CLASS-XII ACCOUNTANCY

WORKSHEET -1

PARTNERSHIP FUNDAMENTAL(p&l app)

TIME- 30 MNTS MARKS- 10

Q.N. QUESTIONS MARKS

1 A , B and C are partners with fixed capitals of 1,00,000 , 200,000 and
3,00,000 respectively. Their partnership deed provides that : 6
(a) A is to be allowed a monthly salary of 600 and B is to be allowed a
monthly salary of 400.
(b) C will be allowed a commission of 5% of the net profit after
allowing salaries of A and B.
(c) Interest is to be allowed on capitals @ 6%.
(d) Interest will be charged on partners annual drawings at 4%.
(e) The annual drawings were :B 10,000 and C 15,000.
The net profit for the year ending 31st march, 2014 amounted to
1,72,000.
Prepare P&L Appropriation account.
[Ans: Share of profit 39,000 to each partner.]
2 David and John were partners in a firm sharing profits in the ratio of 4 : 1. 4
Theircapitals on 1.4.2006 were : David Rs.2,50,000 and John Rs.50,000.
The partnershipdeed provided that David will get a commission of 10% on
the net profit afterallowing a salary of Rs.2,500 per month to John. The
profit of the firm for the yearended 31.3.2007 was Rs.1,40,000.
Prepare Profit and Loss Appropriation Account for the year ended
31.3.2007.

[Answer :- Profit to David Rs.79,200; John Rs.19,800]

SPACE FOR ROUGH WORK:

 WORKSHEET -2
PARTNERSHIP FUNDAMENTAL(p&l app)
TIME- 30 MNTS MARKS- 10

1 A, B and C were partners in a firm having capitals of Rs.60,000, Rs.60,000 6

andRs.80,000 respectively. Their current account balances were : A
Rs.10,000; B Rs.5,000and C Rs.2,000 (Dr.). According to the partnership
deed the partners were entitled tointerest on capital @5% p.a. C being the
working partner was also entitled to a salaryof Rs.6,000 p.a. The profits
were to be divided as follows:
(a)The first Rs.20,000 in proportion to their capitals
(b) Next Rs.30,000 in the ratio of 5 : 3 : 2
(c) Remaining profits to be shared equally
The firm made a profit of Rs.1,56,000 before charging any of the above
items.
Prepare the profit and loss appropriation account and pass the necessary
Journal entry for the appropriation of profits.

[Answer :- Share of profit : A Rs.51,000; B Rs.45,000; C Rs.44,000]

SPACE FOR ROUGH WORK:
2 David and John were partners in a firm sharing profits in the ratio of 4 : 1.
Theircapitals on 1.4.2006 were : David Rs.2,50,000 and John Rs.50,000. 4
The partnershipdeed provided that David will get a commission of 10% on
the net profit afterallowing a salary of Rs.2,500 per month to John. The
profit of the firm for the yearended 31.3.2007 was Rs.1,40,000.
Prepare Profit and Loss Appropriation Account for the year ended
31.3.2007.

[Answer :- Profit to David Rs.79,200; John Rs.19,800]

SPACE FOR ROUGH WORK

 WORKSHEET -3

PARTNERSHIP FUNDAMENTAL(int. on drawing and capital)

TIME- 30 MNTS MARKS- 10
1 X and Y are partners in a firm sharing profits equally. Their capitals on 31st 3
March2014 were Rs.2,40,000 and Rs.1,80,000 respectively. Drawings of
the partners to thedate were Rs.40,000 and Rs.60,000 respectively. Profit
for the year was Rs.1,60,000.
Calculate interest on capital @ 8 % p.a. for the year ended 31st March 2014.
[Answer :- Interest on X’s Capital Rs.16,000 and Y Rs.12,800]

2 Calculate interest on drawings of Mr.Vinod @ 8% p.a. for the year ended 3

31st March,2014 in each of the following cases:
Case 1: If he withdrew Rs.2,000 at the beginning of each year.
Case 2: If he withdrew Rs.2,000 during the middle of each month.
Case 3: If he withdrew Rs.2,000 at the end of each month.
[Answer:- Case 1: Rs.1,040; Case 2: Rs.960; Case 3: 880]

3 Calculate interest on A’ drawing : 4

(1) If he has withdrawn 60,000 on 1stoct. 2006 and the rate of
interest on drawing is 8% per annum.
(2) If he has withdrawn 60,000 on 1stoct. 2006 and the rate of
interest on drawing is 8% . Books are closed on 31st march 2007.
[Ans(1)2,400 (2) 4,800]
 WORKSHEET -4

PARTNERSHIP FUNDAMENTAL(PAST ADJ.)

TIME- 30 MNTS MARKS- 10

A, B and C are partners in a firm sharing profits and losses in the ratio of 2:3:5. 3
8 Their fixed capitals were 15,00,000, Rs.30,00,000 and Rs.6,00,000 respectively.
For the year 2009 interest on capital was credited to them @ 12% instead of
10%. Pass the necessary adjustment entry.

9 A , B and C are partners in a firm. On 1-4-2010 there capital stood at 4

50,000 25,000 25,000 respectively. As per provisions of the partnership
deed :
(a) C was in entitled for a salary of 1,000p.m.
(b) Partners were entitled to interest on capital at 5%p.a.
(c) Profits were to be shared in the ratio of capital.
The net profit for the year ended 2011 of 33,000 was divided
equally without providing for the above terms.
[Ans: A capital debit by 500 . B capital debit by 5,750 and C capital credit
6,250.]

10 A , B and C are partners sharing profits in the ratio 4:3:1.The partners

agreed to share future profits in the ratio of 5:4:3. Calculate each partners
gain or sacrifice due to change in ratio.
[ans A sacrifices 2/24, B sacrifices 1/24 and C gains 3/24.]
 WORKSHEET -5
PARTNERSHIP FUNDAMENTAL(PAST ADJ.)
TIME- 30 MNTS MARKS- 10

1 6
A business has earned average profits of 1,00,000 during last few years and the
normal rate of return in similar business is 10%. Find out the value of goodwill by
(1) Capitalization of super profit method and
(2) Super profit method if the goodwill is valued at 3 years purchase of
super profit.
The assets of business where 10,00,000 and its liabilities 1,80,000
[Ans: (1) 1,80,000 (2) 54,000]

2 4
Calculate the value of goodwill on the basis of three years purchase of last five
years average profits:
2005- 50,000, 2006- 60000, 2007- 30,000(loss) , 2008 – 40,000, 2009- 30,000
 WORKSHEET NO. 1
ADMISSION OF A NEW PARTNER AND TREATMENT OF GOODWILL
S.NO QUESTIONS MARKS

1 Ram and shyam are partners sharing profit and loss in the ratio of 1
2:1.thaey take diwan as a partner for 1/5th share.the goodwill account
appears in the books at its full value Rs15,000.diwan is to pay
proportionate amount as premium for goodwill which he pays to ram
and shyam privately

2 X and Y are partners sharing profit in the ratio oof 3:1.Z is admitted as 1
a partner for which he pays Rs 30,000 for Goodwill in cash .X,Y,Z
decided to share the future profits in equal proportion.you are
required to pass a single journal entry to give effect to the above
arrangement.

