Sybcom Accounts

CHAPTER 1 : PARTNERSHIP FINAL ACCOUNT
BASIC FINAL ACCOUNT
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 :
Trial balance as on 31 December 2013
Particulars Debit ` Credit` Particulars Debit` Credit`

Capital A/C Carriage outwards 1400
- Ajit 60000 Wages 24000
- Sujit 40000 Insurance 1600
Drawing A/C Discount Received 200
-Ajit 2000 Postage 800
-Sujit 1000 Debtors and 70400 64200
Creditors
Stock on 1-1-2013 44000 Furniture 24000
Bills Receivable 1800 Cash in hand 9800
Purchases and sales 190000 302000 Machinery 80000
Return 6000 2000 Rent and taxes 1200
Salaries 10000 Printing and 400
stationary
468400 468400
Adjustments : 1] The closing stock on 31 December 2013 was valued at `56000. [2] The outstanding
expenses were (a) wages `2000 (b) Salaries `930 [3] Goods of `2000 were distributed as free sample
[Interest on partners capital was to be provided at 7 % p.a. [5] Prepaid insurance was `100 [6]
Depreciation was to be provided on furniture at 10 % and on machinery at 5% [7] A reserve for bad
debt and doubtful debt was to be created at 5 % of sundry debtors.
[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.
[gross profit ` 327000, net profit ` 143400, partners A/C ` 132600]
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 :
PARTICULAR DEBIT` CREDIT`

Building 27500
Returns outward 110000
Machinery 20000
bills payable 17500
Salary & wages 10500 -
Cash at bank 20000 -
Cash in hand 550 -
Motor cycle 10000
Office expenses 500
Rani’s Capital 58000
Rita’s capital 31000
Furniture 10000 -
Carriage 2500 -
Purchases 110000 -
Return outward 2750
Sales 140000
Return inward 1000 -
Bad debt 500 -
Debtors 16400
Creditors 10000
Rent 550
Printing and stationary 750
Travelling expenses 2750 -
Stock[1.1.2013] 15000 -
Insurance 750
Discount 4000
Advertisement[for 3 years] 6000
259250 259250
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
[G.P.`41250; N.P.`15650; B/S TOATL `132450]

[5] Bhavana, Raveena & Kangana carried on retail business in partnership, sharing profit and loses in
the ratio 2:1:2.

Loan from bank 120000
Plant & machinery 150000
Investment in govt.security 50000
bills payable 36200
Salary & wages 62000 -
Sales 565000
Sales return 5000 -
Trade creditors 87000
Motor vehicles 60000
Office & trade expenses 40200
Bhavana’s Capital 90000
Ravina’s capital 52000
Kangana’s Capital 66000
Furniture & fitting 47000 -
Land & building 100000
Purchases 280000
Rent, rates & insurance 15500
Professional charges 3500
Provision for Doubtful debts 500
Balance at bank 43700
Debtors 51600
Drawing: Bhavana 12000
Raveena 6000
Kangana 19000
Printing and stationary 6900
Bills receivable 18300
Stock[1.4.2013] 46000
1016700 1016700
[1] Stock on 31.3.2014 was valued ` 66500. [2] A debtor of `1600 is to be written off and provision
against the remaining debtors should be made at 5%. [3]Provide for the following outstanding
expenses as on 31.3.2014 printing & stationary `2400,Salaries & wages `8000. [4] Insurance prepaid
as on 31.3.2014 `2500. [5] Depreciate land & building by 5% furniture & Fitting by 10 % plant and
machinery & motor vehicles by 20 %. . You are require to prepare Trading & P &L A/C for year
ended 31 March 2014 and Balance sheet as on date .
ADMISSION
[1]ADMITTED ON THE FIRST DAY OF A/C YEAR
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

