- Question 1
Nirman Ltd. issued 50,000 equity shares of Rs 10 each. The amount was payable as follows :On application − Rs 3 per share
On allotment − Rs 2 per share
On first and final call − The balanceVIEW SOLUTION
Applications for 45,000 shares were received and shares were allotted to all the applicants. Pooja, to whom 500 shares were allotted, paid her entire share money at the time of allotment, whereas Kundan did not pay the first and final call on his 300 shares. The amount received at the time of making first and final call was :
(i) Rs 2,25,000
(ii) Rs 2,20,000
(iii) Rs 2,21,000
(iv) Rs 2,19,500
- Question 2
Give the meaning of forfeiture of shares. VIEW SOLUTION
- Question 3
Anant, Gulab and Khushbu were partners in a firm sharing profits in the ratio of 5 : 3 : 2. From 1.4.2014, they decided to share the profits equally. For this purpose the goodwill of the firm was valued at Rs 2,40,000.VIEW SOLUTION
Pass necessary journal entry for the treatment of goodwill on change in the profit sharing ratio of Anant, Gulab and Khushbu.
- Question 4
On the death of a partner, his share in the profits of the firm till the date of his death is transferred to the :
(i) Debit of Profit and Loss Account.
(ii) Credit of Profit and Loss Account.
(iii) Debit of Profit and Loss Suspense Account
(iv) Credit of Profit and Loss Suspense Account VIEW SOLUTION
- Question 5
Geeta, Sunita and Anita were partners in a firm sharing profits in the ratio of 5 : 3 : 2. On 1.1.2015 they admitted Yogita as a new partner for 1/10th share in the profits. On Yogita's admission, the Profit and Loss Account of the firm was showing a debit balance of Rs 20,000 which was credited by the accountant of the firm to the capital accounts of Geeta, Sunita and Anita in their profit sharing ratio. Did the accountant give correct treatment ? Given reason in support of your answer.VIEW SOLUTION
- Question 6
In the absence of Partnership Deed, interest on loan of a partner is allowed :
(i) at 8% per annum.
(ii) at 6% per annum.
(iii) no interest is allowed.
(iv) at 12% per annum. VIEW SOLUTION
- Question 7
State any three purposes other than 'issue of bonus shares' for which securities premium can be utilized.VIEW SOLUTION
- Question 8
On 1.4.2013, Brij and Nandan entered into partnership to construct toilets in government girls schools in the remote areas of Uttarakhand. They contributed capitals of Rs 10,00,000 and Rs 15,00,000 respectively. Their profit sharing ratio was 2 : 3 and interest allowed on capital as provided in the Partnership Deed was 12% per annum. During the year ended 31.3.2014, the firm earned a profit of Rs 2,00,000.VIEW SOLUTION
Prepare Profit and Loss Appropriation Account of Brij and Nandan for the year ended 31.3.2014
- Question 9
'India Auto Ltd.' is registered with an authorised capital of Rs 7,00,00,000 divided into 7,00,000 shares of Rs 100 each. The company issued 50,000 shares to the vendor for building purchased and 2,00,000 shares were issued to the public. The amount was payable as follows :
On application and allotment – Rs 20 per share
On first call – Rs 50 per share
On second and final call – The balance
All calls were made and were duly received except on 100 shares held by Rajani, who failed to pay the second and final call. Her shares were forfeited.
Present the 'Share Capital' in the Balance Sheet of the company as per Schedule VI Part I of the Companies Act, 1956. Also prepare 'Notes to Accounts'.VIEW SOLUTION
- Question 10
'Good Blankets Ltd.' are the manufacturers of woollen blankets. Blankets of the company are exported to many countries. The company decided to distribute blankets free of cost to five villages of Kashmir Valley destroyed by the recent floods. It also decided to employ 100 young persons from these villages in their newly established factory at Solan in Himachal Pradesh. To meet the requirements of funds for starting its new factory, the company issued 50,000 equity shares of Rs 10 each and 2,000 8% debentures of Rs 100 each to the vendors of machinery purchased for Rs 7,00,000.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
The following is the Balance Sheet of A, B and C as on 31th March, 2014.
