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2751.

AandBare partnersin firmsharingprofits in theratioof 3:2theyhadadvancedto thefirm Rs. 30,000asa loanin theirprofit- sharingratio on1stOctober , 2018the parnership Deedis silenton intereston loansfrompartners compute interestpayableby the firmto thepartners assumingthefirmclosesits books everyyear on 31st March .

Answer»

Solution :interest payableto A -RS. A-Rs. `XX`3/5`xx`6/10 `xx`6/12=Rs. 540,
interest payableto B-Rs. 30,000`xx`2/5`xx`6/10 =Rs. 360.
HINT :- Accordingto the partnershipAct 1932interest@6% p.apayableon the amount of loangivenbypartnersin thepresentcaseinterestwill bepayablefor 6 months i.e.,from1st OCTOBER2018 toMarch ,2019
Discussion
2752.

A transaction involving a decrese in both Current Ratio and Quick Ratio is

Answer»

Sale of NON - current ASSET for cash.
Sale of stock- in TRADE at loss.
Cach payment of a Current Liability.
Purchase of stock - in Trade on CREDIT.

Solution :Purchase of stock - in Trade on credit.
Discussion
2753.

A transaction involving a decrese in Debt - Equity Ratio and increase in Current Ratio is

Answer»

ISSUE of Debentures against the purchase of fixed assets.
Issue of Debentures for CASH.
Redemption of PREFERENCE shares for cash.
Issue of shares for cash.

Solution :Issue of shares for cash.
Discussion
2754.

A transaction involving a decrease in Debt-Equity Ratio and increase in Current Ratio is

Answer»

ISSUE of DEBENTURES against the PURCHASE of fixed assets
Issue of Debentures for cash
Redemption of PREFERENCE shares for cash
Issue of shares for cash

Solution :Issue of shares for cash
Discussion
2755.

A transaction involving a decrease in both Current Ratio and Quick Ratio is

Answer»

SALE of Non-CURRENT Asset for cash
Sale of Stock-in-Trade at loss
Cash payment of a Current Liability
PURCHASE of Stock-in-Trade on CREDIT

Solution :Purchase of Stock-in-Trade on credit
Discussion
2756.

(a) The net profit after interest and tax of a company was Rs. 1,20,000, Rate of income tax is 40%. The company has 10% Debentures of Rs. 1,00,000. Calculate Interest Coverage Ratio.(b) From the following information related to a company, calculate Interest Coverage Ratio: Opening inventory Rs. 20,00,000, Closing inventory Rs. 22,000, Purchases Rs. 80,000, Wages Rs. 9,000, Carriage outwards Rs. 2,000, Returns outward Rs. 1,000, Revenue from Operations Rs. 80,000, Carriage inwards Rs. 4,000, Rent Rs. 5,000.

Answer»

Solution :(a) Interest Coverage Ratio = `("Net PROFIT before Interest and Tax")/("Interest on Long-term Loans")`
`=(Rs.2,10,000)/(Rs.10,000)=21` TIMES
Working Note: Calculation on Net Profit before Interest and Tax:
Net Profit after Tax = Rs. 1,20,000
Tax Rate = 40%
Let Net Profit before Tax = Rs. 100
Tax = Rs. 40
`{:(,"Net Profit after Tax= Rs. 100 - Rs. 40 = Rs. 60 "," Rs"),(therefore,"Net Profit before Tax "("Rs. 1,20,000"xx(Rs. 100)/(Rs. 60)),"2,00,000"),(,"Add: Interest @ 10% on Debentures",ul"10,000"),(,"Net Profit before Interest and Tax",ulul"2,10,000"):}`
(b) Inventory Turnover Ratio = `("Cost of REVENUE from Operations")/("Average Inventory")`
`=("Rs. 90,000 (WN 1)")/("Rs. 21,000 (WN 2)")=4.29`
Working Notes:
1.Cost of Revenue from Operations = Opening Inventory + Net Purchases* + Wages + Carriage Inwards
-CLOSING Inventory
= Rs. 20,000 + Rs. 79,000 + Rs. 9,000 + Rs. 4,000 - Rs. 22,000 = Rs. 90,000.
*Net Purchases - Returns Outward
= Rs. 80,000 - Rs. 1,000 = Rs. 79,000.
2. Average Inventory =`("Opening Inventory + Closing Inventory")/(2)`
`=("Rs. 20,000 + Rs. 22,000")/(2)=Rs.21,000`,
Discussion
2757.

