Accountancy – II 1

SOLUTIONS TO
REVISONARY PROBLEMS
Chapter - 1
BILLS OF EXCHANGE

Solution 1:
Entries in the books of Kranthi (Drawer)
Date Particulars L.F. Debit Credit
Rs. Rs.
31-7-06 Madhav a/c Dr. 9,000
To Sales a/c 9,000
(Being the goods sold on credit with 10%
Trade discount)
31-7-06 Bills receivable a/c Dr. 9,000
To Madhav a/c 9,000
(Being the 3 months acceptance taken)
1-10-06 Cash a/c Dr. 9,000
To Bills Receivable a/c 9,000
(Being the bill honoured on the due date)

Entries in the books of Madhav (Drawee)

Date Particulars L.F. Debit Credit
Rs. Rs.
31-7-06 Purchases a/c Dr. 9,000
To Kranthi a/c 9,000
(Being the goods purchased on Credit with
10% trade discount)
31-7-06 Kranthi a/c Dr. 9,000
To Bills payable a/c 9,000
(Being the 3 months acceptance goods)
1-7-03 Bills payable a/c Dr. 9,000
To Cash a/c 9,000
(Being the bill honoured on the due date)
Note: Trade discount will not appear in the books. As such it is to be deducted from the
price.
Sale Price Rs. 10,000
Less: Trade Discount (10%) 1,000
----------
Amount to be paid 9,000
----------
Solution 2:
Entries in the books of Nagaraju (Drawer)
Date Particulars L.F. Debit Credit
Accountancy – II 2

Rs. Rs.
1-11-04 Bills receivable a/c Dr. 15,000
To Omkar a/c 15,000
(Being the 4 months acceptance taken)
1-11-04 Keerthi a/c Dr. 15,500
To Bills Receivable a/c 15,000
To Discount a/c 500
(Being the bill endorsed to his creditors for
settlement of his debt)

Entries in the books of ‘Keerthi (Drawee)

Date Particulars L.F. Debit Credit
Rs. Rs.
1-11-04 Nagaraju a/c Dr. 15,000
To Bills payable a/c 15,000
(being the 4 months acceptance given)
4-3-05 Bills payable a/c Dr. 15,000
To Cash a/c 15,000
(Being the bill honoured on the due date)

Solution 3:
Entries in the books of ‘Kapoor (Drawer)
Date Particulars L.F. Debit Credit
Rs. Rs.
A Bills Receivable a/c Dr. 5,000
To Syam a/c 5,000
(Being 3 months bill drawn)
B If the bill is retained till the due date:
Cash a/c Dr. 5,000
To Bills receivable a/c 5,000
(Being the bill honoured on the due date)
C If the bill is discounted with banker:
Bank a/c Dr. 4,800
Discount a/c Dr. 200
To Bills Receivable a/c 5,000
(Being the bill discounted at Bank)
D When the bill is endorsed:
Kota a/c Dr. 5,100
To Bills receivable a/c 5,000
To Discount a/c 100
(Being the bill endorsed for full settlement
of his debt)
E When the bill is sent to the bank for
collection:
Bill sent for collection to bank a/c Dr. 5,000
To Bills receivable a/c 5,000
(Being the bill sent to the bank for
collection)

Solution 4:
Entries in the books of Nellima (Drawer)
Accountancy – II 3

Date Particulars L.F. Debit Credit

Rs. Rs.
15-10-03 Bills Receivable a/c Dr. 6,000
To Sita a/c 6,000
(being the 4 months acceptance taken)
A If the retains the bill with him till
18-2-04 Maturity: Dr. 6,000
Sita a/c 6,000
To Bills receivable a/c
(Being the bill dishonoured on the due
date)
B When the bill is discounted:
15-10-03 Bank a/c Dr. 5,900
Discount a/c Dr. 100
To Bills Receivable a/c 6,000
(Being the bill discounted at bank)
18-2-04 Sita a/c Dr. 6,000
To Bank a/c 6,000
(Being the bill dishonoured on the due
date)
C When the bill is endorsed to Jeenath:
15-10-03 Jeenath a/c Dr. 6,000
To Bills Receivable a/c 6,000
(Being the bill endorsed)
18-2-04 Sita a/c Dr. 6,000
To Jeenath a/c 6,000
(Being the endorsed bill Dishonoured)
D When the bill is sent to the bank for
collection:
15-10-03 Bill sent for collection to bank a/c Dr. 6,000
To Bills Receivable a/c 6,000
(Being the bill sent to the Bank for
collection)
18-2-04 Sita a/c Dr. 6,000
To Bill sent for collection to bank 6,000
(Being bill dishonoured on the due date)

Solution 5:
Entries in the books of Mr. Mitra (Drawer)
Date Particulars L.F. Debit Credit
Rs. Rs.
1-3-06 Bills Receivable a/c Dr. 5,000
To Sukla a/c 5,000
(Being the 3 months bill drawn)
1-3-06 Bank a/c Dr. 4,925
Discount a/c Dr. 75
To Bills Receivable a/c 5,000
(Being the bill discounted at bank 5,000 x
Accountancy – II 4

6/100 x 3/12)
4-6-06 Sukla a/c Dr. 5,000
To Bank a/c 5,000
(Being the bill dishonoured)
4-6-06 Bills Receivable a/c Dr. 5,050
To Sukla a/c 5,000
To Interest a/c 50
(Being the new acceptance taken with
interest @ 6% p. a. – 5,000 x 6/12 x 2/12)
11-8-06 Cash a/c Dr. 5,050
To Bills Receivable a/c 5,050
(Being the new bill honoured on the due
date)

Entries in the books of Sukla (Drawee)

Date Particulars L.F. Debit Credit
Rs. Rs.
1-3-06 Mitra a/c Dr. 5,000
To Bills payable a/c 5,000
(Being the acceptance given)
4-6-06 Bills payable a/c Dr. 5,000
To Mitra a/c 5,000
(Being the bill dishonoured)
4-6-06 Mitra a/c Dr. 5,050
To Bills payable a/c 5,000
To Interest a/c 50
(Being the New bill given with interest)
11-8-06 Bills payable a/c Dr. 5,050
To Cash a/c 5,050
(Being the bill dishonoured)

Solution 6:
Entries in the books of Nagur (Drawer)
Date Particulars L.F. Debit Credit
Rs. Rs.
1-1-06 Bills Receivable a/c Dr. 4,000
To Kesav a/c 4,000
(Being the bill drawn for 2 months)
1-3-06 Kesav a/c Dr. 4,000
To Bills Receivable a/c 4,000
(Being bill cancelled for Renewal)
1-3-06 Bills Receivable a/c Dr. 4,030
To Kesav a/c 4,000
To Interest a/c 30
(Being New acceptance taken with interest)
When the bill is honoured:
Cash a/c Dr. 4,030
To Bills receivable a/c 4,030
(Being New bill honoured on the due date)
When the bill is dishonoured:
Kesav a/c Dr. 4,050
To Bills Receivable a/c 4,030
Accountancy – II 5

To Cash a/c 20
(Being the bill dishonoured with charges)

Entries in the books of Kesav (Drawee)

Date Particulars L.F. Debit Credit
Rs. Rs.
1-1-06 Nagur a/c Dr. 4,000
To Bills payable a/c 4,000
(Being the acceptance given)
1-3-06 Bills payable a/c Dr. 4,000
To Nagur a/c 4,000
(Being old bill cancelled for Renewal)
1-3-06 Nagur a/c Dr. 4,000
Interest a/c Dr. 30
To Bills payable a/c 4,030`
(Being a new acceptance given with
interest)
When the bill is honoured:
Bills payable a/c Dr. 4,030
To Cash a/c 4,030
(Being the bill honoured on the due date)
When the bill is dishonoured:
Bills payable a/c Dr. 4,030
Noting charges a/c Dr. 20
To Nagur a/c 4,050
(Being the bill dishonoured with the Noting
charges)

Solution 7:
Entries in the books of Basu (Drawer)
Date Particulars L.F. Debit Credit
Rs. Rs.
Dasu a/c Dr. 9,000
To Sales a/c 9,000
(Being the goods sold on credit)
Bills Receivable a/c Dr. 9,000
To Dasu a/c 9,000
(Being the bill drawn for 3 months)
Dasu a/c Dr. 9,000
To Bills Receivable a/c 9,000
(Being the old bill cancelled for renewal)
Cash a/c Dr. 2,000
To Dasu a/c 2,000
(Being part amount received)
Bills Receivable a/c Dr. 7,140
To Dasu a/c 7,000
To Interest a/c 140
(Being bill drawn with @ 12% interest)
Dasu a/c Dr. 7,140
To Bills Receivable a/c 7,140
(Being the bill dishonoured)
Cash a/c Dr. 714
Bad debts a/c Dr. 6,426
Accountancy – II 6

To Dasu a/c 7,140

(Being the 10% amount recovered)

Entries in the books of Dasu (Drawee)

