Partnership Dec 2020 Updated

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Partnership Accounts
1. A and B are equal partners. They admit C and D as partners with 1/5 and 1/6 share
respectively. What is the profit sharing ratio of all the partners?
Ans: 19:19:12:10
2. A, B and C are partners with profit sharing ratio 5:3:2. A wants to retire, B and C agreed to
continue at 2:1. Find the profit gaining ratio between B and C.
Ans: B:C=11:4
3. Calculate ratios in the following cases:
Case-I A, B & C sharing in the ratio 3:2:1, B retired and his share was taken up by A & C in the
ratio of 3:2. D was admitted and he acquired 1/8th of A’s revised balance and 1/3rd of C’s original
balance in his favor. Find out gaining sacrificing and new ratio.
Ans: A:C:D=441:176:103
Case-II A, B & C are sharing in the ratio of 3:2:1. C retired and his share was taken up by A & B
equally. D admitted and he receives 1/8th shares of original share from A and 1/6th from B.
Calculate new ratio, sacrificing ratio and gaining ratio.
Ans: A:B:D=75:50:19
4. P, Q and R share profit and losses in the ratio of 4:3:2 respectively. Q retires and P and R decide
to share future profits and losses in the ratio of 5:3. Then immediately H is admitted of 3/10
shares of profits half of which was gifted by p and the remaining shares was taken by H equally
from P and R. Calculate the new profit sharing ratio after H’s admission and Gain ratio of P and
R.
Ans: New Ratio =4:3:3
5. A,B and C are partner sharing profit and losses in the ratio of 3:2:1. B retired from the firm.
Partners A and C decided to take his share in 3:1 ratio. What is the new ratio of the partners A
and C?
Ans: New Ratio= 3:1
6. Journalize entries in following cases.

Case-I A& B ratio is 1:1. Goodwill of the firm is Rs. 50,000. C is admitted for 1/5 share new ratio is
2:2:1. New partner brings 50,000 in cash for Capital and goodwill.
Case-II A& B ratio is 1:1. C is admitted a new ratio is 2:2:1, goodwill already appearing is in
balance sheet is Rs. 10,000. Partners want the goodwill should appear in new books at Rs. 40,000
goodwill is valued at Rs. 50,000.
Case-III A and B ratio is 1:1 Goodwill is valued at Rs. 90,000. C admitted and the new ratio is
2:2:1. C brings goodwill Rs. 10,000 and Cash Rs. 15,000.
Case-IV A, B & C sharing in the ratio 1:1:1 goodwill is value at Rs. 60,000. D is admitted and he
brings goodwill Rs. 30,000. B retired and new ratio of A, C, & D is 3:2:1. D brings 30,000 in cash
and B withdraw 25,000 from firm. New firm agrees to show goodwill at Rs. 36,000.
Rajan Adhikari, FCA Partnership Accounts (CAP -II Dec 20)

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Case-v A, B & C sharing in the ratio of 3:2:1. Goodwill already appearing is Rs. 12,000 re-value at
Rs. 72,000. D & E are admitted who bring Rs. 42,000 goodwill equally. New firm agreed to share
profits in the ratio of 2:2:1:1among. A,C,D & E. B retired and goodwill should appear at Rs. 18,000.
7. i) Ram and Shyam are equal partners. They wanted to admit Mohan as 1/6th Partner. Goodwill
is valued at Rs. 60,000 on the occasion of admission of the new partner. Journalize (study
material)
ii) Vijay and Mohan are equal partners. They wanted to admit Rakesh as 1/3rd partner. He
brought Rs. 60,000 as goodwill. Journalize.
iii) Anand, Bhupesh, Dinesh were equal partners. On 31st December, 2000, Dinesh desired to
retire when goodwill was valued at Rs. 60,000. On Dinesh’s retirement Anand and Bhupesh
agreed to share profit in the ratio of 3:2. Journalize.
iv) Anand, Bhupesh, Ram are in partnership sharing profit and loss at the ratio 2:2:1. They want
to admit Dinesh into partnership with one-fifth share. Dinesh brings in Rs. 30,000.00 as capital
and Rs. 10,000.00 as premium for goodwill.
8. Amit and Sumit are partners sharing profits and losses in the ratio 3:2. Their Balance Sheet as
on 31st March 2011 is given below:
Liabilities Amount Assets Amount

Capital Accounts: Land and Building 3,20,000
Amit 1,76,000 Investment(Market value Rs. 50,000
Sumit 55,000)
2,54,000 Debtors 3,00,000
Loan from Puneet 3,00,000 Less: Provision for doubtful

debts 10,000 2,90,000
General Reserve 30,000 Stock 1,10,000
Employer’s Provident 10,000 Cash at Bank 50,000
Creditors 50,000
Total 8,20,000 8,20,000
They decided to admit Puneet as a new partner from 1st April, 2011 on the following terms:
i) Amit will give 1/3rd of his share and Sumit will give 1/4th of his share to Puneet.
ii) Puneet’s loan account will be converted into his capital .
iii) The goodwill of the firm is valued at Rs. 3,00,000. Puneet will bring his share of his
Goodwill in cash and the same was immediately withdrawn by the partners.
iv) Land and building was found undervalued by Rs. 100,000.
v) Stock was found overvalued by Rs. 60,000.
vi) Provision for doubtful debts will be made equal to 5% debtors.
vii) Investments are to be valued at their market price.
It was decided that the total capital of the firm after admission of new partner would be Rs.
10,00,000. Capital accounts of partners will be readjusted on the basis of their profit sharing
ratio and excess or deficiency will be adjusted in cash.
You are required to prepare:

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a) Revaluation A/c
b) Partner’s Capital A/c
c) Balance Sheet of the firm after admission of new partner.
Ans: Contribution Amit- 182,000 Sumit- 18,000 Rev. Profit Amit-24,000 Sumit 16,000
9. A partnership firm earns the following net profit during last 3 years:
Rs.
1997 2,80,000
1998 3,20,000
1999 3,40,000
Partnership capital accounts during the period were as follows:
Rs.
01-01-1997 8,00,000
31-12-1997 9,50,000
31-12-1998 10,80,000
31-12-1999 11,50,000
A similar firm earns 25% on capital.
Required:
i) Valuation of goodwill taking one year’s weighted average profit.
ii) Valuation of goodwill taking 5 years super profit based on weighted average profits.
iii) Valuation of goodwill taking discounted value of 5 years super profit @ 15% p.a.
iv) Valuation of goodwill on capitalization basis.
Ans: i) 3,23,330 ii) 3,64,580 iii) 2,44,429 iv) 2,91,665
10. Lee and Lawson are in equal partnership. They agreed to take Hicks as one-fourth partners.
For this it was decided to find out the value of goodwill. M/s Lee and Lawson earned profits
during 2005-2008 as follows:
Year Profit
2005 1,20,000
2006 1,25,000
2007 1,30,000
2008 1,50,000
On 31-12-2008 capital employed by M/s Lee and Lawson was Rs. 5,00,000. Rate of normal profit is
20%.Find out the value of goodwill following various methods.
11. Calcualte goodwill of a firm on the basis of three years’ purchase of the weighted average
profits of the last four years. Profits of these four year 31st March were:
2006 2007 2008 2009
Rs. 40,400 Rs. 49,600 Rs. 40,000 Rs. 60,000
The weights assigned to each year ended on 31st March are: 2006-1: 2007-2: 2008-3 and
2009-4.
You are provided with the following additional information:

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i) On 31st March, 2008 a major plant repair was undertaken for Rs. 12,000 which was charged to
revenue. The said sum is to be capitalized for goodwill calculation subject to adjustment of
depreciation of 10% p.a. on reducing balance method.
ii) The closing stock for the year 2006-2007 was overvalued by Rs. 4,800
iii) To cover management cost an annual charge of Rs. 9,600 should be made for the purpose of
goodwill valuation.
Ans: Goodwill - 1,31,880
12. From the following information, calculate the value of goodwill of M/s Sharma and Gupta:
i) At three years purchase of Average Profits.
ii) At three years purchase of Super Profits.
iii) On the basis of capitalization of Super Profits.
iv) On the basis of capitalization of Average Profits.
Information:
a) Average capital employed in the business Rs. 7,00,000
b) Net trading results of the firm for the past years: Profit 2007 Rs 147,600; Loss 2008 Rs 148,100;
Profit 2009 Rs 448,700.
c) Rate of interest expected from capital having regard to the risk involved 18%.
d) Remuneration to each partner for his service Rs 500 par month.
e) Assets (excluding goodwill) Rs 754,762. Liabilities 31,329.
13. A and B are equal partners with capitals of Rs 1,60,000 and Rs. 1,20,000 respectively. They
admit C as a partner on 1st January, 2010 for 1/4th share in the profits of the firm. C brings in
Rs. 1,60,000 as his share of capital. Give the Journal entries on C’s admission
Ans: Goodwill - 2,00,000
14. The Balance Sheet of X and Y who share profits and losses In the ratio of 3:2 as on 31st
March 2010 was:
Sundry Creditors 1,00,000 Cash at Bank 10,000
Reserve 60,000 Debtors 50,000
Profit and loss a/c 25,000 Stock 70,000
X’s Capital 48,000 Furniture 20,000
Y’s Capital 32,000 Plant and Machinery 1,00,000
Advertisement 15,000
Expenditure
2,65,000 2,65,000
They admit Z as a partner with 1/5th share in the profits of the firm, Z brings in Rs. 50,000 as his
capital. Give the necessary Journal Entry for the adjustment of goodwill.
Ans: Goodwill 50,000
15. X, Y and Z are three doctors who are running Polyclinic D, E, F and G were then taken in on
payment of Rs. 10,000 by each of them as goodwill and also Rs. 40,000 to be brought in by each

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of them as capital. Goodwill is shared by the existing partners equally. Each of the original
partners also contributed Rs. 40,000 by way of capital. The terms of sharing profits or losses
were as follows:
a) 60% of the visiting fee is to go to the specialist concerned.
b) 40% of the chamber fee will be payable to the individual specialist
c) 50% of operation fees and fees for pathological reports, X-ray and ECG will accrue in favor of
the doctor concerned
d) Balance of profit and loss is shared equally
e) The proportion of fees and charges accruing in favor of individual doctors are to be withdrawn
then and there
f) The receipts for the year after the admission of new partners are:
Fees for
Visiting fees Chamber fees reports
operation etc.
X General practitioner 60,000 80,000
Y Gynecologist 10,000 70,000 40,000
Z Cardiologist 40,000 30,000
D Child Specialist 40,000 60,000
E Pathologist 40,000
F Radiologist 16,000 80,000
G Dentist 10,000 60,000
1,10,000 2,76,000 2,50,000
Expenses for the year are as follows:
Rent 31,000
Light 5,000
Nurses Salary 12,000
Attendance wages 6,000
Telephones 8,200
Printing and stationery 2,000
Medicines, band aids, injections etc. 4,000
Depreciation:
Furniture 2,000
X-Ray Machine 10,000
ECG equipment’s 4,000
Dentist chairs 2,000
Surgical Equipment’s 2,000
20,000
Prepare Profit and Loss Account of the polyclinic, also showing the final distribution of profit or loss
among the partners.
Ans: Net profit to each partner- 35,200
16. Ramesh, Haresh and Suresh are in partnership. Haresh and Suresh are entitled to 15%
commission on net profit to be shared equally for the special service rendered by them to the

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partnership. However, all the partners are entitled to 8% interest on fixed capital of Rs. 5,00,000
each. The business is run at the premises of Mr. Ramesh who is further entitled to get a monthly
rent of Rs. 2,000 to be adjusted against his current account. They share profits and losses
equally. Net profit during the year 2010 was Rs. 7,00,000. During the year they were discussing
to change the profit sharing ratio because Mr Ramesh could not attend to business work. Finally
they decided to increase interest on capital to 12% p.a. with effect from 1st Baishak, 2070 and to
change the profit sharing ratio to 1:2:2 with effect from the same date. With that Heresh and
Suresh would not get any commission. Prepare Profit and Loss Appropriation Account.
17. Amit and sumit commenced business as partners on April 1, 2010. Amit contributed Rs.
40,000 and sumit Rs. 25,000 as their share of capital. The partners decided to share their
profits in the ratio of 2:1. Amit was entitled to salary of Rs. 6,000 p.a. Interest on capital was to
be provided @ 6% p.a. The drawings of Amit and sumit for the year ending March 31, 2011 were
Rs. 4,000 and Rs. 8,000 respectively. The profits of the firm after providing Amit’s salary and
interest on capital were Rs. 12,000.
Draw up the capital accounts of the partners
1. When capitals are fluctuating, and
2. When capitals are fixed.
18. A, B and C are partners of the firm ABC& Co sharing profits and losses in the ratio of 5:3:2.
Following is the Balance Sheet of the firm as at 31-3-2008
Partners Capital A/cs: Goodwill 1,00,000
A 4,50,000 Building 10,50,000
B 1,30,000 Machinery 6,50,000
C 1,70,000 Furniture 2,15,000
Investment Investments(Market value Rs. 60,000
Fluctuation: 75,000)
Reserve 1,00,000 Stock 6,50,000
Contingency Reserve 75,000 Sundry Debtors 6,95,000
Long term loan 15,00,000 Advertising Suspense 25,000
Bank Overdraft 2,20,000
Sundry Creditors 8,00,000
34,45,000 34,45,000
It was decided that B would retire from the partnership on 1.4.2008 and D would be admitted as a
partner on the same date. Following adjustments are agreed amongst the partners for the
retirement/admission:
i) Goodwill is to be valued at Rs. 5,00,000, but the same will not appear as an Asset in the books
of the firm.
ii) Building and Machinery are to be revalued at Rs. 10,00,000 and Rs. 5,20,000 respectively.
iii) Investments are to be taken over by B at the market value.
iv) Provision for doubtful debts to be maintained at 20% on sundry debtors.
v) The capital of the reconstituted firm will be Rs. 10,00,000 to be contributed by the partners A, C
and D in their new profit sharing ratio of 2:2:1.
vi) Surplus funds if any will be used to pay the bank overdraft.
vii) Amount due to retiring partner B will be transferred to his loan account.

