MINIMUM LEARNING MATERIAL

FUNDAMENTAL OF PARTNERSHIP

1. Amit, Babu and Charu set up a partnership firm, agreed to share profits and losses in the ratio of
3:2:1 on April 1, 2019. The contributed 50,000, 40,000 and 30,000, respectively as the
capitals. Amit is be paid a salary of 1,000 per month and Babu, a Commission of 5,000. It is
also provided that interest to be allowed on capital at 6% p.a. The drawing for the year were Amit
6,000, Babu 4,000 and Charu 2,000. Interest on drawings @ 6% p.a. The net profit as per
Profit and Loss Account for the year ending March 31, 2020 was 35,660. In the beginning of
the year Amit provided 1,00,000 as loan. Prepare the Profit and Loss Appropriation Account to
show the distribution of profit among the partner.

Sol: P/L Appropriation A/c

Particulars Amount ( ) Particulars Amount ( )

Amits' salary 12,000 Net Profit 29,660

Babus' commission 5,000 (35,660 – 6,000)
Interest on Capitals : Interest on drawings
Amit -3,000
Amit – 180
Babu-2,400
Charu-1,800 Babu – 120 360
Share of profit transferred to 7,200 Charu – 60
Capital accounts:5,820
Amit- 2,910
Babu- 1,940
5,820
Charu-970
30,020
30,020

2. Sonu and Rajat started a partnership firm on 1st April, 2017. They contributed 8,00,000 and
6,00,000 as their capitals and decided to share profits & losses in the ratio of 3: 2.The
Partnership Deed provided that Sonu was to be paid a salary of 20,000 per month and Rajat a
commission of 5% on turnover. It also provided that interest on capital be allowed @ 8% p.a
Sonu withdrew 20,000 on 1st-December, 2017 and Rajat withdrew 5,000 at the end of each
month. Interest on drawings was charged @ 6% p.a. The net profit as per Profit & Loss Account
for the year ended 31st March, 2018 was 4,89,950. The turnover of the firm for the year ended
31st March, 2018 amounted to 20,00,000. Prepare the Profit and Loss Appropriation Account to
show the distribution of profit among the partner. (CBSE 2019)
Sol: P/L Appropriation A/c
Particulars Amount ( ) Particulars Amount ( )

Sonu's salary(20,000x12) 2,40,000 Net Profit 4,89,950

Rajat’s commission 1,00,000 interest on drawings
Interest on Capitals : Sonu – 20,000x4/12x6/100
Sonu -64,000 =400
Rajat -48,000 1,12,000 Rajat –
Share of profit transferred to 60,000x6/100x5.5/12 =1,650 2,050
Capital accounts:
Sonu- 24,000
Rajat- 16,000 40,000
4,92,000 4,92,000

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3. Anupam and Abhishek are partners sharing profits and losses in the ratio of 3:2. Their capital
accounts showed balances of 1,50,000 and 2,00,000 respectively on Jan 01, 2017. Show the
calculation of interest on capital for the year ending December 31, 2017.The partnership deed
provides for interest on capital @ 8% p.a. and the firm earned a profit of 14,000 during the
year. Prepare the Profit and Loss Appropriation Account to show the distribution of profit among
the partner.
Sol: P/L Appropriation A/c
Particulars Amount ( ) Particulars Amount ( )

Interest on Capitals : Net Profit 14,000

Anupam -6,000
Abhisek -8,000 14,000

4. The partnership agreement between Maneesh and Girish provides that:

(i) Profits will be shared equally;
(ii) Maneesh will be allowed a salary of 400 p.m;
iii) Girish who manages the sales department will be allowed a commission ( equal to 10% of
the net profits, after allowing Maneesh's salary);
(iv) 7% p.a. interest will be allowed on partner's fixed capital;
(v) 5% p.a. interest will be charged on partner's annual drawings;
(vi) The fixed capitals of Maneesh and Girish are 1,00,000 and 80,000, respectively. Their
annual drawings were 16,000 and 14,000, respectively. The net profit for the year ending
March 31, 2015 amounted to 40,000.Prepare firm's Profit and Loss Appropriation Account of
Maneesh and Girish.

Sol: P/L Appropriation A/c

Particulars Amount ( ) Particulars Amount ( )

Maneesh's salary(400x12) 4,800 Net Profit 40,000

Girish’s commission 3,520 Interest on Drawings:
Interest on Capitals : Maneesh - 400
Maneesh -7,000
12,600 Girish - 350
Girish - 5,600 750
Share of profit transferred to
Capital accounts : (19,830)
Maneesh – 9,915
Girish - 9,915
19,830 40,750
40,750

5. John and Mathew share profits and losses in the ratio of 3:2. They admit Mohanty into their firm
to 1/6 share in profits. John personally guaranteed that Mohanty's share of profit, after charging
interest on capital @ 10 per cent per annum would per annum would not be less than 30,000 in
any year. The capital provided was as follows: John 2,50,000, Mathew 2,00,000 and Mohanty
1,50,000. The profit for the year ending March 31,2015 amounted to 1,50,000 before
providing interest on capital. Show the Profit & Loss Appropriation Account if new profit sharing
ratio is 3:2:1.

2
 Sol: P/L Appropriation A/c

Particulars Amount ( ) Particulars Amount ( )

Interest on Capitals : Net Profit 1,50,000

John - 25,000
Mathew - 20,000
Mohanty – 15,000
Share of profit transferred to 60,000
Capital accounts:
John- 45,000
Less : 15,000 30,000
Mathew - 30,000
Mohanty – 15,000
Add:Deficiency 15,000
30,000 90,000
4,92,000
4,92,000

ADMISSION OF A NEW PARTNER

6. Following is Balance Sheet of A and B who share profits in the ratio of 3:2.
Balance Sheet of A and B as on April 1, 2015
Liabilities Amount ( ) Assets Amount ( )

Sundry creditors 20,000 Cash in hand 3,000

Profit & Loss a/c 20,000 Debtors 12,000
General Reserve 25,000 Stock 15,000
Workmen’s Compensation Fund 5,000 Furniture 10.000
Capitals: Plant and Machinery 30,000
A - 30,000 Goodwill 5,000
B - 20,000 50,000 Advertisement Suspense a/c 15,000
1,20,000 Profit & Loss a/c 30,000
1,20,000

On that date C is admitted into the partnership on the following terms:

1. C is to bring in 15,000 as capital and 5,000 as premium for goodwill for 1/6th share.
2. The value of stock is reduced by 10% while plant and machinery are appreciated by 10%.
3. Furniture is revalued at 9,000.
4. A provision for doubtful debts is to be created on sundry debtors at 5% and 200 is to be
provided for an electricity bill.
5. Investment worth 1,000 (not mentioned in the balance sheet) is to be taken into account.
6. A creditor of 100 is not likely to claim his money and is to be written off.
prepare revaluation account and capital account of partner.

