CHAPTER:1
ACCOUNTING FOR NOT FOR PROFIT ORGANISATION
Q.1 Give two main sources of income of a ‘Not for profit
organisation’.
Q.2 State any two characteristics
of Receipt and Payment Account.
Q.3 How would you account for ‘subscription due to be received’ in
the current year in the books of a non
trading organisation?
Q.4 How would you account for
‘subscription received in advance’ in the current year in the books of a non
trading organisation?
Q.5
What is meant by fund based accounting?
Q.6 Tournament fund appears in the books Rs. 15,000 and expenses on
tournament during the year were Rs. 18000. How will you show this in format
while preparing financial statement of a not-for-profit organisation?
Q.7 As per Receipt and Payments account for the year ended on March
31, 2008, the subscription received were Rs. 2,50,000. Addition information
given is as follows:-
(i)
Subscriptions outstanding on 01-04-2007 Rs. 50,000.
(ii)
Subscription outstanding on 31-03-2008 Rs. 35,000.
(iii)Subscription
Received in advance as on 31-03-2008 Rs. 30000.
Ascertain the amount of income from
subscription for the year 2007-08.
Q.8 From the following extracts of Receipts and Payments Account and
the additional information given below, compute the amount of income from
subscriptions and show us how they would appear in the Income and Expenditure
Account for the year ending March 31, 2007and the Balance sheet on that date:-
Receipts and Payments A/C
For the year ending March 31, 2007
|
Receipts
|
Rs.
|
Payments
|
Rs.
|
|
Subscription
:-
2005-06 - 7000
2006-07
- 30000
2007-08 - 5000
|
42000
|
|
|
Additional information:-
(i)
Subscription outstanding on March 31, 2006 Rs. 8500.
(ii)
Total subscriptions outstanding on March 31, 2007 Rs.
18,500.
(iii)
Subscriptions received in advance as on March 31, 2006
Rs. 4000.
Q. 9 From the following particulars of a club, calculate the amount of
salaries to be shown in Income and expenditure account for the year ended 31
March, 2008:-
Total
salaries paid during the year 2007-08 Rs.
87,000
Outstanding
salaries on 01-04-2007 Rs.
17,000
Prepaid salaries
on 01-04-2007 Rs.
19,000
Outstanding
salaries on 31-03-2008 Rs.
32,000
Prepaid salaries
on 31-03-2008 Rs
20,000
Q.10
Calculate the amount to be debited to
Income and Expenditure account under the heading sports items for the year
2006-07 in respect of the Osmosis club:-
Stock of sports
items on 01-04-2006 Rs.
44,700
Stock
of sports items on 31-03-2007 Rs.
24,500
Paid
for sports items during the year Rs.
97,900
Creditors for supplies of sports
items 31-03-2007 Rs. 26,500.
Q.11 Show the following information in the Balance Sheet of the Cosmos
club as on 31st March 2007:-
|
Particulars
|
Dr
(Rs)
|
Cr
(Rs)
|
|
Tournament
Fund
|
-
|
1,50,000
|
|
Tournament
Fund Investment
|
1,50,000
|
-
|
|
Income
From Tournament Fund
Investment
|
-
|
18,000
|
|
Tournament
Expenses
|
12,000
|
-
|
Additional Information:-
Interest
accrued on Tournament Fund Investment Rs. 6000.
Q.12 Calculate the amount
medicines to be debited in the Income and Expenditure Account of a Hospital on
the basis of the following information:-
|
|
01-04-2006
Rs.
|
31-03-2007
Rs.
|
|
Stock
of Medicines
|
90,000
|
1,24,000
|
|
Creditors
for Medicines
|
2,40,000
|
2,04,000
|
Amount paid for medicines during
the year was Rs. 6,79000.
Q.13 Distinguish between Receipts
and Payments A/C and Income and expenditure A/C.
CHAPTER:2
ACCOUNTING FOR PARTNERSHIP
FIRMS: BASIC CONCEPTS
Q.1 State the conditions under which capital balances may change under
the system of a Fixed Capital Account.
Q.2 A is partner in a firm. His capital as on Jan 01, 2007 was Rs.
60,000. He introduced additional capital of Rs. 20000 on Oct 01 2007. Calculate
interest on A’s capital @ 9% p.a.
Q.3 A, B and C are partners in a firm having no partnership agreement.
A, B and C contributed Rs. 20,000, Rs.
30,000 and Rs. 1,00,000 respectively. A and B desire that the profit should be
divided in the ratio of capital contribution. C does not agree to this. How
will you settle the dispute.
Q.4 A and B are partners in a firm without a partnership deed. A is an
active partner and claims a salary of Rs. 18,000 per month. State with reason whether the claim is valid or not.
Q.5 Chandar and Suman are partners in a firm without a partnership
deed. Chandar’s capital is Rs. 10,000 and Suman’s capital is Rs. 14,000.
Chander has advanced a loan of Rs. 5000 and claim interest @ 12% p.a. State
whether his claim is valid or not.
Q.6 R, S, and T entered into a partnership of manufacturing and
distributing educational CD’s on April 01, 2006. R looked after the business
development, S content development and T financed the project. At the end of
the year (31-03-2007) T wanted an interest of 12% on the capital employed by
him. The other partners were not inclined to this. How would you resolve this
within the ambit of the Indian Partnership Act, 1932?
Q.7 A, B and C are partners in a firm. A withdrew Rs. 1000 in the
beginning of each month of the year. Calculate interest on A’s drawing @ 6%
p.a.
Q.8 A, B and C are partners in a firm, B withdrew Rs. 800 at the end
of each month of the year. Calculate interest on B’s drawings @ 6% p.a.
Q.9 A, B and C are partners in a firm. They have omitted interest on
capital @ 10 % p.a. for three years ended 31st march 2007. Their
fixed capitals on which interest was to be calculated through –out were
A Rs. 1,00,000
B Rs. 80,000
C Rs. 70,000
Give the necessary
Journal entry with working notes.
Q.10 X, Y, and Z are partners sharing profits and losses in the ratio
of 3:2:1. After the final accounts have been prepared it was discovered that
interest on drawings @ 5 % had not been taken into consideration. The drawings
of the partner were X Rs. 15000, Y Rs. 12,600, Z Rs. 12,000. Give the necessary
adjusting Journal entry.
Q.11 A, B and C are partners sharing profits and losses in the ratio
of 3:2:1. Their fixed capitals are Rs. 1,50,000, Rs. 1,00,000 and Rs. 80,000
respectively. Profit for the year after providing interest on capital was Rs.
60,000, which was wrongly transferred to partners equally. After distribution
of profit it was found that interest on capital provided to them @ 10% instead
of 12% . Pass necessary adjustment entry.
Show your working
clearly.
Q.12 Ravi and Mohan were partner in a firm sharing profits in the
ratio of 7:5. Their respective fixed capitals were Ravi Rs. 10,00,000 and Mohan
Rs. 7,00,000. The partnership deed provided for the following:-
(i) Interest on capital
@ 12% p.a.
(ii) Ravi’s salary Rs.
6000 per month and Mohan’s salary Rs. 60000 per year.
The profit for
the year ended 31-03-2007 was Rs. 5,04,000 which was distributed equally
without providing for the above. Pass an adjustment Entry.
Q.13 Distinguish between fixed capital method and fluctuating capital
method.
Q.14 A, B and C were partners in a firm having capitals of Rs. 60,000,
Rs. 60,000 and Rs. 80,000 respectively. Their current account balances were A-
Rs. 10,000, B- Rs. 5000 and C- Rs. 2000 (Dr.). According to the partnership
deed the partners were entitled to an interest on capital @ 5% p.a. C being the
working partner was also entitled to a salary of Rs. 6,000 p. a. The profits
were to be divided as follows:
(i) The first Rs. 20,000
in proportion to their capitals.
(ii) Next Rs. 30,000 in
the ratio of 5:3:2.
(iii) Remaining profits
to be shared equally.
During the year the firm made a profit
of Rs. 1,56,000 before charging any of the above items.
Prepare the profit and loss appropriate
on A/C.
Q.15 A and B are partners sharing profits in proportion of 3:2 with
capitals of Rs. 40,000 and Rs. 30,000 respectively. Interest on capital is
agreed at 5 % p.a. B is to be allowed an annual salary of Rs. 3000 which has
not been withdrawn. During 2001 the profits for the year prior to calculation
of interest on capital but after charging B’s salary amounted to Rs. 12,000. A
provision of 5% of this amount is to be made in respect of commission to the
manager.
Prepare
profit and loss appropriation account showing the allocation of profits.
CHAPTER:3
RECONSTITUTION OF PARTNERSHIP
ADMISSION OF A PARTNER
Q.1 On what occasions does the
need for valuation of goodwill arise?
Q.2 Why is it necessary to revalue
assets and liabilities at the time of
admission of a new partner?
