BAL BHARTI SCHOOL, BAHADURGARH

ACCOUNTANCY ASSIGNMENTS - XII

ACADEMIC SESSION 2023-24

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 INDEX
S. NO NAME OF THE TOPIC PAGE NO

1. PARTNERSHIP-FUNDAMENTALS 3–4

2. ADMISSION OF A PARTNER 5 – 11

3. RETIREMENT AND DEATH OF A PARTNER 12 – 17

4. DISSOLUTION OF A FIRM 18

5. ACCOUNTING FOR SHARE CAPITAL 19 – 22

6. ACCOUNTING FOR DEBENTURES 23 – 25

7. RATIO ANALYSIS 26 - 29

8. CASH FLOW STATEMENT 30 – 36

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 Accounting For Partnership Firms -Fundamentals

1. X and Y are partners in a firm. Their capitals as on April 1, 2009 were Rs.2,50,000 and
Rs.1,80,000 respectively. They share profits equally. On July 1, 2009, they decided that their
capitals should be Rs.2,00,000 each. The necessary adjustments in the capitals were made by
withdrawing or introducing cash. According to the partnership deed, interest on capital is to be
allowed @8% p.a. X is to get an annual salary of Rs.4,000and Y is allowed a monthly salary of
Rs.800.It was found that Y was regularly withdrawing his monthly salary.
The manager of the firm is entitled to a commission of 10% of the profit before any adjustment is
made according to the partnership deed.
Net profit for the year ended on 31st March, 2010, before charging interest on capital and salary,
was Rs.80, 000. Prepare the Profit and Loss Appropriationaccount, Partner's Capital accounts and
Current accounts. (Profit: X-12,900, Y- 12,900; Current A/C: X-33, 900,Y-28,500)

2. The partnership agreement of Maneesh and Girish provides that:

(i) Profits will be shared equally.
(ii) Maneesh will be allowed a salary of Rs.400p.m.
(iii) Girish who manages the sales department will be allowed a commissionequal to 10%
of the net profit after allowing Maneesh's salary.
(iv) 7% interest will be allowed on partner's fixed capital.
(v) 5% interest will be charged on partner's annual drawings.
(vi) The fixed capitals of Maneesh and Girish are Rs.1, 00,000 and Rs.80,000 respectively.
Their annual drawings were Rs.16, 000 and Rs.14,000 respectively. The net profit for
the year ending March 31, 2002 amountedtoRs.40,000.
Prepare firm's Profit and Loss Appropriation Account.

3. A and B are partners with capitals of Rs.5,00,000 and Rs.3,00,000 respectively.

The profits for the year ended 31st March, 2010 was Rs.3, 46,000 before allowing interest
on partner's loan. Show the distribution of profit after taking the following into
consideration:
(i) Interest on A's loan of Rs.1,50,000 to the firm provided on 1st April,2009.
(ii) Interest on capital to be allowed @ 5%p.a.
(iii) Interest on drawings @6% p.a. Drawings were A Rs.60, 000 and BRs.40,000.
(iv) B is to be allowed a commission of 2% on sales. Sales for the yearwere Rs.30,
00,000.
(v) 10% of the divisible profits is to be kept in a Reserve
(vi) X and Y are partners with a profit sharing ratio of 1:2 with capitals of Rs.4, 00,000and Rs.6,
00,000 respectively. On 1st October, 2004, X and Y granted loans of Rs.1, 00,000 and
Rs.60,000 respectively to the firm. Distribute the profits/losses amongst the partners for
the year ended 31st March, 2005 in each of the following cases:
Case (a) If the profit before interest for the year amounted to Rs.12,000.
Case (b) If the profit before interest for the year amounted to Rs.3,000.
Case (c) If the loss before interest for the year amounted to Rs.7,500.

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 4. A and B contribute Rs.5,00,000 and Rs.3,00,000 respectively by way of capital on which
they agree to allow interest @6% p.a. Their respective share of profit is 3:2 and the profit for the
year is Rs.40, 000 before allowing interest on capitals. Prepare the necessary account to allocate
interest on capitals.

5. L, M and N are partners who have omitted interest on capitals for three years ended on
31st March,2011. Their fixed capitals in three years were L- Rs.40,000, M-Rs.25,000, N-
Rs.15,000. Rate of interest on capital is 12%p.a. Their profit sharing ratios were 2009- 5:2:1,
2010-3:2:1, 2011- 2:1:1. Give the necessary adjusting entry.

6. The net profit of a firm for the year ended 31st March, 2011 was Rs. 30,000, which has been
duly distributed amongst its three partners A, B & C in their agreed proportions of 3:1:1
respectively. It was discovered on 10th April, 2011 that the undermentioned transactions were
not passed through the books of accounts of the firm for the year ended 31st March, 2011,
which stood duly closed on that date:
a) Interest on capital @ 10%p.a.
b) Interest on drawings : A Rs.350 B Rs. 250 C Rs.150
c) Commission due to A on a special transaction Rs.3,000
d) Salary of Rs.5,000 to A and Rs.7,500 to B.
The capital accounts of the partners on 1st April, 2010 were: A- Rs.25,000 B-Rs.20,000 C Rs. 15,000
You are required to suggest a journal entry to be passed on 10th April, 2011 whichwill not affect
the profit and loss account of the firm for the year ended 31st March 2011 and at the same time
will rectify the position of the partners.

7. A, B and C are the partners in a firm. After the accounts of partnership have been drawn on and the
books closed off, it is discovered that for the years ended 31st March, 2010 and 2011, interest has
been allowed to the partners upon their capitals @ 6% p.a. although there is no provision for
interest in the partnership deed. Their fixed capitals on which interest was calculated were Rs.
1,00,000, Rs. 80,000 and Rs. 60,000 respectively.
During the last two years, they have shared the profits as follows:
2010 3:2:1
2011 5:3:2
You are required to give necessary adjusting entry on 1st April, 2011

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 ADMISSION OF A PARTNER

1. R and M were partners in a firm sharing profits in 3:2 ratios. They admitted S and N as a new
partners’ sacrificed 1/3rd of his share in favor of S and M sacrificed ½ of his share in favour of N.
Calculate the new profit sharing ratio.

2. Find out the sacrificing ratio and new ratio in the following cases:-
(a) A and B are partners sharing profits and losses in the ratio of 3:2.C is admitted for
1/4thshare.A and B decide to share equally in future.
(b) A and B are partners. They admit C for ¼th share. In future the ratio between A and B would be
2:1.

3. A and B are partners sharing profits and losses in the ratio of 4:1.They admit C into partnership for
1/6th share for which he pays Rs.20,000 for goodwill. A, B and C decide to share future profits in the
ratio of 3:2:1.Give the necessary journal entries.

