Accounts

AHLCON PUBLIC SCHOOL
ACCOUNTANCY CLASS XII ASSIGNMENT

FUNDAMENTALS OF PARTNERSHIP
One Mark Questions
1. Why Profit and Loss Appropriation Account is prepared?
2. Do all firms of business organizations prepare the Profit and Loss Appropriation Account?
3. What should we do when appropriations are more than the profits?
4. Where would you record the interest on capital when capitals are fixed?
5. Amit and Sumit are partners in a firm having not partnership deed. Amit and Sumit have
contributed Rs.2,00,000 and Rs.4,00,000 respectively as capitals. Sumit wants that profit
should be distributed in the ratio of capitals and interest on capital should be 10% p.a. but
Amit
does not agree to this. State giving reason who is correct in this case.
6. How would you record the interest on drawings when capitals are fixed?
7. Name the method of calculating interest on drawings of the partners if different amounts
are withdrawn on different dates.
8. A, B and C are partners sharing profits equally. They have decided that no interest on
drawings is to be charged to any partner. But after one year ‘D’ wants that interest on
drawings should be charged to every partner. State how ‘D’ can do this.
Three/Four Marks Questions

1. David and John were partners in a firm sharing profits in the ratio of 4 : 1. Their capitals on
1.4.2006 were : David Rs.2,50,000 and John Rs.50,000. The partnership deed provided that
David will get a commission of 10% on the net profit after allowing a salary of Rs.2,500 per
month to John. The profit of the firm for the year ended 31.3.2007 was Rs.1,40,000. Prepare
Profit and Loss Appropriation Account.
2. Suresh and Ramesh started business on 1.1.2013 with capitals of Rs.1,20,000 and Rs.80,000
respectively. During the year, Suresh introduced Rs.20,000 to the firm as additional capital
on 1.7.2013. They withdrew Rs.1,000 per month for the house expenses in lieu of profit.
Interest on capital is to be allowed @ 10% per annum. Calculate the interest payable to
Suresh and Rameshfor the year ending 31.12.2013.
3. Vinod and Kumar started business on 1st April, 2013 with capitals of Rs.5,00,000 and
Rs.3,00,000 respectively. On 1st October 2013 they decided that their capitals should
be 4,00,000 each. The necessary adjustment in the capitals were made by introducing or
withdrawing cash. Interest on capital is allowed at 8% p.a. Calculate the interest on Kumar’s
Capital on 31st March 2014.
4. Find out interest on drawing of Mr. Sharma, if he withdrew Rs.3,000 in the beginning of
every month for last six months.. Rate of interest on drawings is 6% p.a.
5. Find out interest on drawing of Mr. Verma, if he withdrew Rs.3,000 at the end of every
1
month for six months ended 31st March 2014. Rate of interest on drawings is 6% p.a.
6. Find out interest on drawing of Mr. Mohan, if he withdrew Rs.4,000 in the middle of
every month for six months ended 31st March 2017. Rate of interest on drawings is 6% p.a.
7. On March 31, 2017 after the close of books of accounts, the capital accounts of X, Y and Z
stood at Rs.48,000; 40,000 and Rs 24,000 respectively. The profits for the year Rs.72,000
was distributed equally. Subsequently it was discovered that interest on capital @5% p.a.
had been omitted. The profit sharing ratio was 2:2:1. Pass adjustment entry.
8. Ram and Shyam were partners in a firm sharing profits in the ratio of 3:5. Their fixed
capitals were Rs.2,50,000 and Rs.4,50,000 respectively. After the final accounts of the
year had been closed, it was found that interest on capital at 10% per annum as provided in
the partnership agreement has not been credited to the capital accounts of the partners.
Give necessary adjustment entry.
9. W, X, Y and Z are partners sharing profits and losses in the ratio of 4:3:3:2. Their fixed
capitals on 31.3.2017 were Rs.30,000; Rs.45,000; 60,000 and 45,000 respectively. After
preparing the final accounts for the year ended 31.3.2017. it was discovered that interest
on capital @12% p.a. was not allowed and interest on drawings amounting to Rs.1,000;
1,250; 750 and 500 respectively was not charged. Give necessary adjustment entry.
10. Vinod, Bitu and Chetan were partners in a firm. On 1.4.2013 their capitals were
Rs.1,00,000; Rs.50,000 and Rs.50,000 respectively. As per the provisions of the
partnership deed:
(i) Chetan was entitled for a salary of Rs.10,000 p.a.
(ii) Partners were entitled to interest on capital at 5% p.a.
(iii) Profits were to be shared in the ratio of partner’s capital.
The net profit for the year 2013-14 of Rs.66,000 was divided equally without providing for
the above terms. Give adjustment entry.
11. X and Y are sharing profits in the ratio of 3:2. Z was admitted for 1/6th share of profit with
a minimum guaranteed amount of Rs.20,000. The firm earned a profit at the end of first
financial year Rs.1,08,000. Find out the share of profit which X, Y and Z will get.
12. A, B and C were partners in a firm sharing profits in 2:3:5 ratio. A was guaranteed a
minimum profit of Rs.1,00,000. Any deficiency on this account was to be borne by C. the
net profit of the firm for the year ended 31.3.2013 was Rs.4,50,000. Prepare Profit and
Loss Appropriation Account.
13. A, B and C are partners sharing profits in the ratio of 5:4:1. C is given a guarantee that his
share of profits in any given year would be Rs.5,000. Deficiency, if any, would be borne
by A and B equally. The profits for the year 2013 amounted to Rs.40,000. Pass necessary
journal entries.
Six Marks Questions

1. Ahmad, Bheem and Daniel are partners in a firm. On 1st April 2011 the balance in their
capital accounts stood at Rs.8,00,000, Rs.6,00,000 and Rs.4,00,000 respectively. They shared
2
profits in the proportion of 5 : 3 : 2 respectively. Partners are entitled to interest on capital
@5% p.a. and salary to Bheem @ Rs.3,000 per month and a commission of Rs.12,000 to
Daniel as per the provisions of the partnership deed.
2. Singh and Gupta decided to start a partnership firm to manufacture low cost jute bags
as plastic bags were creating many environmental problems. They contributed capitals of
Rs. 1, 00,000 and Rs. 50,000 on 1st April, 2012 for this. Singh expressed his willingness to
admit Shakti as a partner without capital, who is specially abled but a very creative and
intelligent friend of his. Gupta agreed to this. The terms of
partnership were as follows :
(i) Singh, Gupta and Shakti will share profits in the ratio of 2 : 2 : 1.
(ii) Interest on capital will be provided @ 6% p.a.
Due to shortage of capital, Singh contributed Rs. 25,000 on 30th September, 2012 and
Gupta contributed Rs. 10,000 on 1st January, 2013 as additional capital. The profit of
the firm for the year ended 31st March, 2013 was Rs. 1,68,900.
(a) Identify any two values which the firm wants to communicate to the society.
(b) Prepare Profit and Loss Appropriation Account for the year ending 31st March,
2013.
3 Seema, Tanuja and Tripti were partners in a firm trading in garments. They were sharing
profits in the ratio of 5 : 3 : 2. Their capitals on 1st April, 2012 were Rs. 3,00,000,
Rs. 4,00,000 and Rs. 8,00,000 respectively. After the flood in Uttarakhand, all partners
decided to help the flood victims personally. For this Seema withdrew Rs. 20,000 from the
firm on 15th September, 2012. Tanuja instead of withdrawing cash from the firm took
garments amounting to Rs. 24,000 on 1st October from the firm and distributed those to the
flood victims. On the other hand, Tripti withdrew Rs. 2,00,000 from her capital on 1st
January, 2013 and provided a mobile medical van in the flood affected area. The partnership
deed provides for charging interest on drawings @ 6% p.a. After the final accounts were
prepared it was discovered that interest on drawings had not been charged. Give the
necessary adjusting journal entry and show the working notes clearly. Also state any two
values which the partners wanted to communicate to the society.
3
GOODWILL: NATURE AND VALUATION
One Mark Question
1. Define Goodwill.
2. List any four factors affecting goodwill.
3. How does the factor ‘Quality of Products’ affect the goodwill of a firm?
4. How does the market situation affect the value of goodwill of a firm?
5. How does the nature of business affect the value of goodwill of a firm?
6. Describe the need for valuation of goodwill.
7. What is meant by Super Profit Method?
8. What are the four steps involved in calculating goodwill through Super Profit?
9. If the amount of super profit is negative, what does it indicate?
10. What do you mean by number of years purchase?
Three/ Four Marks Questions
1. Compute the value of goodwill on the basis of four years purchases of the average profits
based on the last five years. 2010 -90,000 ;2011- (40,000) Loss ,’2012 -80,000 ;2013 -70,000
;2014- 60,000
2. The following were the profit of a business firm:
2012 Rs.60,000 (including an abnormal gain Rs.25,000)
2013 Rs.1,20,000 (after charging an abnormal loss Rs.40,000)
2014 Rs.1,26,000 (excluding Rs.6,000 as insurance premium of property now to be insured)
Calculate firm’s goodwill at two year’s purchase of the average profit of the last three years.
3. The books of a business firm showed that the capital employed on 31 December 2013 was
Rs.20,00,000 and the profits for the last five years were:
2010 Rs.2,40,000
2011 Rs.2,80,000
2012 Rs.2,70,000
2013 Rs.2,50,000
2014 Rs.3,10,000
4. You are required to find out the value of goodwill based on 3 years purchase of the super
profits of the business. Given that the normal rate of return is 10%.
A and B are partners in a firm sharing profits in the ratio of 2 : 1. Their capitals are
Rs.2,00,000 and Rs.1,50,000. Normal rate or return on the capital employed is 10%. Both
partners will get annual salary of Rs.25,000 each. Profits of firm are :
Year Profit/Loss
2008 75,000
2009 90,000
2010 1,20, 000
4
Calculate the value of goodwill on the basis of 2 years purchase of super profits.
5. A Business earned average profits of Rs.5,00,000 during the last few years and the normal
rate of return in similar business is 10%. Find out the value of Goodwill by
(i) Capitalization of Super Profit method and
(ii) Super Profit method, if the goodwill is valued at 3 years purchase of super profit.
The assets of the business were Rs.50,00,000 and its external liabilities Rs.9,00,000.
6. Vinod and Kumar are partners in a firm. Their capitals were: Vinod Rs.6,00,000 and
Kumar Rs.4,00,000. During the year 2014 the firm earned a profit of Rs.3,00,000.
Calculate the value of goodwill of the firm assuming that the normal rate of return is 20%.
7. A Business has earned average profits of Rs.2,00,000 during the last few years and the
normal rate of return in a similar type of business is 10%. Ascertain the value of Goodwill
by Capitalisation method. Given that the value of Net Assets of the firm is Rs.16,40,000.
8. Larson, William and Harry are partners in a firm with the capitals of Rs.1,87,500 ,
Rs.1,50,000 , Rs.1,12,500. Average profit of the business for last few years is
Rs.72,000. Normal rate of return in a similar business is 10%. Calculate the value
of goodwill by capitalization of super profit.
5
CHANGE IN PROFIT SHARING RATIO
One Mark Questions
1. What is meant by Reconstitution of a Firm?
2. What is meant by Change in Profit Sharing Ratio?
3. Why are “Reserves and Surplus” distributed at the time of reconstitution of the firm? [1]
4. Why is it necessary to revalue the assets and liabilities of a firm on its reconstitution? Explain
briefly.
5. Ram, Shyam and Mohan were partners sharing profits in the equal ratio. They have decided to
share the profits in the ratio of 5 : 3 : 2 with retrospective effect. Calculate the sacrificing or Gain of
the partners.
6. Mahesh , Verma and Mukesh were partner’s sharing profits in the ratio of 4 : 3 : 2. The partners
decided to share profits and losses in the ratio of 2 : 2 : 1. Calculate each partner’s Gain or Sacrifice
due to change in ratio.
7. What are accumulated profits?
8. What are accumulated losses?
9. What is sacrificing ratio?
10. What is the nature of Revaluation Account?
1. Ram, Shyam and Sundar are partners in a firm sharing profits and losses in the ratio of 3:2:1.
In future they decided to share profits in the ratio of 6:5:2. For this purpose, the goodwill of
the firm was valued at Rs.78,000. Pass necessary journal entry for the treatment of goodwill
due to change in profit sharing ratio.
2. P, Q and R are partners sharing profits in the ratio of 4/9 : 1/3 : 2/9. They have decided to
share profits in the ratio of 1 : 1 : 1. Goodwill of the firm is valued at Rs.10,800. Give Journal
entries to record the above arrangement.
3. A, B and C are partners sharing profits and losses in the ratio of 3 : 1 : 1. On 1st January
2014, they decided to share profits in equal ratio. The goodwill of the firm is valued at
Rs.45,000. Give necessary journal entry due to the change in profit sharing ratio.
4. Akshita , Bakshi and Chanda were partners in a firm sharing profits in 3 : 2 : 1 ratio. They
decided to share the future profits in 5 : 3 : 2 ratio. For this purpose the goodwill of the firm
was valued at Rs.60,000. Pass an adjustment entry for the treatment of goodwill due to
change in profit sharing.
6
5. Sumit,Bunty and Chandra are partners in a firm sharing profits in the ratio of 3:3:2. They
decided to share profits equally w.e.f. April 1, 2014. On that date, the profit and loss account
showed the credit balance of Rs.24,000. Instead of closing the Profit and Loss Account, it was
decided to record an adjustment entry reflecting the change in the profit sharing ratio.
Record
necessary journal entry to effect to the same.
6. Vinod, Sunita and Simran are partners in a firm sharing profits in the ratio of 3:2:1. They
decided to share profits equally w.e.f April 1, 2014. On that date the profit and loss
account showed the credit balance of Rs.60,000 and a balance of Rs.30,000 in general
reserve. Instead of closing profit and loss account, it was decided to record an adjustment
entry reflecting the change in the profit sharing ratio. Give necessary journal entry to give
effect to the same.
7. Krishan and Kumar are partners in a firm sharing profits in the ratio of 3:2. They decided to
share future profits equally. On the date of change in profit sharing ratio the profit and loss
account showed a debit balance of Rs.20,000. Give necessary entry to give affect to the
same.
8. Elephant, Fish and Giraffe are partners sharing profits in the ratio of 7:6:5. Their fixed
capitals are Rs.1,40,000; Rs.80,000 and Rs.1,60,000 respectively. It is now decided that the
total
capital of the firm should be Rs.7,20,000 and should be in the profit sharing ratio of the
partners. Calculate the amount of capital to be contributed by the individual partners and
record necessary journal entry for the same.
Six Marks Questions

1. X and Y are partners in a firm sharing profits in the ratio of 2:3. The Balance Sheet of the
[6] firm as on 31.03.2007 is given below :
Liabilities Amount Assets Amount

Capital Accounts : Land 5,00,000
X 8,00,000 Buildings 6,00,000
Y 12,00,000 20,00,000 Plant 8,00,000
Creditors 3, 10,000 Furniture 1, 20,000
Expenses outstanding 70,000 Stock 1, 80,000
Debtors 1, 50,000
Cash 30,000
23, 80,000 23, 80,000
7
The partners decided to share profits in equal ratio with effect from 01.04.2007. The
following adjustments were agreed upon:
(a) The goodwill of the firm was valued at Rs.4, 00,000 but it was not to appear in
books. (b) Land was valued at 8,00,000, Plant at 7,20,000 and furniture at 1,00,000 and
were to appear at revalued amounts in the Balance Sheet.
Pass necessary journal entries to give effect to the above.
8

ADMISSION OF A PARTNER
One Mark Questions
1. State any two rights acquired by a newly admitted partner.

