CH- 1 ACCOUNTING FOR PARTNERSHIP FIRMS

Transcription

1 CH 1 ACCOUNTING FOR PARTNERSHIP FIRMS FILL IN THE BLANKS (Reverse Questions) 1. X, Y and Z were partners in a firm. Their capitals on were X Y, and Z The partnership deed provided for the following: i) They will share profits in the ratio of 2:3:3. ii) X will be allowed a salary of? p.a. iii) Interest on capital will be 12% p.a. During the year X withdraw 2; Y 30,000 and Z 1. For the year ended The firm earned a profit of 5,00,000. Prepare profit and loss appropriation account and partner s capital account. PROFIT AND LOSS APPROPRIATION A/C To interest in Capital X 24,000 Y 30,000 Z 36,000 To Salary to X To Profit Transferred X= 99,500 Y=? Z=? 90,000? By profit and loss A/c 5,00,000? 5,00,000 5,00,000 PARTNER S CAPITA ACCOUNTS X Y Z X Y Z To Bank (Drawing) To Balance c/d 2 30,000 1 By Balance b/d By Interest on Capital By Salary (X) By P./L Appropriation A/c? 24,000 99,500 30,000 36,000 3,35,500 3,35, Suresh and Naresh were partners with capitals of and respectively. Interest on capital was 6% p.a. Naresh is to be allowed annual salary of. During the year , the profits prior to the calculation of interest on capital but after charging Naresh s salary was 18,750. A provision of 5% of the profit is to be made in respect of commission to their manager. You are required to prepare profit and loss appropriation account and partner s capital account for the year ending 31 st March, PROFIT AND LOSS A/C To Manager s Commission (5% on ) 1,125 By Profit for the year (before Naresh s Salary) 18,750

2 To Net Profit transferred to Profit and Loss Appropriation A/c PROFIT AND LOSS APPROPRIATION A/C For the year ended 31 st March, 2007 To Naresh s Salary To Interest on Capital Suresh 4,500 Naresh 2,700 To Profit Transferred to Capital A/c Suresh Naresh 7,200 By Profit and Loss Account To Balance c/d PARTNERS CAPITAL ACCOUNT Suresh Naresh Suresh Naresh 84, , By Balance b/d By Salary By Interest on Capital 4,500 2, By Profit and Loss (Salary of Profit) 84, , , , A, B and C are partners in the ratio of 5:3:2. According to the agreement C was given a guarantee of minimum amount of 30,000 as his share of profit every year. The profit for the year 2002 was Divide the profit among A, B and C by preparing profit and loss appropriation account. PROFIT AND LOSS APPROPRIATION A/C To Profit transferred to Capital Accounts By Net Profit A = Given to C B =36,000 Given to C C = +From A +From B 30,000 1,20,000

3 4. A and B are partners in a firm sharing profits in the ratio of 2:1. On they decide to admit C for Share in profits with a guaranteed amount of 25,000 per annum. A undertook to meet the liability arising out of the guaranteed amount to C. The firm earned a profit of for the year ended March 31, Prepare profit and loss appropriation Account Profit & Loss Appropriation Account For the year Ending 31 st March, 2003 To A s Capital A/c =40,000 Less: Given to C To B s Capital A/c = To C s Capital A/c = Add: Form A By Profit and loss A/c (Profits for the year) 15,000 75,000 75, Manshi and Divyansh are partners in a firm. Manshi was to get a commission of 10% in, the net profit before charging any commission. However, Divyansh was to get a commission of 10% on the net profit after charging all commissions. Fill in the missing figures in the following profit and loss Appropriation account for the year ended 31 st March, Profit & Loss Appropriation Account For the year ended 31 st March, 2014 To Manish s Commission (. 10/100) To Divyansh s Commission To Profit transferred to Capital A/cs: Manish Divyansh 11,000 By profit & loss A/c

4 CH 2: Reconstitution of Partnership 1. Punam & Sonam were partners in a firm sharing profits in the ratio of?:?. their balancesheet on 31 st March, 2007 was as follows: Creditors General Reserve Bills Payable Capital A/cs Punam 40,000 Sonam 35,000 Balance Sheet 30, ,000 Cash Stock Debtors 4 Provision 4,800 Patents Building 27,000 30,000 43,200 7,400 20,400 75,000 1,2 1,2 Manu is admitted into the partnership giving him 1/5 th share in the profits. Manu is to bring in 30,000 as her capital and her share of goodwill in cash subject to the following terms: (I) Goodwill of the firm to be valued at 50,000 (II) Stock to be reduced by? Percent and the provision for bad debts be reduced by 50% (III) Patents to be valueless. (IV) There was a claim against the firm for damages amounting to 2,000. The claim has now been accepted Prepare the revaluation account, the partners capital accounts and the balance sheet of the new firm: REVALUATION ACCOUNT Cr. To Stock A/c To patents A/c To Claim for Damages A/c By Provision for Bad debts A/c By Loss Transferred to Old Partners 2,000 Punam Sonam Capital Accounts Cr. To Revaluation A/c (Loss) To Balance c/d Punam Sonam 6,000 4,000 Monu By Balance b/d By General Reserve By Cash By Premium A/c Punam 40,000 10,800 Sonam 35,000 7,200 Monu 56,800 46,200 30,000 56,800 46,200 30,000