4. X and Y are in partnership sharing profit and losses in the ratio of 3:2.Their balance sheet as on 31st
March,2012 was asunder:

Liabilities Rs. Assets Rs.

Creditors 15,000 Cash 5,000

General 12,000 Debtors 20,000
Reserve
Less: provision 800 19,200
Capital
60,000 Patents 14,800
Accounts: XY
Current 30,000 Investment 8,000

Accounts: XY Fixed assets 72,000

10,000 Goodwill 10,000

2,000

1,29,000 1,29,000

They admit Z on the following terms:-

a. A provision of 5% is to be created on debtors.
b. Accrued income of Rs.1,500 does not appear in the books and Rs.5,000 areoutstanding for salaries.
c. Present market value of investment is Rs.6,000. X takes over the investments atthis value.
d. New profit sharing ratio of partners will be 4:3:2. Z will bring in Rs.20,000 as his capital.
e. Z is to pay in cash an amount equal to his share in firm’s goodwill valued at twice
the average profits of the last 3 years which were Rs.30,000; Rs.26,000 and Rs.25,000 respectively.
f. Half the amount of goodwill is withdrawn by old partners.
You are required to pass journal entries, prepare revaluation A/c, capital A/cs, currentA/cs and the
balance sheet.

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5. The following is the balance sheet at 31stMarch, 2010, of A and B who are in partnership and share
profits and losses in the proportion of 3/5 and 2/5respectively.
Liabilities Rs. Assets Rs.

Creditors 15,000 Cash 1,660

Bills Payable 4,310 Debtors 22,500

Provision for D/D 4,000 stock 12,500

Capital Accounts - A 24,000 Investment 4,250

B 9,000 Furniture 900

Machinery & Plant 4,500

Freehold Premises 10,000

56,310 56,310

They admit C into partnership from 1st April, 2010.The terms of agreement are as under:
a. C to bring in Rs.6,000 as capital and rs.4,800 for goodwill in order to get2/7th share in profit.
b. Rs.4,800 paid by C to be credited to the loan accounts of A and B in respectiveproportions.
c. Freehold premises is undervalued byRs.5,000.
d. Machinery and Plant is overvalued byRs.500.
e. Stock to be discounted at 10% and provision for doubtful debts be reduced byRs.1,000.
f. Investment are to be brought down at their market price
beingRs.3,200. Prepare revaluation, capital a/c and balancesheet.

6. X and Y are in partnership, sharing profits in the ratio of 5:3 respectively. Their balance sheet is as
follows:
Liabilities Rs. Assets Rs.

Creditors 28,000 Cash 7,800

Z’s loan A/c 30,000 Debtors 40,000

Workmen compensation fund 4,000 Less: provision 1,800 38,200

Capital Accounts: stock 56,000

A 50,000 Investment 10,000

B 40,000 Goodwill 10,000

90,000 Plant 30,000

1,52,000 1,52,000

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 Z is admitted into partnership on the following terms:-
a. The new profit sharing ratio will be 4:3:2 between X, Y and Z Respectively.
b. Z’s loan should be treated as his capital.
c. Goodwill of the firm is valued atRs.27, 000.
d. Rs.8,000 of investment were to be taken over by X and Y in their profit sharing ratio.
e. Stock be reduced by10%.
f. Provision for doubtful debts should be@5% on debtors and a provision for discount on debtors
@2% should also be made.
g. X is to withdrawn Rs.6,000in cash. Prepare necessary accounts.

7. The following is the Balance sheet of R and S who share profits in the ratio of2:1.

Liabilities Rs. Assets Rs.

Creditors 20,000
Reserve fund 12,000 Debtors 40,000

Bank overdraft 15,000 Less: provision 3,600 36,400

Capital Accounts: stock 20,000

A 40,000 Building 25,000

B 30,000 Patent 2,000

70,000 Machinery 33,600

1,17,000 1,17,000

C is admitted into partnership on the following terms:-

New profit sharing ratio is agreed 3:2:1.C brings in proportionate capital afterthe following
Adjustment:-
a. C brings in Rs. 10,000 in cash as his share of goodwill.
b. Provision for doubtful debts is to be reduced byRs.2,000.
c. There is an old typewriter valued Rs,2,600. It does not appear in the books ofthe firm. It is
to be recorded.
d. Patents are valueless.
e. 2% discount is to be received from creditors.
Prepare Revaluation A/c, capital A/cs and Balance sheet.

8. The Balance sheet of R and S, who were sharing profits in the ratio of 3:1, on 31stMarch 2009
was as follows:-

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 Liabilities Rs. Assets Rs.

Creditors 2,800 Cash at Bank 2,000

Employees provident fund 1,200 Debtors 6,500
General reserve 2,000 Less: provision 500 6,000

stock 3,000
Capital Accounts:
Investment 5,000
R 6,000

S 4,000 10,000

16,000 16,000

They decided to admit M on 1st April 2009 for 1/5th share on the following terms:-
a. M shall bring Rs.6,000 as his share of premium.
b. That unaccounted accrued income of Rs.100 be provided for.
c. The market value of investment wasRs.4,500.
d. A debtor whose dues of Rs.500 were written off as bad debts paid Rs.400 in full settlement.
e. M to bring in capital to the extent of 1/5th of the total capital of the new firm.
Prepare Revaluation A/c, partner’s capital A/cs and balance sheet of the firm.

9. The following is the balance sheet of A,B and C sharing profits and losses in
Proportion of 6:5:3:-

Liabilities Rs. Assets Rs.

Creditors 18,900 Cash at Bank 1,890

Bills payable 6,300 Debtors 26,460

General reserve 10,500 stock 29,400

Capital Accounts: Furniture 7,350

A 35,400 Land & building 45,150

B 29,850 Goodwill 5,250

C 14,550 79,800

1,15,500 1,15,500

They decided to admit D for 1/8th share on the following terms:-

a. That furniture be depreciated byRs.920.

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 b. An old customer, whose account was written off as bad, has promised to payRs.2,000 in
full settlement of his debt.
c. That a provision of Rs.1,320 be made for outstanding repair bills.
d. That the value of Land & building having appreciated be brought uptoRs.54,910.
e. That D should bring in Rs.14,700 as his capital.
f. That D should bring in Rs.14,070 as his share of goodwill.
g. That after making the above adjustment the capital accounts of old partners be adjusted on
the basis of the proportion of D’s capital to his share in business i.e., actual cash to be paid off
or brought in by the old partners, as the case maybe.
Prepare the necessary ledger accounts.
10. A, B and C are partners in a firm sharing profits and losses in the ratio of 3:2:1.Their Balance
sheet as at 31st March,2007 is as follows:-
Liabilities Rs. Assets Rs.