Date Particulars L.F. Debit Credit
Rs. Rs.
Purchases a/c Dr. 9,000
To Basu a/c 9,000
(Being the goods purchased on Credit)
Basu a/c Dr. 9,000
To Bills payable a/c 9,000
(Being the acceptance given)
Bills payable a/c Dr. 9,000
To Basu a/c 9,000
(Being old bill cancelled for Renewal)
Basu a/c Dr. 2,000
To Cash a/c 2,000
(Being partly paid)
Basu a/c Dr. 7,000
Interest a/c Dr. 140
To Bills payable a/c 7,140
(Being the bill accepted with Interest @
12%)
Bills payable a/c Dr. 7,140
To Basu a/c 7,140
(Being the bill dishonoured)
Basu a/c Dr. 7,140
To Cash a/c 714
To Deficiency a/c 6,426
(Being 10% amount only settled)

Chapter – 2
AVERAGE DUE DATE

Solution 1:
Calculation of Average Due date (Base Date = July 5)
Due Date Amount Rs. Days from Base Products
date to due dates
2006
July 5 500 0 0
August 10 850 36 30,600
September 25 350 82 28,700
November 10 650 128 83,200
2,350 1,42,500
= July 5 + 60.64 days
Total of Product
Average Due=date
July5Base
+ 61 Date 
Total of Amount
= Total 66 days
1,42,500
 July 5th 
2,350
Accountancy – II 7

= Less: July 31/35

= Less: Aug 31 / 4 days September
 Average due date is September 4.
Solution 2:
Calculation of Average Due date (Base Date = June 6)
Due Date Amount Rs. No. of days from Products
Base Date
2006
June 5 400 0 0
August 5 500 61 30,500
July 6 200 30 6,000
September 14 300 100 30,000
1,400 66,500

Total of Product
Average Due date  Base Date 
Total of Amount

66,500
 July 6th 
1,400

= June 6 + 47.5 days

= 53 days
= Less: June 30
----
July 23 days
------
 Average due date is July 23rd.

Solution 3:
Calculation of Average Due date (Base Date = March 8)
Due Date Amount Rs. No. of days from Products
Base Date
2006
March 8 600 0 0
April 19 500 42 21,000
June 18 400 102 40,800
May 9 700 62 43,400
2,200 1,05,200

Total of Product
Average Due date  Base Date 
Total of Amount

1,05,200
 March 8th 
2,200
= March 8 + 48 days
Accountancy – II 8

= 56 days
= Less: March 31
----
April 25 days
------
 Average due date is April 25th.

Solution 4:
Calculation of Average Due date (Base Date = March 1)
Due Date Amount Rs. No. of days from Products
Base Date
2006
March 1 400 0 0
June 18 200 109 21,800
April 19 300 49 14,700
May 9 500 79 39,500
1,400 76,000

Total of Product
Average Due date  Base Date 
Total of Amount

76,000
 March 1 
1,400

= March 1 + 54 days
= 55 days
= Less: March 31
----
April 24 days
------
 Average due date is April 24th
Calculation of Interest:
No. of days from Average Due Date to settlement date
March 2 to May 29 = 35 days
Interest = Amount x No. of days / 365 x Rate /100
Amount = Rs.1,400
No. of days = 35
Rate = 5%
= 1400 x 35/365 x 5/100
= Rs.6-71.
Interest is Rs.6-71.
Accountancy – II 9

Solution 5:
Calculation of Due Dates: Due date = Date of the bill + Term + 3 days grace period
1) 2006 January 10 + 2 months + 3 days = March 13
2) 2006 February 19 + 2 months + 3 days = April 22
3) 2006 March 19 + 2 months + 3 days = May 22

Calculation of Average Due date (Base Date = March 13)

Due Date Amount Rs. No. of days from Products
Base Date
2006
March 13 100 0 0
April 22 200 40 8,000
May 22 500 70 35,000
800 43,000

Total of Product
Average Due date  Base Date 
Total of Amount

43,000
 March13 
800
= March 13 + 54 days
 Average due date is May 6th .
Calculation of Interest:
No. of days from Average Due date to settlement date
May 6 to August 14 = 100 days
Interest = Amount x No. of days / 365 x Rate /100
= 800 x 100/365 x 10/100
= Rs.21-62
 Interest is Rs.21-62

Solution 6:
Calculation of Average due date (Base date = Jan 10)
Due Date Amount Rs. No. of days from Products
Base Date
2006
Jan 10 600 0 0
Jan 20 400 10 4,000
Feb 19 800 40 32,000
March 21 600 70 42,000
2,400 78,000

Total of Product
Average Due date  Base Date 
Total of Amount

78,000
 Jan 10 
2,400
Accountancy – II 10

= Jan 10 + 33 days
 Average due date is February 12th.
Calculation of Interest:
From Average Due Date to settlement date
February 12 to March 31 = 47 days
Interest = Amount x No. of days / 365 x Rate /100
= 2400 x 47/365 x 10/100
= Rs.30-90.

Solution 7:
Calculation of Average due date (Base date = July 10)
Due Date Amount Rs. No. of days from Products
Base Date
2006
July 10 200 0 0
August 9 300 30 9,000
September 8 600 60 36,000
October 8 400 90 36,000
November 7 200 120 24,000
December 7 100 150 15,000
1,800 1,20,000

Total of Product
Average Due date  Base Date 
Total of Amount

1,20,000
 July 10 
1,800

= July 10 + 67 days
 Average due date is September 15th.
Calculation of Interest:
From Average Due Date to settlement date
September 15 to December 31 = 107 days
Interest = Amount x No. of days / 365 x Rate /100
= 1800 x 107/365 x 6/100
= Rs.31-66.
Interest is Rs.31-66.
Accountancy – II 11

Chapter - 3
ACCOUNT CURRENT
Solution 1:

Rahul in Account Current with Chetan as on 30th June 2005

Dr.
Cr.
Accountancy – II 12

Date Particulars No. of Amount Products Date Particulars

days Rs.
2005 2005
Jan 1 To Sales 180 1,230-00 2,21,400 Jan 10 By Bills Receivable
(Due Mar 13)
Mar 5 To Bills payable 83 400-00 33,200 Feb 15 By purchases
(Due April 8)
Difference in products x Rate of Interest
April 30 To Sales
Interest  30 800-00 24,000 June 15 By Sales returns
(Due May 31) 365 x 100
June 30 To Interest - 9-99 By Difference in products
June 30 By Balance c/d
2,439-99 2,78,600
July 1 To Balance b/d 489-99

= Rs.9-99

72,950 x 5

365 x 100

Solution 2:

Kumar in Account Current with Murali as on 30-6-2006

Dr.
Cr.
Date Particulars No. of Amount Products Date Particulars
days Rs.
2006 2006
Jan 1 To Balance b/d 181 5,000-00 9,05,000 Feb 15 BY Purchases
Jan 10 To Sales 171 2,040-00 3,48,840 Feb 20 By Sales Return’s
Apr 20 To Cash 71 300-00 21,300 Mar 15 By Cash
May 25 To Purchase Returns 36 100-00 3,600 June 30 By Difference in products
June 30 To Interest - 141-50 - June 30 By Balance c/d
7,581-50 12,78,740
July 1 To Balance b/d 5,641-50

Difference in products x Rate

Interest 
365 x 100
10,33,040 x 5

365 x 100
= Rs.141-50.
Accountancy – II 13

Solution 3:

Lakshmi in Account Current with Bhavani as on 31-3-2006

Dr.
Cr.
Date Particulars No. of Amount Products Date Particulars
days Rs.
2006 2006
Jan 4 To Sales 86 10,000-00 8,60,000 Jan 15 By Bank (cheque)
Feb 25 To Purchase returns 34 250-00 8,500 Jan 20 By Bills Receivable (Due
April 23)
Mar 12 To Sales (Due Apr 10) -10 1,000-00 - 10,000 Feb 20 By Purchases
Mar 31 To Interest - 160-27 - By Difference in products
Mar 31 By Balance c/d
11,410-27 8,58,500
April 11 To Balance b/d 2,410-27

Difference in products x Rate

Interest 
365 x 100

4,87,500 x12

365 x100

 Rs.160  27.

