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Model Test Papers M.153

Or

Grand Auto Ltd. invited applications for 5,00,000 Equity Shares of ` 10 each at a
premium of ` 2 per share. The amount was payable as follows:

On Application — ` 5 (including premium),
On Allotment — ` 4,
On First and Final Call — ` 3.

Applications for 7,50,000 shares were received. Applications for 1,50,000 shares
were rejected and pro rata allotment was made to the remaining applicants. Excess
application money was utilised towards sum due on allotment. Giri who had applied
for 12,000 shares failed to pay the allotment and call money. His shares were forfeited.
Out of the forfeited shares, 5,000 shares were reissued for ` 8 per share fully paid-up.
Pass necessary Journal entries in the books of Grand Auto Ltd. (8)

17. X and Y were traders in partnership, sharing profits and losses in the proportion
of X—3/5 and Y—2/5. On 1st April, 2018, they admit Z into the partnership on the
following terms:
Z would have 1/6th share, which is purchased 1/8th from X and 1/24th from Y by paying
` 1,00,000 equivalent to that share of goodwill, which was retained in the business
by the existing partners. Z also brought ` 2,00,000 as his capital into the firm. It was
further agreed that machinery would be reduced to 90% of its book value, investments
would be valued at their market value, i.e., ` 80,000 and land and building would be
valued at 150% of the book value.

Balance Sheet of X and Y as at 31st March, 2018 was as follows:
Liabilities ` Assets `
Creditors 5,10,000 Goodwill 1,00,000
Capital A/cs: Machinery 1,00,000
X 2,00,000 Land and Building 4,00,000
Y 2,00,000 4,00,000 Investment (at cost) 1,10,000
Stock 1,00,000
Debtors 60,000
Cast at Bank 40,000
9,10,000 9,10,000
Interest on drawings is to be ignored but interest on capital (on opening balance of
the year) is to be allowed at 10%. Profit for the year ended 31st March, 2019 was
` 4,18,000 before charging interest on capitals. Drawings made by the partners were
as follows:
X—` 1,00,000; Y—` 80,000; and Z—` 50,000.
You are required to journalise the opening adjustments and prepare Profit and
Loss Appropriation Account and Partners’ Capital Accounts for the year ended
31st March, 2019.