Professional Documents
Culture Documents
1] From the following trial balance of Ajit and Sujit, you are require to prepare a trading and profit
and loss A/C for the year ended 31 December 2013 and balance sheet as on that date :
[gross profit 96000, net profit 68050, net profit transferred 61050]
2] Sujata, Sarita and suman are partners sharing P & L in the ratio 3:2:1. Suman is guaranteed profit
of ` 16000 p.a. as her minimum share. Any deficiency will be borne by the other partners in their
profit sharing ratio. Interest at rate of 6% is to be allowed on partners fixed capital account. On 31
march,2014,Trial balance was as under :
Debit ` Credit `
Building 64000 Fixed capital A/C :
Machinery 50000 -Sujata 80000
Vehicles 20000 -Sarita 60000
Purchases 290000 Current accounts:
Stock 68000 - Sujata 16000
Wages 65000 -Sarita 9000
Trade expenses 25000 Sales 672000
Salaries 30000 Creditors 48000
Repairs 28000 Provision for doubtful debts 3000
Commission 2500 Commission 4000
Office expenses 33200 Discount 6400
Rates and Taxes 22900
Bank balance 142400
Debtors 84000
Suman current account 13400
938400 938400
Additional information : (1) Closing stock ` 70000 (2) Sujata has taken goods worth ` 3000 from
stock for which no entry is made in the books. (3) Sarita is to be paid ` 24000 for travelling expenses
for business trip. (4) Wages outstanding are ` 5000 and commission received in advance ` 1000 (5)
Depreciation on machinery and building is to be provided @ 10%p.a. and on vehicle @15% p.a
(6)Provision for doubtful debts is to be increased to ` 6000 (7) Goods worth ` 10000 were destroyed
by fire ,the same were not insured.
3]X,Y,Z are partners in manufacturing business sharing profit and loss , X 2/5 , Y 2/5, Z 1/5. Z’s
annual share of profit is to be a minimum of ` 20000 any deficiency being borne by the other two
partners in their profit sharing ratio. No interest is allowed or charged on partners current account
but fixed capital accounts carry interest at 6 % per annum. The firms trial balance as on 31 march
2014 was as follows :
Particulars ` Particulars `
Freehold premises cost 90000 Capital A/C
Plant and machinery 80000 X
80000
Stock[1/4/2013] 72000 Y
60000
Purchases 380000 Z 170000
30000
Motor vehicles 24000 Current account[1/4/2013]
Manufacturing Wages 82000 X
18000
Trade expenses 6000 Y 24000
6000
Salaries 54000 Sales 678000
Repairs 12000 Creditors 42000
Cash discount 2400 Provision for Doubtful 3400
debt[1/4/2013]
Office expenses 36000 Cash Discount 4200
Carriage inward 6200 Provision for Depreciation
(1/4/2013):
-Plant and Machinery 24000
-Motor Vehicles 12000
Rates and Insurance 14000
Professional Charges 4000
Debtors 68000
Bank at balance 8000
Current Account Z (1-4-2013) 11000
Carriage Outward 8000
957600 957600
You are given the following information:
(1)Stock on hand on 31st March 2014 amounted to `64800.(2)Sales included 24000 for goods sold
out on sale or return charged to customers at cost plus 20% & which remained in their hands
unsold on 31st March 2014.(3)The following amounts included in salaries have been drawn each
month by the partners:X500; Y400; Z250. (4)It was agreed that a charge of `2500 should be made to
Y for goods supplied to him from stock during the year. (5) X who acted as traveller is to be created
with an expenses allowance of ` 2000. (6) Repairs include an item of ` 7500 for alteration to the
office which amount ,it is agreed should be capitalised. (7) Rates and insurance paid in advance
amounted to ` 5000 and office expenses accrued amounted to ` 1200. (8) A motor vehicle costing `
9000 had been purchased during the year against which ` 6000 had been allowed on the sale of old
vehicle, the net amount only being debited to motor vehicle account. The vehicle sold had cost `
7500 and had been written down to ` 2500. (9) Depreciation on plant and machinery and motor
vehicle is to be provided at the rate of 10% and 20% p.a. on the cost. (10) A debt of ` 600 is to be
written off and the provision for doubtful debt increased to ` 4500. You are require to prepare
[a]Trading & P &L A/C for year ended 31 march 2014 [b]Balance sheet as on date [c] Partners
current a/c. [Gross profit 195100,Net profit 81300,balance sheet 293200]
[4] Rani & Rita are partners sharing profit & Losses equally. The firms trial balance as on 31
December 2014 was as follows :
Closing stock on 31.12.2013 was valued at ` 20500 WHILE ITS MARKET PRICE IS ` 22500. [2] Goods
worth ` 2500 were destroyed by fire & insurance company agreed to pay ` 2000 in full settlement of
the claim. [3] Unpaid expenses- Rent `50 & Salary `250. [4] Provide depreciation at 10 % on
machinery &5 % on furniture. [5] Goods worth ` 4000 were sold on 27 th december2013 but no entry
was made in the books. You are require to prepare Trading & P &L A/C for year ended 31
December 2013 and Balance sheet as on date
Ram & Kirti were in partnership in retail business sharing profit & losses in proportion of 3:2. As
from 1.1.2013 they admitted vikram into partnership giving him 1/5 of profit. Vikram brought in
`20000 in cash of which `60000 were considered as being in payment for his share of goodwill and
reminder as his capital. The following was extracted from the books as on 31.12.2013
JAYA AND BHADURI WERE PARTNERSHIP SHARING PROFIT IN THE RATIO OF 3:2 FROM 1 ST JAN
2013 ,THEY ADMITTED AMIT INTO PARTNERSHIP GIVING HIM 1/6 SHARE IN PROFIT. HE BROUGHT
`10000 CASH, OF WHICH `3000 WAS CONSIDERED AS BEING IN PAYMENT FOR HIS SHARE OF
GOODWILL AND HT EBALANCE AS HIS CAPITAL.
