Prepared by - Mr.

Sahil Maathur
Date - 29th December, 2023

Accounts
Maximum Marks: 80
Time Allowed: Three Hours
(Candidates are allowed additional 15 minutes for only reading the paper. They must NOT
start writing during this time.)
Instructions:
1. This question paper contains two sections.
2. Candidates have to attempt all questions from Section A and Section B.
3. There are internal choices provided in each section.
4. The intended marks for questions or parts of questions are given in the brackets. [ ]
5. All calculations should be shown clearly.
6. All working, including rough work, should be done on the same page as, and
adjacent to, the rest of the answer.

Section A (60 Marks)

Answer all questions

Question 1
In subparts (i) to (iv) choose the correct options and in subparts (v) to (x) answer the
questions as instructed.

i. One-third of machinery is taken by Ranjan for Rs. 30,000 and balance is revalued at Rs.
57,600 (Book value of Machinery: Rs. 72,000).
What is the net increase in the value of Machinery recorded in the Revaluation Account? [1]
a) Rs. 9,600
b) Rs. 6,000
c) Rs. 15,600
d) None of these

ii. On dissolution, Goodwill Account is transferred to [1]

a) The capital accounts of Partners
b) The credit of Cash Account
c) The debit of Realisation Account
d) The credit of Realisation Account

iii. Durga Ltd. issued 80,000, 10% Debentures of Rs. 100 each at certain rate of discount
and were to be redeemed at 20% premium. Existing balance of Securities Premium before
issuing of these debentures was Rs. 25,00,000 and after writing off Loss on Issue of
Debentures, the balance in Securities Premium was Rs. 5,00,000. At what rate of discount,
these debentures were issued?[1]
a) 10%
b) 5%
c) 25%
d) 15%
iv. Which of the following statements is correct in the context of share capital? [1]
a) Authorised Capital is always more than the Issued capital.
b) Issued Capital is always equal to Authorised Capital.
c) Authorised Capital can be more or equal but cannot be less than Issued Capital.
d) Issue Capital is independent of Authorised Capital.

v. A & B are partners sharing profits and losses in the ratio of 3:2. C is admitted for 1/4th
share and for which Rs. 30,000 and Rs. 10,000 are credited as a premium for goodwill to A
and B respectively.
What will be the new profit-sharing ratio of A , B and C ? [1]

vi. Assertion (A): Abnormal loss of a year should be subtracted from the net profit of the
year for the calculation of goodwill.

Reason (R): Future profits depend upon the average performance of the business in the
past. [1]
a) Both Assertion and Reason are correct, and Reason is the correct explanation for
Assertion.
b) Both Assertion and Reason are correct, but Reason is not the correct explanation for
Assertion.
c) Assertion is false and Reason is true.
d) Assertion is true and Reason is false.

vii. Dissolution expenses were Rs. 8,000; Rs. 3,000 were to be borne by the firm and the
balance by Rajib, a partner. The expenses were paid by the partner.
Pass journal entry. [1]

viii. As a result of the measure taken by the government in the year 2019-20 of non-creation
of Debenture Redemption Reserve by listed companies / NBFCs or HFCs, the
investments in the debenture issues from these companies have become riskier.
Source (edited): The Hindu, August, 2019
State the adverse impact of this measure on the investors? [1]
ix. In which major head and sub head, Premium on redemption of debentures is shown?
[1]
x. Anurag Ltd., a listed HFC, is to redeem its debentures of nominal value Rs. 2,50,000 each
on 30th September, 2020, 31st December, 2020, 31st March, 2021 and 30th June, 2021.
What should be the amount to be invested in Debentures Redemption Investment on or
before 30th April, 2020? [1]

Question 2
Anand, Bihari and Shivin are equal partners in a firm. Bihari retires and his claim including
his capital and his share of goodwill is Rs. 40,000. He is paid in kind, a vehicle valued at Rs.
20,000 which is unrecorded in the books of the firm till the date of retirement and the balance
by accepting a bill.
You are required to give the Journal entries for recording the payment to Bihari in the books
of the firm. (3)

