Model Test Paper 1

Time Allowed: 3 Hours Maximum Marks: 80

General Instructions:
1. This question paper contalns 34 questions. All questions are compulsoty
2. This question paper is divided into two parts, Part Aand B
3Part Ais compulsory for all candidates
4. Part-B has two options, ie, 0) Analysis of Financlal Statements and U)Computerised Actounting Students
must attempt only one of the glven options.
5. Questions 1 to 16 and 27 to 30 carry 1 mark each.
6. Questions 17 to 20, 31and 32 carry 3 marks each.
7. Questions 21, 22 and 33 carry 4marks each.
8 Questions from 23 to 26 and 34 carry 6 marks each.
9. There is no overall choice. However, an internal cholce has been provided in 7 questions of one mark,
2 questions of three marks, 1questlon of four marks and 2 questions of six marks.

Part A
(Accounting for Partnership Firms and Companies)
1. Ram and Shyam are partners in a firm sharing profits in the ratio of 3 :2. They
admitted Mohan as a partner for 1/4th share in the profits of the firm. Mohan brings
10,000 for his share of goodwill. Following entry is passed when Mohan's share of
goodwill is credited to sacrificing partners:
JOURNAL
Date Particulars LF. Dr. () Cr.)
Premium for Goodwll A/c Dr 10,000
To Ram's Capital A/c 4,000
To Shyam's Capital A/c 6,000
(Mohan's share of goodwill credited to sacrificing partners)
New profit-sharing ratio of Ram, Shyam and Mohan will be
(a) 5:4 :3. (6) 5: 1:2.
(c) 7:5: 4. (d) 2: I:1. [1]
2. Assertion (A): Rent paid to a partner is debited to Profit &Loss Account.
Reason (R): It is a charge against profit and not an appropriation.
In the context of above two statements, which of the following is correct?
(a) Assertion (A) is correct but Reason (R) is wrong.
(6) Both Assertion (A) and Reason (R) are correct, but Reason (R) is not the
correct explanation of Assertion (A)
(c) Both Assertion (A) and Reason (R) are incorrect.
(d) Both Assertion (A) and Reason (R) are correct, and Reason (R) is the correct
explanation of Assertion (A). [1
 An Aid to Accountancy-CBSE X
M2
ata premium of20% nnsuets Model Test Papers
3. Amritdhara Ltd. issued 10,000 Equity Shares of 10 each
M3
and balance as First and Final Call. It had eal
t3 on Application,5on Allotment Pnrtnera' drawings during the yenr had been Lalit100,000 and Pankaj 5 000
shareholders te pay allotment money. Share Capital yet to be called will be Profit-sharing rntio between Lalit and Pankaj waAs 3 :2. What will be the interest on
(a) 40,000. (b) ? 20.000. capital, if the capitals nre fluctunting?
(d) 50,000. (a) Lalit- 34,300 and Pankaj-
() 30,000. 23,700
(b) Lalit? 22,800 and Pankaj- 28,200.
Or
(c) Lalit 22,800 and Pankaj 13,450.
Debentures which are transferable by mere delivery are () Lalit 28,300 and Pankaj 22,750.
(a) Redeemable Debentures. (b) Registered Debentures.
i) Bearer Debentures. () Non-convertible Debentures. [1) 5. Atal, Madan and Mehra are partners in a firm. At the time of distribution od profit
for the year there was dispute between the partners. Profit before interest on
4 Lshu, Vishu and Nishu are partners in a firm sharing profits and losses in the ratio of partner's loan was 12,000 and Madan demanded interest @1On% pa. on his loan of
5:3:2.They decide to share profits and losses in the ratio of 2:3:5with effect from 1,80,000, There was no agreement on this matter, What will be the amount payable to
lst April. 2022. They also decide to record the effect of the following balances without Atal, Madan and Mehra respectively?
affecting their book values by passing a Journal entry: (a) 4,800 to each partner.
Book Value () (b) 4,000 to ench partner.
General Reserve 35,000
() Loss of 2,400 for Atal and Mehra and Madan will take home 16,800.
Profit & Loss Account 15,000 (d) 800 to Atal, 10.400 to Madan and 800 to Mehra.
Advertisement Suspense Account 20,000
6. Ayush Ltd. issued 50,000, 8% Debentures of 100 each at par redeemable at a
Which of the following is the correct Journal entry for the above? premium. Loss on Issue of Debentures was written off 5,00,000 from Securities
(o) Lshu's Capital Ale ...Dr. 79.000 Premium and Statement of Profit & Loss each. At what rate, these debentures
To Vishu's Capital Ae 9,000 will be redeemed?
(Adjustment made for net accumulated profts and reserves) (a) 105. (6) 110.
(b) Vishu's Capital Ale ..Dr. 9,000 (c) 115. (d) 120.
To Ishus Capital Ae R9,000 Or
(Adjustment made for net accumulated profits and reserves) a diseount af 5%
(c) Vishu's Capital Ae ..Dr. 79,000
Hari Aggarbatti Ltd. issued 50,000, 89% Debentures of 100 each at
off 5,00,000
To and redeemable at a premium. Loss on Issue of Debentures was written
Nishu's Capital Ae 9,000 Securities Premium and Statement of Profit & Loss ench What is the premium
from
(Adjustment made for net aceumulated profits and reserves) payable per debenture on redemption?
(d) Nishus Capital Ae ...Dr. R9,000 (a) 10. (6) 15.
To Lshu's Capital Ale 79,000 (d) 20.
(Adjustment made for net aceumulated profits and reserves) (c) 5.
50 each at premium of 5 per share.
7. Automotive Ltd, issued 50,000 Bquity Shares of
Or
(including premium) on allotment and
On 31st March, 2022, after the closure of the Amount was payable 20 on application, 20
accounts, capital accounts of Lalit and How much minimum application money, the company
Pankaj were 4,00,000 and 5,00,000 respectively. Interest on capital ia balance on first and final call.
G6% p.a. as per the Partnership Deed. allowable must receive to allot the shares?
Subsequently, it was noticed that interest on (6) 9,00,000
capital had been omitted while determining distributable profit for the year (a) ? 10,00,000
31st March, 2022 which ended () 7,00,000
amounted to2,00,000. (c) ? 8,00,000
 Am Aid to
MA Accountancy-CRSE X Model Test Papers MS
due to Shiv, the retiringne
8. Erom the following information, ealeulate the amount
9. Not Profit of the firm in
Capital aceount balance 1,50,000 (a) 1,84,800. (b) 1.76,000
Loan account balanee 1,25,500 (c) 1,80,000. (d) t 1,92,000
Accrued interest on loan 4,000
Value of Goodwill 1,25,000
10. Intereat on drawing credited to Profit &Loss Appropriation Account will be
(a) 1,500. (b) 2,000.
Gain Profit) on Revaluation 25,000
Share of Profit (c) 1,600. (dy t 1,000.
50%
(a) 45.000 (6) 3,54,500. 11. Choose the correct sequence of steps in the context of ndmission of a partner
(c t 3,44.000 (d) t 3,54,000.
() Preparation of Balance Sheet of new firm
Or (ü) Preparation of Capital Accounts of Partners.
Match Last I (Provisions of Partnership Aet) with List II (Matters with whieh (iÐ Preparation of Revaluntion Aceount.
the provisions are related) and select the correet answer using the codes given below (iD) Preparation of Bank Account.
the lists:
List Listl (a) (üi); (iv): (: (i). (b) (i): (0: io: (ü).
A Interest s aliowed @6% pa Drawingsby Partners () (ii): (): (iD): (0). (d (0: iv): (i): (üin).
No interest is allowed Net loss of the firm for an accounting year.
