1

Partn rship Accounts

1. A and B are eqrral partners. They mit C and D as partners with 1/5 and 1/6 share
respectively. W.hat is the profrt sharing r tio of a-11 the nartners?
Ans: 79:79:72:70

2. A, B and C are partners with profrt sh g ratio 5:3:2. A wants to retire, B and C agreed to
continue at 2:L Find the profrt gaining between B and C.
Ans: B:C=77:4
3. Calculate ratios in the following cases:
Case-I A, B & C sharing in the ralio 3:2:I B retired and his share was taken upbyA&Cinthe
ratio of 3:2. D was admitted and he acqui 1/Bth of A's revised balance and I l3rd of C's original
ba-lance in his favor. Irind out gaining cing and new ratio.
Ans: A:C: D=44 7 : 7 7 6 : 7 03

Case-II A, B & C zre sharing in the ratio o 3:2:I. C retired and his share was taken urr bv A & B
equally. D admitterl and he receives 1/8th ares of original share from A and 1/6th from B.
Ca-1culate new ratio, sacrificing ratio and ing ratio.
Ans: A:B:D=75:5O:79

4. P, Q and R share profit and losses in ratio of 4:3:2 respectively. Q retires and P and R decide
to share future profits and losses in ratio of 5:3. Then immediately H is admitted of 3/10
shares of profit,s half of which was gifte by p and the remaining shares was taken by H equally
from P and R. Calculate the new orofit aring ratio after H's admission and Gain ratio of P and
R.
Ans: New Ratio =4:3:3

5. A,B and C are partner sharing profit losses in the ratio of 3:2:7. B retired from the firm.
Partners A and C <lecided to take his in 3:1 ratio. What is the new ratio of the partners A
and C?
Ans: New Ratio= 3:7

6. Journalize entrjes in following cases.

Case-I A& B ratio is 1:1. Goodwill of the fir is Rs. 50,000. C is admitted for 1/5 share new ratio is
2:2:1. New partner brings 50,000 in cash fo Capital and goodwill.
Case-II A& B ratirr is 1:1. C is admitted new ratio is 2:2:1, goodwill already appearing is in
balance sheet is Rr;.'1O.OOO. Partners want goodwill should appear in new books at Rs. 4O.O00
goodwill is valued eLt Ris. 50,000.
Case-III A and B :ratio is 1:1 Goodwill is alued at Rs. 90.000. C admitted and the new ratio is
2:2:I. C brings goodwlll Rs. 10,000 and Rs. 15,000.
Case-IV A, B & C shering in the ratio 1:1: goodwill is value at Rs. 60,000. D is admitted and he
brings goodwill Rs. 3C),OOO. B retired and n ratio of A, C, & D is 3:2:1. D brings 30,000 in cash
and B withdraw 25,000 from firm. New firm s to show goodwiil at Rs. 36,000.

Rajan Adhikari, FCA Partnership Accounts (CAP -l

Case-v A, B & C rsharing in the ratio of 3: :1. Goodwill already appearing is Rs. I2,OOO re-value at
Rs. 72,000, D & .E are admitted who bri Rs. 42,000 goodwill equally. New f,rrm agreed to share
profits in the ratio of 2:2:I:1among. A,C,D E. B retired and goodwill should appear at Rs. 18,000.

7. Amit and Sumit eLre partners sharing ts and losses in the ratio 3:2. Their Balance Sheet as
on 3l st March 201 1 is given below:

Capital Accountsi: Land and Building 3,20,000

Amit r,76,OOO Investment(Market va-lue Rs.
Sumit 55,000)
Debtors 3,00,000
Loan from Punee,t 3,00,000 Less: Provision for doubtful
debts 10.000 2,9O,OOO

General Reserve 1,10,000

Employer's Provident Cash at Bank

They decided to admit Puneet as a n partner from 1st April, 201 1 on the following terms:
Amit wi.1l give 1/3rd of his share and Sumit will give I l4th of his share to Puneet.
ii) Puneet's loan account will be verted into his capital .
iii) The go,rdvrill of the firm is val ed at Rs. 3,OO,OO0. Puneet will bring his share of his
Goodwill in cash and the sa-rne immediatelv withdrawn bv the partners.
irr) Land a:rd building was found u dervalued by Rs. 100,000.
v) Stock vras found overvalued by s. 60,000.
vi) Provision lbr doubtful debts will e made equal to 5%o debtors.
vii) Investm.ents are to be valued at ir market price.
It was decided that the total capital f the frrm after admission of new partner would be Rs.
IO,OO,00O. Capital accounts of partn will be readjusted on the basis of their profrt sharing
ratio and excess or deficiencv will be iusted in cash.
You are requiLrecl to prepare:
a) Revaluation Af c
b) Partner's Capital A/c
Balance Sheet of the frrm after admis ion of new partner.
Ans: Contribul:ion Amit- 782,OOO IE,OOO Rev. Proftt Amit-24,OOO Sumit 76'000

8. A partnership lhrm earns the following t profit during last 3 years:

2,80,000

3,40,000
Partnership capita[ accounts during the iod were as follows:

Partnership Accounts (CAP -ll

 01-01-1997
3I-12-1997
3 1- 12-1998
31-12-1999 1 1,50,
A similar firm earns 2S%o on
Required:
""prtrf-
i) Valuatiorr ofgoodwill taking one average profit.
ii) Valuation of'goodwill taking 5 based on weighted average profrts.
iii) Valuation of goodwill taking discor 5 years super profit @ IS% p.a.
iv) Valuatiorr of goodwill on capitaliza ion basls.
s: i) 3,13,330 ii) 9,64,580 iii) 2,44,429 ia)
2,gI,665
9. Lee and Lawson are in equai partnershi
. to take Hicks as one-fourth partners. For
this it was decidecl to find out the valu ofTh"U $greed
goodfvill. M/s Lee and Lawson earned profits
2005-2008 as fcllows: during

1,25,000

On 31-12-2008 capital .-p-oy"a Uy tvt7" and was Rs. 5,00,000. Rate of normal profit is
2OVo.Find out the value of goodwill following various
ethods.

10. Calcualte goodwill of a firm on the asis of

lthree years, purchase of the weighted average
profits of the las,t fc,ur years. profits of th four Jrear 31st March were:

lRs.49,600
The weights assigned to each vear ded on 31st March 2006-I: 2OO7-2: 2008-3 and
2009-4.
You are providecl wi.th the following addi al infQrmation:
i) On 31st March, 2008 a major plant
revenue. The said sum is to be capi
depreciation of 1O% p.a. on reducing
ii) The closing stocl< for the year 2006-2007
iii) To cover manag(lm(:nt cost an annual
goodwill valuation.
Ans: Goodwitt - I,gI,ggO
11. From the following information, calcu te the vflue of goodwill
of M/s Sharma and Gupta:
i) At three years p'urchase of Average profi
ii) At three years p'urchase of Super profits.
iii) On the basis of <:apitalization of Super its.
iv) On the basis of capitalization of Average hts"

Rajen Adhikari, FCA

Partnership Accounts (CAP -tl
Information:
a) Average capital employed in the business
b) Net trading results of the firm for the past
Profit 2009 Rs 448,7OO'
c) Rate of interest expected from capital hav
d) Remuneration to each partner for his se
e) Assets (excluding goodwill) Rs 754,762.

L2. A and B are equial partners with capit and Rs. 1,2O,OOO resPectivelY' TheY
admit C as a partner on lst January, 201 n the profits of the firm' C brings in
Rs. 1,60,000 as his share of capital. Give on C's admission
Ans: Goodwill' 2'OO,OOO

13. The Balance Sheet of X and Y who ,r. ptoftt" and losses In the ratio of 3:2 as on 31st
March 2010 was:

Sundrv Creditot-s 1,O0,O00

Profit and loss ei/c

X's Capital
Y's Capital Machinery 1,00,000

2,65,OOO
They admit Z as a partner with 1/5th share the ts of the frrrn, Z brings in Rs. 50,000 as his
capital. Give the necesriary Journal Entry for the adj stment of goodwill.
Ans: Goodwill SO,OOO

L4. Amit and surnit commenced business s part ers on April 1, 2010. Amit contributed Rs.
40,000 and sum.it Fi.s. 25,000 as their of ca ital. The partners decided to share therr
orofits in the rat.io of 2:I. Arnit was enti d to sal of Rs. 6,OOO p.a. Interest on capital was to
be provided@ 6"/o p.a. The drawings of A it and umit for the year ending March 3I,2OI1 were
Rs. 4,000 and Rs. €i,000 respectively. Th profrts f the firm after providing Amit's salary and
interest on capit.al were Rs. 12,000.
Draw up the capital accounts of the partner
1. When capitals are fluctuating, and
2. When capitals are frxed.

15. A, B and C are partners of the firm A C& Co ng profrts and losses in the ratio of 5:3:2'
Following is the Bal S of the firm as at 31-3-2008

Partners Capital A/cs:

'Rajan Adhikari, FCA

Partnership Accounts (CAP -ll
 4,50,000
1,30,000
1,70,OOO 2,15,O00
lnvestment Market value Rs.
Fluctuation:

Contingency Rerserve
Long term loan 15,00,000 25,000

Sundrv Credit,ors

It was decided that B would retire from the hip on L4.2OO8 and D would be admitted as a
partner on the same date. Following s are agreed amongst the partners for the
retirement/ admission :
i) Goodwill is to tre valued at Rs.
of the firm.
ii) Building and MactLinery are to be revalu at Rs. 1O,OO,OOO and Rs. 5,20,000 respectively.
iii) Investments are to be taken over bv B at the m et value.
iv) Provision for doubtful debts to be main lned at O%" on sundry debtors.
v) The capital of the reconstituted frrm will Rs. 10,00,000 to be contributed by the partners A, C
and D in their r:Lew profit sharing ratio 2:2:7.
vi) Surplus funds if aly will be used to pay e ban overdra-ft.
vii)Amount due to retiring partner B will be ansfr to his loan account.
Prepare
D Revaluation Accounts
II) Capital Account.s of the partners and
III) Balance sheet of the firm after reconstitu
Ans: Reaa 3 rO4,OOO Bo,lance Sheet Total 54,2 8,8OO

L6. Ram, Rahim arrd Robert are partners, sharin profits and losses in the ratio of 5:3:2.
It was decided that Robert would retire on 7-O3-2 5 and in his place Richard would be admitted
as a partner with new profit sharing ratio , Rahim and Richard at 3:2:I.

