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R Q and R are partners sharing profit in the ratio 3:2:1. Q retires, P and R decided that the capital of the new firm will be fixed at Rs. 6,00,000 in the profit sharing ratio. The capital accounts of P and R shows a balance of Rs. 5,00,000 and Rs. 1,00,000 respectively on the date of retirement after making all adjustments. Find the actual amount of cash to be brought in or paid off by the remaining partners.
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State the conditions under which the capital balances may change under the system of fixed capital account.
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If capitals are fixed, where will the interest on drawings be recorded?
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Name the method of calculating interest on drawings if different amounts are withdrawn at different rates.
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Tata runs a not-for-profit organisation to provide quality education to poor students. Which value is followed by the company?
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Vijay, a director of the company proposed in a board meeting that to inculcate the habit of savings among people he wanted to bring a special issue of shares. His proposal was accepted by the company. The company issued 35,000 shares of Rs. 100 each, payable Rs. 30 on application, Rs. 50 on allotment and Rs. 20 on call. Tarun, a shareholder holding 25 shares could not pay his call money and Arjun another shareholder holding 30 shares paid the call money with allotment. Tarun, paid the amount due to him after four months explaining the reason for this delay, the company did not charge any interest from him. Calculate the amount received by the company on allotment.
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Chanchal Ltd, dealing in aero-space fuel, issued 2,00,000 equity shares of Rs. 20 each, at a premium of Rs. 5 per share, payable as Rs. 8 per share on application Rs. 10 per share on allotment (including premium) Rs. 7 per share on first and final call The issue was fully subscribed. All the amounts were duly received with the exception of 10,000 shares held by Rajeev and Bhaskar, who failed to pay the first and final call. Give the journal entry. Also identify the value being violated by the shareholders.
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On 1st April, 2017, the book value of machinery was Rs. 2,88,000. On 1st July, 2017, \[\frac{1}{4}\,th\] of the machinery was sold for Rs. 50,000. Depreciation is being charged @10% p.a. show the following adjustment in income and expenditure account for the year ended 31st March, 2018.
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X, Y and Z are partners sharing profits and losses in the ratio of 3 : 2 : 3. From 1st April, 2017, they decided to share profits in the ratio of 2 : 3 : 4. The goodwill of the firm was valued at Rs. 3,60,000. You are required to pass necessary journal entry.
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VK Ltd issued 5,000, 9% debentures of Rs. 100 each at par for cash and also raised a loan of Rs. 80,000 from America Bank, for which the company placed with the bank Rs. 1,00,000, 9% debentures as collateral security. As per the terms, the bank is obliged and bound to immediately release the debentures, as soon as the loan is repaid. How will you show the debentures in the balance sheet of the company assuming that the company has recorded the issue of debentures as collateral in the books?
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P, Q and R were partners sharing profits and losses in the ratio of 5 : 3 : 2 respectively. On 31st December, 2016, their balance sheet stood as under: Balance Sheet as at 31st December, 2016
Liabilities | | Amt (Rs.) | Assets | Amt (Rs.) |
Sundry Creditors | | 80,000 | Cash | 40,000 |
Workmen Compensation Fund | | 40,000 | Sundry Debtors | 70,000 |
General Reserve | | 60,000 | Investment | 50,000 |
Bills Payable | | 30,000 | Stock | 80,000 |
Capital A/cs | | | Machinery | 1,00,000 |
P | 1,00,000 | | Patents | 20,000 |
Q | 60,000 | | Goodwill | 50,000 |
R | 40,000 | 2,00,000 | | |
| | 4,10,000 | | 4,10,000 |
Adjustments (i) P died on 1st July, 2017. (ii) Goodwill be valued at 3 years' purchase of the average profit of last 4 years, which were 2012 Rs. 40,000; 2013 Rs. 20,000 (loss); 2014 Rs. 60,000 and 2015 Rs. 84,000. (iii) For the purpose of calculating P's share in profits, profit during 2016 should be taken to have accrued on the basis of profit of 2015. (iv) P's drawings up to the date of death were Rs. 10,000. (v) Interest on drawings at 6% per annum irrespective of period. Prepare P's capital account.
