Practice Test 4
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X sent out certain goods to Y of Delhi. 1/10 of the goods were lost in transit. Invoice value of goods lost Rs 12,500. Invoice value of goods sent out on consignment will be:

  • Solution

    Let × be the invoice value of goods sent out
    Goods lost in transit will be 1/10 of × = Rs. 12,500
    Thus × will be 10 × 12,500 = Rs. 1,25,000

W Ltd. issued 20,000, 8% debentures of Rs.10 each at par, which are redeemable after 5 years at a premium of 20%. The amount of loss on redemption of debentures to be written off every year will be

  • Solution

    Premium on redemption = 20% of Rs. 2,00,000 = Rs. 40,000
    Amount to be written off every year = 40,000/5 = Rs. 8,000

S Ltd. issued 2,000, 10% Preference shares of Rs.100 each at par, which are redeemable at a premium of 10%. For the purpose of redemption, the company issued 1,500 Equity Shares of Rs.100 each at a premium of 20% per share. At the time of redemption of Preference Shares, the amount to be transferred by the company to the Capital Redemption Reserve Account will be

  • Solution

    Amount to be transferred to capital redemption reserve account = face value of the shares to be redeemed i.e.
    Rs. 2,00,000 less proceeds from the new issue i.e. Rs. 1,50,000 = Rs. 50,000

A company forfeited 2,000 shares of Rs.10 each (which were issued at par) held by Mr. John for non-payment of allotment money of Rs.4 per share. The called-up value per share was Rs.9. On forfeiture, the amount debited to share capital will be

  • Solution

    When there is forfeiture of shares which are issued at par the share capital account is debited with the called up value of the shares forfeited.
    So the amount to be debited to the share capital account will be 2,000 × 9 = Rs. 18,000

R, J and D are the partners sharing profits in the ratio 7:5:4. D died on 30th June 2009. It was decided to value the goodwill on the basis of three year’s purchase of last five years average profits. If the profits are Rs. 29,600; Rs. 28,700; Rs. 28,900; Rs. 24,000 and Rs.26,800. D’s share of goodwill will be

  • Solution

    Goodwill = (29,600 + 28,700 + 28,900 + 24,000 + 26,800) × 3/5 = Rs. 82,800 Share of D in goodwill = 4/16 × 82,800 = Rs. 20,700

  • Solution

    Difference in trial balance is due to wrong placing of Salaries A/c. Salaries account should come on Dr. side instead of Cr. side.

If a purchase return of Rs.84 has been wrongly posted to the debit of the sales return account, but had been correctly entered in the suppliers account, the total of the trial balance would show

  • Solution

    Purchase return account (cr) under casted by Rs 84 and sales return account (dr) over casted by Rs 84. Thus the debit side of the trial balance will be Rs 168 more than the credit side.

A second hand car is purchased for Rs.10,000, the amount of Rs. 1,000 is spent on its repairs,Rs. 500 is incurred to get the car registered in owner’s name and Rs. 1,200 is paid as dealer’s commission. The amount debited to car account will be

  • Solution

    Total cost of a fixed asset = cost of acquiring the asset + all other incidental cost involved in bringing the asset into working situation

    Amount debited to the car account = purchase cost + repairs + registration cost + dealers commission
    = 10,000 + 1,000 + 500 + 1,200 = Rs. 12,700

The cash book showed an overdraft of Rs.1,500, but the pass book made up to the same date showed that cheques of Rs.100, Rs. 50 and Rs.125 respectively had not been presented for payments; and the cheque of Rs.400 paid into account had not been cleared. The balance as per the pass book will be
(a) (b)
(c) (d)

  • Solution

A & B are partners sharing profits and losses in the ratio 5:3. On admission, C brings Rs. 70,000 cash and Rs. 48,000 against goodwill. New profit sharing ratio between A, B and C are 7:5:4. The sacrificing ratio among A & B will be

  • Solution

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FUNDAMENTALS OF ACCOUNTING
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