accounting for business 25 october ii

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ACCOUNTING FOR BUSINESS

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ACCOUNTING FOR BUSINESS

Dr. T.K. Jain.

AFTERSCHO☺OLCentre for social entrepreneurship

Bikaner M: 9414430763

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• Narendra Limited having nominal capital of Rs. 5,00,000 divided into 50,000 Equity Shares of Rs. 10 each issued 30,000 equity shares at par, payable as to Rs. 2 on application, Rs. 3 on allotment, Rs. 2.50 on first call and Rs. 2.50 on second call. All the shares were subscribed for and were alloted Ofl 1St April, 2007. The last date for payment of amount due on allotment being 30th April, 2007. The first and second calls were made on 1st August, 2007 and 1st December, 2007 and were and were payable by 31st August, 2007 and 31St December, 2007 respectively. All the amounts were received by the prescribed dates except that the holder of 100 shares failed to deposit the amount due on allotment by the prescribed date and instead he deposited. this amount with interest @ 5% per annum with the first call money. Another holder of 200 shares paid the whole amount on his shares along with allotment money. He was, however, paid interest @ 6% per annum on his advance deposits..


Solution

• Bank Dr. To Share application Cr. 60000• Sha Appl Dr. to share capital cr. 60000• Sh. Allotm. Dr. to share capital cr. 90000• Bank dr. To Sh. Allot. 89700Bank Dr. To call in advance : 1000First call Dr. 75000 to sh. Capital 75000Bank dr. 74500 cal in adv. Dr. 250 To 1st call 74750Bank Dr. 305 To call in arrers. 300 to int. 5 2nd call Dr. 75000 to sh. Capital 75000Bank Dr. 74750 call in advance 250 to 2nd call 75000Int. on call in advance 25 to bank 25 answer.


Question on FIFO

• Young Entrenpreneurs Ltd. has furnished the following details

• Date Particulars UnitsRate (Rs.)

• 01.03.2008 Opening stock 100 1.75• 05.03.2008 Purchased 150 1.50• 12.03.2008 Purchased 300 1.60• 08.03.2008 Issued 200 -• 18.03.2008 Issued 250 -• What is the value of closing stock using FIFO

method:


SOLUTION

• THE CLOSING STOCK IS OF 100 UNITS. Thus this closing stock will be valued at the last rate so

• 100*1.6 = 160 is the closing stock. Answer.


Find the value of closing stock using LIFO principle

• The following are the details supplied by Greenguards Ltd.. in respect of its raw materials for the Month of December, 2007

• Date Receipts price issues• (Units)• 01.12.2005 2,000(Opening) 5• 07.12.2005 1,000 6• 10.12.2005 - - 2,500• 15.12.2005 2,000 6.50• 31.12.2005 - - 2,200• On 31.12.2007, a shortage of 100 units was found


Solution ….

• Closing stock

• = (2+1+2) – (2.5+2.2)= .3 thousand

• However, 100 units are normal loss• Thus we shall value closing stock for 200

units. Thus closing stock is 200 * 5 (the rate of the first material) = 1000.

• In LIFO, the last material goes first, so what is left is with the first rate.


Valuation of Stock • Physical verification of stock was done on 23rd October.

the value of stock was Rs 4,80,000 following transactions took place between 23rd October and 31 October —

• 1. Out of goods sent on consignment, goods costing Rs 24,000 were unsold.

• 2. Purchases of Rs 40,000 were made, out of which goods worth Rs 16,000 were delivered on 5th November

• 3. Sales were Rs 1,36,000, which include goods worth Rs 32,000 sent on approval. Half of these goods were returned before 30th June, but no intimation is available regarding the remaining goods. Goods are sold at cost plus 25%. However, goods costing Rs24,000 had been sold for Rs12,000.

• You want to determine the value of stock on 31 October.


Solution …..

• Stock on 23 October 480000• Add 24000 unsold• Add purchases (40000 – 16000)=24000

• Sales (136000 – 32000) = 104000• Sales includes abnormal sales 24000• Normal sales (80000+16000)*100/125

• Less -Cost of sales = 76800 + 24000

=480000 +(24000+24000-76800-24000)=427200


What is the closing stock & depreciation?

• Ajay Saharan Inc.: Assets Balance on 01.01.2008 is Rs 28,000. The Company purchased during the year Rs 16,000 Depreciation is to be charged on the assets as follows — 1/5th of their values is to, be written off in the year of purchase and 2/5th in each of the next 2 years. Of the stock as on 01.01.2008, ½ was one year old and ½ was 2 years old.


Solution

• Dep on goods purchased 16000*1/5 =3200

• ½ of the goods were 1 year old and ½ 2 year old. So solve it as follows:

• 7000 on assets of 14000 purchased 1 year back and 14000 on assets purchased 2 years back.

• Thus total dep. = 3200+7000+14000=24200 answer.


ABOUT AFTERSCHO☺OL

Afterschoool conducts three year integrated PGPSE (after class 12th along with IAS / CA / CS) and 18 month PGPSE (Post Graduate Programme in Social Entrepreneurship) along with preparation for CS / CFP / CFA /CMA / FRM. This course is also available online also. It also conducts workshops on social entrepreneurship in schools and colleges all over India – start social entrepreneurship club in your institution today with the help from afterschoool and help us in developing society.


Why such a programme?

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Who are our supporters?

• Afterschoolians, our past beneficiaries, entrepreneurs and social entrepreneurs are supporting us.

• You can also support us – not necessarily by money – but by being promotor of our concept and our ideas.


About AFTERSCHO☺OL PGPSE – the best programme for developing great

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• Industry oriented practical curriculum• Designed to make you entrepreneurs – not just

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Workshops from AFTERSCHO☺OL

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Pedagogy

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• AFTERSCHO☺OL will shortly open its branches in important cities in India including Delhi, Kota, Mumbai, Gurgaon and other important cities. Afterschooolians will be responsible for managing and developing these branches – and for promoting social entrepreneurs.


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• We want to write case studies on social entrepreneurs, first generation entrepreneurs, ethical entrepreneurs. Please help us in this process. Help us to be in touch with entrepreneurs, so that we may develop entrepreneurs.


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accounting for business 25 october ii

Business

value of closing stock

foundafterschools material

equity shares of rs

pgpse participantsquestion

pgpse participantsfind

pgpse participantsaccounting

nominal capital of rs

allotment money