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ISC ACCOUNTS 85

(Three hours)
(Candidates are allowed additional 15 minutes for only reading the paper.
They must NOT start writing during this time.)
---------------------------------------------------------------------------------------------------------------Section A - Answer Question 1 (compulsory) from Part I and any other four questions
from Part II.
Section B and Section C Answer two questions from either section B or Section C.
The intended marks for questions or parts of questions are given in brackets [ ].
Transactions should be recorded in the answer book.
All calculations should be shown clearly.

All working, including rough work, should be done on the same sheet as, and adjacent
to, the rest of the answer.
---------------------------------------------------------------------------------------------------------------

SECTION A
PART I (20 Marks)
Answer all questions.

[6 2]

Question 1
Answer each of the following questions briefly:

Q1. What constitutes the capital structure of a limited company?


Q2. Under what circumstances premium for goodwill paid by the incoming partner would
never be recorded in the books of account?
Q3. State any four factors upon which the value of goodwill of a firm depends.
Q4. Mention two differences between dissolution of a partnership and dissolution of a firm.
Q5. How would you treat workman compensation fund and employees provident fund
shown on the liability side of Balance Sheet, at the time of dissolution of partnership firm
and why?
Q6. Why are assets and liabilities revalued at the time of admission of a partner?
PART II (40 Marks)
Answer any four questions.

Ur
mil
a

Question 2
Urmila and Umesh decided to undertake a venture jointly. They agreed to share
profits & losses in the ratio of 3 : 2.

sup
plie
d
fro

m her own stock goods worth `. 2,00,000 and paid `.4,950 for freight and `. 1,200
for Sundry Expenses.
Umesh purchased goods of `. 1,95,000 for the venture and paid `. 7,000 for selling
expenses. Umesh accepted a bill for 3 months of `. 95,000 drawn by Urmila as an
advance. This bill was discounted immediately by Urmila for `.92,000 and. Umesh
sold all the goods for `. 5,00,000.
At the end of the venture, the accounts were settled.
Give journal entries for the above transactions, in the books of Urmila and Show
Joint Venture Account and Urmilas Account, in the books of Umesh.

Question 3

[5]

A, and C are partners with fixed capitals of Rs. 2,00,000, Rs. 1,50,000 and Rs.
1,00,000
respectively. The balance of current accounts on 1st January, 2004 were A Rs.
10,000
(Cr.); B Rs. 4,000 (Cr.) and C Rs. 3,000 (Dr.). A gave a loan to the firm of Rs.
25,000 on 1st July, 2004.
The Partnership deed provided for the following:(i) Interest on Capital at 6%.
(ii) Interest on drawings at 9%. Each partner drew Rs. 12,000 on 1st July, 2004.
(iii) Rs. 25,000 is to be transferred in a Reserve Account.
(iv) Profit sharing ratio is 5:3: 2 upto Rs. 80,000 and above Rs. 80,000 equally. Net
Profit of the firm before above adjustments was Rs. 1,98,360.
From the above information prepare Profit and Loss Appropriation Account, Capital
and Current Accounts of the partners.

Question 4

[10]

X and Y were partners in a firm sharing profits in 3:1. On 01-01-2000 They admitted Z
as a partner for 1/4th share in the profits. Z was to bring Rs. 60,000 for his capital. The
Balance Sheet of X and Y on 01-01-2000 was as follows :Balance Sheet as on 01-01-2000
Liabilities

Rs.

Creditors

Assets

Rs.

35,000 Land & Building

20000

Capitals :-

Plant & Machinery

35000

X
25000

Stock

15000

65000 Debtors

40000

Less-Provision for doubtful

17500
500

5000 Investments
General Reserve

17000
23000

Cash

5000

115000

115000

The other terms agreed upon were :1. Goodwill of the firm was valued on the basis of Z.
2. Land and Buildings were valued at Rs.32500 and Plant and Machinery at
Rs.30000.
3. 50% of the general reserve to be kept as provision for doubtful debts.
4. A liability of Rs. 600 included in Sundry Creditors was not likely to arise.
5. The capitals of the partners be adjusted on the basis of Zs contribution of
capital to the firm.
6. Excess or shortfall if any to be transferred to current accounts.
Prepare Revaluation Account, Partners Capital Accounts and the Balance
Sheet of the new firm.

