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601.

W and R were partners in a firm sharing profits in the ratio of 3:2 respectively. On 31st March, 2013, their Balance Sheet was as follows: B was admitted as a new partner on the following conditions: (i) B will get 4/15th share of profits. (ii) B had to bring Rs 15,000 as his capital. (iii) B would pay cash for his share of goodwill based on 2(1)/(2)1 years' purchase of average profit of last 4 years. (iv) The profits of the firm for the years ending 31st March, 2010,2011,2012 and 2013 were Rs 10,000, Rs 7,000, Rs 8,500 respectively. (v) Stock was valued at Rs 10,000 and provision for doubtful debts ws raised up to Rs500. (vi) Plant was revalued at Rs 20,000. Prepare Revaluation Account, Partners' Capital Account and Balance Sheet of the new firm.

Answer»

SOLUTION :Loss on REVALUATION- Rs 150, PARTNERS' Capital Accounts: W-Rs 23,210, R-Rs 17,140,
B-Rs 15,000. BALANCE SHEET Total-Rs 82,850.
Discussion
602.

W and R are partners ina firm sharing profits in the ratio of 3 : 2. Their Balance Sheet as on 31st March, 2016 was as follows: On the above date, C was admitted for 1/6th share in the profits on the following terms: (i) C will bring RS.30,000 as his capital and RS.10,000 for his share of goodwill premium, half of which will be withdrawn by W and R. (ii) Debtors RS.1,500 will be written off as bad debts and a provision of 5% will be created for bad and doutful debts. (iii) Outstanding salarywill be paid off. (iv) Stock will be depreciated by 10% furniture by RS.500 and Plant and Machinery by 8%. (v) Investments RS.2,500 not mentioned in the Balance Sheet were to be taken into account. (vi) A creditor Journal entries for the above transaction in the books of the firm on C's admission.

Answer»

SOLUTION :



1. Unless agreed OTHERWISE, sacrificing ratio of OLD PARTNERS will be same as their old profit-sharing ratio.
Discussion
603.

Vineet was the Managing Director of Lalit Plastics Ltd. For the last six years the company had been consistently earning good profits. Vineet followed democratic style of leadership. He believed in giving respect to his subordinates by agreeing to their good suggestions. The company also opened a school for girls in the locality and also contributed towards the cleanliness of the locality. Following is the 'Comparative Statement of Profit and Loss' of Lalit Plastics Ltd. for the year ended 31st March, 2014:(i) Calculate Net Profit Ratio for the years ending 31st March, 2013 and 2014.(ii) Identify any two values which are being communicated to the society in the above case.

Answer»

SOLUTION :(Calculation of Net Profit Ratio:
Net Profit Ratio = `("Net Profit after Tax")/("Revenue from Operations")xx100`
For the year ended 31ST March, 2013
Net Profit Ratio = `("RS. 5,40,000")/("Rs. 12,00,000")xx100=45%`,
For the year ended 31st March, 2014
Net Profit Ratio = `("Rs. 7,20,000")/("Rs. 16,00,000")xx100=45%`
Values which are being communicated to the society:
•Social RESPONSIBILITY towards society.
•Sensitivity towards cleaner environment.
Discussion
604.

VKR Ltd. issued 975, 9% Debentures of Rs. 500 each on 14th March, 2016. Pass necessary Journal entries for the issue of debentures under thefollowing situations: (a) When debentures were issued at a premium of 10%redeemable at a premium of 6%. (b) When debentures were issued at per redeemable at 9% premium.

Answer»

Solution :(a) (i) DR. Bank A/c and Cr. Debentures Application and Allotment A/c by Rs. 5,36,250.
(ii) Dr. Debentures APPLICATIONS and Allotment A/c: Rs. 5,36,250 and Loss on Issue of Debentures Ac: Rs. 29,250,
Cr. 9% Debentures A/c: Rs. 4,87,500, SECURITIES Premium RESERVE A/c: Rs. 48,750, and
Premium on Redemption of Debentures A/c: Rs. 29,250.
(b) (i) Dr. Bank A/c and Cr. Debentures Application and Allotment A/c by Rs. 4,87,500.
(ii) Dr. Debentures Application and Allotment A/c: Rs. 4,87,500, and Loss on Issue of Debentures A/c: 43,875.
Cr. 9% Debentures A/c: Rs. 4,87,500, and Premium on Redemption of Debentures A/c: Rs. 43,875.
Discussion
605.