Particulars ` Particulars `
Drawings: Rent payable 928
- Jaya 4000 Outstanding wages 2719
- Bhaduri 3500 Sales 263150
Purchases 166405 Return outward 3120
Return inward 4250 RDD 1200
Debtors 40200 Creditors 30106
Opening stock 27225 Bills payable 8950
Salaries 8753 Dividend 825
Wages 20137 Capital: 42000
Building 6750 -jaya 14500
Postage 3226
Power 1850
General expenses 3314
Rent rate and taxes 3517
Bad debt 525
Loan to P’ at 6%p.a[given on 5000
1/9/13]
Investment 11500
Prepaid expenses 524
Cash/bank 5752
Bills receivable 17070
343798 343798
ADJUSTMENT: [1] Closing stock was valued at `15760 [2] Goods costing `1000 have been stolen but
not entered in the books. [3]Write off 1/5th of patents [4] B.R. include dishonoured bill of `1050 [5]
Maintain reserve for Doubtful debt @ 5% [6] Depreciate building @10%p.a. [7] Necessary
adjustment in connection with admission is to be made through current accounts of the partner. [8]
Goodwill should not appear in the books. Prepare final Account.
A & B were partners sharing profit and losses in 2/3[A] & 1/3[B]. Interest on fixed capital was
credited at the rate of 5 % p.a .No interest was charged on drawing. On 1/1/2014 C was admitted as
a partner & the new profit sharing was A 6/10, B 3/10, C1/10. C WAS TO BE CREDITED WITH A
SALARY AT THE RATE OF `6000P.A.
It was agreed by A that C’s total share of profit including his salary and interest on capital should be
guaranteed at a minimum of 18600. Any apportionment should be made as to gross profit on the
basis of sales and as to expenses, with exception of general expenses, on the basis of time.Trial
balance as follows :
Asha and Bisha were partners sharing profit and loss in the ratio of 3:2 with effect from 1/10/2012,
Cisha joins as a third partner. The ratio was 2:2:1.The following is the trial balance as on 31-3-2013.
Furniture 200000 -
General expenses 60000 -
Selling expenses 14000 -
[5] Pranav & Harsh carried on business in partnership sharing profit & losses in the ratio 3:2. They
admitted Pranam on 1.1.2013
,giving him share 1/6th .He brought ` 200000 on his capital & `5000 as his share of goodwill..The trial
balance as follows:
[1] Stock on 31.3.2014 was valued at `206300. [2] A debtor of `1250 is to be written off & provision
against the remaining debtors should be made at 5 %. [3] Provide for the following outstanding
expenses as on 31.3.2014: Sundry Expenses `2900,Salaries `3000 & wages `1200. [4]Insurance prepaid
as on 31.3.2014 `2500 [5] Depreciate following asset as given: Plant and machinery 20 %, Computer
25% , Office premises 5%p.a. [6] Param is entitled to recive rent ` 1000.
You are require to prepare: Trading and P & L for the year to march 31 march 2014 and balance
sheet.
[1]
DEBIT ` CREDIT `
Drawings:
- A 12000
- B 12000 Sales 294000
- C 12000
Purchases 156000 Return outward 2000
Return inward 2400 RDD 8800
Debtors 100000 Creditors 76500
Stock 24000 Bills payable 8700
Salaries 27000 Bank loan 20000
Carriage inward 4500 Capital A/C :
Carriage outward 6750 -A 30000
Further adjustment at year end : [1] Closing stock is valued at `14300. [2] Bad debt provision is to be
kept at 1500. [3] 15% interest on partners capital is to be provided. [5]Each partner is to be
paid a salary of `1200p .a. [6] :Loan of `300 was given to a worker but is wrongly debited to salary
account. [7] Outstanding trade expenses `100. [G.P.:44600, N.P.:12725,B/S:138100]
[3]Dinesh, Amar and Manoj were partners sharing profit and loss in the ratio of 3:2:1 respectively.
following information provides trial balance.
Debit ` Credit `
Building 900000 capital A/C :
Machinery 600000 -Dinesh 320000
Furniture 45000 -Amar 270000
12% investment 1.4.2013 200000
Stock 125500 R.D.D 9000
Rent 144000 Loan from Amar 150000
sundry expenses 42000
Salaries 293000 Creditors 216250
Advertisement 62500 Gross profit 1425000
Carriage outward 22500 Bills payable 26350
Insurance 9000 Interest on investment 12000
Salesman commission 150000 Bank loan-31.3.2014 300000
Cash and bank 25750
Debtors 45000
Bills receivable 61750
Drawing: Dinesh 32500
Amar 43500
Manoj 28000
Bad debts 6000
2953000 2953000
On 31 december,2013,Dinesh retired. Following are the adjustment
[1] Goodwill of the firm was valued at `240000. [2]Balance of Dinesh Capital account after all
adjustment was to be transferred to his loan A/C carrying interest @ 18% p.a. [3] Depreciate fixed
asset @12%p.a. [4]Write off further bad debt `12000 [5]Provide interest on capital @9% p.a. & loan
6% [6]During the year Gross profit ratio is constant. [7] Sales upto December,2013 were ` 2500000 &
thereafter was `625000. {G.P.:1140000,N.P.:464200,B.S.:2174600]
[4] Jack & John carried on retail business in partnership sharing profit and losses : Jack 2/3 ,John 1/3
. Interest credited on partners fixed capital at the rate of 10 % p.a. & no interest was charged on
drawing. On January 1,2014 Jackson & Johnson were admitted as partner & as from that date,
profits & losses were shared Jack 6/12,John 3/12,Jackson 2/12 & Johnson 1/12. Johnson’s share was
guaranteed by jack at the minimum rate of ` 12000p.a, In addition to his share of the profits,
Johnson was to be credited with a salary at `6000 p.a. The arrangement as to interest are to
continue. Extracted trial balance as follows:
[gp:`159450,NPPRE)`75000,(POST)`24450:B/S :`176250]
[5] [Sole trader admitting partner during year] :Krishna was caring on business as a wholesale
businessman. He closes his books of A/C on 31.3 of every year. Kiran was his manager on a monthly
salary of `2000 till 30September,2013 & from 1st October,2013 it was agreed that he will be admitted
as a partner with 1/3rd share in the profit & losses without any salary. Following trial balance as on
31.3.2014
381000 381000
Additional information:[1] Purchases were ` 100000 upto 30 th September 2013. [2] Sales during the
first six month of the year were `11000. [3] Stock as on 30 th September 2013 & as on 31st march
2014 was `50000 & `20000 respectively. [4] Furniture & fitting are to be depreciated at 10 % &
motor car at 20%. [5] Rent which was `450p.m. upto 30th November 2013 was increased to `600 p.m.
from 1st December,2013. You are require to prepare: Trading and P & L for the year to march 31
march 2014 and balance sheet.
