SOLUTION

SAMPLE QUESTION PAPER - 4

SUBJECT- ACCOUNTANCY (055)
CLASS XII (2024-25)
Part A:- Accounting for Partnership Firms and Companies
1.
(b) 1 : 1 : 1
Explanation:
When old ratio is given and incoming partner's new share is given then old ratio is the sacrificing ratio.
2.
(b) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion
(A).
Explanation:
Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion
(A).
3. (a) called-up value of shares
Explanation:
The company debits the Share Capital Account with the amount called-up up to the date of forfeiture on
shares. It credits the Shares Allotment Amount or Shares Call Account with amount called-up on
forfeited shares but due from the shareholders.
OR
(c) ₹ 25,000 from Securities Premium and ₹ 15,000 from Statement of Profit & Loss (Finance Cost)
Explanation:
₹ 25,000 from Securities Premium and ₹ 15,000 from Statement of Profit & Loss (Finance Cost).
4. (a) In which profit sharing ratio of gaining partners increase
Explanation:
Gaining Ratio is calculated at the time of admission or retirement or death of a partner. It is the excess of
the new ratio over the old ratio of old partners except for a retired or deceased partner. The formula for
gaining ratio:
Gaining Ratio = New Ratio - Old ratio
OR
(d) Veena's Share of Profit ₹ 1,000
Explanation:
Interest on Drawings:
Veena = 50,000 X 10/100 X 6/12 = 2,500
Yuvansh = 40,000 X 10/100 X 6/12 = 2,000
Profit= Interest on drawings - loss
 = 4,500 - 2,500 = 2,000
Profit would be distributed equally. So Veena’s share of profit = 1,000
5.
(c) No interest can be charged
Explanation:
No interest can be charged
6.
(b) Loss on Issue will be debited by ₹ 40,000
Explanation:
Loss on Issue will be debited by ₹ 40,000
Loss on issue of debenture = (4,000× 100) × 10%
Loss on issue of debenture = ₹ 40,000
OR

(c) Issue as collateral securities

Explanation:
Issue as collateral securities
7. (a) Both A and R are true and R is the correct explanation of A.
Explanation:
Both A and R are true and R is the correct explanation of A.
8. (a) Value of the firm’s goodwill × outgoing partner's share of profit
Explanation:
At the time of retirement, the share of goodwill is calculated for the retired or deceased partner as
follows: Value of the firm’s goodwill × His Share of profit
OR

(b) X ₹ 5,400 and Y ₹ 3,600

Explanation:
Share of profit comes to Rs.9000 which is divine in the ratio 3:2 between X and Y.
9. (a) ₹ 2,400
Explanation:
₹ 2,400
10. (a) ₹ 2,100
Explanation:
₹ 2,100
11.
(c) X ₹ 16,000; Y ₹ 8,000
Explanation:
200000x8%=16000
 100000x8%=8000
12. (a) ₹ 18,000
Explanation:
The company debits a certain amount to the share capital at the time of forfeiture of shares which is
always the called up value. And the called-up value is that amount which any company demands from its
shareholders periodically every year.
The share capital is debited because the called up amount which the company was expecting from was
shareholders has not been deposited and thus they have to reduce the capital balance by debiting share
capital account.
Share capital amount can be calculated as under:
Share Capital Amount = Called up value per share × No. of shares Substitute values in the above
equation
Share Capital Amount = ₹ 9 × 2000 shares = ₹ 18,000
The amount debited to share capital is ₹ 18,000.
13.
(c) (a) - (iii), (b) - (i), (c) - (iv), (d) - (ii)
Explanation:
(a) - (iii), (b) - (i), (c) - (iv), (d) - (ii)
14. (a) Nominal Account
Explanation:
Rent paid to a partner is an expense for the business. All expenses and losses are considered as Nominal
account. Rent paid to the partner is a charge against the profit and it will be paid whether there is profit
or loss in the business. Rent paid to the partner is expenses hence charged from P& L A/c.
15.
(c) From the old partners in their new profit sharing ratio
Explanation:
A new partner can acquire his share of profits from the old partners in their old profit sharing ratio or
from one partner or from the old partners equally. But he cannot acquire his share of profit from the old
partners in the new profit sharing ratio because the new profit sharing ratio is fixed only after the
admission of the new partner. New partner only can get his share from only old partner or partners.
OR

(d) ₹ 2,50,000
Explanation:
₹ 2,50,000
Total capital of the firm on the basis of new partner capital = 80,000

1
= 4,00,000
5

Total capital of all partner = 40,000 + 40,000 + 80,000 - 10,000 = 1,50,000

Goodwill = 4,00,000 - 1,50,000 = 2,50,000
16. (a) received from the partner.
Explanation:
received from the partner.
17. Old Ratio of P, Q and R = 1

