INTRODUCTION

Heartiest welcome to SMART TRACK TO ACCOUNTANCY. It is an attempt to uplift

the speed of solving problems in Accountancy. Here the author tried to bring questions from
various areas that have maximum importance in annual exams. The questions are arranged after
analysing past few years questions and the due weightage given to each chapters and topics.
Hope it will be useful to bring a better change in the performance of your achievement.
Expecting your valuable suggestions for further modifications.

Instructions for Students

1. Bring your maximum concentration for solving problem.
2. Try to Read the specimen question and solution carefully.
3. Try to solve the problem with in the stipulated time.
4. Create a mind map while solving the problem.
5. Improve your speed with conscious thoughts.
6. The question number column includes the time with in which you have to solve the
problem.
 PROFIT & LOSS APPROPRIATION ACCOUNT

Q.1 A, B and C set up a partnership firm on 1 st April, 2017. They contributed Rs. 50,000,
Rs. 40,000 and Rs. 30,000, respectively as their capitals and agreed to share profits
and losses in the ratio of 5: 3:2. A is to be paid a salary of Rs. 10,000 and Commission
of B Rs. 6,000 and of C Rs. 2000. It is also provided that interest to be allowed on
capital at 8% p.a. The drawings for the year were A Rs. 3,000, B Rs. 2,000 and C Rs.
1,500. Interest on drawings of Rs. 200 was charged on A’s drawings, Rs. 180 on B’s
drawings and Rs. 100, on C’s drawings. The net profit as per Profit and Loss Account
for the year ending 31stMarch, 2017 was Rs. 35,000. Prepare the Profit and Loss
Appropriation Account.
Answer Dr Profit & Loss Appropriation a/c Cr
Particular Amount Particular Amount
To A’s Salary 10000 By Net Profit b/d 35000
To B’s Commission 6000 By Interest on Drawings
To C’s Commission 2000 A 200
To Interest on Capital B 180
A 8000 C 100 480
B 3200
C 1600 8800
To Profit transferred
to Capital Account
A 4340
B 2604
C 1736
8680
35480 35480

Q.2 R, P and N entered into partnership, bringing in Rs. 100,000, Rs. 75,000 and Rs.
50,000 respectively into the business. They decided to share profits and losses in the
[ 10 minutes] ratio of 2:1:1 and agreed that interest on capital will be provided to the partners @10
per cent per annum. During the year they earned a profit of Rs. 45,000. R will get a
salary Rs. 3000 twice in a year and N a commission of Rs. 2500 and also to be
charged an interest of 12% on their drawings, irrespective of the period, which is Rs.
10000 for R, Rs. 8,000 for P and Rs. 6000 for N. Prepare the Profit and Loss
Appropriation Account.
Answer

Q.3 Karun, Varun and Kumar entered into partnership, bringing in Rs. 80,000, Rs.
50,000 and Rs. 45,000 respectively into the business. They decided to share profits
[ 8 minutes] and losses equally and agreed that interest on capital will be provided to the partners
@10 per cent per annum. During the year they earned a profit of Rs. 40,000. They
are also to be charged an interest of 12% on their drawings, irrespective of the
period, which is Rs. 7500 for Karun, Rs. 6,000 for Varun and Rs. 3500 for Kumar.
Prepare the Profit and Loss Appropriation Account.
Answer

Q.4 X, Y and Z entered into partnership, bringing in Rs. 1,40,000, Rs. 1,25,000 and
Rs. ,75,000 respectively into the business. They decided to share profits and losses in
[ 5 minutes] the ratio of 5:3:2 and agreed that interest on capital will be provided to the partners
@15 per cent per annum. During the year they earned a profit of Rs. 58,000.
According to the partnership deed both the partners are entitled to Rs. 1,0000 as
Salary per anum. X will get a Commission of Rs. 5000 and Z Rs. 2000. They are also
to be charged an interest of 15% on their drawings, irrespective of the period, which
is Rs. 6000 for X, Rs. 3,000 for Y and Rs. 1500 for Z. Prepare the Profit and Loss
Appropriation Account.
Answer

Calculation Of Interest On Capital

Q.1 A and B started partnership firm as on April 01. 2017 with capital of Rs. 2,00,000 and
Rs. 1,50,000 respectively. On July 01, 2017, A introduced an additional capital of Rs.
30,000 and B, Rs. 40,000. On October 01 A withdrew Rs. 25,000, and on January 01,
2018 B withdraw, Rs. 20,000 from their capitals. Interest is allowed @ 10% p.a.
Calculate interest payable on capital to both the partners during the financial year
2017–2018.
Answer A’s Interest on Capital
Interest on Rs. 2,00,000 for full year =
Add: Interest on 30000 for 9 months =
Less : Interest on 25000 for 6 months =
Total Interest on Capital = 21000 B’s
Interest on Capital
Interest on Rs. 1,50,000 for full year =
Add: Interest on 80000 for 9 months =
Less : Interest on 20000 for 3 months = 500
Total Interest on Capital = 17500

Q.2 Raju and Nivin started partnership firm as on April 01. 2017 with capital of Rs.
2,50,000 and Rs. 1,80,000 respectively. On June 01, 2017, Raju introduced an
[ 5 minutes] additional capital of Rs. 50,000 and Nivin, Rs. 45,000. On October 31 Raju
withdrew Rs. 40,000, and on November 01, 2018 Nivin withdraw, Rs. 30,000 from
their capitals. Interest is allowed @ 10% p.a. Calculate interest payable on capital to
both the partners during the financial year 2017–2018.
Answer

Q.3 Jeevan and Ram started partnership firm as on April 01. 2016 with capital of Rs.
2,50,000 and Rs. 2,00,000 respectively. On August 01, 2016, Jeevan introduced an
[ 3 minutes] additional capital of Rs. 1,00,000 and Ram, Rs. 75,000. On October 31 Jeevan
withdrew Rs. 50,000, and on November 31, 2017 Ram withdraw, Rs. 60,000 from
their capitals. Interest is allowed @ 10% p.a. Calculate interest payable on capital to
both the partners during the financial year 2016–2017.
Answer
 – Fixed Amount Withdrawn At The
Calculation Of Interest On Drawings
Beginning Of The Month
Q.1 Wilbert withdrew money during the year ending March 31, 2017 from his capital
account, for his personal use. Calculate interest in drawings in each of the following
alternative situations, if rate of interest is 9 per cent per annum. (a) If he withdrew
Rs. 3,000 per month at the beginning of the month.
(b) If an amount of Rs. 3,000 per month was withdrawn by him at the end of each
month.
(c) If an amount of Rs. 3,000 per month was withdrawn by him in the middle of
each month.
(d) If the amounts withdrawn were : Rs. 12,000 on June 01, 2016, Rs. 8,000; on
August 31, 2016, Rs. 3,000; on September 30, 2016, Rs. 7,000, on November 30, 2016,
and Rs. 6,000 on January 31, 2017.
Answer (a) As a fixed amount of Rs. 3,000 per month is withdrawn at the beginning of the
1
month, interest on drawings will be calculated for an average period of 6 ⁄2months.
Interest on Drawings =
(b) As the fixed amount of Rs. 3,000 per month is withdrawn at the end of each
month, interest on drawings will be calculated for an
1
average period of 5 ⁄2months.
Interest on Drawings =
(c) As the fixed amount of Rs. 3,000 per month is withdrawn at the end of each
month, interest on drawings will be calculated for an average period of 6 months.
Interest on Drawings =

Amount Period In
Date Withdrawn Months Interest
12000×9×10
Jun. 1, 2014 12,000 10 = 900
100×12
8000×9×7
Aug. 31, 2014 8,000 7 100×12
= 420
3000×9×6
Sept. 30, 2014 3000 6 100×12
= 135
7000×9×4
Nov. 30, 2014 7000 4 100×12
= 210
6000×9×2
Jan. 31, 2015 6000 2 100×12
= 90
Total 1755
Q.2 Giri withdrew money during the year ending March 31, 2017 from his capital
account, for his personal use. Calculate interest in drawings in each of the following
alternative situations, if rate of interest is 8 per cent per annum.
(a) If he withdrew Rs. 4,000 per month at the beginning of the month.
(b) If an amount of Rs. 4,000 per month was withdrawn by him at the end of each
[ 10 mts] month.
(c) If an amount of Rs. 4,000 per month was withdrawn by him in the middle of
each month.
(d) If the amounts withdrawn were : Rs. 15,000 on June 01, 2016, Rs. 6,000; on
August 31, 2016, Rs. 5,000; on September 30, 2016, Rs. 8,000, on November 30, 2016,
and Rs. 6,000 on January 31, 2017.
Answer

Q.3 Rahith withdrew money during the year ending March 31, 2017 from his capital
account, for his personal use. Calculate interest in drawings in each of the following
alternative situations, if rate of interest is 8 per cent per annum. (a) If he withdrew
Rs. 6,000 per month at the beginning of the month.
(b) If an amount of Rs. 6,000 per month was withdrawn by him at the end of each
[ 8 mts] month.
(c) If an amount of Rs. 6,000 per month was withdrawn by him in the middle of
each month.
(d) If the amounts withdrawn were : Rs. 15,000 on June 31, 2016, Rs. 6,000; on
August 01, 2016, Rs. 5,000; on September 01, 2016, Rs. 8,000, on November 01, 2016,
and Rs. 6,000 on January 31, 2017.
 Calculation of New Ratio – Admission of a New Partner
Q.1 Ramu and Shiva are partners in a firm sharing profits in the ratio of 3:2. They admit
Ghanesh as a new partner. Ramu surrenders 1/4 of his share and Shiva 1/3 of his share
in favour of Ghanesh. Calculate new profit sharing ratio of Ramu, Shiv and Ghanesh.
Answer
Ramu’s old share =
Share surrendered by Ramu
Ramu’s new share
Shiva’s old share
Share surrendered by Shiva
Shiva’s new share
Ghanesh’s new share
New profit sharing ratio among Ramu, Shiva and Ganesh will be 27:16:17
Q.2 Hari and Raj are partners in a firm sharing profits in the ratio of 4:3. They admit Jeeva
as a new partner. Hari surrenders 1/4 of his share and Raj 1/3 of his share in favour of
[5 mts] Jeeva. Calculate new profit sharing ratio of Hari, Shiv and Jeeva.

Answer

Q.3 Aravind and Babu were partners in a firm sharing profits in 3:2 ratio. They admitted
[3 mts] Chandran for 3/7 share which he took 2/7 from Aravind and 1/7 from Babu. Calculate
new profit sharing ratio.
Answer
 Calculation of New Ratio – Retirement / Death of a New Partner
Q.1 Arjun, Aryan and Sidhu are partners sharing profits in the ratio of 3:2:1. Arjun retires
and his share is taken up by Aryan and Sidhu in the ratio of 3:2. Calculate the new
profit sharing ratio.
Answer Gaining Given, Ratio of Aryan and Sidhu = 3:2
Old Profit Sharing Ratio of between Arjun, Aryan and Sidhu 3:2:1
Share acquired by Aryan
Share acquired by Sidhu
New Share = Old Share + Acquired Share
Harpreet’s New Share
Sidhu’s New Share
New Profit Sharing Ratio of Aryan and Sidhu = 19:11
Q.2 Seetha, Arya and Sindhu are partners sharing profits in the ratio of 5:3:2. Arjun
retires and her share is taken up by Arya and Sindhu in the ratio of 3:2. Calculate the
[5 mts] new profit sharing ratio.

Answer

Q.3 Siva, Karna and Reghu are partners sharing profits in the ratio of 4:3:1. Reghu
[3 mts] retires and his share is taken up by Siva and Karna in the ratio of 5:3.
Calculate the new profit sharing ratio.
Answer

Preparation of Final Accounts at The Time Of

Admission of A Partner
Q.1 ARJUN and DWIJJU were partners in a firm sharing profits in 3:2 ratio. On Jan. 01,
2015 they admitted VIKRAM for 1/5 share in the profits. The Balance Sheet of ARJUN
and DWIJJU as on Jan. 01, 2015 was as follows:
Balance Sheet of ARJUN and DWIJJU as on 1.1.2015
LIABILITIES AMOUNT ASSETS AMOUNT
Creditors 15000 L&B 35000
Bills Payable 10000 Plant 45000
ARJUN’s capital 80000 Debtors 22000
DWIJJU’s Capital 35000 Less:Provision 2000 20000
Stock 35000
Cash 5000
140000 140000
It was agreed that:
i) The value of Land and Building be increased by Rs. 15,000.
ii) The value of plant be increased by 10,000.
iii) Goodwill of the firm be valued at Rs. 20,000.
iv) VIKRAM to bring in capital to the extent of 1/5th of the total capital of the new
firm.
Record the necessary journal entries and prepare ledger accounts of the firm after
VKRAM’s admission.
 Dr. Revaluation A/C Cr.
Particular Amount Particular Amount
Profit on Revaluation Plant and Machinery Building 15000
Transferred to capital account 25000 10000

25000 25000
Partner’s Capital A/C
Dr. Cr.
Particular A D V Particular A D V
To Current 59000 21000 By Balance b/d 80000 35000
A/c 48000 By Cash
To Balance 32000 2000 By Goodwill 20000
C/d By Revaluation
[Profit]
12000 8000
Answer
15000 10000
107000 53000 20000 107000 53000 20000
Balance Sheet As on …..
Liabilities Amount Assets Amount
B/P 10000 Cash 45000
Creditors 59000 Debtors 20000
Out standing 2000 Stock 35000
Capitals Plant and Machinery 55000
A 48000 Building 50000
D 32000
V 20000
205000 205000

Q.2 The following was the Balance Sheet of Ajay, Bwichu and Druv sharing profits and
losses in the ratio of 6:5:3 respectively.

Balance Sheet as on…………………………………

Liability Amount Asset Amount
Creditors 9,000 Land and Buildings 24,000
Bills Payable 3,000 Furniture 3,500
Capital Accounts Stock 14,000 12,600
Ajay 19,000 Debtors 900
Bwichu 16,000 Cash
Druv 8,000
43,000
55,000 55,000
[20 mts] They agreed to take Jain into partnership and give him a share of 1/8 on the following
terms:
a) that jain should bring in rs. 4,200 as goodwill and rs. 7,000 as his capital;
(b) that furniture be depreciated by 12%;
(c) the stock be depreciated by 10%
(d) that a reserve of 5% be created for doubtful debts:
(e) that the value of land and buildings having appreciated be brought up to rs.
 31,000 (f) that after making the adjustments the capital accounts of the old partners
(who continue to share in the same proportion as before) be adjusted on the basis of
the proportion of jain’s capital to his share in the business, i.e., actual cash to be paid
off to, or brought in by the old partners as the case may be.
Prepare Cash Account, Profit and Loss Adjustment Account (Revaluation
Account) and the Opening Balance Sheet of the new firm.

Answer
Q.3 A and B were partners in a firm sharing profits in 3; 2 ratio. C was admitted as a new
partner for 1/4th share in the profits on April 1, 2015. The Balance Sheet of the firm on
March 31, 2015 was as follows:
Balance Sheet of A and B As at March 31, 2015
Liabilities Assets
Creditors 20,000 Cash 20,000
General Reserve 16,000 Debtors 18,000
Capitals: Stock 20,000
A 96,000 Furniture 12,000
B 68,000 1,64,000 Machinery 40,000
Buildings 90,000
2,00,000 2,00,000
[12mts]
The terms of agreement on C’s admission were as follows:
a) C brought in cash 60,000 for his capital and 30,000 for his share of goodwill.
b) Building was valued at 1,00,000 and Machinery at 36,000.
c) The capital accounts of A and B were to be adjusted in the new profit-sharing
ratio. Necessary cash was to be brought in or paid off to them as the case may be.
Prepare Revaluation Account, Partner’s Capital Account and the Balance Sheet of A, B
and C.
Answer
 Preparation of Final Accounts at The Time Of
Retirement of A Partner
Khushboo, Leela and Meena were partners in a firm sharing profits in the ratio of 5:3:2.
Their Balance Sheet on March 31, 2015 was as follows:
Balance Sheet of Khushboo, Leela and Meena At March 31, 2015
Liabilities Assets
Creditors Capitals: 70,000 Bank 44,000
Khushboo 90,000 Debtors 24,000
Leela 56,000 Stock 60,000
Meena 60,000 2,06,000 Buildings 1,40,000
Profit & Loss A/c 8,000
Q.1 2,76,000 2,76,000
On April 1,2015 Leela retired on the following terms:
i. Building was to be depreciated by 10,000.
ii. A Provision of 5% was to be made on Debtors for doubtful debts. iii.
Salary outstanding was 4,800.
iv. Goodwill of the firm was valued at 1,40,000.
v. Leela was to be paid 20,800 through cheque and the balance was to be paid in two
equal quarterly installments (starting from June 30, 2015) along with interest @ 10%
Prepare Revaluation Account, Leela’s Capital Account and her Loan Account till it is
finally paid

Dr. Revaluation Account Cr.

Particulars LF Particulars LF

To Buildings 10,000 By Loss Distributed

To Prov. for Doubtful 1,200 Khushboo 8,000
Debts 4,800 Leela 4,800 16,000
To Salary Outstanding Meena 3,200
16,000 16,000
Dr. Leela’s Capital Account Cr.
Particulars LF Particulars LF

To Profit & Loss A/c 2,400 By Balance b/d 56,000

Answer To Revaluation A/c 4,800 By Khushboo’s Capital 30,000
To Bank A/c 20,800 By Meena’s Capital 12,000
To Leela’s Loan A/c 70,000
98,000 98,000
Dr. Leela’s Loan Account Cr.
Date Particulars LF Date Particulars LF
2015 2015
Jun 30 To Bank A/c 36,750 Apr 1 By Leela’s Capital 70,000
Sep 30 To Bank A/c 35,875 Jun 30 By Interest 1,750
Sep 30 By Interest 875
72,625 72,625
 X,Y and Z were partners in a firm sharing profits in the ratio of 2 : 2 : 1. Their Balance
Sheet as on March 31, 2015 was as follows:
Balance Sheet As on March 31 ,2015
Q.2 Liabilities Amount Assets Amount
Creditors Reserves 49,000 Cash 8,000
Capitals 18500 Debtors 19000
X Stock 42000
Y 82000 Land & Building 207000
Z 60000 Patents 9000
75500
285000 285000
Y retired on March 31, 2015 on the following terms:
(i) Goodwill of the firm was valued at Rs. 70,000 and was not to appear in the books.
[20 mts]
(ii) Bad debts amounting to Rs. 2,000 were to be written off.
(iii) Patents were considered as valueless.
Prepare Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of X and
Z after Y’s retirement.
Answer

Q.3 LIABILITIES Rs. ASSETS Rs. The

Creditors 6900 Bank 5500
Reserves 7500 Debtors 5000
Capitals Less:Provision 100 4900
A 18000 Stock 8000
B 13500 Investments 11500
C 9000 40500 Land & Building 25000
54900 54900
balance sheet of A,B & C who were sharing profits and losses in proportion to their
capitals in the balance sheet on 31st march 2016.
B retired on 1st April 2016 and the following was agreed upon;
a) The stock be depreciated by 6%
[12mts] b) That the provision for doubtful debts be brought up to 5% on Debtors.
c) Land & building be appreciated by 20%
d) A provision of Rs.770 be made in respect of outstanding legal charges.
 e) Investment are brought down to Rs.8500
f) The goodwill of the firm was Rs.10800and B’s share will be adjusted to the
accounts of A & C. ( No goodwill account is raised )
g) The entire capital of the new firm is fixed at Rs.28000.
Pass necessary journal entries , prepare necessary ledger accounts and the balance
sheet of the new firm
Answer
 Preparation of Final Accounts at The Time Of
Death of A Partner
Liabilities Assets
Q.1
Capitals: Buildings
Punit 60,000 Machinery 40,000
Rahul 50,000 1,40,000 Patents 60,000
Seema 30,000 20,000 Stock Cash 12,000
Reserves 14,000 20,000
Creditors 42,000
1,74,000 1,74,000
On 31 March 2015 the Balance Sheet of Punit, Rahul and Seema was as follows
st

Balance Sheet of Punit, Rahul and Seema As at March 31, 2015

They were sharing Profit and loss in the ratio 5:3:2.
• Seema died on October 1, 2015. It was agreed between her executors and the
remaining partners that:
• Goodwill be valued at 2 years’ purchase of the average profits of the previous five
years, which were: 2010-11: 30,000; 2011-12: 26,000; 2012-13: 24,000; 2013-14:
30,000 and 2014-15: 40,000.
• Patents be valued at 16,000; Machinery at 56,000; Buildings at 60,000.
• Profit for the year 2015-16 be taken as having been accrued at the same rate as that in
the previous year.
• Interest on capital be provided at 10% p. a.
• A sum of 15,500 was paid to her executors immediately.
Prepare Revaluation Account, Seema’s Capital Account and Seema’s executors
Account.
 Dr. Revaluation Account Cr.
Particulars LF Particulars LF
To Machinery 4,000 By Patents ByBuildings 4,000
To Profit Distributed: 20,000
Punit 10,000
Rahul 6,000 20,000
Seema 4,000
24,000 24,000
Dr. Seema’s Capital Account Cr.
Date Particulars Date Particulars
Answer 2015 2015
Oct1 To Seema’s 55,500 Apr1 By Balance b/d By 30,000
Executor’s Oct 1 Reserves 4,000
A/c Oct 1 By Punit’s Capital 7,500
Oct 1 By Rahul’s Capital 4,500
Oct 1 By Revaluation
A/c 4,000
Oct 1 By P & L Suspense 4,000
Oct 1 By Int. on Capital 1,500

55,500 55,500

Dr. Seema’s Executor’s Account Cr.

Date Particulars LF Date Particulars LF
2015 2015
Oct 1 To Bank A/c 15,500 Oct 1 By Seema’s 55,500
Oct 1 To Seema’s Capital
Executor’s Loan A/c 40,000 A/c

55,500 55,500
 Liabilities Assets
Capitals: Buildings 21,000
Arati 20,000 Investment 13250
Bharati 12,000 40,000 Debtors 12,000
Seema 8000 120,00 Bills Receivables 4300
Reserves 14,000 Stock 1750
Creditors 12000 Cash 12000
Bills payable Bank 13700
Q.2
78,000 78,000
Arti, Bharti and Seema are partners sharing profits in the proportion of 3:2:1 and their
Balance Sheet as on March 31, 2016 stood as follows :
Bharti died on June 12, 2016 and according to the deed of the said partnership, her
executors are entitled to be paid as under :
(a) The capital to her credit at the time of her death and interest thereon @ 10% per
annum.
(b) Her proportionate share of reserve fund.
(c) Her share of profits for the intervening period will be based on the sales during
[20 mts]
that period, which were calculated as Rs.1,00,000. The rate of profit during past three
years had been 10% on sales.
(d) Goodwill according to her share of profit to be calculated by taking twice the
amount of the average profit of the last three years less 20%. The profits of the
previous years were :
2014 – Rs.8,200 2015
– Rs.9,000
2016 – Rs.9,800
The investments were sold for Rs.16,200 and her executors were paid out. Pass the
necessary journal entries and write the account of the executors of Bharti.

Answer
Q.3 Nithya, Sathya and Mithya were partners sharing profits and losses in the ratio of
5:3:2. Their Balance Sheet as on December 31, 2015 was as follows
Liabilities Assets
Capitals: Goodwill 5,000
Nithya 30,000 Investment 10000
Sathya 30,000 80,000 Debtors 8,000
Mithya 20000 60,00 Premises Stock 20000
Reserves 14,000 Patents 13000
Creditors Bank 6000
Machinery 8000
30000
[12mts] 100,000 100,000

Mithya dies on May 1, 2015. The agreement between the executors of Mithya and
the partners stated that :
1
(a) Goodwill of the firm be valued at 2 ⁄2times the average profits of last four
years. The profits of four years were : in 2011, Rs.13,000; in 2012, Rs.12,000; in 2013,
Rs.16,000; and in 2014, Rs.15,000.
(b) The patents are to be valued at Rs.8,000, Machinery at Rs.25,000 and Premises
at Rs.25,000.

(c) The share of profit of Mithya should be calculated on the basis of the profit of
2002.
(d) Rs.4,200 should be paid immediately and the balance should be paid in 4 equal
half-yearly instalments carrying interest @ 10%.
Record the necessary journal entries to give effect to the above and write the
executor’s account till the amount is fully paid. Also prepare the Balance Sheet of
Nithya and Sathya as it would appear on May 1, 2002 after giving effect to the
adjustments.
Answer

Preparation of Final Accounts at The Time Of

Dissolution of A Partnership Firm
 Ram, Rahim and Auntony were in partnership sharing profits and losses in the ratio of 1/2, 1/3 and
1/6 respectively. They decided to dissolve the partnership firm on 31.3.1998, when the Balance
Sheet of the firm appeared as under :
Balance Sheet of the firm as on 31.3.1998
Liabilities Amount Assets Amount

Sundry Creditors 5,67,000 Goodwill A/c 4,56,300

Bank Overdraft 6,06,450 Plant and Machinery 6,07,500
Joint Life Policy Reserve 2,65,500 Furniture 64,650
Loan from Mrs. Ram 1,50,000 Stock 2,36,700
Capital Accounts: Sundry Debtors 5,34,000 Ram 4,20,000 Joint Life Policy 2,65,500
Rahim 2,25,000 7,65,000 Commission Receivable 1,40,550
Auntony 1,20,000 Cash in Hand 48,750 2353950
2353950

Q.1 The following details are relevant for dissolution :

(i) The joint life policy was surrendered for Rs. 2,32,500.
(ii) Ram took over goodwill and plant and machinery for Rs. 9,00,000.
(iii) Ram also agreed to discharge bank overdraft and loan from Mrs. Ram. (iv) Furniture and
stocks were divided equally between Ram and Rahim at an agreed valuation of Rs.
3,60,000.
(vi) Sundry debtors assigned to firm’s creditors in full satisfaction of their claims.
(vi) Commission receivable was received in toto in time.
(vii) A bill discounted was subsequently returned dishonoured and proved valueless Rs. 30,750
(including Rs. 500 noting charges).
(viii) Ram paid the expenses of dissolution amounting to Rs. 18,000.
(ix) Auntony agreed to receive Rs. 1,50,000 in full satisfaction of his rights, title and interest in
the firm.
Answer
Realization Account
Particular Amount Particular Amount
To Goodwill A/c 4,56,300 By Sundry Creditors A/c 5,67,000 To Plant & Machinery
A/c 6,07,500 By Joint Life Policy Reserve A/c 2,65,500
To Furniture A/c 64,650 By Cash A/c :
To Stock A/c 2,36,700 Joint Life Policy 2,32,500 To Sundry Debtors A/c
5,34,000 By Ram’s Capital A/c:
To Joint Life Policy A/c 2,65,500 Goodwill, Plant and
To Ram’s Capital A/c: Machinery 9,00,000 Dissolution Expenses
18,000 10,80,000 To Cash A/c : Furniture, Stocks 1,80,000
Bill dishonoured 30,750 By Rahim’s Capital A/c: 1,80,000
To Partner’s Capital Accounts: Furnitures stocks
(Profit on realisation)
Ram 55,800 1,11,600
 Rahim 37,200
Auntony 18,600
2325000 2325000
 Capital Accounts
Particular Ram Rahim Auntony Particular Ram Rahim Auntony
To Realisation A/c By Balance b/d By 4,20,000 2,25,000 1,20,000
Goodwill, Plant 9,00,000 Bank Overdraft By 606450
Furniture, Stocks 1,80,000 1,80,000 Loan from Mrs.
To Auntony’s Capital Ram 150000
A/c 6,840 By Realisation 18000
4,560 By Realisation By
To Cash 55,800
To Cash 150000 Partners’ Capital 37,200 18,600
1,63,410 77,640 A/cs:
Ram
Rahim 6,840
4,560
12,50,250 2,62,200 1,50,000 12,50,250 2,62,200 1,50,000
Cash Account
Particular Amount Particular Amount
To Balance b/d 48,750 By Realisation A/c: 30750
To Realisation A/c 2,32,500 By Partners’ Capital Accounts
To Commission Receivable A/c 1,40,550 Ram 1,63,410
Rahim 77,640
Auntony 1,50,000
421800 421800
Hema and Garima were partners in a firm sharing profits in the ratio of 3:2 . On
March 31, 2015, their Balance Sheet was as follows:
Balance Sheet of Hema and Garima as at March 31, 2015
Liabilities Assets
Creditors 36,000 Bank 40,000
Q.2 Garima’s Husband’s Loan 60,000 Debtors 76,000
Hema’sLoan 40,000 Stock 2,00,000
Capitals: Furniture 20,000
Hema 2,00,000 3,00,000 Leasehold 1,00,000
Garima 1,00,000 Premises
4,36,000 4,36,000
On the above date the firm was dissolved. The various assets were realized and
liabilities were settled as under:
(i) Garima agreed to pay her husband’s loan.
[20 mts] (ii) Leasehold Premises realized 1,50,000 and Debtors 2,000 less.
(iii) Half the creditors agreed to accept furniture of the firm as full settlement of
their claim and remaining half agreed to accept 5% less.
(iv) 50% Stock was taken over by Hema on cash payment of 90,000 and
remaining stock was sold for 94,000.
(v) Realisation expenses of 10,000 were paid by Garima on behalf of firm.
Prepare necessary ledger accounts.
Answer
Q.3 Sonia, Rohit and Udit are partners sharing profits in the ratio of 5:3:2. Their
Balance Sheet as on March 31, 2014 was as follows
Liabilities Amount Assets Amount
Creditors 30000 Building 200000
Bills Payable 30000 Machinery 40000
Bank loan 120000 130000 Stock 160000
Sonia’s Husband’s loan 80000 Bills Receivable 120000
General Reserve Furniture 80000
Capitals 70000 Bank 60000
Sonia 90000
Rohit 110000
Udit
660000 660000
[12mts] The firm was dissolved on that date. Close the books of the firm with
following information:
1. Buildings realised for Rs.1,90,000, Bills receivable realised for
Rs.1,10,000; Stock realised Rs.1,50,000; and Machinery sold forRs.48,000
and furniture for Rs. 75,000,
2. Bank loan was settled for Rs.1,30,000. Creditors and Bills payable
were settled at 10% discount,
3. Rohit paid the realisation expenses of Rs.10,000 and he was to get a
remuneration of Rs.12,000 for completing the dissolution process. Prepare
necessary ledger accounts.
Answer
 Issue of Shares – Forfeiture & Reissue of Shares
Amrit Ltd. issued 50,000 shares of `10 each at a premium of `2 per share payable as
`3 on application, `4 on allotment (including premium), `2 on first call and the
remaining on second call. Applications were received for 75,000 shares and a
Q.1 prorata allotment was made to all the applicants. All moneys due were received
except allotment and first call from Sonu who applied for 1,200 shares. All his shares
were forfeited. The forfeited shares were reissued for `9,600. Final call was not
made. Pass necessary journal entries.
Answer
 Velco Ltd. issued 30,000 shares of ` 10 each at a discount of `1 per share payable as `3
Q.2 on application, `2 on allotment, `2 on first Call and `2 on second call. Applications
were received for 40,000 shares and a pro-rata allotment was made to all the
applicants. All money due were received except allotment and first call from Mohit
who had applied for 2,000 shares. His shares were forfeited after first call.
[20 mts]
Subsequently, the second call was duly made and duly received. Thereafter, the
forfeited shares were reissued for `9 fully paid. Pass the necessary journal entries

Answer
 Arushi Computers Ltd. issued 10,000 equity shares of Rs.100 each at 10% discount.
Q.3 The net amount payable as follows:
On application Rs.20
On allotment Rs.30 (Rs.40 – discount Rs.10 )
On first call Rs.30 On
final call Rs.10
A shareholder holding 200 shares did not pay final call. His shares Were forfeited.
[12mts] Out of these 150 shares were reissued to Ms.Sonia at Rs.75 per shares. Give journal
entries in the books of the company.
Answer
 Issue of Debenture
A Ltd. issued 5,000, 10% debentures of Rs.100 each, at a premium of Rs.10 per
debenture payable as follows:
On application Rs.25
Q.1 On allotment Rs.45 (including premium)
On first and final call Rs.40
The debentures were fully subscribed and all money was duly received. Record the
necessary entries in the books of the company.

Answer

ABC Ltd. issued 50,000, 10% debentures of Rs.100 each, at a premium of Rs.10 per
Q.2 debenture payable as follows:
On application Rs.25
On allotment Rs.45 (including premium)
[10 mts]
On first and final call Rs.40
The debentures were fully subscribed and all money was duly received. Record the
necessary entries in the books of the company.
Answer

Q.3 ABC Ltd. issued 50,000, 10% debentures of Rs.100 each, at a premium of Rs.10 per
debenture payable as follows:
On application Rs.25
On allotment Rs.45 (including premium)
On first and final call Rs.40
The debentures were fully subscribed and all money was duly received. Record the
[8mts] necessary entries in the books of the company.
Answer

Redemption of Debentures
Write Journal Entries for the following:
1. Issue of 1,00,000, 9% debentures of Rs. 100 each and redeemable at par. Issue
and Redemption of Debentures 99
2. Issue of 1,00,000, 9% debentures of Rs. 100 each at premium of 5% but
redeemable at par.
3. Issue of 1,00,000, 9% debentures of Rs. 100 each at discount of 5% repayable at
Q.1
par. 4. Issue of 1,00,000, 9% debentures of Rs. 100 each at par but repayable at a
premium of 5%.
5. Issue of 1,00,000, 9% debentures of Rs. 100 each at discount of 5% but
redeemable at premium of 5%.
6. Issue of 1,00,000, 9% debentures of Rs. 100 each at premium of 5% and
redeemable at premium of 5%.
Answer
 Q.2 Write Journal Entries for the following:
1. Issue of 5,00,000, 9% debentures of Rs. 100 each and redeemable at par. Issue and
Redemption of Debentures 99
2. Issue of 5,00,000, 9% debentures of Rs. 100 each at premium of 5% but
[15 mts] redeemable at par.
3. Issue of 5,00,000, 9% debentures of Rs. 100 each at discount of 5% repayable at
par. 4. Issue of 5,00,000, 9% debentures of Rs. 100 each at par but repayable at a
premium of 5%.
5. Issue of 5,00,000, 9% debentures of Rs. 100 each at discount of 5% but
redeemable at premium of 5%.
6. Issue of 5,00,000, 9% debentures of Rs. 100 each at premium of 5% and
redeemable at premium of 5%.
Answer
Q.3 Write Journal Entries for the following:
1. Issue of 21,00,00, 9% debentures of Rs. 100 each and redeemable at par. Issue and
Redemption of Debentures 99
2. Issue of 11,00,00, 9% debentures of Rs. 100 each at premium of 5% but
redeemable at par.
3. Issue of 31,00,00, 9% debentures of Rs. 100 each at discount of 5% repayable at
[10mts] par. 4. Issue of 41,00,00, 9% debentures of Rs. 100 each at par but repayable at a
premium of 5%.
5. Issue of 21,00,00, 9% debentures of Rs. 100 each at discount of 5% but
redeemable at premium of 5%.
6. Issue of 51,00,00, 9% debentures of Rs. 100 each at premium of 5% and
redeemable at premium of 5%.
Answer
 Preparation Of Comparative Statement
Q.1 The following are the excerpts of balance sheets of J. Ltd. for the year ended March 31,
2013 and 2014. Prepare a Comparative balance sheet and comment on the financial
position of the business firm.
Particulars Note No. 2014 2013
EQUITY AND LIABILITIES
(1) Shareholders Funds (a) 1 14,00,000 10,00,000
Share capital 5,00,000 4,00,000
(b) Reserves and Surplus
(2) Non Current Liabilities 2 5,00,000 1,40,000
Long term borrowings
1,00,000 60,000 60,000
(3) Current Liabilities 80,000
Trade Payables
Short term Provisions
Total 25,80,000 16,60,000
ASSETS
(1) Non Current Assets 3 16,00,000 9,00,000
(a) Fixed assets 4 1,40,000 2,00,000
(i) Tangible assets
(ii) Intangible Assets
(2) Current Assets (a)
Inventories 2,50,000 2,00,000
(b) Trade Receivables 5,00,000 3,00,000
(c) Cash and Cash Equivalents 90,000 60,000
Total 25,80,000 16,60,000
Answer Particulars Note 2014 2013 Absolute Percentage
No. B A Change[B-A= C] 𝐶
Change ⁄𝐴100
EQUITY AND LIABILITIES
Shareholders Funds 14,00,000 10,00,000
(a) Share capital 1 5,00,000 4,00,000 400000 40
(b) Reserves and Surplus Non 100000 25
Current Liabilities 5,00,000 1,40,000
Long term borrowings 2 360000 257
Current Liabilities 1,00,000 60,000
Trade Payables 80,000 60,000 40000 66
Short term Provisions
20000 33
Total 25,80,000 16,60,000 920000 55
ASSETS
(1) Non Current Assets
(a) Fixed assets 3 16,00,000 9,00,000
Tangible assets 4 1,40,000 2,00,000 700000 77
Intangible Assets 60000 30

(2) Current Assets Inventories

Trade Receivables 2,50,000 2,00,000 50000 25
Cash and Cash Equivalents 5,00,000 3,00,000 200000 66
90,000 60,000 30000 50
Total 25,80,000 16,60,000 920000 55
Q.2 Following are the Balance Sheets of Krishna Ltd. as on 31st March 2013 and 2014
Prepare Comparative Statement balance sheet

Particulars 2015 2016

Equity Share Capital 2500000 2500000
Tangible & Intangible Assets 3600000 3000000
General Reserves 600000 500000
Investments 500000 500000
Long Term Loans 1500000 1500000
Inventory 400000 700000
[12mts] Trade Receivables 600000 500000
Cash & Cash Equivalents 50000 300000
Creditors 550000 500000

Answer

Working Notes
Q.3 Following are the Balance Sheets of Prasu Ltd. as on 31st March 2013 and 2014
Prepare Comparative Statement balance sheet
Answer

Preparation of Common Size Statement

Q.1 The following are the excerpts of balance sheets of J. Ltd. for the year ended March 31,
2013 and 2014. Prepare a Common Size Statement
Particulars Note No. 2014 2013
EQUITY AND LIABILITIES
Shareholders Funds 1 14,00,000 10,00,000
(c) Share capital 5,00,000 4,00,000
(d) Reserves and Surplus 2
Non Current Liabilities 5,00,000 1,40,000
Long term borrowings
Current Liabilities 1,00,000 60,000
Trade Payables 80,000 60,000
Short term Provisions
Total 25,80,000 16,60,000
ASSETS
Non Current Assets
(a) Fixed assets 3 16,00,000 9,00,000
Tangible assets 4 1,40,000 2,00,000
Intangible Assets
(2) Current Assets
Inventories 2,50,000 2,00,000
Trade Receivables 5,00,000 3,00,000
Cash and Cash Equivalents 90,000 60,000
Total 25,80,000 16,60,000

