R, S and T entered into a partnership of manufacturing and distributing educational CDs on April  1,2006.  R looked after the business development, S content development and T finance the project.  At the end of the year (31-3-2007) T wanted an interest of 12% p.a. on the capital employed by him.  The other partners were not inclined to this.  How would you resolve this within the ambit of the Indian Partnership Act, 1932 ?

What are super profits ?

State the ratio in which the partners share the accumulated profits when there is a change in the profit sharing ratio amongest existing partners.

Why heirs of a retiring/deceased partner are entitled to a share of goodwill of the firm ?

State the liability of partners in case of dissolution of firm.

Mention the account where you transfer the amount of cash in hand at the time of dissolution of firm.

What is meant by capital reserve?

What arr preliminary expenses?

Give any one purpose for which the amount received as 'Securities Premium' may be utilised.

D Ltd. invited applications for issuing 10,00,000 equity shares of Rs.10 each. The public applied for 8,55,000 shares. Can the company proceed for the allotment of shares? Give reason in support of your answer.

Why would an investor prefer to invest in shares and party in the debentures of a company? 

Define operating cycle

How the solvency of business is assessed by ' Financial Statement Analysis' ?

State trhe significance of analysis of financial statements to the 'Lenders'.

The gross profit ratio of a company is 50%. State with reason whether the rent received by Rs.15,000 will increase, decrease or not change the ratio.

Sharma and Verma were partners in a firm sharing profits in the ratio of 4 : 1.  Their capitals on 01- 04 -2006 were Sharma Rs. 5,00,000 and Verma Rs. 1,00,000.  The partnership deed provided that Sharma will get a commission of 10% on the profit after allowing a salary Rs. 5,000 per month to Verma.  The profit of the firm for the year ended 31st March, 2007 was Rs. 2,80,000.
Prepare Profit and Loss Appropriation Account of Sharma and Verma for the year ended 31.03.2007.

After the account of a partnership have been drawn up and the books closed, it is discovered that interest on capitals for the year 2013-14 and 2014-15 has been credited to partners though there is no such provision in the partnership deed.the amounts involved are

You are required to put through adjusting entries as on 1st April 2015, If profits were shared as follows
2013-4 - 1 : 1 : 1          2014-15- 3 : 4 : 3
It may be assumed that capitals are fixed.

A and B are partners in a firm sharing profits in the ratio of 5:3. They admit C into the partnership for 3/10th share in profits which he takes 2/10th from A and 1/10th from A and 1/10th from B. C brings in Rs.3,000 as premium in cash out of his share of Rs.7,800. Goodwill account does not appear in the books of A and B. Give the necessary journal entries in the books of the new firm.

Following was the balance sheet of Arun, Bablu and Chetan sharing profits and losses in the ratio 0f \(\frac { 16 }{ 14 } :\frac { 5 }{ 14 } :\frac { 3 }{ 14 } \) respectively
                              Balance Sheet
                                   as at

They agreed to take Deepak into partnership and give him a share of 1/8 on the following terms
(i) Deepak should bring RS.4,200 as goodwill and RS.7,000 as his capital.
(ii) Furniture be depreciated by 12%.
(iii) Stock be depreciated by 10%.
(iv) A reserve of 5% be created for doubtful debts.
(v) The value of land and buildings having appreciated be brought up to RS.31,000.
(vi) After making the adjustments, the capital accounts of the old partners (who continue to share in the same proportion as before) be adjusted on the basis of the proportion of Deepak's capital to his share in the business i.e. actual cash to be paid off to or brought in by the old partners as the case may be.
Prepare cash account, profit and loss adjustment account (revaluation account) and the opening balance sheet of the new firm.

Why would an investor prefer to invest in the debentures of a company rather than in its shares?  

The stock turnover ratio of a company is 3 times. State, giving reason, whether the ratio improves, declines or does not change because of increase in the value of closing stock by Rs.5,000.

Assuming that the debt to equity ratio is 1:2, state giving reason, whether the ratio will improve, decline or will have no change in case equity shares are issued for cash.

X Ltd has an operating ratio at 85%. Its management is interested in maintaining this ratio at 80%. What are the two choices to do so?

From the following particulars obtained from the books of Mohan Ltd. calculate the creditors turnover ratio and average payable period.Total purchases Rs.42,500 cash purchases Rs.4,000, purchases return Rs.2,000, creditors at the end of the year Rs.6,000; bills payable at the end of the year Rs.1000.

State whether depreciation charged by a company will result into inflow, outflow or no flow of cash.

A and B are partners in a firm. They withdrew Rs 96,000 and Rs 72,000 respectively during the year evenly at the middle of every month.According to the Partnership agreement, interest on drawings is to be charged @10% per annum. Calculate interest on drawings of the partners using the appropriate formula.

Navya and Kavya are partners in a firm sharing profits and losses equally. They admitted Raju as a partner for 1/5th share of profit. Raju brought into partnership 'book debts' amounting to RS.40,000 (less provision for doubtful debts of 5%). The goodwill of his connections valued at RS.80,000 and the balance amount in cash, borrowed from his Hemraj, so as to take his capital of RS.2,40,000. Show the journal entry in the books of the firm.

Archie,Betty and Veronica are partners sharing profits in the ratio of 3:2:1 With effect from 1st April 2015 they decide to share profits in the ratio of 2:2:1 Their balance sheet as at 31st March,2015 

For the above purpose ,it was agreed that
(a) Plant and machinery should be written down by Rs 25,000.
(b)Stock is found overvalued by 10% It was decided to reduce its value accordingly
(c)Land and building has to be appreciated by 25%.(d)Creditors amounting to be Rs 5,500 are not likely to claim their amount.
(d)Creditors amounting to Rs 5,500 are not likely to claim their account.
(e) Goodwill at the time of reconstitution, is to be valued at 3 years purchase of average profits of last five years,which were Rs 22,500.
You are required to give effect to the above adjustments.
(i) By opening revaluation account         
(ii) By passing a single adjustment entry

Sandeep, Praveen and Tara are partners sharing profits in the ratio of 3:2:1. On 1st April, 2012  Sandeep gave a notice to retire from the firm. Praveen and Tara after all adjustments showed a balance of Rs.64,000 and Rs.1,00,000 respectively. The total amount to be paid to Sandeep was Rs.1,23,000. This amount was to be paid by Praveen and Tara in such a way Pass necessary Journal entires for the above transations in the books of the firm. Show your working clearly.

Pawan,Prem and Poonam were partners in a firm sharing profits in the ratio of 2:1:2. Their fixed capitals were RS.2,00,000, RS.1,50,000 and 2,00,000 respectively. The firm closses its books on 31st March every year. On 31.03.2006 Prem died. The executor of a deceased partner according to the agreement was entitled for the following:

(i) Interest on capital from the first day of the accounting year till the date of his death @ 10% p.a.

(ii) His share of goodwill - The goodwill of the firm for the on Prem's death was valued at RS.3,00,000.

(iii) His share of profits - the profit of the firm for the year ended 31.03.2006 was RS.1,50,000 Prem's executor was paid the sum due in two equal annual instalment with interest @ 10% p.a. prepare Prem's capital account as on 31.03.2006 to be presented to his executor and his executor's loan account for the year ending 31.03.2007 and 31.03.2008.

P, Q and R are partners in a firm in the ratio of 5 : 3 : 2. On 31st December, 2010 the firm was dissolved.  On dissolution, the following particulars are available :

(i) Assets realised Rs. 1,70,000 after a loss of Rs. 20,000.

(ii) Liabilities were paid Rs. 27,000 including an unrecorded liability of Rs. 1,000.

(iii) Realisation expenses paid Rs. 700.

(iv) On the date of dissolution, partners' capital was in the ratio of 2 : 2 : 1.

Prepare Realisation Account, Partners' Capital Accounts and Cash Account.

Ayyan Ltd issued 85,000, 12% preference shares Rs 100 each at a premium of Rs 20 per share, payable
(i) Rs 30 on application
(ii) Rs 40 on allotment (including premium)
(iii) Rs 30 on first call
(iv) Rs 20 on second and final call
The company received applications for 1,00,000 shares and the directors approved the following schemes of allotment.
(i) Applicants for 20,000 shares were allotted in full.
(ii) Applicants for 50,000 shares were allotted 50% of the shares applied.
(iii) Applicants for 30,000 shares were allotted \({83}^\frac{1}{2}\) % of the shares applied.
Pass the necessary journal entries

LMN Ltd purchased its own debentures of the face value of Rs 2,00,000 from the open market for immediate cancellation at Rs 92. Pass journal entries.

Following particulars are extracted from notes to accounts to the Balance Sheets of Varun Ltd. as on 31.03.2013 and 31.03.2014.  Prepare a Cash Flow Statement.

Additional Information :
(i) During the year 2013-2014, Rs. 15,000 depreciation was charged on fixed tangible assets.
(ii) Company has paid Rs. 12,000 interim dividend during the year.

From the following balance sheets, prepare cash flow statement.

