- Question 1
'Samta Limited' invited applications for issuing 6,750 equity shares of Rs 10 each. The amount was payable as follows :
On application − Rs 3 per share
On allotment − Rs 5 per share
On first and final call − Rs 2 per share
The issue was fully subscribed. Subhash applied for 250 shares and paid his entire share money with application. Moti applied for 175 shares and paid allotment money also with application. The amount received with applications was :
(a) Rs 16,750
(b) Rs 16,000
(c) Rs 19,250
(d) Rs 22,875
- Question 2
Give the meaning of forfeiture of shares. VIEW SOLUTION
- Question 3
Deepak, Farukh and Lilly were partners in a firm sharing profits in the ratio of 3 : 2 : 1. On 28.2.2015 Farukh retired from the firm. On Farukh's retirement there was a balance of Rs 12,000 in Workmen's Compensation Reserve which was no more required. On Farukh's retirement this amount will be :
(a) Debited to the Capital accounts of all the partners in their profit sharing ratio.
(b) Credited to the Capital accounts of all the partners in their profit sharing ratio.
(c) Credited to the Capital accounts of Deepak and Lilly in their profit sharing ratio.
(d) Credited to the Capital account of Farukh. VIEW SOLUTION
- Question 4
Anurag and Bhawana entered into partnership on 1.4.2014. On 1.1.2015 they admitted Monika as a new partner for share in the profits which she acquired equally from Anurag and Bhawana. The new profit sharing ratio of Anurag, Bhawana and Monika was 4 : 3 : 3. Calculate the profit sharing ratio of Anurag and Bhawana at the time of forming the partnership.VIEW SOLUTION
- Question 5
Kamal and Vimal were partners in a firm sharing profits in the ratio of 3 : 2. Ghosh was admitted as a new partner for share in the profits.VIEW SOLUTION
On Ghosh's admission the Balance Sheet of the firm showed a credit balance of Rs 10,000 in its Profit and Loss Account which was debited by the accountant of the firm in the accounts of Kamal and Vimal. Did the accountant give correct treatment to the balance of Profit and Loss Account? If 'yes' give the reason and if 'not' give the correct treatment.
- Question 6
In the absence of partnership agreement, interest on drawings of a partners is charged :
(i) at 6% per annum.
(ii) at 9% per annum.
(iii) at 12% per annum.
(iv) no interest is charged. VIEW SOLUTION
- Question 7
State any three conditions for the issue of shares at discount. VIEW SOLUTION
- Question 8
K and L were partners in a firm sharing profits in the ratio of 3 : 2. On 1.4.2014 their Balance Sheet was as follows :
LiabilitiesAmountRsAssetsAmountRsCapitals :Sundry Assets1,80,000K80,000L1,00,0001,80,0001,80,0001,80,000
The profit for the year ended 31.3.2014, Rs 90,000 was divided between the partners without allowing interest on capital at 6% per annum and a salary to K at Rs 4,000 per quarter. During the year K withdrew Rs 20,000 and L withdrew Rs 27,000.VIEW SOLUTION
Pass a single adjustment entry to rectify the error.
- Question 9
'Telecom Limited' is registered with an authorized capital of Rs 8,00,00,000 divided into 80,00,000 equity shares of Rs 10 each. The company issued 1,00,000 shares at a premium of Rs 2 per share. The amount was payable as follows :VIEW SOLUTION
On application − Rs 3 per share
On allotment − Rs 5 per share (including premium)
On first and final call − The balance
All calls were made and were duly received except the first and final call on 1,000 shares held by Asha.
Present the 'Share Capital' in the Balance Sheet of the company as per Schedule VI Part I of the Companies Act, 1956.
- Question 10
'Panipat Blankets Limited' are the manufacturers and exporters of blankets. The company decided to distribute 1,000 blankets free of cost to five villages of Kashmir which had been damaged by the floods. It also decided to employ 100 young persons from these villages in their newly established factory at Ludhiana in Punjab. To meet the requirements of funds for its new factory, the company issued 1,00,000 equity shares of Rs 10 each and 2,000, 9% debentures of Rs 100 each to the vendors of machinery purchased for Rs 12,00,000.VIEW SOLUTION
Pass necessary journal entries for the above transactions in the books of the company. Also identify any one value which the company wants to communicate to the society.
