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Class 12 - Accountancy
Sample Paper - 02 (2022-23)

Maximum Marks: 80
Time Allowed: : 3 hours

General Instructions:

1. This question paper contains 34 questions. All questions are compulsory.

2. This question paper is divided into two parts, Part A and B.
3. Part - A is compulsory for all candidates.
4. Part - B has two options i.e. (i) Analysis of Financial Statements and (ii) Computerised Accounting. Students must
attempt only one of the given options.
5. Question 1 to 16 and 27 to 30 carries 1 mark each.
6. Questions 17 to 20, 31and 32 carries 3 marks each.
7. Questions from 21 ,22 and 33 carries 4 marks each
8. Questions from 23 to 26 and 34 carries 6 marks each
9. There is no overall choice. However, an internal choice has been provided in 7 questions of one mark, 2 questions of three
marks, 1 question of four marks and 2 questions of six marks.

Part A:- Accounting for Partnership Firms and Companies

1. What will be the adjusting entry to provide for Interest on Partner’s loan?
a) Interest on Parntners Loan A/c Dr.
To partners Loan A/c
b) Parntners Loan A/c Cr.
To partners Loan A/c
c) Parntners A/c Dr.
To partners Loan A/c
d) Parntners Loan A/c Dr.
To partners Capital A/c
2. Assertion (A): A new partner can be admitted into a partnership firm with the consent of the existing partners.
Reason (R): According to section 31 of the Indian Partnership Act, 1932, the new partner shall not be introduced into a
firm without the consent of all the existing partners. Unless it is agreed otherwise by the partners and partnership deed.
a) Both A and R are true and R is the correct explanation of A.
b) Both A and R are true but R is not the correct explanation of A.
c) A is true but R is false.
d) A is false but R is true.
3. A firm earns ₹ 1,10,000.The normal rate of return is 10%. The assets of the firm were ₹ 11,00,000 and liabilities ₹
1,00,000. Value of goodwill by the capitalisation of average profit will be
a) ₹ 5,000
b) ₹ 10,000
c) ₹ 2,00,000
d) ₹ 1,00,000

OR

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Calculate the average profit of last four year's profits. The profits of the last four years were:
2008 27000
2009 39000

2010 16000 (loss)

2011 40000
a) ₹10000
b) Rs. 22500
c) ₹30000
d) ₹40000
4. First call amount received in advance from the shareholders before it is actually called up by the directors is:
a) Credited to share allotment account
b) Debited to first call account
c) Debited to calls-in-advance account
d) Credited to calls-in-advance account

OR

Which type of shares legally can be issued at discount?

a) Emlpoyees stock option scheme plan
b) Equity Shares
c) Preference Shares
d) Sweat Equity Shares
5. Lee Ltd issued 5200 10% Debentures of ₹100 each payable as ₹40 on the application and ₹60 on the allotment.
Applications were received for 6000 debentures. Applicants for 500 debentures were sent a letter of regret and money
was returned. The allotment was made proportionately to the remaining applicants. Oversubscription was applied to the
amount due on allotment. All money was duly received. Calculate the amount to be returned to the applicants.
a) ₹200000
b) ₹12000
c) ₹20000
d) ₹32000
6. One Creditor worth ₹4,500 took over stock valued at Rs.5,200 in full satisfaction of his claim.
a) No Entry is required
b)
Creditors A/c Dr. 4,500
To Bank A/c 4,500
c)
Creditors A/c Dr. 4,500
To Realisation A/c 4,500
d)
Creditor A/c Dr. 5,400

To Assets A/c 5,400

OR

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A loan of ₹10,000 advanced by a partner to the firm was refunded. What journal entry should be recorded for the same?
a)
Bank A/c Dr. 10,000
To Realisation A/c 10,000
b)
Bank A/c Dr. 10,000
To Partner's Loan A/c 10,000
c)
Realisation A/c Dr. 10,000

To Bank A/c 10,000

d)
Partner’s Loan A/c Dr. 10,000
To Bank A/c 10,000
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7. RT Ltd. Issued 20,000 Equity shares of ₹10 each at a premium of ₹3 payable as follows: On Application ₹4; On
Allotment ₹5 (including premium) On 1st call ₹2; On 2nd Call ₹ 2. Applications were received for 30,000 shares and
pro-rata allotment was made to all. Pass necessary Journal entry for the amount due on the allotment:
a) Share Allotment A/c ... Dr. ... 1,00,000
To Equity Share Capital A/c ... 40,000
To Securities premium A/c ... 60,000
b) Share Allotment A/c ... Dr. ... 1,00,000
To Equity Share Capital A/c ... 30,000
To Securities premium A/c ... 70,000
c) Share Allotment A/c ... Dr. ... 1,00,000
To Equity Share Capital A/c ... 50,000
To Securities premium A/c ... 50,000
d) Share Allotment A/c ... Dr. ... 1,00,000
To Equity Share Capital A/c ... 60,000
To Securities premium A/c ... 40,000
8. Vinod Limited has 5,000, 11% Debentures which are to be redeemed within the 8 months from the date of previous
balance sheet. How will you show these debentures in the balance sheet?
a) Under Other Current Liabilities
b) Long Term Borrowings
c) Short Term Borrowings
d) Trade payables

OR

Vinay Ltd. purchased machinery worth ₹72,000 and issued 12% debentures of ₹100 each at a discount of 4% of the
purchase price. Calculate the number of debentures issued.
a) 750
b) 700

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c) 720
d) 710

Question No. 9 to 10 are based on the given text. Read the text carefully and answer the questions:
Rana and Amit were partners sharing Profit and Losses in 3:2 with effect from 1st April 2021, they decided to share
future profits equally. The goodwill was adjusted at the time of change in profit sharing ratio between partners.
9. State the need for treatment of goodwill on change in profit sharing ratio.
i. The gaining partner is required to compensate the sacrificing partner.
ii. The sacrificing partner is required to compensate the gaining partner.
iii. Both the gaining partner is required to compensate the sacrificing partner and the sacrificing partner is required to
compensate the gaining partner.
iv. None of these.
a) Option (iii)
b) Option (i)
c) Option (iv)
d) Option (ii)
10. Which partner’s capital account is debited at the time of adjusting goodwill through capital accounts?
a) All partner’s capital account
b) Sacrificing partner’s capital account
c) None of these
d) Gaining partner’s capital account
11. When a company purchases some assets and not paying cash instead issues debentures as a payment for the purchase,
from the vendors it is known as the issue of:
a) Debentures issued for cash
b) Debentures issued for consideration other than cash
c) Debentures issued as collateral security
d) Debenture issued in consideration of asset
12. Neeta and Sumita are partners sharing profits and losses in the sates 2:1. They admit Geeta as a partner for Share.
1