3
 SOL: Revaluation A/c

Liabilities Amount ( ) Assets Amount ( )

Stock 1,500 Plant and Machinery 3,000

Furniture 1,000 Investments 1,000
Provision for Doubtful 600 Sundry creditors 100
Outstanding Electricity 200
Profit transferred
A - 480
B - 320 800
4100
4100

Particulars A B C Particulars A B C

Goodwill 3,000 2,000 Balance b/d 30,000 20,000

Advertisement Bank 15,000
Suspense a/c 9,000 6,000 Profit & Loss 12,000 8,000
a/c
Profit & Loss a/c 18,000 12,000
G.Reserve 15,000 10,000
Bal c/d 33,480 22,320 15,000 WCF 3,000 2,000
63,480 32,320 15,000 Prem.for
Goodwill 3,000 2,000
Rev a/c 480 320
63480 42,320 15,000

7. Given below is the Balance Sheet of A and B, who are carrying on partnership business as on
March 31,2017. A and B share profits in the ratio of 2:1.
Balance Sheet of A and B as at March 31, 2017
Liabilities Amount ( ) Assets Amount ( )

Sundry creditors 58,000 Cash in hand 10,000

Bills Payable 10,000 Cash at Bank 40,000
Outstanding Expenses 2,000 Debtors 60,000
Workmen’s Compensation Fund 30,000 Stock 40.000
Investment Fluctuation Fund 12,000 Plant and Machinery 1,00,000
Capitals: Building 1,50,000
A -1,80,000 Investment 42,000
B – 1,50,000 3,30,000 (Market value 32,000)
4,42,000 4,42,000

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 C is admitted as a partner on the date of the balance sheet on the following terms:
1. C will bring in 1,00,000 as his capital and 60,000 as his share of goodwill for 1/4 share
in profits, which he doesn’t bring in cash.
2. Plant is to be appreciated to 1,20,000 & the value of buildings is to be appreciated by 10%.
3. Stock is found overvalued by 4,000.
4. A provision for doubtful debts is to be created at 5% of debtor.
5. Creditors were unrecorded to the extend of 1,000.
Record revaluation Account, partners' capital accounts of the constituted firm after admission of
the new partner.

Revaluation A/c

Liabilities Amount ( ) Assets Amount ( )

Stock 4,000 Plant and Machinery 20,000

Provision for Doubtful Debts 3,000 Buildings 15,000
Creditors 1,000
Profit transferred
A – 18,000
B – 9,000 35,000
27,000
35,000

Particulars A B C Particulars A B C

Balan. c/d 2,60,00 1,90,000 1,00,000 Balance b/d 1,80,000 1,50,000

0 Bank 1,00,000
IFF 2,000 1,000
WCF 20,000 10,000
C’sCurrent a/c 40,000 20,000
Rev a/c 18,000 9,000
1,90,000 1,00,000 2,60,000 1,90,000 1,00,000
2,60,00
0

8. A and B are partners in a firm sharing profits in the ratio 2:1. C is admitted into the firm with 1/4
share in profits. He will bring in 30,000 as capital and capitals of A and B are to be adjusted in
the profit sharing ratio. The Balance Sheet of A and B as on March 31, 2017 (before C's
admission) was as under:
Balance Sheet of A and B as at March 31,2017
Liabilities Amount ( ) Assets Amount ( )

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 Sundry creditors 8,000 Cash in hand 2,000
Bills Payable 4,000 Cash at Bank 10,000
General Reserve 6,000 Debtors 8,000
Employees Provident Fund 10,000 Stock 10,000
Investment Fluctuation Fund 30,000 Furniture 5.000
Capitals: Plant and Machinery 25,000
A - 50,000 Building 40,000
B – 32,000 Investment 40,000
82,000
1,40,000 1,40,000

Other terms of agreement are as under:

1. C will bring in 12,000 as his share of goodwill.
2. Building was valued at 45,000 and Machinery at 23,000.
3. A provision for bad debts is to be created @ 6% on debtor.
4. The capital accounts of A and B are to be adjusted by opening current accounts.
Give Revaluation Account and prepare Capital Account after C's admission.
SOL: Revaluation A/c
Liabilities Amount ( ) Assets Amount ( )

Machinery 2,000 Building 5,000

Provision for Bad Debts 480
Profit transferred
A -1680
B - 840 2520
5,000
5000

Particulars A B C Particulars A B C

Current a/c 23,680 18840 Balance b/d 50,000 32,000 30,000

Bank
G.Reserve 4,000 2,000
IFF 20,000 10,000
Bal c/d 60,000 30,000 30,000 Prem.for
Goodwill 8,000 4,000
83,680 48840 30,000 Rev a/c 1,680 840
83,680 48,840 30,000

9. The Balance Sheet of W and R who shared profits in the ratio of 3:2 as follows on January, 01,
2015.
Balance Sheet of W and R as on March, 31, 2015
Liabilities Amount ( ) Assets Amount ( )

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 Sundry creditors 20,000 Cash in hand 5,000
Capitals: Debtors 20,000
W -40,000 Less: Provision for Doubtful
R– 30,000 70,000 Debts 700 19,300
Stock 25,000
Plant and Machinery 35,000
Patents 5,700
90,000 90,000

On this date B was admitted as a partner on the following conditions:

1. He was to get 1/3 share of profit.
2. He had to bring in necessary capital on the basis of old partner’s capital.
3. He would pay cash for goodwill which would be based on 2½ years purchase of the profits of
the past four years.
4. W and R would withdraw half the amount of goodwill premium brought by B.
5. The assets would be revalued as: Sundry Debtors at book value less a provision of 5%; Stock
at 20,000; Plant and Machinery at 40,000: and Patents at 12,000.
6. Liabilities were valued at 23,000, one bill for goods purchased having been omitted from
books.
7. Profit for the past four years were:

2011 15,000 2013 14,000

2012 20,000 2014 17,000
Give Revaluation Account and prepare Capital Account after B's admission.

SOL: Revaluation A/c

Liabilities Amount ( ) Assets Amount ( )

Stock 5,000 Plant & Machinery 5,000

Provision for Doubtful Debts 300 Patents 6,300
S Creditor 3,000
Profit transferred
W -1800
R - 1200 3000 5,000

5000

Capital a/c
Particulars W R B Particulars W R B

Cash a/c 3,300 2,200 Balance b/d 40,00 30,000

Bank 0 39,250
Bal c/d 45,100 33,400 39,250 Prem.for Goodwill 4,400
48,400 35,600 39,250 Rev a/c 6,600 1,200
1,800 35,600 39,250

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 48,40
0

W + R ‘s Capital =45,100+33,400 =78,500 .B’s Capital =78,500x3/2x1/3=39,250

10.. Ashish and Dutta were partners in a firm sharing profits in 3:2 ratio. On Jan.01,2015 they
admitted Vial for 1/5th Share in the profits. The Balance sheet of Ashish and Dutta as on March
31 ,2016 was as follows :
Balance Sheet of A and B as on 1st March, 2016
Liabilities Amount ( ) Assets Amount ( )

Sundry creditors 15,000 Cash in hand 5,000

Bills Payable 10,000 Debtors 22,000
Capitals: Less: Prov. for Doubtful Debts 2,000 20,000
Ashish -80,000 Stock 35,000
Dutta – 35,000 1,15,000 Plant 45,000
Land & Building 35,000
1,40,000 1,40,000
It was agreed that :
1. The value of Land and Building be increased by was valued at 15,000 .
2. The value of Plant be increased by 10,000 .
3.Goodwill of the firm be valued at 20,000.
4.Vimal to bring in capital to the extent of 1/5th of the total capital of the new firm.
prepare Revaluation a/c and Capital accounts of partners.
SOL: Revaluation A/c
Liabilities Amount ( ) Assets Amount ( )
Profit transferred Land & Building 15,000
Ashish -15,000 Plant 10,000
Dutta – 10,000 25,000
25000 25,000

Capital a/c
Particulars Ashish Dutta Vimal Particulars Ashis Dutta Vimal
h

Balance b/d 80,000 35,000

Bank 36,000
Bal c/d 97,400 46,600 36,000 Prem.for Goodwill 2,400 1,600
97,400 46,600 36,000 Rev a/c 15,000 10,000
97,400 46,600 36,000

11. RETIREMENT OF A PARTNER

The Balance Sheet of Mohit ,Neeraj and Sohan who are partners in a firm sharing profits
according to their capitals as on March 31, 2017 was under :

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 Liabilities Amount ( ) Assets Amount ( )

Sundry creditors 21,000 Building 1,00,000

General Reserve 20,000 Machinery 50,000
Capitals: Stock 18,000
Mohit - 80,000 Debtors 20,000
Neeraj - 40,000 Less: Provision for Doubtful
Sohan -40,000 1,60,000 Debts 1,000 19,000
2,01,000 Cash in bank 14,000
2,01,000

On this date,Neeraj decided to retire from the firm and was paid for his share in the firm subject
to the following :
1. Building to be appreciated by 20% .
2. Provision of for Bad Debts to be increased to 15% on Debtor.
3. Machinery to be depreciated by 20%.
4. Goodwill of the firm is valued at 72,000 and the retiring partner’s share is adjusted through
the capital accounts of remaining partners .
5. The Capital of the new firm be fixed 1,20,000.
Give Revaluation Account and prepare Capital Account after B's retirements.

