CHAPTER 1 PARTNERSHIP FINAL ACCOUNTS

Q.1 Ganga and Godawari are partners sharing profits and losses equally. The Trial
Balance of their firm on 31st March, 2007 was as follows:
Trial Balance as on 31st March, 2007
Debit Balances Credit Balances
Particulars ₹ ₹
Stock (1-4-2006) 80,000
Purchases and Sales 4,00,000 7,68,000
Return Inwards 30,000
Carriage 7,500
Power and Fuel 40,000
Wages 35,000
Trade Expenses 8,000
Debtors and Creditors 80,000 60,000
Salaries 72,000
Insurance 6,000
Postage 3,000
Commission 8,000 12,000
Plant and Machinery 2,00,000
Furniture 80,000
Advertisement 15,000
Building 4,00,000
Drawings :
Ganga 8,000
Godawari 10,000
Capital :
Ganga 2,50,000
Godawari 2,50,000
12% Bank loan taken on 1-10-2006 1,50,000
Cash in Hand 7,500
14,90,000 14,90,000
Adjustments :
(1) Stock on 31-3-2007 was valued at Cost price ₹ 1,00,000 and Market price ₹ 1,20,000
(2) Depreciate Plant and Machinery and Buildings at 20% and 10% respectively.
(3) Insurance is paid for one year ending on 30-06-2007.
(4) Good withdrawn by Ganga for her personal use of ₹ 10,000 during the year were not recorded in the books.
(5) Provide ₹ 10,000 as Bad debts and Reserve for Doubtful Debts is to be maintained at 5% on Debtors

Prepare : Trading Account, Profit and Loss Account for the year ending on 31 st March, 2007
Balance Sheet as on that date after making the above adjustments.
 CHAPTER 2 ACCOUNTS OF ‘NOT FOR PROFIT CONCERNS
Q.1 Following is the accounting information for the year 2009-2010 of Cricket , prepare Income
and Expenditure Account for the year ended 31-03-2010 and Balance Sheet as on that date:
Balance Sheet as on 01-04-2009
Liabilities Amount Amount Assets Amount Amount
₹ ₹ ₹ ₹
Capital Fund 67,100 Land 1,20,000
Building Fund 54,000 Sports Material 32,000
Bank Overdraft 37,400 Cash in Hand 2,200
Outstanding Subscriptions
2007-2008 1,800
2008-2009 2,500 4,300
1,58,500 1,58,500

Dr. Receipts and Payments Account for the year ending on 31-03-2010 Cr.
Receipts Amount Amount Payments Amount Amount
₹ ₹ ₹ ₹
To Balance b/d 2,200 By Bank Overdraft (Repaid) 37,400
(Cash in Hand) By Salaries 25,600
To Subscriptions By Electricity Charges 2,250
2007-2008 1,800 By Rent and Taxes 1,750
2008-2009 2,500 By Printing and Stationery 5,100
2009-2010 65,500 69,800 By Entertainment Expenses 8,700
To Donations 11,000 31-03-2010
To Entertainment Receipts 8,800 By Balance
To Entrance Fees 2,000 Cash in Hand 3,000
Cash at Bank 10,000
98,800 93,800
Adjustments:
(1) Donations are received for Building Fund.
(2) Entrance Fees are to be Capitalized.
(3) Outstanding Subscription ₹ 1,500.
1
(4) Depreciate sport material @12 % p.a.
2
 Q.2 From the following Receipts and PaymentAccount of NanasahebPatil Engineering College,
Faizpur for the year ending 31st March 2013 and additional Information, Prepare Income and
Expenditure Account for year ending 31-03-2013 and a Balance Sheet as on that date :

Receipts and Payments Account for the year ending on 31-03-2013

Receipts Amount Amount Payments Amount Amount

₹ ₹ ₹ ₹
To Balance b/d By Salaries to
Cash in Hand 15,950 Teaching Staff 8,50,500
Cash at Bank 1,00,070 Office Staff 1,81,000
To Interest 51,000 By Electricity 51,900
To Subscriptions 25,800 By Books 57,800
To Life Memebrship Fees 20,500 By Furniture 45,000
To Donations 6,36,000 By Stationery 19,950
To Tuition Fees 11,20,000 By Fixed Deposit 7,50,000
To Term Fees 2,00,900 31-03-2013
To Admission Fees 55,000 By Balance c/d
To Sundry Receipts 6,930 Cash in Hand 13,500
Cash at Bank 2,62,500
22,32,150 22,32,500

Additional Information:

(1) Particulars 01-04-2012 31-03-2013

Books 5,50,000 5,50,000
Furniture 2,15,000 2,00,000
Building Fund 9,35,000 ?
Fixed Deposits 8,00,000 ?
Capital Fund 7,46,020 ?