The partnership deed of X,Y,Z trading in partnership as it provides the following information:
(1)Interest at 5% on capital Account. (2) B & C to be entitled to salary of `500 & `350 p.m.
respectively. (3) Balance of profit to be shared equally. (4) On retirement of partner, deferred revenue
expenses are to be written off in proportion of partners capital.
A retires from partnership as on 31 december 2013 and you are asked to prepare a B/S as on 31
december 2013 showing amount payable to A on retirement from the following trial balance :
PARTICULAR ` PARTICULAR `
Capital account-X 50000 Cash in hand 500
- -Y 10000 LIABILITIES 17000
5000 Trading account 52000
-z
Current account-y 4000 Salaries to staff 8000
3000 Rent and other office 7000
-z exp
Land and building 37500 Expenses 7000
Furniture 6000 Depreciation 500
Debtors 15000 Bad debts 1000
Cash at bank 10000 Deferred revenue 6500
exp.
134000 134000
[1] Arun,Varun and Mithun were partnership sharing profit & losses in the ratio 2:2:1 respectively.
The partnership was dissolved on 1st April,2013. Their B/S as on 31.3.2013 was as follows:
Liabilities ` Asset `
Sundry Creditors 106250 Cash 9520
General reserve 21250 Sundry Debtors 87125
Capital: Arun 82450 Stock 57035
Varun 93500 Machinery 179520
Mithun 55250 Furniture 25500
358700 358700
Sundry creditors have to be paid `98600 in full settlement. A sum of ` 9520 have to be provided for
expenses of realisation. The asset are realised as under:
[2]The firm of LMS was dissolved on 31.3.2014 at which date its balance sheet stood as follows :
Liabilities ` Asset `
Creditors 200000 Fixed asset 4500000
Bank loan 500000 Cash and bank 200000
L’s Loan 1000000
Capital: L 1500000
M 1000000
S 500000
4700000 4700000
Partners share profit equally. A firm of C.A. is retained to realise the asset & distribute the cash after
discharge of liabilities. Their fees which are to include all expenses is fixed at ` 100000. No loss is
expected on realisation since fixed asset includes valuable land and building. Realisation are 1st
`500000,2nd `1500000, 3rd `1500000, 4th 3000000,5th `3000000. The C.A. firm decided to pay off the
partners in “Higher Relative Capital Method”. You are require to prepare Statement Showing
distribution of cash with necessary working.
[3] Alu, Mutter & Gobi partners of M/S Veg always sharing profit and losses in the ratio of 3:2:1. On
30th June 2013 they decided to dissolve their firm when their balance sheet was as under:
Liabilities ` Asset `
Sundry Creditors 150000 Goodwill 80000
Reserve 60000 Building 64000
Plant 47000
Capital:Alu 80000 Furniture 44000
Mutter 60000 Debtors 92500
Gobi 50000 190000 Bills receivable 39000
Stock 22500
Bank 11000
400000 400000
The realisation and Expenses of Realisation were as stated below:
Liabilities ` Asset `
Sundry Creditors 160000 Cash 50000
General reserve 150000 Sundry Debtors 1250000
Capital Accounts: North 500000 Plant and machinery 2000000
East 150000 Inventories 750000
500000
West
East’s loan 500000
Bank overdraft 700000
4050000 4050000
Adjustment:
Profit sharing ratio: North1/2, East 1/3, West 1/6. [2]Bankers could realise only `680000 on sale of
pledge stock. [3] During August 2013,Plant and Machinery were disposed of at `1800000,expenses of
sale realised `150000.The remaining debtors were taken over by West for `50000, who contributed
the said amount in cash. [4] An amount of `25000 was kept reserved for meeting a contingent
liability against which actual payment of `20000 was made in full settlement on 1 st September,2013.
[5] A creditor for `80000 agreed to forgo `20000 while a claim of unrecorded creditor for `10000 had
to be admitted.[6] Partners decided to distribute cash as and when realised. Show statement of
distribution of cash. Use Highest Relative Capital Method.
[Unpaid balance:315000,210000,105000]
[5] Sonam,Nidhi & Pooja are partners always sharing profit and losses in the ratio of 4:2:1. they
decided to dissolve their firm as on 31.3.2014 when their balance sheet was as under:
Liabilities ` Asset `
Creditors 30000 Land and building 50000
Bills payable 30000 Machinery 150000
10%bank loan[unsecured] 40000 Cash and bank 500
Capital: Sonam 100000 Stock 34500
Nidhi 60000 Debtors 45000
Pooja 20000
280000 280000
`800 has to be provided for realisation expenses. Thereafter all cash received should be distributed
among the partners. The amount were realised in instalment as follows:
Instalments `
1st 60300
2nd 50000
3rd 79000
4th 27700
You are require to prepare Statement showing Piecemeal distribution of cash as per excess capital
method.
[Ultimate excess:`10000]
[6] Amar, Akbar, Anthony & Aesop are partners of M/S ALL & CO. sharing profit and losses in the
ratio of 4:3:2:1. ON 30TH June 2014 ,they decided to dissolve their firm . when their balance sheet
was as under:
Liabilities ` Asset `
Liabilities 50000 Asset 400000
Reserve 60000 Capital: Anthony 5000
Capital: Amar 45000
Akbar 150000
Aesop 100000
405000 405000
The realisation & Expenses of realisation were as under:
Realisation ` Expenses `
You are require to prepare Statement showing Piecemeal distribution of amount available under
Highest Relative capital method.
