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What is meant by specific donation?
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The firm XXX earned a profit of Rs. 2,75,000 during the year ending on 31st March, 2017.10% of this profit was to be transferred to general reserve. Pass necessary journal entries for the same.
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Ashish and Bhuvnesh are the partners in a firm. They admit Chakresh into the firm. The new ratio is agreed to be 2 : 2 :1. Ashish and Bhuvnesh made equal sacrifice to accommodate Chakresh. What was the old ratio of Ashish and Bhuvnesh?
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Smita International Ltd issued 2,50,000 shares of Rs. 10 each at a premium of Rs. 2 Payable as:
On application | Rs. 3 |
On allotment | Rs. 4 (including premium) |
On first call | Rs. 3 |
On second and final call | Rs. 2 |
Mr. Kishan who holds 1,000 shares failed to pay the first call money. The company has forfeited the 1,000 shares after the first call. On forfeiture, the amount debited to share capital account would be?
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A firm having the assets of Rs. 4,00,000 and liabilities of Rs. 1,68,000 earns the annual profit of Rs. 36,000. The rate of normal profit being 12%. Calculate the amount of goodwill by capitalisation of super profit method.
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Ram and Shyam are partners sharing profits in the ratio of 3 : 2. Mrs Ram has given a loan of Rs. 4,00,000 to the firm and the firm also obtained a loan of Rs. 2,00,000 from Shyam. The firm was dissolved and its assets were realised for Rs. 5,00,000. State the order of payment of Mrs Ram's loan and Shyam's loan with reason, if there were no other creditors of the firm.
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Ronak Ltd took over the assets amounting to Rs. 3,44,000 and liabilities of Rs. 88,800 of Paras Ltd at an agreed value of ? 2 55,200. The purchase price was discharged by issuing 8% debentures of Rs. 100 each at a premium of 10%. Give journal entries in the books of Ronak Ltd.
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Designs Unlimited is in garment business. As its corporate social responsibility, it decided to install 100 toilets in the schools. The project was named 'Swastha Bharat'. It purchased materials worth Rs. 2,25,000 from Indian Traders Ltd. Payment made as Rs. 5,000 by a cross cheque and remaining by issuing equity shares of Rs. 10 each at 10% premium. Pass journal entries for the same. Identify the value being conveyed in the question.
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Subscription received by an institution in 2017-18 Rs. 8,000. Subscription unpaid on 1st April, 2017 for 2016 - 17 Rs. 800, Rs. 720 of these were received in 2017 - 18. Advance subscription received on 31st March, 2017 were Rs. 200 and on 31st March, 2018 were Rs. 160. Subscription unpaid on 31st March, 2018 for 2017 - 18 were Rs. 280. You are required to show the subscription in income and expenditure account.
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Neetu, Sonia and Bobby are partners sharing profits in the ratio of 4 : 3 : 2. On 1st April, 2016, Neetu gave a notice to retire from the firm. Sonia and Bobby decided to share future profits in the ratio of 2 : 3. The adjusted capital accounts of Sonia and Bobby showed a balance of Rs. 1,50,000 and Rs. 2,45,000 respectively. The total amount to be paid to Neetu is Rs. 2,00,000. This amount is to be paid by Sonia and Bobby in such a way that their capitals become proportionate to their new profit sharing ratio. Pass necessary journal entries for the above transactions in the books of the firm. Show your working clearly.
