Solution Class 12 - Accountancy Accountancy Section A: Lsss 1 / 19
Solution Class 12 - Accountancy Accountancy Section A: Lsss 1 / 19
Class 12 - Accountancy
ACCOUNTANCY
Section A
1. (c)
Legacy
Explanation:
It is like donation. It is the amount given to a non-trading concern as per the
will of deceased person. It is taken to the Receipts and Payments Account as
Capital Receipts. This will appear in Balance Sheet on liability side.
2. (a)
Owner’s equity
Explanation:
NPO doesnt have any owners equity , they can take debt.
3. (a)
Deficit
Explanation:
NPO make income and expenditure account which shows surplus if income
exceeds exp. or Surplus if Exp. exceeds income.
4. (c)
Income
Explanation:
By selling old newspapers, NPO will receive revenue hence it will be an
income for NPO which is to shown in Income and expenditure account on
income side.
5. (b)
Quality of product.
Explanation:
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A firm producing qualitative products can easily have name and fame in the
market. This lead to increase in the value of goodwill. The business firms
which enjoys good commercial reputation for the quality of their products,
they have a high value of goodwill.
6. (d)
Arpit A/c Dr 75
Naman A/c Dr 50
To Manik A/c 125
Explanation:
Calculation of Interest on drawings:
Manik = 20,000 ×10/100 × 6/12 = 1,000 (Dr.)
Arpit = 15,000 ×10/100 × 6/12 = 750 (Dr.)
Naman = 10,000 ×10/100 × 6/12 = 500 (Dr.)
Profit = 1,000 + 750 + 500 = 2,250 (they should get this profit in 5:3:2 Ratio)
Profit should be credited as below
Manik = 2,250 x 5/10 = Rs. 1,125 (Cr.)
Arpit = 2,250 x 3/10 = Rs. 675 (Cr.)
Naman = 2,250 x 2/10 = Rs. 450 (Cr.)
Hence Adjustment:
Manik 125 (Cr.)
Arpit 75 (Dr.)
Naman 50 (Dr.)
7. (a)
After calculating Net Profit
Explanation:
Profit and Loss Account is prepared after calculating the net profit. Profit and
loss appropriation account shows the distribution of net profit amongst the
partners in the form of interest on capital, salary, commission and
remuneration etc. and transfer of profit to various reserves. profit and loss
appropriation account is prepared after the preparation of profit and loss
account.
8. (b)
10,000
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Explanation:
Minimum guarantee of profit to a partner means, that partner will not get the
less amount than the guarantee amount. If there is any deficiency, it will borne
by the existing partners who have given guarantee. But it does not mean that
he will get only guarantee amount, if his profit exceeds the limit of guaranteed
amount, that will be paid to him. For example, in the above question
guaranteed amount of C is Rs. 8,000 but he is getting Rs. 10,000 as per the
profit sharing ratio. So he will get Rs. 10,000.
9. (d)
Rs.420
Explanation:
Calculation of interest on drawings:
1. When drawings during the year are given but it is not mentioned that
drawings are made in the beginning, middle or end, in such a case average
period should be used because per annum word is given with the rate of
interest.
2. Average Period = 6 Months
3. Interest on Drawings = 7,000 × 12/100 × 6/12 = Rs. 420
10. (d)
Opening capital
Explanation:
Calculation of interest on capital should be always done on the opening capital
first and after that on additional capital introduced (if any) by the partner
during the year. Interest on opening capital and additional capital should be
shown in a combined manner as total interest on capital during the year.
11. (d)
To strengthen the financial position
Explanation:
It is a good decision by the partners to create a reserve. A reserve is created
only out of profits when there is sufficient profit in the business. In case of
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loss, a reserve cannot be created. The main purpose of creating a reserve is to
strengthen the financial position of the business firm.
12. (a)
Goodwill
Explanation:
Rule: Debit the Gainer partner and credit the sacrificing partner. Whenever
there is reconstitution of partnership the amount of compensation will be
equal to the proportionate amount of goodwill.
13. (c)
P= Rs.35000, Q= Rs.30,000, R= Rs.25,000
Explanation:
New Profit Sharing Raio = 3:2:1
P’s Share of Profit = 90,000 × 3/6 = 45,000
Q’s Share of Profit = 90,000 × 2/6 = 30,000
R’s Share of Profit = 90,000 × 1/6 = 15,000
R should get 25,000 but he is getting only Rs.15,000 (deficiency Rs.10,000 will
be met by P)
Now P’s Share will be = 45.000 – 10,000 = Rs. 35,000
14. (b)
Super Profit
Explanation:
Goodwill is the capitalized value of super profits. To find out the super profits,
we deducted normal profits from the actual average profits (average profits –
normal profits). To find out the value of goodwill, super profit should be
capitalised i.e. super profits × 100/Normal Rate of Return.
