Particulars

TO G/w
TO Land
To Building
To Machiner
TO Motor Ca
TO Furniture
To Investmen
TO Loose Too
To Stock
To BR
To Debtors
To Cash (Crs)
To A's Capita
To Cash (Crs
To Real Exp
TO Partner's

Total

Particula
TO C's Curren
TO P&L

TO Real

TO Cash

Total
PC 195500
Cash 75500
Eq. shares 120000
 Realisation A/c
Particulars Amount Particulars Amount
TO G/w 10000 By Prov 2000
TO Land 20000 By Mrs. A 15000
To Building 110000 By Crs 76000
To Machinery 50000 By Crs (Exp) 20000
TO Motor Car 28000 By BP 14000
TO Furniture 12000 By Bank od 60000
To Investments 18000 By ABC Ltd 195500
TO Loose Tools 7000 By A 13000
To Stock 18000 By Cash 20000
To BR 20000 By Cash
To Debtors 40000 Motor Car 24000
To Cash (Crs) 74000 Furniture 4000
To A's Capital 15000 Loose Tools 1000 29000
To Cash (Crs for exp)) 20000
To Real Exp 500
TO Partner's Cap a/c 2000

Total 444500 Total 444500

Partner's Capital a/c

Particulars A B C Particulars A B C
TO C's Current 56000 By Bal c/f 70000 80000 10000
TO P&L 6000 4000 2000 By GR 9000 6000 3000
By Inv FF 2000 1333 667
TO Real 13000 By C's Loan 33000
To Eq. shares in ABC Ltd 60000 40000 20000 By Mrs. A 15000
By Real 1000 667 333
TO Cash 18000 44000
By Cash 31000

Total 97000 88000 78000 Total 97000 88000 78000

 Cash a/c
Particulars Amount Particulars Amount
TO Bal c/d 1000 By Real (Crs) 74000
To Drs 20000 By Real (Crs for exp) 20000
TO Real By Real exp 500
Motor Car 24000 By A 18000
Furniture 4000 By B 44000
Loose Tools 1000 29000
To ABC Ltd 75500
To C 31000

Total 156500 Total 156500

ABC Ltd a/c

Particulars Amount Particulars Amount
To Real 195500 By Cash 75500
By Eq. shares in ABC Ltd 120000

Total 195500 Total 195500

Particulars
To Sunndry As
To Real Profit

Total

Particulars

To Equity shar
To Cash
To Cash

Total

Particulars
To Real

Total
Calculation of PC 105000 What if
Mode of Payment X
Cash 44100 9450
15% Non Cum Pref sh 18900 15%
Equity shares 42000 Interest 1417.5
Total 105000 10% pref 10%
14175
 Realisation A/c
Particulars Amount Particulars Amount
To Sunndry Assets 100000 By Sundy Creditors 29440
To Real Profit 34440 By Jalan Pvt. Ltd. 105000

Total 134440 Total 134440

Partner's Capital a/c

Particulars X Y Z Particulars X Y Z
TO 15% Non Cum Pref shares
9450 5670 3780 bY Bal 9450 5670 3780
To Equity shares 8400 12600 21000 By Current a/c 36162 15498
To Cash 8820 13230 22050 By Real Profit 6888 10332 17220
To Cash 25830 By Cash 25830

Total 52500 31500 46830 Total 52500 31500 46830

Jalan Pvt Ltd a/c

Particulars Amount Particulars Amount
To Real 105000 By Cash 44100
By Eq. shares in ABC Ltd 42000
BY 15% Non Cum Pref shares 18900

Total 105000 Total 105000

Case (b)
Partner's Capital a/c
Particulars X Y Z Particulars X Y Z
To Cash 30870 13230 bY Bal 9450 5670 3780
To Pref Shares 13230 5670 By Current a/c 36162 15498
To Equity Shares 8400 12600 21000 By Real Profit 6888 10332 17220

Total 52500 31500 21000 Total 52500 31500 21000

X Y Z
Balance 52500 31500 21000 105000
Ideal Capital in PSR 8400 12600 21000 42000
Excess Capital 44100 18900 0
Mode of payments of PC:
Pref Shares 13230 5670 18900
Cash 30870 13230 44100
Equity Shares 8400 12600 21000 42000
52500 31500 21000 105000
Working Note - 1: Purchase Consideration

