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M.62 An Aid to Accountancy—CBSE XII
Answers

PART A
1. Honorarium is a token payment to a person who has undertaken a service voluntarily
which normally commands a fee. It is an expression of gratitude rather than a payment
for the service. For example, payment made to an invited doctor for delivering a lecture
on Healthcare.
Or
It is shown as income in Income and Expenditure Account.
2. Following are the two situations in which interest on partners’ capital is provided:
(i) When profit-sharing is equal but capitals contributed by partners are unequal.
(ii) When profit-sharing is unequal but capitals contributed by partners are equal.
Or

Basis Profit and Loss Appropriation Account Profit and Loss Suspense Account
Preparation Profit and Loss Appropriation Account is prepared Profit and Loss Suspense Account is prepared to
to distribute profit among partners according to the adjust profit for a particular time period before
terms of Partnership Deed. the end of the accounting year.
12
3. Interest on Suman’s Capital = ` 50,000 × = ` 6,000
100
12
Interest on Sudha’s Capital = ` 25,000 × = ` 3,000
100
Total Interest payable to Suman and Sudha = ` 6,000 + ` 3,000 = ` 9,000.

ADJUSTMENT TABLE
Particulars Suman (`) Sudha (`) Total (`)

(i) Interest on Capital not credited to Current Accounts 6,000 (Cr.) 3,000 (Cr.) 9,000 (Dr.)
(ii) Excess Profit credited to Current Accounts due to not
allowing interest on capital, now taken back 4,500 (Dr.) 4,500 (Dr.) 9,000 (Cr.)
Net Effect 1,500 (Cr.) 1,500 (Dr.) ...

ADJUSTMENT ENTRY
Date Particulars L.F. Dr. (`) Cr. (`)
Sudha’s Current A/c ...Dr. 1,500
To Suman’s Current A/c 1,500
(Being the adjustment of interest on capital omitted in
previous year, now rectified)
4. Maximum amount of discount on reissue of forfeited shares = Amount received by the
company on forfeited shares.
Nominal Value of a Share = ` 10
Final call not received = ` 2
Amount received on a share = ` 10 – ` 2 = ` 8
Maximum discount on reissue = ` 8 per share = 1,000 × ` 8 = ` 8,000.