2,66,000 2,66,000 C retires on the above date and it was agreed that : (1) C s share of goodwill was Rs. 8,000

Transcription

1 MODEL TEST PAPER SUBJECT ; ACCOUNTANCY (CLASS XII) SET I ROLL NO TIME ALLOWED 3 HRS. MAX MARKS : 80 Day & Date of Examination : Name and Signature of Candidate : Name and Signature of Invigilator : General Instructions : (1) Please check that this question paper contains printed pages (2) Please write down the serial number of the question before attempting it. (3) 15 minutes time has been allotted to read this question paper. The question paper will be distributed at 08:45 a.m. From 08:45 a.m. to 09:00 a.m. the students will read the question paper only and will not write any answer script during this period. (4) Please check that this question paper contains 25 questions. (5) All questions are compulsory. (6) Marks are indicated against each question. (7) Avoid overwriting and cutting. (8) Give calculations or working notes wherever required. PART A (ACCOUNTING FOR PARTNERSHIP FIRMS AND COMPANIES) 1. What is meant by partnership and state any two essential elements of partnership. (1) 2. State the two main rights that a newly admitted partner acquires in the firm. (1) 3. When is the Partner s Executor s A/c is prepared? (1) 4. State any two factors which influence the valuation of goodwill of a partnership firm. (1) 5. What are Preliminary Expenses? (1) 6. State any two purposes for which securities premium can be utilized. (1) 7. Which companies are exempted from creating Debenture Redemption Reserve (DRR) by SEBI? (1) 8. A, B and C are partners in a firm having fixed capital of Rs. 80,000, Rs. 40,000 and Rs. 50,000 respectively sharing profits as 7 : 6 : 4. The rate of interest on capital was agreed at 10% p.a. but was wrongly credited to 12% p.a. Give the necessary adjustment entry to adjust the balance of partners capital a/c. (3) 9. Give the journal entries in each of the following cases at the time of issue of debentures. (1) A debenture issued at Rs. 110, repayable at Rs. 100 (2) A debenture issued at Rs. 100, repayable at Rs. 105 (3) A debenture issued at Rs. 105, repayable at Rs. 105 (3) 10. Mohit Ltd. Has 10,000, 12% debentures of Rs. 100 each due for redemption on 31 st March Assuming that debentures are to be redeemed out of profit fully and DRR has a balance of Rs. 3,60,000 on that date, record necessary journal entries at the time of redemption of debentures. (3) 11. A, B and C were partners sharing profits in the ration of 5 : 3 : 2. Their Balance Sheet as on 1 st April 2012 was as follows : Balance Sheet of A, B and C as on 1 st April 2012 Liabilities Amount (Rs.) Assets Amount (Rs.) Creditors Employees Provident fund Capital : A Rs. 1,00,000 B Rs. 70,000 C Rs. 50,000 20,000 26,000 2,20,000 Cash Debtors Stock Furniture Building 16,000 16,000 80,000 34,000 1,20,000 2,66,000 2,66,000 C retires on the above date and it was agreed that : (1) C s share of goodwill was Rs. 8,000

2 (2) 5% provision for doubtful debts was to be made on debtors (3) Creditors were valued Rs. 4,000 more than book value. Pass the necessary journal entries for the above transactions on C s retirement. (4) 12. On 1 st April 2012, an existing firm had assets of Rs. 75,000 including cash of Rs. 5,000 the partners capital a/cs showed a balance of Rs. 60,000 and the reserve constituted the rest. If the normal rate of return is 10% and goodwill of the firm is to be valued at Rs. 4 years purchase of super profit, find the average profits of the firm. (4) 13. X Ltd. Purchased machinery for Rs. 5,00,000 from Y Ltd. Rs. 1,25,000 was paid by issuing a crossed cheque, and Rs. 1,25,000 by accepting a bill of exchange drawn by Y Ltd. Payable after 3 months. The balance was paid by issue of equity shares of Rs. 10 each at a premium of 25 %. Pass the necessary journal entries. (4) 14. (a) Distinguish between reserve capital and capital reserve. (Any two) (b) What is meant by Private placement and Under-subscription of shares? (4) 15. P, Q and R are partners with capitals of Rs. 40,000, Rs. 30,000 and Rs. 20,000 respectively. The partnership deed provided the following : (1) R to get salary Rs. 2,000 p.a. (2) Q to get commission Rs. 1,500 (3) P s loan Rs. 6% p.a. (4) Drawings of partners were : P : Rs. 5,000 ; Q : Rs. 4,000 and R : Rs. 3,000 (5) Profit sharing ration 2 : 1 : 1 The profits for the year ended 31 st December 2008 without taking the above facts amounted to Rs. 12,700. Prepare Profit & Loss Appropriation A/c and Partners capital a/c. (6) 16. A, B and C are partners in a trading firm, the firm has a fixed total capital of Rs. 60,000 held equally by all partners. Under the partnership deed, the partners were entitled to : (1) A and B to a salary of Rs. 1,800 and Rs. 1,600 per month respectively. (2) In the event of death of a partner, goodwill was to be valued at 2 years purchase of the averae profit of the last 3 years. (3) Profit upto the date of death based on the profits of previous year. (4) Partners were to be charged interest on 5% p.a. and allowed interest on 6% p.a. B died on 1 st Jan 2011, his drawings to the dte of death were Rs. 2,000 and the interest thereon was Rs. 60, the profits for the three years ended 31 st March 2008, 2009 and 2010 were Rs. 21,200 ; Rs. 3,200 (Dr.) and Rs. 9,000 respectively. Prepare B s Capital A/c to calculate the amount to be paid to his executors. (6) 17. Aamir and Anuj, belonging to two different religions and states of a country were close friends, formed a partnership. Their profit sharing ratio is 3 : 2Their balance sheet as at 31 st March 2013 was under : Liabilities Amount (Rs.) Assets Amount (Rs.) Creditors 10,000 Debtors 22,000 Employees Provident fund 8,000 Less: Provision 1,000 21,000 General Reserve Workmen Compensation Reserve Capital A/c : 30,000 15,000 Land & Building Plant & Machinery Stock 18,000 12,000 11,000 Aamir : 15,000 Bank 21,000 Anuj : 10,000 25,000 Advertisement Expenss 5,000 88,000 88,000 They admit Zeenat, a different abled girl as a third partner for 1/6 th share in the profit on the following terms : (1) Value of land and building be increased by Rs. 3,000 (2) Stock is undervalued by Rs. 2,500 (3) Provision for doubtful debts by increased by Rs. 1,500 (4) The liability of workmen compensation reserve was determined to be Rs. 20,000 (5) Zeenat brought her share of goodwill Rs. 10,000 in cash. Goodwill amount withdrawn by partners. (6) Zeenat was to bring in further cash of Rs. 15,000 as her capital (a) Prepare revaluation a/c, partners capital a/c and Balance sheet of new firm. (b) Identify any two values which according to you motivated them to form a partnership firm.