2. What is the main purpose of admitting a new partner in a firm?
3. Distinguish between sacrificing ratio and gaining ratio.
4. Vinod and Kumar are partners sharing profits in the ratio of 3:2. They admitted
Mohan as a new partner for 1/5th share in the future profit. Calculate new profit
sharing ratio of the partners.
5. What do you mean by Hidden Goodwill?
6. What compensation is paid by a new partner to the sacrificing partners for sacrificing
their share in his favour ?

1. A and B were partners in a firm sharing profits in the ratio of 3:2. They admitted Z
and M as new partners. The new profit sharing ratio will be 2:2:1:1. Z and M
brought in Rs.11,00,000 each for their respective capitals and also necessary
amount of premium for goodwill in cash. Goodwill was valued at Rs.9,60,000 for
the firm. Calculate the sacrificing ratio of X and Y and pass necessary journal
entries for the above transactions in the books of the firm.
2. (a) Ashu and Bindu are partners in a firm sharing profits in the ratio of 3 : 2.
Chameli is admitted as a partner. Ashu and Bindu surrender 1/2 of their
respective shares in favour of Chameli. Find the new profit sharing ratio and also
the sacrificing ratio.
(b) Chameli is to bring his share of premium for goodwill in cash. The goodwill of the
firm is estimated at Rs.80,000. Pass necessary entries for the record of goodwill in the
above case.
3. AK and BK are partners in a firm sharing profits in the ratio of 5 : 3. They admit CK
into the partnership for 3/10th share in profits, which he takes 1/10th from AK and
1/10th from BK. CK brings in Rs.15,000 as premium in cash out of his share of
Rs.39,000. Goodwill account does not appear in the books of AK and BK. Give
necessary journal entries.
4. X and Y are partners in a firm sharing profits in 3:2 ratio. They admitted Z as a new
partner and the new profit sharing ratio will be 2:1:1. Z brought Rs.20,000 for her
share of goodwill. Goodwill already appeared in the books at Rs.10,000. Give
9
5. Vinod and David are partners in a firm sharing profits in the ratio of 3:2. On
January 1, 2014 they admit Kumar as a new partner for 1/6th share in the future
profits. Kumar brought Rs.1,00,000 for his capital but could not bring any amount for
goodwill. The firm’s goodwill on Kumar’s admission was valued at Rs.75, 000. Give
6. VK and KK are partners in a firm sharing profits in the ratio of 2:3. On January 1,
2014 they admit PK as a new partner for 1/4th share in the profits. PK brought
Rs.80,000 as capital and Rs.18,000 for his 1/4th share in profits. The new profit
sharing ratio of VK, KK and PK will be 3:3:2. VK and KK decided to withdraw the
premium paid by PK. Record necessary journal entries.
7. EK and FK were partners in a firm sharing profits in the ratio of 3 : 1. They admitted
GK as a new partner on 1.3.2005 for 1/3rd share. It was decided that EK, FK and GK
will share future profits equally. GK brought Rs.50,000 in cash and Machinery worth
Rs.70,000 for his share of profit as premium for goodwill. Showing your working
clearly, give necessary entries.
8. X and Y are partners sharing profits in the ratio of 4:3. They admit Z as a new partner.
The profit sharing ratio of X, Y and Z will be 2:3:1. Calculate the gain or sacrifice of old
partners.
9. A, B, C and D are in partnership sharing profits and losses in the ratio of 36:24:20:20
10. Respectively. E joins the partnership for 20% share. A, B, C and D would share profits
in future in 3/10; 4/10; 2/10; 1/10. Calculate the new profit sharing ratio after E’s
admission.
11. X and Y divide profits and losses in the ratio of 3:2. Z is admitted in the firm as new
partner with 1/6th share, which he acquires, from X and Y in the ratio of 1:1.
Calculate new profit sharing ratio of all partners.
Six/Eight Marks Questions
1. P and S are partners in a firm sharing profits in the ratio of 3:2. Their Balance Sheet on 31 st
March 2013 was as follows:
Liabilities Rs Assets Rs
Bank overdraft 20,000 Cash 8,000
Creditors 30,000 Debtors 30,000
Provision for bad debts 1,000 Bills Receivable 40,000
General Reserve 15,000 Stock 50,000
V’s Loan 20,000 Building 90,000
P’s capital 1,00,000 Land 1,48,000
S’s capital 1,80,000
3,66,000 3,66,000
th
V is admitted into the partnership giving her 1/8 share in profits subject to the following
terms:
10
(i) V’s Loan will be converted into his capital.
(ii) The Goodwill of the firm was valued at Rs.80,000 and V brought his share of
goodwill premium in cash.
(iii) Provision for bad debts was to be made equal to 5% of the debtors.
(iv) Stock was to be depreciated by 5%. (v) Land was to be appreciated by 10%.
Prepare Revaluation A/c, Partners’ Capital A/cs and the balance sheet of new firm.
2. Ram and Shyam are partners in a firm sharing profits in the ratio of 3:1. Their Balance Sheet
on 31st March 2013 was as follows:
Creditors 2,800 Cash 2,000
Workmen’s Compensation 1,200 Debtors 48,000
Fund 2,000 Less : Provision 4,800 6,000
General reserve 6,000 Stock 3,000
Ram’s capital 4,000 Investments 5,000
Shyam’s capital
16,000 16,000
th
Mohan is admitted into the partnership giving her 1/5 share in profits subject to the
following terms:
a. Mohan shall bring in Rs.6, 000 as his share of premium.
b. That unaccounted accrued income of Rs.100 is provided for.
c. The Market Value of Investment was Rs.4, 500.
d. A debtor whose dues of Rs.500 were written off as bad debts paid Rs.400 in full
settlement.
e. A claim of Rs.200 on account of workmen’s compensation to be provided for.
Mohan to bring to Rs.5, 000 as his share of capital.
Prepare Revaluation A/c, Partners’ Capital A/c and the balance sheet of new firm.
3. Krishna and Suresh are partners in a firm sharing profits in the ratio of 3: 2. Their [6]
balance sheet was as follows on 31.3.2013:
General Reserve 5,000 Plant & Machinery 30,000

Sundry Creditors 15,000 Patents 5,000
Capitals : Krishna 30,000 Furniture 3,000
Suresh 20,000 50,000 Stock 16,000
Debtors 15,000
Cash 1,000
70,000 70,000
th
On that date Mohan is admitted as a partner for 1/5 share on the following terms:
(a) He is to contribute Rs.14,000 as his share of capital which includes his share of
premium for goodwill.
11
(b) Goodwill is valued at 2 years purchase of the average profits of the last 4 years,
which were Rs.10,000; Rs.9,000; Rs.8,000 and Rs.13,000 respectively.

(c) Plant & Machinery to be written down to Rs.25,000 and patents written up by
Rs.8,000.
Prepare Revaluation A/c, Partners Capital A/cs and Balance Sheet of new firm.
4. A and B are partners in a firm sharing profits in the ratio of 2:1. Their Balance Sheet on (6)
31st March 2013 was as follows:
Bills Payable 10,000 Cash in Hand 10,000
Sundry creditors 58,000 Cash at Bank 40,000
Outstanding expenses 2,000 Sundry Debtors 60,000
A’s capital 1,80,000 Stock in Hand 40,000
B’s capital 1,50,000 Plant and Machinery 1,00,000
Building 1,50,000
4,00,000 4,00,000
C is admitted into the partnership giving her 1/4th share in profits subject to the following
terms:
a. C will bring in Rs.1, 00,000 as his capital and Rs.60,000 as his share of goodwill
for 1/4th share in profits.
b. Plant is to be appreciated to Rs.1, 20,000 and the value of buildings is to be
appreciated by 10%.
c. Stock is found overvalued by Rs.4, 000.
d. A Provision for bad and doubtful debts is to be created at 5% of debtors.
e. Creditors were unrecorded to the extent of 10,000.
Prepare necessary ledgers, Balance Sheet and Journal entries.
5. Ram and Shyam were partners in a firm sharing profits in the ratio of 3: 2. On 31. 3. [6]
2013. Their Balance Sheet was as follows:
Sundry Creditors 10,000 Plant and Machinery 10,000
Workmen Compensation fund 5,000 Land and Building 8,000
General Reserve 15,000 Debtors 12,000
Capitals : Ram 10,000 Less: Provision 1,000 11,000
Shyam 10,000 20,000 Stock 12,000
Cash 9,000
50,000 50,000
On the above date Mohan was admitted as a new partner in the firm on the following terms:
(i) Provision of doubtful debts would be increased by Rs.2, 000.
(ii) The value of land and building would be increased to Rs.18, 000.
12
(iii) The value of stock would be increased by Rs.4, 000.
(iv) The liability against Workmen’s Compensation Fund is determined at Rs.2, 000.
(v) Mohan brought in as his share of goodwill Rs.10, 000 in cash.
(vi) Mohan would bring further cash as would make his capital equal to 20% of the total
capital of new firm after the above revaluation and adjustments are carried out.
6. A and B are partners in a firm sharing profits in the ratio of 3: 2. Their balance sheet was as
follows on 31.3.2013:
General Reserve 10,000 Goodwill 5,000

Sundry Creditors 50,000 Plant & Machinery 65,000
Capitals : A 60,000 Furniture 15,000
B 50,000 1,10,000 Investments 20,000
Stock 20,000
Debtors 30,000
Cash 15,000
1,70,000 1,70,000
On that date C is admitted as a partner on the following terms:
(a) C is to bring capital Rs.40, 000 and Goodwill Rs.15, 000.
(b) Partners agreed to share the future profits in the ratio of 5:3:2.
(c) Investments will be appreciated by 20% and furniture depreciated by 10%.
(d) One customer who owed the firm Rs.2, 000 becomes insolvent and nothing could be
realized from him.
(e) Creditors will be written back by Rs.2, 000.
(f) Outstanding bills for repairs Rs.1, 000 will be provided for.
(g) Interest accrued on investments Rs.2, 000.
(h) Capital of the partners shall be proportion to their profit sharing ratio. For this
Adjustments to be made through cash.
7. A and B are partners in a firm sharing profits in the ratio of 3:1. Their Balance Sheet on [6]
31st March 2013 was as follows:
Creditors 70,000 Land and Building 40,000
General reserve 10,000 Plant and Machinery 70,000
A’s capital 50,000 Investments 26,000
B’s capital 80,000 Stock 30,000
Debtors 35,000
13
Less : Provision 1,000 34,000
Cash 10,000
2,10,000 2,10,000
th
C is admitted into the partnership giving her 1/4 share in profits. C to bring Rs.60, 000 as
her capital, subject to following terms:
(i) Goodwill of the firm to be valued at Rs.24,000
(ii) Land and Building were valued at Rs.65,000 and Plant and Machinery at Rs.60,000
(iii) Provision for bad and doubtful debts was found in excess by Rs.400
(iv) A Liability of Rs.1, 200 included in sundry creditors was not likely to arise.
(v) The Capitals of the partners be adjusted on the basis of C’s contribution of capital.
(vi) Excess of shortfall, if any to be transferred to Current Accounts.
Prepare Revaluation A/c, Partners’ Capital A/cs and the balance sheet of new firm.
14
RETIREMENT AND DEATH OF A PARTNER
One Mark Questions
1. How a partner can be retired from the firm? [1]
2. What is the affect of the retirement of a partner? [1
3. X, Y and Z are partners. X retires and goodwill of the firm is valued at Rs.90,000. Pass
Journal entry for the treatment of goodwill on X’s Treatment.
4. MK, NK and KK who are partners in a firm sharing profits in the ratio of 3:2:1. Goodwill
has been valued at Rs.1,50,000. On NK’s retirement MK and KK agree to share
profits equally. Pass necessary journal entry for treatment of NK’s sharing of goodwill.
5. Distinguish between Sacrificing ratio and Gaining ratio.

