Commerce Eed - Vision

By,

Gobind Kumar Jha

CA (F), L.L.B(H), M.COM,
B.COM(H)
 Gobind Kumar Jha 9874411552

CHAPTER – 1: PROFIT & LOSS

APPROPRIATION ACCOUNT

Provision of Section 13 of Partnership Act: Net Profit of a partnership business is divided between the
partners on the basis of their deed. In absence of Partnership Deed, Section 13 of the partnership act is to
be applied which states that:
a) Interest on capital – NIL.
b) Interest on drawings – NIL.
c) Bonus, Commission, Salary and other allowances to partners – NIL.
d) Share of profit – Equally.
e) Interest on Loan given by any partner - @ 6% p.a.

Rules for calculating of interest on drawings:

a) When date not given – 6 months.
b) Drawings at the beginning of each months – 6.5 months.
c) Drawings at the end of each months – 5.5 months.
d) Drawings at the beginning of each quarter – 7.5 months.
e) Drawings at the end of each quarter – 4.5 months.

Practical Problems
1. Calculate interest on drawings of Ashok @ 10% p.a. for the year ended 31st March, 2019,
in each of the following alternative cases:
Case 1. If he withdrew Rs. 7,500 in the beginning of each quarter.
Case 2. If he withdrew Rs. 7,500 at the end of each quarter.
Case 3. If he withdrew Rs. 7,500 during the middle of each quarter.

2. Amit and Vijay started a partnership business on 1st April, 2018. Their capital contributions
were Rs. 2,00,000 and Rs. 1,50,000 respectively. The Partnership Deed provided as
follows:
(a) Interest on capital be allowed @ 10% p.a.
(b) Amit to get a salary of Rs. 2,000 per month and Vijay Rs. 3,000 per month.
(c) Profits are to be shared in the ratio of 3 : 2.
Net profit for the year ended 31st March, 2019 was Rs. 2,16,000. Interest on drawings amounted to
Rs. 2,200 for Amit and Rs. 2,500 for Vijay.
Prepare Profit and Loss Appropriation Account.
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3. Sajal and Kajal are partners sharing profits and losses in the ratio of 2 : 1. On 1st April,
2018 their Capitals were: Sajal – Rs. 50,000 and Kajal – Rs. 40,000.
Prepare Profit and Loss Appropriation Account and the Partners' Capital Accounts at the end of
the year after considering the following items:
(a) Interest on Capital is to be allowed @ 5% p.a.
(b) Interest on the loan advanced by Kajal for the whole year, the amount of loan being Rs.
30,000.
(c) Interest on partners' drawings @ 6% p.a. Drawings: Sajal Rs. 10,000 and Kajal Rs. 8,000.
(d) 10% of the divisible profit is to be transferred to
Reserve. Net profit for the year ended 31st March, 2019
is Rs. 68,460.
Note: Net profit means net profit after debit of interest on loan by the partner.
You are required to prepare Profit and Loss Appropriation Account.

4. A and B are partners sharing profits and losses in the ratio of 3 : 1. On 1st April, 2018, their
capitals were: A – Rs. 50,000 and B – Rs. 30,000. During the year ended 31st March, 2019
they earned a net profit of Rs. 50,000. The terms of partnership are:
(a) Interest on capital is to allowed @ 6% p.a.
(b) A will get a commission @ 2% on turnover.
(c) B will get a salary of Rs. 500 per month.
(d) B will get commission of 5% on profits after deduction of all expenses including such
commission. Partners' drawings for the year were: A – Rs. 8,000 and B – Rs. 6,000. Turnover
for the year was Rs. 3,00,000.
After considering the above facts, you are required to prepare Profit and Loss Appropriation Account.

5. A, B and C were partners in a firm having capitals of Rs. 50,000; Rs. 50,000 and Rs.
1,00,000 respectively. Their Current Account balances were A: Rs. 10,000; B: Rs. 5,000
and C: Rs. 2,000 (Dr.). According to the Partnership Deed the partners were entitled to an
interest on Capital @ 10%
p.a. C being the working partner was also entitled to a salary of Rs. 12,000 p.a. The profits were
to be divided as:
(a) The first Rs. 20,000 in proportion to their capitals.
(b) Next Rs. 30,000 in the ratio of 5 : 3 : 2.
(c) Remaining profits to be shared equally.
The firm earned net profit of Rs. 1,72,000 before charging any of the above items.
Prepare Profit and Loss Appropriation Account and pass necessary Journal entry for the
appropriation of profits.
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6. On 1st January, 2018 Amal and Anil started a partnership business with capital of Rs. 20,000
and Rs. 15,000 respectively. They decided to share profits and losses in the ratio of 3:2. Their
partnership deed also provides the following:
i. Interest on capital is to be charged @ 5% p.a.
ii. Interest on drawings is to be charged @ 3% p.a.
iii. Amal’s drawings is Rs. 500 p.m. and Anil’s drawings is Rs. 400 p. m.
iv. Anil is to get Rs. 300 p.m. as salaries and Amal is entitled to a commission @ 2% on
sales. (Sales
– Rs. 1,50,000)
Before any of the above adjustments, their profits during 2018 was Rs. 30,026.
Show Profit & Loss Appropriation Account for the year 2018 and the Partner’s Capital
Account assuming that partners capital are:
a) Fixed; and
b) Fluctuating.

7. On 1st January, 2020 X and Y started a partnership business with capital of Rs. 60,000 and
Rs. 40,000 respectively. They decided to share profits and losses in the ratio of 2:1. Their
partnership deed also provides the following:
v. Interest on capital is to be charged @ 10% p.a.
vi. Interest on drawings is to be charged @ 8% p.a.
vii. X’s drawings is Rs. 800 p.m. and Y’s drawings is Rs. 1,200 p. m.
viii. Y is to get Rs. 2,500 p.m. as salaries and X is entitled to a commission @ 2.5% on sales.
(Sales –
Rs. 2,80,000)
Before any of the above adjustments, their profits during 2020 was Rs. 50,000.
Show Profit & Loss Appropriation Account for the year 2020 and the Partner’s Capital Account
assuming that partners capital are:
c) Fixed; and
d) Fluctuating.

8. A, B and C are partners in a firm. Their capital balances as on 1.1.2021 were Rs. 50,000; Rs.
40,000 and Rs. 30,000 respectively. Prepare profit & Loss Appropriation Account for the year
ended 31.12.2021 after considering the following information:
a) Interest on capital @ 10% p.a.
b) A will get a monthly salary of Rs. 800.
c) Net profit before considering the above is Rs. 50,000.
d) 10% of profit to be transferred to General Reserve.
e) The ratio of sharing profit & loss by A, B and C is 4:3:2.
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9. A, B and C are partners of a firm. On 1st January, 2020 their

capitals were: A – Rs. 80,000; B – Rs. 60,000; C – Rs. 50,000. All of
them agreed that: Interest on capital is payable @ 5% p.a.
A is to receive salary of Rs. 500 p.m.
B is to receive commission @ 5% on net profit after charging such commission.
10% of the net profit is to be transferred to general reserve
The net profit for the year ended 31st December, 2020 before considering the above facts was
Rs. 40,000.
Prepare P&L Appropriation Account and the Partner’s Capital Account.

10. X, Y and Z are partners in a firm with capitals of Rs. 5,00,000; Rs. 4,00,000 and Rs. 3,00,000
respectively on 1st January, 2019. The partnership contains the following clauses:
a) Interest on capital @ 5% p.a.
b) Interest on drawings @ 6% p.a.
c) X get salary of Rs. 5,000 p.m.
d) Y gets commission @ 10% on distributable profit.
e) They share profit and losses equally.
f) The net profit of the firm for the year ended 31st December, 2019 amounted to Rs.
1,20,000 and the drawings of the partners are:
X – Rs. 30,000; Y – Rs. 20,000 and Z – Rs. 10,000.
Prepare Profit & Loss Appropriation Account for the year ended on 31.12.2019.

11. Ram and Ravan started a partnership business on 1.1.18 by introducing Rs. 5,00,000 and
Rs. 4,00,000 respectively. Their partnership deed provide that:
i. Interest on capital to be charged @ 5% p.a.
ii. Interest on drawings to be charged @ 8% p.a.
iii. They are entitled to annual salary of Rs. 60,000 and Rs. 40,000 respectively.
iv. Ram is entitled to a commission of 4% on net sales of Rs. 28,00,000.
The net profit for the year 2018 was Rs. 10,91,400. During the year Ram and Ravan drew each
Rs. 80,000 and Rs. 60,000 respectively. You are required to prepare Profit & Loss Appropriation
Account for the year 2018.

12. Pushpa and Raju are partners of a firm sharing profit and loss in the ratio of 3:2. On 1.1.2021
their capital were as follows: Pushpa – Rs. 1,00,000 and Raju – Rs. 80,000. Net profit for the
year ended on 31.12.2021 was Rs. 60,000. Considering the following conditions, prepare
Profit & Loss Appropriation Account for the year ended 31.12.2021.
a) Interest on capital @ 8% p.a.
b) Interest on drawings @ 12% p.a.
c) Raju is entitled to get salary of Rs. 3,000 per quarter.
d) Pushpa is to receive commission @ 3% on sales. (Net sales for the year – Rs. 4,00,000)
e) Pushpa drew Rs. 6,000 on 1.4.2021 and Raju drew Rs. 15,000 on 30.9.2021.
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13. Ravi and Shashi are partners in a firm sharing profits and losses in the ratio of 3:1. Net profit of
the firm during the year ended 31st December, 2017 amounted to Rs. 3,00,000.
From the following information, prepare Profit & Loss Appropriation Account of the firm for the year
ended on 31st December, 2017. On 1.1.2017, the balances in the capital and current accounts of the
partners were:
Capital Account Current Account
Ravi Rs. 1,60,000 Rs. 20,000
Shashi Rs. 1,20,000 Rs. 12,000
i. Interest on capital @ 5% p.a.
ii. Interest on partners’ drawings @ 10% p.a.
iii. Drawings during the year were: Ravi – Rs. 40,000 & Shashi – Rs. 30,000.
iv. Ravi is entitled to a commission of 5% of net profit before considering the above items.

14. R & S are partners sharing profits and losses in the ratio of 3:2. On 1.1.2018, their capitals
are: R – Rs. 40,000 and S – Rs. 30,000.
Prepare Profit & Loss Appropriation Account for the year ended 31.12.2018 after considering the
following items:
a) Interest on capital @ 6% p.a.
b) R is entitled to get commission @ 2.5% on sales.
c) S is to get salary of Rs. 1,000 p.m.
d) Interest on drawings @ 10% p.a.
e) 10% of distributable profit is to be transferred to Reserve Fund.
f) Partners drawings during the year: R – Rs. 10,000; S – Rs. 5,000.
g) Total sales during the year was Rs. 3,00,000.
h) Net profit before considering the above ite,s was Rs. 1,20,000.

15. Srinjoy, Arup and Hritwik were partners in a firm sharing profit in the ratio of 5:7:8. Their fixed
capital on 1.1.2019 were: Srinjoy – Rs. 5,00,000; Arup – Rs. 7,00,000 & Hritwik – Rs. 8,00,000.
Their partnership deed provided for the following:
a) Interest on capital @ 10% p.a.
b) Salary of Rs. 10,000 p.m. to Hritwik.
c) Interest on drawings @ 12% p.a.
d) Srinjoy withdrew Rs. 40,000 on 31.1.2019.
e) Arup withdrew Rs. 50,000 on 31.3.2019.
f) Hritwik withdrew Rs. 30,000 on 31.12.2019.
g) During the year 31.12.2019, the firm earned a profit of Rs. 3,50,000.
h) Partners’ are entitled to share of profit or loss in the ratio of 5:7:8 upto profit Rs. 20,000
and
above profit are equally.
Prepare a Profit & Loss Appropriation Account for the year ended 31.12.2019.
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16. X, Y and Z are equal partners of a firm. On 1.1.2017, their capitals were: Rs. 2,00,000; Rs.
3,00,000 & Rs. 4,00,000 respectively. The partnership deed provided the following:
a) Interest on Capital @ 6% p.a. and interest on drawings @ 12% p.a.
b) Partner’s salary – X Rs. 12,000 p.a.; Y – Rs. 3,000 per quarter and Z Rs. 1,000 p.m.
c) Z will receive a commission on sales @ 2%. Sales for the year Rs. 10,00,000.
d) Drawings of partners: X – Rs. 40,000 on 1.7.17; Y – Rs. 3,000 at the beginning of
each month and Z – Rs. 4,000 at the end of each month.
e) Net profit for the year ended 31.12.17 was Rs. 2,00,000.

Prepare Profit & Loss Appropriation Account for the year ended 31.12.17.

17. A and B are partners in a firm sharing profits and losses in the ratio of 2:1. Their capitals as on
1.4.2018 were Rs. 1,00,000 and Rs. 80,000 respectively. on 1.7.18, A introduced Rs. 20,000
and B introduced Rs. 40,000. The net profit for the year ended 31.3.2019 was Rs. 90,000.
Prepare Profit & Loss Appropriation Account after taking into consideration of the following
information:
a) Interest on capital @ 6% p.a.
b) Interest on drawings @ 7.5% p.a. (Drawings of A – Rs. 8,000 and B – Rs. 10,000)
c) Partners are allowed Rs. 500 and Rs. 600 p.m. respectively as salary.
d) Interest on loan payable to Y on his loan of Rs. 15,000.
e) 50% of profit to be distributed in equal ratio and rest in capital ratio.

18. P & Q are partners sharing profits and losses in the ratio of 2:1. On 1.1.2018, their capitals
are: P – Rs. 40,000 and Q – Rs. 30,000.
Prepare Profit & Loss Appropriation Account for the year ended 31.12.2018 after considering the
following items:
a) Interest on capital @ 6% p.a.
b) P is entitled to get commission @ 2.5% on sales.
c) Q is to get salary Rs. 1,000 p.m.
d) Interest on drawings @ 10% p.a.
e) 10% of the distributable profit is to be transferred to Reserve Fund.
f) Partners drawings during the year: P – Rs. 10,000 & Q – Rs. 5,000.
g) Total sales during the year was Rs. 3,00,000.
h) Net profit before consideration of the above items was Rs. 1,20,000.