3 A and B are partners sharing profit in the ratio of 3:2.they admit C 1

into partnership.C pays a premium of Rs 1000 for 1/4th share of
profit.the new ratio is 3:3:2.goodwill a/c appears in the books at Rs
1000.give necessary journal entry

4 A and B were partners in a firm sharing profits and losses in the ratio 1
3:2.They admitted C as a new partner for 3/7th share in the profit and
the new profit sharing ratio will be 2:2:3.C brought Rs 2,00,000 as his
capital and Rs 1,50,000 as a premium of goodwill.half of their share of
premium was withdrawn by A and B from the firm.calculate the
sacrificing ratio and pass necessary journal entries for the above
transactions in the book of the firm
5 Make format of the revaluation account.
 WORKSHEET 2

S.NO. QUESTIONS MARKS

1 A and B are partners in a firm with the capital of Rs 60,000 and

1,20,000 resp.They decided to admit C for 1/4th share in future
profits.C is to bring in a sum of Rs 70,000 as his capital. Calculate the
amount of goodwill

2 Write the journal entries for the following accounting treatment of

goodwill in different cases:

1.Goodwill paid privately

2.Goodwill brought in cash

Distribution of Goodwill

3.Goodwill withdrawn by the sacrificing partners

4.Goodwill not brought in cash

5.Goodwill brought in kind

3 The ratio in which the old partners are surrendering their share of
profits in favour of the new partner is called……………………

4 What are the circumstances when there is a need for revaluation of

asssets and liabilities.

5 What is sacrificing ratio?

 MARKING KEY WORKSHEET NO. 1
ADMISSION OF A NEW PARTNER AND TREATMENT OF GOODWILL
S.NO ANSWERS MARKS

1. Debit ram’s a/c Rs 10,000. shyam’s Rs 5,000. and credit GW account Rs

15,000

2. Cash a/c DR Rs 30,000. Y a/c DR Rs7500. To X cap a/c 37,500

3. A cap a/c Dr. Rs600. B cap aaa/c Dr 400. To goodwill a/c 1000….

Debit cash and credut premium a/c by Rs 1000. and premium amt of Rs
1000 to be Cr to A and B in the sacrificing ratio.

4. Sacrificing ratio 11:4

5 Format

WORKSHEET 2

S.NO. ANSWERS MARKS

1 Goodwill is Rs 30,000.

2 1. No entry

2. Cash/bank a/c Dr

To premium for goodwill a/c

Premium for goodwill a/c Dr

To sacrificing partners capital a/c

3. Sacrificing partners capital a/c Dr

To cash/bank a/c

4. New partners capital/current a/c Dr

To sacrificing partners capital a/c

5.Assets a/c Dr

To premium for goodwill a/c.

3 Sacrificing Ratio

4 Change in Profit Sharing Ratio ,admission of a new partner,retirement

of a partner,and death of a partner.

5 The deducted part of the profit sharing ratio of the old partners .
 WORKSHEET 3 ADMISSION OF A PARTNER

S.NO. QUESTIONS MARKS

1 Hemant and Nishant were partners in a firm sharing profits in the ratio of 3
3:2.Their capitals were Rs. 1,60,000 and Rs. 1,00,000 respectively.They admitted
Somesh on 1st April,2013 as a new partner for 1/5th share in the future profits.
Somesh brought Rs. 1,20,000 as his capital. Calculate the value of goodwill of the
firm and record necessary journal entries for the above transactions on Somesh’s
admission.

2 The balance Sheet of Madan and Mohan who share profits and losses in the ratio 8
of 3:2, on 31st March, 2010 was as follows:
Balance Sheet
(as on 31st March , 2010)
LIABILITIES Rs ASSETS Rs
Creditors 28,000 Cash at Bank 10,000

Workmen’s Debtors 65000 60,000

Compensation Fund 12,000 Reserve for
Doubtful Debts
(5000)
General Reserve 20,000 Stock 30,0000
Capital A/c: Investments 50,000
Madan 60,000
Mohan 40,000 1,00,000
Patents 10,000
160,000 160,000
st th
They decided to admit Gopal on 1 April, 2010 for 1/4 share on the following
terms:
(i) Gopal shall bring Rs. 25000 as his share of
Premium for Goodwill.
(ii) That unaccounted accrued income of Rs. 500 be
provided for.
(iii) An Unrecorded typewriter was sold for Rs. 800.
(iv) The market value of Investments was Rs. 45000.
(v) A claim of Rs. 2000 on account of Workmen
compensation to be provided for.
(vi) Patents are undervalued by Rs. 5000.
(vii) Gopal to bring in capital equal to 1/4th of the total
capital of the new firm after all adjustments.
Prepare the Revaluation account and Partner’s Capital account.
3 K, N and A were partners in a firm sharing profits and losses in the ratio 3:2:1. At
the time of admission of a partner, the goodwill of the firm was valued at
Rs.4,00,000. The accountant of the firm passed the entry in the books of
accounts and thereafter showed goodwill at Rs.4,00,000 as an asset in the
Balance Sheet. Was he correct in doing so? Why?

4 (a) X, Y and Z were partners in a firm sharing profits in the ratio of 3 : 2: 1.

On 31st March, 2015, X retired and new profit sharing of Y and Z was
decided as 2 : 1. M was admitted as a partner. Y and Z surrender ½ of
their respective share in favour of M. Calculate Gaining Ratio, Sacrificing
Ratio and New Ratio.

4
 ( b ) A, B and C were partners with fixed capitals and sharing profits and losses in
the ratio of 3:2:1. At the end of the accounting period D is admitted as a new
partner and B was retired on the same day. The new ratio among the partners A,
C and D was agreed 5:3:2. D brings Rs.4,00,000 as his capital but could not bring
his share of goodwill in cash and same was adjusted through his current account.
Goodwill of the firm was valued Rs. 1,80,000. Give entries and find out the ratios

5 Anant, Gulab and Khushbu were partners in a firm sharing profits in the
ratio of 5 : 3 : 2. From 1.4.2014, they decided to share the profits equally.
For this purpose the goodwill of the firm was valued at Rs. 2,40,000.Pass
necessary journal entry for the treatment of goodwill on change in the
profit sharing ratio of Anant, Gulab and Khushbu.
WORKSHEET 3

S.NO. ANSWERS MARKS

1
1. Hidden Goodwill Rs. 2,20,000
Journal entry:
Somesh’s capital a/c Dr. 44,000
To Hemant’s capital account 26,400
To Nishant’s capital account 17,600
2
Revaluation profits : Rs.1300
Capital account balances: Madan : Rs. 93,780; Mohan :
Rs.62,520 : Gopal : Rs.52,100 (2+2+2+2)

3 No, the accountant’s decision is not correct because according to AS-26,

goodwill should be recorded in the books only when consideration in money or
money’s worth has been paid for it
4 (a) Gaining Ratio of Y = 2/6
Z= 1/6
Sacrificing Ratio of Y = 2/6
Z = 1/6
New Ratio = Y : Z : M = 2: 1 : 3
(a) Journal Entries :
Cash A/c Dr. 400000
To D’s Capital A/c 400000

C’s Current A/c Dr. 24000

D’s Current A/c Dr. 36,000
To B’s Current A/c 60000
5 Gulab’s Capital A/c Dr 8,000
Khushbu’s Capital A/c Dr. 32,000
To Anant’s Capital A/c 40,000
(Being treatment of goodwill
in change in profit sharing
ratio recorded i.e 1:4)
WORKSHEET 1 RETIREMENT OF PARTNER

1 At thetime of retirement of a partner, profit on revaluation will be credited to the 1

capital account of:
a) retiring partner
b) all partner in old profit sharing ratio
c) Remainingpartner in their old profit sharing ratio
d) remaining partner in their new profit sharing ratio

2 X,Y and Z were partners sharing profit and losses in the ratio of 4:3:2. Y retires and 3
surrender 1/9th of his share in favour of X and the remaining in favour of Z. calculate new
profit sharing ratio and gaining ratio.
(ans. 13:14 new ratio, 1:8 gaining ratio)

3 . A , B and C are partners sharing profits in the ratio 6:4:5. Their capitals were A- 4
1,00,000. B- 80,000 and C- 60,000. On 1stapril 2009, B retired from the firm and the
new profit sharing ratio between A and C was decided as 11: 4 . On B retirement the
goodwill of the firm was valued at 1,80,000. Showing your calculations clearly
pass necessary journal entry for the treatment of goodwill on B retirement.
[ans- only A gain 5/15 . C has also sacrificed 1/15. A will debited by 60,000 and B
andC will be credited by 48,000 and 12,000.]

