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Dey's Solution Book Accountancy XII Part-A 2021-22 Edition
Dey's Solution Book Accountancy XII Part-A 2021-22 Edition
Dr. Receipt and Payment Account Cr. Dr. Subscriptions A/c Cr.
Receipts (`) Payments (`) Particulars (`) Particulars (`)
To Balance b/d By Rent 3,000 To Balance b/d 5,000 By Balance b/d 5,000
Cash 1,000 By Sports materials 4,800 (O/s in the beginning) (Advance in the
Bank 7,200 By Refreshments 600 To Income and beginning)
To Subscriptions By Maintenance expenses Expenditure A/c 1,11,000 By Cash A/c 1,01,000
2018-19 500 for tennis court 2,000 (Bal. Fig.) By Balance c/d (O/s 12,000
2019-20 7,600 By Salary 2,500 To Balance c/d at the end)
2,000
2020-21 900 9,000 By Tournament expenses 2,400 (Advance at the end)
To Sale of refreshments 1,000 By Furniture purchased 1,500
To Entrance fees 1,000 By Office expenses 1,200 1,18,000 1,18,000
To Sale of old sports 1,200 By Balance c/d
materials Cash 400 Do it yourself 1.6
To Donation for pavilion 4,600 Bank (Bal. Fig.) 6,600
Subscription A/c
25,000 25,000
Particulars (`) Particulars (`)
Do it yourself 1.2 To O/s Subscription 27,000 By Advance Subscription 8,000
(beginning) (beginning)
Income & Expenditure A/c
To Income & 1,20,000 By Receipts & Payments 1,27,000
Expenditure ` Income ` Expenditure A/c A/c (Bal. Fig.)
To Salary 1,800 By Subscriptions 22,500 To Advance 10,000 By Outstanding 22,000
To Rent 2,400 By Entrance Fees 2,000 Subscription (end) Subscription (end)
Less: Prepaid (1,200) 1,200 (3,000 – 1,000)
1,57,000 1,57,000
To Electricity 1,000 By Donations 750
To Taxes 2,200 By Rent of Hall 1,750
Do it yourself 1.7
To Printing & Stationery 400 By Interest on F.D. 1,368
To Sundry Expenses 900 (15,200 × 9/100) Subscription received during the year 2,45,000
To Surplus (Bal. Fig.) 20,868 Add. O/S subscription as on 31.3.2020
28,368 28,368 For 2018-19 (14,600 – 14,000) 600
For 2019-20 23,700 24,300
Do it yourself 1.3
Add: Advance Subscription for the year 2019-20 26,400
Dr. Subscriptions A/c Cr.
2,95,700
Particulars ` Particulars `
Less: Outstanding Subscription as on 31.3.2019 (14,600)
To Balance b/d 6,500 By Balance b/d 4,100
(O/s in the beginning) (Advance in beginning) Amount of subscription to be credited in the 2,81,100
To Income and 69,000 By Cash A/c 68,500 Income and Expenditure A/c
Expenditure A/c(Bal. Fig.) By Balance c/d 5,400
To Balance c/d 2,500 (O/s at the end) Do it yourself 1.8
(Advance at the end) Subscription A/c
78,000 78,000
(`) (`)
Dr. Receipts and Payments A/c Cr. To Balance b/d 40,000 By Balance b/d 12,000
(outstanding (Advance
Receipts ` Payments ` subscriptions in the subscriptions in
To Subscriptions 68,500 beginning) the beginning)
Dr. Income and Expenditure A/c Cr. To I & E A/c (200 × 2,00,000 By Cash A/c 2,05000
`1,000)
Expenditure ` Income `
To Balance c/d (Advance 30,000 By Balance c/d 53,000
By Subscriptions 69,000 Subscriptions at the (outstanding
Balance Sheet as on 31 March 2020 end) subscriptions at
Liabilities ` Assets ` the end)
For 2018-19 Nil
Advance Subscriptions 2,500 Subscription Outstanding 5,400 For 2019-20 53,000
2,70,000 2,70,000
Do it yourself 1.4
Dr. Subscriptions A/c Cr. Do it yourself 1.9
Particulars ` Particulars ` Subscription A/c
To Balance b/d 6,000 By Cash A/c 98,000 Particulars (`) Particulars (`)
(O/s in the beginning) By Balance c/d (O/s To Balance b/d 16,000 By Balance b/d 12,000
To I & E A/c (Bal. Fig.) 1,00,000 at the end): (outstanding opening) (Advance opening)
To Balance c/d For 2019 3,000 To Income & 68,000 By Cash A/c 70,000
(Advance at the end) 2,000 For 2020 7,000 10,000 Expenditure A/c
1,08,000 1,08,000 To Balance c/d 11,000 By Balance c/d
Balance Sheet as on 31 March 2020 (Advance end) (outstanding end)
For 2018-19 8,000
Liabilities ` Assets ` For 2019-20 5,000 13,000
Advance Subscription 2,000 Subscription Outstanding 10,000 Total 95,000 Total 95,000
2 Accountancy XII Part A – by Subhash Dey
Balance Sheet of Charitable Hospital as at 31/03/2020 Dr. Balance Sheet as on 31 March 2019 Cr.
Liabilities (`) Assets (`) Liabilities (`) Assets (`)
Creditors for Stationery 19,000 Stationery 40,000 O/s Salary 1,000 Subscription O/s 3,600
Do it yourself 1.20 Capital Fund 39,900 Land and Building 25,000
Dr. Income and Expenditure Account Cr. (Bal. Fig.) Furniture 2,600
Books 6,200
Expenditure ` Income `
Cash and Bank Balance 3,500
To Salaries 55,000 By Subscription 44,000
To Lighting Expenses 5,500 Less: Advance (1,000) 40,900 40,900
To Stationery 4,000 Less : Arrears Do it yourself 1.23
Less: Outstanding (Previous year) (750)
Dr. Income and Expenditure Account Cr.
(Previous year) (400) 3,600 Add: Arrear
Expenditure (`) Income (`)
To Misc. Expenses 3,000 (current year) 4,700 46,950
To Loss on Sale of 1,300 By Subscriptions 28,200
To Interest on loan 1,200 By Net Proceeds of Furniture Less: Opening O/s (2,000)
Add: Outstanding 3,600 4,800 Refreshment Room 30,000 To Salary 3,600 Add: Closing O/s 2,300
To Rent and Rates 4,500 By Locker’s Rent 4,900 Add: O/s 600 4,200 Less: Closing advance (500) 28,000
Less : Prepaid (500) To Rent 6,500 By Sale of Old Newspapers 1,250
4,000
Less: Prepaid (500) 6,000 By Government Grants 12,000
To Surplus (Bal. fig.) 5,950 To Newspapers 1,850 By Interest on F.D. 450
81,850 81,850 To Electricity 3,000 Add: Accrued Interest 450 900
To General Expenses 3,200
Do it yourself 1.21
To Postage Charges 300
Dr. Income and Expenditure Account Cr. To Surplus (Bal.fig.) 22,300
42,150 42,150
Expenditure (`) Income (`)
To Salaries 2,000 By Subscriptions 10,400 Balance Sheet as on 31 Dec., 2020
Add: Outstanding 1,500 3,500 By Donation 2,000 Liabilities (`) Assets (`)
To Telephone expenses 300 By Entrance Fees 500
Salary outstanding 600 Furniture 12,000
To Electricity charges 600 (50% of `1,000) Advance Subscription 500 Add: Purchases 10,500
To Postage and Stationery 150 By Bank interest 450 Capital Fund 38,550 Less: Sale (5,000) 17,500
To Entertainment Exp. 900 Add: Outstanding 150 600 Add: Surplus 22,300 60,850 Books 5,000
Add: Outstanding 500 1,400 By Interest on 200 Add: Purchases 7,000 12,000
To Miscellaneous expenses 600 investment Prepaid Rent 500
To Depreciation on furniture 375 By Hall rent 300 Subscription outstanding
For 2019: 800
To Surplus (Bal. fig.) 7,075
For 2020: 1,500 2,300
14,000 14,000 Accrued Interest on F.D. 450
F.D. with Bank @10% p.a. 18,000
Do it yourself 1.22 Cash in hand 3,000
Dr. Income and Expenditure A/c Cr. Cash at bank 8,200
Expenditure (`) Income (`) 61,950 61,950
Particulars Amit Babu Charu Particulars Amit Babu Charu To Bank A/c 40,000 50,000 By Balance b/d 80,000 60,000
(Drawings) By Salary A/c 24,000 36,000
To 50,000 40,000 30,000 By Bank 50,000 40,000 30,000 To Interest on 2,000 2,500 By Interest on 9600 7,200
Balance A/c Drawings A/c capital A/c
c/d To Balance c/d 87,600 62,700 By P/L App. A/c 16,000 12,000
50,000 40,000 30,000 50,000 40,000 30,000
(share of profits)
1,29,600 1,15,200 1,29,600 1,15,200
Dr. Partner’s Current Account Cr.
Do it yourself 2.5
Particulars Amit Babu Charu Particulars Amit Babu Charu
Dr. Profit and Loss Appropriation Account Cr.
To Bank A/c 6,000 4,000 2,000 By Interest on 3,000 2,400 1,800
(Drawings) capital A/c Particulars ` Particulars `
To Interest 270 180 90 By Partner’s 2,000 – –
on drawings salary A/c To Salary–Pawan’s Current A/c 6,000 By Profit and Loss A/c 24,900
To Balance 14,730 7,220 1,710 By Partner’s – 5,000 – (Net profit)
To Commission–Purna’s Current A/c 4,000
c/d Commission A/c
By P & L App. 6,000 4,000 2,000 To Interest on Capital: By Interest on drawings:
A/c (share of Pawan’s Current A/c 1,800 Pawan’s Current A/c 75
profit) Purna’s Current A/c 25
Purna’s Current A/c 1,200 3,000 100
21,000 11,400 3,800 21,000 11,400 3,800 To Share of Profit:
Pawan’s Current A/c 7,200
Do it yourself 2.2 Purna’s Current A/c 4,800 12,000
Dr. Partners’ Capital A/c Cr. To Bank A/c 3,000 1,000 By Balance b/d 10,000 8,000
(Drawings) By Salary 6,000 –
Particulars Rakhi Shikha Particulars Rose Lily To Interest 75 25 By Commission – 4,000
To Bank A/c 7,000 10,000 By Balance b/d 2,00,000 3,00,000 on Drawing By Interest on Capital 1,800 1,200
(Drawings) By Partner's – 60,000 To Balance c/d 21,925 16,975 By P&L App. A/c 7,200 4,800
To P & L App. A/c 34,720 52,080 Salary A/c 25,000 18,000 25,000 18,000
(share of loss) By Interest on 20,000 30,000
To Balance c/d 1,78,280 3,27,920 capital A/c Do it yourself 2.6
2,20,000 3,90,000 2,20,000 3,90,000
Dr. Profit & Loss Appropriation A/c Cr.
Do it yourself 2.3 Particulars (`) Particulars (`)
Settlement of the dispute between Harshad and Dhiman: To Interest on Capital: By Profit and 7,800
(i) Interest on capital will not be provided since there is no partnership agreement. Jay’s Capital A/c 7800 × 8/13 = 4800 Loss A/c
(ii) Interest on Harshad's loan will be given @ 6% p.a., i.e. `1,00,000 ×6/100 × Vijay’s Capital A/c 7800 × 5/13 = 3000 7,800
6/12 = `3,000.
(iii) No remuneration shall be allowed to Dhiman for taking part in the conduct of 7,800 7,800
the business of the firm.
(iv) Net profit after charging interest on Harshad's loan `1,77,000 (i.e. `1,80,000 Working notes:
– `3,000) will be distributed equally between the partners, irrespective of the
Calculation of Interest on Capital @9% p.a:
capital contribution by them, i.e. `88,500 each.
(a) Interest on Jay’s Capital: 7,200
Dr. Profit and Loss Appropriation A/c Cr.
(b) Interest on Vijay’s Capital: 4,500
Particulars ` Particulars `
11,700
Available profit is `7,800. Since the profit is less than interest, the available
To Share of profits: By Profit and Loss A/c (net profit 1,77,000 profit will be distributed in the ratio of interest i.e. 7,200:4,500 or 8:5.