Creditors 36,000 Cash 14,000

Reserve fund 15,000 Debtors 50,000

Bank overdraft 20,000 Less: provision 2,500 47,500

Capital Accounts: stock 60,000

A 60,000 Fixed assets 98,500

B 60,000 Patent 6,000

C 50,000 Goodwill 15,000

1,70,000

2,41,000 2,41,000

On 1st April,2007, D is admitted into the firm with 1/4th share in the profits,which he gets 1/8th
from A and 1/8th from B.
a. D will introduce Rs.60,000 as his capital and pay Rs.18,000 as his share of goodwill.

b. 20% of the reserve is to be remaining as a provision against bad and doubtfuldebts.

c. A liability to the extent of Rs.1,000 be created in respect of a claim for damagesagainst the firm
d. An item of Rs.4,000 included in creditors is not likely to be claimed.

e. Stock is to be reduced by 30% and Patents to be written off in full.

f. A is to pay off the Bank overdraft.

After making the above adjustments the capital accounts of the old partners be adjusted on the Basis
of D’s capital to his share in the business i.e., actual cash to be paid off to, or brought in by the old
partners as the case maybe.

Prepare necessary accounts and give journal entries.

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11. K & P are partners sharing profit and losses in the ratio of 3:2. They employed C as their manager to
whom they paid a salary of Rs.750 per month. C deposited Rs.20,000 on which interest was
payable @ 9% p.a. At the end of 2001 (after division of the year's profits) it was decided that C
should be treated as partners with effect from 1st January, 1998 with 1/6th share in profits, his
deposit being considered as capital, carrying interest at 6% p.a. like capitals of other partners. The
firm's profits and losses after allowing interest on capitals were as follows:

1998 Profit Rs.59,000

1999 Profit Rs.62,000

2000 Loss Rs.4,000

2001 Profit Rs.78,000

Record the necessary journal entries to give effect to the above.

12. A and B are partners with capitals of Rs.50,000 and Rs40,000 respectively, on which they are
entitled to interest @ 10% p.a. They divide profits in the ratio of 2:1. They take C into partnership
with 1/4th share of profits and guaranteed that his share of profits will not be less than Rs.20,000. C
brought Rs.30,000 as his capital. Any excess profits received by C over his 1/4th share will be borne
by A & B in the ratio of 4:1. Profits at the end of the year before allowing interest on capitals
amounted to Rs. 72,000. Distribute the profits.

13. A, B and C are in partnership. A & B sharing profits in the ratio of 3:1 and C receiving an annual
salary of Rs.32,000 plus 5%of the profits after charging his salary and commission, or 1/4th of the
profit of the firm whichever is more. Any excess of the latter over the former received by C is,
under the partnership deed, to be borne by A and B in the ratio of 3:2. The profit for the year
ended 31st March, 2011 came to Rs.1,68,000 after charging C's salary. Show the distribution of
profits among the partners

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 VALUE BASED QUESTIONS

14. A, B and C after completing their computer engineering decided to start the business of developing
computer software’s. They entered into partnership for this purpose on 1st April, 2013. Identify any
four values which according to you motivatedthem to form the partnership firm.

15. A,B, C and D are partners in a firm. A has contributed Rs.5,00,000 more towards capital on which
he claims interest @ 6% p.a. B and C agreed to it but D opposed it arguing that partnership deed
does not provide for it. Identify the value beingignored in this case.

16. A and B are partners. A was authorized to buy goods for the firm. A placed an order of Rs.
10,00,000 with a supplier, who offered 15% commission to A. A declined to receive commission and
requested the supplier to reduce to purchase price by 15%. Supplier agreed to it. Which value has
been fulfilled by A?

17. Partners decided that 5% profits, each year be given to Resident Welfare Association of the area
for establishing a waste management mechanism by setting up a door to door collection system of
the waste. Which value has been fulfilled by Partners?

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 RETIREMENT AND DEATH OF A PARTNER

1. A, B and C are partners sharing profits in the ratio of 1/4:2/5:7/20. A retires and his share is
taken up by B and C in the ratio of 1:2. Calculate the new ratio.

2. M, S and N are partners without any partnership deed. M retires. Calculate the future ratio of
continuing partners if they agreed to acquire her share i) in the ratio of 5:3 ii) equally. Also
mention their gaining ratio.

3. A,B,C and D are partners sharing profits in the ratio of 1:4:3:2. D retired and the goodwill is
valued at Rs. 2,00,000. D's share of goodwill is to be adjusted into the capital accounts A,B and C
who decide to share future profits in the ratio of 4:3:3.Pass necessary journal entry.

4. A and B are partners sharing profits in the ratio of A 3/6, B 2/6 and transfer to reserve 1/6.
Their Balance sheet on 31st March, 2012 was as follows:

Liabilities Amount Assets Amount

Employee's Provident Goodwill 15,000

fund 18,000 Plant 90,000
Reserve fund 12,000 Patents 4,400
Sundry Creditors 10,000 Stock 30,000
Profit & Loss A/C 24,000 Investments 20,000
Capitals: Debtors 20,000
A 80,000 Less: 400 19,600
B 40,000 1,20,000 Provision

Cash 5,000

1,84,000 1,84,000

B retires on 1st April, 2012. The terms were:

a) Goodwill is to be valued at Rs.50,000
b) Value of patents is to be increased by Rs. 3,000 but Plant was found
over valued by Rs. 15,000.
c) Provision for doubtful debts should be 5% on debtors and provision fordiscount
should also be made on debtors and creditors at 3%.
d) Out of insurance which was entirely debited to profit & loss AccountRs.870 be
carried forward as unexpired insurance.
e) Investments were revalued at Rs. 16,000. Half of these investments weretaken over

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 by B.
f) There is a claim for workmen's compensation to the extent of Rs.5,000.
B was paid off in full. A borrowed the necessary money from the bank onthe security of
plant and stock to pay off B.
Prepare Revaluation Account, Capital Accounts and the Balance sheet of A.

5. Following is the Balance sheet of A, B and C as on 31st march,2011. They

shared profits in the ratio of2:2:1.

Liabilities Amount Assets Amount

General Reserve 2,50,000 Cash at Bank 10,000

Sundry Creditors 5,00,000 Stock 3,40,000
Profit & Loss Debtors 6,00,000
Capitals A/cs: Less: Provision 25,000 5,75,000
A 5,00,000 For doubtful debts
B 3,00,000 Land & Building 10,00,000
C 1,50,000 9,50,000 Advertisement
Suspense
A/C 60,000

Partners Loan A/Cs Profit & Loss A/c 15,000

B 1,80,000
C 1,20,000 3,00,000

20,00,000 20,00,000

B retires on 1st April, 2011 on the following terms:

a) Stock is overvalued by Rs. 20,000 and land & building are undervalued byRs.1,00,000.
b) Provision for doubtful debts is to be increased to Rs.30,000.

c) Old credit balances of sundry creditors Rs.40,000 be written back.

d) A computer purchased on 1st October, 2010 for Rs.50,000 debited to office

expenses account is to brought into account charging depreciation @20%p.a.
e) Goodwill of the firm is valued at Rs.1,50,000 and the amount due to B be adjusted in
the capital accounts of A and C.
Prepare the revaluation Account, Capital Account and the new Balance sheet.

