A trader sells goods at a profit of 25% on sale. In a particular month he sold goods costing Rs. 34,200 sale price of goods will be _____________
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Solution
The sales price (SP) of goods or commodities is the price at which a particular product or commodity is
sold across channels or markets.
Here profit percentage on sales 25%
Let x be the sale price of goods
Then profit = 25% of x = 0.25x
Cost price = x – 0.25x = 0.75x = 34,200
x = 34,200/0.75 = Rs. 45,600
X sells goods at Cost plus 60%. Total sales were Rs. 16,000 cost price of the goods will be: _____________
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Solution
Cost price is also known as cp is the original price of any item. The cost is the total outlay required to produce a product or carry out a service. Cost price is used in establishing profitability in the following ways:
Selling price (excluding tax) less cost results in the profit in money terms.
Here selling price = cost + 60% = Rs. 16,000
Let the cost price be x
Then x + 60% of x = 16,000
Or 1.6x = 16,000
Or x = 16,000/1.6 = Rs. 10,000
A company purchased plant for Rs. 5,000. The useful life of the plant is 10 years and the residual value is Rs. 500. The management wants to depreciate it by straight line method. Rate of depreciation will be _____________
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Solution
Straight line method depreciates cost evenly throughout the useful life of the fixed asset. Straight line depreciation is calculated as follows:
Depreciation per annum = (Cost – Residual Value) / Useful Life
Where:
Cost includes the initial and any subsequent capital expenditure.
Residual Value is the estimated scrap value at the end of the useful life of the asset. As the residual value is expected to be recovered at the end of an asset’s useful life, there is no need to charge the portion of cost equaling the residual value.
Useful Life is the estimated time period an asset is expected to be used from the time it is available for
use to the time of its disposal or termination of use.
Here Cost of the asset = Rs. 5,000
Salvage value = Rs. 500
Depreciation = (5,000 – 500)/10 = Rs. 450
Rate of Depreciation = 450/5,000 × 100 = 9%
When preparing a Bank reconciliation statement, if you start with a debit balance as per cash book, cheques sent to Bank but not collected within the period should be _____________
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Solution
Cheques sent to bank (not collected) will be deducted in the given case.
Z Ltd. forfeited 600 shares of Rs. 10 each, on which first call of Rs. 3 per share was not received; the second and final call of Rs. 2 per share has not yet been called. Forfeited share A/c will be credited with _____________
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Solution
Forfeited share A/c will be credited with total shares × amount received up to the time of forfeiture = 600 × (10 – 2 – 3) = Rs. 3,000.
Pavan Ltd. invited application for 30,000 shares payable as under:
Rs. 3 per share on application;
Rs. 3 per share on allotment;
Rs. 2 per share on First call;
Rs. 2 per share on final call;
Ashok, who had been allotted 500 shares failed to pay both the calls. His shares were forfeited and reissued at Rs. 9 per share to Hari, as fully paid up. Amount transferred to capital Reserve will be _____________
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Solution
When the shares forfeited are reissued at discount, Bank account is debited by the amount received and Share capital account is credited by the paid up amount. The amount of discount allowed is debited to Share Forfeited Account. This is for adjusting the amount of discount so allowed from the amount forfeited at the time of forfeiture.
Now the amount of discount allowed on reissue of shares at the most can be equal to the forfeited amount on such shares. In that case the share forfeited account after reissue will show a zero balance.
But in case, this amount of discount is less than the amount forfeited, the remaining forfeited amount will be profit for the company. This profit is a capital gain to the company and is transferred to Capital Reserve account.
In the above question discount on shares reissued = number of shares reissued × discount allowed per share = 500 × (10 – 9) = Rs. 500Amount available for the reissued shares in shares forfeiture account = number of shares reissued × amount forfeited per share = 500 × (10 – 4) = 500 × 6 = Rs. 3,000.
The surplus amount to be transferred to capital reserve account = 3,000 – 500 = Rs. 2,500.
Gopal was holding 100 shares of Rs. 10 each of a company on which he had paid Rs. 3 on application and Rs. 2 on allotment but could not pay Rs. 2 on first call. Directors forfeited his shares. Share capital will be debited by _____________
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Solution
When shares issued at par are forfeited the accounting treatment will be as follows:
(i) Debit Share Capital Account with amount called up (whether received or not) per share up to the time of forfeiture.
(ii) Credit Share Forfeited A/c. with the amount received up to the time of forfeiture.
(iii) Credit ‘Unpaid Calls A/c’ with the amount due on forfeited shares. This cancels the effect of debit to such calls which take place when the amount is made due forfeited shares account will be credited by the amount which has been received in respect of forfeited shares.Here total called up value of the shares is 100 × (3 + 2 + 2) = 700rs. Thus share capital account will be
debited by Rs. 700.
X Ltd. purchased the business of Y Ltd. for Rs. 9,00,000 payable in fully paid shares of 100 each at a premium of 25%. The number of shares to be issued by X Ltd. to settle the purchase consideration will be ______
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Solution
Number of shares will be calculated as 9,00,000/125 = 7,200.
Pavan Ltd.’s authorized capital is 60,000 shares of Rs. 10 each. 4000 fully paid shares were issued to promoters for their services. This amount will be debited to_______
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Solution
The shares issued to promoters will be debited to goodwill account.
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Solution
Dividends payable are dividends that a company’s board of directors has declared to be payable to its shareholders. Until such time as the company actually pays the shareholders, the cash amount of the dividend is recorded within a dividends payable account as a current liability.
Here dividend payable will be 5% of (4,60,000 – 7,500) = Rs. 22,625