AHSEC Class 12: Accountancy Solved Question Papers' 2018 | AHSEC | SOLVED QUESTION PAPERS

AHSEC ACCOUNTANCY SOLVED QUESTION PAPERS
2018 (ACCOUNTANCY)
Full Marks: 100
Pass Marks: 30, Time: Three Hours

11. Amar and Bahadur are partners of a firm sharing profits in the ratio of 3:2. They admit Mery as a new partner for ¼ th share in the future profits. The new profit sharing ratio between Amar and Bahadur is agreed to be 2 : 1. Calculate their sacrificing ratio.                               3

Ans: Aman : Bahadur = 3:2 (Old Ratio)

Mery’s share = ¼ (out of total share)

Let the total share be 1

Mery’s share = 1x ¼ =  ¼

Remaining share = 1 -  ¼ = ¾

Now, Amar’s new share = ¾ x 2/3 = 2/4

Bahadur’s new share = ¾ x 1/3 = 1/4

Therefore, Amar: Bahadur:Mery = 2:1:1 (New ratio)

Again, Sacrifice ratio = Old Share – New Share

Amar’s sacrifice = 3/5 – 2/4 = (12-10)/20 = 2/20

Bahadur’s sacrifice = 2/5 – ¼ = (8-5)/20 = 3/20

Therefore, Sacrifice ratio = 2/20:3/20 = 2:3

Or

Ranjana, Sadhana and Kamona are partners sharing profits in the ratio of 4: 3: 2. Ranjana retires and Sadhana and Kamona agree to share future profits in the ratio of 5: 3. Calculate the gaining ratio.        3

Ans: Ranjana:Sadhana:Kamona = 4:3:2 (Old Ratio)

Sadhana:Kamona = 5:3 (New Ratio)

Gaining Ratio = New Share – Old Share

Now, Sadhana’s Gain = 5/8 – 3/9 = (45-24)/72 = 21/72

Kamona’s Gain = 3/8 – 2/9 = (27-16)/72 = 11/72

Therefore, Gaining Ratio = 21:11

12. From the following Receipts and Payments Account for the year ended 31^st March, 2017 and other details of KAZIRANGA SPORTS CLUB, prepare an Income Expenditure Account for the year ended 31^st March, 2017.

Receipts and Payments Account

Receipts	Rs.	Payments	Rs.
Cash in hand on 01.04.16 Subscriptions: 2015-16:                 1,000 2016-17:               30,000 2017-18:                 2,000   Donation Interest Donation for Buildings Life Membership Fees	10,000       33,000   7,000 3,000 10,000 7,000	Salaries Honorarium Sports Expenses Rent Travelling Expenses Purchase of Furniture Cash in hand on 31.3.17	8,000 5,000 2,000 3,000 2,000 35,000 15,000
	70,000		70,000

Additional Information:

a)      Outstanding Salaries = 2,000/-

b)      Prepaid Rent = 1,000/-

Ans:

Income and Expenditure A/c of Kaziranga sports

For the year ended on 31-3-2017

Expenditure	Amount	Income	Amount
To Salaries                                          8000 Add:-outstanding Salaries               2000 To Honorarium To Sports expenses To Rent                                              3000 Less:-Prepaid rent                            1000 To Travelling expenses To Surplus (Excess on income over expenditure)	10,000 5000 2000   2000 2000 19,000	By Subscription   By Donation By Interest	30,000   7000 3000
	40,000		40,000

Note:-

a)      Donation for Buildings and life membership fees are capital receipts hence not shown in income and expenditure A/c.

b)      Purchase of Furniture is a capital expenditure.

Or

Explain the steps in preparation of Income and Expenditure Account.   5

Ans: Steps in the Preparation of Income and Expenditure Account: Following steps may be helpful in preparing an Income and Expenditure Account from a given Receipt and Payment Account:

1. First, The opening and closing balances of cash and bank are ignored as they are not an income.

2. Second, Exclude the capital receipts and capital payments as these are to be shown in the Balance Sheet. Income and expenditure accounts include only revenue items.

3. Third, Consider only the revenue receipts to be shown on the income side of Income and Expenditure Account with due adjustments of income accrued and income received in advance.

