12th Grade First Full Test

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Questions:

Fill up / 1 Marks

3 x 1 = 3

State the interest of trade unions in the analysis of financial statements.

What is the number of major heads which appear for the assets items of company's Balance Sheet?

State the ratio in which the partners share the accumulated profits when there is a change in the profit sharing ratio amongest existing partners.

Generic 8

4 x 8 = 32

P, Q and R are partners sharing profits and losses in the ratio of 3:2:1. Q decided to retire from the firm on 31st March 2018. From the following information, complete revaluation account, partners' capital accounts and balance sheet.
Dr Revaluation Cr

Particulars	Amt (Rs)	Particulars	Amt(Rs)
To Plant and MachineryA/c	48,000	By Furniture and Fixtures A/c	12,300
To Loose Tools A/c	11,500	By Sundry Creditors A/c	6,200
To Land and Building A/c	1,00,000	By.......	..........
	1,59,500		1,59,500

Dr Particular Capital Account Cr

Particular	P(Rs)	Q(Rs)	R(Rs)	Particular	P(Rs)	Q(Rs)	R(Rs)
To...........	........	...........	.......	By Balance b/d	4,00,000	2,00,000	1,00,000
To Advertisement				By Contingency
Suspense A/c	45,000	30,000	15,000	Reserve A/c	60,000	40,000	20,000
To Q's Capital A/c	30,000	-	10,000	By Profit and Loss A/c	30,000	20,000	10,000
To cash A/c	-	13,000	-	By P's Capital A/c	-	30,000	-
To Q's Loan A/c	-	2,10,000	-	By R's Capital A/c	-	10,000	-
To ...........	........	-	......
	4,90,000	3,00,000	1,30,000		4,90,000	3,00,000	1,30,000

Balance Sheet
as at 31st March, 2015

Particulars		Amt(Rs)	Assets	Amt(Rs)
..............		............	Cash in Hand (20,000-13,000)	7,000
Creditors		2,63,800	Cash at Bank	2,500
Bills Payable		1,80,000	Stock	1,18,000
Capital A/cs			Debtors	2,00,000
P	......		Land and Building	4,00,000
R	.......	.......	Plant and Machinery	1,92,000
			Loose Tools	46,000
			Furniture and Fixtures	94,300
			Trademarks	20,00
		........		........

The quick ratio of Sigma Ltd is 1.2 : 1. Its current assets are of Rs.75,000 and current liabilities amount to Rs.40,000. Find the value of inventory.

Dinesh Ltd. invited applications for issuing 10,000 Equity Shares of Rs. 10 each. The amount was payable as follows;
On Application - Rs.1
On Allotment - Rs.2
On First call - Rs.3
On Second and Final Call - Balance.
Issue was fully subscribe. Ram to whom 100 shares were allotted, failed to pay the allotment money and his shares were forfeited immediately after allotment. Shyam to whom 150 shares were allotted, failed to pay the first call. His shares were also forfeited after the first call. After wards the second and final call was made. Mohan to whom 50 shares were allotted at Rs.9 per share fully paid up. Pass the necessary journal entries in the book of Dinesh Ltd.

Singh,Gupta and Lal are partners in a firm sharing profits in the ratio of 3:2:3. They admitted Jain as a new partner. Singh surrendered 1/3rd of his share in favour of Jain. Gupta surrendered 1/4th of his share in favour of Jain and Lal surrendered 1/5th of his share in favour of Jain. Calculate the new profit sharing ratio.

1 Marks

3 x 1 = 3

Give an example of the activity which remains financing activity for every enterprise.

A,T and R were partners in a firm sharing profits in the ratio of 5:6:7 respectively. State the ratio in which the goodwill of the firm amounting to Rs.16,00,000 will be adjusted in the capital accounts of A and T in case of R's death.

10.

How does the factor 'location' after the goodwill of a firm ?

Generic 6

6 x 6 = 36

11.

DLF Ltd issued 20,000, 10% debentures of Rs.100 each on 1st April. 2014. The issue was fully subscribed. According to the terms of issue, interest on the debentures is payable half-yearly on 30th September and 31st March and the tax deducted at source is 10%.
Pass necessary journal entries related to the debenture interest for the half-yearly ending 31st March, 2015 and transfer of interest on debentures of the year to the statement of profit and loss.

12.

A company offers 20,000 shares to the public. The amount payable is as follows
On application Rs 3 per share, on allotment Rs 2 per share, on first call Rs 3 per share and on final call Rs 2 per share, on first cal Rs 3 per share and on
final call Rs 2 per share.
Applications are received for 30,000 shares.
The directors make the allotment as follows
(i) No allotment to applicants for 6,000 shares.
(ii) Rest were allotted on a pro-rata basis.
All calls were duly made and paid except
(i) a, a holder of 200 shares paid both the calls with allotment.
(ii) B, a holder of 400 shares fails to pay both the calls.
(iii) C, a holder of 200 shares fails to pay the second call.
Pass the necessary journal entries to record the above transactions in the company's books.
Identify the values being violated by the company and shareholders.

