Explore topic-wise InterviewSolutions in .

This section includes InterviewSolutions, each offering curated multiple-choice questions to sharpen your knowledge and support exam preparation. Choose a topic below to get started.

1501.

List the major heads of Statement of Profit and Loss shown as Income and Expenses.

Answer»


SOLUTION :N/a
Discussion
1502.

List any two items that need adjustment is boods of account f a firm at the time of admission of a partner.

Answer»

Solution :(i) ADJUSTMENT of Accumulated PROFITS, Losses and Reserves.
(ii) Adjustment of GOODWILL.
Discussion
1503.

List five items that are included in inventories.

Answer»


SOLUTION :N/a
Discussion
1504.

List any two Operating Activities which result into inflow of cash .

Answer»

Solution :(i) Cash SALES.
(II) Cash Received from TRADE RECEIVABLES.
Discussion
1505.

List any two grounds on which a court may dissolve a firm .

Answer»
Discussion
1506.

List any two financing activities that will result into outflow of cash.OrName any two financing activities that will result into outflow of cash.

Answer»

SOLUTION :(i) PAYMENT of dividend(ii) Cash repayment of amount BORROWED.
Discussion
1507.

List any two features of Income and Expenditure Account.

Answer»

Solution :(I) It is a Nominal Account. Only revenus EXPENSES, relating to the CURRENT year are debited to this account and only revenue incomes, related to the current year are credite to this account.
(ii) It has no poening balance. The closing balance, which is the balancing figure, is EITHER SURPLUS or DEFICIT,
Discussion
1508.

List any three modes of redemption of debentures.

Answer»

Solution :Debentures maybe REDEEMED by any of the following THREE MODES:
(i) Payment after stipulated period, i.e., payment in lump sum
(II) ANNUAL drawings or draw of lots, i.e., in instalments, or
(iii) Purchase of own debentures from open market. (Not in Syllabus)
Discussion
1509.

List any three items that can be shown under the heading 'Reserves and Surplus' in a company's Balance Sheet.OrList any four items of 'reserves' that are shown under the heading 'Reserves and 'Surplus' in the Balance Sheet of a company as per Schedule III of the Companies Act, 2013.

Answer»

SOLUTION :(i) Capital RESERVE,
(II) Capital Redemption Reserve,
(iii)DEBENTURES Redemption Reserve, and
(IV) Securities Premium Reserve.
Discussion
1510.

List any two attributes of information to be stored in Payroll data base.

Answer»

Solution : Attributes of information to be stored in PAYROLL data base: (Any TWO)
(i) Name
(II) ID
(iii) Designation
(iv) LOCATION
(v) Basic Pay
Discussion
1511.

List any three items each of the Balance Sheet of a company under the head 'Reserves and Surplus' and 'Current Liabilities'.

Answer»


SOLUTION :N/a
Discussion
1512.

List any three items each of the Balance Sheet of a Company under the head Current Assets and Current Liabilities as per Schedule III, Part I of the Companies Act, 2013.

Answer»


SOLUTION :N/a
Discussion
1513.

List any four items other than 'Stock-in-Trade' that are presented under the sub-headinventories' as per Schedule III of the Companies Act, 2013.

Answer»

SOLUTION :(i) Raw MATERIALS(ii) Work-in-Progress
(III) Finished Goods(IV) Stores and Spares.
Discussion
1514.

List any three improtant solvency ratios.

Answer»
Discussion
1515.

List any three difference between a Share anda Debenture.

Answer»

SOLUTION :
Discussion
1516.

List any three important Solvency Ratios.

Answer»

Solution :Important SOLVENCY Ratios are:
1. Debt to Equity RATIO,
2. Total Assets to Debt Ratio and
3. Proprietary Ratio.
Discussion
1517.

List any five items that are shown under Reserves and Surplus.

Answer»

Solution :i) Debentures REDEMPTION Reserve; ii) Securities Premium Reserve; iii) Surplus, i.e., Balance in Statement of PROFIT and Loss; IV) INVESTMENTS Fluctuation Reserve; and v) Workmen Compensation Reserve.
Discussion
1518.

