16,000, 2002 Rs. 20,000 and 2001 Rs. 12,000. Goodwill account need not be kept in the accounts Required: Calculate the amount payable to Bs heirs. Or The Balance Sheet of Ram, Han and Mohan who were sharing, profits as 2 : 3 : 2 respectively stood as follows on 31st March, 2004:

Liabilities Capital Accounts: Ram Hari Mohan Sundry Creditors

Rs. Assets L and & Buildings 10,00,000 Machinery 15,00,000 Closing Stock 10,00,000 Sundry Debtors 5,00,000 Cash and Bank Balances 40,00,000

Rs. 10,00,000 17,00,000 5,00,000 6,00,000 2,00,000 40,00,000

On 31st March, 2004 Han desired to retire from the firm and the remaining partners decided to carry on. It was agreed to revalue the Assets and Liabilities on that date on the following basis: (a) L and & Buildings be appreciated by 30%. (b) Machinery be depreciated by 20%. (c) Closing Stock to be valued at Rs. 4,50,000. (d) Provision for doubtful debts be made at 5%. (e) Old credit balances of Sundry Creditors Rs. 5,00,000 be written back. (f) Joint Life Policy of the partners surrendered and cash obtained Rs. 3,50,000. (g) Goodwill of the entire firm be valued at Rs. 6,30,000 and Hans share of the Goodwill be adjusted in the accounts of Ram and Mohan who share the future profits & losses in the ratio of 3 : 2. (h) The total capital of the firm is to be the same as before retirement. Individual capitals be in their profit sharing ratio. (i) Amount due to Hail is to be settled on the following basis 50% on retirement and the balance 50% with in one year. Prepare Revaluation Account, Capital Accounts of Partners, Cash Accounts and Balance Sheet as 1.4 of M/s Ram & Mohan.

Q. 14. (a) ABC Ltd. forfeited 150 Equity Shares of Rs. 10 each issued at a premium of Rs. 5 per share, for nonpayment of allotment money of Rs. 8 per share (including premium of 5 per share), the first call of Rs. 2 per share and the final call of Rs. 3 per share. Out of these 100 equity shares were reissued at Rs. 14 per share. Give journal entries in the books of the company to record the forfeiture and reissue of shares. (b) V.K. Ltd. forfeited 10 shares of Rs. 10 each (Rs. 6 called up) issued at a discount of 10% to Y on which he had paid the application money of Rs. 2 per share. Out of these, 8 shares were reissued to Z at Rs. 6 per share, Rs. 8 called up. Give journal entries to record forfeiture and reissue of shares in the books of the company. Q. 15. The following is the Balance Sheet of A and B on 31 December, 2004:

Liabilities Sundry Creditors Bills Payable Mrs. A's Loan Mrs. B's Loan General Reserve Salaries Outstanding

Rs. Assets 30,000 Cash in hand 8,000 Cash at Bank 5,000 Stock-in-Trade 10,000 Investment 10,000 Debtors 1,000 Less: Provision for Doubtful Debts 10,000 Plant 10,000 Building Goodwill _________ Profit & Loss A/c 84,000 2.000 20,000

Rs. 500 8,000 5,000 10,000

A's Capital B's Capital

18,000 20,000 15,000 4,000 3.5000 84,000

The firm was dissolved on 31st December, 2004 on the following terms: (a) A promised to pay off Mrs. As loan and took away stock-in-trade at Rs. 4,000. (b) B tool away half the investment at 10% discount. (c) Debtors realized Rs. 19,000. (d) Creditors and Bills Payable were due, on an average basis, on month after 31st December, but they were paid immediately on 31st December, at a discount of 6% per annum. (e) Plant realized Rs. 25,000, Building Rs. 40,000, Goodwill Rs. 6,000 and remaining investments at Rs. 4,500. (f) There was an old typewriter in the firm which had been written off completely from the books of the firm. It was now estimated to realize Rs 300. It was taken away by B at this estimated price. (g) Realization expenses were Rs. 1000. You are required to give necessary ledger accounts to close the books of the firm. PART B: ANALYSIS OF FINANCIALS STATEMENTS Q. 16. Differentiate between a Funds Flow Statement and Balance Sheet. Q. 17. Explain meaning and significance of the following: (a) Debt-Equity Ratio (b) Debtors Turnover Ratio Q. 18. The following balances appear in the books of Roop Publications Ltd:

Rs. Goodwill Plant and Machinery Building Cash at hand Stock in trade Stock Capital: 1,000 Equity shares of Rs. 100 each issued at par Rs. 80 per share called up and paid up 8% Debentures Preliminary Expenses Creditors Dividends payable 20,000 1,60,000 1,45,000 10,000 70,000

80,000 2,50,000 5,000 55,000 25,000

Showing the above items under the major heads in accordance with Section 211 and Part I of Schedule VI of the Companies Act 1956, prepare a Balance Sheet of the company. Q. 19. From the following summarized Balance Sheets as at 31st December pre pare a comparative Balance Sheet of X Ltd. as at that date:

Liabilities

1995 Rs.

1996 Assets Rs. 60,00,000 Fixed Assets Investments 15,00,000 C. Assets 18,00,000 27,00,000 18,00,000 13,20,000 3,30,000 1,54,50,000

1995 Rs. 90,00,000 15,00,000 45,00,000

1996 Rs. 1,08,00,000 15,00,000 31,50,000

Equity Share Capital Preference share Capital Reserves and Surplus Secured Loans Unsecured Loans Current Liabilities Provision for Taxation

60,00,000 15,00,000 15,00,000 30,00,000 15,00,000 12,00,000 3,00,000 1,50,00,000

________ 1,50,00,000

________ 1,54,50,000

Or Discuss the purpose of financial statement analysis. Q. 20. From the following information, calculate Stock Turnover Ratio, Operating Ratio and Capital Turnover Ratio:

Rs.
Opening Stock Closing Stock Purchases Sales Sales Returns Carriage Inwards Office Expenses Selling and Distribution Expenses 28,000 22,000 46,000 90,000 10,000 4,000 4,000 2,000

Capital Employed Q. 21. Calculate cash Flows from operating activities from the following information: Particulars Debtors Prepaid Expenses Accrued Income Income Received in Advance Creditors Bills payable Outstanding Expenses 2003 Rs. 42,000 2,000 1,500 800 26,000 13,000 8,000

2,00,000

2004 Rs. 46,000 2,700 1,200 1,000 28,000 11,000 6,000

Profit made during 2004 amounted to Rs. 1,00,000 after taking into account the following adjustments: Rs. (i) Profit on Sale of Investment (ii) Loss on Sale of Machine (iii) Goodwill Amortized (iv) Depreciation Charged 2,000 900 3,000 2,900

Or From the following Balance Sheets of DJA Co. LTD., prepare Funds Flow statements and Statement of Changes in Working Capital:

Liabilities

31-3-03 Rs.

31-3-04 Assets Rs. 70,000 Goodwill 50,000 Machinery 30,000 Investments 14,000 Cash at Bank 26,000 Sundry Debtors 22,000 Stock in Trade 3,000 Discount on Issue Of _______ Debentures 2,15,000

31-3-03 Rs. 20,000 82,000 6,000 24,000 16,000 8,000 1.000 1,57,000

31-3-04 Rs. 16,000 1.08,000 16,000 26,000 38,000 11,000 _______ 2,15,000

Share Capital Debentures General Reserve Profit & Loss A/c Income Tax Payable Sundry Creditors Bills Payable

60,000 30,000 20,000 12,000 18,000 15,000 2,000 _______ 1,57,000

(a) During the year investment costing Rs. 6,000 was sold for Rs. 5,600. (b) Depreciation pro on machinery was Rs. 10,000

----------------------------------------------XXXXXXXXXXXXXXXXXXXXX------------------------------------------------------------------------------------------------------XXXXXXXXXXXXXXXXXXXXX--------------------------------------------------------PART A: PARTNERSHIP AND COMPANY ACCOUNTS Q. 1. In the absence of a partnership deed, how are mutual relations of partners governed?

Q. 2. Rand S are partners in a firm sharing profits and losses in the ratio of 3 : 2. They admit T as a new partner R surrenders 1/5th share of his profit in favour of T and S surrenders 2/5th of his share in favour of T. Calculate their new profit sharing ratio. Q. 3. A and B are partners sharing profit and losses in the ratio of 3 : 2. They admit C into the partnership for share lit profits. C brings Rs. 30,000 as capital and Rs. 10,000 as goodwill New profit sharing ratio of the partners shall be 3 : 3 : 2. Pass necessary journal entries. Q. 4. On 1st Jan., 2004, ABC Ltd. had 1,000, 12% Debentures of Rs. 100 each. Interest on debentures is payable half yearly on 30th June and on 31st December. On 1st May, 2004, the company purchased 300 own Debentures at Rs. 93 Ex-interest for the Investment purpose and sold the same @ Rs. 99 cum-interest after six months. Record the necessary Journal entries on date of purchase and sale. Q. 5. Anu, Beena, Ceema, Deeps share profits in the ratio of 5 : 3 : 2 : 2 and their capitals are Rs. 5,000, Rs. 6,500, Rs. 6,000 and Rs. 6500 respectively. On 31 December, 2002, after closing the books it is found that interest on capital @ 5% p.a. was omitted. Instead of altering the signed accounts, it was decided to pass a. single: adjustment entry at the beginning of the next the necessary journal entry. Q. 6. What do you mean by Issuing shares at premium? State the provisions of Sec. 78 of the Companies Act, 1956 regarding the utilization of Share (Securities) Premium Account. Q. 7. X Ltd. issued debentures amounting to Rs. 10,00,000 at a discount of 6%, repayable by annual drawings of Rs. 2,00,000 each year, beginning With the end of first year The directors decided to write off discount based on debentures outstanding at the end of each year Calculate the amount of discount to be written off each year. Prepare Discount on Issue of Debentures Account also for each year. Q. 8. Disha Ltd. had 2,000, 12% Debentures of Rs. 50 each on December 2002 redeemable at a premium of 10%. They are to be converted into equity shares of Rs. 10 each issued. Case (i) at par Case (ii) at a premium of Rs. 15 i.e., at Rs. 25 Case (iii) at a discount of Rs. 2 i.e., at Rs. 8 Q. 9. Give any four points of distinction between a Share and a Debenture. Q. 10. X, Y and Z were partners in a firm sharing profits in the ratio of 4 : 3 : 3. They had a Joint Life Policy of Rs. 1,00,000. The annual pr paid was Rs. 1,000 and was considered as an asset. Y died on 15.3.2003. On that date the surrender value of the Policy was Rs. 15,000. Pass necessary journal entries on Ys death related to Joint Life Policy transactions. Q. 11. The Balance Sheet of Seem Ltd. disclosed the following information of 1 January, 2000: Rs. 16% Debentures Debenture Redemption Fund 15% Debenture Redemption Fund Investments 10,00,000 8,00,000 8,00,000

