C‟s share of goodwill = 1,00,000 X 1/5 = Rs. 20,000 C‟s Capital A/c .DR. 20000 To A‟s Capital A/c 12000 To B‟s Capital A/c 8000 Ans.5. REVALUATION ACCOUNT DR CR PARTICULAR AMOUNT(RS) PARTICULAR AMOUNT(RS) MACHINE 2,000 BUILDING 5,000 PRO.FOR B.D.D 800 PARTNERS CAPITAL; X-1650 Y -550 2200 5,000 5,000 CAPITAL ADJUSTMENT; Z BRINGS 20,000 FOR 1//4 SHARE THEREFORE TOTAL CAPITAL=20,000X4=80,000 LESS; X CAPITAL 20,000 COMBINED CAPITAL 60,000 X CAPITAL=60,000X3/4=45,000 Y CAPITAL=60,000X1/4=15,000 CAPITAL A/C PARTICULAR X Y Z PARTICULAR X Y Z BALANCE B/D CASH GEN,RES. 9,000 3,000 REVALUATION 1650 550 current a/c 4850 50 PREMIUM 4,500 1,500 BALANCE C/D 15,000 15,050 15050 BALANCESHEET LIABILITIES AMOUNT ASSETS AMOUNT CREDITORS 18,000 CASH 31,000 B/P 10,000 DEBTORS;16,000
Stock Debtors Prabhat’s capital Deep’s capital cash 30000 45000 25000 5000 7000 252500 Deep’s capital account Prabhat’s capital account Cash Realisation Loss T/F to Deep’s Capital 27300 Prabhat’s capital 18200 27000 40000 110000 45500 252500 PARTNER’S CAPITAL ACCOUNT Particulars Deep Prabhat Particulars Deep Prabhat To realisation a/c To realisation A/c To cash 27000 27300 40700 40000 18200 86800 By balance b/d By Realisation A/c 90000 5000 120000 25000 95000 145000 95000 145000 CASH ACCOUNT Particulars Amount Particulars Amount To Balance b/d 25000 110000 By realisation A/c Deep’s capital a/c Prabhat’s capital a/c 7500 40700 86800 135000 135000 ANS(13): REALIZATION ACCOUNT Particulars Rs Particulars Rs To Land To Stock To Debtors To Shilpa capital (bank loan) ToCash (expenses) To Cash(creditors) To Profit on realisation Shilpa 10470 Meena 6980 Nanda 3490 81000 56760 18600 20000 1200 31000 20940 By Bank Loan By Creditors By Provision for doubtful debts By Shilpa capital( stock) By Bank(stock) By Bank (debtors) By Bank(land) By Bank(debtors) 20000 37000 1200 35000 14000 8000 110000 4300 229500 229500 CAPITAL ACCOUNT Particulars Shilpa Meena Nanda Particular Shilpa meena Nanda Balance b/d Realisation a/c Cash 35000 81470 50980 23000 Balance b/d General reserve Realisation(Bank) Profit on Realisation Cash (Nanda) 80000 6000 20000 10470 40000 4000 6980 2000 3490 17510 116470 50980 23000 116470 50980 23000 CASH ACCOUNT Particulars Rs Particulars Rs Balance b/d Realisation (stock) Realisation (Debtors) Realisation (Land) Realisation (Debtors) Nanda Capital 10840 14000 8000 110000 4300 17510 164650 Realisation expenses Realisation (Cr.) Shilpa Capital Meena Capital 1200 31000 81470 50980 164650 ANS(14): REALISATION ACCOUNT
Particulars Rs Particulars Rs Debtors Plant Stock Leasehold Land Furniture Cash Creditors Cash (Expenses) Cash (Loan) Profit on realisation Sourav 3250 Utkarsh 3250 12000 47000 42000 60000 25000 25500 2500 40000 6500 Sundry creditors Loan Bank Leasehold Land 72000 Furniture 22500 Stock 40500 Plant 48000 Debtors 10500 27000 40000 193500 260500 260500 PARTNER’S CAPITAL ACCOUNTS Particulars Sourav Utkarsh Particulars Sourav Utkarsh Bank 68250 68250 Balance b/d Reserve Fund Profit on realisation 60000 5000 3250 60000 5000 3250 68250 68250 68250 68250 BANK ACCOUNT Particulars Rs Particulars Rs Balance b/d Realisation (assets) 11000 193500 204500 Realisation (Cr) Realisation ( Exp.) Realisation (loan) Sourav capital 68250 Utkarsh capital 68250 25500 2500 40000 136500 204500 ANS (15): Realisation Account Particulars Rs Particulars Rs Building Machinery Furniture Stock Investment Debtors Ashu Capital (Crs.) Harish Capital (B.O.) Cash (Expenses) Profit on Realisation Ashu 3600 Harish 2400 80000 70000 14000 20000 60000 48000 88000 50000 3000 6000 439000 Creditors Bank overdraft Ashu Capital (building) Harish Capital (mach. & furniture) Bank (Debtors) Ashu Capital 48000 Harish Capital 32000 88000 50000 95000 80000 46000 80000 439000 Cash Account Particulars Rs Particulars Rs Balance b/d Realisation (debtors) Harish Capital 8000 46000 5600 59600 Realisation (Exp.) Ashu Capital 3000 56600 59600 Partner’s Capital Account Particulars Ashu Harish Particulars Ashu Harish Realisation (Building) Realisation 95000 80000 Balance b/d Realisation (Crs) 108000 88000 54000
(machinery) Realisation (stock & investment) Bank 48000 56000 32000 Realisation (B.O.) Profit on realisation Bank 3600 50000 2500 5600 199600 112000 199600 112000 ANS(16): Realisation Account Particulars Rs Particulars Rs Plant Debtors Furniture Stock Investment Bills receivable Sanjay capital Cash creditors Cash (B/P) 90000 60000 32000 60000 70000 36000 18300 80000 30000 Creditors Bills payable Bank : Plant 72000 Debtors 54000 Furniture 18000 Stock 54000 Investment 76000 B/R 31000 Loss of Realisation Sanjay Tarun Vineet 80000 30000 305000 61300 476300 476300 Capital account Particulars Sanjay Tarun Vineet Particulars Sanjay Tarun Vineet Loss on realisation Bank 30650 87650 20434 79566 10216 59784 Balance b/d Realisation (expenses) 100000 18300 100000 70000 118300 100000 70000 118300 100000 70000 Cash account Particulars Rs Particulars Rs Balance b/d Realisation (S. Assets) 32000 305000 Realisation (Creditors) Sanjay Capital 87650 Tarun Capital 79566 Vineet Capital 59784 80000 227000 337000 337000 ANS(17): Realisation account Particulars Rs Particulars Rs Sundry Debtors Stock Motor Cars Machinery Investment Ixtures Tanu Capital Manu capital Bank (Expenses) 55000 75000 90000 45000 70000 9000 50000 30400 2200 Sundry Creditors Bills Payable Bills Loan Tanu Capital (Debtors) Bank Manu Capital (machinery) Tanu Capital (Motor Cars) Bank : Investment 76000 Fixtures 4000 Loss on Realisation : Tanu 23500 Manu 14000 62000 32000 50000 55000 10000 40000 60000 80000 37600 426600 426600 Partner’s Capital Account
Solution: Solution: JOURNAL Particulars L.F. Amt.(Dr.) Amt.(Dr.) Bank A/c Dr. To Share Application A/c (Being share application money received on 46,000) 2,400 1,38,000 1,500 9,00 75,000 45,000 18,000 Share Application A/c Dr. To Share Capital A/c To Share Allotment A/c To Bank A/c (Being share application money transferred) Share Allotment A/c Dr. To Share Capital A/c To Securities Premium Res. A/c (Being allotment money due) 1,25,000 75,000 50,000 Bank A/c(12,5000-4,5000=8,0000-3,000= 77,000 +16,00)Dr. To Equity Share Allotment A/c To Calls-in-advance a/c (Being allotment money received and on 800 shares @ Rs. 4 per share). 