19. A, B and C are partners in a firm with capitals of Rs. 4,00,000; Rs. 3,00,000 and Rs.
3,00,000 respectively on 1st January, 2018. The partnership deed contains the
following clauses:
a) Interest on capital @ 5% p.a.
b) Interest on drawings @ 6% p.a.
c) A gets salary of Rs. 4,000 p.m.
d) B gets commission @ 10% on the Net profit.
e) Profit and losses to be shared in the ratio of 4:3:3.
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f) The net profit of the firm for the year ended 31st December, 2018 amounted to Rs.
4,80,000 and the drawings of the partners are:
A – Rs. 30,000; B – Rs. 20,000 and C – Rs. 10,000.
Prepare Profit & Loss Appropriation Account for the year ended on 31.12.2018.

20. X, Y and Z are partners in a firm. Their capital balances as on 1.1.2015 were Rs. 50,000; Rs.
40,000 and Rs. 30,000 respectively. prepare Profit & Loss Appropriation Account for the year
ended 31.12.2015 after considering the following information:
a) Interest on capital @ 10% p.a.
b) X will get a monthly salary of Rs. 800.
c) Net profit before considering the above is Rs. 50,000.
d) 10% of profit to be transferred to General Reserve.
The ratio of sharing profits & losses by A, B and C is 4:3:2.
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CHAPTER – 2: ISSUE OF SHARES

 Issue of shares: Issue of shares us a source of raising capital from market. A limited co.
always issueshares to public to raise fund. A company can issue shares for:
 Cash consideration
 Non cash consideration:- issue to vendor, promoters, bonus shares & sweat
shares. Issue price of shares can be taken in different instalments, which are:
1st Instalment –
Application 2nd Instalment
– Allotment 3rd Instalment –
1st Call
4th Instalment – Final call
A company can issue shares in three ways:
a) At par
b) At premium
c) At discount: Not possible under New Company Act, 2013.

 Issue of Shares at Par: When shares are issued at its face value, then it is called issue of
shares at par. Ex.: Suppose, face value of shares is Rs. 10. If the co. issued such shares at
Rs. 10 then it is called issue of shares at par.

 Issue of Shares at Premium: When a company issue its shares at a price over and above, its
face value then it is called issue of shares at premium. Extra amount over face value is
called “Securities Premium”. Securities Premium is a capital profit for a company & it will
come under the Reserve & Surplus in the Balance Sheet. Sec. 52 of the Companies Act,
2013, Securities Premium can be utilized for:
a) Writing off preliminary expenses
b) Writing off premium on redemption of preference shares & debentures
c) Writing off underwriting commission
d) Expenses on issue of shares & debentures
e) Issuing fully paid bonus shares
f) Buy back of own shares & securities
Ex: Suppose face value of shares is Rs. 10. Issue price of shares is Rs. 15. It is called issue of
shares at premium. Here, securities premium = Rs. 15 – Rs. 10 = Rs. 5.

 Issue of shares at discount: As per section 53 of the Companies Act, 2013, a company cannot
issue shares of new class at discount. However, sweat equity shares can be issued at
discount.
 Gobind Kumar Jha 9874411552

 Subscription of shares: When the public gives application for shares to the company then it is
calledsubscription. This subscription is of three types:
a) Full Subscription;
b) Over Subscription; and
c) Under Subscription.

a) Full Subscription: When the co. received application equal to the issued capital then it is
called full subscription. Ex.: Suppose, X Ltd. issued 10,000 Equity Shares of Rs. 10 each. The
co. received application for 10,000 Equity Shares. Here, no. of application is equals to issued
capital. Hence it is called full subscription.

b) Over Subscription: When the co. received excess application than its issued capital, then it is
called over subscription. The co. either rejects the extra application or makes allotment in some
suitable ratio, called pro-rata allotment. Ex.: Suppose, X Ltd. issued 10,000 Equity Shares. The
co. received application for 11,000 Equity Shares. It is called over subscription. This excess
shares should be rejected by the co. or the co. can made pro-rata allotment.

c) Under Subscription: When a co. received application for less no. of Equity Shares than its
issued capital then it is called under subscription. But the co. has to follow “Minimum Subscription”
clause of Companies Act. According to this clause a co. must get application or 90% of issued
capital, otherwise the issue is supposed to be cancelled. It means when a co. gets application for
90% or more of issued capital but less than 100% of issued capital then it is called under
subscription. In case of under subscription, problem will be solved on the basis of application
received.

 Calls-in-Arrear: When a shareholder fails to pay any amount due on his shares then it is
called Calls- inArrear. In such case the Equity Shareholder is liable to pay interest @ 10%
p.a. as per Table F. suchinterest is payable after the due date of payment of call to the
actual payment, on the arrear amount of calls.

 Calls-in-Advance: When any shareholder pays any calls money in advance then it is called
“Calls-in Advance”. It is a liability for the company. The company is liable to pay interest on
calls-in-advance @ 12% p.a., as per Table F from the date of advance till the date of making
calls.

 Share Capital: Share of a company are of two types such as:

a) Equity Share Capital,
b) Preference Share Capital.

Equity Shareholders are the owner of the co. but preference shareholders are not the owner of the company.
However, Preference Shareholder will get dividend & capital repayment prior to the equityshareholder.
 Gobind Kumar Jha 9874411552

 Classification of Share Capital: The various classifications are:

a) Authorized Capital
b) Issued Capital
c) Subscribed Capital
d) Called up Capital
e) Paid-up Capital

a) Authorized Capital: Authorised Capital is the maximum capital of a limited co. It is the capital
for which the co. is registered. Hence, it is also called registered capital or nominal capital. This
capital is mentioned in the memorandum of the company.

b) Issued Capital: Issued Capital is a part of authorized capital. It means out of authorized
capital, when a company issue shares then it is called issued capital.

c) Subscribed Capital: When the public gives application for issued capital then it becomes
subscribed capital. In case of over subscription and full subscription, the issued capital and
subscribed will be same. However, in the case of under subscription, issued capital &
subscribed capital will be different.

d) Called-up Capital: The amount of share are payable in instalments, when a co. called only a
portion of
instalments then it is called “Called-up Capital”. Ex.:- Suppose a co. issued 10,000 Equity Shares of
Rs. 10 each & amount payable on shares are: Rs. 3 on application, Rs. 2 on allotment and balance
on a call. If the co. called only allotment money then called up value of shares = 10,000 X 5 = Rs.
50,000.

e) Paid up Capital: Paid up capital means the amount paid by the shareholders. It means paid up
capital = Called up capital less calls-in-arrear.
 Gobind Kumar Jha 9874411552

Practical Problems
1) Lennova Ltd. has authorised share capital of Rs. 1,00,00,000 divided into 1,00,000 Equity
Shares of Rs. 100 each . It has existing issued and paid up capital of Rs. 25,00,000. It further
issued to public 25,000 Equity Shares at a premium of 20% for subscription payable as under:
On Application Rs. 30
On Allotment Rs. 60 and
On Call Balance Amount.

The issue was fully subscribed and allotment was made to all the applicants . The company did not
make the call during the year. Pass necessary Journal Entries in the books of Lennova Ltd.

2) The authorised capital of Rs. 16,00,000 of Bharat Ltd. is divide into 1,60,000 Equity Shares of
Rs. 10 each. Out of these shares, 80,000 Equity Shares were issued at par to public for
subscription. The full nominal value is payable on application. All the shares were subscribed
by the public and total amount was paid for. Pass necessary journal entries in the books of the
compa
3) Hema Ltd. invited applications for 10,000 shares of Rs. 100 each payable as
follows: Rs. 20 on application,
Rs. 30 on allotment,
Rs. 20 on first call and
the balance on final
call.
All the shares were applied and allotted. All the money was duly received. You are
required to Journalise these transactions.

4) Modern Marbles Ltd. was registered with an authorised capital of Rs.10,00,000 divided into
7,500 Equity Shares of Rs. 100 each and, 2,500 Preference Shares of Rs.100 each. 1,000
Equity Shares and 500; 9% Preference Shares were offered to public on the following terms –
Equity Shares payable Rs.10 on application, Rs. 40 on allotment and the balance in two calls
of Rs. 25 each. Preference Shares are payable Rs. 25 on application, Rs. 25 on allotment
and Rs.50 on first and final call. All the shares were applied for and allotted . Amount due
was duly received. Prepare Cash Book and pass necessary Journal entries to record the
above issue of share.

5) Prakash ltd. Company has ca subscribed capital of 2,00,000 equity shares of ₹ 10 per share.
The directors forfeited 500 shares held by a shareholder, who had failed to pay the first call
made ₹ 2 per share and final call made ₹ 3 per share. After forfeited of these 500 shares and
directors re-issued these forfeited shares @ 8 per share.
Pass the Journal Entries for Forfeited and re-issue of shares in the books of Prakash Ltd. Co.
 Gobind Kumar Jha 9874411552

6) Jivan Ltd. issued 15,000 Shares of ₹ 10 each at a premium of ₹ 2 per share payable as
follows:
₹ 2 on Application, ₹ 5 On allotment (including premium), ₹ 5 on Call
Application were received for 20,000 shares, excess application moneys were refunded. A
shareholder 3 holding 1,000 shares did not pay Call Money. His shares were forfeited after
Final Call. Out of these 600 shares were reissued to Mr. Roy @ 8 Per share.
Pass Journal Entries in the books of Jivan Ltd.(Narration is not Required)

7) GKJ Ltd. Issued 20,000 shares @ 10 each at a premium of ₹ 2 per share payable as follows:
₹ 4 on application, ₹ 5 on allotment (including premium of ₹ 2), ₹ 3 on call.
Applications were received for 23,000 shares. Applications for 3000 shares were refunded.
Allotment and call moneys were duly received expect one shareholder who holds 1000
shares failed to pay the call money.
Give the journal Entries in the books of GKJ Ltd. (Narration is not Required)

8) Shanu Ltd. issued 10,000 shares of ₹ 10 each at a premium of ₹ 2 per share payable as
follows:
₹ 2 on Application, ₹ 5 on Allotment (including premium of ₹ 2 ), ₹ 3 on 1st call and ₹ 2 on
Final call.
A shareholder, holding 500 shares did not pay final call money. His shares were forfeited.
Out of these, 300 shares were re-issued to Mr. Sen at ₹ 9 per share.
Pass the Journal Entries in the books of Shanu Ltd. (Narration is not Required).

9) Getwell Ltd. purchased a machine for ₹ 1,10,000 from Impex limited. The purchase price of
the machine was paid off by issuing equity shares of ₹ 10 each at a premium of 10%.
Find the number of equity shares issued and pass necessary Journal Entries in the books of
Getwell Ltd.

10) Dipaboli Ltd. issued 10,000 equity shares of ₹ 10 each at a premium of ₹ 2 per share. The
share price is payable in the following ways:
₹3 on application, ₹ 6 on allotment (including premium), ₹ 3 on first and final call.
Application were received for 12,000 shares. Excess application money on 2,000 shares
were refunded. One shareholder holding 100 shares paid the final call money along with
allotment money. All money due were received in full.
Pass necessary journal entries (including cash transaction) in the books of Dibaboli Ltd.

11) Bijoy Ltd. forfeited 200 shares of ₹ 10 each fully called up for non payment of final call money
of ₹ 3 per share. These shares are subsequently reissued at ₹ 8 per share. Pass necessary
journal entries in the books of Bijoy Ltd.

12) DK Co. Ltd. issued 10,000 shares of ₹ 25 each at a premium of ₹ 5 per share payable as
follows:
On application ₹ 10 (including premium ₹ 3), On allotment ₹ 10 (including premium of ₹ 2),
on first call ₹ 5, on Final call ₹ 5.
Application were received for 12,000 shares, excess application money will be adjusted with
allotment money due. All moneys were received up to Final call, except one shareholder
holding 1,000 shares failed to pay the final call money.
Pass journal entries including cash transaction in the books of DK Co. Ltd.
 Gobind Kumar Jha 9874411552

13) Uttam Ltd. issued 1000 equity shares of ₹ 10 each at par payable on ₹ 6 on application, ₹ 2
on allotment and ₹ 2 on call. All amounts are duly received except a holder of 200 shares
failed to pay allotment money and call money. His shares were forfeited. Show two journal
entries for money collected on call forfeiture of shares in the books of the company.

14) Jay Co. Ltd. issued 20,000 equity shares 20 each ata premium of ₹ 5 per share payable as
follows:
On share application ₹ 5, On share allotment 10 (including premium of ₹ 5), On share first
call ₹ 5, On share final call.
All amounts due on shares were received except one shareholder holding 1000 shares,
failed to pay the first and final call money and another shareholder holding 500 shares failed
to pay final call only. These 1500 shares were subsequently forfeited by the company. Show
necessary journal entries in the books of Jay Co.Ltd.
 Gobind Kumar Jha 9874411552

Chapter – 3: Valuation and Nature of Goodwill

Meaning of Goodwill:
Goodwill is very easy to understand but very difficult to define. Goodwill is an intangible asset which is
shown under the head “Fixed Assets” in the balance sheet. So, goodwill is also called intangible fixed
assets. Intangible assets means an asset which does not have any physical existence but its presence can
be felt at the time of business transaction. Goodwill is nothing but a hidden force which helps a business
to earn “Super Profit”. Business having more goodwill can earn more profits and vice versa.

Method of valuation of goodwill:

a) Average Profit Method:
Goodwill = Average Profit x No. of years of purchases
Here, profit does not includes non-trading income and non-trading expenses.

b) Weighted Average Profit:

Goodwill = Weighted Average x No. of years of purchases

c) Super Profit Method:

Goodwill = Super Profit x No. of years of purchases
Where Super Profit = Average Profit – Normal Profit
It means profit earned over and above normal profit is called super profit.

d) Capitalization of average profit method:

𝐴𝑣𝑒𝑟𝑎g𝑒 𝑃𝑟𝑜fi𝑡
 Normal Capital Employed = 𝑁𝑜𝑟𝑚𝑎𝑙 𝑅𝑎𝑡𝑒 𝑜f 𝑅𝑒𝑡𝑢𝑟𝑛 𝑥 100
ctual Capital Employed = Fixed Asset + Current Asset – Current Liabilities

Goodwill = Normal Capital Employed – Actual Capital Employed.


e) Capitalization of super profit method:

𝑆𝑢𝑝𝑒𝑟 𝑃𝑟𝑜fi𝑡
Goodwill = 𝑁𝑜𝑟𝑚𝑎𝑙 𝑅𝑎𝑡𝑒 𝑜f 𝑅𝑒𝑡𝑢𝑟𝑛 𝑥 100

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Practical Problems

1. Profit of last 5 years is: Rs. 30,000; Rs. 40,000; Rs. 45,000; Rs. 25,000 & Rs. 80,000. Find the value of
goodwill by taking 3 years purchases of average profit of last 5 years.
(Value of goodwill = Rs. 1,32,000)

2. Find the value of goodwill by taking 3 years purchases of average profit of last 5 years. The profit & loss
of last 5 years are:
2009 Rs. 30,000
2010 Rs. 40,000
2011 Rs. 10,000 (Loss)
2012 Rs. 25,000
2013 Rs. 15,000
(Value of goodwill = Rs. 60,000)

3. Profit of last 3 years are: Rs. 80,000; Rs. 1,00,000 & Rs. 1,20,000. Find the value of goodwill by taking 2
years purchases of weighted average profit of last 3 years.
(Value of goodwill = Rs. 21,334)

4. Profits of last 5 years are: Rs. 2,00,000; Rs. 2,50,000; Rs. 3,00,000; Rs. 3,50,000 & Rs. 4,00,000.
Managers are entitled to commission of Rs. 12,000 p.a. Find the value of goodwill by taking 3 years
purchases of weighted average profit of last 5 years.
(Value of goodwill = Rs. 10,00,000)

5. Capital employed of a business is Rs. 5,00,000 and normal rate of return on capital employed is 20%.
Average profit of the business is Rs. 1,70,000. Find the value of goodwill by taking 3 years purchases of
super profit.
(Value of goodwill = Rs. 2,10,000)

6. Profit of last 5 years are: Rs. 60,000; Rs. 80,000; Rs. 50,000; Rs. 75,000 & Rs. 90,000. Capital employed
of the business is Rs. 4,00,000 and normal rate of return of such type of business is 10%. Find the value
of goodwill by taking 3 years purchases of super profit.
(value of goodwill = Rs. 93,000)

7. Capital employed is Rs. 8,00,000. Average profit is Rs. 1,00,000 and normal rate of return is 10%. Find
the value of goodwill by capitalization of average profit method.
(Value of goodwill = Rs. 2,00,000)

8. Profit of last 5 years are: Rs. 90,000; Rs. 1,00,000; Rs. 1,50,000; Rs. 75,000 & Rs. 80,000. Capital
employed of the business is Rs. 5,00,000 and normal rate of return of such type of business is 12%. Find
the value of goodwill by capitalization of average profit method.
(Value of goodwill = Rs. 3,25,000)
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9. Capital employed is Rs. 10,00,000. Average profit is Rs. 1,20,000 and normal rate of return is 10%. Find
the value of goodwill by capitalization of super profit method.
(Value of goodwill = Rs. 2,00,000)

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Chapter – 4: Change in Profit Sharing Ratio

1. A and B are sharing profits and losses equally. With effect from 1st April, 2019, they agree to share
profits in the ratio of 4 : 3. Calculate individual partner's gain or sacrifice due to the change in ratio.
1 1
(Ans: A’s Gain 14; B’s Sacrifice 14)

2. X, Y and Z are sharing profits and losses in the ratio of 5 : 3 : 2. With effect from 1st April, 2019,
they decide to share profits and losses in the ratio of 5 : 2 : 3. Calculate each partner's gain or
sacrifice due to the change in ratio.
1 1
(𝐴𝑛𝑠: 𝑍′𝑠 𝐺𝑎i𝑛 ; 𝑌′𝑠 𝑆𝑎𝑐𝑟ifi𝑐𝑒 )
10 10

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3. X, Y and Z are sharing profits and losses in the ratio of 5 : 3 : 2. With effect from 1st April, 2019,
they decide to share profits and losses equally. Calculate each partner's gain or sacrifice due to the
change in ratio.
(Ans: Y’s Gain 1/30; Z’s Gain 4/30; X’s Sacrifice 5/30)

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Chapter – 5: Admission of a Partner

1. Red and white are partners sharing profits and losses in the ratio 3 : 2. On 31 st March, 2016 their Balance
sheet was as under:
Liability Amount Assets Amount
(₹) (₹)
Capitals Plant and Machinery 40,000
Red - ₹ 60,000 Furniture 10,000
White - ₹ 40,000 1,00,000 Sundry Debtors 45,000
Reserve 20,000 Stock 25,000
Creditors 10,000 Cash in hand 10,000
1,30,000 1,30,000

On 1st April, 2016 Blue is admitted into the partnership on the following terms:
(i) Furniture is revalued at ₹ 8,000 and Plant and Machinery is to be appreciated by 15%.
(ii) Sundry Creditors not yet recorded in the books amounting to ₹ 2,000 to be recorded immediately.
(iii) Stock is to be increased by ₹ 6,000.
(iv) Blue will get 1/2 th share of profit.
(v) Blue is to bring ₹ 30,000 as capital and ₹ 10,000 as premium for goodwill in cash.

Pass necessary Journal Entries for recording the above transaction in the books of the firm.

2. Sachin and Sourav are the partners in a firm. They share profit and losses in the ratio of 3 : 2. Their balance
sheet as on 31st March ,2018 was as under:
Liabilities Amount ₹ Amount ₹ Assets Amount ₹ Amount ₹
Capital A/Cs: Building 1,00,000
Sachin 80,000 Plant 25,000
Sourav 40,000 1,20,000 Stock 40,000
Reserves 40,000 Debtors 75,000
Creditors 60,000 Less: Provision for
Biils Payable 20,000 doubtful debt 5,000 70,000
Cash & Bank 5,000
2,40,000 2,40,000
th
On 01.04.2018 Rahul was admitted as a new partner having 1/5 share of the future profit of the firm on the
following terms and conditions:
(i) Goodwill was valued at ₹ 1,25,000.
(ii) Building should be revalued at ₹ 1,20,000.
(iii) Plant should be depreciated by 20%.
(iv) Provision for bad & doubtful debts should be raised to 10% on debtors.
(v) Stock should be revalued at ₹ 30,000.
(vi) Rahul introduced ₹ 30,000 as Capital and necessary amount of share of goodwill in cash.

Prepare Revaluation A/c and Partners Capital A/c in the books of firm.

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3. A and B share profit & losses in the ratio of 3 : 2. Their balance sheet as at 31.03.2015 was as under.
Liabilities Amount (₹) Assets Amount (₹)
Capitals A/c’s Building 80,000
A 60,000 Plant 60,000
B 40,000 1,00,000 Stock 40,000
Reserves 80,000 Debtors 32,000
Creditors 35,000 Less: Provision 2,000 30,000
Cash at Bank & Cash in Hand 10,000
2,25,000

On 01.04.2015, C is admitted in the firm fore 1/5 th share in the business on the following terms:
(i) Building to be valued at ₹ 1,00,000
(ii) Plant to be reduced by ₹ 10,000.
(iii) Provision on debtors to be increased to ₹ 3,000.
(iv) Stock to be reduced by 5%.
(v) C brings 50% of the Combined capital of A and B after adjustment at his capital.
(vi) C will bring 50% of the combined capital of A and B after adjustment at his Capital.
(vii) The new profit sharing ratio after C’s admission will be 2 : 2 : 1.

Prepare:-
(i) Revaluation Account.
(ii) Partner’s Capital Account.
(iii) Balance Sheet as on 01.04.2015 after admission of C.
(iv)
4. A and B are partners showing profits and losses in 4 : 3. On 31 st December, 2014 their position was as
under:

Liabilities Amount (₹) Amount (₹) Assets Amount (₹) Amount (₹)
Capital A/c’s Land & Building 50,000
A 60,000 Plant & Machinery 25,000
B 40,000 1,00,000 Furniture 15,000
Reserve 21,000 Stock 25,000
Creditors 18,000 Debtors 20,000
Less: PBDD -(1,000) 19,000
Cash 5,000
1,39,000 1,39,000

On 1st Jan, 2015 they admit C as a new partner on the following terms:
(i) C will get 1/4th share of profit.
(ii) Land & Building to be increased to ₹ 60,000 and Plant & Machinery is to be increased by ₹ 6,000.
(iii) Stocks to be reduced by ₹ 3,000.
(iv) C is to introduce ₹ 25,000 as Capital and ₹ 7,000 as premium for goodwill in cash.

Pass necessary journal entries recording the above transaction in the books of firm.

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5. A and B are partners in a firm sharing profits and losses in the ratio of 3 : 2. Following is their
Balance Sheet as at 31st March, 2019:

Liabilities ₹ Assets ₹
Capital A/cs: Building 35,000
A 50,000 Machinery 25,000
B 30,000 80,000 Stock 15,000
Creditors 20,000 Debtors 15,000
Investments 5,000
Bank 5,000

1,00,000 1,00,000

C is admitted as a partner on 1st April, 2019 on the following terms:

a. C is to pay ₹ 20,000 as capital for 1/4th share. He also pays ₹ 5,000 as premium for
goodwill.
b. Debtors amounted to ₹ 3,000 is to be written off as bad and a Provision of 10% is
created against Doubtful Debts on the remaining amount.
c. No entry has been passed in respect of a debt of ₹ 300 recovered by A from a
customer, which was previously written off as bad in previous year. The amount is to be
paid by A.
d. Investments are taken over by B at their market value of ₹ 4,900 against cash payment.
You are required to prepare Revaluation Account, Partner's Capital Accounts and new
Balance Sheet.

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6. X and Y are partners sharing profits and losses in the ratio of 3/4 and 1/4. Their Balance Sheet asat
31st March, 2019 is:

Liabilities ₹ Assets ₹
Capital A/cs: Land and Building 1,25,000
X 1,50,000 Furniture 5,000
Y 80,000 2,30,000 Stock 1,00,000
Workmen Compensation Reserve 20,000 Sundry Debtors 80,000
Sundry Creditors 1,50,000 Bills Receivable 15,000
Bills Payable 37,500 Cash at Bank 1,00,000
Cash in Hand 12,500
4,37,500 4,37,500

They admit Z into partnership on 1st April, 2019 on the following terms:
a. Goodwill is to be valued at ₹ 1,00,000.
b. Stock and Furniture to be reduced by 10%.
c. A Provision for Doubtful Debts is to be created @ 5% on Sundry Debtors.
d. The value of Land and Building is to be appreciated by 20%.
e. Z pays ₹ 50,000 as his capital for 1/5th share in the future profits.
You are required to show Revaluation Account, Partners' Capital Accounts and Balance Sheet of
the new firm.
7. Deepika and Rajshree are partners in a firm sharing profits and losses in the ratio of 3 : 2. On 31st
March, 2019 their Balance Sheet was:

Liabilities ₹ Assets ₹
Sundry Creditors 16,000 Cash in Hand 1,200
Public Deposits 61,000 Cash at Bank 2,800
Bank Overdraft 6,000 Stock 32,000
Outstanding Liabilities 2,000 Prepaid Insurance 1,000
Capital A/cs: Sundry Debtors 28,000
Deepika 48,000 Less: PDD 800
Rajshree 40,000 88,000 Plant and Machinery 48,000
Land and Building 50,000
Furniture 10,000

1,73,000 1,73,000

On 1st April, 2019 the partners admit Anshu as a partner on the following terms:
a. The new profit-sharing ratio of Deepika, Rajshree and Anshu will be 5 : 3 : 2 respectively.
b. Anshu shall bring in ₹ 32,000 as his capital.
c. Anshu is unable to bring in any cash for his share of goodwill. Partners, therefore, decide to
calculate the goodwill on the basis of Anshu's share in the profits and the capital contribution
madeby her to the firm.
d. Plant and Machinery is to be valued at ₹ 60,000, Stock at ₹ 40,000 and the Provision for Doubtful
Debts is to be maintained at ₹ 4,000. Value of Land and Building has appreciated by 20%.
Furniture has been depreciated by 10%.

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e. There is an additional liability of ₹ 8,000 being outstanding salary payable to employees of the
firm. This liability is not included in the outstanding liabilities, stated in the above Balance Sheet.
Partners decide to show this liability in the books of account of the reconstituted firm.
Prepare Revaluation Account, Partners' Capital Accounts and Balance Sheet of Deepika, Rajshree
and Anshu.

8. Yogesh and Naresh are partners sharing profits in the ratio of 3 : 2. They admit Ramesh for 1/3rd
share on 1st April, 2019 and also decide to share future profits equally. Balance Sheet of the firm as at
31st March, 2019 was as follows:
Liabilities ₹ Assets ₹
Capital A/cs: Land 4,00,000
Yogesh 5,00,000 Building 4,00,000
Naresh 5,00,000 10,00,000 Furniture 50,000
Current A/cs: Computers 1,00,000
Yogesh 1,10,000 Stock 1,50,000
Naresh 90,000 2,00,000 Sundry Debtors 2,10,000
Employees' Provident Fund 25,000 Less: Provision 10,000 2,00,000
Workmen Compensation Reserve 1,00,000 Cash 10,000
Sundry Creditors 75,000 Bank 70,000
Expenses Payable 10,000 Advertisement Suspense 30,000
14,10,000 14,10,000

They admitted Ramesh on the following terms:

a. He will bring ₹ 5,00,000 as his capital.
b. His share of goodwill is valued at ₹ 1,00,000 .
c. Value of Land and Building is to be appreciated by ₹ 40,000 each.
d. Value of Furniture to be reduced to ₹ 40,000.
e. Provision for Doubtful Debts to be increased to 10%.
f. A liability for damages of ₹ 10,000 is to be created.
Pass the Journal entries on admission of Ramesh and prepare Revaluation Account.