[7] Mr.B,C,D ARE sharing profit and losses in the ratio of 5:4:3 ON 1,January2014 ,they decided to
dissolve their firm . when their balance sheet was as under:
Liabilities ` Asset `
General reserve 30000 Machinery 87000
Mr.B LOAN 15000 Motor car 39000
Mr.CLoan 20000 Investment 30000
Creditors 25000 Stock 27000
Capital Account: Mr.B 60000 Debtors 41000
Mr.C 50000 Cash in hand 16000
Mr.D 40000
240000 240000
The Assets were realised as follows:
PARTICULAR ` PARTICULAR `
On January 31000 On march 1,2014;Realised 11000
18,2014;Realised
On February 28000 On march 15,2014;Realised 10500
1,2014;Realised
On February 49000 On march 31,2014;Realised 23500
12,2014;Realised
On February 14000
18,2014;Realised
On February 18, 2014. The motor car was taken over by Mr.B at an agreed of ` 3000.Distribution
Expenses were provided at an estimate of ` 1500 but actual expenditure was ` 1200.On march
31,2014 the accounts were closed.
[1] Two firms P & Q , R & S agreed to amalgamate their business. Their position as on 31.12.2013
was as follows:
Liabilities ` Asset `
Creditors 104000 Cash AT BANK 156000
Capital: debtors 130000
P 182000 Furniture 10000
Q 130000 Stock 42000
Building 78000
416000 416000
Balance sheet as of R & S as at 31.12.2013
Liabilities ` Asset `
Creditors 52000 Cash AT BANK 65000
Capital: debtors 104000
R 91000 Furniture 13000
S 65000 Stock 26000
208000 208000
Creditors & debtors were not taken over by the new firm ‘PQRS’.Building was retained by P &Q but
the new firm agreed to pay a monthly rent of ` 400.
The cash for working of the new firm was estimated at `130000 to be provided by the partners in
their new profit sharing proportion as under”: P 3/10,Q 3/10, R 2/10, S 2/10.
*Write the books of P,Q & R,S.*Give the opening balance sheet of PQRS.
[2] Following is the B/S of M/S Inki & Pinki & M/S Rinki & Sinki as on 31st march 2014.
Liabilities Inki & Rinki & Asset Inki & Rinki &
Pinki Sinki Pinki Sinki
Mrs. Inki’s loan 10000 - Building - 42000
Outstanding salaries 1000 900 Plant & Machinery 40000 25000
Stock 20000 15000
Creditors 25000 30000 Furniture 10000 8000
Bills payable - 9000 Debtors 12000 11000
Capital Account : Cash in hand 5000 3900
P 36000 - Patterns & Moulds 3000 5000
Q 18000 -
R - 40000
S - 30000
90000 109900 90000 109900
Inki & Pinki sharing profits in the ratio of 2:1 & Rinki & Sinki were sharing profits in the ratio of 3:2
.The two firms were amalgamated on the following grounds:
* Outstanding salaries were paid by the old firm. * Furniture of both firm were not to be taken over
by new firm. Inki & Pinki sold their furniture for ` 12000, Rinki & Sinki sold their furniture for `
7000. * Patterns & Moulds of both the firm were not taken over by the new firm and distributed in
profit sharing ratio. * Building was valued at `45000. * Stock of Inki & Pinki was undervalued by `
2000 but of Rinki & Sinki was overvalued by ` 3000. * Debtors of Inki & Pinki include bad debt of
`2000.Debtors were taken by new firm subject to 5% reserve for doubtful debts. * Mr.Inki agreed to
pay off Mrs. Inki’s loan. Close the books of old firm and prepare the balance sheet of Inki &
Pinki , Rinki & Sinki .
[Inki & Pinki : Realisation profit ` 1500; Rinki & Sinki : Realisation loss ` 1550; B/S Total ` 189950 ]
[3] Following is the B/S of M/S DE & M/S GH as on 31st march 2015.
Liabilities ` ` Asset ` `
Trade Creditors 140000 98000 Building 250000 -
Bank loan 28000 70000 Stock 35000 123200
Capital: debtors 56000 140000
D 280000 - Machinery 158000 28000
E 140000 - Investment 75000 112000
G - 168000 Cash 14000 44800
H - 112000
588000 448000 588000 448000
They agreed to amalgamate their business from 1.4.2014 as ‘DEGH’ Share profit & losses:
D E G H
Old firm 2 1 3 2
New Firm 3 2 3 2
All asset & Liabilities are taken over at an agreed value shown as under :
Particulars ` `
Bank loan 28000 70000
Trade creditors 135000 95000
Building 300000 -
Machinery 150000 30000
Investment 70000 110000
Stock 38000 124000
Debtors 55000 138000
Prepare necessary accounts in the books of old firm. balance sheet of new firm.
CAPITAL ADJUSTMENT
[1] Following is the B/S of TWO FIRMS M/S B & C :M/S P & V as on 30.6.2014.
Balance sheet as on 30.6.2014 B:C
Liabilities ` Asset `
Creditors 30000 Cash AT BANK 22500
Bills payable 7500 Investment 15000
Bank overdraft 3000 Furniture 18000
B’s loan 9000 Goodwill 13500
General reserve 12000 Debtors 15000
Investment Fluctuation fund 3000 Less:R.D.D 1500 13500
Capital Account: Machinery 22500
B 52500 Premises 45000
C 33000 Land -
150000 150000
Liabilities ` Asset `
Creditors 15000 Cash AT BANK 12000
Bank overdraft 15000 Furniture 9000
Investment 12000
General reserve 4500 Debtors 12000
Investment Fluctuation fund 1500 Land 75000
Capital Account:
P 54000
V 30000
120000 120000
On 1.7.2014 the two firm shall take over the investment after reducing their values by 10 %. * The
new firm shall takeover the investment after reducing their values by 10%. * Furniture of both the
firms shall not be taken over by the new firm & were taken over by the partners in profit sharing
ratio. * The new firm to take over only trade liabilities. B & C paid liabilities not taken over by the
new firm while p & V took over them in profit sharing ratio. * Each firm is paid ` 67500 for goodwill.