4. Fourth, Take the revenue expenses to the expenditure side of the Income and Expenditure Account with due adjustments of prepaid expenses and outstanding expenses.

5. Last, Consider the following items not appearing in the Receipt and Payment Account that need to be taken into account for determining the surplus/ deficit for the current year :

(a) Depreciation of fixed assets.

(b) Profit or loss on sale of fixed assets.

(c) Opening and Closing Stock.

13. Charles Ltd. made a profit of Rs. 1, 00,000/- after charging depreciation of Rs. 20,000 on assets and a transfer to general reserve of Rs. 30,000/-. The goodwill written off was Rs. 7,000/- and gain on sale of machinery was Rs. 3,000/-. Other information available to you (change in the value of current assets and current liabilities) are: debtors showed an increase of Rs. 6,000/-; creditors an increase of Rs. 10,000/-; prepaid expenses an increase of Rs. 200/-; bills receivable a decrease of Rs. 3,000/-; bills payable a decrease of Rs. 4,000/- and outstanding expenses a decrease of Rs. 2,000/-. Ascertain cash flow from operating activities.

Ans: Calculation of Cash Flow from operating activities

Particulars	Amount
Net profit Add:- Non - cash and Non –operating expenses and losses including Appropriation             Depreciation             Transfer to General Reserve             Goodwill written off   Less:-Non – cash and non – operating incomes and gains:                     Gain on Sale of Machinery   Effect of working capital changes                     Increase in Debtors                     Increase in Creditors                     Increase in prepaid expenses                     Decrease in B/R                     Decrease in B/P                     Decrease in outstanding expenses Cash Flow From operating activities	1,00,000   20,000 30,000 7,000
	1,57,000   3,000
	1,54,000   (6,000) 10,000 (200) 3,000 (4,000) (2,000)
	1,54,800

Or

Explain the terms:                                           2 ½ + 2 ½

1)      Cash equivalents.

2)      Cash flows.

Ans: 1) Cash Equivalents: Cash Equivalents are short-term, highly liquid investments that are readily convertible cash. Examples of cash equivalents are: (a) treasury bills, (b) commercial paper, (c) money market funds and (d) Investments in preference shares and redeemable within three months.           

2) Cash flows: Cash flows are the movement of cash and cash equivalents. Cash flows comprised of cash inflows and cash outflows. Cash inflows means cash generated from operating, investing and financing activities and cash outflows means cash and cash equivalent expended in operating, investing and financing activities.

 

14. Mention any five objectives of Ratio Analysis.                           5

Ans: Answer: A Ratio is an arithmetical expression of relationship between two related or interdependent items. If such ratios are calculated on the basis of accounting information, then they are called accounting ratios. Simply, accounting ratio is an expression of relationship between two accounting terms or variables or two set of accounting heads or group of items stated in financial statement. It is one of the techniques of financial analysis which is used to evaluate the operating efficiency and financial position of a business concern.

Objectives of Ratio analysis

1.       To know the weak areas of the business which need more attention.

2.       To know about the potential areas which can be improved with the effort in the desired direction?

3.       To provide a deeper analysis of the profitability, liquidity, solvency and efficiency levels in the business.

4.       To provide information for decision making.

5.       To provide information for inter-firm and intra-firm comparison.

Or

Calculate current assets of a company from the following information:                                5

Stock turnover ratio = 4 times Stock at the end is Rs. 20,000/- more than the stock at the beginning. Sales Rs. 3,00,000/- and gross profit ratio is 20% of Sales. Current liabilities = 40,000/- Quick ratio = 0.75

Ans: Given,

STR = 4 Times

Sales = Rs. 3,00,000

G.P = 20% of Sales

Now, Gross Profit = 3,00,000*20% = 60,000

Again, cost of goods sold = Sales – GP = 3,00,000 – 60,000 = 2,40,000

Now, STR = Cost of goods sold / Average stock

=> 4 = 2,40,000/Average Stock

=> Average Stock = 2,40,000/4 = 60,000

 

