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financial accounting

Financial Accounting 1st Edition Dhanesh K. Khatri - Solutions

Pass necessary journal entries in the journal for the following transactions: Date 2010 Transaction Deepak started business with cash 4,50,000 and machinery worth * 3,50,000 Deposited cash into bank 3,30,000 Purchased furniture in cash 42,000 January 1 January 2 January 3 January 3 Purchased
Classify the following items into different assets and liabilities as these would appear in the balance sheet. Also identify expense and income items. S. No. 1 4 7 10 13 16 19 22 25 28 31 Item Land Equipments Bank over draft Long-term investment Patents Capital Sales for the year Salary Outstanding
From the following trial balance, prepare an income statement: Account Name Opening Stock Finished Goods Raw Material Purchase of Raw Material Direct Wages Manufacturing Expenses Administrative Expenses Depreciation Preliminary expenses Written off Selling and Distribution Expenses Loss on Sale of
Capital structure of a company includes the following:(i) Equity share capital: 60,000 shares of face value ₹100 each (ii) Preference shares capital: 10,000, 10% shares of face value ₹100 each (iii) Debt of 20,00,000 bearing a coupon rate of 12%During the year, the company earned EBIT of
Using the following data, prepare financial statements—trading account, profit and loss account and balance sheet: Account Opening stock Purchase Wages Power Salary Advertising Expenses Building Machinery Debtors Patents Commission Paid Rent Paid Interest Paid Insurance Premium Amount
Classify the following items into asset, expense, liability and income: S. No. 1 2345678 2 9 10 Name of Account Cash a/c Bank a/c Capital a/c Furniture a/c Salary a/c Purchase a/c Sales a/c Mohit's a/c Commission received a/c Rent a/c Trial Balance As on. ****** L.F. Debit Amount
Capital of a company on April 1, 2010 comprised 2,50,00,000 equity shares of face value ₹10 each, and 12% preference shares of total value ₹10,00,00,000. On this date, the net balance of reserve and surplus was ₹19,00,00,000. During the year, the company had EAT of ₹45,00,00,000 out of
Show the following items by depicting the impact on different assets and liabilities:(i) Ramson started business with cash ₹8,50,000 and a machinery of ₹3,00,000(ii) Deposited cash into bank ₹5,50,000(iii) Purchased furniture of ₹1,74,500 and issued cheque(iv) Purchased goods of
BB Ltd holds 80% shares with voting rights of Dilip Agro Ltd (DAL) and 61% shares of Ashok Agro Ltd (AAL). DAL holds shares of the following companies:(i) XYZ Ltd 20% shares with voting rights (ii) LML Ltd 75% shares with voting rights (iii) AAL holds 55% shares with voting rights of WWF Ltd.Show
Suzain Danial, after retirement, helped her son in starting his new business by contributing a capital of ₹25,00,000. After the opening ceremony of the business, she never intervened in the business decisions. All the business activities were managed by her son, Dileep Danial. After one year, the
DXK Ltd purchased 12% bonds of face value ₹1,50,000 on April 1, 2006 at a market price of ₹1,61,370. These are redeemable at par after five years. The implied interest rate on the date of purchase was 10% per annum for these types of bonds. DXK Ltd categorized these bonds to be
Show whether the following items are expenses or asset:(a) Purchased furniture of ₹1,00,000 and issued cheque(b) Purchased machinery of ₹1,50,000 from DD Enterprises(c) Purchased goods of ₹1,80,000 from Dilip Enterprises(d) Paid wages for the month ₹30,000 in cash(e) Paid research expenses
An investor purchases 100 shares of a company at a price of ₹320, whereas face value per share is ₹10. He/she expects to get 120% dividend at the end of one year and expected market price at the end of the year is ₹380. Calculate the return on equity.
An investor purchases 200 shares of a company at a price of ₹150. At the end of one year, he/she gets a dividend of ₹18 per share and sells the share in the market at a price of ₹147 per share after one year.Calculate the return on equity.