Harshad's Capital A/c 88,500 after Interest on Harshad's loan)
Dhiman's Capital A/c 88,500 (1,80,000 – 3,000) Do it yourself 2.7
Journal
1,77,000 1,77,000
Date Particulars L.F. Dr. Cr.
Do it yourself 2.4
2020 Interest On Capital A/c Dr. 1,44,000
Dr. Profit and Loss Appropriation Account Cr. 31 To E’s Current A/c 36,000
Mar. To F’s Current A/c 48,000
Particulars ` Particulars `
To G’s Current A/c 60,000
To Partner’s Salary A/c By Profit and Loss A/c 1,00,300 (Interest on Capital Credited to Partners’ Capital A/c)
Ramesh (2000 × 12) 24,000 – Net Profit P& L Appropriation A/c Dr. 1,44,000
Suresh (3000 × 12) 36,000 By Interest on To Interest on Capital A/c 1,44,000
To Interest on capital A/c Drawings A/c (Interest on capital transferred to P & L App. A/c)
Ramesh 9600 Ramesh 2,000
Suresh 7200 Suresh 2500 4500 P& L Appropriation A/c Dr. 66,000
To Partners’ Capital A/c (share of profit) To E’s Current A/c 19,800
Ramesh 16,000 To F’s Current A/c 19,800
Suresh 12,000 28,000 To G’s Current A/c 26,400
(Profit on Appropriation transferred)
1,04,800 1,04,800
CHAPTER 2 Accounting for Partnership Firms - SOLUTIONS 9
Do it yourself 2.8 (ii) Distributable profit = Net profit + Interest on partners’ drawings –
Interest on partners’ capitals – Soniya’s salary – Charu’s commission =
Drawings No. of Months Product 3,56,600 + 5,400 – 72,000 – 1,20,000 – 50,000 = `1,20,000
600 10 6,000
500 9 4,500 Do it yourself 2.11
1000 7 7,000
Calculation of interest on drawings
400 5 2,000
Interest on Moli’s total drawings will be calculated for an average period
1500 3 4500
of 6.5 months, i.e. (1,000 × 12) × 12/100 × 6.5/12= `780
300 2 600
Interest on Golu’s total drawings will be calculated for an average
700 1 ... .700 period of 5.5 months, i.e (1000 × 12) × 12/100 × 5.5/12 = `660
25,300 Interest on Golu’s loan @6% p.a. for 8 months = 10,000 × 6/100 ×
Interest on Rakesh’s Drawings = 25,300× 6/100 ×1/12 = `126.50 8/12 = `400. It is a charge against the profits.
Interest on Rohan’s Drawings = (400×12) × 6/100 × 6.5/12 = `156 Net profit as per P & L A/c = 20,950 – 400 = `20,550
Do it yourself 2.9
Journal Dr. Profit and Loss Appropriation A/c Cr.
2020 Nusrat’s Current A/c Dr. 600 To Interest on capital A/c By Profit and Loss A/c – 20,550
Mar. To Interest on Drawings A/c 600 Moli 4,000 Net Profit
31 (Being Interest on drawings charged Golu 2,000 6,000 By Interest on Drawings
= 15,000 × 8/100 × 6/12 = `600) To Partner’s capital A/c Moli 780
(share of profit) Golu 660 1,440
Moli 9,554
Do it yourself 2.10
Journal Golu 6,396 15,990
Opening Capital 40,000 35,000 29,000 Particulars Himanshu (`) Vikrant (`)
Particulars Eluin Monu Ahmed Total (`) Add: Drawings 30,000 40,000
Profit already distributed Dr. 60,000 40,000 20,000 1,20,000 Less: Profit already Distributed (50,000) (50,000)
Interest on Drawings Dr. 500 360 200 1,060 Opening Capital 1,80,000 1,30,000
Total Dr. 60,500 40,360 20,200 1,21,060
Interest on Capitals Cr. 2,000 1,750 1,450 5,200 Statement Showing Adjustment
Share of Profits Cr. 57,930 38,620 19,310 1,15,860
Particulars Himanshu Vikrant Total (`)
Total Cr. 59,930 40,370 20,760 1,21,060
Profit already distributed Dr. 50,000 50,000 1,00,000
Adjustment/Net Effect Dr. 570 Cr. 10 Cr. 560
12% Interest on Drawings for Dr. 1,800 2,400 4,200
Do it yourself 2.31 6 months
Journal
Total Dr. 51,800 52,400 1,04,200
Date Particulars L.F. Dr. (`) Cr. (`)
5% Interest on Capital Cr. 9,000 6,500 15,500
2020 Saroj’s Capital A/c Dr. 2,350 Share of profit Cr. 44,350 44,350 88,700
Mar. 31 Mahinder’s Capital A/c Dr. 1,300
To Umar’s Capital A/c 3,650 Total Cr. 53,350 50,850 1,04,200
(Being interest on capital and interest on
drawings omitted, now adjusted) Adjustment 1,550 (Cr.) 1,550 (Dr.)
CHAPTER 2 Accounting for Partnership Firms - SOLUTIONS 13
9. Profit and Loss Appropriation Account for year ending 31 March, 2017 Notes: 1. Calculation of opening capitals:
Nusrat (`) Himesh (`) K.K. (`)
Particulars (`) Particulars (`) Closing capital 24,000 18,000 12,000
To Salary– Bhawna 50,000 By Profit and Loss A/c – Net 9,50,000 + Drawings 3,600 4,500 2,700
To Commission– Disha 36,000 profit – Profit already distributed (18,000) (12,000) (6,000)
(3,000×12) Opening capital 9,600 10,500 8,700
To Interest on Capitals 2. Nusrat (`) Himesh (`) K.K. (`) Total (`)
Ankur 84,000
Profit already distributed Dr. 18,000 12,000 6,000 36,000
Bhawna 36,000
Disha 24,000 1,44,000 Interest on capital Cr. 960 1,050 870 2,880
Profit* Cr. 16,080 11,040 6,000 33,120
To Partners’ Capital A/cs
Ankur (4,20,000 – 6,000) 4,14,000 Total Cr. 17,040 12,090 6,870 36,000
Bhawna (1,80,000) 1,80,000 Net effect 960 (Dr.) 90 (Cr.) 870 (Cr.) —
Disha (1,20,000+6,000) 1,26,000
* Distributable profit = ` 33,180 (Nusrat ` 16,560; Himesh ` 11,040 and K.K.
9,50,000 9,50,000 ` 5,520). K.K.’s deficiency ` 480 borne by Nusrat.
10. Profit & Loss Appropriation A/c 12. Receipts and Payments A/c of Good Health club
Particulars (`) Particulars (`) Receipts Amt. (`) Payments Amt. (`)
To Interest on capitals: By Net Profit 1,56,000 To Balance b/d By Wages and Salaries 55,000
A's current A/c 3,000 Cash 70,000 By Investment in 9%
B's current A/c 3,000 Bank 3,00,000 Debenture of XYZ Ltd. 2,40,000
C's current A/c 4,000 10,000 To Subscription By Health Journals 5,000
To Salary–C's current A/c 6,000 2018-19 40,000 By Stationery 12,500
To Profit transferred to: 2019-20 3,75,000 By Insurance Premium 6760
A's current A/c 51,000 2020-21 20,000 4,35,000 By Courier Charges 800
B's current A/c 45,000 To Donations for Gym 1,64,000 By Municipal Taxes 9570
C's current A/c 44,000 1,40,000 To Admission Fees 14,000 By Machinery Purchased 38,000
1,56,000 1,56,000 To Life Membership Fees 45,000 By Balance c/d
To Locker Rent 11,000 Cash in Hand 43000
Journal
To Sale for Newspapers 300 Cash at Bank (Bal. Fig.) 6,30,410
Date Particulars L.F. Dr. (`) Cr.(`) To Interest on Bank Balance 1,740
Profit & Loss Appropriation A/c Dr. 1,40,000 10,41,040 10,41,040
To A’s Current A/c 51,000 13. Income and Expenditure Account
To B’s Current A/c 45,000
To C’s Current A/c 44,000 Expenditure (`) Income (`)
(Being profit appropriated)
To Salaries 20,000 By Profit on Sports 17,800
11. I Part: Adjustment Entry To Stationery 4,500 By Interest on 8%
Add: Opening stock 1,500 Govt. Securities 5,000 6,000
Date Particulars L.F. Dr. (`) Cr. (`)
Less: Closing stock (2,000) 4,000 Add: Accrued 1,000
2020 Vijay’s Capital A/c Dr. 200 To Rates and Taxes 1,500 By Subscription 25,000
31 Mar. Anil’s Capital A/c Dr. 150 To Telephone Charges 7,500 By Deficit 3,550
To Mohan’s Capital A/c 350 Less: Opening O/s (3,000)
(Adjustment for omissions)
Add: Closing O/s 1,500 6,000
To Sundry expenses 500
Particulars Mohan Vijay Anil
Add: Closing O/s 300
Closing Capital 30,000 25,000 20,000 Less: Opening O/s (250) 550
Add: Drawings 5,000 4,000 3,000 To Depreciation on building 20,000
Less: Profit already distributed (8,000) (8,000) (8,000) To Courier charges 300
Opening Capital 27,000 21,000 15,000 52,350 52,350
18 Accountancy XII Part A – by Subhash Dey
Journal
(Existing goodwill written off in old ratio 3:2)
* A’s new share = 1/2 – 2/9 = 5/18. New ratio= 5/18 : 1/2 : 2/9 = 5 : 9 : 4 15,35,750 8,47,250 6,00,000 15,35,750 8,47,250 6,00,000
(x) Revaluation A/c Dr. 2,300 Balance Sheet after Rohan’s admission
To Outstanding Repairs A/c 2,300 Liabilities (`) Assets (`)
(Being increase in liabilities recorded)
Creditors 60,000 Cash in Hand 1,24,000
(xi) C’s Capital A/c Dr. 6,928 Capitals: Cash at Bank 90,000
D’s Capital A/c Dr. 1,732 Rajat 1,26,000 Debtors 44,000
To Revaluation A/c 8,660 Ravi 54,000 Stock 30,000
(Being loss on revaluation transferred Rohan 60,000 2,40,000 Furniture 12,000
to Partner’s Capital A/c)
3,00,000 3,00,000
Do it yourself 3.42
Do it yourself 3.44
Calculation of Cash in hand: Revaluation A/c
Balance Sheet of Allah, Jesus and Hari Particulars (`) Particulars (`)
Liabilities (`) Assets (`) To Liability for B/R 18,000 By Land and Building 36,400
Sundry liabilities 3,000 Motors 1,200 To Stock 22,200 By Loss transferred to:
Capital accounts Furniture 400 To Furniture 46,600 Om 25,200
Allah 1,500 Stock 2,650 Ram 16,800
Jesus 1,750 Debtors 3,780 Shanti 8,400 50,400
Hari 2,000 5,250 Cash in Hand 220 86,800 86,800
8,250 8,250 Partner’s Capital A/c
Balance Sheet after Satnam’s Admission Particulars Om Ram Shanti Particulars Om Ram Shanti
Liabilities Amt. (`) Assets Amt. (`) To Rev. A/c 25,200 16,800 8,400 By Bal. b/d 3,58,000 3,00,000 2,62,000
Sundry liabilities 3,000 Motors 950 To Current A/c – 9,200 1,16,600 By Reserve 24,000 16,000 8,000
Capital accounts Furniture 380 To Bal. c/d 4,50,000 3,00,000 1,50,000 By Premium 15,000 10,000 5,000
By Current A/c 78,200 – –
Allah 1,910 Stock 2,650
Jesus 2,160 Debtors 3,780 4,75,200 3,26,000 2,75,000 4,75,200 3,26,000 2,75,000
Hari 2,410 Cash in hand (220 + 3,520 Hanuman’s Capital A/c
Satnam 1,800 8,280 1800 + 1500)
11,280 11,280 Particulars (`) Particulars (`)
To Balance c/d 1,00,000 By Bank A/c 1,00,000
Working notes: Revaluation A/c
1,00,000 1,00,000
Particulars (`) Particulars (`)
To Motors 250 By Loss on Revaluation tr. to: Working Notes: Hanuman’s capital = 1,00,000, Hanuman’s share = 1/10
Capital of the firm = 1,00,000 × 10 = 10,00,000
To Furniture 20 Allah's Capital A/c 90
Om’s new capital = 9,00,000 × 3/6 = 4,50,000
Jesus' Capital A/c 90 Ram’s new capital = 9,00,000 × 2/6 = 3,00,000
Hari's Capital A/c 90 270 Shanti’s new capital = 9,00,000 × 1/6 = 1,50,000