- Question 11
Kavita, Ravita and Sunita were partners in a firm sharing profits in 2 : 1 : 2 ratio. On 31.3.2014 their Balance Sheet was as follows :
LiabilitiesAmountRsAssetsAmountRsCreditors83,000Cash45,000Bills Payable19,000Debtors34,000Capitals :Bills Receivable15,000Kavita1,40,000Furniture2,10,000Ravita1,80,000Machinery2,00,000Sunita90,0004,10,000Sunita’s Capital8,0005,12,0005,12,000
On 31.9.2014, Sunita died. The partnership deed provided for the following to the executors of the deceased partner :
(a) Her share in the goodwill of the firm, calculated on the basis of three years' purchase of the average profits of the last four years.The profits of the last four years were Rs 1,98,000; Rs 2,24,000; Rs 2,76,000 and Rs 3,27,000 respectively.
(b) Her share in the profit of the firm till the date of her death, calculated on the basis of the average profits of the last four years.
(c) Interest @ 6% per annum on the credit balance, if any, in her Capital account.
(d) Interest on her loan @ 12% per annum.
Prepare Sunita's Capital Account to be presented to her executors.VIEW SOLUTION
- Question 12
Jain, Gupta and Singh were partners in a firm. Their fixed capitals were : Jain Rs 4,00,000 ; Gupta Rs 6,00,000 and Singh Rs 10,00,000. They were sharing profits in the ratio of their capitals. The firm was engaged in the processing and distribution of flavoured milk. They partnership deed provided for interest on capital at 10% per annum. During the year ended 31st March 2014 the firm earned a profit of Rs 1,47,000.VIEW SOLUTION
Showing your working notes clearly, prepare Profit and Loss Appropriation Account of the firm.
- Question 13
'Chennai Fibers Limited' was registered with an authorized capital of Rs 40,00,000 divided into 4,00,000 equity shares of Rs 10 each. The company had issued 1,00,000 shares and the dividend paid per share was Rs 3 for the year 2007 - 08. The management of the company decided to export its readymade apparels to European countries. To meet the requirement of additional funds, the finance manager put up before the Board of Directors the following three alternative proposals :
(i) Issue of 1,54,000 equity shares at par.
(ii) Obtain a loan of Rs 15,40,000 from a financial institution for a period of 5 years. The loan was available @ 12% per annum.
(iii) Issue 16,000, 9% debentures of Rs 100 each at a discount of 10% redeemable in instalments at the end of third, fourth, fifth and sixth year as per details given below :
III 2,00,000 IV 3,00,000 V 4,00,000 VI 7,00,000
After comparing the alternatives, the company decided in favour of the third alternative and issued debentures on 1.4.2008.VIEW SOLUTION
Prepare 9% debentures account for the years 2008 - 09 to 2013 - 14.
- Question 14
Chopra, Shah and Patel were partners sharing profits in the ratio of 3 : 2 : 1. On 31.3.2014 their firm was dissolved. The assets were realized and liabilities were paid off. The accountant prepared Realisation Account, Partner's Capital Accounts and Cash Account but forgot to post few amounts in these accounts.
You are required to complete the below give accounts by posting correct amounts.
To Plant and Machinery
By Sundry Creditors
By Mrs. Chopra’s Loan
To Sundry Debtors
By Repairs and Renewals Reserve
To Prepaid Insurance
By Provision for Bad Debts
By Cash A/c – (Assets sold) :
To Chopra’s Capital A/c
(Mrs. Chopra’s Loan)
To Cash A/c (Dishonoured Bill)
To Cash (Creditors)
By Chopra’s Capital A/c (Investments)
To Cash (Expenses)
Partner’s Capital Accounts
By bal. b/d
By Realisation A/c (Dishonoured Bill)
By Realisation (Sundry Creditors)
To Patel’s Capital A/c
By Chopra’s Capital A/c
By Shah’s Capital A/c
- Question 15
On 1.4.2013 Mohan and Sohan entered into partnership for doing business of dry fruits. Mohan introduced Rs 1,00,000 as capital and Sohan introduced Rs 50,000. Since Sohan could introduce only Rs 50,000 it was further agreed that as and when there will be a need Sohan will introduce further capital. Sohan was also allowed to withdraw from his capital when the need for the capital was less. During the year ended 31.3.2014, Sohan introduced and withdrew the following amounts of capital :
Date Capital Introduced Capital Withdrawn 01.5.2013 10,000 ___ 30.6.2013 ___ 5,000 30.9.2013 97,000 ___ 01.2.2014 ___ 87,000
The partnership deed provided for interest on capital @ 6% per annum. Calculate interest on capitals of the partners.
