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M.52 Management Accounting (Section B)—ISC XII

BALANCE SHEET OF THE RECONSTITUTED FIRM as at 1st April, 2020
Liabilities ` Assets `
Creditors 28,000 Cash at Bank (WN 4) 82,375
Workmen Compensation Claim 2,000 Debtors 65,000
Capital Accounts: Less: Provision for Doubtful Debts 5,000 60,000
Madan 99,780 Stock 30,000
Mohan 66,520 Investments 45,000
Gopal 41,575 2,07,875 Patents 15,000
Accrued Income 500
Unexpired Insurance 5,000
2,37,875 2,37,875
Working Notes:
1. Amount recovered in the form of bad debts written off last year is a gain for the firm. Therefore, Revaluation Account is
credited with the amount.
2. In the given case, there is a claim of ` 2,000 on account of Workmen Compensation. Therefore, Workmen Compensation
Reserve of ` 2,000 is used for providing the liability and balance amount of ` 10,000 (i.e., 12,000 – 2,000) is distributed
among Madan and Mohan in their old profit-sharing ratio.
3. Calculation of Gopal’s Share of Capital: `
Adjusted Capital of Madan 99,780
Adjusted Capital of Mohan 66,520
Combined capital of Madan and Mohan for 4/5 share 1,66,300
Total Capital of the firm should be = ` 1,66,300 × 5/4 = ` 2,07,875
Gopal’s Share of Capital = ` 2,07,875 × 1/5 = ` 41,575.
4. Dr. BANK ACCOUNT Cr.
Particulars ` Particulars `
To Balance b/d 10,000 By Balance c/d 82,375
To Bad Debts Recovered A/c 5,800
To Gopal’s Capital A/c (WN 3) 41,575
To Premium for Goodwill A/c 25,000
82,375 82,375

4. JOURNAL OF BAYSON LTD.
Date Particulars L.F. Dr. (`) Cr. (`)
Bank A/c ...Dr. 40,00,000
To Equity Shares Application A/c 40,00,000
(Being the application money received for 80,000 shares @ ` 50 per share)
Equity Shares Application A/c ...Dr. 40,00,000
To Equity Share Capital A/c (54,000 × ` 50) 27,00,000
To Equity Shares Allotment A/c (40,000 × ` 10) 4,00,000
To Calls-in-Advance A/c ` (40,00,000 – 27,00,000 – 4,00,000) 9,00,000
(Being the application money adjusted)
Equity Shares Allotment A/c ...Dr. 5,40,000
To Equity Share Capital A/c 5,40,000
(Being the allotment money due on 54,000 shares @ ` 10 per share)