Cash in hand
Cash at bank
Capitals Accounts :
B 7,500 Furniture 12,000
'C' died on 30th June, 2014. Under the terms of Partnership Deed, the executors of the deceased partner were entitled to :
(a) Amount standing to the credit of partner's capital account.
(b) Interest on capital @ 6% per annum.
(c) Share of goodwill on the basis of twice the average of past three years profits.
(d) Share of profit from the closing of last financial year to the date of death on the basis of last year's profit. The profits of the last three years were as follows :
2011 – 2012 9,000 2012 – 2013 10,500 2013 – 2014 12,000
The firm closes its books on 31th March every year. The partners shared profits in the ratio of their capitals.
Prepare C's Capital Account to be presented to his executors.VIEW SOLUTION
- Question 12
Prem, Param and Priya were partners in a firm. Their fixed capitals were Prem Rs 2,00,000; Param Rs 3,00,000 and Priya Rs 5,00,000. They were sharing profits in the ratio of their capitals. The firm was engaged in the sale of ready-to-eat food packets at three different locations in the city, each being managed by Prem, Param and Priya. The outlet managed by Prem was doing more business than the outlets managed by Param and Priya. Prem requested Param and Priya for a higher share in the profits of the firm which Param and Priya accepted. It was decided that the new profit sharing ratio will be 2 : 1 : 2 and its effect will be introduced retrospectively for the last four years. The profits of the last four years were Rs 2,00,000; Rs 3,50,000; Rs 4,75,000 and Rs 5,25,000 respectively.VIEW SOLUTION
Showing your calculations clearly, pass a necessary adjustment entry to give effect to the new agreement between Prem, Param and Priya.
- Question 13
'Ananya Ltd' had an authorized capital of Rs 10,00,00,000 divided into 10,00,000 equity shares of Rs 100 each. The company had already issued 2,00,000 shares. The dividend paid per share for the year ended 31.3.2007 was Rs 30. The management decided to export its products to African countries. To meet the requirements of additional funds, the finance manager put up the following three alternate proposals before the Board of Directors :
(i) Issue 47,500 equity shares at a premium of Rs 100 per share.
(ii) Obtain a long-term loan from bank which was available at 12% per annum.
(iii) Issue 9% debentures at a discount of 5%.
After evaluating these alternatives the company decided to issue 1,00,000, 9% debentures on 1.4.2008. The face value of each debenture was Rs 100. These debentures were redeemable in four instalments starting from the end of third year, which was as follows :
III 10,00,000 IV 20,00,000 V 30,00,000 VI 40,00,000
Prepare 9% debenture account from 1.4.2008 till all the debentures were redeemed.VIEW SOLUTION
- Question 14
Mala, Neela and Kala were partners sharing profits in the ratio of 3 : 2 : 1. On 1.3.2015 their firm was dissolved. The assets were realized and liabilities were paid off. The accountant prepared Realisation Account, Partners' Capital Accounts and Cash Account, but forgot to post few amounts in these accounts.
You are required to complete these below given accounts by posting correct amounts.