No nterestnocharged Capital contributed by the partners 12. 10,000 Equity Shares of 10 each are forfeited for non-payment of first and linal
D Shared equally by all the partners unless otherwise Loan glven by a partner to the fim. call of 4per share. Out of these 5,000 Equity Shares were reissued at 7per hare
agreed
as fully paid. Minimum price at which the remaining 5,000 Equity Shares can be
Codes: reissued is
B (b A D (a) 5,000. () 20,000
3 2 2 (c) 50,000. (G 35.000.
B B D
13. In terms of the provisions of Companies Act, 2013, Securities Premium can be used
2 4 1 4
for which of the following purposes?
Read the following hypothetical situation and answer Q.9 and Q. (a) Issue of Partly Paid Bonus Shares
10. (b) Payment of Dividend to Shareholders
Karan. Tarun and Varun are partners having capitals of 4,00,000,
t2.00,000 respectively. Their deed provides that: 3,00,000 and
(e) Writing off Preliminary Expenses
(à Each of the partner is to be eredited at the end of ench () Writing off Capital Losses.
year with an annual salary
oft 4,000.
(i0 Karan. Tarun and Varun have a right to withdraw? 10,000 12,000 and 14. Rao and Reddy are partners in a firm sharing profits in the ratio of 3:2 Their capitals
respectively for personal use. Any drawing in 16,000 after ndjustments are 80,000 and 60,000 respectively. They admit Shiv as a partner
excess of the given limit will be
charged interest @10% pa. on his capital contribution of 35,000. New profit-sharing ratio of partners is to be
() Manager of the firm is to be
given commission @5% on net 5:3:2. Capital Accounts of the old partners are to be proportionate to their
his commission profit after charging
profit-shring ratio adjusted on the basis of Shivs Capital.
During the year, partners drawings were:
Varun 16000. Karan 22,000, Tarun- 20,000 and The surplus cnpital to be paid to Reddy will be
During the year 2021-22, firm's (a) 5,000. (6) 6.000.
commission was 1.72,800, profit after allowing partners'
salaries but before (c) 7,500. (d) 8,000.
 An Aid to Accountancy-CBSE M.7
Model Test Papers
M.6
Rajesh for the yenr ona
are partners. Interest on drawings of drawings of Rajesh i
15. Mukeshhand Rajesh
Or
was i,200. What was the total of7:211
31st March. 2022@ p.a.
10%
middle of each month? Alta,Karan and Shilpa were partners in a firm sharing profits in the ratio
the
withdrew a fixed amount during (b) 22,000.
respectively. Their fixed cnpitals were ns follows:
Alia-3,00,000, Karan-2,00,000 and Shilpa 1,00,000.
(a) 20.000.
(c) t 24.000.
(d) 30.000. The partnership deed provided for the following for division of profit:
(i) 10% of the net profit will be transferred to General Reserve
Or guarantee to Shilpa was
(i) Shilpa was gunranteed profit of ? 50,000, Any loss of
of each quarter and interest e
Ram, a partner withdrew 6,000 in the beginning year 31st March, 202
to be shared by Ali and Karan equally.
was 2.00,000
drawings Was calculated as 1,500 at the end of accounting Net profit of the firm for the year ended 31st March, 2022
31st March, 2022
What is the rate of interest on drawings charged? Prepare Profit &Loss Appropriation Account for the year ended [3
(6) 9%. 5,00,000 of Basics Ltd
and liabilities of
(d) 5%. 19, Asics Ltd. took over the assets of 25,00,000 each issued at a discount of 5% and
(c) 10% Asics Ltd. issued 20,000, 6% Debentures of in100
the books of Asics Ltd.
16. At the time of dissolution of a firm, firm's total assets were 5,00,000, creditors were redeemable at 5%. Pass the Journal entries
1.00.000. Realisation expenses amounted to 10,000. Assets realised 20% more than Or
the book value and creditors were paid 5% less. Gain/loss on realisation will be India Ltd. with assets of t 50,00,000
Sketchers Ltd. took over the business of Herbaloft
(6) Loss =75,000. consideration 37,50,000. The consideration was
(a) Gain=t 95,000. d liabilities of 7,50,000 for a
and balance by issue of 8% Preference Shares
(c) Gain =B4,95,000 (G) Loss ={1,00,000. paid by issuing bank draft of 4.50.000 and redeemnable at a premiumn of 10 each.
at a premium of 10 each and
of 100 e [3
and losses in the
17. Monu. Nigam and Shreya were partners in a firm sharing profitsAs per the terms of Pass the Journal entries in the books of Sketchers Ltd. From
on 31st March every year. sharing profits in 3: 2:1 ratio.
ratio of 4:3:1. The firm closes its books 20. Anita, Asha and Amrit are partners partnership
Partnership Deed on the death ofany partner, share of goodwill of the deceased partner profits in the ratio of 2:3:1. The
lst April, 2022, they decided to share change in profit-sharing ratio, goodwill should
was to be calculated on the basis of 50% of the net profits credited to that partner's any
deed provided that in the event of ofaverage profit of last five years. The profits and
Capital Account during the last four completed years before death. Monu died
on be valued at three years' purchase
lst July, 2022. losses of last five years were:
t1.20,000
Year ending on 31st March, 2018 3,00,000
Profits for the last four years were:
Year ending on 31st March, 2019 t3.40,000
Year Profit ) Year ending on 31st March, 2020
2.80.000
2018-19 97,000 Year ending on 31st March, 2021 40,000 (Loss)
2019-20 1,05,000 Year ending on 31st March, 2022 [3)
record the above change.
2020-21 30,000 Pass the necessary Journal entry to 5,00,00,000 divided into 30,00,000
with authorised capital of each. It issued
2021-22 84,000 21. Latex Ltd. is a company 2,00,000 Preference Shares of 100 payable 13
His share of profit in the year of his death was to be calculated on the basis of sales, Equity Shares of 10 each and at a premium of? 10 each
Shares
Sales for the year ended 31st March, 2022 was 21,00,000. From lst. April, 2022 to for subscription 10,00,000 Equityotment and balance ns first and final call. Shares
(including premium); 3 on allotnin excess of issued shares, Shares were allotted
30th June, 2022, the firm's sales were 2,00,000. subscribed were 2,00,000 shares with application money to applicants of 2, 00, 000
along
Pas necessary Journal entries relating to the amount of goodwill and profit to be by sending Letter of Regret
transferred to Monu's Capital Account. Also show your workings clearly. [3 Equity Shares. Shares held by Gaurav
received except on 265,000 Equityyecall money along with
18. Sindhu, Rahul and Kamlesh are partners in a firm sharing profits and losses in Amount due on allotment was number of shares paid the
the while another shareholder of equal
ratio of 4:3:3. Their fixed capitals are 1,00,000, 7 2,00,000 and 3,00,000
respectively. the allotment money. company
capital in the Balance Sheet of the
For the year 2021-22, interest on capital was credited to them @
10% p.a. instead
of 9% p.a. to show the shareCompanies
You are requiredSchedule Act, 2013. (4
IIl of the
Pass an adjustment entry and show the prepared as per
working clearly.
 An Aid to Accountancy -CBSE M
M.8
in the er Model Test Papers M9