L7. The following was the Balance Sheet fA B who were sharing Profits and Losses in the
ratio of 2:I on 37.12.2006:

Capital Accounts: and Machinery 12,00,00o

10,o0,o0o
5,00,000 3,00,000

Sundrv Creditors
Bills Pavable

Rajan Adhikari, FCA Paftnership Accounts (CAP -ll

 6

They agreed to adrnit C into the partnershi on the bllowing terms:

i) The goodwill of the firm was fixed at Rs 1,05,0 0.
ii) That the value, of Stock and Plant and I achine y were to be reduced by 10%.
iii) That a p:rovision of soh was to be create for Dc rbtful Debts.
iv) That the building account was to be ap t.by 2Ooh.
v) There was an unrecorded Liabilitv of . 10,00(
vi)
vi) Investments worth Rs. 20,000 (Not m tioned i rthe Balance Sheet) were taken into
in account.
vii') That the valur: o.[ Reserve fund, the rlues of Liabilities and the values of Asse
ssets other than
Cash are not to be altered.
viii) C was to be giverr one fourth fi Pro t and was to bring capital equaltl to
t his share of
Profrt after all adjustrnents.
Prepare Memoranclum Revaluation Capi ta Account of the Partners and the Balance Sheet
.

of the newly reconstituted firm.

l
Ans: Reaaluationt Profit-75,OOO

18. X, Y and Z wet:e in partnership .lng pro ts and losses as one half, one fo
fourth and one
fourth respectirrely. It was agreed that .terest s ould be allowed at the rate of 10(
Ooh per annum
on partners'capite[ accounts and :d at tht rate of 8 percent annum on theirir drawings. No
interest was to be rallowed or charged on current Lccounts.
The followinfJ are the particulars of their capital rccounts, current accounts and
rd drawings(as
shown by the dra-ft acr:ounts)
Capital Accounts Current I lcount Drawings for
balance on 1st Jan. balance on 1st Jan year to 31st Dec. Interest on
198,1 drawings
198 t 1984
X 1,50,000 cr. 20,000 cr. 3O,O00 2,OOO
Y 80,000 cr. 10,000 cr. 20,000 760
Z 60,000 cr. 10,000 cr. 20,000 1,400

The draft accounts for the year to 31st Dec :mber 1 984 showed a net profrt of Rs. 1,120,OOO before
taking into account interest on partners'cE pital ac :ount balances and drawings. Thte audit of the
draft accounts revealerC the following errors;
1. The rent clf X's private house, amountin 3 to Rs. 1,500 and paid on 31st Decembt tber, 1984, had
been included in rents charged in profit e nd loss a.ccount.
2. Repairs amounl-ingi to Rs. 20,000 had b, :en trea :ed as additions to machinery, de
depreciation on
which had been charged at the rate of 20
3. The premium amount to Rs. 6,000 on \ 's life i surarice policy and paid on 30th th June, 1984,
had been included under insurance charl ,es in t1 e profrt and loss account.
Z-retked frorrL the parl-nership on 31st Dece nber 11 34, and agreed to leave the amour
unt due to him
lrom firm as a loan repayable by agreed in t. X and Y agreed to continue in partnership,
sharing profits and losses as two third and o ne third
ln ascertaining the arnount due to Z from t. he firm rnd for the purposes of the newr partnership
1 it
was agreed to make the following adujustme. nts:
i) Goodwill to be 'ra-lued at Rs. 1,44,000 bu t no acc )unt for goodwill to be raised in the
th books.
ii) The value of freehold premises to be incr eased b. Rs. 40.O0O.

ilajan Adhikari, FCA rts (CAP -ll

Partnership Accounts
 iii)
The provision for bad debts to be increased bv s. 12,000.
You are required to prepare:
i) The profrt and loss appropriation accoUnt for e year
ended 31st December 1984. making all
the necessary adjustments for the errors and
Partners'Capital and Current Accounts (in col mnar form)
for the year ended 31st December,
7984, incorporati:ng the adjustments on Z,s reti

19. Dosi and Dr:sai are in partnership as equal ners. Dosi by agreement retires and his son
Dinesh joins the firm on the basis that he would t one third share of the profrt.

12,000

Capital Accounts:

Goodwill is agreed at Rs. 3O,OOO and written up ingly. Sufficient money is to be introduced
so as to enable Dosi to be paid off and leave Rs. 4. in Bank; Desai and Dinesh are to provide
such sum as to mal<e their capitals proportionate to ir share of Profrt. Dosi agrees to contribute
from his capital half of the amount Dinesh has to o vide.
Assuming the agreement was carried out, show the j urnal entries required
ald prepare the
Balance Sheet of th,e firm M/s Desai and Dinesh.
Arts: Cq.sh contribution Desai-9, Dinesh-9,Soo Cash pagment Dosi 22,SOO

20. Avinash ,Basudzr Ltd. and Chinmoy Ltd. were partnership sharing profrts and losses in the
ratio of 9:4:2. BasuLda Ltd. retired from the ership on 31st March I9gB, when the firm,s
balance sheet w€[S ELS under:

Sundry Creditors
Capital Accounts: Sundrv Debtors
Avinash 2,7OO
Basuda Ltd. I,2OO
Chinmoy Ltd 600
Land & Building

Basuda Ltd.'s share in goodwill and capital was acqu by Avinash and Chinmoy Ltd. in the ratio
of 1:3, the continu.lng partners bringing in the n ar5r finance to pay off Basuda Ltd. The
partnership deed providles that on retirement or admi sion of a partner, the goodwill of the firm is
to
be valued at three ti.mes the average annual profrts the frrm for the four years ended on the date
of retirement or admLission. The profits of the firm d ing the four years ended 31st March 1998
in
thcusands of rupees were:

Bajan Adhikari, FCA Partnership Accounts (CAP -ll

 The deed further provided that goodGtt-ccount is t to appear in the books of accounts at all.
The continuing partnr:rs agreed that with effect lst April 1998, Ghanashyam, son of Avinash is
to be admitted as a piirtner with 21o/o share of profi
Avinash gifts to Ghanashyam, by transfer from hi capital account, an a_rnount sufficient to cover
up l2.5o/o of capital and goodwill requirement. The balance 72.5% of capital and goodwill
requirement is purchased by Ghanashyam from Avi sh and Chimnoy Ltd. in the ratio of 2:I.
The frrm asks to you:
i) Prepare a statemerrt showing the continuing er's shares;
ii) Pass journal entries including for bank transac s and
iii) Prepare the balanc:e sheet of the firm after Ghan shyam's admission.
Ans: New PSR-I 7:Z:6 Totat Capitat-6,Ooo

21. X and Y are equal partners. X by agreement tires and Z joins the firm on the basis of one
third share of profits on O 1-O 1- 1999 . The balan of the books as on 37-12-1998 were:

Goodwill
Fixed assets at cost
Current Assets:

Bank Balance

Provision for depreciation

Capital accounts:
1,04,000
r,o2,ooo

Goodwiil and fixed assets valued at Rs. 3O,OOO and Rs. 1,40,000 respectively and it was agreed to
be written up accordingly- sufficient money is to be ntroduced so as to enable X to be paid off and
leave Rs. 5,000 cash at Bank; y and Z are to vide such sum as to make their capitals
proportionate to their share of profit. Assuming agreement was carried out, show the journal
entries required and prepare the balance sheet after ission of z.
Ans: Y-42,OOO Z.85,OOO Pagment X- 7,3O,OOO

22. The following is lhe Balance Sheet of A, B and who were partners as on 31-3-1993;

Balance Sheet as a 31-03-1993

Rajan Adhikari, FCA Partnership Accounts (CAP -ll I

 Liabilities Amount Assets
A's capital Af: Amount
33,600 flanr and vlachlnerv 49,000
lJ s uapltat A/c 25,200 t\:rnrture and fitt 4,800
C's Capital A/c 72,OOO utock rn trade 22,BOO
Sundry creditors 12,ooo Dunctry uebtors 27,600
rc"/o lVlortgiage Loan 1 6,600 uasfi on hand 1,000
UASN at Dank 200
99,4OO 66 rla^
They sna.re prollt{j ar
share profrtr;
claimed:d his
his share
share of srcnraf
secret rac6*,^ t^-^EL arising
reserve/profit ^,,t I and
or : oI the ibllowing;
a) Dutring the year eraded 31-3_1993 purchase of
achinery at
'i;:^:^1 -," o
a cost ur
":t of I(S'
Rs. lu,uuu
1O,OOO was charged
.
purchases
rchases account.
account, the erectio- chz to
erection charqes of
^n'o.--.-:.; Rs. oo hcino nh--ged
:preciation is to be charg
(Depreciation 5uu to
LL' machinery
rrr'r-crlnery repars
repairs account.
a
charg
b) Rs. 600 received frorn Mr. l
personal account.instead or
lroperty sublet was credited to his
Rs. 400 debit on 31_3_93
is debit balance from Rs. 1,000 to
c) Interest on mortgage loan
5_93 and the whole amount was
charged to interest account
\fter rectifying the above errors, it
was mutually deci<ied as un
i) The goodwill of the hrm be
:oIits of the last three years. Such
profits should be correct p:
he book profrts for the rast three
financial years ,were:
1g,3gO;
I99O_91_ Rs.
,T,4TI
ii) Plant and Machinery to be (
and doubtful debts to be made at
5%o on sundry debtors.
iii) The goodwill shoul<lnot app
iv) There is a liability fbr Rs. 50
re accounted for.
c should be paid half of his dues in, cash whic{ sha,ll be brought in by A and B in their profit
--v) sharing ratio an'd the other half shatl be left in tfire business
loan fetching an interest of
1QO/-
lSVo ^p.a.
^ ".-c,"
Prepare Profit and Loss Adjustment account, Revalu,
tion account, Capital Accounts of
rf the partners
and the Balance Sheet of A and B after C,s retiremen
Ans: Profit &.Loss Adjus :ment f 0,555 Reu. .Loss Z1465 B/s-
B, 7,02,991

223. Messrs Dinesh, Bhupesh and Malik is a firrr sharing profits

and losses in the
:e ratio 2:2:7.
Their Balance Sheet as on 3lst March 2000 is as ,elow:
Liabilities Amount Assets Amount
Sundry Creditors 12,950 Land anr Building 25,000
Outstanding liabiljltier; 1,500 Furnitur, 6,500
General Reserve 6,50O Stock of oods 17,750
Capita-l Account: Sundry I btors 5,500
Mr.Dinesh L2,r)gg Cash in 1 and I40
Mr.Bhupesh 12,1100 Cash at I ank 960

Rajan Adhikari, FCA Partnershlp Accounts ( cAP -il |

 Ma-lik 5,O00

The partners have agreed to take

following terms;
tvt.. tvtay"rrt Z" partner with effet from 1st
2000 on the

ital
,500
ided at 7Oo/o of the debtors.
v) The value of Land and building
should be enh
til by 2Oo/o
The vaiue of goodlwill be fixed
n".
"t to15,000
vii) General Reserve will be transferred the par
viii) The new profit sharing ratio shall Capital Accounts
be;
Mr. Dinesh S/15
Mr. Bhupesh 5/1,5
Mr. Malik 3/ 1lj
Mr. Mayank2/Is
ix) The goodwill accor_lnt shall not be raised to the
tners'accounts
The outstanding lia.bilities include
Rs. lOOO due to . Sumit which has been paid by Mr. Dinesh.
Necessaqr entries vrere not made in
the books.
Prepare:
i) Revaluation Account
ii) The capital Account of the partners
iii) The balance sheet of the firm as newly constitu
(Journal entries are not required)
Ans: Reu. profit_ ,3OO Capitat Ig,l2O,
lg,I2O, 7,560, S,OOO
24. A, B and C are partners sharing profrts and lo
in the ratio of 2:3:5. On 31st March, 2OIO
their balance shr:et was:
)iabilities
Capital A/c:
A 36r,000
B 44,OOO
C 52i,000 1,32,000

Bills payable
Profrt and loss a/c

2,42,OOO
They admit D into ee,rtne.@
i) Furniture, Investments and Machinery to be de iated by 15%
ii) Stock is revaluect at Rs. 4g,O0O
ii! Outstanding renil arnounted to Rs. 1,800
iu) Prepaid salaries .Rs. 800

Rajan Adhikari, FCA

Partnership Accounts (CAp -ll
 v) D bring in Rs. 32,OOO as his capital and Rs.
,OOO for goodwill in cash for I/6th of the share
future profits of the firm
rri Adjustment of cerpitals to be made in cash
'',I
vii) Capital of the pertners shall be proportionate
their profit sharing ratio taking D,s Capital as
base.
Prepare the revaluatjon account, partners,
capital unts, cash account and the balance sheet of
the new firm.

