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If there is a sports fund appearing in the balance sheet, then expenses incurred on sports activities will be shown on the debit side of income and expenditure account. Justify.
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Suman and Varsha are partners sharing profits and losses in the ratio of 5:6. Draupadi joins the firm as a new partner. The new profit sharing ratio of Suman, Varsha and Draupadi agreed at 5 : 6 : 3 respectively. Calculate the sacrificing ratio.
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Distinguish between sacrificing ratio and new profit sharing ratio.
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Name the head and sub-head under which the debentures issued for consideration other than cash appear in the balance sheet.
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Name the asset that is not transferred to the debit side of realisation account, but brings certain amount of cash against its disposal at the time of dissolution of the firm.
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A, B and C shared profits in the ratio of 3 : 2: 1. The profits of the last three years were Rs. 70,000, Rs. 42,000 and Rs. 53,000 respectively. These profits were by mistake, shared equally for all the three years. It is now decided to correct the error. Pass necessary journal entry for the same.
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Subscriptions received by the Health Club during the year 2017 were as under:
| | Amt (Rs.) |
| 2016 | 13,000 |
| 2017 | 86,000 |
| 2018 | 5,000 |
| | 1,04,000 |
| Particulars | Amt (Rs.) |
| Subscription Outstanding as on 31st Dec, 2016 | 18,000 |
| Subscription Outstanding as on 31st Dec, 2017 | 15,000 |
| Subscription Received in Advance in 2016 for 2017 | 4,000 |
Calculate the amount of subscription to be shown in Income and Expenditure Account.
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Surender, Ramesh, Naresh and Mohan are partners in a firm sharing profits in 2 : 1 : 2 : 1 ratio. On the retirement of Naresh, the goodwill was valued at Rs. 2,16,000. Surender, Ramesh and Mohan decided to share future profits equally. Pass the necessary journal entry for the treatment of goodwill without opening goodwill account.
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Ultimate Ltd purchased machinery form Evergreen Ltd for Rs. 10,00,000 to start a business of manufacturing low cost school dresses for children belonging to low income group. In made the payment as follows: Rs 2,00,000 by cheque, 5,000, 10% Preference Shares of Rs. 100 each at par, and 3,000, 10% Debentures of Rs. 100 each at par. You are required to
| (i) Pass the Journal entries for the transactions; and |
| (ii) Identify the values conveyed by the company. |
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Shiva Ltd. Issued 2,00,000 debentures of Rs. 20,00,000 at Rs. 3 premium, full amount called-up on application. 2,20,000 applications are received and debentures are allotted on pro-rata basis. Money overpaid on application is refunded. Pass journal entries.
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Sita, Reeta and Geeta are partners in a firm sharing profits and losses in the ratio of 4 : 3 : 1. As per the terms of partnership deed, on the death of any partner, goodwill was to be valued at 50% of the net profits credited to that partner?s capital account during the last three completed years before her death. Sita died on 28th February, 2017. The profits for the last five years were 2012 ? Rs. 60,000, 2013 ? Rs. 97,000, 2014 ? Rs. 1,05,000, 2015 ? Rs. 30,000 and 2016 ? Rs. 84,000. On the date of sita?s death, building was found undervalued by Rs. 80,000, which was to be considered. Calculate amount of Sita?s share of goodwill in the firm and complete the following journal entries. The new profit sharing ratio between Reeta and Geeta will be equal. JOURNAL
| Date | Particulars | | LF | Amt (Dr) | Amt (Cr) |
| | ??.. | Dr | | ? | |
| | To ??.. | | | | ? |
| | (Being the increase in value of building brought into account) | | | | |
| | Revaluation A/c | Dr | | 80,000 | |
| | To Sita?s Capital A/c | | | | ? |
| | To ?? | | | | ? |
| | To Geeta?s Capital A/c | | | | ? |
| | (Being the transfer of profit on revaluation to partner?s capital account in their old profit sharing ratio) | | | | |
| | ???. | Dr | | 13,688 | |
| | ???. | Dr | | ? | |
| | To ??.. | | | | ? |
| | (Being Sita?s share of goodwill adjusted in the capital accounts of gaining partners in their gaining ratio, i.e. 1 : 3) | | | | |
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Given below is the balance sheet of A and B Who are partners in a firm sharing profits in the ratio of 3 : 2. Balance Sheet as at. ?..