                 Current liabilities

                 Quick ratio

Again, Let the opening stock be x

(opening stock + Closing stock)/2 = Average Stock

=> [x + (x + 20,000)]/2 = 60,000

=> 2x + 20,000 = 1,20,000

=> 2x = 1,00,000

=> x = 50,000

Therefore, opening stock = 50,000

And Closing stock = 50,000 + 20,000 = 70,000

Again,

Current liabilities = 40,000

Quick ratio = 0.75

Now, Quick ratio = (Liquid assets / Current liabilities)

=> 0.75 = (Liquid assets / 40,000)

=> Liquid assets = 0.75*40,000 = 30,000

Therefore, Current assets = Liquid assets + Closing Stock = 30,000 + 70,000 = 1,00,000

15. Shyam, Gagan and Ram are partners sharing profits in the ratio of 2 : 2 : 1. On 31^st March, 2017, their Balance Sheet was as follows:

Balance Sheet

Liabilities	(Rs.)	Assets	(Rs.)
Sundry Creditors Reserve Capital: Shyam:                               20,000/- Gagan:                                10,000/- Ram:                                    10,000/-	50,000 10,000       40,000	Cash Debtors Stock Machinery Buildings	5,000 20,000 25,000 20,000 30,000
	1,00,000		1,00,000

Gagan retired on that date and Shyam and Ram agreed to share future profits in the ratio 5 : 3. Stock, Machinery and Buildings were revalued at Rs. 20,000/-, Rs. 15,000/- and Rs. 45,000/- respectively. Prepare Revaluation Account and Partner’s Capital Account.            2 ½ + 2 ½=5

Ans:

Revaluation A/c

Dr.                                                                                                                                                                                            Cr.

Particulars	Amount	Particulars	Amount
To Stock To Machinery To Profit on revaluation. - Shyam = 5,000*2/5 - Gagan = 5,000*2/5 - Ram = 5,000*1/5	5,000 5,000   2,000 2,000 1,000	By Building	15,000
	15,000		15,000

Partner’s Capital A/c

Particulars	Shyam	Gagan	Ram	Particulars	Shyam	Gagan	Ram
To Gagan’s loan A/c To Balance c/d	26,000	16,000	13,000	By Balance b/d By Reserve By Revaluation	20,000 4,000 2,000	10,000 4,000 2,000	10,000 2,000 1,000
	26,000		13,000		26,000	16,000	13,000

Or

Prepare the new format of the Balance Sheet of a company with the major headings only.   5

Ans: Proforma of Balance Sheet

Name of the Company …………………………………….

Balance Sheet as at……………………………………..

Particulars	Note No.	Amount (Current Year)	Amount (Previous Year)
I. EQUITY AND LIABILITIES (1) Shareholders’ Funds (a) Share capital (b) Reserves and surplus (c) Money received against share Warrants (2) Share application money pending allotment (3) Non – current liabilities (a) Long term borrowings (b) Deferred tax liabilities (net) (c) Other long term liabilities (d) Long term provisions (4) Current liabilities (a) Short term borrowings (b) Trade payables (c) Other current liabilities (d) Short term provisions
Total
II ASSETS (1) Non-Current Assets (a) Fixed assets (i) Tangible assets (ii) Intangible assets (iii) Capital work in progress (iv) Intangible assets under development (b) Non-current investments (c) Deferred tax assets (net) (d) Long term loans and advances (e) Other non-current assets (2) Current Assets (a) Current investments (b) Inventories (c) Trade receivables (d) Cash and cash equivalents (e) Short term loans and advances (f) Other current assets
Total

 16. Mohit, Sohan and Rahul were partners sharing profits in the ratio of 2 : 2 : 1. Their Balance Sheet as on 31^st March, 2017 was as follows:

Balance Sheet

Liabilities	(Rs.)	Assets	(Rs.)
Capital: Mohit:                                 30,000/- Sohan:                                 20,000/- Rahul:                                  20,000/- General Reserve Creditors	70,000 5,000 25,000	Fixed Assets Stock Sundry Debtors Cash at Bank	60,000 10,000 20,000 10,000
	1,00,000		1,00,000

Sohan died on June 30, 2017. It was agreed between the remaining partners and his executors that:

1)      Goodwill will be valued at Rs. 50,000.

2)      Interest on capital is provided at 10% p.a.

3)      Profit for the year 2017-18 be taken as having accrued at the same rate as that of the previous year which was Rs. 40,000/-

4)      The amount due to Sohan shall be transferred to his Executor’s Loan Account.