5 Balance Sheet (After Admission) Bills Payable Creditors Claim for Damages Capital A/c Punam Sonam Manu 5,000 30,000 Cash 27,000 + Stock 30,000 Debtors 4 Provision Building 20,400 1,60,000 1,60, Aman & Shubham were partners whit capital of 4,00,000 & 6,00,000 respectively. Their profit sharing ratio was 4:3. Vimal was admitted. The new ratio was decided as 3:2:2 respectively. Vimal brings As his share of premium. Pass necessary journal entries if capital accounts of the partners are fixed. Also find out the sacrifice ratio. Solution: Journal Date L.F Amt () Cr. Amt () Cash/Bank A/c To Premium A/c (being premium brought by Vimal) Premium A/c To Aman s A/c To Shubham A/c (Being amount of premium credited to old partners Account in ratio) 60, Ram & Shyam were partners in the ratio of 3:2. Mohan was admitted as a new partner and it was decided that they will share future profits & losses in :. Mohan bring 75,000 as this capital and goodwill of the firm at the time of admission was 90,000. Pass necessary journal entries and also find out the sacrificing ratio: (A) When goodwill appears in the books 75,000 Journal Date L.F Amt () Cr. Amt () (1) Ram s Capital A/c Shyam s Capital A/c To Goodwill A/c 75,000 (Being already appeared goodwill written off among old partners in old ratio) (2) Cash/Bank A/c To Mohan s Capital A/c (Being of capital brought in by Mohan)

6 (3) Mohan s Current A/c To Ram s Capital A/c To Shyam Capital A/c (Being premium among Credited to old partners in sacrifice ratio) 30,000 24,000 6, L & M Share profit of a business in the ratio of :. they admit N into the firm for a fourth in the profit in the profits to be contributed equally by L & m. on the date of admission, the balance sheet L & M was as follows. Balance Sheet As at L s Capital M s Capital Reserve fund Bank Loan Creditors Terms of N s admission were as follows: 30,000 Machinery 26,000 20,000 Furniture 1 Stock 10,000 12,000 Debtors 2,000 Cash 6, (I) N will bring 25,000 as his capital (II) Goodwill of the firm is to be valued at 4years purchase of the average super profits of the last three years. Average profits of the last three years are 20,000; while the normal profits that can be earned on the capital employed are 12,000. (III) Furniture is to be revalued at 24,000. (IV) Calculate new profit sharing ratio. Prepare Revaluation Account, Partners Capital Accounts and Balance sheet of the firm after admission of N. DR. Revaluation Accounts Cr. To Stock A/c To Partner s Capital A/c L M By Partner s Capital Accounts L M N L M To Balance c/d By balance b/d 30,000 20,000 By Reserve fund By Revaluation A/c 2,500 1,500 By Cash A/c By (premium) 4,000 4,000 N 25,000

7 Balance Sheet As at Capital L M N Bank Loan Creditors 12,000 2,000 Machinery Furniture Stock Debtors Cash 26, On 31 st December, 2004 the balance sheet of A & B, who are partners ina firm sharing profits in the ratio 3:2 was as follows: Capital A 10,000 B General Reserve Workmen s Compensation Fund Creditors Balance Sheet 1 15,000 Plant & Machinery Land & Buildings Debtors 12,000 Provision 1,000 Stock Cash 10,000 11,000 12,000 9,000 5,000 12,000 50,000 50,000 They admitted C into partnership on the following terms. (I) Provision for doubtful debts would be increased by.. (II) The Liability against workmen s compensation fund is determined at 2,000. (III) C brought in as his share of goodwill 10,000 in cash. (IV) C would bring future cash as would make his capital equal to 20% of the total capital of the new firm, after the above revaluation account and adjustment are carried out. Prepare revaluation account, partner s capital account and the balance sheet of the firm after C s admission DR. Revaluation Account Cr. To Provision for Doubtful Debts To Profit A s Capital A/c 7,200 B s Capital A/c 4,800 By By 12,000

8 Partners Capital Accounts Cr. A B C A B C To balance c/d By balance b/d By Revaluation A/c By By By Premium A/c 10,000 7,200 6,000 4,800 4,000 To Balance c/d By Balance B/d By Cash Balance Sheet (After Admission) Creditors Workmen s Claim Capitals A 34,000 B 24,000 C 12,000 10,000 1 Plant Land & Building Debtors 12,000 Provision 3,000 9,000 Stock Cash 16,000 (9, ,000 + ) 6. Beena & Sudha were partners in the ratio of : their balance sheet as at 31 st December 2002, was as under: Salary outstanding Sundry Creditors Capital Accounts Beena Sudha Balance Sheet 6,000 43,200 Cash Sundry Debtors 28,800 Provision 960 Stock Plant & Machinery Goodwill 9,360 27,840 6,000 96,000 9,600 Anita was admitted into partnership & the following terms were agreed: (1) % depreciation was charges on plant & machinery (2) New profit sharing will be 5:3:2 (3) 5% provision was made on debtors (4) Goodwill of the firm is valued at 24,000. (5) Anita will bring 24,000 as her share of capital and capitals of Beena & Sudha would be adjusted on the basis of her capital. Actual cash to be brought in or withdrawn by old partners, as the case may be.

