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State any two adjustments needed at the time of retirement of a partner.
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The firm of X and Y earned a profit of Rs. 23,00,000 during the year ending on 31st March, 2017. They have decided to donate 10% of this profit to an NGO working for senior citizens. Pass necessary journal entries for distribution of profits.
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When will the capital account of the partners not show a debit balance in spite of regular losses?
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On 28th February, 2017 the first call of Rs. 2 per share became due on 25,000 equity shares alloted by XYZ Ltd. P, a holder of 500 shares did not pay the first call money. Q, a holder of 375 shares paid the second and final call of Rs. 4 per share along with the first call. Pass the necessary journal entry for the amount received by opening calls-in-arrears and calls-in-advance account in the books of the company.
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Give examples of expenses that are not recorded in income and expenditure account?
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Sangeet and Puneet are partners in a firm sharing profits equally. Kshitij is admitted for l/4th share. Goodwill of the firm is valued at Rs. 60,000. He pays his share of goodwill privately to the old partners. How will this transaction be recorded in the books of the firm?
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Arihant Ltd has 60,000 , 12% debentures of Rs. 100 each outstanding as on 31st March, 2017. These debentures are due for redemption on 31st March, 2018. Debenture redemption reserve has a balance of Rs. 7,50,000 on 31st March, 2017. Pass journal entries at the time of redemption of debentures.
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Palak, Geetika and Sarvesh are partners. They have omitted interest on capital @ 10% per annum for three years ended 31st March, 2017. Their fixed capitals on which interest was to be calculated throughout were : Rs. 10,000, Rs. 8,000 and Rs. 7,000 respectively. Their profit sharing ratio were 2015 - 1 : 2 : 2; 2016 - 5 : 3 : 2 and 2017 - 4 : 5 : 1. The firm earned profit of Rs. 2,500 in each year. They decided to donate blankets, woollen clothes and medicines to an Old Age Home. Give the necessary adjusting journal entries and identify the value being conveyed in the question.
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Find out the cost of medicines consumed during 2017-18 from the following information:
Particulars | Amt (Rs.) |
Payment for Purchase of Medicines | 13,32,000 |
Creditors for Medicine Purchased | |
On 1st April, 2017 | 90,000 |
On 31st March, 2018 | 61,200 |
Stock of Medicines | |
On 1st April, 2017 | 2,23,200 |
On 31st March, 2018 | 1,94,400 |
Advance to Supplies of Medicines | |
On 1st April, 2017 | 41,400 |
On 31st March, 2018 | 65,520 |
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X Ltd purchased machinery from Y Ltd and paid to Y Ltd as follows :
(i) By issuing 5,000, equity shares of Rs. 10 each at a premium of 10%. |
(ii) By issuing 100, 9% debentures of Rs. 100 each at a discount of 10%. |
(iii) Balance by accepting a bill of exchange of Rs. 25,000 payable after one month. |
Pass necessary journal entries in the books of X Ltd for the purchase of machinery and making payment to Y Ltd.
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Nisha and Saisha were partners. Nisha died on 30th April, 2017. The partnership deed provided for the following :
(i) Profits to be divided as Nisha \[\frac{1}{2}\], Saisha \[\frac{1}{3}\] and \[\frac{1}{6}th\] to be transferred to reserves. |
(ii) The accounts are closed on 31st March each year. |
(iii) In the event of the death of a partner, the executors will be entitled to the following: |
(a) Capital to the credit of the deceased partner on the date of the death. |
(b) Interest on capital at 12% p.a. |
(c) Proportion of profit to the date of death based on the average profits credited for the last 3 years. |
(d) Share of goodwill based on three years' purchase of the average profits of the preceding 3 years. |
Additional Information Nisha's capital Rs. 3,60,000; Saisha's capital Rs. 2,40,000; reserves Rs. 90,000; cash Rs. 3,30,000 and investment Rs. 2,10,000. Prepare Nisha's capital account to be presented to her executor who died on 30th April, 2017. The profits for the three proceeding years were Rs. 2,52,000, Rs. 2,70,000 and Rs. 2,97,000.