Q.3 What is meant by sacrificing
ratio?
Q.4 State two occasions when
sacrificing ratio may be applied.
Q.5 A business has earned average
profit of Rs. 60,000 during the last few years. The assets of the business are
Rs. 5,40,000 and its external liabilities are Rs. 80,000. The normal rate of
return is 10%. Calculate the value of goodwill on the basis of capitalisation
of super profits.
Q.6 The capital of a firm of
Arpit and Prajwal is Rs. 10,00,000. The market rate of return is 15% and the goodwill
of the firm has been valued Rs. 1,80,000 at two years purchase of super
profits. Find the average profits of the firm.
Q.7 The average profits for last
5 years of a firm are Rs. 20,000 and goodwill has been worked out Rs. 24,000
calculated at 3 years purchase of super profits. Calculate the amount of
capital employed assuming the normal rate of interest is 8 %.
Q.8 Rahul and Sahil are partners
sharing profits together in the ratio of 4:3. They admit Kamal as a new
partner. Rahul surrenders 1/4th
of his share and Sahil surrenders 1/3rd of his share in
favour of Kamal. Calculate the new profit sharing ratio.
Q.9 Ajay and Naveen are partners
sharing profits in the ratio of 5:3. Surinder is admitted in to the firm for
1/4th share in the profit which he acquires from Ajay and Naveen in
the ratio of 2:1. Calculate the new profit sharing ratio.
Q.10 A and B were partners
sharing profits in the ratio of 3:2. A surrenders 1/6th of his share
and B surrenders 1/4th of his share in favour of C, a new partner.
What is the new ratio and the sacrificing ratio.
Q.11 Aarti and Bharti are
partners sharing profits in the ratio of 5:3. They admit Shital for 1/4th
share and agree to share between them in the ratio of 2:1 in future. Calculate
new and sacrificing ratio.
Q.12 X and Y divide profits and
losses in the ratio of 3:2. Z is admitted in the firm as a new partner with 1/6th
share, which he acquires from X and Y in the ratio of 1:1. Calculate the new
profit sharing ratio of all partners.
Q.13 Rakhi and Parul are partners
sharing profits in the ratio of 3:1. Neha is admitted as a partner. The new
profit sharing ratio among Rakhi, Parul and Neha is 2:3:2. Find out the
sacrificing ratio.
Q.14 X and Y are partners sharing
profits in the ratio of 5:4. They admit Z in the firm for 1/3rd
profit, which he takes 2/9th from X and 1/9th from Y and
brings Rs. 1500 as premium. Pass the necessary Journal entries on Z’s
admission.
Q.15 Ranzeet and Priya are two
partners sharing profits in the ratio of 3:2. They admit Nilu as a partner, who
pays Rs. 60,000 as capital. The new ratio is fixed as 3:1:1. The value of
goodwill of the firm was determined at Rs. 50,000. Show journal entries if Nilu
brings goodwill for her share in cash.
Q.16 A and B are partners sharing
profits equally. They admit C into partnership, C paying only Rs. 1000 for
premium out of his share of premium of Rs. 1800 for 1/4th share of
profit. Goodwill account appears in the
books at Rs. 6000. All the partners have decided that goodwill should not
appear in the new firms books.
Q.17 A and B are partners sharing profits in the
ratio of 3:2. Their books showed goodwill at Rs. 2000. C is admitted with 1/4th
share of profits and brings Rs. 10,000 as his capital but is not able to bring
in cash goodwill Rs. 3000. Give necessary Journal entries.
Q.18 Piyush and Deepika are
partners sharing in the ratio of 7:3. they admit Seema as a new partner. The
new ratio being 5:3:2. Pass journal entries.
Q.19 A and B are partners with
capital of Rs. 26,000 and Rs. 22,000 respectively. They admit C as partner with
1/4th share in the profits of the firm. C brings Rs. 26,000 as his
share of capital. Give journal entry to record goodwill on C’s admission.
Q.20 A and B are partners sharing
profits in the ratio of 3:2. They admit C into partnership for 1/4th
share. C is unable to bring his share of goodwill in cash. The goodwill of the
firm is valued at Rs. 21,000. give journal entry for the treatment of goodwill
on C’s admission.
Q.21 A and B are partners with
capitals of Rs. 13,000 and Rs. 9000 respectively. They admit C as a partner
with 1/5th share in the
profits of the firm. C brings Rs. 8000 as his capital. Give journal entries to
record goodwill.
Q.22 A, B and C were partners in
the ratio of 5:4:1. On 31st Dec. 2006 their balance sheet showed a
reserve fund of Rs. 65,000, P&L A/C (Loss) of Rs. 45,000. On 1st
January, 2007, the partners decided to change their profit sharing ratio to
9:6:5. For this purpose goodwill was valued at Rs. 1,50,000.
The partners do not want to distribute
reserves and losses and also do not want to record goodwill.
You are required to pass single journal entry
for the above.
Q.23 A and B were partners in the
ratio of 3:2. They admit C for 3/13th share. New profit ratio after
C’s admission will be 5:5:3. C brought some assets in the form of his capital
and for the share of his goodwill.
Following were the
assets:
Assets Rs.
Stock 2,44,000
Building 2,40,000
Plant and Machinery 1,40,000
At the time of
admission of C goodwill of the firm was valued at Rs. 12,48,000.
Pass necessary
journal entries.
Q.24 X, Y and Z
are sharing profits and losses in the ratio of 5:3:2. They decide to share
future profits and losses in the ratio of 2:3:5 with effect from 1st
April, 2002. They also decide to record the effect of the reserves without
affecting their book figures, by passing a single adjusting entry.
Book Figure
General Reserve Rs.
40,000
Profit &
loss A/C Rs.
10,000
Advertisement
Suspense A/C Rs.
20,000
Pass the
necessary single adjusting entry.
CHAPTER:4
RECONSTITUTION OF
APARTNERSHIP FIRM
RETIREMENT /DEATH
OF A PARTNER
Q.1 Distinguish between Sacrificing Ratio and
Gaining Ratio.
Q.2 Kamal, Kishore and Kunal are partners in a
firm sharing profits equally. Kishore retires from the firm. Kamal and Kunal
decide to share the profits in future in the ratio 4:3. Calculate the Gaining
Ratio.
Q.3 P, Q and R are partners sharing profits in
the ratio of 7:2:1. P retires and the new profit sharing ratio between Q and R
is 2:1. State the Gaining Ratio.
Q.4 A, B and C are partners in a firm sharing
profits in the ration of 2:2:1. B retires and his share is acquired by A and C
equally. Calculate new profit sharing ratio of A and C.
Q.5 X, Y and Z are partners sharing profits in
the ratio of 4/9, 1/3 and 2/9. X retires and surrenders 2/3rd of his
share in favour of Y and remaining in favour of Z. Calculate new profit sharing
ratio and gaining ratio.
Q.6 X, Y and Z have been sharing profits and
losses in the ratio of 3:2:1. Z retires. His share is taken over by X and Y in
the ratio of 2:1. Calculate the new profit sharing ratio.
Q.7 P, Q and R were partners in a firm sharing
profits in 4:5:6 ratio. On 28-02-2008 Q retired and his share of profits was
taken over by P and R in 1:2 ratio. Calculate the new profit sharing ratio of P
and R.
Q.8 Mayank, Harshit and Rohit were partners in a
firm sharing profits in the ratio of 5:3:2. Harshit retired and goodwill is
valued at Rs 60000. Mayank and Rohit decided to share future profits in the
ratio 2:3. Pass necessary journal entry for treatment of goodwill.
Q.9 Ramesh, Naresh and Suresh were partners in a
firm sharing profits in the ratio of 5:3:2. Naresh retired and the new profit
sharing ratio between Ramesh and Suresh was 2:3. On Naresh retirement the
goodwill of the firm was valued at Rs. 120000. Pass necessary journal entry for
the treat.
Q.10 L, M and O were partners in a firm sharing
profits in the ratio of 1:3:2. L retired and the new profit sharing ratio between
M and O was 1:2. On L’s retirement the goodwill of the firm was valued Rs.
120000. Pass necessary journal entry for the treatment of goodwill.
Q.11 State the journal entry for treatment of
deceased partners share of profit for his life period in the year of death.
Q.12 X, Y and Z were partners in a firm sharing
profits and losses in the ratio of 3:2:1. The profit of the firm for the year
ended 31st March, 2007 was Rs. 3,00000. Y dies on 1st
July 2007. Calculate Y’s share of profit up to date of death assuming that
profits in the year 2007- 2008 have been accured on the same scale as in
the year 2006-07 and pass necessary journal entry.
Q.13
A, B and C were partners in a firm sharing profits in 3:2:1 ratio. The firm
closes its books on 31st March every year. B died on 12-06-2007. On
B’s death the goodwill of the firm was valued at Rs. 60000. On B’s death his
share in the profit of the firm till the time of his death was to be calculated
on the basis of previous years which was Rs.150000. Calculate B’s share in the
profit of the firm. Pass necessary journal entries for the treatment of
goodwill and B’s share of profit at the time of his death.