22. Arnab, Ragini and Dhrupad are partners sharing profits disagreements a
certain issues of
3:1:1 Last vear, conficts arose due to Bal () Brahmputrn Ltd. forfeited 5,000 Shares of t 20 ench iued at a premium of
decided to d1ssolve the firm. On that date their t4 per share for non:payment of t5ench as first eall and final call. Call-in-Arrears
31st March. 2022. they
Sheet was as under: are not transferred to Calla-in-Arrears Account. Out of the forfeited shares, 2,50
were reissued at ita nominal (face) value as fully paid-up 6
DHRUPAD as at 31st March. 2022
BALANCE SHEET OE ARNAB RAGINI AND
24. Amit and Bnlnn are partners in a firm aharing profita in the ratio of 2:1 Chander
Labilities
Assets is admitted in the firm for 1/Ath share in profts, He brings 3,09,000 as his capital
Creditors
60.000 Bank S0.5 The Balance Sheet of Amit and Balan as at 31st March, 2022 was as under
Amaby Brothers Loan 95,000Debtors 1,70,000 BALANCE SHEET OF AMIT AND BALAN Os Gt 31st March 2022
100.000 Less Provision for Doubtful Debts 20,000 150.0%
Dhrupad's Loan Liabilities Assets
Investment Fluctuation Reserve s0.000 Stock
Investments
150.000
2.50,00 Creditors 1,20,000Cash at Bank
120000

Capital A/Cs General Reserve 60.000Debtors 80 000

275,000 Buliing 3,00.00% 150000
Arnab
Capital A/cs: Stock
200.000 Profit &Loss Account 50,00 Furniture
50.000
Ragin Amit 5,20,000
L70.000 645000 250.000
Dhrupad
9.50,000 Balan 3,00,000 8.20,000 Machinery 400 D00
9,50,000 Building
1000.000
10.00000
The assets were realised and the liabilities were paid as under:
(0 Arnab agreed to pay his brother's loan. Other terms of the agreement are as under:
() Investments realised 20% less. () Chander will bring 1,20,000 as his share of goodwill.
at 2,30,000.
(u) Creditors were paid at 10% less. (i) Building was valued at 4,50,000 and Machinery6% on debtors.
A provision for doubtful debts is to be created @
(o) Building was auctioned for 3,55,000. Commission on auction was 5,000. (ii)
Accounts and the Balance Sheet of
(o) 50% of the stock was taken over by Ragini at market price which was 20% les Prepare Revaluation Account, Partners' Capital
the new firm.
than the book value and the remaining was sold at market price.
(e) Dissolution expenses were 8,000. 3,000 were to be borne by the firm and the Alfa, Beta and Gama are in partnership
Their
sharing profits in the ratio of 5:3 as: 2follows:
balance by Dhrupad. The expenses were paid by him, lst April, 2022, the day Beta decided to retire from firm, was
Balance Sheet on
Prepare Realisation Account and Partners' Capital Accounts. Assets
Llabilities
23. GalaxyLad. registered with 3,00,000 Equity Shares of 50 each issued 80,000 Equity 300,000Building
250 000
Alfa's Capltal 1.50.000
Shares for subscription at apremium of 20% payable 20 on application
og and
and balance 2.00,000 Machinery 250.000
on allotment. Subscription was received for 1,00,000 Equity Shares t allotment was Betas Capital 200,000 nvestments
made to all the applicants on pro rata basis. Gama's Capital 1,00.000Debtors 100.000
General Reserve S0.000
1,00,000 Stock
Raman to whom 5,000 Equity Shares were allotted did not pay the allotment money Sundry Creditors
and his shares were forfeited. Out of the forfeited shares, 3,000 Equity Shares were Cash at Bank 900.000
reissued as fuly paid-up at the minimum reissue price. 900,000