1. VK, NK and KK are partners sharing profits in the ratio of 5:3:2. KK retires and the new
profit sharing ratio between VK and NK is 5:3. Calculate gain ratio.
2. White, Black and Red were partners sharing profits in the ratio of 5:3:2. Black retires
on 1.1.2014 with White and Red agreeing to share the profits in future in the ratio of
6:4. Find the gain ratio.
3. X, Y and Z were partners in a firm sharing profits in the ratio of 4:3:2. Y retired. His
share was taken over equally by X and Z. In which ratio will the profit or loss on
revaluation of assets and liabilities on the retirement of Y be transferred to the
capital accounts of the partners?
4. Anil, Bobby and Chetan are partners sharing profits in the ratio of 3:2:1. Bobby
retires and the new profit sharing ratio between Anil and Chetan is 3:1. Find out gain
ratio of Anil and Chetan.
5. MK, NK and KK who are partners in a firm sharing profits in the ratio of 3:2:1.
Goodwill has been valued at Rs.1,50,000. On NK’s retirement MK and KK agree to
share profits equally. Pass necessary journal entry for treatment of NK’s sharing of
goodwill.
6. A, B and C are partners sharing profits in the ratio of 2:2:1. On July 1, 2013, Goodwill
of the firm was valued at Rs.45,000. Goodwill does not appear in books. On this date
A retires. Pass Journal entry regarding goodwill.
7. X, Y and Z were partners in the ratio of 3:2:1. Y retired and the new profit sharing
ratio between X and Z was 2:1. On Y’s retirement, the goodwill of the firm was valued
15
at Rs.1,80,000. Pass necessary journal entry for the treatment of goodwill on Y’s
retirement.
8. Ravi, Mukesh, Naresh and Yogesh are partners in a firm sharing profits in the ratio of
2:2:1:1. On Mukesh’s retirement, the goodwill of the firm is valued at Rs.45,000. Ravi,
Naresh and Yogesh decided to share future profits equally. Pass the necessary journal
entry for the treatment of goodwill.
9. A, B and C are partners sharing profits in the ratio of 4:3:2. B retires and the goodwill
of the firm is valued at Rs.18,000. Pass journal entry for the treatment of goodwill on
B’s retirement.
Six/Eight Marks Questions
1. Vijay, Vinay and Vivek were partners in a firm sharing profits in 5 : 3: 2 ratio. On 31.3.2006
Vivek retired from the firm. On the date of Vivek’s retirement the Balance Sheet was as
under:
Creditors 54,000 Bank 1,60,000
Bills Payable 26,000 Debtors 40,000
Outstanding Rent 45,000 Less: Provision 800 39,000
Provision for Legal 1,15,000 Stock 42,000
Claims Furniture 1,75,000
Capitals : Land and Building 4,00,000
Vijay 2,54,000
Vinay 1,80,000
Vivek 1,42,000 5,76,000
8,16,000 8,16,000
On Vivek’s retirement it was agreed that:
(a) Land and Building will be appreciated by 5% and Furniture will be

appreciated by 20%.
(b) Provision for bad debts was to be made at 5% on debtors and provision for
legal damages to be made for Rs.60, 000.
(c) Goodwill of the firm was valued at Rs.60, 000.
(d) Rs.70, 000 from Vivek’s Capital Account will be transferred to his loan
account and the balance will be paid by cheque.
Prepare Revaluation A/c, Partners Capital A/c and Balance Sheet.
2. X, Y and Z were partners in a firm sharing profits and losses in the ratio of [6] 2:2:1. On
31.3.2014 their Balance Sheet was as follows:
16
Bills Payable 49,000 Cash 15,000
Creditors 51,000 Bills Receivables 4,500
Profit and Loss 37,500 Debtors 10,500
Capitals : X 40,000 Stock 20,000
Y 40,000 Furniture 40,000
Z 32,500 1,12,500 Plant and Machinery 60,000
Building 1,00,000
2,50,000 2,50,000
On 1.4.2014 X retired from the business. On X’s retirement, the assets and
liabilities were revalued as follows:
(i) Stock was depreciated by 10%. Furniture was depreciated by 20% and
Plant and Machinery by 5%. Building was appreciated by 20%.
(ii) The goodwill of the firm was valued at Rs.30, 000.
X was to be paid Rs.9, 800 in cash on retirement, and the balance in three equal
installments.
Prepare Revaluation Account, Partners Capital Accounts, X’s Loan Account and
Balance Sheet as on 1.4.2014.
3. PP, QQ and RR were partners in a firm sharing profits in the ratio of 2:3:5. On

Creditors 35,000 Bank 22,500
Capitals : PP 40,000 Debtors 20,000
QQ 35,000 Less: Provision 2,500 17,500
RR 30,000 1,05,000 Stock 25,000
Building 70,000
Profit and Loss A/c 5,000
1,40,000 1,40,000
On the above date RR retired from the firm due to his illness on the following
terms:
(i) Building was to be depreciated by Rs.20,000

(ii) Provision for doubtful debts was to be maintained at 20% on debtors
(iii) Salary outstanding Rs.2, 500 was to be recorded and creditors Rs.2, 000
will not be claimed.
(iv) Goodwill of the firm was valued at Rs.36, 000.
(v) RR was to be paid Rs.7, 500 in cash, through bank and the balance was to
be transferred to his loan account.
Prepare Revaluation Account, Partners capital account and Balance Sheet. (6)
17
4. Vinod, Mohan and Raj were partners in a firm sharing profits in the ratio of 1/2;
1/3; 1/6 respectively. The Balance Sheet of the firm on 31 st December 2013
stood as follows:
Creditors 19,000 Cash at Bank 2,500
Bills Payable 5,000 Debtors 16,000
Reserve Fund 12,000 Less: Provision 500 15,500
Capitals : Vinod Stock 25,000
40,000 Motor Vans 8,000
Mohan 30,000 95,000 Machinery 35,000
Raj 25,000 Building 45,000
1,31,000 1,31,000
Mohan retired from the firm on the above date subject to the following
conditions:
(i) Goodwill of the firm be valued at Rs.18,000 and is not to be shown in the
books of the firm.
(ii) Machinery would be depreciated by 10% and Motor Vans by 15%.
(iii) Stock would be appreciated by 20% and Building by 10%.
(iv) The provision for doubtful debts would be increased by 1,950.
(v) Liability for workmen’s compensation to the extent of 1,650 would be
created.
It was agreed that Vinod and Raj would share profits in future in the ratio of 3:2.
Prepare Revaluation Account, Partners capital account and Balance Sheet.
5. AK, KK and VK were partners in a firm sharing profits and losses in the ratio of their capitals.
On 31.3.2009 their Balance Sheet was as follows:

Creditors 12,500 Land and Building 50,000
Workmen Compensation fund 3,750 Machinery 75,000
General Reserve 8,750 Closing Stock 25,000
Capitals : AK 50,000 Sundry Debtors 27,500
KK 75,000 Less : Provision 2,500 25,000
VK 50,000 1,75,000 Cash at Bank
2,00,000 2,00,000
On 31.3.2009 AK retired from the business. On AK’s retirement, the assets and
liabilities were revalued as follows:
18
(i) Land and Building to be appreciated by 30%
(ii) Machinery be appreciated by 20%
(iii) There were bad debts of Rs.4,250
(iv) The claim on account of workmen compensation was estimated at
Rs.2,000
(v) Goodwill of the firm was valued at Rs.35,000 and AK’s share of Goodwill
be adjusted against the Capital Accounts of the continuing partners KK
and VK who have decided to share future profits in the ratio of 4:3
respectively.
(vi) Capital of the new firm in total will be the same as before the
retirement of AK and will be in the new profit sharing ratio of the
continuing partners.
(vii) Amount due to AK be settled by paying Rs.12,500 in cash and the
balance by transferring to her loan account which will be paid latter on.
6. LK, MK and NK were parnters in a firm sharing profits in the ratio of 50% :30% and 20%
respectively. On 31.3.2014 thier Balance Sheet was as follows:
Creditors 42,000 Premises 1,24,000

Profit and Loss A/c 30,00020,00050,000 Motor Vans 40,000
Investment Fluctuation Investment 38,000
Fund Plant
2,20,000 24,000
General Reserve Stock 30,000
Capitals : Debtors 80,000
LK 1,00,000 (-) Provision 6,000 74,000
MK 80,000 Cash 32,000
NK 40,000
3,62,000 3,62,000
On the above date MK retired from the firm due to his illness on the following terms:
(i) Firm’s goodwill was valued at Rs.1, 02,000 and it was decided to adjust
MK’s Goodwill into capital accounts of continuing partners.
19
(ii) There is a claim for workmen’s compensation to the extent of Rs.8, 000.
Investments are brought down to Rs.30, 000.
(iii) Provision for bad debts is to be reduced by Rs.2, 000.
(iv) MK will be paid Rs.16,400 in cash and balance will be transferred to his
Loan account which will be paid in 3 equal installments together with
interest @10% p.a.
(v) LK’s and NK’s Capital will be adjusted in their new profit sharing ratio
i.e. 3:2 through cash account.
7. FK, GK and HK were partners in a firm sharing profits in the ratio of 5; 3; 2 [6]
st
respectively. The Balance Sheet of the firm on 31 March 2013 stood as follows:
Creditors 44,000 Fixed Assets 2,00,000

Bills Payable 16,000 Stock 90,000
Profit and Loss A/c 30,000 Debtors
90,000
Capitals : FK 1,30,000 Cash 20,000
GK 1,00,000
HK 80,000
3,10,000
4,00,000 4,00,000
FK retired from the firm on the above date subject to the following conditions:
1. Goodwill of the firm be valued at Rs.50,000
2. Fixed Assets were valued at Rs.2,50,000
3. Stock was considered worth Rs.80,000
4. FK is to be paid in cash brought in by GK and HK in such a way
so as to make their capitals proportionate to their new profit
sharing ratio, which is 3:2 respectively. Minimum cash balance
is to be maintained at Rs.14,000.
Prepare Revaluation Account, Partners capital account and Balance Sheet. Pass necessary
journal entries.
20
DEATH OF A PARTNER
One Mark Questions
1. What is meant by death of a partner?
2. How will you calculate profits of deceased partner?
3. Distinguish between Death of a Partner and Retirement of a partner.
4. Give journal entry of transferring amount to executor’s account.

1. H, O and N were partners in a firm sharing profits in the ratio of 7:2:1. On 25
December 2013, H died and the new profit sharing ratio between O and N was
equal. On H’s death, the goodwill of the firm was valued at Rs.48, 000. Calculate the
gaining ratio and pass the necessary journal entry on H’s death for the treatment of goodwill.
2. X, Y and Z were partners in a firm sharing profits in the ratio of 3:2:1. The firm
closes its books on 31st March every year. Y died on 12 June 2013. On Y’s death the
goodwill of the firm was valued at Rs.1,20,000. On his death his share in the profits of
the firm till the time of his death was to be calculated on the basis of previous year’s
profit which was Rs.3,00,000. Calculate Y’s share in the profit of the firm. Pass
necessary journal entries for the treatment of goodwill and Y’s share of profit at the
time of his death.
3. David and John were partners in a firm sharing profits in 4:1 ratio. David died three
months after the date of the last balance sheet. According to the partnership deed,
legal representative of deceased partner were entitled to the following payment:
(i) His capital Rs.3, 00,000 as per the last balance sheet.
(ii) Interest on capital @12% per annum up to the date of death.
(iii) His share of profits to the date of death calculated on the basis of the
average profits of last three years. The net profits of the last three years
were Rs.2,00,000; Rs.3,00,000 and Rs.4,00,000.
Prepare David’s Capital Account to be rendered to his representative and the executor’s
account.
4. P, Q and R were partners in a firm sharing profits in 2 : 2: 1 ratio. The firm closes its
books on 31st March every year. P died three months after the last accounts were
prepared. On that date the goodwill of the firm was valued at Rs.90, 000. On the death
of a partner his share of profit in the year of death was to be calculated on the basis of
the average profits of the last four years. The profits of last four years were :
31.3.2007 Rs.2, 00,000; 31.3. 2006 Rs.1,80,000; 31.3.2005 Rs.2,10,000; 31.3.2004
(Loss Rs.1,70,000)
Pass necessary journal entries for the treatment of goodwill and P’s share of profit on
the death. Show clearly the calculations of P’s share of profit.
21
Six Marks Questions
1. X, Y and Z were partners in a firm sharing profits in the ratio of 3:2:1. The firm closes
its accounts on 31st March every year. X died on 30.9.2004. On that date credit
balance in his capital account was Rs.60, 000. The firm had General Reserve of
Rs.32,000 on that date. The partnership deed provided that on the death of a
partner:
(i) Interest on capital at the rate of 10% per annum shall be allowed.
(ii) Goodwill will be calculated on the basis of 3 years purchase of the four
years average profits which were follows: 31st March 2003, 2002, 2001
and 2000 were Rs.28,000, Rs.32,000; Rs.40,000 and Rs.20,000
respectively.
(iii) The deceased partner’s share of profit upto the date of death will be
calculated on the basis of last year’s profit. Prepare X’s Capital A/c to be
shown to his executors.
2. Priya, Riya and Siya are partners sharing profits in the ratio of 4:3:1 respectively. It is
provided in the partnership deed that on the death of any partner, her share of
goodwill was to be valued at half of the profits credited to her account during the
four previous completed years. Riya died on 1st January 2012. The firm’s profits for
the last four years were: 2008 Rs.1,20,000, 2009 Rs.80,000, 2010 Rs.40,000 and 2011
Rs.80,000. Determine the amount that should be credited to Riya in respect of her
share of goodwill. On the date of Riya’s death, one of the old debtor whose account
was closed last year by transferring his debt amounting to Rs.8,000 to bad debts
account, has now promised to pay the amount fully.
Pass the necessary Journal entries for the above mentioned transactions at the time
of Riya’s death.
3. MP, NP and OP were partners in a firm sharing profits and losses equally. On

Creditors 80,000 Plant and Machinery 2,40,000
General Reserve 1,20,000 Stock 1,20,000
Capitals : MP 2,80,000 Sundry Debtors 3,80,000
NP 2,80,000 Cash at Bank 1,60,000
OP 2,80,000 8,40,000 Cash in hand 1,40,000
10,40,000 10,40,000
th
NP died on 14 March 2010. According to the Partnership Deed, executors of the deceased
partner are entitled to:
Balance of partner’s capital account.
22
 Interest on capital @5% p.a.
 Share of goodwill calculated on the basis of twice the average of past three year’s
profits and Share of profits from the closure of the last accounting year till the
date of death on the basis of twice the average of three completed year’s profits
before death.
 Profits for 2007, 2008 and 2009 were Rs.3, 20,000; Rs.3, 60,000 and Rs.4, 00,000
respectively. Show the working for deceased partner’s share of goodwill and
profits till the date of his death.
Prepare NP’s Capital Account to be rendered to his executor.
4. PS, QS and RS were partners in a firm sharing profits in the ratio of their
capitals. On 31.3.2006 their Balance Sheet was as follows:

Creditors 18,400 Land & Building 93,600
General Reserve 21,600 Plant & Machinery 52,000
Capitals : PS 96,000 Stock 18,800
QS 48,000 Sundry Debtors 26,000
RS 48,000 1,92,000 Cash at Bank 22,400
Cash in hand 19,200
2,32,000 2,32,000
QS died on 30 June 2006. Under the terms of partnership, the executors of deceased
partners were entitled to:
1. Amount standing to the credit of the partner’s Capital Account.