4 X, Y and Z are partners in a firm sharing profits and losses in the ratio of 3:2:1. X 4
retires from the firm on 1st April2015.On the date of Z’s retirement, following
balances appeared in the books of the firm:
GeneralReserveRs.90,000;Profit and loss
Account(Dr.)Rs.15,000;Workmencompensation Reserve Rs, 12,000 which
was no more required.
Pass journal Entries for the adjustment of these items on Z’s retirement and also
mention one value associated with maintaining workmen compensation reserve.
5 X, Y and Z are partners sharing profits in the ratio of 5:3:2. On 31-03-2014 the 8
Balance Sheet of the firm stood as under :
Balance Sheet
(As on March 31,2014)
Liabilities Amount(Rs.) Assets Amount(Rs.)

Sundry Creditors 26,500 Bank 10,000

Employees’ Provident 3,500 Debtors 65,000
Fund
15,000 Stock 55,000
Workmen
Compensation Reserve Fixed Assets 1,25,000

X’s Capital 1,10,000

Y’s Capital 56,000

Z’s Capital 44,000

2,55,000 2,55,000

Additional informations :-
(i)B retires on the same day. The goodwill be valued at Rs.75,000.
(ii)The fixed assets be appreciated by 20%; that stock be reduced to Rs.50,000.
Give the necessary Ledger accounts and balance sheet of the firm after B’s
retirement.
SPACE FOR ROUGH WORK
 WORKSHEET 1 DEATH OF PARTNER

1 A, B andC are partners sharing profit and losses in the ratio 5:3:2. B met with an accident 1
and died and his share was taken by A and C equally. Calculate new ratio.(ans. 13:7)

2 X,Y and Z were partners in a firm sharing profits in 3:2:1. The firm closes its bookon 31stof 3
march every year. B died in 30th June 2007. On B’s death the goodwill of the firm was
valued at Rs.60,000. On B,s death his share in the profts of the firm till the date of his
death was to be calculated on the bases of previous years profit which was 1,50,000.
Calculate B’s share in the profit of the firm. Pass necessary journal entries for the
treatment of goodwill and B’s share of profit at the time of his death.(ans. Goodwill-
20,000 and profit Rs. 12,500)

st
3 You are given the B/S of A,B& C who sharing P&L in the ratio of 2:2:1. As at 31 march 6
2007.
creditors 40,000 goodwill 30,000
Reserve fund 25,000 Fixed assets 60,000
A capital 30,000 stock 10,000
B capital 25,000 Sundry debtors 20,000
C capital 15,000 Cash at bank 15,000
1,35,000 1,35,000
B died on june 15, 2007. According to the deed , his legal representative are entitled to ;
(a) Balance in capital a/c.
(b) Share of goodwill valued on the basis of thrice the average profits of past 4 years.
(c) Share in profit up to the date of death on the basis of average profits for the past 4 year.
(d) Interest on capital @ 12% p.a.
Profits for the year ending on march 31 of 2004,2005,2006,2007 were 15,000; 17,000;
19,000 and 13,000 respectively.
B’s legal representative were to be paid the amount due. A and C continue as equal
partners. Prepare B’s capital a/c and executors a/c.
[answer- Amount paid to B representative 44,158]
WORKSHEET ON DISSOLUTION OF PARTNERSHIP FIRM

1 Give a difference between the following: 4

1) reconstitution of the firm and dissolution of the firm

2) dissolution of the partnership and dissolution of partnership firm.

3) firms debts and private debts

4) realization account and revaluation account

2 Give necessary journal entries in each of the following alternative cases: 4

1) Expenses of realization amounted to Rs.7,400.
2) Expenses of realization amounted to Rs.7,400 were paid by Ravi a partner.
3) Expenses of realization were to be borne by Deepak, a partner, for which he was
allowed a commission of 2% on net cash realized from dissolution. The net cash realized
was Rs. 1,00,000 and actual realization expenses were Rs. 7,400.
4) ) expenses of realization amounted to Rs.7,400 were to be borne by Mohan a partner
who used firm’s cash for paying these expenses.

3 Fill in the blanks in the following journal, where R and L are partners in the firm at the 4
time of dissolution:
particulars Dr.(Rs.) Cr.(Rs.)
………………………….a/c Dr
To…………………………….a/c
(being R paid to the creditors Rs. 17,000)
………………………….a/c Dr 70,000
To…………………………….a/c 70,000
(being L agreed to pay his wife’s loan)
………………………….a/c Dr
To…………………………….a/c
 (being stock worth Rs. 41,000 was taken over by R at
Rs. 39,000)
………………………….a/c Dr
To…………………………….a/c
(being other assets realized at Rs. 45,500)
4 Following is the balancesheet of Ramesh and Suresh as at 28thfeb. 2005: 4

liabilities Rs. Assets Rs.

Sundry creditors 20,000 Land and building 40,000
Bills payable 40,000 Furniture and fittings 28,000
Capital a/c Truck 20,000
Ramesh 30,000 Stock 10,000
Suresh 30,000 Debtors 12,000
Cash 10,000
1,20,000 1,20,000
Prepare realization a/c of the partners with the following additional information.
1) On the above date Ramesh took over the creditors and suresh took over the bills
payable.
2) assets realized as debtors Rs. 9,000; furniture Rs. 21,000; truckRs. 32,000; stock Rs.
6,000 and land and building Rs.60,000
3) expenses of realization paid by Ramesh were Rs. 1,200.
(ans. Rs. 16,800 profit)

5 P,Q and R sharing P&L in the ratio of 5:3:2. They decided to dissolve the firm on 6
31/03/2013
Their balance sheet as on date
creditors 19,000 bank 3,500
B/P 12,000 stock 19,800
Loan from S 7,300 Debtors 15,000 14,000
Less : provision 1,000
P capital 25,000 investment 10,000
Q capital 10,000 furniture 12,000
R capital 9,000 machinery 23,000
82,300 82,300

An unrecorded assets is taken by P at 5,000. Investment are taken by Q at 10%

 discount. Other assets are realized as follows: stock 16,500 , debts 14,500 , furniture
7,800 , machinery 20,500.expenses on realization amounted to 500 are met by R.
Close the books of the firm giving relevant ledger.
[ ans. Loss on realization 6,000. Final payment to P 17,000 and R 8,300. Q brings
800. Total bank a/c 63,600.]

SPACE FOR ROUGH WORK

 WORKSHEET

FINANCIAL STATEMENT OF COMPANIES.

Q. No. Questions marks

1 Under what major sub heading will the following items be placed in the 3
B/S Of a company as per schedule-III, part-I of the companies act, 2013.
(a) capital reserve (b) Bonds (c) Loans repayable on demand
(d) Vehicles (e) goodwill (f) Loose tools.

2 Under what major sub heading will the following items be placed in the 4
B/S Of a company as per schedule-III, part-I of the companies act, 2013.
(a) sundry debtors (b) bills payable (c) bills receivable (d) land &building
(e) debentures(f) equity share capital (g) short term investment
(h) creditors

3 Under what major sub heading will the following items be placed in the 3
B/S Of a company as per schedule-III, part-I of the companies act, 2013.
(a) copyrights(b) cheques (c) general reserve (d) stock of finished
goods (e) patents (f) machine
 WORKSHEET 1

S.NO. COMPARATIVE STATEMENT MARKS

1. Name two tools of financial analysis 1

2 What is comparative balance sheet? 1

3 Prepare a comparative statement of profit and loss with the help of the following 4
information.

2011-12 2012-13

Revenue from operation 20,00,000 30,00,000

Expenses 12,00,000 21,00,000

Other income 4,00,000 3,60,000

Income tax 50% 50%

4 Prepare the format of comparative balancesheet 4

5 Suryafarms ltd,is a leading manufacturing company.encouraged by the spurt in its
profits,company decided to give 15% interim dividend to the equity shareholders of the
company.following is the comparative statement of profit and loss of the company.
COMPARATIVE STATEMENT OF PROFIT AND LOSS
For the year ended 31st march,2012 and 2013.

particulars Note 2011-12 2012-13 Absolute %

no. changes(increase changes(increase
or decrease) or decrease)

1 2 3 4 5

I.revenue from 50,00,000 - - 50.00

operations

II Add:other 2,00,000 - (-) (25.00)

income

Total revenue - - - -
I+II

III - - 15,00,000 50.00

Less:expenses

Pofit before - - - -
tax

Less:tax - - 1,00,000 25.00

Profit after tax - - - -

You are required to:

(1)Fill the missing figures in the format.
(2)Compute the net profit ratio for both the years and
(3)Identify the values involved in paying the interim dividend.

6 Prepare a common size balancesheet of X ltd from the following information 4

31.3.2002(in lakhs) 31.3.2001(in

lakhs)

Current assets 28.80 22.80

Non current investments 1.80 1.20

Fixed assets 41.40 36.00

Share capital 30.00 30.00

Reserve and surplus 12.00 7.20

Non current liabilities 12.60 12.00

Current liabilities 17.40 10.80

S.NO ANSWERS MARK
. S

1. Comparative and common size .

2. It shows the increase and decrease in various assets, liabilities and capital in two or
more balancesheets of the same business enterprise on different dates.

3. Profit after tax 2012 Rs6,00,000,2013 Rs6,30,000.

% changes in

RFO OI TR EXPENSES PBT PAT

50.00 (10.00) 40.00 75.00 5.00 5.00

NOTE:While solving the questions ,figure of 2011-12 will be presented first.

4 Full format as per schedule III.2013.

5 COMPARATIVE STATEMENT OF PROFIT AND LOSS

For the year ended 31st march,2012 and 2013.

particulars Not 2011-12 2012-13 Absolute %

e changes(increas changes(increas
no. e or decrease) e or decrease)

1 2 3 4 5

I.revenue 50,00,00 75,00,00 25,00,000 50.00

from 0 0
operations

II Add:other 2,00,000 1,50,000 (50,000) (25.00)

income

Total 52,00,00 76,50,00 24,50,000 47.12

revenue I+II 0 0

III 30,00,00 45,00,00 15,00,000 50.00

Less:expense 0 0
s

Pofit before 22,00,00 31,50,00 9,50,000 43.18

 tax 0 0

Less:tax 4,00,000 5,00,000 1,00,000 25.00

Profit after 18,00,00 26,50,00 8,50,000 47.22

tax 0 0

(2)net profit ratio=net profit after tax/revenue from operation x100.

2011-12 is 36% and 2012-13 is 35.33.

(3)Values are sharing and fulfilment of responsibility.

6. Yr 2001: share capital 50%,reserve &surplus 12%,non current liabilities 20%.current

liabilities 18%.fixed assets 60%,non current investments 2%.current assets 38%....

Yr 2002: : share capital 41.67%,reserve &surplus 16.66%,non current liabilities

17.5%.current liabilities 24.17%.fixed assets 57.5%, investments 2.5%.current assets
40%....
WORKSHEET 1 RATIO ANALYSIS

1 Give the formula of current ratio and interest coverage ratio. 1

2 state any two items included in current assets and current liabilities. 1

3 Give the formula of Return of Investment (return on capital employed) ratio and Debt- 1
equity ratio.

4 X ltd liquidity ratio is 2.5:1. Stock is Rs. 6,00,000. Current ratio is 4:1.Find out the 2
current liabilities.
( Ans.-Rs. 400,000)

5 X ltd. Has a current ratio 4.5:1 and a quick ratio of 3:1. If its inventory is Rs. 36,000. 3
Find out its total current assets and total current liabilities.
( ans.-. C L Rs.24,000 ;C A Rs.1,08,000and Quick assets Rs. 1,72,000)

6 What is included in long term debts. 1

7 Net profit before interest and tax Rs.4,00,000; 15% long term debt Rs. 8,00,000; 2
shareholders’ fund Rs. 4,00,000. Calculate return on investment.(ans.- 33.33%)

8 X ltd has a term loan of Rs. 10,000. Interest on the loan for the year is Rs. 1,25,000 1
and its profit before interest and tax is Rs. 5,00,000. Calculate interest coverage ratio.
(ans.- 4 times)

9 Debt Equity ratio of X ltd. Is 2:1. What is the effect of conversion of debenture into 1
preference share.

10 Total assetsRs. 12,50,000; total debts Rs. 10,00,000; current liabilities Rs. 5,00,000. 2
Calculate debt equity ratio.
(ans-2:1)

Prepared by: Shweta dhiman (kvafschandinagar)

WORKSHEET 2 RATIO ANALYSIS

1 Inventory turnover ratio is 3 times. Sales are Rs. 1,80,000; opening inventory Rs. 2,000 3
more than the closing inventory. Calculate opening and closing inventory when goods
are sold at 20% profit on cost. (ans opening inventory 51,000and closing Rs. 49,000)

2 Calculate amountof gross profit and sales from the following information: 4
Average inventory is Rs. 80,000; inventory turn over ratio=6 times; selling price is 25%
above cost. (ans.-G P=1,20,000; sales= 6,00,000)

3 Calculate trade receivables or debtor turnover ratio and average collection period. 3
Credit revenue from operation (net credit sales) for the year is Rs. 6,00,000; debtors Rs.
50,000; bills receivables Rs. 50,000.(ans.- 6 times; 2 months)

4 Working capital=Rs.2,50,000; cost of revenue from operation Rs.10,00,000; gross profit 3

on sales 20%.calculate working capital turnover ratio.(ans-5 times.)

5 Calculate operating ratio when cost of revenue from operation is Rs. 6,00,000; operating 2
expenses Rs. 40,000; revenues from operation Rs. 8,00,000. (ans.-80%)

6 What will be operating profit ratio if operating ratio is 85%. 1

7 Operating ratio of a company 80% state which of the following transaction will 4
increase/decrease/not alter the operating ratio?
1) purchase of stock in trade Rs. 7,000
2) revenue from operation Rs. 500
3) drawings of goods cosing Rs. 2,000
4) paid income tax Rs. 7,000.
WORKSHEET 3 RATIO ANALYSIS

1 Fill in the blanks:

A Current ratio=………………………./………………………………

B Acid test ratio=current asset-…………-………….

………………………………….

C Debt-equity ratio=…………………………….
……………..funds

D Total assets to debt ratio=………………………………./…………………………………..

E Proprietary ratio=shareholders funds/………………………………………………

F Interest coverage ratio=profit…………….interest and tax

………………………….

G Inventory turnover ratio=cost of…………………………………….

………………………………..

H Trade receivable turnover ratio=………………………………………………..

Average trade receivables

I Trade payable turnover ratio=net credit…………………………….

……………………………………

J Working capital turnover ratio=……………………………………………../working capital

K Gross profit=…………………………………….X100
…………………………

M …………………………..ratio=cost of revenue from operation+ operating expensesX100

Revenue from operations

N Operating profit ratio=……………………………………….X100

……………………………….

O Net profit ratio=…………………………………………./………………………..

P …………………………………………….=profit ………….. interest tax and dividend X100

Capital employed
 WORKSHEET 1 CASH FLOW STATEMENT

1 Preparation of cash flow statement is guided by which Accounting Standard? 1

2 Identify activities as operating/investing/financing/cash and cashequivalent ineach of 2

thefollowing
1)interest received on loans granted by financial company
2)payment of dividend on equity shares
3)rent received on building
4)bank overdraft
3 State whether following activities will result into inflow/outflow/no flow of cash 2
1)purchase of goods on credit
2) sale proceed of building
3) proposed dividend
4) purchase of fixed assets at 10% less cost price
4 Calculate cash flow from operating activities 4
Particulars 2003(Rs.) 2004(Rs.)
Debtors 42,000 46,000
Prepaid expenses 2,000 2,700
Accured income 1,500 1,200
Biils receivables 14,000 12,000
Income received in advance 800 1,000
Billspayable 13,000 11,000
Creditors 26,000 28,000
Outstanding expenses 8,000 6,000

Profit earned during 2004 amouniedRs. 1,00,000 after taking into account the following
adjustments:
1) profit on sale of investment is Rs. 2,000
2) losson sale of machine Rs. 900
3) goodwill amortized Rs. 3,000
4) Depreciation charged 2,900
(Rs 1,00,600)
5 From the following Balance sheet, prepare a cash flow statement as per AS- 6
3.

Particulars 31.03.12 31.03.11

I. Equity &liabilities:
(1) shareholders funds:
(a) share capital 1,50,000 1,20,000
(b) reserve & surplus 60,000 50,000
(2) current liabilities:
Trade payables 1,10,000 1,50,000
3,20,000 3,20,000
Total
II. Assets :
(1) Non-current assets :
Fixed assets 80,000 50,000
(2) current assets :
(a) inventory 40,000 60,000
(b) Trade receivables 80,000 1,00,000
(c) cash & cash 1,20,000 1,10,000
equivalent
3,20,000 3,20,000
Total

A dividend of 30,000 was paid during the year 2011-12.

Answer : cash from operating activities 40,000 ; cash used investing
activities
(30,000) ; cash from financing activities nil.
WORKSHEET 2 CASH FLOW STATEMENT

1 From the following information , calculate cash flow from investing activities: 4
Particulars Closing(Rs.) Opening(rs.)
Machinery(at cost) 4,20,000 4,00,000
Accumulated depreciation 1,10,000 1,00,000
Patents 1,60,000 2,80,000
Additional information:
1. during the year , a machine costing Rs. 40,000 with accumulated depreciation of Rs.
24,000 was sold for Rs. 20,000.
2. patents were written off to the extent of Rs. 40,000 and some patents were sold at a
profit of Rs. 20,000.
(Ans. Rs. 60,000)

2 ABC ltd. Provide the following information. Calculate cash from financing activities: 4
particulars 31/03/2014(Rs.) 31/03/2013(rs.)
Equity share capital 15,00,000 10,00,000
10%debentures - 1,00,000
Loan from bank 2,00,000 -
Additional information
1. Interest paid on debentures Rs. 10,000.
2. dividend paid Rs. 50,000
3. During the year 2013-14, XYZ ltd. Issued bonus shares in the ratio of 2:1 by capitalizing
reserves.
(ans- Rs.40,000)

3 State any two objectives of preparing of cash flow statement. 1

4 List any two activities resulting inflow of investing activities in a cash flow statement. 1

Prepared by: Shweta Saxena (kvpitampuradelhi )

 Work sheet 1 (Share capital)

ISSUE OF SHARES AT PAR and PREMIUM

Time: 30 min. m.marks:18

1 Define Authorized Capital. 1

2 Define Issued Capital. 1

3 Define Subscribed Capital. 1

4 Define subscribed and fully paid share. 1

5 Define subscribed and not fully paid share. 1

6 Full form of OPC. 1

7 Full form of ESOP. 1
8 What is calls in arrears? 1

9 Define ‘Calls –in-advance’ 1

10 What is rate of interest on call in arrear and call in advance according to 1

table F of company act 2013?

11 P ltd. Invited applications for issuing 5,00,000 equity shares of Rs. 10 each . The 3
whole amount was payable on application. The issue was fully subscribed. Pass
necessary journal entries.

12 Q ltd. Invited applications for issuing 5,00,000 equity shares of Rs. 10 each at a 3
premium of Rs. 3 . The whole amount was payable on application. The issue was
fully subscribed. Pass necessary journal entries.

13 State any two purpose for which securities Premium reserve can be utilized. 2
 Work sheet 2

Issue of share for consideration other than cash

Time:30 min
M.Marks:15

1 What is meant by shares issued for consideration other than cash? 1

2 Vimal ltd. Purchase Machinery of 9,90,000 from Kamal Ltd. .The payment to 6
Kamal Ltd. Was made by issuing equity shares of Rs. 100 each.Pass necessary
journal entries in the books of Vimal Ltd. For purchase of machinery and issue
of shares when
a) Issue of share are at par.
b) Issue of shares were issued at 25% prem.

3 Marinal Ltd. Purchased a business from Kunal Ltd. For a sum of Rs. 8
44,00,000 by issuing 40,000 fully paid equity shares of Rs. 100 each at a
premium of 10%. The assets and liabilities consisted of the following:
Plant and Machinery Rs. 14,00,000 , Debtors Rs. 5,00,000, Inventory Rs.
10,00,000, Building Rs. 23,00,000, and creditors Rs. 5,00,000.
Pass necessary J.E, in the books of Mrinal Ltd. For the above transactions.
 Work sheet 3 (Share capital)

Oversubscription of shares

Time:30 M.M:20

1 What is meant by ‘Pro rata allotment of shares’? 1

2 Give two alternatives available to a company for the allotment of shares in case of 2
oversubscription.

3 Give Difference between Over-Subscription and Under-Subscription Of shares 3

3 Preeti& Co. Ltd. Was registered with an authorized capital of Rs. 6
10,00,000/- divided into 1,00,000 shares of Rs.10 each. The company
offered 60,000 shares to the public-which were payable Rs.2 per share
on application: Rs.4 on allotment and the balance when required.
Applications for 92000 shares were received on which the Directors
allotted as follows:
Applications for 40,000 shares-Full
Applicants for 50,000 shares-40%
Applicants for 2,000 shares –NIL
Rs.1,72,000 was realized on account of allotment money
(excluding the amount carried from application money)
Show the journal Entries recording the above