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9. A and B were partners in a firm sharing profits in 3 : 1 ratio. They admitted C as a partner for 1/4th
share in the future profits. C was to bring ₹ 60,000 for his capital. The Balance Sheet of A and B asat
1st April, 2019, the date on which C was admitted, was:

Liabilities ₹ Assets ₹
Capital A/cs: Land and Building 40,000
A 50,000 Plant and Machinery 70,000
B 80,000 1,30,000 Stock 30,000
General Reserve 10,000 Debtors 35,000
Creditors 70,000 Less: Provision for 34,000
Doubtful Debts 1,000
Investments 26,000
Cash 10,000
2,10,000 2,10,000

The other terms agreed upon were:

a. Goodwill of the firm was valued at ₹ 24,000.
b. Land and Building were valued at ₹ 65,000 and Plant and Machinery at ₹ 60,000.
c. Provision for Doubtful Debts was found in excess by ₹ 400.
d. A liability of ₹ 1,200 included in Sundry Creditors was not likely to arise.
e. The capitals of the partners be adjusted on the basis of C's contribution of capital to the firm.
f. Excess of shortfall, if any, be transferred to Current Accounts.
Prepare Revaluation Account, Partners' Capital Accounts and Balance Sheet of the new firm. (Profit
Rs. 16,600 & Balance Sheet Rs. 3,51,950)

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10. Shikhar and Rohit were partners in a firm sharing profits in the ratio of 7 : 3. On 1st April, 2013, they
admitted Kavi as a new partner for 1/4th share in profits of the firm. Kavi brought ₹ 4,30,000 as his
capital and ₹ 25,000 for his share of goodwill premium. The Balance Sheet of Shikhar and Rohit as on
1st April, 2013 was as follows:
BALANCE SHEET OF SHIKHAR AND ROHIT as at 1st April, 2013
Liabilities ₹ Assets ₹
Capital A/cs: Land and Building 3,50,000
Shikhar 8,00,000 Machinery 4,50,000
Rohit 3,50,000 11,50,000 Debtors 2,20,000
General Reserve 1,00,000 Less: Provision 20,000 2,00,000
Workmen's Compensation Fund 1,00,000 Stock 3,50,000
Creditors 1,50,000 Cash 1,50,000

15,00,000 15,00,000

It was agreed that:

a. the value of Land and Building will be appreciated by 20%.
b. the value of Machinery will be depreciated by 10%.
c. the liabilities of Workmen's Compensation Fund were determined at ₹ 50,000.
d. capitals of Shikhar and Rohit will be adjusted on the basis of Kavi's capital and actual cash to be
brought in or to be paid off as the case may be.
Prepare Revaluation Account, Partners' Capital Accounts and Balance Sheet of the new firm.

11. L, M and N were partners in a firm sharing profits in the ratio of 3 : 2 : 1. Their Balance Sheet
on31st March, 2015 was as follows:

Liabilities ₹ Assets ₹
Creditors 1,68,000 Bank 34,000
General Reserve 42,000 Debtors 46,000
Capital's A/cs: L 1,20,000 Stock 2,20,000
M 80,000 Investments 60,000
N 40,000 2,40,000 Furniture 20,000
Machinery 70,000

4,50,000 4,50,000

On the above date, O was admitted as a new partner and it was decided that:
(i) The new profit-sharing ratio between L, M, N and O will be 2 : 2 : 1 : 1.
(ii) Goodwill of the firm was valued at ₹ 1,80,000 and O brought his share of goodwill premium in
cash.
(iii) The market value of investments was ₹ 36,000.

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(iv) Machinery will be reduced to ₹ 58,000.

(v) A creditor of ₹ 6,000 was not likely to claim the amount and hence was to be written off.
(vi) O will bring proportionate capital so as to give him 1/6th share in the profits of the firm.
Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet of the new firm.

12. Kalpana and Kanika were partners in a firm sharing profits in the ratio of 3 : 2. On 1st April, 2019,
they admitted Karuna as a new partner for 1/5th share in the profits of the firm. The Balance Sheetof
Kalpana and Kanika as on 1st April, 2019 was as follows:

BALANCE SHEET OF KALPANA AND KANIKA as on 1st April, 2019

Liabilities ₹ Assets ₹
Capital A/cs: Land and Building 2,10,000
Kalpana 4,80,000 Plant 2,70,000
Kanika 2,10,000 6,90,000 Stock 2,10,000
General Reserve 60,000 Debtors 1,32,000
Workmen's Compensation Fund 1,00,000 Less: Provision 12,000 1,20,000
Creditors 90,000 Cash 26,000
1,30,000

9,40,000 9,40,000

It was agreed that:

a. the value of Land and Building will be appreciated by 20%.
b. the value of plant be increased by ₹ 60,000.
c. Karuna will bring ₹ 80,000 for her share of goodwill premium.
d. the liabilities of Workmen's Compensation Fund were determined at ₹ 60,000.
e. Karuna will bring in cash as capital to the extent of 1/5th share of the total capital of the new
firm.
Prepare Revaluation Account, Partners' Capital Accounts and Balance Sheet of the new firm.

13. Following was the Balance Sheet of A and B who were sharing profits in the ratio of 2 : 1 as at
31stMarch, 2019:

Liabilities ₹ Assets ₹
Capital A/cs: Building 25,000
A 15,000 Plant and Machinery 17,500
B 10,000 25,000 Stock 10,000
Sundry Creditors 32,950 Sundry Debtors 4,850
Cash in Hand 600

57,950 57,950

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They admit C into partnership on the following terms:

a. C was to bring ₹ 7,500 as his capital and ₹ 3,000 as goodwill for 1/4th share in the firm.
b. Values of the Stock and Plant and Machinery were to be reduced by 5%.
c. A Provision for Doubtful Debts was to be created in respect of Sundry Debtor ₹ 375.
d. Building was to be appreciated by 10%.
Pass necessary Journal entries to give effect to the arrangements. Prepare Revaluation Account,
Partners' Capital Accounts and Balance Sheet of the new firm.

14. Given below is the Balance Sheet of A and B, who are carrying on partnership business on 31st
March, 2019. A and B share profits and losses in the ratio of 2 : 1.
BALANCE SHEET OF A AND B
as at 31st March, 2019
Liabilities ₹ Assets ₹
Bills Payable 10,000 Cash in Hand 10,000
Creditors 58,000 Cash at Bank 40,000
Outstanding Expenses 2,000 Sundry Debtors 60,000
Capital A/cs: Stock 40,000
A 1,80,000 Plant 1,00,000
B 1,50,000 3,30,000 Building 1,50,000
4,00,000 4,00,000

C is admitted as a partner on 1st April, 2019 on the following terms:

a. C will bring ₹ 1,00,000 as his capital and ₹ 60,000 as his share of goodwill for 1/4th share in the
profits.
b. Plant is to be appreciated to ₹ 1,20,000 and the value of building is to be appreciated by 10%.
c. Stock is found overvalued by ₹ 4,000.
d. A provision for doubtful debts is to be created at 5% of sundry debtors.
e. Creditors were unrecorded to the extent of ₹ 1,000.
Pass the necessary Journal entries, prepare the Revaluation Account and Partners' Capital
Accounts, and show the Balance Sheet after the admission of C.

15. X and Y are partners in a firm sharing profits in the ratio of 3 : 2. Their Balance Sheet as at 31st
March, 2019 was as follows:

Amount Amount
Liabilities Assets
(₹) (₹)
Outstanding Rent 13,000 Cash 10,000
Creditors 20,000 Sundry Debtors 80,000
Workmen Compensation Reserve 5,600 Less : Provision 4,000 76,000
Capital A/cs: X 50,000 Stock 20,000
Y 60,000 1,10,000 Profit and Loss A/c 4,000
Machinery 38,600

1,48,600 1,48,600

On 1st April, 2019, they admitted Z as a partner for 1/6th share on the following terms:
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(i) Z brings in ₹ 40,000 as his share of Capital but he is unable to bring any amount for Goodwill.
(ii) Claim on account of Workmen Compensation is ₹ 3,000.
(iii) To write off Bad Debts amounted to ₹ 6,000.
(iv) Creditors are to be paid ₹ 2,000 more.
(v) There being a claim against the firm for damages, liabilities to the extent of ₹ 2,000 should be
created.
(vi) Outstanding rent be brought down to ₹ 11,200.
(vii) Goodwill is valued at 112/112 years' purchase of the average profits of last 3 years, less ₹
12,000. Profits for the last 3 years amounted to ₹ 10,000; ₹ 20,000 and ₹ 30,000.

Pass Journal entries, prepare Partners' Capital Accounts and opening Balance Sheet.

16. Rajesh and Ravi are partners sharing profits in the ratio of 3 : 2. Their Balance Sheet at 31st March,
2019 stood as:
BALANCE SHEET as at 31st March, 2019
Liabilities ₹ Assets ₹
Creditors 38,500 Cash 2,000
Outstanding Rent 4,000 Stock 15,000
Capital A/cs: Prepaid Insurance 1,500
Rajesh 29,000 Debtors 9,400
Ravi 15,000 Less : Provision 400 9,000
Machinery 19,000
Building 35,000
Furniture 5,000
86,500 86,500

Raman is admitted as a new partner introducing a capital of ₹ 16,000. The new profit-sharing ratio
is decided as 5 : 3 : 2. Raman is unable to bring in any cash for goodwill. So, it is decided to value
the goodwill on the basis of Raman's share in the profits and the capital contributed by him.
Following revaluations are made:
a. Stock to decrease by 5%;
b. Provision for Doubtful Debts is to be ₹ 500;
c. Furniture to decrease by 10%;
d. Building is valued at ₹ 40,000.
Show necessary Ledger Accounts and Balance Sheet of new firm

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Chapter – 6: Retirement/Death of a Partner

 Retirement of a Partner:

1. A, B and C were partners in a firm sharing profit & losses in the ratio of 3 : 1 : 1. On 31st march, 2018 their
Balance Sheet was as follows:
Liabilities Amount ₹ Assets Amount ₹
Creditors 1,00,000 Bank 32,000
Bills payable 50,000 Debtors 70,000
Capital Accounts: Less: Provision for
A 1,50,000 Doubtful debt 2,000 68,000
B 1,50,000 Stock 80,000
C 1,50,000 3,50,000 Building 3,00,000
Profit & Loss A/c 20,000

On the above date B retires on the following terms:

(i) Building was to be appreciated by 10%
(ii) Provision for doubtful debts was to be raised to 10% of debtors.
(iii) Creditors ₹ 10,000 would not be claimed.
(iv) There was an outstanding bill of ₹ 2,000 for repair.
(v) Goodwill of the firm was valued at ₹ 75,000 and no goodwill account was to be opened in the new
Balance Sheet.
(vi) B was to be paid ₹ 20,000 in cash and the balance was to be transferred to his loan account.

Prepare Revaluation Account, Partner Capital Accounts and New Balance Sheet of A and C after B’s retirement.

2. Portia, Mourparna and Nandana are three partners of a firm. They shared profit & loss in the ratio of 2 : 2 : 1
Their Balance Sheet as on 31.12.2016 was as under:

Liabilities Amount (₹) Assets Amount (₹)

Capital A/c: Land & Building 2,00,000
Potia 2,00,000 Machinery 3,00,000
Mourparna 3,00,000 Stock-in- Trade 1,00,000
Nandana 2,00,000 7,00,000 Sundry Debtors 1,10,000
General Reserve 60,000 Less: Provision 10,000 1,00,000
Sundry Creditors 40,000 Cash at Bank 1,00,000
8,00,000 8,00,000

On 01.04.2016 Portia retired from the firm on the following conditions:

(i) Land & Building to be valued at ₹ 3,00,000.
(ii) Machinery to be reduced by 10%.
(iii) All debtors were considered as good.
(iv) Goodwill valued at ₹ 30,000, but no goodwill is to appear in the books of accounts of the firm.
(v) Amount payable to Portia was transferred to her loan account.
(vi) Mourparna and Nandana will share profits and losses in the ratio of 3 : 2.

Prepare Revaluation Account, Partners capital account and Balance sheet as on 01.04.2016 after retirement of
Portia.
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3. Rai, Rwik and Neel were carrying on partnership business sharing profits in the ratio of 5 : 3 : 2
respectively. On 31st March, 2017 the Balance Sheet of the firm stand as follows:
Balance Sheet
As on 31.03.2017
Liabilities Amount Assets Amount
(₹) (₹)
Capitals Building 80,000
Rai ₹ 60,000 Stock 30,000
Rwik ₹ 40,000 Debtors 60,000
Neel ₹ 40,000 1,40,000 Cash 50,000
General Reserve 50,000
Creditors 30,000
2,20,000 2,20,000

Neel retired on 01.01.2017 on the following terms:-

(i) Building to be appreciated by ₹ 20,000.
(ii) Provision for doubtful debts to be made at 10% on debtor’s.
(iii) Goodwill of the firm is valued at ₹ 80,000 and value of goodwill will not be shown in the Balance
Sheet after retirement of Neel.
(iv) ₹ 26,000 to be paid immediately and the balance of his capital account to be transferred to his loan
account.

Prepare Revaluation Account and Partner’s Capital Account in the books of the firm.
4. P, Q and R are partners in a firm sharing profits and losses in the ratio of 3 : 2 : 1. Their Balance Sheet as
on 31.03.2014 is as follows:
Liabilities Amount (₹) Assets Amount (₹)
Capital Building 40,000
P 36,000 Furniture 4,000
Q 24,000 Stock 15,000
R 20,000 80,000 Debtors 35,000
Creditors 30,000 Cash 16,000
1,10,000 1,10,000

On the date, P retired on the following terms:

(i) Value of building is to be raised by 20%.
(ii) Furniture is to be depreciated by 10%
(iii) 5% provision is to be created on Debtors
(iv) Goodwill is to be valued ₹ 18,000

It is agreed that Q and R will share profit and losses equally after P’s retirement. Amount due to P is to be
transferred to P’s loan Account.
Prepare Revaluation A/c., Partner’s Capital Account, Balance Sheet.

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5. X, Y and Z were partners in a firm sharing profits in the ratio of 2 : 2 : 1. Their Balance Sheet as at
31st March, 2019 was:

Amount Amount
Liabilities Assets
(₹) (₹)
Creditors 49,000 Cash 8,000
Reserve 18,500 Debtors 19,000
Capital A/cs: X 82,000 Stock 42,000
Y 60,000 Building 2,07,000
Z 75,500 2,17,500 Patents 9,000
2,85,000 2,85,000

Y retired on 1st April, 2019 on the following terms:

a. Goodwill of the firm was valued at ₹ 70,000 and was not to appear in the books.
b. Bad Debts amounted to ₹ 2,000 were to be written off.
c. Patents were considered as valueless.
Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet
of X and Z after Y's retirement.

6. Kanika, Disha and Kabir were partners sharing profits in the ratio of 2 : 1 : 1. On 31st March, 2016,
their Balance Sheet was as under:
Amount Amount
Liabilities Assets
(₹) (₹)
Trade creditors 53,000 Bank 60,000
Employees' Provident Fund 47,000 Debtors 60,000
Kanika's Capital 2,00,000 Stock 1,00,000
Disha's Capital 1,00,000 Fixed assets 2,40,000
Kabir's Capital 80,000 Profit and Loss A/c 20,000

4,80,000 4,80,000

Kanika retired on 1st April, 2016. For this purpose, the following adjustments were agreed upon:
a. Goodwill of the firm was valued at 2 years' purchase of average profits of three completed years
preceding the date of retirement. The profits for the year:
2013-14 were ₹ 1,00,000 and for 2014-15 were ₹ 1,30,000.
b. Fixed Assets were to be increased to ₹ 3,00,000.
c. Stock was to be valued at 120%.
d. The amount payable to Kanika was transferred to her Loan Account.