270 270
CHAPTER 3 Reconstitution of a Partnership Firm: Goodwill, Admission of a New Partner & Change in Profit Sharing Ratio - SOLUTIONS 23
Particulars (`) Particulars (`) To Goodwill A/c 12,500 7,500 – By Bal. b/d 1,50,000 90,000 –
To Rev. A/c 500 300 – By Bank A/c – – 40,000
To profit transferred to: By Land and building 20,000 To Bank A/c 5,000 3,000 – By Premium 10,000 6,000 –
Partner’s Capital A/c By Provision for D/D 800 To Bank A/c 62,000 37,200 – By W.C. 20,000 –
12,000
To Bal. c/d 1,00,000 60,000 40,000 Fund
D 17,100 By Sundry Creditors 2,000
E 5,700 22,800 1,80,000 1,08,000 40,000 1,80,000 1,08,000 40,000
Particulars D (`) E (`) F (`) Particulars D (`) E (`) F (`) Capital’s A/cs Land & Building 1,50,000
Atal 1,00,000 Machinery 40,000
To Partner’s 55,100 53,700 – By Bal. b/d 1,00,000 70,000 – Madan 60,000 Patents 5,000
Current A/c By Rev. A/c 17,100 5,700 –
To Bal. c/d 90,000 30,000 40,000 By Reserve 24,000 8,000 –
Mehra 40,000 2,00,000 Stock 27,000
By Cash A/c – – 40,000 Creditors (20,000 – 2,500) 17,500 Debtors 47,000
By Premium 4,000 – – Claim for Damages 325 Less: Provision 1,175 45,825
O/s Electricity Bill 3,000
1,45,100 83,700 40,000 1,45,100 83,700 40,000
Bank overdraft 47,000
Balance Sheet as on 1.4.2020
2,67,825 2,67,825
Liabilities (`) Assets (`)
Working Notes: Sacrifice Ratio =Old Ratio –New Ratio
Creditors 52,000 Land & Building 70,000
Capital A/cs Debtors 40,000
Atal = 5/8 – 5/10 = 5/40; Madan = 3/8 – 3/10 = 3/40
D 90,000 Less: Provision 2,200 37,800 TotalCapital of new Firm = 40,000 × 10/2 = `2,00,000
E 30,000 Machinery 60,000 Atal’s New Capital = 2,00,000 ×5/10 = `1,00,000
F 40,000 1,60,000 Stock 15,000 Madan’s New Capital = 2,00,000 × 3/10 = `60,000
Current A/cs Investment 42,000
D 55,100 Cash 88,000 Do it yourself 3.49
E 53,700 1,08,800 Goodwill 8,000 Revaluation A/c
3,20,800 3,20,800 Particulars (`) Particulars (`)
Do it yourself 3.47 To Stock 3,000 By Building 20,000
Revaluation Account To Provision for D/D 400
Particulars (`) Particulars (`) To Furniture 2,000
To Gain transferred to:
To Provision for Bad Debts 250 By Creditors 500 A’s Capital A/c 8,760
(1250 – 1000) By Loss tr. to Capital A/c B’s Capital A/c 5,840 14,600
To Claim for Damages 800 B 330
C 220 550 20,000 20,000
Working Notes: Vimal’s Capital = (97,400 + 46,600) × 5/4 × 1/5 = `36,000 Particu- L M N O Particulars L M N O
lars
Do it yourself 3.51 To Rev. 15,000 10,000 5,000 – By Bal. b/d 1,20,000 80,000 40,000 –
Revaluation A/c A/c By Reserve 21,000 14,000 7,000 –
To Bal. 1,56,000 84,000 42,000 56,400 By Premium 30,000 – – –
c/d By Bank A/c – – – 56,400
Particulars (`) Particulars (`)
1,71,000 94,000 47,000 56,400 1,71,000 94,000 47,000 56,400
To Plant and Machinery 35,000 By Creditors 2,500
To Furniture and Fixture A/c 6,500 By Loss tr. to Balance Sheet of L, M, N and O as at 31st March 2020
To Provision for D/D 3,000 Raman’s Capital A/c 28000
Rohit’s Capital A/c 14000 42,000 Liabilities (`) Assets (`)
44,500 44,500 Creditors 1,62,000 Bank 1,20,400
Partners’ Capitals: Debtors 46,000
Partner’s Capital Account
L 1,56,000 Investment 36,000
Particulars Raman Rohit Saloni Particulars Raman Rohit Saloni M 84,000 Machinery 58,000
N 42,000 Furniture & Fittings 20,000
To Rev. A/c 28,000 14,000 – By Bal. b/d 1,40,000 1,00,000 –
O 56,400 3,38,400 Stock 2,20,000
To Bal. c/d 1,61,600 1,02,400 1,32,000 By W.C. Fund 16,000 8,000 –
By Premium 33,600 8,400 – 5,00,400 5,00,400
By Bank A/c – – 1,32,000
Particu- Ram Mohan Sohan Hari Particulars Ram Mohan Sohan Hari
Aman’s Capital A/c Dr. 40,000 lars
Bobby’s Capital A/c Dr. 40,000 To Rev. 12,000 9,000 6,000 3,000 By Bal. b/d 4,00,000 4,50,000 2,50,000 2,00,000
Chandani’s Capital A/c Dr. 40,000 To Ram’s – – 13,500 40,500 By Sohan’s 13,500 4,500 – –
Cap. A/c Capital A/c
To Goodwill A/c 1,20,000 To Mo- – – 4,500 13,500 By Hari’s 40,500 13,500 – –
(Being goodwill written off in new ratio ) han’s Capital A/c
Cap. A/c By Current – – 1,55,000 3,65,000
To 3,15,000 2,05,000 – – A/c
Do it yourself 3.62 Current
Journal A/c
To Bal. 1,27,000 2,54,000 3,81,000 5,08,000
c/d
Date Particulars Dr. (`) Cr. (`)
4,54,000 4,68,000 4,05,000 5,65,000 4,54,000 4,68,000 4,05,000 5,65,000
Profit and Loss A/c Dr. 9,000
To P’s Capital A/c 2,250 Balance Sheet of Ram, Mohan , Sohan & Hari
To Q’s Capital A/c 2,250 Liabilities (`) Assets (`)
To R’s Capital A/c 4,500
(Being Profit and Loss Account credited to Partners’ Capital A/c: Fixed Assets 9,00,000
Partners’ Capital Accounts) Ram 1,27,000 Current Assets 5,20,000
Mohan 2,54,000 Partners’ Current A/c:
Workmen’s Compensation Reserve A/c Dr. 64,000 Sohan 3,81,000 Sohan 1,55,000
To Workmen’s Compensation Claim A/c 30,000 Hari 5,08,000 12,70,000 Hari 3,65,000 5,20,000
To P’s Capital A/c 8,500 Workmen Compensation 1,50,000
To Q’s Capital A/c 8,500 Partners’ Current A/c:
To R’s Capital A/c 17,000 Ram 3,15,000
(Being Workmen’s Compensation Reserve Mohan 2,05,000 5,20,000
adjusted for claim and the balance distributed 19,40,000 19,40,000
among the partners)
Do it yourself 3.65
P’s Capital A/c Dr. 60,000 Journal
Q’s Capital A/c Dr. 60,000
To R’s Capital A/c 1,20,000 Date Particulars L.F. Dr. (`) Cr. (`)
(Being adjustment entry made for goodwill) 2020 C’s Capital Account Dr. 50,000
1 Apr. To A’s Capital Account 50,000
Working Notes: Sacrificing ratio = Old ratio – New ratio (Treatment of goodwill due to change in
P’s = 1/4 – 2/5 = –3/20 (gain); Q’s = 1/4 – 2/5 = –3/20 (gain) profit sharing ratio)
R’s = 2/4 – 1/5 = 6/20 (Sacrifice) Reserve Fund Account Dr. 18,000
To A’s Capital Account 9,000
Do it yourself 3.63 To B’s Capital Account 6,000
Revaluation A/c To C’s Capital Account 3,000
(Reserve Fund transferred to partners’
Particulars (`) Particulars (`)
capital accounts in their old profit sharing
ratio)
To W.C. claim 5,000 By Loss on revaluation tr. to
To Fixed assets A/c 80,000 Partners’ Capital A/c Revaluation Account Dr. 18,000
Manu 17,000 To Fixed Assets Account 18,000
Hary 17,000 (Revaluation of fixed assets on change in
Ali 8,500 profit sharing ratio)
Reshma 42,500 85,000 A’s Capital Account Dr. 9,000
85,000 85,000 B’s Capital Account Dr. 6,000
C’s Capital Account Dr. 3,000 18,000
Partner’s Capital A/c To Revaluation Account
Particulars Manu Hari Ali Reshma Particulars Manu Hari Ali Reshma (Loss on revaluation tr. to partners’ capital A/c)
To Rev. A/c 17,000 17,000 8,500 42,500 By Bal. b/d 2,00,000 2,50,000 1,50,000 3,50,000
A’s Capital Account Dr. 60,000
To Reshma’s 2,000 2,000 6,000 – By Manu’s To A’s Current Account 60,000
Capital A/c Cap. A/c – – – 2,000
To Cash A/c – 14,750 – 1,01,250 By Hary’s
(Adjustment of capital by opening of current A/c)
To Bal. c/d 2,16,250 2,16,250 2,16,250 2,16,250 Cap. A/c
By Ali’s
– – – 2,000 C’s Current Account Dr. 60,000
Cap. A/c – – – 6,000 To C’s Capital Account 60,000
By Cash A/c 35,250 – 80,750 – (Adjustment of capital by opening of cur-
2,35,250 2,50,000 2,30,750 3,60,000 2,35,250 2,50,000 2,30,750 3,60,000 rent A/c)
CHAPTER 3 Reconstitution of a Partnership Firm: Goodwill, Admission of a New Partner & Change in Profit Sharing Ratio - SOLUTIONS 27
Balance Sheet of Mahadev, Sukesh, Menon and Thomas as at 31 Mar. 2016 Self Assessment Test - 3.2
Liabilities (`) Assets (`) 3. Average Profit = 80,000 + 8,000 (Undervaluation of Stock) = ` 88,000
Normal Profit = 8,00,000 x 8/100 = ` 64,000
Partners’ Capital A/c: Fixed Assets 17,25,000 Super Profit = 88,000 – 64,000 = `24,000
Mahadev 8,60,000 Current Assets 6,75,000
Goodwill = 24,000 × 7 = ` 1,68,000
Sukesh 6,45,000
Menon 4,30,000
4. Journal
Thomas 2,15,000 21,50,000
Date Particulars L.F. Dr (`) Cr. (`)
W.C. Claim 1,00,000
Sundry Creditors 1,50,000 2020 Sneh’s Capital A/c Dr. 2,000
1 April To Sudha’s Capital A/c 1,000
24,00,000 24,00,000
To Pushpa’s Capital A/c 1,000
(Adjustment for profit and loss balance because of
6. Working Notes: (i) Calculation of goodwill: change in profit sharing ratio)
Average Profits = (15,000 + 20,000 + 14,000 + 17,000)/4 = 66,000/4 = `16,500
Goodwill of the firm = `16,500 × 2.5 = `41,250 Working Notes: Sudha = 3/8 – 1/3 = 1/24 (sacrifice);
B’s share of goodwill = `41,250 × 4/15 = `11,000. Pushpa = 3/8 –1/3 = 1/24 (sacrifice); Sneh = 2/8 – 1/3 = –2/24 (gain)
(ii) Calculation of adjusted capitals and excess/shortage of capital:
6. Revaluation A/c
Details W (`) R (`)
Particulars (`) Particulars (`)
Opening Capital 40,000 30,000
Share of Goodwill 6,600 4,400 To Furniture A/c 11,000 By Debtors A/c 5,000
Less: Withdrawal of goodwill (3,300) (2,200) To Provision for D/D on debtors A/c 4,000 By Land and 62,000
Profit on Revaluation 1,800 1,200 To Provision for D/D on B/R A/c 2,250 building A/c
To Claim for damages A/c 8,000
Adjusted Capital 45,100 33,400 To Profit tr. to Partners’ Capital A/cs
New Capital 49,500 33,000 Chander 20,875
Adjustment of capital 4,400 400 Damini 20,875 41,750
(shortage of capital) (Excess capital)
67,000 67,000
28 Accountancy XII Part A – by Subhash Dey
Partner's Capital A/c 8. Profit and Loss Adjustment A/c (Revaluation A/c)
Particulars Chander Damini Elina Particulars Chander Damini Elina Particulars (`) Particulars (`)
To Bank A/c 12,500 12,500 – By Bal. b/d 2,50,000 2,16,000 – To Furniture 420 By Land and Buildings 7,000
To Bal. c/d 2,83,375 2,49,375 3,00,000 By Bank A/c – – 3,00,000 To Stock 1,400
By premium 25,000 25,000 – To Reserve for D/D 630
By Rev. A/c 20,875 20,875 – To Profit on Revaluation tr.