Realisation AccountDr.Cr.ParticularsAmountRsParticularsAmountRsTo Sundry Assets :By Provision for bad debts1,000Machinery10,000By Sundry Creditors15,000Stock21,000By Sheela’s Loan13,000Debtors20,000By Repairs and Renewals Reserve1,200Prepaid Insurance400By Cash – Assets sold :Investments3,00054,400Machinery8,000To Mala’s Capital A/c13,000Stock14,000
– Sheela’s LoanDebtors16,00038,000To Cash – Creditors paid15,000By Mala’s Capital Investments2,000To Cash – Dishonoured bill paid5,000To Cash Expenses800……………..………….88,20088,200Capital AccountsDr.Cr.ParticularsMalaRsNeelaRsKalaRsParticularsMalaRsNeelaRsKalaRs………….………….………….………….………….………….………….………….………….………….………….………….To Cash12,0009,000By Cash1,00023,00015,0003,00023,00015,0003,000Cash AccountDr.Cr.ParticularsAmountRsParticularsAmountRsTo Balance b/d2,800By Realisation A/c15,000To Realisation A/c38,000– Creditors paid– Sale of assetsTo Kala’s Capital A/c1,000By Dishonoured bill5,000……………………….By Mala’s Capital A/c12,000By Neela’ s Capital A/c9,00041,80041,800
- Question 15
On 1.1.2008, Uday and Kaushal entered into partnership with fixed capitals of Rs 7,00,000 and Rs 3,00,000 respectively. They were doing good business and were interested in its expansion but could not do the same because of lack of capital. Therefore, to have more capital, they admitted Govind as a new partner on 1.1.2010. Govind brought Rs 10,00,000 as capital and the new profit sharing ratio decided was 3 : 2 : 5. On 1.1.2012, another new partner Hari was admitted with a capital of Rs 8,00,000 for 1/10th share in the profits, which he acquired equally from Uday, Kaushal and Govind. On 1.4.2014 Govind died and his share was taken over by Uday and Hari equally.VIEW SOLUTION
(i) The sacrificing ratio of Uday and Kaushal on Govind's admission.
(ii) New profit sharing ratio of Uday. Kaushal, Govind and Hari on Hari's admission.
(iii) New profit sharing ratio of Uday, Kaushal and Hari on Govind's death.
- Question 16
'X Ltd.' invited applications for issuing 10,000 equity shares of Rs 100 each at a premium of Rs 100 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
The issue was fully subscribed. A shareholder holding 500 shares paid the full share money with application. Another shareholder holding 200 shares failed to pay the first and final call money. His shares were forfeited. The forfeited shares were re-issued for Rs 19,000 as fully paid up.
Pass necessary journal entries for the above transactions in the books of the company.OR
'Y Ltd.' invited applications for issuing 15,000 equity shares of Rs 10 each on which Rs 6 per share were called up, which were payable as follows:
On application – Rs 2 per share
On allotment – Rs 1 per share
On first call − Rs 3 per share
The issue was fully subscribed and the amount was received as follows :
On 10,000 shares – Rs 6 per share
On 3,000 shares – Rs 3 per share
On 2,000 shares – Rs 2 per share
The directors forfeited those shares on which less than Rs 6 per share were received. The forfeited shares were re-issued at Rs 9 per share, as Rs 6 per share paid up.
Pass necessary journal entries of the above transactions in the books of the company.VIEW SOLUTION
- Question 17
Om, Ram and Shanti were partners in a firm sharing profits in the ration of 3 : 2 : 1. On 1st April, 2014 their Balance Sheet was as follows :
Capital Accounts :
Land and Building
Plant and Machinery
On the above date Hanuman was admitted on the following terms:
(i) He will bring Rs 1,00,000 for his capital and will get 1/10th 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 3,00,000.
(iii) A liability of Rs 18,000 will be created against bills receivables discounted.
(iv) The value of stock and furniture will be reduced by 20%.
(v) The value of land and building will be increased by 10%.
(vi) Capital accounts of the partners will be adjusted on the basis of Hanuman's capital in their profit sharing ratio by opening current accounts.
Prepare Revaluation Account and Partner's Capital Accounts.
Xavier, Yusuf and Zaman were partners in a firm sharing profits in the ratio of 4 : 3 : 2. On 1.4.2014 their Balance sheet was as follows :
Cash at Bank
Capital Accounts :
Less: Prov. for Bad Debts
Plant and Machinery
Land and Building
Yusuf had been suffering from ill health and thus gave notice of retirement from the firm. An agreement was, therefore, entered into as on 1.4.2014, the terms of which were as follows:VIEW SOLUTION
(i) That land and building be appreciated by 10%
(ii) The provision for bad debts is no longer necessary.
(iii) That stock be appreciated by 20%
(iv) That goodwill of the firm be fixed at Rs 54,000. Yusuf share of the same be adjusted into Xavier's and Zamna's Capital Accounts, who are going to share future profits in the ratio of 2 : 1.
