3267 + Interview Questions in Accountancy Page 14 InterviewSolution

651.	If debentures are to be redeemed at premium, the premium on redemption of debentures account shall be ___
Answer» If debentures are to be redeemed at premium, the premium on redemption of debentures account shall be ___

Discussion

652.	X and Y are partners with the capital of Rs 50,000 and Rs 30,000 respectively. Interest payable on capital is 10% p.a. Find the interest on capital for both the partners when the profits earned by the firm is Rs 4,800.
Answer» X and Y are partners with the capital of Rs 50,000 and Rs 30,000 respectively. Interest payable on capital is 10% p.a. Find the interest on capital for both the partners when the profits earned by the firm is Rs 4,800.

Discussion

653.

Compute Gross Profit Ratio, Working Capital Turnover Ratio, Debt Equity Ratio and Proprietary Ratio from the following information: Rs Paid-up Share Capital 5,00,000 Current Assets 4,00,000 Revenue from Operations 10,00,000 13% Debentures 2,00,000 Current Liabilities 2,80,000 Cost of Revenue from Operations 6,00,000

Answer»

Compute Gross Profit Ratio, Working Capital Turnover Ratio, Debt Equity Ratio and Proprietary Ratio from the following information:

	Rs
Paid-up Share Capital	5,00,000
Current Assets	4,00,000
Revenue from Operations	10,00,000
13% Debentures	2,00,000
Current Liabilities	2,80,000
Cost of Revenue from Operations	6,00,000

Discussion

654.

X and Y are partners . The Partnership Deed provides inter alia:(a) That the Accounts be balanced on 31st March every year.(b) That the profits be divided as : X one-half, Y one-third and carried to a Reserve one-sixth.(c) That in the event of the death of a partner , his Executors be entitled to be paid out:(i) The Capital to his credit till the date of death .(ii) His proportion of profits till the date of death based on the average profits of the last three completed years.(iii) By way of Goodwill , his proportion of the total profits for the three preceding years .(d) Liabilities ₹ Assets ₹ Capital A/cs: Sundry Assets 21,000 X 9,000 Y 6,000 15,000 Reserve 3,000 Creditors 3,000 21,000 21,000 The Profits for three years were : 2015-16—₹ 4,200; 2016-17—₹ 3,900; 2017-18—₹ 4,500. Y died on 1st August, 2018. Prepare necessary accounts.

Answer» X and Y are partners . The Partnership Deed provides inter alia:

(a) That the Accounts be balanced on 31st March every year.

(b) That the profits be divided as : X one-half, Y one-third and carried to a Reserve one-sixth.

(c) That in the event of the death of a partner , his Executors be entitled to be paid out:

(i) The Capital to his credit till the date of death .

(ii) His proportion of profits till the date of death based on the average profits of the last three completed years.

(iii) By way of Goodwill , his proportion of the total profits for the three preceding years .

(d)


Liabilities		₹	Assets	₹
Capital A/cs:			Sundry Assets	21,000
X	9,000
Y	6,000	15,000

Reserve		3,000
Creditors		3,000



		21,000		21,000

The Profits for three years were : 2015-16

—

₹ 4,200; 2016-17

—

₹ 3,900; 2017-18

—

₹ 4,500. Y died on 1st August, 2018. Prepare necessary accounts.

Discussion

655.	State which of the following would result in inflow/outflow or no flow of Cash and Cash Equivalents:(a) Sale of Fixed Assets, Book Value ₹ 1,00,000 at a profit of ₹10,000.(b) Sale of goods against cash.(c) Purchase of machinery for cash.(d) Purchase of Land and Building for ₹10,00,000. Consideration paid by issue of debentures.(e) Issued fully paid Bonus Shares.(f) Cash withdrawn from bank.(g) Payment of Interim Dividend.(h) Proposed Dividend.
Answer» State which of the following would result in inflow/outflow or no flow of Cash and Cash Equivalents: (a) Sale of Fixed Assets, Book Value ₹ 1,00,000 at a profit of ₹10,000. (b) Sale of goods against cash. (c) Purchase of machinery for cash. (d) Purchase of Land and Building for ₹10,00,000. Consideration paid by issue of debentures. (e) Issued fully paid Bonus Shares. (f) Cash withdrawn from bank. (g) Payment of Interim Dividend. (h) Proposed Dividend.

Discussion

656.	Amar and Bimal entered into partnership on 1st April, 2017 contributing ₹ 1,50,000 and ₹ 2,50,000 respecitvely towards capital. The Partnership Deed provided for interest on capital 10% p.a. It also provided that Capital Accounts shall be maintained following Fixed Capital Accounts method. The firm earned net profit of ₹ 1,00,000 for the year ended 31st March 2018.Pass the Journal entry for interest on capital.
Answer» Amar and Bimal entered into partnership on 1st April, 2017 contributing ₹ 1,50,000 and ₹ 2,50,000 respecitvely towards capital. The Partnership Deed provided for interest on capital 10% p.a. It also provided that Capital Accounts shall be maintained following Fixed Capital Accounts method. The firm earned net profit of ₹ 1,00,000 for the year ended 31st March 2018. Pass the Journal entry for interest on capital.

Discussion

657.	After reading about potato farming in tyres, Mohini started growing potatoes at home. Initially she did not get a good crop, but she kept on trying and ultimately learnt how to grow good potatoes. She now contributes several kilograms of potatoes to her kitchen, and thus helps save money. What values did Mohini show?
Answer» After reading about potato farming in tyres, Mohini started growing potatoes at home. Initially she did not get a good crop, but she kept on trying and ultimately learnt how to grow good potatoes. She now contributes several kilograms of potatoes to her kitchen, and thus helps save money. What values did Mohini show?

Discussion

658.	Calculatethe open economy multiplier with proportional taxes, T = tY,instead of lump−sum taxes as assumed in the text.
Answer» Calculate the open economy multiplier with proportional taxes, T = tY, instead of lump−sum taxes as assumed in the text.

