ITL Public School Answer Key (Set A)

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1 ITL Public School Answer Key (Set A) Date of Exam: Class: XII Time:3 hrs M. M:80 Subject: Accountancy General Instructions:. All questions are compulsory 2. Marks for each question are indicated against it 3. Attempt all parts of a question together SET A The business run by a Joint Hindu Family consists of two or more members, but it is not a partnership. Why? Ans- HUF comes into existence by operation of law not by an agreement. 2 Parag and Sachin are partners sharing profits in the ratio 3:2. Ragini is admitted with /5 th share and brings in Rs. 84,000 as her share of goodwill which is credited to the capital accounts of Parag and Sachin respectively with Rs. 63,000 and Rs. 2,000. What will be the new profit sharing ratio of partners? Ans- SR= 3: From P gets /5 x3/4= 3/20; P new share= 3/5-3/20= 9/20 S = /5 x ¼= /20; S new share= 2/5- /20= 7/20 R = /5 x 4/4= 4/20 9:7:4 3 A, B and C are in partnership sharing profit in the ratio 3:2:. The partnership deed provides that B to get minimum profit of Rs.25,000. The profit earned by the firm after all the necessary distribution is Rs. 60,000. The guarantors will share the deficit in equal ratio. Calculate the deficit amount to be borne by A. Ans- 60,000 x /3= 20,000 Deficiency = 5000 A = X, Y and Z are partners in a firm sharing profits and losses in the ratio of 3:2:. They decided to admit A, their landlord as a partner in the firm. The accountant of the firm passed the entry of rent paid for the building to A in Profit and Loss appropriation account. Is he correct in doing so? Give reason in support of your answer. Ans- No, the accountant is not correct as rent is a charge and shd go to P n L account. 5 X Ltd. made pro rata allotment of shares of Rs. 50each issued at par in the ratio of 5:4. Ram failed to pay allotment money and his shares were forfeited. 3/4 th of the forfeited shares were reissued for Rs. 4,020 with maximum permissible discount of Rs.,980 as fully paid. How many shares were allotted to Ram? Ans- amt credited to sh cap = =6000 No. of sh reissued = 6000/50= 20 No. of sh allotted = 20x4/3=60shares 6 Define Reserve Capital. Ans- that part of authorized capital which can be called by the company only in the event of winding up of the company. 7 X,Y and Z were close friends. They decided to form partnership business of manufacturing stuffed toys, For this purpose, they registered their partnership firm and drafted a comprehensive partnership deed. Identify the values involved in the case.