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Prepare
I) Revaluation Accounts
II) Capital Accounts of the partners and
III) Balance sheet of the firm after reconstitution.
Ans: Revaluation Loss 3,04,000 Balance Sheet Total 34,28,800
19. Ram, Rahim and Robert are partners, sharing profits and losses in the ratio of 5:3:2.
It was decided that Robert would retire on 31-03-2005 and in his place Richard would be admitted
as a partner with new profit sharing ratio between Ram, Rahim and Richard at 3:2:1.
20. The following was the Balance Sheet of A and B who were sharing Profits and Losses in the
ratio of 2:1 on 31.12.2006:
Capital Accounts: Plant and Machinery 12,00,000
A 10,00,000 Building 9,00,000
B 5,00,000 Sundry Debtors 3,00,000
Reserve Fund 9,00,000 Stock 4,00,000
Sundry Creditors 4,00,000 Cash 1,00,000
Bills Payable 1,00,000
29,00,000 29,00,000
They agreed to admit C into the partnership on the following terms:
i) The goodwill of the firm was fixed at Rs. 1,05,000.
ii) That the value of Stock and Plant and Machinery were to be reduced by 10%.
iii) That a provision of 5% was to be created for Doubtful Debts.
iv) That the building account was to be appreciated by 20%.
v) There was an unrecorded Liability of Rs. 10,000
vi) Investments worth Rs. 20,000 (Not mentioned in the Balance Sheet) were taken into account.
vii) That the value of Reserve fund, the values of Liabilities and the values of Assets other than
Cash are not to be altered.
viii) C was to be given one fourth share in the Profit and was to bring capital equal to his share of
Profit after all adjustments.
Prepare Memorandum Revaluation Account, Capital Account of the Partners and the Balance Sheet
of the newly reconstituted firm.
Ans: Revaluation Profit-15,000
21. X, Y and Z were in partnership sharing profits and losses as one half, one fourth and one
fourth respectively. It was agreed that interest should be allowed at the rate of 10% per annum
on partners’ capital accounts and charged at the rate of 8 percent annum on their drawings. No
interest was to be allowed or charged on current accounts.
The following are the particulars of their capital accounts, current accounts and drawings(as
shown by the draft accounts)
Capital Accounts Current Account Drawings for Interest on
balance on 1st Jan. balance on 1st Jan. year to 31st Dec. drawings

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1984 1984 1984

X 1,50,000 cr. 20,000 cr. 30,000 2,000
Y 80,000 cr. 10,000 cr. 20,000 760
Z 60,000 cr. 10,000 cr. 20,000 1,400
The draft accounts for the year to 31st December 1984 showed a net profit of Rs. 1,20,000 before
taking into account interest on partners’ capital account balances and drawings. The audit of the
draft accounts revealed the following errors;
1. The rent of X’s private house, amounting to Rs. 1,500 and paid on 31st December, 1984, had
been included in rents charged in profit and loss account.
2. Repairs amounting to Rs. 20,000 had been treated as additions to machinery, depreciation on
which had been charged at the rate of 20%
3. The premium amount to Rs. 6,000 on Y’s life insurance policy and paid on 30th June, 1984,
had been included under insurance charges in the profit and loss account.
Z-retired from the partnership on 31st December 1984, and agreed to leave the amount due to him
from firm as a loan repayable by agreed installment. X and Y agreed to continue in partnership,
sharing profits and losses as two third and one third.
In ascertaining the amount due to Z from the firm and for the purposes of the new partnership it
was agreed to make the following adujustments:
i) Goodwill to be valued at Rs. 1,44,000 but no account for goodwill to be raised in the books.
ii) The value of freehold premises to be increased by Rs. 40,000.
iii) The provision for bad debts to be increased by Rs. 12,000.
i) The profit and loss appropriation account for the year ended 31st December 1984, making all
the necessary adjustments for the errors revealed and
ii) Partners’ Capital and Current Accounts (in columnar form) for the year ended 31st December,
1984, incorporating the adjustments on Z’s retirement.
22. Dosi and Desai are in partnership as equal partners. Dosi by agreement retires and his son
Dinesh joins the firm on the basis that he would get one third share of the profit.
Dr. Cr.
Goodwill 12,000
Bank 8,000
Debtors 3,000
Stock 26,000
Creditors - 6,000
Capital Accounts:
Dosi - 23,000
Desai - 20,000
Goodwill is agreed at Rs. 30,000 and written up accordingly. Sufficient money is to be introduced
so as to enable Dosi to be paid off and leave Rs. 4,000 in Bank; Desai and Dinesh are to provide
such sum as to make their capitals proportionate to their share of Profit. Dosi agrees to contribute
from his capital half of the amount Dinesh has to provide.

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Assuming the agreement was carried out, show the journal entries required and prepare the
Balance Sheet of the firm M/s Desai and Dinesh.
Ans: Cash contribution Desai-9,000 Dinesh-9,500 Cash Payment Dosi 22,500
23. Avinash ,Basuda Ltd. and Chinmoy Ltd. were in partnership sharing profits and losses in the
ratio of 9:4:2. Basuda Ltd. retired from the partnership on 31st March 1998, when the firm’s
balance sheet was as under;
Rs. Rs.
Sundry Creditors 600 Cash and Bank 284
Capital Accounts: Sundry Debtors 400
Avinash 2,700 Stock 800
Basuda Ltd. 1,200 Furniture 266
Chinmoy Ltd 600 4,500 Plant 850
Land & Building 2,500
5,100 5,100
Basuda Ltd.’s share in goodwill and capital was acquired by Avinash and Chinmoy Ltd. in the ratio
of 1:3, the continuing partners bringing in the necessary finance to pay off Basuda Ltd. The
partnership deed provides that on retirement or admission of a partner, the goodwill of the firm is to
be valued at three times the average annual profits of the firm for the four years ended on the date
of retirement or admission. The profits of the firm during the four years ended 31st March 1998 in
thousands of rupees were:
Rs.
1994-95 450
1995-96 250
1996-97 600
1997-98 700
The deed further provided that goodwill account is not to appear in the books of accounts at all.
The continuing partners agreed that with effect from 1st April 1998, Ghanashyam, son of Avinash is
to be admitted as a partner with 25% share of profits.
Avinash gifts to Ghanashyam, by transfer from his capital account, an amount sufficient to cover
up 12.5% of capital and goodwill requirement. The balance 12.5% of capital and goodwill
requirement is purchased by Ghanashyam from Avinash and Chimnoy Ltd. in the ratio of 2:1.
The firm asks to you:
i) Prepare a statement showing the continuing partner’s shares;
ii) Pass journal entries including for bank transactions and
iii) Prepare the balance sheet of the firm after Ghanashyam’s admission.
Ans: New PSR-11:7:6 Total Capital-6,000
24. X and Y are equal partners. X by agreement retires and Z joins the firm on the basis of one
third share of profits on 01-01-1999. The balance of the books as on 31-12-1998 were;
Dr. Cr.
Goodwill 10,000

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Fixed assets at cost 1,20,000

Current Assets:
Stock 60,000
Debtors 40,000
Bank Balance 8,000
Creditors 20,000
Provision for depreciation 12,000
Capital accounts:
X 1,04,000
Y 1,02,000
2,38,000 2,38,000
Goodwill and fixed assets valued at Rs. 30,000 and Rs. 1,40,000 respectively and it was agreed to
be written up accordingly- sufficient money is to be introduced so as to enable X to be paid off and
leave Rs. 5,000 cash at Bank; Y and Z are to provide such sum as to make their capitals
proportionate to their share of profit. Assuming the agreement was carried out, show the journal
entries required and prepare the balance sheet after admission of z.
Ans: Contribution Y-42,000 Z-85,000 Payment X-1,30,000
25. The following is the Balance Sheet of A, B and C who were partners as on 31-3-1993;
Balance Sheet as at 31-03-1993

A’s capital A/c 33,600 Plant and Machinery 49,000
B’s Capital A/c 25,200 Furniture and fittings 4,800
C’s Capital A/c 12,000 Stock in trade 22,800
Sundry creditors 12,000 Sundry Debtors 21,600
15% Mortgage Loan 16,600 Cash on hand 1,000
Cash at bank 200
99,400 99,400
They share profits and losses in the ratio of 2:2:1. On 1st April, 1993 C retired from the firm and
claimed his share of secret reserve/profit arising out of the following;
a) During the year ended 31-3-1993 purchase of Machinery at a cost of Rs. 10,000 was charged to
purchases account, the erection charges of Rs. 600 being charged to machinery repairs account.
(Depreciation is to be charged at 10% p.a.)
b) Rs. 600 received from Mr. X on 30-3-93 towards rent of the property sublet was credited to his
personal account instead of to rent account so as to reduce his debit balance from Rs. 1,000 to
Rs. 400 debit on 31-3-93.
c) Interest on mortgage loan was paid in advance up to 31-5-93 and the whole amount was
charged to interest account during the year ended 31-3-93. After rectifying the above errors, it
was mutually decided as under;
i) The goodwill of the firm be valued at five times the average profits of the last three years. Such
profits should be correct profits and not the book profits. The book profits for the last three
financial years were:

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1990-91- Rs. 18,380; 1991-92-Rs. 32,000; 1992-93-Rs. 7,471

ii) Plant and Machinery to be depreciated by 10% prov. For bad and doubtful debts to be made at
5% on sundry debtors.
iii) The goodwill should not appear in the books.
iv) There is a liability for Rs. 501 for bills discounted. This has to be accounted for.
v) C should be paid half of his dues in, cash which shall be brought in by A and B in their profit
sharing ratio and the other half shall be left in the business as C’s loan fetching an interest of
18% p.a.
Prepare Profit and Loss Adjustment account, Revaluation account, Capital Accounts of the partners
and the Balance Sheet of A and B after C’s retirement.
Ans: Profit & Loss Adjustment 10,555 Rev. Loss 7,465 B/s- 1,02,991
26. Messrs Dinesh, Bhupesh and Malik is a firm sharing profits and losses in the ratio 2:2:1.
Their Balance Sheet as on 31st March 2000 is as below:
Sundry Creditors 12,850 Land and Building 25,000
Outstanding liabilities 1,500 Furniture 6,500
General Reserve 6,500 Stock of goods 11,750
Capital Account: Sundry Debtors 5,500
Mr.Dinesh 12,000 Cash in hand 140
Mr.Bhupesh 12,000 Cash at Bank 960
Mr. Malik 5,000 29,000
49,850 49,850
The partners have agreed to take Mr. Mayank as a partner with effet from 1st April, 2000 on the
following terms;
i) Mr. Mayank shall bring Rs. 5,000 towards his capital
ii) The value of stock should be increased by Rs. 2,500
iii) Reserve for bad and doubtful debts should be provided at 10% of the debtors.
iv) Furniture should be depreciated by 10%
v) The value of Land and building should be enhanced by 20%
vi) The value of goodwill be fixed at Rs. 15,000
vii) General Reserve will be transferred to the partner’s Capital Accounts
viii) The new profit sharing ratio shall be;
Mr. Dinesh 5/15
Mr. Bhupesh 5/15
Mr. Malik 3/15
Mr. Mayank 2/15
ix) The goodwill account shall not be raised to the partners’ accounts
The outstanding liabilities include Rs. 1000 due to Mr. Sumit which has been paid by Mr. Dinesh.
Necessary entries were not made in the books.
Prepare:
i) Revaluation Account

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ii) The capital Account of the partners

iii) The balance sheet of the firm as newly constituted (Journal entries are not required)
Ans: Rev. Profit- 6,300 Capital 19,120, 18,120, 7,560, 3,000
27. A, B and C are partners sharing profits and losses in the ratio of 2:3:5. On 31st March, 2010
their balance sheet was;
Capital A/c: Cash 18,000
A 36,000 Bills Receivable 24,000
B 44,000 Furniture 28,000
C 52,000 1,32,000 Stock 44,000
Creditors 64,000 Debtors 42,000
Bills payable 32,000 Investments 32,000
Profit and loss a/c 14,000 Machinery 34,000
Goodwill 20,000
2,42,000 2,42,000
They admit D into Partnership on the following
i) Furniture, Investments and Machinery to be depreciated by 15%
ii) Stock is revalued at Rs. 48,000
iii) Outstanding rent amounted to Rs. 1,800
iv) Prepaid salaries Rs. 800
v) D bring in Rs. 32,000 as his capital and Rs. 6,000 for goodwill in cash for 1/6th of the share
future profits of the firm
vi) Adjustment of capitals to be made in cash
vii) Capital of the partners shall be proportionate to their profit sharing ratio taking D’s Capital as
base.
Prepare the revaluation account, partners’ capital accounts, cash account and the balance sheet of
the new firm.
28. A,B and C are partners sharing profits in the ratio of 4:3:1 Balance sheet as on 31st March
2010 is,
Creditors 70,000 Cash in Hand 80,000
bills payable 30,000 Cash at Bank 20,000
Workmen’s compensation 20,000 Stock 75,000
Reserve General reserve 80,000 Debtors 1,30,000
Capital A/c’s Less provision for doubtful 1,25,000
debts 5000
A 2,00,000 Building 1,50,000
B 3,00,000 Joint life policy 1,00,000
C 2,00,000 7,00,000 Investments 1,20,000
Plant and Machinery 2,30,000
9,00,000 9,00,000

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On the above date B retires from the firm selling his share of profit to A For Rs. 36,000 and to C for
Rs. 45,000 in the ratio of 4:5. For the purpose of B’s retirement it was agreed that:
i) Stock is to be appreciated by 20% and building by 10%
ii) Joint life policy is surrendered to the insurance company for Rs. 70,000
iii) Provision for doubtful debts is increased to 10%
iv) Investment are sold for Rs. 2,30,000
v) Claim on account of workmen’s compensation is Rs. 12,000
vi) Amount due to B is to be settled on the following basis; 50% on retirement and the balance
50% within one year.
vii) The capital of the newly constituted firm is fixed at Rs. 6,00,000 to be divide among A and C in
the profit sharing ratio.
Adjustment is to be made in cash, calculate the new profit sharing ratio and prepare the revaluation
account partners’ capital accounts.
Ans: Rev. Profit 1,10,000
29. P, Q and R have been in partnership for a number of years sharing profits in the ratio 6:5:3.
Work in progress was not brought into the accounts.
The balance sheet of the partnership as on 31st March, 1993 showed the following position:
Rs. Rs.
Capital Accounts: Fixed Assets 22,400
P 25,000 Goodwill 12,950
Q 18,000 Current assets:
R 8,700 Debtors 73,500
Sundry Creditors 67,600 Balance at Bank 10,450
1,19,300 1,19,300
On 31st March, 1993 P retired from the partnership and it was agreed to admit S as a partner on
the following terms:
i) Goodwill in the old partnership was to be revalued at two years purchase of the average profits
over last three years. The profits of the last three years have been Rs. 12,400, Rs. 13,600 and
Rs. 14,005. Goodwill was to be written off in the new company.
ii) P to take car out of the partnership assets at an agreed value of Rs. 1000. The car had been
included in the accounts as on 31st March 1993 at a written down value of Rs. 594
iii) Although work in progress had not been and will not be included in the partnership accounts,
the new partners were to credit P with his share based on an estimate that work in progress was
equivalent to 20% of the debtors
iv) The new partners Q, R and S were to share profits in the ratio of 5:3:2. The new capital is to be
Rs. 25,000 subscribed in the profit sharing ratio.
v) Q, R and S were each to pay P the sum of Rs. 5000 out of their personal resources in part
repayment of his share in the partnership
vi) P to lend to S any amount required to make up his capital in the firm from the monies due to
him and any further balance due to P was to be left in the new partnership as a loan bearing
interest at 9% per annum. Any adjustment required to the capital accounts of Q and R were to
be paid into or withdrawn from the partnership bank account.

14
i) The capital accounts in columnar form of the partners reflecting therein the adjustments
required on the change in partnership and
ii) Balance sheet on completion.
30. A,B and C are partners in a firm sharing profits and losses in the ratio of 4:2:1. Their
Balance Sheet on 31-12-92 stands as follows:
Rs. Rs.
Sundry Creditors 15,000 Cash at Bank 5,300
General Reserve 10,000 Sundry Debtors 18,000
Capital Accounts: Less: Provision 300 17,700
A 25,000 Stock in trade 20,000
B 18,000 Furniture 6,000
C 17,000 60,000 Plant and Machinery 16,000
Land and Building 20,000
85,000 85,000
The partners decide to alter their profit sharing ratio to 6:5:5 with effect from 1-1-93 and for that
purpose the following adjustments are agreed upon:
i) The provision for Bad debts is to be raised to 5 % of sundry debtors
ii) Stock, furniture and Plant and Machinery are to be reduced in value by 5 % , 10% and 5%
respectively
iii) Land and building are to be appreciated by Rs. 4000.
iv) There is a joint life policy of the partners the surrender value of which on 31-12-1992 was Rs.
10,000. The annual premium of Rs. 1,500 is charged to Profit and Loss Account.
v) The goodwill of the firm is to be valued at two years’ purchase of the average profits of the last
four years before charging insurance premium.
vi) There is a pending law suit against the firm for damaged goods and a liability of Rs. 1,400 is
likely to arise
The net divisible profit of the firm for the last four year are:
Rs Rs.
1989 15,000 1991 16,000
1990 18,000 1992 21,000
Show by a single journal entry how the accounts of the partners should be adjusted assuming that
the firm decides not to raise Goodwill or Policy account nor to alter any value of assets, claims or
reserves in the books. Also prepare the reconstituted Balance Sheet.
Ans: Debit B- 1,543 C-9,771 Credit A- 11,314
31. X, Y and Z were partners sharing profits and losses in the ratio of 3:2:1. The position of the
firm as on 1st January 1981 was:
X’s Capital 30,000 Fixed Assets 40,000
Y’s Capital 20,000 Debtors 30,000
Z’s Capital 10,000 Stock 40,000
General Reserve 12,000 Bank Balance 10,000

15
Capital Reserve 9,000

Creditors 39,000
1,20,000 1,20,000
On this date the partners decided to change their profit and loss sharing ratio to 1:2:3
Goodwill was valued at Rs. 18,000.
No entries were however passed to give effect to this change.
On 31st December 1981 the balance sheet of the firm were:
X’s Capital 30,000 Fixed Assets 36,000
Less Drawing 5,000 25,000 Debtors 45,000
Y’s Capital 20,000 Stock 55,000
Less Drawing 3,000 17,000 Advances 14,000
Z’s Capital 10,000
Less Drawing 4,000 6,000
General Reserve 36,000
Capital Reserve 9,000
Creditors 50,000
Bank Overdraft 7,000
1,50,000 1,50,000
On 31st December, 1981 the firm was sold as a going concern in Y for Rs. 1,35,000, Y introduced
sufficient funds to pay off X and Z.
You are asked to
1) Pass Journal entries on 31st December, 1981 to give effect to the above changes in the
constitution of the firm on 1-1-1981
2) Prepare the Balance Sheet of Y as on 1st January 1982.
32. A, B and C were partners in a firm sharing profits and losses in the ratio of 5:3:2
resepctively. A died on 29th February 2008. The balance sheet on that date was:
Capital A/cs: Machinery 35,000
A 12,000 Furniture 6,000
B 16,000 Stock 15,000
C 12,000 40,000 Debtors 15,000
General Reserve 12,000 Cash 3,000
Creditors 22,000
74,000 74,000
The firm had a joint life policy in the names of the partners for the insured value of Rs. 60,000.
The premium paid on the policy was debited to the profit and loss account. The Partnership Deed
provided that on the death of a partner the assets and liabilities are to be revalued.
The assets and liabilities were revalued as follows on A’s death:
i) Machinery Rs. 45,000 and Furniture Rs. 7,000
ii) A provision of 10% was created for doubtful debts

16
iii) A provision of Rs. 15,000 was made for taxation

iv) The goodwill of the firm was valued at Rs. 15,000 on A’s death
v) Death claim for policy was realized in full
The amount payable to A was transferred to his executor’s account. You are required to prepare
the Revaluation Account, Capital Accounts of the partners and the Balance sheet of B and C.
Ans: Transfer to executor -52,750
33. Ram, Sham and Mohan were partners sharing profits and losses in the ratio of 2:2:1. Their
Balance Sheet as on 1-1-1999 stood as follows:
Capital Accounts: Fixed Assets 1,00,000
Ram Stock 25,000
50,000 Debtors 35,000
Sham 1,20,000 Cash and Bank 10,000
40,000
Mohan
30,000
Reserves 10,000
Creditors 40,000
1,70,000 1,70,000
The firm had taken a Joint Life Policy for Rs. 1 Lacs, the premium amounts on which were charged
to the profit and loss account. On 1st July, 1999 Mohan died. His representatives agreed that;
i) Goodwill of the firm be valued at Rs. 50,000
ii) Fixed assets be written down by Rs. 10,000 and
iii) In lieu of profits up to 1st July, 1999, Mohan should be paid at the rate of 25% per annum on
his capital as on 1-1-1999.
The policy money was received on 31-12-1999 and Mohan’s heirs were paid the total amount due
on the same day. Current years(1999) profit after charging depreciation of Rs. 9,500 (Rs. 5,000
related to the 1st Half) was Rs. 40,500. The year end figures of stock, debtors and creditors and
cash and bank balances were respectively Rs. 33,000, 29,000, 35,000 and 66,217. The particulars
regarding their drawings are given below:
Up to 1-7-1999 After 1-7-1999
Ram 4,125 5,000
Sham 4,125 5,000
Mohan 1,750 -
Prepare the balance sheet of the firm as on 31st December 1999.
34. Following is the balance sheet of Black and White as on 31st March, 2008:
Rs. Rs.
Sundry creditors 20,000 Plant and Machinery 100,000
Reserve fund 32,000 Stock 40,000
Capital a/c’s Sundry debtors 60,000
black Cash at bank 50,000
100,000 Cash in hand 2000
brown 200,000
50,000

17
white
50,000
252,000 252,000
White died on 30th June, 2008. Under the terms of partnership deed, the executors of deceased
partner were entitled to:
(i) Amount standing to the credit to the Partner’s capital account
(ii) Interest on capital at 5% p.a.
(iii) Shares of goodwill on the basis of twice the average of the past three year’s weighted average
profits.
(iv) Share of profits from the closing of the last financial year to the last of death on the basis of
the last’s simple average profits.
(v) White share of goodwill will be adjusted to the accounts of Black and Brown who will maintain
a profit - sharing ratio of 2:1 in the new firm. They decided not to raise any goodwill account.
Profit for the year ended 31st March, 2006, 2007 and 2008 were Rs.80,000, Rs.90,000 and
Rs.100,000 respectively. Profits were shared in the ratio of capitals.
Pass the necessary journal entries and draw up white’s account to be rendered to his executors.
Ans: Transfer to executor -1,10,917
35. Ram, Rahim and Auntony in partnership sharing profits and losses in the ratio of 1/2 , 1/3
and 1/6 respectively. They decided to dissolve the partnership firm on 31-3-1998, when the
balance sheet of the firm appeared as under
Balance sheet of the firm as on 31-3-1998
Sundry creditors 5,67,000 Goodwill A/c 4,56,300
Bank overdraft 6,06,450 Plant & Machinery 6,07,500
Joint Life policy reserve 2,65,500 Furniture 64,650
Loan from Mrs.Ram 1,50,000 Stock 2,36,700
Capital Account 7,65,000 Sundry Debtors 5,34,000
Ram 4,20,000 Joint Life policy 2,65,500
Rahim 2,25,000 Commission 1,40,550
Auntony 1,20,000 Receivable
Cash on Hand 48,750
23,53,950 23,53,950
The following details are relevant for dissolution:
i) The joint life policy was surrendered for Rs. 2,32,500.
ii) Ram took over goodwill and plant and machinery for Rs. 9,00,000
iii) Ram also agreed to discharge bank overdraft and loan from Mrs.Ram.
iv) Furniture and stocks were divided equally between Ram and Rahim at an agreed
valuation of Rs. 3,60,000.
v) Sundry debtors were assigned to firm’s creditors in full satisfaction of their claims.
vi) Commission receivables was received in time,
vii) A bill discounted was subsequently returned dishonored and proved valueless. Rs.
30,750(including Rs. 500 noting charges).
viii) Ram paid the expenses of dissolution amounting to Rs.18,000.