Liquid Assets include:

Answer»

DEBTORS
BILLS RECEIVABLE
Bank BALANCE
All of the Above

Answer :D
Discussion
1519.

Liquid Assets:

Answer»

CURRENT Assets - Prepaid EXP.
Current Assets - INVENTORY + Prepaid Exp.
Current Assets - Inventory - Prepaid Exp.
Current Assets + Inventory - Prepaid Exp.

Answer :C
Discussion
1520.

Liquid Ratio is equal to liquid assets divided by :

Answer»

Non-Current LIABILITIES
Current Liabilities
TOTAL Liabilities
CONTINGENT Liabilities

ANSWER :B
Discussion
1521.

Liquid Assets do not include :

Answer»

BILLS RECEIVABLE
Debtors
Inventory
Bank BALANCE

Answer :C
Discussion
1522.

Life Membership Free received by NPO is accounted as

Answer»

REVENUE RECEIPT
CAPITAL Receipt
As an Assert
None of these

Solution :Capital Receipt
Discussion
1523.

Life Membership Fee received by NPO is accounted as

Answer»

REVENUE RECEIPT.
CAPITAL Receipt.
As an Asset.
None of These.

Solution :Capital Receipt.
Discussion
1524.

Leena, Madan and Naresh were partners in a firm sharing profits andlosses in the ratio of 2:2:3. On 31st March, 2015, their Balance Sheet was as follows: On 31st March, 2015, madan retired from the firm and the remaining partners decided to carry on the business. It was decided to revalue assets and liabilities as under: (i) Land and Building be appeciated by Rs 2.40,000 and Machinery be depreciated by 10% (ii) 50% of Investments were taken over by the retiring partner at book value. (iii) An old costomer Mohit whose account was aritten off as bad debt had promised to pay Rs 7,000 in settlement of his full debt of Rs 10,000. (iv) Provision for Doubtful Debts was to be made at 5% on debtors. (v) Closing Stock will be valued at market price which is Rs1,00,000 less than the book value. (vi) Goodwill of hte firm be valued at Rs 5.60,000 and Madan's share of goodwill be adjested in the accounts of Leena and Naresh. Leena and naredh decided to share future profits and losses in the ratio of 3:2. (vii) The total capital of the new firm will be Rs 32,00,000 which will be in the proportion of the profit-sharing ratio of Leena and naresh. (viii) Amount due to Madan was settled by accepting a Bill of Exchange in his favour payable after 4 months. Prepare Revaluation Account, Partners' Capital Account and Balance Sheet of the firm after Madan's retirement.

Answer»

Solution :
1. Calculation of Gain of each PARTNER:
Gain of a Partner = New Share - Old Share
Leena's Gain `=3//5-2//7=(21-10)/(35)=11//35,`
Naresh's Gain `=2//5-3//7=(14-15)/(35)=1//35^(**)`
`""^(**)"Negative"` result indicates that Naresh has sacrificed As Leena is the only GAINING partner, she wil COMPENSATE not only the ratiring partner (MADAN) buy also the sacrificing partner (Naresh).
2. Naresh's Share of Goodwill = `Rs 5,60,000xx1//35=Rs16,000.`
3. Madan's Share of Goodwill `Rs5,60,000xx2//7=Rs1,60,000.`
4. Capital of the PARNERS in the New Firm:
Leena's capital = Rs 32,00,000 `xx` 3/5 = Rs, 19,20,000, Naresh's capital = Rs 32,00,000 `xx` 2/5= Rs 12,80,000.
5.
6. Adjustment No. (ii), an old customer Mohit whose account was written off as bed debt has promised to pay Rs 7,000, is not to be treated as debtors, if this promise was in writing, it could be treated as debtor and Revaluation Account would have credited by Rs 7,000. And also, Amount of Provision for Doubtful Debts would have increased by Rs 350 (i.e., of Rs 7,000).
Discussion
1525.

