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Published on: 01/01/2019
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1.
Saya Ltd has 20,000, 7% debentures on 100 each due for redemption on 31 st March, 2015. There is a balance of Rs 3,50,000 in debenture redemption reserve account on the date of redemption Investment, as required by the Companies Act, 2013 is made in fixed deposit bearing interest 6% per annum. Bank deducted TDS @ 10% on its maturity which is 31st March, 2015. Pass journal entries at the time of redemption of debentures.
2.
J and K are partners in a firm.Their capitals are: J Rs.3,00,000 and K Rs.2,00,000.During the year ended 31st march, 2015, the firm earned a profit of Rs.1,50,000.Assuming that rate of return is 20%, calculate the value of goodwill of the firm
(i) By capitalisation method
(ii) By super profit method if the goodwill is valued at 2 years' purchases of super profit.
3.
State the ratio in which the partners share all the accumulated profits, losses and fictitious assets at the time of retirement of a partner.
4.
Calculate Current Ratio from the following information:
Inventory Turnover :4 times
Inventory in the beginning was Rs 20,000 less than Inventory at the end.
Revenue from Operation Rs.6,00,000.
Groos Profit Ratio 25%.
Current Liabilities Rs.60,000.
Quick Ratio 0.75:1.
5.
Hari, Ravi and kavi were partners in a firm sharing profits in the ratio of 3:2:1. They admitted Guru as a new partner for 1/7th share in the profits. The new profit sharing ratio will be 2:2:2:1 respectively. Guru brought Rs.3,00,000 for his capital and Rs.45,000 for his 1/7th share of goodwill. Showing your workings clearly,pass necessary journal entries in the books of the firm for the above mentioned transactions.
6.
The partners of a firm distributed the profits for the year ended 31st March, 2003 Rs. 75,000 in the ratio of 3 : 2 : 1. without providing for the following adjustments:
(i) A and B were entitled to a salary of Rs. 3,000 each per annum.
(ii) B was entitled to a commission of Rs. 5,000
(iii) B and c had guaranteed a minimum profit of Rs. 30,000 p.a. to A
(iv) Profits were to be shared in the ratio of 3 : 3 : 2.
Pass necessary journal entry for the above adjustments in the books of firm.
7.
What will be the operating profit ratio if operating ratio is 83.64%?
8.
Why is the government interested in analysing financial statements ?
9.
Name the two basic financial statements of a company as per Schedule III part I of the Companies Act,2013.
10.
What is meant by change in profit sharing ratio?
11.
Give one transaction which may result into outflow of cash and one which may result into no flow of cash.
12.
State any two deductions that may have to be made from the amount payable to the legal representative of a deceased partner.
13.
Distinguish between 'Dissolution of Partnership' and 'Dissolution of Partnership Firm' on the basis of Settlement of accounts.
14.
R, S and T are partners in a firm sharing profits in the ratio of 2:1:1 respectively.Firm closes its accounts on 31st March every year.S died on 30th September, 2015.There was a balance of Rs.1,25,000 in capital account in the beginning of the year.In the event of death of any partner, the partnership deed provides for the following
(i)Interest on capital will be calculated at the rate of 6% per annum.
(ii)The executor deceased partner shall be paid Rs.24,000 for his share of goodwill.
(iii)His share of profit till the date of death will be calculated on the basis of sales.It is also specified that the sales during the year 2014-15 were Rs.4,00,000.The sales from 1st April, 2015 to 30th Sptember, 2015 were Rs.1,20,000.The profit of the firm for the year ending 31st March, 2015 was Rs.2,00,000
Prepare capital account to be presented to his executor.
15.
Srijan Ltd issued 30,000, 10% debentures of Rs.100 each on 1st April, 2013. The issue was fully subscribed. According to the terms of issue, interest is payable on half-yearly basis.
Pass journal entries for the year ended 31st March, 2014.
16.
Calculate the amount of gross profit, if average stock Rs.80,000, inventory turnover ratio 6 times, selling price 25% above cost.
17.
G and M were partners in a firm sharing profits in the ratio of 5:3 their fixed capitals were Rs.3,00,000 and Rs.2,00,000 respectively. the partnership deed provided that
(i) Interest on capital should be allowed @12% per annum.
(ii)G should be allowed a salary of Rs.40,000 per annum for extra time he devotes to business.
(iii) A commission of 5% of the net profit should be allowed to M for his extra efforts in marketing for the firm.
the net profit for the year ended on 31st March, 2015 was rs.2,00,000. prepare profit and loss appropriation account.Also, identify the values shown by the firm
18.
