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Model Test Papers M.207

On 31st March, 2018, X retired from the firm and the remaining partners decided to
carry on the business. It was agreed to revalue the assets and reassess the liabilities
on that date, as follows:
(i) Land and Building to be brought up to 130% of its book value.
(ii) Machinery be depreciated by 30%.
(iii) There were Bad Debts of ` 35,000.
(iv) Claim on account of Workmen Compensation was estimated at ` 15,000.
(v) Goodwill of the firm was valued at ` 2,80,000 and X’s share of Goodwill was
adjusted against the Capital Accounts of the continuing partners Y and Z who
have decided to share future profits in the ratio of 3 : 4 respectively.
(vi) Capital of the new firm in total will be the same as before the retirement of
X and will be in the new profit-sharing ratio of the continuing partners.
(vii) Amount due to X be settled by paying ` 1,00,000 immediately and balance by
transferring to his Loan Account which will be paid later.
Prepare Revaluation Account, Capital Accounts of Partners and Balance Sheet of the
firm after X’s retirement. (8)
17. Kitply Ltd. invited applications for 70,000 equity shares of ` 10 each at a premium of
` 35 per share. The amount was payable as follows:
On Application : ` 15 (including ` 12 premium);
On Allotment : ` 10 (including ` 8 premium); and

On First and Final Call : Balance.
Applications for 65,000 shares were received and allotment was made to all the
applicants. A shareholder, Ram, who was allotted 2,000 shares, failed to pay the
allotment money. His shares were forfeited immediately after allotment. Afterwards,
the first and final call was made. Sohan, who had 3,000 shares, failed to pay the first
and final call. His shares were also forfeited. Out of the forfeited shares, 4,000 shares
were reissued at ` 50 per share as fully paid-up. The reissued shares included all the
shares of Ram.
Pass necessary Journal entries for the above transactions in the books of Kitply Ltd.
Also show how ‘Share Capital’ will appear in the Balance Sheet of the Company.
Or
Kailash Ltd. invited applications for 80,000 Equity Shares of ` 10 each at a premium
of ` 40 per share. The amount was payable as follows:
On Application : ` 35 (including ` 30 premium);
On Allotment : ` 8 (including ` 4 premium); and
On First and Final Call : Balance.

Applications for 77,000 shares were received. Shares were allotted to all the applicants.
Sundram to whom 7,000 shares were allotted, failed to pay the allotment money. His