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Class 12 Accounts - Fundamental

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Ques 1 2. 3. 4. 5. 6. FUNDAMENTAL P,Q and R are partners in the firm. Their capital accounts stood at Rs.30,OOO, Rs.15,OOO and Rs. 15,000 respectively on 1st January ,20X1. As per the provision of the deed . (i) R was to be allowed a remuneration of Rs. 3,000 p.a. (ii) Interest at 5% p.a was to be provided on capital (iii) Profits were to be divided in the ratio of 2:2:1..lgnoring the above terms , net profit of Rs. 18,000 for the year ended was divided among the three partners equally. Pass an adjustment entry to rectify the error . Show the working clearly. (Arts: Dr. Q Rs.450 and Cr. P & R Rs.300 and 150) (CBSE 1998 Delhi ) A,B and C were partners in a firm . On 1-1-2001 their capitals stood at Rs.50,000 Rs.25,OOO and Rs.25,OOO respectively . As per the provisions of the partnership deed C was entitled for a salary of Rs.1,500 p.m. Partners were entitled to interest on capital at 5% p.a. (c) Partners were to be shared in the ratio of capitals. The net profit for the year of Rs.45,OOO was divided equally without providing for the above terms . Pass an adjustment entry to rectify the above error . (Ans: Dr. A Rs. 1500 and B Rs. 8250 & Cr. C Rs. 1999 Delhi ) X, Y and Z partners have omitted interest on capital for three years ended 31st December , 1992. Their fixed capitals on which interest is based were throughout X Rs. 20,000, Y Rs.16,000; and Z Rs.14,OOO. Interest is to be allowed at 5% per annum . Their profit —sharing ratios were : 1990—1 Give the necessary adjusting entry . (Ans: Dr. Y's Current A/c by Rs.600 and Cr. X's Current A/c by Rs.250 and Z's Current A/c by Rs.200) A,B and C are partners in a firm. Through there is no provision in the partnership deed for interest on capital, this has been provided to the accounts @ 5% p.a. for the two years ended on 31st dec,1991, and 31st dec,1992. Their fixed capital on which interest was calculated were throughout Rs.50,OOO. B Rs.40,OOO and C Rs.30,OOO. During the two years, they share profit as follows: 1991-----5 3 2 1992-----2 .2 1 You are required to put through an adjustment entry as on 1st jan,1993. (Ans: Dr. C Rs.600; Cr. A and B Rs.400 and Rs.200) A and B are partners in a firm. A is to get a commission of 10 % of Net Profit before charging any commission .B is to get commission of 10 % on Net Profit after charging all commission . Net Profit before charging any commission was Rs.55,OOO. Find out the commission of A nad B. (Ans: A commission 5,500; B's commission 4,500)(CBSE 1991 Delhi ) Ram and Gopal were partners in a firm sharing profits in the ratio of 3:2. On 1:1 20x1 their fixed capitals were and respectively. On 31.3.2001, they decided that their total capital(Fixed)should be in their profit sharing ratio. Accordingly they introduced or withdrew the necessary capital. The partnership deed provided the following . (i) Interest on capital @ 12 %p.a. (ii) Interest on drawings @ 18%p.a. (iii) Monthly salary to Ram @ Rs.2000 per month and to Gopal @ Rs.3,OOO per month. The drawings of Ram and Gopal during the year were as follows: Date 2001 July 1 September 30 Ram 10,000 15,000 The profit earned by the firm for the year ended 31.12.2001 was Rs.2, was to be kept in a reserve. You are required to prepare profit and loss appropriation account. oo,ooo. Gopal 12,000 12,000 10% of this profit (Ans: Profit Rs. 1998 Delhi] 7. 8. A, B and C are partners sharing profit in the ratio 5:4:1. C is given a guaranteed that his share in any year will not be less than Rs.5,OOO. The profit for the year ended December 31,20X1 amounted to Rs.40,OOO. Amount excess given to C will be borne by B. Pass the journal entries in the books of A, B and C. (Ans: Dr. B Rs. 1000 and Cr. Rs. 1991 Delhi A, B and C are partners sharing profits in the ratio 5:4:1. C is given a guarantee that his share of profits in any given years would be Rs.5,000. Deficiency, if any, would be borne by A and B equally. The profits for the year amounted to Rs. 40,000. Pass necessary entries in books
9. 10. of the firm. (Ans: Dr. A and B Rs. 500, 500 and C Cr. Rs. 1999 Delhi] The partners of a firm distributed the profits for the year ended 31st March 2003, Rs. 90, 000 in the ratio of 3:2:1 without providing for the following adjustments : (i) A & B were entitled to a salary of Rs. 1,500 each per annum (ii) B was entitled to a commission of Rs. 4,500. (iii) B & C had guaranteed a minimum profit of Rs. 35, 000 p.a. to A. (iv) Profits were to be shared in the ratio of 3:3:2. Pass necessary journal entry for the above adjustment in the books of the firm . (Ans: Dr. A Cr. 2004] A and B are partners sharing profits in the ratio of 5:3 . C was to receive salary of Rs.150 per month, plus a commission of 5 % on the profits after charging such salary and commission or 1/5th of the profits of the firm ,whichever is larger. Any excess of the latter over the former is under the partnership agreement to be borne personally by A. Prepare the profit & Loss Appropriation Account in each of the following alternative cases: Case (a): If the profits before charging C's salary and commission for the year amounted to Rs.24,900. Case (b): If the profits for the year amounted to Rs.10,710 after charging C's salary. Case (c): If the profits for the year amounted to Rs.12,OOO after charging C's salary and commission . 11. GOODWILL A is a partner in a firm for the year ending 31 march 2006. A's drawings were : 31 may 2005 Rs.5,OOO; 30 sept. 2005 Rs.4,OOO; 31 dec. 2005 Rs.6,OOO; 31 Jan. 2006 Rs.7,OOO. Calculate A's interest on drawings @ 12 % p.a. QUES 1 2. 3. 4. 5. Ram and Shyam were partners from 1st April 2002. They disclosed the profit for the last three years : an abnormal gain of Rs.800) 2003-2004----Rs. 2,100(lncluding an abnormal loss of Rs.100) 2004-2005----Rs. 3,000(Excluding Rs.600 as insurance premium of the firm.) Calculate the value of the firm's goodwill on the basis of 3 years purchase of the average profits for the last 3 years. The average net profits expected in the future by the firm are Rs.46,OOO per year. The average capital employed in the business by the firm is Rs. The rate of return expected from capital invested in this class of business is 10% . The remuneration of the [Ans: Rs.1,0601 (Ans: Goodwill Rs.6,600) partners is estimated to be Rs. 8,000 per annum . Find out the value of goodwill on the basis of two years purchase of Super Profits. (Goodwill Rs.16,OOO) On 1st April 1994, an existing Firm had assets of Rs. 75,000 including cash of Rs.5,000. It's creditors amounted to Rs.5,OOO on that date . The firm had a Reserve Fund of Rs. 10,000 while partners capital accounts showed a balances of Rs.60,OOO. If the Normal Rate of return is 20%, and the goodwill of the firm is valued at Rs.24,OOO, at four years purchase of super profit, find the average profits per year , of the firm . A firm has earned an average profit of Rs.55,OOO during the last years and the normal rate of return in similar type of business is 10 %. Find out the goodwill by capitalization method assuming that the firm owns total assets worth including there in a goodwill of Rs.50,OOO and the firm has to pay to the outside liabilities. The average profit of the firm is Rs. 15,000. The total tangible assets in the firm is Rs. and outside liabilities are Rs.40,000. In the same type of business , the normal rate employed . Calculate the value of goodwill by capitalization of super profit method. (Goodwill of return is 10% of the capital (Goodwill Rs. 50,000)
ADMISSION OF PARTNER X, Y and Z are partners in the ratio of 3:2:1. W is admitted with 1/6 share in profit. Z would retain his QI. Q2. original share . Find out new profit sharing ratio. (New Ratio X and Y are partners sharing profit and losses in the ratio of 3:2. Z is admitted for 1/4th share. Thereafter W enters for 20paise in the rupee. Compute the profit sharing ratio of X, Y and Z and W (New Ratio after W's admission A and B are partners in a firm sharing profits and losses in the ratio of 5:3., C is admitted as a new partner for 1/8th share in the profit of the Q3. firm . C brings in Rs.48,OOO as his capital but is not in a position to bring any amount by way of goodwill. Goodwill of the firm is valued at Rs.32,OOO. decided that the new profit sharing ratio will be 9:5:2 and adjustment regarding goodwill is to be made without raising any goodwill It was account in books . Pass the necessary journal entries in the books of the firm. (Goodwill credited to A Rs.2,OOO, B Rs.2,OOO) X and Y are partners in a firm sharing profits and losses in the ratio of 5:3. On March 1, 2004 they admitted Z as a new partner . The new profit sharing ratio will be 4:3:2. Z brought in in cash as his share of capital but could not bring any amount for goodwill in cash The firm's goodwill on Z's admission was valued at At the time of Z's admission goodwill existed in the books of the firm at Pass the necessary journal entries in the books of the firm on firm on Z's admission .Show your workings clearly. (Goodwill credited to X Y Rs.90,OOO) Q5. A& B are partners with capitals of Rs.30,OOO and Rs.10,OOO respectively. They admit C as a partner for 1/4th share in the profits of the firm. C brings Rs.15,000 as his capital. Give journal entries to record goodwill. Q6. A & B are partners sharing ratio 3:2 with a capitals of Rs.10,000 & Rs.12,000 respectively. They (Goodwill credited to A & B Rs.625each) admitted C as a partner for 1/5th share . He brings Rs.7,000 as his share of Capital & necessary Amount of Goodwill in cash. Give journal. Q7. A and B are partners sharing profits in the ratio of Rs.5:3. They admit C into the firm for 3/ 10th share in Profit which he takes 2/ 10th from A and 1/ 10th from B . C brings as premium in cash out of his share of Rs.7,800 . Goodwill account does not appear in the books of A and B . Give necessary journal entries in the books of new firm. A and B are partners sharing profits in the ratio of 3:2. They admit C into the firm for 3/7thy profits Q.8. (which he takes 2/ 7th from A and 1/ 7th from B ) and brings Rs.3,000 as premium out of his share of Rs.3,600. Goodwill account does not appear in the books of A and B . Draft the necessary journal entries . M and N are partners in a firm sharing profits and losses in the ratio of 5:3. On 31st December 1985, Liabilities Sundry Creditors Bills payable Capitals: Q9. 12,000 10,000 4,000 2,000 22,000 28,000 Assets Machinery Stock Sundry Debtors Bank Balance Cash in hand their Balance sheet was as under : 12,000 8,000 7,200 500 300 28,000 On the above date the partners decide to admit R asa partner on the following terms : (c) (d) The new profit sharing ratio of M,N and R will be 7:5:4 respectively. R shall bring Rs.8,OOO as his capital and Rs.4,OOO for his share of goodwill. M and N will draw half of the goodwill in cash. Machinery is to be valued at Rs.15,OOO,Stock at Rs.10,OOO and a provision for bad debts of Rs.1,OOO is to be created. There is a liability of Rs.2,OOO, being the outstanding salary payable to employees of the firm. This liability is not included in the creditors . Partners decide to show this liability in the books of accounts of the new firm. Prepare Revaluation Account, Partners Capital accounts and Balance sheet of the M,N and R. (Ans. Profit on Revaluation Rs.2,OOO Balance sheet total Rs.42,OOO ) A and B were partners sharing profits and losses equally. The balance sheet as on March 31,1999 was as follows: Liabilities Creditors Bills Payable Outstanding expenses General Reserve Capitals : 50,000 15,000 3,000 20,000 50,000 Assets Cash in hand Cash at Bank Debtors 20,000 Less : Provision 500 Stock Furniture 12,000 15,000 19,500 20,000 10,000
B Q10. 30,000 Machinery Land & building 18,000 73,500 1, 68,000 On that date, They agreed to admit C as a partner on the following terms: C shall get 1/5th share in profits and he will bring Rs.20,OOO as Capital and Rs.5,OOO as his share (b) (c) (d) (g) of goodwill. Goodwill brought in by C shall be withdrawn by A and B . Provision for doubtful debts should be brought up to 5% debtors. Machinery be depreciated by Rs.1,OOO and furniture by 12 1/2 %. Stock be revalued at Rs.23,OOO. Land & Building be appreciated by 20% and Investment of Rs.2, 000 which did not appear in books should be recorded. Prepare Revaluation A/c, Partners Capital A/c and Balance sheet. (Ans. Profit on Revaluation Rs.16,950; Balance sheet Rs.2,04,950) A and B share profits in the proportion of 3/4th and 1/4. Their Balance sheet on December 31,1981 was Liabilities Sundry Creditors Reserve Fund Capitals: B QII. 41,500 4,000 30,000 16,000 91,500 Assets Cash at Bank Bills Receivable Debtors Stock Fixtures Land and Buildings as follows: 26,500 3,000 16,000 20,000 1,000 25,000 91,500 On Jan,1,1982 , C was admitted into partnership on the following terms: That C pays Rs.10,OOO as his capital for 1/5th share. That C pays Rs.5,OOO for goodwill . Half of this sum is to be withdrawn by A and B . (c) That stock and fixtures be reduced by 10% and a 5% provision for doubtful debts be created on Sunday Debtors and Bills Receivable That the value of land and buildings be appreciated by 20%. There being a claim against the firm for damages, a liability to the extent of Rs.1,OOO should be created. An item of Rs.650 included in sundry creditors is not likely to be claimed and hence should be written back. Record the above transactions(journal entries )in the books of the firm assuming that the profit sharing ratio between A and B has not changed . Prepare the new balances sheet on the admission of Mr. C. Record the above transactions (journal entries) in the books of the firm assuming that the profit sharing ratio between A and B has not changed . Prepare the new balance sheet on the admission of Mr. C. (Ans. Profit on Revaluation Rs.16,OOO;Balance sheet A/c Rs.1,05,950) The balance sheet of A and B who shared profits in the ratio of 3:2 was as follows on 1st Jan 1999: Liabilities Sundry Creditors Reserve A's Capital B's Capital 20,000 20,000 28,000 22,000 90,000 Assets Cash in hand Sundry Debtors 20,000 Less: Provision 700 Stock Plant and Machinery Patients On this date , C was admitted as a partner on the following terms : (b) (c) (d) He was to get 4/15th of profit; He was to introduce Rs.30,OOO as capital; He would pay cash for goodwill which would be based on 2 years purchase of the average profits of past four years; A and B would withdraw half the goodwill in cash; Assets would be revalued as under; Sundry Debtors at book value less a provision of 5%. Plant and Machinery at Rs.41,OOO and patents at Rs.12,OOO and Liabilities were proved at Rs.23,OOO one bill for goods purchased having been omitted from 5,000 19,300 25,000 35,000 5,700 90,000 stock at Rs.20,OOO. book. Profits for the purchase of calculation of goodwill were : 1995 Rs.15,OOO 1997 Rs. 14,000