The annual contribution to the Debenture Redemption Fund was Rs. 80,000 for the year 2000. The debentures were redeemable on 31st December, 2000. On 31st December, 2000 the investments were sold for Rs. 8,20,000 and the debentures were redeemed. The bank balance on 31st December, 2000 prior of interest from Debenture Redemption Fund Investments was Rs. 90,000. Prepare Debenture Account, Bank Account, Debenture Redemption Fund Account and Debenture Redemption Fund Investments Account for the year 2000. Q. 12. A and B are partners in a firm sharing profits and losses in the ratio of 3: 2. They admit C Into partnership of 1/5th share in profit on 31st December, 1996. On that date their Balance Sheet stood as under: Liabilities: Capital Accounts: A B General Reserves Sundry Creditors Rs. Assets Good will 60,000 Plant & Machinery 50,000 Furniture 10,000 Investments 50,000 Stock Sundry Debtors _________ Cash in hand 1,70,000 C was admitted on the following terms: (i) C is to bring capital Rs. 40,000 and goodwill Rs. 15,000. (ii) Partners agreed to share the future profit in the ratio of 5 : 3 : 2. (iii) Investments will be appreciated by 20% and furniture depreciated by 10%. (iv) One customer who owed the firm Rs. 2,000 become insolvent and nothing could be realized from him. (v) Creditors will be written back by Rs. 2,000. (vi) Outstanding bills for repairs Rs. 1,000 will be provided for. (vii) Interest accrued on investments Rs. 2,000. (viii) Capital of the partners shall be in proportion to their profit sharing ratio. For this, adjustment be made through cash. Prepare Revaluation Account, Capital Accounts and Balance Sheet of the new firm. Q. 13. (a) XYZ Ltd. forfeited 200 equity shares of Rs. 10 each issued at a premium of Rs. 5 per share, held by Shyam for non-payment of allotment money of Rs. 8 per share (including share premium Rs. 5 per share), first call of Rs. 2 per share and final call of Rs. 3 per share. Out of these, 125 equity shares were reissued to Bhajanlal at Rs. 9 per share as fully paid. .Journalise. 5 (b) VT Ltd. forfeited 20 shares of Rs. 10 each (Rs. 7 called up), issued at a discount of 10% to Meena on which she had paid Rs. 2 per share. Out of these, 18 shares were reissued to Neeta as Rs. 8 called up for Rs. 6 per share. Give journal entries to record forfeiture and reissue of shares. Q. 14. A, B and C are partners sharing profits of 2 : 1 : 1. They closed their books on 31st December each year. A died on 28th February, 2001 when their Balance Sheet was as follows: Rs. 5,000 65,000 15,000 20,000 20,000 30,000 15,000 1,70,000

Liabilities Creditors

Rs. Assets 3,790 Cash

Rs. 20,000

Joint Life Policy Reserve Profit for Two Months (Before interest & Salaries) Capitals: A B C 10,000 6,000 5,000

3,600 Sundry Debtors 3,110 Loan to A Joint Life policy

3,900 4,000 3,600

21,000 31,500

______ 31,500

Accounting to the partnership deed: (a) Interest on capital is allowed @ 6% per annum A and B are entitled to salaries at Rs. 300 and Rs. 250 per month. (b) In the event of death of a partner Goodwill was to be valued at 2 years purchase of the average net profits of 3 completed years preceding death. The net profits for the year 1998, 1999 and 2000 was Rs. 5,500. Rs. 4,800 and Rs. 6,500 respectively. Firm had taken a Joint Life Policy (with profit policy) of Rs. 10,000. The insurance company admitted a claim of Rs. 12,600 including bonus. As share was paid to his exe cutors. B and C continued the firm. Prepare Profit and Loss Appropriation Account, Partners Capital Accounts and Balance Sheet of B and C. Or X,Y,Z were partners in a firm whose Balance Sheet as on 31st Dec., 2002 was as under: Balance Sheet as at 31.12.2002

Liabilities Creditors General Reserve X's Capital Y's Capital Z's Capital

Rs. Assets 18,240 Cash 7,500 Debtors 20,000 Stock 14,500 Furniture 10,000 70,240

Rs. 16,240 22,500 26,500 5,000 _________ 70,240

Y retired on that date in this connection it was derided to make the following adjustments: (a) To reduce Stock and Furniture by 5% and 10% respectively. (b) To provide for Doubtful Debts at 5% on Debtors. (c) A long dispute with the Creditors was settled and firm has to pay R 9,050. In anticipation Rs. 6,000 have already been Included In sundry creditors for this purpose. (d) Goodwill was valued at Rs. 12,000. (e) To share profits and losses in 5:3 respectively. (f) Y should be paid off and the satire sum payable to Y shall be brought In by X and Z in such a way that their capitals should be in their new profit sharing ratio. Prepare Revaluation Account, Partners Capital Accounts and Balance Sheet after Ys retirement. Q. 15. A, B and C who shared profits in the ratio of 3 : 2 : 1 agreed upon the Dissolution of their partnership on 31st December, 1998, on which date their Balance Sheet was as under:

Liabilities Capital Accounts: A B Mrs. A's loan Creditors Joint Life policy Fund Investment Fluctuation Fund

Rs. Assets Machinery 50,000 Cash 10,000 Investments 8,000 Joint Life Policy 20,500 Debtors 14,000 Cash at Bank 6,000 C's Capital A/c _______ 1,0,500

Rs. 40,000 8,000 20,000 14,000 9,000 6,000 11,500 _______ 1,08,500

Following transactions took place: (i) The joint life policy was surrendered for Rs. 15,000. (ii) The Investments were taken over by A for Rs. 11,500. He also agreed to discharge his wifes loan. (iii) B took over the stock at Rs. 7,500 and Debtors amounting to Rs. 5,000 for Rs. 4,000. (iv) Machinery realized Rs. 50,000 and the remaining Debtors realized 50% of the book value. (v) The expenses of realization amounted to Rs. 1,000. (vi) Investments worth Rs. 3,000 were not recorded in the books and realised at the same price. Prepare necessary ledger accounts to close the books of the firm. PART B: ANALYSIS OF FINANCIAL STATEMENTS Q. 16. Mention the advantage of Funds Flow Statement. Q. 17. Explain the meaning and significance of the following ratios: (a) Current Ratio (b) Stock Turnover Ratio Q. 18. Under which of the major heads will the following items be shown, while preparing the Balance Sheet of a company, as per provisions of companies Act, 1956, as contained in Schedule VI? Rs. Preliminary Expenses Discount on issue of Debentures 10% Debentures Stock-in-trade Cash at Bank Bills Receivable Goodwill Loose Tools Horses and Carts Motor Truck Provision for Taxation Bank Overdraft 1,40,000 10,000 1,90,000 40,000 35,000 12,000 20,000 12,000 22,000 75,000 6,000 30,000

Q. 19. From the following information prepare a comparative Balance Sheet of Deep Ltd. as on 31st December:

Particulars Equity Share Capital Fixed Assets Reserves and Surpluses Investments Long Term Loans Current Assets Current Liabilities

31-12-1995 Rs. 25,00,000 30,00,000 5,00,000 5,00,000 15,00,000 15,00,000 5,00,000

31-12-1996 Rs. 25,00,000 36,00,000 6,00,000 5,00,000 15,00,000 10,50,000 5,50,000

Q. 20. The current ratio of a company is 2 : 1. State giving reasons which of the following would improve, reduce, or not change the ratio: (a) repayment of a current liability (b) purchasing goods on cash (c) sale of office equipment for Rs. 4,000 (Book Value Rs. 5,000) (d) sale of goods Rs. 11,000 (cost Rs. 10,000) (e) payment of dividend Or Explain any four limitations of financial statement analysis. Q. 21. Calculate net-cash flows from operating activities from the following in formation: Rs. Profits made during 1996 Transfer to General Reserve Depreciation provided Profit on sale of furniture Loss on sale of machine Preliminary expenses written off Additional Information: 1995 Rs. Debtors Bills Receivable Stock Prepaid Expenses Creditors Bills Payable Outstanding Expenses 10,000 7,000 15,000 2,000 20,000 15,000 3,000 1996 Rs. 15,000 5,000 18,000 3,000 18,000 25,000 4,000 50,000 10,000 20,000 5,000 10,000 10,000

Or Prepare Funds Flows Statement and Schedule of Changes in Working Capital from the following Balance Sheets:

Liabilities

1995 Rs.

1996 Assets Rs.

1995 Rs.

1996 Rs.

Share Capital Share Premium General Reserve Profit & Loss A/c 16% Debentures Proposed Dividend Provision for Tax Creditors Bills Payable

1,00,000 50,000 45,000 70,000 30,000 15,000 25,000 15,000 3,50,000

1,50,000 Fixed Assets 10,000 Sundry Debtors 70,000 Cash 65,000 Bank 50,000 Stock 40,000 B/R 20,000 Good will 20,000 27,000 4,52,000

1,80,000 20,000 10,000 15,000 75,000 20,000 30,000 ________ 3,50,000

2,70,000 30,000 5,000 17,000 80,000 30,000 20,000 ________ 4,52,000

Additional Information: (a) Depreciation on Fixed Assets Rs. 20,000. (b) Fixed Assets of the value of Rs. 10,000 sold for Rs. 15,000.