SOL: Revaluation A/c

Liabilities Amount ( ) Assets Amount ( )

Provision for DD 2,000 Building 20,000

Machinery 10,000
Profit transferred
Mohit -4,000
Neeraj -2,000
Sohan – 2,000 8,000
20000 20,000

Partner’s Capital a/c

Particulars Mohit Neeraj Sohan Particulars Mohit Neeraj Sohan

Neeraj’s 12,000 6,000 Balance b/d 80,000 40,000 40,000

Capital G.Reserve 10,000 5,000 5,000
Bank a/c 65,000 Rev a/c 4,000 2,000 2,000
Bal c/d 82,000 41,000 Mohit Capital 12,000
Sohan Capital 6,000
94,000 65,000 41,000 94,000 65,000 47,000
Bank a/c 2,000 1,000 Bal b/d 82,000 41,000
Bal c/d 80,000 40,000 82,000 41,000
82,000 41,000

12. Narang. Suri and Bajaj are partners in a firm sharing profits and losses in proportion of 1/2, 1/6
and 1/3 respectively. The Balance Sheet on April 1, 2015 was as follows:
Books of Suri and Bajaj
Balance Sheet as on April 1, 2015
Liabilities Amount ( ) Assets Amount ( )

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 Bills Payable 12,000 Freehold Premises 40,000
Sundry creditors 18,000 Machinery 30,000
Reserves 12,000 Furniture 12,000
Capitals: Stock 22,000
Narang - 30,000 Debtors 20,000
Suri - 30,000 Less: Provision for Doubtful
Bajaj - 28,000 Debts 1,000 19,000
Cash 7,000
88,000 1,30,000
1,30,000
Bajaj retires from the business and the partners agree to the following:
a) Freehold premises and stock are to be appreciated by 20% and 15% respectively.
b) Machinery and furniture are to be reduced by 10% and 7% respectively.
c) Bad Debts reserve is to be increased to 1,500.
d) Goodwill is valued at 21,000 on Bajaj's retirement.
e) The continuing partners have decided to adjust their capitals in their new profit sharing
ratio after retirement of Bajaj. Surplus/deficit, if any, in their capital accounts will be adjusted
through current accounts.
Prepare necessary ledger accounts and draw the Balance Sheet of the reconstituted firm.
SOL: Revaluation A/c
Liabilities Amount ( ) Assets Amount ( )
Bad Debt reserve 500 Freehold Premises 8,000
Machinery 3,000 Stock 3,300
Furniture 840
Profit transferred(6960) 25,000
Narang -3,480
Suri – 1,160
Bajaj - 2,320 6,960
25,000

Partner’s Capital a/c

Particulars Narang Suri Bajaj Particulars Narang Suri Bajaj

Bajaj’s Cap. 5,250 1,750 Balance b/d 30,000 30,000 28,000

Bajaj’sloan a/c 41,320 G.Reserve 6,000 2,000 4,000
Bal c/d 34,230 31,410 Rev a/c 3,480 1,160 2,320
Narang Capital 5,250
Suri Capital 1,750
39,480 33,160 41,320 39,480 33,160 41,320
Suri Current a/c 15,000 Bal b/d 34,230 31,410
Balance c/d 49,230 16,410 NarangCurrent a/c 15,000
49,230 31,410 49,230 31,410

13. Following is the Balance Sheet of Jain, Gupta and Malik as on March 31, 2016.
Balance Sheet as on March 31, 2016
Liabilities Amount ( ) Assets Amount ( )

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 Sundry creditors 19,800 Land and Building 26,000
Telephone bills outstanding 300 Bonds 14,370
Accounts Payable 8,950 Cash 8,950
Profit & Loss a/c 16,750 Bills Receivable 5,500
Capitals: Sundry Debtors 23,450
Jain – 40,000 Stock 26,700
Gupta - 60,000 Office Furniture 18,100
Malik - 20,000 1,20,000 Plants and Machinery 18,250
Computers 20,230
1,65,800 1,65,800
The partners have been sharing profits in the ratio of 5:3:2. Malik decides to retire from business
on April 1, 2016 and his share in the business is to be calculated as per the following terms of
revaluation of assets and liabilities Stock 20,000; Office furniture 14,250; Plant and
Machinery 23,530: Land and Building 20,000.
A provision of 1,700 to be created for doubtful debts. The goodwill of the firm is valued at
9,000.
The continuing partners agreed to pay 16,500 as cash on retirement of Malik, to be
contributed by continuing partners in the ratio of 3:2. The balance in the capital account of
Malik will be treated as loan.
Prepare Revaluation account, capital accounts of the reconstituted firm.

SOL: Revaluation A/c

Liabilities Amount ( ) Assets Amount ( )
Office Furniture 4,000 Stock 1,900
Land & Building 6,000 Plant & Machinery 3,300
Prov.for DD 1,700 Loss transferred
Jain - 3,250
Gupta – 1,950
11,700 Mallik – 1,300 6,500
11,700

Capital a/c
Particulars Jain Gupta Mallik Particulars Jain Gupta Mallik

Rev(loss) 3,250 1,950 1,300 Balance b/d 40,000 60,000 20,000

Mallik’s Capital 1,125 675 P/L a/c 8,375 5,025 3,350
Cash a/c 16,500 Jain’ Capital 1,125
Mallik Loan a/c 7,350 Gupta’s Capital 675
Bal c/d 53,900 69,000 Cash(adjustment) 9,000 6,600

58,275 71,625 25,150 58,275 71,625 25,150

14. DEATH OF A PARTNER

Nithya, Sathya and Mithya were partners sharing profits and losses in t ratio of 5:3:2. Their
Balance Sheet as on March 31, 2015 was as follows:
Books of Nithya, Sathya and Mithya Balance Sheet at March 31, 2015

Liabilities Amount ( ) Assets Amount ( )

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 Sundry creditors 14,000 Investments 10,000
Reserve Funds 6,000 Goodwill 5,000
Capitals: Premises 20,000
Nithya – 30,000 Patents 6,000
Sathya - 30,000 Machinery 30,000
Mithya - 20,000 80,000 Stock 13,000
Debtors 8,000
Bank 8,000
1,00,000 1,00,000

Mithya dies on August 1, 2015. The agreement between the executors of Mithya and the partners
stated that:
(a) Goodwill of the firm be valued at 2.5 times the average profits of last four years. The profits
of four years were in 2011-12, 13,000; in 2012-13, 12000; in 2013-14, 16,000; and in 2014-
15, 15,000.
(b) The patents are to be valued at 8,000, Machinery at 25,000 a Premises at 25,000.
(c) The share of profit of Mithya should be calculated on the basis of the profit of 2014-15.
(d) 4,200 should be paid immediately and the balance should be paid in 4 equal half-yearly
instalments carrying interest @ 10%.
Record the Mithya’s capital a/c to give effect to the above .
Mithya’s capital a/c
Particulars Amount ( ) Particulars Amount ( )