2,95,875 2,61,875 3,00,000 2,95,875 2,61,875 3,00,000
to Partners’ Capital A/cs
Arun 1,950
Balance Sheet of Reconstituted Firm Bablu 1,625
Liabilities (`) Assets (`) Chetan 975 4,550
7,000 7,000
Claim for damages 8,000 Furniture 99,000
Partner’s Capital Account
Sundry Creditors 1,04,000 Debtors 80,000
Capitals: (75,000 + 4,000) Particulars Arun Bablu Chetan Deepak Particulars Arun Bablu Chetan Deepak
Chander 2,83,375 Less: Provision 4,000 76,000 To Cash A/c 1,750 1,625 – – By Bal. b/d 19,000 16,000 8,000 –
Damini 2,49,375 Bills Receivable 45,000 To Bal. c/d 21,000 17,500 10,500 7,000 By Cash A/c – – – 7,000
By Premium 1,800 1,500 900 –
Elina 3,00,000 8,32,750 Less: Provision 2,250 42,750 By Rev. A/c 1,950 1,625 975 –
Land and Building 3,72,000 By Cash A/c – – 625 –
Cash 3,55,000 22,750 19,125 10,500 7,000 22,750 19,125 10,500 7,000
9,44,750 9,44,750
Balance Sheet after Deepak’s Admission
P’s Current A/c Dr. 1,14,900 Date Particulars L.F. Dr. (`) Cr. (`)
To P’s Capital A/c 1,14,900 Cash/ Bank A/c Dr. 50,000
(Capital A/c adjusted) To S’s capital A/c 50,000
Q’s Current A/c Dr. 23,400 (Being cash brought in by S)
To Q’s Capital A/c 23,400 Cash/ Bank A/c Dr. 10,000
(Capital A/c adjusted) To P’s capital A/c 10,000
R’s Capital A/c Dr. 1,38,300 (Being cash brought in by P)
To R’s Current A/c 1,38,300 R’s Capital A/c Dr. 10,000
( Capital A/c adjusted) To Cash/ Bank A/c 10,000
(Being cash withdrawn by R)
CHAPTER 3 Reconstitution of a Partnership Firm: Goodwill, Admission of a New Partner & Change in Profit Sharing Ratio - SOLUTIONS 29
To – – 72,000 2,33,000 By 2,28,000 77,000 – – To T’s Capital A/c 25,000 – – By Balance b/d 1,00,000 50,000 25,000
Current Current To Bal. c/d 85,500 71,000 81,500 By Rev. A/c 5,500 11,000 16,500
A/c A/c By Reserve A/c 5,000 10,000 15,000
To Bal. 3,92,000 2,94,000 1,96,000 98,000 By R’s Capital A/c – – 25,000
c/d
1,10,500 71,000 81,500 1,10,500 71,000 81,500
4,28,000 3,27,000 2,77,000 3,37,000 4,28,000 3,27,000 2,77,000 3,37,000
Balance Sheet of R, S and T
Balance Sheet of A, B, C and D
Particulars (`) Particulars (`)
Liabilities (`) Assets (`)
Creditors 44,000 Land 80,000
Sundry Creditors 90,000 Fixed Assets 8,00,000 Bills Payable 20,000 Building 47,000
Partners’ Capital Current Assets 3,00,000 Capitals: Plant 1,00,000
A 3,92,000 Partners’ Current A/c: R 85,500 Stock 40,000
B 2,94,000 A 2,28,000 S 71,000 Debtors 30,000
C 1,96,000 B 77,000 3,05,000 T 81,500 2,38,000 Bank 5,000
D 98,000 9,80,000
Claim for Workmen 30,000 3,02,000 3,02,000
Compensation Working Notes: Sacrificing ratio = Old ratio – New ratio
Partners’ Current A/c: R’s = 1/6 – 1/3 = –1/6 (Gain); S’s = 2/6 – 1/3 = Nil
C 72,000 T’s = 3/6 – 1/3 = 1/6
D 2,33,000 3,05,000
8. Revaluation A/c
14,05,000 14,05,000
8. Revaluation A/c Particulars (`) Particulars (`)
To Machinery A/c 20,000 By Building A/c 50,000
Particulars (`) Particulars (`) To Provision for D/D 4,800
To Workmen’s com- 5,000 By Bank A/c (bad debts recovered) 2,000 To Partners’ Capital A/c:
pensation claim By Patents 2,000 Arun 16,800
To Stock By Loss transferred to: Balu 8,400 25,200
3,000 Madan’s Capital A/c 2,400 50,000 50,000
Mohan’s Capital A/c 1,600 4,000
Partner’s Capital A/c
8,000 8,000
Particulars Arun Balu Chetan Particulars Arun Balu Chetan
Partners Capital Accounts
To Current A/c 36,800 88,400 – By Balance b/d 5,00,000 3,20,000 –
Particulars Madan Mohan Gopal Particulars Madan Mohan Gopal To Bal. c/d 6,00,000 3,00,000 3,00,000 By Rev. A/c 16,800 8,400 –
By Reserve A/c 40,000 20,000 –
To Rev. A/c 2,400 1,600 – By Balance b/d 60,000 40,000 –
By Cash A/c – – 3,00,000
To Bal. c/d 63,600 52,400 23,200 By Premium – 10,000 –
By Premium 80,000 40,000 –
By Reserve A/c 6,000 4,000 –
By Bank A/c – – 23,200 6,36,800 3,88,400 3,00,000 6,36,800 3,88,400 3,00,000
66,000 54,000 23,200 66,000 54,000 23,200 Balance Sheet
Balance Sheet of the reconstituted firm Particulars (`) Particulars (`)
Working Notes: Divisible profits = ` 4,80,000 (to be divided in 5 : 4 : 3). To Salaries 31,500 By Subscription 60,000
To Postage 1,250 Add: Outstanding
Anand’s share = ` 2,00,000; Bhaskar’s share = ` 1,60,000 To Rent 9,000 Subscription 15,000 75,000
Dinkar’s share = ` 1,20,000. To Printing and Stationery 14,000 By Entrance Fees 1,100
Anand’s guaranteed profit (excluding interest on capital) is ` 1,90,000 To Miscellaneous Expenses 3,100 By Sale of old magazines 450
But he gets `2,00,000. So, guarantee is met. To Consumption of By Interest on Investment 3,500
Bhaskar’s guaranteed profit (including interest on capital but excluding Sports Material: (70,000 × 10/100 × 6/12)
salary) is ` 2,45,000. But he gets 1,60,000 + 80,000 = ` 2,40,000. So, opening stock 3,000
deficiency of ` 5,000 is to be borne by Dinkar. Add: purchases 11,500
Less: closing stock (4,500) 10,000
Net Share of profit: Anand = ` 2,00,000 To Depreciation on Furniture 1,000
Bhaskar 1,60,000 + 5,000 = ` 1,65,000 (20,000 × 10/100 × 6/12)
Dinkar 1,20,000 – 5,000 = ` 1,15,000 To Surplus 10,200
II Part: Profit & Loss Appropriation A/c 80,050 80,050
Particulars (`) Particulars (`) 15. Super Profits = Average Profits – Normal Profits
= 90,000 – 10% of 6,00,000 = 90,000 – 60,000 = `30,000
To A’s Capital A/c 2,12,500 By Net Profit after Interest 4,25,000
To B’s Capital A/c 2,12,500 4,25,000 on loan (4,30,000 – 5,000)
Goodwill = Super Profits × No. of years purchase
30,000 × 2 = `60,000
4,25,000 4,25,000 Partner's Capital A/c
Partner's Capital A/c Particulars X Y Z Particulars X Y Z
Particulars A B Particulars A B To Bank A/c 1,16,000 1,04,000 – By Bal. b/d 3,00,000 3,00,000 –
To Bal. c/d 2,00,000 2,00,000 2,00,000 By Bank A/c – – 2,00,000
To Bal. c/d 7,12,500 5,12,500 By Bank A/c 5,00,000 3,00,000 By Premium 16,000 4,000 –
By Profit & Loss 2,12,500 2,12,500 for Goodwill
App. A/c
3,16,000 3,04,000 2,20,000 3,16,000 3,04,000 2,20,000
7,12,500 5,12,500 7,12,500 5,12,500
Cash/Bank A/c
Journal
Particulars (`) Particulars (`)
Date Particulars L.F. Dr. ( `) Cr. (`) To Balance b/d 40,000 By X’s Capital A/c 1,16,000
2020 Profit & Loss App. A/c Dr. 4,25,000 To Z’s Capital A/c 2,00,000 By Y’s Capital A/c 1,04,000
31 Mar. To A’s Capital A/c 2,12,500 To Premium for goodwill A/c 20,000 By Balance b/d 40,000
To B’s Capital A/c 2,12,500 2,60,000 2,60,000
(Being Profit Distributed among the
partners) Working Notes: Sacrificing Ratio = Old Ratio – New Ratio
X's Sacrifice = 3/5 – 1/3 = 4/15
A’s Loan A/c Y's Sacrifice = 2/5 – 1/3 = 1/5
Particulars (`) Particulars (`)
To Balance 2,05,000 By Bank A/c 2,00,000
c/d By Interest 5000
on Loan A/c
2,05,000 2,05,000
32 Accountancy XII Part A – by Subhash Dey
Date Particulars L.F. Dr. (`) Cr. (`) Working notes: Saroj Shanti
Goodwill A/c Dr. 72,000 (ii) Old Share 3/10 5/10
To Keshav’s Capital A/c 32,000 (ii) New Share 1/2 1/2
To Nirmal’s Capital A/c 24,000 (iii) Gaining Share [(i) – (ii)] 1/2 – 3/10 =2/10 1/2 – 5/10 =0
To Pankaj’s Capital A/c 16,000 Gaining Ratio of Saroj and Shanti = 1:0
(Goodwill raised at its full value in old ratio) Sangeeta’s share of goodwill = 2/10 × `90,000 = `18,000
Keshav’s Capital A/c Dr. 45,000 Do it yourself 4.7
Pankaj’s capital A/c Dr. 27,000 Journal
To Goodwill A/c 72,000 Date Particulars L.F. Dr. (`) Cr. (`)
(Goodwill written-off in the new ratio)
(i) Mohan’s Current A/c Dr. 4,000
(b) Journal Girdhari’s Current A/c Dr. 3,000
Date Particulars L.F. Dr. (`) Cr. (`) Shyam’s Current A/c Dr. 1,000
To Goodwill A/c 8,000
Keshav’s Capital A/c Dr. 13,000
(Decrease in the value of goodwill adjusted
Pankaj’s Capital A/c Dr. 11,000 among all the partners’ capital accounts in
To Nirmal’s Capital A/c 24,000 their old profit sharing ratio)
(Nirmal’s share of goodwill adjusted to Keshav
and Pankaj in their gaining ratio of 13:11) (ii) Mohan’s Current A/c Dr. 28,000
Girdhari’s Current A/c Dr. 24,000
Working Notes: 1. Vimal’s share of goodwill = `72,000 × 3/9 = `24,000 To Goodwill A/c 52,000
2. Keshav’s gain = 5/8 – 4/9 = 13/72; Pankaj’s gain = 3/8 – 2/9 = 11/72 (Being the valued goodwill written off by
Hence, Gaining Ratio between Keshav and Pankaj is 13 : 11 debiting the remaining partners capital
accounts in their new ratio 7:6)
Do it yourself 4.4
Journal Do it yourself 4.8
Date Particulars L.F. Dr. (`) Cr. (`)
Value of goodwill of the firm = `16,000 × 3/1 = `48,000.