25. A,B and C are partners sharing profits in

ratio of 4:3:1 Balance sheet as on 3lst March
201O is,
Liabilities

bills payable
Workmen's compensation
Reserve General reserve
Capital A/c's
sion for doubtful 1,25,000
A 2,00,000
B 3,00,000 Joint li
c 2,00,000 7,0q000 1,20,000
2,30,000
9,OO,O0O
9,OO,OOO
On the above date
share of profrt to A For ns. S6pOO and to C for
Rs. 45,000 in the ratio, of 4:5. For the purpose of
B,s nt it was agreed that:
i) Stock is to be appr:eciatedby 2O%o and building IOo/o
ii) Joint life policy is surrendered to the insurance pany for Rs. 70,000
iii) Provision for doubtful debts is increased to 1o%
-'',v) Investment are sold for Rs. 2,30,000
v) Claim on account rcf workmen,s compensation is Rs. 12,000
vi) Amount due to B is to be settled on the fol ng basis; 5O%o on retirement and the balance
50% within one vear.
vii) The capital of the newly constituted firm is fixed at Rs. 6,00,000 to be divide among A and C in
the profrt sharing ratio.
Adjustment is to be ma.de in cash, calculate the new ofit sharing ratio and prepare the revaluation
account partners' capital accounts.

Ans: Rea. Profit I,IO,OOO

26. A,B and C are partners in a frrm sharing frts and losses in the ratio of 4:2:I. Their
Balance Sheet on 3l -12-92 stands as follows:

Rajan Adhikari, FCA

Partnership Accounts (CAp -tl
 Capital Account-...o^
17,700
B 18,000
C I7,OOO
Machinery

The partrrers dEcide

purpose the following adjustments to 6:5:5 with effect from- 1-i-93 and
are agreed upon for that
i) The pr-ovision for Ijad debts is to be raised
ii) Stock, furniture and plant and Machineryto 5
(
of sundry debtors
are to be reduced in value by S %o
respectively , lOVo and 5%
iii) Land zrnd building are to be appreciated
by Rs.
iv) There is a joint life policy of ifr. partners the rrender va_lue of which on 31_ I2_Igg2
10,000. The annueil premium of was Rs.
Rs. 1,500
v) The goodwill of the firm is to be valued is cl to ProIit and Loss Account.
at two 'purchase of the average profits of the last
four years before cJharging insurance premium.
vi) There .is a pendingl 1aw suit against
the firm f damaged goods and a liability of Rs.
likely to arise 1,400 is
The net divisible profit of the firm
for the last four

i6,000

fhow by a single journ e pa_rtners should be adjusted assuming

the firm decides not to raise Goodwill or policv that
acc nt nor to alter any value of assets,
reserves in the books. Also prepare claims or
the reconstituted Sheet.
Debit B- 7,543 C-9,72I Cred,it A- lI,g14
lns:
27 . A, B and C were partners in a firm shari g profits and losses in the ratio
resepctively. A died on 29th February
2OOB. The br ance sheet on that
of 5:3:2
date was:
Liabilities Amount Assets Amount
Capitat A/cs:
Machiner 35,000
A 12,000 I.\rrniture 6,000
B 16,000 Stock
c 12,ooo 40,000 Debtors
15,000
15,000
General Reserve 12,ooo UASTI 3^OOO
Creditorr; 22,OOO
74,OOO
74,OOO
lhe ltrm had a joint life policy in the na_tnes of the rartners for the insured
value oT Rs. 60,000.
The premlum paid on the poiicy was debited
to the rofit and loss account. The partn ership
provided that on the dleath of a partner the Deed
assets a i liabilities are to be revalued.
fhe assets and liabilities were revalued as follows
Th
or A's death:
1,) Machinery Rs. 45,OOO and Furniture Rs. 7,OOO
Rajarn Adhikari, FCA
Partnership Accounts (cAP -tl
 ii) A provision of 'IO%o was created for
doubtful
iii) A provision of IRs. 15,OOO was made
for taxa
tv) The goodwil.t of the firm was valued
at Rs. 15 on A's death
v) Death claim for policy was realized in full
The arnount payabre to A was transferred
to his executor's account. you are required
the Reva-luation Account, Capital Accounts to prepare
of the partners and the Balance sheet
of B and C.
Ans: Transfer to executor _S2,ZSO
24. Ram, Sham arLd Mohan were partners
sh profits and
Balance Sheet ias on 7-I-I999 stood 1osses in the ratio of 2:2:I. Their
as foilows:

Capital Ar:counts:
Ram
50,000
Sham
40,o00 1,20,000
Mohan
30,000

The hrm had taken a.loi'

the premium amounts on which were charged
to the profit and losrs account. On 1st July, 1999 M
died. His representatives agreed that;
il Goodwjtl of the firm be valued at Rs. SO,OOO
ii) Fixed assets be ,nrritten down by Rs. 1O,OOO and
iii) In lieu of profits up to lst July, Iggg, Mohan sh d be paid at the rate of 2S%o per arrnum on
his capital as on I-I-Iggg.
The policy money was received on 3I_I2_Igg9
and ohan's heirs were paid the total amount due
--on the same day. Current years(Iggg) profit after harging depreciation of Rs. 9,500 (Rs. 5,OOO
related to the 1st Ftalf) was Rs. 4O,5OO. The vear d figures of stock, debtors and creditors and
cash and bank balances were respectively Rs. 33,
, 29,OOO,35,O0O and 66,217. The particulars
regarding their drawings are given below:
Up to L-7-19 After L-7-L999

Prepare the balance sheet orffi ber 1999.

29. Following is the balance sheet of Black and as on 31st March, 2OO8:

Sundry creclitors 20,000 Machinery 100,000

Reserve fund 32,000 40,000
Capital a/c's Sundry btors 60,000
black Cash at 50,000
100,000 Cash in 2000
brown 200,000
Rajan Adhikari, FCA
Partnership Accounts (CAp -il i
 50,000
white

White died on 3Ot.h .Iune 2OOg.

, Under the terms of partnership deed,
the executors of deceased
partner were entitled to:
(i) Amount standing to the credit to the partner,s
(ii) Interest on capitial at S%o p.a. apital account
(iil) Shares of goodw:ill on the basis of twice
the a of the past three year,s weighted
profits. average

year to the last of death on the basis

of
ccounts of Black and Brown who will
maintain
ey decided not to raise any goodwill
account.
and 20OB were Rs.BO,OOO, Rs.9O,OOO and
io of capitals.
's account to
be rendered to his executors.
Ans: Transfer to executor -lrlo,gIT
30. Rarn, Rahim and Auntony in partnership
sh ng profits and losses in the ratio of I/2
and 1/6 respectively. They decided to dissolve
e partnership frrm on 31-3-1998, when the
, 7/3
balance sheet of the firm appeared as
under
Ba-lance sheet of the firm as on 31_3_
1998

Sundry creditors 5,67,000

& Machinery 6,07,500
Joint Life policy res,erve

2,36,7OO
5,34,000
Ram 4,20,000
Rahim 2,25,OOO
1,40,550
Auntony 1,2O,OCrO

The followin g details ar. reGuarrt 6idis solution

:
i) The joint lil'e policy was surrendered for Rs.
ii) Ram took over goodwill and plant and machi ,32,5OO. for Rs. 9,00,000
iii) Ram also agreed to discharge bank overd.ri and loan
from Mrs.Ram.
iu) Furniture iancl stocks were divided eou between Ram and Rahim at an agreed
valuation of Rsr. 3,60,000,
v) Sundry debtors were assigned to firm,s credi in full satisfaction of their claims.
vi) Commissiorr receivables was received in time
vii) A bill discounted was subsequently retu ed dishonored
and proved valueless. Rs.
30,750(includirrg Rs. 5OO noting charges).

Rajan Adhikari, FCA

Partnership Accounts (CAp -tl
 viii) Ram paid the expenses of dissolution
i") unting to Rs.18,OOO.
Aunton5z ag;reed to receive Rs.
1,50,000 i full satisfaction of his
in the fir:m. rights, title and interest
You are required to show the
accounts g to closing of books on dissolution
firm. , of the
Cqsh Pagment Ram_ l, 63,4 I O Rahim_7
Z, 64 O
31. A, B, C carried on business in partnership
I ing Profits and Losses in the ratio
decided to forrn a private limited 1:2:3. They
company, AB Ltd. And C is not interested to take
shares in AB (F) Ltd. The authorized over the
share ot the compa_ny is Rs. 12,OO,OOO
12,000 ordinar5r shares of Rs. 1OO divided into
each.
The company was incorporated
and took goodwill as valued and certain assets
partnership 1irrn on 31.3.2006. The of the
Balance heet of the partnership firm on
as lbllows: that date was

Capital eccounts:
1,00,000
2,00,000
3,00,000
Current Accounts:
re & httings 11,000
39,420
2,35,000
A's l,oan A1c ZA,OOO
(+) irrterest accrued 2O0O
Current Liabilitv:
1,0o,o00

C who retired w.r" pre@

(A and B) with one motorcycle valued in
the books of the firm Rs. 9,000. The remainin
motorcycles were sold in the open market for
Rs. 13,000. C also received certain furnitu for which he was charged Rs. 2,000. The
debtors which were all considered good were
taken over by C for Rs. 4O,OOO. A and B were
charged in their profit sharing ratio for the
va-lue of Motorcycle presented by them to
C.
It was agreed that C who is not willing to take e shares in AB (p) Ltd. Was discharged first
by providing necessa_ry cash. A and B should
b ng cash, if necessarv.
AB (ll) Ltd. f'ook over the remaining furnit re and fittings
machinery for Rs,
at a price Rs. 13,000 the
1,25,000, the stock at an ae value of Rs. 2,OO,OOO and the land at its
book va-lue. The value of the goodwill of the
ership firm was agreed at Rs. gg,O0O. The
creditors of thre firm were settled by the Iirm fi Rs.
70,000. A's loan account together with
interest accru€:d was transferred to his capital
unt,
The purchase consideration was discharged by
he company by the issue of equal number of
fulty paid up equily shares at par to A and B.
Prepare Realization A/c, Capital A/c of the
and Cash A/c. Also draw the Balance
Sheet of AB (P) Ltcl.