(a) The Debt to Equity Ratio of a company is 1 : 2. State with reason which of the following transactions would (i) increase, (ii) decrease or (iii) not change the ratio: 1. Issued equity shares of Rs. 1,00,000. 2. Obtained a short-term loan from bank Rs. 1,00,000.(b). From the following information compute 'Total Assets to Debt Ratio':Long-term BorrowingsRs. 3,00,000Long-term ProvisionsRs. 1,50,000Current LiabilitiesRs. 75,000Non-current AssetsRs. 5,40,000Current AssetsRs. 1,35,000

Answer»

Solution :(a) Change Reason
1. DECREASE:Increase in Equity with no change in Debt.
2. Not change :NeitherEquity nor Debt is changing.
(B) Total Assets to Debt RATIO = `("Total Assets")/("Long-term Debt")=("Rs. 6,75,000" )/("Rs. 4,50,000")=1.5 : 1`.
WORKING Notes:
1. Total Assets = Non-current Assets + Current Assets = Rs. 6,75,000.
2. Long-term Debt = Long-term Borrowings + Long-term PROVISIONS = Rs. 4,50,00.
Discussion
2758.

(a) Show the following information in financial statements of a ‘ Not-for-Profit’ Organisation: (b) What will be the effect, if match expenses go up by Rs. 6,000 other things remaining the same?

Answer»

Solution :(a)
BALANCE Sheet as on………..*

* Only relevant data.
(b)
If match expenses go up by Rs. 6,000, the net balance of the match fund becomes negative i.e. Debit exceeds the Credit, and the RESULTANT debit balance of Rs. 2,000 shall be charged to the INCOME and Expenditure ACCOUNT of that year.
Discussion
2759.

(A) PS Ltd., forfeited 500 euity shares of Rs. 100 each for the non-payment of first call of Rs. 30 per share. The final call of Rs. 10 per share was not yet made. The forfeited shares were re-issued for Ra. 65,500 fully paid up. Pass necessary journal entries in the books of the company. (B) Samta Ltd., forfeited 800 equity shares of Rs. 100 each for the non-payment of first call of Rs. 30 per share. The final call of Rs. 20 per share was not yet made. Out of the forfeited shares 400 were re-issued at the rate of Rs. 105 per share fully paid up. Pass necessary journal entries in the books of Samta Ltd. for the above transactions.

Answer»

SOLUTION :CAPITAL RESERVE (A) RS. 30,000, (B) Rs. 20,000.
Discussion
2760.

(a) Rohan and Mohan are partners in a firm sharing profits in the ratio of 5:3 Respectively. They admit Bhim as a partner for 1/7 share in thr profit. The new profit-sharing ratio will be 4:2:1. Calculate sacrificing ratio of Rohan and Mohan (b) Amla and Kamla are partners in a firm sharing profits in the ratio fo 4:1 respectively. They admitted Bimal as a new partner for 1/4 share in the profit, which she acquired wholly form Amla. Determine new profit-sharing ratio of partners.

Answer»

SOLUTION :(a) Share Sacrificed = Old Share - New Share
Rohan's Sacrifice `=5/8-4/7=(35-32)/(56)-3/56,` Mohan's Sacrifice `=3/8-2/7=(21-16)/(56)-5/56`
Thus, Sacrificing Ratio f Rohan and Mohan `=3/56:5/56=3:5`
(B) New Share of Amla = Old Share - Share Sacrifice in FAVOUR of BIMAL.
`=4/5-1/4=(16-5)/(20)=11/20`
Thus, New Ratio of Amla, KAMAL and Bimla `=11/20:1/5:1/4=11/20:4/20:5/20or11:4:5.`
Discussion
2761.

A company's Revenue from Operations are Rs. 20,00,000 , Cost of Revenue from Operations is Rs. 14,00,000 and indirect expenses are Rs. 2,00,000 . What is the amount of Gross Profit ?