Goodwill 1,000 Balance b/d 20,000

Mithya’s Executor’s a/c 28,600 Revaluation a/c 400
Reserve Funds 1,200
29,600 Nithya’s capital a/c 4,375
Sathya’s capital a/c 2,625
Profit &Loss Suspense a/c
1,000
29,600
15. Puneet. Pankaj and Pammy are partners in a business sharing profits and losses in the ratio of
2:2:1 respectively. Their balance sheet as on March 31. 2017 was as follows:
Balance Sheet as on March 31, 2017
Liabilities Amount ( ) Assets Amount ( )
Sundry creditors 1,00,000 Bank 20,000
Reserve Funds 50,000 Stock 30,000
Capitals: Debtors 80,000
Puneet – 60,000 Investments 70,000
Pankaj - 1,00,000 Furniture 35,000
Pammy - 40,000 2,00,000 Building 1,15,000
3,50,000 3,50,000

Mr. Pammy died on September 30, 2017. The partnership deed provided the following:
(i) The deceased partner will be entitled to his share of profit up to the date of death calculated
on the basis of previous year's profit.
(ii) He will be entitled to his share of goodwill of the firm calculated on the basis of 3 years'
purchase of average of last 4 years' profit. The profits for the last four financial years are
given below:
for 2013-14; 80,000; for 2014-15; 50,000; for 2015-16, 40,000; for 2016-17,
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 30,000.
The drawings of the deceased partner up to the date of death amounted to 10,000. Interest
on capital is to be allowed at 12% per annum.
Surviving partners agreed that 15,400 should be paid to the executors immediately and
the balance in four equal yearly instalments with interest at 12% p.a. on outstanding balance.
Show Mr. Pammy's Capital account, his Executor's account till the settlement of the amount
due.
Pammy’s capital a/c
Particulars Amount ( ) Particulars Amount ( )

Drawings 10,000 Balance b/d 40,000

Pammy’s Executor’s a/c 75,400 Interest on Capital 2,400
Reserve 10,000
Puneet’s capital a/c 15,000
Pankaj’s capital a/c 15,000
Profit & Loss
Suspense a/c 3,000
85,400 85,400
DISSOLUTION OF PARTNERSHIP FIRM
Record journal entries at the time of dissolution of a partnership firm of Vibha, Shobha and
16. Anubha in the following cases:
a) Dissolution expenses amounted to 6,500.
b) Dissolution expenses 7,800 were paid by Anubha.
c) Vibha was appointed to look after the dissolution process for which she was given a
remuneration of 12,000 .
d) Shobha was appointed to look after the dissolution work for which she was allowed a
remuneration of 15,000. She agreed to bear dissolution expenses. Actual dissolution
expenses paid by her amounted to 11,800.
e) Anubha was to look after the dissolution process for which she was allowed a remuneration of
12,000 she also agreed to bear dissolution expenses. Actual expenses 9,500 were paid
by the firm.
f) Anubha looked after the dissolution work for remuneration of 8,500 and agreed to bear
dissolution expenses up to 6,000. Actual expense paid by her were 7,600.
g) Vibha was appointed to look after the dissolution work for which she was allowed a
remuneration of 14,000. She agreed to take over investment of the book value of 13,000
towards payment of her remuneration. Investment have already been transferred to realization
Account.
Journal
Date Particulars Dr. Cr.
a) Realisation a/c Dr. 6,500
To, Bank a/c 6,500
b) Realisation a/c Dr. 7,800
To, Anubha’s Capital a/c 7,800
c) Realisation a/c Dr. 12,000
To, Vibha’s Capital a/c 12,000
d) Realisation a/c Dr. 15,000
To, Shobha’s Capital a/c 15,000
e) (i)Realisation a/c Dr. 12,000
To, Anubha’s Capital a/c 12,000

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 (ii)Anubha’s Capital a/c Dr. 9,500
To, Bank a/c 9,500

f) (i)Realisation a/c Dr. 8,500

To, Anubha’s Capital a/c 8,500
(ii)Realisation a/c Dr. 16,000
To, Anubha’s Capital a/c 16,000
g) No entry

17. Nayana and Arushi were partners sharing profits equally . Their Balance Sheet on March 31,2017
was as follows:
Balance Sheet of Nayana and Arushi as on March 31, 2017
Liabilities Amount ( ) Assets Amount ( )
Sundry creditors 20,000 Bank 30,000
Arushi’s Current Account 10,000 Debtors 25,000
Workmen’s Compensation Reserve 15,000 Stock 35,000
Bank Overdraft 5,000 Furniture 40,000
Capitals: Machinery 60,000
Nayana -1,00,000 Narayana’s Current
Arushi – 50,000 1,50,000 Account 10,000
2,00,000 2,00,000

The firm was dissolved on the above date:

1. Nayana took over 50% of the stock at 10% less on its book value, and the remaining stock
was sold at a gain of 15%. Furniture and Machinery realised for 30,000 and 50,000
respectively;
2. There was an unrecorded investment which was sold for 34,000;
3. Debtors realised 90% only and 1,200 were recovered for bad debts written-off last year;
4. There was an outstanding bill for repairs which had to be paid for 2,000.
Prepare Realisation Accounts to close the books of the firm.

Realisation a/c
Liabilities Amount ( ) Assets Amount (
)
Debtors 25,000 Sundry creditors
Stock 35,000 Bank Overdraft
Furniture 40,000 Bank:
Machinery 60,000 1,60,000 Investments - 34,000
Bank: Furniture - 30,000
Sundry creditors – 20,000 Machinery - 50,000
Bank Overdraft - 5,000 Debtors(90%) - 22,500
Out standing Bill – 2,000 27,000 Stock - 20,125
Profits transferred : Bad debts recovered 1,200 1,57,825
Nayana Capitals -5,788 Narayana’s Capital 15,750
Arushi Capitals –5,787 11,575 (stock taken over)
1,98,575 1,98,575

14
18. Romesh and Bhawan were in partnership sharing profit and losses as 3:2. Their Balance Sheet as
on March 31, 2017, was as follows:
Balance Sheet of Romesh and Bhawan as on March 31, 2014
Liabilities Amount ( ) Assets Amount ( )
Bank Loan 60,000 Bank 30,000
Creditors 80,000 Debtors 70,000
Bills payable 40,000 Stock 2,00,000
Bhawan’s Loan 20,000 Investment 1,40,000
Capitals: Buildings 60,000
Romesh -1,00,000
Bhawan – 2,00,000 3,00,000
5,00,000 5,00,000

They decided to dissolve the firm. The following information is available:

1. Debtors were recovered 5% less. Stock was realised at books value and building was sold for
51,000,
2. It is found that investment not recorded in the books amounted to 10,000. The same were
accepted by one creditor for this amount and other Creditors were paid at a discount of 10%. Bills
payable were paid full,
3. Romesh took over some of the Investments at 8,100 (book value less 10%). The remaining
investment were taken over by Bhawan at 90% of the book value less 900 discount,
4. Bhawan paid bank loan along with one year interest at 6% p.a,
5. An unrecorded liability of 5,000 was paid.
Prepare Realisation Account.

