Board Paper of Class 12-Commerce 2017 Accountancy MeritNation(SET 1) - Solutions

Answer briefly each of the following questions:        [6 × 2 = 12 Marks]
 
(i) Name the account which is prepared to find the profit and loss of a join venture, if;
 
(ii) What will be the treatment of loan given to a partner by the firm at the time of its dissolution?
 
(iii) Give the adjusting entry for interest on capital allowed to a partner, when the firm follows the fixed capital method.
 
(iv) State, with reason, whether securities premium reserve can be used to write off bad debts.
 
(v) Give any two differences between a Company's Balance Sheet and a Firm's Balance Sheet.
 
(vi) State where will the non-cash transactions be recorded at the time of issue of shares, if all cash transactions are entered in the Cash Book. VIEW SOLUTION

Karan, Ali and Deb are partners in a firm sharing profits and losses in the ratio of 3 : 2 : 1. On 31^st March, 2016, their Balance Sheet was as under:     [12 Marks]
 
Karan died on 1^st July, 2016. An agreement was reached amongst Ali, Deb and Karan's legal representatives that :

(a) Building be revalued at Rs 93,500.

(b) Furniture be appreciated by Rs 10,000.

(c) To write off the Provision for Doubtful Debts since all debtors were good.

(d) Investments be valued at Rs 38,000.

(e) Goodwill of the firm be valued at Rs 1,20,000.

(f) Karan's share of profit to the date of his death, to be calculated on the basis of previous year's profit which was Rs 25,000.

(g) Interest on capital to be allowed on Karan's capital @ 6% per annum.

(h) Amount payable to Karan's legal representative to be transferred to his legal representative's loan account.

You are required to :

(i) Pass journal entries on the date of Karan's death.

(ii) Prepare the Interim Balance Sheet of the reconstituted firm. VIEW SOLUTION

Cargo Ltd. invited applications for the issue of 20,000 Equity shares of Rs 10 each at a premium of Rs 1 per share, payable as follows:      [12 Marks]
 

On Application	Rs 3
On Allotment	The balance (including premium Rs 1)

 
Applications were received for 30,000 shares and pro-rata allotment was made to the remaining applicants after refunding application money to 5,000 share applicants.

Nicholas, who was allotted 3,000 shares, failed to pay the allotment money and his shares were forfeited.

Out of these forfeited shares, 1,000 shares were reissued as fully paid-up @ Rs 8 per share.

You are required to:

(i) Pass Journal entries in the books of the company.

(ii) Prepare Calls-in-arrears Account.

(iii) Prepare Share Forfeiture Account. VIEW SOLUTION

(A) Following balances have been extracted from the books of Universe Ltd. as at 31^st March, 2016:        [8 Marks]
 
(B) Chrome Ltd. took over assets of Rs 6,00,000 and liabilities of Rs 40,000 of Polymer Ltd. at an agreed value of Rs 6,30,000. Chrome Ltd. issued 10% Debentures of Rs 100 each at a discount of 10% to Polymer Ltd. in full satisfaction of the price. Chrome Ltd. writes off any capital losses incurred during a year, at end of that financial year.     [4 Marks]

You are required to pass the necessary journal entries to record the above transactions in the books of Chrome Ltd. VIEW SOLUTION

Juliet and Rabani are partners in a firm, sharing profits and losses in the ratio of 3:1. On 31^st March, 2016, their Balance Sheet was as under:       [12 Marks]
 

Balance Sheet of Juliet, and Rabani as at 31st March, 2016
Liabilities		Amount (Rs)	Assets		Amount (Rs)
Sundry Creditors		70,000	Plant and Machinery		1,76,000
General Reserve		30,000	Inventory		26,000
Provident Fund		40,000	Sundry Debtors	57,000
Capital A/c			Less: Provision for Doubtful Debts	(3,000)	54,000
Juliet	1,10,000		Cash at Bank		68,000
Rabani	90,000	2,00,000	Profit & Loss A/c		16,000
		3,40,000			3,40,000

Mike was taken as a partner for ${\frac{1}{4}}^{\mathrm{th}}$ share, with effect from 1^st April, 2016, subject to the following adjustments:

(a) Plant and Machinery was found to be overvalued by Rs 16,000. It was to be shown in the books at the correct value.