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Arun and Varun were partners sharing profits in 3 : 2 ratio. Their balance sheet on 31st March, 2017 was as follows: Balance Sheet as at 31st March, 2017
Liabilities | | Amt (Rs.) | Assets | Amt (Rs.) |
Capital A/cs | | | Cash | 7,500 |
Arun | 1,37,500 | | Sundry Debtors | 30,000 |
Varun | 75,000 | 2,12,500 | Stock | 50,000 |
Creditors | | 37,500 | Land and Building | 1,00,000 |
| | | Plant and Machinery | 62,500 |
| | 2,50,000 | | 2,50,000 |
They admitted Tarun as partner on the following terms: (i) Tarun is to bring Rs. 62,500 as capital. (ii) They will share future profits in 2 : 2 : 1 ratio. (iii) Assets and liabilities are revalued as Land and building at Rs. 1,25,000, depreciate plant and machinery @10% per annum, provision for doubtful debts Rs. 2,500, stock at Rs. 45,000, Rs. 2,500 be reserved for bills discounted. Show memorandum revaluation account.
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The following is the receipts and payments account of Dhara Sports Club for the year ended 31st March, 2018. Receipts and Payments Account Dr for the year ending 31st March, 2018 Cr
Receipts | Amt (Rs.) | Payments | Amt (Rs.) |
To Advertisement in Club's Year Book | 39,900 | By Rent | 1,26,000 |
To Grant | 70,000 | By Salary | 1,96,000 |
To Entrance Fees | 24,500 | By Telephone | 17,500 |
To Table Tennis Fees | 28,000 | By Postage | 22,400 |
To Billiard Fees | 36,400 | By Rent and Tax | 50,400 |
To Bar Receipts | 4,20,000 | By Bar Purchases | 3,15,000 |
To Subscription | 1,75,000 | By furniture | 35,000 |
To Donation | 84,000 | By Stationery | 56,000 |
| | By Balance | |
| | Cash | 5,600 |
| | Bank | 53,900 |
| 8,77,800 | | 8,77,800 |
Additional Information (i) Donations are for specifically building fund. (ii) Salary is paid @ Rs. 17,500 p.m and salary of Rs. 7,000 is prepaid. (iii) Subscription in arrear Rs. 21,000 and received in advance Rs. 3,500. (iv) Rent is paid for 3 years in advance. (v) Sundry person owed Rs. 10,500 for advertisement in club's year book. (vi) Bar stock at the end Rs. 56,000 and stationery at the end Rs. 7,500. You are required to prepare income and expenditure account for the year ended 31st March, 2018.
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Karan and Kartik are partners in a firm sharing profits and losses in the ratio of 3 : 2. The balances in their capital and current accounts as on 1st April, 2017 were as under:
Items | Karan (Rs.) | Kartik (Rs.) |
Capital accounts | 3,00,000 | 2,00,000 |
Current accounts (Cr) | 1,00,000 | 80,000 |
The partnership deed provides that Karan is to be paid salary @ Rs. 500 per month whereas, Kartik is to get a commission of Rs. 40,000 for the year. Interest on capital is to be credited at 6% per annum. The drawings of Karan and Kartik for the year were Rs. 30,000 and Rs. 10,000, respectively. The net profit of the firm before making these adjustments was Rs. 2,49,000. Interest on Karan's drawings was Rs. 750 and Kartik's drawings was Rs. 250. Prepare profit and loss appropriation account and partners' capital and current accounts.
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The balance sheet of Ajit, Vijeet, and Sujeet on the date of dissolution was as follows: Balance Sheet as at?..
Liabilities | | Amt (Rs.) | Assets | Amt (Rs.) |
Creditors | | 52,000 | Bank | 6,500 |
Employees Provident Fund | | 26,000 | Debtors | 41,600 |
Outstanding Expenses | | 13,000 | Stock | 54,600 |
Capital A/cs | | | Prepaid Expenses | 2,600 |
Ajeet | 1,05,950 | | Furniture | 13,000 |
Sujeet | 76,050 | 1,82,000 | Machinery | 1,09,200 |
| | | Profit and Loss A/c | 19,500 |
| | | Vijeet?s Capital A/c | 26,000 |
| | 2,73,000 | | 2,73,000 |
Sujeet was appointed to realise the assets and pay the liabilities. He was entitled to receive 5% commission on the amounts realised from sale of assets. He was also to bear the expenses of realisation. Assets realised as follows: Machinery- Rs. 91,000 ; debtors-Rs. 26,000 ; furniture-Rs. 9,7 50, stock at 60% of its book value. Expenses of realisation amounted to Rs. 1,950. An office typewriter realised Rs. 3,250 which was not shown in the books of accounts. There was a contingent liability of Rs. 6,500 for bills discounted for which Rs. 2,600 had to be paid. Prepare realisation account.