3 OR Following is the Balance Sheet of X and Y, who share profits and losses in the ratio of 4 : 1, as at 31 st March 2009 Liabilities Amount (Rs.) Assets Amount (Rs.) Sundry Creditors 8,000 Bank 20,000 Bank Overdraft 6,000 Debtors 17,000 X s Brother s Loan 8,000 Less: Provision 2,000 15,000 Y s Loan Investment Fluctuation Fund Capital A/c : 3,000 5,000 Stock Investment Building 15,000 25,000 25,000 Aamir : 50,000 Goodwill 10,000 Anuj : 40,000 90,000 Profit & Loss 10,000 1,20,000 1,20,000 The firm was dissolved on the above date and the following arrangements were decided upon : (1) X agreed to pay off his brother s loan (2) Debtors of Rs. 5,000 proved bad (3) Other assets realized investment 20% less, and goodwill at 60%. (4) One of the creditors for Rs. 5,000 were paid only Rs. 3,000. (5) Building was auctioned for Rs. 30,000 and the auctioner s commission amounted to Rs. 1,000 (6) Y took over part of stock at Rs. 4,000 (being 20% less than book value), balance stock realized 50%. (7) Realisation expenses amounted Rs. 2,000 (8) A motor bike (which was brought out of the firm s money) was not shown in the books of the firm. It is now sold for Rs. 10,000. During the course of dissolution it was noticed by partners that the firm had taken goods worth R. 12,500 on credit from Mr. Mohit in the year 2007 but both the parties (i.e., the firm and Mr. Mohit) have forgotten the same to record in their respective books. Instead of charging interest amount due from the firm, Mr. Mohit himself agreed to accept Rs. 10,000 in full settlement of claim. (A) Prepare realization a/c, partners capital a/c and Bank a/c (B) Identify the values which according to you motivated the firm to settle liability. (C) Identify the values which according to you motivated Mr. Mohit to accept Rs. 10,000 instead of Rs. 12, Dinesh Ltd. Invite applications for issuing 10,000 equity shares of Rs. 10 each. The amount was payable as follows : On application - Re. 1 On allotment - Rs. 2 On first call - Rs. 3 On second & final call - Balance The issue was fully subscribed. Ram to who 100 shares were allotted failed to pay the allotment money and his shares were forfeited immediately after allotment. Shyam, to whom 150 shares were allotted, failed to pay the first call, his shares were also forfeited after the first call. Afterwards, the second & final call was made. Mohan to whom 50 shares were allotted failed to pay second & final call. His shares were also forfeited. All the forfeited shares were re-issued at Rs. 9/- per share fully paid up. Pass the necessary journal entries in the books of Dinesh Ltd. OR (1) Poonam Ltd. Forfeited 400, 8% preference shares of R. 100 each, issued at discount of 10% for the non payment of first call of Rs. 20 per share has not yet been made. The forfeited shares were re-issued at Rs. 44,000 fully paid. Pass the necessary journal entries for the forfeiture and issue of shares. (2) X Ltd. Forfeited 150 shares of Rs. 20 each issued at premium of Rs. 5 per share for the non payment of second and final call of Rs. 7 per share. 100 of these shares were Rs. 21 per share fully paid. Journalise the above transactions regarding the forfeiture and re-issue. (3) M Ltd. Forfeited 2000 shares of Rs. 10 each (fully called up) for the non-payment of allotment money of Rs. 6 per share including Rs. 2 as premium. Of these, 1,500 shares were re-issued to Rs. 9 per share fully paid. Journalise the above transactions in the books of M Ltd.

4 PART B (ANALYSIS OF FINANCIAL STATEMENTS) 19. Give two areas of interest for investors while analyzing the financial statements. (1) 20. State any two objectives of preparing Cash Flow Statement (1) 21. Give one transaction which may result into outflow of cash and one which may result into no flow of cash. (1) 22. Give the major headings and sub-headings under which the following items will be shown in a company s Balance Sheet as per revised Schedule VI, Part I of the Companies Act 1956 : (1) Trade payable (2) Loose tools (3) Gross Fixed Assets (4) Provision for tax (5) 8% Debentures (6) Statement of Profit & Loss 23. From the following statement of Profit & Loss of Goldstar Ltd. For the year ended 31 st March 2013 and 2014, prepare comparative Statement of Profit and Loss : (4) Particulars 31 st March 2014 (Rs.) Revenue from operations 20,00,000 Purchase of Stock in Trade 8,00,000 Change in inventories of stock in trade 25,000 Employees benefit expenses 3,00,000 Other incomes 2,00, st March 2013 (Rs.) 16,00,000 6,40,000 15,000 2,00,000 3,00, (a) Current ratio of ABC Ltd. Is 5 : 1 and liquid ratio is 3 : 1, inventories are Rs. 2,00,000. Find current liabilities. (b) Cost of revenue from operations Rs. 2,40,000, inventories Turnover ratio 8 times. Find out the value of opening inventories if, opening inventories is Rs. 10,000 less than the closing inventories. 25. The Balance Sheet of Kewal Ltd. as at 31 st March 2006 and 31 st March 2007 were : Particulars 31 st March 2007 (Rs.) I.EQUITY AND LIABILITIES 1. Shareholders funds (a) Share Capital 10,00,000 (b) Reserves & Surplus : Balance Statement of Profit & Loss 2,50, Currrent Liabilities : Short term liabilities : Proposed dividend 50, st March 2006 (Rs.) 7,00,000 1,50,000 40,000 TOTAL 13,00,000 8,90,000 II.ASSETS 1.Non Current Assets Fixed Assets (Tangible) Plant & Machinery 2.Current Assets (a) Inventories (Stock) (b) Cash 8,00,000 5,00,000 1,00,000 75,000 4,00,000 3,15,000 13,00,000 8,90,000 Additional Information : (1) Rs. 50,000 deprciation has been charged to plant and machinery during the year 2007 (2) A piece of machinery costing Rs. 12,000 (Book value Rs. 5,000) was sold at 60% profit on book value. Prepare Cash Flow Statement. (6)

