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P, Q and R are partners sharing profits in the ratio of \[\frac{1}{2},\] \[\frac{2}{5}\]and \[\frac{1}{10}.\]Find the new ratio of remaining partners, if R retires and his share is taken up by P.
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State the ratio in which the retiring partner's share of goodwill is debited to remaining partners.
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Name the account which shows the classified summary of transactions of a cash book in a not-for-profit organisation.
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X is a partner in M/s XYZ & Co has advanced a loan of Rs. 2,00,000 to the firm. Rate of interest was not decided but X demands interest on loan @ 10% p. a. at the year end. Is the demand of X justified?
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State the minimum amount of profit required to be transferred to debenture redemption reserve.
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Why should a new partner contribute towards goodwill at the time of admission?
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Explain with an imaginary example how issue of debentures as collateral security is shown in the balance sheet of a company when it is recorded in the books of accounts.
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Vansh Ltd issued 50,000 shares of Rs. 10 each at a premium of Rs. 2 per share payable as Rs. 3 on application, Rs. 5 (including premium) on allotment and the balance on first and final call. Applications were received for 92,000 shares and allotment was done as under:
(i) Applicants of 50,000 shares | 30,000 shares |
(ii) Applicants of 40,000 Shares | 20,000 shares |
(iii) Applicants of 2,000 | Nil |
Achint, who applied for 1,000 shares in category A and Sameer who was allotted 500 shares in category B failed to pay allotment money Calculate the amount received on allotment.
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(i) Mars, Venus and Jupiter were partners in a firm sharing profits in the ratio of 5 : 3 : 2 dealing in manufacturing of handicrafts and Khadi items. From 1st April, 2017, they decided to share the profits equally. For this purpose, the goodwill of the firm was valued at Rs. 2,40,000. Pass necessary journal entry for the treatment of goodwill on change in the profit sharing ratio of Mars, Venus and Jupiter. (ii) Also identify the value shown in the above problem.
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Show the following information in the balance sheet of the Khushi Sports Club as on 31st March 2017.
Particulars | Amt (Rs.) | Amt (Rs.) |
Tournament Fund | - | 12,500 |
Tournament Fund Investment | 12,500 | - |
Income from Tournament Fund Investment | - | 1,500 |
Tournament Expenses | 1,000 | 1,500 |
Additional Information Interest accrued on tournament fund investment Rs. 500.
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Ashu and Nishu are partners in a firm sharing profits in the ratio of 3 : 2. They admit Vishu as a new partner. The new profit sharing ratio of Ashu, Nishu and Vishu will be 5 : 5 : 3. Vishu contributed the following assets towards his capital and for his share of goodwill. Stock Rs. 1,67,000, debtors Rs. 1,40,000 (less provision for doubtful debts of 5%), land Rs. 1,00,000 and plant and machinery Rs. 1,80,000. On the date of admission of Vishu, the goodwill of the firm was valued at Rs. 13,00,000. Record the necessary journal entries in the books of the firm on Vishu's admission.
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Kanu, Sunny and Richa were partners sharing profits in the ratio of 3 : 2 : 1. On 31st March, 2017 their balance sheet stood as under: Balance Sheet as at 31st March, 2017
Liabilities | | Amt (Rs.) | Assets | Amt (Rs.) |
Creditors | | 72,000 | Cash at Bank | 70,000 |
General Reserve | | 24,000 | Investments | 50,000 |
Capital A/cs | | | Patents | 15,000 |
Kanu | 75,000 | | Stock | 25,000 |
Sunny | 70,000 | | Debtors | 20,000 |
Richa | 50,000 | 1,95,000 | Building | 75,000 |
| | | Machinery | 36,000 |
| | 2,91,000 | | 2,91,000 |
Richa died on 31st May, 2017. The following terms were agreed upon: (i) Goodwill will be valued at 3 years' purchase of the average profits of last 5 years, which were 2012 ? Rs. 40,000; 2013 ? Rs. 40,000; 2014 ? Rs. 30,000; 2015 ? Rs. 40,000 and 2016 ? Rs. 50,000. (ii) For the purpose of calculating Richa's share of profits till the date of death, it was agreed that the same be calculated based on the average profits for the last 2 years. Prepare Richa's capital account to be rendered to the executor.