Kamya Ltd. paid the installment of Rs. 20,000 for furniture purchased on credit, in which, interest of Rs. 2,000 was included. How will you show this payment at the time of preparation of cash flow statement.
19.
Nonu and Monu are partners in a firm sharing profits and losses in the ratio of 3:2 with capitals of RS.2,40,000 and RS.1,60,000 respectively. The amount of capital carries interest @ 10% per annum. They admit Sonu into the partnership with effect from 1st January, 2015 on the following terms
(i) Sonu is to bring in RS.20,000 for his share of goodwill in cash.
(ii) Sonu is to contribute RS.2,50,000 as his share of capital.
(iii) The partners' capitals will carry interest @ 12% per annum.
(iv) The new profit sharing ratio of Nonu, Monu and Sonu will be 9:6:4.
(v) Nonu will be entitled to 5% commission on net profit.
(vi) The profits for the year ending on 31st March, 2015 before providing for Nonu's commission and interest on partners' capitals amounted to RS.1,60,000.
Prepare profit and loss appropriation account for the year ending on 31st March, 2015.
20.
Himalaya Company Limited issued for public subscription of 1,20,000 equity shares of Rs 10 each at a premium of Rs 2 per share payable as under :
|
With Application |
Rs 3 per share |
|
On allotment (including premium) |
Rs 5 per share |
|
On First call |
Rs 2 per share |
|
On Second and Final call |
Rs 2 per share |
Applications were received for 1,60,000 shares. Allotment was made on pro-rata basis. Excess money on application was adjusted against the amount due on allotment.
Rohan, whom 4,800 shares were allotted, failed to pay for the two calls. These shares were subsequently forfeited after the second call was made. All the shares forfeited were reissued to Teena as fully paid at Rs 7 per share.
Record journal entries in the books of the company to record these transactions relating to share capital. Also show the company’s balance sheet.
21.
Maharana Ltd's main business is manufacturing of tyres. The company is very particular about the observation of the provisions of the Companies Act. On 1st April, 2013, the company issued Rs18,00,000, 8% debentures of Rs 100 each. The debentures were redeemable at a premium of 5%. On 31st March, 2016, all the debentures were redeemed. Since the manufacturing of tyres results in air pollution, the company had installed a plant for its effective control.
Pass necessary journal entries for the redemption of debentures. Also identify the value observed by Maharana Ltd. It is assumed that the company has adequate balance in debenture redemption reserve account.
22.
The quick ratio of Zumbo Ltd is 1.5 : 1. Its inventory amounts to Rs.50,000 and its current liabilities are of Rs.1,50,000. Find its current ratio.
23.
Rv Corp Ltd issued 40,000 equity shares of Rs10 each at a premium of Rs.2 payable along with application. The Public applied for 48,000 shares.
Pass necessary journal entries when
(i) Excess shares are rejected.
(ii) Pro-rata allotment is made
(iii) Application for 2,500 shares are rejected and the remaining are allotted shares on a pro-rata basis.
24.
The balance sheet of A, B and C who were sharing profits and losses in the ratio of 1/2, 1/3 and 1/6 respectively, was as follows on 1st April, 2014
| Liabilities | Amt(Rs) | Assets | Amt(Rs) | |
|---|---|---|---|---|
| Bills Payable | 6,400 | Cash | 25,650 | |
| Sundry Creditors | 12,500 | Bills Receivable | 5,400 | |
| Capital A/cs | Deptors | 17,800 | ||
| A | 40,000 | Stock | 22,300 | |
| B | 25,000 | Furniture | 3,500 | |
| C | 20,000 | 85,000 | Plant and Machinery | 9,750 |
| Profit and Loss A/c | 4,500 | Building | 24,000 | |
| 1,08,400 | 1,08,400 | |||
A retired from the business on 1st April, 2014 and his share in the firm was to be ascertained on the revaluation of the assets as follows
Stock Rs.20,000; furniture Rs.3,000; plant and machinery Rs.9,000; building Rs.20,000; Rs.850 was to be provided for doubtful debts.The goodwill of the firm was valued at Rs.6,000.
A was to paid Rs.11,500 in cash on retirement and the balance in three equal yearly instalment with interest at 9% per annum.
Prepare revaluation account and partners' capital accounts on the date of A's retirement and A's loan account till final payment is made to him.
1.
Rs 1,50,000 will be transferred from suplus, i.e. balance in statement of profit and loss to DRR account and after redemption DRR Rs 5,00,000 will be transferred to general reserve; Interest earned on fixed deposit = Rs 18,000; TDS = Rs 1,800
2.