9 You are required to prepare revaluation account, capital account of the partners and balance sheet of the new firm. Revaluation Account Cr. To plant & machinery A/c To provision for doubtful debts 480 By loss Beena= = Sudha= = Partners Capital Accounts Cr. To Profit and loss A/c To Revaluation To Goodwill To Beena s Capital To balance c/d Beena 14,760 Sudha 4,920 Anita 24,000 By Balance b/d By Anita s Current A/c By Sudha s Capital A/c By Cash Been 81,600 Sudha 37,200 Anita 24,000 24,000 24,000 To balance c/d 24,000 By Balance b/d By Cash A/c 24,000 24,000 24,000 Balance Sheet (After Admission) Salary outstanding Sundry Creditors Capital Accounts: Beena Sudha Anita 24,000 43,200 Cash (9, ) Sundry Debtors 28,800 Provision Stock Plant & Machinery 96,000 19,200 Anita Current A/c 6,000 76,800 1,69,200 1,69,200

10 CH: 3. Change in the profit sharing Ratio Among Existing Partners 1. A, B & C were partners in the ratio of 3:2:1. Their balance sheet as at 31 st December 2006 was as follows Creditors General Reserve Capital A B C Balance Sheet 80,000 Bank Bills Receivable Debtors Stock Furniture Machinery Goodwill 80,000 10,000 30,000 1,00,000 40,000 60,000 On 1 st January 2007 the partners decided to share their profits equally. Following other terms were decided. (1) Firm s goodwill is valued at 60,000. Revaluation Account To To Profit A: =6,000 B: =4,000 C: =2,000 By Machinery 12,000 20,000 Partners Capital Account To goodwill To A s capital To balance c/d A B C 5,000 By balance b/d By general reserve By C s Capital By Revaluation A 1,00,000 6,000 B 60,000 4,000 C 50,000 2,000 1,46,000 84,000 62,000 1,46,000 84,000 62,000 Creditors Capital: A B Balance Sheet (As at 1 st January, 2007) 80,000 Bank Bills Receivable Debtors Stock 30,000 92,000

11 C Furniture Machinery 40,000 80,000 3,32,000 3,32,000 CH: 4 1. A, B & C were partners in the ratio of 2:3:4. Retires and at the time of his retirement goodwill was valued at 36,000. Pass necessary journal entries for the treatment of goodwill Journal Date L.F Amt () Cr. Amt ()..Capital A/c..Capital A/c To.Capital A/c (Being retiring partner s share of goodwill is adjusted remaining partners in their gaining ratio i.e..:..) 2. A, B & C were partners in the ratio of? :? :?. goodwill exists in the books at a value of 28,800. B retires and on the Date of retirement goodwill of the firm was valued at 72,000. New ratio of A & C is 3:2. Pass the necessary journal entries for the adjustment of goodwill. Journal Date L.F Amt () Cr. Amt () A s Capital A/c B s Capital A/c C s Capital A/c To goodwill A/c (Being existing goodwill written off in old partners in old ratio) A s capital A/c C s Capital A/c To B s Capital A/c (Being goodwill is adjusted at the time of retirement of B in Gaining ratio i.e. : ) 14,400 9,600 4,800 28, P, Q & r were partners in the ratio of 2:3:5. Goodwill exists in the balance sheet 1,80,000. P retires and onn the date of retirement goodwill of the firm is valued at 1,35,000. Future ratio of Q & R will be :. calculate new profit sharing ratio. Pass necessary journal entries for the adjustment of goodwill

12 Journal Date L.F Amt () Cr. Amt () P s capital A/c Q s capital A/c R s Capital A/c To goodwill A/c (Being existing goodwill written of in all the partners in old ratio) Q s capital A/c 27,000 To P s capital A/c 27,000 (Being adjustment of goodwill at the time of retirement in gaining ratio i.e.?:?) 4. X,Y & Z were partners in the ratio of 3:2:1 and Equal capitals Balance Sheet As at Sundry Creditors Reserve for contingency Capital Accounts: X Y Z 20,160 9,600 Cash at Bank Sundry Debtors Plant & machinery Land & Building 14,400 20,800 22,400 On the above date, Z retires and amount due to him was paid in cash. Other terms were agreed as follows: (1) Create a provision of % on sundry debtors for doubtful debts (2) Depreciation plant & machinery was 1,520 (3) Land & building was revalued at 24,160. To Provision for Doubtful debts To plant & machinery Revaluation Accounts By land & Building By Loss X Y Z Partners Capital Accounts To Revaluation To Bank To balance c/d X Y Z X Y Z 80 By BY reserve for contingency

13 Sundry Creditors Capital: X Y Complete above Account and balance sheet Balance Sheet (After retirement of Z) of X & Y 20,160 Cash at bank (20,160 ) Sundry Debtors 14,400 Provisions 13,680 Plant and machinery Land & Building 5. P,Q & R were partners in the ratio of 5:3:2. Their balance sheet was as follows: Balance sheet Capitals: P Q R Reserve Fund 2,16,0000 Buildings Land Plant & Machinery Furniture Stock Sundry Debtors Cash in hand 4,56,000 4,80,000 5,5 92,400 2,22,000 2,06,400 Q retires on the above. Following terms were agreed: (1) Furniture were valued at 96,000 (2) 12,000 was made provision for doubtful debts (3) Goodwill of the firm is valued at 2,40,000 (4) Q was paid immediately and the balance was transferred to his loan & account (5) Future profits sharing ratio was decided as 3:2. To Stock To provision for Doubtful Debts Revaluation Account By Furniture By Loss: P Q R 3,600 27,600

14 To Revaluation To Q s Capital To goodwill To Cash To Q s Loan To Balance c/d P Partners Capital Accounts R Q BY Balance b/d By Reserve fund By P s Capital By R s Capital P 8,64,000 Q 4,9 R 4,14,000 5,79,600 9,36,000 4,04,400 9,72,000 6,34,800 4,57,200 9,72,000 6,34,800 4,57,200 43,200 Capitals: P 9,36,000 R 4,04,400 Q s Loan Sundry Creditors Balance Sheet (After retirement of Q) 13,40,400 5,79,600 1,6 Building Land Plant & Machinery Furniture Stock Sundry Debtors 2,06,400 Provision Cash (1,45,200 ) 4,56,000 4,80,000 5,5 96,000 2,06,400 20,8 6. Aman, Bimal & Chaman were partners in the ratio of 3:2:1. On 31 st December 2004 their balance sheet was as under: Balance sheet Provision for Doubt full Debts Sundry Creditors Bills payable Capitals: Aman 78,750 Bimal 70,000 Chaman 61,250 1,300 10,000 5,000 Cash at Bank Debtors Plant & Machinery Land 7 Buildings 10,000 16,000 80,300 1,20,000 2,10,000 2,26,300 2,26,300 Chaman Retires on the Above date and the new profits sharing of Aman & Bimal is decided as :. other terms were agreed as follows: (1) Goodwill of the firm was valued at 36,000 (2) Aman & Bimal have decided to adjust their capital in their new profit sharing ratio after the retirement of Chama. Excess of deficiency will be withdrawal or brought in cash as the case may be. (3) Chaman s account will be transferred to his loan account. (4) Calculate new profit sharing ratio & Complete of following

15 Revaluation Account To By By By Loss: Aman Bimal Chaman To Chaman s capital (Goodwill) To Revaluation To balance c/d To Chaman s Loan To Bank To balance c/d Aman 2,000 73,900 Partners capital Accounts Chaman Bimal 4,000 64,100 66,300 By Balance b/d By Aman s Capital By Bimal s Capital Aman 78,750 Bimal 70,000 Chaman 61,250 2,000 4,000 78,750 70,000 67,250 78,750 70,000 67,250 66,300 By Balance b/d 73,900 64,100 66,300 By Bank A/c 66,300 66,300 Sundry Creditors Bills Payable Chaman s Loan Capitals: Aman Bimal New Balance Sheet (After Retirement of Chaman) 10,000 5,000 66,300 Cash at bank (10,000 + ) Debtors Prepaid Insurance Plant & Machinery Land & building 16,000 5,000 1,0 7. Joyti, Ruchi & Yogesh wee partners sharing profits & Losses in proportion to their capital. Their balance sheet as at 31 st March, 2007 was as follows: Balance Sheet Sundry Creditors Outstanding Expenses Capital Accounts Joyti Ruchi Yogesh 21, Buildings Machinery Debtors Provision Bank Cash 4

16 Ruchi decided to retire due to old age. They agreed to the following adjustments in the books of accounts to decide Ruichi s Share: (1) Building to be appreciated to 120% (2) The provision for bad and doubtful debts to be increased to 1,000 on debtors (3) Machinery to be depreciated by 20% (4) Goodwill of the entire frim to be valued at 72,000. Ruchi s share to be adjusted in the accounts of Joyti & Yogesh. (5) Joyti & Yogesh also decide that the capital of the firm after Ruchi s retirement be 1,80,000 in their profit sharing Ratio, i.e., actual cash to be brought in or paid to a partner as the case may be complete the following.. Revaluation Account Cr. To provision for Doubtful debts (1, ) To 600 By Building By To Profit Joyti s Capital 5,689 Ruchi s Capital 4,267 Yogesh s Capital 2,844 12,800 23,000 23,000 To Ruchi s Capital To bank To Balance c/d Joyti Partners Capital Accounts Yogesh Ruchi By Balance b/d By Revaluation By Joyti s Capital (goodwill) By Yogesh s Capital (Goodwill) Joyti 80,000 5,689 Ruchi 60,000 4,267 Yogesh 40,000 2,844 85,689 88,267 42,844 85,689 88,267 42,844 To Balance c/d By Balance c/d To Bank (Balance Fig.) Bank Account Cr. To Balance b/d To Cash By Ruchi s Capital By Balance c/d 3,200 To Jyoti s Capital To Yogesh s Capital 91,467 91,467

17 Capital Accounts Joyti Yogesh Sundry Creditors Outstanding Expenses Balance Sheet of Joyti & Yogesh (After Retirement of Ruchi) 21, Building ( + ) Machinery (4 9,600) Prepaid Insurance Debtors 3 Provision 1,000 Bank 1,20,000 38,400 3,000 37,000 2,01,600 2,01, Sita, Geeta & Meeta were partners in the Ratio of 4:3:2. Balance Sheet as at 31 st December 2004 Outstanding Expenses 1,200 Goodwill Creditors 3,600 Land & Building Reserve Fund Sundry Debtors Capital Cash at Bank Sita 12,000 Geeta 10,800 Meeta 8,400 4,320 16,800 12,000 13,680 31,200 46,800 46,800 Geeta died on 14 th March, According to an agreement the deceased partner will be entitled to get. (1) Interest in p.a (2) Goodwill of the firm was valued at 25,920. (3) Her share to profit on the basis of average profit of the three completed years before death. Profits for the pas years 2001,2002,2003 & 2004 were 9,600, 11,520, 15,360 & 12,000 respectively. Geeta s Capital Account To goodwill (Existing goodwill written off) To Balance Transferred to Geeta s Executor s Account By By Reserve Fund By By Sita s Capital (Goodwill) By Meeta s Capital (Goodwill) By Profits & Loss Suspense Account 108 To Bank Account To Loan Account Geeta s Executer s Account By Geeta s Capital Account

18 CH: 5 1. Following is the Balance Sheet of A & B as on 31 December, Creditors A s Loan A s Wife Loan Capital Accounts A 36,000 B 72,000 Balance Sheet 20,000 12,000 Goodwill Machinery Stock Debtors Cash in Hand Cash at Bank 21,600 72,000 54,000 20,000 1,0 On the above date partners decided to dissolve the firm. 1,800 was considered as baddebts. Stock was sold at 10% less than its book value & machinery realized 1,0. Creditors were paid off at discount of 720. Expenses of Realisation were of 1,800. Realisation Account Cr. To To Machinery To Stock To Debtors To bank (Realisation Expenses) To Bank (Expenses liabilities paid) (Creditors + A s wife s Loan) (19, ,000) To Profit Transferred to Partner s Capital Account A B 21,600 72,000 54,000 20,000 59,280 By Creditors By A a wife s Loan By Bank ( Realized) i.e. Debtors + Stock + Machinery) ( ,000 2,34,800 2,34,800 A s Loan Account Cr. To Bank A/c 12,000 By Balance b/d 12,000 12,000 12,000 Capital Accounts A B A B To Bank By Balance b/d 36,000 72,000 (Final Payment) By Realisation Profit

19 Bank Account Cr. To Balance b/d To Cash () (Deposited in Bank) To Realisation ( Realized) 3,600 Complete above Account and Balance Sheet 8,800 By Realisation (Exp.) BY Realisation (payment of ) By By A s Capital BY B s Capital 1,800 59, Sanjay & Summer were partners in a firm sharing profits in the ratio of 2:3. On their Balance Sheet was as follows: Capital: Sanjay Sameer 3,00,000 Creditors Workmen Compensation Fund Balance Sheet of Sanhay & Sameer AS at ,00,000 Land & Building Stock Debtors Bank 3,00,000 1,00,000 1,50,000 1,55,000 7,05,000 7,05,000 The frim was dissolved on and the assets and liabilities were settled as follows: (I) Sanjay greed to take over land & building at by paying cash (II) Stock was sold for 90,000; (III) Creditors accepted Debtors in full settlement of their claim. Realisation Account To land & Building To Stock To Debtors 3,00,000 1,00,000 1,50,000 By Creditors BY Bank (Land & Building) By Bank A/c (Stock) BY Loss Transferred to: Sanjay s Capital A/c Sameer s Capital A/c Partners Capital Accounts To Realisation A/c (Loss) To Bank A/c (Final Payment) Sanjay Sameer Sanjay Sameer By Balance b/d 2,00,000 3,00,000 2,000 3,000 By 40,000 60,000 2,40,000 3,60,000 2,40,000 3,60,000

