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Are there any restrictions on the purpose for which a bank loan may be used?

On January 1, 2011, X Ltd issue 5,000, 8% Debentures of Rs. 100 each repayable at par at the end of three years. It has been decided to set up a cumulative sinking fund for the purpose of their redemption. The investments are expected to realise 4% net. The Sinking Fund Table shows that Rs. 0.320348 amounts to one rupee 4% per annum in three years. On December 31, 2013 the balance at bank was Rs. 2,42,360 and the investments realised Rs. 3,25,000. The debentures were paid off. Give journal entries and show ledger account.

A and B are partners and the profit is divided as follows: $\frac{1}{2}$ to $A;\frac{1}{3}$ to B and $\frac{1}{6}$ carried to a Reserve Account. They admit C as a partner on 1st April, 2017 at which date the Balance Sheet of the firm was as under:

$\begin{array}{cccc}\text{Capital and Liabilities}& \text{Rs}& \text{Assets}& \text{Rs}\\ \text{Creditors}& 1,60,000& \text{Cash at Bank}& 20,000\\ \text{Outstanding Expenses}& 12,000& \text{Debtors}& 2,20,000\\ \text{Reserve}& 90,000& \text{Stock}& 1,80,000\\ \text{Capital A/cs:}& & \text{Plant and Machinery}& 1,50,000\\ A3,18,000& & \text{Buildings}& 2,00,000\\ B\underset{–}{2,00,000}& 5,18,000& \text{Advertisement Expenditure}& 10,000\\ & \underset{–}{\overline{7,80,000}}& & \underset{–}{\overline{7,80,000}}\end{array}$

Following terms were agreed upon :

(i) Stock is undervalued by 10%.

(ii) Depreciation of Rs 30,000 had been omitted on plant and machinery for the year ended 31st March, 2017.

(iii) Creditors include a contingent liability of Rs 50,000 which has been decided by the Court at Rs 43,000.

(iv) In respect of debtors, the following debts proved bad or doubtful : Rs 15,000 due from Ram - bad to the full extent;

Rs 20,000 due from Shyam - insolvent, estate expected to pay only 40%.

(v) Goodwill of the firm is valued at Rs 60,000. However, C is unable to bring his share of goodwill in cash.

(vi) C is given $\frac{1}{5}th$ share of profits which he acquires equally from A and B. C is to bring in capital proportionate to his share of profits in the firm.

(vii) The partners decide that 5% of profit of each year be given to a N.G.O. (Non-Government Organisation) which is working for cleanliness drive in the area.

You are required to prepare revaluation account

Pass journal entries in the following cases:

(a) A Co.Ltd. issued ₹40,000; 12% Debentures at a premium of 5% redeemable at par.

(b) A Co.Ltd. issued ₹40,000; 12% Debentures at a discount of 10% redeemable at par.

(c) A Co.Ltd. issued ₹40,000; 12% Debentures at par redeemable at 10% premium.

(d) A Co.Ltd. issued ₹40,000; 12% Debentures at a discount of 5% and redeemable at 5% premium.

(e) A Co.Ltd. issued ₹40,000; 12% Debentures at a premium of 10% redeemable at 110%.

Following is the Balance Sheet of Wisben Led , as on 31st March, 2012.

$$\begin{array}{cccc}\text{Particulars}& \text{Notes to}& \text{Current Year}& \text{Previous Year}\\ & & \text{(Rs)}& \text{(Rs)}\\ \text{1. Equity and Liabilities :}& & & \\ \text{(1) Shareholders' Funds}& & & \\ \text{(a) Share Capital}& & 7,00,000& 6,00,000\\ \text{(b) Reserve and Surplus (Profit and Loss Balance)}& & 2,00,000& 1,10,000\\ \text{(2) Non-current Liabilities}& & & \\ \text{Long-term Borrowings}& & 3,00,000& 2,00,000\\ \text{(3) Current Liabilities}& & & \\ \text{Trade Payables}& & 30,000& 25,000\\ \text{Total}& & 12,30,000& 9,35,000\\ \text{II. Assets :}& & & \\ \text{(1)Non-current Assets}& & 11,00,000& 8,00,000\\ \text{(a) Fixed Asset : Tangible Assets}& & & \\ \text{(2) Current Assets}& & & \\ \text{(a)Inventories}& & 70,000& 60,000\\ \text{(b) Trade Receivables}& & 32,000& 40,000\\ \text{CAsh and Cash Equivalents}& & 28,000& 35,000\\ \text{Total}& & 12,30,000& 9,35,000\end{array}$$

Adjustments : During the year a piece of machinery of the book value of Rs 80,000 was sold for Rs 65,000.Depreciation provided on tangible assets during the year amounted to Rs 2,00,000. Prepare a Cash Flow Statement.