Liability of a shareholder is limited to ……………… of the shares allotted to him :

Answer»

PAID up VALUE
Called up value
Face value
RESERVE PRICE

Answer :C
Discussion
1526.

Legacy Donation received by NPO to be used for specific purpose is accounted as

Answer»

REVENUE RECEIPT
CAPITAL Receipt
As an Assert
None of these

Solution :Capital Receipt
Discussion
1527.

Law does not provide that at the time of admission of a partner assets be revalued and liabilities reassessed. Why are the assets revalued and liabilities reassessed?

Answer»

Solution :When a partner is ADMITTED the assets are revalued and liabilities are reassessed. The gain (PROFIT) or loss, as the case may be is distributed among the OLD partners in their old profit-sharing RATIO. It is done with a REASON that the new partner is neither put to an advantege nor disadvantage because of increased value of assets or decreased liabilities and vice versa.
Discussion
1528.

Land and Building (book value) Rs.1,60,000 sold for Rs. 3,00,000 through a broker who charged 2% commission on the deal, Journalise the transaction, at the time of dissolution of the firm.

Answer»

SOLUTION :
Alternatively, REALISATION ACCOUNT be credited by Rs.3,00,000 being value realised for Building and Realisation Account be debited by Rs.6,000 being commission paid to BROKER.
Discussion
1529.

Land and Building (book value ).Rs 1,60, 000 sold for .Rs 3,00,000 througha broker who charged 2 % commission on the deal . Journalise the transaction, at time of dissolution of the firm .

Answer»

SOLUTION :
Discussion
1530.

Land and Buidling (book value) ₹ 1,60,000 sold for ₹ 3,00,000 through a broker who charged 2% commission on the deal . Journalise the transaction , at the time of dissolution of the firm .

Answer»
Discussion
1531.

Lalit, Pankaj and Rahul are partners sharing profits in the ratio of 4 : 3 : 3. After all adjustments, on Lalit’s retirement with respect to general reserve, goodwill and revaluation etc., the balances in their capital accounts stood at Rs. 70,000, Rs. 60,000 and Rs. 50,000 respectively. It was decided that the amount payable to Lalit will be brought by Pankaj and Rahul in such a way as to make their capitals proportionate to their profit sharing ratio. Calculate the amount to be brought by Pankaj and Rahul and record necessary journal entries for the same. Also record necessary entry for payment to Lalit. After Lalit’s retirement, the new profit sharing ratio between Pankaj and Rahul is 3 : 3, i.e. 1 : 1.

Answer»

Solution :a. Calculation of total capital of the new firm
BALANCE in PANKAJ’s Capital ACCOUNT (after adjustment) =60,000
Balance in Rahul’s Capital account (after adjustment) =50,000
Amount payable to Lalit (Retiring partner) =70,000
Total capital of new firm (i) + (ii) + (iii) = 1,80,000
B. Calculation of new capitals of the continuing partners
Pankaj’s New Capital =Rs. 1,80,000`xx (1)/(2)`= Rs. 90,000
Rahul’s New Capital =Rs. 1,80,000`xx (1)/(2)`= Rs. 90,000
c. Calculation of the amounts to be brought in or withdrawn by the continuing partners
Discussion
1532.

Lalit, Madhur and Neena were partners sharing profits as 50% 30% and 20% respectively. On 31st March, 2013 their Balance Sheet was as follows: On this date, Madhur retired and Lalit and Neena agreed to continue on the following terms: (i) The goodwill of the firm was valued at Rs 51,000. (ii) There was a claim for Workmen's Compensation to the extent of Rs 6,000. (iii) Investment were broutht down to Rs 15,000. (iv) Provision for bed debts was reduced by Rs 1,000. (v) Madhur was paid Rs 10,300 in cash and the balance was transferred to his lone account payable in two equal instalments together with interst @12% p.a. Prepare Revaluation Account, Partners' Capital Accounts and Madhur's Loan Account till the lone is finally paid off.