Rajan Adhikari, FCA

Partnership Accounts (CAp -ll i
 Ans: htrchq.se Consid.eration
7,25,O9o Ir_2i9,42O
6TOO,OOO Req.tization profit SI,OOO Contribution A_

32. X'and y,carrying on business in partn

dissolve the frrm and seli the business
ip sharing profits and losses equally wished
to X' to
position was as follows: nited Company on 31 .3.2006, *f.." the
firm's

1,50,000

Sun<lry Crediron;

r'he arrang"-".rt rith

r) Land and Btrilding was purchased
at 2Oo/o re than the book va-lue
ii) llurniture: an.d Stock were purchased
at bc k values less 15%
iii) 'lhe goodrvill of the firm was valued
at Rs.
iv) The firms's debtors cash and cred.itors
: not to be taken over but the company agreed
to collect ther book debts of the firm and
ischarge the creditors of the firm as
for which services, the company was to a_n agent,
paid 5% on a_ll collections from the firm,s
debtors and ',3%o on cash paid to firms
credi
v) The purchase price was to be discharged
b; the company in fully paid equity shares
10 each at a premium of Rs. 2 per of Rs,
share.
The company collected all the amounts
from d tors. The creditors were paid off less by Rs.
1000 allowed by them as discount. The
company rid the ba_lance due to the vend.ors in cash.
Realization acco-unt, the Capital accounts
of the ners and the Cash account in the books
partnership firm. of

Realizqtion profit g4,gg| AC_2,T/,OOO

33. X, Y, and Z are partners of the firmXyZ and.

o. sharing profits and Losses in the ratio of
4:3:2. Following irs the Balance sheet of the
firm as 31st March, 2OOB:

Partners' Capitalsr:
4,00,000
3,00,000
5,00,000
2,OO,OOO
10,000
General Reserve
Sundry Creditors
13,1O,OOO 13,1O,OOO

Partners of the firrn decided to dissolve the firm

on t e above said dzrte. It was found that a credit
purchase of Rs. 20,000 in January, 200g
had not recorded in the books of the firm

Rajan Adhikari, FCA

Partnership Accounts (CAp -ll
 Fixed assets reetJized. Rs. 5,2O,OOO
and book Rs. 4,40,000.
Stocks were va_l.uecl at Rs. 2,SO,O0O
and it was over by partner y.
Creditors a-llowed cliscount of So/o
and the expen s of realization amounted to Rs. 6,000. you
required to prepare: are
i) Realization account
ii) Partners capital account and
iii) Cash accou.nt
Ans: Realization toss 99, Pagment X-9,9 6,000 Y-4Z,OOO Z_ I,gg,OOO
34. P, Q and R are partners sharing profits
and sses in the ratio 2:2:I. Their balance sheet
on 31st March, 2OO9 is as follows: as

Capital Accounti
1,09,000
1,20,000

Reserve Fund

They decided to dissolve the firm. The following

are e amounts reaJized from the assets.
Plant and Machi:nerv
Fixtures

Sundry Debtors
Creditors allowed a r
expenses amounted to Rs. 1,500. A bill Rs.
4,2O0 due for sales tax was received during
the of reaJization and this was also paid.
You are required to prepare:
Realization account Partners capi account
Cash account
Ans: Req,lization proJit S, Pagment P- I,46,000 }-Z4,O4O R-}Z,O2O
35. Ajay, Brjay, Ram and Shyam are partners in a firm
sharing profits and losses in the ratio of
4:I:2:3. The follovring is their Ba_lance Sheet as at
1st March, 1996.

Sundry Creditors; 3,00,000 btors 3,50,000

btful Debts

Capital A/c
Ajay 7,00,000
2,00,000

Rajan Adhikari, FCA

Partnership Accounts (CAp -ll
 18

Shyam 3,00,000 10,00,000 Other r ssets 3,10,000

Capital Alc
Vijay 2,00,00o
Ram 1,50,O00
13,OO,OOO
13,OO,OOO
Jrst March, 1996, the frrm is dissolvea ana tfre ollowing
On 31
points are agreed upon:
i)) Ajay is to take over sund.ry debtors at gOot
of book value
ii)i) Shyam is to take over the stocks at 9S%o 'the
o value and
ii) Ram is to discharge sundry creditors.
iii)
otl
)ther assets reaJize Rs.3,OO,OOO and the expensr
s of realization come to Rs. 30.OOO
/ijay is found inso.[vent and Rs. 2I,gOO is rea]ize
Vrj,
l from his estate
)repare RealizatiorL
Pre Account and Capita-l Accounl s of the partners. Show
' The also the Cash
Ce A/c.
'he loss arising ouLt of capital
deficiency may be distributed following the ,n in garner vs.
mu
ourray. decision

Ans: Req.lizqtion Loss 7O,OOO Loss of Vijag- 7,8S,IOO

Rqtio- Ajag : Shgam
t = 7:3

36. Neptune, Jupiter, Venus and pluto had carrying on business in partnership sharing
profits and losses in the ratio of 3:2:L:1. They dr
de to dissolve the partnership on the basis of
the following Balance Sheet as on 30th April 2OO

Capital Account
Neptune 1,00,000
Jupiter 60,000 1,60,000

Sundry Creditors

Pluto 12,

The assets we:re reaJized as urra..

Debtors 24,OOO
Stock 60,000
Furniture 16,000
Premises 90,000

ii) Expenses of dissolution amounted to Rs. 4,

iii) Further creditors of Rs. 72,OOO had to be m
ir) General Reserve unlike Capital Reserve was ilt up by appropriation of profits.
You are required to draw up the Rea_lization Acco t, Partners Capital Accounts and the Cash
Account assuming that venus has became insol t and nothing was realized from his private
estate. Apply the prirrciples laid down in Garner vs uffay.
Ans: lizqtion Loss 7,26,O00 Ratio- N : J = IS:8
Rajan Adhikari, FCA Partnership Accounts (CAP -ll
 37. The firm of Kapil and Dev has
four partn
stood as follows: and as of 3lst March, 1995, its Balance sheet

Capital A/c

2,50,000
1,25,000
1,00,000
Current A/c:

3,00,000
1,50,000
rrent assets
Loan from NBFC
Current Liabilties
13,go,ooo
13,go,ooo
The partners have been sharing profits
and lor ies in the ratio 4:4:I:1. It has
dissolve the Iirrn onr 1_4_f ggS on been agreed to
tle basis of the bllowing outstanding:
i) The following a,ssets are to be adjusted to
values
e extent indicated with respect to the book
Land 2OAo/o
Building I20%
Computers TO(%
Debtors gS%
Stocks 90%
ii) In the case of th.e loarr, the lenders
are to be at their insistence a pre_payment premium
of 1%o
iii) B.Dev is insolve.nt and no arnount
is recovera Ie from him. His father R.Dev,
to bear 5O%o of his defrciency. The balance however agrees
f the deficiency is agreed to be apportioned
according to .[aw.
Assuming that the re>aJization of the assets
and of liabilities is carried out immediatelv.
show the cash A/c, IReaJizationA/c and
the 'sA/c.
Ans : Realizqtion profit_
,OOO Ratio .F;S..R=2 : 2 : I DeJiciencg_ }S,OOO

38. The following is the balance sheet as

at 3Oth J e,2OOO of Lal, parveen and
of a firm sharing prolits and losses equa_llv. eueen, partners

Capital Accounts:
LaJ2O,OOO
Parveen30,0OO
Queen 5,000

Current Account

Rajan Adhikari, FCA

Partnership Accounts (CAp -ll I
 Parveen 18,000

17,600
Provision for p"ffi
dutv
Creditors for e.xpenses
1,16, 1,16,9oo
The firm a"c.pt.s a@d. To take ver the following asseti at ualues
to each: $ren opposite
Plant and Machinery 3O,OO0
Building 4O,OOO
Stock-in-trade 18,000
The company agrees to discharge TS%o of
the ideration due in equity shares of Rs. 10 each
to be allotted at a premium of Rs. 1 per share.
I e ba-lance of consideration will be
the company, at a:r interest of IS%o per annum, retained bv
to be paid six months after the transfer is put
through.
The firm realizes its sundry debtors for Rs.
000; motorcar is taken by partner LaJ at an
agreed vaLue of Rs SOOO paid by him in cash;
ses of reaJization met by the firm came to
Rs. 500; the liability to excise duty was frnally
di arged at Rs. 10,000.
Queen Private Assets are worth Rs. 15,OOO and s individual
liabilities and debts amount to Rs.
19,000.
Record the above transactions in the books
of firm and close the books assuming that the
transactions were :rl1 put through on 1st Julv
Show the ledger accounts only. Rule in
Garner Vs. Murray is to be applied.
Ans: Req.lizqtion t- 3,7OO htrchase Consideration gg,OOO

39. A, B, C and D are sharing profits and losses in ratio 5:5:4:2 frauds committed by C during
the year were founrC out and it was decided to issolve
the partnership on 31st March 2O1O
when their Balance sheet was as under:

Capital:
A 90,000
B 90,000
C
D 35,000
14,500
General Reserve

Bills Pavable

Following information is given to you:

i) A cheque for Rs. 4,300 received from was not recorded in the books and was
misappropriated by C.

Rajan Adhikari, FCA

Partnership Accounts (CAp -ll
 2t
ii) Investments costing Rs. 5,400
were sold by C at T,9OO and the
personal account. This sale was funds transferred to his
omitted fi om the firm,s books.
iii) A creditor :rgreed to take over investmen
'l'he rest of the s of the book value of Rs. S,4OO at Rs.
creditors were paid off at a scount 8,400.
irr) The other assets reafized. as follows: of 2%o.

Building IOSo of bool< value

Stock Rs. 78,000
Investments - the rest investments were
sold at a profit of Rs. 4,800
Debtors - the rest of the debtors were
reafized at discount of
v) The bills payable were settled at a discoun ofRs.4O0 I2%o
vr) The expenses of dissolution amounted to
vii) It was found out that reaJizationfrom C,s .4,goo. vate assets would only be Rs. 4,000.
Prepare the necessary Ledger Accounts.

