Q 1 What is meant by goodwill? Name any two methods of valuation of goodwill.  (Marks 2)

Q 2 R and S are partners sharing profits in the ratio of 5 : 3. T joins the firm as a new partner. R gives 1/4 of his share and S gives 2/5 of his share to the new partner. Find out the new ratio.  (Marks 3)

Q 3 State any three purposes for which share premium amount can be utilised.  (Marks 3)

Q 4 P, Q and R are partners in a firm. Their capital accounts stood at Rs. 30,000, Rs. 15,000 and Rs. 15,000 respectively on 1 January, 1996. As per the provisions of the deed :
(i) R was to be allowed a remuneration of Rs. 3,000 p.a., (ii) Interest at 5 % p.a. was to be provided on capital, (iii) Profits were to be divided in the ratio of 2 : 2 : 1. Ignoring the above terms, net profit of Rs. 18,000 for the year ended 1996 was divided among the three partners equally.
Pass an adjustment entry to rectify the error. Show the working clearly.  (Marks 4)

Q 5 X Limited issued 12% debentures of Rs. 10,00,000 at 8% discount redeemable at par. Assume that the debentures are redeemed by drawing method in the following manner:

Prepare discount on issue of debentures account.  (Marks 5)

Q 6 Rearrange the following in the form of a company balance sheet as per Schedule VI Part I of the Company Act 1956.    (Marks 5)

	Rs.
Bills payable	30,000
Unclaimed dividend	12,000
Accounts Receivables	11,000
Shares in NTPC Ltd.	20,000
Deposits with ICICI Bank	50,000
Share Premium	75,000
Prepaid Rent	1,000
Underwriting commission	1,500
Stores and spares	6,000
Patents	2,000

Q 7 (a) M and N are partners in a firm. M has given a loan of Rs. 8,000 to the firm on 1 April, 1994. The partnership deed is silent upon the question of provision of interest on partner's loan. Compute the amount of interest payable on the loan advanced by M to the firm assuming the books are closed on 31 December each year.
(b) P, R and S are in partnership sharing profits in the ratio of 4 : 3 : 1 respectively. It is provided in the partnership deed that, on the death of any partner, his share of goodwill is to be valued at half of the profits credited to his account during the previous four completed years. R dies on January, 1997. The firm's profit for the last four years 1993 : Rs. 1,20,000, 1994 : Rs. 80,000, 1995 : Rs. 40,000, 1996 : Rs. 80,000, Determine the amount that should be credited to R in respect of his share of goodwill.  (Marks 3 + 3)

Q 8 K Limited has been registered with an authorised capital of Rs. 2,00,000 divided into 2000 shares of Rs. 100 each of which, 1000 shares were offered for public subscription at a premium of Rs. 5 per share, payable as under :
                       Rs
on application   10
on allotment     25 (including premium)
on first call       40
on final call       30
Applications were received for 1800 shares, of which applications for 300 shares were rejected outright; the rest of the applications were allotted 1000 shares on pro-rata basis. Excess application money was transferred to allotment.
All the monies were duly received except from Sundar, holder of 100 shares, who failed to pay allotted and first call money. His shares were later forfeited, and reissued to Shyam at Rs. 60 per share Rs. 70 paid up. Final call has not been made.
Pass necessary cash book and journal entries in the books of K Limited.

OR

M Ltd. issued on January 1, 1992 1000 12% debentures of Rs. 100 each repayable at the end of 3 years at a premium of 5%. It was decided to create a sinking fund for the redemption of debentures. The investment are expected to earn interest at 5% p.a.
Reference to the sinking fund table shows that Re. 0.37209 invested at 5% p.a. amounts to Re. 1 at the end of three years, the investments were sold at Rs. 70,000 and the debentures were redeemed. Prepare debentures account, sinking fund account and sinking fund investment account for the three years.  (Marks 10)

Q 9 J, S and R were in partnership sharing profits and losses in the ratio of 3 : 2 : 1. Their Balance Sheet as on 31 December, 1994 was as follows :

It was agreed to dissolve the firm, and the terms of the dissolution were :

(i) J took over building at book value and agreed to pay off creditors.
(ii) Accrued interest was not collected whereas there was a contingent liability of Rs. 600 which was meet.
(iii) Other assets realised : plant: Rs. 25,000; stock : Rs. 5,000; debtors: Rs. 4,600
(iv) Realisation expenses: Rs. 600
Prepare realisation account, capital accounts and cash account.

OR

A, B and C were carrying on partnership business sharing profits in the ratio of 3 : 2 : 1 respectively. On 31 December, 1996, the Balance Sheet of the firm stood as follows:

B retired on the above mentioned date on the following terms :

(i) Building to be appreciated by Rs. 7,000.
(ii) Provision for doubtful debts to be made 5% on debtors.
(iii) Goodwill of the firm is valued at Rs. 18,000 and adjustment in this respect to be made in the continuing partner's capital accounts without raising goodwill account.
(iv) Rs. 3,000 to be paid to B immediately and the balance in his capital account to be transferred to his loan account.
Prepare revaluation account, capital accounts, cash account, and the balance sheet after B's retirement. (Marks 12)