----------------------------------------------XXXXXXXXXXXXXXXXXXXXX------------------------------------------------------------------------------------------------------XXXXXXXXXXXXXXXXXXXXX--------------------------------------------------------Q. 1. List any four contents of a 'Partnership Deed'. 2 Q. 2. Distinguish between 'Reserve Capital' & 'Capital Reserve'. 2 Q. 3. What is meant by 'Private Placement of shares'? 2 Q. 4. State the meaning of "Debentures issued as Collateral Security". 2 Q. 5. The partners of a firm distributed the profits for the year ended 31 2003, Rs. 90,000 In the ratio of 3 : 2 : 1 without providing for the following adjustments: (a) A & B were entitled to a salary of Rs. 1,500 each per annum. (b) B was entitled to a commission of Rs.4,500. (c) B & C had guaranteed .g minimum profit of Rs. 35,000 p.a. to A (d) Profits were to be sbared in the ratio of 3 : 3 : 2. Pass necessary journal entry for the above adjustments in the books of the firm. 3 Q. 6. Pass necessary journal entries in the books of the Company in following cases for redemption of 1,000 12% Debentures of Rs. 10 each issued at par: (a) Debentures redeemed at par by conversion into 12% Pref. Shares of Rs. 100 each. (b) Debentures redeemed at a premium of 10% by conversion into Equity shares issued at par. (c) Debentures redeemed at a premium of 10% by conversion into Equity shares issued at a premium of 25%. 3

Q. 7. (a) R & T are partners in a firm sharing profits in the ratio of 3 : 2. S joins the firm. R surrenders 1/4th of his share and T 1/5th of his share in favour of S. Find the new profit sharing ratio. (b) P, Q & R are equal partners in a firm. Goodwill has been valued at Rs. 36,000; On R's retirement from the firm P and Q agree to share profits in the ratio of 3 : 2. Pass necessary journal entry for treatment of R's share of Goodwill. 2+2 =4 Q. 8. A & B were partners in a firm from 1-4-2001 with capitals of Ra. 60,000 and Rs. 40,000 respectively. They shared profits and losses in the ratio of 3 : 2. They carried on business for 2 years. In the first year they made a profit of Rs. 50,000 and in the 2nd year ending 31 st March, 2003 , they incurred a loss of Rs. 20,000. As the business was no longer profitable they decided to wind up. Creditors on that date were Rs. 20,000. The partners withdrew Rs. 8,000 each per year for their personal expenses. The assets realised Rs. 1,00,000. The expenses on realisation was Rs. 3 , 000. Prepare Realization Account and show your workings clearly. 4 Q. 9. Rohit Ltd. purchased assets from Rohan & Co., for Rs. 3,50,000. A sum of Rs. 75,000 was paid by the means of a bank draft and for the balance due Rohit Ltd. issued Equity shares of Rs. 10 each at a premium of 10%. Journalise the above transactions in the books of the Company. 4 Q. 10. P Ltd. Issued 6,000 12% Debentures of Ra. 100 each at a discount of 6 % to be redeemed as follows 1st year: NIL; 2nd year: NIL; 3rd year : Rs. 4,00,000 ; 4th year Rs. 2,00,000. Show the Discount on Issue of Debentures Account for the period of 4 years in the books 01 the Company. 4 Q. 11. The following balances stood as on 31-3-2003 in the books of a Company 12 % Debentures Debenture Redemption Fund Debenture Redemption Fund Investments represented by: Rs. 4,00,000 9 % Loan Rs, 7,00,000 8 % Govt. Paper Rs. 10,00,000 Rs. 10,00,360 Rs. 3,80,000 Rs. 6,20,360

On the above date, the investments were sold as follows: 9 % Loan at par, and 8 % Govt. Paper at 90 % of nominal value. The Debentures were also redeemed accordingly. Show the necessary ledger accounts. 4 Q. 12. A, B & C were partners in a firm sharing profits in the ratio of 5 : 3 : 2. On 31" March, 2003 their Balance Sheet was as under:

Liabilities CreditorsRreserve Capital Accounts: A's Capital 30,000 B's Capital 25,000 C's Capital 15,000

Rs. 11,000 Buiding 6,000 Machinery Stock Patents 70,000 Debtors ______ Cash 87,000

Assets

Rs. 20,000 30,000 10,000 11,000 8,000 _8,000 87,000

A died on 1st October, 2003 . It was agreed between his executors and the remaining partners that:

(a) Goodwill to be valued at 2% years purchase of tie average profits of the previous four years which were. 2000 : Rs. 13,000; 2001: Rs. 12,000 : 2002 : Rs. 20,000 & 2003 : Rs. 15,000. (b) Patents be valued at Rs. 8,000; Machinery at Rs 28,000; and Buildings at Rs. 25,000. (c) Profit for the year 2003-04 be taken as having accrued at the same rate as that of the previous year. (d) Interest on Capital be provided at 10 % p.a. (e) Half of the amount due to A to be paid immediately to the executor and the balance transferred to his (Executor) Loan A/c. Prepare A's Capital A/c and A's Executor's A/c as on 1st October, 2003. 6 Q. 13. AB Ltd. invited applications for 1,00,000 Equity shares of Ra. 10 each, payable as Rs. 2 on application, Rs. 3 on allotment and the balance on first and final call. Applications were received for 3,00,000 shares and the shares were allotted on a pro rate basis. The excess application money was to be adjusted against allotment only. M, a shareholder, who had applied for 3,000 shares, failed to pay the call money and his shares were accordingly forfeited and reissued at Rs. 8 per share as fully paid. Pass necessary journal entries. 6 Q. 14. A, B and C are partners in a firm sharing profits in the ratio of 2: 1: 1. Their Balance Sheet as on 31" March, 2003 was as under: 6

Liabilities Creditors A's Capital B's Capital C's Capital

Rs. Assets 50,000 Goodwill 80,000 Land & Buildings 80,000 Plant & Machinery 60,000 Motor Car Debtors _______ Cash 2,70,000

Rs. 30,000 80,000 56,000 54,000 48,000 _2,000 2,70,000

The firm was dissolved on that date. The assets realised : Goodwill Rs. 20,000; Land & Buildings Ra. 1,00,000; Plant & Machinery R 50,000; Motor Car Rs. 28,000 and Debtors 50 % of the book value Realisation Expenses were Rs. 2,000. Prepare Realisation Account, Capital Accounts of Partners and Cash Account to close the books of the firm. Or Pass necessary Journal Entries for the following transactions at the time of dissolution of the firm. (a) Loan of Rs. 10,000 advanced by a partner to the firm was refunded. (b) X, a partner takes over an unrecorded asset (Typewriter) at Rs. 300. (c) Undistributed Balance (Debit) of P & L A/c Rs. 30,000. The firm has three partners X, Y& Z. (d) The assets of the firm realised Rs. 1,25,000. (e) Y who undertakes to carry out the dissolution proceedings is paid Rs. 2,000 for the same. (f) Creditors paid Ra. 28,000 in full settlement of their account of Rs. 30,000. Q. 15. The Balance Sheet of A, B & C who are partners in a firm sharing profits according to their capitals as on 31st March, 2003 was as under.8

Liabilities Creditors A's Capital B's Capital C's Capital General Reserve

Rs. Assets 21,000 Buildings 80,000 Machinery 40,000 Stock 40,000 Debtors 20,00 Less: provision for Bad Debts ________ Cash at Bank 2,01,000 20,000 1,000

Rs. 1,00,000 50,000 18,000

19,000 14,000 2,01,000

On that date B decided to retire from the firm and was paid for his share in the firm subject to the following: (a) Buildings to be appreciated by 20%. (b) Provision for Bad Debts to be increased to 15 % on Debtors. (c) Machinery to be depreciated by 20%. (d) Goodwill of the firm is valued at Rs. 72,000 and the retiring partner's share is adjusted through the Capital Accounts of remaining partners. (e) The Capital of the new firm be fixed at Rs. 1,20,000. Prepare Revaluation Account, Capital Accounts of the partners and the Balance Sheet after retirement of B. Or Usha and Asha are partners in a firm sharing profits in the ratio of 3 : 2. TheIr Balance Sheet on 31st March, 2003 was as follows:

Liabilities CreditorsRreserve Capital Accounts: A's Capital 30,000 B's Capital 25,000 C's Capital 15,000

Rs. 27,000 Cash 18,000 Debtors 5,000 Less: Provision 40,000 For bad debts 35,000 Stock Patents __________ 2,01,000 Building

Assets

Rs. 24,000

48,000 4,800

43,000 30,000 7,400 20,400 _________ 1,25,000

Neelam is admitted into the partnership giving her 1/5th share in the profits. Neelam to bring in Rs. 30,000 as her Capital and her share of Goodwill in Cash subject to the following terms: (a) Goodwill of the firm to be valued at Rs. 50,000. (b) Stock to be reduced by 10 % and Provision for Bad Debts be reduced by Rs. 2,400. (c) Patents are valueless. (d) There was a claim against the firm for damages amounting to Rs. 2,000. The claim has now been accepted. Prepare Revaluation Account Partners' Capital Accounts and the Balance Sheet of the new firm. PART B : ANALYSIS OF FINANCIAL STATEMENTS