3
:
1

3
:
1

New Ratio of P, Q and R = 3

7
:
3

7
:
1

Sacrifice or Gain:
7 − 9
P= 1

3
−
3

7
=
21
=
2

21
(Gain)
7 − 9
Q= 1

3
−
3

7
=
21
=
2

21
(Gain)
7 − 3
R= 1

3
−
1

7
=
21
=
4

21
(Sacrifice)
In the books of ....
Journal
Dr. Cr.
Date Particular L.F.
(₹) (₹)
April
P's Capital A/c (2/21 of 42,000) Dr. 4,000
1
Q's Capital A/c (2/21 of 42,000) Dr. 4,000
To R's Capital A/c (4/21 of 42,000)
(R compensated by P and Q for the sacrifice made by him)(Refer 8,000
working Note)
18. CALCULATION OF OPENING CAPITAL
Particulars C (₹) D (₹)
Capitals at the end 7,00,000 6,00,000
Add: Drawings during the year 75,000 50,000
Interest on Drawings 7,500 5,000
Share of Loss for the year 20,000 20,000
8,02,500 6,75,000
Less: Capital Introduced during the year ... 1,00,000
Interest on Capital 15,000 (15,000) 10,000 (1,10,000)
Capitals in the beginning 7,87,500 5,65,000
OR
Books of Ananya, Bhavi and Chandni
Journal
Amount Amount
Date Particulars L.F
(₹) (₹)
 2022 March
Bhavi’s Capital A/c Dr. 11,000
31
To Ananya’s Capital A/c 3,000
To Chandani’s Capital A/c
(Adjustment entry passed for omission of salary to 8,000
partners)
Table Showing Adjustments
Particulars Ananya (₹) Bhavi (₹) Chandni (₹) Firm (₹)
Salary to be credited 18,000 4,000 18,000 40,000
₹ 40,000 to be debited in 3 : 3 : 2 15,000 15,000 10,000 40,000
Difference 3,000 11,000 8,000
Cr. Dr. Cr.
19. X Ltd.
Journal
Date Particulars L.F. (₹) (₹)
2018 Sep
Debenture Interest Account ... Dr. 24,000
30
To Debenture holders Account 21,600
To TDS Payable Account 2,400
(Being Debenture Interest due to debenture holders, TDS deducted
@10%)
" Debenture holders A/c ... Dr. 21,600
TDS Payable A/c ... Dr. 2,400
To Bank A/c 24,000
(Being Payment made to Debenture holders and tax deposited)
2019 Mar
Debenture Interest A/c ... Dr. 24,000
31
To Debenture holders A/c 21,600
To TDS Payable A/c 2,400
(Being Debenture Interest due to debenture holders, TDS @10%)
" Debenture holders A/c ... Dr. 21,600
TDS Payable A/c ... Dr. 2,400
To Bank A/c 24,000
 (Being Payment made to Debenture holders and tax deposited)
" Statement of Profit and Loss ... Dr. 48,000
To Debenture Interest A/c 48,000
(Being Debenture Interest account transferred to Statement of Profit
and Loss)
OR
In the books of Sundram Ltd.
Journal Entries
Date Particulars L.F. Dr.(Rs.) Cr.(Rs.)
Furniture A/c Dr. 3,00,000
To Ravindram Ltd.
3,00,000
(Being furniture purchased)
Ravindram Ltd. Dr. 1,00,000
To Bills Payable A/c
(Being a part payment made by an issue of a promissory note of Rs. 1,00,000
1,00,000)
Ravindram Ltd. Dr. 2,00,000
To Equity Share Capital A/c 1,60,000
To Securities Premium Reserve A/c
(Being the balance of payment made by issue of 16,000 equity shares 40,000
of Rs. 10 each at a premium of 25%)
Calculation Of Amount Of Security Premium Reserve = 16,000* 10* 25% = 40,000
It is noted that securities premium account is shown in the balance sheet under the head reserve and
surplus.
20. i. Goodwill = Super Profit × No. of Years of Purchase
= 20,000 × 3 = ₹ 60,000
ii. Goodwill = Super Profit × 100

Normal Rate of Return

= 20,000 × 100

10
= ₹ 2,00,000
Working Notes:
Average Profit = ₹ 50,000 (given)
Normal Rate of Return
Normal Profit = Capital Employed × 100

= 3,00,000 × 10

100
= ₹ 30,000
Super Profit = Average Profit - Normal Profit
Super Profit= 50,000 - 30,000 = ₹ 20,000.
21. Applied Allotted
Category (I) 1,40,000 1,40,000
Category (II) 60,000 0
Category (III) 4,50,000 3,60,000
Total 6,50,000 5,00,000
Working Note of Category (III)
i. Excess money Received on Application & Allotment
= 4,50,000 shares - 3,60,000 shares
= 90,000 share × ₹ 8
= ₹ 7,20,000
Entire excess of ₹ 7,20,000 will be Adjusted on first & final call
ii. Number of share allotted to Hitesh
= 5,000 × 3,60,000

4,50,000

= 4,000 shares
Excess money received on application and allotment
= (5,000 share - 4,000 shares) × ₹ 8
= ₹ 8,000
Entire excess of ₹ 8,000 will Adjusted on first & final call
Amount not received on first & final call
= (4,000 share× ₹ 6) - ₹ 8,000
= ₹ 24,000 - ₹ 8,000
Not received = ₹ 16,000
Journal Entry
Particulars L.F. Amount (Dr.) Amount (Cr.)
Bank A/c Dr. 52,00,000
To Share Application & Allotment 52,00,000
(Amount received on Application & Allotment)