Ans: Res.tization Gain_S4g

40. A, B, C are partners in A & Company sharing pr

ts and losses in the ratjo 2:2:1 respectively.
The Balance Sheet of A & Company as at 31st
March 1993 is as follows;

Capital:
A 1,46,000 Current
B 54,000 Stocks 1,25,000
c 50,000 Debtors 1,25,000
C's loan account Cash 5,000
Loan from Mrs. A
20,ooo
Sundry Creditors
Provision for Bad D,ebts

The firm was dissolved on th; date of B,alaoc.

t due to continued losses. ,After preparing the
above balance sheet as on 31-3-1993 it was disco that purchases amourrting to Rs. 2O,OOO
in March, 1993 were not record.ed in books, though the goods were
received during March lgg3.
Fixed Assets reaJized Rs. 1OO,OOO, stocks Rs. 1.0
,O0O and debtors Rs. 1O2,5OO creditors were
paid after deduction of discount@2%. The expens, of reaJization
came to Rs. 5,400. A aereed to
take over the loan of Mrs. A, B is insolvent and his estate is unable
to contribute anything.
Prepare the relevant accounts to close the books A and Company applyrng the decisions of
Garner vs. Murrav.

Ans: Realizqti<>n Loss -lr2OrOOO

4L. TiIak, Sham and Farid were in partnership shari profits ald losses in the ratio of 2:2:I. On
30th September , 2OOO their Balance sheet was as S:

Capital Account:
Titak 80,000 1,25,000
' Rajan Adhikari, FCA Partnership Accounts (CAP -ll I
 Sham 50,000
Farid 20,000 1,50,000
Current Accounts:
T1lak29,7OO
Sham 11,300
Farid(Dr.)(14,500)
Sundry Creditors

Tilak decides to retire on 3Oth S"pt"-b.., 2OOO and as Fraid appears to be

short of private
assets, Sham decides that he does not wish to over Tilak's share of partnership so all three
partners decide to dissolve the partnership wit effect from 3Oth Septernber,2ooo.
If then
transpires that farid has no private assets whatsoe
The premises are sold for Rs. 60,000 and the pl t for Rs. 1,07,500. The fixtures realize Rs.
20,000 and the stock is acquired by another fi at book va-lue less 5%. Debtors realize Rs.
45,900. Realization expenses amount to Rs. 4.SOO.
The bank overdraft isr discharged and the creditors also paid in full.
You are required to write up the following ledger unts in the partnership books following the
rules in Garner vs. Murray.
i) Realization Account
ii) Partners'Current Account
iii) Partners'Capital Accounts showing the of the firm's books.
Ans: Realization Loss -3S.S4O

2. Anand, Bharat and Charan have been suffering s for many years on December 31, when
their balance sheet rvas drawn up as given below, ey decided to dissolve up partnership. They
shared profits in the ratio of %, I/5, I/6.

Capital accounts
Anand3,0O0
Bharat 1,500 xture and
Charan100 rniture
Current accounts:
Anand500 rrent Assets:
Bharat 200 10,000
Charan(Debit) 25,OOO
(200)
100
Current liabilities and provisions:
Trade Creditors
Bank overdraft

There was a contingent liability in respect of a filed against the partners for a sum of Rs.
1,000.

. Rajan Adhikari, FCA Partnership Accounts (CAP -ll

 23

The furniture and fixtures reaJized

i. 1,800 on auction. The leasehold property has only there
yea_rs to run. Anand agreed
to take it over for Rs' 400. The stock reaJized.
Rs. 20,000. In the balance of De Rs. g,0oo and Debtors
's Rs. 5,000 was not bad,
mutually agreecl that Anand and Bh they were slow_paylng. It was
at should equa-lly take thenn over at their book
liabilities were discharged at book v va-rues. '.tre
es''lhe suit was decided against the firm a'd the
Rs. 1,000 to the complainant plus Rs firm paid
B0 on account of costs. AnLand and Bharat
but charan was insolvent and his es were of means
e paid divided of Rs. 25 p. in the rupee.
Prepare Realization Account and cl
off the trooks off the firm.
Ans: Req.lization Loss _9,ggo

43. P, Q, R and S has been carrying or

business in partnership sharing profit and
ratio of 4:3:2:1. They decide to dissol the partnership losses in the
on the basis of following Ba_lance Sheet
as on 3Oth April ,2OIl.

Capital Accounts Land and Building

P 1,69,000 Furniture and fixtures
Q 1,09,000 2,76,000
General Reserv,e
72,500
Cash in hand
Sundry Credito.rs Capital withdrawn:
1, 10,000 R 25,000
s 18,000
5r42rOOO
i) The assets were realired as un
Land and building t ,000
Furniture and fixture 4 ,000
Stock ,000
Debtors 000
ii) Expenses of dissolution amoun to Rs. 7,8OO
iii) Further crr:ditors of Rs. 1g,000 l to be met.
iu) R became j.nsolvent and nothing rea\zed from his privatr: estate
Applying the pr.inciples laid down i Garner vs. Murray, prepa.re the Realization Account,
Partner's Capital.Accounts and Cash A
Ans: Realization Loss _l.OO,SOO

44. P, Q and R were partners sharing profi and losses in the ratio 3:.2:7, no partnership salary or
interest on capital being allowed. Their ce sheet on 30th June,2OII is as follows:

Fixed Assets:
P 20,000

Plant and equipment

Current Accountsi: Motor \/ehicle

Rajan Adhikari, FCA

Partnership Accounts (CAp -ll L
 P 500
Current AssEiJ
a 9,000

Trade oebtorsDpbo
Trade Creditor-s
Less: Provision 1OO
Cash at Bank
Miscellaneou" to"".*
R's Current Account
Profit and loss account

OnIst.lrrty,ZOt@ dissolved.
Rs. 500 but no cash pass"d
spec, allv in respect of this transaction.
"t ;i:r"i:;."Jt
realized the foliowing amounts: sale

Freehold p.opr ty
Plgt and equfi,ment

Trade Debtors
Trade creditors rffi
amounted to Rs. 1,500. The loan
fult settlement orldEir aebG. The
dissolution
fully ""sts;i
from was repaid, P and e were both
bring in any casrh required but sotvent and able to
R we forced into bankruptcy and *a"
creditors 1/3 of t.he amount due. onty able to pay his
You are required to show:
a) Cash and Bank Account
b) Realization Ac,count and
c) Partners fixed and Current Account
-45. Amal arrd Bimai are in
equal partn p. Their Balance Sheet stood as
2011 when the finn was dissoived: under on 31st March.

Creditors A/c
Plant and Machinirv
Amal's Capital A/c
Furniture

Lma_l's Drawings

The assets reaJized. as und.er:

Plant and machinerv

Furniture

Rajan Adhikari, FCA

Partnership Accounts (CAp -il f
 Debtors

The expenses o
pay his private to Rs. 175.
private estate has a surplus rent even
of Rs. 2oo onrv.
46. A, B, C and D were partners
sharin profrts and losses
their Ba_lance Sireet as
on St.tZ.Ziig in the ratio of 3:3:2:2. Following
was

Capital accounts
A 60,000 Capital eciounG
B 45,000 C 4B,OOO
D 1B,OOO
Furniture

Debtors 4g,OO0
Less: Provision for _

Doubtful debts 1,SOO

on31.n.;2oo,ooEffi md B was ap
the liabilities. He was entifled
to recei e 5%o commission
partners as capital. He agreed on the
to bear he expenses of rcalizationamount finarv o"lot","oll#
follows: Debtors Rsr. 33,000;
Stock Rs. 2 ,0OO; Furniture
The u...r. were realized
as
Creditors were paid off in Rs. 3,OOO; Trademarks Rs.
12,OOO.
full, in addi rn' a contingent liability
matefialized to the extent of Rs. 7,SOO. for bills receivabre discounted
surrendered for Rs. 9OOO. a j1in1 tife poticy ro,
Rs. 1 1,100 was rec:overeal
Expenses of |"":,ji::._t
amounted to Rs. 1,500. C
R". eo,ooo. rhis was
from his was insolvent but
Prepare Rea_lization Account,
Bank Accou t and Capital
Accounts of the partners.
47. Anand, and Bhunesh r,,o.o
on 3 1 st o.".J;:; "i#T":lTl:fi#. siness as equal partners.
The firm,s Ba_lance Sheet
as
'
Capital Account:
Anand Assets:
1,3g,ooo eholdBuilding
Bhupesh 80,000
7,52,O0O t and Machinery
Bank Loan 1,90,000
40,000
Current Liabilities 20,ooo
rrent Assets:
Sundry Creditors 70,ooo
Bil1s Payable
10,000

4,1O,OOO

Rajan Adhika ri, FCA

Partnership Accounts (CAp _ll
 26
The business was carried
on till 3Ot June' 20oo' The
of profits made o".i"* i partners withdrew in equal
lT:":"t
depreciation on: e period of six months(from .l"ourry amounts ha_lf
2OOO) after charging
Leasehold building IO%o
per annum
Plant and machi:nery lO%o
per annum
Furniture 1O%o y>er annum
IVleanwhile sundrry creditors
were red ced By Rs. 15,OOO,
loan by Rs. 2O,O0O. Bills payable by Rs. 2,500
and Bank
On 30th June stock was
valued at Rs. book debts were Rs. 7s,0oo
2,s00. and cash at bank was
On 3Oth June 2OOO, the frrm
sold the siness to a limited company
equity shares of Fls. 10 each. for Rs. 4,00,000 payabie in
ffre part s decided to take shares
difference to be se:ttled
in cash. ir,ifre p.on," sharing ratio, anv
You are required to prepare:
1) Ba-lance slLeet as on 30th
June , 2000
ii) Statement of profit .*rr"O jrrr.,
iii) the period six months ended
Rea_lization Account on 30_6_2000.
ir) Capital Accounts of the partners

Ans: Net proftt eq.rned _*2,OOO

48. Mr.MaJik and Mr.Dinesh
were carrying t business as equal partners.
as on 3lst Deceml5er, 1999 was as follo The firms Balance sheet
:

Sundry Creditors

ant and Machinery

Bills payable
furniture
Capital accour-..--
Malik 1,50,000 nt Life Policy
Dinesh
1,48,000 sehold premises
t and toss a/c(Gbitbil;€

The busine.s wa.Effi 2ooo. rne part

the amount of profitr; made during
p.a. had been written off leaseholJ
the pr O:f .o months(from January_Uune 2OOO)ounts ha_lf
t, 7O%o p.a. off plant and machinery after 7lo/o
office furniture. Meanwhile sundry and. Sohp.a. off
creditor were reduced by Rs. 1O,O0O
On 30th June 2OOO stock was va_lued
at I . 63,400. Bill payable was reduced by
Banl< overdraft by Rs;. 1S,OOO. Rs. 2,300 and
Book Debt were va_lued at Rs. 65,000. The joint
realized for Rs. 9,SOO and other life policy was
items rem ed the sarne as on 3lst December,
On 30th June 2OOO the firm Iggg.
sold the busi less to a limited company. The value
was estimated at Rs. 1,Og,OOO
and the rest
of the goodwill
of the assets were valued on the
basis of the Balance
Rajan Adhika ri, FCA
Partnership Accounts (CAp _ll
 27
Sheet as on 3Oth June, 2000.
The pany paid the purchase
shares ofRs. 10 each, at par. consideration in fully paid
equity
You are requireclto prepare
a Reali n Account and Capita-l Account
June, 2OOO. of the partners as on 3Oth

Ans: profit earned during

the period. _gSrOOO
49. X, Y and Z are partners sharing
ts and losses as 2:1:1. Their
March, 2OO2 is as below: Balance Sheet as on 31st

Partner's Capital
X 90,000 Machineries
Y
60,o0o Investments
Z
10,000 Current Assets:
Bills Payable
Cash at Bank
Sundry Creditorsi 5,000
Debtors
80,000
Stock
60,000
Repairs n". ZI,OO-O incu#O
machinery account. Stocks are
tffi ago was treated as
I by Rs. 10,OOO. De ebited to
on machinery on diminishing balance. e 10,000
n n^^ collected charged
^^rr - ,
.r
Rs' from debtors was ,,ot .""oidlo.)"
books but taken l>y Z.The accounts
a e rectified and then Xy ltd. is
business. y is to trake the investments formed to take over the
Rs. 3000. X \Mill pay the creditors.
be paid by X and y -ur
in their profit sharinl
L.0e1r prolrt
Bills payable would
shari: ratio.
Goodwill and stocl.:s are valued
at Rs. I ,000 and Rs. 42,5g0 respectively. Debtors
10% below book vedue, whereas are taken at
other ar rets except cash at bank
values. Xy ltd. Is to pay the firm to be considered at their book
by issu of equity shares of Rs. 1O each.
to take 6,000 shares and balance Z is insolvent, y agreed
take over by X. Show profit and loss
realizatjon account and partner,s adjustment accJunt
capita-l nt in the books of the firm.