Prepare Sohan Capital Account as on the date of his death.                                         5

Ans:

Sohan’s Capital A/c

Particulars	Amount	Particulars	Amount
To Sohan’s Executors A/c	46,500	By Balance b/d By Interest on Capital A/c (20,000*10%*3/12) By General reserve (5,000*2/5) By P/L Suspense (40,000*3/12*2/5)  By Mohit’s Capital A/c By Rahul’s Capital A/c	20,000 500 2,000 4,000 13,333 6,667
	46,500		46,500

Or

What is Partnership Deed? Mention any three distinctions between Fixed and Fluctuating Capital Accounts of a partner. 2+3=5

Ans: Ans: Partnership deed: A partnership is formed by an agreement. This agreement may be oral or in writing. Though the law does not expressly require that the partnership agreement should be in writing, it is desirable to have it in writing. A written agreement, which contains the terms of partnership, as agreed to by the partners is called ‘Partnership Deed.’

Difference between fixed capital accounts and fluctuating capital Accounts:    

Basic of difference	Fixed Capital Account	Fluctuating Capital Accounts
1. Opening and Closing balance	Opening and Closing balances normally remains same.	Opening and Closing balance change due to adjustment in capital account.
2. Current account	Current accounts of partners are opened in this case.	Current accounts of partners are not opened in this case.
3. Adjustment relating to capital	All adjustment relating to partners capital accounts are made in current account.	All such adjustments are made in capital account itself.
4. Closing capital	The closing balance of capital account always shows a credit balance.	The closing balances of partner’s capital account may be debit or credit.

17. SONU and ASHU were partners sharing profits in the ratio of 3 : 1. Their Balance Sheet as on 31^st March, 2017 was as follows:

Balance Sheet

Liabilities	(Rs.)	Assets	(Rs.)
Creditors Loan Capital: SONU:                            50,000/- ASHU:                            50,000/-	10,000 20,000     1,00,000	Cash at Bank Sundry Assets Profit and Loss Account	20,000 70,000 40,000
	1,30,000		1,30,000

The firm was dissolved on the above date. The assets were realised at Rs. 50,000/-. Creditors were paid at a discount of 20%. SONU agreed to pay off the Loan. Realisation expenses were Rs. 2,000/-. Prepare Realisation Account, Bank Account and Partners Capital Account.    5

Ans:

Realisation A/c

Particulars	Amount	Particulars	Amount
To Sundry assets To Bank (Payment to Creditors) To Sonu’s Capital (Loan taken over) To Bank (Expenses)	70,000 8,000 20,000 2,000	By Creditors By Loan By Bank (Assets realised) By Loss on realisation - Sonu = 20,000*3/4 - Ashu = 20,000*1/4	10,000 20,000 50,000   15,000 5,000
	1,00,000		1,00,000

Bank A/c

Particulars	Amount	Particulars	Amount
To Balance b/d To Realisation A/c (Assets realised)	20,000 50,000	By Realisation A/c (Payment to creditors) By Realisation A/c (Expenses paid) By Sonu’s Capital A/c By Ashu’s Capital A/c	8,000 2,000 25,000 35,000
	70,000		70,000

Partner’s Capital A/c

Particulars	Sonu	Ashu	Particulars	Sonu	Ashu
To P/L To Realisation A/c To Bank (Final Payment)	30,000 15,000 25,000	10,000 5,000 35,000	By Balance b/d By Realisation A/c (Loan taken over)	50,000 20,000	50,000
	70,000	50,000		70,000	50,000

Or

What do you mean by Dissolution of a Partnership? State three grounds for Dissolution of Partnership. 2+3=5

Ans: Reconstitution of Partnership: A Partnership agreement is an agreement between two or more persons for carrying out various business activities. Reconstitution of a partnership refers to a situation when there is a change in the existing partnership agreement. In such a case, a new partnership agreement is formed to replace the old partnership agreement. It means the firm continues to exist and the only change will take place in existing partnership agreement.  Thus, reconstitution of a partnership takes place in each of the following cases:

a)      Change on profit sharing ratio

b)      Admission of a partner (Refer below for explanation)

c)       Retirement of a partner

d)      Death of a partner

e)      Amalgamation of two firms

18. Explain the terms ‘Over-subscription’ and ‘Under-subscription’ of shares.                   2 ½ + 2 ½=5

Ans: Over-subscription: When the number of shares applied is more than the number of shares issued by a company, the issue of shares is said to be oversubscribed. The company cannot allot shares more than those offered for subscription. In case of over-subscription, there are three possibilities arise:

(a) Some applicants may not be allotted any shares. This is known as ‘rejection of applications’.

