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Model Test Papers M.65

Rohan & Co. ...Dr. 15,00,000
Discount on Issue of Debentures A/c ...Dr. 7,50,000
To 9% Debentures A/c 22,50,000
(Being the payment made to Rohan & Co. by issue of 15,000;
9% Debentures of ` 150 each at a discount of ` 50 per debenture)
10. AN EXTRACT OF INCOME AND EXPENDITURE ACCOUNT
Dr. for the year ended 31st March, 2018 Cr.
Expenditure ` Income `
To Salaries A/c* 2,88,000
*Calculation of Current Year’s (2017–18) Salaries:
Particulars `
Salaries paid during the Year 2,97,800
Add: Outstanding Salaries (31.3.2018) 14,000
Prepaid Salaries (1.4.2017) 5,600 19,600
3,17,400
Less: Outstanding Salaries (1.4.2017) 19,000
Prepaid Salaries (31.3.2018) 10,400 29,400
Amount to be shown in Income and Expenditure Account on Expenditure side 2,88,000
Alternative Solution:
Dr. SALARIES ACCOUNT Cr.
Particulars ` Particulars `
To Prepaid Salaries A/c 5,600 By Outstanding Salaries A/c 19,000
(in the beginning) (in the beginning)
To Bank A/c (Paid during the year) 2,97,800 By Income and Expenditure A/c 2,88,000
To Outstanding Salaries A/c (at the end) 14,000 (Balancing Figure)
By Prepaid Salaries A/c (at the end) 10,400
3,17,400 3,17,400

11. PROFIT AND LOSS APPROPRIATION ACCOUNT
Dr. for the year ended 31st March, 2018 Cr.
Particulars ` Particulars `
To Net Profit transferred to: By Profit and Loss A/c (Net Profit) 4,00,000
P’s Capital A/c 2,18,750
Less: Deficiency in R’s Share 15,000 2,03,750
Q’s Capital A/c 1,31,250
Less: Deficiency in R’s Share 10,000 1,21,250
R’s Capital A/c 50,000
Add: Transferred from P and Q 25,000 75,000
4,00,000 4,00,000

Working Notes:
1. Calculation of New Profit-sharing Ratio of P, Q and R:
P’s New Share = 7/8 × 5/8 = 35/64
Q’s New Share = 7/8 × 3/8 = 21/64
R’s Share of Profit = 1/8 or 8/64
Thus, New Profit-sharing Ratio of P, Q and R = 35 : 21 : 8.
2. Deficiency in R’s share (` 25,000) is to be borne by P and Q in the ratio of 3 : 2, i.e., ` 15,000 and ` 10,000 respectively.