Amar’s Capital A/c Dr. 30,000 Journal
To Ram’s Capital A/c 10,000
Date Particulars L.F. Dr. (`) Cr. (`)
To Mohan’s Capital A/c 10,000
To Sohan’s Capital A/c 10,000 A’s Capital A/c Dr. 8,000
(Adjustment of Goodwill on Sohan’s retirement) B’s Capital A/c Dr. 8,000
To C’s Capital A/c 16,000
Working Notes: (C’s share of goodwill adjusted in A’s and B’s
Amar Ram Mohan Sohan capital accounts in their gaining ratio of 1:1)
(i) Prabhat’s Capital A/c Dr. 40,000 31.3.18 To Bank A/c 75,000 1.4.17 By Girdhari’s Capital A/c 1,50,000
Qasim’s Capital A/c Dr. 30,000 To bal. c/d 90,000 31.3.18 By Interest A/c 15,000
Roger’s Capital A/c Dr. 20,000 1,65,000 1,65,000
31.3.19 To Bank A/c 75,000 1.4.18 By balance b/d 90,000
To Goodwill A/c 90,000 To bal. c/d 24,000 31.3.19 By Interest A/c 9,000
(For the existing goodwill written off in the
99,000 99,000
old ratio)
31.3.20 To Bank A/c 26,400 1.4.19 By balance b/d 24,000
(ii) General Reserve A/c Dr. 45,000 31.3.20 By Interest A/c 2,400
To Prabhat’s Capital A/c 20,000 26,400 26,400
To Qasim’s Capital A/c 15,000
To Roger’s Capital A/c 10,000 Working Notes: Amount payable to Girdhari = Girdhari’s Capital `1,00,000
(For the amount of general reserve distrib- + Share of goodwill `38,000 + Share of Revaluation profit `2,000 + Share
uted among the partners in old ratio) of General reserve `10,000 = `1,50,000
(iii) Roger’s Capital A/c Dr. 48,000
Do it yourself 4.14
To Qasim’s Capital A/c 36,000 Journal
To Prabhat’s Capital A/c 12,000
(For the adjustment made for goodwill on Date Particulars L.F. Dr. (`) Cr. (`)
Qasim’s retirement)
(i) A’s Capital A/c Dr. 24,000
Working Notes: Calculation of Gaining / Sacrificing Ratio B’s Capital A/c Dr. 24,000
Prabhat = 4/9 – 1/3 = 1/9 (Sacrifice); Roger = 2/9 – 2/3 = -4/9 (Gain) To D’s Capital A/c 48,000
(Treatment of goodwill on retirement of D)
Do it yourself 4.11 General Reserve Dr. 1,30,000
Journal To A’s Capital A/c 13,000
To B’s Capital A/c 26,000
Date Particulars L.F. Dr. (`) Cr. (`) To C’s Capital A/c 39,000
(i) Alok’s Capital A/c Dr. 45,000 To D’s Capital A/c 52,000
Narendra’s Capital A/c Dr. 27,000 (General Reserve distributed)
Shiv’s Capital A/c Dr. 18,000 D’s Capital A/c Dr. 4,00,000
To Goodwill A/c 90,000 To D’s Loan A/c 4,00,000
(For the existing goodwill written off in the (D’s claim credited to his Loan A/c)
old ratio)
(ii) Alok’s Capital A/c Dr. 25,000 Dr. D’s Capital Account Cr.
Narendra’s Capital A/c Dr. 15,000 Particulars (`) Particulars (`)
Shiv’s Capital A/c Dr. 10,000
To General Reserve A/c 50,000 To D’s Loan A/c 4,00,000 By Balance b/d 3,00,000
(For the amount of general reserve distribut- By A’s Capital A/c 24,000
ed among the partners in old ratio) By B’s Capital A/c 24,000
By General Reserve 52,000
(iii) Shiv’s Capital A/c Dr. 96,000
To Alok’s Capital A/c 24,000 4,00,000 4,00,000
To Narendra’s Capital A/c 72,000
(For the adjustment made for goodwill on Do it yourself 4.15
Karan’s retirement) Journal
Balance Sheet of the Reconstituted Firm Dr. Partner’s Capital Accounts Cr.
Liabilities (`) Assets (`) Particulars R S T Particulars R S T
To Rev,. A/c 6,720 6,720 3,360 By Bal. b/d 80,000 50,000 40,000
Trade creditors 53,000 Bank 60,000
To Goodwill A/c 8,000 --- 4,000 By P & L A/c 3,600 3,600 1,800
Employees’ Provident Fund 47,000 Debtors 60,000 To Cash A/c 18,080 By Goodwill 4,800 4,800 2,400
Kanika’s loan 3,00,000 Stock 1,20,000 To S’s Loan A/c --- 33,600 ---
To Bal. c/d 73,680 36,840
Disha’s capital 80,000 Fixed assets 3,00,000
Kabir’s capital 60,000 88,400 58,400 44,200 88,400 58,400 44,200
2021 To bank 3,72,000 2021 By Balance 6,20,000 By F’s Cap- ---- 2,250 -----
31 A/c 3,10,000 April 1 b/d ital A/c
March To Balance 2021 By Interest 62,000 By General 28,000 8,000 4,000
c/d March 31 on Reserve
Loan A/c
By E’s ----- 60,000 -----
6,82,000 6,82,000 Loan A/c
J's gain = 3/5 – 5/10 = 1/10; K's gain = 2/5 – 2/10 = 2/10 To Bal. c/d 1,02,060 68,040 --- By Rev. A/c 300 200 100
Total Capital of new firm = 1,36,800 + 38,400 = 1,75,200 By current A/c 11,800
J's Capital = 1,05,120 and K's Capital = 70,080
1,02,600 80,200 44,500 1,02,600 80,200 44,500
Do it yourself 4.29
Dr. Revaluation A/c Cr. Do it yourself 4.31
Journal
Particulars (`) Particulars (`)
To Provision for D/D 7,000 By P & M 20,000 Date Particular L.F. Dr. (`) Cr. (`)
To Furniture 3,000 (i) Cash A/c Dr. 90,500
To Profit transferred to: To David’s Capital A/c 44,600
Akul’s Capital A/c 4,000 To Aslam’s Capital A/c 45,900
Bakul’s Capital A/c 4,000 (Being cash brought in by David & Aslam to
Chandan’s Capital A/c 2,000 10,000 adjust Capital in new profit Sharing Ratio)
Partners’ Capital A/c Working Notes: P’s share of profit = 1,05,000 × 3/12 × 2/5 = `10,500
Particulars X Y Z Particulars X Y Z
(b) Rate of Profit = Profit/Sales×100 = 40,000/4,00,000 ×100 = 10%
Profit of the firm for three months = `1,50,000 ×10/100 = `15,000
To P & L 2,750 1,650 1,100 By Bal. b/d 40,000 62,000 33,000
Adjustment By P&L A/c
X’s Share of profit = `15,000 × 2/5 = `6,000.
A/c By Y’s 42,500 25,500 17,000 Journal
To X’ Cap A/c - 8,000 32,000 Cap A/c 8,000 96,800
To Bank A/c 1,19,750 - By Z’s Date Particulars L.F. Dr. (`) Cr. (`)
To Bank A/c - 2,050 Cap A/c 32,000 P & L Suspense A/c Dr. 6,000
To Balance 75,800 1,13,700 By Bank
c/d A/c To X’s Capital A/c 6,000
(Being share of profit credited to his X’s
1,22,500 87,500 1,46,800 1,22,500 87,500 1,46,800 capital A/c)
Working Notes :
Total Capital = `77,850 + `16,900 + `94,750 = `1,89,500 Do it yourself 4.36
Total Capital of the new firm = 1,89,500 Journal
Y’s Capital = `1,89,500 x 2/5 = `75,800; Z’s Capital = `1,89,500 x 3/5 = `1,13,700 Date Particulars L.F. Dr.(`) Cr. (`)
Do it yourself 4.33 2020 Vikas’s Capital A/c Dr. 12,000
Dec. Vishal’s Capital A/c Dr. 12,000
Dr. Partner’s Capital Account Cr.
31 To Vaibhav’s Capital A/c 24,000
Particulars Fish Goat Hen Particulars Fish Goat Hen (Being Vaibhav share of goodwill ad-
justed in the capital A/c of the existing
To Cash 90,000 – – By Balance b/d 65,000 50,000 40,000
To Fish – 4,500 3,000 By Rev. A/c 10,000 6,000 4,000 partners in their gaining ratio i.e. 1:1)
To Bal. c/d – 1,12,200 74,800 By Reserve A/c 7,500 4,500 3,000 Dec. Vikas’s Capital A/c Dr. 20,000
By Goat Capital 4,500
By Hen Capital 3,000 31 Vishal’s Capital A/c Dr. 20,000
By Cash A/c 56,200 30,800 Vaibhav’s Capital A/c Dr. 10,000
90,000 1,16,700 77,800 90,000 1,16,700 77,800
To Profit & Loss A/c 50,000
(Being Vaibhav’s share in debit bal-
ance of Profit & Loss A/c transferred)
Balance Sheet as at December 31, 2002
Dec. Profit & Loss Suspense A/c Dr. 11,250
Liabilities (`) Assets (`) 31 To Vaibhav’s Capital A/c 11,250
Goat’s Capital 1,12,200 Fixed Assets 1,25,000 (Being Vaibhav’s share of profit upto
Hen’s Capital 47,800 Stock 40,000 the date of death transferred to his
Sundry Creditors 22,000 Debtors 45,000 Capital A/c)
Bills Payable 8,000 Bank 7,000 Dec. Vaibhav’s Capital A/c Dr. 4,05,250
Total 2,17,000 Total 2,17,000 31 To Vaibhav’s Executors’ A/c 4,05,250
(Being amount due to Vaibhav trans-
ferred to his executors’ A/c)
Working Notes: 1. Goat’s gain = 3/5 –3/10 = 3/10
Hen’s gain = 2/5 – 2/10 = 2/10 Do it yourself 4.37
2. (a) Balance of Capital of the firm after Fish’s retirement =
Goat’s Capital `56,000 + Hen’s Capital `40,000 = `1,00,000 Dr. Dolly’s Capital A/c Cr.
Shortage of cash to be brought in by Goat and Hen in order to make Particulars (`) Particulars (`)
payments of Fish `90,000 – `3,000 = `87,000
To Dolly’s 2,06,200 By Balance b/d 2,00,000
Total Capital of New Firm = `1,87,000
Executors A/c By P & L Suspense A/c 200
Particulars Goat Hen By Farhan’s Capital A/c 3,750
(a) New Capital (`1,87,000 in the ratio of 3:2) 1,12,000 74,800 By Hina’s Capital A/c 2,250
(b) Existing Capital 56,000 44,000 2,06,200 2,06,200
(c) Cash to be brought in (a–b) 56,200 30,800
Do it yourself 4.38
3. Dr. Revaluation Account Cr.
Dr. Harish’s Capital A/c Cr.