Q.14
A, B and C were partners in a firm sharing profits in the ratio of 2:2:1. C
dies on 31st July, 2007. Sales during the previous year upto 31st
march, 2007 were Rs. 6,00,000 and profits were Rs. 150000. Sales for the
current year upto 31st July were Rs. 250000. Calculate C’s share of
profits upto the date of his death and pass necessary journal entry.
CHAPTER:5
DISSOLUTION OF PARTNERSHIP FIRM
Q.1
Distinguish between dissolution of partnership and dissolution of partnership
firm on the basis of continuation of business.
Q.2
Why is Realisation Account prepared on dissolution of partnership firm?
Q.3
State any one point of difference between Realisation Account and Revaluation
Account.
Q.4
All partners wish to dissolve the firm. Yastin, a partner wants that her loan
of Rs. 2,00000 must be paid off before the payment of capitals to the partners.
But, Amart, another partner wants that the capital must be paid before the
payment of Yastin’s loan. You are required to settle the conflict giving
reasons.
Q.5
On a firms dissolution debtors as shown in the Balance sheet were Rs. 17000 out
of these Rs. 2000 became bad. One debtor of Rs. 6000 became insolvent and 40%
could be recovered from him. Full recovery was made from the balance debtors.
Calculate the amount received from debtors and pass necessary journal entry.
Q.6
On dissolution of a firm, Kamal’s capital account shows a debit balance of Rs.
16000. His share of profit on realization is Rs. 11000. He has taken over firms
creditors at Rs. 9000. Calculate the final payment due to /from him and pass
journal entry.
Q.7
A and B were partners in a firm sharing profits and losses equally. Their firm
was dissolved on 15th March, 2004, which resulted in a loss of Rs.
30,000. On that date the capital A/C of A showed a credit balance of Rs. 20,000
and that of B a credit balance of Rs. 30000. The cash account has a balance of
Rs. 20000. You are required to pass the necessary journal entries for the (i)
Transfer of loss to the capital accounts and (ii) making final payment to the
partners.
Q.8
What journal entries would be passed in the books of A and B who are partners in
a firm, sharing profits in the ratio of 5:2, for the following transactions on
the dissolution of the firm after various assets (other than cash) and third
party liabilities have been transferred to Realisation Account?
(a)
Bank loan Rs. 16,000 is paid.
(b)
Stock worth Rs. 6000 is taken over by B.
(c)
Loss on Realisation Rs. 14,000.
(d)
Realisation expenses amounted to Rs. 2,000, B has to
bear these expenses.
(e)
Deferred Revenue
Advertising Expenditure appeared at Rs. 28,000.
(f)
A typewriter completely written off in the books of the
firm was sold for Rs. 200.
ACCOUNTING FOR SHARE CAPITAL & DEBENTURE
THEORETICAL QUESTIONS
Q.1 Jain Ltd has incurred a loss
of Rs. 8,00,000 before payment of
interest on debentures. The directors of the company are of the opinion that interest
on debentures is payable only when company earn profit. Do you agree?
Q.2 As per latest guidelines
governing the servicing of debentures a company is required to create on
special account. Name that account.
Q.3 Name the method of redemption
of debentures in which there is no requirement of creating Debenture Redemption
Reserve.
Q.4 What is the nature of receipt
of premium on issue of shares?
Q.5 Can a company issue shares at
a premium in the absence of any express authority in its articles?
Q.6 What is the maximum rate of
interest which the board of directors of a company can normally pay on
calls-in-advance if the articles are silent on the matter of such interest?
Q.7 State with reason whether a
company can issue its shares at a discount in its Initial Public Offer (IPO).
Q.8 Why securities premium money
can not be used for payment of cash dividend among shareholders?
Q.9 Jamuna Ltd. with paid-up
share capital of Rs. 60,00,000 has a balance of Rs. 15,00,000 in securities
premium account. The company management does not want to carry over this
balance. You are required to suggest the method for utilizing this premium
money that would achieve the objectives of the management and maximize the
return to shareholders.
Q.10 Distinguish between a share
and a Debenture.
Q.11 Can share premium be
utilised for the purchase of fixed assets?
Q.12 State in brief, the SEBI
guidelines regarding Debenture Redemption Reserve(DRR).
Q.13 Which companies are exempted
from the obligation of creating DRR by SEBI?
Q.14 What is the restriction on
reissue of forfeited shares at discount?
PRACTICAL QUESTIONS
Q.1
X Ltd. issued 20,000 shares of Rs. 10 each at a premium of 10% payable as
follows:-
On application
Rs. 2 ( 1st Jan 2001), on allotment Rs. 4 (including premium) (1st
April 2001), On first call Rs. 3 (1st June 2001), on second call
& final call Rs. 2 (1st Aug. 2001).
Applications
were received for 18,000 shares and the directors made allotment in full. One
shareholder to whom 40 shares were allotted paid the entire balance on his
share holdings with allotment money and another shareholder did not pay
allotment and 1st call money on his 60 shares but which he paid with
final call.
Calculate
the amount of interest paid and received on calls-in-advance and
calls-in-arrears respectively on 1st Aug. 2001.
Q.2 X Ltd took over the assets of Rs. 6,60,000 and liabilities of Rs.
80,000, Y Ltd for Rs. 600,000. Show the necessary journal entries in the book
of X Ltd. assuming that
Case-I : The consideration was payable 10% in cash and the balance in
54000 equity shares of Rs. 10 each.
Case-II : The consideration was payable 10% in cash and the balance in
45000 equity shares of Rs. 10 each.
Case-III : The consideration was payable 10% in cash and the balance
in 60,000 equity shares of Rs. 10 each.
Q.3 X ltd. was formed with a capital of Rs. 500,000 divided into
shares of Rs. 10 each out of these 2000 shares were issued to the vendors as
fully paid as purchase consideration for a building acquired, 1000 shares were
issued to signatories to the memorandum of association as fully paid. The
directors offered 6500 shares to the public and called up Rs. 6 per and
received the entry called up amount on
share allotted. Show these transaction in the Balance sheet of a company.
Q.4 X Ltd. invited applications
for 11,000 shares of Rs. 10 each issued at 10% premium payable as:
On application Rs. 3 (including Rs. 1
premium)
On allotment Rs. 4 (including Rs. 1 premium)
On 1st
Call Rs. 3
On 2nd&
final call Rs. 2
Application were
received for 24000 shares.
Category I : One
fourth of the shares applied for allotted 2000 shares.
Category II:
Three fourth the shares applied for allotted 9000 shares.
Remaining
applicants were rejected. Mr. Mohan holding 300 shares out of category II
failed to pay allotment and two calls and his shares were re issued @ Rs. 11
fully paid-up. Pass necessary journal entries.
Q.5 A company forfeited 240 shares of Rs. 10 each issued to raj at a
premium of 20%. Raman had applied for 300 shares and had not paid anything
after paying Rs 6 per share including premium on application. 180 shares were
reissued at Rs. 11 per share fully paid up. Pass journal entries relating to
forfeiture and reissue of shares.
Q.6 On 1st July 2007.
A Ltd gave notice of their intention to redeem their outstanding Rs. 400,000 8%
Debentures on 1st January, 2008 @ Rs. 102 each and offered the
holders the following options-
(a) To subscribe for (i) 6% cumulative preference shares of Rs. 20 each
at Rs. 22.50 per share, accepted by debenture holders of Rs. 1,71,000 or (ii)
12% debentures were issued @96% accepted by the holders of Rs. 1,44,000
Debentures.
(b) Remaining debentures to be redeemed for cash if neither of the
option under (a) was accepted. Pass necessary journal entries.
Q. 7 Sonu Ltd. company issued 15,000 shares of Rs. 10 each. Payment on
there shares is to be made as follows:
On
application Rs. 4 ( 1st Feb, 2003)
On
allotment Rs. 3 (1st April,
2003)
On
final call Rs. 3 (1st May,
2003)
Rakesh to whom
1000 shares were allotted paid the full amount on application and mohan to whom
200 shares were allotted paid the final call money on allotment. Interest @ 6%
was paid on 1st May, 2003. Pass necessary journal entries.
Q.8 TPT Ltd. invited applications for issuing 1,00,000 equity shares of
Rs. 10 each at a premium of Rs. 3 per share. The whole amount was payable on
application. The issue was oversubscribed by 30,000 shares and allotment was
made on pro-rata basis. Pass necessary journal entries in the books of the
company.
Q9 What is Zero Coupon Bond ?
Q10 What is a Debenture Trust
Deed?
Q.11
On 01-04-1999, A Ltd., issued 2000, 7% debentures of Rs. 100 each at a discount
of 10% redeemable at par after 4 years by converting them into equity shares of
Rs. 100 each issued at a premium of 25%.
