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Model Test Papers M.447

Working Note: STATEMENT SHOWING THE REQUIRED ADJUSTMENT

Particulars X (`) Y (`) Z (`)
I. Amount Already Recorded:
Interest on Capital (Cr.) (1) 50,000 1,00,000 1,50,000
Interest on Drawings (Dr.) (2) (30,000) (50,000) (80,000)
Commission (Cr.) (3) ... 40,000 ...
Salary (Cr.) (3) 1,20,000 ... ...
Share of Profit (` 3,00,000 in the ratio of 1 : 2 : 3) (Cr.) 50,000 1,00,000 1,50,000
Amount already recorded, now written Back (Dr.) 1,90,000 1,90,000 2,20,000
II. Amount which should have been Credited:
Share of Profit (i.e., ` 6,00,000* in 1 : 1 : 1 ratio) (Cr.) (4) 2,00,000 2,00,000 2,00,000
III. Difference (I – II) or Net Effect 10,000 10,000 20,000
(Cr.) (Cr.) (Dr.)
*Revised Profit = ` 3,00,000 + (` 50,000 + ` 1,00,000 + ` 1,50,000: Interest on Capital (1))
– (` 30,000 + ` 50,000 + ` 80,000: Interest on Drawings (2))
+ ` 40,000 (Commission (3)) + ` 1,20,000 (Salary (3)) = ` 6,00,000.
As Partnership Deed is silent, the following provisions of the Indian Partnership Act, 1932 are to be applied:
1. No interest is payable to any partner in respect of capital.
2. No interest on drawings is to be charged.
3. No salary or commission is to be paid to any partner.
4. Profits/losses are to be shared equally.
10. JOURNAL OF RAMA LTD.
Date Particulars L.F. Dr. (`) Cr. (`)
2018
Mar. 31 Surplus, i.e., Balance in Statement of Profit and Loss A/c ...Dr. 2,50,000
To Debentures Redemption Reserve A/c 2,50,000
(Being the profit transferred to DRR equivalent to 25%
of the value of Debentures outstanding)
April 1 Debentures Redemption Investment A/c ...Dr. 1,50,000
To Bank A/c 1,50,000
(Being the amount invested in specified securities equal to 15% of the
amount of redeemable debentures)
Sept. 30 Bank A/c ...Dr. 1,56,000
To Debentures Redemption Investment A/c 1,50,000
To Interest Earned A/c 6,000
(Being the debentures redemption investment realised and interest received)
Oct. 1 9% Debentures A/c ...Dr. 10,00,000
To Debentureholders’ A/c 10,00,000
(Being the amount due to debentureholders on redemption)
Debentureholders’ A/c ...Dr. 10,00,000
To Bank A/c 10,00,000
(Being the payment made to debentureholders)
Debentures Redemption Reserve A/c ...Dr. 2,50,000
To General Reserve A/c 2,50,000
(Being the amount in DRR A/c transferred to General Reserve)