Purchases & SALES 171625 262650
Returns 5250 4125
Customers and creditors 40200 25525
Bills receivable and bills payable 20070 11950
Carriage inward 15000 -
Carriage outward 2175 -
Stock[1/1/2013] 39725 -
Reserve for doubtful debts- - 5200
Outstanding carriage inward - 1200
Bad debts 400 -
Salaries 9795 -
Furniture 5000 -
Shop 15500 -
Postage and insurance 3240 -
Trade expenses 2690 -
Rent rates and taxes 4200 -
Loan to Vishnu[1/8/2013] 6000 -
Prepaid insurance 240 -
Rent accrued but not paid - 900
Cash in hand 4440 -
Current account:
Ram 5000 -
Kirti 4000 -
Vikram 2000 -
Capital accounts
Ram - 15000
Kirti - 10000
Cash paid by vikram - 20000
Computer 30000 -
Professional charges 4450 -
Loan from ICICI Bank - 34450
391000 391000
You are require to prepare the firms trading and profit and loss account for the year ending 31 st
december,2013 & balance sheet as on that date having regard the following information. [1] Stock
at the end was ` 20000. [2] Depreciation on computer and furniture is to be charged at 10 % p.a. [3]
one fifth of the shop are to be written off. [4] Goods worth `800 have been destroyed fire and
insurance co. has admitted the claim for `600 only. [4] Bills receivable include a dishonoured bill for
`1100 of `1000 due from customer on account of sale who has become insolvent. [6] Debtors include
`300 for goods supplied to kirti and an item of `1000 due from customer on account of sale who has
become insolvent [7]R.D.D is to be maintained at 5% on debtors.
[G.P :55975, N.P: 24425, B/S:132150]
[2]GOODWILL BOUGHT IN CASH AND WRITTEN OFF
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.
Trial balance as on 31 december 2013
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
Addition to building 500 -Bhaduri 8300

Patent 7300 Cash paid by Amit[1/4/2013] 10000
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
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.
[G.P.:63163, N.P.:40730, B/S: 106233]
[3]Minimum profit guaranteed
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 :

Drawing and capital
-A 30000 48000
-B 15000 24000
-C [cash paid on 1/1/2014] 3000 8000
Delivery van(cost and provision for debt) 10000 4000
Sales return 9000 -
Sales( 9 month to december 31 2013 `240000 - 369000
Purchases 222000 -
Stock[march 31 2013] 48000 -
Furniture 15000 -
General expenses [9 months to december2013 ` 4850] 10400 -
Salaries 24000 -
Heating and lighting 2200 -
Rent and rates 9600 -
Debtors and creditors 53000 18000
Cash and bank 19800 -
471000 471000
ADJUSTMENT:[1] On march 31 2014 stock was valued at `47000 [2]Rates paid in advance `600 [3]
`800 is to be provided for electricity consumed to that date. [4] included in the sales and debtors
was `6000 for goods sent on sale or return on feb 1, 2014 which was still unsold on march
31,2014(cost `3000) [5] Depreciation is to be provided at 20 % p.a. on the cost of delivery van and
at 21/2 % p.a. on the furniture. You are require to prepare: Trading and P & L for the year to
march 31 march 2014 and balance sheet.
[G.P :87333, N.P.:55952, B/S:136025]
[4]COLUMNAR TRADING A/C
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.

Drawing and capital
-Asha 15000 300000
-Bisha 10000 200000
-Cisha 5000 151000
Opening stock(1-4-2012) 30000 -
Purchases and Sales 900000 1400000
Wages 140000 -
Furniture 200000 -
General expenses 60000 -
Selling expenses 14000 -
Debtors and creditors 626000 250000

Cash and bank 350000 -
Amount brought by cisha(for his share of goodwill) - 50000
2350000 2350000
OTHER INFORMATION: [1] Stock on 31/3/2013 was `180000 [2] Purchases from 1/4/2012-30/9/2012
were `400000. [3] Sales from 1/4/2012-30/9/2012 were `600000. [4] Wages from 1/4/2012 to
30/9/2012 were `60000. [5] Stock on 30/9/2012 was `80000. [6] Furniture worth `100000 was
purchased on 1-1-2013. Write off depreciation on furniture at 20 % p.a. [7] Interest on partner
capital is to be provided at 12 % p.a. [8] No interest is to be charged on partners drawing.
[G.P.: 190000, N.P.:144000, B.S.: 1331000]
[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:

capital
Pranav 315600
Harsh 242400
Sales 485260
Trade creditors 59000
Purchases 345120
Wages 12000
Plant and machinery 160000
Computer 146000
Office premises 265000
Sales return 5260
Stock[1.4.2013] 164200
Salaries 35420
Sundry expenses 54260
Debtors 41250
Cash on hand 12880
Insurance 36000
Provision for doubtful debts - 2130
Cash at bank 42160
Drawing: Pranav 19500
Harsh 12500
Param 14500
Loan from Harsh at 10 %[taken on January 1,2014] - 55000
Goodwill 36000
Travelling expenses 12460
Cash brought in by param - 250000
1414510 1414510
Additional information:
[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.
RETIREMENT DURING A/C YEAR:
[1]
The following is the trial balance of a firm as on 31 december 2013.
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
Bills receivable 3250 -b 30000

