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2651.

An Example of cash flow from financing activity is :

Answer»

Payment of DIVIDEND
Receipt iof dividend on INVESTMENT
CASH RECEIVED from customer
PURCHASE of fixed asset

Answer :A
Discussion
2652.

An example of Cash Flow from Operating Activity is:

Answer»

Cash RECEIPTS from SALE of GOODS and SERVICES
Sale of long-term INVESTMENTS
Interest Received
Issue of Debentures

Answer :A
Discussion
2653.

An example of an activity which is classified as financing activity in case of all enterprise is:

Answer»

PAYMENTOF SALARIES
Paymentof DIVIDED on SHARES
Purchase of GOODWILL
PaymentInterset on Borrowings.

Solution :Paymentof Divided on Shares
Discussion
2654.

An enterprise may hold securities and loans for dealing or trading purposes in which case they are similar to inventory acquired specifically for resale.' Is the statement correct? Cash flows from such activities will be classified under which type of activity while preparing Cash Flow Statement?

Answer»

Solution :The statement that 'An enterprise MAY hold securities and loans for dealing or trading PURPOSES in which case they are similar to inventory ACQUIRED specifically for resale' is correct for financial companies.
CASH flows from such activities will be classified under Operating Activities while preparing Cash Flow Statement.
Discussion
2655.

An Annual Report is issued by a company to its:

Answer»

Director
Auditors
Shareholders
Management

Answer :C
Discussion
2656.

Amrit Ltd. has issued 5,00,000 Equity Shares of Rs. 10 each for subscription. All the calls were made and amount were received on due dates expect allotment amount of Rs. 2 per share and first and final call of Rs. 3 per share on 5,000 shares. The accountant suggests that the amount of calls-in-arrears must be transferredto Calls-in-Arrears Account. Is theaccountant stating correctly ?

Answer»

Solution :No, it is not compulsory for the company to TRANSFER the amount of Rs. 25,000 to Calls-in-Arrears ACCOUNT, it can retain the amount not received on ALLOTMENT (Rs. 10,000) in Shares AllotmentAccount and amount not received on FIRST and final call (Rs. 15,000) in Shares First and Final Call Account.
Discussion
2657.

Amrit Ltd., issued 50,000 shares of Rs. 10 each at a premium of Rs. 2 per share payable as Rs. 3 on application, Rs. 4 on allotment (including premium), Rs. 2 on first call and the remaining on second call.Applications were received for 75,000 shares and a pro-rata allotment was made to all the applicants. All moneys due were received except allotment and first call from Soun who applied for 1,200 shares. All his shares were forfeited. The forfeited shares were reissued for Rs. 9,600. Final call was not made. Pass the necessary journal entries.

Answer»

Solution :Amount received on ALLOTMENT RS. 1,23,000, CAPITAL RESERVE Rs. 3,600.
Discussion
2658.

Amrit Dhara Ltd.' invited applications for issuing 80,000 Equity Shares of Rs. 10 each. The amount was payable as follows: {:("On application and allotment",,-,,"Rs. 2 per share,"),("On first call",,-,,"Rs. 4 per share,"),("On second and final call",,-,,"the balance."):} Applications for 1,00,000 shares were received. Shares were allotted on pro rata basis to all the applicants. Excess money received with applications was adjusted towards sums due on first call. Manohar who had applied for 2,000 shares failed to pay the first call and his shares were immediately forfeited. Aftcrwards cecond and final call was made. Mohan who was allotted 2,400 sharesfailed to pay thesecond and final call. His shares were also forfeited. All the forfeited shares were reissued at Rs. 9 per share as fully paid-up. Pass necessary Journal entries in the books of the company for the above transactions.

Answer»

SOLUTION :
Working Nots:
Number of SHARES allotted to Manohar = `(80,000)/(1,00,000) xx 2,000` = 1,600 shares.
(a) Application and Allotment Money paid by Manohar = `2,000 xx Rs. 2 = Rs. 4,000`.
(b) Application and Allotment Money required `=1,600 xx Rs. 2 = Rs. 3,200`.
(C) Surplus application and allotment money [(a)-(b)] =Rs.4,000 - Rs. 4,000 - Rs. 3,200 = Rs. 800.
(d) First CALL money due on 1,600 shares = ` 1,600 xx Rs. 6,400`.
(e) Calls-in-Arrears `[(a)-(c)] = Rs. 6,400- Rs. 800 = Rs. 5,600`.
Discussion
2659.