Geeta pays ₹50,000 as cash for capital but does not bring any amount for goodwill. The goodwill of the new firm is
valued at ₹36,000. Give journal entry.
a)
Cash/Bank A/c Dr. 20,000

To Geeta's Capital A/c 20,000

b)
Cash A/c Dr. 50,000

To Geeta's Capital A/c 50,000

Geetha's capital A/c Dr. 9,000

To Neetha's capital A/c 6,000

To Sumitha's capital A/c 3,000
c)
Cash/Bank A/c Dr. 5,000
To Geeta's Capital A/c 5,000

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d)
Cash/Bank A/c Dr. 50,000

To Sunita's capital A/c 50,000

13. Under the Capitalisation of Super Profit, the formula for calculating the goodwill is
a) Average profit divided by the rate of return
b) Super profit divided by the rate of return
c) Super profit multiplied by the rate of return
d) Average profit multiplied by the rate of return
14. R, S and T are partners in a firm. They decided to share profits up to Rs. 10,000 in the ratio 30%, 50% and 20%
respectively. Above this amount, profits are shared equally. If the profits of the firm for the year was Rs. 25,600.
Distribute the profit.
a) R= ₹8,200, S= ₹10,200 and T= ₹7,200
b) R= ₹9,200, S= ₹7,200 and T= ₹8,200
c) R= ₹10,200, S= ₹9,200 and T= ₹7,200
d) R= ₹12,200, S= ₹8,200 and T= ₹7,200
15. A, B and C are partners in firm sharing profits in the ratio of 5 : 7 : 2. C died on 31st March 2010. What will be the new
ratio of A and B:
a) Capital contribution ratio
b) 7 : 2
c) 1 : 1
d) 5:7

OR

A, B and C are partners sharing profit and losses in the ratio of 2 : 2 : 1. B retires from the firm, at that time goodwill of
the firm was valued at ₹30,000. What contribution has to be made by A and C in order to pay B?
a) ₹20,000 and ₹10,000
b) ₹8,000 and ₹4,000
c) ₹6,000 and ₹6,000
d) ₹15,000 and ₹15,000
16. A and B are partners sharing profits in the ratio of 3:2. They admitted C as a new partner for share in the future profits
1

of the firm. Calculate new profit sharing ratio of A, B and C.

a) 12:8:5
b) 10:7:4
c) 12:10:4
d) 14:10:6
17. Vikas, Gagan and Momita were partners in firm sharing profits in the ratio of 2 : 2 : 1. The firm closes its books on 31st
March every year. On 30th September, 2014 Momita died. According to the provisions of Partnership Deed the legal
representatives of a deceased partner are entitled for the following in the event of his/her death:
i. Capital as per the last Balance Sheet.
ii. Interest on capital at 6% per annum till the date of her death.
iii. Her share of profit to the date of death calculated on the basis of average profit of last four years.
iv. Her share of goodwill to be determined on the basis of three years' purchase of the average profit of last four years.
The profits of last four years were:
Year 2010-11 2011-12 2012-13 2013-14
Profit(₹) 30,000 50,000 40,000 60,000

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The balance in Momita's Capital Account on 31st March, 2014 was ₹ 60,000 and she had withdrawn ₹ 10,000 till date
of her death. Interest on her drawings was ₹ 300. Prepare Momita's Capital Account to be presented to her executors.
18. Raman and Daman are partners sharing profits in the ratio of 60 : 40 and for the last four years they have been getting
annual salaries of ₹ 50,000 and ₹ 40,000 respectively. The annual accounts have shown the following net profit before
charging partners' salaries:
Year ended 31st March, 2017 - ₹ 1,40,000; 2018 - ₹ 1,01,000 and 2​ 019 - ₹ 1,30,000.
​On 1st April, 2019, Zeenu is admitted to the partnership for 1/4th share in profit (without any salary). Goodwill is to be
valued at four years' purchase of weighted average profit of last three years (after partners' salaries); Profits to be
weighted as 1 : 2 : 3, the greatest weight being given to the last year. Calculate the value of Goodwill.
19. Fill in the missing information in the following:

JOURNAL

Date Particulars L.F. Dr. (₹) Cr. (₹)

Bank A/c Dr. ________
To 12% Debenture Application & Allotment A/c
(Application money received on ________ Debentures of ₹100 each issued at a ________
discount of 10%)
12% Debenture Application & Allotment A/c Dr. 18,00,000
Loss on issue of debentures A/c Dr. _______
To 12% debentures A/c _______
To Premium on Redemption A/c
(Transfer of application money to Debentures Account, issued at a discount of ________
10% and redeemable at a premium of 5%)
20. D, E and F are sharing profits and losses in the ratio of 5 : 3 : 2. They decide to share profits and losses in the ratio of 2 :
3 : 5 with effect from 1st April, 2019. They also decide to record the effect of the following without affecting their book
values, by passing an adjustment entry:
Book Values (₹)
General Reserve 1,50,000
Contingency Reserve 25,000
Profit and Loss A/c (Cr.) 75,000
Advertisement Suspense A/c (Dr.) 1,00,000
21. Complete the following Journal entries:

Journal

Dr. Cr.
Date Particulars L.F.
(Rs.) (Rs.)
Share Capital A/c (100 × Rs. 9) Dr. 900
To Forfeited Shares A/c ---
To Calls-in-Arrears A/c
(Being the forfeiture of 100 Shares, Rs 9 called-up, on which allotment money of Rs. 3 ---
and first call money of Rs. 4 have not been received)
........................................ Dr. 800

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....................................... Dr. 200

To .........................
1,000
(Being the reissue of 100 shares fully paid-up at Rs. 8)
Shares reissued @ Rs 10 (Per Share) :
(i) Share Capital A/c (100× Rs. 9) Dr. 900
To Forfeited Shares A/c (100× Rs. 2) 200
To Calls-in-Arrears A/c (100× Rs. 7)
(Being the forfeiture of 100 shares, Rs. 9 called-up, on which allotment money of Rs. 3 700
and first call money of Rs. 4 have not been received)
(ii) ...................... Dr. ---
To .....................
---
(Being the reissue of 100 forfeited shares, fully paid-up at par)
(iii) ......................... Dr. ---
To .................
---
( _________________ )
22. Vinod, Vijay and Venkat are partners sharing profits and losses in the ratio of 3 : 2 : 1. They decided to dissolve their
firm on 31st March. 2019 the date on which their Balance Sheet stood as:
Liabilities ₹ Assets ₹
Creditors Bank
Bills Payable Stock
Vinod's Loan Debtors 15,000
General Reserve Less: Provision for D.Debts 1,000 14,000
Capital A/cs : Vinod 25,000 Investments 4,000
Vijay 11,000 Furniture 10,000
Venkat 8,000 44,000 Machinery 33,000
84,300 84,300
The following additional information is given:
a. The Investments are taken over by Vinod for ₹ 5,000.
b. Assets realised as follows:
Stock - ₹ 17,500
Debtors - ₹ 14,500
Furniture - ₹ 6,800
Machinery - ₹ 30, 300
c. Expenses on Realisation amounted to ₹ 2,000.
Close the books of the firm giving relevant ledger accounts.
23. Better Prospect Ltd. acquired land costing ₹ 1,00,000 and in payment allotted 1,000 Equity Shares of ₹ 100 each as fully
paid. Further, the company issued 4,000 Equity Shares to public. The shares were payable as: ₹ 30 on application; ₹ 30
on allotment; ₹ 40 on first and final call. Applications were received for all shares which were allotted. All the money
was received except the call on 200 shares. Pass journal entries and prepare Balance Sheet of the company.
24. A and B are partners sharing profits in the ratio of 4 : 3. Their Balance Sheet as at 31st March 2019 stood as :