Answer»

RS. 1800000
Rs. 400000
Rs. 800000
Rs. 600000

Answer :D
Discussion
2762.

A, B and C are partners with profit sharing ratio 4:3:2. B retiresand goodwill was valued Rs. 1,08,000. If A & C share profits in 5:3, find out the godwill shared by A anc C in favour of B.

Answer»

RS. 22,500 and Rs. 13,500
Rs. 16,500 and Rs. 19, 500
Rs. 67,500 and Rs. 40,500
Rs. 19,500 and Rs. 16,500

Answer :D
Discussion
2763.

A Company's Current Ratio is 2.4:1 and Working Capital is Rs. 5,60,000. If its Liquid Ratio Ratio is 1.5, what will be the value of inventory?

Answer»

RS. 6,00,000
Rs. 2,00,000
Rs. 3,60,000
Rs. 6,40,000

Answer :C
Discussion
2764.

A Company's Current Ratio is 3:1, Current Liabilities are Rs. 2,50,000, Inventory is Rs. 60,000 and Prepaid Expenses are Rs. 5,000. Its Liquid Assets will be:

Answer»

RS. 6,90,000
Rs. 6,95,000
Rs. 6,85,000
Rs. 8,15,000

Answer :C
Discussion
2765.

A Company's Current Assets are Rs. 8,00,000 and its current liabilities are Rs. 4,00,000. Subsequently, it purchased goods for Rs. 1,00,000 on credit. Current ratio will be …………

Answer»

`2:1`
`2.25:1`
`1.8:1`
`1.6:1`

ANSWER :C
Discussion
2766.

A and Bstartedbusiness on 1stapril2018 withcapialsOf Rs. 6,00,000and Rs. 4,00,000 respectivelyDuringthe year,AintroducedRs. 1,00,000 asaddditionalon 1stOctober,2018theywithdrew Rs. 50,000 permonth againstProfits interestOn capital isto beallowed@ 10%Per Annum . Calculate interestpayableto Aand BFor theyearended31st March , 2019.

Answer»

Solution :`{:( " interest on A 's capitals:",,Rs),("interest on Rs.. 1.00.000 for one year",Rs.6.00.000xx10//100,60.000),("interest n Rs. 1.00.000 for 6 months: ",Rs. 1.00.000xx6//12xx10//100,5.000),("(from 1astOctber , 2018 to 31ST March2018 to 31st MARCH ,2019)",,),(,,UNDERLINE overline(65.000)),("interest : on B's capital: ",,),("intereston Rs. 4.00.000 foroneyear:",Rs.4.00.000xx10//100,Rs.40.000):}`
Discussion
2767.

A B andC arepartners sharingprofits in theratioOf5:4:1C is givena guaranteethat hisminimum share of profit in anygivenyearwouldbe atleast Rs. 5,000Deficiency if , anywouldbe borneby A and Bequallyprofitfor theyearended31stMarch 2019was Rs. 40,000Passnecessaryjournalentriesin thebooks ofthefirm .

Answer»


ANSWER :DerficencyofC -RS, 1,000 BORNEBY AAND bequallyI.e.,Rs, 500EACH
Discussion
2768.

A firm is dissolved when all partners give consent to it.

Answer»


ANSWER :A
Discussion
2769.

A and Barepartnerssince1stApril, 2018withouta partnershipDeedand theyintroducedcapitalsof Rs. 35,000 andRs. 20,000 respectivelyon 1st October2018A advancedloanofRs.8,000to thefirmwithoutantagreementas tointerestprofitand lossAccountfor theyearended31 st AMrch,2019showsa profitof Rs. 15,000butthepartnerscannotagreeon paymentof interestandthebasicofdivision ofprofitsyou arerequiredto divilethe profitsbetweenthemgivingreasonsfor youmethod .

Answer»

SOLUTION :A ANDB eachGets Rs. 7,380as PROFIT and `wedge ` GETS Rs. 240 asinterest on `wedge ` 's LOAN
Discussion
2770.