2. Interest on capital @ 12% p.a.
3. Share of goodwill on the basis of three years purchase of last three
years average profits.
4. Share of profit from the closing of last financial year to the date of
death on the basis of the last year’s profit. Profit for the years ending
on 31st March 2004, 2005 and 2006 were Rs.44,000; Rs.52,000
and Rs.24,000 respectively.
Showing the full working of your calculations, pass necessary journal entries in the
books of the firm for the above transactions on the death of QS.
5. AB, BB and SB are partners in a firm sharing profits in the proportion of 3:2:1. Their
balance sheet as on 31.3.2003 stood as follows:
23
Bills Payable 24,000 Building 42,000
Creditors 28,000 Cash in hand 24,000
General Reserve 24,000 Cash at bank 27,400
Capitals: AB 40,000 Debtors 24,000
BB 24,000 Bills receivable 8,600
SB 16,000 80,000 Stock 3,500
Investment 26,500
1,56,000 1,56,000
BB died on 30.6.2003 and according to the deed of the said partnership his executors
are entitled to be paid as under:
(a) The capital to his credit at the time of his death and interest on it @10% p.a.
(b) His Proportionate share of general reserve.
(c) His share of profit for the intervening period will be based on the sales during that
period. Sales were calculated at Rs.2, 40,000 (for 3 months) for 2003-04. The rate
of profit during past three years had been 10% on sales.
(d) Goodwill according to his share of profit to be calculated by taking twice the
amount of profits of the last three years less 20%. The profits of the previous three
years were: 2000-01 Rs.16, 400; 2001-02 Rs.18, 000; 2002-03 Rs.19, 600.
(e) The investment was sold at par and his executors were paid out. Prepare BK’s
Capital A/c and his executor’s account.
6. A, B and C were partners in a firm sharing profits in the ratio of 5:3:2. On 31.3.2005 their
balance sheet was:
Creditors 22,000 Building 40,000
General Reserve 12,000 Machinery 60,000
Capitals: Stock 20,000
A 60,000 Patents 22,000
B 50,000 Debtors 16,000
C 30,000 1,40,000 Cash 16,000
1,74,000 1,74,000
A died on 1.10.2005. It was agreed between his executors and the remaining partners
that:
1. Goodwill be valued at 2 years purchase of the average profits of the previous 4
years, which were 2000-01 Rs.26,000; 2001-02 Rs.24,000; 2002-03 Rs.40,000;
200304 Rs.30,000.
2. Patents be valued at Rs.16, 000; Machinery at Rs.56, 000; Building at Rs.50,
000. Profits for the year 2005-06 are taken as having accrued at the same rate
as the previous year.
24
3. Interest on capital is provided at 10% p.a. Half of the amount due to A to be
paid immediately to the executor and the balance transferred to the
Executor’s Loan
4. Prepare A’s Capital Account and his Executor’s Account at the time of his
death.
25
DISSOLUTION OF THE FIRM
One Mark Questions
1. What is meant by Dissolution of a partnership?

2. What is meant by Dissolution of a partnership firm?
3. What is Realization Account?
4. In case of Dissolution of a firm, which liabilities are to be paid first?
5. In case of Dissolution of firm, which item on the liabilities side are to be paid last? [1]
6. When an asset is taken over by a partner, why is his capital account debited? [1]
7. X and Y are partners in a firm sharing profits in the ratio of 3:2. Mrs. X has given a
loan of Rs.60,000 to the firm and the firm also obtained a loan of Rs.30,000 from Y.
The firm was dissolved and its assets were realized for Rs.75,000. State the order of
payment of Mrs. X’s Loan with reason, if there were no creditors of the firm.
Three/Four Mark Questions
1. Pass the necessary journal entries for the following transactions on the dissolution of the
firm of Mohan and Sohan after the various assets (other than cash) and outside liabilities
have been transferred to Realisation Account:
 Bank Loan Rs.60, 000 was paid.
 Stock worth Rs.80,000 was taken over by partner Sohan
 Partner Mohan paid a creditor Rs.20,000
 An asset not appearing in the books of accounts realized Rs.6,000
 Expenses of realization Rs.10,000 were paid by partner Sohan
 Profit on realization Rs.1, 80,000 was distributed between Mohan and Sohan in 5:4 ratio.
2. SK, MK and RK commenced business on 1st April, 2008 with fixed capitals of Rs.2,00,000,
Rs.1,60,000 and Rs.1,20,000 respectively. They agreed to share profits and losses in the ratio
of 4:3:3. During the year 2008-09, they made a profit of Rs.1, 12,000 before allowing interest
on capital @10% p.a. The profit for the year 2009-10 was Rs.24, 000 after allowing interest
on capital. Each of the partners had drawn Rs.40,000 during this period 2008-10. The
partners with mutual consent agreed to wind up the business operations. Creditors on that
date were Rs.2, 16,000. Assets realized Rs.8, 40,000 and the expenses of realization were
Rs.10, 000. Prepare the Balance Sheet as on 31st March, 2010 and find out the profit or loss
on realization.
3. The partnership between AK and BK was dissolved on March 31, 2014. Their capitals
on that date were Rs.8,50,000 and Rs.1,50,000 respectively. Rs.5, 00,000 was owed by
26
the firm to AK, and BK owed to the firm Rs.1,00,000. Creditors on that date were Rs.10,
00,000. The assets realized Rs.22, 50,000 exclusive of what was owed by BK. find the profit
or loss on realization.
4. . Vinod, Mohan and David were partners in a firm sharing profits in the ratio of 4:3:3. The
firm was dissolved. After the transfer of assets and external liabilities to Realization Account,
the following transactions took place:
(i) Khan, a creditor to whom Rs.18, 000 were due to be paid, accepted office equipment at
Rs.12, 000 and the balance was paid to him in cash.
(ii) Singh, a creditor to whom Rs.48, 000 were due to be paid, tool over Machinery at Rs.60,
000. Balance was paid by him in cash.
(iii) An unrecorded liability of the firm Rs.23, 400 was paid by Vinod
(iv) The loss on dissolution was Rs.10, 000.
Pass necessary Journal entries for the above transactions in the books of the firm.
Six Marks Questions
1. Pass the necessary journal entries for the following transactions on the dissolution of the firm of
Sudha and Shiva after the various assets (other than cash) and outside liabilities have been
transferred to realization account:
(i) Sudha agreed to pay off her husband’s loan Rs.19,000
(ii) A debtor whose debt of Rs.9,300 was written off in the books paid Rs.7,500 in full settlement
(iii) Shiva took over all investments at Rs.13,300
(iv) Sundry creditors Rs.10,000 were paid at 9% discount
(v) Realisation expenses Rs.3,400 were paid by Sudha for which she was allowed Rs.3,000
(vi) Loss on realization Rs.9,400 was divided between Sudha and Shiva in 3:2 ratio.
2.Black, White and Green were partners in a firm. They decided to dissolve their firm. Pass
necessary Journal entries for the following after various assets (other than cash and bank) and the
third party liabilities have been transferred to Realisation Account:
(a) There was a stock of Rs.45, 000. White took over 50% of the stock at 10% discount and remaining
stock was sold at 40% profit on book value.
(b) P/L Account was showing a debit balance of Rs.7, 500 which was distributed among the partners.
(c) A Machinery which was not recorded in the books was sold for Rs.1, 000.
(d) Black was paid only Rs.2, 500 for his loan to the firm which amounted to Rs.2, 750.
27
(e) Realization Expenses amounting to Rs.2, 500 paid by Green.
(f) There were 50 Shares of Rs.10 each in NTPC Ltd. Acquired at a cost of Rs.600 which had been
written off completely from the books. These shares are valued @ Rs. 9 each and divided among the
partners in their profit sharing ratio.
3. Pass the necessary Journal entries for the following transactions on the dissolution of the firm of
King and Singh after the various assets (other than cash) and outside liabilities have been
transferred to Realisation Account:
(i) Bank Loan Rs.45, 000 was paid
(ii) Stock worth Rs.60, 000 was taken over by a partner Singh
(iii) King paid Rs.27, 000 to a creditor
(iv) A liability not appearing in the books of accounts settled Rs.11, 100
(v) Expenses of realization Rs.2, 700 were paid by partner Singh
(vi) Profit on realization Rs.21,300 was distributed between King and Poppy in 7:3 ratio.
5. SN and SM were partners in a firm sharing profits in the ratio of 2:3. On 31.3.2011 [6] their
Balance Sheet was as follows:

(Rs.) (Rs.)
Capitals : SN 4,00,000 Land and Building 6,00,000

SM 6,00,000 10,00,000 Stock 2,00,000
Creditors 2,10,000 Debtors 3,00,000
Workmen Compensation Fund 2,00,000 Bank 3,10,000
14,10,000 14,10,000
The firm was dissolved on 1.4.2011 and the assets and liabilities were settled as
follows:
5. SN agreed to take over Land and Building at Rs.7, 00,000 by paying cash.
6. Stock was sold for Rs.1, 80,000.
7. Creditors accepted debtors in full settlement of the firm.
28
Pass necessary journal entries for dissolution of the firm.
5. SK and MK were partners in a firm sharing profits in the ratio of 3:7. On 31.3.2011, [6] their
balance sheet of was as follows:
Creditors 5,54,000 Land and Building 12,00,000

Profit and Loss A/c 2,46,000 Machinery 10,00,000
Capitals : SK 6,00,000 Stock 80,000
MK 14,00,000 20,00,000 Debtors 4,00,0001,20,000
Bank
28,00,000 28,00,000
The firm was dissolved on 1.04.2011 and the assets and Liabilities were settled as
follows:
(i) Creditors accepted stock and debtors in full and final settlement of their claim.
(ii) Land and Building was sold for Rs.14, 00,000 and Machinery was taken over by
MK by paying cash less than 30% of its book value.
Pass necessary journal entries for dissolution of firm.
6. AK and VK were partners in a firm sharing profits in the ratio of 3:5. On 31.3.2011, [6] their
Balance Sheet was as follows:
Creditors 3,58,000 Land and Building 8,00,000
Employee Provident Fund 42,000 Machinery 6,00,000
Capitals : AK 6,00,000 Debtors 4,44,000
VK 10,00,000 16,00,000 Cash at Bank 1,56,000
20,00,000 20,00,000
The firm was dissolved on 1.04.2011 and the assets and liabilities were settled as
follows:
(i) Land and Building realised Rs.8,60,000

(ii) Debtors realized Rs.4, 50,000 (with interest) and Rs.2, 000 were recovered
for bad debts written off last year.
(iii) There was an unrecorded investment which was sold for Rs.50,000
29
(iv) VK took over Machinery at Rs.5,60,000 for cash
(v) 50% of the creditors were paid Rs.8, 000 less in full settlement and the
remaining creditors were paid full amount.
7. Ram, Shyam and Mohan were partners sharing profits in the ratio of 2 : 2: 1. The [6] Balance
Sheet on 31.3.2012 when they dissolved the firm was as follows:
Bank Loan 23,000 Other Sundry Assets 2,34,000