Pass journal entries in the
following cases:
(i)
If debentures are redeemed on maturity.
(ii)
If debentures are redeemed before maturity.
Q.12 Pass journal entries for the
following at the time of issue of debentures:
(a) B Ltd. issues 30,000, 12% Debentures of Rs. 100 each at a discount
of 5 % to be repaid at par at the end of 5 years.
(b) E Ltd. issues Rs. 60,000, 12%
Debentures of Rs. 100 each at a discount of 5 % repayable at a premium
of 10% at the end of 5 years.
(c) F Ltd. issues Rs. 70,000, 12% Debentures of Rs. 100 each at a
premium of 5 % redeemable at 110%.
Q.13
500 shares of Rs. 100 each issued at a discount of 10% were forfeited for the
non-payment of allotment money of Rs. 50 per share. The first and final call of
Rs.10 per share on these shares were not made. The forfeited shares were
reissued at Rs. 80 per share fully paid-up.
Q.14 200 shares of Rs. 100 each issued at a discount of 10% were
forfeited for the non- payment of allotment money of Rs. 50 per share. The
first and final call of Rs. 10 per share on these shares were not made. The forfeited share were
reissued at Rs. 14 per share fully paid up.
Q.15 800 Shares of Rs. 10 each issued at per were forfeited for the
non-payment of final call of Rs. 2 per share. These shares were reissued at Rs.
8 per share fully paid-up.
Chapter 3 & 4
Analysis of Financial
Statements
Qus:1 How will you show the following items in the
Balance sheet of a company.
(i) Loose tools (ii) Livestock
Qus:2 Under what heads the following items on the
Liabilities side of the Balance sheet Of a company will
be
presented
(i)
Provision for taxation.
(ii)
Bills Payable
Qus:3
State any two items which are shown under the head ‘Reserves and
Surplus” in a company balance sheet.
Qus:4
Give the format of the Balance sheet of a company(main headings only) as per the requirement of
Schedule VI of the companies
Act.1956.
Qus:5 Give the heading under which the following
items will be shown in a company’s Balance sheet:
(i)
Patents.
(ii)
Discount on issue of Debentures
(iii)
Sundry Debtors
(iv)
Securities Premium.
(v)
Railway sliding.
Qus:6 The following balance have been from the
book of Sahara Ltd. Share capital Rs.10,00,000, securities
Premium Rs. 1,00,000, 9% Debentures Rs.
500,000, Creditors Rs. 200,000., Proposed Dividend
Rs.
50,000. , Freehold property RS. 9,00,000, share of Reliance Industries Rs.
4,00,000, Work-in-
Progress Rs. 4,00,000, Discount on Issue of Debentures Rs. 1,00,000.
Prepare the balance sheet of the company as per schedule VI part 1 of the companies Act.1956.
Prepare the balance sheet of the company as per schedule VI part 1 of the companies Act.1956.
Qus:7 List any three items that can be shown as
contingent Liabilities in a company’s
Balance sheet.
Qus:8 Give two examples Of “Miscellaneous
Expenditure”
Q 9. State how the creditors are interested in the Analysis
of Financial statements.
Qus:10 Prepare
Comparative income statement from the following information for the years ended
march
31,2003 and 2004.
|
Particulars
|
2003(Rs.)
|
2004(Rs.)
|
|
1.Net Sales
2.Cost of Goods Sold
3. Direct Expenses
3.Indirect Expenses
4.Income Tax rate
|
10,00,000
60% of sales
10,000
10% of Gross profit
50%
|
15,00,000
60% of sales
12,000
10% of Gross Profit
60%
|
Interest on
Investments @ Rs 40,000 p.a
CHAPTER - 5
RATIO
ANALYSIS
Qus:1 How will
you assess the liquidity or short term financial position of a business ?
Qus:2 Current
ratio of Reliance Textiles Ltd. Is 1.5 at present. In future it want to improve
this ratio to 2. Suggest any two accounting transaction for improving the
current ratio.
Qus:3 State one
transaction which results in an increase in ‘ liquid ratio ‘and nochange in
‘current ratio’.
Qus:4 Why stock
is excluded from liquid assets ?
Qus:5 Quick
ratio of a company is 1.5 :1 . State giving reason whether the ratio will
improve , decline or Not change on
payment of dividend by the company.
Qus:6 State one
transaction which result in a decrease in ‘ debt-equity ratio ‘ and no change
in ‘ current Ratio ‘.
Qus:7 How does
ratio analysis becomes less effective when the price level changes?
Qus:8. Indicate
which ratio a shareholders would use who is examining his portfolio and wants
to decide Whether he should hold or sell his shareholdings?
Qus:9 Indicate
which ratio would be used by a Long-Term creditor who is interested in
determining whether his claim is
adequately secured ?
Qus:10 What will
be the Operating profit, If operating Ratio is 78% ?
Qus:11 The
Debaters turnover Ratio of a company is 6 times. State with reasons whether the
ratio will Improve , decrease, or not change due to increases in the value of
closing stock by Rs. 50,000?
Qus:12 What will
be the impact of ‘ Issue of shares against the purchase of fixed assets ‘ on a
debt Equity ratio of 1:1 ?
Qus:13 State one transaction
involving a decrease in Liquid ratio and no change in current ratio.
Qus:14 Assuming that the Debt
Equity Ratio is 2:1. State giving reason , whether the ratio will improve, decline or will have no change
in case bonus shares allotted to equity shareholders by Capitalizing profits.
Qus:15 The ratio of current Assets (Rs. 9,00,000) to
current liabilities is 1.5:1. The accountant of this Firm is interested in
maintaining a current ratio of 2:1 by paying some part of current liabilities
You are required to suggest him the amount of current liabilities which must be
paid for the Purpose.
Qus:16 A company has a loan of Rs.15,00,000 as part
of its capital employed. The interest payable on Loan is 15% and the ROI of the company is
25%. The rate of income tax is 60%.what is the Gain to shareholders due to the
loan raised by the company?
Qus:17 Rs.2,00,000 is the cost of goods sold, inventory
turnover 8 times, stock at the beginning is 1.5 Times more than the stock at
the end. Calculate the value of opening & closing stock .
Qus:18 From the given information, calculate the
stock turnover ratio: sales Rs.5,00,000,
Gross Profit 25% on cost , opening stock was 1/3rd of the value of
closing stock. Closing stock was 30% Of
sales.
Qus:19 Calculate cost of goods sold from the
following information: Sales Rs.12,00,000, Sales Returns Rs.80,000, operating expenses Rs.1,82,000,
operating ratio 92%.
Qus:20 Calculate the amount of opening stock and
closing stock from the following figures:
Average Debt collection period 4 month stock turnover ratio 3 times.
Average Debtors Rs.1,00,000 Cash sales being 25% of total sales Gross profit
ratio 25% stock at the end was 3 Times that in the beginning.
Qus:21 (a) Calculate return on
Investment from the following information :
Net profit
after Tax Rs.6,50,000.
12.5% convertible debentures Rs
8,00000.
Income Tax
50%.
Fixed Assets
at cost Rs.24,60,000.
Depreciation
reserve Rs.4,60,000.
Current Assets Rs. 15,00,000.
Current
Liabilities Rs. 7,00,000.
(b) Profit before interest and tax(PBIT)
Rs.2,00,000, 10% preference shares of Rs.100 each.
Rs.2,00,000, 2,0000 equity shares of Rs.
10 each, Rate of tax @ 50% calculate earning pen
Share(EPS).
CHAPTER 6
CASH FLOW STATEMENT
Qus:1 Why is the cash flow
statement not a suitable judge of profitability ?
Qus:2 Under which accounting
standard , cash flow statement is prepared ?
Qus:3 Why do we add back
depreciation to net profit while calculating cash flow from operating
activities.
Qus:4 How will you classify loans
given by Birla Finance Ltd.? While preparing cash flow statement.
Qus:5 How will you classify
deposits by customers in HDFC Bank while preparing cash flow statement.
Qus:6 Where will you show
purchase of computer in cash flow statement ?
Qus:7 Give two examples of ‘ Significant non cash
transactions ‘.
Qus:8 How will you classify loans given by Tata
Manufacturing Company.
Qus:9 A company receives a dividend of Rs. 2 Lakhs on its
investment in other company’s share will it be
Cash inflow
from operating or investing activities in case of a.
(i)
Finance Company.
(ii)
Non-Finance Company.
Qus:10 How are
various activities classified as per AS-3 (Revised) ?
Qus:11 Cash flow from operating Activities + Cash flow from
Investing Activities + Cash flow from Financing
Activities =……………………………………
Qus:12 What are the two methods
which can be employed to calculate net cash flow from operating activities ?