Particulars Rs. in 000's

Goodwill (WN 2) 120
Fixed Assets 300
Investments 50
Stock 100
Debtors 60
Unsecured loans -200
Purchase Consideration 430

Mode of payment of Purchase Consideration

Cash (To be brought in to pay off A = 150-280-40) 170
Equity Shares 260
Total 430
Working Note - 2: Calculation of Goodwill

Particulars Rs. in 000's

A Fixed Capital:
A 200
B 100
C 100 400
B Normal Rate of Return 15%
C Normal Profit (C= Ax B) 60
D Actual Profit 100
E Super Profit (Actual Profit - Normal Profit i.e. D-C) 40
F No. of years of purchase 3
G Goodwill (E x F) 120
 Realisation A/c
Particulars Rs. in 000's Particulars Rs. in 000's

To Fixed Assets 300 By Unsecured Loans 200

To Investments 50 By BC (P) Ltd 430
To Current Assets: By Loss on Realisation 40
Stock 100
Debtors 60
To Realisation Expenses 40
To Goodwill 120

Total 670 Total 670

Rs. in 000's
Partner's Capital a/c
Particulars A B C Particulars A B C
To Loss on Realisation 20 10 10 By Bal c/f 200 100 100
To Cash 280 By Current a/c 40 20
To Equity shares 130 130 By Goodwill 60 30 30
To Cash 10 By Cash 10

Total 300 150 140 Total 300 150 140

Rs. in 000's
Cash & Bank a/c
Particulars Rs. in 000's Particulars Rs. in 000's
To Bal c/d 150 By Real Exp 40
To BC (P) Ltd 170 By A's Capital a/c 280
To C's Capital a/c 10 By B's Capital a/c 10

Total 330 Total 330

BC (P) Ltd a/c

Particulars Amount Particulars Amount
To Realisation 430 By Cash 170
By Equity Shares 260

Total 430 Total 430

Case - 1 GW has been taken over

In the Books of BC (P) Ltd

Fixed Asstes 300

Investments 50
Stock 100
Debtors 60
Goodwill 120
To USL 200
To ABC Firrm 430

ABC Firm 430

To Cash 170
To Share Capital 260

Case - 2 GW hasnot been taken over

Fixed Asstes 370

Investments 100
Stock 130
Debtors 60

To USL 200
To ABC Firrm 430
To Capital Reserve 30
ABC Firm 430
To Cash 170
To Share Capital 260
Calculation of PC

Goodwill (not considered as it is not Real Asset) 0

Land & Building (180000+10%) 198000
Machinery 180000
Furniture 72000
Stock 81000
Investment 100000
Sundry Debtors 80000
Bills Receivable 14000
Creditors -100000
Outstanding Expenses -5000
Purschase consideration 620000
Mode of payment:
Equity Shares 330000
(3000 equity shares @ Rs. 110 each (Face value
100+Premium 10%)
Bank 290000
Total 620000
 Realisation A/c
Particulars Amount Particulars
To Goodwill 100000 By Creditors
To Land & Building 180000 By Bills Payable
To Machinery 180000 By Outstanding
To Furniture 60000 By RSN Ltd a/c
To Investment 100000 By Partner's Capital (Realisation Loss)
TO Stock 90000
To Sundry Debtors 80000
To Bills Receivable 14000
To Narendra's Capital a/c 30000

Total 834000 Total

Partner's Capital a/c

Particulars Ravindra Surendra Narendra Particulars
To Realisation Loss 39500 26333 13167 By Bal b/d
To Equity Shares 165000 110000 55000 By Profit & Loss
To Bank 140500 80333 90167 By Workmen Comp Fund
By Worker's profit sharing fund
By IFF
By Realisation

Total 345000 216667 158333 Total

Bank a/c
Particulars Amount Particulars
To Bal b/d 21000 By Ravindra
To RSN Ltd 290000 By Surendra
By Narendra

Total 311000 Total

RSN Ltd a/c

Particulars Amount Particulars
To Realisation 620000 By Equity Shares
By Bank
Total 620000 Total
 Amount
100000
30000
5000
620000
apital (Realisation Loss) 79000