You are required to pass the Journal entries in the books of Galaxy Ltd. The terms of retirement
were:
for40,000 for foregoing
Alfa for 30,000 and from Gama
Or () Beta takes goodwill from
Pass Journal entries for forfeiture and reissue in the following two cases: his share of profits. 50,000.
by 20% and building by
(0 Raipur Ltd. forfeited 5,000 Shares of 10 each issued at par of Pawan (i) Stock to be appreciated 2,70,000.
sold for
against application of 7,000 Shares for non-payment of 4 per share as (ii) Investments were
allotment money and?3 per share as first and final call, which was transferred is paid by bank draft. Balance Sheet of the
(iv) Beta Partners' Capital Accounts and
to Calls-in-Arrears Account. Out of the above, 2,000 Equity Shares were reissued Prepare Revaluation Account, [6]
for 15 as fully paid-up. new firm.
 An Aid to
M.10 Accountancy-CBSE Y Model Test Papers M.11
losses equally B.
25. Ganesh. Harish and Anil were partners sharing profits and
2019, Following entry was passed for the treatment of good
died on 30th June. Which one of the following is correct?
Date |Particula
LE D
Dr
() Aggregate of shareholders' funds and long.term debta is known as capital employed
Ganeshs Capital Ac 24,000
Dr. 12,000 (i) The main objective of computing Operating Profit Ratio is to determine the
Anils Capital Ac
To Hansh Capital A/c operational efficiency of the management.
IGoodwill adiusted by debiting gaining partners in gaining ratio)
36.000 iiD Operating Ratio = 100-Operating Profit Ratio.
80,000, based on th. (iv) While caleulating Trade Receivables Turnover Ratio, 'Provsion for Doubtfal Debte
Harnsh's share of profit till date of death was estimated as is deducted from the total amount of Trade Receivables.
previous year. Final dues payable to Harish's executor on the date of death w (a) All are correct. (b) All are incorrect
caleulated as t 3,30,000 without considering the following: (c) Only () and (i) are correct. (d) Except (iv) all are correct
Unrecorded asset (Furniture) taken by Harish earlier 50,000. 28. Cost of Revenue from Operations 73,00,000
Unrecorded liabilities assumed by the executors of Harish 5,000. Purchases 4,00,000
What is the correct amount due to Harish's executors? Opening Inventory 50,000
() Prepare Harish's Executors Account till ffnal settlement assuming that he was Inventory Turnover Ratio will be
paid 60.000 on 3oth June, 2019 and balance was to be paid in three equal (a) 2 Times. (6) 3 Times.
annual instalments starting from 30th June, 2020 together with interest rate (c) 1.5 Times. (d) 4 Times.
as specified in Section 37 of the Indian Partnership Act. [6) 29. A company received insurance claim of 7,50,000 for repairing the building which
26. Fit India Ltd. has paid up share capital ofR 1,00,00,000 (divided into 5,00,000 Equity was damnaged due to earthquake. Expense on repairing the building was 6.50,000.
Shares of? 20 each) and 10,000, 7% Debentures of 200 each. On 1st July, 2021, it Balance 1,00,000 was shown as Other Income in the Statement of Profit & Loss. It
will be shown in the Cash Flow Statement as follows:
further issued 756 Debentures at a premium of 10% redeemable at 25% premium to
meet the long-term funds requirement of 1,65,00,000. The issue price was payable (a) Added to Net Profit before Tax and Extraordinary Item under Cash Flow from
Operating Activities and Outlow under Investing Activities.
along with application. Balance in Securities Premium Account after the issue of
debentures is 25,00,000. Loss for the year ended 31st March, 2022 is 10,00,000. (6) Deducted from Net Profit before Tax and Extraordinary Item under
Activities.
You are required to Cash Flow from Operating Activities and Inflow under Investing
Extraordinary Item under
(c) Deducted from Net Profit before Tax and
(0 Pass Journal Entries for issue of Debentures; Investing Aetivities as
Cash Flow from Operating Activities and Inflow under
) Prepare Loss on Issue of Debentures Account; and Extraordinary Item.
(u) PasSS Journal Entries for interest on debentures, if interest is payable on (d) No adjustment will be made.
30th September and 31st March each year. [6 Or
100 each at a discount of R5, redeemable
Acompany issued 10,000, 7% Debentures of?
premium. LOSS of 1,50,000 was written off from Statement
Part B at the end of 4yenrs at 10% in the Cash Flow Statement as 1follows:
of Profit & Loss. It will be shown
(Analysis of Financial Statements) before Tax and Extraordinary Item under Cash Flow
(a) Deducted from Net Profit
27. AStatement of Assets (Current and Non-current), from Operating Activities.
Liabilities (Current and Non-current) Extraordinary Item under Cash Flow from
and Equity (ie, Shareholders' Funds) indicating the (6) Added to Net Profit before Tax and
at a given date is known as
finaneial position of an enterprise Operating Activities.
from Investing Activities.
(a) Income Statement. (c) As Outflow under Cash Flow
(6) Balance Sheet. from Financing Activities.
(c) Cash Flow () As Outflow under Cash Flow
Statement. (d) Funds Flow Statement.
 An Aid fe
M.12
Accontancy-Chs
of Cash from sale of et Alodel Trt Papers MI1
information, determine the nflow
30. From the follening March 2022 ( 3lst Mareh, 2021
3l 0 Sale of Machinery at n loss of 50,000
Mnchiners
5.00,000 3,00,000 () Purchnse of Stoek-in Trade on credit of two monthe for 40
Additional Infermation (o) Conversion of Debentures into Equity Shares of t 500,000
March. 2022- 50,000. un) Purehnse of Fixed Assets for t 4.00 000 on a long term delerred payment
Deprecintion for the sear ended 31st basis.
t4.00,000.
Purchaseof Machiners during the vear
of 50.000. 4. Read the following hypothetical text and answer the pven questions on its bas
Part of Machinery was sold at a profit Profit for the yenr ended 31st March, 2022 ofiPay (a payment proceseing tart up wa
iai 200.000
(b) 2.50,000
U5,00,000 after nceounting the following
() 3,50,000
Particulars
which the following iten
S1. State the major heads and sub-heads (if any) under Depreciation
will he shown in the Balance Sheet of a company as per Schedule Il of Compani Loss of Furniture due to Fire
25 500
At, 2013 Interest on Investment (Long-term)
0 Provision for Tax Tax Refund
0 Loan pavabie on demand Additional nformation:
31e Mars 3eMa
( Computer and related equipment. Particulars 20792 2021
6c) Goods acquired for trading. 20 00.D00 1500 000
() Capital Advances. Share Capital
Ca 1500.000 2000.D00
(ui) Current Maturities of Long-term Debts. SecuritiessP
Prermium 250000 250.a00
General Reserve 500000 320000
32. 0 "For a satisfactory short-term financial position, a firm should have current assety Machinery 100 000
tIce af its current liabilities". Why? Give reasons. Furniture
100.000
() Why Provision for Doubtful Trade Receivables'is deducted from the total amount Marketable Securities
10% Non-curent Investment 300D00 200 000
of trsde receivables while calculating Current Ratio? S0.000
Patents
Cash-in-Hand and at Bank SC000
33. From the following information, caleulate: 500.000
à Return on Investment Ratio. (i) Net Assets Turnover Ratio. Bank Overdraft 100000 75000
Provision for Tax
Particulars
50,000.
Net Proftafter interest and Tax 240000 () Patents purchased during the year was
Tax I6000 ended 31st March, 2021 and 2022 was
(i) Proposed Dividend for the respectively
Net Faed Assets Property, Plant and Equpment and intangible Assets 10,00,000 1,50,000 and 2,00,000
Non curent investments (Nontrade. ended 31st March, 2021 and 2022 was
Equty Share Capial (Face value 10 per sharej
1,00,000
(iüi) Interim Dividend during the year
15% Preference Share Capital
5,00000
50,000 and 1,20,000 respectively.
1,00,000
Reserves and Surplus induding surplus of the year under consideration)
200. 000 You are requirod to:
10% Debentures extraordinary items.
Revenue from Operations
4,00,000 1. Determine Net Profit before tax and
24,00,000 Working Capital Changes.
2. Determine Operating Profit before
Investing Activities.
3. Determine Cash Flow from
Debt to Capital Employed Ratio of a company is Financing Activities.
0.4:1. State giving reasons, which 4. Determine Cash Flow from
of the following will improue, (6]
reduce or not change the ratio? 5. Determine Cash and Cash Equivalents.
 Au Aid to
M14
Accountancy-Chst Model Test Papers M.15
ANSWERS

