Q.1 Distinguish
between Sacrificing Ratio and Gaining Ratio.
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
|
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.
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
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.
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
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.
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
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.
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
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.
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
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.
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
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.
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.)
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.
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.)
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.
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.)
Q.11 State the
journal entry for treatment of deceased partners share of profit for his life
period in the year of death.
Ans.
11 Profit and loss suspense A/C Dr
To deceased partner’s capital A/C
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.
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)
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.
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
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.
Ans.
15 Profit & Loss suspense A/C Dr.
Rs. 12,500
To C’s capital A/C Rs.
12,500
RETIREMENT
OF PARTNER
6 to 8 marks
Q.1 The balance
sheet of X, V, Z who was sharing profits in proportion of capital as follows
:-
Particulars Amount Particulars Amount
Sunday
creditors 1,000 Cash at bank 15,600
Capitals 25,000 Debtors
5,000 4,900
X 20,000 Less provision 100
Y 15,000
Z 67,000 Stock 10,000
P/M 11,500
Furniture 25,000
67,000 67,000
Y retires
arid the following adjustment of the assets and liabilities has been made
before the ascertainment of the amount payable by the firm to Y
1. That the stock be depreciated by 5%
2. That the provision for doubtful
debts be increased to 5% on debtors.
3. That a provision of RS.750 be made
in respect of outstanding legal charges.
4. That the land and building be
appreciated by 20%.
5. That
the goodwill of the entire firm be fixed at Rs. 16,200 and V share of the same
be adjusted into the account of X and Z
(No good will account is to be raised)
6. That X and Z decide to share future
profits of the firm in equal proportions
7. That
the entire capital of the new firm at Rs. 48000 between X and Z in· equal
proportion. For the purpose, actual cash
is to be brought in or paid off.
You are
required to prepare the revolution account; partner’s capital account and bank
account and revised balance sheet after V’s retirement also indicate the
gaining rates.
Solution 1
Dr. Revaluation
A/c Cr.
Particulars Rs. Assets Rs.
To stock
A/c 500 By land and building 5,000
To
provision for doubtful debts a/c 150
To
outstanding
Legal
charges 750
To profit
transferred to
Capital
A/c
X 1500
Y 1200
Z 900 3,600
5,000 5,000
Dr. Partner’s
Capital Accounts Cr.
Particulars ARs. B Rs. C Rs. Particulars A
Rs. B Rs. C Rs.
To Y’s Cap
A/c 1350 — 1050 By bal b/d 25,000 25,000 15,000
To Y’s
loan A/c - 2600 - By Rev. A/c 1500 1250 900
To bal C/d 251150 - 11850 By X’s Cap A/c - 1350 -
(G/W)
By
X’s cap A/c
(G/W) - 4050 -
26500 26600 15900 26500 26600 15900
To bank
A/c 1150 - - By bal b/d 25150 - 11850
To Bal C/d 24000 - 24000 By Bank - - 12150
25150 - 24000 25150 24000 25150
Dr. Bank
A/c Cr.
To Bal B/d 15,600 By X’s cap A/c 1,150
To Z’s
Capital A/c 12,150 By bal c/d 26,600
27,750 27,750
BALANCE SHEET OF THE NEW FIRM
Liabilities Rs. Assets Rs.
Sundry
Creditors 7,000 Cash at bank 26,600
Outstanding
legal charges 750 Sundry debtors (5000-250) 4,750
Y’s Loan 26,600 Stock 9,500
Capital Plan
& Machinery 11,500
X 24000 Land & Building 30,000
Z 24000 48,000
83,250 83,250
Q.2 The Balance
Sheet of A, B and C on 31st December 2007 was as under :
BALANCE SHEET
as at 31.12.2007
Liabilities Amount Assets Amount
A’s
Capital 400,00 Buildings 20,000
B’s
Capital 30,000 Motor Car 18,000
C’s
Capital 20,000 Stock 20,000
General
Reserve 17,000 Investments 1,20,000
Sundry
Creditors 1,23,000 Debtors 40,000
Patents 12,000
2,30,000 2,30,000
The
partners share profits in the ratio of 8 : 4 : 5. C retires from the firm on
the same date subject to the following term S and conditions:
i) 20% of the General Reserve is to
remain’ as a reserve for bad and doubtful debts. ;
ii) Motor)r Car is to be decreased by
5%.
iii) Stock is to be revalued at Rs.17,
500.
iv) Goodwill is valued at’ 2 ½ years
purchase of the average profits of last 3 years.
Profits
were; 2001: Rs.11,000; 200l: Rs. 16,000
and 2003: Rs.24,000.
C. was paid in July A and B
borrowed the necessary amount from the Bank on the security of Motor Car
and stock to payoff C.
Prepare
Revaluation Account, Capital Accounts and Balance Sheet of A and B.
Ans.2 SOLUTION
REVALUATION ACCOUNT
Particulars Rs. Particulars Rs.
To Motor
Cars A/C 900 By Loss transferred to
To Stock
A/C 2,500 A’s Capital A/c Rs. 1,600
B’s
Capital A/c Rs. 800
C’s
Capital A/c Rs. 1,000 3,400
3,400 3,400
PARTNERS CAPITAL ACCOUNT
Particulars ARs. B Rs. C
Rs. Particulars A Rs. B
Rs. C Rs.
To C’s Capital A/c 8,334 4,166 - By Balance b/d 40,000 30,000 20,000
To Revaluation A/c (Loss) 1,600 800 1,000 By
General Reserve A/c 6,400 3,200 4,000
To Bank A/c - - 35,500 By A’s Capital A/c - - 8,334
Balance c/d 36,466 28,234 - By B’s Capital A/c - - 4,166
46,400 33,200 36,500 46,400 33,200 36,500
By
Balance b/d 36,466 28,234 -
BALANCE
SHEET OF A AND B
Liabilities Rs. Assets Rs.
Sundry
creditors 1,23,000 Building 20,000
Bank Loan 35,500 Motor Card 17,100
Capital A 36,466 Stock 17,500
B 28,234 64,700 Investment 1,20,000 Debtors 36,600
Patents 12,000
2,23,200 2,23,200
Q.3 A, Band C
were partners in a firm sharing profits equally: Their Balance Sheet on.31.12.2007 stood as:
BALANCE SHEET AS AT
31.12.07
Liabilities Rs. Assets Rs.
A Rs. 30,000 Goodwill 18,000
B Rs. 30,000 Cash 38,000
C Rs. 25,000 85,000 Debtors .
43,000
Bills
payable 20,000 Less: Bad Debt provision 3,000 40,000
Creditors 18,000 Bills Receivable 25,000
Workers
Compensation Fund 8,000 Land and Building 60,000
Employees
provide4nt Fund 60,000 Plant and Machinery 40,000
General
Reserve 30,000
2,21,000 2,21,000
It was
mutually agreed that C will retire from partnership and for this purpose
following terms were agreed upon.
i) Goodwill
to be valued on 3 years’ purchase of average profit of last 4 years which were
2004 : Rs.50,000 (loss); 2005 : Rs. 21,000; 2006: Rs.52,000; 2007 : Rs.22,000.
ii) The Provision for Doubtful Debt was
raised to Rs. 4,000.
iii) To appreciate Land by 15%.
iv) To decrease Plant and Machinery by
10%.
v) Create provision of
Rs;600 on Creditors.
vi) A sum of Rs.5,000 of Bills Payable
was not likely to be claimed.
vii) The
continuing partners decided to show the firm’s capital at 1,00,000 which would
be in their new profit sharing ratio which is 2:3. Adjustments to be made in
cash
Make
necessary accounts and prepare the Balance Sheet of the new partners.
Ans.3 REVALUATION ACCOUNT
Particulars Rs. Particulars Rs.
To
Provision for Debts A/c 1,000 By Land A/c 9,000
To Plant
& Machinery A/c 4,000 By Provision on Creditors A/c 600
To Profit
transferred to By
Bills Payable A/c 5,000
A’s
Capital A/c Rs. 3,200
B’s
Capital A/c Rs. 3,200
C’s
Capital A/c Rs. 3,200 9,600
14,600 14,600
PARTNER’S CAPITAL
ACCOUNTS
Particulars ARs. B Rs. C
Rs. Particulars A Rs. B
Rs. C Rs.
To Goodwill A/c 6,000 6,000 6,000 By Balance b/d 30,000 30,000 25,000
To C’s Capital A/c 2,250 9,000 - By General Reserve 10,000 10,000 10,000
To C’s Loan A/c - - 46,116 By Worksmen A/c 2,667 2,667 2,666
Compensation
Fund
To Balance c/d 40,000 60,000 - By Revalu A/c (profit) 3,200 3,200 3,200
By
A’s Capital A/c - - 2,250
By
B’s Capital A/c - - 9,000
By
Cash A/c (Deficiency) 2,383 29,133 -
48,250 75,000 52,116 48,250 75,000 52,116
By
Balance b/d 40,000 60,000 -
BALANCE SHEET
as at 31.12.07
Liabilities Rs. Assets Rs.