Discussion

659.	X Ltd. forfeited 900 Equity Shares of ₹ 100 each for the non-payment of allotment money of ₹ 30 per share and the first call of ₹ 20 per share. The second and final call of ₹ 25 per share has not been made . The forfeited shares were reissued for ₹ 90 per share , ₹ 75 paid-up. Journalise the above.
Answer» X Ltd. forfeited 900 Equity Shares of ₹ 100 each for the non-payment of allotment money of ₹ 30 per share and the first call of ₹ 20 per share. The second and final call of ₹ 25 per share has not been made . The forfeited shares were reissued for ₹ 90 per share , ₹ 75 paid-up. Journalise the above.

Discussion

660.	ABC Ltd. issued 3,000, 14% Debentures of Rs 100 each at a discount of 5% on January 1, 2012. The debentures are redeemable at par in three equal instalments at the end of the third, fourth and fifth year. What is the value of debentures redeemable at the end of fifth year?
Answer» ABC Ltd. issued 3,000, 14% Debentures of Rs 100 each at a discount of 5% on January 1, 2012. The debentures are redeemable at par in three equal instalments at the end of the third, fourth and fifth year. What is the value of debentures redeemable at the end of fifth year?

Discussion

661.	What journal entries will be made in the following cases when company redeems debentures at the expiry of period by serving the notice: (a) when debentures were issued at par with a condition to redeem them at premium; (b) when debentures were issued at premium with a condition to redeem that at par; and (c) when debentures were issued at discount with a condition to redeem them at premium?
Answer» What journal entries will be made in the following cases when company redeems debentures at the expiry of period by serving the notice: (a) when debentures were issued at par with a condition to redeem them at premium; (b) when debentures were issued at premium with a condition to redeem that at par; and (c) when debentures were issued at discount with a condition to redeem them at premium?

Discussion

662.	This analysis is also known as ‘Vertical analysis’.
Answer» This analysis is also known as ‘Vertical analysis’.

Discussion

663.	Under which sub-headings will the following items be shown in the Balance Sheet of a company as per Revised Schedule VI, Part of the Companies Act, 1956 (now Schedule III, Part I of the Companies Act, 2013). (i) Long-term loan (ii) Capital Redemption Reserve. (iii) Short-term provision (iv) Goodwill. (v) Provision for warranties. (vi) Brand/Trade-marks.
Answer» Under which sub-headings will the following items be shown in the Balance Sheet of a company as per Revised Schedule VI, Part of the Companies Act, 1956 (now Schedule III, Part I of the Companies Act, 2013). (i) Long-term loan (ii) Capital Redemption Reserve. (iii) Short-term provision (iv) Goodwill. (v) Provision for warranties. (vi) Brand/Trade-marks.

Discussion

664.	Calculatethe half-life of a first order reaction from their rate constantsgiven below:(i) 200 s−1 (ii) 2 min−1 (iii) 4 years−1
Answer» Calculate the half-life of a first order reaction from their rate constants given below: (i) 200 s⁻¹ (ii) 2 min⁻¹ (iii) 4 years⁻¹

664.

Calculatethe half-life of a first order reaction from their rate constantsgiven below:(i) 200 s−1 (ii) 2 min−1 (iii) 4 years−1

Answer»

Calculate
the half-life of a first order reaction from their rate constants
given below:

(i)
200 s⁻¹
(ii)
2 min⁻¹
(iii)
4 years⁻¹

Discussion

665.

Given below is the Balance Sheet of A and B, who are carrying on partnership business on 31.12.2016. A and B share profits and losses in the ratio of 2:1. Balance Sheet of A and B as on December 31, 2016 Liabilites Amount (Rs) Assets Amount (Rs) Bills Payable 10,000 Cash in Hand 10,000 Creditors 58,000 Cash at Bank 40,000 Outstanding 2,000 Sundry Debtors 60,000 Expenses Stock 40,000 Capitals: Plant 1,00,000 A 1,80,000 Buildings 1,50,000 B 1,50,000 3,30,000 4,00,000 4,00,000 C is admitted as a partner on the date of the balance sheet on the following terms: (i) C will bring in Rs 1,00,000 as his capital and Rs 60,000 as his share of goodwill for 1/4 share in the profits.(ii) Plant is to be appreciated to Rs 1,20,000 and the value of buildings is to be appreciated by 10%.(iii) Stock is found over valued by Rs 4,000.(iv) A provision for bad and doubtful debts is to be created at 5% of debtors.(v) Creditors were unrecorded to the extent of Rs 1,000. Pass the necessary journal entries, prepare the revaluation account and partners’ capital accounts, and show the Balance Sheet after the admission of C.

Answer»

Given below is the Balance Sheet of A and B, who are carrying on partnership business on 31.12.2016. A and B share profits and losses in the ratio of 2:1.

Balance Sheet of A and B as on December 31, 2016
Liabilites			Amount (Rs)	Assets	Amount (Rs)
Bills Payable			10,000	Cash in Hand	10,000
Creditors			58,000	Cash at Bank	40,000
Outstanding			2,000	Sundry Debtors	60,000
Expenses				Stock	40,000
Capitals:				Plant	1,00,000
	A	1,80,000		Buildings	1,50,000
	B	1,50,000	3,30,000
			4,00,000		4,00,000

C is admitted as a partner on the date of the balance sheet on the following terms:

(i) C will bring in Rs 1,00,000 as his capital and Rs 60,000 as his share of goodwill for 1/4 share in the profits.

(ii) Plant is to be appreciated to Rs 1,20,000 and the value of buildings is to be appreciated by 10%.

(iii) Stock is found over valued by Rs 4,000.

(iv) A provision for bad and doubtful debts is to be created at 5% of debtors.

(v) Creditors were unrecorded to the extent of Rs 1,000.

Pass the necessary journal entries, prepare the revaluation account and partners’ capital accounts, and show the Balance Sheet after the admission of C.

Discussion

666.	Raj Ltd . issued 5,000; 8% Debentures of ₹ 100 each at a premium of 5% payable as follows:₹ 10 on application ; ₹ 20 along with premium on allotment and balance on first and final call.Pass necessary Journal entries.
Answer» Raj Ltd . issued 5,000; 8% Debentures of ₹ 100 each at a premium of 5% payable as follows: ₹ 10 on application ; ₹ 20 along with premium on allotment and balance on first and final call. Pass necessary Journal entries.

Discussion

667.	Giving examples, explain each of the following accounting terms: Fixed assets Revenue Expenses Short-term liability Capital
Answer» Giving examples, explain each of the following accounting terms: Fixed assets Revenue Expenses Short-term liability Capital

667.

