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M.10 An Aid to Accountancy—CBSE XII
Answers

PART A
1. No, it is incorrect statement. Income and Expenditure Account is prepared on Accrual
Basis of Accounting.
Or
Legacy donations are the donations received by a Not-for-Profit Organisation under
a will on the death of a donor. It may be General Donation or Specific Donation.
`
2. Net Profit (as given) 1,50,000
Less: Interest on Young’s Loan (10% of ` 50,000) 5,000
1,45,000
Less: Partners’ salaries 25,000
Net Profit (Divisible) 1,20,000

Old’s Total Appropriation of Profit = 1/2 of ` 1,20,000 (Share of Profit) + ` 15,000 (Salary)
= ` 75,000.
3. Since C acquires 1/5th of his share from A, it means he acquires 4/5th (i.e., 1 – 1/5th)
of his share from B.
If 4/5 share of C = 4/25
Then, C’s share = 4/25 × 5/4 = 1/5
Calculation of New Shares:
Share acquired by C from A = 1/5 × 1/5 = 1/25; From B = 4/25
A’s New Share = 3/5 – 1/25 = 14/25; B’s New Share = 2/5 – 4/25 = 6/25; C’s Share = 1/5
or 5/25.
14 6 5
Hence, New Profit-sharing Ratio of A, B and C = : : = 14 : 6 : 5.
25 25 25
Or
JOURNAL
Date Particulars L.F. Dr. (`) Cr. (`)
Workmen Compensation Reserve A/c ...Dr. 80,000
To Workmen Compensation Claim A/c 50,000
To X’s Capital A/c 15,000
To Y’s Capital A/c 15,000
(Being the workmen compensation claim accounted and surplus
Workmen Compensation Reserve transferred to Old Partners’
Capital Accounts in their Old profit-sharing ratio)
4. Debentures Redemption Reserve Required ` 20,00,000
Less: Existing Balance of DRR ` 1,00,000
Amount to be transferred to Debentures Redemption Reserve ` 19,00,000
Or
General Reserve Account.