Creditors 32,000 Furniture 22,000
Customers 2,48,400
Capitals: Less : Provision 2,400 2,46,000
Ram 2,55,000 Stock 35,600
Shyam 2,20,000 Cash 26,400
Mohan 34,000 5,09,000
5,64,000 5,64,000
It was agreed that:
i. Ram to take over furniture at Rs.16, 000 and debtors amounting to Rs.2, 40,000 at
Rs.2, 34,400 and the creditors of Rs.32, 000 were to be paid by him at this figure.
ii. Shyam is to take over all stock for Rs.34,000 and some sundry assets at
Rs.1, 44,000 (being 10% less than the book value)
iii. Mohan to take over remaining sundry assets at 80% of the book value and
assume the responsibility of discharge of loan together with accrued interest of
Rs.4, 600.
iv. The expenses of realization were Rs.5, 400. The remaining debtors were sold to
a debt collecting agency at 50% of the value.
Prepare necessary accounts to close the books of the firm.
2 Lucky, Boss and Chandu were partners sharing profits in the ratio of 3:1:1. Their [6] Balance
Sheet as on March 31st 2009, the date on which they dissolve their firm, was as follows:
30
Capitals: Sundry Assets 34,000
Lucky 55,000 Stock 15,600
Boss 20,000 89,000 Debtors 48,400
Chandu 14,000 3,000 Less : Provision 2,400 46,000
Loan 12,000 Bills Receivables 2,000
Creditors Cash 6,400
1,04,000 1,04,000
It was agreed that:
 Lucky to take over Bills Receivables at Rs.1, 600, debtors amounting to Rs.40,
000 at Rs.34, 400 and the creditors of Rs.12, 000 were to be paid by him at
this figure.
 Boss to take over all stock for Rs.14,000 and some sundry assets at
Rs.14, 400 (being 10% less than the book value).
 Chandu to take over remaining sundry assets at 90% of the book value
and assume the responsibility of discharge of loan together with
accrued interest of Rs.600.
 The expenses of realization were Rs.540. The remaining debtors were sold to a
debt collecting agency at 50% of the book value.
Prepare necessary Accounts
31
SHARE CAPITAL
Forfeiture and re-issue of shares
Q.1 1000 eq. shares of Rs. 100 each forfeited due to non payment of final call of Rs. 20. These
shares were re-issued at Rs. 90 per share fully paid up to Mr. X.
Q.2 1000 eq. shares of Rs. 100 each forfeited due to non payment of first call of Rs. 20. Final call
of Rs. 20 was not yet made. These shares were re-issued at Rs. 80 per share fully paid up to
Mr. X.
Q.3 1000 eq. shares of Rs. 100 each forfeited on which only application (Rs. 25) and allotment
(Rs. 30) were received. These shares were re-issued at Rs. 70 per share fully paid up to Mr. X.
(Rs. 30) were received. These shares were re-issued at Rs. 105 per share to Mr. X.
(Rs. 30) were received. Final call of Rs. 20 was not yet made. These shares were re-issued at
Rs. 45 per share fully paid up to Mr. X.
Rs. 30 per share fully paid up to Mr. X.
Rs. 50 per share as Rs. 80 paid up to Mr. X.
Rs. 90 per share as Rs. 80 paid up to Mr. X.
Q.9 1000 eq. shares of Rs. 100, issued at premium of 10%, were forfeited due to non-payment of
final call of Rs. 30. These shares were re-issued to Mr. X @ Rs. 90 as fully paid up.
Q.10 1000 eq. shares of Rs. 100, issued at premium of 10%, were forfeited due to non-payment of
first call of Rs. 30. Final call of Rs. 20 was not yet made. These shares were re-issued to Mr.
X @ Rs. 60 as Rs. 80 paid up.
Q.11 1000 eq. shares of Rs. 100, issued at premium of Rs. 50 were forfeited due to non-payment of
allotment of Rs. 50 (including Rs. 30 Premium) and first call of Rs. 40 (including Rs. 20).
Final call of Rs. 20 was not yet made. These shares were re-issued to Mr. X @ Rs. 80 fully
paid up.
Final call of Rs. 20 was not yet made. These shares were re-issued to Mr. X @ Rs. 100.
32
Final call of Rs. 20 was not yet made. Out of these 800 shares were re-issued to Mr. X @ Rs.
80 fully paid up.
100.
120.
Presentation of Share Capital in Balance Sheet
Q.1 XYZ Ltd was incorporated with the authorized capital of Rs. 50, 00, 00,000 divided into eq.
shares of Rs. 100 each. It issued 2, 00,000 eq. shares of Rs. 100 each on which Rs. 20
(Application), Rs. 30 (Allotment), Rs. 35 (First call), Rs. 15 (second and final call) was to be
received. Applications for 2, 00,000 shares was received. Shares were allotted to all the
applicants and amount was duly received.
How you will present shares capital account in the balance sheet?
shares of Rs. 100 each. It issued 2, 00,000 eq. shares of Rs. 100 each on which Rs. 20
received. Applications for 2, 00,000 shares was received. Shares were allotted to all the
applicants and amount were duly received except 10,000 shares on which first call money was
not paid by Mr. Mohan.
shares of Rs. 100 each. It issued 2,00,000 eq. shares of Rs. 100 each on which Rs. 20
received. Applications for 2,00,000 shares was received. Shares were allotted to all the
applicants and amount were duly received except 10,000 shares on which Final call money
was not paid by Mr. Mohan.
Q.4 XYZ Ltd was incorporated with the authorized capital of Rs. 40,00,00,000 divided into eq.
applicants and amount were duly received except 10,000 shares on which first and Second &
final call money was not paid by Mr. Mohan.
33
applicants. All the money was duly received except money due on second & final call which
is yet to be made.
applicants. Mr. Mohan has not paid the first call money on 2000 shares allotted to him.
Second & final call was not yet made.
applicants. Mr. Mohan has not paid the allotment and first call money on 2000 shares allotted
to him. Second & final call was not yet made.
applicants. Mr. Mohan has not paid the allotment and first call money on 2000 shares allotted
to him. Second & final call was not yet made.
received. Applications for 2,25,000 shares was received. 25,000 applications were rejected
and remaining shares were allotted to the applicants. Mr. Mohan has not paid the allotment
and first call money on 2000 shares allotted to him. Second & final call was not yet made.
received. Applications for 2,25,000 shares was received. Allotment was made on prorate
basis. Mr. Mohan has not paid the first call money on 2000 shares allotted to him. Second &
final call was not yet made.
How you will present the shares capital account in the balance sheet?
Previous Years Question Papers – 2013 (All India) Set-1