Giving examples, explain each of the following accounting terms: Fixed assets Revenue Expenses Short-term liability Capital

Answer»

Giving examples, explain each of the following accounting terms:

Fixed assets

Revenue

Expenses

Short-term liability

Capital

Discussion

668.	Achad and Vichal were partners in a firm sharing profits in the ratio of 3 : 5. On 31.3.2011 their Balance Sheet was as follows: Capital and LiabilitiesAmount (Rs.)AssetsAmount (Rs.)Capital:Land and Building4,00,000Achal 3,00,000Machinery3,00,000Vichal 5,00,000––––––––––8,00,000Debtors2,22,000Creditors1,79,000Cash at Bank78,000Employees Provident Fund21,000¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯10,00,000–––––––––––¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯10,00,000––––––––––– The firm was dissolved on 01.04.2011 and the assets and liabilities were settled as follows : (i) Land and Building realised Rs. 4,30,000; (ii) Debtors realised Rs. 2,25,000 (with interest) and Rs. 1,000 were recovered for bad debts written off last year; (iii) There was an unrecorded investment which was sold for Rs. 25,000; (iv) Vichal took-over machinery at Rs. 2,80,000 for cash; (v) 50% of the creditors were paid Rs. 4,000 less in full settlement and the remaining creditors were paid full amount. Prepare realisation account.
Answer» Achad and Vichal were partners in a firm sharing profits in the ratio of 3 : 5. On 31.3.2011 their Balance Sheet was as follows: $\begin{matrix} Capital and Liabilities & Amount (Rs.) & Assets & Amount (Rs.) Capital: & Land and Building & 4, 00, 000 Achal 3, 00, 000 & Machinery & 3, 00, 000 Vichal 5, 00, 000 - -------- - & 8, 00, 000 & Debtors & 2, 22, 000 Creditors & 1, 79, 000 & Cash at Bank & 78, 000 Employees Provident Fund & 21, 000 ¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯ 10, 00, 000 - --------- - & ¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯ 10, 00, 000 - --------- - \end{matrix}$ The firm was dissolved on 01.04.2011 and the assets and liabilities were settled as follows : (i) Land and Building realised Rs. 4,30,000; (ii) Debtors realised Rs. 2,25,000 (with interest) and Rs. 1,000 were recovered for bad debts written off last year; (iii) There was an unrecorded investment which was sold for Rs. 25,000; (iv) Vichal took-over machinery at Rs. 2,80,000 for cash; (v) 50% of the creditors were paid Rs. 4,000 less in full settlement and the remaining creditors were paid full amount. Prepare realisation account.

668.

Achad and Vichal were partners in a firm sharing profits in the ratio of 3 : 5. On 31.3.2011 their Balance Sheet was as follows: Capital and LiabilitiesAmount (Rs.)AssetsAmount (Rs.)Capital:Land and Building4,00,000Achal 3,00,000Machinery3,00,000Vichal 5,00,000––––––––––8,00,000Debtors2,22,000Creditors1,79,000Cash at Bank78,000Employees Provident Fund21,000¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯10,00,000–––––––––––¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯10,00,000––––––––––– The firm was dissolved on 01.04.2011 and the assets and liabilities were settled as follows : (i) Land and Building realised Rs. 4,30,000; (ii) Debtors realised Rs. 2,25,000 (with interest) and Rs. 1,000 were recovered for bad debts written off last year; (iii) There was an unrecorded investment which was sold for Rs. 25,000; (iv) Vichal took-over machinery at Rs. 2,80,000 for cash; (v) 50% of the creditors were paid Rs. 4,000 less in full settlement and the remaining creditors were paid full amount. Prepare realisation account.

Answer»

Achad and Vichal were partners in a firm sharing profits in the ratio of 3 : 5. On 31.3.2011 their Balance Sheet was as follows:

$\begin{matrix} Capital and Liabilities & Amount (Rs.) & Assets & Amount (Rs.) Capital: & Land and Building & 4, 00, 000 Achal 3, 00, 000 & Machinery & 3, 00, 000 Vichal 5, 00, 000 - -------- - & 8, 00, 000 & Debtors & 2, 22, 000 Creditors & 1, 79, 000 & Cash at Bank & 78, 000 Employees Provident Fund & 21, 000 ¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯ 10, 00, 000 - --------- - & ¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯ 10, 00, 000 - --------- - \end{matrix}$

The firm was dissolved on 01.04.2011 and the assets and liabilities were settled as follows :

(i) Land and Building realised Rs. 4,30,000;

(ii) Debtors realised Rs. 2,25,000 (with interest) and Rs. 1,000 were recovered for bad debts written off last year;

(iii) There was an unrecorded investment which was sold for Rs. 25,000;

(iv) Vichal took-over machinery at Rs. 2,80,000 for cash;

(v) 50% of the creditors were paid Rs. 4,000 less in full settlement and the remaining creditors were paid full amount.

Prepare realisation account.

Discussion

669.	Bright Ltd. issued 5,000; 10% Debentures of ₹ 100 each on 1st April, 2015 . The issue was fully subscribed . According to the terms of issue, interest on the debentures is payable half-yearly on 30th September and 31st March and the tax deducted at source is 10%.Pass necessary journal entries related to the debenture interest for the year ending 31st March , 2016 and transfer of interest on debentures of the year to the Statement of Profit and Loss .
Answer» Bright Ltd. issued 5,000; 10% Debentures of ₹ 100 each on 1st April, 2015 . The issue was fully subscribed . According to the terms of issue, interest on the debentures is payable half-yearly on 30th September and 31st March and the tax deducted at source is 10%. Pass necessary journal entries related to the debenture interest for the year ending 31st March , 2016 and transfer of interest on debentures of the year to the Statement of Profit and Loss .

Discussion

670.	Total Debt ₹12,00,000; Shareholders' Funds ₹2,00,000; Reserves and Surplus ₹50,000; Current Assets ₹5,00,000; Working Capital ₹1,00,000. Calculate Total Assets to Debt Ratio.
Answer» Total Debt ₹12,00,000; Shareholders' Funds ₹2,00,000; Reserves and Surplus ₹50,000; Current Assets ₹5,00,000; Working Capital ₹1,00,000. Calculate Total Assets to Debt Ratio.