Amrinder, Mahinder and Joginder are partners in a firm. Mahinder retires from the firm. On his date of retirement, Rs. 60,000 becomes due to him. Amrinder and joginder promise to pay him in instalments every year at the end of the year. Prepare Mahinder's Loan Account in the following cases: 1. When payment is made four yearly instalments plus interest @ 12% p.a. on the unpaid balance.

Answer»

Solution : (a) When payment is made in four yearly instalments plus INTEREST


(b) When payment is made in three yearly instalments of RS. 20,000 each including interest.
(c ) When payment is made in four EQUAL yearly instalmentsincluding interest `@ 12%` (Annually).

Note:The annual instalment of payment in 4 years `@ 12%` interest works out at Rs. 19,754 (Annually of Rs. 0.329234 as per Annually Table x 60,000).
It may noted that the accounting treatment for disposal of amount due to retiring partner and deceased partner is similar with a difference that in case of DEATH of a partner, the amount credited to him/her is transferred to his EXECUTORS’ Account and the payment has to be made to him/her. This shall be taken up later in this chapter.
Discussion
2660.

Amrit Ltd. issued a prospectus inviting applications for 20,000 shares at a premium of Rs. 2 per share payable as follows : {:("On Application","Rs. 5 (including premium)"),("On Allotment","Rs. 4"),("On Call","Rs. 3"):} Applications were received for 30,000 shares and pro-rata allotment made on applications for 24,000 shares. Excess money paid on applications for these shares was utilised towards allotment money. Atul, who applied for 600 shares failed to pay the allotment money and on his subsequent failure to pay the cll, his shares were forfeited. Pass the necessary entries in the books of Amrit Limited.

Answer»

Solution :Amount received on allotment Rs. 58,500, Balance of Share Forfeiture A/c Rs. 2,000.
Hint : (1) As Atul had APPLIED for 600 Shares,
he must have been ALLOTTED `600xx(20,000)/(24,000)=500` shares.
(2) Entry for the forefeiture of shares :
`{:("Share Capital A/cDr.5,000",),("To Share Allotment A/c","1,500"),("To Share Ist & Final CALL A/c","1,500"),("To Share Forfeiture A/c","2,000"):}`
Discussion
2661.

Amount received from sale of unrecorded asset at the time of dissolution of the firm is credited to

Answer»

PARTNER's CAPITAL Accounts
Profit and LOSS ACCOUNT
REALISATION Account
Cash Account

Solution :Realisation Account
Discussion
2662.

Amount received from sale of grass by a club should be treated as:

Answer»

Capital RECEIPT
REVENUE Receipt
ASSET
EARNED Income

Answer :B
Discussion
2663.

Amount of Calls inAdvance is

Answer»

ADDED to SHARE Capital
Deducted from Share Capital
Shown on the Assets side
Shown on the EQUITY & LIABILITIES side

Answer :D
Discussion
2664.

Amount left after deducting gross profit from Revenue from Operations is generally :

Answer»

COST of REVENUE from Operations
Material consumed
Opening INVENTORY+ PURCHASES -CLOSING Inventory
All of the above

Answer :D
Discussion
2665.

Amount is set aside to Debentures Redemption Reserve (DRR) by

Answer»

All the COMPANIES
All companies except BANKING Company
All companies except All India FINANCIAL Institutions regulated by RBI
All companies except Banking Company and All India Financial Insititutions regulated by RBI

Solution :All companies except Banking Company and All India Financial Insititutions regulated by RBI
Discussion
2666.

Amount isset aside to Debenture Redenption Reserve (DRR) by

Answer»

All the companies.
All companies EXCEPT Banking COMPANY.
All companies except all INDIA Financial INSTITUTIONS regulated RBI.
All companies except banking Company and All india Fianncial institutions regulated by RBI.

Solution :All companies except banking Company and All india
Discussion
2667.

Amount is not set aside to Debenture Redemption Reserve (DRR) if

Answer»

The DEBENTURES are not CONVERTIBLE
The debentures are PARTLY convertible
The debentures are FULLY convertible
None of these

Solution :The debentures are fully convertible
Discussion
2668.

Amount isnotinvested in Debentures Redemption investment (DRI) by

Answer»

All the companies.
All those companies which are REQUIRED to SET ASIDE amount to Debenture Redemption Reserve.
Both (a) and (b)
None of these.

Solution :All those companies which are required to set aside amount to Debenture Redemption Reserve.
Discussion
2669.

Amount is not invested in Debenture Redemption Investment (DRI) if

Answer»

The DEBENTURES are not CONVERTIBLE
The debentures are PARTLY convertible
The debentures are FULLY convertible
None of the above

Solution :The debentures are fully convertible
Discussion
2670.

Amitabh and Babul are partners sharing profits in the ratio of 3:2, withcapitals of Rs. 50,000 and Rs. 30,000 respectively. Interest on capital is agreed @ 6% p.a. Babul is to be allowed an annual salary of Rs. 2.500. During the year 2016-17, the profits prior tothe calculation of interest on capitall but after charging Babul's salary amounted to Rs. 12,500. A provision of 5% of the profit is to be made in respect of commission to the Manager. Prepare Profit and Loss Appropriation account showingthedistribution of profit and the partners' capital accounts for the year ending March 31, 2017.

Answer»

SOLUTION :
Discussion
2671.

Amount is invested in Debentures Redemption Investment (DRI) by

Answer»

All the companies
All those companies which are REQUIRED to set ASIDE AMOUNT to Debenture Redemption RESERVE
Both (a)and (b)
NONE of the above

Solution :All those companies which are required to set aside amount to Debenture Redemption Reserve
Discussion
2672.

Amit, Babu and Charu set up a partnership firm on April 1, 2015. They contributed Rs. 50,000, Rs. 40,000 and Rs. 30,000, respectively as their capitals and agreed to share profitsand losses in the ratio of 3:2:1. Amit is to be paid a salary of Rs. 1,000 per month and Babu, a Commission of Rs. 5,000. It is also provided that interest to be allowed on capital at 6%p.a. The drawings for the year were Amit Rs. 6,000, Babu Rs. 4,000 and Charu Rs. 2,000. Interest on drawings of Rs. 270 was charged on Amit's drawings, Rs. 180 on Babu's drawings and Rs. 90, on Charu's drawings. The net profit as per Profit and Loss Account for the year ending March 31,2015 was Rs. 35,660. Prepare the Profit and Loss Appropriation Account to show the distribution of profit among the partners.

Answer»

SOLUTION :
Discussion
2673.

Amit, bimalandchamanare partners sharingprofitsand lossesequally Amitand chamanhavegivenloanto thefirmon1stOctober , 2018of Rs. 1.00.000and Rs, 1.50.000 respectively. Itisagreedthatinterest @ 9 %p.awillbe paidon loanBooksofaccountof thefirmareclossedon31 stMarchevery year . Interest on loanis yetbe paidas on31 stMarch, 2019pass Journalentries in thebooksofaccountof thefirm andprepareladgeraccountsof thwotwopartners.

Answer»

SOLUTION :
Discussion
2674.

Amit and Kartik are partners sharing profits and losses equally. They decided to admit Saurabh for an equal share in the profits. For this purpose goodwill of the firm was to be valued at four year's purchase of super profits. Balance Sheet of the firm on Saurabh's admission was as follows: The normal rate of return is 12% per annum. Average profit of the firm for the last four years was Rs 30,000. Calculate Saurabh's share of goodwill.

Answer»

Solution :AVERAGE Profit = Rs 30,000
Capital Employed or Net Assets = All assets (other than GOODWILL, fictitious assets and non-trade INVESTMENTS) at their current values less Outsiders' liabilities
= Rs 1.90,000- Rs 25,000 - Rs 5,000 = Rs 1,60,000
Normal Profit = Average Capital Employed `xx` Normal Rate of Return /100
`=Rs 1,60,000xx12//100=Rs19,200`
Super Profit = Average Profit - Normal Profit
`=Rs30,000 - Rs19,200 = Rs 10,800`
Goodwill = Super Profit `xx` No. of Years' Purchase
`=Rs 10,800xx4=Rs43,200`
SAURABH's share of Goodwill `=Rs 43,200xx1//3=Rs14,400.`
Discussion
2675.