(b) Some applicants may be allotted less number of shares than they have applied for. This is known as partial or pro-rata allotment.

(c) Some applicants may be allotted the full number of shares they have applied for. This is known as full allotment.

Under subscription: When the number of shares applied is less than the number of shares issued by a company, the issue of shares is said to be under subscribed. In this case accounting entries are passed with the number of shares applied by the public.    

Or

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ALSO READ (AHSEC ASSAM BOARD CLASS 12):

1. AHSEC CLASS 12 ACCOUNTANCY CHAPTERWISE NOTES

2. AHSEC CLASS 12 ACCOUNTANCY IMPORTANT QUESTION (THEORY)

3. AHSEC CLASS 12 ACCOUNTANCY IMPORTANT QUESTION BANK (PRACTICAL)

4. AHSEC CLASS 12 ACCOUNTANCY PAST EXAM PAPERS (FROM 2012 TILL DATE)

5. AHSEC CLASS 12 ACCOUNTANCY SOLVED QUESTION PAPERS (FROM 2012 TILL DATE)

6. AHSEC CLASS 12 ACCOUNTANCY CHAPTERWISE MCQS

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What is a ‘Preference Share’? State the different types of Preference Shares.                  2+3=5

Ans: Preference Share: According to Sec. 43 (a) of the Companies Act 2013, a share that carries the following two preferential rights is called ‘Preference Share’:

(i) Preference shares have a right to receive dividend at a fixed rate before any dividend given to equity Shares.      

(ii) Preference shares have a right to get their capital returned, before the capital of equity shareholders is returned in case the company is going to wind up.

Preference shares are further subdivided into:

(a) On the basis of dividend: Cumulative and Non-cumulative preference shares

Cumulative preference shares are those which have the right to receive arrear of dividend before the dividend is paid to the equity shareholders.

Non-cumulative preference shares are those which do not have the right to receive arrear of dividends.

(b) On the basis of participation: Participating and non-Participating preference shares

Participating preference shares are those which have the rights to participate in remaining profits after payment of dividends to the equity shareholders.

Non-Participating preference shares are those which do not have the rights to participate in remaining profits after payment of dividends to the equity shareholders.

(c) On the basis of conversion: Convertible and Non-Convertible preference shares

Convertible preference shares are those which have the right to be converted into equity shares.

Non-convertible preference shares are those which do not have the right to be converted into equity shares.

(d) On the basis of redemption: Redeemable and Irredeemable preference shares

Redeemable preference shares are those which are redeemable after the expiry of specific period of time.

Irredeemable preference shares are those which are not redeemed by the company except in case of winding up.

19. Following is the Trial Balance of RAM and SHYAM as on 31^st March, 2017:

Trial balance

Particulars (DR)	Rs.	Particulars (CR)	Rs.
Plant & Machinery Freight on Sales Publicity Land & Buildings Sundry Debtors Bad debts Cash at Bank Investments Cash in hand Salaries Rent Stock Drawings: RAM                          6,000 SHYAM                    10,000	10,000 3,000 2,000 50,000 10,000 2,000 15,000 8,000 1,000 12,000 8,000 25,000     16,000	Capital Accounts: RAM                               36,000 SHYAM                           40,000 Trading Account: Gross Profit Creditors Bank Loan Bills Payable	76,000   60,000 12,000 8,000 6,000
	1,62,000		1,62,000

Prepare a Profit & Loss Account and the Profit and Loss Appropriation Account of the firm for the year ended 31^st March, 2017 and a Balance Sheet as on that date, after taking into consideration the following additional information:               8

                     i.            Outstanding Salaries Rs. 3,000/-

                   ii.            Ram will get a Commission of Rs. 10,000/- for the year.