(b)
Part A Working Note:
Calculatlon of Opening Copital
1. (
Lalit () Panka (
Working Note:
Closing Capltal (31.3.2022) 4,00,000 5.00.000
Sacrihcing ratio 4000:6.000 or 2:3 Add: Drawings 50.000
1,00,000
Rams sacrihce 1/4x 2/5 2/20
5.00,000 $50.000
Shyams sacrihce = 1/4x 3/5 3/20
Less: Share of Profit (3:2) 1,20,000 80.000
New proft share of old partnes Old profit share-Share profit sacrificed Opening Capltal (142021) 380,000
3 2 12-2 10
Rams new proft Interest on Capital: Lalit =3,80,000 x6/100 =t22,800
share20 20 20
Pankaj 4,70,000 x6/100 = 28.200.

Shyams new profit share 38-3 5

$20 20 20 5. ()
Working Note:
Mohan's share = 1/4 or 5/20 Proft after interest on partner's loan =12,000-T9,600 Ginterest on Madars Loan of 160.900
2400
New Profit-sharing ratio of Ram, Shyam and Mohan =10/20:5/20:5/20= 10:5:5 or 2:1:1.
Share of proft of eachpartner =2400/3 =800
2. (d)
Amount payable to Madan =800 (Proft) +9,600 (lnterest on Loan)
3. (a) 40,000 (10,000 x4 per share), =10,400.

Or 6. () Premium payable on redemption of debentures is 10,00,000, Le..? 20 per

debenture. Thus, redemption rate is 120 100 + 20).
(c) Because transfer deed is not executed and holder of the debentures is taken
as oWner. Or

4. (d) (c) Premium payable on redemption of debentures is 2.50,000 ( 5,00,000 Loss)

- 2,50,000 (Discount). Premium payable on redemption is 5 per debenture
Working Notes:
1. Calculation of Net Effect of Accumulated Proft/Loss or Reserves: R 2,50,000+ 50,000).
General Reserve 35.000 7. (6) Shares applied should not be less than 90% of the shares issued for subscription
Profit & Loss Account Hence, company must receive at least of 50,000x 20.
9,00,000 being 90%%
15,000
Less Advertisement Suspense Account (20,000) 8. (6)
Net Amount 30.000 Amount due to Shlv 150,000+ 1,25,500+4.000+t62.500 (5o% af goodwil +12500 (SO%of
Profit on Revaluatlon)
2 Caiculation of Gain/Loss of Share:
=354500.
Ishu Vishu Nishu
New profit share Or
2 3 5
Old profit share 5 3 2 (d)
Difference 3/10 (Managers commissionll.
3/10
9. (b) R 1,72,800+ 12,000 (Salary to partners)-8800
Sacrificing Partner Gaining Partner Working Note:
1,84800
3. Share of Sacrihicing and Gaining
Partner in the Net Accumulated Profit, Reserves: Net profit before salary= t1,72,800+12,000 (Partner's salary)
&800
For lshu -t30,000 x 3/10 =9000 Managers commission= 1,84,800 x 5/105 =
For Nishu 30 000 x3/10=t9.000 Net profit of the firm=184,800-8,800 =t1,76,000.
 An Aid to
M.1E Accountancy-CBSE X Model Test Papers M.17

10, () 16. (a)

Working Note: Working Note:
Interest on Drawings D REALISATION ACCOUNT
10 6 600 Particulars Particular
Karan 12000 100 12 To Sundry Assets 500,000 By Creditors Ae
10 6 400 To Bank AWc By Bank AWe (Asetsi 6.00000
Tanin 8000*1
000 Creditors 95,000
Expenses 10.000 1.05,000
linit. To Galn (Profit on Realisation (Balanclng Fqure)
Tnterest is charged in excess of the given 95000
700.000 700000