18
ix) Auntony agreed to receive Rs. 1,50,000 in full satisfaction of his rights, title and interest
in the firm.
You are required to show the accounts relating to closing of books , on dissolution of the
firm.
Ans: Cash Payment Ram-1,63,410 Rahim-77,640
36. A, B, C carried on business in partnership sharing Profits and Losses in the ratio 1:2:3. They
decided to form a private limited company, AB (P) Ltd. And C is not interested to take over the
shares in AB (P) Ltd. The authorized share capital of the company is Rs. 12,00,000 divided into
12,000 ordinary shares of Rs. 100 each.
The company was incorporated and took over goodwill as valued and certain assets of the
partnership firm on 31.3.2006. The Balance Sheet of the partnership firm on that date was
as follows:
Capital Accounts: Fixed Assets:
A 1,00,000 Machinery 1,20,000
B 2,00,000 Land 1,74,000
C 3,00,000 Motorcycles 30,000
Current Accounts: Furniture & fittings 11,000
A 39,420 Current Assets:
B 60,580 Stock 2,35,000
A’s Loan A/c 28,000 Debtors 43,000
(+) interest accrued 2000 30,000 Cash in hand 87,000
Current Liability: C’s overdrawn 1,00,000
Creditors 70,000
8,00,000 8,00,000
C who retired was presented by the other partners (A and B) with one motorcycle valued in
the books of the firm Rs. 9,000. The remaining motorcycles were sold in the open market for
Rs. 13,000. C also received certain furniture for which he was charged Rs. 2,000. The
debtors which were all considered good were all taken over by C for Rs. 40,000. A and B were
charged in their profit sharing ratio for the book value of Motorcycle presented by them to C.
It was agreed that C who is not willing to take the shares in AB (P) Ltd. Was discharged first
by providing necessary cash. A and B should bring cash, if necessary.
AB (P) Ltd. Took over the remaining furniture and fittings at a price Rs. 13,000 the
machinery for Rs. 1,25,000, the stock at an agreed value of Rs. 2,00,000 and the land at its
book value. The value of the goodwill of the partnership firm was agreed at Rs. 88,000. The
creditors of the firm were settled by the firm for Rs. 70,000. A’s loan account together with
interest accrued was transferred to his capital account.
The purchase consideration was discharged by the company by the issue of equal number of
fully paid up equity shares at par to A and B.
Prepare Realization A/c, Capital A/c of the partners and Cash A/c. Also draw the Balance
Sheet of AB (P) Ltd.

19
Ans: Purchase Consideration 6,00,000 Realization Profit 51,000 Contribution A-

1,25,080 B-28,420
37. ‘X’ and ‘Y’ carrying on business in partnership sharing profits and losses equally wished to
dissolve the firm and sell the business to ‘X’ Limited Company on 31.3.2006, when the firm’s
position was as follows:
X’s Capital 1,50,000 Land and Building 1,00,000
Y’s Capital 1,00,000 Furniture 40,000
Sundry Creditors 60,000 Stock 1,00,000
Debtors 66,000
Cash 4,000
3,10,000 3,10,000
The arrangement with X Limited Company was as follows:
i) Land and Building was purchased at 20% more than the book value
ii) Furniture and Stock were purchased at book values less 15%
iii) The goodwill of the firm was valued at Rs. 40,000.
iv) The firms’s debtors cash and creditors were not to be taken over but the company agreed
to collect the book debts of the firm and discharge the creditors of the firm as an agent,
for which services, the company was to be paid 5% on all collections from the firm’s
debtors and 3% on cash paid to firms creditors.
v) The purchase price was to be discharged by the company in fully paid equity shares of Rs.
10 each at a premium of Rs. 2 per share.
The company collected all the amounts from debtors. The creditors were paid off less by Rs.
1000 allowed by them as discount. The company paid the balance due to the vendors in cash.
Realization account, the Capital accounts of the partners and the Cash account in the books of
partnership firm.
Ans: Realization Profit 34,930 PC-2,79,000
38. X, Y, and Z are partners of the firm XYZ and Co. sharing profits and Losses in the ratio of
4:3:2. Following is the Balance sheet of the firm as at 31st March, 2008:
Partners’ Capitals: Fixed Assets 5,00,000
X 4,00,000 Stock in trade 3,00,000
Y 3,00,000 Sundry Debtors 5,00,000
Z 2,00,000 Cash in hand 10,000
General Reserve 90,000
13,10,000 13,10,000
Partners of the firm decided to dissolve the firm on the above said date. It was found that a credit
purchase of Rs. 20,000 in January, 2008 had not been recorded in the books of the firm .

20
Fixed assets realized Rs. 5,20,000 and book debts Rs. 4,40,000.
Stocks were valued at Rs. 2,50,000 and it was taken over by partner Y.
Creditors allowed discount of 5% and the expenses of realization amounted to Rs. 6,000. You are
required to prepare:
i) Realization account
ii) Partners capital account and
iii) Cash account
Ans: Realization loss 99,000 Payment X-3,96,000 Y-47,000 Z-1,98,000
39. P, Q and R are partners sharing profits and losses in the ratio 2:2:1. Their balance sheet as
on 31st March, 2009 is as follows:
Capital Accounts: Plant and Machinery 1,08,000
P 1,20,000 Fixtures 24,000
Q 48,000 Stock 60,000
R 24,000 Sundry Debtors 48,000
Reserve Fund 60,000 Cash 60,000
Creditors 48,000
3,00,000 3,00,000
They decided to dissolve the firm. The following are the amounts realized from the assets.
Plant and Machinery 1,02,000
Fixtures 18,000
Stock 84,000
Sundry Debtors 44,400
Creditors allowed a discount of 5% and realization expenses amounted to Rs. 1,500. A bill Rs.
4,200 due for sales tax was received during the course of realization and this was also paid.
Realization account Partners capital account
Cash account
Ans: Realization profit 5,100 Payment P-1,46,000 Q-74,040 R-37,020
40. Ajay, Bijay, Ram and Shyam are partners in a firm sharing profits and losses in the ratio of
4:1:2:3. The following is their Balance Sheet as at 31st March, 1996.
Sundry Creditors 3,00,000 Sundry Debtors 3,50,000
Less: Doubtful Debts
50,000
3,00,000
Capital A/c Cash in hand 1,40,000
Ajay 7,00,000 Stocks 2,00,000

21
Shyam 3,00,000 10,00,000 Other Assets 3,10,000

Capital A/c
Vijay 2,00,000
Ram 1,50,000
13,00,000 13,00,000
On 31st March, 1996, the firm is dissolved and the following points are agreed upon:
i) Ajay is to take over sundry debtors at 80% of book value
ii) Shyam is to take over the stocks at 95% of the value and
iii) Ram is to discharge sundry creditors.
Other assets realize Rs.3,00,000 and the expenses of realization come to Rs. 30,000.
Vijay is found insolvent and Rs. 21,900 is realized from his estate
Prepare Realization Account and Capital Accounts of the partners. Show also the Cash A/c.
The loss arising out of capital deficiency may be distributed following the decision in garner vs.
murray.
Ans: Realization Loss 70,000 Loss of Vijay- 1,85,100 Ratio- Ajay : Shyam = 7:3
41. Neptune, Jupiter, Venus and Pluto had been carrying on business in partnership sharing
profits and losses in the ratio of 3:2:1:1. They decide to dissolve the partnership on the basis of
the following Balance Sheet as on 30th April 2003.
Capital Account Premises 1,20,000
Neptune 1,00,000 Furniture 40,000
Jupiter 60,000 1,60,000 Stock 1,00,000
General Reserve 56,000 Debtors 40,000
Capital Reserve 14,000 Cash 8,000
Sundry Creditors 20,000 Capital Overdrawn
Mortgage Loan 80,000 Venus 10,000
Pluto 12,000 22,000
3,30,000 3,30,000
i) The assets were realized as under:
Debtors 24,000
Stock 60,000
Furniture 16,000
Premises 90,000
ii) Expenses of dissolution amounted to Rs. 4,000

iii) Further creditors of Rs. 12,000 had to be met
iv) General Reserve unlike Capital Reserve was built up by appropriation of profits.
You are required to draw up the Realization Account, Partners Capital Accounts and the Cash
Account assuming that venus has became insolvent and nothing was realized from his private
estate. Apply the principles laid down in Garner vs Murray.
Ans: Realization Loss 1,26,000 Ratio- N : J = 13:8

22
42. The firm of Kapil and Dev has four partners and as of 31st March, 1995, its Balance sheet
stood as follows:
Capital A/c Land 50,000
F.Kapil 2,00,000 Building 2,50,000
S.Kapil 2,00,000 Office equipment 1,25,000
R.Dev 1,00,000 Computers 70,000
Current A/c: Debtors 4,00,000
F.Kapil 50,000 Stocks 3,00,000
S.Kapil 1,50,000 Cash at Bank 75,000
R.Dev 1,10,000 Other current assets 22,600
Loan from NBFC 5,00,000 Current a/c
Current Liabilties 70,000 B.Dev 87,400
13,80,000 13,80,000
The partners have been sharing profits and losses in the ratio 4:4:1:1. It has been agreed to
dissolve the firm on 1-4-1995 on the basis of the following outstanding:
i) The following assets are to be adjusted to the extent indicated with respect to the book
values
Land 200%
Building 120%
Computers 70%
Debtors 95%
Stocks 90%
ii) In the case of the loan, the lenders are to be paid at their insistence a pre-payment premium
of 1%
iii) B.Dev is insolvent and no amount is recoverable from him. His father R.Dev, however agrees
to bear 50% of his deficiency. The balance of the deficiency is agreed to be apportioned
according to law.
Assuming that the realization of the assets and discharge of liabilities is carried out immediately,
show the cash A/c, Realization A/c and the Partner’s A/c.
Ans: Realization Profit- 24,000 Ratio F:S:R=2:2:1 Deficiency- 85,000
43. The following is the balance sheet as at 30th June, 2000 of Lal, Parveen and Queen, Partners
of a firm sharing profits and losses equally.
Capital Accounts: Plant and 42,000
Lal20,000 Machinery
Parveen30,000 Building 18,000
Queen 5,000 55,000 Motor Car 3,200
Sundry Debtors 23,000
Current Account Stock-in-trade 21,000

23
Lal 16,000 Bank Balance 1,800

Parveen 18,000 34,000 Current Account:
Trade Creditors 17,600 Queen 7,800
Provision for payments of excise 8,400
duty
Creditors for expenses 1,800
1,16,800 1,16,800
The firm accepts an offer from z co. ltd. To take over the following assets at values given opposite
to each:
Plant and Machinery 30,000
Building 40,000
Stock-in-trade 18,000
The company agrees to discharge 75% of the consideration due in equity shares of Rs. 10 each
to be allotted at a premium of Rs. 1 per share. The balance of consideration will be retained by
the company, at an interest of 15% per annum, to be paid six months after the transfer is put
through.
The firm realizes its sundry debtors for Rs. 20,000; motorcar is taken by partner Lal at an
agreed value of Rs. 5000 paid by him in cash; expenses of realization met by the firm came to
Rs. 500; the liability to excise duty was finally discharged at Rs. 10,000.
Queen Private Assets are worth Rs. 15,000 and his individual liabilities and debts amount to Rs.
18,000.
Record the above transactions in the books of the firm and close the books assuming that the
transactions were all put through on 1st July 2000. Show the ledger accounts only. Rule in
Garner Vs. Murray is to be applied.
Ans: Realization Profit- 3,700 Purchase Consideration 88,000
44. A, B, C and D are sharing profits and losses in the ratio 5:5:4:2 frauds committed by C during
the year were found out and it was decided to dissolve the partnership on 31st March 2010
when their Balance sheet was as under:
Capital: Building 1,20,000
A 90,000 Stock 85,500
B 90,000 Investments 29,000
C - Debtors 42,000
D 35,000 Cash 14,500
General Reserve 24,000 C 15,000
Trade Creditors 47,000
Bills Payable 20,000
3,06,000 3,06,000
Following information is given to you:
i) A cheque for Rs. 4,300 received from debtor was not recorded in the books and was
misappropriated by C.