- Question 16
Ratan Limited invited applications for issuing 12,000 equity shares of Rs 100 each at a premium of Rs 75 per share. The amount was payable as follows :
On application and allotment – Rs 100 per share(including Rs 50 premium)On first and final call – The balance
Applications for 15,000 shares were received. Shares were allotted on pro-rata basis to all applicants. Excess money received with applications was adjusted towards sums due on first and final call. Govind who had applied for 300 shares paid the full share money at the time of applying for shares. Girdhar, who had applied for 600 shares, failed to pay the first and final call money. His shares were forfeited. Out of the forfeited shares, 300 shares were re-issued at Rs 90 per share as fully paid-up.
Pass necessary journal entries for the above transactions in the books of 'Ratan Limited'.
'Kalyan Limited' invited applications for issuing 90,000 equity shares of Rs 10 each at a discount of 8%. The amount was payable as follows :
On application – Rs per share
On allotment – Rs 3 per share
On first and final call – The balanceVIEW SOLUTION
Application for 87,000 shares were received. Shares were allotted to all the applicants. A shareholder, Shyam who had applied for 1,600 shares failed to pay the allotment money and his shares were immediately forfeited. Later on, the first and final call was made. Another shareholder Ram, to whom 1,500 shares were allotted failed to pay the first and final call. His shares were also forfeited. Out of the forfeited shares 2,000 shares were re-issued at Rs 9 per share as fully paid-up. The re-issued shares included all the shares of Ram.
Pass necessary journal entries for the above transactions in the books of 'Kalyan Limited'.
- Question 17
A, B and C were partners in a firm sharing profits in the ratio of 3 : 2 : 1. On 1.4.2014 their Balance Sheet was as follows :
Liabilities Amount Rs Assets Amount
Creditors 25,200 Bank 8,200 Provident Fund 3,000 Debtors 60,000 General Reserve 21,000 Less: Provision 2,000 58,000 Capital Accounts : Stock 50,000 A 80,000 Investments 20,000 B 73,000 Patents 10,000 C 40,000 1,93,000 Machinery 96,000 2,42,200 2,42,200
On the above date C retired. It was agreed that :
(i) Goodwill of the firm be valued at Rs 5,400.
(ii) Depreciation of 10% was to be provided on machinery.
(iii) Patents were to be reduced by 20%.
(iv) Liability on account of Provident Fund was estimated at Rs 2,500.
(v) C took over investments for Rs 31,700.
(vi) A and B decided to adjust their capitals in proportion to their profit sharing ratio. For this purpose current accounts were opened.
Prepare Revaluation Account and Partners' Capital Accounts on C's retirement.
O, R and S were partners in a firm sharing profits in the ratio of 3 : 2 : 1. On 1.4.2014 their Balance Sheet was as follows :
Capital Accounts :
R’s Current Account
Land and Building
Plant and Machinery
Current Accounts :
Profit and Loss Accounts
On the above date, H was admitted on the following terms :
(i) H will bring Rs 50,000 as his capital and will get 1/6th share in the profits.
(ii) He will bring necessary cash for his share of goodwill premium. The goodwill of the firm was valued at Rs 90,000.
(iii) The new profits sharing ratio will be 2 : 2 : 1 : 1.
(iv) A liability of Rs 7,004 will be created against bills receivables discounted.
(v) The value of stock, furniture and investments is reduced by 20% whereas the value of land and building and plant and machinery will be appreciated by 20% and 10% respectively.
(vi) The Capital accounts of the partners will be adjusted on the basis of H's Capital through their current accounts.
Prepare Revaluation Account and Partner's Current Accounts and Capital Accounts.