Q. 16. How are the various activities classified according to AS-3 (Revised) while preparing the Cash Flow Statement? 2 Q. 17. Give two examples each of Non-current assets & Non-current liabilIties. 2 Q. 18. Give the format of the Balance Sheet of a Company (main headings only), as per the requirements of Schedule VI of the Companies Act 1956. 3 Q. 19. Rs. 2,00,000 is the cost of goods sold, inventory turnover 8 times; Stock at the beginning is 1.5 times more than the stock at the end. Calculate the values of Opening & Closing Stocks. 3 Q. 20. (a) The ratio of Current Assets (Rs. 6,00,000) to Current Liabilities (Rs. 4,00,000) is 1 : 5 : 1. The accountant of the firm is Interested in maintaining a Current Ratio of 21 by paying off a part of the Current Liabilities Compute the amount of Current Liabilities that should be paid, so that the Current Ratio at the level of 2 : 1 may be maintained. (b) Compute the Gross Profit Ratio from the following information: Sales = Rs. 4,00,000 and gross profit % on cost 2+2=4 Q. 21. From the following Information of a. Public Company as at 31st March, prepare a Funds Flow Statement showing full working of your calculations:

Liabilities Equity Share Cap. 10% pref. share Capital 12% Debentures Profit & Loss A/C General Reserve Current Liabilities

2003 Rs. 4,00,000 2,00,000 1,00,000 2,00,000 1,50,000 70,000 _________ 11,20,000

2004 Rs.

Assets

2003 Rs 7,10,000 1,25,000 2,70,000 10,000 5,000 ________ 1,74,800

2004 Rs. 6,20,000 80,000 3,40,,000 1,00,000 15,000 25,000 _________ 11,80.000

4,50,000 Fixed Assets 3,00,000 Investment 2,00,000 Current Assets Profit & Loss A/C 1,20,000 Good will 1,10,000 Preliminary Exp. ________ 11,80,000

The Depreciation provided during the year was Rs. 1,35,000. Or X Ltd. made a profit of Rs. 1,00,000 after charging Depreciation of Rs. 20,000 on assets and a transfer to General Reserve of Rs. 30,000 The goodwill written off was Rs. 7,000 and the gain on sale of Machinery was Rs. 3,000. The other information available to you (changes in the value of Current Assets & Current Liabilities) is as follows: At the end of the year Debtors showed an increase of Rs. 6,000, Creditors an increase of Ps 10,000, Prepaid Expenses an Increase of Rs. 200; Bills Receivable a Decrease of Rs. 3000; Bills Payable a Decrease of Rs. 4,000 and Outstanding Expenses a Decrease of Rs. 2,000. Ascertain the cash flow from the operating activitIes. 6

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Q. 1. List any two circumstances under which the fixed capital of partners may change. 2 Q. 2. Distinguish between 'Over Subscription' and 'Under Subscription'. 2 Q. 3. What is meant by forfeiture of shares? 2 Q. 4. State the meaning of 'Non Convertible Debentures' 2 Q. 5. The partners of a firm distributed the profits for the year ended 31st March, 2003 , Rs. 1,40,000 in the ratio of 2 : 2 : 1 without providing for the following adjustments: (a) A and B were entitled to a salary of Rs. 1,500 per quarter. (b) C was entitled to a commission of Rs. 8,000. (c) A and C had guaranteed a minimum profit of Rs. 50,000 p.a. to B. (d) Profits were to be shared in the ratio of 3 : 3 : 2. Pass necessary journal entry for the above adjustments in the books of the firm. 3 Q. 6. Pass necessary journal entries in the books of the company in the following cases for redemption of 2,000 12% Debentures of Rs. 10 each issued at par: 3 (a) Debentures redeemed at par by conversion into 10% preference shares of Rs.50 each. (b) Debentures redeemed at a premium of 5% by conversion into equity shares issued t par. Q. 7. (a) A and B are partners ins firm sharing profits in the ratio of 5 : 3. C joins the firm. A surrenders 1/4th of his share a B 1/5 th of his share in favour of C. Find the new profit sharing ratio. (b) M, N and 0 who are partners in a firm share profits in the ratio of 3 : 2 : 1. Goodwill has been valued at Rs. 60,000. On N's retirement M and O agree to share profits equally. Pass necessary journal catty toe treatment of N's share of goodwill. 2+2=4 Q. 8. A, B and C were partners in a firm sharing profits in the ratio of 4:3:3. On 1.403 they decided to dissolve the firm. On that date A's capital was Rs 1,25,000, B's capital was Rs. 45,000 and C's capital was Rs. 15,000 (Dr.). The creditors amounted to Rs. 23,150 and cash in hand was Rs. 4,520.The assets realised Rs. 1,44,910 and the expenses of dissolution were Rs. 1,860. Prepare Realization Account and show your working clearly. 4 Q. 9. Ram & Co. purchased machinery from Mona & Co. for Ps. 4,00,000. A sum of Rs. 1,75,000 was paid by the means of a bank draft and for the balance due Ram & Co. issued equity shares of P.s. 10 each at a discount of 10%. Journalise the above transactions in the books of the company. 4 Q. 10. Maneesh Ltd. issued 10,000 12% debentures of Rs. 100 each at a discount of 6% to be redeemed a follows: 1st Year: Nil; 2nd Year : Rs. 5,00,000; 3rd Year : NIl; 4th Year: Rs. 5,00,000. Show the Discount on issue of Debentures Account for the period of 4 years. 4 Q. 11. The following balances stood as on 31.3.03 in the books of a company: 8% Debentures Debentures Redemption Fund Debentures Redemption Fund Investments represented by: Rs. 6,00,000 9% Loan Rs. 15,00,000 8% Government Paper Rs. 20,00,000 Rs. 20,00,360 Rs. 5,40,000 Rs. 14,60,360

On the above date, the Investments were sold as follows: 8% Government Paper at 90% of nominal value, and 9% loan at par, The Debentures were also redeemed accordingly. Show the necessary ledger accounts. 4 PART B - ANALYSIS OF FINANCIAL STATEMENTS Q. 17. Give any two examples each of Current Asset and Current Liabilities. 2 Q. 19. Rs. 2,40,000 is the Cost of goods sold, Inventory turnovers times; Stock at the beginning is 1.5 times more than the Stock at the end. Calculate the values of Opening and Closing Stock. 3 Q. 20. (a) The ratio of Current Asset (Rs. 3,00,000) to Current Liabilities (Rs. 2,00,000) is 1.5 : 1. The accountant of the firm is interested in maintaining a Current Ratio of 2 : 1, by paying off a part of the Current Liabilities. Compute the amount of Current Liabilities that should be paid, so that the Current Ratio at the level of 2 : 1, may be maintained. (b) Compute the Gross Profit Ratio from the following Information: Sales Rs. 6,00,000; Gross Profit 25% on cost. 2+2 Q. 21. From the following Information of a company as at 31st March, 2003 , prepare a Funds Flow Statement showing full working of your calculations: 6

Liabilities Equity Share Cap. 10% pref. share Capital 12% Debentures Profit & Loss A/C General Reserve Current Liabilities

2003 Rs. 4,00,000 2,00,000 1,00,000 2,00,000 1,50,000 70,000 _________ 11,20,000

2002 Rs.

Assets

2003 Rs 7,10,000 1,25,000 2,70,000 10,000 5,000 ________ 11,20,800

2002 Rs. 6,20,000 80,000 3,40,,000 1,00,000 15,000 25,000 _________ 11,80.000

4,50,000 Fixed Assets 3,00,000 Investment 2,00,000 Current Assets Profit & Loss A/C 1,20,000 Good will 1,10,000 Preliminary Exp. ________ 11,80,000

The Depreciation provided during the year was Rs. 1,25,000. Or X Ltd. made a profit of Rs. 1,20,000 after charging depreciation of 20,000 on assets and a transfer to General Reserve of Rs. 30,000. The goodwill written off was Rs. 7,000 and the gain on sale of machinery was Rs. 3,000. The other information available to you is (changes in the value of Current Assets and Current Liabilities) at the end of the year: Debtors showed an increase of Rs. 6,000; Creditors an increase of Rs. 10,000; Prepaid Expenses an increase of Rs. 200; Bills Receivable a decrease of Rs. 3,000; Bills Payable a decrease of Rs. 4,000 and Outstanding Expenses a decrease of Rs. 2,000. Ascertain the cash flow from the operating activities.

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PART A - PARTNERSHIP AND COMPANY ACCOUNT Q. 1. What is meant by partnership' 2 Q. 2. What is meant Reserve capital? 2 Q. 3. State any two purposes for which balance to the credit of security premium account can be used. 2 Q. 4. On 15.2.2004 'A' LTD invited applications for issue of 1,00,000 9% debentures of Rs. 100 each at a discount of 6%, redeemable at par after 3 years. The full amount was payable on application and the debentures were Issued on 15.3.2004. Pass the journal entries for the above transactions. 2 Q. 5. X Ltd. purchased assets of Y ltd. as under: Plant and Machinery Land and Building Rs. 8,00,000 Rs. 72,00,000