Bank balance 8000 -C 30000
Cash balance 2500

Machinery 36000
Investment 25000
Office expenses 16500
Bad debts 2100
Premises 50000
500000 500000
On 1 July A retired and the following adjustment were agreed: [1] Goodwill of ` 90000 was brought
into the books of account. [2] Furniture worth ` 20000 was purchased on 31/3/2013 but the invoice
was not recorded in the books. [3] Balance in A’s A/C after making all adjustment was to be
transferred to his lpan A/C carrying interest @16%. [4] Closing stock was valued at `42000. [5]
Depreciate machinery by 10%. Premises by 5% & furniture by 5%p.a. [6] Provide interest on capital
at 10 %.Prepare trading and P&L A/C and balance sheet as on date.[G.P.:151100,
N.P.:46075,B/S:361100]
[2] DEATH DURING ACCOUNTING YEAR
Following is trial balance of A,B & M as on 31.12.2013
Particulars Debit ` Particulars Credit`

Bank balance 2800 Capital A/C
Bad debts 700 -A 12000
Debtors 33500 -B 12000
Drawing A/C -M 12000
-A 4000 Sales 92000
-b 4000 Returns 600
-M 4000 Bad debt provision 3000
Bills Receivable 1000 Bank loan 6750
Purchases 52000 Creditors 25500
Goods return 800 Bills payable 900
Stock(1.1.2013) 8000 Other loan 2000
Salary 9000
Office expenses 4000
Trade expenses 1500
Carriage inward 1500
Carriage outward 2250
Cash on hand 700
Investment 5000
Building 20000
Plant &Machinery 12000
166750 166750
On 1 st july 2013 A died. Adjustment are as follows: [1] Goodwill was to be raised at`30000&
brought into the new books. [2]Machinery worth `24000 was purchased on 31.3.2013 but the
purchase invoice was not recorded in books.[3Balance starting to Credit of after giving effect of
above was to be treated as loan of Mrs.A on which interest @ 15% p.a is allowed.
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
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:

Partners Drawing & Capital (Fixed)Account
Jack 10000 30000
John 9000 16000
Jackson[capital paid is on January 31,2014] 12000
Johnson[capital paid is on January 31,2014] 9000
Purchases 277000
Stock on 1.4.2013 75000
Sales[ up to December 31,2013:`360000] 484350
Direct wages 40000
Overheads & trading Exp.[excluding depreciation] 47200
Fixed asset at cost 60000
Depreciation of Fixed asset-1.4.2013 20000
Debtors 38000
Creditors 27600
Bank account 44150
Provision for doubtful debts 1400
600350 600350
Other information: [1] Stock on 31.3.2014 was valued at `69100.[2] Trade expenses accrued but not
entered in the books amounted to `1200.[3] Unsold goods costing `4000 which were on sale or
return had been invoiced on march 5,2014 at `6000, which amount was included in sales and
debtors.[4] `80000 is to be provided for depreciation for the year fixed asset.[5] The provision for
doubtful debt is to be increased to ` 5000. You are require to prepare: Trading and P & L for the
year to march 31 march 2014 and balance sheet.
[gp:`159450,NPPRE)`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

Krishna’s Drawing and capital A/C 20000 37000
Purchases & Sales 210000 330000
Debtors and Creditors 15000 8700
Furniture & Fitting 9000
Motor car 15000
Stock[1.4.2013] 30000
Bank balance 15000
Cash balance 900
Salaries 15000
Advertisement & selling exp. 33000
Professional charges 2400
Rent 6400
Prepaid rent 400
Bills receivable & bills payable 8900 5300
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.
ON Last day of A/C year Retirement
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
CHAPTER 2: PIECEMEAL DISTRIBUTION OF CASH
[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:
Date of Realisation Asset Realised `