15. (a)
Contingency Reserve
Explanation:
At the time of reconstitution of a partnership firm partners can distribute only
free and accumulated reserves and profits. In the given question, only
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contingency reserve is a free reserve which partners can distribute in their old
profit sharing ratio.
16. (b)
Sneh Dr.2,000; Sudha and Pushpa Cr.1,000 each
Explanation:
There is a gain of 2/24th to Sneh and Sudha. Pushpa will sacrifice 1/24th each
of their share. Hence Sudha’s and Pushpa’s capital account should be credited
each by 1/24th of the balance in profit and loss account, i.e. 1/24 × 24,000 = Rs.
1,000 each and Sneh’s capital account should be debited by Rs. 2,000.
17. (b)
Employees Provident Fund
Explanation:
Employees provident fund is not a free reserve. Partners cannot distribute
employees provident fund. Partners can distribute only free reserves and
accumulated profits at the time of reconstitution of a partnership firm. In the
above question partners will distribute all reserves and retained earnings
except employees provident fund.
18. (b)
Revaluation account
Explanation:
Revaluation account is prepared to record any increase/decrease in the value
of assets and liabilities. The value of some assets may increase or decrease
with the passage of time. Similarly some liabilities may also show an
increase/decrease in the value. The Revaluation account is credited if there is
an increase in the value of assets or decrease in the value of liabilities. On the
other hand it is debited if there is any decrease in the value of assets or an
increase in the value of liabilities.
19. (a)
Revaluation of assets
Explanation:
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When reconstitution of a firm takes place, it is necessary to revalue the assets
and re-assess the liabilities. The process of recording change in the value of
assets and liabilities is called revaluation. Profit or loss calculated through
revaluation is distributed among the partners in their profit sharing ratio.
20. (a)
Horizontal analysis
Explanation:
Comparative financial statement is an example of Horizontal analysis because
it requires comparative financial statements of two or more accounting
periods.
Section B
Rate months.as.per.Average.M ethod
21. Interest on Drawing = Amount × 100
×
12
Rate 6.5
Case (i) Interest on Drawing = Amount × 100
×
12
10 6.5
1, 000 × 12 ×
100
×
12
= Rs. 650
Rate 6
Case (ii) Interest on drawing = Amount × 100
×
12
10 6
1, 000 × 12 × × = Rs. 600
100 12
100 12
Rate 5.5
1, 000 × 12 ×
100
×
12
= Rs. 550
=
Dr. . Cr.
30,000 30,000
Dr. Cr.
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Balance b/d 60,000 40,000
Dr. Cr.
Interest on
600 400 Partners’ Salaries 12,000 12,000
Drawings
Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs
Chauhan 1,000 × 12
12,000 24,000 Tripathi 600
=
Interest on Capital
Tripathi 3,000
Profit Transferred
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to
31,000 31,000
Dr. Cr.
Dr. Cr.
Interest on
600 400 Interest on Capital 3,000 2,000
Drawings
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15,000 = Average profit - 8,800
Average profit = 15,000 + 8,800 = Rs 23,800
24. Gaining Ratio : The ratio in which the partners have agreed to gain their shares
in profit from the other partner or partners is known as gaining ratio.
Sacrificing Ratio : Ratio in which the old partners sacrifice their share in favour
of new partner is called sacrificing ratio.
Section C
25. Books of Sports Club
Income and Expenditure Account
For the year ended 31.03.2016
Dr. Cr.
Balance Sheet
as at 31.03.2016
Amount Amount
Liabilities Assets
Rs Rs
Sports Fund
Sports Fund : 35,000 35,000
Investments
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(Being the adjustment entry passed)
Working Notes:
Calculation of Adjusted Profits
Adjusted Profit = Given Profit - Salary - Commission - Guarantee to Binay
= 1,50,000 - 16,000 (8,000 + 8,000) - 8,000 - 50,000 = Rs 76,000
Distribution Of Profit
Ajay's share of profit = 76000 × 3/5 = 45600
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To Kumar's Capital A/c 60,000
iii. Gupta has gained so he will be debited by 1,20,000 and Kumar and Kavita
have sacrificed , so they will be credited by 60,000 each.
28. Keshav; Meenakshi; Mohit
Old ratio 1/5 : 2/5 : 2/5
New ratio 1/3 : 1/3 : 1/3
Sacrifice or Gain
3 5 2
Keshav = 1/5 – 1/3 = 15
−
15
= −
15
(gain)
6 5
Meenakishi = 2/5 – 1/3 = (Sacrifice)
1
− =
15 15 15
6 5 1
Mohit = 2/5 – 1/3 = − = (Sacrifice)
15 15 15
Journal
Debit Credit
Date Particulars L.F.
(Rs.) (Rs.)
2015 2
Keshav’s capital A/c (2, 40, 000 × ) Dr. 32,000
Apr. 1 15
1
To Meenakshi capital A/c (2, 40, 000 × ) 16,000
15
1
To Mohit’s capital A/c (2, 40, 000 × ) 16,000
15
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profit sharing ratio)
32,000 32,000
Total
===== ======
Absolute Percentage
Change Change
Particulars 2014 2015 (Increase or (Increase or
Decrease) Decrease)
(Rs.) (Rs.)