Qus:13 Escorts Ltd. Engaged in
the business of manufacturing tractors invested Rs.40,00,000 in the shares of a
Car manufacturing Company. state with reason whether the dividend received on
this investment will be cash flow from
operating activities or Investing activities.
Qus:14 Modern Toys Ltd. Purchased
a machinery of Rs.20,00,000 for manufacturing toys. State giving reason Whether the cash flow due to the purchase of
machinery will be cash flow from operating activities,
Investing
activities or Financing activities ?
Qus:15 From the following profit or loss account find out
the flow of cash from operating activities of
Mohan
Ltd.
Dr. PROFIT AND LOSS ACCOUNT
Cr.
|
Particulars
|
Amount
|
Particulars
|
Amount
|
|
To Rent Paid 14,000
To Salaries
To Loss on sale of
Furniture
To Goodwill written Off
To Bad Debts
To Office Expenses
To Discount allowed
To Proposed Dividend
To Provision for Tax
To Net Profit
|
(Rs)
12,000
25,000
15,000
10,000
8,000
3,000
18,000
7,000
30,000
22,000
52,800
2,02,800
|
By Gross Profit
By Profit on Sale of
Machine
By Tax Refund
By Rent received 4,000
|
(Rs)
1,82,000
12,000
3,800
5,000
|
Note:
There was increase in Closing stock by Rs. 25,000.
Qus:16 Prepare Cash
flow Statement from the following information of Box Ltd. For the year ended
March
31,2004.
BALANCE SHEETS OF
LION LTD. AS ON MARCH 31,2004
|
Liabilities
|
2003
|
2004
|
Assets
|
2003
|
2004
|
|
Share capital
Profit & Loss Account
General Reserve
Tax Provision
Creditors
Bill Payables
Depreciation Provision
|
(Rs)
3,00,000
1,20,000
60,000
70,000
50,000
30,000
25,000
6,55,000
|
(Rs)
4,00,000
2,60,000
95,000
80,000
90,000
10,000
40,000
|
Goodwill
Machinery
12% Investments
Stock
Debtors
Cash at Bank
|
(Rs)
70,000
3,00,000
1,50,000
35,000
50,000
30,000
20,000
6,55,000
|
(Rs)
30,000
3,20,000
3,00,000
1,85,000
70,000
40,000
30,000
9,75,000
|
Additional
Information :
1.Investment costing Rs.50,000
were sold for Rs. 48,000 during the year.
2.Tax paid during the year
Rs.70,000.
3.Interest received on
Investment Rs. 12,000.
SUGGESTED ANSWERS
ON
HOTS
CHAPTER:1
NOT FOR PROFIT ORGANISATION
Q. 1 (i)
Subscription (ii) Donation.
Q.2 (i) Receipts and Payments Account is a summary of Cash Book.
(ii) Non- cash expenses such as depreciation
and outstanding expenses are not shown in Receipts and Payments Account.
Q.3 Subscription due to be received is added with subscription received
during the year in Income and Expenditure A/C and shown as an asset in the
closing balance sheet.
Q.4 Subscription received in advance is subtracted from subscription
received during the year in Income and Expenditure A/C and shown as a liability
in the closing Balance sheet.
Q.5 Fund based accounting is a book peeping technique where by
separate self-balancing sets of assets, liability, income, expenses and fund
balance accounts are maintained for each contribution for a specific purpose.
Q.6 Income
and Expenditure A/C
For the year ended ………
|
Expenditure
|
Rs.
|
Income
|
Rs.
|
|
To Tournament Expenses 18000
Less Tournament Fund 15000
|
3000
|
|
|
Q. 7 Calculation of current year
subscription to be shown in Income and Expenditure A/C for the year ended March
31, 2008 :-
Total subscription received during the year 250000
Add:-
Outstanding subscription on
31-03-2008 35000
Advance subscription on 01-04-2007 NIL 35000
285000
Less :-
Outstanding subscription on
01-04-07 50000
Advance subscription on
31-03-2008 30000 (80000)
Current year
subscription
205000
Q. 8 Income and Expenditure A/C
For the year ending March 31, 2007
|
Expenditure
|
Rs.
|
Income
|
Rs.
|
|
|
|
By Subscription 30000
Add:- outstanding subscription for 2006 -07
(18500-1500) 17000
Add:- Advance in 2005-06 4000
|
51000
|
Balance sheet
As
on 31st March 20007
|
Liabilities
|
Amount
|
Assets
|
Amount
|
|
Subscription in advance
|
5000
|
Subscription outstanding 2005-06 1500
2006-07 17000
|
18500
|
Q. 9 Calculation of salaries to
be shown in Income and Expenditure A/C for the year ended March 31, 2008:-
Rs.
Total Salaries paid during the year 87,000
Add:-
Outstanding salaries on 31-03-2008 32,000
Prepaid
salaries on 01-04-2007 19,000 51,000
138,000
Less:-
Outstanding Salaries on 01-04-2007 17,000
Prepaid salaries on 31-03-2008 2,000 (37,000)
Salaries to be shown in Income
and Expenditure A/C
101000
Q. 10
Amount paid for sports items during the year 97900
Add:-
Stock of sports items as on 01-04-2006 44700
Creditors
for sports as on 31-03-2007 26500 71200
169100
Less :-
Stock
of sports items as on 31-03-2007 24500
Sports items to be debited in the
Income and expenditure A/C 144600
Q.11 Balance sheet of Cosmos Ltd.
As on 31st
March, 2007
|
Liabilities
|
Amount
|
Assets
|
Amount
|
|
Tournament Fund 1,50000
Add
Income from Tournament Fund Investment 18,000
Accured interest
on tournament fund Investment 6000
1,74,000
Less Tournament Expenses 12,000
|
162000
|
Tournament
Fund investment.
Accured interest on Tournament
fund Investment
|
1,50000
6000
|
Q. 12 Amount paid for medicine during the year 6,79000
Add:-
Stock
of medicine on 01-04-2006 90,000
Creditors
for medicine on 31-03-2007
204,000 294,000
9,73,000
Less:-
Stock of medicine on 31-03-2007 124,000
Creditors for medicine as on
01-04-2006 240,000 364,000
Medicine to be debited in in Income and Expenditure
A/C. 609000
Q. 13 Difference between
Receipts and Payments and Income and Expenditure.
|
Basis
|
Income and Expenditure
|
Receipts and Payments
|
|
(i) Nature
|
It is a kin to profit and loss A/C
|
It is the summary of Cash book.
|
|
(ii) Nature of Items
|
It records income and expenditure of revenue nature only
|
It records receipts and payments of both capital and revenue nature.
|
|
(iii) Result
|
The result of Income and expenditure A/C is surplus or deficit.
|
The result of Receipt and Payments is closing balance of cash and
Bank.
|
CHAPTER:2
ACCOUNTING FOR PARTNERSHIP FIRMS: BASIC CONCEPTS
Ans. 1 (i) When additional
capital is introduced.
(ii) When capital is withdrawn.
Ans.
2 60000 X 9/100 = 5400
20000 X 9/100 X 3/12 =
450
Total
Interest 5850
Ans.
3 C is correct as in the absence of partnership agreement, profits and losses
are divided equally among partners.
Ans. 4 A’s claim is not valid as in
the absence of partnership deed, no salary is allowed to partners.
Ans.
5 Chander’s claim is not valid as in the absence of partnership deed interest
on partners loan is provided @ 6% p.a.
Ans.
6 As per provision of Indian Partnership act 1932, when there is no
partnership, no partner is entitled for interest on his capital contribution.
Ans.
7 Interest on drawing = 12000 X 6/100 X 6.5/12 = 390
Ans.
8 Interest on drawing = 9600
X 6/100 X 5.5/12 = 264
Ans.
9 ANALYSIS TABLE
|
|
A
|
B
|
C
|
|
Interest
on Capital (3 years) Cr.
|
30000
|
24000
|
21000
|
|
Adjustment
of profit Dr.
|
25000
|
25000
|
25000
|
|
|
(Cr) 5000
|
(Dr) 1000
|
(Dr) 4000)
|
Journal Entry :-
B’s
current A/C Dr. 1000
C’s
Current A/C Dr. 4000
To
A’s current A/C 5000
(Adjustment entry for omission of
interest on capital @ 10% p.a.)
Ans. 10 ANALYSIS
TABLE
|
|
X
|
Y
|
Z
|
Total
|
|
Interest on drawings (Dr)
|
750
|
630
|
600
|
1980
|
|
Adjustment
of profit
(Cr)
|
990
|
660
|
330
|
1980
|
|
|
(Cr) 240
|
(Cr) 30
|
(Dr)270
|
-
|
Z’s
Capital A/C Dr. 270
To
X’s Current A/C
240
To
Y’s current A/C 30
(Adjustment entry for omission of
interest on drawings @ 5 % p.a.)
Ans.
