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A, B and C are partners sharing profits equally. A drew regularly Rs. 4,000 in the beginning of every month for the six months ended 30th September, 2016. Calculate interest on A?s drawings @ 5% p.a.
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The firm of Sonu and Monu earned a profit of Rs. 3,25,000 during the year ending on 31st March, 2016. They have decided to donate 10% of this profit to an NGO working for senior citizens. Pass necessary journal entry for the distribution of profits.
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X Ltd issued 10,000, 8% debentures of Rs. 10 each, payable on application and redeemable at par at any time after 6 years. Record the entries for the issue of debentures in the books of X Ltd.
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Raju and Manoj are partners with capital of Rs. 8,000 and Rs. 6,000 respectively. They admit Naveen as a partner for \[\frac{1}{4}th\] share in the firm's profit. Naveen brings Rs. 8,000 as his share of capital. Calculate the amount of Hidden goodwill?
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On admission of a new partner in a firm, an accountant is of the opinion that reserves and accumulated profits should not be distributed as there is no legal requirement and also he is of the opinion that if they are not distributed, they will remain in business and they can be distributed when a partner retires or when the firm is dissolved. Is the accountant correct?
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Name any two capital receipts that are directly added to the capital fund?
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Wadhwa Ltd issued 60,000 15% debentures of Rs. 10 each credited as fully paid to the promoters for their services and issued 15,000, 15% debentures of Rs. 10 each credited as fully paid to the underwriters for the underwriting services. Journalise these transactions. Also identify the value shown by the company in issuing debentures to underwriters.
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Arundhati Ltd was registered with a capital of Rs. 10,00,000 in shares of Rs. 20 each. It invited applications for 50,000 shares. The amount is payable as Rs. 5 on application, Rs. 10 on allotment and Rs. 5 on first and final call. Give journal entries for the above transactions and also show the cash book of the firm, when the public has subscribed for 46,500 shares.
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X, Y and Z are partners sharing profits in the ratio of 4 : 3 : 2. On 1st April, 2017, Y gave a notice to retire from the firm. X and Z decided to share future profits in the ratio of 1 : 1. The capital accounts of X and Z after all adjustments showed a balance of Rs. 21,500 and Rs. 40,250 respectively. The total amount to be paid to Y was Rs. 47,750. This amount was to be paid by X and Z in such a way that their capitals become proportionate to their new profit sharing ratio. Pass necessary journal entries in the books of the firm for the above transactions. Show your working clearly.
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Calculate the amount of sports material to be debited to income and expenditure account for the year ended 31st March, 2017 on the basis of the following information:
Particulars | 1st April, 2016 | 31st March, 2017 |
Stock of sports material | 4,500 | 3,840 |
Creditors for sports material | 1,200 | 1,560 |
Amount paid for sports material during the year was Rs. 11,400.
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P, Q and R were partners in a firm sharing profits and losses in the ratio of 3 : 1 : 1. On 1st April, 2017, their balance sheet stood as under: Balance Sheet as at 1st April, 2017
Liabilities | | Amt (Rs.) | Assets | Amt (Rs.) |
General Reserve | | 25,000 | Land and Building | 1,50,000 |
Profit and Loss A/c | | 35,000 | Machinery | 50,000 |
Machinery Replacement Fund | | 17,000 | Machinery Replacement Fund Investments | 17,000 |
Investments Fluctuation Reserve | | 20,000 | Investments (Market value Rs. 28,000) | 30,000 |
Workmen?s Compensation Reserve | | 23,000 | Current Assets | 1,18,000 |
Employees? Provident Fund | | 30,000 | Advertisement Expenditure | 25,000 |
Creditors | | 1,00,000 | (Deferred revenue) | |
Capital A/cs | | | | |
P | 1,00,000 | | | |
Q | 30,000 | | | |
R | 20,000 | 1,50,000 | | |
| | 4,00,000 | | 4,00,000 |
They admitted S into partnership for l/5th share of profits on the above date. A claim on account of workmen's compensation is estimated at Rs. 13,000 only. Give the necessary journal entries to adjust the accumulated profits and losses.
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Following is the balance sheet of Amit, Rahul and Ankit as at 31st March, 2017. Balance Sheet as at 31st March, 2017
Liabilities | | Amt (Rs.) | Assets | Amt (Rs.) |
Sundry Creditors | | 40,000 | Plant and Machinery | 2,00,000 |
Reserve Fund | | 64,000 | Stock | 80,000 |
Capital A/cs | | | Sundry Debtors | 1,20,000 |
Amit | 2,00,000 | | Cash at Bank | 1,00,000 |
Rahul | 1,00,000 | | Cash in Hand | 4,000 |
Ankit | 1,00,000 | 4,00,000 | | |
| | 5,04,000 | | 5,04,000 |
Ankit died on 30th June, 2017. Under the terms of partnership deed, the executors of the deceased partner were entitled to the following:
(i) Amount standing to the credit of the partner's capital account. |
(ii) Interest on capital @ 5% per annum. |
(iii) Share of goodwill on the basis of twice the average of the past three years' profits. |
(iv) Share of profits from the closing of the last financial year to the date of death on the basis of the last year's profits. |
(v) Ankit's share of goodwill will be adjusted to the accounts of Amit and Rahul who will maintain a profit sharing ratio of 2 : 1 in the new firm. They decide not to raise any goodwill account. |
Profits for the year ended 31st March, 2015, 2016 and 2017 were Rs. 1,60,000, Rs.1,80,000, Rs. 2,00,000 respectively. Profits were shared in the ratio of capitals. Draw up Ankit's capital account.
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Following is the receipts and payments account of Green Club for the year ended 31st March, 2018. Receipts and Payments Account Dr for the year ending 31 st March, 2018 Cr
Receipts | | Amt (Rs.) | Payments | Amt (Rs.) |
To Balance b/d | | 15,640 | By Salary | 2,400 |
To Subscriptions | | | By Newspaper | 1,640 |
2016-17 | 960 | | By Electricity Bill | 800 |
2017-18 | 21,200 | | By 9% Investments (1st July, 2017) | 16,000 |
2018-2019 | 400 | 22,560 | By Books | 8,480 |
To Sale of Old Newspapers | | 1,000 | By Rent | 5,440 |
To Government Grants | | 8,000 | By Furniture | 8,400 |
(Book Value Rs. 5,600) | | | By Balance c/d | 8,960 |
To Interest on Investments | | 360 | | |
| | 52,120 | | 52,120 |
Additional Information (i) The club owned furniture Rs. 12,000 and Books Rs. 5,600 on 1st April, 2017. (ii) Salary and rent were outstanding Rs, 480 and Rs. 960 on 31st March, 2018. (iii) Subscription outstanding on 31st March, 2017 was Rs. 1,600 and on 31st March 3 Was Rs. 2,000. Prepare income and expenditure account and balance sheet for the year ending 31st March, 2018.
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A, B and C were partners in a firm sharing profits in the ratio of 2 : 2 : 1. On 28th February, 2017, their firm was dissolved. 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 |
2,60,000 |
By Creditors |
1,60,000 |
To A?s Capital A/c (Creditors) |
1,50,000 |
By C's Capital A/c (Sundry assets) |
1,30,000 |
To B?s Capital A/c |
10,000 |
By ... |
... |
(Realisation Expenses) |
|
|
|
|
4,20,000 |
|
4,20,000 |
Dr Partners? Capital Account Cr
Particulars |
A (Rs.) |
B (Rs.) |
C (Rs.) |
Particulars |
A (Rs.) |
B (Rs.) |
C (Rs.) |
To Balance b/d |
- |
- |
46,000 |
By Balance b/d |
1,50,000 |
10,000 |
- |
To ??. |
. |
. |
. |
By Realisation A/c |
- |
- |
- |
To Realisation A/c |
- |
- |
1,30,000 |
By Cash A/c |
- |
32,000 |
2,02,000 |
(Assets) |
|
- |
- |
(Cash brought in) |
|
|
|
To Cash A/c |
2,48,000 |
- |
- |
|
|
|
|
(Final Payment) |
|
|
|
|
|
|
|
|
3,00,000 |
52,000 |
2,02,000 |
|
3,00,000 |
52,000 |
2,02,000 |
Dr Cash Account Cr
Particulars |
Amt (Rs.) |
Particulars |
Amt (Rs.) |
To Balance b/d |
14,000 |
By......... |
... |
To .... |
... |
|
|
To .... |
... |
|
|
|
2,48,000 |
|
2,48,000 |
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A and B are partners with capitals of Rs. 5,00,000 and Rs. 4,00,000 respectively, on which they are entitled to interest at 10% p.a. They divide profits in the ratio of 2 : 1 . They take C into partnership with l/4th share of profits and guaranteed that his share of profit will not be less than Rs. 2,00,000. C brought Rs. 3,00,000 as his capital. Any excess profits received by C over his l/4th share will be borne by A and B in the ratio of 4 : 1. Profits at the end of the year before allowing interest on capitals amounted to Rs. 7,20,000. Distribute the profits.
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A and B are partners sharing profits and losses in the ratio of 1:1. Following is their balance sheet. Balance Sheet as at...
Liabilities | | Amt (Rs.) | Assets | Amt (Rs.) |
Creditors | | 1,00,000 | Cash | 50,000 |
General Reserve | | 60,000 | Debtors | 60,000 |
Workmen Compensation Fund | | 40,000 | Building | 2,00,000 |
Employees Provident Fund | | 50,000 | Machine | 1,00,000 |
Bills Payable | | 50,000 | Stock | 80,000 |
Capital A/cs | | | Patents | 20,000 |
A | 2,00,000 | | Investment | 50,000 |
B | 1,00,000 | 3,00,000 | Goodwill | 20,000 |
| | | Profit and Loss | 20,000 |
| | 6,00,000 | | 6,00,000 |
Adjustments
(i) C comes for l/6th share and brings capital of Rs. 1,00,000 and proportionate share in goodwill. |
(ii) Goodwill of the firm is valued at Rs. 1,20,000. |
(iii) Half the premium is withdrawn by old partners. |
(iv) Rs. 20,000 unrecorded typewriter brought into books. |
(v) Make Rs. 5,000 provision for unforseen liabilities. |
(vi) Bills payable paid-off. |
(vii) Building was found undervalued by Rs. 40,000. |
(viii) Capital of A and B adjusted in new profit sharing ratio on the basis of C's capital. The difference is adjusted in cash. |
Prepare revaluation account, partners' capital accounts, cash account and balance sheet of the new firm. Or A, B and C are partners with profit sharing ratio 5 : 3 : 2. Their balance sheet is as follows: Balance Sheet as at..
Liabilities | | Amt (Rs.) | Assets | Amt (Rs.) |
Creditors | | 80,000 | Bank | 40,000 |
Bills Payable | | 60,000 | Debtors | 60,000 |
General Reserve | | 30,000 | Furniture | 40,000 |
Reserve for Contingency | | 20,000 | Investment | 30,000 |
Workmen Compensation Fund | | 40,000 | Building | 1,00,000 |
Provident Fund | | 40,000 | Prepaid Insurance | 10,000 |
Capital A/cs | | | Goodwill | 20,000 |
A | 40,000 | | Patents | 30,000 |
B | 30,000 | | Profit and Loss | 40,000 |
C | 30,000 | 1,00,000 | | |
| | 3,70,000 | | 3,70,000 |
Adjustments
(i) C takes retirement, new ratio of A and B is 3 : 2. |
(ii) Rs. 10,000 given to C in cash and balance transferred to C's loan account. |
(iii) Capital of new firm fixed at Rs. 2,00,000 and difference adjusted in cash. |
(iv) Prepaid insurance is no more required. |
(v) Rs. 10,000 unrecorded typewriter has to be shown in the balance sheet. |
(vi) Investment is valued at Rs. 20,000 and is taken over by A at this value. |
(vii) Make 5% provision for discount on creditors. |
(viii) Outstanding repair bills due Rs. 10,000. |
(ix) Provident fund decreased by 10,000. |
(x) Accrued commission Rs. 5,000. |
(xi) Building increased by 20%. |
(xii) Goodwill of the firm valued at Rs. 40,000. |
Prepare necessary ledgers.
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Kanso Ltd issued 10,00,000 shares of Rs. 10 each at a premium of Rs. 4 per share payable as follows: Rs. 4 on application Rs. 6 on allotment Rs. 4 on call Applications were received for 14,00,000 shares and pro-rata allotment was made as follows: To the applicants of 10,00,000 shares, 8,00,000 shares were issued and for the rest, 2,00,000 shares were issued. All money due were received except the allotment and call money from Viresh who had applied for 15,000 shares (out of the group of 10,00,000 shares). All his shares were forfeited. 7,500 of the forfeited shares were re-issued for Rs. 8 per share fully paid-up. Pass necessary Journal entries for the above transactions. Or Ram Ltd invited applications for 8,00,000 equity shares of Rs. 10 each at a premium of Rs. 40 per share. The amount was payable as follows:
On application | - | Rs. 35 Per share (including Rs. 30 Premium) |
On allotment | - | Rs. 8 per share (including Rs. 4 Premium) |
On first and final call | - | Balance |
Applications for 7,70,000 shares were received. Shares were allotted to all the applicants. Sumit to whom 70,000 shares were allotted failed to pay the allotment money. His shares were forfeited immediately after allotment. Afterwards the first and final call was made. Sohail, the holder of 5,000 shares failed to pay the first and final call. His shares were also forfeited. Out of the forfeited shares 10,000 shares were reissued at Rs 50 per share fully paid-up. The reissued shares included all the shares of Sohail. Pall necessary journal entries for the above transaction in the books of Ran Ltd.
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Rakshak Ltd. Made an operating profit of Rs. 1,85,500 after charging depreciation of Rs. 31,200. During that year, trade payables increased by Rs. 26,600 and inventory increased by Rs. 40,300. There was no change to trade receivables. Assuming that no other factors affected it, what would be the cash generated from operations.
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Sale of marketable securities at par would result in inflow, outflow or no flow of cash?
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List any four items of ?reserves? that are shown under the heading ?reserves and surplus in the balance sheet of a company as per schedule III of the companies Act, 2013. Identify the value in showing the items separately in the notes to accounts?
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(i) How the earning capacity of a business is assessed by financial statement analysis. |
(ii) How does subjectivity become a limitation of financial statement analysis. |
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From the following information, calculate any two of two of the following ratios.
(i) Debt to equity ratio |
(ii) Working capital turnover ratio |
(iii) Return on investment |
Information Equity share capital Rs. 25,000, general reserve Rs. 2,500 balance of statement of profit and loss after interest and tax Rs. 7,500, 9% debentures Rs. 10,000, creditors Rs. 7,500, land and building Rs. 32,500, equipments Rs. 7,500, Debtors Rs. 7,250 cash Rs. 2,750, revenue from operations i.e. sales for the year ended 31st March, 2017 was Rs. 50,000, tax, rate is 50%.
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From the balance sheet and information given below, prepare cash flow statement. Balance Sheet as at ???.
Particulars | 31st March, 2017 | 31st March, 2018 |
EQUITY AND LIABILITIES | | |
Creditors | 32,000 | 35,200 |
A?s Loan | 20,000 | - |
Loan from Bank | 32,000 | 40,000 |
Capital | 1,00,000 | 1,22,400 |
| 1,84,000 | 1,22,400 |
ASSETS | | |
Cash | 8,000 | 5,600 |
Debtors | 24,000 | 40,000 |
Stock | 28,000 | 20,000 |
Land | 32,000 | 40,000 |
Machinery | 64,000 | 44,000 |
Building | 28,000 | 48,000 |
| 1,84,000 | 1,97,600 |
During the year, machine costing Rs. 8,000 (Accumulated Depreciation Rs. 2,400) was sold for Rs. 4,000. The provisions for depreciation against machinery as on 31st March, 2017 and 31st March, 2018 were Rs. 20,000 and Rs. 32,000 respectively. Net profit for the year amounting to Rs. 36,000.
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