Balance Sheet

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Liabilities ₹ Assets ₹
Sundry Creditors 28,000 Cash 20,000
Reserve 42,000 Sundry Debtors 1,20,000
Capitals A/cs: Stock 1,40,000
A's Capital 2,40,000 Fixed Assets 1,50,000
B's Capital 1,20,000 3,60,000
Total 4,30,000 4,30,000
They decided that with effect from 1st April 2019, they will share profits and losses in the ratio of 2 : 1. For this purpose
they decided that:
i. Fixed assets are to be depreciated by 10%.
ii. A Provision for Doubtful Debts of 6% be made on Sundry Debtors.
iii. Stock be valued at ₹1,90,000.
iv. An amount of ₹ 3,700 included in Creditors is not likely to be claimed.
Partners decided to record the revised values in the books. However, they do not want to disturb the Reserves. You are
required to pass the Journal entries, prepare the Capital Accounts of Partners and the revised Balance Sheet.
25. X, Y and Z were in partnership sharing profits in the ratio of 3:2:1. On 1 st April, 2015 the Balance Sheet of the firm
stood as follows:
Liabilities ₹ Assets ₹
Provision for Doubtful Debts 1,300 Cash at Bank 10,000
Sundry Creditors 15,000 Debtors 16,000
Capitals: Stock 20,000
X 78,750 Machinery 60,000
Y 70,000 Land and Building 1,20,000
Z 61,250 2,10,000
2,26,300 2,26,300
Z retires on the above date and the new profit sharing ratio between X and Y will be 5 : 4. Following terms were agreed :
i. Land and Buildings be reduced by 10%.
ii. Out of the insurance premium paid during the year ₹ 5,000 be carried forward as unexpired.
iii. There is no need of any provision for doubtful debts.
iv. Goodwill of the firm be valued at ₹ 54,000.
v. X and Y decided that their capitals will be adjusted in their new profit sharing ratio, by bringing in or paying cash to
the partners. Z’s a/c will be transferred to his loan a/c.
a. Pass necessary journal entries; prepare the capital accounts and the new balance sheet.
b. Z is paid ₹ 9,300 on the date of retirement and the remaining amount in three equal instalments together with
interest at the rate of 10% p.a. on the outstanding balance. Show Z’s loan a/c for 3 years.
26. Give the journal entries at the time of issue of debentures in the following cases:
i. Issued ₹5,00,000, 12% debentures at par and redeemable at par after 5 years.
ii. Issued ₹8,00,000, 11% debentures at 6% discount, redeemable at par after 4 years.
iii. Issued ₹10,00,000, 14% debentures at 5% premium, redeemable at par after 4 years.
iv. Issued ₹20,00,000, 12% debentures at par, redeemable at 5% premium after 3 years.
v. Issued ₹12,00,000, 13% debentures at 4% discount, redeemable at 6% premium after 3 years.
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papers with their own name and logo.
Part B :- Analysis of Financial Statements
27. Which of the following statements are true?
A. Cash flow reveals only the inflow of cash
B. Cash flow reveals only the outflow of cash
C. Cash flow is a substitute for income statement
D. Cash flow statement is not a replacement of funds flow statement.
a) Only D
b) Both B and C
c) Only B
d) Only A

OR

Value of copyrights was Rs.68,000 in the year 31st March 2015 but after one year on 31st March 2016 value of
copyrights was Rs.1,00,000. How it will affect the cash flow statement?
a) Add Rs. 1,00,000 in investing activities
b) Less Rs. 32,000 in investing activities
c) Add Rs. 32,000 in investing activities
d) Less Rs.1,00,000 in investing activities
28. How a Company’s balance sheet is different from the balance sheet of partnership firm?
a) A company‘s Balance Sheet format is fixed under schedule III .Whereas, there is no standard form prescribed
under the Indian partnership Act,1932 for a partnership Firm’s balance sheet.
b) In case of a company‘s Balance sheet previous year‘s figures are required to be given whereas it is not so in the
case of a partnership firm’s balance sheet.
c) Not different
d) For company‘s Balance Sheet and partnership balance sheet format is fixed under schedule III.
29. Which of the following item is not added or deducted while preparing a cash flow statement?
a) Dividend Received
b) Bonus shares issued
c) Dividend Paid
d) Purchase of goodwill

OR

Some type of transaction which are considered movement between cash and cash equivalents are given below except
________.
a) Cash credit
b) Purchase of cash equivalent securities
c) Cash withdrawn from bank
d) Sale of cash equivalent securities
30. It helps in ascertaining change in the items of income statement and Position Statement of different years in terms of
figures and percentage.
a) Ratio Analysis
b) Common Size statements
c) Trend Analysis
d) Comparative statements

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31. Give the heads under which the following items are shown in a company's Balance Sheet as per Schedule III, Part I of
the Companies Act, 2013?
i. Mortgage Loan
ii. Patents
iii. Investments
iv. General Reserve
v. Bills Receivable and
vi. 10% Debentures
32. Calculate Trade Receivables Turnover Ratio from the following information:
31st March, 2018 (₹) 31st March, 2019 (₹)
Sundry Debtors 28,000 25,000
Bills Receivable 7,000 15,000
Provision for Doubtful Debts 2,800 2,500
Total Sales ₹ 1,00,000; Sales Return ₹ 1,500; Cash Sales ₹ 23,500.
33. Calculate Opening and Closing Trade Receivables from the following information if Trade Receivables Turnover Ratio
is 3 Times:
i. Cash Revenue from Operations is 1

3
rd of Credit Revenue from Operations.
ii. Cost of Revenue from Operations ₹2,40,000.
iii. Gross Profit 25% on Cost of Revenue from Operations.
iv. Trade Receivables at the end were 3 times more than that of in the beginning.

