Page 96 - MA12

M.2 Management Accounting (Section B)—ISC XII

Part II (48 Marks)
(Answer any four questions)
2. Arun and Barun are partners in a firm sharing profits in the ratio of 2 : 3. They
admitted Chandan, as a partner for 1/2 share in the profits. Chandan brings ` 5,00,000
for his capital and the capitals of Arun and Barun will be adjusted in the profit-
sharing ratio. For this, Current Accounts will be opened. Balance Sheet of the firm as
at 31st March, 2020 before Chandan’s admission was as follows:

BALANCE SHEET OF ARUN AND BARUN as at 31st March, 2020
Liabilities ` Assets `
Creditors 1,20,000 Cash in Hand 40,000
Bills Payable 1,60,000 Sundry Debtors 2,05,000
General Reserve 1,00,000 Less: Provision for Doubtful Debts 5,000 2,00,000
Workmen Compensation Reserve 40,000 Furniture 2,00,000
Capital A/cs: Arun 3,75,000 Machinery 3,10,000
Barun 1,25,000 5,00,000 Building 1,10,000
Profit and Loss A/c 40,000
Goodwill 20,000
9,20,000 9,20,000

Other terms of the agreement were as follows:
(i) Chandan will bring ` 1,75,000 for his share of goodwill.
(ii) Building will be revalued at ` 3,90,000 and machinery be reduced by ` 70,000.
(iii) A liability towards damages payable to a customer of ` 14,000 is to be accounted.
(iv) All Debtors are good.
(v) There is a claim against the firm for damages, liability to the extent of ` 5,000 is to
be created.
(vi) ` 10,000 included in creditors was no longer payable.
Prepare Revaluation Account, Partners’ Capital Accounts, Partners’ Current Accounts
and Balance Sheet of the new firm. [12]

3. (a) Smart Co. Ltd. had issued 5,000, 9% Debentures of ` 100 each at par redeemable at
105% after 4 years. The company purchased 600 of these debentures for cancellation,
500 Debentures @ ` 95 per debenture and @ ` 98 per debenture for the remaining
100 Debentures. The expenses on purchase of Debentures were ` 400. Pass Journal
entries for cancellation of debentures in the books of the company.
(b) Pass the Journal entries for forfeiture and reissue of shares in the following cases:
(i) Power Project Ltd. forfeited 600 shares of ` 10 each, ` 7 called-up, on which the
shareholder had paid application and allotment money of ` 5 per share. Out of
these, 450 shares were reissued to Dutta as ` 7 paid-up for ` 8 per share.
(ii) Vijaya Ltd. forfeited 300 shares of ` 10 each, ` 8 called-up, issued at a premium
of ` 2 per share held by ‘Raj’ for non-payment of allotment money of ` 5 per share
(including premium). Out of these, 210 shares were reissued to Mohan as ` 8 called-up
for ` 10 per share. [4 + 8 = 12]