11 ANALYSIS
TABLE
|
|
A
|
B
|
C
|
Total
|
|
Wrong profit Dr.
|
20000
|
20000
|
20000
|
60000
|
|
Interest
on Capital @ 2%
Cr.
|
3000
|
2000
|
1600
|
6600
|
|
Correct
profit
Cr.
|
26700
|
17800
|
8900
|
53400
|
|
|
(Cr) 9700
|
(Dr) 200
|
(Dr) 9500
|
-
|
B’s
Current A/C Dr. 200
C’s
Current A/C Dr. 9500
To
A’s current A/C 9700
(Adjustment entry for interest on
capital and distribution in wrong ratio.)
Ans. 12
ANALYSIS
TABLE
|
|
Ravi
|
Mohan
|
Total
|
|
Wrong Profit Distributed Dr.
|
252000
|
252000
|
504000
|
|
Interest
on capital omitted
Cr.
|
120000
|
84000
|
204000
|
|
Salary
to be provided
Cr.
|
72000
|
60000
|
132000
|
|
Current
Profit Cr.
|
98000
|
70000
|
168000
|
Net
adjustment Cr. 38000 Dr. 38000
Mohan’s
current A/C Dr. 38000
To
Ravi’s Current A/C
38000
(Adjustment entry for omission of certain
provisions of partnership deed.)
Ans. 13 Distinction between Fixed and
Fluctuating Capital method:-
|
Basis
of differences
|
Fixed
capital method
|
Fluctuating
Capital Method
|
|
(i)
Number of Accounts
|
Two
accounts are maintained in fixed capital method.
|
Only
one account is maintained.
|
|
(ii)
Change in capital A/C balances
|
Remain
unchanged
|
Balance
fluctuate frequently.
|
|
(iii)
Recording of transactions
|
Adjustment
regarding interest on capital, interest on drawings partners salary and
profits etc are recorded in partners current account.
|
All
these adjustments are recorded in partners capital accounts.
|
Ans. 14 Profit transferred to A’s current A/C Rs. 51,000
B’s current A/C Rs. 45,000
C’s current A/C Rs. 44,000
Ans. 15 Net profit transferred to A’s
Capital A/C Rs. 4,650
B’s Capital A/C Rs. 3,100
CHAPTER:3
RECONSTITUTION OF
PARTNERSHIP
ADMISSION
OF A PARTNER
Ans. 1 Need of valuation of
goodwill arises on the following occasions:-
(i)
Change in profit sharing ratio of existing partners.
(ii)
Admission of a partner.
(iii)
Retirement of a partner.
(iv)
Death of a partner.
Ans. 2 It is
necessary to revalue assets and reassess liabilities at the time of admission
of new partners as if assets and liabilities are overstated or understated in
the books then its benefits or loss should not affect the near partner.
Ans. 3
Sacrificing ratio is the ratio in which old partners have agreed to sacrifice
their share of profit in favour of the new partner. This ratio is calculated by
deducting the new ratio from the old ratio.
Sacrificing Ratio = Old
Ratio - New Ratio
Ans. 4 (i) On
admission of a new partner.
(ii) On change on profit sharing
ratio of existing partner.
Ans. 5
(i)Capital employed = Assets – Liabilities
=
540000 – 80000
=
Rs. 460000
(ii) Normal Profit = Capital
employed X Normal rate of return/100
=
Rs. 460000 X 10/100 = 46000
(iii) Super Profit = Firm’s Average
profit – Normal Profit
= 60000 – 46000
= 14000
(iv) Goodwill = Super profit X 100/ Normal rate of return
= 14000 X 100/ 10
= 140000
Ans. 6 (i) Super
profit = Value of goodwill /Number of years purchase
= 180000/2
= 90000
(ii) Normal Profit = Capital
employed X Normal rate of return /100
=
1000000 X 15/ 100
=
150000
(iii)
Average Profit = Normal Profit + Super profit
=
150000 + 90000
=
240000
Ans. 7 (i) Super profit = value of
goodwill/ number of years purchase
= 240000/3
= 80000
(ii) Normal Profit = Average profit
– Super profit
= 20000 – 8000
= Rs. 12000
(iii) Capital Employee = Normal
Profit X 100/ Normal rate of return
= 12000 X 100/8
=
150000
Ans. 8 Rahul’s sacrificing share = 4/7 X 1/4 =
1/7
Sahil’s sacrificing share = 3/7 X 1/3 = 1/7
Rahul’s new share =
4/7 – 1/7 = 3/7
Sahil’s New share =
3/7 – 1/7 = 2/7
Kamal’s share =
1/7+1/7 = 2/7
New profit sharing ratio =
3:2:2
Ans. 9 Ajay’s scarifies = 1/4 X 2/3 =
2/12
Naveen’s scarifies =1/4 X 1/3 =
1/12
Ajay’s new share
= 5/8 – 2/12 = 11/24
Naveen’s New share
= 3/8 – 1/12 = 7/24
Surender’s share =
1/4 or 6/24
New ratio =
11:7:6
Ans. 10
Old ratio =
A: B = 3:2
A surrender =
3/5 X 1/6 = 3/30 =1/10
B surrender =
2/5 X 1/4 = 1/10
A’s new share =
3/5 – 1/10 = 5/10
B’s new share
= 2/5 – 1/10 = 3/10
C’s new share
= 1/10 +1/10 = 2/10
New ratio =
5/10, 3/10, 2/10 OR 5:3:2
Sacrificing Ration =
Old ratio – New ratio
A
= 3/5 – 5/10 = 1/10
B
= 2/5 – 3/10 = 1/10
Sacrificing ratio =
1:1
Ans. 11
Old ratio =
5:3
Shital = 1/4th Share
Let the profit be Rs. 1
Remaining profit =
1-1/4 =3/4
Arti : Babita =
2:1
Arti’s share =
3/4 X 2/3 = 1/2
Babita’s Share =
3/4 X 1/3 = 1/4
New Ratio =
1/2, 1/4, 1/4 Or 2:1:1
Sacrificing ratio =
Old ratio – New ratio
Arti’s sacrifies =
5/8 – 2/4 = 1/8
Babita’s Sacrifies =
3/8 – 1/4 = 1/8
Sacrificing Ratio =
1:1
Ans. 12 Old ratio = X:Y = 1:1
Z is admitted for
1/6th share which he acquire from X,Y in the ratio of 1:1
Since 1/6 X 1/2 =
1/12 from X and Y
X’s new ratio = 3/5 – 1/12 = 31/60
Y’s New ratio = 2/5 – 1/12 = 19/60
Z’s share = 1/6
New ratio = 31/60, 19/60,1/6 or 31:19:10
Ans. 13
Old ratio =
Rakhi : Parul = 3:1
New ratio = Rakhi: Parul: Neha = 2:3:2
Rakhi’s sacrifice =
3/4 – 2/7 = 13/28
Parul’s sacrifice =
1/4 -3/7 = 5/28 (Gain)
So, Rakhi’s sacrifice 13/28th share and Parul
is gaining to the extent of 5/28th share.
Ans. 14
Cash A/C Dr.
1500
To premium A/C 1500
(cash brought in by Z for his share of goodwill)
Premium A/C Dr.
1500
To X’s capital A/C 1000
To Y’s Capital A/C 500
(Goodwill distributed among sacrificing partners in the
ratio of 2:1.)
Ans. 15
Cash A/C Dr.
70000
To Nilu’s capital A/C 60000
To premium A/C 10000
(Cash brought in by new partner)
Premium A/C Dr.
10000
To Priya’s capital A/C 10000
(Amount of goodwill distributed among sacrificing partner
in their sacrificing ratio.)
Ans. 16
Cash A/C Dr.
1000
To premium A/C 1000
(Amount of goodwill brought in by C)
Premium A/C Dr.
1000
C’s capital A/C Dr.
800
To A’s capital A/C 900
To B’s capital A/C 900
(Rs. 1800 distributed among sacrificing partners in
sacrificing ratio.)
A’s capital A/C Dr.
3000
B’s capital A/C Dr.
3000
To goodwill A/C 6000
(Old goodwill written off among old partners in old
ratio.)
Q. 17
Cash A/C Dr.
10000
To C’s capital A/C 10000
(Cash brought in by C for his share of capital)
A’s capital A/C Dr.
1200
B’s Capital A/C Dr.
800
To goodwill A/C 2000
(Old goodwill written off among old partners in old
ratio.)
C’s capital A/C Dr.
3000
To A’s capital A/C 1800
To B’s capital A/C 1200
(Adjustment of goodwill on admission of C)
Ans. 18
Cash A/C Dr.
4000
To premium A/C 4000
(Amount of goodwill brought in by new partner)
Premium A/C Dr.
4000
To Piyush’s capital A/C 4000
(Goodwill distributed among sacrificing partners in their
sacrificing ratio.)
Ans. 19
Cash A/C Dr.
26000
To C’s capital A/C 26000
(Amount of capital brought in by new partner.)
C’s capital A/C Dr.