13.

From the details given below, calculate
(i) Current ratio (ii) Quick ratio
Sundry debtors =Rs.4,00,000, stock =Rs.1,60,000,
marketable securities =Rs.80,000, cash =Rs.1,20,000,
prepaid expenses =Rs.40,000, bills payable =Rs.80,000,
sundry creditors =Rs.1,60,000, debentures =Rs.2,00,000,
expenses payable =Rs.1,60,000,net sales =Rs.20,00,000

14.

A and B are partners sharing the profits and losses in the ratio of 2 : 3 with capital of Rs.12,000 and Rs.6,000 respectively. On 1st October, 2014 A and B granted loans of Rs.24,000 and Rs.12,000 respectively to the firm, the profits before any interest for the year 2014-2015 amounted to Rs.1,260. Show the distribution of profits/losses by preparing profit and loss account.

15.

P, Q and R are partners sharing profit in the ratio of 4/9 : 3/9 : 2/9. Q retires and his capital after making adjustments for reserves and gain (profit) on revaluation stands at Rs.1,39,200. P and R agreed to pay him Rs. 1,50,000 in full settlement of his claim. Record necessary journal entry for adjustment of goodwill if the new profit sharing ratio is decided at 5: 3.

16.

List any two financing activities that result into outflow of cash.

Generic 3

8 x 3 = 24

17.

Ramesh Ltd has 18,000, 10% debentures of Rs 100 each due for redemption on 31st March, 2015. Assuming that the debentures were redeemed out of profits, there was a credit balance of Rs 18,00,000 in surplus, i.e. balance in statement of profit and loss. Pass necessary journal entries.

18.

Vikas Ltd purchased furniture for Rs 30,00,000 from Sambhav Ltd Rs 10,000 were paid by drawing a promissory note in favour of Sambhav Ltd. The balance was paid bu issue of equity shares pf Rs 10 each at a premium of 25%. Pass necessary journal entries in the books of Vikas Ltd. Identify the value shown by the company in issuing shares for consideration other than cash.

19.

At what rate is interest payable on the amount remaining unpaid to the executor of deceased partner?

20.

Gyan Ud issued 10,000, 10% debentures of Rs 100 each on 1st October 2014 to be redeemed on 31st July 2015. How will it be shown in the balance sheet as at 31st March 2015?

21.

P, Q and R are partners and their capitals on 1st April 2014 were: P RS.2,00,000, Q Rs.4,00,000 and R Rs.6,00,000
The Following appropriations are provided
(i) Interest on capital at 10% per annum.
(ii) Interest on drawings at 6% irrespectively of time period
(iii) P as a working partner received a salary of Rs.3,000 per Month
(iv) Q is paid a commission of Rs.8,000.
After providing the above items, remaining profit was rs.90,000 which was distributed by the partners in the ratio of their capitals.The drawings of the partners were: P RS10,000, Q Rs.12,000 and R Rs.16,000. There was no partnership deed in the business. Give necessary adjustment entry.

22.

When a liability is to be discharged by a partner, why is his capital account credited?

23.

Why is sacrificing ratio calculated in case of admission of a partner?

24.

Partners in a firm describe to charge interest on drawings, however, the partnership deed does not provide for charging interest on drawings.State what steps can be taken by the partners so that the firm can charge interest on drawings.

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Answers Key:

Fill up / 1 Marks

3 x 1 = 3

()
Trade unions can judge the profitability of the business enterprises on the basis of analysis of financial statements because trade unions are interested in negotiating wages agreements.

()
Two

()
Old profit sharing ratio.

Generic 8

4 x 8 = 32

Dr Revaluation Account Cr

Particular	Amt(Rs)	Particular		Amt(Rs)
To Plant and MMachinery A/c	48,000	By Furniture and Fixtures A/c		12,300
To Loose Tools A/c	11,500	By Creditors A/c		6,200
To Land an Buildings A/c	1,00,000	By Loss Transferred to
		P's Capital A/c	70,500
		Q's Capital A/c	47,000
		R's Capital A/c	23,500	1,41,000
	1,59,000			1,59,000