Particulars (`) Particulars (`)
Particulars (`) Particulars (`)
To Stock 5,000 By Fixed Assets 25,000
To Profit transferred to: To Harish’s 3,11,250 By Balance b/d 2,00,000
Fish 10,000 Executor’s A/c By Profit and Loss A/c 30,000
Goat 6,000 By P/L Suspense A/c 6,250
Hen 4,000 20,000 By Satish’s Capital A/c 28,125
By Ashish’s Capital A/c 46,875
Total 25,000 Total 25,000 3,11,250 3,11,250
4. Dr. Cash Account Cr. Working Notes: Average Profit= 1,50,000 + 1,00,000/2 = 1,25,000
Particulars (`) Particulars (`) Harish share of profit = 1,25,000x 3/12 x 2/10= 6,250
Goodwill of the firm= 1,25,000 x 3 = 3,75,000
To Balance b/d 10,000 By Fish’s Capital 90,000 Harish’s Share of Goodwill= 3,75,000 x 2/10= 75,000
To Goat’s Capital 56,200 By Balance c/d 7,000 Do it yourself 4.39
To Hen’s Capital 30,800
Total 97,000 Total 97,000 Dr. C’s Capital A/c Cr.
Particulars (`) Particulars (`)
Do it yourself 4.34 To C’s 14,813 By Balance b/d 7,500
Executors A/c By Reserve Fund 1,200
(a) Journal By Interest on capital 113
Date Particulars L.F. Dr. (`) Cr. (`) By A’s Capital A/c 3,500
By B’s Capital A/c 1,750
P & L Suspense A/c Dr. 10,500 By P & L Suspense 750
To P’s Capital A/c 10,500
(Being share of profit credited to his A/c) 14,813 14,813
38 Accountancy XII Part A – by Subhash Dey
Rakesh’s Capital A/c Dr. 5,000 A’s Capital A/c Dr. 38,000
To Drawings A/c 5,000 To A’s Executor’s A/c 38,000
(Amt. withdrawn for personal use) (Being capital account transferred
to A’s executors A/c)
Cash A/c Dr. 15,000
To Investments A/c 15,000 Do it yourself 4.49
To Revaluation A/c 4,000
(Investment sold at profit ) Dr. Ashok’s Capital A/c Cr.
Revaluation A/c Dr. 4,000 Particulars (`) Particulars (`)
To Pinki’s Capital A/c 2,000
To Drawings A/c 15,000 By Balance b/d 90,000
To Qureshi’s Capital A/c 1,000
To Interest on By Interest on
To Rakesh’s Capital A/c 1,000
(Revaluation profit distributed in old ratio
Drawings A/c 1,500 Capital A/c 8,100
2 : 1 : 1) To Ashok’s By P&L Suspense A/c 40,000
Executor’s A/c 3,01,600 By Babu’s Capital A/c 90,000
Rakesh’s Capital A/c Dr. 23,936 By Chetan’s Capital A/c 90,000
To Rakesh’s Executors A/c 23,936
(Rakesh’s total share 10,000 + 11,850 3,18,100 3,18,100
+ 5,000 + 1,086 – 5,000 + 1,000 =
`23,936) Do it yourself 4.50
Rakesh’s Executor’s A/c Dr. 23,936 Dr. Harish’s Executor Account Cr.
To Cash A/c 23,936
(Rakesh’s executor were paid off) Particular (`) Particular (`)
To Cash/Bank A/c 22,500 By Harish’s Capital A/c 90,000
Do it yourself 4.47 To Balance c/d 67,500
90,000 90,000
Dr. Rekha’s Capital Account Cr.
Particulars (`) Particulars (`) To Cash/Bank 34,650 By Balance b/d 67,500
To Balance c/d 45,000 By Interest A/c 12,150
To Rekha’s 6,95,250 By Balance b/d 4,50,000
Executors’ By Manika Capital A/c 1,00,000 79,650 79,650
A/c By Mohit Capital A/c 20,000 To Cash/Bank A/c 30,600 By Balance b/d 45,000
By Profit & Loss Suspense A/c 34,000 To Balance c/d 22,500 By Interest A/c 8,100
By Interest on Capital A/c 11,250
53,100
By General Reserve A/c 80,000
6,95,250 6,95,250 To Cash/Bank A/c 26, 550 By Balance b/d 22,500
By Interest A/c 4,050
Working Notes: 1. Average Profit = `3,00,000
Rekha’s Share of Goodwill = ` 3,00,000 x 4/10 = ` 1,20,000 26,550 26,550
2. Average Profit of last two years = `3,40,000
Rekha’s Share of Profit = `3,40,000 x 3/12 x 4/10 = `34,000 Do it yourself 4.51
3. Interest on Rekha's capital = 4,50,000 × 10/100 × 3/12 = `11,250
Mithya’s share of goodwill = 56,000/4 × 2.5 × 2/10 = `7,000
Mithya’s share of profit = 15,000 × 4/12 × 2/10 = `1,000
Do it yourself 4.48
Dr. Revaluation A/c Cr.
Journal
Particulars (`) Particulars (`)
Date Particulars L.F. Dr. (`) (Cr.) (`)
To Machinery 5,000 By Patents 2,000
Revaluation A/c Dr. 24,000
To Profit distributed: By Premises 5,000
To Patents A/c 8,000
Nithya 1,000
To Furniture A/c 6,000
Sathya 600
To Plant A/c 10,000
Mithya 400 2,000
(Being assets revalued)
7,000 7,000
Workmen’s Comp. fund A/c Dr. 10,000
To claim for workmen’s comp. 7,000
Dr. Partner’s capital A/c Cr.
To A’s Capital A/c 1,000
To B’s Capital A/c 1,000 Particulars Nithya Sathya Mithya Particulars Nithya Sathya Mithya
To C’s Capital A/c 1,000 To Goodwill 2,500 1,500 1,000 By Bal. b/d 30,000 30,000 20,000
(Being compensation fund transferred To Mithya’s 4,375 2,625 - By Reserve 3,000 1,800 1,200
to claim and balance distributed) Capital A/c By Rev. A/c 1,000 600 400
To Mithya’s - - 28,600 By Nithya’s - - 4,375
A’s capital A/c Dr. 8,000 Excuters A/c Capital A/c
B’s capital A/c Dr. 8,000 To Bal. c/d 27,125 28,275 - By Sathya’s - - 2,625
C’s capital A/c Dr. 8,000 Capital A/c
By P&L - - 1,000
To Revaluation A/c 24,000 Suspense A/c
(Being loss on revaluation distribut-
ed among partners) 34,000 32,400 29,600 34,000 32,400 29,600
40 Accountancy XII Part A – by Subhash Dey
31.3.19 To Bank A/c 1,46,400 1.4.18 By Prem's Capital 2,44,000 Particulars (`) Particulars (`)
To Bal. c/d 1,22,000 31.3.19 By Interest A/c 24,400
To Seema’s 55,500 By Balance b/d 30,000
2,68,400 2,68,400 Executor’s A/c By Reserves A/c 4,000
31.3.20 To Bank A/c 1,34,200 1.4.19 By Bal. b/d 1,22,000 By Punit’s Capital A/c 7,500
31.3.20 By Interest A/c 12,200 By Rahul’s Capital A/c 4,500
By Revaluation A/c 4,000
1,34,200 1,34,200
By P & L Suspense A/c 4,000
5. Revaluation A/c By Interest on Capital A/c 1,500
Particulars (`) Particulars (`) 55,500 55,500
To Buildings 10,000 By Loss Distributed: Dr. Seema’s Executor’s Account Cr.
To Prov. for D/D 1,200 Khushboo 8,000
To Salary Leela 4,800 Particulars (`) Particulars (`)
Outstanding 4,800 Meena 3,200 16,000 To Bank A/c 15,500 By Seema’s Capital A/c 55,500
To Seema’s
16,000 16,000 Executor’s Loan A/c 40,000
Dr. Leela’s Capital Account Cr. /Balance c/d
40,000 55,500
Particulars (`) Particulars (`)
To Profit & Loss A/c 2,400 By Balance b/d 56,000 Working Notes:
To Revaluation A/c 4,800 By Khushboo’s Capital 30,000 Average Profit = (30,000+26,000+24,000+30,000+40,000)/5 × 2 = 60,000
To Bank A/c 20,800 By Meena’s Capital 12,000 Goodwill = 30,000 × 2=60,000
To Leela’s Loan A/c 70,000 Seema’s share of Profit for 6 months = 40,000 × 6/12 × 2/12 = 4,000
Interest on Seema’s Capital = 30,000 × 10/100 × 6/12 = 1,500
98,000 98,000
CHAPTER 4 Reconstitution of a Partnership Firm: Retirement/Death of a Partner - SOLUTIONS 43
Shalini’s Capital A/c Dr. 16,000 1,31,400 1,16,550 65,700 1,31,400 1,16,550 65,700
To Goodwill A/c 80,000
(For the existing goodwill written off in Balance Sheet
the old ratio) Liabilities (`) Assets (`)
ii. General Reserve A/c Dr. 40,000 Creditors 41,400 Land & Building 1,65,000
To Asha’s Capital A/c 20,000 Yusuf's loan 1,16,550 Debtors 30,450
To Naveen’s Capital A/c 12,000 Capitals: Stock 57,600
To Shalini’s Capital A/c 8,000 X 1,19,400 Plant & Machinery 51,000
(For the amount of general reserve dis- Z 59,700 Cash 33,000
tributed among the partners in old ratio) 3,37,050 3,37,050
44 Accountancy XII Part A – by Subhash Dey
Working Notes: Xavier's gain = 2/3 – 4/9 = 2/9; Zaman's gain = 1/3 – 2/9 = 1/9 10. Adjustment Entry
Total capital = 1,19,400 + 59,700 = 1,79,100
Xavier’s capital = 1,79,000 × 2/3 = 1,19,400; Zaman’s capital = 1,79,000 × 1/3 = 59,700 Date Particulars L.F. Dr. (`) Cr. (`)
2020 Kavita’s Capital A/c Dr. 300
II Part: Revaluation A/c
31 Pradeep’s Capital A/c Dr. 200
Particulars (`) Particulars (`) Dec. To Chandan’s Capital A/c 500
(Adjustment for treating Chandan as a
To Provision For D/D 2,000 By Partner’s cap. A/c partner w.e.f. 1 Jan., 2016)
To Furniture A/c 150 T 1,575
To Stock A/c 1000 N 1,575 3,150 Details As Manager As Partner
3150 3,150
Salary (`750 × 12 × 4) 36,000 –
Dr. Partner’s Capital A/c Cr. Interest on Deposit(`20,000 × 9% × 4) 7,200 –
Interest on Capital (`20,000 × 6% × 4) – 4,800
Particulars T N M Particulars T N M – 38,900
Share of Profit [1/6 of
To Rev. 1,575 1,575 – By Bal. b/d 30,000 15,000 – {(59,000 + 62,000 – 4,000 + 78,000)
A/c By Reserve 1,000 1,000 – + 43,200 – 4,800} = 1/6 × 2,33,400]
To Bal. 31,675 16,675 15,500 By Bank A/c – – 15,500
c/d By Premium 2,250 2,250 – Total share of profits 43,200 43,700
33,250 18,250 15,500 33,250 18,250 15,500 12. Dr. Revaluation Account Cr.
Balance Sheet Particulars Amt. (`) Particulars Amt. (`)
Liabilities (`) Liabilities (`) To Bad Debts 1,000 By Partners’ capital
Creditors 18,000 Cash at bank 21,000 A/cs (Loss)
Capitals Debtors 40,000 A 750
T 31,675 Less: Provision (2,000) 38,000 B 250 1,000
N 16,675 Stock 5,000 1,000 1,000
M 15,500 63,850 Furniture 2,850
Dr. Partner’s Capital Account Cr.