 

Profit & Loss A/c

For the year ended on 31-03-2017

Particulars	Amount	Particulars	Amount
To Freight on Sales To Publicity To Bad debts To Salaries              12,000 Add:- Outstanding  3,000 To Rent To Net Profit	3,000 2,000 2,000   15,000 8,000 30,000	By Gross profit b/d	60,000
	60,000		60,000

Profit & Loss Appropriation A/c

For the year ended on 31-03-2017

Particulars	Amount	Particulars	Amount
To Partner’s Commission       -Ram To Share of Profit - Ram = 20,000*1/2 - Shyam = 20,000*1/2	10,000   10,000 10,000	By Net Profit	30,000
	30,000		30,000

Balance Sheet

As on 31-03-2017

Liabilities	Amount	Assets	Amount
Outstanding Salaries Creditors Bank loan Bills payable Capital: Ram                               36,000 Add: Commission       10,000 Add: Share of profit   10,000 Less: Drawings              6,000 Shyam’s Capital           40,000 Add:- Share of profit  10,000 Less:- Drawings           10,000	3,000 12,000 8,000 6,000         50,000     40,000	P/M Land & Building Sundry Debtors Cash at Bank Investments Cash in hand Stock	10,000 50,000 10,000 15,000 8,000 1,000 25,000
	1,19,000		1,19,000

20. Honda Limited issued 10,000 equity shares of 100 each payable as follows:

                Rs. 20/- on application

                Rs. 30/- on allotment

                Rs. 20/- on first call

                Rs. 30/- on second and final call

10,000 shares were applied for the allotted. All money due was received with the exception of both the calls on 300 shares held by SUPRIYA. These shares were forfeited. Give necessary journal entries.                 8

Ans:

Journal Entries

In the books of Honda Ltd.

Particulars	L/f	Amount Dr.	Amount Cr.
Bank A/c                                                                                            Dr. To Share Application A/c (Being the application money received on 10,000 shares @ Rs. 20 each)		2,00,000	2,00,000
Share Application A/c                                                                      Dr. To Share Capital A/c (Being the application money on 10,000 shares @ Rs. 20 each transferred to Share Capital & excess refunded)		2,00,000	2,00,000
Share Allotment A/c                                                                          Dr. To Share Capital A/c (Being the allotment money due on 10,000 shares @ Rs. 30 each)		3,00,000	3,00,000
Bank A/c                                                                                               Dr. To Share Allotment A/c (Being the allotment money received on 10,000 shares @ Rs. 30 each)		3,00,000	3,00,000
Share 1st Call A/c                                                                                 Dr. To Share Capital A/c (Being the first call money due on 10,000 shares @ Rs. 20 each)		2,00,000	2,00,000
Bank A/c                                                                                                Dr. Calls-in-arrear A/c                                                                               Dr. To Share 1st Call A/c (Being the first call money received on 9,700 shares)		1,94,000 6,000	2,00,000
Share 2nd and Final Call A/c                                                               Dr. To Share Capital A/c (Being the first call money due on 10,000 shares @ Rs. 30 each)		3,00,000	3,00,000
Bank A/c                                                                                                Dr. Calls-in-arrear A/c                                                                                Dr. To Share 2nd and Final Call A/c (Being the first call money received on 9,700 shares)		2,91,000 9,000	3,00,000

Or

Write short notes on:                                    2x4=8

1)      Re-issue of forfeited shares.

2)      Calls in Arrears.

3)      Calls in Advance.

4)      Reserve Capital.

1) Reissue of forfeited shares: The directors of the company have the power to re-issue the forfeited shares on such terms as it think fit. Thus the forfeited shares can be reissued at par, or at premium or at discount. However, if the forfeited shares are reissued at discount, the amount of discount should not exceed the amount credited to the share forfeiture A/c. If the discount allowed on reissue is less than the forfeited amount there will be the surplus left in the share forfeited A/c. This surplus will be of the nature of capital profits so it will be transferred to the Capital Reserve A/c.

2) Calls in arrears: Calls-in-Arrears: The amount which is not paid by shareholders when money is demanded by the company, such amount is known as ‘Calls-in-Arrears’. The maximum rate of interest to be provided on calls in arrear must not exceed 10% per annum.