OR

The following figures relate to the years ending 31st December, 2017 and 2018. What do they indicate?
31-12-2017 (₹) 31-12-2018 (₹)
Revenue from Operations (Sales) 6,00,000 7,00,000
Revenue from Operations Return
60,000 40,000
(Sales Returns)
Gross Profit on Revenue from
20% 25%
Operations
Trade Receivables 59,000 1,06,000
Opening Inventory 1,20,000 —
Closing Inventory 1,60,000 2,40,000

In 2017 Trade Receivables increased by ₹ 10,000. Ascertain the Trade Receivables turnover ratio and the Inventory
Turnover Ratio. Give your comments about the company’s performance in 2018.
34. From the following Balance Sheet of Solar Power Ltd. as at 31st March, 2017 and 2016:
Particulars Note No. 31st March, 2017 31st March, 2016
₹ ₹
I. EQUITY AND LIABILITIES
1. Shareholders' Funds
(a) Share Capital 3,00,000 1,00,000
(b) Reserves and Surplus 1 25,000 1,20,000

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2. Non-Current Liabilities
Long-term Borrowings 2 80,000 60,000
3. Current Liabilities
(a) Trade Payables 6,000 20,000
(b) Short-term Provisions 68,000 70,000
Total 4,79,000 3,70,000
II. ASSETS
1. Non-Current Assets
Fixed Assets 4 3,36,000 1,92,000
2. Current Assets
(a) Inventories 67,000 60,000
(b) Trade Receivables 51,000 65,000
(c) Cash and Cash Equivalents 25,000 49,000
(d) Other Current Assets - 4,000
Total 4,79,000 3,70,000
Note to Accounts
Particulars 31st March, 2017 31st March, 2016
₹ ₹
1. Reserves and Surplus
Surplus, i.e., Balance in Statement of Profit and Loss 25,000 1,20,000
25,000 1,20,000
2. Long-term Borrowings
10% Long-term Loan 80,000 60,000
80,000 60,000
3. Short-term Provisions
Provisions for Tax 68,000 70,000
68,000 70,000
4. Fixed Assets
Machinery 3,84,000 2,15,000
Accumulated Depreciation (48,000) (23,000)
3,36,000 1,92,000
Additional Information:
i. Additional loan was taken on 1st July, 2016.
ii. Tax of ₹ 53,000 was paid during the year.
Prepare Cash Flow Statement.

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Class 12 - Accountancy
Sample Paper - 02 (2022-23)

Solution

Part A:- Accounting for Partnership Firms and Companies

1. (a) Interest on Parntners Loan A/c Dr.
To partners Loan A/c
Explanation: Inerest on partner’s loan is a charge against the profit. It should be shown in the debit side of Profit and
Loss account and credit side of Partner’s Loan account. In a normal situation Interest on partner’s loan should not be
shown in the partners capital account or partners current account.
2. (a) Both A and R are true and R is the correct explanation of A.
Explanation: Both A and R are true and R is the correct explanation of A.
3. (d) ₹ 1,00,000
Explanation: ₹ 1,00,000

OR

(b) Rs. 22500

Explanation: Calculation of Average Profit When loss is given:-
1. Calculation of total profits earned during 4 years:
27,000 + 39,000 – 16,000 + 40,000 = 90,000
2. Average profit = Total Profit / No of Years Purchase = 90,000/4 = 22,500
4. (d) Credited to calls-in-advance account
Explanation: Credited to calls-in-advance account, when the amount is received in Advance.

OR

(d) Sweat Equity Shares

Explanation: A company cannot its shares at discount as per section 53 of the Companies Act, 2013. But Sweat Equity
Shares can be issued at discount legally.
5. (c) ₹20000
Explanation: No. of Debenture issued 5,000
Applications Rejected 500
Application money received per debenture= 40
Amount received on excess 500 applications = 500 × 40 = 20,000 which is to be returned now.
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6. (a) No Entry is required
Explanation: If an asset is taken over by the external liabilities for the full settlement of their due amount, in such a case
no need to record any journal entry. Because Assets and Liabilities both are transferred already in Realisation A/c. Now
no Entry will be passed.

OR

(d)

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Partner’s Loan A/c Dr. 10,000
To Bank A/c 10,000
Explanation: When Partners loan is Paid then liability will decrease hence it will be debited. The asset will also
decrease (bank) so it will be credited.
7. (a) Share Allotment A/c ... Dr. ... 1,00,000
To Equity Share Capital A/c ... 40,000
To Securities premium A/c ... 60,000
Explanation: Amount due on allotment will be ₹1,00,000 i.e. 40,000 + 60,000 (premium).
No adjustment of pro-rata amount is made in the due entry. When the amount is received then the entry is passed
adjusting such pro-rata amount.
8. (a) Under Other Current Liabilities
Explanation: When debentures become due for the redemption they are shown under the heading of Current Liabilities
and subheading Other Current Liabilities. Debentures are Liability of company.

OR

(a) 750
Explanation: Cost of machinery = Rs. 72000
Issue price = 100 - 4 = Rs.96
72,000
No. of debentures to be issued to the vendor = 96
= 750
9. a. (b) Option (i)
Explanation: The gaining partner is required to compensate the sacrificing partner.
10. a. (d) Gaining partner’s capital account
Explanation: Gaining partner’s capital account
11. (b) Debentures issued for consideration other than cash
Explanation: When a company purchases some assets and instead of paying cash issue debentures as a payment for the
purchase from the vendors it is known as the issue of debentures for consideration other than cash.
Asset A/c ... Dr.
To vendor A/c
Vendor A/c ... Dr.
To debentures A/c
12. (b)
Cash A/c Dr. 50,000
To Geeta's Capital A/c 50,000

Geetha's capital A/c Dr. 9,000

To Neetha's capital A/c 6,000

To Sumitha's capital A/c 3,000

Explanation: Journal entry for the amount brought by the new partner as his capital:
Cash/Bank A/c Dr. 50,000

To Geeta's Capital A/c 50,000

Since Geetha does not bring any amount for goodwill, her capital account is debited with her share of goodwill and old
partners are credited with the share in sacrificing ratio. sacrificing ratio equal to 2:1

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Geetha's share of Premium for Goodwill = 36,000 × 1

4
= Rs. 9,000
13. (b) Super profit divided by the rate of return
Explanation: Super profit divided by the rate of return
14. (a) R= ₹8,200, S= ₹10,200 and T= ₹7,200
Explanation:

Calculation of Distribution of Profits During the year:

First Rs. 10,000 of profit will be distributed in 30%, 50% and 20% i.e. 3,000; 5,000 and 2,000
Next 15,600 (25,600 - 10,000) in equal ratio i.e. 5,200 each (15,600 × 1/3).
R’s Share of Profit = 3,000 + 5,200 = Rs. 8,200
S’s Share of Profit = 5,000 + 5,200 = Rs. 10,200
T’s Share of Profit = 2,000 + 5,200 = Rs. 7,200

15. (d) 5:7

Explanation: The new ratio of A and B will be 5:7.