2 Ans. Team work, compliance with law. 8 Ankur a partner in affirm. During the year he had withdrawn Rs. 48,000 evenly through out the year on st of every month. As per the deed interest on drawings is 6%p.a. Accountant of the firm calculated the interest on drawing as Rs. 2,880. But Ankur is of the view that accountant has wrongly calculated the interest on drawing. Who is correct?and what is correct amount of interest on drawing? Ans x6/00x/2x3/2= 560 Ankur is correct. 9 State any three purposes other than issue of bonus shares for which securities premium can be utlilised. Ans- (i) to write off preliminary expenses. (ii)to write off the expenses and commission allowed on issue of securities or debentures of the company. (iii) to provide for the premium payable on redemption of redeemable preference shares or debentures of the company. (iv) to buy back its own shares. Any three x 3 = 3mk 0 Rhea, Leena and Raman were partners sharing profits in the ratio of 5:3:2. On 3st March, 205, it was decided that Leena should be given more profits as per her contribution towards the business. Hence Rhea and Raman decided to surrender /3 rd of their shares respectively towards Leena. On this date, Building ( book value 8,00,000) was found to be undervalued by 0 % ; Profit and Loss A/c ( Balance) appeared in the books at,00,000; Machinery (book value 2,50,000) to be depreciated by 20 %; Stock (book value 70,000) be valued at 80,000; Workmen Compensation Reserve appeared in the books at 90,000.A claim of Rs. 30,000 is payable to a worker. Partners decided neither to show the revised values of assets and liabilities nor to write off accumulated profits, reserves or losses from the books. Pass the single adjusting entry. Ans:- amt adjusted= =20000 () Sac share Rhea= 5/0x/3=5/30 Raman= 2/0x/3=2/30 () Rhea cap acc Raman Cap acc 8000 To Leena cap acc () Aaju and Baaju share profits in the ratio 3:2, have following capital balances respectively ; Rs. 50,000 and 30,000. Also there is a Reserve Fund of Rs. 25,000. They admit Champak as a partner who contributes Rs. 30,000(including capital and goodwill) for /6 th share. Goodwill of the firm is valued at Rs. 54,000. Pass the necessary journal entries on Champak s admission. Show your workings clearly. Ans- Cash a/c 30,000 () To C s cap a/c 2,000 To prem for Gw a/c 9,000 Prem for Gw a/c 9,000 () To A cap a/c 5400 To B s cap a/c 3600 Reserve a/c 25,000 To A cap a/c 5000 To B cap a/c 0000 () 2 M, S and N are partners sharing profits and losses equally. Goodwill already appeared in the books at Rs.45,000. On N retires from the firm and on the same day a new partner K is admitted for /6 th share. New profit sharing ratio between M,S and K will be 3:2:. K will bring Rs.2,00,000 for his share of capital and only Rs. 2,000 out of his share of Rs. 2,000 of goodwill in cash. Pass the necessary journal entries. Ans- M cap a/c

3 N cap a/c 5,000 S cap a/c 5000 To G/W a/c 45,000 Cash a/c To K cap a/c To prem for gw a/c 2000 Prem for gw a/c 2000 K cap a/c 0,000 M cap a/c 2,000 To N cap a/c 24,000 x3 = 3 mk 3 X, Y and Z are partners in a firm. On..4 it was discovered that the profits/ losses for the year 202 and 203 were distributed in the ratio 3:2: and 2:2: respectively instead of 2:2: and 3:2:. During the year 202 the firm earned profit of Rs. 60,000 however during 203 they suffered a loss of Rs. 30,000. Pass necessary adjustment entry to rectify the above error. Ans- X cap a/c 9,000 To Y s cap a/c 6000 To Z s cap a/c 3000 () Year Particulars X Y Z Firm 202 Wrg pft cred 3:2: (30000) (20000) (0000) Pft redistributed2:2: (60000) Net effect (6000) Wrg loss debited2:2: (30000) Lossredistributed3:2: (5000) (0000) (5000) Overall net effect (9000) On st April 205, A Ltd. was formed with an authorized capital of Rs. 20,00,000 divided into 2,00,000 equity shares of RS. 0each. The company invited applications for,80,000 shares. The company received applications for,70,000 shares. During the first year Rs. 8 per share was called. S holding,000 shares did not pay allotment money of Rs. 3 per share and first call of Rs. 2 per share and her shares were forfeited. A holding 500 shares did not pay first call money of Rs. 2 per share. Present the share capital in the Balance Sheet of the Company. Also prepare Notes to Accounts. Ans- - Balance Sheet mk Particulars Notes no. 206 I Equity and liabilities. Shareholders funds (a)share capital 3,54, Notes to Accounts:- Particulars. Share capital Authorised share capital 2,00,000 equity shares of Rs.0 each Issued share capital,80,000 equity shares of Rs.0 each 3mk amt 20,00,000 8,00,000 Subscribed capital Subscribed and not fully paid up,69,000 equity shares of Rs.0 each Rs.8 called up 3,52,000 (-) calls in arrears (,000)