* There was unrecorded office equipment of p and v valued at ` 1200 which was not taken over. *
The capital of new firm fixed at `240000 to be divided equally among the partners. Pass necessary
journal entries in the books of B ,C & P,V.
[2] Following is the B/S of TWO FIRMS OF M/S DRUGS TRADERS & MEDICINE MERCHANTS AS ON
31.3.2014.
LIABILITIES DRUGS MEDICINE ASSET DRUGS MEDICINE
TRADERS MERCHANTS TRADERS MERCHANTS
` ` ` `
Creditors 30000 40000 Cash in hand 12200 5700
Bank O/D 10000 - Stock 30800 40300
Capital Account: debtors 42000 35000
C 80000 - Premises 63000 -
D 40000 - Bills receivable - 11000
E - 45000 3% National saving - 24000
certificates
F - 35000
160000 142000 160000 142000
C &D share profit and losses in the ratio of 2:1 & E,F share profit and losses in the ratio of 3:1. They
decided to amalgamate their business on the following terms: 1.Bank O/D & O/S salaries should be
paid by respective firms. 2. 3 % National saving certificates are not to be taken over by the new
firm. 3. The goodwill of DRUGS TRADERS is fixed at `12000 & the goodwill of MEDICINE
MERCHANTS is fixed at ` 24000. 4. The stock of DRUGS TRADERS is valued at `29900 & MEDICINE
MERCHANTS at ` 38050. 5.Reserve of 5% is to be made for doubtful debt of both the firms. 6. The
total capital of new firm is ` 240000 divided between C,D,E,F in the ratio of 4:3:3:2. 7. The goodwill
account is to be written off in the books of new firm.
Pass necessary journal entries in the books of DRUGS TRADERS & MEDICINE MERCHANTS and the
new firm.
[3] A & CO. & C & CO. Decided to amalgamate on the following terms & condition on 1 st
April,2014,when their B/S were as follows :
1.In case of A & CO. [A] Goodwill was valued at `3000. [B] Partners of A & CO. Should be take over
its bank loan.. [C] Building was taken to be worth ` 6000. [D] Stock to be valued at ` 2500.
2.In case of C & CO. . [A] Goodwill was valued at `2000. [B]Investment were not taken over by the
new firm. [c] Stock to be valued at ` 1880.
You are require to show necessary ledger account in the books of A & CO , C &CO. And prepare
B/S of new firm after amalgamation.
[1]Shri bala & Shri wala are in partnership as Lala & Co.” In the similar type of business shri Fail &
Shri Shirish are in partnership as Farish & co. It was agreed that on 1st April 2014 the partnership be
amalgamated into one firm Larish & Co.”.The profit sharing ratio of the old firm & new firm are as
follows:
Old firm 2 3 3 2
New firm 6 5 3 4
As on 31st march 2014 the balance sheet of their firm were as follows:
LIABILITIES Lala & Farish & co ASSET Lala & Farish & co
Co. ` ` Co. ` `
BALA ‘s capital 60000 - Land 45000 54000
WALA’s capital 90000 - Furniture 13000 9500
FALI’s capital - 60000 Investment 4000 -
SHIRISH’s capital - 40000 Stock 44900 26000
Creditors 30000 33000 Debtors 52500 42250
Bank Lo/d - 6500 bank 5600 -
Vehicles 15000 7750
180000 139500 180000 139500
The amalgamation was ,made on following terms:
Shri Bala to take over investment foe `8000.The capital of the partners in the firm to be `300000 &
to be contributed by their profit sharing ratio & adjustment to be made in cash. Sharing ratio and
adjustment to be made in cash.
You are require to show necessary ledger account in the books of Lala & co. And prepare B/S of
new firm after amalgamation.
[2] M/s Ambuja traders & M/s Ultratech Traders were are in partnership they Decided to
amalgamate . when their B/S were as follows :
*The new firm called as M/S Cement traders decided to value goodwill of both firms at 18000 each.
*For Ambuja traders the new firm took investment & debtors of book value. Premises at `75000 &
Machinery at ` 13000. Furniture was not taken over by the new firm. *For Ultratech Traders the new
firm took furniture & Debtors at book values. Land & building at ` 94000. Investment were not taken
over by the new firm. *The new firm agreed to take such cash after payment of loan ,made by each
firm. * Tade creditors of each firm were taken over by the new firm at book values. You are require
to closes the books of old firm And prepare opening B/S of new firm .
[ Realisation profit-Ambuja `31100, Ultratech ` 42000, B/S-`280300]
[3][Two proprietors: Following is the B/S of x & y who are printing enterprises:
X’S business:*Stock `2500,Sundry debtors `6200* Furniture & Fixture `5300. * Plant and machinery
`22000.&* Goodwill `4000,Sundry creditors `2500 including outstanding expenses. *bank loan to be
paid by X.
Y’s Business:* Stock `6200,Sundry debtors `8000.*Furniture & Fixture `7500, Land & building ` 52000.
*Other liabilities to be paid by Y. * Sundry creditors ` 14000,* Bills payable `3800, *Goodwill `10000.
[1] the Profits will be shared by them in the new firm 1:2. [2] Total capital of new firm will be `
150000[in new PSR] ,the difference to be settled in cash.
Prepare realisation a/c ,Capital a/c of X & Y & also the opening balance sheet of the new firm.