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Anuj, Vishal and Shekhar were equal partners. Their balance sheet as at 31st March, 2017 is Balance Sheet as at 31st March, 2017
Liabilities | | Amt (Rs.) | Assets | | Amt (Rs.) |
Bills Payable | | 10,000 | Bank | | 10,000 |
Sundry Creditors | | 20,000 | Stock | | 10,000 |
General Reserve | | 15,000 | Furniture and Fixtures | | 14,000 |
Profit and Loss A/c | | 3,000 | Sundry Debtors | 22,500 | |
Capital A/cs | | | (-) Provision for Doubtful Debts | (2,500) | 20,000 |
Anuj | 30,000 | | Buildings | | 60,000 |
Vishal | 20,000 | | | | |
Shekhar | 16,000 | 66,000 | | | |
| | 1,14,000 | | | 1,14,000 |
Vishal retired on 1st April, 2017. Anuj and Shekhar decided to continue the business as equal partners on the following terms: (i) Goodwill of the firm was valued at Rs. 28,800. (ii) The provision for bad and doubtful debts to be maintained @ 10% on debtors. (iii) Buildings to be increased to Rs. 66,000. (iv) Furniture and fixtures to be reduced by Rs. 4,000. (v) Rent outstanding (not provided for as yet) was Rs. 750 The remaining partners decided to bring in sufficient cash in the business to pay-off Vishal and to maintain a bank balance of Rs. 12,400. They also decided to re-adjust their capitals as per their new profit sharing ratio. Prepare the necessary ledger accounts and the balance sheet. Or Anita and Sanjay are partners dealing in manufacturing plastic polythenes, with profit sharing ratio of 2 : 1. Their balance sheet as at 31st March, 2017 was as under, when the government banned the plastic polythene and therefore they shifted to manufacturing paper bags. Balance Sheet as at 31st March, 2017
Liabilities | | Amt (Rs.) | Assets | Amt (Rs.) |
Bills Payable | | 60,000 | Cash in Hand | 20,000 |
Sundry Creditors | | 60,000 | Cash at Bank | 80,000 |
Salaries Outstanding | | 10,000 | Sundry Debtors | 40,000 |
Profit and Loss | | 30,000 | Stock | 60,000 |
Capital A/cs | | | Machinery | 1,70,000 |
Anita | 1,50,000 | | Goodwill | 90,000 |
Sanjay | 1,50,000 | 3,00,000 | | |
| | 4,60,000 | | 4,60,000 |
They admitted Sonu into partnership on 1st April, 2017. The new profit sharing ratio is agreed as 2 : 1 : 1. Other terms of Sonu's admission were as under: (i) He will bring in Rs. 1,20,000, through cheque, as his share of capital and Rs. 30,000 as his share of goodwill. (ii) Machinery is to be appreciated by 10%. (iii) Stock overvalued by Rs. 2,000. (iv) A provision for doubtful debts is to be created at 5% on debtors. (v) Creditors are unrecorded to the extent of Rs. 7,000. Prepare the revaluation account, partners' capital accounts, bank account and the balance sheet of the new firm after the admission.
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On 1st April, 2016, Ranjana Ltd. made an issue of 3,00,000 equity shares of Rs. 10 each at a premium of Rs. 4 per share, payable as follows: Rs. 6 on application (including Rs. 1 premium) Rs. 2 on allotment (including Rs. 1 premium) Rs. 3 on first call (including Rs. 1 premium) Rs. 3 on second and final call (including Rs. 1 premium) Applications were received for 4,50,000 shares, of which applications for 90,000 shares were rejected and their money was refunded. Rest of the applicants were issued shares on prorata basis and their excess money was adjusted towards allotment. Jatin, to whom 6,000 shares were allotted, failed to pay the allotment money and his shares were forfeited after allotment. Ruchi, who applied for 10,800 shares failed to pay the two calls and on her such failure, her shares were forfeited. 12,000 forfeited shares were re-issued as fully paid on receipt of Rs. 9 per share, the whole of Ruchi's shares being included. Prepare the cash book and pass the necessary journal entries. Or Hindustan Ltd invited application for 14,000 equity shares of Rs. 10 each payable as under: On application - Rs. 2 On first call - Rs. 3 On allotment - Rs. 2 On final call - Rs. 3 Application were received for 21,000 shares and pro-rata allotment was made to all the applicants. All the shareholders paid the amount due with the following exception: (i) Rajeev, who was allotted 1,400 shares, failed to pay the allotment and calls. (ii) Sanjeev, who was allotted 1,050 shares paid only application and allotment. These shares were forfeited and subsequently 1,800 shares were reissued as fully paid at a discount of 20%. Shares reissued include 1,000 shares of Rajeev and 800 shares of Sanjeev. Pass necessary journal entries.
