Case Study Questions

Amrita and Kalyani are partners sharing profits in the ratio of $3:2$. They decide to expand the business by admitting Suraj as a new partner for a $\frac{1}{4}\text{th}$ share. Suraj's share of premium for goodwill is valued at $\text{Rs. }90,000$, which he pays to compensate Amrita and Kalyani in an agreed ratio of $1:4$.The firm's books provide the following information on that date:

The claim against the Workmen Compensation Fund is determined to be $\text{Rs. }2,00,000$, and an existing goodwill balance appears in the books at $\text{Rs. }60,000$.Calculate the respective shares of Amrita and Kalyani in the revaluation profit.

Amrita and Kalyani are partners sharing profits in the ratio of $3:2$. They decide to expand the business by admitting Suraj as a new partner for a $\frac{1}{4}\text{th}$ share. Suraj's share of premium for goodwill is valued at $\text{Rs. }90,000$, which he pays to compensate Amrita and Kalyani in an agreed ratio of $1:4$.The firm's books provide the following information on that date:

The claim against the Workmen Compensation Fund is determined to be $\text{Rs. }2,00,000$, and an existing goodwill balance appears in the books at $\text{Rs. }60,000$.How will the premium for goodwill brought in by Suraj be distributed between Amrita and Kalyani?

XYZ Ltd. operates in the FMCG sector in the South Indian market. To expand into Northern India, the company raises an additional capital of $\text{Rs. }20,00,000$. It raises $\text{Rs. }12,00,000$ by issuing $10\%$ Debentures of $\text{Rs. }100$ each at a discount of $10\%$, redeemable after $6$ years. The remaining funds are raised by issuing perpetual $5\%$ Debentures of $\text{Rs. }8,00,000$ of $\text{Rs. }100$ each at a $15\%$ premium. After six years of successful operations, the company takes a loan of $\text{Rs. }5,00,000$ from PNB, pledging $5\%$ Debentures of $\text{Rs. }8,00,000$ as collateral security. The loan is fully repaid within two years.When a company records the issue of debentures as collateral security using the journal entry method, what amount should be debited to the "Debenture Suspense Account"?

Amrita and Kalyani are partners sharing profits in the ratio of $3:2$. They decide to expand the business by admitting Suraj as a new partner for a $\frac{1}{4}\text{th}$ share. Suraj's share of premium for goodwill is valued at $\text{Rs. }90,000$, which he pays to compensate Amrita and Kalyani in an agreed ratio of $1:4$.The firm's books provide the following information on that date:

The claim against the Workmen Compensation Fund is determined to be $\text{Rs. }2,00,000$, and an existing goodwill balance appears in the books at $\text{Rs. }60,000$.What is Amrita's share in the unallocated balance of the Workmen Compensation Fund?

XYZ Ltd. operates in the FMCG sector in the South Indian market. To expand into Northern India, the company raises an additional capital of $\text{Rs. }20,00,000$. It raises $\text{Rs. }12,00,000$ by issuing $10\%$ Debentures of $\text{Rs. }100$ each at a discount of $10\%$, redeemable after $6$ years. The remaining funds are raised by issuing perpetual $5\%$ Debentures of $\text{Rs. }8,00,000$ of $\text{Rs. }100$ each at a $15\%$ premium. After six years of successful operations, the company takes a loan of $\text{Rs. }5,00,000$ from PNB, pledging $5\%$ Debentures of $\text{Rs. }8,00,000$ as collateral security. The loan is fully repaid within two years.When issuing the $10\%$ debentures of $\text{Rs. }12,00,000$ at a $10\%$ discount, what amount should be debited to the "Discount on Issue of Debentures A/c" if all money is received in a single installment?

XYZ Ltd. operates in the FMCG sector in the South Indian market. To expand into Northern India, the company raises an additional capital of $\text{Rs. }20,00,000$. It raises $\text{Rs. }12,00,000$ by issuing $10\%$ Debentures of $\text{Rs. }100$ each at a discount of $10\%$, redeemable after $6$ years. The remaining funds are raised by issuing perpetual $5\%$ Debentures of $\text{Rs. }8,00,000$ of $\text{Rs. }100$ each at a $15\%$ premium. After six years of successful operations, the company takes a loan of $\text{Rs. }5,00,000$ from PNB, pledging $5\%$ Debentures of $\text{Rs. }8,00,000$ as collateral security. The loan is fully repaid within two years.How are the $10\%$ debentures (repayable after $6$ years) classified based on their redemption terms?

