In the books of Saranya Ltd Journal entries Date Particulars    L.F  Debit Rs. Credit Rs.   Bank A/c (30,000 x 3)  Dr    90,000     To Equity share application A/c       90,000   (Application money received)           Equity share application A/c (20,000 x 3)  Dr   60,000     To Equity share capital A/c       60,000   (Transfer of share application money to share
capital)           Equity share application A/c (10000 x 3)  Dr   30,000     To Bank A/c       30,000   (Excess share application money refunded)           Equity share allotment A/c (20,000 x 4)  Dr   80,000     To Equity share capital A/c       80,000   (share allotment money due)           Bank A/c  Dr   80,000     To Equity share allotment A/c       80,000   (Allotment money received)           Equity share first and final call A/c  Dr   60,000     To Equity share capital A/c       60,000   (share first and final call money due)           Bank A/c  Dr   60,000     To Equity share first and final call A/c       60,000   (share first and final money received)        

Dr. Revaluation Account Cr.

Particulars	Rs.	Rs.	Particulars		Rs.
To Furniture A/c		1,000	By Stock A/c		4,000
To Provision for bad debts A/c		1,000	By Loss on revaluation transferred to
To Outstanding repairs		11,000	Charles capital A/c (3/9)	3,000
			Muthu’s capital A/c (4/9)	4,000
			Sekar’s capital A/c (2/9)	2,000	9,000
		13,000			13,000

Dr. Capital Account Cr.

Particulars	Charles Rs.	Muthu Rs.	Sekar Rs.	Particulars	Charles Rs.	Muthu Rs.	Sekar Rs.
To Profit and loss A/c	6,000	8,000	4,000	By Balance b/d	30,000	40,000	20,000
To Revaluation A/c (loss	3,000	4,000	2,000	By Workmen’s compensation fund	9,000	12,000	6,000
To Bank	30,000	-	-
		40,000	20,000
	39,000	52,000	26,000		39,000	52,000	26,000
				By Balance b/d	-	40,000	20,000

Balance Sheet as on 1st January 2019

Liabilities	Rs.	Rs.	Asset	Rs.	Rs.
Capital accounts:			Furniture	20,000
Muthu	40,000		Less: Depreciation	1,000	19,000
Sekar	20,000	60,000	Stock	40,000
Sundry creditors		33,000	Add: Appreciation	4,000	44,000
Outstanding repairs		11,000	Debtors	30,000
			Less: Provision for bad debts	1,000	29,000
			Cash at bank	42,000
			Less: Amount paid to Charles	30,000
		1,04,000			1,04,000

Average profit = \(\frac { Total\ profit }{ Number\ of\ year } \)
=\(\frac { 62,000+61,000+63,000 }{ 3 } \)
= \(\frac { 1,86,000 }{ 3 } \)
= Rs. 62,000
Normal profit = Capital employed \(\times\) Normal rate of return
= 4,00,000 \(\times\) 10%
= Rs. 40,000
Super profit = Average profit - Normal profit
= 62,000 – 40,000
= Rs. 22,000
Goodwill = \(\frac { Super\ profit }{ Normal\ rate\ of\ return } \) \(\times\)100
= \(\frac { 22,000 }{ 10 } \) \(\times\) 100
= Rs. 2,20,000

Dr.                                         Partners’ Capital Account                                          Cr

Date	Particulars	Bragathish Rs.	Naresh Rs.	Date	Particulars	Bragathish Rs.	Naresh Rs.
	To Balance c/d	4,50,000	6,00,000		By Balance b/d	4,00,000	6,00,000
					By Bank A/c	50,000	-
					(Additional capital)
		4,50,000	6,00,000			4,50,000	6,00,000
					By Balance b/d	4,50,000	6,00,000

Dr.                                         Partners’ Current Account                                              Cr

Date	Particulars	Bragathish Rs.	Naresh Rs.	Date	Particulars	Bragathish Rs.	Naresh Rs.
	To Balance b/d	-	15,000		By Balance b/d	20,000	-
					By Profit and loss
	To Drawings A/c	45,000	60,000
					appropriation A/c	80,000	1,20,000
	To Interest on				(share of profi
		2,000	3,000
	To Balance c/d	90,000	1,10,000		By Interest on capita A/c	20,000	30,000
					By Commission A/c	17,000	-
					By Salary A/c	-	38,000
		1,37,000	1,88,000			1,37,000	1,88,000
					By Balance b	90,000	1,10,000

Dr In the books of Mayiladuthurai Recreation club Receipts and Payments Account for the year ended 31^st March, 2019 Cr

Receipts	Rs.	Rs.	Payments	Rs.
To Balance b/d			By Refreshments charges	l3,000
Cash in hand	15,000		By Construction of tennis
Cash at bank	25,000	40,000	cocert	7,000
To Donation received		48,000	By Rent paid	1,000
To Sale of old equipment		26,000	By Salary of watchman	12,000
To Club annual day			By Club annual day expenses	15,000
To Receipts from charity show		4,000	By Entertainment expenses	13,500
To Sale of investments		12,000	By Billiards table purchased	5,000
			By Expenses of charity show	3,000
			By Balance cld
			Cash in hand	12,000
			Cash at bank	50,000
		1,48,000		1,48,000

In the books of Chennai Sports Club

In the books of Chennai Sports Club
Dr. Receipts and Payments Account for the year ended
31^st March, 2018 Cr.