11. (c)
at which each sha 17 JOURNAL
12, (b) Amount forfeited per share is R6. Hence, minimum amount Particulars Dr
can be reissued is 4. Total value is 5,000 x 4=20.000. Date
Nigarn's Capital Ac 59250
13. (c) Section 52 (2) of the Companies Act, 2013 does not allow issue of Partly Paid Bonus eyas Capital AC 19750
Shares. payment of dividend and writing off capital losses from the amount o DMs Capital NC 79.000
Securities Premium. It allows writing off Preliminary Expenses. (Monus share of goodwill adjusted in Capital Accounts of Nigam and
Shreya in their gaining ratio of 3: 1)
Proft &LossSuspense Alc Dr 4 D0C
14. (c) 4000
To Monus Capital Ac
Working Note: (Monu's share of estimated proft till the date of his death credited)
Capital of new frm on the basis of Shiv's capital =35,000 x 10/2-1,75,000
Reddy's capital in the new firm t1,75,000 x 3/10 t 52.500 Working Notes:
Surplus capital paid to Reddy = 60,000-52,500=7.500. 1. Calculation of Goodwill and Monus Share of Goodwill:
Monu's Share of Goodwill=50/100 ( 97,000+ 1,05,000+30.000+ 84,000) x4/8)= 79.000.
15. (c) 2. Calculation of Monu Share of Profit til the date of death:
Working Note: t84,000o (Profit) vI200000 x4/8=4,000.
Monu's Share of Profit
Let the total drawings of Rajesh during the year = 21,00,000 (Sales)
of lnterest 6
Interest on Drawings = Total Drawinos y Kate 12 3. Gaining Ratio of Nigam and Shreya 3:1.
100
ADJUSTING JOURNALENTRY
1,200rx 18
100 12 Dr
Date Particulars
11 200
1,200 = xx D
102 Rabul's Current A/c D.
Kamleshs Current Alc 1400
71.200 = x20
To Sindhus Current A/c
I=1,200x 20=24,000 (nterest on capital provided @10% pa. instead of 99%, now rectifed)
"Average period = ((11.5+ 5)/2]=6 months.
ADJUSTMENT TABLE
Or Working Note: Karnleshs Cument A Firm
(c) Particulars Sindhus Current A/c Rahuls Current A/e
Dr ( a
Working Note: Dr. ( Dr.) Gr. Dr. )
30,000 60.000
Let the Rate of Interest = 20,000
Interest cedited to be cancelled 10,000
27,000 S4000
Interest on Drawings Total Drawinos x Kate of Interest 75* 9.000 B00
Interest to be paid 1800 6000
100 12 2400 1800
Share in the profit (4:3:3)
t1,500 = t24000 x 5
R60.000-t54,00) 60,000 60.000
100 12 10000 11,400 20,000 19,800 30,000 28,800
1,500 = 150x
1400 (C) 200 (Dr) 1,200 (De)
K150o/150= 10% Net Effect
"Average period (12+3/2] 7.5 months
 An Aid to Accoumtancy -CBSE h
M.IS Model Test Papers M19
Or
|Herbal India Ltd.
=1,80,000 x 1/10 =18,000 3750000
Shilpa's actunl share of profit
Loss on lssue of Preference Shares Ne J00.00
To Bank Ne
Deficiency = Guaranteed Profit -18,000
43A.000
To 8NPreference Share Capital A/e 3000 000
-t 50,000-18,00032,000 To Premlum on Redemption of
equally, ie., 16,000 each. 30.000, 8% Preference Shares issuedPrelerence Shares At
at premium of t 10 and redeemable
Deficiencv is to be borne by Alia and Karan at 10 premum)
31st March, 2022
PROEIT &LOSS APPROPRIATION ACCOUNT for the year ended 20. Valuation of Goodwill
Particular
Particulars
Average Proft = 20,000+3,00,000 + 3,40,000+ 2,80.000-t 40,000
20.000By Profit &Loss A/c (Net Profit)
To General Resenve AC 2,00,000 -2,00,000
To Profe transterned to Goodwill=2,00,000 x3=6,00,000.
Alas Cunent Ac 180.000x7/101 126000 Caleulation of Gain or Sacrifice of Partners:
Less Defoency bone 16000 1,10,000
arans CurertAc180.00x20) 36000
Sacrifice profit share = Old profit share - New profit share
Anita = 3/6- 2/6 = 1/6 (Le., sacrifice)
Less Dehcency bone 16.000 20,000 Asha = 2/6-3/6 (1/6) (ie., gain)
Shilpas Curent A 18.000 Amrit = 1V6- 1/6 = 0
t180 000x1/10) Anita is a sacrificing |partner and Asha is a gaining partner.
Add Dehciency borne by Compensation payable by Asha to Anita =t 6.00.000 x 1/6= 1.00,000
Alg 16.000
JOURNAL
Karan 16000 50.000 LE D(
Date Particulars
200.000 2,00.000
2022
1 Asha's Capital A/c Dt 1.00000
April 100.000
19 JOURNAL To Anitas Capital A/c
Adjustment for goodwl made on change in profit-sharing ratiol
Date Particulars LE Dr.
Dr 25,00,000 BALANCE SHEET OF LATEX LTD. at
Sundry Assets Ae 21.
To Sundy Liabiliies AC Note No Centear
5,00,000
Particulars
To Basics Ltd 20,00,000
Assets and liabilities taken over) L EQUITY AND LIABILITIES
Basics Ltd 20,00,000 1. Shareholders' Funds
5925 D00
Loss on issue of Debentures A/c Dr 2,00,000 Share Captal
To 6% Debentures Ae 21,00,00 Notes to Accounts
To Premium on Redemption of Debentures A/c 1,00,00 Particulars
(20,000,6% Debentures issued at 5% discount redeemable at 5% premium) , Share Capital
Authorised Capital 3.00.00.000
Or 30.00,000 Equlty Shaes of 10 each 20000.000
2.00,000 Preference Shares of 100 each 50000.000
JOURNAL
Date Particulars Issued Capltal 100,00.000
LE Dr.) |Cr. 10.00.000 Equlty Shares of t 10 each
Sundry Assets Ae Dr. 50,00,000 bched but not fuly pald
To Sundry Labilities A/e 60.00.000
To Capital Reserve Ac
7,50,000 10.00.000 Eouity Shares of 10 each, 6called-up 75.000 5925,000
500000 Less Cals-ln-Arrears
To Herbal lndia Ltd
37,50,000 show share capital in the Balance Sheet of the company, Hence, Securities Premium
(Business taken overd Note: The questlon requlres toin-Advanceft 1.00.000) recelved is not shown in the Balance Sheet.
(t L00,00,000) and Calls-in-A
 An Aid te
Accountancy-Chst M21
M.20 Model Trst Iajers
REALISATION ACCOUNT Share Capital Ac
Securities Premium A/e
Particulars To Shares Allotment Ne
Particular To Shares forfeited Ale
125 000
Debts Nc
By Povtson for Doubtul 2030 (S000equtty shares of Rarnan forfeited for non pment of allotment mon
To Sundy Avets
By Creditors
170000 Bank A/c
Debton
150.000 By Arnabt Brothers Loan Reserve
W/e
Nc 95009 Shares Forleited A/e D
Stoc By lnvestment Fluctuation To Share Capitai Ac
250000
Inestments
300.000 &70000By Bank A/c (Assets Realised): B000 eguity shares reissued for l750001
Blidne Investments 2.00.000
o5 000
Te Amab Captal At 3,55,000 Worklng Notes:
Building
Amabs Brothers Loan
54 000 Stock
60.000 61500 L Equity Shares allotted are 4Equity Shares for each SEquty Shares applied. ie.in the rtio o5 4
To Bank Aic (Creditor s000By Raginis Capital NC 60D0 2 Raman was allotted 5,000 Equity Shares. Thus, he applied for 6290 Equty
Shares (5.000 S4
To Bank AciCommisson
3000 (Stocke 75000-20% of 75000) Application Money Received (6,250 x 20) t125000
To Dhrupady Capital Ac (Expenses
ts000-tS 000 By Loss on Realisation translerred to: Application Money adjusted towards Shae Capital (5.000x 20) 100000
Amabs Capital Ac 76.200
Raginis Capital Ac 25,400 Alotment Money Account towards Share Capital 25,000