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A, B and C are partners in a firm sharing profits in the proportion of 3 : 2 : 1. Their balance sheet as at 31st March, 2018 stood as follows: Balance Sheet as at 31st March, 2018
Liabilities |
|
Amt (Rs.) |
Assets |
Amt (Rs.) |
Bills Payable |
|
7,200 |
Buildings |
12,600 |
Creditors |
|
8,400 |
Cash in Hand |
2,550 |
General Reserve |
|
7,200 |
Cash at Bank |
12,870 |
Capital A/cs |
|
|
Debtors |
7,200 |
A |
12,000 |
|
Bills Receivable |
2,580 |
B |
7,200 |
|
Stock |
1,050 |
C |
4,800 |
24,000 |
Investments |
7,950 |
|
|
46,800 |
|
46,800 |
|
|
|
|
|
|
B died on 30th June, 2018 and according to the deed, his executors are entitled to :
(i) Capital to his credit at the time of his death. |
(ii) Interest on capital @ 10% p.a. |
(iii) Share of general reserve. |
(iv) Share of profits based on the sales during that period. Sales till 30th June was Rs. 72,000. The rate of profit was 10% on sales. |
(v) Goodwill according to his share of profit to be calculated by taking twice the amount of profits of the last 3 years less 20%. The profits for the previous 3 years were: |
I - Rs. 4,920, II - Rs. 5,400 and III - Rs. 5,880. The investments were sold at par and B's executors were paid out in full. Prepare B's capital account and his executor's account.
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Pawan, Iqbal and Rick are partners sharing profits in the ratio of 2 : 2 : 1. From 1st April, 2017, they decided to share profits in the ratio of 1 : 2 : 2. On that date, following balances appeared in the balance sheet. Profit and loss (debit balance Rs. 40,000); general reserve Rs. 1,40,000 and deferred revenue expenditure Rs. 20,000. Pass adjusting journal entries when these reserves will appear in the books of the reconstituted firm.
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X and Y are partners in a firm sharing profits and losses in the ratio of 5 : 3. They admit Z into the firm on 1st April, 2018. From the information given below, complete revaluation account, partners' capital account and the balance sheet of the new firm. Dr Revaluation Account Cr
Particulars |
|
Amt (Rs.) |
Particulars |
Amt (Rs.) |
To Profit Transferred to |
|
|
By Machinery A/c |
9,800 |
X's Capital A/c |
.... |
|
By Stock A/c |
1,400 |
Y's Capital A/c |
.... |
.... |
|
|
|
|
.... |
|
11,200 |
Dr Partners' Capital Account Cr
Particulars |
X (Rs.) |
Y (Rs.) |
Z (Rs.) |
Particulars |
X (Rs.) |
Y (Rs.) |
Z (Rs.) |
To Goodwill A/c |
7,000 |
4,200 |
.... |
By Balance b/d |
44,800 |
47,600 |
.... |
To Balance c/d |
.... |
.... |
.... |
By General Reserve A/c |
7,000 |
4,200 |
.... |
|
|
|
|
By Revaluation A/c |
? |
.... |
.... |
|
|
|
|
By Z?s Current A/c |
... |
.... |
.... |
|
|
|
|
By Bank A/c |
.... |
.... |
42,000 |
|
.... |
.... |
.... |
|
.... |
.... |
.... |
Balance Sheet as at 1st April, 2018
Liabilities |
|
Amt (Rs.) |
Assets |
Amt (Rs.) |
Creditors |
|
8,400 |
Bank |
49,000 |
Bank Loan |
|
8,400 |
Stock |
11,200 |
Capital A/cs |
|
|
Debtors |
32,200 |
X |
.... |
|
Furniture |
7,000 |
Y |
.... |
|
Machinery |
..... |
Z |
.... |
.... |
Z?s Current A/c |
5,600 |
|
|
.... |
|
..... |
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Pass the necessary journal entries for the following transactions on the dissolution of the firm of A, B and C (who were sharing profits in the ratio of 4 : 3 : 3) after the transfer of all assets (other than cash) and external liabilities to realisation account.