7500
To A’s capital A/C 3750
To B’s capital A/C 3750
(C’s share of goodwill distributed among A and B)
Calculation of Hidden goodwill:-
Capital of A and B =
26000 + 22000
=
48000
C brings =
26000 for 1/4th share
Total capital of the firm = 26000 X 4/1
=
104000
Existing capital of the firm = 48000 + 26000
=
74000
Goodwill =
104000 – 74000
=
30000
C’s share of goodwill =
30000 X 1/4 = 7500
Ans. 20
C’s capital A/C Dr.
5250
To A’s capital A/C 3150
To B’s capital A/C 2100
(C’s share of goodwill distributed among old partners in
sacrificing ratio i.e. 3:2)
Ans. 21
Cash A/C Dr.
8000
To C’s capital A/C 8000
(Amount of capital brought in by new partner)
C’s capital A/C Dr.
2000
To A’s capital A/C 1000
To B’s capital A/C 1000
(Share of goodwill distributed among A and B in
sacrificing ratio i.e. 1:1)
Calculation of Hidden Goodwill.
C brings 8000 for 1/5 share
Since total capital of the firm = 8000 X 5/1
=
40000
Existing capital of the firm = 13000 + 9000 + 8000
=
30000
Goodwill =
40000 – 30000
=
10000
C’s share of goodwill =
10000 X 1/5
=
2000
Ans. 22
C’s Capita; A/C Dr.
Rs. 25, 500
To A’s Capital A/C Rs.
8,500
To B’s Capital A/C Rs.
17,000
Ans. 23
|
|
Rs
|
Rs
|
|
(i) Stock A/C Dr.
Building A/C Dr
Plant & Machinery A/C
Dr.
To C’s capital A/C
To premium A/C
|
2,44,000
2,40,000
1,40,000
|
3,36,000
2,88,000
|
|
(ii) Premium A/C
Dr.
To A’s Capital A/C
To B’s Capital A/C
|
2,88,000
|
2,68,800
19,200
|
Ans. 24
|
Z’s Capital A/C
Dr.
|
Rs.
9000
|
|
|
To X’s Capital A/C
|
|
Rs.
9000
|
Chapter -4
RETIREMENT AND
DEATH OF A PARTNER
Ans. 1
|
Basis
|
Sacrificing Ratio
|
Gaining Ratio
|
|
(i)
Meaning
|
Proportion
in which old partners sacrifice their share in favour of new partner.
|
Proportion
in which continuing partner gain the share of outgoing partner on his
retirement.
|
|
(ii)
Occasion
|
Sacrificing
ratio is calculated at the time of admission of new partner.
|
Gaining
ratio is calculated at the time of retirement or death of a partner.
|
|
(iii)
Formula
|
Sacrificing
ratio = Old ratio – New ratio
|
Gaining
ratio – Old ratio
|
Ans. 2 Gaining Ratio = New ratio –
Old ratio
Kamal’s Gain = 4/7 – 1/3 = 5/21
Kunal’s Gain = 3/7 – 1/3 = 2/21
Gaining Ratio = 5:2
Ans. 3 Old ratio =
P Q R
7 :
2 : 1
New ratio =
Q R
2 : 1
Gaining Ratio = New ratio – Old ratio
Q’s gain =
2/3 – 2/10 = 14/30
R’s gain =
1/3 – 1/10 = 7/30
Gaining Ratio = 14:7 or 2:1
Ans. 4 A’s gaining share =
2/5 X ½ = 1/5
A’s new share =
2/5 + 1/5 = 3/5
C’s gaining share = 2/5 X ½ = 1/5
C’s New share =
1/5 + 1/5 = 2/5
New ratio of A and C = 3:2
Ans. 5
Y’s gaining share =
4/9 X 2/3 = 8/27
Z’s gaining share =
4/9 – 8/27 = 4/27
Y’s new share =
Old share + gain
= 1/3 + 8/27 = 17/27
Z’s new share =
2/9 + 4/27 = 10/27
[
New Ratio =
17:10
Gaining ratio =
8/27 : 4/27 or 2:1
Ans. 6
Old Ratio =
3:2:1
Z Retire
X’s Gaining =
1/6 X 2/3 = 2/18
X’s New share =
3/6 + 2/18 = 11/18
Y’s Gaining =
1/6 X 1/3 = 1/18
Y’s new share =
2/6 + 1/18 = 7/18
New Ratio =
11/18, 7/18 Or 11:7
Ans. 7 Old ratio =
P Q R
= 4:5:6
Q retired
P’s gaining =
1/3 X 5/15 = 1/9
P’s new share =
4/15 + 1/9 = 17/45
R’s Gaining share =
2/3 X 5/15 = 2/9
R’s new share =
6/15 + 2/9 = 28/45
New Ratio =
17:28
Ans. 8 Rohit’s capital A/C Dr. 24000
To Mayank’s capital A/C 6000
To harshit’s Capital A/C 18000
(Adjustment Entry for treatment of goodwill in gaining
ratio.)
Ans. 9 Suresh capital A/C Dr. 48000
To Ramesh’s capital A/C 12000
To Naresh capital A/C 36000
(Goodwill adjusted among the gaining partner in gaining
ratio.)
Ans. 10 O’s capital A/C Dr. 40000
To C’s capital A/C 20000
To M’s capital A/C 20000
(Adjustment of goodwill in gaining partners in their
gaining ratio.)
Ans. 11 Profit and loss
suspense A/C Dr
To deceased partner’s capital A/C
Ans. 12 Total profit for
the year ended 31st March 2007 = Rs 300000
Y’s share of profit up to date of death = 300000 X 2/6 X 3/12
= 25000
Profit and Loss suspense A/C Dr. 25000
To Y’s capital A/C 25000
( Y’s share of profit transferred to Y’s capital A/C)
Ans. 13 Profit and Loss
suspense A/C Dr. 10000
To B’s capital A/C 10000
(B’s share of profit transferred to B’s capital A/C)
A’s capital A/C Dr.
15000
C’s capital A/C Dr.
5000
To B’s capital A/C 20000
(B’s share of goodwill transferred to B’s capital A/C and
debited to remaining
partners capital A/C in their gaining ratio.)
B’s share of profit = Number of days from 1 April to 12th
June 2007
= 73 Days
B’s share of profit = 150000 X 1/3 X 73/365
= Rs. 10000
Ans. 15 Profit & Loss
suspense A/C Dr. Rs. 12,500
To C’s capital A/C Rs.
12,500
CHAPTER - 5
DISSOLUTION OF PARTNERSHIP FIRM
Ans. 1 In case of
dissolution of partnership, the firm may continue its business operation but in
case of dissolution of partnership firm, the business operations are
discontinued.
Ans. 2 Realisation account
is prepared to ascertain profit or loss on sale of assets and payment of
liabilities.
Ans. 3 Realisation Account
is prepared on dissolution of partnership firm and Revaluation account is
prepared on reconstitution of partnership firm.
Ans. 4 Yustin’s claim is
valid as according to section 48 (b) of partnership Act, partners loan are to
be paid before any amount is paid to partners on account of their capitals.
Ans. 5 Cash A/C Dr. 11400
To Realisation A/C 11400
(For debtors realized on dissolution of firm)
Ans. 6 Kamal’s capital A/C Dr. 4000
To cash A/C 4000
(for final payment to Kamal)
Ans. 7 (i) A’s capital A/C Dr. 15000
B’s capital A/C Dr.
15000
To realization A/C 30000
(For transfer of loss on dissolution)
(ii) A’s capital A/C Dr. 5000
B’s capital A/C Dr.
15000
To cash A/C 20000
(For final payment to
partners)
Ans. 8
|
|
JOURNAL
|
|
|
|
|
|
Dr. (Rs)
|
Cr. (Rs.)
|
|
(a)
|
Realisation A/C
Dr.
To Bank A/C
|
12000
|
12000
|
|
(b)
|
B’s capital A/C
Dr.
To realisation
A/C
|
6,000
|
6,000
|
|
(c)
|
A’s capital A/C
Dr.
B’s capital A/C
Dr.
To Realisation A/C
|
10,000
4,000
|
14000
|
|
(d)
|
B’s capital A/C Dr.
To bank A/C
|
2,000
|
2,000
|
|
(e)
|
A’s capital A/C
Dr.
B’s capital
A/C
Dr.
To deferred revenue advertising expenditure A/C
|
20,000
8,000
|
28,000
|
|
(f)
|
Bank A/C Dr.
To realisation A/C
|
200
|
200
|
ACCOUNTING FOR SHARE CAPITAL & DEBENTURE
Ans.1 No’ because Interest
on debentures is a charge against profit and not an appropriation of profit.
Ans. 2 Debenture Redemption
Reserve Account.
Ans. 3 Redemption of
debentures by conversion.
Ans. 4 Capital Nature.
