Goods costing Rs. 1,20,000 were sent on consignment basis. These goods are invoiced to give a gross margin of 20% on invoice price. The amount of loading is:
On 1-4-2009, Ram invested Rs.1,00,000 in a business. Interest on capital is to be allowed @12% per annum. Amount of interest to be charged to P & L Account for the year
2009-2010 is:
-
Solution
Interest on capital allowed = 12%
Capital invested = Rs. 1,00,000
Thus interest to be charged to P&L = 12% of 1,00,000 = Rs. 12,000
On January 1, 2010 Victory Ltd., purchased a second hand machinery for Rs. 50,000 and spend Rs. 2,000 as shipping and forwarding charges, Rs. 1,000 as import duty, Rs.1,000 as
carriage inwards, Rs.500 is repair charges, Rs. 200 as installation charges, Rs.400 as brokerage of the middle man and Rs. 100 for an iron pad. Total cost of machinery is
-
Solution
Cost of acquisition includes the purchase cost plus any reasonable costs incurred in placing the asset into
a position where it is ready for use.
So the amount debited to machinery account will be = purchase cost + shipping forwarding + import duty
+ carriage inwards + repair charges + installation charges + brokerage + iron pad
= 50,000 + 2,000 + 1,000 + 1,000 + 500 + 200 + 400 + 100 = Rs. 55,200
A firm dealing in cloth has 15,000 meters of cloth on April 1, 2009 valued at Rs.1,50,000. The firm purchased 20,000 meters @ Rs.12 per meter during the year ending 31st March,
2010 and sold 30,000 meters @ Rs.25 per meter during the same period. As per LIFO,the closing inventory will be valued at:
-
Solution
Last-In, First-Out is one of the common techniques used in the valuation of inventory on hand at the end
of a period and the cost of goods sold during the period. LIFO assumes that goods which made their way
to inventory (after purchase, manufacture etc.) later are sold first and those which are manufactured or
acquired early are sold last. Thus LIFO assigns the cost of newer inventory to cost of goods sold and
cost of older inventory to ending inventory account. This method is exactly opposite to first-in, first-out
method.
Since the firm is following LIFO method for valuation of inventory the closing inventory i.e.
15,000 units + 20,000 units – 30,000 units = 5,000 units will be valued @ of the opening inventory
Per unit value of the opening inventory = 1,50,000/15,000 = Rs. 10
Thus the value of the closing inventory will be = 5,000 × 10 = Rs. 50,000
Indigo Ltd. had 9,000, 10% redeemable preference shares of Rs. 10 each, fully paid up. The company decided to redeem these preference shares at par by the issue of sufficient number of equity shares of Rs.10 each fully paid up at a discount of 10%. The number of equity shares issued should be:
-
Solution
Total value of the redeemable preference shares to be redeemed = 9,000 × 10 = Rs. 90,000
Thus value of equity shares of Rs. 10 each to be issued = Rs. 90,000
The number of equity shares to be issued = 90,000/9 = 10,000 shares
Gama Ltd. issued 10,000, 10% debentures of Rs.100 each at a discount of 10%. The entire amount is payable on application. Application were received for 12,000 debentures. The
allotment of debentures was made on 10th October, 2009. The amount which should be credited to the debentures account on 10th October, 2009 will be:
-
Solution
In case applications are received for more debentures than issued, it is known as over subscription. Application money received on over applied shares are returned by the company. Thus the amount to be credited to the debentures account will be the value of the debentures actually issued
Here the amount to be credited to the debentures account will be = 10,000 × 100 = Rs. 10,00,000
Alfa Ltd. issued 20,000, 8% debentures of Rs. 10 each at par. The debentures are redeemable at a premium of 20% after 5 years. The amount of loss on redemption of
debentures should be:
-
Solution
Loss on redemption of debenture will be equal to the premium of 20% at which the debentures are
redeemable after 5 years
Thus loss on redemption of debentures will be = 20% of 2,00,000 = Rs. 40,000
Rent due for the month of March will appear___________ in the cash book
-
Solution
Cash book is a financial journal that contains all cash receipts and payments, including bank deposits and withdrawals. In the cash book only the transactions which are either received or paid in cash/bank are recorded thus rent due but not received will not be recorded in the cash book.
Dheeraj and Gopal are partners in a firm with capitals of Rs. 5,00,000 each. They admit Deepak as a partner with ¼th share in the profits of the firm. Deepak bring Rs. 8,00,000 as his share of capital. The profit and loss account showed a credit balance of Rs. 4,00,000 as on the date of his admission. The value of hidden goodwill will be
-
Solution
When the value of goodwill is not given in the question then hidden goodwill is calculated with reference
to the total capital of the firm and the profit sharing ratio.
Hidden goodwill is that goodwill the amount of which is not mentioned in the deed, but the amount of
which has to calculated by capitalisation method or with the help profit sharing ratio.
This method is generally used when the new partner is unable to bring in his share of goodwill which is at
the same time unknown. So to calculate the value of this hidden goodwill we will follow these steps:
1. First, we will multiply the capital brought by the new partner with his reciprocated ratio.
2. Secondly, we total up the actual capitals of all the partners including the capital brought by the new
partner as well.
3. Then we deduct the total of actual capitals of all the partners from the assumed capital.
Assumed capital = 8,00,000 × 4 = Rs. 32,00,000
Actual capital = Dheeraj’s capital + Gopal’s capital + profit as on the date of admission + Deepak’s
capital = 5,00,000 + 5,00,000 + 4,00,000 + 8,00,000 = Rs. 22,00,000
Hidden goodwill = 32,00,000 – 22,00,000 = Rs. 10,00,000