OR

(b) ₹8,000 and ₹4,000

Explanation: On the retirement of B, total goodwill of the firm is ₹30,000
B's share of goodwill = ₹30000 × ( ) = ₹12,0002

Contributions by A and C to compensate B will be in their gaining ratio i.e., 2 : 1

A = ₹12000 × ( ) = ₹8000
2

B = ₹12000 × ( ) = ₹4000
1

16. (a) 12:8:5

Explanation: Calculation of the new ratio of partners:
Old Ratio of A and B are = 3:2
C is admitted for share
1

Let Total Share be 1

Remaining share = 1 - 1

5
= 4

A’s new share = 3

×
4
= 12

5 5 25

B’s new share = =

2 4 8
×
5 5 25

C’s Share OR
1 5

5 25

New Ratio of A, B & C are 12 : 8 : 5

17. Momita's Capital Account

Dr. Cr.

Particulars ₹ Particulars ₹

To Drawings A/c 10,000 By Balance b/d 60,000

To Interest on Drawing A/c 300 By Interest on Capital A/c 1,800

To Momita's Executor's A/c 83,000 By Profit and Loss Suspense A/c 4,500

By Vika's Capital A/c 13,500

By Gagan's Capital A/c 13,500

93,300 93,300

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W.N.:
i. Calculation of Interest on Momita's Capital
Interest on Capital (6 Months) = 60,000× = ₹ 1,800
6 6
×
100 12

ii. Calculation of Momita's share in Profits

30,000+50,000+60,000+40,000 1,80,000
Average Profit = 4
=
4
= ₹ 45,000
Momita's profit = 45,000 × = ₹ 4,500
1 6
×
5 12

iii. Adjustment of Goodwill

Average Profit = 45,000
Goodwill = Average Profit × Number of year's purchase
Goodwill = 45,000 × 3 = ₹ 1,35,000
Momta's Goodwill = 1,35,000 × 1

5
= ₹ 27,000
Momta's share of goodwill is to be distributed between Vikas and Gagan in their = 1 : 1
Vikas's = 27,000 × = ₹ 13,500
1

Gagan = 27,000 × = ₹ 13,500

1

Profits before charging Salary Profits after charging Salary Weighted Profits
Year Weights
18. (₹) (₹) (₹)
31st March,
1,40,000 1,40,000 - 90,000 = 50,000 1 50,000
2017

31st March,
1,01,000 1,01,000 - 90,000 = 11,000 2 22,000
2018
31st March,
1,30,000 1,30,000 - 90,000 = 40,000 3 1,20,000
2019

Total 6 1,92,000
Total of Weighted Profits
Weighted Average Profits = (
Total Weights
)

1,92,000
=
6
= ₹ 32,000
Goodwill = Weighted Average Profits × No. of years of Purchase
= ₹ (32,000 × 4) = ₹ 1,28,000.
Weighted average method of goodwill is calculated when mention in question.

19. JOURNAL

Date Particulars L.F. Dr. (₹) Cr. (₹)

Bank A/c Dr. 18,00,000

To 12% Debenture Application & Allotment A/c
(Application money received on 20,000(i) Debentures of ₹100 each issued at 18,00,000
a discount of 10%)

12% Debenture Application & Allotment A/c Dr. 18,00,000

Loss on issue of debentures A/c Dr. 3,00,000(ii)

To 12% debentures A/c 20,00,000

To Premium on Redemption A/c

(Transfer of application money to Debentures Account, issued at a discount 1,00,000
of 10% and redeemable at a premium of 5%)

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Working Notes:
i. Net amount received ₹18,00,000
Debentures have been issued at 5% Discount. Hence, face value of Debentures
= 18,00,000 × = ₹20,00,000
100

95
20,00,000
Number of Debentures = 100
= 20,000
ii. Loss on issue A/c has been debited by ₹3,00,000 by grouping together the discount on issue ₹2,00,000 and Premium
on Redemption ₹1,00,000.
20. Calculation of Net Effect of Accumulated Profits, Losses and Reserves:
Particulars ₹

General Reserve 1,50,000

Contingency Reserve 25,000

Profit and Loss A/c (Cr.) 75,000

2,50,000

Less: Advertisement Suspense A/c (Dr.) 1,00,000

1,50,000
Calculation of Sacrificing/Gaining Ratio due to change in Profit-Sharing Ratio
Calculation of Sacrifice (Gain): D E F

(i) Their Old Share 5/10 3/10 2/10

(ii) Their New Share 2/10 3/10 5/10

(iii) Sacrifice/(Gain) (i) - (ii) 3/10 (Sacrifice) ... -3/10 (Gain)

Calculation of Share of sacrificing and gaining partner in the net accumulated profits, losses and reserve: For D =
₹1,50,000 × 3/10 = ₹45,000; For F = ₹1,50,000 × 3/10 = ₹45,000

ADJUSTMENT ENTRY

Date Particulars L.F. Dr. (₹) Cr. (₹)

2019

April 1 F's Capital A/c Dr. 45,000

To D's Capital A/c 45,000

(Being the adjustment made for net accumulated profits, losses and reserves)

IMPORTANT NOTE: When Reserves, accumulated profits and losses are adjusted through Partners' Capital Accounts,
Reserves, accumulated profits and losses will appear in the Balance Sheet of the new firm at the old values.

21. Journal Entries

Dr. Cr.
Date Particulars L.F.
(Rs.) (Rs.)
Share Capital A/c (100 × Rs. 9) Dr. 900

To Forfeited Shares A/c (100*2) 200

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To Calls-in-Arrears A/c (100*7) 700
(Being the forfeiture of 100 Shares, Rs. 9 called-up, on which allotment money of Rs.
3 and first call money of Rs. 4 have not been received)

Bank A/c( 100× Rs. 8) Dr. 800

Forfeited Shares A/c(100× Rs. 2) Dr. 200

To Share Capital A/c (100× Rs. 10)
1,000
(Being the reissue of 100 shares fully paid-up at Rs. 8)

Shares reissued @ Rs. 10 (Per Share):

(i) Share Capital A/c (100× Rs. 9) Dr. 900

To Forfeited Shares A/c (100× Rs. 2) 200

To Calls-in-Arrears A/c (100× Rs. 7)

(Being the forfeiture of 100 shares, Rs. 9 called-up, on which allotment money of Rs. 3 700
and first call money of Rs. 4 have not been received)

(ii) Bank A/c( 100× Rs. 10) Dr. 1,000

To Share Capital A/c (100× Rs. 10)

1,000
(Being the reissue of 100 forfeited shares, fully paid-up at par)

(iii) Forfeited Shares A/c Dr. 200

To Capital Reserve A/c

200
( Being the gain on reissue transferred to Capital Reserve )
Note : Maximum discount that can be allowed on reissue of forfeited shares is the amount forfeited i.e. amount credited
to the forfeited shares. In other words, reissue price can not be less than the amount unpaid on forfeited shares.
If forfeited shares are issued at par or premium the total amount forfeited on the share is a gain of capital nature and
transferred to capital reserve.