Solution 4:

Ram in Account Current with Kalyan as on 30-9-2005

Dr.
Cr.
Date Particulars No. of Amount Products Date Particulars
days Rs.
2005 2005
July 12 To Sales 80 1,430-00 1,14,400 July 18 By Cash
Aug 5 To Cash 56 800-00 44,800 Sept 13 By Sales return
Aug 8 To Sales 53 1,200-00 63,600 Sept 18 By Cash
Sep 30 To Interest 48-19 Sept 30 By Difference in products
Sept 30 By Balance c/d
3,478-19 2,22,800
Oct 1 To Balance b/d 2,278-19
Difference in products x Rate
Interest 
365 x 100

1,75,900 x10

365 x100

 Rs.48  19
Accountancy – II 14

Solution 5:

Bhavani in Account Current with Vani as on 30th September 2006

Dr.
Cr.
Date Particulars No. of Amount Products Date Particulars
days Rs.
2006 2006
July 3 To Sales 89 750-00 66,750 July 1 By Balance b/d
July 12 To Sales (Due July 27) 65 1,305-00 84,825 July 25 By Bills Receivable (Due
Sept 28)
Aug 17 To Sales (Due Sept 17) 13 1,000-00 13,000 July 31 By Difference in products
Sep 28 To Bills Receivable 2 4,000-00 8,000 July 31 By Balance c/d
To Cash (Noting 2 30-00 60
charges)
Sep 30 To Interest 19-50
7,104-50 1,72,635
Oct 1 To Balance b/d 2,604-50

Difference in products x Rate

Interest 
365 x 100

1,18,635 x 6

365 x100

 Rs.19  50

Solution 6:

Kaveri in Account Current with Raja as on 30th September 2005

Dr.
Cr.
Date Particulars No. of Amount Products Date Particulars
days Rs.
2005 2005
Accountancy – II 15

July 12 To Sales 80 4,000 –00 3,20,000 July 18 By Cash

Aug 2 To Cash 59 500-00 29,500 Aug 17 By Sales Returns
Sep 10 To Sales 20 1,000-00 20,000 Sep 14 By Cash
Sep 30 To Interest 38-34 - By Difference in products
Sept 30 By Balance c/d
5,538-34 3,69,500
Oct 1 To Balance b/d 3,738-34

Difference in products x Rate

Interest 
365 x 100

2,79,900 x5

365 x100

 Rs.38  34

Solution 7:

Khan Account Current with Ranga as on 31-12-2006

Dr.
Cr.
Date Particulars No. of Amount Products Date Particulars
days Rs.
2006 2006
Aug 2 To Sales 151 900-00 1,35,900 Aug 20 By Cash
Oct 10 To Sales (Due on Nov 51 2,000-00 1,02,000 Oct 25 By Cash
10)
Nov 30 To Cash 31 1,000-00 31,000 Nov 2 By sales returns
Dec 31 To Interest - 24-89 Dec 31 By Difference in products
Dec 31 By Balance c/d
3,924-89 2,68,900
2004 To balance b/d 1,674-89
Jan 1

Difference in products x Rate

Interest 
365 x 100

90,850 x10

365 x100

 Rs.24  80
Accountancy – II 16

Solution 8:

Gupta Account Current with Modi as on 30-6-2006

Dr.
Cr.
Date Particulars No. of Amount Products Date Particulars
days Rs.
2006 2006
April 1 To Balance b/d 91 4,000-00 3,64,000 April 30 By Cash
May 25 To Sales 36 3,000-00 1,08,000 May 10 By Purchases
June 25 To Sales 5 1,000-00 5,000 June 12 By Bills Receivable
(Due on August 14)
June 30 To Interest 91-23 June 30 By Difference in products
June 30 By Balance c/d
8,091-23 4,77,000

Difference in products x Rate

Interest 
365 x 100

3,33,000 x10

365 x100

 Rs.91  23

Solution 9:
Sridevi in Account Current with Andhra Bank as on 30-6-2006
Dr.
Cr.
Amount
Date Particulars Dr. or Cr. Balance D
Dr. Cr.
2006
April 1 By Cash 4,000 Cr. 4,000
May 10 To Cash 11,000 Dr. 7,000
May 20 By Cash 1,000 Dr. 6,000
June 6 By cash 3,000 Dr. 3,000
June12 To Cash 2,000 Dr. 5,000
June 15 To Cash 3,000 Dr. 8,000
June 22 By Cash 6,000 Dr. 2,000
June 30 To Interest 82-30
June 30 By Balance c/d 2,082-30
16,082-30 16,082-30
Accountancy – II 17

July 1 To Balance b/d 2,082-30

Working Notes:
Interest = Total Products x Rate / 365 x 100
Interest on Debit balances = 2,77,000 x 12 / 366 x 100 = Rs.90-82
Interest on Credit balance = 1,56,000 x 2 /366 x 100 = Rs. 8-52
------------
Surplus interest (Debit balance) Rs.82-30
------------

Chapter - 4
DEPRECIATION

I. Fixed Installment Method :

Solution 1:
Furniture Account
Dr. Cr.
Date Particulars Amount Date Particulars Amount
Rs. Rs.
1 year To cash 35,000 1 year By Depreciation 3,500
Jan 1 Dec 31 (35,000 x 10/100)
“ By Balance c/d 31,500
35,000 35,000
II year To Balance b/d 31,500 II year By Depreciation 3,500
Jan 1 Dec 31 (35,000 x 10/100)
“ By Balance c/d 28,000
31,500 31,500
III year To Balance b/d 28,000 III year By Depreciation 3,500
Jan 1 Dec 31 (35,000 x 10/100)
“ By Balance c/d 24,500
28,000 28,000
IV year To Balance b/d 24,500 IV year By Depreciation 3,500
Jan 1 Dec 31 (35,000 x 10/100)
“ By Balance c/d 21,000
24,500 24,500
V year To Balance b/d 21,000 V year By Depreciation 3,500
Jan 1 Dec 31 (35,000 x 10/100)
“ By Balance c/d 17,500
21,000 21,000
VI year To Balance b/d 17,500
Jan 1
Accountancy – II 18

Solution 2:
Plant and Machinery Account
Dr. Cr.
Date Particulars Amount Date Particulars Amount
Rs. Rs.
1-1-99 To cash 40,000 31-12-99 By Depreciation 9,000
“ By Balance c/d 31,000
40,000 40,000
1-1-00 To Balance b/d 31,000 31-12-00 By Depreciation 9,000
“ By Balance c/d 22,000
31,000 31,000
1-1-01 To Balance b/d 22,000 31-12-01 By Depreciation 9,000
“ By Balance c/d 13,000
22,000 22,000
1-1-02 To Balance b/d 13,000 31-12-02 By Depreciation 9,000
“ By Balance c/d 4,000
13,000 13,000
1-1-03 To Balance b/d 4,000
Working Notes:
Cost of the Machinery = Rs.40,000
Depreciation in 4 years = 90% (10% is scrap)
Depreciation = Cost of Assets – Scrap value / Estimated life
= 40,000 – 4,000 / 4
= 36,000 / 4 = 9,000
Annual Depreciation is Rs.9,000.

Solution 3:
Asset Account
Dr. Cr.
Date Particulars Amount Date Particulars Amount
Rs. Rs.
1 year To Cash 50,000 1 year By Depreciation 4,500
Jan 1 (48,000 + 2,000) Dec 31
“ By Balance c/d 45,500
50,000 50,000
2 year To Balance c/d 45,500 2 year By Depreciation 4,500
Jan 1 Dec 31
“ By Balance c/d 41,000
45,500 45,500
3 year To Balance b/d 41,000 3 year By Depreciation 4,500
Jan 1 Dec 31
“ By Balance c/d 36,500
41,000 41,000
4 year To Balance b/d 36,500 4 year By Depreciation 4,500
Jan 1 Dec 31
“ By Balance c/d 32,000
36,500 36,500
Accountancy – II 19

5 year To Balance b/d 32,000

Jan 1
Working Notes:
Cost of the Asset Rs.48,000
+ Erection charges Rs. 2,000
--------------
Total Value of the Asset Rs.50,000
--------------
Residual value after 10 years Rs.5,000
Depreciation in 10 years (50,000 – 5,000) Rs.45,000
Annual Depreciation = 45,000 / 10 = Rs.4,500
Rate of Depreciation = Depreciation / Cost of Assets x 100
= 4,500 /50,000 x100
= 9%

Solution 4:
Machinery Account
Dr. Cr.
Date Particulars Amount Date Particulars Amount
Rs. Rs.
1-7-00 To cash 55,000 31-12-00 By Depreciation 2,500
(50,000 + 5,000) (6 months)
“ By Balance c/d 52,500
55,000 55,000
1-1-01 To Balance b/d 52,500 31-12-01 By Depreciation 5,000
“ By Balance c/d 47,500
52,500 52,500
1-1-02 To balance b/d 47,500 31-12-02 By Depreciation 5,000
“ By Balance c/d 42,500
47,500 47,500
1-1-03 To balance b/d 42,500
Working Notes:
Annual Depreciation = Cost + Installation – Scrap Value / Estimated Life Period
= 50,000 + 5,000 – 5,000 / 10 = 5,000
Depreciation = Rs.5,000
For 6 months Depreciation = 5,000 x 6/12 = Rs.2,500.
Accountancy – II 20

