General Instructions :
(i) This question paper contains two parts A and B.
(ii) Part A is compulsory for all.
(iii) Part B has two options – Option – I Analysis of Financial Statements and Option – II.Computerized Accounting.
(iv) Attempt only one option of Part B.
(v) All parts of a question should be attempted at one place.
PART – A
(Accounting for Partnership Firms and Companies)
Q1.Does partnership firm has a separate legal entity ? Give reason in support of your answer.
Q2.A and B were partners in a firm sharing profits and losses in the ratio of 4 : 3. They admitted C as a new partner. The new profit sharing ratio between A, B and C was 3 : 2 : 2. A surrendered ¼ of his share in favour of C. Calculate B’s Sacrifice.
Q3.P and Q were partners in a firm sharing profits equally. Their fixed capitals were 1,00,000 and ` 50,000 respectively. The partnership deed provided for interest on capital at the rate of 10% per annum. For the year ended 31st march, 2016 the profits of the firm were distributed without providing interest on Capital.Pass necessary adjustment entry to rectify the error.
Q4.X Ltd. invited applications for issuing 1000, 9% debentures of ` 100 each at a discount of 6%. Applications for 1,200 debentures were received. Pro-rata allotment was made to all the applicants.Pass necessary Journal Entries for the issue of debentures assuming that the whole amount was payable with applications.
Q5.Y Ltd. forfeited 100 equity shares of ` 10 each for the non-payment of first call of ` 2 per share. The final call of ` 2 per share was yet to be made.Calculate the maximum amount of discount at which these shares can be re-issued.
Q6.Gupta and Sharma were partners in a firm. They wanted to admit two more members in the firm. List the categories of individuals other than minors who cannot be admitted by them.
Q7.Jain Motors Ltd. converted its 200, 8% debentures of ` 100 each issued at a discount of 6% into equity shares of ` 10 each, issued at a premium of 25%. Discount on issue of 8% debentures has not yet been written off.Showing your working notes clearly pass necessary Journal Entries on conversion of 8% debentures into equity shares.
Q8.Amar, Ram, Mohan and Sohan were partners in a firm sharing profits in the ratio of 2 : 2 : 2 : 1. On 31st January, 2017 Sohan retired. On Sohan’s retirement the goodwill of the firm was valued at ` 70,000. The new profit sharing ratio between Amar, Ram and
Mohan was agreed as 5 : 1 : 1.Showing your working notes clearly, pass necessary Journal Entry for the treatment of goodwill in the books of the firm on Sohan’s retirement.
Q9.Z Ltd. purchased machinery from K Ltd. Z Ltd. paid K Ltd as follows :
(i) By issuing 5,000 equity shares of ` 10 each at a premium of 30%.
(ii) By issuing 1000, 8% Debentures of ` 100 each at a discount of 10%.
(iii) Balance by giving a promissory note of ` 48,000 payable after two months.Pass necessary journal entries for the purchase of machinery and payment to K Ltd. in
the books of Z Ltd.
Q10.Akash Ltd. is registered with an authorized Capital of ` 8,00,00,000 divided into equity shares of ` 10 each. Subscribed and fully paid up share capital of the company was` 4,00,00,000. For providing employment to the local youth and for the development of the rural areas of the Jammu and Kashmir State the company decided to set up a food processing unit in Anantnag district. The Company also decided to open skill development centres in Ladakh, Srinagar and Punch. To meet its new financial requirements the company decided to issue 1,00,000 equity shares of ` 10 each and 10,000, 9% debentures of ` 100 each. The debentures were redeemable after five years. The issue of equity shares and debentures was fully subscribed. A shareholder holding 1,000 shares failed to pay the final call of ` 2 per share.Present the share capital in the Balance Sheet of the company as per the provisions of Schedule III of the Companies Act, 2013. Also, identify any two values that the company wishes to propagate.
Q11.Karan and Varun were partners in a firm sharing profits and losses in the ratio of 1 : 2. Their fixed capitals were ` 2,00,000 and ` 3,00,000 respectively. On 1st April, 2016 Kishore was admitted as a new partner for14th share in the profits. Kishore brought
` 2,00,000 for his capital which was to be kept fixed like the capitals of Karan and Varun. Kishore acquired his share of profit from Varun.Calculate goodwill of the firm on Kishore’s admission and the new profit sharing ratio of Karan, Varun and Kishore. Also, pass necessary Journal Entry for the treatment of Goodwill on Kishore’s admission considering that Kishore did not bring his share of
goodwill premium in Cash.
Q12.Sandeep, Mandeep and Amandeep were partners in a firm sharing profits in the ratio of 2 : 2 : 1. The firm closes its books on 31st March every year. On 30th September, 2016 Mandeep died. The partnership deed provided that on the death of a partner his
executors will be entitled to the following :
(1) Balance in his capital account and interest @ 12% p.a. on capital. On 1-4-2016 the balance in Mandeep’s Capital Account was ` 1,00,000.
(2) His share in the profits of the firm in the year of his death which will be calculated on the basis of rate of net profit on sales of the previous year which was 25%. The sales of the firm till 30th September, 2016 were ` 9,00,000.
(3) His share in the goodwill of the firm. The goodwill of the firm on Mandeep’s death was valued at ` 1,50,000. The partnership deed also provided that the following deductions will be made from the amount payable to the executor of the deceased partner :
(1) His drawings in the year of his death. Mandeep’s drawings till 30th September, 2016 were ` 4,000.
