1.

(c) Interest on Drawings =Amount of Withdrawal x Number of Monthsx Rate Average Months
100 12
=8000x 12x 15,55 =6,600
100 12
2. (b) 62
3. (d) Both (a) and (c)
Or (c) Number of Debentures = Purchase Consideration 3,60,000
=3,000 Debentures
Face Value + Premium 100 +20
4. (b) To distribute goodwill
1
U (b) C's newprofit share = Old profit share + Share taken from B=+ _3
5 5
D 5

A's new profit share :

e New profit sharing ratio of AandC ==2:3
5 5
5. (a) Amount is received for 7,600 shares, i.e. 7,600 x10=76,000
 of the
prohibited to make anyinvitation to the public to subscribe tor any securities
0. (C) A private company is
Company.
7. (c) Interest on Drawings x55/12 =?1,375
x10% x 65/12 =71,625; Bablu = (2,500 x 12) x10%
Raju=(2,500 x 12)
Profits = 500.000 + (1,625 + 1,375) 50,000-25,000=4,28,000
Þ. (d) Distributable
4.28,000 x 10% =42,800
Iransferred to Reserve Fund = the business but provide capital and share profits and
partners do not take any partinthe conduct of
9. (b) Sleeping
losses inthe agreed ratio Realisation Account
10. (d) Dr Particulars Amt ()
Particulars Amt (?)
1,75,000
To Sundry Assets 1,60,000 By Sundry Liabilities
1,25,000
1,40,000 By Bank
To Bank 3,00,000
3,00,000

5
120,000 =40,000: Amount of interest =120,000x 100 =76,000
Or (c) Yearly instalment = 3
Total amount payable = 40,000 + 6,000 = 46,000
1. (b) 14 days Or (a) 12% p.a.
12. (c) Assertion (A)is true, but Reason (R) is false
13. (d) Goodwill =Number of Years' Purchase x Average Profits
53,750 =Number of Years' Purchase x 21,500
53,750 =2.5
Number of Years' Purchase =
21500
110,000
14. (d) New value of land and buildings = 1,00,000 + 10% of 1,00,000 =
15. (c) Both (a) and (b) Or (b) Only )
=-=
16. (c) Q's Sacrifice/(Gain) =Old Ratio - New Ratio 3 3 3
1
because it is sacrificed)
Q's share of goodwillto be adjusted =x15000=5,000 (credited
JOURNAL
17.
Particulars LF Amt (Dr) Amt (Cr)
Date
2022
Nitin's Capital A/c Dr 3,500
Apr 1
Megha's Capital A/c Dr 1,500
ToPriyanka's Capital A/c 1,500
3,500
To Ankit's Capital A/c
(Being the adjustment of interest on capital omitted in previous year).

Working Notes
1 Statement Showing Adjustment
Particulars Nitin ()Megha () Priyanka () Ankit () Total ()
Amount to be Credited
8,000 10,000| 26,000
Interest on Capital @ 5% 3,000| 5,000
Amount to be Debited
Share of profit (26,000 in 1: 1:1:1) 6,500 6,500 6,500 6,500 26,000
3,500 (Dr) 1,500 (Dr) 1,500 (Cr) 3,500 (Cr)
 2 Calculation of Interest on Capital
5 5
Nitin = 60,000 x = 3000 ; Megha = 1,00,000 x =5,000
100 100
5 5
Priyanka =1,60,000 x. 100 &000: Ankit =2,00,000x 100 = {10,000

18. () Balance Sheet (Extract)

as at 1st April, 2022
Particulars Note No. Amt ()
IEQUITY AND LIABILITIES
1. Shareholders' Funds
() Share Capital 1 3,38,500
(i) Reserves and Surplus 2 3,000
() Notes to Accounts

Particulars Amt )
1. Share Capital
Authorised Share Capital
50,000 Equity Shares of 10 each 5,00,000
Issued Share Capital
45,000 Equity Shares of 10 each 4,50,000
Subscribed Capital
Subscribed but not Fully Paid-up
42,250 Equity Shares of 8 each 3,38,000
( Calls-in-arrears (500 x 2) (1,000)
3,37,000
(+) Forfeited Shares (250 x 6) 1,500 3,38,500
2. Reserves and Surplus
Capital Reserve [4,500 (750 x 6) 1,500 (750 x 2)] 3,000