Bills
Payable 15,000 Debtors Rs. 43,000
Creditors 17,400 Less: Provision Rs. 4,000 39,000
Employees
Provident Fund 60,000 Bills Receivables 25,000
C’s Loan 46,116 Land & Buildings 69,000
A’s
Capital 40000 Plant & Machinery 36,000
B’S
Capital 60000 1,00,000 Cash 69,516
2,38,516 2,38,516
Q.4 A, Band C were partners in a firm .sharing
profits in the ratio of 5: 3: 2. On 31st
March, 2005 their Balance Sheet was as under:
Liabilities Rs. Assets Rs.
Creditors 7,000 Buildings 20,000
Reserve 10,000 Machinery 30,000
Accounts: Stock 10,000
A 30,000 Patents 6,000
B 25,000 Debtors 8,000
C 15,000 70,000 Cash
13,000
87,000 87,000
A died on
1st October, 2005. It was agreed between his executors and the remaining
partners that
a. Goodwill
be valued at 2 years’ purchase of the average profits of the previous five
years, which were 2001: Rs. 15,000; 2002: Rs. 13,000; 2003: Rs. 12,000; 2004:
Rs. 15,000 and 2005: Rs. 20,000.
b. Patents be valued at Rs. 8,000;
Machinery at Rs. 28,000; Buildings at Rs. 30,000.
c. Profit
for the year 2005-06 is taken as having accrued at the same rate as the
previous year.
d. Interest on capital be provided at
10% p.a.
e. A sum of Rs. 11,500 was to be paid
to his executors immediately.
Ans.4 Prepare
A’s Capital Account and his executors’ account at the time of his death.
A’s Capital A/c
Particulars Rs. Particulars Rs.
Executor’s
A/c 61,500 By Balance b/d 30,000
By
Reserves [10,000× ] 5,000
By
B’s Capital A/c [15,000 × ] 9,000
By
C’s Capital A/c [15/000 × ] 6,000
By
Revaluation A/c [10,00 × ] 5,000
By
Profit & Loss Suspense A/c 5,000
By
Interest on Capital A/c [30/000 × × ] 1,500
60,500 61,500
A’s EXECUTORS ACCOUNT
Particulars Rs. Particulars Rs.
Balance
c/d 61,500 By A’s Capital A/c 61,500
61,500 61,500
By
Balance b/d 61,500
Q.5 A, B and C were partners in ka firm sharing
profits in the ratio of 5:3:2 On 31st March 2005 their Balance Sheet was as
under :
Liabilities Rs. Assets Rs.
Reserves 10,000 Buildings 20,000
Creditors 7,000 Machinery 30,000
A’s
Capital 30000 Stock 10,000
B’s
Capital 25000 Patents 6,000
C’s
Capital 15000 70,000 Cash 21,000 87,000 87,000
C died on
1st Oct. 2005. It was agreed between his executors and the remain partners that:
a. Goodwill
be valued at 2 years’ purchase of the average profits of the pre five years,
which were 2001 :Rs. 15,000; 2002 : Rs. 13,000; 2003 : Rs. 12,000; Rs. 15,000 :
2004 and 2005 : Rs. 20,000.
b. Patents be valued at Rs. 8,000;
Machinery at Rs. 28,000; Buildings at Rs. 30,
c. Profit
for the year 2005-06 be taken as having accrued at the same rate previous
year.
d. Interest on capital be provided at
10% p.a.
e. A sum of Rs. 7,750 was paid to his
executors immediately.
Prepare
C’s Capital Account and his executors account at the time of his death.
Ans.5
C’S CAPITAL ACCOUNT
Particulars Rs. Particulars Rs.
To C’s
Executor’s A/c 27,750 By Balance b/d 15,000
By
Reserves 2,000
By
Revaluation A/c 2,000
By
p& L Suspense A/c 2,000
By
Interest on Capital 750
By
A’s Capital A/c 3,750
By
B’s Capital A/c 2,250
27,750 27,750
C’S
EXECUTOR’S ACCOUNT
Particulars Rs. Particulars Rs.
To Cash
A/c 7,750 By C’s Capital A/c 27,750
To
Executor’s Loan A/c
or Bal c/d
20,000 27,750
Q.6 Anil, Jatin and Ramesh were sharing profit in the ratio of 2:1:1.
Their Balance Sheet as at 31.12.2001
stood as follows:-
BALANCE SHEET
as at 31.12. 2001
Liabilities Rs. Assets Rs.
Creditors 24,400 Cash 1,00,000
Bank Loan 10,000 Debtors 20000
Profit and
Loss A/c 18,000 Less : Provision 1600 18,400
Bills
Payable 2,000 Stock 10,000
Anil’s
Capital 50,000 Land & Building 20,000
Jatin’s
Capital 40,000 Investment 14,000
Ramesh’s
Capital 40,000 Goodwill 22,000
1,84,400 1,84,400
Ramesh
died on 31st March 2002. The following adjustments were agreed upon-
(a) Building be appreciated by Rs. 2,000
(b) Investments be valued at 10% less
than the book value.
(c) All debtors (except 20% which are
considered as doubtful) were good.
(d) Stock be increased by 10 %
(e) Goodwill
be valued at 2 years’ purchase of the average profit of the past five years.
(f) Ramesh’s
share of profit to the death be calculated on the basis of the profit of the
preceding year. profit for the years 1997, 1998, 1999 and 2000 were Rs. 26,000,
Rs. 22,000, Rs. 20,000 and Rs. 24,000 respectively.
Ans.6 Prepare
revaluation account, partner’s capital Account, Ramesh ‘s Executors’ Account
and Balance sheet immediately after Ramesh’s death assuming that Rs. 18, 425 be paid immediately to his executors and balance to b left to the
Ramesh’s Executor’s Account
REVALUATION ACCOUNT
Particulars Rs. Particulars Rs.
To
Investment A/c 1,400 By Building A/c 2,000
To
Provision for doubtful debt A/c 2,400 By Stock A/c 1,000
By
Loss transferred to
Anil’s
Capital A/c Rs.400
Jatin’s
Capital A/c Rs. 200
Ramesh’s
Capital A/c Rs. 200 800
3,800 3,800
PARTNERS’ CAPITAL
ACCOUNTS
Particulars Anil
Jatin Ramesh Particulars Anil Jatin Ramesh
Rs. Rs. Rs. Rs. Rs. Rs.
To Goodwill A/c 11,000 5,500 5,500 By Balance b/d 50,000 40,000 40,000
To Ramesh Capital A/c 7,333 3,667 - By Profit and Loss A/c 9,000 4,500 4,500
To Revaluation A/c (Loss) 400 200 200 By
Profit &Loss Susp A/c - - 1,125
To Ramesh’s
Executor’s A/c - - 50,925
To Balance c/d 40,267 35,133 - By Anil’s Capital A/c - - 7,333
By
Jatin’s Capital A/c - - 3,667
59,000 41,500 56,625 59,000 41,500 56,625
By
Balance b/d 40,267 35,133 -
Date Particulars Rs. Date Particulars Rs.
2002 2002
Mar. 31 To Cash A/c 18,425 Mar. 31 By
Raeesh’s Capital A/c 50,925
Dec. 31 To Balance A/c 32,500
50,925 50,925
2003
Jan.1 By Balance b/d 32,500
BATANCE SHEET
Liabilities Rs. Assets Rs.
Bank Loan 10, 000 Cash 81,575
Creditors 20,400 Debtors Rs.
20,000
Bills
Payable 2,000 Less: Provision Rs. 4,000 16,000
Ramesh’s
Executor’s Loan 32,500 Stock 11,000
Anil’s
Capital 40,267 Land and Building 22,000
Jatin’s
Capital 35,133 Investments 12,600
Profit
and Loss Suspense A/c 1,125
1,44,300 1,44,300
Retirement and Death of a Partner
Q.1 What is meant by retirement of a partner?
Ans. Retirement of a partner is one of the modes
of reconstituting the firm in which old partnership comes to an end and a new
partner among the continuing (remaining) partners (i.e., partners other than
the outgoing partner) comes into existence.
Q.2 ‘How
can a partner retire from the firm?
Ans. A
partner may retire from the firm;
i) in
accordance with the terms of agreement; or
ii) with the consent of all other partners; or
iii) where the partnership is at will, by giving a notice in writing to
all the partners of his intention to retire.
Q.3 What
do you understand by ‘Gaining Ratio*?
Ans. Gaining
Ratio means the ratio by which the share in profit stands increased. It is
computed by deducting old ratio from the new ratio.
Q.4 What
do you understand by ‘Gaining Partner’?
Ans Gaining
Partner is a partner whose share in profit stands increased as a result of
change in partnership.
Q.5 Distinguish
between Sacrificing Ratio and Gaining Ratio.