50. The following is thr: Balance sheet

of A d, Bharat and Cheema on 31st December,2OOO
they decided to disrsoive the partnership. when

ndry Assets

Capital Account:
Anand 15,000
Bharat 18,000
Cheema 9,O00

The assets realizedlhe foilowrn-g sums

in ins lments:

Rajan Adhikari, FCA

Partnership Accounts (CAp _ll
 The expen"i" of
to be Rs. 5oo but uttim@s.4oO
Show how at ear only.
profits in the ratio of 2:2:I. ived should be distributed
between partners. They share

51. The firm of LMSI was dissolved

on 31_ at which date its Balance
Sheet stood as follows:
Amount
Fixed Assets
45,00,000
Cash and Bank
L's Loan
10,00,00
Capital
L
M
S
5,00,000

Partners share profits equally. 47,OO.OOO

a n.r" o Chartered
and distribute the cash after the assets
discharge
is fixed at Rs. 1,00,000. No loss fees which are to inctude
is exner lt:l'i::,t:^_11"r
on reafization since fixed assets
aJl expenses
and building. include valuable land

15,00,000
15,00,000
30,00,000
The charter.a a"c@ 30,00,000
Method'you are required to prepare to pay off the partners in Higher
Relative Capital
a tement showing distribution
workings. of cash with necessary

Ans: Realization proJit-

L,M&S 16,gg,ggg each
52. The partners Amit, Bhatia
and Charan called upon you to assist them
affairs of their partnership on
3Oth Jun
in winding up the
2OOO. Their Balance Sheet
below: as on that date is given

Sundry Creditors 17,ooo

Capitat AccounG
undry Debtors
tock in trade
45,000 t and equipment

Rajan Adhikari, FCA

Partnership Accounts (CAp _ll -
 1,60,5OO
losses m tfr..aUo of S:gZ-
ers at the end of each month.
trons are as foliows
July 2OOO
Rs. 16,500- collected from
Debtors; t ce rs un-collectable.
Rs. 10,000- received from
sale of enti stock
Rs. 1,OOO-Liquidation expenses
paid
Rs. 8,000- cash retained
in the busin at the end of the month.
August 2OOO
Rs. 1,SOO-liquidation expenses
paid. A part payment of
equipment for Rs. 1O,OOO(boot his
tav eqvrLd'
capital, charan
urlara-n accepted a piece
vafue n, 4,000) of
Rs. 2,500- cash retained
in the busines at the end of
the month.
September 2OOO
Rs.75,0OO- receiverd on
sale of remainin plant and
Rs. l,OOO-liquidatiron expenses equipment
paid. No ash retained in the
Required: prepare a schedul. business.
of cash ts as of September
distributed. Apply HCRM. 30, showing how the cash

53. The firm of Richa presented you

with the following Balance
1998. Sheet drawn as at 31st
March,

Sundry Creaitors
Cash on hand
Capital Accounts:
Akram4O,OOO
Stock in trade
Balram30,000
Plant and tvtacEinF
Charan27,OOO
rrent Account:
ram4,000

Partners
"6"rea
p- Ltio of 4:3:
was decided to wind partners
it
assets and distribute cash among
end of each month. the partners at the
The followi ng reahizal:ion was
made:
i) May 1998- Its. 1S,O0O from deb rs and
reaJization we:re Rs. S0O.
Rs. 20,000 by sale of stock. Expenses
on
ii) June i99B- Balance of debtors
:d Rs. 10,000. Balance of stock fetched
iii) August 1998- part of machinerv Rs. 24,OOO.
w sold for Rs. 18,000. Expenses
Rs. 600. incidenta_l to sale were
iu) September 1999- part of machi
valued in the books at Rs. 5OOO
in part discharge at an agreed valu was taken by Akram
of Rs. 10,000. Ba-lance of machinery
30,000(net) was sord for Rs.

Rajan Adhikari, FCA

Partnership Accounts (CAp _ll
 30
Partners decided to keep
min mum cash balance of Rs.
Rs. 1,000 thereafter. 2,000 in the first 3 months
and
Show the amount due
to ners will be settled. Al1 working
answer. should from part of your

its and losses in the ratio of

5:3:2. Their capitals were
Rs.
sets of the firm were:

Liabilities fo. io,t..."t orrGil*

Spouses of par-ners-
Furniture
Machinery

The assets realized,in full

in the order i which they are
listed above. B is insolvent.
You are required to prepare
a statemen showing the distribution
applytng maximurn possible of cash as and when ava'able
loss procecl re._-'-.!{vrv,

55. Daksh Associates is a reputed

frrm. On account of certain
partners, it was decided to misunderstanding between the
dissolve the irm as on 31st
December,2OOg was as follows:
Capitals:
Land and building
Daksh3,OO,0O0 7,00,000
Other fixed assets
Yash2,O0,OO0 3,00,000
Siddhart(Minor) l,OO,OOO

Bills receivabies

2,OO,OOO

It was decided thatffi 1g,oo,ooo

-charge of n"
towards expenses; lTe sha_ll be paid R". 10,ooo
a nuneration of So/o on the amounts
pa_rtners towards their contribution distributed to the
other loans. Assets reaJized are as
under:
1-I-2010
15-1-2010
r-2-20ro
r5-2-201o Bills ReceivabG
r-3-2010
1s-3-2010 Land and Buildings
8,00,000
Rajan Adhikari, FCA
Partnership Accounts {CAp _tl
 31
Prepare a statement showing
how money received on vaflous
assuming: dates will be distributed
actual e).penses of reatization
:iul :1.
rne lrrm is solvent. unted to Rs. 2O,OOS.
cJ The profrt sharing ratio
was as u

d) ThefrnarIGscffi March, 2orc.

56. Amar, Akbar and Antony are in pa Ans: Reatization Loss
D-L9,OSO y-lg,OSO
37, 2OlO on which the ership. The folowing is their
date tfrey Ai Ba]ance Sheet as at March
5:3:2; lved their partnership.
They profit in the ratio of
"ir"r"a

Plant atra ir4i"frirrerv

Loan A/c rrrra,
Capital A/cA;;,
1,00,000

Itwasagreedtofrffi ,n.
Viz. ApnI lS, 201OIRs. 60,000 O*atr. eaJized,
May 1,201ORs. I,46,OOO
May 31, 201ORs. gtl,OOO
Prepare a statement showing
how the dis bution should be made under
and writeup the cash accounl maximum loss method
"rrA O"r,.r.,
capital accounts.

57. Their Balance Sheet as at 31_3_97

is as llows

(Rs. 000)

A 200
B 100
c 100
tock 100
Current A""ourrtJ
p'40
and barrk 15O
820
Unsecured toans

Rajan Adhikari, FCA

Partnership Accounts (CAp _ll I
 32
On I-4-92 it agreed arnong the
partr :rs that BC (p) Ltd. A
having each taken up tOO shares new g formed company with
I Rs. 10 each rBandC
including goodr,vill but exclr
r
will take o uer the firm as a going
upon:
rding cas r and bank balances. I Concern
The following points are als
so agreed
i) Goodwill will be value dat3ye
rs purchase of super profi ls.
ii) The actural profit for tJ 1e purpo
e of goodwill va_luation will
iii) Normal riate of return will
be 1r o/o
be Rs. 1,OO,O0O.
on frxed capital
iv) All other assets and lir rbilities
v) r ill be taken over at book vi tlues.
The purc,hase conside ration
wi I be payable partly in sha :es
cash. payment in casl r being of Rs. 10 each and partly in
t meet the requirement to discharge 1
retire. A, who has agreed
a, to
vi) B and C are to acquire equal
in erest in the new company
vii) Expenses of liquidatior r Rs. 40,r
00
You are required to prr :pare
the :r.ecessary Ledger Accounts

58. P and Q are par.tners of p

& Co. Sha ing profit and losses in
partners of R & Co. sharing profits th e ratio of 3:1 md
e rd losses in the
e and
and R are
decide to amalgernate and fo ratio of i ):1. On 31st March 2OO9
rm a ne' 'firm M/s peR and Co. , vherein p, 2OO they
partners sharing profits and l e, and R would
wo; be
osses in he ratio of 3:2:1. The
above date are as follows: bale Lnce sheets of two firms
ms on the r

Liabilities I:dECO R&.arr Assets P&co.

Capitals: R&co.
Fixed Assetil-
P 2,4O,OOO
Building 50,000
O 1,60,000 60,000
2,oo,oo Plant & Machinery
R 1,50,000 1.60.000
1,o0,00 Office equipment 20,o00 6,000
Reserve 5U,000 1,50,00r \,urrent Assets:
Stock In Trade 7,2O,OOO 1,40,000
Sundry Debtors 1,60,000
Sundry 2,OO,O0o
1,20,000 1, 16,00( Bank Balance
Creditors 3O,bOO 90,000
Cash in Hand 20,ooo
DuetoP&Co 10,000
1,00,00c Due from R &, C-o
tlant< Uverdraft 1,o0,00o
i30,0o0
Total t5,5o,ooo o,66,OO(
The drtralga_Inated llrn took orr^r fL'o 1- 6,5O,OOO 6,66,O0O
ul Lrre rorlowtng terms:
aa) Building of p& co was valued
at Rs. 1 1,000
bb) Plant and Machinery of p
& Co wa valued at Rs. 2,SO,OOO and that
2,00,000. of R & Co a Rs.
c):) A11 stock in Tracite is to be appreciated by 2O%.
dl1) Goodwilt valued of p&Co
appear in the books of peR&Co."f n". r,Zf ,000 and R&Co at Rs. 60,000 but the same wi1 I not
:) Partners of new firm will bring
e)
the recessa_ry cash to pay other partners
capitals accordirrg to the profit sharint to adjust their
ratio.