12.4.2013 Sundry debtors 62050
28.4.2013 Stock 45050
12.5.2013 Machinery 140930
25.5.2013 Furniture 21250
The actual expenses of realisation amounted to ` 8500 up to last realisation. Prepare statement
showing the distribution of cash under Excess Capital Method.
[Excess capital:Mithun:8500,Loss on realisation:32300,32300,16150]
[2]The firm of LMS was dissolved on 31.3.2014 at which date its balance sheet stood as follows :
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.
[Final Excess capital of L:500000, Profit on realisation: 1633334,1633333,1633333]
[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:
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:
Date Realisation` Expenses`

31st July 85000 5000
31st August 113000 3000
30th September 187000 7000
You are require to prepare Statement showing Piecemeal distribution of cash available under
Highest Relative Capital method.
[Excess capital Gobi:20000,Loss on realisation:9500,6333,3167]

[4] North, East &West were in partnership till 30th june 2015on which date balance sheet of firm was
under:
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:
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
The actual realisation expenses were `500.
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 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 `
31st July 125000 5000
31st August 100000 3000
You are require to prepare Statement showing Piecemeal distribution of amount available under
Highest Relative capital method.
[Ultimate excess: Aesop `50000 ]
[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:
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.
[Ultimate excess: D `2500,Realisation loss:32167,25733,19300]]
CHAPTER 3: AMALGAMATION OF FIRM
REALISATION ITEMS AND GOODWILL
[1] Two firms P & Q , R & S agreed to amalgamate their business. Their position as on 31.12.2013
was as follows:
Balance sheet as of P & Q as at 31.12.2013
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
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.
[P.C.PQ `104000; RS `52000; B/S Total `221000]
[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.
[PC:DE-`464000;GH-`281800; Realisation profit:-`44000;GH-`1800;BS TOTAL:`1073800]
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
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
Balance sheet as on 30.6.2014 P:V
Bank overdraft 15000 Furniture 9000
Investment 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.
[B,C-PROFIT`16500;P,V-PROFIT `63000; B/S `330300]
[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.
[DRUGS TRADERS-Realisation profit `9000: MEDICINE MERCHANTS Realisation profit-`20000;b/s

Total-`330000]
[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 :
LIABILITIES A & CO C & CO ASSET A & CO C & CO

A’s capital 6000 - Building 5000 -
B’s capital 3000 - Furniture 600 1000
C’s capital - 3300 Investment - 2000
D’s capital - 2200 Stock 3000 2600
Creditors 1000 1500 Debtors 2000 2400
Bank loan 2000 2500 Cash at bank 1400 1500
12000 9500 12000 9500
Terms of Amalgamation:
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.
[ A & CO.-PROFIT `3500; C & CO-PROFIT `1280; B/S TOTAL ` 24280]
SOLE TRADERS AMALGAMATING INTO FIRM
[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:
Bala Wala Fali Shirish
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
Bank Lo/d - 6500 bank 5600 -
Vehicles 15000 7750
180000 139500 180000 139500
The amalgamation was ,made on following terms:
Lala & Co.[`] Farish & Co[`]
Stock 46000 34500

Vehicles 15000 8000
Furniture 8500 7500
Land 54000 54000
Goodwill 40000 30000
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.
[Bala-profit `19840,Wala-profit `29760,B/S Total-`392250]
[2] M/s Ambuja traders & M/s Ultratech Traders were are in partnership they Decided to
amalgamate . when their B/S were as follows :
LIABILITIES Ambuja Ultratech ASSET Ambuja Ultratech

traders Traders traders Traders
Creditors 16800 25200 Cash and bank 22400 23800
Bills payable 7000 - Furniture 8000 8400
Rakesh’s capital 50000 - Investment 14000 11400
Arun’s capital 30000 - Premises 42000 -
Sham capital - 50000 Debtors 12500 6400
Tiku’s capital - 28000 Land and - 70000
building
Bank loan 14000 11200 Machinery 21000 -
Reserve 14000 56000 Goodwill 11900 -
131800 120000 131800 120000
The amalgamation was made on following terms:
*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:
LIABILITIES X [`] Y [`] ASSET X [`] Y [`]