Amitand vijaystarteda partnershipbusinesson 1st April, 2018theircapitalcontributionswereRs. 2,00,000andRs, 1,50,000respectively,theDeedprovidedas follows: (A)interest n capials be allowed@ 10% p.a (b)amitto geta salaryof Rs. 2,000 per month and vijayRs. 3,000per month . (c )Profitare tobeshared in theratioof 3:2 Net profit foryearended13st MArch,2019was Rs. 2,16,000 intereston amountedto Rs. 2,200for amitandRs. 2,500 forvijay. prepareprofitand lossappropriationAccount .

Answer»


Answer :shareof PROFIT;AMIT -RS.75,420: VIJAY -rs. 50,280
Discussion
2676.

Amitand Sumitare partners in firmsharing profitin the ratio of 2: 1 . It wasdecided bythem to sharpeprofits equallyw.e.f 1st April, 2019. Calculatethe Sacrificing and Ganing Ratio.

Answer»

Solution :New Profits-Shraingratio = 1:1
Calculation of Sacrifice/(Gain) of EACHPARTNER:
Scarifced SHARE = OLD Share- New Share
AMIT`= (2)/(3)-(1)/(2) = (4-3)/(6) = (1)/(6)` (i.e., Sacrifice)
Sumit`= (1)/(3) -(1)/(2)= (2-3)/(6) = (1)/(6)`(i.e., Gain)
Discussion
2677.

Ambrish, lalitandcharu arepartnersin afirm , theydo nothavea partnershipDeed . (I)Ambrishwhohascontributedmorecapitalthanotherparthnersdemandsinterestoncapitalat 10%p.a ButLalitandCharu donotagree withhim . (ii)Lalithasdevotedhisfulltimein thebusiness anddemandsa salary of Rs 5.000 p.m butambirshand charu do notagreewithhim . , (iii)charudemands interest on theloan of Rs . 50.000 advancedby herat themarket rateinterest i.e.,@ 12 %P.a (iv)Ambrishhasdrawn Rs. 10.000 fromthefirmfirmforpersonaluseLalid andcharudemand thatinterest shouldbecharged! 10%perannum . (v) profitbeforetakingintoaccountany of theaboveclaimsamountedto Rs. 50.000 at theendof thefirstyearof thebusinessAmbrishdemandsshareof profitin thecapitaltario . Howwillthedisputesbesettled?

Answer»

Solution :Thepartnersdo nothavea partnership Deedtherefore, provisionsof theindianpartnershipAct , 1932willapplyto settlethedisputes :
(i)INTERESTON capitalis notpayableto anyparthertherefore,Ambrishwillnot getintereston thecapital .
(ii)Remunerationis notpayableto anyparther, thereforeLalit will not getsalary.
(III)intereston parther'sLoanis payable@ 6 %p.atherefore, charu will interestRs. 3.000(i.e.,Rs. 50.000`xx`6/100).
(IV)INterestin Ambrish 'sDrawingwillnot becharged . ltbr. (v)profitafterinterestin chru'sLoan, i.e.,Rs. 47.000 isto bedistributedequally .
Discussion
2678.

Amar,Tarunand Akhilare partners sharing profits and losses in the ratioof 5:3:2. Their Balance Sheetas at 31st March, 2019 was follows: Profit-sharing ratio amongthe partners was agreed to be 2:2:1 w.e.f 1st April, 2019. Theyagreed to the following : (i)Stockto be increased to ₹2,20,000. (ii)Provisionfor DoubtfulDebts tobe reduced by ₹2,000. (iii) Furniture to bereduced to%20. (iv) Computers to be reduced to₹2,70,000. (v) Goodwillof the firm is valued at ₹1,00,000. The partners decided tocarrythe assetsand liabilities at theirexistingvalues. Theyalso decided that Reserves andProfitand Loss Account balance be carried at thesame values. Pass an Adjustment entrygivingeffect to the abovearrangementand prepare Balance Sheet after adjustments.

Answer»

Solution :
Working note

2. Calculation ofSacrifice/(Gain) of EACHPARTNER:
`{:(,,"Amar","Tarun","AKHIL"),(,"OLD Share",5//10,3//10,2//10),(,"New Share",2//5,2//5,1//5),(,"Sacrifice/(Gain) = Old Share -New Share",=(5-4)/(10),=(3-4)/(10),=(2-2)/(10)),(,,=1//10,=-1//10,"Nil"),(,,"Sacrifice","(Gain)",),(,"Proprtion AMOUNT to be Adjueted","₹19,200(Cr.)","₹19,200(Dr.)",):}`
Discussion
2679.

Amit and bimalstared businesson 1stapril , 2018withcapitalof Rs. 15,00,000 and Rs. 9,00,000respectivelyon 1stoctober, 2018theydecidedthattheircapitalshouldbeRs. 12,00,000each, thenecessaryadjustments incapitalsweremadebyintroducingor withdrawingby chequeintereston capitalis allowed@8% p.acomputeinterestoncapialfortheyear ended31st March ,2019.

Answer»


ANSWER :INTERESTON CAPITAL AMIT -RS. 1,08,000 ;Bramit -Rs. 84,000
Discussion
2680.

Amit and Beena were partnes in a firm sharing profits and losses in the ratio of 3:1. Chaman was admitted as a new partner for 1/6th share in the profits. Chaman acquired 2/5th of his share from Amit. How much share did Chaman acquire from Beena?

Answer»

Solution :CHAMAN's Share of Profit = 1/6
Share of Profit ACQUIRED by Chaman from Amit `=1//6xx2//5=2//30`
THEREFORE, share of profit acquired by Chaman from Beena
`1/6-2/30(5-2)/(30)-3/30or1/10.`
Discussion
2681.

Amar, Ram, Mohan and Sohan were partners in a firm sharing profits in the ratio 2:2:2:1. On 31st January, 2017 Sohan retired. On Sohan's retirement the goodwill of the firm was valued at Rs 70,000. The new profit-sharing ratio among Amar, Ram and Mohan was agreed as 5:1:1. Showing your working notes clearly, pass necessary journal entry for the treatment of goodwill in the books of the firm on Sohan's retirement.

Answer»

SOLUTION :
Discussion
2682.

Aman,Chaman and Daman are partners sharingprofitsand losses in the ratio of5:4:1. Their Balance Sheet as at 31st March, 2019 was as follows: Profits-sharingratioo w.e.f 1st April, 2019 wasdecided to be equal. It was good among thepartners to carryout followingadjustments. (i) Stockto bereduced to ₹40,000. (ii) Provisionfor Doubtful Debts to bewritten back , since alldebtors are good. (iii) Computers to be reduced by ₹20,000. (iv) Outof theSalaries Payable, ₹10,000 wasnot payable as theemployee leftwithoutnotice. (v) Outsanding Expensewerenot payableanymore. (vi) An unrecorded asset (Motor Cycle) valued at ₹10,000 to beaccounted. (vii) Goodwillof the firmwas valued at ₹50,000. (viii) Totalcapitalof the firm₹6,00,000 was to bein profit-sharing ratio, excess capital tobc withdrawnandshortfallto bemade good. PrepareRevauation Account,Partners' CapitalAccountsand BalanceSheet of thenew firm.

Answer»

Solution :
WORKING Note:

2. Adjustmentof GOODWILL:
`{:(,,,"₹", "₹"), ("DAMAN's Capital A/c (50,000" xx "7/30)", "....Dr." ,, 11","667 , ), ("To Aman's Capital A/c (₹ 50,000"xx "5/30)" ,,,, 8","333), ("To Chaman's Capital A/c(₹ 50,000" xx "2/30)" ,,,, 3","334):}`
3. TotalCapitalof the firm = ₹6,00,000
Capitalof eachPartner in THEFIRMAS per new Profit-Sharingratio will be₹ 2,00,000(i.e., `₹6,00,000 xx 1//3`)
`{:(,,,"₹", "₹"), ("Daman's Capital A/c (50,000" xx "7/30)", "....Dr." ,, 11","667 , ), ("To Aman's Capital A/c (₹ 50,000"xx "5/30)" ,,,, 8","333), ("To Chaman's Capital A/c(₹ 50,000" xx "2/30)" ,,,, 3","334):}`
Discussion
2683.

Amar , bhanuandcharuare partners in a firmAmarand bhanu are to getannualsalaryof Rs, 1,20,000 f p.a. eachas theyare fullyinvolvedin thebusinessNetprofitfor theyearis Rs. 4,80,000.Determinethe shareofprofitto becreditedto eachpartner.

Answer»

SOLUTION :SHAREOF PROFIT -RS. 80,000 each
Discussion
2684.