1. At what rate is interest paid by the company on calls in advance, if it has not prepared its own
Articles of Association? [1]
34
2. What is meant by “Calls in Arrears”? [1]
13. The authorized capital of Suhas Ltd. is Rs. 50,00,000 divided into 25,000 shares of Rs. 200
each. Out of these, the company issued 12,000 shares of Rs. 200 each at a premium of 10%.
The amount per share was payable as follows:
[4]
Rs. 60 on Application
Rs. 60 on allotment (including premium)
Rs. 30 on first call and Balance on final call
Public applied for 11000 shares. All the money was duly received.
Prepare an extract of Balance Sheet of Suhas Ltd. as per Revised Schedule VI Part I of the
Companies Act 1956 disclosing the above information. Also prepare „notes to accounts‟ for
the same.
14. Nikhil Ltd. purchased a running business from Sonia Ltd. for a sum of Rs. 22,00,000 by
issuing 20,000 fully paid equity shares of Rs. 100 each at a premium of 10%. The assets and
liabilities consisted of the following:
[4]
Machinery : Rs. 7,00,000
Debtors : Rs. 2,50,000
Stock : Rs. 5,00,000
Building : Rs. 11,50,000
Bills Payable : Rs. 2,50,000
Pass necessary journal entries in the books of Nikhil Ltd. for the above transactions.
18. Starplus Company issued for public subscription 1,50,000 shares of the value of Rs. 100 each
at a discount 10% payable per share as follows:
Rs. 20 on application, Rs. 30 on allotment and Rs. 40 on call.
The company received applications for 3,00,000 shares. The allotment was done as under:
(a) Applicants of 30,000 shares were allotted 10,000 shares.
(b) Applicants of 1,40,00 shares were allotted 80,000 shares.
(c) Remaining applicants were allotted 60,000 shares.
After adjusting excess money in allotment, the money was returned. Harit, a shareholder who
had applied for 7,000 shares of group (b), failed to pay allotment and call money. Roshan,
another shareholder who was allotted 6,000 shares, paid the call money along with the
allotment. Roshan also belonged to group (b).
Pass necessary Journal entries to record the above transactions in the books of the company.
Show your working notes clearly.
OR
Record the Journal entries for forfeiture and reissue in the following cases:
(a) X Ltd. forfeited 200 shares of Rs. 100 each, Rs. 70 called up, on which the shareholders
had paid application and allotment money of Rs. 50 per share. Out of these, 150 shares were
re-issued to Naresh as Rs. 70 paid up for Rs. 80 per share.
(b) Y Ltd. forfeited 180 shares of Rs. 10 each, Rs. 8 called up, issued at a premium of Rs.2 per
shares to R for non-payment of allotment money of Rs. 5 per share (including premium). Out
of these, 160 shares were re-issued to Sanjay as Rs. 8 called up for Rs. 10 per share fully paid
up.
35
(c) Z Ltd. forfeited 30 shares of Rs. 100 each issued at a discount of Rs. 10 per share for non-
payment of first and final call money of Rs. 30 per share. Out of these, 20 shares were re-
issued at Rs. 30 per share fully paid up.
5. D Ltd. Invited applications for issuing 10,00,000 equity shares of Rs. 10 each. The public
applied for 8,55,000 shares. Can the company proceed for the allotment of shares? Give
reason in support of your answer. [1]
6. A Ltd. Forfeited 100 equity shares of Rs. 10 each issued at a premium of 20% for the non-
payment of final call of Rs. 5 including premium. State the maximum amount of discount at
which these shares can be re-issued. [1]
st
13. (SET-1) On 1 April, 2012, Vishwas Ltd. Was formed with an authorized capital of Rs.
10,00,000 divided into 1,00,000 equity shares of Rs. 10 each. The company issued prospectus
inviting applications for 90,000 equity shares. The company received applications for 85,000
equity shares. During the first year, Rs. 8 per share were called. Ram holding 1,000 shares and
Shyam holding 2,000 shares did not pay the first call of Rs. 2 per share. Shyam‟s shares were
forfeited after the first call and later on 1,500 of the forfeited shares were re-issued at Rs. 6 per
share, Rs. 8 called up. [4]
Show the following:
(a) Share Capital in the Balance Sheet of the company as per revised Schedule VI Part I of the
Companies Act, 1956.
(b) Also prepare „Notes to Accounts‟ for the same.
17. X Ltd. Invited applications for issuing 75,000 equity shares of Rs. 10 each at a premium of
Rs. 5 per share. The amount was payable as follows:
On application and allotment – Rs. 9 per share (including premium)
On first and final call – The balance amount
Applications for 3,00,000 shares were received. Application for 2,00,000 shares were rejected
and money refunded. Shares were allotted on pro-rata basis to the remaining applications. The
first and final call was made. The amount was duly received except on 1,500 shares applied
by Ravi. His shares were forfeited. The forfeited shares were re-issued at a discount of Rs. 4
per share.
Pass necessary journal entries for the above transactions in the books of X Ltd.
OR
Y Ltd. Invited applications for issuing 80,000 equity shares of Rs. 10 each at a discount of Rs.
10%. The amount was payable as follows:
On application and allotment – Rs 6 per share
On first and final call – the balance amount.
Applications for 2,00,000 shares were received. Applications for 40,000 shares were rejected
and money refunded. Shares were allotted on pro-rata basis to the remaining applicants. The
first and final call was made. All money was received except on 1,600 shares applied by
Rohan. His shares were forfeited. The forfeited shares were re-issued at the maximum
discount permissible under the law.
Pass necessary journal entries for the above transactions in the books of Y Ltd.
36
14 (SET-2) On 1st April, 2012, Blue Heaven Ltd. Was formed with an authorized capital of Rs.
20,00,000 divided into 2,00,000 equity shares of Rs. 10 each. The company issued prospectus
inviting applications for 1,80,000 equity shares. The company received applications for
1,70,000 equity shares. During the first year, Rs. 8 per share were called. Arun holding 2,000
shares and Varun holding 4,000 shares did not pay the first call of Rs. 2 per share. Varun‟s
shares were forfeited after the first call and later on 3,000 of the forfeited shares were re-
issued at Rs. 6 per share, Rs. 8 called up.
[4]
Show the following:
18. KY Ltd. Invited applications for issuing 60,000 equity shares of Rs. 10 each at a premium of
Applications for 2,00,000 shares were received. Application for 80,000 shares were rejected
first and final call was made. The amount was duly received except on 600 shares applied by
Mukesh. His shares were forfeited. The forfeited shares were re-issued at Rs. 8 per share fully
paid up.
Pass necessary journal entries for the above transactions in the books of KY Ltd.
OR
JY Ltd. Invited applications for issuing 70,000 equity shares of Rs. 10 each at a discount of
Rs. 10% . The amount was payable as follows:
first and final call was made. All money was received except on 1,400 shares applied by
Naresh. His shares were forfeited. The forfeited shares were re-issued at the maximum
discount permissible under the law.
Pass necessary journal entries for the above transactions in the books of JY Ltd.
14. On 1st April, 2012, Micro-tech Ltd. Was formed with an authorized capital of Rs. 50,00,000
divided into 5,00,000 equity shares of Rs. 10 each. The company issued prospectus inviting
applications for 4,50,000 equity shares. The company received applications for 4,20,000
equity shares. During the first year, Rs. 8 per share were called. Trilok holding 1,000 shares
and Rajesh holding 2,000 shares did not pay the first call of Rs. 2 per share. Rajesh‟s shares
were forfeited after the first call and later on 1,500 of the forfeited shares were re-issued at Rs.
6 per share, Rs. 8 called up. [4]
Show the following:
37
18. NY Ltd. Invited applications for issuing 90,000 equity shares of Rs. 10 each at a premium of
Applications for 2,70,000 shares were received. Application for 90,000 shares were rejected
first and final call was made. The amount was duly received except on 1,800 shares applied
by Govind. His shares were forfeited. The forfeited shares were re-issued at Rs. 8 per share
fully paid up.
Pass necessary journal entries for the above transactions in the books of NY Ltd.
OR
GY Ltd. Invited applications for issuing 85,000 equity shares of Rs. 10 each at a discount of
Rs. 10% . The amount was payable as follows:
first and final call was made. All money was received except on 1,700 shares applied by Hari.
His shares were forfeited. The forfeited shares were re-issued at the maximum discount
permissible under the law.
Pass necessary journal entries for the above transactions in the books of GY Ltd.
Previous Years Question Papers – 2015-16 (Foreign) Set-1,2,3
3. On 15-1-2016 the first call of Rs 4 per share became due on 10000 equity shares issued by
New India Ltd. Aman a holder of 500 shares did not pay the first call money. Shanti a
shareholder holding 600 shares paid the second and final call of Rs 3 per share alongwith the
first call.
Pass the necessary journal entry for the amount received by opening „Calls-in-arrears‟ and
„Calls-in-advance‟ account in the books of the company. [1]
8. „B‟ Ltd. took over the assets of Rs 14,00,000 and liabilities of Rs 4,00,000 of C Ltd. for a
purchase consideration of Rs 9,19,000. Rs 17,000 were paid by a bank draft in favour of C
Ltd. and the balance was paid by issue of equity shares of Rs 10 each at a premium of 10% in
favour of C Ltd. Pass necessary journal entries for the above transactions in the books of B
Ltd. [3]
9. To provide employment to the youth and to develop a backward area of Jharkhand which is
near one of the coal mines, Thermal Power Energies Ltd. decided to set-up a Thermal Power
Plant of 500 mega watt capacity. The company decided to issue 10,00,000 equity shares of Rs
10 each at a premium of 70% to finance the project. Applications for 17,00,000 shares were
received. Applications for 5,00,000 shares were rejected and money refunded. Shares were
allotted on pro-rata basis to the remaining applicants. The whole of share money was payable
on application.
Pass necessary journal entries for the above transactions in the books of the company and
identify any two values which the company wants to convey to the society. [3]
16. JS Ltd. invited applications for issuing 80,000 equity shares of Rs 10 each at a premium of Rs
6 per share. The amount was payable as follows : [8]
38
On application – Rs 4 per share (including premium Rs 1 per share)
On Allotment – Rs 6 per share (including premium Rs 3 per share)
On First and Final Call – Balance.
and application money refunded. Shares were allotted on pro-rata basis to the remaining
applicants. Excess money received with applications was adjusted towards sums due on
allotment. Raman holding 400 shares failed to pay the allotment money. His shares were
forfeited immediately after allotment. Afterwards the final call was made. Veer who had
applied for 1200 shares failed to pay the final call. His share were also forfeited. Out of the
forfeited shares 500 shares were re-issued at Rs 8 per share fully paid-up. The re-issued shares
included all the forfeited shares of Raman.
Pass necessary journal entries for the above transactions in the books of J.S. Ltd.
OR
RS Ltd. has issued 25,000 equity shares of Rs 10 each at a premium of Rs 2 per share payable
with application money. The incomplete journal entries related to the issue are given below.
You are required to complete these blanks.
BOOKS OF RS LTD.
JOURNAL
Date Particulars LF Amount (Dr) Amount (Cr)
2015 …………………………………………… Dr ………..
Jan,10 To ………………………….. ………..
(Application money received for 35000 shares @ 5
per share
Jan, 16 ………………………………….. Dr. ………..
To ………………………. ………..
To ………………………. ………..
To ………………………. ………..
To ………………………. ………..
((Transfer of share application money to share
capital a/c, securities premium a/c, refunded for
4000 shares for rejected applications and balance to
share allotment as shares were allotted on pro-rata
basis)
Jan,31 ………………………………….. Dr. ………..
To ………………………. ………..
(Amount due on allotment @ Rs 4 per share)
Feb,20 ………………………………….. Dr. ………..
To ………………………. ………..
(Balance amount received on allotment)
Apr,01 ………………………………….. Dr. ………..
To ………………………. ………..
(First and final call money due)
Apr,20 ………………………………….. Dr. ………..
Calls-in-arrears a/c Dr. ………..
To ………………………. ………..
(Money received on first and final call except on
500 shares)
Aug,27 ………………………………….. Dr. ………..
39
To ………………………. ………..
To ………………………. ………..
(Forfeited the shares on which first and final call
money was not received)
Oct,03 ………………………………….. Dr. ………..
………………………………….. Dr. ………..
To ………………………. ………..
(Re-issued the forfeited shares @ Rs 8 per share
fully paidup)
………………………………….. Dr. ………..
To ………………………. ………..
(………………………………………………….)
Previous Years Question Papers – 2015-16 (All India) Set-1,2,3
3. On 28.2.2016 the first call of Rs 2 per share became due on 50,000 equity shares allotted by
Kumar Ltd. Komal a holder of 1000 shares did not pay the first call money. Kovil a holder of
750 shares paid the second and final call of Rs 4 per share along with the first call.
Pass the necessary journal entry for the amount received by opening calls - in - arrears and
calls - in - advance account in the books of the company. [1]
9. K Ltd. took over the assets of Rs 15,00,000 and liabilities of Rs 5,00,000 of P Ltd. for a
purchase consideration of Rs 13,68,500. Rs 25,500 were paid by issuing a promissory note in
favour of P Ltd. payable after two months and the balance was paid by issue of equity shares
of Rs 100 each at a premium of 25%. [3]
Pass necessary journal entries for the above transactions in the books of K Ltd.
10. To provide employment to the youth and to develop Baramula district of Jammu and Kashmir,
Jyoti Power Ltd. decided to setup a power plant. For raising funds the company decided to
issue 8,50,000 equity shares of Rs 10 each at a premium of Rs 3 per share. The whole amount
was payable on application. Applications for 20,00,000 shares were received. Applications for
3,00,000 shares were rejected and shares were alloted to the remaining applicants on pro - rata
basis.
Pass necessary journal entries for the above transactions in the books of the company and
identify any two values which the company wants to propagate. [4]
16. SK Ltd invited applications for issuing 3,20,000 equity shares of Rs 10 each at a premium of
Rs 5 per share. The amount was payable as follows: [8]
On application - Rs 3 per share (including premium Rs 1 per share)
On allotment - Rs 5 per share (including premium Rs 2 per share)
On First and Final Call - Balance.
and application money refunded. Shares were allotted on pro-rata basis to the remaining
applicants. Excess money received with applications was adjusted towards sums due on
allotment. Jeevan holding 800 shares failed to pay the allotment money and his shares were
immediately forfeited. Afterwards final call was made, Ganesh who had applied for 2,700
shares failed to pay the final call. His shares were also forfeited. Out of the forfeited shares
1,500 shares were re-issued at Rs 8 per share fully paid up. The re-issued shares included all
the forfeited shares of Jeevan.
Pass necessary journal entries for the above transactions in the books of the company.
40
OR
BBG Ltd. had issued 1,00,000 equity shares of Rs 10 each at a premium of Rs 3 per share
payable with application money. While passing the journal entries related to the issue, some
blanks are left. You are required to complete these blanks.
Books of BBG Ltd.
Journal
Date Particulars LF Amount (Dr) Amount (Cr)
2015 …………………………………………… Dr ………..
Jan,05 To ………………………….. ………..
(Application money received for 140000 shares @ 6
per share
Jan, 17 ………………………………….. Dr. ………..
To ………………………. ………..
To ………………………. ………..
To ………………………. ………..
To ………………………. ………..
(Application money transferred to share capital
account, securities premium account, refunded for
20,000 shares for rejected applications and balance
adjusted towards money due on allotment as shares
were allotted on pro - rata basis)
Jan,17 ………………………………….. Dr. ………..
To ………………………. ………..
(Amount due on allotment @ Rs 4 per share)
Feb,20 ………………………………….. Dr. ………..
To ………………………. ………..
(Balance amount received on allotment)
Apr,01 ………………………………….. Dr. ………..
To ………………………. ………..
(First and final call money due)
Apr,20 ………………………………….. Dr. ………..
Calls-in-arrears a/c Dr. 3000
To ………………………. ………..
(Money received on first and final call except on
500 shares)
May,20 ………………………………….. Dr. ………..
To ………………………. ………..
To ………………………. ………..
(Forfeited the shares on which first and final call
money was not received)
June,15 ………………………………….. Dr. ………..
………………………………….. Dr. 3000
To ………………………. ………..
(Forfeited shares re-issued)
………………………………….. Dr. ………..
To ………………………. ………..
(………………………………………………….)
41
Previous Years Question Papers – 2016-17 (All India) Set-1,2,3
5. Z Ltd. forfeited 1,000 equity shares of Rs 10 each for the non-payment of the first call of Rs 2
per share. The final call of Rs 3 per share was yet to be made.
Calculate the maximum amount of discount at which these shares can be reissued. [1]
9. Disha Ltd. purchased machinery from Nisha Ltd. and paid to Nisha Ltd. as follows:
(i) By issuing 10,000, equity shares of Rs 10 each at a premium of 10%.
(ii) By issuing 200, 9% debentures of Rs 100 each at a discount of 10%.
(iii) Balance by accepting a bill of exchange of Rs 50,000 payable after one month.
Pass necessary journal entries in the books of Disha Ltd. for the purchase of machinery and
making payment to [3]
10. Ganesh Ltd. is registered with an authorized capital of Rs 10,00,00,000 divided into equity
shares of Rs 10 each. Subscribed and fully paid up capital of the company was Rs
6,00,00,000. For providing employment to the local youth and for the development of the
tribal areas of Arunachal Pradesh the company decided to set up a hydro power plant there.
The company also decided to open skill development centers in Itanagar, Pasighat and
Tawang. To meet its new financial requirements, the company decided to issue 1,00,000
equity shares of Rs 10 each and 1,00,000, 9% debentures of Rs 100 each. The debentures
were redeemable after five years at par. The issue of shares and debentures was fully
subscribed. A shareholder holding 2,000 shares failed to pay the final call of Rs 2 per share.
Show the share capital in the Balance Sheet of the company as per the provisions of Schedule
III of the Companies Act, 2013. Also identify any two values that the company wishes to
propagate.
17. VXN Ltd. invited applications for issuing 50,000 equity shares of Rs 10 each at a premium of
Rs 8 per share. The amount was payable as follows :
On Application : Rs 4 per share (including Rs 2 premium)
On Allotment : Rs 6 per share (including Rs 3 premium)
On First Call : Rs 5 per share (including Rs 1 premium)
On Second and Final Call : Balance Amount
The issue was fully subscribed. Gopal, a shareholder holding 200 shares, did not pay the
allotment money and Madhav, a holder of 400 shares, paid his entire share money along with
the allotment money. Gopal‟s shares were immediately forfeited after allotment. Afterwards,
the first call was made. Krishna, a holder of 100 shares, failed to pay the first call money and
Girdhar, a holder of 300 shares, paid the second call money also along with the first call.
Krishna‟s shares were forfeited immediately after the first call. Second and final call was
made afterwards and was duly received. All the forfeited shares were reissued at Rs 9 per
share fully paid up.
OR
JJK Ltd. invited applications for issuing 50,000 equity shares of Rs 10 each at par. The
amount was payable as follows :
On Application : Rs 2 per share
On Allotment : Rs 4 per share
On First and Final Call : Balance Amount
The issue was oversubscribed three times. Applications for 30% shares were rejected and
money refunded. Allotment was made to the remaining applicants as follows :
Category No. of Shares Applied No. of Shares Allotted
42
I 80,000 40,000
II 25,000 10,000
Excess money paid by the applicants who were allotted shares was adjusted towards the sums
due on allotment.
Deepak, a shareholder belonging to Category I, who had applied for 1,000 shares, failed to
pay the allotment money. Raju, a shareholder holding 100 shares, also failed to pay the
allotment money. Raju belonged to Category II. Shares of both Deepak and Raju were
forfeited immediately after allotment. Afterwards, first and final call was made and was duly
received. The forfeited shares of Deepak and Raju were reissued at Rs 11 per share fully paid
up.
Additional Question:
Mona Earth Mover Ltd. decided to issue 12,000 shares of Rs.100 each at
premium of Rs. 20 each. The amount was payable as under:
On application : Rs. 25
On allotment : Rs. 50
On first call : Rs. 20
On second call : Balance amount
Applications were received for 13,000 shares. The directors decided to reject
application of 1,000 shares and their application money being refunded in
full. All the money was received as and when due except following
exceptions:
(a) Mr. A who had applied for 200 shares and allotted the same had paid all
the amount along with application.
(b) Mr. B who was allotted 300 shares paid nothing except allotment.
(c) Mr. C who was allotted 100 shares fails to pay calls.
(d) Mr. D who was allotted 150 shares paid all his dues along with
allotment.
(e) Mr. E who was allotted 50 shares didn’t pay final call.
Record the transactions in the books of Mona Earth Movers Ltd.
Additional Question:
XYZ Ltd. issued a prospectus inviting applications for 2,000 eq. Shares of
Rs. 10 each at a premium of Rs. 4 per share payable as:
43
On application Rs. 6 (including Rs.1 premium)
On allotment R.s 2 (including Rs.1 premium)
On first call Rs. 3 (including Rs.1 premium)
On second and final call Rs. 3 (including Rs.1 premium)
Applications were received for 3,000 shares. And pro-rata allotment was
made on the applications for 2,400 shares. It was decided to utilize excess
application money towards the money due on allotment.
X, to whom 40 shares were allotted, failed to pay allotment money and on
his subsequent failure to pay the first call, his shares were forfeited.
Y, who applied for 72 shares failed to pay the two calls and on his such
failure, his shares were forfeited.
Of the shares forfeited, 80 shares were sold to Z credited of fully paid up for
Rs. 9 per share, the whole of Y’s shares being included. Pass the necessary
journal entries and prepare cash book (bank column) in the books of XYZ
Ltd.
Additional Question
New Company Ltd has a nominal capital of Rs. 2,50,000 in shares of Rs.
10. Of these, 4,000 shares were issued as fully paid in payment of Building
purchased. 8,000 shares were subscribed by the public and during first year.
Rs. 5 per share were called-up, payable at Rs. 2 on application, Rs.1 on
allotment, Rs. 1 on first call and Rs. 1 on second call. The amounts
received in respect of these shares were:
On 6,000 shares the full amount called.
On 1,250 shares Rs. 4 per share
On 500 shares Rs. 3 per share
On 250 shares Rs. 2 per share
The directors forfeited the 750 shares on which less than Rs. 4 had been
paid. The shares were subsequently re-issued at Rs. 3 per share.
Give journal entries recording the above transactions and prepare cash book
(bank column).
44
ISSUE AND REDEMPTION OF DEBENTURES
1. MRF Ltd. issued 600, 11% debentures of Rs 1000 each on 1-1-2016. Pass necessary journalentriesfor
the issue of debentures in the following situations: [3] (a) When debentures were issued at a
discount of 5% and were redeemable at a premium of 8%. (b) When debentures were issued at a
premium of 10% and were redeemable at a premium of 6%. 35. Why are irredeemable debentures
also known as perpetual debentures? 1
2. 6. Distinguish between shares and debentures on the basis of convertibility. 1
3. 7. K K Limited obtained a loan of Rs. 10,0,000 from State Bank of India @ 9 % interst. The company
issued Rs. 15,000 9 % debentures in favour of State Bank of India as collateral security. Pass
necessary Journal entries for the above transactions:
(i) When company decided not to record the issue of 9 % Debentures as collateral security.
(ii) When company decided to record the issue of 9 % Debentures as collateral security. 3
4. Why are irredeemable debentures also known as perpetual debentures? 1
On1stJanuary 2010 Dream Ltd. issued 15, 000, 11% Debentures of₹100 each at par which repayable at
a premium of 15% on 31stDecember 2014.On the date of maturity, the company decided to redeem
the above mentioned Debenture as per the terms of issue, out of profits. The Profit &Loss Account
shows a credit balance of₹20, 00,000on thisdate. The offer was accepted by all the Debenture-
holders and all the debentures were redeemed. Pass the necessary journal entries in the books of the
Company only for the redemption of Debentures
5. ABC Ltd. issued 10,000; 10% Debentures of `100 each at a premium of 8% on 30th June,
2014 redeemable at par on 30th June, 2015. The issue was fully subscribed.
journalize. 1
6. Calculate the maximum permissible discount which a company can allow at the time of
reissue of forfeited shares in the following case:
A share of `10 originally issued at a premium of `1 on which application and allotment
money (including premium) of `5 has been received. 1
7. Pass necessary journal entries at the time of issue of debentures in the following cases : (i) 10,000,
10% Debentures of ` 120 each issued at 5% premium, repayable at par. (ii) 20,000, 9% Debentures of
` 100 each, issued at 5% discount, repayable at 7% premium. (4)
8. X Ltd. invited applications for issuing 500, 12% debentures of Rs 100 each at a discount of 5%. These
debentures were redeemable after three years at par. Applications for 600 debentures were received.
Pro-rata allotment was made to all the applicants.
Pass necessary journal entries for the issue of debentures assuming that the whole amount
Was payable with application. 1
9. BPL Ltd. converted 500, 9% debentures of Rs 100 each issued at a discount of 6% into equity shares
of Rs 100 each issued at a premium of Rs 25 per share. Discount on issue of 9% debentures has not yet
been written off.
Showing your working notes clearly, pass necessary journal entries for conversion of 9% debentures
into equity shares. 3
45
10. Disha Ltd. purchased machinery from Nisha Ltd. and paid to Nisha Ltd. as follows :
(i) By issuing 10,000, equity shares of Rs 10 each at a premium of 10%.
(ii) By issuing 200, 9% debentures of Rs 100 each at a discount of 10%.
(iii) Balance by accepting a bill of exchange of Rs 50,000 payable after one month.
Pass necessary journal entries in the books of Disha Ltd. for the purchase of machinery and making
payment to Nisha Ltd. 3
10. Give journal entries for the issue of debentures in the following conditions.
I. Issued 2,000, 12% debentures of Rs. 100 each at par, redeemable also at par.
II. . Issued 2,000, 12% debentures of Rs. 100 each at a discount of 2%, redeemable at par
III. Issued 2,000, 12% debentures of Rs 100 each at a premium of 5%, redeemable at par.
IV. Issued 2,000, 12% debentures of Rs. 100 each at par but redeemable at 5% premium.
V. Issued 2,000, 12% debentures of Rs. 100 each at a discount of 2%, redeemable at a premium
of 5%.
VI. Issued 2,000, 12% debentures of Rs. 100 each at a premium of 5%, redeemable at a premium
of 10%.
11. Chandra Tubes Ltd. Issued 70,000, 7% debentures of 100 each on June 30,2011 redeemable at a
premium of 6% on July 1,2015. The Board of Directors have decided to transfer out of profits
7,50,000 to Debentures Redemption Reserve on March 31,2013, 5,00,000 on March 31,2014 and
5,00,000 on March 31,2015.Record necessary journal entries regarding issue and redemption of
debentures. Ignore entries relating to writing off loss on issue of debentures and interest paid
thereon. th[Ans2. Debentures Redemption Investment 10,50,000 on 30 April, 2015; Debenture
Redemption Reserve amounting to 17,50,000 will be transferred to General Reserve.]
12. Mayur Ltd. Issued 15,000 9% Debentures of 100 each redeemable after 5 years either by draw of lots
or by purchase in the open market. At the end of five years, it purchased all its debentures for
immediate cancellation @ 94 per debenture. Expenses of purchase amounted to 1,500. Pass the
necessary journal entries for cancellation of debentures assuming the company has sufficient balance
in Debenture Redemption Reserve. [Ans3. Profit on Redemption 88,500 will be transferred to Capital
Reserve; Debenture Redemption Reserve transferred to General Reserve 3,75,000.]Hint: Investment
encashed 2,25,000Note: It is assumed that the Company has invested 15% amount at the beginning
of financial year.
13. On 1 April,2012 a company issued 10,000, 9% debentures of 100 each at a premium of 5%. The
terms of issue provide for redemption of 1,00,000 worth Debentures every year commencing from
March,2014 either by purchasing in the open market or by draw of lots stat the company's option. On
31 March,2014, the company purchased 400 debentures @95 and 500 debentures @96 for
cancellation and redeemed the balance of 10,000 debentures by draw of lots. Journalise these
transactions and also show how you would deal with the profit on redemption of debentures.
14. Green Forest Ltd. Issued 12,00,000, 7% Debentures divided into debentures of 100 each ston April 1,
2010, redeemable in four equal annual installments starting from 31 March, 2015. The Board of
Directors have decided to create Debenture Redemption Reserve of 80,000 on March 31,2012;
80,000 on March 31,2013 and the balance on March 31,2014. Record necessary journal entries at the
46
time of issue and at the time of redemption of debentures and creation of Debenture Redemption
Reserve.
15. IFCI Ltd.(an All India Financial Company) issued 10,00,000; 9% Debentures of Rs.50 st steach on 1
April, 2008 redeemable on 1 April, 2015. How much amount of Debentures Redemption Reserve is
required before the redemption of debentures? Also, pass Journal entries for issue and redemption
of debentures.
16. On 1 April,2013, following were the balances of Blue Bird Ltd.: st10% Debentures (redeemable on 31
March, 2015) Rs. 15,00,000 Debenture Redemption Reserve Rs. 2,00,000
The company met the requirements of the Companies Act, 2013 regarding - Debenture Redemption
Reserve and Investment and redeemed the debentures. Pass necessary Journal entries for the above
transactions in the books of the company.
17. Shakti Enterprises Ltd. Issued 30,000; 8% Debentures of Rs.100 each on 1 October,2011
stredeemable in five equal annual instalments starting with 31 March,2015. The Board decides to
transfer the Debenture Redemption Reserve Rs.50,000 stand Rs.4,00,000 on 31 March, 2012 and
2013 respectively and balance required to be sttransferred to Debenture Redemption Reserve on 31
March, 2014. Pass Journal entries.
18. On 1 April,2010, X Ltd. Had 1,000; 12% Debentures of Rs.100 each. Interest on th st stdebentures is
payable half yearly on 30 September and on 31 March. On 1 July, 2010, the company purchased 300
own debentures at Rs.93 for immediate cancellation. Pass Journal entries for the purchase and
cancellation of debentures.
19. AAA Ltd. purchased its own 1,000; 10% of Debentures of Rs.100 each @ Rs.100 from open market for
immediate cancellation. As per the terms of issue, these debentures were redeemable at 5%
premium. Pass necessary Journal entries for purchase and cancellation of debentures.
20. DDD Ltd. purchased its own 2,500; 10% of Debentures of Rs.100 each redeemable at 10% premium
@112 per debenture for immediate cancellation. Pass necessary Journal entries for purchase and
cancellation of debentures.
21. Pass necessary Journal entries in the books of the company in the following cases for redemption of
2,000; 12% Debentures of Rs.10 each issued at par: (a) Debentures redeemed at par by conversion
into 10% preference shares of Rs.50 each. (b) Debentures redeemed at premium of 5% by conversion
into equity shares issued at a par. (c) Debentures redeemed at premium of 5% by conversion into
equity shares issued at a premium of 20%.
22. On April 1, 2013, XY Limited issued Rs. 10,00,000, 10% debentures at a discount of 14%. The
debentures were to be redeemed in four equal annual installments starting from March 31st, 2015.
Prepare „Discount on issue of Debenture Account‟ for the first three years starting from April 1, 2013.
Also show your working clearly.
47
FINANCIAL STATEMENTS OF A COMPANY & ITS TOOLS
One Mark Questions
1. List the items which are shown under the heading Current Assets, Loan and Advances
2. List the items which are shown under the heading Current Liabilities and provisions as per
schedule VI of Part 1 of the Companies Act, 2013
3. What are financial statements of a Company?
4. Distinguish between vertical and horizontal analysis.
5. What is comparative statement?
6. Define common size statement
7. What is inter firm and intra firm analysis?
1. What are the objectives of Financial Statements of a Company?