Solution 5:
Machinery Account (Fixed installment Method)
Dr. Cr.
Date Particulars Amount Date Particulars Amount
Rs. Rs.
1-1-99 To cash 50,000 31-12-99 By Depreciation 7,500
(50,000 x 15/100)
“ By Balance c/d 42,500
50,000 50,000
1-1-00 To Balance b/d 42,500 31-12-00 By Depreciation 7,500
1-4-00 To Cash 10,000 “ By Depreciation 1,125
(10,000 x 9/12 x 15/100)
“ By Balance c/d 43,875
52,500 52,500
1-1-01 To Balance b/d 43,875 30-6-01 By Depreciation 3,750
(50,000 x 15/100 x 6/12)
P & L a/c (Profit) 3,750 “ By Cash (sale) 35,000
(see working notes)
“ By Depreciation 1,500
(10,000 x 15/100)
“ By Balance c/d 7,375
47,625 47,625
1-1-02 By Balance b/d 7,375 31-12-02 By Depreciation 1,500
(10,000 x 15/100)
“ By Balance c/d 5,875
7,375 7,375
1-1-03 By Balance b/d 5,875
Working Notes:
Cost of Machine Sold (1-1-99) 50,000
Less: Depreciation for 1999 7,500
----------
Book value (on 1-1-2000) 42,500
Less: Depreciation for 2000 year 7,500
---------
Book value (on 1-1-2001) 35,000
Less: Depreciation for 6 months (30-6-01) 3,750
----------
Cost of sales 31,250
Less: selling price 35,000
----------
Profit on sale of Machinery 3,750
---------
Accountancy – II 21

II. Diminishing Balance Method :

Solution 6:
Machinery Account
Dr. Cr.
Date Particulars Amount Date Particulars Amount
Rs. Rs.
1-1-00 To cash 30,000 31-12-00 By Depreciation 3,000
“ By Balance c/d 27,000
30,000 30,000
1-1-01 To Balance b/d 27,000 31-12-01 By Depreciation 2,700
(27,000 x 10/100)
“ By Balance c/d 24,300
27,000 27,000
1-1-02 To Balance b/d 24,300 31-12-02 By Depreciation 2,430
(24,300 x 10/100)
“ By Balance c/d 21,870
24,300 24,300
1-1-03 To Balance b/d 21,870

Solution 7:
Machinery Account (Diminishing Balance Method)
Dr. Cr.
Date Particulars Amount Date Particulars Amount
Rs. Rs.
1-1-00 To cash 15,000 31-12-00 By Depreciation 2,250
(12,000 + 3,000)
“ By Balance c/d 12,750
15,000 15,000
1-1-01 To Balance b/d 12,750 31-12-01 By Depreciation 1,913
“ By Balance c/d 10,837
12,750 12,750
1-1-02 To Balance b/d 10,837 31-12-02 By Depreciation 1,626
“ By Balance c/d 9,211
10,837 10,837
1-1-03 To Balance b/d 9,211 31-12-03 By Depreciation 690
To P & L a/c (Profit) 1,479 “ By Cash (Sale) 10,000
10,690 10,690

Solution 8:
Machinery Account (Diminishing balance Method)
Dr. Cr.
Date Particulars Amount Date Particulars Amount
Rs. Rs.
1-1-00 To cash 15,000 31-12-00 By Depreciation 1,875
(12,000 + 3,000) (15,000 x 25/100)
“ By Balance c/d 13,125
15,000 15,000
Accountancy – II 22

1-1-01 To Balance b/d 13,125 31-12-01 By Depreciation 1,641

(12 ½%)
“ By Balance c/d 11,484
13,125 13,125
1-1-02 To Balance b/d 11,484 31-12-02 By Depreciation 1,436
“ By Cash (Sale) 7,000
“ By P & L a/c (Loss) 3,048
11,484 11,484

Solution 9 :
Machinery Account (Reducing Balance)
Dr. Cr.
Date Particulars Amount Date Particulars Amount
Rs. Rs.
30-6-99 To cash 85,000 31-12-99 By Depreciation 4,250
(85,000 x 6/12 x 10/100)
“ By Balance c/d 80,750
85,000 85,000
1-1-2000 To Balance b/d 80,750 31-12-00 By Depreciation 9,575
1-1-2000 To Cash 15,000 “ By Balance c/d 86,175
95,750 95,750
1-1-01 To Balance b/d 86,175 31-12-01 By Depreciation 8,618
“ By Balance c/d 77,557
86,175 86,175
1-1-02 To Balance b/d 77,557 31-12-02 By Depreciation 7,756
To P & L a/c (profit) 11,134 “ By Cash (Sale) 70,000
“ By Balance c/d 10,935
88,691 88,691
1-1-03 To Balance b/d 10,935
Working Notes:
Cost of Machine on 30 – 6-99 85,000
Less: Depreciation in 1999 for 6 months 4,250
---------
Book value on 1-1-2000 80,750
Less: Depreciation in 2000 year 8,075
---------
Book value 72,675
Less: Depreciation in 2001 year 7,268
---------
65,407
Less: Depreciation in 2002 year 6,541
---------
Book value on the date of sale 58,866
Less: Selling Price 70,000
---------
Accountancy – II 23

Profit on sale of Machinery 11,134

---------

III. Both Methods :

Solution 10:
Machinery Account
Dr. Cr.
Date Particulars Amount Date Particulars Amount
Rs. Rs.
1-4-98 To cash 20,000 31-12-98 By Depreciation 1,500
(20,000 x 9/12 x 12/100)
“ By Balance c/d 18,500
20,000 20,000
1-1-99 To balance b/d 18,500 31-12-99 By Depreciation 2,000
(20,000 x 10/100)
“ By Balance c/d 16,500
18,500 18,500
1-1-2000 To Balance b/d 16,500 31-12-00 By Depreciation 2,000
(20,000 x 10/100)
“ By Balance c/d 14,500
16,500 16,500
Diminishing:
1-1-01 To Balance b/d 14,500 31-12-01 By Depreciation 1,740
(14,500 x 12/100)
“ By Balance c/d 12,760
14,500 14,500
1-1-02 To Balance b/d 12,760 31-12-02 By Depreciation
(Diminishing) (12,760 x 1,531
12/100)
“ By Balance c/d 11,229
12,760 12,760
1-1-03 To Balance b/d 11,229
Note: Fixed Installment for (10%) 1-4-98 to 31-12-2000.
Diminishing method for (12%) 1-1-2001 to 31-12-02.
Solution 11:
Machinery (Fixed Installment) Account
Dr. Cr.
Date Particulars Amount Date Particulars Amount
Rs. Rs.
30-6-99 To cash 70,000 31-12-99 By Depreciation 3,500
(70,000 x 6/12 x 10/100)
“ By Balance c/d 66,500
70,000 70,000
1-1-00 To Balance b/d 66,500 31-12-00 By Depreciation 7,000
(70,000 x 10/100)
“ By Balance c/d 59,500
66,500 66,500
1-1-01 To Balance b/d 59,500 31-12-01 By Depreciation 7,000
“ By Balance c/d 52,500
Accountancy – II 24

59,500 59,500
1-1-02 To Balance b/d 52,500 31-12-02 By Depreciation 7,000
“ By Balance b/d 45,500
52,500 52,500
1-1-03 To Balance b/d 45,500

Machinery Diminishing Method account

Dr. Cr.
Date Particulars Amount Date Particulars Amount
Rs. Rs.
30-6-99 To cash 70,000 31-12-99 By Depreciation 3,500
(70,000 x 6/12 x 10/100)
“ By Balance c/d 66,500
70,000 70,000
1-1-00 To Balance b/d 66,500 31-12-00 By Depreciation 6,650
(66,500 x 10/100)
“ By Balance c/d 59,850
66,500 66,500
1-1-01 To Balance b/d 59,850 31-12-01 By depreciation 5,985
(59,850 x 10/100)
“ By Balance c/d 53,865
59,850 59,850
1-1-02 To Balance b/d 53,865 31-12-02 By Depreciation 5,387
(53,865 x 10/100)
“ By Balance c/d 48,478
53,865 53,865
1-1-03 To Balance b/d 48,478

Chapter - 5
CONSIGNMENT ACCOUNTS
Solution 1:
Accounts in the Books of Lal:
Consignment account
Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Goods sent on 50,000 By Siva & sons (sales) 44,000
Consignment a/c
To Cash (exp.) 2,000 By Stock on
consignment a/c 13,000
To Siva & Sons
(expenses) 2,000
To Siva & Sons
(commission) 1,760
To P & L a/c 1,240
Profit
57,000 57,000
Accountancy – II 25

Siva & Sons Account

Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Consignment 44,000 By Cash 20,000
a/c
By Consignment 2,000
By Consignment 1,760
By Bank 20,240
44,000 44,000

Goods sent on Consignment account

Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Trading a/c 50,000 By Consignment a/c 50,000
50,000 50,000
Working Notes:

 3 1
Closing Stock  1 -  
 4 4

Valuation of Closing Stock:

Rs.
Stock value = 50,000
Expenses of Consignor = 2,000
----------
Total Value = 52,000
---------
Unsold stock = 52,000 x ¼
= 13,000
 Value of Closing stock is 13,000.