Amarand bimalenteredintopartnershipon 1stApril,2018contributingRs. 1,50,000 andRs, 2,50,000 respectivelytowards capitalthe partnerships Deedprovidedforinterestoncapital @10% p.a it alsoprovided thatcapital accounts shallbe maintainedfixedAccountsmethodthe firmpass thejournalenrty forinterest on capital .

Answer»


ANSWER :Drprofitand LOSS apporopriationA/c by RS. 40,000
CR.,.AMAR 'scurrectA/Cby Rs, 15,000 and bimal 'sCurrectA/c by Rs. 25,000
Discussion
2685.

Aman, Yatin and Uma were partners andwere sharingprofits andlosses in theratio of 5: 3: 2. Uma retired and her sharewas takenoverby Aman and Yatin in 5:3 ratio. Calculate thegaining ratio of Aman and Yatin.

Answer»

Solution :UMA's share TAKEN by Aman `= 2//10 xx 5//8 xx = 10//80`
Uma'sshare takenbyYatin `= 2//10xx3//8xx=6//80`
Thus, Gaining Ratio of Aman and Yatin `= 10//80 : 6//80 = 10: 6 or 5 :3`.
Discussion
2686.

Although Income and Expenditure Account prepared by a No-for-Profit Organisation andProfit and Loss Account prepared by an enterprise are prepared on the same principles of accounting why is it that in the case of Not- for-Profit Organisation it is termed as incomeand expenditureAccount.

Answer»


Solution :Both Income and EXPENDITURE Account and Profit and loss Account are prepared on accrual basis of ACCOUNTING . But a Not-for-profit Organisation is not established with an AIM to EARN profit but is established for welfare purposes. On the other hand , a BUSINESS is established with an aim to earn profit. Therefore statement prepared by a Not-for-Profit Oraganisation is termed as Income and Expenditure Account and statement prepared by a business is termed as profit and Loss Account.
Discussion
2687.

Alpha Ltd. Has 10,000, 8% Debentures of Rs.100 each due for redemption on 31st March 2018. Debenture Redemption Reserve has a balance of Rs.1,90,000 on 31st March, 2017. It was decided to invest the required amount towards Debenture Redemption Investment. Investments were realised at 104% less 0.5% brokerage and debentures were redeemed. Record the necessary entries for the redemption of debentures.

Answer»

SOLUTION :
Discussion
2688.

Alok, Narendra and Shiv were partners in a firm sharing profits in the ratio of 5:3:2. Goodwill appeared at Rs 90,000 and Geneal Reserve at Rs 50,000 in the books of the firm. Narendra decided to retire from the firm. On the date of his retirement, goodwill of the firm was valued at Rs 2,400,000. The new profit-sharing ratio of Alok and Shiv was 2:3. Record necessary Journal entries on Narendra's retirement.

Answer»

Solution :
Notes: Calculation of Gaining Ratio:
Gain of a Partner = New Share - Old share
ALOK's Gain `=2/5-5/10=(4-5)/(10)=-1/10("Sacrifice")^(** **)`
SHIV's Gain `=3/5-2/10=(6-2)/(10)=4/10("Gain")`
As Shiv is the only gaining partner, he will compensate not only the RETIRING partner (Narendra) but also the SACRIFICING partner (Alok).
`""^(**)Rs2,40,000xx1/10Rs24,000.`
`""^(**)"NAGATIVE"` result indicates that Alok has sacrificed.
Discussion
2689.

All the partners wish to dissolve the firm . Yasin , a partner wants that her loan of ₹5,00,000 be paid before payment of capitals to the partners . But Amar , another partner wants that the capitals be paid before the payment of Yasin's loan . You are required to settle the conflict giving reasons.

Answer»

SOLUTION :Yasin is CORRECT . Loan from partner has PRIORITY over capital as to REPAYMENT . So , Yasin's loan of ₹ 5,00,000 will be PAID before the payment of capital .
Discussion
2690.

All the partners want to dissolve the firm Y a partner demands that his loan of ₹2,00,000 be paid before payment of capitals of the partners . But X , another partner demands that capitals be paid before payment of Y's loan . Who is correct ?

Answer»
Discussion
2691.

