Revaluation of Assets (Retirement)

Q. Jain Ltd purchased machinery costing ₹ 10, 00, 000 from Ayer Ltd. 50% of the payment was made by cheque and for the remaining 50% , the company issued Equity Shares of ₹ 100 each at a premium of 25% . Pass necessary Journal entries in the books of Jain Ltd . for the above transaction.

Q.

From the following Balance Sheet of Computer India Ltd., prepare cash flow statement.

(Rs in '000)

Particulars	Note No.	31st March 2017 (Rs)	31st March 2016 (Rs)
I) Equity and Liabilities
1. Shareholders’ Funds
a) Share capital		50, 000	40, 000
b) Reserves and surplus-Surplus	1	3, 700	3, 000
2. Non-Current Liabilities
10% Debentures		6, 500	6, 000
3. Current Liabilities
a) Short-term borrowings	2	6, 800	12, 500
b) Trade payables		11, 000	12, 000
c) Short-term provisions	3	10, 000	8, 000
Total		88, 000	81, 500
II) Assets
1. Non-current assets
a) Fixed assets	4	25, 000	30, 000
2. Current assets
a) Inventories		35, 000	30, 000
b) Trade receivables		24, 000	20, 000
c) Cash and cash equivalents-cash		3, 500	1, 200
d) Other current assets-prepaid exp.		500	300
Total		88, 000	81, 500

Notes to Accounts

	Particulars	31st March 2017 (Rs)	31st March 2016 (Rs)
1.	Reserve and surplus
	(i) Balance in statement of profit and loss	1, 200	1, 000
	(ii) General reserve	2, 500	2, 000
		3, 700	3, 000
2.	Short-term borrowings
	Bank Overdraft	6, 800	12, 500
3.	Short-term provisions
	(i) Provision for taxation	4, 200	3, 000
	(ii) Proposed dividend	5, 800	5, 000
		10, 000	8, 000
4.	Fixed Assets:
	Fixed Assets	40, 000	41, 000
	Less: Accumulated Depreciation	(15, 000)	(11, 000)
		25, 000	30, 000

Additional Information:

Interest paid on Debenture Rs. 600

Q.

The following is the balance Sheet of Gupta and Sharma as on December 31, 2012

$$\begin{array}{cccccccc}& & & & \text{Balance Sheet of Gupta and Sharma}& & & \\ & & & & \text{as on December 31, 2012}& & & \end{array}$$

$$\begin{array}{ccccc}\text{Capital and Liabilities}& & \text{Amt.}& \text{Assets}& \text{Amt.}\\ \text{Sundry Creditors}& & 38,000& \text{Cash at Bank}& 12,500\\ \text{Mrs. Gupta's Loan}& & 20,000& \text{Sundry Debtors}& 55,000\\ \text{Mrs. Sharma's Loan}& & 30,000& \text{Stock}& 44,000\\ \text{Reserve Fund}& & 6,000& \text{Bills Receivable}& 19,000\\ \text{Provision of Doubtful Debts}& & 4,000& \text{Machinery}& 52,000\\ \text{Capital}& & & \text{Investment}& 38,500\\ \text{Gupta}& 90,000& & \text{Fixtures}& 27,000\\ \text{Sharma}& \underset{–}{60,000}& \underset{–}{1,50,000}& & \underset{–}{}\\ & & 2,48,000& & 2,48,000\\ & & \underset{–}{}& & \underset{–}{}\end{array}$$

The firm was dissolved on December 31 2012 and Asset realised and setlements of Liabilities as follows:
(a) The realisation of the assets were as follows
$$\begin{array}{cc}\text{Sundry Debtors}& 52,000\\ \text{Stock}& 42,000\\ \text{Bills Receivable}& 16,000\\ \text{Machinery}& 49,000\end{array}$$
(b) Investment was taken over by Gupta at agreed value of 36, 000 and agreed to pay of Mrs Gupta's loan.

(c) The Sundry Creditors were paid fo less % discount.

(d) The realisation expenses incurred amounted to Rs. 1, 200.

Journalise the entries to be made on the dissolution and prepare realisation account, bank account and partners capital accounts.

Q. X Ltd. took a loan of ₹ 3, 00, 000 from IDBI Bank . The company issued 4, 000; 9% Debentures of ₹ 100 each as a collateral security for the same . Show how these items will be presented in the Balance Sheet of the company.

Q. A company took a loan of ₹ 4, 00, 000 from Bandhan Bank Ltd. and issued 8% Debentures of ₹ 4, 00, 000 as a collateral security.

Q.

At the time of retirement, the assets and liabilities are revalued so that the _______ share in profit/loss due to revaluation can be ascertained.

1. Outgoing partner

2. Incoming partners

3. All partners

4. None of these

Q.

Shine Limited has a current ratio 4.5:1 and quick ratio 3:1; if the inventory is 36, 000, calculate current liabilities and current assets.

Q.

Profit/Loss on Revaluation of Assets & Liabilities on the retirement of a partner is shared by the partners in their:

1. Gaining Ratio

2. Old Profit Sharing Ratio

3. New Profit Sharing Ratio

4. Capital Ratio

Q.

The Orient Company Limited offered for public subscription 20, 000 equity shares of Rs 10 each at a premium of 10% payable at Rs 2 on application; Rs 4 on allotment including premium; Rs 3 on First Call and Rs 2 on Second and Final call. Applications for 26, 000 shares were received. Applications for 4, 000 shares were rejected. Pro-rata allotment was made to the remaining applicants. Both the calls were made and all the money were received except the final call on 500 shares which were forfeited. 300 of the forfeited shares were later on issued as fully paid at Rs 9 per share. Give journal entries and prepare the balance sheet.

