The following is the balance sheet of M/s P & Q as on 31 March 2011: Liabilities Assets Sundry Creditors 80,000 Land & Building 4,00,000 Mrs. P”s Loan 3,60,000 Plant & Machinery 3,20,000 Capital Accounts Stock in Trade 1,20,000 P:4,80,000 Sundry Debtors 2,00,000 Q:3.20.000 8,00,000 Investments 1,60,000 Cash at Bank 40,000 12,40,000 [2,40,000 Profits were shared as two-thirds to P and one- thirds to Q. […]

The balance sheet of X, Y & Z stood as follows when they sold off the concern to a newly started joint stock company. Liabilities Assets Capital Accounts Land & Buildings 1,68,000 X 2,70,000 Machinery 84,000 Y 1,80,000 Stock 1,56,000 Z 90.000 5,40,000 Debtors 1,08,000 Sundry Creditors 48,000 Bills Receivable 72,000 5,88,000 5,88,000 The joint stock company was started with a capital of Rs.12,00,000 divided […]

X Ltd. was incorporated for taking over the business of Y from 1 April 2011. The following was the balance sheet of Y as on 31 March 2011: Liabilities Assets Capital 2,01,600 Land & Buildings 3,20,000 Loan Creditors 2,40,000 Plant & Machinery 56,000 Trade Creditors 1,42,400 Furniture 40,000 Sundry Debtors 1,68,000 5,84,000 5,84,000 The company took over the business with fixed assets and loans on […]

Model: Pre- and post-incorporation profits (statement method) time and sales ratios and allocation Thambu Ltd. was registered on 1 October 2009 to acquire the running business of Shetty & Co. with effect from 1 April 2009. The following was the profit and loss account of the company as on 31 March 2010: Particulars Particulars To Office Expenses 70,000 By Gross Profit b/d 3,00,000 To Formation […]

Model: Statement method. (Time and sales ratios; allocation and actual) Shiva Co. Ltd. was incorporated on 31 July 2009 to acquire the business of Bhagya & Co. as on 1 April 2009. The books of accounts disclosed the following on 31 March 2010: Sales for the year were Rs.24,20,000 (From 1 April 2009 to 31 July 2009 6,05,000; from 1 August 2009 to 31 March […]

Chase runs a sandwich shop. She is compiling her end-of-year financial statements and wants your advice on a number of items: (a)She has a high degree of customer loyalty and wants to include this within the value of the business overall. She proposes including a value for goodwill on her balance sheet – in order to represent the estimated selling price of the business, which […]

Model: Statement method and weighted sales ratio) A company was incorporated on 18 May 2010 to take over a business from the proceeding 1 January. The accounts were made up to 31 December 2010 as usual and the trading and profit and loss account gave the following results: Particulars Particulars To Opening Stock 1,00,000 By Sales 12,00,000 To Purchases 8,00,000 By Closing Stock 1,00,000 To […]

Ajay & Co. Ltd. was incorporated to acquire the business of Vivek whose balance sheet was as follows: Liabilities Assets Creditors 24,000 Land 1,44,000 Capital 4,80,000 Furniture 30,000 Stock 2,34,000 Debtors 54,000 Bank 42,000 5,04,000 5,04,000 The purchase consideration was agreed at Rs.6,00,000 which was to be paid as: 16,800 equity shares of Rs.20 each Rs.2,04,000 in preference shares of Rs.100 each and the balance […]

The following data relate to the financial records of Bellwood Ltd, a manufacturer, for the year ended 30 June 2019. £ Inventory of raw materials as at 1 July 2018 15,665 Inventory of work-in-progress as at 1 July 2018 24,411 Purchases of raw materials 298,080 Direct power 11,180 Direct labour 301,500 Royalties 5,560 Supervisory wages 56,110 Factory rent 17,891 Machinery depreciation 6,600 Factory maintenance 4,513 […]

A company was formed with an authorized capital of Rs.30,00,000 divided into 1,50,000 equity shares of Rs.100 each, 15,000 9% preference shares of Rs.100 each to purchase the going concern of M/s Raju & Co. the balance sheet of which stood as follows: Liabilities Assets Bills Payable 21,000 Cash 27,000 Creditors 38,400 Debtors 45,000 Capital 7,92,600 Stock 2,10,000 Machinery 3,00,000 Buildings 2,70,000 8,52,000 8,52,000 The […]