(III) Expenses
b) Changes in Inventories of
80,000 40,000; (40,000) (50.00)
Stock-in-trade
(V) Profit before Tax (II - IV) 1,52,000 2,98,000 1,46,000 96.05
Working Note
2014 2015
Changes in investors of
80,000 40,000
stock-in-trade
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Cost of revenue from 6,00,000 8,20,000
operations
Section D
30. Balance Sheet
Cash 28,260
Furniture 11,600
1,01,060 1,01,060
.
======= =======
To General
... 2,500 By Donations ... 21,220
Expenses
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Furniture 1,000 7,000 . ... ...
Balance Sheet
as on 31st March 2015
Subscriptions
Add: Surplus 20,160 1,21,220 1,400
o/s
Book 60,000
Less
6,000 60,240
Depreciation
Investments 28,000
Dr Revaluation Account Cr
31.
Amount Amount
Particulars Particulars
(Rs) (Rs)
R (33,000×1/6) 5,500
S (33,000×2/6) 11,000
36,000 36,000
Dr Capital A/c Cr
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Particulars R (Rs) S (Rs) T(Rs) Particulars R (Rs) S (Rs) T (Rs)
To T's Capital
25,000 - - By Balance b/d 1,00,000 50,000 25,000
A/c (Goodwill)
By Revaluation
5,500 11,000 16,500
A/c (Profit)
By R's Capital
To Balance c/d 85,500 71,000 81,500 - - 25,000
A/c(Goodwill)
By General
5,000 10,000 15,000
Reserve A/c
Balance Sheet
as at 31st March, 2015
Bank 5,000
3,02,000 3,02,000
Working Note
Journal entry in respect of General Reserve
General Reserve will be distributed among old partners in their old profit
sharing ratio .
R's share = 30,000×1/6 = 5,000; S's share = 30,000×2/6 = 10,000 ; T's share=
30,000×3/6 = 15,000
Calculation of Sacrifice or Gain of Each Partner
Sacrificing/(Gaining) Share = Old Share - New Share
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1 1 1−2 1
R = − = = ( ) Gain
6 3 6 6
2 1 2−2
S = − = = Nil
6 3 6
3 1 3−2 1
T =
6
−
3
=
6
=
6
Sacrifice
Firm's goodwill = Rs.1,50,000
R will pay his share for goodwill to the sacrificing partner T
1
= 1, 50, 000 × = Rs.25, 000
6
Section E
32. The profit and loss appropriation account is an extension of the profit and loss
account. The main intention of preparing a profit and loss appropriation
account is to show the distribution of profits among the partners. So as per the
particulars available in this question the Profit & Loss Appropriation A/c is
prepared as follows:-
Profit and Loss Appropriation Account
for the year ended 31.3.2010
Dr. Cr.
To Interest on
By Net Profit 2,70,000
Capital
By Interest on
L's Current A/c 24,000
Drawings:
To Profit transferred
to
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N's Current A/c 63,487.50 1,52,370
2,72,370 2,72,370
Working Notes:
i. As capitals are fixed, therefore interest, salary, and share of profit will be
transferred to partners’ current account.
ii. Calculation of interest on drawings
L = 10,000× 100
12
×1 = Rs 1,200
12 6
M = 12,000× × = Rs 720
100 12
12 3
N = 15,000× × = Rs 450
100 12
Subscriptions
Loss on Sale of Old
1,300 received for 26,500 ...
Furniture(Note 3 )
2017
Add:
General Expenses 3,200 Outstanding for 1,500 28,000
2017
Sale of Old
Electricity ...... 3,000 1,250
Newspapers
Interest
Add: Outstanding for
600 4,200 received on 450 ...
2017
F.D.
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Interest
Surplus (Excess of
Income over 22,300 . ...
Expenditure)
42,150 . 42,150
Amount Amount
Liabilities Assets
(₹) (₹)
38,550 38,550
Subscription
Received in Advance 500 Furniture 12,000 ...
for 2018
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... Less: Sale (5,000) 17,500
10% Fixed
... Deposit with 18,000 ...
Bank
Add: Accrued
... Interest (Note 2 450 18,450
)
Subscription
... Outstanding for 1,500 ...
2017
Add:
... Outstanding for 800 2,300
2016 (Note 1 )
... . ...
61,950 . 61,950
Working Notes :
1. Subscriptions received for 2016 are Rs. 1,200. It means Rs. 800 are still in
arrears which are shown in the Balance Sheet of 2017.
2. Interest received on Fixed Deposits is Rs.450, whereas due interest as per the
rate of 10% p.a. is Rs. 900 for 6 months (from June to December). Therefore,
accrued interest is shown in the Balance Sheet.
3. Loss on sale of Furniture = Rs.5,000 - Rs. 3,700 = Rs. 1,300
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