Under what headings will you show the following items in the Financial Statements of a Company :

(i) Goodwill

(ii) Unclaimed Dividends

(iii) Provision for Tax

(iv) Securities Premium Reserve

(v) Loose Tools

(vi) Sale of Products

(vii) Interest paid on Overdraft

(viii) Business promotion exp.

Rakhi and Shikha are partners in a firm, with capitals of Rs 2,00,000 and Rs 3,00,000 respectively. The profit of the firm, for the year ended 2016-17 is Rs 23,200. As per the Partnership agreement, they share the profit in their capital ratio, after allowing a salary of Rs 5,000 per month to Shikha and interest on Partner’s capital at the rate of 10% p.a. During the year Rakhi withdrew Rs 7,000 and Shikha Rs 10,000 for their personal use. You are required to prepare Profit and Loss Appropriation Account and Partner’s Capital Accounts.

___liabilities are transferred to the Realisation account.

On the issue of debentures as collateral security, which account is credited?

Ravi Ltd. issued 50,000 shares of ₹10 each payable as ₹2 on application, ₹3 on allotment, ₹2.5 on first call, and ₹2.5 on the second and final call. All the amount was duly received except for the second and final call on 800 shares. These shares were forfeited. Out of these, 600 shares were re-issued as fully paid up in such a way that ₹2,100 were transferred to the capital reserve.

Pass the journal entry for forfeiture of shares:



[2 marks]

Subtract: $\frac{7}{8}-\frac{3}{4}=$ _____

What will be the net inflow or outflow from investing activities if the plant and machinery and goodwill shows an increase of Rs 35,000 and Rs 15,000 respectively from previous year and dividend received during the year amounted to Rs 10,000.

DG Ltd Purchased assets of Rs 2,50,000 from VG Ltd . DG Ltd issued equity shares of Rs 50 each fully paid in consideration at a premium of Rs 30. Calculate the no of shares issued.

Arun, Boby and Chintu are partners in a firm sharing profit in the ratio or 2:2:1. According to the terms of the partnership agreement, Chintu has to get a minimum of Rs 60,000, irrespective of the profits of the firm. Any Deficiency to Chintu on Account of such guarantee shall be borne by Arun. Prepare the profit and loss appropriation account showing distribution of profits among partners in case the profits for year 2015 are: (i) Rs 2,50,000; (ii) 3,60,000.

What term is used for the amount invested by the owner in the business?

Under which head the following items of a financial company will be shown :

(i) Dividend received (ii) Interest earned (iii) Profit on sale of fixed asset and (iv) Profit on sale of investments, and (v) Refund of Income Tax.

A, B and C are the partners sharing profits in the ratio of 7:5:4 died on 30th June and profits for the current accounting year were 48,000. How much share in the profits for the period 1st April to 30th June will be credited to C account.

____________ is prepared in order to ascertain net gain or loss on revaluation of assets and liabilities and bringing unrecorded items into books

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:

Bayson Ltd. invited applications for issuing 54,000 shares of Rs 100 each payable as follows:

Rs 50 per share on application

Rs 10 per share on application

Applications were received for 80,000 shares.

Full allotment was made to the applicants of 14,000 shares. The remaining applicants were allotted 40,000 shares on pro-rata basis. Excess money received with applications was adjusted towards sums due on allotment and call.

Vibhor, holding 1,200 shares, who belonged to the category of applicants to whom full allotment was made, paid the call money at the time of allotment. Vidur, who belonged to the category of applicants to whom shares were allotted on pro-rata basis did not pay anything after application on his 400 shares.Vidur's share were forfeited after the first and final call. All the forfeited shares were later on re-issued at Rs 110 per share as fully paid up.

Pass the necessary journal entries in the books of Bayson Ltd. for the above transactions by opening calls in arrears and calls in advance wherever necessary.

A partnership firm earned net profits during the last 3 years as follows:

2007 - Rs. 1,90,000

2008 - Rs. 2,20,000

2009 - Rs. 2,50,000

Calculate the value of goodwill on the basis of 2 years’ purchase of average profits basis during the above mentioned 3 years.

Rajan and Rajani are partners in a firm. Their capitals were Rajan Rs. 3,00,000; Rajani Rs. 2,00,000. During the year 2015 the firm earned a profit of Rs. 1,50,000. Calculate the value of goodwill of the firm assuming that the normal rate of return is 20%?

What entries for the redemption of debentures will be done when (a) debentures are redeemed by annual drawings out of profits; (b) debnetures are redeemed by drawing a lot of capital; and (c) debentures are redeemed by purchasing them in the open market when sinking fund for the redemption of debentures is not maintained - (i) when out of profit, and (ii) when out of capital?

How is ‘Discount on Issue of Debentures’ treated in the books of accounts? How will you deal with the ‘discount in issue of debentures’ when the debentures are to be redeemed in instalments?

A, B, C and D were partners sharing profits in the ratio of 2 : 1 : 3 : 4. B retires and his share is acquired by A and C in the ratio of 4 : 1. Calculate the new ratio and the gaining ratio.