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A, B, C, D and E were partners in a firm sharing profits and losses in the ratio of 5 : 4 : 3 : 2 : 1 respectively. Unfortunately, D and E met with a tragic car accident in which both of them died. The goodwill of the firm was valued at Rs. 1,50,000 and A, B and C decided to share the future profits and losses in the ratio of 4 : 6 : 5 respectively. Give the journal entries to record the above.
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A, B and C were partners in a firm having capitals of Rs. 42,000, Rs. 42,000 and Rs. 56,000 respectively, Their current account balances were A : Rs. 7,000, B : Rs. and C : Rs. 1,400 (Dr). According to the partnership deed, the partners were entitled to interest on capital @ 5% p.a. C being the working partner was also entitled to a salary of 4,200 p.a. The profits were to be divided as follows:
(i) The first Rs. 14,000 in proportion of their capital. |
(ii) Next Rs. 21,000 in the ratio of 5 : 3 : 2. |
(iii) Remaining profits to be shared equally. |
The firm made a profit of Rs. 1,09,200 before charging any of the above items. Prepare the profit and loss appropriation account and pass necessary journal entry for apportionment of profit.
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Gesu, Tanu and Megha are partners sharing profits and losses in the ratio of 2 : 2 : 1. Megha retires on 31st March, 2017. Complete the following revaluation account, partners' capital accounts and balance sheet of the firm. Dr Revaluation Account Cr
Particulars |
Amt (Rs.) |
Particulars |
Amt (Rs.) |
To Investments A/c |
50,000 |
By Land and Building A/c |
4,00,000 |
To Profit Transferred to |
|
By Stock A/c |
1,00,000 |
Partners' Capital A/c |
? |
|
|
|
5,00,000 |
|
5,00,000 |
Dr Partners' Capital Account Cr
Particulars |
Gesu (Rs.) |
Tanu (Rs.) |
Megha (Rs.) |
Particulars |
Gesu (Rs.) |
Tanu (Rs.) |
Megha (Rs.) |
To Megha's Capital A/c |
1,06,800 |
1,06,800 |
- |
By Balance b/d |
12,00,000 |
12,00,000 |
8,00,000 |
To Megha's Loan A/c |
- |
- |
.... |
By Gesu's Capital A/c |
- |
- |
1,06,800 |
To....... |
... |
.... |
- |
By Tanu's Capital A/c |
- |
- |
1,06,800 |
|
|
|
|
By General Reserve A/c |
3,20,000 |
3,20,000 |
1,60,000 |
|
|
|
|
By .... |
.... |
.... |
.... |
|
|
|
|
By Profit and Loss Suspense A/c |
- |
- |
30,000 |
|
17,00,000 |
17,00,000 |
12,93,600 |
|
17,00,000 |
17,00,000 |
12,93,600 |
Balance Sheet as at 31st March, 2017
Liabilities |
Amt (Rs.) |
Assets |
Amt (Rs.) |
? |
... |
Land and Building |
24,00,000 |
10% Megha?s Loan |
12,93,600 |
Investments |
2,00,000 |
Sundry Creditors |
2,00,000 |
Stock |
6,00,000 |
|
|
Sundry Debtors |
8,00,000 |
|
|
Cash at Bank |
4,50,000 |
|
|
Cash in Hand |
2,00,000 |
|
|
.... |
.... |
|
.... |
|
.... |
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Following receipts and payments account was prepared from the cash book of Youth Club for the year ending receipts and payments account for the year ending 31st December, 2017. Receipts and Payments Account for the year ending 31st December, 2017
Receipts | Amt (Rs.) | Payments | Amt (Rs.) |
Balance b/d | | Charity | 23,000 |
Cash in Hand | 23,000 | Rent and Taxes | 6,400 |
Cash at Bank | 25,200 | Salary | 12,000 |
Donation | 18,000 | Printing | 1,200 |
Subscription | 85,600 | Postage | 600 |
Legacies | 36,000 | Advertisements | 9,000 |
Interest on Investment | 9,000 | Insurances | 4,000 |
Sale of Old Newspapers | 400 | Furniture | 42,000 |
| | Investment | 46,000 |
| | Balance c/d | |
| | Cash in Hand | 19,800 |
| | Cash at Bank | 33,200 |
| 1,97,200 | | 1,97,200 |
Prepare income and expenditure account for the year ended 31st December, 2017 and a balance sheet on that date after the following adjustments:
(i) It was decided to treat \[\frac{1}{3}rd\] of the amount received on account of donation as income. |
(ii) Insurance premium was paid in advance for 3 months. |
(iii) Interest on investment Rs. 2,200 accrued was not received. |