| Liabilities | | Amt (Rs.) | Assets | Amt (Rs.) |
| Sundry Creditors | | 3,00,000 | Land and Buildings | 4,00,000 |
| Profit and Loss A/c | | 1,00,000 | Plant and Machinery | 3,00,000 |
| Capital Accounts | | | Stock | 70,000 |
| A | 4,00,000 | | Debtors | 1,80,000 |
| B | 2,00,000 | 6,00,000 | Bank | 50,000 |
| | | 10,00,000 | | 10,00,000 |
On the date, C is admitted as a partner on the following terms:
| (i) A gives 1/3rd of his share while B gives 1/10th from his share to C. |
| (ii) Goodwill is valued at 2 years? purchase of the average profits of the last 5 years, which were Rs. 50,000 (loss); Rs. 1,20,000; Rs. 10,000 (loss); Rs. 3,00,000 and Rs. 3,40,000 respectively. C does not bring his share of goodwill in cash. |
| (iii) C brings in capital in proportion to his share of profit in the firm. |
Pass necessary journal entries.
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Karan and Pragya are partners in a firm sharing profits in the ratio of 2 : 3. The balance sheet of the firm as on 31st March, 2017 is given below: Balance sheet As at 31st March, 2017
| Liabilities | | Amt (Rs.) | Assets | Amt (Rs.) |
| Creditors | | 6,20,000 | Bills Receivable | 3,60,000 |
| Bills Payable | | 1,80,000 | Stock | 16,00,000 |
| Capital A/cs | | | Machinery | 18,40,000 |
| Karan | 16,00,000 | | Land and Building | 10,00,000 |
| Pragya | 24,00,000 | 40,00,000 | | |
| | | 48,00,000 | | 48,00,000 |
The partners decided to share profits in equal ratio with effect from 1st April, 2017. The following adjustments were agreed upon: (i) Land and building was valued at Rs. 16,000 and machinery at Rs. 16,40,000 and were to appear at revalued amounts in the balance sheet. (ii) The goodwill of the firm was valued at Rs. 80,000 but it was not to appear in books. Pass the necessary journal entries to give affect to the above and also prepare revaluation account, partners? capital account and balance sheet.
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Adil and Muneer, who were sharing Profits and losses in the ratio of 3 : 1 respectively, decided to dissolve the firm on 31st March, 2017. At that date, some of their balance are given below:
| Adil?s Capital | Rs. 50,000 |
| Muneer?s Capital | Rs. 5,000 (Debit balance) |
| Profit and Loss Account | Rs. 4,000 (Debit balance) |
| Trade Creditors | Rs. 15,000 |
| Loan from Mrs. Adil | Rs. 5,000 |
| Cash at Bank | Rs. 1,000 |
The assets (other than cash at bank) realised Rs. 55,000 and all creditors including loan from Mrs. Adil were paid off less 5% discount. Realisation expenses amounted to Rs. 500. Prepare the realization account, bank account and the capital account of the partners assuming that both the partners are solvent.