(i) A, one of the partners was to bear all the realisation expenses for which he was given a commission of 2% of net cash realised from dissolution. Cash realised from assets was Rs. 25,000 and cash paid for liabilities amounted to Rs. 5,000. Expenses of realized Rs. 1,000 paid by A. |
(ii) Workmen compensation reserve Rs. 30,000, workmen compensation paid Rs. 10,000. |
(iii) Commission received in advance Rs. 1,000 was returned to customers after deducting Rs. 200. |
(iv) There was a bill for Rs. 1,000 under discount. The bill was received from X who proved insolvent and a first and final dividend of 25% was received from his estate. |
(v) Bankers (who granted loan of Rs. 7,000) accepted stock of Rs. 6,000 at a discount of 20% and the balance in cash. |
(vi) Prepaid insurance of Rs. 5,000 and goodwill of Rs. 50,000 were also appearing in the balance sheet but no other additional information was given with regard to these two items. |
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Given below is the information related to Happy Club.
Assets (1st April, 2017) | Amt (Rs.) |
Ground and Pavilion | 50,000 |
Sports Equipment | 30,000 |
Furniture | 7,000 |
Stock of Stationery | 1,000 |
Subscription Due | 1,200 |
Receipts and Payments Account Dr for the year ending 31st March, 2018 Cr
Receipts | | Amt (Rs.) | Payments | Amt (Rs.) |
To Balance b/d | | 5,000 | By Stationery | 3,000 |
To Subscriptions | | | By Salaries | 10,000 |
2016 - 17 | 900 | | By Audit Fees | 1,000 |
2017 - 18 | 18,000 | | By Advertising | 2,000 |
2018 - 19 | 500 | 19,400 | By Fire Insurance | 1,500 |
To Sale of Newspapers | | 300 | By furniture | 2,000 |
To Rent Received | | 2,200 | By Investments | 18,000 |
To Entrance Fees | | 12,000 | By Balance c/d | 1,400 |
| | 38,900 | | 38,900 |
Income and Expenditure Account Dr for the year ended 31st March, 2018 Cr
Expenditure | | Amt (Rs.) | Income | Amt (Rs.) |
To Salaries | | 11,000 | By Subscription | 19,000 |
To Stationery | | 2,800 | By Entrance Fees | 12,000 |
To Audit Fees | | 1,500 | By Rent Received | 2,400 |
To Advertising | | 3,000 | By Sale of Newspapers | 300 |
To Fire Insurance | | 1,200 | | |
To Depreciation | | | | |
Sports Equipment | 5,000 | | | |
Furniture | 800 | 5800 | | |
To Surplus, i.e. Excess of | | | | |
Income over Expenditure | | 8,400 | | |
| | 33,700 | | 33,700 |
Prepare the balance sheet as on 1st April, 2017 and 31st March, 2018.
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Radha Ltd issued for public subscription 40,000 equity shares of Rs. 10 each at a premium of Rs. 2 per share payable as under : On application Rs. 4 per share; on allotment Rs. 5 per share (including premium) and on call Rs. 3 per share. Applications were received for 60,000 shares. Allotment was made, pro-rata to the applications for 48,000 shares, the remaining being rejected. Money overpaid on applications was applied towards sum due on allotment. C, to whom 1,600 shares were alloted, failed to pay the allotment money and J, to whom 2,000 shares were alloted, failed to pay the call money. These shares were subsequently forfeited. Record journal entries in the books of the company. Or On 1st January, 2017, the director of Geeta Ltd issued for public subscription 50,000 equity shares of Rs. 10 each at Rs. 12 per share payable as to Rs. 5 on application (including premium), Rs. 4 on allotment and balance on call on 1st May, 2017. The lists were closed on 10th February, 2017. By that date, applications for 70,000 shares were received. Out of the cash received, Rs. 40,000 was returned and Rs. 60,000 was applied towards the amount due on allotment, the balance of which was paid on 16th February, 2017. All the shareholders paid the call due on 1st May, 2017 with the exception of an allottee of 500 shares. These shares were forfeited on 29th September, 2017 and reissued as fully paid at Rs. 8 per share on 1st November, 2017. The company, as a matter of policy, does not maintain a calls-in-arrears account. Give journal entries to record these share capital transactions in the books of Geeta Ltd.