6. On 31st March, 2013, the balance sheet of P, Q and R, who were sharingprofits in
proportion to their capitals stood as follows:

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 Liabilities Amount Assets Amount

Bills payable 8,000 30,000

Cash at Bank
General Reserve 6,000 Stock 14,000

Sundry Creditors 12,000 Debtors 10,000

Capitals A/cs: Less: Provision 200 9,800

P 30,000 For doubtful debts

Q 30,000 Land & Building 50,000

R 15,000 75,000 Profit & Loss A/c 6,000

Machinery 8,200

17,000
Employee's P.F

1,18,000 1,18,000

Q retires and the following readjustments of the assets and liabilities have been
agreed upon before the ascertainment of the amount payable to Q.:
a) That out of the amount of insurance which was debited entirely to profit andloss
accouters. 1,292 be carried forward as unexpired insurance.
b) That the land and building be appreciated by10%.
c) That the provision for doubtful debts be brought upto 5% on debtors.
d) That machinery be depreciated by6%
e) That a provision of Rs. 1,500 be made in respect of any outstanding billfor printing
and stationery.
f) That the goodwill of the firm will be valued at Rs.18,000.
g) That the entire capital of the firm as newly constituted be fixed at Rs.60,000 between P
and R in the proportion of three-fourth and one one forth after passing entries in their
accounts for adjustments, i.e. actual cash to be paid off or to be brought in by the
continuing partners as the case maybe.
h) That Q be paid Rs.5,000 in cash and the balance be transferred to his loan account
payable in two equal annual instalment along within tersest @ 8%p.a.

Prepare necessary accounts and the balance sheet of the firm of P and R. Also prepare Q's loan till
it is finally settled.

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7. A, B and C were partners in a firm whose Balance sheet as on 31st march, 2012 was as below:

Liabilities Amount Assets Amount

General Reserve 3,000 Cash at Bank 6,496

Sundry Creditors 7,096 Stock 10,600

Capitals A/cs: Debtors 9,000

A 8,000 Furniture 2,000

B 6,000

C 4,000 18,000

28,096 28,096

B retired on that date and in this connection it was decided to make the followingadjustments:

a) To reduce stock and furniture by 5% and 10% respectively; and

b) To provide for doubtful debts at 5% on debtors.

Rent outstanding (not provided for as yet) was valued at Rs. 260. Goodwill was valuedat Rs.4,200. A
and C decided:

i) To share profits and losses in 5:3respectively.

ii) Not to show goodwill in the books.

iii) To readjust their capitals in their profit sharing ratio ;and

iv) To bring in sufficient cash to pay off B immediately and to leave a balance ofRs.1,000 in
the bank. B was paid off.

Give journal entries to record the above and draft the balance sheet of the new firm.

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8. A, B and C are sharing profits in the ratio of 3:2:1. C dies on 30th June, 2011. Accounts are closed
on 31st march, every year. Sales for the year ending 31st march, 2011 amounted to Rs.6,00,000.
Sales from 1st April, 2011 to 30th June, 2011 amounted to Rs.2,40,000. The profit for the year ending
31st march, 2011 amounted toRs.30,000.
Calculate the deceased partner's share in the current year's profits.

9. A, B and C were carrying on business with the following assets with effect from 1st april, 2011:
Furniture Rs.18,000; Machine Rs.72,000; Cash Rs.10,000; Debtors Rs.20,000. Their profit sharing
ratio was 5:3:2. Capital is also shared in the same ratio. B died on 30th September, 2011. His son
claimed his father's interest in the firm.
The following was the statement:
1) Allow his capital to his credit on that date of death.
2) Give 5% p.a. interest on his capital
3) He had been drawing @ Rs.600 per month which he withdrew at the beginning of each month.
He be allowed to retain these drawings as a part of his share of profit.
4) Interest @6% p.a. be charged on his drawings.
5) They had separate life policies for which the premium had been paid out of profit & loss
account of the firm: A Rs. 50,000; B Rs. 60,000; C Rs.40,000. The surrender value of A's policy
was50% whereas of C's policy it was60%.
6) Goodwill was evaluated twice the average of profits which wereRs.21,000.

Prepare B's Personal Account.

10. A, B and S are partners sharing profits in the proportion of 3:2:1 and theirbalance sheet on
march 31,2003 stood as follows:

BALANCE SHEET as at March 31, 2003

Liabilities Amount Assets Amount

Bills payable 12,000 Bank 13,700

Sundry Creditors 14,000 Stock 1,750

Contingency Reserve 12,000 Debtors 12,000

Capitals A/cs: Building 21,000

A 20,000 Cash in hand 12,000

B 12,000 40,000 Bill Receivable 4,300

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 S 8,000 Investment 13,250

78,000
78,000

B died on June 12, 2003 and according to the deed of the said partnership her executors
are entitled to be paid as under:

i. The capital to her credit at the time of her death and interest thereon@10%perannum.

ii. Her proportionate share of reserve fund.

iii. Her share of profits for the intervening period will be based on the sales during past
three years had been 10% on sales.
iv. Goodwill according to her share of profit to be calculated by taking twice the amount of
the average profit of the last three years less 20%. The profits of the previous years
were:

2001 Rs. 8,200

2002 Rs. 9,000

2003 Rs.9,800

The investments were sold at par and her executors were paid out. Pass thenecessary journal
entries and write the account of the executors of B.

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 DISSOLUTION OF PARTNERSHIP FIRMS

Rohit and Suresh are in partnership sharing profit in the ratio 2:3. On March 31.2005, they agree
to dissolve the business. Pass necessary journal entries at the time of dissolution to record the
follow-ing:
a) Realisation expenses amounted to Rs 2000
b) Deferred revenue advertising expenditure appeared in the books at Rs 60,000
c) P & L A/c on the asset side of the balance sheet was Rs 30,000
d) An unrecorded asset of Rs 3,000 was taken over by Suresh
e) Liabilities amounting to Rs 24,000 already transferred to Realisation account, was
settledat Rs 22,000.
f) Loan to Rohit was adjusted through his Capital A/c Rs 15,000
Pass necessary journal entries for the following transactions on the dissolution of the firm of Sudha
and Shiva after the various assets (other than cash) and liabilities were transferred to Realisation
A/c:
i) Sudha agreed to pay off her husband’s loan Rs 19,000
ii) A debtor whose debt of Rs 9,000 was written off in the books paid Rs 7,500 in full settlement
iii) Shiva took over all investments at Rs 13,300
iv) Sundry creditors Rs 10,000 was paid at 9% discount
v) Realisation expenses Rs 3.400 were paid by Sudha for which she was allowed Rs 3,000
vi) Loss on realization Rs 9,400 was divided between Sudha and Shiva in 3:2 ratio

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 COMPANY ACCOUNTS

ACCOUNTING FOR SHARE CAPITAL & DEBENTURE

Q.1 Jain Ltd has incurred a loss of Rs. 8,00,000 before payment of interest on debentures. The directors
of the company are of the opinion that interest on debentures is payable only when company earn
profit. Do you agree?