Prepare Revaluation Account, Capital Accounts of the partners and the Balance Sheet of thereconstituted
firm.

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7. The Balance Sheet of X, Y and Z who were sharing profits in ratio of their capitals stood as follows
at 31st March, 2019:

Amount Amount
Liabilities Assets
(₹) (₹)
Sundry Creditors 13,800 Cash at Bank 11,000
Capital A/cs: Sundry Debtors 10,000
X 45,000 Less: Provision 200 9,800
Y 30,000 Stock 16,000
Z 15,000 90,000 Plant and Machinery 17,000
Land and Building 50,000
1,03,800 1,03,800

Y retired on 1st April, 2019 and the following terms:

a. Out of the insurance premium debited to Profit and Loss Account, ₹ 1,500 to be carried forward
as Prepaid Insurance.
b. Provision for Doubtful Debts to be brought up to 5% of Sundry Debtors.
c. Land and Building to be appreciated by 20%.
d. A provision of ₹ 4,000 be made in respect of outstanding bills for repairs.
e. Goodwill of the firm was determined at ₹ 21,600.
Y's share of goodwill be adjusted to that of X and Z who will share profits in future in the ratio of
3 : 1.
Pass necessary Journal entries and give the Balance Sheet after Y's retirement.
(Profit Rs. 7,200 & Balance Sheet Rs. 1,15,000)

8. A, B and C are partners in a firm, sharing profits and losses as A 1/3, B 1/2 and C 1/6 respectively.
The Balance Sheet of the firm as at 31st March, 2019 was:

Liabilities ₹ Assets ₹
Capital A/cs: Building 50,000
A 30,000 Plant and Machinery 40,000
B 40,000 Furniture 10,000
C 25,000 95,000 Stock 25,000
General Reserve 16,000 Debtors 18,000
Sundry Creditors 25,000 Less: Provision 500 17,500
Loan Payable 15,000 Cash in Hand 8,500

1,51,000 1,51,000

C retires on 1st April, 2019 subject to the following adjustments:

a. Goodwill of the firm be valued at ₹ 24,000. C's share of goodwill be adjusted into the accounts
of A and B who are going to share in future in the ratio of 3 : 2.
b. Plant and Machinery to be reduced by 10% and Furniture by 5%.
c. Stock to be appreciated by 15% and Building by 10%.
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d. Provision for Doubtful Debts to be raised to ₹ 2,000.

Pass Journal entries to record the above transactions in the books of the firm and show the Profit
and Loss Adjustment Account, Capital Account of C and the Balance Sheet of the firm after C's
retirement.

9. Pankaj, Naresh and Saurabh are partners sharing profits in the ratio of 3 : 2 : 1. On 1st April, 2019,
Naresh retired on that date, Balance Sheet of the firm was as follows:

Amount Amount
Liabilities Assets
(₹) (₹)
General Reserve 12,000 Bank 7,600
Sundry Creditors 15,000 Debtors 6,000
Bills Payable 12,000 Less: Provision 400 5,600
Outstanding Salary 2,200 Stock 9,000
Provision for Legal Damages 6,000 Furniture 41,000
Capital A/cs: Premises 80,000
Pankaj 46,000
Naresh 30,000
Saurabh 20,000 96,000

1,43,200 1,43,200

Additional Information:
a. Premises have appreciated by 20%, stock depreciated by 10% and provision for doubtful debts
was to be made 5% on debtors. Further, provision for legal damages is to be made for ₹ 1,200 and
furniture to be brought up to ₹ 45,000.
b. Goodwill of the firm be valued at ₹ 42,000.
c. ₹ 26,000 from Naresh's Capital Account be transferred to his Loan Account and balance be paid
through bank: if required, necessary loan may be obtained from bank.
d. New profit-sharing ratio of Pankaj and Saurabh is decided to be 5 : 1.

Give the necessary Ledger Accounts and Balance Sheet of the firm after Naresh's retirement.

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 Gobind Kumar Jha 9874411552

10. X, Y and Z are partners sharing profits and losses in the ratio of 3 : 2 : 1. Balance Sheet of the firm
as at 31st March, 2019 was as follows:

Amount Amount
Liabilities Assets
(₹) (₹)
Creditors 21,000 Cash at Bank 5,750
Workmen Compensation Reserve 12,000 Debtors 40,000
Investments Fluctuation Reserve 6,000 Less: Provision 2,000 38,000
Capital A/cs: Stock 30,000
X 68,000 Investment (Market Value ₹ 17,600) 15,000
Y 32,000 Patents 10,000
Z 21,000 1,21,000 Machinery 50,000
Goodwill 6,000
Advertisement Expenditure 5,250

1,60,000 1,60,000

Z retired on 1st April, 2019 on the following terms:

a. Goodwill of the firm is to be valued at ₹ 34,800.
b. Value of Patents is to be reduced by 20% and that of machinery to 90%.
c. Provision for doubtful debts is to be created @ 6% on debtors.
d. Z took over the investment at market value.
e. Liability for Workmen Compensation to the extent of ₹ 750 is to be created.
f. A liability of ₹ 4,000 included in creditors is not to be paid.

11. J, H and K were partners in a firm sharing profits in the ratio of 5 : 3 : 2. On 31st March, 2015, their
Balance Sheet was as follows:
Amount Amount
Liabilities Assets
(₹) (₹)
Creditors 42,000 Land and Building 1,24,000
Investment Fluctuation Fund 20,000 Motor Vans 40,000
Profit and Loss Account 80,000 Investments 38,000
Capital A/cs: J 1,00,000 Machinery 24,000
H 80,000 Stock 30,000
K 40,000 2,20,000 Debtors 80,000
Less: Provision 6,000 74,000
Cash 32,000
3,62,000 3,62,000

On the above date, H retired and J and K agreed to continue the business on the following terms:
(i) Goodwill of the firm was valued at ₹ 1,02,000.
(ii) There was a claim of ₹ 8,000 for workmen's compensation.
(iii) Provision for bad debts was to be reduced by ₹ 2,000.
(iv) H will be paid ₹ 14,000 in cash and balance will be transferred in his Loan Account which will be
paid in four equal yearly instalments together with interest @ 10% p.a.
(v) The new profit-sharing ratio between J and K will be 3 : 2 and their capitals will be in their new
34
 Gobind Kumar Jha 9874411552
profit-sharing ratio. The capital adjustments will be done by opening Current Accounts.
Prepare Revaluation Account, Partners' Capital Accounts and Balance Sheet of the new firm.

12. X, Y and Z are partners in a firm sharing profits in the ratio of 3 : 1 : 2. On 31st March, 2019, their
Balance Sheet was:
Amount Amount
Liabilities Assets
(₹) (₹)
Bills Payable 12,000 Freehold Premises 40,000
Sundry Creditors 28,000 Machinery 30,000
General Reserve 12,000 Furniture 12,000
Capital A/cs: Stock 22,000
X 30,000 Sundry Debtors 20,000
Y 20,000 Less: Provision for 1,000 19,000
Doubtful Debts
Z 28,000 78,000 Cash 7,000

1,30,000 1,30,000

Z retired on 1st April, 2019 from the business and the partners agree to the following:
a. Freehold Premises and Stock are to be appreciated by 20% and 15% respectively.
b. Machinery and Furniture are to be reduced by 10% and 7% respectively.
c. Provision for Doubtful Debts is to be increased to ₹ 1,500.
d. Goodwill of the firm is valued at ₹ 21,000 on Z's retirement.
e. Continuing partners to adjust their capitals in their new profit-sharing ratio after retirement of
Z.Surplus/deficit, if any, in their Capital Accounts will be adjusted through Current Accounts.

Prepare necessary Ledger Accounts and draw the Balance Sheet of the reconstituted firm.

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 Gobind Kumar Jha 9874411552

Death of a Partner:

1. P, Q and R are partners in a firm sharing profit & losses in 3 : 2 : 1, On 31 st March, 2015 their Balance
Sheet was as under:
Liabilities Amount (₹) Assets Amount (₹)
Capital A/c’s Buildings 90,000
P 80,000 Machinery 40,000
Q 50,000 Furniture 20,000
R 45,000 1,75,000 Stock 30,000
Reserve 30,000 Debtors 40,000
Creditors 25,000 Cash 10,000

R died on 31st July 2015. Under the terms of partnership deed R is entitled to:
(i) Capital including interest on capital @ 10% p.a.
(ii) Salary per month ₹ 1,000.
(iii) Share of profit on the basis of profit of the last year. Profit of the last year was ₹ 90,000.

Show R’s capital Account by showing working notes clearly.

2. The Balance Sheet of X, Y and Z as at 31st March, 2018 was:

Amount Amount
Liabilities Assets
(₹) (₹)
Bills Payable 2,000 Cash at Bank 5,800
Employees' Provident Fund 5,000 Bills Receivable 800
Workmen Compensation Reserve 6,000 Stock 9,000
General Reserve 6,000 Sundry Debtors 16,000
Loans 7,100 Furniture 2,000
Capital A/cs: Plant and Machinery 6,500
X 22,750 Building 30,000
Y 15,250 Advertising Suspense 6,000
Z 12,000 50,000
76,100 76,100

The profit-sharing ratio was 3 : 2 : 1. Z died on 31st July, 2018. The Partnership Deed provides that:
a. Goodwill is to be calculated on the basis of three years' purchase of the five years' average
profit. The profits were: 2017-18: ₹ 24,000; 2016-17: ₹ 16,000; 2015-16: ₹ 20,000 and
2014-15: ₹10,000 and 2013-14: ₹ 5,000.
b. The deceased partner to be given share of profits till the date of death on the basis of
profits forthe previous year.
c. The Assets have been revalued as: Stock ₹ 10,000; Debtors ₹ 15,000; Furniture ₹
1,500; Plantand Machinery ₹ 5,000; Building ₹ 35,000. A Bill Receivable for ₹ 600 was
found worthless.
d. A Sum of ₹ 12,233 was paid immediately to Z's Executors and the balance to be paid
in twoequal annual instalments together with interest @ 10% p.a. on the amount
outstanding.
e. Prepare Revaluation Account, Partner’s Capital Account and Balance Sheet of the new firm.
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 Gobind Kumar Jha 987441152
3. Priyank, Quillan and Rahul are partners in a firm sharing profit and loss in 3 : 2 : 1. On 31st
March, 2015 their balance sheet was as under:

Liabilities Amount (₹) Assets Amount (₹)

Capitals A/c’s Building 90,000
Priyank 80,000 Machinery 40,000
Quillan 50,000 Furniture 20,000
Rahul 45,000 1,75,000 Stock 30,000
Reserve 30,000 Debtors 40,000
Creditors 25,000 Cash 10,000
2,30,000

Rahul died on 31st July, 2015. Under the terms of Partnership Deed Rahul is entitled to:
(i) Capital including interest on capital @ 10% p.a.
(ii) Share of profit on the basis of profit of the last year. Profit of the last year was ₹
90,000.
Show Rahul’s Capital Account by showing working notes clearly.

4. P,Q and R are partners sharing profit and losses in 3 : 2 : 1. Their Balance Sheet as on
31.03.19:

Liabilities Amount(₹) Assets Amount(₹)

P’s Capital 80,000 Building 90,000
Q’s Capital 50,000 Machinery 40,000
R’s Capital 45,000 Furniture 20,000
Reserve 30,000 Stock 30,000
Creditors 25,000 Debtors 40,000
Cash 10,000
2,30,000

On 12th June 2019 R died. Under the terms of partnership deed R is entitled to:
(i) Capital including interest on Capital @ 10% p.a.
(ii) Share of profit on the basis of profit of last year. Profit of the last year was ₹ 90,000.
Show R’s Capital Account by showing working notes clearly.
 Gobind Kumar Jha 9874411552

Chapter – 8: Accounting for Share Capital

 Issue of shares: Issue of shares us a source of raising capital from market. A limited co. always issue
shares to public to raise fund. A company can issue shares for:
 Cash consideration
 Non cash consideration: issue to vendor, promoters, bonus shares & sweat shares.
Issue price of shares can be taken in different instalments, which are:
1st Instalments – Application
2nd Instalments – Allotment
3rd Instalments – 1st Call
4th Instalments – Final call
A company can issue shares in three ways:
a) At par
b) At premium
c) At discount: Not possible under New Company Act, 2013.

 Issue of Shares at Par: When shares are issued at its face value, then it is called issue of shares at par. Ex.:
Suppose, face value of shares is Rs. 10. If the co. issued such shares at Rs. 10 then it is called issue of
shares at par.
 Issue of Shares at Premium: When a company issue its shares at a price over and above, its face value
then it is called issue of shares at premium. Extra amount over face value is called “Securities Premium”.
Securities Premium is a capital profit for a company & it will come under the Reserve & Surplus in the
Balance Sheet. Sec. 52 of the Companies Act, 2013, Securities Premium can be utilized for:
a) Writing off preliminary expenses
b) Writing off premium on redemption of preference shares & debentures
c) Writing off underwriting commission
d) Expenses on issue of shares & debentures
e) Issuing fully paid bonus shares
f) Buy back of own shares & securities
Ex: Suppose face value of shares is Rs. 10. Issue price of shares is Rs. 15. It is called issue of shares at
premium. Here, securities premium = Rs. 15 – Rs. 10 = Rs. 5.

 Issue of shares at discount: As per section 53 of the Companies Act, 2013, a company cannot issue shares
of new class at discount. However, sweat equity shares can be issued at discount.
 Subscription of shares: When the public gives application for shares to the company then it is called
subscription. This subscription is of three types:
a) Full Subscription;
b) Over Subscription; and
c) Under Subscription.