(i) 2,50,0.00
(ii) 1,00,000
3.
At the time of retirement of a partner, all partners share accumulated reserves, profits and losses in their old profit sharing ratio.
4.
Liquid Assets Rs.45,000 (i.e., 75XRs.60,000), Closing Inventory Rs.1,22,500, Current Assets Rs.1,67,500 (i.e., Rs.45,000+Rs.1,22,500), Current Ratio 2.79:1 (i.e., \(Rs.1,67,500\div 60,000\) )
[Hints: (i) Cost of revenue from operations Rs.4,50,000 i.e., Rs.6,00,000 (Revenue from operations) - Rs 1,50,000 (G.P. i.e., 25% of Rs.6,00,000)
(ii) Average Inventory Rs.1,12,500 (i.e., \(Rs.4.50,000\div 4\) )]
5.
(i) Dr.Cash A/c Rs.3,45,000; Cr.Guru's Capital A/c Rs.3,00,000 and Premium for goodwill A/c Rs.45,000.
(ii) Dr.Premium for Goodwill A/c Rs.45,000 and kavi's Capital A/c Rs.37,500; Cr.Hari's Capital A/c Rs.67,500 and Ravi's Capital Rs.15,000.
[Hint: (i)Hari's sacrifice 9/42, Ravi's sacrifice 2/42, kavi's gain 5/42 (ii)Kavi's share of goodwill: Rs.45,000X7/1X5/42=Rs.37,500]
6.
Dr. Table Showing Adjustments Cr.
| Particulars |
A Rs. |
B Rs. |
C Rs. |
|
|---|---|---|---|---|
| Present Position | ||||
| (i) Salary of A and B @ Rs. 3,000 each per annum | Cr. | 3,000 | 3,000 | - |
| (ii) Commission of B | Cr. | - | 5,000 | - |
| (iii) Division of Profit | Cr. | 30,000 | 20,400 | 13,600 |
| (Cr.) | 33,000 | 28,400 | 13,600 | |
| Old Position | ||||
| Division of Profit Rs. 75,000 in the ratio 3 : 2 : 1, now cancelled by debiting it | (Dr.) | 37,500 | 25,000 | 12,500 |
| Net effect to be debited or credited to partners' captial a/cs | (Cr. - Dr.) | 4,500 | 3,400 | 1,100 |
| (Dr.) | (Cr.) | (Cr.) | ||
Journal Entry
| Date | Particulars | L.F. | Dr. (Rs.) | Cr.(Rs.) | |
|---|---|---|---|---|---|
| A's Capital A/c | Dr. | 4,500 | |||
| To B's Capital A/c | 3,400 | ||||
| To C's Capital A/c | 1,100 | ||||
| (For adjustment entry passed for omission of salary, commission and change in profit sharing ratio) | |||||
Note: Divisible profit Rs. 64,000 (Rs. 75,000 - Rs. 11,000) out of which Rs. 30,000 will be transferred to A as guaranteed profit and remaining Rs. 34,000 will be divided between B and C in the ratio of 3 : 2, i.e., Rs. 20,400 and Rs. 13,600 respectively.
7.
( )
Operating Profit Ratio=100-83.64% =16.36%.
8.
( )
On the basis of analysis of financial statements, government can judge which industry is progressing on the desired lines and which industry needs help.
9.
( )
(i)Statement of profit and Loss
(ii)Balance sheet
10.
( )
Change in the profit sharing ratio means that one partner is purchasing from another a share of profit which previously belonged to the former.
11.
Outflow of cash Purchase of investments
No flow of cash Cash deposited into the bank
12.
( )
(i) Share of accumulated losses
(ii) Drawings upto death etc.
13.
( )
In case of dissolution of partnership, assets are revalued and liabilities are reassessed whereas in case of dissolution of partnership firm, all the assets other than cash are realised and liabilities are paid.
14.
Transferred to S's executor's account=Rs.1,79,750
Share of S's in current year's profit=Rs.15,000
15.
Debenture interest for half year = Rs.1,50,000
16.
Gross profit =Rs.1,20,000
17.
Profit to current accounts:
G = Rs. 56,250
M = Rs.33,750
18.
The installment of Rs. 18,000 will be shown as outflow of cash under investing activity and the interest of Rs. 2,000 as outflow in financing activity.
19.