Notes to Accounts

Additional Information
(i) Dividend of RS. 46,000 was paid
(ii) The income tax paid during the year RS.56,000
(iii) Machinery was purchased during the year RS.66,000
(iv) Depreciation written - off on machinery RS.28,000; building RS.20,000. Identify the values being shown by the company in the above case.

The following is the balance sheet as at 31st December, 2014 of A and B, who share profits and losses in the ratio of 3:2.
                                            Balance Sheet
                                   as at 31st December, 2014

On 1st January, 2015, they agreed to admit C into Partnership on the following terms
(i) Provision of doubtful debts would be increased by  RS.2,000.
(ii) The value of land and building would be increased to RS.18,000.
(iii) The value of stock would be increased by RS.4,000.
(iv) A worker being injured in the factory, and a claim of RS. 2,000 was declared for him.
(v) C brought in as his share of goodwill RS.10,000 in cash.
(vi) Capital account of A and B will be adjusted by opening cash account.
(vii) C would bring further cash as would make his capital equal to 20% of the total capital of the new firm after the above revaluation and Adjustments are carried out.
Prepare revaluation account, partners' capital accounts and balance sheet of the firm after C's admission.

D,O and C are partners in a firm sharing profits and losses in the ratio of 5:3:2.They decide to share future profits and losses in the ratio of 2:5:3 with effect from 1st April,2015 Their balance sheet showed a debit balance of Rs 4,800 in profit and loss account and a balance of Rs 28,800 in general reserve.For this purpose,it was agreed that
(I) The goodwill of the firm be valued at Rs 36,000.
(ii)The land (having book value of Rs 60,000) be valued at Rs 96,000.
(iii) The stock (having book value of Rs 60,000) be depreciated by 6%
(iv) Creditors amounting to Rs 480 were not likely to be claimed.
(v)Unrecorded investments to be valued at Rs 27,120.
Give the necessary single adjusting entry to record the above arrangement.

Parul, Payal and Priyanka are Partners. They decided to dissolve the firm, Pass the necessary journal entries for the following after the various assets(other than cash and bank) and outside liabilities have been transferred to realisation account.
(i) There were total debtors of Rs76,000. A provision for bad and doubtful debts also stood in the books at Rs6,000. Rs12,000 debtors proved bad and rest paid the amount due.
(ii) Parul agreed to pay off her husband's loan of Rs7,000 at a discount of 5%.
(iii) A machine which is not recorded in the books was taken over by Payal at Rs3,000 Whereas its expected value was Rs5,000.
(iv) Priyanka paid realisation expenses of Rs15,000 out of her pocket and she was to get a remuneration of Rs18,000 for completing the dissolution process.
(v)  contingent liability (not provided for) of Rs4,000 was also discharged.
(vi) The firm had a debit balance of Rs27,000 in the profit and loss account on the date of dissolution.

Z Ltd was founded with a nominal capital of Rs 3,00,000 divided into 6,000 equity shares of Rs 50 each. 2,000 shares were issued as fully paid to the vendors for purchase consideration. 2,000 shares were offered for public subscription at a premium of Rs 5 per share payable as

On application Rs 15, on allotment Rs 15 (including premium), on first call Rs 10 and on final call Rs 15. Applications were received for 1,950 shares which were duly allotted. A holder of 200 shares failed to pay the first call money and his shares were forfeited. These shares were re-issued @ Rs 35 per share paid-up. Find call has not been made. Give necessary journal entries.

From the following information, prepare the relevant notes to accounts.

Depreciate buildings @ 5%, plant and equipment @ 20%, furniture and fixtures @ 10%, brands @ 10% and computer software @ 60%.

From the following information, calculate any two of the following ratios.
(i) Current ratio
(ii) Debt to equity ratio
(iii) Inventory turnover ratio
Information
Revenue from operations (Net sales) Rs.5,00,000, opening inventory Rs.7,000, closing inventory Rs.4,000 more than the opening inventory, net purchase Rs.1,00,000 less than net sales, operating expenses Rs.30,000, liquid assets Rs.75,000, prepaid expenses 2,000, current liabilities Rs.60,000, 9% debentures 3,00,000, long-term loan from bank Rs.1,00,000, equity share capital Rs.10,00,000, 8% preference share capital Rs.2,00,000.

The summarised balance sheets of kartik Ltd as at 31st March  2014 and 2015 are

Notes to Accounts

Additional Information(i) Investments costing Rs.8,000 were sold during the year 2014-15 for Rs.8,500.
(ii) Provision for taxation made during the year was Rs.9,000
(iii) During the year, part of the fixed assets costing Rs.10,000 was sold for Rs.12,000 and the profit was included in the statement of profit and loss.
(iv) Dividend paid during the year amounted to Rs.40,000.You are required to prepare the cash flow statement.