4 Sangama Ltd. Issued Rs. 10,00,000 new capital divided into Rs. 100 shares at 8
a premium of RS. 20 per share, payable as under:
On application : Rs. 10 per share
On allotment : Rs. 40 per share (including premium of Rs. 10 per
share)
On first and final call: balance
Over payments on application were to be applied towards sums due on
allotment and first and final call. Where no allotment was made, money was to
be refunded in full.
The issue was oversubscribed to the extent of 13,000 shares. Applicants for
12,000 shares were allotted only 2,000 shares and applicants for 3,000 shares
were sent letters of regret. Shares were allotted in full to the remaining
applicants.
All the money was duly received.
a) Which value has been affected by rejecting the applicants of the
applicants who had applied for 3,000 shares? Suggest a better
alternative for the same.
b) Give journal entries to record the above transactions (including cash
transactions ) in the books of the company.
 Work sheet 4 (Share capital)

Forfeiture and Reissue of shares

Time: 40 min. M.M:20

1 What is the maximum permissible discount at which forfeited shares can be 1

reissued?

2 XYZ Ltd. issued 5,000 equity shares of Rs.10 each at par payable. On 2
application Rs.2 per share, on allotment Rs.3 per share, on first call Rs.3 per
share and on second call Rs.2 per share. Mr X was allotted 40 shares. He
failed to pay first call and final call and his shares were forfeited. Give
journal entries for forfeiture of shares.

3 A company issues 10,000 equity shares of the valur of Rs.10 each, payable 3
Rs.3 on application, Rs.3 on allotment and Rs.4 on first and final call. All
amounts were received except the call money on 100 shares. These shares
were forfeited and are resold as fully paid for Rs.500. Give necessary journal
entries.

4 Record the journal entries for forfeiture and reissue in the following cases: 6
a) Xerox Ltd. Forfeited 200 shares of Rs. 100 each ,Rs, 70 called up, on
which the shareholders had paid application and allotment money of
 Rs.. 50 per share. Out of these, 150 shares were reissued to Namisha
as Rs. 70 paid up for Rs. 80 per share.
b) Yamuna Ltd. Forfeited 180 shares of Rs. 10 each, Rs, 8 called up,
issued at a premium of Rs. 2 per share to Rama for non-payment of
allotment money of Rs 5 per share (including premium). Out of
these, 160 shares were reissued to Samita. As Rs. 8 called up for Rs.
10 per share fully paid up.

5 AB Ltd. invited applications for 1,00,000 equity shares of Rs.10 each, 8

payable as Rs.2 on application, Rs.3 on allotment and the balance on first
and final call. Applications were received for 3,00,000 shares and the shares
were allotted on a pro rata basis. The excess application money was to be
adjusted against allotment only. M, a shareholder, who had applied for 3,000
shares, failed to pay the call money and his shares were accordingly forfeited
and reissued @ Rs.8 per share as fully paid.
Pass necessary journal entries.
 Work sheet 5(debentures)

Issue of Debentures at par, premium from redemption point of time

Time:30 M.M:15

1 Define debenture. 1

2 Why would an investor prefer to invest in debentures of a company 1

rather than in its shares?

3 Give any one point of distinction between a share and a debenture 1

4 P ltd. Invited applications for issuing 9% 5,00,000 debentures of Rs. 10 each . 4

The whole amount was payable on application. The issue was fully subscribed.
Pass necessary journal entries.

5 Pass journal entries for the issue of debentures in the following cases- 8
a) Rs. 40,000; 15% debentures of Rs. 100 each issued at
par, redeemable at par.
b) Rs. 40,000; 15% debentures of Rs. 100 each issued at
premium of 10% , redeemable at par.
c) Rs. 40,000; 15% debentures of Rs. 100 each issued at
par, redeemable at premium of 10%
d) Rs. 40,000; 15% debentures of Rs. 100 each issued at
premium of 10%, redeemable at premium of 10%
 Work sheet 6(debentures)

Issue of Debentures for consideration other than cashans issue of debentures as collateral
security

Time: 30 min M.M: 12

1 Give the meaning of ‘Issue of Debentures as a collateral security’. 1

2 Sumedha Ltd. purchased Machinery from Hira Ltd. for Rs.8,40,000 . 3

Sumedha Ltd. issued 9% Debentures of Rs.100 each at a premium of 20%.
Pass necessary journal entries in the books of Sumedha Ltd.

3 Pass the necessary Journal entry when 10,000 debentures of Rs. 100 each are 4
issued as collateral security against a Bank loan of Rs. 8,00,000.

4 4
X Ltd. obtained a loan of Rs. 4,00,000 from IDBI Bank. The company issued
5000, 9% Debentures of Rs. 100 each as a collateral security for the same.
Show how these items will be presented in the Balance Sheet of the
company.

BY: Ms. JASDEEP KAUR PGT COMMK.V.NO.1 PATIALA

 WORKSHEET -1

REDEMPTION OF DEBENTURES

TIME-40MNTS MARKS-10
Q.N. QUESTIONS MARKS
1 A Ltd. Issued Rs. 6,00,0008% , deb. Of Rs. 100 each redeemable after 3 4
years either by draw of lots or by purchase in the open market. At the end
of three years, finding the market price of deb. At Rs. 95 per deb. It
purchased all its deb. For immediate cancellation. Pass journal entry for
cancellation of deb. Assuming that company has sufficient balance in
D.R.R.
Ans: gain on cancellation of deb. Rs. 30,000, general reserve 3,00,000

2 Z Ltd. Had Rs. 5,00,000 10% deb. Outstanding on 1st April, 2013. On the 3
same date the company purchased Rs. 1,00,000 own deb. at 98% as
investment from the open market . pass journal entries for purchase.

3. Amit Ltd. Has 4,000 , 8% Deb. of Rs. 100 each due for redmption on 3
march 31,2015.the company has a D.R.R. of Rs. 1,15,000 on that date.
Assuming that no interest is due record the necessary journal entry at the
time of redemption of Deb.
Ans: Rs. 85,000 will be transferred from P&L app. a/c to D.R.R. and the
balance of this a/c Rs. 2,00,000 will be transferred to general reserve a/c.
 WORKSHEET-2
REDEMPTION OF DEBENTURE
TIME-30MNTS MARKS-10

1 R Ltd.issuedRs. 6,00,00,000 10% deb. Divided in to deb. Of Rs. 100 each 6

on 1st April, 2007redemmable in four equal annual instalment starting from
1st April, 2009. The directors have decided to create D.R.R. of Rs.
75,00,000 on 31st March 2008 and 2009. Record necessary journal entries
at the time of redemption of deb. And creation of D.R.R.

Ans: transfer from DRR to General Res. Rs. 1,50,00,000

2 3
ABC Ltd. Purchased for cancellation its own 5,000, 9%
Debentures of 100 each for 95 per debenture. The brokerage
charges 15,000 were incurred. Calculate the amount to be
transferred to capital reserve.

Sol.
Amount of profit on redemption to be transferred to capital reserv=
10,000

3 How much amount transfer to DRR as per section 71(4) of 1

companies act 2013
 WORKSHEET-3
REDEMPTION OF DEBENTURE
TIME-30MNTS MARKS-10

1 3
Explain with an imaginary example how issue of debenture as
collateral security is shown in the balance sheet of a company
when it is recorded in the books of accounts.