Q.2 As per latest guidelines governing the servicing of debentures a company is required to create on
special account. Name that account.

Q.3 Name the method of redemption of debentures in which there is no requirement of creating
Debenture Redemption Reserve.

Q.4 What is the nature of receipt of premium on issue of shares?

Q.5 Can a company issue shares at a premium in the absence of any express authority inits articles?

Q.6 What is the maximum rate of interest which the board of directors of a company can normally pay
on calls-in-advance if the articles are silent on the matter of such interest?

Q.7 State with reason whether a company can issue its shares at a discount in its Initial Public Offer
(IPO).
Q.8 Why securities premium money cannot be used for payment of cash dividend among shareholders?

Q.9 Jamuna Ltd. with paid-up share capital of Rs. 60,00,000 has a balance of Rs. 15,00,000 in securities
premium account. The company management does not want to carry over this balance. You are
required to suggest the method for utilizing this premium money that would achieve the objectives of
the management and maximize the return to shareholders.

Q.10 Distinguish between a share and a Debenture.

Q.11 Can share premium be utilized for the purchase of fixed assets?

Q.12 State in brief, the SEBI guidelines regarding Debenture Redemption Reserve (DRR).

Q.13 Which companies are exempted from the obligation of creating DRR by SEBI?

Q.14 What is the restriction on reissue of forfeited shares at discount?

19
 APPLICATION BASED QUESTIONS

Q.1 X Ltd. issued 20,000 shares of Rs. 10 each at a premium of 10% payable as follows:-
On application Rs. 2 ( 1st Jan 2001), on allotment Rs. 4 (including premium) (1st April 2001),
On first call Rs. 3 (1st June 2001), on second call & final call Rs. 2 (1st Aug. 2001).
Applications were received for 18,000 shares and the directors made allotment in full.
One shareholder to whom 40 shares were allotted paid the entire

balance on his share holdings with allotment money and another shareholder did
not pay allotment and 1st call money on his 60 shares but which he paid with finalcall.
Calculate the amount of interest paid and received on calls-in-advance andcalls- in-
arrears respectively on 1st Aug. 2001.

Q.2 X Ltd took over the assets of Rs. 6,60,000 and liabilities of Rs. 80,000, Y Ltd for Rs.600,000. Show
the necessary journal entries in the book of X Ltd. assuming that

Case-I : The consideration was payable 10% in cash and the balance in 54000 equityshares of Rs.
10each.
Case-II : The consideration was payable 10% in cash and the balance in 45000 equityshares of Rs.
10each.
Case-III : The consideration was payable 10% in cash and the balance in 60,000 equityshares of Rs.
10each.

Q.3 X ltd. was formed with a capital of Rs. 500,000 divided into shares of Rs. 10 each out of these 2000
shares were issued to the vendors as fully paid as purchase consideration for a building acquired,
1000 shares were issued to signatories to the memorandum of association as fully paid. The
directors offered 6500 shares to the public and called up Rs. 6 per and received the entry called up
amount on share allotted. Show these transaction in the Balance sheet of a company.

Q.4 X Ltd. invited applications for 11,000 shares of Rs. 10 each issued at 10% premium payable as:
On application Rs. 3 (including Rs. 1 premium)
On allotment Rs. 4 (including Rs. 1premium)
On1stCall Rs. 3
On 2nd&finalcall Rs.2 Application were
received for 24000 shares.
Category I : One fourth of the shares applied for allotted 2000 shares.
Category II: Three fourth the shares applied for allotted9000 shares.

20
Remaining applicants were rejected. Mr. Mohan holding 300 shares out of category II failed to pay
allotment and two calls and his shares were re issued @ Rs. 11 fully paid- up.

Pass necessary journal entries.

Q.5 A company forfeited 240 shares of Rs. 10 each issued to raj at a premium of 20%. Raman had
applied for 300 shares and had not paid anything after paying Rs 6 per share including premium
on application. 180 shares were reissued at Rs. 11 per share fully paid up. Pass journal entries
relating to forfeiture and reissue of shares.

Q.6 On 1st July 2007. A Ltd gave notice of their intention to redeem their outstanding Rs. 400,000 8%
Debentures on 1st January, 2008 @ Rs. 102 each and offered the holders thefollowing options-

(a) To subscribe for (i) 6% cumulative preference shares of Rs. 20 each at Rs. 22.50 per share, accepted
by debenture holders of Rs. 1,71,000 or (ii) 12% debentures were issued @96% accepted by the
holders of Rs. 1,44,000Debentures.
(b) Remaining debentures to be redeemed for cash if neither of the option under (a) was accepted.
Pass necessary journal entries.

Q. 7 Sonu Ltd. Company issued 15,000 shares of Rs. 10 each. Payment on their shares is to be made as
follows:
On application Rs. 4 ( 1st Feb, 2003) On
allotment Rs. 3 (1st April, 2003)
On final call Rs. 3 (1st May, 2003)
Rakesh to whom 1000 shares were allotted paid the full amount on application and mohan to whom
200 shares were allotted paid the final call money on allotment. Interest @ 6% was paid on 1st May,
2003. Pass necessary journal entries.

Q.8 TPT Ltd. invited applications for issuing 1,00,000 equity shares of Rs. 10 each at a
premium of Rs. 3 per share. The whole amount was payable on application. The issue was
oversubscribed by 30,000 shares and allotment was made on pro-rata basis. Pass necessary journal
entries in the books of the company.

Q9 What is Zero Coupon Bond?

Q10 What is a Debenture Trust Deed?

21
Q.11 On 01-04-1999, A Ltd., issued 2000, 7% debentures of Rs. 100 each at a discount of 10%
redeemable at par after 4 years by converting them into equity shares of Rs. 100 each issued at
a premium of25%.

Pass journal entries in the following cases:

(i) If debentures are redeemed on maturity.

(ii) If debentures are redeemed before maturity.