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 Gobind Kumar Jha 9874411552

a) Full Subscription: When the co. received application equal to the issued capital then it is called full
subscription. Ex.: Suppose, X Ltd. issued 10,000 Equity Shares of Rs. 10 each. The co. received
application for 10,000 Equity Shares. Here, no. of application is equals to issued capital. Hence it is
called full subscription.
b) Over Subscription: When the co. received excess application than its issued capital, then it is called
over subscription. The co. either rejects the extra application or makes allotment in some suitable
ratio, called pro-rata allotment. Ex.: Suppose, X Ltd. issued 10,000 Equity Shares. The co. received
application for 11,000 Equity Shares. It is called over subscription. This excess shares should be
rejected by the co. or the co. can made pro-rata allotment.
c) Under Subscription: When a co. received application for less no. of Equity Shares than its issued
capital then it is called under subscription. But the co. has to follow “Minimum Subscription” clause of
Companies Act. According to this clause a co. must get application or 90% of issued capital, otherwise
the issue is supposed to be cancelled. It means when a co. gets application for 90% or more of issued
capital but less than 100% of issued capital then it is called under subscription. In case of under
subscription, problem will be solved on the basis of application received.

 Calls-in-Arrear: When a shareholder fails to pay any amount due on his shares then it is called Calls-in-
Arrear. In such case the Equity Shareholder is liable to pay interest @ 10% p.a. as per Table F. such
interest is payable after the due date of payment of call ot the actual payment, on the arrear amount of
calls.
 Calls-in-Advance: When any shareholder pays any calls money in advance then it is called “Calls-in-
Advance”. It is a liability for the company. The company is liable to pay interest on calls-in-advance @ 12%
p.a., as per Table F from the date of advance till the date of making calls.
 Share Capital: Share of a company are of two types such as:
a) Equity Share Capital,
b) Preference Share Capital
Equity Shareholders are the owner of the co. but preference shareholders are not the owner of the
company. However, Preference Shareholder will get dividend & capital repayment prior to the equity
shareholder.

 Classification of Share Capital: The various classifications are:

a) Authorized Capital
b) Issued Capital
c) Subscribed Capital
d) Called up Capital
e) Paid-up Capital

a) Authorized Capital: Authorised Capital is the maximum capital of a limited co. It is the capital for
which the co. is registered. Hence, it is also called registered capital or nominal capital. This capital is
mentioned in the memorandum of the company.
b) Issued Capital: Issued Capital is a part of authorized capital. It means out of authorized capital, when a
company issue shares then it is called issued capital.

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 Gobind Kumar Jha 9874411552

c) Subscribed Capital: When the public gives application for issued capital then it becomes subscribed
capital. In case of over subscription and full subscription, the issued capital and subscribed will be
same. However, in the case of under subscription, issued capital & subscribed capital will be different.
d) Called-up Capital: The amount of share are payable in instalments, when a co. called only a portion of
instalments then it is called “Called-up Capital”. Ex.:- Suppose a co. issued 10,000 Equity Shares of Rs.
10 each & amount payable on shares are: Rs. 3 on application, Rs. 2 on allotment and balance on a
call. If the co. called only allotment money then called up value of shares = 10,000 X 5 = Rs. 50,000.
e) Paid up Capital: Paid up capital means the amount paid by the shareholders. It means paid up capital
= Called up capital less calls-in-arrear.

Practical Problems
1. Prakash ltd. Company has ca subscribed capital of 2,00,000 equity shares of ₹ 10 per share. The directors
forfeited 500 shares held by a shareholder, who had failed to pay the first call made ₹ 2 per share and final
call made ₹ 3 per share. After forfeited of these 500 shares and directors re-issued these forfeited shares
@ 8 per share.
Pass the Journal Entries for Forfeited and re-issue of shares in the books of Prakash Ltd. Co.
2. Jivan Ltd. issued 15,000 Shares of ₹ 10 each at a premium of ₹ 2 per share payable as follows:
₹ 2 on Application, ₹ 5 On allotment (including premium), ₹ 5 on Call
Application were received for 20,000 shares, excess application moneys were refunded. A shareholder 3
holding 1,000 shares did not pay Call Money. His shares were forfeited after Final Call. Out of these 600
shares were reissued to Mr. Roy @ 8 Per share.
Pass Journal Entries in the books of Jivan Ltd.(Narration is not Required)
3. GKJ Ltd. Issued 20,000 shares @ 10 each at a premium of ₹ 2 per share payable as follows:
₹ 4 on application, ₹ 5 on allotment (including premium of ₹ 2), ₹ 3 on call.
Applications were received for 23,000 shares. Applications for 3000 shares were refunded. Allotment and call
moneys were duly received expect one shareholder who holds 1000 shares failed to pay the call money.
Give the journal Entries in the books of GKJ Ltd. (Narration is not Required)
4. Shanu Ltd. issued 10,000 shares of ₹ 10 each at a premium of ₹ 2 per share payable as follows:
₹ 2 on Application, ₹ 5 on Allotment (including premium of ₹ 2 ), ₹ 3 on 1 st call and ₹ 2 on Final call.
A shareholder, holding 500 shares did not pay final call money. His shares were forfeited. Out of these, 300
shares were re-issued to Mr. Sen at ₹ 9 per share.
Pass the Journal Entries in the books of Shanu Ltd. (Narration is not Required).
5. Getwell Ltd. purchased a machine for ₹ 1,10,000 from Impex limited. The purchase price of the machine
was paid off by issuing equity shares of ₹ 10 each at a premium of 10%.
Find the number of equity shares issued and pass necessary Journal Entries in the books of Getwell Ltd.
6. Dipaboli Ltd. issued 10,000 equity shares of ₹ 10 each at a premium of ₹ 2 per share. The share price is
payable in the following ways:
₹3 on application, ₹ 6 on allotment (including premium), ₹ 3 on first and final call.
Application were received for 12,000 shares. Excess application money on 2,000 shares were refunded. One
shareholder holding 100 shares paid the final call money along with allotment money. All money due were
received in full.
Pass necessary journal entries (including cash transaction) in the books of Dibaboli Ltd.
7. Bijoy Ltd. forfeited 200 shares of ₹ 10 each fully called up for non payment of final call money of ₹ 3 per
share. These shares are subsequently reissued at ₹ 8 per share. Pass necessary journal entries in the
books of Bijoy Ltd.

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 Gobind Kumar Jha 9874411552

8. DK Co. Ltd. issued 10,000 shares of ₹ 25 each at a premium of ₹ 5 per share payable as follows:
On application ₹ 10 (including premium ₹ 3), On allotment ₹ 10 (including premium of ₹ 2), on first call ₹ 5, on
Final call ₹ 5.
Application were received for 12,000 shares, excess application money will be adjusted with allotment money
due. All moneys were received up to Final call, except one shareholder holding 1,000 shares failed to pay
the final call money.
Pass journal entries including cash transaction in the books of DK Co. Ltd.
What do you mean by Reserve Capital? Distinguish between Share and Debenture.
9. Uttam Ltd. issued 1000 equity shares of ₹ 10 each at par payable on ₹ 6 on application, ₹ 2 on allotment
and ₹ 2 on call. All amounts are duly received except a holder of 200 shares failed to pay allotment money
and call money. His shares were forfeited. Show two journal entries for money collected on call forfeiture of
shares in the books of the company.
10. Jay Co. Ltd. issued 20,000 equity shares 20 each ata premium of ₹ 5 per share payable as follows:
On share application ₹ 5, On share allotment 10 (including premium of ₹ 5), On share first call ₹ 5, On share
final call.
All amounts due on shares were received except one shareholder holding 1000 shares, failed to pay the first
and final call money and another shareholder holding 500 shares failed to pay final call only. These 1500
shares were subsequently forfeited by the company. Show necessary journal entries in the books of Jay
Co.Ltd.
11. Lennova Ltd. has authorised share capital of ₹ 1,00,00,000 divided into 1,00,000 Equity Shares of ₹ 100
each . It has existing issued and paid up capital of ₹ 25,00,000. It further issued to public 25,000 Equity
Shares at a premium of 20% for subscription payable as under:
On Application: ₹ 30
On Allotment: ₹ 60 and
On Call: Balance Amount.
The issue was fully subscribed and allotment was made to all the applicants . The company did not
make the call during the year. Pass necessary Journal Entries in the books of Lennova Ltd.

12. The authorised capital of ₹ 16,00,000 of Bharat Ltd. is divide into 1,60,000 Equity Shares of ₹ 10 each.
Out of these shares, 80,000 Equity Shares were issued at par to public for subscription. The full nominal
value is payable on application. All the shares were subscribed by the public and total amount was paid
for. Pass necessary journal entries in the books of the company.

13. Hema Ltd. invited applications for 10,000 shares of ₹ 100 each payable as follows:
₹ 20 on application, ₹ 30 on allotment, ₹ 20 on first call and the balance on final call.
All the shares were applied and allotted. All the money was duly received.
You are required to Journalise these transactions.

14. Modern Marbles Ltd. was registered with an authorised capital of ₹10,00,000 divided into 7,500 Equity
Shares of ₹ 100 each and, 2,500 Preference Shares of ₹100 each. 1,000 Equity Shares and 500; 9%
Preference Shares were offered to public on the following terms – Equity Shares payable ₹10 on
application, ₹40 on allotment and the balance in two calls of ₹ 25 each. Preference Shares are
payable ₹ 25 on application, ₹ 25 on allotment and ₹50 on first and final call. All the shares were applied
for and allotted . Amount due was duly received. Prepare Cash Book and pass necessary Journal entries
to record the above issue of shares and show how the Share Capital will appear in the Balance Sheet.

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 Gobind Kumar Jha 9874411552

15. Seema Ltd. offered for subscription 10,000 shares of ₹ 25 each, payable ₹ 5 per share on application, ₹
10 per share on allotment (including ₹ 5 per share as premium), ₹ 5 per share as first call on the shares
and the balance in two equal amounts at intervals of three months. All the shares were applied for and
allotted. All the money was received except the second call and final call on 200 and 400 shares
respectively. Pass the entries in the company's Journal, Cash Book and the ledger. Also show the
company's Balance Sheet on completion of the above transactions.

16. Bharat Ltd. was incorporated with a capital of ₹ 2,00,000 divided into shares of ₹ 10 each. 2,000 shares
were offered for subscription and out of these, 1,800 shares were applied for and allotted. ₹ 3 per share
(including ₹ 1 premium) was payable on application, ₹ 4 per share (including ₹ 1 premium) on allotment,
₹ 2 per share on first call and ₹ 3 per share on final call. All the money was received. Give necessary
Journal entries and show share capital in the Balance Sheet.
17. Authorized capital of Suhani Ltd . is ₹ 45,00,000 divided into 30,000 shares of ₹ 150 each . Out of these
company issued 15,000 shares of ₹ 150 each at a premium of ₹ 10 per share . the amount was payable
as follows:
₹ 50 per share on application , ₹ 40 per share on allotment (including premium ), ₹ 30 per share on firs t
call and balance on final call . Public applied for 14,000 shares. All the money was duly received .
Prepare an extract of Balance Sheet of Suhani Ltd . as per Schedule III , Part I of the companies Act, 2013
disclosing the above information . Also prepare 'Notes to Accounts ' for the same.
18. Beautiful Co. Ltd. issued 3,000 equity shares of Rs. 10 each payable as Rs. 3 per share on applications, Rs.
5 per share (including Rs. 2 as premium) on allotment and Rs. 4 per share on call. All the shares were
subscribed. Money due on all shares was fully received excepting Ram holding 50 shares failed to pay the
allotment and call money and Shyam, holding 100 shares failed to pay the call money. All those 150
shares were forfeited. Of the shares forfeited, 125 shares (including whole of Ram’s shares) were
subsequently re-issued to Jadu as fully at a discount of Rs. 2 per share.
Pass necessary Journal Entries and prepare the Balance Sheet of the Company as per Schedule
III of the Companies Act, 2013.
19. Alfa Trading Co. Ltd. offered 10,000 equity shares of Rs. 10 each for subscription at a premium of Rs. 2
per share payable as follows:
On application Rs. 3; On allotment Rs. 4 (including premium); On Final call Rs. 5.
The company received application for 10,250 shares. 10,000 shares were allotted pro-rata in due course
and the excess money adjusted with allotment. Money due to allotment was received in time. The
company made the first and Final call and received the money in due time except in on 100 shares.
Subsequently the company forfeited those 100 shares for non-payment of call and reissued to Sri Ram
at Rs. 7 per share as fully paid up. Journalise the above transactions and show the Balance Sheet.
20. Blue Star Ltd. issued a prospectus inviting application for 50,000 Equity Shares of Rs. 10 at a premium of
20%, payable as Rs. 5 on application (including premium); Rs. 4 on allotment and the balance towards1st
and Final call.
Applications were received for 65,000 shares. Application moneys received on 5,000 shares were
refunded with letter of regret and allotments were made pro-rata to the applicants for 60,000 shares.
Money overpaid on applications including premium was adjusted on account of sums due on allotment.
Mr. Sharma to whom 700 shares were allotted failed to pay the allotment money and his shares were
forfeited on his subsequent failure to pay the call money. All the forfeited shares were subsequently
sold to Mr. Jain credited as fully paid for Rs. 9 per share. Pass Journal & Balance Sheet.

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 Gobind Kumar Jha 9874411552

21. Pioneers Ltd. issued for public subscriptions 60,000 equity shares of Rs. 10 each at a premium of Rs. 2
per share payable as under: On application – Rs. 2 per share; On allotment – Rs. 5 per share (including
premium); On 1st call – Rs. 2 per share; On final call – Rs. 3 per share.
Applications were received for 90,000 shares. Allotment was made pro-rata to applications for 72,000
shares, the remaining applications being refused. Tarak to whom 2,400 shares were allotted failed to
pay the allotment and 1st call money. His shares were forfeited after the 2 nd and Final call was made.
Nimai to whom 3,000 shares were allotted failed to pat the two calls. His shares were also forfeited.
Subsequently, out of these forfeited shares 3,900 shares (including all shares of Tarak) were re-issued to
Praveen as fully paid up at Rs. 8 per share.
Show the necessary journal entries and Balance Sheet of the firm.
22. Shraswati Ltd. issued 2,000 shares of Rs. 10 each at a premium of Rs. 2 per share payable as Rs. 2 per
share on application; Rs. 5 per share on allotment(including premium); Rs. 3 per share on first call and
Rs. 2 on final call. Application for 3,000 shares were received and allotment was made pro-rata to
applicants of 2,400 shares. Money overpaid on application was employed on account of sums due to
allotment.
Amar, to whom 40 shares were allotted, failed to pay the allotment money and on his subsequent
failure to pay 1st call, his shares were forfeited. Akbar who originally applied for 72 shares failed to pay
the two calls and his share, were forfeited after the final call. Of these, 80 shares were sold to Anthony
as fully paid for Rs. 9 per share, the whole of Amar’s shares being included. Show the Cash Book, the
Journal Entries and the Balance Sheet

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 Gobind Kumar Jha 9874411552

Chapter – 9: Issue of Debentures

1. Joy Ltd. Purchased the following assets from the Bijoy Ltd.
Building ₹ 4,00,000, Machinery ₹ 2,00,000, Stock ₹ 1,50,000. Bijoy Ltd. Was paid for such purchases ₹
1,50,000 by cheque and the balance by issue of 12% debentures of ₹ 100 per debenture at a premium of
25%.
2. Y Ltd. Purchased equipment worth ₹ 1,99,500 and issued debentures to the vendor as purchase
consideration. Pass necessary Journal Entries in the following two situations:
Situation 1: If 12% debenture of ₹ 100 each are issued to the vendor at a premium of 5%.
Situation 2: If 12% debenture of ₹ 100 each are issued to the vendor at a discount of 5%.