(Sol. Alfa Ltd. obtained Loan of 1, 00,000 from Indian Bank and
issued 1200, 10% Debentures of 100 each as Collateral security.
(or any other example)

2 6

Ruchi Ltd issued 42,000, 7% Debentures of 100 each on 1st

April, 2011, redeemable at a premium of 8% on 31St March
2015. The Company decided to create required Debenture
Redemption Reserve on 31st March 2014. The company
invested the funds as required by law in a fixed deposit with
State Bank of India on 1st April, 2014 earning interest @10% per
annum. Tax was deducted at source by the bank on interest
@10% per annum. Pass necessary Journal Entries regarding
issue and redemption of debentures.

3 How much amount transfer to DRI as per section 71(5) of 1

companies act 2013
WORKSHEET-4
REDEMPTION OF DEBENTURE
TIME-30MNTS MARKS-10

1 3
 A.Ltd. purchased its own debentures of the face value of Rs.2,00,000 from
the open market for immediate cancellation at Rs.92. Record the journal
entries
(Ans.- profit on cancellation Rs 16000)

2 Give the name of two types companies which are not required to open 1
DRR.

3 Dipesh Ltd redeemed its 8,000, 11 % Debentures of Rs. 100 each in the 6
following manner;

(i) 4,000 debentures were purchased @ Rs. 95.

(ii) 3,000 debentures were purchased @ Rs. 93
(iii) 1,000 debentures were purchased @ Rs. 97.50.
(iv) The expenses on purchase of own debentures amounted to Rs.
200. The debentures were purchased for immediate
cancellation. Pass journal entries.

BY PANKAJ VERMA KV BALRAMPUR

Work sheet 1
solution 0F ISSUE OF SHARES AT PAR , PREM
1 Define Authorized Capital. 1
 Capital as is authorized by Memorandum of Company to be maximum amount of share
capital of the company.
2 Define Issued Capital. 1
Company issues from time to time for subscription
3 Define Subscribed Capital. 1
Such part of capital which is for the time being subscribed by the members of a company.
4 Define subscribed and fully paid share. 1
Share which company has called up its entire nominal value and has also received it.
5 Define subscribed and not fully paid share. 1
Share which company has either called up its entire nominal value but has not received it or
the company has not called up its entire nominal value.
6 Full form of OPC. 1
One person company
7 Full form of ESOP. 1
Employee stock option Plan
8 What is calls in arrears? 1
It refers to that part of capital which is not received
9 Define ‘Calls –in-advance’ 1
When a company accepts money paid by some of its allot tees for the calls not yet
due, such amount is known as ‘Calls –in-advance’. It may also happen in case of
partial or pro-rata allotment of shares when the company retains excess amount
received on application of shares.
10 What is rate of interest on call in arrear and call in advance according to table F of 1
company act 2013?
Call in arrear 10% & call in advance 12%
11 P ltd. Invited applications for issuing 5,00,000 equity shares of Rs. 10 each . The whole 2
amount was payable on application. The issue was fully subscribed. Pass necessary journal
entries.
Particulars Dr. Cr.
Bank a/c …….. Dr. 50,00,000
To Equity share application & 50,00,000
allotment
Equity share application & allotment…Dr. 50,00,000
To Equity share capital a/c 50,00,000
12 Q ltd. Invited applications for issuing 5,00,000 equity shares of Rs. 10 each at a premium of 3
Rs. 3 . The whole amount was payable on application. The issue was fully subscribed. Pass
necessary journal entries.
Particulars Dr. Cr.
Bank a/c …….. Dr. 65,00,000
To Equity share application & 65,00,000
allotment
Equity share application & allotment…Dr. 65,00,000
To Equity share capital a/c 50,00,000
To Securities Premium reserve 15,00,000
13 State any two purpose for which securities Premium reserve can be utilized. 2
a) For issue of fully paid shares.
b) For writing off preliminary expenses.

Work sheet 2
Solution of of share for consideration other than cash
1 What is meant by shares issued for consideration other than cash? 1
 That share against which the company has not received cash instead has received
assets or services.
2 Vimal ltd. Purchase Machinery of 9,90,000 from Kamal Ltd. .The payment to Kamal 6
Ltd. Was made by issuing equity shares of Rs. 100 each.Pass necessary journal entries
in the books of Vimal Ltd. For purchase of machinery and issue of shares when
c) Issue of share are at par.
d) Issue of shares were issued at 25% prem.
Particulars Dr. Cr.
Machinery a/c…..Dr. 9,90,000
To Kamal Ltd. 9,90,000
Case 1
Kamal Ltd……….Dr. 9,90,000
To Equity share capital A/c 9,90,000
Case 2
Kamal Ltd……….Dr. 9,90,000
To Equity share capital A/c 7,92,000
To Securities premium reserve 1,98,000
3 Marinal Ltd. Purchased a business from Kunal Ltd. For a sum of Rs. 44,00,000 8
by issuing 40,000 fully paid equity shares of Rs. 100 each at a premium of
10%. The assets and liabilities consisted of the following: Plant and Machinery
Rs. 14,00,000 , Debtors Rs. 5,00,000, Inventory Rs. 10,00,000, Building Rs.
23,00,000, and creditors Rs. 5,00,000.
Pass necessary J.E, in the books of Mrinal Ltd. For the above transactions.
Solution:
Particulars Dr. Cr.
Plant and Machinery A/c Dr. 14,00,000

Debtors A/c Dr. 5,00,000

Inventory A/c Dr. 10,00,000

Building A/c Dr 23,00,000
To creditors A/c 5,00,000
To Kunal Ltd. A/c 44,00,000
To Capital Reserve A/c 3,00,000

Kunal Ltd……….Dr. 44,00,000

To Equity share capital A/c 40,00,000
To Securities premium reserve 4,00,000
Work sheet 3

Marking scheme of Oversubscription

1 What is meant by ‘Pro rata allotment of shares’? 1

Allotment of shares on proportionate basis
2 Give two alternatives available to a company for the allotment of shares in case of 2
oversubscription.
a) Rejecting excess applications
b) Pro rata allotment.
3 . 3
Basis Over-Subscription Of Under-Subscription Of
shares shares
 1.Shares Number of shares Number of shares applied is
applied applied is more than less than the shares offered
the shares offered for for subscription
subscription
2.Acceptance All applications are not All the applications for
accepted. Some are shares are accepted, i.e., full
rejected. Alternatively, allotment is made
shares are allotted on
pro rata
3.Refund Excess application As all the applications are
money is to be accepted, there is no excess
refunded or adjusted money to be refunded
towards allotment and
calls.
4.Minimum A company does not A company may face the
face such a problem
4 Preeti& Co. Ltd. Was registered with an authorized capital of Rs. 6
10,00,000/- divided into 1,00,000 shares of Rs.10 each. The company
offered 60,000 shares to the public-which were payable Rs.2 per share
on application: Rs.4 on allotment and the balance when required.
Applications for 92000 shares were received on which the Directors
allotted as follows:
Applications for 40,000 shares-Full
Applicants for 50,000 shares-40%
Applicants for 2,000 shares –NIL
Rs.1,72,000 was realized on account of allotment money
(excluding the amount carried from application money)
Show the journal Entries recording the above

JOURNAL DATE PARTICULARS L.F. Dr.(Rs.) Cr.(Rs)

