Page 2 :
HAND BOOK, SECOND PUC, , ACCOUNTANCY, (NEW SYLLABUS), , Book 1: Not-For-Profit Organisation and Partnership Accounts, Book 2: Company Accounts and Analysis of Financial Statements, , 2020-2021, MYSURU DISTRICT P U COMMERCE FORUM (R), Vidyavardhaka composite pre-university college, Sheshadri Iyer Road, Near Private Bus Stand, Mysuru

Page 4 :
INDEX, PARTICULARS, Book 1, , Book 2, , Blue, Print &, Model, Question, Papers, , PAGE NO., , 1, , Accounting for Not-for-Profit, Organisations, , 01-16, , 2, , Accounting for Partnership- Basic, Concepts, , 17-28, , 3, , Reconstitution of Partnership FirmAdmission of a Partner, , 29-52, , 4, , Reconstitution of Partnership FirmRetirement/Death of a Partner, , 53-81, , 5, , Dissolution of Partnership Firm, , 81-94, , 1, , Accounting for Share Capital, , 2, , Financial Statements of a Company, , 111-119, , Blue Print, , 120-120, , 95-110, , MQP 1, , 121-128, , MQP 2, , 130-135

Page 5 :
Accountancy II PUC, , BOOK - 1, CHAPTER -1, , Mysuru District P U Commerce Forum, , Accounting for Not-For - Profit Organisation, Section A: One Marks Questions, , I. Fill in the Blanks:, 1. Not-For-Profit organisations are used for the welfare of the Society, 2. Not-For-Profit organisations are not engaged in Trading or Business, 3. Receipts and Payments Account is the summary of Cash and Bank transactions., 4. Income and Expenditure account is just like a Profit and Loss Account of a trading concern., 5. Income and Expenditure A/c is prepared on Accrual basis., 6. Subscription is a fee paid by the Members, 7. Legacies are the amounts received as per the will of the deceased person., 8. Opening balance in Receipt and Payment A/c represents Cash balance, 9. Government Grants for maintenance is treated as Revenue receipt., 10. Donation for specific purpose are always Capitalised, , II. Multiple choice questions:, , 1. Not-For-Profit organisations are formed for:, (a) Profit, (b) Service, (c) Profit & Service, (d) None of these, 2. Most of Not-For-Profit organisation transactions are :, (b) Credit, (a) Cash, (c) Cash & Credit, (d) None of these, 3. Receipt and Payment Account include items of :, (a) Capital Nature, (b) Revenue Nature, (d) None of these, (c) Both (a) & (b), 4. Income and Expenditure Account includes the amounts of :, (a) Current year, (b) Previous year, (c) Next year, (d) Both Current year and Previous year, 5. Capital Fund does not include:, (a) Entrances fees, (c) Building fund, , 6. Legacies are treated as:, (a) Revenue Receipt, (c) Revenue Expenditure, , (b) Legacies, (d) Life Membership fees, , (b) Capital Receipt, , (d) Capital Expenditure, 1|Page

Page 6 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , 7. Purchase of a computer by a college is treated as:, (a) Capital Receipts, (b) Capital Expenditure, (c) Revenue Receipt, (d) Revenue Expenditure, , 8. In the absence of any specific instruction, where do you show the Entrance Fee?, (a) Debit side of the Income and Expenditure Account, , (b) Credit side of the Income and Expenditure Account, (c) Liability side of the Balance sheet, (d) Added to capital Fund on the liabilities side of B/S, , 9. Special Funds are shown in :, (a) Income side, (c) Liability side, 10. Life membership fees are treated as:, (a) Capital Receipts, (c) Capital Expenditure, 11. Loss on sale of fixed asset is treated as:, (a) Capital Receipts, (c) Capital Expenditure, , III., , (b) Expenditure side, (d) Asset side, (b) Revenue Receipt, (d) Revenue Expenditure, (b) Revenue Receipt, , (d) Revenue Expenditure, , True or False type questions:, , 1. Receipt and Payment Account is a summary of all capital receipts and payments. False, 2. If the sports fund is maintained, sports expenses will be shown on the debit side of Income and, Expenditure Account. False, 3. The balancing figure on credit side of Income and Expenditure Account denotes excess of, expenses over incomes. True, 4. Scholarship granted to students out of funds provided by Government will be debited to Income, and Expenditure Account. False, 5. Donations for specific purpose are always capitalised. True, 6. Opening Balance Sheet is prepared when the Opening Balance of capital fund is not given., True, 7. Surplus of Income and Expenditure Account is added to Capital Fund. True, 8. Income and Expenditure Account is equivalent to Profit and Loss Account of a trading concern., True, 9. Receipt and payment Account does not differentiate between capital and revenue receipts., True, 10. Capital and Revenue items are recorded in Receipt and Payment Account. True, , IV., , Very short answer questions:, , 1. Give an example for Not-For-profit organisation., Ans: 1. Charitable institutions. 2. Govt. hospitals., , 3. Public libraries., , 2. What is the Motive of Not-For-profit organisation?, Ans: Service, 2|Page

Page 7 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , 3. Where do you show Opening Bank overdraft in Receipt and Payment Account?, Ans: Credit side, 4. Name any one final account of a Not-For-profit organisation., Ans: 1. Income and Expenditure Account, 2. Balance Sheet., 5. State any one major source of income of Not-For-profit organisation., Ans: 1. Subscription from members, 2. Donations, 6. State any one book of account maintained by a Not-For-profit organisation., Ans: 1. Cash book, 2. Ledger., , 7. State any one feature of Receipt and Payment Account., Ans: 1. It is a summary of the cash book., (Write any one relevant feature), 8. How do you treat the prizes paid, when the prize fund is not maintained?, Ans: Revenue Expenditure., 9. What is Capial fund?, Ans: Capital Fund = Assets – Liabilities (of a not for profit organisation), 10. Give an example for specific donation., Ans: 1. Donations for Building, , 2. Donations for Book bank., , 11. How do you treat the Life Membership Fees?, Ans: Capital Receipt., , Section B : Two Marks Questions, , 1. What are Not-For-Profit organisation?, Ans: Not for profit organisation refers to the organisation that is formed for the welfare of the, society. Their main aim is to provide services to the members or the public at large without, any profit motive., 2. Give any two examples of Not-For-Profit organisation., Ans: 1. Charitable Institutions, 2. Govt Hospital, 3. Public libraries., 4. Sports clubs, 3. State any two features of Not-For-Profit organisation., Ans: 1. They are formed for providing services such as education, sports, etc., 2. They are organised as charitable trust / societies., 3. Their affairs are usually managed by a managing committee., 4. Name any two books of accounts maintained by Not-For-Profit organisation., Ans: 1. Cash Book, 2. Ledger, 3. Stock Register., 5. Give the meaning of Receipt and Payment Account., Ans: It is the summary of cash and bank transactions. It is prepared by Not for profit, organisation at the end of the year form the cash book., 6., , State any two features of Receipt and Payment Account., Ans: 1. It is a real account, 2. It includes both capital and revenue items., 3. It is a summary of cash book., , 3|Page

Page 8 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , 7. What do you mean by Income and Expenditure Account?, Ans: It is the summary of the Income and Expenditure for the accounting year. It is prepared, by Not- For-Profit organisation to ascertain the surplus or deficit of the organisation., , 8. State any two features of Income and Expenditure Account., Ans: 1. It is a nominal account., 2. It is like a profit and loss account of business firms., 3. It includes only revenue items., 9. Give any two examples of Revenue Expenditure., Ans: a. Depreciation, b. Salary paid, , c. Rent paid, , 10. Give any two examples of Capital Expenditure., Ans: a. Cost of construction of building., b. Purchase of Machinery., c. Furniture purchased, 11. Give any two examples of Revenue Receipts., Ans: a. Subscriptions received., b. Rent received., 12. Give any two examples of Capital Receipts., Ans: a. Long-term loan borrowed., b. Sale of fixed assets., , c. Sale of old newspaper, c. Legacies received, , 13. State any two differences between Receipt and Payment Account and Income and Expenditure, Account., Receipt and Payment Account, Income and Expenditure Account., (a) It is a summary of the cash book., (a) It is a summary of Income and, Expenditure, (b) It includes both capital and revenue, (b) It includes only revenue items., items., 14. What is Capital Fund?, Ans: Capital Fund is the difference between assets and liabilities of a Not for profit, organisation. It consists of surplus and certain capitalised receipts such as Legacies, Life, membership fee, Entrance fee, etc., 15. What are Legacies?, Ans: Legacies are the amount received as per the will of a deceased person. It is treated as, capital receipt and is directly added to capital fund in the balance sheet., 16. What is Honorarium?, Ans: It is the amount paid to the person who is not the regular employee of the organisation,, for his service., Example: Payment to an artist for giving performance at the club., 17. Give the meaning of Endowment Fund., Ans: Endowment fund is a fund arising from a bequest or gift, the income of which is devoted, for specific purpose. It is a capital receipt and shown on the liability side of the Balance sheet., 4|Page

Page 9 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , 18. How do you treat tournament expenses, when separate tournament fund is not maintained?, Ans: when separate tournament fund is not maintained, then tournament expenses are debited, to income and expenditure account., 19. How do you treat prizes awarded, when Prize Fund is maintained?, Ans: Prizes awarded are deducted from Prizes Fund on the liability side of the Balance sheet., , Section E : Five Marks Questions, Practical oriented Questions:, I., , II., , Classify the following into Revenue and Capital items:, Answers, 1. X-ray plant purchased by a hospital, 2. Interest received, 3. Sale of old sports materials, 4. Donation received for Swimming pool, 5. Honorarium paid, 6. Installation charges of new machinery, 7. Subscription to newspaper, 8. Life membership fees, 9. Subscriptions received from members, 10. Amount paid for up keep of grounds, 11. Cost of purchase of assets, 12. Rent received, 13. Donations for buildings, 14. Government grant for maintenance, 15. Cost of installation of lights and fans, 16. Sale of old tennis balls, 17. Legacies received, 18. Match expenses met out of Match Fund, 19. Prizes awarded to students on the college day, 20. Laboratory expenses of science department of a college, , Capital Item, Revenue Item, Revenue Item, Capital Item, Revenue Item, Capital Item, Revenue Item, Capital Item, Revenue Item, Revenue Item, Capital Item, Revenue Item, Capital Item, Revenue Item, Capital Item, Revenue Item, Capital Item, Capital Item, Revenue Item, Revenue Item, , Prepare Receipts and Payment Account of a Not-For-Profit Organisation with 5 imaginary, figures., , Receipt and Payment Account, Dr., For the year ended 31.03.2018, Receipts, ₹, Payments, To Balance b/d, 10,000 By Salaries, To Subscriptions, 10,000 By Furniture, To Donations, 10,000 By Rent, By Balance c/d, 30,000, 15,000, To Balance b/d, , Cr., ₹, 5,000, 5,000, 5,000, 15,000, 30,000, , 5|Page

Page 10 :
Accountancy II PUC, , I., , Mysuru District P U Commerce Forum, , Section D: 12 Marks Questions, Preparation of Income and Expenditure Account and Balance Sheet when, Opening Balance Sheet is given in the problem, , 1. Followings are the Balance Sheet and Receipts and Payments Account of Sharada, Education Society, Mangaluru., Balance Sheet as on 31-03-2017, ₹, ₹, Liabilities, Assets, Capital fund, 36,400 Cash in hand, 2,050, Audit fees, 2,500 Maps and charts, 1,600, 5% Govt. Bonds, 31,000, Subscriptions outstanding, 1,000, Furniture, 3,250, 38,900, 38,900, Receipts and Payments A/C for the year ending 31-03-2018, Cr., ₹, ₹, Receipts, Payments, To Balance b/ d, 2,050 By Audit fees, 2,500, To Subscriptions, 20,500 By Rent, 1,800, To Donation, 2,500 By Maps and charts, 3,400, To Interest on Govt., 850 By Stationery and postage, 250, Bonds, By Salary, 8,000, By Functions, 1,050, By Balance c/ d, 8,900, 25,900, 25,900, , Dr., , Adjustments:, 1) Audit fees ₹ 2,500 still due, 2) Charge ₹ 250 as depreciation on furniture., 3) Half of the donation is to be Considered as revenue., 4) Outstanding Subscriptions ₹2,000 and subscriptions received in advance ₹1,500., 5) Salary prepaid ₹ 2,500, Prepare: i) Income and Expenditure Account and, ii) Balance Sheet as on 31-03-2018., , 6|Page

Page 11 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , Solution:, , Income and Expenditure Account, Dr., For the year ending 31-03-2018, ₹, Expenditure, Incomes, To Audit Fees, 2,500, By Subscriptions, Less: O/s Audit fees, Previous year, Add: O/s Audit Fees., Current year, , 2,500, Nil, , 2,500, , To Rent, To Stationary & postage, To Salary, To Functions, To Depreciation on Furniture, To Surplus (Excess income, , 2,500, , Cr., , 20,500, Less: O/s Subscription of 1,000, Previous year, 19,500, Add: O/s Subscription, 2,000, Current year, 21,500, , 1,800 Less: Subscription Received, In Advance, 1,500, 250, 8,000 By Donation (2,500x50/100), 1,050 By Interest on Govt Bonds 850, 250 Add: O/s Interest on Govt bonds 700, (31,000x2/100 = 1,550 -850), 8,950, , over the expenditure), , 22,800, , ₹, , 20,000, 1,250, 1,550, 22,800, , Balance Sheet As on 31-03-2018, , Liabilities, Capital Fund, 36,400, Add: Surplus, 8,950, 45,350, Add Donation, 1,250, (2,500x50/100), , O/S Audit Fees, Subscription received in, Advance, , ₹, , Assets, Cash in Hand, Maps & Charts, Add: Purchase, , 46,600 5% Govt Bonds, , Add: O/s Interest, , 2,500 Furniture, , Less: Depreciation, , 1,600, 3,400, 31,000, 700, 3,250, , 1,500 O/s Subscription current year, 50,600, , 250, , ₹, 8,900, 5,000, 31,700, 3,000, 2,000, 50,600, , 2. Followings are the Balance Sheet and Receipt & Payment Account of Golden Sports Club,, Vijayapura., Balance Sheet as on 31-03-2017, Liabilities, ₹, Assets, ₹, Outstanding salary, 7,000 Cash in hand, 15,500, Pre-received Subscriptions, 4,000 Sports Materials, 35,000, Capital Fund, 1,50,500 Furniture, 21,000, Land and Buildings, 90,000, 1,61,500, 1,61,500, , 7|Page

Page 12 :
Accountancy II PUC, , Dr., , Mysuru District P U Commerce Forum, , Receipts and payment A/c for the year ending 31-03-2018, , Receipts, To Balance b/ d, To Subscriptions, To Entrance Fees, To Sale of old newspaper, To Sports Fees, , ₹, 15,500, 52,000, 6,000, 3,000, 9,500, , 86,000, , Payments, By Salary, By Sports materials (1-102017), By Investments, By Postage, By Electricity charges, By Up- keep of grounds, By Balance c/ d, , Cr., ₹, 25,000, 18,000, 15,000, 400, 1,600, 6,500, 19,500, 86,000, , Adjustments:, a) Outstanding subscriptions for 2018 ₹ l,000, b) Outstanding salary as on 31-03-2018 ₹ 5,000, c) Half of the Entrance fees are to be capitalized., d) Depreciate sports materials @ 20% per annum, Prepare: i) Income and Expenditure account for the year ending 31-03-2018 and, ii) Balance Sheet as on that date, Solution:, Income and Expenditure Account, Dr., For the year ending 31-03-2018, Cr., ₹, ₹, Expenditure, Incomes, To Salary, 25,000, By Subscriptions, 52,000, Add: Pre-received Sub., 4,000, Less: O/s Salary, 7,000, Previous year 18,000, Previous year, 56,000, Add: O/s Salary, 5,000 23,000, Add: O/s Subscription, 1,000, Current year, Current year, 57,000, To Postage, 400 By Entrance fees, 3,000, (6,000x1/2)), To Electricity Charges, 250, 3,000, To Up-keep of ground, 6,500 By Sale of old newspaper, By Sports Fees, 9,500, To Depreciation of sports, Materials, 1) 35,000 x 20/100 =, 7,000, 2) 18,000 x 20/100 x 6/12 = 1,800, 8,800, To Surplus (Excess income, over the expenditure), , 32,200, 72,500, , 72,500, 8|Page

Page 13 :
Accountancy II PUC, , Balance Sheet As on 31-03-2018, , Mysuru District P U Commerce Forum, , ₹, Liabilities, Assets, Capital Fund, 1,50,500, Cash in Hand, Add: Surplus, 32,200, Sport Materials, 1,82,700, Add: Purchase, Add: Entrance Fees, 3,000 1,85,700, (6,000x1/2), , O/S Salary, , Less: Depreciation, , 5,000 Furniture, Land & Buildings, Investments, O/s Subscriptions, , 35,000, 18,000, 53,000, 8,800, , 1,90,700, , ₹, 19,500, , 44,200, 21,000, 90,000, 15,000, 1,000, 1,90,700, , 3. Followings are the Balance Sheet and Receipt and Payment Account of Malnad Sports, Club, Chikkamagaluru, Balance Sheet as on 31-03-2017, Dr., Cr., Liabilities, ₹, Assets, ₹, Outstanding salary, 3,200 Cash at Bank, 52,400, Pre-received Subscriptions, 4,000 Outstanding Subscription, 4,800, Outstanding Rent, 800 Investment, 21,000, Capital Fund, 1,30,800 Sports Materials, 43,600, Furniture, 32,800, 1,38,800, 1,38,800, , Dr., , Receipts and payment A/c for the year ending 31-03-2018, Receipts, , To Balance b/d, To Subscriptions:, 2016-17, 2017-18, 2018-19, To Donations, To Entrance Fees, To Interest, To Sale of old sports, , ₹, , Payments, , 52,400 By Rent:, 4,800, 90,200, 4,200, 32,400, 65,200, 2,800, 2,000, 2,54,000, , 2016-17, 2017-18, By Salary 2016-17, 2017-18, 2018-19, By Printing, By General Expenses, By Furniture (31-03-2018), By Sports Materials, By Balance c/d, , Cr., ₹, , 800, 8,800, 3,200, 46,400, 2,400, 15,200, 10,800, 48,000, 57,600, 60,800, 2,54,000, 9|Page

Page 14 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , Adjustments:, a. Subscriptions outstanding ₹ 5,600., b. Printing unpaid ₹ 1,000., c. Interest accrued ₹ 800., d. Depreciate furniture by 10% and sports materials by 10%., e. Capitalize 50% of donations., Prepare: (i) Income and Expenditure account and (ii) Balance Sheet as on 31-03-2018., Solution:, Income and Expenditure Account, Dr., For the year ending 31-03-2018, Cr., ₹, ₹, Expenditure, Incomes, To Rent, 8,800 By Subscriptions, 90,200, To Salaries, 46,400, Add: O/s Subscription of 5,600, To Printing, 15,200, Current year, 95,800, Add: Subscription Received, Add: Printing unpaid 1,000 16,200, To General Expenses, 10,800, in Advance 2016-17 4,000, 99,800, To Depreciation on Furniture, 1) 32,800x10/100, 3,280 By Donation (32,400x50/100) 16,200, By Entrance Fees, 65,200, To Depreciation on Sports, By Interest, 2,800, Materials, Add: Interest Accrued, 800, 3,600, 1) 43,600x10/100 =, 4,360, 2) 57,600x10/100x6/12 =2,880, 2,000, 7,240 By Sale of old sports, Materials, To Surplus (Excess of income, over the expenditure), 94,080, 1,86,800, 1,86,800, Note: Furniture purchased on end of the Accounting period, hence depreciation is nil, Balance Sheet As on 31-03-2018, , Liabilities, Capital Fund, 1,30,800, Add: Surplus, 94,080, Add: Donation, , (32,400x50/100), , ₹, , 16,200 2,41,080, , Printing unpaid, Subscription Received in, Advance (2018-19), , 1,000, 4,200, , 2,46,280, , Assets, Cash in Bank, Investments, Sports Materials, , ₹, 60,800, 5,200, , 43,600, Add: Purchased, 57,600, 1,01,200, Less: Depreciation, 7,240, 93,960, Furniture, 32,800, Add: Purchased, 48,000, 80,800, Less: Depreciation, 3,280 77,520, O/s Standing subscription, 5,600, Interest accrued, 800, Prepaid Salary, 2,400, 2,46,280, 10 | P a g e

Page 15 :
Accountancy II PUC, , II., , Mysuru District P U Commerce Forum, , Preparation of Income and Expenditure Account and Balance Sheet when, Opening Balance Sheet is not Given, , 4. From the following Receipt and Payment Account and information given below,, prepare Income and Expenditure Account and the Balance Sheet of Adult Literacy, Orgnisation as on March 31, 2018, Receipt and Payment A/C for the year ending 31-03-2017, Dr., Cr., Receipts, Payments, ₹, ₹, , To Cash in Hand (1-1-2017), To Subscriptions, To Donation, To Sale of furniture, (Book value 6,000), To Entrance Fees, To Life Membership Fees, To Interest on, Investments (5% P.A.), , Additional information:, , 6,800, 60,200, 3,000, 4,000, , 800, 7,000, 5,000, 86,800, , By Salaries, By Traveling Expenses, By Stationery, By Rent, By Repairs, By Books purchased, By Building purchased, By Cash in hand, (31-12-2017), , Particulars, As on 01-01-2017, l) Subscriptions received in advance, 1,000, 2) Outstanding subscriptions, 2,000, 3) Stock of stationery, 1,200, 4) Books, 13,500, 5) Furniture, 16,000, 6) Outstanding rent, 1,000, 7) Investments, 1,00,000, , Solution:, , 24,000, 6,000, 2,300, 16,000, 700, 6,000, 30,000, 1,800, , 86,800, , As on 31-12-2017, 3,200, 3,700, 800, 16,500, 8,000, 2,000, 1,00,000, , Balance Sheet as on 1-01-2017, , Liabilities, Pre-received Subscriptions, Outstanding Rent, Capital Fund, (Balancing Figure), , ₹, 1,000, 1,000, 1,37,500, , 1,39,500, , Assets, Cash in hand, Outstanding Subscription, Stock of Stationery, Books, Furniture, Investment, , ₹, 6,800, 2,000, 1,200, 13,500, 16,000, 1,00,000, 1,39,500, 11 | P a g e

Page 16 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , Income and Expenditure Account, Dr., For the year ending 31-12-2017, Cr., ₹, ₹, Expenditure, Incomes, To Salaries, 24,000 By Subscriptions, 60,200, To Travelling expenses, 6,000, Less: O/s Subscription, 2,000, To Stationery, 2,300, Previous year, 58,200, Purchased, Add: O/s Subscription of 3,700, Add: Opening stock 1,200, Current year, 61,900, Add: Subscription received, of stationery 3,500, Less: Closing stock of 800, 2,700, In Advance (2017), 1,000, Stationery, 62,900, Less: Subscription received 3,200 59,700, To Rent, 16,000, In advance (2018), Less: O/s Rent of P/y 1,000, 15,000, 3,000, Add: O/s Rent of C/y, 2,000 17,000 By Donation, Entrance, Fees, 800, To Repairs, 700, 5,000, To Loss on Sale of Furniture, 2,000 By Interest on Investment, (6,000 - 4,000), To Depreciation on Books, 3,000, To Depreciation on Furniture, 2,000, To Surplus (Excess income, over the expenditure), 11,100, 68,500, 68,500, Balance Sheet As on 31-03-2018, , ₹, Liabilities, Assets, Capital Fund, 1,37,500, Cash in Hand, Add: Surplus, 11,100, Stock of Stationery, 1,48,600, Buildings, Add: Life Membership Fees 7,000 1,55,600 Books, O/S Rent, 2,000 Furniture, Subscription received in, Investment, Advance, 3,200 O/s Subscription, 1,60,800, Working Note: 1, Depreciation on Books, Opening stock of Books 13,500, Add: Book Purchased, 6,000, 19,500, Less: Closing stock of 16,500, Books, , Depreciation on books = 3,000, , ₹, 1,800, 800, 30,000, 16,500, 8,000, 1,00,000, 3,700, 1,60,800, , Depreciation on Furniture, Opening stock of Furniture, 16,000, Less: Furniture Sold, 6,000, 10,000, Less: Closing stock of, 8000, Furniture, , Depreciation on Furniture, , = 2,000, 12 | P a g e

Page 17 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , 5. From the following Receipt and Payment Account of a club, prepare Income and, Expenditure Account for the year ended March 31, 2018 and the Balance Sheet as on that, date., Receipt and Payment A/C for the year ending 31-03-2017, Dr., Cr., Receipts, , ₹, , To Balance b/ d, To Subscription:, 2016-17, 2,000, 2017-18, 70,000, 2018-19, 3,000, To Sale of old books, (costing ₹ 2,300), To Rent from use of Hall, To Sale of Newspapers, To Profit from, entertainment, , Payments, , 3,500 By General Expenses, By Salary, By Postage, By Electricity charges, 75,000 By Furniture, 2,000 By Books, By Newspapers, 17,000 By Meeting expenses, 400 By T.V. set bought, By Balance c/d, 7,300, 1,05,200, , ₹, , 900, 16,000, 1,300, 7,800, 26,500, 13,000, 600, 7,200, 16,000, 15,900, 1,05,200, , Additional information:, a) The club has 100 members each paying an annual subscription of ₹ 900., Subscriptions outstanding on March 31, 2017 were ₹ 3,600., b) On March 31, 2018 salary outstanding amounted to ₹ 1,000, Salary paid included ₹, 1,000 for the year 2016-17, c) On April 1, 2018, the club owned the Land and Buildings ₹ 25,000, Furniture ₹ 2,600, and Books ₹ 6,200, Solution:, Liabilities, O/s Salary, Capital Fund, (Balancing Figure), , Balance Sheet as on 1-04-2017, ₹, Assets, 1,000 Cash at Hand, 39,900 O/s Subscription, Land & Buildings, Furniture, Books, 21,500, , ₹, 3,500, 3,600, 25,000, 2,600, 6,200, 21,500, , 13 | P a g e

Page 18 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , Income and Expenditure Account, Dr., For the year ending 31-03-2018, ₹, Expenditure, Incomes, To General Expenses, 900 By Subscriptions, 70,000, To Salary, 16,000, Less: O/s Subscription of P/y 3,600, 66,400, Less: O/s Salary, 1,000, Previous year 15,000, Add: O/s Subscription of P/y2,000, Add: O/s Salary, 1,000 16,000, Received in current Year 68,400, Current year, , To Postage, To Electricity Charges, To News papers, To Meeting expenses, To Loss on Sale of old Books, (2,300 – 2000), To Surplus (Excess income, over the expenditure), , 1,300, 7,800, 600, 7,200, , Add: O/s Subscription of, Current Year (W.N), , Cr., ₹, , 20,000, 88,400, , Add: O/s Subscription of p/y, , Still in current year (W.N)1,600, , By Rent from Use of Hall, 300 By Sale of newspaper, By profit from entertainment, 80,600, 1,14,700, , 90,000, 17,000, 400, 7,300, 1,14,700, , Balance Sheet As on 31-03-2018, , ₹, Liabilities, Assets, Capital Fund, 39,900, Cash in Hand, Add: Surplus, 80,600 1,20,500 Furniture, Subscription Received in, 3,000 Add: Purchase, Advance, Books, O/S Salary, 1,000 Add: Purchase, , 2,600, 26,500, 6,200, 13,000, 19,200, 2,300, , ₹, 15,900, 29,100, , Less: Sale of old books, 16,900, T.V. Set, 16,900, O/s Subscription C/y 20,000, Add: O/s Subscription of P/y 1,600 21,600, 1,24,500, 1,24,500, Working Note:, , Calculation of O/s Subscription of Current Year, Total Subscription Receivable 100 x 900 =, 90,000, Less: Subscription received in Current year 70,000, Outstanding subscription in current year 20,000, , O/s Subscription of Previous year, still O/s in Current year, O/s in Previous year, 3,600, Less: Previous year O/s, Received in Current year 2,000, Balance of o/s in current year 1,600, , 14 | P a g e

Page 19 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , 6. Receipt and Payment Account of Shankar Sports Club is given below Prepare Income, and Expenditure Account for the year ending 31-03-2018, , Dr., , Receipt and Payment A/C for the year ending 31-03-2018, Receipts, , To Cash in Hand, To Entrance fees, To Donation for Buildings, To Locker Rent, To Life Membership Fees, To Profit from, entertainments, To Subscriptions, , ₹, , Payments, , By Rent, By Wages, By Billiard table, By Furniture, By Interest, By Postage, 3,000 By Salary, 40,000 By Cash in hand, 80,000, 2,600, 3,200, 23,000, 1,200, 7,000, , Cr., ₹, , 18,000, 7,000, 14,000, 10,000, 2,000, 1,000, 24,000, 4,000, 80,000, , Additional information:, (a) Subscription outstanding on March 31, 2017 is ₹1,200 and ₹ 2,300 on March 31, 2018., Opening stock of postage stamps is ₹ 300 and closing stock is ₹ 200., (b) Rent ₹1,500 related to 2016-17 and ₹ 1,500 is still unpaid., (c) On April 1, 2017, the club owned furniture ₹ 15,000 and Furniture valued at ₹ 22,500, on March 31, 2018., (d) The club took a loan of ₹ 20,000 @10 p.a. for the year 2016-17., , Solution:, Liabilities, Rent Unpaid, Loan @10% P.a., , Balance Sheet as on 1-04-2017, ₹, Assets, 1,500 Cash at Hand, 20,000 Outstanding Subscription, Stock of postage Stamp, Furniture, Capital Fund (Deficit), (Balancing Figure), 21,500, , ₹, 2,600, 1,200, 300, 15,000, 2,400, 21,500, , 15 | P a g e

Page 20 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , Income and Expenditure Account, Dr., For the year ending 31-03-2018, ₹, Expenditure, Incomes, To Rent, 18,000, By Subscriptions, Less: O/s Rent of P/Y, , 40,000, Less: O/s Subscription of 1,200, Previous year, 38,800, Add: O/s Subscription of 2,300, , 1,500, , 16,500, Add: O/s Rent of C/y 1,500 18,000, Current Year, To Wages, 7,000, To Interest, 2,000 By Entrance fees, By Locker Rent, To Postage(Purchased), 300, By Profit from Entertainment, Add: Purchase of postage 1,000, By Deficit (Excess of expenditure, 1,300, Over income), Less: Closing stock of 200, 1,100, , Cr., ₹, , 41,100, 3,200, 1,200, 3,000, 6,100, , Postage, , To Salary, To Depreciation on Furniture, , 24,000, 2,500, 54,600, , 54,600, , Balance Sheet As on 31-03-2018, , Liabilities, Loan (10% P.A.), Donation for Building, O/S Rent, , ₹, 20,000, 23,000, 1,500, , Assets, Cash in Hand, Billiard table, Furniture, Postage of stamps, O/s Subscription, Capital Fund (Debit Balance) 2,400, Add: Deficit of current year 6,100, 8,500, Less: Life Membership fees 7,000, , ₹, 4,000, 14,000, 22,500, 200, 2,300, , 1,500, 44,500, , 44,500, Note: When Deficit Capital Fund along with deficit in income & Expenditure A/c, it should be, shown in Balance sheet Assets Side., , Working Note: 1, Depreciation on Furniture, Opening stock of Furniture, 15,000, Add: Furniture (purchased), 10,000, 25,000, Less: Closing stock of, 22,500, Furniture, , Depreciation on Furniture = 2,500, ***END***, 16 | P a g e

Page 21 :
Accountancy II PUC, , BOOK-1, CHAPTER – 2, , Mysuru District P U Commerce Forum, , ACCOUNTING FOR PARTNERSHIP: BASIC CONCEPTS, Section A : One mark questions :, I. Fill in the blank questions:, 1. Section 4 of Indian Partnership Act, 1932 defines Partnership, 2. A partnership has no separate Legal entity., 3. In order to form a partnership, there should be at least 2 persons., 4. Partnership is the result of Agreement between two or more persons to do business and share, its profits and losses., 5. It is preferred that the partners have a Written agreement, 6. The agreement should be to carry on some Lawful business., 7. Each partner carrying on the business is the principal as well as the for all other partners agent, 8. The liability of a partner for his acts is unlimited, 9. In the absence of partnership Deed interest on advance from Partner will be charged @ 6%, percentage per annum., 10. Under fixed capital method, the capitals of the partners shall remain fixed., 11. Under fluctuating Capital Method, the partners capital account balances Change from time to, time., 12. Profit and Loss Appropriation Account is merely an extension of Profit/Loss Account of firm., 13. Profit and loss Appropriation Account………………………….Dr, To Interest on capital Account., (Transferring interest on capital to P/L appropriation A/c), , xxx, ---, , --xxx, , 14. Profit/Loss Appropriation Account………………………….Dr, To Salary to Partners account, (Transferring partner’s salary to P/L Appropriation A/c)., , xxx, ---, , --xxx, , 15. Profit/Loss Appropriation A/c………………………………….Dr, To partners’ Capital/Current A/c., (Profit shared & transferred), , xxx, ---, , --xxx, , 16. When fixed amounts is withdrawn at the end of every month, interest on the total amount for, the year ending is calculated for 5½ months., 17. Under fluctuating capital method, all the transactions relating to partners are directly recorded, in the partners capital accounts, 18. Under fixed capital method, the amount of capital remains same fixed, 19. Under fixed capital method, all the transactions relating to a partner are recorded in a separate, account called partners current Account., 17 | P a g e

Page 22 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , 20. There is not much difference in the final accounts of a sole proprietary concern and that of a, partnership firm, , II. Multiple Choice Questions:, 1. The agreement between the partner should be in :, a)Oral, b)Written, c) Oral or Written, 2., , Partnership deed contains :, a) Name of firm, c) Profit and loss sharing ratio, , d) None of the above, , b) Name and address of the part, , d) All of the above, , 3., , If any partner has advanced some money to the firm beyond the amount of his capital, he shall, be entitled to get interest on the amount at the rate of :, a) 5% p.a., b) 6% p.a., c) 8% p.a, d) None of the above, , 4., , Interest on capital is generally provided for in that situations when:, a) The partners contribute unequal amounts of capital but share profits equally., b) The capital contribution is same but profit sharing is unequal, , c) both the situations above., d) None of the above., , 5., , When fixed amount is withdrawn on the first day of every month, interest on total amount for, the year ending will be calculated for:, a) 2 &1/2 months, b) 4 &1/2 months, c) 6 &1/2 months, d) None of the above, , 6., , When varying amounts are withdrawn at different intervals, the interest is calculated using:, a) Simple Method, b) Average Method, c) Product Method, d) None of the above, , 7., , Adjustment for correction of omission and commission can be made:, a) Profit and loss Adjustment account, b) Directly in the Capital Accounts of concerned partners, c) Both the situations above., d) None of the above, , 8., , In order to form a Partnership there should be at least:, b) Two persons, a) One person, c) Seven persons, d) None of the above, , 9. The business of a partnership concern may be carried on by:, a) All the partners, b) Any of them acting for all, c) All Partners or any of them acting for all, d) None of the above, 10. The agreement between Partners must be to share:, a) Profits, b) Losses, c) Profits and losses, , d) None of the above, 18 | P a g e

Page 23 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , 11. The liability of a Partner for acts of the firm is:, a) Limited, b) Unlimited, c) Both the above., d) None of the above, , 12. The partnership Deed should be properly drafted and prepared as per the provisions of the:, a) Partnership Act., b) Stamp Act, c) Companies Act, d) None of the above, 13. The clauses of Partnership Deed can be altered with the consent of:, a) Two Partners, b) Ten Partners, c) Twenty Partners, d) All the Partners, III. True or False Questions:, 1. The agreement between partners must be in writing. False., 2. The clauses of partnership deed can be altered with the consent of all the Partners. True, 3. If the partnership deed is silent about the profit sharing ratio, the profit and loss of the firm is, to be shared equally. True, 4. A partner is entitled to claim interest at the rate of 10% p.a. on the amount of capital contributed, by him, if there is no agreement in the firm. False, 5. In the absence of Partnership Deed, no partner is entitled to get salary. True, 6. Under fixed capital method the Partner's Capital Accounts will always show a credit balance., True, 7. P/L Appropriation A/c shows how the profits are appropriated among the partners. True, 8. When fixed amount is withdrawn during the middle of every month, interest on total amount, is calculated for 6 months: True, 9. lf there is loss, no interest on capital is to be paid to partners, even if there is a provision in, Partnership Deed: True, 10. Accounting treatment for Partnership is similar to that of a sole Proprietorship Business: True, 11. There are two methods by which the capital accounts of partners can be ' maintained: True, 12. Profit and Loss appropriation account is merely an extension of the Profit and Loss Account of, a firm: True, 13. Interest on partners’ capital is debited to Partners' Capital Accounts: False, 14. In case of Guarantee of profit to a partner, assurance may be given by only one partner: True, , IV. Very Short Answer Questions:, , 1. Who is a Partner?, Ans. The persons who have entered into partnership with one another are individually called, partner, 2. What do you mean by Partnership Firm?, Ans. The persons who have entered into partnership with one another are collectively called, partnership firm, 19 | P a g e

Page 24 :
Accountancy II PUC, , 3. State any one features of Partnership., Ans.1) Agreement, 2) Two are persons, , Mysuru District P U Commerce Forum, , 4. What is the minimum number of partners in a firm?, Ans. 2 partners, 5. Name any one contents of Partnership Deed., Ans. a) Name and address of the firm or, , b) Name and address of partners, , 6. Name any one method of maintaining capital accounts of Partners., Ans. Fixed capital system., 7. Name any one final accounts of partnership firm., Ans. Profit/Loss account, & Balance sheet etc., 8. How do you distribute profit or loss among the partners in the absence of partnership deed?, Ans. Equally, 9. Why the Profit and Loss Appropriation account is prepared?, Ans. Profit and Loss Appropriation a/c is prepared to appropriate profits among partners, 10. At what rate Interest on advances by Partners is to be paid as per Partnership Act?, Ans. 6% P.a., 11. When interest is charged on partners drawings?, Ans. Interest on drawings in charged when there is a provision in agreement among the, partners about it., 12. When Partners Current Accounts are prepared in partnership firms?, Ans. Partners’ Capital accounts are maintained under fixed capital system., 13. State any one special aspect of partnership accounts., Ans. Maintenance of partners’ capital accounts under, 14. When the Current Accounts of Partners are opened?, Ans. Current accounts are opened when the firm decides to follow fixed capital system, 15. Under fluctuating capital method, how many accounts are maintained for each partner?, Ans. Only one account i.e. capital Accounts, 16. State any one feature of fluctuating capital method., Ans. Capital balance changes year after year for each partner, 17. State any one situation in which provision of payment of interest on capital to partner is, made., Ans. 1) where the capital contribution is same but profit sharing is unequal, 18. Find out Interest at 8% p.a. on capital of Rs.50,000 for 9 months., Ans. Interest = 50,000 X 8/100 X 9/12 = ₹ 3,000, 19. Which is the suitable method for calculation of Interest on drawings, when fixed amount is, withdrawn every month?, Ans: Average period method or short cut method, 20. Give one example for past adjustment?, Ans. Omission of interest on partners’ capital, 20 | P a g e

Page 25 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , Section B: Two Marks questions:, , 1. What is Partnership?, Ans. when two or more persons join hands to set up business and share its profits and, losses is called partnership., 2. Define Partnership?, Ans: According to section 4 Indian partnership act, “partnership is the relation between, persons who have agreed to share the profits of a business carried on by all or any of them, acting for all”, 3. State any two features of Partnership., Ans: a) Agreement, b) Two or more persons, 4. What is Partnership Deed?, Ans: Partnership deed is the written agreement containing terms of partnership and stamped, as per stamp Act and signed by all the partners., 5. What are the methods of maintaining capital account of partners?, a) Fixed capital method and, b) Fluctuating capital method, 6. What is fixed capital method?, Ans: Fixed capital method is followed to have capital balances same year after year. So, capital accounts and current Accounts are prepared to separate adjustments from capital, 7. What is fluctuating capital method?, Ans: Fluctuating Capital method is followed to have all adjustments in only one A/c as, partners capital A/C. So, the balances would change year after year, 8. State any two differences between fixed and fluctuating capital methods., Ans:, Key points, Fixed, Fluctuating, 1. Accounts involved, a) Capital A/c b) Current A/c, Capital A/c, 2. Adjustments, Adjustments are recorded in, Adjustments & balances are, current A/c, taken together, 9. What do you mean by Profit and Loss Appropriation Account?, Ans: Profit/Loss appropriation Account is merely an extension of Profit/Loss account of, the partnership firm. It shows how the profit appropriated among the partners, 10. What is guarantee of profit to a partner?, Ans: Partner will be admitted sometimes with a guarantee of certain minimum. Amount by, way of his share of profits of the firm such a situation is called as guarantee of profit., 11. What do you mean by past adjustments?, Ans: past adjustments are the adjustments to be made in respect of Omission or errors in the, recording of transactions / preparation of final accounts of partnership firm., 12. State any two final accounts of a Partnership firm., Ans: a) Profit and loss Account, b) Balance sheet, 21 | P a g e

Page 26 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , 13. In the absences of partnership deed, specify the rules relating to the followings:, a. Sharing of profit and losses, b. Interest on partners’ capital, Ans: a) Sharing of profits and losses – Equally, b) Interest on partners’ capital – Not to be allowed, 14. State the rules relating to the followings in the absence of Partnership Deed:, a. Interest on drawings, b. Interest on advances from Partners., Ans: a) Interest on drawings – Not to be charged, b) Interests on advances from partners – at 6% p.a., , 15. Name any two methods for calculation of Interest on drawings., Ans: 1) Product method, 2) Average period method, 16. When the Interest on drawings is generally provided to partners?, Ans: Interest is provided as per the terms of the partnership deed., 17. How do you close Profit and Loss Appropriation Account in Partnership?, Ans: By transferring the profit or loss on appropriation to partners capital Accounts, 18. State any two special aspects of Partnership Accounts., Ans: 1) Maintenance of partner’s capital account, 2) Distribution of profit and loss among the partners, 19. Name any two contents of Partnership Deed., Ans. 1) Name & address of partners, , 2) Date of commencement of the business, , SECTION C: SIX MARKS QUESTIONS:, Problems on Preparation of P & L Appropriation A/c, , 1. Sachin and Pratham started business in partnership on 01.04.2015 with a capital of ₹ 1,00,000 and, ₹ 80,000 respectively agreeing to Share profits and losses in the ratio of 3:2. For the year ending, 31.03.2016, they earned the profits of ₹ 36,000 before allowing:, i), Interest on capital at 5% p.a., ii) Interest on drawings: Sachin ₹ 600 and Pratham ₹ 1 ,000, iii) Yearly salary of Pratham ₹ 6,000 and commission to Sachin ₹4000., Iv] Their drawings during the year: Sachin ₹ 16,000 and Pratham ₹ 20,000., Prepare Profit and Loss Appropriation Account., Solution:, Profit and Loss Appropriation Account., Dr., For the year ended 31-03-2016, Cr., , Particulars, , To Interest on Capital, Sachin(1,00,000x 5/100) 5,000, Pratham(80,000 x 5/100) 4,000, To Pratham’s Salary, To Sachin’s Commission, To Partners’ Capital A/c, Sachin - 18,600X 3/5, 11,160, Pratham – 18,600X 2/5, 7,440, , ₹, , Particulars, , ₹, , By profit & loss A/c (Net profit b/d) 36,000, By Int. on drawings, 9,000, Sachin, 600, 6,000, Pratham, 1,000 1,600, 4,000, 18,600, 37,600, , 37,600, 22 | P a g e

Page 27 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , 2. Shiva and Basava are partners sharing profits in the ratio of 2: 1 with capitals of ₹ 25,000 and ₹, 15,000 respectively. Interest on capital is agreed @ 6% p.a. Basava is to be allowed an annual salary, of ₹ 1,500. During the year 2015-16, they earned. The profits of ₹ 10,000. Interest on drawings, being; Shiva ₹ 1,500 and Basava ₹ 1000. Prepare Profit and Loss Appropriation Account., Solution:, Dr., , Profit and Loss Appropriation Account., For the year ended 31-03-2016, , Particulars, , ₹, , To Interest on Capital, Shiva (25,000 x 6/100), Basava (15000 x 6/100), , 15,00, 900, , To Basava’s salary, To Partners’ Capital A/c, Shiva - 8,600X 2/3, Basava – 8,600X 1/3, , 5,733, 2,867, , Particulars, , By profit & loss A/c (Net profit b/d), By Int. on drawings, 2,400, Shiva, 1,500, Basava, 1,000, 1,500, , ₹, , Cr., , 10,000, , 2,500, , 8,600, 12,500, , 12,500, , 3. X & Y are Partners commenced Partnership business on 1.1.2016 sharing profits & losses in 3:2, ratio with capitals of ₹ 1,00,000 and ₹ 80,000 respectively. They earned profits of ₹ 15,000 for, the year before allowing:, a) Interest on Capitals@ 10% p.a., b) Interest on drawings: X ₹ 1,000 & Y ₹ 800, c) Commission payable to X ₹ 2000, d) Salary payable to Y ₹ 3000, Prepare P & L Appropriate A/c for the year ending 31.12.2017., , Solution:, , Particulars, To Interest on Capital, X (1,00,000 x 10/100), Y (80,000 x 10/100), To X’s Commission A/c, To Y’s Salary A/c, , Profit and Loss Appropriation Account., For the year ended 31-03-2017, , ₹, , 10,000, 8,000, , Particulars, , ₹, , By profit & loss A/c (Net profit b/d) 15,000, By Int. on drawings, 18,000, X, 1,000, Y, 800, 1,800, 2,000, 3,000 Partners’ Capital A/c (Loss), X - 6,200 X 3/5, 3,720, Y – 6,200 X 2/5, 2,480 6,200, 23,000, 23,000, 23 | P a g e

Page 28 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , PROBLEMS ON CALCULATION OF INTEREST ON DRAWINGS, , 1. Yasashviand Tapashvi are partners in a firm: During the year ended on 31st March 2016, Yasashvi, makes the drawings as under:, Date of Drawings, , ₹, , 01.08.2015, 5,000, 31.12.2015, 10,000, 31.03.2016, 15,000, Partnership Deed provided that partners are to be charged interest on drawings @ 12% p.a. Calculate, the interest on drawings of Yasashvi under Product Method., Solution:, Calculation of Interest on drawings, Date of Drawings, ₹, No. of O/s Months, Product, 01-08-2015, 5,000, 8, 40,000, 31-12-2015, 10,000, 3, 30,000, 31-03-2016, 15,000, 0, 0, Total, 70,000, Interest on Drawings = Total Product x Rate x, , 1, , 12, 12, , 1, , Yashasvi’s Interest on drawings = ₹ 70,000 X100 X 12 = ₹ 700., , 2. Sahana and Saniya are partners in firm. Sahana's drawings for the year 2016-17 are given as, under:, ₹ 4,000 on 01.06.2016, ₹ 6,000 on 30.09.2016, ₹ 2,000 on 30.11.2016, ₹ 3,000 on 01.01.2017, Calculate interest on Sahan's drawings at 8% p.a. for the year ending on 31.03.2017, under, product method., Solution:, Date of Drawings, 01-06-2016, 30-09-2016, 30-11-2016, 01-01-2017, , Calculation of Interest on drawings, ₹, No. of O/s Months, 4,000, 10, 6,000, 6, 2,000, 4, 3,000, 3, Total, , Interest on Drawings = Total Product x Rate x, Sahana’s Interest on drawings = ₹.93,000, , 1, , 12, 8, 1, 𝑋𝑋 100 𝑋𝑋 12, , Product, 40,000, 36,000, 8,000, 9,000, 93,000, , = Rs.620, , 3. Murthy and Patil are partners in a firm sharing profits and losses in the ratio of 3:2. Murthy, withdraw ₹ 4,000 quarterly at the beginning of each quarter. Calculate the interest on drawings at, 9% p.a. for the year ending 31.03.2017, under product method., 24 | P a g e

Page 29 :
Accountancy II PUC, , Solution:, Date of Drawings, 01-04-2016, 01-07-2016, 01-10-2016, 01-01-2017, , Mysuru District P U Commerce Forum, , Calculation of Interest on drawings, ₹, No. of O/s Months, 4,000, 12, 4,000, 09, 4,000, 06, 4,000, 03, Total, , Interest on Drawings = Total Product x Rate x, , 1, , 12, , 9, , Murthy’s Interest on drawings = ₹ 1,20,000 𝑋𝑋 100 𝑋𝑋, , 1, 12, , Product, 48,000, 36,000, 24,000, 12,000, 1,20,000, , = ₹ 900, , 4. Calculate interest on drawings of Mr. Kamalakar @10% p.a if he withdrew ₹ 1,000 per month by, the short cut method:, (i) At the beginning of each month, (ii) At the end of each month., Solution : (i) At the beginning of each month :, , Interest on Drawings = Total Drawings x, Average period =, , 12+1, 2, , 𝟏𝟏𝟏𝟏, , =, , 𝟐𝟐, , 10, , Interest on drawings = ₹ 12,000 𝑋𝑋 100 𝑋𝑋, (ii) At the End of each month :, , 5., , 11+0, 2, , 𝟏𝟏𝟏𝟏, , =, , 𝟐𝟐, , 10, , Interest on drawings = ₹ 12,000 𝑋𝑋 100 𝑋𝑋, , 100, , 1, , x Average Period x 12, , Total drawings = ₹ 1,000 X 12 =12,000, , 13, 2, , Interest on Drawings = Total Drawings x, Average period =, , 𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅, 1, , 𝑋𝑋 12 = ₹ 650, 𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅, 100, , 1, , x Average Period x 12, , Total drawings = ₹ 1,000 X 12 =12,000, , 11, 2, , 1, , 𝑋𝑋 12 = ₹ 550, , Calculate interest on drawings of Purohit @10%p.a. if he withdrew ₹ 48,000 in year evenly., (i) At beginning of each quarter., (ii) At end of each quarter., Solution :, , (i) At beginning of each quarter:, , Interest on Drawings = Total Drawings x, Average period =, , 12+3, 2, , 𝟏𝟏𝟏𝟏, , =, , 𝟐𝟐, , 10, , Interest on drawings = ₹ 48,000 𝑋𝑋 100 𝑋𝑋, (ii) At the End of each Quarter:, 9+0, 2, , =, , 𝟗𝟗, 𝟐𝟐, , 100, , 1, , x Average Period x 12, , Total drawings = ₹ 48,000, , 15, 2, , Interest on Drawings = Total Drawings x, Average period =, , 𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅, 1, , 𝑋𝑋 12 = ₹ 3,000, 𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅, 100, , 1, , x Average Period x 12, , Total drawings = ₹ 48,000, , 10, , 9, , 1, , Interest on drawings = ₹ 48,000 𝑋𝑋 100 𝑋𝑋 2 𝑋𝑋 12 = ₹ 1,800, , 25 | P a g e

Page 30 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , PROBLEMS ON GUARANTEE OF A PROFIT, , 1. Sachin and Rahul were partners in a firm sharing profits and losses in the ratio of 3:2. They admit, Dhoni for 1/6th share in profits and guaranteed that his share of profits will not be less than ₹, 25,000. Total profits of the firm were ₹ 90,000. Calculate share of profits for each partner when the, Guarantee is given by a firm. Prepare Profit and Loss Appropriation Account., Solution:, Profit and Loss Appropriation Account., For the year ended ………………, Particulars, ₹, Particulars, ₹, To Sachin’s Capital, 45,000, By Profit & loss A/c, 90,000, (-) Deficiency Share, 6,000, 39,000, (Net profit b/d), To Rahul’s Capital, (-) Deficiency Share, , 30,000, 4,000, , To Dhoni’s Capital, (+) Deficiency Share, , 15,000, 10,000, , Working Note:, , 26,000, 25,000, 90,000, , Minimum Guarantee of profit to Dhoni, Less: Share in profit as per profit sharing ratio, (90,000X1/6), Deficiency in profit, Deficiency born by Sachin & Rahul in the ratio of 3:2, Sachin: 10,000X3/5 = 6,000, Rahul: 10,0000X2/5 = 4,000, , 90,000, ₹, 25,000, 15,000, 10,000, 10,000, , Calculation of Capital As per, New Ratio, New Ratio= 3:2:1, Total profit = ₹ 90,000, , Sachin = ₹ 90,000X3/6 =₹ 45,000, Rahul = ₹ 90,000X2/6 =₹ 30,000, Dhoni = ₹ 90,000X1/6 =₹ 15,000, , 2. Roja and Usha were partners in a firm sharing profits and losses in the ratio of 3:2. They admit Sahana, for 1/6th share in profits and guaranteed that his share of profits will not be less then ₹ 25,000. Total, profits of the firm were ₹ 90,000. Calculate share of profits for each partner when the Guarantee is given, by Roja. Prepare Profit and Loss Appropriation Account., , Solution:, Particulars, To Roja’s Capital, (-) Deficiency Share, , Profit and Loss Appropriation Account., For the year ended ………………, ₹, Particulars, 45,000, By Profit & loss A/c, (Net profit b/d), 10,000, 35,000, , To Usha’s Capital, To Sahana’s Capital, (+) Deficiency Share, Total, , ₹, 90,000, , 30,000, 15,000, 10,000, , 25,000, 90,000, , Total, , 90,000, , 26 | P a g e

Page 31 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , Working Note:, , Minimum Guarantee of profit to Dhoni, Less: Share in profit as per profit sharing ratio, (90,000X1/6), Deficiency in profit, Deficiency born by Roja, , ₹, 25,000, 15,000, 10,000, 10,000, , SECTION – E, PRACTICAL ORIENTED QUESTIONS, 1. How do you treat the following in the absence of Partnership Deed?, a) Profit Sharing Ratio, - Equal, b) Interest on Capital, , - Not Allowed, , c) Interest on Drawings, , - Not Charged, , d) Interest on advances from partners, , - Allowed At 6% p.a., , e) Remuneration to partners for firm’s work, , - No Remuneration, , 2. Write two partners current accounts under fixed capital system with 5 imaginary figures., Dr., , Particulars, To Drawings, To Interest on Drawings, To Balance c/d, , Partners Current Account, A (₹), B (₹), Particulars, 10,000 10,000 By Interest on Capital A/c, 1,000, 1,000 “ Salary A/c, 19,000, 9,000 “ P & L Appropriation A/c, 30,000 20,000, By Balance b/d, , A (₹), 10,000, 10,000, 10,000, 30,000, 19,000, , Cr., B (₹), 10,000, 10,000, 20,000, 9,000, , 3. Write two partners’ capital accounts under fluctuating capital system with 5 imaginary figures., Dr., , Particulars, To Drawings, To Interest on Drawings, To Balance c/d, , Partners Capital Account, Cr., A (₹), B (₹), Particulars, A (₹), B (₹), 10,000, 10,000 By Balance b/d, 1,00,000 1,00,000, 1,000, 1,000 By Interest on Capital A/c, 10,000 10,000, 10,000, “ Salary A/c, 119,000 1,09,000 “ P & L Appropriation A/c 10,000 10,000, 1,30,000 1,20,000, 1,30,000 1,20,000, By Balance b/d, 1,19,000 1,09,000, 27 | P a g e

Page 32 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , 4. Write Profit and Loss Appropriation Account of a firm with 5 imaginary figures., Profit and Loss Appropriation Account, Dr., For the year ended 31.03.2018, Particulars, ₹, Particulars, To Interest on Capital A/c, By Profit & Loss A/c, - Rama, 5000, [Net Profit b/d], - Krishna, 5000, 10,000 By Interest on Drawings A/c, To Salary to Rama A/c, 10,000, - Rama, 2500, To Commission to Krishna A/c 10,000, - Krishna, 2500, To Partners Capital A/c, -Rama, 10000, -Krishna, 10000, 20,000, 50,000, , Cr., ₹, 45,000, , 5,000, , 50,000, , ***END***, , 28 | P a g e

Page 33 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , BOOK - 1, CHAPTER -3, RECONSTITUTION OF A PARTNERSHIP FIRM ADMISSION OF A PARTNER, Section A: One Mark Questions, , I. Fill In The Blanks:, 1. Old Ratio is used to distribute accumulated profits and losses at the time of admission of a new, partner., 2. Profit or loss on revaluation is shared among the old partners in Old Ratio ratio, 3. Old ratio - New ratio = Sacrifice Ratio, 4. Accumulated losses are transferred to the capital accounts of the old partners at the time of, admission in their Old Ratio ratio., 5. General reserve is to be transferred to Capital accounts at the time of admission of a new, partner., 6. Goodwill brought in by new partner in cash is to be distributed among old partners in Sacrifice, Ratio, 7. If the amount brought by new partner is more than his share in capital, the excess is known as, Goodwill, 8. Asset Account is debited for the increase in the value of an asset., 9. Unrecorded asset is to be credited to Revaluation account., 10. A and B are partners sharing profits & losses equally with capitals of ₹ 45,000 each. C is, admitted for 1/3rd share and he brings in ₹ 60,000 as his capital. Hidden Goodwill is ₹ 30,000, (60,000x3 = 1,80,000) (45,000x3 = 1,50,000) Hidden Goodwill = 1,80,000-1,45,000 = 30,000, 11. Due to change in profit sharing ratio, some partners will gain in future profits while others will, loose, 12. Goodwill is an Intangible asset., 13. Goodwill account is credited for cash brought in by new partner for his share of goodwill., 14. New Profit Sharing Ratio ratio is required for sharing future profits and also for adjustment of, capitals., , II. Multiple Choice Questions:, , 1. At the time of admission of a new partner, general reserve appearing in the old balance sheet is, transferred to:, a) All Partners Capital Account, b) New Partner's Capital Account, c) Old Partners Capital Account, d) None of the above, , 2. A, B and C are partners in a firm. If D is admitted as a new partner:, a) Old firm is dissolved, b) Old firm and old partnership are dissolved, , c) Old partnership is reconstituted, d) None of the above, , 29 | P a g e

Page 34 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , 3. On the admission of a new partner, increase in the value of asset is credited to:, a) Profit and Loss Adjustment (Revaluation) Account, b) Asset Account, c) Old Partners Capital Account, d) None of the above, , 4. At the time of admission of a partner, undistributed profits appeared in the balance sheet of the, old firm is transferred to the capital accounts of:, a) Old partners in old profit sharing ratio, b) Old partners in new profit sharing ratio, c) All the partners in new profit sharing ratio, d) None of the above, 5. If new partner brings cash for his share of goodwill, goodwill is transferred to Old Partners' Capital, Account in:, a) Sacrificing ratio, b) Old profit sharing ratio, c) New profit sharing ratio, d) None of the above, 6. Which of the following are treated as reconstitution of a Partnership Firm?, a) Admission of a partner, b) Change in profit sharing ratio, c) Retirement of a partner, d) All the above, 7. Profit or Loss on revaluation is shared among the partners in the:, a) Old profit sharing ratio, b) New profit sharing ratio, c) Capital ratio, d) Equal ratio, 8. Assets and Liabilities are recorded in Balance Sheet after the admission of a partner at:, a) Original value, b) Revalued value, c) Realisable value, d) None of the above, 9. On the admission of a new partner, the increase in the value of an asset is credited to:, a) Revaluation Account, b) Asset Account, c) Old partners' Capital Account, d) None of the above, 10. Old Profit Sharing Ratio - New Profit Sharing Ratio is _________________, a) Sacrificing ratio, b) Gaining ratio, c) Both the above, d) None of the above, 11. In the absence of an agreement to the contrary, it is implied that old partners will contribute to, new partner's share of profit in the ratio of:, a) Capital, b) Old profit sharing ratio, c) Sacrificing ratio, d) Equally, 12. The balance of reserves and other accumulated profits at the time of admission of a new partner, are transferred to:, a) All partners in the new ratio, c) Old partners in the old ratio, b) Old partners in the new ratio, d) Old partners in the sacrificing ratio, 30 | P a g e

Page 35 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , 13. Goodwill raised in books at the time of admission of partner will be written off in:, a) Old profit-sharing ratio, b) New profit-sharing ratio, c) Sacrificing ratio, d) None of the above, 14. Revaluation Account is debited for the:, a) Increase in provision for doubtful debts, b) Increase in the value of building, c) Decrease in the amount of creditors, d) Transfer of loss on revaluation, , 15. A and B are partners sharing profits in the ratio of 3:1. C is admitted into partnership for 1 /4th, share. The sacrificing ratio of A and B will be:, a) Equal, b) 3:1, c) 2:1, d) 3:2, , III. True or False Type Questions:, , 1. Goodwill brought in cash by new partner is distributed among old partner in their Sacrificing, ratio. (True), 2. In case of admission of a partner, profit or loss on revaluation is transferred to Old Partners', Capital Accounts. (True), 3. Accumulated profit is transferred to all partners' capital Accounts including new partner., (False), 4. The debit balance of Profit and Loss Account shown in the assets side of the Balance Sheet, will be debited to Old Partners Capital Accounts. (True), , 5. Increase in the value of an asset is credited to Revaluation Account. (True), 6. The traditional name of 'Revaluation A/c' is 'Profit and Loss Adjustment A/c’. (True), 7. Goodwill is an intangible asset. (True), 8. Decrease in the value of liability is debited to Revaluation Account. (False), 9. Sacrifice ratio is required to distribute the cash brought by new partner among old partners for, their share of goodwill. (True), 10. Share sacrificed = Old share - New share. (True), , IV. Very Short Answer Type:, 1. What is Partnership?, Ans: According to section 4 of Indian partnership Act of 1932, partnership is defined as, “The, relationship between the persons who have agreed to share profit of business carried on by all, or any one of them acting for all”., 2. What do you mean by reconstitution of a Partnership Firm?, Ans: Reconstitution of partnership firm means any change in the existing agreement, (partnership agreement), 31 | P a g e

Page 36 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , 3. State any one reason for admission of a new partner., Ans: (a) Increase in capital, (b) Improves managerial ability, (c) Increases goodwill of firm, 4. State any one right acquired by a newly admitted partner., Ans: (a) Right to share the assets of the partnership firm, , 5. Why the NPSR is required at the time of admission of a partner?, Ans: To share the future profits of the firm by all partners. Therefore, NPSR is required at the, time of admission of partner., 6. What is Goodwill?, Ans: Goodwill refers to the reputation of a firm in respect of profit expected in future over and, above the normal profit., 7. State any one factor affecting the value of goodwill., Ans: Nature of business: Firm having stable demand is able to earn more profit with help of, goodwill., 8. What is normal profit?, Ans: Normal profit is minimum compensation that a firm receives for operating., 9. State any one method of valuation of goodwill., Ans: (a) Average profit method, (b) Super profit method, (c) Capitalization method, 10. Give the formula for sacrifice ratio, Ans: SR = OR – NR, (Sacrifice ratio) = Old ratio – New ratio, 11. Which account is to be debited to record the increase in the value of an asset?, Ans: Assets A/c needs to be debited, Asset A/c…………………………………………….Dr, xxx, --To Revaluation A/c, --xxx, (Being increased assets transferred to Revaluation A/c), 12. What is Revaluation Account?, Ans: The gain or loss on revaluation of each asset and liability is transferred to an account called, revolution account., 13. What account will be credited when there is a loss on revaluation?, Ans: Revaluation A/c is credited when there is loss on revaluation., 14. What account will be debited when the cash is brought by a new partner for his share of, goodwill?, Ans: Bank A/c needs to be debited, Bank A/c……………………………………………..Dr, xxx, --To Goodwill Ac, --xxx, 32 | P a g e

Page 37 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , 15. What is hidden goodwill?, Ans: Hidden goodwill is the excess of desired total capital of the firm over the actual combined, capital of all partners., , Section B: Two Marks Questions:, 1. When the goodwill is distributed among old partners in the sacrificing ratio?, Ans: Goodwill is distributed among old partners in the sacrifice ratio, when the goodwill is, brought in cash by new partner, 2. State any two methods of valuation of goodwill., Ans: (a) Average Profit Method, (b) Super Profit Method, 3. State any two rights acquired by a new partner., Ans: (a) Right to share the assets of partnership firm, (b) Right to share profit of partnership firm, 4. What do you mean by hidden goodwill?, Ans: Sometimes the value of goodwill is not given at time of admission of a new partner. In, such a situation, it has to be inferred from the arrangement of the capital and profit sharing ratio., 5. Pass the journal entry to write off the goodwill raised to the extent of full value., Ans: New partner’s capital A/c ………………………….. Dr., xxx, ---To Old Partner’s Capital A/c, ---xxx, [Being goodwill raised in books and written off], 6. State any two matters which need adjustments in the books of the firm at the time of admission, of a new partner., Ans: Matters which need adjustments in books of the firm at time of admission of new partner, are:,  Goodwill,  Revaluation of assets and liabilities,  Capital of old partners,  Reserves ad other accumulated profits or losses., 7. What is sacrifice ratio?, Ans: The ratio in which existing partners contribute to share of profit payable to the new/, incoming partner is called sacrifice ratio., (Sacrifice ratio = Old ratio – New ratio), OR, Sacrifice ratio is ratio in which old partner surrender their part of share of profit to new partner, on account of admission of partner., 8. Why the sacrifice ratio is calculated?, Ans: Sacrifice ratio is calculated to distribute the goodwill brought in cash by new partner., 33 | P a g e

Page 38 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , 9. What is the need for the revaluation of assets and liabilities on the admission of a partner?, Ans: It is always desirable to ascertain whether the assets of firm shown in books at current, value. In case the asset and liabilities may be overstated or understated there may also be some, unrecorded assets and liabilities., 10. State any two reasons for admitting a new partner., Ans: (a) Increase in capital, (b) Improves managerial ability, (c) Increases goodwill of firm, 11., , How do you close revaluation account when there is a profit?, Ans: If there is profit in revaluation A/c it shows credit balance and the balance or profit in, transferred to capital A/c of old partners using old ratio., , 12., , State any two factors which determine the goodwill of the firm., Nature of business: Firm having stable demand is able to earn more profit with help of, goodwill., Location: Business must be centrally located at a place having heavy consumer traffic., , 13., , What is average profit method of valuation of goodwill?, Ans: Under this method goodwill will be calculated on the basis of average profit of past few, years and also considering multiplying factor., Average profit =, , 𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇 𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝 𝑜𝑜𝑜𝑜 𝑔𝑔𝑔𝑔𝑔𝑔𝑔𝑔𝑔𝑔 𝑛𝑛𝑛𝑛.𝑜𝑜𝑜𝑜 𝑦𝑦𝑦𝑦𝑦𝑦𝑦𝑦𝑦𝑦, 𝑁𝑁𝑁𝑁.𝑜𝑜𝑜𝑜 𝑦𝑦𝑦𝑦𝑦𝑦𝑦𝑦𝑦𝑦, , 14., , Goodwill of the firm valued at two years purchase of the average profit of last four years. The, total profits for last four years is ₹. 40,000. Calculate the goodwill of the firm., Ans: Goodwill = Average profit × No. of year purchase, 𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇 𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝 40,000, Average profit =, =, = 10,000, 𝑁𝑁𝑁𝑁.𝑜𝑜𝑜𝑜 𝑦𝑦𝑦𝑦𝑦𝑦𝑦𝑦, 4, Goodwill = 10,000 × 2 = Rs. 20,000, , 15., , Pass the journal entry for increase in the value of building on the admission of a partner., Ans: Building A/c………………………………….Dr, xxx, --To Revaluation A/c, --xxx, [Being increase in value of building], , 16., , Pass the journal entry for the decrease in the value of a liability., Ans: Liability A/c, Dr, To Revaluation A/c, [Being decrease in value of liability], , xxx, ---, , --xxx, , 34 | P a g e

Page 39 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , PROBLEM ON CALCULATION OF NPSR AND SR, , Problems on calculation of New profit sharing Ratio:, 1. Anil and Vishal are partners sharing profits in the ratio of 3:2. They admitted Sumit as a new, partner for 1/5th share in future profits of the firm. Calculate new profit sharing ratio of Anil,, Vishal and Sumit., , Solution:, , Hint :, NPSR = Remaining share× Old Ratio, New Ratio = ?, 4 3 12, Anil = × =, New Partner Share = 1/5, 5 5 25, Old Ratio = 3:2, 4 2, 8, Vishal = × =, Remaining share = 1 – New partner share, 5 5 25, 1, 1 5, 5, = 1−, Sumit = × =, 5, 5 5 25, 4, 12 8 5, Remaining share =, New ratio =, : :, 5, 24 25 25, NPSR = New partner sharing ratio, New Ratio =12 : 8 : 5, , 2. ‘A’ and ‘B’ are partners in a firm sharing profits and losses in ratio of 3:2. They admit ‘C’ into, the partnership for 1/6th share in the profits. Calculate the new profit sharing ratio., , Solution:, Hint :, New Ratio = ?, New Partner Share = 1/6, Old Ratio = 3:2, Remaining share = 1 – New partner share, 1, = 1−, 6, 5, Remaining share =, 6, NPSR = New partner sharing ratio, , NPSR = Remaining share×Old Ratio, 5 3 15, ‘A’ = × =, 6 5 30, 5 2 10, ‘B’ = × =, 6 5 30, 5, 1 5, ‘C’ = × =, 6 5 30, 15 10 5, NR =, OR New Ratio 3 : 2 : 1, :, :, 30 30 30, , 3. ‘A’, ‘B’ and ‘C’ are partners sharing profits and losses in the proportion of 2/8th, 3/8th and 3/8th., They admit ‘d’ for 1/4th share, calculate the new profit sharing ratio of all partners., , 35 | P a g e

Page 40 :
Accountancy II PUC, , Solution:, , Mysuru District P U Commerce Forum, , Hint :, New Ratio = ?, , NPSR = Remaining share×Old Ratio, 3 2, 6, A= × =, 1, 4 8 32, New Partner Share =, 4, 3 3 9, B= × =, Old Ratio = 2:3:3, 4 8 32, Remaining share = 1 – New partner share, 3 3, 9, C= × =, 1, 4 8 32, = 1−, 4, 1 8, 8, D= × =, 3, 4 8 32, Remaining share =, 4, 6 9 9 8, New Ratio =, OR, :, :, :, NPSR = New partner sharing ratio, 32 32 32 32, New Ratio = 6 : 9 : 9 : 8, , 4. Veena and Vani are partners sharing profits in the ratio of 3:2. They admit Rani as a new partner, for 1/5th share in future profits of the firm, which she gets equally from Veena and Vani. Calculate, new profit sharing ratio of Veena, Vani and Rani., , Solution:, Sacrifice ratio = Acquired share × New partner share, 1 1, 1, Veena = × =, 5 2 10, 1 1, 1, Vani = × =, 1, 5 2 10, New partner share, 5, 1 1, SR =, :, 1, 10 10, Acquired Share = 1: 1 or, :, 2, 3 × 2 − 1× 1 6 − 1 5, 3 1, New Ratio of Veena = −, =, =, 1, 10, 10, 4 10, 10, 2, 2 4, 2 × 2 − 1× 1, 3, New ratio of Vani = −, =, =, NR=Old Ratio–Sacrifice Ratio, 4 10, 10, 10, Sacrifice Ratio = ?, 1 2, 2, New Ratio of Rani = × =, 4 2 10, New Ratio = 5 : 3 : 2, N R = New Ratio, Hint :, New Ratio = ?, Old Ratio = 3: 2, , 5. Amar and Akbar are partners, sharing profits and looses in ratio of 6:4. They admit Antony into, partnership giving him 6/20th share, which he obtains 4/20th from Amar and 2/20th from Akbar., Calculate the new profit sharing ratio., 36 | P a g e

Page 41 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , Solution:, , 6, 4, 6 × 2 − 4 ×1 8, =, =, −, 10 10, 20, 20, 4, 2, 4 × 2 − 2 ×1, 6, New ratio of Akabar =, =, =, −, 10, 10, 20, 20, 6, New partner share, 6 1 6, New Ratio of Antony =, × =, 20, 20 1 20, 4 2, 5 10, 20, Sacrifice Ratio =, :, New Ratio = 8 : 6 : 6 (÷ 2), 20 20, 2 2, 4, OR, New Ratio = Old Ratio – Sacrifice Ratio, 1, 2, 4:3:3, LCM = 5×2×2, 6. Saraswathi and Laxmi are partners in a firm sharing profits in ratio of 4 :1. They admit Parvati, as a new partner for 1/4th share in future profits, which she acquired wholly from Saraswati., Calculate the new profit sharing ratio of the all partners., New Ratio of Amar =, , Hint :, New Ratio = ?, Old Ratio = 6:4, , Solution:, , Hint :, New Ratio = ?, Old Ratio = 4:1, New Partners Share = 1/4, 1, Sacrifice Ratio = : 0, 4, , New Ratio = Old Ratio – Sacrifice Ratio, 4 1 4 × 4 − 1 × 5 11, Saraswathi = − =, =, 20, 20, 5 4, 1, 1 4 4, Laxmi = − 0 = × =, 5, 5 4 20, 1 5, 5, Parvathi = × =, 4 5 20, New Ratio = 11 : 4 : 5, , 2 5, 4, 5, 2, LCM = 5×2×2= 20, 7. Raga and Tala are partners sharing profits and losses in ratio of 7:3. They admit Shruti into the, partnership. Raga surrenders 1/2nd of his share and Tala 1/4th of her share in favour of Shruti., Calcualte new profit sharing ratio of Raga, Tala and Shruti., , Solution:, , Hint :, New Ratio = ?, Old Ratio = 7:3, Surrender Share =, , 1 1, 2 1, : , LCM= :, 2 4, 4 4, , 5 10, 40, 2 2, 8, 2 1, 4, 1, 2, LCM = 5×2×2×2 = 40, , Sacrifice Ratio = Surrender Share × Old Ratio, 2 7, 14, Raga = ×, =, 4 10 40, 3, 1 3, Tala =, =, Sacrifice Ratio =, ×, 40, 4 10, 14 3, :, 40 40, New Ratio = Old Ratio – Sacrifice Ratio, 7 14 28 − 14 14, Raga =, =, =, −, 40, 40, 10 40, 3 3 × 4 − 3 ×1 9, 3, Tala =, −, =, =, 40, 40, 10 40, 14 3 17, Shruthi =, +, =, 40 40 40, NR = 14 : 9 : 17, 37 | P a g e

Page 42 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , 8. Pradeep and Sandeep are partners sharing profits and losses in the ratio of 5:3. They admit, Pramod into the partnership and offer him 1/6th of the share which he acquired in ratio of 3:1, from old partners. Calculate the new profit sharing ratio., , Solution:, , Sacrifice Ratio = New partner share × Acquired share, 1 3, 3, Pradeep = × =, 6 4 24, 1 1, 1, 3 1, Sandeep = × =, Sacrifice Ratio =, :, 6 4 24, 24 24, New Ratio = Old Ratio – Sacrifice Ratio, 5 3, 5 × 3 − 1 12, =, =, Pradeep = −, 2 8, 24, 8 24, 24, 24, 2 4, 12, 3 1, 9 −1, 8, 2 2, 6, Sandeep = −, =, =, 8 24, 24, 24, 1, 3, LCM = 2×2×2×3 = 24 Pramod = 1 × 4 = 4, 6 4 24, 12 8 4, NR =, or (÷4), :, :, 24 24 24, New Ratio = 3 : 2 : 1, , Hint :, New Ratio = ?, Old Ratio = 5:3, New Partners Share = 1/6, Acquired Ratio = 3:1, , Problems on Sacrifice Ratio:, 1. Mohan and Madan are partners sharing profits and losses in ratio of 4:3. They admit Murali into, partnership. The new profit sharing ratio is agreed at 7:4:3 respectively. Find out the sacrifice ratio, of old partners., , Solution:, , Hint :, Sacrifice Ratio = ?, Old Ratio = 4:3, New Ratio : 7:4:3, 7 7, 14, 1, 2, LCM = 7×2 = 14, , Sacrifice Ratio = Old Ratio – New Ratio, 4 7 4× 2 − 7 1, Mohan = −, =, =, 7 14, 14, 14, 3 4, 3× 2 − 4 2, Madan = −, =, =, 7 14, 14, 14, 1 2, =, :, 14 14, OR, Sacrifice Ratio = 1 : 2, , 2. Dinesh and Mahesh are partners sharing profits and losses I ratio of 3:2. They admit Ramesh into, business and new ratio was agreed to be 5:4:3. Calculate the sacrifice ratio., 38 | P a g e

Page 43 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , Solution:, , Hint :, Sacrifice Ratio = ?, Old Ratio = 3:2, New Ratio : 5:4:3, , Sacrifice Ratio = Old Ratio – New Ratio, 3 5, 3 × 12 − 5 × 5, 1, Dinesh = −, =, =, 5 12, 60, 60, 2 × 12 − 4 × 5, 4, 2 4, Mahesh = −, =, =, 60, 60, 5 12, Sacrifice Ratio = 11 : 4, , 2 5, 12, 2 5, 6, 5, 3, LCM = 2×2×3×5=60, 3. Anil and Sunil are partners in firm sharing profits and losses in the ratio of 3:2. They admit Ashok, as new partner for 1/4th share. The new profit sharing ratio between Anil and Sunil will be 2:1., Calculate the Sacrifice Ratio., , Solution:, , Hint :, Sacrifice Ratio = ?, Old Ratio = 3:2, New Partners Share = 1/4, Remaining partners share 2:1, Remaining share = 1 – New Partner, Share, 1 3, = 1− =, 4 4, 2 5, 4, 5, 2, LCM = 2×2×5=20, , New Ratio = Remaining share X Remaining, partners share, 3 2, 6, Anil = × =, 4 3 12, 3 1, 3, × =, Sunil = 4 3 12, 1 3, 3, × =, New Ratio = 3 : 2 : 1, Ashok = 4 3 12, Sacrifice Ratio = Old Ratio – New Ratio, 3 2 3× 4 − 2 × 5, 2, Anil = − =, =, 5 4, 20, 20, 2 1 2 × 4 − 1× 5 3, Sunil = − =, =, 20, 5 4, 20, Sacrifice Ratio = 2:3, , 4. ‘X’ and ‘Y’ are partners in a firm sharing profits and losses in ratio of 3:2. They admit ‘Z’ into, partnership ‘X’ agrees to surrender 1/2nd of his share and ‘Y’ agrees to surrender 1/4th of his share, in favour of ‘Z’. Calculate sacrifice ratio., , Solution:, , Hint :, Sacrifice Ratio = ?, Old Ratio = 3:2, Surrender Share : =, , 2 1, 1 1, : LCM= :, 4 4, 2 4, , Sacrifice Ratio = Old Ratio X Surrender share, 6, 3 2, X= × =, 5 4 20, 2 1, 2, Y= × =, 5 4 20, = 6 :2, (÷2), OR, Sacrifice Ratio = 3 : 1, 39 | P a g e

Page 44 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , 5. Ram and Rahim are partners sharing profits and losses equally. They admit Charlin into, partnership. Ram agrees to surrender 1/3rd of his share and Rahim agrees to surrender 1/4th of his, share to Charlin. Calculate the sacrifice ratio., , Solution:, , Hint :, Sacrifice Ratio = ?, Old Ratio = 1:1, , 1 1, :, 3 4, 1 3, 4 3, 1 4, = ×, :, × = :, 4 3 12 12, 3 4, , Surrender Share LCM =, , Section D:, , Sacrifice Ratio = Old Ratio X Surrender share, 1 4, 4, Ram = ×, =, 2 12 24, 1 3, 3, Rahim = ×, =, 2 12 24, Sacrifice Ratio = 4 : 3, , 12 Marks Questions, , 1. 'A' and 'B' are partners sharing profits and losses in the ratio of 2:1.Their Balance Sheet, as on 31.3.2018 was as follows:, Balance Sheet as on 31.03.2018, Liabilities, ₹, Assets, ₹, Creditors, 20,000 Cash in Hand, 5,000, Bills Payable, 10,000 Stock, 15,000, Reserve Fund, 12,000 Debtors, 20,000, Capitals, Machinery, 30,000, A, 60,000, 60,000 Buildings, B, 12,000, 40,000 Investments, 1,42,000, 1,42,000, Adjustments:, On 01.04.2018, 'C' is admitted into partnership on the following conditions:, a) 'C' should bring in cash ₹ 25,000 as his capital and ₹15,000 towards goodwill (As, per AS -26), b) Appreciate buildings at 20% and stock is revalued at ₹ 12,000., c) Provision for doubtful debts maintained at 5% on debtors., d) Outstanding salary ₹ 2,000., Prepare: i) Revaluation Account., ii) Partners' Capital Accounts &, iii) New Balance Sheet of the firm., , 40 | P a g e

Page 45 :
Accountancy II PUC, , Solution:, Dr., Particulars, To Depreciation on stock, , Revaluation Account, ₹, 3,000, , (15,000-12,000), , To provision for doubtful, Debts (20,000 x 5/100), To Outstanding Salary, To Partners capital A/c, , 1,000, , Mysuru District P U Commerce Forum, , Cr., , Particulars, By Appreciation on Buildings, , ₹, 12,000, , (60,000 x 20/100), , 2,000, , (Profit on Revaluation), , A 6,000 x 2/3 = 4,000, B 6,000 x 1/3 = 2,000, , To Balance c/d, , (Closing Capital), , 12,000, , Partners’ Capital Account, , Dr., Particulars, , To A’s Capital A/c, (15,000 x 2/3), To B’s Capital A/c, (15,000 x 1/3), , 6,000, 12,000, , A, , -, , B, , -, , C, Particulars, 10,000 By Balance b/d, By Cash A/c, 5,000 (25,000+15,000), , 82,000 51,000 25,000, , A, B, 60,000 40,000, -, , Cr., , C, 40,000, , By C’s Capital A/c 10,000, , 5,000, , -, , 8,000, , 4,000, , -, , (15,000 x 2:1), By Reserve Fund, (12,000 x 2:1), , By Revaluation A/c 4,000, , 82,000 51,000 40,000, , By Balance b/d, , 2,000, 82,000 51,000 40,000, 82,000 51,000 25,000, , Balance Sheet as on 01.04.2018, Liabilities, Creditors, Bills Payable, , O/s Salary, Capitals, A, B, C, , 82,000, 51,000, 25,000, , ₹, 20,000, 10,000, 2,000, , 1,58,000, , Assets, Cash in Hand, (5,000+25,000+15,000), Stock, 15,000, Less: Depreciation, 3,000, Debtors, 20,000, Less: PDD, , 1000, , Add: appreciation, , 60,000, 12,000, , Machinery, Buildings, Investments, , 1,90,000, , ₹, 45,000, 12,000, 19,000, 30,000, 72,000, 12,000, 1,90,000, 41 | P a g e

Page 46 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , 2. Arati and Bharati are partners in a firm sharing profits and losses in the ratio of 3:2., Their Balance Sheet as on 31.03.2017 stood as follows:, Balance Sheet as on 31.03.2018, Liabilities, Bills Payable, Creditors, , ₹, 14,000, 16,000, , Capitals, Arati, Bharati, , 50,000, 25,000, , Assets, Cash in Hand, Buildings, Patents, Machinery, Debtors, 20,000, Less: Provisions 600, Stock, , 1,05,000, , ₹, 15,000, 25,000, 6,000, 35,000, 19,400, 4,600, 1,05,000, , Adjustments:, On 01.04.2017, Jayanti is admitted into the partnership on the following terms:, a. Jayanti brings in cash ₹ 20,000 as capital and 10,000 towards Goodwill., Goodwill is withdrawn by old partners. (As perAS-26), b. Buildings are appreciated by ₹ 5,000 & machinery is depreciated by 20%., c. Provision for doubtful debts is increased by ₹ 1,000., d. The new profit-sharing ratio between the partners is 5:3:2., Prepare: i) Revaluation Account, ii) Partners' Capital Accounts &, iii) Balance Sheet of the firm after admission., Solution:, Dr., , Particulars, To Depreciation on, Machinery, (35,000x20/100), To provision for doubtful, Debts (Increased), , Revaluation Account, ₹, 7,000, 1,000, , 8,000, , Particulars, By Appreciation on Buildings, , Cr., , ₹, 5,000, , To Partners capital A/c, (Loss on Revaluation), , Arati, 3,000 x 3/5 = 1,800, Bharati 3,000 x 2/5 = 1,200, , 3,000, 8,000, , 42 | P a g e

Page 47 :
Accountancy II PUC, , Dr., Particulars, , To Arati’s Capital A/c, , Mysuru District P U Commerce Forum, , Partners’ Capital Account, Arati, , -, , (20,000 x 1/2), , (20,000 x 1/2), To Cash A/c, , (Goodwill Withdrawn), , To Revaluation A/c, , To Balance c/d, (Closing Capital), , -, , -, , To Bharati’s Capital A/c, , Particulars, 5,000 By Balance b/d, By Cash A/c, 5,000 (20,000+10,000), , Bharati Jayanti, , -, , 5,000, , 5,000, , Arati, , Bharati Jayanti, , 50,000 25,000, 5,000, , By jayanti’s, Capital A/c, , -, , Cr., , 5,000, , (10,000 x1:1 S.R), , 1,800 1,200, 48,200 23,800 20,000, 55,000 30,000 30,000, , By Balance b/d, , 30,000, -, , 55,000 30,000 30,000, 48,200 23,800 20,000, , Balance Sheet as on 01.04.2018, Liabilities, Bills Payable, Creditors, Capitals, Arati, Bharati, Jayanti, , ₹, 14,000, 16,000, , Assets, Cash in Hand, (15,000+20,000), Buildings, , Add: Appreciation, , 48,200, 23,800, 20,000, , 92,000, , Patents, Machinery, , Less: Depreciation, , Debtors, , ₹, 35,000, 25,000, 5,000, 35,000, , 7,000, , 20,000, Less:PDD(600+1000) 1,600, Stock, , 1,22,000, , 30,000, , 6,000, , 28,000, 18,400, 4,600, 1,22,000, , Working Note:, Calculation of Sacrifice Ratio, Old Ratio: 3:2, New Ratio: 5:3:2, Sacrifice Ratio = Old Ratio – New Ratio, 3, , 5, , Arati’s Sacrifice Ratio = 5 − 10 =, 2, , 3, , 30−25, , Bharati’s Sacrifice Ratio = 5 − 10 =, , =, , 5, , 50, 50, 20−15, 5, 50, 𝟓𝟓, , = 50, 𝟓𝟓, , Sacrifice Ratio of Arati & Bharati = 𝟓𝟓𝟓𝟓 : 𝟓𝟓𝟓𝟓 𝒐𝒐𝒐𝒐 𝟏𝟏: 𝟏𝟏, , 43 | P a g e

Page 48 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , 3. 'A', 'B' and 'C' are partners in a firm sharing profits and losses in the ratio of 6:4. Their, Balance Sheet as on 31.03.2017 was as follows:, Balance Sheet as on 31.03.2018, Adjustments:, Liabilities, ₹, Assets, ₹, Creditors, 1,00,000 Cash in Bank, 17,000, Reserve, 32,000 Bills Receivable, 19,000, Bank Over Draft, 8,000 Stock, 80,000, Capitals, Buildings, 60,000, A, 1,20,000, 70,000 Debtors, B, 6000 1,14,000, 80,000 Less: PDD, 2,90,000, 2,90,000, On O1.04.2017, they admit 'D' into the partnership for 1/5th share in future profit on the, following terms:, a. 'D' brings in cash ₹ 50,000 as his capital and 40,000 towards Goodwill. Half of the, goodwill amount withdrawn by old Partners (As per As-26), b. Reduce stock by 10% and increase buildings to ₹ 69,000., c. Provision for doubtful debts decreased by ₹ 2,000., Prepare: i) Revaluation Account, ii) Partners' Capital Accounts &., iii) New Balance Sheet of the new firm., Solution:, , Revaluation Account, , Dr., , Particulars, To Depreciation on, Stock, (80,000x10/100), To Partners capital A/c, , ₹, 8,000, , Cr., , Particulars, By Appreciation on Buildings, , ₹, 9,000, , By provision for doubtful, Debts (Decreased), , 2,000, , (69,000-60,000), , (Profit on Revaluation), , A 3,000 x 6/10, , = 1,800, , B 3,000 x 4/10, , = 1,200, , 3,000, 11,000, , 11,000, , 44 | P a g e

Page 49 :
Accountancy II PUC, , Dr., Particulars, , To A’s Capital A/c, (40,000 x 6/10), To B’s Capital A/c, , (40,000 x4/10), , To Cash A/c, , (Half Goodwill, Withdrawn), , Mysuru District P U Commerce Forum, , Partners’ Capital Account, A, , -, , 12,000, , A, B, Particulars, - 24,000 By Balance b/d, 70,000 80,000, By Cash A/c, - 16,000 (50,000+40,000), By C’s Capital A/c 24,000 16,000, 8,000, (40,000 x6:4), By Reserve, 19,200 12,800, B, , C, , C, , Cr., , 90,000, -, , (32,000 x 6:4), (20,000 x 6:4), To Balance c/d, 1,03,000 1,02,000 50,000 To Revaluation A/c 1,800 1,200, (Closing Capital), 1,15,000 1,10,000 90,000, 1,15,000 1,10,000 90,000, By Balance b/d, 1,03,000 1,02,000 50,000, , Balance Sheet as on 01.04.2018, Liabilities, Creditors, Bank over draft, Capitals, A, B, D, , ₹, 1,00,000, 8,000, , 1,03,000, 1,02,000, 50,000 2,55,000, , 3,63,000, , Assets, ₹, Cash in Hand, 87,000, (17,000+50,000+20,000), Bills Receivable, 19,000, Debtors, 1,20,000, Less:PDD(6000-2000) 4,000 1,16,000, Stock, 80,000, Less: Depreciation, 8,000 72,000, Buildings, 60,000, Add: Appreciation, 9,000 69,000, 3,63,000, , Problems on Adjustments on Capital, 4. Mahendra and Surendra are equal partners in a firm. Their Balance Sheet as on 31.03.2017, stood as follows:, Balance Sheet as on 31.03.2017, Liabilities, ₹, Assets, ₹, Creditors, 40,000 Stock, 39,000, Bank Laon, 8,000 Land & Buildings, 40,000, Machinery, 36,000, Motor Car, 8,000, Capitals, Debtors, 32,000, Mahendra, 1,000, 31,000, 80,000 Less: PDD, Surendra, 14,000, 40,000 Cash at Bank, 1,68,000, 1,68,000, 45 | P a g e

Page 50 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, 1, , Adjustments: On 01.04.2017, Chandra is admitted into partnership for 6 share in profits, , on the following terms:, 1) Chandra brings ₹ 26,000 as capital., 2) Goodwill of the firm is valued at ₹ 18,000 (As Per AS-26), 3) Motor car and Machinery are to be depreciated by 20% and ₹ 3,800 respectively., 4) Prepaid rent ₹ 600., 5) Provision for doubtful debts is to be maintained at 10%., 6) The Capital Accounts of all the partners are to be adjusted in their new profit-sharing ratio, 3:2:1 based on Chandra's Capital (Adjustments are to be made in cash), Prepare: i) Revaluation Account, ii) Partners' Capital Account &, iii) New Balance Sheet of the firm., Solution:, Dr., Revaluation Account, Particulars, ₹, Particulars, To Depreciation on, By prepaid Rent, Motor Car (8,000x20/100), 1,600, To Depreciation on, To Partners capital A/c, (Loss on Revaluation), Machinery, 3,800, To Provision for doubtful, Mahendra 7,000 x 1/2 =3,500, debts, 2,200, Surendra 7,000 x 1/2 =3,500, , 7,000, , 7,600, , 7,600, , Cr., , ₹, 600, , (32,000x10/100= 3,200 -1,000), , Dr., Particulars, , Partners’ Capital Account, -, , -, , -, , -, , To Mahendra’s, Capital A/c, (3,000x0:2), To Surendra’s, Capital A/c, (3,000x0:2), To Revaluation A/c, , 3,500, , To Cash A/c, , 7,500, , (Excess Cash Refund), , Particulars, By Balance b/d, 80,000 40,000, By Cash A/c, By Chandra’s, 3,000, 3,000, Capital A/c, (w.n.3,000X 0:2), By Cash A/c, 6,500, , Mahendra Surendra Chandra, , 3,500, , -, , Mahendra Surendra, , -, , -, , To Balance c/d, 69,000 46,000 23,000, (Closing Capital), 80,000 49,500 26,000, , (Deficit Cash, brought in), , By Balance b/d, , Cr., , Chandra, , 26,000, -, , 80,000 49,500 26,000, 69,000 46,000 23,000, 46 | P a g e

Page 51 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , Balance Sheet as on 01.04.2018, , Liabilities, Creditors, Bank Loan, Capitals, Mahendra, Surendra, Chandra, , 69,000, 46,000, 23,000, , ₹, 40,000, 8,000, , Assets, Cash at Bank, , ₹, 39,000, , Stock, Debtors, , 39,000, , (14,000+26,000+6,500-7,500), , 32,000, , Less:PDD(1000+2200)3,200, , 1,38,000, , Land & Buildings, Machinery, 36,000, Less: Depreciation, 3,800, Motor Car, 8,000, Less: Depreciation, 1,600, Prepaid Rent, , 1,86,000, , Particulars, To Balance c/d, To Chandra’s Capital A/c, To Surendra’s Capital A/c, , To Balance b/d, , ₹, Particulars, 14,000 By Mahendra’s Capital A/c, 26,000 By Balance c/d, 6,500, 46,500, 39,000, , Working Note:, A. Calculation of Sacrifice Ratio, 1, , 1, , Old Ratio = 2 ∶ 2, , 3, , 2 1, , New Ratio = 6 ∶ 6 : 6, 1, , 3, , Sacrifice Ratio of Mahendra = 2 − 6 =, 1, , 2, , Sacrifice Ratio of Mahendra = 2 − 6 =, , 32,200, 6,400, 600, 1,86,000, , Bank Account, , Dr., , 28,800, 40,000, , 6−6, 12, 6−4, 12, , Cr., , ₹, 7,500, 39,000, 46,500, , 𝟎𝟎, , = 𝟏𝟏𝟏𝟏, 𝟐𝟐, , = 𝟏𝟏𝟏𝟏, 𝟎𝟎, , 𝟐𝟐, , Sacrifice Ratio of Mahendra & Surendra = 𝟏𝟏𝟏𝟏 : 𝟏𝟏𝟏𝟏 𝒐𝒐𝒐𝒐 𝟎𝟎: 𝟐𝟐, , B. Calculation of Goodwill, Old Ratio = 1:1 New partner share = 1/6, Total goodwill valued = 18,000, , 1, , New partner share of Goodwill = 18,000 𝑋𝑋 6 = 3,000, , 47 | P a g e

Page 52 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , C. Calculation of Closing Capital based on New partner’s Capital, New partner’s Capital after adjustment of Goodwill = 26,000 – 3,000 = 23,000, 1, , New partner’s Capital = 6 = 23,000, 6, , Total Capital = 23,000𝑋𝑋 1 = 1,38,000, 3, , Mahendra’s Capital = 1,38,000𝑋𝑋 6 = 𝟔𝟔𝟔𝟔, 𝟎𝟎𝟎𝟎𝟎𝟎, 2, , Surendra’s Capital = 1,38,000𝑋𝑋 6 = 𝟒𝟒𝟒𝟒, 𝟎𝟎𝟎𝟎𝟎𝟎, 1, , Mahendra’s Capital = 1,38,000𝑋𝑋 6 = 𝟐𝟐𝟐𝟐, 𝟎𝟎𝟎𝟎𝟎𝟎, 5., , Vani and Veena are partners sharing profits and losses in the ratio of 3:2. Their Balance, Sheet as on 31.03.2017 was as follows:, Balance Sheet as on 31.03.2017, , Liabilities, Creditors, Reserve, , ₹, 40,000, 15,000, , Capitals:, Mahendra, Surendra, , 80,000, 40,000, , Assets, Cash at bank, Stock, Debtors, Furniture, Machinery, Motor Car, , ₹, 6,000, 30,000, 30,000, 20,000, 60,000, 15,000, 1,55,000, , 1,55,000, Adjustments:, On 01.04.2017, they admit Rani as new partner into partnership on the following, Conditions:, 1, , a. Rani is to bring in ₹ 40,000 as capital and offer th share in future profits., 6, , b. Goodwill of the firm is valued at ₹ 30,000, And withdrawn by old partners (As Per, AS-26), c. Machinery is appreciated by 10% and stock is reduced by 10%., d. Furniture revalued at ₹ 18,000 and Investments worth ₹ 2,000 is not recorded in, the books, now it is to be taken into account., e. PDD is created at 5% on debtors., Prepare: i) Revaluation Account., ii) Partners' Capital Accounts &, iii) New Balance Sheet of the firm., , 48 | P a g e

Page 53 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , Solution:, , Revaluation Account, , Dr., , Particulars, To PDD created, ( 30,000X5/100 ), To Depreciation on, Stock (24000X10/100), To Depreciation on, Furniture (20,000-18,000), To Partners Capital A/c, (Profit on Revaluation), Vani = 2,100*3/5 = 1,260, Veena = 2,100*2/5 = 840, , Dr., Particulars, To Vani’s, Capital A/c, (5,000X3/5), , To Veena’s, Capital A/c, , Vani, -, , Amount, Particulars, 1,500 By Appreciation on Machinery, (60,000x10/100), 2,400 By Unrecorded Investment, , (Goodwill withdrawn), , 2,000, , 2,000, , 2,100, 8,000, , 8,000, , Partners Capital Account, Veena Rani, Particulars, By Balance b/d, 3,000 By Bank A/c, , -, , -, , 3,000, , 2,000, , (5,000X2/5), , To Bank A/c, , Cr., Amount, 6,000, , Vani, 60,000, By Rani’s Capital A/c 3,000, (5,000x 3:2), 2,000 By Reserves A/c, 9,000, 15,000x 3:2, By Revaluation A/c 1,260, -, , Veena, 40,000, 2,000, , Cr., Rani, 40,000, -, , 6,000, , -, , 840, , -, , 48,840, 46,840, , 40,000, 35,000, , To Balance c/d 70,260 46,840 35,000, (Closing Capital), , Dr., , 73,260 48,840 40,000, , Particulars, To Balance b/d, To Rani’s capital, , 73,260, By Balance b/d 70,260, , Bank Account, , Amount, Particulars, 6,000 By Vani’s Capital A/c, 40,000 By Veena’s Capital, By Balance c/d, (Closing Cash at Bank), , 46,000, , Cr., , Amount, 3,000, 2,000, 41,000, 46,000, , 49 | P a g e

Page 54 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , Balance Sheet As on 31/03/2017, Liabilities, Amount, Assets, Creditors, 40,000, Cash in Bank (40,000+6,000-3,000-2,000), Stock, 24,000, Partner’s Capital, Less: Depreciation, 2,400, Vani, 70,260, Debtors, 30,000, Veena, 46,840, Less: PDD, 1,500, Rani, 35,000, 1,52,100 Furniture, 20,000, Less: Depreciation, 2,000, Machinery, 60,000, Add : Appreciation, 6,000, Unrecorded Investment, Motor Car, 1,92,100, Working Note:, Calculation of New Partners Goodwill, 1, Total goodwill Valued 30,000,, New partner’s share = 6, 1, , New partners Goodwill = 30,000𝑋𝑋 6 = 𝟓𝟓, 𝟎𝟎𝟎𝟎𝟎𝟎, 3, , Vani’s Share = 5,000𝑋𝑋 5 = 𝟑𝟑, 𝟎𝟎𝟎𝟎𝟎𝟎, , Amount, 41,000, 21,600, 28,500, 18,000, 66,000, 2,000, 15,000, 1,92,100, , 2, , Veena’s Share = 5,000𝑋𝑋 5 = 𝟐𝟐, 𝟎𝟎𝟎𝟎𝟎𝟎, , 6. Gowri and Ganesh are partners in a firm sharing profit 3:2. Following is their Balance, Sheet as on 31.03.2017. Balance Sheet as on 31.03.2017, Liabilities, Creditors, Bills Payable, General Reserve, Capitals:, Gowri, Ganesh, , ₹, Assets, ₹, 20,000 Cashin Hand, 7,000, 4,000 Stock, 25,000, 6,000 Buildings, 40,000, Debtors, 17,000, 1,500, 80,000 Less:PDD, 15,500, 40,000 Furniture, 14,500, Patents, 30,000, Plant & Machinery, 18,000, 150,000, 150,000, On O1.04.2017, Shiva is admitted into partnership on the following terms:, a. Shiva should bring ₹ 25,000 as capital., b. Goodwill of the firm is valued at ₹ 18,000 (As Per AS-26), c. Stock is to be increased by 8%., d. Provision for doubtful debts is increased to ₹ 2,600., e. Capital accounts of partners are to is be adjusted in their new profit-sharing ratio, 3:2:1, based on Shiva's capital (Adjustments to be made in cash)., Prepare: i) Revaluation Account., ii) Partners' Capital Accounts &, iii) Balance sheet of the new firm., 50 | P a g e

Page 55 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , Solution:, , Revaluation Account, , Dr., , Particulars, To Provision for doubtful, Debts (2,600-1,500), To Partners capital A/c, , ₹, 1,100, , Cr., , Particulars, By Appreciation on stock, (25,000X8/100, , ₹, 2,000, , (Profit on Revaluation), , Gowri 900 x 3/5 = 540, Ganesh 900x 2/5 = 360, , 900, 2,000, , 2,000, , Partners’ Capital Account, , Dr., Particulars, , Cr., Gowri Ganesh Shiva, 80,000 40,000, 25,000, 1,800 1,200, -, , Gowri Ganesh Shiva, Particulars, To Gowri’s, - 1,800 By Balance b/d, Capital A/c, By Cash A/c, (3,000x3:2), By Shiva’s, To Ganesh’s, 1,200, Capital A/c, Capital A/c, (w.n.3,000x3:2), (3,000x3:2), By General, 3,600, To Cash A/c, 19,940, Reserve(6,000x3:2), (Excess Cash drawn), By Revaluation A/c, 540, To Balance c/d, 66,000 44,000 22,000 By Cash A/c, (Deficit, brought, in), (Closing Capital), 85,940 44,000 25,000, , By Balance b/d, , 2,400, , -, , 360, 40, , -, , 85,940 44,000 25,000, 66,000 44,000 22,000, , Balance Sheet as on 01.04.2018, Liabilities, Creditors, Bills Payable, Capitals, Gowri, Ganesh, Shiva, , 66,000, 44,000, 22,000, , ₹, 20,000, 4,000, , Assets, Cash at Bank, , (7,000+25,000+40-19,940), , Stock, , Add: Appreciation, , Buildings, , 1,32,000, 1,56,000, , Debtors, , 25,000, 2,000, , 17,000, Less: PDD(1,500+1,100) 2,600, Furniture, Patents, Plant & machinery, , ₹, 12,100, 27,000, , 40,000, , 14,400, 14,500, 30,000, 18,000, 1,56,000, 51 | P a g e

Page 56 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , Dr., , Bank Account, ₹, Particulars, 7,000 By Gowri’s Capital A/c, 25,000 By Balance c/d, 40, 32,040, 12,100, , Particulars, To Balance c/d, To Shiva’s Capital A/c, To Ganesh’s Capital A/c, To Balance b/d, , Working Note: A. Calculation of Sacrifice Ratio, 3, , 2, , Old Ratio = 5 ∶ 5, , 3, , 3, , Sacrifice Ratio of Gowri = 5 − 6 =, 2, , 2, , 18−15, , Sacrifice Ratio of Ganesh = 5 − 6 =, , 30, 𝟑𝟑, , 𝟑𝟑, , = 𝟑𝟑𝟑𝟑, , 30, 12−10, , Cr., , ₹, 19,940, 12,100, 32,040, , 3, , 2 1, , New Ratio = 6 ∶ 6 : 6, , 𝟐𝟐, , = 𝟑𝟑𝟑𝟑, , 𝟐𝟐, , Sacrifice Ratio of Gowri & Ganesh = 𝟑𝟑𝟑𝟑 : 𝟑𝟑𝟑𝟑 𝒐𝒐𝒐𝒐 𝟑𝟑: 𝟐𝟐, , B. Calculation of Goodwill, Old Ratio = 1:1 New partner share = 1/6, Total goodwill valued = 18,000, 1, New partner share of Goodwill = 18,000 𝑋𝑋 6 = 3,000, 3, , Gowri’s Share = 3,000𝑋𝑋 5 = 𝟏𝟏, 𝟖𝟖𝟖𝟖𝟖𝟖, , 2, , Ganesh’s share = 3,000𝑋𝑋 5 = 𝟏𝟏, 𝟐𝟐𝟐𝟐𝟐𝟐, , C. Calculation of Closing Capital based on New partner’s Capital, New partner’s Capital after adjustment of Goodwill = 25,000 – 3,000 = 22,000, 1, , New partner’s Capital = 6 = 23,000, 6, , Total Capital = 22,000𝑋𝑋 1 = 1,32,000, 3, , Gowri’s Capital = 1,32,000𝑋𝑋 6 = 𝟔𝟔𝟔𝟔, 𝟎𝟎𝟎𝟎𝟎𝟎, 2, , Ganesh’s Capital = 1,32,000𝑋𝑋 6 = 𝟒𝟒𝟒𝟒, 𝟎𝟎𝟎𝟎𝟎𝟎, 1, , Shiva’s Capital = 1,32,000𝑋𝑋 6 = 𝟐𝟐𝟐𝟐, 𝟎𝟎𝟎𝟎𝟎𝟎, , ***END***, , 52 | P a g e

Page 57 :
Accountancy II PUC, , BOOK-1, CHAPTER 4, , Mysuru District P U Commerce Forum, , Reconstitution of a Partnership Firm – Retirement of a Partner, , SECTION A: One-Mark Questions, I. Fill in the blanks., 1. Old ratio is used to distribute accumulated profits and losses at the time of retirement of a, partner., 2. Profit or loss on revaluation is shared among the partners in Old ratio on retirement of a, partner., 3. New ratio- Old ratio = Gain Ratio., 4. Accumulated losses are transferred to the Capital Accounts of the partners at the time of, retirement in their old ratio., 5. General reserve is to be transferred to All partner’s capital accounts at the time of retirement, of a partner., 6. Goodwill raised to the extent of retiring partner’s share only is to be debited to continuing, partner’s capital accounts in gain ratio., 7. In the absence of any instruction Retiring Partner’s capital A/c is closed by transferring its, balance to Retiring Partner’s Loan A/c., 8. New ratio is used for adjustment of continuing partner’s capitals., 9. X, Y and Z are the partners sharing profits and losses in the ratio of 3:2:1. If Y retires, the, new ratio of X and Z will be 3:1., 10. Share gained is calculated by deducting old share from the new share., 11. The ratio in which the remaining partners will share future profits after retirement is called, new ratio., 12. The balance in the retiring partner’s loan a/c is shown on the liability side of the Balance, sheet till the last instalment is paid., 13. The amount paid to the Retiring Partner in excess of what is due to him is called hidden, goodwill., 14. In the absence of any agreement as the disposed of amount due to retiring partner, Sec 37., 15. If goodwill already appears in the books, it will be written off by debiting all partners’, capital a/c in their old partner-sharing ratio., , II. Multiple choice questions., , 1. Arun, Tarun and Charan are partners sharing profits in the ratio of 5:3:2. If Charan retries, the, New Profit Sharing Ratio between Arun and Tarun will be, a) 3:2, b) 5:3, c) 5:2, d) None of the above, , 2. The old profit sharing ratio among Raja, Sathish and Teju were 2:2:1. The New Profit Sharing, Ratio after Sathish’s retirement is 3:2. The gaining ratio is, a) 3:2, b) 2:1, c) 1:1, d) 2:2, 53 | P a g e

Page 58 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , 3. Anand, Bahadur and Chander are partners sharing profit equally. On Chander’s retirement,, his share is acquired by Anand and Bahadur in the ratio of 3:2. The New Profit Sharing Ratio, between Anand and Bahadur will be, a) 8:7, b) 4:5, 3:2, d) 2:3, , 4. In the absence of any information regarding the acquisition of share in the profit of the, retiring/ deceased partner by the remaining partners, it is assumed that they will acquire his/, her share, a) Old Profit Sharing Ratio, b) New Profit Sharing Ratio, c) Equal Ratio, c) None of the above, 5. On retirement/ death of a partner, the Retiring / Deceased Partner’s Capital Account will be, credited with, a) His/her share of goodwill, b) Goodwill of the firm, c) Shares of goodwill of remaining partners, d) None of the above, 6. Govind, Hari and Prathap are partners. On retirement of Govind, the goodwill already appears, in the Balance Sheet at ₹ 24000. The Goodwill will be written off by debiting, , a. All partners’ capital accounts in their old profit sharing ratio., , b. Remaining partners’ capital accounts in their new profit sharing ratio., c. Retiring partners’ capital accounts from his share of goodwill, d. None of the above, , 7. Chaman, Raman and Suman are partners sharing profits in the ratio of 5:3:2. Raman retires,, the new profit sharing ratio between Chaman and Suman will be 1:1. The goodwill of the firm, is valued at ₹ 1,00,000. Raman’s share of goodwill will be adjusted by, , a. Debiting Chaman’s Capital Account and Suman’s Capital Account with ₹, 15,000 each., , b. Debiting Chaman’s Capital Account and Suman’s Capital Account with ₹ 21,429 and ₹, 8,571 respectively., c. Debiting only Suman’s Capital Account with ₹ 30000., d. Debiting Raman’s Capital Account with ₹. 30000., 8. On retirement/ death of a partner, the remaining partners who have gained due to change in, profit sharing ratio should compensate the :, a. Retiring partners only, , b. Remaining partners (who have sacrificed) as well as retiring partners., c. Remaining Partners only (who have sacrificed), d. None of the above, , III. True or False type questions., , 1. Profit or loss on revaluation is transferred to All Partners Capital Accounts in case of retirement of, a partner. True, , 2. Accumulated profit is transferred to Continuing Partners Capital A/c. False, 54 | P a g e

Page 59 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , 3. Adjustment of partner’s capitals of the remaining partners is to be made in the new ratio. True, 4. New share = Old share + share sacrificed. False, , 5. Share gained is computed by deducting Old share from the new share. True, 6. Increase in the value of asset is debited to Revaluation Account. False, 7. Gain ratio is used to adjust the goodwill raised to the extent of retiring partner share only. True, 8. Full value of goodwill raised on retirement is credited to All partners Capital Accounts including, retiring partner in their old ratio. True, 9. Sec. 37 of the Indian Partnership Act, 1932 states that the outgoing partner has an option to, receive either interest @ 6% p.a. till the date of payment or such share of profits which has been, earned with his money. True, IV. Very short answer questions., 1. What do you mean by retirement of a partner?, Ans: A partner is said to be retired from the firm, when his relation with the firm as a partner, comes to an end, 2. Give the formula for calculating Gain Ratio., Ans: Gain Ratio = New ratio – Old ratio., 3. Why the gain ratio is required on retirement of a partner?, Ans: Gaining ratio is required to write off goodwill created only to the extent of retiring partner’s, share., 4. Why the new ratio is required on retirement of a partner?, Ans: New ratio is required to share future profits/ losses between remaining partners., 5. Give the formula for calculation of new profit sharing ratio on retirement of a partner., Ans: New Profit Sharing Ratio = Old share + Acquired share., 6. What do you mean by hidden goodwill?, Ans: Hidden goodwill refers to the amount paid to retiring partner in excess of actual amount, due to him., 7. Proportion gained = New share - ……………….., Ans: Proportion gained = New share – Old share., , SECTION B :, , V. Two Marks Questions, 1. Mention any two circumstances for retirement of a partner., Ans: (a) When all remaining partners’ give their consent., (b) Old age of a partner, (c) Misunderstanding with other partner., 55 | P a g e

Page 60 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , 2. What is gain ratio?, Ans: The gain ratio is the ratio in which the remaining partners gain or acquire the share of, retiring partner on his retirement., , 3. State any two differences between sacrificing ratio and gaining ratio., Sacrifice ratio, Gain ratio, a) It is calculated at the time of admission a) It is calculated at the time of retirement of, of a partner., a partner, b) Share sacrifice = Old ratio – New ratio b) Share gained = New ratio – Old ratio, c) It is the ratio which decreases the old, c) It is the ratio which increases the, partner’s share of profit, remaining partners’ share of profit, 4. State any two purposes of calculating new profit sharing ratio., Ans: (a) To share the future profits of the firm., (b) To write off the firms goodwill., (c) To adjust the remaining partners’ capital., 5. Name two methods of treatment of goodwill., Ans: (a) Goodwill is created at its full value and retained in the books., (b) Goodwill is created at its full value and written off immediately., (c) Goodwill is created to the extent of retiring partners share and written off immediately., 6. How do you close revaluation account on retirement of a partner?, Ans: By transferring profit or loss on revaluation account to the capital account of all the, partners in their old ratio., 7. Pass the journal entry for adjusting retiring partner’s share of goodwill when no goodwill is, raised., Ans: Remaining partners Capital A/c………………………………Dr., xxx, ---To Retiring partner’s Capital A/c, ---xxx, (Being retiring partner’s share of goodwill adjusted, in remaining partners capital a/c in their new ratio), 8. Mention any two modes of payment on settlement of Retiring Partner’s Capital A/c., Ans: (a)Settlement is made in lump sum by cash or by cheque., (b) Amount due to retiring partner is treated as loan., (c) Amount due to retiring partner is partly paid in cash and the balance amount transferred, to his loan a/c., 9. Pass the journal entry to close Retiring Partner’s Capital Account when the payment is made, immediately., Ans: Retiring partner’s Capital A/c …………………………………Dr., xxx, ---To Cash/ Bank A/c, ---xxx, (Being retiring partner’s a/c is settled by payment), 10. Give the journal entry to close Revaluation Account when there is a profit., Ans: Revaluation A/c……………………………………………….Dr., xxx, To All Partners’ Capital A/c, ---(Being profit on revaluation transferred to partners Capital a/c), , ---xxx, 56 | P a g e

Page 61 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , 11. Give the journal entry to close Revaluation Account when there is a loss., Ans: All partners’ Capital A/c……………………………………….Dr., To Revaluation A/c, (Being loss on revaluation transferred to partners’ Capital a/c), , xxx, ----, , ---xxx, , 12. Why do firms revalue the assets and liabilities on retirement?, Ans: On retirement of the partner the assets and liabilities of the firm are revalued in order to, ascertain true position of the business. The value of some of the assets and liabilities may be, increased or decreased. To record the increase or decrease in the value of assets and liabilities, firms prepare revaluation a/c., 13. Why retiring partner is entitled to a share of goodwill of the firm?, Ans: The retiring partner is entitled to his share of goodwill at the time of retirement because, the goodwill has been earned by the firm with the efforts of all partners including retiring, partner., 14. A, B and C are partners in a firm sharing Profits and Losses in the ratio of 3:2:1. If “C” retires,, then what will be the NPSR of A & B., Ans: If C retires the new profit sharing ratio of A and B is 3:2., 15. Give the journal entry when the retiring partner is partly paid in cash and the remaining amount, is treated as loan., Ans: Retiring Partner’s Capital A/c…………………………. Dr. xxx, ---To Cash/ Bank A/c…………………………, ---xxx, To Retiring Partners loan A/c………………., ---xxx, (Being part payment to retiring partner made on his retirement, and remaining amount transferred His loan a/c), 16. Give the journal entry when retiring partner’s whole amount is treated as loan., Ans: Retiring Partner’s Capital A/c……………………………. Dr., xxx, To Retiring Partner’s loan A/c ……………………..., ---(Being amount due to retiring partnrer transferred to his loan A/c), , ---xxx, , SECTION C: Six marks questions, 1. Ankith, Suchith and Chandru are partners in a firm sharing profits and losses in the ratio of, 4:3:2. Ankith retires from the firm. Suchith and Chandru agreed to share in the ratio of 5:3 in, future. Calculate gain ratio of Suchith and Chandru., Ans : Old Ratio = 4:3:2., New Ratio = 5:3, Gain ratio = New ratio – Old ratio., 5, 8, , 3, 9, , Suchith’s gain = - =, Chandru’s gain =, , 3, 8, , -, , 2, 9, , 45−24, 72, , =, , =, , 27−16, 72, , 21, 72, , =, , 11, 72, , Hence gaining ratio between Suchith and Chandru, , 21, 72, , :, , 11, 72, , = 21:11, 57 | P a g e

Page 62 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , 2. Vani, Rani and Soni are partners in a firm sharing profits and losses in the ratio of 4:3:2. Soni, retires from the firm. Vani and Rani agreed to share equally in future. Calculate gain ratio of, Vani and Rani., Ans :, , Old Ratio = 4:3:2, New Ratio = 1:1, Gain Ratio = New ratio – Old Ratio, 1, 2, , 4, 9, , Vani’s gain = - =, 1, 2, , Rani’s gain =, , -, , 3, 9, , =, , 9−8, 18, , =, , 9−6, 18, , =, , 1, 18, , 3, 18, , Hence gaining ratio between Vani and Rani, , 1, 18, , :, , 3, 18, , = 1:3, , 3. A, B, C and D are partners in a firm sharing profits and losses in the ratio of 2:1:2:1. On A’s, retirement continuing partners decided to share future profits equally. Calculate the gain ratio., Ans :, , Old Ratio = 2:1:2:1, New Ratio = 1:1:1, Gain Ratio = New ratio – Old Ratio, 1, 3, , 1, 6, , B’s gain = - =, C’s gain =, D’s gain =, , 1, 3, , 1, 3, , -, , -, , 2, 6, , 1, 6, , 2−1, 6, , =, , =, , =, , 2−2, 6, , 2−1, 6, , =, , 1, 6, , =, , 0, 6, , 1, 6, , Hence gaining ratio between B and D only, , 1, 6, , 1, 6, , : = 1:0:1 or 1:1, , 4. A, B and C are partner’s sharing profits and losses in the ratio of 1:1:1. B retires from the firm., A and C decided to share the profit in future in the ratio of 4:3. Calculate the gain ratio., Ans :, , Old Ratio = 1:1:1, New Ratio = 4:3, Gain Ratio = New ratio – Old Ratio, 4, 7, , 1, 3, , B’s gain = - =, C’s gain =, , 3, 7, , -, , 1, 3, , =, , 12−7, 21, , 9−7, 21, , =, , =, , 2, 21, , 5, 21, , Hence gaining ratio between B and C, , 5, 21, , :, , 2, 21, , = 5:2, 1 3, 2 10, , 5. Ashok, Anil and Ajay are partners sharing profits and losses in the ratio of ,, , 1, 5, , and . Anil, , retires from the firm. Ashok and Ajay decided to share future profits and losses in the ratio of, 3:2. Calculate the gain ratio., , 58 | P a g e

Page 63 :
Accountancy II PUC, , Ans :, , Old share =, , 1 3 1, 2 , 10 5, , Mysuru District P U Commerce Forum, , New Ratio = 3:2, , Old Ratio = 5:3:2, , Gain Ratio = New ratio – Old Ratio, 3, 5, , Ashok’s gain = Ajay’s gain =, , 2, 5, , -, , 5, 10, , 2, 10, , 6−5, 10, , =, , 4−2, 10, , =, , 1, 10, , =, , 2, 10, , =, , Hence gaining ratio between Ashok and Ajay, , 1, 10, , :, , 2, 10, , = 1:2, , Problems on calculation of New Profit Sharing Ratio, 3 1, 8 2, , 1, 8, , 6. Latha, Abhishek and Apeksha are Partners sharing profits and losses in the ratio of , and ., Latha retires and surrenders, , 2, 3, , of her share in favour of Abhishek and the remaining share in, , favour of Apeksha. Calculate new profit sharing ratio., Ans :, , Old Ratio =, Old ratio =, , 3 1, 8, 2, 34, 88, , 1, 8, 1, 8, , Surrender share =, 3, 8, , Share gained by Abhishek =, , 3, 8, , Share gained by Apeksha =, , 2, 3, , x, , 1, 3, , x, , and, , 1, 3, , 6, 24, , =, , =, , 2, 3, , 3, 24, , New Share = Old share + Share Gained, 4, 8, , Abhishek’s New share = +, Apeksha’s New share =, , 1, 8, , +, , 6, 24, , 3, 24, , 12+6, 24, , =, , 3+3, 24, , =, , =, , =, , 18, 24, , 6, 24, , Hence New Profit Sharing Ratio of Abhishek and Apeksha, , 18, 24, , :, , 6, 24, , = 18:6 = 3:1, , 7. Naveen, Suresh and Tarun are partners sharing profits and losses in the ratio of 5:3:2. Suresh, retires from the firm and his share is acquired by Naveen and Tarun in the ratio of 2:1. Calculate, new profit sharing ratio., Ans :, , Old Ratio = 5:3:2, Gain ratio = 2:1, Share gained = Retiring partner’s share X Gain ratio of remaining partners, 3, 10, , Share gained by Naveen =, Share gained by Tarun =, , 3, 10, , x, , x, , 1, 3, , 2, 3, , =, , =, , 6, 30, , 3, 30, , New Share = Old share + Share Gained, Naveen’s New share =, Tarun’s New share =, , 5, 10, , 2, 10, , +, , +, , 6, 30, , 3, 30, , =, , =, , 15+6, 30, , 6+3, 30, , =, , =, , 21, 30, , 9, 30, , Hence New Profit Sharing Ratio of Naveen and Tarun, , 21, 30, , :, , 9, 30, , = 21:9 = 7:3, 59 | P a g e

Page 64 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , 8. Vidya, Sandya, Latha and Sudha are partners sharing profits in the ratio of 3:2:1:4. Vidya retires, and her share is acquired by Sandya and Latha in the ratio of 3:2. Calculate new profit sharing, ratio and gaining ratio of the remaining partners., Ans :, , Old Ratio = 3:2:1:4, Share acquired = 3:2, Share gained = Retiring partner’s share X Gain ratio of remaining partners, 3, 10, , Share gained by Sandya =, , 3, 10, , Share gained by Latha =, , 3, 5, , x, 2, 5, , x, , Share gained by Sudha = NIL, , =, , 9, 50, , =, , 6, 50, , Hence, the Gain Ratio of Sandya, Latha and Sudha, New Share = Old share + Share Gained, Sandya’s New share =, Latha’s New share =, Sudha’s New share =, , 2, 10, , +, , 4, 10, , =, , 1, 10, , +, , 9, 50, , 6, 50, , 10+9, 50, , =, , 5+6, 50, , =, , 20, 50, , =, , =, , 9 6, : :, 50 50, , 0 = 9:6:0 = 3:2:0, , 19, 50, , 11, 50, , New Profit Sharing Ratio of Sandya, Latha and Sudha, , 19, 50, , :, , 11, 50, , :, , 20, 50, , = 19:11:20, , 9. Pooja, Priya and Pratistha are partners sharing profits and losses in the ratio of 3:2:1. Priya, retires. Her share is taken by Pooja and Pratistha in the ratio of 2:1. Calculate New Profit Sharing, Ratio., Ans :, , Old Ratio = 3:2:1, Gain ratio = 2:1, Share gained = Retiring partner’s share X Gain ratio of remaining partners, Share gained by Pooja =, , 2, 6, , x, , Share gained by Pratistha =, , 2, 6, , 2, 3, , =, , x, , 1, 3, , 4, 18, , =, , 2, 18, , New Share = Old share + Share Gained, 3, 6, , Pooja’s New share = +, Pratistha’s New share =, , 4, 9+4 13, =, =, 18, 18, 18, 1, 2, 3+2, 5, + =, =, 6 18, 30, 30, , Hence New Profit Sharing Ratio of Pooja and Pratistha, , 13, 18, , :, , 5, 18, , = 13:5, , 10. P, Q and R are partners sharing profits in the ratio of 3:2:1. Q retires and his share is acquired, by P and R in the ratio of 3:2. Calculate new profit sharing ratio., Ans :, , Old Ratio = 3:2:1, Gain ratio = 3:2, Share gained = Retiring partner’s share X Gain ratio of remaining partners, Share gained by P =, Share gained by R =, , 2, x, 6, 2, x, 6, , 3, =, 5, 2, =, 5, , 6, 30, 4, 30, , 60 | P a g e

Page 65 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , New Share = Old share + Share Gained, 3, 6, 15+ 6 21, =, =, 6 30, 30, 30, 1, 4, 5+4, 9, = + =, =, 6 30, 30, 30, , P’s New share = +, R’s New share, , Hence New Profit Sharing Ratio of P and R, , 21, 30, , :, , Section D, , 9, 30, , = 21:9 = 7:3, , 12 Marks Problems Without Capital Adjustments, 1. Digvijay, Brijesh and Parakaram were partners in a firm sharing profits in the ratio of, 2: 2:1., Balance Sheet as on March 31, 2018 was as follows:, , Liabilities, , Creditors, Reserves, Digvijay's Capital, Brijesh's Capital, Parakaram's Capital, , ₹, 49,000, 18,500, 82,000, 60,000, 75,500, 2,85,000, , Assets, , Cash, Debtors, Stock, Buildings, Patents, , Adjustment:, Brijesh retired on March 31, 2018 on the following terms:, a) Goodwill of the firm was valued at ₹ 60,000 (As per AS-26.), b) Bad debts amounting to ₹ 2,000 were to be written off., c) Patents were considered as valueless., Prepare:, , ₹, 8,000, 19,000, 42,000, 2,07,000, 9,000, 2,85,000, , (i) Revaluation Account,, (ii) Partners' Capital Accounts and, (iii) Balance Sheet of Digvijay and Parakaram after Brijesh's retirement., Solution:, Dr., , Particulars, To Bad Debts A/c, (Bad Debts written off), To Depreciation on Patents, , Revaluation Account, ₹, 2,000, 9,000, 12,000, , Particulars, By Partners Capital A/c, (Loss on Revaluation), , Digvijay = 11,000*2/5 = 4,400, Brijesh = 11,000*2/5 = 4,400, Parakaram =11,000*1/5 = 2,200, , ₹, , Cr., , 11,000, 11,000, 61 | P a g e

Page 66 :
Accountancy II PUC, , Partners’ Capital Account, , Dr., Particulars, , Digvijay Brijesh Paraka, ram, To Revaluation A/c 4,400 4,400 2,200, To Brijesh’s, 16,000, Capital A/c, - 8,000, (24,000X2:1), , (Share of Goodwill), To Brijesh Loan A/c, (Balancing Figure), , -, , 87,000, , Mysuru District P U Commerce Forum, , Cr., Digvijay Brijesh Paraka, ram, By Balance b/d, 82,000 60,000 75,500, By Reserve Fund 7,400, 7,400, 3,700, (18,500 x 2:2:1), By Digvijay’s, 16,000, Particulars, , Capital A/c (W.n.), (Share of Goodwill), , By Parakaram’s, 69,000 Capital A/c (W.n.), , -, , 8,000, , To Balance c/d, 69,000, (Share of Goodwill), (Closing Capital), 89,400 91,400 79,200, 89,400 91,400, By Balance b/d, 69,000, -, , -, , 79,200, 69,000, , Balance Sheet as on 01.04.2018, Liabilities, ₹, Creditors, 49,000, Brijesh’s Loan A/c, 87,000, Capitals, Digvijay, 69,000, Parakaram, 69,000 1,38,000, , Assets, Cash in Hand, Debtors, Less: Bad debts, , Stock, Buildings, Patents, Less: Depreciation, , 2,74,000, Working Note:, Calculation of Goodwill, , 2, , Old Ratio = 2:2:1 Retiring partner share = 5, , 19,000, , 2,000, 9,000, 9,000, , ₹, 8,000, 17,000, 42,000, 2,07,000, nil, 2,74,000, , Total goodwill valued = 60,000, 2, , Retiring partner share of Goodwill = 60,000 𝑋𝑋 5 = 24,000, 2, , Digvijay’s Share = 24,000 𝑋𝑋 3 = 16,000, 1, , Parakaram’s Share = 24,000 𝑋𝑋 3 = 8,000, 2. Pankaj, Naresh and Saurabh are partners sharing profits in the ratio of 3:2:1. Naresh, retired from the firm due to his illness. On that date the Balance Sheet of the firm was, as follows:, 62 | P a g e

Page 67 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , Books of Pankaj, Naresh and Saurabh Balance Sheet as on March 31, 2018, , Liabilities, General Reserve, Sundry Creditors, Bills Payable, Outstanding Salary, Provision for Legal, Damages, Capitals:, Pankaj, 46,000, Naresh, 30,000, Saurabh, 20,000, Additional Information:, , ₹, 12,000, 15,000, 12,000, 2,200, 6,000, , Assets, , Bank, Debtors, Less: PDD, Stock, Furniture, , 6000, 400, , Premises, 96,000, 1,43,200, , ₹, 7,600, , 5,600, 9,000, 41,000, 80,000, , 1,43,200, , a) Premises have been appreciated by 20%, stock depreciated by 10% and, provision for doubtful debts was to be made at 5% on debtors. Further, provision, for legal damages is to be made for ₹ 1,200 and furniture to be brought up to ₹, 45,000., b) Goodwill of the firm be valued at ₹ 48,000 (As per AS-26), , c) ₹ 26,000 from Naresh's Capital Account be transferred to his Loan Account, and balance be paid through bank If required, necessary loan may be obtained, from Bank., d) New profit-sharing ratio of Pankaj and Saurabh is decided to be 5:1., , Prepare: 1) Revaluation A/ c,, 2) Partner’s Capital Accounts and, 3) Balance Sheet of the firm after Naresh's Retirement., Solution:, Revaluation Account, Dr., Particulars, ₹, Particulars, To Depreciation on stock, 900 By Appreciation on Premises, (80,000X20/100), ( 9,000X10/100), To Provision for Legal, 1,200 By Provision for Bad debts, damages, (6,000X5/100 = 300-400, By Appreciation on Furniture, By Partners Capital A/c, (profit on Revaluation), (45,000 - 41,000), Pankaj 18,000X3/6 = 9,000, Naresh 18,000X2/6 = 6,000, Saurabh18,000X1/6 = 3,000, , 18,000, 20,100, , Cr., ₹, 16,000, 100, 4,000, , 20,100, 63 | P a g e

Page 68 :
Accountancy II PUC, , Dr., Particulars, To Naresh’s, Capital A/c, (16,000X5:1), , (Share of Goodwill), , To Naresh’s Loan A/c, , (Balancing Figure), To Bank A/c, , Partners’ Capital Account, , Cr., Pankaj Naresh Saurabh, 46,000 30,000 20,000, 2,667 By General Reserve 6,000 4,000, 2,000, (12,000 x 3:2:1), By Pankaj’s, 13,333, Capital A/c (W.n.), -, , Pankaj Naresh Saurabh, 13,333, , -, , -, , 26,000, , -, , 30,000, , To Balance c/d, 47,667, (Closing Capital), , -, , Mysuru District P U Commerce Forum, , Particulars, By Balance b/d, , (Share of Goodwill), , -, , -, , By Saurabh’s, 22,333 Capital A/c (W.n.), , 2,667, , -, , (Share of Goodwill), , By Revaluation A/c 9,000, , 61,000 56,000 25,000, , By Balance b/d, , 6,000, 3,000, 61,000 56,000 25,000, 49,000, 21,000, -, , Balance Sheet as on 01.04.2018, Liabilities, Sundry Creditors, Bills payable, Provision for Legal, damages (6,000+1,200), O/s Salary, Bank Loan (w.n.), Naresh’s Loan A/c, Capitals, Pankaj, 47,667, Saurabh, 22,333, , ₹, 15,000, 12,000, 7,200, , 2,200, , 22,400, , 26,000, , Debtors, , Assets, , 6,000, , Less: PDD(6,000X5/100), , Stock, 9,000, Less: Depreciation, 900, Furniture, 41,000, Add: Appreciation 4,000, Premises, 80,000, Add: Appreciation 16,000, , 70,000, , 1,54,800, , Dr., , 300, , Bank Account, , Particulars, Amount, Particulars, To Balance b/d, 7,600 By Naresh capital A/c, To Loan A/c, (Balancing figure BoD) 22,400, 28,000, , ₹, 5,700, 8,100, 45,000, 96,000, , 1,54,800, , Cr., Amount, 30,000, 30,000, , 64 | P a g e

Page 69 :
Accountancy II PUC, , Working Note:, , Calculation of Goodwill, , Mysuru District P U Commerce Forum, 2, , Old Ratio = 3:2:1 Retiring partner share = 6, Total goodwill valued = 48,000, , 2, , Retiring partner share of Goodwill = 48,000 𝑋𝑋 6 = 16,000, 5, , Pannkaj’s Share = 16,000 𝑋𝑋 6 = 13,333, 1, , Saurabh’s Share = 16,000 𝑋𝑋 6 = 2,667, 3. Radha, Sheela and Meena were in partnership sharing profits and losses in the, proportion of 3:2: 1..On April 1, 2018, Sheela retires from the firm and on that date,, Balance Sheet was as follows:, , Liabilities, Trade Creditors, Bills Payable, Expenses Owing, General Reserve, Capitals:, Radha, 15,000, Sheela, 15,000, Meena, 15,000, , ₹, 3,000, 4,500, 4,500, 13,500, , 45,000, 70,500, , Assets, Cash in Hand, Cash at Bank, Debtors, Stock, Factory Premises, Machinery, Loose Tools, , ₹, 1,500, 7,500, 15,000, 12,000, 22,500, 8,000, 4,000, 70,500, , The terms were:, (a) Goodwill of the firm was valued at ₹13,500 (As per AS-26), (b) Expenses owing to be brought down to ₹ 3,750., (c) Machinery and Loose Tools are to be valued at 10% less than their book value., (d) Factory premises are to be revalued at ₹ 24,300., Prepare:, 1. Revaluation Account, 2. Partners' Capital Accounts and, 3. Balance Sheet of the firm after retirement of Sheela., , 65 | P a g e

Page 70 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , Dr., , Revaluation Account, Particulars, Amount, Particulars, To Depreciation on, By Expenses owing reduced, Machinery 8,000x10/100, 800, (4,500 – 3,750), To Depreciation on, By Appreciation on Factory, Loose tools 4,000x10/100, 400, primes (24,300 -22,500), To Partners Capital A/c, (Profit on Revaluation), Radha 1,350X3/6 = 675, Sheela 1,350X2/6 = 450, Meena 1,350X1/6 = 225, 1,350, 11,000, , Dr., Particulars, To Sheela’s, Capital A/c, (4,500X3:1), , To Sheela Loan A/c, (Balancing Figure), , Partners Capital Account, Radha Sheela Meena, Particulars, Radha, By Balance b/d, 15,000, 3,375, 675 By General reserve 6,750, (13,500X3:2:1), , -, , To Balance c/d, 19,050, (Closing Capital), , 24,000, -, , By Radha’s, Capital A/c, 16,800 (4,500X3/4), By Meena’s, Capital A/c, -, , (4,500X1/4), By Revaluation A/c, , 22,425 24,000 17,425, , By Balance b/d, Liabilities, Trade Creditors, Bills payable, Expenses owing, (4,500 -750), Sheela’s Loan A/c, Partner’s Capital, Radha, 19,050, Meena, 16,800, , -, , 675, 22,425, 19,050, , Balance Sheet As on 31/03/2018, Amount, Assets, 3,000 Cash in Hand, 4,500 Cas at Bank, 3,750 Debtors, Stock, 24,000 Machinery, Less: Depreciation, Factory premises, 35,850 Add: Appreciation, Loose Tools, Less: Depreciation, 71,100, , Cr., Amount, 750, , 1,800, , 2,550, Cr., Sheela Meena, 15,000 15,000, 4,500, 2,250, , 3,375, , -, , 1,675, , -, , 450, 225, 24,000 17,425, 16,800, , 8,000, 800, 22,500, 1,800, 4,000, 400, , Amount, 1,500, 7,500, 15,000, 12,000, 7,200, 24,300, 3,600, 71,100, 66 | P a g e

Page 71 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , Working Note:, Calculation of Goodwill, , 2, , Old Ratio = 3:2:1 Retiring partner share = 6, Total goodwill valued = 13,500, , 2, , Retiring partner share of Goodwill = 13,500 𝑋𝑋 6 = 4,500, 3, , Radha’s Share = 4,500 𝑋𝑋 4 = 3,375, 1, , Meena’s Share = 4,500 𝑋𝑋 4 =, , 1,125, , Problems on with Capital Adjustment, , 4. Narang, Suri and Bajaj are partners in a firm sharing profits and losses in proportion of, 1/2, 1/6 and 1/3 respectively., The Balance Sheet on April 1, 2018 was as follows:, , Liabilities, Bills Payable, Sundry Creditors, Reserves, Capital Accounts:, Narang 40,000, Suraj 20,000, Bajaj 28 000, , ₹, 12,000, 18,000, 12,000, , 88,000, 1,30,000, , Assets, Freehold Premises, Machinery, Furniture, Stock, Sundry Debtors 20,000, Less: RBD, 1000, Cash, , ₹, 40,000, 30,000, 12,000, 22,000, , 19,000, 7,000, 1,30,000, , Bajaj retires from the business and the partners agree to the following :, a) Freehold premises and stock are to be appreciated by 20% and 15% respectively., b) Machinery and furniture are to be depreciated by 10% and 7% respectively., c) Bad Debts reserve is to be increased to ₹ 1,500., d) Goodwill is valued at ₹ 21,000 (As per AS-26), e) The continuing partners have decided to adjust their capitals in their new profit, sharing ratio after retirement of Bajaj. Surplus/deficit, if any, in their Capital, Accounts will be adjusted through cash., Prepare:, (i) Revaluation A/ c,, (ii) Partners' Capital Accounts and, (iii) Balance Sheet of the reconstituted firm., , 67 | P a g e

Page 72 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , Solution:, , Revaluation Account, , Dr., Particulars, To Depreciation on, Machinery (30,000x10/100), To Depreciation on, Furniture (12,000x7/100), To Bad debts, (1,500 -1,000), To Partners Capital A/c, (Profit on Revaluation), Narag 6,960X3/6 = 3,480, Suraj 6,960X1/6 = 1,160, Bajaj 6,960X2/6 = 2,320, , Cr., Amount, 8,000, , Amount, , Particulars, By Appreciation on Freehold, 3,000, Premises (40,000x20/100), By Appreciation on Stock, 840, (22,000x15/100), 500, , 3,300, , 6,960, 11,300, , 11,300, , Partners Capital Account, , Dr., Particulars, , To Baja’s, Capital A/c, (7,000X3:1), To Baja’s Loan A/c, (Balancing figure), , To Cash A/c, , (Excess Cap withdrawn), , To Balance c/d, , (Closing Capital), , Narag, , Suraj, , 5,250 1,750, -, , 5,000, , 49,230 16,410, , Bajaj, , -, , Particulars, , By Balance b/d, By Reserve A/c, , (12,000X 3:1:2), , 41,320 By Narag’s, Capital A/c, (7,000X3/4), By Suraj’s, Capital A/c, (7,000X1/4), , Cr., Narag, , Suraj, , -, , -, , 5,250, , -, , -, , 1,750, , 1,160, -, , 2,320, -, , 54,480 23,160, 49,230 16,410, , 41,320, -, , 40,000 20,000, 6,000 2,000, , By Revaluation A/c 3,480, By Cash A/c, 5,000, 54,480 23,160 41,320, , (Deficit Cash brings), , By Balance b/d, , Bajaj, , 28,000, 4,000, , 68 | P a g e

Page 73 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , Balance Sheet As on 1/04/2018, Liabilities, Amount, Assets, Sundry Creditors, 18,000 Freehold premises, Bills payable, 12,000 Add: Appreciation, Baja’s Loan A/c, 41,320 Machinery, Less: Depreciation, Partner’s Capital, Furniture, Narag, 49,230, Suraj, 16,410, 65,640 Less: Depreciation, Stock, Add: Appreciation, Sundry Debtors, Less: RBD (1000+500), Cash in Hand, 1,36,960, Cash Account, , Dr., , Particulars, To Balance b/d, To Narag’s Capital A/c, , Amount, Particulars, 7,000 By Suraj capital A/c, 5,000 By Balance C/d, , Amount, 40,000, 8,000, 30,000, 3,000, 12,000, 840, 22,000, 3,300, 20,000, 1,500, , 48,000, 27,000, 11,160, 25,300, 18,500, 7,000, 1,36,960, , Cr., Amount, 5,000, 7,000, , 12,000, 7,000, , To Balance b/d, , 12,000, , Working Note 01, A. Calculation of Goodwill As per AS-26, 1 1 1, 1 3, 3 1 1 2 2, 3 1 2, Old Ratio: 2 : 6 : 3 = 2 x 3 = 6: 6 : 3x2 =6 = 6 : 6 : 6, Total Goodwill valued 21,000, , Retiring partner share =, , 2, 6, , Retiring Partner Share of Goodwill = 21,000𝑋𝑋 = 𝟕𝟕, 𝟎𝟎𝟎𝟎𝟎𝟎, 3, 4, 1, =7,000𝑋𝑋 =, 4, , 2, 6, , Narag’s Share of Goodwill =7,000𝑋𝑋 = 𝟓𝟓, 𝟐𝟐𝟐𝟐𝟐𝟐, Suraj’s Share of Goodwill, , 𝟏𝟏, 𝟕𝟕𝟕𝟕𝟕𝟕, , B. Calculation of Closing Capital of remaining partners based on New Ratio, 3, , 1, , 2, , Old Ratio = 6 : 6 : 6, , 3, , 1, , New Ratio after retirement is 4 : 4, , 69 | P a g e

Page 74 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , Total Capital after All Adjustment, Particulars, Narag, Opening Capital, 40,000, Reserve fund, 6,000, Revaluation A/c, 3,480, 49,480, Less: Baja’s capita (Share of Goodwill), 5,250, Total 44,230, Total Capital = 44,230+21,410 = 65,640, Share of Closing capital of Remaining partners is, 3, , Suraj, 20,000, 2,000, 1,160, 23,160, 1,750, 21,410, , a) Capital of Narag = 65,640 x 4 = 49,230, 1, , b) Capital of Suraj = 65,640 x 4, , = 16,410, , 5. Following is the Balance Sheet of Jain, Gupta and Malik as on March 31, 2018., Balance Sheet as on March 31, 2018, , Liabilities, Sundry Creditors, Telephone bills O/S, Accounts payable, Accumulated profits, Capitals:, Jain, 40,000, Gupta, 60,000, Malik, 20,000, , ₹, Assets, 19,800 Land and Buildings, 300 Bonds, 8,950 Cash, 16,750 Bills Receivable, Sundry Debtors, Stock, Office Furniture, 1,20,000 Plant and Machinery, Computers, 1,65,800, , ₹, 26,000, 14,370, 5,500, 23,450, 26,700, 18,100, 18,250, 20,230, 13,200, 1,65,800, , Additional Information:, The partners have been sharing profits in the ratio of 5:3:2. Malik decides to retire from, business on April 1, 2018 and his share in the business is to be calculated as per the following, terms of revaluation of assets and liabilities:, a) Stock ₹ 20,000; Office furniture ₹ 14,250; Plant and Machinery ₹ 23,530; Land and, Building ₹ 20,000., b) A provision of ₹ 1,700 to be created for doubtful debts. The goodwill of the firm is, valued at ₹ 9,000., c) The continuing partners agreed to pay ₹16,500 as cash on retirement of Malik, to be, contributed by continuing partners in the ratio of 3:2. The balance in the Capital, Account of Malik will be treated as Loan., Prepare:, (i) Revaluation A/c,, (ii) Capital Accounts, and, (iii)Balance Sheet of the reconstituted firm., 70 | P a g e

Page 75 :
Accountancy II PUC, , Dr., Particulars, To Depreciation on, Furniture, (18,250 – 14,250), To Depreciation on, Land & Buildings, (26,000 – 20,000), To Provision for Bad debts, , Dr., Particulars, To Mallik’s, Capital A/c, (1,800x3:2), , Revaluation Account, , Mysuru District P U Commerce Forum, , Amount, , Particulars, By Appreciation on Stock, 4,000, (20,000 - 18100), By Appreciation on Plant &, 6,000, Machinery (23,530 -20,230), By partners Capital A/c, (Loss on Revaluation), 1,700 Jain = 6,500*5/10 =, 3,250, Gupta = 6,500*3/10 =, 1,950, Malik = 6,500*2/10 =, 1,300, 11,700, , Cr., Amount, 1,900, 3,300, , 6,500, 11,700, , Partners Capital Account, , Cr., Particulars, Jain, Gupta Malik, By Balance b/d, 40,000 60,000 20,000, By Accumulated, 8,375 5,025, 3,350, Profit (16,750X 5:3:2), To Revaluation A/c 3,250 1,950, 1,300 By Jain’s Capital A/c, 1080, (1,800X3/5), To Cash A/c, 16,500, By Gupta’s Capital A/c, (payment to Malik), 720, (1,800X2/5), To Malik Loan A/c, 7,350 By Cash A/c, To Balance c/d, 9,900 6,600, 53,900 69,000, (16,500 x 3:2), (Closing Capital), 58,275 71,625 25,150, 58,275 71,625 25,150, 53,900 69,000, By Balance b/d, Jain, 1080, , Dr., Particulars, To Balance b/d, To Jain Capital A/c, To Gupta Capital, To Balance b/d, , Gupta Malik, 720 -, , Cash Account, Amount Particulars, 5,500 By Malik capital A/c, 9,900 By Balance C/d, 6,600, 22,000, 5,500, , Cr., Amount, 16,500, 5,500, 22,000, , 71 | P a g e

Page 76 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , Balance Sheet As on 31/03/2018, Liabilities, Amount, Assets, Amount, Sundry Creditors, 19,800 Land & Buildings, 26,000, Telephone bill o/s, 300 Less: Depreciation, 6,000, 20,000, Accounts payable, 8,950 Bonds, 14,370, Malik’s Loan A/c, 7,350 Cash in Hand, 5,500, Partner’s Capital, Bills Receivable, 23,450, Sundry Debtors, 26,700, Jain, 53,900, Gupta, 69,000, 1,22,900 Less: RBD, 1,700, 25,000, Stock, 18,100, Add: Appreciation, 1,900, 20,000, Office Furniture, 18,250, Less: Depreciation, 4,000, 14,250, Plant & Machinery, 20,230, Add: Appreciation, 3,300, 23,530, Computers, 13,200, 1,59,300, 1,59,300, Working Note 01, A. Calculation of Goodwill As per AS-26, 2, Total Goodwill is valued = 9,000, Retiring Partner Share =10, 2, , Retiring partner share of goodwill = 9,000𝑋𝑋 10 = 1,800, 3, , Malik’s share of Goodwill = 1,800𝑋𝑋 5 = 1,080, 2, , Gupta’s share of Goodwill = 1,800𝑋𝑋 5 =, , 720, , 6. The Balance Sheet of Amit, Bhima and Chandru who are partners in a firm Sharing, profits according to their capitals as on March 31, 2018 was as under:, Balance sheet As on 31-03-2018, , Liabilities, Creditors, Amit's Capital, Bhimu's Capital, Chandru's Capital, General Reserve, , ₹, 21,000, 80,000, 40,000, 40,000, 20,000, , 2,01,000, , Assets, , Buildings, Machinery, Stock, Debtors, Less: PBD, Cash at Bank, , 20,000, 1,000, , ₹, 1,00,000, 50,000, 18,000, , 19,000, 14,000, 2,01,000, , On that date, Bhima decided to retire from the firm and was paid for his share in the firm, subject to the following, a. Buildings to be appreciated by 20%., b. Provision for Bad debts to be increased to 15% on Debtors., c. Machinery to be depreciated by 20%., , 72 | P a g e

Page 77 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , d. Goodwill of the firm is valued at ₹ 72,000 (As per AS-26), e. The capital of the new firm be fixed at ₹ 1,20,000 and it should be adjusted equally, among Continuing partners and adjustments are to be made in cash., Prepare:, (i) Revaluation Account,, (ii) Capital Accounts of the partners, and, (iii) Balance Sheet after retirement of Bhima., Revaluation Account, , Dr., , Particulars, To Provision for Bad debts, , (20,000x15/100 = 3,000-1000), , To Depreciation on, Machinery (50,000x20/100), To Partners Capital A/c, (Profit on Revaluation), Amith 8,000X2/4 = 4,000, Bhima 8,000X1/4 = 2,000, Chandru8,000X1/4 =2,000, , Amount, Particulars, 2,000 By Appreciation on Buildings, (1,00,000x20/100), 10,000, , Cr., Amount, 20,000, , 8,000, 20,000, , 20,000, , Partners’ Capital Account, , Dr., Particulars, To Bhima’s, Capital A/c, , Amith, , 9,000, , Bhima Chandru, , -, , 9,000, , (18000x1:1), , Particulars, , By Balance b/d, , By General Reserve, (20,000X 2:1:1), , 65,000, By Amith’s, 25,000, Capital A/c, (Excess Capital withdrawn), (18,000X1/2), To Balance c/d, 60,000, By, Chandru’s, 60,000, (Closing Capital), To Bhima’s Loan A/c, To Cash A/c, , Cr., Amith, , 80,000 40,000, 10,000 5,000, , -, , Capital A/c, (18,000X1/2), By Revaluation A/c 4,000, , 1,20,000x 1:1, , 40,000, 5,000, , 9,000, , -, , 9,000, , -, , 2,000, , 2,000, 22,000, , 94,000 65,000, By Balance b/d 60,000, -, , 69,000, 60,000, , By Cash A/c, , (Deficit Cash brings), , 94,000 65,000 69,000, , Bhima Chandru, , -, , 73 | P a g e

Page 78 :
Accountancy II PUC, , Dr., , Particulars, To Balance b/d, To Chandru Capital A/c, To Balance b/d, , Mysuru District P U Commerce Forum, , Cash Account, , Cr., Amount, 25,000, 11,000, , Amount, Particulars, 14,000 By Amith capital A/c, 22,000 By Balance C/d, 36,000, 11,000, , 36,000, , Balance Sheet As on 31/03/2018, Liabilities, Amount, Assets, Creditors, 21,000 Buildings, Bhima’s Loan A/c, 65,000 Add: Appreciation, Partner’s Capital, Machinery, Amith, 60,000, Less: Depreciation, Chandru, 60,000, 1,20,000 Stock, Debtors, Less: PBD, Cash in Hand, 2,06,000, , Amount, 1,00,000, 20,000, 50,000, 10,000, 20,000, 3,000, , 1,20,000, 40,000, 18,000, 17,000, 11,000, 2,06,000, , Working Note:, A. Calculation of Old Ratio, , Ratio of partners = based on their Capital, =80,000 : 40,000 : 40,000, , =8:4:4, , Old Ratio of Partners = 2 : 1 : 1, , B. Calculation of retiring partner share of Goodwill, Total Goodwill is valued = 72,000, 1, , Retiring partner share of goodwill = 72,000𝑋𝑋 4 = 18,000, 1, , 1, , Retiring Partner share =4, , Amith’s Share of Goodwill= 18,000𝑋𝑋 2 = 9,000, 1, , Chandru’s Share of Goodwill= 18,000𝑋𝑋 2 = 9,000, , C. Calculation of Closing capital, Total Capital of Firm = 1,20,000, , 1, , Amith’s Capital = 1,20,000𝑋𝑋 2 = 60,000, 1, , 1 1, , New Ratio of remaining Parters =2 : 2, , Chandru’s Capital = 1,20,000𝑋𝑋 2 = 60,000, , 74 | P a g e

Page 79 :
Accountancy II PUC, , II. Fill in the blanks :, , Part -B, , Mysuru District P U Commerce Forum, , DEATH OF A PARTNER, , 1. Executors account is generally prepared at the time of Death of a Partner., 2. Accounting treatment at the time of retirement and death is Uniform., 3. The period from date of the last balance sheet and the date of the partners’ death is called, intervening period., 4. Profit and Loss Suspense account is debited for the transfer of share of accrued profit of a, deceased partner., 5. Accrued profit is calculated on the basis of Previous year /Average profit., 6. Amount payable to the executors of the deceased partner is transfer to Executors Loan, account., , II. Multiple choice Questions:, , 1. Accrued profit is ascertained on the following ways:, a) Average profit, b) Previous year’s profit, c) On sales, d) All of the above, 2. Amount due to deceased partner is settled in the following manner:, a) Immediate full payment, b) Transferred to Loan Account, c) Partly paid in cash and the balance transferred to Loan A/ c, d) All of the above., 3. Deceased partner’s share of profit in the accrued profit may be., a) Last year’s profit, b) Average profit of past few years, c) Sales, d) All the above, , 4. Amount payable to the Executors of the deceased partner is transferred to:, a) Executor Loan Account, b) Executors Account, c) Remaining partner’s Capital A/c, d) None of the above, 5. Items to be considered while calculating the amount payable to the deceased partner, a) His share of capital, b) His share in reserve, b) His share in accrued profit, d) All the above, , III. True of False, , 1. Deceased partner’s claim is transferred to his Executor’s Account . ‘True’, , 2. Deceased partner’s share of profit for the year intervening period may be calculated on the basis, of last year’s profit / average of past few years or on the basis of sales. ‘True’, 3. Deceased partner may be paid in one lump sum or instalments with interest. ‘True’, , 75 | P a g e

Page 80 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , 4. Retirement normally takes place at the end of an accounting period, where as death of a partner, may occur any time. ‘True’, 5. Amount payable to the Executors of the deceased partner is transferred to Executors Loan, Account. ‘True’, , IV. Very Short Answer Question:, 7. Who is an ‘Executor’?, Ans: Executor is the legal representative of a deceased partner in a partnership firm., 8. When do you prepare Executors Account?, Ans: Executer’s account is prepared at the time of a death of a partner., 9. Which account is credited for the share of accrued profit of a deceased partner?, Ans: Deceased partner’s capital account., 10. What is intervening period ?, Ans: The period from date of last balance sheet and the date of the partner’s death is called, intervening period., 11. How do you close the Executors Account?, Ans: Executor account is closed by transferring its balance to Executor loan account., , Section B: Two Marks Question, , 1. Give the meaning of accrued profit ., Ans: The profit from the date of last balance sheet till to the date of a death of a partner in a, partnership firm is considered as accrued profit., 2. Write any two ways of settlement of claims to the deceased partner., Ans: (a) Immediate full payment by cash, (b) Partly paid in cash and balance transferred to loan account, 3. Write the journal entry to close the deceased partner’s Capital Account., Ans: Deceased partners’ capital A/c……………………………..Dr, To Deceased partners executor A/c, (Being balance of deceased partner capital account transferred), , xxx, ----, , ---xxx, , 4. Pass Journal entry for transfer of accrued profit of the deceased partner., Ans: Profit and Loos suspense A/c……………………………..Dr, To Deceased partners capital A/c, (Being accrued profit transferred to deceased partner), , xxx, ----, , ---xxx, , 5. Write the journal entry for cash paid immediately to the executors of the deceased partner., Ans: Deceased partners executor A/c ……………………………..Dr, xxx, ---To BankA/c, ---xxx, (Being payment made to deceased partner executors), , 76 | P a g e

Page 81 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , Format of Deceased partners’ capital account, Dr, Deceased Partners Capital Account, Particulars, ₹, Particulars, To Drawings A/c, xxx By Balance b/d, To Interest on Drawing A/c, xxx By Revaluation A/c, (Amount x Interest rate x period), By Profit/Loss A/c (Amount x share), To Deceased Partners Executor A/c xxx By Reserves A/c (Amount x share), By A’s Capital A/c (Share of Goodwill), (Balancing figure), By B’s Capital A/c (Share of Goodwill), By Joint life policy A/c (Amount x share), By Salary (Amount x no of month’s), By Commission A/c (amount x period), By Interest on capital, (Amount x Int rate x Period), By Profit/Loss suspense A/c, (Amount x Share x Period), xxx, , Cr, ₹, xxx, xxx, xxx, xxx, xxx, xxx, xxx, xxx, xxx, xxx, xxx, , Six Marks Questions & Answers, , 1. Akash, Anil and Adarsh are the partners sharing profit and losses in the ratio of 3:2:1, their, capitals as on 1-04-2017 were ₹ 70,000, ₹ 90,000 and ₹ 60,000 respectively Akash died on, 31-12-2017 and the partnership deed provides the following:, 1) Interest on capital @ 8% p.a, 2) Akash’s salary ₹ 2,000 p.m, 3) His share of profit up to the date of death based on previous year‘s profit. Firms profit for, 2016 -17 ₹ 24,000, 4) His share of Goodwill ₹ 12,000, Ascertain the amount payable to Akash’s Executor by preparing Akash’s capital a/c, Solution:, Dr, Particulars, To Akash’s executor A/c, ( Balancing figure), , Akash’s capital Account, ₹, 1,13,200, , 1,13,200, , Particulars, By Balance b/d, By Interest on capital A/c, (70000 x 8/100 x 9/12), By Anil’s Capital A/c, (share of goodwill) (12,000X2/3), By Akash’s Capital A/c, (share of goodwill) (12,000X1/3), By Profit/Loss suspense A/c, (24,000 x 3/6 x 9/12), By Salary A/c (2000 x 9), , Cr, ₹, 70,000, 4,200, 8,000, 4,000, 9,000, 18,000, 1,13,200, 77 | P a g e

Page 82 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , 2. Arif, Sunil and Patil are partners sharing profit and losses in the ratio of 4:3:3. Their capital, balance on 01-04-2018 stood at ₹ 100,000, ₹ 80,000 and ₹ 50,000 respectively ., Arif died on 01-10-2018. The partnership deed provides the following;, 1) Interest on capital at 10% p.a, 2) He had withdrawn ₹ 5,000 upto the date of death., 3) Arif share of Goodwill ₹ 6,000 (As per AS-26), 4) His share of profit up to the date of death on the basis of previous year’s profit of ₹ 30,000, Prepare Arif’s executor A/c, Solution:, Dr., Particulars, To Arif’s Drawing A/c, To Balance c/d, , Arif’s Executor’s Account, ₹, Particulars, 5,000 By Arif’s capital A/c, 1,12,000 By Interest on capital A/c, (1,00,000 x 10/100 x6/12), By Sunil’s Capital A/c, (share of goodwill), (6,000X3/6), , By Patil’s Capital A/c, (share of goodwill), (6,000X3/6), , By Profit and Losses suspense A/c, (30,000 x 4/10 x 6/12), 1,17,000, , Cr., , ₹, 1,00,000, 5,000, 3,000, 3,000, 6,000, 1,17,000, , 3. Pavan, Madan and Suman were partners sharing profit and losses in the ratio of 2:1:1. Their, Balance sheet as on 31-03-2017 was as under, Balance sheet as on 31-03-2017, Liabilities, ₹, Assets, ₹, Sundry creditors, 25,000 Cash, 6,000, Reserve fund, 20,000 Stock, 12,000, Capitals :, Debtors, 15,000, Pavan 15,000, Investment, 15,000, Madan10,000, Building, 32,000, Suman10,000, 35,000, 80,000, 80,000, The partnership deed provides that in event death of partner his executor is entitled to get the, followings;, 1) The capital at the date of last balance sheet, 2) His proportion of reserve fund, 3) His share profit to the date of death based on the average profit of the last 3 years profits, 4) His share of goodwill. Goodwill of the firm is twice the average profit of last 3 years profits,, the profits for the last three years were: 2014-15 -₹ 16,000, 2015-16- ₹ 16,000 and 2016-17₹ 15,520, 78 | P a g e

Page 83 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , 5) Suman died on 01-07-2017. He had also with drawn ₹ 5,000 till to date of his death., Prepare Suman’s capital A/c and her executor A/c., Solution:, Dr., Suman’s Capital Account, Cr., Particulars, ₹, Particulars, ₹, To Drawing, 5,000 By Balance b/d, 10,000, To Suman executor’s A/c, 18,910 By Reserve fund (20,000x1/4), 5,000, By Profit/Loss suspense a/c, 990, (15840x1/4x3/12), By Pavan’s Capital (Share of G/w), 5280, By Madan’s Capital (Share of G/w), 2,640, 23,910, 23,910, Dr., Particulars, , Suman’s executor Account, ₹, , Working note:, Average profit =, , Particulars, By Suman’s capital a/c, , Cr., , ₹, 18,910, , Calculation of Goodwill, Total profit, No of years, , = 16,000+16,000+15,520, 3, = 47,520 = 15,840, 3, , Goodwill = Average profit x No of years Purchase, =, 15,840 x 2, =, ₹ 31,680, Suman’s Share of Goodwill =31,680X1/4 =7,920, Shared by Pavan to Suman = 7,920X2/3 = 5280, Share by Madan to Suman = 7,920X1/3 = 2,640, , 4. Shobha,Sudha and Rathna arte partners. Sharing profit and losses in the ratio of 2:2:1. Their, Balance sheet as on 31-03-2018 was as follows: (QP -2019), Balance sheet as on 31-03-2018, Liabilities, ₹, Assets, ₹, Sundry creditors, 30,000 Cash in hand, 10,000, Capitals:, Debtors, 25,000, Stock, 40,000, Shobha 15,000, Plant &machinery, 40,000, Sudha 25,000, 70,000, Rathna 30,000, 15,000, Reserve fund, 1,15,000, , 1,15,000, , Rathna died on 30-06-2018. Her executor’s should be entitled to:, 1) Her capital on the date of last balance sheet, 2) Her share of reserve fund on the date of last balance sheet, 3) Her share of profit up to the date of death, on the basis of previous year’s profit., Previous year profit is ₹ 20,000., 4) Her share of Goodwill. Good will of the form is valued at ₹ 40,000., 5) Interest on capital at 10%p.a., 79 | P a g e

Page 84 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , You are required to ascertain amount payable to executor of Rathna by Preparing Rathna’s capital A/c, Solution:, Dr, Rathna’s Capital Account, Cr, Particulars, To Rathna’s Executor a/c, , ₹, Particulars, 42,750 By Balance b/d, By Reserve fund (15,000x1/5), By Profit & Loss Suspense A/c, (20,000x1/5x3/12), By Shobha’s Capital A/c, By Sudha’s Capital A/c, By Interest on capital A/c, (30,000x10/100x3/12), 42,750, , ₹, 30,000, 3,000, 1,000, 4,000, 4,000, 750, 42,750, , A. Calculation of Goodwill, Rathna’s Share of Goodwill = 40,000X1/5 = 8,000, Shared by Shobha to Rathna’s = 8,000X2/4 = 4,000, Share by Sudha to Rathna’s = 8,000X2/4 = 4,000, , 5. Puneet ,Pankaj and Prakash are partners in a business sharing profit and losses in the ratio of, 2:2:1 respectively.their balance sheet as on 31-03-2017 was as follows, Balance sheet as on 31-03-2017, Liabilities, ₹, Assets, ₹, Sundry creditors, 1,00,000 Cash at bank, 20,000, Capital account, Stock, 30,000, Puneet 60,000, Sundry Debtors, 80,000, Pankaj 1,00,000, Investments, 70,000, Prakash 40,000, 2,00,000 Furniture, 35,000, Reserve fund, 50,000 Buildings, 1,15,000, 3,50,000, 3,50,000, Mr. Praksh died on 30-09-2017. The partnership deed provides the following;, a) The deceased partner will be entitled to his share of profit up to the date of death calculated on, the basis of previous year’s profit., b) He will be entitled to his share of Goodwill of the firm calculated on the basis of three year’s, purchase of average of last 4 year’s profit. The profits for the last four financial year’s are, given below: 2013-14 - ₹ 80,000, 2014-15- ₹ 50,000 ,2015-16- ₹ 40,000 and 2016-17, ₹ 30,000, c) The drawing of the deceased partner up to the date of death amounted to ₹ 10,000., d) Interest on capital is to be allowed at 12% p.a., Show Mr. Prakash’s capital Account., 80 | P a g e

Page 85 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , Solution:, Dr, Prakash’s capital Account, Particulars, ₹, Particulars, To Drawing A/c, 10,000 By Balance b/d, To Prakash’s Executors A/c, 75,400 By Interest on capital A/c, (40,000X12/100X6/12), By Reserve fund A/c (50,000x1/5), By Puneet’s Capital (Share of G/w), By Pankaj’s Capital (Share of G/w), By Profit/Loss suspense, A/c(30,000x1/5x6/12), 85,4000, Working note:, Average profit =, , Total profit, No of years, = 80,000+50,000+40,000+30,000, 4, =, 2,00,000 =, 50,000, 4, , Cr, ₹, 40,000, 2,400, 10,000, 15,000, 15,000, 3,000, 85,400, , Calculation of Goodwill, Goodwill = Average profit x No of years Purchase, =, 50,000 X 3, =, 1,50,000, Prakash’s Share of Goodwill = 1,50,000X1/5 =30,000, Shared by Puneet to Prakash = 30,000X2/4 = 15,000, Share by Pankaj to prakash = 30,000X2/4 = 15,000, SECTION – E, , PRACTICAL ORIENTED QUESTIONS AND ANSWERS, 1. Prepare Executors Loan Account with imaginary figures showing the repayment in two, annual equal installment along with interest., Dr., , A’s Executor’s Loan Account, , Date, Particulars, 31.3.2018 To Bank A/c, [10,000+2,000], 31.3.2018 To Balance c/d, 31.3.2019 By Bank A/c, 10,000+1,000], , ₹, Date, 12,000 01.4.2017, 31.3.2018, 10,000, 22,000, 11,000 01.4.2018, 31.3.2019, 11,000, , Particulars, By A’s Capital A/c, By Interest A/c, (20,000X10/100), , By Balance b/d, By Interest A/c, , Cr., , ₹, 20,000, 2,000, 22,000, 10,000, 1,000, , (10,000X10/100), , 11,000, , ***END***, , 81 | P a g e

Page 86 :
Accountancy II PUC, , BOOK - 1, CHAPTER -5, , Mysuru District P U Commerce Forum, , Dissolution of Partnership Firm, I. Two Marks questions:, , Section B, , 1. What is Dissolution of partnership?, Ans: Dissolution of partnership means some of the partners terminate their connections with, the firm and remaining partners will continue the business of the firm., , 2. Give the meaning of Dissolution of Partnership Firm?, Ans: Dissolution of partnership Firm means dissolution of partnership between all the partners, of the Firm. All the partners cut off their connections with the firm and the business of the firm, is closed down., 3. State any two circumstances under which a partnership firm is dissolved?, Ans: (a) With the Consent of all the partners, (b) With a Contract between the partners, (c) Expiry of fixed period, (d) Completion of venture (any two), 4. State any two difference between dissolution of partnership and dissolution of partnership, firm?, Difference between:Dissolution of Partnership, , a. Business is not closed / terminated, b. Assets and Liabilities revalued, , Dissolution of Partnership Firm, , a. Business is closed, b. Assets are sold and liabilities are paid off, , 5. What is Realisation Account?, Ans: Realisation Account is an account, which is prepared at the time of Dissolution of a, partnership firm to ascertain the profit or loss on realisation assets and payment of liabilities., 6. Why is Realisation Account is prepared?, Ans: Realisation Account is prepared to close all the ledger Accounts and to make settlement, of accounts., 7. What is the accounting treatment for unrecorded Asset Realised on Dissolution of a Firm?, Ans: Unrecorded asset realised is debited to cash (Bank) account and credited to realisation, account, 8. What is the accounting treatment for unrecorded Liability paid on dissolution of a Firm?, Ans: Unrecorded Liability paid is debited to realisation account and credited to cash (Bank), account., 9. How do you treat PBD on Dissolution of a Firm?, Ans: P.B.D is closed by transferring it to credit side of realisation account., 10. Give the journal entry for an asset taken over by a partner on dissolution of a firm?, Ans: Partner’s Capital A/c…………………., Dr, xxx, -To Realisation A/c, -xxx, (Being asset taken over by partner), 82 | P a g e

Page 87 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , 11. Give the journal entry for an liability taken over by a partner on dissolution of a Firm?, Ans: Realisation A/c………………………., Dr, xxx, -To Partner’s Capital A/c, -xxx, (Being liability taken over by partner), 12. Give the journal entry for transferring an asset to realisation account?, Ans: Realisation A/c………………….., Dr, xxx, -To Asset A/c, -xxx, (Being transfer of asset), 13. Give the journal entry for the transfer of an outside liability to realisation Account?, Ans: Liability A/c…………………….., Dr, xxx, -To Realisation A/c, -xxx, (Being transfer to Liability), 14. Give the journal entry for the payment of partners Loan on Dissolution of an Firm?, Ans: Partners Loan A/c……………….., Dr, xxx, -To Cash /Bank A/c, -xxx, (Being partner’s loan paid), 15. Give the journal entry for sale of an asset on Dissolution of a firm?, Ans: Cash / Bank A/c…………………… Dr, xxx, -To Realisation A/c, -xxx, (Being sale of Asset), 16. Give the journal entry for the payment of Liability of an Dissolution of Firm?, Ans: Realisation A/c…………………….. Dr, xxx, -To Cash (Bank), -xxx, (Being payment of Liability), 17. Give the journal entry for the transfer of profit on Realisation?, Ans: Realisation A/c………………….., Dr, xxx, To Partner’s Capital A/c s, -(Being profit transferred), , -xxx, , 18. Give the journal entry for the transfer of loss on Realisation?, Ans: Partner’s Capital A/c……………… Dr, xxx, To Realisation A/c, -(Being Transfer for loss), , -xxx, , 19. Give the journal entry for realisation expenses paid by the Firm?, Ans: Realisation A/c……………………. Dr, xxx, To Cash (Bank) A/c, -(Being realistion expenses paid), , -xxx, , 20. How do you close realisation A/c on Dissolution of Firm?, Ans: Realisation account is closed by transferring its balance to partners’ capital account., 83 | P a g e

Page 88 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , 21. Give the journal entry for realisation expenses paid by the partner on behalf of the Firm?, Ans: Realisation A/c……………………. Dr, xxx, -To Partner’s Capital A/c, -xxx, (Being realisation expenses paid by the partner), , 1., , Section -D: Questions for 12 Marks:, Suvarna and Sunanda are partners sharing profits and losses equally. Their Balance, Sheet as on 31. 3. 2018 was as follows :, Liabilities, Bills Payable, Creditors, Sunanda's loan, Reserve fund, Capitals:, Suvarna, Sunanda, , Balance Sheet as on 31. 3. 2018, Assets, ₹, 10,000, 50,000, 25,000, 15,000, , Cash at Bank, Debtors, 55,000, Less : P.B.D., 3,000, Stock, Furniture, Machinery, Buildings, Profit and Loss A/c, , ₹, 15,000, , 52,000, 40,000, 15,000, 60,000, 25,000, 80,000, 81,000, 12,000, 2,40,000, 2,40,000, On the above date the firm was dissolved. The following information is available:, a) The assets realised as follows: Debtors ₹ 52,000, Stock ₹ 39,000, Machinery ₹ 24,000,, b) Buildings ₹ 75,000 and Furniture ₹ 13000,, c) Creditors and Bills payable were paid@ 5% discount., d) Dissolution expenses amounted to ₹ 4000., Prepare: i) Realisation Account, ii) Partners' Capital Accounts and, iii) Bank Account., , 84 | P a g e

Page 89 :
Accountancy II PUC, , Realisation Account, , Dr., , Mysuru District P U Commerce Forum, , Cr., Amount, , Particulars, Amount, Book value of Assets, To Debtors, 55,000, To Stock, 40,000, To Furniture, 15,000, To Machinery, 25,000, To Buildings, 81,000, To Bank A/c (Liabilities paid), Bills payable, 9,500, [10,000 -500 (10,000x5/100)], , Creditors, , 47,500, , [50,000- 2,500 (50,000x5/100)], , To Bank A/c, (Dissolution expenses), , Dr., Particulars, To Profit & Loss A/c, , 12,000x1:1, To Realisation A/c, , (Loss on Realisation), , To Bank A/c, (Closing Capital), , Dr., Particulars, To Balance b/d, To Realisation A/c, (Assets Realised), , Suvarna, 6,000, 5,500, , Particulars, Book value of Liabilities:, By PBD, 3,000, By Bills Payable, 10,000, By Creditors, 50,000, By Bank A/c (Assets Realised), Debtors, 52,000, Stock, 39,000, Machinery, 24,000, Buildings, 75,000, 57,000, Furniture, 13,000, 2,03,000, By Partner’s Capital A/c, 4,000, (Loss on Realisation), Suvarna 11,000x1/2 = 5,500, Sunanda 11,000x1/2=, 5,500, 11,000, 2,77,000, 2,77,000, Partners Capital Account, Cr., Sunanda Particulars, Suvarna Sunanda, 6,000 By Balance b/d, 60,000, 80,000, By Reserve Fund, 7,500, 7,500, 5,500, (15,000x1:1), , 56,000, , 76,000, , 67,500, , 8 7,500, , 67,500, , Bank Account, Amount Particulars, 15,000 By Sunanda’s Loan, 203,000 By Realisation A/c (Liabilities Paid), By Dissolution Expenses, By Partners Capital, Suvarna, 56,000, Sunanda, 76,000, 2,18,000, , 87,500, Cr., Amount, 25,000, 57,000, 4,000, , 1,32,000, 2,18,000, 85 | P a g e

Page 90 :
Accountancy II PUC, , 2., , Mysuru District P U Commerce Forum, , Anitha and Sunitha are partners sharing profits and losses equally. Their Balance, Sheet as on 31. 3. 2014 was as follows :, Balance Sheet as on 31. 3. 2018, Liabilities, Assets, Bills Payable, 6,000 Cash at Bank, 6,000, Creditors, 20,000 Debtors, 28,000, Anitha's loan, 5,000 Less: P.B.D., 2,000, 26,000, Vanitha's loan, 5,000 Stock, 40,000, Reserve fund, 30,000 Investments, 20,000, Capitals, Furniture, 14,000, Anitha, 50,000 Buildings, 60,000, Sunitha, 50,000, 1,66,000, 1,66,000, On the above date the firm was dissolved. The following information is available:, a) Thse assets realised as follows: Debtors ₹ 25,600, Stock ₹ 39,000, Building ₹ 66,000, b) Anitha took over 50% of investments at 10% less on its book value and remaining, investments were sold at a gain of 20%., c) Furniture was taken over by Sunitha at ₹ 12,000., d) Anitha agreed to bear all Realisation expenses. For the service Anita is paid ₹ 2,600., Actual Realisation Expenses amounted to ₹ 2,000., Prepare: i) Realisation Account ii) Partners' Capital Accounts and, iii) Bank Account., , Solution:, Dr., , Realisation Account, Cr., Particulars, Amount, Particulars, Amount, Book value of Assets:, Book value of Liabilities:, To Debtors, 28,000 By Creditors, 20,000, To Stock, 40,000 By Bills Payable, 6,000, To Investment, 20,000 By Vanitha’s Loan, 5,000, To Buildings, 60,000 By PBD, 2,000, To Furniture, 14,000 By Bank A/c (Assets Realised), To Bank A/c (Liabilities paid), Debtors, 25,600, Creditors, 20,000, Stock, 39,000, Bills Payable, 6,000, Buildings, 66,000, Vanitha’s Loan, 5,000, 31,000, Investment(50%), 12,000 1,42,600, (10,000 + 20%), To Anitha’s Capital A/c, 2,600, (Dissolution Exps took over), By Anitha’s Capital A/c, 9,000, (Investment Took over by), To Partner’s Capital A/c, (20,000x50/100 = 10,000 – 10%), (Profit on Realisation), Anitha 1,000x1/2 = 500, By Sunitha’s Capital A/c, 12,000, (Furniture, Took, over, by), Sunitha1,000x1/2 = 500, 1,000, 1,96,600, 1,96,600, 86 | P a g e

Page 91 :
Accountancy II PUC, , Dr., , Particulars, To Realisation A/c, (Investment Took over), , To Realisation A/c, (Furniture took over), , To Bank A/c, , (Closing Capital), , Dr., , Particulars, To Balance b/d, To Realisation A/c, (Assets Realised), , 3., , Mysuru District P U Commerce Forum, , Partners Capital Account, Anitha Sunitha, Particulars, 9,000, By Balance b/d, By Reserve Fund, (30,000x1:1), 12,000, By Realisation A/c, 59,000, 53,500 (Dissolution exps took over), By Realisation A/c, , Cr., Anitha Sunitha, 50,000, 50,000, 15,000, 15,000, , 68,100, , 68,100, , 65,500, , (Profit on Realisation), , 2,600, , -, , 500, , 500, , Bank Account, Amount, Particulars, 6,000 By Anitha’s Loan, 1,42,600 By Realisation A/c (Liabilities paid), By Partners Capital, Anitha, 59,100, Sunitha, 53,500, 1,48,600, , 65,500, Cr., Amount, 5,000, 31,000, , 1,12,600, 1,48,600, , Ramya, Kavy a and Divy a are partners sharing profits and losses in the ratio of 1:2:1., their balance sheet as on 31.3.2018 was as follows:, ₹, Liabilities, ₹, Assets, , Creditors, Bills Payable, Bank 0/D, Reserve fund, Vani's loan, Capitals:, Ramya, Kavya, Divya, , 20,000, 6,000, 4,000, 8,000, 5,000, , Cash, Debtors, Stock, Furniture, Machinery, Buildings, , 15,000, 15,000, 18,000, 12,000, 20,000, 60,000, , 42,000, 35,000, 20,000, 1,40,000, 1,40,000, On the above date they decided to dissolve the firm:, a) Assets realised as follows: Debtors ₹ 13500, Stock ₹ 19,800, Buildings ₹ 62,000,, Vehicle which was unrecorded also realised ₹ 4,000 and Machinery realised at book, value ., b) Furniture was taken over by Ramya at a valuation of ₹ 9000, c) Creditors were settled at 10% less. Divya a took over Vani's loan., 87 | P a g e

Page 92 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , d) Interest on Bank O/D due ₹ 400 was also paid off., e) Realisation expenses amounted to ₹ 4,000., Prepare: (i) Realization A/ c, (ii) Partners Capital Accounts and, , (iii) Cash A/c, , Solution:, Dr., , Realisation Account, Particulars, Amount, Particulars, Book value of Assets, Book value of Liabilities:, To Debtors, 15,000 By Creditors, To Stock, 18,000 By Bills Payable, To Furniture, 12,000 By Bank over Draft, To Machinery, 20,000 By Vani’s Loan, To Buildings, 60,000 By Cash A/c (Assets Realised), To Cash A/c (Liabilities paid), Debtors, 13,500, Creditors, 18,000, Stock, 19,800, [20,000 – 2,000(10000x10/100)], Buildings, 62,000, Bills Payable, 6,000, Unrecorded Vehicle 4,000, Bank over Draft 4,000, Machinery, 20,000, Add: O/s interest 400 4,400, 28,400 By Ramya’s Capital A/c, To Cash A/c (Dissolution Expenses), 4,000, (Furniture Took over by), To Divya’s Capital A/c, 5,000, , Cr., Amount, 20,000, 6,000, 4,000, 5,000, , 1,19,300, 9,000, , ( Vani’s Loan Took over), , To Partner’s Capital A/c, (Profit on Realisation), Ramya = 900x1/4 = 225, Kavya = 900x2/4 =, 450, Divya =900x1/4 =, 225, , Dr., , 900, 1,63,300, , 1,63,300, , Partners Capital Account, Particulars, , Ramya, , To Realisation A/c 9,000, ( Ramya took over, the furniture), , To Cash A/c, , (Closing Capital), 1,20,000x 1:1, , Kavya, , -, , Divya, , -, , Particulars, , By Balance b/d, By Reserve Fund, (8,000X 1:2:1), , 35,225 39,450, , 27,225 By Realisation A/c, , ( Divya took over Vani’s, Loan), , By Revaluation A/c, , 44,225 39,450 27,225, , Cr., Ramya, , Kavya, , 42,000 35,000, 2,000 4,000, , Divya, , 20,000, 2,000, , -, , -, , 5,000, , 225, , 450, , 225, , 44,225 39,450, , 27,225, , 88 | P a g e

Page 93 :
Accountancy II PUC, , Cash Account, , Dr., , Particulars, To Balance b/d, To Realisation A/c, (Assets Realised), , 4., , Mysuru District P U Commerce Forum, , Amount, Particulars, 15,000 By Realisation A/c, 1,19,300, (Liabilities paid), By Dissolution Expenses, By Partners Capital, Ramy, 35,225, Kavya, 39,450, Divya, 27,225, 1,34,300, , Cr., Amount, 28,400, 4,000, , 1,01,900, 1,34,300, , X, Y and Z are partners sharing profits and losses in the ratio of 3:2: 1. Their Balance, Sheet as on 31.3.2018 was as follows:, Balance Sheet as on 31.3.2018, Liabilities, , ₹, , Assets, Machinery, , 30,000, 20,000, 10,000, , Investments, Stock in trade, , Capitals:, X, Y, Z, Mrs.Y's loan, Creditors, Life Policy Fund, Investment Fluctuation, , Joint Life Policy, Debtors, Profit and loss A/ c, Cash at bank, , ₹, 40,500, 20,830, 17,550, 14,000, 8,700, 1,500, 5,420, , 10,000, 18,500, 14,000, 6,000, 1,08,500, 1,08,500, The firm was dissolved on the above date., a) Joint life policy is surrendered for ₹ 12, 000. Machinery is realised for ₹ 55,000,, Stock is realised for ₹15, 000, Debtors realised ₹ 6,150, b) Investments are taken over by Mr. X for ₹ 17, 500, c) Mr. Y agrees to discharge his wife's loan., d) It is found that an investment not recorded in the books is worth ₹ 3,000. The same, is taken over by one of the creditors., e) Expenses of realisation amounted to ₹ 600., Prepare: (i) Realisation A/ c, (ii) Partners' capital Accounts and, (iii) Bank A/c, 89 | P a g e

Page 94 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , Solution:, Dr., , Realisation Account, Particulars, Amount, Particulars, Book value of Assets:, Book value of Liabilities:, To Machinery, 40,500 By Creditors, To Investment, 20,830 By Life policy fund, To Stock in Trade, 17,550 By Investment fluctuation fund, To Joint Life policy, 14,000 By Mrs. Y’s Loan, To Debtors, 8,700 By Bank A/c (Assets Realised), To Bank A/c (Liabilities paid), Joint Life Policy, 12,000, Creditors, 18,500, Machinery, 55,000, Less: Unrecorded, Stock, 15,000, Investment taken over 3,000, 15,500, Debtors, 6,150, To Bank A/c, 600, (Dissolution Expenses), By X’s Capital A/c, To Y’s Capital A/c, 10,000 (Investment Took over by), , Cr., Amount, 18,500, 14,000, 6,000, 10,000, , 88,150, 17,500, , (Mrs. Y’s Loan taken over), , To Partner’s Capital A/c, (Profit on Realisation), X 26,470X3/6 = 13,235, Y 26,470X2/6 = 8,823, Z 26,470X1/6 = 4,412, , 26,470, 1,54,150, , Dr., , X, Particulars, To Realisation A/c 17,500, , Partners Capital Account, Y, , 750, , (1,500X3:2:1), , To Bank A/c, , (Closing Capital), , Z, , -, , By Balance b/d, , 500, , 250, , (Profit on Realisation), , 24,985 38,323 14,162, 35,000 22,500 22,500, , Dr., , Particulars, To Balance b/d, To Realisation A/c, (Assets Realised), , Particulars, , -, , (Investment took over), , To profit & Loss A/c, , 1,54,150, Cr., X, , Y, , Z, , -, , 10,000, , -, , 30,000 20,000 10,000, By Realisation A/c 13,235 8,823 4,412, By Realisation A/c, (Mrs. Y’s Loan took over), , 35,000 22,500, , Bank Account, Amount, Particulars, 5,420 By Realisation A/c (Liabilities paid), 88,150 By Realisation A/c (Realisation paid), By Partners Capital, X, 24,985, Y, 38,323, Z, 14,162, 93,570, , 22,500, , Cr., Amount, 15,500, 600, , 77,470, 93,570, 90 | P a g e

Page 95 :
Accountancy II PUC, , 5., , Mysuru District P U Commerce Forum, , Amara, Madhura and Prema are partners sharing profits and losses in the ratio of 2:1:1., Their Balance Sheet as on 31.3.2018 was as follows:, Balance sheet as on 31.3.2018, Assets, ₹, ₹, Liabilities, , Bills payable, Creditors, Capitals:, Amara, Madhura, Prema, Joint Life Policy Fund, , 4,300, 5,700, , 30,000, 20,000, 20,000, 4,000, , Cash in hand, Bills Receivable, Stock, Debtors, 7,000, Less: PBD, 400, Joint Life Policy, Machinery, Prepaid Rent, , 1,000, 400, 20,000, , 6,600, 4,000, 50,000, 2,000, 84,000, , 84,000, The firm was liquidated on the above date:, a) Amara took over Joint Life Policy for ₹ 5,000, b) Stock realised for ₹22,000, Debtors realised ₹4,100 and Machinery was sold for, ₹ 58,000., c) Bills on hand realised in full., d) One bill for ₹ 500 under discount was dishonoured and had to be paid by the firm., Prepare: (i) Realisation A/ c, (ii) Partners’ capital Accounts and, (iii) Bank A/c, Solution:, Dr., , Realisation Account, Particulars, Amount, Particulars, Book value of Assets:, Book value of Liabilities:, To Bills Receivable, 400 By PBD, To Stock, 20,000 By Bills Payable, To Debtors, 7,000 By Creditors, To Joint Life policy, 4,000 By Joint Life Policy Fund, To Machinery, 50,000 By Cash A/c (Assets Realised), To Prepaid Rent, 2,000, Stock, 22,000, To Cash A/c (Liabilities paid), Debtors, 4,100, Bills payable, 4,300, Machinery, 58,000, Creditors, 5,700, Bills Receivable, 400, Bill Dishonoured, 500, 10,500 By Amara’s Capital A/c, (Joint Life policy Took over by), To Partner’s Capital A/c, (Profit on Realisation), Amara 10,000x2/4 = 5,000, Madhura10,000x1/4 = 2,500, Prema 10,000x1/4 = 2,500, , 10,000, 1,03,900, , Cr., Amount, 400, 4,300, 5,700, 4,000, , 84,500, 5,000, , 1,03,900, 91 | P a g e

Page 96 :
Accountancy II PUC, , Dr., , Partners Capital Account, , Amara Madhura Prema, Particulars, To Realisation A/c 5,000, (Joint life policy, took over), , To Cash A/c, , (Closing Capital), , Mysuru District P U Commerce Forum, , Particulars, , By Balance b/d, , Cr., , Amara Madhura Prema, , 30,000 20,000 20,000, By Realisation A/c 5,000 2,500 2,500, (Profit on Realisation), , 30,000 22,500 22,500, 35,000 22,500 22,500, , Dr., , Particulars, To Balance b/d, To Realisation A/c, (Assets Realised), , 35,000 22,500, , Bank Account, Amount, Particulars, 1,000 By Realisation A/c, (Liabilities paid), 84,500, By Partners Capital, Amara, Madhura, Prema, 85,500, , 22,500, , Cr., Amount, 10,500, , 30,000, 22,500, 22,500, , 75,000, 85,500, , 6., , Mohan, Nagaraju and Prakash are partners sharing profits and losses in the ratio of, 4:3:2. Their Balance sheet as on 31.3.2018 was as follows, Balance Sheet as on 31. 3. 2018, ₹, ₹, Liabilities, Assets, Creditors, 25,000 Cash, 9,000, Bills Payable, 17,000 Debtors, 27,000, Prakash's Loan, 10,000 Stock, 15,000, Reserve Fund, 18,000 Investments, 5,000, Capitals: Mohan, 30,000 Furniture, 14,000, Nagaraj, 20,000 Buildings, 40,000, Prakash, 10,000 Goodwill, 20,000, 1,30,000, 1,30,000, On the above date the firm was dissolved and following information is available., a) The assets realised as follows : Debtors realised 10% less than the book value,, Investments realised 20% more than the book value, Buildings realised ₹ 60,000, Stock, realised ₹ 12,000 and Furniture sold for ₹ 15,000., b) Goodwill is taken over by Mohan at ₹ 15,000, c) Creditors and Bills payable are settled at discount of 5% each., d) Realisation expenses ₹ 2,000., Prepare: (i) Realisation A/ c, , (ii) Partners' capital Accounts and, , (iii) Bank A/c, 92 | P a g e

Page 97 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , Solution:, , Realisation Account, , Dr., , Particulars, Book value of Assets:, To Debtors, To Stock, To Investment, To Furniture, To Buildings, To Goodwill, To Cash A/c (Liabilities paid), Creditors, 23,750, , Amount, , Particulars, Book value of Liabilities:, By Creditors, By Bills Payable, By Cash A/c (Assets Realised), Debtors, 24,300, , 27,000, 15,000, 5,000, 14,000, 40,000 [27,000-2,700(27,000X10/100)], 20,000, Investment, 6,000, Buildings, Stock, Furniture, , 16,150, , (17,000-850), (10,000x5/100), , 25,000, 17,000, , [5,000+ 1,000(5,000X20/100)], , (25,000-1,250), (10,000x10/100), , Bills payable, , Cr., Amount, , 60,000, 12,000, 12,000 1,17,300, , 39,900 By Mohan’s Capital A/c, , To Cash A/c, , 2,000, , (Realisation Expenses), , 15,000, , (Goodwill Took over by), , To Partner’s Capital A/c, (Profit on Realisation), , Mohan 11,400x4/9 =5,067, Nagaraj11,400x3/9 = 3,800, Prakash11,400x2/9 = 2,533, , Particulars, To Realisation A/c 15,000, Mohan, , To Cash A/c, , (Closing Capital), , 1,74,300, , Partners Capital Account, , Dr., , (Goodwill took over), , 11,400, 1,74,300, , Nagaraj Prakash, , -, , -, , Particulars, , By Balance b/d, , By Reserve Fund, (18,000x4:3:2), 28,067 29,800 16,533, By Realisation A/c, (Profit on Realisation), , 43,067 29,800 16,533, , Cr., Mohan, , Nagaraj Prakash, , 30,000 20,000 10,000, 8,000 6,000 4,000, 5,067, , 3,800, , 2,533, , 43,067 29,800, , 16,533, , 93 | P a g e

Page 98 :
Accountancy II PUC, , Dr., , Particulars, To Balance b/d, To Realisation A/c, (Assets Realised), , Bank Account, Amount, 9,000, 1,17,300, , Mysuru District P U Commerce Forum, , Cr., Amount, 39,900, , Particulars, By Realisation A/c, (Liabilities paid), , By Realisation A/c, , 2,000, , By Praksh Loan, By Partners Capital, Mohan, Nagaraj, Prakash, , 10,000, , (Realisation Exps), , 1,26,300, , 28,067, 29,800, 16,533, , 74,400, 1,26,300, , ***END***, , 94 | P a g e

Page 99 :
Accountancy II PUC, , BOOK – 2, CHAPTER – 1, , Mysuru District P U Commerce Forum, , Accounting for Share Capital, I. Fill in the blanks., , Section A: One Marks Questions, , 1. A Company is an Artificial Person., 2. Subscribed capital is the part of the issued capital., 3. Call money received in advance is called Calls in advance, 4. ₹ 5 lakh is the minimum paid up capital of a public company., 5. One month must elapse between two calls., 6. Seven (7) is the minimum number of members in a Public Company., 7. Two is the minimum number of members in a Private Company.\, 8. The amount of buy back of shares in any financial year should not exceed 25% of the paidup capital., 9. Minimum paid up capital of a private company is ₹ 1,00,000, 10. Profit on forfeiture of shares is transferred to Capital reserve account., , II. Multiple Choice Questions:, , 1. Equity share holder are:, a) Creditors, c) Customers of the company, , b) Owners, , d) None of the above, , 2. Interest on calls in arrears is charged according to table ‘F’ at the rate of :, b) 6%, a) 10 %, c) 8%, d) 11%, 3. Shares can be forfeited for :, a) Non-payment of call money, c) Failure to repay the loan to the bank, , b) Failure to attend meeting, d) The pledging of shares as a security, , 4. Balance of share forfeiture Account is shown in the Balance Sheet under the head:, a) Current Liabilities and Provisions, b) Reserves and Surplus, c) Share Capital, d) Unsecured Loans, 5. Issued capital is a part of:, a) Reserve capital, , c) Authorised capital, , b) Unissued capital, d) None of the above, , 6. Maximum number of members in a private company is, a) 40, b) 200, c) 70, d) No limits, 95 | P a g e

Page 100 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , 7. More applications are received than offered to public is called, a) Less offers, b) Under subscription’, c) Over subscription, d) More offer, 8. Paid up capital is part of, a) Authorised capital, , c) Called-up capital, , b) Reserve capital, d) Subscribed capital, , 9. If a shareholder fails to pay call money, it is called., a) Calls unpaid, b) Calls in advance, c) Calls in arrears, d) None of the above, 10. Minimum number of members in a public company is., a) 20, b) 50, c) no limit, , d) 7, , III. True or False Type Questions:, , 1. A company is an Artificial person: True, , 2. Shares of a company are generally transferable: True, 3. Share application account is a liability account: True., 4. Paid –up capital may exceed called-up capital: False, 5. Capital Reserves are created out of capital profits: True., 6. The part of capital which is called-up only on winding up is called reserve capital: True, 7. Private companies invite the application to public: False., 8. Forfeiture of shares is cancellation of the rights of shareholder: True, 9. All the shares of buy-back should be fully paid-up: True, 10. The Articles of Association must authorise the company for the buy-back of shares: True, , IV. Very short answer Questions:, , 1. State any one kind of a company., Ans: (a) Companies limited by shares, (b) Companies limited by Guarantee, (c) Unlimited companies, , 2. What is issued capital?, Ans: Issued capital is part of authorized capital which is actually issued to the public for, subscription., 3. What is buy-back of shares?, Ans: Buy-back of share means purchase of its own shares by a company., 4. What is minimum paid-up capital of a private company?, Ans: ₹ 1 lakh, 96 | P a g e

Page 101 :
Accountancy II PUC, , 5. When the Reserve capital used, Ans: It is used for contingencies or set of capital loss., , Mysuru District P U Commerce Forum, , 6. What is under subscription?, Ans: under subscription means number of shares applied is less than the number of share, application have been invited for subscription., 7. What is over subscription?, Ans: over subscription means application for more shares are received than the number of, share offered to the public for subscription., 8. What is issue of shares at par?, Ans: issue of share at par means issue of share at the face value., 9. What is issue of shares at premium?, Ans: issue of shares at premium means issue of shares at the value which is more than the, face value., 10. What is forfeiture of shares?, Ans: Forfeiture of share means cancellation of rights of shareholders due to non-payment, of allotment or any call money or both., , V. Short answer Question Two marks, , Section B:, , 1. What is a company?, Ans: It is an artificial person having corporate legal entity, distinct from its members and has a, common seal., 2. State any one features of a company., Ans: (a) Limited liability of members, (b) Transferability of shares, 3. What is prospectus?, Ans: Prospects is an invitation to the public by a new company to raise the funds., 4. What is calls in arrears?, Ans: Shareholder fails to pay the amount due on allotment or on any of the calls is called calls, in arrears., 5. State any two methods of issue of shares., Ans: (i) Issue of shares at par, , ii) Issue of shares at premium, , 6. What is issue of shares for consideration other than cash?, Ans: Issue of shares for consideration other than cash means issuing of shares for purchasing, of assets instead of cash., 7. What is forfeiture of shares?, Ans: Forfeiture of shares means cancellation of membership of a shareholder who fails to pay, allotment money or any calls or both., 97 | P a g e

Page 102 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , 8. Give the journal entry for transfer of profit on re-issue of forfeited shares., Ans: Share Forfeiture A/c…………………………………..Dr, To Capital reserve A/c, (Being profit on re-issue transfer to capital reserve account), 9. State any two categories of share capital., a) Authorised capital, b) Issued capital, d) Called up capital, e) Paid up capital, , xxx, ----, , ---xxx, , c) Subscribed capital, , Section -C, Six Marks problems, , 1. ABC Company Ltd., issued 20,000 Equity Shares of ₹10 each. The amount was payable, is as follows., On application ₹2., On allotment ₹3., On first and final call ₹5, All the shares were subscribed and the money duly received., Pass the journal entry upto the stage of first and final call money received., Solution:, Journal Entries in the books of ABC Company Ltd.,, Date Particulars, L.F. Debit, Credit, 1., Bank A/c (20,000x2), Dr., 40,000, To Equity share Application A/c, 40,000, (Being equity share application money received on, 20,000 shares at ₹2 per share), 2., Equity Share Application A/c, Dr., 40,000, To Equity Share Capital A/c, 40,000, (Being application money transferred to share capital A/c), 3., Equity Share Allotment A/c (20,000x3), Dr., 60,000, To Equity Share Capital A/c, 60,000, (Being allotment money due on 20,000 shares at ₹3 per share), , 4., , 5., , 6., , Bank A/c, Dr., To Equity Share Allotment A/c, (Being allotment money received), Equity Share 1st & Final Call A/c (20,000x5), Dr., To Equity Share Capital A/c, (Being share 1st & Final call money due on 20,000, shares at ₹5 per share), Bank A/c, 20,000X5, Dr., To Equity Share A/c, (Being share Final call money received on 20,000 shares, at ₹5 per share), , 60,000, -, , 60,000, , 1,00,000, 1,00,000, , 1,00,000, 1,00,000, , 98 | P a g e

Page 103 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , 2. Ram Company Ltd., issued 10,000 Equity Shares of ₹100 each at premium ₹ 10 per share., The amount was payable is as follows., On application ₹20. On allotment ₹60 (Including Premium) & On first and final call ₹50, All the shares were subscribed and the money duly received. Except the first and final Call, on 1,000 shares. Pass the journal entry upto the stage of first and final call money received., Solution:, , Journal Entries in the books of Ram Company Ltd.,, Date Particulars, L.F. Debit, 1., Bank A/c (10,000x20), Dr., 2,00,000, To Equity share Application A/c, (Being equity share application money received on, 10,000 shares at ₹20 per share), 2., Equity Share Application A/c, Dr., 2,00,000, To Equity Share Capital A/c, (Being application money transferred to share capital A/c), 3., Equity Share Allotment A/c (10,000x60), Dr., 6,00,000, To Equity Share Capital A/c, (10,000X50), To Security Premium A/c, (10,000X10), (Being allotment money due on 10,000 shares at ₹60 per, share including premium of ₹10 per share), 4., Bank A/c, Dr., 600,000, To Equity Share Allotment A/c, (Being allotment money received), 5., Equity Share 1st & Final Call A/c (10,000x50), Dr., 5,00,000, To Equity Share Capital A/c, st, (Being share 1 & Final call money due on 10,000, shares at ₹50 per share), 6., Bank A/c, 9,000X50, Dr., 4,50,000, To Equity Share A/c, (Being share Final call money received on 9,000 shares, at ₹50 per share), , Credit, 2,00,000, , 2,00,000, 5,00,000, 1,00,000, , 600,000, 5,00,000, , 4,50,000, , 3. ‘A’ Company Ltd., issued 5,000 Equity Shares of ₹100 each. The amount was payable, is as follows., On application, ₹20., On allotment, ₹40, On first and final call ₹40, All the shares were subscribed and the money duly received., Pass the journal entry upto the stage of first and final call money received., 99 | P a g e

Page 104 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , Solution:, , Journal Entries in the books of ‘A’ Company Ltd.,, Date Particulars, L.F. Debit, 1., Bank A/c (5,000x20), Dr., 1,00,000, To Equity share Application A/c, (Being equity share application money received on, 5,000 shares at ₹20 per share), 2., Equity Share Application A/c, Dr., 1,00,000, To Equity Share Capital A/c, (Being application money transferred to share capital A/c), 3., Equity Share Allotment A/c (5,000x40), Dr., 2,00,000, To Equity Share Capital A/c, (5,000X40), (Being allotment money due on 5,000 shares at ₹40 per, share), 4., Bank A/c, Dr., 2,00,000, To Equity Share Allotment A/c, (Being allotment money received), 5., Equity Share 1st & Final Call A/c (5,000x40), Dr., 2,00,000, To Equity Share Capital A/c, st, (Being share 1 & Final call money due on 5,000 shares, at ₹40 per share), 6., Bank A/c, (5,000X40), Dr., 2,00,000, To Equity Share A/c, (Being share Final call money received on 5,000 shares, at ₹40 per share), , Credit, 1,00,000, , 1,00,000, 2,00,000, , 2,00,000, 2,00,000, , 2,00,000, , Section -D, 12 Marks Problems, 1. PROBLEMS ON ISSUE OF SHARES AT PAR:, Sun Shine Company issued 5,000 equity shares at ₹100 each. The amount was payable ₹20, on application, ₹30on allotment, ₹50 on first and final call., All the shares were subscribed and the money duly received except the 1st & final, call on 200 shares. The directors decided to forfeit these shares and re-issued at ₹90 per, share as fully paid-up., Pass the necessary journal entries to record the above transactions in books of companies., , 100 | P a g e

Page 105 :
Accountancy II PUC, , Solution:, , Mysuru District P U Commerce Forum, , Journal Entries in the books of Sun Shine Company Ltd.,, Date Particulars, L.F. Debit, Credit, 1., Bank A/c, (5,000x20), Dr., 1,00,000, To Equity share Application A/c, 1,00,000, (Being equity share application money received on, 5,000 shares at ₹20 per share), 2., Equity Share Application A/c, Dr., 1,00,000, To Equity Share Capital A/c, 1,00,000, (Being application money transferred to share capital account), , 3., , 4., , 5., , 6., , 7., , 8, , 9, , Equity Share Allotment A/c (5,000x30), Dr., To Equity Share Capital A/c, (Being allotment money due on 5,000 shares at ₹30, per share), Bank A/c, Dr., To Equity Share Allotment A/c, (Being allotment money received), Equity Share 1st & Final Call A/c (5,000x50), Dr., To Equity Share Capital A/c, (Being share 1st & Final call money due on 5,000, shares at ₹50), Bank A/c (5,000-200 = 4,800x50), Dr., To Equity Share A/c, (Being share Final call money received on 4,800, shares at ₹50 per share), Equity Share Capital A/c (200x100), Dr., To Forfeited Shares A/C (20+30 = 50x200), To Equity Share Final Call A/c(200x50), ( Being forfeiture of 2,000 shares for non-payment of, Final call), Bank A/c, (200x90), Dr., Forfeited Shares A/c (200x10), Dr., To Equity Share Capital A/c (200x100), (Being re-issue of 200 forfeited shares at ₹90 fully, paid up), Forfeited Shares A/c (10,000-2,000), Dr., To Capital Reserve A/c, (Being the balance in forfeited shares account 10,000 2,000 transferred to capital reserve account), , 1,50,000, 1,50,000, , 1,50,000, 1,50,000, 2,50,000, 2,50,000, , 2,40,000, 2,40,000, , 20,000, -, , 10,000, 10,000, , 18,000, 2,000, -, , 20,000, , 8,000, -, , 8,000, , 101 | P a g e

Page 106 :
Accountancy II PUC, , 2. ISSUE OF SHARES AT PREMIUM:, , Mysuru District P U Commerce Forum, , XYZ company limited issued 8,000 equity shares of ₹ 100 each at a premium of ₹ 10., The amount was payable as follows. ₹30 on application, ₹ 60 on allotment (including, premium), ₹ 20 on first and final call, All the shares were subscribed and the money duly received except the 1st and final, call on 400 shares. The directors decided to forfeit these shares and re-issued at ₹ 90 per, share fully paid-up. Pass the necessary journal entries., Solution:, , Journal Entries in the XYZ Company Ltd.,, Date Particulars, L.F, 1., Bank A/c, (8,000X30), Dr., To Equity share Application A/c, (Being equity share application money received on 8,000, shares at ₹30 per share), 2., Equity Share Application A/c, Dr., To Equity Share Capital A/c, (Being application money transferred to share capital, account), 3., Equity Share Allotment A/c, (8,000x60), Dr., To Equity Share Capital A/c (8,000x50), T Security Premium A/c, (8,000x10), 4., 5., 6., 7., , 8., , 9., , (Being allotment money due on 8,000 shares at ₹60 per share), Bank A/c, Dr., To Equity Share Allotment A/c, (Being allotment money received), Equity Share 1st and Final Call A/c (8,000x20), Dr., To Equity Share Capital A/c, (Being share 1st and final call money due on 8,000 shares at ₹20), Bank A/c (8,000-400 = 7600x20), Dr., To Equity Share 1st and Final Call A/c, (Being share 1st & Final call money received on 7,600 shares), Equity Share Capital A/c (400x100), Dr., To Forfeited Shares A/C, (30+50 =80x400), To Equity Share 1st & Final Call A/c (400x20), (Being 400 Shares forfeiture on non-payment of 1st &, Final call), Bank A/c, (400x90), Dr., Forfeited Shares A/c (400x10), Dr., To Equity Share Capital A/c (400x100), (Being re-issue of 400 shares at ₹ 90 fully paid up), Forfeited Shares A/c, (32,000-4,000), Dr., To Capital Reserve A/c, (Being the balance in forfeited shares account (32,0004,000) transferred to capital reserve account), , Debit, Credit, 2,40,000, 2,40,000, 2,40,000, -, , 2,40,000, , 4,80,000, -, , 4,00,000, 80,000, , 4,80,000, -, , 4,80,000, , 1,60,000, -, , 1,60,000, , 1,52,000, -, , 1,52,000, , 40,000, -, , 32,000, 8,000, , 36,000, 4,000, -, , 40,000, , 28,000, -, , 28,000, , 102 | P a g e

Page 107 :
Accountancy II PUC, , 3. PROBLEMS ON UNDER SUBSCRIPTION:, , Mysuru District P U Commerce Forum, , Bright company limited with an authorized capital Rs. 6,00,000 is divided in to shares of, 10 each, issued 40,000 shares at a premium of ₹ 2 per share. The amount was payable as, follows., ₹3 on application, ₹5 on allotment (including premium), ₹4 on first and final call, All the shares were subscribed and the money duly received except the final call on, 1,000 shares. The directors decided to forfeit these shares and re-issued at ₹ 7 per share, fully paid-up. Pass the necessary journal entries to record the above transactions in books, of companies., Solution:, Journal Entries in the books of Bright Company Ltd.,, Date Particulars, L.F. Debit, Credit, 1., Bank A/c, (40,000x3), Dr., 1,20,000, To Equity share Application A/c, 1,20,000, (Being equity share application money received on, 40,000 shares at ₹ 3 per share), 2., Equity Share Application A/c, Dr., 1,20,000, To Equity Share Capital A/c, 1,20,000, (Being application money transferred to share capital, account), 3., Equity Share Allotment A/c (40,000x5), Dr., 2,00,000, To Equity Share Capital A/c (40,000x3), 1,20,000, To Security Premium A/c, (40,000x2), 80,000, (Being allotment money due on 40,000 shares at ₹ 5 per, share), 4., Bank A/c, Dr., 2,00,000, To Equity Share Allotment A/c, 2,00,000, (Being allotment money received), 5., Equity Share First and Final Call A/c (40,000x4) Dr., 1,60,000, To Equity Share Capital A/c, 1,60,000, (Being share first and final call money due on 40,000, shares at ₹ 4), 6., Bank A/c, (40,000-1,000 =39,000x4), Dr., 1,56,000, To Equity Share 1st Call A/c, 1,56,000, (Being share 1st and final call money received on, 39,000 shares), 103 | P a g e

Page 108 :
Accountancy II PUC, , 7., , 8., , 9., , Mysuru District P U Commerce Forum, , Equity Share Capital A/c, (1,000x10), Dr., To Forfeited Shares A/c, (3+3 = 6x1,000), To Equity Share Final Call A/c, (1,000x4), ( Being forfeiture of 1,000 shares for non-payment of, Final call), Bank A/c, (1,000x7), Dr., Forfeited Shares A/c, (1,000x3), Dr., To Equity Share Capital A/c, (Being re-issue of 1,000 forfeited shares at ₹ 7), Forfeited Shares A/c, (6,000 -3,000), Dr., To Capital Reserve A/c, (Being the balance in forfeited shares account (6,0003,000) transferred to capital reserve account), , 10,000, -, , 6,000, 4,000, , 7,000, 3,000, -, , 10,000, , 3,000, -, , 3,000, , 4. PROBLEMS ON OVER SUBSCRIPTION:, Anand company limited issued 10,000 Equity shares of ₹100 each at a premium of ₹ 20., Payable ₹ 20 on application, ₹ 50 on allotment( including premium ₹ 20) , ₹ 25 on first call, and ₹25 on final call. The application received on 13,000 shares and allotted 10,000 share., 2,000 applications rejected and amount returned. 1,000 application money adjusted to, allotment account. All the money was duly received., Pass the necessary journal entries., Solution:, , Journal Entries in the books of Anand Company Ltd.,, Date Particulars, L.F. Debit, Credit, 1., Bank A/c, (13,000x20), Dr., 2,60,000, To Equity share Application A/c, 2,60,000, (Being equity share application money received on, 13,000 shares at ₹20 per share), 2., Equity Share Application A/c, Dr., 2,60,000, To Equity Share Capital A/c (10,000x20), 2,00,000, To Equity Share Allotment A/c (1,000X20), 20,000, To Bank A/c (2,000X20), 40,000, (Being application money transferred to share, capital account, Excess application money transfer, to Allotment account and rejected application, money refunded., 104 | P a g e

Page 109 :
Accountancy II PUC, , 3., , 4., , 5., , 6., , 7., , 8., , Equity Share Allotment A/c (10,000X50), Dr., To Equity Share Capital A/c (10,000x30), To security premium A/c (10,000x20), (Being allotment money due on 10,000 shares at, ₹50 per share), Bank A/c, (5,00,000-20,000), Dr., To Equity Share Allotment A/c, (Being balance allotment money received 5,00,00020,000), Equity Share 1st Call A/c (10,000x25), Dr., To Equity Share Capital A/c, (Being share 1st call money due on 10,000 shares at, ₹ 25), Bank A/c, Dr., To Equity Share 1st Call A/c, (Being share 1st call money received), Equity Share Final Call A/c (10,000x25), Dr., To Equity Share Capital A/c, (Being share final call money due on 10,000 shares, at ₹ 25), Bank A/c, (10,000x25), Dr., To Equity Share Final call A/c, (Being share Final call money received), , Mysuru District P U Commerce Forum, , 5,00,000, 3,00,000, 2,00,000, , 4,80,000, 4,80,000, , 2,50,000, 2,50,000, , 2,50,000, 2,50,000, 2,50,000, 2,50,000, , 2,50,000, -, , 50,000, , 5. PROBLEM ON PARTLY RE-ISSUE:, ABC company limited issued 1,00,000 equity shares of ₹ 10 each at a premium of ₹ 2., The amount was payable as follows., ₹ 2 on application, ₹ 7 on allotment (including premium ), ₹ 3 on first and final call, A shareholder holding 5,000 shares did not pay final call. His shares were forfeited., Out of these 3,500 shares were re-issued at ₹ 8 per share fully paid-up. Give journal entries, in the books of the company., , 105 | P a g e

Page 110 :
Accountancy II PUC, , Solution:, , Mysuru District P U Commerce Forum, , Journal Entries in the ABC Company Ltd.,, Date Particulars, L.F. Debit, Credit, 1., Bank A/c, (1,00,000x2), Dr., 2,00,000, To Equity share Application A/c, 2,00,000, (Being equity share application money received on, 1,00,000 shares at ₹ 2 per share), 2., Equity Share Application A/c, Dr., 2,00,000, To Equity Share Capital A/c, 2,00,000, (Being application money transferred to share, capital account), 3., Equity Share Allotment A/c (1,00,000x7), Dr., 7,00,000, To Equity Share Capital A/c (1,00,000x5), 5,00,000, T Security Premium A/c, (1,00,000x2), 2,00,000, (Being allotment money due on 1,00,000 shares at, ₹7 per share), 4., Bank A/c, Dr., 7,00,000, To Equity Share Allotment A/c, 7,00 ,000, (Being allotment money received), 5., Equity Share First and Final Call A/c(1,00,000x3) Dr., 3,00,000, To Equity Share Capital A/c, 3,00,000, (Being share first and final call money due on, 1,00,000 shares at ₹ 3), 6., Bank A/c (1,00,000-5,000 = 95,000x3), Dr., 2,85,000, To Equity Share final Call A/c, 2,85,000, (Being share first and final call money received on, 95,000 shares), 7., Equity Share Capital A/c (5,000x10), Dr., 50,000, To Forfeited Shares A/C (2+5 =7x5,000), 35,000, To Equity Share Final Call A/c (5,000x3), 15,000, ( Being forfeiture of 5,000 shares for nonpayment, of Final call), 8., Bank A/c, (3,500x8), Dr., 28,000, Forfeited Shares A/c (3,500x2), Dr., 7,000, To Equity Share Capital A/c, 35,000, (Being re-issue of 3,500 forfeited shares at ₹ 8 fully, paid up), 106 | P a g e

Page 111 :
Accountancy II PUC, , 9., , Forfeited Shares A/c (24,500-7,000), To Capital Reserve A/c, (Being the balance in forfeited shares account, (24,500-7,000) transferred to capital reserve, account), , Dr., , Mysuru District P U Commerce Forum, , 17,500, -, , 17,500, , NOTE: Calculation of capital reserve, Forfeited shares amount of 3,500 shares, = 3,500x7=24,500, Less: discount on reissue of forfeited shares= 3,500x2= 7,000, -----------difference is capital reserve, 17,500, 6. ISSUE OF PREFERENCE SHARES AT PREMIUM:, R.J. company limited issued 20,000 Preference shares of ₹ 100 each at a premium of ₹20., The amount was payable as follows., ₹ 30 on application, ₹ 60 on allotment (including premium ₹ 20), ₹ 30 on first and final call, All the shares were subscribed and the money duly received except the final call on, 1,000 shares. The directors decided to forfeit these shares and re-issued at ₹ 90 per share, fully paid-up. Pass the necessary journal entries., Solution:, Journal Entries in the R.J. company Ltd.,, Date Particulars, L.F. Debit, Credit, 1., Bank A/c, (20,000x30), Dr., 6,00,000, To Preference share Application A/c, 6,00,000, (Being preference share application money received, on 20,000 shares at ₹ 30 per share), 2., Preference Share Application A/c, Dr., 6,00,000, To Preference Share Capital A/c, 6,00,000, (Being application money transferred to share, capital account), 3., Preference Share Allotment A/c (20,000x60) Dr., 12,00,000, To Preference Share Capital A/c (20,000x40), 8,00,000, T Security Premium A/c (20,000x20), 4,00,000, (Being allotment money due on 20,000 shares at, ₹60 per share), 107 | P a g e

Page 112 :
Accountancy II PUC, , 4., , 5., , 6., , 7., , 8., , 9., , Bank A/c, Dr., To Preference Share Allotment A/c, (Being allotment money received), Preference Share 1st & Final Call A/c(20,000x30) Dr., To Preference Share Capital A/c, (Being share final call money due on 20,000, shares at ₹ 30), Bank A/c, (19,000x30), Dr., st, To Preference Share 1 & final Call A/c, (Being share first and final call money received on, 19,000 shares), Preference Share Capital A/c (1,000x100), Dr., To Forfeited Shares A/C (30+40 =70x1,000), To Preference Share 1st &Final Call A/c (1,000x30), ( Being forfeiture of 1,000 shares for nonpayment, of Final call), Bank A/c, (1,000x90), Dr., Forfeited Shares A/c (1,000x10), Dr., To Preference Share Capital A/c, (Being re-issue of 1,000 forfeited shares at ₹ 90, fully paid up), Forfeited Shares A/c (70,000-10,000), Dr., To Capital Reserve A/c, (Being the balance in forfeited shares account, (70,000-10,000) transferred to capital reserve, account), , Mysuru District P U Commerce Forum, , 12,00,000, -, , 12,00,000, , 6,00,000, -, , 6,00,000, , 5,70,000, -, , 5,70,000, , 1,00,000, -, , 70,000, 30,000, , 90,000, 10,000, -, , 1,00,000, , 60,000, -, , 60,000, , 7.ISSUE OF SHARES AT PREMIUM:, MCM company limited issued 50,000 equity shares of ₹ 10 each at a premium of ₹ 2. The, amount was payable as follows., ₹ 2 on application, ₹ 7 on allotment (including premium ₹ 2), ₹ 3 on first and final call, All the shares were subscribed and the money duly received except the final call on, 700 shares. The directors decided to forfeit these shares and re-issued at ₹ 7 per share fully, paid-up. Pass the necessary journal entries., 108 | P a g e

Page 113 :
Accountancy II PUC, , Solution:, , Mysuru District P U Commerce Forum, , Journal Entries in the MCM Company Ltd.,, , Date Particulars, L.F., 1., Bank A/c, (50,000x2), Dr., To Equity share Application A/c, (Being equity share application money received on, 50,000 shares at ₹ 2 per share), 2., Equity Share Application A/c, Dr., To Equity Share Capital A/c, (Being application money transferred to share, capital account), 3., Equity Share Allotment A/c (50,000x7), Dr., To Equity Share Capital A/c (50,000x5), To Security Premium A/c (50,000x2), (Being allotment money due on 50,000 shares at, ₹7 per share), 4., Bank A/c, Dr., To Equity Share Allotment A/c, (Being allotment money received), , Debit, Credit, 1,00,000, 1,00,000, , 5., , 6., , 7., , 8., , Equity Share 1st and Final Call A/c (50,000x3) Dr., To Equity Share Capital A/c, (Being share 1st and final call money due on, 50,000 shares at ₹ 3), Bank A/c, (50,000-700 = 49,300x3), Dr., To Equity Share 1st Call A/c, (Being share 1st call money received on 49,300, shares), Equity Share Capital A/c (700x10), Dr., To Forfeited Shares A/C, (2+5 =7x700), To Equity Share Final Call A/c (700x3), ( Being forfeiture of 700 shares for non-payment, of Final call), Bank A/c, (700x7), Dr., Forfeited Shares A/c, (700x3), Dr., To Equity Share Capital A/c, (Being re-issue of 700 forfeited shares at ₹ 7 fully, paid up), , 1,00,000, -, , 1,00,000, , 3,50,000, -, , 2,50,000, 1,00,000, , 3,50,000, -, , 3,50,000, , 1,50,000, -, , 1,50,000, , 1,47,900, -, , 1,47,900, , 7,000, -, , 4,900, 2,100, , 4,900, 2,100, -, , 7,000, , 109 | P a g e

Page 114 :
Accountancy II PUC, , 9., , Forfeited Shares A/c (4,900-2,100), Dr., To Capital Reserve A/c, (Being the balance in forfeited shares account, (4,900-2,100) transferred to capital reserve, account), , Mysuru District P U Commerce Forum, , 2,800, -, , 2,800, , Section E, PRACTICAL ORIENTED QUESTIONS AND ANSWERS, 1. Give the disclosure requirements pertaining to Share Capital in Notes to Accounts of, Balance Sheet of a Company with imaginary figures., Notes to Accounts: Share Capital:, Particulars, 1. Share Capital, Authorized Share Capital, 50,000 equity shares of Rs.100 each, Issued Capital, 40,000 equity shares of Rs.100 each, Subscribed Capital, 35,000 equity shares of Rs.100 each, Called up Capital, 35,000 equity shares of Rs.100 each, Less: Calls-in-arrears, Paid up Capital, , ₹, , ₹, 50,00,000, 40,00,000, 35,00,000, , 35,00,000, 20,000, , 34,80,000, , ***END***, , 110 | P a g e

Page 115 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , BOOK – 2, CHAPTER – 3, , FINANCIAL STATEMENT OF A COMPANY, Section A : One Marks Questions, 1. Fill in the blanks:1. Financial Statements are the basic and formal annual report., 2. Financial statement includes Statement of Profit & loss and balance sheet., 3. Income statement and Position statement are the financial statements., 4. The object of preparation of balance sheet is to ascertain the Financial status of the, enterprise., 5. Income statement is prepared to ascertain profit or loss of the enterprise, 6. Share capital appears under the head Shareholders’ fund, 7. Capital reserve is shown under Reserves & surplus head., 8. Debit balance of statement of profit & loss shall be shown as Surplus figure under surplus, head., 9. Loans, which are repayable within 12 months, are called as short-term borrowings., 10. Fixed assets are classified as tangible and Intangible assets., , 2. Multiple Choice Questions:-, , 1. Financial statements generally include:, a) Comparative statement, , c) Income statement and balance sheet, , b) Fund flow statement, d) None of the above, , 2. The prescribed form of Balance sheet for the companies has been given in the schedule ___, a) VI part I, b) VI part II, c) VI part IV, d) III schedule, 3. Which of the following is shown under the head “fixed assets”, a) good will, b) Patents, c)Trade mark, d) All of the above, 4. Current assets does not include:, a) Short term investments, c) Inventories, , b) Buildings, , d) Cash and cash equivalents, , 5. Current liabilities are to be paid with in ___ month, d) 12 months, a) 3 months b) 6 months, c) 9 months, 6. External users of financial statements does not include:, a) Banks, b) shareholders, c) Creditors, 7. Share capital is shown as _____, a) Authorized capital, c) Subscribed capital, , d) Government, , b) Issued capital, , d) All the above, 111 | P a g e

Page 116 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , 8. Financial statements are prepared based on:, a) Accounting postulate, b) Accounting conventions, c) Recorded facts, d) All the above, 9. Non current assets are:, , a) Expected to use in the business for long period, , b) Involved in entries operating cycle, c) Primarily held for trading, d) Cash and cash equivalents, , 3. True or False:-, , 1. The original cost is the basis of recording transactions. True, 2. Going concern postulates assumes that the enterprise exists for a long period of time. True, 3. The financial statements do not show current financial condition of a business. False, , 4. The stationery is valued at cost. True, 5. Provisions are maintained for known liabilities. True, 6. While preparing financial statements, inventories valued at market price or cost price which, ever is less. True, 7. Cash and cash equivalents are to be disclosed in accordance to IAS – 3.True, 8. Rounding off of figures in financial statements is not mandatory. False, 9. In the balance sheet of a company, goodwill is shown under the heading of ‘Fixed assets’, True, 10. Proposed dividend is shown under the head, ‘Provisions’. True, , 4., , Very Short Answer Questions:-, , 1. Name any one type of financial statements., Ans: a) Income statement &, b) Balance sheet (Position statement), 2. State any one feature of financial statements., Ans: (a) Financial statements are prepared on the basis of facts., (b) Certain accounting conventions are followed while preparing FS, 3. Name any one internal user of financial statements., Ans: 1) Owners, 2) Managers, 4. Write any one objective of financial statements., Ans: (a) To provide information about cash flows., (b) To judge effectiveness of management., 5. State any one type of reserve., Ans: 1) Capital reserve,, , 2) General reserve, , 6. Give an example for non-current asset., Ans: 1) Land & building, 2) Plant & machinery, 112 | P a g e

Page 117 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , 7. Where do you record the money received against share warrants?, Ans: It shown under Equities & Liabilities in the Balance sheet under the heading, shareholders fund., , 8. How do you treat credit balance of income statement under the head surplus?, Ans: Profit & Loss balance (Cr), 9. Write any one feature of current asset., Ans: (a) Current assets is cash or is expected to realised with in 12 months, (b) Current assets is held primarily for trading, 10. How do you treat preliminary expenses?, Ans: It should be written off first out of profits, then it is treated as other non-current assets., , IV. Two Marks Questions:, , Section – B, , 1. Give the meaning of financial statements., Ans: The basic & formal annual reports through which the corporate management, communicates financial information to its owners & other external parties., , 2. State any two benefits of financial statements., Ans: (a) It forms as basis for granting of credit., (b) Report the performance of the management to the shareholders., 3. State any two limitations of financial statements., Ans: (a) Do not reflect current situation, (b) Assets may not realise, 4. State any two postulates, Ans: 1) Going concern postulate,, , 2) Money measurement postulate., , 5. How will you disclose the following items in the balance sheet of a company., A) Loose tools, B) Proposed dividends, Ans: A) Loose tools – Current assets as inventories, B) Proposed dividend – Current liabilities as short term provisions., 6. State any two difference between current liabilities and non-current liabilities., Ans: (a) Current liabilities are expected to be settled within 12 months; while non-current, liabilities are expected to be settled in a period exceeding 12 months., (b) Current liabilities are incurred in entities operating cycle; while non-current liabilities, are not incurred in entities operating cycle., 7. Mention any two items which are shown under the head ‘Reserves and surplus’., Ans: 1) Security premium &, 2) Capital redemption reserve., , 113 | P a g e

Page 118 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , Section –C: 6 Marks problem:, , 1. From the following information prepare statement of profit and loss for the year ending, 31-03-2018 as per schedule III of Companies act, 2013., Particulars, Revenue from operations, Purchase of goods, Salaries to employees, Leave encashment, Rent and taxes, Repairs to machinery, tax, , ₹, 5,00,000, 3,00,000, 40,000, 10,000, 30,000, 20,000, 30%, , Solution:, Statement of profit and loss for the year ending 31.03.2018, Note No., Notes to accounts:, particulars, ₹, Note, 1:, Employee, benefit expenses:, I. Revenue from operation, 5,00,000, II. Other income, Particular, ₹, III. Total income (I + II), 5,00,000, Salaries to employees 40,000, Leave encashment, 10,000, IV. Expenses, Total, 50,000, Purchases of goods, 3,00,000, Employees benefit expenses, 1, 50,000, Note 2: Other expenses:, Other expenses, 2, 50,000, Particular, ₹, Total expenses, 4,00,000, Rent, &, taxes, 30,000, V. Profit before tax (PBT) (III-IV), 1,00,000, Repaira to machinery 20,000, VI. Tax expenses @ 30% on PBT, 30,000, Total 50,000, VII.Profit for the year (V-VI), 70,000, 2. From the following information, prepare statement of profit & loss for the year ending31-032018 as per schedule III of Companies act, 2013., Particulars, Plant and machinery, Furniture, Share capital, Sales, Purchases, Trade payables, Depreciation on plant and machinery, Amortization of goodwill, Interest on debentures, Interest on borrowings, tax, , ₹, 40,000, 20,000, 4,00,000, 3,00,000, 1,80,000, 30,000, 4,000, 6,000, 30,000, 20,000, 30%, , 114 | P a g e

Page 119 :
Accountancy II PUC, , Solution:, , Mysuru District P U Commerce Forum, , Statement of profit and loss, For the year ending 31.03.2018, , particulars, Note No., I. Revenue from operation, II. Other income, III. Total income (I + II), IV. Expenses, Purchases of goods, Finance cost, 1, 2, Depreciation & Amortization expenses, Total expenses, V. Profit before tax (PBT) (III-IV), VI. Tax expenses @ 30% on PBT, VII.Profit for the year (V-VI), , ₹, 3,00,000, 3,00,000, 1,80,000, 50,000, 10,000, 2,40,000, 60,000, 18,000, 42,000, , Notes to accounts:, Note 1: Finance cost:, Particular, Interest on debentures, Interest on borrowings, Total, , Note 2:, , ₹, 30,000, 20,000, 50,000, , Depreciation & Amortization expenses:, Particular, ₹, Depreciation on plant &, 4,000, machinery, Amortization of goodwill 6,000, Total 10,000, , 3. From the following information, prepare Balance sheet of Jindal Co. Ltd. as at 31/03/2018 as per, schedule III of Companies act, 2013., Particulars, Share capital, Reserve & surplus, 10% Debentures, Creditors, Bills payable, Fixed assets, Trade receivables, Short term investments, Cash & cash equivalents, , ₹, 10,00,000, 5,00,000, 5,00,000, 2,00,000, 3,00,000, 15,00,000, 5,00,000, 2,00,000, 3,00,000, , Solution, Notes to accounts, No., Note 1, , Particulars, Long term barrowings:, 10% Debentures, , Note 2, , Trade payable:, Creditors, Bills payable, , Note 3, , Current investments:, Short term investment, , ₹, , Total, , 5,00,000, 5,00,000, , Total, , 2,00,000, 3,00,000, 5,00,000, , Total, , 2,00,000, 2,00,000, , 115 | P a g e

Page 120 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , Balance sheet as at 31st March, 2018, , Particulars, I Equity & Liabilities:, 1. Shareholders’ fund:, Share Capital, Reserves and surplus, 2. Non current Liabilities:, 10% Debentures, 3. Current liabilities:, Trade payable, Total Equity and Liabilities, II. Assets:, 1. Non current assets, Fixed assets, Tangible assets, Intangible assets, 2. Current assets:, Current investment, Trade receivables, Cash & cash equivalents, Total Assets, , Note No., , ₹, , 10,00,000, 5,00,000, 1, , 5,00,000, , 2, , 5,00,000, 25,00,000, , 15,00,000, 3, , 2,00,000, 5,00,000, 3,00,000, 25,00,000, , 4. From the following information prepare statement of profit & loss for the year ending, 31-03-2018 as per schedule III of Companies act, 2013. Note: Tax rate 30%, Sl.No., 1., 2., 3., 4., 5., 6., 7., 8., 9., 10., 11., 12., , Accounts head, Sales, Salaries, Wages, Stock, Purchases, Bank overdraft, 12% debentures (issued at 1/4/2017), Plant and machinery, Depreciation on plant & Machinery, Equity share capital(shares of Rs.10/- each), 7% Preference share capital, land, , Solution:Notes to accounts:, , Debit (₹), 90,000, 1,10,000, 1,50,000, 4,00,000, 1,60,000, 16,000, 6,74,000, 16,00,000, , Credit(₹), 10,00,000, , 2,00,000, 1,00,000, 2,00,000, 1,00,000, 16,00,000, , Note 1: Employment benefit expenses:, Particular, Salaries, Wages, Total, , ₹, 90,000, 1,10,000, 2,00,000, , Note 2: Finance costs:, Particulars, Interest on debenture outstanding, , ₹, 12,000, Total 12,000, Note 3 Depreciation & Amortization expenses:, Particulars, ₹, Depreciation on plant & machinery, 16,000, Total 16,000, , 116 | P a g e

Page 121 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , Solution:, Statement of profit and loss for the year ending 31.03.2018, particulars, I. Revenue from operation, II. Other income, III. Total income (I + II), IV. Expenses, Purchases of goods, Changes of inventories of finished goods, Employment benefit expenses, Finance cost, Depreciation & Amortization expenses, Total expenses, V. Profit before tax (PBT) (III-IV), VI. Tax expenses @ 30% on PBT, VII.Profit for the year (V-VI), , Note No., , 1, 2, 3, , ₹, 10,00,000, 10,00,000, 4,00,000, 1,50,000, 2,00,000, 12,000, 16,000, 7,78,000, 2,22,000, 66,600, 1,55,400, , 5. From the following information, prepare Balance sheet for the year ending 31/03/2018 as per, schedule III of Companies act, 2013., Particulars, Equity share capital, Inventories, Plant and machinery, Preference share capital, Debenture redemption reserve, Outstanding expenses, Proposed dividend, Land and building, Current investments, Cash equivalents, Short term loan from Z Ltd.,, Public deposit, , Solution, , ₹, 20,00,000, 14,00,000, 10,00,000, 12,00,000, 6,00,000, 3,00,000, 5,00,000, 20,00,000, 8,00,000, 10,00,000, 4,00,000, 12,00,000, , Balance sheet as at 31st March, 2018, , Particulars, I Equity & Liabilities:, 1. Shareholders’ fund:, Share Capital, Reserves and surplus, 2. Non current Liabilities:, Public deposit, 3. Current liabilities & provisions:, Payables & Provisions, , II. Assets:, 4. Non current assets, Fixed assets, 5. Current assets:, Current investment /Inventories/Cash, , Note No., 1, , ₹, 32,00,000, 6,00,000, 12,00,000, , Total =, , Total =, , 2, , 12,00,000, 62,00,000, , 3, , 30,00,000, , 4, , 32,00,000, 62,00,000, , 117 | P a g e

Page 122 :
Accountancy II PUC, , Notes to accounts, , No., Particulars, Note 1 Share capital:, Equity share capital, Preference share capital, , Mysuru District P U Commerce Forum, , ₹, 20,00,000, 12,00,000, 32,00,000, , Total, Note 2 Current Liabilities & provisions:, Proposed Dividend, 5,00,000, 3,00,000, O/s Expenses, Short term Loan from Z co, 4,00,000, Total 12,00,000, , No., Particulars, Note 3 Fixed & tangible assets:, Plant & machinery, Land & building, Total, Note 4 Current Assets:, Current investments, Inventories, Cash & Cash equivalents, Total, , ₹, 10,00,000, 20,00,000, 30,00,000, 8,00,000, 14,00,000, 10,00,000, 32,00,000, , Section –C: 5 Marks, PRACTICAL ORIENTED QUESTION:, 1. Write pro-forma of Balance Sheet of a company with main heads only., Balance sheet as at 31st March, 2018, Particulars, Note No., ₹, I EQUITY AND LIABILITIES, 1. Shareholders Fund, XXXX, 2. Non-Current Liabilities, XXXX, 3. Current Liabilities, XXXX, Total, XXXX, II ASSETS, 1. Non-Current Assets, XXXX, 2. Current Assets, XXXX, Total, XXXX, 2. Prepare a Statement of Profit & Loss of a Company in vertical form with, figures of 5 heads only., Statement of Profit and Loss for the year ended 31.03.2019, Particulars, Note No., I, Revenue from Operations, II Other Income, III Total Revenue (I + II), IV Less: Expenses, Profit Before Tax, V Less: Tax (50%), Profit After Tax, , imaginary, ₹, 100000, 10000, 110000, 50000, 60000, 30000, 30000, , 118 | P a g e

Page 123 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , 3. Name the major heads under which the following items will be presented in the, Balance Sheet of a Company [ 5 items only], Example-1:, 1) Goodwill, - Non-Current Assets, 2) Forfeited Shares, - Shareholders’ fund, 3) Preliminary Expenses, - Non-Current Assets, 4) Capital Reserve, - Shareholders’ Fund, 5) Loans from Banks, - Non-Current Liabilities, 6) Investments in shares & debentures (2years) - Non-Current Assets, 7) Securities premium reserve, - Shareholders’ Fund, 8) Surplus, - Shareholders’ Fund, 9) Loose tools, - Current Assets, 10) Provision for taxation, - Current Liabilities, 11) Unclaimed dividend, - Current Liabilities, 12) Short term loans & advances, - Current Assets, 13) Live stock, - Non-Current Assets, 14) Call in arrears / Calls unpaid, - Shareholders’ Fund, 15) Prepaid insurance, - Current Assets, 16) Advance from customers, - Current Liabilities, 17) Debenture redemption reserve, - Shareholder’s Fund, 18) Premium on redemption of debentures, - Non-Current Liabilities, 19) Loss on issue of debentures, - Non-Current Assets, 20) Sinking fund, - Shareholders’ Fund, 21) Sinking fund investments, - Non-Current Assets, 22) Advances to suppliers, - Current Assets, 23) Patents, trademarks, design, - Non-Current Assets, 24) Calls in advance, - Current Liabilities, 25) Furniture and fittings, - Non-Current Assets, 26) Statement of profit & loss (Dr.), - Shareholders’ Fund, 27) 10% Debentures, - Non-Current Liabilities, 28) Proposed dividend, - Current Liabilities, 29) Computer software, - Non-Current Assets, 30) Public deposits, - Non-Current Liabilities, 31) Capital redemption reserve, - Shareholders’ Fund, 32) Work in progress, - Current Assets, 33) Bills receivable, - Current Assets, 34) Statement of profit & loss (Cr.), - Shareholder’s Fund, 35) Stores and spare parts, - Current Assets, , ***END***, , 119 | P a g e

Page 124 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , BLUE PRINT, , Chapter wise Hours Allotted, Weightage of Marks and Typology of Questions: 2020-2021(Revised), Subject: ACCOUNTANCY (CODE - 30), , Class: II PUC, Section wise questions (Excluding POQ), , Chapter, Book, No., , Part -I, , ( 1), , (2), , Chapter Head, , Hours, Allotted, , Total, Marks, , (3), , (4), , (5), , (6), , Sec - C, (06 marks), , Sec - D, (12 marks), , (7), , (8), , (9), , Sec - E, (05 marks, POQs), (10), , 1, , Accounting for Not-For-Profit, Organization, , 15, , 25, , 1, , -, , -, , 2, , -, , 2, , Accounting for Partnership:, Basic Concepts, , 10, , 18, , 2, , 2, , 2, , -, , -, , 3, , Reconstitution of a Partnership Firm, - Admission of a Partner, , 15, , 25, , 1, , -, , -, , 2, , -, , 4, , Reconstitution of Partnership Firm Retirement / Death of a Partner, , 15, , 26, , 2, , -, , 2, , 1, , -, , 5, , Dissolution of Partnership Firm, , 10, , 16, , -, , 2, , -, , 1, , -, , 65, , 110, , 6, , 4, , 4, , 6, , -, , Total of Part - I, , Part -II, , Sec -A, Sec - B, (01 marks) (02 marks), , 1, , Accounting for Share Capital, , 12, , 24, , 2, , 2, , 1, , 1, , -, , 3, , Financial Statements of a, Company, , 10, , 18, , 2, , 2, , 2, , -, , -, , 22, , 42, , 4, , 4, , 3, , 1, , 87, , 152, , 10, , 8, , 7, , 7, , -, , -, , -, , -, , -, , -, , -, , 11, 98, , 15, 167, , -, , -, , -, , -, , 10, , 16, , 42, , 84, , 15, 15, , Total of Part - II, , Grand Total (Part I + 11) excluding Bridge Course & POQ), Bridge Course, POQ (3 Questions of 5 Marks each in Section E), Total hours,marks and sectionwise marks, , 120 | P a g e

Page 125 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , MODEL QUESTION PAPER-I, 2020-21 for reduced syllabus, SECOND YEAR P.U.C ACCOUNTANCY, Time: 3 Hours 15 Minutes, Max Marks: 100, Instructions:, 1. All the sub questions of Section-A should be answered continuously at one place., 2. Provide working notes wherever necessary., 3. 15 minutes extra has been allotted for candidates to read the questions., 4. Figures in the right hand margin indicate full marks., Section –A, Answer any Eight questions, each question carries ONE mark., , 08×01=08, , 1. Not-For-Profit Organisations are formed for, a) Profit, b) Service, c) Profit & Service, d) None of these, 2. The agreement between partners must be in writing. (state T/F), 3. State any one features of Partnership., 4. Expand NPSR., 5. New ratio – Old ratio = _, 6. Who is an ‘Executor’?, 7. A company is an Person., 8. Shares can be forfeited for:, a) Non-payment of call money, b) The pledging of shares as a security, c) Failure to repay the loan to the bank., d) Failure to attend meeting, 9. Give an example for non-current asset., 10. State any one type of reserve., Section –B, Answer any FIVE questions, each question carries TWO marks., 05×02=10, 11. Define partnership., 12. Name any two contents of Partnership Deed., 13. State any two circumstances under which a Partnership Firm is dissolved., 14. Why is Realisation Account prepared?, 15. State any two features of a company., 16. What do you mean by Over subscription?, 17. Give the meaning of financial statements., 18. Write any two objectives of financial statements., 121 | P a g e

Page 126 :
Accountancy II PUC, , Section –C, , Mysuru District P U Commerce Forum, , Answer any FOUR questions, each question carries SIX marks., , 04×06=24, , 19. X & Y are Partners commenced Partnership business on 1.04.2019, sharing profits &, losses in 3:2 ratio with capitals of ₹ 1,00,000 and ₹ 80,000 respectively. They earned, profits of ₹ 15,000 for the year before allowing:, a) Interest on Capitals @ 10% p.a., b) Interest on drawings: X ₹ 1,000 & Y ₹ .800, c) Commission payable to X ₹ 2000, d) Salary payable to Y ₹ 3000, Prepare P & L Appropriate A/c for the year ending 31.03.2020., 20. Yasashvi and Tapashvi are partners in a firm. During the year ended on 31st March, 2020, Yasashvi makes the drawings as under:, Date of Drawings, ₹, 01.08.2019, 5,000, 31.10.2019, 8,000, 31.12.2019, 10,000, 31.03.2020, 15,000, Partnership Deed provided that partners are to be charged interest on drawings @ 12%, p.a. Calculate the interest on drawings of Yasashvi under Product Method., 21. Ankit,Suchit and Chandru are partners in a firm sharing profits and losses in the ratio of, 4:3:2.Ankit retires from the firm.Suchit and Chandru agreed to share in the ratio of 5:3, in future. Calculate gain ratio of Suchit and Chandru., 22. Ramesh, Prakash and Suresh were partners in a firm sharing profits & losses in the ratio, of 5:3:2. On 31st March 2020, their balance sheet was as under:, Balance Sheet as on 31.3.2020, ₹, ₹, Liabilities, Assets, Creditors,, 14,000, 8,000, Reserve Fund, 6,000, Cash, 11,000, Capitals:, 70,000 Debtors, 11,000, Ramesh, 30,000, Patents, 10,000, Prakash, 25,000, Stock, 50,000, Suresh, 15,000, Machinery, 90,000, 90,000, th, Ramesh died on 30 Sept 2019. It was agreed between his executors and the, surviving partners that:, a) Good will to be valued at two and half years purchase of the average, 122 | P a g e

Page 127 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , profits of the previous four years, which were:, 2016-17 ₹ 12, 000, 2017-18 ₹ 20,000, 2018-19 ₹ 13, 000, 2019-20 ₹ 15,, 000 (as per AS26), b) Share in the profit from the date of last balance sheet till to the date of, death to be calculated on the basis of last year’s profit., c) Interest on capital to be allowed at 12% p.a., Prepare Ramesh’s capital account., 23. ‘A’ Company issued 5,000 Equity shares of ₹ 100 each. The amount was payable as, follows: On application, ₹ 20, On allotment, ₹ 40, On first call and final call ₹ 40, All the shares were subscribed and the money duly received., Pass the journal entries up to the stage of first and final call money received., 24. From the following details you are required to prepare statement of profit and loss for, the year ended 31-03-2020 as per Schedule III of Companies Act, 2013., Particulars, ₹, Plant and Machinery, 40,000, Furniture, 20,000, Share capital, 4,00,000, Sales, 3,00,000, Purchases, 1,80,000, Trade Payables, 30,000, Depreciation on plant and machinery, 4,000, Amortisation of goodwill, 6,000, Interest on debentures, 30,000, Interest on borrowings, 20,000, Tax, 30%, 25. Form the following information, prepare Balance Sheet of Jindal Company Ltd as at, 31/03/2020 as per Schedule III of Companies Act, 2013., Particulars, ₹, Share Capital, 10,00,000, Reserves and Surplus, 5,00,000, 10% Debentures, 5,00,000, Creditors, 2,00,000, Bills payable, 3,00,000, Fixed Assets, 15,00,000, Trade receivables, 5,00,000, Short term investments, 2,00,000, Cash and cash equivalents, 3,00,000, 123 | P a g e

Page 128 :
Accountancy II PUC, , Section –D, , Mysuru District P U Commerce Forum, , Answer any FOUR questions, each question carries TWELVE marks., , 04×12=48, , 26. Followings are the Balance Sheet and Receipt and Payment Account of Sree Sports, Club, Bengaluru., Balance Sheet as on 31-03-2018, Liabilities, Outstanding salary, Capital fund, , ₹, 2,000, 32,500, 34,500, , Assets, Cash balance, O/S subscriptions, Sports Materials, Furniture, , ₹, 7,300, 1,200, 16,000, 10,000, 34,500, , Receipt and Payment A/C for the year ended 31-03-2019, Dr., , Receipts, To Balance b/d, To Subscriptions, To Entrance Fees, To Sale of old newspapers, To Sale of old sports, materials, To Rent, , Adjustment:, , ₹, 7,300, 38,000, 2,000, 200, 1,200, 7,000, , 55,700, , Payments, By Salary, By purchase of Sports, Materials, By Investments, By Fixed Deposits, By Postage, By General expenses, By Lighting Charges, By Balance c/d, , Cr., , ₹, 10,000, 6,000, 20,000, 10,000, 300, 400, 1,300, 7,700, 55,700, , a. Subscriptions outstanding for the year 2019 is ₹ 3,000., b. Subscriptions received in advance for the year 2020 ₹ 1,000., c. Depreciate sports materials by ₹ 5,000., d. Capitalize entrance fees., e. Outstanding lighting charges ₹ 300., Prepare:, 1. Income and Expenditure Account and, 2. Balance Sheet as on 31-03-2019., 27. From the following Receipt and Payment Account and information given below, prepare, Income and Expenditure Account and the Balance Sheet of Adult Literacy Orgnisation, as on March 31, 2018, , 124 | P a g e

Page 129 :
Accountancy II PUC, , Dr., , Mysuru District P U Commerce Forum, , Receipt and Payment A/C for the year ending 31-03-2018, , Receipts, To Balance b/d, To Subscriptions, 2017-18, 27,700, 2018-19, 500, To Sale of old newspaper, To Govt. Grant, To Sale of old furniture, (Book value ₹ 5,000), To Interest received on, Fixed Deposits, , Cr., ₹, 3,200, 1,850, 3,000, 18,000, , Payments, ₹, 19,550 By General Expenses, By News papers, By Electricity, 28,200 By Fixed Deposit with Bank, 800, (on 30-06- 17@10%), 12,000 By Books, 3,700 By Salary, By Rent, By Postage charges, 900 By Furniture (purchased), By Balance c/d, 65,150, , 7,000, 3,600, 6,500, 300, 10,500, 11,200, 65,150, , Additional Information:, 1) Subscription due on 31-03-2018 ₹ 1500, 2) On March 31,2018 Salary outstanding ₹ 600, 3) On April 1,2017 Orgnisation owned furniture ₹ 12,000, Books ₹ 5,000, , 28. Raja and Rani are partners in a firm sharing profits and losses in the ratio of 3:2. Their, balance sheet as on 31.03.2020 was as follows., Balance Sheet as on 31.03.2020, Liabilities, Creditors, Bills Payable, General Reserve, Capitals:, Raja, 60,000, Rani, 40,000, , ₹, Assets, 40,000 Cash, 20,000 Machinery, 25,000 Stock, Debtors, 23,000, Less: PDD, 3,000, 100,000 Buildings, Investments, P & L Account, 185,000, , ₹, , 5,000, 60,000, 25,000, , 20,000, 50,000, 20,000, 5,000, 185,000, , On 01.04.2020 they admitted Mantri as a partner and offer him 1/5th share in the future, profits on the following terms., a. Mantri has to bring in Rs. 30,000 as his capital and ₹ 10,000 towards goodwill., b. Goodwill is to be withdrawn by the old partners.(as per AS26), c. Depreciate Machinery by 5%., d. Appreciate buildings by 10%., e. PDD is reduced to ₹ 2,000 and investments are to be revalued at ₹ 25,000., Prepare:, i. Revaluation Account, ii. Partners’ Capital Account., iii. Balance sheet after admission., 125 | P a g e

Page 130 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , 29. Gouri and Ganesh are partners in a firm sharing profit equally. Following is their, Balance Sheet as on 31.03.2020., Balance Sheet as on 31.03.2020, Liabilities, Creditors, Bills Payable, General Reserve, Capitals:, Gouri, Ganesh, , ₹, Assets, 20,000 Cash in Hand, 4,000 Stock, 6,000 Buildings, Debtors, 17,000, 80,000 Less: PDD, 1,500, 40,000 Furniture, Patents, Plant & Machinery, 150,000, , ₹, , 7,000, 25,000, 40,000, , 15,500, 14,500, 30,000, 18,000, 150,000, , On 01.04.2020, Shiva is admitted into partnership on the following terms:, a) Shiva should bring ₹ 25,000 as capital., b) Goodwill of the firm is valued ₹ 16,000. (as per AS26), c) Stock is to be increased by 8%., d) Provision for doubtful debts is increased to ₹ 2,600., e) Capital accounts of partners are to is be adjusted in their new profit-sharing, ratio 3:2:1, based on Shiva’s capital (Adjustments to be made in cash)., Prepare: i). Revaluation Account., ii). Partners’ Capital Accounts &, iii). Balance sheet of the new firm., 30. Radha, Sheela and Meena were in partnership sharing profits and losses in the, proportion of 3:2:1. On April 1, 2020 Sheela retires from the firm and on that date, their, Balance Sheet was as follows:, Liabilities, Trade Creditors, Bills Payable, Expenses Owing, General Reserve, Capitals :, Radha 15,000, Sheela 15,000, Meena 15,000, , ₹, 3,000, 4,500, 4,500, 13,500, , 45,000, 70,500, , Assets, Cash in Hand, Cash at Bank, Debtors, Stock, Factory Premises, Machinery, Loose Tools, , ₹, 1,500, 7,500, 15,000, 12,000, 22,500, 8,000, 4,000, 70,500, , 126 | P a g e

Page 131 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , The terms were:, a) Goodwill of the firm was valued at ₹ 13,500 (as per AS26), b) Expenses owing to be brought down to ₹ 3,750., c) Machinery and Loose Tools are to be valued at 10% less than their book, value., d) Factory premises are to be revalued at ₹ 24,300., Prepare :, 1) Revaluation Account, 2) Partners’ Capital Accounts and, 3) Balance Sheet of the firm after retirement of Sheela., , 31. Rashmi and Geetha are partners sharing profits and losses in the ratio of 3:2. Their, Balance Sheet as on 31-3-2018 is as follows:, Balance Sheet as on 31. 3. 2020, Liabilities, ₹, Assets, ₹, Sundry Creditors, 10,000 Cash at Bank, 5,000, Bills payable, 10,000, Bills Receivable, 10,000, Rashmi’s Loan, 5,000 Sundry Debtors, 20,000, Reserve Fund, 10,000 Stock, 15,000, Capitals:, Machinery, 15,000, Rashmi, 30,000 Furniture, 10,000, Geetha, 40,000 Goodwill, 30,000, 1,05,000, 1,05,000, On the above date the firm was dissolved., a) The assets were realised as follows:, Bills Receivable ₹ 7,500, Sundry Debtors and Stock 10% less than the book, value, Machinery realised 5% more than the book value, and Goodwill realized, for ₹ 12,000., b) Furniture was taken over by Geetha at ₹ 8,000., c) Dissolution expenses were ₹ 600., d) All the liabilities were discharged in full. Prepare:, Prepare:, 1. Realization A/c ,, 2. Partners’ capital Accounts and, 3. Bank A/c., 32. Sun India Ltd. issued 20,000 Equity Shares of ₹ 100 each at premium of ₹ 10 each., The amount payable was as follows:, ₹ 20 on application, ₹ 50 on allotment (including premium), ₹ 40 on first and final call, All the shares were subscribed and money duly received except the first and final call on, 1,000 shares. The Directors forfeited these shares and re-issued them as fully paid at ₹ 90, per share., 127 | P a g e

Page 132 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , Section –E, (Practical Oriented Questions), , Answer any TWO questions, each question carries FIVE marks., , 02×05=10, , 33. How do you treat the followings in the absence of Partnership Deed?, a) Profit Sharing Ratio, b) Interest on Capital, c) Interest on Drawing, d) Interest on Advances from Partners, e) Partner Salary., 34. Write two Partners’ Capital Accounts under Fluctuating Capital System with 5, imaginary figures., 35. Write the pro-forma of a Balance Sheet of a Company with main heads only., ****END****, , 128 | P a g e

Page 133 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , MODEL QUESTION PAPER-II, 2020-21 for reduced syllabus, SECOND YEAR P.U.C ACCOUNTANCY, Time: 3 Hours 15 Minutes, Max Marks: 100, Instructions:, 1. All the sub questions of Section-A should be answered continuously at one place., 2. Provide working notes wherever necessary., 3. 15 minutes extra has been allotted for candidates to read the questions., 4. Figures in the right-hand margin indicate full marks., Section –A, Answer any Eight questions, each question carries ONE mark., , 08×01=08, , 1. Not-For-Profit Organisations are used for the welfare of the, ., 2. Partnership deeds contains,, a) Name of firm, b) Name and address of the partners, c) P/L sharing ratio, d) All of the above, 3. Name any one method of maintaining capital accounts of partners., 4. Expand SR., 5. What do you mean by retirement of a partner?, 6. Deceased partner’s claim is transferred to his Executor’s Account (State T/F)., 7. Issued capital is part of, a) Reserve capital, b) Unissued capital, c) Authorised capital, d) None of the above, 8. State the meaning of under subscription., 9. Share capital appears under the head ., 10. Give an example for non-current liabilities., Section –B, Answer any FIVE questions, each question carries TWO mark, 05×02=10, 11. State any two features of partnership., 12. What is fluctuating capital method?, 13. Give the meaning of Dissolution of a Partnership Firm., 14. State any two circumstances under which a Partnership Firm is dissolved., 15. Give the meaning of calls in arrears., 16. State any two categories of share capital., 17. State any two benefits of financial statements., 18. Mention any two items which are shown under the head’ Reserves and Surplus’., 129 | P a g e

Page 134 :
Accountancy II PUC, , Section –C, , Mysuru District P U Commerce Forum, , Answer any FOUR questions, each question carries SIX marks., 04×06=24, 19. Sachin and Pratham commenced business in partnership with capital of ₹ 1,00,000 and, ₹ 80,000 respectively on 01.04.2018 agreeing to share profits and losses in the ratio of, 3:2. For the year ending 31.03.2019 they earned the profits of ₹ 36,000 before allowing:, i) Interest on capital at 5% p.a., ii) Interst on drawings, Sachin ₹ 600 and Pratham ₹ 1,000, iii) Yearly salary of Pratham ₹ 10,000, iv) Their drawings during the year Sachin ₹ 16,000 and Pratham ₹ 20,000., Prepare profit and loss appropriation account., 20. Sahana and Saniya are partners in firm. Sahana’s drawings for the year 2019-20 are, given as under:, ₹ 4,000 on 01.06.2019, ₹ 6,000 on 30.09.2019, ₹ 2,000 on 30.11.2019, ₹ 3,000 on 01.01.2020, Caluculate interest on Sahan’s drawings at 8% p.a. for the year ending on 31.03.2020,, under product method., 21. Vani,Rani and Soni are partners in a firm sharing profits and losses in the ratio of, 4:3:2.Soni retires from the firm.Vani and Rani agreed to share equally in future. Calculate, gain ratio of Vani and Rani., 22. Raju,Ravi and Roopa are partners sharing profit and losses in the ratio of 4:3:3. Their, capital balances on 01.04.2019 stood ₹ 1,00,000, ₹ 80,000 and ₹ 50,000 respectively., Raju died on 01.10.2019. The partnerships deed provides the followings:, a) Interest on capital at 12% p.a., b) He had withdrawn ₹ 5, 000 up to date of death., c) Raju’s share of good will ₹ 5, 000 (as per AS26), d) His share of profit up to the date of death on the basis of previous year profits., Previous year profits ₹ 20,000., Prepare Raju’s executors account., 23. ABC Company Ltd., issued 20,000 Equity shares of ₹ 10 each. The amount, payable is as follows. On application, ₹ 2, On allotment, ₹ 3, On first and on final call ₹ 5, All shares were subscribed. Give the necessary journal entries up to the stage of, first and final call money received., 130 | P a g e

Page 135 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , 24. From the following information prepare statement of profit and loss for the year ended, 31-03-2020 as per Schedule III of Companies Act, 2013., Particulars, Revenue from operations, Purchase of goods, Salaries to employees, Leave encashment, Rent and taxes, Repairs to machinery, Tax, , ₹, 5,00,000, 3,00,000, 40,000, 10,000, 30,000, 20,000, 30%, , 25. From the following details you are required to prepare balance sheet for the year ended, 31-03-2020 as per Schedule III of Companies Act, 2013., Particulars, Inventories, Equity Share Capital, Plant and Machinery, Preference Share Capital, General Reserve, Creditors, Provision for taxation, Land and Building, Cash at Bank, 12% Debentures, , ₹, 7,00,000, 16,00,000, 8,00,000, 6,00,000, 6,00,000, 3,50,000, 2,50,000, 26,00,000, 5,00,000, 12,00,000, , Section –D, Answer any FOUR questions, each question carries TWELVE marks., 04×12=48, 26. Following are the Balance Sheet and Receipts and Payments Account of Hassan Sports, Club, Hassan., Balance Sheet as on 31-03-2017, Liabilities, ₹, Assets, ₹, Capital fund, 61,000, Buildings, 64,000, Subscription for 2017-18, 1,000, O/S Subscriptions, 1,600, O/S Office expenses, 4,000, O/S Rent, 400, Bank loan, 20,000, Furniture, 12,000, Cash in Hand, 8,000, 86,000, 86,000, , 131 | P a g e

Page 136 :
Accountancy II PUC, , Dr., , Mysuru District P U Commerce Forum, , Receipt and Payment A/C for the year ending 31-03 2018, Cr., Receipts, ₹, Payments, ₹, 8,000, By Office Expenses:, To Balance b/d, 2016-17, 4,000, To Subscriptions:, 1,600, 6,000, 2017-18, 2016-17, 17,600, By Subscription to Newspapers, 2017-18, 2,800, 2,000, & Journals, 2018-19, 4,000, 4,000, To Entrance Fees, By Refreshment Expenses, 4,000, 10,000, To Rent, By Investments, 6,000, 8,000, By Bank Loan, To Income from Drama, 400, 4,400, By Salary, To Sale of newspapers, 6,000, By Balance c/d, 44,000, 44,000, Adjustments:, a) Subscriptions outstanding ₹ 1,000,, b) Salary outstanding ₹ 400,, c) Interest payable ₹ 2,400,, d) Depreciation on Building ₹ 5,000, e) Entrance Fees is to be Capitalised., Prepare: 1) Income and Expenditure Account and, 2) Balance Sheet as on 31-03-2018., 27. Receipt and Payment Account of Shankar Sports Club is given below, for the year, ended March 31, 2018, Dr ., Receipt and Payment A/C for the year ending 31-03-2018, Cr., ₹, ₹, Receipts, Payments, To Cash in Hand, 2,600 By Rent, 18,000, To Entrance fees, 3,200 By Wages, 7,000, To Donation for Building, 23,000 By Billiard table, 14,000, To Locker Rent, 1,200 By Furniture, 10,000, To Life Membership fee, 7,000 By Interest, 2,000, To profit from entertainment, 3,000 By Postage, 1,000, To Subscription, 40,000 By Salary, 24,000, By Cash in hand, 4,000, 80,000, 80,000, Prepare Income and Expenditure Account and Balance Sheet With the help of following, Information: Subscription outstanding on March31, 2017 is ₹ 1,200 and ₹ 2,300 on, March 31, 2018, opening stock of postage stamps is ₹ 300 and closing stock is ₹ 200,, Rent ₹ 1,500 related to 2016-17 and ₹ 1,500 is still unpaid., On April 1, 2017 the club owned Furniture ₹ 15,000, Furniture valued at ₹ 22,500 on, March 31, 2018. The club took a loan of ₹ 20,000 (@10 p. a)2016-17., 132 | P a g e

Page 137 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , 28. Rajesh and Rakesh are partners in a firm sharing profits and losses in the ratio of 3:2., Their balance sheet as on 31.03.2020 stood as follows., Balance Sheet as on 31.03.2020, Liabilities, Assets, ₹, ₹, Creditors, 41,500 Cash at Bank, 22,500, General Reserve, 4,000 Bills Receivable, 3,000, Capital Accounts:, Debtors, 18,000, Rajesh, 30,000 Less: PDD, 1,000, 17,000, Rakesh, 16,000 Stock, 20,000, Buildings, 25,000, Machinery, 4,000, 91,500, 91,500, On 01.04.2020 they admitted Shyam as partner and offered him 1/5th share in the future, profits on the following terms., a. He has to bring in ₹ 10,000 as his capital and ₹ 5,000 towards Goodwill., b. Goodwill treatment as per AS26., c. Appreciate buildings by 20%., d. Maintain at 5% PDD on debtors., e. Provide for outstanding repair bills ₹ 1,000., Prepare: i). Revaluation Account, ii). Partners’ Capital Account., iii). New Balance sheet of the firm, 29. Mahendra and Surendra are equal partners in a firm. Their balance sheet as on, 31.03.2020 stood as follows., Balance Sheet as on 31.03.2020, Liabilities, Assets, ₹, ₹, Creditors, 40,000 Stock, 39,000, Bank Loan, 8,000 Debtors, 32,000, Less: PDD, 1,000, 31,000, Capitals:, Land & Buildings, 40,000, Mahendra 80,000, Machinery, 36,000, Surendra, 40,000, 120,000 Motor Car, 8,000, Cash at Bank, 14,000, 168,000, 168,000, th, On 01.04.2020 Chandra is admitted into partnership for 1/6 share in profits on the, following terms., a. Chandra brings ₹ 26,000 as capital., b. Goodwill of the firm is valued at ₹ 14,000 (as per AS26), c. Motor car and machinery are to be depreciated by 20% and ₹ 3,800 respectively., d. Provision for doubtful debts is to be maintained at 10%., e. The Capital accounts of all the partners be adjusted in their new profit sharing, ratio 3:2:1 based on Chandra’s capital (Adjustments to be made in cash), , 133 | P a g e

Page 138 :
Accountancy II PUC, , Prepare:, , Mysuru District P U Commerce Forum, , i). Revaluation Account, ii). Partners’ Capital Account., iii). New Balance sheet of the firm., , 30. Radha, Sheela and Meena were in partnership sharing profits and losses in the, proportion of 3:2:1. On April 1, 2020, Sheela retires from the firm and on that date, their, Balance Sheet was as follows:, Liabilities, ₹, Assets, ₹, Trade Creditors, 3,000 Cash-in-Hand, 1,500, Bills Payable, 4,500 Cash at Bank, 7,500, Expenses Owing, 4,500 Debtors, 15,000, General Reserve, 13,500 Stock, 12,000, Capitals :, Factory Premises, 22,500, Radha, 15,000, Machinery, 8,000, Sheela, 15,000, Losse Tools, Meena, 15,000, 70,500, 70,500, The terms were :, a) Goodwill of the firm was valued at ₹ 13,000. (as per AS26), b) Expenses owing to be brought down to ₹ 3,750., c) Machinery and Loose Tools are to be valued at 10% less than their book value., d) Factory premises are to be revalued at ₹ 24,300., Prepare :, 1) Revaluation account, 2) Partner’s capital accounts and, 3) Balance sheet of the firm after retirement of Sheela., 31. Shruti, Shilpa and Shreya were partners in a firm, sharing profits and losses in the ratio, of 2 : 2 : 1. They decided to dissolve the firm. Their Balance Sheet on the date of, dissolution was as follows :, Balance Sheet as on 31. 3. 2020, Liabilities, ₹, Assets, ₹, Creditors, 30,000 Cash at Bank, 6,000, Bills payable, 20,000 Debtors, 30,000, Shreya’s Loan, 8,000 Stock, 30,000, General Reserve, 10,000 Furniture, 22,000, Capitals:, Machinery, 20,000, Shruti,, 40,000 Buildings, 50,000, Shilpa, 30,000, Shreya, 20,000, 1,58,000, 1,58,000, 134 | P a g e

Page 139 :
Accountancy II PUC, , Mysuru District P U Commerce Forum, , The assets realised as follows :, a) Debtors realised 10% less than the book value, the Stock realised 15% more than, the book value, Building realised ₹ 60,000., b) The Furniture was taken over by Shruti at ₹ 20,000., c) The Machinery was taken over by Shilpa at ₹ 15,000., d) Creditors and Bills Payable were paid off at a discount of 5%., e) Cost of dissolution amounted to ₹ 1,500., Prepare :, i) Realisation Account, ii) Partner’s Capital Accounts, iii) Bank Account., , 32. XYZ Co. Ltd. issued 30,000 equity shares of ₹ 10 each at a premium of ₹ 1 per share, to the public, payable as follows:, ₹ 2 on application, ₹ 5 on allotment (including premium), ₹ 4 on first call and final call, All the shares subscribed and the money duly received except the first and final call on, 2000 shares. The directors forfeited these shares and re-issued them as fully paid up at ₹, 8 per share., Pass the necessary Journal entries., Section –E, (Practical Oriented Questions), Answer any TWO questions, each question carries FIVE marks., , 02×05=10, , 33. Write two Partners Current Account under Fixed Capital System with 5 imaginary, figures., 34. Give the disclosure requirements pertaining to Share Capital in Notes to Accounts of, Balance Sheet of a Company with imaginary figures., 35. Write the proforma of a Balance Sheet of a Company with main heads only., , ****END****, , 135 | P a g e