Ans. Distinction between Sacrificing Ratio and
Gaining Ratio
Q.6 Give
two circumstances in which gaining ratio is computed. Ans. Gaining Ratio is computed in the following
circumstances: (i) When a partner retires or dies. (ti) When there is a change
in profit-sharing ratio.
Q.7 Why
is it necessary to revalue assets and reassess liabilities at the time of
retirement of a partner ?
Ans. At
the time of retirement or death of a partner, assets are revalued and
liabilities are reassessed so that the profit or loss arising on account of
such revaluation upto the date of retirement or death of a partner may
be ascertained and adjusted in all partners’ capital accounts in their old
profit-sharing ratio.
Q.8 Why is it necessary to distribute Reserves
Accumulated, Profits and Losses at the time of retirement or death of a
partner?
Ans. Reserves,
accumulated profits and losses existing in the books of account as on the date
of retirement or death are transferred to the Capital Accounts (or Current
Accounts) of all the partners (including outgoing or deceased partner) in their
old profit-sharing ratio so that the due share of an outgoing partner in
reserves, accumulated profits/losses gets adjusted in his Capital or Current
Account.
Q.9 What
are the adjustments required on the retirement or death of a partner?
Ans. At
the time of the retirement or death of a partner, adjustments are made for the
following:
(i) Adjustment in regard to goodwill.
(ii) Adjustment in regard to revaluation of assets and reassessment of
liabilities.
(iii) Adjustment in regard to undistributed profits.
(iv) Adjustment in regard to the Joint Life Policy and individual
policies.
Q.10 X wants to retire from the firm. The profit
on revaluation of assets on the date of retirement is Rs. 10,000. X is of the
view that it be distributed among all the partners in their profit-sharing
ratio whereas Y and Z are of the view that this profit be divided between Y and
Z in new profit-sharing ratio. Who is correct in this case?
Ans. X is
correct because according to the Partnership Act a retiring partner is entitled
to share the profit upto the date of his retirement. Since the profit on
revaluation arises before a partner retires, he is entitled to the profit.
Q.11 How is goodwill adjusted in the books of a
firm -when a partner retires from partnership?
Ans. When
a partner retires (or dies), his share of profit is taken over by the remaining
partners. The remaining partners then compensate the retiring or deceased
partner in the form of goodwill in their gaining ratio. The following entry is
recorded for this purpose:
Remaining Partners’ Capital A/cs ...Dr. [Gaining
Ratio]
To Retiring/Deceased
Partner’s Capital A/c [With his share
of goodwill]
If goodwill (or Premium) account
already appears in the old Balance Sheet, it should be written off by recording
the following entry :
All Partners’ Capital/Current
A/cs ...Dr. [Old Ratio]
To Goodwill (or
Premium) A/c
Q.12 X, V and Z are partners sharing profits and
losses in the ratio of 3 : 2 :1. Z retires and the following Journal entry is
passed in respect of Goodwill:
Y’s Capital A/c ...Dr. 20,000
To X’s Capital A/c 10,000
To Z’s Capital A/c 10,000
The value of goodwill is Rs.
60,000. What is the new profit-sharing ratio between X and Y?
Ans. Without
calculating the gaining ratio, the amount to be adjusted in respect of goodwill
can be calculated directly with the help of following statement:
STATEMENT
SHOWING THE REQUIRED ADJUSTMENT FOR GOODWILL
Particulars X(Rs.) V(Rs.) Z(Rs.)
Right
of goodwill before retirement (3:2:1) 30,000 20,000 10,000
(Old
Ratio) Right of goodwill after retirement 20,000 40,000 —
(Balancing
Figure) (New Ratio)
Net
Adjustment (-)
10,000 (+) 20,000 (-) 10,000
The new ratio between X and Y is 1
: 2.
Q.13 State the ratio in which profit or loss on
revaluation will be shared by the partners when a partner retires. ;
Ans. Profit
or loss on revaluation of assets/liabilities will be shared by the partners
(including the retiring partner) hi their old profit-sharing ratio.
Q.14 How
is the account of retiring partner settled?
Ans. The
retiring partner account is settled either by making payment in cash or by
promising the retiring partner to pay in installments along with interest or by
making payment partly in call and partly transferring to his loan account. The
-following Journal entry is passed:
Retiring Partner’s Capital
A/c ...Dr.
To Cash* [If
paid in cash]
Or
To Retiring
Partner’s Loan [If
transferred to loan]
Q.15 What
is Joint Life Policy?
Ans. Joint
Life Policy is an insurance policy taken on the lives of the partners jointly.
Premium of the policy is paid by the firm.
Q.16 What
is the objective of taking a Joint Life Policy by a partnership firm?
Ans. A
partnership firm takes a Joint Life Policy with the objective of receiving
sufficient amount in cash and thereby enabling itself to pay the amount payable
to the retiring partner or to the representatives of the deceased partner,
without adversely affecting the financial position and working of the business.
Q.17 When
does the Joint Life Policy become due?
Ans. Joint Life Policy becomes due for payment
by the Insurance Company either on the death of any partner or on its maturity,
whichever is earlier. The policy may also be surrendered before its maturity.
Q.18 What
is Surrender Value?
Ans. Surrender
Value is the value of the insurance policy that the insurance company pays on
the surrender of a policy before the date of its maturity.
Q.19 How is the share of profit of a deceased
partner calculated from the date of last balance sheet to the date of death?
Ans. If a
partner dies on any date after the date of balance sheet; then his share of
profit is calculated from the beginning of the year to the date of death on the
basis of average profits or last year’s profit. It is calculated on either of
the following two bases:
(i) On the Basis of Time: In this
method, it is assumed that the profits had accrued uniformly in the previous
year. On the basis of time, deceased partner’s share in the profits till the
date of death is calculated as follows:
Share of Deceased Partner
= Average Profits x x
Proportion of Deceased Partner
(ii) On the Basis of Sales: Deceased partner’s share in profit till the
date of death shall be:
= Sales for the period* x x Proportion of Deceased Partner
*Period = from the beginning
of the year to the date of death.
Q.20 How
is amount payable to the representative of a deceased partner calculated?
Ans. In
the case of death of a partner, the legal representatives of a deceased partner
are entitled to the following:
(i) The amount standing to the credit of the deceased partner’s capital
account.
(ii) His share in the goodwill of the firm.
(iii) His share of profit on the revaluation^ assets and reassessment of
liabilities. (iv) His share of reserves
and accumulated profits.
(v) His share of profits earned from the date of last balance sheet of
the date of death.
(vi) Interest on capital provided in the partnership agreement.
(vii) His share of the proceeds of
Joint Life Policy.
The following amounts will be
debited to his account:
(i) His share in the reduction in the value of goodwill, if any.
(ii) His share of loss on revaluation of assets and reassessment of
liabilities.
(iii) His drawings.
(iv) Interest on drawings, if provided in the partnership deed.
(v) His share of loss from the date of last balance sheet to the date of
death.
The balance in the capital account
is transferred to his Executor’s Account.
Q.21 Can
an outgoing partner or Legal Representative of Deceased Partner share in the
subsequent profits?
Or
What will happen if deceased or retired
partner’s dues are not settled immediately?
Ans. As
per the provisions of Section 37 of the Partnership Act, 1932 if full or part
amount of outgoing partner still remains to be paid then
(i) He will be entitled to interest or share in profit or nothing as
has been mutually agreed among partners.
(ii) If nothing is agreed among the partners, then outgoing partner or
his representatives have the choice to get either of the following till final
settlement:
(a) Interest
@ 6% per annum on the balance amount.
(b) Share
in the profit earned proportionate to their amount outstanding to total capital.
Share in Profit =
Normally he will opt for the
better of (a) or (b).
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.
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.
Q.2 Why is Realisation Account prepared on dissolution
of partnership firm?
Ans. 2
Realisation account is prepared to ascertain profit or loss on sale of assets
and payment of liabilities.
Q.3 State any one point of difference between
Realisation Account and Revaluation Account.
Ans. 3
Realisation Account is prepared on dissolution of partnership firm and
Revaluation account is prepared on reconstitution of partnership firm.
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.
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.
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.
Ans. 5
Cash A/C Dr.
11400
To Realisation A/C 11400
(For debtors realized on dissolution
of firm)
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.
Ans. 6
Kamal’s capital A/C Dr.
4000
To cash A/C 4000
(for final payment to Kamal)
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.
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)
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. 12,000 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.
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
|
CBSE SAMPLE PAPER
ACCOUNTANCY
CLASS
- XII
Time
Allowed : 3 Hours Maximum
Marks : 80
General Instructions:
1. This
question paper contains three parts A, B and C.
2.
Part A is compulsory for all.
3. Attempt
onfy one part of the remaining parts B and C.
4. All
parts of questions should be attempted at one place.
PART-A
PARTNERSHIP AND COMPANY ACCOUNTS
1. Not-for-profit organisations have some
distinguishing features from that of profit organisations. State any one of
them, [1]
2. Alka, Barkha and Charu are partners in a
firm having no partnership agreement. Alka Barkha and Charu contributed Rs.
2,00,000, Rs. 3,00,000 and Rs. 1,00,000 respectively. Alka and Barkha desire
that the profits should be divided in the ratio of capital contribution. Charu
does not agree to mis. How will you settle the dispute? [1]
3. Give the formula for 'calculating gaining
share' of apartner in a partnership firm. [1]
4. Pawan and Jayshree are partners. Bindu is
admitted for l/4th share. What is the ratio in which Pawan and Jayshree will
sacrifice their share in favour of Bindu? [1]
5. What is meant by Convertible debentures?
[1]
6. Show the following information in the
Balance Sheet of the Cosmos Club as on 31st March, 2007:
Particulars Debit
Rs. Credit 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. 6,000. [3]
7. Shubh Limited has the following balances
appearing in its Balance Sheet:
Rs.
Securities Premium 22,00,000
9% Debentures 120,00,000
Underwriting Commission 10,00,000
The company decided to redeem its 9%
Debentures at a premium of 10%. You are required to suggest the ways in which
the company can utilise the securities premium
amount. [3]
8. 20,000
Shares of Rs. 10 each were issued for public subscription at a premium of 10%
Full amount was'pavaD'e °n application. Applications were received for 30,000
shares and the Board decided to allot the shares on a pro-rata basis. Pass Journal entries. [3]
9. A, B
and C are partners in a firm. They have omitted interest on capital @ 10% pa.a.
for three years ended 31st March, 2007. Their fixed capitals on which interest
was to be calculated throughout were :
A Rs. 1,00,000
B Rs. 80,000
C Rs. 70,000
Give the necessary adjusting journal
entry with working notes. [4]
10. 'X, Y'and Z were sharing profits and losses
in the ratio of 5:3:2. They decided to share
future profits and losses in the ratio of 2:3:5 with effect from
1.4.2007. They decided to record the effect of the following, without effecting
their book values:-
i) Profit
and Loss Account Rs.
24,000
ii)
Advertisement Suspense Account Rs. 12,000
Pass the necessary adjusting entry. [4]
11. Sajal
Limited had issued shares of Rs. 100 each at a discount of 5%, payable as
follows:
On application Rs.
25 per share
On allotment Rs.
25 per share
On first and final call Balance
One shareholder, Pran holding 50 shares
did not pay his first and final call. As a res! his shares were forfeited.
Of these, 40 shares were reissued to Ram
as fully paid up @ Rs. 110 per share, Pass necessary journal entries to record
the forfeiture and reissue of shares in: books of Sajal Limited. [4]
12 (a) Raghav
Limited purchased a running business from Krishna Traders for a sum of Rs. 15,00,000, payable Rs. 3,00,000 by
cheque and for the balance issued 9% Debentures of Rs. 100 each at par.
The assets and
liabilities consisted of the following :
Rs.
Plant and Machinery 4,00,000
Buildings 6,00,000
Stock 5,00,000
Sundry Debtors 3,00,000
Sundry Creditors 2,00,000
Record necessary journal entries
in the books of Raghav Limited,
(b) On
January 1,2004, Rhythm Limited issued 1,000 10% debentures of Rs. 500 each at par. Debentures are redeemable after
7 years. However, the company gave an option to debenture holders to get their
debentures converted into equity shares
of Rs. 100 each at a premium of Rs. 25 per share any time after the expiry of one year.
Shivansh, holder of 200
debentures, informed on Jan. 1, 2006 that he wanted to exercise the option of conversion of debentures into equity shares.
The company accepted his request
and converted debentures into equity shares.
Pass necessary journal entries
to record the issue of debentures on Jan. 1,2004 and conversion of debentures on Jan. 1,2006. (3+3 = 6)
13. From the following Receipts and Payments
Account of Sonic Club and from the given additional information; prepare Income
and Expenditure Account for the year ending 31st December, 2006 and the Balance
Sheet as on that date :
RECEIPTS AND PAYMENTS ACCOUNT
for the year ending 31st December, 2006
Cr. Dr.
Receipts Rs. Payments Rs.
To Balance b/d 1,90,000 By
Salaries 3,30,000
To Subscriptions 6,60,000 By
Sports Equipment 30,000
To Interest on Investments By Balance c/d 1,60,400
@ 8% p.a. for full year 40,000
8,90,000 8,90,000
Additional Information :
(a)
The club had received Rs. 20,000 for subscription in 2005 for 2006.
(b)
Salaries had been paid only for 11 months
(c)
Stock of Sports Equipment on 31st
December, 2005 was Rs. 3,00,000 and on 31 st
December, 2006 Rs. 6,50,000. (6)
14. Ram, Mohan and Sohan were partners sharing
profits and losses in the ratio of 5:3:2. On 31 st March, 2006 their Balance
Sheet was as under:
Liabilities Rs. Assets Rs.
Capitals : Rs Leasehold 1,25,000
Ram 1,50,000
Patents 30,000
Mohan 1,25,000
Machinery 1,50,000
Sohan 75,000 3,50,000 Stock
1,90,000
Creditors 1,50,000 Cash
at Bank 40,000
Workmen's Compensation 30,000
Reserve
5,35,000 5,35,000
Sohan died on 1st August, 2006. It was
agreed that:
i)
Goodwill of the firm is to be valued at Rs. 1,75,000.
ii)
Machinery be valued at Rs. 1,40,000; Patents at Rs. 40,000; Leasehold at
Rs. 1,50,000 on this date,
iii)
For the purpose of
calculating Sohan?s share in the profits of 2006-07, the profits should be taken to have accrued on the same
scale as in 2005-06, which were Rs. 75,000.
Prepare Sohan's Capital Account
and Revaluation Account. (6)
15. Srijan Limited issued Rs. 10,00,000 new
capital divided into Rs. 100 shares at a premium of Rs. 20 per share, payable
as under:
On Application Rs. 10 per share
On Allotment Rs 0 per share
(including
premium
of Rs, 10 per share)
On First and Final Call Balance
Over-payments on application, were to be
applied towards sums due on allotment and first and final call. Where no
allotment was made, money was to be refunded in full. The issue was
oversubscribed to the extent of 13,000 shares. Applicants for 12,000 shares
were allotted only 2,000 shares and applicants for 3,000 shares were sent
letters of regret and application money was returned to them. All the money due
was duly received.
Give Journal Entries to record the above
transactions (including cash transactions)^ the books of the company. [8]
OR
Sangita Limited invited application for
issuing 60,000 shares of Rs. 10 each at par. amount was payable as follows:
On Application Rs.
2 per share
On Allotment Rs.
3 per share
On First and Final Call Rs. 5 per share
Applications were received for 92,000
shares. Allotment was made on the following basis :
i) To
applicants for 40,000 shares - Full
ii) To
applicants for 50,000 shares - 40% (iii) To applicants for 2,000 Shares -
Nil Rs. 1,08,000 was realised on account
of allotment (excluding the amount carried first application money) and Rs.
2,50,000 on account of call.
The directors decided to forfeit shares
of those applicants to whom full allotment^ made and on which allotment money
was overdue.
Pass journal entries in the books of
Sangita Limited to record the above transactions. [5]
16. L and M share profits of a business in the
ratio of 5:3. They admit N into the firm for a fourth share in the profits to
be contributed equally by L&M. On the date of admission the Balance Sheet
of L&M is as follows :
BALANCE
SHEET
as
at......
Liabilities Rs. Assets Rs.
L's Capital 30,000 Machinery 26,000
M's Capital 20,000 Furniture 18,000
Reserve Fund 4,000 Stock 10,000
Bank Loan 12,000 Debtors 8,000
Creditors 2,000 Cash 6,000
68,000 68,000
Terms of N's admission were as follows :
i)
N will bring Rs. 25,000 as
his capital.
ii)
Goodwill of the firm is to
be valued at 4 years? purchase of the average super profits of the last three years. Average
profits of the last three years are Rs. 20,000;
while the normal profits that can be earned on the capital employed
are Rs. 12,000.
iii)
Furniture is to be
appreciated to Rs. 24,000 and the value of stock into by 20%.
Prepare Revaluation-Account,
Partners Capital Accounts and the Balance Sheet of the firm after admission of N . (8)
OR
On 31st December, 2006 the Balance Sheet
of A. B and C, who were sharing profits and losses in proportion to their
capitals, stood as follows :
Liabilities Amount Assets Amount
Creditors 10,800 Cash at Bank 8,000
Capitals : Rs. Debtors Rs
10,000
A 45,000
Less : Provision 200 9,800
B
30,000
Stock 9,000
C 15,000 90,000 Machinery
24,000
Land
and Buildings 50,000
1,00,800 1,00,800
B retires and the following
readjustments of assets and liabilities have been agreed upon before the
ascertainment of the amount payable to B :
i)
That Land and Buildings be
appreciated by 12%.
ii)
That provision for Doubtful Debts be brought upto 5% of debtors.
iii)
That a provision of Rs.
3,900 be made in respect of an 'outstanding bill for repairs,
iv)
That Goodwill of the entire firm be fixed at Rs.. 18,000 and B?s share
of the same be adjusted into the
accounts of A&C, who are going to share future profits in the proportion of
3/4th and l/4th respectively,
v)
That B be paid Rs. 5,000 immediately and the balance to be transferred
to his Loan Account.
Prepare Revaluation Account,
Capital Accounts of Partners and the Balance Sheet of the firm of A and C. (8)
PART-B
ANALYSIS OF FINANCIAL STATEMENTS
17. Assuming that the Current Ratio is 2:1, state
giving reason whether the ratio will improve, decline or will have no change in
case a Bill Receivable is dishonoured. (1)
18. State whether cash deposited in bank will
result in inflow, outflow or no flow of cash.(1)
19. Interest received by a finance company is
classified under which kind of activity while preparing a cash flow statement ? (1)
20. Show the major headings into which the
liabilities side of a Company's Balance Sheet is organised and presented as per
Schedule VI Part 1 of the Companies Act, 1956.(3)
21. Prepare a Comparative Income Statement with
the help of the following information : (4)
Particulars 2006 2007
Sales Rs.
20,00,000 Rs.
30,00,000
Gross Profit 40% 30%
Indirect Expenses 50% of G P. 40%
of G.P.
Income Tax 50% 50%
22. Following
is the Balance Sheet of X Ltd. as on 31st March, 2006 :
Liabilities Amount Assets Amount
Share Capital 20,00,000 Fixed
Assets (Net) 29,00,000
Reserves 5,00,000 Current Assets 25,00,000
10% Loans 10,00,000 Underwriting
Commission 1,00,000
Current Liabilities 8,00,000
Profit for the year 12,00,000
55,00,000 55,00,000
Find out 'Return on Capital Employed;
23. From the following balance sheets of ABC
Ltd., Find out cash from operating activities only.
Liabilities 31.3.2006 31.3.2007 Assets 31.3.2006 31.3.2007 Rs. Rs. Rs. Rs.
Equity
Share Capital 30,000 35,000 Goodwill 10,000 8,000
General
Reserve 10,000 15,000 Machinery 41,000 54,000
Profit
& Loss Account - 7,000 10%
Inv. 3.000 8.000
10%
Debentures 21,000 25,000 Stock 6,000 24,500
Sundry
Creditors 8,500 12,500 Cash
and Bank 12,000 13,000
Provision
for Depreciation Discount
on
on
Machinery 9,000 13,000 Debentures 500 -
Profit
& Loss
Account 6,000 -
78,500 1,07,500 78,500 1,07,500
Additional
Information :
*Debentures were issued on 31.3.2007.
* Investments were made on 31.3.2007.
ANNUAL PAPER
ACCOUNTANCY
CLASS
- XII
Time
Allowed : 3 Hours Maximum
Marks : 80
General
Instructions :
1. This
question paper contains three parts A, B and C.
2. Part
A is Compulsory for all candidates.
3. Candidates
can attempt only one part of the remaining parts B and C.
4. All
parts of the questions should be attempted at one place.
PART-A
(Not for Profit Organisations, Partnership Firms
and Company Accounts)
1. Distinguish between Income and Expenditure
Account and Receipt and Payment Account on the basis-of nature of items
recorded therein. [1]
2. Ram and Mohan are partners in a firm
without any partnership deed. Their capitals are
Ram Rs.8,00,000 and Mohan Rs.6,00,000.
Ram is an active partner and looks after the business. Ram wants that profit should be shared in
proportion of capitals. State with reason whether his claim is valid or not. [1]
3. Defined goodwill. [1]
4. State
any two reasons for the preparation of 'Revaluation Account' on the admission
of a partner. [1]
5. Give
the meaning of 'minimum subscription'. [1]
6. Calculate
the amount of sports material to be debited to the Income and Expenditure
Account of Capital Sports Club for the year ended 31.3.2007 on the basis of the
following information
1.4.2006 31.3.2007
Rs. Rs.
Stock of sports material 7,500 6,400
Creditors for sports material 2,000 2,600
Amount paid for sports material during
the year was Rs. 19,000.
7. Samta
Ltd. forfeited 800 equity shares of Rs. 100 each for the non-payment of first
call of Rs. 30 per share. The final call of Rs.20 per share was not yet made.
Out of the share 400 were re-issued at
the rate of Rs.105 per share fully paid up.
Pass necessary journal entries in the
books of Samta Ltd. for the above transaction. [3]
8. Deepak Ltd. purchased furniture
Rs.2,20,000 from M/s Furniture Mart. 50% of the amount was paid to Furniture
Mart by accepting a bill of exchange and for the balance the company issue 9%
debentures of Rs.100 each at a premium of 10% in favour of Furniture Mart. Pass
necessary journal entries in the books of Deepak Ltd. for the above
transactions.
[3]
9. Kumar
and Raja were partners in a firm sharing profits in the ratio of 7 :3. Their
fixed capital were: Kumar Rs.9,00,000 and Raja Rs.4,00,000. The partnership
deed provided for the following but the profit for the year was distributed
without providing for:
i) Interest
on capital @ 9% p.a.
ii) Kumar's
salary Rs.50,000 per year and Raja's salary Rs.3,000 per month.
The profit for the year ended
31.3.2007 was Rs.2,78,000.
Pass the adjustment entry. [4]
10. P, Q and R were partners in a firm sharing
profits in 2 : 2 :1 ratio. The firm closes its book on 31 March every year. P died three months
after the last accounts were prepared. On that date the goodwill of the firm
was valued at Rs.90,000. On the death of a partner his share of profit in
the year of death was to be calculated
on the basis of the average profits of the last four years The profits of last
four years were :
Year ended 31.3.2007 Rs.2,00,000
Year ended 31.3.2006 Rs. 1,80,000
Year ended 31,3.2005 Rs. 2,10,000
Year ended 31.3.2004 Rs. 1,70,000 (Loss)
Pass necessary journal entries for the
treatment of goodwill and P's share of profit on his death.
Show clearly the calculation of P's
share of profit. (4)
11. Sagar Ltd. was registered with an authorised
capital of Rs. 1,00,000 divided into 1,00,000 equity shares of Rs.100 each. The
company offered for public subscription 60,000 equity shares.
Applications for 56,000 shares were
received and allotment was made to all the applicants. All the calls were made
and were duly received except the second and final call of Rs.20 per share on
700 shares. Prepare the Balance Sheet of the company showing the different
types of share capital. (4)
12. Following is the Receipt and Payment Account
of Indian Sports Club for the year ended 31.12.2006.
Receipts Amount
Payments Amount
To Balance b/d 10,000 By
Salary 15,000
To Subscriptions 52,000 By
Billiards Table 20,000
To Entrance Fee 5,000 By
Office Expenses 6,000
To Tournament Fund 26,000 By Tournament Expenses 31,000
To Sale of old newspapers 1,000 By
Sports Equipment 40,000
To Legacy 37,000 By
Balance c/d 19,000
1,31,00 1,3
1,000
Other Information:
On 31.12.2006 subscription outstanding
was Rs.2,000 and on 31.12.2005 subscription outstanding was Rs.3,000. Salary
outstanding on 31.12,2006 was Rs.1,500.
On 1.1.2006 the club had building
Rs.75,000, furniture Rs. 18,000,12% investment Rs.30,000 and sports equipment
Rs.30,000, Depreciation charged on these items including purchases was 10%.
Prepare Income and Expenditure Account
of the Club for the year ended 31.12.2006 and ascertain the Capital Fund on
31.12.2005. (6)
13. K and Y were partners in a firm sharing
profits in 3 :2 ratio. They admitted Z as a new partner for l/3rd share in the
profits of the firm. Z acquired his share from K and Y in 2 : 3 ratio. Z
brought Rs.80,000 for his capital and Rs.30,000 for his 1/3"1 share as
premium. Calculate the new profit sharing ratio of K, Y and Z and pass
necessary journal entries for the above transactions in the books of the firm. (6)
14. Pass necessary journal entries in the books of
Varun Ltd. for the following transactions: i) Issued
58,000, 9% debentures of Rs.l,000each at a premium of 10%.
ii) Converted
350,9% debentures of Rs. 100 each into equity shares of Rs. 10 each issued at premium of 25%.
iii) Redeemed
450, 9% debentures of Rs.100 each by draw of lots. (6)
15. R, S
and T were partners in a firm sharing profits in 2 :2 : 1 ratio. On 1.4.2004
their Balance Sheet was as follows :
Liabilities Amount Assets Amount
Bank Loan 12,800 Cash 51,300
Sundry Creditors 25,000 Bills
Receivable 10,800
Capitals : Debtors 35,600
R 80,000 Stock 44,600
S 50,000 Furniture 7,000
T 40.000 1,70,000 Plant and
Machinery 19,500
Profit: and Loss A/c 9,000 Building 48,000
2,16,800 2,16,800
S retired from the firm on 1.4.2004 and
his share was ascertained on the revaluation of assets as follows:
Stock Rs.40,000; Furniture Rs.6,000;
Plant and Machinery Rs. 18,000; Building 40,000, Rs.1,700 were to be provided
for doubtful debts. The goodwill of the firm was valued at Rs. 12,000.