(2) Interest on drawings @ 6% per annum which was calculated as ` 120. The accountant of the firm prepared Mandeep’s Capital Account to be presented to the executor of Mandeep but in a hurry he left it incomplete. Madeep’s capital Account prepared by Accountant of the firm is shown below :
Q13.S, T, U and V were partners in a firm sharing profits in the ratio of 4 : 3 : 2 : 1.On 1-4-2016 their Balance Sheet was as follows :
From the above date partners decided to share the future profits in 3 : 1 : 2 : 4 ratio.
For this purpose the goodwill of the firm was valued at ` 90,000. The partners also agreed for the following :
(i) The claim for workmen compensation has been estimated at ` 70,000.
(ii) To adjust the capitals of the partners according to new profit sharing ratio by opening partners current accounts.Prepare Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of thereconstituted firm.
Q14.On 1-4-2015 K.K. Ltd. issued 500, 9% Debentures of ` 500 each at a discount of 4%, redeemable at a premium of 5% after three years.Pass necessary Journal Entries for the issue of debentures and debenture interest for the year ended 31-3-2016 assuming that interest is payable on 30th September and 31st March and the rate of tax deducted at source is 10%. The company closes its
books on 31st March every year.
Q15.Pass necessary Journal Entries on the dissolution of a partnership firm in the following
(i) L, a partner, was appointed to look after the dissolution process for which he was given a remuneration of ` 10,000.
(ii) Dissolution expenses ` 8,000 were paid by the partner, M.
(iii) Dissolution expenses were ` 5,000.
(iv) P, a partner, was appointed to look after the process of dissolution for which he was allowed a remuneration of ` 7,000. P agreed to bear the dissolution expenses. Actual dissolution expenses ` 4,000 were paid by P.
(v) N, a partner, was appointed to look after the process of dissolution for which he was allowed a remuneration of ` 9,000. N agreed to bear the dissolution expenses. Actual dissolution expenses ` 4,000 were paid by the firm.
(vi) Q a partner was appointed to look after the process of dissolution for which he was allowed a remuneration of ` 18,000. Q agreed to take over stock worth ` 18,000 as his remuneration. The stock had already been transferred to Realisation Account.
Q16.W and R are partners in a firm sharing profits in the ratio of 3 : 2. Their Balance Sheet as on 31st March, 2016 was as follows :
On the above date C was admitted for1/6th share in the profits on the following terms :
(i) C will bring ` 30,000 as his capital and ` 10,000 for his share of goodwill premium, half of which will be withdrawn by W and R.
(ii) Debtors ` 1,500 will be written off as bad debts and a provision of 5% will be created for bad and doubtful debts.
(iii) Outstanding salary will be paid off.
(iv) Stock will be depreciated by 10%, furniture by ` 500 and Plant and Machinery by 8%.
(v) Investments ` 2,500 not mentioned in the balance sheet were to be taken into account.
(vi) A creditor of ` 2,100 not recorded in the books was to be taken into account.Pass necessary Journal Entries for the above transactions in the books of the firmM on C’s admission.
M, N and G were partners in a firm sharing profits and losses in the ratio of 5:3:2. On 31-3-2016 their Balance Sheet was as under :
M retired on the above date and it was agreed that :
(i) Debtors of ` 2,000 will be written off as bad debts and a provision of 5% on debtors for bad and doubtful debts will be maintained.
(ii) Patents will be completely written off and stock, machinery and building will be depreciated by 5%.
(iii) An unrecorded creditor of `10,000 will be taken into account.
(iv) N and G will share the future profits in the ratio of 2 : 3.
(v) Goodwill of the firm on M’s retirement was valued at ` 3,00,000.Pass necessary Journal Entries for the above transactions in the books of the firm on M’s retirement.
Q17.AXN Ltd. invited applications for issuing 1,00,000 equity shares of ` 10 each at a premium of ` 6 per share. The amount was payable as follows :
On Application ` 4 per share (including ` 2 premium).
On Allotment ` 5 per share (including ` 2 premium).
On First Call ` 4 per share (including ` 2 premium).
On Second and Final Call – Balance Amount.
The issue was fully subscribed. Kumar the holder of 400 shares did not pay the allotment money and Ravi the
holder of 1,000 shares paid his entire share money alongwith allotment money.Kumar’s shares were forfeited immediately after allotment. Afterwards first call was made. Gupta a holder of 300 shares failed to pay the first call money and Gopal a holder of 600 shares paid the second call money also alongwith first call. Gupta’s shares were forfeited immediately after the first call. Second and final call was made afterwards. The whole amount due on second call was received.All the forfeited shares were re-issued at ` 9 per share fully paid up.Pass necessary Journal Entries for the above transactions in the books of the company.
XL Ltd. invited applications for issuing 1,00,000 equity shares of ` 10 each at par. The amount was payable as follows :
On Application ` 3 per share.
On Allotment ` 4 per share.
On First and Final Call ` 3 per share.The issue was over-subscribed by three times. Applications for 20% shares were
rejected and the money refunded. Allotment was made to the remaining applicants as follows :
Category No. of Shares Applied No. of Shares Allotted
I 1,60,000 80,000
II 80,000 20,000
Excess money received with applications was adjusted towards sums due on allotment and first and final call. All calls were made and were duly received except the final call by a shareholder belonging to Category I who has applied for 320 shares.His shares were forfeited. The forfeited shares were re-issued at ` 15 per share fully paid up.Pass necessary Journal entries for the above transactions in the book of XL Ltd. open calls in-arrears and calls in advance account whenever required.