Solution 2:
In the Books of Patel (Consignor)
Date Particulars L.F. Debit Credit
Rs. Rs.
Consignment a/c Dr. 20,000
To Goods sent on consignment a/c 20,000
(Being the goods sent on Consignment)
Consignment a/c Dr. 800
To Cash a/c 800
(Being the expenses paid)
Bank a/c Dr. 8,000
To Murthy a/c 8,000
(Being the expenses paid)
Accountancy – II 26

Murthy a/c Dr. 16,800

To Consignment a/c 16,800
(Being the goods sold)
Consignment a/c Dr. 750
To Murthy a/c 750
(Being the advance received)
Consignment a/c Dr. 840
To Murthy a/c 840
(Being the commission due)
Stock on consignment a/c Dr. 4,190
To Consignment a/c 4,190
(Being the closing stock recorded)
Goods sent on consignment a/c Dr. 5,000
To consignment a/c 5,000
(Being the invoice price reduced)
Consignment a/c Dr. 1,000
To Stock Reserve a/c 1,000
(being the closing stock adjusted)
Consignment a/c Dr. 2,600
To P & L a/c 2,600
(Being the profit Transferred to P & L a/c)
Goods sent on consignment a/c Dr. 15,000
To Trading a/c 15,000
(Being the G. S. C. a/c balance Transferred
to Trading a/c)

Consignment account
Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Goods sent on By Murthy (sales) 16,800
Consignment a/c 20,000
To Cash 800 By Stock on 4,190
consignment
To Murthy 750 By Goods sent on
consignment a/c 5,000
To Murthy 840
To Stock Reserve 1,000
To P & L a/c 2,600
(Profit)
25,990 25,990
Working Notes:
1) Valuation of Closing Stock:
Consignor send 100 Machines
Less: Consignee sold 80 Machines
------
Remaining 20 Machines
------
Goods value as per I. P. (100 x 200) - 20,000
Expenses of Consignor - 800
Direct Expenses of consignee - 150
Accountancy – II 27

---------
Total 20,950
----------
100 Machines value - 20,950
20 Machines value - ?
= 20/100 x 20,950
Invoice price = Rs.4,190.
2) Stock reserve:
Prices Difference of 100 Machines 5,000
20 ?
= 20 /100 x 5,000
= 1,000

Solution 3:
Journal entries in the Books of Usha & Co.(consignor)
Date Particulars L.F. Debit Credit
Rs. Rs.
2006 Consignment a/c Dr. 1,00,000
Jan 1 To Goods sent on consignment a/c 1,00,000
(Being the goods sent on Consignment)
Consignment a/c Dr. 1,100
To Cash a/c 1,100
(Being the expenses paid)
Badari & Co. a/c Dr. 80,000
To consignment a/c 80,000
(Being the goods sold)
Consignment a/c Dr. 750
To Badari & Co. a/c 750
(being the expenses paid)
Consignment a/c Dr. 6,400
To Badari & co. a/c 6,400
(being the commission paid)
Stock on consignment a/c Dr. 20,220
To Consignment a/c 20,220
(Being the closing stock recorded)
Goods sent on consignment a/c Dr. 20,000
To Consignment a/c 20,000
(Being the closing stock recorded)
Consignment a/c Dr. 4,000
To Stock Reserve a/c 4,000
(Being the difference of prices of closing
stock recorded)
Cash a/c Dr. 40,000
To Badari & Co. a/c 40,000
(Being the cash received from consignee)
Goods sent on consignment a/c Dr. 75,000
To Trading a/c 75,000
(Being the goods sent on consignment
Accountancy – II 28

balance Transferred to trading a/c)

Consignment a/c Dr. 7,970
To P & L a/c 7,970
(Being the profit transferred to P & L a/c)

Accounts in the books of Usha & Co.

Consignment account
Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
2006 To Goods sent on 1,00,000 By Badari & co. (Sales) 80,000
Jan 1 consignment a/c
To Cash a/c 1,100 By stock on 20,220
(expenses) consignment a/c
To Badari & Co. 750 By Goods sent on 20,000
a/c consignment a/c
(differences of Prices)
To Badari & Co. 6,400
a/c
To Stock 4,000
Reserve
To P / L a/c 7,970
(profit)
1,20,220 1,20,220
Badari & co. account
Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Consignment 80,000 By Consignment 750
By consignment 6,400
By Cash 40,000
By Balance c/d 32,850
80,000 80,000
To Balance b/d 32,850
Working Notes:
Consignor send 1,000 fans
Less: Sold 800 fans
--------
Remaining 200 fans
--------
Invoice price of Stock 1,00,000
Expenses of consignor 1,100
-----------
total 1,01,100
-----------
Cost of 1000 fans 1,01,100
Cost of 200 fans ?
= 200/ 1000 x 1,01,000
= 20,220
Stock Reserve:
Total Difference of Two prices 20,000
Difference of 200 fans ?
= 200/1000 x 20,000
Accountancy – II 29

= 4,000
If cost is Rs.100
Invoice is 125
I. P. Rs.125 – Loss 100
If I. P. Rs.100
= 100 / 125 x 100 = 80
cost is Rs.80
Difference of Prices:
1,000 x 80 = 80,000 cost
1,000 x 100 = 1,00,000
-----------
20,000
-----------

Solution 4:
In the Books of Sagar (Consignor):
Consignment account
Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Goods sent on 1,87,500 By Goods sent on 37,500
consignment a/c consignment a/c
(250 x 750)
To Cash (exp.) 4,500 By Das (Sales) 1,82,500
To Das (exp.) 5,300 By Stock on 19,200
consignment a/c
To Das 9,100
commission
To Stock Reserve 3,750
To P & L a/c 28,550
(Profit)
2,38,700 2,38,700

Das Account
Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Consignment 1,82,000 By Cash (Advance) 1,50,000
a/c
By Consignment (exp.) 5,300
By Consignment 9,100
(commission)
By Balance c/d 17,600
1,82,000 1,82,000
To Balance b/d 17,600
Accountancy – II 30

Goods sent on Consignment account

Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Consignment 37,500 By Consignment 1,87,500
To Trading a/c 1,50,000
1,87,500 1,87,500
Working Notes:
If the Invoice price is = 125
Cost will be = 100
If the invoice price is = 750
Cost will be = ?
= 75/125 x 100
= Rs.600 cost
250 radio ‘s Invoice price (250 x 750) 1,87,500
250 Radio ‘s cost price (250 x 600) 1,50,000
------------
Difference of price 37,500
------------
Valuation of Closing Stock:
Send = 250
Less: sold = 225
------
Remaining = 25
------
Radio invoice price is = 1,87,500
Add: Expenses of Consignor = 4,500
-------------
1,92,000
-----------
250 Radio value = 1,92,000
25 radio value = ?
= 25/250 x 1,92,000
= Rs.19,200
 Closing stock value = Rs.19,200
Stock Reserve:
Total Difference of price = 37,500
Difference of closing stock is = 25/250 x 37,500
= 3,750
Stock reserve = Rs.3,750s

Solution 5:
Consignment account
Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Goods sent on 75,000 By Gupta (Sales) (400 88,000
consignment a/c x 220)
(500 x 150)
To cash a/c (exp.) 5,750 By Stock on 8,160
Consignment (Closing
stock)
To Gupta 1,765 By Abnormal loss 8,075
Accountancy – II 31

(Expenses)
To Gupta 4,400
(Commission)
To P & L a/c 17,320
(profit)
1,04,235 1,04,235

Gupta a/c
Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Consignment 88,000 By Bank 25,000
a/c
By consignment 1,765
(Expenses)
By Consignment 4,400
(Commission)
By Balance c /d 56,835
88,000 88,000
To Balance b/d 56,835

Goods sent on Consignment account

Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Trading a/c 75,000 By consignment a/c 75,000
75,000 75,000
Working notes:
Closing stock send: = 500 Cycles
Less: Loss = 50 Cycles
------
Reached = 450 Cycles
Less: Sold = 400 Cycles
------
Balance = 50 Cycles
------
Cost of 500 cycles is = Rs.75,000
Expenses of Consignor = Rs. 5,750
------------
Rs.80,750
--------------
Cost of 500 cycles = 80,750
Cost of 50 Cycles = ?
= 50/500 x 80,750
= 8,075
Direct Expenses for 450 Cycles is = Rs.765
Direct Expenses for 50 Cycles is = ?
= 50/450 x 765
= 85
Closing stock = (8,075 + 85) = 8,160
Calculation of Abnormal Loss:
Cost of 500 cycles with expenses = 80,750
Cost of 50 cycles = ?
Accountancy – II 32