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X, Y and Z were partners sharing profit in the ratio 2:2:1. After the books were closed, following ommissions were disclosed:
(i) Salary of Rs. 1,800 was payable to X was omitted. |
(ii) Interest on capital @ 10% have been omitted. |
The fixed capital were X ? Rs. 36,000 Y ? Rs. 48,000 Z ? Rs. 42,000 Profit before considering the above items were Rs. 36,000 which was already distributed among the partners. Pass necessary journal entry to rectify the above omissions.
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Golu and Monu are partners sharing profits in the ratio of 3 : 2. The court ordered for the dissolution of their partnership firm on 31st March, 2017. From the following information complete realisation account, partners' capital accounts and cash account. Dr Realisation Account Cr
Particulars |
|
Amt (Rs.) |
Particulars |
|
Amt (Rs.) |
To Sundry Assets A/c |
|
|
By Sundry Liabilities A/c |
|
|
Building |
1,20,000 |
|
Creditors |
80,000 |
|
Investments |
30,600 |
|
Mrs Golu?s Loan |
40,000 |
|
Debtors |
34,000 |
|
Provision for doubtful Debts |
4,000 |
|
Bills Receivable |
37,400 |
|
Investment Fluctuation Fund |
8,000 |
1,32,000 |
Goodwill |
4,000 |
2,26,000 |
By Cash A/c (Assets Realised) |
|
|
To Golu's Capital A/c |
|
|
Debtors |
24,000 |
|
Commission |
1,000 |
|
Building |
1,52,000 |
|
Mrs Golu's Loan |
40,000 |
41,000 |
Bills Receivable |
36,000 |
2,12,000 |
To Cash A/c (Liabilities Paid) |
|
|
By Monu?s Capital A/c (Investments) |
|
27,000 |
Realisation Expenses |
2,500 |
|
|
|
|
Creditors |
72,000 |
74,500 |
|
|
|
To???.. |
|
? |
|
|
|
|
|
3,71,000 |
|
|
3,71,000 |
Dr Partners? Capital Account Cr
Particulars |
Golu (Rs.) |
Monu (Rs.) |
Particulars |
Glou (Rs.) |
Monu (Rs.) |
To Profit and Loss A/c |
4,800 |
3,200 |
By Balance b/d |
42,000 |
42,000 |
To Realisation A/c (Investment) |
.... |
.... |
...... |
..... |
..... |
To Cash A/c (Balancing Figure) |
95,900 |
23,600 |
...... |
..... |
..... |
|
1,00,700 |
53,800 |
|
1,00,700 |
53,800 |
Dr Cash Account Cr
Particulars |
Amt (Rs.) |
Particulars |
Amt (Rs.) |
To Balance b/d |
6,000 |
By Realisation A/c (Liabilities Paid) |
74,500 |
To Realisation A/c |
2,12,000 |
By Monu?s Loan A/c |
24,000 |
(Assets realised) |
|
............ |
.... |
|
|
............ |
.... |
|
2,18,000 |
|
2,18,000 |
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XYZ library showed the following position on 31st March, 2017 Balance Sheet as at 31st March, 2017
Liabilities | Amt (Rs.) | Assets | Amt (Rs.) |
Capital Fund | 5,94,750 | Electrical Fittings | 1,12,500 |
Expenses Payable | 5,250 | Furniture | 37,500 |
| | Books | 3,00,000 |
| | Investment in Securities | 1,12,500 |
| | Cash at Bank | 18,750 |
| | Cash in Hand | 18,750 |
| 6,00,000 | | 6,00,000 |
The receipts and payments account for the year ended on 31st March, 2018 is given below: Receipts and Payments Account Dr for the year ending 31st March, 2018 Cr
Receipts | | Amt (Rs.) | Payments | | Amt (Rs.) |
To Balance b/f | | | By Electric Charges | | 5,400 |
Cash at Bank | 18,750 | | By Postage and Stationery | | 3,750 |
Cash in hand | 18,750 | 37,500 | By Telephone Charges | | 3,750 |
To Entrance Fees | | 22,500 | By Books Purchased | | 45,000 |
To Membership Subscription | | 1,50,00 | By Outstanding Expenses Paid | | 5,250 |
To Sale Proceeds of Old Papers | | 1,125 | By Rent | | 66,000 |
To Hire of Lecture Hall | | 15,000 | By Investment in Securities | | 30,000 |
To Interest on Securities | | 6,000 | By Salaries | | 49,500 |
| | | By Balance c/d | | |
| | | Cash at Bank | 15,000 | |
| | | Cash in Hand | 8,475 | 23,475 |
| | 2,32,125 | | | 2,32,125 |
You are required to prepare an income and expenditure account for the year ended 31st March, 2018 and a balance sheet as at 31st March, 2018 after making the following adjustments:
(i) Membership subscription included Rs. 7,500 received in advance. |
(ii) Provide for outstanding rent Rs. 3,000 and salaries Rs. 2,250. |