78,600 50,000 77,000 1,600 50,000 Share First call A/c Dr. To Share capital A/c (Being first call money due) Bank A/c Dr. Calls-in-advance A/c To Share First Call A/c (Being first call money received ) 47,700 800 48,500 Share Final Call A/c Dr. To Share Capital A/c (Being final call money due) 50,0000 50,000 Bank A/c Dr. Calls-in-advance A/c Dr. To Share Final Call A/c (Being final call money received) 47,700 800 48,500 Shares issued 25,000 Nominal value – Rs. 10 + 2 – Rs. 3 on application Rs. 3 + 2 on allotment Rs. 2 on first call Rs. 2 on final call Applied Allotted 20,000 20,000 6,000 15,000 10,000 Nil 46,000 25,000
Particulars Amt.(Dr.) Amt.(Dr.) Share Capital a/c (300 X 6) Dr. Securities Premium Res. A/c (300 X 4) Dr. To Share Forfeiture A/c (300 x2) To Share Allotment Call A/c(300x8) (Being 300 shares forfeited for the non-payment of allotment of Rs. 8 each including premium of Rs. 4 1,800 1,200 600 2400 BankA/c (300X15)Dr To Share capital A/c (Being reissue of 300 shares at Rs. 15 as fully paid up) 4,500 4,500 Share Forfeiture A/c Dr. To Capital Reserve A/c (Being balance of forfeited share account transferred to capital reserve) 600 600 Case (iii) JOURNAL Particulars L.F. Amt.(Dr.) Amt.(Dr.) Share Capital A/c (200X50)Dr. To Share Final Call A/c To Share Forfeiture A/c (Being 200 shares forfeited for the non-payment of final call) 10,000 2,000 8,000 Bank A/c (200X45) Dr. Share forfeiture a/c (200X5) To Share capital A/c (200X50) (Being reissue of 400 shares at Rs. 45 as fully paid up) 9,000 1,000 10,000 Share Forfeiture A/c Dr. To Capital Reserve A/c (Being balance of forfeited share account transferred to capital reserve) 7000 7000 Example 4. A limited company invites applications for 50,000 equity shares of Rs. 10 each, at a maximum discount by the Companies Act, payable as follows: On application Rs. 3; on allotment Rs. 3; on first call Rs. 2; on final call the balance. Applications were received for 55,000 shares. Allotments were made on the following basis: To applicants for 35,000 shares- in full
3. Profit on Redemption A/c Dr. To Capital Reserve A/c 4000 4000 6. 1 mark for balance sheet and 2 marks for note 1. 2. Bank A/c Dr. To Bank Loan A/c Debenture Suspense A/c Dr. To 9% Debenture A/c 4,00,000 5,00,000 4,00,000 5,00,000 Balance Sheet Liabilities Amt. Amt. Non Current Liabilities 1 4,00,000 4,00,000 Note 1 Bank loan 4,00,000 (Deb. of Rs.5,00,000 issued as collateral security) 7. 1 mark for each entry 1. 2 3. 4 5 9% Debenture A/c Dr. To Debenture holder A/c Statement of P/L A/C Dr.. To DRR A/C Debenture Redemption Investment A/C Dr. T0 Bank A/c (being 15% Investment made as per provision) Bank A/c Dr. To Debenture Redemption Investment A/C (being 15% Investment sold) Debenture holder A/c Dr. To Bank A/c 10,00,000 5,86,000 1,50,000 1,50,000 10,00,000 10,00,000 5,86,000 1,50,000 1,50,000 10,00,000