Share Application & Allotment A/c Dr. 52,00,000

To Share Capital A/c 40,00,000
To Share first & final call A/c 7,20,000
To Bank (6,000 × ₹ 8) 4,80,000
(Amount transferred to share capital)

Share first & final call A/c Dr. 30,00,000

To Share Capital 10,00,000
To Security Premium 20,00,000
(Share first & final call made)

Bank A/c Dr. 22,28,000

To Share first & final call A/c 22,28,000
(Amount received on first & final call)

Share Capital A/c Dr. 60,000

Security Premium A/c Dr. 24,000
To Share forfeiture 48,000
To Share first & final call 36,000
(Kavita Share forfeited)

Share Capital A/c Dr. 40,000

Security Premium A/c Dr. 16,000
To Share forfeiture 40,000
To Share first & final Call 16,000
(Hitesh share forfeited)

Bank A/c Dr. 54,000

Share forfeiture a/c Dr. 6,000
To Share Capital (6,000 × 10) 60,000
(Share reissued at discount)

Share forfeiture A/c Dr. 46,800

To Capital Reserve 46,800
(Amount transfer to Capital Reserve)
Amount Received on First & Final Call:
Particulars Amount (₹)
Share first & final call 30,00,000
Less: Excess amount adjusted (7,20,000)
Less: Amount of Kavita (6,000 × 6) (36,000)
Less: Amount of Hitesh (16,000)
Net amount received 22,28,000
 Amount of forfeiture on 6,000 share
= 48,000+40,000

6,000+4,000
× 6, 000

= ₹ 52,800
Amount transferred to capital reserve
= ₹ 52,800 - ₹ 6,000
= ₹ 46,800
22. Books of Anju, Manju and Sanju
Realisation Account
Dr. Cr.
Amount Amount
Particulars Particulars
₹ ₹
Stock 83,000 Provision for doubtful debts 12,000
Furniture 12,000 Creditors 60,000
Debtors 2,42,000 Loan 15,000
Debtors 2,00,000 Anju’s capital:
Anju capital (creditors) 60,000 Furniture 10,000
Sanju capital (loan) 15,000 Debtors 1,85,000 1,95,000
Bank (realisation
2,200 Manju’s capital:
expenses)
Stock 83,000
Buildings 1,80,000 2,63,000
Sanju’s capital: (remaining debtors less 20% of book
33,600
value)
Loss transferred to:
Anju’s capital 21,360
Manju’s capital 7,120
Sanju’s capital 7,120 35,600
6,14,200 6,14,200
Partners Capital Accounts
Dr. Cr.
Manju Manju
Date Particulars J.F. Anju ₹ Sanju ₹ Date Particulars J.F. Anju ₹ Sanju ₹
₹ ₹
 Realisation
1,95,000 2,63,000 33,600 Balance b/d 2,75,000 1,10,000 1,10,000
(assets)
Realisation Realisation
21,360 7,120 7,120 60,000 - -
(loss) (creditors)
Bank 1,18,640 - 74,280 Realisation - - 15,000
Manju loan
- 20,000
(loan)
Bank - 1,40,120 -
3,35,000 2,70,120 1,15,000 3,35,000 2,70,120 1,15,000
Alternatively, Manju's loan may be first paid through bank account then the amount payable by Manju
on account of debit balance in her capital account. ₹1,60,120 can be corrected form her.
Bank Account
Dr. Cr.
Date 2017 Particulars Amount ₹ Date 2017 Particulars Amount ₹
Balance b/d 55,000 Realisation (expenses) 2,200
Manju’s capital 1,40,120 Anju’s capital 1,18,640
Sanju’s capital 74,280
1,95,120 1,95,120
23. JOURNAL
Date Particulars L.F. Dr. (₹) Cr. (₹)
Bank A/c Dr. 50,000
To Share Application A/c
50,000
(Application money received)

Share Application A/c Dr. 50,000

To Share Capital A/c
50,000
(Application money transferred to Share Capital A/c)

Share Allotment A/c Dr. 50,000

To Share Capital A/c
50,000
(Allotment due)

Bank A/c Dr. 50,000

To Share Allotment A/c
50,000
(Allotment money received)
 Share First Call A/c Dr. 40,000
To Share Capital A/c
40,000
(First call due on 2,000 shares @ ₹ 20 per share)

Bank A/c Dr. 44,000

To Share First Call A/c 38,000
To Calls in Advance A/c (200 × ₹ 30) 6,000
Alternatively*
Bank A/c Dr. 44,000
Calls in Arrears A/c (100 × ₹ 20) Dr. 2,000
To Share First Call A/c 40,000
To Calls in Advance A/c (200 × ₹ 30)
(First Call received on 1,900 shares @ ₹ 20 per share; plus second call 6,000
received in advance on 200 shares @ ₹ 30 per share)
*Alternative entry debiting Calls in Arrears A/c can be passed in all the questions.
BALANCE SHEET OF MESON LTD.
as at ________
Note Current Previous
Particulars
No. year year
I. EQUITY AND LIABILITIES: ₹ ₹
Shareholder’s Funds:
(a) Share Capital 1 1,38,000
Current Liabilities:
Other Current Liabilities 2 6,000
1,44,000
II. ASSETS:
Current Assets:
Cash and Cash Equivalents 3 1,44,000
Notes to Accounts:
₹ ₹
(1) Share Capital
Authorised: 4,00,000
4,000 shares of ₹ 100 each
Issued:
2,000 shares of ₹ 100 each 2,00,000
Subscribed but not Fully Paid Capital:
2,000 shares of ₹ 100 each ₹ 70 called up 1,40,000
Less: Calls in arrears (2,000) 1,38,000
(2) Other Current Liabilities:
Calls in Advance 6,000
(3) Cash and Cash Equivalents:
Cash at Bank 1,44,000
Hint: In this question second call is not made by the directors, hence the entries are to be passed upto
first call only.
OR
Books of Petromax Ltd.
Journal Entries
Date Particulars L.F. Dr.(Rs.) Cr.(Rs.)
Bank A/c Dr. 2,76,000
To Share Application A/c
(Being the application money received on 92,000 shares @ Rs 3 per 2,76,000
share)
Share Application A/c Dr. 2,76,000
To Share capital A/c (50,000× Rs. 3) 1,50,000
To Bank A/c (12,000 × Rs. 3) 36,000
To Share Allotment A/c (30,000× Rs. 3)
90,000
(Being the share application money adjusted)
Share Allotment A/c (50,000 × Rs. 5) Dr. 2,50,000
To Share Capital A/c (50,000× Rs. 3) 1,50,000
To Securities Premium Reserve A/c (50,000 × Rs. 2)
1,00,000
(Being the allotment money due on 50,000 shares)
Bank A/c (W.N. 4) Dr. 1,57,200
Calls-in-Arrears A/c Dr. 6,000
To Share Allotment A/c 1,60,000
To Calls-in-Advance A/c 3,200
(Being the allotment money received except for 1,500 shares of
Date Particulars L.F. Dr.(Rs.) Cr.(Rs.)
Suresh and call money is also received in advance for 800 shares)
Share First Call A/c (50,000 × Rs. 2) Dr. 1,00,000
To Share Capital A/c
1,00,000
(Being the first call money due on 50,000 shares)
Bank A/c Dr. 95,400
Calls-in-Advance A/c (800 × Rs. 2) Dr. 1,600
Calls-in-Arrears A/c (1,500 × Rs. 2) Dr. 3,000
To Share First Call A/c
(Being the first call money received except for 1,500 shares and 1,00,000
calls-in-advance adjusted towards 800 shares on first call money)
Share Final Call A/c Dr. 1,00,000
To Share Capital A/c
1,00,000
(Being the final call money due on 50,000 shares)
Bank A/c Dr. 95,400
Calls-in-Advance A/c Dr. 1,600
Calls-in-Arrears A/c Dr. 3,000
To Share Final Call A/c
(Being the final call money received except for 1,500 shares and 1,00,000
calls-in-advance adjusted towards 800 shares)
Working Notes:
1. Money due from Suresh on Allotment:
i. Number of shares allotted to Suresh = 30,000/40,000 × 2,000 = 1,500 Shares.
ii. Application money paid by Suresh = 2,000 × Rs 3 = Rs 6,000.
iii. Application money required = 1,500 × Rs 3 = Rs 4,500.
iv. Excess application money adjusted on allottment = [(ii) Rs. 6,000 — (iii) Rs. 4,500] = Rs. 1,500.

v. Money due from Suresh on allotment = 1,500 × Rs 5 7,500

Less : Excess application money adjusted (iv) 1,500
Money due from Suresh on allotment 6,000

2. Calculation of Money received on Allotment:

Total amount due on allotment 2,50,000
Less : Excess application money adjusted 90,000
1,60,000
 Calculation of Money received on Allotment:
Less : Money not paid by Suresh (WN 1) 6,000
Money received on Allotment: 1,54,000
3. Calls-in-Advance in case of 800 shares = 800 × Rs. 4 = Rs 3,200
4. Total Money received at the Time of Allotment
= Rs. 1,54,000 (Note 2) + Rs. 3,200 (Note 3) = Rs. 1,57,200
5. The Companies Act 2013 (Sec 52(1)) requires that the amount of premium received on securities to be
credited to Securities Premium Account. Securities Premium is a capital receipt which is shown under
the head Reserve & Surplus on the liability side of the balance sheet.
6. If a shareholder defaults in payment of the call amount due on allotment or on any calls according to
the terms, the amount not received against the amount called is Calls in arrears. The unpaid amount
may or may not be transferred to Calls in arrears account. Company can charge interest on calls in
arrears as per mentioned in articles of association or 6% as per Table F(if articles are silent). The
Directors have right to wave the interest.
24. In the books of the firm
Journal Entries
Debit Credit
Date Particulars L.F.
(₹) (₹)
2023
Revaluation A/c Dr. 14,700
Apr-01
To Typewriter A/c 1,000
To Fixed Assets A/c
(Decrease in value of typewriter and fixed assets transferred to 13,700
Revaluation Account)