Bank A/c …Dr.(92,000xRs.2) 1,84,000
To Share Application A/c 1,84,000
(Being the application money
received for 92000 shares at Rs.2
per share)
Share Application A/c …Dr. 1,24,000
To Share Capital a/c (60,000x2) 1,20,000
To Bank A/c(2000x2) 4,000
(Being the allotment made
as follows: Applicants for rs.40000
shares –Full, Applicants for 50,000
shares-40%, Applicants for 2,000
shares –NIL)
Share Allotment A/c …Dr. 2,40,000 2,40,000
To Share Capital a/c
(Being the allotment due on
60,000 shares @ Rs.4 per
share)
 Share Application A/c 60,000 60,000
…Dr.(note.1)
To Share Allotment a/c
(Being the surplus application
money adjusted on allotment of
20,000 shares)
Bank A/c …Dr. 1,72,000 1,72,000
To Share Allotment A/c(note 2)
(Being the amtrecd on allotment
except on 2000 shares)

5 1 Bank A/c 2,30,000

To share application A/c 2,30,000
2 Share application A/c 2,30,000
To share capital A/c 1,00,000
To share allotment A/c 80,000
To calls in advance A/c 20,000
To bank A/c 30,000
3 Share allotment A/c 4,00,000
To share capital A/c 3,00,000
To S.P. A/c 1,00,000
4 Bank A/c 3,20,000
To share allotment A/c 3,20,000
5 Share first and final A/c 7,00,000
To share capital A/c 6,00,000
To S.P. A/c 1,00,000
6 Bank A/c 6,80,000
Calls in advance A/c 20,000
To Share first and final call A/c 7,00,000

Value  Equal distribution of

wealth violated here
Work sheet 4

Forfeiture and Reissue of shares

1 Amount that the company has forfeited. 1

2 Share forfeited amount Rs.200 3
3 Share forfeiture A/c 600, Capital Reserve A/c 100 3

4 a) Share capital A/c 14,000 6

To share calls A/c 4,000
To share forfeited A/c 10,000
 Bank A/c 12,000
To share capital A/c 10,500
To s. p. A/c 1,500
Share forfeited A/c 7,500
To Capital Reserve A/c 7,500
b) Share capital A/c 1,440
Security premium A/c 360
To share allotment A/c 900
To share forfeited A/c 900

Bank A/c 1,600

To share capital A/c 1,280
To s. p. A/c 320

Share forfeited A/c 800

To Capital Reserve A/c 800
5 App. Money2,00,000; Bank Refund 1,00,000 ;Allotment nil,Share forfeiture 8
A/c Rs. 5000, Capital Reserve A/c Rs.3000.

Work sheet 5

Issue of Debentures at par, premium from redemption point of time

Define debenture. 1
A debenture means an acknowledgement of debt which contains a contract
for repayment of principal and payment of interest at a fixed rate
2 Why would an investor prefer to invest in debentures of a company rather 1
than in its shares?
Ans. An investor would like to invest in debentures because there is
always an assured return and less risk
3 Give any one point of distinction between a share and a debenture. 1
Ans. A share is an ownership security and receives dividend as return.
A Debenture is a creditorship security and receives interest as return.

4 P ltd. Invited applications for issuing 9% 5,00,000 debentures of Rs. 10 each . 4

The whole amount was payable on application. The issue was fully subscribed.
Pass necessary journal entries.

Particulars Dr. Cr.

Bank a/c …….. Dr. 500,000
To Debenture application & 500,000
allotment
Debenture application & 500,000
allotment…Dr. 500,000
To 9%Debenture capital a/c
5 Pass journal entries for the issue of debentures in the following cases- 8
e) Rs. 40,000; 15% debentures of Rs. 100 each issued at par,
redeemable at par.
f) Rs. 40,000; 15% debentures of Rs. 100 each issued at
 premium of 10% , redeemable at par.
g) Rs. 40,000; 15% debentures of Rs. 100 each issued at par,
redeemable at premium of 10%
h) Rs. 40,000; 15% debentures of Rs. 100 each issued at
premium of 10%, redeemable at premium of 10%

Particulars Dr Cr Amount
Amount
Bank A/c - Dr. 40,000
To Debenture Application&Allotment A/c 40,000
(Being application &allotment money recd.)

Debenture Application& Allotment A/c - Dr. 40,000

To 15% Debenture A/c 40,000
(Being Issue of debentures at par and redeemable
at par)

Bank A/c - Dr. 44,000

To Debenture Application&Allotment A/c 44,000
(Being application &allotment money recd.)
Debenture Application& Allotment A/c - Dr. 44,000
To 15% Debenture A/c 40,000
To Securities Premium A/c 4,000
(Being Issue of debentures at par and redeemable
at par)
Bank A/c - Dr. 40,000
To Debenture Application&Allotment A/c 40,000
(Being application &allotment money recd.)

Debenture Application& Allotment A/c - Dr. 40,000

Loss on issue of debenture
To 15% Debenture A/c 40,000
To Premium on redemption 4000
(Being Issue of debentures at par and redeemable
at par)
Bank A/c - Dr. 44,000
To Debenture Application&Allotment A/c 44,000
(Being application &allotment money recd.)
Debenture Application& Allotment A/c - Dr. 44,000
Loss on issue of debenture 4000
To 15% Debenture A/c 40,000
To Securities Premium A/c 4,000
Premium on redemption 4000
(Being Issue of debentures at par and redeemable
at par)

Work sheet 6

Issue of Debentures for consideration other than cashans issue of debentures as collateral
security
Time: 30 min M.M: 12

1 Give the meaning of ‘Issue of Debentures as a collateral security’. 1

Ans. It means issue of debentures to lenders as an additional security over
and above the prime security

2 Sumedha Ltd. purchased Machinery from Hira Ltd. for Rs.8,40,000 . 3

Sumedha Ltd. issued 9% Debentures of Rs.100 each at a premium of 20%.
Pass necessary journal entries in the books of Sumedha Ltd.
Journal
Date Particulars LF Dr Cr Amount
Amount

Debenture Suspense A/c - Dr. 10,00,000

To Debenture A/c 10,00,000

(Being Issue of 10,000

Debentures of Rs.100 each as
collateral security against the
bank loan of Rs.8,00,000)

3 Pass the necessary Journal entry when 10,000 debentures of Rs. 100 each are 4
issued as collateral security against a Bank loan of Rs. 8,00,000.
Journal
Date Particulars LF Dr Cr Amount
Amount

Debenture Suspense A/c - Dr. 10,00,000

To Debenture A/c 10,00,000

(Being Issue of 10,000

Debentures of Rs.100 each as
collateral security against the
bank loan of Rs.8,00,000)

4 4
X Ltd. obtained a loan of Rs. 4,00,000 from IDBI Bank. The company issued
5000, 9% Debentures of Rs. 100 each as a collateral security for the same.
Show how these items will be presented in the Balance Sheet of the
company.
Balance Sheet as at-------------------------
 Particulars Note Current Previous
No. Year Year
(Rs.) (Rs.)
Equity & Liabilities
Non- Current Liabilities
Long Term Borrowings 1 5,00,000
5,00,000

Note no. 1
Long Term Borrowings
Particulars Current Year Previous
(Rs.) Year
(Rs.)
Loan from State Bank of India 5,00,000
(Collateral Security issued 5,000
9% Debentures of Rs.100 each)
5,00,000