100 QUESTIONS Accounts

Valuation of Goodwill
Q1. The capital of the firm of Anuj and Benu is ₹ 10,00,000 and the market rate of interest is
15%. Annual salary to the partners is ₹ 60,000 each. The profits for the last three years were ₹
3,00,000, ₹ 3,60,000 and ₹ 4,20,000. Goodwill of the firm is to be valued on the basis of two
years purchase of last three years average super profits. Calculate the goodwill of the firm. (₹
180000)
Q2. A firm earned average profit of ₹ 3,00,000 during the last few years. The normal rate of
return of the industry is 15%. The assets of the business were ₹ 17,00,000 and its liabilities were
₹ 2,00,000. Calculate the goodwill of the firm by capitalisation of average profits. (₹ 500000)
Q3. L, M and N were partners in a firm sharing profits and losses in the ratio of 5 : 3 : 2. On 1st
April, 2018 they admitted S as a new partner in the firm for 1/5th share in the profits. On. S’
admission the goodwill of the firm was valued at 3 years purchase of last five years average
profits. The profits during the last five years were:
Year ended 31st March Profit (₹)
2014 4,00,000
2015 3,00,000
2016 2,00,000
2017 50,000
2018 (50,000)
Calculate the value of the goodwill of the firm. (₹ 540000)
Q4. Average profits of a firm during the last few years are ₹ 80,000 and the normal rate of return
in a similar business is 10%. If the goodwill of the firm is ₹ 1,00,000 at 4 years’ purchase of super
profit, find the capital employed by the firm. (₹ 550000)
Q5. The firm of P, Q and R earned ₹ 4,00,000 average profits during the last three years. The
capital employed in the business was ₹ 6,00,000. Normal rate of return of the industry is 8%.
Calculate the goodwill of the firm by capitalising the super profits. (₹ 4400000)
Q6. Calculate goodwill of the firm on the basis of 3 years’ purchase of the average profits of the
last five years. The profits of the last five years were:
Year Amount (₹)
2013 – 14 4,00,000
2014 – 15 5,00,000
2015 – 16 (60,000)
2016 – 17 1,50,000
2017 – 18 2,50,000
(i) On 1st January, 2016, a fire broke out which resulted into a loss of goods of ₹ 3,00,000. A
claim of ₹ 70,000 was received from the insurance company.
(ii) During the year ended 31st March, 2017 the firm received an unexpected tax refund of ₹
80,000.
(₹ 834000)
Q7. On 1st April, 2014 a firm had assets of ₹ 1,00,000 excluding stock of ₹ 20,000. Partners’
capital accounts showed a balance of ₹ 60,000. The current liabilities were ₹ 10,000 and the
balance constituted the reserve. If the normal rate of return is 8%, the ‘Goodwill’ of the firm is
valued at ₹ 60,000 at four years of purchase of super profit, find the average profit of the firm.
(₹ 23,800)
Q8. A business has earned average profits of Rs. 1,00,000 during the last few years and the
normal rate of return in similar business is 10%. Find out the value of Goodwill by
(i) Capitalisation of super profit method and
(ii) Super profit method if the goodwill is valued at 3 years purchase of super profit.
The assets of the business were Rs. 10,00,000 and its external liabilities Rs. 1,80,000. (₹ 180000,
₹ 54000)
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Q9. A partnership firm earned net profits during the last three years as follows:
Years Net profit (Rs.)
2007 - 2008 1,90,000
2008 - 2009 2,20,000
2009 - 2010 2,50,000
The capital employed in the firm throughout the above-mentioned period has been Rs. 4,00,000.
Having regard to the risk involved, 15% is considered to be a fair return on the capital. The
remuneration of all the partners during this period is estimated to be Rs. 1,00,000 per annum.
Calculate the value of goodwill on the basis of (i) two year's purchase of super profits earned on
average basis during the above mentioned three years and (ii) by capitalisation method. (₹
120000, ₹ 400000)
Q10. Yash and Karan were partners in an interior designer firm. Their fixed capitals were ₹
6,00,000 and ₹ 4,00,000 respectively. There were credit balances in their current accounts of ₹
4,00,000 and ₹ 5,00,000 respectively. The firm had a balance of ₹ 1,00,000 in General Reserve. The
firm did not have any liability. They admitted Radhika into partnership for 1/4 th share in the profits
of the firm. The average profits of the firm for the last five years were ₹ 5,00,000. Calculate the
value of goodwill of the firm by capitalization of average profits method. The normal rate of return
in the business is 10%. (₹ 3000000)
Common Questions of Change in PSR, Admission, Retirement and Death
of a Partner
Q11. Pass necessary journal entries and show how the following will appear in the
accounts/Balance sheet in each of the following cases if there are three partners A, B and C
sharing profits equally:
Extract of Balance Sheet
Liabilities ₹ Assets ₹
Workmen Compensation 50,000
Reserve
Case 1: Question is Silent/ if there is no information

Case 2: Claim on account of Workmen Compensation is estimated at ₹ 20,000.
Q12. Pass necessary journal entries and show how the following will appear in the
accounts/Balance sheet in each of the following cases if there are three partners A, B and C
sharing profits equally:
Investment Fluctuation Reserve 60,000 Investments 6,00,000

Case 1: Question is Silent/ if there is no information
Case 2: If the market value of Investments is ₹ 6,00,000.
Q13. Pass Journal Entries and show how the following will appear in the accounts/Balance sheet
in each of the following.
1) Value of furniture is to be increase by ₹ 10,000 (Book Value ₹ 50,000)
2) Value of furniture is to be decrease by ₹ 10,000 (Book Value ₹ 50,000)
3) Value of machinery is to be increase to ₹ 60,000 (Book Value ₹ 50,000)
4) Value of machinery is to be decrease to ₹ 10,000 (Book Value ₹ 50,000)
5) Stock is undervalued by 10% (Book Value ₹ 45,000)
6) Stock is overvalued by 10% (Book Value ₹ 55,000)
7) Stock is undervalued by ₹ 5,000 (Book Value ₹ 35,000)
8) Stock is overvalued by ₹ 5,000 (Book Value ₹ 85,000)
9) Machine is taken over by A (partner) at ₹ 40,000 (Book Value ₹ 42,000)
10) Investments of ₹ 50,000 which did not appear in books is to be recorded.
11) A outstanding bill of stationary of ₹ 1,000 now to be recorded.
12) There was a claim against the firm for damages, a liability to the extent of ₹ 10,000
will be created for the same.
13) Revaluation expenses amounted to ₹ 10,000.
14) Revaluation expenses amounted to ₹ 10,000 paid by B (partner).
15) An unaccounted commission receivable of ₹ 15,000 be accounted.
16) Outstanding salary of ₹ 10,000 will be paid off. (Book Value ₹ 15,000)
17) One month salary is outstanding. (Amount paid during the year was ₹ 22,000)
18) Stock to be revalued at ₹ 3,00,000 (Book Value ₹ 2,80,000)
19) Creditors of ₹ 2,000 were not to be paid. (Book Value ₹ 10,000)
20) Bill receivable of ₹ 10,000 discounted with the bank dishonoured.
21) An amount of ₹ 2,500 will be transferred from General Reserve to Provision for
Damages.
22) Patents were found valueless. (Book Value ₹ 8,000)
23) Outstanding rent be brought down to ₹ 11,000 (Book Value ₹ 13,000).
24) An old computer completely written off was sold for ₹ 2,500 as scrap.
25) 40% of stock was sold at a loss of 10% and remaining stock was taken over by B (partner)
at 120% of its value by paying through cheque (Book Value of Stock ₹ 80,000).
26) Outstanding salary of ₹ 10,000 will be paid off in full settlement. (Book Value ₹ 15,000)
Q14. Debtors/Bad Debt/ Bad Debt Recovered/Provision for Doubtful Debts (VIP)
Pass necessary journal entries and show how the following will appear in the accounts/Balance sheet in
each of the following cases:
Case 1:
Debtors 1,00,000
Additional information:
Debtors amounting to ₹ 5,000 were found unrecoverable.
Case 2:
Debtors 1,00,000
Create provision for doubtful debts @ 5% on debtors.
Case 3:
Debtors 1,00,000
Less: Provision for 10,000 90,000
Bad Debt
Create provision for bad debts @ 15% on debtors.
Case 4:
Debtors 1,00,000
Bad Debt
Create provision for bad debts @ 5% on debtors.
Case 5:
Debtors 1,00,000
Bad Debt
Reduce the amount of provision for bad debts by ₹ 2,000.
Case 6:
Debtors 1,00,000
Bad Debt
All debtors are good.

Case 7:
Debtors 1,00,000
Bad Debt
Bhawna, an old customer whose account was written off as bad debts last year, has paid ₹ 2,500.
Case 8:
Debtors 1,00,000
Unrecorded debtors of ₹ 2,000 to be accounted.
Case 9:
Debtors 1,00,000
Debtors of ₹ 5,000 will be written off as bad debts and provision of 5% on debtors for bad and doubtful
debts will be maintained.
Case 10:
Debtors 1,00,000
Bad Debt
Case 11:
Debtors 1,00,000
Bad Debt
Debtors of ₹ 10,000 will be written off as bad debts.
Case 12:
Debtors 1,00,000
Bad Debt

Case 13:
Debtors 1,00,000
Bad Debt
Provision of 4% on debtors for bad and doubtful debts will be maintained and Krishika, an old customer
whose account of ₹ 5,000 was written off as bad debts last year, has paid ₹ 4,500.
Case 14:
Debtors 1,00,000
Bad Debt
Debtors of ₹ 4,000 will be written off as bad debts.
Case 15:
Debtors 36,000
Bad Debt
Debtors of ₹ 2,000 will be written off as bad debts and a provision of 4% will be created on debtors for
bad and doubtful debtors.
Case 16:
General Reserve 5,000 Debtors 36,000
Bad Debt
10% of general reserve to be transferred to provision for bad debts.