Apr-01 Unrecorded stock A/c Dr. 1,000

Investment A/c Dr. 2,000
To Revaluation A/c
(Increase in Unrecorded stock and investment transferred to 3,000
Revaluation Account)

Apr-01 X’s Capital A/c Dr. 7,800

Y’s Capital A/c Dr. 3,900
To Revaluation A/c
(Revaluation loss transferred to old partners X and Y’s Capital 11,700
Account in their old profit sharing ratio)
Apr-01 Reserve Fund A/c Dr. 18,000
To X’s Capital A/c 12,000
To Y’s Capital A/c
(Reserve Fund distributed among old partners in old profit 6,000
sharing ratio)

Apr-01 Cash A/c Dr. 55,000

To Z’s Capital A/c 40,000
To Premium for Goodwill A/c
15,000
(Z brought capital and share of goodwill)

Apr-01 Premium for Goodwill A/c Dr. 15,000

To X’s Capital A/c 10,000
To Y’s Capital A/c
(Premium for Goodwill distributed between X and Y in their 5,000
sacrificing ratio i.e 2 : 1)

Apr-01 X’s Capital A/c Dr. 5,000

Y’s Capital A/c Dr. 2,500
To Cash
7,500
(Half of the Premium for Goodwill withdrawn by X and Y)

Apr-01 X’s Capital A/c Dr. 10,000

To Investments A/c
10,000
(X took over the Investment)

Apr-01 Cash A/c Dr. 5,800

To X’s Capital A/c
5,800
(X’ brought cash to make up deficiency in capital)

Apr-01 Y’s Capital A/c Dr. 26,600

To Cash A/c
26,600
(Y withdrew excess capital after all adjustments)
Cash/Bank Account
Dr. Cr.
Particulars (₹) Particulars (₹)
To Balance b/d 5,000 By X’s Capital A/c 5,000
To Z’s Capital A/c 40,000 By Y’s Capital A/c 2,500
To Premium for Goodwill A/c 15,000 By Y’s Capital A/c 26,600
To X’s Capital A/c 5,800 By Balance c/d 31,700
65,800 65,800
Revaluation Account
Dr. Cr.
Particulars (₹) Particulars (₹)
To Printer A/c (5,000 × 20%) 1,000 By Investment A/c 2,000
To Fixed Assets A/c (1,37,000 × 10%) 13,700 By Unrecorded stock A/c 1,000
By Revaluation Loss transferred to:
X Capital A/c 7,800
Y Capital A/c 3,900
14,700 14,700
Partners’ Capital Accounts
Dr. Cr.
Particulars X Y Z Particulars X Y Z
To Revaluation A/c 7,800 3,900 By Balance b/d 75,000 62,000
To Investment A/c 10,000 By Reserve Fund A/c 12,000 6,000
To Cash A/c 5,000 2,500 By Cash A/c 40,000
To Balance c/d 74,200 66,600 40,000 By Premium for Goodwill A/c 10,000 5,000
97,000 73,000 40,000 97,000 73,000 40,000
To Cash A/c 26,600 By Balance b/d 74,200 66,600 40,000
To Balance c/d 80,000 40,000 40,000 By Cash A/c 5,800
80,000 66,600 40,000 80,000 66,600 40,000
Balance Sheet
as on March 31, 2023 after Z’s admission
Liabilities (₹) Assets (₹)
Cash (5,000+40,000+15,000+5,800-26,600
Sundry Creditors 25,000 31,700
-5,000-2,500)
Capital Account balances: Sundry Debtors 15,000
X 80,000 Stock (10,000+1,000) 11,000
Y 40,000 Printer (₹ 5,000 – ₹ 1,000) 4,000
Z 40,000 1,60,000 Fixed Assets (₹ 1,37,000 - ₹ 13,700) 1,23,300
 1,85,000 1,85,000
Working Notes: 1 Sacrificing Ratio
Old ratio X : Y = 2 : 1
Sacrificing Ratio = 2 : 1
Working Notes: 2 Distribution of Revaluation Loss
Revaluation loss transferred to X's Capital = 11,700 × 2

3
= ₹ 7,800
Revaluation loss transferred to Y's Capital = 11,700 × 1

3
= ₹ 3,900
Working Notes: 3 Distribution of Premium for Goodwill
X will get = 15,000 × 2

3
= ₹ 10,000
Y will get = 15,000 × 1

3
= ₹ 5,000
Working Notes: 4
Total Capital of the firm on the basis of Z's share = 40,000 × 4

1
= ₹ 1,60,000
Total Capital of the firm 1,60,000
Less: Z’s Capital 40,000
Combined Capital of X and Y 1,20,000
X's share of Capital = 1,20,000 × 2

