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Multi Disciplinary Questions - Kendriya Vidyalayakvaairangpuri.edu.in/images/study_material/class_12_2014/...Multi Disciplinary Questions ACCOUNTANCY CLASS 12 QUESTION NO-1 •A and

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Page 1: Multi Disciplinary Questions - Kendriya Vidyalayakvaairangpuri.edu.in/images/study_material/class_12_2014/...Multi Disciplinary Questions ACCOUNTANCY CLASS 12 QUESTION NO-1 •A and

Multi Disciplinary Questions

ACCOUNTANCY

CLASS 12

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QUESTION NO-1

• A and B are partners sharing profits in the ratio of 3:2 with capitals of Rs. 3,20,000 and Rs. 2,60,000.On 1st

April,2013,they admit C into the partnership. A surrenders 1/5th of his share and B surrenders 2/5th of his share in favor of C.C brings in Rs. 1,40,000 for goodwill and the proportionate amount of Capital in cash. Partner’s are entitled to interest on capital @5% p.a.

Profits for the year ending 31st March,2014 before allowing interest on capitals amounted to Rs. 3,00,000. Pass journal entries for the above mentioned transactions.

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Date Particulars L.F. Dr.(R.s) Cr.(Rs.)

2013

Apr-01Bank A/c Dr. 4,20,000

To C's Capital A/c 2,80,000

To premium for goodwill A/c 1,40,000

(the amount of capital and goodwill/premium

brought in cash)

Apr-01Premium for Goodwill A/c Dr. 1,40,000

To A's Capital A/c 60,000

To B's Capital A/c 80,000

(Goodwill credited to old partners in sacrificing ratio

i.e., 3 : 4)

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2014

Mar-31Profit & loss A/c Dr. 3,00,000

To Profit and Loss appropriation A/c 3,00,000

(Transfer of profit & loss to appropriation A/c)

Mar-31Interest on Capital A/c Dr. 50,000

To A's Capital A/c 19,000

To B's Capital A/c 17,000

To C's Capital A/c 14,000

(Interest on partner's Capitals)

Mar-31Profit and Loss Appropriation A/c Dr. 50,000

To interest on Capital A/c 50,000

(Transfer of interest on capital to appropriation A/c)

Mar-31Profit and Loss Appropriation A/c Dr. 2,50,000

To A's Capital A/c 1,20,000

To B's Capital A/c 60,000

To C's Capital A/c 70,000

Transfer of balance of appropriation A/c to capital

accounts in the profit sharing ratio i.e., 12 : 6: 7)

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Working notes

1. share surrendered by A: 1/5th of 3/5 =3/25

Share surrendered by B : 2/5th of 2/5 = 4/25

Sacrificing ratio 3/25 : 4/25 = 3 : 4

A’s new share = 3/5 – 3/25 = 15-3/25 =12/25

B’s new share = 2/5 – 4/25 = 10-4/ 25 = 6/25

C’s share = 3/25 +4/25 = 7/25

hence., new ratios of A, B and C = 12 : 6 : 7

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2. adjusted capital of A = Rs. 3,20,000 + share of goodwill Rs. 60,000 = Rs. 3,80,000adjusted capital of B = Rs. 2,60,000 + share of goodwill Rs. 80,000 = Rs. 3,40,000Total adjusted capital of A and B for 18/25th share = Rs. 3,80,000 + Rs. 3,40,000

= Rs. 7,20,000total capital of new firm : Rs. 7,20,000 × 25/18 = Rs. 10,00,000Proportionate capital of C = Rs. 10,00,000 × 7/25 = Rs. 2,80,000

3. interest on capitals : A 5% on Rs. 3,80,000 = Rs. 19,000B 5% on Rs. 3,40,000 = Rs. 17,000C 5% on Rs. 2,80,000 = Rs. 14,000

Rs. 50,0004. net profit after interest on capital = Rs. 3,00,000 –Rs. 50,000 = Rs.

2,50,000

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QUESTION NO-2

• The partners of a firm distributed the profits for the year ended 31st March,2013,Rs. 7,50,000 equally without providing for the following adjustments:

(1) A and B were entitled to a salary of Rs. 10,000 each per month.(2) B was entitled to a commission of Rs. 60,000.(3) Profits were to be shared in the ratio of 3:2:1.Partners decided to pass an adjusting entry on 1ST April,2013

rectifying the same.On the same date, they admitted D as a new partner for 1/7th

share in the profits. The new profit sharing ratio will be 2:2:2:1respectively. D brought Rs. 3,00,000 for his capital and Rs. 45,000 for his 1/7th share of goodwill. Showing your workings clearly, pass the necessary journal entries in the books of the firm for the above mentioned transactions.

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DATE PARTICULAR L.F. Dr.(RS) Cr.(RS)

2013APRIL 1

C’s Capital A/c Dr.To A’s Capital A/cTo B’s Capital A/c

(Adjustment for wrong appropriation of profit)

1,75,00095,00080,000

APRIL 1 Bank A/c Dr.To D’s Capital A/cTo Premium for Goodwill A/c

(The amount of capital and goodwill/premium brought in cash)

3,45,0003,00,00045,000

April 1 Premium for Goodwill A/c Dr.C’s Capital A/c

To A’s Capital A/cTo B’s Capital A/c

(Premium for goodwill brought in D credited to A and B along with 5/45 of the goodwill to be contributed by C due to gain in his profit sharing ratio)

45,00037,500

67,50015,000

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PARTICULAR A(RS)

B(RS)

C(RS)

TOTAL(RS)

Salary (Cr.)Commission (Cr.)Remaining profit i.e.,

7,50,000-2,40,000-60,000=4,50,000will be divided in 3 : 2 : 1 (Cr.)