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From the following receipts and payments account and information given below, prepare income and expenditure account and balance sheet of adult Literacy Organisation as on 31st December, 2017. Receipts and Payments Account Dr For the year ending 31st December, 2017 Cr
| Receipts | | Amt (Rs.) | Payments | Amt (Rs.) |
| Balance b/d | | | General Expenses | 3,200 |
| Cash in Hand | | 4,000 | Newspaper | 1,850 |
| Cash at Bank | | 15,550 | Electricity | 3,000 |
| Subscriptions | | | Fixed Deposit with Bank (on 30th June, 2017) @ 10% p.a. | 18,000 |
| 2016 | 1,200 | | | |
| 2017 | 26,500 | | Book | 7,000 |
| 2018 | 500 | 28,200 | Salary | 3,600 |
| Sale of Old Newspapers | | 1,250 | Rent | 6,500 |
| Government Grant | | 12,000 | Postage Charges | 300 |
| Sale of Old Furniture (Book value Rs. 5,000) | | 3,700 | Furniture (purchased) | 10,500 |
| Interest Received on FD | | 450 | Balance c/d | |
| | | | Cash in Hand | 3,000 |
| | | | Cash at Bank | 8,200 |
| | | 65,150 | | 65,150 |
Information (i) Subscription outstanding as on 31st December, 2016, Rs. 2,000 and on 31st December, 2017, Rs. 1,500. (ii) On 31st December, 2017, salary outstanding Rs. 600 and one month rent paid in advance. (iii) On 31st January, 2016, organisation owned furniture Rs. 12,000, Books Rs. 5,000.
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On 1st June, 2017, Kartik Ltd. Offered for subscription 50,000 equity Shares of Rs. 100 each at a premium of Rs. 20 per share payable as given below: On application Rs. 20 per share; on allotment (including premium) Rs. 50 per share and two months after allotment Rs. 50 per share. Applications were received for 84,000 shares. On 1st July, 2017, the Directors proceeded to allot shares proportionately. Of these, application for 4,500 shares were accompanied with full amount and hence were accepted in full and the balance allotment was made on pro-rata basis. Excess amount paid by applicants was utilised towards allotment and call money due form them. One of the applicants to whom 300 shares were allotted proportionately, failed to pay the call money. His shares were forfeited on 30th November, 2017 and subsequently issued @ Rs. 130 per share. Record entries relating to these transactions in the journal of the company. Or Jatin Ltd. Has been registered with an authorised Capital of Rs. 2,00,000 Divided into 2,000 shares of Rs. 100 each of which 1,000 shares were offered for public subscription at a premium of Rs. 5 per share payable as under. On application Rs. 10; on allotment Rs. 25 (including premium); on first call 40 and on final call 30. Applications were received for 1,800 shares of which applications for 300 shares were rejected outright, the rest of the applications were allotment. All the money were duly received except form Sachin, a holder of 200 shares, who failed to pay allotment and first call money. His shares were later on forfeited and reissued to Shyam at Rs. 60 per share, Rs. 70 paid-up. Final call has not been made. Record necessary journal entries.
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Ritu, Mitu and Shitu are Partners with profit sharing ratio of 2 : 2 : 1. Their balance sheet is given below: Balance Sheet as at 31st December, 2017
| Liabilities | | Amt (Rs.) | Assets | | Amt (Rs.) |
| Creditors | | 1,00,000 | Bank | | 60,000 |
| Bills Payable | | 70,000 | Debtors | 52,000 | |
| Reserve Fund | | 40,000 | (-) Provision for Doubtful Debts | (2,000) | 50,000 |
| Workmen Compensation fund | | 30,000 | Building | | 2,00,000 |
| Profit and Loss | | 20,000 | Furniture | | 1,30,000 |
| Provident Fund | | 20,000 | Investment | | 30,000 |
| Capital A/cs | | | Prepaid Insurance | | 10,000 |
| Ritu | 80,000 | | Goodwill | | 20,000 |
| Mitu | 80,000 | | | | |
| Shitu | 60,000 | 2,20,000 | | | |
| | | 5,00,000 | | | 5,00,000 |
Adjustments (i) Chintu comes as a new partner and brings proportionate capital and goodwill. (ii) New ratio is 3 : 3 : 2 : 2. (iii) Goodwill of the firm is Rs. 50,000. (iv) Prepaid insurance is no more required. (v) Provision for doubtful debts is to be increased to Rs. 5,000. (vi) Investment is valued at Rs. 20,000 and is taken over by Ritu. (vii) Furniture valued at Rs.1,00,000. (viii) Building valued at 120%. Prepare necessary accounts and balance sheet. Or Manish, Nirjhar and Kshitij are partners with ratio 5 : 3 : 2. Balance Sheet as at?.
