Principles and Practice of Accounting - May 2026

1. (a) State with reasons, whether the following statements are True or False : 6x2=12 (i) Cost of inventories should comprise all cost of purchase. (ii) According to the decision in the case of Garner vs Murray, the loss due to insolvency of a partner has to be borne by the solvent partners in their profit sharing ratio. YLK P.T.O. (2) YLK Marks (iii) Amount spent on demolition of an old building which was necessary for the construction a new…

2023 Suman Limited purchased certain machinery 10 for = 60,00,000. On 1* October, 2025, a part of the said machinery purchased on 1“ April, 2023 for % 4,00,000. having become obsolete was auctioned for % 2,25,000. On the same day a fresh machinery was acquired at a cost of % 7,50,000 and installation charges of % 40,000 were incurred in erecting it on the same date. | The company has adopted the method of providing depreciation @ 10 % per…

(a) Xand Y are partners in a LLP namely Alpha LLP sharing profits 10 and losses in the ratio of 2:1. The Balance Sheet of the LLP firm as at 31 March, 2026 was as follows: Liabilities Amount (%) Assets Amount (%) Capital Accounts: Land and Building 1,40,000 - X 1,00,000 | Plant and Machinery 60,000 \ - Y 80,000 | Inventories 28,000 Profit and Loss Account 24,000 | Trade Receivables 44,000 Bank Overdraft 60,000 | Cash at Bank 18,000…

Donna, Jenny and Tony are partners of DJT Corporation sharing 10 profit and losses in the ratio of 3:2:1. On 31% March, 2025, their Balance Sheet was as under: Liabilities | Amt (%) Assets Amt (%) Capital Land and Building 2,60,000 Accounts: - Donna | 1,60,000 | Plant and Machinery 1,15,000 - Jenny | 1,88,000 | Furniture and Fixture 80,000 - Tony | 1,20,000 | Joint Life Policy 60,000 General 1,44,000 | Inventory 35,000 Reserve Trade 38,000 | Trade Receivables…

(a) Attempt any ONE of the two parts i.e. either (i) or (ii) 5 (i) The Profit and Loss Account of Prabhat showed a net profit of = 15,00,000, after considering the closing inventory of %.9,37,500 on 31% March, 2026. On scrutiny of the books it was observed as under : (1) Purchases for the year included = 37,500 paid for new electrical fittings for the godown. (2) Goods valued at = 1,00,000 were given away as free samples for…

1. To give existing shareholders the option to purchase two = 10 shares @ % 15 per share for every five shares (held prior to the bonus distribution). This option was exercised by all the shareholders.

3. To repay the debentures at a premium of 10%. The DRR Investments realized at par as per existing book value. Give the necessary journal entries to record the above transactions in the books of Star Limited.