(iii) Books to be depreciated @ 10% including additions. Electrical fittings and furniture are also to be depreciated at the same rate. |
(iv) 75% of the entrance fees is to be capitalised. |
(v) Invested on securities is to be calculated @ 5% p.a. including purchases made on 1st October, 2017 for Rs. 30,000. |
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Hans Ltd invited application for issuing 40,000 equity shares of Rs. 10 each at a premium of Rs. 20 per share. The amount was payable as follows: Application - Rs. 20 per share (including Rs. 15 premium) Allotment - Rs. 6 per share (including Rs. 2 premium) First and final call - balance amount Applications for 38,000 shares were received. Shares were allotted to all the applicants. Ajay to whom 350 shares were allotted failed to pay the allotment money. His shares were for forfeited immediately after allotment, afterwards the first and final call was made. Mukesh holder of 250 shares failed to pay the first and final call. His shares were also forfeited. Out of the forfeited shared 500 shares were reissued at Rs. 30 each fully paid up. The reissued shares included all the shares of Mukesh. Give necessary journal entries. Or Seema Ltd issued 40,000 equity shares of Rs. 10 each, amount called-up as: On application Rs. 3; on allotment Rs. 2; on first call Rs. 2; on second call Rs. 1 and balance when required. Amount received on those shares were as follows: On 30,000 shares full amount received; on 5,000 shares Rs. 7 per share; on 3,000 shares Rs. 5 per share; on 2,000 shares Rs. 3 per share. The directors forfeited all those shares on which less than Rs. 7 were paid-up. 3,000 forfeited shares were re-issued at Rs. 6 each, Rs. 8 called up. 1,200 shares out of 2,000 forfeited shares were re-issued @ Rs. 8 each as fully paid-up. Pass necessary journal entries.
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A and B are Partners with 3 : 2 ratio. Their balance sheet is given below: Balance Sheet as at 31st December, 2016
Liabilities | | Amt (Rs.) | Assets | Amt (Rs.) |
Creditors | | 1,00,000 | Bank | 40,000 |
Bills Payable | | 1,00,000 | Debtors | 60,000 |
Workmen?s Compensation Fund | | 40,000 | Building | 2,00,000 |
General Reserve | | 40,000 | Machinery | 1,00,000 |
Bank Overdraft | | 20,000 | Investment | 40,000 |
Profit and Loss | | 20,000 | Furniture | 60,000 |
Capital A/cs | | | Goodwill | 20,000 |
A | 1,00,000 | | | |
B | 1,00,000 | 2,00,000 | | |
| | 5,20,000 | | 5,20,000 |
C is admitted on 1st January, 2017, on the given terms: (i) C brings capital Rs. 1,00,000 and premium Rs. 20,000. (ii) Building increases by 20%. (iii) Bank overdraft would be paid off. (iv) Investments valued at Rs. 30,000 taken over by A. (v) Rs. 20,000 included in creditors are not likely to claim payment. (vi) Capital of all partners adjusted in new ratio on the basis of C?s capital.. (vii) New ratio 2 : 2 : 1. Prepare necessary accounts and balance sheet of the new firm. Or A, B and C are Partners with 5 : 3 : 2 ratio. Their balance sheet is given below: Balance Sheet as at
Liabilities | | Amt (Rs.) | Assets | | Amt (Rs.) |
Creditors | | 1,00,000 | Cash in Hand | | 40,000 |
General Reserve | | 40,000 | Debtors | 62,000 | |
Profit and Loss A/c | | 20,000 | (-) Provision for Doubtful Debts | (2,000) | 60,000 |
Workmen?s Compensation Fund | | 30,000 | Land and Building | | 1,00,000 |
A | 40,000 | | Plant and Machinery | | 1,00,000 |
B | 40,000 | | Goodwill | | 20,000 |
C | 50,000 | 1,30,000 | | | |
| | 3,20,000 | | | 3,20,000 |
(i) C takes retirement. (ii) New ratio of A and B is 3 : 2. Goodwill of the firm is Rs. 40,000. (iii) Provision for doubtful debts increased to Rs. 3,000. (iv) Workmen compensation liability fixed at Rs. 20,000. (v) To pay off C, A and B will bring necessary cash so that their capitals are adjusted in new profit sharing ratio. Prepare revaluation account, partners? capital accounts, cash account and balance sheet.
