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Model Test Papers M.365

Answers

PART A
1. Prizes awarded will be debited to Income and Expenditure Account.
Or
Income and Expenditure Account is a Nominal Account whereas Receipts and Payments
Account is a Real Account.
2. Total Capital of the New Firm = New Partner’s Capital × Reciprocal of his Share
of Profit.
3. Z’s son cannot be admitted as a partner as all partners are not agreed. He can claim
only for his father’s capital and other claims as per Partnership Deed.
4. Interest on Debentures is paid before any dividend is paid to shareholders because it
is charge against profits of the company.

Or
JOURNAL OF STAR LTD.

Date Particulars L.F. Dr. (`) Cr. (`)
Sundry Assets A/c ...Dr. 54,00,000
To Sundry Liabilities A/c 4,00,000
To Moon Ltd. 48,00,000
To Capital Reserve A/c (Balancing Figure) 2,00,000
(Being the purchase of Business from Moon Ltd.)
5. JOURNAL

Date Particulars L.F. Dr. (`) Cr. (`)
Realisation A/c ...Dr. 20,000
To Cash/Bank A/c 20,000
(Being the balance of a creditor paid)
Or

JOURNAL

Date Particulars L.F. Dr. (`) Cr. (`)
Rakesh’s Loan A/c ...Dr. 1,10,000
To Rakesh’s Capital A/c 30,000
To Bank A/c 80,000
(Being the Rakesh’s Loan to the extent of debit balance of his
Capital Account adjusted and the balance paid)

6. Hidden Goodwill = (` 1,60,000 × 5/1) – (` 2,60,000 + ` 1,80,000 + ` 1,60,000)
= ` 2,00,000
Z’s Share of Goodwill = ` 2,00,000 × 1/5 = ` 40,000.