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Amit and Dushyant are partners sharing profits in the ratio of 3 : 2. Their balance sheet stood as under, at 31st December, 2017. Balance Sheet as at 31st December, 2017
Liabilities | | Amt (Rs.) | Assets | | Amt (Rs.) |
Creditors | | 38,500 | Cash | | 2,000 |
Employees Provident Fund | | 4,000 | Stock | | 15,000 |
Workmen Compensation Reserve | | 2,500 | Prepaid Insurance | | 1,500 |
Contingency Reserve | | 2,500 | Debtors | 9,400 | |
Capital A/cs | | | (-) Provision for Doubtful Debts | (400) | 9,000 |
Amit | 26,000 | | Machinery | | 19,000 |
Dushyant | 13,000 | 39,000 | Building | | 35,000 |
| | | Furniture | | 5,000 |
| | 86,500 | | | 86,500 |
Rita is admitted as a new partner introducing a capital of Rs. 16,000. The new profit sharing ratio is decided as 5 : 3 : 2. Rita is unable to bring in any cash for goodwill. So, it is decided to calculate the amount of goodwill on the basis of Rita's share in the profits and the capital contributed by her. Following revaluations are made.
(i) Stock to be depreciated by 5%. |
(ii) Provision for doubtful debts to be made at Rs. 500. |
(iii) Furniture to be depreciated by 10%. |
(iv) Buildings are valued at Rs. 40,000. |
Show the necessary ledger accounts and the balance sheet of the new firm. A, B and C were partners sharing profits and losses in the ratio of 5 : 3 : 2. Balance sheet was as follows: Balance Sheet as at 1st April, 2017
Liabilities | | Amt (Rs.) | Assets | Amt (Rs.) |
Bank Loan | | 1,07,000 | Book Debts | 75,000 |
Sundry Creditors | | 13,000 | Fixed Assets | 1,00,000 |
Bills Payable | | 20,000 | Stock | 50,000 |
Capital A/cs | | | Cash | 35,000 |
A | 50,000 | | | |
B | 45,000 | | | |
C | 25,000 | 1,20,000 | | |
| | 2,60,000 | | 2,60,000 |
C retired on the same date and the following adjustments were made :
(i) Fixed assets were overvalued by 20%. |
(ii) Make provision for outstanding expenses Rs. 10,000. |
(iii) Goodwill was valued at Rs. 50,000. |
C was to be paid immediately by cash brought in by A and B so as to make their capital in new profit sharing ratio which was 3:2. Goodwill was not be raised in the books. Prepare revaluation account, partners' capital account and the balance sheet of the firm.
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Part (B) (Financial Statement Analysis) Under which type of activity will you Classify cash receipt from debtors while preparing cash flow statement?
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State with reason whether charging of depreciation on furniture will result into inflow, outflow or no flow of cash?