Profit and Loss Appropriation Account
for the year ending on 31st March, 2015.
| Particulars | 1st Apr 2014 to 31st Dec 2014 | 1st Jan 2015 to 31st March 2015 | Particulars | 1st Apr 2014 to 31st Dec 2014 | 1st Jan 2015 to 31st March 2015 |
|---|---|---|---|---|---|
| To Interest on Capital | By Profit | 1,20,000 | 40,000 | ||
| Nonu | 18,000 | 9,720 | |||
| Monu | 12,000 | 6,480 | |||
| Sonu | - | 7,500 | |||
| To Commission to Nonu [5% of RS.40,000] | - | 2,000 | |||
| To Net profit Transferred to | |||||
| Nonu | 54,000 | 6,774 | |||
| Monu | 36,000 | 4,516 | |||
| Sonu | - | 3,010 | |||
| 1,20,000 | 40,000 | 1,20,000 | 40,000 |
20.
| Date | Particulars | J.F. | Debit (Rs) | Credit (Rs) | |
|---|---|---|---|---|---|
| Bank a/c | Dr. | 4,80,000 | |||
| To Share Application | 4,80,000 | ||||
| (Application money received for 1,60,000 shares @ Rs. 3 per share) | |||||
| Share Application a/c | Dr. | 4,80,000 | |||
| To Share Capital | 3,60,000 | ||||
| To Share allotment | 1,20,000 | ||||
| (Excess money transferred to share allotment) | |||||
| Share Allotment a/c | Dr. | 6,00,000 | |||
| To Share Capital | 3,60,000 | ||||
| To Securities premium | 2,40,000 | ||||
| (Money due on allotment @ Rs. 3 per share and Rs. 2 per share for share premium) | |||||
| Bank a/c | Dr. | 4,80,000 | |||
| To Share allotment | 4,80,000 | ||||
| (Money received on share allotment) | |||||
| Share First call a/c | Dr. | 2,40,000 | |||
| To Share Capital | 2,40,000 | ||||
| (Money due on share first call) | |||||
| Bank a/c | Dr. | 2,30,400 | |||
| Calls in arrears a/c | Dr | 9,600 | |||
| To Share First Call | 2,40,000 | ||||
| (All money received except for 4,800 shares) | |||||
| Share Second and Final call a/c | Dr. | 2,40,000 | |||
| To Share Capital | 2,40,000 | ||||
| (Money due on share Second and final call) | |||||
| Bank a/c | Dr. | 2,30,400 | |||
| Calls in arrears a/c | Dr | 9,600 | |||
| To Share Second and Final Call | 2,40,000 | ||||
| (All money received except for 4,800 shares) | |||||
| Share Capital a/c | Dr. | 48,000 | |||
| To Share forfeited | 38,400 | ||||
| To Calls in arrears | 19,200 | ||||
| (Forfeiture of shares due to non-payment of call money) | |||||
| Bank a/c | Dr. | 33,600 | |||
| Share forfeiture a/c | Dr. | 14,400 | |||
| To Share capital | 48,000 | ||||
| (Re-issue of shares @ Rs. 7 per share) | |||||
| Share forfeiture a/c | Dr. | 14,400 | |||
| To Capital reserve | 14,400 | ||||
| (Closure of forfeited shares) | |||||
Balance sheet of Himalaya Company as on…
| Liabilities | Amount (Rs) | Assets | Amount (Rs) | ||||
|---|---|---|---|---|---|---|---|
| Share Capital | 1,52,000 | Bank | 14,06,400 | ||||
| Securities premium | 2,40,000 | ||||||
| Forfeited Shares | 14,400 | ||||||
| 14,06,400 | 14,06,400 | ||||||
Working notes
Amount of money received on allotment
Total money due on 1,20,000 shares @ Rs. 5 per share = Rs. 6,00,000
Less Application money received excess of 1,20,000
Adjusted against allotment money = Rs. 1,20,000
Net amount due on allotment = Rs. 4,80,000
21.
JOURNAL
| Date | Particulars | LF | Amt(Dr) | Amt(Cr) | |
|---|---|---|---|---|---|
| 2015 Mar31 |
Surplus, i.e. Balance in Statement of Profit and Loss To Debenture Redemption Reserve A/c (Being the amount equal to 25% of the debentures transferred to DRR ) |
Dr |
4,50,000 |
4,50,000 |
|
| Apr30 |
Debenture Redemption Investment A/c |
Dr |
2,70,000 |
2,70,000 |
|
| 2016 Mar31 |
Bank A/c To Debenture Redemption Investment A/c (Being the investment encashed) |
Dr |
2,70,000 |
2,70,000 |
|
| Mar31 |
8% Debentures A/c Premium on Redemption of Debentures A/c To Debentureholders' A/c (Being the amount due on redemption) |
Dr Dr |
18,00,000 90,000 |
18,90,000 | |
| Debentureholders' A/c To Bank A/c (Being the payment made to the debentureholders) |
Dr |
18,90,000 |
18,90,000 |
||
| Debenture Redemption Reserve A/c To General Reserve A/c (Being the transfer of balance of DRR to general reserve) |
Dr |
4,50,000 |
4,50,000 |
||
Values observed by Maharana Ltd are:
(i) Law-abiding company
(ii) Conservation of environment
22.
\(Current\ ratio=\frac { Current\ assets* }{ Current\ liabilities } \)
\(=\frac { 2,75,000 }{ 1,50,000 } \)
\(Quick\ ratio=\frac { Liquid\ assets* }{ Current\ liabilities } \)
\(\\ \therefore 1.5=\frac { Liquid\quad assets }{ 1,50,000 } \)
\(\\ \Rightarrow \ Liquid\ assets=1,50,000\times 1.5\)
*Current assets=Liquid assets+Inventory
=2,25,000+50,000
=Rs.2,75,000
23.
| Date | Particulars | LF | Amt(Dr) | Amt(Cr) | |
|---|---|---|---|---|---|
| Bank A/c \((48,000\times12)\) | Dr | 5,76,000 | |||
| To Equity Share Application and Allotment A/c | 5,76,000 | ||||
| (Being application money received on 48,000 shares @ Rs12 per Share inclusive of Securities premium) | |||||
| Equity Share Application and Allotment A/c | Dr | 5,76,000 | |||
| To Equity Share Capital A/c \((40,000\times10)\) | 4,00,000 | ||||
| To Securities Premium Reserve A/c \((40,000\times2)\) | 80,000 | ||||
| To Bank A/c \((8,000\times12)\) | 96,000 | ||||
| (Being money received on application transferred to share capital account and securities premium on allotment and the excess refunded) | |||||
24.
Dr Revaluation Account Cr
| Particular | Amt(Rs) | Particular | Amt(Rs) | |
|---|---|---|---|---|
| T Stock A/c | 2,300 | By Loss Transferred to | ||
| To Furniture A/c | 500 | A's Capital A/c | 4,200 | |
| To Plant and Machinery A/c | 750 | B's Capital A/c | 2,800 | |
| To Building A/c | 4,000 | C's Capital A/c | 1,400 | 8,400 |
| To Provision for Doubtful Debts A/c | 850 | |||
| 8,400 | 8,400 | |||
Dr Partners' Capital Account Cr
| Particular | A(Rs) | B(Rs) | C(Rs) | Particular | A(Rs) | B(Rs) | C(RS) |
|---|---|---|---|---|---|---|---|
| To A's Capital A/c | - | 2,000 | 1,000 | By Balnce b/d | 40,000 | 25,00 | 20,000 |
| To Revaluation A/c (Loss) | 4,200 | 2,800 | 1,400 | By Profit and Loss A/c | 2,250 | 1,500 | 750 |
| To Cash A/c | 11,500 | - | - | By B's Capital A/c | 2,000 | - | - |
| To A's Loan A/c | 29,550 | - | - | By C's Capital A/c | 1,000 | - | - |
| To Balanced c/d | - | 21,700 | 18,350 | ||||
| 45,250 | 26,500 | 20,750 | 45,250 | 26,500 | 20,750 |
Dr A's Loan Account Cr
| ate | Particular | Amt(Rs) | Date | Particular | Amt(Rs) |
|---|---|---|---|---|---|
| 2016 | 2015 | ||||
| Mar 31 | To Bank A/c(9,850+1,773) | 11,623 | Apr 1 | By Balance b/d | 19,700 |
| Mar 31 | To Balance c/d | 9,850 | 2016 | ||
| Mar 31 | By Interest A/c (19,700 x9%) | 1,773 | |||
| 21,473 | 21,473 | ||||
| 2017 | 2016 | ||||
| Mar 31 | To Bank A/c(9,850+887) | 10,737 | Apr 1 | By Balance b/d | 9,850 |
| 2017 | |||||
| Mar 31 | By interest A/c (9,850 x 9%) | 887 | |||
| 10,737 | 10,737 |
Working Note
1. Amount of each equal installment without interest \(=\frac{29,550}{3}=₹ 9,850\)
2. Calculation of A's Share of Goodwill
Firm's goodwill = Rs. 6,000; A's share of goodwill = \(₹ 6,000 \times \frac{1}{2}=₹ 3,000\)
To be contributed by B and C in their gaining ratio i.e. 2 : 1
\(B=3,000 \times \frac{2}{3}=₹ 2,000 ; \quad C=3,000 \times \frac{1}{3}=₹ 1,000\)
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