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Payment for purchase of fixed assets is classified or shown as investing activity for both non-finance and finance company. Why?
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Accountant of Solutions Ltd, a company engaged in the business of financing, has shown interest earned under investing activity, while preparing cash flow statement. Is the treatment correct?
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Working capital of a company is Rs. 15,00,000. Its current ratio is 2.5 : 1. Calculate value of current liabilities, current assets and liquid ratio, assuming inventories of Rs. 15,00,000.
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Financial statements are prepared following the consistent accounting concepts, principles, procedures and also the legal environment in which the business organisations operate. These statements are the sources of information on the basis of which conclusions are drawn about the profitability and financial position of a company so that their users can easily understand and use them in their economic decisions in a meaningful way. From the above statement identify any two values that a company should observe while preparing its financial statements. Also, state under which major headings and sub-headings the following items will be presented in the balance sheet of a company as per Schedule III of the Companies Act, 2013.
(i) Computer software under development |
(ii) Sundry debtors |
(iii) Bill discounted but not matured |
(iv) Loose tools |
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From the following information, prepare comparative statement of profit and loss.
Particulars | 31st March, 2018 (Rs.) | 31st March, 2017 (Rs.) |
Revenue from Operations | 1,80,000 | 1,20,000 |
Other Income (% of Revenue from Operations) | 10% | 15% |
Expenses (% of Revenue from Operations) | 60% | 50% |
Tax Rate | 40% | 40% |
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From the following balance sheet of ABS Ltd as at 31st March, 2016 and 2017, prepare cash flow statement for the year ended 31st March, 2017. 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 | 1 | 13,50,000 | 14,15,000 |
| (b) Reserves and Surplus | 2 | 2,70,000 | 7,02,000 |
| 2. Non-current Liabilities | | | |
| Long-term Borrowings : 14% Debentures | | 2,70,000 | 5,40,000 |
| 3. Current Liabilities | | 2,16,000 | 4,32,000 |
| Total | | 21,06,000 | 30,89,000 |
II. | ASSETS | | | |
| 1. Non-current Assets | | | |
| (a) Fixed Assets | | 13,77,000 | 16,74,000 |
| (b) Non-current Investments | | 81,000 | 2,16,000 |
| 2. Current Assets | | | |
| (a) Cash and Cash Equivalents | | 1,08,000 | 3,89,000 |
| (b) Other Current Assets | | 5,40,000 | 8,10,000 |
| Total | | 21,06,000 | 30,89,000 |
Notes to Accounts
Particulars | 2016 Amt (Rs.) | 2017 Amt (Rs.) |
1. Share Capital | | |
Equity Share Capital | 8,10,000 | 11,45,000 |
Preference Share Capital | 5,40,000 | 2,70,000 |
2. Reserves and Surplus | | |
Statement of Profit and Loss | 2,70,000 | 7,02,000 |
Additional Information
(i) Depreciation charged on fixed assets was Rs. 1,62,000. |
(ii) Interim dividend of 15% paid on equity shares. Additional shares issued at 31st March, 2017. |
(iii) Preference shares were redeemed at a premium of 15%. |
(iv) Fixed assets with a book value of Rs. 1,08,000 were sold at Rs. 67,500. |
(v) Preference dividend paid Rs. 64,800. |
(vi) Debentures interest paid during the year Rs. 37,800. |
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