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Model Test Papers M.93

Dr. B’S EXECUTOR’S ACCOUNT Cr.
Particulars ` Particulars `
To Balance c/d 4,14,900 By B’s Capital A/c 4,14,900
4,14,900 4,14,900

Working Notes:
1. Unless agreed otherwise, gaining ratio of continuing partners will be same as their old profit-sharing ratio.
2. Valuation and Adjustment of Goodwill:
Average Profit = (` 2,12,000 – ` 32,000 + ` 90,000)/3 = ` 90,000.
Firm’s Goodwill = ` 90,000 × 2 = ` 1,80,000
B’s share of goodwill = ` 1,80,000 × 1/3 = ` 60,000; which is contributed by A and C in their gaining ratio, i.e., 1 : 1.
3. B’s share of profit = ` 90,000 × 9/12 × 1/3 = ` 22,500.
15. INCOME AND EXPENDITURE ACCOUNT
Dr. for the year ended 31st March, 2018 Cr.
Expenditure ` Income `
To Rent 1,000 By Subscriptions 10,000
Add: Outstanding at the end 600 1,600 Add: Outstanding at the end 500 10,500
To Maintenance Charges 2,440 By Entrance Fees 5,000
Add: Outstanding at the end 100 2,540 By Surplus from Annual Dinner Event 1,500
To Salary 4,500 By Sale of Old Newspapers 1,500
To Honorarium 1,000 By Legacy Donation 12,000
To Conveyance 500
To Surplus, i.e., Excess of Income over Expenditure 20,360
30,500 30,500
BALANCE SHEET as at 31st March, 2018

Liabilities ` Assets `
Outstanding Rent 600 Cash 22,560
Outstanding Maintenance Charges 100 Outstanding Subscriptions 500
Capital Fund: Books 2,000
Life Membership Fees 9,000 Furniture 5,000
Add: Surplus 20,360 29,360
30,060 30,060
Legacy donation being without any stipulation is a General Donation. Hence, it is credited to Income
and Expenditure Account.
16.
Dr. REVALUATION ACCOUNT Cr.
Particulars ` Particulars `
To Building A/c 3,00,000 By Land A/c 3,60,000
To Furniture A/c 60,000
3,60,000 3,60,000

Note: Profit or Loss on Revaluation: NIL.