JOURNAL

Date Particulars LF Amt (Dr) Amt (Cr)

Bank A/c (4,000 x 150) Dr 6,00,000
Allotment Ac
To Debenture Application and 6,00,000
debentures)
(Being application money received on 4,000
Dr
Debenture Application and Allotment A/c 6,00,000
100)
To 12% Debentures A/c (3,000 x 3,00,000
A/c (3,000 x 50)
To Securities Premium Reserve 1,50,000
To Bank A/c (1,000 x150) 1,50,000
to 12% debentures account
(Being application money transferred
and excess money refunded)
Profit and Loss Account
19, December, 2022
Dr for the year ending on 31st
Amt () Particulars Amt ()
Particulars
By Profit before any Interest 1,800
To Interest on Loan By Net Loss (Transferred to capital account)
1,440
X X 108
540 1,980
Y 72 180
1,980 1,980
 Working Notes
6 6
1. Interest on A's loan = 48,000 x X (July to December) = 1,440
100 12
6
2. Interest on B's loan = 18,000 x (July to December) = 540
100 12

Value Point
In the absence of any information, interest on loan is paid @ 6% p.a.
20. Dr Ram's Capital Account Cr
Particulars Amt ()
Particulars Amt ()
To Ram's Loan Ac
9,629.17 By Balance b/d 5,000.00
By Interest on Capital A/c 62.50
By Reserve Fund A/c 1,066.67
By Hari's Capital A/c 1,750.00
By Shyam's Capital A/c 1,750.00
9,629.17 9,629.17

Working Notes
between Hari and Shyam in 1:1 ratio, i.e
1. Ram's share of goodwill, i.e. 3,500 to be distributed
Hari =3,500 x1/2= 1750; Shyam =3500 >x 1/2= 1750
2. Reserve fund=3200 x1/3= 1,066.67
JOURNAL
Or
Particulars LF Amt (Dr) Amt (Cr)
Date
A's Capital A/c (30,000 x 1/6) Dr 5,000
B's Capital A/c (30,000 x 5/6) Dr 25,000
30,000
To C's Capital Ac
(Being C's share of goodwill adjusted to the capital accounts
of A and B in their gaining ratio of 1:5)
Working Notes
1.Calculation of Gaining Ratio
Gaining Ratio = NewShare -Old Share
A =l.1_3-21 B=_2_9-4 5
6 12 12 4 6 12 12

1 5
Gaining ratio = 1:5
12 12
2. Calculation of Hidden Goodwil Amt ()
Amount agreed to be paid in full settlement 2,50,000
() C's capital after all adjustments (2,20,000)
30,000
Hidden goodwill

Value Point hiddengoodwill

In the absence of any information related to goodwill, then this will be the case of

21. JOURNAL Amt(Cr)

LF Amnt (Dr)
Date Particulars 50,000 30,
000
Dr
Profit and Loss A/c 20,000
To Tim's Capital A/c
To Rim's Capital AWc
(Being transfer of profit and loss balance to old partners' capital accounts)
 Date Particulars LF Amt (Dr)
Tim's Current A/c Amt (Cr)
Dr 42,000
To Tim's Capital A/c
To Rim's Capital A/c 28,000
(Being adjustment for goodwill in sacrificing ratio of 2:1) 14,000
Working Notes
1. Calculation of Sacrificing Ratio
Share surrendered by Tim =x 1_1, Share
5 3 5 surrendered by Rim = 10
1 1 2.1
Sacrificing ratio = 2:1
5 10 10 10
2. Calculation of Tim's Share 1 2+1 3
10 10 10 10
3. Valuation of Goodwill
Average profit (2000) +60,000+ (5,000) + 1,50,000 + 1,70,000
5 =770,000
Goodwill at 2 years' purchase =70,000 x2=1,40,000
Tim's share of goodwill= 1,40,000 x 3 -=42,000
10
22. JOURNAL
Date Particulars LF Amt (Dr) Amt (Cr)
Share Capital A/c (1200 x 10) Dr 12,000
Securities Premium Reserve A/c (1200 x 2) Dr 2,400
To Forfeited Shares A/c
2,880
To Share Allotment A/c (WN 1) 5,520
To Share First and Final Call A/c (1200 x 5) 6,000
(Being 1,200 shares forfeited for non-payment of allotment and call
money)
Bank A/c (400 x 9) Dr 3,600
Forfeited Shares A/c Dr 400
To Share Capital A/c 4,000
(Being 400 forfeited shares re-issued as fully paid-up for 9
per share)
Forfeited Shares A/c Dr 560
To Capital Reserve A/c (WN 2) 560
(Being the transfer of profit on re-issue to capital reserve)