1996 Rs.20,OOO 1998 Rs.17,OOO Give ledger accounts to record the above and the Balance sheet on C's admission . What will be the new profit sharing ratio ? (Ans. Profit on Revaluation Rs.4,OOO;Total of B/S Rs.1,32,500; New Profit Sharing Ratio:33:22:20) Balance sheet of A,B,C , D as on 01,Jan,2005 Q12. Liabilities Capitals : B c Assets Land and building Plant and Machinery 90,000 60,000 Creditors General Reserve Workmen's Compensation Fund 20,000 30,000 10,000 4, 10,000 Stock Investments Debtors Less: Provision Bank 50,000 1,000 A, B , C had been sharing profits in the ratio 2:2:1. From 01-01-2005 they decide to admit D into new Ratio is 4:3:2:1. 80,000 70,000 60,000 49,000 51,000 4, 10,000 partnership for 1/ 10th share of profit. The (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) Land & Building is revalued at Plant and Machinery is to be reduced to Rs.75,OOO. Stock is to be reduced by Rs.10,000. An investment with book value of Rs.10,OOO is taken over by A at a valuation of Rs.16,OOO. Rest of the investment are revalued 20% above their book value . Provision for doubtful debts is to be maintained at 5% of debtors. Insurance premium amounting to Rs.3,000 was charged to profit and loss A/c. However , Rs.1,000 out of this is still unexpired. Creditors include Rs.4,OOO which is not likely to be claimed. Liabilities for Workmen Compensation is Estimated at Rs.3,OOO. A claim for damages against the firm for Rs.5,OOO is likely to materials suitable provision should be made therefore. Goodwill of the firm valued at Rs.60,OOO. D will bring Rs.35,OOO as his share Capital & necessary amount of goodwill in cash . Prepare Revaluation A/c , Capital A/c , & new balance sheet . Dr. Particulars To Plant & Machinery To Stock To Pro. Fro D.D To Provision for claim for damages REVALUATION ACCOUNT Amount PARTNER'S c 73,300 73,300 5,000 10,000 1,500 5,000 29,500 51,000 Particulars By Land & Building By +10,000) Capitals : B c To Investment To Balance C/d Liabilities Capitals Account B 11,800 11,800 5,900 16,000 By Prepaid Insurance By Creditors CAPITAL ACCOUNTS 35,000 35,000 By Balance b/d By Bank A/c By Workmen's Comp. Fund By General By Revaluation By premium A/c 2,800 12,000 11,800 Cr. Amount 90.000 2,800 12,000 11,800 30,000 16,000 1,000 4,000 51,000 c 60,000 1,400 6,000 5,900 73,300 Balance Sheet of A,B,C ,D as on 01 Jan 2005 Assets Land & Building Plant & Machinery Stock 35,000 35,000 75,000 60,000
c Creditors 73,300 35,000 Investment Debtors 50,000 Workmen's Compensation Fund Provision for claim for damages 16,000 3,000 5,000 Less: Provision for 2,500 B/D Prepaid Insurance Bank Q13. The following was the balance sheet of A,B and C sharing profits and losses in the ratio of 6:5:3 Liabilities Creditors Bills payable Capital Accounts : B c 10,000 4,000 19,000 16,000 8,000 57,000 Assets Land and building Furniture Stock Debtors Cash 60,000 47,500 1,000 92,000 respectively. 24,000 3,500 14,000 12,600 2,900 57,000 They agreed to take D into partnership and give him a share of 1/8th in the Profits on the following terms : (b) (c) (d) (e) That D should bring in Rs.4,200 as goodwill and Rs.7,000 as his capital. That furniture be depreciated by 12%. That stock be depreciated by 10%. That a provision of 5% be created for doubtful debts. That the value of Land and building be brought up to Rs.31,OOO. That after making the above adjustment the capital account of the old partners (who continue to share in the same proportion as before)be adjust on the basis of the proportion of D'S Capital to his share in the business i.e. actual cash to be paid off to or brought in by the old partners as the case may be . Prepare the cash A/c ,profit & loss adjustment A/c and the opening balance sheet of the new firm. (Profit : Rs.4,550; B/s-70,OOO) Q14. Liabilities A,B and C are partners sharing profits and losses in the ratio 2:3:5. On 31st march 1995 , their balance Capital Accounts : B c 36,000 44,000 52,000 Creditors Bills payable Profits & loss A/c They admit D into partnership on the following terms: 64,000 32,000 14,000 Assets Cash Bills Receivable Furniture Stock Debtors Investment Machinery Goodwill (1) (2) (3) (4) (5) (6) Furniture , Investment and machinery to be depreciated by 15%. Stock is revalued at rs.48,000 Goodwill to be valued at Rs.36,OOO. Outstanding Rent amounted to Rs.1,800. Prepaid Salaries Rs.800 D to bring Rs.38,000towards capital for 1/6 share and other partnership to readjust their sheet was as follows : 18,000 24,000 28,000 44,000 42,000 32,000 34,000 20,000 capital accounts on the basis of their profit sharing ratio. (7) Adjustment of capital to be made in cash. Prepare Revaluation Account, Partner's Capital Accounts , Cash Account and Balance sheet of the new firm . (Loss Rs.11,100; Capitals: A-32,OOO; B-48,OOO; C-80,OOO; D-32,OOO; cash -95,100; Q15. A and B are partners in a firm, sharing profits and losses in the ratio of 3:2. Their balance sheet was as Liabilities Sundry Creditors Capital Accounts: 60,000 30,000 Assets Plant Patent Stock follows on 1st Jan. 1985... 60,000 20,000 40,000
B 50,000 General Reserve 1, 10,000 20,000 1, 60,000 Debtors Bank 36,000 4,000 1, 60,000 C was admitted to the firm on above date on the following terms : He would pay rs.20,OOO as goodwill for 1/4th share in profits. (b) (b) Assets were revalued as under : Plant Rs.64,000; Stock Rs.36,000; Debtors at book value less provision for bad debts. 5% It was found that the creditors include Rs.2,800, which were not to be paid . But it was also found that there Was liabilities for compensation to workers amounted to Rs.4,OOO. C was to introduce Rs.40,OOO as capital and the capitals of other partners were to be adjusted in new profit Sharing ratio. For this purpose , current accounts were to be opened . (Any excess or Deficiency be transfer to current A/c ). Give Revaluation Account, Capital Accounts and balance sheet after C's admission . Q16.(a) A and B are partners in a firm sharing profits and losses in the ratio of 7:3. Their balance sheet as at Liabilities Sundry Creditors Bank Overdraft 46,000 2,000 Reserve Capital B 50,000 40,000 40,000 20,000 10,000 90,000 1, 60,000 Assets Cash in hand Sundry debtors Less: Provision for Doubtful debt Furniture Stock in Trade 31st march 1993 is as follows : 36,000 44,000 30,000 50,000 1, 60,000 On 1st April 1993, C joins the firm as a third partner for 1/4th share of the future profits on the following terms and conditions : (b) (c) (d) Goodwill is valued at Rs.40,000 and C is to bring the necessary amount in cash as premium for goodwill. 20% of the reserve is to remain asa provision against bad and doubtful debts . Stock in trade is to be reduced by 40% and furniture is to be reduced to 40%. A is to pay off the bank Overdraft. C is to introduce Rs.30,000 as his share of capital to which amount other partner's capital shall have to be adjusted . Show the necessary journal entries to carry out the above transaction and prepare balance sheet of the firm immediately after C has become a partner. (Loss Rs.38,OOO; B/S Capitals Q16.(b) Ram, Rahim and Bhaji are equal partners in a firm, their balance sheet as on 31st march 1999 was as Liabilities Sundry Creditors Employees Provident Fund Bills Payable General Reserve Capital Accounts : Ram Rahim Bhajji 27,000 6,000 45,000 15,000 90,000 Assets Goodwill Buildings Machinery Furniture Stock Book debt Cash follows: 72,000 24,000 1, 14,000 12,000 5, 66,000 On that date they agree to take peter as equal partner on the following terms : (b) (c) (d) Peter should bring in as his capital and goodwill . He share of goodwill is valued at Rs.60,OOO. Goodwill appearing in the books must be written off . Provision for loss on stock and provision for bad debt is to be made at 10% and 5% respectively . The value of building is to be taken at The total capital of the new firm has been fixed at and the partners capital accounts are to be Adjusted in the profit sharing ratio.Any excess is to be transferred to current account and any deficit is to be brought in cash. Prepare the Revaluation Account, Partners Capital accounts ,and the balance sheet of the new firm. Q16.(c) Saddam and Osama are partners in s firm sharing profit and losses in the ratio of 3:2. They admit C into profits on 31st December , 1996. On that date their balance sheet stood as under : Liabilities Capital Accounts : Saddam Osama General reserve Sundry Creditors 60,000 50,000 10,000 50,000 Assets Goodwill Plant and Machinery Furniture Investments Stock (Profit -Rs.58,500; B/S partnership of 1/5th share in 5,000 65,000 15,000 20,000 20,000
Sundry Debtors Cash in hand 1, 70,000 Bush was admitted on the following terms : 30,000 15,000 1, 70,000 (c) (d) (e) (g) Bush is to bring capital Rs.40,000 and goodwill Rs.15,000. Partners agreed to share the future profits in the ratio of 5:3:2. Investment will be appreciated by 20% and furniture depreciated by 10%. One customer who owed the firm Rs.2,OOO become in solved and nothing could be realized from him. Creditors will be written back by Rs.2,000. Outstanding bills for repairs Rs.1,OOO will be provided for Interest accrued on investment Rs.2,OOO. Capital of the partners shall be in proportion to their profit sharing ratio. For this , adjustment be made through cash. Prepare Revaluation Account, capital Account and balance sheet of the new firm . (Profit rs.3,500; Osama rs.60,OOO; Bush Rs.40,OOO; B/S 17. 18. 19. The following is the Balance sheet as on 31st December 2002 of A and B, who share profits and losses in the ratio of 3:2.. Liabilities Capital Accounts : B General Reserve Workman's Compensation Fund Creditors Assets Plant and Machinery Land and Building 10,000 10,000 15,000 5,000 10,000 50,000 Debtors 12,000 Less : Provision 1,000 for D.D Stock Cash (iii) (iv) On 1st Jan 2003, they agreed to admit C into partnership of the following terms : Provision of doubtful debts would be increased by Rs.2,000. The value of land and building would be increased to Rs.18,OOO. The value of stock would be increased by Rs.4,OOO. The liability against Workmen's Compensation Fund is determined at Rs.2,OOO. C brought in as his share of goodwill Rs.10,000 is cash . C would brings further cash as would make his capital equal to 20% of the total capital of the new firm after the above revolution and adjustment are carried out. Prepare Revaluation Account, Partner Capital A/c and Balance sheet of the firm after C's admission. (Profit Rs.12.OOO; Capitals: A-34,OOO; Below is the Balance sheet of Khanna and Seth who share profit and losses in the ratio of 3:2. Liabilities Sundry Creditors Bills Payable General Reserve Capital Accounts : Khanna Seth 15,000 2,750 10,250 30,000 20,000 78,000 Assets Plant and Machinery Patents Furniture Stock Sundry Debtors Cash Goodwill 10,000 8,000 11,000 12,000 9,000 50,000 30,000 5,000 1,000 16,000 15,000 1,000 10,000 78,000 On the date of the Balance sheet Mehta is admitted as a partner with 1/4th share in profits upon the following conditions : (b) (c) He is to contribute proportional capital. Goodwill is to be valued at 2 years purchase of four years average profit which were Rs.10,OOO, and Rs.13,OOO respectively. Plant and Machinery is to be written down to Rs.25,OOO and Patents written up to Rs.9,OOO. A provision of 5 % on debtors is required . A liability of Rs.500 included in Sundry creditors is not likely to arise . A joint life policy for Rs.50,OOO taken out by Khanna and Seth on which premium totaling Rs.10,000 have been paid has a surrender value of Rs.6,OOO. Pass entries to record transactions on Mehta's admission and give the balance sheet after admission is complete assuming that joint life policy is to appear in the books of the new firm. (Loss on Revaluation Rs.1,250 Total of B/S .Rs.97,250) The following is the balance sheet of X and Y as at 31st March 1991. Z is admitted as a partner on that date when the position of X and Y was as under :
Liabilities X 's Capital Y's Capital Creditors General Reserve Workman's Compensation Fund 10,000 8,000 12,000 16,000 4,000 50,000 Assets Debtors Stock Cash in hand Buildings Machinery 11,000 12,000 9,000 8,000 10,000 50,000 X and Y shared profit in the proportion of 3:2. The following terms of admission are agreed upon . (b) (e) Revaluation of assets : Buildings Rs.18,OOO; stock Rs.16,OOO. The liability on workmen's compensation fund is determined at Rs.2,OOO. Z brought in as his share of goodwill Rs.10,000 in cash . Z was to bring further cash as would make his capital equal to 20% of the combined capital of X and Y are at above revaluation and adjustment are carried out. The future profits sharing proportions were as under X 2/5th , Y 2/5th and Z 1/5th• 20. Prepare the new balance sheet of the firm and the capital account of the partners. (Revaluation Profit rs.14,OOO B/S Rs.86,OOO) Rahul Vaidya & Amit Sana were partners in a firm sharing profits and losses in the ratio of 4:3. The following is the balance sheet of the firm as on 31st December , 2001: Liabilities Sundry Creditors Bank Overdraft Employees Provident Fund Workman's Compensation Rahul's Capital A/c Amit Capital A/c 20,000 17,000 3,000 Reserve 7,000 66,000 57,000 1, 70,000 Assets Cash Debtors Less : Provision Stock Plant Buildings 20,000 300 14,000 20,000 20,000 40,000 75,000 1, 70,000 They agreed to admit Abhijeet Sawant with effect from 1st Jan 2002 with 1/4th share in profits on the following terms : (b) (d) Abhijeet bring in capital to the extent of 1/.4th of the total capital of the new firm after all adjustment have been made. The necessary adjustment should be made through the current accounts of partners. Buildings are to be appreciated by Rs.14,OOO and plant to be depreciated by Rs.7,OOO. The provision on debtors is to be raised to Rs.1,000. The goodwill of the firm has been valued at Rs.21,000 but no goodwill is to appear in the books. Prepare the Revaluation account, Partner Capital accounts and the balance sheet of the new firm after Mishra admission . (Profit: Rahul 76,600: Amit 47,183 B/S CHANGE IN PROFIT SHARING RATIO Sunny, Anu and Mohit are partners sharing profits and losses in the ratio 5:3:2. Their balance sheet on 31st December, 2001 was as follows : Q21. Liabilities Capitals : Sunny Anu Mohit 75,000 45,000 30,000 Assets Bank Buildings Furniture Debtors Stock Profit and Loss A/c 20,000 35,000 45,000 75,000 25,000 Workmen Compensation Fund Bills payable General reserve Creditors 15,000 55,000 10,000 70,000 On 1st Jan,2002, They decide to share future profits and losses in the ratio 3:3:1 and following adjustment were agreed Upon : A provision for debt @ 5% is to be made on debtors. Buildings is to be appreciated by 25%.
(c) (d) 5% of stock has been spoiled Furniture to be depreciated by 10%. Goodwill is to be valued at Rs.90,OOO. Prepare Revaluation Account, Partner Capital Accounts and Balance sheet of the reconstituted firm. (Profit Rs.15,500; Capital B/S Q22. X , Y and Z are partners in a firm sharing ratio of 2:2:1. Their balance sheet as at March 31, was Liabilities Creditors Bills payable X's Capital Y's Capital Z's Capital General Reserve 30,000 15,000 60,000 30,000 15,000 12,000 1, 62,000 Assets Land Building Plant Stock Debtors Cash X, Y and Z decide to share the profit equally w.e.f. April 1, For this purpose it was agreed that : The goodwill of the firm should be valued at Rs.18,OOO. Land should be revalued at Rs.48,OOO and building should be depreciated by 6%. Creditors amounting to Rs.1,OOO were not likely to be claimed and hence should be written as follows: 30,000 30,000 60,000 30,000 9,000 3,000 1, 62,000 off . You are required to : (a) Record the necessary journal entries to give effect to the above agreement, without opening Revaluation account. (b) Prepare the capital account of the partners and (c) Prepare the balance sheet of the firm after reconstitution . (Capitals B/S X , Y and Z are partners in affirm sharing profits and losses in the ratio of 5:3:2. They decide to share future profits and losses in the Q23. ratio of 2:5:3 with effect from 1st April, Their Balance sheet showed a debit a Balance of Rs.4,OOO in profit and loss Account and a balance of Rs.24,OOO in General Reserve . For this purpose , it was agreed that (b) (c) (d) (e) The goodwill of the firm be valued at Rs.30,000. The Land (having book value of Rs.50,000) be valued at Rs.80,000. The Stock (having book value of Rs.50,OOO) be depreciated by 6%. Creditors amounting to Rs.400 were not likely to be claimed . Joint life policy of which premium were written off to P and L A/c be valued at a surrender value of Rs.22,600. Give the necessary single adjusting entry to record the above arrangement. Z X (Cr.) 30,000) Parul, Swati and Neha are partners in a firm, sharing profits equally. Following is the balance sheet as on December 31st ,2004 . Q8. Liabilities Capitals : Parul Swati Neha 90,000 80,000 45,000 71,000 Assets Fixed Assets Stock in Trade Sundry Debtors (---)Provision Bank Balance Investment Profit & Loss A/c 28,000 4,800 General Reserve Creditors 35,000 23,000 16,000 60,000 21,000 They decided to change the ratio as 2:3:5. For this purpose following revaluations were agreed upon : (c) Fixed Assets depreciated by 20%. Stock appreciated by 10%. Investment valued at Rs.48,000 All the debtors proved good. Goodwill of the firm valued at Rs.30,OOO. Pass the journal entries if partners decided to keep all the assets at their present book values and to keep general reserve undisturbed. (Parul Sacrifice 4/30 ; Swati Sacrifice 1/30 ; Neha gains 5/30)
RETIREMENT P, Q and R equal partners in a firm. Goodwill has been valued at Rs.36, 000; On R's retirement from the firm 1. P and Q agree to share profits in the ratio of 3:2. Pass necessary journal entry for treatment of R's share of goodwill. (P's A/c Dr. 9, 600, Q's A/c Dr. 2, 400, R's A/c cr. 12, 2004] X, Y and Z are partners sharing profits and losses in the ratio of 2/5, 2/5 and 1/5 respectively. Z retires and X 2. and Y decide to share the future profits and the losses in the ratio of 2:1 respectively. There is no goodwill account in the books of the firm. Give necessary journal entries to record this arrangement. Goodwill of firm 3. 4. 1, 31, 000 1, 31, 000 .5 70, 500 70, 500 valued Rs. 3, 000. (X's A/c Dr. 800, Y's A/c cr. Rs. 200, Z's A/c cr. 600) A, B and C are partners sharing profits and losses in the ratio of 4:3:1. B retires selling his share of profits to A and C for Rs. 8, 100; Rs. 3, 600 being paid by A and Rs. 4, 500 by C. The profit for the year after B retirement was Rs. 10, 500. You are required to give necessary journal entries. (New ratio 2:1) A, B and C were partners, sharing profits in the proportion of one half, one third and one-sixth respectively. The firms Balance Sheet as on 31st M arch 2005, stood as under: Liabilities Sundry Creditors Bills Payable Reserve Capital Accounts: B c 19, 000 5, 000 12, 000 40, 000 30, 000 25, 000 Assets Cash at Bank Debtors Less Provision Stock Motor Vans 16, 000 500 Plant & Machinery Factory Buildings 2, 500 15, 500 25, 000 8, 000 35, 000 45, 000 B retires on that date subject to the following adjustment: (a) The goodwill of the firm to be valued at Rs. 18, 000. (b) Plant and Machinery to be depreciated b 10% and Motor Vans by 15%. (c) Stock to be appreciated by 20% and Buildings by 10%. (d) Provision for Doubtful Debts to be increased to Rs. 2, 450. Prepare Revaluation A/c, Capital Accounts to Partners and the Balance Sheet of the new firm. (Capital: A - 42, 925, C - 25, 975, B's Loan - 40, 950; Profit Rs. 2, 850; Balance Sheet Rs. 1, 33, 850) Ram, Shyam and Mohan were in partnership sharing profits and losses in the proportion of 3:2:1. On 31st March. 2005 shaym retires from the firm. On that date, their Balance Sheet was as follows: Liabilities Trade Creditors Bills Payable Expenses Owing Reserve Capital: Ram Shyam Mohan The terms were: 3, 000 4, 500 4, 500 13, 500 15, 000 15, 000 15, 000 Assets Cash in hand Cash at Bank Debtors Stock Factory Premises Machinery Loose Tools 1, 500 7, 500 15, 000 12, 000 22, 500 8, 000 4, 000 (b) (c) Goodwill of the firm was valued at Rs. 13, 500. Expenses owing to be brought down to Rs. 3, 750. Machinery and loose tools are to be valued at 10% less than their book value.
(d) Factory premises to be revalued at Rs. 24, 300. Show the Revaluation A/c, Partners Capital Accounts and Prepare the Balance Sheet of the firm after the retirement of Shyam. (Profit on Revaluation Rs. 1, 350: Balance Sheet Rs. 71, 100; A.I.S.S.E. 1983) N, B and S are partners sharing profits in the ratio of h: 1/3: 1/6. Their Balance Sheet as at 31st Dec. 2005 was as under: 6. 24, 000 24, 000 7. 8. Liabilities Capital: B s Reserve Sundry Creditors Bills Payable 5, 000 4, 000 4, 000 6, 000 4, 000 800 Assets Cash Stock Debtors Plant and Machinery Buildings 800 5, 200 6, 000 4, 800 7, 200 On 1st January, 2006, N retired from the firm and the assets of firm were revalued as follows: Goodwill Rs. 1, 600; Stock Rs. 4, 800; Debtors Rs. 5, 600, Plant and Machinery Rs. 4, 400; Buildings Rs. 8,800; Creditors agreed to a discount of 2 1/2 %. Assuming that above adjustments were duly carried through. Prepare Revaluation Account, Partners Capital Accounts, and the Balance Sheet of B and S. Amount due to N on retirement was agreed to be transferred to his Loan Account. (Profit on Revaluation Rs. 500; Total of Balance Sheet Rs. 24, 400){D.S.S.E. (Comptt.) 1992} Mukesh, Naresh and Kamlesh are equal partners and their Balance Sheet as on 31st Dec.2005 was as follows: Liabilities Creditors Reserve Capitals Accounts . Mukesh Naresh Kamlesh 22,400 15,000 60,000 50,000 50,000 Assets Cash at bank Debtors Less: Reserve Investment Stock Plant Buildings 27,000 1,000 6,200 26,000 7,000 32,000 51,200 75,000 NAmlesh retires on that date subject to the following conditions: (a) Goodwill of firm valued Rs.21,OOO. (b) Plant be depreciated by 10% and the stock be appreciated by 20%. (c) Reserve for doubtful debts be raised to 6%. (d) Interest accrued on investment Rs.348. Pass the necessary Journal entries ,prepare necessary ledger accounts and the openings balance sheet of the new firm. (Profit A/c Kamlesh 's loan Rs.62,336) X, Y and Z were partners sharing profits and losses in the ratio of h: 1/3:1/6 respectively. The Balance sheet of the firm on 31st December , 2005 stood as follows: Liabilities Creditors Bills payable Reserve fund Capitals Accounts . 9,500 2,500 6,000 47,500 65,500 Assets Cash at bank Debtors Less: Reserve Stock Motors Vans Machinery Buildings 8,000 250 x z 20,000 15,000 12,500 1,250 7,750 12,500 4,000 17,500 22,500 65,000 Y retires on that date subject to the following conditions: Goodwill of the firm is valued Rs.9, 000. (b) Machinery to be depreciated by 10% and Motor Vans by 15%.
(c) (d) Stock to be appreciated by 20% and buildings by 10%. The provision for doubtful debts is to be increased by Rs.975. Liability for workmen's compensation to the extent of Rs.825 is to be created. It was agreed that X and Z will share profits in future in the ratio of 3:2 respectively. You are required to prepare the revaluation account, Capital accounts of the partner and the balance sheet of the firm after the retirement of (Profit Rs.600; Capital 22,400; 11,500; Y's Loan Rs.66,925) Ram & Co. is a partnership firm with ram , Vijay and Shyam sharing profits and losses in the ratio of 5:3:2. The balance sheet of the firm on 31st March 2005 is as under : Q9. Q10. QII. Liabilities Capitals : Ram Shyam General Reserve Long term Loan Bank overdraft Trade Creditors 80,000 20,000 30,000 20,000 44,000 Assets Land and Building Plant and Machinery Furniture Investments Stock Debtors 2, 10,000 1, 30,000 40,000 12,000 It was mutually agreed that Vijay will retire from partnership , and for this purpose the following adjustment are to be made : (iii) (iv) Goodwill is to be valued at Rs.l Lakh but the same was to be treated without opening goodwill a/c. Land and Building ; Plant and machinery are to be depreciated by 10% and 5% respectively . Provision for doubtful debts is maintained by 20% on debtors . Investment are to be taken over by Vijay at Rs.15,OOO. Ram and Shyam will share future profits equally. The amount due to Vijay is to be transferred to his loan account . Prepare Revaluation Account, Capital Accounts of the partners and balance sheet of the reconstituted firm. (Loss 52,300; Vijay's Loan 25,310; Capital 6460(Cr.) B/S A,B and C were carrying on business in partnership sharing profits and losses in the ratio of 3:2:1 Respectively . On 31st march,2005 Balance sheet of the firm stood as follows : Liabilities Sundry Creditors Reserve Capitals : 14,590 6,000 29,000 49,590 Assets Cash Debtors Stock Building B c Liabilities Creditors Capitals : B c Reserve 12,000 8,000 9,000 6,900 8,000 11,000 23,000 49,590 B retired on the above —mentioned date on the following terms : (b) (c) (d) buildings be appreciated by Rs.7,OOO. Provision for doubtful debts be made at 5% on Debtors . Goodwill of the firm be valued at Rs.9,OOO and adjustment in this respect be made without raising goodwill account . Rs.5,000 be paid to B immediately and the balance due to him to be treated as a loan carrying interest at 6% per annum. Pass Journal entries to respect the above mentioned transactions and show the balance sheet of the Firm as it should appear immediately after 'B' retirement. On 31st March 2005, the balance sheet of M/S A,B and C sharing profits and losses in proportion To their capitals, stood as follows : Assets Cash at Bank Debtors (Profit Rs.6,600. B/S Rs.51,190) 80,000 98,000 90,000 60,000 Less : Provision 2,000 Stock Machinery Land and Buildings On that date , B wants to retire from the firm and the remaining partners decide to carry on . The
Following readjustments of assets and liabilities have been agreed upon before the ascertainment of the amount payable to B: (b) (c) (d) (g) That out of the Fire Insurance Premium paid during 1998-99, Rs.10,000 be carried forward As unexpired. That the land and building be appreciated by 10%. That the provision for doubtful debts be brought up to 5% on debtors. That machinery be depreciated by 5% . That a provision for Rs.15,OOO be made in respect of an outstanding bill for repairs . That the goodwill of the entire firm be fixed at and B's share of the same be adjusted in the A/c of A and C who share future profit in the proportion of 3/4th and 1/4th respectively. That B be paid Rs.50,OOO in cash and the balance be transferred to his loan A/c . Q12. Liabilities Prepare Revaluation Account, Capital Accounts of the partners and the balance sheet of the firm of A and C. (Revaluation Profit Rs.30,OOO; Balance sheet total Rs.10,03,OOO) X, Y and Z are partners sharing profits in the ratio of their capitals . Y retired from the firm on 31st December , 2006. the date on which the balance sheet of the firm was as follows : Sundry Creditors Bills payable Outstanding Salary Capitals: X z The following adjustment were made : 4,000 2,500 500 30,000 24,000 18,000 79,000 Assets Cash Debtors 6,000 Less : Provision 400 Stock Machinery Land and building 5,400 5,600 10,000 28,000 30,000 79,000 (c) (d) Buildings appreciated by 20%, stock depreciated by 10% and Provision for doubtful debts Was to be 5%.. A reserve for legal charge payable was to be made at Rs.900. Goodwill of the firm be valued at Rs.12,OOO and Y 's share in it be adjusted into the capitals Accounts of X and Z without opening goodwill A/c . Rs.24,OOO from Y's capital accounts be transferred to his loan account and balance be paid In cash. New profit sharing ratio of X and Z decided to be 3:2. Q13. Liabilities Give the necessary ledger accounts and the balance sheet of the firm after Y 's retirement. (Profit Rs.4,200 Y's loan 24,000 Capital 29,550 ; 17,250 B/S 78,700) Odd and Even are partners sharing profits and losses equally. On 31st December 2005. Their balance Sheet was under: Sundry creditors Capitals : Odd Even 7,000 5,000 4,000 16,000 Assets Buildings Machinery Stock Sundry debtors Bank balance 3,000 1,500 3,250 8,150 100 16,000 It is agreed that odd shall retire on 31st December 2005 and that Even shall continue the business on The following terms : (b) (d) The goodwill of the firm to be agreed as worth Rs.1,000. Stock to be agreed as worth Rs.2,750. A provision for doubtful debts (4% on the sundry debtors ) to be made . Odd to be paid out as to Rs.2,000 of the amount due to him in cash and the balance by a bill of exchange (without interest ) at 12 months. Give journal entries regarding the above and the balance sheet of Even on 31st December 1991 after the adjustment have been made . (Loss 826, Even's Capital 3,087 B/S 15,074)
Q14. Liabilities The following was the balance sheet of A and B as on 31st December 2005: Capitals : B Reserve Employees Provident Fund Sundry creditors Profit and loss A/c 10,000 7,500 6,000 500 2,000 6,000 32,000 Assets Machinery and Plant Patents Stock in Trade Sundry Debtors Cash 20,000 2,000 5,000 4,000 1,000 32,000 Q15. Liabilities A retired from the business on 1st Jan, 2006, According to the partnership deed , goodwill is to be Calculated at two years purchased of the average profit in the three years preceding dissolution of the partnership. The profit of the years ending 31stdecember, 2003 and 31st December 2004, were Rs.6,000 and Rs.3,OOO respectively. The patents are valueless. Machinery and plant is to be depreciated by 10% . A provision @ 5% for doubtful debts is to be created on the book debts. Assuming that these adjustment are duly carried out, show the capitals accounts of the partners and The balance sheet of B after A has been paid off. B borrows money from his bank on the security of plant and stock to pay off A. (Capital A—6,400; Loss on Revaluation Rs.4,200 Total of balance sheet 27,800) A,B and C are partners sharing profits in the ratio of 4:3:2. Their balance sheet on 31st march 2005 Was as follows : Creditors General Reserve 33,000 27,000 Capitals : B c Assets Cash Debtors Stock Machinery Land and Building 10,000 15,000 30,000 50,000 70,000 45,000 30,000 The firm had a joint life policy for Rs.40,OOO. The surrender value of the policy was Rs.13,500 as on 31st March, 2005. B retires on the above date on the following conditions : (c) (d) Land and building be appreciated at rs.18,OOO. Goodwill is to be valued at Rs.18,OOO. A provision for doubtful debts of 5% is to be created and machinery be written down by 10% and stock by 5%. A provision of Rs.1,500 be made in respect of legal charges . B to be paid Rs.5,OOO and balance be transferred to his loan account. Prepare Revaluation Account, Partners capital accounts and balance sheet of A and C . (Capitals 89,000, 39,500 Profit Rs.11,250 B's loan Rs.63,250 B/S Q16. Liabilities A,B and C were partners sharing profits in the ratio of 3:2:1. Their balance sheet on 31st March 2005 was as follows : Sundry Creditors General Reserve Capitals : B c 20,000 9,000 40,000 30,000 20,000 1, 19,000 Assets Goodwill Patents Stock Debtors Machinery Cash 10,000 8,000 25,000 20,000 45,000 11,000 The firm had a joint life policy for Rs.60,000 on which premium were paid in all amounting to Rs.25,000 . The surrender value of the policy was Rs.9,000 on 31st March, 2005. B retires on the above date upon the following terms : Goodwill of the firm be valued at Rs.25,OOO.