20 3. X,Y & Z carrying on business as a partnership firm, decided to dissolve the firm on , when their Balancesheet was as follows: Balance Sheet as on Creditors Capital X 1,20,000 Y 90,000 Z 60,000 2,70,000 Cash Debtors Stock Tools Car 62,000 37,000 12,000 Machinery 60,000 Buildings 1,00,000 3,04,000 3,04,000 The partnership deed provided that profits will be divided in the ratio of 3:2:1 respectively among X,Y & Z assets realized as under : Stock 40,000; Tools 5,000; Machinery 7; Building 84,000; Car 25,000; Goodwill 60,000; Debtors realized 59,000. Creditors were settled at a discount of 720. there was an unrecorded asset valued at 3,000, which was handed over to X for 2,000. Realisation Account Cr. To Debtors To Stock To Tools To Car To Machinery To Building To Cash (Payment to Creditors) To Profit X s Capital 37,360 Y s Capital 24,907 X s Capital 12,453 62,000 37,000 12,000 60,000 1,00,000 By Creditors By Cash ( Realized) Stock 40,000 Machinery 7 Debtors 59,000 Tools 5,000 Building 84,000 By 2,000 74,720 (Unrecorded taken) 3,87,000 3,87,000 Capital Account of Partners To (Unrecorded) taken To Cash A/c (Final Payment) X 1,55,360 Y 1,14,907 Z 72,453 By Balance b/d BY X 1,20,000 37,360 Y 90,000 24,907 Z 60,000 12,453 1,57,360 1,14,907 72,453 1,57,360 1,14,907 72,453

21 Cash Account TO Balance b/d To Realisation ( Realized) By Realisation (Payment to creditors) By X s Capital By Y s Capital By Z s Capital 33,280 1,55,360 1,14,907 27, Following is the Balance Sheet of X & Y, who share profits & losses in the ratio of 4:1, as at 31 st March, 2009: Balance Sheet of X & Y As on Sundry Creditors Bank Overdraft X s Brother s 8,00 Bank Debtors 17,000 Less: Provision 2,000 20,000 15,000 Y s Loan Investment Fluctuation fund Capital: X Y 3,000 Stock Investment Buildings Goodwill Profit and loss A/c 15,000 25,000 25,000 10,000 50,000 40,000 1,20,000 1,20,000 The firm was dissolved on the above date the following arrangements were decided upon: (i) X agreed to pay his brother s loan (ii) Debtors of 5,000 proved bad. (iii) Other assets realist investment 20% less; & goodwill at (iv) One of the creditors of 5,000 was paid on 3,000. (v) Building were auctioned for 30,000 and the auctioneer s commissions amounted to 1,000. (vi) Y took over part of stock at 4,000 (being 20% less than the book value). Balance stock realized 50% (vii) Realisation expenses amounted to 2,000. Realisation Account To debtors To Stock To Investment To Buildings To Goodwill To (X s Brothers Loan) To bank (Creditors Paid) 17,000 15,000 25,000 25,000 10,000 By Provision for Doubtful Debts By Sundry Creditors By X s Brothers Loan By investment Fluctuation fund By Bank: Debtors 17,000 5,000 Investment 20,000 2,000

22 To bank (Expenses) 2,000 Goodwill Building Stock* 5,000 By Y s Capital : (Stock) By Capital Accounts: (Loss Transferred) X s Capital A/c 7,200 Y s Capital A/c 1,800 72,000 4,000 9,000 1,0 1,0 Partner s Capital Accounts To Profit & Loss A/c To Realisation A/c (Stock Taken) To Realisation A/c (loss) To Bank A/c (Final Payment) X 7,200 Y 4,000 1,800 By Balance b/d By Realisation A/c (Brother s Loan) X 50,000 Y 40, , ,000 Bank Account To To Realisation A/c ( realized) By Balance b/d (Bank Overdraft) 6,000 By Realisation A/c (Creditors) 72,000 By Realisation A/c (Expenses) By 3,000 By X s Capital A/c By Y s Capital A/c 92,000 92,000

23 CH:6. 1. Fill in the missing figures in the following journal Entries: Journal Date L.F Amt Cr. Amt. Machinery A/c To Hari Ltd. (Being machinery purchased on credit form Hari Ltd.) Hari Ltd. 50,000 To Cash A/c 50,000 (Being cash paid to Hari Ltd.) Hari Ltd. To Share Capital (Being issue of 20,000 shares of 10 each at par) 2. Journal of Y Ltd. Date L.F Amt Cr. Amt. Furniture A/c To X Ltd. (Being furniture purchased from X Ltd.). (Being issue of 9000 shares of 10 each to make full payment to X ltd.). (Being issue of 7200 shares of 10 each at a premium of 25%) 3. Journal of Beena Ltd. Date L.F Amt Cr. Amt..... (Being application money received on 20,000 per Share) Share Application A/c 80,000 To Share capital A/c 80,000 (..).... (Being allotment money due on 20,000 2 per share on capital and 3 on premium).. 100, ,000