Receipts	Rs.	Rs.	Payments	Rs.	Rs.
To Balance b/d:			By Interest paid		5,000
Cash	10,000		By Telephone expenses		7,000
Bank	15,000	25,000	By Upkeep of grounds		22,500
To Life membership fees		5,500	By Bats and balls purchased		13,000
To Tournament fund receipts		15,000	By Tournament expenses		12,500
To Subscriptions received			By Balance c/d
2016 – 2017	4,500		Cash	5,000
2017 – 2018	65,000		Bank (Bal. fig)	55,000	60,000
2018 – 2019	5,000	74,500
		1,20,000			1,20,000

Dr. Total debtors account Cr.

Particulars	Rs	Particulars	Rs.
To Balance b/d	2,50,000	By Cash A/c (received)	5,35,000
To Sales A/c (credit) (balancing figure)	6,60,000	By Discount allowed A/c	25,000
		By Balance c/d	3,50,000
	9,10,000		9,10,000

Dr. Total creditors account Cr.

Particulars	Rs	Particulars	Rs
To Cash A/c (paid)	4,50,000	By Balance b/d	1,50,000
To Discount received A/c	20,000	By Purchases A/c (credit)	4,95,000
To Balance c/d	1,75,000	(balancing figure)
	6,45,000		6,45,000

In the books of Abdul

Dr. Trading and Profit and loss account for the year ended 31st March, 2018 Cr.

Particulars	Rs	Particulars	Rs.
To Opening stock	1,00,000	By Sales	6,60,000
To Purchases	4,95,000	By Closing stock	50,000
To Gross profit c/d	1,15,000
	7,10,000		7,10,000
To Discount allowed	25,000	By Gross profit b/d	1,15,000
To Sundry expenses	30,000	By Discount received	20,000
To Net profit (transferred to capital account)	80,000
	1,35,000		1,35,000

Balance Sheet as on 31st March, 2018

Liabilities	Rs.	Rs.	Assets	Rs.
Sundry creditors		1,75,000	Cash	40,000
Capital	2,35,000		Furniture	10,000
Add: Net profit	80,000		Stock	50,000
	3,15,000		Debtors	3,50,000
Less: Drawings	40,000	2,75,000
		4,50,000		4,50,000

Trade payables turnover ratio = \(\frac { Net\ credit\ purchases }{ Average\ trade\ payables } \)
Net credit purchases = Rs.9,50,000
Average trade payables = \(\frac { Opening\ trade\ payables+Closing\ trade\ payables }{ 2 } \)
= \(\frac { (60,000+45,000)+(50,000+35,000) }{ 2 } \)
= \(\frac { 1,05,000+85,000 }{ 2 } =\frac { 1,90,000 }{ 2 } \) = Rs.95,000
Trade payables turnover ratio = \(\frac { 9,50,000 }{ 95,000 } \) = 10 times
Credit payment period (in days) = \(\frac { Number\ of\ days\ in\ a\ year }{ Trade\ payables\ turn\ over\ ratio } \)
= \(\frac { 365 }{ 10 } \) = 36.5 days

Trend analysis for Mullai Ltd

Particulars	Rs.in lakhs			Trend percentages
	2015-16	2015-16	2017-18	2015-16	2016-17	2017-18
Revenue from operations	100	120	160	100	120	160
Add: Other income	20	24	20	100	120	100
Total revenue	120	144	180	100	120	150
Less: Expenses	20	14	40	100	170	200
Profit before tax	100	130	140	100	130	140
Less: Income tax (30%)	30	39	42	100	130	140
Profit after tax	70	91	98	100	130	140

Operating cost ratio = \(\cfrac { Operating\ cost }{ Revenue\ from\ operations } \times 100=\cfrac { 4,80,000 }{ 8,00,000 } \times 100=60\)%
Cost of revenue from operations = Purchases of stock-in-trade + Change in inventories of stock in trade + Direct expenses (wages)
= 4,50,000 + (40,000) + 10,000 = Rs.4,20,000
Operating expenses = Administrative expenses + Selling and distribution expenses+ Employee benefits expenses (salaries)
= 20,000 + 28,000 + 12,000 = Rs.60,000
Operating cost = Cost of revenue from operations + Operating expenses
= 4,20,000 + 60,000 = Rs.4,80,000
Tutorial Note
Loss on sale of fixed assets is a non-operating item, hence it is ignored.
(iii) Operating profit ratio
Operating profit ratio gives the proportion of operating profit to revenue from operations.
Operating profit ratio is an indicator of operational efficiency of an organisation. It may be computed as follows
Operating profit ratio = \(\cfrac { Operating\ profit }{ Revenue\ from\ operations } \times 100\)
Alternatively, it is calculated as under.
Operating profit ratio = 100 – Operating cost ratio
Operating profit = Revenue from operations – Operating cost
A higher ratio indicates better profitability. Greater the operating ratio, higher is the margin available for paying non-operating expenses
Tutorial note
Operating cost ratio + Operating profit ratio = 100%