Page 156 - DCOM205_ACCOUNTING_FOR_COMPANIES_II

Unit 7: Accounting for Banking Companies

4. The manager is entitled to a commission @ 10% of profits after charging his commission. notes
The net profit is ` 110,000. The commission payable to the manager.
5. ABCD Associates, a partnership firm, had taken a joint life policy for ` 3,00,000. D,
a partner dies and the policy amount is received from the LIC Premium paid so far is
` 60,000. Partners share profits and losses in the ratio of 4:3:2:1. Show the distribution of the
policy money among the partners.
6. A partnership firm purchases machinery from a limited company for ` 99,000. The payment
is to be settled by issue of equity shares of face value of `10 each at par, 10% discount and
10% premium. Determine the number of shares to be issued by the company in each case.
7. ABC Ltd. has the practice of creating provision for doubtful debts @ 5% on debtors. The
balance of provision for doubtful debts on April 01, 2006 and March 31,2007 is ` 30,000 and
` 40,000 respectively. If the amount collected from debtors is ` 56,00,000 during the year
2006-07, credit sales during the year under review.
8. Ray Ltd. purchased furniture of ` 60,000 two years ago. The current book value of the
furniture ` 43,350. If the company charges depreciation on furniture under written down
value method, calculate the rate of depreciation.
9. Sukanya Ltd. purchased a machinery on April 01, 2002 for ` 1,50,000. It was estimated that
the machinery will have a useful life of 5 years after which it will have no salvage value.
If the company follows sum of the years’ digits method of depreciation, calculate the
amount of depreciation charged during the year 2006-07.
10. While preparing reconciliation statement, an accountant observed that following entries
are at disagreement between passbook and firm’s cash book.
(a) A personal cheque of ` 3,000 issued by the partner had been paid from firm’s
account.

(b) A bank draft of ` 3,950 was got issued from bank account and bank had debited
commission of ` 60 on that account.
(c) Bank had recovered ` 200 on one occasion and ` 300 on another occasion on account
of inspection charges.

Passbook presently shows a debit balance of ` 3,19,200. Calculate the balance as per
cash book.

answers: self assessment

1. Reduce/Increase 2. Balance sheet
3. Drawer/Maker 4. Three

5. Previous 6. Delcredcre Commission
7. Honorarium 8. False
9. False 10. False
11. True 12. True
13. True 14. True

15. True 16. (a) Capital expenditure
17. (b) Revenue expenditure 18. (a) Capital expenditure
19. (c) Deferred revenue expenditure 20. (c) Deferred revenue expenditure

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