5 MODEL TEST PAPER SUBJECT ; ACCOUNTANCY (CLASS XII) SET II ROLL NO TIME ALLOWED 3 HRS. MAX MARKS : 80 Day & Date of Examination : Name and Signature of Candidate : Name and Signature of Invigilator : General Instructions : (9) Please check that this question paper contains printed pages (10) Please write down the serial number of the question before attempting it. (11) 15 minutes time has been allotted to read this question paper. The question paper will be distributed at 08:45 a.m. From 08:45 a.m. to 09:00 a.m. the students will read the question paper only and will not write any answer script during this period. (12) Please check that this question paper contains 25 questions. (13) All questions are compulsory. (14) Marks are indicated against each question. (15) Avoid overwriting and cutting. (16) Give calculations or working notes wherever required. PART A (ACCOUNTING FOR PARTNERSHIP FIRMS AND COMPANIES) 1. What is a Partnership Deed? State any two contents of a Partnership Deed. (1) 2. What is meant by goodwill and its nature? (1) 3. Give any two circumstances in which gaining ratio may apply? (1) 4. State any two occasions on which a partnership firm may be constituted. (1) 5. What is meant by Minimum Subscription? (1) 6. What is meant by forfeiture of shares?. (1) 7. What do you mean by debenture issued as collateral security? (1) 8. A,B anc C are partners in a firm. On , their capitals stood at Rs. 50,000, Rs. 25,000 and Rs. 25,000 respectively. As per the provisions of the partnership deed : (1) C was entitled for a salary of Rs p.a. (2) Partners were entitled to interest on 5% p.a. (3) Profits were to be shared in the ratio of partners Capitals. The net profit for the year ended of Rs. 33,000 was distributed equally without providing above terms. Pass the adjustment entry in journal in rectify the above error. (3) 9. X Ld. Secured a loan of Rs. 8,00,000 from the Bank of Baroda by issuing 10,000 9% debenture of Rs. 100 each as a collateral security. How will you show the issue of such debenture in the Balance Sheet? (3) 10. Thandak refrigerators Ltd. had an outstanding balance of Rs. 5,00,000, 6% Debentures of Rs. 100 each redeemable at a premium of 10%. According to the terms of redemption, the company redeemed 10% of these debentures by converting them into 8% preference shares of Rs. 100 each issued at a premium of 10%. Calculate the number of shares to be issued on conversion and record the journal entries for the redemption. (3) 11. Pass the necessary journal entries for the following transactions on dissolution of the firm of A & B after the various assets (other than cash) and outside liabilities have been transferred to realization a/c : C s share of goodwill was Rs. 8,000 (1) Stock of Rs. 7,400 was taken over by A for Rs. 7,000 (2) B agreed to pay his wife s loan Rs. 70,000 (3) A liability not appearing in the books settled at Rs. 3,700 (4) Loss on dissolution of Rs. 4,500 was divided between A & B in their profit sharing ratio 4 : 5 (4) 12. Arti and Bharti are partners in a firm sharing profits in the ratio of 3 : 2. They admitted Sarthi as a new parner and the new profit sharing ratio will be 2 : 1 : 1. Sarthi brought in Rs. 10,000 for her share of goodwill. Goodwill

6 already appeared in the books of Arti & Bharti at Rs. 5,000. Goodwill amount withdrawn by partners. Pass the necessary journal entries. (4) x 7 Marketing Ltd was authorized capital of Rs. 10,00,000 divided into 1,00,000 equity shares of Rs. 10 each. It has existing subscribed capital of 20,000 equity shares of Rs. 10 each and it further issued 50,000 equity shares to public for subscription on 1 st Feb 2013 payable Rs. 5 along with the application Rs. 3 on allotment and balance on first & final call. All the shares were applied for and issued by the company. The company received allotment money on all the shares except on 2000 equity shares. Out of these 2000 equity shares first & final call on 1000 shares on which both allotment and calls were not paid were forfeited after giving due notice to the defaulting shareholders. Show shareholders in Balance Sheet of the Company at 31 st March (4) 14. Exe Ltd purchased assets of the book value of Rs. 4,00,000 and took over the liabilities of Rs. 50,000 from Mohan Bros. It was agreed that the purchase consideration, settled at Rs. 3,80,000 be paid by issuing shares of Rs. 100 each. What journal entries will be made in the following cases : (a) At a discount of 10% ; and (b) At a premium of 10%. It was agreed any fraction of shares be paid in cash (4) 15. P & Q are partners sharing profit in the ratio 3 : 2 with a capital of Rs. 50,000 and Rs. 30,000 respetively. As per partnership deed, partners agreed that : (1) Q be allowed salary of Rs. 5,000 p.a. (2) Interest on capital is 6% p.a. During 2007, profit of the year prior to calculation of interest on capital but after charging salary amounted Rs. 15,000. A provision of 5% of profit be made for manager s commission. Prepare Profit & Loss Appropriation a/c and Partners Capital A/c.(6) 16. On 31 st Dec 2003, the Balance Sheet of P, Q and R who were partners in a firm was as under : Liabilities Amount (Rs.) Assets Amount (Rs.) S. Creditors Reserve fund Capital A/c : 25,000 20,000 Buildings Investments Debtors 26,000 15,000 15,000 P : 15,000 Bill Receivable 6,000 Q : 10,000 Stock 12,000 R : 10,000 35,000 Cash 6,000 80,000 80,000 The partnership deed provides that the profit should be shared in the ratio of 2 : 1 : 1 and in the event of death of a partners, his executors will be entitled to be paid out : 1) The capital to his credit at the date of Balance Sheet 2) His proportion of reserve at the date of last Balance Sheet 3) His proportion of profits to the date of death based on average profit of the last three completed years, plus 10%. 4) By way of goodwill, his proportion of total profits for the three preceding years. 5) The new profits for the last three years were : 2001 Rs. 16,000 ; 2002 Rs. 16,000 ; 2003 Rs. 15,400 R died on 1 st April He had withdrawn Rs. 5,000 to the date of his death. The investments were sold at par and R s executors were paid off. Prepare R s capital a/c and R s Executor s a/c. (6) 17. A and B are partners in a firm sharing profits in the ratio of 3 : 2. Their Balance Sheet as at 31 st Dec 2004 stood as : Liabilities Amount (Rs.) Assets Amount (Rs.) Capital a/c : Machinery 33,000 A : 35,000 Furniture 15,000 B : 30,000 65,000 Investment 20,000 General Reserve Bills Payable 10,000 5,000 Stock Patents 23,000 3,000 Bank Loan 9,000 Debtors 19,000 Creditors 36,000 Less Provision 2,000 17,000 Cash Profit and Loss 12,000 2,000 1,25,000 1,25,000

