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Why is goodwill considered as an intangible asset but not a fictitious asset?
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The accountant of GT Ltd having two partners Geetika and Tushar passed a journal entry to distribute workmen compensation reserve as credit workmen compensation reserve account and debit partners' capital account. Is the treatment correct?
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Pass necessary journal entry to transfer 10% of profits to general reserves, if Profit is given Rs. 5,00,000.
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In case of change in profit sharing ratio, how can the gaining partner compensate the sacrificing partner.
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What do you understand by the term legacy?
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Goel Ltd invited applications for issuing 6,000, 12% debentures of Rs. 100 each at a premium of Rs. 50 per debenture. The full amount was payable on application. Applications were received for 8,000 debentures. Applications for 2,000 debentures. were rejected and application money was refunded. Debentures were allotted to the remaining applicants. Pass necessary journal entries for the above transactions in the books of Goel Ltd.
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Subscription received during the year ended 31st March, 2018 at Youth Club were as under:
2016-17 | Rs. 5,000 |
2017-18 | Rs. 90,000 |
2018-19 | Rs. 25,000Rs. 97,500 |
The club has 1,000 members each paying Rs. 100 each as annual subscription. Subscription outstanding as on 31st March, 2017 were Rs. 9,000. Calculate the amount of subscription to be shown in the income and expenditure account and total outstanding subscription for the year ended on 31st March, 2018.
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ABC Ltd issued 20,000, 9% debentures of Rs. 100 each at a discount of 4% payable Rs. 30 on application and the balance on allotment. The debentures are redeemable after 5 years. Give necessary journal entries for the issue of debentures.
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X Ltd purchased the assets of Y Ltd for Rs. 1,00,000 payable in fully paid equity shares of Rs. 10 each. What entries will be passed in the books of X Ltd if such issue is
(i) at par | (ii) at a premium of 25% |
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X, Y and Z are partners sharing profits and losses in the ratio of 2 : 2 : 1. Y retires from the firm on 31st March, 2017. On the date of Y's retirement, the following balances appeared in the books of the firm.
Advertisement suspense account | Rs. 25,000 |
Contingency reserve | Rs. 15,000 |
Workmen's compensation reserve | Rs. 20,000 |
Loss in business account | Rs. 15,000 |
Pass the necessary journal entries for the adjustment of these items on Y's retirement Write the values which can be associated with the partners in this case.
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AK and BK are partners sharing profits and losses in the ratio of 5:1. They agreed to admit CK as a partner. Profits will be shared equally in future. CK brought in Rs. 60,000 as a premium for his share in profits. Pass necessary journal entries in the books of the firm.
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Ajay, Vijay and Sanjay were partners in a firm sharing profits in the ratio of 2 : 2 : 1. On 31st December, 2016, their balance sheet was as under: Balance Sheet as at 31st December, 2016
Liabilities | | Amt (Rs.) | Assets | Amt (Rs.) |
Creditors | | 40,000 | Cash | 32,000 |
General Reserve | | 30,000 | Debtors | 48,000 |
Capital A/cs | | | Stock | 12,000 |
Ajay | 80,000 | | Patents | 2,000 |
Vijay | 40,000 | | Machinery | 64,000 |
Sanjay | 40,000 | 1,60,000 | | 72,000 |
| | 2,30,000 | | 2,30,000 |
Ajay died on 1st July, 2017. It was agreed between his executor and the remaining partners that (i) Goodwill to be valued at two years' purchase of the average pro fits of the previous four years which were as under: 2013 \[-\] Rs. 20,000; 2014 \[-\] Rs. 28,000; 2015 \[-\] Rs. 36,000 and 2016 ? Rs. 24,000. (ii) Goodwill is not to be shown in the books at all. (iii) Interest on capital be provided at 12% per annum. (iv) His share of profit for the year 2017 be taken as accrued at the same rate as that of the previous year. Prepare Ajay's capital account as on 1st July, 2017.