[4] Switz & Quiz together & independently were carrying on business & their B/S on 30.3.2013 as
follows:
LIABILITIES Switz [`] Quiz [`] ASSET Switz [`] Quiz [`]
Creditors 20000 32000 Cash 14000 4000
Bills payable 24000 - Investment - 24000
General reserve 30000 - Motor car - 18000
Bank O/D - 26000 Stock 44000 24000
Capital Account Debtors 28000 72000
P 60000 - Machinery 76000 -
Q 80000 - Building 52000 -
R - 84000
214000 142000 214000 142000
Switz & Quiz were sharing profit and losses in the ratio of 3:2 .The firms were amalgamated on
1.10.2013, on the following terms: * That the goodwill or Quiz’s BUSINESS BE VALUED AT `14000 &
That of Switz `24000. * That provision at 5% to be made on all debtors. * That stock of Switz should
be depreciated by 7 ½ th & that of Quiz by 5%. * That the machinery & building be taken at `
84000 & `60000 respectively. * The motor car is sold for ` 15000. The loss is borne by all the
partners. * That investment be taken at ` 32000. * Value of goodwill to be maintained at `32000 in
the new firm. * That the new firm’s capital should be ` 280000 out of which `200000 should be held
by Switz & Quiz equally.
Adjustment to be made through current account. Prepare realisation a/c ,Capital a/c in the books of
both parties & also the opening balance sheet of the new firm.
***********************
[1]Following is the B/S of M/S LOBBY & M/S BOBBY as on 31st march 2015
M/S LOBBY
Liabilities ` Asset `
Sundry Creditors 50000 Cash in hand 12000
Loan from vijaya bank 10000 Stock in trade 58000
Capital: Sundry debtors 30000
Ajay 100000 Furniture and fixture 20000
Sujay 50000 Office premises 90000
210000 210000
M/S BOBBY
Liabilities ` Asset `
Sundry Creditors 60000 Cash in hand 16000
Stock in trade 44000
Capital: Sundry debtors 50000
Ankur 60000 Furniture and fixture 10000
Ankit 40000 5% in National saving 40000
Certificate
160000 160000
They shared Profit and losses in proportion to their capital. They decided to amalgamate their
business with effect from 1.4.2014 as per following condition:
[1]Name of the New firm will be Kachcha-Alu Trading corp. [2] Vijaya bank be repaid by Lobby.
[3]5%N.S.C. not to be taken over by new firm. [4]Goodwill of M/S LOBBY are fixed at `21000 &
`25000 respectively. [5]Office premises are revalued at `99000. [6]Stock in trade of M/S LOBBY be
reduced by `9000 & that of M/S BOBBY be increased by `5000. [7] R.D.D. be created @ 5% on debt
of both firms. [8] Total capital of firm of Kachcha-Alu Trading corp will be `180000 & capital of each
partner will be in his P.S.R. which will be : Ajay 30%,Sujay20%,Ankur30%,Ankit20%. [9] The difference
if any, should be transferred to current account. [10]Goodwill account in new firm should be written
off. You are require to close the books of M/S LOBBY & BOBBY. To give the effect to above
arrangement, also prepare B/S as on 1st April,2015
[2] Miss Charu & Paru are in partnership as Maru & co. In similar type of business Miss Palak &
Zalak are in partnership as Malak Associates”. It was agreed that on 1 st April,2013the partnership be
amalgamated into one firm “CHARMALAK” &CO. The profit sharing ratio in the old firm & new firm
are as below:
The Capital of the partners in the new firm to be `400000 & to be Contributed by their profit
Sharing ratio & adjustment to be made in cash/ bank overdraft. You are require to necessary ledger
A/C in the books of Maru & Co. &Malak Associates. And prepare B/S of new firm after
Amalgamation.
[3]Ajay & Vijay are partners who share Profit and losses in the ratio of 2:3in a business. In similar
type of business Kailas & Manish are Partners who share profit and losses equally. It is agreed that
both the firm have to be amalgamate into one from 1st april,2014.On 31.3.2014 financial position of
both the firm is as under:
BALANCE SHEET
[4] Amit traders & Sumit Bros. Decided to amalgamate on the following terms & condition on 1 st
April,2014,when their B/S were as follows:
2.IN CASE OF SUMIT BROS (1) ) Goodwill was valued at `30000. (2) Investment were taken over by
new firm at `30000 (3) Stock to be Valued at `32000 (4) Provision for Doubtful debts to be created
at 5 % on debtor.
3.It was further decided that the total capital of new firm shall be `200000 & the capital of each
partner shall be in profit sharing proportion i.e. 1:1:3:3, the difference to be transferred to the
current accounts. You are require to show necessary ledger account in the books of Amit ,Sumit and
prepare B/S of new firm after Amalgamation and prepare B/S of new firm after Amalgamation
[Basic-Ledger]
[1] ABC CO. WAS FORMED WITH AN authorised capital of `150000consisting of 10000 equity share
@ `10 each and 5000,7 -1/2% preference share of `10 each to acquire on 1-7-14 the business of M/S
Lad & Wad , who were sharing profit in the ratio of 3:2 . their balance sheet as on was as follows:
LIABILITIES ` ASSET `
Trade Creditors 16580 Land & Building 40000
Overdraft 8950 Plant & Machinery 24000
Capital: Stock 15960
Lad 40974 Debtors 23860
Wad 37316
103820 103820
The company took over all the asset and assumed all the liabilities and the consideration was fixed
at ` 110000. In computing this figure, Land and building were valued at`60000, plant and machinery
at `20000, Stock at ` 15000 & debtors at book value subject to allowance of 5 % to cover the
doubtful debts.
The purchase prise was settled by the issue of 3300 equity share at ` 10 each to the firm,2500
preference share and the balance paid in cash. Prepare: 1]Realisation A/C 2] Partners capital A/C 3]
ABC co ltd. A/C 4]Cash A/C .
[2].[Basic-journal]
X,Y and Z were in partnership sharing profit and losses as ½, 3/8, 1/8 respectively. On 31.12.16, they
decided to convert firm into a LIMITED company, when their position was as under :
LIABILITIES ` ASSET `
Mortgage loan 8000 Freehold Property 20000
Sundry Creditors 18000 Machinery 15000
Capital: Stock 14000
X 20000 Debtors 12000
Y 15000 Cash 10000
Z 10000
71000 71000
The company agreed to take over the following asset at the values stated below:
Freehold property :` 24000, Stock `13000, Machinery `14000, Goodwill `5000, Debtors`11000.