(2) 50% of Donations are for Building Fund and the balance is to be treated as revenue income.
(3) Outstanding Subscriptions ₹ 4,200.
(4) Life Membership Fees are to be capitalized.
 CHAPTER 3 ADMISSION OF PARTNER
Q.1Sona and Rupa are the partners in a business sharing profits and losses in the ratio
2 : 1 respectively. TheirBalance Sheet as on 31st March, 2020 is as follows:
Balance Sheet as on 31st March, 2020
Liabilities Amount Amount Assets Amount Amount
₹ ₹ ₹ ₹
Capital A/cs: Cash at Bank 46,950
Sona 2,67,000 Bills Receivable 23,800
Rupa 2,00,000 4,67,000 Debtors 40,000
Creditors 38,500 - R.B.D. -500 39,500
Bills Payable Stock
20,000 45,000
Reserve Fund Furniture
34,500 84,750
Machinery
Building 1,05,000
2,15,000
5,60,000 5,60,000

They admitted Kanchan on 1st April, 2020, as a partner on the following terms:
(1) Kanchan will bring 1,15,000 as her Capital and ₹ 36,000 as Goodwill forth share
in profits.
(2) 50% of the amount of goodwill will be withdrawn by the old partners.
(3) Stock and Machinery are to be depreciated by 10%.
(4) R.B.D. is to be maintained at 5% on debtors.
(5) Building is to be appreciated by 20% and furniture is valued at ₹ 74,000.
Prepare : (1) Profit and Loss Adjustment A/c (2) Partners' Capital A/cs (3) Balance
Sheet of the New Firm.
Q.2Manoj and Rahul are equal partners in a business. Their Balance sheet as on 31st
March, 2013 stood as under
Balance Sheet as on 31st March, 2013
Liabilities Amount Amount Assets Amount Amount
₹ ₹ ₹ ₹
Sundry Creditors 1,80,000 Cash at Bank 1,20,000
General Reserve 36,000 Debtors 62,000
Capitals :Manoj 90,000 (-) R.D.D. 2,000 60,000
Rahul 60,000 Bills Receivable 24,000
Building 1,14,000
Machinery 48,000
3,66,000 3,66,000

They decided to admit Amit on 1st April, 2013 on the following terms:

(1) The Machinery and Building be depreciated by 10%.

(2) Reserve for doubtful debts be increased to ₹ 5,000.
(3) Bills receivable are taken over by Manoj at a discount of 5%.
(4) The amount of creditors paid at a discount of 10%.
(5) The Capital Accounts of all the partners be adjusted in proportion to new profit
sharing ratio by opening current account of partners.
(6) Amit should bring ₹ 80,000 as capital for his 1/4th in future profits and goodwill
account be opened in the books of thefirm at ₹ 40,000.
Prepare Profit and Loss Adjustment A/c, Partner's Capital A/c and Balance Sheet of
the firm.
 CHAPTER 4 RETIREMENT OF PARTNER
Q.1 Shailesh, Anil and Das were partners sharing profits and losses in the ratio at
3:3:2. Their Balance Sheet as on 31-03-2012 is as below:
Balance Sheet as on 31st March, 2012
Liabilities Amount Assets Amount
₹ ₹
Capitals : Building 10,000
Shailesh 11,000 Machinery 10,700
Anil 15,000 Furniture 10,000
Das 8,000 Debtors 5,000
Bills Payable 1,900 Stock 6,600
Creditors 9,000 Cash 6,600
Reserve Fund 4,000
48,900 48,900

On 1st April, 2012 Mr. Das retired from the firm on the following terms:

(1) Shailesh and Anil's share in reserve fund should be continued in the new firm.

(2) Goodwill of the firm is to be valued at ₹ 4,000, however, only Das's share in it is
to be raised in the books and written off immediately.

(3) Assets to be revalued as under stock ₹ 6,300, Machinery ₹ 10,000, Furniture ₹

10,200.

(4) R.D.D. to be maintained at 10% on Debtors.

(5) 100 to be written off from Creditors.

(6) The amount payable to Mr. Das is to be transferred to his loan account.

