3 Marks Question

Question 13 Marks

A and B are partners sharing profits equally. They agree to admit C for equal share. For this purpose goodwill is to be valued at 150% of the average annual profits of the last 5 year's profits.
Profits were:

Year ended	₹
31^st March 2019	40,000
31^stMarch 2020	60,000
31^st March 2021	1,00,000
31^st March 2022	20,000 (Loss)
31^st March 2023	1,50,000

It was observed that:
i. During the year ended 31^st March 2020, an asset of the original cost of ₹ 2,00,000 with book value of ₹ 1,50,000 was sold for ₹ 1,24,000.
ii. On 1^stApril, 2021, 2 Computer's costing ₹ 1,00,000 were purchased and were wrongly debited to Travelling Expenses. Depreciation on Computers was to be charged @ 20% p.a. on written down value basis.
Calculate the value of goodwill.

Answer

Average Profit $=\frac{40,000+86,000+1,00,000+60,000+1,34,000}{5}$
$=\frac{4,20,000}{5}$ = ₹ 84,000
Value of Goodwill $=84,000 \times \frac{150}{100}$ = ₹ 1,26,000
Working Note:
i. Depreciation on Computers for the year ended 31.3.2022 = 20% on ₹ 1,00,000 = ₹ 20,000
ii. Depreciation on Computers for the year ended 31.3.2023: 20% on (₹ 1,00,000 - ₹ 20,000) = ₹ 16,000

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Question 23 Marks

Can the forteited shares be reissued at a discount?

Answer

Yes, they can be reissued at a discount. And the discount limit is limited. This is different in different cases.
i. Originally issued at par or premium. But now reissued at a discount. Condition for a discount is; the amount of discount should be less than or equal to the amount standing to the credit of forfeited shares account.
ii. When the shares were originally issued at a discount and now are reissued at discount, the maximum amount of discount should be less than or equal to the amount credited to the Forteited shares account and the original discount together.

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Question 33 Marks

Blue Ltd. purchased the assets of Shine Ltd. for ₹ 40,00,000 and took over liabilities of ₹ 7,00,000 for ₹ 32,40,000. Payment was made by issuing 10% Debentures of ₹ 100 each at a discount of 10%. Pass the necessary Journal entries in the books of Blue Ltd.

Answer

In the books of Blue Ltd.
Journal Entries
Date	Particulars		L.F.	Debit Amount(₹)	Credit Amount (₹)
	Sundry Assets A/c	Dr.		40,00,000
	To Sundry Liabilities A/c				7,00,000
	To Shine Ltd.				32,40,000
	To Capital Reserve A/c (business purchase of Shine Ltd.)				60,000
	Shine Ltd. A/c	Dr.		32,40,000
	Discount on Issue of Debentures A/c (36,000 $\times $ 10)	Dr.		3,60,000
	To 10% Debentures A/c (36,000, 10% debentures issued as purchase consideration)				36,00,000

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Question 43 Marks

On March 31, 2017 after the close of accounts, the capitals of Mountain, Hill, and Rock stood in the books of the firm at ₹ 4,00,000, ₹ 3,00,000 and ₹ 2,00,000, respectively. Subsequently, it was discovered that the interest on capital @ 10% p.a. had been omitted. The profit for the year amounted to ₹ 1,50,000 and the partner's drawings had been Mountain: ₹ 20,000, Hill ₹ 15,000 and Rock ₹ 10,000. Calculate interest on capital.

Answer

Interest on Capital is calculated on the opening balance of capital, if additional capital is not given. Therefore, first of all opening capital will be calculated from the closing capital.

Statement showing calculation of Opening Capital:
Particulars	Mountain	Hill	Rock
Closing Capital	4,00,000	3,00,000	2,00,000
Add: Drawings	20,000	15,000	10,000
	4,20,000	3,15,000	2,10,000
Less: Profit (1 : 1 : 1)	(50,000)	(50,000)	(50,000)
Opening Capital	3,70,000	2,65,000	1,60,000

Calculation of Interest on Capital @ 10% p.a. is as follows:
Mountain	$3,70,000 \times \frac{10}{100}=$ ₹ 37,000
Hill	$2,65,000 \times \frac{10}{100}=$ ₹ 26,500
Rock	$1,60,000 \times \frac{10}{100}=$ ₹ 16,000

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Question 53 Marks

A and B are partners in a firm. A is entitled to a salary of ₹ 15,000 p.m. and a commission of 10% of net profit before charging any commission. B is entitled to a commission of 10% of net profit after charging his commission. Net profit for the year ended 31^st March 2023 was ₹ 4,40,000.
You are required to show the distribution of profit.

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Question 63 Marks

Anu, Manu, Sonu and Rohan were partners in a firm sharing profits and losses in the ratio of 1 : 2 : 1 : 2. With effect from 1^st April, 2023, they decided to share profits and losses in the ratio of 2 : 4 : 1 : 3. Their Balance Sheet showed General Reserve of ₹ 90,000. The goodwill of the firm was valued at ₹ 4,50,000.
Pass necessary journal entries for the above on account of change in the profit sharing ratio. Show your working clearly.

Answer

Books of Anu, Manu, Sonu and Rohan Journal
Date	Particulars		L.F.	Dr. Amount ₹	Cr. Amount ₹
2023 April 1	General Reserve A/c	Dr.		90,000
	To Anu's Capital A/c				15,000
	To Manu's Capital A/c				30,000
	To Sonu's Capital A/c				15,000
	To Rohan's Capital A/c				30,000
	(Distribution of General Reserve in old profit- sharing ratio)
2023 April 1	Anu's Capital A/c	Dr.		15,000
	Manu's Capital A/c	Dr.		30,000
	To Sonu's Capital A/c				30,000
	To Rohan's Capital A/c				15,000
	(Adjustment for Goodwill on account of change in profit sharing ratio)

Working notes:
Calculation of gain/ sacrifice
Gaining Share = New share - Old share
Anu $=\frac{2}{10}-\frac{1}{6}=\frac{1}{30}$ (Gain)
Manu $=\frac{4}{10}-\frac{2}{6}=\frac{2}{30}$ (Gain)
Sonu $=\frac{1}{10}-\frac{1}{6}=\frac{-2}{30}$ (Sacrifice)
Rohan $=\frac{3}{10}-\frac{2}{6}=\frac{-1}{30}$ (Sacrifice)

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Accountancy 3 Marks Question

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