All the partners decide to dissolve the firm on 31st March , 2019 . Y , a partner , demands that his loans of ₹ 80, 000 should be paid before payment of Mrs. X's loan of ₹ 20 , 000 . But X , another partner , demands that Mrs. X's loan should be paid before payment of Y's loan . Who is correct ?

Answer»

Solution :X is correct . According to SECTION 48 of the Indian Partnership Act , 1932 , OUTSIDE PARTY's debts and paid before PAYMENT of PARTNER's loan . Mrs. X is not a partner in the firm.
Discussion
2692.

All —— (internal/external) liabilities are transferred to the —— (Debit/Credit) side of ——acccount (Bank/Realisation).

Answer»


ANSWER :A::C::D
Discussion
2693.

All assets (except cash/bank and fictitious assets) are transferred to the —— (Debit/Credit) side of ——Account (Realisation/Capital).

Answer»


ANSWER :A::B::D
Discussion
2694.

Ali, Bimal and Deepak are partners in a firm. On 1st April, 2011, their Capital Accounts stood at Rs 4,00,00, Rs 3,00,000 and Rs 2,00,000 respectively. They shared profits and losses in thr proportion of 5:3:2. Partners are entitled to interest on capital@10% per annum and salary to Bimal and Deepak @ Rs 2,000 per month and Rs 3,000 per quarter respectively as per the provisions of the Partnership Deed. Bimal's share of profit (excluding interest on capital but including salary) is guaranteed at a minimum of Rs 50,000 p.a. Any deficiency arising on that account shall be met by Deepak. the profits of the firm for the year ended 31st March, 2012 amounted to Rs 2,00,000. Prepare Profit and Loss Appropriation Account for the year ended on 31st March, 2012.

Answer»

SOLUTION :DEFICIENCY is to be borne by Deepak -RS 3,800, Share of Profit, Ali - Rs 37,000, BIMAL- Rs 26,000, Deepak - Rs 11,000.
Discussion
2695.

Alka, Harpreet and Shreya are partners sharing profits in the ratio of 3:2:1. Alka retires and her share is taken up by Harpreet and Shreya in the ratio of 3:2. Calculate the new profit sharing ratio.

Answer»

Solution :Gaining Given, Ratio of Harpreet and SHREYA = `3:2 = (3)/(5):(2)/(5)`
Old Profit Sharing Ratio of between Alka, Harpreet and Shreya `3:2:1 = (3)/(6):(2)/(6):(1)/(6)`
Share acquired by Harpreet = `(3)/(5)` of`(3)/(6)=(9)/(30)`
Share acquired by Shreya = `(2)/(5)` of `(3)/(6) = (6)/(30)`
NEW Share = Old Share + Acquired Share
Harpreet's New Share = `(2)/(6) + (9)/(30)=(19)/(30)`
Shreya's new Share = `(1)/(6)+(6)/(30) = (11)/(30)`
New Profit Sharing Ratio of Harpreet and Shreya = `19:11`
Discussion
2696.

Akshat, Bilal and Charu are partners dealing in the sale of sports equpment. Akshat without the knowledge of Bilad and Charu is also running the business of supplying sports equipment to a few sports clubs in which his son is a member. He is earning good profits from this husiness but did not inform Bilal and Charu about this. Was Akshat correct in doing so?

Answer»

Solution :Akshat is not correct in RUNNING a PARALLEL BUSINESS.
Discussion
2697.

Akhil andbharatarepartnerssharingprofits andlossesin ratio2:3withcapitalsofRs. 2.00.000 and Rs, 1.00.000respectively.On1stOctober, 2018 Akhiland bharatgaveloans ofRs,4.00.000 andRs, 2.00.000respectively to thefirm. theparthershipDeedis silent on paymentofintereston partner'sloanDterminetheamount ofProfitor lossforyear ended31stMarch ,2019 in eachof thefollowingcasestobedistributedamongpertners : case 1.if theprofitbeforeinterestfor theyear amountedto Rs. 25.000 ltbegt caseif theprofit beforeinterestfor theyearamounted to Rs. 15.000 . case 3.if theLossbeforeinterestforthe year amountedto Rs. 25.000.