SUNDRY Creditors 3000 15000 Cash IN HAND 200 700
Bills payable - 4000 Furniture & 5800 8000
Fixtures
Outstanding : Cash at bank - 4000
Electricity bill 500 - Stock in trade 3000 7000
Contingent - 1200 Sundry Debtors 7000 9000
LIABILITIES
Bank loan 5000 - Plant & 25000 35000
Machinery
General Reserve 2500 - Outstanding - 1500
income
Capital Account 30000 90000
41000 110200 41000 110200
X & Y agree to amalgamate their business from 1.1.2014. They decide to revalue their asset &
liabilities as follows :
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.
[PC-X `37700, Y`96600, realisation PROFIT X-`200, Y-`5400, B/S-`170300]
[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.
[Switz –profit `35300, Quiz-`17200,B/S-`403320]
***********************
[1]Following is the B/S of M/S LOBBY & M/S BOBBY as on 31st march 2015
M/S LOBBY
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
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:
Particulars Charu Paru Palak Zalak

Old firm 2 3 3 2
New firm 6 5 3 4
As on 31.3.2013 the B/S of their firm were as follows:
Liabilities Maru & Malak Asset Maru & Malak

Co Associate co Associates
s
Capital: Charu 80000 - Land 65000 84000
Paru 120000 - Furniture 38000 30500
Palak - 70000 Vehicles 25000 27000
Zalak - 70000 Stock 49900 66000
Creditors 50000 83500 Investment 14000 -
Bank overdraft - - Bank 5600 -
Debtors 52500 52500
250000 250000 250000 250000
The Amalgamation was made on the following terms:
New firm to takeover the Old firm’s asset as under:
Particulars Maru & co` Malak

Associate `
Stock 45000 65000
Vehicle 20000 20000
Furniture 35000 28000
Land 125000 165000
Goodwill 40000 30000
Miss charu to takeover the Investment for `12000.
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
Liabilities A&v K&M Asset A&V K&M

Capital: Ajay 104000 - Goodwill 31200 20800
Vijay 91000 - Machinery 140400 109200
Kailas - 72800 Furniture 28080 21840
General Reserve 26000 20800 Stock 88660 76700
Creditors 102700 74100 Motor Car 187200 124800
Bills payable 50700 35100 Debtors 101920 83460
Loan from SBI 247000 208000 Bills receivable 30940 28080
Cash & Bank 13000 10920
621400 475800 621400 475800
The Amalgamation was made on the following terms: Creditors of both the firm are to be taken at a
discount at 10%. #Machinery is subjet to 5% depreciate of both firm. # Motor car is to be
appreciated by 10% of both firms. # Furniture of both firm is not taken over by new firm. # Stock is
to be appreciated by 20% of both firm. # Goodwill of A & V is to be valued at `62400 whereas of K
& M is `39000. #Capital of new firm is fixed at `936000 to be adjusted according to their new profit
sharing ratio, any adjustment to be made in cash. #The profit sharing ratio is Ajay 3/10, Vijay 2/10 &
Kailas 3/10 & Manish 2/10. And prepare B/S of new firm after Amalgamation and close the books of
the firms.
[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:
Particulars AMIT SUMIT Particulars AMIT SUMIT

Amit’s Capital 26400 - Building 25000 -
Anil’s Capital 33600 - Furniture 11500 27000
Sumit’s capital - 72300 Investment - 22500
Sunil’s capital - 42200 Stock 13600 32600
Bank loan 12000 - Cash at bank 11400 21900
93500 166000 93500 166000
Terms of Amalgamation: 1.IN CASE OF AMIT TRADERS (1) Goodwill was valued at `20000. (2)Amit
took over Bank loan. (3) Building was taken to be worth `60000. (4) Stock to be Valued at `12600. (5)
Provision for Doubtful debts to be created at 5 % on debtor.
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
CHAPTER 4: CONVERSION/SALE OF PARTNERSHIP FIRM INTO A LIMITED COMPANY
[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 .
[Realisation Profit:` 19026 ]
[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 :
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.
[Realisation Profit:` 6000,12000,18000 respectively]
[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:
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.
[Realisation Profit:`4800,3600,1200 respectively]
[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:
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:
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.
Write realisation A/C ,Cash book and capital A/C of partners.
[Purchase consideration ` 80850, realisation profit ` 18570]
QUESTION PAPER – FINANCIAL ACCOUNTING
Q.1] (A) Fill in the blanks with proper words. (Answer any 10) [10]
1. In dissolution of partnership firm all asset are transferred to realisation A/C------Side.
2. Debit balance on Realisation A/C represents------.
3. On Amalgamation------- asset are transferred to partners capital accounts.
4. Partnership firm has----liability.
5. If asset is depreciated Realisation A/C is-----.
6. Trade mark is a-.
7. Return inward is deducted from----.
8. Payment made in advance is shown on -----Side of balance sheet.
9. Goodwill written off in the books of new firm is debited to----Account.
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.
12. On dissolution of firm payment of unrecorded liability is debited to-----Account.
(B) Match the following (any 10) [10]
Column ”A” Column ”B”