The purchase consideration was Rs. 80,00,000. Rs. 20,00,000 were paid through bank and the remaining by issue of 6% debentures of Rs. 100 each at a premium of 20%. Pass necessary journal entries in the books of X Ltd. 3 Q. 6. A and B are partners us firm sharing profits in the ratio of 2; 1. On 1-4-2002 they decide to admit C for 1/5 share in profits with a guaranteed amount of Rs. 25,000 per annum A undertook to meet the liability arising out of the guaranteed amount to C The firm earned a profit of Es. 75,000 for the year ended March 31,2003. Perpare Profit and Loss Appropriation Account. 3 Q. 7. X and Y are partners in a firm sharing profits in the ratio of 5:3. On March 1, 2004 they admitted Z as a new partner. The new profit sharing ratio will be 4 : 3 : 2. Z brought in Rs. 1,00,000 in cash as his share of capital but could not bring any amount for goodwill in cash. The firm's goodwill on Vs admission was valued at Rs. 1,80,000. At the time of Z's admission goodwill existed hi the books of the firm at Rs. 2,40,000. Pass necessary journal entries in the books of the firm on Vs admission. Show your workings clearly. 4 Q. 8. P and Q are partners in a firm sharing profits in the ratio of 3 : 2. On 1-1-2004 their capital balances stood at Rs. 15,000 and Rs. 20,000 respectively. The books also showed a P & L (Dr balance) of Rs. 30,000. The firm had taken a Joint Life Policy in the names of the partners for Rs. 3,00,000. The annual permium of Rs. 15,000 was payable on 15th February each year. The surrender value of the policy on 1. 1.2004 was Rs. 90,000. The firm was dissolved on 1.1.2004 and the Joint Life Policy surrendered. The insurance company paid Rs. 1,00,000 including bonus. Show the capital accounts of the partners, giving effect to the above. 4 Q. 9. W Ltd. Is registered with an authorised capital of Rs. 10,00,000 divided into 1,00,000 equity shares of Rs. 10 each. The company offered 80,000 shares for subscription to the public, out of which 75,000 shares were subscribed for Rs. 6 per share were called and received except a call of Rs. 2 per share on 1000 shares Show the share capital of the company in Its Balance Sheets as per the provisions of Schedule VI Part I of the Companies Act 1956. 4 Q. 10. On 1. 3.2003 G Ltd. had Rs. 8,00,000 9% debentures due for redemption. The company had a balance of Rs. 3,40,000 in its Debenture Redemption Reserve Account. Pass necessary journal entries for redemption of debentures. 4

Q. 11. On 1.4. 1999 A Ltd. issued2000 7% debentures of Rs. 100 each at a discount of 10% redeemable at par after 4 years by converting them into equity shares of Rs. 100 each issued at a permium of 25%. Pass necessary journal entries for the issue and redemption of debentures. 4 Q. 12. A, B and C were partners In a firm sharing profits in the ratio of 3 : 2 : 1. The Balance Sheet as on 31.3.2003 was as follows:

Liabilities Creditors Reserves A's Capital B's Capital C's Capital

Rs. 4.000 Building

Assets

Rs. 20,000 16,000 5,100 6,000 _6,9000 54,000

6,000 Plant and machinery 24,000 Stock 12,000 Debtors _8,000 Cash at bank 54,000

A died on 30.9.2003. Under the partnership agreement the executors of a deceased partner were entitled to: (a) Amount standing to the credit of partner's capital account. (b) Interest on capital at 12% per annum. (c) Share of goodwill ofl the basis of four years purchase of last three years average profit. (d) Share of profit from the closing of the last financial year to the date of death on the basis of last year's profit. Profits for the year 2001,2002 and 2003 Were Rs. 8,000, Rs. 12,000 and Rs. 7,000 respectively. Prepare A's Capital account to be rendered to his executors. 6 Q. 13. Mohan, Sohan and Rohan were partners in a firm sharing profits in the ratio of 2 : 2: 1. On 28.2.2004 their firm was dissolved. The Balance Sheet of the firm on the date of dissolution was as following:

Liabilities Creditors Mohan's Capital Sohan's Capital

Rs. 80,000 Cash

Assets

Rs. 7,000 1,30,000 23,000 _______ 54,000

75,000 Sundry Assets 5,000 Rohan's Capital _______ 1,60,000

Sundry Assets were taken over by Rohan for Rs. 65,000 and Mohan too over the Creditors for Rs. 75,000. Expenses of dissolution paid by Sohan were Rs. 5,000. Prepare Realisation Account, Partner's Capital Accounts and Cash Account. 6 Q. 14. (a) X Ltd. forfeited 1,000 Equity shares of Rs. 10 each Issued at a premium of Rs. 3 per share for the nonpayment of final call of Rs. 6 (Including premium) per share, The forfeited shares were re-Issued as fully paid up for Rs. 7 per share. Pass necessary Journal entries in the books of the company. 2 (b) V Ltd. forfeited 80 Equity shares of Rs. 10 each issued at a discount of 10% for the non-payment of first and final call of Rs. 3 per share. The forfeited shares were re-issued at Rs.12 per share as fully paid up. Pass necessary journal entries in the books of the company. 3 (c) Z Ltd. Issued Equity shares of Rs. 100 each at a permium of Rs. 10 per share for the purchase of furniture of Rs.

99,000. Pass necessary Journal entry for issue of shares. 1 Q. 15. A and B are partners in a firm sharing profits in the ratio of 2 : 1. C is admitted into the firm with 1/4th share in profits. He will bring Rs. 30,000 as his capital. The Balance Sheet of A and B as on 31.3.2002 was as under:

Liabilities Creditors Bills Reserve General Reserve A's Capital B's Capital

Rs. 8,000 Cash 4,000 Debtors 6,000 Stock 52,000 Furniture 30,000 Machinery _________ Building 1,00,000

Assets

Rs. 12,000 8,000 10,000 5,000 25,000 _40,000 1,00,000

Other terms of the agreement are as under: (a) C will bring in Rs. 12,000 as his share of goodwill. (b) Building was valued at Rs. 45,000 and Machinery at Rs. 23,000. (c) A provision for bad debts is to be created @6% on debtors. Prepare Revaluation Account, Partner's Capital Accounts and the Balance Sheet of the new firm. 8 Or X, Y and Z were partners in a firm sharing profits in the ratio of 2 : 2: 1. Their Balance Sheet on 31.3.2003 was as follows:

Liabilities Creditors Reserve X's Capital Y's Capital Z's Capital

Rs. Assets 49,000 Cash 18,500 Debtors 82,000 Stock 60,000 Building 75,000 Patents 2,85,000

Rs. 8,000 19,000 42,000 2,07,000 9,000 2,85,000

Y retired on 31.3.2003 on the following terms: (i) Goodwill of the firm was valued at Rs. 70,000, and was not to appear in the books. (ii) Bad debts amounting to Rs. 2,000 were to be written off. (iii) Patents were considered as valueless. Prepare Revaluation Account, Partner's Capital Accounts and the Balance Sheet of X and Z after V's retirement. PART B - ANALYSIS OF FINANCIAL STATEMENTS Q. 16. What is meant by 'Funds'? 2 Q. 17. State any two objectives of preparing a 'Cash Flow Statement'. 2

Q. 18. State any three limitations of Analysis of Financial Statements. 3 Q. 19. Prepare a common size Balance Sheet and comment of the financial position of A Ltd. and B Ltd. The Balance Sheets of A Ltd. and B Ltd. as at3I .3.2003 are given below: 3

Liabilities Share Capital Reserves and Surplus Current Liabilities

A Ltd. Rs. 6,00,000 3,00,000 1,00,000 10,00,000

A Ltd. Rs. Assets 8,00,000 Fixed Assets 2,50,000 Current Assets 1,50,000 12,00,000

A Ltd. Rs. 4,00,000 6,00,000 ________ 10,00,000

A Ltd. Rs. 7,00,000 5,00,000 ________ 12,00,000

Q. 20. Calculate any two of the following ratios from the given information: 4 (a) Operating ratio (b) Stock turnover ratio (c) Proprietary ratio Information: Net sales Rs. 3,75,000; Cost of Goods sold Rs. 1, 08,500;. Administrative expenses Rs. 42,000; Selling expenses Rs. 47,500; Share capital Rs. 8,00,000; Reserves Rs. 3,50,000; Long term loans Rs. 8,20,000; Fixed assets (Net) Rs. 4,62,000; investments Rs. 2,42,500; Q.21. Following are the Balance Sheets of Z Ltd. as at 31st March, 2002 and 2003:

Liabilities Equity Share Cap. Reserves 8% Debentures Accounts Payable Outstanding ExpeProvisions

2002 Rs. 10,00,000 8.10,000 4,00,000 3,20,000 20,000 20,000 _________ 25,70,000

2003 Rs. Assets 15,00,000 Land 10,15,000 Building 6,00,000 Accumulated 2,90,000 Depreciation 65,000 Inventory 30,000 Accounts Receivable Cash _________ Preliminary Expenses 35,00,000

2002 Rs. 9,00,000 16,50,000 (4,00,000) 2,10,000 1,70,000 25,000 15,000 25,70,000

2002 Rs. 11,00,000 26,00,000 (7,00,000) 2,15,000 1,85,000 90,000 10,000 35,00,000

Additional Information: Dividend Rs. 30,000 was - during the year. Prepare Schedule of Changes in Working Capital, compute Funds from Operations and prepare Statement of Changes in Financial Position. 6 Or On March 31st, 2003 Ramesh and Co. indicated a profit of Rs. 1,25,000, after considering the following: Rs. Depreciation on buildings Depreciation on plant and machinery Amortization of goodwill Gain on sale of machinery 25,000 45,000 20,000

10,000 The current assets and current liabilities at the beginning and the end of the year are: 1-4-2002 Rs. 35,000 75,000 18,000 30,000 10,000 60,000 31-2-2003 Rs. 45,000 69,000 30,000 32,000 5,000 35,000

Accounts Receivable Stock on hand Cash in hand Accounts payable Expenses payable Bank overdraft Ascertain the net cash (cash flow) from operating activities.