Q. Best Barcode Ltd. took a loan of ₹ 5, 00, 000 from a bank giving ₹ 6, 00, 000; 9% Debentures as collateral security. Pass journal entries regarding issue of debentures , if any, and show this loan in the Balance Sheet of the company.

Q.

Software solution India Ltd inviting application for 20, 000 equity share of Rs 100 each, payable Rs 40 on application, Rs 30 on allotment and Rs 30 on call. The company received applications for 32, 000 shares. Application for 2, 000 shares were rejected and money returned to Applicants. Applications for 10, 000 shares were accepted in full and applicants for 20, 000 share allotted half of the number of share applied and excess application money adjusted into allotment. All money received due on allotment and call. Prepare journal and cash book.

Q. Furniture was revalued at Rs. 50, 000 but it is shown as Rs. 37, 000 in the balance sheet. So we debit account and credit account.

1. furniture
2. bank
3. revaluation
4. realisation

Q.

Record necessary journal entries in the following cases:

[a] Creditors worth Rs 85, 000 accepted Rs 40, 000 as cash and Investment worth Rs 43, 000, in full settlement of their claim.

[b] Creditors were Rs 16, 000. They accepted Machinery valued at Rs 18, 000 in settlement of their claim.

[c] Creditors were Rs 90, 000. They accepted Buildings valued Rs 1, 20, 000 and paid cash to the firm Rs 30, 000.

Q.

Q.

At what figures the value of assets and liabilities appear in the books of the firm after revaluation has been done? Show with the help of an imaginary balance sheet.

Q. Question: An extract of Trial balance from the books of Tahiliani and Sons Enterprises on December 31, 2005, is given below.

Name of Account	Debit Amt. (Rs)	Credit Amt. (Rs)
Sundry debtors	$50,000$
Bad debts	$6,000$
Provision for doubtful debts		$4,000$

Additional Information
Bad Debts proved bad not recorded amounted to Rs $2,000$.
Provision is to be maintained at $8\%$ of Debtors.
Give necessary accounting entries for written off the bad debts and creating the provision for doubtful debts account. Also, show the necessary accounts.

Q.

Q. Question: The following information is extracted from the Trial Balance of M/s Nisha traders on 31 December 2005.

Sundry Debtors	$80,500$
Bad debts	$1,000$
Provision for bad debts	$5,000$
Additional Information
Bad Debts	Rs$500$

Provision is to be maintained at $2\%$ of Debtors.
Prepare Bad debts account, Provision for bad debts account and Profit and Loss account.

Q. Overdraft as per cash book means ___________.

1. credit balance in the bank column of the cash book
2. neither of the two
3. both (a) and (b)
4. credit balance in the cash column of the cash book

Q. The cash book shows a bank balance of Rs.7, 800. On comparing the cash book with pass book, the following discrepancies were noted
i) Cheque deposited in bank not credited, Rs.3, 000.
ii) Cheque issued but not yet present for payment, Rs.1, 500.
iii) Insurance premium paid by the bank, Rs.2, 000.
iv) Bank interest credit by the bank, Rs.400.
v) Bank charges, Rs.100.
vi) Directly deposited by a customer, Rs.4, 000.

Q.

Mitali, Indu and Geeta are partners sharing profits and losses in the ratio of 3 : 2 : 1 respectively. It was decided that Indu is to retire from the firm. On this date, a machine having a book value of Rs 60, 000 is revalued at Rs 90, 000. Which of the following is correct in this regards?

1. Rs 10, 000 is to be debited to Indu`s account

2. Rs 10, 000 is to be credited to Indu`s account

3. Rs 20, 000 is to be debited to Indu`s account

4. Rs 20, 000 is to be credited to Indu`s account

Q.

From the following information prepare the balance sheet of Jam Ltd. as per the (revised) Schedule VI:

Inventories Rs. 7, 00, 000; Equity Share Capital Rs. 16, 00, 000; Plant and Machinery Rs. 8, 00, 000; Preference Share Capital Rs. 6, 00, 000; General Reserves Rs. 6, 00, 000; Bills payable Rs. 1, 50, 000; Provision for taxation Rs. 2, 50, 000; Land and Building Rs. 16, 00, 000; Noncurrent Investments Rs. 10, 00, 000; Cash at Bank Rs. 5, 00, 000;Creditors Rs. 2, 00, 000; 12% Debentures Rs. 12, 00, 000.

Q.

Q. If a share of ₹100 on which ₹75 has been called and ₹55 is paid is forfeited, the share capital account should be debited with:

[0.88 marks]

1. ₹100
2. ₹75
3. ₹65
4. ₹25

Q.

If the value of assets due to revaluation is more than the book value, then there will be ___

1. Hidden goodwill

2. Revaluation loss

3. Revaluation profit

4. None of these

Q. Amount realization from the sale of private estate of partners is used first to pay off ___________________.

1. Debts of the firm
2. Private debts of the partner
3. Bank loan of the firm
4. Wife's loan

Q.

At the time of retirement, the assets and liabilities are revalued. State this true or false.

1. Partially true

2. None of the above

Q. At the time of retirement, the assets and liabilities are revalued so that the partners' share in profit/loss due to revaluation can be ascertained.

1. sacrificing
2. outgoing
3. incoming
4. gaining

Q. Rhea and Rhean are partners in a firm sharing profits and losses in the ratio of 2 : 1. Rhean provided a loan of ₹1, 05, 000 to the firm. Calculate interest on loan:


[2 marks]

1. ₹10, 500
2. ₹6, 300

3. ₹5, 250

4. ₹6, 000

Q. To revalue assets & liabilities on admission, retirement or death of partner, _________ is opened.

1. Goodwill A/c
2. Suspense A/c
3. Revaluation A/c
4. Adjustment A/c