Rajan Adhikari, FCA

Partnership Accounts (CAp _ll
 33

f) Provisions for doubtful debts has

be carried forward at Rs. 12,000
P&Co and Rs. 26,000 in respect in respect of debtors of
o debtors of R&Co.

You are required to prepare the

sheet of new firm and capital account
the books of old firrns. of the partners in

59. A ard B are parrtners of AB&Co

sh g profits and losses in the ratio
partners of CDgrCo sharing profits of 2:I and, C and D are
losses in the ratio of 3:2 on 1st
to amalgamate and from a new firm April 2011 they decided
would be partners sharing profits and /s AD&Co wherein all the partners
of the both the frrm
in the ratio of 2:I:3:2 respectively to A,B,C
and D.
lhir balance sheets on that date
as under:

Capitals:
A Building 75,000 90,000
1,50,000 Machinery
B 7,2O,OOO 1,00,000
1,00,000 Furniture
C 15,000 72,OOO
D Stock 24,OOO 36,000
Debtors 65,O00 7g,ooo

Cash at Bank

The amalgamated firrn took over the

bu ss on the following terms:
a) Building was ted<en over at Rs. 1.00 )00 and Rs. 1,25,000 of AB&co
And Machinery was taken over at and CD&Co respectively.
Rs. 1,25,000 and Rs. 1,1O,OOO of AB&Co and CD&Co
respectively.
b) Goodwill of AB{tCo was worth
Rs. 7 ,000 and that CD&Co was worth Rs. 5O,OOO.
account will not be opened in the Goodwill
ks of the new firm the adjustments
through capital accounts of the part being recorded
ers.
c) Provision for dcubtful dabts
tras to carried forward at Rs. 5,OOO in respect of
AB&Co and Rs. 8,OOO in respect of C debtors of

You are required to:

i) Compute the adjustment nece for goodwill
iil Pass the journal entries in the books
of AD&Co assuming that excess/deficit
capital(ta.king D,s Capital as e) with reference to share in profit are
to current account. to be transferred

60. Bharat and sudesh are partners of s :sh& co. sharing profits and losses
sudesh and tilak are partners of tilak&co in the ratio of 3:1
sharing profits and losses in the ratio of 2:I
On 31st October, Iggg, they deci t to amalgamate and form a new firm m/s BST&Co
wherein Bharat, sudesh and tilak ld be partners sharing profits and losses in the ratio
3:2:1 their balance sheets on that da of
were as under:

Rajan Adhikari, FCA

Partnership Accounts (CAp -il I
 34

Due to A&Co 4U,00o Cash in hand 10,000

lJue to 50,
5,000
sudesh&Co
JUO Cash at Bank 15,OO0 2Opoo
Others Credito:rJ 60,000
48, )00 Due from
Tilak&C0
Reserve 25,000 60, )00 Due from A&Co
Capitals: 30,000
Bharat 7,2O,OOO
Sudesh 80,000 Others Debtors 80,000
1,0( ,000 1,00,000
Tilak 50,( oo
Drock 60,000 70,ooo
tiurnlture 10,000 3,000
V AIIICICS
80,000
Machinery /5,000
ijuilding 25,000
3,25,OOO 3,OI ooo 3,25,OOO 3rog,ooo
rne amalgamateclfirm took over the
bu ;LTICSS O nrne lollowlng terms:
(a) Goodwill of sudesh&Co. was
worth Rs. 60,r lO0 and that of Tilak& Co.
account was not to be opened in Rs. 9O,OOO. Good
iood .will
th : books of the new firm
the adjustments being recor(
through capital accounts of the par , recorded
ners.
(b) Building machinery and vehicles
were tr :ken over at Rs. 5O,OOO. Rs
1,00, 00O resprectively. 9O,OOO and
nd Rs.
l

(c) Provision for doubtful debts has

tc be carr ied forwad at Rs. 4,OOO in respect
Sudesh& Co. and Rs. 5,OOO in resp, of debtors
:btors of
ct of de ctors of Tilak& Co.
You are required to :
(il Compute the adjustments ne for goodwill
(ii) Pass the journal entries in tL : books of BST & Co. assuming that
Capital as base ) with refere: excess /deficitt (T's
(l
ce to sl rare in profits are to be transferred
accountts. to curre
rrent

61. On 31st March 2O1O, Sri Ramesh ar qures (

)n payrnent of Rs. g0,0OO the business of
G upta
and Singh traking over at book val Le the M/ S
fc llowing assets and liabilities:
RS
Debtors 35,00 0
Furniture 3,000
Stock 46,OOt l
Creditors 10,o0(
There was no change between 1st Januarv.
2OIO a nd 31st March, 2O1O in the book
assets; arrd liabilities not taken over. value of th
The same
ame sets of books has been continued
r

after th e acquisition and no entries of the acquisition

have been;
)een passed excelrt for the payment
of I s. 80,0( )0 made by Sri Raman.
From the following
fr balrrnce sheet and trial b Llance p repareBusiness purchase Account. Profit and
Loss Accou
rccourrt for the year ended 31st Deceml er ,2OI 0 and Balance Sheet at that date

Rajan Adhikar
dhikari, FCA
Partnership Accounts (CAp -ll
 35

Balarrce eet as at December,2OOg

Furniture

Investments

On 31st December TZOIO the trial balance

Stock Furniture
investment
Insurance policv
Business Purchase Account

Capital:
Gupta
Singh
Raman

Debtors

3,20,000

4,OO,OOO
Closing Stock ns. SO,OOO-

5,13,OO0 5,13,00o

62. The following is the balance sheet of S. Anand and Bhupesh as on 31st March lggg.

Capital Account: d and building

Anand4O,000
Bhupesh50,0OO
vestment 6% debenture in X

Liabilities

1,30,OOO

Rajan Adhikari, FCA

Partnership Accounts (CAp -ll I
 36
Itwas agreed flhat Mr.Cheema
is to
April i999. He is required to contribu admitted for a fifth share in the future profits from 1st
cash towards goodwill and
The following further information Rs. 10,000 towards capital.
is mished
ared the profit in the ratio
3:2
of Rs. 500 p.m from the very inception
of the firm in
c) The future pr:ofit ratio between
d and Bhupesh, cheema will be
get any sala{f after the admission 3:1:1. Mr.Anand will not
f Mrs.Cheema.
d) The good will of the hrm
shall be 'mined on the basis
profrt from business of the of 2 years purchase of the
last 5 . The particulars of the profits average
*. under:
31-03-1995 ""
31-03-1996
37-O3-7997
31-03-1998
3i-03-1999
Profit and loss
1999 included abnormat"ft.. profriof
"h-*girg "rl of Mr.Anand.
SO.O and loss of the year 31_O3_ 1996
on 31_03_
by strike to the e::tent of Rs. was on account of loss
2O,OOO.
It was agreed that the va_lue of the
goodwill of the firm shall appear
e) The trading profit for the year ended in the books of the firm
31st March,2OOO was Rs. 4O,0OO
f) The partners harC drawn before depreciation.
R". t.OC p.m. as drawings.
"r"h
g) The value of the other assets and lia
ilities as on 31st March,2OOO were
Building(befortt"p.."i"tio") as under:

Liabilities
h) Provide aepreciation at 5% on land d building" on th@erest
on Anand Loan,, at 6zo
i) They applied for: conversion
of the fi into a private limited company. certificate
O1-O4-2OO. Th.:f decided to convert received on
pital A/c of the partners into share
of 3:1:1 on the basis of total capi capital in the ratio
as on 3i-03-2000. If necessary partners
subscribe to fresh capitat or withdrav have to
Prepare the profit and Loss Account
the year ended 31st March, 2OOO and the Balance
Sheet of the Connpany.
Assume investment was held since
0l 04-7994 and are non trade in nature.

63. Arun , Sntosh and prabin are in :ship sharing in the proportion of y2, f
respectively. They dlssolve the partnershi / 3, 1 /6
of the Ashadh 3I,2OTO, when the statement
Financial Position of the firm stood as of
un
Sitatement of Financia_l Position as
on Ashadh 3I,2OTO

flajan Adhikari, FCA

Partnership Accounts (CAp -lt i
 Sundry creditors 30,000
Bills payable 37,500
25,000 Sundry Debtors
Santosh's loarr 59,000
40,000 Stock
Capital 39,500
Investment
- Arun 90,000 42,OOO
- Santosh Machinery
49,000
- prabin 75,000 Freehold property
90,000
55,000

ThemachineryGis@
for Rs. 45,00
r:..1o1d properry toor. or,.,
,1?;i-39 To ny rhe remaining assets ;T;:5";"
fo-llows: Sundry Debtors R". iO,SOO
of 5%o. Bills payable is taken
abd S l:t;:
ck Rs. $,1t'ooo'
36,500. s were settled at discount
not shown in books iere also
over by-prabi for Rs.zs,ooo. amounting to Rs. S,OO0
to te paiO. e
reaJized Rs. 1 9,OOO. Realisatio., ^^*__-. not shown in the b";;;^;?;"J;;;
rrfi^^ computer,
office
."i.rr""" mounted to Rs.6,O0O.
Prepare reaJization &rocouht,
partners, capi account, and bank account.

ership sharing profits arrd loss

in the ratio of %, 7 /g
ces between the partners,
it was decided to dissoive
the Statement of Financial position
of the firm was as
Statement of Fin cial Position as on 31.O3.2O2O

Sundry creditors 567,OOO

Bank overdraft 450,300
606,450 P1ant and machinery
Joint life policy 607,500
265,500 Furniture
reserve 64,650
Loan form Mrs. Ram Stock 236,700
150,000 ndry debtors
Capital accounts: 534,000
Ram oint life policy 265,000
420,ooo
Shyam 140,550
225,OOO
Pitamber
120,000
2,353,950
2,353,950
The following details are relevant
for the di
a. Sundry debtors rnzere assigned
to firm, creditors in full satisfaction of their
b. Ram took over goodwill claims.
and plant and Lachinery for Rs.9O0, O0O. He
discharge bank overdraft urrJ to"r, also agreed to
his wife.
c. Furniture and Stock were divided equ
between Ram and Shyam at an
Rs. 360,000. agreed valuation of
d. Commission receivable was received in
e. A bill discounted was dishonored and t
ereafter it proved valueless, amounting
(including notice charge of Rs. to Rs. 30,750
5OO).
f. The joint policy was surrendered for Rs 232,5OO.