Worki1. Calculation
ng Notes of the Amount Due but not Paid on Allotment Amt ()
) Total number of shares applied 1,440
2,880
() Total money paid on application (1,440 x2) 480
() Excess application money [2,880 -(1200 x 2)]
((V) Total amount due on allotment (1200 x 5) 6,000
5,520
() Amount due but not paid on allotment (6,000 - 480)
2. Amount Transferred to Capital Reserve
2,880
Amount forfeited on 1,200 shares
960
*. Amount forfeited on 400 shares = 2,880/1200 x 400
(400)
H DiscOunt allowed on 400 shares re-issued
reserve 560
Ot on re-issue to be transferred to capital
23. () JOURNAL
Date Particulars
LF Amt (Dr) Amt (Cr)
2020
Dr 45,00,000
Apr 1 Bank A/c
To Debentures Application and Allotment A/c 45,00,000
(Being application money received)
Dr 45,00,000
Apr 1 Debentures Application and Allotment A/c
Dr 7,50,000
Loss on lssue of Debentures A/c
To10% Debentures Alc 50,00,000
To Premium on Redemption of Debentures Ac 2,50,000
(Being application money transferred)
2021
Mar 31Statement of Profit and LOss Dr 7,50,000
To Loss on Issue of Debentures Ac 7,50,000
(Loss on issue of debentures written-off)

(ü) JOURNAL
Date Particulars LF Amt (Dr) Amt (Cr)
(a) Plant A/c Dr 10,40,000
To Suraj and Sons 10,40,000
(Being plant is purchased from Suraj and Sons for 10,40,000)
(b) Suraj and Sons Dr 10,40,000
To 12% Debentures A/c
6,00,000
To Securities Premium Reserve Ac
90,000
To Bank A/c
3,50,000
(Being 6,000, 12% debentures are isSued @ 15% premium with
73,50,000 by bank to the Suraj and Sons for the consideration of
plant purchased)
Working Note
12% Debentures account = 6000 x
100=7600.000, Securities premium reserve account= 6000 x 15=90,000
Payable to Suraj and Sons =6,00,000 + 90,000 +3,50,000= 10,40,000
24. Dr
Revaluation Account Cr
Particulars Amt (3)
To Furniture A/c Particulars Amt )
To Stock A/c 40,000| By Building A/c 1,50,000
To Revaluation (Profit) Transterred to
50,000| By Creditors A/c 5,000
Sohan's Capital A/c 39,000
Mohan's Capital A/c 26,000 65,000
1,55,000| 1,55,000
Dr
Partners' Capital Account C
Particulars Sohan Mohan Rohan
Sohan Mohan Rohan
Particulars ) )
To Cash AWc (Premium) 36,000 24,000 By Balance b/d 3,00,000| 2,00,000
To Balance c/d 5,19,000 3,46,000 2,00,000|By General Reserve Ac 1,20,000 80,000
By Cash A/c 2,00,000
By Premium for
Goodwill Ac (3:2) 72,000 48,000
 Sohan Mohan Rohan Sohan Mohan Rohan
Particulars Particulars
()
By Workmen
Compensation
Fund Ac 24,000 16,000
By Revaluation A/c 39,000 26,000
(Profit)
5,55,0003,70,000 2,00,000 5,55,000 3,70,000 2,00,000

Dr Cash Account Cr

Particulars Amt () Particulars Amt ()

To Balance b/d 85,000 By Sohan's Capital A/c (Premium) 36,000
To Rohan's Capital A/c 2,00,000 By Mohan's Capital A/c (Premium) 24,000
To Premium for Goodwil A/c 1,20,000 By Creditors A/c 35,000
To Bank Loan A/c 40,000 By Bills Payable A/c 40,000
By Balance c/d 3,10,000