Drupads Capital Ae 25,400 1,27,00 Allotment Money in Arrears (t 2,00,000-25.000) J5000

ie. they hae been ressued along maxmum dscout
102700 3.000 Equty Shares have been reissued at 25 per share
1027.000 Reserve.
Hence, no amount as acapital gain is transferred to Capital
PARTNERSCAPITAL ACCOUNTS Or
D Arnab Ragini Dhrunat JOURNAL
Arnab
Ragini Dhrupad Particulars
Particulas LEDE
Date Particulars
2.75,0002.00.0001,70 0 Sa000
To Profit &Loss A 30000 10oD00 10000By Balance b/d Share Capital c (5,000 x{ 10) Dt
21.000
By Realisation A/c (Loan) 95000
To Realsation Alc 1Stod) 60.000 To Shares Forfeited Ac
29000
To Realsation Wc (Lons) 76200 25400 25,400By Realisation Nc (Expenses) 300 To Calls-in-Arrears Wc (wN)
To Bank Alc (Final Payment) 263.80o1.04.600 137600 370.0002,00,0001,73,000 5.000 shares of Pawan forfeted lor non-payment of allotment money
3.70.000200,0001,B.000 4and frst and fnal call 3)
30.000
Bank Afc (2000 x 15) 20.000
23 JOURNAL To Share Capital A/c (2.000x 10) 10 000
Date Particulans To Securities Premium Nc2,000xS)
paid up)
Bank Ac
De 20.00,000 2000 equity shares reissue @t15 per share as fully 8400
To Shares Application Ac 20,00,0 Shares Forfeited A/c
Applicaticon money on 1,00.000 equlty shares at20 per share) To Capital Reserve A/c (WN 2)
reissued transferred to Capital Reserve)
Shares Application Ac Dr. 20.00.000 (Amount proportionate to 2.000 shares
To Share Capital Wc 16.00.000
To Shares Allotment AC Working Notes: x3 6000
adjusted against allotment(7,000-5,000)
(Shares allotted on pro rata basis and excess application money 1. Excess application money = 20,000
(5,000 x44
transferred to Shares Allotrment A/c Alotment money due on 5,000 shares t6,000
|Shares Allotment At D 32,00,000 Less Excess application money
To Share Captal We 2400,000 -14000
To Securities Premium Ac 800,000 Allotment money not recelved
Final Call =t15,000
Allotment money due along with securities premium) Money not recelved on First and =t29,000
Bank Ale
To Shares Allotmert A
Dr 2625.000 Total Calls-in-Arrears
ls NiL Proportionate Gain
L000x2.0008400.
26.25,000 reissued at premium, loss on reissue 5,000
(Shares Allotment money received except on 5,000 equity shares) 2 2000 shares have been
transferred to Capital Reserve
 Acountancy-CRSLY
An Afd to.
M.22
OURNAL
AModel Test Papers M.23
LF Dr. (
Particulars Dr. Or
Date 1,00,000
Share Capital Ac 5000t 200 Dr REVALUATION ACCOUNT
S000t5)
To Shares Fist Call Ac Particulars Particulars
To Shares Final Call Ac(S 000
&S) 25
Shares Forfeited Aic(S 000 × 10) To Proft on Revaluatlon transferred to By Stock A 10
To
non-payment of frst cal t5and final call 5) Alfas Capital A/c 40.C00 By Building Ale
S000 shares forfeited fo Dr. 50.000 Beta's Capltal A/c 24.D00 By Investments e 26000
Bank Aic 2500 & 201 Gamas Capital Ae 16,000 80.000
Te Share Captal Ac (2500 201 8000
share as fuly paid-up) BO000
2S00 eguty shares reissudet 20 per D. 25,000
Shares Forfeited Ac 2S00x 10) Dr. PARTNERSCAPTAL ACCOUNTS
Te Capital Resenve Ac Reservel) 25, Beta (Gama (t Particulars Alifa (t Beta Gama
shares neissued transterred to Capital Particulars Alfa(
(Amount proportionate to 2500 To Betas Capital Afc 30.000 300000 200 00200900
40,000By Balance bld 50 000 30.000 20 oco
(Goodwill) By General Reserve Ac
24 REVALUATION ACCOUNT 40 000 24000 15 500
To Bank A/c 324000 By Revaluation A/t
To Balance dd 3,60.000 1,96,000By Alfa's Capital A/ 30000
Particulan
Particulars By Garna's Capital Ac
390 D00324000236 000
20000By Bulding Nc 3,90,000324,D00|236000
To Machinery Aic
To Poson fo Doubth Debs Alc 4800
BALANCE SHEET OF THE NEW FIRM as at 1st Apnit, 2022
To Proft on Revaluation transfemed to:
Liabilities Assets
Amits Captal Ac 16,800 300000
Balans Captal At B400 25200 Alfa's Capital 360000Buildinig
Gama's Capital 1.96.000| Machinery
50000
Sundry Creditots 1,00,000 Debtors
60D00
PARTNERSCAPITAL ACCOUNTS Cashat Bank(1.00.0004270.000-324000 4600
Dr
Particulars Balan cChander Particulars Amit Balan Chand
Amit 656,000

656800 368,400 3,00.000 yBalance bid 520,0003,00,000 50,000

To Balance id
By General Reserve A/c 40,000 20,000
25. () Unrecorded assets (Furniture) taken over by Harish
t5,000
By Revaluation Ac 16,800 8400 Less: Unrecorded liabilities assumed by Harish
745.000
By Bank A/c 3O0001
By Preniumfor GoodwillAWC80,000 40,000 Less: Harish's share of unrecorded assets and liabilities 15,000
656800|3,68400 3.00000 656800 368,4003.000 (1/3rd of t 45,000)
to Harish 30.000
Net amount to be deducted from the anount due
BALANCE SHEET OF THE NEW FIRM as at lst April 2022 30,000 =t3.00,000.
Labilties Asset Therefore, amount due to Harish = 3,30,000-
Creditors 120.,000 Cash at Bank () HARISHS EXECUTOR'S ACCOUNT
5,40,00
Capital Actounts Dr.
120,000+t300,000+120,000) Date Particulars
Amit 656800 Debtors Dat Particulars
80,000 2019
Balan
368,400 Less: Provsion for Doubtful Debts 2019 300.000
Chander 3.00.000 1325200 Stock
4,800 75200
June To Bank NC
60,000 June 30 By Harishs Capital Ae
1.00.000 2020
2020 10800
Furniture 50,00
To Balance chd
2.50,800 March 31By interest Ac
Machinery 230,000 March 3 240.000 x912x 6100)
Bullding 450.000 310.800
310,800
1445200 1445.200
 An Aid to Accountancy-CBSE Model Trsl Paers M25
M24
()
By Balance bid
2020
te Rank A
04400 Ape
Ane 308y Interest A
2.50 LOSSON I5SUE OF DEREHtuES ACCOUT
240000 J12 x6100) Date Particulars Date Partielers

A
2001 167200 March 31By interest
t160000 9/12 x6/100 120 2021
1To 7% Debentures e 3750.000March y Securities PrermumAC
to Balancee July By Statement of Proft &Loss