7 On that date they admit C into partnership for 1/4 th share in the profit on the following terms : (1) C brings capital proportionate to his share. He brings Rs. 7,000 in cash as his share of goodwill. (2) Debtors are all good. (3) An outstanding bill for repair Rs will be brought in the books. (4) Half of the investment were to be taken over by A and B in the respective profit sharing ratio at book value. (5) Patents are valueless. (6) Partners agreed to share future profit in the ratio 3 : 3 : 2. Prepare revaluation a/c, partners capital a/c and Balance Sheet after admission of C into firm OR Jyoti, Ruchi and Yogesh were sharing profits and losses in proportion to their capitals. Their Balance Sheet as at 31 st March 2012 was : Liabilities Amount (Rs.) Assets Amount (Rs.) S. Creditors Capital A/c : Jyoti : 80,000 21,600 Building Machinery Stock 1,00,00 48,000 18,000 Ruchi : 60,000 Debtors 20,000 Yogesh 40,000 1,80,000 Less Provision 400 Bank 19,600 8,000 8,000 Cash 2,01,000 2,01,000 Ruchi decided to retire due to old age. They agreed to the following adjustment in the books of account to decide Ruchi s share : (1) Building to be appreciated by 20% (2) The provision for doubtful debts to be increased by 5% on debtors. (3) Out of total insurance premium paid Rs to be treated as prepaid insurance. This amount was earlier debited to the profit & loss a/c. (4) Machinery to be depreciated by 20%. (5) Goodwill of the entire firm to be valued at Rs. 72,000. Ruchi s share to be adjusted in the accounts of Jyoti and Yogesh (6) Jyoti and Yogesh also decided that the total capital of the firm after Ruchi s retirement be Rs. 1,80,000 in their profit sharing ratio i.e., actual cash to be brought in or paid to a partner as the case may be. You are required to prepare the : (1) Revaluation a/c (2) Partners Capital a/c (3) Balance Sheet of Jyoti and Yogesh 18. Petromax Ltd. issued 50,000 shres of Rs. 10 each at a premium of Rs. 2 per share payable as Rs. 3 on application, Rs. 5 on allotment (including premium and the balance in equal instalments over two calls. Applications were received for 92,000 shares and the allotment was done as under : (A) Applicants of 40,000 shares allotted 30,000 shares (B) Applicants of 40,000 shares allotted 20,000 shares (C) Applicants of 12,000 shares allotted nil Suresh, who had applied for 2,000 shares (category A) did not pay any money other than application money. Chander, who was allotted 800 shares (category B) paid the call money due along with allotment. All other allottees paid their dues as per schedule. (i) Pass the necessary journal entries (ii) Which value has been affected by the rejection of applications of category C. Suggest an alternative. (8)

8 OR AB Ltd. invited applications for 40,000 equity shares of Rs. 10 each at a discount of 10%. The amount was payable as follows : On application - Rs. 4 per share On allotment - Balance after discount Applications were received for 60,000 shares. Applications for 12,000 shares were rejected and pro-rata allotment was made to remaining applicants. Excess money received on application was adjusted towards sums due on allotment. Mohan, to whom 400 shares were allotted failed to pay the allotment money. His shares were forfeited. The forfeited shares were Rs. 8 per share fully paid up, (1) Pass the necessary journal entries (2) Which value has been affected by rejection of applications. Suggest an alternative for the same. PART B (ANALYSIS OF FINANCIAL STATEMENTS) 19. Analysis of Financial Statements ignores price level changes. Comment (1) 20. What will be the result in inflow, outflow or no flow of cash from the following transactions. (1) Cash deposited into bank (2) Depreciation charged on plant and machinery. (1) 21. What is meant by a Cash Flow Statement? (1) 22. List any two items each of the Balance Sheet of a company under the head Reserves & Surplus, Current Liabilities and Current Assets. (3) 23. Prepare Comparative Statement of Profit and Loss from the following information (4) Particulars 31 st March 2014 (Rs.) Revenue from operations (% of other income) 300% Other income Rs. 1,00,000 Cost of material consumed (% of operating revenue) 50% Other expenses ( % of material cost) 10% Tax rate 30% 31 st March 2013 (Rs.) 200% Rs. 2,00,000 60% 20% 30% 24. From the following information, calculate any two of the following ratios : (4) (1) Gross Profit ratio (2) Working capital turnover ratio (3) Proprietary ratio Information : Paid up Capital Rs. 8,00,000 Current Assets Rs. 5,00,000 Credit sales Rs. 3,00,000 Cash Sales 75% of credit sales 9% Debentures Rs. 3,40,000 Current Liabilities Rs. 2,90,000 Cost of goods sold (cost of revenue from operations) Rs. 6,80, The following Balances appeared in Machinery a/c and accumulated depreciation a/c in the books of Jai Bharti Ltd. : Balances as at 31 st March 2003 (Rs.) 17,78,985 3,40, st March 2004 (Rs.) 26,55,450 4,75,690 Machinery a/c Accumulated Depreciation a/c Additional Information : Machinery costing Rs. 2,65,000 on which accumulated depreciation was Rs. 1,00,000 was sold for Rs. 75,000. You are required to : (a) Compute the amount of machinery purchased. Depreciation charged for the year ended and loss on sale of machinery. (b) How shall each of the items related to machinery be shown in Cash Flow Statement? (6)