The following deals were executed between SBBJ and PNB on January 21, 2011:Deal 1: Ten thousands GOI-2012 Series bonds of face value ₹100 each were purchased by SBBJ from PNB at a price of ₹105 per bond deal is to be settled immediately.Deal 2: Twenty thousands GOI-2015 Series bonds of face
Sam Disuja helped his son in starting his new business by contributing a capital of rupees twenty lakh. After the opening ceremony of the business, he never intervened in the business decisions. All the business activities were managed by his son, Ding Dong Disuja. After one year, the total assets
ABC Ltd sold goods of MRP ₹39,000 to Nitish at 25% trade discount. The terms of credit sales were ‘1/14 net 30’. Nitish makes the payment within 10 days. Show the journal entry for this transaction, in the books of ABC Ltd and books of Nitish.
A business enterprise gave away goods costing ₹10,000; 5,500; 3,400, respectively as free sample, as charity and for personal use of owner. Pass journal entry.
Sold goods of ₹40,000 to Mahesh. Subsequently received cash from Mahesh ₹39,800 in the final settlement of his account. Purchased goods from Deepak of ₹80,000. Subsequently issued a cheque of ₹79,500 to Deepak and he allowed discount ₹500. Show how these transactions will appear in the
GK Ltd sold goods of MRP ₹50,000 to Nitish at 15% trade discount in cash. Show the journal entry for this transaction, in the books of GP Ltd and books of Nitish.
P.D. Enterprises executed the following transactions: Date 2010 April 3 April 7 April 10 April 15 April 17 April 29 April 30 May 7 May 9 May 15 May 18 May 19 May 20 May 21 May 22 May 23 May 23 May 24 May 25 May 28 Transactions Started business with cash 11,35,000 Paid rent for the month
M/s Sunder Enterprise executed the following transactions. Record these in the purchase book. Date 12/5/10 16/5/10 20/5/10 21/5/10 Invoice No. 102 207 111 306 Transaction Goods of MRP discount Goods of MRP discount Goods costing Goods costing 75,000 purchased from Naveen Enterprises at 20%
M/s Samsung Enterprise executed the following transactions. Record these in the sales book. Date 13/5/10 16/5/10 22/5/10 24/5/10 Invoice No. 109 110 111 112 Transaction Goods of MRP Goods of MRP Goods of value Goods of value 1,00,000 sold to Nitish Enterprises at 20% trade discount 1,49,500 sold to
M/s Samsung Enterprise executed the following transactions. Record these in the purchase return book. Date 14/5/10 19/5/10 Invoice No. 007 008 Transaction Goods valuing Goods of cost 11,100 returned to Naveen Enterprises 3,900 returned to Satish Enterprises
M/s Sunder Enterprise executed the following transactions. Record these in the sales return book. Date 21/5/10 26/5/10 01/6/10 Invoice No. 131 133 142 Transaction Goods of value Goods of value Goods of value 15,000 return by Nitish Enterprises 1,900 returned by Ram Enterprises 7,500 returned by
D.S. Enterprises executed the following transactions:Record these transactions in subsidiary books. Post them to ledger accounts and prepare trial balance. Date 2010 April 3 April 7 April 10 April 15 April 17 April 29 April 30 May 7 May 9 May 15 May 18 May 19 May 23 May 24 May
P.P. Enterprises executed the following transactions:Record these transactions in subsidiary books. Post them to ledger accounts and prepare trial balance. Date 2010 June 1 June 3 June 4 June 7 June 10 June 15 June 18 June 24 June 26 Transactions Opening cash in hand 2,30,500 Paid rent for the
N.D. Enterprises executed the following transactions: Date 2010 April, 01 April, 02 April, 10 April, 11 April, 15 April, 17 April, 18 Transactions Cash in hand 1,70,500 and Bank balance 85,000 Paid rent for the month 25,000 by cheque Deposited cash into bank 30,000 Sold goods and received cheque *
Show closing entries for the following accounts: S. No. 1 2 3 4 5 6 7 8 9 10 Cash a/c Bank a/c Capital a/c Furniture a/c Name of Account Salary a/c Purchase a/c Sales a/c Mohit's a/c Commission Received a/c Rent a/c Total Trial Balance As on March 31, 2010 L. F. Debit Amount
From the following balance sheet, pass opening entry in the beginning of next accounting year: Liabilities Owner's Capital Secured Bank Loan Bank Overdraft Sundry Creditors Tax payable Outstanding Expenses Balance Sheet as on March 31, 2010 Amount