Less : Profit already distributed equally

1,20,000

2,25,0003,45,0002,50,000

(Cr.)95,000

1,20,00060,000

1,50,0003,30,0002,50,000

(Cr.)80,000

75,00075,0002,50,000

(Dr.)1,75,000

2,40,00060,000

4,50,0007,50,0007,50,000

----

TABLE SHOWING ADJUSTMENTS

Working Notes :

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QUESTION NO-3

• A,B and C were partners in a firm sharing profits in the ratio of 1:2:2. On 1st July,2014 A retired and the new profit sharing ratio of B and C was 3:2. Goodwill of the firm was valued at Rs. 4,00,000.

D is admitted as a partner . B and C surrenders ½ of their respective share in favor of D.

D is to bring his share of premium for the goodwill in cash. Pass necessary entries for the record of goodwill in the above case. Also calculate the sacrificing ratios and new ratios.

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JOURNAL

DATE PARTICULAR L.F. Dr.(Rs)

Cr.(Rs)

2014July 1

80,00080,000

July 1 Bank A/c Dr.To Premium for Goodwill A/c

(Premium for Goodwill brought in cash by D)

2,00,0002,00,000

July 1 Premium for Goodwill A/c Dr.To B’s Capital A/cTo C’s Capital A/c

(Premium brought in by D credited to B and C in the sacrificing ratio of 3 : 2)

2,00,0001,20,000

80,000

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Working Notes :

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Q.4. A,B and C were in partnership sharing profits and losses in the proportions of 3 : 2 : 1. On 1st

April,2011,B retires from the firm. On that date , their Balance Sheet was as follows :

Liabilities (Rs) Assets (Rs)

Trade CreditorsExpenses owingReserve FundWorkmen’s Compensation

ReserveCapitals :

A : 1,95,000B : 1,57,000C : 81,000

69,00045,000

1,05,000

48,000

4,33,000

7,00,000

Cash in handDebtors 1,60,000

Less : Provision 10,000Stock Factory Premises InvestmentsLoose Tools

85,000

1,50,0001,20,0002,25,000

80,00040,000

7,00,000

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The terms were :

(1) Goodwill of the firm to be valued at 2 times of Average Super Profits of last three years . Taking into consideration

the risk of the business, normal profits of the firm are estimated at 5,00,000 every year. But actual profits three years ending 31st march were as 2009 : 6,00,000 , 2010 :

5,50,000 , 2011 : 5,75,000.

(2) Expenses owing to be brought down to 37,500.

(3) Investments are valued at 72,000.A took over investments at this value.

(4) Factory premises is to be revalued at 2,43,000;and Loose tools at 36,000.

(5) Provision for doubtful Debt to be increased by 19,500.

(6) Claim on account of workmen’s compensation is 18,000.

(7) B be paid 50,000 in cash and balance due to him treated as a loan carrying interest @ 6% per annum.

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As per partnership deed, partners are allowed 6% p.a. interest on their capitals. Profits for the year ending 31st march 2012 before allowing interest on the loan

and capitals amounted to 22,000.

Show Journal entry for goodwill adjustments, prepare Revaluation Account and Capital Accounts as on 1st

April 2011 and the distribution of profit for the year ended 31st March,2012.

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JOURNAL ENTRY FOR GOODWILL

DATE PARTICULAR L.F. Dr. (Rs)

Cr.(Rs.)

2011April 1 A’s Capital A/c Dr.

C’s Capital A/c Dr.To B’s Capital A/c

(B’s share of goodwill adjusted to the accounts of continuing partners in their gaining ratio 3 : 1)

37,50012,500

50,000

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REVALUATION ACCOUNT

PARTICULAR (Rs.) PARTICULAR (Rs.)

To InvestmentsTo Loose ToolsTo Provision for doubtful debts

8,0004,000

19,500

31,500

By Expenses owing A/cBy Factory PremisesBy Loss transferred to :

A 3,000B 2,000C 1,000

7,50018,000

6,000

31,500

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CAPITAL ACCOUNTS

PARTICULAR A(Rs.)

B (Rs.)

C (Rs.)

PARTICULAR A(Rs.)

B (Rs.) (Rs.)

April 2011Revaluation A/c

To B’s capital A/cTo Investments A/cTo cash A/cTo B’s loan A/c

To Balance c/d

3,00037,50072,000

00

1,50,0002,62,000

2,00000

50,0002,00,000

02,52,000

1,00012,500

000

90,0001,03,500

1st April 2011By Balance b/dBy Reserve Fund A/cBy Workmen’s Compensation Reserve A/cBy A’s Capital A/cBy C’s Capital A/c

1,95,000

52,500

15,00000

2,62,000

1,57,000

35,000

10,00037,50012,500

2,52,000

81,000

17,500

5,000

1,03,500

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PROFIT & LOSS ACCOUNTfor the year ended 31st march, 2012

PARTICULAR (Rs.) PARTICULAR (Rs.)

To Interest on B’s Loan ( 6% on 2,00,000)To Profit transferred to P & L

Appropriation A/c

12,000

10,00022,000

By Profit (before interest) 22,000

22,000

Since partnership deed is silent in treating on capital as a charge or appropriation it will be treated as appropriation of profits.

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PROFIT AND LOSS APPROPRIATION A/C

PARTICULAR (Rs.) PARTICULAR (Rs.)

6,250

3,75010,000

By Profit & Loss A/c 10,000

10,000

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Interest on A’s Capital 6% on 1,50,000 9,000 Interest on A’s Capital 6% on 90,000 5,400

14,400

The available profit is 10,000 whereas the interest due on capitals is 14,400. Since the profit is less than

interest, the available profit will be distributed in the ratio of interest, i.e., 9,000 : 5,400 or 5 : 3.