Death of a Partner
Q15. Kumar, Verma and Naresh were partners in a firm sharing profit & loss in the ratio of 3 : 2 : 2. On
23rd January, 2015 Verma died. Verma’s share of profit till the date of his death was calculated at ₹
2,350. Pass necessary journal entry for the same in the books of the firm.
Q16. Ram, Ghanshyam and Vrinda were partners in a firm sharing profits in the ratio of 4 : 3 : 1. The firm
closes its books on 31st March every year. On 1st February, 2015, Ghanshyam died and it was decided
that the new profit-sharing ratio between Ram and Vrinda will be equal. The partnership deed provided
for the following, on the death of a partner.
(a) His share of goodwill be calculated on the basis of the half of the profits credited to his account during
the previous four completed years. The firm’s profit for the last four years was: 2010-2011 ₹ 1,20,000,
2011-2012 ₹ 80,000, 2012-2013 ₹ 40,000 and 2013-2014 ₹ 80,000.
(b) His share of profit in the year of his death was to be computed on the basis of average profits of past
two years.
Pass necessary journal entries relating to goodwill and profit to be transferred to Ghanshyam’s capital
account. Also show your workings clearly. (₹ 60,000, ₹ 18,750)
Q17. Anita, Babita and Chamanpreet were partners in a firm. Anita died on 31 March, 2018. The Balance
Sheet of the firm on that date was as under:
Balance Sheet of Anita, Babita and Chamanpreet as at 31.3.2018

Creditors 40,000 Cash at Bank 55,000
General Reserve 63,000 Debtors 40,000
Employees Provident Fund 32,000 Less: PBD 2,000 38,000
Capital Furniture 1,30,000
Anita 2,00,000 Plant & Machinery 4,12,000
Babita 2,00,000
Chamanpreet 1,00,000 5,00,000
6,35,000 6,35,000
On Anita’s death the furniture was to be reduced by ₹ 36,000 and plant was to be brought down to ₹
4,00,000. A claim of ₹ 15,000 on account of workmen’s compensation was accepted.
Pass necessary journal entries for the above transactions in the books of the firm assuming that half the
amount due to Anita’s executor was paid to her immediately.
Q18. Meera, Sarthak and Rohit were partners sharing profits in the ratio of 2 : 2 : 1. On 31 March,
2018, their Balance Sheet was as follows :
Balance Sheet of Meera, Sarthak and Rohit as at 31 March, 2018

Creditors 3,00,000 Fixed Assets 7,00,000
Contingency Reserve 1,00,000 Stock 2,00,000
Capital: Debtors 1,50,000
Meera 4,00,000 Cash at bank 3,50,000
Sarthak 3,50,000
Rohit 2,50,000
14,00,000 14,00,000
Sarthak died on 15th June, 2018. According to the partnership deed, his executors were entitled
to:
(i) Balance in his Capital Account.
(ii) His share of goodwill will be calculated on the basis of thrice the average of the past 4 years’
profits.
(iii) His share in profits up to the date of death on the basis of average profits of the last two
years. The time period for which he survived in the year of death will be calculated in months.
(iv) Interest on capital @ 12% p.a. up to the date of his death.
The firm’s profits for the last four years were:

2014 – 15 ₹ 1,20,000, 2015 – 16 ₹ 2,00,000, 2016 – 17 ₹ 2,60,000 and 2017 – 18 ₹ 2,20,000.
Sarthak’s executors were paid the amount due immediately. Prepare Sarthak’s Capital Account to
be presented to his executors. (₹ 658750)
Q19. 'G', 'E' and 'F' were partners in a firm sharing profits in the ratio of 7 : 2 : 1. The Balance Sheet of the
firm’s on 31stMarch, 2011was as follows:
Balance Sheet of 'G', 'E' and 'F' as on 31stMarch, 2011
Capital: Goodwill 40,000
G 70,000 Land & Buildings 60,000
E 20,000 Machinery 40,000
F 10,000 Stock 7,000
Debtors 12,000
General Reserve 20,000 Cash 5,000
Loan from E 30,000
Creditors 14,000
1,64,000 1,64,000
'E' died on 24thAugust 2011. Partnership deed provides for the settlement of claims on the death of a
partner in addition to his capital as under:
(i) The share of profit of deceased partner to be computed upto the date of death on the basis of average
profits of the past three years which was Rs. 80,000.
(ii) His share in profit/loss on revaluation of assets and re-assessment of liabilities which were as follows:
Land and Buildings were revalued at Rs. 94,000, Machinery at Rs. 38,000 and Stock at Rs. 5,000. A
provision of 2½%was to be created on debtors for bad and doubtful debts.
(iii) The net amount payable to 'E's executors was transferred to his Loan Account, to be paid later on.
Prepare Revaluation Account, Partner's Capital Accounts, E's Executor/c. and Balance Sheet of 'G' and 'F'
who decided to continue the business keeping their capital balances in their new profit-sharing ratio. Any
surplus or deficit to be transferred to current accounts of the partners. (₹ 29,700, G ₹ 76790; F ₹ 10,970,
Loan ₹ 58,340 B/S ₹ 1,60,100)
Q20. A, B and C were partners in a firm sharing profits and losses in the ratio of 3 : 2 : 1. C died on 30th
June, 2016. After all the necessary adjustments, his capital account showed a credit balance of ₹ 70,600.
C’s executor was paid ₹ 10,600 on 1st July, 2016 and the balance in three equal yearly instalments starting
from 30th June, 2017 with interest @ 10% p.a. on the unpaid amount. The firm closes its books on 31st
March every year.
Prepare C’s Executor’s Account till the amount is finally paid.

Change in Profit Sharing Ratio
Q21. Hari, Kunal and Uma are partners in a firm sharing profits and losses in the ratio of 5 : 3 : 2.
From 1st April, 2018 they decided to share future profits and losses in the ratio of 2 : 5 : 3. Their
Balance Sheet showed a balance of ₹ 75,000 in the Profit and Loss Account and a balance of ₹
15,000 in Investment Fluctuation Fund. For this purpose, it was agreed that:
(i) Goodwill of the firm was valued at ₹ 3,00,000.
(ii) That investments (having a book value of ₹ 50,000) were valued at ₹ 35,000.
(iii) That stock having a book value of ₹ 50,000 be depreciated by 10%.
Pass the necessary journal entries for the above in the books of the firm.
Q22. Radhika, Bani and Chitra were partners in a firm sharing profits and losses in the ratio of 2 :
3 : 1. With effect from 1st April, 2018 they decided to share future profits and losses in the ratio
of 3 : 2 : 1. On that date their Balance Sheet showed a debit balance of ₹ 24,000 in Profit and
Loss Account and a balance of ₹ 1,44,000 in General Reserve.
It was also agreed that:
(a) The goodwill of the firm be valued at ₹ 1,80,000.
(b) The Land (having book value of ₹ 3,00,000) will be valued at ₹ 4,80,000.
Pass the necessary journal entries for the above changes.
Q23. X, Y and Z are sharing profits and losses in the ratio of 5 : 3 : 2. They decide to share future
profits and losses in the ratio of 2 : 3 : 5 with effect from 1st April, 2019. They also decide to
record the effect of the following accumulated profits, losses and reserves without affecting
their book values by passing a single entry. .
Book Values ( ₹)
General Reserve 6,000
Profit and Loss A/c (Credit) 24,000
Advertisement Suspense A/c 12,000
Pass an adjustment entry.

Q 24. A, B and C are sharing profits and losses in the ratio of 2 : 2 : 1. They decided to share profit w.e.f.
1st April, 2022 in the ratio of 5 : 3 : 2. They also decided not to change the values of assets and liabilities
in the books of account. The book values and revised values of assets and liabilities as on the date of
change were as follows:
Book values (₹) Revised values (₹)
Machinery 2,50,000 3,00,000
Computers 2,00,000 1,75,000
Sundry Creditors 90,000 75,000
Outstanding Expenses 15,000 25,000
Pass an adjustment entry.
Q25. A, B, C and D were partners in a firm sharing profits in the ratio of 3 : 2 : 3 : 2. On 1.4.2016, their
Balance Sheet was as follows:
Balance Sheet of A, B, C and D as on 1.4.2016
Capital: Fixed Assets 8,25,000
A 2,00,000 Current Assets 3,00,000
B 2,50,000
C 2,50,000
D 3,10,000 10,10,000
Sundry Creditor 90,000

Workmen Compensation Reserve 25,000
11,25,000 11,25,000
From the above date the partners decided to share the future profits in the ratio of 4 : 3 : 2 : 1. For this
purpose the goodwill of the firm was valued at ₹ 2,70,000. It was also considered that:
(i) The claim against Workmen Compensation Reserve has been estimated at ₹ 30,000 and fixed assets
will be depreciated by ₹ 25,000.
(ii) Adjust the capitals of the partners according to the new profit-sharing ratio by opening Current
Accounts of the partners.
Prepare Revaluation Account, Partners’ Capital Account and the Balance Sheet of the reconstituted firm.
(Important) (Revaluation Loss ₹ 30,000; Capitals A ₹ 3,92,000, B ₹ 2,94,000, C ₹ 1,96,000, D ₹ 98,000;
B/S ₹ 14,05,000)
Q26. S, T, U and V were partners in a firm sharing profits in the ratio of 4 : 3 : 2 : 1. On 1-4-2016 their
Balance Sheet was as follows:
Balance Sheet of S, T, U and V as on 1-4-2016
Capital: Fixed Assets 4,40,000
S 2,00,000 Current Assets 2,00,000
T 1,50,000
U 1,00,000
V 50,000 5,00,000

Workmen Compensation Reserve 60,000
11,25,000 6,40,000
From the above date partners decided to share the future profits in 3 : 1 : 2 : 4 ratio. For this purpose, the
goodwill of the firm was valued at ₹ 90,000. The partners also agreed for the following:
(i) The claim for workmen compensation has been estimated at ₹ 70,000.
(ii) To adjust the capitals of the partners according to new profit-sharing ratio by opening partners current
accounts.
Prepare Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of the
reconstituted firm. (Revaluation Loss ₹ 10,000; Capitals S ₹ 1,47,000, T ₹ 49,000, U ₹ 98,000, V ₹ 1,96,000;
B/S ₹ 8,14,000)
Admission of a Partner
Q27. A and B are partners sharing profits in the ratio of 2 : 1. They admit C for 1/4th share in
profits. C brings in ₹ 30,000 for his capital and ₹ 8,000 out of his share of ₹ 10,000 for goodwill.
Before admission, goodwill appeared in books at ₹ 18,000. Give Journal entries to give effect to
the above arrangement.
Q28. On the admission of C, goodwill of A and B is valued at ₹ 30,000. C is to get 1/4th share of
profits. Previously A and B shared profits in the ratio of 3 : 2. C is unable to bring amount of
goodwill. Give Journal entries in the books of A and B when:
(a) there is no Goodwill Account and
(b) Goodwill appears in the books at ₹ 10,000.
Q29. Asin and Shreyas are partners in a firm. They admit Ajay as a new partner with 1/5 th share in
the profits of the firm. Ajay brings ₹ 5,00,000 as his share of capital. The value of the total assets
of the firm was ₹ 15,00,000 and outside liabilities were valued at ₹ 5,00,000 on that date.
Give the necessary Journal entry to record good will at the time of Ajay's admission. Also show
your workings.
Q30. Anu and Bhagwan were partners in a firm sharing profits in the ratio of 3 : 1. Goodwill
appeared in the books at ₹ 4,40,000. Raja was admitted to the partnership. The new profit
sharing ratio among Anu, Bhagwan and Raja was 2 : 2 : 1.
Raja brought ₹ 1,00,000 for his capital and necessary cash for his goodwill premium. The goodwill
of the firm was valued at ₹ 2,50,000.
Record the necessary journal entries in the books of the firm for the above transactions.
Q31. (Capital Adjustment – 1) Sanjana and Alok were partners in a firm sharing profits and losses
in the ratio 3 : 2. On 31st March, 2018 their Balance Sheet was as follows :
Balance Sheet of Sanjana and Alok as on 31-3-2018