Freehold Property 15,000
81,850 81,850 Particulars A (`) B (`) C (`) Particulars A (`) B (`) C (`)
29/70 (Gain) 11/70 (Sac.) 11/70(Sac.) 7/70 (Sac.) Revalution A/c Dr. 32,000
9. C’s share of goodwill = 1/6 of `42,000 = `7,000. But he brings only `6,000. To P’s Capital A/c 19,200
A’s sacrifice = 4/7 – 2/6 = 10/42; B’s sacrifice = 3/7 – 3/6 = –3/42 (Gain) To Q’s Capital A/c 6,400
Journal To R’s Capital A/c 6,400
(Profit on revaluation transferred to Partner’s
Date Particulars L.F. Dr. (`) Cr. (`) Capital A/cs)
Cash A/c Dr. 56,000
To C’s Capital A/c 50,000 General Reserve A/c Dr. 2,000
To Premium for Goodwill A/c 6,000 To Q’s Capital A/c 2,000
(Amount brought by C `50,000 as capital and (Share of General Reserve credited to Q’s
`6,000 as premium for goodwill) Capital A/c)
Premium for Goodwill A/c Dr. 6,000
Q’s Capital A/c Dr. 10,000
C’s Current A/c (`7,000 – `6,000) Dr. 1,000
B’s Current A/c (3/42 of `42,000) Dr. 3,000 To Drawings A/c 10,000
To A’s Current A/c (10/42 of `42,000) 10,000 (Amount of Drawings adjusted with Capital A/c)
(For treatment of Goodwill)
Q’s Capital A/c Dr. 4,63,200
Bank A/c Dr. 7,000 To Q’s Executors A/c 4,63,200
To Revaluation A/c 7,000 (Amount of Capital balance transferred to his
(Unrecorded typewriter sold) Executor A/c)
Revaluation A/c Dr. 7,000
To A’s Current A/c 4,000 Q’s Executor A/c Dr. 1,00,000
To B’s Current A/c 3,000 To Bank A/c 1,00,000
(Profit on revaluation distributed in old ratio 4:3) (Cash paid to Q’s Executors)
CHAPTER 5 Dissolution of a Partnership Firm - SOLUTIONS 45
Rohan’s capital A/c Dr. 8,400 (v)a. Realisation A/c Dr. 9,000
Mohan’s capital A/c Dr. 5,600 To Kavita’s Capital A/c 9,000
(Being remuneration given to Kavita)
To Realisation A/c 14,000
(loss on realisation transferred to partners) b. Kavita’s Capital A/c Dr.
To Realisation A/c 9,000
(Being furniture taken over by Kavita as 9,000
Do it yourself 5.3 remuneration)
Journal OR
Date Particulars L.F. Dr. ( `) Cr. (`) (a.+b.) No Entry
(i) Realisation A/c Dr. 12,000 (vi) No Entry – –
To Bank A/c 12,000
Do it yourself 5.6
(ii) Q’s capital A/c Dr. 16,000 Journal
To Realisation A/c 16,000
(Being stock taken over by Q) Date Particulars L.F. Dr (`) Cr (`)
(iii) Realisation A/c Dr. 4,000 (a) Realisation A/c Dr. 10,000
To P’s Capital A/c 4,000 To Bank A/c 10,000
(Being Creditors paid by P credited to his (Payment of a dishonoured B/R under
capital) discount)
(iv) Bank A/c Dr. 1,200 (b) Realisation A/c Dr. 29,550
To Realisation A/c 1,200 To Bank A/c 29,550
(Being the Realisation of unrecorded assets) (Bills payable discharged)
(v) Realisation A/c Dr. 2,000 (c) Realisation A/c Dr. 21,000
To Q’s Capital A/c 2,000 To Cash A/c 21,000
(Being dissolution expenses paid by partner (Creditors took over stock & balance paid
and credited to his capital A/c) in cash)
(vi) Realisation A/c Dr. 36000 (d) Rajat’s capital A/c Dr. 450
To P’s Capital A/c 20,000 To Realisation A/c 450
To Q’s Capital A/c 16,000 (Unrecorded old typewriter taken over
(Being Profit on Realisation transferred to By Rajat)
capital A/cs of the Partners)
46 Accountancy XII Part A – by Subhash Dey
(a) Aziz’s capital A/c Dr. 64,000 Creditors A/c Dr. 2,000
Bank A/c Dr. 1,04,000 To Realisation A/c 2,000
To Realisation A/c 1,68,000 (Liability transferred to realisation A/c)
(Stock of `80000 taken over by Aziz at Bank A/c Dr. 10,350
20% discount and remaining stock worth To Realisation A/c 10,350
`80000 sold at 30% profit) (Assets realised: Plant & Machinery
(b) Bank A/c Dr. 600 `4,250; Stock `3,500; Debtors `1,850;
Furniture` 7,50)
To Realisation A/c 600
(Bad debtors recored 60% of `1000) Realisation A/c Dr. 1,960
(c) Ashish’s Capital A/c Dr. 40,000 To bank A/c 1,960
(Creditor were paid at 20% less )
To Realisation A/c 40,000
(Bike taken over) Realisation A/c Dr. 60
To Sita’s capital A\c 60
Do it yourself 5.10 (Remuneration for dissolution work)
Journal
Sita’s capital A/c Dr. 450
Date Particulars Dr. (`) Cr. (`) To bank A/c 450
(i) Realisation A/c Dr. 3,500 (Realisation expenses paid by firm on be-
To Cash/ Bank A/c 3,500 half of Sita)
(Being payment made to creditors) Rita’s capital A/c Dr. 200
(ii) Realisation A/c Dr. 2,000 To Realisation A/c 200
To Cash/ Bank A/c 2,000 (Unrecorded asset taken over by Sita)
(Being discounted bill dishonoured) Realisation A/c Dr. 530
(iii) Realisation A/c Dr. 6,000 To Sita’a capital A/c 212
To Ravi’s Capital A/c 4,200 To Rita’s capital A/c 212
To Shankar’s Capital A/c 1,200 To Meeta’s capital A/c 106
To Madhur’s Capital A/c 600 (Profit on realisation)
(Being profit on Realisation transferred to part- Dr. 10,000 + 1,960 + 60 = 12,020
ners capital accounts) Cr. 2,000 + 10,350 + 200 = 12,550
CHAPTER 5 Dissolution of a Partnership Firm - SOLUTIONS 47
Reserve Fund A/c Dr. 2500 Surjit’s Capital A/c Dr. 8,000
To Sita’s capital A/c 1000 To Realisation A/c 8,000
To Rita’s capital A/c 1000 (Investments taken)
To Meeta’s capital A/c 500 Realisation A/c Dr. 37,000
(Reserve fund distributed in 2:2:1) To Bank A/c 37,000
Sita’s capital A/c Dr. 5822 (Creditors were paid)
Rita’s capital A/c Dr. 3012 Realisation A/c Dr. 10,000
Meeta’s capital A/c Dr. 1606 To Surjit’s capital A/c 10,000
To Bank A/c 10,440 (Discharge of Mrs. Surjit’s loan)
(Settlement of partners’ capital A/cs:
Realisation A/c Dr. 1600
Sita = 5,000 + 60 – 450 + 212 + 1,000
= `5,822; Rita = 2,000 – 200 + 212 + To Bank A/c 1600
1,000 = `3,012; Meeta = 1,000 + 106 + (Realisation expenses paid)
500 = `1,606) Surjit’s Caital A/c Dr. 3960
Rahi’s Caital A/c Dr. 2640
Do it yourself 5.13 To Realisation A/c 6600
(Loss `6600 divided in 3 : 2)
Dr. Realisation Account Cr.
Dr. 67,000 + 37,000 +10,000 +
Particulars (`) Particulars (`) 1,600 = `1,15,600
Cr. = 48,000 + 53,000 + 8,000
To Stock 83,000 By Provision for 12,000 = `1,09,000
To Furniture 12,000 doubtful debts Reserve A/c Dr. 15,000
To Debtors 2,42,000 By Creditors 60,000 To Surjit’s capital A/c 9,000
To Buildings 2,00,000 By Loan 15,000 To Rahi’s capital A/c 6,000
To Anju capital A/c 60,000 By Anju’s capital A/c: (Being reserve distributed)
(creditors) Furniture 10,000
Surjit’s capital A/c Dr. 4500
To Sanju capital A/c 15,000 Debtors 1,85,000 1,95,000
Rahi’s capital A/c Dr. 3000
(loan) By Manju’s capital A/c:
To Profit & Loss A/c 7500
To Bank A/c 2,200 Stock 83,000 (Being accumulated losses
(realisation expenses) Buildings 1,80,000 2,63,000 distributed)
By Sanju’s capital A/c:
Rahi’s Capital A/c Dr. 5000
(Remaning debtors less
To Bank A/c 5000
20% of book value) 33,600
(Being settlement of capital
By Loss transferred to: account)
Anju’s capital A/c 21,360
Surjit’s capital A/c Dr. 12540
Manju’s capital A/c 7,120
Rahi’s capital A/c Dr. 8360
Sanju’s capital A/c 7,120 35,640
To Bank A/c 20,900
6,14,200 6,14,200 (Being settlement of capital A/c)
Surjit = 10,000 – 8,000 +
Dr. Partner's Capital Account Cr. 10,000 + 9,000 – 4,500 – 3,960
= `12,540
Particulars Anju Manju Sanju Particulars Dinesh Ramesh Suresh Rahi = 8,000 – 2,640 + 6,000 –
To 1,95,000 2,63,000 33,600 By Bal. b/d 2,75,000 1,10,000 1,00,000
3,000 = `8,360
Realisation By Realisation 60,000 – –
(assets) (creditors) Do it yourself 5.15
To 21,360 7,120 7,120 By Realisation – – 15,000
Realisation (loan) Dr. Realisation Account Cr.
(loss) By Bank A/c – 1,60,120 –
To Bank 1,18,640 – 74,280 Particulars (`) Particulars (`)
3,35,000 2,70,120 1,15,000 3,35,000 2,70,120 1,15,000 To Debtors A/c 1,70,000 By Provision for Bad Debts 20,000
To Stock A/c 1,50,000 By Creditors 60,000
Dr. Bank Account Cr. To Investments A/c 2,50,000 By Arnab's Brother's Loan 95,000
To Building A/c 3,00,000 By I.F. Fund 50,000
Particulars (`) Particulars (`) To Arnab's Capital A/c 95,000 By Bank A/c (Assets realised)
(Arnab's brother's Loan) Investments 2,00,000
To Balance b/d 35,000 By Realisation (expenses) 2,200 To Bank A/c: Building 3,50,000
To Manju’s capital A/c 1,60,120 By Anju’s capital A/c 1,18,640 Creditors 54,000 Stock 60,000 6,10,000
By Sanju’s capital A/c 74,280 Expenses 3,000 57,000 By Ragini's Capital A/c (Stock) 60,000
By Loss tr. to Capital A/cs:
1,95,120 1,95,120 Arnab 76,200
Ragini 25,400
Do it yourself 5.14 Dhrupad 25,400 1,27,000
Journal
10,22,000 10,22,000
Date Particulars L.F. Dr. (`) Cr. (`)
Notes: No entry for payment of realisation expenses `5,000 by Dhrupad
2020 Realisation A/c Dr. 67,000
since he was to bear this amount of expenses.
Dec. 31 To Stock A/c 6,000
To Debtors 19,000 Dr. Partner’s Capital Accounts Cr.
To Furniture 4,000 Particulars Arnab Ragini Dhrupad Particulars Arnab Ragini Dhrupad
To Plant 28,000
To Investments 10,000 To P/L A/c 30,000 10,000 10,000 By Bal. b/d 2,75,000 2,00,000 1,70,000
To – 60,000 – By Realisation 95,000 – –
(Assets transferred) Realisation A/c (Arnab's
Creditors A/c Dr. 38,000 A/c (Stock) Brother's
To 76,200 25,400 25,400 loan)
Mrs Surjit’s Loan Dr. 10,000 Realisation
To Realisation A/c 48,000 A/c (Loss)
(Liabilities transferred) To Bank A/c 2,63,800 1,04,600 1,34,600
To Balance b/d 50,000 By Dhrupad's Loan A/c 1,00,000 To Cash A/c 4500 – – By Bal. b/d 1,00,000 1,00,000 70,000
To Realisation A/c 6,10,000 By Realisation A/c 57,000 To Realisa- 30,650 20,433 10,217 By Re- 18,300 – –
tion A/c alisation
By Arnab's Capital A/c 2,63,800 To Cash A/c 83,150 79,567 59,783 A/c
By Ragini's Capital A/c 1,04,600
By Dhrupad's Capital A/c 1,34,600 1,18,300 1,00,000 70,000 1,18,300 1,00,000 70,000
Ramesh’s Capital A/c Dr. 20,000 Date Particulars L.F. Dr. (`) Cr. (`)
Raman’s Capital A/c Dr. 8,000
To Realization A/c 28,000 (i) Ravi’s Capital A/c Dr. 19,200
(Bills receivable taken over by Ramesh To Realisation A/c 19,200
and investments and stock taken over (Being 40% of the total stock taken
by Raman) over by Ravi at 20% discount)
4. Journal
Self Assessment Test - 5.2
Date Particulars L.F. Dr. (`) Cr. (`) 4. Journal
1 April Realisation A/c Dr. 5,50,000 Date Particulars L.F. Dr. (`) Cr. (`)
2020 To Land and Building A/c 3,00,000
To Stock A/c 1,00,000 (i) Singh’s Capital A/c Dr. 40,500
To Debtors A/c 1,50,000 To Realisation A/c 40,500
(Being assets transferred to Real- (Being 50% of the total stock taken
isation A/c) over by Singh at 10% discount)
Creditors A/c Dr. 1,05,000 (ii) No Entry
To Realisation A/c 1,05,000
(Being creditors transferred to Re- (iii) Cash A/c Dr. 24,300
alisation A/c)
To Realisation A/c 24,300
Bank A/c Dr. 3,50,000 (Being stock sold for cash)
To Realisation A/c 3,50,000 Realisation A/c Dr. 76,000
(iv)
(Being land&building sold to San-
jay for cash) To Bank A/c 76,000
(Being creditors paid in cash at a
Bank A/c Dr. 90,000 discount of 5%)
To Realisation A/c 90,000
(Being stock sold for `90,000.) 5.Dr. Realisation A/c Cr.