2. Explain the various types of advantages of analysis of Financial Statements.
3. What are the limitations of Financial Statements analysis?
4. From the following statement of Profit and Loss of Star Ltd. for the years ended 31st [3]
March 2011 and 2012 prepare a comparative statement of Profit & Loss:
Particulars Note 31.03.2017 31.03.2016

No.
Revenue from operations 20,00,000 16,00,000
Employee benefit expenses 10,00,000 8,00,000
Other Expenses 1,00,000 2,00,000
Tax 50% 50%
Tax rate is 50% in year 2012 and 2011.
5. Prepare a Comparative Statement of Profit & Loss from the following details:
Particulars Note 31.03.2017 31.03.2016

Revenue from operation 30,00,000 20,00,000
Other income (% of Revenue from operations) 15% 20%
Expenses (% of Revenue from operations) 60% 50%
Show working clearly.
6. Prepare a Comparative Balance Sheet from the following:
Particulars NoteNo. 31.03.2017 31.03.2016
48
1. 2. 3. 4
I. Equity and Liabilities

1. Shareholders
funds (a) Share
capital 20,00,000 15,00,000
(b) Reserves and Surplus 3,00,000 4,00,000
2. Non-Current Liabilities
Long term borrowings
3. Current Liabilities
9,00,000 6,00,000
Trade payables
3,00,000 2,00,000
TOTAL 35,00,000 27,00,000
II. ASSETS
(1) Non-Current Assets
(a) Fixed Assets
(i) Tangible assets
(ii) Intangible assets 20,00,000 15,00,000
(2) CURRENT ASSETS 9,00,000 6,00,000
(a) Inventories
(b) Cash and cash equivalents
3,00,000 4,00,000
3,00,000 2,00,000
TOTAL 35,00,000 27,00,000
Show your working clearly.
7. From the following Statement of Profit and Loss of Star Ltd. for the year ended 31st [3]
March 2012, prepare a Common Size Statement of Profit & Loss:
Particulars Note No. 31.03.2017
Revenue from operation 20,00,000
Employee benefit expenses 10,00,000
Other Expenses 1,00,000
49
8. From the following Balance Sheet of Sun Ltd., as on 31st March 2012, prepare a Common [3]
Size Balance Sheet:
Particulars NoteNo. 31.03.2017
1. 2. 3.

1. Shareholders funds
(a) Share capital
(b) Reserves and Surplus 30,00,000
2. Non-Current 4,00,000
Liabilities long term
borrowings
10,00,000
3. Current Liabilities
Trade payables
6,00,000
TOTAL 50,00,000
II. ASSETS
(1) Non-Current Assets
(a) Fixed Assets
(i) Tangible assets
(ii) Intangible assets 30,00,000
(2) CURRENT ASSETS 6,00,000
(a) Inventories
(b) Cash and cash equivalents
10,00,000
4,00,000
TOTAL 50,00,000
Additional Questions
1. Explain why they are interested in financial statements of a Company?

a) Employee b) Workers c) Government and Taxation authorities d) Researchers e)
Banks f) Potential Investors g) Customer
2. State the major headings under which the following items will be put as per Schedule VI of
Part 1 of the Companies Act, 2013
a) Long Term Investments (ii) Bills Receivable (iii) Motor Car (iv) Discount of issue of
shares (v) Securities premium (vi) Unclaimed dividend (Vi) Sundry Creditors (vii)
Provision for Tax (viii) Preliminary Expenses (ix) Loose Tools (x) Interest Accrued on
investments (xi) Goodwill (xii) Premium on Redemption (Xii) Loose Tools (Xiii) Banks
50
RATIO ANALYSIS
Liquidity Ratios
Three Marks Questions
1. A Business has a Current Ratio of 3:1. Its net working capital is Rs.4,00,000 and its stock is
valued at Rs.2,50,000. Calculate Liquid Ratio.
2. Calculate Current Ratio and Quick Ratio :
Sundry Debtors Rs.4,00,000; Prepaid Expenses Rs.40,000; Debentures Rs.2,00,000; Stock
Rs.1,60,000; Bills Payable Rs.80,000; Marketable Securities Rs.80,000; Sundry Creditors
Rs.1,60,000; Cash Rs.1,20,000; Expenses Payable Rs.1,60,000.
3. Calculate Current Assets form the following information:
(i) Stock Turnover : 4 Times (ii) Stock at the end is Rs.20,000 more than the stock in
the beginning (iii) Sales Rs.3,00,000 (iv) Gross Profit Ratio 25% (v) Current
Liabilities Rs.40,000 (vi) Quick Ratio 0.75 : 1
3. The Current Ratio of a company is 2:1. State which of the following would improve, reduce,
or not change the ratio:
(i) Repayment of a Current Liability (ii) Purchasing goods on credit (iii) Sale of office
equipment for Rs.4,000 (Book Value Rs.5,000) (iv) Sale of goods Rs.11,000 (Cost Rs.10,000) (v)
Payment of Dividend
5. A firm has Current Ratio of 4:1 and Quick Ratio of 2.5:1. Assuming inventories are Rs.22, 500, find
out the total current assets and total current liabilities.
6. Current Ratio of a Company is 3 : 1, Working Capital is Rs.30,000. Calculate the amount of Current
Assets and Current Liabilities.
Solvency Ratio
1. The Debt Equity Ratio of a Company is 1:2. Which of the following transaction would
increase, decrease and not change it:
(i) Issue of Equity Shares (ii) Cash Received from Debtors (iii) Redemption of Debentures (iv)
Purchased Goods on credit
1 Calculate Debt Equity Ratio from the following: Equity Share
Capital........................................... Rs.5,00,000 General
51
Reserve................................................... Rs.1,00,000 Accumulated
Profits.......................................... Rs.50,000 10% Debentures.................................................
Rs.1,30,000 Current Liabilities.............................................. Rs.1,00,000 Preliminary
Expenses....................................... Rs.10,000
2 Calculate Debt Equity Ratio; Total Asset to Debt Ratio and Proprietary Ratio from the
following data:
Equity Share Capital................................................ Rs.75,000
Reserve and Surplus............................................... Rs.20,000
Debentures.................................................................. Rs.40,000
Loan from HDFC Bank........................................... Rs.30,000
Current Liabilities.................................................... Rs.15,000
Fixed Tangible Assets............................................. Rs.82,000
Goodwill....................................................................... Rs.48,000
Current Assets.......................................................... Rs.50,000
Activity Ratios
1. Rs.2,00,000 is the cost of goods sold, inventory turnover 8 times; stock at the beginning is 1.5
times more than the stock at the end. Calculate the values of opening and closing stock.
2. From the following information, determine the opening and closing stock:
Stock Turnover Ratio ................................... 4 Times
Total Sales......................................................... Rs.3,00,000
Rate of Gross Profit on Sales..................... 20%
Closing stock is more by Rs.6,000 than the opening stock.
3. Revenue from operations (Net Credit Sales) of Vinod Limited during the year were
Rs.1,80,000. If debtors turnover ratio is 4 times, calculate debtors in the beginning and at the
end of the year. You are informed that closing debtors are two times in comparison to
opening debtors.
4. Find out the Revenue from operations (Sales) if :
Average Stock....................................... Rs.1,60,000
Stock Turnover Ratio........................ 6 Times
Gross Profit............................................. Rs.1,20,000
Profitability Ratios
1. Calculate the Gross Profit Ratio based on the following information:

Cash Sales: 25% of Total Sales; Purchases Rs.2,76,000; Credit Sales Rs.2,40,000; Excess of
Closing Stock over opening stock Rs.20,000.
2. Calculate Cost of Revenue from operations or Cost of goods sold from the following:
Sales Rs.12,00,000; Sales Return Rs.80,000; Operating ExpensesRs.1,82,000; Operating Ratio
92%.
3. Calculate Return on Investment from the following information:
Net Profit after tax Rs.6,50,000
52
2.5% Convertible Debentures Rs.8,00,000
Income Tax 50%
Fixed assets at cost Rs.24,60,000;
Depreciation Reserve Rs.4,60,000;
Current Assets Rs.15,00,000
Current Liabilities Rs.7,00,000
Miscellaneous Questions
1. From the following information, Calculate any two of the following ratios:
Debt Equity Ratio (b) Interest Coverage Ratio (c) Working Capital Turnover Ratio
(d) Return on Investment Information:
Equity Share Capital Rs.5,50,000; General Reserve Rs.50,000; Statement of profit and
loss (profit after tax and interest) Rs.1,50,000; 9% Debentures Rs.2,00,000;
Creditors Rs.1,00,000; Land and Building Rs.6,50,000; Equipment’s Rs.1,50,000;
Debtors Rs.1,45,000; Cash Rs.55,000 and Preliminary Expenses Rs.50,000. Sales for the
year ended 31.3.2011 was Rs.15,00,000 and Tax paid 50%.
2. From the following information, Calculate any two of the following ratios:
(a) Debt Equity Ratio (b) Working Capital Turnover Ratio (c) Return on investment
Equity Share Capital Rs.50,000
General Reserve Rs.5,000
Statement of Profit & Loss (Profit after interest and tax) Rs.15,000
9% Debentures Rs.20,000
Creditors Rs.15,000
Cash 5,500 and Discount on issue of shares Rs.5,000
Sales for the year ended 31.3.2011 was Rs.50,000 and Tax rate is 50%.
53
CASH FLOW STATEMENTS
One Mark Questions
1. What is meant by Cash Flow Statement?

2. State any one objective of Cash Flow Statement?
3. Why is Cash Flow Statement prepared?
4. What is meant by Cash Equivalents?
5. While preparing cash flow statement, what type of activity is ‘Payment of Cash to Acquired
Debentures by an Investment Company’?
6. When is interest received considered as financing activities?
7. Dividend received by a finance company will come under which activity while preparing a
cash flow statement?
Six Marks Questions
2. Prepare a Cash Flow Statement on the basis of the information given in the Balance [6] Sheet
of Vinod Limited as at 31.3.2012 and 2011:
Particulars Note 2011-12 2010-11
No.

(1) Shareholders Funds
: 14,00,000 10,00,000
(a) Share Capital 5,00,000 4,00,000
(b) Reserves & Surplus
(2) Non-current Liabilities: 6,00,000 2,00,000

Long term borrowings (9%
Deposit) (3) Current Liabilities: 1 80,000 60,000
Short Term Provision
TOTAL
25,80,000 16,60,000
54
II. Assets
(1) Non-current Assets: 2
(a) Fixed Assets:
3 16,00,000 9,00,000
(i) Tangible Assets
1,40,000 2,00,000
(ii) Intangible Assets
(2) Current Assets: 2,50,000 2,00,000

(a) Inventories 5,00,000 3,00,000
(b) Trade Receivables 90,000 60,000
(c) Cash and Cash Equivalents
TOTAL 25,80,000 16,60,000
Notes to Accounts:
Particulars 2012 2011
1 Short Term Provisions

Provision for Taxes 80,000 60,000
2. Tangible Fixed Assets

Machinery 16,00,000 9,00,000
3. Intangible Assets
Goodwill 1,40,000 2,00,000
Additional information:
(i) Depreciation provided on Tangible Assets (Machinery) during the year Rs. 2,00,000.
(ii) Interest paid on Deposits (Long term borrowings) Rs.45,000
(iii) The net profit earned during the year before tax Rs.1,00,000
2. Following are the Balance Sheets of Krishtec Limited for the year ended 31 st March 2011 and
[6] 2012:
Particulars 2011-12 2010-11
55
(1) Shareholders Funds :
(a) Share Capital 20,00,000 17,00,000
(b) Reserves & Surplus 3,00,000 4,00,000
(Statement of P/L)
(2) Non-current
Liabilities:
Long term borrowings 3,00,000 2,00,000
(3) Current Liabilities:
50,000 25,000
Trade Payables
Total 26,50,000 23,25,000
II. Assets
(1) Non-current Assets:

(a) Fixed Assets:
8,00,000 9,00,000
(i) Tangible Assets
5,00,000 2,00,000
(ii) Intangible Assets
3,00,000 4,00,000
b) Non-current Investments
(iii) (2) Current Assets:
(a) Inventories 4,00,000 5,00,000
(b) Trade Receivables 1,50,000 1,25,000
(c) Cash and Cash Equivalents 5,00,000 2,00,000
Total 26,50,000 23,25,000
Additional Information:
Depreciation on Tangible Assets was charged Rs.1,00,000 during the year.
56
3. Prepare a Cash Flow Statement on the basis of the information given in the Balance [6] Sheet
of Vinod Limited as at 31.3.2012 and 2011:
Particulars Note 2011-12 2010-11
No.

(1) Shareholders Funds
:
(a) Share Capital 70,000 60,000
(b) Reserves & Surplus 1 44,000 8,000
(2) Non-current
Liabilities:
Long term borrowings 2 50,000 42,000
25,000 17,000
Trade Payables
1,89,000 1,27,000
Total
II. Assets
(1) Non-current Assets:
(a) Fixed Assets:
82,000 64,000
(i) Tangible Assets
16,000 20,000
(ii) Intangible Assets (b) 3
16,000 6,000
Non-current Investments
(2) Current Assets:

(a) Current Investments (Marketable) 18,000 20,000
(b) Inventories 49,000 12,000
(c) Cash and Cash Equivalents 8,000 5,000
1,89,000 1,27,000
Total
Notes to Accounts
Particulars 2012 2011
57
1 Reserves and Surplus
General Reserve 30,000 20,000
Surplus (Balanace in Statement of P/L) 14,000 (12,000)
2. Long Term Borrowings

10% Debentures 50,000 42,000
3. Intangible Assets
Goodwill 16,000 20,000
Additional information:
(i) Depreciation provided on Tangible Assets (Machinery) during the year Rs.8,000.
(ii) Interest paid on Debentures Rs.4,200
(iii) Interest received on Non-current Investment Rs.600
2. Following are the Balance Sheets of Krishtec Limited for the year ended 31st March 2011 and
[6] 2012:
Particulars 2011-12 2010-11
(1) Shareholders Funds :

(a) Share Capital 7,00,000 6,00,000
(b) Reserves & Surplus 2,00,000 1,10,000
(Statement of P/L)
(2) Non-current
Liabilities:
3,00,000 2,00,000
Long term borrowings
30,000 25,000
Trade Payables
Total 12,30,000 9,35,000
II. Assets
(1) Non-current
Assets:
(a) Fixed Assets:
(i) Tangible Assets
(2) Current Assets: 11,00,000 8,00,000

(a) Inventories
(b) Trade Receivables 70,000 60,000
(c) Cash and Cash Equivalents 32,000 40,000
28,000 35,000
58
Total
12,30,000 9,35,000
Adjustments:
During the year a piece of Machinery of the book value of Rs.80,000 was sold for Rs.65,000.
Depreciation provided on tangible assets during the year amounted to Rs.2,00,000.
Prepare a Cash Flow Statement
59

Accounts

Uploaded by

Copyright:

Available Formats

Accounts

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Accounts

Uploaded by

Copyright:

Available Formats

AHLCON PUBLIC SCHOOL

ACCOUNTANCY CLASS XII ASSIGNMENT

Three/Four Marks Questions

Six Marks Questions

Six Marks Questions

Liabilities Amount Assets Amount

ACCOUNTANCY CLASS XII ASSIGNMENT

One Mark Questions

1. State any two rights acquired by a newly admitted partner.

Three/Four Marks Questions

Six/Eight Marks Questions

General Reserve 5,000 Plant & Machinery 30,000

which were Rs.10,000; Rs.9,000; Rs.8,000 and Rs.13,000 respectively.

General Reserve 10,000 Goodwill 5,000

Three/ Four Marks Questions

Six/Eight Marks Questions

(a) Land and Building will be appreciated by 5% and Furniture will be

Liabilities Amount Assets Amount

(i) Building was to be depreciated by Rs.20,000

Liabilities Amount Assets Amount

Liabilities Amount Assets Amount

Creditors 42,000 Premises 1,24,000

Creditors 44,000 Fixed Assets 2,00,000

Three/ Four Marks Questions

Liabilities Amount Assets Amount

Liabilities Amount Assets Amount

1. Amount standing to the credit of the partner’s Capital Account.

Liabilities Amount Assets Amount

One Mark Questions

1. What is meant by Dissolution of a partnership?

Three/Four Mark Questions

Six Marks Questions

(i) Sudha agreed to pay off her husband’s loan Rs.19,000

(iii) Shiva took over all investments at Rs.13,300

(iv) Sundry creditors Rs.10,000 were paid at 9% discount

(i) Bank Loan Rs.45, 000 was paid

(iii) King paid Rs.27, 000 to a creditor

(v) Expenses of realization Rs.2, 700 were paid by partner Singh

Liabilities Amount Assets Amount

Capitals : SN 4,00,000 Land and Building 6,00,000

Creditors 5,54,000 Land and Building 12,00,000

(i) Land and Building realised Rs.8,60,000

Bank Loan 23,000 Other Sundry Assets 2,34,000

Presentation of Share Capital in Balance Sheet

Previous Years Question Papers – 2013 (All India) Set-1

Previous Years Question Papers – 2014 (All India) Set-1

Previous Years Question Papers – 2014 (All India) Set-2

Previous Years Question Papers – 2014 (All India) Set-2

Previous Years Question Papers – 2015-16 (Foreign) Set-1,2,3

Previous Years Question Papers – 2015-16 (All India) Set-1,2,3

ISSUE AND REDEMPTION OF DEBENTURES

One Mark Questions

Three/Four Marks Questions

1. What are the objectives of Financial Statements of a Company?

Particulars Note 31.03.2017 31.03.2016

Particulars Note 31.03.2017 31.03.2016

I. Equity and Liabilities

I. Equity and Liabilities

1. Explain why they are interested in financial statements of a Company?