(b) (c) Machinery be written down by 10%, Partners be written up by 25%, a provision of 5% be created on debtors and a Reserve of 2/12 % on creditors be made. B to be paid Rs.15,000 immediately, which is to be contributed by the other partners in the ratio of their capitals. Q17. Liabilities A and C agreed to share profits in future in the ratio of 3:2 and decided not to keep any account in books in respect of joint life policy. Give journal entries to record the above and the balance sheet of the firm after B's retirement. (Loss on Revaluation Rs.3,OOO; B's loan a/c .Rs.25,OOO B/S A,B and C were in partnership sharing profits and losses equally. On 14thJan 2005, A retired when The firm balance sheet was as under : Assets Sundry Creditors Capitals : B c 16,000 12,000 7,800 6,928 22,600 29,528 Land and building Plant and machinery Sundry Debtors Investments Cash 4,200 6,980 8,915 8,000 1,433 29,528 According to partnership deed , assets were to be revalued on A's retirement as under : (b) (c) Land and building Rs.5,800, Plant and machinery Rs.6,564; Investment Rs.8,400. Besides , goodwill was then valued at Rs.9,600. A accepted the investment at their revalued figures in part payment of his dues: B paid in Rs.4,OOO as further capital and A was paid off the balance of his account. Q18. Prepare the Revaluation account, partners capital accounts and the revised balance sheet of B and c. (Profit rs.1,584, cash paid to A rs.3,328 ; B/S Rs.23,384; capital A/c B Rs.9,728 and C Rs.6,728) The balance sheet of A,B and C who were sharing the results in proportion to their capitals as on 31st march 2005, stood as follows : Liabilities Bills payable Sundry Creditors Capitals : B c 16,000 12,000 8,000 General Reserve 6,250 11,000 36,000 9,000 62,250 Assets Factory Buildings Debtors 12,000 Less : Provision 500 Stock Plant and machinery Bank balances 16,000 12,000 14,000 14,000 6,000 62,250 B retired on that date and the following adjustment were made : (b) (d) (e) Stock was depreciated by 8%. Factory building were appreciated by 20%. Provision for doubtful debts to be created up to 5%. Provision for legal charges to be made at Rs.135. The goodwill of the entire firm was fixed at Rs.10,800 and B's share was to be adjusted into the accounts of A and C who will share profits in future in the ratio of 5:3 respectively. The entire capital of the new firm be fixed at rs.28,OOO in the profit and loss sharing ratio. Pass journal entries and prepare the initial balance sheet of A.B and C after transferring the balance In B's capital account tot his loan account. (Ans. Profit Rs.1,800 Total of B/S Rs.64,585) A,B and C are partners in the ratio of 5:3:2. Their balance sheet as at 31st march 2005 was as follows Q19. Liabilities Trade Creditors General Reserve Capitals : B c 37,000 12,000 10,000 12,000 4,000 Assets Deferred Advertisement Expenditure Land and building Machinery Stock Sundry Debtors 18,000 16,000 9,000 14,500 16,000
Bank 75,000 It was agreed that A shall retire on 31st March 2005 as per the following conditions : Goodwill of the firm is to be valued at three years purpose of the annual profits of the last f for the preceding years were Rs.30,000; Rs.8,OOO; Rs.12,OOO; 1,500 75,000 four years. The profits (iii) (iv) (vi) (vii) Rs. 14,000. Stock is agreed to be valued at Rs.13,500. Land and buildings are to be revalued at Rs.24,OOO and Machinery at Rs.6,400. Provision for doubtful debts at 5% on Sundry debtors is to be created. An unclaimed liability of Rs.400 is to be written off. A to be paid the amount due to him by raising a loan of Rs.20,000 on the security (Mortgage)of the land and building and the balance by exchange (without interest ) payable at the expiry of 12 months. B and C to bring in or take out cash so as to maintain the capital of the new firm at Rs.40,OOO in their profit sharing ratio. Show the calculation of goodwill , and record the above adjustment and prepare the balance of B and C on 31st March , 2005 after the retirement of A. (Profit on Revaluation Rs.4,OOO; Total of B/S Rs.1,09,600) On 31st march 2005, the balance sheet of P, Q and R who were sharing profits and losses in proportion to their capitals stood as follows : Q20. Liabilities Bills Payable Creditors General Reserve 6,000 12,000 6,000 42,000 28,000 14,000 Assets Land and Machinery Machinery Debtors Less : Pro. Stock Cash at bank 10,000 200 Capitals : p Q21. Liabilities 55,000 25,000 9,800 10,000 8,200 Q retired and the following re-adjustments of the assets and liabilities have been agreed upon before the ascertainment of the amount payable to Q. (c) (d) (g) That out of the amount of insurance which was debited entirely to profit and loss account Rs.1,400 be carried forward as an unexpired insurance . That the land and building be appreciated by 10%. That the provision for doubtful debts be brought up to 5% as debtors. That machinery be depreciated by 6%. That a provision of Rs.1,500 be ,made be made in respect of an outstanding bill for repairs. That the goodwill of the entire firm be fixed at Rs.18,OOO and Q's share of the same be adjusted into the accounts of P and R who are going to share future profits in the proportion of three —fourth and one- fourth, respectively. That the entire capital of the firm as newly constituted be fixed at Rs.60,000 between P & R in the proportion of three- fourth and one-fourth after passing entries inn their accounts for adjustments, i.e. actual cash to be paid off or to be brought in by the continuing partners as the case may be . That Q be paid Rs.5,OOO in cash and the balance be transferred to his loan account. Prepare necessary accounts and the balance sheet of the firm of P & R. (Profit on Revaluation Rs.3,600 Total of b/s Rs.1,11,700) A,B and C were partners sharing profits and losses in the ratio of 3:2:1. their balance sheet on at 31st March 2005 was as follows : Sundry Creditors Bank Overdraft Capitals : B c General Reserve 16,000 5,000 33,000 22,000 16,000 6,000 98,000 Assets Goodwill Land and buildings Plant and machinery Stock Sundry debtors 22,000 Less: Provision 500 Cash in hand 6,000 26,000 30,000 15,000 19,000 1,500 98,000 B retires on the date of Balance sheet on the following conditions:
Goodwill is to be valued at 2 years purchase of the average profits of the past years which were Land and buildings are to be revalued at Rs.30,000.Plant and machinery is to be written Down to Rs.25,000; the provision for doubtful debts to be increased to 5% on Sundry debtors and a liabilities of Rs.1,500 is to be (c) created for a claim against the firm. B is to be paid increase in bank overdraft) immediately and the balance is to be left as loan at 9% p.a. Q22. The capitals of the newly constituted firm is fixed at Rs.80,OOO to be divided among A and C in their Profit sharing ratio; adjustment to be made by payment into or out of cash. Journalize the entries required and give the balance sheet after B's retirement . (Loss on revaluation Rs.3,OOO : Total of B/S Rs.1,35,500) A, B and C were partners sharing profits in the ratio of 5:4:3. Their final position as on March 31, 2005 was as below: Liabilities Trade Creditors Capitals : B c General Reserve 15,000 45,000 36,000 27,000 12,000 Assets Cash at bank Debtors 22,000 Less: Provision 200 Stock Machinery & Equipment Buildings 32,200 9,800 20,000 23,000 50,000 B decide to retire . The partners agreed upon the following adjustment to assets and liabilities for determining the amount payable to B: That the provision for doubtful debts be increased to 5%. That the stock be depreciated by 5% and building be appreciated by 20%. That a provision of Rs.1,500 to be made for setting a dispute with a former employee. That the goodwill of the firm to be valued at Rs.32,400. No goodwill account to be raised . That A and C to be equal partners for future . That cash is to be brought in by or paid off to the partners in the new firm to maintain tha capital of Rs.96,000 in equal proportion. Pass the necessary journal entries and prepare Revaluation account , Bank account , partners capital accounts and the balance sheet of the new firm after B's retirement . The balance sheet of A, B and C as at 31st march 2006 is as under : Q23. Liabilities Creditors Capitals B c General Reserve (Profit on Revaluation Rs.7,200; Total of B/S 15,000 50,000 90,000 15,000 10, 16,000 Assets Goodwill Land and buildings Printing Press Stock of Papers etc. Debtors Less: Provision 10,000 Cash at bank C decided to retire on 31st March 2006 as he got some foreign assignment. The partners agreed for The following terms and conditions: (b) (d) (g) Stock to be depreciated by 30% and sale of old papers realized at Rs.1,000. Provision for doubtful debts to be increased to 18% of sundry debtors. Printing Press to be depreciated by 40% and Land and building to be appreciated by 15%. The goodwill of the entire firm to be valued at Rs.75,000. A and B to share future profit in the ratio of 5:3 and maintain the capital of the firm at Rs.8 lakhs in that ratio. A and B to bring in sufficient cash in case of deficiency and withdraw the surplus balance , if any. Final settlement of retiring partners share to be done immediately on his retirement . Pass the journal entries and prepare the necessary ledger accounts and the balance sheet of the firm on the retirement of C.
Q24. Liabilities (Loss on Revaluation Rs.27,OOO; Total of b/s Rs.9,31,OOO) J,R and Y were sharing profits and losses in proportion to their capitals . Their balance sheet on 31st December 2005 was as under: Sundry creditors Capitals: 76,000 57,000 38,000 Employees provident fund Contingency Reserve fund Employees compensation 20,000 1,600 4,500 4,500 Assets Buildings Machinery Stock Debtors 20,000 Less: provision 400 Bank Cash 48,000 18,000 19,600 8,000 8,000 reserve R decided to retire due to old age . They agreed to the following adjustment in the books of accounts to decide R's share: (b) (c) (d) Buildings to be appreciated by 20%. Provision for bad and doubtful debts is to be increased to 5% on debtors. Out of total insurance premium paid Rs.2,800 is to be treated as prepaid insurance. This amount was earlier debited to profit and loss account . Machinery is to be depreciated by 20% . Goodwill of the entire firm is to be valued at Rs.72,000. R's share is to be adjusted in the account of J and Y. J and Y also decide that the total capital of the firm after R's retirement will be in their new profit sharing ratio,(i.e.5:3) actual cash to be brought in or paid to a partner as the case may be . Q25. Liabilities You are required to prepare Revaluation account , the capitals Accounts of all the partners and the balance sheet of J and Y. (Capitals R's loan Profit 12,600 Amount paid to J Rs.7,350; Amt. Brought in by Y Rs.7,350) A,B and C are partners sharing profits and losses in the ratio of 3:2:1. Their balance sheet as at 31st December 2005 stood as under: Creditors Bills payable General Reserve 45,000 18,000 9,000 2, 72,000 Assets Cash in hand Debtors 35,000 Capitals : B c 26. 70,000 80,000 50,000 Less: Provision 5000 For D/D Stock Investment Furniture Plant and furniture Goodwill 22,000 30,000 40,000 20,000 24,000 12,000 A retires and the following is agreed upon: Debtors are all good . (d) (g) (h) Depreciate furniture by 5% and stock by 10%. Interest accrued on investment is Rs.3,000. Creditors will be written back by Rs.3,OOO . Goodwill of the firm is valued at Rs.30,OOO. The firm had taken a joint life policy of The surrender value of the policy on 31st December ,2005 was R.15,OOO. A takes over investment at a valuation of Rs.25,OOO. Joint life policy are not to appear in the new balance sheet . Capital of the newly constituted firm shall remain the same as before and capital of B and C shall be in proportion to their new profit sharing ratio 3:2. Prepare Revaluation Account, Partners capital account and the balance sheet of B and C after retirement assuming that amount due to A is paid off on retirement . (Profit rs.10,800: Capital 80,000; Amt. paid to A-71,OOO; B/S The balance sheet of X, Y and Z who shared profits in the ratio of 4:3:2 as on 31st March 2005 was As follows:
Liabilities Sundry Creditors General Reserve 7,700 1,800 45,000 54,500 Assets Cash at bank Debtors 6,000 Capitals x z 27. Liabilities 19,000 14,000 12,000 Y retired on the above date: Less: Provision 300 Stock Plant and Machinery Buildings 6,300 5,700 7,000 10,500 25,000 54,500 (b) (c) (d) (e) (g) Stock be depreciated by 5%. buildings be appreciated by 5%. A provision of Rs.320 be made for legal charges. Goodwill of the firm is valued at Rs.14,400. X and Z to share the future profits in the ratio of 5:3. Y to be paid Rs.5,OOO in cash and the balance to be transferred to his loan account. X and Z to maintain their capitals in the new profit sharing ratio and to bring in or withdraw cash for the purpose. Capital of the new firm be fixed at Rs.28,000. Prepare Revaluation account, Capital accounts of all partners , bank account and the balance sheet of X and Z after retirement of Y. (Profit rs.580. Capital A/c Rs.6,513; B/S 50,613 Y's loan 14,593) P,Q and R were partners sharing profits and losses in the ratio of 5/10 P; 3/10 Q; and 2/10 R. They Had taken a joint life policy of the face value of Rs.20,OOO. On 31st March 2006 its surrender value Was Rs.4,OOO.On this date the balance sheet of the firm stood as under: Sundry creditors Expenses Outstanding Reserve Capitals p 28. Liabilities 5,300 700 3,000 38,000 47,000 Assets Fixed Assets Stock Book Debts Cash at Bank (Minimum balance) 20,000 10,000 8,000 25,000 11,000 9,000 2,000 47,000 On this date Q decided to retire and for this : (b) (c) Goodwill was valued at Rs.15,OOO. Fixed Assets were valued at Rs.30,OOO. Stock was considered as worth Rs.10,OOO. Q was to be paid through cash brought in by P and R in such a way as to make their capitals proportionate to their new profit sharing ratio which was to be P 3/5 and R 2/5. Goodwill was passed through books without raising as goodwill account; the joint life policy was not to appear in the balance sheet . Record these matters in the journal of the firm and prepare the resultant balance sheet. (Revaluation Profit Rs.4,OOO; Total of B/S Rs.51,OOO) A,B and c were partners sharing profits and losses in the ratio of 5:3:2. They had taken a joint life Policy for a sum assured of On 31st December , 2006, its surrender value was Rs.20,OOO On that date, the balance sheet of the firm stood as under: Sundry Creditors Expenses due Reserve A's Capital B's Capital C's capital 26,500 3,500 15,000 50,000 40,000 Assets Bank Debtors Stock Fixed Assets 10,000 45,000 55,000
B retires on 31st dec,2006. For the purpose the following adjustment were agreed upon: (c) (e) That Goodwill be valued at Rs.75,OOO. That Fixed assets be appreciated by 20%. That Stock be reduced to Rs.50,000. That B be paid through cash brought in by A and C in such a way as to make their capitals proportionate to their new profit sharing ratio which is to be A 3/5 and C 2/5. That Joint life policy are to appear in the balance sheet . Prepare the partners capital A/c and the balance sheet of A and C. (Profit Rs.20,OOO capital Payment to B 89,000) The balance sheet of A,B and C on 31st December 2006 was as follows: 29. Liabilities Creditors Capitals Accounts 50,000 80,000 80,000 60,000 2, 70,000 Assets Goodwill Land and buildings Plant and machinery Motor car Debtors Cash at bank B c 30. Liabilities 30,000 80,000 56,000 54,000 48,000 2,000 The following terms have been agreed upon on A's retirement: (c) (d) (g) Goodwill of firm valued Rs.42,OOO. The value of land and building would be appreciated by Rs.20,OOO. The value of plant and machinery would be reduced to Rs.46,000. Create provision for doubtful debts at 5% on debtors. Create provision of Rs. 1,400 on creditors. The remaining partners decided not to show goodwill as an asset. The entire sum payable to A is to be brought by B and C in such a manner that their capital accounts are in proportion to their profit sharing ratio, which is equal. Prepare necessary ledger accounts. (Profit 9,000; Capital 99,500; 99,500; B/S Payment to 87,000) A,B and C were partners sharing profits and losses in the ratio of 3:2:1. Their balance sheet as at 31st dec,2006 stood as under: Creditors Expenses owing Loan General Reserve Capital Accounts: 24,000 8,000 20,000 12,000 40,000 30,000 30,000 Assets Cash in hand Debtors Less: Provision Stock Investment Furniture Machinery Goodwill 32,000 3,000 15,000 29,000 25,000 20,000 15,000 50,000 10,000 B c 31. ON that date B retired on the following terms: (b) (c) (d) (g) Provision for doubtful debts would be brought down to Rs.2,000. Expenses owing would be reduced by Rs.3,000. Interest accrued on investment was Rs.2,600. Depreciate furniture by 10% and machinery by 5%. There was an outstanding bill for repairs of Rs.2,500 and it was to be provided for . The firm had taken a joint life policy of Rs.80,000 in the name of partners . The surrender value of the policy at the time of retirement of B was Rs.9,OOO. Goodwill of the firm was valued at Rs.25,OOO. A and C decided that joint life policy would not appear in the books of the firm . B was paid in full with the cash brought in by A and C in such a manner that their capitals remain proportionate to their profit sharing ratio 3:2. and cash in hand must be maintained at Rs.20,OOO. Prepare Revaluation Account, Partners Capital Accounts and Balance sheet of A and C. (Capital Payment to B 42,000 B/S The balance sheet of M,N and O who are sharing profit and losses ratio of %,1/3,1/6 respectively,
Was as follows on 30.6.2005: Liabilities Bills payable Sundry Creditors Capital Accounts : o Profits & loss A/c 6,000 12,900 40,000 25.000 20,000 4,500 Assets Cash in hand Cash at Bank Bills receivable Book debt Stock Furniture Plant and machinery Building 150 25,000 5,400 17,800 22,300 3,500 9,750 24,000 32. Liabilities M retires from business 1st July 2005. Assets were revalued as under: Stock rs.20,OOO; Furniture rs.3,OOO; Plant and machinery Rs.9,OOO; Building Rs.20,OOO; and Rs.850 are to be provided for doubtful debts. The goodwill of the firm is agreed to be valued at Rs.6,OOO. M is to be paid Rs.11,050 in cash on retirement and balance in the three equal yearly installments with interest at 5% per annum. Prepare Revaluation Account, Partners capital Accounts and M's loan account till it is finally closed. (Loss 8,400 M's loan 30,000; B/S 88,950; Int. on loan Following is the balance sheet on 31st dec,2005 of M/S A,B and C who share profits in the ratio of 4:2:1 respectively: Capital Accounts : B c Sundry creditors Bills payable General reserve 30,000 20,000 15,000 15,000 3,000 10,500 93,500 Assets Goodwill Stock Sundry debtors Land and building Plant and machinery Motor Vehicle Cash 10,000 15,000 11,000 20,000 26,500 10,000 1,000 93,500 On the above date , A retired and the following arrangements were agreed upon: Goodwill of the firm is to be valued at Rs.24,000. (b) (c) The assets and liabilities are to be valued as under : Stock Rs.12,000; Sundry Debtors Rs.10,500; Land and buildings Rs.22,600, Plant and machinery Rs.25,OOO and sundry creditors Rs.14,OOO. B and C were to introduce Rs.20,OOO and Rs.5,OOO respectively into the business and Rs.16,200 was to be paid to A. The balance due to A was to be paid in three equal annual installments together with interest at 9% p.a. 33. Liabilities Give journal entries to record the above transactions , the balance sheet of the firm after A's retirement and A's loan account until it is paid off. (Loss on Revaluation Rs.1,400; total of B/S Rs.89,900) A,B and C were partners sharing profits in the proportion of 1/6 respectively. The balance Sheet of the firm on 31st march 2005 was as follows: Sundry Creditors Provident Fund Reserve fund Capitals : B c 12,600 3,000 9,000 40,000 36,500 20,000 Assets Cash at Bank Debtors 30,000 Less: Provision 1,000 Stock Investment Patents Plant and machinery 4,100 29,000 25,000 10,000 5,000 48,000
C retired on the above date on the following terms: (c) (d) Goodwill of the firm was valued at Rs.27,OOO. Value of the patents was to be reduced by 20% and that of plant and machinery by 10%. Provision for doubtful debts was to be raised to 6%. C took over the investment at a value of Rs.15,800. Liability on account of Provident fund was only Rs.2,500. Show the necessary journal entries for the treatment of goodwill, prepare revaluation account, capital accounts of the partners and the balance sheet of A and B after C's retirement. (Loss Rs.300; Capital C's loan P,Q and R are in the partnership sharing profits in the ratio of 5:3:2. The balance sheet of the firm as on April 1,2006 was FOLLIows: Liabilities Capitals : p Reserve 40,000 61,000 24,000 30,000 50,000 28,000 5,000 2, 38,000 Assets Bills Receivable Machinery Furniture Sundry debtors Less: Provision For D/D Stock Cash at bank 70,000 3,000 Sundry Creditors Profit & loss A/c Bills payable 15,000 82,000 4,000 67,000 20,000 50,000 On April 1,2006 , Q retire due to his foreign assignment and P and R continued in partnership, sharing profits and losses in the ratio 3:2. It was agreed that following adjustment were to be made on the retirement of Q. (c) (d) The machinery was to revalued at Rs.85,000. The stock was to be reduced by Rs.1,OOO. The furniture was to be reduced to Rs.1,600. The provision for doubtful debts would be 6%. A provision of Rs.800 was to be made of outstanding expenses . A liability on account of damages of Rs.7,000 included in creditors is settled at Rs.12,000. 35 The partnership agreement provides that in case of retirement of a partner goodwill was to be valued at three years purchase of average profits, which are 10,000. Q was paid off in full. P and R were to deposit such an amount in bank so as to make capital in proportionate to the new profit sharing ratio, subject to the condition that a bank balance of Rs.40,000 was to be maintained as working capital. Record the necessary journal entries to give effect to the above arrangements and prepare the partners capital accounts as on 1st April 2006 and also the balance sheet after retirement. (Loss Rs.7,400; to Q Rs.85,180; B/S The balance sheet of A,B and C who are partners in a firm sharing profits according to their capitals as on 31st March 2005 was as under: Liabilities Creditors A's Capital B's Capital C's capital General Reserve 21,000 80,000 40,000 40,000 20,000 Assets Buildings Machinery Stock Debtors 20,000 Less: Provision 1,000 For B/d Cash at bank 50,000 18,000 19,000 14,000 On that date, B decided to retire from the firm and was paid for his share in the firm subject to the following: (b) (d) Buildings to be appreciated by 20%. Provision for bad debts to be increased to 15% on debtors. Machinery to be depreciated by 20%. Goodwill of the firm is valued at Rs.72,000 and the retiring partners share is adjusted through the capital accounts of remaining partners . The capitals of the new firm be fixed at
Prepare Revaluation account, capital accounts of the partners and the balance sheet after retirement of B. (Profit Rs.8,OOO; B/S X, Y and Z were partners in a firm sharing profits in the ratio of 2:2:1. Their balance sheet on 31.3.2005 was as follows: 36. Liabilities Creditors Reserve X's Capital Y's Capital Z's Capital 49,000 18,500 82,000 60,000 75,500 Assets Cash Debtors Stock Buildings Patents 8,000 19,000 42,000 9,000 Y retired on 31.3.2005 on the following terms: (c) Goodwill of the new firm was valued at Rs.70,000 and was not to appear in the books. Bad debts amounting to Rs.2,OOO were to be written off. Patents were considered as valueless. Prepare Revaluation Account, Partners capital accounts and the balance sheet of X and Z after Y's retirement. (Loss Rs.11,100; X P,Q and R were partners in affirm sharing profits in the ratio of 2:3:5. On 31.3.2005 their balance sheet was as follows: 37. Liabilities Creditors Capitals Accounts : 70,000 2, 10,000 Assets Bank Debtors 40,000 p 80,000 70,000 60,000 Less: Provision 5,000 for D/D Stock Building Profit & loss A/c 45,000 35,000 50,000 10,000 On the above date R retire from the firm due to his illness on the following terms: Building was to be depreciated by Rs.40,OOO. Provision fro doubtful debts was to be maintained at 20% on debtors. (c) (d) Salary outstanding Rs.5,OOO was to be recorded and creditors Rs.4,OOO will not be claimed . Goodwill of the firm was valued at Rs.72,000 and the same was to be treated without opening goodwill account. R was to be paid Rs.15,OOO in cash, through bank and the balance was to be transferred to his loan account. Prepare Revaluation Account, Partner's capital Accounts and the balance sheet of P and Q after R's retirement. (Ans. Loss Rs.44,OOO; B/S
DEATH OF A PARTNER Ram, Manohar and Joshi were partners in a firm. Joshi died on 28th February 1994. His share of profit QI. last accounting year till date of death was to be calculated on the basis of the 25, 200 from the closer of the average of three completed years of profits before death. Profits for 1991, 1992 and 1993 were Rs.7,OOO, Rs. 8,000 and Rs.9, 000 respectively. Q2. Calculate Joshi's share of profit till his death and Pass the necessary entry for the same. A,B and C are sharing profits in the ratio of 2:2:1. B died on 31st March, 1999. Accounts are closed on (Joshi's share of profit = Rs.Rs.444) 31st December. Sales for the year 1998 amounted to Rs.3, 00,000. Sales of Rs.l, 00,000 amounted , 1999. The profit for the year, 1998 amounted to Rs.30, 000. Q3. Calculate the deceased partner's share in the profits of the firm. Following in the balance sheet of Ram, Mohan and Sohan as on 31st December 1999: Liabilities Sundry Creditors Reserve Fund Capital Accounts: Ram Mohan Sohan 2, 000 3, 200 10, 000 5, 000 5, 000 Assets Plant & Machinery Stock Sundry Debtors Cash at Bank Cash in Hand between the period from 1st Jan, 1999 to 31st March (B's share = Rs.4, 000) 10,000 4,000 6,000 5,000 200 25,200 Sohan died on 31st March 2000. Under the terms of partnership deed, the executors of a deceased entitled to: (b) (c) (d) year's profit. Amount standing to the credit of the Partners Capital Account. Interest on capital at 5% per annum. Share of goodwill on the basis of twice the average of the past three years profit . Share of profit from the closing of the last financial year to the date of death on the basis of partner were the last Profit for 1997, 1998 and 1999 were respectively Rs.6, 000, Rs.8, 000 and Rs.7, 000. Profit was shared in the ratio of capitals. Pass the necessary journal entries and drawn up Sohan's account to be rendered to his executors. (Balance TFR to Sohan's Executor A/c Rs.9, 800) Bhatt and Seth were carrying on a business in partnership sharing profits and losses in the ratio of 3:2 Respectively. They closed their books of account every year on 31st December. Their balance sheet as 1991 was as follows: Liabilities Bhatt's Capital Seth's Capital Reserve Creditors 90,000 60,000 30,000 20,000 Assets Furniture Stock Debtors Cash 20,000 50,000 30,000 Seth died on 1st May, 1992, Partnership deed provided that in the event of death of a partner his heirs Would be entitled to be paid out: (b) years. (d) Capital to his credit at the date of death. His share of reserve at the date of the last Balance sheet. His share of profit to the date of his death based on the average profit of the last three His share of goodwill based on the total profits of the preceding three accounting years. on 31st December, accounting The profits for the three preceding accounting years were as follows: 1989----Rs.41, 800 1990---- Rs.39, 200 1991----Rs.45, 000
Prepare Seth's capital account transferring amount due to Seth's Heir's loan account. Clearly show your calculations. (Amount TFR to Heirs loan A/c Rs.l, 28,000) Q5. A and B are in partnership sharing profits and losses 3:2. They insure their lives jointly for Rs.75, 000 at an annual premium of Rs.3, 400 to be debited to the business. B dies three month after the date of the last Balance sheet. According to the partnership deed, the legal personal representatives of B are entitled to the following payments: (b) His capital as per the last Balance sheet. Interest on above capital at 3 per cent annum to date of death. His share of profit to date of death calculated on the basis of last years profit. His drawings are to bear interest at an average rate of 2% on the amount irrespective of the period. The net profit for the last three years , after charging insurance premium ,were Rs.20,000, Rs.25,000 and Rs.30, 000 respectively. B's capital as per Balance sheet was Rs.40, 000 and his drawings to date of death were Rs.5, 000. Draw B's Account to be rendered to his representatives. (Balance due, Rs.68, 200) Bimla and Nutan were partners. The partnership deed provides inter alia: Q6. Q7. (iii) That the accounts be balanced on 31st December each year. That the profit be divided as follows: Bimla one- half, Nutan one-third and carried to reserve Account one-sixth. That in the event of death of a partner, his executor will be entitled to the following: (c) The capital to her credit at the date of death. Her proportion of profit to date of death based on the average profit of the last three completed years. Her share of Goodwill based on three years purchases of the average profit for the three preceding completed years. On 31st December , 1991 the trial Balance was as under : Particulars Bimla's Capital Nutan's Capital Reserves Bills receivable Investment Cash Creditors (Dr.) (Cr.) 50,000 40,000 1, 10,000 90,000 60,000 30,000 20,000 The profit for the three years was: 1989---Rs.42, 000, 1990---Rs.39, 000 and 1991---Rs.45, 000. Nutan died on 1st May, 1992. Show the calculations of Nutan's (i) Share of profits, (ii) Share of Goodwill, and (iii) draw up Nutan's Executor's account as would appear in firm's ledger transferring the amount to her Executer loan account. (Nutan's Share of Reserve Rs.12,OOO; Nutan's Share of profits Rs.5,600; Share of goodwill Rs.50,400; Nutan's Executors loan A/c P, R and S are in partnership sharing profit 4/8, 3/8 and 1/8 respectively. It is provided under the partnership deed that on the death of any partners his share of goodwill is to be valued at one-half of the net profit credited to his account during the last 4 completed years (books of accounts are closed on 31st December.) R died on 1st Jan, 1985. The firm's profits for the last 4 years were as follows: 1981(Profits Rs Rs.60, 000); 1983(Loss Rs.20, 000) and 1984 (Profit Rs.80, 000). Determine the amount that should be credited to R in respect of his share of goodwill. Pass a journal entry without raising Goodwill account for its adjustment assuming that profits Ratio between P and S in future will be 3:2. Show your workings clearly. 1982 (Profit sharing Q8. under : (Dr. P by Rs.12, 000 and S by Rs.33, 000 and Cr. R by Rs.45, 000) R,S and T were partners sharing profits and losses in the ratio of 5:3:2 respectively. On 31st December 1990 their balance sheet stood as Liabilities Assets
Sundry Creditors 55, 000 Reserve Fund Capital Accounts: s 30, 000 Goodwill Leasehold Patents Machinery Stock Debtors Cash at Bank 25,000 30,000 50,000 40,000 40,000 75,000 T died onlst May 1991, It was agreed that: (b) (c) Goodwill be valued at 2 1/2 years purchase of last four years profits which were: 1987---Rs.65, 000, 1988---Rs.60, 000, 1989----Rs.80, 000 and 1990----Rs.75, 000. Machinery be valued at Rs.l, 40,000; patents be valued at Rs.40, 000; Leasehold be valued at Rs.l, 25,000 on 1st May, 1991. For the purpose of calculating T 's share in the profits of 1991 the profits in 1991 should be accrued on the same scale as in 1990. A sum of Rs.21, 000 to be paid immediately to the executors of T and the balance to be paid in half-yearly installments together with interest @ 10% interest per annum. Pass the necessary journal entries to record the above transactions and T 's executors account for 1991. taken to have four equal Q9. follows: (T's Executors A/c A,B and C were partners sharing profits in the proportion of 1/2,1/4 and 1/4 respectively. Their Balance sheet on 31st December , 1991 was as Liabilities Sundry Creditors A's Capital B's Capital C's Capital 4,000 10,000 6,000 4,000 24,000 Assets Cash Sundry Debtors Stock in Trade Loan to A Buildings 1,000 4,500 5,500 3,000 10,000 24,000 A died on 1st Jan,1992. The firm had effected an assurance for Rs.10,OOO on the joint lives of the three partners and the amount of the policy was realised on 1st February , 1992. According to the partnership agreement , Goodwill was to be calculated at two years purchase of the average profit of three completed years preceding the death or retirement of a partner . The deceased partners share of capital and goodwill, etc. was paid out in cash on 1st March 1992, the available cash balance supplemented by a loan from the firm's banker on the security of the building. The net profits of three preceding years were Rs.5,500, Rs.4,800 and Rs.6,500. You are required to show the ledger accounts of the partners, and the balance sheet of B and C as it would stand after A's share is paid off. (Amount paid to A's Executors Rs.17,600; Loan taken from bank Rs.6,600;balance sheet total Rs.31,200) QIO.A,B and C are partners sharing profits of 2:1:1. They closed their books on 31st December each year. A died on 38th February, 1991 when their balance sheet was as follows: Liabilities Assets
Creditors Joint life policy Reserve Profit for 2 months (before interest & salaries) A's Capital B's Capital C's Capital According to the partnership deed: 3, 700 3,600 3,110 21,000 31,500 Cash Sundry Debtors Loan to A Joint life policy 20,000 3,900 4,000 3,600 31,500 (a) Interest on capital is allowed @ 6% p.a. A and B are entitled to salaries @ R.300 and Rs.250 p.m. In the event of death of a partner Goodwill was to be valued at 2 years purchase of the average net profits of 3 completed years preceding death. The net profits for the year 1988, 1989 and 1990 was Rs.5,500, Rs.4,800 and Rs.6,500 respectively. Firm had taken a joint life policy (with profit policy) of Rs.10,OOO. The insurance company admitted a claim of Rs.12,600 including bonus. A's share was paid to his executors. B and C continued the firm. Prepare profit &Loss A/c, partners' capital A/c, and balance sheet of B and C . (Profit after Interest and salary Rs.1,800; capital B Rs.12,960 and C Rs.11,450; Amount paid to A's Executor Rs.19,500; Balance sheet Total Rs.28,200) QII. You are given the balance sheet of Jassi, Jaipaul and Jyoti who are partners sharing profits in the ratio Liabilities Creditors Reserve Fund Capitals: Jassal Jaipaul Jyoti 40,000 25,000 30,000 25,000 15,000 Assets Goodwill Fixed Assets Stock Sundry Debtors Cash Bank 30,000 60,000 10,000 20,000 15,000 Jaipaul died in 15th June 1993, According to the deed, his legal representatives were entitled to: Balance in Capital A/c . (ii) (iii) Share of goodwill valued in the basis of thrice the average of the past four year's profit. Share in profits up to the date of death on the basis of average profits for the past four year . Interest on capital A/c @12%p.a. Profits for the years ending on March 31 of 1990, 1991, 1992 and 1993 respectively were Rs.15, 000; Rs.17, 000; Rs.19, 000; Rs.13, 000. The firm had taken insurance policies in the lives of the partners, premium being charged to profit amount and surrender value (on 15.6.93)were: Jassal Jaipaul Jyoti Policy Amount 70,000 70,000 60,000 Surrender value 30,000 30,000 25,000 of 2:2:1. as on 31 march 1993: every year. The policy by taking over Jaipaul's Jaipaul's legal representatives were to be paid the amount due . Jassal and Jyoti continued as partners share equally. Work out the amount payable to Jaipaul's legal representatives. (Balance Transfer to Jaipaul's Executors A/c Rs.94,158)
QI. Q2. Q3. Q5. Q6. Q7. Q8. Q9. ISSUE OF SHARES Anmol was formed with 20,000 shares of Rs.50 each. Out of These 4,000 shares were issued to the vendors as fully paid up as purchase consideration . 10,000 shares were offered to the public and of these 8,000 shares were applied for and allotted . Rs.5 per share was payable on application and Rs.20 on allotment and the balance was to be called in two equal installments whenever required. All money were duly received on allotment except in the case of one share holder holding 100 share who failed to pay the allotment money . You are required to give journal entries. Lagaan Ltd. was registered with a capital of divided into shares of Rs.10 each. Out of these 10,000 shares were issued to the vendors a fully paid up as purchase consideration . 30,000 shares were offered to the public and of these 25,000 shares were applied for and allotted Rs.2 per share on application, Rs.4 per share on allotment (including Rs.2 per share as premium), Rs.2 per share on first call and the balance in two equal amounts at interval of 3 month. All the money were duly received except the 2nd call and final call money on 500 and 1,000 shares respectively. Give the journal & cash book. CALLS IN ADVANCE Dalip Ltd. was registered with a capital of in share of Rs.10 each and issued 40,000 Such shares at a premium of Rs.2 per share, payable as to Rs.2 per share on first call made three months later. All the money payable on application, and allotment was duly received but when the first call was made, one share holder paid the entire balance on his holdings of 600 shares, and another shareholder holding 2,000 shares failed to pay the first call money. Give journal entries to record the above transactions. Rupesh Limited company with an authorized capital of in shares of Rs.100 each issued 2,000 of such shares, payable Rs.25 per share on application, Rs.20 on allotment , Rs.20 three months later, and the balance as and when required. Y, the holder of 200 shares, paid his arrears in respect of shares first call of Rs.25 on 1st august, 1992, the due date of call being 1st may 1992. The interest charges on calls — in arrears are 5%p.a. Pass journal entries. X, the holder of 100 shares, paid his second call of Rs.10 per share along with the share first call money of Rs.20 on 1st May,1992. The second call, made by the company on 1st August 1992. The interest allowed on calls — in — advance as per Articles is 6%p.a. Interest paid to the holders on 1st August 1992. Pass journal entries to record the above transactions. OVERSUBSCRIPTION The Atlas Cycle Ltd. was registered with a capital of divided into 40,000 shares of Rs.25 each. The company offered to the public for subscription 10,000 shares payable Rs.5 per share on application, Rs5 per share on allotment and the balance in two calls of Rs.7.50 each. The company received applications fro 11,600 shares. Applications for 1,000 shares were rejected Altogether and application money was returned to the applicants. A person who applied for Rs.1,OOO shares was allotted only 400 shares and excess of his application money was carried forwards the payment of allotment and calls. Give the journal entries to record the above issue of shares. Sonu company issued new capital divided into Rs.100 shares at a premium of Rs.20 per share payable thus: Rs.10 per share on application. Rs.40 per share and Rs.10 premium on allotment; and Rs.50 per share and Rs.10 premium on final payment. Over- payments on application were to be applied towards sums due on allotment and over- payments on application exceeding sums due on allotment were to be returned. Where no allotment was made, money was to be returned in full. The issue was over-subscribed to the extent of 13,000 shares. Applicants for 12,000 shares were allotted only 1,000 shares and applicants for 2,000 shares were sent letters of regret and application deposits were returned to them. All the money due on allotment and final call was duly received. Make the necessary entries in the company books to record the above transactions. A company offered 10,000 shares of Rs.10/- each payable of Rs.2/- on application, Rs.3/- on allotment, Rs.3/- on 1st call and Rs.2 on final call. The public applied for 15,000 shares. The shares were allotted on a pro-data basis to the applications of 12,000 shares. All shareholders paid the allotment money excepting one shareholder X who was allotted 200 shares. These shares were forfeited. The first call was made thereafter. The forfeited shares were re-issued @ Rs.9/- per share, Rs.8/- paid up. The final call was yet made. You are required to prepare the cash book and pass journal entries. (Ans. Amt. Received on allotment Rs.25,480, Capital Reserve 480) Shagoon India Ltd. issued for public subscription 40,000. Equity Shares of Rs.10 each at a premium of Rs.2 per share payable as under: On application On allotment On first call On second call Rs.2 per share Rs.5 per share (including premium) Rs.2 per share Rs.3 per share Applications were received for 60,000 shares. Allotment was made pro-data to the applicants for 48,000 shares, the remaining applications being refused. Money overpaid on application was applied towards sums due on allotment.
A to whom 1,600 shares were allotted failed to pay the allotment money and B to whom 2,000 shares were allotted failed to pay the two calls. These were subsequently forfeited after the second Call was made. Pass journal entries in the books of Shagoon India ltd. to record the above transactions including the bank entries. (Ans. Amount received on allotment Rs.l, 76, 640; Sh. Forfeiture A/c Rs.13,840) K limited has been registered with an authorized capital of divided into 4,000 shares of Rs.100 each, of which 2,000 shares were offered for public subscription at a premium of Rs.5 per share payable as under: Q10. QII. Q12. Q13. Q14. Q15. On application On first call Rs.10 Rs.40 On allotment On final call Rs.25(including premium) Rs.30 Applications were received for 3,600 shares; of which applications for 600 shares were rejected the rest of the applicants were allotted 2,000 shares on pro-data basis. Excess application money was transferred to allotment. All the money were duly received except from sunder , holder of 200 shares , who failed to pay allotment and first call money. His share were later forfeited, and re-issued to shyam at Rs.60 per share Rs.70 paid up. Final call has not been made. Pass necessary cash book and journal entries in the books of K limited. (Ans. Arrears on allotment rs.4,OOO; bank balance Rs.1,50,OOO, capital Reserve Rs.1,OOO) A company issued fro public subscription 50,000 equity shares of Rs.10 each at a premium of Rs.2 per share payable as under: On application On allotment On first call On second call Rs.2 per share Rs.5 per share(including premium ) Rs.2 per share Rs.3 per share Applications were received for 75,000 shares. Allotment was made pro-data to the applicants for 60,000 shares, the remaining applications being refused. Money overpaid on application was utilized towards sum due on allotment. A to whom 2000 shares were allotted failed to pay the allotment money and the two calls. B to whom 2,500 shares were allotted failed to pay the two calls. These shares were subsequently forfeited after the second call was made. All the forfeited shares were sold to X as fully paid at Rs.8 per share. Give the necessary journal entries for the above transactions. (Ans. Amt. Received on allotment Rs.2,20800: Capital Res. Rs.8300) A company issued for public subscription 75,000 equity shares of Rs.10 each at a premium of Rs.2 per share payable as under: On application On allotment On first call On second call Rs.2 per share Rs.5 per share (including premium) Rs.2 per share Rs.3 per share Applications were received for 1, 12, 500. Shares were allotted to the applicants for 90,000 shares the remaining applications being rejected. Money overpaid on application was utilized towards sum due on allotment. A to whom 3,000 shares allotted failed to pay the allotment money and the two calls and B to whom 3,750 shares were allotted failed to pay the two calls. All these shares were forfeited after the final call. 5,000 shares including all shares of A were re-issued as fully paid share for Rs.7.50 per share excluding premium. Give journal entries to record the above transaction in the books of the company. X Ltd .invited applications for 2, 00,000 equity shares of Rs.10 each at a premium of Rs.2 per share Payable as to Rs.2 on application, Rs.5 on allotment including premium, Rs.2 on first call and Rs.3 on Final call. Applications were received for 3, 00,000 shares. Applications for 60,000 shares were rejected and pro-rata allotment was made to the remaining applicants.. Ram, who applied for 9,600 shares failed to pay allotment money. Shyam, the holder of 12,000 shares failed to pay two calls. These shares were forfeited subsequently all these shares were re-issued at Rs.8 per share as fully paid up. Pass necessary Journal entries in the books of X ltd. (Ans. Capital Reserve Rs.39200; Arrears on allotment Rs.36800) AB Ltd. invited applications for 1, 00,000 12% Preferences Shares of Rs.100 each issued at a discount of 10 %. The amount was payable as follows: On application On allotment On first and final call Rs.20 Rs.30 Balance Applicants for 1, 50,000 shares were received. Applications for 30,000 shares were rejected and pro-rata allotment was made to the remaining applicants. All calls were made and were duly received except the first and final call on 1,000 shares held by Kumar. His shares were forfeited. Out of the Forfeited shares 750 were re-issued at Rs.120 per share fully paid up. Pass the necessary journal entries in the books of AB ltd. (Ans. First and Final call money Received Rs.39, 60,000 Capital Reserve Rs.37, 500) M/S Reliable Investments issued a prospectus inviting applications for 4,000 Equity Shares of Rs.20/- Rs.4/- per share payable as under: each at a premium of
On application On allotment On first call On Second call Rs.4/- per share Rs.10/-per share (including premium) Rs.6/-per share Rs.4/- per share Q16. Q17. Q18. Q19. Applications were received for 6,000 shares and allotment was made pro-rata to the applicants of 4,800 shares, the application for remaining shares being refused. Money overpaid on application was Used on account of sums due on allotment. Harish, to whom 80 shares were allotted, could not pay allotment money and on his subsequent failure to pay the first call , his shares were forfeited after the first call. Mukesh to whom 120 shares were allotted , failed to pay the two calls and his shares were forfeited after the second call. Of the shares forfeited, 160 share were sold to Suresh credited as fully paid at Rs.18/- per share all of Harish's forfeited shares being included . Pass journal entries in the books of the company to record the above transactions. (Ans. Arrears on allotment Rs.736; Capital reserve Rs.864) A Company offered shares of Rs.10 each to the public on the following terms : Rs.3 payable on application, Rs.4 on allotment , the balance as and when required . Applications were received for shares. Allotment was made as under: 80,000 Applications were given 80,000 shares. 50,000 Applications were given 20,000 shares. 10,000 Applications were given nil. Application money is to be applied towards allotment and balance beyond that is to be returned. A share holder who applied for 1,000 shares and was given 1,000 shares failed to pay the allotment money. His shares were forfeited . Pass journal entries to record the above transactions. (Ans. Allotment money received Rs.3,06,OOO; Balance in share forfeited A/c Rs.3000) A,B Ltd . invited applications for issuing equity shares of Rs.10 each. The amount was payable as follows: On application On Allotment Rs.2 per share Rs.3 per share On First & final call Rs.5 per share Application for shares were received and pro-rata allotment was made to all applicants as follows: Applications for 80,000 shares were allotted 60,000 shares on pro-rata basis . Applicants for 70,000 shares were allotted 40,000 shares on pro-rata basis. Sudha to whom 600 shares were allotted out of the group applying for 80.000 shares failed to pay the Allotment money. Her shares was forfeited immediately after allotment . Asha who had applied for 1,400 shares out of the group applying for 70,000 shares failed to pay the first and final call. Her shares were also forfeited. Out of the forfeited shares 1,000 were re-issued @ Rs.8 per share fully paid up. The re-issued shares included all the forfeited shares of Sudha. Pass necessary journal entries to record the above transactions. (Ans. Allotment money Rs.l, 98,600; Capital Reserve Rs.1600) A Limited Company invites application for 50,000 equity shares of Rs.10 each payable as follows: On application On Allotment On First call in final call the balance Rs.3 Rs.4 Rs.2 Applications were received for 55,000 shares. Allotment were made on the following basis: To Applicants for 35,000 shares —in full To Applicants for 20,000 shares — 15,000 shares. Excess money paid on application was utilized towards allotment money. A shareholder who was allotted 1,500 shares out of the group applying for 20,000 shares failed to pay allotment money and money due on calls. These shares were forfeited. 1,000 forfeited shares were re-issued as fully paid on receipt of Rs.8 per share. Show the journal entries in the book of company. (Ans. Amount Received on Allotment Rs.1,80,500; Capital Reserve Rs.2,OOO) Sudershan Ltd. invited applications for 1, 00,000 equity shares of Rs.10 each. The shares were issued at a premium of Rs.5 per share. The amount was payable as follows: On Application and allotment Rs.8 per share (including premium Rs.3) Balance including premium on first and final call. Applications for shares were received . Applications for 10,000 shares were rejected and pro-rata allotment was made to the remaining applicants on the following basis: Applicants for 80,000 shares were allotted 60,000 shares; and Applicants for 60,000 shares were allotted 40,000 shares. X who belonged to the first category and was allotted 300 shares, failed to pay the first call money. Y who belonged to the second category and was allotted 200 shares also failed to pay the first call money. Their shares were forfeited. The forfeited shares were re-issued @Rs.12 per share fully paid up. Pass necessary Cash book and journal entries. (Ans. Arrears on first and final call Rs.1900, Bank balance Rs.15,04,100;Capital Reserve 4,100)
Q20. Q21. Q22. Q23. Q24. X Ltd. invited applications for 20,000 Equity shares of Rs.10 each, payable Rs.2.50 on application; Rs.5 on allotment (including premium Rs.2.50) and Rs. 5 on first and final call. The company received applications for 25,000 shares. It was decided: (iii) (iv) to refuse allotment to the applicant for 1,000 shares . to allot full to the applicant for 4,000 shares. to allot balance of the available shares pro-rata among the other applicants to utilize the excess application money in part payment of the allotment money. (b) All the money due was received except from one applicant to whom shares had been allotted on pro-rata basis. He failed to pay allotment and call money and his 100 shares were forfeited . These shares were reissued at Rs.9 as fully paid . Give journal entries to record the above transactions in the books of the company. (Ans. Capital Reserve Rs.212.50) Bharti Ltd. issued a prospects inviting applications for 50,000 shares of Rs.10 each. These shares were issued at par on the following terms . On application Rs.3, on allotment Rs.4,on first call Rs.2 and on final call the balance. Applications were received for 60,000 shares. Allotments were made on the following basis : (iii) To applicants for 10,000 shares — in full To applicants for 20,000 shares — 15,000 shares To applicants for 30,000 shares — 25,000 shares All excess amount paid on applications is to be adjusted against amount due on allotment The share were fully called and paid up except amount of allotment , first and final call not paid by those who applied for 2,000 shares out of the group applying for 20,000 shares. All the shares on which calls were not paid were forfeited by the board of directors . 1000 forfeited shares were re-issued as fully paid on receipt of Rs.8 per share. Show the journal entries in the books of Bharti Ltd. Amrit Ltd. issued a prospectus inviting applications for 20,000 shares at a premium of Rs.2 per share payable as follows: On applicable On allotment On call Rs.5(including premium) Rs.4 Rs.3 Applications were received for 30,000 share and pro-rata allotment made on application for 24,000 shares Excess money paid on application for these shares was utilized towards allotment money. Atul who applied for 600 share failed to pay the allotment money and on his subsequent failure to pay the call, his shares were forfeited . Pass necessary entries in the books of Amrit Limited. (Ans. Share forfeited A/c Rs.2,OOOO; Allotment money Received Rs.58,500) S.M Ltd issued 5,000 Equity shares of Rs.10 each at a premium of Rs.15 per share payable Rs.12.50 on application (including premium Rs.7.50) and the balance on allotment. Applications were received for 9,000 equity shares, out of which letters of regret were issued to 2,000. Full allotment was made to applications for 1,000 shares. pro —rata allotment was made on the balance . Money overpaid on application was used in allotment. All money due on allotment was received except from a shareholder holding 100 shares to whom pro-rata allotment was made. A company invited applications for 50,000 equity shares of Rs.10 each on the following terms: On application On allotment On first and final call Rs.3 Rs.2 Rs.5 Applications were received for 1, 10,000 shares . it was decided (i) to refuse allotment to the applicants for 10,000 shares (ii) to allot 50% to Mr. X who has applied for 20,000 shares (iii) to allot in full to Mr. Y who has applied for 10,000 shares (iv) to allot balance of the available shares pro-rata among the other applicants and (v) to utilize excess application money in part payment of allotment and final call. Give journal entries till the stage of allotment assuming that the entire sum due on allotments is received in full. (Ans. Amt Received on Allotment Rs.20,OOO) Hindustan Steel Ltd. invited applications for 50,000 equity shares of Rs.10 each at a premium of Rs.4 per share. The amount was payable as under : On application On allotment On first and final call Rs.4(including premium Rs.2) Rs.6 (including premium Rs.2) Balance Applicants for 60,000 shares were received. Allotment was made to all applications of pro-rata basis . Excess application money was adjusted towards sums due on allotment and call money Ram to whom 400 shares were allotted, failed to pay allotment and call money. Shyam to whom 200 shares were issued failed to pay the call money. These shares were forfeited. The forfeited shares were re-issued @ Rs.8 per share fully paid up. Pass the necessary journal entries in the books of the company.
(Ans. Allotment money received Rs.2, 57,920; Capital Reserve Rs.1120) Radhika Textiles Ltd. Invites application for 75,000 equity shares of Rs. 10 each issued at a premium of Rs.5 per share. The amount Q25. Q26. Q27. Q28. Q29. Q30. was payable as follows: On application On allotment Rs7 (including Rs.3 premium) Rs.5 (including Rs.2 premium) Balance on first and final call Application for 1, 00,000 shares were received. Allotment was made to all applicants on pro-rata basis. Puneet to whom 300 shares were allotted, failed to pay allotment and call money. Sumeet to whom 150 shares were allotted failed to pay the call money. These shares were forfeited. The forfeited shares were re-issued @Rs.8 per share fully paid up. Pass the necessary journal entries. (Ans. Allotment money received Rs.199200) 10,000 equity shares of Rs.20 each are issued for public subscription at a premium of 10%. The full amount is payable on application. Applications were received for 20,000 shares and it was decided to make pro-rata allotment to all the applicants, journalize the transactions. Azad Co. Ltd. Offered to public for subscription 10,000 12% preferences shares of Rs.100 each at a premium of Rs.5 per share. Payments were to be made as follows: With Application Rs.20 With allotment On first and final call Rs.55(including premium) Rs.30 Applications were received for Rs.34,OOO shares . Appliances for 2,000 shares were accepted in full. The remaining 8,000 shares were allotted to the applicants for 32,000 shares on pro-rata basis. No money was refunded , the surplus being treated as calls in advance on which interest was payable @ 6% per annum. The call was made three months after the date of the allotment. All money were duly received . The company promptly paid interest on calls in advance to shareholders . Journalize the above mentioned transactions. Also prepare callas in advance account and 12 % preferences share capital accounts . (Interest on calls in adv.Rs.600) A Ltd. forfeited 60 shares of Rs.10 each issued at a premium of 20% to dev who had applied for 72 shares for non payment of allotment money of Rs.5 per share (including premium ) and the first and final call of Rs.5 per share . Out of these 20 shares were re-issued to shyam credited as fully paid up for Rs.9 per share. Give journal entries to record forfeited and re-issue of shares assuming that A ltd. follows the policy of adjusting excess application money towards other sums due on shares . (Capital Reserve Rs.28) Z Ltd. invited application for issuing 40,000 equity shares of Rs.10 each at a premium of Rs.2 per share. The amount was payable as follows: On application Rs.6 (including premium) and balance on allotment Application for 50,000 shares were received. Pro-rata allotment was made to all applicants. Excess money received on application was adjusted towards sums due on allotment. A shareholder to whom 8,000 shares were allotted failed to pay the allotment money and therefore, his shares forfeited. Later on the forfeited shares were re-issued for Rs.70,OOO as fully paid up. Pass necessary journal entries in the books of Z ltd. Sonam Ltd. invited applications for issuing 10,000 equity shares of Rs.10 each at a discount of 10%. Rs.4 per shares were payable on application and the balance after discount on allotment. Applications for 20,000 shares were received. Shares were allotted proportionately to all applicants. An applicant who was allotted 1,500 shares failed to pay the allotment money. His shares were , therefore , forfeited. The forfeited shares were re-issued at Rs.6 per share as fully paid up. Pass necessary journal entries in the books of the company.
QI. Q2. Q3. Q5. Q6. Q7. Q8. Q9. ISSUE OF DEBENTURES FOR CONSIDERATION OTHER THAN CASH AB ltd. Purchased building costing It was agreed that the purchase consideration be paid by issue of 12 % debentures of Rs.100 each. Assuming that debentures have been issued (i) at par and (ii) at a discount of 10%. Pass necessary journal entries. Suvidha Ltd. purchased machinery Rs.1,98,000 from Suppliers Ltd. The payment was to be made by issue of 12% debentures of Rs. 100 each. Pass the necessary journal entries for the purchase of machinery and issue of debentures when: (a) Debentures are issued at par . (b) Debentures are issued at 10% premium. R Ltd. purchased the assets of S Ltd .for It also agreed to take over the liabilities of S Ltd. amounting to for a purchase consideration of The payment to S Ltd. was made by issue of 12% debentures of Rs.100 each at par. Pass the journal entries in the books R ltd. A company purchased assets of and took over liabilities of Rs.40,OOO at an agreed value of The company issued debentures at 10% discount in full satisfaction of the purchase price . Give journal entries in the book of purchasing company . (1/90 x Deb, Dis. of 40,000) LG LTD. purchased assets of the book value of and took over the liabilities of Rs.50,OOO from Samsung Ltd. It was agreed that the purchase consideration , settled at be paid by issuinf debentures of Rs.100 each. What journal entries will be made in the following three cases if debentures are issued: (a) at par, (b) at discount of 10% and (c) at premium of 10%? It was agreed that any fraction of debentures be paid in cash. (Goodwill Rs.30,OOO; case (a) 3,800 debentures of Rs.100 each ; case (b) 4,222 debentures of Rs.100 each; case (c) 3454 debentures of Rs.100 each (d) paid cash Rs.20 ; paid cash Rs.60) ISSUE OF DEBENTURES AS A COLLATERAL SECURITY A Ltd . secured a loan of from the Canara bank by issuing 2,000, 15% debentures of Rs.100 each as collateral security. How will you treat the issue of such debentures ? A Ltd issued 5,000, 13% debentures of Rs.100 each at par and raised a loan of Rs.80,OOO from bank, collaterally secured by 13%Debentures . how will you show the debentures in the balance sheet of the company assuming that the company has recorded the issue of debentures as collateral security in the books. JMD Ltd. raised a loan of from State bank of India on 1.4.2000. Interest @ 10% was payable on 30th Sept. and 31st March every year. As per terms of the agreement, loan amount was to be repaid after three years. The company has offered its plant and machinery as primary security and 8% debentures of as collateral security. Due to shortage of funds, company could not pay interest on loan after two years. Company has also failed to repay the loan amount on due date. The State bank of India took the possession of plant and machinery at an agreed value of and invoked its right vested in the collateral security through Court of Law on 1.7.2003. Pass necessary entries. ISSUE OF DEBENTURES CONSIDERARTION THE TERMS AND CONDITION OF REDEMPTION Give journal entries in each of the following alternatives cases: (d) (g) Note: A debentures issued at Rs.1000 repayable at Rs.1000 A debentures issued at Rs.950 repayable at rs.1000 A debentures issued at Rs.1050 repayable at Rs.1000. A debentures issued at Rs.1000 repayable at Rs.1050. A debentures issued at Rs.950 repayable at Rs.1050. A debentures issued at Rs.1025 repayable at Rs.1050. A debentures issued at Rs.1000 repayable at Rs.950. A debentures issued at Rs.980 repayable at Rs.950. A debentures issued at Rs.1030 repayable at Rs.950. The face value of each debentures is Rs.1000.
RATIO ANALYSIS LIQUIDITY RATIO 1. 2. QI. Current/working capital ratio: under: Current Ratio = Current ratio depicts the relationship between current assets and current liabilities and can be calculated as Current Assets Current liabilities Current assets are those which can be converted into cash within one year. Current Assets = Cash + bank + Closing Stock (Raw material + Work in progress + Finished Goods) + Debtors / Accounts Receivable (Less: provision for D/D) + Bills Receivable +Short term investment / Marketable Securities / Temporary investment + prepaid Express (Unexpired Expenses) +Accrued incomes, Advances, loose tools Current liabilities are those which are repayable within a year. Current Liabilities = Creditors / Accounts payable +Bills payable + Bank overdraft +provision for Taxation + proposed Dividends + Unclaimed Dividend +Loans payable within a year, Short term loan, temporary loan + Un-expired income [Unearned income(income received in advance), Dividend payable , Quick Ratio: income Tax payable Expenses payable (outstanding Expenses ). Generally, Current Ratio of 2:1 is considered to be satisfactory. It is also called Liquid ratio or Acid test ratio. It is a ratio between quick assets and Current liabilities . It is calculated as follows: Quick Ratio = Quick Assets or liquid Assets or Acid test Assets Current Liabilities Liquid Assets means those assets which will yield cash very soon. (Short period) i.e. Quick assets = Current Assets = Current Assets — (Stock + prepaid Expenses) OR Except stock and prepaid expenses all other current assets are liquid assets. Generally, Liquid Ratio of 1:1 is considered to be satisfactory. From the following compute the current ratio and liquid ratio . Particulars Sundry Debtors Cash in hand and at bank Machinery Sundry Creditors Stock 20,000 10,000 7,000 40,000 40,000 Particulars Prepaid Expenses Short term investment Bills payable Debentures Expenses payable 30,000 20,000 40,000 (Current Ratio 2:1 ; Liquid Ratio 1.3:1) From the following compute the current ratio and liquid ratio: Q2. Q3.(a) Liabilities Share Capital Profit and Loss A/c Bank Loan Bank overdraft Sundry Creditors 21,000 1,500 2,500 2,000 6,000 33, 000 Assets Fixed Assets Stock Cash Debtors 17,000 6,000 3,400 6,600 33,000 (Current Ratio 2:1; Liquid Ratio 1.25:1) Following is the Balance sheet of Z Ltd as on 30th June 2005: Liabilities Assets
Equity Share Capital Capital Reserve Reserve for Contingencies Profit and Loss A/c 15%Bank Loan Provision for Tax Sundry Creditors outstanding Expenses Dividend payable Bank overdraft 50,000 10,000 5,000 9,000 6,000 5,000 3,200 700 3,400 2,700 95, 000 Premises Plant & Machinery Loose Tools Patents Closing Stock Debtors 20,600 Less: Provision for d/d 600 Cash Marketable Securities Prepaid Expenses Share issue expenses 20,000 30,000 1,500 6,000 10,000 20,000 2,000 3,000 1,000 1,500 95,000 (Current Ratio 2.5:1; Liquid Ratio 1.77:1) Q3.(b) Following is the Balance sheet of Crescent Chemical Works Limited as on 31st December 2004. Liabilities Equity Share Capital 10% Preference share Capital General Reserve Reserve for Contingencies 12%MortagageDebentures Income Tax payable Bills Payable Bank overdraft Sundry Creditors outstanding Expenses 55,000 15,000 25,000 10,000 25,000 4,000 3,000 3,000 8,000 2,000 1,50, 000 Assets Land and Building Plant & Machinery Furniture and Fixtures Trade investment Bills Receivable Debtors Stock Prepaid Expenses Cash and bank balances 20,000 22,000 3,000 5,000 20,000 10,000 50,000 2,000 18,000 Throw light on the short term financial Position of the company with the help of suitable ratio. (5:1; 2.4:1) Q4.(a) Calculate Current Ratio and Quick ratio from the following information: Particulars Bills Receivable Cash Stock of Finished Goods Loose Tools Bills payable Sundry Creditors (Current Ratio 2.2:1; Liquid Ratio 1:1) 13,000 26,000 90,000 26,000 25,000 60,000 Particulars Sundry Debtors Stock of Raw material Prepaid Insurance Goodwill bank overdraft 15% Debentures 20,000 59,500 6,000 45,000 40,000 Q4.(b) Calculate the current ratio and Acid test ratio from the given particulars and give your comments about the same. Particulars Debtors Short term investment Closing Stock: Raw material Finished Product 40,000 Creditors Outstanding Expenses (Current Ratio 2.31:1; Liquid Ratio 1.16:1) 10,000 20,000 5,000 Particulars Cash Long term investment Prepaid Expenses Plant & machinery Loose Tools Provision for Taxation Profit & Loss A/c 71,000 40,000 9,000 50,000 25,000 80,000 Q5. Q6. Q7. Current liabilities of a company are Rs.4, 00,000. Its current ratio is 4:1 and liquid ratio is 2.5:1. Calculate the value of stock. (value of Stock = Rs.6, OO,OOO) The current ratio of B Ltd. is 4:5:1 and liquid ratio is 3:1. Stock is rs.3, 00,000. What are the current liabilities? (Current liabilities =Rs.2, 00,000) Working capital of a company is Rs.60,OOO. Its current ratio is 2:5:1. Calculate the value of (i) current liabilities (ii) Current assets and (iii) Acid Test ratio, assuming stock of Rs.40, 000.
Q8. X Ltd. has a liquid (acid test ) ratio 2:1. If its stock is Rs.20, 000 and its total current liabilities are Rs.50, 000, Find out its current ratio. (Current ratio = 2.4:1) PROFITABILITY RATIOS 1. 2. QI. Q2. Q3. Gross Profit Ratio: This ratio expresses the relationship of gross profit to net sales. It's expressed in percentage. Gross Profit Ratio = Gross Profit x 100 Net Sales Gross Profit = Net Sales — Cost of goods sold Cost of goods sold = Net sales — gross profit Net Sales = Sales — Sales returns Net Purchases = purchases — Purchases Return Direct Expenses are all those expenses which have been incurred in relation to the production / purchases e.g. wages, carriage , freight, fuel, carriage inward , octroi cleaning charges, custom duty, dock dues, cartage non — recurring expenses etc. Operating Ratio : It may be defined as a ratio which indicates operating cost as a percentage of total sales Operating ratio is calculated as operating cost divided by net sales. Formula is as follows: Operating Ratio = Operating Cost x 100 Net Sales Cost of Goods Sold + Operating Expenses OR Operating Ratio = x 100 Net Sales power, Operating Expenses includes all office and administrative Expenses e.g. salary, electricity, rent, etc. and all the expenses incurrent for Selling and Distribution Expenses e.g. advertising, commission etc. General Expenses, Depreciation. Calculate Gross Profit ratio from the following: Particulars Sales Gross Profit Return inwards Compute Gross Profit Ratio from the following 90,000 40,000 (Gross Profit ratio - Particulars Particulars Opening Stock Credit Sales Returns outward Advertisement Expenses Calculate Gross Profit Ratio: Particulars Sales return Closing stock Cash Sales Purchases Determine Operating ratio: Particulars Opening Stock Purchases Net sales 50,000 15,000 30,000 ,ooo 000 ,ooo ,ooo Closing Stock Cash sales Purchase Carriage inward • -37.5%) 70,000 1, 70,000 10,000 (Gross Profit ratio - • -20%) Office & Administration Expenses 50,000 10,000 Particulars Opening Stock Credit Sales Purchase Returns Direct Expenses (Gross Profit ratio - Particulars Closing Stock Purchase Returns Carriage & Wages Selling and distribution Expenses 75,000 13,000 5,000 30,000
(Gross Profit ratio = 50%) Q5.(a) Calculate Gross Profit from the following: Sales Gross Profit is 25% on Sales. (Gross Profit = Rs.l, 00,000) Rs.4, OO,OOO Q5.(b) Calculate Gross Profit from the following: Sales Gross Profit is 25% on cost. Q6.(a) Calculate Gross Profit from the following: (Gross Profit = • Rs.66,OOO) Cost of goods Sold Gross Profit is 25% on sales. Rs.6, OO,OOO (Gross Profit = Q6.(b) Calculate Gross Profit from the following: Cost of goods Sold Gross Profit is 30% on cost. Rs.30,OOO (Gross Profit = • Rs.15,OOO) Q7. Q8. Q9. The following is the Trading and Profit and Loss Account of Wye Ltd. for the year ended 31st March 2005. Particulars Stock Purchases Carriage Wages Gross Profit c/d Administrative Expenses Selling and Distribution Expenses Interest Net Profit 70,000 6,000 14,000 20,000 3,000 80,000 2,05, 000 Particulars Sales Stock Gross Profit b/d Dividend Received 5,000 You are required to calculate : (a) Gross Profit Ratio (b) Operating ratio. (Gross Profit ratio =50%; Operating ratio= 80.5%) Calculate Operating ratio and Gross Profit ratio from the following: Particulars Sales Sales Return Office and Administrative Expenses Closing Stock Carriage 16,000 25,000 27,500 500 Particulars Purchases Purchases selling and Distribution Expenses Opening Stock (Operating Ratio= 75.83%; Gross Profit ratio - • -43.33%) Calculate the Gross Profit ratio and Operating ratio from the following details: Particulars Sales Gross Profit Selling Expenses Loss by theft Provision for Tax 50% 14,000 12,000 Particulars Sales Return Office Expenses Interest on Loan Income from Investment 14,000 32,500 11,000 30,000 16,000 10,000 6,000
Q10. 1. 2. 3. QI. Q2. Q3. (Operating Ratio= 80%; Gross Profit ratio = 25%) Calculate the gross Profit Ratio from the following data: Cash Sales being 25% of Total sales, purchases Credit sales Excess of closing stock over opening stock Rs.50,000. (Gross Profit ratio= 46.67%) SOLVENCY RATIO Debt to Equity Ratio : Debt to equity ratio is the relation between borrowed funds and owners capital in the firm. OR Debt to equity ratio = Long Term Debt or Long Term Loans Shareholder's Fund Debt Equity Total assets to Debt Ratio: This ratio shows the relationship between total assets and long term debts . Total Assets to debt Ratio = Total Real Assets Long Term Loan Proprietary Ratio: It is also called Equity Assets Ratio or Ratio of net Worth to total assets or stock holder equity ratio. It shows the relationship between Proprietors funds and total assets. It indicates the extent to which the shareholders own the business. Proprietary Ratio = Shareholder's funds Total Real assets OR Shareholder's funds x 100 total real assets Internal Equities (Share holder fund or Proprietary fund or net worth) Equity share capital Preference share capital, Reserve and Surplus, Profit and Loss A/c, Capital Reserve , General Reserve , Retained Earning, Sinking fund, Security Premium, Reserve for contingencies, Accumulated Profit capital Redemption Reserve — (Fictitious Assets), Preliminary Expenses , Discount on Share, Discount on Debentures. Profit and Loss Account (Dr.).Under writing Commission. Total Assets = Current Assets + Net Fixed Assets + Investment Total Assets = Shareholder's Fund + Total Debts Long Term Loans = Debentures , Public Deposits, Mortgage Loan, Secured loan, Unsecured loan Bank loans , Long Term loans. From the following information. Calculate Debt equity Ratio, Total assets to Debt ratio and Proprietary ratio: Liabilities Equity Share Capital General Reserve 12%Debentures Bank overdraft Sundry Creditors Assets Fixed Assets Investments (Long term) Stock in trade Debtors Cash at bank 40,000 (Debt Equity Ratio = 0.5:1; Total Assets to Debt Ratio = 4.44:1; Proprietary Ratio=45%) From the following , Calculate Debt Equity Ratio, total assets to debt ratio and Proprietary . Equity Share capital Preference Share capital Rs.50,OOO, General Reserve Accumulated Profit Rs.60,OOO, Debentures Sundry Creditors Rs.80,OOO. Expenses Payable Rs.20,OOO, Preliminary expenses not yet written off Rs. 10,000. (Debt Equity Ratio = 0.43:1; Total Assets to Debt Ratio = 4.:1; Proprietary Ratio=58.33%) Calculate Debt Equity Ratio, Total Assets to Debt Ratio and Proprietary ratio from the balance sheet of Raj Ltd. as on 31st March, 20x1: Liabilities 90,000 Equity shares of Rs.10 each, fully paid up 4,000, 11% redeemable pref. Shares of Rs.100 each , fully paid up Securities Premium A/c General Reserve Profit and Loss account 80,000 Assets Land and building Plant and machinery Furniture and Fitting Stock Trade debtors Cash in hand Cash at bank 65,000
10,000, 12% convertible debentures of Rs.100 each. Fully paid up Bills payable Trade creditors Outstanding expenses Provision for Tax Bills payable Preliminary expenses 20,000 80,000 60,000 (Debt Equity Ratio = 0.5:1; Total Assets to Debt Ratio = 3.5.:1; Proprietary Ratio=56.82%) From the following balance sheet , calculate debt-equity ratio, total assets to debt ratio. Proprietary ratio. Liabilities Equity Share Capital 12% Preference Reserve Securities Premium Profit & loss A/c 15% debentures Loan from bank Current Liabilities share capital 60,000 15,000 10,000 8,000 18,000 30,000 21,000 21,000 Assets Fixed Assets Current Assets Preliminary Expenses Q5. (Debt Equity Ratio = 0.47:1; Total Assets to Debt Ratio = 3.53.:1; Proprietary Ratio=60%) Following is the balance sheet of Reliance India Ltd. as on 31st march 2001. Liabilities Equity Share Capital 12% Preference share capital Profit & loss A/c General Reserve Bank loan 15% debentures Sundry Creditors Provision for Taxation 90,000 40,000 37,000 33,000 50,000 80,000 56,000 14,000 Assets Fixed Assets Investment Stock Sundry debtors Cash Miscellaneous Expenditure 66,000 3,000 90,000 40,000 77,000 23,000 10,000 Calculate (a) debt equity ratio (b) Total assets to debt ratio and (c) proprietary ratio. (Debt Equity Ratio = 0.68:1; Total Assets to Debt Ratio = 3:1; Proprietary Ratio-48.72%) Q6. Q7. From the following balance sheet calculate Proprietary Ratio and debt-equity ratio . Total assets to debts ratio. Liabilities Equity Share Capital 12% Preference share capital Reserve Profit & loss A/c 15% debentures Current liabilities 50,000 10,000 15,000 12,000 17,000 18,000 Assets Fixed Assets Current Assets Underwriting Commission 82,000 38,000 2,000 (Proprietary Ratio=70.83%;Debt Equity Ratio = 0.2:1; Total Assets to Debt Ratio = 7.06:1) From the following balance sheet calculate (i) Total Assets to debt ratio and (ii) Proprietary ratio (iii) Debt equity ratio. Liabilities Equity Share Capital 12% Preference share capital Reserve Debentures Current liabilities 60,000 10,000 30,000 40,000 20,000 Assets Land and building Furniture Plant and machinery Stock Debtors Cash and bank balance Prepaid Expenses 50,000 25,000 40,000 19,000 20,000 5,500 500
(Total assets to debts Ratio = 4:1; Proprietary ratio= 62.5%; debt equity ratio = 4:1) ACTIVITY RATIOS Debtors (or Receivable) Turnover ratio: debtors Turnover Ratio expresses the relation between receivable and net credit sales. 1. 2. 3. QI. Q2. Debtors Turnover Ratio = Net credit sales Average Accounts Receivable Average accounts Receivable = Opening Debtors + Opening B/R + Closing Debtors + Closing B/R 2 OR Debtor + Bills Receivable Net Credit Sales = Total sales — Cash Sales — sales Returns Inventory Turnover Ratio/ Stock Turnover ratio: It shows the relationship between the cost of goods sold and the inventory level. It is also called Stock or Merchandise Ratio. Inventory/ Stock Turnover Ratio = Cost of Goods Sold Average Stock Average Stock = Opening Stock + Closing Stock 2 Working Capital Turnover Ratio: It is a ratio between cost of goods sold (or sales) and net working capital. It is a measure of efficiency in the utilization of working capital. It is calculated as follows: Working Capital Turnover Ratio = Net sales or Cost of Goods Sold Net working capital Net working capital is calculated as follows: Net working capital = current Assets — Current Liabilities Calculate Stock Turnover ratio. Particulars Stock(Opening) Purchases Sales 25,000 85,000 Particulars Stock(Closing) Carriage inwards (Stock Turnover Ratio= 3 Times) 35,000 15,000 Total Sales for the year Rs.60, 000. Debtors Rs.8, 000; Bills Receivable rs.4, 000. Calculate Debtors Turnover Ratio. (Debtors Turnover ratio = 5 times) From the following data, calculate stock(inventory) Turnover Ratio: Total sales Sales returns Rs.20,OOO, Gross Profit Rs.50,000. Closing Q3. Stock Rs.80,OOO, Excess of Closing Stock over Opening stock Rs.20,OOO. (Stock Turnover Ratio= 2 Times) Q4. Calculate Stock Turnover ratio from the data given below: Stock at the beginning of the year Rs.20,OOO, Stock at the end of the year Rs.10,OOO, Purchase Rs.50,000. carriage inwards Rs.5,OOO. Total Sales Cash Sales Rs.20,OOO. (Stock Turnover Ratio= 4.33 Times) Q5. Opening Stock Rs.59,OOO, Closing Stock Rs.61,OOO. Sales Rs.4, 80,000.. Gross Profit on Sales. Calculate Stock Turnover Ratio. (Stock Turnover Ratio= 6 Times) Q6. Calculate the debtors Turnover Ratio from the following: Total Sales for 2005 Cash Sales for 2005 2, oo,ooo 40,000
Debtors as on Jan1,2005 Debtors as on December 31, 2005 35,000 45,000 (Debtors Turnover ratio = 4 times) Q7. Calculate (i) debtors turnover ratio, and (ii) average collection period from the following as on 31st dec.1998 assuming 365 working days in a year: Particulars Total Gross Sales Sales Returns Total Debtors on 31-12-1998 Bills Receivable on 31-12-1998 60,000 5,000 4,800 1,600 Particulars Cash Sales Total Debtors on 31-12-1997 Bills Receivable on 31-12-1997 - 52.14 days) 13,000 4,400 1,200 (Debtors Turnover ratio = 7 times; Average Collection period - From the following details, calculate Debtors Turnover ratio: Q8. Q9. Q10. Total Sales for the year Cash Sales Sales Returns out of credit sales Opening balance Closing balance 20% of total sales 10,000 18,000 8,000 (Debtors Turnover ratio 10 times) Calculate the working Capital turnover ratio from the following: Current Assets Total Sales Current Liabilities Sales Returns Rs.50,OOO. (Working Capital Turnover ratio 6 times) The following is the Balance sheet of Gyan Ltd. You are required to calculate Working Capital Turnover ratio, Debtors Turnover Ratio, Stock Turnover ratio. Liabilities Equity Share Capital General Reserve Bills payable Creditors Provision for income tax 30,000 50,000 Assets Fixed Assets Less: Accumulated Depreciation Short term Investments Sundry debtors Stock Bills Receivable Cash in hand Cash at bank 1 00 000 50,000 50,000 (iii) Total Sales during the year Sales Returns during the year Cash Sales Gross Profit Rs. (Working capital Turnover Ratio 10 times; Debtors turnover Ratio 19 times; Stock turnover Ratio 6 times)

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