Voluntary retirement compensation paid to employees sample of extraordinary item for

Answer»

OPERATING ACTIVITIES
Investing Activities
Financing Activities
CASH and Cash Equivalent

Solution :Operating Activities
Discussion
606.

Voluntary retirement compensation paid to employees Example of extraordinary item for

Answer»

OPERATING ACTIVITIES.
Investing Activities
Financing Activites.
CASH and Cash Equivalents.

Solution :Operating Activities.
Discussion
607.

Vinod Papers Ltd., invited applications for issuing 1,00,000 shares of RS. 10 each at a premium of Rs. 4 per share payable as follows : {:("On Application","Rs. 4 (including premium Rs. 2)"),("On Allotment","Rs. 4 (including premium Rs. 2)"),("On First & Final Call","Rs. 6"):} Applications were received for 1,30,000 shares and pro-rata allotment was made to all applicants as follows : (i) Applicants for 80,000 shares were allotted 60,000 shares, and (ii) Applicants for 50,000 shares were allotted 40,000 shares. X, who belonged to the first category and was allotted 900 shares failed to pay the allotment and call money. Y, who belonged to the second category and who applied for 1,000 shares also failed to pay the allotment and call money. Their shares were forfeited and 1,400 of theforfeited shares were re-issued @ Rs. 9 per share as fully paid Re-issued shares included whole of Y's shares. Prepare Cash Book, journal entries and an opening Balance Sheet.

Answer»

Solution :Cash at Bank Rs. 13,97,600, Cash received on allotment Rs. 2,75,200, Balance of Share Forfeiture A/c Rs. 1,000, Capital Reserve Rs. 3,000, Balance of Securities Premium Reserve A/c Rs. 3,96,600, Total of Balance Sheet Rs. 13,97,600.
HINTS : (i) Securities Premium Reserve A/c will be debited in the entry of forfeiture.
(ii)`{:("Amount transferred to Capital Reserve :",,"Rs."),("Profit on 800 SHARES of Y",=,"2,400"),("Profit on 600 shares of X" =("Rs. 3,000")/("900 Shares")XX "600 Shares",=,ul("2,000")),(,,"4,400"),("Less : Loss on re-issue of 1,400 shares @ Rs. 1 each",,ul("1,400")),(,,ul(ul("3,000"))):}`
Discussion
608.

Vikas, Vishal and Vaibhav were partners in a firm sharing profits in the ratio of 2:2:1. The firm closes its books on 31st March every year. On 31st December, 2015 Vaibhav died. On that date his Capital Account showed a credit balance of Rs 3,80,000 and Goodwill of the firm was valued at Rs 1,20,000. There was a debit balance of Rs 50,000 in the Profit and Loss Account. Vaibhav's share of profit in the year of his death was to be calculated on the basis of the average profit of last five years. The average profit of last five years was Rs 75,000. Pass necessary Journal entries in the books of the firm on Vaobhav's death.

Answer»

Solution :

`{:(1."Calculation of Vaibhav's Share in PROFIT:",Rs),("Average Profit for the past 5 years","75,000"),("Profit up to the date of DEATH (31st December,2015)(Rs75,000"xx"9/12)","56,250"),("Vaibhav's share in profit (Rs56,250"xx"1/5)","11,250"):}`
2. `{:("Amount due to Vaibhav:","3,80,000"),("Credit BALANCE in Capital A/c","24,000"),("Share in Profit",underline"11,250"),(,"4,15,250"),("Less: Debit Balance of Profit and Loss Account (1/5th)","10,000"),("Total Amount due to Vaibhav",underline underline OVERLINE ("4,25,250")):}`
3. The amount due to Vaibhav is not paid, therefore, entry for transfer of his due amount to his Executors' Account is passed.
Discussion
609.

Vinay and Naman are partners sharing profits in the ratio of 4:1. Their capitals were Rs.90,000 and Rs. 70,000 respectively. They admitted Prateek for 1/3 share in the profits. Parteek brought Rs. 1,00,000 as his capital. Calculate the value of firm's goodwill.

Answer»

Solution :Prateek's share=1/3, Prateek's CAPITAL = RS. 1,00,000.
A. Bassed on Prateek's Capital, Total Capital of the firm will be
`=Rs.1,00,000 xx3//1=Rs.3,000,000`
B. Total EXISTING capital of Vinay, Naman and Prateek
= Rs. 90,000 + Rs. 70,000 + Rs. 1,00,000=Rs.2,60,000.
C. Value of Firm's Goodwill (A-B) = Rs.3,00,000-Rs.2,60,000=Rs.40,000.
Discussion
610.

Vikas and Vivek were partners in a firm sharing profits in the ration of 3:2. On 1st April, 2014 they admitted Vandana as a new partner for 1/8th share in the profits with a gauranteed profit of Rs 1,50,000. The new profit-sharing ratio between Vikas and Vivek will remain the same but they decided to bear any deficiency on account of guarntee to Vandana in the ratio 3:2. The profit of the firm for the year ended 31st March, 2015 was Rs 9,00,000. Prepare of Profit and Loss Appropriation Account of Vikas, Vivek and Vandana for the year ended 31st March, 2015.

Answer»

SOLUTION :Share or Profit, Vikas - Rs 4,50,000, VIVEK- Rs 3,00,000, and VANDANA -N Rs 1,50,000. Deficiency of Rs 37,500 in Vandana's share will be borne by Vikas and Vivek in the ratio of `3:2.`
Discussion
611.

Vikas Bank Ltd . Has outstanding 50,000, 5%Debentures ofRs.100 each redeemable at a premium of Rs.10 each . These debentures are to be redeemed . Amount that will be set aside out of profits to Debenture Redemption Reserve is

Answer»

Rs.50,00,000.
Rs.12,50,000.
Rs.25,00,000.
Nil

Answer :d
Discussion
612.

Vikas Bank Ltd. has outstanding 50,000, 5% Debentures of Rs 100 each redeemable at a premium of Rs 10 each. These debentures are to be redeemed. Amount that will be set aside out of profit to Debenture Redemption Reserve is

Answer»

RS 50,00,000
Rs 12,50,000
Rs 25,00,000
Nil

Answer :D
Discussion
613.

Vikasandvivekwerepartnersin a firmsharing profitsin theratioof 3:2On 1stApril2018they admittedVandana as anewpartners for 1/8sharein theprofits witha guranteedprofitswith guaranteedprofit ofRs. 1,50,000Newprofit - sharingratio betweenvikasand vivekwillremainsame buttheydecidedtobearany deficiency no account ofguranteeto vandanain theratio3:2profitofthe firmfor theyearended31st MArch, 2019WasRs. 9,00,000 Prepare profitand Lossappropriation Accountfo vikasVIvek and vandanafor theyearended31st March , 2019

Answer»


ANSWER :Deficiencyofvandana -RS,37,500Borneby VIKAS -rs. 22,500and vivek0Rs, 15,000shareof PROFIT: vikas -Rs. 4,50,000 vivek-Rs. 3,00,000vandana -Rs. 1,50,000
Discussion
614.

Venus Ltd., is a real estate company. To discharge its Corporate Social Responsibility, it decided to construt a night shelter for the homeless. The company took over assets of Rs. 10,000 and liabilities of Rs. 1,80,000 of Cayns, Ltd. for Rs. 7,60,000. Venus Ltd. issued 9% Debentures of Rs. 100 each at a discount of 5% in full satisfaction of the purchase consideration in favour of Cayns Ltd. Pass necessary Journal entries in the books of Venus Ltd. for the above transactions.

Answer»

SOLUTION :
Note: No. of DEBENTURES to be issued = RS. 7,60,000/Rs. 95 = 8,000 debentures.
Discussion
615.

Vedintendstoretirefromthe firm and desiriesthathissonDevbeinducted as a partnerinhisplace , partnershipDeedDoesnot have a clausein this respect .Suggesthow canDecbeinducted intothefirmas a partner .

Answer»

SOLUTION :Devcan beinductedas apartnerifand onlyif allpartners AGREE .
Discussion
616.

Value Trust was started bya a group of five persons For providing Night Shelter for homeless prople each donating Rs. 1,00,000. Response to the project was extremely good and many people wanted to avial the facility and there was need for Funds . A company approached the trustess making a proposalthat they will give a donation of Rs. 5,00,000 under their Corporate Social Responsibility (CSR) and would also give interest free loan of Rs 5,00,000. The trustess have raised queries whether the not-for-Profit Organisation can take loan for its ectivities and have requested your opinion and also accounting of loan.

Answer»


Solution :There is no bar on Not-for-Profit ORGANISATION to take loan for its operations. THEREFORE ,value Trust may take loan it it so desires . Loan taken by the Not-for-Profit organisation will have to returned by the end of the loan PERIOD and , therfore is a LIABILITY.
Discussion
617.

UTI Bank Ltd. Has outstanding 50,000, 5% Debentures of Rs. 100 each redeemable at a premium of Rs.10 each . These debentures are to be redeemed . Amount that should be invested in Debenture Redemption Reserve is

Answer»

Rs.7,50,000.
Rs.5,00,000.
Rs.50,000.
Nil

Answer :d
Discussion
618.

UTI Bank Ltd. has outstanding 50,000, 5% Debentures of Rs 100 each redeemable at a premium of Rs 10 each. These debentures are to be redeemed. Amount that should be invested in Debenture Redemption Reserve is

Answer»

RS 7,50,000
Rs 5,00,000
Rs 50,000
Nil

Answer :D
Discussion
619.

Usha ltd has a manufacturing base in rural area of andhra pradesh. As a corporate social responsibility it decided to join hands with municipal corporation in educating local population the advantage of cleanliness and contributed large amount in making the area clean following is its comparative balance sheet:

Answer»

SOLUTION :
Discussion
620.

Unrecorded liability, whenpaidondissolutionof a firmisdebited to :

Answer»

PARTNER's CAPITAL A/cs
Relisation A/c
Liabilities A/C
Asset A/c

Answer :B
Discussion
621.

Unrecorded liabilities when paid are debited to

Answer»

Realisation ACCOUNT.
Partner's Capital ACCOUNTS .
NONE of the above.

Solution :Realisation Account.
Discussion
622.

Unrecorded liabilities when paid are shown in:

Answer»

DEBIT of REALISATION ACCOUNT
Debit of BANK Account
CREDIT of Realisation Account
Credit of Bank Account.

Answer :A
Discussion
623.

Unrecorded assets when taken over by a partner are shown in :

Answer»

DEBIT of Realisation ACCOUNT
Debit of Bank Account
CREDIT of Realisation Account
Credit of Bank Account.

Answer :C
Discussion
624.

Unrecorded assets are

Answer»

Debited to REVALUATION ACCOUNT
CREDITED to Revaluation Account
Credited to Partner's CAPITAL Accounts
None of these

Solution :Credited to Revaluation Account
Discussion
625.

Unrecorded asset when realised is credited to

Answer»

RELISATION ACCOUNT.
Partner's Capital Accounts .
NONE of the above.

Solution :REALISATION Account.
Discussion
626.

United Commercial Bank Ltd. Is to redeem 40,000, 10% Debentures of Rs. 100 each on 31 st December , 2018. How much amount should it invest in specified securities?

Answer»

Rs.6,00,000.
Rs.10,00,000.
Rs.5,00,000.
Nil

Answer :d
Discussion
627.

Universe Ltd. Has 2,00,000, 9% debentures of Rs.50 each due for redemption in five equal annual instalments starting from March 31, 2015. Debentures Redemption Reserve has a balance ofRs.17,00,000. Record necessary journal entries.

Answer»

Solution :AMOUNT transferred to DEBENTURE Redemption Reserve Rs.8,00,000 on 31st March, 2014. Investment made for Rs.3,00,000 on 30th April, 2014 and ENCASHED on 31st March, 2019. One-fifth of DRR will be transferred to General Reserve each time on redemption of one-fifth debentures.
Discussion
628.

United Commerical Bank Ltd. is to redeem 40,000, 10% Debentures of Rs 100 each on 31st December, 2018. How much amount should it invest in specified securities ?

Answer»

RS 6,00,000
Rs 10,00,000
Rs 5,00,000
Nil

Answer :D
Discussion
629.

Unique Pictures Limited was registered with an authorised capital of Rs. 5,00,000 divided into 20,000 5% preference shares of Rs. 10 each and 30,000 equity shares of Rs. 10 each. The company issued 10,000 preference and 15,000 equity shares for public subscription. Calls on shares were made as under{:(,,"Equity Shares",,"Preference Shares"),(,,(Rs.),,(Rs.)),("Application",,2,,2),("Allotment",,3,,3),("First Call",,2.50,,2.50),("Second and Final Call",,2.50,,2.50):}All these shares were fully subscribed. All the dues were received except the second and final call on 100 equity shares and on 200 preference shares. Record these transactions in the journal. You are also required to prepare the cash book andbalance sheet.

Answer»

SOLUTION :

Discussion
630.

Under which type of activity will you classify 'sale of shares of another company' while preparing Cash Flow Statement?

Answer»

SOLUTION :While preparing Cash FLOW Statement, SALE of shares of another company will be CLASSIFIED under 'Investing Activity'.
Discussion
631.

Under which type of activity will you classify 'Refund of Tax Received' while preparing Cash Flow Statement?

Answer»

SOLUTION :OPERATING ACTIVITY.
Discussion
632.

Under which type of activity will you classify 'Proceeds from Sale of Patents' while preparing Cash Flow Statement?

Answer»

SOLUTION :INVESTING ACTIVITY.
Discussion
633.

Under which type of activity will you classify 'Proceeds from Sale of Investment' while preparing Cash Flow Statement?

Answer»

SOLUTION :INVESTING ACTIVITY.
Discussion
634.

Under which type of activity will you classify 'Proceeds from Sale of Buildings' while preparing Cash Flow Statement?

Answer»

SOLUTION :INVESTING ACTIVITY.
Discussion
635.

Under which type of activity will you classify 'Dividend Received by a Finance Company' while preparing Cash Flow Statement?

Answer»

SOLUTION :OPERATING ACTIVITY.
Discussion
636.

Under which type of activity will you classify 'Commission and Royalty Received' while preparing Cash Flow Statement?

Answer»

SOLUTION :OPERATING ACTIVITY.
Discussion
637.

Under which type of activity will you classify 'Cash Receipts from Debtors' while preparing Cash Flow Statement?

Answer»

SOLUTION :While preparing Cash FLOW STATEMENT, cash receipts from DEBTORS will be classified under 'Operating Activity'.
Discussion
638.

Under which sub-heads will the following items be placed in the Balance Sheet of a company as per revised Schedule VI, Part I of the Companies Act, 1956 (Schedule III, Part I of the Companies Act, 2013)? (i) Capital Reserve (ii) Bonds (iii) Loans repayble on Demand (iv) Vehicles (v) Goodwill (vi) Loose Tools

Answer»


SOLUTION :
Discussion
639.

Under which type of activity 'Interest paid on long-term borrowings' while preparing Cash Flow Statement?

Answer»

SOLUTION :INTEREST paid on long-term BORROWINGS' will be CLASSIFIED as Financing Activity.
Discussion
640.

Under which tool of financial analysis, 100% is taken as base and all other related figures are expressed as a percentage of base?

Answer»

ComparativeStatement.
COMMON - SIZE STATEMENT.
Ratio Analysis.
None of these.

Solution :Common - size Statement.
Discussion
641.

Under which sub-headings will the following items be shown in the Balance Sheet of a company as per revised Schedule VI, Part I of the Companies Act, 1956 (Schedule III, of the Companies Act, 2013)? (i) Stores and Spares (ii) Trademarks (iii) Short-term Borrowings (iv) Provision for Employees Benefit Long-term Investments (vi) Accrued Incomes

Answer»


Solution :(i) Inventories,
(II) FIXED ASSETS-Intangible Assets,
(iii) Current Liabilities/Short-term Borrowings,
(iv) Long-term Provisions,
(v) Non-Current Investments,
(VI) Other Current Assets.
Discussion
642.