3
= ₹ 80,000
Y's share of Capital = 1,20,000 × 1

3
= ₹ 40,000
OR
Revaluation Account
Amount Amount
Particulars Particulars
(Rs) (Rs)
To Building A/c 1,00,000 By Land A/c 3,20,000
To Furniture A/c 30,000
To Profit transferred to Capital A/cs
L 95,000
M 47,500
N 47,500 1,90,000
3,20,000 3,20,000
======= =======
Partners’ Capital Accounts
L M N L M N
Particulars Amount Amount Amount Particulars Amount Amount Amount
(Rs) ( Rs) ( Rs) ( Rs) ( Rs) ( Rs)
To N's Capital
1,00,000 50,000 By Balance b/d 6,00,000 4,80,000 4,80,000
A/c
To N's Loan
8,37,500 By General Reserve 2,20,000 1,10,000 1,10,000
A/c
To M's Current By Revaluation A/c (
1,20,000 95,000 47,500 47,500
A/c (?) Profit)
To Balance c/d 10,35,000 5,17,500 By L's Capital A/c 1,00,000
- By M's Capital A/c 50,000
By Workmen's
Compensation Fund 1,00,000 50,000 50,000
A/c
By L's Current
1,20,000
A/c(Balancing figure)
11,35,000 6,87,500 8,37,500
11,35,000 6,87,500 8,37,500
======== ======= =======
Balance Sheet
as at 1st April, 2013
Amount Amount
Liabilties Assets
(Rs) ( Rs)
Capital A/cs Land 8,00,000
L 10,35,000 (+) Appreciation 3,20,000 11,20,000
M 5,17,500 15,52,500 Building 6,00,000
Liabilities for Workmen Compensation
1,60,000 (-) Depreciation 1,00,000 5,00,000
Fund
Creditors 2,40,000 Furniture 2,40,000
L's Current Account 1,20,000 (-) Depreciation 30,000 2,10,000
N's Loan Account Debtors 4,00,000
(-) Provision for Doubtful Debts
3,80,000
20,000
Stock 4,40,000
M's Current A/c 1,20,000
Cash 1,40,000
29,10,000 29,10,000
========= =========
Working Notes:
 A partner ceases to be a partner on his retirement or death and as such, the amount of claim of the
retiring partner or the d5ceased partner has to be settled by the firm. The problems that arise at the time
of retirement of a partner from the firm are:
(1) Ascertainment of new profit sharing ratio,
(2) Ascertainment of gaining ratio,
(3) Treatment of goodwill,
(4) Adjustment for revaluation of assets and liabilities,
(5) Adjustment in respect of unrecorded assets and liabilities,
(6) Adjustment in respect of accumulated profits/losses,
(7) Methods of payment to retiring partner.
i. Finn’s goodwill = Rs 6,00,000
N’s share of goodwill = 6,00,000 × = 1,50,000 to be contributed by L and M in gaining ratio i.e.,2 :1;
1

L = 1,50,000 × =Rs 1,00,000; M =1,50,000 × = Rs 50,000

2

3
2

ii. Calculation of Proportionated Capital

L’s capital after all adjustment = 9,15,000
M’s capital after all adjustment = 6,37,500
Total capital of new firm = Rs 15,52,500
L’s new capital = 15,52,500 × = Rs 10,35,000
2

M’s new capital = 15,52,500 × = Rs 5,17,500

1

25. Z's Capital Account

Dr. Cr.
Particulars Amt(Rs) Particulars Amt(Rs)
To Z's Executor's A/c 80,250 By Balance b/d 50,000
By General reserve(24,000 x 1/6) 4,000
By Revaluation A/c(30,000 x 1/6 working notes) 5,000
By X's Capital A/c (20,000 x 3/5 ) 12,000
By Y's Capital A/c (20,000 x 2/5 ) 8,000
By P and L Suspense A/c (working notes X) 1,250
80,250 80,250
Journal
Dr. Cr.
Date Particulars L.F.
(Rs) (Rs)
2008 March
Z's Capital A/c Dr. 80,250
31
To Z's Executor's A/c 80,250
(Being the amount due to Z transferred to Z’s Executor’s A/c
 Dr. Cr.
Date Particulars L.F.
(Rs) (Rs)
on Z’s death)
Z's Executor A/c Dr. 80,250
To Bank A/c
80,250
(Being executor's A/c Settled)
Working Notes:
i. Revaluation Account
Dr. Cr.
Particulars Amt(Rs) Particulars Amt(Rs)
To Building A/c 9,000 By Machinery A/c 34,000
To Profit transferred to Capital A/cs: By Patents A/c 3,300
X (30,000 x 3/6) 15,000
Y (30,000 x 2/6) 10,000
Z (30,000 x 1/6 ) 5,000 30,000
39,000 39,000
ii. Goodwill = 3 x average profit
iii. Average Profit = Total profit / number of years
iv. Total profit = 40, 000 + 40, 000 + 30, 000 + 40, 000 + Rs. 50, 000 = 2, 00, 000.
v. Number of years = 5
vi. So Average Profit = 2,00,000 / 5 = 40,000
vii. Goodwill = 2 x average profit i.e 40000 X 3 = Rs. 1,20,000
Z’s share of Goodwill = 1,20,000 × = Rs. 20,000
1

viii. Z’s share in profit = Average profit × 1

6
×
2

12

ix. Average profit = 50,000 + 40000 / 2 = 45,000

x. Z’s share in profit = Rs. 45,000 × 1

6
×
2

12
= Rs. 1,250
26. JOURNAL OF Y LTD.
Date Particulars L.F. Dr. (₹) Cr. (₹)
2022
Bank A/c Dr. 6,00,000
June 1
To Debentures Application and Allotment A/c
6,00,000
(Application money received for 6,000; 12% Debentures)