S was to be paid Rs. 18,080 in cash on
retirement and the balance in three equal yearly instalments. Prepare Revaluation Account, Partner's
Capital Accounts, S's Loan Account and Balance Sheet on 1.4.2004.
OR
D and E were partners in a sharing
profits in 3 :1 ratio. On 1.4.2007 they admitted F as a new partner for 1/4th
share in the firm which he acquired from D. Their Balance Sheet on the date was
as follows:
Liabilities Amount Assets Amount
Creditors 54,000 Land and Building
Capitals : Machinery
D 1,00,000 Stock
S 70.000 1,70,000 Debtors 40,000
General Reserve 32,000 Less
provision
for
bad debts 3,000 37,000
Investments 50,000 Cash 44,000
2,56,000 2,56,000
F
will bring R. 40,000 as his capital and the other terms agreed upon were :
i) Goodwill of the firm was valued at Rs.
24,000
ii) Land
and Building were valued at Rs. 70,000
iii) Provision for
bad debts was found to be in excess by Rs.800 '
iv) A liability for
Rs.2,000 included in sundry creditors was not likely to arise.
v) Excess
or shortfall, if any, to be transferred to current accounts.
Prepare Revaluation Account, Partner's
Capital Accounts and the Balance Sheet of the New firm.
16. Janata Ltd. invited application for issuing
70,000 equity shares of Rs.10 each at a premium of Rs. 2 per share. The amount
was payable as follows:
On application Rs.4 per share (including premium)
On allotment Rs.3 per share
On first and final Balance
Applications for 1,00,000 shares were
received. Applications for 10,000 shares were rejected. Shares were allotted to
the remaining applicants on pro-rata basis. Excess money received with
applications were adjusted towards sums due on allotment. All calls were made
and were duly received except first and final call on 700 shares allotted to
Kanwar. His shares were forfeited.
The forfeited shares were re-issued for
Rs.77,000 fully paid up.
Pass necessary journal entries for the
books of the company for the above transactions. (8)
OR
Shubham Ltd. invited applications for
the allotment of 80,000 equity shares of Rs.10 each at a discount of 10%. The
amount was payable as follows :
On application Rs.2 per share
On allotment Rs.3
per share
On first and final call- Balance
Applications for 1,10,000 shares were
received. Applications for 10,000 shares were rejected. Shares were allotted on
pro-rata basis to the remaining applicants. Excess application money received
on application was adjusted towards sums due on allotment. All calls were made
and were duly received. Manoj who had applied for 2,000 shares failed to pay
the allotment and first and final call. His shares were forfeited. The
forfeited shares were re-issued for Rs.24,000 fully paid up. Pass necessary
journal entries in the books of the company for the above transaction.
PART-B
(Analysis of Financial Statements)
17. The stock turnover ratio of a company is 3
times. State, giving reason, whether the ratio improves, declines or does not
change because of increase in the value of closing stock by Rs.5,000. (1)
18. State whether the payment of cash to
creditors will result in inflow, outflow or no flow of cash. (1)
19. Dividend paid by a manufacturing company is
classified under which kind of activity while preparing cash flow statement? (1)
20. Show the major headings on the liabilities
side of the Balance Sheet of a company as per Schedule VI Part I of the Companies
Act, 1956. (3)
21. From the following information prepare a
comparative Income Statement of Victor Ltd:
(4)
2006 2007
Rs. Rs.
Sales 15,00,000 18,00,000
Cost of goods sold 11,00,000 14,00,000
Indirect Expenses
20%
of Gross Profit 125% of Gross Profit
Income Tax 50% 50%
22. From the following information calculate any
two of the following ratios (4)
i) Net
Profit Ratio
ii) Debt-Equity
Ratio
iii) Quick
Ratio
Rs.
Paid up Capital 20,00,000
Capital Reserve 2,00,000
9% Debentures 8,00,000
Net Sales 14,00,000
Gross Profit 8,00,000
Indirect Expenses 2,00,000
Current
Assets 4,00,000
Current Liabilities 3,00,000
Opening Stock 50,000
Closing Stock : 2% more than opening
stock.
23. From the following Balance Sheets of Som Ltd.
as on 31.3.2006 and 31.3.2007 prepare a Cash Flow Statement :
Liabilities Amount
Assets Amount
Equity
Share Capital 2,00,000 5,00,000 Fixed
Assets 3,00,000 4,50,000
Profit and
Loss 1,25,000 25,000 Stock 1,00,000 1,50,000
10%
Debentures 1,00,000 75,000 Debtors 75,000 1,25,000
8%
Preference Shares Capital 50,000 75,000 Bank 45,000 65,000
General
Reserve 45,000 1,15,000
5,20,000 7,90,000. 5,20,000 7,90,000
During the year machine costing
Rs.70,000 was sold for Rs. 15,000. Dividend paid Rs.24,000 (6)
ANSWERS
SET-1
(Not
for Profit Organisations, Partnership Firms and Company Accounts)
1. Income and Expenditure Account records
items of revenue nature whereas Receipt and Payments Account records items of
both capital and revenue nature.
2. His claim is not valid because in the
absence of a partnership deed, profits and losses should be shared equally.
3. Goodwill is the value of the reputation of
a firm is respect of the profits expected in future over and above the normal
profits earned by other similar firms belonging to the same industry.
4. The two reasons are :
(i) To
show the assets and liabilities at their current / correct values.
ii) To
ensure that no partner is at an advantage or disadvantage due to change in the
value of assets and liabilities.
5. Minimum subscription is the minimum amount
which in the opinion of the Board of Directors must be raised through the issue
of shares so that the company has necessary funds to carry out its objectives
as stated in its memorandum of Association.
Minimum subscription, according to SEB1
guidelines is 90% of the issued capital.
6. Dr. STOCK OFSPORTS MATERIAL ACCOUNT Cr.
Particulars Amt. (Rs.) Particulars Amt (Rs.)
To Balance b/d 7,500 By
Income & Expenditure A/c - 20,700
(stationery
consumed)
To Creditors - 19,600 By
Balance c/d 6,400
(purchases) 27,100
27,100 27,100
Dr. CREDITORS
FOR SPORTS MATERIAL ACCOUNT Cr.
Particulars Amt. (Rs.) Particulars Amt (Rs.)
To Cash (paid) 19,000 By
Balance b/d 2,000
To Balance c/d 2,600 By
Purchases A/c 19,600
(credit
-bal.fig.)
21,600 21,600
OR
Calculation
of Sports Material consumed during the year
Cash paid during the year 19,000
Add Opening Stock of sports Material 7,500
Less Closing stock of sports Material 6,400
Less Creditors in the beginning 2,000
Add Creditors at the end 2.600
Amount to be debited to Income &
Expenditure A/c 20,700
JOURNAL OF
SAMTALTD.
7.
Date Particulars L.F. Dr.
(Rs.) Cr.(Rs)
Share
Capital A/c Dr. 64,000
To
Share Forfeited A/c 40,000
To
Share First Call A/c / Calls in Arrears A/c 24,000
(Being
800 shares forfeited for noh payment of
first
call)
Bank
A/c Dr. 42,000
To
Share Capital A/c 40,000
To
Securities Premium A/c 2,000
(Being
400 Shares reissued)
Share
Forfeited A/c Dr. 20,000
To
Capital Reserve A/c 20,000
(Being
amount transferred to Capital Reserve)
8.
JOURNAL
OF DEEPAK LTD.
Date Particulars L.F. Dr. (Rs.) Cr.(Rs)
Furniture
A/c
Dr. 2,20,000
To
M/s Furniture Mart A/c 2,20,0001
(Being
furniture purchased)
Ms
Furniture Mart A/c
Dr. 1,10,000
To
Bills Payable A/c 1,10,000:,
(Being
Bill payable Accepted)
M/s
Furniture Mart A/c
Dr. 1,10,000
To
9% Debentures A/c 1,00,000
To
Securities Premium 10,000
(Being
Debentures issued at 10% premium)
9.
JOURNAL
Date Particulars L.F. Dr. (Rs.) Cr.(Rs)
Kumar's
Current A/c Dr. 11,100
To
Raja's Current A/c 11,100
(Being
adjustment made which was omitted earlier)
Working
Notes:
STATEMENT SHOWING ADJUSTMENTS
Particulars Kumar
(Rs.) Raja (Rs.)
Interest
on Capitals 81,000 (Cr.) 36,000
(Cr.)
Salaries
50,000 (Cr.) 36,000
(Cr.)
Wrong
Profits 1,94,600 (Dr.) 83,400
(Dr.)
