NARBHERAM HANSRAJ ENGLISH SCHOOL

BISTUPUR, JAMSHEDPUR
FIRST TERM EXAMINATION 2020-21
STD. 12(D&E) ACCOUNTS F.M. 50

READING TIME: 8:30 a.m. – 8:40 a.m. WRITING TIME: 8:40 a.m. – 10:40 a.m.
SUBMISSION TIME: 10:40 a.m. – 10:50 a.m.

SECTION - A
PART - I
(Answer all the questions)
[7x2]
QI. 1) Give the adjusting and closing entries for recording interest on drawings charged from the partners
when the firm follows the fixed capital method.

2) Interest allowed on capital is debited to profit & loss appropriation account and not to profit and
loss account why ?

3) What is purchased goodwill.

4) What entry is recorded to distribute general reserve and profit & loss credit balance in admission of
a partner.

5) What is hidden goodwill ?

6) Give the adjusting and closing entry for interest on calls in arrears due from a shareholder.
7) Peter, Max and Som were partners in a firm sharing profit & loss in the ratio of 4 : 2 : 1. Their fixed
capitals were Rs.40000, 30000 and 30000 respectively. Som was guaranteed a profit of Rs.39000
by the firm. Any loss because of the guarantee would be shared by Peter & Max equally. Trading
profit of the firm 31.03.2018 was Rs.147000. Show the appropriation of profit.

QII.a) A Co. Ltd. Issued 2,75,000 equity shares of Rs.10 each for subscription at a premium of 10% on the
following terms. [6]
Rs.3 to be paid on application
Rs.4 to be paid on allotment
Rs.2 to be paid on first call
Rs.2 to be paid on final call

Applications were received for 2,50,000 eq. shares which were allotted. Amount due was received on due
date except from a shareholder holding 5000 shares failed to pay the calls. Pass entries and prepare the
Balance Sheet.

b) A and B, the two partners agreed to appropriate the profit of their firm on the following terms : [6]
1) Interest is payable on capital at 6% p.a.
2) A will be entitled to a salary of Rs.550 per month.
3) Interest on loan given by the firm to the partner is @ 10% per annum.
4) Interest on drawings to be charged from partners @ 5% per annum.
5) B will get commission @1% on the sales made during the year.
6) A is entitled to a rent of Rs.20,000 per annum for allowing the firm to carry on the business in his
premises.
Net profit of the firm for the year ended 31.03.2018 was Rs.1,80,000 before taking into account any
of the above terms.
Capital A Rs.150000
B Rs.140000
Loan advanced on 01.10.2017 by B Rs.100000 drawings A Rs.40000, B Rs.30000.
Sales of the firm amounted to Rs.750000. Prepare profit and loss appropriation accounts and
partners capital account.
STD.12 D&E : 2 :

QIII. Amit and Basu are partners in a firm. Their Balance Sheet as at 31.03.2020 was as follows :- [12]

Liabilities Rs. Assets Rs.

Provision for doubtful debts 4000 Cash 5000
Workman compensation reserve 5600 Debtors 80000
Outstanding expenses 3000 Goodwill 5000
Creditors 30000 Stock 20000
Capital Amit 50000 Machinery 38600
Basu 60000 Profit & loss 4000
152600 152600

On 1st April 2020, they admitted Vishnu as a partner on the following conditions.
1) Vishnu brings Rs.60000 as capital but unable to bring any amount for goodwill.
2) New profit sharing ratio 3 : 2 : 1.
3) Claim on account of workmen compensation is Rs. 3000.
4) Write off bad debts amounting to Rs.6000
5) Creditors are to be paid Rs.2000 more.
6) Rs.2000 be provided for a liability to wards customers warranty claim.
7) Outstanding expenses be brought down to Rs.1200.
8) Expenses on revaluation amounting to Rs.5000 are paid by Amit.
9) Out of the amount of insurance which was debited entirely to profit and loss account last year, Rs.5000
be carried forward as unexpected.
10) Goodwill is valued at 1 ½ years purchase of the average profit of last 3 years less Rs.12000. Profit for
the last 3 years amounted to Rs.10000, 20000 and Rs.30000.
Prepare Revaluation Account, capital Account and Balance Sheet.

QIV.a) Calculate the goodwill of a firm on the basis of three years purchase of the weighted average profit of the
last four years. Profits of these four years ended 31.03 were. [6]

31.03.2017 Rs.40400
31.03.2018 Rs.49600
31.03.2019 Rs.40000
31.03.2020 Rs.60000

You are provided with the following additional information :-

1) On 31.03.2019, a major plant repair was undertaken for Rs.12000 which was charged to revenue. The
said sum is to me capitalised for goodwill calculation subject to adjustment of depreciation of 10% on
reducing balance method.
2) The closing stock for the year ended 31.03.2018 was overvalued by Rs.4800.
3) To cover management cost an annual charge of Rs.9600 should be made for the purpose of goodwill
valuation.

b) P, Q and R are partners. Their capitals as on 31.03.2019 stood at Rs.500000, 500000 and 250000. Their
balance in the current accounts as on that date stood at Rs.100000, 150000 and 50000 (Dr) respectively.
Drawings of each of the partners during the financial year were Rs.50000.

In terms of the partnership deed [6]

1) P was to get a salary of Rs. 5000 permonth
2) Interest on capital was to be allowed @10% p.a.
3) Interest on current a/c was to be allowed and charged @5% p.a.
4) Interest on drawings to be charged @5% p.a.
5) Profit are to be shared on the ratio of their capitals.
Net profit Rs.3,00,000 for the year ended 31.03.2020 was credited to their current a/c equally. Pass an
adjustment entry rectifying the above errors, showing your workings.
QV. During the year 2014-15 ABC Ltd. Issued 10,000 equity shares of Rs.50 each at Rs.55 per share payable as
follows :-
On application Rs.15
On Allotment Rs.20 (including premium)
On 1st and final call Rs.20
All the issued shares were subscribed for by the public. One shareholder holding 500 shares did not pay
the amount due on allotment and his shares were immediately forfeited.
Another shareholder holding 100 shares paid the first and final call with allotment. After the Co. had made
the first and final call, 200 of the forfeited shares were reissued as fully paid up at Rs.45 per share. The
share as fully paid up at Rs.45per share. The share issue expenses were Rs.7000 which were written off at
the end of the year. You are required to pass journal entries and draw the Balance Sheet. [12]

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