4 3,5,000 (+) sh fft a/c 3,000 3,54,000 3,54,000 5 The firm of ABC Ltd. is engaged in manufacturing of designer bags from rags collected from household. During the year it earned Rs. 65,600 as profit. You are required to prepare the Profit and Loss Appropriation a/c after considering the following points. (i) Interest on loan given by A, a partner to the firm (Loan Rs. 0,000) (ii) X, a manager was entitled to on profits after charging all expenses including commission. (iii)rs. 0,000 to be given to NGO which is involved in construction of movable toilets in the slum areas. (iv) Partners were allowed interest on combined capital was Rs. 6,00,000 divided in the ratio 3:2: (v) Interest on drawings was Rs.,200 to be charged as /6;/2 and /3 respectively. Also identify two values highlighted in the above given question. Ans:- Values = mk P n L app a/c 3mk Part Amt Part amt Ioc A 8000 B2000 C Net profit ( ) Net profit A 5066 B 5067 C Iod A 200 B 600 C (a) Explain location as a factor affecting goodwill valuation. (b) J and K are partners in a firm. Their capitals totaled Rs. 2,50,000. Profits for the year amounted to Rs. 3,25,000 after charging loss by fire of Rs. 50,000. Closing stock for the above year was undervalued by Rs. 25,000. The firm plans to insure the goods at an annual cost of Rs. 35,000. Calculate goodwill on the basis of 2 ½ years purchase of super profits if the fair rate of return in the same industry was 0.5% Ans-(a) a bs located at a favourable place ie near source of raw material or market will have a higher goodwill as raw material will be delivered quickly and also there will be ease in transportation of finished goods to market. (b) Normal pft= x0.5/00=3250 Actual profits= = Super pft= Goodwill = x 2.5= Teena, Meena and Heena are partners in affirm. They decide to dissolve partnership. Pass the necessary journal entries in the books of the firm on its dissolution assuming all assets and outside liabilities have been transferred to the realization account:- (i) Meena will supervise dissolution work and is allowed a commission of Rs. 0,000. Realisation expenses of Rs. 8,000 were paid by her personally. (ii) There were creditors of Rs. 50,000 at the time of dissolution. 60% of the creditors accepted a computer of Rs. 25,000 at an agreed valuation of 0% less than the book value and cash of Rs. 2,000 in full settlement of their claims. Remaining creditors were paid out at a discount of 5%. (iii)workmen compensation fund stood at Rs. 20,000 and liability in respect of it was ascertained at Rs. 24,000 (iv) Out of debtors worth Rs. 85,000, debtors worth Rs. 0,000 proved to be bad. Only 70% were recovered from debtors worth Rs. 25,000. Rest paid full amount

5 Ans- (i) Realisation a/c 8,000 To M cap a/c 8,000 (ii) realisation a/c 2,000 To cash a/c 2,000 (iii) WCR dr. 20,000 To real a/c 20,000 Real a/c dr.24,000 To cash a/c 24,000 (iv) Cash a/c To realisation a/c Record the journal entries for forfeiture and reissue of shares in the following cases: (i) A Ltd. forfeited 200 shares of Rs. 0 each, Rs. 7 called up on which the shareholder had paid only Rs. 5. Out of these, 50 shares were reissued to M as (ii) Rs. 7 per share paid up for Rs. 8 per share. B Ltd. forfeited 900 shares of Rs. 0 each, issued at a premium of Rs. 2 per share, Rs. 8 called up for non payment of allotment money of Rs. 5 per share (including premium). Out of these, 800 shares were reissued as Rs. 8 called up for Rs. 6 per share. Ans- (i) Share cap a/c 400 mk To share fft a/c 000 To CIA a/c 400 Bank a/c 200 mk To share capital a/c 050 To SPR a/c 50 Sh fft a/c 750 To Cap reserve a/c 750 mk (ii) Share cap a/c 7200 mk SPR a/c,800 To share fft a/c 4500 To CIA a/c 4500 Bank a/c 4800 mk Sh fft a/c 600 To share capital a/c 6400 Sh fft a/c 2400 To Cap reserve a/c 2400 mk 9 Rahul, Anupam and Abhishek were partners in a firm sharing P&L in the ratio 5:3:2. Their Balance Sheet as at 3 st Dec.204 was as under Liabilities Rs. Assets Rs. Rahul s Capital,90,000 Plant & Machinery,5,000 Anupam s Capital,00,000 Stock,60,000 Abhishek s Capital,30,000 Sundry Debtors 2,50,000 General Reserve 60,000 Cash at bank 80,000 Trade payables 40,000 Cash in Hand 75,000 Profit and loss appropriation a/c 2,00,000 Advertisement suspense 0,000 a/c Loan to Anupam 30,000 7,20,000 7,20,000 Anupam died on 3 st March 205. And his share is taken by remaining partners equally. Anupam had withdrawan Rs. 50,000 from his capital on st March 205. According to partnership deed, executors of the deceased partners are entitled to: (i) Balance of Partner s capital account. (ii) Interest on 6% p.a. 6 6

6 (iii) Share of goodwill calculated on the basis of twice the average of past four years profits. (iv) Share of profits from the date of last balance sheet till the date of death on the basis of twice the average of three completed years profits before death. (v) Rs.,65,250 is paid immediately to Anupam s executor and balance was transferred to his loan account which was to be settled by paying him in two annual installment carrying p.a. Profits for 20, 202 and 203 were Rs.,20,000, Rs.,60,000 and Rs.,80,000 respectively. Prepare Anupam s capital account, his executors account and executors loan account till 3 st December 206. Ans- A s capital a/c 3.5mk Particulars Amt Particulars Amt Adv suspense a/c 3,000 Bal b/d,00,000 Drawings 50,000 IOC( ) 250 Loan to A 30,000 Gen reserve 8,000 A s exec a/c P &L app a/c 60,000 R s cap a/c 49,500 Abhi s cap a/c 49,500 R s cap a/c Abhi s cap a/c A s executor s a/c 0.5mk Particulars Amt Particulars Amt Cash a/c,65,250 A s cap a/c A s executor s 3,00,000 loan a/c A s executor s loan a/c 2mk date Particulars Amt date Particulars Amt Bal c/d A s exec a/c 3,00, Int on A s exe loan a/c Bank a/c Bal b/d Bal c/d Int on A s exe loan a/c Int on A s exe 250 loan a/c Parth and Shivika were partners in a firm sharing profits in the ratio of 3:2. The Balance Sheet of the firm on 3 st March 205 was as follows: 6 Liabilities Amt Assets Amt Creditors 80,000 Bank,72,000 Shivika s sister s loan 20,000 Stock 50,000 Capital : Parth,75,000 Debtors 27,000 Shivika,94,000 Furniture 2,20,000 4,69,000 4,69,000 On the above date, the firm was dissolved. The assets were realized and the liabilities were paid off as follows:

7 (a) 50% of the furniture was taken over by Parth at 20% less than the book value. The remaining furniture was sold for Rs. 5,000 less than the book value. (b) There was a bad debt of Rs.,000 and remaining debtors were sold to a debt collection agency at 95%. (c) Stock was taken over by discount. (d) Shivika s sister s loan was paid off along with interest of Rs. 2,000. (e) Expenses on realization amounted to Rs. 5,000 which was paid by Parth. Prepare Realisation a/c, Partners Capital a/c, and bank a/c. Ans- Realisation a/c 3mk Particulars Amt Particulars Amt Stock 50,000 Creditors 80,000 Debtors 27,000 Shivika s sister s loan 20,000 Furniture 2,20,000 P cap a/c Bank crs Bank furniture Loan Debtors P cap a/c 5000 S cap a/c Loss P S Partners capital a/c 2mk Part P S Part P S Real a/c Bal b/d Real (loss) Real a/c 5000 Bank a/c Bank a/c mk Bal b/d Real a/c Real a/c Real a/c P cap a/c 6220 S cap a/c A,B,C and D were partners sharing profit and losses in the ratio 2:::. B retires and his share is taken by A and C equally. Their capital after all adjustments stood at Rs.,75,000 ; Rs. 2,90,000; Rs. 2,52,000 and Rs.,80,000. Bank overdraft stood at Rs. 75,000 and cash in hand was Rs. 28,000, out of which firm paid Rs. 0,000 to a worker who died due to a heart attack. It was agreed that continuing partners will bring cash sufficient to pay off amount due to B, to pay off bank overdraft and to maintain cash balance of Rs. 5,000 in business. This cash will be brought by continuing partners in such a way as to make their capitals proportionate to their new ratio. Find out cash to be brought by each of continuing partners and pass necessary journal entries for the above transactions. Ans- new capital of the firm = = New PSR = 5:3:2. A cap = x5/0= ; bring C cap= x 3/0=290700; bring D cap = x2/0= 93800; bring 3800 Cash a/c To A cap a/c To C cap a/c To D cap a/c 3800 B cap a/c Bank overdraft a/c Compensation to worker a/c 0,000 To cash a/c

8 22 The Balance Sheet of P and T who share profits and losses in the ratio of 3: as on 3 st March 203 was as follows: Liabilities Rs. Assets Rs. Creditors,000 Cash 2,500 Workmen Compensation Reserve 4,000 Debtors 6,000 (-) Provision for doubtful debts (500) 5,500,000 Stock 2,000 Investment Fluctuation Fund General reserve 2,000 Investments 6,000 P cap a/c 6,000 Goodwill 2,000 T cap a/c 4,000 8,000 8,000 On K was admitted for /5 th share on the following terms: (i) The market value of investments is to be taken as Rs. 4,200 (ii) Unaccounted Accrued Income of Rs. 200 be accounted for (iii)a claim on account of Workmen Compensation for Rs.,000 be provided for. (iv) Provision for bad and doubtful debts to be found in excess by Rs (v) K shall bring Rs. 2,000 as his share for goodwill and Rs. 5,000 for capital. (vi) The total capital of all partners of the new firm is agreed upon at Rs.9,600 and the same were to be in profit sharing ratio, adjustments to be made through partners current accounts. Prepare Revaluation account, Partners Capital account and Balance Sheet of the new firm. OR Given below is the Balance Sheet of Amar, Akbar and Zeenat who share profits in the ratio of 2:2: as on 3 st March 204: Liabilities Amt Assets Amt Workmen Compensation Fund 20,000 Cash 2,800 Amar s capital a/c 47,000 Debtors 9,600 Less: Provision For doubtful debts (200) 9,400 Akbar s capital 35,000 Land & Building 50,000 Zeenat s capital 8,000 Stock 25,000 Creditors 9,500 Plant & machinery 23,000 Outstanding expenses 700 Advertisement suspense 6,000 a/c Bank loan 5,000,45,200,45,200 Akbar retires on above date. His share is entirely take by Zeenat. It was agreed that: (i) Provision for doubtful debts to be increased to 5% on debtors. (ii) There is a claim against workmen compensation fund for Rs. 6,000. (iii) A provision for Rs. 2,000 is made for outstanding bill for repairs. (iv) Creditors worth Rs. 280 to be written back. (v) Goodwill of the firm was valued at Rs. 45,000. (vi) Entire capital of the firm be fixed at Rs. 84,000 and capitals of Amar and Zeenat should be adjusted in their new profit sharing ratio, actual cash to be brought in or paid off. (vii) Rs. 45,000 from Akbar s capital a/c be transferred to his loan a/c and balance be paid in cash. Prepare revaluation a/c, Partners capital a/c and balance sheet of the new firm Ans- Revaluation a/c 2mk Particulars Amt Particulars Amt 8