Question 5

[10]
`

The Balance Sheet of Mohit, Neeraj and Sohan who are partners in a firm sharing
profits according to their capitals as on March 31, 2014 was as under:
Liabilities
Creditors
Mohits Capital
Neerajs Capital
Sohans Capital
General Reserve

Amount
(Rs.)
21,000
80,000
40,000
40,000
20,000

2,01,000

Assets
Buildings
Machinery
Stock
Debtors
20,000
Less: Provision 1,000
for Bad Debt
Advertisement suspense
Goodwill
Cash at bank

Amount
(Rs.)
80,000
40,000
18,000
19,000
10,000
20,000
14,000
2,01,000

On that date, Neeraj decided to retire from the firm and was paid for his share in the firm
subject to the following:
1. Buildings to be appreciated by 10%.
2. Provision for Bad debts to be increased to 10% on Debtors.
3. Machinery to be depreciated by25%.
4. Goodwill of the firm is valued at Rs. 60,000 and the retiring partners share is
adjusted through the capital accounts of remaining partners.
5. The capital of the new firm be fixed at Rs. 1,80,000.
Prepare Revaluation Account, Capital Accounts of the partners, and the Balance
Sheet after retirement of B.

Question 6

[10]

Following is the Balance Sheet of Raman and Ramesh on June 30, 2002.
Liabilities

Amount
(Rs.)

Sundry creditors
Bills payable

20,000
20,000

Bank overdraft
Mrs. Ramans loan
Rameshs loan
Investment fluctuation
fund
Employees provident
fund
General reserve
Ramans capital
Rameshs capital

20,000
20,000
10,000
2,800

Total

1,200
2,000
20,000
20,000
1,26,000

Assets

Amount
(Rs.)

Goodwill
Building
Plant and
fittings
Investment
Stock
Debtors
17,000
Less provision
2,000
for bad debts
Bills receivable
Cash
Profit and loss
Total

20,000
25,000
25,000
15,300
8,700
15,000
10,000
13,000
4,000
1,36,000

The firm was dissolved on June 30, 2002 and following was the position :
1. Raman agreed to pay off his wifes loan.
2. Debtors realized Rs. 12,000.
3. Ramesh took away some of the investments at Rs. 4,500(being 10% less
then the book value) . Remaining investments were sold at 20% profit
4. Other assets realized as follows :
Plant and
Fittings
20,000
Building
50,000
Goodwill
6,000
5. Sundry creditors and Bills payable were settled at 5% discount.
6. Raman accepted stock at Rs 8,000 and Ramesh took over bills receivable at
20% discount.
7. A to bear Realization expenses amounted to Rs. 2,000 for which he is to be
paid Rs 1500
prepare various ledger accounts.

Question 7

[10]

ABC Ltd. issued 10,000 shares of Rs. 10 each at a Discount of Re. 1. The amount
was payable as follows:
Rs.2 on application, Rs.3 on allotment, balance on first and final call.
Applications for 20,000 shares were received. Allotment was made as under
Applications for 15,000 shares were allotted 10,000 shares on pro-rata basis.
The remaining applications were rejected. Over payment on applications were
adjusted towards sums due on allotment. All the shareholders paid their due
except Mr. A who had applied for 900 shares did not pay the allotment. His
shares were forfeited immediately. Another shareholder Mr. B holding 400 shares
failed to pay final call money. As shares were reissued @ Rs 8 per share as fully
paid and Bs shares were reissued @ Rs.12 per share as fully paid up. Pass
journal entries.
(b) Also pass entries for reissue in the above question if 500 of As shares were
reissued @Rs.8 per share and half of Bs shares were reissued @ Rs.10 per
share as fully paid up.
(c) Also pass entries for reissue if 800 shares were re-issued @Rs.9 per share.
Reissued shares include all shares of Mr.B.
(d) Also pass entries for reissue if 800 shares were re-issued @Rs.8.50 per
share. Reissued shares include all shares of Mr.A

Question 8

[10]

Parker and Company Limited issued


2,000 15% debentures of ` 100
st
each at a premium of 10% on 1 January, 2011.
Under the terms of issue:
(a) Entire money is payable on application.
th

st

(b) Debenture interest is payable half yearly on 30 June and 31 December.