22. Realisation Account

Particulars Particulars ₹
To Sundry Assets By Sundry Liabilities

Debtors 15,000 Provision 1,000

Stock 19,800 Creditors 17,000

Investments 4,000 B/P 12,000 30,000

Furniture 10,000 By Vinod (Investments) 5,000

Machinery 33,000 81,800 Stock 17,500

To Bank A/c- Debtors 14,500

Creditors 17,000 Furniture 6,800

B/P 12,000 Machinery 30,300 69,100

Expenses 2,000 31,000 By Capital A/cs Losses

Vinod 4,350

Vijay 2,900

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Venkat 1,450 8,700
1,12,800 1,12,800

Bank Account

Particulars ₹ Particulars ₹

To Balance b/d 3,500 By Realisation A/c 31,000

To Realisation A/c 69,100 By Vinod's Loan 5,300

By Capital A/c

Vinod 18,650

Vijay 10,100
Venkat 7,550 36,300

72,600 72,600

Partner's Capital Accounts

Particulars Vinod Vijay Venkat Particulars Vinod Vijay Vankat

To Realisation A/c 5,000 - - By Balance b/d 25,000 11,000 8,000

To Real. Loss 4,350 2,900 1,450 By Gen. Reserve 3,000 2,000 1,000
To Bank A/c 18,650 10,100 7,550

28,000 13,000 9,000 28,000 13,000 9,000

23. Issued to public payable as:
₹ 30 on application
₹ 30 on allotment
₹ 40 first and final call
₹ 100 Called-up

Books of Better Prospect Ltd.

Journal

Date Particulars L.F. Dr. ₹ Cr. ₹

Land A/c Dr. 1,00,000

To Vendor 1,00,000

(Land purchased from the vendor)

Vendor Dr. 1,00,000

To Equity Share Capital A/c 1,00,000

(1,000 equity of ₹ 100 each issued to Vendor)

Bank A/c Dr. 1,20,000

To Equity Share Application A/c 1,20,000

(Share Application money received for 4,000 equity shares at ₹ 30 per share)

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Equity Share Application A/c 1,20,000

To Equity Share Capital Dr. 1,20,000

(Share Application money of 4,000 shares transferred to Equity Share Capital
Account)

Equity Share Allotment A/c Dr. 1,20,000

To Equity Share Capital A/c 1,20,000

(Share allotment due on 4,000 equity shares of ₹ 30 each)

Bank A/c Dr. 1,20,000

To Share Allotment A/c 1,20,000

(Share allotment received for 4,000 shares at ₹ 30 per share)

Share First and Final Call A/c Dr. 1,60,000

To Equity Share Capital A/c 1,60,000

(First and final call due on 4,000 equity shares at 40 per share)

Bank A/c Dr. 1,52,000

Calls-in-Arrears A/c Dr. 8,000

To Share First and Final Call A/c 1,60,000

(First and final call received from 3,800 shares and 200 share failed to pay it)
As per the Schedule III of Companies Act, 2013, the Company's Balance Sheet is presented as follows.

Better Prospect Ltd.

Balance Sheet

Particulars Note No. ₹

I. Equity and Liabilities

1. Shareholders’ Funds

a. Share Capital 1 4,92,000

2. Non-Current Liabilities

3. Current Liabilities

Total 4,92,000
II. Assets

1. Non-Current Assets

a. Fixed Assets
1. Tangible Assets 2 1,00,000

2. Current Assets

a. Cash and Cash Equivalents 3 3,92,000

Total 4,92,000
NOTES TO ACCOUNTS:

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Note No. Particulars ₹
1 Share Capital

Authorised Share Capital

…… shares of ₹ 100 each -

Issued Share Capital

5,000 shares of ₹ 100 each 5,00,000

Subscribed, Called-up and Paid-up Share Capital

1,000 shares of ₹ 100 each (for consideration other than cash) 1,00,000

4,000 shares of ₹ 100 each 4,00,000

Less: Calls-in-Arrears (8,000) 4,92,000

2 Tangible Assets

Land 1,00,000

3 Cash and Cash Equivalents

Cash at Bank 3,92,000

24. Journal Entries

Date Particulars L.F. Dr. Cr.

i Revaluation A/c Dr. 22,200

To Fixed Assets A/c 15,000

To Provision for doubtful debts A/c 7,200

(Being assets revalued.)

ii Stock A/c Dr. 50,000

Creditors A/c Dr. 3,700

To Revaluation A/c 53,700

(Being asset and liability revalued.)

iii Revaluation A/c Dr. 31,500

To A's Capital A/c 18,000

To B's Capital A/c 13,500

(Being revaluation profits adjusted.)

iv A's Capital A/c Dr. 4,000

To B's Capital A/c 4,000

(Being reserves adjusted.)

Capital Accounts

Particulars A B Particulars A B

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To B's Capital A/c 4,000 ..... By Balance b/d 2,40,000 1,20,000

To Balance c/d 2,54,000 1,37,500 By A's Capital A/c ..... 4,000

By Revaluation A/c 18,000 13,500

2,58,000 1,37,500 2,58,000 1,37,500

Revised Balance Sheet

Liabilities ₹ Assets ₹

Sundry Creditors 24,300 Cash 20,000

Reserve 42,000 Sundry Debtors 1,20,000

Capital A/cs: Less : Provision 7,200 1,12,800

A 2,54,000 Stock 1,90,000

B 1,37,500 3,91,500 Fixed Assets 1,35,000

4,57,800 4,57,800
Working Note :
A's Gain = − 2 4
=
14−12
=
2

3 7 21 21

B's sacrifice = 3

7
−
1

3
=
9−7

21
=
2

21

25. a. IN THE BOOKS OF THE FIRM

JOURNAL ENTRIES

Dr. Cr.
Date Particulars L.F.
(₹) (₹)

2015
Prepaid Insurance A/c Dr. 5,000
April 1

Provision for Doubtful debts A/c Dr. 1,300

To Revaluation A/c 6,300

(Increase in the value of assets recorded through revaluation account)

Revaluation A/c Dr. 12,000

To Land and Building A/c 12,000

(Decrease in the value of assets recorded through revaluation account)

X's Capital A/c Dr. 2,850

Y's Capital A/c Dr. 1,900

Z's Capital A/c Dr. 950

To Revaluation A/c 5,700

(Loss on revaluation transferred to old partners capital account in old profit

sharing ratio)

X's Capital A/c Dr. 3,000

Y's Capital A/c Dr. 6,000

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To Z's Capital A/c 9,000
(Goodwill adjusted in the gaining ratio 1:2)

Z's Capital A/c Dr. 69,300

To Bank A/c 9,300

To Z's Loan A/c 60,000

(The balance of Z's Capital A/c transferred to his loan A/c)

Bank A/c Dr. 2,100

To X's Capital A/c 2,100

(The amount brought in by X to raise his capital to profit sharing ratio)

Y's Capital A/c Dr. 2,100

To Bank A/c 2,100

(The amount withdrawn by Y to bring his capital to profit sharing ratio)

PARTNER'S CAPITAL ACCOUNT

Dr. Cr.