Discussion

671.	When debentures are redeemed out of profits, an equal amount is transferred to ___
Answer» When debentures are redeemed out of profits, an equal amount is transferred to ___

Discussion

672.

From the following data relating to the liabilities side of balance sheet of Madhuri Ltd., as on 31st March 2006, you are required to calculate trend percentages taking 2002 as the base year. (Rs in lakhs)Liabilities20022003200420052006Share capital100125130150160Reserves & Surplus506065758012% Debentures200250300400400Bank overdraft1020252520Profit & Loss A/c2022282630Sundry Creditors4070607075

Answer»

From the following data relating to the liabilities side of balance sheet of Madhuri Ltd., as on 31st March 2006, you are required to calculate trend percentages taking 2002 as the base year.

(Rs in lakhs)
Liabilities	2002	2003	2004	2005	2006
Share capital	100	125	130	150	160
Reserves & Surplus	50	60	65	75	80
12% Debentures	200	250	300	400	400
Bank overdraft	10	20	25	25	20
Profit & Loss A/c	20	22	28	26	30
Sundry Creditors	40	70	60	70	75

Discussion

673.	Which of the following is a credit to profit & loss appropriation account?
Answer» Which of the following is a credit to profit & loss appropriation account?

Discussion

674.	What is meant by an ‘Irredeemable Debenture’?
Answer» What is meant by an ‘Irredeemable Debenture’?

Discussion

675.	What is a cash flow statement?
Answer» What is a cash flow statement?

Discussion

676.	If it is agreed thatthe capital of all the partners be proportionate to the new profitsharing ratio, how will you work out the new capital of each partner?Give examples and state how necessary adjustments will be made.
Answer» If it is agreed that the capital of all the partners be proportionate to the new profit sharing ratio, how will you work out the new capital of each partner? Give examples and state how necessary adjustments will be made.

Discussion

677.

(a) X, Y and Z are partners sharing profits and losses in the ratio of 5 : 3 : 2 . They decide to admit W for 1/6th share . Following is th extract of the Balance Sheet on the date of admission: Liabilities ₹ Assets ₹ General Reserve Contingency Reserve Profit and Loss A/c 36,000 6,000 18,000 Advertisement Suspense A/c 24,000 (b) A and B were partners in a firm sharing profit in 4 : 3 ratio. On 1st April, 2018, they admitted C as a new partner . On the date of C's admission , the Balance Sheet of A and B showed a General Reserve of ₹ 84,000 and a debit balance of ₹ 8,400 in the 'Profit and Loss Account '. Pas necessary journal entries for the treatment of these items on C's admission.(c) Give the journal entries to distribute 'Workmen Compensation Reserve' of ₹ 72,000 at the time of admission of Z , when there is no claim against it . The firm has two partners X and Y .(d) Give the journal entries to distribute 'Workmen Compensation Reserve' of ₹ 72,000 at the time of admission of Z , when there is claim of ₹ 48,000 against it . The firm has two partners X and Y .(e) Give the journal entry to distribute ' Investment Fluctuation Reserve' of ₹ 24,000 at the time of admission of Z , when Investment ( Market Value ₹ 1,10,000 ) appears at ₹ 1,20,000. The firm has two partners X and Y.(f) Give the journal entry to distribute ' General Reserve ' of ₹ 4,800 at the time of admission of Z , when 20% of General Reserve is to be transferred to Investment Fluctuation Reserve . The firm has two partners X and Y .(g) A, B and C were partners sharing profits and losses in the ratio of 6 : 3 : 1 . They decide to take D into partnership with effect from 1st April, 2018. The new profit-sharing ratio between A, B , C and D will be 3 : 3 : 3 : 1 . They also decide to record the effect of the following without affecting their book values , by passing a single adjustment entry: Book Value (₹) General Reserve 1,50,000 Contingency Reserve 60,000 Profit and Loss A/c (Cr.) 90,000 Advertisement Suspense A/c (Dr.) 1,20,000 Pass the necessary single adjustment entry, through the Partner's Current Account.

Answer» (a) X, Y and Z are partners sharing profits and losses in the ratio of 5 : 3 : 2 . They decide to admit W for 1/6th share . Following is th extract of the Balance Sheet on the date of admission:

Liabilities	₹	Assets	₹
General Reserve Contingency Reserve Profit and Loss A/c	36,000 6,000 18,000	Advertisement Suspense A/c	24,000

(b) A and B were partners in a firm sharing profit in 4 : 3 ratio. On 1st April, 2018, they admitted C as a new partner . On the date of C's admission , the Balance Sheet of A and B showed a General Reserve of ₹ 84,000 and a debit balance of ₹ 8,400 in the 'Profit and Loss Account '. Pas necessary journal entries for the treatment of these items on C's admission.

(c) Give the journal entries to distribute 'Workmen Compensation Reserve' of ₹ 72,000 at the time of admission of Z , when there is no claim against it . The firm has two partners X and Y .

(d) Give the journal entries to distribute 'Workmen Compensation Reserve' of ₹ 72,000 at the time of admission of Z , when there is claim of ₹ 48,000 against it . The firm has two partners X and Y .

(e) Give the journal entry to distribute ' Investment Fluctuation Reserve' of ₹ 24,000 at the time of admission of Z , when Investment ( Market Value ₹ 1,10,000 ) appears at ₹ 1,20,000. The firm has two partners X and Y.

(f) Give the journal entry to distribute ' General Reserve ' of ₹ 4,800 at the time of admission of Z , when 20% of General Reserve is to be transferred to Investment Fluctuation Reserve . The firm has two partners X and Y .

(g) A, B and C were partners sharing profits and losses in the ratio of 6 : 3 : 1 . They decide to take D into partnership with effect from 1st April, 2018. The new profit-sharing ratio between A, B , C and D will be 3 : 3 : 3 : 1 . They also decide to record the effect of the following without affecting their book values , by passing a single adjustment entry:

	Book Value (₹)
General Reserve	1,50,000
Contingency Reserve	60,000
Profit and Loss A/c (Cr.)	90,000
Advertisement Suspense A/c (Dr.)	1,20,000

Pass the necessary single adjustment entry, through the Partner's Current Account.