3) Calls-in-Advance: Sometimes, it so happens that a shareholder may pay the entire amount on his shares even though the whole amount has not been called up. The amount received in advance of calls from such a shareholder should be credited to "calls in advance". The maximum rate of interest allowed on calls in advance is 12% per annum.

4) Reserve Capital: A company may by special resolution determine that any portion of its share capital which has not been already called up shall not be capable of being called-up, except in the event of winding up of the company. Such type of share capital is known as reserve-capital.

21. X Ltd. issued 5,000, 16% debentures of Rs. 100/- each at a discount of 5% repayable after 5 years at a premium of 5%. You are required to pass journal entries and show the “Loss on Issue of Debentures Account” over the period of five years.    8

Journal Entries

In the books of X Ltd.

Particulars	L/f	Amount Dr.	Amount Cr.
At the time of Issue Bank A/c                                                                                            Dr. Loss on issue of debentures A/c                                                   Dr. To 10% Debentures A/c To Premium on redemption of debentures A/c (Being the 5000 10% Debentures of Rs. 100 each issued at a discount of 5%, but repayable at a premium of 5%)		4,75,000 50,000	5,00,000 25,000
At the time of Redemption 10% Debentures A/c                                                                       Dr. Premium on Redemption of debentures A/c                             Dr. To Bank A/c (Being the 5000 10% Debentures of Rs. 100 each redeemed at a premium of 5%)		5,00,000 25,000	5,25,000

Loss on issue of Debentures A/c

Date	Particulars	Rs.	Date	Particulars	Rs.
Year 1	To 10% Debentures To Premium on redemption A/c	25,000 25,000	Year 1	By Profit and Loss A/c By Balance c/d	10,000 40,000
		50,000			50,000
Year 2	To Balance b/d	40,000	Year 2	By Profit and Loss A/c By Balance c/d	10,000 30,000
		40,000			40,000
Year 3	To Balance b/d	30,000	Year 3	By Profit and Loss A/c By Balance c/d	10,000 20,000
		30,000			30,000
Year 4	To Balance b/d	20,000	Year 4	By Profit and Loss A/c By Balance c/d	10,000 10,000
		20,000			20,000
Year 5	To Balance b/d	10,000	Year 5	By Profit and Loss A/c	10,000
		10,0000			10,000

Working Note:

Amount to be written off each year.

= Amount of loss on issue of debentures/ No. of years = 50,000/5 = 10,000

Or

What is meant by a debenture? Explain the different types of debentures.        2+6=8

Ans: Meaning of Debentures: According to Sec. 2 (30) of the companies Act, 2013, debentures include “debenture stock, bonds and any other instruments of a company evidencing a debt, whether constituting a charge on the assets of the company or not.”

Debentures are debt securities issued by a joint stock company. Amounts collected by way of debentures form part of the loan capital of a company and are repayable after a fixed period. Debenture holders get fixed rate of interest on their debentures as a charge against profit. They are creditors of the company.

Types of Debentures: Debentures are classified as follows:

1. On the Basis of Repayment

a. Redeemable Debentures: These debentures are paid off or redeemed after a fixed period of time.

b. Irredeemable or Perpetual Debentures: These debentures are permanent debentures of a company. They are redeemed only in the event of winding up of a company.

2. On the Basis of Transferability

a. Registered Debentures: These debentures are registered in the name of the owner in the company’s register of debentures.

b. Bearer Debentures: These debentures are not registered in the name of the owner in the company’s register of debentures. These debentures are transferable by mere delivery.

3. On the Basis of Security

a. Secured debentures: These are the debentures which are secured by either a fixed charge or floating charge.

b. Unsecured Debentures: These debentures are not secured by any charge on the assets.

4. On the basis of Conversion

a. Convertible Debentures: These debentures are issued with an option to debenture holders to convert them into shares after a fixed period.

b. Non Convertible Debentures: These are debentures issued without conversion option.

5. On the Basis of Priority

a. First debentures: The debentures which have t be repaid first before other debentures are called first debentures.

b. Second debentures: The debentures which will be repaid after the first debentures are called second debentures.