9 MODEL TEST PAPER SUBJECT ; ACCOUNTANCY (CLASS XII) SET I ROLL NO TIME ALLOWED 3 HRS. MAX MARKS : 80 Day & Date of Examination : Name and Signature of Candidate : Name and Signature of Invigilator : General Instructions : (1) Please check that this question paper contains printed pages (2) Please write down the serial number of the question before attempting it. (3) 15 minutes time has been allotted to read this question paper. The question paper will be distributed at 08:45 a.m. From 08:45 a.m. to 09:00 a.m. the students will read the question paper only and will not write any answer script during this period. (4) Please check that this question paper contains 25 questions. (5) All questions are compulsory. (6) Marks are indicated against each question. (7) Avoid overwriting and cutting. (8) Give calculations or working notes wherever required. PART A (ACCOUNTING FOR PARTNERSHIP FIRMS AND COMPANIES) 1. Give two circumstances in which the fixed capitals of partners may change? (1) 2. A & B share profit & loss in the ratio of 4 : 3. They admit C with 3/7 th share which he gets 2/7 th from A and 1/7 th from B. What is the new profit sharing ratio? (1) 3. State any two items of deduction that may have to be made from the amount payable to a retiring partner? (1) 4. Name any two items which are credited to the account of deceased partner while calculating the amount due to his legal representatives excluding opening balance of capital account. (1) 5. Give any two alternatives available to a company for the allotment of shares in case of over subscription. (1) 6. State any two conditions for the issue of shares at discount as per section 79 of the companies Act. (3) 7. What is meant by Secured Debentures? (3) 8. A, B and C are partners in a firm sharing profit in the ratio of 2 : 2 : 1. C is guaranteed a minimum amount of Rs. 10,000 as his share of profit every year. Deficiency if any, on that account shall be borne by B. The profit for two years ended 31 st March 2003 and 31 st March 2004 were Rs. 50,000 and Rs. 40,000 respectively. Prepare the profit and loss appropriation account for the two years. (3) 9. SSS Ltd. issued 25,000, 10% debentures of Rs. 100 each. Give the journal entries in the following case when : (3) (1) The debenture were issued at a premium of 20%. (2) The debenture were issued as a collateral security to bank against a loan of Rs. 20,00,000. (3) The debenture were issued to a supplier of a machinery costing Rs. 28,00,000 as his full and final payment. 10. Exe Ltd. issued 4,000, 10% debentures of Rs. 100 each which are repayable at par after 5 years. However, company gave an offer to debenture holders to get their debentures converted into equity shares after 2 years. (1) Pass the necessary journal entries at the time of redemption of debentures. (2) Identify two values involved in this decision of the company. (3) 11. A, B and C were partners in a firm sharing profits equally. On B died. On that date, goodwill of the firm was valued at Rs. 90,000. There was a balance of Rs, 2,70,000 in General Reserve. As executors of B were not financially strong enough. So A proposes that the executors of B shall be given ½ share of general reserve and remaining portion shall be distributed between A and C in new ratio which is equal. C accepted to it. (a) Identify the two values which according to you motivated them to introduce such special clauses in the Partnership deed. (b) Pass necessary journal entries on B s death. (4)

10 12. A and B are partners with capitals of Rs. 1,60,000 and Rs. 1,20,000 respectively. They admit C as a partner on 1 st Jan 2012 for 1/4 th share in profits of the firm. C brings in Rs. 1,60,000 as his share of capital. Give the journal entries of C s admission regarding goodwill. (4) 13. Akash Ltd. issued 1,00,000 shares of Rs. 10 each payable as follows Rs. 2 on application payable on 1 st March 2006 ; Rs. 3 on allotment payable on 1 st May 2006 ; Rs. 2 on first call payable on 1 st Aug 2006 and Rs. 3 on second & final call on 1 st Dec All these shares were subscribed for the amount duly received. Akriti, who had 8000 shares paid the amount on both the calls along with allotment. Suniti, who had 4000 shares, paid the amount to second and final call with the first call. Calculate the amount of interest on Calls-in-advance payable to Akriti and Suniti. Pass the necessary journal entries. (4) 14. (a) 20,000 shares of Rs. 10 were issued for public subscription at a premium of 10%. Full amount was payable on application. Applications were received for 30,000 shares and the Board decided to allot the share on prorata basis. Pass the necessary journal entries. (b ) Distinguish between shares and debentures (Any two points) (4) 15. (a) In a partnership, partners are charged interest on 15% p.a. during the year ended 31 st March A partner drew as follows : (6) 1 st May Rs st Aug Rs th Sept. Rs st Jan Rs st Mar Rs What is the interest chargeable to the partner?also pass necessary journal entries. 16. A, B and C started business on 1 st April 2011 with capitals of Rs. 1,00,000 ; Rs. 80,000 and Rs. 60,000 respectively sharing profits & losses in the ratio of 4 : 3 : 3. For the year ended 31 st March 2012, the firm suffered a loss of Rs. 50,000. Each of the partners withdrew Rs. 10,000 during the year. On 31 st March 2012, The firm was dissolved. The creditors of the firm stood at Rs. 24,000 on that date and cash in hand was Rs The assets realized Rs. 3,00,000 and creditors were paid Rs. 23,500 in full settlement of their claims. Prepare the realization a/c, partners capital a/c and Cash a/c. Also show your workings. (6) 17. A, B and C are partners sharing profit and losses in the ratio of 2 : 3 : 5. On 31 st March 2012, their balance sheet was : (8) Liabilities Amount (Rs.) Assets Amount (Rs.) Capital a/c : A : 36,000 B : 44,000 Cash B/R Furniture 24,000 44,000 28,000 C : 52,000 1,32,000 Stock 18,000 Creditors B/P Profit & Loss A/c 64,000 32,000 14,000 Debtors Investments Machinery Goodwill 42,000 32,000 34,000 20,000 2,42,000 2,42,000 They admit D into partnership from 1 st April 2012 on the following terms : (1) Stock is undervalued by 10% (2) Furniture, investments, machinery to be depreciated by 15% (3) Prepaid salaries Rs. 800 (4) Outstanding rent amounted to Rs (5) D brings in Rs. 32,000 as his capital and Rs for goodwill in cash for 1/6 th share in profit. (6) Capital of the partners shall be proportionate to their profit sharing ratio taking D s capital as base. (7) Adjustment of capital to be made in cash. Prepare revaluation a/c, partners capital a/c and Balance Sheet.

11 OR R, M and L are partners in a firm sharing profits in the ratio of 5 : 3 : 2. Partner R died on 20 th Feb The balance sheet of the firm on that date was as follows : Liabilities Amount (Rs.) Assets Amount (Rs.) Capital a/c : R : 12,000 M : 16,000 Machinery Furniture Stock 41,000 6,000 9,000 L : 10,000 38,000 Debtors 15,000 Loan from R General Reserve Creditors 7,000 20,000 19,000 Cash Profit & Loss A/c 3,000 10,000 84,000 According to the partnership deed, on the death of a partner, the executor of the deceased partner will be entitled to : (1) Balance in capital A/c (2) His share in profit & loss on revaluation of assets & liabilities which were as follows : (a) Machinery is revalued at Rs. 45,000 and furniture at Rs. 7,000 (b) A provision of 10% was to be created for doubtful debts. (c) There was an unearned income of Rs. 500 and accrued income of Rs (3) The net amount payable to R was transferred to R s executor s loan a/c which was to be paid later. Prepare revaluation a/c, Partner s capital a/c, R s Executor s a/c, Balance Sheet of L and M who decided to continue the business keeping their capital balances in their new profit sharing ratio. Any surplus or deficit was to be transferred to partner s current a/c. 18. Arti Ltd. invited applications for issuing 80,000 shares of Rs. 10 each at a premium of Rs. 4 per share. The amount was payable as follows : (8) On application Rs. 5 per share On allotment Rs. 9 per share (including premium) Applications were received for 1,40,000 shares. Allotment was made on following basis : (1) To applicants of 80,000 shares - 60,000 shares (2) To applicants of 60,000 shares - 20,000 shares Money overpaid on applications was utilized towards sums due on allotment Rajiv belonging to category (1) who applied for 1,200 shares failed to pay his dues and his shares were forfeited. Pass the necessary journal entries. OR Jain Ltd. invited applications for issuing 75,000 equity shares of Rs. 200 each at a discount of 5%. The amount was payable as follows : On application Rs. 80 On allotment Rs. 60 On First & final call Balance Applications for 70,000 shares were received. Allotment was made to all the applicants and the company received all the money due on allotment except from Ravi to whom 900 shares were allotment and his shares were immediately forfeited. Vishesh, the holder of 700 shares failed to pay first and final call, his shares were also forfeited. All the forfeited shares of Ravi and 350 shares of Vishesh were reissued for Rs. 195 per share fully paid up. Pass the journal entries.

12 PART B (ANALYSIS OF FINANCIAL STATEMENTS) 19. The current ratio of a company is 2 : 1. State with reason whether the sale of goods Rs (cost Rs. 10,000) would improve, reduce or not change the ratio. (1) 20. Give one limitation of Cash Flow Statement. (1) 21. What are two major inflow and outflows of cash from financing activities. (1) 22. Give the format of the balance sheet of a company main headings only, as per the requirement of schedule VI of the Companies Act, (3) 23. From the following Balance Sheet of Sanyog Ltd, prepare Common Size Balance Sheet : (4) Particulars Note No. 31 st March 2013 (Rs.) I.EQUITY AND LIABILITIES 1. Shareholders funds (a) Share Capital 40,00,000 (b) Reserves & Surplus 7,50, Non Current Liabilities Long term borrowings 13,50, Currrent Liabilities : Trade payables 3,00, st March 2012 (Rs.) 30,00,000 10,00,000 9,00,000 2,00,000 TOTAL 64,00,000 51,00,000 II.ASSETS 1.Non Current Assets (a) Fixed Assets (1) Tangible Assets (2) Intangible Assets 2.Current Assets (a) Inventories (b) Cash & Cash equivalents 40,00,000 13,00,000 32,00,000 11,00,000 8,00,000 6,00,000 3,00,000 2,00,000 TOTAL 64,00,000 51,00, (a) Calculate the Debt to Equity ratio from the following : S.No. Items Amount (Rs.) 1 Long Term Borrowings 2,00,000 2 Long term Provisions 1,00,000 3 Current liabilities 50,000 4 Non-current liabilities 3,00,000 5 Current Assets 40,000 (c) Calculate the current assets from the following information : (1) Stock turnover ratio : 4 times (2) Stock at the end is Rs. 20,000 more than stock in the beginning (3) Sales Rs. 3,00,000 (4) Gross profit ratio 25% (5) Current liabilities Rs. 40,000 (6) Quick ratio 0.75 (4)

13 25. From the following Balance Sheet of X Ltd., prepare cash flow statement : Particulars Note No. 31 st March st March 2012 (Rs.) (Rs.) I.EQUITY AND LIABILITIES 1. Shareholders funds (a) Share Capital (b) Reserves & Surplus : Surplus i.e., balance in statement of Profit & Loss 2. Currrent Liabilities : (a)trade payables (b) Other current liabilities 1 6,30,000 3,08,000 2,80,000 14,000 5,60,000 1,82,000 1,82,000 28,000 TOTAL 12,32,000 9,52,000 II.ASSETS 1.Non Current Assets Fixed Assets : Plant and Machinery 2.Current Assets (a) Inventories (b) Cash & Cash equivalents (c ) Trade receivables 3,92,000 1,26,000 84,000 6,30,000 2,80,000 1,82,000 70,000 4,20,000 TOTAL ,52,000 Notes to accounts (1) Share Capital Particulars 31 st March 31 st March (Rs.) (Rs.) Share Capital Equity Share Capital 8% Preference Share Capital 4,30,000 2,00,000 3,60,000 2,00,000 6,30,000 5,60,000 Additional Information : (1) An old machinery having book value of Rs. 42,000 was sold off Rs. 56,000 (2) Depreciation provided on machinery during the year was 28,000 (3) Dividend paid during the year Rs. 56,000 (6)

14 Accounting for Partnership Firms Fundamentals Q1. Which of the following statements will be applicable to Partnership firm in the absence of Partnership deed? (Any one of the following). i) Salary allowed to a partner for extra work done. ii) Interest on capital of partners will be 5% p.a. iii) Interest on partner s 6% p.a. iv) Profit sharing ratio. Answer - i) No ii) No iii) Yes iv) Equal Q2. List any two items appearing on the debit side of a partner s current account. Answer i) Drawing ii) Interest on drawing. Q3. List any four items that are credited to Capital Account of a partner when the capital Account is fluctuating. Answer i) Interest on Capital iii) Commission ii) Salary iv) Profit Share Q4. For how much period of Interest of drawing will be calculated if the equal amounts are drawn for one year. i) On 1 st Day of every Month, ii) End of every Month, iii) Middle of every Month Answer i) 6.5 Months ii) 5.5 Months iii) 6 Months. Q5. State one difference between Fixed capital account and Fluctuating Capital account of Partners? Q6. Ram and Shyam were partners in a firm sharing profits in the ratio of 3:5. Their fixed capitals were Ram Rs. 5,00,000 and ShyamRs. 9,00,000. After the accounts for the year hadbeen closed, it was found that the interest on p.a. as provided in partnershipagreement had not been credited to the Capital Accounts of the partners. Pass a necessary entry to rectify the error. Solution: Date Particulars L.F. Dr. (Rs.) Cr. (Rs.)