Dr.
Self Assessment Test - 5.4
Partner’s Capital A/c Cr.
5. Journal
Particulars A B C Particulars A B C
Date Particulars L.F. Dr. (`) Cr. (`)
Realisation Account Dr. 2,76,500 To P/L A/c 27,000 18,000 9,000 By Bal. b/d 80,000 50,000 30,000
To Land & Building Account 1,00,000 To Cash A/c 4,100 — — By Realisation A/c 5,500 — —
To Furniture Account 50,000 To Realisation 50,000 33,333 16,667 By Cash A/c — 1,333 —
To Machinery Account 90,000 A/c
To Debtors Account 36,500
To Cash A/c 4,400 — 4,333
(Individual Assets accounts closed
by transferring their balances to 85,500 51,333 30,000 85,500 51,333 30,000
Realisation Account)
Creditors Account Dr. 45,000 Dr. Cash A/c Cr.
Outstanding Expenses A/c Dr. 17,000
To Realisation Account 62,000 Particulars (`) Particulars (`)
(Individual External Liabilities
Accounts closed by transferring their To Balance b/d 22,500 By Realisation A/c 1,21,000
balances to Realisation Account) To Realisation A/c 1,10,000 By A’s Capital A/c 8,500
Bank Account Dr. 1,66,900 To B's Capital A/c
1,333 By C’s Capital A/c 4,333
To Realisation Account 1,66,900
( Assets realized and debtors 1,33,833 1,33,833
collected)
Realisation Account Dr. 59,750
To Bank Account Self Assessment Test - 5.5
59,750
(Creditors paid at a discount of
5% and payment of outstanding 5. Journal
expenses)
Realisation Account Dr. 5,000 Date Particulars L.F. Dr. (`) Cr. (`)
To F’s Capital Account 5,000
(Remuneration paid to F for under-
(i) Cash/Bank A/c Dr. 64,000
taking dissolution process) To Realisation A/c 64,000
(Being debtors realised)
E’s Capital Account Dr. 44,940
F’s Capital Account Dr. 44,940 (ii) Payal’s Capital A/c Dr. 3,000
G’s Capital Account Dr. 22,470 To Realisation A/c 3,000
To Realisation Account 1,12,350 (Being unrecorded machine taken
(Loss on Realisation transferred to over)
partners’ Capital Accounts)
(iii) a. Realisation A/c Dr. 70,000
E’s Capital Account Dr. 4,000 To Parul’s Capital A/c 70,000
F’s Capital Account Dr. 4,000 (Being Parul’s commission)
G’s Capital Account Dr. 2,000
To Profit & Loss Account 10,000 b. Parul’s Capital A/c Dr. 1,20,000
(Profit & Loss Account transferred to To Cash/Bank A/c 1,20,000
partners’ Capital Accounts) (For expenses paid by firm on
Bank Account Dr. 24,970 behalf of Parul)
To G’s Capital Account 24,970 (iv) Realisation A/c Dr. 20,000
(Final payment received from G)
To Cash/Bank A/c 20,000
E’s Capital Account Dr. 81,060 (For payment of creditors)
F’s Capital Account Dr. 56,060 1,37,120 Note: No Journal Entry for land
To Bank Account and building of `70,000 taken
(Final payment made to E and F)
over by creditors of `50,000 in
6. Dr. Realisation A/c Cr. full settlement of their claim.
Particulars (`) Particulars (`) (v) Parul’s Capital A/c Dr. 400
To Debtors A/c 52,300 By Creditors A/c 65,000 Payal’s Capital A/c Dr. 200
To Stock A/c 36,000 By Bills Payable A/c 20,000 To Realisation A/c 600
To Investments A/c 15,000 By Provident Fund A/c 12,000 (Being investment of value `600
To Plant A/c 91,200 By Commission in Advance A/c 8,000 taken over by partners)
To Cash A/c: By I.F. Fund A/c 6,000 (vi) Realisation A/c Dr. 20,000
Commission 5,000 By Cash A/c (Assets Realised) To Cash/Bank A/c 20,000
O/S Salary 7,200 Debtors 30,000 (Being bills receivable dishon-
Retrenchment Stock 26,000 oured and payment made by the
Compensation 9,800 Investments 11,250 firm to the bank)
Provident Fund 25,000 Plant 42,750 1,10,000
Bills Payable 20,000 By Loss tr. to Capital A/cs: 6. Dr. Realisation A/c Cr.
Creditors 54,000 1,21,000 A 50,000 Particulars (`) Particulars (`)
To A’s Capital A/c 5,500 B 33,333
(Commission) C 16,667 1,00,000 To Stock-in-Trade 5,000 By Provision for Doubtful 2,000
(5% of 1,10,000) Debts
9. Adjustment Entry
To Goodwill 4,000 By I.F. Fund 1,000
To A’s Capital A/c 5,000 By A’s Capital A/c (Stock) 4,000 Date Particulars L.F. Dr. (`) Cr. (`)
(Mrs A’s Loan) 2020 Sony’s Capital A/c Dr. 1,835
31 To Asha’s Capital A/c 1,835
To Cash A/c 29,850 By B’s Capital A/c
Dec. (Being adjustment for omissions of
Creditors 7,960 Interest on Capital, salary, commission
B/P 10,000 By B’s Capital A/c and Interest on Drawings)
Mrs B’s Loan Investment 4,500 Working Notes:
Old Typewriter 300 4,800
(i) Calculation of opening capitals and interest on capitals:
By Cash A/c
Particulars Asha (`) Sony (`)
Debtors 20,000
Plant 25,000 Closing capital 60,000 50,000
Building 40,000 Less: Share of Profit credited (10,000) (10,000)
(`20,000 shared equally)
Goodwill 6,000
Add: Drawings 8,000 6,000
Investments 4,500 95,500
To Cash A/c 1,000 Opening capital 58,000 46,000
(Expenses)
Interest on capital @6% p.a. 3,480 2,760
To Profit tr. to
Capital A/c (ii) Interest on drawings @5% p.a. for an average period of 6 months:
A 16,245
Asha = 8,000 × 5/100 × 6/12 = `200
B 16,245 32,490
ony = 6,000 × 5/100 × 6/12 = `150
S
1,60,300 1,60,300
(iii) Adjustment Table
Dr. Partner’s Capital A/c Cr. Details Asha Sony Total (`)
(`) (`)
Particulars A (`) B (`) Particulars A (`) B (`)
Omission of Interest on Capital Cr. 3,480 2,760 6,240
To Deferred 1,750 1,750 By Balance b/d 10,000 10,000
Omission of Salary Cr. 5,000 5,000
Revenue
By G. Reserve A/c 5,000 5,000 Omission of Commission Cr. 2,000 2,000
Adv.
Expenditure Total Cr. 8,480 4,760 13,240
To Realisation 4,000 4,800 By Realisation A/c 5,000 — Omission of Interest on Drawings Dr. 200 150 350
A/c (assets (Mrs A’s loan)
taken over) Net Omission Cr. 8,280 4,610 12,890
To Cash A/c — 30,495 24,695 By Realisation A/c 16,245 16,245 Profit less credited, now debited Dr. 6,445 6,445 12,890
Final payment (loss on adjustment)
(Profit) Net effect Cr. Dr. –
36,245 31,245 36,245 31,245 1,835 1,835
To Balance b/d 8,500 By Realisation A/c (liabilities paid) 47,810 Expenditure (`) Income (`)
(500+8,000) By Realisation A/c (expenses) 1,000 To Upkeep of field and pavilion 1,15,000 By Subscriptions 2,50,000
To Realisation A/c To Rates and Insurance 10,000 Add: Outstanding
95,500 By A’s Capital A/c 30,495 To Telephone 3,500 (closing) 42,000
By B’s Capital A/c 24,695 To Postage and Courier charges 4,000 Less: Outstanding
To Printing & stationery 26,000 (opening) 28,000 2,64,000
1,04,000 1,04,000 Add: Opening stock 11,000 By Admission fees 15,000
Less: Closing stock (25,900) 11,100 By Sale of old sports material 2,500
To Miscellaneous expenses 4,400 By Rent of hall 28,000
Self Assessment Test - 5.6 To Secretary’s honorarium 30,000
To Grass seeds 2,600
8.Dr. Income And Expenditure Account Cr. To Sports materials consumed:
Particulars (`) Particulars (`) Opening stock 85,000
Add: Purchases 68,000
To Salaries 2,80,000 Less: Closing stock (76,500) 76,500
Add: Advance To Surplus 52,400
at beginning 10,000 (Excess of income over expenditure)
Add: Outstanding 2,90,000 3,09,500 3,09,500
for 2020 (45,000 – 5,000) 40,000
3,30,000 11. Balance Sheet on the date of Yadav’s admission
Liabilities Amt. (`) Assets Amt. (`)
Balance Sheet
Creditors 60,000 Land & Building 2,00,000
Assets (`) Liabilities (`)
Bank Overdraft 15,000 Stock 10,000
Salaries Outstanding: Salaries Prepaid for 18,000 Murari’s Capital 1,20,000 Debtors 40,000
For 2019: 5,000 2021 Vohra’s Capital 1,60,000 Plant & Machinery 80,000
For 2020 40,000 45,000 Cash (bal. fig.) 25,000
3,55,000 3,55,000
CHAPTER 5 Dissolution of a Partnership Firm - SOLUTIONS 55
To Balance b/d - - 18,000 By Bal. b/d 40,000 30,000 - Particulars Amt. (`) Particulars Amt. (`)
To Realisation 3,000 1,800 1,200 By Realisation 1,000 - - To Outstanding 7,000 By Advance Subscription (beginning) 9,500
A/c (Loss) (Commission Subscription By Cash/Bank A/c
paid) (beginning) By O/s Subscription (end) 1,20,000
To Income & 1,37,000 For 2018-19 2,000
To Realisation 12,500 3,000 - By Cash A/c - - 19,200
A/c
Expenditure A/c For 2019-20 12,500 14,500
1,44,000 1,44,000
To Cash A/c 25,500 25,200 -
Dr. Cash A/c Cr. Date Particulars L.F. Dr. (`) Cr. (`)
(i) Cash/Bank A/c Dr. 27,000
Particulars (`) Particulars (`)
To Realisation A/c 27,000
To Balance b/d 9,000 By Realisation 18,000 (Being debtors and stock realised)
To Realisation A/c 41,500 (Liabilities paid) 1,000
By Realisation (ii) No Journal entries for machinery taken
over by creditors and stock against
(Liabilities paid) bills payable in full settlement.
To Ishita’s Capital A/c 19,200 By Prachi’s Capital A/c 25,500 (iii) Cash/Bank A/c Dr. 2,94,000
By Ritika Cap A/c 25,200 To Realisation A/c 2,94,000
69,700 69,700 (Being land and building sold for `3,00,000,
being broker’s commission 2%)
56 Accountancy XII Part A – by Subhash Dey