3 Aces Ltd. decides to redeem 2,000, 9% Debentures of Rs 100 each on 31 st December, 2018. The company should invest in specified securities on or before

Answer»

30TH APRIL, 2017
30th April, 2018
31st DECEMBER, 2017
31st December, 2016

Solution :30th April, 2018
Discussion
2771.

A, B and C are partners sharing profits in the ratio of 1//2: 1//4: 1//4. New ratio on the retirement of B will be:

Answer»

`2:4`
`1:2`
`2:1`
`1//4:1//2`

ANSWER :C
Discussion
2772.

A partnershipfirmis compulsorilydissolved ):

Answer»

WHENTHE business of THEFIRMIS DECLARED illegal
WHENA partner of thefirmdies
Whena partner of thefirmbecomesinsolvent
When a partner transfers hisshareto someotherpersonwithouttheconsent of other partners

Answer :A
Discussion
2773.

A, B and C are partners, B retires from the firm, on the date of his retirement stock, sundary debtors and provision of doubtful debts stand in the Books of Account at Rs 50,000, Rs 45,000 and Rs 4,500 respectively. The partners decided to reduce the value of stock to 90%, provision for doubtful debts to be brought to 15% of sundry debtors. The entry made for revaluation of stock will be :

Answer»

DR. Revaluation A/c - Rs 5,000, Cr. Stock A/c - Rs 5,000
Dr. Profit and LOSS A/c - Rs 5,000, Cr. Stock A/c - Rs 5,000
Dr. B's CAPITAL A/c - Rs 5,000, Cr. Revaluation A/c - Rs 5,000
None of the above

Answer :A
Discussion
2774.

A company invited applications for 75,000 equity shares of Rs. 100 each. Theapplication money received @ Rs. 30 per share was Rs. 27,00,000. Name the kind of subscription. List the three alternatives for allotting these shares.

Answer»


ANSWER :OVERSUBSCRIPTION.
Discussion
2775.

A Ltd.invited applications for issuing 1,00,000 shares of Rs. 10 each at a premium of Rs. 1 per share. The amount was payable as follows : {:("On Application","Rs. 3 per share"),("On Allotment","Rs. 3 per share (including premium)"),("On First Call","Rs. 3 per share"),("On Second and Final Call","Balance Amount"):} Applications for 1 ,60,000 shares were received. Allotment was made on the following basis : (i) To Applicants for 90,000 shares : 40,000 shares (ii) To Applicants for 50,000 shares : 40,000 shares (iii) To Applicants for 20,000 shares : full shares Excess money paid on applied for 1,500 shares and belonged to category (ii), did not pay allotment, first and second and final call money. Another shareholder, Sudha, who applied for 1,800 shares and belonged to category (i), did not pay the first and second and final call money. All the shares of Rishabh and Sudha were forfeited and were subsequently re-issued at Rs. 7per share fully paid. Pass the necessary journal entries in the books of A Ltd. Open Calls-in-Arrears Account and Calls-in-Advance Account wherever required.

Answer»

SOLUTION :

Discussion
2776.

A company has issued 5,000, 8% Debentures of Rs.100 each at a premium of Rs.10. the prefix 8% is

Answer»

the RATE of interest PAYABLE on the debentures.
to distinguish fromother debentures ISSUED by the company.
Both (a) and (B)
None of these.

Solution :the rate of interest payable on the debentures.
Discussion
2777.

A, B and C are partners in the ratio of 5 : 3 : 2. Before B's salary of Rs.17,000 firm's profit is Rs.97,000. How much in total B will receive from the firm?

Answer»

Rs.17,000
Rs.40,000
Rs.24,000
Rs.41,000

Solution :TOTAL amount received by the PARTNER will be SALARY + Share of PROFIT
Discussion
2778.

A B and Carepartnersin afirm partnership Deed doesnot providesfor interest on capital , still it wascareditedtopartners'capital Accounts @5%p.afor the twoyears ended31stMarch2018and 31 st March, 2019theirfixedcapitals on whichinterestwascalculated throughout were: A- Rs. 50,000,B-Rs. Rs 40,000and c- Rs. 30,000 During the twoyearstheyshared profitsas follows :2017-1885:32,2018-1902:2:1 youarerequiredto pass an adjustmententryas at1stApril, 2019.