= 50/500 x 80,750
Abnormal Loss = 8,075

Chapter - 6
NON-TRADING CONCERNS
Solution 1:
Income and Expenditure a/c of Visakha club for the year ended 31-3-2006
Dr. Cr.
Liabilities Amount Amount Assets Amount Amount
Rs. Rs. Rs. Rs.
To Charities 29,000 By Subscriptions 8,000
To Salaries 5,200 By Donations 16,000
Add: O/s Salaries 600 5,800 Less: transfer to 8,000 8,000
capital fund
To Printing & 800 By Legacies 12,000
Stationery
To Rent & Taxes 2,400 Less: Transfer to 6,000 6,000
capital fund
Add: O/s Rent 400 2,800 By Interest on 19,000
Investment
To Advertisement 500 Add: O/s Interest 500 19,500
Add: O/s Advt. Exp. 100 600 By Interest on 300
Deposits
To Surplus (excess 2,800
of Income over
expenditure)
41,800 41,800

Solution 2:
Balance Sheet of Tirupathi Sports Club as on 1-4-2005
Liabilities Amount Amount Assets Amount Amount
Rs. Rs. Rs. Rs.
Capital Fund (B/ f) 4,500 Cash 250
Bank 2,250
Subscriptions 1,000
receivable
Games equipment’s 1,000
4,500 4,500

Income and Expenditure a/c of Tirupathi sports Club’s for the year ended 31-3-
2006
Dr. Cr.
Accountancy – II 33

Particulars Amount Amount Particulars Amount Amount

Rs. Rs. Rs. Rs.
To Salaries 2,000 By Subscriptions 6,750
To Rent 450 Add: O/s subscriptions 1,050
To Games exp. 3,500 7,800
To Office expenses 2,250 Less: Last year 1,000 6,800
& Postage
To Depreciation on 1,250 By Entrance fee 250
games equipments
(1,000 + 1,500 – 1,250)
By sale of grass 200
By Deficiency (excess 2,300
of exp. over income)
9,550 9,550

Balance sheet of Tirupathi Sports Club as on 31-3-2006

Liabilities Amount Amount Assets Amount Amount
Rs. Rs. Rs. Rs.
Capital fund 4,500 Grass cutting machine 1,000
(+) Life 1,500 Less: Depreciation 100 900
membership
(+) Donations 4,000 Games equipment 1,250
10,000 Cash 750
Less: Deficiency 2,300 7,700 Cash at Bank 5,250
Tournament fund 2,500 Subscriptions Due 1,050
Less: Expenses 1,000 1,500
9,200 9,200

Solution 3:
Balance Sheet of Gymkhana as on 1-1-2005
Liabilities Amount Amount Assets Amount Amount
Rs. Rs. Rs. Rs.
Capital Fund (B/ f) 26,500 Bank 25,000
Subscriptions Due 1,500
26,500 26,500

Income and Expenditure A/c of Gymkhana for the year ended 31-3-2006
Dr. Cr.
Accountancy – II 34

Particulars Amount Amount Particulars Amount Amount

Rs. Rs. Rs. Rs.
To salaries 2,000 By Subscriptions 10,000
Add: O/s Salaries 1,500 3,500 Add: O/s Subscription 400 10,400
To Telephone 300 By rent 300
To Electricity 600 By Interest on Bank 450
Expenses Deposit
To Postage 150 Add: O/s Interest 150 600
To Entertainment 900 By Entrance fee (1000 500
x 50/100)
Add: O/s Expenses 500 1,400 By Interest on
securities (8,000 x 200
5/100 x 6/12)
To Miscellaneous 600 By Donations 2,000
expenses
To Depreciation on
Furniture (5,000 x 375
10/100 x 9/12)
To Surplus (Excess
of Income over 7,075
expenditure)
14,000 14,000

Balance Sheet of Gymkhana as on 31-3-2006

Liabilities Amount Amount Assets Amount Amount
Rs. Rs. Rs. Rs.
Capital Fund 26,500 Furniture 5,000
Add: surplus 7,075 Less: Depreciation 375 4,625
33,575 Books 2,500
Add: entrance fee 500 5% Investments 8,000
(1,000 x 50/100)
Subscriptions 500 Add: Accured interest 200 8,200
received in advance
O/s salaries 1,500 O/s interest on Bank 150
Deposits
O/s entertainment 500 Cash 300
expenses
Bank 20,400
Outstanding 400
subscriptions
36,575 36,575

Solution 4:
Accountancy – II 35

Income and Expenditure a/c of Sangareddy Sports Club for the year ended 31-
3-2006
Dr. Cr.
Particulars Amount Amount Particulars Amount Amount
Rs. Rs. Rs. Rs.
To Administrative 400 By subscriptions 10,600
expenses
To Salaries 1,800 Add: O/s Subscription 1,000 11,600
Add: O/s salaries 600 2,400 By Entertainment 500
receipts
To Travelling exp. 400
To Gardening exp. 500
To Postage exp. 75
To Cricket exp. 850
(200 + 800 – 150)
To Games & sports 300
expenses
To Loss on furniture 20
To Surplus (Excess
of Income over 7,155
Expenditure)
12,100 12,100

Chapter – 7
PARTNERSHIP ACCOUNTS – I

Solution 1:
Journal Entries
Date Particulars L.F. Debit Credit
Rs. Rs.
2006 Revaluation a/c Dr. 30,000
Mar 31 To Stock a/c 20,000
To Furniture a/c 5,000
To Provision for Bad debts a/c 5,000
(Being decrease in the value of assets and
Provision for bad debts)
Buildings a/c Dr. 50,000
To Revaluation a/c 50,000
(Being increase in the value of building)
Revaluation a/c Dr. 20,000
To A’s Capital a/c 8,000
To B ‘s Capital a/c 12,000
(Being revaluation profit distributed to
partners)
Cash a/c Dr. 4,00,000
To ‘C’ capital a/c 3,00,000
Accountancy – II 36

To Goodwill a/c 1,00,000

(Being new partner brings cash for his
share of capital and goodwill)
Goodwill a/c Dr. 1,00,000
To ‘A’ Capital a/c 40,000
To ‘B’ Capital a/c 60,000
(Being Goodwill created to old partner’s
capital a/c)

Revaluation Account
Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Stock a/c 20,000 By Buildings a/c 50,000
To Furniture a/c 5,000
To Provision for 5,000
doubtful debts a/c
To A’s Capital a/c 8,000
To B’s Capital a/c 12,000
50,000 50,000

A’s Capital Account

Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Balance c/d 3,28,000 By Balance b/d 2,80,000
By Revaluation a/c 8,000
(profit)
By Goodwill a/c 40,000
(1,00,000 x 2/5)
3,28,000 3,28,000
By Balance b/d 3,28,000

B’s Capital Account

Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Balance c/d 4,92,000 By Balance b/d 4,20,000
By Revaluation a/c 12,000
(profit)
By goodwill a/c 60,000
(1,00,000 x 3/5)
4,92,000 4,92,000
By Balance b/d 4,92,000

C’s Capital Account

Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Balance c/d 3,00,000 By Cash a/c 3,00,000
3,00,000 3,00,000
By Balance b/d 3,00,000
Accountancy – II 37

Cash/ Bank account

Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Balance b/d By Balance c/d 4,50,000
Cash Rs.30,000
Bank Rs.20,000 50,000
To C ‘s Capital a/c 3,00,000
To goodwill a/c 1,00,000
4,50,000 4,50,000
To Balance b/d 4,50,000

Goodwill Account
Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To A’s capital a/c 40,000 By Cash a/c 1,00,000
To B’s Capital a/c 60,000
1,00,000 1,00,000

Balance Sheet of A, B and C as on 1-4-2006

Liabilities Amount Assets Amount
Rs. Rs.
Sundry creditors 50,000 Cash in hand / Bank 4,50,000
Capital Accounts: Sundry Debtors 1,00,000
A 3,28,000 Less: Provision for 5,000 95,000
bad debts
B 4,92,000 Stock 1,80,000
(2,00,000 – 20,000)
C 3,00,000 11,20,000 Furniture 45,000
(50,000 – 5,000)
Buildings 4,00,000
(3,50,000 + 50,000)
11,70,000 11,70,000

Solution 2:
Revaluation Account
Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Stock 20,000 By Buildings a/c 2,00,000
To creditors 10,000 By Provision for bad 20,000
debts
(50,000 – 30,000)
To Reddy Capital 95,000
a/c
To Naidu Capital 95,000
a/c
2,20,000 2,20,000
Accountancy – II 38

Reddy Capital Account

Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Balance c/d 3,85,000 By Balance b/d 2,50,000
By Revaluation a/c 95,000
(Profit)
By Profit & Loss a/c 10,000
By Goodwill a/c 30,000
3,85,000 3,85,000
By Balance b/d 3,85,000

Gupta Capital Account

Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Balance c/d 3,08,000 By Cash a/c 3,08,000
(7,70,000 x 40/100)
3,08,000 3,08,000
By Balance b/d 3,08,000

Goodwill Account
Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Reddy ‘s 30,000 By Balance c/d 60,000
capital a/c
To Naidu Capital 30,000
a/c
60,000 60,000
To Balance b/d 60,000