Q.12 Pass journal entries for the following at the time of issue of debentures:
(a) B Ltd. issues 30,000, 12% Debentures of Rs. 100 each at a discount of 5 % to berepaid at par
at the end of 5years.
(b) E Ltd. issues Rs. 60,000, 12% Debentures of Rs. 100 each at a discount of 5 %repayable at a
premium of 10% at the end of 5years.
(c) F Ltd. issues Rs. 70,000, 12% Debentures of Rs. 100 each at a premium of 5 %redeemable at
110%.

Q.13 500 shares of Rs. 100 each issued at a discount of 10% were forfeited for the non- payment of
allotment money of Rs. 50 per share. The first and final call of Rs.10 per share on these shares
was not made. The forfeited shares were reissued atRs. 80 per share fully paid-up.

Q.14 200 shares of Rs. 100 each issued at a discount of 10% were forfeited for the nonpayment of
allotment money of Rs. 50 per share. The first and final call of Rs. 10 per share on these shares was
not made. The forfeited shares were reissued at Rs.
14 per share fully paid-up.

Q.15 800 Shares of Rs. 10 each issued at per were forfeited for the non-payment of finalcall of Rs. 2 per
share. These shares were reissued at Rs. 8 per share fully paid-up

22
 ISSUE OF DEBENTURES

1. Reliance Co. purchased assets of Rs.5,00,000 and took over liabilities of Rs.90,000 at an agreed
value of Rs.3,80,000. Reliance Co. issued debentures of Rs.100 each at 5% discount in full satisfaction
of the purchase price. Give journal entries in the booksof Reliance Co.

2. Y Ltd. purchased plant and machinery for Rs.2,00,000 from Z Ltd. 20% of the amount was paid by Y
Ltd. by accepting a bill of exchange in favour of Z Ltd. and the balance was paid by issuing
6%debentures of Rs.1,000 each at a premium of 25%. Journalise the above transactions.

3. X ltd. purchased assets of Y Ltd. asunder:

Plant and Machinery of Rs.20,00,000 at Rs.18,00,000; Land and Buildings of Rs.30,00,000 at Rs.42,00,000
for purchase consideration of Rs.55,00,000 and paid Rs.10,00,000 in cash and remaining by issue of 8%
Debentures of Rs.100 each at a premium of 20%. Record necessary entries in the books of X Ltd.

4. Meghnath Limited took a loan of Rs.1,20,000 from a bank and deposited 1,400, 8%debentures of
Rs.100 each as collateral security along with primary security worth Rs.2 lakhs. Company again took a
loan of Rs.80,000 after two months from a bank and deposited 1,000, 8% debentures of Rs.100 each as
collateral security. Record necessary journal entries and prepare the balance sheet of the company.

5. A Ltd. Company issued debentures of Rs.1,00,000 which were issued as follows:

(1) For cash at 90% Rs.50,000(Nominal)

(2) For creditor for Rs.20,000

Capital Expenditure in satisfaction of his claim Rs.25,000(Nominal)

(3) To Bankers for a loan of Rs.15,000 as

Collateral security Rs.25,000(Nominal)

The issue (1) and (2) are redeemable at the end of 10 years at par. How should the debentures be
dealt with in preparing the Balance Sheet of the Company?

6. Kusum Steel Industries Ltd. issued 21,00,000, 7.5% Debentures of Rs.100 each on March 31,2002
redeemable at a premium of 8% on 30th June,2009. The Board of Directors decided to transfer the
required amount to Debenture Redemption Reserve in three equal annual installments starting with
March 31,2007. Record necessary journal entries regarding issue and redemption of debentures. Ignore
entries relating to interest paid on debentures.

23
 7. Akanksha enterprises Ltd. issued 10,00,00,000, 6% Debentures of Rs.10 each onSeptember 1, 2001
redeemable at a premium of 7% asunder:
On March 31,2005 5,00,00,000 Debentures
On March 31,2007 2,50,00,000 Debenture
On March 31,2009 2,50,00,000 Debentures
The Board of Directors has also decided to transfer the required amount to Debenture
Redemption Reserve in four equal annual installments starting with March 31,2002. record
necessary journal entries. Ignore entries for interest.

8. D Ltd. redeemed Rs.30,00,000, 8% debentures issued at a premium of 5% as follows:

Rs.12,00,000, 8% debentures were converted into equity shares of Rs.100 each at a premium of
Rs.25 per share and the balance by converting them into 8% preference shares of Rs.100 each issued
at a discount of Rs.10 per share. Pass the necessary
journal entries in the books of the company. Show your workings clearly.

9. Journalise the following transactions:

(1) X Ltd. redeemed 1,000, 15% debentures of rs.100 each which were issued at a discount of 6% by
converting them into equity shares of Rs.10 each issued at par.
(2) Y Ltd. redeemed 400, 12% debentures of Rs.100 each which were issued at a discount of 5% by
converting them into11% preference shares of Rs.100 each at a premium of Rs.25 per share.
(3) Z Ltd. converts 500, 12% debentures of Rs.200 each issued at a discount of 10% into 2,000
equity shares of Rs.50 each, Rs.45paid-up.
All of the above debentures were converted at the option of the debenture holders before the
date of redemption.

10. On 1st April,2011, a company issued 1,000, 12% debentures of Rs.500 each at Rs. 450 each.
Debenture holders were given an option to get their debentures converted into Equity Shares of Rs.100
each at a premium of Rs.50 per share. On 31st March 2012, one year's interest had accrued on these
debentures which were not paid. A holder of 100 debentures informed that he wanted to exercise the
option for conversion of debentures into Equity Shares. The company, therefore, accepted his request
and redeemed these 100 debentures by issuing him Equity shares. The interest, however, on these 100
debentures was paid to the debenture holder.
Pass the necessary journal entries to record the above transactions in the books of the
company.

24
11. Company gave notice of its intention to redeem its outstanding Rs.4,00,000, 12%Debenture
Stock at Rs.102 per cent, and offered the holders the following options:
To apply the redemption money for subscribing:
(a) 8% Cumulative Preference Shares of Rs.20 each at Rs.22.50 per share.
(b) 10% Debenture Stock at96%.
(c) To have their holding redeemed for cash.
Holders of Rs.1,71,000 stock accepted the proposal(a). Holders
of Rs.1,44,000 stock accepted the proposal(b). And the
remaining stock holders accepted the proposal(c). Pass the
journal entries to record the above transactions.

12. Pass necessary journal entries for the redemption of debentures in the following cases in the
books of Jain Ltd.:
(i) redeemed 5,400, 12% debentures of rs.100 each by draw of lots.

(ii) Converted 667, 12% debentures of Rs.100 each into equity share of Rs.100 eachissue date a
premium of25%.

13. X Ltd. issued 6,00,000, 10% Debentures of Rs.100 each to be redeemed in three equal installments
beginning 1st April,2009. It duly redeemed the debentures as per the terms of issue. Identify the
values followed by X Ltd. in redeeming debentures on time.