The co. also agreed to pay `17500 to sundry creditors in full settlement of their claim. Out of
purchase price `35000 was paid in fully share of `10 each and balance in cash .The expenses
amounted to `500. Shares were distributed in the ratio of final capital balances. Pass necessary
journal entries in the books of the firm.
[3]Aata, Bata & kata were partners carrying on partnership business and sharing profit and losses in
the ratio of 1:2:3. On 31.3.2013,their balance sheet was as under:
LIABILITIES ` ` ASSET `
Capital: Aata 10000 - Building 20800
Bata 20000 - Machinery 30000
Kata 30000 60000 Motor car 50000
Bata’s loan 20000 Stock 15000
Creditors 15000 Investment 1000
Bills payable 5000 Debtors 20000
Loan from SBI 247000 208000
Cash 9000
100000 100000
On the above data a Private ltd. company was incorporated to take over the above business on the
following terms:
1] All asset(except cash and investment) & all liabilities(except loan) to be taken over by the
company for which all asset are valued at par except building which is considered worth `27000 &
stock as worth `14000. Further goodwill is valued at `30000.
2] Bata’s loan to be partly liquidated by his taking over the firms cash and investment at par. For the
balance he is given 8% debentures received from the company in part discharge of purchase
consideration.
3] The balance of the purchase consideration is received in the form of equity shares of the
company which are to be appositely distributed amongst the partners. Give journal entries and
Ledger A/C to close the books of the firm.
[4](Expenses)
Palak, Methi and shepu carry on business in partnership sharing profit and losses in the proportion
of ½, 3/8, 1/8 respectively. On 31st march 2012 they agreed to sell their business to a limited
company. Position was as follows:
Particulars ` Particulars `
Palak’s Capital 40000 Machinery 48000
Methi’s Capital 30000 Furniture 42000
Shepu’s capital 26000 Cash 2000
Loan on mortgage 16000 Stock 23000
Sundry creditors 18000 Book debt 15000
130000 130000
The company took the following asset at the valuation shown below:
Machinery ` 61000, Furniture `31800, Stock `22000, Book debts `14000, Goodwill `10000. The
company also agreed to pay the creditors which was agreed at ` 17700. The company paid `67000 in
fully paid shares of `10 each and the balance in cash. The Expenses amounted to `1500. Prepare
ledger A/C in the books of the Firm.
[5] Idli & Sambar are Partners sharing profit & losses in the ratio of 2:1 & their balance sheet as on
31.3.2016 was as follows:
LIABILITIES ` ASSET `
Capital: Idli 60000 Cash in hand 600
Sambar 40000 Bills receivable 10000
Reserve fund 12000 Machinery 40000
Idli’s loan 40000 Stock 87400
Creditors 80000 Debtors 120000
Bills payable 20000 Less: Provision 6000 114000
252000 252000
They agreed to sell the business to MEDUWADA limited company & the company to take over the
asset & liabilities as follows:
Machinery `32000, Stock `70000,Debtors `101400, Bills receivable `10000, Goodwill `12000 & cash.
The company agreed to take over creditors at `76000 & bills payable `20000. The firm received
`80000 of the purchases in `10 fully paid equity share & balance in cash. Distribute the share in the
ratio of 3:2 between the partners . Prepare the necessary ledger account in the books of the firm.
[Realisation loss:`22000]
[6]Commission to company for setting firm debtors/creditors: M/S Arvind & Bose carrying on
business in partnership to dissolve the firm & sell off the business to a limited company on 31st
march,2012,when the firm position was as under:
LIABILITIES ` ASSET `
Sundry Creditors 63750 Cash 15300
Arvind’s Capital 102000 Furniture 9960
Bose’s capital 51000 Stock 46140
Debtors 145350
216750 216750
The arrangement with limited company as follows:
*Furniture & stock was purchased at balance sheet values less 10 %. * Goodwill of the firm was
valued at `30360. * The firm’s debtors, cash & creditors were not to be taken over by the company,
but the company agreed to collect the books debts & discharge the liabilities of the vendors as
agent, for which services the company was to be paid 3 % on all collection from the vendors
debtors & 2 % on cash paid to vendors creditors. * The purchase price was to be discharged by the
company in fully paid equity share of `10 each at premium of ` 1 per share.
The company received during the first two month after purchase of business ` 144000 from vendors
debtors in full satisfaction. The creditors were paid off less ` 750 allowed by them as ignore the
question of interim distribution of cash.
Q.1] (A) Fill in the blanks with proper words. (Answer any 10) [10]
10. The balance due to retiring partner is transferred to his –account until final settlement.
11. After all external liabilities are paid the balance cash is paid to the partners as per –method.
3. Balance in Ajay’s Account after making all adjustment was to be transferred to his loan account
carrying interest @16%.
Prepare Trading & P &L A/C for year ended 31st march 2017 .
OR
Q.2] Krishna was carrying on business as wholesale business man. He closes his books of accounts
by 31st march every year. Arjun was his manager on a monthly salary of ` 2000 till 30th September
2016 & from 1st October 2016 it was agreed that he will be admitted as partner with 1/3rd share in
profit & losses without any salary. The books of the firm yielded the following trail balance at the
end of the year on 31st march 2017. [15]
5. Rent which was 1450 p.m. upto 30th November 2016 was increased to ` 600 per month. From 1st
December 2016.
Q.3] P,Q,R, are partners of M/S Pinku stationers, sharing profit & losses in the ratio of 1:1:2. On 30th
June,2017 They decided to dissolve their firm when their balance sheet was as under:
[15]
Liabilities ` Asset `
Sundry Creditors 160000 Goodwill 120000
General reserve 80000 Debtors 180000
Capital: P 240000 Stock 123000
Q 160000 Building 240000
R 300000 Plant 268000
Loan from Q 40000 Bills receivable 37000
Bank 12000
980000 980000
The realisation & expenses of realisation were as stated below:
OR
Q.3] The firm of Midas present you with the following balance sheet drawn as on 31st march,2017:
[15]
Liabilities ` Asset `
Sundry Creditors 74000 Cash in hand 6000
Capital Accounts: Sundry Debtors 68000
P 80000 Stock in trade 78000
R 60000 Machinery 102000
M 54000 Current Accounts:
R
8000
M 14000
6000
268000 268000
Partners shared profit & losses in the ratio of 4:3:3 .Due to differences among the partners it was
decided to wind up the firm, realise the asset distribute the cash among the partners at the end of
each month.
i.April2017:`30000 from debtors & `40000 by sale of stock. Expenses on Realisation `1000.
iii.June2017: Part of machinery was sold for `36000. Expenses incidentioal to sale ` 1200.
iv. July 2017:Part of machinery valued in the books at 10000 was taken by P in part discharge at
an agreed value of ` 20000. Balance of machinery was sold for ` 60000(net)
Show how the amounts due to partners will be settled as per Highest Relative Capital method.