Cash Book Account

Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Balance b/d 15,000 By Balance c/d 3,23,000
To Gupta capital 3,08,000
a/c
3,23,000 3,23,000
To Balance b/d 3,23,000

Balance sheet of Reddy, Naidu, Gupta as on 1-4-2006

Liabilities Amount Assets Amount
Rs. Rs.
Creditors 1,10,000 Cash / Bank 3,23,000
(1,00,000 + 10,000)
Bank overdraft 95,000 Stock 80,000
(1,00,000 – 20,000)
Capital Accounts: Debtors 2,50,000
Reddy 3,85,000 (-) Provision for bad debts 30,000 2,20,000
Naidu 3,85,000 Land & Buildings 6,00,000
Accountancy – II 39

(4,00,000 + 2,00,000)
Gupta 3,08,000 Goodwill 60,000
12,83,000 12,83,000

Working Notes:
1. Calculation of goodwill:
Total profits 40,000 + 80,000 + 60,000 = 1,80,000
Average profits = 1,80,000 / 3 = 60,000
Goodwill = 1,80,000
2. Calculation of Gupta ‘s capital
Capital of Gupta & Naidu = 3,85,000 + 3,85,000
= 7,70,000
Gupta introduce 40% of the adjusted
Capital of Reddy and Naidu = 7,70,000 x 40/100 = 3,08,000
Gupta ‘s Capital = 3,08,000

Solution 3:
Revaluation Account
Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Stock a/c 15,000 By Land & Building 40,000
To Furniture a/c 10,000
To Provision for 10,000
bad debts a/c
To Raghu capital 3,750
a/c
To Tendulkar 1,250
Capital a/c
40,000 40,000

Raghu Capital Account

Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Balance c/d 6,00,000 By Balance b/d 3,00,000
By Revaluation a/c 3,750
By General Reserve 75,000
By Goodwill a/c 60,000
By Bank a/c 1,61,250
6,00,000 6,00,000
By Balance b/d 6,00,000

Tendulkar Capital Account

Dr. Cr.
Accountancy – II 40

Date Particulars LF Amount Date Particulars LF Amount

Rs. Rs.
To Cash 46,250 By Balance b/d 2,00,000
To Balance c/d 2,00,000 By Revaluation a/c 1,250
By General Reserve 25,000
By Goodwill a/c 20,000
2,46,250 2,46,250
By Balance b/d 2,00,000

Sonal Capital Account

Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Balance c/d 2,00,000 By Cash a/c 2,00,000
2,00,000 2,00,000
By Balance b/d 2,00,000

Goodwill Account
Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Raghu Capital 60,000 By Balance b/d 80,000
a/c
To Tendulkar 20,000
capital a/c
80,000 80,000
To Balance b/d 80,000

Cash / Bank Account

Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Balance b/d 3,00,000 By Tendulkar capital 46,250
a/c
To Sonal capital 2,00,000 By Balance c/d 6,15,000
a/c
To Raghu capital 1,61,250
a/c
6,61,250 6,61,250
To Balance b/d 6,15,000

Balance Sheet of Bindu, Sindhu, Hindu as on 1-4-2006

Liabilities Amount Assets Amount
Rs. Rs.
Creditors 3,50,000 Cash 61,500
Capital Accounts: Debtors 2,00,000
Raghu 6,00,000 Less: Provision for 10,000 1,90,000
bad debts
Tendulkar 2,00,000 Stock 1,35,000
(1,50,000 – 15,000)
Sonal 2,00,000 Land & Buildings 2,40,000
(2,00,000 + 40,000)
Accountancy – II 41

Furniture 90,000
(1,00,000 – 10,000)
Goodwill 80,000
13,50,000 13,50,000
Working Notes:
1. Calculation of new profit sharing Ratio: (old Ratio 3 : 1)
Total Profit = 1
Sonal ‘s share = 1/5
Remaining share = 1- 1/5 = 4/5
Raghu’s Share = 4/5 x ¾ = 12/20
Tendulkar ‘s Share = 4/5 x ¼ = 4/20
Sonal ‘s Share = 1/5 x 4/4 = 4/20
New profit sharing ratio = 12 : 4 : 4
= 3:1:1

2. Total Capital:
1/5th share capital = 2,00,000
Total Capital = 2,00,000 x 5/1 = 10,00,000
3. Partners capital:
Raghu = 10,00,000 x 3/5 = 6,00,000
Tendulkar = 10,00,000 x 1/5 = 2,00,000
Sonal = 10,00,000 x 1/5 = 2,00,000

Solution 4:
Revaluation Account
Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Provision for 1,000 By Buildings a/c 3,000
bad debts
To Stock 1,800 By Mary Capital 1,680
To Furniture 1,000 By Rajani capital 1,120
To Machinery 2,000
5,800 5,800

Mary capital account

Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Revaluation 1,680 By Balance b/d 48,000
Accountancy – II 42

a/c(Loss)
To Balance c/d 52,320 By goodwill a/c 6,000
54,000 54,000

rajani capital Account

Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Revaluation a/c 1,120 By Balance b/d 24,000
(loss)
To Balance c/d 26,880 By Goodwill a/c 4,000
28,000 28,000
By Balance b/d 26,880

Bindu Capital Account

Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Balance c/d 16,000 By Cash a/c 16,000
16,000 16,000
By Balance b/d 16,000

Goodwill Account
Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Mary capital 6,000 By Balance c/d 10,000
a/c (loss)
To Rajani capital 4,000
a/c
10,000 10,000
To Balance b/d 10,000

Cash / Bank Account

Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Balance By Balance c/d 28,000
Cash 2,000
Bank 10,000
To Bindu capital 16,000
a/c
28,000 28,000
To Balance b/d 28,000

Balance Sheet of Mary, Rajani and Bindu as on 1-4-2006

Liabilities Amount Assets Amount
Rs. Rs.
Creditors 16,000 Cash / Bank 28,000
Bank overdraft 10,000 Debtors 20,000
Bills payable 12,000 Less: Provision for 1,000 19,000
Accountancy – II 43

bad debts
Capitals: Stock 18,000
Mary 52,320 Less: Depreciation 1,800 16,200
Rajani 26,880 Furniture 10,000
Bindu 16,000 Less: Depreciation 1,000 9,000
Buildings 30,000
Add: Appreciation 3,000
Machinery 20,000
Less: Depreciation 2,000 18,000
Goodwill 10,000
1,33,200 1,33,200

Solution 5:
Revaluation Account
Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Creditors 1,000 By Plant & Machinery 20,000
To Provision for 3,000 By Buildings 15,000
bad debts
To Stock 4,000
To Capitals
A 18,000
B 9,000
35,000 35,000

A ‘s capital Account
Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Balance c/d 2,38,000 By Balance b/d 1,80,000
By Revaluation a/c 18,000
(Profit)
By Goodwill a/c 40,000
2,38,000 2,38,000
By Balance b/d 2,38,000

B ‘s Capital Account
Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Balance c/d 1,79,000 By Balance b/d 1,50,000
By Revaluation a/c 9,000
(profit)
By Goodwill 20,000
1,79,000 1,79,000
By Balance b/d 1,79,000

C ‘s capital Account
Dr. Cr.
Accountancy – II 44

Date Particulars LF Amount Date Particulars LF Amount

Rs. Rs.
To Balance c/d 1,00,000 By Cash a/c 1,00,000
1,00,000 1,00,000
By Balance b/d 1,00,000

Goodwill Account
Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To A’s capital a/c 40,000 By Cash a/c 60,000
To B’s capital a/c 20,000
60,000 60,000

Cash / Bank Account

Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Balance b/d By Balance b/d 2,10,000
Cash 10,000
Bank 40,000
To Goodwill a/c 60,000
To Z ‘s capital a/c 1,00,000
2,10,000 2,10,000
To Balance b/d 2,10,000

Balance Sheet of A, B, C as on 1-4-2006

Liabilities Amount Assets Amount
Rs. Rs.
Bills payable 10,000 Debtors 60,000
Creditors 58,000 Less: Provision for 3,000 57,000
bad debts
Add: Add. Creditors 1,000 59,000 Stock 40,000
Outstanding expenses 2,000 Less: Depreciation 4,000 36,000
Capital Accounts: Plants & Machinery 1,00,000
A 2,38,000 Add: Appreciation 20,000 1,20,000
B 1,79,000 Buildings 1,50,000
C 1,00,000 Add: Appreciation 15,000 1,65,000
Cash / Bank 2,10,000
5,88,000 5,88,000

Solution 6:
Revaluation Account
Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Plant & 3,500 By Land & Buildings 5,000
Machinery
To Provision for 2,250 By Stock 4,500
bad debts
To A capital a/c 2,250
Accountancy – II 45

To B capital a/c 1,500

9,500 9,500

A’s Capital Account

Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Balance c/d 56,250 By Balance b/d 45,000
By General Reserve 6,000
(10,000 x 3/5)
By Goodwill 3,000
(5,000 x 3/5)
By Revaluation a/c 2,250
56,250 56,250
By Balance b/d 56,250