Pass journal entries for the following transactions:(i) Purchased machinery from Lohia Ltd of ₹1,20,000 (ii) Purchased furniture from Gulab Enterprises of ₹35,000 (iii) Paid to Lohia Ltd by cheque ₹1,20,000 (iv) Write off depreciation on machinery ₹3,000
Prepare final accounts using the following balance: S. No. 1 2 3 4 5 6 Capital a/c Machinery a/c Furniture a/c Salary a/c 7 Insurance Premium a/c 8 Advertising Expense a/c 9 10 11 12 13 14 15 16 17 Cash a/c Bank a/c 18 19 20 Name of Account Bad Debts a/c Purchase a/c Stationery a/c Freight
Show how the following adjustments are to be shown in the final accounts:Adjustments(i) Wages due but not paid so far ₹21,000(ii) Insurance premium paid on January 1, 2010 is for twelve month-period(iii) Commission earned but not received so far ₹13,000(iv) Interest received includes ₹9,000
Rework the following balance sheet in vertical form: Particulars Equity Share Capital (face value 100) 18% Preference Share Capital General Reserve Securities Premium P & L Account 12.5 % Debenture Sundry Creditors Tax Payable Proposed Dividend Balance Sheet As on March 31,
Rework the following income statement and balance sheet in vertical form: Particulars To Opening Stock Raw Material To Purchase of Raw Material To Direct Wages To Manufacturing Expenses To Administrative Expenses To Depreciation To Preliminary expenses Written off To Selling and
Trial balance of a business as on March 31, 2009 showed Sundry Debtors ₹1,70,000 and Bad Debts ₹12,000. Business wishes to maintain a provision for doubtful debts @ 4% for the next year. Show adjustment entries and how these will appear in final accounts.
Trial balance as on March 31, 2010 showed Sundry Debtors of ₹80,000; Bad Debts ₹5,400; Discount Allowed ₹500 and Provision for Doubtful Debts ₹7,000. It was decided to maintain provision for doubtful debts @ 4% of debtors and provision for discount on debtors @ 2% for next financial
In the trial balance on March 31, 2010 building appeared at a gross value at ₹11,20,000. Provision for depreciation in the trial balance is at ₹2,24,000. The company has the practice of charging depreciation @ 20% as per SLM on this asset. Show how adjustment entry and how this item will appear
The following balances have been taken from the books of Kashish Packaging Ltd as on March 31, 2010 (Rupees in lakh): Dr. Particulars Cash in hand Cash at bank Bills receivables Investments Sundry deposits Advances Debtors Land and building Furniture Motor car Closing stock Establishment
By using balance sheet, prepare trial balance: Particulars Equity Share Capital (face value 10) 10% Preference Share Capital General Reserve Securities Premium P & L Account Debenture Sundry Creditors Tax Payable Balance Sheet as on March 31,
From the following trial balance prepare trading account, profit and loss account and balance sheet.Additional Information (adjustments)(i) Closing stock was ₹9,000 crore (ii) Insurance premium for 3 months at the rate of ₹200 crore per annum was pre-paid.(iii) One month rent ₹305 crore was
From the following trial balance, prepare manufacturing account, trading account, as well as profit and loss account:Additional Information (adjustments)(i) Closing stock of raw material, work-in-process and finished goods was 13,500; 16,000 and 14,000, respectively.(ii) Wages ₹12,000 was due but
Roopak Sales (RS) manufactures customer specific juicer and mixers as well as standard juicer and mixers. It received a confirmed order (the order that is non-cancellable) from a M.M. Hotels (MMH) for the installation of both the type of products for which ₹2,00,000 was received for customized
Apex Transport Company (ATC) owns the license to operate public transport vehicle on route no. 777. Sigma College (SC) wishes to use its license to operate for one round tour only and pays ₹25,000 license fee. ATC also passed on the license to GTC LTd for a period of two years by charging
BBS College received grant of ₹1,05,00,000 from UGC the details of the grant provided that ₹75,00,000 is for the construction of three rooms, ₹17,50,000 for computers and internet and ₹12,50,000 for books and journal. The work should be completed in two years. The building was constructed
BJS College (BJS) was granted and paid a grant of ₹15,00,000 by UGC under border area. The major condition of the grant being released is that college should spend a total amount of ₹26,00,000 including the amount of grant over three years period for the development of a career counseling camps
On April 1, 2008 Gee Pee Ltd (GPL) granted employee stock option plan (ESOP) to its employees for allotting 200 shares to each employee at a price of ₹40 per share on the vesting date that is after two years from the grant date, i.e., April 1, 2010. The face value and market value of the share on
Calculate net profit for managerial remuneration from the following information: Particulars Salaries and wages Repairs Miscellaneous expenses Workmen compensation (including 3,000 legal compensation) Compensation for breach of contract Donation to charitable fund Interest Depreciation (7,500 as
Falcon Ltd (FL) provides the following details about its financial results:Equity share capital ₹70,00,000, Current year’s profit ₹40,00,000, Average amount paid as equity dividend in the past three years ₹17,00,000. During the current year, the company wishes to declare a dividend of 18%.
Profit to sales is 1% and amount of profit is say ₹15 lakh. Then what is the amount of sales?
A company has net worth of ₹25 lakh, Long-term liabilities of ₹12 lakh. Fixed assets is worth ₹16 lakh and current assets are ₹25 lakh. There are no intangible assets or other non-current assets. Calculate its net working capital.
Current ratio of a concern is 1:1. What will be the net working capital?
Suppose current ratio is 5:1 and NWC is ₹30,000, Then what is the amount of current assets?
The amount of term loan (TL) installment is ₹10,00,000/ per month, monthly average interest on TL is ₹50,000. If tax rate is 50% and PAT is ₹2,70,000 per month, what would be the interest coverage ratio?
The balance sheet of DXI Ltd for the year 2009–10 disclosed ₹8,20,000 as liability for derivative contract expiring in next six months from the date of balance sheet. In the next financial year, i.e., 2010–11 the liability for the derivative contract was discharged at ₹9,42,000. Show how
The manufacturer of automatic gear scooters gives a warranty of three years on every scooter for the repair or replacement of the scooters that fail to perform as per the specification. Past experience reveal that on an average 5% of the scooters require repair costing ₹2,000 each and another 1%
By taking the data of question 2, if in case each scooter can raise only one claim during the period of three year. During the year 2010-11, 50 scooters were repaired at a cost of ₹1,700 each and another 50 were replaced at a cost of ₹3,200 each. Show how subsequent measurement of these
Average age of employees of a company is 56 years the retirement age is 60 years. Defined benefit plan introduced in the current year envisages payment of extra retirement benefit equal to 5% of the last salary drawn for each year of service put in by the employee from the date of commencement of
Alok Limited (AL) purchased goods worth ₹3,00,000 and ₹2,80,000 from Ramesh Limited (RL) on cash and for one month credit, respectively. AL accepted a bill of exchange of two months duration for ₹5,00,000 in the favour of Dilip Limited (DL). Do these transactions result in financial assets
Sunslife Limited (SL) invited application for the issue of 1,00,000 equity shares of face value ₹10 each issued at a premium of 10% for cash all the shares were subscribed for and issued as per the rules. Another 50,000 equity shares of ₹10 were issued to the vendors of machinery. Show how
On February 10, 2011 Dinesh Limited (DL) entered into a contract for buying two lot of call option with product series ‘CA, Tata Steel (800), 600, April 2011, @ ₹30’ and sold one lot of put option with product series ‘PA, Ranbaxy (500), 560, April 2011, @ ₹40’. It also entered into a
The balance sheets of Hyper Limited (HL) and Fun Limited (FL) on 31st March, 2011 are as follows:On the balance sheet date HL acquired the business of FL for which it agreed to pay the following purchase consideration on the date of business combination.(i) HL to issue its one share for every two
On April 1, 2000 Sport Limited (SL) issued 10% convertible debentures of face value ₹100 each. Each debenture is convertible into four equity shares after five years from the date of issue. Had SL issued redeemable debentures then it would have offered an interest rate of 12% on these debentures.