| Liabilities | | Amt (Rs.) | Assets | Amt (Rs.) |
| Creditors | | 1,00,000 | Cash in Hand | 40,000 |
| Expenses Owing | | 20,000 | Debtors | 60,000 |
| Reserve Fund | | 30,000 | Building | 1,00,000 |
| Workmen Compensation Fund | | 10,000 | Bills Receivable | 40,000 |
| Capital A/cs | | | Goodwill | 20,000 |
| Manish | 60,000 | | Profit and Loss | 30,000 |
| Nirjhar | 60,000 | | Patents | 30,000 |
| Kshitij | 40,000 | 1,60,000 | | |
| | | 3,20,000 | | 3,20,000 |
Adjustments (i) Manish takes retirement. (ii) New ratio of Nirjhar and Kshitij is 1 : 1 and goodwill of the firm is valued at Rs. 60,000. (iii) Expenses owing increased by Rs. 10,000. (iv) Creditors increased to Rs. 1,05,000. (v) Rs. 10,000 bills receivable dishonoured and are not recoverable. (vi) Patents are now value less. (vii) Rs. 20,000 unrecorded investment brought into books. (viii) Rs. 10,000 paid to Manish in cash and balance is transferred to his loan account. Prepare necessary accounts and balance sheet.
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State why cash flow statement is not a substitute for income statement?
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State how cash flow statements are historical in nature?
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Name any four items that can be disclosed under current investments. Identify the values shown by the company.
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What is meant by analysis of financial statements? State any two advantages of analysis of financial statements.
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Calculate the amount of opening trade receivables and closing trade receivables from the following figures: Trade Receivables Turnover Ratio = 5 times Gross Profit Ratio = 20% Opening Trade Receivables were \[\frac{1}{3}rd\] of Closing Trade Receivables. Cash Revenue from Operations being \[\frac{1}{4}\,th\] of Credit Revenue from Operations, Cost of Revenue from Operations is Rs. 10,00,000.
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From the following balance sheet of Vikas Ltd. As on 31st March, 2016 and 2017, prepare a cash flow statement. Balance Sheet as at 31st March, 2016 and 2017
| | Particulars | Note No. | 31st March, 2016 Amt (Rs.) | 31st March, 2017 Amt (Rs.) |
| I. | EQUITY AND LIABILITIES | | | |
| | 1. Shareholders? Funds | | | |
| | (a) Share Capital | | 90,000 | 1,30,000 |
| | (b) Reserves and Surplus | 1 | 48,000 | 84,000 |
| | 2. Current Liabilities | | | |
| | Trade Payables | | 17,400 | 22,000 |
| | Total | | 1,55,400 | 2,36,000 |
| II. | ASSETS | | | |
| | 1. Non-current Assets | | | |
| | Fixed Assets | | | |
| | 2. Current Assets | | | |
| | (a) Inventories | | 22,000 | 26,000 |
| | (b) Trade Receivables | | 36,000 | 39,000 |
| | (c) Cash and Cash Equivalents | | 4,000 | 5,000 |
| | Total | | 1,55,400 | 2,36,000 |
Notes to Accounts
| Particulars | 2016 Amt (Rs.) | 2017 Amt (Rs.) |
| 1. Reserves and Surplus | | |
| General Reserve | 30,000 | 55,000 |
| Balance of statement of Profit and Loss | 20,000 | 30,000 |
| Preliminary Expenses | (2,000) | (1,000) |
| | 48,000 | 84,000 |
Additional Information (i) Depreciation Charged on fixed assets for the year 2016-2017 was Rs. 20,000. (ii) Income tax Rs. 5,000 has been paid during the year.