Rajan Adhikari, FCA

Partnership Accounts (CAp _ll I
 38
o
b.Ram pard Rs.1B,OOO towards
the e s of dissolution.
h. Pitamber agreed to receive
Rs.1SO, in full satisfaction of his rights,
the firm. titte and interest 1n
You are required to show
the accounts tion to closing of the books
on dissolution of the firm.
65. Akhilesh, Bhaskar and Chandra
32,2069, their Statement
r
their business on partnership
of finalciaj and on Ashadh
rtton was as follows:

Partner,s Capitaf el- 30,000

Akhilesh Fixed Assets:
25,000 Land and Building
Bhasker 10,o00
19,750 Plant and
Chandra 20,ooo
73,750 machinery
Sundry Creditors 3,750 33,750
77,250 Loose Tools
Akhilesh's Loan
15,000 Current Assets:
Inventory
25,OOO
Debtors
35,000
Cash at Bank
6,25O 66,25O

For the purpose of dissolution,

the followin valuations were
Particulars made:_
Amount
Goodwill
12,500
Land and Building
11,250
Inventory
22,500

Plant and Machinery as in the

Statement of nancial Position, subj ect to I O%o
Loose tools as in the Statement depreciation
of Financial rsition
Debtors as in the Statement of
Financial po n, subject to Rs. 2,TSO provision
and allowance of 5% forr discou"i. - for doubtful debts
The_liability of sundry creditors
is taf<en over r Bhaskar and Chandra subject
Rs.500 for discounts. Bhaskar to aliowance of
and Chandra to share profits
proporti_on as previous. Draw
up the Re aJizati nllt1". "ra t"res in tfr. same
Account and other necessary
P?"k: Akhitesh, Bhaskar.rri Cl-"rdra anr opening Statement of Financiuf accounts
of in the
Bhaskar and Chandra togethe. *iifr'tf,.i, pJiion of M/S
ing entries.
66. A, B and C are in partnership
for
ratio of 3:4:3. On gOrf,April, ZOiZit a nu: ber of years. profits and Losss were shared in the
was d :ided to dissolve the partnership.
Financial position of the frr* ," The Statement of
.iifrut
O : stood as below:
Statement f Financial position
As on tr Aprii, 2012

Rajan Adhikari, FCA

Partnership Accounts (CAp _il |
 39

Partner'scapitaa"--unG
A 78,OOO
30,000 Debtors
B 52,500
90,000 Stock
C 747,OOO
120,000 Cash
Trade creditors 37,500
75,000

Duringtrreaissoruu-on the
foilowing cash othertr"osacEonserosEl
2012
3 May- A agreed to settle
a hire purchase : outstanding on a motor
6,TSO and is to adjustedln car. The amount was Rs.
his car account.
_3 May- Debtors were assigned to C for
the sum of Rs.4S,OOO.
J May- C settled one creditors
for Rs. 3. by giving him one of the private
3 May- The fixed assets, apart paintings.
from the ca
auction for Rs, 1O2,OOO. This
car is
y*"l,lf 1?""T
be taken at
vatue of Rs.26,250, were sotd
at
in his capital aLccount. book varue un c.1"ji"""",#li.';"##made
1 June - Realisation expenses
of Rs. 5,250
10 June- Cash transfbrs
alnong partners v
16 June- The remaining
creditor. *.r.

1": May
2OI2, B and C formed a new par
9"
the Iirm, X and.r,
o_ther by merging with another firm.
and I 1^elshin
rses
The partners in
"h;"J;;;fi;s
Chaibe & Co. and witl t"k" ;;;A;"to"r.* equally. The new amalgamated
nrm _il il;;;;
All partners have agreed to the , both firms.
fofio*rrg u"l e for assets which will be
taken over:
dC Xandy
Stocks Rs.
93,000
-nurniture
.dotor vehicles 12,OOO

Goodwill 22,500
67, 500
would be shared:

Capital is to be contributed in the

same prop ns after allowing Rs.
Goodwill is not to appear in any 3O,OOO for working capital.
..i of Uooks.
You are required to:
a. Show the accounts closing the books
the A, B and C partnershio.
b. Prepare a Statement of Finarrcial posi n for Chalibe & Co. as at i trrtav
2OI2.
67. Sansad, Sarkar and Sambidhan
were ers, sharing profits and Losses in
5:3:2 respectively. O:: 31.t Ashadh, the ratio of
2069 Statement of Financial position stood
as follows:
Sansad's capitai-
t and machinery 13,62,OOO

Rajan Adhikari, FCA

Partnership Accounts (CAp _ll I
 40
Darkar,s capital
7,O7,BOO F\rrniture
Sambidhan,s capitzrJ 2,36,OOO-
6,96,2OO Stock "rr@g"
Creditors 7,O2,OOO
4,g7,ooo Debtors
1,91,000
Cash at Bank
r otal
26,64,OO0 1,73,000 l

26,64,OOO
On 31"t poush, 2069, Sansad
died. Accorc lng to partnership
capital account of the deceased deed,
prr,.r., * Ls to be credited with: on the leath of a part ners, the
i. His share of profrt for a revelant pat
earned during the immediately
t of the year of death calculated
on the basis o f profit
-_ prec :ding accounting year, and
ii. His share of goodwill
Goodwill was to tre valued
at two years, purchase of the
three accounting years. The average prolits f immediately
profiis,"" rer books of account ,
preceding
For accounting year ended 1
wire as foll \MS:
31"t Ashadh 2067
For accounting year ended 3,2g,ooo
31"t Ashadh 2068
For accountingyear ended 3,46,Ooo
3l"t Ashadh, 2069
However, while going through 3,78,000
the books
3 0, 0 O0 worth oi-ro"""-,-:;,::'^::'.' it came to tigh
-J11i;y#;::.ff tight that Rs.
c apit arize d ;i ; tt
;
x,'l the saine was not
: w€
provided on the machiner], )epreciation
6 26"1,"p., u Inum. l w
was
O1r 1"t Chaitra, 2Ot59 Sarrsaj,s
son Saha nati was admitted
effect on the following t.;;; into partnersJ rip with immer
mediate
(a) Sahamati woull get
one_fourth share in the profit
ratio between Sarkar anA S"mlidhan of the firm, while tt .e relative
vould remain unchanged. rrofit sharing
profi
(b) The final balance of
SansaA;s-"apitaf :ccount
account. would be credited to Sal tamati's
rpital
capitr
(") adjustment,would be made in
1"
basis of valuatic,n of firm,s gooa*iif
the :apital Accounts for Sahamati,s
share ofgoodr
rodwill. The
deafh f^+r,^-
hio fattL.,
h of his o-v$"r'
o---' *, uld be
vvYqrLr us the same as was aclonfed
Lrte sarrle adopted at the time of the
On 31"t Ashadh, 207
garned a profit of Rs and Loss of the firm showed
that the firm had
Sarkar and Sambid re r
totaled Rs. 3o,ooo. , t,oo iie
respective e cl
"upit"_l
,,,
You are required to:
(t Prepare a Staterrre
Poush, 2ozo; an<1 rf profits for the accountin gyear
ended 31"t
(ii) Pass Journal entu:i
admission into partr ating-to de,ath of the partner.
Sahamati,s
:he year relating to transfer
and distribution of p
"i
or.*"g" i""orrr,"
68.'Unicorn,and,pults
g,t ?rofits and Losses in the ratio
to change *".. of 3:1 was agreed

;mti::t*_""1:*
R..
:::t;iq:Ji*:#ilJ:,lTrT;","?i:,H",.
of three years'profits. ftre proii"?th;;revious
three 3J..
v.*"-L"ling
2066-67-Rs. 15O,OO0;

Rajan Adhikari, FCA

Partnership Accounts (CAp -il L
 41_

2067 -68-Rs. 2O0,OOO

and
2068-69-Rs. 250,OOO
Pass the necessitn
entry to gi e effect to the
of the partners. -'3ournal above arrangement in
the capital accounts

69. A, B and C were partners

of a firm haring profits
Balance Sheet of the firm, and losses in the ratio of
as at 31st M 2O7O was as under:
3 :4 :3. The
Liabilities ,
Rs. Assets
Capital Accounts: Rs.
Fixed Assets
A .+9,000 1,00,000
Current Assets:
B 64,000
-Stock
c 49,000 1,60,000
30,000
Reserve -Debtors 60,000
20,ooo -Cash and Bank 30,0oo
--Creditors 7,2O,OOO
4O,O0o
2r2OrOOO
a joint tife potiry for 2,2O,OOO
1T^T:lljjar<-en
or Pront o' Lo r.-F;il;til;
Rs t* eri o di c a]ly p ar d was ch
:::::*T:i,partners and "
ljll j:*..*
z 1,3&fl arge d to
surviving ur9Ll
the 1"gJ;;;;.senta
I
"l[fl:-*t^o
ves ofC that:
er, 20 r d. ra ;;_
;;"ffi #:.Til:
Goodwilt of the firm wil l"
lt], uat, at Rs. 60,000.
fll,
(iii) ,ti1:o
In
Asset,s wil te
fieu of profits, c
*ri; ffi"; Rs. 20,000.
March, 2OIO. "rr""iJll "r, at the rate of 2S%o per annum
on his capita_l as on 3lst

I%:3#Jd#HfiX'l#.,ffi"ffi ;ffi S,.;;:

as under:

-On the basis of the above figures, please in the entitlement of the iegal heirs
March, 2OIL of C as on 31st

70. F, G and K were partners

sharing prr and losses at the 2:2:I. K wants
2014. Given below the l3alance to retire on 3I_I2_
Sheet oi,fr. :tnership as well as other information:
Balance as on 3l-12-20l+
Liabilities Rs. Ass Rs.
Capital A/cs:
Fixed Assets 1,50,000
F 7,2O,OOO Inven 50,000
G 80,000 Trade Receivables 70,000
K 60,000 Bank 50,000
Reserve 10,000
Trade Payables 50,000
3,2O,OOO
G 3,2O,OOO
.F-a agree to share profits and losses at th ratio of 3:2 in
be Rs, 50,000. Sundry f,:ixed future. Value of goodwill is taken to
n.-."t. ,r. revalu I upward by Rs. 30,OOO
10,000. Trade receivable. *.r. ana irrJ.ntory Uy n".
u"frled at Rs. 6 ,000 on 3I.I2.2OI4.
Rajan Adhikari, FCA
F and C
"gr..
t bring
Partnership Accounts (CAp -ll
 su ent cash to disch claim of K rake their
matn in Rs. 75,000 onate' Also they wanted
in for capital. H to
books of not want to show goodwill
necessarv rl entries
at entries -*rs urc'L ure ualanc"
G.
sh;#ilt/iTil:j
7t. A,BandCwere
following is their
psh
sheet as 3/ LO and r/2.

Capi A/cs: Rs.

1,000
t qnd machinery 5,000
4 debtors 20,000
3
A Trade
1: 000
ances to A 2,OOO
Loan to date 8,000
c 2,
Loan bank on book
debts Plant etc.
ooo
36,OOO
assets reaiized
,000. A's pri
of Rs. 3,OOO. The z,ooo has a liabirity
of 0;5 Paisa in a
vate estate Xl;n*t:-'*::* 1.R1r,."ir.;ffi;Jl
B is insotv""t.
is recei 5:;1:999.
assuming that tries relating di olu ti on are
gs
p as s ed tr, ro u grrleJi^ri""'l'"'":ffiJ
Ans: Req.llzafionfrom C- ggg.gg

Rajan Adhika i, FcA

Partnership Accounts (CAp -tl