Answer»

SOLUTION :

`{:(,,Rs,Rs),("1.Investment FLUCTUATION Fund A/c",...Dr.,"10,000",),("Revaluation A/c",...Dr.,"15,000",),("To Investment A/c",,,"25,000"):}`
2.Madhu's SHARE of Goodwill `=Rs51,000xx3/10=Rs15,300,` which is contributed by LALIT and Neena in their gaining RATIO of `5:2.`
Discussion
1533.

L Ltd. Forfeited 470 equity shares of Rs. 20 each issued at a premium of Rs. 3 per share for the non-payment of allotment money of Rs. 8 (including premium Rs. 3) andfirst call ofRs. 5 per share. Final call of 5 per share was not made. Out of these, 235 shares were reissued at Rs. 19 each fully paid. Pass necessary Journal entries for the above transactions in the books of L Ltd.

Answer»

SOLUTION :
Discussion
1534.

L, P and G are three partners sharing profit in the ratio 15:9:8.Retires. L and P decided to share profits in equals ratio. Gaining ratio. Gaining ratio will be:

Answer»

`15:9`
`9:15`
`7:1`
`1:7`

ANSWER :D
Discussion
1535.

Kusum Steel Industries Ltd. issued 21,000, 71//2% Debentures of Rs.100 each on March 31, 2011 redeemable at a premium of 8% on 30th June, 2018. The Board of Directors decided to transfer the required amount to Debenture Redemption Reserve in three equal annual instalments starting with March 31, 2016. Record necessary journal entries regarding issue and redemption of debentures. Ignore entries relating to writing off loss on issue of debentures and interest paid thereon.

Answer»

SOLUTION :
Discussion
1536.

Kushal, Kumar and Kavita were partners in a firm sharing profits in the ratio of 3:1:1. On 1st April, 2012, their Balance Sheet was as follows: On the above date Kavita retired and the following was agreed: (i) Goodwill of the firm was valued at Rs 40,000. (ii) Land was to be appreciated by 30% and building was to be depreciated by Rs 1,00,000. (iii) Value of furniture was to be reduced by Rs 20,000. (iv) Bad Debts Reserve is to be increased to Rs 15,000. (v) 10% of the amount payable to Kavita was paid in cash and the balance was transfered to her Loan Account. (vi) Capitals of Kaushal and Kumar will be in proportion to their new profit sharing ratio. The surpuls/deficit, if any in their Capital Account will be adjusted through Current Accounts. Prepare Revaluation Account, Partner's Capital Account and Balance Sheet of Kushal and Kumar after Kavita's retirement.

Answer»

Solution :Loss on Revaluation-RS 5,000, Partners' Capital Accounts and KUSHAL-Rs 4,98,000, Kumar- Rs 1,66,000. Kavita's LONE Account-Rs 2,97,900. BALANCE SHEET Total-Rs 3,96,900. Kumar's Current Account -Rs 1,35,000 (Cr.), Kushal's Current Account-Rs 1,35,000 (Dr.).
Discussion
1537.

Kumar, Verma and Naresh were partners in a firm sharing profit and loss in the ratio of 3:2:2 . On 23rd January , 2015, Verma died. Verma's share of profit till the date of this death was calculated at Rs. 2,350. Pass necessary Journal entry for the same in the books of the firm.

Answer»

SOLUTION :
Discussion
1538.

Kumar, Lakshya, Manoj and Naresh are partners sharing profits in the ratio of 3 : 2 : 1 : 4. Kumar retires and his share is acquired by Lakshya and Manoj in the ratio of 3:2. Calculate new profit sharing ratio and gaining ratio of the remaining partners.