Answer»

Solution :
Note :-Sinceintereston capitalwasallowedprofit DECREASED by thetotalamountof interest ,interestallowed wastakenby thepartnersin theirprofit-Sharingratiothereforeintereston capital SHOULDBE weittenbackandprofiti.e total amountofinterest) shouldbecreditedtopartnersin theirin theirprofit - sharing RATIO .
Discussion
2779.

A company has passed a resolution to call Rs 2 per share in the event of it being wound up. Balance amount, i.e., Rs 8 per share has been called and also received. How will it be classified in the Balance Sheet of the company?

Answer»


Solution :It will be classified or shown as 'Subscribed but Not FULLY Paid-up' because the company has called and RECEIVED Rs 8 per SHARE against its nominal (face) value of Rs 10.
Discussion
2780.

A, B and C who are presentlysharingprofitsin theratio of 5:3:2. decide to share future profitsand losses in the ratio of 2:3:5. Give theJournal entryto distribute Workmen CompensationReseve of ₹ 1,20,000 at thetimeof change in profits-sharingratio, when: (i) no informationis given (ii)there is no claim against it.

Answer»


Answer :In both CASE; Dr. WORKMEN Compensation RESERVE A/c - ₹ 1,20,000; Cr. A's Capital A/c - ₹ 60,000 B's Capital A/c- ₹ 36,000 andC'sCapitalA/c - ₹24,000
Discussion
2781.

A and Bare partnerssharing profits equallyA drewregularyRs. 4,000At theendof every month foryearcalculateended30thSeptember2019calcalateintereston drawings @5%p.afora periodof sixmonths.

Answer»


SOLUTION :INTERESTON drawnings will NE becharged for 2.5 monthson TOTALOF EACHQUARTER.
Discussion
2782.

A Mutual Fund Company receives a dividend of Rs. 25 lakhs on its investments in another company's shares. Why is it a cash inflow from operating activities for this company?

Answer»

Solution :A Mutual Fund Company is a FINANCIAL ENTERPRISE thus, dividend of Rs. 25 lakhs received by this company from its investments in shares is cash INFLOW from OPERATING activities.
Discussion
2783.

A company's liquid assets are Rs. 5,00,000 and its current liabilities are Rs. 3,00,000. Thereafter, it paid Rs.-1,00,000 to its trade payables. Quick ratio will be:

Answer»

`1.33:1`
`2.5:1`
`1.67:1`
`2:1`

ANSWER :D
Discussion
2784.

A, B and C are partners sharing profits and losses in the ratio of 5:4:1. Calculate new profit-sharing ratio, sacrificing ratio and gaining ratio in each of the followingcases: Case 1. C acquires1//5th share from A Case 2. C acquires 1//5th share equally from A and 8. Case 3.A, B and C will share future profits and losses equally. Case 4. C acquires 1//10th share of A and 1//2 share of B.

Answer»


Answer :(1) NEW Profit-sharing Ratio-3:4:3; SACRIFICE of `A- 1//5`: Gain of `C-1//5`;
(2) New Profit-sharing Ratio- 4:3:3; SACRIFICING Ratio (A and 8-1:1; Gain of `C-2//10`
(3) New Profit-sharing Ratio-Equal; Sacrificing Ratio (A and B)-5:2 GOIN of `C-7//30`
(4) New Profit-sharing Ratio-9:4:7; Sacrificing Rotio (A and B)-1:4: Gain of `C-5//2`
Discussion
2785.

A partner draws Rs. 10.000per monthunder the pernershipDeedintereston drwingsis tobe charged@ 15 %p.aCalculateinterest if theif thedrwawingare maderegulary : (I)in thebeginningof themonth , (ii)in themiddleof themonth, or (iii)at theendfothemonth.

Answer»

SOLUTION :INTERESTIN thethreesituationswill be:
(i) totalDrawings in the=Rs. 1.20.00 Rateof interest = 15 % p,a
interestn DRAWINGS `=(rs. 1.20.000xx15)/(100)xx(6^(1/(2))/(12)=Rs.9.750.`
*Averageperiod `=("12 months +1 month ")/(2) =6(1)/(2)"*")`= months
(ii)totalDrawings in theyear= Rs. 1.20.000rateof interest=15%
intereston drawings`=(Rs.1.20.000xx15)/(1000xx(6*)/(12)=Rs. 9.000`
*avaeageperiod`=("10th months+ 1/2 month")/(2)=6` months .
(iii)Totaldrawings in theyear= Rs 1.20.000 Rateof interest= 15 % p,a
intereston Drawings `=(rs. 1.20.000xx15)/(100)xx(51//2)/(12)=Rs. 8.250.`
* Averageperiod `=("11 months +0Months )/(2)=5^(1)/(2))` months
*AVERAGE PERIOD `=("Months Leftafter firstDrawing + Months Left AfterLAstDwawing")/(2)`
Discussion
2786.

A, B and C are partners in a firm sharing profit/loss in the ratio of 2:2:1. On March 31,2019, C died. Accounts are closed on Dec., 31 every year. The sales for the year 2018 was Rs. 6,00,000 and the profits were Rs. 60,000. The sales for the period from Jan. 1, 2019 to March 31,2019 were Rs. 2,00,000. The share of deceased partner in the current year's profits on the basis of sales is :

Answer»

RS. 20,000
Rs. 8,000
Rs. 3,000
Rs. 4,000

Answer :D
Discussion
2787.

A Ltd. forfeited 100 equility shares of Rs. 10 each issued at a premium of 20% for the non-payment of final call of Rs. 5 including premium. State the maximum amount of discount at which these shares can be re-issured.

Answer»

SOLUTION :These shares can be REISSUED at a MAXIMUM discount of Rs. 7 PER share (i.e. Rs. 700).
Discussion
2788.

A Company issuing debentures with a maturity period of not more than ......... Need not create Debenture Redemption Reserve.

Answer»

A - 2 MONTHS
B - 6 months
C - 12 months
D - 18 months

Answer :D
Discussion
2789.

A company received applications for 1,25,000 equity Shares against as issue of 1,00,000 Equity Shares of Rs 10 each. Allotment is yet to be made against the applications received as on the date of the Balance Sheet. How will it be shown in the Balance Sheet?

Answer»


SOLUTION :Rs 10,00,0,00 `(i.e., 1,09,000xx Rs 10)` will be shown against Share APPLICATION Money Pending ALLOTMENT and Rs 2,50,000 `(i.e., 25,000xx Rs 10)` will be shown as 'Other Current LIABILITY' under Current Liabilities.
Discussion
2790.

A company's Current assets are Rs. 3,00,000 and its current liabilities are Rs. 2,00,000. Subsequently, it paid Rs. 50,000 toits trade payables. Current ratio will be ……….

Answer»

`2:1`
`1.67:1`
`1.25:1`
`1.5:1`

ANSWER :B
Discussion
2791.

A Bill of Exchange cannot be sent to bank for collection. It can be discounted only. Do you agree? Give reasons

Answer»

Solution :No, a Bill of Exchange can be SENT to bank for collection. Other USES of a bill are: it can be HELD by the drawer TILL MATURITY, it can be endo₹ed or discounted from the bank.
Discussion
2792.

A Ltd. Forfeited 100 equity shares of Rs. 10 each issued at a premium of 20% for non-payment of final call of Rs. 5 including premium. State the maximum amount of discount at which these shares can be reissued.

Answer»

SOLUTION :These SHARES can be reissued up to a discont of Rs. 7 PER share or Rs. 700.
Discussion
2793.

A company issued 10,000 shares of Rs. 10 each at as premium of Rs. 1 per per share, payment to be made as follows : {:(,"Rs."),("On Application",3),("On Allotment","4 (including premium)"),("On First call",2),("On Second and final call",2):} Applications were received for 20,000 shares. Applications for 5,000 shares were rejected and allotment was made proportionately to the remaining applicants. The directors made both the calls and all the money were received , except the allotment, first call and final call on 400 shares, which were subsequently forfeited. Later, 300 of the forfeited sharesd were re-issued as fully paid @ Rs. 15 per share. Give journal entriesto record the above.

Answer»

SOLUTION :Bank Balance Rs. 1,11,900, Share Capitasl Rs. 99,000, Securities Premium Reserve Rs. 11,100, Capital Reserve Rs. 1,350, Balance left in Share Forfeiture A/c Rs. 450.
Hint : Securities Premium Reserve Account has been debited in the entry of forfeiture because it is assumed that ENTIRE excess application money received on FORFEITED SHARES is utlised for share capital.
Discussion
2794.

A business earned average profits of Rs 6,00,000 diring the last few years. The normal rate of profits in the similar type of business is 10%. The total value of assets and liabilities of the business were Rs 22,00,000 and Rs 5,60,000 respectively. Calculate value of goodwill of the firm by super profit methof if the goodwill is valuced at 2(1)/(2) years' purchase of super profits.

Answer»

Solution :Value of Goodwill = Super Profit `xx` No. of YEARS' Purchase
`=Rs 4,36,000xx2.5=Rs10,90,000.`
Working notes:
1. Normal Profit = Capital Employed or NET Assets `xx` Normal RATE of Return/100
`=Rs 16,40,000^(**)xx10//100=Rs1,64,000.`
`"*"Net` Assets = ASSET - Labilities = Rs 22,00,000-Rs 5,60,000 = Rs 16,40,000.
2. Super Profit = AVERAGE Profit - Normal Profit
= Rs 6,00,000- Rs 1,64,000= Rs 4,36,000.
Discussion
2795.

A and Bare partners charingprofitsin theratioof 2:1theyadmitted C, theirmanager as a partnersfrom1stApril, 2018for 1/5thshareof profit,Cwhilebeingmanger ,wasgettingsalaryof Rs. 50,000p,aPluscommissionof 10%of netprofit aftercharing such salaryand commissionit wasalsoagreeed that anyexcessamountwhichC reseives as a partners (over his salary andcommission)willbevbornebyA profitforthe yearended31st March , 2019wasRs, 6,44,000before payment of salaryand commissionprepareprofitand lossappropritationAccount .

Answer»

Solution :C',s shareas a manager -rS. 1,04,000C'sshareas partners-Rs. 1,28,800
Deficviency osRs. 24,800 to bemet by A FINAL SHARE of profitA-RS. 3,35,200,B -Rs. 1,80,000,C -rs. 1,28,800 .
Discussion
2796.

A Ltd. invited applications for issuing 1,00,000 shares of Rs. 10 each at a premium of Rs. 1 per share. The amount was payable as follows: {:("On Application",,-,,"Rs. 3 per share,"),("On Allotment",,-,,"Rs. 3 per share (including premium),"),("On First Call",,-,,"Rs. 3 per share,"),("On Second and Final Call",,-,,"Balance amount."):} Applications for 1,60,000 shares were received. Allotment was made on the following basis: {:((i),"To applicants for 90,000 shares",:,"40,000 shares,"),((ii),"To applicants for 50,000 shares",:,"40,000 shares,"),((iii),"To applicants for 20,000 shares",:,"Full shares."):} Excess money paid on application is to be adjusted against the amount due on allotment and calls. Rishabh, a shareholder, who applied for 1,500 shares and belonged to category (ii), did not pay allotment, first and second and final call money. Another shareholder, Sudha, who applied for 1,800 shares and belonged tocategory (i) , did not pay the first and second and final call money. All the shares of Rishabh and sudha were forfeited and were subsequently reissued at Rs. 7 per share fully paid. Pass the necessary Journal entries in thebooks of A Ltd. Open Calls-in-Arrears Account and Calls-in-Advance Account wherever required.