Capital: Cash 1,66,000
Debtors 1,46,000
Sanjana 5,00,000 Less Provision
Alok 4,00,000 9,00,000 For Doubtful Debts 2,000 1,44,000
Stock 1,50,000
Sundry Creditor 60,000 Investments 2,60,000
Workmen Compensation 60,000 Furniture 3,00,000
Fund
10,20,000 10,20,000
On 1st April, 2018, they admitted Nidhi as a new partner for 1/4th share in the profits on the
following terms:
(a) Goodwill of the firm was valued at ₹ 4,00,000 and Nidhi brought the necessary amount in
cash for her share of goodwill premium, half of which was withdrawn by the old partners.
(b) Stock was to be increased by 20% and furniture was to be reduced to 90%.
(c) Investments were to be valued at ₹ 3,00,000. Alok took over investments at this value.
(d) Nidhi brought ₹ 3,00,000 as her capital and the capitals of Sanjana and Alok were adjusted in
the new profit-sharing ratio.
Prepare Revaluation Account, Partners Capital Accounts and the Balance Sheet of the
reconstituted firm on Nidhi’s admission. (Revaluation Profit ₹ 40,000; Capitals Sanjana ₹
5,40,000, Alok ₹ 3,60,000, Nidhi ₹ 3,00,000; B/S ₹ 12,60,000)
Q32. (Capital Adjustment – 2) A, B and C were partners in a firm sharing profits in the ratio of
3:2:1. On 31-3-2015 their Balance Sheet was as follows:
Balance Sheet of A, B and C as on 31-3-2015

Capital: Bank 17,000
A 60,000 Debtors 23,000
B 40,000 Stock 1,10,000
C 20,000 1,20,000 Investments 30,000
Furniture & Fittings 10,000
Sundry Creditor 84,000 Machinery 35,000
General Reserve 21,000
2,25,000 2,25,000
On the above date D was admitted as a new partner and it was decided that:
(i) The new profit-sharing ratio between A, B, C and D will be 2:2:1:1.
(ii) Goodwill of the firm was valued at ₹ 90,000 and D brought his share of goodwill premium in
cash.
(iii) The market value of investments was ₹ 24,000.
(iv) Machinery will be reduced to ₹ 29,000.
(v) A creditor of ₹ 3,000 was not likely to claim the amount and hence to be written off.
(vi) D will bring proportionate capital so as to give him 1/6th share in the profits of the firm.
Prepare Revaluation Account, Partner’s Capital Accounts and the Balance Sheet of the
reconstituted firm. (Revaluation Loss ₹ 9,000; Capitals A ₹ 81,000, B ₹ 44,000, C ₹ 22,000 D ₹
29,400; B/S ₹ 2,57,400)
Q33. (Capital Adjustment – 3) On 31st March, 2019 the Balance Sheet of Madan and Mohan
who share profits and losses in the ratio of 3 : 2 was as follows :
Balance Sheet of Madan and Mohan as at 31st March, 2019

Capital: Cash at Bank 10,000
Madan 60,000 Debtors 65,000
Mohan 40,000 1,00,000 Less: Provision for
Doubtful Debts 5,000 60,000
Sundry Creditor 28,000 Stock 33,000
General Reserve 10,000 Patents 57,000
Employee’s Provident Fund 22,000
1,60,000 1,60,000
They decided to admit Gopal on 1st April, 2019 for 1/5th share which Gopal acquired wholly
from Mohan on the following terms:
(i) Gopal shall bring ₹ 10,000 as his share of premium for Goodwill.
(ii) A debtor whose dues of ₹ 3,000 were written off as bad debt paid ₹ 2,000 in full settlement.
(iii) A claim of ₹ 5,000 on account of workmen’s compensation was to be provided for.
(iv) Patents were undervalued by ₹ 2,000. Stock in the books was valued 10% more than its
market value.
(v) Gopal was to bring in capital equal to 20% of the combined capitals of Madan and Mohan
after all adjustments.
Prepare Revaluation Account, Capital Accounts of the Partners and the Balance Sheet of the new
firm. (Revaluation Loss ₹ 4,000; Capitals Madan ₹ 63,400, Mohan ₹ 52,400, Gopal ₹ 23,200; B/S
₹ 1,94,200)
Retirement of a Partner
Q34. Aman, Bimal and Deepak are partners sharing profits in the ratio of 2 : 3 : 5. The goodwill of the
firm has been valued at ₹ 37,500. Aman retired. Bimal and Deepak decided to share profits equally in
future. Calculate gain/sacrifice of Bimal and Deepak on Aman’s retirement and also pass necessary
journal entry for the treatment of goodwill. (B to A ₹ 7,500)
Q35. Kavi, Ravi, Kumar and Guru were partners in a firm sharing profits in the ratio of 3 : 2 : 2 : 1. On
1.2.2017, Guru retired and the new profit sharing ratio decided between Kavi, Ravi and Kumar was 3 : 1 :
1. On Guru’s retirement the goodwill of the firm was valued at ₹ 3,60,000. Showing your working notes
clearly, pass necessary journal entry in the books of the firm for the treatment of goodwill on Guru’s
retirement. (K Dr 81,000 To R ₹ 18,000 To K ₹ 18,000 To G ₹ 45,000)
Q36. Arjun, Bhim and Nakul are partners sharing profits & losses in the ratio of 14 : 5 : 6 respectively.
Bhim retires and surrenders his 5/25th share in favour of Arjun. The goodwill of the firm is valued at 2
years purchase of super profits based on average profits of last 3 years. The profits for the last 3 years
are Rs. 50,000, Rs. 55,000 & Rs. 60,000 respectively. The normal profits for the similar firm are Rs.
30,000. Goodwill already appears in the books of the firm at Rs. 75,000. The profit for the first year after
Bhim's retirement was Rs. 1,00,000. Give the necessary Journal Entries to adjust Goodwill and distribute
profits showing your workings.
Q37. Shivam, Kapil and Deepak are partners sharing profits in the ratio of 3:1:2. On 31st March, 2022,
Kapil retired and his capital account after adjustments of reserve and profit on revaluation was ₹
3,50,000. Shivam and Deepak paid him ₹ 4,20,000 in settlement of his claim. To settle his account, a
machine of ₹ 4,20,000 was given to Kapil. Pass the necessary Journal entries in the books of the firm.
Q38. X, Y and Z were in partnership sharing profits and losses in the ratio 3:2:1. Z retired from the firm
on 1st April, 2018. After adjustments, his capital account shows a credit balance of ₹ 1,00,000 on the date
of retirement. Z is paid ₹ 40,000 immediately and the balance to be paid in three equal annual
instalments from 31st March, 2019 along with interest @ 10% p.a. Prepare Z’s loan account until he is
paid the amount due to him. The firm closes its books on 31st March every year.
Q39. P, Q and R were in partnership sharing profits and losses in the ratio 2:2:1. Q retired from
the firm on 1st April, 2019. After adjustments, his capital account shows a credit balance of ₹
2,20,000 on the date of retirement. Q is paid ₹ 60,000 immediately and the balance to be paid in
four equal semi-annual instalments along with interest @ 10% p.a. Prepare Q’s loan account until
he is paid the amount due to him. The firm closes its books on 31st March every year .
Q40. Banwari, Girdhari and Murari are partners in a firm sharing profits and losses in the ratio of
4 : 5 : 6. On 31st March, 2014, Girdhari retired. On that date the capitals of Banwari, Girdhari and
Murari before the necessary adjustments stood at ₹ 2,00,000, ₹ 1,00,000 and ₹ 50,000
respectively. On Girdhari’s retirement, goodwill of the firm was valued at ₹ 1,14,000. Revaluation
of assets and re-assessment of liabilities resulted in a profit of ₹ 6,000. General Reserve stood in
the books of the firm at ₹ 30,000.
The amount payable to Girdhari was transferred to his loan account. Banwari and Murari agreed
to pay Girdhari two yearly instalments of ₹ 75,000 each including interest @ 10% p.a. on the
outstanding balance during the first two years and the balance including interest in the third
year. The firm closes its books on 31st March every year.
Prepare Girdhari’s loan account till it is finally paid showing the working notes clearly.
Q41. M, N and G were partners in a firm sharing profits and losses in the ratio of 5:3:2. On 31-3-
2016 their Balance Sheet was as under:
Balance Sheet of M, N and G as on 31-3-2016
M 1,50,000 Debtors 45,000
N 1,25,000 Less: Provision for
G 75,000 3,50,000 Doubtful Debts 5,000 40,000
Stock 50,000
Sundry Creditor 55,000 Machine 1,50,000
General Reserve 30,000 Patents 30,000
Building 1,00,000
Profit & Loss A/c 25,000
4,35,000 4,35,000
M retired on the above date and it was agreed that:
(i) Debtors of ₹ 2,000 will be written off as bad debts and a provision of 5% on debtors for bad
and doubtful debts will be maintained.
(ii) Patents will be completely written off and stock, machinery and building will be depreciated
by 5%.
(iii) An unrecorded creditor of ₹10,000 will be taken into account.
(iv) N and G will share the future profits in the ratio of 2 : 3.
(v) Goodwill of the firm on M’s retirement was valued at ₹ 3,00,000.
Pass necessary Journal Entries for the above transactions in the books of the firm on M’s
retirement. (Revaluation Loss ₹ 54,150; M’s Loan ₹ 2,75,425)
Q42. (Capital Adjustment – 1) Mohan, Vinay and Nitya were partners in a firm sharing profits and
losses in the proportion of 1/2, 1/3 and 1/6 respectively. On 31st March, 2018, their Balance
Sheet was as follows:
Balance Sheet of Mohan, Vinay and Nitya as at 31st March, 2018
Mohan 1,20,000 Debtors 63,000
Vinay 1,00,000 Less: Provision for
Nitya 90,000 3,10,000 Doubtful Debts 2,000 61,000
Bill Receivables 54,000
Sundry Creditor 48,000 Plant & Machine 1,20,000
General Reserve 30,000 Land & Building 2,92,000
Employee Provident Fund 1,70,000
5,58,000 5,58,000
Mohan retired on the above date and it was agreed that:
(i) Plant and machinery will be depreciated by 5%.