Dr Partners' Capital Account Cr

Particulars	P(Rs)	Q(Rs)	R(R)	Particulars	P(Rs)	Q(Rs)	R(Rs)
To Revaluation A/c (Losss)	70,500	47,000	23,500	By Balance b/d	4,00,000	2,00,000	1,00,000
To Advertisement				By Contingency
Suspence A/c	45,000	30,000	15,000	Reserve A/c	60,000	40,000	20,000
To Q's Capital A/c	30,000	-	10,000	By Profit and Loss A/c	30,000	20,000	10,000
To Cash A/c	-	13,000	-	By P's Capital A/c	-	30,000	-
To Q's Loan A/c	-	2,10,000	-	By R's Capital A/c	-	10,000	-
To Balance c/d	3,44,500	-	81,500
	4,90,000	3,00,000	1,30,000		4,90,000	3,00,000	1,30,000

Balance Sheet
as at 31st March, 2015

Liabilities		Amt(Rs)	Assets	Amt(Rs)
Q's Loan @ 6% per annum		2,10,000	Cash in Hand (20,000-13,000)	7,000
Creditors		2,63,800	Cash at Bank	2,500
Bills Payable		1,80,000	Stock	1,18,000
Capital A/cs			Debtors	2,00,000
P	3,44,500		Land and Buildings	4,00,000
R	81,500	4,26,000	Plant and Machinery	1,92,000
			Loose Tools	46,000
			Furniture and Fixtures	94,300
			Trademarks	20,000
		10,79,800		10,79,800

\(Quick\ ratio=\frac { Liquid\ assets }{ Current\ liabilities } \)
\(\) \( \ 1.2=\frac { Liquid\ assets }{ 40,000 } \)
Inventory = Current assets - Liquid assets
= 75,000-48,000=Rs. 27,000

Capital Reserve Rs.550, i.e., Rs.850 or .e., Rs.100+Rs.450+Rs.300 Share Forfeiture-Rs.300 (Loss).
[Hint: Bank A/c: Rs. 10,000 (Application) + Rs.19,800 (Allotment) + Rs.29,250 (1st call) + Rs.38,800 (2nd call) + Rs.2,700 (reissue)]

(i)Calculation of Sacrificing share:
Singh's sacrifice=\({1\over3}of{3\over8}={1\over8};\) Gupta's sacrifice=\({1\over4}of{2\over8}={1\over16}\); Lal's sacrifice=\({1\over5}of{3\over8}={3\over40}\)
(ii)Calculation of new profit sharing ratio:
New share =old Share-Sacrificed share
Singh's new share=\({3\over8}-{1\over8}={3-1\over8}={2\over8};\) Gupta's new share=\({2\over8}-{1\over16}={4-1\over16}={3\over16};\)
Lal's new share=\({3\over8}-{3\over40}={15-3\over40}={12\over40};\)
Jain's new share=\({1\over8}+{1\over16}+{3\over40}={10+5+6\over80}={21\over80}\)
Thus,New Ratio is \({2\over8}:{3\over16}:{12\over40}:{21\over80}={20:15:24:21:\over80}=20:15:24:21\)

1 Marks

3 x 1 = 3

Dividend paid

()
R's share of goodwill will adjusted to A and T in their gain ratio 5:6.

10.

()
Favourable location of a business will attract more customers, result in higher sales and therefore, has leads to higher profits and therefore, has more value of goodwill.

Generic 6

6 x 6 = 36

11.

Debenture interest for half year = Rs.1,00,000;
TDS for half year = Rs.10,000

12.

Amount received at allotment = Rs 29,000
Amount received at first call = Rs 58,200
Amount received at second call = Rs 38,400
Balane sheet total = Rs 1,97,600

13.

Current ratio = 2: 1; Quick ratio = 1.5: 1

14.

Share of profit: A = Rs.72, B = Rs.108

15.

Hidden goodwill = Rs.10,800; Gaining ratio=13:11; Debit P's capital account and R's capital account with Rs.5,850 and Rs.4,950 respectively and credit Q's capital account with Rs.10,800.

16.

(i) Redemption of Debentures
(ii) Payment of Dividend.

Generic 3

8 x 3 = 24

17.

DRR = Rs 18,00,000; Investment in specified securities =Rs 2,70,000

18.

Number of shares issued = 1,600 shares.

19.

Interest is payable @6% per annum on the amount remaining unpaid to the executor of deceased partner

20.

They will be shown as 'short-term borrowings' in the balance sheet as at 31st March 2014 because they are repayable within 12 months of the date of issue of debentures.

21.

Debit R with Rs.20,134 and credit P and Q with Rs.13,507 and Rs.6,627 respectively.

22.

When a liability is to be discharged by a partner, his capital account is credited because the partner's claim is increased over the firm by the amount of liability discharged by him, thus his capital account is increased.

23.

sacrificing ratio is calculated to determine the amount of compensation to be paid by the incoming partner to the sacrificing partners.

24.

The partnership deed should be amended to incorporate the clause to charge interest on drawings.It is only then, interest on drawings can be charged.