Debentures Application and Allotment A/c Dr. 6,00,000

Loss on Issue of Debentures A/c Dr. 42,000
 To 12% Debentures A/c 6,00,000
To Premium on Redemption of Debentures A/c
(Debentures allotted and premium payable on redemption 42,000
accounted)

2023
March Statement of Profit & Loss (Finance Cost) Dr. 42,000
31
To Loss on Issue of Debentures A/c
42,000
(Loss on Issue of Debentures written off)
Notes:
1. Loss on Issue of Debentures is written off in the year debentures are allotted.
2. Loss on Issue of Debentures is written off from Statement of Profit & Loss because the company does
not have balance in Securities Premium.
Dr. LOSS ON ISSUE OF 12% DEBENTURES ACCOUNT Cr.
Date Particulars ₹ Date Particulars ₹
By Statement of Profit &
2022 To Premium on Redemption of 2023 March
42,000 Loss 42,000
June 1 Debentures A/c 31
(Finance Cost)
42,000 42,000
Part B :- Analysis of Financial Statements
27.
(d) Window Dressing
Explanation:
Window Dressing
OR
(a) Postulates
Explanation:
Postulates
28. (a) 15,000
Explanation:
Current Asset/Current Liabilities = 3/1
Current Asset = 3 Current Liabilities
Current Asset – Current Liabilities = 30,000
3 Current Liabilities – Current Liabilities = 30,000
2 Current Liabilities = 30,000
Current Liabilities = 15,000
29.
(b) Cash outflow from investing activities ₹ 4,70,000
Explanation:
To classify this transaction based on cash flow activities:
i. Acquisition of shares is considered an investing activity because it involves the purchase of
financial assets (shares). This results in a cash outflow of ₹ 5,00,000.
ii. Dividend received is considered cash inflow from operating activities (not related to the
acquisition). However, in the context of this specific question, we need to look at the net cash impact
of the share acquisition transaction itself, which is ₹ 5,00,000 minus ₹ 30,000 = ₹ 4,70,000.
Thus, the correct answer is cash outflow from investing activities ₹ 4,70,000, because the net cash used
in the acquisition of shares is an investment-related transaction.
Correct answer: Cash outflow from investing activities ₹ 4,70,000.
OR
(a) only ii
Explanation:
debentures issued against purchase of machinery is non cash transaction
30.
(d) Investing Activity
Explanation:
Sale of shares of other company are part of investment which is now sold by the company. It is sale of
investment, so it will take place in investing activity.

31. [Link]. Items Headings Sub-headings

Non Current Property, Plant and Equipment and Intangible
(i) Patents
Assets Assets - Intangible Assets
Patents being developed by the Non Current Property, Plant and Equipment and ; Intangible
(ii)
Company. Assets Assets - Intangible; Assets under development.
Current Maturities of Long Current
(iii) Short-term Borrowings
term Debts. Liabilities
Computer and related Non-Current Property, Plant and Equipment and Intangible
(iv)
equipment. Assets Assets - Property, Plant and Equipment
(v) Goods acquired for trading Current Assets Inventories
Non Current
(vi) 10% Debentures Long-term Borrowings
Liabilities
Debentures with maturity
Current
(vii) period in current financial Other Current Liabilities
Liabilities
period
32. Net Credit Revenue from operations = Total Revenue from operations – Cash revenue from operations -
Sales Return
= 24,00,000 – 4,60,000 – 20,000 = 19,20,000
Trade Receivables Turnover Ratio = Net Credit Revenue from operations / Average Trade Receivables
6 = 19,20,000 / Average Trade Receivables
Average Trade Receivables = 19,20,000 / 6 = 3,20,000
(Opening Debtors + Closing Debtors + Opening B/R + Closing B/R) / 2 = Average Trade Receivables
(2,50,000 + Closing Debtors + 14,000 + 12,000) / 2 = 3,20,000
Closing Debtors = 6,40,000 – 2,76,000 = 3,64,000
33. HARSH LTD.
COMMON SIZE BALANCE SHEET
as at 31.3.2022 and 31.3.2023
(₹ in Lakhs)
Absolute Percentage of Balance Sheet
Note Amounts Total
Particulars
No. 2022 2023
2022 % 2023 %
₹ ₹
I. EQUITY AND LIABILITIES:
(1) Shareholder's Funds
(a) Share Capital 1 18.00 18.00 45(i) 40(iv)
(b) Reserves & Surplus 4.00 5.40 10(ii) 12(v)
(2) Non-Current Liabilities 14.00 14.40 35(iii) 32(vi)
(3) Current Liabilities 4.00 7.20 10 16
40.00 45.00 100 100
II. ASSETS:
(1) Non-Current Assets
Property, Plant and Equipment and
28.00 30.60 70 68
Intangible Assets
(2) Current Assets 12.00 14.40 30 32
40.00 45.00 100 100
Working Notes:

i. Share Capital: 2022 2023

Equity Share Capital 16.00 16.00
Preference Share Capital 2.00 2.00
 18.00 18.00
ii. All percentages will be calculated on the basis of total of Balance Sheet.
Hence, in 2022 percentages will be based on ₹ 40 Lakhs.
in 2023 percentages will be based on ₹ 45 Lakhs.
Thus,
i. 18

40
× 100 = 45%
ii. 4

40
× 100 = 10%
iii. 14

40
× 100 = 35%
iv. 18

45
× 100 = 40%
v. 5.40

45
× 100 = 12%
vi. 14.40

45
× 100 = 32% and so on.
OR
Mark Ltd.
COMPARATIVE STATEMENT OF PROFIT & LOSS
for the years ended 31st March 2018 and 31st March 2019
Note Absolute Change Percentage Change
Particulars 2017-18 2018-19
No. (Increase or Decrease) (Increase or Decrease)
1 2 3 4 5
A B B-A=C C

A
× 100 = D
₹ ₹ ₹ %
Revenue from
I. 40,00,000 50,00,000 10,00,000 25
operations
Add: Other
II. 2,00,000 2,50,000 50,000 25
income
III. Total Income 42,00,000 52,50,000 10,50,000 25
IV. Less: Expenses
Purchase of stock
30,00,000 40,00,000 10,00,000 33.33
in trade
Changes in
8,00,000 10,00,000 2,00,000 25
inventory
Other Expenses 4,00,000 5,00,000 1,00,000 25
Total Expenses 42,00,000 55,00,000 13,00,000 30.95
Profit Before Tax ____ (2,50,000) (2,50,000) ____
34. CASH FLOW STATEMENT OF XYL LIMITED
for the year ended 31st March 2023
 Particulars ₹ ₹
A. Cash Flows from Operating Activities: 1,55,000
Profit before Tax (Working Note 1)
Adjustments for non-cash and non-operating items:
Add: Depreciation on Plant 10,000
Depreciation on Land and Building 20,000
Goodwill written off 25,000 55,000
2,10,000
Less: Rent Received 10,000
Operating profit before working capital changes 2,00,000
Add: Increase in Current Liabilities:
Trade Payables 32,000
2,32,000
Less: Increase in Current Assets:
Inventory 32,000
Trade Receivables 50,000 (82,000)
Cash generated from operating activities 1,50,000
Less: Income Tax paid (35,000)
Net Cash from operating activities 1,15,000
B. Cash Flows from Investing Activities:
Sale of Land and Building(2) 10,000
Purchase of Plant(3) (1,30,000)
Rent Received 10,000
Net Cash used in investing activities (1,10,000)
C. Cash Flows from Financing Activities:
Issue of share capital 50,000
Payment of proposed dividend (for 2022) (42,000)
Interim dividend paid (20,000)
Net Cash used in financing activities (12,000)
Net Decrease in cash and cash equivalents (7,000)
Add: Cash and cash equivalents in the beginning of the period 25,000
Cash and cash equivalents at the end of the period 18,000
Working Notes:
1. Profit before Tax:
₹
st
Profit & Loss Balance on 31 March, 2023 48,000
st
Less: Profit & Loss Balance on 31 March, 2022 30,000
18,000
Add: Proposed Dividend for 2022 42,000
Interim Dividend paid 20,000
Transfer to General Reserve 30,000
(4)
Provision for Taxation 45,000
1,55,000
There will be no effect of proposed dividend of 2023.

2. Dr. LAND AND BUILDING ACCOUNT Cr.

Particulars ₹ Particulars ₹
To Balance b/d 2,00,000 By Depreciation A/c 20,000
By Bank A/c (Balancing figure, being sale) 10,000
By Balance c/d (Given) 1,70,000
2,00,000 2,00,000

3. Dr. PLANT ACCOUNT Cr.

Particulars ₹ Particulars ₹
To Balance b/d 80,000 By Depreciation A/c (Given) 10,000
To Bank A/c (Balancing figure being purchase) 1,30,000 By Balance c/d (Given) 2,00,000
2,10,000 2,10,000

4. Dr. PROVISION FOR TAX ACCOUNT Cr.

Particulars ₹ Particulars ₹
To Bank A/c (Payment made)
35,000 By Balance b/d (Given) 40,000
(Given)
By Statement of P & L (Balancing figure, being
To Balance c/d (Given) 50,000 45,000
provision made in 2023)
85,000 85,000
5. Rent received is deducted from Profits because it is related to investment in property. It will be shown
as inflow of cash under Investing Activity.