1

a) Define Government company.

b) State the conditions under which the capital balances may change under the system of
fixed capital account.
c) Explain Cash Equivalents with examples
d) X and Y are partners sharing profits in the ratio of 7 : 3. They admit C for l/5th
share,which he acquires in equal proportion from both. Find the new profit sharing ratio.
e) State the applicable interests on calls-in-arrear and calls-in-advance if the articles is
silent.
f) Write a brief note on Capital Reserve.
g) What is meant by ‘unlimited liability of a partner’?
h) Puja, Priya and Pamela are partners sharing profits and losses in the ratio of 5:3:2.
Priya retires. Her share is taken by Priya and Pamela in the ratio of 2:1. Calculate their
new profit sharing ratio.
i) A and B are partners sharing profits equally. A drew regularly Rs.4,000 at the end of
every month for months ended 30th September, 2013. Calculate interest on drawings @
5% p.a.
j) Amar and Samar were partners in a firm sharing profits and losses in 3:1 ratio. They
admitted Kumar for 1/4 share of profits. Kumar could not bring his share of goodwill
premium in cash. The Goodwill of the firm was valued at Rs.80,000 on Kumar’s
admission. Record necessary journal entry for goodwill on Kumar’s admission.

2
a) Alo, Bimala and Deepa are partners in a firm. On 1st April, 2021 their capital accounts
stood at Rs.4,00,000, Rs.3,00,000 and Rs.2,00,000 respectively. They shared profits and
losses in the ratio of 5:3:2. Partners are entitled to interest on capital @ 10% per annum
as well as salary to Bimala and Deepa @ Rs.12,000 per month and Rs.3,000 per quarter
respectively as per the provisions of the partnership deed.
Bimala’s share of profit (excluding interest on capital but including salary) is guaranteed
at a minimum of Rs.50,000 per annum. Any deficiency arising on that account shall be
met by Deepa. The profits of the firm for the year ended 31st March, 2012 amount to
Rs.2,00,000. Prepare profit and loss appropriation account for the year ended on 31st
March, 2022.
b) X Ltd took over the following assets and liabilities of Y Ltd:
Land & Building Rs.20,00,000
Stock-in-trade Rs.5,00,000
Sundry Debtors Rs.2,50,000
Sundry Creditors Rs.2,00,000
X Ltd. paid the purchase consideration by issuing bank draft of Rs.16,00,000 and 50,000
equity shares of Rs.20 each at a premium of 10%. Calculate purchase consideration and
pass necessary journal entries in the books of X Ltd.
c) A, B and C were partners in a firm. On 1st April, 2008, their fixed capitals stood at
Rs.50,000, Rs.25,000 and Rs.25,000 respectively.
As per the provisions of the partnership deed:
(i) B was entitled for a salary of Rs.5,000 per annum.
(ii) All the partners were entitled to interest on capital at 5% per annum.
(iii) Profits were to be shared in the ratio of capitals.
The net profit for the year ending 31st March, 2009 of Rs.33,000 and 31st March, 2010 of
Rs.45,000 was divided equally without providing for the above terms.
Pass necessary adjustment journal entry to rectify the above errors.
d) Patrick purchased Ronald’s firm on 1st April, 2019. It was agreed to value goodwill at
three year’s purchase of average normal profits of the last four years. The profits of
Ronald’s firm for the last four years were:-
Year ended Rs.
31st March, 2016 90,000
31st March, 2017 1,60,000
31st March, 2018 1,80,000
31st March, 2019 2,20,000
Following are noticed:-
a) During the year ended 31st March, 2016 an asset was sold at a gain (profit) of
Rs.10,000.
b) During the year ended 31st March, 2017 a machine got destroyed in an accident and
Rs.30,000 was written off as a loss in profit and loss account.
c) During the year ended 31st March, 2018 firm’s assets were not insured due to
oversight. Insurance premium being Rs.10,000.
Calculate the value of goodwill.

3. Prince Textiles Limited issued a prospectus inviting applications for 2,00,000 equity
shares of Rs.10 each at a premium of Rs.3 per share payable as follows :
On Application Rs.2
On Allotment Rs.5 (including premium)
On First Call Rs.3
On Final Call Rs.3
Applications were received for 30,000 shares and allotment was made on prorata basis.
Money overpaid on applications was adjusted to the amount due on allotment.
Mr. ‘Mohit’ whom 400 shares were allotted, failed to pay the allotment and the first call
money. His shares were forfeited after the first call. Ms. ‘Jolly’ whom 600 shares were
allotted, failed to pay for the two calls and hence her shares were also forfeited. Of the
shares forfeited, 800 shares were reissued to Ms. Supriya as fully paid for Rs.9 per share,
the whole of Mr. Mohit’s shares being included.
Record necessary journal entries in the books of the Company.

4.
Prepare a Cash Flow Statement from the above Balance Sheet of Nitro Ltd. taking into
consideration that a depreciation of Rs.80000 charged to Plant during the year.

5. The following was the Balance Sheet of Arun, Bablu and Chetan sharing profits and
losses in the ratio of 6:5:3.

They agreed to take Deepak into partnership and give him a share of 1/8 on the following
terms:
a) that Deepak should bring in Rs.4,200 as goodwill and Rs.7,000 as his Capital
(b) that furniture be depreciated by 12%
(c) that stock be depreciated by 10%
(d) that a Reserve of 5% be created for doubtful debts
(e) that the value of land and buildings having appreciated be brought upto Rs.31,000
(f) that after making the adjustments the capital accounts of the old partners (who
continue to share in the same proportion as before) be adjusted on the basis of the
proportion of Deepak’s Capital to his share in the business, i.e., actual cash to be paid off
to, or brought in by the old partners as the case may be.
Prepare Cash Account, Revaluation Account and the Opening Balance Sheet of the new
firm.

6. Sajal and Kajal are partners sharing profits and losses in the ratio of 2: 1. On 1st April,
2015 their Capitals were: Sajal – Rs.50,000 and Kajal – Rs.40,000.
Prepare Profit and Loss Appropriation Account and the Partners’ Capital Accounts at the
end of the year after considering the following items:
a. Interest on Capital is to be allowed @ 5% p.a.
b. Interest on the loan advanced by Kajal for the whole year, the amount of loan being
Rs.30,000.
c. Interest on partners’ drawing @ 6% p.a. Drawings: Sajal Rs.10,000 and Rs.Kajal 8,000.
d. 10% of the divisible profits is to be transferred to Reserve.
They earned profit of Rs.70,260 for the year ended 31st March, 2016.

7. R, S and M were carrying on business in partnership sharing profits in the ratio of 3 : 2

: 1 respectively. On March 31, 2011 Balance Sheet of the firm stood as follows:

S retired on the above mentioned date on the following terms

(a) Buildings to be appreciated by Rs.8,800.
(b) Provision for doubtful debts to be made @ 5% on debtors.
(c) Goodwill of the firm to be valued at Rs.9,000.
(d) Rs.5,000 to be paid to S immediately and the balance due to him to be treated as a
loan carrying interest @ 6% per annum.
Prepare necessary accounts and the balance sheet of the reconstituted firm.