(v) The entire capital of the newly constituted firm be readjusted by bringing in or paying necessary cash so that the future capitals of Xavier and Zaman will be in their profit sharing ratio.
Prepare Revaluation Account and Partner's Capital Accounts.
- Question 18
Amongst the following, 'Payment of bonus to the employees' by an insurance company is which type of activity ?
(i) Operating activity.
(ii) Investing activity.
(iii) Financing activity.
(iv) Both operating and financing activity.VIEW SOLUTION
- Question 19
While preparing Cash Flow Statement, the accountant of 'Rachana Ltd.', a financing company, included 'Interest received on loan' in financing activities. Was the correct in doing so ? Give reason.VIEW SOLUTION
- Question 20
Under which major headings and sub-headings will the following items be shown in the Balance Sheet of a company as per Schedule VI Part I of the Companies Act, 1956 :
(i) Cheques in hand.
(ii) Stock of work-in-progress.
(iv) Loose tools.
(v) Provision for bad debts.
(vi) Negative balance shown by the Statement of Profit and Loss.
(viii) Unpaid dividend.VIEW SOLUTION
- Question 21
The Current Ratio of a company is 2.1 : 1.2. State with reasons which of the following transactions will increase, decrease or not change the ratio :VIEW SOLUTION
(i) Redeemed 9% debentures of Rs 1,00,000 at a premium of 10%.
(ii) Received from debtors Rs 17,000.
(iii) Issued Rs 2,00,000 equity shares to the vendors of machinery.
(iv) Accepted bills of exchange drawn by the creditors Rs 7,000.
- Question 22
The motto of 'Pharma Ltd', a company engaged in the manufacturing of low-cost generic 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 bonus to all employees at double the rate than last year.
Following is the Comparative Statement of Profit and Loss of the company for the years ended 31-3-2013 and 31-3-2014.
Comparative Statement of Profit and Loss
2012 – 13
2013 – 14
Revenue from operations 20,00,000 30,00,000 10,00,000 50 Less : Employees benefit expenses 12,00,000 14,00,000 2,00,000 16-67 Profit before tax 8,00,000 16,00,000 8,00,000 100 Tax at 25% rate 2,00,000 4,00,000 2,00,000 100 Profit after tax 6,00,000 12,00,000 6,00,000 100
(i) Calculate Net Profit Ratio for the years ending 31st March, 2013 and 2014.
(ii) Identify any two values which 'Pharma Ltd'. is trying to propagate.
- Question 23
Following is the Balance Sheets of Solar Power Ltd. as at 31.3.2014 :
Solar Power Ltd.
Particulars Note No. 31.3.2014 Rs 31.3.2013 Rs I. Equity and Liabilities :1. Shareholder's Funds :(a) Share Capital 24,00,000 22,00,000(b) Reserves and Surplus 1 6,00,000 4,00,0002. Non-Current Liabilities :Long Term-Borrowings 4,80,000 3,40,0003. Current Liabilities :(a) Trade Payables 3,58,000 4,08,000(b) Short-Term Provisions 1,00,000 1,54,000 Total 39,38,000 35,02,000 II. Assets :1. Non-Current Assets :(a) Fixed Assets :(i) Tangible 2 21,40,000 17,00,000(ii) Intangible 3 80,000 2,24,0002. Current Assets :(a) Current Investments 4,80,000 3,00,000(b) Inventories 2,58,000 2,42,000(c) Trade Receivables 3,40,000 2,86,000(d) Cash and Cash equivalents 6,40,000 7,50,000 Total 39,38,000 35,02,000
Notes to Accounts
S. No. Particulars As on
1. Reserves and Surplus Surplus (balance in Statement of Profit and Loss) 6,00,000 4,00,000 2. Tangible Assets Machinery 25,40,000 20,00,000 Less : Accumulated Depreciation (4,00,000) (3,00,000) 3. Intangible Assets Goodwill 80,000 2,24,000
Additional Information :
During the year a piece of machinery, costing Rs 48,000 on which accumulated depreciation was Rs 32,000, was sold for Rs 12,000.
Prepare Cash Flow Statement.VIEW SOLUTION