(iv) Rent Rs. 1,200, salary Rs. 1,800 and advertisement expenses Rs. 2,000 outstanding as on 31st December, 2017. |
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Nandini, Krish and Hina were partners in a firm sharing profits in the ratio of 2 : 2 : 1. On 28th February, 2017 their firm was dissolved. The balance sheet of the firm on the date of dissolution was as follows: Balance Sheet as at 28th February, 2017
Liabilities | | Amt (Rs.) | Assets | Amt (Rs.) |
Creditors | | 80,000 | Cash | 7,000 |
Capital A/cs | | | Sundry Assets | 1,30,000 |
Nandini | 75,000 | | Hina?s Capital | 23,000 |
Krish | 5,000 | 80,000 | | |
| | 1,60,000 | | 1,60,000 |
Sundry assets were taken over by Hina for Rs. 65,000 and Nandini took over the creditors for Rs. 75,000, expenses of dissolution paid by Krish were Rs. 5,000. Prepare realisation account, partners' capital accounts and cash account. The balance sheet of A and B, who share profits and losses in the ratio of 3 : 2 on 31st March, 2017 was as follows: Balance Sheet as at 31st March, 2017
Liabilities | | Amt (Rs.) | Assets | | Amt (Rs.) |
Creditors | | 28,000 | Cash at Bank | | 10,000 |
Workmen's Compensation Fund | | 12,000 | Debtors | 65,000 | |
General Reserve | | 20,000 | (-) Provision for Doubtful Debts | (5,000) | 60,000 |
Capital A/cs | | | Stock | | 30,000 |
A | 60,000 | | Investment | | 50,000 |
B | 40,000 | | Patents | | 10,000 |
| | 1,60,000 | | | 1,60,000 |
They decided to admit C on 1st April, 2017 for l/4th share on the following terms:
(i) C shall bring Rs. 20,000 as his share of premium for goodwill. |
(ii) That unaccounted accrued income of Rs. 1,000 be provided for. |
(iii) The market value of investments was Rs. 45,000. |
(iv) A debtor whose dues of Rs. 5,000 were written-off as bad debts paid Rs. 4,000 settlement. |
(v) A claim of Rs. 3,000 on account of workmen's compensation to be provided for. |
(vi) Patents are overvalued by Rs. 2,000. |
(vii) C to bring in capital equal to 1/4th of the total capital of the firm after all adjustments. |
Prepare the revaluation account, partners' capital account and the balance sheet of the new firm.
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Global Ltd invited applications for 30,000 shares of Rs. 100 each at a premium of Rs. 20 per share payable as follows: On application Rs. 40 (including Rs. 10 premium); on allotment Rs. 30 (including Rs. 10 premium); on first call Rs. 30 and on second and final call Rs. 20. Applications were received for 40,000 shares and pro-rata allotment was made on the application for 35,000 shares. Excess application money is to be utilized towards sum due on allotment. Nisha to whom 600 shares were allotted failed to pay the allotment money and her shares were forfeited after allotment. Asha who applied for 1,050 shares failed to pay the first call and her shares were forfeited after first call. Second and final call was made. All the money due on second call have been received. Of the shares forfeited, 1,000 shares were reissued as fully paid-up for Rs. 80 per share, which included the whole of Asha's shares. Record necessary journal entries in the books of Global Ltd. Or XYZ Ltd issued 50,000 shares of Rs. 10 each at a premium of Rs. 2 per share, payable as follows: Rs. 3 on application; Rs. 6 on allotment (including premium) and Rs. 3 on call Applications were received for 75,000 shares and a pro-rata allotment was made as follows: To the applicants of 40,000 shares, 30,000 shares were issued and for the rest 20,000 shares were issued. All money due were received except the allotment and call money from Q who had applied for 1,200 shares (out of group of 40,000 shares). All his shares were forfeited. The forfeited shares were reissued for Rs. 7 per share fully paid-up. Pass necessary journal entries for the above transactions.
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What are the principle revenue producing activities for an insurance company?
