X, Y and Z are partners sharing profits in the ratio 2:2:1. On retirement of Y, goodwill was valued as Rs. 30,000. The contribution of X and Z to compensate Y will be __________

Rs. 20,000 and Rs. 10,000
Rs. 8,000 and Rs. 4,000
They will not contribute any thing.
Information is insufficient for any comment

Solution

At the time of retirement of a partner an adjustment is necessary in respect of the goodwill. the retiring
partner is entitled to his share of goodwill in the firm. In absence of agreement goodwill is to be distributed
in the profit sharing ratio.
Thus the contribution of X and Z to compensate Y will be
Y’s share in goodwill = 30,000 × 2/5 = 12,000
X’s contribution = 12,000 × 2/3 = 8,000
Z’s contribution = 12,000 × 1/3 = 4,000

A company forfeited 2,000 shares of Rs. 10 each (which were issued at par) held by Mr. John for non-payment of allotment money of Rs. 4 per share. The called-up value per share was Rs.9. On forfeiture, the amount debited to share capital will be __________

Rs. 10,000
Rs. 8,000
Rs. 2,000
Rs. 18,000.

Solution

When shares issued at par are forfeited the accounting treatment will be as follows:
(i) Debit Share Capital Account with amount called up (whether received or not) per share up to the
time of forfeiture.
(ii) Credit Share Forfeited A/c with the amount received up to the time of forfeiture.
(iii) Credit ‘Unpaid Calls A/c’ with the amount due on forfeited shares. This cancels the effect of
debit to such calls which take place when the amount is made due.
So the amount to be debited to share capital account will be = total number of shares forfeited × called up
value of each share = 2,000 × 9 = Rs. 18,000

Solution

For journal entry for renewal in books of A will be, BR and cash will be debited and L and interest will be
credited. Thus option (A) is correct.

X and Y are partners sharing profits in the ratio 5:3. They admitted Z for 1/5th share of profits, for which he paid Rs. 1,20,000 against capital and Rs. 60,000 against goodwill. Find the capital balances for each partner taking Z’s capital as base capital.

Rs. 3,00,000; Rs. 1,20,000 and Rs. 1,20,000
Rs. 3,00,000; Rs. 1,20,000 and Rs. 1,80,000
Rs. 3,00,000; Rs. 1,80,000 and Rs. 1,20,000
Rs. 3,00,000; Rs. 1,80,000 and Rs. 1,80,000

Solution

If a purchase return of Rs.1,000 has been wrongly posted to the debit of the sales returns account, but has been correctly entered in the suppliers’ account, the total of the

Trial balance would show the debit side to be Rs. 1,000 more than the credit
Trial balance would show the credit side to be Rs. 1,000 more than the debit
The debit side of the trial balance will be Rs. 2,000 more than the credit side
The credit side of the trial balance will be Rs. 2,000 more than the debit side

Solution

In the given case, total of Dr. side of trial balance will be Rs.2,000 more than Cr. Side.

Debit balance as per Cash Book of ABC Enterprises as on 31.3.2010 is Rs. 1,500. Cheques deposited but not cleared amounts to Rs. 100 and Cheques issued but not presented is Rs. 150. The bank allowed interest amounting Rs. 50 and collected dividend Rs. 50 on behalf of ABC Enterprises. Balance as per pass book should be

Rs. 1,600
Rs. 1,450
Rs. 1,850
Rs. 1,650

Solution

X of Kolkata sends out certain goods at cost + 25%. Invoice value of goods sends out Rs. 2,00,000. 4/5th of the goods were sold by consignee at Rs.1,76,000. Commission is 2% upto invoice value and 10% of any surplus above invoice value.
The amount of commission will be:

Rs. 4,800
Rs. 5,200
Rs. 3,200
Rs. 1,600

Solution

Invoice value of goods sold = 4/5 of 2,00,000 = 1,60,000
Sales value = 1,76,000
Surplus of sales above invoice value = 1,76,000 – 1,60,000 = Rs. 16,000
Thus commission = 2% of 1,60,000 + 10% of 16,000 = 3,200 + 1,600 = Rs. 4,800

R, J and D are the partners sharing profits in the ratio 7:5:4. D died on 30th June 2010 and profits for the accounting year 2009-2010 were Rs. 24,000. How much share in profits for the period 1st April 2010 to 30th June 2010 will be credited to D’s Account.

Rs. 6,000
Rs. 1,500
Nil
Rs. 2,000

Solution

On the death of a partner, The representatives are entitled to Share of profit upto the date of death.
Thus share in profits for the period 1st April 2010 to 30th June 2010 to be credited to D’s Account will be
calculated as follows:
Profit for the period will be 24,000 × 3/12 = 6,000
Share of D in profit = 4/16 of 6,000 = Rs. 1,500

Goods costing Rs 2,00,000 sent out to consignee at Cost + 20%. Invoice value of the goods will be

Rs. 2,50,000
Rs. 2,40,000
Rs. 3,00,000
None of the above

Solution

Invoice value = cost + markup
Invoice value = 2,00,000 + 20% of 2,00,000 = 2,00,000 + 40,000 = Rs. 2,40,000

Electricity charges paid on 1 October, 2008 for the year to 30 September, 2009 was Rs. 2,400 and electricity charges paid on 1 October, 2009 for the year to 30 September, 2010 was Rs. 3,200. Electricity charges paid, as shown in the profit and loss account for the year ended 31 December 2009, would be:

Rs. 2,400
Rs. 3,200
Rs. 2,600
Rs. 3,000

Solution

Expense must be recorded in the accounting period in which it is incurred. Therefore, prepaid expense must be not be shown as expense in the accounting period in which it is paid but instead it must be presented as such in the subsequent accounting periods in which the services in respect of the prepaid expense have been performed.
Thus electricity expenses paid for the current year will be shown in the profit and loss account.
Electricity charges paid = 1-1-2009 to 30-9 -2009 + 1-10-2009 to 31-12-2009 = 2,400 × 9/12 + 3,200 × 3/12 = 1,800 + 800 = Rs. 2,600

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