1] Dues to employees A] 12% p.a.
2] Fluctuation capital method B] Distributed among the partners
3] Excess capital method C] Closing stock
4] Amalgamation of firm D] Liability
5] Purchase consideration E] Created after payment of external
liability
6] Loose tools F] 6 % p.a.
7] Preferential liability G] Income tax dues
8] Interest on partners loan H] Not a fixed asset
9] Interest on partners loan I]Amount payable by purchasing company
10] Income received in advance J] Purchase consideration
11] Unsold stock at the end of the year K] Highest relative capital method
12] Unsold stock at the end of the year L] Separate current A/c is not opened
M] Preferential liability
Q.2] The firms trial balance as on 31 march 2017 is as follows : [15]
Particulars Debit Particulars Credit

Drawings: Ajay 12000 capital A/C : Ajay 30000
Vijay 12000 Vijay 30000
Sanjay 12000 Sanjay 30000
Purchases 156000 Sales 294000
Stock 24000 R.D.D 8800
Return inward 2400 Return outward 2000
Salary 27000 Bank loan 20000
Office expenses 16500 Creditors 76500
Bad debts 2100 Bills payable 8700
Carriage inward 4500
Carriage outward 6750
Debtors 100000
Bank 8000
Cash 2500
Investment 25000
Premises 50000
Machinery 36000
500000 500000
On 1st October 2016, Ajay retired & the following adjustment were agreed upon:
1.Goodwill of ` 90000 was brought into the books of account.

2. Furniture worth `20000 was purchased on 30 th June 2016,but the invoice was not recorded in the
books .
3. Balance in Ajay’s Account after making all adjustment was to be transferred to his loan account
carrying interest @16%.
4. Closing stock was valued @42000.
5. Depreciate machinery by 10% ,premises by 5% & Furniture by 5%.
6. Provide interest on capital @10%.
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]

Krishna’s Drawing and capital 20000 37000
Stock[1.4.2016] 30000 -
Debtors & Creditors 15000 8700
Furniture & fitting 9000 -
Motor car 15000 -
Purchases and Sales 210000 330000
Bank 15000 -
Cash 900 -
Salaries 15000 -
Advertising & selling Exp. 33000 -
Professional charges 2400 -
Rent 6400 -
Prepaid rent 400 -
Bills receivable &Bills payable 8900 5300
381000 381000
Additional information:
1. Purchases were ` 100000 upto 30th September 2016.
2. Sales during the first 6 months of the year were ` 110000.

3. Stock on 30th September 2016 & 31st march 2017 was ` 50000 & ` 20000.
4. Furniture & fitting are to be depreciated @ 10 % & motor car @ 20%.
5. Rent which was 1450 p.m. upto 30th November 2016 was increased to ` 600 per month. From 1st
December 2016.
Prepare Trading & P &L A/C in columnar form.\
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]
Sundry Creditors 160000 Goodwill 120000
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:
Date realisation expenses

31 July
st
110000 2000
31st August 340000 10000
31st October 162000 3000
You are require to prepare Statement Showing distribution of cash available under Highest Relative
Capital Method.
OR
Q.3] The firm of Midas present you with the following balance sheet drawn as on 31st march,2017:
[15]
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.
ii.May2017: Balance of debtors realised `20000.Blance of stock fetched `48000.
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 :
LIABILITIES M&N` R&S ASSET M&N` R&S

Creditors 54000 36000 Cash 3600 1800
Loan - 39600 Stock 28800 32400
Capital Account: Debtors 21600 30600
M 36000 - Land 36000 47400
N 36000 - Machinery 25200 28800
R - 36000 Furniture 10800 12600
S - 36000 Bank 7200 5400
O/S Expenses 7200 11400
133200 159000 133200 159000
The two firm decided to amalgamate & form into M/S MNRS with effect from 31st march 2017.
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.
You are require to prepare:
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]
M/S Lalwani Brothers[Balance sheet]
Capital : Anil 100000 Furniture & fixture 20000
Sunil 50000 Office premises 90000
Loan from Vijaya bank 10000 Debtors 30000
210000 210000
M/S Motwani Brothers[Balance sheet]
Capital : Ajay 60000 Furniture & fitting 10000
Vijay 40000 5%National saving 40000
Certificate
Sundry Debtors 50000
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:
Anil 30%,Ajay30%,Sunil20%,Vijay20%.The differences should be transferred to Current account.