DRR A/C Dr. To. General Reserve A/C 10,00,000 10,00,000 8. 3 marks for 1st 2 entries and 3 marks for last 4 entries 1. 2. 3. 4. 5 6 7 8 Sundry Assets A/c Dr. Goodwill A/c Dr. To Sundry Liabilities A/c To P & Co. A/c P & Co. A/c Dr. Loss on Issue of Debenture A/c Dr. To 12% Debenture A/c To Security Premium A/c To Premium on Redemption A/c Statement of P & L App. A/c Dr. To Deb. Red. Res. A/c (being DRR created equal to 25% of Deb.) Debenture Redemption Investment A/C Dr. T0 Bank A/c (being 15% Investment made as per provision) Bank A/c Dr. To Debenture Redemption Investment A/C (being 15% Investment sold) 12% Debenture A/c Dr. Premium on Redemption A/c Dr. To Debenture holder A/c Debenture holder A/c Dr. To Bank A/c Deb. Red. Res. A/c Dr. To General Reserve A/c 6,00,000 30,000 5,50,000 25,000 1,25,000 75,000 75,000 5,00,000 25,000 5,25,000 1,25,000 70,000 5,50,000 5,00,000 50,000 25,000 1,25,000 75,000 75,000 5,25,000 5,25,000 1,25,000
1. 2 3 4. 5 6 7 Bank A/c Dr. To 12% Deb. App.& Allot. A/c 12% Deb. App.& Allot. A/c Dr. Loss on Issue of Debenture A/c Dr. To 10% Debenture A/c To Premium on Redemption A/c Statement of P & L App. A/c Dr. To Deb. Red. Res. A/c Debenture Redemption Investment A/C Dr. T0 Bank A/c (being 15% Investment made as per provision) Bank A/c Dr. To Debenture Redemption Investment A/C (being 15% Investment sold) 10% Debenture A/c Dr. Premium on Redemption A/c Dr. To Debenture holder A/c Deb. Red. Res. A/c Dr. To General Reserve A/c 15,00,000 15,00,000 2,25,000 5,00,000 2,25,000 2,25,000 15,00,000 2,25,000 15,00,000 15,00,000 15,00,000 2,25,000 5,00,000 2,25,000 2,25,000 17,25,000 15,00,000 12. 1 ½ marks for 1st two entries and 1 mark for last entry 1. 2. 3. Statement of P & L App. A/c Dr. To Deb. Red. Res. A/c Debenture Redemption Investment A/C Dr. T0 Bank A/c (being 15% Investment made as per provision) Bank A/c Dr. To Debenture Redemption Investment A/C (being 15% Investment sold) 60,000 1,50,000 1,50,000 60,000 1,50,000 1,50,000
4 5 9% Debenture A/c Dr. To Debenture holder A/c Debenture holder A/c Dr. To Bank A/c 10,00,000 10,00,000 10,00,000 10,00,000 13.(a) 1 ½ marks for each entry 1. 2. Sundry Assets A/c Dr. To Sundry Liabilities A/c To Radha Ltd. To Capital Reserve A/c Radha Ltd. A/c Dr. To 9 % Debentures A/c To Security Premium Reserve A/c No. of Deb.=7,20,000 =6000 Deb. 100+20=120 8,40,000 7,20,000 80,000 7,20,000 40,000 6,00,000 1,20,000 (b)(i) ½ mark for each entry 1. 2. Bank A/c Dr. To Deb. App.& Allot. A/c Deb. App. & Allot. A/c Dr. To Debenture A/c To Security Premium Reserve A/c 110 110 110 100 10 (b)(ii) ½ mark for each entry 1. 2. Bank A/c Dr. To Deb. App.& Allot. A/c Deb. App.& Allot. A/c Dr. Loss on Issue of Deb. A/c Dr. To Debenture A/c To Premium on Redemption A/c 100 100 5 100 100 5 (b)(iii) ½ mark for each entry