Ans. 5 Yes. [ Hint See
section 78]
Ans. 6 According to table
‘A’ not exceeding 6 % p.a.
Ans. 7 Section 79 Companies
Act- the shares must be of a class already issued. So a company cannot issue
shares at a discount in its Initial Public Offer.
Ans. 8 It is restricted
under section 78 of Indian Companies Act.
Ans. 9 Mention the
provisions of section 78.
Ans. 10 Basis of difference
:
(i)
Ownership
(ii)
Return
(iii) Voting
Right
(iv) Convertibility
Ans. 11 No.
Ans. 12 As per SEBI
guidelines, an amount equal to 50% of the debenture issue, must be transferred
to DRR before the redemption begins.
Ans. 13 The following
companies are exempted from the obligation of creating DRR –
(i)
A company which has issued debentures with a maturity
of 18 months or less.
(ii)
Infrastructure companies, which are wholly engaged in
the business of developing, maintaining and operating infrastructure
facilities.
Ans. 14 A Company can
reissue forfeited shares at a discount not more than amount forfeited on these
shares.
PRACTICAL QUESTIONS
Ans. 1 Interest on Calls in
advance Rs. 2.80
Interest on Calls in arrears Rs. 5.50
Ans. 2
Solution:-
|
(i)
|
Sundry Assets A/C
Dr.
Goodwill A/C
Dr.
To Sundry Liabilities
To Y Ltd.
|
660,000
20,000
|
80000
600000
|
|
(ii)
|
Y Ltd.
Dr.
To Bank A/C
|
60,000
|
60000
|
|
Case I
|
Y Ltd
Dr.
To Equity share capital A/C
|
540,000
|
540, 000
|
|
Case II
|
Y Ltd
Dr.
To Equity share capital A/C
To securities premium A/C
|
540,000
|
450,000
90,000
|
|
Case III
|
Y’ Ltd
Dr.
Discount on issue share A/C
Dr.
To Equity share capital A/C
|
540,000
60000
|
600,000
|
Ans. 3 Issued Capital Rs.
95000.
Ans. 4 Hint-
(i)
Amount received on allotment Rs. 26,100.
(ii)
Amount transferred to share forfeited A/C Rs. 900
(iii)
Amount transferred to Capital Reserve Rs. 600.
Ans. 5 Capital Reserve Rs. 990.
Ans. 6
Hints-
(1) Case a (i) – No. of preference shares issued
7752.
(2) Case a (ii)- No. of debentures issued 1530.
(3) Remaining 85000 debentures paid in cash.
Ans. 7 Interest on Calls in
advance = 15 + 3 = Rs. 18
Ans. 8
(i)
Dr. Bank A/C Rs. 16,90,000, Cr.Eq.share Application A/C
Rs. 16,90,000.
(ii)
Dr.Eq.Share Application A/C Rs. 16,90,000, Cr.Eq. share
Capital A/C Rs.10,00,000, Cr. Security premium A/C Rs. 300,000, Cr. Bank A/C
Rs. 3,90,000.
Ans. 9 Debentures Issued without a predetermined rate
of interest are called zero coupon Bond.
Ans 10. A company issuing
Debentures by way of public issue is required to appoint the trustees and
execute a trust deed . It is a document
created by the company which issues the Debentures.
Ans. 11 Case (i) – No. of
Equity shares to be issued 1,600.
Case (ii) – No. of Equity shares to be issued 1,440.
Ans. 12
Journal
of B Ltd.
(a)
|
(i) Bank A/C Dr.
28,50,000
To.
Deb. Application & Allotment A/C 28,50,000
(ii) Deb. Application & allotment
Discount on
issue of
To 12 % debentures A/C 30,00,000
|
Journal
of E Ltd.
(b)
|
(i)
To. Deb.
Application & Allotment A/C 57,000
(ii) Deb. Application & allotment
Loss on
issue of Debentures A/C
Dr. 9,000
To 12 %
debentures A/C 60,000
To
Debenture Redemption Premium A/C 6000
|
Journal
of F Ltd.
(c)
|
(i)
To. Deb.
Application & Allotment A/C 73,500
(ii) Deb. Application & allotment
Loss on
issue of Debentures A/C
Dr. 7,000
To 12 %
debentures A/C 70,000
To
Securities premium A/C 3,500
To
Debenture Redemption Premium A/C 7,000
|
Ans. 13 Capital Reserve Rs. 10,000
Ans. 14 Capital Reserve Rs. 600
Ans. 15 Capital Reserve Rs. 4,800.
Analysis of Financial
Statements
Ans:1 (i- Current Assets
ii)
Fixed Asset.
Ans:2 Items Heading Sub-Heading
Provision for Taxation Current Liabilities Provision
& Provision
Bills payable Current Liabilities Current Liabilities
& Provision
Ans:3 (i) Capital Reserve
ii) Debenture Redemption Reserve
Ans:4 Balance sheet as on______
Liabilities Rs. Assets Rs.
Share capital
Fixed Assets
Reserve & surplus Investment
Secured Loans
Current Assets,
Unsecured Loans
Loan and Advances
(a)
Current Assets
(b) Loans & Advance
Current Liabilities &
Provision Miscellaneous Expenditures
(a)
Current Liabilities Profit
& Loss amount (Dr.Balance)
(b) Provision
Ans:5 (i) Fixed Assets.
(ii) Miscellaneous Expenditures
(iii)Current Assets Loans &
Advance under Current Assets.
(iv)Reserve and Surplus.
(v)Fixed Assets.
Ans:6 Total of Balance Sheet Rs.18,50,000.
Ans:7 (i) Claims against the Company not acknowledged
as debts .
(ii) Uncalled Liability on partly
paid shares.
(iii)Arrears of Dividend on
Cumulative preference shares.
Ans:8. Discount on Issue of
shares, Advertisement Suspense a/c
Accounting Ratios
Ans:1 Short term financial position of the business is
assessed by calculating current ratio and liquid ratio.
Ans:2 (i) Payment of current liabilities.
(ii) Issue
of share capital etc.
Ans:3 Sale of stock at cost price.
Ans:4 (i) because there is uncertainty whether it will be
sold or not.
(ii) It
will take time before it is converted into debtors’ and cash.
Ans:5 Quick ratio will improve as both the liquid assets and
current liabilities will decrease by the same
Amount.
Ans:6 Conversion of debentures into shares.
Ans:7 Accounting ratios are calculated from financial
statements, which are down on the basis of historical
Cost as
recorded in the book of accounts .
Ans:8 Total Assets to Debt Ratio.
Ans:9 Debt-Equity-Ratio.
Ans:10 100-78=22%
Ans:11 No change because it will neither affect net credit
sales nor average receivable.
Ans:12 Debt-equity ratio will decrease because the Long-term
loans remain unchanged where as the
Shareholders’
funds are increased by the amount f share capital issued .
Ans:13 Purchase of goods for cash .
Ans:14 Debt equity ratio will not change as the total amount
of shareholders funds will remain same.
Ans:15 Payment of current Liabilities Rs.3,00,000.
Ans:16 Net gain to shareholders Rs.60,000.
Ans:17 Closing stock = Rs.14,285.
Opening
stock = Rs.35,715.
Ans:18 Stock turnover Ratio = 4 times .
Ans:19 Cost of goods sold =Rs.8,48,400.
Ans:20 Opening stock Rs. 50,000.
Closing
stock Rs. 1,50,000.
Ans:21 (a) Net profit before interest Rs.14,00,000
capital employed Rs. 28,00,000
Return on investment 50%.
(b)Earning
per share Rs. 4.
Cash Flow Statement
Ans:1 Cash Flow statement is prepared on cash basis of
accounting but profit is calculated on accrual basis. So cash flow statement is not a judge of
profitability.
Ans:2 Under accounting standard-3(Revised).
Ans:3 Depreciation reduces the
net profit without reducing the cash balance as it is a non-cash item.
Ans:4 As Operating Activities.
Ans:5 Operating Activities.
Ans:6 As Outflow under Investing Activities.
Ans:7 Give any two examples-
(i)
Acquisition of fixed asset by issue of debentures or
shares.
(ii)
Conversion of debentures into shares.
Ans:8 Classified as Financing Activities.
Ans:9 It will be operating
activities in case of a finance company and investing activities in case of
Non-Financing Company.
Ans:10 (i) Operating Activities.
(ii)Investing Activities.
(iii)Financing Activities.
Ans:11 …= Net
Increase /Decrease in cash and Cash Equivalents.
Ans:12 Direct Method and Indirect Method.
Ans:13 Investing Activities Because …………….
Ans:14 Investing Activities Because …………….
Ans:15 Cash from Operating Activities Rs.1,03,800.
Ans:16 (i) Cash
Inflow From Operating Activities Rs.80,000.
(ii)Cash Outflow on Investing Activities Rs.1,60,000,
(iii)Cash Inflow From Financing
Activities Rs. 1,00,000.