----------------------------------------------XXXXXXXXXXXXXXXXXXXXX------------------------------------------------------------------------------------------------------XXXXXXXXXXXXXXXXXXXXX--------------------------------------------------------PART A: PARTNERSHIP ANDCOMPANY ACCOUNT Q. 1. Distinguish between fixed and fluctuating capital. 2 Q. 2. What is meant by reserve capital? 2 Q. 3. State the meaning of calls-in-advance. 2 Q. 4. What is meant by debenture? 2 Q. 5. A Ltd. took over assets of Rs. 10,00,000 and creditors of RS. 1,00000 from B Ltd. and issued 6% debentures of Rs. 100 each at a pr of 25% as purchase Consideration. Pass necessary journal entries in the books of A Ltd. 3 Q. 6. A, B and Care partners in a firm with capitals of Rs. 40,000, Rs. 60,000 and Rs. 80,000 respectively. After the accounts of the firm for the year have been closed it is discovered that interest at the rate of 8% p.a. as provided in the partnership agreement has not been credited to the capital accounts of the partners before distribution of profits. It is decided to make an adjustment entry at the beginning of the next year. Pass the necessary journal entry. Q. 7. X and Y were partners in a firm in sharing profits in the ratio of 3 : 2. On 10.3.2004 they admitted Z as a new partner in the firm for 3/13 share in the profits. The new profit sharing ratio will be 5 : 5 : 3.Z contributed the following assets towards his capital and for his share of goodwill (premium): Stock RS. 40,000; Debtors Rs. 60,000; Land Rs. 1,00,000 and Plant and Machinery Rs. 60,000. On the date of admission of Z the goodwill of the firm was valued at Rs. 5,20,000, which Is not appear in the books. Pass necessary journal entries in the books of the firm on Z's admission. Show your calculations clearly. 4 Q. 8. L and M were partners in a firm sharing profits in the ratio of4:3. The firm was dissolved on 28.2.2004. Pass necessary journal entries for the following transactions: 4 (i) Debtors Rs.20,000 were taken over by L for R. 18,000.

(ii) Creditors Rs. 15,000 were paid at a discount of 5%. (iii) Expenses of dissolution Rs. 1,000 were paid by M. (iv) Loss on realisation was Rs. 7,000 Q. 9. X Ltd. forfeited 750 shares of Rs. 100 each issued at a discount of 10% for the non-payment of the first call of Rs. 20 per share. The final call of Rs. 30 per share was not called. Out of the forfeited shares 500 shares were reissued as fully paid for Rs. 20,000. Pass necessary journalentries. 4 Q. 10. A Ltd. issued 1,00,000 9% debentures of Rs. 100 each at a discount of 6%, redeemable Ma premium of 5% after 3 years payable as: Rs. 50 on application and Rs. 44 on allotment. Pass necessary journal entries for issue of debentures. 4 Q. 11. AH Ltd. issued Rs. 20,00,000; 9% debentures of Rs. 100 each at a discount of 10% redeemable after five years by converting them into equity shares of Rs. 10 each. Pass necessary journal entries for the issue and redemption of debentures. 4 Q. 12. X, V and Z were partners in a firm sharing profits in the ratio of 3:2: 1. The firm closes its accounts on 31st March every year. X died on 30-9-2004 . On that date credit balance in his capital account was Rs. 30,000. The firm had general reserve of Rs. 16,000 on that date. The partnership deed provided that on the death of a partner: (a) Interest on capital at the rate of 10% per annum shall be allowed. (b) Goodwill will be calculated on the basis of 3 years purchase of the four years average profits which were as follows: Profits for the years ending 31st March 2003 ,2002,2001 and 2000 were Rs. 14,000, Rs. 16,000, Rs. 20,000 and Rs. 10,000 respectively. (c) The deceased partner's share of profit upto the date of death will be calculated on the basis of last year's profits. Prepare X's capital account to be shown to his executors. Q. 13. Following is the Balance Sheet of Anju and Manju who are partners in a firm sharing profits in the ratio of 3 : 2, as at 31.3.2003:

Liabilities Creditors General reserve Anju's Capital Manju's Capital

Rs.

Assets

Rs. 21,000 3,000

31,500 Plant and machinery 1,250 Stock 5,000 Debtors 10,000 4,000 Less: Provision for _500 bad debts _________ Bank Profit and loss account 41,750

9,500 5,750 2,500 41,750

The firm was dissolved on 31.3.2003. Plant and machinery realised Rs. 16,000 and stock Rs. 2,500. Rs. 9,000 were collected from the debtors. Creditors were paid Rs. 30,000 in settlement. Prepare Realisation Account, Capital Accounts of Anju and Manju and Bank Account to close the books of the firm. Q. 14. X Ltd. invited applications for the issue of 10,00,000 equity shares of Rs. 10 each payable as follows:

On application and allotment On 1st call On second and final call

Rs. 3 per share Rs. 4 per share Rs. 3 per share

Applications for 15,00,000 shares were received and pro-rata allotment was made to al! the applicants. Excess application money was adjusted on the sums due on first call. When the first call was made one shareholder who had applied for 1 5,000 shares did not pay the first call money. Pass necessary journal entries in the books of the company. 6 Q. 15. K, L and M were partners in a firm sharing profits in the ratio of 5 : 3 : 2. On 31.3.2003 the Balance Sheet of the firm was as follows:

Liabilities Creditors K's Capital L's capital M's capital

Amount Rs. 30,000 Bank 40,000 Debtors

Assets

Amount Rs. 20,000 14,000 1,00,400 3,600 1.38.000

16,000 2,000

36,000 Less: provision for 32.000 bad debts

________ Building 1,38,000 Profit and Loss Account

L retired from the firm on the following terms: (a) The new profit sharing ratio between K and M will be 2 : 1. (b) Goodwill of the firm is valued at Rs. 72,000, which is not to be shown in the books. (c) Provision for bad debts is to be made at the rate of 10% on debtors. (d) Creditors of Rs. 4,000 will not be claimed. Prepare Revaluation Account, Partners' Capital Accounts and Balance Sheet of K and M after L's retirement. Or A and B are partners in a firm sharing profits in the ratio of 2 :1. Their Balance Sheet as at 31.3.2003. was as follows:

Liabilities Bank Creditors A's capital B's capital

Amount Rs. Assets 60,00 Cash 1,00,000 Debtors 1,80,000 Stock 1,70,000 Land and building 5,10,000

Amount Rs. 10,000 1,00,000 2,00,000 2,00,000 5,10,000

On 1.4.2003 C is admitted to the firm for 1/4the share on. the following terms: (a) He will bring in Rs. 1,50,000 as his capital and Rs. 60,000 for his share of goodwill. (b) Land and Building is valued at Rs. 2,50,000 and stock at Rs. 1,85,000. (c) Rs. 5,000 is provided for doubtful debts. Prepare Revaluation Account, Partners' Capital Accounts and Balance Sheet of A, B and C. 8 PART B - ANALYSIS OF FINANCIAL STATEMENTS Q. 16. What is meant by a Cash Flow Statement? 2

Q. 17. State the meaning of 'Funds from Operations'. 2 Q. 18. State any three advantages of analysis of financial statements. 3 Q. 19. Prepare a common size Balance Sheet and comment on the financial position of X Ltd. and Y Ltd. The Balance Sheets of X Ltd. and Y Ltd. as at 31.3.2003 are given below: 3

Liabilities

X Ltd. Rs.

Y Ltd. Assets Rs. . 12,00,000 Fixed Assets 3,50,000 Current Assets 2,50,000 18,00,000

X Ltd. Rs. 10,00,000 5,00,000 ________ 15,00,000

Y Ltd. Rs. 16,00,000 2,00,000 18,00,000 18,00,000

Share and capital Reserves and surplus Current liabilities

9,00,000 4,00,000 2,00,000 15,00,000

Q. 20. Calculate any two of the following ratios from the given information: (a) Gross Profit Ratio (b) Stock Turnover Ratio (c) Proprietary Ratio Information: Net Sales Rs. 4,00,000; Cost of goods sold Rs. 2,00,500; Administrative expenses Rs. 45,000; Selling expenses Rs. 57,000; Share capital Rs. 8,50,000; Reserves and Surplus Rs. 3,00,000;Long-term loans Rs. 8,20,000; Fixed assets (net) Rs. 4,62,000; Investments Rs. 2,42,500; Debtors Rs. 72,000; Opening stock Rs. 2,40,000; Closing stock Rs. 2,10,000 and Bank Balance Rs. 3,00,000. 4 Q. 21. Following are the Balance Sheets of R Ltd. as at 31st March, 2002 and 2003:

Liabilities

2002 Rs.

2003 Assets Rs. . 7,50,000 Land 5,07,500 Building 3,00,000 Accumulated 1,45,000 Depreciation 32,500 Inventory 15,000 Accounts receivable _______ Cash 17,50,000 Pre. Expenses

2002 Rs. 4,50,000 8,25,000 (2,00,000) 1,05,000 1,35,000 12,500 _7,500 13,35,000

2003 Rs. 5,40,000 13,00,000 (3,50,000 1,07,500 1,42,500 5,000 _5,000 17,50,000

Equity share capital Reserves 8% debentures accounts payable outstanding expenses provision for taxation

5,00,000 4,05,000 2,50,000 1,60,000 10,000 10,000 ________ 13,35,000

Additional Information: Dividend Rs. 40,000 was paid during the year. Prepare Schedule of Changes in Working Capital, compute Funds from Operations and prepare Statement of Changes in Financial Position. 6 Or

Monika Ltd. reported at net profit of Rs. 15,000 for the year ending on 31.3.2003 after taking the following into consideration: Rs. 15,000 45,000 20,000 5,000

Depreciation on plant and machinery Depreciation on land and buildings Amortisation of goodwill Loss on sale of machinery

----------------------------------------------XXXXXXXXXXXXXXXXXXXXX------------------------------------------------------------------------------------------------------XXXXXXXXXXXXXXXXXXXXX--------------------------------------------------------PART A - PARTNERSHIP AND COMPANY ACCOUNT Q. 1. What is meant by partnership' 2 Q. 2. What is meant Reserve capital? 2 Q. 3. State any two purposes for which balance to the credit of security premium account can be used. 2 Q. 4. On 15.2.2004 'A' LTD invited applications for issue of 1,00,000 9% debentures of Rs. 100 each at a discount of 6%, redeemable at par after 3 years. The full amount was payable on application and the debentures were Issued on 15.3.2004. Pass the journal entries for the above transactions. 2 Q. 5. X Ltd. purchased assets of Y ltd. as under: Plant and Machinery Land and Building Rs. 8,00,000 Rs. 72,00,000