15 Ram s Current A/C To Shyam s Current A/C (For adjustment of omission of Interest on capital made) 2,500 2,500 Q7. X, Y, and Z are partners sharing profits and losses in the ratio of 3:2:1. After the final accounts have been prepared, it was discovered that the interest on drawing had not been taken in to consideration. The interest on drawings of the partners amounted to X - Rs. 250, Y Rs. 180 and Z Rs Give the necessary adjustment journal entry. Solution: Date Particulars L.F. Dr. (Rs.) Cr. (Rs.) Y s Capital A/C Z s Capital A/C 3 12 To X s Capital A/C 15 (For Interest on drawing omitted, now corrected) Q8. Malti, Paroand Arti are partners in a firm having fixed capital of Rs. 80,000, Rs. 40,000 and Rs. 50,000 respectively sharing profits as 7:6:4. The raet of Interest on capital was agreed at 10% p.a., but was wrongly credited to them as 12% p.a. Give the necessary adjustment entry to adjust the balance of Partner s Capital Accounts. Solution: Date Particulars L.F. Dr. (Rs.) Cr. (Rs.) Malti s Current A/C Arti s Current A/C To Paro s Current A/C 400 (Excess Interest on Capital credited, now corrected) Q9(a).Sachin, Kapil and Rashmi have been sharing profits and losses in the ratio of 3:2:1 respectively. Rashmi wants that she should share the profits equally with Sachin and Kapil. She further wants that change in profit sharing ratio should be applicable retrospectively for the last three years. Other partners have no objection to this. The profits for the last three years were Rs. 60,000, Rs. 47,000 and Rs. 55,000. Record the adjustment by means of journal entry. Give working. Solution: Date Particulars L.F. Dr. (Rs.) Cr. (Rs.) Sachin s Capital A/C Dr. 27,000 To Rashmi s Capital A/C 27,000 (For change due to profit sharing ratio rectified) Q9(b). Point out whether any value is involved in the decision taken by Sachin and Kapil to share profit equally with Rashmi.

16 Solution: Following values are involved in this decision: i) Promotion of equality among partners. ii) Showing respect towards woman partner by eliminating gender biasness. Q10. A, B, and C were partners in a firm. On 1 st January 2009, their capitals were Rs. 60,000, Rs. 30,000 and Rs. 30,000 respectively. As per partnership deed, partners were entitled to: i) Salary to C atrs. 500 per month ii) Interest on 5% p.a. iii) Profits to be shared in the Capital ratio. Q11. A, B and C were partners in a firm having capitals of Rs. 60,000, Rs. 60,000 and Rs. 80,000 respectively. Their Current Account balances were A: Rs. 10,000; B: Rs. 5,000 and C: Rs. 2,000 (Dr.). According to the partnership deed the partners were entitled to interest on 5% p.a. C being the working partner was also entitled to a salary of Rs. 6,000 p.a. The profits were to be divided as follows: i) The first Rs. 20,000 in proportion to their Capitals. ii) Next Rs. 30,000 in the ration of 5:3:2. iii) 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 & Loss Appropriation Account and pass necessary journal entry for apportionment of Profit. Answer: Q12. A and B are partners sharing profits in the ration of 3:2 with capitals of Rs. 50,000 and Rs. 30,000 respectively. Interest on capital is 6% p.a. B is to be allowed an annial salary of Rs. 2,500. During 1995, profits of the year prior to calculation of interest on capital but after charging B s salary amounted to Rs. 12,500. Manager is to be allowed a commission of 5% on the profits remaining after deducting salary and interest on capitals but before charging such commission. Prepare an account showing allocation of profits and partners capital accounts. Solution: Profit and Loss Appropriation Account For the Year ending.. Particulars Amount (Rs.) Particulars Amount (Rs.) To Interest on Capitals: By Profit & Loss A/c A 3,000 (Net Profit after B s Salary) 12,500 B 1, To Manager s Commission: 5% on (Rs. 12,500 Rs. 4,800) i.e 7,700 * 5/100 To Profit transferred to Capital A/c: A (3/5) 4,389 B (2/5) 2, ,315

17 12,500 12,500 Capital Balances: A: Rs. 57,389 B: Rs. 37,226 Q13. A, B and C were partners in a firm sharing profits in the ration of 2:2:1. C was guaranteed to be given a profit of Rs. 50,000 per year. Deficiency if any, on that account hall be borne by A and B in the ratio of 3:2. The net profit of the firm for the year ended was Rs.2,00,000 Prepare Profit & Loss Appropriation Account of A, B and C. Solution: Particulars Amount (Rs.) Particulars Amount (Rs.) To Profit Trans. to Capital A/cs: By Profit & Loss A/c A 2/5 80,000 (Net Profit) 2,00,000 Less: Transfer to C 6,000 74,000 B 2/5 80,000 Less: Transfer to C 4,000 C 1/5 40,000 Add from: A 6,000 B 4,000 76,000 50,000 2,00,000 2,00,000 Q14. A and B are partners with capitals of Rs. 1,00,000 and Rs. 80,000 respectively. On 1 st January 2009, the trading profit of the firm for the year before appropriation as per partnership deed was Rs. 67,500. As per partnership deed, they were entitled to: i) Interest on 9% p.a. ii) A to get salary Rs. 1,000 p.m. iii) B to get commission Rs. 10,000. iv) Drawings of A and B were Rs. 6,000 and Rs. 5,000 respectively and interest thereon amounts to Rs. 400 and Rs. 300 respectively. Show how the profits for the year 2009 will be distributed between A and B and also show Capital Accounts under: a) Fixed Capital b) Fluctuating Capital. Answer: i) Divisible Profit Rs. 30,000; A s share Rs. 15,000 and B s share Rs. 15,000 in ratio 1:1

18 (A) Capital of A - Rs. 1,00,000, B Rs. 80,000; Current A/c: A Rs. 29,600, B 26,900 (B) Fluctuating Capital: A Rs. 1,29,600, B Rs. 1,06,900 Valuation of Goodwill Q1. Define goodwill. Ans. Goodwill refers to capacity of a Business to earn more profits over and above the normal profits earned by the similar frims. Q2. State any four reasons for Valuation of goodwill in relation to partnership firm. Ans. Valuation of goodwill is required whenever the mutual rights of partners change. It is required in following cases: i) Change in the profit sharing ration among the existing partners. ii) Admission of a new partner. iii) Retirement of a partner. iv) Death of a partner. v) Sale of partnership firm. Q3. Explain any three features of Goodwill. Ans: Features of goodwill are: i) In is an intangible asset but not a fictitious asset. ii) Value of goodwill is subject to change with the passage of time. iii) Valuation of goodwill is subjective in nature. Q4. List any four factors that help in the creation of goodwill of a partnership firm. Ans. Factors affecting valuation of goodwill are: i) Location of business. ii) Nature of business. iii) Longevity of business. iv) Quality of products. v) Degree of competition. vi) Brand image. Q5. A business has earned profits of Rs. 1,00,000; Rs. 80,000 and Rs. 60,000 during the last three years. The assets of the business are Rs. 8,00,000 and its external liabilities are Rs. 2,00,000. The normal rate of return is 10%. Find goodwill if