6. On the Basis of Coupon Rate (interest rate)

a. Fixed Rate Debentures: Most of the time debentures are issued with a pre-fixed rate of interest. These debentures are called fixed interest debentures.

b. Floating rate Debentures: Floating rate as the names suggests keeps changing.

c. Zero Coupon Bonds: These debentures do not carry a specific rate of interest. These debentures are issued at a substantial discount but redeemed at par.

22. A and B are partners sharing profits in the ratio of 3 : 2. Their Balance Sheet as on 31^st March, 2017 was as follows:

Balance Sheet

Liabilities	(Rs.)	Assets	(Rs.)
Sundry Creditors Capital: A:                               30,000/- B:                               20,000/-	20,000     50,000	Cash in hand Sundry Debtors Stock Furniture Machinery	3,000 12,000 15,000 10,000 30,000
	70,000		70,000

C was admitted as new partner on the following terms and conditions:

1)      C will bring Rs. 15,000/- for capital and Rs. 5,000/- for his share of Goodwill for 1/6^th share in the future profits.

2)      The value of stock to be reduced by Rs. 2,000/- and that of Machinery be increased by Rs. 8,000/-

3)      The value of furniture to be fixed at Rs. 9,000/-

Pass journal entries in the books of the firm and prepare the Balance Sheet of the new firm.                      8

Ans:

Journal Entries

In the Books of the Firm

Particulars	L/F	Amount (Dr.)	Amount (Cr.)
Cash A/c                                                                                                       Dr.             To C’s Capital A/c             To Premium for goodwill A/c (Being the Capital and premium for goodwill brought in cash)		20,000       5,000       3,000       8,000       5,000	15,000 5,000     3,000 2,000     2,000 1,000     8,000       3,000 2,000
Premium for goodwill A/c                                                                        Dr.              To A’s Capital A/c              To B’s Capital A/c (Being the Premium for goodwill distributed between A & B)
Revaluation A/c                                                                                          Dr.               To Stock A/c               To Furniture A/c (Being the loss on revaluation of assets transferred to revaluation A/c)
Machinery A/c                                                                                            Dr.               To Revaluation A/c (Being the profit on revaluation of machinery transferred to revaluation A/c)
Revaluation A/c                                                                                          Dr.               To A’s Capital A/c               To B’s Capital A/c (Being the profit on revaluation distributed between the partners)

Balance Sheet of New Firm

As on 31-03-2017

Liabilities	Amount	Assets	Amount
Sundry creditors Capital:           A           B           C	20,000   36,000 24,000 15,000	Cash in hand (3,000+20,000) Sundry Debtors Stock Machinery Furniture	23,000 12,000 13,000 38,000 9,000
	95,000		95,000

 Or

Give journal entries on dissolution of a Partnership firm in respect of the following:          1x8=8

a)      For transfer of assets.

b)      For sale of assets.

c)       If any partner takes over any asset.

d)      For payment of liabilities.

e)      For payment of Realisation Expenses.

f)       For realisation of unrecorded assets.

g)      For transfer of the balance of General Reserve Account.

h)      For payment of Partners’ Loan.

Journal Entries

In the books of firm

No.	Particulars	L/f	Amount Dr.	Amount Cr.
a)	Realisation A/c                                                                                Dr. To Sundry Assets A/c (Being the Sundry assets transferred to realisation A/c)		-------	-----
b)	Cash A/c                                                                                          Dr. To Realisation A/c (Being the sundry assets realised)		--------	--------
c)	Partner’s Capital A/c                                                                     Dr. To Realisation A/c (Being the assets taken over by partners)		--------	-------
d)	Realisation A/c                                                                               Dr. To Cash A/c (Being the sundry liabilities paid off)		----------	--------
e)	Realisation A/c                                                                               Dr. To Cash A/c (Being the realisation expenses paid)		---------	--------
f)	Cash A/c                                                                                          Dr. To Realisation A/c (Being the unrecorded assets realised)		--------	--------
g)	General Reserve A/c                                                                     Dr. To Partner’s Capital A/c (Being the reserve fund distributed between the partners)		--------	-------
h)	Partner’s Loan A/c                                                                        Dr. To Cash A/c (Being the partner’s loan paid off)		-------	--------