By DeeCee – Divine Classes Test of Accounts Time : 60 Mins. MM : 30 Q 1. Following information is available about the business of a firm: (i) Profits: In 2013, ₹ 40,000; In 2014, ₹ 50,000; In 2015, ₹ 60,000, (ii) Nonrecurring income of ₹ 1,000 is included in the profits of 2014, (iii) profits of 2013 have been reduced by 6,000 because goods were destroyed by fire, (iv) Goods have not been insured but it is thought to insure them in future. The insurance premium is estimated at 400 per year, (v) Reasonable remuneration of the proprietor of business is ₹6,000 per year, but it has not been taken into account for calculation of above mentioned profits, (vi) Profits of 2015 include 5,000 income on investment. Goodwill is agreed to be valued at two years' purchase of the weighted average profits of the past three years. The appropriate weights to be used are: 2013: 1; 2014:-2; 2015 :-3. (3) Q 2. A, B and C are partners sharing profits and losses in the ratio of 2:2:1. From 1st April, 2019 they decided to share future profits and losses equally. Following balances appeared in their books: ₹ Profit and Loss A/c (Cr.) 20,000 Advertisement Suspense A/c (Dr.) 15,000 Workmen Compensation Reserve 60,000 It was agreed that: (i) Goodwill should be valued at two year's purchase of super profits. Firm's average profits. Firm's average profits are 75,000. Capital invested in the business is 6,00,000 and normal rate of return is 10%. (ii) Furniture (book value of 50,000) be reduced to ₹30,000. (iii) Computers (book value of 40,000) be reduced by ₹10,000. (iv) Claim on account of Workmen's Compensation amounted to 50,000. (v) Investments (book value of 30,000) were revalued at 25,000. Pass necessary journal entries for the above. 1 (3) By DeeCee – Divine Classes Q 3. On 1st April, 2015 the Capitals of A and B were ₹ 4,00,000 and 2,00,000 respectively. They divided profits in their capital ratio. Profits for the year ended 31st March, 2016 were ₹ 3,00,000 which have been duly distributed among the partners, but the following transactions were not passed through the books: (a) Interest on Capitals @ 12% p.a. (b) Interest on Drawings A 12,000; B 10,000. (c) Commission due to B 20,000 on a special transaction. (d) A is to be paid a salary of ₹50,000. You are required to pass a journal entry on 10th April, 2016 which will not affect the P&L A/c of the firm and at the same time will rectify the errors. (4) Q 4. A, B and C were partners in a firm. Their capitals were A ₹ 1,00,000, B ₹ 2,00,000 and C ₹ 3,00,000 respectively on 1st April, 2017. According to the partnership deed they were entitled to an interest on capital @ 5% p.a. In addition A was also entitled to draw a salary of ₹ 5,000 per month. C was entitled to a commission of 5% on the profits after charging the interest on capital; but before charging the salary payable to A. The net profits for the year ended 31st March, 2018 were 3,60,000 distributed in the ratio of their capitals without providing for any of the above adjustments. The profits were to be shared in the ratio 2:3: 5. Pass the necessary adjustment entry showing the workings clearly. (4) Q 5. Vikas and Vivek were partners in a firm sharing profits in the ratio of 3:2. On 1-4-2014 they admit Vandana as a new partner for 1/8th share in the profits with a guaranteed profit of ₹ 1,50,000. The new profit sharing ratio between Vikas and Vivek will remain the same but they decided to bear any deficiency on account of guarantee to Vandana in the ratio 2 : 3. The profit of the firm for the year ended 31-3-2015 was ₹ 9,00,000. Prepare Profit and Loss Appropriation Account of Vikas, Vivek and Vandana for the year ended 31-3-2015. (4) Q 6. Shreya and Vivek were partners in a firm sharing profits in the ratio 3:2. The balances in their capital and current accounts as on 1st April, 2017 were as under: Sherya (₹) Vivek (₹) Capital Accounts 5,00,000 2,50,000 Current Accounts 1,00,000 (Cr.) 28,000 (Dr.) 2 By DeeCee – Divine Classes The partnership deed provided that Shreya was to be paid a salary of ₹5,000 p.m. whereas Vivek was to get a commission of ₹30,000 for the year. Interest on capital was to be allowed @ 8% p.a. whereas interest on drawings was to be charged @ 6% p.a. The drawings of Shreya were 15,000 drawn on 30th September 2017 while Vivek withdrew 30,000 on 1st September, 2017. The net profit of the firm for the year before making the above adjustments was 1,20,000. Prepare Profit and Loss Appropriation Account and Partner's Capital and Current Accounts. (6) Q. Ashok, Bhim and Chetan were partners in a firm sharing profits in the ratio of 3:2:1. Their Balance Sheet as at 31-3-2015 was as follows: Balance Sheet of Ashok, Bhim and Chetan as at 31-3-2015 Liabilities Creditors Bills Payable General Reserve Capitals: Ashok 2,00,000 Bhim 1,00,000 Chetan 50,000 ₹ 1,00,000 40,000 60,000 Assets Land Building Plant Stock Debtors Bank ₹ 1,00,000 1,00,000 2,00,000 80,000 60,000 10,000 3,50,000 5,50,000 5,50,000 Ashok, Bhim and Chetan decided to share the future profits equally, w.e.f., April 1, 2015. For this it was agreed that: (i) Goodwill of the firm be valued at 3,00,000. (ii) Land be revalued at 1,60,000 and building be depreciated by 6%. (iii) Creditors of 12,000 were not likely to be claimed and hence be written off. Prepare Revaluation Account, Partners' Capital Accounts and Balance Sheet of the reconstituted firm. (6) 3