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The following is the receipts and payments account of Ananda Hospital for the year ended on 31st March, 2018. You are required to prepare income and expenditure account for the year ended on 31st March, 2018 and balance sheet as on that date. Receipts and Payments Account Dras on 31st March, 2018Cr
Receipts | Amt (Rs.) | Payments | Amt (Rs.) |
To Balance b/d | 23,800 | By Medicines | 92,400 |
To Grant | 56,000 | By Salaries | 75,600 |
To Subscription | 1,34,400 | By Fees to Doctors | 67,200 |
To Donation | 42,000 | By General Expenses | 3,360 |
To Proceeds from Charity Show | 33,600 | By Equipment?s | 42,000 |
To Interest on Investment @ 9% p.a. | 25,200 | By Charity Show Expenses | 11,200 |
| | By Balance c/d | 23,240 |
| 3,15,000 | | 3,15,000 |
Other Information
Particulars | 31st Mach, 2017 (Rs.) | 31st March, 2018 (Rs.) |
(i) Subscription-in arrears | 1,400 | 2,800 |
(ii) Subscription-in-advance | 4,200 | 3,500 |
(iii) Stock of Medicines | 30,800 | 35,000 |
(iv) Amount due to Suppliers of Medicines | 19,600 | 32,200 |
(v) Value of Equipment?s | 75,600 | 95,200 |
(vi) Value of Building | 1,90,400 | 1,79,200 |
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S and T were partners from 1st April, 2015 with capitals of Rs. 1,20,000 and Rs. 80,000 respectively. They shared profits in the ratio of 3 : 2. They carried on business for two years. In the first year ended 31st March, 2016, they earned a profit of Rs. 1,00,000 but in the second year ended 31st March, 2017, a loss of Rs. 40,000 was incurred. As the business was no longer profitable, they dissolved the firm on 31st March, 2017. Complete the realisation account, partners' capital account and cash account. DrRealisation AccountCr
Particulars |
Amt (Rs.) |
Particulars |
|
Amt (Rs.) |
To Sundry Assets A/c |
2,36,000 |
By Creditors |
|
40,000 |
To Cash A/c (Creditors) |
40,000 |
By Cash A/c (Assets realised) |
|
2,00,000 |
To Cash A/c, (Expenses) |
6,000 |
By ..... |
|
|
|
|
.......... |
? |
|
|
|
.......... |
? |
42,000 |
|
2,82,000 |
|
|
2,82,000 |
DrPartners' Capital Account Cr
Particulars |
S (Rs.) |
T (Rs.) |
Particulars |
S (Rs.) |
T (Rs.) |
............... |
. |
. |
By Balance b/d |
1,24,000 |
72,000 |
To Cash A/c (Final payment) |
98,800 |
55,200 |
|
|
|
|
1,24,000 |
72,000 |
|
1,24,000 |
72,000 |
DrCash AccountCr
Particulars |
Amt (Rs.) |
Particulars |
Amt (Rs.) |
To Realisation A/c (Assets realised) |
2,00,000 |
By ....... |
. |
|
|
By ....... |
. |
|
|
By S?s Capital A/c (Final Payment) |
. |
|
|
By T?s Capital A/c (Final payment) |
. |
|
2,00,000 |
|
2,00,000 |
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Sagar, Mayank and Rohit commenced business on 1st April, 2016 with capitals of Rs. 2,00,000, Rs. 1,60,000 and Rs. 1,20,000 respectively. They agreed to share profits and losses in the ratio of 4 : 3 : 3. During the year 2016-17, they made a profit of Rs. 98,000 before allowing interest on capital @10% p.a. The profit for the year 2017-18 was Rs. 1,20,000 after allowing interest on capital. Each of the partners had drawn Rs. 20,000 p.a. The partners with mutual consent agreed to wind up the business operations. Creditors on that date were Rs. 20,200. Assets realised Rs. 4,20,000 and the expenses. realisation were Rs. 5,000. Prepare the balance sheet as on 31st March, 2018 and Find out the profit or loss on realisation.