IV. Total Expenses V. Profit Before Tax (III-IV) VI. Tax expenses: Current Tax (50% and 60%) VII. Profit After Tax (V-VI) 2,72,000 1,36,000 1,36,000 3,40,000 2,04,000 1,36,000 68,000 68,000 --- 25 50 --- Note No. 1:- Cost of Revenue from Operations - 60% of Sales 2013- 8,00,000 x 60/100 = 4,80,000 2014 – 10,00,000 x 60/100 = 6,00,000 Note No.2 :- Employees Benefit Expenses - 10% of Cost of Revenue from Operations As per note No.1- 2013 – 4,80,000 x10/100 = 48,000 2014 – 6,00,000 x 10/100= 60,000 Value involved: Decision making, Comprehension and Analytical bent of mind. Conclusion: In spite increase in revenue by 25%, there is no change in profit, because expenses have increased by 25% 3) Preparation of Common Size Statement: 2012 Q.1. What are Common Size statements? (2011) Ans:- Common Size statements express all items of financial statements as a percentage of some common base such as revenue from operations for profit & loss statement and totals of balance sheet for balance sheet. Q.2. Raj Ltd decided to bear the higher education cost of five brilliant students belonging to the weaker section of the society. Following is the Statements of Profit & Loss of Raj Ltd for the year ended 31-3-2011. Particulars Amount (Rs.) Income: Revenue from Operations Other Income Total Revenue Expenses: Cost of Materials Consumed Other Expenses Total Expenses Tax 2,00,000 15,000 2,15,000 1,10,000 5,000 1,15,000 40,000 You are required to: Prepare a common size Statement of Profit & Loss of Raj Ltd for the year ended 31.3.2011. Identify the value involved. (CBSE 2012) Solution:-
Capital Employed = Shareholder’s Funds + Long Term Debts = Rs.2,40,000 + Rs.4,00,000 = Rs.6,40,000 Return on Capital Employed = Net Profit before Interest and Tax = 2,00,000 x 100 = 31.25% Capital employed 6,40,000 Note : It is assumed that Shareholder’s Funds include current year’s profits.
Provision for Depreciation Account Particulars (Rs.) Particulars (Rs.) To Furniture A/c (Balancing figure being accumulated depreciation on sold furniture) To Balance c/d 2,000 9,000 By Balance b/d By Depreciation A/c 6,000 5,000 11,000 11,000 Computation for Gain or Loss on Sale of Furniture Cost of sold furniture 4,000 Less: Accumulated Depreciation 2,000 Value of the sold furniture on the date of sale 2,000 Less: Sale price 5,000 Gain on sale of furniture 3,000 1: Gain on sale Rs. 3,000 subtract from net profit under Operating Activity. 2: Purchase of furniture Rs. 12,000 is involves an outflow of cash under Investing Activity. 3: Sale of Rs. 5,000 is involves an inflow of cash under Investing Activity. 4: Depreciation charged on furniture during the year Rs. 5,000 added back to net profit under operating activity. (24) X Ltd, made a profit of Rs. 1,00,000 after considering the following items. Depreciation on fixed assets Rs. 20,000 (b) Writing off preliminary expenses Rs. 10,000. (c)Loss on sale of furniture Rs. 1,000. (d) Provision for taxation Rs. 1,60,000. (e) Transfer to General Reserve Rs. 14,000. (f) Profit on sale of machinery Rs. 6,000. Items 31/03/2013(Rs.) 31/03/2014 (Rs.) Debtors Creditors Bills Receivable Bills Payable Prepaid Expenses 24,000 20,000 20,000 16,000 400 30,000 30,000 17,000 12,000 600 Solution: Calculation of Cash Flow from Operating Activities Particulars (Rs.) Net Profit before Tax Net Profit 1,00,000 Provision for Taxation 1,60,000 Transfer to General Reserve 40,000 Adjustment for: 2,74,000