19 i) Goodwill is valued at 2 years purchase of average profit of last three years. ii) Goodwill is valued at 3 years purchase of super profits. iii) Goodwill is valued by capitalization of average profits. iv) Goodwill is valued by capitalization of super profits. Ans. Q6. The average capital employed in a business is Rs. 2,50,000 and average net profit earned is Rs. 35,000 p.a. The normal rate of return on average capital employed is 10%. The remuneration amounting to Rs. 5,000 p.a. is considered reasonable to owners. Compute goodwill on the basis of 2 years purchase of Super profit. Solution: i) Actual Average Profit: Rs. 35,000 Rs, 5,000 = Rs. 30,000 ii) Normal Profit = Rs. 2,50,000 * 10/100 = Rs. 25,000 iii) Super Profit = Rs. 30,000 Rs. 25,000 = Rs. 5,000 iv) Goodwill = Super Profit * No. of Years Purchase = Rs. 5,000 * 2 = Rs. 10,000 Q7. The average profit earned by a firm is Rs. 55,000 which includes abnormal income of Rs. 5,000 on an average basis. The capital invested in the business is Rs. 5,00,000 and the normal rate of return is 8%. Calculate goodwill of the firm on the basis of 4 times of super profit. Solution: Total average profit = Rs. 55,000 Less: Abnormal Profit = Rs. 5,000 i) Actual average Profit = Rs. 50,000 ii) Normal Profit = Capital Employed * Normal rate of return 100 = Rs. 5,00,000 * 8 = Rs. 40, iii) Super Profit = Average Profit Normal Profit = Rs. 50,000 Rs. 40,000 = Rs. 10,000 iv) Goodwill = Super Profit * No. of Years Purchase = Rs. 10,000 * 4 = Rs. 40,000 Q8. The average profit of a firm is Rs. 1,20,000. The total tangible assets in this firm are Rs, 15,00,000 and outside liabilities are Rs. 4,00,000. The normal rate of return is 10% on capital employed. Calculate goodwill by capitalization method on the basis of a) Super profit method. b) Average profit method.

20 Solution: With the given information, we can use either of the two methods based on capitalization: A) Based on Super Profit i) Capital employed or Net Tangible Assets = Tangible Assets Outside Liabilities = Rs. 15,00,000 Rs. 4,00,000 = Rs. 11,00,000 ii) Normal Rate of Return = 10% iii) Normal Profit = Capital Employed * Normal rate of return 100 = Rs. 11,00,000 * 10 = Rs. 1,10, iv) Super Profit = Average Profit Normal Profit = Rs. 1,20,0000 Rs. 1,10,000 = Rs. 10,000 v) Goodwill = Super Profit * 100 Normal Rate of Return = Rs. 10,000 * 100 = Rs. 1,00, B) Based on Average Profit i) Average Profit = Rs. 1,20,000 ( Given) Average Profit * 100 ii) Capital value of Average Profit = Normal Rate of Return Rs. 1,20,000 * 100 = Rs. 12,00,000 = 10 iii) Capital Employed (See Part A) = Rs. 11,00,000 iv) Goodwill = Capital Value of Average Profit Actual Capital Employed = Rs. 12,00,000 Rs. 11,00,000 = Rs. 1,00,000 Changein Profit Sharing Ratio Q1. What is sacrificing ratio? Ans. The ratio in which the partners have agreed to sacrifice their share in profit in favour of other partner or partners, is called as sacrificing ratio. Q2. Define gaining ratio? Ans. Due to change in the profit sharing ratio, one or more partners gain their profit share, it is called gaining ratio.

21 ADMISSION OF A PARTNER 1 MARK QUESTION Q1- State any one purpose for admitting a new partner in a firm. Q2- State the two main rights that a newly admitted partner acquires in the firm. 3 MARKS QUESTION Q3- P & Q are partners sharing profits in the ratio of 3:2.They admit R for ¼ th share. P & Q decided to share profits equally. Calculate new profit sharing ratio & sacrificing ratio. Ans: New Profit sharing ratio-3:3:2, sacrificing ratio- 9:1. Q4- A & B are partners in a firm sharing profits in the ratio of 3:2. C is admitted as a partner. A & B surrender ½ of their respective shares in favour of C. Find new profit sharing ratio & sacrificing ratio. Ans: New profit sharing ratio: 3:2:5. Sacrificing ratio: 3:2. Q4- X & Y are partners sharig profits in the ratio of 7:5. They admit z as a partner who acquires 1/12th share from X & 1/6 th from Y as his share. Calculate new profit sharing ratio & sacrificing ratio. Ans: New profit sharing ratio-2:1:1. Sacrificing ratio- 1:2. 8 MARKS QUESTION Q5- M & N are partners in a firm sharing profits in the ratio of 3:1. Their balance Sheet as on was as follows: Creditors Liabilities Rs Assets Rs Bills Payable Outstanding salary Capitals M 2,00,000 N 1,30,000 28,000 40,000 2,000 3,30,000 Cash Debtors Stock Plant Land & Building 50,000 60,000 40,000 1,00,000 1,50,000 4,00,000 4,00,000 On the above date O was admitted as a partner for 1/4 th share in profits on following terms: (i) O will bring Rs 1,50,000 as his capital & Rs 90,000 as his share of premium for goodwill for his share of profits. (ii) Plant is to be appreciated to Rs 1,30,000 & the value of land & building is to be appreciated by 5%. (iii) Stock is overvalued by Rs 6,000. (iv) A provision for bad & doubtful debts is to be created at 5% on debtors. (v) There were unrecorded creditors Rs 4,500. Prepare Revaluation Account, Partner s Capital Accounts and the Balance Sheet. Ans: Revaluation profit- Rs 24,000, Capital Accounts- M- Rs 2,85,500, N- Rs 1,58,500,