M.N. Ltd invited application to issue 10,000 preference shares of face value ₹10, each at 20% premium. The amount to be paid as to ₹5 (including Re. 1 of premium) at the time of application, ₹5 (including ₹1 of premium) on allotment, ₹1 per share on first and Re. 1 on second and final
ABC Ltd was registered with an authorized share capital of ₹5,00,000 divided into 50,000 equity shares of face value of ₹100 each. Of these, on December 1, the company issued 30,000 shares that were fully subscribed by the public. The amount was payable as follows:On application ₹20; on
J.K. Ltd invited application to issue 3,000 equity shares of face value ₹10 each at par. The amount to be paid as to ₹3 at the time of application, ₹ 6 on allotment, ₹1 per share on first and final call. The company received the application for 5,500 shares, applicants for 500 shares were
On July 1, 2008, Dewee Limited issued 30,000 10% debentures of face value ₹100 each at par. After 18 months from the date of issue, each debenture is to be converted into two equity shares of face value ₹10 each at a premium of ₹40 each. On the date of conversion, all the debentures were
Debentures of face value ₹100 each having a coupon rate 10% p.a. have a provision for interest payment every year on September 30 and March 31. The following were the market prices:(i) On July 1, ex-interest ₹99 per debenture (ii) On February 1, cum-interest 99.50 per debenture If 100
On 1st April, 2011, Deep Limited (DL) acquired the business of Cycle Limited (CL) by acquiring all the assets and liabilities. Land and building of CL was valued at ₹9,50,000 and furniture and fixtures at ₹2,00,000 and rest of the assets and liabilities at the book value. It agreed to discharge
On March 31, 2011 Hanging Limited (HL) acquired 3,000 equity shares of ₹10 each of Flat Limited (FL) at a total market value of ₹ 35,000 crore. The balance sheet of both the companies on March 31, 2011 is as follows:Out of the debtors and bills receivables of HL ₹7,500 crore and ₹2,400
Taking the data of Problem 1, consider that BL purchased 40% equity of HL at a cost of ₹3,00,000 and there was no difference between the book value and fair value of the assets. Then show how goodwill is to be recognized. If we further assume that the fair value of net assets increased by
On April 1, 2010, Bush Limited (BL) purchased 40% equity shares of Huss Limited (HL) at a cost of ₹2,40,000. The equity of HL on this date comprised(a) Equity share capital ₹3,00,000,(b) Securities premium ₹2,00,000,(c) Reserve and surplus ₹1,00,000.During the year 2010–11, GHL earned a
Suppose in Problem 3, JPL sold a machinery to GL, on which it earned a profit of ₹80,000. The useful life of the asset is five years. JPL holds 40% equity in GL. Show how unrealized profit is to be recognized in the year 2010–11.Data from Problem 3Gee Limited (GL) is an associate of Jee Pee
Gee Limited (GL) is an associate of Jee Pee Limited (JPL). During the year GL sold goods of selling price ₹1,00,000 to JPL. On March 31, 2011 closing stock of JPL comprised stock amounting to ₹30,000 out of the goods purchased from GL. Financial statements of GL disclose a gross profit margin
An investor purchases 100 shares of a company at a price of ₹213., At the end of one year, he/she gets a dividend of ₹6.50 per share and sells the share in the market at a price of ₹257 per share after one year.Calculate the return on equity.