3. On 01.04.2015, fairdeal ltd. Issued 10,000, 10% Debentures of ₹ 100 each at a premium of 5%. Interest of
debenture is payable on 30 th September and 31dst March every year. Interest on Debentures were duly
paid during the year 2015-16.
Pass Journal entries for issue of debentures and payment of interest in the books of fairdeal Ltd.
4. Light Ltd. Purchased the following assets from Black Ltd:-
Plant & Machinery ₹ 2,00,000, Land & Building ₹ 5,00,000, Black Ltd. Was paid for such purchases ₹ 1,00,000
by Bank draft and the balance by issue of 10% Debenture (face value ₹ 100) at 20% premium.
Pass necessary journal entries in the books of light Ltd

5. Vishwas Ltd. issued 2,000; 9% Debentures of ₹ 100 each payable as follows:

₹ 25 on application; ₹ 25 on allotment and ₹ 50 on first and final call.
Applications were received for all the debentures along with the application money did allotment was
made . Call money was also received on the due date.
Pass necessary Journal entries in the books of the company.
6. A Ltd . issued 2,000; 9% Debentures of ₹ 100 each on the following terms:
₹20 on applications ;₹ 20 on allotment ; ₹ 30 on first call ; ₹ 30 on final call.
The public applied for 2,400 debentures. Applications for 1,800 debentures were accepted in full.
Applications for 400 debentures were allotted 200 debentures and applications for 200 debentures
were rejected . Pass necessary Journal entries .
7. ABC Ltd. issued 40,000; 10% Debentures of ₹ 100 each at par for cash payable in full along with the
application. Applications were received for 60,000 debentures . Debentures were allotted and
excess application money was refunded. Pass Journal entries in the books of the company.
8. Narain Laxmi Ltd. invited applications for issuing 7,500; 12% Debentures of ₹ 100 each at a
premium of ₹ 35 per debenture . The full amount was payable on application. Applications were
received for 10,000 Debentures. Allotment was made to all the applications on pro rata.
Pass necessary Journal entries for the above transactions in the books of Narain Laxmi Ltd.
9. Raj Ltd . issued 5,000; 8% Debentures of ₹ 100 each at a premium of 5% payable as follows:
₹ 10 on application ; ₹ 20 along with premium on allotment and balance on first and final call.
Pass necessary Journal entries.
10. Nipa Limited issued ₹ 10,00,000 Debentures of ₹ 100 each at a premium of 10% , payable 25% on
application (including premium) and the balance on allotment . The debentures were applied for and
the amount was dully received.
You are required to give Journal entries and prepare Cash Book.
11. Alok Ltd. issued 7,000, 10% Debentures of ₹ 500 each at a premium of ₹ 50 per debenture
redeemable at a premium of 10% after 5 years. According to the terms of issue, ₹ 200 was payable
on application and balance on allotment.
Record necessary Journal entries at the time of issue of 10% Debentures.
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12. Vijay Laxmi Ltd. invited applications for 10,000; 12% Debentures of ₹ 100 each at a premium of ₹ 70
per debenture .The full amount was payable on application.
Applications were received for 13,500 debentures. Applications for 3,500 debentures were rejected
and application money was refunded . Debentures were allotted to the remaining applications .
13. Iron Products Ltd. issued 5,000; 9% Debentures of ₹ 100 each at a premium of ₹ 40 payable as
follows;
a. ₹ 40 , including premium of ₹ 10 on applications;
b. ₹ 45, including premium of ₹ 15 on allotment ; and
c. Balance as first and final call.
The issue was subscribed and allotment made. Calls were made and due amount was received .
Pass Journal entries .
14. X Ltd . issued 12,000; 8% Debentures of ₹ 100 each at a discount of 5% payable as 25% on
application;20% on allotment and balance after three months.
Pass Journal entries.

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 Gobind Kumar Jha 9874411552

Chapter – 10: Accounting Ratios

1. From the following information calculate (a) Debt Equity Ratio and (b) Current Ratio:

Share Capital ₹ 60,000

General Reserve ₹ 30,000
Long term Loan ₹
1,00,000
Creditors ₹ 50,000
Bank Overdraft ₹ 66,000
Debenture ₹ 16,000
Debtors ₹ 70,000
Cash ₹ 30,000

2. Calculate Debtor’s Turnover ratio and Gross Profit Ratio.

Amount (₹)
Total Sales 9,00,000
Opening Debtors 1,20,000
Closing Debtors 1,30,000
Sales Return 1,00,000
Cash Sales 2,50,000
Gross Profit 1,80,000

3. Calculate Debtors Turnover ratio and Gross profit ratio.

Amount (₹)
Total Sales 2,60,000
Cash Sales 60,000
Opening Debtors 20,000
Closing Debtors 30,000
Gross Profit 52,000

4. From the following information calculate (a) Current Ratio (b) Liquid ratio.

Amount (₹)
Debtors 30,000
Prepaid expense 2,000
Stock 20,000
Cash at Bank 10,000
Creditors 25,000
Bank overdraft 6,000

1. Calculate Inventory Turnover Ratio from the data given Below:

₹ ₹
Inventory in the beginning of year
the year
Inventory at the end of the
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 Gobind Kumar Jha 9874411552
10,000 Revenue from Operations, i.e., Sales 1,00,000
20,000 Carriage Inwards 5,000

Purchases 50,000
State the significance of this ratio.

2. From the following information, calculate value of Opening Inventory:

Closing Inventory = ₹ 68,000
Total Sales = ₹ 4,80,000 (including Cash Sales ₹ 1,20,000)
Total Purchases = ₹ 3,60,000 (including Credit Purchases ₹
2,39,200)
Goods are sold at a profit of 25% on cost.

3. From the following information, determine Opening and Closing inventories:

Inventory Turnover Ratio 5 Times, Total sales ₹ 2,00,000, Gross Profit Ratio 25%. Closing Inventory
is more by ₹ 4,000 than the Opening Inventory.

4. Following figures have been extracted from Shivalika Mills Ltd.:

Inventory in the beginning of the year ₹ 60,000.
Inventory at the end of the year ₹ 1,00,000.
Inventory Turnover Ratio 8 times.
Selling price 25% above cost.
Compute amount of Gross Profit and Revenue from Operations (Net Sales).

5. Inventory Turnover Ratio 5 times; Cost of Revenue from Operations (Cost of Goods Sold) ₹
18,90,000. Calculate Opening Inventory and Closing Inventory if Inventory at the end is 2.5 times
more than that in the beginning.
₹ 3,00,000 is the Cost of Revenue from Operations (Cost of Goods Sold).
Inventory Turnover Ratio 8 times; Inventory in the beginning is 2 times more than the inventory at the
end. Calculate value of Opening and Closing Inventories.

6. From the following Information, calculate Inventory Turnover Ratio:

Credit Revenue from Operations ₹ 3,00,000; Cash Revenue from Operations ₹ 1,00,000, Gross Profit
25% of Cost, Closing Inventory was 3 times the Opening Inventory. Opening Inventory was10% of Cost of
Revenue from Operations.

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Chapter – 11: Cash Flow Statement

1. From the following Balance Sheet of B Ltd, prepare a Cash Flow Statement for the year ended 31.03.2018:

Note no. 31.03.2017 31.08.2018

Particulars Amount Amount
(₹) (₹)
I.Equity and Liabilities
1. Shareholder’s Fund:
(a) Share Capital 4,00,000 5,00,000
(b) Reserve & Surplus 20,000 46,000
(Balance in Statement of Profit & Loss)
2. Current Liabilities:
Sundry Creditors 40,000 30,000
Outstanding Expense 8,000 10,000
Short term Provision 92,000 50,000
(Provision for Taxation) 5,60,000 6,36,000
II Assets:
1. Non- Current Assets:
Tangible Assets 1,00,000 1,32,000
2. Current Assets:
(a) Inventories 1,60,000 1,80,000
(b) Trade Receivable 2,40,000 2,30,000
(c) Cash and Cash equivalents 60,000 94,000
5,60,000 6,36,000

2. Following are the summarized Balance Sheet of B.T Ltd. for the year ended 31.03.2015 and 31.03.2016:

Liabilities 31.03.2015 31.03.2016 Assets 31.03.2015 31.03.2016

Equity Share Capital of Plant and Machinery
₹10 each 10,00,000 13,00,000 (at cost) 7,00,000 9,30,000
General Reverse 40,000 40,000 Less:-Depreciation 2,00,000 2,30,000
Profit & Loss A/c 20,000 24,000 5,00,000 7,00,000
12% Debenture 1,50,000 1,50,000 Investment (Long term) 2,00,000 2,80,000
Sundry Creditors 2,40,000 2,20,000 Stock 4,00,000 5,00,000
Bills Payable 20,000 36,000 Debtors 3,00,000 2,00,000
Cash at Bank 70,000 90,000
14,70,000 17,70,000 14,70,000 17,70,000
Prepare a cash flow statement of B.T. Ltd. for the year ended on 31.03.2016.

3. From the following Balance Sheets. Prepare Cash flow statement for the year ended on 31.12.2015:
Liabilities 31.12.2014 31.12.2015Assets 31.12.2014 31.12.2015
Share capital 55,000 70,000 Goodwill 30,000 20,000
Profit & Loss A/c 25,000 45,000 Fixed Assets 40,000 85,000
Reserve 15,000 20,000 Investment (Long term) 12,200 11,500
9 % Loan (taken on Inventories 30,000 45,000
31.12.2015) 25,000 50,000 Debtors 20,000 35,000
Creditors 16,000 20,000 Bills receivable 4,000 10,000
Bills payable 4,000 7,500 Cash & Bank 3,800 6,000

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 Gobind Kumar Jha 9874411552
4. From the following information calculate Cash Flow Statement from operating activities for the ended
31.03.2014.
Balance Sheet of GKJ Ltd.
As on 31.03.2013 and 31.03.2014
Liabilities 31.03.2013 31.03.2014 Assets 31.03.2013 31.03.2014
Share Capital 1,20,000 14,00,000 Goodwill 20,000 16,000
General Reverse 8,000 12,000 Building 76,000 96,400
Profit & Loss A/c 7,200 6,200 Investment 4,000 14,000
Proposed Debenture 11,200 20,200 Debtors 30,000 43,200
Creditors 28,400 36,400 Stock 34,000 31,200
Cash 10,800 14,00
1,74,800 2,14,800 1,74,800 2,14,800

Balance Sheets of M. S. Ltd. as on 31.12.2014 and 31.12.2015

5. From the following information, calculation Cash Flow from Operating Activities and Investing Activities:
31st,
31st, March,
Particular March,
2019, (₹)
2018, (₹)
Surplus, i.e., Balance in Statement of 2,50,000 10,00,000
Profit and Loss
Provision for Tax 75,000 75,000
Trade Payables 1,00,000 3,75,000
Current Assets (Trade Receivables 11,50,000 13,00,000
and Inventories)
Fixed Assets (Tangible) 21,25,000 23,30,000
Accumulated Depreciation 10,62,500 11,00,000

Additional Information:
a. A machine having book value of ₹ 1,00,000 (Depreciation provided thereon ₹ 1,62,500) was sold at a loss of
₹ 20,000.
Tax paid during the year ₹ 75,000.

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6. From the following information, calculate Net Cash Flow from Operating Activities and Financing Activities:

31st March 31st March

Particular 2019 2018
(₹) (₹)
Equity Share Capital 13,75,000 11,25,000
5% Preference Share Capital 5,00,000 7,50,000
General Reserve 3,75,000 3,00,000
Surplus i.e., Balance in Statement of Profit and Loss 3,75,000 (3,50,000)
Securities Premium Reserve 25,000 ...
Provision for Tax 1,00,000 50,000
Non-current Liabilities (8% Debentures) 6,50,000 3,75,000
Short-term Borrowings (8% Bank Loan) 1,00,000 1,25,000
Trade Payables 5,00,000 2,50,000
Trade Receivables and Inventories 13,00,000 11,50,000

7. From the following information, prepare Cash Flow Statement:

Particulars (₹)
Opening Cash and Bank Balances 1,50,000
Closing Cash and Bank Balances 1,70,000
Decrease in Stock 80,000
Increase in Bills Payable 1,20,000
Sale of Fixed Assets 3,00,000
Repayment of Long-term Loan 5,00,000
Net Profit for the Year 20,000

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 Gobind Kumar Jha 9874411552

8. Following is the Balance Sheet of Fine Products Ltd. as at 31st March, 2019:

31st 31st
Note March, March,
Particulars
No. 2019 2018
(₹) (₹)
I. EQUITY AND LIABILITIES
1. Shareholders' Funds
(a) Share Capital: Equity Share Capital 3,50,000 3,00,000
(b) Reserves and Surplus 1 57,000 38,000
2. Current Liabilities
(a) Trade Payables 53,000 35,000
(b) Other Current Liabilities 6,000 8,000
(c) Short-term Provisions 2 32,000 28,000
Total 4,98,000 4,09,000
II. ASSETS
1. Non-Current Assets
(a) Fixed Assets:
(i) Tangible Assets 3 2,48,000 2,00,000
(ii) Intangible Assets (Goodwill) 40,000 50,000
(b) Non-Current Investments 35,000 10,000
2. Current Assets
(a) Inventories 39,000 57,000
(b) Trade Receivables 1,08,000 75,000
(c) Cash and Bank Balance 28,000 17,000
Total 4,98,000 4,09,000

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 Gobind Kumar Jha 9874411552

Notes to Accounts

31st 31st
March, March,
Particulars
2019 2018
(₹) (₹)
1. Reserves and Surplus
General Reserve 30,000 20,000
Surplus, i.e., Balance in Statement of 27,000 18,000
Profit and Loss
57,000 38,000
2. Short-term Provisions
Provision for Tax 32,000 28,000
3. Tangible Fixed Assets
Land and Building 57,000 1,10,000
Plant and Machinery 1,91,000 90,000
2,48,000 2,00,000

You are required to prepare Cash Flow Statement for the year ended 31st March, 2019.

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 Gobind Kumar Jha 9874411552
9. Prepare a Cash Flow Statement on the basis of the information given in the Balance Sheet of Libra Ltd. as at
31st March, 2013 and 31st March 2012:
31st 31st
Note March, March,
Particulars
No. 2013 2012
(₹) (₹)
I. EQUITY AND LIABILITIES
1. Shareholders' Funds
(a) Share Capital 8,00,000 6,00,000
(b) Reserves and Surplus 1 4,00,000 3,00,000
2. Non-Current Liabilities
Long-term Borrowings 1,00,000 1,50,000
3. Current Liabilities
(a) Trade Payables 40,000 48,000
Total 13,40,000 10,98,000
II. ASSETS
1, Non-Current Assets
(a) Fixed Assets:
Tangible Assets 8,50,000 5,60,000
(b) Non-Current Investments 2,32,000 1,60,000
2. Current Assets
(a) Current Investments 50,000 1,34,000
(b) Inventories 76,000 82,000
(c) Trade Receivables 38,000 92,000
(d) Cash and Cash Equivalents 94,000 70,000
Total 13,40,000 10,98,000

Notes to Accounts

31st 31st
March, March,
Particulars
2013 2012
(₹) (₹)
I. Reserves and Surplus
Surplus, i.e., Balance in Statement of Profit and Loss 4,00,000 3,00,000

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10. Following are the Balance Sheets of Solar Power Ltd. as at 31st March, 2014 and 2013:
Solar Power Ltd.
BALANCE SHEET
31st
31st March,
Note March,
Particulars 2013
No. 2014
(₹)
(₹)
I. EQUITY AND LIABILITIES
1. Shareholders' Funds
(a) Share Capital 24,00,000 22,00,000
(b) Reserves and Surplus 1 6,00,000 4,00,000
2. Non-Current Liabilities
Long-term Borrowings 4,80,000 3,40,000
3. Current Liabilities
(a) Trade Payables 3,58,000 4,08,000
(b) Short-term Provisions 1,00,000 1,54,000
Total 39,38,000 35,02,000
II. ASSETS
1. Non-Current Assets
Fixed Assets:
(i) Tangible Assets 2 21,40,000 17,00,000
(ii) Intangible Assets 3 80,000 2,24,000
2. Current Assets
(a) Current Investments 4,80,000 3,00,000
(b) Inventories 2,58,000 2,42,000
(c) Trade Receivables 3,40,000 2,86,000
(d) Cash and Cash Equivalents 6,40,000 7,50,000
Total 39,38,000 35,02,000

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Notes to Accounts

31st
31st March,
March,
Particulars 2014
2013
(₹)
(₹)
1. Revenue and Surplus
Surplus, i.e., Balance in Statement of Profit and Loss 6,00,000 4,00,000
2. Tangible Assets
Machinery 25,40,000 20,00,000
Less: Accumulated Deprciation (4,00,000) (3,00,000)
21,40,000 17,00,000
3. Intangible Assets
Goodwill 80,000 2,24,000

11. Following is the Balance Sheet of Mevanca Limited as at 31st March, 2017:
Mevanca Limited BALANCE SHEET
as at 31st March, 2017:
31st 31st
Note March, March,
Particulars
No. 2017 2016
(₹) (₹)
I. EQUITY AND LIABILITIES
1. Shareholders' Funds
(a) Share Capital 3,00,000 1,00,000
(b) Reserves and Surplus 1 25,000 1,20,000
2. Non-Current Liabilities
Long-term Borrowings 2 80,000 60,000
3. Current Liabilities
(a) Trade Payables 6,000 20,000
(b) Short-term Provisions 3 68,000 70,000
Total 4,79,000 3,70,000
II. ASSETS
1. Non-Current Assets
Fixed Assets 4 3,36,000 1,92,000
2. Current Assets
(a) Inventories 67,000 60,000
(b) Trade Receivables 51,000 65,000
(c) Cash and Cash Equivalents 25,000 49,000
(d) Other Current Assets … 4,000
Total 4,79,000 3,70,000

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Notes to Accounts
31st 31st
March, March,
Particulars
2017 2016
(₹) (₹)
1. Reserves and Surplus
Surplus, i.e., Balance in Statement of Profit and Loss 25,000 1,20,000
25,000 1,20,000
2. Long-term Borrowings
10% Long-term Loan 80,000 60,000
80,000 60,000
3. Short-term Provisions
Provision for Tax 68,000 70,000
68,000 70,000
4. Fixed Assets
Machinery 3,84,000 2,15,000
Accumulated Depreciation (48,000) (23,000)
3,36,000 1,92,000

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12. From the following Balance Sheet of Kumar Ltd. as at 31st March, 2019, prepare Cash Flow Statement:
31st 31st
March, March,
Particulars Note No.
2019 2018
(₹) (₹)
I. EQUITY AND LIABILITIES
1. Shareholders' Funds
(a) Share Capital 1 16,00,000 10,40,000
(b) Reserves and Surplus, 2 5,50,000 2,60,000
2. Non-Current Liabilities
Long-term Borrowings:
9% Debentures 4,00,000 6,00,000
3. Current Liabilities
Trade Payables 4,50,000 1,00,000
Total 30,00,000 20,00,000
II. ASSETS
1. Non-Current Assets
Fixed Assets 20,00,000 15,00,000
2. Current Assets
(a) Inventories 3,00,000 2,00,000
(b) Trade Receivables 2,00,000 1,00,000
(c) Cash and Cash Equivalents 5,00,000 2,00,000
Total 30,00,000 20,00,000

Notes to Accounts
31st 31st
March, March,
Particulars
2019 2018
(₹) (₹)
1. Share Capital
Equity Share Capital 15,00,000 10,00,000
7% Preference Share Capital 1,00,000 40,000
16,00,000 10,40,000
2. Reserves and Surplus
General Reserve 4,00,000 60,000
Surplus, i.e., Balance in Statement of Profit and Loss 1,50,000 2,00,000
5,50,000 2,60,000

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13. Following are the Balance Sheets of Krishtec Ltd. for the years ended 31st March 2012 and 2011:
31st 31st
Note March, March,
Particulars
No. 2012 2011
(₹) (₹)
I. EQUITY AND LIABILITIES
1. Shareholders' Funds
(a) Share Capital 12,00,000 8,00,000
(b) Reserves and Surplus (Surplus, i.e., Balance in 3,50,000 4,00,000
Statement of Profit and Loss)
2. Non-Current Liabilities
Long-term Borrowings 4,40,000 3,50,000
3. Current Liabilities
(a) Trade Payables 60,000 50,000
Total 20,50,000 16,00,000

II. ASSETS
1, Non-Current Assets
Fixed Assets:
Tangible Assets 12,00,000 9,00,000
2. Current Assets
(a) Inventories 2,00,000 1,00,000
(b) Trade Receivables 3,10,000 2,30,000
(c) Cash and Cash Equivalents 3,40,000 3,70,000
Total 20,50,000 16,00,000

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14. From the following Balance Sheet of JY Ltd. as at 31st March 2017, prepare a Cash Flow
Statement:

BALANCE SHEET
as at 31st March, 2017
31st
31st March,
Particular Note No. March,
2017 (₹)
2016 (₹)
I. EQUITY AND LIABILITIES
1. Shareholders' Funds
(a) Share Capital 5,00,000 5,00,000
(b) Reserves and Surplus 1 1,00,000 (25,000)
2. Non-Current Liabilities
Long-term Borrowings 2 2,50,000 1,50,000
3. Current Liabilities
(a) Short-term Borrowings 3 1,50,000 1,10,000
(b) Short-term Provisions 4 1,25,000 75,000
Total 11,25,000 8,00,000
II. ASSETS
1. Non-Current Assets
Fixed Assets–Tangible 5 6,00,000 4,50,000
2. Current Assets
(a) Trade Receivables 2,75,000 2,25,000
(b) Cash and Cash Equivalents 50,000 25,000
(c) Short-term Loans and Advances 2,00,000 1,00,000
Total 11,25,000 8,00,000

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Notes to Accounts

31st March, 31st March,

Particular 2017 2016
(₹) (₹)
1. Reserves and Surplus
Surplus, i.e., Balance in Statement of Profit and 1,00,000 (25,000)
Loss
1,00,000 (25,000)
2. Long-term Borrowings
10% Debentures 2,50,000 1,50,000
2,50,000 1,50,000
3. Short-term Borrowings
Bank Overdraft 1,50,000 1,00,000
1,50,000 1,00,000
4. Short-term Provisions
Provision for Tax 1,25,000 75,000
1,25,000 75,000
5. Tangible Assets
Machinery 7,37,500 5,25,000
Accumulated Depreciation (1,37,500) (75,000)
6,00,000 4,50,000

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15. Prepare Cash Flow Statement from the following Balance Sheet:
31st 31st
Note March, March,
Particulars 2013 2012
No.
(₹) (₹)
I. EQUITY AND LIABILITIES
1. Shareholders' Funds
(a) Share Capital 6,00,000 5,00,000
(b) Reserves and Surplus 1 4,00,000 2,00,000
2. Current Liabilities
(a) Trade Payables 2,80,000 1,80,000
Total 12,80,000 8,80,000
II. ASSETS
1, Non-Current Assets
(a) Fixed Assets:
Plant and Machinery 5,00,000 3,00,000
2. Current Assets
(a) Inventories 1,00,000 1,50,000
(b) Trade Receivables 6,00,000 4,00,000
(c) Cash and Cash Equivalents 80,000 30,000
Total 12,80,000 8,80,000

Notes to Accounts

31st 31st
March, March,
Particulars
2013 2012
(₹) (₹)
I. Reserves and Surplus
Surplus, i.e., Balance in Statement of Profit and Loss 4,00,000 2,00,000
Additional Information:
(i) An old machinery having book value of ₹50,000 was sold for ₹60,000.
(ii) Depreciation provided on Machinery during the year was ₹30,000.

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16. Following is the summarised Balance Sheet of Philips India Ltd. as at 31st March 2018:
31st 31st
Note March, March,
Particulars
No. 2018 2017
(₹) (₹)
I. EQUITY AND LIABILITIES
1. Shareholders' Funds
(a) Share Capital 13,50,000 13,50,000
(b) Reserves and Surplus 1 11,34,000 10,68,000
2. Non-Current Liabilities
Long-term Borrowings: 10% Mortgage Loan 8,10,000 ...
3. Current Liabilities
(a) Trade Payables (Creditors) 4,20,000 5,04,000
(b) Short-term Provisions:
Provision for Tax 30,000 2,25,000
Total 37,26,000 31,47,000
II. ASSETS
1, Non-Current Assets
(a) Fixed Assets (Tangible) 9,60,000 12,00,000
(b) Non-Current Investments 1,80,000 1,50,000
2. Current Assets

(a) Current Investments 21,000 17,000

(b) Inventories 63,30,000 7,82,000
(c) Trade Receivables 13,65,000 6,30,000
(c) Cash and Cash Equivalents 5,70,00 4,30,000
Total 37,26,000 31,47,000

Notes to Accounts

31st 31st
March, March,
Particulars
2018 2017
(₹) (₹)
I. Reserves and Surplus
General Reserve 9,30,000 9,00,000
Surplus, i.e., Balance in Statement of Profit and Loss 2,04,000 1,68,000
11,34,000 10,68,000

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23. From the following Balance Sheet, prepare Cash Flow Statement:
31st 31st
Note March, March,
Particulars ulars
No. 2019 2018
(₹) (₹)
I. EQUITY AND LIABILITIES
1. Shareholders' Funds
(a) Share Capital 2,50,000 2,00,000
(b) Reserves and Surplus, 1 90,600 80,500
2. Current Liabilities
(a) Short-term Borrowings: Bank Loan ... 70,000
(b) Trade Payables 1,35,200 1,50,000
(c) Short-term Provisions: Provision for Tax 35,000 30,000
Total Total Expenses 5,10,800 5,30,500
II. ASSETS
1. Non-Current Assets
Fixed Assets:
(i) Tangible Assets 2 3,59,000 3,50,000
(ii) Intangible Assets: Goodwill 5,000 ...
2. Current Assets
(a) Inventories 74,000 1,00,000
(b) Trade Receivables 64,200 80,000
(c) Cash and Cash Equivalents 8,600 500
Total 5,10,800 5,30,500

Notes to Accounts
31st 31st
March, March,
Particulars
2019 2018
(₹) (₹)
I. Reserves and Surplus
General Reserve 60,000 50,000
Surplus, i.e., Balance in Statement of Profit and Loss 30,600 30,500
90,600 80,500
2. Tangible Assets
Land and Building 1,90,000 2,00,000
Plant and Machinery 1,69,000 1,50,000
3,59,000 3,50,000

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24. From the following Balance Sheet of Akash Ltd. as at 31st March 2014:

31st
31 March,
March,
Particulars Note No. 2013
2014
(₹)
(₹)
I. EQUITY AND LIABILITES
1. Shareholders' Funds
(a) Share Capital 15,00,000 14,00,000
(b) Reserves and Surplus 1 2,50,000 1,10,000
2. Non-Current Liabilities
Long-term Borrowings 2,00,000 1,25,000
3. Current Liabilities
(a) Short-term Borrowings 2 12,000 10,000
(b) Trade Payables 15,000 83,000
(c) Short-term Provisions 3 18,000 11,000
Total 19,95,000 17,39,000
II. ASSETS
1. Non-Current Assets
Fixed Assets:
(i) Tangible Assets 4 18,60,000 16,10,000
(ii) Intangible Assets 5 50,000 30,000
2. Current Assets
(a) Current Investments 8,000 5,000
(b) Inventories 37,000 59,000
(c) Trade Receivables 26,000 23,000
(d) Cash and Cash Equivalents 14,000 12,000
Total 19,95,000 17,39,000

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tes to Accounts :
31st
31st March,
Particulars March,
2013 (₹)
2014 (₹)
1. Reserves and Surplus
Surplus, i.e., Balance in Statement of Profit and Loss 2,50,000 1,10,000
2. Short-term Borrowings :
Bank Overdraft 12,000 10,000
3. Short-term Provisions
Provision for Tax 18,000 11,000

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