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M.186 An Aid to Accountancy—CBSE XII

Normal Rate of Return
6. Normal Profit = Capital Employed ×
100
15
= ` 10,00,000 × = ` 1,50,000
100
Super Profit = Average Profit – Normal Profit
= ` 3,00,000 – ` 1,50,000 = ` 1,50,000
100
Goodwill = Super Profit ×
Normal Rate of Return
100
= ` 1,50,000 × = ` 10,00,000.
15
7. (i) Amount agreed to be paid to Y = ` 95,000 + ` 7,200 = ` 1,02,200.
(ii) Calculation of New Profit-sharing Ratio of X and Z:
New Share = Old Share + Share Gained
X’s New Share = 4/9 + [(` 3,900/` 7,200) × 3/9] = 4/9 + 13/72 = 45/72
Z’s New Share = 2/9 + [(` 3,300/` 7,200) × 3/9] = 2/9 + 11/72 = 27/72
Thus, New Profit-sharing Ratio of X and Z = 45/72 : 27/72 or 5 : 3.
8. JOURNAL OF STRONG LTD.

Date Particulars L.F. Dr. (`) Cr. (`)
(i) Bank A/c ...Dr. 30,00,000
To Debentures Application and Allotment A/c 30,00,000
(Being the receipt of debentures application money for 2,500;
10% Debentures @ ` 1,200 each)
Debentures Application and Allotment A/c ...Dr. 30,00,000
To 10% Debentures A/c 25,00,000
To Securities Premium Reserve A/c 5,00,000
(Being the issue of 2,500; 10% Debentures of ` 1,000 each at 20% premium)
(ii) Debentures Suspense A/c ...Dr. 25,00,000
To 10% Debentures A/c 25,00,000
(Being the issue of 2,500; 10% Debentures of ` 1,000 each as collateral
security for a loan from bank)
(iii) Vendor’s A/c ...Dr. 25,00,000
To 10% Debentures A/c 25,00,000
(Being the issue of 2,500; 10% Debentures of ` 1,000 each to
supplier of machinery)
Note: Entry for purchase of machinery is not passed assuming it has already been passed.
9. In the Books of Shivalika International Ltd.
JOURNAL
Date Particulars L.F. Dr. (`) Cr. (`)
On Creation of DRR:
Surplus, i.e., Balance in Statement of Profit and Loss A/c ...Dr. 25,000
To Debentures Redemption Reserve A/c 25,000
(Being the transfer of Profit to DRR equal to 25% of the value of
Outstanding Debentures)