Realisation a/c
Liabilities Amou ( ) Assets Amou ( )
Debtors 70,000 Bank Loan 60,000
Stock 2,00,000 Sundry creditors 80,000
Investment 1,40,000 Bills Payable 40,000
8,100
Buildings 60,000 4,70,000 Romesh’ Cap. (Investment)
Bhawan’s Cap.(Investment) 1,17,000
Bank ( bills payable) 40,000
Bank:
Bank (creditors) 63,000
Bhawan’s capital Debtors - 66,500
63,600
(Loan with interest) Stock - 2,00,000
5,000
Bank ( Unrecorded Liability) Buildings - 51,000
Loss transferred to : 3,17,500
Romesh’s Capital – 11,400
Bhawan’s Capital - 7,600 19,000
6,41,600 6,41,600
19. Journalise the following transactions regarding realisation expenses:
[a] Realisation expenses amounted to 2,500.
[b] Realisation expenses amounting to 3,000 were paid by Ashok, one of the partner.
[c] Realisation expenses 2,300 borne by Tarun, personally.
[d] Amit, a partner was appointed to realised the assets, at a cost of 4,000. The actual amount of

15
 realisation expenses amounted to 3,000.
Journal
Date Particulars Dr. Cr.
a) Realisation a/c Dr. 2,500
To, Bank a/c 2,500
b) Realisation a/c Dr. 3,000
To, Ashok’s Capital a/c 3,000
c) No Entry as realisation expenses borne by
partner personally
d) Realisation a/c Dr. 4,000
To, Amit’s Capital a/c 4,000
20. Give journal entries for the following transactions:
a. A Firm has a Stock of 1,60,000. Aziz, a partner took over 50% of the Stock at a discount of
20%,
b. Remaining Stock was sold at a profit of 30% on cost,
c. Land and Building (book value 1,60,000) sold for 3,00,000 through a broker who charged
2%, commission on the deal.
d. Plant and Machinery (book value 60,000) was handed over to a Creditor at an agreed
valuation of 10% less than the book value,
e. Investment whose face value was 4,000 was realised at 50%.
Journal
Date Particulars Dr. Cr.
a) Aziz’ Capital a/c Dr. 64,000
To, Realisation a/c 64,000
(80,000x80%)
b) Bank a/c Dr. 1,04,000
To,Realisation a/c 1,04,000

c) Bank a/c Dr. 2,94,000

To,Realisation a/c 2,94,000

d) No Entry
e) Bank a/c Dr. 2,000
To,Realisation a/c 2,000

21. How will you deal with the realisation expenses of the firm of Rashim and Bindiya in the
following cases:
a) Realisation expenses amount to 1,00,000,
b) Realisation expenses amounting to 30,000 are paid by Rashim, a partner.
c) Realisation expenses are to be borne by Rashim and he will be paid 70,000 as remuneration
for completing the dissolution process. The actual expenses incurred by Rashim were
1,20,000.
Journal
Date Particulars Dr. Cr.
a) Realisation a/c Dr. 1,00,000
To, Bank a/c 1,00,000
b) Realisation a/c Dr. 30,000
To, Rahim’s Capital a/c 30,000
c) Realisation a/c Dr. 70,000
To, Rahim’s Capital a/c 70,000

16
22. Record necessary journal entries to realise the following unrecorded assets and liabilities in the
books of Paras and Priya:
a) There was an old furniture in the firm which had been written-off completely in the books.
This was sold for 3,000,
b) Ashish, an old customer whose account for 1,000 was written-off as bad in the previous year,
paid 60%, of the amount,
c) Paras agreed to takeover the firm's goodwill (not recorded in the books of the firm), at a
valuation of 30,000,
d) There was an old typewriter which had been written-off completely from the books. It was
estimated to realized 400. It was taken away by Priya at an estimated price less 25%,
e) There were 100 shares of 10 each in Star Limited acquired at a cost of 2,000 which had
been written-off completely from the books. These shares are valued @ 6 each and divided
among the partners in their profit sharing ratio.
Journal
Date Particulars Dr. Cr.
a) Bank a/c Dr. 3,000
To, Realisation a/c 3,000
b) Bank a/c Dr. 600
To, Realisation a/c 600
c) Paras’s Capital a/c Dr. 30,000
To,Realisation a/c 30,000

d) Priya’s Capital a/c Dr. 300

To, Realisation a/c 300
e) Paras’s Capital a/c Dr. 300
Priya’s Capital a/c 300
To,Realisation a/c 600

23. What journal entries would be recorded for the following transactions on the dissolution of a firm
of Arti and Karim after various assets (other than cash) on the third party liabilities have been
transferred to Reliasation account.
a) Arti took over the Stock worth 80,000 at 68,000.
b) There was unrecorded Bike of 40,000 which was taken over by Mr. Karim.
c) The firm paid 40,000 as compensation to employees.
d) Sundry creditors amounting to 36,000 were settled at a discount of 15%.
e) Loss on realisation 42,000 was to be distributed between Arti and Karim in the ratio of 3:4.

Journal
Date Particulars Dr. Cr.
a) Arti’s Capital a/c Dr. 68,000
To,Realisation a/c 68,000

b) Arti’s Capital a/c Dr. 68,000

To,Realisation a/c 68,000

c) Realisation a/c Dr. 12,000

To, Bank a/c 12,000
d) Realisation a/c Dr. 15,000
To, Bank a/c 15,000
e) Arti’s Capital a/c Dr. 18,000

17
 Karim’s Capital a/c 24,000
To,Realisation a/c 42,000

24. Shilpa, Meena and Nanda decided to dissolve their partnership on March 31,2017. Their profit
sharing ratio was 3:2:1 and their Balance Sheet was as under:
Balance Sheet of Shilpa, Meena and Nanda as on March 31, 2017
Liabilities Amount ( ) Assets Amount ( )

Bank loan 20,000 Land 81,000

Creditors 37,000 Stock 56,760
Provision Debtors 18,600
for Doubtful Debts 1,200
Nanda’s Capital 23,000
General Reserve 12,000
Cash at Bank 10,840
Capitals:
Shilpa - 80,000
Meena - 40,000 1, 20,000
1,90,200
1,90,200
The stock of value of 41,660 are taken over by Shilpa for 35,000 and she agreed to discharge
bank loan. The remaining stock was sold at 14,000 and debtors amounting to 10,000 realised
8,000. land is sold for 1,10,000. The remaining debtors realised 50% at their book value. Cost
of realisation amounted to 1,200. There was a typewriter not recorded in the books worth
6,000 which were taken over by one of the Creditors at this value.
Prepare Realisation Account.

Realisation a/c
Liabilities Amount ( ) Assets Amount (
)
To assets Bank loan 20,000
Land 81,000 Creditor 37,000
Stock 56,760 Provision for DD 1,200
Debtors 18,600 1,56,360 Shilpa’s Capital(stock) 35,000
Shilpa’s Capital 20,000 Cash:
Bank : Stock -- 14,000
Creditors - 31,000 Debtors - 12,300
Realisation Expenses - 1,200 32,200 Land - 1,10,000 1,36,300

Profits transferred :
Shilpa’s Capitals -10,470
Meena’s Capitals – 6,980
Nanda’s Capital - 3,490 20,940
2,29,500 2,29,500

18
25. The following is the Balance sheet of Tanu and Manu, who shares profit and losses in the ratio
of 5:3, On March 31,2017:

Balance Sheet of Tanu and Manu as on March 31, 2017

Liabilities Amount ( ) Assets Amount ( )

Creditors 62,000 Cash at Bank 16,000

Bills Payable 32,000 Debtors 55,000
Bank loan 50,000 Stock 75,000
General Reserve 16,000
Motor Car 90,000
Capitals: 12,000
Machinery 45,000
Tanu - 1,10,000
Investment 70,000
Manu - 90,000
Fixtures 9,000
2,00,000
3,60,000
3,60,000

On the above date the firm is dissolved and the following agreement was made:
Tanu agree to pay the bank loan and took away the sundry debtor Sundry creditors accepts stock
and paid 10,000 to the firm. Machinery is taken over by Manu for 40,000 and agreed to pay of
bills payable at a discount of 5%.. Motor car was taken over by Tanu for 60,000. Investment
realized 76,000 and fixtures 4,000. The expenses of dissolution amounted to 2,200.
Prepare Realisation Account.

Realisation a/c
Liabilities Amount ( ) Assets Amount (
)
Debtors 55,000 Sundry creditors – 62,000
Stock 75,000 Bank Overdraft - 32,000
Motor Car 90,000 Bank Loan - 50,000 1,44,000
Machinery 45,000 Tanu’s Capital a/c
Investment 70,000 Debtors - 55,000
Fixture 9,000 3,44,000 Motor Car – 60,000 1,15,000
Manu’s Capital a/c (Bills Payable) 30,400 Bank:
Bank ( Expenses) 2,200 Stock - 10,000
Tanu’s Capital a/c 50,000 Investments - 76,000
Fixtures - 40,000 90,000
Manu’s Capital
(Machinery) - 40,000
Loss transferred
Tanu’s Capital – 23,500
4,26,600 Manu’s Capital – 14,100 37,600
4,26,600

19
 COMPANY’S BALANCE SHEET

26. Simco Ltd. issued 20,000 Equity Shares of 10 each a premium of 20% payable along with the
application. All the shares were applied and duly allotted .Show how would you show in the
Balance Sheet.
Sol :

Particulars Note no.