Answer»

Solution :Whenthe PARTNERSHIP Deedissilent as tointereston partner'sLoan, asper theindianpartnershipAct 1932 , interest@ 6%p.ais allowedon loanbyparther.
case 1.Distributableprofit/loss= profitbefore- interest - intereston partners ' loan
`=Rs. 25.000-Rs.18.000*= Rs. 7.000`
`{:(" interest on AKHIL's loan"(Rs 4.00.000xx6//100xx6//12) , Rs12.000),("intereston bharat 'sLoan" ( Rs. 2.00.000xx6//100xx6//12),Rs6.000),("total ",underline underline OVERLINE(Rs18.000)):}`
Case 2.Distributableprofit/Loss= PROFIT before interest - interestonpartners ' loan
`=Rs. 15.000= Rs. 18.00 = Rs. 3.000 ("Loss").`
inerest onpartner'sloanisachage Against profit
interestonpartner'sloanbeinga chargeaginstagainstprofitis paidorcredited topartner'sloanaccount evaniflessthantheamountofintereston lon.TheresultinglossisDistributedamongpartnersin THEPROFIT - sharingratio .
case 3.DistributableProfit .loss- Lossbeforeinterest+ intereston partners 'sLoan
`= Rs. 25.000+ Rs. 18.00 = Rs. 43.000("loss")`
Discussion
2698.

Akash Ltd. is registered with an authorised capital of Rs. 8,00,00,000 divided into equity shares of Rs. 10 each. Subscribed and fully paid-up share capital of thecompany was Rs.4,00,00,000. For providing employment to the local youth and for the development of therural areas of theJammu and Kashmir State, thecompany decided to set up a food processing unit in Anantnag district. The company also decided to open skill development centres in Ladakh, Srinagar andpunch. To meet its new financial requirements, thecompany decided to issue 1,00,000 equity shares of Rs. each and 10,000, 9% Debentures of Rs. 100 each. The debentures were redeemable after five years. The issue of equity shares anddebentures was fully subscribed. A shareholder holding 1,000 shares failed to pay thefinal call of Rs. 2 per share. Present theshare capital in theBalance Sheet of the company as per the provisions of Schedule III of the Companies Act, 2013.

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SOLUTION :
Discussion
2699.

Alfa and Beta were partners in a firm. They were tranding in artificial limbs. On 1st April, 2013 they admitted Gama, a good friend of Beta into the partnership. Gama lost his one hand in an accident and Alfa and Beta decided to give one artificial hand free of cost to Gama. The Balance Sheet of Alfa and Beta as at 31st March, 2013 was as follows: Gama was admitted in the firm of the following terms: (i) Gama bring in Rs 4,00,000 as his share of capital, but he was unable to bring any amount for woodwill. (ii) The new profit-sharing ratio bwetween Alfa, Beta and Gama will be 3:2:1. (iii) Claim on account Workmen's Compensation was Rs 30,000. (iv) To write off bed debts amounting Rs 40,000. (v) Creditors were paid Rs 20,000 more. (vi) Outstanding expenses be brough down to Rs 12,000. (vii) Rs 20,000. be provided for an unforeseen liaility. (viii) Goodwill of the firm was valued at Rs 1,80,000. Prepare Revaluation Account, Capital Accounts of Partners and Opening Balance Sheet of the new frim.

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SOLUTION :
Discussion
2700.

Ajay,Binay and Chetan were partners sharing profits in the ratio of 3:3:2. The Partnership Deep provided for the following, (i) Salary of Rs 2,000 per quarter to ajay and Binay. (ii) Chetan ws entitled to a commission of Rs 8,000. (iii) Binay was guaranteed a profit of Rs 50,000 p.a. The profit of the year endd 31st March, 2015 was Rs 1,50,000 which was distributed among Ajay, Binay and Chetan in the ratio of 2:2:1, without taking into consideration the provisions or Partnership Deed. Pass necessary reactifying entry for the above adjustments in the books of the firm. Show your workings clearly.

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Solution :
When net profit of Rs 1,26,000 is SHARED among Ajay, Binay and CHETAN in the RATIO of `3:3:2,` Ajay gets Rs 47,250, Binay gets Rs 47,250 and Chetan gets Rs 31,500. Binay was guarnateed a profit of Rs 50,000 p.a. The deficiency of Binay's share of Rs 2,750 (Rs 50,000-Rs 47,250) will be DEDUCTED from SHARES of Ajay and Chetan in the ratio of `3:2,` i.e., Rs 1,650 and Rs 1,100 respectively.
Discussion