9 To investments 800 By accrued income 200 By prov for doubtful debts 200 By loss P 300 T Partners capital a/c Part P T K Part P T K Goodwill a/c By bal c/d Rev a/c By GR a/c T current a/c 230 By WCR K current a/c 080 By cash a/c 5000 Bal c/d By prem for gw By P current a/c , Balance Sheet Liabilities Rs. Assets Rs. Creditors,000 Cash 9,500 Workmen Compensation,000 Debtors 6,000 Reserve (-) Provision for doubtful debts (300) 5,700 P cap a/c 760 Stock 2,000 T cap a/c 3920 Investments 4200 K cap a/c 3920 Accrued income 200 T current a/c 230 P current a/c 230 K current a/c OR New ratio = 2:3 Revaluation a/c 2 Particulars Amt Particulars Amt To Provision for bad 780 By creditors a/c 280 debts To prov for O/S bill 2000 By loss transferred to capital a/c 2500 Amar,000 Akbar,000 Zeenat Capital a/c 3 Particulars Amar Akbar Zeenat Particulars Amar Akbar Zeenat To revaluation By bal b/d 47,000 35,000 8,000 a/c To adv susp a/c 2,400 2,400,200 By WCF a/c 5,600 5,600 2,800 To akbar cap a/c 8,000 By zeenat s cap a/c 8,000 To cash a/c 5,600 0,200 By cash a/c To akbar s loan a/c 45,000 To bal c/d 33,600 50,400

10 B/S Liabilities Amt Assets Amt Claim on Workmen Compensation Fund 6,000 Cash Amar s capital a/c 33,600 Debtors 9,600 Less: Provision For doubtful debts (980) 8,620 Zeenat s capital 50,400 Land & Building 50,000 Akbar s loan a/c 45,000 Stock 25,000 Creditors 9,220 Plant & machinery 23,000 Outstanding expenses 700 Bank loan 5,000 Prov for O/S bill 2,000,6,920,6, RK Ltd invited applications for issuing 70,000 equity shares of Rs. 0each at a premium of Rs. 35 per share. The amount was payable as follows:- On application Rs. 5 (including Rs. 2 premium) On allotment Rs. 0(including Rs.8 premium) On first and final call Balance Applications for 75,000 shares were received and allotment was made to all applicants proportionately. Ram, who was allotted,400 shares, failed to pay the allotment money. His shares were forfeited immediately after allotment. Afterwards, the first and final call was made. Sohan, who had 3,000 shares, failed to pay the first and final call. His shares were also forfeited. All the forfeited shares, were reissued at Rs. 50 per share fully paid up. Pass necessary Journal entries. OR X Ltd issued shares during the year You are required to fill the missing figures in the following journal entries. You are informed that one applicant did not pay anything after paying application money and all of his shares were forfeited and reissued. X Ltd. JOURNAL Date Particulars L.F. Amt Cr. Amt Bank a/c Dr To Share application a/c (Being share application money received on 25,000 Rs. 3per share) Share application a/c To share Capital a/c To share allotment a/c To bank a/c (being allotment of 0,000 shares to the applicants of 5,000 shares on prorate basis and balance shares rejected and application money refunded) Share allotment a/c Dr To share capital a/c To securities premium reserve a/c (being due on Rs. 4 per share including Re. per share premium) Calls in arrears a/c To _ 8

11 (being all amount received on allotment except on 400 shares) To (being first call Rs. 2 per share) To _ (being amount received on first call) To (being second and final call Rs. 2 per share) To _ (being amount received on second and final call) To To (being forfeited the shares on which allotment and calls not received) To (being reissued all the forfeited shares at Rs.8 per share fully paid up) To _ (being gain on reissue of forfeited shares transferred to capital reserve account) Ans-. Bank a/c DR To eq sh app a/c Eq sh app a/c To eq sh cap a/c To sec prem reserve a/c To sh allot a/c Sh allot a/c dr To eq sh cap a/c To sec prem reserve a/c Bank a/c dr Calls in arrears a/c dr.2500 To sh allot a/c Sh cap a/c dr Sec prem reserve a/c dr. 200 To sh fft a/c 5700 To calls in arrears Sh first and final call a/c dr To sh cap a/c To sec prem reserve a/c