Answer
Particulars Note Absolute Change Percentage Change
No. 2014 2013 2014 2013
EQUITY AND LIABILITIES
Shareholders Funds
(e) Share capital 1 14,00,000 10,00,000 60
5,00,000 4,00,000 55 24
(f) Reserves and Surplus 19
Non Current Liabilities 19
Long term borrowings 2 5,00,000 1,40,000 8
Current Liabilities
Trade Payables 1,00,000 60,000
80,000 60,000 4
Short term Provisions 3 4
4

Total 25,80,000 16,60,000 100 100

ASSETS
(1) Non Current Assets 3 16,00,000 9,00,000
(a) Fixed assets Tangible 4 1,40,000 2,00,000
assets 62 54
Intangible Assets 2,50,000 2,00,000 6 12
(2) Current Assets Inventories 5,00,000 3,00,000
Trade Receivables 90,000 60,000 10 12
Cash and Cash Equivalents 19 18
3 4
Total 25,80,000 16,60,000 100 100
Q.2 Following are the Balance Sheets of Krishna Ltd. as on 31 st March 2013 and 2014
Prepare Prepare a Common Size Statement

Particulars 2015 2016

Equity Share Capital 2500000 2500000
Tangible & Intangible Assets 3600000 3000000
General Reserves 600000 500000
Investments 500000 500000
Long Term Loans 1500000 1500000
[12mts] Inventory 400000 700000
Trade Receivables 600000 500000
Cash & Cash Equivalents 50000 300000
Creditors 550000 500000

Answer

Working Notes
Q.3 Following are the Balance Sheets of Prasu Ltd. as on 31st March 2013 and 2014 Prepare
Comparative Statement balance sh Prepare a Common Size Statement

[10 mts]

Answer
 Calculation of Accounting Ratios
Q1 Following information is given by a company from its books of accounts as on
March 31, 2017

Answer
Q2 Following information is given by a company from its books of accounts as on
March 31, 2015
Items Amount
Inventory 1,00,00
Total Current Assets 200,00
Shareholders’ funds 4,50,00
13% Debentures 3,30,00
[15 mts] Current liabilities 1,20,00
Net Profit Before Tax 3,51,00
Cost of revenue from operations 45,0,00
Calculate:
i) Current Ratio ii) Liquid
Ratio iii) Debt Equity Ratio
iv) Interest Coverage Ratio
v) Inventory Turnover Ratio

Answer
Q3 Following information is given by a company from its books of accounts as on
March 31, 2015
Items Amount
Inventory 1,00,000
Total Current Assets 250,000
Shareholders’ funds 4,50,000
13% Debentures 3,00,000
Current liabilities 1,25,000
[10 mts] Net Profit Before Tax 3,25,000
Cost of revenue from operations 47,0,000
Calculate:
i) Current Ratio ii) Liquid
Ratio iii) Debt Equity Ratio
iv) Interest Coverage Ratio
v) Inventory Turnover Ratio
Answer

Preparation of Cash Flow Statement

Q1 Following is the Balance Sheets of as at 31-3-2014:

Balance Sheet as at 31-3-2014

Notes to Accounts:-

Additional Information:
(i) Tax paid during the year amounted to 16, 000.
(ii) Machine with a net book value of 10,000 (Accumulated Depreciation
40,000) was sold for 2,000.
Prepare Cash Flow Statement.
Answer

Q2 Following are the Balance Sheets of Sewak Ltd. as on 31-3-2011 and 31-32012:

[15 mts]
Particulars Note 31-3-2011 31-3-2012
No.
1. EQUITY AND LIABILITIES :
Shareholders’ Funds:
Share Capital Reserve and 1 4,00,000 7,00,000
Surplus (50,000) (3,20,000)
Non-Current Liabilities:
Long-term Borrowings 2 2,00,000 4,00,000
Current Liabilities:
Trade Payables 1,10,000 1,50,000

Outstanding Expenses 10,000 20,000

TOTAL 6,70,000 9,50,000

2. ASSETS:
Non-Current Assets:
Fixed Assets 3,00,000 5,00,000
Non-Current Investments 2,00,000 1,40,000
Current Assets:
Inventory 50,000 1,00,000
Trade Receivables 1,00,000 1,70,000
Cash & Cash Equivalents 20,000 40,000
TOTAL 6,70,000 9,50,000

Notes to Accounts: 1. Reserve and Surplus: 31-3-2011 31-3-2012

Profit and Loss A/c (50,000) (3,20,000)
2. Long-term Borrowings:
9% Debentures
2,00,000 4,00,000
Additional Information: Included in the fixed assets was a piece of machinery costing
70,000 on which depreciation charged was 40,000 and it was sold for 30,000.
During the year 1,40,000 depreciation was charged on fixed assets.
Prepare Cash flow statement
Answer
Q3 From the Balance Sheets and information given below prepare Cash Flow Statement:
Particulars Note 31st March 2013 31st March 2012
No. (Rs.) (Rs.)
I. Equity and Liabilities
Shareholders’ Funds
(a) Share Capital 3,50,000 3,00,000
(b) Reserve & Surplus (profit) 1,00,000 55,000
Non-current Liabilities
[10 mts] Long-term Borrowings : Bank Loan 1,50,000 1,00,000
Current Liabilities 15,000
Trade Payables (Creditors) 12,500
Total 6,15,000
4,67,500
II Assets
1. Non-current Assets (a)
Fixed Assets:
5,50,000
(i) Tangible Assets (Machinery) 4,00,000
2. Current Assets 35,000
(a) Inventories 16,000
30,000
(b) Trade Receivables (Debtors) 14,000 20,000
(c) Cash and Cash Equivalents 6,15,000 17,500
Total 4,67,500

Adjustments : During the year a piece of machinery of book value of Rs.40,000 was
sold for Rs.32,500. Depreciation provided on tangible assets during the year
amounted to Rs.1,00,000.

Answer