I. Equity and Liabilities
1. Shareholders' Funds
a) Share capital 1 2,00,000
b) Reserve and surplus
2 40,000

Notes to Accounts
1. Share Capital
Authorised Capital
Equity Shares of 10 each
Issued Capital
2,00,000
20,000 Equity Shares of 10 each
Subscribed Capital
Subscribed and Fully Paid-up
20,000 Equity Shares of 10 each 2,00,000
2. Reserves and Surplus
Securities Premium 40,000

27. "Tractors India Ltd.' is registered with an authorised capital of 10,00,000 divided into 1,00,000
equity shares of 10 each. The company issued 50,000 equity shares at a premium of 5 per
share. 2 per share were payable with application, 8 per share (including premium) on
allotment and the balance amount on first and final call. The issue was fully subscribed and all
the amount due was received except the first and final call money on 500 shares allotted to
Balaram.
Present the 'Share Capital' in the Balance Sheet of 'Tractors India Ltd.' as per Schedule III, Part I
of the Companies Act, 2013. Also prepare Note to Accounts for the same.
Sol:
"Tractors India Ltd.'
Balance Sheet
Particulars Note no.
I. Equity and Liabilities
1. Shareholders' Funds
a) Share capital 1 4,97,500

Notes to Accounts

20
 1. Share Capital
Authorised Capital
1,00,000 Equity Shares of 10 each 10,00,000
Issued Capital
5,00,000
50,000 Equity Shares of 10 each
Subscribed Capital
Subscribed and Fully Paid-up
49,500 Equity Shares of 10 each 4,95,000
Subscribed and not Fully Paid-up
500 Equity Shares of 10 each 5,000
Less : Calls in Arrear 2,500 2,500 4,97,500

28. Akshit Fashion Ltd. was registered with a capital of 85,00,000 divided into equity shares of 100
each. The company invited applications for issuing 45,000 shares. The amount was payable as:
25 on application, 35 on allotment, 25 on first call and balance on final call.

Applications were received for 42,000 shares and allotment was made to all the applicants.
Abhay to whom 3,000 shares were allotted did not pay the final call. Kavi, to whom 3,300 shares
were allotted, did not pay both the calls. His shares were forfeited.

Present the Share Capital in the Balance Sheet of the company as per Schedule III of the
Companies Act, 2013.

Balance Sheet of "Akshit Fashion Ltd.'

Particulars Note no.
I. Equity and Liabilities
1. Shareholders' Funds
a) Share capital 1 40,23,000

Notes to Accounts
1. Share Capital
Authorised Capital
85,000 Equity Shares of 10 each 85,00,000
Issued Capital
45,000 Equity Shares of 10 each 45,00,000
Subscribed Capital
Subscribed and Fully Paid-up
35,700 Equity Shares of 10 each
Subscribed and not Fully Paid-up 35,70,000
3,000 Equity Shares of 100 each 3,00,000
Less : Calls in Arrear 45,000
2,55,000
Forfeited Shares A/c (3,300x 60) 1,98,000
40,23,000
ISSUE OF DEBENTURES

29. A company took a loan of 10,00,000 from Punjab National Bank and issued 10% debentures of
12,00,000 of 100 each as a collateral security. Explain how you will deal with the issue of
debentures in the books of the company.Pass journal entry and show it in Balance Sheet.

21
 Journal Entry

Particulars Dr.( ) Cr.( )

Debenture Suspense a/c Dr. 12,00,000
To,10% Debentures a/c 12,00,000
(12,000 Debentures of 100 each issued as collatral
security to P.N.Bank)

Particulars Note no.

I. Equity and Liabilities
1. Non-Current Liabilities 1 10,00,000
Long -term borrowings

Notes to Accounts
Particulars
1. Long -term borrowings
Secured Loan from PNB 10,00,000
12,000,10% Debentures of 100 each 12,00,000
Less :Debentures Suspense 12,00,000
-
10,00,000

30. A company issues the following debentures:

(i) 10,000, 12% debentures of 100 each at a discount of 10% but redeemable at par after 5
years;
(ii) 5,000, 12% debentures of 1000 each at a premium of 5% but redeemable at par after 5 years;
(iii) 10,000, 12% debentures of 100 each at par but redeemable at premium of 5% after 5 years.
(iv) 150,7% debentures of 1,000 each are issued at 5% discount and repayable at premium of
10%.
(v) Issue of 1,00,000, 9% debentures of 100 each at premium of 5% and redeemable at
premium of 5%.

i) a) Bank a/c Dr. 9,00,000

To,12% Debentures Application & Allotment a/c 9,00,000
b)Debentures Application & Allotment a/c Dr. 9,00,000
Discount on issue of Debentures a/c Dr. 1,00,000
To, 12% Debentures a/c 10,00,000

ii) a) Bank a/c Dr. 52,50,000

To,12% Debentures Application & Allotment a/c 52,50,000
b)Debentures Application & Allotment a/c Dr. 52,50,000

To, 12% Debentures a/c 50,00,000

To, Security Premium a/c 2,50,000

iii) a) Bank a/c Dr. 10,00,000

To,12% Debentures Application & Allotment a/c 10,00,000

22
 b)Debentures Application & Allotment a/c Dr. 10,00,000
Loss on issue of Debentures a/c Dr. 50,000
To, 7% Debentures a/c 10,00,000
To, Premium on Redemption of Debentures a/c 50,000

iv) a) Bank a/c Dr. 1,42,500

To,7% Debentures Application & Allotment a/c 1,42,500
b)Debentures Application & Allotment a/c Dr. 1,42,500
Loss on issue of Debentures a/c Dr. 22,500
To, 7% Debentures a/c 1,50,000
To, Premium on Redemption of Debentures a/c 15,000

v) a) Bank a/c Dr. 1,05,000

To,9% Debentures Application & Allotment a/c 1,05,000
b)Debentures Application & Allotment a/c Dr. 1,05,000
Loss on issue of Debentures a/c Dr. 5,000
To, 9% Debentures a/c 1,00,000
To, Premium on Redemption of Debentures a/c 5,000
To, Securities Premium a/c 5,000

31. Vimal Ltd. purchased assets worth 5,00,000 and took over liabilities of 1,00,000 of Kapil Ltd.
for a purchase consideration of 4,50,000. Vimal Ltd. paid one third of the amount by cheque
and balance was settled by issuing 11% Debentures of 100 each at a premium of 20%.
Pass necessary Journal entries in the books of Vimal Ltd. for the above transactions.

Journal
Date Particulars Dr. Cr.
a) Assets a/c Dr. 5,00,000
Goodwill a/c (Balancing Fig) 50,000
To, Liabilities a/c 1,00,000
To, Kapil Ltd. 4,50,000

b) Kapil Ltd. Dr. 1,50,000

To,Bank a/c 1,50,000

c) Kapil Ltd. Dr. 3,00,000

To, 11% Debentures a/c (2,500x100) 2,50,000
To, Securities Premium a/c (2,500x20) 50,000

32. On 1st July, 2023, Moonlight Ltd. issued 10,000, 9% Debentures of 200 each at a discount of
5% redeemable after 5 years at a premium of 10%. All the debentures were subscribed and
allotment was made. It has balance in Securities Premium of 1,00,000.
Pass the Journal entries for issue of debentures and writing off the loss on issue of debentures.

