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Model Test Papers M.229

for the last 3 years are: ` 50,000, ` 55,000, ` 60,000. The normal profit for similar firm
is ` 30,000. Goodwill already appears in the books of the firm at ` 75,000. Profit for
the first year after Y’s retirement was ` 1,00,000. Pass the necessary Journal entries
to adjust goodwill and to distribute profit. (3)
8. (i) As per guidelines governing the servicing of debentures, a company is required to set
aside profit to a special account before redemption of debentures, name that account.
(ii) State the minimum amount of profit required to be transferred to Debentures
Redemption Reserve.
(iii) State the head under which the Debentures Redemption Reserve is shown in the
Balance Sheet. (3)
9. Gopalan Ltd. issued 5,000; 9% Debentures of ` 100 each at par and also raised a
Long-term loan of ` 80,000 from bank, collaterally secured by 1,000; 9% Debentures
of ` 100 each.
Pass the Journal entry for issue of debentures as collateral security. How will it be
shown in the Note to Accounts?
Or
Pilot Pens Ltd. purchased Machinery of ` 55,000 from Kiran Machines Ltd. 10% was
paid by Pilot Pens Ltd. by accepting a Bill of Exchange in favour of Kiran Machines Ltd.
and the balance was paid by issue of 9% Debentures of ` 100 each at par, redeemable
after five years. Pass necessary Journal entries in the books of Pilot Pens Ltd. (3)
10. Calculate the amount of medicines to be debited in the Income and Expenditure Account
of a Charitable Hospital from the following information:

Particulars 1st April, 31st March,
2017 (`) 2018 (`)
Stock of Medicines 90,000 1,24,000
Creditors for Medicines 2,40,000 2,04,000
Amount paid for medicines during the year was ` 6,79,000. (3)
11. A, B and C are partners in a firm sharing profits in 5 : 3 : 2. The firm closes its books
on 31st March every year. B died on 12th June, 2018. On B’s death, the goodwill of
the firm was valued at ` 5,40,000. B’s share in profits of the firm till the date of death
from the last Balance Sheet was to be calculated on the basis of previous year’s profit
which was ` 7,29,000. A and C decide to share future profits in 2 : 1. Complete the
following Journal entries:
JOURNAL
Date Particulars L.F. Dr. (`) Cr. (`)
2018
June 12 ? ...Dr. ?
? ...Dr. ?
To ? ?
(Being the treatment of goodwill on death of B)
? ...Dr. ?
? ...Dr. ?
To ? ?
(Being B’s share of profit till the time of his death)
(4)