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Model Test Papers M.249

(e) JOURNAL OF XYZ LTD.

Date Particulars L.F. Dr. (`) Cr. (`)
Case I
Share Capital A/c ...Dr. 2,500
Securities Premium Reserve A/c ...Dr. 1,000
To Forfeited Shares A/c 1,500
To Shares Allotment A/c 2,000
(Being 500 shares forfeited for non-payment of allotment money)
Case II
Share Capital A/c ...Dr. 3,750
Securities Premium Reserve A/c ...Dr. 1,000
To Forfeited Shares A/c 1,500
To Shares Allotment A/c 2,000
To Shares First Call A/c 1,250
(Being 500 shares forfeited for non-payment of allotment and first call)
Case III
Share Capital A/c ...Dr. 3,750
To Forfeited Shares A/c 2,500
To Shares First Call A/c 1,250
(Being 500 shares forfeited for non-payment of first call)

Case IV
Share Capital A/c ...Dr. 5,000
To Forfeited Shares A/c 3,750
To Shares Second and Final Call A/c 1,250
(Being 500 shares forfeited for non-payment of second and final call)

PART B

18. (i) It must be readily convertible into known amount of cash, and
(ii) It must be subject to an insignificant risk of change in value.
An investment normally qualifies as cash equivalent only when it has a short maturity
of, say 3 months or less from the date of acquisition.
19. Financing Activity.
20. (a)
S. No. Items Mojor Heads
(i) Provision for Warranties Non-current liabilities
(ii) Unpaid Dividend Current Liabilities
(iii) Calls-in-Advance Current Liabilities
(iv) Interest accrued on Investments Current Assets
(b) (i) Financial Statements ignore the price level changes since these are prepared
on historical cost-basis and not on current value basis.
(ii) Financial Statements are not free from personal bias since the subjectivity is
inherent in personal Judgements involved in taking decisions. For example,
method of depreciation, method of inventory valuation, provision for doubtful
debts, etc., are based on personal decision.