4,45,000 4,45,000

Balance Sheet
as at lst April, 2022
Liabilities Amt () Assets Amt ()
Sundry Creditors (60,000 40,000) 20,000 Land and Building 4,50,000
Bank Loan 40,000 (3,00,000 + 1,50,000)
Capital Acs Furniture (1,60,000 40,000) 1,20,000
Sohan 5,19,000 Bills Receivable 40,000
Mohan 3,46,000 Debtors 55,000
Rohan 2,00,000 10,65,000 Stock (2,00,000- 50,000) 1,50,000
Bank 3,10,000
11,25,000 11,25,000

Working Notes
1. General reserve =2,00,000 (3: 2)
Sohan =x2,00,000 =1,20,000 ; Mohan =x2,00,000
5
=* 80,000

2. Calculation of New Profit Sharing Ratio

1_5-1 4
Rohan's share = Remaining share =1-=
5 5
4 8
Sohan's share = X 12. Mohan's share=5 x5;
25
5 25
Rohan's share =
1
X
5
New profit sharing ratio =12:8:5
5^5 25
Or
Revaluation Account C
Dr
Particulars Amt ()
Amt ()
Particulars
260 By Buildings Ac 26,000
lo Provision for Doubtful Debts AWC
15,600|
10 Plant and Machinery AG
To Profit Transferred to
V's Capital Ac 5,070
W's Capital A/c 2,535|
2,535 10,140|
X's Capital A/c 26,000 26,000
 Dr Partners' Capital Account C
Particulars V () W ()
Particulars V) W ()
9,000 By Balance b/d 75,000 50,000
To V's Capital A/c 9,000 700 350
55,000
To V's Loan A/c 98,770 By Profit and Loss A/c 350
5,070 2,535
To Balance c/d 43,885 48,885 By Revaluation A/c 2,535
(Profit)
By W's Capital Ac 9,000
By X's Capital A/c 9,000
98,770 52,885
98,770 52,885 57,885 57,885
Balance Sheet
as at 3 1st December, 2022
Liabilities Amt () Assets Ant
Bills Payable 10,600 Buildings 96,000
Sundry Creditors
11,000 Plant and Machinery 62,400
V's Loan
98,770| Stock
22,000
16,000
Capital Acs Debtors
W 43,885 ( Provision for Doubtful Debts (660) 21,340
X 48,885 92,770 Bank 7,500
Cash 9,900
2,13,140| 2,13,140

Working Notes
1.Calculation of Gaining Ratio
Gaining Ratio = New Share -Old Share
1 1 2-11, X's Gain = 1 12-1 1
W's Gain =
2 4 4 2 4 4

Gaining ratio of Wand X=1:1

2. Treatment of Goodwill
2
V's share of goodwill =36,000 >x=*18000
4

Date Particulars LF Amt (Dr) Amt (Cr)

W's Capital A/c D 9,000
X's Capital A/c Dr 9,000
To V's Capital A/c 18,000
(Being V's share of goodwill adjusted among W and X
in their gaining ratio)

25. JOURNAL
Date Particulars LF Amt (Dr) Amt (Cr)
() (a) Workmen Compensation Reserve A/c Dr 3,000
To Realisation A/c 3,000
(Being the balance of workmen compensation reserve transferred to
realisation account)
(b) Realisation A/c D 3,000
3,000
To Bank A/c
(Being the liability on account of workmen compensation paid)
(i) Realisation A/c D 750
To Bank A/c 750

(Being the unrecorded liability on account of workmen compensation

paid)
 Date Particulars LF Amt (Dr) Amnt (Cr)
Bank A/c Dr 40,000
(i) (a)
To Realisation AG 40,000
(Being the building realised)
(b) Realisation A/c Dr 800
To Bank A/c 800
(Being the commission paid to broker @ 2% of 40,000)
(iv) 150 3,000
Bank AVc(2.000 x 100
Dr