Prepare : Profit & Loss Adjustment A/c, Partners Capital Accounts and Balance Sheet
of the New firm on 1st April,2012.
 CHAPTER 5 DEATH OF PARTNER
Q.1 Vishnu, Prabhakar and Krishna were partners in a business sharing profits and
losses in the ratio of 3 : 1:1 respectively. Their Balance Sheet as on 31st March, 2012
was as follows:
Balance Sheet as on 31st March, 2012
Liabilities Amount Assets Amount
₹ ₹
Capitals : Plant and Machinery 35,000
Vishnu 40,000 Stock 25,000
Prabhakar 30,000 Debtors 20,000
Krishna 25,000 Cash 30,000
Creditors 5,000
Reserve Fund 10,000
1,10,000 1,10,000

Krishna died on 1st October, 2012 and the partnership deed provided that:
(1) The deceased partner to be given his share of profit to the date of death on the basis of
the profits of the previous year.
(2) His share of goodwill will be calculated on two years purchase of average profit of the
last 4 years. The net profit for last 4 years were: ₹ 70,000, ₹ 55,000, ₹ 45,000, ₹30,000.
(3) Plant and Machinery to be valued at 40,000. Reserve for doubtful debts of 2,000 to be
created.
(4) The drawings of Krishna up to the death amounted to 20,000.
(5) Interest on capital at 10% p.a. is to be allowed and 6% p.a. to be charged on drawings.
Both the interests should be calculated for 6 months.
Prepare : Krishna's Capital A/c and Profit and Loss Adjustment A/c.
 CHAPTER 6 DISSOLUTION OF PARTNERSHIP FIRM
Q.1X, Y and Z were carrying on business. They share profits and losses in the ratio of
5: 3: 2 respectively. Their Balance Sheet as on 31st March, 2010 was as under :
Balance Sheet as on 31st March, 2010
Liabilities Amount Amount Assets Amount Amount
₹ ₹ ₹ ₹
Sundry Creditors 21,000 Plant and Machinery 20,000
Y's loan 5,000 Investments 8,000
Reserve Fund 20,000 Stock 30,000
Capital Account : Debtors 18,000
X 20,000 Less: R.D.D. 1,000 17,000
Y 10,000 Cash in hand 2,000
Z 4,000 Cash at Bank 3,000
80,000 80,000
On the above date the firm was dissolved and the assets realised as under :
(1) Investments ₹ 5,000, Stock ₹ 24,000 and Debtors ₹ 15,000.
(2) The Plant and Machinery was taken over by Mr. 'X' at book value.
(3) Sundry Creditors and Mr. 'Y' loan were paid in full.
(4) Realisation expenses incurred ₹ 1,000.
Prepare Realisation Account, Partner’s Capital Account Bank Account and Journal
Entries.
Q.2. Rahul, Rohit and Ramesh were partners in a firm sharing profit and losses in the
ratio of 2:2:1 respectively. The Balance Sheet as on 31st March 2012, was as follows :
Balance Sheet as on 31st December, 2011
Liabilities Amount Amount Assets Amount Amount
₹ ₹ ₹ ₹
Sundry Creditors 20,000 Cash at Bank 8,000
Bills Payable 5,000 Debtors 16,000
General Reserve 6,000 Less: R.D.D. 1,000 15,000
Rahul's Loan A/c 16,000 Stock 20,000
Capital A/cs: Plant and Machinery 30,000
Rahul 25,000 Furniture 6,000
Rohit 10,000 Ramesh's Capital A/c 3,000
82,000 82,000
The firm was dissolved on the above date :
(1) The Assets realised as follow :
Debtors₹ 9,000, Plant and Machinery ₹ 26,000, Stock ₹ 14,000 and Furniture ₹3,000

(2) The Creditors were paid ₹ 18,000 in full settlement and the bills payable were paid
in full.

(3) The realisation expenses amounted to ₹ 3,000.

(4) Ramesh became insolvent and was able to bring in only ₹ 1,800 from his private
estate.

Prepare (1) Realisation A/c (2) Bank A/c and (3) Partners' Capital A/c. Solution :
 CHAPTER 7 BILLS OF EXCHANGE
Q.1.Harbhajan draws a bill on Manmit for ₹ 8,000 at 3 months. Manmit accepts and
returns to Harbhajan. Harbhajan then sends the bill to his bank for collection.
On due date Manmit finds himself unable to make payment of the bill and
request Harbhajan to renew it. He accepts the proposal on the condition that Manmit
should pay ₹ 2,000 along with interest @ 15% p.a. in cash and should accept new bill
for the balance at 2 months. These arrangements were carried through. One month
before Manmit retired his acceptance @ 12% p.a.
Give journal entries and Manmit's Account in the books of Harbhajan.

