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M.288 An Aid to Accountancy—CBSE XII

Answers

PART A

1. ‘Accrual Concept of Accounting’ is followed.
Or
‘Receipts and Payments Account’ shows the classified summary of transactions of Cash
Book whereas Cash Book shows the daily cash transactions.
2. Since the amount of available profit is less than the total amount of Interest on Capital,
the available profit has been distributed in the ratio of interest claims of X and Y, i.e.,
` 12,000: ` 6,000 or 2 : 1. Thus,
2
Interest allowed on X’s Capital = ` 15,000 × = ` 10,000;
3
1
Interest allowed on Y’s Capital = ` 15,000 × = ` 5,000.
3
3. Goodwill = Capitalised Value of the Business – Net Assets.
Notes:
1. Capitalised Value of the Business = Average Future Maintainable Profit × 100
Normal Rate of Return
2. Net Assets = All assets (other than goodwill, fictitious assets and non-trade investments) at their current
value less outsiders’ liabilities.
Or
(a) In case of any dispute or doubt, Partnership Deed being a contract among partners
is the guiding document.
(b) It can specify the duties and powers of each partner.
4. (a) To make pro rata allotment to all the applicants.
(b) Accepting some applications in full and allotting the balance shares on pro rata
basis to the remaining applicants.
Or
Securities Premium Reserve Account is not debited when shares are forfeited. Securities
Premium once received cannot be utilised for purposes other than those prescribed
under Section 52(2) of the Companies Act, 2013.
5. A well-managed firm usually enjoys the advantages of high productivity and cost
efficiency. This leads to higher profits and, therefore, the value of goodwill will be higher.
6. Assets Realised other than cash = ` 5,05,000 – ` 5,000 = ` 5,00,000
Commission on Assets Realised = 1% of ` 5,00,000 = ` 5,000
Cash Available for Partners after Payment to creditors and commission
= ` 5,05,000 – ` 2,25,000 – ` 5,000 = ` 2,75,000
Commission based on Cash distribution = ` 2,75,000 × 10/110 = ` 25,000
Hence, Total Remuneration of Mohan = ` 5,000 + ` 25,000 = ` 30,000.
7. ADJUSTMENT JOURNAL ENTRY
Date Particulars L.F. Dr. (`) Cr. (`)
Q’s Current A/c ...Dr. 200
R’s Current A/c ...Dr. 400
To P’s Current A/c 600
(Being the less interest on capital provided, now rectified)