This document provides examples of calculating surplus capital for various partnership scenarios. It shows how to prepare statements of surplus capital by taking the capital of each partner as the base to distribute any excess amounts. For the first example, the statement shows Partner C has a first surplus of Rs. 10,000 and Partners B and C have second surpluses of Rs. 30,000 and Rs. 40,000 respectively. The document then provides multiple additional examples of calculating surplus capital in different partner situations.
Inter - I Year - Commerce - Formation of a company - Important documents - Memorandum of Association - Its Clauses - Articles of Association - Contents - Prospectus
Inter - I Year - Commerce - Formation of a company - Important documents - Memorandum of Association - Its Clauses - Articles of Association - Contents - Prospectus
Magic Blades stock has risen rapidly to $50 per share. Th.docxsmile790243
Magic Blade's stock has risen rapidly to $50 per share. The increase is due to excitement about its new knife
that uses a light beam to slice fruits and vegetables. This process enhances the final appearance and quality
of salads and fruit trays.
The board of directors is considering strategies to divide the corporate ownership into more shares of stock,
and bring about some reduction in the price per share. They are considering a stock split, small stock dividend,
or large stock dividend. The board is unsure of the accounting effects of such transactions, and has requested
information about how stockholders' equity would be impacted.
Prior to the contemplated stock transaction, equity consisted of:
Stockholders’ Equity
Common stock, $2 par value, 2,000,000 shares authorized,
500,000 shares issued and outstanding $1,000,000
Paid-in capital in excess of par 2,000,000
Retained earnings 6,000,000
Total stockholders’ equity $9,000,000
(a) Assuming the board were to declare a 2 for 1 split, how would the revised stockholders' equity
appear?
(b) Assuming the board were to declare a 15% stock dividend, how would the revised stockholders'
equity appear?
B-14.07 Stock dividends and splits
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SPREADSHEET
TOOL:
Holding a
cell reference
constant
Mike
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Summary information for Branford Corporation's balance sheet follows:
BRANFORD CORPORATION
Balance Sheet
August 15, 20X4
Assets
Cash $ 125,000
Accounts receivable 250,000
Inventory 750,000
Property, plant, & equipment (net) 860,000
Total assets $1,985,000
Liabilities
Accounts payable $125,000
Accrued liabilities 260,000
Notes payable 290,000
Total liabilities $ 675,000
Stockholders’ equity
Common stock, $5 par $700,000
Paid-in capital in excess of par 300,000
Retained earnings 310,000
Total stockholders’ equity 1,310,000
Total liabilities and equity $1,985,000
Branford's business is growing rapidly, and the company needs to expand its manufacturing facilities. This
expansion will require the company to obtain an additional $1,000,000 in cash. The company is exploring
five alternatives to obtain the necessary capital:
Equity structure and impact I-14.01
Mike
Highlight
366 | CHAPTER 14
DEBT OPTION:
Branford is able to borrow, on a 5-year note, the full amount needed. The interest rate on
this note would be 7%, and the note would require monthly payments.
COMMON STOCK OPTION:
Branford has identified an investor who is willing to pay $1,000,000 for 40,000 newly is-
sued common shares. Common shares have been paying a dividend of $0.50 per share.
Branford anticipates that this dividend rate will be maintained.
NONCUMULATIVE PREFERRED STOCK OPTION:
Branford has identified a hedge fund that will pay $1,000,000 for 8% noncumulative
preferred stock to be issued at par.
CUMULATIVE PREFERRED STOCK OPTION:
Branford has identified an insurance company that will pay $1,000,000 for 6% cumulative
preferred ...
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Strategies for Effective Upskilling is a presentation by Chinwendu Peace in a Your Skill Boost Masterclass organisation by the Excellence Foundation for South Sudan on 08th and 09th June 2024 from 1 PM to 3 PM on each day.
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Exploiting Artificial Intelligence for Empowering Researchers and Faculty,
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at Integral University, Lucknow, 06.06.2024
By Dr. Vinod Kumar Kanvaria
This slide is special for master students (MIBS & MIFB) in UUM. Also useful for readers who are interested in the topic of contemporary Islamic banking.
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4. A, B & C are partners sharing profits and losses in the ratio of 1:1:1.
Their capitals are Rs. 1,20,000, Rs. 1,50,000 and Rs. 2,00,000
respectively. Calculate Surplus Capital
First Surplus ‘C’ Rs. 125000
Second Surplus ‘B’ & ‘C’ Rs. 30000 & 140000 Respectively
Particulars A(2) B(2) C(1)
Balance as per the Balance Sheet 120000 150000 200000
Taking Capital of ‘A’ as base (Rs. 60000) 120000 120000 60000
Balance 0 30000 140000
Taking Capital of ‘B’ as base (Rs.15000) 0 30000 15000
Balance 0 0 125000
5. A, B & C are partners sharing profits and losses equally. Their capitals
are Rs. 20,000, Rs. 50,000 and Rs. 60,000 respectively.
Calculate Surplus Capital.
Statement Showing Surplus Capital
Particulars A (1/3) B (1/3) C (1/3)
Balance as per Balance Sheet 20000 50000 60000
Taking the capital of ‘A’ as Base 20000 20000 20000
Balance 0 30000 40000
Taking the capital of ‘B’ as base 0 30000 30000
Balance 0 0 10000
First Surplus ‘C’ Rs. 10000
Second Surplus ‘B’ & ‘C’ Rs. 30000 & 40000 Res.
6. A, B & C are partners sharing profits and losses in the ratio of 3:2:1.
Their capitals are Rs. 30,000, Rs. 50,000 and Rs. 60,000 respectively.
Calculate Surplus Capital.
Statement Showing Surplus Capital
Particulars A (3) B (2) C (1)
Balance as per Balance Sheet 30000 50000 60000
Taking the capital of ‘A’ as Base (Rs. 10000) 30000 20000 10000
Balance 0 30000 50000
Taking the capital of ‘B’ as base (Rs.15000) 0 30000 15000
Balance 0 0 35000
First Surplus ‘C’ Rs. 35000
Second Surplus ‘B’ & ‘C’ Rs. 30000 & 50000 respectively
7. A, B & C are partners sharing profits and losses in the ratio of 3:2:2.
Their capitals are Rs. 1,20,000, Rs. 50,000 and Rs. 20,000 respectively.
General Reserve is Rs. 70,000 on the date of dissolution.
Calculate Surplus Capital.
STATEMENT SHOWING SURPLUS CAPITAL
Particulars A(3) B(2) C(2)
Balance as per Balance Sheet 120000 50000 20000
Add: General Reserve 30000 20000 20000
Total of Capital 150000 70000 40000
Taking the capital of ‘C’ as Base (Rs.20000) 60000 40000 40000
Balance 90000 30000 0
Taking the capital of ‘B’ as base (Rs.15000) 45000 30000 0
Balance 45000 0 0
First Surplus ‘A’ Rs. 45000
Second Surplus ‘A’ & ‘B Rs. 90000 & 30000 Respectively
8. A, B & C are partners sharing profits and losses in the ratio of 5:3:2.
Their capitals are Rs. 1,20,000, Rs. 60,000 and Rs. 20,000 respectively.
The Balance Sheet showed a Loss of Rs. 40,000 on the date of
dissolution. Calculate Surplus Capital.
First Surplus - ‘A’ Rs. 20000
Second Surplus – A & B Rs. 70000 & 30000 respectively
Particulars A(5) B(3) C(2)
Balance as per Balance Sheet 1,20,000 60,000 20,000
Less: Loss (Distributed in PSR) 20000 12000 8000
Balance 100000 48000 12000
Taking Base of ‘C’ (Rs.6000) 30000 18000 12000
Balance 70000 30000 0
Taking the Base of ‘B’ (Rs.10000) 50000 30000 0
Balance 20000 0 0
9. A, B & C are partners sharing profits and losses equally. Their capitals
are Rs. 500000, Rs. 200000 and Rs. 300000 respectively.
Profit & Loss account showed a credit balance of Rs. 60000 on the date
of dissolution. Calculate Surplus Capital.
Statement Showing Surplus Capital
Particulars A (1) B(1) C(1)
Balance as per Balance Sheet 500000 200000 300000
Add : Credit balance of P & L Account 20000 20000 20000
Balance 520000 220000 320000
Taking the capital of ‘B’ as Base 220000 220000 220000
Balance 300000 0 100000
Taking the capital of ‘C’ as base 100000 0 100000
Balance 200000 0 0
First Surplus ‘A’ Rs. 200000
Second Surplus ‘A’ & ‘C’ Rs. 300000 & 100000 Respectively
10. A, B & C are partners sharing profits and losses equally. Their capitals
are Rs. 20,000, Rs. 50,000 and Rs. 60,000 respectively.
Calculate Surplus Capital
Statement Showing Surplus Capital
First Surplus ‘C’ Rs. 10000
Second Surplus ‘B’ & ‘C’ Rs. 30000 & 40000
RESPECTIVELY
Particulars A (1/3) B (1/3) C (1/3)
Balance as per Balance Sheet 20000 50000 60000
Taking the capital of ‘A’ as Base 20000 20000 20000
Balance 0 30000 40000
Taking the capital of ‘B’ as base 0 30000 30000
Balance 0 0 10000
11. A, B & C are partners sharing profits and losses in the ratio of 2:2:1.
Their capitals are Rs. 1,20,000, Rs. 1,50,000 and Rs. 2,00,000
respectively. The Profit & Loss account showed a credit balance of Rs.
50000. Calculate Surplus Capital
First Surplus ‘C’ Rs. 125000
Second Surplus ‘B’ & ‘C’ Rs. 30000 & 140000 Respectively
Particulars A(2) B(2) C(1)
Balance as per the Balance Sheet 120000 150000 200000
Add: P&L A/c in PSR 20000 20000 10000
New Balance 140000 170000 210000
Taking Capital of ‘A’ as base (Rs. 70000) 140000 140000 70000
Balance 0 30000 140000
Taking Capital of ‘B’ as base (Rs.15000) 0 30000 15000
Balance 0 0 125000
12. A, B & C are partners sharing profits and losses in the ratio of 1:2:3.
Their capitals are Rs. 1,00,000, Rs. 50,000 and Rs. 60,000 respectively.
The Profit & Loss account showed a credit balance of Rs. 60000.
Calculate Surplus Capital
First Surplus ‘A’ Rs. 75000
Second Surplus ‘A’ & ‘B’ Rs. 80000 & 10000 Respectively
Particulars A(1) B(2) C(3)
Balance as per the Balance Sheet 100000 50000 60000
Add: P&L A/c in PSR 10000 20000 30000
New Balance 110000 70000 90000
Taking Capital of ‘C’ as base (Rs. 30000) 30000 60000 90000
Balance 80000 10000 NIL
Taking Capital of ‘B’ as base (Rs.5000) 5000 10000 NIL
Balance 75000 NIL NIL
13. Practice Sum # 1
Name of the Partners P, Q & R
Capital Balances INR 50000, 80000 & 90000
Profit sharing ratio 1:2:3
General Reserve 120000
14. STATEMENT SHOWING SURPLUS CAPITAL
Particulars P- 1 Q- 2 R-3
Balance as per the Balance Sheet 50000 80000 90000
Add : General Reserve Rs. 120000 20000 40000 60000
Total Capital 70000 120000 150000
Taking the capital of ‘R’ as base (Rs. 50000) 50000 100000 150000
Balance 20000 20000 0
Taking the capital of ‘Q’ as Base 10000 20000 0
Balance 10000 0 0
1st Surplus – P Rs. 10000
2nd Surplus P & Q Rs. 20000 each
15. Thank you
Dr. Yashodhan Mithare
Professor (Commerce)
H.V. Desai College, Pune 411002
Mithare@yashodhan.org