B ‘s Capital Account
Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Balance c/d 32,500 By Balance b/d 25,000
By General reserve 4,000
(10,000 x 2/5)
By Goodwill 2,000
(5,000 x 2/5)
By Revaluation a/c 1,500
32,500 32,500
By Balance b/d 32,500

C’s Capital Accounts

Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Balance b/d 15,000 By Cash a/c 15,000
15,000 15,000

Goodwill Account
Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To ‘A’ Capital a/c 3,000 By Cash a/c 5,000
To ‘B’ Capital a/c 2,000
5,000 5,000

Cash / Bank Account

Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Balance b/d 5,000 By Balance c/d 25,000
To Goodwill 5,000
To ‘C’ Capital a/c 15,000
25,000 25,000
Accountancy – II 46

To Balance b/d 25,000

Balance sheet of A, B, C as on 1-4-2006

Liabilities Amount Rs. Assets Amount Rs.
Creditors 40,000 Cash / Bank 25,000
Bills payable 12,000 Land & Buildings 30,000
(25,000 + 5,000)
Capital Accounts: Plant & Machinery 31,500
(35,000 – 3,500)
A 56,250 Furniture & Fittings 1,500
B 32,500 Stock 25,000
(20,500 + 4,500)
C 15,000 Debtors 42,750
(45,000 – 2,250)
1,55,750 1,55,750

Solution 7:
Revaluation Capital Account
Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Provision for 4,000 By P Capital 7,550
bad debts
To Furniture 1,200 By Q capital 7,550
To Machinery 4,200
To Buildings 5,700
15,100 15,100

P ‘s Capital Account
Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Revaluation 7,550 By Balance b/d 90,000
(loss)
To Balance c/d 1,30,450 By General Reserve 18,000
By Goodwill 30,000
1,38,000 1,38,000
By Balance b/d 1,30,450

Q ‘s Capital Account
Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Revaluation 7,550 By Balance b/d 60,000
(Loss)
To Balance c/d 1,00,450 By General Reserve 18,000
By Goodwill 30,000
1,08,000 1,08,000
By Balance b/d 1,00,450
Accountancy – II 47

R’s Capital Account

Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Balance b/d 90,000 By Cash 90,000
90,000 90,000
By Balance b/d 90,000

Goodwill Account
Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Hari Capital a/c 30,000 By Balance c/d 60,000
To Giri Capital a/c 30,000
60,000 60,000
To Balance b/d 60,000

Cash / Bank Account

Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Balance b/d By Balance c/d 1,74,000
Cash 8,000
Bank 76,000
To R Capital a/c 90,000
1,74,000 1,74,000

Balance Sheet of P, Q and R as on 1-4-2006

Liabilities Amount Assets Amount
Rs. Rs.
Outstanding expenses 20,000 Debtors 80,000
Creditors 60,000 Less: Provision for bad 4,000 76,000
debts
Bank overdraft 80,000 Furniture 24,000
Bills payable 40,000 Less: Depreciation 1,200 22,800
Capitals: Machinery 84,000
P 1,30,450 Less: Depreciation 4,200 79,800
Q 1,00,450 Buildings 1,14,000
R 90,000 Less: Depreciation 5,700 1,08,300
Goodwill 60,000
Cash / Bank 1,74,000
5,20,900 5,20,900

Chapter – 8
PARTNERSHIP ACCOUNTS – II
Accountancy – II 48

Solution 1:
Revaluation Account
Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Patents 1,000 By Reserve for bad 2,000
debts
To Outstanding 400
expenses
To A capital a/c 200
To B Capital a/c 200
To C Capital a/c 200
2,000 2,000

A’s Capital Account

Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To ‘A’ loan a/c 18,533 By Balance b/d 15,000
By General Reserve 3,333
By Revaluation a/c 200
(Profit)
18,533 18,533

‘B’ Capital Account

Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Balance c/d 18,533 By Balance b/d 15,000
By General Reserve 3,333
By Revaluation a/c 200
(profit)
18,533 18,533
By Balance b/d 18,533

‘C’ Capital Account

Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Balance c/d 18,534 By Balance b/d 15,000
By General Reserve 3,334
By Revaluation a/c 200
(Profit)
18,534 18,534
By Balance b/d 18,534

‘A’ Loan a/c

Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Balance b/d 18,533 By A’s capital a/c 18,533
18,533 18,533
Accountancy – II 49

Balance Sheet of B & C as on 31-3-2006

Liabilities Amount Assets Amount
Rs. Rs.
Creditors 8,000 Bank 5,000
A’ s loan a/c 18,533 Plant & Machinery 20,000
Outstanding expenses 400 Furniture 8,000
Capital Accounts Debtors 25,000
B 18,533 Goodwill 6,000
C 18,534 37,067 Patents 1,000
(-) Depreciation 1,000 NIL
64,000 64,000

Solution 2:
Revaluation Account
Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Machinery a/c 28,000 By Buildings 8,000
To Reserve for 700 Capital accounts:
bad debts
By Usha 10,350
By Asha 6,210
By Mesha 4,140 20,700
28,700 28,700

Usha Capital Account

Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Revaluation a/c 10,350 By Balance b/d 80,000
(loss)
To Balance c/d 1,04,150 By General Reserve 10,000
By Goodwill 24,500
1,14,500 1,14,500
By Balance b/d 1,04,150

Asha Capital Account

Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Revaluation a/c 6,210 By Balance b/d 60,000
(Loss)
To Balance c/d 74,490 By General Reserve 6,000
By Goodwill 14,700
Accountancy – II 50

80,700 80,700
By Balance b/d 74,490

Mesha Capital Account

Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Revaluation a/c 4,140 By Balance b/d 30,000
(Loss)
To Vishwam Loan 39,660 By General Reserve 4,000
a/c
By Goodwill 9,800
43,800 43,800

Mesha ‘s Loan Account

Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Balance b/d 39,660 By Viswam Capital 39,660
a/c
39,660 39,660
By Balance b/d 39,660

Goodwill Account
Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Usha Capital 24,500 By Balance b/d 49,000
a/c
To Asha Capital 14,700
a/c
To Mesha Capital 9,800
a/c
49,000 49,000
To Balance b/d 49,000

Balance Sheet of Usha & Asha as on 31-3-2006

Liabilities Amount Assets Amount
Rs. Rs.
Creditors 1,21,000 Cash in hand 50,500
Bills payable 10,000 Debtors 31,000
Viswam loan a/c 39,660 Less: R. B. D 1,200 29,800
Capitals: Stock 20,000
Suryam 1,04,150 Machinery 1,40,000
Chandram 74,490 Less: depreciation 28,000 1,12,000
Buildings 80,000
Add: Appreciation 8,000 88,000
Goodwill 49,000
3,49,300 3,49,300
Accountancy – II 51

Solution 3:
Revaluation Account
Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Furniture 20,000 By Plant & 80,000
Machinery
To Stock 15,000
To Reserve for 5,000
Bad debts
To Rama Capital 18,000
a/c
To Rahim capital 12,000
a/c
To David capital 6,000
a/c
80,000 80,000

Ram Capital Account

Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Ram ‘s loan a/c 5,38,000 By Balance b/d 4,00,000
By revaluation 18,000
By Profit & Loss 30,000
By Goodwill 90,000
5,38,000 5,38,000

Rahim Capital Account

Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Balance c/d 3,92,000 By Balance b/d 3,00,000
By Revaluation 12,000
By Profit & Loss 20,000
By Goodwill 60,000
3,92,000 3,92,000
By Balance b/d 3,92,000

David Capital Account

Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Balance c/d 2,46,000 By Balance b/d 2,00,000
By Revaluation 6,000
By Profit & Loss 10,000
By Goodwill 30,000
2,46,000 2,46,000
By Balance b/d 2,46,000
Accountancy – II 52

Ram Loan Account

Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Balance c/d 5,38,000 By Ram Capital 5,38,000
5,38,000 5,38,000
By Balance b/d 5,38,000

Goodwill Account
Dr. Cr.
Date Particulars LF Amount Date Particulars LF Amount
Rs. Rs.
To Ram Capital 90,000 By Balance c/d 1,80,000
a/c
To Rahim capital 60,000
a/c
To David capital 30,000
a/c
1,80,000 1,80,000
To Balance b/d 1,80,000

Balance Sheet of Rahim & David as on 1-4-2006

Liabilities Amount Assets Amount
Rs. Rs.
Creditors 1,20,000 Cash in hand 14,000
Bills payable 80,000 Cash at Bank 1,00,000
Bank Overdraft 70,000 Debtors 1,80,000
Ram loan a/c 5,38,000 Less: RBD 9,000 1,71,000
Capitals: Furniture 2,16,000
(2,40,000 – 24,000)
Rahim 3,92,000 Stock 2,85,000
(3,00,000 – 15,000)
David 2,46,000 Plant & Machinery 4,80,000
(4,00,000 + 80,000)
Goodwill 1,80,000
14,46,000 14,46,000
Accountancy – II 53