Answer»

Solution :`{:(,,"Lakshya","Manoj","Naresh",),((i),"OLD Share",(2)/(10),(1)/(10),(4)/(10),),((ii),"Acquired Share from Kumar",(3)/(5)"of"(3)/(10),(2)/(5)"of"(3)/(10),"Nil",),(,,=(9)/(50),=(6)/(50),"Nil",),((iii),"New share = (i) = (ii)",(2)/(10)+(9)/(50),=(1)/(10)+(6)/(50),=(4)/(10)+"Nil",),(,,=(19)/(50),=(11)/(50),=(20)/(50),):}`
The New Profit Sharing RATIO is `19:11:20`
Gaining ratio is `3:2:0`
Notes: 1. Since Lakshya and Manoj are acquiring Kumar'sshare of profit in the ratio of `3:2`, hence, the gaining ratio will be `3:2` between Lakshya and Manoj.
2. Naresh has neither sacrificed nor gained.
Discussion
1539.

Kumar, Gupta and Kavita were partners in a firm sharing-profits and losses equally. The firm was engaged in the storage and distribution of canned juice and its godowns were located at three different places in the city. Each godown was being managed individually by Kumar, Gupta and Kavita. Because of increase in business activities at the godown managed by Gupta, he had to devote more time. Gupta demanded that his share in the profits of the firm be increased, to which Kumar and Kavita agreed. The profit-sharing ratio wasto be 1: 2: 1 .For this purpose, goodwill of thefirmwasvalued at two year'spurchase of theaverageprofits of last five years. The profits of thelast five years were as follows: Youarerequired to : (a) Calculate the goodwill of the firm . (b)Pass necessaryJourbalentryfor the treatment of goodwillon changein profits-sharingratio of Kumar , Guptaand kavita.

Answer»

SOLUTION :(a) AverageProfit `=(₹(4,00,000 + 4,80,000 + 7,33,000- 33,000 + 2,20,000))/(5) = ₹3,60,000`
Gooddwill of the Firm= Average Profit `XX` No. of Year's Pruchase
= ₹ 3,60,000 xx 2 = ₹7,20,000.
(B)
Working Note : Calculationof SACRIFICE /(Gain ) of EachProfit -Sharing Ratio

Guptahas gained,so he willde debited by`2//12` of`₹ 7,20,00 = ₹ 1,20,000`
Kumarand kavita havesacrified, so theywill becredited by2/12 of ₹7,20,000 =₹ 60,000 (each).
Discussion
1540.

Kuber Ltd. On 1st April 2010 acquired assets of the value of Rs.7,00,000 and liabilities worth Rs.80,000 from Varun Ltd., at an agreed value of Rs.6,30,000. Kuber Ltd. Issued 10% Debentures of Rs.100 each at a premium of 5% in full satisfaction of purchase consideration. The debentures were redeemable on 31st October, 2015 at a premium of 4%. Pass journal entries to record the above including redemption of debentures.

Answer»

SOLUTION :GOODWILL Rs.10,000, Debentures ISSUED : 6,000 Debentures of Rs.100 each. DEBENTURE Redemption Reserve created for Rs.1,50,000, Debenture Redemption Investment Rs.90,000.
Discussion
1541.

Krishna and Suresh were partners in a firm sharing profits in the rotio of 3:1. On 1st April, 2015 they admitted Rahul as a new partner for 1/5th share in profits of the firm. On the date of Rahul's admission othe Balance Sheet of Krishna and Suresh showed a General Reserve of Rs 1,20,000, a debit balance of Rs 60,000 in Profit and LossA/c and Workmen Compensation Found of Rs 1,50,000. The following was agreed upon a Rahul's admission: (1) Rahul will bring Rs 1,50,000 as his share of goodwill premium in cash (ii) Goodwill of the firm be valued at Rs 2,40,000. (iii) There was a calim of Workmen Compensation for Rs 1,70,000. (iv) The partners decided to share future profits in the ratio of 3:1:1. Pass the necessary Journal entries for the above on Rahul's admission.