To Realisation A/c 3,000

(Being the investments realised)
26. JOURNAL
Date Particulars LF Amt (Dr) Amt (Cr)
Bank Ac (26,000x2) Dr 52,000
To Equity Share Application A/c 52,000
(Being share application money received for 26,000 shares
@2per share)
Equity Share Application A/c Dr 52,000
To Equity Share Capital Ac (20,000x2) 40,000
To Equity Share Allotment A/c (2,000 x 2) 4,000
To Bank A/c (4,000 x 2) 8,000
(Being application money @2per share on 20,000 shares
transferred to share capital account and money of 4,000 shares
returned, remaining transferred to share allotment)
Equity Share Allotment A/c Dr 80,000
To Equity Share Capital A/c (20,000 x 3) 60,000
To Securities Premium Reserve A/c (20,000x 1) 20,000
(Being share allotment money due on 20,000 shares @ 4
per share including 1 securities premium reserve)
Bank A/c (80,000 4,000) Dr 76,000
To Equity Share Allotment A/c 76,000
(Being share allotment money received for all the shares after
adjustment of money transferred from share application)
Equity Share First Call A/c Dr 60,000
To Equity Share Capital A/c (20,000x 3) 60,000
(Being share first call money due on 20,00 shares @3 per share)
Bank A/c (20,000 x 3) Dr 60,000
To Equity Share First Call A/c 60,000
(Being share first call received for 20,000 shares @3 per share)
Equity Share Second and Final Call A/c Dr 40,000
To Equity Share Capital A/c (20,000 x2) 40,000
(Being share second and final call money due on 20,000 shares
@2 per share)
Bank A/c (19,500 x2) Dr 39,000
To Equity Share Second and Final Call A/c 39,000
(Being share second and final call money received for 19,500
shares @2 per share)
Equity Share Capital A/c (500 x 10) Dr 5,000
To Equity Share Second and Final Call A/c (500 x 2) 1,000
To Equity Share Forfeiture A/c (500 x 8) 4,000
forfeited for
(Being 500 shares @10 per share fully called-up share)
non-payment of second and final call @ 2 per
 Particulars
LF Amt (Dr) Amt (Cr)
Date
Dr 2,700
Bank A/c (300 x 9) Dr 300
Equity Share Forfeiture Ac (300 × 1) 3,000
To Equity Share Capital A/c (300 x 10)
9 per share fully
(Being 300 shares @ 10 each re-issued for
paid-up)
Dr 2.100
Equity Share Forfeiture A/c (WN) 2,100
To Capital Reserve A/c
account
(Being balance of 300shares in share forfeiture
adjustment)
transferred to capital reserve account, after
Working Note
Calculation of Capital Reserve
Amt ()
forfeiture of 300 shares (300 x 8) 2,400
Money transferred to share forfeiture account against
forfeiture account (300 x 1) (300)
() Money adjusted on re-issue of 300 shares from
Amount transferred to capital reserve account 2,100
JOURNAL
Or
Particulars LF Amt (Dr) Amt (Cr)
Date
Dr 60,000
Bank A/c (30,000 x 2)
To Share Application Alc 60,000
(Being the application money received on 30,000 shares
@2 per share)
Share Application A/c (30,000 x 2) D 60,000
To Share Capital A/c (20,000 x2) 40,000
To Share Allotment A/c (4,000 x 2) 8,000
To Bank A/c (6,000 x 2) 12,000
(Being the application money adjusted and surplus refunded)
Share Allotment Ac (20,000 x 5) Dr 1,00,000
ToShare Capital A/c (20,000 x 3) 60,000
To Securities Prenmium Reserve A/c (20,000 x 2) 40,000
(Being the allotment due @5 on 20,000 shares)
Bank A/c (WN 2) Dr 90,160
To Share Allotment A/c 90,160
(Being the receipt of allotment money less Sanchit shares)
Share First Call A/c (20,000 x 3) Dr 60,000
ToShare Capital Ac 60,000
(Being the first call due @3on 20,000shares)
Bank A/c (19,000 x 3) Dr 57,000
To Share First Call A/c 57,000
(Being the receipt of first call money on 20,000 shares less
shares of Sanchit and Parth)
Share Capital A/c (400 x 8) Dr 3,200
Securities Premium Reserve A/c (400 x 2) Dr 800
To Share Allotment A/c (WN 1) 1,840
To Share First Call A/c 1,200
To Forfeited Shares A/c 960
(Being the forfeiture of 400 shares held by Sanchit for non-payment
of allotment money and the first call)
Share Final Call A/C Dr 39,200
To Share Capital A/c (19,600 x 2) 39,200
(Being the amount due on final call @2 per share on 19,600
(20,000- 400) shares)
 Date Particulars LF Amt (Dr) Amt (Cr)
Bank Ac (19,000 x 2) Dr 38,000
To Share Final Call A/c 38,000
(Being the receipt of final call money on 19,600
shares less
Parth's shares)
Share Capital Ac (600 x 10) Dr 6,000
To Share First Call A/c (600 x 3)
1,800
To Share Final Call A/c (600 x 2)
1,200
To Forfeited Shares A/c
3,000
(Being the forfeiture of Parth's 600 shares, for
both calls) non-payment of
Bank Ac (800 x 9) Dr 7,200
Forfeited Shares A/c (800 x 1) Dr 800
To Share Capital A/c 8,000
(Being the re-issue of 800 shares, discount allowed being ?800)
Forfeited Shares A/c Dr 2,160
To Capital Reserve A/c (WN 4) 2,160
(Being the profit on re-issue of 800 shares transferred to
capital reserve)
Working Notes
1. Calculation of Amount not Paid by Sanchit on Allotment
Number of shares applied by Sanchit
20,000 shares allotted to applications for 24,000
400 shares allotted to applications for 24,000/20,000 × 400 = 480 shares
Amt ()
Sanchit paid only application money @2 on 480 shares (480 >x 2) 960
(H Application money due on shares allotted (400 x 2) (800)
Excess application money adjusted on allotment 160
Allotment money due on 400 shares @ 5 (400x 5) 2,000
() Excess money transferred from share application account (160)
Amount not paid by Sanchit on allotment/calls-in-arrears 1,840
2. Allotment money received = 1,00,000 - 8,000 - 1,840 = 90,160
3. Since. the guestion is silent as to utilisation of 160 (exCess received on application from Sanchit) between share
capital and securities premium reserve, it has been assumed that the entire excess of ?160 is exclusivelvfor share and
hence, credited to forfeited share account.
4. The amount of 2,160 transferred from forfeited shares account to capital reserve has been calculated ae ndar
Amount relating to shares of Sanchit (480 x 2) 960
() Discount allowed on re-issue (400) 560
Amount relating to shares of Parth (400 x 5) 2,000
(- Discount allowed on re-issue of 400 shares (400) 1,600
2,160
Note Since. 200 shares of Parth have not yet been re-isSUed, the torreited amount in respect of these shares remain in
the forfeited shares accOunt.

Common Students uSually make mistake between shares apPplied or shares allotted. Carefully check whether share
Mistake anplied or share allotted is given in the question and calculate accordingly the one not given, according
to the formula.

27, (a) Both the statements are correct Or (a) decrease

28. (a) Operating Ratio(%) Or (a) It will increase
29. (a) Cash Generated from Operations Amt ()
2,00,000
Operating Profit 22,000
(+) Depreciation 2,22,000
(75,000)
( Increase in Inventory 1,47,000
27,200
(+) Increase in Trade Payables
1,74,200
Account C
Provision for Income Tax
30. (b) Dr Particulars
Amt () Amt (
Particulars
3,50,000 By Balance b/d 3,00,000
To Bank A/c (Bal. Fig. being tax paid)
4,20,000 By Statement of Profit and Loss 4,70,000
To Balance c/d
(Provision made during the year)
7,70,000 7,70,000

31. Items Major Heads Sub-heads

S. No.
Computer Software Under development Non-current Assets Fixed Assets (Intangible
Asset underdevelopment)
Unclaimed Dividends Current Liabilities Other Current Liabilities
(i)
Provision for Tax Current Liabilities Short-term Provisions
(i)
32. Common Size Income Statement
for the year ended 31st March, 2021 and 2022
% of Revenue from
Absolute Amounts
Operations
Particulars
2021 (3) 2022 () 2021 (%) 2022 (%)
1. Revenue from Operations 15,00,000 20,00,000 100 100

||, Other Income 1,50,000 2,00,000 10 10

III. Total (| + I) 16,50,000 22,00,000 110 110

53.33 20
V. Expenses 8,00,000 4,00,000
V. Profit (| IV) 18,00,000 56.67 90
8,50,000
28.33 45
Tax @ ( 50% (4,25,000) (9,00,000)
Profit after Tax 28.33 45
4,25,000 9,00,000

33. Inventory Turnover Ratio = Cost of Revenue from Operations (Cost of Goods Sold) (WN)
Average Inventory
let opening inventory be x
15000 Closing Inventory = X-200
3=
X+ X-200 (X+ x-200)
2 Average Inventory= 2
3x + 3x- 600 =30,000
6x =30,600
.:. X=5,100 (Opening Inventory); Closing Inventory =5,100 -200 =4,900.
 Working Note
Let Cost be 100; Add: Profit 20% =20, therefore, Sales =? 120
Cost of Revenue from Operations 18000 x 100 =15,000
120
Or Current Liabilities = 80,000 40,000
2
Quick Assets =40,000x 1.5=760,000
Inventory=Current Assets -Quick Assets = 20,000*
*It is presumed as average inventory because there is no information of opening and closing inventories.
Inventory Turnover Ratio = Cost of Revenue from Operations, i.e., Cost of Goods Sold-=6(Givern)
Average Inventory (20,000)
Cost of Revenue from Operations, i.e. Cost of Goods Sold = 1,20,000
Profit =25%of 1,20,000 = 30,000
Revenue from Operations, i.e., Net Sales =Cost of Revenue from Operations, i.e., Cost of Goods Sold+ Profit
=1,20,000 +30,000 =1,50,000
34. Cash Flow Statement
for the year ended 31st March, 2022
Particulars Amt ()
I. Cash Flow from Operating Activities
Net Profit before Taxation and Extraordinary Items (WN 1) 35,500
Adjustments for
(+) Depreciation 35,000
(- Profit on Sale of Investments (250)
Profit on Sale of Fixed Assets (1,000) 33,750
Operating Profit before Working Capital Changes 69,250
(+) Decrease in Current Assets and Increase in Current Liabilities
Inventories 15,000
Current Liabilities
() Increase in Current Assets and Decrease in
Trade Receivables (1,22,500)
Trade Payables (17,000) (1,24,500)
Cash used in Operating Activities (55,250)
) Income Tax Paid (37,000)
Net Cash used in Operating Activities (92,250)
I. Cash Flow from Investing Activities
Purchase of Investments (9,000)
6,000
Sale of Fixed Assets
4,250
Sale of Investments
Investing Activities 1,250
Net Cash Inflow from
Activities
I. Cash Flow from Financing 1,35,000
Mortgage Loan (20,000)
Dividend Paid
Financing Activities 1,15,000
Net Cash Inflow from I| + I)
Increase in Cash and Cash Equivalent (| + 24,000
Net Year
in the Beginning of the 74,500
Cash and Cash Equivalent Year
Equivalent at the End of the 98,500
Cash and Cash
Working Notes
1. Net Profit before Tax and
Extraordinary Items Amt ()
Particulars
34,000
Glosing Balance of Statement of Profit and Loss (31st March, 2021)
7opening Balance of Statement of Profit and Loss (31st March, 2021)
(28,000)
20,000
(+) Interim Dividend
4,500
(+) Provision for Taxation
(+) Transfer to Reserve 5,000
35,500

2. Dr Fixed Assets Account Cr

Particulars Amt () Particulars Amt ()

To Balance b/d 2,00,000| By Bank A/c 6,000
To Statement of Profit and Loss o1,000 By Depreciation A/c (Balancing figure) 35,000
(Profit on sale) By Balance c/d 1,60,000
2,01,000! 2,01,000

3. Dr Investment Account Cr
Particulars Amt () sitivlo Particulars Amt )
To Balance b/d 25,000| By Bank A/c 4,250
To Statement of Profit and Loss (Profit) 250| By Balance c/d 30,000
To Bank A/c(Balancing figure) 9,000
34,250 34,250

4. Dr Provision for Taxation Account Cr

Particulars Amt () Amt ()
Particulars
To Bank A/c (Balancing figure) s 37,000| By Balance b/d 37,500
To Balance c/d 4,500
5,000| By Statement of Profit and Loss
(Provision made) 42,000
42,000