Actual
Profits 52,500 (Cr.) 22,500
(Cr.)
Adjustments 11,100
(Dr.) 11,100 (Cr.)
10.
JOURNAL
Date Particulars L.F. Dr. (Rs.) Cr.(Rs)
P
& L Suspense A/c Dr. 10,500
To
P's Capital A/c 10,500
(Being
share of profit credited to his A/c)
Q's
Capital A/c
Dr. 24,000
R's
Capital A/c
Dr. 12,000
To
P's Capital A/c 36,000
(Being
adjustment made in respect of P's share
of
goodwill)
Working
Note :
(a) P's Share of profit = Average
profit x 3/12 x 2/5
Average Profit = 2,00,000
+ 1,80.000 + 2,10,000 -1,70,000
= Rs.1,05,000
P's
share of profit = 1,05,000
x 3/12 x 2/5 = Rs.l0,500
P's
share in goodwill = Rs.90,000 x 2/5 = Rs. 36,000
11.
BALANCE SHEET OF SAGAR LTD.
. as at
..........
Liabilities Amount
(Rs.) Assets Amount (Rs.)
SHARE CAPITAL
Authorised Capital 1,00,00,000
1,00,000
equity shares of Rs. 100 each
Issued Capital
60,000
equity shares of Rs. 1 00 each 60,00,000
Subscribed Capital
56,000
equity shares of Rs.100 each 56,00,000
Less
calls in arrears
14.000 55,86,000
OR
Liabilities Amount
(Rs.) Assets Amount (Rs.)
A uthorised Capital
1,00,000
Equity Shares of Rs.100 each 1,00,00,000
Issued Share Capital
60,000
Equity Shares of Rs.100 each 60,00,000
Subscribed Share Capital
56,000
Equity Shares of Rs. 100 each 56,00,000
Called up and Paid up Share Capital
56,000 Equity Shares of Rs. 100
each 56,00,000
Less,
calls in arrears 14.000 55,86,000
Note : If the Issued Capital is taken as
Rs.56,00,000, full credit was given.
12.
INCOME & EXPENDITURE ACCOUNT
for the year ended 31st December
2006
Expenditure Amt.
(Rs.) Income Amt (Rs.)
To Salary 15,000 By Subscription 52,000
Add:
Outstanding Salary 1,500 16,500 Add: Subscription Outstanding
To Office
Expenses 6,000 at the end 2,000
To Excess
of Expenses
Over
Tournament Fund 5,000 Less: Subscription
(31,000-26,000) Outstanding
in the
beginning 3.000
To
Depreciation on Building 7,500 By Entrance Fees 5,000
To
Depreciation on Furniture 1,800 By Sale of old Newspaper 1,000
To
Depreciation on Sports Equipment 7,000
To Surplus 16,800 By
Accrued Interest 3,600
60,600 60,600
BALANCE
SHEET
as at
31" December 2005
Liabilities Amount (Rs.) Assets Amount
(Rs)
Capital 1,66,000 Cash 10,000
Subscription
Outstanding
3,000
Building
75,000
Furniture 18,000
Sports
Equipment 30,000
1
2% Investments 30,000
1,66,000 1,66,000
Notes
:
1. If
Billiards Table is included in furniture, then depreciation On furniture would
be Rs.3,800 and the surplus would be
Rs.l 4,800.
2. No
marks were deducted if depreciation has been charged on Investments. The
surplus would change accordingly.
13. Old
Ratio =
3:2
Z's
share = 1/3
Z
acquires from K = 1/3 x 2/5 = 2/15
Z
acquires from Y = 1/3 x 3/5 = 3/15
K's
new share = Old share-share to Z = 3/5-2/15 = 7/15
Y's
new share = Old share - share to Z = 2/5 -3/15 = 3/15
New
profit sharing ratio = 7:3:5
JOURNAL
Date Particulars L.F. Dr. (Rs.) Cr.(Rs)
Cash
A/c
Dr. 1,10;000
To
Z's Capital A/c 80,000
To
Premium A/c 30,000
(Being
Capital and share of goodwill brought in by
the
new partner)
Premium
A/c
Dr. 30,000
To
K's Capital A/c 12,000
To
Y's Capital A/c 18,000
(Being
the amount of premium distributed in
Sacrificing ratio)
14. i) JOURNAL OF VARUN LTD.
Date Particulars L.F. Dr. (Rs.) Cr.(Rs)
Bank
A/c
Dr. 6,38,00,000
To
Debenture Application and Allotment A/c 6,38,00,000
(Being
Debenture Application money received)
Debenture
Application and Allotment A/c Dr.
6,38,00,000
To
9% Debentures A/c 5,80,00,000
To
Securities Premium A/c 58,00,000
(Being
issue of Debentures at Premium of 10%)
II) JOURNAL
Date Particulars L.F. Dr. (Rs.) Cr.(Rs)
9%
Debentures A/c
Dr. 35,000
To
Debenture Holders 35,000
(Being
amount due to Debenture Holders)
Debenture
holders A/c Dr. 35,000
To
Equity Share Capital A/c 28,000
To
Securities Premium A/c 7,000
(Being
2,800 Equity Shares issued at a premium of 25%)
III) JOURNAL
Date Particulars L.F. Dr. (Rs.) Cr.(Rs)
9%
Debentures A/c
Dr. 45,000
To
Debenture Holders 45,000
(Being
amount due to Debenture Holders)
Debenture
Holders A/c Dr.
45,000
To
Bank A/c 45,000
(Being
amount paid to Debenture Holders)
15. REVALUATION ACCOUNT
Expenditure Amt. (Rs.) Income Amt
(Rs.)
To Stock 4,600 By Loss transferred to
To
Furniture 1,000 Partners capital A/cs :
To Plant
&. Mach. 1,500 R 6,720
To
Building 8,000 S 6,720
To
Provision for T 3,360 16,800
Doubtful
Debts 1,700
16.800 16.800
CAPITAL
ACCOUNTS
Particulars R Rs. S Rs. T Rs. Particulars R
Rs. S Rs. T Rs
To
Revaluation
A/c 6,720 6,720 3,360 By Balance b/d 80,000 50,000 40,000
By
P&L A/c 3,600 3,600 1,800
To S's
Capital A/c 3,200 - 1,600 By R's
To Cash
A/c 18,080 Capital A/c _ 3,200 -
To S's
Loan By
T's
A/c - 33,600 - Capital A/c - 1,600 -
To
Bal. c/d 73,680 36,840
83,600 58,400 41,800 83,600 58,400 41,800
BALANCE SHEET
as at 1.4.2004
Liabilities Amt (Rs.) Assets Amt
(Rs.)
Bank Loan 12,800 Cash 33,220
Sundry
Creditors 25,000 Bill Receivables 10,800
S'sLoan 33,600 Debtors 35,600
Capital Less
Provision 1,700 33,900
R 73,680 Stock 40,000
T 36,840 Furniture 6,000
1,10,520 Plant & Machinery 18,000
Building 40,000
1,81,920 1,81,920
S's LOAN ACCOUNT
Cr. Dr.
Date Particular Amount (Rs,) Date Particular Amount (Rs.)
To
Balance c/d 33,600 2004
Apr.
1 By S's Capital 33,600
33,600 33,600
OR
REVALUATION ACCOUNT
Cr. Dr,
Particulars Amt (Rs.) Particulars Amt
(Rs.)
To Profit
TVansferred to By
Land and building 20,000
Partner's
Capital A/c By
Provisions for doubtful debts 800
D 17,100 By Sundry Creditors 2,000
E 5,700 22,800
22,800 22,800
PARTNERS' CAPITAL ACCOUNTS
Particulars D Rs. E Rs. F Rs. Particulars D
Rs. E Rs. F Rs.
To 67,100 43,700 -- By Balance b/d 1,00,000 70,000 --
Current
A/c 80,000 40,000 40,000 By Revaluation A/c 17,100 5,700 --
By
General Reserve 24,000 8,000 --
By
Cash A/c -- -- 40,000
By
F's Current A/c 6,000 --
1,47,000 83,700 46,000 1,47,000 83,700 46,000
BALANCE SHEET
as at 1" April 2007
Liabilities Amt
(Rs.) Assets Amt (Rs.)
Creditors 52,000 Land & Building 70,000
Capital
A/c's Debtors 40,000
D 80,000 Less Provision 2.200 37,800
E 40,000 Machinery 60,000
F 40,000 1,60,000 Stock 15,000
Current
A/c's Investment 50,000
D 67,100 Cash 84,000
E 43,700 F's Current A/c 6,000
1,10,800
3,22,800 3,22,800
Note:
Full credit was given if an examinee has calculated the adjusted capitals as: D
Rs. 68,000; E Rs.34,000 and F Rs.34,000 and the total of the Balance Sheet is
Rs,3,16,800.