24
ii) Investments costing Rs. 5,400 were sold by C at 7,900 and the funds transferred to his
personal account. This sale was omitted from the firm’s books.
iii) A creditor agreed to take over investments of the book value of Rs. 5,400 at Rs. 8,400.
The rest of the creditors were paid off at a discount of 2%.
iv) The other assets realized as follows:
Building 105% of book value
Stock Rs. 78,000
Investments - the rest investments were sold at a profit of Rs. 4,800
Debtors - the rest of the debtors were realized at a discount of 12%
v) The bills payable were settled at a discount of Rs. 400
vi) The expenses of dissolution amounted to Rs. 4,900.
vii) It was found out that realization from C’s private assets would only be Rs. 4,000.
Prepare the necessary Ledger Accounts.
Ans: Realization Gain-548
45. A, B, C are partners in A & Company sharing profits and losses in the ratio 2:2:1 respectively.
The Balance Sheet of A & Company as at 31st March , 1993 is as follows:
Capital: Fixed Assets 2,00,000
A 1,46,000 Current Assets:
B 54,000 Stocks 1,25,000
C 50,000 Debtors 1,25,000
C’s loan account 25,000 Cash 5,000
Loan from Mrs. A 50,000 B’s Current A/c 20,000
Provision for Bad Debts 25,000
4,75,000 4,75,000
The firm was dissolved on the date of Balance Sheet due to continued losses. After preparing the
above balance sheet as on 31-3-1993 it was discovered that purchases amounting to Rs. 20,000
in March, 1993 were not recorded in books, though the goods were received during March 1993.
Fixed Assets realized Rs. 100,000, stocks Rs. 1,05,000 and debtors Rs. 102,500 creditors were
paid after deduction of discount @ 2%. The expenses of realization came to Rs. 5,400. A agreed to
take over the loan of Mrs. A, B is insolvent and his estate is unable to contribute anything.
Prepare the relevant accounts to close the books of A and Company applying the decisions of
Garner vs. Murray.
Ans: Realization Loss -1,20,000
46. Tilak, Sham and Farid were in partnership sharing profits and losses in the ratio of 2:2:1. On
30th September , 2000 their Balance sheet was as follows:
Capital Account: Premises 50,000
Tilak 80,000 Fixtures 1,25,000

25
Sham 50,000 Plant 32,500

Farid 20,000 1,50,000 Stock 43,200
Current Accounts: Debtors 54,780
Tilak29,700
Sham 11,300
Farid(Dr.)(14,500) 26,500
Sundry Creditors 84,650
Bank Overdraft 44,330
3,05,480 3,05,480
Tilak decides to retire on 30th September, 2000 and as Fraid appears to be short of private
assets, Sham decides that he does not wish to take over Tilak’s share of partnership so all three
partners decide to dissolve the partnership with effect from 30th September,2000. If then
transpires that farid has no private assets whatsoever.
The premises are sold for Rs. 60,000 and the plant for Rs. 1,07,500. The fixtures realize Rs.
20,000 and the stock is acquired by another firm at book value less 5%. Debtors realize Rs.
45,900. Realization expenses amount to Rs. 4,500.
The bank overdraft is discharged and the creditors are also paid in full.
You are required to write up the following ledger accounts in the partnership books following the
rules in Garner vs. Murray.
i) Realization Account
ii) Partners’ Current Account
iii) Partners’ Capital Accounts showing the closing of the firm’s books.
Ans: Realization Loss -35,540
47. Anand, Bharat and Charan have been suffering losses for many years on December 31, when
their balance sheet was drawn up as given below, they decided to dissolve up partnership. They
shared profits in the ratio of ½, 1/3, 1/6.
Capital accounts Fixed Assets
Anand3,000 Goodwill 3,000
Bharat 1,500 4,600 Fixture and 2,000
Charan100 furniture
Current accounts: Leasehold property 5,000
Anand500 Current Assets:
Bharat 200 Stock 10,000
Charan(Debit) 500 Debtors 25,000
(200) Cash 100
Current liabilities and provisions: 35,000
Trade Creditors 5,000
Bank overdraft
45,100 45,100
There was a contingent liability in respect of a suit filed against the partners for a sum of Rs.
1,000.

26
The furniture and fixtures realized Rs. 1,800 on auction. The leasehold property has only there
years to run. Anand agreed to take it over for Rs. 400. The stock realized Rs. 9,000 and Debtors
Rs. 20,000. In the balance of Debtors Rs. 5,000 was not bad, they were slow-paying. It was
mutually agreed that Anand and Bharat should equally take them over at their book values. The
liabilities were discharged at book values. The suit was decided against the firm and the firm paid
Rs. 1,000 to the complainant plus Rs. 80 on account of costs. Anand and Bharat were of means
but charan was insolvent and his estate paid divided of Rs. 25 P. in the rupee.
Prepare Realization Account and close off the books off the firm.
Ans: Realization Loss -9,880
48. P, Q, R and S has been carrying on business in partnership sharing profit and losses in the
ratio of 4:3:2:1. They decide to dissolve the partnership on the basis of following Balance Sheet
as on 30th April, 2011.
Capital Accounts Land and Building 2,46,000
P 1,68,000 Furniture and fixtures 65,000
Q 1,08,000 2,76,000 Stock 1,00,000
General Reserve 95,000 Debtors 72,500
Capital Reserve 25,000 Cash in hand 15,500
Sundry Creditors 36,000 Capital withdrawn:
Mortgage Loan 1,10,000 R 25,000
S 18,000 43,000
5,42,000 5,42,000
i) The assets were realized as under:
Land and building 2,30,000
Furniture and fixture 42,000
Stock 72,000
Debtors 65,000
ii) Expenses of dissolution amounted to Rs. 7,800
iii) Further creditors of Rs. 18,000 had to be met.
iv) R became insolvent and nothing was realized from his private estate
Applying the principles laid down in Garner vs. Murray, prepare the Realization Account,
Partner’s Capital Accounts and Cash Accounts.
Ans: Realization Loss -1,00,300
49. P, Q and R were partners sharing profits and losses in the ratio 3:2:1, no partnership salary or
interest on capital being allowed. Their balance sheet on 30th June, 2011 is as follows:
Fixed Capital Fixed Assets:
P 20,000 Goodwill 40,000
Q 20,000 Freehold property 8,000
R 10,000 50,000 Plant and equipment 12,800
Current Accounts: Motor Vehicle 7,00

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P 500 Current Assets:

Q 9,000 9,500 Stock 3,900
Loan from P 8,000 Trade Debtors 2,000
Trade Creditors 12,400 Less: Provision 100 1,900
Cash at Bank 200
Miscellaneous losses:
R’s Current Account 400
Profit and loss account 12,000
79,900 79,900
On Ist July, 2011 the partnership was dissolved. Motor Vehicle was taken over by Q at a value of
Rs. 500 but no cash passed specifically in respect of this transaction. Sale of other assets
realized the following amounts:
Particulars Amount
Goodwill Nil
Freehold property 7,000
Plant and equipment 5,000
Stock 3,000
Trade Debtors 1,600
Trade creditors were paid Rs. 11,700 in full settlement of their debts. The costs of dissolution
amounted to Rs. 1,500. The loan from P was repaid, P and Q were both fully solvent and able to
bring in any cash required but R was forced into bankruptcy and was only able to pay his
creditors 1/3 of the amount due.
You are required to show:
a) Cash and Bank Account
b) Realization Account and
c) Partners fixed and Current Accounts.
50. Amal and Bimal are in equal partnership. Their Balance Sheet stood as under on 31st March,
2011 when the firm was dissolved:
Creditors A/c 4,800 Plant and Machinery 2,500
Amal’s Capital A/c 750 Furniture 500
Debtors 1,000
Stock 800
Cash 200
Bimal’s Drawings 550
5,550 5,550
The assets realized as under:

Particulars Amount
Plant and machinery 1,250
Furniture 150

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Debtors 400
Stock 500
The expenses of realization amounted to Rs. 175. Amal’s private estate is not sufficient even to
pay his private debts, whereas Bimal’s private estate has a surplus of Rs. 200 only.
51. A, B, C and D were partners sharing profits and losses in the ratio of 3:3:2:2. Following was
their Balance Sheet as on 31.12.2009:
Capital Accounts: Capital Accounts:
A 60,000 C 48,000
B 45,000 1,05,000 D 18,000 66,000
Creditors 46,500 Furniture 12,000
A’s Loan 30,000 Trademarks 21,000
Stock 30,000
Debtors 48,000
Less: Provision for -
Doubtful debts 1,500 46,500
Bank 6,000
On 31.12.2009, the firm was dissolved and B was appointed to realize the assets and to pay off
the liabilities. He was entitled to receive 5% commission on the amount finally paid to other
partners as capital. He agreed to bear the expenses of realization. The assets were realized as
follows: Debtors Rs. 33,000; Stock Rs. 24,000; Furniture Rs. 3,000; Trademarks Rs. 12,000.
Creditors were paid off in full, in addition, a contingent liability for bills receivable discounted
materialized to the extent of Rs. 7,500. Also there was a joint life policy for Rs. 90,000. This was
surrendered for Rs. 9000. Expenses of realization amounted to Rs. 1,500. C was insolvent but
Rs. 11,100 was recovered from his estate.
Prepare Realization Account, Bank Account and Capital Accounts of the partners.
52. Anand and Bhupesh were carrying on business as equal partners. The firm’s Balance Sheet as
on 31st December, 1999 was as follows:
Capital Account: Fixed Assets:
Anand 1,38,000 LeaseholdBuilding 80,000
Bhupesh 1,52,000 Plant and Machinery 1,80,000
Bank Loan 40,000 Furniture 20,000
Current Liabilities : Current Assets:
Sundry Creditors 70,000 Stock 60,000
Bills Payable 10,000 Book Debts 68,000
Cash at Bank 2,000
4,10,000 4,10,000

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The business was carried on till 30th June, 2000. The partners withdrew in equal amounts half
the amount of profits made during the period of six months(from January 2000) after charging
depreciation on:
Leasehold building 10% per annum
Plant and machinery 10% per annum
Furniture 10% per annum
Meanwhile sundry creditors were reduced By Rs. 15,000, Bills payable by Rs. 2,500 and Bank
loan by Rs. 20,000.
On 30th June stock was valued at Rs. 70,000, book debts were Rs. 75,000 and Cash at bank was
2,500.
On 30th June 2000, the firm sold the business to a limited company for Rs. 4,00,000 payable in
equity shares of Rs. 10 each. The partners decided to take shares in the profits sharing ratio, any
difference to be settled in cash.
i) Balance sheet as on 30th June , 2000
ii) Statement of profit earned during the period six months ended on 30-6-2000.
iii) Realization Account
iv) Capital Accounts of the partners.
Ans: Net Profit earned -82,000
53. Mr.Malik and Mr.Dinesh were carrying on business as equal partners. The firms Balance sheet
as on 31st December, 1999 was as follows:
Sundry Creditors 65,500 Stock 54,000
Bank Overdraft 30,000 Plant and Machinery 1,82,000
Bills payable 12,500 Office furniture 15,000
Capital Accounts: Book Debts 73,000
Malik 1,50,000 Joint Life Policy 9,500
Dinesh 1,48,000 Leasehold premises 34,500
Profit and loss a/c(debit balance) 26,000
Drawings account: 9,000
Malik 3,000
Dinesh
4,06,000 4,06,000
The business was carried on till 30th June 2000. The partners withdraw in equal amounts half
the amount of profits made during the period of six months(from January-June 2000) after 10%
p.a. had been written off leasehold premises, 10% p.a. off plant and machinery and 5% p.a. off
office furniture. Meanwhile sundry creditors were reduced by Rs. 10,000.
On 30th June 2000 stock was valued at Rs. 63,400. Bill payable was reduced by Rs. 2,300 and
Bank overdraft by Rs. 15,000. Book Debts were valued at Rs. 65,000. The joint life policy was
realized for Rs. 9,500 and other items remained the same as on 31st December, 1999.
On 30th June 2000 the firm sold the business to a limited company. The value of the goodwill
was estimated at Rs. 1,08,000 and the rest of the assets were valued on the basis of the Balance

30
Sheet as on 30th June, 2000. The company paid the purchase consideration in fully paid equity
shares of Rs. 10 each, at par.
You are required to prepare a Realization Account and Capital Account of the partners as on 30th
June, 2000.
Ans: Profit earned during the period -35,000
54. X, Y and Z are partners sharing profits and losses as 2:1:1. Their Balance Sheet as on 31st
March, 2002 is as below:
Partner’s Capital: Goodwill 15,000
X 90,000 Machineries 75,000
Y 60,000 Investments 5,000
Z 10,000 Current Assets:
Bills Payable 30,000 Cash at Bank 5,000
Sundry Creditors 50,000 Debtors 80,000
Stock 60,000
2,40,000 2,40,000
Repairs Rs. 20,000 incurred three years ago was treated as capital expenditure and debited to
machinery account. Stocks are overvalued by Rs. 10,000. Depreciation at 10% p.a. was charged
on machinery on diminishing balance. Rs. 10,000 collected from debtors was not recorded in
books but taken by Z. The accounts are rectified and then XY ltd. Is formed to take over the
business. Y is to take the investments at Rs. 3000. X will pay the creditors. Bills payable would
be paid by X and Y in their profit sharing ratio.
Goodwill and stocks are valued at Rs. 12,000 and Rs. 42,580 respectively. Debtors are taken at
10% below book value, whereas other assets except cash at bank to be considered at their book
values. XY ltd. Is to pay the firm by issue of equity shares of Rs. 10 each. Z is insolvent, Y agreed
to take 6,000 shares and balance taken over by X. Show profit and loss adjustment account,
realization account and partner’s capital account in the books of the firm.
55. The following is the Balance sheet of Anand, Bharat and Cheema on 31st December, 2000 when
they decided to dissolve the partnership.
Creditors 2,000 Sundry Assets 48,500
Anand Loan 5,000 Cash 500
Capital Account:
Anand 15,000
Bharat 18,000
Cheema 9,000
49,000 49,000
The assets realized the following sums in installments:
I 1,000
II 3,000

31
III 3,900
IV 6,000
V 20,100
34,000
The expenses of realization were expected to be Rs. 500 but ultimately amounted to Rs. 400 only.
Show how at each stage the cash received should be distributed between partners. They share
profits in the ratio of 2:2:1.
56. The firm of LMS was dissolved on 31-3-1995, at which date its Balance Sheet stood as follows:
Creditors 2,00,000 Fixed Assets 45,00,000
Bank Loan 5,00,000 Cash and Bank 2,00,000
L’s Loan 10,00,000
Capital
L 15,00,000
M 10,00,000
S 5,00,000
47,00,000 47,00,000
Partners share profits equally. A firm of Chartered Accountants is retained to realize the assets
and distribute the cash after discharge of liabilities. Their fees which are to include all expenses
is fixed at Rs. 1,00,000. No loss is expected on realization since fixed assets include valuable land
and building.
S.No. Rs.
1 5,00,000
2 15,00,000
3 15,00,000
4 30,00,000
5 30,00,000
The chartered accountant firm decided to pay off the partners in ‘Higher Relative Capital
Method’ You are required to prepare a statement showing distribution of cash with necessary
workings.
Ans: Realization Profit- L,M&S 16,33,333 each
57. The partners Amit, Bhatia and Charan have called upon you to assist them in winding up the
affairs of their partnership on 30th June, 2000. Their Balance Sheet as on that date is given
below:
Sundry Creditors 17,000 Cash at Bank 6,000
Capital Accounts: Sundry Debtors 22,000
Amit 67,000 Stock in trade 14,000
Bhatia 45,000 Plant and equipment 99,000
Charan 31,500 Loan-Amit 12,000
Loan-Bhatia 7,500

32
1,60,500 1,60,500
i) The partners share a profit and losses in the ratio of 5:3:2
ii) Cash is distributed to the partners at the end of each month.
iii) A summary of liquidation transactions are as follows
July 2000
Rs. 16,500- collected from Debtors; balance is un-collectable.
Rs. 10,000- received from sale of entire stock
Rs. 1,000-Liquidation expenses paid
Rs. 8,000- cash retained in the business at the end of the month.
August 2000
Rs. 1,500-liquidation expenses paid. As part payment of his capital, charan accepted a piece of
equipment for Rs. 10,000(book value Rs. 4,000)
Rs. 2,500- cash retained in the business at the end of the month.
September 2000
Rs.75,000- received on sale of remaining plant and equipment
Rs. 1,000-liquidation expenses paid. No cash retained in the business.
Required: Prepare a schedule of cash payments as of September 30, showing how the cash was
distributed. Apply HCRM.
58. The firm of Richa presented you with the following Balance Sheet drawn as at 31st March,
1998.
Sundry Creditors 37,000 Cash on hand 3,000
Capital Accounts: Sundry Debtors 34,000
Akram40,000 Stock in trade 39,000
Balram30,000 Plant and Machinery 51,000
Charan27,000 97,000 Current Account:
Balram4,000
Charan3,000 7,000
1,34,000 1,34,000
Partners shared profits and losses in the ratio of 4:3:3. Due to difference among the partners it
was decided to wind up the firm, realize the assets and distribute cash among the partners at the
end of each month.
The following realization was made:
i) May 1998- Rs. 15,000 from debtors and Rs. 20,000 by sale of stock. Expenses on
realization were Rs. 500.
ii) June 1998- Balance of debtors realized Rs. 10,000. Balance of stock fetched Rs. 24,000.
iii) August 1998- part of machinery was sold for Rs. 18,000. Expenses incidental to sale were
Rs. 600.
iv) September 1998- Part of machinery valued in the books at Rs. 5000 was taken by Akram
in part discharge at an agreed value of Rs. 10,000. Balance of machinery was sold for Rs.
30,000(net)

33
Partners decided to keep minimum cash balance of Rs. 2,000 in the first 3 months and
Rs. 1,000 thereafter.
Show the amount due to partners will be settled. All working should from part of your
answer.
59. A, B and C are partners sharing profits and losses in the ratio of 5:3:2. Their capitals were Rs.
9,600 ; Rs.6000 ; Rs. 8,400 respectively.
After paying creditors, the liabilities and assets of the firm were;

Liabilities for interest on loans: Investments 1,000
Spouses of partners 2,000 Furniture 2,000
Machinery 1,200
Partners 1,000
Stock 4,000
The assets realized in full in the order in which they are listed above. B is insolvent.
You are required to prepare a statement showing the distribution of cash as and when available,
applying maximum possible loss procedure.
60. Daksh Associates is a reputed firm. On account of certain misunderstanding between the
partners, it was decided to dissolve the firm as on 31st December, 2009 was as follows:
Capitals: Land and building 7,00,000
Daksh3,00,000 Other fixed assets 3,00,000
Yash2,00,000 Stock in trade 2,00,000
Siddhart(Minor) 1,00,000 6,00,000 Debtors 4,00,000
Trade Loans 3,00,000 Bills receivables 1,50,000
Bank overdraft 3,00,000 Goodwill 30,000
Other loans 2,00,000
Creditors 2,00,000 Cash 20,000
Siddhart’s loan 2,00,000
18,00,000 18,00,000
It was decided that Mr.Daksh shall be in-charge of Realization. He shall set apart Rs. 10,000
towards expenses; He shall be paid a remuneration of 5% on the amounts distributed to the
partners towards their contribution other than loans. Assets realized are as under:
Date Particulars Amount
1-1-2010 Debtors 3,50,000
15-1-2010 Fixed Assets 4,00,000
1-2-2010 Debtors 50,000
15-2-2010 Bills Receivable 1,40,000
1-3-2010 Fixed Assets 50,000
15-3-2010 Land and Buildings 8,00,000

34
Prepare a statement showing how the money received on various dates will be distributed
assuming:
a) The actual expenses of realization amounted to Rs. 20,005.
b) The firm is solvent.
c) The profit sharing ratio was as under:
Profit Loss
Daksh 2 1
Yash 2 1
Siddhart 1 Nil
5 2
d) The final dissolution is made on 15th March, 2010.
Ans: Realization Loss D-19,050 Y-19,050
61. Amar, Akbar and Antony are in partnership. The following is their Balance Sheet as at March
31, 2010 on which the date they dissolved their partnership. They shared profit in the ratio of
5:3:2;
Creditors 80,000 Plant and Machinery 60,000
Loan A/c amar 20,000 Premises 80,000
Capital A/cAmar 1,00,000 Stock 60,000
Akbar 30,000
Debtors 1,20,000
Antony 90,000
3,20,000 3,20,000
It was agreed to repay the amounts due to the partners as and when the assets were realized
Viz. April 15, 2010Rs. 60,000
May 1, 2010Rs. 1,46,000
May 31, 2010Rs. 94,000
Prepare a statement showing how the distribution should be made under maximum loss method
and writeup the cash account and partners capital accounts.
62. Their Balance Sheet as at 31-3-97 is as follows

(Rs. 000)
Fixed Capital Fixed Assets 300
A 200 Investments 50
B 100 Current Assets:
C 100 400 Stock 100
Current Accounts: Debtors 60
A 40 Cash and bank 150 310
B 20 60
Unsecured Loans 200
660 660

35
On 1-4-97 it agreed among the partners that BC (P) Ltd. A newly formed company with B and C
having each taken up 100 shares of Rs. 10 each will take over the firm as a going concern
including goodwill but excluding cash and bank balances. The following points are also agreed
upon:
i) Goodwill will be valued at 3 years purchase of super profits.
ii) The actual profit for the purpose of goodwill valuation will be Rs. 1,00,000.
iii) Normal rate of return will be 15% on fixed capital
iv) All other assets and liabilities will be taken over at book values.
v) The purchase consideration will be payable partly in shares of Rs. 10 each and partly in
cash. Payment in cash being to meet the requirement to discharge A, who has agreed to
retire.
vi) B and C are to acquire equal interest in the new company
vii) Expenses of liquidation Rs. 40,000
You are required to prepare the necessary Ledger Accounts.
63. P and Q are partners of P & Co. Sharing profit and losses in the ratio of 3:1 and Q and R are
partners of R & Co. sharing profits and losses in the ratio of 2:1. On 31st March 2009 they
decide to amalgamate and form a new firm M/s PQR and Co. wherein P, Q, and R would be
partners sharing profits and losses in the ratio of 3:2:1. The balance sheets of two firms on the
above date are as follows:
Liabilities P&co. R&co. Assets P&co. R&co.
Capitals: Fixed Assets:
P 2,40,000 - Building 50,000 60,000
Q 1,60,000 2,00,000 Plant & Machinery 1,50,000 1.60.000
R - 1,00,000 Office equipment 20,000 6,000
Reserve 50,000 1,50,000 Current Assets:

Stock In Trade 1,20,000 1,40,000
Sundry Debtors 1,60,000 2,00,000
Sundry 1,20,000 1,16,000 Bank Balance 30,000 90,000
Creditors Cash in Hand 20,000 10,000
Due to P & Co. - 1,00,000 Due from R & Co. 1,00,000 -
Bank Overdraft 80,000 -
Total 6,50,000 6,66,000 6,50,000 6,66,000
The amalgamated firm took over the business on the following terms:
a) Building of P& co was valued at Rs. 1,00,000
b) Plant and Machinery of P & Co was valued at Rs. 2,50,000 and that of R & Co at Rs.
2,00,000.
c) All stock in Trade is to be appreciated by 20%.
d) Goodwill valued of P&Co at Rs. 1,20,000 and R&Co at Rs. 60,000 but the same will not
appear in the books of PQR&Co.
e) Partners of new firm will bring the necessary cash to pay other partners to adjust their
capitals according to the profit sharing ratio.

36
f) Provisions for doubtful debts has to be carried forward at Rs. 12,000 in respect of debtors of
P&Co and Rs. 26,000 in respect of debtors of R&Co.
You are required to prepare the balance sheet of new firm and capital account of the partners in
the books of old firms.
64. A and B are partners of AB&Co sharing profits and losses in the ratio of 2:1 and C and D are
partners of CD&Co sharing profits and losses in the ratio of 3:2 on 1st April 2011 they decided
to amalgamate and from a new firm M/s AD&Co wherein all the partners of the both the firm
would be partners sharing profits and losses in the ratio of 2:1:3:2 respectively to A,B,C and D.
Their balance sheets on that date were as under:

Liabilities AB&CoRs. CD&CoRs. Assets AB&CoRs. CD&CoRs.
Capitals: Building 75,000 90,000
A 1,50,000 Machinery 1,20,000 1,00,000
B 1,00,000 Furniture 15,000 12,000
C - 1,20,000 Stock 24,000 36,000
D - 80,000 Debtors 65,000 78,000
Reserve 66,000 54,000 Due from 47,000 -
CD&Co
Creditors 52,000 35,000 Cash at Bank 18,000 15,000
Due to AB&Co - 47,000 Cash in hand 4,000 5,000
3,68,000 3,36,000 3,68,000 3,36,000
a) Building was taken over at Rs. 1,00,000 and Rs. 1,25,000 of AB&co and CD&Co respectively.
And Machinery was taken over at Rs. 1,25,000 and Rs. 1,10,000 of AB&Co and CD&Co
respectively.
b) Goodwill of AB&Co was worth Rs. 75,000 and that CD&Co was worth Rs. 50,000. Goodwill
account will not be opened in the books of the new firm the adjustments being recorded
through capital accounts of the partners.
c) Provision for doubtful dabts has to be carried forward at Rs. 5,000 in respect of debtors of
AB&Co and Rs. 8,000 in respect of CD&Co.
You are required to:

i) Compute the adjustment necessary for goodwill
ii) Pass the journal entries in the books of AD&Co assuming that excess/deficit
capital(taking D’s Capital as base) with reference to share in profit are to be transferred
to current account.
65. Bharat and sudesh are partners of sudesh& co. sharing profits and losses in the ratio of 3:1
sudesh and tilak are partners of tilak&co sharing profits and losses in the ratio of 2:1
On 31st October, 1998, they decided to amalgamate and form a new firm m/s BST&Co
wherein Bharat, sudesh and tilak would be partners sharing profits and losses in the ratio of
3:2:1 their balance sheets on that date were as under:
Liabilities Sudesh&Co Tilak&Co Assets Sudesh&Co Tilak&Co

37
Due to A&Co 40,000 - Cash in hand 10,000 5,000

Due to - 50,000 Cash at Bank 15,000 20,000
sudesh&Co
Others Creditors 60,000 48,000 Due from 50,000 -
Tilak&C0
Reserve 25,000 60,000 Due from A&Co - 30,000
Capitals:
Bharat 1,20,000 -
Others Debtors 80,000 1,00,000
Sudesh 80,000 1,00,000
Tilak - 50,000
Stock 60,000 70,000
Furniture 10,000 3,000
Vahicles - 80,000
Machinery 75,000 -
Building 25,000 -
3,25,000 3,08,000 3,25,000 3,08,000
(a) Goodwill of sudesh&Co. was worth Rs. 60,000 and that of Tilak& Co. Rs. 90,000. Good will
account was not to be opened in the books of the new firm , the adjustments being recorded
through capital accounts of the partners.
(b) Building machinery and vehicles were teken over at Rs. 50,000. Rs 90,000 and Rs.
1,00,000 respectively.
(c) Provision for doubtful debts has to be carried forwad at Rs. 4,000 in respect of debtors of
Sudesh& Co. and Rs. 5,000 in respect of debtors of Tilak& Co.
You are required to :
(i) Compute the adjustments necessary for goodwill
(ii) Pass the journal entries in the books of BST & Co. assuming that excess /deficit (T’s
Capital as base ) with reference to share in profits are to be transferred to current
accounts.
66. On 31st March 2010, Sri Ramesh acquires on payment of Rs. 80,000 the business of M/S
Gupta and Singh taking over at book value the following assets and liabilities:
RS
Debtors 35,000
Furniture 3,000
Stock 46,000
Creditors 10,000
There was no change between 1st January, 2010 and 31st March, 2010 in the book value of the
assets and liabilities not taken over.
The same sets of books has been continued after the acquisition and no entries of the acquisition
have been passed except for the payment of Rs. 80,000 made by Sri Raman.
From the following balance sheet and trial balance prepare Business Purchase Account. Profit and
Loss Account for the year ended 31st December , 2010 and Balance Sheet at that date

38
Balance Sheet as at December, 2009

Liabilities Assets
Capital Furniture 3,000
Accounts
Sri Gupta 30,000 Investments 5,000
Sri Singh 20,000 50,000 Insurance 2,000
Policy
Bank Loan 18,000 Stock 40,000
Creditors 12,000 Debtors 30,000
80,000 80,000
On 31st December 2010 the trial balance is:

RS. RS.
Stock Furniture 40,000
Investment 3,000
Insurance Policy 5,000
Business Purchase Account 2,000
Bank Loan 80,000
Capital: 18,000
Gupta 30,000
Singh 20,000
Raman 30,000
Bankl 3,000
48,000
Debtors
Creditors 15,000
Purchases 3,20,000
Expenses 12,000
Sales 4,00,000
Closing Stock Rs. 50,000
5,13,000 5,13,000
67. The following is the balance sheet of M/S. Anand and Bhupesh as on 31st March 1999.
Capital Account: Land and building 50,000
Anand40,000 Stock 30,000
Bhupesh50,000 90,000 Debtors 20,000
Anand Loan 10,000 Investment 6% debenture in X 20,000
ltd.
General Reserve 10,000 Cash 10,000
Liabilities 20,000
1,30,000 1,30,000

39
It was agreed that Mr.Cheema is to be admitted for a fifth share in the future profits from 1st
April 1999. He is required to contribute cash towards goodwill and Rs. 10,000 towards capital.
The following further information is furnished
a) The partners Anand and Bhupesh shared the profit in the ratio 3:2
b) Mr.Anand was receiving a salary of Rs. 500 p.m from the very inception of the firm in
addition to share of profit.
c) The future profit ratio between Anand and Bhupesh, cheema will be 3:1:1. Mr.Anand will not
get any salary after the admission of Mrs.Cheema.
d) The good will of the firm shall be determined on the basis of 2 years purchase of the average
profit from business of the last 5 years. The particulars of the profits are as under:
Year ended 31-03-1995 Profit 20,000
Year ended 31-03-1996 Loss 10,000
Profit and loss after charging salary of Mr.Anand. The profit of the year ended on 31-03-
1999 included abnormal profit of 30,000 and loss of the year 31-03-1996 was on account of loss
by strike to the extent of Rs. 20,000.
It was agreed that the value of the goodwill of the firm shall appear in the books of the firm
e) The trading profit for the year ended 31st March, 2000 was Rs. 40,000 before depreciation.
f) The partners had drawn each Rs. 1,000 p.m. as drawings.
g) The value of the other assets and liabilities as on 31st March, 2000 were as under:
Building(before depreciation) 60,000
Stock 40,000
Debtors Nil
Investment 20,000
Liabilities Nil
h) Provide depreciation at 5% on land and buildings on the closing balance and interest at 6%
on Anand Loan.
i) They applied for conversion of the firm into a private limited company. Certificate received on
01-04-200. They decided to convert Capital A/c of the partners into share capital in the ratio
of 3:1:1 on the basis of total capital as on 31-03-2000. If necessary partners have to
subscribe to fresh capital or withdraw.
Prepare the Profit and Loss Account for the year ended 31st March, 2000 and the Balance
Sheet of the Company.
Assume investment was held since 01-04-1994 and are non trade in nature.
68. Parveen, Queen and Ram were in partnership sharing profits and losses equally and their
Balance Sheet was as follows as on 31st December, 1999.
Capital Account: Cash 2,000
Parveen50,000 Stock 18,000

40
Queen 40,000 Book Debts 7,500

Ram 30,000 1,20,000 Investments 12,500
Creditors 7,000 Factory:
Staff Security Deposits 8,000 SectionI
Staff Provident Fund 7,900 32,000 72,000
Section II40,000
Profit and Loss Account 5,100 Vehicles 28,000
Fixed Bank Deposits of
staff securities 8,000
1,48,000 1,48,000
As proposals for expansion were being considered, Ram decided to retire and start a similar
business subject to the following terms:
I) Stock was revalued at 20 percent less and investments at 10 percent less.
II) A debt of Rs. 2,500 due to the firm was suspected to be bad ; but since it was allowed at Ram’s
instance Ram agreed to collect it himself, the firm however agreeing to value it at 10% less
III) One of the vehicles fully depreciated but still in operation was to be raised to its scrap value of
Rs. 3,000 and given to Ram in Part payment of his dues from the firm
IV) Ram’s salary as Marketing Chief was raised by Rs. 500 a month from 1st January, 1999 on
the understanding that he would continue in the firm for at least three years from that date
and that if he retired within that period he should return to the firm half of the additional
salary he drew since 1st January 1999
V) The partnership agreement stipulated that any retiring partner going into similar business
outside should pay the firm a consolidated payment of Rs. 9,000 at the time of retirement. The
amount was to be shared between the continuing partners in the ratio of their capital before all
adjustments were given effect to.
As soon as the amount due from the firm to Ram was finally arrived at, Parveen and Queen
disposed of the investments whose market value at the time of sale stood at Rs. 12,000 and they
introduced cash in equal amounts in such a way that not only was Ram’s claim fully settled but
the firm had a total cash balance of Rs. 7,000. After selling Ram’s account on retirement
Parveen and Queen decided on converting their business into a joint stock company.
Negotiations were carried on with Sumit and Tilak who agreed to join the business on the
following conditions
a) Factory section I being uneconomical should be replaced by modern equipment which sumit
and Tilak will supply at a price of Rs. 65,000 Sumit and Tilak would buy up factory section II
at Rs. 35,000 the d….charges of Rs. 2,000 being borne by the firm of Parveen and Queen.
b) For the rest of their claims Sunil and Tilk would take equity shares in the new company.
The Parveen and Queen Co. Ltd would have an authorized capital of Rs. 2,00,000 divided into
shares of Rs. 10 each. It was decided that Parveen and Queen would get equity shares at par for
their capital account balanced. The shares other than those given in Parveen and Queen and
Sumit and Tilak were subscribed for by the public and paid up fully in cash.
You are required to show:
a) Capital Account of Parveen, Queen and Ram and profit and loss adjustment account in the
firm’s books
b) Balance sheet of Parveen and Queen immediately on Ram’s retirement and

41
c) The opening Balance Sheet of the Parveen and Queen Co. Ltd.
69. Arun , Sntosh and Prabin are in partnership sharing in the proportion of ½, 1/3, 1/6
respectively. They dissolve the partnership of the Ashadh 31, 2070, when the statement of
Financial Position of the firm stood as under:
Statement of Financial Position as on Ashadh 31, 2070
Liabilties (Rs) Assests (Rs)
Sundry creditors 30,000 Bank 37,500
Bills payable 25,000 Sundry Debtors 58,000
Santosh’s loan 40,000 Stock 39,500
Capital Investment 42,000
- Arun 90,000 Machinery 48,000
- Santosh 75,000 Freehold property 90,000
- Prabin
55,000
Total 315,000 315,000
The machinery was taken over by Santosh for Rs. 45,000. Arun took over the investment for Rs.
40,000 and freehold property took over by Prabin at Rs. 95,000. The remaining assets realized as
follows: Sundry Debtors Rs. 56,500 abd Stock Rs. 36,500. Sundry creditors were settled at discount
of 5%. Bills payable is taken over by Prabin for Rs.23,000. There liabilities amounting to Rs. 3,000
not shown in books are also to be paid. An office computer, not shown in the books of accounts,
realized Rs. 19,000. Realisation expenses amounted to Rs.6,000.
Prepare realization account, partners’ capital account, and bank account.
70. Ram, Shyam and Pitamber were in partnership sharing profits and loss in the ratio of ½, 1/3
and 1/6 respectively. Due to certain differences between the partners, it was decided to dissolve
the partnership firm on 31.03.2070, when the Statement of Financial Position of the firm was as
follows:
Statement of Financial Position as on 31.03.2070
Sundry creditors 567,000 Goodwill 450,300
Bank overdraft 606,450 Plant and machinery 607,500
Joint life policy 265,500 Furniture 64,650
reserve Stock 236,700
Loan form Mrs. Ram 150,000 Sundry debtors 534,000
Capital accounts: Joint life policy 265,000
Ram 420,000 Commission 140,550
Shyam 225,000 receivable
Pitamber 120,000 Cash on hand 48,750
Total 2,353,950 2,353,950
The following details are relevant for the dissolution:

42
a. Sundry debtors were assigned to firm’s creditors in full satisfaction of their claims.
b. Ram took over goodwill and plant and machinery for Rs.900, 000. He also agreed to
discharge bank overdraft and loan from his wife.
c. Furniture and Stock were divided equally between Ram and Shyam at an agreed valuation of
Rs. 360,000.
d. Commission receivable was received in time.
e. A bill discounted was dishonored and thereafter it proved valueless, amounting to Rs. 30,750
(including notice charge of Rs. 500).
f. The joint policy was surrendered for Rs. 232,500.
g. Ram paid Rs.18,000 towards the expenses of dissolution.
h. Pitamber agreed to receive Rs.150,000 in full satisfaction of his rights, title and interest in
the firm.
You are required to show the accounts relation to closing of the books on dissolution of the firm.
71. Akhilesh, Bhaskar and Chandra carried their business on partnership and on Ashadh
32,2069, their Statement of financial Position was as follows:
Liabilties Rs. Rs. Assests Rs. Rs.
Partner’s Capital A/Cs 30,000 Fixed Assets:
Akhilesh 25,000 Land and Building 10,000
Bhasker 18,750 Plant and 20,000
Chandra 73,750 machinery 3,750 33,750
Sundry Creditors 11,250 Loose Tools
Akhilesh’s Loan 15,000 Current Assets:
Inventory 25,000
Debtors 35,000
Cash at Bank 6,250 66,250
Total 1,00,000 1,00,000
They decided to dissolve the firm on Ashadh 32,2069. Bhaskar and Chandra continued the
business, agreeing to purchase Akhilesh’s share of capital of the firm in the proportions in which
they shared profits and losses are shared: Akhilesh’s 2/5, Bhaskar 2/5 and Chandra 1/5. Bhaskar
and Chandra utilize the cash at bank to pay Akhilesh and contribute the balance.
For the purpose of dissolution, the following valuations were made:-
Particulars Amount
Goodwill 12,500
Land and Building 11,250
Inventory 22,500
Plant and Machinery as in the Statement of Financial Position, subject to10% depreciation
Loose tools as in the Statement of Financial Position
Debtors as in the Statement of Financial Position, subject to Rs. 2,750 provision for doubtful debts
and allowance of 5% for discount.
The liability of sundry creditors is taken over by Bhaskar and Chandra subject to allowance of
Rs.500 for discounts. Bhaskar and Chandra continue to share profits and losses in the same
proportion as previous. Draw up the Realization Account and other necessary accounts in the

43
books of Akhilesh, Bhaskar and Chandra and opening Statement of Financial Position of M/S
Bhaskar and Chandra together with their opening entries.
72. A, B and C are in partnership for a number of years. Profits and Losss were shared in the
ratio of 3:4:3. On 30th April, 2012 it was decided to dissolve the partnership. The Statement of
Financial Position of the firm as at that date stood as below:
Statement of Financial Position
As on 30th April, 2012

Partner’s capital accounts: Fixed Assets 78,000
A 30,000 Debtors 52,500
B 90,000 Stock 147,000
C 120,000 Cash 37,500
Trade creditors 75,000
Total 315,000 315,000

During the dissolution, the following cash and other transactions arose:
2012
3 May- A agreed to settle a hire purchase debt outstanding on a motor car. The amount was Rs.
6,750 and is to adjusted in his capital account.
3 May- Debtors were assigned to C for the agreed sum of Rs. 45,000.
3 May- C settled one creditors for Rs. 3,000 by giving him one of the private paintings.
3 May- The fixed assets, apart from the car which had a book value of Rs.26,250, were sold at
auction for Rs. 102,000. This car is to be taken at book value by C. Adjustment is to be made
in his capital account.
1 June - Realisation expenses of Rs. 5,250 were paid.
10 June- Cash transfers among partners were completed.
16 June- The remaining creditors were paid.
On 1st May 2012, B and C formed a new partnership by merging with another firm. The partners in
the other firm, X and Y, shared profits and losses equally. The new amalgamated firm will be called
Chaibe & Co. and will take over the stocks of both firms.
All partners have agreed to the following value for assets which will be taken over:
B and C X and Y
Rs. Rs.
Stocks 73,500 93,000
Furniture - 12,000
Motor vehicles - 22,500
Goodwill 25,200 67, 500
The partners also agreed that profits and losses would be shared:
B-20%, C-15%, X-30% and Y- 35%.
Capital is to be contributed in the same proportions after allowing Rs. 30,000 for working capital.
Goodwill is not to appear in any set of books.

44

a. Show the accounts closing the books of the A, B and C partnership.
b. Prepare a Statement of Financial Position for Chalibe & Co. as at 1 May 2012.
73. Sansad, Sarkar and Sambidhan were partners, sharing profits and Losses in the ratio of
5:3:2 respectively. On 31st Ashadh, 2069 their Statement of Financial Position stood as follows:
Sansad’s capital 7,79,000 Plant and machinery 13,62,000
Sarkar’s capital 7,07,800 Furniture and Fittings 2,36,000
Sambidhan’s capital 6,86,200 Stock 7,02,000
Creditors 4,91,000 Debtors 1,91,000
Cash at Bank 1,73,000
Total 26,64,000 26,64,000
On 31st Poush, 2069, Sansad died. According to partnership deed, on the death of a partners, the
capital account of the deceased partner was to be credited with:
i. His share of profit for a revelant part of the year of death calculated on the basis of profit
earned during the immediately preceding accounting year, and
ii. His share of goodwill
Goodwill was to be valued at two years’ purchase of the average profits of immediately preceding
three accounting years. The profits’ as per books of account were as follows:
For accounting year ended 31st Ashadh, 2067 3,29,000
However, while going through the books of accounts on Sansad’s death, it came to light that Rs.
30,000 worth of wages were spent on installation of a new machinery, but the same was not
capitalized; the machinery was put into operation on 1st Chaitra, 2068. Depreciation was
provided on the machinery @ 20% per annum.
On 1st Chaitra, 2069 Sansad’s son Sahamati was admitted into partnership with immediate
effect on the following terms:
(a) Sahamati would get one-fourth share in the profit of the firm, while the relative profit sharing
ratio between Sarkar and Sambidhanwould remain unchanged.
(b) The final balance of Sansad’s capital account would be credited to Sahamati’s capital
account.
(c) An adjustment would be made in the capital Accounts for Sahamati’s share of goodwill. The
basis of valuation of firm’s goodwill would be the same as was adopted at the time of the
death of his father.
On 31st Ashadh, 2070 the Statement of Profit and Loss of the firm showed that the firm had
earned a profit of Rs. 4,16,000 for the year. The respective drawings accounts showed that while
Sarkar and Sambidhan had withdrawn Rs. 60,000 each during the year, Sahamati’s drawing
totaled Rs. 30,000. The Drawings Accounts are closed at the end of the yearby transfer to
respective capital accounts.
(i) Prepare a Statement showing distribution of profits for the accounting year ended 31st
Poush, 2070; and

45
(ii) Pass Journal entries for all transactions relating to death of the partner. Sahamati’s
admission into partnership, and at the end of the year relating to transfer of Drawings Accounts
and distribution of profit for the year.
74. ‘Unicorn’ and ‘Pulsar’ are partners sharing Profits and Losses in the ratio of 3:1 was agreed
to change were Rs. 3,00,000 and Rs. 2,00,000 respectively. As from 1st Shrawan 2069 it was
agreed to change the profit sharing ratio 3:2. According to the partnership deed, goodwill should
be valued at two years’ purchase of the average of three years’ profits. The profits of the previous
three years ending 31st Ashadh were:
2066-67-Rs. 150,000;
2067-68-Rs. 200,000 and
2068-69-Rs. 250,000
Pass the necessary journal entry to give effect to the above arrangement in the capital accounts
of the partners.
75. A, B and C were partners of a firm sharing profits and losses in the ratio of 3 : 4 : 3. The
Balance Sheet of the firm, as at 31st March, 2010 was as under:
Liabilities Rs. Assets Rs.
Capital Accounts: Fixed Assets 1,00,000
A 48,000 Current Assets:
B 64,000 -Stock 30,000
C 48,000 1,60,000 -Debtors 60,000
Reserve 20,000 -Cash and Bank 30,000 1,20,000
Creditors 40,000
2,20,000 2,20,000
The firm had taken a joint life policy for Rs. 1,00,000; the premium periodically paid was charged to
statement of Profit or Loss. Partner C died on 30th September, 2010. It was agreed between the
surviving partners and the legal representatives of C that:
(i) Goodwill of the firm will be valued at Rs. 60,000.
(ii) Fixed Assets will be written down by Rs. 20,000.
(iii) In lieu of profits, C should be paid at the rate of 25% per annum on his capital as on 31st
March, 2010.
Policy money was received and the legal heirs were paid off. The profits for the year ended 31st
March, 2011, after charging depreciation of Rs. 10,000 (depreciation upto 30th September was
agreed to be Rs. 6,000) were Rs. 48,000.
Partners‟ Drawings Accounts showed balances as under:
A Rs. 18,000 (drawn evenly over the year)
B Rs. 24,000 (drawn evenly over the year)
C (up-to-date of death) Rs. 20,000
On the basis of the above figures, please indicate the entitlement of the legal heirs of C as on 31st
March, 2011.
76. F, G and K were partners sharing profit and losses at the 2:2:1. K wants to retire on 31-12-
2014. Given below the Balance Sheet of the partnership as well as other information:
Balance Sheet as on 31-12-2014

46
Capital A/cs: Sundry Fixed Assets 1,50,000

F 1,20,000 Inventory 50,000
G 80,000 Trade Receivables 70,000
K 60,000 Bank 50,000
Reserve 10,000
Trade Payables 50,000
3,20,000 3,20,000
F and G agree to share profits and losses at the ratio of 3:2 in future. Value of goodwill is taken to
be Rs. 50,000. Sundry Fixed Assets are revalued upward by Rs. 30,000 and inventory by Rs.
10,000. Trade receivables were valued at Rs. 65,000 on 31.12.2014. F and G agree to bring
sufficient cash to discharge claim of K and to make their capital proportionate. Also they wanted to
maintain Rs. 75,000 bank balance for working capital. However they did not want to show goodwill
in the books of accounts. Pass necessary journal entries and draft the Balance Sheet of M/s F and
G.
77. A, B and C were in partnership sharing profit and losses in the ratio of 1/5, 3/10 and 1/2.
The following is their balance sheet as on 30.06.2014.

Capital A/cs: Cash 1,000
A 3,000 Plant and machinery 5,000
B 4,000 Sundry debtors 20,000
C 3.000 Advances to A 2,000
Trade creditors 12,000 Loss to date 8,000
Loan from C 2,000
Loan from bank on book
debts and plant etc. 12000
36,000 36,000
The assets realized Rs. 20,000. A's private estate which is valued at Rs. 7,000 has a liability
thereon of Rs. 3,000. The private estate realized Rs. 4,000. B is insolvent. From C's estate a
dividend of 0.5 Paisa in a rupee is received. Show the realization account and the accounts of the
partners assuming that all entries relating to dissolution are passed through realization account.
Ans: Realization from C- 333.33

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1

6. Journalize entries in following cases.

Rajan Adhikari, FCA Partnership Accounts (CAP -II Dec 20)

Liabilities Amount Assets Amount

Loan from Puneet 3,00,000 Less: Provision for doubtful

Rajan Adhikari, FCA Partnership Accounts (CAP -II Dec 20)

Rajan Adhikari, FCA Partnership Accounts (CAP -II Dec 20)

Rajan Adhikari, FCA Partnership Accounts (CAP -II Dec 20)

Rajan Adhikari, FCA Partnership Accounts (CAP -II Dec 20)

Rajan Adhikari, FCA Partnership Accounts (CAP -II Dec 20)

Rajan Adhikari, FCA Partnership Accounts (CAP -II Dec 20)

1984 1984 1984

Rajan Adhikari, FCA Partnership Accounts (CAP -II Dec 20)

Rajan Adhikari, FCA Partnership Accounts (CAP -II Dec 20)

Fixed assets at cost 1,20,000

Balance Sheet as at 31-03-1993

Rajan Adhikari, FCA Partnership Accounts (CAP -II Dec 20)

1990-91- Rs. 18,380; 1991-92-Rs. 32,000; 1992-93-Rs. 7,471

Rajan Adhikari, FCA Partnership Accounts (CAP -II Dec 20)

ii) The capital Account of the partners

Rajan Adhikari, FCA Partnership Accounts (CAP -II Dec 20)

Rajan Adhikari, FCA Partnership Accounts (CAP -II Dec 20)

Rajan Adhikari, FCA Partnership Accounts (CAP -II Dec 20)

Capital Reserve 9,000

Rajan Adhikari, FCA Partnership Accounts (CAP -II Dec 20)

iii) A provision of Rs. 15,000 was made for taxation

Rajan Adhikari, FCA Partnership Accounts (CAP -II Dec 20)

Rajan Adhikari, FCA Partnership Accounts (CAP -II Dec 20)

Rajan Adhikari, FCA Partnership Accounts (CAP -II Dec 20)

Ans: Purchase Consideration 6,00,000 Realization Profit 51,000 Contribution A-

Rajan Adhikari, FCA Partnership Accounts (CAP -II Dec 20)

Rajan Adhikari, FCA Partnership Accounts (CAP -II Dec 20)

Shyam 3,00,000 10,00,000 Other Assets 3,10,000

ii) Expenses of dissolution amounted to Rs. 4,000

Rajan Adhikari, FCA Partnership Accounts (CAP -II Dec 20)

Rajan Adhikari, FCA Partnership Accounts (CAP -II Dec 20)

Lal 16,000 Bank Balance 1,800

Rajan Adhikari, FCA Partnership Accounts (CAP -II Dec 20)

Rajan Adhikari, FCA Partnership Accounts (CAP -II Dec 20)

Sham 50,000 Plant 32,500

Rajan Adhikari, FCA Partnership Accounts (CAP -II Dec 20)

Rajan Adhikari, FCA Partnership Accounts (CAP -II Dec 20)

P 500 Current Assets:

The assets realized as under:

Rajan Adhikari, FCA Partnership Accounts (CAP -II Dec 20)

Rajan Adhikari, FCA Partnership Accounts (CAP -II Dec 20)

Rajan Adhikari, FCA Partnership Accounts (CAP -II Dec 20)

Rajan Adhikari, FCA Partnership Accounts (CAP -II Dec 20)

Rajan Adhikari, FCA Partnership Accounts (CAP -II Dec 20)

Rajan Adhikari, FCA Partnership Accounts (CAP -II Dec 20)

Liabilities Amount Assets Amount

Rajan Adhikari, FCA Partnership Accounts (CAP -II Dec 20)

62. Their Balance Sheet as at 31-3-97 is as follows

Rajan Adhikari, FCA Partnership Accounts (CAP -II Dec 20)

Reserve 50,000 1,50,000 Current Assets:

Rajan Adhikari, FCA Partnership Accounts (CAP -II Dec 20)

Their balance sheets on that date were as under:

You are required to:

Rajan Adhikari, FCA Partnership Accounts (CAP -II Dec 20)

Due to A&Co 40,000 - Cash in hand 10,000 5,000

Rajan Adhikari, FCA Partnership Accounts (CAP -II Dec 20)

Balance Sheet as at December, 2009

On 31st December 2010 the trial balance is: