Time allowed: 3 hours
[Maximum marks : 100

Notes :-
(i) This question paper is divided into four parts - I, II, III and IV.
(ii) Part I is compulsory for all candidates and of the remaining parts II, III and IV you can attempt only one part.
(iii) Each part carries 50 marks. 
(iv) Each question carries marks indicated against it.

Part I
Accounting

Q1) Why is 'Profit and Loss Appropriation Account' prepared?  (Marks 3)

Q2) What are the alternatives available to a company for the allotment of debentures when there is over- subscription of debentures? (Marks 3)

Q3) A and B were partners sharing profits in the ratio of 3 : 2. They admitted X and Y as new partners. A surrendered 1/3rd of his share in favour of X and B surrendered 1/4th of his share in favour of Y. Calculate  the new profit sharing ratio of A, B, X and Y. (Marks 3)

Q4) A and B were partners in firm sharing profits and losses equally. Their firm was dissolved on 15th March 1999, which resulted in a loss of Rs. 30,000. On that date the capital account of A showed a credit balance of Rs. 20,000 and that of B a credit balance of Rs. 30,000. The cash account had a balance of Rs. 20,000. You are required to pass the necessary journal entries for the :
(i) transfer of loss to the capital accounts of the partners and
(ii) making final payment to the partners. (Marks 4)

Q5) M and J are partners in a firm sharing profits in the ratio of 3 : 2. They admitted R as a new partner. The new profit sharing ratio between M, J and R will be 5 : 3 : 2. R brought Rs. 25,000 for his share of goodwill premium. Pass the necessary journal entries for the treatment of goodwill? (Marks 3)

Q6) Suvidha Ltd. purchased machinery worth Rs. 1,98,000 from Suppliers Ltd. The payment was made by issue of 12% debentures of Rs. 100 each. Pass necessary journal entries for the purchase of machinery and issue of debentures when:
(i) Debentures are issued at par.
(ii) Debentures are issued at 10% discount.
(iii) Debentures are issued at 10% premium.  (Marks 4)

Q7) X Limited has an authorise capital of Rs. 10,00,000 divided into equity shares of Rs. 10 each. The company invited applications for 50,000 shares. Applications for 40,000 shares were received. All calls were made and were duly received except the final call of Rs. 2 per share on 1000 shares. 500 of the shares on which the final call was not received were forfeited. Show how Share Capital will appear in the Balance Sheet of the company as per Schedule VI Part - I of the Companies Act. 1956? (Marks 5)

Q8) AB Ltd. invited applications for 1,00,000 12% preference shares of Rs. 100 each issued at a discount of 10%. The amount was payable as follows :
On Application Rs. 20
On Allotment Rs. 30
On First and Final Call - balance
Applications for 1,50,000 shares were received. Applications for 30,000 shares were rejected and pro-rata allotment was made to the remaining applicants. All calls were made and were duly received except the first and final call on 1000 shares held by Kumar. His shares were forfeited. Out of the forfeited shares 750 shares were re-issued at Rs. 120 per share fully paid up.
Pass necessary journal entries in the books of AB Ltd.


OR

The following balances appeared in the books of Madhu Ltd. as on 1st April 1997:

12% Debentures Debenture Redemption Fund Debenture Redemption Fund Investments

Rs. 1,50,000 Rs. 1,25,000 Rs. 1,25,000

The Debenture Redemption Fund Investments were represented by Rs. 1,30,000 9% government securities.
The annual instalment added to the fund was Rs. 20,600. On 31st March 1998 the bank balance before the receipt of interest on investments was Rs. 40,000. On that date all the investments were sold at 84% and the debentures were duly redeemed.
Prepare Debentures Accounts, Debenture Redemption Fund Account, Debenture Redemption Fund Investment Account and Bank Account for 1997-98. The company closes its books on 31st March every year. (Marks 11)

Q9) A, B and C were partners sharing profits in the proportions of 1/2, 1/3 and 1/6 respectively. The Balance Sheet of the firm on 31st March 1998 was as follows :

Ram died on 31st March 1995. Under the partnership agreement the executor of Ram was entitled to :
(a) Amount standing to the credit of his capital account.
(b) Interest on capital which amounted to Rs. 62.50.
(c) His share of goodwill Rs. 3,500.
(d) His share of profit from the closing of the last financial year to the date of death which amounted to Rs. 437.50.
Ram's executor was paid Rs. 1,800 on 1st April 1995 and the balance in four equal yearly instalments starting from 31/3/1996 with interest @ 6% p.a.
Pass the necessary Journal entries and draw up Ram's Account to be rendered to his executor and Ram's Executor's account till it is finally paid.