Answer»

Solution :(i) Dr. GENERAL Reserve A/c: RS 1,20,000,
Cr. Krishna's Capital A/c Rs 90,000 and Suresh's Capital A/c, Rs 30,000.
(II) Dr. Krishna's Capital A/c: Rs 45,000 and Suresh's Capital A/c Rs 15,000,
Cr. Profit and LOSS A/c: Rs 60,000.
(iii) Dr. Workmen Compoensation Fund A/c: Rs 1,50,000 and Ravaluatino A/c Rs 20,000,
Cr. Workmen Compensation Claim A/c: Rs 1,70,000.
(iv) Dr. Krishna's Capital A/c Rs 15,000 and Suresh's Capital A/c: Rs 5,000,
Cr. Revaluation A/c: Rs 20,000.
(v) Dr. Cash/Bank A/c: Rs 1,98,000.
Cr. Rahul's Capital A/c: Rs 1,15,000 and PREMIUM for Goodwill A/c: Rs 48,000.
(vi) Dr. Premium for Goodwill A/c: Rs 48,000,
Cr. Krishna's Capital A/c: Rs 36,000 and Suresh's capital A/c: Rs 12,000.
Discussion
1542.

KS Ltd.invited applications for issuing 1,60,000 equity shares of Rs. 10 each at a premium of Rs. 6 per share. The amount was payable as follows: On Application - Rs. 4 per share (Including premium Rs. 1 per share), On Allotment - Rs. 6 per share (Including premium Rs. 3 per share), On First andFinal Call - Balance. Applications for 3,20,000 shares were received. Applications for 80,000 shares were rejected and application money refunded. Shares were allotted on pro rata basis to theremaining applicants. Excess money received with applications was adjusted towards sums due on allotment. Jain holding 800 shares failed to pay the allotment money. His shares were forfeited immediately after allotment. Afterwards, the final call was made. Gupta who had applied for 1,200 shares failed to pay the final call. These shareswere also forfeited. Out of the forfeited shares, 1,000 shares were reissued at Rs. 8 per share fully paid-up. The reissued shares included all theforfeited shares of Jain. Pass necessary Journal entries for theabove transactions in the books of KS Ltd.

Answer»

Solution :

Working NOTES:
`{:(" 1. Amount received on Allotment:",Rs.),("Amount due on allotment (1,60,000"xx"Rs.6)","9,60,000"),("LESS: Amount appropriated from shares application","3,20,000"),(,BAR(6,40,000)),("Less: Amount not received on 800 shares(Rs.6,40,000"xx"800/1,60,000)","3,200"),("Amount received",bar(UL(ul(6,36,800)))):}`
2. Amount received and appropriated on 800 shares:
Shares allotted to Gupta = 800
`{:("Shares applied by Gupta =800"xx"2,40,000/1,60,000 = 1,200",,Rs.),("Amount received on Application (1,200"xx"Rs.4)",,"4,800"),("Less: Appropriated out of Shares Application Money on Share Capital (800"xx"Rs.3)","Rs.2,400",),("Appropriated out of Shares Application Money on Securities Premium (800"xx"Rs.1)"," "ul(Rs.800),"3,200"),("Excess Shares Application Money adjusted on allotment",,bar(ul(ul(1,600)))),("Amount due on shares allotment:",,):}`
`{:(,,"Share Capital",,"Securities Premium"),("Amount due on allotment towards",,"(800"xx"Rs.3)2,400",,"(800"xx"Rs. 3)2,400"),("Less: Excess Shares Application Money",,"1,600",,...),("Amount to be reversed (Not Received)",,bar(ul(ul(" "800))),,bar(ul(ul(2,400)))):}`
Excess Application Money is first appropriated towards Share Capital and balance, if any, towards Securities Premium. Hence, excess application money is appropriated towards Share Capital only, as there is no balance left thereafter.
`{:(,,Rs.),(" 3. Amount forfeited on shares reissued of Jain",,"4,000"),("Amount forfeited on shares reissued out of Gupta's shares"("Rs." 4,800xx(200)/(800)),,(1,200)/(5,200)),("Less: Discount on reissue (1,000"xx"Rs. 2)",,"2,000"),("Gain on reissue to be transferred to Capital Reserve",,bar(ul(ul(3,200)))):}`
Discussion
1543.