(b) Provision for Doubtful Debts was to be reduced by Rs 2,000.

(c) Creditors included an amount Rs 2,000 received as commission from Malini. The necessary adjustment was required to be made.

(d) Goodwill of the firm was valued at Rs 60,000. Mike was to bring in cash, his share of goodwill along with his capital of Rs 1,00,000.

(e) Capital Accounts of Juliet and Rabani were to be readjusted in the new profit sharing arrangement on the basis of Mike's capital, any surplus to be adjusted through current account and any deficiency through cash.

You are required to prepare:

(i) Revaluation Account.

(ii) Partners' Capital Accounts.

(iii) Balance Sheet of the reconstituted firm. VIEW SOLUTION

(A) Rashi and Runa jointly undertake to complete the construction of an auditorium for Pascal Ltd. They agreed to share profits and losses in the ratio of 3:2.   [8 Marks]
 
(B) Joseph and Leena entered into a Joint venture to sell edible oil. It was decided that Joseph would record all the transactions of the venture.   [4 Marks]
  VIEW SOLUTION

Mita, Rita and Sandra were partners in a firm, sharing profits and losses in the ratio of 2:2:1. Mita had personally guaranteed that in any year Sandra's share of profit, after allowing interest on capital to all the partners @ 5% per annum and charging interest on drawing @ 4% per annum, would not be less than Rs 10,000.      [8 Marks]

The capitals of the partners on 1^st April, 2015 were:

Mita Rs 80,000, Rita Rs 50,000 and Sandra Rs 30,000.

The net profit for the year ended 31^st March, 2016, before allowing or charging any interest amounted to Rs 40,000.

Mita had withdrawn Rs 4,000 on 1^st April, 2015, while Sandra withdrew Rs 5,000 during the year.

You are required to prepare the Profit and Loss Appropriation Account for the year 2015-16.

(B) Anita, Asha and Bashir are partners sharing profits and losses in the ratio of 3:2:1 respectively. From 1^st April 2016, they decided to change their profit sharing ratio to 2:1:3. Their partnership deed provides that in the event of any change in the profit changing ratio, the goodwill of the firm should be valued at two years' purchase of the average super profits for the past three years.                           [4 Marks]

The actual profits and losses for the past three years were:
 

2015-16	Profit Rs 40,000.
2014-15	Profit Rs 30,000.
2013-14	Loss Rs 10,000.

The average capital employed in the business was Rs 1,10,000; the rate of interest expected from capital invested was 10%.

You are required to:

(i) Calculate the value of goodwill at the time of change in profit sharing ratio. (Show the workings clearly with the formulae.)

(ii) Pass the journal entry to record the change. VIEW SOLUTION

(A) Roshan, Mahesh, Gopi and Jai are partners sharing profits and losses in the ratio of 3:3:2:2.        [4 Marks]
 
(B) Mehta and Menon were partners in a firm, sharing profits and losses in the ratio of 7:3.         [8 Marks]
 

Additional information:

(a) Bills Payable falling due on 31^st May, 2016 were retired on the date of dissolution of the firm, at a rebate of 6% per annum.

(b) The bankers accepted the furniture (included in sundry assets) having a book value of Rs 18,000 in full settlement of the loan given by them.

(c) Remaining assets were sold for Rs 1,50,000.

(d) Liability on account of outstanding salary not recorded in the books, amounting to Rs 15,000 was met.

(e) Menon agreed to take over the responsibility of completing the dissolution work and to bear all expenses of realization at an agreed remuneration of Rs 2,000. The actual realizaton expenses were Rs 1,500 which were paid by the firm on behalf of Menon.

You are required to prepare:

(i) Realisation Account.

(ii) Partners' Capital Accounts.

VIEW SOLUTION