Page 521 - AAAXII

Model Test Papers M.499

Answers

PART A
1. AN EXTRACT OF INCOME AND EXPENDITURE ACCOUNT
Dr. for the year ended 31st March, 2018 Cr.
Expenditure ` Income `
To Prizes Awarded 20,000
Reason: There does not exist any Prize Fund. So, the amount of Prizes awarded would
be debited to Income and Expenditure Account. It is the case of expenses
independent of any specific fund.
Or
Income and Expenditure Account is the summary of revenue incomes, revenue expenses and
losses of the Current Year, along with the surplus, (i.e., Excess of Income over Expenditure)
or deficit (i.e., Excess of Expenditure over Income), which is transferred to the Capital Fund.
2. (a) Partners’ Capital Accounts. (b) Partners’ Current Accounts.
Or
Revaluation gain or loss belongs to the period before the admission and, therefore,
new partner is not entitled for the gain (profit) or liable for the loss.
3. Y is correct as Section 48 of Indian Partnership Act, 1932 provides that loan by a
partner to the firm is paid before capital is repaid.
4. Raman’s (Partner) Loan A/c ...Dr. ` 1,00,000
To Realisation A/c ` 1,00,000
(Being an asset taken in settlement)
5. JOURNAL
Date Particulars L.F. Dr. (`) Cr. (`)
General Reserve A/c ...Dr. 40,000
To Provision for Doubtful Debts A/c (` 40,000 × 20/100) 8,000
To X’s Capital A/c 16,000
To Y’s Capital A/c 16,000
(Being 20% of General Reserve transferred to Provision and
balance to partners in their old profit-sharing ratio)
6. CALCULATION OF AMOUNT TO BE TRANSFERRED TO DEBENTURES REDEMPTION RESERVE
Particulars `
Debentures Redemption Reserve Required (100% of ` 80,00,000) 80,00,000
Less: Existing Balance of Debentures Redemption Reserve 4,00,000
Amount to be transferred to Debentures Redemption Reserve 76,00,000
Or
Fully Convertible Debentures are those debentures which are convertible into shares
or other securities as per agreed terms and conditions against the total amount due.

7. (i) Average Profit (after partners’ remuneration)
= ` 5,50,000 – ` 2,50,000 (Partners’ Remuneration)
= ` 3,00,000