Kinley Ltd. has a credit balance of Rs. 10,00,000 in Securities Premium Reserve. It did not earn profit during the year and thus was unable to declare dividend. Amit, the accountant of the company, suggested that Securities Premium Reserve of Rs. 10,00,000 may be used for payment of dividend. However, auditor of the company advised against such utilisation of the reserve. What must have been the reason for this advice ?

Answer»

Solution :The auditor's advice must have been based on the provisions of Section 52(2) of the Companies Act, 2013 which prescribesthe purposes for which Securities Premium Reserve can be utilised. The Companies Act, 2013 which prescribes the purposes for which Securities Reserve can be utilised. The purposes are:
(i) Issuing fully paid bonus shares to the members,
(ii) Writing off preliminary expenses,
(III) Writing off the expenses of , or the commission paid or discount ALLOWED on any issue of securities or DEBENTURES of the COMPANY,
(iv) Writing off premium payable on redemptionof Redeemable Preference Shares or of Debentures of thecompany, and
(v) Purchasing its own shares.
Since, the Act does not allow utilisation of the reserve for dividend,the auditor must have advised the management not to use the reserve for payment of dividend.
Discussion
1544.

Khyati Ltd.issued a prospectus inviting applications for 80,000 equity shares of Rs. 10 each payable as follows : Rs. 2 on application Rs. 3 on allotment Rs. 2 on first call Rs. 3 on final call Applications were received for 1,20,000 equity shares. It was decided to adjust the excess amount received on account of over subscription till allotment only. Hence allotment was made as under : (i) To applicants for 20,000 - in full (ii) To applicants for 40,000 - 10,000 shares (iii) To applicants for 60,000 shares - 50,000 shares Allotment was made and all shareholders except Tammana, who had applied for 2,400 shares out of the froup (iii), could not pay allotment money. Her shares were forfeited immediately after allotment. Another shareholder Chaya, who was allotted 500 shares out of group (ii), failed to pay first call. 50% of Tamanna's shares were reissued to Satnaam as Rs. 7 paid up for payment of Rs. 9 per share. Pass necessary journal entries in the books of Khyati Ltd. for the above transactions by opening calls in arrears and calls in advance account wherever necessary.

Answer»

SOLUTION :

Discussion
1545.

Keshav, Nirmal and Pankaj are partners sharing profits and losses in the ratio of 4:3:2. Nirmal retires and the goodwill is valued at Rs. 72,000. Keshav and Pankaj decided to share future profits and losses in the ratio of 5:3. Record necessary journal entries (a) when goodwill is raised at its full value and written off immediately (b) when goodwill is not to appear in firms books at all.

Answer»

Solution :(a)When Goodwill is raised and written-off

(b) When goodwill is not to appear in firm's books at all
Working Notes
1. Vimal's SHARE of goodwill = Rs. `72,000xx(3)/(9)` = Rs. 24,000
2. CALCULATION of Gaining RATIO
Gaining Share = New Share - Old Share
Keshav's Gaining Share = `(5)/(8)-(4)/(9)=(13)/(72)`
Pankaj's Gaining Share = `(3)/(8)-(2)/(9)=(11)/(72)`
Hence. Gaining Ratio between Keshav and Pankaj is 13:11 i.e. `(13)/(24):(11)/(24)`
Discussion
1546.

Kavya, Manya and Navita were partners sharing profits as 50%30% and 20% respectively. On 31st March, 2016 their Balance Sheet stood as follows: On the above date, Sameer retired and Navita agreed to continue the business on the following terms: (a) Firm's goodwill was valued at Rs 60.000 and Navita agreed to continue the business on the following terms: (b) There was a claim for Workmen's Compensation to the extent of Rs 4,000. (c) Investments were revalued at Rs 2,13,000. (d) Fixed Assets were to be depreciated by 10% Kavya was to be paid Rs 20,000 throuth a back draft and the balance was together with interest @10% p.a. Prepare Revaluation Account, Parteners' Capital Accounts and kavya's Loan Account till it is finally paid.

Answer»

Solution :

WORKING Notes:
1. Unless agreed OTHERWISE gaining ratio of remaining partners will be the same as their old profit-sharing ratio (In the given question, it is `3:2`).
2. Kavya's share of GOODWILL `=Rs 60,000xx5//10=Rs 30,000,` which is contributed by Manya and NAVITA in their gaining ratio. Thus,
Manya's contribution `=Rs30,000xx3//5=Rs18,000,`
navita's contribution `=Rs30,000xx2//5=Rs12,00`
Discussion
1547.

Karan, Nakul and Asha were partners in a firm sharing profits and losses in the ratio 3 : 2 :1. At the time of admission of a partner the goodwill of the firm was valued at RS.2,00,000. The accountant of the firm passed the entry in the books of accounts and thereafter showed goodwill at RS.2,00,000 as an asset in the Balance Sheet. Was he correct in doing so? Why?

Answer»

Solution :The accountant's decision is not correct because according to AS-26, goodwill should be accounted in the BOOKS only when consideration in MONEY or money's worth has been PAID for it.
Discussion
1548.

Khushboo Ltd. issued for Public subscription 50,000 equity shares of Rs. 10 each at a premium of 30% payable as under : Rs. 4 on application Rs. 5 on allotment (including premium) Rs. 4 on first & final call Applications were received for 1,00,000 shares. Allotment was made pro-rata to the applicants for 80,000 shares, the remaining applications being refused. Money overpaid on applications was utilised towards sums due on allotment. Chatterjee, to whom 1,000 shares were allotted, failed to pay the allotment and call money and the shares subsequently forfeited. Half of the forfeited shares were reissued as fully paid at a discount of 10%. Show the journal entries to record the above transactions.

Answer»

Solution :Amount received on allotment RS. 1,27,400, Capital Reserve Rs. 2,500.
Hints : (i) Out of excess application money of Rs. 2,400, the amount of Rs. 2,000 is a PART of share capital and BALANCE of Rs. 400 is a part of SECURITIES premium.
(ii) Entry for forfeiture of shares :
`{:("Equity Share Capital A/c","Dr.10,000"),("Securities Premium Reserve A/c (3,000-400)","Dr.2,600"),("To Equity Share Allotment A/c","2,600"),("To Equity Share First & Final Call A/c","4,000"),("To Share Forfeiture A/c","6,000"):}`
Discussion
1549.

Kaveri Ltd. Issued 50,000, 8% Debentures of Rs.100 each at par on Oct. 1, 2012 redeemable on March, 31, 2016. It was decided to invest 15% of the face value of debentures to be redeembed towards Debenture Redemption Investment on 30th April, 2015. Debentures were redeemed on due date. Record necessary entries for issue and redemption of debentures.

Answer»

Solution :Debenture REDEMPTION Reservecreated for Rs.12,50,000 on March 31,2015. Debenture Redemption INVESTMENT MADE for Rs.7,50,000 on 30th April, 2015.
Discussion
1550.

Karam Singh and Suleman decided to start a partnership firm to manufacture low cost paper bags from the waste paper as plastic bags were caeating many environmental problems. For this, they contributed capitals of Rs 20,00,000 and Rs 1,00,000 respectively on 1st April, 2012 Suleman also expressed his willingness to admit Inderjeet as a partner without capital in the firm. Inderjeet is specially abled but a very creative and intelligent friend of his. Karam singh agrccd to this. The terms of partnership were as follows: (i) Karam Singh, Suleman and Inderjeet will share profits in the ratio 2:2:1. (ii) Interest on capital will be provided @6%p.a. Due to shortage of capital, Karam Singh contributed Rs 50,000 on 30th September, 2012 and Suleman contributed Rs 20,000 on 1st January, 2013 as additional capital. The profit of the firm for the year ended 31st March, 2013 was Rs 2,00,300. Prepare Profit and Loss Appropriation Account for the year ending 31st March, 2013.

Answer»

Solution :SHARE of PROFIT: Karam SINGH - Rs 72,200, Sulemsn - Rs 72,200, and INDERJEET- Rs 36,100.
Discussion