834000

Ravindra Surendra Narendra

200000 120000 80000
60000 40000 20000
30000 20000 10000
45000 30000 15000
10000 6667 3333
30000

345000 216666.7 158333.3

Amount
140500
80333
90167

311000

Amount
330000
290000
620000
Particulars
To Building
To plant
To Furniture
To Stock
To Debtors
To Realisation

Total

Particul
To Drawings
To Eq. shares
To Cash

Total

Particulars
To Bal b/f
To A's Capital

Total
 Ans (1) Statement of Net Assets as on 30.6.1998
Fixed Assets
Building (80000 - Dep @ 10% p.a.) 76000
Plant (180000 - Dep @ 10% p.a.) 171000
Furniture (20000 - Dep 10% p.a.) 19000 266000

Current Assets :
Stock 70000
Book Value 75000
Cash 2500 147500
413500
Less :Liabilities
Bank loan 20000
Creditors 55000
Bill payable 7500 -82500
Net Assets as on 30.6.98 331000

Ans (2) statement of profit during 6 months ends on 30.6.98

Net Assets as on 30.6.98 331000

Less: Net assets as on 31.12.97
(138000+152000) -290000
Net capital as on 30.6.98 41000
Add: Drawings 41000
Profit earned 82000
 Realisation A/c
Particulars Amount Particulars Amount
To Building 76000 By Loan 20000
To plant 171000 By Creditors 55000
To Furniture 19000 By B/P 7500
To Stock 70000
To Debtors 75000 By New company
To Realisation Profit 71500 (Purchase Consideration) 400000

Total 482500 Total 482500

Partner's Capital a/c

Particulars A B Particulars A B
To Drawings 20500 20500 By Bal c/f 138000 152000
To Eq. shares in AB Ltd 200000 200000 By Profit 41000 41000
To Cash 8250 By Realisation 35750 35750
By Cash 5750
Total 220500 228750 Total 220500 228750

Cash a/c
Particulars Amount Particulars Amount
To Bal b/f 2500 By B's Capital A/c 8250
To A's Capital a/c 5750

Total 8250 Total 8250

 AB Ltd a/c
Particulars Amount Particulars Amount
To Realisation 400000 By Eq. shares in AB Ltd 400000

Total 400000 Total 400000

Land & Building 300000
Plant & Machinery 150000
Stock 224000
Debtors 122000
Bank 150000
Creditors -356000
PC 590000

9% Unsecured Loan Stock

Amar (7200/9%) 80000
Akbar (5400/9%) 60000
Anthony (4500/9%) 50000
Total unsecured Loan stock 190000

Balance Equity shares 400000

Profit sharing ratio = based on profit distribution given in the question

61260 : 61260: 40840
3:03:02
Particular
To Bal
To Akbar's

Total

Particular
To Realisa

Total
 Realisation A/c
Particulars Amount Particulars

T0 Land & Buildings 260000 By Creditors

To Plant & Mac hinery 200000 By Faiway Ltd
To Motor Vehicles 150000 By Partner's Capiral
To Stock 224000 Amar 49000
TO Debtors 122000 Akbar 35000
To Bank 150000 Anthony 36000
By Realisation Loss

Total 1106000 Total

Partner's Capital a/c

Particulars Amar Akbar Anthony Particulars Amar Akbar
To Realisation 49000 35000 36000 By Bal 240000 180000
To 9% USL Stock 80000 60000 50000 By Current a/c 98600 64200
To Eq shares 150000 150000 100000 By Cash 0 15800
To Realisation Loss 15000 15000 10000
To Cash 44600 0 18700

Total 338600 260000 214700 Total 338600 260000

 Bank a/c
Particulars Amount Particulars
To Bal 197500 By Realisation
To Akbar's Capital 15800 BY Partner's Capital a/c
Amar
Anthony

Total 213300 Total

Fairway Ltd a/c

Particulars Amount Particulars
To Realisation 590000 By 9% USL stock
By Eq shares

Total 590000 Total

Amount

356000
590000

120000
40000

1106000

Anthony
150000
64700
0

214700
Amount
150000

44600
18700

213300

Amount
190000
400000

590000