PRE BOARD 1st (2022-23)

Accounts

Time: 3 hour Class: XII M.M.80

This Paper is divided into two Parts.

Attempt all questions from Part -1 and Part –II.
The intended marks for questions or parts of questions are given in brackets [ ].

SECTION A (60 Marks)

(Answer all questions.)
Question 1 [1]
A company forfeits 1000 shares of Rs 10 each. It had received Rs 6000 on these shares.
What is the maximum discount that can be allowed by the company on the reissue of 400
shares?
(a) Rs 4000
(b) Rs 400
(c) Rs 2400
(d) Rs 1600

Question 2 [1]
Which of the following groups not included a company could issue shares for consideration
other than cash?
(a) Issue of shares to promoters
(b) Issue of shares to Underwriters
(c) Issue of shares to Vendors
(d) Issue of shares to the General public for Cash

Question 3 [1]
Bharat Ltd. (a listed NBFC) has 40000, 5% debentures of Rs 100 each due for redemption at
par on 31st March, 2022.
The Debentures Redemption Investment which was purchased on 30st April, 2021, was
realized on the date of redemption at 111% less 1% brokerage, and the debentures were
redeemed.

You are required to calculate the sale price of the Debentures Redemption Investment.
Question 4 [1]

What is the object of the realization account?

(a) Close the books of accounts

(b) To determine the profits or losses on realization of assets and payment of liabilities.
(c) To determine the profits or loss on revaluation of assets and reassessment of liabilities.
(d) A and b

Question 5 [1]

At the time of retirement of a partner, loss on revaluation of assets and reassessment of

liabilities should be debited to…….

(a) All partner’s capital account in their old ratio

(b) Retiring partner’s capital account in his/her sacrificing ratio
(c) Remaining partner’s capital account in their new ratio
(d) None of these

Question 6 [1]

The formula for valuing goodwill under the capitalization of super profits method is;

(a) Super profit made by the firm multiplied by the normal rate of return
(b) Capital Employed by the firm multiplied by the normal rate of return
(c) Capitalised profit of the firm divided by the rate of return
(d) Super profit made by the firm divided by the normal rate of return

Question 7 [1]

A and B are partners in a firm sharing profits and losses in the ratio of 3: 2. They admit C as
a new partner for 1/5 share of profit. Investment Fluctuation reserve Rs 45000.

Book Value of investment Rs 60000. The market value of investments at the time of
admission of ‘C’ Rs 45000. What journal entry will be passed in the books of the firm?

Question 8 [1]

A, B and C are partners in a firm sharing profits and losses in the ratio of 3: 2: 1. C retires
from the firm and his share is purchased by A and B in the ratio of 1: 1.

New Profit sharing ratio between A and B respectively would be:-

(a) 1:1
(b) 2:2
 (c) 7:5
(d) 3:2

Question 9 [1]

P and Q are partners in a firm sharing profits and losses in the ratio of 3 : 2. They admit R as
a new partner for ¼ share of profit.

Workmen Compensation Reserve Rs 35000.

Provision for Workmen Compensation claim Rs 25000. What Journal entry will be passed in
the books of the firm?

Question 10 [1]

The Share of Goodwill of the retiring partner is debited to remaining partners in their…….

(a) Sacrificing Ratio

(b) Gaining Ratio
(c) New Ratio
(d) Old Ratio

Question 11 [3]

Kavi, Dhruv and Parth are partners in a firm sharing profits and losses in the ratio of 3:1:1.

Balance Sheet of Kavi, Dhruv and Parth (extract) As at 31st March, 2022

Liabilities Amt Assets Amt

- - Bank 25000
st
On Kavi’s retirement from the firm on 1 April, 2022, the amount due to him is determined
at Rs 76000. The firm took a sufficient loan from the bank on the mortgage of the firm
Building to pay the amount due to Kavi.

You are required to pass the necessary journal entries to pay the amount due to Kavi.

OR

BHARAT Ltd issued for public subscription 40000 equity shares of Rs 10 each. Application
received for 50000 shares. 40000 shares allotted to 50000 applicants on a pro-rata basis and
Excess application money adjusted with allotment. Amount payable as under:

On application Rs 3 per share,

On allotment Rs 4 per share,

On first and final call Rs 3 per share.

All duly money received.

Pass journal entries in the books of the company.

Question 12 [3]

Reena and Meena are partners in a firm.They admit Teena on 1st April, 2022, for ¼ share in
the profits of the firm. On average, the profit earned by Reena and Meena are Rs 51000.

They average capital employed by the firm is Rs 2,50,000.

The normal rate of return in the industry is 10%.

It is decided to value goodwill on the basis of four years’ purchase of profits in excess of
profits @10% on the money invested.

You are required to:

(i) Calculate the goodwill of the firm.

(ii) Pass the journal entries in the books of the firm if Teena brings into the firm
her share of goodwill in cash.

Or

The Hindustan Limited purchased Building on credit from J.k. Builders Rs 27,00,000 and
issued 10% Debentures of Rs 100 each as purchase consideration. Pass Journal Entries from
the following cases-

(a) If debentures issued at par.

(b) If debentures issued at 10% Discount.
(c) If debentures issued at 25% Premium.

Question 13 [3]

A, B and C were partners sharing profits in the ratio of 6 : 4 :5. On 1st April, 2016, B retired
from the firm and the new profit-sharing ratio between A and C was decided as 11: 4. On B’s
retirement, the goodwill of the firm valued at Rs 360000. Pass journal entry for treatment of
goodwill on B’s retirement.

OR

The net profit of X, Y and Z for the year ended March 31, 2022 was Rs 300000 and the same
was distributed among them in their agreed ratio of 3:1:1. It was subsequently discovered
that the under mentioned transactions were not recorded in the books:

(i) Interest on capital @ 12% p.a.

 (ii) Interest on drawings amounting to X Rs 1900,Rs 1600 and Rs 1500.
(iii) Partner’s Salary: X Rs 2000 per month, Y Rs 36000 p.a.

The capital accounts of partners were fixed as: X Rs 1,00,000, Y Rs 80,000 and Z Rs 60,000.
Record the adjustment entry.

Question 14 [3]

A and B sharing profits and losses in the ratio of 3:2 decided to admit C for 1/4th share. On
this date, their balance sheet disclosed the following items. Pass journal entries in the books
of the firm.

Investment Fluctuation Reserve Rs 80000

Investment (at costs) in Balance sheet Rs 4,00,000

Case(i) If the Market Value of investment is Rs 350000

Case(ii) If the Market Value of investment is Rs 320000.

Case(iii) If the Market Value of investment is Rs 3,00,000

Question 15 [6]

The Balance Sheet of Ravi and Kavi as at 31st March, 2022, was as follows:

Balance Sheet of Rs at 31st March, 2022

Liabilities Rs Assets Rs
Creditors 50000 Cash 14000
Investment Fluctuation 3000 Debtors 47000
Reserve Stock 23000
Capital a/c: Furniture 500
Ravi 35000 Property 20000
Kamal 27500 Investment 11000
115500 115500

The partners shared profits in the ratio of 4 : 1. On that date Shubi is admitted into the
partnership for 1/5 share of profit on the following terms:

1. Shubi brings in Rs 35000 as capital and Rs 15000 as premium for goodwill in cash.
2. The value of the stock is reduced by Rs 3000 while property is appreciated by 20%.
3. Furniture is revalued at Rs 450.
4. A provision for doubtful debts is to be created on sundry debtors at 10%
5. Patents worth Rs 5000 (not mentioned in the balance sheet) is to be taken into account.
 6. Market Value of investment Rs 12000. Prepare Revaluation account.

Question 16 [6]

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

Balance Sheet of Susan, Geeta and Rashi

As at 31st March, 2017

Liabilities Amt Assets Amt

Sundry Creditors 50000 Cash at Bank 70000
Workmen Compensation Re. 25000 Sundry Debtors 65000
Employees Provident Fund 5000 Less- Provision for d/d (5000) 60000
Bank Loan 55000 Goodwill 50000
Capital a/c: Furniture 100000
Susan 220000 Building 380000
Geeta 170000
Rashi 135000 525000

660000 660000

The partners decided to dissolve their partnership on 31st March, 2017.

The following transactions took place at the time of dissolution:

(a) Realization expenses of Rs 2000 were paid by Susan on behalf of the firm.
(b) Geeta took over the goodwill for her own business at Rs 40000.
(c) Building was taken over by Rashi at Rs 300000.
(d) Only 80% of the debtors paid their dues.
(e) Furniture was sold for Rs 97000.
(f) Bank Loan was settled along with interest of Rs 5000.
(g) You are required to prepare the Realization Account.

OR

Harish , Paresh and Mahesh were three partners sharing profits and losses in the ratio of
5:4:1.

Paresh retired on 31st March, 2017. His capital as on 1st April, 2016, was Rs 80000.
 During the year 2016-17, he made drawings of Rs 5000. He was to be charged interest on
drawings of Rs 100.

The partnership deed provides that on the retirement of a partner, he will be entitled to:

i. His share of capital

ii. Interest on Capital @ 10% per annum.
iii. His share of profit in the year of retirement.
iv. His share of goodwill of the firm
v. His share in the profit/ losses on revaluation of assets and liabilities.

Additional information:

(a) Paresh’s share in the profits of the firm for the year 2016-17 was Rs 20000.
(b) Goodwill of the firm was valued at Rs 24000.
(c) The firm suffered a loss of Rs 12000 on the assets and liabilities.
(d) It was decided to transfer the amount due to Paresh to his loan account bearing interest
@6% per annum. The loan was to be repaid in two equal annual installments, the first
installment to be paid on 31st March, 2018.

You are required to prepare:

(i) Paresh’s Capital Account.

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

Question 17 [6]

Jay and Vijay are partners in a firm sharing profits and losses in the ratio of 3: 2. Sanjay is
admitted as a new partner for 1/3 share in the profits. Sanjay contributed the following assets
towards his capital and for his share of goodwill.

Land Rs 90,000; Machinery Rs 90,000; Stock Rs 60,000; Debtors Rs 60000. On the date of
admission, Goodwill of the firm is valued at Rs 5,20,000. Journalize the above transaction
in the books of firm.

Question 18 [10]

Subhash Ltd. Was registered with an authorized capital of Rs 40,00,000 divided into
4,00,000.

Equity Shares of Rs 10 each. The company offered 1,00,000 shares to the public at a
premium of Rs 2 per share, payable as follows:

Rs 3 on application
Rs 6 on allotment (including premium)

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

Question 19 [10]

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

Balance Sheet of Annie and Bonnie

As at 31st March, 2017

Liabilities Amt Assets Amt

Sundry Creditors 21000 Cash at Bank 20000
General Reserve 15000 Sundry Debtors 22000
Capital A/c: Less- Provision for d/d(1000) 21000
Annie 45000 Stock 10000
Bonnie 40000 85000 Plant & Machinery 60000
Goodwill 10000
1,21,000 1,21,000

Carl was to be taken as a partner for ¼ share in the profits of the firm, with effect from 1 st
April, 2017, on the following terms:

(a) Bad debts amounting to Rs 1500 to be written off.

(b) Stock to be taken over by Annie at Rs 12000.
(c) Plant and Machinery to be valued at Rs 50000
(d) Goodwill of the firm to be valued at Rs 20000
(e) Carl to bring in Rs 50000 as his capital. He was unable to bring in cash, his share of
goodwill.
(f) General Reserve not to be distributed. For this it was decided that Carl would
compensate the old partners through his current account.

You are required to:

(i) Pass journal entries on the date of Carl’s admission.

(ii)Prepare the Balance Sheet of the reconstituted firm.

OR

Naresh, Dhruv and Azeem are partners sharing profits in the ratio of 5: 3:7.
Naresh retires from the firm. Dhruv and Azeem decided to share profits in the ratio of 2:3.
The adjusted capital accounts of Dhruv and Azeem at the time of Naresh’s retirement
showed the balances of Rs 33000 and Rs 70500 respectively. The total amount to be paid to
Naresh is Rs 90500 which is paid in cash immediately by the firm, the cash being contributed
by Dhruv and Azeem in such a way that their capitals become proportionate to their new
profit-sharing ratio and the firm maintains a minimum cash balance of Rs 5000 from its
existing balance of Rs 20000.

You are required to pass journal entries to record:

 Payment made to the retiring partner

 Cash brought in by the remaining partners to pay off the retiring partner

SECTION- B

Question- 1 [10]

X and Y are partners share profits in the ratio of 3 :1. Their Balance Sheets as at 31 st March,
2022, was as under:

Liabilities Amt Assets Amt

Outstanding Expenses 5000 Cash 7800
Sundry Creditors 36000 Sundry Debtors 24000
Provision for Doubtful 800 Stock 5000
Debts Fixed Assets 80000
Capital Accounts: 68000 Goodwill 8000
X 31000 P& L A/c 16000
Y 140800 140800

Z admitted into partnership on 1st April, 2022 the following terms:-

(h) Fixed assets are overvalued by 25%.

(i) Provision for doubtful debts should remain at 5% on debtors.
(j) The new profit sharing ratio will be 5:3:2.
(k) Z will pay Rs 20000 as capital and the capital of old partners will be adjusted on the
basis of new partner’s capital and his share in the business, actual cash to be brought in
or withdrawn by old partners, as the case may be.
(l) Goodwill of the firm is valued at Rs 20000.

Prepare journal entries, capital accounts and the opening Balance Sheet of the new firm.

Question -2 [10]
Following is the Balance Sheet of A, B and C as at 31st March, 2015:

Liabilities Amt Assets Amt

Sundry Creditors 18000 Tools 6000
Workmen Compensation 19200 Furniture 48000
Reserve Stock 36000
Capital Accounts: 60000 Debtors 36000
A 30000 Cash at Bank 30000
B 30000 Cash in Hand 1200
C 157200 157200

B died on 30th June, 2015. Under the partnership agreement the executor of B was entitled
to:

(a) Amount standing to the credit of his Capital Account.

(b) Interest on Capital which amounted to Rs 375.
(c) His share of goodwill Rs 21000.
(d) His share of profit from the closing of the last financial year to the date of death which
amounted to Rs 2625.

B’s executor was paid Rs 20400 on 1st July, 2015 and the balance in four equal yearly
instalments starting from 30th June, 2016 with interest @ 6% p.a.

Pass the necessary Journal entries and draw up B’s Account to be rendered to his executor
and B’s Executor’s Account till it is finally paid. The firm closes its book on 31st March
every year.