Page 117 - MA12

Model Test Papers M.23

Karam died on 12th June, 2020 and according to the Partnership Deed his executors
were entitled to be paid as under.
(i) His share in the profit of the firm till the date of his death which will be calculated
on the basis of average profit of last three completed years.
(ii) His share in the goodwill of the firm which will be calculated on the basis of two
years’ purchase of total profits of last three years.
(iii) Profits for the last three years ended 31st March, were: ` 30,000, ` 70,000 and ` 80,000.
(iv) It is decided by Priya and Anna that General Reserve and accumulated losses
not to be distributed. For this, it was decided that the remaining partners would
compensate the deceased partner through their Capital Accounts.
Prepare Karam’s Capital Account to be rendered to his executors.
(b) Lokesh, Mansoor and Nihal were partners in a firm sharing profits in the ratio of
5 : 3 : 2. On 31st March, 2020 their Balance Sheet was as follows:

Liabilities ` Assets `
Creditors 34,000 Cash at Bank 68,000
Employees’ Provident Fund 10,000 Stock 38,000
Investment Fluctuation Reserve 20,000 Debtors 94,000
Capital A/cs: Less: Provision for Doubtful Debts 6,000 88,000
Lokesh 1,40,000 Investments 80,000
Mansoor 80,000 Goodwill 40,000
Nihal 50,000 2,70,000 Profit and Loss 20,000
3,34,000 3,34,000
On 1st April, 2020, Mansoor retired and Lokesh and Nihal agreed to continue business
on the following terms:
(i) Goodwill of the firm was valued at ` 1,02,000.
(ii) There was a claim for Workmen’s Compensation to the extent of ` 12,000 and
investments were brought down to ` 30,000.
(iii) Provision for Doubtful Debts was to be reduced by ` 2,000.
(iv) Mansoor was to be paid ` 20,600 by cheque and the balance will be transferred
to his loan account which was paid in two equal annual instalments along with
interest @ 10% p.a.
(v) Capitals of Lokesh and Nihal were to be adjusted in their new profit-sharing ratio
by bringing in or paying off by cheque as the case may be.
Prepare Revaluation Account, Partners’ Capital Accounts and Balance Sheet of
the new firm. [4 + 8 = 12]
4. Ratnakar Ltd. issued 50,000 equity shares of ` 100 each payable ` 20 on application;
` 40 on allotment and ` 20 each on first and final call. Applications were received for
75,000 shares. Applicants of 25,000 shares were sent letters of regret and application
money was refunded.
Mohan, a holder of 1,500 shares failed to pay allotment money which he paid
along with the first call.
Raman, a shareholder holding 500 shares paid both the calls along with allotment.
Kamal, a shareholder holding 1,000 shares did not pay first call and second and
final call. His shares were forfeited. 800 of these forfeited shares were reissued at
` 120 per share as fully paid-up.
Pass necessary Journal entries for the above transactions in the books of the company. Also
show relevant items as they would appear in the Balance Sheet of the company. [12]