When obligation to pay is binding on account of a past event, it is recognized as(a) Contingent liability(b) Liability at historical cost(c) Liability at fair value(d) None of these
Financial liabilities held for trading are to be measured(a) By using the method of amortization using effective interest rate’.(b) At fair value(c) At historical cost(d) At prospective value using actuarial method
Which one of the following is applicable for provisions?(a) Present obligation is recognized as a result of a past event(b) The event—activity, agreement or contract that has been executed in the past.(c) Monetary outflow is more probable.(d) None of these(e) All of these
Using a particular provision for some other liability or expenditure is(a) Allowed under IAS-37(b) Allowed under AS-29(c) Allowed under both of these(d) Not allowed under both of these
A company should make provision for which one of the following?(a) Present obligation on account of obligating events(b) For future operating expenses(c) For future contracts(d) All of these(e) None of these
Which of the following should not be considered as restructuring costs?(a) Retraining or relocation cost.(b) Marketing(c) Investment in new system as a result of closure or relocation.(d) None of these(e) All of these
Who among the following is required to deposit initial margin for an option contract?(a) Buyer only(b) Seller only(c) Both of these(d) Neither of these
Who among the following is required to deposit initial margin for a futures contract?(a) Buyer only(b) Seller only(c) Both of these(d) Neither of these
Which of the following parameters is not regulated by the exchange in a futures contract?(a) Strike price(b) Underlying asset(c) Lot size(d) All of these
Which of the following parameters is regulated by the exchange in an option contract?(a) Exercise price(b) Lot size(c) Premium(d) All of these
A document that does not contain the details about the final issue price of the shares being issued is called(a) Letter of intent(b) Prospectus(c) Red-herring prospectus(d) Offer document
Which of the following is applicable about rights issue?(a) Rights can be renounced.(b) Rights can be renounced only by the permission of SEBI.(c) Rights can be renounced only in favour of another exiting equity shareholder.(d) Neither of these.
Which of the following is not applicable for buy back of shares?(a) A listed company is required to follow SEBI guidelines about buy back.(b) An unlisted company cannot buy back its securities.(c) Neither of these.(d) Both of these.
In an amalgamation of two companies A and B into a newly established company AB, AB issued 30,000 shares of ₹10 each to A and 45,000 equity shares of ₹10 each to B. Identify the acquirer under IFRS-03.(a) A(b) B(c) AB(d) More facts are required
Pursuant to demerger, if the resulting company is a foreign company, then show how capital gain is to be recognized.(a) To be taxed @ 22.60%(b) To be taxed at 33.90%(c) Need not be recognized(d) None of these
Pursuant to demerger, if the resulting company is an Indian company, then show how capital gain is to be recognized.(a) To be taxed @ 22.60%(b) To be taxed at 33.90%(c) Need not be recognized(d) None of these
HL holds 25% shares and 100% debentures of VL. Then which of the following is the relationship between HL and VL?(a) VL is associate company of HL.(b) VL is subsidiary of HL.(c) HL is subsidiary of VL.(d) None of these.
When one company has insignificant influence over another, then which of the following accounting standards is followed by the investor company to report investment?(a) AS-13(b) AS-27(c) AS-31(d) AS-21
When one company holds less than 20% shares with voting rights of another company, then the relationship between both the companies is considered as(a) Holding and subsidiary(b) One company having significant influence on another(c) Associate companies(d) Group companies(e) None of these
HL holds 51% shares and 10% debentures of VL. Then which of the following is the relationship between HL and VL?(a) VL is associate company of HL.(b) VL is subsidiary of HL.(c) HL is subsidiary of VL.(d) None of these.
When one company has significant influence over another, then which of the following international accounting standards is followed by the investor company to report investment?(a) IAS-13(b) IAS-27(c) IAS-31(d) IAS-28
Consolidated financial statements are guided by the provisions of(a) AS-21 and IAS-27(b) AS-13 and IAS-27(c) AS-27 and IAS-13(d) AS-21 and IAS-31
For which of the following transactions, unrealized profit is eliminated?(a) Downstream business transaction(b) Upstream business transaction(c) Both of these(d) None of these
Pass necessary journal entries and prepare trial balance for the following transactions: 1 2 3 4 5 6 7 8 Started business with cash 1,00,000 Deposited cash into bank 30,000 Purchased furniture and issued cheque 12,000 Purchased goods and paid cash 20,000 Taken a loan from bank * 1,20,000 Sold half
Explain the term business combination how purchase consideration is to be calculated under IFRS 03.

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