State the sources of capital reserve.

Question

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Answer

Following are the sources of capital reserve:
$(1)$ Profit on sale of fixed assets and investments.
$(2)$ Profit on revaluation of fixed assets.
$(3)$ Premium received by the company on issue of shares or debentures.
$(4)$ Balance of share for feiture account after reissue of shares forfeited by the company.
$(5)$ Profit prior to incorporation of the company.
$(6)$ Capital redemption reserve for redeeming preference shares.
$(7)$ Profit on redemption of debentures at discount.

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Write journal entry for each transaction and explain its accounting treatment of individual transaction as per equation method :
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Pass necessary rectification entries to rectify the following journal entries written by Ishwarlal:
Date	Particulars		L.F.	Debit(Rs.)	Credit (Rs.)
$1$	Kishan’s A/c.	Dr.		$7,000$
	To Cash A/c.				$7,000$
	(Being the salary of current month $Rs.7,000$ paid to Kishan)
$2$	Purchase A/c.	Dr.		$9,500$
	To Clinton's A/c.				$9,500$
	(Being the goods of $Rs.9,500$ sold to Clinton on credit)
$3$	Purchase A/c.	Dr.		$17,100$
	To Cash A/c.				$17,100$
	(Being the goods worth $Rs.20,000$ purchased at $10\%$ trade discount and $5\%$ cash discount)
	Total			$33,600$	$33,600$