Q.4] The B/S of M/s M&N and M/s R&S as on 31st march 2017 was as follows :
Partners would share profit & losses equally between themselves as they were doing prior to
amalgamation & they agreed to following revaluation of asset & liabilities.
M&N` R&S
Land 45000 45000
Machinery 30000 32000
Furniture 10000 12000
Debtors 21000 30000
Stock 29000 34000
Creditors 52000 34000
Loan - 38000
O/S Expenses 7200 11400
In addition to the above it was decided: 1.Goodwill of M & N and R & S were values ` 35000 &
20000 & it should be written off in the new firm. 2. That the reconstructed capital of the partners
would be ` 37500 each. The Difference if any should be transferred to current account.
The accounts in the books of M/S M & N & The opening balance sheet of the new firm.
OR
Q.4] The following is the B/S of M/S Lalwani Bros & M/S Motwani Bros. As on 31st March 2017.
[15]
LIABILITIES ` ASSET `
Sundry Creditors 50000 Cash in hand 12000
Capital : Anil 100000 Furniture & fixture 20000
Sunil 50000 Office premises 90000
Loan from Vijaya bank 10000 Debtors 30000
Stock in trade 58000
210000 210000
M/S Motwani Brothers[Balance sheet]
LIABILITIES ` ASSET `
Sundry Creditors 60000 Cash in hand 16000
Capital : Ajay 60000 Furniture & fitting 10000
Vijay 40000 5%National saving 40000
Certificate
Sundry Debtors 50000
Stock in trade 44000
160000 160000
They shared profit & losses in proportion to their cpital. They decided to amalgamate their business
with effect from 1.4.2017,as per the following terms & condition:
1.That the name of the new firm shall be VANEE TRADING CORPORATION. 2. That the vijaya bank
loan be repaid. 3. That the 5% National saving Certificate not to be taken over by new firm to be
distributed between partners equally at book value. 4. That the goodwill of M/S Lalwani bros. & M/S
Motwani Brothers fixed at ` 21000 & `25000 . 5. That office premises are valued at `99000. 6. That
stock in trade of M/S Lalwani be reduced by 9000 & that of M/S Motwani increased by ` 5000. 7.
That a reserve for bad debts to be created at the arte of 5% on debts of both firm. 8. That total
capital of the Vanee Trading Corporation will be ` 180000 and the capital of each partner will be in
his profit sharing ratio will be as follows:
You are require to close the books of M/S Lalwani Brothers & prepare balance sheet of VANEE
TRADING CORPORATION as on 1st april2017.
Q.5] Veena & Neena are carrying on business in the name of Veena & co. Sharing profit in the ratio
of 2:3 .On 31st march 2017 their balance sheet was:
LIABILITIES ` ASSET `
Creditors 20000 Cash /Bank 12000
Neena A/C 88000 Property 72000
Veena A/c 60000 Stock 40000
General reserve 24000 Debtors 48000
Loan-Neena 16000 Machinery 60000
Bank overdraft 32000 Advances 8000
240000 240000
On the same date Veena pvt.ltd. was incorporated to take over the running business of Veena & Co,
on the following terms:
1.Goodwill of the firm is to be valued at 2 years purchase of average profit of past 5 years. The firm
used to transfer ` 4000 every year to general reserve. The profit after above transfer were ` 12800
`14000,`15000,`14200 & `15400. 2. Machinery is Overvalued by `6000 & property is undervalued by `
8000 other asset & liabilities except loan Of Neena are over at book value. 3. The company decided
to allot[a] 12% Preference share to that partners who has excess capital after necessary adjustment
tot he extent of such amount. [b] Equity share for the balance amount payable. 4. The face value of
share is ` 10. Show necessary journal entries in the books of both parties.
OR
Ajit & Sujit were partners sharing profit & losses in the ratio of 2:1 & their balance sheet as on
31.3.2016 was as follows: [15]
Liabilities ` Asset `
Current account: Ajit 26000 Freehold premises 62000
Sujit 18000 Stock 32000
Capital: Ajit 50000 Plant and machinery 18000
Sujit 40000 Book debt 41000
Ajit’s loan account 40000 Bank PNB 45000
Account payable 24000 210000
198000 198000
The partners wishing to dissolve firm. Accepted the order of Majestic ltd. To acquire the stock &
Fixed asset at an inclusive prise of ` 140000.
Purchase consideration was to be satisfied by-1. A cash payment of ` 35000. 2. By allotment to the
partners 6000 ,6% preference share of `10 each valued at `8 per share. 3.57000 ordinary share of `1
each.
The book debts realises `38000 & accounts payable were settled by `22000.
The partners agreed that the following should be the basis of distribution on dissolution of
partnership.(a) Ajit’s to be allotted preference share in settlement of his loan ,the remaining
preference share being allotted equally to them. (b) The ordinary share to be allotted in the ratio of
profit sharing. (c) The balance to be paid in cash.
Prepare: Realisation A/C, Partners capital A/C, Majestic ltd. A/C, Cash A/C.
Q.6] (a) What is the Acounting procedure for accounting of Amalgamatiobn of firm in the booksof
Amalgamating firms ?
OR
A] Net Asset method of purchase consideration. [b] Proportionate capital method [c] Death of
partner [d] Interest on partners loan [e] Fluctuating capital [f] Accounting procedure in the books of
purchasing company.
*****************