(ii) An old computer previously written off was sold for ₹ 4,000.
(iii) Bad debts amounting to ₹ 3,000 will be written off and a provision of 5% on debtors for bad
and doubtful debts will be maintained.
(iv) Goodwill of the firm was valued at ₹ 1,80,000 and Mohan’s share of the same was credited in
his account by debiting Vinay’s and Nitya’s accounts.
(v) The capital of the new firm was to be fixed at ₹ 90,000 and necessary adjustments were to be
made by bringing in or paying off cash as the case may be.
(vi) Vinay and Nitya will share future profits in the ratio of 3 : 2.
reconstituted firm. (Revaluation Loss ₹ 6,000; Capitals Vinay ₹ 54,000, Nitya ₹ 36,000; Mohan’s
Loan ₹ 2,22,000; B/S ₹ 5,30,000)
Q43. (Capital Adjustment – 2) Akul, Bakul and Chandan were partners in a firm sharing profits in
the ratio of 2 : 2 : 1. On 31st March, 2018 their Balance Sheet was as follows :
Balance Sheet of Akul, Bakul and Chandan as on 31-3-2018
Akul 1,60,000 Debtors 60,000
Bakul 1,20,000 Less: Provision for
Chandan 92,000 3,72,000 Doubtful Debts 2,000 58,000
Stock 80,000
Sundry Creditor 45,000 Plant & Machine 1,80,000
General Reserve 20,000 Furniture 90,000
Employee Provident Fund 13,000
4,50,000 4,50,000
Bakul retired on the above date and it was agreed that:
(i) Plant and Machinery was undervalued by 10%.

(ii) Provision for doubtful debts was to be increased to 15% on debtors.
(iii) Furniture was to be decreased to ₹ 87,000.
(iv) Goodwill of the firm was valued at ₹ 3,00,000 and Bakul’s share was to be adjusted through
the capital accounts of Akul and Chandan.
(v) Capital of the new firm was to be in the new profit-sharing ratio of the continuing partners.
Prepare Revaluation account, Partners’ Capital accounts and the Balance Sheet of the
reconstituted firm. (Revaluation Profit ₹ 10,000; Capitals A ₹ 1,00,000; C ₹ 50,000, B’s Loan ₹
2,52,000; B/S ₹ 4,60,000)
Q44. (Capital Adjustment – 3 & 4) Sushma, Gautam and Kanika were partners in a firm sharing
profits in the ratio of 5 : 3 : 2. On 31st March, 2018, their Balance Sheet was as follows :
Balance Sheet of Sushma, Gautam and Kanika as at 31st March, 2018
Capital: Cash at Bank 1,40,000
Sushma 3,00,000
Gautam 2,50,000 Debtors 1,60,000
Kanika 3,50,000 9,00,000
Stock 2,40,000
Profit & Loss Account 1,00,000 Investments 2,00,000
Employee Provident Fund 40,000
Fixed Assets 3,60,000
11,00,000 11,00,000
On the above date, Sushma retired and it was agreed that:
(i) Fixed Assets will be reduced to ₹ 2,90,000.

(ii) A provision of 5% on debtors for bad and doubtful debts will be created.
(iii) Stock was to be valued at ₹ 2,18,000. Sushma took over the stock at this value.
(iv) Goodwill of the firm on Sushma’s retirement was valued at ₹ 8,00,000. Sushma’s share of
goodwill was treated by debiting Gautam and Kanika’s Capital Accounts.
(v) Sushma was paid cash brought by Gautam and Kanika in such a way that their capitals became
in profit sharing ratio and a balance of ₹ 58,000 was left in the bank.
(vi) Gautam and Kanika will share the future profits in the ratio of 2 : 3.
reconstituted firm. (Revaluation Loss ₹ 1,00,000; Capitals Gautam ₹ 2,40,000, Kanika ₹ 3,60,000;
B/S ₹ 7,00,000)

Dissolution of a Partnership Firm
Q45. (Realisation Expenses) Pass necessary journal entries on the dissolution of a partnership
firm in the following cases:
(i) Dissolution expenses were ₹ 800.
(ii) Dissolution expenses ₹ 800 were paid by Prabhu, a partner.
(iii) Geeta, a partner, was appointed to look after the dissolution work, for which she was
allowed a remuneration of ₹ 10,000. Geeta agreed to bear the dissolution expenses. Actual
dissolution expenses ₹ 9,500 were paid by Geeta.
(iv) Janki, a partner, agreed to look after the dissolution work for a commission of ₹ 5,000. Janki
agreed to bear the dissolution expenses. Actual dissolution expenses ₹ 5,500 were paid by
Mohan, another partner, on behalf of Janki.
(v) A partner, Kavita, agreed to look after the dissolution process for a commission of ₹ 9,000.
She also agreed to bear the dissolution expenses. Kavita took over furniture of ₹ 9,000 for her
commission. Furniture had already been transferred to realisation account.
(vi) A debtor, Ravinder, for ₹ 19,000 agreed to pay the dissolution expenses which were ₹ 18,000
in full settlement of his debt.
(vii) Realisation expenses of ₹ 7,000 were paid by firm on the behalf of Sanjay, a partner.
(viii) Raj, a partner, is paid remuneration of ₹ 15,000 for dissolution of the firm. Realisation
expenses of ₹ 8,000 are paid by the firm.
(ix) N, a partner, was appointed to look after the process of dissolution for which he was allowed
a remuneration of ₹ 9,000. N agreed to bear the dissolution expenses. Actual dissolution
expenses ₹ 4,000 were paid by the firm.
(x) S, a partner, was appointed to look after the process of dissolution for which he was allowed
a remuneration of ₹ 10,000. S agreed to bear the dissolution expenses. Actual dissolution
expenses ₹ 12,000 were paid by the firm.
(xi) Expenses of realisation ₹ 4,000 were to be borne by Rony. Rony used the firm’s cash for
paying these expenses.
Q46. (Partners Loan) Pass the necessary journal entries for the following transactions on the
dissolution of the partnership firm after the various assets (other than cash) and external
liabilities have been transferred to Realization Account:
(i) Mrs. Rohan’s loan (Partner’s Wife) was settled by giving her an unrecorded computer of ₹
22,000.
(ii) Dhwani’s Loan (Partner) of ₹ 50,000 to the firm was settled by paying ₹ 42,000.
(iii) Rohan’s Loan (Partner) of ₹ 20,000 was settled at ₹ 21,000.
(iv) Loan to Charu (Partner) of ₹ 60,000 was settled by payment to Charu’s brother loan of the
same amount.
(v) Noor’s Loan (Partner) of ₹ 80,000 to the firm and she took over Machinery of ₹ 60,000 as part
payment.
(vi) Paavni’s Loan (Partner) of ₹ 40,000 was settled by giving an unrecorded asset of ₹ 45,000.
(vii) Kavish, a partner, agreed to pay off his wife’s loan of ₹ 8,000.
Q47. (Workmen Compensation Reserve) Manoj and Nand were partners sharing profits in the
ratio of 3: 2. Pass journal entries under following situations at the time of dissolution of firm:
(i) Workmen Compensation Reserve stood at ₹ 1,00,000 and there was no liability towards
Workmen Compensation.
(ii) Workmen Compensation Reserve stood at ₹ 1,00,000 and liability in respect of it was
ascertained at ₹ 75,000.
(iii) Workmen Compensation Reserve stood at ₹ 1,00,000 and liability in respect of it was
ascertained at ₹ 1,00,000.
(iv) Workmen Compensation Reserve stood at ₹ 1,00,000 and liability in respect of it was
ascertained at ₹ 1,20,000.
(v) Workmen Compensation Reserve stood at NIL and liability in respect of it was ascertained at
₹ 1,00,000.
Q48. Pass the necessary journal entries for the following transactions on the dissolution of the
partnership firm after the various assets (other than cash) and external liabilities have been
transferred to Realization Account:
(i) An unrecorded asset of ₹ 2,000 and cash ₹ 3,000 was paid for liability of ₹ 6,000 in full
settlement.
(ii) 100 shares of ₹ 10 each have been taken over by partners A & B at market value of ₹ 20 per
share in their profit sharing ratio, which is 3 : 2.
(iii) Stock of ₹ 30,000 was taken over by a creditor of ₹ 40,000 at a discount of 30% in full
settlement.
(iv) The firm had stock of ₹ 60,000. Ankit took over 40% of the stock at a discount of 20%; 30% of
the stock was taken over by creditors of ₹ 20,000 if full settlement while the remaining stock was
sold off at a profit of 20% on cost.
(v) A liability under a suit for damages included in creditors was settled at ₹ 32,000 as against
only ₹ 13,000 provided in the books. Total creditors of the firm were ₹ 50,000.
(vi) There was a bill of exchange of ₹ 10,000 under discount. The bill was received from Abhishek
who became insolvent.
(vii) Creditors of ₹ 30,000 took over stock of ₹ 10,000 at 10% discount and the balance was paid
to them in cash.
(viii) Debtors amounting to ₹ 1,40,000 were handed over to a debt collection agency which
charged 5% commission. The remaining debtors were ₹ 47,000, out of which debtors of ₹ 17,000
could not be recovered because the same became insolvent. Provision for doubtful debts was ₹
15,000.
(ix) Sunil, a debtor of ₹ 50,000 had to pay the amount due 3 months after the date of dissolution.
He was allowed a discount of 5% p.a. for making payment immediately.
(x) Sunil, a debtor of ₹ 50,000 had to pay the amount due 3 months after the date of dissolution.
He was allowed a discount of 5% for making payment immediately.
(xi) There was an old furniture which has been completely written off from the books. Yogesh, a
partner, took away the same for ₹ 4,000.
(xii) Building (Book Value of ₹ 5,00,000) sold for ₹ 8,00,000 through a broker who charged 2 %
commission.
(xiii) Profit & Loss showed a debit balance of ₹ 56,000. There were two partners A & B sharing
profits in 3 : 2
(xiv) Z, an old customer, whose account for ₹ 10,000 was written off as bad debt last year, paid
70% of the amount,
(xv) There was an outstanding bill for repairs for which ₹ 19,000 was paid.
(xvi) A creditor amounting to ₹ 70,000 accepted ₹ 30,000 in cash and investments of the book
value of ₹ 45,000 in full settlement of his claim.
(xvii) A creditor for ₹ 1,40,000 accepted building valued at ₹ 1,80,000 and paid to the firm ₹
40,000.
(xviii) Bank loan of ₹ 3,00,000 was paid along with interest of ₹ 21,000.
Q49. Girija and Ganesh were partners in a firm sharing, profits and losses in the ratio of 2 : 3. On
31st March, 2017 their Balance Sheet was as follows :
Creditors 80,000 Cash at Bank 20,000
Bank Overdraft 50,000 Debtors 55,000
Girija’s Brother’s loan 77,000 Less: Provision for
Ganesh’s loan 28,000 doubtful debts 2,000 53,000
Investment Fluctuation Fund 15,000 Stock 78,000
Capitals: Investments 89,000
Girija 1,50,000 Buildings 2,50,000
Ganesh 1,00,000 2,50,000 Profit and Loss A/c. 10,000
5,00,000 5,00,000
On the above date the firm was dissolved. The assets were realized and the liabilities
were paid off as follows:
(a) Debtors of ₹ 6,000 were proved bad.

(b) Girija agreed to pay off her brother’s Loan.
(c) One of the creditors for ₹ 10,000 was paid only ₹ 3,000 in full settlement of his account.
(d) Buildings were auctioned for ₹ 1,80,000 and the auctioneer’s commission amounted to ₹
8,000.
(e) Ganesh took over part of stock at ₹ 4,000 (being 20% less than the book value). Balance of
the Stock was handed over to the remaining creditors in full settlement of their account.
(f) Investments realized ₹ 9,000 less.
(g) Realisation expenses amounted to ₹ 17,000 and were paid by Ganesh.
Prepare Realisation Account, Partners’ Capital Accounts and Bank Account. (Realisation Loss ₹
90,000; Final Payments Girija ₹ 1,87,000, Ganesh ₹ 53,000; Bank A/c ₹ 3,21,000)
Q50. Michael, Jackson and John were partners in a firm sharing profits in the ratio of 3 : 1 : 1. On
31st March, 2017, they decided to dissolve their firm. On that date their Balance Sheet was as
follows:
Balance Sheet of Michael, Jackson and John as at 31.3.2017

Creditors 11,500 Bank 6,000
Loan 3,500 Debtors 48,400
Less: Provision for
Capitals: doubtful debts 2,400 46,000
Michael 50,000 Stock in trade 16,000
Jackson 25,000 Furniture 2,000
John 14,000 89,000 Sundry Assets 34,000
1,04,000 1,04,000
It was agreed that:
(i) Michael was to take over Furniture at ₹ 2,600 and Debtors amounting to ₹ 40,000 at ₹ 34,400
and the Creditors of ₹ 10,000 were to be paid by him at this figure.
(ii) Jackson was to take over all the stock in trade at ₹ 14,000 and some of the other Sundry
Assets at ₹ 28,800 (being 10% less than book value).
(iii) John was to take over the remaining Sundry Assets at 90% of the book value and assumed the
responsibility for the discharge of the loan.
(iv) The remaining debtors were sold to a debt collecting agency for 50% of the book value. The
expenses of dissolution ₹ 600 were paid by John.
Prepare Realisation Account, Bank Account and Partners’ Capital Accounts. (Revaluation Loss ₹
12,800; Final Payment Michael ₹ 15,320, John ₹ 13,740; Amount brought by Jackson ₹ 20,360;
Bank A/c ₹ 30,560)

Q51. Classify the following items under Major heads and Sub-head (if any) in the Balance Sheet of a Company as
per schedule III of the Companies Act 2013.
S.No. Items Major Head Sub-Head

1 Accrued Income
2 Advance Taxes
3 Balance with Bank
4 Bank Overdraft
5 Cash Credit
6 Bills Payable/Creditors
7 Bill Receivables/Debtors
8 Capital Reserve
9 Capital Redemption Reserve
10 Cash in hand
11 Cheques and Drafts in hand
12 Security Premium
13 Debenture Redemption Reserve
14 Calls in Advance
15 Calls in Arrears
16 Current Maturities of long-term
debts
17 Debentures
18 Equity/ Preference Share Capital
19 Forfeited Share Account
20 Loose Tools
21 Stores and Spares
22 Goodwill, Trade Mark,
Copyrights and Patents
23 Land and Building
24 Unpaid Dividend
25 Share options Outstanding
Account
26 Raw Material, Work-in-Progress
and Finished Goods
27 Provision for Tax
28 Provision for Warranties
29 Prepaid Expenses/Prepaid
Insurance
30 Income received in advance
31 Advances recoverable in
cash within the operation
cycle
32 Capital Advances
33 Furniture and Fixtures
34 Provision for Employee
Benefits (Gratuity/Earned
Leave)
35 Loan Repayable on Demand
36 Investment in Debentures
37 Capital Work in Progress
38 Patents being developed by
the company
39 Long term investments with
maturity period less than 6
months
40 Mining Rights, Publishing
Titles, Computer Software,
Licenses and Franchise
41 Term Loan from Bank
42 Balance of Statement of
Profit and Loss
43 Negative Balance of
Statement of Profit and Loss
44 Shares in State Bank of India
45 Outstanding Salary
46 Interest accrued on
Investments
47 Provident Fund
48 Interest accrued but not due
49 Interest accrued and due
50 Unpaid Matured Deposits
51 Premium on redemption of
debentures
52 Accrued Interest on calls in
advance
Answer to Q 51.
S.No. Items Major Head Sub-Head

1 Accrued Income Current Assets Other Current Assets
2 Advance Taxes Current Assets Other Current Assets
3 Balance with Bank Current Assets Cash and Cash Equivalents
4 Bank Overdraft Current Liabilities Short Term Borrowings
5 Cash Credit Current Liabilities Short Term Borrowings
6 Bills Payable/Creditors Current Liabilities Trade Payables
7 Bill Receivables/Debtors Current Assets Trade Receivables
8 Capital Reserve Shareholder’s Fund Reserve and Surplus
9 Capital Redemption Reserve Shareholder’s Fund Reserve and Surplus
10 Cash in hand Current Assets Cash and Cash Equivalents
11 Cheques and Drafts in hand Current Assets Cash and Cash Equivalents
12 Security Premium Shareholder’s Fund Reserve and Surplus
13 Debenture Redemption Reserve Shareholder’s Fund Reserve and Surplus
14 Calls in Advance Current Liabilities Other Current Liabilities
15 Calls in Arrears Shareholder’s Fund Share Capital – By way of
deduction
16 Current Maturities of long-term Current Liabilities Short Term Borrowings
debts
17 Debentures Non-Current Liabilities Long term Borrowings
18 Equity/ Preference Share Capital Shareholder’s Fund Share Capital
19 Forfeited Share Account Shareholder’s Fund Share Capital – Shown in Notes
to Accounts
20 Loose Tools Current Assets Inventories
21 Stores and Spares Current Assets Inventories
22 Goodwill, Trade Mark, Non-Current Assets Property, Plant and Equipment
Copyrights and Patents and Intangible Assets —
Intangible Assets
23 Land and Building Non-Current Assets Property, Plant and Equipment
and Intangible Assets —
Property, Plant and Equipment
24 Unpaid Dividend Current Liabilities Other Current Liabilities
25 Share options Outstanding Shareholder’s Fund Reserve and Surplus
Account
26 Raw Material, Work-in-Progress Current Assets Inventories
and Finished Goods
27 Provision for Tax Current Liabilities Short term Provisions
28 Provision for Warranties Non-Current Liabilities Long term Provisions
29 Prepaid Expenses/Prepaid Current Assets Other Current Assets
Insurance
30 Income received in advance Current Liabilities Other Current Liabilities
31 Advances recoverable in cash Current Assets Short Term Loans and
within the operation cycle Advances
32 Capital Advances Non-Current Assets Long Term Loans and
Advances
33 Furniture and Fixtures Non-Current Assets Property, Plant and
Equipment and Intangible
Assets — Property, Plant and
Equipment
34 Provision for Employee Non-Current Liabilities Long term Provisions
Benefits (Gratuity/Earned
Leave)
35 Loan Repayable on Demand Current Liabilities Short Term Borrowings
36 Investment in Debentures Non-Current Assets Non-Current Investments
37 Capital Work in Progress Non-Current Assets Property, Plant and
Equipment and Intangible
Assets
38 Patents being developed by Non-Current Assets Property, Plant and
the company Equipment and Intangible
Assets — Intangible Assets
under Development
39 Long term investments with Current Assets Current Investments
maturity period less than 6
months
40 Mining Rights, Publishing Non-Current Assets Property, Plant and
Titles, Computer Software, Equipment and Intangible
Licenses and Franchise Assets — Intangible Assets
41 Term Loan from Bank Non-Current Liabilities Long term Borrowings
42 Balance of Statement of Profit Shareholder’s Fund Reserve and Surplus
and Loss
43 Negative Balance of Shareholder’s Fund Reserve and Surplus
Statement of Profit and Loss
44 Shares in State Bank of India Non-Current Assets Non-Current Investments
45 Outstanding Salary Current Liabilities Other Current Liabilities
46 Interest accrued on Current Assets Other Current Assets
Investments
47 Provident Fund Non-Current Liabilities Long term Provisions
48 Interest accrued but not due Current Liabilities Other Current Liabilities
49 Interest accrued and due Current Liabilities Other Current Liabilities
50 Unpaid Matured Deposits Current Liabilities Other Current Liabilities
51 Premium on redemption of Non-current Other Non-Current
debentures Liabilities Liabilities
52 Accrued Interest on calls in Current Liabilities Other Current Liabilities
advance
Accounting Ratios
Q52. State with reason whether the following transactions would (a) Increase (b) Decrease or (c) No
Change the ratio.
1. Current Ratio is 2:1. Company purchased furniture of ₹ 45,000 and the vendor was paid by issue
of equity shares of ₹ 10 each at par.
2. Quick Ratio is 2:1. Purchase of goods for cash for ₹ 15,000.
3. Quick Ratio is 2:1. Purchase of goods on credit for ₹ 15,000.
4. Quick Ratio is 2:1. Sale of furniture for cash ₹ 10,000.
5. Quick Ratio is 2:1. Cash received from debtors ₹ 20,000.
6. Debt Equity Ratio is 1:1. Sale of goods at profit.
7. Debt Equity Ratio is 1:1. Redemption of debentures.
8. Current Ratio of a company is 2: 1. Redeemed 9% debentures of ₹ 1,00,000.
9. Current Ratio of a company is 2.1: 1.2. Accepted bills of exchange drawn by the creditors ₹
7,000.
10. Debt Equity Ratio is 2:1. Issue of shares for cash.
11. Debt Equity Ratio is 2:1. Issue of Bonus Shares.
12. Debt Equity Ratio is 2:1. Sale of fixed assets at a loss of ₹ 5,000.
13. Quick ratio of a company is 1: 1. Paid insurance premium in advance ₹ 10,000.
14. Quick ratio of a company is 1: 1. Issued fully paid equity shares of ₹ 1,00,000.
15. Operating ratio is 80%. Purchase of goods costing ₹20,000
16. Operating ratio is 80%. Paid Wages ₹ 8,000
17. Debt to Equity ratio of a company is 0·50. Purchase of fixed assets on a credit of 3 months.
18. Debt to Equity ratio of a company is 0·50. Obtained 8% long-term loan.
19. Proprietary ratio of is 0·80 : 1. Obtained a loan from bank ₹ 2,00,000 payable after five years.
20. Proprietary ratio of is 0·80 : 1. Purchased machinery for cash ₹ 75,000.
21. Proprietary ratio of is 0·80 : 1. Redeemed 5% redeemable preference shares ₹ 1,00,000.
22. Proprietary ratio of is 0·80 : 1. Issued equity shares to the vendors of machinery purchased for
₹4,00,000.
23. Current Ratio is 2:1. Discounted a bill of ₹ 10,000 from bank. Bank Charged discount of ₹ 200.
24. Current Ratio is 2:1. Bill discounted with bank ₹ 8,000 was dishonoured.
25. Debt Equity Ratio is 2:1. Declaration of Final Dividend.
26. Debt to Capital Employed ratio is 0.3:1. Sale of Equipments costing ₹ 10,00,000 for ₹ 9,00,000.
27. Debt to Capital Employed ratio is 0.3:1. Purchased Goods on Credit for ₹ 1,00,000 for a credit of
15 months, assuming operating cycle is of 18 months.
28. Debt to Capital Employed ratio is 0.3:1. Conversion of Debentures into Equity Shares of ₹
2,00,000.
29. Debt to Capital Employed ratio is 0.3:1. Tax Refund of ₹ 50,000 during the year.
30. Gross Profit is 25%. Purchase of Stock in trade ₹ 50,000
Answers to Q52
1. No Change
2. Decrease
3. Decrease
4. Improve
5. No Change
6. Reduce
7. No Change
8. Increase
9. No Change
10. Decrease
11. No Change
12. Increase
13. Decrease
14. Increase
15. No Change
16. Increase
17. No Change
18. Increase
19. Decrease
20. No Change
21. Decrease
22. Increase
23. Decrease
24. No Change
25. Increase
26. Increase
27. No Change
28. Decrease
29. Decrease
30. No Change
Q53. A company had Current Assets ₹ 3,00,000 and Current Liabilities ₹ 1,40,000. Afterwards, it
purchased goods worth ₹ 20,000 on credit. Calculate the Current Ratio after the purchase of goods.
(2:1)
Q54. X Ltd. has a current ratio of 3 : 1 and quick ratio of 2 : 1. If the excess of current assets over quick
assets as represented by stock is Rs. 40,000, calculate current assets and current liabilities. (₹ 1,20,000;
₹ 40,000)
Q55. From the following information calculate Interest Coverage Ratio: Net profit after interest and tax
₹ 1,20,000; Rate of income tax 40%; 15% debentures ₹ 1,00,000; 12% Mortgage loan ₹ 1,00,000. (8.4
Times)
Q56. From the given information, compute ‘Proprietary Ratio’. Long-term borrowings ₹ 2,00,000; Long-
term provisions ₹ 1,00,000; Current liabilities ₹ 50,000; Non-current Assets ₹ 3,60,000; Current Assets
₹ 90,000. (0.22:1)
Q57. From the following information, calculate Total Assets to Debt Ratio:
Capital Employed ₹ 25,00,000
Investment ₹ 2,10,000
Land ₹ 8,50,000
Trade Receivables ₹ 2,75,000
Cash and Cash Equivalents ₹ 1,50,000
Equity Share Capital ₹ 14,30,000
8% Debentures ₹ 4,00,000
Capital Reserve ₹ 2,75,000
Surplus i.e., Balance in statement of profit and loss ₹ 1,50,000
(2.30:1)
Q58. From the given information, compute Debt to Equity Ratio. Long-term borrowings ₹ 2,00,000;
Long-term provisions ₹ 1,00,000; Current liabilities ₹ 50,000; Non-current Assets ₹ 3,60,000; Current
Assets ₹ 90,000. (3:1)
Q59. Total Debt ₹ 24,00,000, Current Assets ₹ 10,00,000, Non-Current Assets ₹ 18,00,000, Working
Capital ₹ 2,00,000. Calculate Debt to Capital Employed Ratio. (0.8:1)
Q60. A company earns Gross profit of 25% on cost. For the year ended 31st March, 2017 its
Gross Profit was ₹ 5,00,000; Equity Share Capital of the company was ₹ 10,00,000; Reserves and
Surplus ₹ 2,00,000; Long Term Loan ₹ 3,00,000 and Non-Current Assets were ₹ 10,00,000.
Compute the ‘Working capital turnover ratio’ of the company. (5 Times)
Q61. Calculate Net Assets Turnover ratio from the following information: - Profits after Tax were
₹ 6,00,000; Tax rate was 40%; 15% Debentures were of ₹20,00,000; 10% Bank Loan was ₹
20,00,000; 12% Preference Share Capital ₹ 30,00,000; Equity Share Capital ₹ 40,00,000;
Reserves and Surplus were ₹ 10,00,000; Sales ₹ 3,75,00,000 and Sales Return ₹ 15,00,000. (3
Times)
Q62. Calculate trade receivable turnover ratio from the given information. Total revenue from
operations during the year ₹ 8,40,000, Cash revenue operations is 40% of credit revenue from
operations., Closing trade receivables ₹ 2,00,000 and excess of closing trade receivables over
opening trade receivables ₹ 80,000 (3.75 Times)
Q63. Calculate the value of opening inventory and closing inventory from the following
information: Revenue from operations ₹ 4,50,000; Gross profit was 25% above cost; Opening
inventory was ₹ 10,000 more than the closing inventory; Inventory Turnover Ratio was 6 times.
(₹ 65,000; ₹ 55,000)
Q64. Capital Employed ₹ 12,00,000, Working Capital ₹ 2,00,000. Cost of Revenue from
Operations ₹ 16,00,000, Gross Profit 25% on Cost. Calculate Fixed Assets Turnover Ratio (2
Times)
Q65. Y Ltd’s profits after interest and tax was ₹ 1,00,000. Its Current Assets were ₹ 4,00,000;
Current Liabilities ₹ 2,00,000; Fixed Assets ₹ 6,00,000 and 10% Long term debt ₹ 4,00,000. The
rate of tax was 20%. Calculate ‘Return on Investment’ of Y Ltd. (20.625%)
Q66. the following information, calculate Gross Profit Ratio:
Revenue from Operations:
Cash ₹ 2,00,000
Credit ₹ 8,00,000
Purchases:
Cash ₹ 40,000
Credit 3,60,000
Carriage Inwards ₹ 8,000
Salaries ₹ 42,000
Decrease in Inventory ₹ 1,22,000
Returns Outwards ₹ 20,000
Wages ₹ 20,000
(47%)
Q67. From the given information, calculate Operating Ratio

Cash Revenue from Operations: ₹ 10,00,000
Credit Revenue from Operations: 120% of Cash Revenue from
Operations
Operating Expenses: 10% of Total Revenue from
Operations
Rate of Gross Profit: 40%
Opening Inventory: ₹ 1,50,000
Closing Inventory: ₹ 20,000 more than Opening Inventory
(70%)
Q68. From the following information obtained from the books of Kamal Ltd., Calculate Net Profit Ratio. (33.2%)
Revenue from operations ₹ 2,50,000
Purchases ₹ 1,05,000
Carriage Inwards ₹ 4,000
Salaries ₹ 30,000
Decrease in inventory ₹ 15,000
Return Outwards ₹ 5,000
Wages ₹ 18,000
Q69. Mixed Ratios

a. A company had a liquid ratio of 1.5:1 and a current ratio of 2:1. Its inventory turnover ratio was 6 times. It
had total current assets of ₹ 2,00,000. Find out revenue from operations if the goods are sold at 25% profit
on cost. (₹ 3,75,000)
b. Calculate Current Ratio and Current Assets of a company from the following information:
Stock Turnover Ratio: 4 times
Stock in the end was Rs. 20,000 more than stock in the beginning.
Sales Rs. 3,00,000 Gross Profit Ratio 25%
Current Liabilities Rs. 40,000
Quick Ratio 0.75 : 1
(2.41:1; ₹ 96,250)
c. From the following information obtained from the books of P. Ltd., calculate, (i) Return on Investment, and
(ii) Debt-Equity Ratio : Information : Net Profit after interest and tax ₹ 6,00,000; 6% Debentures ₹
10,00,000; Capital employed ₹ 20,00,000, and Tax rate 40%.
(53%; 1:1)
d. Average Inventory ₹ 60,000, Revenue from Operations ₹ 6,00,000, the rate of Gross Loss on Sales is 10%.
Calculate the Inventory Turnover Ratio. (11 Times)
e. From the following information obtained from the books of Raja Ltd, calculate (i) Trade Receivables
Turnover Ratio, and (ii) Trade Payables Turnover Ratio.
Revenue from operations ₹ 15,00,000
Creditors ₹ 2,00,000
Bills receivable ₹ 79,000
Bills Payable ₹ 87,000
Debtors ₹ 2,21,000
Purchases ₹ 11,48,000
(5 Times; 4 Times)
Q70. Cash Flow Statement
(Cash inflow from Operating Activities ₹ 4,95,000
Cash used in Investing Activities ₹ 7,30,000
Cash inflow from Financing Activities ₹ 2,35,000)
Q71.
(WN: (₹ 44,000); OA: (₹ 67,500); IA: (₹ 1,69,000); FA: ₹ 2,12,500)

Q72.
Additional Information:
a. 12% debentures were issued on 1st September, 2017.
b. Interim Dividend paid during the year ₹ 20,000.
c. Tax provided during the year ₹ 1,00,000
d. Proposed Dividend for the year ended 31st March, 2017 was ₹ 30,000 and for the year ended
31st March, 2018 was ₹ 40,000.
(WN: ₹ 4,40,000; OA: ₹ 2,27,000; IA: (₹ 4,48,000); FA: ₹ 3,83,000)

Q73.
Ans. IA: (₹ 8,48,000)/(₹ 8,00,000)

Q74.
Ans. FA: ₹ 9,04,000

Q75.
You are required to:
1. Calculate Net Profit before tax and extraordinary items.
2. Calculate Operating profit before working capital changes.
3. Calculate Cash flow from Investing activities.
4. Calculate Cash flow from Financing activities.
5. Calculate closing cash and cash equivalents.
Ans 1. ₹10,70,000; 2. ₹11,50,000; 3. (₹2,40,000); 4. (₹2,00,000); 5. ₹3,50,000
Q76. Answer the following questions:

1. In case of Finance Companies, Payment of dividend will be classified as _________ activity.
2. In case of Finance Companies, receipt of dividend will be classified as _________ activity.
3. Mevo Ltd., a financial enterprise had advanced a loan of ₹ 3,00,000, invested ₹ 6,00,000 in
shares of the other companies and purchased machinery for ₹ 9,00,000. It received
dividend of ₹ 70,000 on investment in shares. The company sold an old machine of the
book value of ₹ 79,000 at a loss of ₹ 10,000. Compute Cash flows from Investing Activities.
4. ‘Interest received and paid’ is considered as which type of activity by a finance company
while preparing a Cash Flow Statement?
5. State whether the following will increase, decrease or have no effect on cash flow from
operating activities while preparing ‘Cash Flow Statement’:
a. Decrease in outstanding employees’ benefits expenses by ₹ 3,000
b. Increase in prepaid insurance by ₹ 2,000
6. Will ‘acquisition of machinery by issue of equity shares’ be considered while preparing
‘Cash Flow Statement’? Give reason in support of your answer.
7. Net increase in working capital other than cash and cash equivalents will increase, decrease
or not change cash flow from operating activities. Give reason in support of your answer.
Answers to Q76.
1. Financing
2. Operating
3. (₹ 14,31,000)
4. Operating Activity; Operating Activity
5. Decrease; Decrease
6. Will not be considered as there is no flow of cash.
7. Decrease: Net increase in working capital implies the outflow of cash from operating activities.
Issue of Debentures
Q77. Disha Ltd. purchased machinery from Nisha Ltd. and paid to Nisha Ltd. as follows:
(i) By issuing 10,000, equity shares of ₹ 10 each at a premium of 10%.
(ii) By issuing 200, 9% debentures of ₹ 100 each at a discount of 10%.
(iii) Balance by accepting a bill of exchange of ₹ 50,000 payable after one month.
Pass necessary journal entries in the books of Disha Ltd. for the purchase of machinery and
making payment to Nisha Ltd. (Purchase Price ₹ 1,78,000)
Q78. Venus Ltd., is a real estate company. To discharge its corporate Social Responsibility, it
decided to construct a night shelter for the homeless. The company took over assets of ₹
10,00,000 and liabilities of ₹ 1,80,000 of Cayns Ltd. for ₹ 7,60,000. Venus Ltd. issued 9%
Debentures of ₹ 100 each at a discount of 5% in full satisfaction of the purchase consideration in
favour of Cayns Ltd.
Pass necessary journal entries in the books of Venus Ltd. for the above transactions.
Q79. A company took a loan of Rs. 10,00,000 from Punjab National Bank and issued 10%
debentures of Rs. 12,00,000 of Rs. 100 each as a collateral security. Explain how you will deal with
the issue of debentures in the books of the company.
Q80. On 1st April, 2015 P Ltd issued 6,000 12% Debentures of ₹ 100 each at par redeemable at a
premium of 7%. The debentures were to be redeemed at the end of third year. Prepare Loss on
issue of Debentures.
Q81. Pass necessary journal entries and prepare 9% debentures account for the issue of 7,500,
9% debentures of ₹ 50 each at a discount of 6%, redeemable at a premium of 10%.
Q82. Pass the necessary journal entries for the issue of debentures in the following cases:
a. Issued ₹ 30,000, 10% Debentures of ₹ 100 each at Par, redeemable at par.
b. Issued ₹ 50,000, 10% Debentures of ₹ 100 each at discount of 5%, redeemable at par.
c. Issued ₹ 28,000, 10% Debentures of ₹ 100 each at premium of 15%, redeemable at par.
d. Issued ₹ 80,000, 10% Debentures of ₹ 100 each at par, redeemable at premium of 10%.
e. Issued ₹ 40,000, 10% Debentures of ₹ 100 each at discount of 5%, redeemable at premium of
10%.
f. Issued ₹ 30,000, 10% Debentures of ₹ 100 each at premium of 10%, redeemable at premium of
15%.
Q83. On 1.4.2015, J.K. Ltd. issued 8,000, 9% debentures of ₹ 1,000 each at a discount of 6%,
redeemable at a premium of 5% after three years. The company closes its books on 31st March
every year. Interest on 9% debentures is payable on 30th September and 31st March every year.
The rate of tax deducted at source is 10%. Pass necessary journal entries for the issue of
debentures and debenture interest for the year ended 31.3.2016.
Accounting for Share Capital
Q84. Authorized capital of Suhani Ltd is ₹ 45,00,000 divided into 30,000 shares of ₹ 150 each.
Out of these company issued 15,000 shares of ₹ 150 each at a premium of ₹ 10 per share. the
amount was payable as follows:
₹ 50 per share on application, ₹ 40 per share on allotment (including premium), ₹ 30 per share
on first call and balance on final call. Public applied for 14,000 shares. All the money was duly
received.
Prepare an extract of Balance Sheet of Suhani Ltd. as per Schedule III of the companies Act,
2013 disclosing the above information. Also prepare 'Notes to Accounts ' for the same.
Q85. ‘Tractors India Ltd.’ is registered with an authorized capital of ₹ 10,00,000 divided into
1,00,000 equity shares of ₹ 10 each. The company issued 50,000 equity shares at a premium of
₹ 5 per share. ₹ 2 per share were payable with application, ₹ 8 per share including premium on
allotment and the balance amount on first and final call. The issue was fully subscribed and all
the amount due was received except the first and final call money on 500 shares allotted to
Balaram.
Present the ‘Share Capital’ in the Balance Sheet of ‘Tractors India Ltd.’ as per Schedule III of the
Companies Act, 2013. Also prepare Notes to Accounts for the same.
Q86. Alpha India Ltd. was registered with an authorised capital of ₹ 10,00,000 divided into
1,00,000 equity shares of ₹ 10 each. The company offered to the public for subscription 80,000
equity shares payable per share as: ₹ 3 on application, ₹ 2 on allotment, ₹ 3 on first call and the
balance on second and final call. The issue was fully subscribed and all amounts due were
received except the first and final call money on 2,000 shares allotted to Chavi. Her shares were
forfeited.
Present the ‘Share Capital’ in the Balance Sheet of the company as per Schedule III of the
Companies Act, 2013. Also prepare ‘Notes to Accounts’.
Q87. ‘India Auto Ltd.’ is registered with an authorised capital of ₹ 7,00,00,000 divided into
7,00,000 shares of ₹ 100 each. The company issued 50,000 shares to the vendor for building
purchased and 2,00,000 shares were issued to the public. The amount was payable as follows:
On application and allotment – ₹ 20 per share
On first call – ₹ 50 per share
On second and final call – The balance
All calls were made and were duly received except on 100 shares held by Rajani, who failed to
pay the second and final call. Her shares were forfeited.
Present the ‘Share Capital’ in the Balance Sheet of the company as per Schedule III of the
Companies Act, 2013. Also prepare ‘Notes to Accounts’.
Q88. On 1st April, 2012, Vishwas Ltd. was formed with an authorised capital of Rs. 10,00,000
divided into 1,00,000 equity shares of Rs. 10 each. The company issued prospectus inviting
applications for 90,000 equity shares. The company received applications for 85,000 equity
shares. During the first year, Rs. 8 per share were called. Ram holding 1,000 shares and Shyam
holding 2,000 shares did not pay the first call of Rs. 2 per share. Shyam's shares were forfeited
after the first call and later on 1,500 of the forfeited shares were reissued at Rs. 6 per share, Rs. 8
called-up.
Show the following:
(a) Share capital in the Balance Sheet of the company as per Schedule III of the Companies ACt,
2013.
(b) Also prepare 'Note to Accounts' for the same.
Q89. Pass entries for forfeiture and re-issue in the following cases.
1. Vikram Ltd. forfeited 5,000 shares of Rahul, who had applied for 6,000 shares for non-
payment of allotment money of ₹ 5 per share and first and final call of ₹ 2 per share. Only
application money of ₹ 3 was paid by him. Out of these 3,000 shares were re-issued @ ₹ 12 per
share as fully paid. (₹ 10,800)
2. Ratan Ltd. forfeited 3,000 shares of ₹ 10 each (issued at ₹ 2 premium) for non-payment of first
call of ₹ 2 per share. Final call of ₹ 3 per share was not yet made. Out of these 2,000 shares were
re-issued at ₹ 10 per share as fully paid. (₹ 10,000)
3. L Ltd. forfeited 470 Equity Shares of Rs. 10 each issued at a premium of Rs. 5 per share for non-
payment of allotment money of Rs. 8 per share (including share premium Rs. 5 per share) and
the first and final call of Rs. 5 per share. Out of these 60 Equity Shares were subsequently re-
issued at Rs. 14 per share. (₹ 120)
4. Z Ltd. Forfeited 470 equity shares of Rs. 20 each issued at a premium of Rs. 3 per share for the
non-payment of allotment money of Rs. 8 (including premium Rs. 3) and first call of Rs. 5 per
share. Final call of 5 per share was not made. Out of these, 235 shares were reissued at Rs. 19
each fully paid. (₹ 940)
5. X Ltd. forfeited 200 shares of ₹ 100 each, ₹ 70 called up, on which the shareholders had paid
application and allotment money of ₹ 50 per share. Out of these, 150 shares were reissued to
Naresh as ₹ 70 paid up for ₹ 60 per share. (₹ 6,000)
6. Q Ltd. forfeited 180 shares of ₹ 10 each, ₹ 8 called up, issued at a premium of ₹ 2 per share to
R for non-payment of allotment ₹ 5 per share (including premium). Out of these, 160 shares
were reissued to Sanjay as ₹ 8 paid up for ₹ 6 per share. (₹ 480)
Q90. ‘KLN Ltd.’ invited applications for issuing 1,00,000 shares of ₹ 10 each at a premium of ₹ 2
per share. The amount was payable as follows:
On Application – ₹ 3 per share (including premium ₹ 1)
On Allotment – ₹ 4 per share (including premium ₹ 1)
On First call – ₹ 3 per share
On Second and Final Call – Balance amount
Application for 1,90,000 shares were received. Allotment was made to the applicants as follows:
Category No. of Shares Applied No. of Shares Allotted
I 50,000 40,000
II 1,00,000 60,000
Remaining applications were rejected.
Rajat, a shareholder belonging to Category I who had applied for 2,500 shares, failed to pay the
amount due on allotment and first call. His shares were immediately forfeited.
Reema, a shareholder belonging to Category II who was holding 3,000 shares failed to pay the
first call and second call money. Her shares were also forfeited. Afterwards 4,000 shares were
reissued @ ₹ 8 per share fully paid up. These included all the forfeited shares of Reema.
Pass necessary journal entries for the above transactions in the books of ‘KLN Ltd.’ (₹ 9,750)
Q91. Denspar Ltd. invited applications for issuing 2,00,000 equity shares of ₹ 10 each at a
premium of ₹ 20 per share. The amount was payable as follows:
On Application – ₹ 2 per share
On Allotment – ₹ 13 per share (including ₹ 10 premium)
On First Call – ₹ 7 per share (including ₹ 5 premium)
On Final Call – ₹ 8 per share (including ₹ 5 premium)
Applications for 1,80,000 shares were received. Shares were allotted to all the applicants. Yogesh,
a shareholder holding 5,000 shares paid his entire share money along with the allotment money.
Vishesh, a holder of 7,000 shares, failed to pay the allotment money. Afterwards the first call was
made. Vishesh paid the allotment money along with the first call money. Samyesh, holding 2,000
shares did not pay the final call. Samyesh’s shares were forfeited immediately after the final call.
Out of the forfeited shares, 1,500 shares were reissued at ₹ 8 per share fully paid up.
Pass the necessary journal entries for the above transactions in the books of Denspar Ltd. (₹
7,500)
Q92. X Ltd. invited applications for issuing 50,000 equity shares of ₹ 10 each. The amount was
payable as follows:
On Application : ₹ 2 per share
On Allotment : ₹ 2 per share
On First Call : ₹ 3 per share
On Second and Final Call : Balance amount
Applications for 70,000 shares were received. Applications for 10,000 shares were rejected and
the application money was refunded.
Shares were allotted to the remaining applicants on a pro-rata basis and excess money received
with applications was transferred towards sums due on allotment and calls, if any.
Gopal, who applied for 600 shares, paid his entire share money with application. Ghosh, who had
applied for 6,000 shares, failed to pay the allotment money and his shares were immediately
forfeited. These forfeited shares were re-issued to Sultan for ₹ 20,000; ₹ 4 per share paid up. The
first call money and the second and final call money was called and duly received.
Pass necessary journal entries for the above transactions in the books of X Ltd. Open Calls-in-
Advance Account and Calls-in-Arrears Account wherever necessary. (₹ 12,000)
Q93. A Ltd. invited applications for issuing 1,00,000 shares of ₹ 10 each at a premium of ₹ 1 per
share. The amount was payable as follows :
On Application : ₹ 3 per share
On Allotment : ₹ 3 per share (including premium)
On First Call : ₹ 3 per share
On Second and Final Call : Balance amount
Applications for 1,60,000 shares were received. Allotment was made on the following basis :
(i) To applicants for 90,000 shares : 40,000 shares
(ii) To applicants for 50,000 shares : 40,000 shares
(iii) To applicants for 20,000 shares : full shares
Excess money paid on application is to be adjusted against the amount due on allotment and
calls.
Rishabh, a shareholder, who applied for 1,500 shares and belonged to category (ii), did not pay
allotment, first and second and final call money. Another shareholder, Sudha, who applied for
1,800 shares and belonged to category (i), did not pay the first and second and final call money.
All the shares of Rishabh and Sudha were forfeited and were subsequently re-issued at ₹ 7 per
share fully paid.
Pass the necessary journal entries in the books of A Ltd. Open Calls-in-Arrears Account and
Calls-in-Advance Account wherever required. (₹ 3,100)

Fundamentals of Partnership
Q94. Calculation of Interest on Drawings
1. A partner withdraws ₹ 10,000 in the beginning of each month. IOD @ 15% pa (₹ 9,750)
2. A partner withdraws ₹ 10,000 in the middle of each month. IOD @ 15% pa (₹ 9,000)
3. A partner withdraws ₹ 10,000 at the end of each month. IOD @ 15% pa (₹ 8,250)
4. A partner withdraws ₹ 60,000 in the beginning of each quarter. IOD @ 10% pa (₹ 15,000)
5. A partner withdraws ₹ 90,000 in the middle of each quarter. IOD @ 10% pa (₹ 18,000)
6. A partner withdraws ₹ 60,000 at the end of each quarter. IOD @ 10% pa (₹ 9,000)
7. X withdrew ₹ 5,000 every month in the beginning of the first 6 months of the year. IOD @ 6%
pa (₹ 1,425)
8. Y withdrew ₹ 5,000 every month in the middle of the first 6 months of the year. IOD @ 6% pa
(₹ 1,350)
9. Z withdrew ₹ 5,000 every month at the end of the first 6 months of the year. IOD @ 6% pa (₹
1,275)
10. A withdrew ₹ 4,000 every month in the beginning of the last 6 months of the year. IOD @ 5%
pa (₹ 350)
11. B withdrew ₹ 4,000 every month in the middle of the last 6 months of the year. IOD @ 5% pa
(₹ 300)
12. C withdrew ₹ 4,000 every month at the end of the last 6 months of the year. IOD @ 5% pa (₹
250)
13. P withdrew ₹ 40,000 during the year. IOD @ 10% pa. (₹ 2,000)
14. Q withdrew ₹ 50,000 during the year. IOD @ 10%. (₹ 5,000)

Q95. Calculation of Opening Capital and Interest on Capital
1. X, Y & Z are partners in the ratio of 4:1:1. The firm maintains fluctuating capital accounts and
the balance of the same as on 31-03-2021 amounted to ₹ 1,50,000; ₹ 5,50,000 and ₹11,00,000 for
X, Y and Z respectively. Divisible profit amounting to ₹ 3,00,000 for the year ended 31-03-2021
was distributed among partners allowing interest on capital @10% pa. During the year each
partner withdrew ₹ 50,000 per month. Calculate opening capitals of partners. (₹ 5,00,000; ₹
10,00,000; ₹ 15,00,000)
2. A & B are partners in the ratio of 3:2. The firm maintains fluctuating capital accounts and the
balance of the same as on 31-03-2020 amounted to ₹1,60,000 and ₹1,40,000 for A and B
respectively. Their drawings during the year were ₹30,000 each.
As per partnership deed interest on capital @10% p.a. on opening capitals had been provided to
them. Calculate opening capitals of partners given that their profits were ₹90,000. Show your
workings clearly. (₹ 1,38,364; ₹ 1,31,636)
Q96. Past Adjustments
1. Ajay, Manish and Sachin were partners sharing profits in the ratio 5:3:2. Their Capitals were ₹
6,00,000; ₹ 8,00,000 and ₹ 11,00,000 as on April 01, 2021. As per Partnership deed, Interest on
Capitals were to be provided @ 10% p.a. For the year ended March 31, 2022, Profits of ₹ 2,00,000
were distributed without providing for Interest on Capitals.
Pass an adjustment entry and show the workings clearly.
(Ajay ₹ 52,000 Dr to Manish ₹ 4,000 to Sachin ₹ 48,000)
2. Neena and Sara were partners in a firm with fixed capitals of < 5,00,000 and < 4,00,000
respectively. It was discovered that interest on capital @ 6% p.a. was credited to the partners for
the two years ending 31st March, 2018 and 31st March, 2019 whereas there was no such
provision in the partnership deed. Their profit-sharing ratio during the last two years was: 2017 -
18 - 4 : 5
2018 - 19 5 : 1
Showing your workings clearly, pass the necessary adjustment entry to rectify the error.
(Sara ₹ 9,000 to Neena ₹ 9,000)
3. On 31st March, 2019, the balance in the capital accounts of Asha, Nisha and Disha after
making adjustments for profits and drawings were ₹ 1,50,000, ₹ 1,20,000 and ₹ 90,000
respectively. Subsequently, it was discovered that interest on capital and interest on drawings
had been omitted.
The partners were entitled to interest on capital @ 10% p.a. Interest on drawings was also to be
charged @ 10% p.a. The drawings during the year were: Asha ₹ 50,000, Nisha ₹ 60,000 and
Disha ₹ 30,000. The net profit for the year ending 31st March, 2019 amounted to ₹ 1,00,000.
The profit sharing ratio was 2 : 2 : 1.
Pass the necessary adjustment entry. Also show your workings clearly.
(Nisha Dr ₹ 2,200 to Disha ₹ 1,900 to Asha ₹ 300)
Q97. Jay, Vijay and Karan were partners of an architect firm sharing profits in the ratio of 2 : 2 :
1. Their partnership deed provided the following:
(i) A monthly salary of ₹ 15,000 each to Jay and Vijay.
(ii) Karan was guaranteed a profit of ₹ 5,00,000 and Jay guaranteed that he will earn an annual
fee of ₹ 2,00,000. Any deficiency arising because of guarantee to Karan will be borne by Jay and
Vijay in the ratio of 3 : 2.
During the year ended 31st March, 2018 Jay earned fee of ₹ 1,75,000 and the profits of the firm
amounted to ₹ 15,00,000.
Showing your workings clearly prepare Profit and Loss Appropriation Account and the Capital
Account of Jay, Vijay and Karan for the year ended 31st March, 2018.
Q98. Maanika, Bhavi and Komal are partners sharing profits in the ratio of 6:4:1. Komal is
guaranteed a minimum profit of ₹ 2,00,000. The firm incurred a loss of ₹22,00,000 for the year
ended 31st March,2018. Pass necessary journal entry regarding deficiency borne by Maanika
and Bhavi and prepare Profit and Loss Appropriation Account.
Q99. Amay, Anmol and Rohan entered into partnership on 1st July, 2021 to share profits and
losses in the ratio of 3:2:1. Amay guaranteed that Rohan’s share of profit after charging interest
on capital @ 6% p.a would not be less than ₹ 36,000 p.a. Their fixed capital balances are: ₹
2,00,000, ₹ 1,00,000 and ₹ 1,00,000 respectively. Profit for the year ended 31st March, 2022
was ₹1,38,000. Prepare Profit and Loss Appropriation A/c.
Q100. A, B and C were partners in a firm. On 1st April, 2018 the balance in their capital accounts
stood at ₹ 8,00,000, ₹ 6,00,000 and ₹ 4,00,000 respectively. As per the provisions of the
partnership deed, partners were entitled to interest on capital @ 5% p.a., salary to B ₹ 3,000 per
month and a commission of ₹ 12,000 to C.
A’s share of profit, excluding interest on capital, was guaranteed at ₹ 25,000 p.a. B’s share of
profit, including interest on capital but excluding salary was guaranteed at ₹ 55,000 p.a. Any
deficiency arising on that account was to be met by C. The profits of the firm for the year ending
31st March, 2019 amounted to ₹ 2,16,000.
Prepare Profit and Loss Appropriation Account for the year ending 31st March, 2019.

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100 QUESTIONS Accounts

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Valuation of Goodwill

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Case 1: Question is Silent/ if there is no information

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Balance Sheet of Anita, Babita and Chamanpreet as at 31.3.2018

Balance Sheet of Meera, Sarthak and Rohit as at 31 March, 2018

The firm’s profits for the last four years were:

Balance Sheet of 'G', 'E' and 'F' as on 31stMarch, 2011

Prepare C’s Executor’s Account till the amount is finally paid.

Pass an adjustment entry.

Pass an adjustment entry.

Balance Sheet of A, B, C and D as on 1.4.2016

Sundry Creditor 90,000

Balance Sheet of S, T, U and V as on 1-4-2016

Sundry Creditor 80,000

Balance Sheet of Sanjana and Alok as on 31-3-2018

Balance Sheet of A, B and C as on 31-3-2015

Balance Sheet of Madan and Mohan as at 31st March, 2019

Balance Sheet of Mohan, Vinay and Nitya as at 31st March, 2018

Mohan retired on the above date and it was agreed that:

(i) Plant and machinery will be depreciated by 5%.

Balance Sheet of Akul, Bakul and Chandan as on 31-3-2018

Bakul retired on the above date and it was agreed that:

(i) Plant and Machinery was undervalued by 10%.

Balance Sheet of Sushma, Gautam and Kanika as at 31st March, 2018

On the above date, Sushma retired and it was agreed that:

(i) Fixed Assets will be reduced to ₹ 2,90,000.

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(ii) Dissolution expenses ₹ 800 were paid by Prabhu, a partner.

(iii) Rohan’s Loan (Partner) of ₹ 20,000 was settled at ₹ 21,000.

(a) Debtors of ₹ 6,000 were proved bad.

Balance Sheet of Michael, Jackson and John as at 31.3.2017

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S.No. Items Major Head Sub-Head

S.No. Items Major Head Sub-Head

Q67. From the given information, calculate Operating Ratio

Q69. Mixed Ratios

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(WN: ₹ 4,40,000; OA: ₹ 2,27,000; IA: (₹ 4,48,000); FA: ₹ 3,83,000)

Ans. IA: (₹ 8,48,000)/(₹ 8,00,000)

Ans. FA: ₹ 9,04,000

Q76. Answer the following questions:

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14. Q withdrew ₹ 50,000 during the year. IOD @ 10%. (₹ 5,000)

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