Discussion

678.	At the time of admission of a partner in an existing partnership business, what happens with the profit sharing ratio?
Answer» At the time of admission of a partner in an existing partnership business, what happens with the profit sharing ratio?

Discussion

679.

X, Y and Z are partners sharing profits and losses in the ratio of 7 : 5 : 4 . Their Balance Sheet as at 31st March, 2018 stood as: Liabilities ₹ Assets ₹ Capital A/cs: Sundry Assets 7,00,000 X 2,10,000 Y 1,50,000 Z 1,20,000 4,80,000 General Reserve 65,000 Profit and Loss A/c 25,000 Creditors 1,30,000 7,00,000 7,00,000 Partners decided that with effect from 1st April, 2018 , they will share profits and losses in the ratio of 3 : 2 : 1 . For this purpose, goodwill of the firm was valued at ₹ 1,50,000. The partners neither want to record the goodwill nor want to distribute the General Reserve and profits.

Answer» X, Y and Z are partners sharing profits and losses in the ratio of 7 : 5 : 4 . Their Balance Sheet as at 31st March, 2018 stood as:


Liabilities		₹	Assets	₹
Capital A/cs:			Sundry Assets	7,00,000
X	2,10,000
Y	1,50,000
Z	1,20,000	4,80,000
General Reserve		65,000
Profit and Loss A/c		25,000
Creditors		1,30,000

		7,00,000		7,00,000

Partners decided that with effect from 1st April, 2018 , they will share profits and losses in the ratio of 3 : 2 : 1 . For this purpose, goodwill of the firm was valued at ₹ 1,50,000. The partners neither want to record the goodwill nor want to distribute the General Reserve and profits.

Discussion

680.	Write a Python program to calculate the amount payable if money has been lent on simple interest.Principal or money lent = P, Rate of interest = R% per annum and Time = T years. Then Simple Interest (SI) = (P x R x T)/ 100.Amount payable = Principal + SI. P, R and T are given as input to the program.
Answer» Write a Python program to calculate the amount payable if money has been lent on simple interest. Principal or money lent = P, Rate of interest = R% per annum and Time = T years. Then Simple Interest (SI) = (P x R x T)/ 100. Amount payable = Principal + SI. P, R and T are given as input to the program.

Discussion

681.	A and B are in partnership sharing profits and losses in the ratio of 5 : 3. C is admitted as a partner who pays ₹ 40,000 as capital and the necessary amount of goodwill which is valued at ₹ 60,000 for the firm. His share of profits will be 1/5th which he takes 1/10th from A and 1/10th from B.Give Journal entries and also calculate future profit-sharing ratio of the partners.
Answer» A and B are in partnership sharing profits and losses in the ratio of 5 : 3. C is admitted as a partner who pays ₹ 40,000 as capital and the necessary amount of goodwill which is valued at ₹ 60,000 for the firm. His share of profits will be 1/5th which he takes 1/10th from A and 1/10th from B. Give Journal entries and also calculate future profit-sharing ratio of the partners.

Discussion

682.	A company issued 10,000 Equity Shares of ₹ 10 each at a premium of ₹ 3 per share payable ₹ 5 on application, ₹ 5 (including premium) on allotment and the balance on first call . All the shares offered were applied for and allotted. All the money due on allotment was received except on 200 shares. Call was made. All the amount due thereon was received except on 300 shares. Directors forfeited 200 shares on which both allotment and call money were not received.Pass necessary journal entries to record the above.
Answer» A company issued 10,000 Equity Shares of ₹ 10 each at a premium of ₹ 3 per share payable ₹ 5 on application, ₹ 5 (including premium) on allotment and the balance on first call . All the shares offered were applied for and allotted. All the money due on allotment was received except on 200 shares. Call was made. All the amount due thereon was received except on 300 shares. Directors forfeited 200 shares on which both allotment and call money were not received. Pass necessary journal entries to record the above.

Discussion

683.

Convert the following Income Statement into Common Size Statement and interpret the changes in 2005 in the light of the conditions in 2004. 2004Rs2005RsGross Sales30,60036,720Less : Returns600700Net Sales30,00036,020Less : Cost of Goods Sold18,20020,250Gross Profit11,80015,770Less : Operating Expenses Administration Expenses3,0003,400Sales Expenses6,0006,600Total Expenses9,00010,000Income from Operations2,8005,770Add : Non-operating Income300400Total Income3,1006,170Less : Non-operating Expenses400600Net Profit2,7005,570

Answer»

Convert the following Income Statement into Common Size Statement and interpret the changes in 2005 in the light of the conditions in 2004.

	2004 Rs	2005 Rs
Gross Sales	30,600	36,720
Less : Returns	600	700
Net Sales	30,000	36,020
Less : Cost of Goods Sold	18,200	20,250
Gross Profit	11,800	15,770
Less : Operating Expenses
Administration Expenses	3,000	3,400
Sales Expenses	6,000	6,600
Total Expenses	9,000	10,000
Income from Operations	2,800	5,770
Add : Non-operating Income	300	400
Total Income	3,100	6,170
Less : Non-operating Expenses	400	600
Net Profit	2,700	5,570

Discussion

684.	Godrej Ltd .has 20,000;7% Debentures of ₹ 100 each due for redemption on 31st August, 2017. There is a balance of ₹ 3,50,000 in Debentures Redemption Reserve Account as on 31st March,2015. Investment, as required by the Companies Act, 2013 is made on 1st April, 2016 in fixed deposit bearing interest 6%p.a. Bank deducted TDS 10% on its maturity which is 31st March,2017.Pass journal entries for redemption of debentures.
Answer» Godrej Ltd .has 20,000;7% Debentures of ₹ 100 each due for redemption on 31st August, 2017. There is a balance of ₹ 3,50,000 in Debentures Redemption Reserve Account as on 31st March,2015. Investment, as required by the Companies Act, 2013 is made on 1st April, 2016 in fixed deposit bearing interest 6%p.a. Bank deducted TDS 10% on its maturity which is 31st March,2017. Pass journal entries for redemption of debentures.

Discussion

685.