Particulars X (₹) Y (₹) Z (₹) Particulars X (₹) Y (₹) Z (₹)

To Z's Capital A/c 3,000 6,000 - By Balance b/d 78,750 70,000 61,250
To Revaluation A/c 2,850 1,900 950 By X's Capital A/c - - 3,000

To Bank A/c 9,300 By Y's Capital A/c - - 6,000

To Z's Loan A/c 60,000

To Balance c/d 72,900 62,100 -

78,750 70,000 70,250 78,750 70,000 70,250

To Bank A/c - 2,100 - By Balance b/d 72,900 62,100 -

To Balance c/d 75,000 60,000 - By Bank A/c 2,100 - -

75,000 62,100 - 75,000 62,100 -

NEW BALANCE SHEET

as at 1st April, 2015

Liabilities ₹ Assets ₹

Sundry Creditors 15,000 Cash at Bank (₹ 10,000 + ₹ 2,100 - ₹ 2,100 - ₹ 9,300) 700
Z's Loan 60,000 Debtors 16,000

Capital account balances: Stock 20,300

X 75,000 Prepaid Insurance 5,000

Y 60,000 1,35,000 Machinery 60,000

Land and Buildings 1,08,000

2,10,000 2,10,000

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W.N.:
i. Calculation of Gaining Ratio = New Ratio - Old Ratio
Gain to X = − =
5 3 1

9 6 18

Gain to Y =
4 2 2
− =
9 6 18

Hence, Gaining Ratio = 18

1
:
2

18
= 1:2
ii. Adjustment of Capitals ofX and Y according to new profit sharing ratio
= Total Capital oOfand Y after all the adjustments = ₹ 72,900 + ₹ 62,100 = ₹ 1,35,000
This Capital should be in their profit sharing ratio, i.e., 5 : 4.
Therefore, the Capital of A" in the new firm should be th of 1,35,000 = 75,000
5

But the existing Capital of X is = ₹ 72,900

Hence, X will bring in = ₹ 2,100
The Capital of Y in the new firm should be th of 1,35,000 = ₹ 60,000
4

But the existing Capital of Y is = ₹ 62,100

Hence, Y will withdraw = ₹ 2,100
b. Z'S LOAN A/C
Dr. Cr.

Date Particulars ₹ Date Particulars ₹

2016 Mar. To Bank A/c (₹ 20,000 + ₹ 2015 April
26,000 By Z's Capital A/c (transfer) 60,000
31 6,000) 1

2016 Mar. 2016 Mar. By Interest A/c (on ₹ 60,000 at

To Balance c/d 40,000 6,000
31 31 10%)

66,000 66,000

2017 Mar. To Bank A/c (₹ 20,000 + ₹ 2016 April

24,000 By Balance b/d 40,000
31 4,000) 1

2017 Mar. 2017 Mar. By Interest A/c (on ₹ 40,000 at

To Balance c/d 20,000 4,000
31 31 10%)

44,000 44,000

2018 Mar. To Bank A/c (₹ 20,000 + ₹ 2017 April

22,000 By Balance b/d 20,000
31 2,000) 1

2018 Mar. By Interest A/c (on ₹ 20,000 at

2,000
31 10%)

22,000 22,000

26. i. JOURNAL ENTRIES

Date Particulars L.F. Dr. (₹) Cr. (₹)

Bank A/c Dr. 5,00,000

To 12% Debenture Application & Allotment A/c

5,00,000
(Being Application money received)

12% Debenture Application & Allotment A/c Dr. 5,00,000

To 12% Debentures A/c 5,00,000

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(Being Debentures allotted, issued at par, redeemable at par)

ii. JOURNAL ENTRIES

Date Particulars L.F. Dr. (₹) Cr. (₹)

Bank A/c Dr. 7,52,000

To 11% Debenture Application & Allotment A/c

7,52,000
(Being Application money received)
11% Debenture Application & Allotment A/c Dr. 7,52,000

Discount on issue of Debentures A/c Dr. 48,000

To 11% Debentures A/c

(Being Transfer of application money to Debentures Account, issued at a 8,00,000
discount of 6%, redeemable at par)

iii. JOURNAL ENTRIES

Date Particulars L.F. Dr. (₹) Cr. (₹)

Bank A/c Dr. 10,50,000

To 14% Debenture Application & Allotment A/c

10,50,000
(Being Application money received)

14% Debenture Application & Allotment A/c Dr. 10,50,000

To 14% debentures A/c 10,00,000

To Securities Premium Reserve A/c

(Being Transfer of application money to Debentures Account, issued at a 50,000
premium of 5%, redeemable at par)

iv. JOURNAL ENTRIES

Date Particulars L.F. Dr. (₹) Cr. (₹)

Bank A/c Dr. 20,00,000

To 12% Debenture Application & Allotment A/c

20,00,000
(Being Application money received)

12% Debenture Application & Allotment A/c Dr. 20,00,000

Loss on issue of Debenture a/c 1,00,000

To 12% Debentures A/c 20,00,000

To Premium on Redemption A/c

(Being Transfer of application money to Debentures Account, issued at a 1,00,000
par, but redeemable at a premium of 5%)

v. JOURNAL ENTRIES

Date Particulars L.F. Dr. (₹) Cr. (₹)

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Bank A/c Dr. 11,52,000

To 13% Debenture Application & Allotment A/c

11,52,000
(Being Application money received)

13% Debenture Application & Allotment A/c Dr. 11,52,000

Loss on issue of Debentures A/c Dr. 1,20,000

To 13% Debentures A/c 12,00,000

To Premium on Redemption A/c

(Being Transfer of application money to Debentures Account, issued at a 72,000
discount of 4% and redeemable at a premium of 6%)
To practice more questions & prepare well for exams, download myCBSEguide App. It provides complete study
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Part B :- Analysis of Financial Statements
27. (a) Only D
Explanation: Only D

OR

(b) Less Rs. 32,000 in investing activities

Explanation: Increase in the value of copyrights means the company has purchased copyrights (Non-Current Assets).
So Less Rs. 32,000 in investing activities. Increase or decrease in the value of non-current assets is shown under-
investing activity.
28. (a) A company‘s Balance Sheet format is fixed under schedule III .Whereas, there is no standard form prescribed under
the Indian partnership Act,1932 for a partnership Firm’s balance sheet.
Explanation: Partnership firm's balance sheet is a T format balance sheet where capital and liabilities are shown on left
hand side and assets are shown on right hand side. There is no need of sub dividing assets and liabilities into sub heads.
A Company's balance sheet has a vertical format under which assets,liabilities and capital has to be sub divided into sub
headings like shareholders fund,non current assets,current assets,current liabilities etc.
29. (b) Bonus shares issued
Explanation: Issue of bonus shares will not affect the preparation of cash flow statement as in this transaction no cash
involved. There is no cash inflow or outflow of cash.

