A, B and C were partners in a firm sharing profits and losses in the ratio of 2:2:1 respectively with the capital balance of Rs. 50,000 for A and B, for C Rs. 25,000. B declared to retire from the firm and balance in reserve on the date was Rs. 15,000. If goodwill of the firm was valued as Rs. 30,000 and profit on revaluation was Rs. 7,050 then what amount will be transferred to the loan account of B?
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Solution
Amount to be transferred to B’s loan account will be:
Capital 50,000
Reserve 15,000 × 2/5 = Rs. 6,000
Goodwill 30,000 × 2/5 = Rs. 12,000
Profit on revaluation 7,050 × 2/5 = Rs. 2,820
Total = Rs. 70,820
A, B and C are the partners sharing profits and losses in the ratio of 5:3:2, took a joint life policy of Rs. 30,000. On the death of B what amount will be payable to each partner?
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Solution
When any one of the partner dies the life insurance policy money is distributed among the partners in the
profit sharing ratio i.e.
A : 30,000 × 5/10 = Rs. 15,000
B : 30,000 × 3/10 = Rs. 9,000
C : 30,000 × 2/10 = Rs. 6,000
A Company wishes to earn a 20% profit margin on selling price. Which of the following is the profit mark up on cost, which will achieve the required profit margin?
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Solution
Let X be the selling price then profit = 20% of x
Cost = selling price – profit = X – 20% of x = 80% of x
Profit markup = (profit/cost price) × 100 = (.2x/.8x) × 100 = 25%
The subscribed share capital of S Ltd. is Rs.80,00,000 of Rs.100 each. There were no calls in arrear till the final call was made. The final call made was paid on 77,500 shares. The calls in arrear amounted to Rs.62,500. The final call on each share will be_________
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Solution
Total no. of shares = 80,00,000/100 = Rs. 80,000 shares
Fully paid shares = Rs. 77,500
Shares on which the calls are in arrear = Rs. 80,000 – 77,500 = Rs. 2,500
Calls in arrear in amount = Rs. 62,500
Final calls on 2,500 shares = Rs. 62,500
Thus final call on 1 share = 62,500/2,500 = Rs. 25
The following information pertains to X Ltd.:
Equity share capital called up Rs. 5,00,000
Calls in arrear Rs. 40,000
Calls in advance Rs. 25,000
Proposed dividend 15%
The amount of dividend payable will be
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Solution
Dividend will be paid on the amount called up and received i.e. called up value – calls in arrears
Or dividend payable = 15% of (5,00,000 – 40,000) = 15% of 4,60,000 = Rs. 69,000
G Ltd. acquired assets worth Rs.7,50,000 from H Ltd. by issue of shares of Rs.100 at a premium of 25%. The number of shares to be issued by G Ltd. to settle the purchase
consideration will be_________
(a) (b)
(c) (d)
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Solution
Let x shares were issued by Ltd.
Total value of shares at cost plus premium = x (100 + 25) = Rs. 7,50,000
Or 125x = Rs. 7,50,000
Or x = Rs. 7,50,000/125 = Rs. 6,000 shares
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 _________
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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
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_________
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Solution
Premium on redemption = 20% of 2,00,000 = Rs. 40,000
Amount to be written off every year = 40,000/5 = Rs. 8,000
Mohan purchased goods for Rs. 15,00,000 and sold 4/5th of the goods amounting Rs. 18,00,000 and paid expenses amounting Rs. 2,70,000 during the year, 2009. He paid Rs. 5,000 for an electricity bill of Dec. 2008 and advance salaries amounting Rs. 15,000 was paid for the month of Jan. 2010. He counted net profit as Rs. 3,50,000.
The net profit calculated by him is correct according to _________
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Solution
Matching concept supports the given calculation of profit.
Mr. A purchased a machinery costing Rs. 1,00,000 on 1st October, 2011. Transportation and installation charges were incurred amounting Rs. 10,000 and Rs. 4,000 respectively.
Dismantling charges of the old machine, in place of which new machine was purchased, amounted Rs. 10,000. Market value of the machine was estimated at Rs. 1,20,000 on
31st March, 2012. While finalising the annual accounts, A values the machinery at Rs. 1,20,000 in his books.
Which of the following concepts was violated by A?
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Solution
Cost concept is violated in the given case.