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Net increase in working capital other than cash and cash equivalents will increase, decrease or not change cash flow from operating activities. Give reason?
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The accountant of HP Ltd while preparing cash flow statement added loss on sale of fixed assets to net profit for calculating cash flow from operating activities. Was he correct in doing so? Give reason for your answer.
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Under which head and sub-head will the following items appear in the balance sheet of a company?
(i) Share option outstanding account |
(ii) Interest accrued and due on secured loans. |
(iii) Advances recoverable in cash |
(iv) Prepaid rent |
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From the following information, calculate any 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. 25,000, tax rate is 50%. Identify the value reflected by the company in maintaining debt to equity ratio.
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Fill in the missing figures in the following common size statement of profit and loss: Common Size Statement of Profit and Loss for the year ending 31st March, 2018
|
Particulars |
Note No. |
Absolute Amt (Rs.) |
Percentage of Revenue from Operations % |
I. |
Revenue from Operations |
|
.... |
.... |
II. |
Other Income |
|
3,00,000 |
.... |
III. |
Total Revenue (I+II) |
|
..... |
.... |
IV. |
(-) Expenses: |
|
|
|
|
Cost of Materials Consumed |
|
... |
.... |
|
Other Expenses |
|
7,50,000 |
60 |
|
Total Expenses |
|
.... |
15 |
|
Profit before Tax (III-IV) |
|
.... |
.... |
|
(-)Tax |
|
(...) |
(20) |
|
Profit and Tax |
|
.... |
.... |
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From the following summarised balance sheets of PQR Ltd. as on 31st March, 2016 and 2017, you are required to prepare the cash flow statement. Balance Sheet as at 31st March, 2017 and 2016
| Particulars | Note No. | 31st March, 2017 Amt (Rs.) | 31st March, 2016 Amt (Rs.) |
I. | EQUITY AND LIABILITIES | | | |
| 1. Shareholders' Funds | | | |
| Share Capital | | 35,00,000 | 30,00,000 |
| Reserves and Surplus | 1 | 23,00,000 | 15,00,000 |
| 2. Non-current Liabilities | | | |
| Long-term Borrowings: 15% Debentures | | 10,00,000 | 15,00,000 |
| 3. Current Liabilities | | | |
| Trade Payables | | 12,50,000 | 8,00,000 |
| Short-term Provisions | 2 | 5,50,000 | 5,00,000 |
| Other Current Liabilities | 3 | 60,000 | 50,000 |
| Total | | 86,60,000 | 73,50,000 |
II. | ASSETS | | | |
| 1. Non-current Assets | | | |
| Fixed Assets | 4 | 47,50,000 | 40,00,000 |
| Long-term Investments (At cost) | | 9,00,000 | 9,00,000 |
| 2. Current Assets | | | |
| Inventories | | 13,50,000 | 10,00,000 |
| Trade Receivables | | 12,25,000 | 11,25,000 |
| Cash and Cash Equivalents | | 4,35,000 | 3,25,000 |
| Total | | 86,60,000 | 73,50,000 |
Notes to Accounts
| Particulars | 31st March, 2017 Amt (Rs.) | 31st March, 2016 Amt (Rs.) |
1. | Reserves and Surplus | | |
| Balance in Statement of Profit and Loss | 22,50,000 | 15,00,000 |
| Capital Reserve (Profit on sale of investments) | 50,000 | - |
| | 23,00,000 | 15,00,000 |
2. | Short-term Provisions | | |
| Proposed Dividend | 1,70,000 | 1,50,000 |
| Provision for Tax | 3,80,000 | 3,50,000 |
| | 5,50,000 | 5,00,000 |
3. | Other Current Liabilities | | |
| Outstanding Expenses | 60,000 | 50,000 |
| | 60,000 | 50,000 |
4. | Fixed Assets | | |
| Fixed Assets (At cost) | 60,00,000 | 50,00,000 |
| (-) Accumulated Depreciation | (12,50,000) | (10,00,000) |
| | 47,50,000 | 40,00,000 |
Additional Information
(i) During the year ended 31st March, 2016, fixed assets with a net book value of Rs. 50,000 (accumulated depreciation Rs. 1,50,000) were sold for Rs. 40,000. |
(ii) During the year ended 31st March, 2016, investments costing Rs. 4,00,000 were sold. |
(iii) Debentures were redeemed at a premium of 10%. |
(iv) Tax of Rs. 3,75,000 was paid. |
(v) Debenture interest paid during the year ended 3lst March, 2016 was. Rs. 1,50,000. |
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