X, Y and Z are partners sharing profits ands losses in the ratio of 6 : 3 : 1 . They decide to take W into partnership with effect from 1st April, 2018 . The new profit-sharing ratio between X, Y , Z and W will be 3 : 3 : 3 : 1 . They also decide to record the effect of the following revaluations without affecting the book values of the assets and liabilities by passing a single adjustment entry: Book Value(₹ ) Revised Value(₹ ) Plant and Machinery 3,50,000 3,40,000 Land and Building 5,00,000 5,50,000 Trade Creditors 1,00,000 90,000 Outstanding Expenses 85,000 1,00,000 Pass necessary adjustment entry.

Answer» X, Y and Z are partners sharing profits ands losses in the ratio of 6 : 3 : 1 . They decide to take W into partnership with effect from 1st April, 2018 . The new profit-sharing ratio between X, Y , Z and W will be 3 : 3 : 3 : 1 . They also decide to record the effect of the following revaluations without affecting the book values of the assets and liabilities by passing a single adjustment entry:

	Book Value(₹ )	Revised Value(₹ )
Plant and Machinery	3,50,000	3,40,000
Land and Building	5,00,000	5,50,000
Trade Creditors	1,00,000	90,000
Outstanding Expenses	85,000	1,00,000

Pass necessary adjustment entry.

Discussion

686.

From the following information, calculate Operating Ratio: Cost of Revenue Revenue from Operation: from Operations (Cost of Goods Sold) ₹52,000 Gross Sales ₹ 88,000 Operating Expenses ₹18,000 Sales Return ₹ 8,000

Answer» From the following information, calculate Operating Ratio:

Cost of Revenue		Revenue from Operation:
from Operations (Cost of Goods Sold)	₹52,000	Gross Sales	₹ 88,000
Operating Expenses	₹18,000	Sales Return	₹ 8,000

Discussion

687.	Why a retiring/deceased partner is entitled to a share of goodwill of the firm?
Answer» Why a retiring/deceased partner is entitled to a share of goodwill of the firm?

Discussion

688.	Cash flow from ___ is an item on the cash flow statement that reports the aggregate change in a company's cash position resulting from investment gains or losses.
Answer» Cash flow from ___ is an item on the cash flow statement that reports the aggregate change in a company's cash position resulting from investment gains or losses.

Discussion

689.

Raghu and Rishu are partners sharing profits in the ratio 3 : 2. Their Balance Sheet as at 31st March, 2009 was as follows: BALANCE SHEET OF RAGHU AND RISHU as at 31st March, 2009 Liabilities ₹ Assets ₹ Creditors 86,000 Cash in Hand 77,000 Employees' Provident Fund 10,000 Debtors 42,000 Investments Fluctuation Reserve 4,000 Less: Provision for Doubtful Debts 7,000 35,000 Capital A/cs: Investments 21,000 Raghu 1,19,000 Buildings 98,000 Rishu 1,12,000 2,31,000 Plant and Machinery 1,00,000 3,31,000 3,31,000 Rishabh was admitted on that date for 1/4th share of profit on the following terms:(a) Rishabh will bring ₹ 50,000 as his share of capital.(b) Goodwill of the firm is valued at ₹ 42,000 and Rishabh will bring his share of goodwill in cash.(c) Buildings were appreciated by 20%.(d) All Debtors were good.(e) There was a liability of ₹ 10,800 included in Creditors which was not likely to arise.(f) New profit-sharing ratio will be 2 : 1 : 1.(g) Capital of Raghu and Rishu will be adjusted on the basis of Rishabh's share of capital and any excess or deficiency will be made by withdrawing or bringing in cash by the concerned partners as the case may be.Prepare Revaluation Account, Partners' Capital Accounts and Balance Sheet of the new firm.

Answer» Raghu and Rishu are partners sharing profits in the ratio 3 : 2. Their Balance Sheet as at 31st March, 2009 was as follows:

BALANCE SHEET OF RAGHU AND RISHU

as at 31st March, 2009
Liabilities		₹	Assets		₹
Creditors		86,000	Cash in Hand		77,000
Employees' Provident Fund		10,000	Debtors	42,000
Investments Fluctuation Reserve		4,000	Less: Provision for Doubtful Debts	7,000	35,000
Capital A/cs:			Investments		21,000
Raghu	1,19,000		Buildings		98,000
Rishu	1,12,000	2,31,000	Plant and Machinery		1,00,000

		3,31,000			3,31,000

Rishabh was admitted on that date for 1/4th share of profit on the following terms:

(a) Rishabh will bring ₹ 50,000 as his share of capital.

(b) Goodwill of the firm is valued at ₹ 42,000 and Rishabh will bring his share of goodwill in cash.

(c) Buildings were appreciated by 20%.

(d) All Debtors were good.

(e) There was a liability of ₹ 10,800 included in Creditors which was not likely to arise.

(f) New profit-sharing ratio will be 2 : 1 : 1.

(g) Capital of Raghu and Rishu will be adjusted on the basis of Rishabh's share of capital and any excess or deficiency will be made by withdrawing or bringing in cash by the concerned partners as the case may be.

Prepare Revaluation Account, Partners' Capital Accounts and Balance Sheet of the new firm.

Discussion

690.	What do owners expect as returns for blocking their money in the business?
Answer» What do owners expect as returns for blocking their money in the business?

Discussion

691.

X, Y and Z were partners in a firm sharing profits in the ratio of 2 : 2 : 1. On 31st March, 2018, their Balance Sheet was as follows: Liabilities Amount (₹) Assets Amount (₹) Trade Creditors 1,20,000 Cash at Bank 1,80,000 Bills Payable 80,000 Stock 1,40,000 General Reserve 60,000 Sundry Debtors 80,000 Capital A/cs: Building 3,00,000 X 7,00,000 Advance to Y 7,00,000 Y 7,00,000 Profit and Loss A/c 3,20,000 Z 60,000 14,60,000 17,20,000 17,20,000 Y died on 30th June, 2018. The Partnership Deed provided for the following on the death of a partner:(i) Goodwill of the business was to be calculated on the basis of 2 times the average profit of the past 5 years. Profits for the years ended 31st March, 2018, 31st March, 2017, 31st March, 2016, 31st March, 2015 and 31st March, 2014 were ₹ 3,20,000 (Loss); ₹ 1,00,000; ₹ 1,60,000; ₹ 2,20,000 and ₹ 4,40,000 respectively.(ii) Y's share of profit or loss from 1st April, 2018 till his death was to be calculated on the basis of the profit or loss for the year ended 31st March, 2018.You are required to calculate the following:(a) Goodwill of the firm and Y's share of goodwill at the time of his death.(b) Y's share in the profit or loss of the firm till the date of his death.(c) Prepare Y's Capital Account at the time of his death to be presented to his executors.