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HCL Ltd paid Rs. 30,000 as instalment for machinery purchased on credit which included interest of Rs. 5,000. How will this payment be presented while preparing cash flow statement?
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Mention the items under the head 'non-current liabilities' as per Provision of Schedule III Part I of Companies Act, 2013.
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Calculate debtors in the beginning and at the end of the year.
Particulars | Amt (Rs.) |
Net Credit Sales | 2,00,000 |
Debtors Turnover Ratio | 8 times |
Debtors at the end are Rs. 7,000 more than at the beginning.
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From the following information, prepare comparative balance sheet of Malishka Ltd. Also identify the value being reflected in the preparation of comparative statements. Balance Sheet as at 31st March, 2016 and 2017
| Particulars | 31st March, 2016 (Rs.) | 31st March, 2017 (Rs.) |
I. | EQUITY AND LIABILITIES | | |
| 1. Shareholders' Funds | | |
| (a) Share Capital | 25,00,000 | 25,00,000 |
| (b) Reserves and Surplus | 5,00,000 | 6,00,000 |
| 2. Non-current Liabilities | | |
| Long-term Borrowings | 15,00,000 | 15,00,000 |
| 3. Current Liabilities | | |
| (a) Short-term Borrowings (Bank Overdraft) | 2,25,000 | 2,40,000 |
| (b) Trade Payables | 2,00,000 | 2,25,000 |
| (c) Other Current Liabilities | 50,000 | 55,000 |
| (d) Short-term Provisions | 25,000 | 30,000 |
| Total | 50,00,000 | 51,50,000 |
II. | ASSETS | | |
| 1. Non-current Assets | | |
| (a) Fixed Assets (Tangible) | 30,00,000 | 36,00,000 |
| (b) Non-current Investments | 5,00,000 | 5,00,000 |
| 2. Current Assets | | |
| (a) Inventories | 7,50,000 | 5,50,000 |
| (b) Trade Receivables | 5,00,000 | 3,00,000 |
| (c) Cash and Cash Equivalents | 1,50,000 | 1,75,000 |
| (d) Other Current Assets | 1,00,000 | 25,000 |
| Total | 50,00,000 | 51,50,000 |
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From the following balance sheets of Drishti Ltd, prepare cash from operating activities for the year ended 31st March, 2018. Balance Sheet as at 31st March, 2018
| Particulars | Note No. | 31st March, 2018 (Rs.) | 31st March, 2017 (Rs.) |
I. | EQUITY AND LIABILITIES | | | |
| 1. Shareholder's Funds | | | |
| (a) Equity Share Capital | | 1,40,000 | 1,20,000 |
| (b) Reserve and Surplus | 1 | 88,000 | 14,000 |
| 2. Non-current Liabilities | | | |
| Long-term borrowings | 2 | 1,00,000 | 84,000 |
| 3. Current Liabilities | | | |
| Trade Payables | | 50,000 | 34,000 |
| TOTAL | | 3,78,000 | 2,52,000 |
II. | ASSETS | | | |
| 1. Non-current Assets | | | |
| (a) Fixed Assets | | | |
| (i) Tangible Assets | 3 | 1,64,000 | 1,28,000 |
| (ii) Intangible Assets | | 32,000 | 40,000 |
| (b) Non-current Investments | | 32,000 | 12,000 |
| 2. Current Assets | | | |
| (a) Inventory | | 98,000 | 24,000 |
| (b) Cash and Cash Equivalents | | 52,000 | 48,000 |
| TOTAL | | 3,78,000 | 2,52,000 |
Notes to Accounts
| Particulars | 31st March, 2018 (Rs.) | 31st March, 2017 (Rs.) |
1. | Reserve and Surplus | | |
| General Reserve | 60,000 | 40,000 |
| Surplus i.e. Statement of Profit and Loss | 28,000 | (26,000) |
2. | Long-term Borrowings | | |
| 12% Debentures | 1,00,000 | 84,000 |
3. | Tangible Assets | | |
| Machinery | 2,16,000 | 1,64,000 |
| (-) Provision for Depreciation | (52,000) | (36,000) |
| | 1,64,000 | 1,28,000 |
Additional Information
(i) Debentures were issued on 31st March, 2018. |
(ii) Non-current investments were purchased on 31st March, 2018. |
(iii) Rate of interest on investments is 10% p.a. |
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