A bad debt recovered during the year is a
-
Solution
Recovered bad debt is revenue in nature.
The profit of the M/s ABC, a partnership firm before charging managerial commission is Rs. 44,000. The managerial commission is charged @ 10% on profit after charging such commission. The amount of managerial commission will be
-
Solution
Let the managerial commission be x
Profit before charging managerial commission = Rs. 44,000
Profit after charging managerial commission = 44,000 – x
Managerial commission = x = 10% of profit after charging managerial commission = 10% of (44,000 – x)
x = 10% of (44,000 – x)
x = 4,400 – x/10
x + x/10 = 4,400
11x/10 = 4,400
Managerial commission = x = 4,400 × 10/11 = Rs. 4,000
On 31st March 2009, Suraj has to pay to M/s Chandra Rs.7,000 on account of credit purchase from the later. He paid Rs.1,800 on 30th June 2009 after availing a cash discount of 10%. On 30th September 2009, he paid Rs. 2,850 after availing 5% cash discount. On account of final settlement, the amount to be paid by Suraj without any discount will be
-
Solution
Total amount to be paid = Rs. 7,000
Amount paid after discount of 10% on 30-6-2009 = Rs. 1,800
The amount paid before discount will be = 1,800 × 10/9 = Rs. 2,000
Thus amount left to be paid = 7,000 – 2,000 = Rs. 5,000
Amount paid on 30-9-2009 after 5% discount = 2,850
The amount paid before discount = 2,850 × 100/95 = Rs. 3,000
Thus amount left to be paid in final installment without any discount = 5,000 – 3,000 = Rs. 2,000
The total cost of goods available for sale with a company during the current year is Rs.12,00,000 and total sales during the period is Rs.13,00,000. If the gross profit margin of the company is 33 1/3% on cost, the closing inventory during the current year is
-
Solution
Cost of goods sold = sales – gross profit margin = x (say)
Thus x = sales – 331 / 3 % of x
x + 100/3% of x = 13,00,000
x + 1/3x = 13,00,000
4/3x = 13,00,000
X = Rs. 9,75,000
Closing inventory = goods available for sale-cost of goods sold = 12,00,000 – 9,75,000 = Rs. 2,25,000
If a sales return of Rs.1,500 has been wrongly posted to the credit of the purchase returns account, but has been correctly entered in the trade receivable’s account, the total of the
-
Solution
If sales return has been wrongly posted to the credit of the purchase return account ,purchase return account (cr) will be over casted by Rs. 1500 and sales return account (dr) will be under casted by Rs. 1,500.
Debit balance as per Cash Book of Topsy Enterprise as on 31.3.2010 is Rs. 1,500. Cheques deposited but not cleared amounts to Rs. 100 and Cheques issued but not presented is of Rs. 150. The bank allowed interest amounting Rs. 50 and collected dividend Rs. 50 on behalf of Topsy Enterprise. After reconciliation, balance as per pass book should be
-
Solution
In the bank reconciliation statement, when balance as per the cash book is taken as the starting point, then direct deposits from the customer of Rs. 2,500 in the bank will be
-
Solution
Direct Credits or Direct Deposits are amounts deposited directly by someone into an account of the company. The payer rather than the payee in this case initiate the deposit. Direct Credits are useful where regular receipts are expected from known parties (such as rent, interest on investment, royalties,etc) who can deposit the money without the involvement of the payee. The deposit may be made through cash, cheque or a fund transfer.
Bank records the amount received as soon as the transfer through direct credit is made but the business entity records the amount when it receives intimation by the bank through bank statement or otherwise.
Therefore, the balance as per bank statement may be higher than the balance as per cash book due to direct credits not yet accounted for by the entity.The difference needs to be added to the balance of the cash book when taken as the starting point in the preparation a bank reconciliation.
Books of Ekta, shows on 1st January 2010 furniture Rs. 20,000. During the year a part of the furniture whose book value on 1st January 2010 is Rs. 1,200 has been exchanged with another furniture by paying additional Rs. 500. Ekta charge depreciation @ 10% p.a. The net amount of the furniture to be shown in the balance sheet will be
-
Solution
Value of furniture as on 1-1-2010 = Rs. 20,000
Book value of the furniture exchanged as on 1-1-2010 = Rs. 1,200
This furniture was sold during the year so depreciation for half year will be charged on it.
Thus depreciation for half year on the furniture exchanged = 10% of 1,200 × 6/12 = Rs. 60
Thus bookvalue of the furniture exchanged after depreciation will be = 1,200 – 60 = Rs. 1140
Thus the value of the new furniture = 1,140 + 500 = Rs. 1,640
Value of old furniture after depreciation will be = (20,000 – 1,200) × 9/10 = 16,920The value of new furniture after charging half year depreciation = 1,640 – 1,640 × 10% × 6/12 = 1,558
Thus the total value of furniture shown in the balance sheet will be = 16,920 + 1,558 = Rs. 18,478
Bajaj Ltd. issued 25,000 equity shares of Rs. 10 each payable at Rs. 2 on application,Rs. 3 on allotment, Rs. 2 on first call and the balance in the final call. Archit, who has 1,000 shares paid full value of shares with allotment money. The amount to be debited to bank account at the time of receipt of first call money will be
-
Solution
Out of 25,000 shares Archit paid full value of 1,000 shares held by him with allotment. So at the time of first call money received and debited to bank account will be = (25,000 – 1,000) × 2 = Rs. 48,000
Light Ltd. has 10,000 5% preference shares of Rs. 10 each to be redeemed after 5 years. The company forfeited 500 preference shares on which final call of Rs 2 has not been received after due notice, and cancelled these shares on account of redemption. Remaining shares were redeemed out of reserves of the company. The amount to be credited to capital redemption reserve will be
-
Solution
Capital Redemption Revere is an account to which is credited the nominal value of shares that have been redeemed insofar as the redemption was not paid for by the proceeds of a new issue of shares and was not a payment out of capital.
Thus the amount to be credited to the capital redemption reserve account = 10,000 × 10 = Rs. 1,00,000