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M.262 An Aid to Accountancy—CBSE XII

Answers

PART A

1. (a) Right to share profits with other partners in agreed ratio.
(b) Right to share in assets of the business.
Or
Two reasons for preparation of Revaluation Account at the time of admission
of a partner are:
(i) To show the assets and liabilities at their current (revised) values.
(ii) To ensure that no partner is at an advantage or disadvantage due to change in
the value of assets and amount of liabilities.
2. Cost of construction of a building is deducted from ’Building Fund’ and is added to
Capital Fund.
Or
It is credited to Income and Expenditure Account.
3. A firm is termed as reconstituted when (Any two):
(i) Profit-sharing ratio among the partners changes;
(ii) There is admission of a partner;
(iii) There is retirement of a partner; and
(iv) There is death of a partner.

4. JOURNAL
Date Particulars L.F. Dr. (`) Cr. (`)
A’s Capital A/c ...Dr. 80,000
B’s Capital A/c ...Dr. 2,20,000
To C’s Capital A/c 3,00,000
(Being C’s share of goodwill adjusted by debiting gaining partners
in their gaining ratio)
Working Notes:
1. Amount payable in excess of amount due to retiring partner reflects C’s share of goodwill. Thus, C’s share
of goodwill = `11,50,000 – ` 8,50,000 = ` 3,00,000, which will be contributed by A and B in their gaining ratio, i.e.,
4 : 11 (WN 2).
2. Calculation of Gaining Ratio:
Gain of a partner = New share – Old share
A gains = 1/3 – 2/10 = 4/30; B gains = 2/3 – 3/10 = 11/30
Thus, Gaining ratio of A and B = 4/30 : 11/30 = 4 : 11.
5. The amount credited to Forfeited Shares Account on reissued shares.
Or
‘Share Capital Account’ is debited with the amount called-up towards share capital
on such shares till the stage of forfeiture.