Answer»

Solution :

WORKING Notes:
1.`{:("Category I: To applicants for 90,000 shares: 40,000 shares allotted",Rs.),("Application money received (90,000"xx"Rs.3)","2,70,000"),("Less: Application money adjusted on allotted shares (40,000"xx"Rs. 3)","1,20,000"),("Excess application money",bar(1,50,000)),("Less: Excess application money adjusted on allotment (40,000"xx"Rs.3)","1,20,000"),("Adjusted on first call (Calls-in-Advance)",bar(ul(ul(30,000)))) :}`
Category II: To applicants for 50,000 shares: 40,000 shares allotted
`{:(,Rs.),("Application money received (50,000"xx"Rs.3)","1,50,000"),("Less: Application money adjusted on allotted (40,000"xx"Rs.3)","1,20,000"),("Surplus application money adjusted on allotment",bar(ul(ul(30,000)))):}`
Total surplus application money adjusted on allotment = Rs. 1,20,000 (Category I) + Rs. 30,000 (Category II)
=Rs. 1,50,000.
2. Calculation of money due but not paid by RISHABH.
(a) No. of shares allotted to Rishabh (Category II) = `(40,000)/(50,000)xx 1,500 = 1,200 ` shares.
(b) `{:(,Rs.),("Application money received (1,500"xx"Rs.3)","4,500"),("Less: Application money required on allotted shares (1,200"xx"Rs.3)","3,600"),("Surplus application money adjusted on allotment",bar(ul(ul(" "900)))):}`
(c) Allotment money due (1,200`xx` Rs. 3 = Rs.3,600) but not received from Rishabh = Rs. 3,600 - Rs. 900 = Rs. 2,700.
(d) AMOUNT not received on first call (1,200`xx` Rs.3) = Rs. 3,600.
(e) Amount not received on second call (1,200 `xx` Rs. 2) = Rs. 2,400.
3. Calculation of money due but not paid by SUDHA:
(a) No. of shares allotted to Sudha (Category I ) = `(40,000)/(90,000) xx 1,500 ` = 800 shares.
(b)`{:(,Rs.),("Application money received (1,800"xx"Rs.3)","5,400"),("Less: Application money required on allotted shares (800"xx"Rs.3)","2,400"),("Excess application money received from Sudha",bar(3,000)),("Less: Excess application money adjusted on allotment(800"xx"Rs.3)","2,400"),("Surplus application money adjusted on first call",bar(ul(ul(" "600)))):}`
(c) First call money due but not received = (800`xx` Rs.3) - Rs. 600 = Rs. 1,800.
(d) Second and Final call money due but not received = 800 `xx` Rs. 2 = Rs. 1,600.
Discussion
2797.

A Ltd. Engaged in the business of retailing of two wheelers, invested Rs 50,00,000 in the shares of a manufacturing company. Dividend received on this investment will be ,

Answer»

Cash Flow from Operating ACTIVITIES
Cash Flow from INVESTING Activities
Cash Flow from Financing Activities
Cash EQUIVALENT

Answer :B
Discussion
2798.

A and B were partners in a firm sharing profits in theratio of 3:2 . With effect from 1 stApril 2019 they agreed to shareprofits equally. For thispurposethegoodwill of thefirm was valued at Rs. 30,000. Pass thenecessary journal entry.

Answer»

Solution :(a) When Goodwillis adjusted through Partner's Capital Account :
OLD Ratio of A and B= 3:2
NewRatio of A and B= 1:1
Sacrifice or GAIN :
`A = 3/5 -1/2 = (6-5)/10 = 1/10 ` (Sacrifice)
`B = 2/5 - 1/2 = (4-5)/10 = 1/10 ` (Gain)
Since A has SACRIFICED, he will be CREDITED from `1/10` of Rs. 30,000 = Rs. 3,000
Since B hasgained, he will be debited from`1/10 ` of Rs. 30,000 = Rs. 3,000

ALTERNATE SOLUTION :
(b) When Goodwill israised and WRITTEN Off :
Discussion
2799.

A, B and C are partners sharingprofits and losses in theratio of 2:2:1.Asa result of change in profit-sharing ratio to 1:1:1 following Revalution Account and Capital Accounts were drawn , in whichsome values are missing.

Answer»

SOLUTION :
Discussion
2800.

A Ltd. Foreited a share of Rs. 100 issued at a premium of 20% for non-payment of first call of Rs. 30 per share and fianl call of Rs.10 per share. State the minimum price at which this share can be reissued.

Answer»

SOLUTION :Minimum price at which share CANBE reissued = RS. 100 - Rs. 60 = Rs. 40.
Discussion