24 (Being money received on Allotment).... (Being amount due on 20,000 shares for first 5 per share including premium of 2).. (Being amount due on 20,000 1 per share on record and final call.. (.) 20,000 20, Ashok limited invited applications for 20,000 shares of 10 each payable as follows: 3 on application; 2 on allotment; 3 as first call and balance on second call. 90,000 was received on account of application money. Allotment of share were made as follows: (1) To Applicants for 8000 share full (2) 1 were refunded as some of the applications were rejected (3) Remaining got prorata allotment. All the money was duly received pass necessary journal entries by filling the following information. (1) Application were received for Shares (2) Applications were rejected (3) got shares (Prorata) 5. N ltd. Was registered with a nominal capital of 3,00,000 divided into shares of 10 each. It purchased a Machinery & Payment made by issuing fully paid up share. The remaining share were offered to the public. The amount was payable as follows. 2 on application, 3 on allotment; 2.50 on first call and 2.50 on final call. The company did not make the final call. Gopi the holder of 100 shares failed to pay the allotment money & first call money. Directors forfeited his shares which were reissued later on. Journalise these transactions. Journal of N Ltd. Date L.F Amt Cr. Amt... (Being share allotment money received).. (being payment made to venders in 20,000 fully paid up shares).. (Being application money received).

25 .. (Application money transferred to share capital).. (Being allotment money due).. (Being allotment money received).. (Being first call money due) Bank A/c To Share first Call (.) (Being 100 shares forfeited) Bank A/c To Share Capital To Sec. Premium Reserve (..) Share Forfeiture A/c To Capital Reserve (Being share forfeiture amount transferred to capital reserve) Journal Entries Date L.F Amt Cr. Amt. Share Capital A/c ( ) 10,000 To Calls in arrear (1000 7) 7,000 To Share forfeiture (1000 3) 3,000 (Being 1000 shares forfeited) Bank A/c To Share Capital A/c To Second Premium Reserve A/c (..).. (Being balance of forfeiture amount transferred to capital Reserve)

26 7. Journal Entries Date L.F Amt Cr. Amt. Share Capital A/c (200 7) 1400 To Share Ist call (200 2) To Share forfeiture 400 (Being 200 share forfeited) Bank A/c (50 6) 300 Share Forfeiture A/c To Share Capital (50 7) (Being 50 Shares reissued) (Being Balance of share forfeiture A/c transferred to capital Reserve account) 8. Ahuja Ltd. Invited application for 7,00,000 equity shares of 10. the amount was payable as follows. On Application 3 On Allotment 4 Balance on two equal instalment of lst and IInd call. will be refunded if it is in excess after adjusting on allotment. Somesh a Shareholder, who had applied for 8400 shares has not paid both the calls. Company decided to forfeited his Shares. Later on these shares were reissued & is transferred to general reserve. Complete the following journal entries & fill up the missing information. Date L.F Amt Cr. Amt. Bank A/c 50,40,000 To Equity Share Application A/c 50,40,000 (Being application money received on 3 per share) Equity Share Application A/c To Equity Share Capital A/c To Equity Share Allotment A/c To Bank A/c (Being amount transferred to share capital after prorata allotment and in excess money is refunded) Equity Share Allotment A/c To Equity Share Capital A/c (Allotment money due on 7,00,000 Share) Equity Share first call A/c To Equity Share Capital A/c (Being First Call money due on 7,00,000 shares) Bank A/c To Equity Share First call A/c (Being amount received 1 st Call) Equity Share Second call A/c

27 To Equity Share Capital A/c (Being second and first call money due) Equity Share Capital A/c To Equity Share I st call A/c To Equity Share II nd call A/c To Share Forfeiture A/c (Being Shares forfeited) Bank A/c Share forfeiture A/c To Equity Share Capital A/c (Being Shares Reissued) Share forfeiture A/c To Capital Reserve A/c (Being amount of share forfeiture transferred to capital reserve) 9. 6,000 shares of 10 each of Manju Ltd. Were forfeited by Crediting 10,000 to share forfeited account. Out of these 3600 share were reissued. Journal Entries Date L.F Amt Cr. Amt. Equity Share Capital A/c 60,000 To Share forfeiture A/c To Call in arrear 10,000 (Being 6,000 shares forfeited) (Being 3600 share Reissued) Share Forfeiture A/c 2400 To Capital Reserve 2400 (Being Share forfeiture amount transferred to capital reserve A/c)

28 CH: 7 1. Puneet Ltd. Issued 6,000, 13% debentures of 100 each at par on the following terms: 30 on application, 20 on allotment and balance on first & final call. Debentures were not fully subscribed. But all the money was duly received on its subscription. Pass necessary journal entries Journal of Puneet Ltd. Date L.F Amt Cr. Amt. 1,50,000 1,50,000 (Being application money received). (Being application money transferred) (Being allotment money due).. (Being allotment money received). (Being first and final call money due)... (Being first & final call monet received 2. Ram Ltd. Issued 2000, 12% debentures of 100 each at a premium which is payable in two equal instalment on application and allotment. Money was payable as follows: 30 on application [Plus? Premium] 20 on application [plus? Premium] 50 on first & final Call. Application were received for 2800 debentures and the allotment was made proportionately to all the applicants. Excess money received on applications were utilized towards amount due on allotment. Pass necessary journal entries by filling up the blanks. Journal of Rama Ltd. Date L.F Amt Cr. Amt. 9 9 (Being 12% debentures Application money received) 9 60,000 10,000 2 (Being application money transferred to debenture account and excess money adjusted) 12% Debentures Allotment A/c 50,000