12 7. Bank a/c dr Calls in arrears a/c dr To sh first and final call a/c Sh cap a/c dr Sec prem reserve a/c dr To calls in arrears To sh fft a/c Bank a/c dr To sh cap a/c To sec prem serve a/c Sh fft a/c dr To cap reserve a/c OR Date Particulars L.F. Amt Cr. Amt Bank a/c Dr To Share application a/c (Being share application money received on ,000 Rs. 3per share) Share application a/c To share Capital a/c To share allotment a/c To bank a/c (being allotment of 0,000 shares to the applicants of 5,000 shares on prorate basis and balance shares rejected and application money refunded) Share allotment a/c Dr To share capital a/c To securities premium reserve a/c (being due on Rs. 4 per share including Re. per share premium) Bank Calls in arrears a/c To Sh allot a/c (being amount received on allotment on _9600_shares) , _sh first call a/c To sh cap a/c (being first call Rs. 2 per share) _Bank a/c Calls in arrears a/c_ To _sh first call a/c_ (being amount received on first call) 20,000 9,200 _800 20, Sh second and final call To sh cap a/c (being second and final call Rs. 2 per share) Bank a/c_ Calls in arrears a/c 20,000 9,200 _800 20,000

13 To Sh second and final call (being amount received on second and final call) _Sh cap a/c Sec prem reserve a/c To _Sh fft a/c To _calls in arrears a/c (being forfeited the shares on which allotment and calls not received) _bank a/c Sh fft a/c To _Sh cap a/c (being reissued all the forfeited shares at Rs.8 per share fully paid up) 4000_ , Sh fft a/c 000 To capital reserve account 000 (being gain on reissue of forfeited shares transferred to capital reserve account) SET B 6 Distinguish between Reserve Capital and Capital Reserve. Ans- reserve capital is that part of authorized capital which can be called only in the event of winding up of company. Capital reserve is the reserve created out of capital profits which is not available for distribution of dividend. 8 Ankur a partner in a firm. During the year he had withdrawn Rs. 48,000 evenly through out the year on last date of every month. As per the deed interest on drawings is 6%p.a. Accountant of the firm calculated the interest on drawing as Rs. 2,880. But Ankur is of the view that accountant has wrongly calculated the interest on drawing. Who is correct?and what is correct amount of interest on drawing? Ans x 6/00x/2x /2= 320 Ankur is correct. 9 State any three purposes other than buy back of own shares for which securities premium can be utlilised. Ans- (i) to write off preliminary expenses. (ii)to write off the expenses and commission allowed on issue of securities or debentures of the company. (iii) to provide for the premium payable on redemption of redeemable preference shares or debentures of the company. (iv) issue of fully paid bonus shares. 3 X, Y and Z are partners in a firm. On..4 it was discovered that the profits/ losses for the year 202 and 203 were distributed in the ratio 3:2: and 2:2: respectively instead of 2:2: and 3:2:. During the year 202 the firm earned loss of Rs. 30,000 however during 203 they suffered a profit of Rs. 60,000. Pass necessary adjustment entry to rectify the above error. Ans- X cap a/c 9,000 To Y s cap a/c 6000 To Z s cap a/c 3000 () Year Particulars X Y Z Firm 202 Wrg loss debited (30000) 3:2: loss redistributed2:2: (2000) (2000) (6000) Net effect 3000 (2000) (000) 3 4

14 203 Wrg pft credited2:2: (24000) (24000) (2000) Pft redistributed3:2: (60000) Net effect 6000 (4000) (2000) Overall net effect 9000 (6000) (3000)