261600 261,609 37,50,D00

Finance Gosti
1790
2021
By Balance b'd
89600 April
Aune 30 y Interest Ac
16720%
240
(iD)
JOURNAL ENTAIES (FOR INTEREST ON DEBENTURES

ts0 0t200-t24or Particulars LE Drn

2022 R160,000 x 3/12 x 6/100) Date
2022 Interest A/C 2021
3600 March 31By B.60 30 Interest on Debentuies N 132.500
March To Salancece R80000 x912 x6/100] 132500
1o v e e nth 000 NDebentures of t 200 eadch for
173.200 1,73200 6months and 75,000,7% Debentures for 3monthsi)
DE 332500
|2022 Debenuren 132506
022
une 0te Bank Aie SA800 Apnil 1By Balance b/d 83.600 (interest pald to debentureholdersl
June 30By tnterest Alc 120
(80,000 x 3/12 x 6/100)
2022 595000
84.800 aech
March 31 nterest on bDebentures 595000
To Debe
interest payable on 85.000, 7% Debentures of t 200 each
Note Under Section 37 of indun Partnership Act. 1932, if the anount due to a deceased partner is not settlt
of a deceased partner at his option is entited to
for b rron
and the business is caried on, the legal representative Debentureholders ANc De S95.D00
eeive either iterest e6% pa tl the amount s paid off or share of the profit which has been earned b ank Ale
595 000
using the amount due to him nterestst ppald to debentureholders)
26. (0 JOURNAL
LE Dr.) Part B
Datr Particular Cr.
2021 27. (b) Balance Sheet
luy Bank AlE Dr L65.00.000o

lo Debentures Application and Alotment A/ 1,650000

(d) Except (iv) all are correct
(Appleation money teceed)
Debentures Apglcatun and Allotment Ac Dt. 165.00.000O 28. (6)
Loss on tsue uf Debentues At Dr. 3750,000 Working Note: inventory
Openlng Inventory + Purchases-Closing
lo Detentures A 1,50.00,000 Cost of Revenue from Operations= +t4,00,000-Closing Inventory
3.00.000 = t50.000
lo Securtis Pemiun A
15.00,0 inventory-3,00,000+50,000+ t4.00,000 =t150,000
Ciosing
Opening Inventory + Closing Inventory
lo Penium on edengtion of Debentues AVt 37.50,000
(75.000, 7H Dbentues of t 200 eachedeemable at 259% premiurn allotted) Average lnventory
2022
March 31 Secutes Penium Ae
ts0.000 +150000.u00,000
D 2500,000
Sutement of Prott &Loss (Finance Cost) B00.000 -3 Times
D 1250,000 Cost of Revenue fram Operations
lo Los on hsue of Debentures Ac
Inventory Turnover Ratlo Average Inventory L00,000
3750.000
Los on isur of debentures writte olf)
 Au Aid to
M.26
AccountmeyCeSE Model Test Papers M27
29. (el Or
) Net Aeseta or Capital Ernployed Turnover Ratio Reverue from Operations
Capital Employed
30. (a) 24.00,000 2 Times
MACHINERY ACCOUNT
t1200,000
Particulars Or
Particuians Eect
3.00.000By Depreciation Ae S.No. Reason
To Balanceb S0.000+1.50000)
To Bank Ac (Purchase 400.000 By Bank Alc (Sales) (t 2,00,00 ) improve Capital employed lis decreased by the amount of los but debt emans unchanged

o Gain iProfti on Sale of Machinery Ac

50 000 By Balance cd 50000 No change Nether Debt nor Capital Employed is affected
Reduce Debt will decrease but capltal employed remains
750.000 unchanged
(v) Irnprove Both Debt and capital employed are increased by the same amount.
31
S Ne Item Major Head Sub-head 34. 1. Net Profit before Tax and Extraordinary Ilems:
Current Liabilities Short-term Provisions = Net Profit for the year+ Interim Dividend+Loss of furniture due to fire +Provtston
Provsion fo Tas Short-term Borrowings
Loan pavable on demand Current Llabilities for Tax + Proposed Dividend- Tax Refund
Computer and related equipment Non-curent AssetsProperty, Plant and Equiprment and intanot =15,00,000 + 1,20,000 + 10,000+1.00,000 +7 1.50,000-10,000
Assets-Property, Plant and Equioment
=18,70,000
(v)Goods acqured for trading Cufrent Acsets Inventories
v)Capital Advances Non-curent Assets Long-term Loans and Advances 2. Operating Profit before Working Capital Changes:
(vCurent matutes of long-term debts Curent Liabities Short-term Borowings = Net Profit before Tax and Extraordinary ltems +Adjustments for Non-cash and
Non-operating Expenses-Adjustments for Non-cash and Non-operating Incomes.
32. (a) Current Ratio of 2:1 is considered ideal or satisfactary due to the following reasone =(1870,000+*1,00,000 (Depreciation) +*80.000-*5,000 (Interest onIrvestments)
0 Some of the current assets ike inventories and trade receivables mav no =20,25,000.
realise the full amount, in case of need. *Patents Amortised = Opening Patents+ Purchased-Closing Patents
tD Current assets should be more than current liabilities to ensure sufficient =t80,000+50,000- 50,000
working capital to run the day-to-day business activities, = 80,000.
In short, if current ratio is 2or more it means the firm has adequate liquidity and
it has the ability to meet its current obligations. 3. Cash Plow from Inuesting Activities:
(b) While caleulating current ratiolquick ratio, 'Provision for Doubtful Trade = Interest on Long-term Investments- Purchase of Machinery- Purchase of Non
Receivables' is deducted from the total amount of Trade Receivables to ascertain current Investment- Purchase of Patents
the realisable value of trade receivables. =t 25,000-2,00,000-1,00,000- 50,000
Net Profit before Interest and Tax -(3,25,000) Outflow.
33. 0) Return on Lnvestments (RO)= <100
Capital Employed 4. Cash Flow from Financing Activities
of Proposed
240,000 + 1,60,000+40,00000 = Proceeds from Iasue of Shares-Payment of Bank Overdraft-Payment
Dividend- Payment of Interim Dividend
12,00,000 =5,00,000-2,00,000- 1,50,000- 1,20,000
t4,40,000 =30,000.
x100= 36.67%.
12,00,000
5. Cash and Cash Equivalenta:
Capital Employed = Equity Share Capital + Reserves and
Surplus =Cash in Hand and at Bank + Marketable Securities
+15% Preference Share Capital + 10% ={ 50,000 + 1,00,000
Debentures
=5,00,000+ 2,00,000+ 1,00,000 +4,00,000 =1,50,000.
=t 12,00,000,