Answer» X, Y and Z were partners in a firm sharing profits in the ratio of 2 : 2 : 1. On 31st March, 2018, their Balance Sheet was as follows:

Liabilities		Amount (₹)	Assets	Amount (₹)
Trade Creditors		1,20,000	Cash at Bank	1,80,000
Bills Payable		80,000	Stock	1,40,000
General Reserve		60,000	Sundry Debtors	80,000
Capital A/cs:			Building	3,00,000
X	7,00,000		Advance to Y	7,00,000
Y	7,00,000		Profit and Loss A/c	3,20,000
Z	60,000	14,60,000
		17,20,000		17,20,000

Y died on 30th June, 2018. The Partnership Deed provided for the following on the death of a partner:

(i) Goodwill of the business was to be calculated on the basis of 2 times the average profit of the past 5 years. Profits for the years ended 31st March, 2018, 31st March, 2017, 31st March, 2016, 31st March, 2015 and 31st March, 2014 were ₹ 3,20,000 (Loss); ₹ 1,00,000; ₹ 1,60,000; ₹ 2,20,000 and ₹ 4,40,000 respectively.

(ii) Y's share of profit or loss from 1st April, 2018 till his death was to be calculated on the basis of the profit or loss for the year ended 31st March, 2018.

You are required to calculate the following:

(a) Goodwill of the firm and Y's share of goodwill at the time of his death.

(b) Y's share in the profit or loss of the firm till the date of his death.

(c) Prepare Y's Capital Account at the time of his death to be presented to his executors.

Discussion

692.	Under which line item of the financial statements following items will be shown:(i) Sales; (ii) Loss on Sale of Vehicle; (iii) Debentures; (iv) Unamortised Loss on Issue of Debentures (to be written off within 12 months of the date of Balance Sheet); (v) Encashable Leave Payable at the Time of Retirement; (vi) Tax Reserve; (vii) Carriage on Purchases of Stock-in-Trade; and (viii) Telephone and Internet Expenses?
Answer» Under which line item of the financial statements following items will be shown: (i) Sales; (ii) Loss on Sale of Vehicle; (iii) Debentures; (iv) Unamortised Loss on Issue of Debentures (to be written off within 12 months of the date of Balance Sheet); (v) Encashable Leave Payable at the Time of Retirement; (vi) Tax Reserve; (vii) Carriage on Purchases of Stock-in-Trade; and (viii) Telephone and Internet Expenses?

Discussion

693.	From the following data, calculate Inventory Turnover Ratio:Total Sales ₹5,00,000; Sales Return ₹50,000; Gross Profit ₹90,000; Closing Inventory ₹1,00,000; Excess of Closing Inventory over Opening Inventory ₹20,000.
Answer» From the following data, calculate Inventory Turnover Ratio: Total Sales ₹5,00,000; Sales Return ₹50,000; Gross Profit ₹90,000; Closing Inventory ₹1,00,000; Excess of Closing Inventory over Opening Inventory ₹20,000.

Discussion

694.	A and B are partners sharing Profit and Loss in the ratio 3 : 2 having Capital Account balances of ₹ 50,000 and ₹ 40,000 on 1st April, 2017. On 1st July, 2017, A introduced ₹ 10,000 as his additional capital whereas B introduced only ₹ 1,000. Interest on capital is allowed to partners 10% p.a.Calculate interest on capital for the financial year ended 31st March, 2018.
Answer» A and B are partners sharing Profit and Loss in the ratio 3 : 2 having Capital Account balances of ₹ 50,000 and ₹ 40,000 on 1st April, 2017. On 1st July, 2017, A introduced ₹ 10,000 as his additional capital whereas B introduced only ₹ 1,000. Interest on capital is allowed to partners 10% p.a. Calculate interest on capital for the financial year ended 31st March, 2018.

Discussion

695.

A limited company offered for subscription of 1,00,000 equity shares of Rs 10 each at a premium of Rs 2 per share. 2,00,000. 10% Preference shares of Rs 10 each at par.The amount on share was payable as under : Equity Shares Preference Shares On Application Rs 3 per share Rs 3 per share On Allotment Rs 5 per share Rs 4 per share (including a premium) On First Call Rs 4 per share Rs 3 per share All the shares were fully subscribed, called-up and paid.Record these transactions in the journal and cash book of the company:

Answer»

A limited company offered for subscription of 1,00,000 equity shares of Rs 10 each at a premium of Rs 2 per share. 2,00,000. 10% Preference shares of Rs 10 each at par.

The amount on share was payable as under :

	Equity Shares	Preference Shares
On Application	Rs 3 per share	Rs 3 per share
On Allotment	Rs 5 per share	Rs 4 per share
	(including a premium)
On First Call	Rs 4 per share	Rs 3 per share

All the shares were fully subscribed, called-up and paid.

Record these transactions in the journal and cash book of the company:

Discussion

696.	A statement of cash flows has ........... sections.
Answer» A statement of cash flows has ........... sections.

Discussion

697.

X & Y started business on 1st April 2017 with capitals of Rs 5,00,000 & Rs 3,00,000 respectively. There is no withdrawal or addition of capital during the year. Calculate the interest on capital 12% p.a. if the books of accounts are closed on 31st Dec 2017.

Answer»

X & Y started business on 1st April 2017 with capitals of Rs 5,00,000 & Rs 3,00,000 respectively. There is no withdrawal or addition of capital during the year.

Calculate the interest on capital 12% p.a. if the books of accounts are closed on 31st Dec 2017.

Discussion

698.

