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M.204 An Aid to Accountancy—CBSE XII

(ii) A will get salary @ ` 1,000 per month.
(iii) B’s share of profits (including interest on capital) has been guaranteed to be not
less than ` 2,00,000.
(iv) D’s share of profits (excluding interest on capital) has been guaranteed by A to
be not less than ` 95,000.
Net Profit for the year ended 31st March, 2018 was ` 6,70,000. Prepare Profit and Loss
Appropriation Account for the year ended 31st March, 2018 and also pass necessary
Journal entries regarding deficiencies borne by the partners. (4)
13. How will be the following items dealt while preparing the Income and Expenditure
Account of Chennai Sports Club for the year ending 31st March, 2018 and its Balance
Sheet as on that date?
Particulars 1st April, 31st March,
2017 (`) 2018 (`)

Outstanding Subscription 11,875 8,750
Advance Subscription 3,500 6,500
Outstanding Salaries 18,750 11,250
Prepaid Salaries 6,250 3,750
Amount due to Suppliers of Sports Material 18,750 11,250
Advances to Suppliers of Sports Material 6,250 3,750
Stock of Sports Material 18,750 8,750
During the year ended 31st March, 2018, the payment made to the suppliers of Sports
Material was ` 67,500 and Cash Purchases were 10% of Credit Purchases. Subscription
received during the year ` 1,86,125; Salaries paid ` 67,500. (6)
14. Anil, Bhanu and Chandu were partners in a firm sharing profits in the ratio of 5 : 3 : 2.
On 31st March, 2017, their Balance Sheet was as under:
Liabilities ` Assets `
Creditors 91,000 Building 2,00,000
Bank Overdraft 1,00,000 Machinery 30,000
Reserves Fund 6,000 Stock 10,000
Capital A/cs: Patents 11,000
Anil 30,000 Debtors 8,000
Bhanu 25,000 Cash 8,000
Chandu 15,000 70,000
2,67,000 2,67,000

Due to an accident, Anil died on 1st October, 2017. Anil’s family became financially
weak. Bhanu and Chandu decided to admit Anil’s daughter in the business. It was
agreed between Anil’s executor and the remaining partners that:
(i) Goodwill to be valued at 2½ years’ purchase of the average profit of the previous
four years which were: Year 2013–14: ` 13,000; Year 2014–15: ` 12,000;
Year 2015–16: ` 20,000; Year 2016–17: ` 15,000.
(ii) Patents be valued at ` 8,000; Machinery at ` 28,000; and Building at ` 2,50,000.