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901.

Balance Sheet of P, Q and R as at 31st March, 2019, who were sharing profits in the ratio of 5 : 3 : 1, was: Liabilities Amount (₹) Assets Amount (₹) Bills Payable 40,000 Cash at Bank 40,000 Loan from Bank 30,000 Stock 19,000 General Reserve 9,000 Sundry Debtors 42,000 Capital A/cs: Less: Provision for Doubtful Debts 2,000 40,000 P 44,000 Q 36,000 Building 40,000 R 20,000 1,00,000 Plant and Machinery 40,000 1,79,000 1,79,000 The partners dissolved the business. Assets realised − Stock ₹ 23,400; Debtors 50%; Fixed Assets 10% less than their book value. Bills Payable were settled for ₹ 32,000. There was an Outstanding Bill of Electricity ₹ 800 which was paid off. Realisation expenses ₹ 1,250 were also paid.Prepare Realisation Account, Partner's Capital Accounts and Bank Account.

Answer» Balance Sheet of P, Q and R as at 31st March, 2019, who were sharing profits in the ratio of 5 : 3 : 1, was:
















































































Liabilities

Amount



(₹)

Assets

Amount



(₹)
Bills Payable

40,000


 Cash at Bank 40,000
Loan from Bank 30,000 Stock 19,000
General Reserve

9,000


 Sundry Debtors

42,000


Capital A/cs:


Less: Provision for Doubtful Debts

2,000

40,000
P 44,000
Q

36,000


Building 40,000
R

20,000

1,00,000


 Plant and Machinery

40,000







1,79,000

1,79,000







The partners dissolved the business. Assets realised − Stock ₹ 23,400; Debtors 50%; Fixed Assets 10% less than their book value. Bills Payable were settled for ₹ 32,000. There was an Outstanding Bill of Electricity ₹ 800 which was paid off. Realisation expenses ₹ 1,250 were also paid.

Prepare Realisation Account, Partner's Capital Accounts and Bank Account.
Discussion
902.

Under which of the major heads will the following items be shown while preparing Balance Sheet of a company, as per Schedule III of the Companies Act, 2013: (i) Unamortised Loss on Issue of Debentures (To be written off after 12 months from the date of Balance Sheet); (ii) 10% Debentures; (iii) Stock-in-Trade; (iv) Cash at Bank; (v) Bills Receivable; (vi) Goodwill; (vii) Loose Tools; (viii) Truck; (ix) Provision for Tax; and (x) Sundry Creditors?

Answer» Under which of the major heads will the following items be shown while preparing Balance Sheet of a company, as per Schedule III of the Companies Act, 2013:





















(i) Unamortised Loss on Issue of Debentures (To be written off after 12 months from the date of Balance Sheet);
(ii) 10% Debentures; (iii) Stock-in-Trade; (iv) Cash at Bank;
(v) Bills Receivable; (vi) Goodwill; (vii) Loose Tools;
(viii) Truck; (ix) Provision for Tax; and (x) Sundry Creditors?
Discussion
903.

Net Profit before Interest and Tax ₹2,50,000; Capital Employed ₹10,00,000. Calculate Return on Investment.

Answer» Net Profit before Interest and Tax ₹2,50,000; Capital Employed ₹10,00,000. Calculate Return on Investment.
Discussion
904.

Explain the usefulness of trend percentages in interpretation of financial performance of a company.

Answer» Explain the usefulness of trend percentages in interpretation of financial performance of a company.
Discussion
905.

The following balances were extracted from the books of Harish Chandra on 31st March, 2018: ₹ ₹ Drawings 15,000 Capital 2,45,000 Life Insurance Premium 5,000 Loan 78,800 General Expenses 25,000 Sales 6,53,600 Building 1,10,000 Purchases 4,70,000 Machinery 93,400 Motor Car 20,000 Stock on 1st April, 2017 1,62,000 Reserve Fund (Cr.) 9,000 Power 22,400 Commission (Cr.) 13,200 Insurance 13,150 Car Expenses 18,000 Wages 72,000 Bills Payable 38,500 Debtors 62,800 Cash 800 Creditors 25,000 Bank Overdraft 33,000 Input CGST A/c 15,000 Charity 1,050 Input SGST A/c 15,000 Bad Debts 5,500 Output IGST A/c 30,000 Stock on 31st March, 2018 was valued at ₹ 2,35,000.Prepare final accounts for the year ended 31st March, 2018.

Answer» The following balances were extracted from the books of Harish Chandra on 31st March, 2018:
































































































₹
₹
Drawings
15,000

 Capital
2,45,000
Life Insurance Premium
5,000

 Loan
78,800
General Expenses
25,000

 Sales
6,53,600
Building
1,10,000

 Purchases
4,70,000
Machinery
93,400

 Motor Car
20,000
Stock on 1st April, 2017
1,62,000

 Reserve Fund (Cr.)
9,000
Power
22,400

 Commission (Cr.)
13,200
Insurance
13,150

 Car Expenses
18,000
Wages
72,000

 Bills Payable
38,500
Debtors
62,800

 Cash
800
Creditors
25,000

 Bank Overdraft
33,000
Input CGST A/c
15,000

 Charity
1,050
Input SGST A/c
15,000

 Bad Debts
5,500
Output IGST A/c
30,000



Stock on 31st March, 2018 was valued at ₹ 2,35,000.

Prepare final accounts for the year ended 31st March, 2018.
Discussion
906.

On 1st April 2017, Sunrise Ltd issued 5000, 8% Debentures of Rs. 100 each at a discount of 5%. What will be the total amount of interest for the year ending 31st March 2018?

Answer»

On 1st April 2017, Sunrise Ltd issued 5000, 8% Debentures of Rs. 100 each at a discount of 5%. What will be the total amount of interest for the year ending 31st March 2018?
Discussion
907.

Darshan sold goods for ₹ 40,000 to Varun on 8.1.2017 and drew upon him a bill of exchange payable after two months. Varun accepted the bill and returned the same to Darshan. On the due date the bill was met by Varun. Record the necessary Journal entries in the books of Darshan and Varun in the following circumstances:When the bill was retained by Darshan till the date of its maturity.When Darshan immediately discounted the bill 6% p.a. with his bank.When the bill was endorsed immediately by Darshan in favour of his creditor Suresh.When three days before its maturity, the bill was sent by Darshan to his bank for collection.

Answer» Darshan sold goods for ₹ 40,000 to Varun on 8.1.2017 and drew upon him a bill of exchange payable after two months. Varun accepted the bill and returned the same to Darshan. On the due date the bill was met by Varun. Record the necessary Journal entries in the books of Darshan and Varun in the following circumstances:

When the bill was retained by Darshan till the date of its maturity.

When Darshan immediately discounted the bill 6% p.a. with his bank.

When the bill was endorsed immediately by Darshan in favour of his creditor Suresh.

When three days before its maturity, the bill was sent by Darshan to his bank for collection.
Discussion
908.

Determine debtors turnover ratio if, closing debtors is Rs 40,000, total sales is Rs 4,00,000. Credit sales is 25% of total sales and excess of closing debtors over opening debtors is Rs 30,000.

Answer»

Determine debtors turnover ratio if, closing debtors is Rs 40,000, total sales is Rs 4,00,000. Credit sales is 25% of total sales and excess of closing debtors over opening debtors is Rs 30,000.
Discussion
909.

The following is the summerised transactions and Statement of Profit and Loss Account for the year ending March 31, 2007 and the Balance Sheet as on the basis of following information, calculate:(i) Gross Profit Ratio (ii) Current Ratio (iii) Acid Test Ratio (iv) Inventory Turnover Ratio (v) Fixed Assets Turnover Ratio Rs. Gross Profit 50,000 Revenue from Operations 1,00,000 Inventory 15,000 Trade Receivables 27,500 Cash and Cash Equivalents 17,500 Current Liabilities 40,000 Land & Building 50,000 Plant & Machinery 30,000 Furniture 20,000

Answer»

The following is the summerised transactions and Statement of Profit and Loss Account for the year ending March 31, 2007 and the Balance Sheet as on the basis of following information, calculate:



(i) Gross Profit Ratio (ii) Current Ratio (iii) Acid Test Ratio (iv) Inventory Turnover Ratio (v) Fixed Assets Turnover Ratio














































Rs.
Gross Profit 50,000
Revenue from Operations 1,00,000
Inventory 15,000
Trade Receivables 27,500
Cash and Cash Equivalents 17,500
Current Liabilities 40,000
Land & Building 50,000
Plant & Machinery 30,000
Furniture 20,000
Discussion
910.

What is the difference between the internal and external sources of raising funds? Explain.

Answer»

What is the difference between the internal and external sources of raising funds? Explain.
Discussion
911.

X, Y and Z are partners in a firm sharing profits in the ratio of 3 : 2 : 1. On 1st April, 2009, Y retires from the firm. X and Z agree that the capital of the new firm shall be fixed at ₹ 2,10,000 in the profit-sharing ratio. The Capital Accounts of X and Z after all adjustments on the date of retirement showed balance of ₹ 1,45,000 and ₹ 63,000 respectively. State the amount of actual cash to be brought in or to be paid to the partners.

Answer» X, Y and Z are partners in a firm sharing profits in the ratio of 3 : 2 : 1. On 1st April, 2009, Y retires from the firm. X and Z agree that the capital of the new firm shall be fixed at ₹ 2,10,000 in the profit-sharing ratio. The Capital Accounts of X and Z after all adjustments on the date of retirement showed balance of ₹ 1,45,000 and ₹ 63,000 respectively. State the amount of actual cash to be brought in or to be paid to the partners.
Discussion
912.

Calculate the goodwill of a firm on the basis of three years' purchase of the weighted average profit of the last four years. The appropriate weights to be used and profits are: Year 2014-15 2015-16 2016-17 2017-18 Profit (₹) 1,01,000 1,24,000 1,00,000 1,40,000 Weight 1 2 3 4 On a scrutiny of the accounts, the following matters are revealed:(i) On 1st December, 2016, a major repair was made in respect of the plant incurring ₹ 30,000 which was charged to revenue. The said sum is agreed to be capitalised for goodwill calculation subject to adjustment of depreciation of 10% p.a. on reducing balance method.(ii) The closing stock for the year 2015-16 was overvalued by ₹ 12,000.(iii) To cover management cost, an annual charge of ₹ 24,000 should be made for the purpose of goodwill valuation.(iv) In 2015-16, a machine having a book value of ₹ 10,000 was sold for ₹ 11,000 but the proceeds were wrongly credited to Profit and Loss Account. No effect has been given to rectify the same. Depreciation is charged on machine 10% p.a. on reducing balance method.

Answer» Calculate the goodwill of a firm on the basis of three years' purchase of the weighted average profit of the last four years. The appropriate weights to be used and profits are:
























Year 2014-15 2015-16 2016-17 2017-18
Profit (₹) 1,01,000 1,24,000 1,00,000 1,40,000
Weight 1 2 3 4

On a scrutiny of the accounts, the following matters are revealed:

(i) On 1st December, 2016, a major repair was made in respect of the plant incurring ₹ 30,000 which was charged to revenue. The said sum is agreed to be capitalised for goodwill calculation subject to adjustment of depreciation of 10% p.a. on reducing balance method.

(ii) The closing stock for the year 2015-16 was overvalued by ₹ 12,000.

(iii) To cover management cost, an annual charge of ₹ 24,000 should be made for the purpose of goodwill valuation.

(iv) In 2015-16, a machine having a book value of ₹ 10,000 was sold for ₹ 11,000 but the proceeds were wrongly credited to Profit and Loss Account. No effect has been given to rectify the same. Depreciation is charged on machine 10% p.a. on reducing balance method.
Discussion
913.

A business has earned average profits of Rs.1,00,000 during the last few years. Find out the value of goodwill by capitalisation method, given that the assets of the business are Rs.10,00,000 and its external liabilities are Rs. 1,80,000. The normal rate of return is 10%.

Answer»

A business has earned average profits of Rs.1,00,000 during the last few years. Find out the value of goodwill by capitalisation method, given that the assets of the business are Rs.10,00,000 and its external liabilities are Rs. 1,80,000. The normal rate of return is 10%.
Discussion
914.

From the following information, calculate Change in Inventory of Finished Goods: Opening Inventory and Closing Inventory of Finished Goods ₹2,00,000 and ₹1,75,000 respectively.

Answer» From the following information, calculate Change in Inventory of Finished Goods: Opening Inventory and Closing Inventory of Finished Goods ₹2,00,000 and ₹1,75,000 respectively.
Discussion
915.

Find out the Credit Purchases from the details given below: ₹ Balance of Creditors on 1st April 2006 32,000 Balance of Creditors on 31st March, 2007 46,000 Cash paid to Creditors 2,20,000 Cheques issued to Creditors 60,000 Purchases Returns 10,000 Discount received from Creditors 6,600 Cash Purchases 1,15,000 B/P accepted 16,000 B/P Dishonoured 2,000 B/R endorsed to Creditors 7,000 Endorsed B/R dishonoured 3,000

Answer» Find out the Credit Purchases from the details given below:



















































₹
Balance of Creditors on 1st April 2006 32,000
Balance of Creditors on 31st March, 2007 46,000
Cash paid to Creditors 2,20,000
Cheques issued to Creditors 60,000
Purchases Returns 10,000
Discount received from Creditors 6,600
Cash Purchases 1,15,000
B/P accepted 16,000
B/P Dishonoured 2,000
B/R endorsed to Creditors 7,000
Endorsed B/R dishonoured 3,000
Discussion
916.

Give journal entriesfor the following transactions:1. To record theRealisation of various assets and liabilities,2. A Firm has a Stockof Rs 1,60,000. Aziz, a partner took over 50% of the Stock at adiscount of 20%,3. Remaining Stock wassold at a profit of 30% on cost,4. Land and Buildging(book value Rs 1,60,000) sold for Rs 3,00,000 through a broker whocharged 2%, commission on the deal,5. Plant and Machinery(book value Rs 60,000) was handed over to a Creditor at an agreedvaluation of 10% less than the book value,6. Investment whoseface value was Rs 4,000 was realised at 50%.

Answer»

Give journal entries
for the following transactions:


1. To record the
Realisation of various assets and liabilities,


2. A Firm has a Stock
of Rs 1,60,000. Aziz, a partner took over 50% of the Stock at a
discount of 20%,


3. Remaining Stock was
sold at a profit of 30% on cost,


4. Land and Buildging
(book value Rs 1,60,000) sold for Rs 3,00,000 through a broker who
charged 2%, commission on the deal,


5. Plant and Machinery
(book value Rs 60,000) was handed over to a Creditor at an agreed
valuation of 10% less than the book value,


6. Investment whose
face value was Rs 4,000 was realised at 50%.
Discussion
917.

On 1st April, 2017, X started a business with ₹ 40,000 as his capital. On 31st March, 2018, his position was as follows: Particulars (₹) Creditors ................................................................................ 30,000 Bills Payable ................................................................................ 10,000 Bank ................................................................................ 10,000 Debtors ................................................................................ 50,000 Stock ................................................................................ 40,000 Plant ................................................................................ 68,000 Furniture ................................................................................ 12,000 During the year 2017–18, X drew ₹ 24,000. On 1st October, 2017, he introduced further capital amounting to ₹ 30,000. You are required to ascertain profit on loss made by him during the year 2017–18.Adjustments:(a) Plant is to be depreciated at 10%.(b) A provision of 5% is to be made against debtors, Also prepare the Statement of Affairs as on 31st March, 2018.

Answer» On 1st April, 2017, X started a business with ₹ 40,000 as his capital. On 31st March, 2018, his position was as follows:













































Particulars


(₹)
Creditors ................................................................................ 30,000
Bills Payable ................................................................................
10,000
Bank ................................................................................
10,000
Debtors ................................................................................
50,000
Stock ................................................................................
40,000
Plant ................................................................................ 68,000
Furniture ................................................................................
12,000



During the year 2017–18, X drew ₹ 24,000. On 1st October, 2017, he introduced further capital amounting to ₹ 30,000. You are required to ascertain profit on loss made by him during the year 2017–18.

Adjustments:

(a) Plant is to be depreciated at 10%.

(b) A provision of 5% is to be made against debtors, Also prepare the Statement of Affairs as on 31st March, 2018.
Discussion
918.

From the following information, calculate Liquid Ratio: Particulars ₹ Particulars ₹​ Current Assets 2,00,000 Trade Receivables 1,10,000 Inventories 50,000 Current Liabilities 70,000 Prepaid Expenses 10,000

Answer» From the following information, calculate Liquid Ratio:





Particulars


 ₹ Particulars

₹​

Current Assets


 2,00,000 Trade Receivables

1,10,000

Inventories


 50,000 Current Liabilities

70,000

Prepaid Expenses


10,000




Discussion
919.

P, Q and R are partners sharing profits in the ratio of 7 : 5 : 3. P retires and it is decided that profit-sharing ratio between Q and R will be same as existing between P and Q. Calculate New profit-sharing ratio and Gaining Ratio.

Answer» P, Q and R are partners sharing profits in the ratio of 7 : 5 : 3. P retires and it is decided that profit-sharing ratio between Q and R will be same as existing between P and Q. Calculate New profit-sharing ratio and Gaining Ratio.
Discussion
920.

Ending Prepaid Rent, Prepaid Insurance etc.+ Expired Rent, Expired Insurance etc. − Beginning Prepaid Rent, Prepaid Insurance etc. is equal to ___

Answer»

Ending Prepaid Rent, Prepaid Insurance etc.+ Expired Rent, Expired Insurance etc. − Beginning Prepaid Rent, Prepaid Insurance etc. is equal to ___
Discussion
921.

______________ present a true and fair view of the financial position of the business.

Answer»

______________ present a true and fair view of the financial position of the business.
Discussion
922.

(i) Revenue from Operations: Cash Sales ₹4,20,000; Credit Sales ₹6,00,000; Return ₹20,000. Cost of Revenue from Operations or Cost of Goods Sold ₹8,00,000. Calculate Gross Profit Ratio.(ii) Average Inventory ₹1,60,000; Inventory Turnover Ratio is 6 Times; Selling Price 25% above cost. Calculate Gross Profit Ratio.(iii) Opening Inventory ₹1,00,000; Closing Inventory ₹60,000; Inventory Turnover Ratio 8 Times; Selling Price 25% above cost. Calculate Gross Profit Ratio.

Answer» (i) Revenue from Operations: Cash Sales ₹4,20,000; Credit Sales ₹6,00,000; Return ₹20,000. Cost of Revenue from Operations or Cost of Goods Sold ₹8,00,000. Calculate Gross Profit Ratio.

(ii) Average Inventory ₹1,60,000; Inventory Turnover Ratio is 6 Times; Selling Price 25% above cost. Calculate Gross Profit Ratio.

(iii) Opening Inventory ₹1,00,000; Closing Inventory ₹60,000; Inventory Turnover Ratio 8 Times; Selling Price 25% above cost. Calculate Gross Profit Ratio.
Discussion
923.

Prepare the trading and profit and loss account and a balance sheet of M/s Shine Ltd. from the following particulars. Account TitleAmountRsAccount TitleAmountRsSundry debtors1,00,000Bills payable85,550Bad debts3,000Sundry creditors25,000Trade expenses2,500Provision for bad debts1,500Printing and Stationary5,000Return outwards4,500Rent, Rates and Taxes3,450Capital2,50,000Freight2,250Discount received3,500Sales return6,000Interest received11,260Motor car25,000Sales1,00,000Opening stock75,550 Furniture and Fixture15,500 Purchases75,000 Drawings13,560 Investments65,500 Cash in hand36,000 Cash in bank53,000 4,81,310 4,81,310 Adjustments1. Closing stock was valued Rs 35,000.2. Depreciation charged on furniture and fixture 5%.3. Further bad debts Rs 1,000. Make a provision for bad debts 5% on sundry debtors.4. Depreciation charged on motor car 10%.5. Interest on drawing 6%.6. Rent, rates and taxes was outstanding Rs 200.7. Discount on debtors 2%.

Answer»

Prepare the trading and profit and loss account and a balance sheet of M/s Shine Ltd. from the following particulars.





























































































































Account Title



Amount



Rs



Account Title



Amount



Rs



Sundry debtors



1,00,000



Bills payable



85,550



Bad debts



3,000



Sundry creditors



25,000



Trade expenses



2,500



Provision for bad debts



1,500



Printing and Stationary



5,000



Return outwards



4,500



Rent, Rates and Taxes



3,450



Capital



2,50,000



Freight



2,250



Discount received



3,500



Sales return



6,000



Interest received



11,260



Motor car



25,000



Sales



1,00,000



Opening stock



75,550







Furniture and Fixture



15,500







Purchases



75,000







Drawings



13,560







Investments



65,500







Cash in hand



36,000







Cash in bank



53,000









4,81,310





4,81,310






Adjustments



1. Closing stock was valued Rs 35,000.



2. Depreciation charged on furniture and fixture 5%.



3. Further bad debts Rs 1,000. Make a provision for bad debts 5% on sundry debtors.



4. Depreciation charged on motor car 10%.



5. Interest on drawing 6%.



6. Rent, rates and taxes was outstanding Rs 200.



7. Discount on debtors 2%.
Discussion
924.

In the year ended 31st March, 2018, salaries paid amounted to ₹ 2,04,000. Ascertain the amount chargeable to the Income and Expenditure Account for the year ended 31st March ,2018 from the following additional information: ₹ Prepaid Salaries on 31st March, 2017 24,000 Prepaid Salaries on 31st March, 2018 12,000 Outstanding Salaries on 31st March, 2017 18,000 Outstanding Salaries on 31st March, 2018 15,000

Answer» In the year ended 31st March, 2018, salaries paid amounted to ₹ 2,04,000. Ascertain the amount chargeable to the Income and Expenditure Account for the year ended 31st March ,2018 from the following additional information:























₹
Prepaid Salaries on 31st March, 2017 24,000
Prepaid Salaries on 31st March, 2018 12,000
Outstanding Salaries on 31st March, 2017 18,000
Outstanding Salaries on 31st March, 2018 15,000
Discussion
925.

A, B and C are partners in a firm. They do not have a Partnership Deed. At the end of the first year of the commencement of the firm, they have faced the following problems :(a) A wants that interest on capital should be allowed to the partners but B and C do not agree.(b) B wants that the partners should be allowed to draw salary but A and C do not agree.(c) C wants that the loan given by him to the firm should bear interest 10% p.a. but A and B do not agree.(d) A and B having contributed larger amounts of capital, desire that the profits should be divided in the ratio of their capital contribution but C does not agree.State how you will settle these disputes if the partners approach you for purpose.

Answer» A, B and C are partners in a firm. They do not have a Partnership Deed. At the end of the first year of the commencement of the firm, they have faced the following problems :

(a) A wants that interest on capital should be allowed to the partners but B and C do not agree.

(b) B wants that the partners should be allowed to draw salary but A and C do not agree.

(c) C wants that the loan given by him to the firm should bear interest 10% p.a. but A and B do not agree.

(d) A and B having contributed larger amounts of capital, desire that the profits should be divided in the ratio of their capital contribution but C does not agree.

State how you will settle these disputes if the partners approach you for purpose.
Discussion
926.

Mohan and Sohan were partners in a firm sharing profits and losses in the ratio of 3 : 2. They admitted Ram for 1/4th share on 1st April, 2019. It was agreed that goodwill of the firm will be valued at 3 years' purchase of the average profit of last 4 years ended 31st March, were ₹ 50,000 for 2015-16, ₹ 60,000 for 2016-17, ₹ 90,000 for 2017-18 and ₹ 70,000 for 2018-19. Ram did not bring his share of goodwill premium in cash. Record the necessary Journal entries in the books of the firm on Ram's admission when:(a) Goodwill appears in the books at ₹ 2,02,500.(b) Goodwill appears in the books at ₹ 2,500.(c) Goodwill appears in the books at ₹ 2,05,000.

Answer» Mohan and Sohan were partners in a firm sharing profits and losses in the ratio of 3 : 2. They admitted Ram for 1/4th share on 1st April, 2019. It was agreed that goodwill of the firm will be valued at 3 years' purchase of the average profit of last 4 years ended 31st March, were ₹ 50,000 for 2015-16, ₹ 60,000 for 2016-17, ₹ 90,000 for 2017-18 and ₹ 70,000 for 2018-19. Ram did not bring his share of goodwill premium in cash. Record the necessary Journal entries in the books of the firm on Ram's admission when:

(a) Goodwill appears in the books at ₹ 2,02,500.

(b) Goodwill appears in the books at ₹ 2,500.

(c) Goodwill appears in the books at ₹ 2,05,000.
Discussion
927.

Narayanan purchased goods for Rs 25,000 from Ravinderan on Feb. 01, 2016. Ravinderan drew upon Narayanan a bill of exchange for the same amount payable after 30 days. On the due date Narayanan dishonoured his acceptance. Pass the necessary journal entries in the books of Ravinderan and Narayanan in following cases:· When the bill was retained by Ravinderan with him till the date of its maturity.· When the bill was discounted by Ravinderan immediately with his bank 6% p.a.· When the bill was endorsed to his creditor Ganeshan.· When the bill was sent by Ravinderan to his bank for collection a few days before it maturity.

Answer»

Narayanan purchased goods for Rs 25,000 from Ravinderan on Feb. 01, 2016. Ravinderan drew upon Narayanan a bill of exchange for the same amount payable after 30 days. On the due date Narayanan dishonoured his acceptance. Pass the necessary journal entries in the books of Ravinderan and Narayanan in following cases:



· When the bill was retained by Ravinderan with him till the date of its maturity.



· When the bill was discounted by Ravinderan immediately with his bank 6% p.a.



· When the bill was endorsed to his creditor Ganeshan.



· When the bill was sent by Ravinderan to his bank for collection a few days before it maturity.
Discussion
928.

Jain Ltd purchased machinery costing ₹ 10,00,000 from Ayer Ltd. 50% of the payment was made by cheque and for the remaining 50% , the company issued Equity Shares of ₹ 100 each at a premium of 25% . Pass necessary Journal entries in the books of Jain Ltd . for the above transaction.

Answer» Jain Ltd purchased machinery costing ₹ 10,00,000 from Ayer Ltd. 50% of the payment was made by cheque and for the remaining 50% , the company issued Equity Shares of ₹ 100 each at a premium of 25% . Pass necessary Journal entries in the books of Jain Ltd . for the above transaction.
Discussion
929.

X and Y are partners in a firm sharing profits in the ratio of 3 : 2. On 1st April, 2019, they admit Z as a partner for 1/4th share in the profits. Z contributed following assets towards his capital and for his share of goodwill:Stock ₹ 60,000; Debtors ₹ 80,000; Land ₹ 1,00,000, Plant and Machinery ₹ 40,000.On the date of admission of Z, the goodwill of the firm was valued at ₹ 6,00,000.Pass necessary Journal entries in the books of the firm on Z's admission.

Answer» X and Y are partners in a firm sharing profits in the ratio of 3 : 2. On 1st April, 2019, they admit Z as a partner for 1/4th share in the profits. Z contributed following assets towards his capital and for his share of goodwill:

Stock ₹ 60,000; Debtors ₹ 80,000; Land ₹ 1,00,000, Plant and Machinery ₹ 40,000.

On the date of admission of Z, the goodwill of the firm was valued at ₹ 6,00,000.

Pass necessary Journal entries in the books of the firm on Z's admission.
Discussion
930.

The following is the trial balance on June 30, 2006 of the Modern Manufacturing Company Ltd. DetailsAmountRsDetailsAmountRsStock, 30th June, 20057,500Dividend paid in, August, 2005500Sales35,000Interim Dividend paid in Feb., 2006400Purchases24,500Capital- 10,000 Rs 1 shares full Paid10,000Productive wages5,000Debtors3,750Discounts (Dr.)700Creditors1,750Discounts (Cr.)500Plant and machinery2,900Salaries750Cash in Bank1,620Rent495Reserve1,550General expenses1,705Loan to Managing Director325Profit and loss account,1,503Bad Debts15830th June 2005 (Cr.) Stock, on June 30, 2006 Rs 8,200. You are required to make out the trading account, and profit and loss account for the year ended June 30, 2006 and the balance sheet as on the date. You are also to make provision in respect of the following: (i) Depreciate machinery 10% per annum; (ii) Reserve 5% for discount on debtors; (iii) One month rent Rs 45 was due on 30th June; and (iv) Six month’s insurance, included in general expenses, was unexpired at Rs 75.

Answer»

The following is the trial balance on June 30, 2006 of the Modern Manufacturing Company Ltd.

































































































Details



Amount



Rs



Details



Amount



Rs



Stock, 30th June, 2005



7,500



Dividend paid in, August, 2005



500



Sales



35,000



Interim Dividend paid in Feb., 2006



400



Purchases



24,500



Capital- 10,000 Rs 1 shares full Paid



10,000



Productive wages



5,000



Debtors



3,750



Discounts (Dr.)



700



Creditors



1,750



Discounts (Cr.)



500



Plant and machinery



2,900



Salaries



750



Cash in Bank



1,620



Rent



495



Reserve



1,550



General expenses



1,705



Loan to Managing Director



325



Profit and loss account,



1,503



Bad Debts



158



30th June 2005 (Cr.)




















Stock, on June 30, 2006 Rs 8,200. You are required to make out the trading account, and profit and loss account for the year ended June 30, 2006 and the balance sheet as on the date. You are also to make provision in respect of the following: (i) Depreciate machinery 10% per annum; (ii) Reserve 5% for discount on debtors; (iii) One month rent Rs 45 was due on 30th June; and (iv) Six month’s insurance, included in general expenses, was unexpired at Rs 75.
Discussion
931.

From the following information, prepare Trading Account for the year ended 31st March, 2019:Adjusted Purchases ₹ 6,60,000; Sales ₹ 7,44,000; Closing Stock ₹ 50,400; Freight and Carriage Inwards ₹ 3,600; Wages ₹ 6,000; Freight and Cartage Outwards ₹ 2,000.

Answer» From the following information, prepare Trading Account for the year ended 31st March, 2019:

Adjusted Purchases ₹ 6,60,000; Sales ₹ 7,44,000; Closing Stock ₹ 50,400; Freight and Carriage Inwards ₹ 3,600; Wages ₹ 6,000; Freight and Cartage Outwards ₹ 2,000.
Discussion
932.

Anita, Bimla and Cherry are three partners. On 1st April, 2018, their Capitals stood as: Anita ₹ 1,00,000, Bimla ₹ 2,00,000 and Cherry ₹ 3,00,000. It was decided that:(a) they would receive interest on Capital 5% p.a.,(b) Anita would get a salary of ₹ 5,000 per month,(c) Bimla would receive commission 5% of net profit after deduction of commission, and(d) 10% of the net divisible profit would be transferred to the General Reserve.Before the above items were taken into account, the profit for the year ended 31st March, 2019 was ₹ 5,00,000. Prepare Profit and Loss Appropriation Account and the Capital Accounts of the partners.

Answer» Anita, Bimla and Cherry are three partners. On 1st April, 2018, their Capitals stood as: Anita ₹ 1,00,000, Bimla ₹ 2,00,000 and Cherry ₹ 3,00,000. It was decided that:

(a) they would receive interest on Capital 5% p.a.,

(b) Anita would get a salary of ₹ 5,000 per month,

(c) Bimla would receive commission 5% of net profit after deduction of commission, and

(d) 10% of the net divisible profit would be transferred to the General Reserve.

Before the above items were taken into account, the profit for the year ended 31st March, 2019 was ₹ 5,00,000. Prepare Profit and Loss Appropriation Account and the Capital Accounts of the partners.
Discussion
933.

Digvijay, Brijesh and Parakaram were partners in a firm sharing profits in the ratio of 2:2:1. Their Balance Sheet as on March 31, 2017 was as follows: Liabilities Amount Rs Assets Amount Rs Creditors 49,000 Cash 8,000 Reserves 18,500 Debtors 19,000 Digvijay’s Capital 82,000 Stock 42,000 Brijesh’s Capital 60,000 Buildings 2,07,000 Parakaram’s Capital 75,500 Patents 9,000 2,85,000 2,85,000 Brijesh retired on March 31, 2017 on the following terms:(i) Goodwill of the firm was valued at Rs 70,000 and was not to appear in the books.(ii) Bad debts amounting to Rs 2,000 were to be written off.(iii) Patents were considered as valueless.Prepare Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of Digvijay and Parakaram after Brijesh’s retirement.

Answer»











Digvijay, Brijesh and Parakaram were partners in a firm sharing profits in the ratio of 2:2:1. Their Balance Sheet as on March 31, 2017 was as follows:

























































Liabilities

Amount



Rs

Assets

Amount



Rs

Creditors

49,000

Cash

8,000

Reserves

18,500

Debtors

19,000

Digvijay’s Capital

82,000

Stock

42,000

Brijesh’s Capital

60,000

Buildings

2,07,000

Parakaram’s Capital

75,500

Patents

9,000



2,85,000



2,85,000












Brijesh retired on March 31, 2017 on the following terms:



(i) Goodwill of the firm was valued at Rs 70,000 and was not to appear in the books.



(ii) Bad debts amounting to Rs 2,000 were to be written off.



(iii) Patents were considered as valueless.



Prepare Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of Digvijay and Parakaram after Brijesh’s retirement.
Discussion
934.

X company issued ₹ 10,00,000 shares for subscription of ₹ 100 each at a premium of ₹ 20 per share payable as: ₹ 10 per share on application, ₹ 40 per share and ₹ 10 premium on allotment, and₹ 50 per share and ₹ 10 premium on final payment.Over-payments on application were to be applied towards amount due on allotment and over-payments on application exceeding amount due on allotment was to be returned. Issue was oversubscribed to the extent of 13,000 shares . Applicants for 12,000 shares were allotted only 1,000 shares and applicants for 2,000 shares were sent letters of regret. All the money due on allotment and final call was duly received . Pass necessary entries in the company 's books to record the above transactions. Also, prepare company's Balance Sheet on completion of the above transactions.

Answer» X company issued ₹ 10,00,000 shares for subscription of ₹ 100 each at a premium of ₹ 20 per share payable as:

₹ 10 per share on application,

₹ 40 per share and ₹ 10 premium on allotment, and

₹ 50 per share and ₹ 10 premium on final payment.

Over-payments on application were to be applied towards amount due on allotment and over-payments on application exceeding amount due on allotment was to be returned. Issue was oversubscribed to the extent of 13,000 shares . Applicants for 12,000 shares were allotted only 1,000 shares and applicants for 2,000 shares were sent letters of regret. All the money due on allotment and final call was duly received .

Pass necessary entries in the company 's books to record the above transactions. Also, prepare company's Balance Sheet on completion of the above transactions.
Discussion
935.

The following is the trial balance of Alfa Ltd., for the year ended June 30, 2005 DetailsAmountRsDetailsAmountRsLand and Buildings3,00,000Sundry Creditors40,000Plant and Machinery4,50,000Bills Payable20,000Furniture and Fittings40,000General Reserve2,00,000Goodwill60,000Profit and Loss Account Balance (on 1.7.04)90,000Sundry Debtors60,000Sales6,25,000Bills Receivable26,000Purchase Returns15,000Investments (5% Govt. Securities)30,000Equity Share Capital5,00,000Cash in Hand2,0008% Preference Share Capital2,00,000Cash at Bank55,000 Preliminary Expenses29,000 Purchases4,00,000 Sales Return10,000 Stock on 1-7-0485,000 Wages47,000 Salaries55,000 Rent, rates and taxes9,000 Carriage Inwards6,500 Law Charges2,500 Trade Expenses23,000 16,90,000 16,90,000 Prepare the Profit and Loss Account and Balance Sheet of the company after taking the following particulars into consideration: a) The original cost of land and building plant and machinery and furniture and fittings was Rs 2,50,000, Rs 6,00,000 and Rs 60,000 respectively. Additions during the year were: Building Rs 50,000 and Plant Rs 20,000.b) Depreciation is to be charged on plant and machinery and furniture and fitting at 10 per cent on original cost.c) Of the sundry debtors, Rs 10,000 is outstanding for a period exceeding 6 months, Rs 5,000 are considered doubtful, while the others are considered good.d) The directors are entitled to a commission at 1 percent of the net profits before charging such commission.e) Stock on 30th June, 2005 is Rs 1,30,000.f) Provide Rs 34,800 for income tax

Answer»

The following is the trial balance of Alfa Ltd., for the year ended June 30, 2005

























































































































































Details



Amount



Rs



Details



Amount



Rs



Land and Buildings



3,00,000



Sundry Creditors



40,000



Plant and Machinery



4,50,000



Bills Payable



20,000



Furniture and Fittings



40,000



General Reserve



2,00,000



Goodwill



60,000



Profit and Loss Account Balance (on 1.7.04)



90,000



Sundry Debtors



60,000



Sales



6,25,000



Bills Receivable



26,000



Purchase Returns



15,000



Investments (5% Govt. Securities)



30,000



Equity Share Capital



5,00,000



Cash in Hand



2,000



8% Preference Share Capital



2,00,000



Cash at Bank



55,000







Preliminary Expenses



29,000







Purchases



4,00,000







Sales Return



10,000







Stock on 1-7-04



85,000







Wages



47,000







Salaries



55,000







Rent, rates and taxes



9,000







Carriage Inwards



6,500







Law Charges



2,500







Trade Expenses



23,000









16,90,000





16,90,000






Prepare the Profit and Loss Account and Balance Sheet of the company after taking the following particulars into consideration:





a) The original cost of land and building plant and machinery and furniture and fittings was Rs 2,50,000, Rs 6,00,000 and Rs 60,000 respectively. Additions during the year were: Building Rs 50,000 and Plant Rs 20,000.



b) Depreciation is to be charged on plant and machinery and furniture and fitting at 10 per cent on original cost.



c) Of the sundry debtors, Rs 10,000 is outstanding for a period exceeding 6 months, Rs 5,000 are considered doubtful, while the others are considered good.



d) The directors are entitled to a commission at 1 percent of the net profits before charging such commission.



e) Stock on 30th June, 2005 is Rs 1,30,000.



f) Provide Rs 34,800 for income tax
Discussion
936.

(a) W, X, Y and Z are partners sharing profits and losses in the ratio of 1/3, 1/6, 1/3 and 1/6 respectively. Y retires and W, X and Z decide to share the profits and losses equally in future.Calculate gaining ratio.(b) A, B and C are partners sharing profits and losses in the ratio of 4 : 3 : 2. C retires from the business. A is acquiring 4/9 of C's share and balance is acquired by B. Calculate the new profit-sharing ratio and gaining ratio.

Answer» (a) W, X, Y and Z are partners sharing profits and losses in the ratio of 1/3, 1/6, 1/3 and 1/6 respectively. Y retires and W, X and Z decide to share the profits and losses equally in future.

Calculate gaining ratio.

(b) A, B and C are partners sharing profits and losses in the ratio of 4 : 3 : 2. C retires from the business. A is acquiring 4/9 of C's share and balance is acquired by B. Calculate the new profit-sharing ratio and gaining ratio.
Discussion
937.

Rupak Ltd. issued 10,000 shares of Rs 100 each payable Rs 20 per share on application, Rs 30 per share on allotment and balance in two calls of Rs 25 per share. The application and allotment money were duly received. On first call all member pays their dues except one member holding 200 shares, while another member holding 500 shares paid for the balance due in full. Final call was not made.Give journal entries and prepare cash book.

Answer»

Rupak Ltd. issued 10,000 shares of Rs 100 each payable Rs 20 per share on application, Rs 30 per share on allotment and balance in two calls of Rs 25 per share. The application and allotment money were duly received. On first call all member pays their dues except one member holding 200 shares, while another member holding 500 shares paid for the balance due in full. Final call was not made.



Give journal entries and prepare cash book.
Discussion
938.

A, B, C, and D are partners in a firm sharing profits as 4 : 3 : 2 : 1 respectively. It earned a profit of ₹ 1,80,000 for the year ended 31st March, 2018. As per the Partnership Deed, they are to charge a commission 20% of the profit after charging such commission which they will share as 2 : 3 : 2 : 3. You are required to show appropriation of profits among the partners.

Answer» A, B, C, and D are partners in a firm sharing profits as 4 : 3 : 2 : 1 respectively. It earned a profit of ₹ 1,80,000 for the year ended 31st March, 2018. As per the Partnership Deed, they are to charge a commission 20% of the profit after charging such commission which they will share as 2 : 3 : 2 : 3. You are required to show appropriation of profits among the partners.
Discussion
939.

Analysis of any financial Statement comprises ___.

Answer»

Analysis of any financial Statement comprises ___.
Discussion
940.

From the information given below you are required to prepare the cash paid for the inventory: RsInventory in the beginning40,000Purchases1,60,000Inventory in the end38,000Trade payables in the beginning14,000Trade payables in the end14,500

Answer»

From the information given below you are required to prepare the cash paid for the inventory:






































Rs



Inventory in the beginning



40,000



Purchases



1,60,000



Inventory in the end



38,000



Trade payables in the beginning



14,000



Trade payables in the end



14,500
Discussion
941.

Commence Publications Ltd. issued 50,000 Equity Shares of ₹ 10 each at a premium of 10% payable as under: On application ₹ 2, On first call ₹ 2, On allotment ₹ 5, On final call ₹ 2. The calls were made by the company and all the money was duly received except the allotment and call money on 500 shares. These shares were, therefore, forfeited and later reissued ₹ 9 per share as fully paid-up.Pass necessary journal entries to record the above transactions.

Answer» Commence Publications Ltd. issued 50,000 Equity Shares of ₹ 10 each at a premium of 10% payable as under:















On application ₹ 2, On first call ₹ 2,
On allotment ₹ 5, On final call ₹ 2.



The calls were made by the company and all the money was duly received except the allotment and call money on 500 shares. These shares were, therefore, forfeited and later reissued ₹ 9 per share as fully paid-up.