Following is the Balance Sheet of Vishnu, Sanjiv and Sudhir as at 31st March, 2018: Liabilities Amount (₹) Assets Amount (₹) Bills Payable 20,000 Cash 8,000 Creditors 18,000 Bills Receivable 12,000 Mrs. Vishnu's Loan 20,000 Stock 25,000 Outstanding Salary 5,000 Sundry Debtors 40,000 Profit and Loss A/c 10,000 Less: Provision for D. Debts 4,000 36,000 Workmen Compensation Reserve 15,000 Capital A/cs: Land and Building 50,000 Vishnu 40,000 Furniture 10,000 Sanjiv 30,000 Computers 5,000 Sudhir 18,000 88,000 Investments 30,000 1,76,000 1,76,000 Profit-sharing ratio of the partners is 5 : 3 : 2 . At the above date, the partners decided to dissolve the firm .The assets were realised as follows:Bill Receivable were realised at a discount of 5% . All Debtors were good. Stock realised ₹ 22,000. Land and Building realised 40% higher than the book value . Furniture was sold for ₹ 8,000 by auction and auctioneer's commission amounted to ₹ 500.Computers were taken by Vishnu for ana greed valuation of ₹ 3,000. Investments were sold in the open market at a price of ₹ 45,000 , for which commission of ₹ 600 was paid to the broker. Bills Payable were paid at full amount . Creditors , however, agreed to accept 10% less. All other liabilities were paid off at their book value.The firm retrenched their employees three months before the dissolution of the firm and firm had to pay ₹ 20,000 as compensation.Prepare Realisation Account , Partners' Capital Accounts and Cash Account.

Answer» Following is the Balance Sheet of Vishnu, Sanjiv and Sudhir as at 31st March, 2018:

Liabilities		Amount (₹)	Assets		Amount (₹)
Bills Payable		20,000	Cash		8,000
Creditors		18,000	Bills Receivable		12,000
Mrs. Vishnu's Loan		20,000	Stock		25,000
Outstanding Salary		5,000	Sundry Debtors	40,000
Profit and Loss A/c		10,000	Less: Provision for D. Debts	4,000	36,000
Workmen Compensation Reserve		15,000
Capital A/cs:			Land and Building		50,000
Vishnu	40,000		Furniture		10,000
Sanjiv	30,000		Computers		5,000
Sudhir	18,000	88,000	Investments		30,000

		1,76,000			1,76,000

Profit-sharing ratio of the partners is 5 : 3 : 2 . At the above date, the partners decided to dissolve the firm .

The assets were realised as follows:

Bill Receivable were realised at a discount of 5% . All Debtors were good. Stock realised ₹ 22,000. Land and Building realised 40% higher than the book value . Furniture was sold for ₹ 8,000 by auction and auctioneer's commission amounted to ₹ 500.

Computers were taken by Vishnu for ana greed valuation of ₹ 3,000. Investments were sold in the open market at a price of ₹ 45,000 , for which commission of ₹ 600 was paid to the broker.

Bills Payable were paid at full amount . Creditors , however, agreed to accept 10% less. All other liabilities were paid off at their book value.

The firm retrenched their employees three months before the dissolution of the firm and firm had to pay ₹ 20,000 as compensation.

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

Discussion

699.	Does public debt impose a burden? Explain.
Answer» Does public debt impose a burden? Explain.

Discussion

700.	Which of the following is technique/s of financial statement analysis?
Answer» Which of the following is technique/s of financial statement analysis?

Discussion

Explore topic-wise InterviewSolutions in .

If debentures are to be redeemed at premium, the premium on redemption of debentures account shall be ___

X and Y are partners with the capital of Rs 50,000 and Rs 30,000 respectively. Interest payable on capital is 10% p.a. Find the interest on capital for both the partners when the profits earned by the firm is Rs 4,800.

Calculatethe open economy multiplier with proportional taxes, T = tY,instead of lump−sum taxes as assumed in the text.

ABC Ltd. issued 3,000, 14% Debentures of Rs 100 each at a discount of 5% on January 1, 2012. The debentures are redeemable at par in three equal instalments at the end of the third, fourth and fifth year. What is the value of debentures redeemable at the end of fifth year?

This analysis is also known as ‘Vertical analysis’.

Calculatethe half-life of a first order reaction from their rate constantsgiven below:(i) 200 s−1 (ii) 2 min−1 (iii) 4 years−1

Raj Ltd . issued 5,000; 8% Debentures of ₹ 100 each at a premium of 5% payable as follows:₹ 10 on application ; ₹ 20 along with premium on allotment and balance on first and final call.Pass necessary Journal entries.

Giving examples, explain each of the following accounting terms: Fixed assets Revenue Expenses Short-term liability Capital

Total Debt ₹12,00,000; Shareholders' Funds ₹2,00,000; Reserves and Surplus ₹50,000; Current Assets ₹5,00,000; Working Capital ₹1,00,000. Calculate Total Assets to Debt Ratio.

When debentures are redeemed out of profits, an equal amount is transferred to ___

Which of the following is a credit to profit &amp; loss appropriation account?

What is meant by an ‘Irredeemable Debenture’?

What is a cash flow statement?

If it is agreed thatthe capital of all the partners be proportionate to the new profitsharing ratio, how will you work out the new capital of each partner?Give examples and state how necessary adjustments will be made.

At the time of admission of a partner in an existing partnership business, what happens with the profit sharing ratio?

From the following information, calculate Operating Ratio: Cost of Revenue Revenue from Operation: from Operations (Cost of Goods Sold) ₹52,000 Gross Sales ₹ 88,000 Operating Expenses ₹18,000 Sales Return ₹ 8,000

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

Cash flow from ___ is an item on the cash flow statement that reports the aggregate change in a company's cash position resulting from investment gains or losses.

What do owners expect as returns for blocking their money in the business?

From the following data, calculate Inventory Turnover Ratio:Total Sales ₹5,00,000; Sales Return ₹50,000; Gross Profit ₹90,000; Closing Inventory ₹1,00,000; Excess of Closing Inventory over Opening Inventory ₹20,000.

A statement of cash flows has ........... sections.

X &amp; Y started business on 1st April 2017 with capitals of Rs 5,00,000 &amp; Rs 3,00,000 respectively. There is no withdrawal or addition of capital during the year. Calculate the interest on capital 12% p.a. if the books of accounts are closed on 31st Dec 2017.

Does public debt impose a burden? Explain.

Which of the following is technique/s of financial statement analysis?

Which of the following is a credit to profit & loss appropriation account?

X & Y started business on 1st April 2017 with capitals of Rs 5,00,000 & Rs 3,00,000 respectively. There is no withdrawal or addition of capital during the year. Calculate the interest on capital 12% p.a. if the books of accounts are closed on 31st Dec 2017.