25
 Ratio Analysis

Q1.Rs.2,00,000 is the cost of goods sold, Inventory turnoverratiois8times;stockatthebeginning is 1.5

times more than thestock at the end. Calculate the value of Opening and closing stock.

Q2. Calculate Debtors turnover ratio and Average collection period from thefollowing particulars as

on 31stDec. 2008 assuming 365 working days in a year:-

Total gross salesCash 11,00,000 Total Debtors on 55,000

sales 1,65,000 31.12.07 66,000
Sales return Provisionof 11,000 Total Debtors on 11,000
Doubtful Debts 31.12.08
1,910 22,000
Bills Receivable on
31.12.07

Bills Receivable on
31.12.08

Q3. From the following figures pertaining to two companies A Ltd. and B Ltd. belonging to plastic
industry. Calculate the Gross profit ratio of the two companies. Which company is doing better?
Particulars A Ltd. (Rs.) B Ltd. (Rs.)

Net profit after interest 75,000 1,10,000

Indirect expenses 10,000 15,000

Interest paid on debentures 15,000 25,000

Sales(Gross) 3,30,000 3,80,000

Sales return 10,000 20,000

26
 Q4. Calculate Operating Ratio and Operating Profit Ratio from the followinginformation:
Rs.
Net Sales 8,00,000
Cash Sales 2,00,000
Gross Profit Ratio 20%
Office & Selling Expenses 60,000
Depreciation 20,000
Loss oRns. 10,000
Equity share capital 4,00,000
Preference share capital 1,00,000
General Reserve 2,75,000
10% Debentures 4,00,000
Current liabilities 1,00,000
Discount on issue of shares 5,000
Net profit (after interest & tax) 80,000
Rate of Tax 50%

Q5. Write any five differences between shares and debentures.

Q6. Calculate Debtors turnover ratio and Average collection period from the following:- Credit
sales for the year Rs.60,000, Debtors Rs.5,000 , Bills ReceivableRs.5,000

Q7. A) Calculate Total Asset to Debt ratio

Total DebtsRs900000, Capital employedRs1100000, Current

liabilities Rs 100000.
B) Calculate stock if:

Current Ratio = 4, Quick Ratio = 3 and Working capital Rs 108000.

Q8. . A company had a liquid ratio of 1.5 and current ratio of 2 and inventoryturnover ratio 6
times.IthastotalcurrentassetsofRs.8,00,000 intheyear2003.Findoutannualsalesifgoodsare sold at
25% profit on Cost.

Q9. (a) From the given information, calculate stock turnover ratio.

Sales Rs. 5,00,000, Gross profit 25%; Opening stock was 1/3rdof the value of closingstock; Closing stock
was 30% of sales.

(b) ABusinesshascurrentratioof3:1andquickratioof1.8:1,if the working capitalisRs.1,60,000. Calculate the

total current assets and stock.

27
Q10. Following is the Balance Sheet of X Ltd. as on 31stMarch, 2008

Liabilities Rs. Assets Rs.

Bills payable 10,00,000 Cash 1,00,000

Creditors 15,00,000 Bills Receivable 4,00,000

10% Long term 10,00,000 Debtors 20,00,000

loan 5,00,000 Stock 9,00,000
Profit & Loss A/c 5,00,000 Investment 1,00,000
Reserves Fixed Assets (Net)
10,00,000 20,00,000
Share capital

55,00,000 55,00,000

The existing liquid ratio stands at 1:1. A liability of Rs.4,00,000 under dispute has to be paid
immediately as per Court order. Show the effect of this order on Liquid ratio& Current ratio.

Q11. The current ratio of a company is 2:1. State giving reason that payment of Dividend already
declared, would improve, reduce or not alter the current ratio.

Q12. From the following data, calculate Quick ratio:-

Working capital Rs.2,50,000; Total debts Rs.4,00,000; Long term debts Rs.3,20,000; stock Rs.2,00,000;
Prepaid expenses Rs.10,000.

Q13. The ratio of current assets (Rs.3,00,000) to current liabilities is 2.4:1. The accountant of this
firm is interested in maintaining a current ratio of 2:1 by acquiring some current assets on credit.
You are required to suggest him the amount of current assets which must be acquired for this
purpose.

Q14. The Debt Equity ratio of a company is 1:2. Explain issue of new equity sharesof RS.75,000
would increase, decrease or not change it.
Q15. The Debt Equity ratio of a company is 0.67:1. Explain that conversion ofDebentures into
Equity shares would increase, decrease or not change it.

28
Q16. From the given information calculate the stock turnover ratio:

Sales Rs.2, 00,000; Gross profit 25% on cost; Opening stock was 1/3rdof the value of closing
stock. Closing Stock was 30% of sales.

Q17. Net profit of a company was 20%. Its indirect expenses were Rs.80,000 and cash sales was
Rs.3,00,000. The credit sales were 80% of the total sales. Calculate the Gross profit ratio of
company.

Q18. . On the basis of the following information, calculate:

(i) Debt Equity Ratio

(ii) Working Capital Turnover Ratio

Information: Net Sales Rs.60,00,000; Cost of goods sold Rs.45,00,000; other current assets
Rs.11,00,000; Current Liabilities Rs.4,00,000; Paid up Share Capital Rs.6,00,000; 6% Debentures
Rs.3,00,000; 9% Loan Rs.1,00,000; Debenture Redemption Reserve Rs.2,00,000; Closing Stock
Rs.1,00,000.

Q19. Calculate debtor turnover ratio and average collection period fromthe following
information-

Totalsales-840000,

Cash sales are40%ofcreditsales,closingdebtors100000,andopening debtors being 4/5 of closing debtors.

29
 CASH FLOW STATEMENET

1. X Ltd. made a profit of Rs.4,75,000 after considering the following items:

Provision for tax made during the year 44,000

Preliminary expenses written off 5,000

Depreciation on fixed assets 50,000

Loss on sale of machinery 16,000

Provision for Doubtful debts 10,000

Gain on sale of Land 7,500

ADDITIONAL INFORMATION:

Particulars 2013 Rs. 2012 Rs.

Deferred Tax Liability(Net) 10,000 25,000

Trade Receivables 78,000 52,000

Prepaid Expenses 3,000 2,000

Trade Payables 51,000 40,000

Expenses Payable 20,000 34,000

Tax paid during the year was Rs.50,000.

Calculate cash from Operating Activities.

2. From the following information, calculate net cash from operations:

Particulars Rs.