23
 Journal
Date Particulars Dr. Cr.
2023 Bank a/c Dr. 19,00,000
July 1 To,9% Debentures Application & Allotment a/c. 19,00,000

2023 Debentures Application & Allotment a/c Dr. 19,00,000

July 1 Loss on issue of Debentures a/c Dr. 3,00,000
To, 9% Debentures a/c 20,00,000
To, Premium on Redemption of Debentures a/c 2,00,000

2024 Securities Premium a/c Dr. 1,00,000

March31 Statement of P/L (Finance cost) Dr. 2,00,000
To, Loss on issue of Debentures a/c 3,00,000

33. Health2Wealth Ltd. had share capital of 80,00,000 divided in shares of 100 each and 20,000,
8% Debentures of 100 each as part of capital employed.

The company needed additional funds of 55,00,000 for which they decided to issue debentures
in such a way that they got required funds after issuing debentures of the same class as earlier, at
10% premium. These debentures were to be redeemed at 20% premium after 4 yea These
debentures were issued on 1st October, 2021.
You are required to:
(i) Pass entries for issue of Debentures.
(ii) Prepare Loss on Issue of Debentures Account assuming there was existing balance of
Securities Premium Account of 2,80,000.
(iii) Pass entries for Interest on debentures on 31st March, 2022 assuming interest is payable on
30th September and 31st March every year.
(i)
Date Particulars Dr. Cr.
(i) Bank a/c Dr. 55,00,000
To,9% Debentures Application & Allotment a/c. 55,00,000

2023 Debentures Application & Allotment a/c Dr. 55,00,000

July 1 Loss on issue of Debentures a/c Dr. 10,00,000
To, 8% Debentures a/c 50,00,000
To, Premium on Redemption of Debentures a/c 10,00,000
To, Securities Premium a/c 5,00,000

(ii)
Date Particulars Date Particulars
2021 To, Premium on 2022 By Securities 7,80,000
Oct.1 Redemption of March Premium a/c
Debentures a/c 10,00,000 31 By St. of P/L 2,20,000
10,00,000 10,00,000

(iii) Journal

24
 Date Particulars Dr. Cr.
2022 Debentures interest a/c Dr. 2,80,000
Marc To, Debentures holders a/c. 2,80,000
h 31
Marc Debentures holders a/c. Dr. 2,80,000
h 31 To, Bank a/c 2,80,000

Marc Statement of P/L (Finance cost) Dr. 3,60,000

h 31 To, Debentures interest a/c 3,60,000
34. Sl.No. Items Major Heads Sub-heads
1. Securities Premium Shareholder’s Fund Reserve &Surplus
2. Calls-in arrears Shareholder’s Fund Share Capital
3. Capital Reserve Shareholder’s Fund Reserve &Surplus
4. Capital Redemption Reserve Shareholder’s Fund Reserve &Surplus
5. Debentures Redemption Reserve Shareholder’s Fund Reserve &Surplus
6. Surplus Balance of the Statement of Shareholder’s Fund Reserve &Surplus
P/LA A/c
7. Balance of the Statement of P/L A/c Shareholder’s Fund Reserve &Surplus
(negative balance) Deduction
8. Provision for Retirement Benefits Non-Current Long-term
Liabilities Borrowings
9. Bonds Non-Current Long-term
Liabilities Borrowings
10. Terms Loan from Bank Non-Current Long-term
Liabilities Borrowings
11. Debentures Non-Current Long-term
Liabilities Borrowings
12. Public Deposit Non-Current Long-term
Liabilities Borrowings
13. Premium payable on Redemption of Non-Current Other Long-term
Preference Shares Liabilities Liabilities
9. Provision for Warranties Non-Current Long-term Provisions
Liabilities
10. Provident Fund Non-Current Long-term Provisions
Liabilities
11. Retirement Benefits Payable Non-Current Long-term Provisions
Liabilities
12. Leave Encashment for Employees Non-Current Long-term Provisions
Unpaid Dividend Liabilities
13 Bank Overdraft Current Liabilities Short-term
Borrowings
14. Loans repayable on demand Current Liabilities Short-term
Borrowings
15. Current Maturities of Long -term Current Liabilities Short-term
Debts Borrowings
16. Calls-in-Advance Current Liabilities Other Current
Liabilities
17. Income Received in Advance Current Liabilities Other Current
Liabilities
18. Interest Accrued and Due on Current Liabilities Other Current
Borrowings Liabilities
19. Interest Accrued but not Due on Current Liabilities Other Current
Borrowings Liabilities

25
 20. Unpaid Dividends (Unclaimed Current Liabilities Other Current
Dividends) Liabilities
21. Provision for Employees Benefits Current Liabilities Short-term Provision
22. Provision for Tax Current Liabilities Short-term Provision
23. Land, Building Machinery & Non-current Assets Fixed Assets
Computer (Tangible)
24. Goodwill, Computer software, Mining Non-current Assets Intangible fixed
Rights ,Licenses & Franchise Assets
25. Capital Work-in- Progress Non-current Assets Fixed Tangible
Assets
26. Investments in Debentures Non-current Assets Non-Current
Investments
27. Shares in SBI, India Non-current Assets Non-Current
Shares in Listed Company Investments
28. Capital Advances Non-current Assets Long-term Loans and
Advances
29. Work-in-Progress, Stores and Spares Current Assets Inventories
and Loose Tools
30. Cash in Hand Current Assets Cash and Cash
Equivalents
31. Prepaid Expenses, Accrued Incomes Current Assets Other Current Assets
35. From the following statement of profit and loss of Madhu Co. Ltd., prepare comparative
statement of profit and loss for the year ended March 31, 2016 and 2017:

Particulars Note No. 2015-16 ( ) 2016-17 ( )

Revenue from operations 16,00,000 20,00,000

Employee benefit expenses 8,00,000 10,00,000
Other expenses 2,00,000 1,00,000
Tax rate 40%

36. The following are the Balance Sheets of J. Ltd. as at March 31, 2016 and 2017.
Prepare a Comparative balance sheet.

Particulars Note 2015-16 ( ) 2016-17 ( )

No.
I. Equity and Liabilities
1. Shareholders' Funds
a) Share capital 20,00,000 15,00,000
b) Reserve and surplus 3,00,000 4,00,000
2. Non-current Liabilities
Long-term borrowings 9,00,000 6,00,000
3. Current liabilities
Trade payables 3,00,000 2,00,000
Total 35,00,000 27,00,000
II. Assets
1. Non-current assets
a) Fixed assets
Tangible assets 20,00,000 15,00,000
Intangible assets 9,00,000 6,00,000
2. Current assets
Inventories 3,00,000 4,00,000
Cash and cash equivalents 3,00,000 2,00,000
35,00,000 27,00,000

26
37. From the following statement of profit and loss of Madhu Co. Ltd., prepare Common Size
Income Statement for the year ended March 31, 2016 and 2017:

Particulars Note No. 2015-16 ( ) 2016-17 ( )

Net Sales 18,00,000 25,00,000

Cost of goods sold 10,00,000 12,00,000
Operating expenses 80,000 1,20,000
Non-Operating expenses 12,000 15,000
Depreciation 20,000 40,000
Wages 10,000 20,000

38. The following are the Balance Sheets of XRI Ltd. as at March 31, 2016 and 2017.
Prepare a Common-Size balance sheet.

Particulars Note March March

No. 31,2016( ) 31,2017(
)
I. Equity and Liabilities
1. Shareholders' Funds
a) Share capital 15,00,000 12,00,000
b) Reserve and surplus 5,00,000 5,00,000
2. Non-current Liabilities
Long-term borrowings 6,00,000 5,00,000
3. Current liabilities
Trade payables 15,50,000 10,50,000
Total 41,50,000 32,50,000
II. Assets
1. Non-current assets
a) Property, Plant &Equipment &Intangible Assets:
Property, Plant &Equipment
-Plant & Machinery 14,00,000 8,00,000
Intangible assets
- Goodwill 16,00,000 12,00,000
b) Non-Current Investments 10,00,000 10,00,000
2. Current assets
Inventories 1,50,000 2,50,000
41,50,000 32,50,000