Q.2.Dolly owes Neena ₹ 84,000. Neena draws a bill for ₹ 84,000 on Dolly for a
period of 3 months. Dolly accepts it and returns it to Neena. Neena discounted the bill
with her bank at a discount of 16% p.a. On the due date, the bill was dishonoured and
noting charges amounted to ₹ 400 paid by bank. Neena paid in cash the amount due to
the bank on dishonour of the bill. Dolly accepted another bill of 3 months drawn by
Neenafor the balance plus interest ₹ 600. Before one month of the due date of this bill,
Dolly paid the amount at a discount of 12% p.a. to retire the bill. Pass journal entries
in the books of Neena.
 CHAPTER 8 COMPANY ACCOUNTS ISSUE OF SHARE
Q.1. Vijay Ltd. issued 40,000 Equity shares of 10 each payable as follows:
On Application : ₹2 On Allotment : ₹3
On First Call : ₹3 On Second Call : ₹2
The company received applications for 50,000 equity shares. Allotment of
shares was made on pro-rata basis. Share allotment and calls were made and as also
received except Raja holding 1,000 shares failed to pay both the calls. His shares were
forfeited after second call.
Record the above transactions in books of Vijay Ltd.

Q.2. The Century Ltd. issued 8,000 shares of ₹ 100 each at a premium of 10%
payable as under :
On Application : ₹25 On Allotment : ₹40(including premium)
On First Call : ₹20 On Second Call : ₹25
Company called up allotment and both the calls which were duly received
except Ramesh to whom 500 shares were allotted failed to pay allotment and calls.
His shares were forfeited after second call.
Prepare Journal of Century Ltd.
 CHAPTER 9 ANALYSIS OF FINANCIAL STATEMENTS
Q.1 Balance Sheet of 'X' Ltd. Co. for the year ending 31st March 2011 and
31st March 2012 is given below :
Liabilities 31-03-11 31-03-12 Assets 31-03-11 31-03-12
₹ ₹ ₹ ₹
Share Capital 3,00,000 4,20,000 Fixed Assets 4,00,000 6,50,000
Reserve and Surplus 50,000 90,000 Investments 1,00,000 1,30,000
Secured Loans 90,000 1,40,000 Current Assets 1,50,000 1,00,000
Unsecured Loans 80,000 1,30,000
Current Liabilities 1,30,000 1,00,000
6,50,000 8,80,000 6,50,000 8,80,000

You are required to prepare Comparative Balance Sheet of X Ltd. as on 31st

March 2011 and 31st March 2012.

Q.2 Balance Sheet of 'Y' Ltd. Co. for the year ending 31st March 2011 and
31st March 2012 is given below:
Liabilities 31-03-11 31-03-12 Assets 31-03-11 31-03-12
₹ ₹ ₹ ₹
Equity Share Capital 9,00,000 10,00,000 Fixed Assets 13,00,000 10,00,000
Preference Share Capital 1,00,000 90,000 Investments 2,30,000 1,50,000
4,70,000 6,50,000
Reserve and Surplus 70,000 1,50,000 Current Assets
Secured Loans 4,00,000 3,00,000
Unsecured Loans 3,00,000 1,60,000
Current Liabilities 2,30,000 1,00,000
20,00,000 18,00,000 20,00,000 18,00,000

You are required to prepare common size statement for year ending 31st
March 2011 and 31st March 2012.
Q.3 Income Statement of 'X' Ltd. Co. for the year ending 31st March 2011
and 31st March 2012 is given below :

Particulars 31-03-2011 31-03-2012

₹ ₹
Sales 5,00,000 8,00,000
Less: Cost of sales 3,20,000 5,60,000
Gross profit 1,80,000 2,40,000
Less: Indirect Expenses 70,000 90,000
Net profit before tax 1,10,000 1,50,000
Less Income tax 50% 55,000 75,000
Net profit after tax 55,000 75,000

You are required to prepare Comparative Income Statement of 'X' Ltd. Co.
for the year ended 31st March 2011
Q.4 Income statements for the year ending 31st March 2011 and 31st
March 2012 are given below:

Particulars 31-03-2011 31-03-2012

₹ ₹
Net Sales 10,00,00 12,00,000
Less: Cost of goods sold 5,80,000 6,20,000

Gross profit 4,20,000 5,80,000

Less Office and Administrative Expenses 1,05,000 1,20,000
Less: Selling and Distribution Expenses 1,10,000 1,30,000

Net Profit 2,05,000 3,30,000