(c) Tax to be deducted at source @ 10%.
(d) Debentures are to be redeemed after 5 years from the date of issue.
Pass the necessary journal entries for the year 2011.

SECTION B
Answer any two questions

Question 9
From the following Balance Sheet, prepare a Common Size Comparitive Statement:
Balance Sheet
Liabilities
2002
2003
Assets
2002
2003
Rs.
Rs.
Rs
Rs.
Share Capital
2,64,000
2,80,000
Cash in Hand
10,000
lO,750
Current Liabilities 65,000
70,000
Cash at Bank
3,500
5,000
Long-term Debt 1,00,000
87,500
Bills Receivable 22,500
22,750
Bills Payable
12,500
Sundry Debtors 90,000
85,000
Sundry Creditors 10,000
16,000
Inventories
70,000
83,000
Bank Overdraft
50,000
71,500
Fixed Assets
3,00,000
3,07,500
Prepaid Expenses 5,500
lO,500
5,01,500

5,25,000

5,01,500

5,25,000

Question 10

(a)
Ranjit Ltd. provides the following information for the year ending 31 ~ March
2003 and request you to ascertain (a)
Operating Ratio (b) Operating Profit Ratio and (c) Operating Profit:
Sales1,00,000
Gross Profit4,00,000
Office Expenses30,000,Selling Expenses20,000

. Administrative Expenses15,000
Loss on Sale of Plant2,000
Interest received on investments2,500
Net Profit Rs. 3,35,000
(b) From the following information find out (a) Sales (b) Closing Stock (c)
Sundry Debtors and (d) Sundry Creditors
Gross Profit Ratio 25%
Debtors' Turnover Ratio 2 months
Stock Turnover Ratio 2 times
Creditors' Turnover Ratio 3 months
Closing stock is Rs. 10,000 more than the opening stock. Bills receivable amount
to Rs. 30,000 and Bills payable to Rs. 40,000. Cost of goods sold for the year is
Rs. 6,00,000
(
s

Question 11
(a)

Define Operating Activities.

[2]
st

(b) From the following Balance Sheets of Pixie Ltd. As on 31 March, 2011 and
st
31 March 2012, prepare a Cash Flow Statement.
Particulars
I. Equity and Liabilities
1. Shareholders Funds
Equity Share Capital
10% Preference Share Capital

31.03.2011
(`)

3,00,000
50,000

[8]
31.03.2012
(`)

6,50,000
1,00,000

Reserve and Surplus

31.03.2011

31.03.2012

Balance of Statement of
Profit & Loss Account
General Reserve
Securities Premium Reserve
Preliminary Expenses
(adjusted 31.03.2011)

1,60,000
90,000
30,000

1,10,000
60,000

(30,000)
________
2,50,000

-----________
1,70,000

2,50,000

1,70,000

Long Term Borrowings


10% Debentures
Total

3,50,000
9,50,000

2,50,000
11,70,000

II. Assets
1. Non Current Assets
Fixed Assets
Non Current Investments

4,50,000
50,000

7,00,000
60,000

Inventories

2,00,000

2,10,000

Trade Receivables

1,50,000

90,000

60,000

1,10,000

2. Non Current Liabilities

2. Current Assets

Bank
Short-term Investments

__40,000

---

9,50,000

11,70,000

Additional Information:

(i) During the year, a machine costing ` 80,000 (accumulated


depreciation thereon being `10,000) was sold for ` 65,000.
(ii) Debentures were redeemed on 30.09.2011.
(iii) Depreciation charged on Fixed Assets ` 80,000.

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