9.Goodwill A/C in the new firm should be written off.
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:
Creditors 20000 Cash /Bank 12000
Neena A/C 88000 Property 72000
Veena A/c 60000 Stock 40000
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]
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 ?
(b) What are the adjustments in final Accounts of a firm ?
OR
Q.6]Short notes (any 4)
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.
*****************

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CHAPTER 1 : PARTNERSHIP FINAL ACCOUNT

BASIC FINAL ACCOUNT

Trial balance as on 31 December 2013

Particulars Debit ` Credit` Particulars Debit` Credit`

[gross profit ` 327000, net profit ` 143400, partners A/C ` 132600]

PARTICULAR DEBIT` CREDIT`

[G.P.`41250; N.P.`15650; B/S TOATL `132450]

PARTICULAR DEBIT` CREDIT`

[1]ADMITTED ON THE FIRST DAY OF A/C YEAR

PARTICULAR DEBIT` CREDIT`

[G.P :55975, N.P: 24425, B/S:132150]

[2]GOODWILL BOUGHT IN CASH AND WRITTEN OFF

Trial balance as on 31 december 2013

Addition to building 500 -Bhaduri 8300

[G.P.:63163, N.P.:40730, B/S: 106233]

[3]Minimum profit guaranteed

PARTICULAR DEBIT` CREDIT`

[G.P :87333, N.P.:55952, B/S:136025]

[4]COLUMNAR TRADING A/C

PARTICULAR DEBIT` CREDIT`

Debtors and creditors 626000 250000

[G.P.: 190000, N.P.:144000, B.S.: 1331000]

PARTICULAR DEBIT` CREDIT`

RETIREMENT DURING A/C YEAR:

The following is the trial balance of a firm as on 31 december 2013.

Bills receivable 3250 -b 30000

Cash balance 2500

[2] DEATH DURING ACCOUNTING YEAR

Following is trial balance of A,B & M as on 31.12.2013

Particulars Debit ` Particulars Credit`

PARTICULAR DEBIT` CREDIT`

PARTICULAR DEBIT` CREDIT`

ON Last day of A/C year Retirement

CHAPTER 2: PIECEMEAL DISTRIBUTION OF CASH

Date of Realisation Asset Realised `

[Excess capital:Mithun:8500,Loss on realisation:32300,32300,16150]

[Final Excess capital of L:500000, Profit on realisation: 1633334,1633333,1633333]

Date Realisation` Expenses`

[Excess capital Gobi:20000,Loss on realisation:9500,6333,3167]

The actual realisation expenses were `500.

31st July 125000 5000

31st August 100000 3000

30th September 150000 7000

[Ultimate excess: Aesop `50000 ]

[Ultimate excess: D `2500,Realisation loss:32167,25733,19300]]

CHAPTER 3: AMALGAMATION OF FIRM

REALISATION ITEMS AND GOODWILL

Balance sheet as of P & Q as at 31.12.2013

[P.C.PQ `104000; RS `52000; B/S Total `221000]

[PC:DE-`464000;GH-`281800; Realisation profit:-`44000;GH-`1800;BS TOTAL:`1073800]

Balance sheet as on 30.6.2014 P:V

[B,C-PROFIT`16500;P,V-PROFIT `63000; B/S `330300]

[DRUGS TRADERS-Realisation profit `9000: MEDICINE MERCHANTS Realisation profit-`20000;b/s

LIABILITIES A & CO C & CO ASSET A & CO C & CO

[ A & CO.-PROFIT `3500; C & CO-PROFIT `1280; B/S TOTAL ` 24280]

SOLE TRADERS AMALGAMATING INTO FIRM

Bala Wala Fali Shirish

Lala & Co.[`] Farish & Co[`]

Stock 46000 34500

Furniture 8500 7500

Land 54000 54000

Goodwill 40000 30000

[Bala-profit `19840,Wala-profit `29760,B/S Total-`392250]