The purchase consideration was Rs. 80,00,000. Rs. 20,00,000 were paid through bank and the remaining by issue of 6% debentures of Rs. 100 each at a premium of 20%. Pass necessary journal entries in the books of X Ltd. 3 Q. 6. A and B are partners us firm sharing profits in the ratio of 2; 1. On 1-4-2002 they decide to admit C for 1/5 share in profits with a guaranteed amount of Rs. 25,000 per annum A undertook to meet the liability arising out of the guaranteed amount to C The firm earned a profit of Es. 75,000 for the year ended March 31,2003. Perpare Profit and Loss Appropriation Account. 3 Q. 7. X and Y are partners in a firm sharing profits in the ratio of 5:3. On March 1, 2004 they admitted Z as a new partner. The new profit sharing ratio will be 4 : 3 : 2. Z brought in Rs. 1,00,000 in cash as his share of capital but could not bring any amount for goodwill in cash. The firm's goodwill on Vs admission was valued at Rs. 1,80,000. At the time of Z's admission goodwill existed hi the books of the firm at Rs. 2,40,000. Pass necessary journal entries in the books of the firm on Vs admission. Show your workings clearly. 4 Q. 8. P and Q are partners in a firm sharing profits in the ratio of 3 : 2. On 1-1-2004 their capital balances stood at Rs. 15,000 and Rs. 20,000 respectively. The books also showed a P & L (Dr balance) of Rs. 30,000. The firm had taken a Joint Life Policy in the names of the partners for Rs. 3,00,000. The annual permium of Rs. 15,000 was payable on 15th February each year. The surrender value of the policy on 1. 1.2004 was Rs. 90,000. The firm was dissolved on

1.1.2004 and the Joint Life Policy surrendered. The insurance company paid Rs. 1,00,000 including bonus. Show the capital accounts of the partners, giving effect to the above. 4 Q. 9. W Ltd. Is registered with an authorised capital of Rs. 10,00,000 divided into 1,00,000 equity shares of Rs. 10 each. The company offered 80,000 shares for subscription to the public, out of which 75,000 shares were subscribed for Rs. 6 per share were called and received except a call of Rs. 2 per share on 1000 shares Show the share capital of the company in Its Balance Sheets as per the provisions of Schedule VI Part I of the Companies Act 1956. 4 Q. 10. On 1. 3.2003 G Ltd. had Rs. 8,00,000 9% debentures due for redemption. The company had a balance of Rs. 3,40,000 in its Debenture Redemption Reserve Account. Pass necessary journal entries for redemption of debentures. 4 Q. 11. On 1.4. 1999 A Ltd. issued2000 7% debentures of Rs. 100 each at a discount of 10% redeemable at par after 4 years by converting them into equity shares of Rs. 100 each issued at a permium of 25%. Pass necessary journal entries for the issue and redemption of debentures. 4 Q. 12. A, B and C were partners In a firm sharing profits in the ratio of 3 : 2 : 1. The Balance Sheet as on 31.3.2003 was as follows:

Liabilities Creditors Reserves A's Capital B's Capital C's Capital

Rs.

Assets

Rs. 20,000 16,000 5,100 6,000 _6,9000 54,000

4.000 Building 6,000 Plant and machinery 24,000 Stock 12,000 Debtors _8,000 Cash at bank 54,000

A died on 30.9.2003. Under the partnership agreement the executors of a deceased partner were entitled to: (a) Amount standing to the credit of partner's capital account. (b) Interest on capital at 12% per annum. (c) Share of goodwill ofl the basis of four years purchase of last three years average profit. (d) Share of profit from the closing of the last financial year to the date of death on the basis of last year's profit. Profits for the year 2001,2002 and 2003 Were Rs. 8,000, Rs. 12,000 and Rs. 7,000 respectively. Prepare A's Capital account to be rendered to his executors. 6 Q. 13. Mohan, Sohan and Rohan were partners in a firm sharing profits in the ratio of 2 : 2: 1. On 28.2.2004 their firm was dissolved. The Balance Sheet of the firm on the date of dissolution was as following:

Liabilities Creditors Mohan's Capital Sohan's Capital

Rs. 80,000 Cash 75,000 Sundry Assets

Assets

Rs. 7,000 1,30,000 23,000 _______ 54,000

5,000 Rohan's Capital _______ 1,60,000

Sundry Assets were taken over by Rohan for Rs. 65,000 and Mohan too over the Creditors for Rs. 75,000. Expenses of dissolution paid by Sohan were Rs. 5,000. Prepare Realisation Account, Partner's Capital Accounts and Cash Account. 6 Q. 14. (a) X Ltd. forfeited 1,000 Equity shares of Rs. 10 each Issued at a premium of Rs. 3 per share for the nonpayment of final call of Rs. 6 (Including premium) per share, The forfeited shares were re-Issued as fully paid up for Rs. 7 per share. Pass necessary Journal entries in the books of the company. 2 (b) V Ltd. forfeited 80 Equity shares of Rs. 10 each issued at a discount of 10% for the non-payment of first and final call of Rs. 3 per share. The forfeited shares were re-issued at Rs.12 per share as fully paid up. Pass necessary journal entries in the books of the company. 3 (c) Z Ltd. Issued Equity shares of Rs. 100 each at a permium of Rs. 10 per share for the purchase of furniture of Rs. 99,000. Pass necessary Journal entry for issue of shares. 1 Q. 15. A and B are partners in a firm sharing profits in the ratio of 2 : 1. C is admitted into the firm with 1/4th share in profits. He will bring Rs. 30,000 as his capital. The Balance Sheet of A and B as on 31.3.2002 was as under:

Liabilities Creditors Bills Reserve General Reserve A's Capital B's Capital

Rs. 8,000 Cash 4,000 Debtors 6,000 Stock 52,000 Furniture 30,000 Machinery _________ Building 1,00,000

Assets

Rs. 12,000 8,000 10,000 5,000 25,000 _40,000 1,00,000

Other terms of the agreement are as under: (a) C will bring in Rs. 12,000 as his share of goodwill. (b) Building was valued at Rs. 45,000 and Machinery at Rs. 23,000. (c) A provision for bad debts is to be created @6% on debtors. Prepare Revaluation Account, Partner's Capital Accounts and the Balance Sheet of the new firm. 8 Or X, Y and Z were partners in a firm sharing profits in the ratio of 2 : 2: 1. Their Balance Sheet on 31.3.2003 was as follows:

Liabilities Creditors Reserve X's Capital Y's Capital Z's Capital

Rs. Assets 49,000 Cash 18,500 Debtors 82,000 Stock 60,000 Building 75,000 Patents 2,85,000

Rs. 8,000 19,000 42,000 2,07,000 9,000 2,85,000

Y retired on 31.3.2003 on the following terms: (i) Goodwill of the firm was valued at Rs. 70,000, and was not to appear in the books. (ii) Bad debts amounting to Rs. 2,000 were to be written off. (iii) Patents were considered as valueless. Prepare Revaluation Account, Partner's Capital Accounts and the Balance Sheet of X and Z after V's retirement. PART B - ANALYSIS OF FINANCIAL STATEMENTS Q. 16. What is meant by 'Funds'? 2 Q. 17. State any two objectives of preparing a 'Cash Flow Statement'. 2 Q. 18. State any three limitations of Analysis of Financial Statements. 3 Q. 19. Prepare a common size Balance Sheet and comment of the financial position of A Ltd. and B Ltd. The Balance Sheets of A Ltd. and B Ltd. as at3I .3.2003 are given below: 3

Liabilities Share Capital Reserves and Surplus Current Liabilities

A Ltd. Rs. 6,00,000 3,00,000 1,00,000 10,00,000

A Ltd. Rs. Assets 8,00,000 Fixed Assets 2,50,000 Current Assets 1,50,000 12,00,000

A Ltd. Rs. 4,00,000 6,00,000 ________ 10,00,000

A Ltd. Rs. 7,00,000 5,00,000 ________ 12,00,000

Q. 20. Calculate any two of the following ratios from the given information: 4 (a) Operating ratio (b) Stock turnover ratio (c) Proprietary ratio Information: Net sales Rs. 3,75,000; Cost of Goods sold Rs. 1, 08,500;. Administrative expenses Rs. 42,000; Selling expenses Rs. 47,500; Share capital Rs. 8,00,000; Reserves Rs. 3,50,000; Long term loans Rs. 8,20,000; Fixed assets (Net) Rs. 4,62,000; investments Rs. 2,42,500; Q.21. Following are the Balance Sheets of Z Ltd. as at 31st March, 2002 and 2003:

Liabilities Equity Share Cap. Reserves 8% Debentures Accounts Payable Outstanding ExpeProvisions

2002 Rs. 10,00,000 8.10,000 4,00,000 3,20,000 20,000 20,000 _________ 25,70,000

2003 Rs. Assets 15,00,000 Land 10,15,000 Building 6,00,000 Accumulated 2,90,000 Depreciation 65,000 Inventory 30,000 Accounts Receivable Cash _________ Preliminary Expenses 35,00,000

2002 Rs. 9,00,000 16,50,000 (4,00,000) 2,10,000 1,70,000 25,000 15,000 25,70,000

2002 Rs. 11,00,000 26,00,000 (7,00,000) 2,15,000 1,85,000 90,000 10,000 35,00,000

Additional Information: Dividend Rs. 30,000 was - during the year. Prepare Schedule of Changes in Working Capital, compute Funds from Operations and prepare Statement of Changes in Financial Position. 6 Or On March 31st, 2003 Ramesh and Co. indicated a profit of Rs. 1,25,000, after considering the following: Rs. Depreciation on buildings Depreciation on plant and machinery Amortization of goodwill Gain on sale of machinery 25,000 45,000 20,000 10,000

The current assets and current liabilities at the beginning and the end of the year are: 1-4-2002 Rs. 35,000 75,000 18,000 30,000 10,000 60,000 31-2-2003 Rs. 45,000 69,000 30,000 32,000 5,000 35,000

Accounts Receivable Stock on hand Cash in hand Accounts payable Expenses payable Bank overdraft Ascertain the net cash (cash flow) from operating activities.