Or
Shahrukh, Salmaan and Aamir are partners in a firm sharing profits in the ratio of 3 : 2 : 1.
On 31st March 2018, Aamir retired. Following balances were disclosed by the firm’s Balance
Sheet on this date:
I. Capitals: Shahrukh Rs. 10,00,000; Salmaan Rs. 6,00,000 and Aamir Rs. 4,40,000.
II. Profit & Loss (Dr. Balance) Rs. 45,000.
III. Advertisement Expenditure Rs. 15,000.
Revaluation of Assets and re-assessment of liabilities resulted in a loss of Rs. 60,000. On
the retirement of Aamir, Goodwill is valued at Rs. 1,80,000.
The amount payable to Aamir is agreed to be paid in two yearly instalments of Rs. 2,00,000
each including interest @ 10% p.a. on the outstanding balance during the first two years and
the balance including interest in the third year. Books are closed on 31st March every year.
Prepare Aamir’s loan Account till it is finally paid. (3)

Question 3

Anupama Ltd. issued 5000, 15% debentures of Rs.100 each at 5% discount on 1 May 2022.
It pays interest on debentures on 30th June and 31st December every year, TDS being 5%.
Pass the journal entries for Interest on Debentures only, if the books are closed on 31
March every year. (3)

Question 4

On 1st April, 2019, the following balances appeared in the books of Gama Pvt. Ltd.
9% Debentures (redeemable on 31st March, 2020) Rs. 40,00,000

Debenture Redemption Reserve Rs. 3,00,000

The required investment was made by the company on 1st April, 2019, and the company
met the requirements of the Companies Act, 2013 regarding DRR. The debentures were
redeemed on the due date.
You are required to prepare for the year 2019-20:
(a) Debentures A/c
(b) Debenture Redemption Reserve A/c
(c) Debenture Redemption Investment A/c. [3]

Or
Jerome Ltd., an unlisted manufacturing company, had 20,000, 6% Debentures of Rs. 100
each due for redemption at par on 31st March, 2022. On this date the company had the
required amount of Rs. 2,00,000 in its Debenture Redemption Reserve.

The Debenture Redemption Investment which was purchased on 30th April, 2021, was
realised at 98% on the date of redemption and the debentures were redeemed on the due
date.

You are required to pass journal entries in the books of the company for the year 2021-22.
(Ignore interest on debentures).[3]
Question 5
On 1st April, 2021, a firm had assets of Rs. 3,00,000, including cash of Rs. 5,000. The
Partners’ Capital Accounts showed a balance of Rs. 2,00,000 and the Reserve constituted
the rest. If the normal rate of return is 10% and the goodwill of the firm is valued at Rs.
2,00,000 at four years’ purchase of super profit, find the average profit of the firm. [3]

Question 6
Palms Ltd. was formed on 1st November, 2022, with a capital Rs. 12,00,000 divided into
Equity shares of Rs. 10 each at a premium of Rs. 2 per share. It offered 1,00,000 shares to
the public.
The issue price was payable as follows:
40% of Face Value with application
60% of Face Value with allotment (including premium)
The balance as and when required.
The balance was not called till the date of the Balance Sheet.
All the shares offered by the company were subscribed for. One shareholder holding 1000
shares paid the balance with allotment.
Another shareholder holding 800 shares did not pay the allotment money when due. 50% of
his shares were forfeited by the company.
You are required to show the items under Equity and Liabilities in the Balance Sheet of the
Company (prepared as per Schedule III of the Companies Act, 2013) at the end of the
financial year with Notes to Accounts. [6]

Question 7
Following is the Balance Sheet as at 1st April, 2022 of Kabir and Farid who are in
partnership sharing profits and losses in the ratio of 5:2.

Liabilities Amount Assets Amount

Sundry Creditors 13,00,000 Bank 1,00,000

Capital A/cs: Stock 2,00,000

Kabir 8,00,000
Farid 7,00,000 15,00,000

Debtors 3,05,000
Less- Provision for Bad debts
5,000 3,00,000

Plant and Machinery 5,00,000

Building 17,00,000

28,00,000 28,00,000

On the date of the above Balance Sheet, they admit Samir as a partner on the following
terms:
I. Samir will bring Rs. 10,00,000 for his capital and the necessary amount of
goodwill/premium in cash for 3/8th share in future profits.
 II. Goodwill of the firm on Samir’s admission was valued at Rs. 14,00,000
III. That new profit sharing ratio will be 2:3:3.
Pass the necessary Journal entries to record the above transactions and prepare Balance
Sheet of the firm after Samir’s admission as a partner. [6]

Or

Krishna and Suresh were partners in a firm sharing profits in the ratio of 3:1. On 1st April,
2015 they admitted Rahul as a new partner for 1/5th share in profits of the firm. On the date
of Rahul’s admission the balance sheet of Krishna and Suresh showed Krishna’s Capital Rs.
5,00,000, Suresh’s Capital Rs. 3,50,000, General Reserve of Rs. 1,20,000, a debit balance
of Rs. 60,000 in a Profit and Loss A/c and Workmen Compensation Reserve of Rs.
1,50,000.
The following was agreed upon on Rahul’s admission:
I. Rahul will bring Rs. 1,50,000 as his capital and his share of goodwill premium in
cash.
II. Goodwill of the firm be valued at Rs. 2,40,000.
III. There was a claim of Workmen Compensation for Rs. 1,70,000.
IV. The partners decided to share future profits in the ratio of 3:1:1.
Prepare Partners’ Capital Accounts for the above on Rahul’s admission. [6]

Question 8
Srijan, Raman and Manan were partners in a firm sharing profits and losses in the ratio of
2:2:1. On 31st March, 2023 their Balance Sheet was as follows:
Balance Sheet of Srijan, Raman and Manan as at 31-3-2023

Liabilities Amount Assets Amount

Capitals: Capital: Manan 10,000

Srijan
2,00,000 3,50,000
Raman 1,50,000

Creditors 75,000 Plant 2,20,000

Bills Payable 40,000 Investments 70,000

Outstanding Salary 35,000 Stock 50,000

Debtors 60,000

Bank 10,000

Profit and Loss Account 80,000

5,00,000 5,00,000

On the above date they decided to dissolve the firm:

 I. Srijan was appointed to realise the assets and discharge the liabilities. Srijan was to
receive 5% commission on sale of assets (except cash) and was to bear all
expenses of realisation.
II. Assets were realised as follows:
Plant - Rs. 85,000
Stock - Rs. 33,000
Debtors - Rs. 47,000
III. Investments were realised at 95% of the book value.
IV. The firm had to pay Rs. 7,500 for an outstanding repair bill not provided for earlier.
V. A contingent liability in respect of bills receivable, discounted with the bank had also
materialised and had to be discharged for Rs. 15,000.
VI. Expenses of realisation amounting to Rs. 3,000 were paid by Srijan.

Prepare Realisation Account [6].

Question 9

Ruma and Neha started business on 1st April, 2021, with fixed capitals of Rs. 4,00,000 and
Rs. 3,50,000 respectively.
On 1st October, 2021, they decided that their total capital (fixed) should be Rs. 8,00,000, in
their profit-sharing ratio of 3:2.
Accordingly, they introduced extra capital or withdrew excess capital.
Their partnership deed provided for the following:
(a) Interest on capital to be allowed @ 10% per annum.
(b) A monthly salary of Rs. 1,000 each to be allowed to both Ruma and Neha.
(c) Interest on drawings to be charged @ 18% per annum.
Ruma had withdrawn Rs. 12,000, during the year. As per the deed, the interest on her
drawings amounting to Rs. 1,080 to be charged from her.
During the year ending 31st March, 2022, the firm earned a net profit of Rs. 2,04,000 before
charging manager’s commission of Rs. 20,400 and interest on bank loan of Rs. 4,000.
You are required to:
(i) Give the journal entry to close Ruma’s Drawings Account.
(ii) Prepare Profit and Loss Appropriation Account for the year ending 31st March, 2022. [10]

Or

X, Y, Z are in the partnership and on 1st April, 2022, their respective capitals were Rs.
2,00,000; Rs. 1,20,000 and Rs. 1,00,000. Y is entitled to a salary of Rs. 25,000 and Z Rs.
20,000 per annum, payable before division of profits. Interest is allowed on capital at 5%
per annum but is not charged on drawings. Of the net divisible profits of the first Rs.
1,00,000; X is entitled to 40 percent; Y to 35 per cent and Z to 25 per cent , over that amount
profits are shared equally. The profit for the year ended 31st March, 2023, after debiting
partnership salaries, but before charging interest on capitals, was Rs. 1,81,000 and the
partners had drawn Rs. 8,000 each.
Prepare Partners' Capital account for the year.[10]

Question 10
During the year 2014-15, ABC Ltd. issued 10,000 Equity Shares of Rs. 50 each at Rs. 55
per shares, payable as follows:

On application Rs. 15;

On allotment Rs. 20 (including premium Rs. 5)

On first and final call Rs. 20

All the issued shares were subscribed for by the public.

One shareholder holding 500 shares did not pay the amount due on allotment and his
shares were immediately forfeited.
Another shareholder holding 500 shares did not pay the amount due on allotment and his
shares were immediately forfeited.
Another shareholder holding 100 shares paid the amount of the first and final call with
allotment.
After the company had made the first and final call, 200 of the forfeited shares were reissued
as fully called-up at Rs. 45 per share.
The share issue expenses were Rs. 7,000 which were written off at the end of the year.
You are required to pass journal entries in the books of the company for the year ending 31st
March, 2015. [10]

Or
(A)Following is an extract from the Journal of Nickel Ltd. You are required to complete
the journal entries filling up the information represented by ‘?’ which is missing
from these journal entries.
Date Particulars L.F. Amount Amount

Share Capital A/c…. Dr. ?

Securities Premium Reserve A/c…. Dr. ?
To Calls in Arrears A/c ?
To Share Forfeiture A/c ?
(Being 1200 shares of Amit forfeited,
who had applied for 2,000 shares on, for
non-payment of allotment and first call)

Bank A/c…. Dr. ?

Share Forfeiture A/c…. Dr. ?
To Share Capital A/c ?
(Being __?__ forfeited shares reissued
at Rs.7 per share as Rs. 8 paid up)

Share Forfeiture A/c…. Dr. 5,000

To Capital Reserve A/c 5,000
(Being net gain on reissued shares
transferred to Capital Reserve)

Nickel Ltd. issued Equity shares of Rs. 10 each at a premium of Rs. 3 per share payable as
Rs. 4 per share on application, Rs. 5 per share on allotment (including premium), Rs. 2 per
share on first call and Rs. 2 per share on final call. [8]
(B) A company issued 50,000 equity shares of Rs. 10 each at par payable as under:
On application Rs. 2; On allotment Rs. 1; On first call Rs. 3 and on final call Rs. 4 per share
(four months after first call).
Amount due on application and allotment was duly received. One shareholder holding 1,000
shares could not pay the first call money in time. Another shareholder holding 2,000 shares
paid the final call money alongwith the first call money.
Final call was made. All the shareholders paid in full. First call arrear on 1,000 shares
alongwith interest on calls in arrears were also received at the time of final call. The
company paid interest on calls in advance and charged interest on calls in arrears according
to the provisions of Table F of schedule I of Companies Act, 2013.
Make entries in the company’s journal for ‘interest on calls in arrear and interest on
calls is advance’ only. [2]
Section B (20 marks)

Question 11
In subparts (i) and (ii) choose the correct options and in subparts (iii) to (v) answer the
questions as instructed.

(i) From the following calculate Interest coverage ratio

Net profit after tax Rs 12,00,000; 10% debentures Rs 1,00,00,000; Tax Rate 40% [1]
a. 1.2 times
b. 3 times
c. 2 times
d. 5 times
(ii) Paid Rs. 7,00,000 to purchase shares in K.L Ltd. and received a dividend of Rs. 20,000
after acquisition. These transactions will result in[1]
a. Cash used in Investing Activities Rs. 7,00,000
b. Cash generated from Financing Activities Rs. 7,20,000
c. Cash generated from Financing Activities Rs. 6,80,000
d. Cash used in Investing Activities Rs. 6,80,000

(iii) If average inventory is Rs. 5,00,000 and closing inventory is two times more than that in
the beginning, then what will be the value of closing inventory? [1]

(iv) Comparative statement is also known as _______ analysis.[1]

(v) Working Capital is Rs. 7,00,000; Creditors Rs. 80,000; Other Current liabilities Rs.
4,00,000; Calculate Current Ratio.[1]

Question 12
From the following data, prepare a Common-size statement of Profit & Loss of Nicholson
Ltd. (3)

Particulars Amount (as at 31st

March, 2022) (in
rupees)
 Revenue from operations 10,00,000

Cost of material consumed 5,00,000

Employees Benefit Expenses 1,00,000

Finance cost 10,000

Tax Rate 40% of Profit before

Tax

Question 13
Calculate Cash flow from Financing Activities from the following particular activities.

Amount Amount
(31/3/23) (31/3/22)

Equity share capital 12,00,000 7,00,000

8% Preference share capital 1,00,000

9% Debentures 2,00,000

7% Debentures 1,00,000

Additional information -
1. Equity shares were issued at a premium of 2%.
2. 8% Preference shares were redeemed at a premium of 2%.
3. 9% Debentures were issued at discount of 1% and 7% Debentures were redeemed
at a premium of 5%.
4. Underwriting commission on Equity shares was paid @ 2.5% on the issue price.
5. Interest paid on 7% Debentures Rs. 7,000.
6. Dividend paid on preference shares Rs. 8,000. [6]

Or

From the following Balance Sheet of Swastik Ltd.as at 31st March, 2022, answer the
following questions.

Particulars Note 31st March, 31st March,

no. 2022 2021

I. EQUITY AND LIABILITIES

1. Shareholders’ Funds
a. Share Capital 1 7,00,000 5,00,000
b. Reserves and Surplus 2 2,50,000 3,25,000
2.Non-Current Liabilities
Long term borrowings 3 2,00,000 2,50,000
3. Current Liabilities
Short term Provisions 4 50,000 25,000
 II. ASSETS
1. Non-Current Assets
a. Property, Plant and Equipment and Intangible
Assets:
— Property, Plant and Equipment (Machinery) 5,00,000 3,00,000
b. Non-current Investments 2,00,000 1,40,000
2. Current Assets
a. Inventories 1,50,000 2,00,000
b. Trade Receivables 5 1,80,000 1,50,000
c. Cash and Bank Balances 1,70,000 3,10,000

Total 12,00,000 11,00,000

Notes to Accounts
Particulars 31st March, 31st March,
2022 2021

1. Share Capital
Equity Shares Capital 6,00,000 2,00,000
12% Preference Share Capital (Non-Cumulative) 1,00,000 3,00,000

7,00,000 5,00,000

2. Reserves and Surplus

General Reserve 1,50,000 1,86,000
Surplus i.e., Balance in Statement of P/L 1,00,000 1,39,000

2,50,000 3,25,000

3. Long term Borrowings

9% Debentures 2,00,000 2,50,000

4. Short Term Provisions

Provision for Taxation 50,000 25,000

5. Trade Receivables
Debtors 1,88,000 1,55,000
Less: Provision for Doubtful debts 8,000 5,000

1,80,000 1,50,000

Additional information:
I. All debtors are good.
II. Machinery costing Rs. 1,00,000 on which depreciation charged was Rs. 70,000, was
sold at a profit of 20% on book value. Depreciation charged during the year
amounted to Rs. 70,000.
III. Preference shares were redeemed at par on 31st March, 2022.
IV. Debentures were redeemed on 1st January, 2022 and Equity Shares were issued on
1st April, 2021.
V. Dividend was declared on preference shares and was paid out of General Reserve.
VI. Non-current Investments costing Rs. 60,000 were sold at a profit of 20%.
VII. Provision for Income tax made was Rs. 50,000
Q.1 Find the amount of Net Profit before Tax. [1]
Q.2 Find the amount of Machinery purchased.[1]
Q.3 Find the amount of tax paid during the year.[1]
Q.4 What will the amount of Interest on 9% Debentures.[1]
Q.5 How much investment was purchased during the year?[1]
Q.6 What is the amount of Net working capital changes?[1]

Question 14
From the following information, calculate (up to two decimal places)(Any three) [6]:
(i) Liquid Ratio; (ii) Working Capital Turnover Ratio;
(iii)Operating Ratio; (iv) Net Profit Ratio.

Particulars Amount

Cost of Revenue from Operations/Cost of Goods Sold 6,00,0000

Operating Expenses 50,000
Gross Sales 8,00,000
Sales Return 10,000
Total Current Assets 3,00,000
Total Current Liabilities 1,00,000
Total Assets 7,00,000
Closing Inventory 30,000
Prepaid Insurance 5,000
Share Capital 5,60,000
Reserves and Surplus 34,000