- Question 18
Which of the following transactions will result into flow of cash :VIEW SOLUTION
(i) Deposited Rs 43,000 into bank.
(ii) Withdrew cash from bank Rs 23,000.
(iii) Sale of machinery of the book value of Rs 38,000 at a loss of Rs 3,000.
(iv) Converted Rs 2,00,000, 9% debentures into equity shares.
- Question 19
While preparing 'Cash Flow Statement', the accountant of 'Jain Limited', a financing company, showed dividend received on investments as investing activity. Was he correct in doing so? Give reason. VIEW SOLUTION
- Question 20
Under which major headings and sub-heading will the following items be placed in the Balance Sheet of a company as per Schedule VI part I of the Companies Act, 1956 :VIEW SOLUTION
(i) Loans provided re-payable on demand.
(iv) General Reserve
(vi) Loose tools
(vii) Stock of finished goods
(viii) 9% debentures re-payable after three years
- Question 21
The Current Ratio of a company is 2.5 : 1.5. State with reasons which of the following transactions will increase, decrease or not change the ratio :VIEW SOLUTION
(i) Discounted a bills receivable of Rs 10,000 from bank, Bank charged discount of Rs 200.
(ii) A bill receivable Rs 8,000 discounted with bank was dishonoured.
(iii) Cash deposited into bank Rs 7,000.
(iv) Paid cash Rs 5,000 to the creditors.
- Question 22
The motto of 'Nav Hind Pharma Limited', a company engaged in the manufacturing and distribution of Aurvedic medicines, is 'Healthy India'. Its management and employees are hardworking, honest and motivated. The net profit of the company doubled during the year ended 31.3.2014. Encouraged by its performance, the company decided to pay one month's extra salary to all its employees.
Following is the Comparative Statement of Profit and Loss of the company for the years ended 31.3.2013 and 31.3.2014 :
Nav Hind Pharma Limited
Comparative Statement of Profit and Loss
2012 − 13
2013 − 14
Revenue from operations 40,00,000 60,00,000 20,00,000 5.0 Less : Employees benefit expenses 24,00,000 28,00,000 4,00,000 16.67 Profit before tax 16,00,000 32,00,000 16,00,000 100 Tax @ 50% 8,00,000 16,00,000 8,00,000 100 Profit after tax 8,00,000 16,00,000 8,00,000 100
(i) Calculate New Profit Ratio for the years ending 31.3.2013 and 31.3.2014.
(ii) Identify any two value which 'Nav Hind Pharma Limited' is trying to communicate. VIEW SOLUTION
- Question 23
Following is the Balance Sheets of Wind Power Ltd. as at 31.3.2014 :
Wind Power Ltd.
Balance Sheet as at 31.3.2014
Particulars Note No. 2013–14 Rs 2012–13 Rs I. Equity and Liabilities :1. Shareholder's Funds :(a) Share Capital 48,00,000 44,00,000(b) Reserves and Surplus 1 12,00,000 8,00,0002. Non-Current Liabilities :Long-Term Borrowings 9,60,000 6,80,0003. Current Liabilities :(a) Trade Payables 7,16,000 8,16,000(b) Short-Term Provisions 2,00,000 3,08,000 Total 78,76,000 70,04,000 II. Assets :1. Non-Current Assets :(a) Fixed Assets :(i) Tangible 2 42,80,000 34,00,000(ii) Intangible 3 1,60,000 4,80,0002. Current Assets :(a) Current Investments 9,60,000 4,48,000(b) Inventories 5,16,000 4,84,000(c) Trade Receivables 6,80,000 5,72,000(d) Cash and Cash equivalents 12,80,000 16,20,000 Total 78,76,000 70,04,000
Notes to Accounts
S. No. Particulars As on
1. Reserves and Surplus Surplus (Balance in Statement of Profit and Loss) 12,00,000 8,00,000 2. Tangible Assets Machinery 50,80,000 40,00,000 Less : Accumulated Depreciation (8,00,000) (6,00,000) 3. Intangible Assets Goodwill 1,60,000 4,80,000
Additional Information :
During the year a piece of machinery, costing Rs 96,000 on which accumulated depreciation was Rs 64,000 was sold for Rs 24,000.
Prepare Cash Flow Statement.VIEW SOLUTION