16. IN THE BOOKS OF JANTA LTD.
JOURNAL
Date Particulars L.F. Dr. (Rs.) Cr.(Rs)
Bank A/c Dr. 4,00,000
To
Share Application A/c 4,00,000
(Being
application money received on 1,00,000 shares
@
Rs.4 per share including premium)
Share
Application A/c Dr. 4,00,000
To
Share CapitaVA/c 1,40,000
To
Securities Capital A/c 1,40,000
To
Share Allotment A/c 80,000
To
Bank A/c 40,000
(Being
application money adjusted to wards share capital
&
Share allotment & balance refunded)
Share
Allotment A/c Dr. 2,10,000
To
Share Capital A/c 2,10,000
(Being
amount due on share allotment)
Bank
A/c Dr. 1,30,000
To
Share Allotment A/c 1,30,000
(Being
allotment money-received)
Share
First & Final Call A/c Dr. 3,50,000
To
Share Capital A/c 3,50,000
(Being
amount due on share first & final call
on
70,000 share @ Rs.5 each)
Bank
A/c Dr. 3,46,500
To
Share First & Final Call A/c 3,46,500
(Being
first & final call received)
OR
Bank
A/c Dr. 3,46,500
Calls
in Arrears A/c
Dr. 3,500
To
Share First & Final Call A/c 3,50,000
(Being
first & final call received)
Share
Capital A/c Dr. 7,000
To
Share Forfeited A/c 3,500
To
Share First & Final Call / Calls in Arrears A/c 3,500
(Being
7010 shares forfeited due to non payment of
first
& final call)
Bank A/c Dr. 77,000
To
Share Capital A/c 7,000
To
Securities Premium A/c 70,000
(Being
forfeited share reissued @ Rs.77,000)
Share Forfeited A/c Dr. 3,500
To
Capital Reserve A/c 3,500
(Being
Capital Profit on reissued shares transferred to
capital
reserve A/c)
OR
Date Particulars L.F. Dr. (Rs.) Cr.(Rs)
Bank
A/c Dr. 2,20,000
To
Share Application A/c 2,20,000
(Being
application money received on 1,10,000 share
@
Rs.2 per share)
Share
Application A/c Dr. 2,20,000
To
Share Capital A/c 1,60,000
To
Share Allotment A/c 40,000
To
Bank A/c 20,000
(Being
application money adjusted to wards share capital
&
Share allotment & balance refunded)
Share
Allotment A/c Dr. 2,40,000
Discount
on Issue of Shares A/c Dr. 80,000
To
Share Capital A/c 3,20,000
(Being
amount due on share allotment)
Bank
A/c Dr. 1,96,000
To
Share Allotment A/c 1,96,000
(Being
allotment money received)
OR
Bank
A/c Dr. 1,96,000
Calls
in Arrears A/c
Dr. 4,000
To
Share Allotment A/c 2,00,000
(Being
first & final call received)
Share
First & Final Call A/c Dr. 3,20,000
To
Share Capital A/c 3,20,000
(Being
amount due on share first & final call on 80,000
shares
@ Rs.4 each)
Bank
A/c Dr. 3,13,600
To
Share First & Final Call A/c 3,13,600
(Being
first & final call received)
OR
Bank
A/c Dr. 3,31,600
Calls
in Arrears A/c
Dr. 6,400
To
Share First & Final Call A/c 3,20,000
(Being
first & final call received)
Share
Capital A/c Dr. 16,000
To
Share Forfeited A/c 4,000
To
Share allotment A/c 4,000
To
Share First & Final Call A/c 6,400
To
Discount on Issue of Shares A/c 1,600
(Being
1,600 shares forfeited due to non payment of allotment & first
& final call)
OR
Share
Capital A/c Dr. 16,000
To
Share Forfeited A/c 4,000
To
Calls in Arrears A/c 10,000
To
Discount on Issue of Shares A/c 1,600
(Being
1,600 shares forfeited due to non payment of allotment & first
&. final call)
Bank
A/c Dr. 24,000
To
Share Capital A/c 16,000
To
Securities Premium A/c 8,000
(Being
forfeited shares reissued @ Rs.24,000)
Share
Forfeited A/c Dr. 4,000
To
Capital Reserve A/c 4,000
(Being
Capital Profit on reissued shares transferred to
capital
reserve A/c)
PART-B
(Analysis of Financial
Statements)
17. Stock
turnover ratio will decline because die amount of average stock will increase,
cost c goods sold remaining the same.
18. Outflow
of Cash
19. Financing
Activity
20. The major headings on the liability side of
the balance sheet are:
i)
Share Capital
ii) Reserves
& Surplus
iii)
Secured Loans
iv) Unsecured
Loans
v)
Current Liabilities &
Provisions
a) Current Liabilities
b) Provisions
21. COMPARATIVE INCOME STATEMENT OF VICTOR LTD.
Particulars 2006 Rs. 2007 Rs. Absolute Change %age Change
Sales 15,00,000 18,00,000 3,00,000 20
Less Cost
of
goods Sold 11,00,000 14,00,000 3,00,000 27,27
Gross Profit 4,00,000 4,00,00 -- --
Less
Indirect
Expenses 80,000 1,00,000 20,000 25
Net Profit before
Tax 3,20,000 3,00,000 (20,000) (6.25)
Less :
Income Tax 1,60,000 1,50,000 (10,000) (6.25)
Net Profit After Tax 1,60,000 1,50,000 (10,000) (6.25)
22. Any Two of
the following ratios:
i) Net
Profit Ratio = Net Profit / Net Sales X 100
Net Profit = Gross
Profit - Indirect expenses
= 8,00,000-2,00,000
=
Rs.6,00,000
Net
Profit Ratio = 6,00,000 / 40,00,000 x 100 = 42.86%
ii) Debt
Equity Ratio = Debt / Equity
Debt =
Debentures = Rs.8,00,000
Equity = Equity Share Capital + Capital Reserve
=
Rs.20,00,000 + Rs.2,00,000
=
Rs.22,00,000
Debt
Equity Ratio = 8,00,000
/ 22,00,000 = 4:11
Note
: Full credit was given if net profit is added to equity. Then debt equity
Ratio
= Rs.8,00,000 / Rs.28,00,000 = 2 :
7 .
iii) Quick Ratio = Liquid Assets / Current Liabilities
Liquid Assets = Current Assets - Closing Stock
Liquid Assets = Rs.4,00,000
- Rs.60,000 = Rs.3,40,000
Current Liabilities = Rs.3,00,000
Quick Ratio = 3,40,000
/ 3,00,000= 17: 15 or 1.13 : 1
23. Calculation
of Net Front / Loss before tax :
Profit for
the year (1,00,000)
Add:
Transferred to Reserve
70,000
Add:
Dividend
24,000
(6,000)
CASH
FLOW STATEMENT
for the year ended 31st
March 2007
Particulars (Rs.) (Rs.)
A Cash Flows from Operating Activities
Net Loss
as per Profit & Loss A/c (6,000)
Adjustments
:
Add:
Debenture Interest 10,000
Loss
on sale of machinery
55,000 65,000
Operating
Profit before Working Capital changes 59,000
Adjustments
for Working Capital Changes
Less:
Increase in Current Assets
Stock (50,000)
Debtors (50,000) (1,00,000)
Net Cash used in Operating Activities (41,000) (41,000)
B. Cash Flow from Investing Activities :
Sale of
Fixed Assets 15,000
Purchase
of Fixed Assets (2,20,000)
Net Cash used in Investing Activities (2,05,000) (2,05,000)
C. Cash Flow from Financing Activities:
Issue of
Equity Share Capital 3,00,000
Issue of
{Preference Share Capital 25,000
Redemption
of Debentures (25,000)
Dividend
Paid (24,000)
Interest
on Debentures paid (10,000)
Net Cash Flaw from Financing Activities 2,66,000 2,66,000
Net
Increase / Decrease in Cash & Cash Equivalents
Add
Opening Cash and Cash Equivalents 20,000
Add
Opening Cash and Cash Equivalents 45,000
Closing
Cash and Cash Equivalents
65,000
Working
Notes :
Dr. FIXED ASSETS ACCOUNT Cr.
Particulars Amt (Rs.) Particulars Amt
(Rs.)
To Balance
b/d 3,00,000
By Machinery Sold A/c 70,000
To
Bank-purchase 2,20,000 By Balance c/d 4,50,000
5,20,000 5,20,000
Cr. MACHINERY SOLD ACCOUNT Cr.
Particulars Amt (Rs.) Particulars Amt
(Rs.)
To Fixed
Assets A/c 70,000 By Bank .Sale 15,000
By
P&C A/c (Less on Sate) 55,000
70,000 70,000
Note 1 : Full credit was given to an
examinee if he /she has taken preference dividend separately. The answers would
be:
Net Profit before tax =
Rs.(2,000)
Cash used in operating activities =
Rs.(37,000)
Cash used in investing activities =
Rs.(2,05,000)
Cash generated from financing
activities = Rs.2,62,000
Note
2 : In case, interest on debentures and dividend on preference shares has been
calculated on the closing balances, no marks were deducted.
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