Operating profit after Provision for tax of Rs.1,53,000 6,28,000

Insurance proceeds from the famine settlement 1,00,000

Proposed Dividend for the current year 72,000

Depreciation 1,40,000

Loss on sale of machinery 30,000

Profit on sale of investments 20,000

Dividend received on investments 6,000

Decrease in current assets(other than cash and cash equivalents) 10,000

30
Increase in current liabilities 1,51,000

Increase in current assets(other than cash and cash equivalents) 6,00,000

Decrease in current liabilities 64,000

Income tax paid 1,18,000

Refund of income tax received 3,000

3. From the following particulars of R Ltd., calculate Cash Flows from FinancingActivities:
Particulars 2006 2007

Equity Share Capital 6,00,000 10,00,000

18% Preference Share Capital 4,00,000 3,00,000

Securities Premium 1,00,000 2,60,000

14% Debentures 2,00,000 2,50,000

Discount on debentures 5,000 6,000

Underwriting commission on issue of shares ---- 20,000

Additional Information:
1. Dividend on preference shares and an interim dividend @15% were paid on equityshares on
March 31,2007.
2. Preference shares were redeemed on March 31, 2007 at a premium of 5%. Suchpremium has
been provided out of profit.
3. New shares and debentures were issued on March 31,2007.

4. From the following particulars of Bharat Gas Ltd., calculate Cash Flows from Investing
Activities. Also show the workings clearly by preparing the ledger accounts.

Assets 2006 2007

Goodwill 1,00,000 3,00,000

Patents 2,80,000 1,60,000

Machinery 10,20,000 12,40,000

10% Long Term Investments 60,000 1,60,000

Investment in Land 1,00,000 1,00,000

31
 Shares of Amartax Ltd. 1,00,000 1,00,000

Additional Information:

1. Patents are written off to the extent of Rs.40,000 and some patents were sold at a profit
ofRs.20,000.
2. A machine costing Rs.1,40,000(depreciation provided thereon Rs.60,000) was sold for
Rs.50,000. Depreciation charged during the year wasRs.1,40,000.
3. On March 31,2007, 10% investments were purchased for Rs.1,80,000 and some investments were
sold at a profit of Rs.20,000. Interest on investment was received on March31,2007.

4. Amartax Ltd. paid dividend @10% on its shares.

5. A plot of land was purchased out of surplus funds for investment purposes and let out for
commercial use and rent receivedRs.30,000.

5. From the following Balance Sheet of surya Ltd., as on 31st March, 2012 and 2011,prepare a
statement of cash flow:

Particulars Note 2012 2011

No. Rs. Rs.

I. Equity and Liabilities

Shareholder's Funds:

Share Capital 4,75,000 4,00,000

Reserves and Surplus 1 1,32,000 (10,000)

Non Current Liabilities:

Long Term Borrowings 2 2,50,000 2,00,000

Current Liabilities:

Trade Payables 1,10,000 50,000

Short Term Provision 3 16,000 10,000

Total 9,83,000 6,50,000

II. Assets

Non Current Assets:

32
 Fixed Assets 4 4,52,000 1,70,000

Non Current Investments 45,000 40,000

Other Non Current Assets 5 12,000 16,000

Current Assets:

Inventory 2,00,000 1,50,000

Trade receivables 56,000 1,76,000

Cash and Cash equivalents 2,14,000 94,000

Other Current Assets 4,000 4,000

Total 9,83,000 6,50,000

Notes: 2012 2011

(1) Reserve and Surplus:

Securities Premium 60,000 -----

Profit and Loss balance 72,000 (10,000)

1,32,000 (10,000)

(2) Long Term Borrowings:

2,50,000 2,00,000
15% Debentures

(3) Short Term Provisions:

Provision for Doubtful debts 16,000 10,000

(4) Fixed Assets: 5,00,000 2,00,000

Less: Accumulated Depreciation 48,000 30,000

4,52,000 1,70,000

(5) Other Non Current Assets:

Discount on Issue of Debentures 12,000 16,000
(6) Other Current Assets:
Discount on Issue of Debentures 4,000 4,000
Additional Information:

33
 1. Dividend paid during the year Rs.36,000.
2. Investments costing Rs.10,000 were sold at a profit of40%.
3. Fixed assets costing Rs. 20,000(accumulated depreciation Rs.8,000) weresold for
Rs.17,000.
4. Additional debentures amounting to Rs.50,000 were issued at par on1stAugust,2011.
Interest on debentures has been paid regularly.

6. Following are the balance sheets of Sewak Ltd. as on 31.3.2012 and31.3.2011:

Particulars Note 2012 2011
No. Rs. Rs.

I. Equity and Liabilities

Shareholder's Funds:
Share Capital 7,00,000 4,00,000
Reserves and Surplus 1 (3,20,000) (50,000)

Non Current Liabilities:

Long Term Borrowings 2 4,00,000 2,00,000
Current Liabilities:
Trade Payables 1,50,000 1,10,000
Other Current Liabilities 3 20,000 10,000
Total 9,50,000 6,70,000

II. Assets

Non Current Assets:

Fixed Assets 4 5,00,000 3,00,000
Non Current Investments 1,40,000 2,00,000
Other Non Current Assets 5 12,000 ----

Current Assets:
Inventory 1,00,000 50,000
Trade receivables 1,70,000 1,00,000

Cash and Cash equivalents 25,000 20,000

Other Current Assets 3,000 -----

34
Total

Notes 31.3.2012 31.3.2011

: Reserves and Surplus:

(1)

Profit and Loss Balance (3,20,000) (50,000)

(2) Long Term Borrowings:

9% Debentures 4,00,000 2,00,000

(3) Other Current Liabilities:

Outstanding Expenses 20,000 10,000

(4) Other Non Current Assets:

Share Discount 12,000 ------

(5) Other Current assets

Share Discount 3,000 -------

Additional Information:

(1) Included in the fixed assets was a piece of machinery costing Rs.70,000 on which
depreciation charged was Rs.40,000 and it was sold for Rs.30,000. During the year
Rs.1,40,000 depreciation was charged on fixedassets.
(2) In April,2011, shares for Rs.3,00,000 were issued at 5% discount.
Prepare a Cash Flow Statement.

35
 7. Prepare a Cash Flow Statement from the following:

STATEMENT OF PROFIT ANDLOSS

(for the year ended 31st March,2012)

Particulars Note Amoun

No. t (Rs.)

I. Revenue from Operations 25,40,000

II. Expenses:

Cost of Material Consumed 20,60,000

Employee Benefit Expenses 1,36,000

Finance Costs 1 20,000

Depreciation and Amortization Expenses 54,000

Other Expenses 2 16,000

Total Expenses

22,86,000

III. Profit before Tax(I-II) 2,54,000

Provision for Tax 34,000

2,20,000

Profit after Tax

Notes:
(1) Finance Costs:
Interest on Debentures 20,000

(2) Other Expenses:

Goodwill written off 16,00

36
37