----------------------------------------------XXXXXXXXXXXXXXXXXXXXX------------------------------------------------------------------------------------------------------XXXXXXXXXXXXXXXXXXXXX--------------------------------------------------------PART A: PARTNERSHIP ANDCOMPANY ACCOUNT Q. 1. Distinguish between fixed and fluctuating capital. 2 Q. 2. What is meant by reserve capital? 2 Q. 3. State the meaning of calls-in-advance. 2 Q. 4. What is meant by debenture? 2 Q. 5. A Ltd. took over assets of Rs. 10,00,000 and creditors of RS. 1,00000 from B Ltd. and issued 6% debentures of Rs. 100 each at a pr of 25% as purchase Consideration. Pass necessary journal entries in the books of A Ltd. 3 Q. 6. A, B and Care partners in a firm with capitals of Rs. 40,000, Rs. 60,000 and Rs. 80,000 respectively. After the accounts of the firm for the year have been closed it is discovered that interest at the rate of 8% p.a. as provided in the partnership agreement has not been credited to the capital accounts of the partners before distribution of profits.

It is decided to make an adjustment entry at the beginning of the next year. Pass the necessary journal entry. Q. 7. X and Y were partners in a firm in sharing profits in the ratio of 3 : 2. On 10.3.2004 they admitted Z as a new partner in the firm for 3/13 share in the profits. The new profit sharing ratio will be 5 : 5 : 3.Z contributed the following assets towards his capital and for his share of goodwill (premium): Stock RS. 40,000; Debtors Rs. 60,000; Land Rs. 1,00,000 and Plant and Machinery Rs. 60,000. On the date of admission of Z the goodwill of the firm was valued at Rs. 5,20,000, which Is not appear in the books. Pass necessary journal entries in the books of the firm on Z's admission. Show your calculations clearly. 4 Q. 8. L and M were partners in a firm sharing profits in the ratio of4:3. The firm was dissolved on 28.2.2004. Pass necessary journal entries for the following transactions: 4 (i) Debtors Rs.20,000 were taken over by L for R. 18,000. (ii) Creditors Rs. 15,000 were paid at a discount of 5%. (iii) Expenses of dissolution Rs. 1,000 were paid by M. (iv) Loss on realisation was Rs. 7,000 Q. 9. X Ltd. forfeited 750 shares of Rs. 100 each issued at a discount of 10% for the non-payment of the first call of Rs. 20 per share. The final call of Rs. 30 per share was not called. Out of the forfeited shares 500 shares were reissued as fully paid for Rs. 20,000. Pass necessary journalentries. 4 Q. 10. A Ltd. issued 1,00,000 9% debentures of Rs. 100 each at a discount of 6%, redeemable Ma premium of 5% after 3 years payable as: Rs. 50 on application and Rs. 44 on allotment. Pass necessary journal entries for issue of debentures. 4 Q. 11. AH Ltd. issued Rs. 20,00,000; 9% debentures of Rs. 100 each at a discount of 10% redeemable after five years by converting them into equity shares of Rs. 10 each. Pass necessary journal entries for the issue and redemption of debentures. 4 Q. 12. X, V and Z were partners in a firm sharing profits in the ratio of 3:2: 1. The firm closes its accounts on 31st March every year. X died on 30-9-2004 . On that date credit balance in his capital account was Rs. 30,000. The firm had general reserve of Rs. 16,000 on that date. The partnership deed provided that on the death of a partner: (a) Interest on capital at the rate of 10% per annum shall be allowed. (b) Goodwill will be calculated on the basis of 3 years purchase of the four years average profits which were as follows: Profits for the years ending 31st March 2003 ,2002,2001 and 2000 were Rs. 14,000, Rs. 16,000, Rs. 20,000 and Rs. 10,000 respectively. (c) The deceased partner's share of profit upto the date of death will be calculated on the basis of last year's profits. Prepare X's capital account to be shown to his executors. Q. 13. Following is the Balance Sheet of Anju and Manju who are partners in a firm sharing profits in the ratio of 3 : 2, as at 31.3.2003:

Liabilities

Rs.

Assets

Rs.

Creditors General reserve Anju's Capital Manju's Capital

31,500 Plant and machinery 1,250 Stock 5,000 Debtors 10,000 4,000 Less: Provision for _500 bad debts _________ Bank Profit and loss account 41,750

21,000 3,000

9,500 5,750 2,500 41,750

The firm was dissolved on 31.3.2003. Plant and machinery realised Rs. 16,000 and stock Rs. 2,500. Rs. 9,000 were collected from the debtors. Creditors were paid Rs. 30,000 in settlement. Prepare Realisation Account, Capital Accounts of Anju and Manju and Bank Account to close the books of the firm. Q. 14. X Ltd. invited applications for the issue of 10,00,000 equity shares of Rs. 10 each payable as follows: On application and allotment On 1st call On second and final call Rs. 3 per share Rs. 4 per share Rs. 3 per share

Applications for 15,00,000 shares were received and pro-rata allotment was made to al! the applicants. Excess application money was adjusted on the sums due on first call. When the first call was made one shareholder who had applied for 1 5,000 shares did not pay the first call money. Pass necessary journal entries in the books of the company. 6 Q. 15. K, L and M were partners in a firm sharing profits in the ratio of 5 : 3 : 2. On 31.3.2003 the Balance Sheet of the firm was as follows:

Liabilities Creditors K's Capital L's capital M's capital

Amount Rs. 30,000 Bank

Assets

Amount Rs. 20,000 16,000 2,000 14,000 1,00,400 3,600 1.38.000

40,000 Debtors 36,000 Less: provision for 32.000 bad debts ________ Building

1,38,000 Profit and Loss Account

L retired from the firm on the following terms: (a) The new profit sharing ratio between K and M will be 2 : 1. (b) Goodwill of the firm is valued at Rs. 72,000, which is not to be shown in the books. (c) Provision for bad debts is to be made at the rate of 10% on debtors. (d) Creditors of Rs. 4,000 will not be claimed. Prepare Revaluation Account, Partners' Capital Accounts and Balance Sheet of K and M after L's retirement. Or A and B are partners in a firm sharing profits in the ratio of 2 :1. Their Balance Sheet as at 31.3.2003. was as follows:

Liabilities

Amount Rs. Assets

Amount Rs.

Bank Creditors A's capital B's capital

60,00 Cash 1,00,000 Debtors 1,80,000 Stock 1,70,000 Land and building 5,10,000

10,000 1,00,000 2,00,000 2,00,000 5,10,000

On 1.4.2003 C is admitted to the firm for 1/4the share on. the following terms: (a) He will bring in Rs. 1,50,000 as his capital and Rs. 60,000 for his share of goodwill. (b) Land and Building is valued at Rs. 2,50,000 and stock at Rs. 1,85,000. (c) Rs. 5,000 is provided for doubtful debts. Prepare Revaluation Account, Partners' Capital Accounts and Balance Sheet of A, B and C. 8 PART B - ANALYSIS OF FINANCIAL STATEMENTS Q. 16. What is meant by a Cash Flow Statement? 2 Q. 17. State the meaning of 'Funds from Operations'. 2 Q. 18. State any three advantages of analysis of financial statements. 3 Q. 19. Prepare a common size Balance Sheet and comment on the financial position of X Ltd. and Y Ltd. The Balance Sheets of X Ltd. and Y Ltd. as at 31.3.2003 are given below: 3

Liabilities

X Ltd. Rs.

Y Ltd. Assets Rs. . 12,00,000 Fixed Assets 3,50,000 Current Assets 2,50,000 18,00,000

X Ltd. Rs. 10,00,000 5,00,000 ________ 15,00,000

Y Ltd. Rs. 16,00,000 2,00,000 18,00,000 18,00,000

Share and capital Reserves and surplus Current liabilities

9,00,000 4,00,000 2,00,000 15,00,000

Q. 20. Calculate any two of the following ratios from the given information: (a) Gross Profit Ratio (b) Stock Turnover Ratio (c) Proprietary Ratio Information: Net Sales Rs. 4,00,000; Cost of goods sold Rs. 2,00,500; Administrative expenses Rs. 45,000; Selling expenses Rs. 57,000; Share capital Rs. 8,50,000; Reserves and Surplus Rs. 3,00,000;Long-term loans Rs. 8,20,000; Fixed assets (net) Rs. 4,62,000; Investments Rs. 2,42,500; Debtors Rs. 72,000; Opening stock Rs. 2,40,000; Closing stock Rs. 2,10,000 and Bank Balance Rs. 3,00,000. 4 Q. 21. Following are the Balance Sheets of R Ltd. as at 31st March, 2002 and 2003:

Liabilities

2002 Rs.

2003 Assets Rs. .

2002 Rs.

2003 Rs.

Equity share capital Reserves 8% debentures accounts payable outstanding expenses provision for taxation

5,00,000 4,05,000 2,50,000 1,60,000 10,000 10,000 ________ 13,35,000

7,50,000 Land 5,07,500 Building 3,00,000 Accumulated 1,45,000 Depreciation 32,500 Inventory 15,000 Accounts receivable _______ Cash 17,50,000 Pre. Expenses

4,50,000 8,25,000 (2,00,000) 1,05,000 1,35,000 12,500 _7,500 13,35,000

5,40,000 13,00,000 (3,50,000 1,07,500 1,42,500 5,000 _5,000 17,50,000

Additional Information: Dividend Rs. 40,000 was paid during the year. Prepare Schedule of Changes in Working Capital, compute Funds from Operations and prepare Statement of Changes in Financial Position. 6 Or Monika Ltd. reported at net profit of Rs. 15,000 for the year ending on 31.3.2003 after taking the following into consideration: Rs. Depreciation on plant and machinery Depreciation on land and buildings Amortisation of goodwill Loss on sale of machinery 15,000 45,000 20,000 5,000