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DEF Company Ltd offered for public subscription 10,000 shares of Rs. 10 each at Rs. 11 per share. Money was payable as follows: Rs. 3 on application; Rs. 4 on allotment (including premium); Rs. 4 on first and final call. Applications were received for 12,000 shares and the directors made pro-rata allotment. Akansha, an applicant for 120 shares, could not pay the allotment and call money and Shalu, a holder of 200 shares, failed to pay the call. All these shares were forfeited. Out of the forfeited shares, 150 shares (the whole of Akansha shares being included) were issued at Rs. 8 per share. Record journal entries for the above transactions and prepare the share forfeited account. Or Krishna Ltd issued 40,000 equity shares of Rs. 10 each at a premium of Rs. 2.50 per share. The amount was payable as follows: On application Rs. 2 per share; on allotment Rs. 4.50 per share (including premium); and on call Rs. 6 per share. Owing to heavy subscription the allotment was made on pro-rata basis as follows: (i) Applicants for 20,000 shares were allotted 10,000 shares. (ii) Applicants for 56,000 shares were allotted 14,000 shares. (iii) Applicants for 48,000 shares were allotted 16,000 shares. It was decided that the excess amount received on applications would be utilized on allotment and the surplus would be refunded. Riya, to whom 1,000 shares were allotted and who belongs to category (i), failed to pay allotment money. Her shares were forfeited after the call. Pass the necessary journal entries in the books of Krishna Ltd for the above transactions.
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Rachit and Madhur were partners in a firm sharing profits and losses in the ratio of 4 : 3. The following is the balance sheet of the firm as on 31st December, 2016. Balance Sheet as at 31st December, 2016
Liabilities | | Amt (Rs.) | Assets | | Amt (Rs.) |
Sundry Creditors | | 20,000 | Cash | | 14,800 |
Bills Payable | | 3,000 | Debtors | 20,500 | |
Bank Overdraft | | 17,000 | (-) Provision for Doubtful Debts | (300) | 20,200 |
Capital A/cs | | | Stock | | 20,000 |
Rachit | 70,000 | | Plant | | 40,000 |
Madhur | 60,000 | 1,30,000 | Building | | 75,000 |
| | 1,70,000 | | | 1,70,000 |
They agreed to admit Rishant as a partner with effect from 1st January, 2017 for 1/4th share in profits on the following terms: (i) Rishant will bring in capital to the extent of l/4th of the total capital of the new firm after all adjustments have been made. (ii) Building is to be appreciated by Rs. 14,000 and plant to be depreciated by Rs. 7,000. (iii) The provision on debtors is to be raised to Rs. 1,000. (iv) The goodwill of the firm has been valued at Rs. 21,000. Prepare revaluation account, partners' capital account and balance sheet of the firm immediately after Rishant's admission. Or Randhir, Rishi and Rajeev are partners with 2 : 2 : 1 ratio. Balance Sheet as at 31st December, 2017
Liabilities | | Amt (Rs.) | Assets | Amt (Rs.) |
Creditors | | 60,000 | Cash in Hand | 30,000 |
General Reserve | | 20,000 | Bank | 20,000 |
Workmen Compensation Fund | | 10,000 | Debtors | 50,000 |
Capital A/cs | | | Building | 1,00,000 |
Randhir | 60,000 | | Investment | 20,000 |
Rishi | 40,000 | | Deferred Revenue Expenses | 10,000 |
Rajeev | 40,000 | 1,40,000 | | |
| | 2,30,000 | | 2,30,000 |
Adjustments (i) Rajeev takes retirement. (ii) New profit sharing ratio between Randhir and Rishi is 11: 9 and goodwill of the firm is valued at Rs. 40,000. (iii) Investment is taken over by Rajeev at Rs. 15,000. (iv) Rs. 6,000 worth unrecorded typewriter is taken by Randhir at Rs. 5,000. (v) Building increase by 10%. (vi) 10,000 paid to Rajeev in cash and the balance transferred to his loan account. (vii) Continuing partners decide to adjust their capitals in their profit sharing ratio. Adjustments are to be made through cash. Prepare necessary accounts and balance sheet.
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Give an example of a non-cash transaction.
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Mention the net amount of 'source' or 'use' of cash when a fixed asset (having book value Rs. 1,20,000) is sold at a loss of Rs. 40,000.
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Draw notes to accounts for change in inventories of Kartik Ltd for the year ended 31st March, 2017 from the following information and determine the amount that will be shown in the statement of profit and loss against change in inventories of finished goods, work-in-progress and stock-in-trade.
Particulars | Opening Inventory (Rs.) | Closing Inventory (Rs.) |
Finished Good | 5,00,000 | 4,00,000 |
Work-in-progress | 9,00,000 | 10,00,000 |
Stock-in-trade | 15,00,000 | 14,00,000 |
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Prepare common-size statement of profit and loss from the following statement of profit and loss: Statement of Profit and Loss for the year ending 31st March, 2018
| Particulars | Note No. | 21st March 2018 Amt (Rs.) |
I. | Income | | |
| Revenue from Operations | | 10,00,000 |
| Other Income | | 2,00,000 |
| Total Revenue | | 12,00,000 |
II. | Expenses | | |
| Purchases of Stock-in-trade | | 5,00,000 |
| Change in Inventories of Stock-in-trade | | 2,50,000 |
| Other Expenses | | 1,50,000 |
| Total | | 9,00,000 |
III. | Net Profit before Tax (I-II) | | 3,00,000 |
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From the following balance sheet of Kushal Ltd as at 31st March, 2017 and additional information, calculate the debtors? turnover ratio and debt collection period. Balance Sheet As at 31st March, 2017
| Particulars | 31st March, 2017 Amt (Rs.) |
I. | EQUITY AND LIABILITIES | |
| 1. Shareholders? Funds | |
| (a) Share Capital | 5,00,000 |
| (b) Reserves and Surplus | 2,00,000 |
| 2. Non-current Liabilities | 2,00,000 |
| (a) Long-term Borrowings | 2,00,000 |
| (b) Deferred Tax Liabilities (Net) | 50,000 |
| 3. Current Liabilities | |
| (a) Trade Payables | 2,00,000 |
| (b) Short-term Provisions | 10,000 |
| Total | 11,60,000 |
II. | ASSETS | |
| 1. Non-current Assets | |
| Fixed Assets (Tangible assets) | 7,00,000 |
| 2. Current Assets | |
| (a) Trade Receivables | 3,50,000 |
| (b) Inventories | 1,10,000 |
| Total | 11,60,000 |
Additional Information
(i) Credit sales of Rs. 15,00,000 and cash sales of Rs. 2,50,000. |
(ii) Trade receivables in the beginning of the year were Rs. 4,50,000. |
Write the value shown by the business in maintaining such a debtor?s turnover ratio. Industry average being 3.
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From the following balance sheet of SS Ltd, prepare 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 | 1 | 8,00,000 | 10,00,000 |
| (b) Reserves and Surplus | 2 | 60,000 | 74,000 |
| 2. Non-current Liabilities | | | |
| 15% Debentures | | 1,20,000 | 1,30,000 |
| 3. Current Liabilities | | | |
| (a) Short-term Borrowings: Bank Overdraft | | 2,50,000 | 1,36,000 |
| (b) Trade Payables (Sundry creditors) | | 2,40,000 | 2,20,000 |
| (c) Short-term Provisions | 3 | 1,60,000 | 2,00,000 |
| Total | | 16,30,000 | 17,60,000 |
II. | ASSETS | | | |
| 1. Non-current Assets | | | |
| Fixed Assets | 4 | 6,00,000 | 5,00,000 |
| 2. Current Assets | | | |
| (a) Trade Receivables (Debtors) | | 4,00,000 | 4,80,000 |
| (b) Inventories (Stock) | | 6,00,000 | 7,00,000 |
| (c) Other Current Assets | | 6,000 | 10,000 |
| (d) Cash and Cash Equivalent | | 24,000 | 70,000 |
| Total | | 16,30,000 | 17,60,000 |
Notes to Accounts
| Particulars | 2016 Amt (Rs.) | 2017 Amt (Rs.) |
1. | Share Capital | | |
| Equity Share Capital | 8,00,000 | 9,00,000 |
| 12% Preference Share Capital | - | 1,00,000 |
| | 8,00,000 | 10,00,000 |
2. | Reserves and Surplus | | |
| Statement of Profit and Loss | 20,000 | 24,000 |
| General Reserve | 40,000 | 50,000 |
3. | Short-term Provisions | | |
| Provision for Taxation | 60,000 | 84,000 |
| Proposed Dividend | 1,00,000 | 1,16,000 |
| | 1,60,000 | 2,00,000 |
4. | Fixed Assets (Tangible) | | |
| Fixed Assets | 8,20,000 | 8,00,000 |
| (-) Depreciation | (2,20,000) | (3,00,000) |
| | 6,00,000 | 5,00,000 |
Additional Information
(i) Debenture Interest Paid Rs. 18,000. |
(ii) Preference Shares were issued at the end of the year. |
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