Page 122 - MA12

M.28 Management Accounting (Section B)—ISC XII

Answers

1. (i) (a) Calculate Average Capital Employed of the business as under:
Opeing Capital Employed + Closing Capital Employed
Average Capital Employed = .
2
(b) Normal Profit = Average Capital Employed × Normal Rate of Return/100.
(c) Super Profit = Average Future Maintainable Profit – Normal Profit.
(d) Goodwill = Super Profit × No. of Years’ Purchase.
(ii) Debentures Redemption Reserve (DRR) is a reserve set aside out of profits available for
payment as dividend for the purpose of redemption of debentures.
The amount to be transferred to DRR is specified in Rule 18(7)(b) of the Companies
(Share Capital and Debentures) Rules, 2014. The rule prescribed that a company shall
transfer at least 25 per cent of the nominal (face) value of the outstanding debentures to DRR.
(iii) Dr. Raja’s Capital A/c: ` 22,500 and Samrat’s Capital A/c: ` 52,500;
Cr. Badshah’s Capital A/c: ` 75,000.
(iv) Dr. Investment Fluctuation Reserve A/c—` 40,000;
Cr. Sunil’s Capital A/c—` 15,000; Dalip’s Capital A/c—` 15,000 and Investments A/c—` 10,000.
(v)
Basis Undersubscription Oversubscription

1. Shares Applied Number of shares applied for is less than the Number of shares applied for is more than the
number of shares offered for subscription. number of shares offered for subscription.
2. Acceptance All the applications for shares are accepted, i.e., All applications are not accepted. Some
full allotment is made. are rejected. Alternatively, shares are
allotted on pro rata basis.
3. Refund As all applications are accepted, there is no Excess application money is refunded or
excess money to be refunded. adjusted towards allotment.
(vi) Non-current Assets comprises of following items:
(a) Fixed Assets;
(b) Non-current Investments;
(c) Deferred Tax Assets (Net);
(d) Long-term Loans and Advances;
(e) Other Non-current Assets.
2. (a) PROFIT AND LOSS APPROPRIATION ACCOUNT
Dr. for the year ended 31st March, 2020 Cr.
Particulars ` Particulars `
To General Reserve A/c (10% of ` 1,80,000) 18,000 By Profit and Loss A/c (Net Profit) 1,80,000
To Interest on Capital A/c: By Interest on Drawings A/c:
Mohit 15,000 Mohit (` 36,000 × 6.5/12 × 6/100) 1,170
Ali 12,500 27,500 Ali (` 36,000 × 6/12 × 6/100) 1,080
To John’s Salary A/c 60,000 John (` 36,000 × 5.5/12 × 6/100) 990 3,240
To Mohit’s Remuneration A/c (10% of ` 1,80,000) 18,000
To Ali’s Commission A/c 5,136
[10/110(` 1,80,000 – ` 18,000 – ` 27,500 –
` 60,000 – ` 18,000)]
To Profit transferred to:
Mohit’s Capital A/c 18,201
Ali’s Capital A/c 18,201
John’s Capital A/c 18,202 54,604
1,83,240 1,83,240