OR

(a) Cash credit

Explanation: Internal movement in cash and cash equivalents will not make any effect. Cash credit is not part of cash
and cash equivalents. It is part of financing activities.
30. (d) Comparative statements
Explanation: A comparative statement is a document that compares a particular financial statement with prior period
statements or with the same financial report generated by another company. Analyst and business managers use the
income statement, balance sheet and cash flow statement for comparative purposes.

31. S.No. Items Main Head of Balance Sheet Sub-head of Balance Sheet

(i) Mortgage Loan Non-current Liabilities Long-term Borrowings

(ii) Patents Non-current Assets Fixed Assets—Intangible Assets

(iii) Investments Non-current Assets Non-current Investments

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(iv) General Reserve Shareholders' Funds Reserves and Surplus

(v) Bills Receivable Current Assets Trade Receivables

(vi) 10% Debentures Non-current Liabilities Long-term Borrowings

32. Net Credit Sales = Total Sales - Sales Return - Cash Sales
= Rs.1,00,000 - Rs. 1,500 - Rs.23,500 = Rs.75,000
Opening Debtors + Opening Bills Receivable + Closing Debtors + Closing Bills Receivable
Average Receivable = 2
28,000+7,000+25,000+15,000
Average Receivable = 2
= ₹ 37,500
Trade Receivable Turnover Ratio =
Net Credit Sales

Average Trade Receivables

75,000
Trade Receivable Turnover Ratio = = 37,500
= 2 Times
Trade receivable includes both debtors and bill receivable.
33. Total Revenue from Operations = Cost of Revenue from Operations + Gross Profit
= ₹2,40,000 + 25% of ₹2,40,000 = ₹3,00,000
Calculation of Credit Revenue from Operations:
Let Credit Revenue from Operations = x
Cash Revenue from Operations = x

x+ x

3
= 3,00,000
3x + x = ₹9,00,000
₹9,00,000
x= 4
= ₹ 2,25,000 (Credit Revenue from Operations).
Credit Revenue from Operations
Trade Receivables Turnover Ratio = Average Trade Receivables

₹2,25,000
3 =
Average Trade Receivables

₹2,25,000
Average Trade Receivables = 3
= ₹75,000
Calculation of Opening and Closing Trade Receivables:
Opening Trade Receivables + Closing Trade Receivables
Average Trade Receivables = 2

Let Opening Trade Receivables = x, Closing Trade Receivables = x + 3x = 4x

₹75,000 = x+4x

x + 4x = ₹1,50,000; x = ₹1,50,000/5 = ₹30,000 (Opening Trade Receivables)

Closing Trade Receivables = 4x = ₹30,000 × 4 = ₹1,20,000.

OR

YEAR 2017 Closing trade receivables of 2017 were ₹ 10,000 more in comparison to the opening trade receivables of
2017. Therefore, the opening trade receivables of 2017 = ₹ 59,000 - ₹ 10,000 = ₹ 49,000.
Opening Trade Receivables + Closing Trade Receivables
Therefore, Average Trade Receivables = 2
49,000+59,000
=
2
= ₹ 54,000
Credit Revenue from Operations
Trade Receivables Turnover Ratio = Average Trade Receivables

5,40,000
=
54,000
= 10 Times
Cost of Revenue from Operations
Inventory Turnover Ratio =
Average Inventory

Cost of Revenue from Operations = ₹ 5,40,000 less 20%

= ₹ 5,40,000 - ₹ 1,08,000 = ₹ 4,32,000
₹1,20,000+₹1,60,000
Average Inventory = 2
= ₹ 1,40,000
4,32,000
∴ Inventory Turnover Ratio = 1,40,000
= 3.09 times.
Year 2018

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Closing trade receivables of 2017 will be treated as the opening trade receivables of 2018. Therefore,
59,000+1,06,000
Average Trade Receivables = 2
= 82, 500

Credit Revenue from Operations

Trade Receivables Turnover Ratio =
Average Trade Receivables

6,60,000
=
82,500
= 8 times
Cost of Revenue from Operations
Inventory Turnover Ratio = Average Inventory

Cost of Revenue from Operations = ₹ 6,60,000 less 25%

= ₹ 6,60,000 - ₹ 1,65,000 = ₹ 4,95,000
1,60,000+2,40,000
Average Inventory = 2
= ₹2, 00, 000
4,95,000
∴ Inventory Turnover Ratio = 2,00,000
= 2.475 times

34. Cash Flow Statement of Solar Power Ltd.

for the year ended March 31, 2017

Particulars ₹ ₹

A. Cash Flow from Operating Activities

Net Loss as per Statement of Profit and Loss (95,000)

Add: Provision for Tax made (WN 1) 51,000

Net Loss before Tax and Extraordinary Items (44,000)

Add: Depreciation 25,000

Interest paid on loan (WN 2) 7,500

Net Loss before Working Capital Changes (11,500)

Add: Decrease in Trade Receivables 14,000

Decrease in other Current Assets 4,000

Less: Decrease in Trade Payables (14,000)

Increase In Inventories (7,000)

Net Loss before Tax (14,500)

Add: Tax to be paid during the year (53,000)

Cash used in Operating Activities (67,500)

B. Cash Flow From Investing Activities

Purchase of Machinery (1,69,000)

Cash Used in Investing Activities (1,69,000)

C. Cash Flow From Financing Activities

Proceeds from Issue of Shares 2,00,000

Proceeds from additional loan taken 20,000

Interest paid on long-term loan (7,500)

Cash Flow from Financing Activities 2,12,500

Net Decrease in Cash and Cash Equivalents (A+B+C) (24,000)

Add: Opening Balance of Cash and Cash Equivalent 49,000

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Cash and Cash Equivalents at the end of the year 25,000

Working Notes:

i. Provision for Tax A/c

Dr. Cr.
Date Particulars ₹ Date Particulars ₹

2017 2016

March 31 To Cash A/c 53,000 April 1 By Balance b/d 70,000

March 31 To Balance c/d 68,000 2017

March 31 By Profit & Loss A/c 51,000

1,21,000 1,21,000
Interest on Loan Interest on Loan taken on 1 st July, 2016 = ₹ (20,000 ) = ₹ 1,500
ii. Interest on Loan as on 31 st March, 2016 = ₹ (60,000 × ) = ₹ 6,000
10

100

Total Interest Paid on Loan = (6,000 + 1,500) = ₹ 7,500

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