3 Marks Question

Question 13 Marks

Average profit of Sharma & Co. is ₹ 50,000 per year. Average capital employed in the business is ₹ 3,00,000. If the normal rate of return on capital employed is 10%,
calculate goodwill of the firm by:
i. Super Profit Method at three years' purchase; and
ii. Capitalisation of Super Profit Method.

Answer

i. Goodwill = Super Profit $\times$ No. of Years of Purchase
= 20,000 $\times$ 3 = ₹ 60,000
ii. Goodwill = Super Profit $\times \frac{100}{\text { Normal Rate of Return }}$
$=20,000 \times \frac{100}{10}=$ ₹ 2,00,000
Working Notes:
Average Profit = ₹ 50,000 (given)
Normal Profit = Capital Employed $\times \frac{\text { Normal Rate of Return }}{100}$
= 3,00,000 $\times \frac{10}{100}=$ ₹ 30,000
Super Profit = Average Profit - Normal Profit
Super Profit = 50,000 - 30,000 = ₹ 20,000.

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Question 23 Marks

Complete the following journal entries:

Journal Entries in the books of Sundram Ltd.
Date	Particulars		L.F.	Dr.(Rs.)	Cr.(Rs.)
	Furniture A/c	Dr.		3,00,000
	To Ravindram Ltd. (Being furniture purchased)				3,00,000
	………………………..	Dr.		….
	……………………….. (Being a part payment made to Ravindram Ltd. by an issue of a promissory note of Rs. 1,00,000)				….
	………………………..	Dr.		….
	………………………..				….
	……………………….. (Being the balance of payment made by issue of 16,000 equity shares of Rs. 10 each at a premium of 25%)				….

Answer

Calculation Of Amount Of Security Premium Reserve = 16,000* 10* 25% = 40,000
It is noted that securities premium account is shown in the balance sheet under the head reserve and surplus.

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Question 33 Marks

X Ltd. has 4,000 12% debentures of ₹ 100 each on 1st April 2018. According to the terms of issue interest on debentures is payable half-yearly on 30th September and 31st March and the rate of tax deducted at source is 10%. Pass necessary journal entries for interest on debentures for the year 2018-19.

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Question 43 Marks

Ananya, Bhavi and Chandni were partners in a firm with capitals of ₹ 3,00,000, ₹ 2,00,000 and ₹ 1,00,000 respectively.
According to the provisions of the partnership deed:
i. Ananya and Chandni were each entitled to a monthly salary of ₹ 1,500.
ii. Bhavi was entitled to a salary of ₹ 4,000 per annum.
The profit for the year ended 31^st March, 2022, ₹ 80,000 was divided between the partners in their profit sharing ratio of 3 : 3 : 2 without providing for the above adjustments.
Pass the necessary adjustment entry to rectify the above omissions in the books of the firm. Show your working notes clearly.

Answer

Books of Ananya, Bhavi and Chandni
Journal
Date	Particulars		L.F	Amount (₹)	Amount (₹)
2022 March 31	Bhavi's Capital A/c	Dr.		11,000
	To Ananya's Capital A/c				3,000
	To Chandani's Capital A/c (Adjustment entry passed for omission of salary to partners)				8,000

Table Showing Adjustments
Particulars	Ananya (₹)	Bhavi (₹)	Chandni (₹)	Firm (₹)
Salary to be credited	18,000	4,000	18,000	40,000
₹ 40,000 to be debited in 3 : 3 : 2	15,000	15,000	10,000	40,000
Difference	3,000	11,000	8,000
	Cr.	Dr.	Cr.

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Question 53 Marks

C and D are partners in a business and their capitals at the end of the year were ₹ 7,00,000 and ₹ 6,00,000 respectively. Calculate their opening capitals from the following information:
a. Drawings of C and D for the year were ₹ 75,000 and ₹ 50,000 respectively.
b. D introduced capital of ₹ 1,00,000 during the year.
c. Interest on capital credited to the Capital Accounts of C and D were ₹ 15,000 and ₹ 10,000 respectively.
d. Interest on drawings debited to the Capital Accounts of C and D were ₹ 7,500 and ₹ 5,000 respectively.
e. Share of loss debited to Capital Account of each Partner was ₹ 20,000

Answer

CALCULATION OF OPENING CAPITAL
Particulars		C (₹)		D (₹)
Capitals at the end		7,00,000		6,00,000
Add: Drawings during the year		75,000		50,000
Interest on Drawings		7,500		5,000
Share of Loss for the year		20,000		20,000
		8,02,500		6,75,000
Less: Capital Introduced during the year	…		1,00,000
Interest on Capital	15,000	(15,000)	10,000	(1,10,000)
Capitals in the beginning		7,87,500		5,65,000

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Question 63 Marks

P, Q and R are partners sharing profits equally. They decided that in future R will get $\frac{1}{7}$ share in profits. On the day of change, firm's Goodwill is valued at ₹ 42,000. Give Journal Entries arising on account of change in profit sharing ratio.
[Hint: New Ratios $\frac{3}{7}: \frac{3}{7}: \frac{1}{7}$. P and Q gain $\frac{2}{21}$ each and R sacrifices $\frac{4}{21}$]

Answer

Old Ratio of P, Q and R $=\frac{1}{3}: \frac{1}{3}: \frac{1}{3}$
New Ratio of P, Q and R $=\frac{3}{7}: \frac{3}{7}: \frac{1}{7}$
Sacrifice or Gain:
P $=\frac{1}{3}-\frac{3}{7}=\frac{7-9}{21}=\frac{2}{21}$ (Gain)
Q $=\frac{1}{3}-\frac{3}{7}=\frac{7-9}{21}=\frac{2}{21}$ (Gain)
R $=\frac{1}{3}-\frac{1}{7}=\frac{7-3}{21}=\frac{4}{21}$ (Sacrifice)

In the books of....
Journal
Date	Particular		L.F.	Dr. (₹)	Cr. (₹)
April 1	P's Capital A/c (2/21 of 42,000)	Dr.		4,000
	Q's Capital A/c (2/21 of 42,000)	Dr.		4,000
	To R's Capital A/c (4/21 of 42,000)(R compensated by P and Q for the sacrifice made by him)(Refer working Note)				8,000

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Accountancy 3 Marks Question

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