XYZ Ltd. operates in the FMCG sector in the South Indian market. To expand into Northern India, the company raises an additional capital of $\text{Rs. }20,00,000$. It raises $\text{Rs. }12,00,000$ by issuing $10\%$ Debentures of $\text{Rs. }100$ each at a discount of $10\%$, redeemable after $6$ years. The remaining funds are raised by issuing perpetual $5\%$ Debentures of $\text{Rs. }8,00,000$ of $\text{Rs. }100$ each at a $15\%$ premium. After six years of successful operations, the company takes a loan of $\text{Rs. }5,00,000$ from PNB, pledging $5\%$ Debentures of $\text{Rs. }8,00,000$ as collateral security. The loan is fully repaid within two years.What are debentures that are perpetual in nature and have no fixed maturity date for repayment called?

XYZ Ltd. operates in the FMCG sector in the South Indian market. To expand into Northern India, the company raises an additional capital of $\text{Rs. }20,00,000$. It raises $\text{Rs. }12,00,000$ by issuing $10\%$ Debentures of $\text{Rs. }100$ each at a discount of $10\%$, redeemable after $6$ years. The remaining funds are raised by issuing perpetual $5\%$ Debentures of $\text{Rs. }8,00,000$ of $\text{Rs. }100$ each at a $15\%$ premium. After six years of successful operations, the company takes a loan of $\text{Rs. }5,00,000$ from PNB, pledging $5\%$ Debentures of $\text{Rs. }8,00,000$ as collateral security. The loan is fully repaid within two years.The $5\%$ debentures of $\text{Rs. }8,00,000$ ($\text{Rs. }100$ face value) were issued at a $15\%$ premium. The payment terms are $\text{Rs. }25$ on application, $\text{Rs. }50$ on allotment, and $\text{Rs. }40$ on the first and final call. Calculate the total amount credited to the "Securities Premium Account".

Amrita and Kalyani are partners sharing profits in the ratio of $3:2$. They decide to expand the business by admitting Suraj as a new partner for a $\frac{1}{4}\text{th}$ share. Suraj's share of premium for goodwill is valued at $\text{Rs. }90,000$, which he pays to compensate Amrita and Kalyani in an agreed ratio of $1:4$.The firm's books provide the following information on that date:

The claim against the Workmen Compensation Fund is determined to be $\text{Rs. }2,00,000$, and an existing goodwill balance appears in the books at $\text{Rs. }60,000$.What journal entry must be passed to write off the existing goodwill appearing in the books?

Amrita and Kalyani are partners sharing profits in the ratio of $3:2$. They decide to expand the business by admitting Suraj as a new partner for a $\frac{1}{4}\text{th}$ share. Suraj's share of premium for goodwill is valued at $\text{Rs. }90,000$, which he pays to compensate Amrita and Kalyani in an agreed ratio of $1:4$.The firm's books provide the following information on that date:
$$\begin{array}{lrr}\text{Particulars}& \text{Book Value (Rs.)}& \text{Revalued Figure (Rs.)}\\ \text{Machinery}& 25,00,000& 27,00,000\\ \text{Land}& 10,00,000& 50,00,000\\ \text{Computers}& 2,50,000& 50,000\\ \text{Workmen Compensation Fund}& 5,00,000& -\end{array}$$
The claim against the Workmen Compensation Fund is determined to be $\text{Rs. }2,00,000$, and an existing goodwill balance appears in the books at $\text{Rs. }60,000$.What journal entry must be passed to write off the existing goodwill appearing in the books?

Case Study Information:Pragya Madan, an ex-Indian hockey player, decided to start a hockey academy named "Bright Hockey Academy" on 1st April 2022 to train young girls.Her neighbor, Ishwar, died and willed his land to start the academy.Her father, Ramkumar, spent ₹20,00,000 for the construction of a pavilion.100 young girls joined the academy and paid an annual subscription of ₹1,000 each.10 members paid a single amount of ₹25,000 each to obtain life membership.Hockey sticks and balls purchased during the year amounted to ₹27,000. Closing stock of these items is nil.Question: The Life Membership fees received from the 10 members is:

Amrita and Kalyani are partners sharing profits in the ratio of $3:2$. They decide to expand the business by admitting Suraj as a new partner for a $\frac{1}{4}\text{th}$ share. Suraj's share of premium for goodwill is valued at $\text{Rs. }90,000$, which he pays to compensate Amrita and Kalyani in an agreed ratio of $1:4$.The firm's books provide the following information on that date:
$$\begin{array}{lrr}\text{Particulars}& \text{Book Value (Rs.)}& \text{Revalued Figure (Rs.)}\\ \text{Machinery}& 25,00,000& 27,00,000\\ \text{Land}& 10,00,000& 50,00,000\\ \text{Computers}& 2,50,000& 50,000\\ \text{Workmen Compensation Fund}& 5,00,000& -\end{array}$$
The claim against the Workmen Compensation Fund is determined to be $\text{Rs. }2,00,000$, and an existing goodwill balance appears in the books at $\text{Rs. }60,000$.What is Amrita's share in the unallocated balance of the Workmen Compensation Fund?

Amrita and Kalyani are partners sharing profits in the ratio of $3:2$. They decide to expand the business by admitting Suraj as a new partner for a $\frac{1}{4}\text{th}$ share. Suraj's share of premium for goodwill is valued at $\text{Rs. }90,000$, which he pays to compensate Amrita and Kalyani in an agreed ratio of $1:4$.The firm's books provide the following information on that date:
$$\begin{array}{lrr}\text{Particulars}& \text{Book Value (Rs.)}& \text{Revalued Figure (Rs.)}\\ \text{Machinery}& 25,00,000& 27,00,000\\ \text{Land}& 10,00,000& 50,00,000\\ \text{Computers}& 2,50,000& 50,000\\ \text{Workmen Compensation Fund}& 5,00,000& -\end{array}$$
The claim against the Workmen Compensation Fund is determined to be $\text{Rs. }2,00,000$, and an existing goodwill balance appears in the books at $\text{Rs. }60,000$.Calculate the respective shares of Amrita and Kalyani in the revaluation profit.

Amrita and Kalyani are partners sharing profits in the ratio of $3:2$. They decide to expand the business by admitting Suraj as a new partner for a $\frac{1}{4}\text{th}$ share. Suraj's share of premium for goodwill is valued at $\text{Rs. }90,000$, which he pays to compensate Amrita and Kalyani in an agreed ratio of $1:4$.The firm's books provide the following information on that date:
$$\begin{array}{lrr}\text{Particulars}& \text{Book Value (Rs.)}& \text{Revalued Figure (Rs.)}\\ \text{Machinery}& 25,00,000& 27,00,000\\ \text{Land}& 10,00,000& 50,00,000\\ \text{Computers}& 2,50,000& 50,000\\ \text{Workmen Compensation Fund}& 5,00,000& -\end{array}$$
The claim against the Workmen Compensation Fund is determined to be $\text{Rs. }2,00,000$, and an existing goodwill balance appears in the books at $\text{Rs. }60,000$.How will the premium for goodwill brought in by Suraj be distributed between Amrita and Kalyani?

Case Study Information:Moonrise Co. is authorized with a Share Capital of ₹5,00,000. It issued 10,000 equity shares of ₹12 each (Face Value ₹10 + Premium ₹2).The money was payable as:₹4 on Application₹4 on Allotment (including premium of ₹2)₹4 on 1st and final callApplications were received for 12,000 shares and the directors decided to make a pro-rata allotment. Mr. Rashidi, an applicant for 120 shares, failed to pay the allotment and call money. Mr. Shantanu, a holder of 200 shares, failed to pay the call money. All these shares were forfeited. Out of the forfeited shares, 150 shares (including all of Rashidi's shares) were reissued at ₹8 per share.Question: The amount transferred to the Capital Reserve Account will be:

Case Study Information:Moonrise Co. is authorized with a Share Capital of ₹5,00,000. It issued 10,000 equity shares of ₹12 each (Face Value ₹10 + Premium ₹2).The money was payable as:₹4 on Application₹4 on Allotment (including premium of ₹2)₹4 on 1st and final callApplications were received for 12,000 shares and the directors decided to make a pro-rata allotment. Mr. Rashidi, an applicant for 120 shares, failed to pay the allotment and call money. Mr. Shantanu, a holder of 200 shares, failed to pay the call money. All these shares were forfeited. Out of the forfeited shares, 150 shares (including all of Rashidi's shares) were reissued at ₹8 per share.Question: The total amount of Securities Premium Reserve credited at the time of the allotment of shares will be:

Case Study Information:Moonrise Co. is authorized with a Share Capital of ₹5,00,000. It issued 10,000 equity shares of ₹12 each (Face Value ₹10 + Premium ₹2).The money was payable as:₹4 on Application₹4 on Allotment (including premium of ₹2)₹4 on 1st and final callApplications were received for 12,000 shares and the directors decided to make a pro-rata allotment. Mr. Rashidi, an applicant for 120 shares, failed to pay the allotment and call money. Mr. Shantanu, a holder of 200 shares, failed to pay the call money. All these shares were forfeited. Out of the forfeited shares, 150 shares (including all of Rashidi's shares) were reissued at ₹8 per share.Question: The shares are reissued at a:

Case Study Information:Pragya Madan, an ex-Indian hockey player, decided to start a hockey academy named "Bright Hockey Academy" on 1st April 2022 to train young girls.Her neighbor, Ishwar, died and willed his land to start the academy.Her father, Ramkumar, spent ₹20,00,000 for the construction of a pavilion.100 young girls joined the academy and paid an annual subscription of ₹1,000 each.10 members paid a single amount of ₹25,000 each to obtain life membership.Hockey sticks and balls purchased during the year amounted to ₹27,000. Closing stock of these items is nil.Question: Sports material consumed during the financial year 2022-2023 will be:

Case Study Information:Pragya Madan, an ex-Indian hockey player, decided to start a hockey academy named "Bright Hockey Academy" on 1st April 2022 to train young girls.Her neighbor, Ishwar, died and willed his land to start the academy.Her father, Ramkumar, spent ₹20,00,000 for the construction of a pavilion.100 young girls joined the academy and paid an annual subscription of ₹1,000 each.10 members paid a single amount of ₹25,000 each to obtain life membership.Hockey sticks and balls purchased during the year amounted to ₹27,000. Closing stock of these items is nil.Question: The accounting treatment for the expenditure incurred on the construction of the pavilion (₹20,00,000) is:

Case Study Information (Questions 41-45):Pragya Madan, an ex-Indian hockey player, decided to start a hockey academy named "Bright Hockey Academy" on 1st April 2022 to train young girls.Her neighbor, Ishwar, died and willed his land to start the academy.Her father, Ramkumar, spent ₹20,00,000 for the construction of a pavilion.100 young girls joined the academy and paid an annual subscription of ₹1,000 each.10 members paid a single amount of ₹25,000 each to obtain life membership.Hockey sticks and balls purchased during the year amounted to ₹27,000. Closing stock of these items is nil.Question: The land donated by the deceased neighbor Ishwar under his will is classified as:

Case Study Information (Questions 46-50):Moonrise Co. is authorized with a Share Capital of ₹5,00,000. It issued 10,000 equity shares of ₹12 each (Face Value ₹10 + Premium ₹2).The money was payable as:₹4 on Application₹4 on Allotment (including premium of ₹2)₹4 on 1st and final callApplications were received for 12,000 shares and the directors decided to make a pro-rata allotment. Mr. Rashidi, an applicant for 120 shares, failed to pay the allotment and call money. Mr. Shantanu, a holder of 200 shares, failed to pay the call money. All these shares were forfeited. Out of the forfeited shares, 150 shares (including all of Rashidi's shares) were reissued at ₹8 per share.Question: The Balance Sheet of the company will show the authorized capital of the company as:

Case Study Information:Moonrise Co. is authorized with a Share Capital of ₹5,00,000. It issued 10,000 equity shares of ₹12 each (Face Value ₹10 + Premium ₹2).The money was payable as:₹4 on Application₹4 on Allotment (including premium of ₹2)₹4 on 1st and final callApplications were received for 12,000 shares and the directors decided to make a pro-rata allotment. Mr. Rashidi, an applicant for 120 shares, failed to pay the allotment and call money. Mr. Shantanu, a holder of 200 shares, failed to pay the call money. All these shares were forfeited. Out of the forfeited shares, 150 shares (including all of Rashidi's shares) were reissued at ₹8 per share.Question: The amount of Securities Premium Reserve to be debited at the time of forfeiture of shares will be:

Case Study Information:Pragya Madan, an ex-Indian hockey player, decided to start a hockey academy named "Bright Hockey Academy" on 1st April 2022 to train young girls.Her neighbor, Ishwar, died and willed his land to start the academy.Her father, Ramkumar, spent ₹20,00,000 for the construction of a pavilion.100 young girls joined the academy and paid an annual subscription of ₹1,000 each.10 members paid a single amount of ₹25,000 each to obtain life membership.Hockey sticks and balls purchased during the year amounted to ₹27,000. Closing stock of these items is nil.Question: The amount of recurring subscription revenue credited to the Income and Expenditure Account during the year will be: