Sybcom Ac Sem3.docx

S.Y.B.Com.

D.S.E. SEM.III

ANAND CLASSES 9271008451

S.Y.B.Com. Discipline Specific Elective Course

Accountancy & Financial Management - III INDEX CHAPTER NAME 1. PARTNERSHIP FINAL ACCOUNTS

PAGE NO. 2-23

2. PIECEMEAL DISTRIBUTION OF CASH

24-38

3. AMALGAMATION OF FIRM

39-43

4. Conversion / Sale of a PARTNERSHIP FIRM INTO A LIMITED COMPANY

44-49

1

S.Y.B.Com.

D.S.E. SEM.III

ANAND CLASSES 9271008451

CHAPTER NO 1 PARTNERSHIP FINAL ACCOUNTS PART 1— BASIC FINAL ACCOUNT Q.1] From the following trial balance of Ajit and Sujit, you are require to prepare a trading and profit and loss A/C for the year ended 31st December 2017 and balance sheet as on that date : Trial balance as on 31st December 2017 Particulars Credit Particulars Debit ` Debit ` Credit ` `

Capital A/C - Ajit - Sujit Drawing A/C -Ajit -Sujit Stock on 1-1-2016 Bills Receivable Purchases & sales Return Salaries

60000 40000 2000 1000 44000 1800 190000 6000 10000

302000 2000

Carriage outwards Wages Insurance Discount Received Postage Debtors & Creditors Furniture Cash in hand Machinery Rent and taxes Printing & stationary TOTAL

1400 24000 1600 200 800 70400 24000 9800 80000 1200 400 468400

64200

468400

Adjustments: [1] The closing stock on 31 December 2013 was valued at `56000. [2] The outstanding expenses were (a) wages `2000 (b) Salaries `930. [3] Goods of `2000 were distributed as free sample. [4] Interest on Partners capital was to be provided at 7 % p.a. [5] Prepaid insurance was `100. [6] Depreciation was to be provided on furniture at 10 % and on machinery at 5%. [7] A reserve for bad debt and doubtful debt was to be created at 5 % of sundry debtors. [Gross Profit ` 96000, Net Profit for appropriation `68050, Balance Sheet Total ` 232180]

Q.2] Sujata, Sarita and suman are partners sharing P & L in the ratio 3:2:1. Suman is guaranteed profit of `16000 p.a. as her minimum share. Any deficiency will be borne by the other partners in their profit sharing ratio. Interest at rate of 6% is to be allowed on partners fixed capital account. On 31 march, 2018 Trial balance was as under : Debit ` Credit ` Building Machinery Vehicles Purchases Stock Wages Trade Expenses Salaries Repairs Commission Office Expenses Rates And Taxes

64000 50000 20000 290000 68000 65000 25000 30000 28000 2500 33200 22900

Fixed Capital A/C : -Sujata -Sarita Current Accounts: - Sujata -Sarita Sales Creditors Provision For Doubtful Debts Commission Discount 2

80000 60000 16000 9000 672000 48000 3000 4000 6400

S.Y.B.Com.

D.S.E. SEM.III

Bank Balance Debtors Current Account Suman

ANAND CLASSES 9271008451

142400 84000 13400 938400

938400

Additional information: (1) Closing stock `70000. (2) Sujata has taken goods worth ` 3000 from stock for which no entry is made in the books. (3) Sarita is to be paid ` 24000 for travelling expenses for business trip. (4) Wages outstanding are ` 5000 and commission received in advance `1000. (5) Depreciation on machinery and building is to be provided @ 10%p.a. and on vehicle @15% p.a (6)Provision for doubtful debts is to be increased to `6000. (7) Goods worth ` 10000 were destroyed by fire, the same were not insured. You are required to prepare a trading and profit and loss A/C for the year ended 31 st March 2018 and balance sheet as on that date. [Gross Profit `327000, Net Profit for appropriation `143400, Balance Sheet `410000] 3] X,Y,Z are partners in manufacturing business sharing profit and losses, X 2/5 , Y 2/5, Z 1/5. Z’s annual share of profit is to be a minimum of ` 20000 any deficiency being borne by the other two partners in their profit sharing ratio. No interest is allowed or charged on partner’s current account but fixed capital accounts carry interest at 6 % per annum. The firm’s trial balance as on 31st March 2017 was as follows: Particulars Capital A/C -X -Y -Z Current A/C -X -Y -Z Stock on 1-4-2016 Freehold Premises Cost Purchases & sales Return Salaries

Debit `

Credit `

Particulars

Carriage outwards 80000 Wages 60000 Insurance 30000 Discount Received 18000 Postage 6000 Debtors & Creditors 11000 72000 1800 190000 6000 10000

Particulars Freehold premises cost Plant and machinery

` 90000 80000

Stock[1/4/2013]

72000

Purchases

380000

Motor vehicles Manufacturing Wages

24000 82000

Furniture Cash in hand 302000 Machinery 2000 Rent and taxes Printing & stationary TOTAL

Particulars Capital A/C X 80000 Y 60000 Z 30000 Current account[1/4/2013] X 3

Debit ` 1400 24000 1600

Credit `

200 800 70400

64200

24000 9800 80000 1200 400 468400

`

170000

468400

S.Y.B.Com.

D.S.E. SEM.III

Trade expenses

6000

Salaries Repairs Cash discount

54000 12000 2400

Office expenses Carriage inward

36000 6200

ANAND CLASSES 9271008451

18000 Y 6000 Sales Creditors Provision for Doubtful debt[1/4/2013] Cash Discount Provision for Depreciation (1/4/2013): -Plant and Machinery -Motor Vehicles

24000 678000 42000 3400 4200

24000 12000

Rates and Insurance Professional Charges Debtors Bank at balance Current Account Z (1-4-2013) Carriage Outward

14000 4000 68000 8000 11000 8000 957600 957600 You are given the following information: (1)Stock on hand on 31st March 2014 amounted to `64800.(2)Sales included 24000 for goods sold out on sale or return charged to customers at cost plus 20% & which remained in their hands unsold on 31 st March 2014.(3)The following amounts included in salaries have been drawn each month by the partners:X500; Y400; Z250. (4)It was agreed that a charge of `2500 should be made to Y for goods supplied to him from stock during the year. (5) X who acted as traveller is to be created with an expenses allowance of ` 2000. (6) Repairs include an item of ` 7500 for alteration to the office which amount ,it is agreed should be capitalised. (7) Rates and insurance paid in advance amounted to ` 5000 and office expenses accrued amounted to ` 1200. (8) A motor vehicle costing ` 9000 had been purchased during the year against which ` 6000 had been allowed on the sale of old vehicle, the net amount only being debited to motor vehicle account. The vehicle sold had cost ` 7500 and had been written down to ` 2500. (9) Depreciation on plant and machinery and motor vehicle is to be provided at the rate of 10% and 20% p.a. on the cost. (10) A debt of ` 600 is to be written off and the provision for doubtful debt increased to ` 4500. You are require to prepare [a]Trading & P &L A/C for year ended 31 march 2014 [b]Balance sheet as on date [c] Partners current a/c. [Gross profit 195100,Net profit 81300,balance sheet 293200] [4] Rani & Rita are partners sharing profit & Losses equally. The firms trial balance as on 31 December 2014 was as follows : PARTICULAR

DEBIT`

Building

27500

Returns outward

110000

Machinery

20000

bills payable

CREDIT`

17500

Salary & wages

10500

-

Cash at bank

20000

-

Cash in hand

550

-

Motor cycle

10000

Office expenses

500 4

S.Y.B.Com.

D.S.E. SEM.III

ANAND CLASSES 9271008451

Rani’s Capital

58000

Rita’s capital

31000

Furniture

10000

-

Carriage

2500

-

Purchases

110000

-

Return outward

2750

Sales

140000

Return inward

1000

-

Bad debt

500

-

Debtors

16400

Creditors

10000

Rent

550

Printing and stationary

750

Travelling expenses

2750

-

Stock[1.1.2013]

15000

-

Insurance

750

Discount

4000

Advertisement[for 3 years]

6000 259250

259250

Closing stock on 31.12.2013 was valued at ` 20500 WHILE ITS MARKET PRICE IS ` 22500. [2] Goods worth ` 2500 were destroyed by fire & insurance company agreed to pay ` 2000 in full settlement of the claim. [3] Unpaid expenses- Rent `50 & Salary `250. [4] Provide depreciation at 10 % on machinery &5 % on furniture. [5] Goods worth ` 4000 were sold on 27th december2013 but no entry was made in the books. You are require to prepare Trading & P &L A/C for year ended 31 December 2013 and Balance sheet as on date [G.P.`41250; N.P.`15650; B/S TOATL `132450] [5] Bhavana, Raveena & Kangana carried on retail business in partnership, sharing profit and loses in the ratio 2:1:2.

PARTICULAR

DEBIT`

Loan from bank

CREDIT` 120000

Plant & machinery

150000 5

S.Y.B.Com.

D.S.E. SEM.III

Investment in govt.security

ANAND CLASSES 9271008451

50000

bills payable

36200

Salary & wages

62000

Sales

565000

Sales return

5000

Trade creditors

87000

Motor vehicles

60000

Office & trade expenses

40200

Bhavana’s Capital

90000

Ravina’s capital

52000

Kangana’s Capital

66000

Furniture & fitting

47000

Land & building

100000

Purchases

280000

Rent, rates & insurance

15500

Professional charges

3500

Provision for Doubtful debts

-

500

Balance at bank

43700

Debtors

51600

Drawing: Bhavana

12000

Raveena

6000

Kangana

19000

Printing and stationary

6900

Bills receivable

18300

Stock[1.4.2013]

46000 1016700

1016700

[1] Stock on 31.3.2014 was valued ` 66500. [2] A debtor of `1600 is to be written off and provision against the remaining debtors should be made at 5%. [3]Provide for the following outstanding expenses as on 31.3.2014 printing & stationary `2400,Salaries & wages `8000. [4] Insurance prepaid as on 31.3.2014 `2500. [5] Depreciate land & building by 5% furniture & Fitting by 10 % plant and machinery & motor vehicles by 20 %. . You are require to prepare Trading & P &L A/C for year ended 31 March 2014 and Balance sheet as on date .

ADMISSION

6

S.Y.B.Com.

D.S.E. SEM.III

ANAND CLASSES 9271008451

[1]ADMITTED ON THE FIRST DAY OF A/C YEAR Ram & Kirti were in partnership in retail business sharing profit & losses in proportion of 3:2. As from 1.1.2013 they admitted vikram into partnership giving him 1/5 of profit. Vikram brought in `20000 in cash of which `60000 were considered as being in payment for his share of goodwill and reminder as his capital. The following was extracted from the books as on 31.12.2013 PARTICULAR

DEBIT`

CREDIT`

Purchases & SALES

171625

262650

Returns

5250

4125

Customers and creditors

40200

25525

Bills receivable and bills payable

20070

11950

Carriage inward

15000

-

Carriage outward

2175

-

Stock[1/1/2013]

39725

-

Reserve for doubtful debts-

-

5200

Outstanding carriage inward

-

1200

Bad debts

400

-

Salaries

9795

-

Furniture

5000

-

Shop

15500

-

Postage and insurance

3240

-

Trade expenses

2690

-

Rent rates and taxes

4200

-

Loan to Vishnu[1/8/2013]

6000

-

Prepaid insurance

240

-

Rent accrued but not paid

-

900

Cash in hand

4440

-

Ram

5000

-

Kirti

4000

-

Vikram

2000

-

Ram

-

15000

Kirti

-

10000

Cash paid by vikram

-

20000

Current account:

Capital accounts

7

S.Y.B.Com.

D.S.E. SEM.III

ANAND CLASSES 9271008451

Computer

30000

-

Professional charges

4450

-

Loan from ICICI Bank

-

34450

391000

391000

You are require to prepare the firms trading and profit and loss account for the year ending 31 st december,2013 & balance sheet as on that date having regard the following information. [1] Stock at the end was ` 20000. [2] Depreciation on computer and furniture is to be charged at 10 % p.a. [3] one fifth of the shop are to be written off. [4] Goods worth `800 have been destroyed fire and insurance co. has admitted the claim for `600 only. [4] Bills receivable include a dishonoured bill for `1100 of `1000 due from customer on account of sale who has become insolvent. [6] Debtors include `300 for goods supplied to kirti and an item of `1000 due from customer on account of sale who has become insolvent [7]R.D.D is to be maintained at 5% on debtors. [G.P :55975, N.P: 24425, B/S:132150] [2]GOODWILL BOUGHT IN CASH AND WRITTEN OFF JAYA AND BHADURI WERE PARTNERSHIP SHARING PROFIT IN THE RATIO OF 3:2 FROM 1 ST JAN 2013 ,THEY ADMITTED AMIT INTO PARTNERSHIP GIVING HIM 1/6

SHARE IN

PROFIT. HE BROUGHT `10000 CASH, OF WHICH `3000 WAS CONSIDERED AS BEING IN PAYMENT FOR HIS SHARE OF GOODWILL AND HT EBALANCE AS HIS CAPITAL. Trial balance as on 31 december 2013 Particulars

`

Drawings:

Particulars

`

Rent payable

928

-

Jaya

4000

Outstanding wages

2719

-

Bhaduri

3500

Sales

263150

Purchases

166405

Return outward

3120

Return inward

4250

RDD

1200

Debtors

40200

Creditors

30106

Opening stock

27225

Bills payable

8950

Salaries

8753

Dividend

825

Wages

20137

Capital:

42000

Building

6750

-jaya

14500

Addition to building

500

-Bhaduri

8300

8

S.Y.B.Com.

D.S.E. SEM.III

Patent

7300

Postage

3226

Power

1850

General expenses

3314

Rent rate and taxes

3517

Bad debt

525

ANAND CLASSES 9271008451

Cash paid by Amit[1/4/2013]

10000

Loan to P’ at 6%p.a[given on 5000 1/9/13] Investment

11500

Prepaid expenses

524

Cash/bank

5752

Bills receivable

17070 343798

343798

ADJUSTMENT: [1] Closing stock was valued at `15760 [2] Goods costing `1000 have been stolen but not entered in the books. [3]Write off 1/5th

of patents [4] B.R. include

dishonoured bill of `1050 [5] Maintain reserve for Doubtful debt @ 5% [6] Depreciate building @10%p.a. [7] Necessary adjustment in connection with admission is to be made through current accounts of the partner. [8] Goodwill should not appear in the books. Prepare final Account. [G.P.:63163, N.P.:40730, B/S: 106233] [3]Minimum profit guaranteed A & B were partners sharing profit and losses in 2/3[A] & 1/3[B]. Interest on fixed capital was credited at the rate of 5 % p.a .No interest was charged on drawing. On 1/1/2014 C was admitted as a partner & the new profit sharing was A 6/10, B 3/10, C1/10. C WAS TO BE CREDITED WITH A SALARY AT THE RATE OF `6000P.A. It was agreed by A that C’s total share of profit including his salary and interest on capital should be guaranteed at a minimum of 18600. Any apportionment should be made as to gross profit on the basis of sales and as to expenses, with exception of general expenses, on the basis of time.Trial balance as follows : PARTICULAR

DEBIT`

Drawing and capital 9

CREDIT`

S.Y.B.Com.

D.S.E. SEM.III

ANAND CLASSES 9271008451

-A

30000

48000

-B

15000

24000

-C [cash paid on 1/1/2014]

3000

8000

Delivery van(cost and provision for debt)

10000

4000

Sales return

9000

-

Sales( 9 month to december 31 2013 `240000

-

369000

Purchases

222000

-

Stock[march 31 2013]

48000

-

Furniture

15000

-

General expenses [9 months to december2013 ` 4850]

10400

-

Salaries

24000

-

Heating and lighting

2200

-

Rent and rates

9600

-

Debtors and creditors

53000

18000

Cash and bank

19800

-

471000

471000

ADJUSTMENT:[1] On march 31 2014 stock was valued at `47000 [2]Rates paid in advance `600 [3] `800 is to be provided for electricity consumed to that date. [4] included in the sales and debtors was `6000 for goods sent on sale or return on feb 1, 2014 which was still unsold on march 31,2014(cost `3000) [5] Depreciation is to be provided at 20 % p.a. on the cost of delivery van and at 21/2 % p.a. on the furniture. You are require to prepare: Trading and P & L for the year to march 31 march 2014 and balance sheet. [G.P :87333, N.P.:55952, B/S:136025] [4]COLUMNAR TRADING A/C Asha and Bisha were partners sharing profit and loss in the ratio of 3:2 with effect from 1/10/2012, Cisha joins as a third partner. The ratio was 2:2:1.The following is the trial balance as on 31-3-2013. PARTICULAR

DEBIT`

CREDIT`

-Asha

15000

300000

-Bisha

10000

200000

-Cisha

5000

151000

Opening stock(1-4-2012)

30000

-

Drawing and capital

10

S.Y.B.Com.

D.S.E. SEM.III

ANAND CLASSES 9271008451

Purchases and Sales

900000

1400000

Wages

140000

-

Furniture

200000

-

General expenses

60000

-

Selling expenses

14000

-

Debtors and creditors

626000

250000

Cash and bank

350000

-

Amount brought by cisha(for his share of goodwill)

-

50000

2350000

2350000

OTHER INFORMATION: [1] Stock on 31/3/2013 was `180000 [2] Purchases from 1/4/201230/9/2012 were `400000. [3] Sales from 1/4/2012-30/9/2012 were `600000. [4] Wages from 1/4/2012 to 30/9/2012 were `60000. [5] Stock on 30/9/2012 was `80000. [6] Furniture worth `100000 was purchased on 1-1-2013. Write off depreciation on furniture at 20 % p.a. [7] Interest on partner capital is to be provided at 12 % p.a. [8] No interest is to be charged on partners drawing. [G.P.: 190000, N.P.:144000, B.S.: 1331000] [5] Pranav & Harsh carried on business in partnership sharing profit & losses in the ratio 3:2. They admitted Pranam on 1.1.2013 ,giving him share 1/6th .He brought ` 200000 on his capital & `5000 as his share of goodwill..The trial balance as follows: PARTICULAR

DEBIT`

CREDIT`

capital Pranav

315600

Harsh

242400

Sales

485260

Trade creditors

59000

Purchases

345120

Wages

12000

Plant and machinery

160000 11

S.Y.B.Com.

D.S.E. SEM.III

ANAND CLASSES 9271008451

Computer

146000

Office premises

265000

Sales return

5260

Stock[1.4.2013]

164200

Salaries

35420

Sundry expenses

54260

Debtors

41250

Cash on hand

12880

Insurance

36000

Provision for doubtful debts

-

Cash at bank

42160

Drawing: Pranav

19500

Harsh

12500

Param

14500

2130

Loan from Harsh at 10 %[taken on January 1,2014]

-

55000

Goodwill

36000

Travelling expenses

12460

Cash brought in by param

-

250000

1414510

1414510

Additional information: [1] Stock on 31.3.2014 was valued at `206300. [2] A debtor of `1250 is to be written off & provision against

the remaining debtors should be made at 5 %. [3] Provide for the

following outstanding expenses as on 31.3.2014: Sundry Expenses `2900,Salaries `3000 & wages `1200. [4]Insurance prepaid as on 31.3.2014 `2500 [5] Depreciate following asset as given: Plant and machinery 20 %, Computer 25% , Office premises 5%p.a. [6] Param is entitled to recive rent ` 1000. You are require to prepare: Trading and P & L for the year to march 31 march 2014 and balance sheet. RETIREMENT DURING A/C YEAR: [1] The following is the trial balance of a firm as on 31 december 2013.

12

S.Y.B.Com.

DEBIT

D.S.E. SEM.III

`

ANAND CLASSES 9271008451

CREDIT

`

Sales

294000

Drawings: -

A

12000

-

B

12000

-

C

12000

Purchases

156000

Return outward

2000

Return inward

2400

RDD

8800

Debtors

100000

Creditors

76500

Stock

24000

Bills payable

8700

Salaries

27000

Bank loan

20000

Carriage inward

4500

Capital A/C :

Carriage outward

6750

-A

30000

Bills receivable

3250

-b

30000

Bank balance

8000

-C

30000

Cash balance

2500

Machinery

36000

Investment

25000

Office expenses

16500

Bad debts

2100

Premises

50000 500000

500000

On 1 July A retired and the following adjustment were agreed: [1] Goodwill of ` 90000 was brought into the books of account. [2] Furniture worth ` 20000 was purchased on 31/3/2013 but the invoice was not recorded in

the books. [3] Balance in A’s A/C after making all

adjustment was to be transferred to his lpan A/C carrying interest @16%. [4] Closing stock was valued at `42000. [5] Depreciate machinery by 10%. Premises by 5% & furniture by 5%p.a. [6] Provide interest on capital at 10 %.Prepare trading and P&L A/C and balance sheet as on date.[G.P.:151100, N.P.:46075,B/S:361100] [2] DEATH DURING ACCOUNTING YEAR Following is trial balance of A,B & M as on 31.12.2013 Particulars

Debit `

Particulars

Bank balance

2800

Capital A/C 13

Credit`

S.Y.B.Com.

D.S.E. SEM.III

ANAND CLASSES 9271008451

Bad debts

700

-A

12000

Debtors

33500

-B

12000

-M

12000

Drawing A/C -A

4000

Sales

92000

-b

4000

Returns

600

-M

4000

Bad debt provision

3000

Bills Receivable

1000

Bank loan

6750

Purchases

52000

Creditors

25500

Goods return

800

Bills payable

900

Stock(1.1.2013)

8000

Other loan

2000

Salary

9000

Office expenses

4000

Trade expenses

1500

Carriage inward

1500

Carriage outward

2250

Cash on hand

700

Investment

5000

Building

20000

Plant &Machinery

12000 166750

166750

On 1 st july 2013 A died. Adjustment are as follows:

[1] Goodwill was to be raised

at`30000& brought into the new books. [2]Machinery worth `24000 was purchased on 31.3.2013 but the purchase invoice was not recorded in books.[3Balance starting to Credit of after giving effect of above was to be treated as loan of Mrs.A on which interest @ 15% p.a is allowed. Further adjustment at year end : [1] Closing stock is valued at `14300. [2] Bad debt provision is to be kept at

1500. [3] 15% interest on partners capital is to be provided. [5]Each

partner is to be paid a salary of `1200p .a. [6] :Loan of `300 was given to a worker but is wrongly

debited

to

salary

account.

[7]

Outstanding

trade

expenses

`100.

[G.P.:44600, N.P.:12725,B/S:138100] [3]Dinesh, Amar and Manoj were partners sharing profit and loss in the ratio of 3:2:1 respectively. following information provides trial balance. Debit

`

Building

900000

Credit capital A/C : 14

`

S.Y.B.Com.

D.S.E. SEM.III

ANAND CLASSES 9271008451

Machinery

600000

-Dinesh

320000

Furniture

45000

-Amar

270000

12% investment 1.4.2013

200000

Stock

125500

R.D.D

9000

Rent

144000

Loan from Amar

150000

sundry expenses

42000

Salaries

293000

Creditors

216250

Advertisement

62500

Gross profit

1425000

Carriage outward

22500

Bills payable

26350

Insurance

9000

Interest on investment

12000

Salesman commission

150000

Bank loan-31.3.2014

300000

Cash and bank

25750

Debtors

45000

Bills receivable

61750

Drawing: Dinesh

32500

Amar

43500

Manoj

28000

Bad debts

6000 2953000

2953000

On 31 december,2013,Dinesh retired. Following are the adjustment [1] Goodwill of the firm was valued at `240000. [2]Balance of Dinesh Capital account after all adjustment was to be transferred to his loan A/C carrying interest @ 18% p.a. [3] Depreciate fixed asset @12%p.a. [4]Write off further bad debt `12000 [5]Provide interest on capital @9% p.a. & loan 6% [6]During the year Gross profit ratio is constant. [7] Sales upto December,2013

were

`

2500000

&

thereafter

was

`625000.

{G.P.:1140000,N.P.:464200,B.S.:2174600]

[4] Jack & John carried on retail business in partnership sharing profit and losses : Jack 2/3 ,John 1/3 . Interest credited on partners fixed capital at the rate of 10 % p.a. & no interest was charged on drawing. On January 1,2014 Jackson & Johnson were admitted as partner & as from that date, profits & losses were shared Jack 6/12,John 3/12,Jackson 2/12 & Johnson 1/12. Johnson’s share was guaranteed by jack at the minimum rate of ` 12000p.a, In addition

15

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D.S.E. SEM.III

ANAND CLASSES 9271008451

to his share of the profits, Johnson was to be credited with a salary at `6000 p.a. The arrangement as to interest are to continue. Extracted trial balance as follows: PARTICULAR

DEBIT`

CREDIT`

Jack

10000

30000

John

9000

16000

Partners Drawing & Capital (Fixed)Account

Jackson[capital paid is on January 31,2014]

12000

Johnson[capital paid is on January 31,2014]

9000

Purchases

277000

Stock on 1.4.2013

75000

Sales[ up to December 31,2013:`360000]

484350

Direct wages

40000

Overheads & trading Exp.[excluding depreciation]

47200

Fixed asset at cost

60000

Depreciation of Fixed asset-1.4.2013

20000

Debtors

38000

Creditors

27600

Bank account

44150

Provision for doubtful debts

1400 600350

600350

Other information: [1] Stock on 31.3.2014 was valued at `69100.[2] Trade expenses accrued but not entered in the books amounted to `1200.[3] Unsold goods costing `4000 which were on sale or return had been invoiced on march 5,2014 at `6000, which amount was included in sales and debtors.[4] `80000 is to be provided for depreciation for the year fixed asset.[5] The provision for doubtful debt is to be increased to ` 5000. You are require to prepare: Trading and P & L for the year to march 31 march 2014 and balance sheet. [gp:`159450,NPPRE)`75000,(POST)`24450:B/S :`176250] [5] [Sole trader admitting partner during year] :Krishna was caring on business as a wholesale businessman. He closes his books of A/C on 31.3 of every year. Kiran was his manager on a monthly salary of `2000 till 30September,2013 & from 1st October,2013 it was agreed that he will be admitted as a partner with 1/3rd share in the profit & losses without any salary. Following trial balance as on 31.3.2014 PARTICULAR

DEBIT` 16

CREDIT`

S.Y.B.Com.

D.S.E. SEM.III

ANAND CLASSES 9271008451

Krishna’s Drawing and capital A/C

20000

37000

Purchases & Sales

210000

330000

Debtors and Creditors

15000

8700

Furniture & Fitting

9000

Motor car

15000

Stock[1.4.2013]

30000

Bank balance

15000

Cash balance

900

Salaries

15000

Advertisement & selling exp.

33000

Professional charges

2400

Rent

6400

Prepaid rent

400

Bills receivable & bills payable

8900

5300

381000

381000

Additional information:[1] Purchases were ` 100000 upto 30th September 2013. [2] Sales during the first six month of the year were `11000. [3] Stock as on 30 th September 2013 & as on 31st march 2014 was `50000 & `20000 respectively. [4] Furniture & fitting are to be depreciated at 10 % & motor car at 20%. [5] Rent which was `450p.m. upto 30th November 2013 was increased to `600 p.m. from 1st December,2013. You are require to prepare: Trading and P & L for the year to march 31 march 2014 and balance sheet.

ON Last day of A/C year Retirement The partnership deed of X,Y,Z

trading in partnership as it provides the following

information: (1)Interest at 5% on capital Account. (2) B & C to be entitled to salary of `500 & `350 p.m. respectively. (3) Balance of profit to be shared equally. (4) On retirement of partner, deferred revenue expenses are to be written off in proportion of partners capital. A retires from partnership as on 31 december 2013 and you are asked to prepare a B/S as on 31 december 2013 showing amount payable to A on retirement from the following trial balance : 17

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D.S.E. SEM.III

ANAND CLASSES 9271008451

PARTICULAR

`

PARTICULAR

Capital account-X

50000

Cash in hand

-

10000

LIABILITIES

17000

5000

Trading account

52000

-

` 500

Y -z Current account-y

4000

Salaries to staff

3000

Rent

-z

and

8000

other 7000

office exp

Land and building

37500

Expenses

7000

Furniture

6000

Depreciation

500

Debtors

15000

Bad debts

1000

Cash at bank

10000

Deferred

revenue 6500

exp. 134000

134000

CHAPTER 2: PIECEMEAL DISTRIBUTION OF CASH [1] Arun,Varun and Mithun were partnership sharing profit & losses in the ratio 2:2:1 respectively. The partnership was dissolved on 1st April,2013. Their B/S as on 31.3.2013 was as follows: Liabilities

`

Asset

`

Sundry Creditors

106250

Cash

9520

General reserve

21250

Sundry Debtors

87125

Capital: Arun

82450

Stock

57035

Varun

93500

Machinery

179520

Mithun

55250

Furniture

25500

358700

358700

Sundry creditors have to be paid `98600 in full settlement. A sum of ` 9520 have to be provided for expenses of realisation. The asset are realised as under: Date of Realisation

Asset Realised

`

12.4.2013

Sundry debtors

62050

28.4.2013

Stock

45050

12.5.2013

Machinery

140930

25.5.2013

Furniture

21250 18

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D.S.E. SEM.III

ANAND CLASSES 9271008451

The actual expenses of realisation amounted to ` 8500 up to last realisation. Prepare statement showing the distribution of cash under Excess Capital Method. [Excess capital:Mithun:8500,Loss on realisation:32300,32300,16150] [2]The firm of LMS was dissolved on 31.3.2014 at which date its balance sheet stood as follows : Liabilities

`

Asset

`

Creditors

200000

Fixed asset

4500000

Bank loan

500000

Cash and bank

200000

L’s Loan

1000000

Capital: L

1500000 M S

1000000 500000 4700000

4700000

Partners share profit equally. A firm of C.A. is retained to realise the asset & distribute the cash after discharge of liabilities. Their fees which are to include all expenses is fixed at ` 100000. No loss is expected on realisation since fixed asset includes valuable land and building. Realisation are 1st `500000,2nd `1500000, 3rd `1500000, 4th 3000000,5th `3000000. The C.A. firm decided to pay off the partners in “Higher Relative Capital Method”. You are require to prepare Statement Showing distribution of cash with necessary working. [Final Excess capital of L:500000, Profit on realisation: 1633334,1633333,1633333] [3] Alu, Mutter & Gobi partners of M/S Veg always sharing profit and losses in the ratio of 3:2:1. On 30th June 2013 they decided to dissolve their firm when their balance sheet was as under: Liabilities

`

Asset

`

Sundry Creditors

150000

Goodwill

80000

Reserve

60000

Building

64000

Plant

47000

Furniture

44000

Debtors

92500

Bills receivable

39000

Capital:Alu 80000 Mutter 60000 Gobi

190000

19

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D.S.E. SEM.III

ANAND CLASSES 9271008451

50000 Stock

22500

Bank

11000

400000

400000

The realisation and Expenses of Realisation were as stated below: Date

Realisation`

Expenses`

31st July

85000

5000

31st August

113000

3000

30th September

187000

7000

You are require to prepare Statement showing Piecemeal distribution of cash available under Highest Relative Capital method. [Excess capital Gobi:20000,Loss on realisation:9500,6333,3167] [4] North, East &West were in partnership till 30th june 2015on which date balance sheet of firm was under: Liabilities

`

Asset

`

Sundry Creditors

160000

Cash

50000

General reserve

150000

Sundry Debtors

1250000

Capital Accounts: North

500000

Plant and machinery

2000000

150000

Inventories

750000

East 500000 West East’s loan

500000

Bank overdraft

700000 4050000

4050000

Adjustment: Profit sharing ratio: North1/2, East 1/3, West 1/6. [2]Bankers could realise only `680000 on sale of pledge stock. [3] During August 2013,Plant and Machinery were disposed of at `1800000,expenses of sale realised `150000.The remaining debtors were taken over by West for `50000, who contributed the said amount in cash. [4] An amount of `25000 was kept reserved for meeting a contingent liability against which actual payment of `20000 was made in full settlement on 1st September,2013. [5] A creditor for `80000 agreed to forgo

20

S.Y.B.Com.

D.S.E. SEM.III

ANAND CLASSES 9271008451

`20000 while a claim of unrecorded creditor for `10000 had to be admitted.[6] Partners decided to distribute cash as and when realised. Show statement of distribution of cash. Use Highest Relative Capital Method. [Unpaid balance:315000,210000,105000] [5] Sonam,Nidhi & Pooja are partners always sharing profit and losses in the ratio of 4:2:1. they decided to dissolve their firm as on 31.3.2014 when their balance sheet was as under: Liabilities

`

Asset

`

Creditors

30000

Land and building

50000

Bills payable

30000

Machinery

150000

10%bank

40000

Cash and bank

500

100000

Stock

34500

Nidhi

60000

Debtors

45000

Pooja

20000

loan[unsecured] Capital: Sonam

280000

280000

`800 has to be provided for realisation expenses. Thereafter all cash received should be distributed among the partners. The amount were realised in instalment as follows: Instalments

`

1st

60300

2nd

50000

3rd

79000

4th

27700

The actual realisation expenses were `500. You are require to prepare Statement showing Piecemeal distribution of cash as per excess capital method. [Ultimate excess:`10000]

21

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D.S.E. SEM.III

ANAND CLASSES 9271008451

[6] Amar, Akbar, Anthony & Aesop are partners of M/S ALL & CO. sharing profit and losses in the ratio of 4:3:2:1. ON 30TH June 2014 ,they decided to dissolve their firm . when their balance sheet was as under: Liabilities

`

Asset

`

Liabilities

50000

Asset

400000

Reserve

60000

Capital: Anthony

5000

Capital: Amar

45000

Akbar

150000

Aesop

100000 405000

405000

The realisation & Expenses of realisation were as under: Realisation `

Expenses `

31st July

125000

5000

31st August

100000

3000

30th September

150000

7000

You are require to prepare Statement showing Piecemeal distribution of amount available under Highest Relative capital method. [Ultimate excess: Aesop `50000 ] [7] Mr.B,C,D ARE sharing profit and losses in the ratio of 5:4:3 ON 1,January2014 ,they decided to dissolve their firm . when their balance sheet was as under: Liabilities

`

Asset

`

General reserve

30000

Machinery

87000

Mr.B LOAN

15000

Motor car

39000

Mr.CLoan

20000

Investment

30000

Creditors

25000

Stock

27000

Capital Account: Mr.B

60000

Debtors

41000

50000

Cash in hand

16000

Mr.C 40000 Mr.D 240000

240000 22

S.Y.B.Com.

D.S.E. SEM.III

ANAND CLASSES 9271008451

The Assets were realised as follows: PARTICULAR

`

On

January 31000

PARTICULAR

`

On march 1,2014;Realised

11000

18,2014;Realised On

February 28000

1,2014;Realised On

march 10500

15,2014;Realised February 49000

12,2014;Realised On

On On

march 23500

31,2014;Realised

February 14000

18,2014;Realised On February 18, 2014. The motor car was taken over by Mr.B at an agreed of ` 3000.Distribution Expenses were provided at an estimate of ` 1500 but actual expenditure was ` 1200.On march 31,2014 the accounts were closed. [Ultimate excess: D `2500,Realisation loss:32167,25733,19300]]

CHAPTER 3: AMALGAMATION OF FIRM REALISATION ITEMS AND GOODWILL [1] Two firms P & Q , R & S agreed to amalgamate their business. Their position as on 31.12.2013 was as follows: Balance sheet as of P & Q as at 31.12.2013 Liabilities

`

Asset

`

Creditors

104000

Cash AT BANK

156000

Capital:

debtors

130000

P

182000

Furniture

10000

Q

130000

Stock

42000

Building

78000

416000

416000

Balance sheet as of R & S as at 31.12.2013 Liabilities

`

Asset 23

`

S.Y.B.Com.

D.S.E. SEM.III

Creditors

52000

Capital:

ANAND CLASSES 9271008451

Cash AT BANK

65000

debtors

104000

R

91000

Furniture

13000

S

65000

Stock

26000

208000

208000

Creditors & debtors were not taken over by the new firm ‘PQRS’.Building was retained by P &Q but the new firm agreed to pay a monthly rent of ` 400. The cash for working of the new firm was estimated at `130000 to be provided by the partners in their new profit sharing proportion as under”: P 3/10,Q 3/10, R 2/10, S 2/10. *Write the books of P,Q & R,S.*Give the opening balance sheet of PQRS. [P.C.PQ `104000; RS `52000; B/S Total `221000] [2] Following is the B/S of M/S Inki & Pinki & M/S Rinki & Sinki as on 31st march 2014. Liabilities

Inki

& Rinki & Asset

Inki

& Rinki &

Pinki

Sinki

Pinki

Sinki

Mrs. Inki’s loan

10000

-

Building

-

42000

Outstanding salaries

1000

900

Plant & Machinery

40000

25000

Stock

20000

15000

Creditors

25000

30000

Furniture

10000

8000

Bills payable

-

9000

Debtors

12000

11000

Cash in hand

5000

3900

Patterns & Moulds

3000

5000

90000

109900

Capital Account : P

36000

-

Q

18000

-

R

-

40000

S

-

30000

90000

109900

Inki & Pinki sharing profits in the ratio of 2:1 & Rinki & Sinki were sharing profits in the ratio of 3:2 .The two firms were amalgamated on the following grounds: * Outstanding salaries were paid by the old firm. * Furniture of both firm were not to be taken over by new firm. Inki & Pinki

sold their furniture for ` 12000, Rinki & Sinki sold their

furniture for ` 7000. * Patterns & Moulds of both the firm were not taken over by the new firm and distributed in profit sharing ratio. * Building was valued at `45000. * Stock of Inki & Pinki was undervalued by ` 2000 but of Rinki & Sinki was overvalued by ` 3000. * Debtors 24

S.Y.B.Com.

of Inki & Pinki

D.S.E. SEM.III

ANAND CLASSES 9271008451

include bad debt of `2000.Debtors were taken by new firm subject to 5%

reserve for doubtful debts. * Mr.Inki agreed to pay off Mrs. Inki’s loan. Close the books of old firm and prepare the balance sheet of

Inki & Pinki , Rinki & Sinki .

[Inki & Pinki : Realisation profit ` 1500; Rinki & Sinki : Realisation loss ` 1550; B/S Total ` 189950 ] [3] Following is the B/S of M/S DE & M/S GH as on 31st march 2015. Liabilities

`

`

Asset

`

`

Trade Creditors

140000

98000

Building

250000

-

Bank loan

28000

70000

Stock

35000

123200

debtors

56000

140000

Capital: D

280000

-

Machinery

158000

28000

E

140000

-

Investment

75000

112000

G

-

168000

Cash

14000

44800

H

-

112000

588000

448000

588000

448000

They agreed to amalgamate their business from 1.4.2014 as ‘DEGH’ Share profit & losses: D

E

G

H

Old firm

2

1

3

2

New Firm

3

2

3

2

All asset & Liabilities are taken over at an agreed value shown as under : Particulars

`

`

Bank loan

28000

70000

Trade creditors

135000

95000

Building

300000

-

Machinery

150000

30000

Investment

70000

110000

Stock

38000

124000

Debtors

55000

138000

Prepare necessary accounts in the books of old firm. balance sheet of new firm. [PC:DE-`464000;GH-`281800; Realisation profit:-`44000;GH-`1800;BS TOTAL:`1073800]

25

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D.S.E. SEM.III

ANAND CLASSES 9271008451

CAPITAL ADJUSTMENT [1] Following is the B/S of TWO FIRMS M/S B & C :M/S P & V as on 30.6.2014. Balance sheet as on 30.6.2014 B:C Liabilities

`

Asset

`

Creditors

30000

Cash AT BANK

22500

Bills payable

7500

Investment

15000

Bank overdraft

3000

Furniture

18000

B’s loan

9000

Goodwill

13500

General reserve

12000

Debtors 15000

Investment

Fluctuation 3000

Less:R.D.D

13500

fund

1500

Capital Account:

Machinery

22500

B

52500

Premises

45000

C

33000

Land

-

150000

150000

Balance sheet as on 30.6.2014 P:V Liabilities

`

Asset

`

Creditors

15000

Cash AT BANK

12000

Bank overdraft

15000

Furniture

9000

Investment

12000

Debtors

12000

Land

75000

General reserve Investment

4500 Fluctuation 1500

fund Capital Account: P

54000

V

30000 120000

120000

On 1.7.2014 the two firm shall take over the investment after reducing their values by 10 %. * The new firm shall takeover the investment after reducing their values by 10%. * Furniture of both the firms shall not be taken over by the new firm & were taken over by the partners in profit sharing ratio. * The new firm to take over only trade liabilities. B & C paid liabilities 26

S.Y.B.Com.

D.S.E. SEM.III

ANAND CLASSES 9271008451

not taken over by the new firm while p & V took over them in profit sharing ratio. * Each firm is paid ` 67500 for goodwill. * There was unrecorded office equipment of p and v valued at ` 1200 which was not taken over. * The capital of new firm fixed at `240000 to be divided equally among the partners. Pass necessary journal entries in the books of B ,C & P,V. [B,C-PROFIT`16500;P,V-PROFIT `63000; B/S `330300] [2] Following is the B/S of TWO FIRMS OF M/S DRUGS TRADERS & MEDICINE MERCHANTS AS ON 31.3.2014.

LIABILITIES

DRUGS

MEDICINE

ASSET

DRUGS

MEDICINE

TRADERS MERCHANTS

TRADERS MERCHANTS

`

`

`

`

Creditors

30000

40000

Cash in hand

12200

5700

Bank O/D

10000

-

Stock

30800

40300

debtors

42000

35000

Capital Account: C

80000

-

Premises

63000

-

D

40000

-

Bills receivable

-

11000

E

-

45000

3%

National -

24000

saving certificates F

-

35000

160000

142000

160000

142000

C &D share profit and losses in the ratio of 2:1 & E,F share profit and losses in the ratio of 3:1. They decided to amalgamate their business on the following terms: 1.Bank O/D & O/S salaries should be paid by respective firms. 2. 3 % National saving certificates are not to be taken over by the new firm. 3. The goodwill of DRUGS TRADERS is fixed at `12000 & the goodwill of MEDICINE MERCHANTS is fixed at ` 24000. 4. The stock of DRUGS TRADERS is valued at `29900 & MEDICINE MERCHANTS at ` 38050. 5.Reserve of 5% is to be made for doubtful debt of both the firms. 6. The total capital of new firm is ` 240000 divided between C,D,E,F in the ratio of 4:3:3:2. 7. The goodwill account is to be written off in the books of new firm. Pass necessary journal entries in the books of DRUGS TRADERS & MEDICINE MERCHANTS and the new firm. 27

S.Y.B.Com.

D.S.E. SEM.III

ANAND CLASSES 9271008451

[DRUGS TRADERS-Realisation profit `9000: MEDICINE MERCHANTS Realisation profit`20000;b/s Total-`330000] [3] A & CO. & C & CO. Decided to amalgamate on the following terms & condition on 1 st April,2014,when their B/S were as follows : LIABILITIES

A & CO

C & CO

ASSET

A & CO

C & CO

A’s capital

6000

-

Building

5000

-

B’s capital

3000

-

Furniture

600

1000

C’s capital

-

3300

Investment

-

2000

D’s capital

-

2200

Stock

3000

2600

Creditors

1000

1500

Debtors

2000

2400

Bank loan

2000

2500

Cash at bank

1400

1500

12000

9500

12000

9500

Terms of Amalgamation: 1.In case of A & CO. [A] Goodwill was valued at `3000. [B] Partners of A & CO. Should be take over its bank loan.. [C] Building was taken to be worth ` 6000. [D] Stock to be valued at ` 2500. 2.In case of C & CO. . [A] Goodwill was valued at `2000. [B]Investment were not taken over by the new firm. [c] Stock to be valued at ` 1880. You are require to show necessary ledger account in the books of A & CO , C &CO. And prepare B/S of new firm after amalgamation. [ A & CO.-PROFIT `3500; C & CO-PROFIT `1280; B/S TOTAL ` 24280] SOLE TRADERS AMALGAMATING INTO FIRM [1]Shri bala & Shri wala are in partnership as Lala & Co.” In the similar type of business shri Fail & Shri Shirish are in partnership as Farish & co. It was agreed that on 1 st April 2014 the partnership be amalgamated into one firm Larish & Co.”.The profit sharing ratio of the old firm & new firm are as follows: Bala

Wala

Fali

Shirish

Old firm

2

3

3

2

New firm

6

5

3

4

28

S.Y.B.Com.

As on

31st

D.S.E. SEM.III

ANAND CLASSES 9271008451

march 2014 the balance sheet of their firm were as follows:

LIABILITIES

Lala

& Farish

Co. `

co `

BALA ‘s capital

60000

-

WALA’s capital

90000

FALI’s capital

& ASSET

Lala

& Farish

Co. `

co `

Land

45000

54000

-

Furniture

13000

9500

-

60000

Investment

4000

-

SHIRISH’s capital

-

40000

Stock

44900

26000

Creditors

30000

33000

Debtors

52500

42250

Bank Lo/d

-

6500

5600

-

15000

7750

180000

139500

bank Vehicles

180000

139500

&

The amalgamation was ,made on following terms: Lala & Co.[`]

Farish & Co[`]

Stock

46000

34500

Vehicles

15000

8000

Furniture

8500

7500

Land

54000

54000

Goodwill

40000

30000

Shri Bala to take over investment foe `8000.The capital of the partners in the firm to be `300000 & to be contributed by their profit sharing ratio & adjustment to be made in cash. Sharing ratio and adjustment to be made in cash. You are require to show necessary ledger account in the books of Lala & co. And prepare B/S of new firm after amalgamation. [Bala-profit `19840,Wala-profit `29760,B/S Total-`392250] [2] M/s Ambuja traders & M/s Ultratech Traders were are in partnership they Decided to amalgamate . when their B/S were as follows : LIABILITIES Creditors

Ambuja

Ultratech

traders

Traders

16800

25200

ASSET Cash and bank 29

Ambuja

Ultratech

traders

Traders

22400

23800

S.Y.B.Com.

D.S.E. SEM.III

ANAND CLASSES 9271008451

Bills payable

7000

-

Furniture

8000

8400

Rakesh’s capital

50000

-

Investment

14000

11400

Arun’s capital

30000

-

Premises

42000

-

Sham capital

-

50000

Debtors

12500

6400

Tiku’s capital

-

28000

Land

and -

70000

building Bank loan

14000

11200

Machinery

21000

-

Reserve

14000

56000

Goodwill

11900

-

131800

120000

131800

120000

The amalgamation was made on following terms: *The new firm called as M/S Cement traders decided to value goodwill of both firms at 18000 each. *For Ambuja traders the new firm took investment & debtors of book value. Premises at `75000 & Machinery at ` 13000. Furniture was not taken over by the new firm. *For Ultratech Traders the new firm took furniture & Debtors at book values. Land & building at ` 94000. Investment were not taken over by the new firm. *The new firm agreed to take such cash after payment of loan ,made by each firm. * Tade creditors of each firm were taken over by the new firm at book values. You are require to closes the books of old firm And prepare opening B/S of new firm . [ Realisation profit-Ambuja `31100, Ultratech ` 42000, B/S-`280300] [3][Two proprietors: Following is the B/S of x & y who are printing enterprises: LIABILITIES

X [`]

Y [`]

ASSET

X [`]

Y [`]

SUNDRY Creditors 3000

15000

Cash IN HAND

200

700

Bills payable

4000

Furniture

-

& 5800

8000

Cash at bank

-

4000

Fixtures Outstanding : Electricity bill

500

-

Stock in trade

3000

7000

Contingent

-

1200

Sundry

7000

9000

LIABILITIES Bank loan

Debtors 5000

-

Plant

& 25000

35000

Machinery General Reserve

2500

-

Outstanding income

Capital Account

30000

90000 30

-

1500

S.Y.B.Com.

D.S.E. SEM.III

41000 X & Y agree to

110200

amalgamate

ANAND CLASSES 9271008451

41000

110200

their business from 1.1.2014. They decide to revalue their

asset & liabilities as follows : X’S business:*Stock `2500,Sundry debtors `6200* Furniture & Fixture `5300. * Plant and machinery `22000.&* Goodwill `4000,Sundry creditors `2500 including outstanding expenses. *bank loan to be paid by X. Y’s Business:* Stock `6200,Sundry debtors `8000.*Furniture & Fixture `7500, Land & building ` 52000. *Other liabilities to be paid by Y. * Sundry creditors ` 14000,* Bills payable `3800, *Goodwill `10000. [1] the Profits will be shared by them in the new firm 1:2. [2] Total capital of new firm will be ` 150000[in new PSR] ,the difference to be settled in cash. Prepare realisation a/c ,Capital a/c of X & Y & also the opening balance sheet of the new firm. [PC-X `37700, Y`96600, realisation PROFIT X-`200, Y-`5400, B/S-`170300] [4] Switz & Quiz together & independently were carrying on business & their B/S on 30.3.2013 as follows: LIABILITIES

Switz [`]

Quiz [`]

ASSET

Switz [`]

Quiz [`]

Creditors

20000

32000

Cash

14000

4000

Bills payable

24000

-

Investment

-

24000

General reserve

30000

-

Motor car

-

18000

Bank O/D

-

26000

Stock

44000

24000

Debtors

28000

72000

Capital Account P

60000

-

Machinery

76000

-

Q

80000

-

Building

52000

-

R

-

84000

214000

142000

214000

142000

Switz & Quiz were sharing profit and losses in the ratio of 3:2 .The firms were amalgamated on 1.10.2013, on the following terms: * That the goodwill or Quiz’s BUSINESS BE VALUED AT `14000 & That of Switz `24000. * That provision at 5% to be made on all debtors. * That stock of Switz should be depreciated by 7 ½ th & that of Quiz by 5%. * That the machinery & building be taken at ` 84000 & `60000 respectively. * The motor car is sold for ` 15000. 31

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The loss is borne by all the partners. * That investment be taken at ` 32000. * Value of goodwill to be maintained at `32000 in the new firm. * That the new firm’s capital should be ` 280000 out of which `200000 should be held by Switz & Quiz equally. Adjustment to be made through current account. Prepare realisation a/c ,Capital a/c in the books of both parties & also the opening balance sheet of the new firm. [Switz –profit `35300, Quiz-`17200,B/S-`403320] ***********************

[1]Following is the B/S of M/S LOBBY & M/S BOBBY as on 31st march 2015 M/S LOBBY Liabilities

`

Asset

`

Sundry Creditors

50000

Cash in hand

12000

Loan from vijaya bank

10000

Stock in trade

58000

Sundry debtors

30000

Capital: Ajay

100000

Furniture and fixture

20000

Sujay

50000

Office premises

90000

210000

210000

M/S BOBBY Liabilities

`

Asset

`

Sundry Creditors

60000

Cash in hand

16000

Stock in trade

44000

Sundry debtors

50000 10000

Capital: Ankur

60000

Furniture and fixture

Ankit

40000

5%

in

National

saving 40000

Certificate 160000

160000

They shared Profit and losses in proportion to their capital. They decided to amalgamate their business with effect from 1.4.2014 as per following condition:

32

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[1]Name of the New firm will be Kachcha-Alu Trading corp. [2] Vijaya bank be repaid by Lobby. [3]5%N.S.C. not to be taken over by new firm. [4]Goodwill of M/S LOBBY are fixed at `21000 & `25000 respectively. [5]Office premises are revalued at `99000. [6]Stock in trade of M/S LOBBY be reduced by `9000 & that of M/S BOBBY be increased by `5000. [7] R.D.D. be created @ 5% on debt of both firms. [8] Total capital of firm of Kachcha-Alu Trading corp will be `180000 & capital of each partner will be in his P.S.R. which will be : Ajay 30%,Sujay20%,Ankur30%,Ankit20%. [9] The difference if any, should be transferred to current account. [10]Goodwill account in new firm should be written off. You are require to close the books of M/S LOBBY & BOBBY. To give the effect to above arrangement, also prepare B/S as on 1st April,2015 [2] Miss Charu & Paru are in partnership as Maru & co. In similar type of business Miss Palak & Zalak are in partnership as Malak Associates”. It was agreed that on 1 st April,2013the partnership be amalgamated into one firm “CHARMALAK” &CO. The profit sharing ratio in the old firm & new firm are as below: Particulars

Charu

Paru

Palak

Zalak

Old firm

2

3

3

2

New firm

6

5

3

4

As on 31.3.2013 the B/S of their firm were as follows: Liabilities

Maru Co

& Malak

Asset

Maru

Associate

co

s Capital: Charu

& Malak Associate s

80000

-

Land

65000

84000

Paru

120000

-

Furniture

38000

30500

Palak

-

70000

Vehicles

25000

27000

Zalak

-

70000

Stock

49900

66000

Creditors

50000

83500

Investment

14000

-

Bank overdraft

-

-

Bank

5600

-

Debtors

52500

52500

250000

250000

250000

250000

The Amalgamation was made on the following terms: New firm to takeover the Old firm’s asset as under: Particulars

Maru & co` 33

Malak

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D.S.E. SEM.III

ANAND CLASSES 9271008451

Associate ` Stock

45000

65000

Vehicle

20000

20000

Furniture

35000

28000

Land

125000

165000

Goodwill

40000

30000

Miss charu to takeover the Investment for `12000. The Capital of the partners in the new firm to be `400000 & to be Contributed by their profit Sharing ratio & adjustment to be made in cash/ bank overdraft. You are require to necessary ledger A/C in the books of Maru & Co. &Malak Associates. And prepare B/S of new firm after Amalgamation. [3]Ajay & Vijay are partners who share Profit and losses in the ratio of 2:3in a business. In similar type of business Kailas & Manish are Partners who share profit and losses equally. It is agreed that both the firm have to be amalgamate into one from 1st april,2014.On 31.3.2014 financial position of both the firm is as under: BALANCE SHEET Liabilities

A&v

K&M

Asset

A&V

K&M

Capital: Ajay

104000

-

Goodwill

31200

20800

Vijay

91000

-

Machinery

140400

109200

Kailas

-

72800

Furniture

28080

21840

General Reserve

26000

20800

Stock

88660

76700

Creditors

102700

74100

Motor Car

187200

124800

Bills payable

50700

35100

Debtors

101920

83460

Loan from SBI

247000

208000

Bills receivable

30940

28080

Cash & Bank

13000

10920

621400

475800

621400

475800

The Amalgamation was made on the following terms: Creditors of both the firm are to be taken at a discount at 10%. #Machinery is subjet to 5% depreciate of both firm. # Motor car is to be appreciated by 10% of both firms. # Furniture of both firm is not taken over by new firm. # Stock is to be appreciated by 20% of both firm. # Goodwill of A & V is to be valued at `62400 whereas of K & M is `39000. #Capital of new firm is fixed at `936000 to be adjusted according to their new profit sharing ratio, any adjustment to be made in cash.

34

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#The profit sharing ratio is Ajay 3/10, Vijay 2/10 & Kailas 3/10 & Manish 2/10. And prepare B/S of new firm after Amalgamation and close the books of the firms. [4] Amit traders & Sumit Bros. Decided to amalgamate on the following terms & condition on 1st April,2014,when their B/S were as follows: Particulars

AMIT

SUMIT

Particulars

AMIT

SUMIT

Amit’s Capital

26400

-

Building

25000

-

Anil’s Capital

33600

-

Furniture

11500

27000

Sumit’s capital

-

72300

Investment

-

22500

Sunil’s capital

-

42200

Stock

13600

32600

Creditors

21500

51500

Debtors

32000

62000

Bank loan

12000

-

Cash at bank

11400

21900

93500

166000

93500

166000

Terms of Amalgamation: 1.IN CASE OF AMIT TRADERS

(1)

Goodwill

was

valued

at

`20000. (2)Amit took over Bank loan. (3) Building was taken to be worth `60000. (4) Stock to be Valued at `12600. (5) Provision for Doubtful debts to be created at 5 % on debtor. 2.IN CASE OF SUMIT BROS (1) ) Goodwill was valued at `30000. (2) Investment were taken over by new firm at `30000 (3) Stock

to be Valued at `32000 (4) Provision for Doubtful

debts to be created at 5 % on debtor. 3.It was further decided that the total capital of new firm shall be `200000 & the capital of each partner shall be in profit sharing proportion i.e. 1:1:3:3, the difference to be transferred to the current accounts. You are require to show necessary ledger account in the books of Amit ,Sumit and prepare B/S of new firm after Amalgamation and prepare B/S of new firm after Amalgamation

CHAPTER 4: CONVERSION/SALE OF PARTNERSHIP FIRM INTO A LIMITED COMPANY [Basic-Ledger] [1] ABC CO. WAS FORMED WITH AN authorised capital of `150000consisting of 10000 equity share @ `10 each and 5000,7 -1/2% preference share of `10 each to acquire on 1-714 the business of M/S Lad & Wad , who were sharing profit in the ratio of 3:2 . their balance sheet as on was as follows: 35

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LIABILITIES

`

ASSET

`

Trade Creditors

16580

Land & Building

40000

Overdraft

8950

Plant & Machinery

24000

Stock

15960

Debtors

23860

Capital: Lad

40974

Wad

37316 103820

103820

The company took over all the asset and assumed all the liabilities and the consideration was fixed at ` 110000. In computing this figure, Land and building were valued at`60000, plant and machinery at `20000, Stock at ` 15000 & debtors at book value subject to allowance of 5 % to cover the doubtful debts. The purchase prise was settled by the issue of 3300 equity share at ` 10 each to the firm,2500 preference share and the balance paid in cash. Prepare: 1]Realisation A/C 2] Partners capital A/C 3] ABC co ltd. A/C 4]Cash A/C . [Realisation Profit:` 19026 ] [2].[Basic-journal] X,Y and Z were in partnership sharing profit and losses as ½, 3/8, 1/8 respectively. On 31.12.16, they decided to convert firm into a LIMITED company, when their position was as under : LIABILITIES

`

ASSET

`

Mortgage loan

8000

Freehold Property

20000

Sundry Creditors

18000

Machinery

15000

Stock

14000

Capital: X

20000

Debtors

12000

Y

15000

Cash

10000

Z

10000 71000

71000

The company agreed to take over the following asset at the values stated below: Freehold property :` 24000, Stock `13000, Machinery `14000, Goodwill `5000, Debtors`11000. The co. also agreed to pay `17500 to sundry creditors in full settlement of their claim. Out of purchase price `35000 was paid in fully share of `10 each and balance in cash .The 36

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D.S.E. SEM.III

ANAND CLASSES 9271008451

expenses amounted to `500. Shares were distributed in the ratio of final capital balances. Pass necessary journal entries in the books of the firm. [3]Aata, Bata & kata were partners carrying on partnership business and sharing profit and losses in the ratio of 1:2:3. On 31.3.2013,their balance sheet was as under: LIABILITIES

`

`

ASSET

`

Capital: Aata

10000

-

Building

20800

Bata

20000

-

Machinery

30000

Kata

30000

60000

Motor car

50000

Bata’s loan

20000

Stock

15000

Creditors

15000

Investment

1000

Bills payable

5000

Debtors

20000

Cash

9000

Loan from SBI

247000

208000 100000

100000

On the above data a Private ltd. company was incorporated to take over the above business on the following terms: 1] All asset(except cash and investment) & all liabilities(except loan) to be taken over by the company for which all asset are valued at par except building which is considered worth `27000 & stock as worth `14000. Further goodwill is valued at `30000. 2] Bata’s loan to be partly liquidated by his taking over the firms cash and investment at par. For the balance he is given 8% debentures received from the company in part discharge of purchase consideration. 3] The balance of the purchase consideration is received in the form of equity shares of the company which are to be appositely distributed amongst the partners. Give journal entries and Ledger A/C to close the books of the firm. [Realisation Profit:` 6000,12000,18000 respectively] [4](Expenses) Palak, Methi and shepu carry on business in partnership sharing profit and losses in the proportion of ½, 3/8, 1/8 respectively. On 31st march 2012 they agreed to sell their business to a limited company. Position was as follows: 37

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D.S.E. SEM.III

ANAND CLASSES 9271008451

Particulars

`

Particulars

`

Palak’s Capital

40000

Machinery

48000

Methi’s Capital

30000

Furniture

42000

Shepu’s capital

26000

Cash

2000

Loan on mortgage

16000

Stock

23000

Sundry creditors

18000

Book debt

15000

130000

130000

The company took the following asset at the valuation shown below: Machinery ` 61000, Furniture `31800, Stock `22000, Book debts `14000, Goodwill `10000. The company also agreed to pay the creditors which was agreed at ` 17700. The company paid `67000 in fully paid shares of `10 each and the balance in cash. The Expenses amounted to `1500. Prepare ledger A/C in the books of the Firm. [Realisation Profit:`4800,3600,1200 respectively] [5] Idli & Sambar are Partners sharing profit & losses in the ratio of 2:1 & their balance sheet as on 31.3.2016 was as follows: LIABILITIES

`

ASSET

`

Capital: Idli

60000

Cash in hand

600

40000

Bills receivable

10000

Reserve fund

12000

Machinery

40000

Idli’s loan

40000

Stock

87400

Creditors

80000

Debtors

Sambar

120000 Bills payable

20000

Less:

Provision 114000

6000 252000

252000

They agreed to sell the business to MEDUWADA limited company & the company to take over the asset & liabilities as follows: Machinery `32000, Stock `70000,Debtors `101400, Bills receivable `10000, Goodwill `12000 & cash. The company agreed to take over creditors at `76000 & bills payable `20000. The firm received `80000 of the purchases in `10 fully paid equity share & balance in cash. Distribute the share in the ratio of 3:2 between the partners . Prepare the necessary ledger account in the books of the firm. 38

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D.S.E. SEM.III

ANAND CLASSES 9271008451

[Realisation loss:`22000] [6]Commission to company for setting firm debtors/creditors: M/S Arvind & Bose carrying on business in partnership to dissolve the firm & sell off the business to a limited company on 31st march,2012,when the firm position was as under: LIABILITIES

`

ASSET

`

Sundry Creditors

63750

Cash

15300

Arvind’s Capital

102000

Furniture

9960

Bose’s capital

51000

Stock

46140

Debtors

145350

216750

216750

The arrangement with limited company as follows: *Furniture & stock was purchased at balance sheet values less 10 %. * Goodwill of the firm was valued at `30360. * The firm’s debtors, cash & creditors were not to be taken over by the company, but the company agreed to collect the books debts & discharge the liabilities of the vendors as agent, for which services the company was to be paid 3 % on all collection from the vendors debtors & 2 % on cash paid to vendors creditors. * The purchase price was to be discharged by the company in fully paid equity share of `10 each at premium of ` 1 per share. The company received during the first two month after purchase of business ` 144000 from vendors debtors in full satisfaction. The creditors were paid off less ` 750 allowed by them as ignore the question of interim distribution of cash. Write realisation A/C ,Cash book and capital A/C of partners. [Purchase consideration ` 80850, realisation profit ` 18570] [7](Investment sold ;Car T/O by partner;BP p[aid by firm) Amar,Akbar & Anthony who are partners in a firm & share profit & Losses in the ratio 2:2:1 respectively, decided to convert their firm to a limited company, the ABC Ltd. The balance sheet on the date of conversion shows the following position: Balance Sheet as on 31st March,2008

39

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D.S.E. SEM.III

ANAND CLASSES 9271008451

LIABILITIES

`

ASSET

`

Sundry Creditors

24000

Building

30000

Bills payable

1500

Plant & Machinery

18000

General reserve

6000

Motor

12000

Furniture

2500

Capital Accounts: Amar

30000

Stock

4700

Akbar

28000

Sundry Debtors

26000

Anthony

17000

Investment

6000

Cash at Bank

7300

106500

106500

The ABC ltd agreed to take over the following asset at values shown below: Building `32000,Plant & ?Machinery`16500, Furniture`2000, `Stock `7800, Goodwill`4000 & Sundry debtors subject to 5% R.D.D. The company has also agreed to take over sundry creditor at 22000. The purchase consideration was paid by the company by issue of sufficient number of equity share of `1 each fully paid, at par. The firm sold investment for `8000 & paid off bills payable fully. The Motor was taken over by Amar at book value. The firm paid realisation expenses of `800. Prepare: [a] Realisation Account [b] Partners capital Account [c] ABC LTD. Account [d] Bank Account [e] Show working of purchase consideration in the books of partnership firm. [8][ ASSET & LIABILITIES not T/O; Realisation Expenses;Curent A/C Dr) X,Y,Z are partners sharing profit & losses in the ratio of 3:2:1 respectively. They decided to sell their business to a limited company on 1.1.16.Their position was as under: Balance Sheet as on 31st March,2015 LIABILITIES

`

ASSET

`

Creditors

8800

Building

69000

Bills payable

22200

Cash at Hand

550

Mrs.X’s Loan

4500

Z’s Current A/C

6900

Capital Accounts:

Debtors

12000

X

37950

Less: R.D.D

Y

41300

Stock

600

11400 7500

40

S.Y.B.Com.

D.S.E. SEM.III

Z

3000

Creditors for Expenses 6000 General reserve

ANAND CLASSES 9271008451

Investment

5400

Cash at Bank

26000

3000

106500

126750

126750

The purchasing company agreed to take over only building at `60400 & to pay –off only bills payable. It agreed to issue 365 equity share @ `100 each as fully p[aid Balance in cash. ’Y’ acquiring investment at `5000. The firm sold away stock for `7940 & collected `10000 from debtors(balance due from debtors proved as bad debts). The firm paid off all the creditors & earned `800 as discount. The creditors for expenses were X’ agreed to pay-off his wife’s loan. Share’s were distributed between X’ & Y’ in the ratio of their capital balances. Z paid his dues to the firm in cash. Show necessary ledger accounts in the books of the firm. [9]Santosh & Prakash were in partnership sharing profit & losses in the ratio of 3:1. Following is the balance sheet of the firm as on 31st December,2004. Balance Sheet as on 31st December,2015 LIABILITIES

`

ASSET

`

Creditors

21480

Fixed Asset

31500

Capital Accounts:

Debtors

29400

Santosh

36000

Cash at Bank

5580

Prakash

12000

Stock

16800

48000

Current Account: Santosh

6300

Prakash

3000

9300

Loan from Prakash

4500

Creditors

21480 83280

83280

Prashant Ltd agreed to take stock & Fixed Asset excluding the value of ?Motor car `6150, for a consideration of `72000 which is to be satisfied. 1.By the payment of cash `24000. valued at `75 per share.

2.Allotment of 240 preference share of `100 each

3.The balance by allotment of equity share of the value of `

10 each. The Debtors realised `28800 & the creditors were satisfied for `21000. The following were agreed between partners: 41

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D.S.E. SEM.III

ANAND CLASSES 9271008451

1.Equity shares be allotted in the fixed capital ratio. 2.Santosh to take over the motor car at an agreed value of `6300. 3.The preference share to the value of loan amount to be allotted to Prakash & the remaining preference share to be allotted to partners equally.

4.The

balance remaining be paid in cash. You are require to show:[a] Realisation Account [b] ] Partners capital Account[c] Bank Account[d] Statement showing distribution of shares. [10]A,B,C sharing profit & losses equally, decided to convert their business into a limited company as on 31st December 2014 when their balance sheet stood as follows: LIABILITIES

`

ASSET

`

Sundry Creditors

40000

Bills receivable

16000

Debtors

40000

Capital Accounts: A

20000

Plant

6000

B

10000

Stock in Trade

25000

C

12000

Furniture

14000

Loan from X

6000

Patents

8000

General Reserve

12000

Goodwill

11000

Bank Overdraft

20000 120000

120000

1.The Goodwill of the firm was valued at two years purchase of the average profit of the last three years; the profits being `12000, `2000 & `16000 respectively.

2.The

plant

&

Furniture was valued at `8000 & `16000 respectively. 3.The debtors were taken at 5% less. 4.The firm was allotted 1000 , 10% preference share of `20 each, 3000 equity shares of `10 each & the balance was paid in cash. 5.Expenses of realisation were `2000.

6.A,B,C

agreed to take preference shares in the ratio of 4:3:3 & equity shares in the ratio of 5:3:2.Prepare necessary accounts to close the books of the firm. [11]A,B were partners sharing profit & losses in the proportion of 3/5 & 2/5 respectively. Their Balance sheet as on 31st December 2014 was as under: LIABILITIES

`

ASSET

`

Sundry Creditors

6400

Cash

4500

Bills payable

3500

Plant & Machinery

50000

Reserve Fund

15000

Freehold premises

45000

Capital Accounts:

Investment

4000

A

70260

Stock

31000

B

46840

Book debtors

7500

117100

42

S.Y.B.Com.

D.S.E. SEM.III

142000

ANAND CLASSES 9271008451

142000

AB limited was formed with an authorised capital of `500000 divided into 25000 equity shares of `10 each & 25000 Preference share of `10 each to acquire the going concern of A & B upon the following terms: 1.The company took over all asset except investment. It valued the stock & Plant & machinery at 10 % lss than the book value & the freehold premises at 20 % more than the book value. 2.The liabilities were to be discharged by the company.

3.The

goodwill

of

the firm was to be valued at 2 years purchase of the average profit of 3 years. The working result of the firm showed that it had made profit of `15000 in 2012, `18000 in 2013 & `21000 in 2014 after setting aside `5000 to reserve fund every year.

4.The purchase price

was agreed upon to be paid `53000 in fully paid equity shares, `50000 in fully paid preference share, `30000 in debentures & the balance in cash.

5.The

partners

sold

the

investment & realised `4100. You are require to prepare in the books of firm of A & B: [a] Realisation Account [b] ] Partners capital Account[c]Cash Account Assuming that shares & Debenture are to be distributed in profit sharing ratio, the final settlement being made in cash. [12]Rudra & Kunal are partners sharing profit & losses in the ratio of 3:2. They decided to convert their business into a limited company, RK Ltd. On december 31,2015 when the balance sheet stood as under: LIABILITIES

`

ASSET

`

Sundry Creditors

33000

Land & Building

80000

Lo9an Creditors

80000

Plant & Machinery

60000

Reserve Fund

30000

Furniture

21000

Capital Accounts:

Patents

18000

Rudra

70000

Stock

31000

Kunal

50000

Bills receivable

16000

Sundry debtors

28000

Cash at Bank

16000

120000

263000

263000

In order to arrive at the purchase consideration, the following terms are agreed by the company: [a] The company will take over the loan creditors but will not take over sundry Creditors.

[b] Land & Building will be valued at `95000 , Machinery `72000 & Stock 43

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D.S.E. SEM.III

ANAND CLASSES 9271008451

`32000 & all other asset taken[except cash & patents] at their book value. Patents are valued at ` 25000 & realised in cash

[c]The goodwill of the firm will be valued at 2 years

purchase of the average profit of the last three years. The profit for last 3 years after setting aside `10000 to Reserve Fund each year were as follows: 2012-`44000, 2013-`52000, 2014`60000 .

[d] The vendor to be allotted equity share of ` 10 each to the amount equal to

the purchase consideration. You are require to show the necessary accounts in the books of the firm assuming that all the transaction have been duly completed & surplus cash, if any was distributed equally & the balance was adjusted by the shares of the new company. [13]Arjun, Nakul & Bhim are partners of Bright Brothers. They share profit & Losses in the ratio of 5:4:3. On January 1,2006 their balance sheet was as under: LIABILITIES

`

ASSET

`

Creditors

20000

Plant & Machinery

60000

Bills payable

10000

Building

75000

Capital Accounts:

Delivery Van

18000

Arjun

Stock

21000

Investment

26000

Sundry debtors

30000

Cash

15000

75000

Nakul

60000

Bhim

50000

185000 245000

245000

On the above date, a private company was incorporated to take over the above firm on the basis of the following terms & Condition: [a]All asset[except delivery van] & all liabilities[excluding Nakul’s Loan] were taken over by the company at their book value except the following: Building `98000, Machinery `56000 [b] Goodwill of the firm is to be valued at `42000.

[c] Delivery Van was taken over

by Nakul’s at an agreed valuation of ` 15000 as part payment of his loan & for the balance consideration received from the company.

[d]The balance purchase consideration was

discharged by the new firm by issuing fully paid up equity share of `1 each. Give necessary ledger A/C in the books of firm. COMPANY BOOKS

44

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D.S.E. SEM.III

ANAND CLASSES 9271008451

[14]Veeru & Naru are carrying on business in name of Veena & Co. Sharing profit in the ratio of 2:3 . On 31.3.2013 their balance sheet was as follows: Particulars

`

Particulars

`

Naru A/C

88000

Property

72000

Veeru A/C

60000

Stock

40000

General reserve

24000

Debtors

48000

Loan Naru

16000

Machinery

60000

Bank overdraft

32000

Advances

8000

Creditors

20000

Cash/Bank

12000

240000

240000

On the same date Veena pvt Ltd. Was incorporated to take over the running business of Veena & Co. On following term: [a]Goodwill of the firm is to be valued at 2 years purchase of average profit of past five years. The firm used to transfer `4000 every year to General reserve. The profit after above transfer were `12800, `14000, `15000, `14200, `15400. [b]Plant

is

overvalued

by

`6000

&

property is undervalued by `8000. Othe asset & liabilities except ;loan of Naru-are taken over at book value. [c]The company decided to allot (i)12% preference share to that partner who has excess capital after all necessary adjustment to the extent of such amount. (ii)Equity share for balance amount payable

[d]The face value of share is `10/- Show journal

ent6ries in the books of both parties to the above agreement. [15]P & Q were partners sharing profit in the ratio of 2:1. Their balance sheet on 31.3.2012 on which date they converted their business into a company was as follows: LIABILITIES

`

ASSET

`

Creditors

60000

Cash

14000

Debtors

52000

Stock

32000

Mortage on freehold 20000 property Capital Accounts: P

40000

Machinery

10000

Q

20000

Freehold premises

32000

140000

140000

The company took over all asset & Liabilities except mortgage of freehold premises for a purchase price of `120000 payable as to ` 24000 in cash, `48000 in debenture and the balance in equity share of `100 each. 45

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D.S.E. SEM.III

ANAND CLASSES 9271008451

Close the books of the firm after the above transaction have been carried out, mortgage loan has been paid & partners agreed to share the debenture & share proportion to their final capital. Prepare the ledger A/.C in the books of the firm, & Journal entries & Balance sheet in the books of purchasing company.

QUESTION PAPER – FINANCIAL ACCOUNTING Q.1] (A) Fill in the blanks with proper words. (Answer any 10)

[10]

1. In dissolution of partnership firm all asset are transferred to realisation A/C------Side. 2. Debit balance on Realisation A/C represents------. 46

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D.S.E. SEM.III

ANAND CLASSES 9271008451

3. On Amalgamation------- asset are transferred to partners capital accounts. 4. Partnership firm has----liability. 5. If asset is depreciated Realisation A/C is-----. 6. Trade mark is a-. 7. Return inward is deducted from----. 8. Payment made in advance is shown on -----Side of balance sheet. 9. Goodwill written off in the books of new firm is debited to----Account. 10. The balance due to retiring partner is transferred to his –account until final settlement. 11. After all external liabilities are paid the balance cash is paid to the partners as per – method. 12. On dissolution of firm payment of unrecorded liability is debited to-----Account. (B) Match the following (any 10) Column ”A”

[10] Column ”B”

1] Dues to employees

A] 12% p.a.

2] Fluctuation capital method

B] Distributed among the partners

3] Excess capital method

C] Closing stock

4] Amalgamation of firm

D] Liability

5] Purchase consideration

E] Created after payment of external liability

6] Loose tools

F] 6 % p.a.

7] Preferential liability

G] Income tax dues

8] Interest on partners loan

H] Not a fixed asset

9] Interest on partners loan

I]Amount

payable

by

purchasing

company 10] Income received in advance

J] Purchase consideration

11] Unsold stock at the end of the year

K] Highest relative capital method

12] Unsold stock at the end of the year

L] Separate current A/c is not opened M] Preferential liability

Q.2] The firms trial balance as on 31 march 2017 is as follows :

47

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D.S.E. SEM.III

Particulars

Debit

Drawings: Ajay

12000

ANAND CLASSES 9271008451

Particulars

Credit

capital A/C : Ajay

30000

Vijay

12000

Vijay

30000

Sanjay

12000

Sanjay

30000

Purchases

156000

Sales

294000

Stock

24000

R.D.D

8800

Return inward

2400

Return outward

2000

Salary

27000

Bank loan

20000

Office expenses

16500

Creditors

76500

Bad debts

2100

Bills payable

8700

Carriage inward

4500

Carriage outward

6750

Debtors

100000

Bills receivable

3250

Bank

8000

Cash

2500

Investment

25000

Premises

50000

Machinery

36000 500000

500000

On 1st October 2016, Ajay retired & the following adjustment were agreed upon: 1.Goodwill of ` 90000 was brought into the books of account. 2. Furniture worth `20000 was purchased on 30th June 2016,but the invoice was not recorded in the books . 3. Balance in Ajay’s Account after making all adjustment was to be transferred to his loan account carrying interest @16%. 4. Closing stock was valued @42000. 5. Depreciate machinery by 10% ,premises by 5% & Furniture by 5%. 6. Provide interest on capital @10%. Prepare Trading & P &L A/C for year ended 31st march 2017 . OR 48

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D.S.E. SEM.III

ANAND CLASSES 9271008451

Q.2] Krishna was carrying on business as wholesale business man. He closes his books of accounts by 31st march every year. Arjun was his manager on a monthly salary of ` 2000 till 30th September 2016 & from 1st October 2016 it was agreed that he will be admitted as partner with 1/3rd share in profit & losses without any salary. The books of the firm yielded the following trail balance at the end of the year on 31st march 2017. [15] PARTICULAR

DEBIT`

CREDIT`

Krishna’s Drawing and capital

20000

37000

Stock[1.4.2016]

30000

-

Debtors & Creditors

15000

8700

Furniture & fitting

9000

-

Motor car

15000

-

Purchases and Sales

210000

330000

Bank

15000

-

Cash

900

-

Salaries

15000

-

Advertising & selling Exp.

33000

-

Professional charges

2400

-

Rent

6400

-

Prepaid rent

400

-

Bills receivable &Bills payable

8900

5300

381000

381000

Additional information: 1. Purchases were ` 100000 upto 30th September 2016. 2. Sales during the first 6 months of the year were ` 110000. 3. Stock on 30th September 2016 & 31st march 2017 was ` 50000 & ` 20000. 4. Furniture & fitting are to be depreciated @ 10 % & motor car @ 20%. 5. Rent which was 1450 p.m. upto 30th November 2016 was increased to ` 600 per month. From 1st December 2016. Prepare Trading & P &L A/C in columnar form.\

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D.S.E. SEM.III

ANAND CLASSES 9271008451

Q.3] P,Q,R, are partners of M/S Pinku stationers, sharing profit & losses in the ratio of 1:1:2. On 30th June,2017 They decided to dissolve their firm when their balance sheet was as under:

[15]

Liabilities

`

Asset

`

Sundry Creditors

160000

Goodwill

120000

General reserve

80000

Debtors

180000

Capital: P

240000

Stock

123000

Q

160000

Building

240000

R

300000

Plant

268000

40000

Bills receivable

37000

Bank

12000

Loan from Q

980000

980000

The realisation & expenses of realisation were as stated below: Date

realisation

expenses

31st July

110000

2000

31st August

340000

10000

30th September

350000

5000

31st October

162000

3000

You are require to prepare Statement Showing distribution of cash available under Highest Relative Capital Method. OR Q.3] The firm of Midas present you with the following balance sheet drawn as on 31st march,2017:

[15]

Liabilities

`

Asset

`

Sundry Creditors

74000

Cash in hand

6000

Capital Accounts: P

Sundry Debtors

68000

80000

Stock in trade

78000

R

60000

Machinery

102000

M

54000

Current Accounts: R 8000 M 6000 50

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D.S.E. SEM.III

ANAND CLASSES 9271008451

268000

268000

Partners shared profit & losses in the ratio of 4:3:3 .Due to differences among the partners it was decided to wind up the firm, realise the asset distribute the cash among the partners at the end of each month. i.April2017:`30000 from debtors & `40000 by sale of stock. Expenses on Realisation `1000. ii.May2017: Balance of debtors realised `20000.Blance of stock fetched `48000. iii.June2017: Part of machinery was sold for `36000. Expenses incidentioal to sale ` 1200. iv. July 2017:Part of machinery valued in the books at

10000 was taken by P in part

discharge at an agreed value of ` 20000. Balance of machinery was sold for ` 60000(net) Show how the amounts due to partners will be settled as per Highest Relative Capital method. Q.4] The B/S of M/s M&N and M/s R&S as on 31st march 2017 was as follows : LIABILITIES

M & N R&S

ASSET

`

M & N R&S `

Creditors

54000

36000

Cash

3600

1800

Loan

-

39600

Stock

28800

32400

debtors

21600

30600

Capital Account: M

36000

-

Land

36000

47400

N

36000

-

Machinery

25200

28800

R

-

36000

Furniture

10800

12600

S

-

36000

Bank

7200

5400

O/S Expenses

7200

11400

133200

159000

133200

159000

The two firm decided to amalgamate & form into M/S MNRS with effect from 31st march 2017. Partners would share profit & losses equally between themselves as they were doing prior to amalgamation & they agreed to following revaluation of asset & liabilities. M&N`

R&S

Land

45000

45000

Machinery

30000

32000

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D.S.E. SEM.III

ANAND CLASSES 9271008451

Furniture

10000

12000

Debtors

21000

30000

Stock

29000

34000

Creditors

52000

34000

Loan

-

38000

O/S Expenses

7200

11400

In addition to the above it was decided: 1.Goodwill of M & N and R & S were values ` 35000 & 20000 & it should be written off in the new firm. 2. That the reconstructed capital of the partners would be ` 37500 each. The Difference if any should be transferred to current account. You are require to prepare: The accounts in the books of M/S M & N & The opening balance sheet of the new firm. OR Q.4] The following is the B/S of M/S Lalwani Bros & M/S Motwani Bros. As on 31st March 2017.

[15] M/S Lalwani Brothers[Balance sheet]

LIABILITIES

`

ASSET

`

Sundry Creditors

50000

Cash in hand

12000

100000

Furniture & fixture

20000

50000

Office premises

90000

Debtors

30000

Stock in trade

58000

Capital : Anil Sunil Loan

from

Vijaya 10000

bank 210000

210000

M/S Motwani Brothers[Balance sheet] LIABILITIES

`

ASSET

`

Sundry Creditors

60000

Cash in hand

16000

60000

Furniture & fitting

10000

40000

5%National

Capital : Ajay Vijay

saving 40000

Certificate Sundry Debtors

50000

Stock in trade

44000

52

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D.S.E. SEM.III

160000

ANAND CLASSES 9271008451

160000

They shared profit & losses in proportion to their cpital. They decided to amalgamate their business with effect from 1.4.2017,as per the following terms & condition: 1.That the name of the new firm shall be VANEE TRADING CORPORATION. 2. That the vijaya bank loan be repaid. 3. That the 5% National saving Certificate not to be taken over by new firm to be distributed between partners equally at book value. 4. That the goodwill of M/S Lalwani bros. & M/S Motwani Brothers fixed at ` 21000 & `25000 . 5. That office premises are valued at `99000. 6. That stock in trade of M/S Lalwani be reduced by 9000 & that of M/S Motwani increased by ` 5000. 7. That a reserve for bad debts to be created at the arte of 5% on debts of both firm. 8. That total capital of the Vanee Trading Corporation will be ` 180000 and the capital of each partner will be in his profit sharing ratio will be as follows: Anil 30%,Ajay30%,Sunil20%,Vijay20%.The differences should be transferred to Current account. 9.Goodwill A/C in the new firm should be written off. You are require to close the books of M/S Lalwani Brothers & prepare balance sheet of VANEE TRADING CORPORATION as on 1st april2017. Q.5] Veena & Neena are carrying on business in the name of Veena & co. Sharing profit in the ratio of 2:3 .On 31st march 2017 their balance sheet was: LIABILITIES

`

ASSET

`

Creditors

20000

Cash /Bank

12000

Neena A/C

88000

Property

72000

Veena A/c

60000

Stock

40000

General reserve

24000

Debtors

48000

Loan-Neena

16000

Machinery

60000

Bank overdraft

32000

Advances

8000

240000

240000

On the same date Veena pvt.ltd. was incorporated to take over the running business of Veena & Co, on the following terms: 1.Goodwill of the firm is to be valued at 2 years purchase of average profit of past 5 years. The firm used to transfer ` 4000 every year to general reserve. The profit after above transfer were ` 12800 `14000,`15000,`14200 & `15400. 2. Machinery is Overvalued by `6000 & 53

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D.S.E. SEM.III

ANAND CLASSES 9271008451

property is undervalued by ` 8000 other asset & liabilities except loan Of Neena are over at book value. 3. The company decided to allot[a] 12% Preference share to that partners who has excess capital after necessary adjustment tot he extent of such amount. [b] Equity share for the balance amount payable. 4. The face value of share is ` 10. Show necessary journal entries in the books of both parties. OR Ajit & Sujit were partners sharing profit & losses in the ratio of 2:1 & their balance sheet as on 31.3.2016 was as follows:

[15]

Liabilities

`

Asset

`

Current account: Ajit

26000

Freehold premises

62000

18000

Stock

32000

50000

Plant and machinery

18000

40000

Book debt

41000

Ajit’s loan account

40000

Bank PNB

45000

Account payable

24000

210000

198000

198000

Sujit Capital: Ajit Sujit

The partners wishing to dissolve firm. Accepted the order of Majestic ltd. To acquire the stock & Fixed asset at an inclusive prise of ` 140000. Purchase consideration was to be satisfied by-1. A cash payment of ` 35000. 2. By allotment to the partners 6000 ,6% preference share of `10 each valued at `8 per share. 3.57000 ordinary share of `1 each. The book debts realises `38000 & accounts payable were settled by `22000. The partners agreed that the following should be the basis of distribution on dissolution of partnership.(a) Ajit’s to be allotted preference share in settlement of his loan ,the remaining preference share being allotted equally to them. (b) The ordinary share to be allotted in the ratio of profit sharing. (c) The balance to be paid in cash. Prepare: Realisation A/C, Partners capital A/C, Majestic ltd. A/C, Cash A/C. Q.6] (a) What is the Acounting procedure for accounting of Amalgamatiobn of firm in the booksof Amalgamating firms ? (b) What are the adjustments in final Accounts of a firm ? 54

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D.S.E. SEM.III

ANAND CLASSES 9271008451

OR Q.6]Short notes (any 4) A] Net Asset method of purchase consideration. [b] Proportionate capital method [c] Death of partner [d] Interest on partners loan [e] Fluctuating capital [f] Accounting procedure in the books of purchasing company. *****************

OUR SUCCESSFUL STUDENTS OF T.Y.B.COM SEM 5 NAME

COLLEGE

GRADE

MS. MAYURY BIDVI

MUTHA KALYAN

A [81% FA]

MS. PRIYA CHAVRE

BIRLA KALYAN

A [78% FA]

MS. JENNY SHINDE

MUTHA KALYAN

B [68% FA]

MS. MEGHNA CHAVRE

BIRLA KALYAN

B [70% FA]

OUR SUCCESSFUL STUDENTS OF T.Y.B.M.S. SEM 5 NAME

COLLEGE

GRADE

MS. JAGRUTI BHOIR

AGRAWAL KALYAN

A

MS. NEETA GONDHALI

AGRAWAL KALYAN

A

MS. SUVERNA THENGE

AGRAWAL KALYAN

A

MS. MINAKSHI KHANDEKAR

AGRAWAL KALYAN

B

55

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D.S.E. SEM.III

ANAND CLASSES 9271008451

ALL THE BEST FOR YOUR SUCCESS

56