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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 profit, liability and financial position of a company so that their user 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 main 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) Bills payable |
(ii) Shares of XYZ Ltd |
(iii) Bills of exchange |
(iv) Short-term loans |
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Prepare common size statement of profit and loss from the following information :
Particulars | 31st March, 2018 (Rs.) | 31st March, 2017 (Rs.) |
Revenue from Operations | 7,50,000 | 5,62,500 |
Other Income | 75,000 | 56,250 |
Purchase of Stock-in-trade | 5,62,500 | 4,50,000 |
Change in Inventories of Stock-in-trade | (37,500) | 7,500 |
Other Expenses | 7,500 | 5,625 |
Rate of Income Tax | 40% | 40% |
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The balance sheet of Kartik Ltd as at 31st March, 2017 is given below: Balance Sheet as at 31st March, 2017
| Particulars | Note No. | 31st March, 2017 Amt (Rs.) |
I. | EQUITY AND LIABILITIES | | |
| 1. Shareholders' Funds | | |
| (a) Share Capital | | 96,000 |
| (b) Reserves and Surplus | | 24,000 |
| 2. Non-current Liabilities | | |
| Long-term Borrowings : 10% Debentures | | 60,000 |
| 3. Current Liabilities | | |
| (a) Trade Payables | | 93,600 |
| (b) Short-term Provisions | | 2,400 |
| Total | | 2,76,000 |
II. | ASSETS | | |
| 1. Non-current Assets | | |
| Fixed Assets | | |
| (i) Tangible | | 1,80,000 |
| 2. Current Assets | | |
| (a) Inventories | | 48,000 |
| (b) Trade Receivables | | 36,000 |
| (c) Cash and Cash Equivalents | | 9,120 |
| (d) Other Current Assets: Prepaid Expenses | | 2,880 |
| Total | | 2,76,000 |
Compute the following ratios:
(i) Current ratio |
(ii) Liquid ratio |
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From the following balance sheets of Karunesh 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) Equity Share Capital | | 3,00,000 | 3,60,000 |
| (b) Reserves and Surplus | 1 | 1,60,000 | 2,00,000 |
| 2. Non-current Liabilities | | | |
| Long-term Borrowings | 2 | 2,62,000 | 3,78,000 |
| 3. Current Liabilities | | | |
| (a) Trade Payables | | 16,000 | 20,000 |
| (b) Cash Credit | | 12,000 | 8,000 |
| (c) Other Current Liabilities | 3 | 6,000 | 2,000 |
| Total | | 7,56,000 | 9,68,000 |
II. | ASSETS | | | |
| 1. Non-current Assets | | | |
| Fixed Assets | | | |
| (i) Tangible | 4 | 4,60,000 | 6,40,000 |
| (ii) | 5 | 20,000 | 10,000 |
| 2. Current Assets | | | |
| (a) Inventories | | 40,000 | 34,000 |
| (b) Trade Receivables | 6 | 1,36,000 | 1,68,000 |
| (c) Other Current Assets : Prepaid Expenses | 7 | 20,000 | 16,000 |
| (d) Cash and Cash Equivalents | | 80,000 | 1,00,000 |
| Total | | 7,56,000 | 9,68,000 |
Notes to Accounts
| Particulars | 2016 Amt (Rs.) | 2017 Amt (Rs.) |
1. | Reserves and Surplus | | |
| General Reserve | 60,000 | 60,000 |
| Balance of Statement of Profit and Loss | 1,00,000 | 1,40,000 |
| | 1,60,000 | 2,00,000 |
2. | Long-term Borrowings | | |
| 12% Debentures | 1,02,000 | 1,38,000 |
| 12% Public Deposits | 1,60,000 | 2,40,000 |
| | 2,62,000 | 3,78,000 |
3. | Other Current Liabilities | | |
| Outstanding Expenses | 6,000 | 2,000 |
| | 6,000 | 2,000 |
4. | Fixed Assets (Tangible) | | |
| Building | 3,00,000 | 4,40,000 |
| Plant | 1,60,000 | 2,00,000 |
| | 4,60,000 | 6,40,000 |
5. | Fixed Assets (Intangible) | | |
| Goodwill | 20,000 | 10,000 |
| | 20,000 | 10,000 |
6. | Trade Receivables | | |
| Debtors | 1,20,000 | 1,50,000 |
| Bills Receivables | 16,000 | 18,000 |
7. | Other Current Assets | | |
| Prepaid Expenses | 20,000 | 16,000 |
| | 20,000 | 16,000 |
Additional Information
(a) Depreciation charged on building Rs. 20,000 and plant Rs. 10,000. |
(b) Interest paid on debentures Rs. 14,400. New debentures of Rs. 36,000 were issued on 1st October, 2016. |
(c) Interest paid on deposits from public Rs. 19,200 for the year. |
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