Pass necessary journal entries to record the above transactions.
Discussion
942.

Following is theinformation given in respect of certain items of a Sports Club. Showthese items in the Income and Expenditure Account and the BalanceSheet of the Club: Particulars Rs Sports Fund as on 1.4.2005 35,000 Sports Fund Investments 35,000 Interest on Sports Fund 4,000 Donations for Sports Fund 15,000 Sports Prizes awarded 10,000 Expenses on Sports Events 4,000 General Fund 80,000 General Fund Investments 80,000 Interest on General Fund Investments 8,000

Answer»

Following is the
information given in respect of certain items of a Sports Club. Show
these items in the Income and Expenditure Account and the Balance
Sheet of the Club:



















































Particulars

Rs

Sports Fund as on 1.4.2005

35,000

Sports Fund Investments



35,000

Interest on Sports Fund

4,000

Donations for Sports Fund



15,000

Sports Prizes awarded



10,000

Expenses on Sports Events



4,000

General Fund



80,000

General Fund Investments



80,000

Interest on General Fund Investments



8,000
Discussion
943.

Total Debt ₹15,00,000; Current Liablities ₹5,00,000; Capital Employed ₹15,00,000. Calculate Total Assets to Debt Ratio.

Answer» Total Debt ₹15,00,000; Current Liablities ₹5,00,000; Capital Employed ₹15,00,000. Calculate Total Assets to Debt Ratio.
Discussion
944.

X, Y and Z are partners sharing profits in the ratio of 5 : 3 : 2. Y retires on 1st April, 2019 from the firm, on which date capitals of X, Y and Z after all adjustments are ₹ 1,03,680, ₹ 87,840 and ₹ 26,880 respectively. The Cash and Bank Balance on that date was ₹ 9,600. Y is to be paid through amount brought in by X and Z in such a way as to make their capitals proportionate to their new profit-sharing ratio which will be X 3/5 and Z 2/5. Calculate the amount to be paid or to be brought in by the continuing partners assuming that a minimum Cash and Bank balance of ₹ 7,200 was to be maintained and pass the necessary Journal entries.

Answer» X, Y and Z are partners sharing profits in the ratio of 5 : 3 : 2. Y retires on 1st April, 2019 from the firm, on which date capitals of X, Y and Z after all adjustments are ₹ 1,03,680, ₹ 87,840 and ₹ 26,880 respectively. The Cash and Bank Balance on that date was ₹ 9,600. Y is to be paid through amount brought in by X and Z in such a way as to make their capitals proportionate to their new profit-sharing ratio which will be X 3/5 and Z 2/5. Calculate the amount to be paid or to be brought in by the continuing partners assuming that a minimum Cash and Bank balance of ₹ 7,200 was to be maintained and pass the necessary Journal entries.
Discussion
945.

Naina and Sunaina are partners sharing profits and losses in the ratio of 3 : 4 contributing capital of ₹ 30,000 each. During the year Naina withdrew ₹ 1,500, and Sunaina withdrew ₹ 3,000 on which interest was charged at ₹ 150 and ₹ 300 respectively. Pass the journal entry for charging interest if accounts are maintained under a fixed capital method.[0.88 marks]

Answer»

Naina and Sunaina are partners sharing profits and losses in the ratio of 3 : 4 contributing capital of ₹ 30,000 each. During the year Naina withdrew ₹ 1,500, and Sunaina withdrew ₹ 3,000 on which interest was charged at ₹ 150 and ₹ 300 respectively. Pass the journal entry for charging interest if accounts are maintained under a fixed capital method.



[0.88 marks]
Discussion
946.

Classify the following into Assets, Liabilities, Capital, Revenue, and Expenses: (i) Plant and Machinery; (ii) Bank Loan; (iii) Sales; (iv) Rent; (v) Discount Received; (vi) Carriage Inwards; (vii) Carriage outwards; (viii) Purchases; (ix) Bills Payable; (x) Wages; (xi) Advance Income; (xii) Accrued Income; (xiii) Goodwill; (xiv) Furniture and Fixtures; (xv) Outstanding Expenses; (xvi) Capital.

Answer» Classify the following into Assets, Liabilities, Capital, Revenue, and Expenses:



























(i) Plant and Machinery; (ii) Bank Loan; (iii) Sales; (iv) Rent;
(v) Discount Received; (vi) Carriage Inwards; (vii) Carriage outwards; (viii) Purchases;
(ix) Bills Payable; (x) Wages; (xi) Advance Income; (xii) Accrued Income;
(xiii) Goodwill; (xiv) Furniture and Fixtures; (xv) Outstanding Expenses; (xvi) Capital.
Discussion
947.

Light Lamps Ltd. issued 50,000 shares of ₹ 10 each as fully paid-up to the promoters for their services to set-up the company . It also issued 2,000 shares of ₹ 10 each credited as fully paid-up to the underwriters of shares for their services . journalise these transactions.

Answer» Light Lamps Ltd. issued 50,000 shares of ₹ 10 each as fully paid-up to the promoters for their services to set-up the company . It also issued 2,000 shares of ₹ 10 each credited as fully paid-up to the underwriters of shares for their services . journalise these transactions.
Discussion
948.

In how much time would the simple interest on a certain sum be 0.125 times the principal at 10% per annum ?

Answer» In how much time would the simple interest on a certain sum be 0.125 times the principal at 10% per annum ?
Discussion
949.

Q52. In the context of investigations into the alleged multi-crore fraud involving the Punjab National Bank, which of the following statements is correct about ‘Letter of Undertaking’ (LoU) :

Answer»

Q52. In the context of investigations into the alleged multi-crore fraud involving the Punjab National Bank, which of the following statements is correct about ‘Letter of Undertaking’ (LoU) :
Discussion
950.

Due to a rise of 12% in the price of mangoes, adealer gets 27 kg less for 24750. Find the following(a) The new price per kg of mangoes(b) Theoriginal price per kg of mangoes(approximately)

Answer» Due to a rise of 12% in the price of mangoes, a
dealer gets 27 kg less for 24750. Find the following
(a) The new price per kg of mangoes
(b) The
original price per kg of mangoes
(approximately)
Discussion