Under which sub-headings will the following items be shown in the Balance Sheet of a company as per revised Schedule VI, Part I of the Companies Act, 1956 (Now Schedule III, Part I of the Companies Act, 2013)?(i) Long-term Loans(ii) Capital Redemption Reserve(iii) Short-term Provisions(iv) Goodwill(v) Provision for Warranties(vi) Brand/Trademarks

Answer»

SOLUTION :(i) Long-term Borrowings
(II) Reserves and Surplus
(iii) Short-term Provisions (Under Current Liabilities)
(IV) Fixed Assets-Intangible Assets
(V) Long-term Provisions
(vi) Fixed Assets-Intangible Assets
Discussion
643.

Under which sub-head will the following be classified or shown: (i) Long-term Borrowings, (ii) Deferred Tax Liabilities (Net), and (iii) Long-term Provisions?

Answer»

SOLUTION :Non-current LIABILITIES.
Discussion
644.

Under which major heads and sub-heads the following items will be placed in the Balance Sheet of a company as per revised Schedule VI, Part I of the Companies Act, 1956 (Schedule III, Part I of the Companies Act, 2013)? (i) Accured Incomes (ii) Loose Tools (iii) Provision for Employees Benefits(iv) Unpaid Dividend (v) Short-term Loans (vi) Longs-term Loans

Answer»


SOLUTION :
Discussion
645.

Under which major headings the following items will be presented in the Balance Sheet of a company as per Schedule III, Part I of the Companies Act, 2013? (i) Loans provided repayable on demand (ii) Goodwill (iii) Copyrights (iv) Loose Tools (v) Cheques (vi) General Reserve (vii) Stock of Finished Goods (viii) 9% Debentures repayable after three years

Answer»


SOLUTION :
Discussion
646.

Under which major headings and sub-headings will the following items be shown in the Balance Sheet of company as per Schedule VI, Part I of the Companies Act, 1956 (Now Sechdule III, Part I of the Companies Act, 2013)? (i) Net loss as shown by Statment of Profit and Loss (ii) Capital Redemption Reserve (iii) Bonds (iv) Loans repayable on demand (v) Unpaid dividend (vi) Buildings (vii) Trademarks (viii) Raw materials

Answer»


SOLUTION :
Discussion
647.

Under which major headings and sub-headings the following items will be shown in the Balance Sheet of a company as per Schedule III of the Companies Act, 2013? (i) Long-term Loans (ii) Loose Tools (iii) Trademarks (iv) Drafts in Hand

Answer»


SOLUTION :
Discussion
648.

Under which major headings and sub-headings the following items will be shown in the Balance Sheet of a company as per Sechdule III of the Companies Act, 2013? (i) Bank Ovredraft (ii) Cheques in Hand (iii) Loose Tools (iv) Long-term Provisions

Answer»


SOLUTION :
Discussion
649.

Under which major head will the following be shown: (I) Share Capital, and (ii) Money Received Aqainst Share Warrants?

Answer»


SOLUTION :(i) SHAREHOLDERS' FUNDS;
(II) Shareholders' Funds.
Discussion
650.

Under which main head and sub-head of Equity and Liabilities part of the Balance Sheet are the following items classified or shown: (i) Bonds, (ii) Debntures, (iii) Public Deposits,(iv) Capital Redemption Reserve, (v) Forfeited Shares Account, (vi) Sundry Creditors, and (vii) Interest Accrued but Not Due on Debentures?

Answer»

Solution :(i) Long-term Borrowings under Non-current Liabilities;
(ii) long-term Borrowings under Non-current Liabilities;
(iii) Long-term Borrowings under Non-current Liabilities;
(iv) Reserves and Surplus under Shareholders' FUNDS;
(v) SUBSCRIBED Capital under the sub-HEAD Share Capital under the MAIN head Shareholders' Funds (Shown by way of addition to Subscribed Capital);
(vi) Trade Payables under Current Liabilities;
(vii) Other Current Liabilities under Current Liabilities.
Discussion