39. From the following information ,prepare Cash Flow Statement for Pioneer Ltd.

Particulars Note March 31,2017 March

No. ( ) 31,2016( )
I. Equity and Liabilities
1. Shareholders' Funds:
a) Share capital 1 7,00,000 5,00,000
b) Reserve and surplus 2 3,50,000 2,00,000
2. Non-current Liabilities:
Long-term borrowings: Bank Loan 50,000 1,00,000
3. Current Liabilities:

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 a) Trade payables 45,000 50,000
b) Other current liabilities: outstanding rent 7,000 5,000
c) Short-term provisions 3 1,20,000 80,000
Total 12,72,000 9,35,000

II. Assets
1. Non-current assets
a) Property, Plant &Equipment &Intangible Assets:
(i) Property, Plant &Equipment 4 5,00,000 5,00,000
(ii) Intangible assets 5 95,000 1,00,000
b) Non-current investments 1,00,000 -
2. Current assets
a) Inventories 1,30,000 50,000
b) Trade receivables 1,20,000 80,000
c) Cash and cash equivalents 6 3,27,000 2,05,000
Total 12,72,000 9,35,000
Notes to Accounts:
Particulars March 31,2017( ) Mar 31,2016( )
1. Equity Share capital 7,00,000 5,00,000
2. Reserve and Surplus
Surplus:i.e.,Balance in Statement of Profit &Loss 3,50,000 2,00,000
3. Short-term Provision:
Proposed Dividend 70,000 50,000
Provision for Taxation 50,000 30,000
1,20,000 80,000
4. Property, Plant &Equipment &Intangible Assets:
Property, Plant &Equipment
- Equipment 2,30,000 2,00,000
-Furniture 2,70,000 3,00,000
5,00,000 5,00,000
5. Intangible Assets :
Patents………………………………………… 95,000 1,00,000
6. Cash and cash equivalents:
i) Cash 27,000 5,000
ii) Bank balance 3,00,000 2,00,000
3,27,000 2,05,000
During the year equipment costing 80,000 was purchased. Loss on sale of equipment amounted
to 5,000 .Depreciation of 15,000 and 3,000 charged on equipment and furniture.
40. From the following information ,prepare Cash Flow Statement for Pioneer Ltd.
Particulars Not March March
e 31,2017( ) 31,2016( )
No.
I. Equity and Liabilities
1. Shareholders' Funds:
a) Share capital 15,00,000 10,00,000
b) Reserve and surplus 7,50,000 6,00,000
2. Non-current Liabilities:
Long-term borrowings: 1 1,00,000 2,00,000
3. Current Liabilities:
a) Trade payables 1,00,000 1,10,000
b) Short Term Provision:

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 (Provision for taxation) 95,000 80,000

Total 25,45,000 19,90,000

II. Assets
1. Non-current assets
a) Property, Plant &Equipment &Intangible Assets:
(i) Property, Plant &Equipment 2 10,10,000 12,00,000
(ii) Intangible assets(Goodwill) 1,80,000 2,00,000
b) Non-current investments 6,00,000 -
2. Current assets
a) Inventories 1,80,000 1,00,000
b) Trade receivables 2,00,000 1,50,000
c) Cash and cash equivalents 3 3,75,000 3,40,000
Total 25,45,000 19,90,000

Notes to Accounts:
Particulars March 31,2017( ) March31,2016( )
1. Long-term borrowings:
i)Debentures - 2,00,000
ii)Bank Loan 1,00,000 -
1,00,00 2,00,000
2. Property, Plant&Equipment
i) Land and Building 6,50,000 8,00,000
ii)Plant and machinery 3,60,000 4,00,000
10,10,000 12,00,000
3. Cash and cash equivalents:
i) Cash in hand 70,000 50,000
ii) Bank balance 3,05,000 2,90,000
3,75,000 3,40,000

Additional information:
1. Dividend proposed and paid during the year 1,50,000.
2. Income tax paid during the year includes 15,000 on account of dividend tax.
3. Land and building book value 1,50,000 was sold at a profit of 10%.
4. The rate of depreciation on plant and machinery is 10%.

41. From the following information ,prepare Cash Flow Statement for Mohan Ltd.
Particulars Note March March
No. 31,2017( ) 31,2016( )

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 I. Equity and Liabilities
1. Shareholders' Funds:
a) Equity Share capital 3,00,000 2,00,000
b) Reserve and surplus 2,00,000 1,60,000
2. Non-current Liabilities:
Long-term borrowings 1 80,000 1,00,000
3. Current Liabilities:
a) Trade payables 1,20,000 1,40,000
b) Short-term provisions 2 70,000 60,000
Total 70,000 60,000
7,70,000 6,60,000
II. Assets
1. Non-current assets
a) Property, Plant & Equipment 3 5,00,000 3,20,000
2. Current assets
a) Inventories 1,50,000 1,30,000
b) Trade receivables 4 90,000 1,20,000
c) Cash and cash equivalents 5 30,000 90,000
Total 7,70,000 6,60,000

Notes to Accounts:
Particulars March 31,2017( ) Mar 31,2016( )
1. Long-term borrowings:
Bank Loan 80,000 1,00,000
2. Short-term Provision:
Proposed Dividend ……………………………. 70,000 60,000
3.i) Property, Plant & Equipment :
Machinery 6,00,000 4,00,000
Less :Accumulated Depreciation 1,00,000 80,000
5,00,000 3,20,000
4. Trade Receivable
Debtors 60,000 1,00,000
Bills Receivable 30,000 20,000
5. Cash and cash equivalents: 90,000 1,20,000
ii) Bank 30,000 90,000

Additional Information:
Machine costing 80,000 on which accumulated depreciation was 50,000 was sold for
20,000.
42. From the following information ,prepare Cash Flow Statement for DCX Ltd.

Particulars Note March March

No. 31,2018( ) 31,2017( )

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 I. Equity and Liabilities
1. Shareholders' Funds:
a) Share capital 30,00,000 21,00,000
b) Reserve and surplus 1 4,00,000 5,00,000
2. Non-current Liabilities:
Long-term borrowings 2 8,00,000 5,00,000
3. Current Liabilities:
a) Trade payables 1,50,000 1,00,000
b) Short-term provisions 3 76,000 56,000
Total 44,26,000 32,56,000

II. Assets
1. Non-current assets
Property, Plant & Equipment &Intangible Assets:
i) Property, Plant & Equipment 4 27,00,000 20,00,000
ii) Intangible Assets 8,00,000 7,00,000
2. Current assets
a)Current Investment 89,000 78,000
b) Inventories 8,00,000 4,00,000
c) Cash and cash equivalents 37,000 78,000
Total 44,26,000 32,56,000

Notes to Accounts:
Particulars March 31,2018( ) March 31,2017(
)
1. Reserve and surplus :
Surplus i.e., Balance in Statement of Profit & Loss 4,00,000 5,00,000
2. Long-term borrowings:
8% Debentures 8,00,000 5,00,000
3. Short-term Provision:
Provision for Tax ……………………………. 76,000 56,000
3. Property, Plant & Equipment:
Machinery 33,00,000 25,00,000
Less :Accumulated Depreciation (6,00,000) (5,00,000)
27,00,000 20,00,000

Additional Information:
(i) During the year a Machinery costing 8,00,000 on which accumulated depreciation was
3,20,000 was sold for 6,40,000.
(ii) Debentures were issued on 1st Apil ,2017.

ASHOK KUMAR HOTA PGT (COMMERCE)

DPS KALINGA,BHUBANESWAR. (Phone-9861110078)

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