29 (Being Allotment money due including premium) Bank A/c To 12% Debentures Allotment A/c (Being allotment money received) (Being first & Final call Due) (Being first & final call money received) 3. Fill up the missing figures in the following journal Entries Date L.F Amt Cr. Amt. Sundry A/c 4,20,000 To Sundry A/c To.. To Sohan (vender) 40,000 3,60,000 (Being assets and liabilities purchased) Sohan. To 11% Debentures A/c (Issue of Debentures of 100 each at a discount of 20) 4. Fill up the missing figures the following journal entries Journal Date L.F Amt Cr. Amt. A/c 90,000 To A/c To Binay Ltd. 20,000 8 (being and liabilities purchased from Binary Ltd.) Binary Ltd. To 12% Debentures A/c To (Being issued debentures of 100 each at premium of 10%)

30 5. Fill up the missing figures in the following journal entries of Sudhershan Ltd. Journal Date L.F Amt Cr. Amt Bank A/c March 31 To Bank Loan A/c (Being loans of 18,00,000 taken from corporation Bank) March 31 Debentures Suspense A/c To 13% Debentures A/c (Being issue of Debentures of 100 each as a collateral security) Balance Sheet of Sudharshan Ltd. As at 31 st March 2015 Note No Amt() Current Year (I) Equity & NonCurrent Longterm Borrowings 1 Amt. () Previous year Notes to Accounts (1) Longterm Borrowings 24,000, 13% debentures of 100 each Less: Debentures Suspense A/c 24,00,000 24,00,000 Cr. Amt. (Bank loan on collateral security of debentures of 24,00,000) 6. Fill up the blanks in following journal Entries Journal Date L.F Amt Cr. Amt. Bank A/c To 10% Debentures Application and allotment A/c (Being app. Money received on issue of 5000, 10% debentures of 100 each at a premium of 5%) 10% debentures application and allotment A/c Loss on issue of Debentures A/c To 10% debentures A/c To Security premium reserve A/c To Premium on Redemption A/c 50,000 (Being.)

31 7. Fill up the missing information in the following journal entries Journal Date L.F Amt Cr. Amt. Bank A/c To Debentures Allotment & Allotment A/c (Being application money received on. Debentures of 100 each issued at a discount of 5%) Debentures Application & Allotment A/c 95 Loss on Issue of Debentures A/c To Debentures A/c To Premium of Redemption A/c (Being transfer of application money to debentures account, issued at discount of 5% & Redeemable at a premium of 5%) CH: 8 1. A Ltd. Redeemed its entries 12% debentures at a premium of 10%. Out of profit on 30 th June Following is the journal entries fill up the missing figures. Journal of A Ltd. Date L.F Amt Cr. Amt th June To. (Being profits transfer to ) 30 th June 12% Debentures A/c 80,00,00.. To Debentures Holders A/c (Being amount due on redemption) 30 th June Debentures holders A/c To Bank A/c (Being payment to debenture holders made) 30 th June.A/c To General Reserve A/c (Being debentures redemption reserve is transfer to general reserve after redemption of all the debentures ) 2. Manmohan chemicals Ltd. Has some outstanding 11% debentures divided into debentures of 100 each due for redemption on 31T December, Pass necessary Journal entries if there is some balance in debentures redemption reserve account on the date of redemption. Fill in the blanks in the following journal entries. Also state the balance which is already exists in debentures redemption reserve. Journal of Manmohan Ltd. Date L.F Amt Cr. Amt th Statement of Profit & Loss A/c 2,50,000 June To Debentures redemption Reserve A/c (Being..) 2,50,000.A/c

32 To. (Being payment due to debentures holders).a/c To A/c (Being payment made to debentures holders) Debentures Redemption Reserve A/c To General Reserve A/c (Being transfer of debentures redemption reserve to general reserved) 7,50,000 7,50, Fill up the missing information in the following journal Entries Journal Date L.F Amt Cr. Amt. Own Debentures A/c To Bank A/c (being 500 own debentures of 100 each purchased at. Each for immediate cancellation) 10% Debentures A/c To. A/c To A/c (Being own Debentures cancelled). A/c To. A/c (Being Profits on redemption transfer to A/c) 47, in the following journal entries fill up the missing information Journal of RENU Ltd. Date L.F Amt Cr. Amt. A/c To Bank A/c (Being 300 own debentures of 100 each purchased at.. each and 200 brokerage is paid) 9% Debentures A/c To..A/c To Profit of redemption of Debentures A/c (Being own debentures cancelled) 5. Fill up the missing figures in the following journal Entries Journal of Anita Ltd. Date L.F Amt Cr. Amt De. 31 Own Debentures A/c To Bank A/c (Being.) De.31 8% Debentures A/c To Own Debentures A/c 24,350 To Profit on cancellation A/c (Being ) De.31..A/c 650 To Capital Reserve A/c 650 (Being..)

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