Dey's Solution Book Accountancy XII Part-A 2021-22 Edition

CHAPTER 1 Accounting for Not-for-Profit Organisations - SOLUTIONS 1
Do it yourself 1.1 Do it yourself 1.5
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

Dr. Income And Expenditure Account Cr. Dr. Balance Sheet as on 31 March 2020 Cr.
Liabilities (`) Assets (`)
(a) Pavilion Fund
To Salaries 2,80,000
Donations received for
Add: Advance 10,000
construction of permanent
at beginning
pavilion 12,25,000
Add: Outstanding Less: Expenditure as
for 2020 construction of
(45,000 – 5,000) 40,000 3,30,000 pavilion (10,80,000) 1,45,000
Balance Sheet as on 31.12.2020 (b) Tournament Fund
Balance on 01.04.19 10,700
Assets (`) Liabilities (`)
Add: Subscriptions for
Salaries Outstanding: Salaries Prepaid for 18,000 tournaments 65,800
For 2019: 5,000 2021 Less: Tournaments
For 2020 40,000 45,000 expenditures (72,400) 4,100
Balance Sheet
Liabilities (`) Assets (`) Particulars (`)
Prize fund 80,000 Prize Fund Investments 80,000 Amount paid to creditors during the year 25,00,000
Add: Income Accrued Interest on 4,000 Add: Closing balance of creditors 8,00,000
from prize fund 8,000 prize fund investments
Less: Opening balance of creditors (6,00,000)
Investments
Add: Accrued Purchases of Medicines 27,00,000
Interest on prize Add: Opening stock of Medicines 8,00,000
fund investments 4,000 Less: Closing stock of medicines (15,00,000)
Less: Prizes Amount of Medicines to be debited to Income & 20,00,000
Awarded (6,000) 86,000 Expenditure Account
Do it yourself 1.12 (b) Balance Sheet of Charitable Hospital as at 31/03/2020
Balance Sheet
Liabilities (`) Assets (`) Liabilities (`) Assets (`)
Match fund 8,000 Creditors for Medicines 8,00,000 Stock of Medicines 15,00,000
Add: Donation (Specific) 5,000
Do it yourself 1.17
Add: Sale of Match Tickets 7,000
Less: Match Expenses (16,000) 4,000 Particulars (`)
Payment for Purchase of medicines (as per receipts 3,70,000
Do it yourself 1.13
Balance Sheet (As on 31st March 2019) and payment A/c)
Add: Advance paid to suppliers of medicines as on 11,500
April 1, 2019
Prize Fund 20,000
Less: Advance paid on March 31, 2020 (18,200)
Balance Sheet (As on 31st March 2020)
Less: Opening Creditors for medicine (25,000)
Liabilities (`) Assets (`) Add: Closing Creditors for medicine 17,000
Prize Fund 20,000 Medicine purchased during 2019-20 3,55,300
Add: Donation 40,000
Add: Opening stock of medicines 62,000
Less: Prize Awarded (69,000)
Less: Closing stock of medicine (54,000)
Transfer to I & E A/c (9,000) –
Medicines consumed during 2019-20 3,63,300
Income And Expenditure Account
Do it yourself 1.18
Expenditure (`) Income (`) Calculation of the amount of medicines to be posted to Income
and Expenditure A/c:
To Prize Awarded 9,000
Opening stock of medicines 25,000
Do it yourself 1.14 Add: Purchased during the year 1,00,000
1,25,000
Dr. Income and Expenditure A/c Cr.
Less: Closing stock of medicines (20,000)
Expenditure (`) Income (`) Amount of medicines consumed to be posted in 1,05,000
By Interest on General 20,000 Income and Expenditure A/c
Fund Investments Do it yourself 1.19
Dr. Balance Sheet as on 31 March 2020 Cr. Particulars (`)

Amount paid to creditors during the year 46,000
Add: Closing balance of creditors 19,000
General Fund 2,00,000 General Fund 2,00,000
Less: Opening balance of creditors (30,000)
Sports Fund Investments
Balance as on 1.4.2019 80,000 Sports Fund 80,000 Credit Purchases of Stationery 35,000
Add: Interest on sports Investments Add: Cash Purchases of Stationery 6,000
Fund Investments 8,000 Add: Opening stock of Stationery 25,000
Add: Donations 30,000 Less: Closing stock of Stationery (40,000)
Less: Sports prizes (16,000) Amount of Stationery to be debited to Income
Less: Expenses (7,000) 95,000 &Expenditure Account 26,000
Balance Sheet of Charitable Hospital as at 31/03/2020 Dr. Balance Sheet as on 31 March 2019 Cr.
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
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
To Salary 16,000 By Subscriptions 90,000 Notes: Calculation of opening capital fund:

Add: O/s (closing) 1,000 (100 × `900) Balance Sheet as on 31 Dec., 2019
Less: O/s (opening) (1,000) 16,000 By Rent Hall 17,000 Liabilities (`) Assets (`)
To Loss on sale of Books 1,200 By Sale of 400 Capital Fund 38,550 Cash in hand 4,000
To General Expenses 900 Newspapers Cash at bank 15,550
To Postage 1,300 By Profit from 7,300 Subscriptions outstanding 2,000
Entertainment Furniture 12,000
To Electricity Charges 7,800
Books 5,000
To Newspapers 600
To Meeting Expenses 7,200 38,550 38,550
To Surplus (Bal.fig.) 79,700 Do it yourself 1.24
1,14,700 1,14,700 Dr. Income and Expenditure A/c Cr.
Balance Sheet as on 31 March 2020 Expenditure (`) Income (`)
Liabilities (`) Assets (`) To Salary 72,000 By Subscriptions 75,000
Advance Subscriptions 3,000 Subscription outstanding Less: Opening O/s (6,000) (500× 150)
O/s Salary 1,000 For 2018-19: Add: Closing O/s 1,200 67,200 By Sale of old 10,800
Capital Fund (3600 – 2600) 1600 To Depreciation on L&B 30,000 newspapers
Opening Balance 39,900 For 2019-20: By Profit from
Add: Surplus 79,700 1,19,600 (90,000 – 70,000) 20,000 21,600
To Loss on sale of furniture 2,000 44,000
Land and Building 25,000 To General Expenses 18,000 entertainment
Furniture 2600 To Electric charges 12,000 By Rent 84,000
Add: Purchase 26,500 29,100 To Newspapers 33,800 By Deficit (Bal. 200
Books 6,200 fig.)
To Postage 3,000
Add: Purchase 13,000
Less: Sale (3,200) 16,000 To Stationery 40,000
Cash and Bank Balance 15,900 To Audit Fees 8,000
TV. Set 16,000
2,14,000 2,14,000
1,23,600 1,23,600
Balance Sheet as on 31 March 2020 Balance Sheet as on 31 March, 2020

Advance Subscriptions 12,000 Subscriptions outstanding 15,000 Advance Subscription 3,200 Cash in hand 1,800
Salary Outstanding 1,200 Land and Building 6,00,000 Outstanding Rent 2,000 Subscription outstanding 3,700
Capital Fund 6,94,000 Less: Depreciation 30,000 5,70,000 Capital Fund 1,37,500 Stock of Stationery 800
Less:Deficit (200) 6,93,800 Furniture 37,000 Add: Life Membership Books 16,500
Add: Purchase 8,000 Fees 7,000 Furniture 8,000
Less: Sale (6,000) 49,000 Add: Surplus 11,100 1,55,600 Investments 1,00,000
Library Books 30,000 Building 30,000
Add: Purchase 10,000 40,000 1,60,800 1,60,800
Cash Balance 33,000
Notes: Balance Sheet as on 31 March, 2019
7,07,000 7,07,000
Do it yourself 1.25 Advance Subscription 1,000 Cash in hand 6,800
Outstanding Rent 1,000 Subscriptions O/s 2,000
Dr. Income and Expenditure A/c Cr. Capital Fund (Balancing 1,37,500 Stock of Stationery 1,200
figure) Books 13,500
Expenditure (`) Income (`) Furniture 16,000
To Salary 11,000 By Subscriptions 52,000 Investments (5,000/5 × 100) 1,00,000
Add: Outstanding 1,000 12,000 Less: Opening o/s (1,200) 1,39,500 1,39,500
To Depreciation: Add: Closing o/s 3,200 54,000
Building 3,600 By Profit on Sale of Sports Equipment 300 Do it yourself 1.27
Furniture 1,970 By Sale of Old Newspapers 750
Sports Equipment 2,730 8,300 By Entrance Fees 3,200 Dr. Income and Expenditure A/c Cr.
To Electric Charges 5,500 By Accrued Interest on F.D. 750 Particulars (`) Particulars (`)
To Office Expenses 4,100 (30,000×10%×3/12)
To Printing and Stationery 2,300 By Locker Rent 1,250 To Stationery consumed: By Subscriptions 2,00,000
To Repair of Ground 2,000 Add: Outstanding 250 1,500 Opening Stock 3,000 (200 × `1,000)
To Surplus (Bal. fig.) 26,300 Add: Purchases 23,400 By Interest on
Less: Closing Stock (4,000) 22,400 Investments 800
60,500 60,500
To Loss on sale of old furniture 2,400 Add: Interest
Balance Sheet as on 31 Dec., 2020 To Electricity expenses 10,600 Accrued 160 960
To Expenses on lectures 30,000 By Government Grant 17,400
Liabilities (`) Assets (`) To Surplus (Bal. fig.) 1,52,960
Salary outstanding 1,000 Billiards Table 17,500 2,18,360 2,18,360
Tournament Fund 26,000 Cash in hand 12,690
Less: Expenses (18,500) 7,500 Cash at bank 10,000
Capital Fund 74,590 Fixed Deposit @10% p.a. 30,000
Balance Sheet of Sears Club as on 31st March 2020
Add: Life Membership Accrued Interest on F.D. 750 Liabilities (`) Assets (`)
Fees 2,200 Subscription outstanding 3,200
Add: Legacy 37,500 Locker Rent outstanding 250 Subscriptions received 7,200 Outstanding Subscriptions:
Add: Surplus 26,300 1,40,590 in advance For 2018-19 20,000
Building 36,000 Donations for building 40,000 (60,000 – 40,000)
Less: Depreciation (3,600) 32,400
Capital Fund 62,000 For 2019-20 81,000
Furniture 12,000
Add Surplus 1,52,960 2,14,960 (2,00,000 – 25,000 – 94,000) 1,01,000
Add: Purchases 7,700
17,730 Stock of Stationery 4,000
Less: Depreciation (1,970)
Cash 50,000
Sports Equipment 17,500
Investments 8,000
Interest accrued on investments 160
Less: Sale (2,200)
24,570 Sports Equipment 59,000
Less: Depreciation (2,730)
Books 40,000
1,49,090 1,49,090
2,62,160 2,62,160
Notes: Balance Sheet as on 31 Dec., 2019
Working Notes:
Balance Sheet of Sears Club as on 31st March 2019
Capital Fund 74,590 Cash and Bank Balance 7,890 Liabilities Assets (`)
Subscriptions outstanding 1,200
Building 36,000 Subscriptions received in 25,000 Outstanding Subscriptions 60,000
Furniture 12,000 advance (25 × `1,000) Stock of Stationery 3,000
Sports Equipment 17,500 Capital Fund 62,000 Cash 20,000
Furniture 4,000
74,590 74,590
87,000 87,000
Do it yourself 1.26
Dr. Income and Expenditure A/c Cr. Do it yourself 1.28
To Stationery Consumed: By Subscriptions 60,200 Dr. Income & Expenditure A/c Cr.
Payments for purchase 2,300 Less: Opening Particulars (`) Particulars (`)
Add: Opening Stock 1,200 outstanding (2,000)
Less: Closing Stock (800) 2,700 Add: Closing To Salaries 64,500 By Subscription 3,00,000
To Depreciation: outstanding 3,700 + O/s (closing) 8,000 72,500 (–) Advance
Books (13,500 + 6,000 – 16,500) 3,000 Add: Opening To Misc. Expenses 52,000 (2020-21) (15,000)
Furniture (16,000 – 6,000 – 8,000) 2,000 Advance 1,000 To Telephone Charges 12,000 + o/s subscription
To Loss on Sale of Furniture 2,000 Less: Closing To Printing & Stationery (2019-20) 20,000 3,05,000
To Rent 16,000 Advance (3,200) 59,700 Opening Stock 12,000 By Interest on Investment 2400
Less: Opening O/s (1,000) By Entrance Fees 800 + Purchases 19,000 + Accrued Interest 1600 4,000
Add: Closing outstanding 2,000 17,000 By Donations 3,000 – Closing Stock (15,000) 16,000 By Donations 17,000
To Salary 24,000 By Interest on Investment 5,000 To Surplus (Bal.fig.) 2,46,100 By Rent 70,000
To Travelling Expenses 6,000 +Receivable 2,000 72,000
To Repair 700 By Sale of old newspaper 600
To Surplus (Balancing Figure) 11,100
3,98,600 3,98,600
68,500 68,500
Balance Sheet of Gems Club as on 31st March 2020 Do it yourself 1.30

Dr. Income and Expenditure A/c Cr.
Subscriptions received in 15,000 Outstanding Subscriptions 20,000
advance Printing and Stationery 15,000
Outstanding Salary 8,000 Cash 56,500 To Loss on sale of furniture 1,300 By Subscriptions 26,500
Capital Fund 62,000 Furniture 1,30,000 To Salary 3,000 + O/s 2005-06 1,700 28,200
Add: Surplus 2,46,100 3,08,100 Rent Receivable 2,000 (+)outstanding 600 3,600 By Sale of old newspapers 1,250
Fax Machine 6,000 To Newspapers 2,050 By Government grants 10,000
6% Investments 1,00,000 To Electricity bill 1,000 By Interest on F.D. 450
Accrued Interest on 1,600 To Rent 6,800 (+) Accrued interest 900 1,350
Investments
(+)outstanding 1,200 8,000
3,31,100 3,31,100 To Surplus (Bal.fig.) 24,850
Working Notes: Calculation of opening capital fund: 40,800 40,800
Balance Sheet of Gems Club as on 31st March 2019
Balance Sheet as on 31.3.2020
Capital Fund 62,000 Cash 50,000
Printing and Stationery 12,000 Advance Subscriptions 500 Cash 11,200
62,000 62,000 Outstanding Salary 600 Subscriptions outstanding 2,500
Outstanding Rent 1,200 Furniture 15,000
Do it yourself 1.29 Capital Fund 43,550 Add: Purchase 10,000
Dr. Income & Expenditure A/c Cr. Add: Surplus 24,850 68,400 Less: Sale (7,000) 18,500
Books 7,000
Add: Purchase 10,600 17,600
To Salaries 1,66,000 By Subscription 1,80,000 F.D. @9% p.a. 20,000
To Stationery consumed Less: Subscription
Accrued Interest on F.D. 900
Opening stock 7,200 For 2018-19 (12,000)
Add:Purchases 32,000 Less: Subscription 70,700 70,700
Less: Closing Stock (5,400) 33,800 For 2020-21 (18,000) 1,50,000
Working Notes: (i) Calculation of opening capital fund:
To Rent 48,000 By Interest on Balance Sheet as on 31.3.2019
Add: Outstanding investment 65,000
(closing) 4,000 Add: Accrued Liabilities (`) Assets (`)
Less: Outstanding Investment 10,000 75,000 Capital fund 43,550 Cash 19,550
(opening) (4,000) 48,000 By Donations 1,12,000 Subscriptions outstanding 2,000
To Telephone expenses 8,000 By sale of concert Furniture 15,000
Less: Prepaid (2,000) 6,000 tickets 2,47,000
Books 7,000
To Miscellaneous expenses 24,000 Less: Concert
To Sports Material Expenses (58,000) 1,89,000 43,550 43,550
Consumed (ii) Subscription outstanding as on 31.3.2020 `2,500 includes subscription
Opening stock 12,000 outstanding for 2018-19 `800 (2,000 – 1,200). Therefore, subscriptions
Add:Purchases 78,000 outstanding for 2019-20 = 2,500 – 800 = `1,700.
Less: Closing Stock (21,000) 69,000
To Depreciation on building 80,000 Do it yourself 1.31
To Surplus (Bal.fig.) 99,200
Dr. Income & Expenditure A/c Cr.
5,26,000 5,26,000
Expenditures (`) Incomes (`)
Balance Sheet of Queen’s Club as on 31st March 2020
To Campaign Expenses 1,30,000 By Subscription 1,80,000
To Office Rent 40,000 By Govt. Grants 2,00,000
Subscriptions received 18,000 Stock of Stationery 5,400
To Salary 10,000 By Interest 16,000
in advance Stock of Sports Material 21,000
To Furniture hire rent 12,000 Accrued on F.D.
Outstanding Rent 4,000 Building 8,00,000
To Advertisement 15,000 (2,00,000 ×
Tournament Fund 1,64,000 Less: Depreciation (80,000) 7,20,000 12% × 8/12)
Capital Fund 20,09,200 6% Investment 10,00,000 To Loss on sale of old
Add: Surplus 99,200 21,08,400 Add: Purchase 5,00,000 15,00,000 Furniture (3,000 – 2,000) 1,000
Accrued Interest To Surplus (Bal.fig.) 1,88,000
on Investment 10,000
3,96,000 3,96,000
Cash 36,000
Prepaid Telephone Expenses 2,000 Balance Sheet As at 31st March, 2020
22,94,400 22,94,400 Liabilities (`) Assets (`)
Working Notes: Balance Sheet as on 31st March 2019 Capital Fund 1,28,000 12% Fixed Deposits
Liabilities (`) Assets (`) Add: Surplus 1,88,000 2,00,000
Add: Life Membership Add: Accrued
Outstanding Rent 4,000 Outstanding Subscriptions 12,000
Capital Fund 20,09,200 Stock of Stationery 7,200 Fees 30,000 3,46,000 Interest 16,000 2,16,000
Stock of Sports Material 12,000 Creditors 60,000 Books 50,000
Building 8,00,000 Computers 75,000
6% Investment 10,00,000
Cash 1,82,000 Cash at Bank 40,000
Cash in Hand 25,000
20,13,200 20,13,200
4,06,000 4,06,000
Note: Total Interest on Investment = 10,00,000 × 6% + 5,00,000 × 6%
× 6/12 = 60,000 + 15,000 = `75,000
7. Balance Sheet as on 31.3.2020

Self Assessment Test - 1.1
4. Receipt and Payment Account Liabilities Amt. (`) Assets Amt. (`)
Sports fund 22,000 Sports Fund 18,000
Receipts (`) Payments (`)
Add: Interest from Investments
To Balance b/d By Investment 80,000 Sports fund Investments 3,000 Accrued Interest 2,000
Cash in hand 5,000 By Rent 20,000 Add: Accrued Interest on on Sports fund
Cash at Bank 25,000 By General Expenses 21,500 Sports fund investments 2,000 investments
To Subscriptions 1,65,000 By Postage and Stationery 2,000 Less: Sports Expenses (5,000) 22,000
To Donations 35,000 By Courier Charges 1,000
By Sundry Expenses 2,500
8. Income and Expenditure A/c
By Balance c/d Expenditure (`) Income (`)
Cash in hand 12,000
Cash at bank (Bal. fig.) 91,000 To Miscellaneous Expenses 1,50,000
Less: Opening outstanding expenses (11,400)
2,30,000 2,30,000
Add: Closing outstanding expenses 20,100
Add: Opening prepaid expenses 3,750
5. Subscription received during the year 2,20,000
Less: Closing prepaid expenses (4,250) 1,58,200
Add: O/S subscription as on 31.3.2020
For 2018-19 (7,800 – 2,800) 5,000 Balance Sheet as on 31 March, 2020
For 2019-20 25,200 30,200
Add: Advance Subscription for the year 2019-20 21,600
O/s Misc. Expenses 20,100 Prepaid Misc. Expenses 4,250
Less: Outstanding Subscription as on 31.3.2019 (7,800)
Amount of subscription to be credited in I & E A/c 2,64,000 9. Income and Expenditure A/c
6. Balance Sheet as on 31st March 2020 Expenditure (`) Income (`)
Liabilities (`) Assets (`) To Depreciation: By Subscriptions 32,500

Building Add: Closing O/s 750
Match Fund 5,00,000
(5% of 20000) 1,000 Less: Advance 500 32,750
Add: Donations 1,24,000
Furniture By Donation 2,500
Add: Sale of Match Tickets 3,75,000
[5% of (3000+8600)] 580 By Profit from entertainment 7,250
Less: Match expenses (10,00,000)
Books By Interest 350
Transfer to I & E A/c (1,000) —
[10% of (2000+6500–1000)] 750 2,330
To loss on sale of Books 250
Dr. Income and Expenditure A/c Cr. To Rent 6,600
To Electric Charges 3,200
Particulars (`) Particulars (`) To Lecturer Fees 730
To Match Expenses 1,000 To Office Expenses 1,480
To Printing and Stationery 1,050
To Legal Fees 1,870
7.Dr. Income and Expenditure Account Cr. To Expenses on Nukar Drama 1,300
To Surplus (Bal.fig.) 24,040
42,850 42,850
To Salaries 3,30,000 By Subscription 6,60,000
Add: O/s 30,000 3,60,000 Add: Advance 20,000 6,80,000
To Depreciation on By Interest on
Sports Equipments 50,000 Investments 40,000 Self Assessment Test - 1.3
To Surplus (bal. fig.) 3,10,000 4. Subscription A/c
7,20,000 7,20,000
Balance Sheet as on 31st December, 2020
To Balance b/d (O/s 32,000 By Balance b/d 25,000
Liabilities Amt. (`) Assets Amt. (`) subscriptions in the (Advance in the
Capital Fund 9,70,000 Investments 5,00,000 beginning) beginning)
Add: Surplus 3,10,000 12,80,000 Sports Equipments 3,00,000 To I & E A/c (1,000 × `300) 3,00,000 By Cash A/c
Salaries Outstanding 30,000 Add : Purchased 4,00,000 To Balance c/d (Advance By Balance c/d (O/s 3,00,000
Less : Depreciation 50,000 6,50,000 Subscriptions at the end) 36,800 subscriptions at end)
Cash 1,60,000 For 2018-19 Nil
13,10,000 13,10,000 For 2019-20 43,800 43,800
Working Notes: Balance Sheet as on 31st December, 2019 3,68,800 3,68,800
Liabilities (`) Assets (`) 5.
Subscription Received in 20,000 Cash 1,90,000
Details Amt. (`)
Advance Investment 5,00,000
Capital Fund (Bal. fig) 9,70,000 (40,000/8 × 100) Payment to creditors of stationery 61,000
Sports Equipment 3,00,000 Less: Advance paid for stationery to creditors on 31.3.2020 (11,000)
9,90,000 9,90,000 Less: Creditors for stationery on 1.4.2019 (7,000)
Add: Creditors for stationery on 31.3.2020 14,750
Credit purchases of stationery during the year 57,750
6. Subscription A/c Add: Cash purchases of stationery 10,000
Particulars (`) Particulars (`) Less: Book value of stationery sold (20,000)
To O/s (beginning) 4,500 By Advance 3,000 Add: Stationery on 1.4.2019 20,000
To I & E A/c (2,000 × `500) 10,00,000 (beginning) Less: Stationery on 31.3.2020 (25,000)
To Advance (end) 4,500 By Bank A/c 10,00,000
By O/s (end) 6,000 Amount of stationery consumed to be debited to 42,750
Income and Expenditure A/c
10,09,000 10,09,000
6. Income And Expenditure Account 6. Income & Expenditure A/c
Particulars (`) Particulars (`) Particulars (`) Particulars (`)

To Salaries 2,80,000 To Salaries 1,66,000 By Subscription 1,80,000
Add: Advance 10,000 To Stationery consumed Less: Subscription
at beginning Opening stock 7,200 For 2018-19 (12,000)
Add:Purchases 32,000 Less: Subscription
Add: Outstanding
Less: Closing Stock (5,400) 33,800 For 2020-21 (18,000) 1,50,000
for 2020
To Rent 48,000 By Interest on investment
(45,000 – 5,000) 40,000 3,30,000
Add: O/s (closing) 4,000 65,000
Balance Sheet as on 31.12.2020 Less: O/s (opening) (4,000) 48,000 Add: Accrued 10,000 75,000
To Telephone expenses 8,000 By Donations 1,12,000
Assets (`) Liabilities (`) Less: Prepaid (2,000) 6,000 By Sale of concert tickets
Salaries Outstanding: Salaries Prepaid for 2021 18,000 To Miscellaneous expenses 24,000 2,47,000
For 2019: 5,000 To Sports Material: Less: Concert Expenses
For 2020 40,000 45,000 Opening stock 12,000 (58,000) 1,89,000
Add:Purchases 78,000
7. Delhi Charitable Trust Less: Closing Stock (21,000) 69,000
Dr. Income and Expenditure A/c Cr. To Depreciation on building 80,000
To Surplus 99,200
5,26,000 5,26,000
To Insurance 1,600 By Donations 3,000
(2000/15 × 12) (1/3 of 9,000) Self Assessment Test - 1.5
To Rent and Taxes 3200 By Interest on
Add: O/s 600 3,800 Investment 4500
3. Particulars (`)
To Salary 6,000 Add: Accrued 1100 5,600
Add: 900 6,900 By Subscription 42,800 Subscription received during the year 3,40,000
To Advertisements 4,500 By Sale of old 200 Add: Subscription outstanding as on 31-3-2020 47,000
Add: O/s 1,000 5,500 Newspaper Add: Advance Subscription on 1-4-2019 25,000 72,000
To Charity 11,500 Less: Subscription outstanding as on 1-4-19
To Printing 600 Less: Subscription received in advance on 31-3-20 (28,000)
To Postage 300 Amount of Subscription to be credited to (35,000) (63,000)
To Surplus (Bal.fig.) 21,400 Income & Expenditure A/c 3,49,000
51,600 51,600 4. Balance Sheet as on 31.3.2020
Balance Sheet as on Dec. 31, 2020 Liabilities (`) Assets (`)
Liabilities (`) Assets (`) Tournament fund 40,000

Add: Receipts from Tournament 16,000
Donation (Specific) 6,000 Cash in Hand 9,900 Less: Tournament Expenses (14,000) 42,000
O/s Expenses: Cash at Bank 16,000
Rent 600 Prepaid Insurance 400 Dr. Income and Expenditure A/c Cr.
Salary 900 Accrued Interest on 1,100
Expenditure Amt. (`) Income Amt. (`)
Advertisement 1000 2,500 investments
Capital Fund 24,100 Investments 23,000 To Table Tennis Match Expenses 4,000
Add: Legacies 18,000 Furniture 21,600 5. Income and Expenditure A/c
Add: Surplus 21,400 63,500
72,000 72,000
Notes: Balance Sheet as on Dec. 31, 2019 To Rent and Taxes 4000 By Legacies (50% of 24,000) 12,000
Add: O/s Rent 800 4,800 By Donations (50% of 32,000) 16,000
Liabilities Amt. (`) Assets Amt. (`) To salaries 10,400 By Interest on Investments
Add: O/s salary 1200 11,600 Received 3,800
Capital Fund (Bal. Fig.) 24,100 Cash in Hand 11,500 To Advertisements 1,100 Add: Accrued Interest 2,000 5,800
Cash at Bank 12,600 Add: O/s 200 1,300 By Subscriptions 50,200
24,100 24,100 To Charities 60,000 By Interest on Deposits 800
To Printing 1,000 By sale of old newspapers 500
To Postage 300
Self Assessment Test - 1.4 To Insurance 4,800
To Surplus 1,500
4. (`)
Amount paid to creditors 1,10,000 85,300 85,300
Add: Closing balance of creditors 27,000 6. Income and Expenditure A/c
Less: Opening balance of creditors (23,500) Expenditure (`) Income (`)
Add: Opening Stock of Sports Materials 21,000
Less: Closing Stock of Sports Materials (24,000) To Telephone Expenses 800 By Subscriptions 24,000
To Salary 4,000 Less: Opening O/s (3,000)
Sports Materials to be debited to I & E A/c 1,10,500
To Newspaper 700 Add: Opening Advance 1,000
5. Income and Expenditure A/c To Sundry Expenses 1,000 Add: Closing O/s 1,000 23,000
To Surplus 31,500 By Entrance Fees 2,800
Expenditure (`) Income (`) By Locker Rent 1,000
Add: Advance in the beginning 2
00 1,200
To Salary 68,000 By Fees:
By Govt. Grant 11,000
Less: O/s salary beginning (5,000) Total fees collected
Add: O/s salary at the end 3,000 66,000 during the year 38,000 38,000
To Entertainment Expenses 8,000 5,20,000
To Tournament Expenses 25,000 Less: Fees O/s in Dr. Balance Sheet as on 31 March 2020 Cr.
To Meeting Expenses 18,000 the beginning (80,000)
Liabilities Amt. (`) Assets Amt. (`)
To Travelling expenses 7,000 Add: Fees O/s at
To Periodicals 40,000 – 31,000 9,000 the end 30,000 4,70,000 Capital Fund 36,800 Cash Balance 2,500
To Rent 15,000 By Donations 25,000 Add: Life Membership 1,200 Subscriptions O/s 1,000
To Postage, telegram and Add: Surplus 31,500 69,500 Furniture 4,000
telephone charges 6,000 O/s Salary 1,000 Defence Bonds 18,000
To Printing and Stationery 18,000 Loan 10,000 Land 20,000
To Surplus 3,23,000 Building 35,000
4,95,000 4,95,000 80,500 80,500

Do it yourself 2.1 Dr. Partners’ Capital A/c Cr.

Dr. Partner’s Capital Account Cr. Particulars Ramesh Suresh Particulars Ramesh Suresh
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. Profit and Loss Appropriation A/c Cr. 25,000 25,000
Particulars ` Particulars ` Dr. Partner’s Capital Account Cr.

To Partner’s Salary 60,000 By Profit and Loss A/c 23,200 Particulars Pawan Purna Particulars Pawan Purna
– Shikha (5000 × 12) – Net Profit
To Balance c/d 30,000 20,000 By Balance b/d 30,000 20,000
To Interest on capital By Partner’s capital A/c
@10% p.a. (share of loss) 30,000 20,000 30,000 20,000
Rakhi 20,000 Rakhi 34,720
Shikha 30,000 50,000 Shikha 52,080 86,800 Dr. Partner’s Current Account Cr.
1,10,000 1,10,000 Particulars Pawan Purna Particulars Pawan Purna
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
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
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.
Date Particulars L.F. Dr. (`) Cr. (`) Particulars ` Particulars `
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
Date Particulars L.F. Dr. (`) Cr. (`) 21,990 21,990

2019 Cash/Bank A/c Dr. 12,00,000
Dr. Partner’s Capital A/c Cr.
Apr. 1 To Soniya’s Capital A/c 5,00,000
To Charu’s Capital A/c 4,00,000 Particulars Moli Golu Particulars Moli Golu
To Sunita’s Capital A/c 3,00,000 To Bank A/c 12,000 12,000 By Balance b/d 40,000 20,000
(Being capital contributed by partner’s) (Drawings) By Interest on
2020 Profit and Loss A/c Dr. 3,56,600 To Interest on 780 660 capital A/c 4,000 2,000
Mar. To Profit and Loss App. A/c 3,56,600 Drawings A/c By P/L App. A/c
31 (For transfer of net profit) To Balance c/d 40,814 15,736 (share of profit) 9,594 6,396
Soniya’s Capital A/c Dr. 2,750 53,594 28,396 53,594 28,396
Charu’s Capital A/c Dr. 1,500
Smita’s Capital A/c Dr. 1,150 Do it yourself 2.12
To Interest on Drawings A/c 5,400 Dr. Profit & Loss Appropriation A/c Cr.
(For charging interest on drawings)
Interest on Drawings A/c Dr. 5,400
To Profit and Loss Appropriation A/c 5,400 To Interest By Profit & Loss A/c (Net Profit) 30,000
(For transfer of interest on drawings) on Capital: By Interest on drawings:
Interest on Capital A/c Dr. 72,000 Lalan’s Current Lalan’s Current A/c 225
To Soniya’s capital A/c 30,000 A/c 12,000 Balan’s Current A/c 375 600
To Charu’s capital A/c 24,000 Balan’s Current By Net Loss transferred:
To Smita’s capital A/c 18,000 A/c 24,000 36,000 Lalan’s Current A/c 3,240
(For providing interest on capital) Balan’s Current A/c 2,160 5,400
Profit and Loss Appropriation A/c Dr. 72,000 36,000 36,000
To Interest on capital A/c 72,000 Note:- Interest on drawings to be calculated for 6months because time
(For transfer of interest on capital) period is not given:-
Partner’s Salary A/c Dr. 1,20,000 Lalan = 3,000 × 15/100 × 6/12 = `225
To Soniya’s capital A/c 1,20,000 Balan = 5,000 × 15/100 × 6/12 = `375
(Salary payable to Soniya)
Profit and Loss Appropriation A/c Dr. 1,20,000 Do it yourself 2.13
To Partner’s Salary A/c 1,20,000
Dr. P&L Appropriation A/c Cr.
(For transfer of partner’s salary)
Partner’s Commission A/c Dr. 50,000 Particulars ` Particulars `
To Charu’s capital A/c 50,000 To Interest on Capital By Profit and Loss 3,88,000
(being Commission payable to Charu) A’s current A/c * 40,500 A/c – Net Profits
Profit and Loss Appropriation A/c Dr. 50,000 B’s current A/c 45,000 (4,00,000 – 12,000)
To Partner’s Commission A/c 50,000 C’s current A/c 54,000 1,39,500
(For transfer of partner’s salary) To Salary – A’s current A/c 2,00,000
Profit and Loss Appropriation A/c Dr. 1,20,000 To Profits transferred to:
To Soniya’s capital A/c 60,000 A’s current A/c 14,550
To Charu’s capital A/c 40,000 B’s current A/c 14,550
To Smita’s capital A/c 20,000 C’s current A/c 19,400 48,500
(For share of profits) 3,88,000 3,88000
Notes: (i) Interest on Soniya’a drawings = (5,000 × 12) × 10/100 ×
5.5/12 = `2,750 * Interest on A’s capital = 4,00,000 × 9% + 2,00,000 × 9% × 3/12
Interest on Charu’s drawings = (10,000 ×4) × 10/100 × 4.5/12 = `1,500 = 36,000 + 4,500 = `40,500
Interest on Smita’s drawings = 69,000 ×10/100 ×2/12 = `1,150
Dr. Partner's Current A/c Cr. Do it yourself 2.17

Particulars A B C Particulars T N M
Dr. Profit & Loss Appropriation A/c Cr.
To Balance 20,000 10,000 15,000 By Interest 40,500 45,000 54,000
b/d on Capital Particulars (`) Particulars (`)
To Bank A/c 40,000 75,000 55,000 By Salary 2,00,000 – –
(Drawings) By P & L 14,550 14,550 19,400 To Partners’ Capital A/c: By Profit and loss 4,00,000
To Balance 1,95,050 – 3,400 App. A/c P 2,18,750 A/c (net profit)
c/d By Balance c/d – 25,450 – Less Deficiency (15,000) 2,03,750
2,55,050 85,000 73,400 2,55,050 85,000 73,400 Q 1,31,250
Less Deficiency (10,000) 1,21,250
Do it yourself 2.14 R 50,000
Add: From P 15,000
New profit sharing ratio of Kavita, Lalit and Mohan = 2 : 1 : 1. From Q 10,000 75,000
Dr. Profit and Loss Appropriation Account Cr. 4,00,000 4,00,000
Do it yourself 2.18
To Kavita’s capital A/c By Profit and Loss 76,000
Share of profit 38,000 A/c (Net profit) Profit Sharing Ratio of Ram, Mohan and Sohan 1/2 : 1/3 : 1/6 – 3 : 2 : 1
Less: Share in (4,000) 34,000 Dr. Profit and Loss Appropriation A/c Cr.
deficiency
To Lalit’s capital A/c
Share of profit 19,000 To Interest on capital By Profit & 2,00,000
Less: Share in (2,000) 17,000 Ram 50,000 Loss A/c
deficiency Mohan 25,000 (Net profit)
To Mohan’s capital A/c Sohan 20,000 95,000
Share of profit 19,000 To Partners Capital A/c
Add: Deficiency Ram 52,500
received from: Less: Deficiency (4,500) 48,000
Kavita 4,000 Mohan 35,000
Lalit 2,000 25,000 Less: Deficiency (3,000) 32,000
Sohan 17,500
76,000 76,000
Add: Deficiency received from:
Do it yourself 2.15 Ram 4,500
Journal Mohan 3,000 25,000
Date Particulars L.F. Dr. (`) Cr. (`) 2,00,000 2,00,000

2020 Profit and Loss Appropriation A/c Dr. 1,20,000 Do it yourself 2.19
31 To Mahesh’s Capital A/c 72,000
Dec. To Dinesh’s Capital A/c 36,000 Dr. Profit and Loss Appropriation Account Cr.
To Rakesh’s Capital A/c 12,000 Particulars (`) Particulars (`)
(Profit distributed in profit sharing ratio
6 : 3 : 1) To Amit’s capital A/c 42,000 By Profit and Loss 75,000
Mahesh’s Capital A/c Dr. 7,800 Less: Share in deficiency (600) 41,400 A/c (Net profit)
Dinesh’s Capital A/c Dr. 5,200 To Babita’s capital A/c 28,000 By Babita’s Capital 9,000
To Rakesh’s Capital A/c 13,000 Less: Share in deficiency (400) A/c – Deficiency in
(Rakesh’s share of deficiency `13,000 To Sona’s capital A/c 14,000 27,600 guaranteed gross
borne by Mahesh and Dinesh in 3:2) Add: Deficiency received from: fees
Amit 600 (25,000 – 16,000)
Working Notes: Calculation of new profit sharing ratio: Babita 400 15,000
Rakesh’s share = 1/10. Therefore, remaining share = 1 – 1/10 = 9/10
Mahesh’s new share = 2/3 of 9/10 = 18/30; Dinesh’s new share = 1/3 84,000 84,000
of 9/10 =9/30. Thus, New ratio of Mahesh, Dinesh and Rakesh = 18/30:
Do it yourself 2.20
9/30: 1/10 = 18:9:3 = 6:3:1
Do it yourself 2.16 Dr. Profit and Loss Appropriation Account Cr.
Dr. Profit and Loss Appropriation A/c (for 2018-19) Cr.
To P&L A/c – Net loss 6,00,000 By A's Capital A/c 3,75,000
Particulars (`) Particulars (`) To C’s Capital A/c By B's Capital A/c
(minimum guaranteed profit) 1,00,000 3,25,000
To Partner’s capital A/c By Profit and Loss A/c 40,000
(share of profit) (Net profit) 7,00,000 7,00,000
Aman 16,000 16,000
Babita (16,000 – 2000) 14,000 Journal
Suresh (8,000 + 2000) 10,000 Date Particulars L.F. Dr. (`) Cr. (`)
40,000 40,000 A’s Capital A/c Dr. 1,50,000
B’s Capital A/c Dr. 1,00,000
Dr. Profit and Loss Appropriation A/c (for 2019-20) Cr. To C’s Capital A/c 2,50,000
(Deficiency borne by A and B in 3:2)
Working Notes:
To Partner’s capital A/c 60,000 By Profit and Loss A/c 60,000
(share of profit) (Net profit) A B C
Aman 24,000
Loss Distributed 2,25,000 Dr. 2,25,000 Dr. 1,50,000 Dr.
Babita 24,000
Effect of Guarantee 1,50,000 Dr. 1,00,000 Dr. 2,50,000 Cr.
Suresh 12,000
Net Effect 3,75,000 Dr. 3,25,000 Dr. 1,00,000 Cr.
60,000 60,000

Journal
(i) Journal
Date Particulars L.F. Dr. (`) Cr. (`)
2020 Meenakshi’s Current A/c Dr. 960
A’s Current A/c Dr. 10,000
Apr. 1 Gauri’s Current A/c Dr. 3,840
To C’s Current A/c 10,000
To Kavita’s Current A/c 4,800
(Being interest on capital omitted,
(Adjustment for interest on capital
now rectified)
for the year 2018-19 and 2019-20)
Past Adjustment Table
Working Notes: Table Showing Adjustment
A B C Total (`) Kavita Meenakshi Gauri Total
Omission of IOC Dr. 40,000 50,000 60,000 1,50,000 Interest on Capital (2018-19) Dr. 12,000 9,600 7,200 28,800
Total divided in PSR Cr. 50,000 50,000 50,000 1,50,000 Interest on Capital (2019-20) Dr. 12,000 9,600 7,200 28,800
Total Dr. 24,000 19,200 14,400 57,600
Net Effect 10,000 (Dr.) – 10,000 (Cr.)
Profit to be credited (2018-19) Cr. 14,400 9,600 4,800 28,800
(ii) Journal Profit to be credited (2019-20) Cr. 14,400 8,640 5,760 28,800
Date Particulars L.F. Dr. (`) Cr. (`) Total Cr. 28,800 18,240 10,560 57,600
Adjustment 4,800 Cr. 960 Dr. 3,840 Dr.
R’s Capital A/c Dr. 1,300
To P’s Capital A/c 400
To Q’s Capital A/c 900 Do it yourself 2.25
(Being interest on drawings omitted, Journal
now rectified) Date Particular L.F. Dr. (`) Cr. (`)
Past Adjustment Table Priyanka’s Capital A/c Dr. 15,000

To Mona’s Capital A/c 7,500
P Q R Total (`) To Nisha’s Capital A/c 7,500
Omission of IOD 1,000 (Dr.) 500 (Dr.) 2,000 (Dr.) 3,500 (Being Capital accounts of Partners’ adjusted)
Total divided in PSR 1,400 (Cr.) 1,400 (Cr.) 700 (Cr.) 3,500
Working notes: Profits for last three years = 15,000 + 25,000+50,000 = 90,000
Net Effect 400 (Cr.) 900 (Cr.) 1,300 (Dr.)
Mona Nisha Priyanka
Do it yourself 2.22 Profit already distributed(Dr.) 22,500 22,500 45,000
To be distributed as equally(Cr.) 30,000 30,000 30,000
Journal
Net Effect Cr. 7,500 Cr. 7,500 Dr. 15,000
Q’s Current A/c Dr. 500 Do it yourself 2.26
To P’s current A/c 500 Journal
(Being the adjustment of less interest Date Particulars L.F. Dr (`) Cr (`)
on capital credited) 2020 Usha’s Capital A/c Dr. 6,816
31 Mar. To Mita’s Capital A/c 6,816
Working Notes: Adjustment Table (Rectifying entry for omission of IOC, IOD
and Mita’s commission)
Particulars P(`) Q (`) Total (`)
Interest on Capital less credited by Cr. 2,000 1,000 3,000 Past Adjustment Table
2%, now credited Particulars Mita Usha Total
Share in Profit `3,000 less debited, Dr. 1,500 1,500 3,000 Omission of IOC Cr. 8,400 7,200 15,600
now debited equally Omission of Mita’s Commission Dr. 8,000 – 8,000
Interest on Drawings Dr. 480 360 840
Adjustment Cr. 500 Dr. 500 — Net Omissions Cr.15,920 6,840 22,760
Total divided in PSR Dr.9,104 (Dr.) 13,656 (Dr.) 22,760(Cr.)
Net Effect 6,816 (Cr.) 6,816 (Dr.) —
Do it yourself 2.23
Do it yourself 2.27
Adjustment Entry Adjustment Entry
Date Particulars L.F. Dr. (`) Cr. (`) Date Particulars L.F. Dr. (`) Cr. (`)
2021 Mamta’s Current A/c Dr. 200 2020 X’s Current A/c Dr. 2,500
1 Jan. To Anju’s Current A/c 100 31 Mar. To Y’s Current A/c 2,400
To Manju’s Current A/c 100 To Z’s Current A/c 100
(Adjustment for omission of interest (Adjustment for omission of interest on
on capitals for 3 years) capitals and drawings and salary)
Adjustment Table Working Notes:

Particulars Anju Manju Mamta Total (`) Past Adjustment Table
Interest on capitals @5% Cr. 1,500 1,200 900 3,600 Particulars X (`) Y (`) Z (`) Total (`)
p.a. for 3 years (500 × 3) (400 × 3) (300 × 3) (1,200 × 3)
Profit already distributed Dr. 36,000 12,000 12,000 60,000
Profit of 2018 distributed Dr. 400 300 500 1,200
Interest on Drawings Dr. 700 500 300 1,500
in 4:3:5
Profit of 2019 distributed Dr. 600 600 400 1,200 Total Dr. 36,700 12,500 12,300 61,500
in 3:2:1 Interest on Capitals Cr. 5,000 4,000 3,000 12,000
Profit of 2020 distributed Dr. 400 400 400 1,200 Salary Cr. 1,000 1,500 — 2,500
in 1:1:1 Share of Profits credited in 3:1:1 Cr. 28,200 9,400 9,400 47,000
Total Dr. 1,400 1,100 1,100 3,600 Total Cr. 34,200 14,900 12,400 61,500
Adjustment/Net Effect Cr. 100 Cr. 100 Dr. 200
Adjustment/Net Effect Dr. 2,500 Cr. 2,400 Cr.100
Do it yourself 2.28 Working Notes: Calculation of Opening Capital:

Journal Saroj Mahinder Umar
Date Particulars L.F. Dr. (`) Cr. (`) Closing Capitals 80,000 60,000 40,000
Less: Profits (40,000) (30,000) (10,000)
2020 Mohan’s current A/c Dr. 38,000
Add: Drawings 24,000 24,000 36,000
31 Mar. To Ravi’s current A/c 38,000 Opening Capitals 64,000 54,000 66,000
(Wrong distribution of profit and omission of
interest on capital and salary, now adjusted) Table showing adjustment
Saroj Mahinder Umar Total
Working Notes: Ravi (`) Mohan (`) Total Interest on Capital (Cr.) 6,400 5,400 6,600 18,400
Amount already distributed Dr. 2,52,000 2,52,000 5,04,000 Interest on Drawing (Dr.) 550 550 900 2,000
Amount should have been Net (Cr.) 5,850 4,850 5,700 16,400
distributed Profits already distributed (Dr.) 8,200 6,150 2,050 16,400
i) Interest on capital Cr. 1,20,000 84,000 2,04,000 Net Effect 2,350 (Dr.) 1,300 (Dr.) 3,650 (Cr.) ---
ii) Salary Cr. 72,000 60,000 1,32,000
iii) Divisible profit Cr. 98,000 70,000 1,68,000
Total Cr. 2,90,000 2,14,000 5,04,000 Do it yourself 2.32
Net Effect 38,000 (Cr.) 38,000(Dr.) Journal
Do it yourself 2.29
Adjustment Entry 2014 Y’s Capital A/c Dr. 2,856
April To X’s Capital A/c 2,856
Date Particulars L.F. Dr. (`) Cr. (`) 1 (Being interest on capital and salary omitted,
now adjusted)
A’ s Current Account Dr. 5,640
To B’s Current Account 4,860
To C’s Current Account 780 Working Notes: Calculation of Opening Capital :
(Being Adjustment entry passed)
X (`) Y(`)
Working Notes: A B C Total (`) Closing Capitals 1,30,000 1,00,000

Less: Profits (51,000) (34,000)
Profit distributed (3 : 2 : 1) Dr. 15,000 10,000 5,000 30,000
Add: Drawings 18,000 9,000
Omission of interest on Cr. 1,500 1,000 500 3,000
Opening Capitals 97,000 75,000
capital Omission of salary Cr. – 6,000 – 6,000
Omission of commission Cr. – – 1,350 1,350 Interest on Capital @ 12% p.a. 11,640 9,000
Share of profit (2 : 2 :1) Cr. 7,860 7,860 3,930 19,650
X Y Total
Total Cr. 9,360 14,860 5,780 30,000
Omission of Interest on Capital 11,640 9,000 20,640
Net Effect 5,640 (Dr.) 4,860(Cr.) 780(Cr.) – (Cr.)
Salary to X ( Cr.) 9,000 9,000
Do it yourself 2.30 Net loss to firm (Dr.) 17,784 11,856 29,640
Adjustment Entry
Net Effect 2,856(Cr.) 2,856(Dr.) ---
2020 Eluin’s Capital A/c Dr. 570
31 Mar. To Monu’s Capital A/c 10 Do it yourself 2.33
To Ahmed’s Capital A/c 560 Journal
(Adjustment for omission of interest on
capitals and drawings) Date Particulars L.F. Dr. (`) Cr. (`)
2020 Vikrant’s Capital Account Dr. 1,550
Working Notes 1: Calculation of Opening Capitals
31 Mar. To Himanshu’s Capital Account 1,550
Particulars Eluin Monu Ahmed (Adjustment of interest on Capital and
Closing Capital 80,000 60,000 40,000 interest on drawings for previous year)
Add: Drawings 20,000 15,000 9,000
Less: Profit already distributed (60,000) (40,000) (20,000) Working Notes: Statement of Opening Capital
Opening Capital 40,000 35,000 29,000 Particulars Himanshu (`) Vikrant (`)
Working Notes 2: Adjustment Table Closing Capital 2,00,000 1,40,000
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
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.)
Interest on Raj’s capital = (2,50,000 × 8/100 × 3/12 + 2,00,000 × 8/100 × 9/12

Do it yourself 2.34
= `17,000
Journal Entry
Interest on Suri’s capital = (1,50,000 × 8/100 × 3/12) + (2,00,000 × 8/100 ×
Date Particulars L.F. Dr. (`) Cr. (`) 9/12 = `15,000
2020 Ajay's Capital A/c Dr. 14,000 6. Journal Entries
31 Mar. Binay's Capital A/c Dr. 14,000
Date Particulars L.F. Dr (`) Cr (`)
To Chetan's Capital A/c 28,000
(Adjustment of omissions of salary, P & L Appropriation A/c Dr. 40,000
commission and guaranteed profit) To Pinki’s capital A/c 20,000
To Deepti’s capital A/c 16,000
Working Notes: Adjustment Table To Kahu’s capital A/c 4,000
(For distribution of profits)
Particulars Ajay Binay Chetan Total (`)
Pinki’s capital A/c Dr. 500
Profit distributed in Dr. 60,000 60,000 30,000 1,50,000
Deepti’s Capital A/c Dr. 500
2:2:1, now debited
To Kaku’s Capital A/c 1,000
Salary Cr. 8,000 8,000 – 16,000 (For deficiency `1,000 borne by Pinki
Commission Cr. – – 8,000 8,000 and Deepti equally)
Share of profit* Cr. 38,000 38,000 50,000 1,26,000
Total Cr. 46,000 46,000 58,000 1,50,000 7. Adjusting Entry
Net Effect 14,000 (Dr.) 14,000 (Dr.) 28,000 (Cr.) – Date Particulars L.F. Dr. (`) Cr. (`)
2020 Anil’s capital A/c Dr. 75
* Divisible profit = `1,26,000 to be distributed in 3:3:2.
31 March Vineet’s capital A/c Dr. 255
Ajay's share = `47,250; Binay's share = `47,250 and Chetan's share = `31,500 To Vipul’s capital A/c 330
Deficiency in Chetan's share of profit = 50,000 – 31,500 = `18,500, to be (Being adjustment entry passed for
borne by Ajay and Binay in 3:3, i.e. equally. omission of interest on drawings)
Net share of divisible profit:
Working Notes:
Ajay: 47,250 – 9,250 = `38,000 ( 1) Interest on Partner’s drawings @ 6% p.a. for 6 months
Binay: 47,250 – 9,250 = `38,000 Anil: 30,000 × 6/100 × 6/12 = `900
Chetan: 31,500 + 18,500 = `50,000 Vineet: 25,000 × 6/100 × 6/12 = `750
(2) Vipul’s withdrawal of capital `2,50,000 is not drawings. Hence, no
Do it yourself 2.35
interest on drawings has been calculated:
Adjustment Entry
Past Adjustment Table
Particulars Anil Vineet Vipul Total (`)
2020 A’s Capital A/c Dr. 2,500
31 Dec. B’s Capital A/c Dr. 2,500 Interest on drawings (Dr.) 900 750 – 1,650
To C’s Capital A/c 5,000 Profit (5 : 3 : 2) (Cr.) 825 495 330 1,650
(Adjustment for treating C as a partner Net effect 75 (Dr.) 255 (Dr.) 330 (Cr.) –
w.e.f. 1 Jan., 2016)
8. Journal
Notes: Total claim of C as a Manager for 4 years:
Salary = `7,500 × 12 × 4 = `3,60,000; Interest on Deposit = `2,00,000 × Date Particulars L.F. Dr. (`) Cr. (`)
9% × 4 = `72,000. Total `4,32,000 Profit and Loss A/c Dr. 35,660
Total share of C as a partner for 4 years: To Profit and Loss Appropriation A/c 35,660
Interest on Capital = `2,00,000 × 6% × 4 = `48,000 (Transfer of Profit)
Share of Profit = 1/6 of [(5,90,000 + 6,20,000 – 40,000 + 7,80,000) + Ajit’s Salary A/c Dr. 12,000
4,32,000 – 48,000] = 1/6 × 23,34,000 = `3,89,000 To Ajit’s Capital A/c 12,000
(Amount of Ajit’s Salary)
Total = 48,000 + 3,89,000 = `4,37,000
Net effect: C’s Capital A/c to be credited by `5,000 (`4,37,000 – `4,32,000) Profit and Loss Appropriation A/c Dr. 12,000
borne by A and B equally. To Ajit’s Salary A/c 12,000
(Transfer of Ajit’s Salary to Profit and Loss
Appropriation Account)
Self Assessment Test - 2.1 Choudhary’s Commission A/c Dr. 5,000
5. I Part: Profit and Loss Appropriation A/c To Choudhary’s Capital A/c 5,000
(Amount of Choudhary’s Commission)
Particulars (`) Particulars (`) Profit and Loss Appropriation A/c Dr. 5,000
To Choudhary’s Commission A/c 5,000
To Interest on capital A/c: By Profit and Loss 2,00,300 (Transfer of Chouhdary’s Commission)
Karam Singh 13,500 A/c– Net profit
(2,00,000 × 6/100 × 6/12 + Interest on Capital A/c Dr. 7,200
2,50,000 × 6/100 × 6/12) To Ajit’s Capital A/c 3,000
To Choudhary’s Capital A/c 2,400
Suleman 6,300 To Vishal’s Capital A/c 1,800
(1,00,000 × 6/100 × 9/12 + (Amount of interest on capital)
1,20,000 × 6/100 × 3/12)
Profit and Loss Appropriation A/c Dr. 7,200
To Partner’s capital A/c
To Interest on Capital A/c 7,200
(Share of profit) (Transfer of Interest on Capital to Profit
Karam Singh 72,200 and Loss Appropriation Account)
Suleman 72,200 Ajit’s Capital A/c Dr. 270
Inderjeet 36,100 Choudhary’s Capital A/c Dr. 180
1,80,500
Vishal’s Capital A/c Dr. 90
2,00,300 2,00,300 To Interest on Drawings A/c 540
(Amount of interest on drawings)
II Part: Journal
Interest on Drawings A/c Dr. 540
Date Particulars L.F. Dr. (`) Cr. (`) To Profit and Loss Appropriation A/c 540
(Transfer of interest on drawings to Profit and
2019 Raj’s Capital A/c Dr. 50,000 Loss Appropriation Account)
1 July To Cash /Bank A/c 50,000
Profit and Loss Appropriation A/c Dr. 12,000
(Being capital withdrawn)
To Ajit’s Capital A/c 6,000
Cash/Bank A/c Dr. 50,000 To Choudhary’s Capital A/c 4,000
To Suri’s capital A/c 50,000 To Vishal’s Capital A/c 2,000
(For addition to capital) (Amount of profit on appropriation)
Self Assessment Test - 2.2 Self Assessment Test - 2.3

3. Journal 4. I Part: Profit & Loss Appropriation A/c for the year 2019-20
Param’scurrent A/c Dr. 1,55,000
Priya’s Current A/c Dr. 1,55,000 To Interest on Capital: By Profit and 1,47,000
To Prem’s Current A/c 3,10,000 Jain’s Capital A/c 29,400 Loss A/c
(Change in profit sharing ratio Gupta’s Capital A/c 44,100
incorporated retrospectively) Singh’s Capital A/c 73,500 1,47,000
Working notes: Table showing adjustments 1,47,000 1,47,000
Particulars Prem Param Priya Total (`) Working notes: Calculation of Interest on Capital:
(a) I nterest on Jain’s Capital: `40,000
Profits already distributed 3,10,000 4,65,000 7,75,000 15,50,000 (b) I nterest on Gupta’s Capital: `60,000
in 2 : 3 : 5 (Dr.) (c) Interest on Singh’s capital: `1,00,000
Profits to be distributed 6,20,000 3,10,000 6,20,000 15,50,000 `2,00,000
in 2 : 1 : 2 (Cr.) The available profit is `1,47,000. Since the profit is less than interest, the available
Net effect 3,10,000 1,55,000 1,55,000 --- profit will be distributed in the ratio of interest i.e. 40,000 : 60,000 : 1,00,000 = 2:3:5
(Cr.) (Dr.) (Dr.)
II Part: Profit & Loss Appropriation A/c for the year 2019-20
4. Journal
To Interest on Capital: By Profit and 2,00,000
2014 L’s Capital A/c Dr. 4,228 Brij’s Capital A/c 80,000 loss A/c
April 1 To K’s Capital A/c 4,228 Nandan’s Capital A/c 1,20,000 2,00,000
(Being interest on capital and salary
omitted, now adjusted) 2,00,000 2,00,000
Working Notes: Calculation of Opening Capital Working Notes: Interest on capital of Brij = `1,20,000
Interest on capital of Nandan = `1,80,000
K (`) L (`) Total interest payable = `3,00,000. But Net Profit = `2,00,000 only.
Closing Capitals 80,000 1,00,000 Proportionate profit/Interest on capital:
Less: Profits (54,000) (36,000) Brij = 1,20,000/ 3,00,000 x 2,00,000 = `80,000
Add: Drawings 20,000 27,000 Nandan = 1,80,000 / 3,00,000 × 2,00,000 = `1,20,000
Opening Capitals 46,000 91,000 5. Journal
Interest on Capital @ 6% p.a. 2,760 5,460
Particulars K (`) L (`) Total (`) Mar. 31 Esha’s Capital A/c Dr. 6,250
2020 Manav’s Capital A/c Dr. 300
Cancellation of profits Dr. 54,000 36,000 90,000
To Daman’s Capital A/c 6,550
Omission of IOC Cr. 2,760 5,460 8,220 (Being interest on capital and interest on
drawings omitted, now adjusted)
Salary Cr. 16,000 – 16,000
Divisible profit Cr. 39,468 26,312 65,780 Working Notes: Calculation of Opening Capital:
Total Cr. 58,228 31,772 90,000 Esha Manav Daman
Net Effect 4,228 (Cr.) 4,228 (Dr.) – Closing Capitals 3,20,000 2,40,000 1,60,000
Less: Profits (45,000) (30,000) (15,000)
5. Add: Drawings 48,000 48,000 60,000
Dr. Profit and Loss Appropriation A/c Cr. Opening Capitals 3,23,000 2,58,000 2,05,000
Particulars (`) Particulars (`) Table showing adjustment
To Interest on Capital: By Profit and Loss A/c 3,00,000
Moli’s Current A/c 25,000 (3,06,000 – 6,000) Esha Manav Daman Total
Bhola’s Current A/c 40,000 By Interest on Drawings: Interest on Capital (Cr.) 32,300 25,800 20,500 78,600
Raj’s Current A/c 20,000 85,000 Moli’s Current A/c 1,800 Interest on Drawing (Dr.) 1,200 1,200 1,500 3,900
To Salary– Moli’s Current A/c 4,000 Bhola’s Current A/c 3,300 Net (Cr.) 31,100 24,600 19,000 74,700
To Commission–Bhola’s Current A/c 30,000 Raj’s Current A/c 2,400 7,500 Profits already distributed (Dr.) 37,350 24,900 12,450 74,700
To Profits transferred to:
Moli’s Current A/c 56,550 Net Effect 6,250 (Dr.) 300 (Dr.) 6,550 (Cr.) ---
Less: guarantee (37,300) 19,250
Bhola’s Current A/c 56,550
6.
Less: guarantee (37,300) 19,250 Dr. Profit and Loss Appropriation A/c Cr.
Raj’s Current A/c 75,400
Add: from Moli 37,300 Particulars (`) Particulars (`)
Add: from Bhola 37,300 1,50,000
To Interest on Capital: By Profit and Loss A/c –
3,07,500 3,07,500 Sameer’s Current A/c Net Profit (Bal. fig.) 77,750
(15,00,000 × 5% × 3/12 + By Interest on Drawings
Dr. Partner’s Current Accounts Cr. 18,00,000 × 5% × 9/12) 86,250 (for 6 months)
Particulars Moli Bhola Raj Particulars Moli Bhola Raj Yasmin’s Current A/c Sameer’s Current A/c 1,800
(10,00,000 × 5% × 3/12 + Yasmin’s Current A/c 1,200 3,000
To Bank A/c 40,000 60,000 80,000 By Interest on 25,000 40,000 20,000 12,00,000 × 5% × 9/12) 57,500 By Share of Loss tr. to:
(Drawings) capital A/c To Partner’s Salary — Sameer’s Current A/c 60,000
To Interest 1,800 3,300 2,400 By Salary A/c 4,000 – –
Sameer’s Current A/c 20,000 Yasmin’s Current A/c 40,000 1,00,000
on Drawings By Commission – 30,000 –
To Bal. c/d 6,450 25,950 87,600 A/c To Partner’s Commission –
By P & L App. 19,250 19,250 1,50,000 Sameer’s Current A/c 10,000
A/c – share of Yasmin’s Current A/c 7,000
profit
1,80,750 1,80,750
48,250 89,250 1,70,000 48,250 89,250 1,70,000
Dr. Partner’s Capital Accounts Cr. II Part: Adjustment Entry

Date Particulars Sameer Yasmin Date Particulars Sameer Yasmin Date Particulars L.F. Dr. (`) Cr. (`)
31 To 18,00,000 12,00,000 1 Apr. By Bank A/c 15,00,000 10,00,000 2017 C’s Current A/c Dr. 9,000
Mar. Balance 2019 (capital 31 To A’s Current A/c 8,000
2020 c/d 1 July introduced) Mar. To B’s Current A/c 1,000
2019 By Bank A/c 3,00,000 2,00,000 (Being adjustment made for omissions)
(additional)
capital Notes: Total profit of last 2 years = 33,000 + 45,000 = `78,000
18,00,000 12,00,000 18,00,000 12,00,000
Particulars A (`) B (`) C (`) Total (`)
Dr. Partner’s Current Accounts Cr. Profit already distributed Dr. 26,000 26,000 26,000 78,000
Date Particulars Sameer Yasmin Date Particulars Sameer Yasmin Interest on capital @ 5% p.a. 5,000 2,500 2,250 10,000
31 To Bank A/c 30,000 20,000 31 By Interest 86,250 57,500 for 2 years Cr.
Mar. (Drawings) Mar. on capital A/c Salary for 2 years Cr. — 10,000 — 10,000
2020 To Interest on 1,800 1,200 2020 By Salary A/c 20,000 – Profit Cr. 29,000 14,500 14,500 58,000
Drawings A/c By Commission 10,000 7,000
To P&L App. A/c 60,000 40,000 A/c Total Cr. 34,000 27,000 17,000 78,000
(share of loss)
To Balance c/d 24,450 3,300 Net effect 8,000 1,000 9,000 —
(Cr.) (Cr.) (Dr.)
1,16,250 64,500 1,16,250 64,500
Self Assessment Test - 2.4 5. Journal
5. (a) No interest is payable on partners’ capitals. The profit `126,000 Date Particulars L.F. Dr. (`) Cr. (`)
will be shared by Priya and Kajal in 5:3. Piya: 5/8 × 1,26,000 =
2020 Rajiv’s Capital A/c Dr. 2,760
`78,750; Kajal: 3/8 × 1,26,000 = `47,250
31 To Sanjeev’s Capital A/c 2,760
(b) Interest on capitals @12% p.a.: Priya: `72,000; Kajal: `96,000 Mar. (Being IOC omitted, now rectified)
Total interest on capital = `1,68,000. But Net profit = `1,26,000
Interest on capital will be paid to the extent of total profits Working Notes: Past Adjustment Table
available. In this case, profit will be effectively distributed in the Particulars Rajiv Sanjeev Total
ratio of interest on capital, i.e. 72,000 : 96,000 = 3 : 4
Omission of Interest on Capital Cr. 5,400 4,800 10,200
Interest on Capitals:
Priya: 3/7 × 1,26,000 = `54,000 Profits wrongly distributed Dr. 52,000 8,000 60,000
Kajal: 4/7 × 1,26,000 = `72,000 Profits correctly distributed Cr. 43,840 5,960 49,800
Net Effect 2,760 (Dr.) 2,760 (Cr.) –
7. I Part: Journal
6. Profit and Loss Appropriation Account
2020 Bobby’s Capital A/c Dr. 14,402 To Maneesh’s salary A/c (400 × 12) 4,800 By Profit and Loss 40,000
Apr 1 To Abhir’s Capital A/c 10,112 To Girish’s Commission A/c 3,520 A/c – Net profit
To Vineet’s Capital A/c 4,290 [10% of (40,000 – 4,800)] By Interest on
(Being interest on Capital and interest on To Interest on Capital A/c Drawings A/c
drawings omitted, now rectified) Maneesh 7,000 Maneesh 400
Girish 5,600 12,600 Girish 350 750
Working Notes: To Share of Profit transferred to
(i) Interest on Abhir’s drawings = 2,40,000 × 6/100 × 5.5/12 = `6,600 Partners’ Current A/cs:
Maneesh 9,915
Interest on Bobby’s drawings = 1,00,000 × 6/100 × 9/12 = `4,500 Girish 9,915 19,830
Interest on Vineet’s drawings = 1,00,000 × 6/100 × 5/12 = `2,500 40,750 40,750
Total `13,600
(ii) Calculation of opening capitals and interest on capitals: 7. (a) Journal
Particulars Abhir Bobby Vineet
Date Particulars L.F. Dr. (`) Cr.(`)
Capital on 31-3-2020 8,00,000 6,00,000 4,00,000
Less: Share of profit (60,000) (60,000) (30,000) Ram’s current A/c Dr. 2,500
Add: Drawings 2,40,000 1,00,000 1,00,000 To Shyam’s current A/c 2,500
Capital on 1-4-2019 9,80,000 6,40,000 4,70,000 (Being IOC omitted, now adjusted)
Total Interest on Capital @ 10% p.a. = 98,000 + 64,000 + 47,000 = ` 2,09,000 Working Notes:
Profits available = `1,50,000 + 13,600 = `1,63,600
Therefore, Interest on Capital will be given to the extent of `1,63,600 in Partners Cr. interest on capital Dr. profits Net Effect
the ratio of Interest on Capitals i.e., 98:64:47. Abhir = 98/209 × 1,63,600 Ram 50,000 52,500 2,500 Dr.
= `76,712; Bobby = 64/209 × 1,63,600 = `50,098; Vineet = 47/209 × Shyam 90,000 87,500 2,500 Cr.
1,63,600 = `36,790 (b) Journal
(iii) Past Adjustment Table
Particulars Abhir (`) Bobby (`) Vineet (`) Total (`) Z’s Capital A/c Dr. 135
Cancellation of Dr. 60,000 60,000 30,000 1,50,000 To X’s Capital A/c 120
profits To Y’s Capital A/c 15
Omission of Dr. 6,600 4,500 2,500 13,600 (Interest on drawings omitted, now adjusted)
interest Working Notes: Interest is to be calculated for six months only.
on drawings
Total Dr. 66,600 64,500 32,500 1,63,600
Partners Dr. interest on drawings in Cr. Net effect
3:2:1 profits
Omission of Cr. 76,712 50,098 36,790 1,63,600 Dr. Cr.
interest X 375 495 – 120
on capitals Y 315 330 – 15
Net Effect 10,112 (Cr.) 14,402 (Dr.) 4,290 (Cr.) – Z 300 165 135 –
990 135 135
Self Assessment Test - 2.6 Details As Manager As Partner

6. I Part: Calculation of Stationery debited to Income and Expenditure A/c : Salary (`750 × 12 × 4) 36,000 –
Opening stock of stationery 8,000 Interest on Deposit(`20,000 × 9% × 4) 7,200 –
+Stationery purchased during the year 47,000 Interest on Capital (`20,000 × 6% × 4) – 4,800
– closing stock of stationery (6,000) Share of Profit [1/6 of {(59,000 + 62,000 – 4,000 + – 38,900
`49,000 78,000) + 43,200 – 4,800} = 1/6 × 2,33,400]
II Part: Balance Sheet of Queen’s Club as on 31st March 2019 (An extract) Total share of profits 43,200 43,700
Building Fund 4,80,000 10% Building 4,80,000 II Part: Profit and Loss Appropriation A/c for the year 2019-20
Add: Donations 6,00,000 Fund Investments Particulars (`) Particulars (`)
Add: Interest on Building Building 3,60,000 To Interest on Capitals tr. to: By P&L A/c (Net profit) 80,000
Fund Investments 48,000 A’s Capital A/c 10,000 By C’s Capital A/c 10,000
Less: Expenditure on B’s Capital A/c 4,000 (C will account for and
construction tr. to Capital fund (3,60,000) 7,68,000 C’s Capital A/c 3,000 17,000 pay to the firm the net
profit earned by him from
Capital Fund 10,80,000 To Salary – A’s Capital A/c 18,000
the similar business, i.e.
Add: Tr. from Building Fund 3,60,000 14,40,000 To Commission – B’s Capital A/c 5,000 `10,000)
(10/110 × 55,000)
7. Income and Expenditure Account for the year 2019-20
To Share of Profit transfered to:
Expenditure (`) Income (`) A’s Capital A/c 30,000
To Salary 1,500 By Subscriptions 22,500 B’s Capital A/c 10,000
To Rent 800 By Entrance fees 1,250 C’s Capital A/c 10,000 50,000
To Electricity 3,500 By Donation 2,500 90,000 90,000
To Taxes 1,700 By Rent of hall 750
11. Profit and Loss Appropriation A/c
To Printing & Stationery 380 By Interest on fixed 125
To Sundry Expenses 920 deposits with bank Particulars (`) Particulars (`)
To Surplus 18,325 (5,000 ×10/100 × 3/12) To Interest on Capital By Profit and Loss A/c 3,00,000
27,125 27,125 X’s Current A/c 45,000 - Net Profit b/d
9. I Part: Journal Y’s Current A/c 27,000 72,000 By Interest on Drawings
To Salary – Z’s Current A/c 48,000 X’s Current A/c 3,600
To General Reserve 15,000 Y’s Current A/c 4,320 7,920
2020 Chahat’s Capital A/c Dr. 5,400
To Profit transferred to:
Mar. To Ekta’s Capital A/c 5,400
31 (Being interest on capital and interest on X’s Current A/c 1,15,280
drawings omitted, now adjusted) Y’s Current A/c 57,640 1,72,920
3,07,920 3,07,920
Ekta Ankit Chahat 12. Income and Expenditure Account for the year ended 31st March 2020
Closing Capitals 1,50,000 2,10,000 2,70,000
Less: Profits (20,000) (40,000) (60,000) Expenditure (`) Income (`)
Add: Drawings 24,000 24,000 24,000 To Office Expenses 29,000 By Sale of old newspapers 900
Opening Capitals 1,54,000 1,94,000 2,34,000 To Electrical Charges 15,000 By Locker rent 7,000
Add: Outstanding 10,000 25,000 By Interest on investment 1,600
Ekta Ankit Chahat Total To Postage and Stationery 9,000 Add: Accrued interest 400 2,000
To Depreciation on Furniture 4,000 By Entrance fees 50,000
Interest on Capital (Cr.) 15,400 19,400 23,400 58,200
To Depreciation on computers 30,000 By Subscriptions 98,000
Interest on Drawing (Dr.) 600 600 600 1,800
(1,00,000 × 60% × 6/12) Add: Advance (beginning) 6,000
Net (Cr.) 14,800 18,800 22,800 56,400
To Surplus (Bal. fig.) 46,900 Less: Advance (closing) (20,000) 84,000
Profits already distributed (Dr.) 9,400 18,800 28,200 56,400
Net Effect 5,400 (Cr.) Nil 5,400 (Dr.) --- 1,43,900 1,43,900
II Part: Journal Balance Sheet as on 31st March 2020

Date Particulars L.F. Dr. (`) Cr. (`) Liabilities (`) Assets (`)
2020 B’s Capital A/c Dr. 5,280 Advance Subscriptions 20,000 Computers 1,00,000
31 Mar. To A’s Capital A/c 5,280 O/s Electric charges 10,000 Less: Depreciation (30,000) 70,000
(Being interest on capital and salary Subscription for Relief Fund 17,000 Furniture 40,000
omitted, now adjusted) Capital Fund 88,000 Less: Depreciation (4,000) 36,000
Working Notes: Calculation of Opening Capital: Add: Life 1,00,000 Cash in hand 35,500
membership fees Cash at Bank 80,000
A (`) B (`) Add: Surplus 46,900 2,34,900 10% Investments 60,000
Closing Capitals 60,000 20,000 Accrued Interest on Investments 400
Less: Profits (48,000) (32,000)
2,81,900 2,81,900
Opening Capitals 22,000 8,000 13. Dr. Income and Expenditure A/c Cr.
Interest on Capital 2,640 960
Table Showing Adjustment
To Stationery Consumed: By Subscriptions 60,200
A B Total Payments for purchase 2,300 Less: Opening
Interest on Capital (Cr.) 2,640 960 3,600 Add: Opening Stock 1,200 outstanding (2,000)
Salary to Partner (Cr.) 12,000 – 12,000 Less: Closing Stock (800) 2,700 Add: Closing
Profit to be Recovered (Dr.) 9.360 6,240 15,600 To Depreciation: outstanding 3,700
Books (13,500 + 6,000 – 16,500) 3,000 Add: Opening
Adjustment 5,280 Cr. 5,280 Dr. Furniture (16,000 – 6,000 – 8,000) 2,000 Advance 1,000
10. I Part: Adjustment Entry To Loss on Sale of Furniture 2,000 Less: Closing
To Rent 16,000 Advance (3,200) 59,700
Date Particulars L.F. (`) (`) Less: Opening O/s (1,000) By Entrance Fees 800
Add: Closing outstanding 2,000 17,000 By Donations 3,000
2020 Kavita’s Capital A/c Dr. 300
To Salary 24,000 By Interest on Investment 5,000
31 Pradeep’s Capital A/c Dr. 200
To Travelling Expenses 6,000
Dec. To Chandan’s Capital A/c 500
To Repair 700
(Adjustment for treating Chandan as a
To Surplus (Balancing Figure) 11,100
partner w.e.f. 1 Jan., 2016)
68,500 68,500
2. Past Adjustment Table

7. Journal Particulars Mohan Vijay Anil Total
Date Particulars L.F. Dr. (`) Cr.(`) Profit already distributed Dr. 8,000 8,000 8,000 24,000
Profit and Loss Adjustment A/c Dr. 25,000 Interest on Drawings Dr. 250 200 150 600
To Jain’s Current A/c 10,000 Total Dr. 8,250 8,200 8,150 24,600
To Gupta’s Current A/c 15,000
(For omission of interest on capital) Interest on Capitals Cr. 2,700 2,100 1,500 6,300
Jain’s Current A/c Dr. 15,000 Share of Profits* Cr. 5,900 5,900 6,500 18,300
Gupta’s Current A/c Dr. 10,000 Total Cr. 8,600 8,000 8,000 24,600
To Profit and Loss Adjustment A/c 25,000
(For loss on adjustment in 3:2) Adjustment/Net Effect Cr. 350 Dr. 200 Dr. 150
*Distributable profit = `18,300. Each Partner’s Share = 1/3 of `18,300 = `6,100.
8. Particulars (`) Anil’s share of profit (including Interest on Capital) = 6,100 + 1,500 = 7,600.
Deficiency of profit = 8,000 – 7,600 = `400, to be borne by Mohan and Vijay
Payment to creditors of sports material 91,000
equally. Thus, Mohan’s share of profit = Vijay’s share of profit = 6,100 – 200 =
Add: Closing creditors of sports material 45,000
`5,900 and Anil’s share of profit = `6,500.
Less: Opening creditors of sports material (37,000)
Add: Cash purchases of sports material 40,000 II Part: Adjustment Entry
Total purchases 1,39,000
Less: Sports material sold during the year (Book Value) (50,000)
2017 Nusrat’s Capital A/c Dr. 960
Add: Opening stock of sports material 50,000
31 Mar. To Himesh’s Capital A/c 90
Less: Closing stock of sports material (55,000)
To K.K.’s Capital A/c 870
Amount to be shown in Income and Expenditure A/c 84,000 (Being adjustment made for omissions)
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
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

(a) C’s share = 1/6, Remaining share = 1–1/6 = 5/6 Average Profit = (1,67,000 + 1,56,000 + 1,92,000 – 10, 000)/ 4 = 1,26,250
A’s new share = 3/5×5/6 = 15/30;B’s new share = 2/5×5/6 = 10/30 Value of Goodwill= 1,26,250 × 80/100 = `1,01,000
New profit sharing ratio of A, B and C = 15/30 : 10/30 : 1/6 C’s share of goodwill(cash brought by C as premium for goodwill)
= 15 : 10 : 5 OR 3 : 2 : 1 = 1,01,000 × 1/5 = `20,200
(b) A’s new share = 2/5 – 1/8 = 11/40
Do it yourself 3.8
New profit sharing ratio of A, B, C, D = 11/40 : 2/5 : 1/5 : 1/8
= 11 : 16 : 8 : 5 2016-17 `3,50,000 – `56,250 = `2,93,750
(c) Sacrificing ratio of P and Q = 1 : 2, R’s share = 1/5 2017-18 `4,75,000 – `56,250 = `4,18,750
P’s sacrifice= 1/3 × 1/5 = 1/15 2018-19 `6,70,000 – `56,250 = `6,13,750
Q’s sacrifice = 2/3 × 1/5 = 2/15 2019-20 `7,45,000 – `56,250 – `15,000 = `6,73,750
P’s new share = 2/3 – 1/15 = 9/15 Goodwill of the firm
Q’s new share = 1/3 – 2/15 = 3/15 = (`2,93750 + `4,18,750 + `6,13,750 + `6,73,750)/4×2 = `10,00,000
New profit sharing ratio of P, Q, R = 9/15 : 3/15 : 1/5 C’s share of goodwill = 1/4 × `10,00,000 = `2,50,000
= 9 : 3 : 3 = 3 : 1 : 1
Do it yourself 3.9
(d) A’s new share = 3/5 – 2/7 = 11/35
B’s new share = 2/5 – 1/7 = 9/35 Average profits = 40,000 + 50,000 + 55,000 + 70,000 + 85,000/5 = `60,000
New ratio of A, B, C = 11/35 : 9/35 : 3/7 = 11 : 9 : 15 Normal profits = 5,00,000 × 10/100 = `50,000
Do it yourself 3.2 Average super profits = 60,000 – 50,000 = `10,000
Goodwill = 10,000 × 3 = `30,000
(a) Singh’s sacrificed share = 1/3 of 3/8 = 3/24
Do it yourself 3.10
Gupta’s sacrifice = 1/4 of 2/8 = 2/32; Khan’s sacrifice = 1/5
New share of a partner = Old share – Share sacrificed Super Profits = Average Profits – Normal Profits
Singh’s new share = 3/8 – 3/24 = 6/24 Normal Profits = Capital employed x Normal rate of Return/100
Gupta’s new share = 2/8 – 2/32 = 6/32 i.e. 1,00,000 x 15/100 = `15,000
Khan’s new share = 3/8 – 1/5 = 7/40 Average Profits = (30,000 + 36,000 + 42,000)/3 = `36,000
Jain’s share = Singh’s sacrifice + Gupta’s sacrifice + Khan’s sacrifice Super Profits = 36,000 – 15,000 =`21,000
= 3/24 + 2/32 + 1/5 = 31/80 Goodwill = 21,000 x 2 = `42,000
New profit sharing of Singh, Gupta, Khan and Jain
Do it yourself 3.11
= 6/24 : 6/32 : 7/40 : 31/80 = 20 : 15 : 14 : 31
(b) Kabir’s new share = 7/10 – 2/10 = 5/10 (a) Average profit = 4,80,000/4 = 1,20,000
Farid’s share = 3/10 – 1/10 = 2/10; Jyoti’s share = 2/10 + 1/10 = 3/10 Normal Profit = 5,00,000 × 15/100 = 75,000
New profit sharing ratio = 5 : 2 : 3 and Sacrificing ratio = 2 : 1 Super Profit = 1,20,000 – 75,000 = 45,000
Do it yourself 3.3 Goodwill = 45,000 × 3 = `1,35,000
(b) Capital employed = 3,00,000 + 2,00,000 = `5,00,000
(a) Sacrificing ratio = Old ratio – New ratio Normal profits = Capital employed × Normal rate of return /100
A’s sacrifice = 5/9 – 91/180 = 9/180; B’s sacrifice = 4/9 – 71/180 = 9/180 = 5,00,000 × 20/100 = `1,00,000
Therefore, Sacrificing ratio = 1 : 1 Super profits = Actual profits – Normal profits = 1,50,000 – 1,00,000 = `50,000
(b) Z’s share = 1/5. Combined share of X and Y = 1 – 1/5 = 4/5 Goodwill = Super profits × 100/Normal of return
The new ratio between X and Y = 3 : 1 = 50,000 × 100/20 = 50,000 × 5 = `2,50,000
X’s new share = 4/5 × 3/4 = 3/5; Y’s new share = 4/5 × 1/4 = 1/5
Do it yourself 3.12
Therefore, new ratio of X, Y and Z = 3/5 : 1/5 : 1/5 = 3 : 1 : 1
Sacrificing ratio = Old ratio – New ratio Average Profit = `75,000, Undervaluation of Stock = 5,000
X’s sacrifice = 7/10 – 3/5 = 1/10; Y’s sacrifice = 3/10 – 1/5 = 1/10 Average Adjusted Profit = 75,000 + 5,000 = `80,000
Therefore, Sacrificing ratio = 1 : 1 Normal Profit = 7,00,000 × 7/100 = `49,000
Do it yourself 3.4 Super Profit = 80,000 – 49,000 = `31,000
Goodwill = 31,000 × 5 = `1,55,000
A’s Old Share = 4/7
Do it yourself 3.13
A’s Sacrifice = 1/4 × 4/7 = 1/7; C’s Share = 2/7
B’s Sacrifice = C’s share – A’s sacrifice = 2/7 – 1/7 = 1/7 (i) Capital Employed = Assets – External Liabilities
OR B’s Sacrifice = B’s Old Share – B’s New Share = 3/7 – 2/7 = 1/7 = `10,00,000 –`1,80,000 = `8,20,000
Calculation of new ratio of A, B, C and D: Normal Profits = 8,20,000 × 10/100 = `82,000
A’s sacrifice = 1/3 × 3/7 = 1/7; B’s sacrifice = 1/4 × 2/7 = 2/28 Super Profits =1,00,000 – 82,000 = `18,000
A’s new share = Old share – Sacrifice = 3/7 – 1/7 = 2/7 Capitalization method: Goodwill = Super Profits × 100/NRR
B’s new share = 2/7 – 2/28 = 6/28; C’s new share = 2/7(unchanged) = 18,000 × 100/10 = `1,80,000
D’s share = 1/7 + 2/28 = 6/28 Super Profit method: Goodwill = Super Profit × No. of years of Purchase
Therefore, new ratio of A, B, C and D= 2/7 : 6/28 : 2/7 : 6/28 = 4 : 3 : 4 : 3 = `18,000 × 3 = `54,000
Old ratio =3:2 Capital employed (actual) = Net tangible assets = Total assets (excluding
A’s Sacrifice (in favour of C)=1/4x3/5=3/20 goodwill) – Outside liabilities = 3,80,000 – 60,000 = `3,20,000
B’s Sacrifice (in favour of D)=1/2x2/5=2/10 Normal profits = 10/100 × 3,20,000 = `32,000
A’s New Share=3/5-3/20=9/20; B’s New Share=2/5-2/10=2/10 Average profit = `60,000
New Profit Sharing Ratio=9 : 4 : 3 : 4 Super profit = `60,000 – `32,000 = `28,000
Do it yourself 3.6 Goodwill = `28,000 x 3 = `84,000
Neel Madhav’s Share of Goodwill = `84,000 x 1/6 = `14,000
Year Normal Profits/Adjusted profits
Do it yourself 3.15
2017-18 20,000 – 5,000(abnormal gain) = `15,000
2018-19 40,000 + 10,000 (abnormal loss) = `50,000 Capital employed = Total assets – External liabilities = 75,000 – 0 = `75,000
2019-20 = `40,000 Normal profit = 75,000 × 10% = `7,500
`1,05,000 Goodwill = Super profit × No. of years purchase
Average of normal profits = 1,05,000/3 = `35,000 24,000 = (Average profit – Normal profit) × 4
Goodwill = 35,000 × 2= `70,000 6,000 = Average profit – 7,500
Average profit = 6,000 + 7,500 = `13,500
CHAPTER 3 Reconstitution of a Partnership Firm: Goodwill, Admission of a New Partner & Change in Profit Sharing Ratio - SOLUTIONS 19

Journal Journal
Cash/ Bank A/c Dr. 62,000 Stock A/c Dr. 50,000
To Suresh’s Capital A/c 50,000 Machinery A/c Dr. 1,00,000
To Premium for Goodwill A/c 12,000 Land A/c Dr. 1,50,000
(The amount brought in by Suresh as Capital To C’s Capital A/c 2,00,000
and Goodwill) To Premium for Goodwill A/c 1,00,000
Premium for Goodwill A/c Dr. 12,000 (Assets brought by C for his share of
To Rajesh’s Capital A/c 4,000 capital and goodwill premium)
To Mohit’s Capital A/c 8,000 Premium for Goodwill A/c Dr. 1,00,000
(Goodwill transferred to Rajesh and Mohit in To A’s Capital A/c 1,00,000
the sacrificing ratio of 1:2) (Amount of goodwill premium credited
to A’s capital A/c since A alone sacrifices
Working Notes: Calculation of sacrificing ratio: Old ratio – New ratio whole share of C.)
Rajesh = 2/3 – 3/5 = 1/15 ; Mohit = 1/3 – 1/5 = 2/15
Therefore, sacrificing ratio = 1: 2 (a) C’s share of goodwill (premium)= `4,00,000 × 1/4= `1,00,000.
(b) C’s share = 1/4. Remaining share = 1 – 1/4 = 3/4. A’s new share = B’s new share
Do it yourself 3.17 = 1/2 × 3/4 = 3/8. New ratio of A, B and C = 3:3:2.
Journal A’s sacrifice = 5/8 – 3/8 = 2/8; B’s sacrifice = 3/8 – 3/8 = Nil
Date Particulars L.F. Dr. (`) Cr. (`) Do it yourself 3.21
Cash/ Bank A/c Dr. 15,000 Journal
To Premium for Goodwill A/c 15,000 Date Particulars L.F. Dr. (`) Cr. (`)
(The amount brought in by Copper as
premium for goodwill)
Cash/Bank A/c Dr. 70,000
To David’s Capital A/c 50,000
Premium for Goodwill A/c Dr. 15,000 To Premium for Goodwill A/c 20,000
Silver’s Capital A/c Dr. 6,000 (Cash brought by David for his share of capital
To Gold‘s Capital A/c 21,000 and goodwill premium)
(Adjustment of goodwill on Copper’s admission)
Premium for Goodwill A/c Dr. 20,000
Working Notes: Calculation of sacrificing ratio: Old ratio – New ratio To George’s Capital A/c 16,000
Gold = 4/5 – 1/3 = 7/15 (sacrifice) ; Silver= 1/5 – 1/3 = –2/15 (gain) To Henry’s Capital A/c 4,000
Since Silver is gaining on Copper’s admission, therefore, he will also have (Amount of goodwill premium shared by old
to compensate Gold proportionately = Goodwill of the firm × Gaining share partners in their sacrificing ratio 4 : 1)
= (15,000 × 3) × 2/15 = `6,000 George’s Capital A/c Dr. 27,000
Henry’s Capital A/c Dr. 18,000
Do it yourself 3.18 To Goodwill A/c 45,000
Journal
(Existing goodwill written off in old ratio 3:2)
(i) David’s share of goodwill = 1/3 × `60,000 = ` 20,000

Date Particulars L.F. Dr. (`) Cr. (`) (ii) George’s sacrifice = 3/5 – 1/3 = 4/15; Henry’s sacrifice = 2/5 – 1/3
2020 Cash/ Bank A/c Dr. 65,000 = 1/15. Sacrificing ratio = 4:1
31 To C’s Capital A/c 50,000 Do it yourself 3.22
Mar. To Premium for Goodwill A/c 15,000
(The amount brought in by C as Capital Sarthi will be required to bring in share of goodwill premium
and Goodwill) = 1/4 of (`24,000 – `5,000) = 1/4 × `19,000 = `4,750
Journal
To A’s Capital A/c 8,000 Date Particulars L.F. Dr. (`) Cr. (`)
To B’s Capital A/c 7,000
(Goodwill transferred to A and B in sacrificing
Cash A/c Dr. 54,750
ratio 8:7) To Sarthi’s Capital A/c 50,000
To Premium for Goodwill A/c 4,750
A’s Capital A/c Dr. 4,000 (Amount brought in by Sarthi as capital and goodwill)
B’s Capital A/c Dr. 3,500
To Cash/ Bank A/c 7,500 Premium for Goodwill A/c Dr. 4,750
(Cash withdrawn by A and B, half of their To Aarti’s Capital A/c 2,850
share of goodwill) To Bharti’s Capital A/c 1,900
(Goodwill brought in by Sarthi shared by old
Do it yourself 3.19 partners in their ratio of sacrifice 3 : 2)
Journal
Aarti’s sacrifice = 3/5 – 2/4 = 2/20 = 1/10; Bharti’s sacrifice = 2/5 – 1/3 = 1/15;
Date Particulars L.F. Dr. (`) Cr. (`) Sacrificing ratio =1/10 : 1/15 = 3 : 2
Cash A/c Dr. 98,000 Do it yourself 3.23
Average Profits = `1,80,000; Goodwill = 1,80,000 x 3 = `5,40,000
Journal
(The amount of capital and goodwill
brought by Ajay) Date Particulars Dr. (`) Cr. (`)
Premium for Goodwill A/c Dr. 18,000 2020 Goodwill A/c Dr. 5,40,000
To P’s Capital A/c 1,800 1 Apr. To L’s Capital A/c 2,70,000
To K’s Capital A/c 16,200 To M’s Capital A/c 1,62,000
(Amount of goodwill brought by B shared To N’s Capital A/c 1,08,000
by P and K in their sacrificing ratio 1:9) (Being goodwill raised in old ratio)
P’s Capital A/c Dr. 1,800 L’s Capital A/c Dr. 2,25,000
K’s Capital A/c Dr. 16,200 M’s Capital A/c Dr. 1,35,000
To Cash/Bank A/c 18,000 N’s Capital A/c Dr. 90,000
(Cash withdrawn by P and K) S’s Capital A/c Dr. 90,000
Sacrificing Ratio: P’s sacrifice = 2/5 – 3/8 = 1/40; K’s sacrifice = 3/5 – 3/8 To Goodwill A/c 5,40,000
(Goodwill written-off in new ratio)
= 9/40. Thus, sacrificing ratio is 1:9.

Journal
(a)Calculation of Hidden Goodwill:
Date Particulars L.F. Dr. (`) Cr. (`) Saurabh’s share = 1/5, Saurabh’s Capital = `3,00,000
Goodwill A/c Dr. 36,000 Total capital of the new firm = 3,00,000 × 5/1 = `15,00,000
To Rajesh’s Capital A/c 18,000 Actual total capital of all partners = 5,00,000+3,00 000+3,00,000 = ` 11,00,000
To Mukesh’s Capital A/c 18,000 Goodwill of the firm = 15,00,000 – 11,00,000 = `4,00,000
(Goodwill raised at full value in old ratio 1 : 1) Thus, Saurabh’s share of goodwill = 1/5 × 4,00,000 = `80,000
Rajesh’s Capital A/c Dr. 16,000 (b)Calculation of New Profit Sharing ratio:
Mukesh’s Capital A/c Dr. 12,000 Pankaj’s new share = 3/5 – 1/5 = 2/5; Naresh’s new share = 2/5
Hari’s capital A/c Dr. 8,000 New Ratio = 2:2:1
To Goodwill A/c 36,000 (c) Journal
(Goodwill written off in new ratio 4 : 3 : 2)
Do it yourself 3.25 Goodwill A/c Dr. 4,00,000
Goodwill account to be raised and written off = (8,000 – 5,000) × 9/2 = `13,500 To Pankaj’s Current A/c
Journal To Naresh’s Current A/c 2,40,000
(Goodwill raised in old ratio 3 : 2) 1,60,000
Pankaj’s Current A/c Dr. 1,60,000
Cash/Bank A/c Dr. 55,000
Naresh’s Current A/c Dr. 1,60,000
To Tilak’s Capital A/c 50,000
Sourabh’s Current A/c Dr. 80,000
(Amount brought as capital and goodwill) To Goodwill A/c 4,00,000
(Goodwill written-off in new ratio 2 : 2: 1)
To Priya’s Capital A/c 3,500
To Sudhir’s Capital A/c 1,500 Do it yourself 3.31
(Goodwill brought by Tilak shared in
sacrificing ratio 7:3) Old Ratio = 3:2; Z’s share = 1/3
Z acquires from K = 1/3 × 2/5= 2/15; Z acquires from Y = 1/3 × 3/5=3/15
Goodwill A/c Dr. 13,500
K’s new share = Old share – share given to Z = 3/5 – 2/15 = 7/15
To Priya’s Capital A/c 8,100
Y’s new share = Old share – share given to Z = 2/5 – 3/15 = 3/15
To Sudhir’s Capital A/c 5,400
New profit sharing ratio = 7:3:5
(Goodwill raised at full value in old ratio 3 : 2)
Journal
Priya’s Capital A/c Dr. 6,000
Sudhir’s Capital A/c Dr. 4,500 Date Particulars L.F. Dr. (`) Cr. (`)
Tilak’s capital A/c Dr. 3,000 Cash A/c Dr. 1,10,000
To Goodwill A/c 13,500 To Z’s Capital A/c 80,000
(Goodwill written off in new ratio 4 : 3: 2) To Premium for Goodwill A/c 30,000
(Being Capital and share of goodwill
Priya’s sacrifice = 3/5 – 4/9 = 7/45; Sudhir’s sacrifice = 2/5 – 3/9 = 3/45
brought in by the new partner)
Sacrificing ratio =7 : 3
Do it yourself 3.28 To K’s Capital A/c 12,000
Total capital of new firm on the basis of Sam’s capital and his share To Y’s Capital A/c 18,000
= 60,000 × 5/1 = `3,00,000 (Being the amount of premium distributed in
Actual total capital of all partners = `80,000 + `50,000 + `60,000 = `1,90,000 sacrificing ratio)
Goodwill of the firm = `3,00,000 – `1,90,000 =`1,10,000
Do it yourself 3.32
Sam’s share = 1/5 × `1,10,000 = `22,000 Journal
Journal
Cash A/c Dr. 3,45,000
2020 Bank A/c Dr. 60,000 To Guru’s capital A/c 3,00,000
1 Jan. To Sam’s Capital A/c 60,000 To Premium A/c 45,000
(Cash brought by Sam for his capital) (Capital and premium brought in by Guru)
Sam’s Capital A/c Dr. 22,000 Premium A/c Dr. 45,000
To Hem’s Capital A/c 13,200 Kavi’s capital A/c Dr. 37,500
To Nem’s Capital A/c 8,800 To Hari’s capital A/c 67,500
(Adjustment of goodwill through partners’
To Ravi’s capital A/c 15,000
capital accounts)
(Premium adjusted through the partners
capital accounts)
Do it yourself 3.29
Hari's Sacrifice = 3/6 – 2/7 = 9/42; Ravi's Sacrifice = 2/6 – 2/7 = 2/42
(a) Calculation of Hidden Goodwill: Kishore’s share = 1/4
Kavi's Sacrifice = 1/6 – 2/7 = –5/42 (gain)
Kishore’s Capital = `2,00,000
Goodwill of the firm = 45,000 ×7/1 = `3,15,000
Total capital of the new firm = 2,00,000 × 4 = `8,00,000
Compensation payable by Kavi = 3,15,000×5/42 = `37,500
Existing total capital of all partners= 2,00,000 + 3,00 000 + 2,00,000 = `7,00,000
Goodwill of the firm = 8,00,000 – 7,00,000 = `1,00,000 Do it yourself 3.35
Thus, Kishore’s share of goodwill = 1/4 X 1,00,000 = `25,000 Journal
(b) Calculation of New Profit Sharing ratio:
Karan’s new share = 1/3; Varun’s new share = 2/3 – 1/4 = 5/12 Date Particulars L.F. Dr. (`) Cr. (`)
Kishore’s share = 1/4. Therefore, New Ratio = 4:5:3 A’s Capital A/c Dr. 5,000
(c) Journal B’s Capital A/c Dr. 5,000
Date Particulars L.F. Dr. (`) Cr. (`) To Profit and Loss A/c 10,000
(Accumulated losses debited to the old
2020 Kishore’s Current A/c Dr. 25,000 partners in their old ratio, i.e. 1:1)
Apr. 1 To Varun’s Current A/c 25,000 Cash A/c Dr. 25,000
(Being credit given for goodwill to Varun on
Kishore’s admission) To C’s Capital A/c 25,000
(Amount brought by C as capital)
(a) C’s Capital A/c Dr. 4,000 Do it yourself 3.39

To A’s Capital A/c 4,000 Revaluation A/c
(C’s share of goodwill = 2/9 of `18,000 = Particulars (`) Particulars (`)
`4,000 debited to C’s Capital A/c and credited
to A’s Capital A/c since sacrificing ratio of A To Buildings A/c 80,000 By Land A/c 1,50,000
and B is 1:0) To L’s CapitalA/c 43,750
To M’s Capital A/c 26,250
(b) Goodwill A/c Dr. 18,000
1,50,000 1,50,000
To A’s Capital A/c 9,000
To B’s capital A/c 9,000 Partners’ Capital Accounts
(Being goodwill raised in old ratio 1 : 1)
Particulars L M N Particulars L M N
A’s Capital A/c Dr. 5,000
B’s Capital A/c Dr. 9,000 To L’s Cap. – – 57,000 By Bal. b/d 12,85,000 7,16,000 –
To M’s Cap. – – 15,000 By Reserve 1,50,000 90,000 –
C’s Capital A/c Dr. 4,000 To Bal. c/d 15,35,750 8,47,250 5,28,000 By N’s Cap. 57,000 15,000 –
To Goodwill A/c 18,000 By Rev. A/c 43,750 26,250 –
(Being goodwill written off in new ratio*) By Cash A/c – – 6,00,000
* 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
Do it yourself 3.37 Cash/Bank Accounts

Revaluation Account
To Balance b/d 1,39,000 By Balance c/d 7,39,000
To Stock in hand 4,000 By Plant and 20,000 To N’s Capital 6,00,000
To Provision for doubtful debts 3,000 Machinery
7,39,000 7,39,000
To Creditors 1,000 By Buildings 15,000
To Profit on revaluation tr. to: Balance Sheet of L, M and N as at March 31,2020
A’s Capital A/c 18,000
B’s Capital A/c 9,000 27,000 Liabilities (`) Assets (`)
35,000 35,000 Capitals : Land 7,50,000

L 15,35,750 Building 8,00,000
M 8,47,250 Other Fixed Assets 3,90,000
Partners’ Capital Accounts
N 5,28,000 29,11,000 Stock 1,98,000
Particulars A B C Particulars A B C Sundry Creditors 1,49,000 Debtors 1,83,000
Cash/Bank 7,39,000
To Bal. 2,38,000 1,79,000 1,00,000 By Bal. b/d 1,80,000 1,50,000 –
30,60,000 30,60,000
c/d By Bank A/c – – 1,00,000
By Rev. A/c 18,000 9,000 – L 's Sacrifice = 5/8 = 7/15 = 75 – 56/120 = 19/120
2,38,000 1,79,000 1,00,000 2,38,000 1,79,000 1,00,000
M's Sacrifice = 3/8 = 5/15 = 45 – 40/120 = 5/120
Sacrifice Ratio of L and M = 19 : 5
N’s share of goodwill = 3/15 × `3,60,000 = `72,000
Balance Sheet of A, B and C as on April 01, 2020
Liabilities (`) Assets (`) Do it yourself 3.40
Revaluation A/c
Bills Payable 10,000 By Cash in hand 10,000
Sundry Creditors 59,000 By Cash at bank 1,40,000 Particulars (`) Particulars (`)
Outstanding Expenses 2,000 Sundry Debtors 60,000
Capitals Less: Provision 3,000 57,000 To Claim for Workmen By Land & Building 26,000
A 1,98,000 Stock 36,000 Compensation 6,000
B 1,59,000 Plant and Machinery 1,20,000 To Provision for Bad debts 5,000
C 1,00,000 4,57,000 Buildings 1,65,000 To Partners’ Capital
Accounts (Gain)
5,28,000 5,28,000 Madhu 6,000
Vidhi 9,000 15,000
Do it yourself 3.38
Revaluation A/c 26,000 26,000

Partners’ Capital A/c
To Stock 2,000 By Land and Buildings 5,000
To Fixtures 100 By Sundry creditors 650 Particulars Madhu Vidhi Gayatri Particulars Madhu Vidhi Gayatri
To Provision for doubtful debts 800
To Provision for discount on B/R To 150 To Goodwill A/c 60,000 90,000 1,50,000 By Balance b/d 5,20,000 3,00,000 –
Claim for damages 1,000 To Bal. c/d 5,98,000 4,17,000 2,50,000 By Reserve A/c 12,000 18,000 –
To Profit on Revaluation tr. to: By Rev. A/c 6,000 9,000 –
A's Capital A/c 1,200 By Cash A/c – – 4,00,000
B's Capital A/c 400 1,600 By Goodwill A/c 1,20,000 1,80,000 –
5,650 5,650 6,58,000 5,07,000 4,00,000 6,58,000 5,07,000 4,00,000

Partners’ Capital Accounts Balance Sheet of as at 31st March, 2020
Particulars A B C Particulars A B C Liabilities (`) Assets (`)
To Bank 1,875 625 By Balance b/d 30,000 16,000 –
Partners’ Capital A/c: Land & Building 3,26,000
A/c By Reserve fund 3,000 1,000 –
Madhu 5,98,000 Machinery 2,80,000
To Balance 36,075 18025 10,000 By Rev. A/c (profit) 1,200 400 –
Vidhi 4,17,000 Stock 80,000
c/d By Bank A/c – – 10,000 Gayatri 2,50,000 12,65,000 Debtors 3,00,000
By Premium A/c 3,750 1,250 – Claim for W.C. 6,000 Less: Provision 15,000 2,85,000
37,950 18,650 10,000 37,950 18,650 10,000 Bills Payable 1,50,000 Bank (50,000 + 4,00,000) 4,50,000
Balance sheet (after C’s admission) 14,21,000 14,21,000
Claim for Damages 1,000 Stock 18,000 Do it yourself 3.41

Sundry creditors 40,850 Fixtures 900 Journal
Capital A/c Debtors 16,000
A 36,075 Less: Provision (800) 15,200 Date Particulars L.F. Dr. (`) Cr. (`)
B 18,025 Bill receivable 3,000
C 10,000 64,100 Less: Provision (150) 2,850 (i) E's Capital A/c Dr. 2,500
Land and Buildings 30,000 To C’s Capital A/c 2,000
Cash at Bank (26,500 + 10,000 39,000
+ 5,000 – 1,875 – 625) To D’s Capital A/c 500
(For adjustment of General Reserve)
1,05,950 1,05,950
Partner’s Capital Account

(ii) Cash A/c Dr. 1,20,000
To E’s Capital A/c 1,00,000 Particulars Allah Jesus Hari Satnam Particulars Allah Jesus Hari Satnam
To Premium for Goodwill A/c 20,000 To Rev. A/c 90 90 90 – By Bal. b/d 1,500 1,750 2,000 –
(Being cash received as E’s capital and To Balance c/d 1,910 2,160 2,410 1,800 By Cash A/c – – – 1,800
By Premium 500 500 500 –
premium for goodwill)
2,000 2,250 2,500 1,800 2,000 2,250 2,500 1,800
(iii) Premium for Goodwill A/c Dr. 20,000
To C’s Capital A/c 16,000 Do it yourself 3.43
To D’s Capital A/c 4,000 Revaluation A/c
(Being premium for Goodwill credited Particulars (`) Particulars (`)
to old partner’s capital account in
sacrificing ratio) To Stock 20,000 By Loss tr. to:
To Furniture 18,000 Rajat’s Capital A/c 26,600
(iv) C’s Capital A/c Dr. 8,000 Ravi’s Capital A/c 11,400
D’s Capital A/c Dr. 2,000 38,000 38,000
To Cash A/c 10,000
(Being half of goodwill amount Partners’ Capital A/c
withdrawn by C and D)
Particulars Rajat Ravi Rohan Particulars Rajat Ravi Rohan
(v) Bad debts A/c Dr. 2,000 To Rev. A/c 26,600 11,400 – By Bal. b/d 1,00,000 80,000 –
To Debtors A/c 2,000 To Cash A/c – 20,600 – By Reserve 7,000 3,000 –
(Being debtors `2,000 written off) To Balance c/d 1,26,000 54000 60,000 By Cash – – 60,000
By Premium 7,000 3,000 –
(vi) Provision for D/D A/c Dr. 2,000 By Cash A/c 38,600 – –
To Bad debts A/c 2,000 1,52,600 86,000 60,000 1,52,600 86,000 60,000
(Being provision utilised for writing off
bad debts) Working Notes: Rohan’s Capital for 1/4 th share = `60,000
Total capital = `60,000 x 4 = `2,40,000
(vii) Provision for D/D A/c Dr. 640 Rajat’ share in profits = 7/10 × 3/4 = 21/40; Ravi’s share = 3/10 × 3/4 = 9/40
To Revaluation A/c 640 Rajat’s Capital = 2,40,000 × 21/40 = `1,26,000
(Being provision for bad debts decreased) Ravi’s Capital = 2,40,000 × 9/40 = `54,000
(viii) Revaluation A/c Dr. 14,000 Cash A/c

To Stock A/c 2,000 Particulars (`) Particulars (`)
To Furniture A/c 4,000
To Bal b/d 36,000 By Ravi’s Capital A/c 20,600
To Plant & Machinery A/c 8,000
To Rohan’s Capital A/c 60,000 By Bal. c/d 1,24,000
(Being decrease in assets recorded)
To Premium for goodwill 10,000
(ix) Investments A/c Dr. 7,000 To Rajat’s Capital A/c 38,600
To Revaluation A/c 7,000 1,44,600 1,44,600
(Being increase in investments recorded)
(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
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
Balance sheet (As on 31st March 2020)

Do it yourself 3.45
Revaluation Account Liabilities (`) Assets (`)
Particulars (`) Particulars (`) Capital’s A/cs Land&Building 80,000
To Building 15,000 By Loss transferred to: B 60,000 Machinery 20,000
To Machinery 2,000 A’ Capital A/c 11,424 C 60,000 Furniture 10,000
To Provision for D/D 2,040 B’ Capital A/c 7,616 19,040 D 30,000 1,50,000 Debtors 25,000
Creditors (60,000 – 500) 59,500 Less: Provision 1,250 23,750
19,040 19,040 Claim for Damages 800 Cash 76,550
Partner’s Capital Accounts 2,10,300 2,10,300

Particulars A B C Particulars A B C
Working Notes: Sacrifice Ratio =Old Ratio – New Ratio
To Rev. A/c 11,424 7,616 – By Bal. b/d 1,50,000 80,000 – B's = 3/5 – 2/5 = 1/5; C's = 2/5 – 2/5 = Nil
To Current A/c 40,176 6,784 – By Reserve 14,400 9,600 – Total Capital of new firm = 30,000 × 5/1 = `1,50,000
To Bal. c/d 1,20,000 80,000 40,000 By Cash A/c – – 40,000
By Premium 7,200 4,800 – B’s New Capital = 1,50,000 × 2/5 = `60,000
C’s New Capital = 1,50,000 × 2/5 = `60,000
40,000 94,400 40,000 40,000 94,400 40,000

Do it yourself 3.48
Balance Sheet of A, B and C as on 31st March 2020
Liabilities (`) Assets (`) Revaluation A/c
Creditors 36,000 Building 1,85,000 Particulars (`) Particulars (`)

Bills Payable 20,000 Machinery 40,000
To Claim for 325 By Creditors 2,500
Capitals: Debtors 34,000
damages By Provision for Doubtful debts 25
A 1,20,000 Less: Provision 2,040 31,960
To Provision for 3,000 By Loss transferred to Partner’s
B 80,000 Stock 24,000
outstanding Bill capital A/c
C 40,000 2,40,000 Cash 62,000
Atal 500
A’s current A/c 40,176
Madan 300 800
B’s current A/c 6,784
3,325 3,325
3,42,960 3,42,960
Do it yourself 3.46
Revaluation Account Particulars Atal Madan Mehra Particulars Atal Madan Mehra
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
22,800 22,800 Balance sheet (As on 31st March 2020)

Capital Accounts Liabilities (`) Assets (`)
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
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
1,050 1,050 Partners’ Capital A/c

To Bal. c/d 1,60,000 96,000 64,000 By Balance b/d 1,04,000 52,000 –
Particulars B (`) C (`) D (`) Particulars B (`) C (`) D (`)
By Cash A/c – – 64,000
To P&L A/c 6,000 4,000 – By Bal. b/d 60,000 40,000 – By Revaluation A/c 8,760 5,840 –
To Rev. A/c 330 220 – By Cash A/c – – 30,000 By W.C. Fund 6,000 4,000 –
To Cash A/c 7,500 – – By Premium – – By Contingency Reserve 6,000 4,000 –
To Cash A/c 1,170 – – By Cash A/c 15,000 24,220 – By Premium 7,500 7,500 –
To Bal. c/d 60,000 60,000 30,000 – By Cash A/c 27,740 22,660 –
75,000 64,220 30,000 75,000 64,220 30,000 1,60,000 96,000 64,000 1,60,000 96,000 64,000
Balance Sheet of the Reconstituted firm as at April 1, 2020

Do it yourself 3.52
Liabilities (`) Assets (`) Revaluation A/c
Capitals: Cash 1,37,400 Particulars (`) Particulars (`)

A 1,60,000 Sundry Debtors 37,600 To Stock A/c 5,000 By Machinery A/c 6,000
B 96,000 Less: Provision 2,000 35,600 To Furniture A/c 8,000 By Loss transferred
C 64,000 3,20,000 Stock 57,000 To Bad Debts A/c 3,000 to Capital A/c
Creditors 1,54,000 Prepaid Insurance 6,000 To Provision for 1,350 Sahaj 7,567
Employees 16,000 Plant & Machinery 76,000 bad debts A/c Nimish 3,783 11,350
Provident Fund Building 1,60,000 17,350 17,350
Furniture 18,000
4,90,000 4,90,000
Particulars Sahaj Nimish Gauri Particulars Sahaj Nimish Gauri
Working Notes:
To Rev. A/c 7,567 3,783 – By Bal. b/d 1,20,000 80,000 –
Capital of the new firm= 64,000 × 10/2 = `3,20,000 To Bal. c/d 1,42,433 91,217 1,16,825 By Reserve 20,000 10,000 –
A’s New Capital = 5/10 of 3,20,000= `1,60,000 By Premium 10,000 5,000 –
B’s New Capital = 3/10 of 3,20,000= `96,000 By Cash A/c – – 1,16,825
A's Sacrifice = 3/5 – 5/10 = 1/10; B's Sacrifice = 2/5 – 3/10 = 1/10 1,50,000 95,000 1,16,825 1,50,000 95,000 1,16,825
Do it yourself 3.50 Balance sheet of Sahaj, Nimish & Gauri

Vimal’s share of goodwill = 1/5 of `20,000 = `4,000
Revaluation A/c
Capital A/cs Machinery (1,20,000+6,000) 1,26,000
Particulars (`) Particulars (`) Sahaj 1,42,433 Furniture (80,000- 8,000) 72,000
To Profit tr. to: By Land and Building 15,000 Nimish 91,217 Stock (50,000- 5,000) 45,000
Ashish’s Capital A/c 15,000 By Plant 10,000 Gauri 1,16,825 3,50,475 Debtors 30,000
Dutta’s Capital A/c 10,000 25,000 Creditors 30,000 Less:Bad Debts 3,000
Emp. Provident Fund 40,000 Less:Provision 1350 25,650
25,000 25,000 Cash/Bank 1,51,825
Partner’s Capital Account 4,20,475 4,20,475
Particulars Ashish Dutta Vimal Particulars Ashish Dutta Vimal Working Notes:
To Bal. c/d 97,400 46,600 36,000 By Balance b/d 30,000 35,000 Gauri's Capital = (1,42,433 + 91,217) × 3/2 × 1/3 = `1,16,825
By Rev. A/c 15,000 10,000
By Premium 2,400 1,600 Do it yourself 3.53
for Goodwill A/c
By Cash A/c 36,000 Revaluation A/c
97,400 46,600 36,000 97,400 46,600 36,000 Liabilities (`) Assets (`)
Balance Sheet of A, B and C as on March 31, 2020 To Investments A/c 24,000 By Creditors A/c 6,000
Liabilities (`) Assets (`) To Machinery A/c 12,000 By Partners’ Capital A/c:
(transfer of loss)
Creditors 15,000 Cash (5,000 + 36,000 + 4,000) 45,000 L 15,000
Bills Payable 10,000 Debtors 22,000
M 10,000
Partners’ Capital A/cs: Less: Provision (2,000) 20,000
Ashish 97,400 Stock 35,000 N 5,000 30,000
Dutta 46,600 Plant 55,000 36,000 36,000
Vimal 36,000 1,80,000 Land and Buildings 50,000
2,05,000 2,05,000 Partner’s Capital A/c
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
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
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
1,89,600 1,16,400 1,32,000 1,89,600 1,16,400 1,32,000

Do it yourself 3.54
Balance Sheet of Raman, Rohit and Saloni as on 31- 3- 2020 Revaluation A/c
Liabilities (`) Assets (`) Particulars (`) Particulars (`)
Capital A/c Plant and machinery 1,40,000 To Plant & Machinery A/c 28,000 By Stock A/c 500
Raman 1,61,600 Furniture and fittings 58,500
To Debtors A/c 500 By loss transferred to
Rohit 1,02,400 Stock 47,000
Saloni 1,32,000 3,96,000 Debtors 1,10,000 Partner’s Capital A/c:
Workmen Compensation claim 16,000 Less (10,000) 1,00,000 Abha 14,000
Creditors 1,57,500 Bank 2,24,000 Binay 14,000 28,000
5,69,500 5,69,500 28,500 28,500
Partner’s Capital A/c Journal

Particulars Abha Binay Chitra Particulars Abha Binay Chitra Date Particulars L.F. Dr. (`) Cr. (`)
To Rev. A/c 14,000 14,000 – By Bal. b/d 55,000 30,000 – X’s Capital A/c Dr. 40,000
To Goodwill A/c 5,000 5,000 – By W.C. Fund 7,500 7,500 – To Y’s Capital A/c 40,000
To P & L A/c 2,500 2,500 – By Premium 2,500 2,500 –
(Share of goodwill given by X to Y on
To Stock A/c 4,000 4,000 – By Bank A/c – 12,500 18,000
To Bank A/c 12,500 – – change in their profit share ratio)
To Bal. c/d 27,000 27,000 18,000 Land A/c Dr. 3,00,000
65,000 52,500 18,000 65,000 52,500 18,000 To Revaluation A/c 3,00,000
(Profit on revaluation of land recorded)
Do it yourself 3.55 Revaluation A/c Dr. 1,00,000
Journal
To Plant A/c 80,000
Date Particulars L.F. Dr. (`) Cr. (`) To Furniture A/c 20,000
(Loss of revaluation of plant and
2020 Gulab’s Capital A/c Dr. 8,000
furniture recorded)
Apr. 1 Khushbu’s Capital A/c Dr. 32,000
To Anant’s Capital A/c 40,000 Revaluation A/c Dr. 2,00,000
(Being treatment of goodwill in change in profit To X’s Capital A/c 80,000
sharing ratio)
To Y’s Capital A/c 1,20,000
(Profit on revaluation distributed among
Working Notes: Sacrificing ratio = Old ratio – New ratio X and Y)
Anant’s = 5/10 – 1/3 = 5/30 (sacrifice)
Do it yourself 3.59
Gulab’s = 3/10 – 1/3 = –1/30 (gain)
Journal
Khushboo’s = 2/10 – 1/3 = – 4/30 (gain)
Date Particulars Dr. (`) Cr. (`)
Do it yourself 3.56 Radhika’s Capital A/c Dr. 8,000
Bani’s Capital A/c Dr. 12,000
(i) Average Profits = (60,000 + 1,50,000 + 1,70,000 + 1,90,000 – Chitra’s Capital A/c Dr. 4,000
70,000)/5 = `5,00,000/5 = `1,00,000 To Profit and Loss A/c 24,000
Goodwill = `1,00,000 x 3 = `3,00,000 (Being undistributed loss transferred to
(ii) Sacrificing ratio = Old ratio – New ratio Partners’ Capital Accounts)
P’s =5/10 – 1/3 = 5/30 (Sacrifice) General Reserve Dr. 1,44,000
Q’s = 3/10 – 1/3 = –1/30 (gain) To Radhika’s Capital A/c 48,000
R’s = 2/10 – 1/3 = – 4/30 (gain) To Bani’s Capital A/c 72,000
Journal To Chitra’s Capital A/c 24,000
(Being General Reserve distributed to
Date Particulars L.F. Dr. (`) Cr. (`) Partners’ Capital Accounts)
2021 Q’s Capital A/c Dr. 10,000 Radhika’s Capital A/c Dr. 30,000
1 Jan. R’s Capital A/c Dr. 40,000 To Bani’s Capital A/c 30,000
To P’s Capital A/c 50,000 (Being adjustment entry made for goodwill)
(Being adjustment made for goodwill on Land A/c Dr. 1,80,000
change in profit sharing ratio)
To Revaluation A/c 1,80,000
(Being Land revalued)
Do it yourself 3.57 Revaluation A/c Dr. 1,80,000
To Radhika’s Capital A/c 60,000
Date Particulars L.F. Dr. (`) Cr. (`) To Bani’s Capital A/c 90,000
31.3.20 General Reserve A/c Dr. 60,000 To Chitra’s Capital A/c 30,000
(Being gain on Revaluation transferred to
To Babita’s Capital A/c 20,000
Partners’ Capital Accounts)
To Kavita’s Capital A/c 20,000
To Dinesh Capital A/c 20,000
(Being General reserve transferred to Do it yourself 3.60
partner’s capital) Journal
Babita’s Capital A/c Dr. 40,000 Date Particulars L.F. Dr. (`) Cr. (`)
Kavita’s Capital A/c Dr. 40,000 2020 General Reserve A/c Dr. 1,17,000
Dinesh Capital A/c Dr. 40,000 1 Apr. To L’s Capital A/c 23,400
To Profit and Loss A/c 1,20,000 To M’s Capital A/c 35,100
(Being debit balance of profit and loss To N’s Capital A/c 58,500
A/c transferred to partner’s capital) (Being the General Reserve transferred
Dinesh Capital A/c Dr. 60,000 to partners’ Capital A/c)
To Babita’s Capital A/c 48,000 L’s Capital A/c Dr. 7,000
To Kavita’s Capital A/c 12,000 M’s Capital A/c Dr. 10,500
(Being treatment of Goodwill done) N’s Capital A/c Dr. 17,500
To Profit & Loss A/c 35,000
Sacrificing ratio = Old ratio – New ratio (Being debit balance of Profit & Loss A/c
Babita’s = 1/3 – 1/2 = 4/30 (sacrifice) transferred to partners’ Capital A/c)
Kavita’s = 1/3 – 3/10 = 1/30 (sacrifice) M’s Capital A/c Dr. 50,000
Dinesh’s sacrifice=1/3 – 5/10 = –5/30 (gain) To N’s Capital A/c 50,000
(Being adjustment for Goodwill)
Do it yourself 3.58 Revaluation A/c Dr. 30,000 6,000
To L’s Capital A/c 9,000
Sacrificing ratio = Old ratio – New ratio
To M’s Capital A/c 15,000
X's = 2/5 – 1/2 = –1/10 (gain)
To N’s Capital A/c
Y's = 3/5 – 1/2 = 1/10 (Sacrifice)
(Being gain on revaluation transferred
Share of Goodwill to be given by X to Y = `4,00,000 × 1/10 = `40,000 to Partners’ Capital A/c)
M’s gain = 1/10; N’s Sacrifice = 1/10

Balance Sheet of as at 31st March 2020

Do it yourself 3.61
Journal Liabilities (`) Assets (`)
Date Particulars Dr. (`) Cr. (`) Sundry Creditors 45,000 Fixed Assets 7,20,000
Partners’ Capital A/c: Current Assets 2,40,000
2020 Aman’s Capital A/c Dr. 2,500 Manu 2,16,250
1 Apr. Bobby’s Capital A/c Dr. 2,000 Hary 2,16,250
Chandani’s Capital A/c Dr. 500 Ali 2,16,250
To Revaluation A/c 5,000 Reshma 2,16,250 8,65,000
(Being loss on revaluation debited to Partners’ Workmen Compensation claim 50,000
Capital Accounts) 9,60,000 9,60,000
General Reserve A/c Dr. 20,000 Do it yourself 3.64

To Aman’s Capital A/c 10,000 Revaluation A/c
To Bobby’s Capital A/c 8,000 Particulars (`) Particulars (`)
To Chandani’s Capital A/c 2,000
To Claim for 30,000 By Loss tr. to Capital A/c
(Being General Reserve distributed among the
Workmen Ram 12,000
partners)
Compensation Mohan 9,000
Goodwill A/c Dr. 1,20,000 Sohan 6,000
To Aman’s Capital A/c 60,000 Hari 3,000 30,000
To Bobby’s Capital A/c 48,000 30,000 30,000
To Chandani’s Capital A/c 12,000
(Being goodwill raised in old ratio 5 : 4 :1) Partner’s Capital A/c
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’
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)
Do it yourself 3.68 Journal

Journal
Date Particulars L.F. Dr. (`) Cr.(`)
Jan. Cash A/c Dr. 41,000
2020 Jain’s Capital A/c Dr. 16,000
01 To B’s Capital A/c 30,000
1 Apr. To Gupta’s Capital A/c 16,000
(Being adjustment made on account of
2015 To Goodwill A/c 11,000
(Sum brought in by B as his Capital
change in profit-sharing ratio)
and his share (4/5) of the goodwill)
Working Notes: (i) Total amount to be adjusted = Goodwill + Appreciation Goodwill A/c Dr. 11,000
in the value of Land – Depreciation of Building = 75,000 + 90,000 – 5,000 To W’s Capital A/c 6,600
= `1,60,000 To R’s Capital A/c 4,400
(ii) Calculation of sacrifice/gain of the partners: (Goodwill brought by B credited to W’s
Jain’s = 2/5 – 1/2 = –1/10 (gain) and R’s capital accounts in old profit
Gupta’s = 3/5 – 1/2 = 1/10 (sacrifice) ratio of 3:2 )
W’s Capital A/c Dr. 3,300

Self Assessment Test - 3.1 R’s Capital A/c 2,200 5,500
To Cash A/c
(Amount (half of goodwill) withdrawn
4. Year Normal Profits Amount (`) by the old partners)
2017-18 4,00,000 – 50,000 3,50,000
Revaluation A/c Dr. 5,300
2018-19 5,00,000 + 1,00,000 6,00,000
To Provision for Doubtful Debts A/c 300
2019-20 2,50,000 2,50,000
To Stock A/c 5,000
Total Normal Profits 12,00,000 (Increase in provision for doubtful debts
Average Normal profits = 12,00,000/3 = `4,00,000 to `1,000 (5% of `20,000) and decrease
Goodwill = 4,00,000 × 3 = `12,00,000 in value of stock)
5. Revaluation A/c Plant and Machinery A/c Dr. 5,000

Patents A/c Dr. 6,300
Particulars (`) Particulars (`) To Revaluation A/c 11,300
(Increase in value of Plant and
To Claim for Workmen 25,000 By loss on revaluation Machinery and Patents)
Compensation transferred to Partners’
To Fixed Assets A/c 75,000 Capital A/c Revaluation A/c Dr. 3,000
Mahadev 50,000 To Sundry Creditors A/c 3,000
(Increase in liabilities)
Sukesh 20,000
Menon 20,000 Revaluation A/c Dr. 3,000
Thomas 10,000 1,00,000 To W’s Capital A/c 1,800
1,00,000 1,00,000 To R’s Capital A/c 1,200
(Being profit on adjustment transferred
Partner’s Capital A/c to partners’ capital accounts)
Particu- Mahadev Sukesh Menon Thomas Pa r t i c u - Mahadev Sukesh Menon Thomas

Cash A/c Dr. 4,400
lars lars To W’s Capital A/c 4,400
To Rev. 50,000 20,000 20,000 10,000 By Bal. b/d 7,00,000 6,00,000 5,00,000 4,50,000 (Being shortage of capital brought
To – 12,000 – – By 12,000 – – – in by W)
Mahadev’s Sukesh’s
Capital
To Cash – – 50,000 2,25,000
Capital
By Cash 1,98,000 77,000 – –
R’s Capital A/c Dr. 400
To Bal. 8,60,000 6,45,000 4,30,000 2,15,000 To Cash A/c 400
c/d (Being excess capital withdrawn by R)
9,10,000 6,77,000 5,00,000 4,50,000 9,10,000 6,77,000 5,00,000 4,50,000
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 (`)
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
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
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

Creditors 9,000 Furniture 3,080
6. Journal Bills Payable 3,000 Stock 12,600
Capital accounts Debtors 12,600
Date Particulars L.F. Dr. (`) Cr. (`) Arun 21,000 Less: Reserve for D/D (630) 11,970
Bablu 17,500 Land and Buildings 31,000
Bank A/c Dr. 8,50,000
Chetan 10,500 Cash 9,350
To Raghav’s Capital A/c 6,00,000
Deepak 7,000 56,000
To Premium for goodwill A/c 2,50,000
(Being capital and premium brought in by 68,000 68,000
Raghav)
Working Notes: (i) Total capital of new firm = `7,000 × 8 = `56,000,
Premium for goodwill A/c Dr. 2,50,000 out of which Deepak’s capital is `7,000. Remaining capital = `49,000.
To Asha’s Capital A/c 1,50,000 Arun’s new capital = 6/14 of `49,000 = `21,000;
To Aditi’s Capital A/c 1,00,000 Bablu’s new capital = `17,500; Chetan’s new capital = `10,500
(Being premium for goodwill credited to
the capital acounts of Asha and Aditi in the
sacrificing ratio) (ii) Cash Account
Working Notes: Calculation of goodwill: Particulars (`) Particulars (`)

2016-17 `3,50,000 – `56,250 = `2,93,750 To Balance b/d 900 By Arun’s Capital A/c 1,750
2017-18 `4,75,000 – `56,250 = `4,18,750 To Deepak’s Capital A/c 7,000 By Bablu’s Cap. A/c 1,625
2018-19 `6,70,000 – `56,250 = `6,13,750 To Premium for Goodwill 4,200 By Balance c/d 9,350
2019-20 `7,45,000 – `56,250 – `15,000 = `6,73,750 To Chetan’s Capital A/c 625
Goodwill = Average Profit × No. of years purchase 12,725 12,725
= (2,93,750 + 4,18,750 + 6,13,750 + 6,73,750)/4 × 2 = `10,00,000
Raghav’s share of goodwill = ¼ × `10,00,000 = `2,50,000
7. Journal
5. Journal
Date Particulars L.F. Dr (`) Cr. (`)
Bad Debts A/c Dr. 6,000 Date Particulars L.F. Dr. (`) Cr. (`)
To Debtors A/c 6,000 Cash/Bank A/c Dr. 5,50,000
(Bad debts written off)
To Divya’s Capital A/c 5,00,000
Revaluation A/c..Dr. 9,000 To Premium for Goodwill A/c 50,000
To Bad Debts A/c 6,000 (Divya brings his share of capital and
To Provision For Doubtful Debts A/c 3,000 premium)
(Bad Debts and Provision transferred to
Revaluation A/c) Premium for Goodwill A/c Dr. 50,000
P’s Capital A/c Dr. 4,500 Dayal’s Capital A/c Dr. 50,000
Q’s Capital A/c Dr. 3,000 To Devi’s Capital A/c 50,000
R’s Capital A/c Dr. 1,500 To Daya’s capital A/c 50,000
To Revaluation A/c 9,000 (Goodwill transferred to the Capital A/c
(Loss on revaluation transferred to Partners’ as per Gain/ Sacrifice)
capital A/c)
Working Notes: Sacrificing ratio = Old ratio – New ratio
General Reserve A/c Dr. 60,000
To P’s Capital A/c 30,000
Devi’s = 2/5 – 1/5 = 1/5; Dayal’s = 1/5 – 2/5 = –1/5 (gain)
To Q’s Capital A/c 20,000 Daya’s = 2/5 – 1/5 = 1/5
To R’s Capital A/c 10,000 6. Journal
(General reserve credited to Partners’ Capital A/c)
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)
Working Notes: Calculation of cash brought in or paid off:

Details P (`) Q (`) R (`)
Existing capitals 40,000 50,000 60,000 4. Year Profit(Loss) (`)
Adjusted capitals 50,000 50,000 50,000 2013-14 50,000
Cash withdrawn/ brought in 10,000 (10,000) 2014-15 40,000+10,000 = 50,000
2015-16 75,000
7. Revaluation A/c 2016-17 (25,000)
2017-18 50,000
2,00,000
To Claim for Workmen 5,000 By loss on revaluation
Compensation transferred to Partners’ Average profits = `2,00,000/5= `40,000
To Fixed assets A/c 25,000 Capital A/c oodwill= Average Profits x Number of years purchase
G
A 9,000 = `40,000 × 3 = `1,20,000
B 6,000
C 9,000 7. Revaluation A/c
D 6,000 30,000
30,000 30,000
To Building A/c 3,000 By Land A/c 30,000
Partner’s Capital A/c
To Partners’ Capital A/c: By Creditors A/c 6,000
Partic- A B C D Partic- A B C D R 5,500
ulars ulars S 11,000
To Rev. 9,000 6,000 9,000 6,000 By Bal. 2,00,000 2,50,000 2,50,000 3,10,000 T 16,500 33,000
A/c b/d
36,000 36,000
To C’s 13,500 13,500 – – By A’s – – 13,500 13,500
Capital Cap. Partner’s Capital A/c
To D’s 13,500 13,500 – – By B’s – – 13,500 13,500
Capital Capital Particulars R S T Particulars R S T
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
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 (`)
Liabilities (`) Assets (`) Creditors 80,000 Building 4,50,000

Bills Payable 40,000 Machinery 2,30,000
Creditors 28,000 Cash at bank 45,200 Capitals: Debtors 80,000
Employees P.F. 22,000 Debtors 65,000 Arun 6,00,000 Less: Provision 4,800 75,200
Workmen compensation claim 5,000 Less: Provision for Balu 3,00,000 Furniture 1,50,000
Chetan 3,00,000 12,00,000 Cash 5,40,000
Capitals: doubtful debts 5,000 60,000 Current A/cs:
Madan 63,600 Stock 30,000 Arun 36,800
Mohan 52,400 Patents 59,000 Balu 88,400 1,25,200
Gopal 23,200 1,39,200
14,45,200 14,45,200
1,94,200 1,94,200
Working Notes: Total Capital of New firm = 3,00,000 × 4/1 = `12,00,000
Partner’s Capital Accounts

Particulars Ram Shyam Mohan Particulars Ram Shyam Mohan
7. II Part:
To Bal. c/d 12,000 6,000 4,500 By Bal. b/d 6,000 4,000 –
Details (`) By Reserves 1,500 500 –
Subscriptions Received during 2019-20 2,50,000 By Premium 4,500 1,500 –
Less: Subscriptions outstanding on 1.4.2019 (50,000) By Cash A/c – – 4,500
Add: Subscriptions outstanding on 31.3.2020 35,000 12,000 6,000 4,500 12,000 6,000 4,500
Less: Subscriptions received in advance on 31.3.2020 (30,000)
Income from subscription for the year 2019–20 2,05,000 Balance Sheet as on 1st Apr, 2009
11. Journal
Creditors 2,800 Cash 12,900
Date Particulars L.F. Dr. (`) Cr. (`) Employees Provident Fund 1,200 Accrued Income 100
2020 Rina’s Capital A/c Dr. 864 Capitals: Debtors (6500-500) 6,000
Apr 1 To Diya’s Capital A/c 864 Ram 12,000 Stock 3,000
(Rectifying entry for omission of IOC and Shyam 6,000 Investments 4,500
Diya’s salary) Mohan 4,500
Working Notes: 26,500 26,500
[1] Calculation of Opening capital : DIYA RINA
Closing Capital 2,40,000 1,20,000
Add : Drawings 16,000 12,000 Self Assessment Test - 3.7
Less: Profits (72,000) (18,000)
Opening Capital 1,92,000 1,14,000 9. I Part:
IOC @ 12% p.a. 23,040 13,680
[2] Past Adjustment Table (`)
Diya Rina Total Subscription received during 2020 80,000
Omission of IOC Cr. 23,040 13,680 36,720 Less: Subscription O/s in the beginning (3,000)
Omission of Diya’ salary Cr. 36,000 – 36,000 Less: Advance subscription at the end (6,000)
Total Cr. 59,040 13,680 72,720
Add: Subscription O/s at the end 12,000
Total divided in PSR Dr. 58,176 14,544 72,720
Net Effect 864(Cr.) 864(Dr.) –
Amount of subscriptions to be shown 83,000
12. Income and Expenditure A/c in Income and Expenditure A/c
Particulars (`) Particulars (`) II Part:

To Stationery consumed: By Subscriptions 2,00,000 Calculation of cost of sports materials consumed:
Opening Stock 3,000 (200 × `1,000) (`)
Add: Purchases 23,400 By Interest on Investments Amount paid for sports materials during the year 2019-20 17,000
Less: Closing Stock (4,000) 22,400 800 Less: Creditors for sports material as on April 1, 2019 (2,000)
To Loss on sale of old furniture 2,400 Add: Accrued 160 960 Add: Payments not yet made (i.e. creditors at the end) 1,200
To Electricity expenses 10,600 By Government Grant 17,400
Less: Closing advance paid for sports materials (3,500)
To Expenses on lectures 30,000
Sports materials purchased during the year 12,700
Add: Opening stock of sports materials 7,500
To Surplus (Bal. fig.) 1,52,960
Sports materials available for use 20,200
2,18,360 2,18,360 Less: Closing Stock of sports materials (6,200)
Balance Sheet of Sears Club as on 31st March 2020 Amount of sports materials to be shown in the debit
side of Income and Expenditure A/c 14,000
10. Journal
Subscriptions received 7,200 Outstanding Subscriptions:
in advance For 2018-19 20,000 Date Particulars L.F. Dr (`) Cr (`)
Donations for building 40,000 For 2019-20 81,000 1,01,000
Capital Fund 62,000
Stock of Stationery 4,000
Add Surplus 1,52,960
To Bhavya’s Capital A/c 9,000
2,14,960 Cash 50,000
To Naman’s Capital A/c 9,000
Investments 8,000
(Gain on revaluation transferred to
Interest accrued on investments 160
Capital accounts of partners in old
Sports Equipment 59,000
ratio 1:1)
Books 40,000
Naman’s Capital A/c Dr. 20,000
2,62,160 2,62,160
To Bhavya’s Capital A/c 20,000
Working Notes: Balance Sheet of Sears Club as on 31st March 2019 (Treatment of goodwill due to
change in profit sharing ratio)
Liabilities Assets (`)
Subscriptions received 25,000 Outstanding Subscriptions 60,000 Naman’s gain= 1/6
in advance (25 × `1,000) Stock of Stationery 3,000 Bhavya’s sacrifice = 1/6
Capital Fund 62,000 Cash 20,000 11. Pinky’s new share = Old share – Share sacrificed = 3/6–1/8 = 9/24
Furniture 4,000 Qumar’s new share = 2/6–1/16 = 13/48
87,000 87,000 Roopa’s new share = 1/6–1/16=5/48
New ratio = 9/24 : 13/48 : 5/48 : 1/4 = 18 : 13 : 5 : 12
13. Revaluation A/c Pinki Qumar Roopa
Particulars (`) Particulars (`) New Capital 90,000 65,000 25,000
To investments 500 By Accrued Interest 100 Existing Capital 80,000 30,000 20,000
By Cash A/c (Bad Debts 400 Shortage of Capital 10,000 35,000 5,000
Recovered)
Journal
500 500
13. II Part: Journal

Cash A/c Dr. 60,000
To Seema’s Capital A/c 60,000 2020 Naman’s Capital A/c Dr. 11,140
(Capital brought by Seema) Mar 31 To Raman’s Capital A/c 5,870
Pinky’s Current A/c Dr. 10,000 To Chaman’s Capital A/c 5,270
(Being interest on capital and interest on
Qumar’s Current A/c 35,000 drawings omitted, now adjusted)
Roopa’s Current A/c 5,000
To Pinky Capital A/c 10,000 Working Notes: Calculation of Opening Capital:
To Qumar’s Capital A/c 35,000 Raman Naman Chaman
To Roopa’s Capital A/c 5,000
(Adjustment of capitals through current A/cs) Closing Capitals 1,60,000 1,20,000 1,60,000
Less: Profits (15,000) (30,000) (15,000)
12. I Part: Profit and Loss Appropriation Account Add: Drawings 48,000 48,000 36,000
Particulars (`) Particulars (`) Opening Capitals 1,93,000 1,38,000 1,81,000
To Salary – Bhaskar 48,000 By Profit and Loss 8,32,000 Table showing adjustment
To Commission– Dinkar 64,000 A/c – Net profit
To Interest on Capitals: Raman Naman Chaman Total
Anand 1,00,000 Interest on Capital (Cr.) 19,300 13,800 18,100 51,200
Bhaskar 80,000 Interest on Drawing (Dr.) 1,920 1,920 1,320 5,160
Dinkar 60,000 2,40,000 Net (Cr.) 17,380 11,880 16,780 46,040
To Partners’ Capital A/c
(Share of profits) Profits already distributed (Dr.) 11,510 23,020 11,510 46,040
Anand 2,00,000 Net Effect 5,870 (Cr.) 11,140 (Dr.) 5,270 (Cr.) –
Bhaskar 1,65,000
Dinkar 1,15,000 4,80,000 14. Income And Expenditure A/c
8,32,000 8,32,000 Expenditure (`) Income (`)
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
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
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
Do it yourself 4.1 (ii) Aparna’s Capital A/c Dr. 1,08,000

Sonia’s Capital A/c Dr. 72,000
(a) (i) 3 : 2 (ii) 5 : 2 (iii) 5 : 3 To Goodwill A/c 1,80,000
(b) Share acquired by Harpreet = 3/5 × 5/6 = 9/30 (Full value of goodwill written off by debiting
Share acquired by Shreya = 2/5 × 3/6 = 6/30 remaining partners’ capital accounts in
New Share = Old Share + Acquired Share their new profit sharing ratio of 3:2)
Harpreet’s = 2/6 + 9/30 = 19/30; Shreya’s = 1/6 + 6/30 = 11/30
New Profit Sharing Ratio of Harpreet and Shreya = 19 : 11 Working Notes: Aparna Sonia
(c) Gaining Share = New Share – Old Share (i) New Share 3/5 2/5
Anita’s = 4/7 – 1/3 = 5/21; Nisha’s = 3/7 – 1/3 = 2/21 (ii) Old Share 3/6 1/6
Gaining Ratio = 5 : 2 (iii) Gaining Share 3/5 – 1/6 = 3/30 2/5 – 1/6 = 7/30
Manisha’s share of goodwill = 2/6 × `1,80,000 = `60,000
Do it yourself 4.2
Do it yourself 4.6
(a) H’s Gain = 3/10 × 20 /100 = 3/50
Journal
H’s new share = H’s old share + H’s Gain = 4/10 + 3/50 = 23/50
S’s Gain = 3/10 × 80 /100 = 12 /50 Date Particulars L.F. Dr. (`) Cr. (`)
S’s new share = S’s old share + S’s Gain = 3/10 + 12/50 = 27/50 Sangeeta’s capital A/c Dr. 12,000
New Profit sharing Ratio of H and S is 23 : 27 Saroj’s capital A/c Dr. 18,000
(b) Priya’s share = 3/10 = Gaining ratio = 2 : 1 Shanti’s capital A/c Dr. 30,000
Puja Pratishtha To Goodwill A/c 60,000
(i) Old share 5/10 2/10 (Existing goodwill written off in old ratio
(ii) Gaining share 2/3 × 3/10 = 2/10 1/3 × 3/10 = 1/10 2 : 3 : 5)
(iii) New share [(i) + (ii)] 5/10 + 2/10= 7/10 2/10 + 1/10 = 3/10
New profit sharing ratio of Puja and Pratishtha = 7/10 : 3/10 = 7 : 3 Saroj’s capital A/c Dr. 18,000
To Sangeeta’s capital A/c 18,000
Do it yourself 4.3 (Treatment of goodwill on Sangeeta’s
(a) Journal retirement)
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
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
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)
New Ratio 5/7 1/7 1/7 - Do it yourself 4.9

Old Ratio 2/7 2/7 2/7 1/7 Journal
3/7 (Gain) –1/7 (Sacrifice) –1/7 (Sacrifice) 1/7 (sacrifice) Date Particulars LF Dr. (`) Cr. (`)
Do it yourself 4.5 General Reserve A/c Dr. 36,000
Journal To Naresh’s Capital A/c 12,000
Date Particulars L.F. Dr. (`) Cr. (`) To Rajkumar’s Capital A/c 12,000
To Bishwajeet’s Capital A/c 12,000
(i) Goodwill A/c (1,80,000 – 1,20,000) Dr. 60,000 (Reserve distributed in old ratio, i.e. equally)
To Aparna’s Capital A/c 30,000
Naresh’s capital A/c Dr. 5,000
To Manisha’s Capital A/c 20,000
Rajkumar’s capital A/c Dr. 5,000
To Sonia’s Capital A/c 10,000
(Increase in the value of goodwill credited Bishwajeet’s capital A/c Dr. 5,000
to all partners’ capital accounts in their To Profit and Loss A/c 15,000
old profit sharing ratio of 3:2:1) (Accumulated loss debited in old ratio 1:1:1)
CHAPTER 4 Reconstitution of a Partnership Firm: Retirement/Death of a Partner - SOLUTIONS 33

Journal Dr. Girdhari’s Loan Account Cr.
Date Particulars L.F. Dr. (`) Cr. (`) Date Particulars (`) Date Particulars (`)
(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
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
orking Notes: Calculation of Gaining / Sacrificing Ratio

W Date Particulars L.F. Dr. (`) Cr. (`)
Alok = 5/10 – 2/5 = 1 /10 (Sacrifice) Revaluation A/c Dr. 20,550
Shiv = 2/10 – 3/5 = -4/10 (Gain) To Machinery A/c 7,000
To Stock A/c 12,000
Do it yourself 4.12 To Debtors A/c 1,550
(Loss on revaluation of assets recorded
Journal on Gagan’s retirement)
Date Particulars L.F. Dr. (`) Cr. (`) Building A/c Dr. 30,000
To Revaluation A/c 30,000
(Appreciation in the value of Building
To Plant and Machinery 4,000 on Gagan’s retirement)
To Provision for Bad and Doubtful Debts 1,000
To Stock A/c Revaluation A/c Dr. 9,450
(Value of assets decreased) 2,000 To Shyam’s Capital A/c 3,780
To Gagan’s Capital A/c 3,780
Building A/c Dr. 20,000 To Ram’s Capital A/c 1,890
Investments A/c Dr. 5,000 (Profit on revaluation transferred to
To Revaluation A/c 25,000 partners’ capital accounts in the ratio
(Value of assets increased) of 2 : 2 : 1)
Revaluation A/c Dr. 18,000 Reserve A/c Dr. 14,500

To Himanshu’s capital A/c 9,000 To Shyam’s Capital A/c 5,800
To Gagan’s capital A/c 6,000 To Gagan’s Capital A/c 5,800
To Naman’s capital A/c 3,000 To Ram’s Capital A/c 2,900
(Profit on Revaluation transformed to (Reserve transferred to partner’s
all partners’ capital accounts in their capital accounts)
old ratio 3:2:1)
Dr. Partner’s capital A/c Cr.

Shyam’s Capital A/c Dr. 15,750
Ram’s Capital A/c Dr. 12,250 Particu- Pankaj Naresh Sourabh Particu- Pankaj Naresh Sourabh
To Gagan’s Capital A/c 28,000 lars lars
(Gagan’s share of goodwill adjusted to
To 14,000 - - By Bal. b/d 46,000 30,000 20,000
Shyam and Ram in their gaining ratio
Naresh’s
of 9 : 7)
capital
Gagan’s Capital A/c Dr. 1,00,080 A/c
To Gagan’s Loan A/c 1,00,080 To - 26,000 - By 6,000 4,000 2,000
(Amount payable to retiring partner Naresh’s General
transferred to his loan account) Loan Reserve
A/c
Balance Sheet of Shyam and Ram To Bank - 28,000 - By Rev. A/c 9,000 6,000 3,000
Liabilities Amount (`) Assets Amount (`) A/c
Sundry Creditors 49,000 Cash 8,000 To Bal. 47,000 - 25,000 By - 14,000 -

c/d Pankaj’s
Employees’ Provident Fund 4,000 Debtors 17,450
capital
Capitals: Stock 30,000 A/c
Shyam 73,830 Machinery 78,000
Ram 67,540 1,41,370 Building 1,52,000 61,000 54,000 25,000 61,000 54,000 25,000
Gagan’s Loan 1,00,080 Patents 9,000
Balance Sheet (after Naresh’s retirement)
2,94,450 2,94,450
Working Notes: Share Gained = New Share – Old Share
Shyam’s Gain = 5/8 – 2/5 = 9/40; Ram’s Gain = 3/8 – 1/5 =7/40 Provision for Legal 7,200 Premises 96,000
Therefore, Gaining Ratio of Shyam and Ram = 9 : 7. Damages Stock 8,100
Sundry Creditors 15,000 Debtors 6,000
Do it yourself 4.16 Bills Payable 12,000 Less: Provision (300) 5,700
Dr. Revaluation A/c Cr. Salary outstanding 2,200 Furniture 45,000
Naresh’s Loan 26,000
Particulars (`) Particulars (`) Bank Loan/Overdraft 20,400
To Provision for Doubtful debts 350 By Buildings 8,800 Capitals:
To Profit on revaluation tr. to Pankaj 47,000
capital A/c Sourabh 25,000 72,000
R 4,225 1,54,800 1,54,800
S 2,817 8,450
M 1,408 Notes: Bank Account
8,800 8,800 Particulars ` Particulars `

To Balance b/d 7600 By Naresh’s 28,000
Dr. Partner’s capital A/c Cr. To Bank Loan/Bank 20,400 capital A/c
Particulars R S M Particulars R S M overdraft
To Good- 6,000 – 3,000 By Bal. b/d 20,000 7,500 12,500 28,000 28,000
will A/c
Notes: Naresh’s share of goodwill = 2/6 of `42,000 = `14,000
To Bank – 5,000 - By Rev. A/c 4,225 2,817 1,408 Pankaj’s gain = 5/6 – 3/6 = 2/6 ; Sourabh’s gain = 1/6 – 1/6 = Nil
To S’s - 8,317 - By R’s - 2,250 -
Loan capital A/c Do it yourself 4.19
To Bal. 22,725 - 12,408 By Good- 4,500 3,000 1,500 Dr. Revaluation Ac Cr.
c/d will A/c
28,725 13,317 15,408 28,725 13,317 15,408
To profit transferred By Fixed assets A/c 60,000
Balance Sheet (after S’s retirement) to Partners’ Capital By Stock A/c 20,000
Liabilities (`) Assets (`) Accounts:
Sundry creditors 16,000 Buildings 31,800 Kanika 40,000
Loan @ 6% p.a. 8,317 Debtors 7,000 Disha 20,000
Capitals: Less: Provision for (350) 6,650 Kabir 20,000
R 22,725 Doubtful debts 80,000 80,000
M 12,408 Stock 12,000
Patents 8,000 Dr. Partner's Capital A/c Cr.
Bank (6,000 – 5,000) 1,000
Particu- Kanika Disha Kabir Particulars Kanika Disha Kabir
59,450 59,450 lars ` ` ` ` ` `
Do it yourself 4.17 To - 35,000 35,000 By Bal. b/d 2,00,000 1,00,000 80,000
Kanika’s
Dr. Revaluation A/c Cr. Capital
A/c
Particulars (`) Particulars (`) To Profit 10,000 5,000 5,000 By Rev. A/c 40,000 20,000 20,000
& Loss
To Stock A/c 900 By Premises A/c 16,000 A/c
To Provision for legal damages 120 By Provision for 100
To 3,00,000 - - By Disha’s 35,000 - -
To Profit on revaluation A/c Doubtful Debts
Kanika’s Capital A/c
Pankaj 9,000 By Furniture A/c 4,000 loan A/c
Naresh 6,000
To Bal. - 80,000 60,000 By Kabir’s 35,000 - -
Sourabh 3,000 18,000 c/d Capital A/c
20,100 20,100 3,10,000 1,20,000 1,00,000 3,10,000 1,20,000 1,00,000
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
5,40,000 5,40,000 Balance Sheet
Do it yourself 4.22 Liabilities (`) Assets (`)
Dr. Revaluation A/c Cr. Bank Loan 12,800 Cash 33,220

Sundry Creditors 25,000 Bill Receivables 10,800
Particulars (`) Particulars (`) S’s Loan 33,600 Debtors 35,600
Capital: A/cs Less Provision 1,700 33,900
To Workmen 4,000 By Investments 13,000 R 73,680 Stock 40,000
Compensation By Loss transferred to: T 36,840 1,10,520 Furniture 6,000
Claim A/c Kavya’s Capital A/c: 40,000 Plant & Machinery 18,000
To Fixed Assets 89,000 Manya’s Capital A/c: 24,000 Building 40,000
A/c Navita’s capital A/c: 16,000 80,000 1,81,920 1,81,920
93,000 93,000
Dr. S’s Loan A/c Cr.
Dr. Partners’ Capital A/c Cr.
Particular (`) Particular Amount (`)
Particu- Kavya Manya Navita Particu- Kavya Manya Navita
lars lars By S’s Capital A/c 33,600
(`) (`) (`) (`) (`) (`)
To Rev. 40,000 24,000 16,000 By 6,00,000 5,00,000 4,00,000

A/c Balance Do it yourself 4.25
(Loss) b/d
Dr. Revaluation A/c Cr.
To Good- – 36,000 24,000 By 50,000 30,000 20,000
will General Particulars (`) Particulars (`)
A/c Reserve
A/c To machinery 4,000 By Land & Building 68,000
To Bank 20,000 By 30,000 18,000 12,000 To Stock 4,000
A/c Good- To Prov. for Doubtful Debts 600
will A/c To Gain transferred to:
G’s Capital A/c 41,580
To 6,20,000
Kavya’s E’s capital A/c 11,880
Loan F’s Capital A/c 5,940 59,400
To Bal. 4,88,000 3,92,000 68,000 68,000

c/d
6,80,000 5,48,000 4,32,000 6,80,000 5,48,000 4,32,000
Particulars G E F Particulars G E F

Dr. Kavya’s Loan A/c Cr. To E’s 15,750 ---- 2,250 By Balance 1,40,000 40,000 20,000
Capital b/d
A/c
Date Particulars (`) Date Particulars (`)
To E’s ----- 1,37,880 --- By Rev. A/c 41,580 11,880 5,940
2020 To Balance 6,20,000 2020 By Kavya’s 6,20,000 Loan A/c
31 c/d 31 Capital A/c
March March To Bal. 2,10,000 --- 30,000 By G’s ---- 15,750 ----
c/d Capital
6,20,000 6,20,000 A/c
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
By current 16,170 ---- 2,310

2022 To bank 3,41,000 2021 By Balance 3,10,000 A/c
31 A/c 1 April b/d 31,000
March 2022 By Interest 2,25,750 137,880 32,250 2,25,750 1,37,880 32,250
31 March on Balance Sheet of the Reconstituted firm
Loan A/c
3,41,000 3,41,000
Capitals: Cash 90,000
G 2,10,000 Debtors 24,000
Do it yourself 4.23
F 30,000 2,40,000 Less: Provision 600 23,400
Dr. Revaluation A/c Cr. E’s Loan 1,37,880 Stock 10,000
Creditors 28,000 Machinery 76,000
Land & building 1,88,000
To Stock 4,600 By Loss transferred to G’s current A/c 16,170
To Furniture 1,000 Partners capital A/c F’s Current A/c 2,310
To Plant & Mach. 1,500 R 6,720
To Building 8,000 S 6,720 4,05,880 4,05,880
To Provision for D.D. 1,700 T 3,360 16,800
Working Notes: New Firm’s capital = 2,40,000
16,800 16,800
E’s capital = 7/8 x 2,40,000=2,10,000; F’s capital=1/8 x 2,40,000= 30,000
Do it yourself 4.28 Balance Sheet of the reconstituted firm

Dr. Revaluation A/c Cr. Liabilities (`) Assets (`)
Liabilities (`) Assets (`) Sundry Creditors 45,000 Cash at bank 42,000
To Claim for workmen 8,000 By Provision for bad debts A/c 2,000 Employees P. F. 13,000 Debtors 60,000
compensation A/c By Partners’ Capital A/c: Bakul’s Loan 2,52,000 Less Provision 9,000 51,000
(transfer of loss) Capitals 1,50,000 Stock 80,000
J 3,000 Akul 1,00,000 Furniture 87,000
H 1,800 Chandan 50,000 Plant and Machinery 2,00,000
K 1,200 6,000
8,000 8,000 4,60,000 4,60,000
Dr. Partner’s Capital A/c Cr. Do it yourself 4.30

Particulars J H K Particulars J H K Dr. Revaluation A/c Cr.
To 3,000 1,800 1,200 By Bal. b/d 1,00,000 80,000 40,000
Revaluation By Investment 10,000 6,000 4,000
A/c Fluctuation
To H’s 10,200 --- 20,400 Fund To machinery A/c 9,600 By Provident fund A/c 500
Capital A/c By Profit & 40,000 24,000 16,000 To Patents A/c 2,000 By Investment A/c 11,700
To Cash A/c --- 14,000 --- Loss A/c
To H’s --- 1,24,800 --- By J’s --- 10,200 ---
To profit transferred to
Loan A/c capital A/c Partner’s Capital A/c:
To J’s 31,680 --- --- By K’s --- 20,400 ---
Current A/c Capital A/c
A 300
To Bal. c/d 1,05,120 --- 70,080 By K’s --- --- 31,680 B 200
Current A/c C 100 600
1,50,000 1,40,600 91,680 1,50,000 1,40,600 91,680
12,200 12,200
Balance Sheet of J and K Dr. Partner’s Capital A/c Cr.
Liabilities (`) Assets (`) Particulars A B C Particulars A B C
Creditors 42,000 Land & Building 1,24,000
To C’s 540 360 By Bal. b/d 80,000 73,000 40,000
Claim for Workmen 8,000 Motor Van 40,000 Capital A/c
Compensation Investment 38,000
H’s Loan A/c 1,24,800 Machinery 24,000 To 31,700 By A’s Capital 540
J’s Current A/c 31,680 Stock 30,000 Investment A/c
A/c
Partners’ Capitals: Debtors 80,000
J 1,05,120 Less: Provision 4,000 76,000 To C’s loan 12,800 By B’s Capital 360
K 70,080 1,75,200 Cash 18,000 A/c A/c
K’s Current A/c 31,680
To Current 11,800 By General 10,500 7,000 3,500
3,81,680 3,81,680 A/c Reserve 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
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)
20,000 20,000 Naresh’s Capital A/c Dr. 90,500

To Cash A/c / Bank A/c 90,500
Dr. Partners Capital Accounts Cr. (Being amount paid to Naresh.)
Particulars Akul Bakul Chandan Particu- Akul Bakul Chandan
lars Working Note: (i) David’s Capital = `33,000; Aslam’s Capital = `70,500
To Bakul 80,000 - 40,000 By bal. 1,60,000 1,20,000 92,000 Naresh to be paid = `90,500; Total Capital of new firm = `1,94,000
Capital A/c b/d David’s New Capital = `1,94,000 x 2/5 = `77,600
To Bakul - 2,52,000 - By 8,000 8,000 4,000 Aslam’s New Capital= `1,94,000 x 3/5 = `1,16,400
loan A/c General (ii) Adjustment of capital
Reserve
To balance 92,000 58,000 By Rev. 4,000 4,000 2,000 David (`) David (`)
c/d A/c A/c Old Capital 33,000 70,500
By Akul - 80,000 -
Capital
New Capital 77,600 1,16,400
A/c Cash to be brought in 44,600 45,900
By Chan- - 40,000 -
dan Do it yourself 4.32
Capital
A/c Dr. Profit And Loss Adjustment A/c Cr.
1,72,000 2,52,000 98,000 1,72,000 2,52,000 98,000
To Bank - - 8,000 By 92,000 - 58,000
A/c balance To Fixed Assets A/c 2,500 By Creditors A/c 2,000
b/d To Provision for 5,000 By Loss transferred to :
To balance 1,00,000 - 50,000 By Bank 8,000 - - Doubtful Debts A/c X’s Capital A./c 2,750
c/d A/c Y’s Capital A/c 1,650
1,00,000 - 58,000 1,00,000 - 58,000 Z’s Capital A/c 1,100 5,500
7,500 7,500
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.
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.
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
Working notes: Do it yourself 4.44

i. Calculation of Interest on Capital: 7,500 x 6/100 x 3/12 = `113
ii. Calculation of Share of Profit: 12,000 x 3/12 x = `750 Dr. H’s Capital A/c Cr.
iii. Share in Goodwill: 31,500/3 = 10,500 x2 = 21,000 x = `5,250 Particulars (`) Particulars (`)
To H’s 1,60,400 By Balance b/d 50,000
Do it yourself 4.40 executor’s (85,000 – 35,000)
A/c By Interest on capital A/c 1,500
Dr. Momita’s Capital A/c Cr.
By G’s capital A/c 46,286
Particulars (`) Particulars (`) By I’s Capital A/c 34,714
To Drawings A/c 10,000 By Balance b/d 60,000 By P & L suspense A/c 18,000
To Interest on 300 By P/L Suspense A/c 4,500 By Reserve A/c 9,900
drawings A/c By Interest on Capital 1,800 1,60,400 1,60,400
To Momita’s 83,000 By Vikas Capital A/c 13,500 Notes: Interest on capital = 50,000 × 12/100 × 3/12 = `1,500
Executor A/c By Gagan’s Capital A/c 13,500 Share of Profit = 2,40,000 × 3/12 × 3/10 = `18,000
93,300 93,300
Do it yourself 4.45
Working notes: Journal
i. Calculation of Interest on Capital: 60,000 x 6/100 x 6/12 = `1,800
ii. Calculation of Momita’s Share of Profit = 45,000 x 1/5 x 6/12 = `4,500
iii. Momita’s Share in Goodwill = 45,000 x 3 x 1/5 = `27,000 2020 Mohit’s Capital A/c Dr. 9,600
15 Rahul’s Capital A/c Dr. 9,600
Do it yourself 4.41 June To Sohan’s Capital A/c 19,200
(Treatment of goodwill)
Dr. Surbhi’s Capital A/c Cr. Reserve Fund Dr. 25,000
Particulars Amt. (`) Particulars Amt. (`) To Mohit’s Capital A/c 10,000
To Sohan’s Capital A/c 10,000
To Balance b/d 24,000 By Som’s Capital A/c 76,875 To Rahul’s Capital A/c 5,000
To Surbhi’s 1,83,863 By Sudha’s Capital A/c 76,875 (Reserve distributed in old ratio)
Executor A/c By P/L Suspense A/c 38,438 Mohit’s Capital A/c Dr. 12,000
By Surbhi’s Loan A/c 15,675 Sohan’s Capital A/c Dr. 12,000
2,07,863 2,07,863 Rahul’s Capital A/c Dr. 6,000
Working notes: (Existing goodwill written off in old ratio)
i. Calculation of Share of Profit :
Profit and Loss Suspense A/c Dr. 1,333
2,56,250 x 1/5 x 9/12 = `38,437.50 or `38,438
To Sohan’s Capital A/c 1,333
ii. Share in Goodwill = 3 x 10,25,000/4 x 1/5 = `1,53,750 (Sohan’s share of profit)
iii. Interest on Surbhi’s Loan = 15,000 × 6/100 × 9/12 = `675.
iv. Surbhi’s Loan A/c Interest on Capital A/c Dr. 625
To Sohan’s Capital A/c 625
Particulars Amt. (`) Particulars Amt. (`) (Interest on capital = 25,000 × 12/100
× 2×1/2/12)
To Surbhi’s 15,675 By Balance b/d 15,000
Capital A/c By Interest A/c 675 Joint Life Policy A/c Dr. 1,25,000
To Mohit’s Capital A/c 50,000
15,675 15,675 To Sohan’s Capital A/c 50,000
To Rahul’s Capital A/c 25,000
Do it yourself 4.42
(share of Joint Life Policy)
Dr. Karan’s Capital A/c Cr. Sohan’s capital A/c Dr. 94,158
To Sohan’s Executor’s A/c 94,158
Particulars Amt. (`) Particulars Amt. (`)
(sohan’s executors claim due)
To Balance b/d 13,000 By Arun’s Capital A/c 90,000 (25,000 + 19,200 + 10,000 + 1,333 +
To Karan’s 2,00,430 By Varun’s Capital A/c 67,500 625 + 50,000 – 12,000 = 94158)
Executor A/c By P/L Suspense A/c 26,250 Sohan’s Executor’s A/c Dr. 94,158
By Karan’s Loan A/c 28,000 To Bank A/c 94,158
By Interest on Loan 28,000 (Sohan’s executors were paid the among due)
2,13,430 2,13,430 Working Notes

1. Goodwill of the Firm = 3 × Average Profit = 3 × 64,000/4 = `48,000
Working notes:
Sohan’s Share of Goodwill = `48,000 × 2/5 = ` 19,200
i. Calculation of Interest on Loan: 28,000 x 12/100 x 6/12 = `1,680
2. Share of Profit = `64,000/4 × 2/5 × 2.5/12 = `1,333
ii. Calculation of Share of Profit = 1,75,000 x 3/10 x 6/12 = `26,250
3. S
ohan’s Share in Joint Life Policy = 2/5 × 1,25,000 = `50,000
iii. Share in Goodwill = 3 x 7,00,000/4 x 3/10 = `1,57,500
4. Interest on Capital = `25,000 × 12/100 × 2.5/12 = `625
Rockey’s share of profit = 14,000 × 3/12 × 2/7 = `1,000 akesh’s share of Profit = [(16,000 + 16,000 + 15,400)/3 × 3/12 × 1/4]
R
Goodwill = 14,000 × 2 = `28,000. + 10% = [15,800 × 3/12 × 1/4] + 10% = `987.50 + 10% = 987.50 +
Rockey’s share = 2/7 × 28,000 = `8,000 [Gaining Ratio 3:2] 98.75 = `1086 (app.)
Dr. Rockey’s Capital A/c Cr. Rakesh’s share of goodwill = 1/4 of Total profit of last three years
Particulars (`) Particulars (`) = 1/4 × (16,000 + 16,000 + 15,400) = `11,850
Journal
To Rockey’s By Balance b/d 20,000
Executers A/c 33,821 By General Reserve 4,571 Date Particulars L.F. Dr. (`) Cr. (`)
By Goodwill A/c 8,000 Pinki’s Capital A/c Dr. 7,900
By P/L Suspense A/c 1,000 Qureshi’s Capital A/c Dr. 3,950
By Interest on Capital 250 To Rakesh’s Capital A/c 11,850
(20,000 × 5/100 × 3/12) (Rakesh’s share of goodwill adjusted in capi-
33,821 33,821 tal of Pinki and Qureshi in gaining ratio 2 : 1)
Reserve Fund Dr. 20,000 General reserve A/c Dr. 9,000

To Pinki’s Capital A/c 10,000 Profit and loss A/c Dr. 6,000
To Qureshi’s Capital A/c 5,000 To A’s capital A/c 5,000
To Rakesh’s Capital A/c 5,000 To B’s capital A/c 5,000
(Reserve distributed in old ratio 2 : 1 : 1) To C’s capital A/c 5,000
Profit and Loss Suspenses A/c Dr. 1,086 (Being general reserve and prof-
To Rakesh’s Capital A/c 1,086 it and loss A/c distributed among
(Rakesh’s share of profit) partners in a profit sharing ratio)
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
Journal
Date Particulars L.F. Dr. (`) (Cr.) (`)
To Machinery 5,000 By Patents 2,000
To Profit distributed: By Premises 5,000
To Patents A/c 8,000
Nithya 1,000
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
Balance Sheet (after Mithya’s Death)

3. (i) Sacrificing Share of Uday 5/10 – 3/10 = 2/10
Mithya’s Executors 24,400 Patents 8,000
Sacrificing Share of Kaushal 5/10 – 2/10 = 3/10
A/c (28,600 – 4,200) Machinery 25,000
Sacrificing Ratio =2:3
Creditors 14,000 Premises 25,000
(ii) Uday’s new share 3/10 –1/30 = 8/30
Capitals: Investments 10,000
Kaushal’s new share 2/10 – 1/30 = 5/30
Nithya 27,125 Stock 13,000
Govind’s new share 5/10–1/30 = 14/30
Sathya 28,275 Debtors 8,000
Hari’s new share 1/30 + 1/30 + 1/30 = 3/30
Bank (8,000 – 4,200) 3,800
New ratio = 8:5:14:3
Profit and Loss Suspense
(iii) Uday 8/30 +7/30 = 15/30; Kaushal new share = 5/30
A/c (share of Mithya’s profit) 1,000
Hari new share = 3/30 +7/30 =10/30
93,800 93,800 New ratio = 15:5:10 or 3:1:2
4. Journal
Dr. Pammy’s Executor's A/c Cr.
Particulars (`) Particulars (`) Date Particulars L.F. Dr. ( `) Cr. (`)
To Bank A/c 4,200 By Mithya’s Capital A/c 28,600 X’s capital Account Dr. 10938
To Bank A/c By Interest A/c Y’s capital Account Dr. 6562
(12,200 + 1,220) 13,420 (24,400 × 10/100 × 6/12) 1,220 To Z’s capital Account 17500
To Balance c/d 12,403 By Interest A/c (being Z’s share of goodwill compensated
(12,200 × 10/100 × 2/12) 203 by the existing partner)
30,023 30,023 Profit and loss suspense A/c Dr. 2500
To Bank A/c By Balance b/d 12,403 Z’s capital A/c 2500
(being Z’s share profit till the date of
(12,200 + 203 + 12,816 By Interest A/c death credited to his capital A/c)
413) (12,403 × 10/100 × 4/12) 413
12,816 12,816 Revaluation A/c Dr. 5,000
To Machinery A/c 5,000
(being decrease in the value machinery
Do it yourself 4.52 recorded)
RevaluationAccount
Patents A/c Dr. 5,000
Particulars (`) Particulars (`) Building A/c Dr. 12,500
Machinery A/c 2,000 Land & Building 34,000 To Revaluation A/c 17500
Stock A/c 2,000 A/c (Being assets revalued)
Provision for Bad & Revaluation A/c Dr. 12,500
doubtful debts A/c 300 To X’s Capital A/c 6,250
Profit transferred to To Y’s Capital A/c 3,750
Capital A/c To Z’s Capital A/c 2,500
G 20,790 (Being Profit on Revaluation transferred to
E 5,940 Partners Capital A/c)
F 2,970 29,700
Z’ capital Account Dr. 60,000
34,000 34,000 To Z’s Executors A/c 60,000
(Being net amount due to Z transferred to
Partner’s Capital Account his executors A/c)
Particulars G E F Particulars G E F Z’s Executor’s Account Dr. 17,500
To Goodwill 28,000 8,000 4,000 By Balance b/d 70,000 20,000 10,000 To Bank A/c 17,500
To E’s Exec- 28,340 By Reserve 14,000 4,000 2,000 (Being executors are paid cash partly)
utor’s A/c By Rev. A/c 20,790 5,940 2,970
To Bal. c/d 76,790 10,970 By P/L 6,400 Dr. Z’s Executor’s Account Cr.
Suspense A/c
1,04,790 36,340 14,970 1,04,790 36,340 14,970

To bank 17,500 By Z’s Capital A/c 60,000
Balance sheet of G & F
To bank 13,175 By interest on loan 2,550
Liabilities (`) Assets (`) (10625+2550)
Capital A/c Land&Building 94,000
To balance c/d 31,875
G 76,790 Machinery 38,000 62550 62550
F 10,970 87,760 Stock 5,000
Creditors 14,000 Debtors 12,000
E’s Executors A/c 58,340 Less: Provision 300 11,700 Self Assessment Test - 3.2
Cash 5,000
4. Gain of a continuing partner = New share of profit – Old share of profit
P & L Suspense A/c 6,400
A’s gain = 3/6 – 3/10 = 6/30; B’s gain = 2/6 – 3/10 = 1/30
1,60,100 1,60,100 C’s gain = 1/6 – 2/10 = –1/30
D’s share of goodwill = 2/10 × 6,00,000 = `1,20,000
E’s Executor’s A/c
Compensation payable to C by A and B = 1/30 × 6,00,000 = `20,000
Particulars (`) Particulars (`) Journal
To Balance 58,340 By E’s Capital A/c 28,340 Date Particulars L.F. Dr. (`) Cr. (`)
c/d By E’s Loan A/c 30,000
On the A’s capital A/c Dr. 1,35,000
58,340 58,340 date of B’s capital A/c Dr. 1,35,000
WorkingNote:- D’s C’s capital A/c 90,000
1. E’s share in profit = 80,000 × 146/365×2/10 = `6,400 retire- D’s capital A/c Dr. 90,000
2. G’s Capital (Adjusted ) = 76,790; F’s Capital (adjusted) = 10,970 ment To Goodwill A/c 4,50,000
(Being goodwill written off in
Total =`87,760; G’s Capital = 87,760×7/8 = `76,790;
old ratio 3 : 2 : 2 : 2)
F’s Capital = 87,760 × 1/8 = `10,970
Balance Sheet (after Gopal’s retirement)

A’s capital A/c Dr. 1,20,000
B’s capital A/c Dr. 20,000 Liabilities (`) Assets (`)
To C’s capital A/c 20,000
Workmen’s compensa- 8,000 Land and 2,60,000
To D’s capital A/c 1,20,000
(Being treatment of goodwill) tion claim Building A/c
Gopal’s Loan 2,00,000 Machinery 2,40,000
After 1 Profit and Loss Dr. 12,00,000 Sundry Creditors 50,000 Debtors 93,000
year Appropriation A/c 6,00,000 Capitals: Closing stock 1,00,000
To A’s capital A/c 4,00,000 Keshav 4,00,000 Cash at bank 2,65,000
To B’s capital A/c 2,00,000 Madhav 3,00,000 7,00,000
To C’s capital A/c
(Being profit distributed in 3 9,58,000 9,58,000
: 2 : 1)
5. Journal Self Assessment Test - 3.3
Date Particulars L.F. Dr. (`) Cr. (`) 4. (a) Gaining share of a continuing partner = New Share – old share
A's Capital A/c Dr. 5,040 Ashok Ajay
To B's Capital A/c 5,040 (i) New share 3/5 2/5
(For adjustment of goodwill) (ii) Old share 1/2 1/5
Reserve A/c Dr. 30,000 (iii) Gaining share [(i) – (ii)] 3/5 – 1/2= 1/10 2/5 – 1/5 = 1/5
To A's Capital A/c 18,000 Gaining ratio of Ashok and Vijay = 1/10 : 1/5 = 1 : 2
To B's Capital A/c 12,000 (b) Share taken by A out of B’ share=4/15 × 1/2
(Being reserve distributed) New Share of A =Old Share + Gain = 8/15+2/15 = 10/15
Profit and Loss Suspense A/c Dr. 700 Share taken by C out of B’ share = 4/15 × 1/2 = 2/15
To B's Capital A/c 700 B’s New Share = Old share+Gain = 3/15+2/15 = 5/15
(For share of profit) New Profit Sharing Ratio = 10 : 5 or 2 : 1
B's Capital A/c Dr. 77,740 5. Dr. Dinesh’s Capital A/c Cr.
To B's Executor's A/c 77,740
(For transfer of total share of B) Particulars (`) Particulars (`)
Working Notes: Profit sharing Ratio of A and B = 1/2 : 1/3 = 3 : 2 To Deferred Revenue 7,000 By Balance b/d 30,000
B's share of goodwill = (4,200 + 3,900 + 4,500)/3 × 3 × 2/5 = `5,040 Expenditure By General 20,000
B's share of profit = (3,900 + 4,500)/2 × 5/12 × 2/5 = `700 To Dinesh’s 2,500 Reserve
Loan A/c By Alwin’s 15,000
6. Keshav’s gain : 3/7 – 2/7 = 1/7; Madhav’s gain : 3/7 – 2/7 = 1/7 To Dinesh’s 95,500 Capital A/c
Gaining ratio = 1:1; Gopal’s share of goodwill = 2/7 × 1,40,000 = `40,000 Executor’s A/c By Pramod’s 10,000
Total capital of the new firm = `7,00,000 Capital A/c
Keshav’s new capital = 4/7 × 7 = 7,00,000 = `4,00,000 By Profit and 30,000
Madhav’s new capital = `3,00,000 Loss Suspense
1,05,000 1,05,000
To Machinery A/c 60,000 By Land and Building A/c 60,000 Dr. Dinesh’s Executor’s A/c Cr.
To Bad debts 7,000 By Loss transferred to Particulars Amt. (`) Particulars Amt. (`)
partners’ capital A/c:
To Cash A/c 47,750 By Dinesh’s 95,500
Gopal 2,000
To Bills payable A/c 47,750 Capital A/c
Keshav 3,000
Madhav 2,000 7,000 47,750 95,500
67,000 67,000 Working Note: Share of Profit = `3,60,000 × 1/6 × 5/10 = `30,000
Dr. Partner’s Capital A/c Cr. 6. Dr. REVALUATION A/C Cr.
Particulars Gopal Keshav Madhav Particulars Gopal Keshav Madhav
To Rev. A/c 2,000 3,000 2,000 By Bal- 2,00,000 3,00,000 2,00,000
(loss) ance b/d
To Machinery A/c 3000 By Freehold 8,000
To Furniture A/c 840 Premises A/c
To Gopal’s – 20,000 20,000 By W.C 2,000 3,000 2,000
capital A/c fund To Provision for D/D 1500 By Stock A/c 3,300
To Bank A/c 50,000 – – By Reserve 10,000 15,000 10,000 To Partner’s capital A/c
To Gopal’s 2,00,000 – – By 20,000 – –
N 2980
Loan A/c Keshav’s S 993
Capital
B 1987 5960
To Balance – 4,00,000 3,00,000 My 20,000 – – 11,300 11,300
c/d Madhav’s
capital Dr. PARTNER'S CAPITAL A/C Cr.
By Bank – 1,05,000 1,10,000 Particulars N S B Particulars N S B
A/c
To B’s A/c 5250 1750 – By Balance B/d 30,000 30,000 28,000
2,52,000 4,23,000 3,22,000 2,52,000 4,23,000 3,22,000
To B’s By N’s Capital A/c – – 5250
Dr. Bank A/c Cr. Loan A/c – – 40,987 By S’s Capital A/c – – 1750
To Bal. c/d 33,730 31,243 – By General Reserve 6,000 2,000 4,000
By Revaluation A/c 2980 993 1987
To Balance b/d 1,00,000 By Gopal’s capital A/c 50,000
38980 32993 40987 38980 32993 40987
To Keshav’s capi- 1,05,000 By Balance c/d (Bal. fig.) 2,65,000
tal A/c 1,10,000 To Current – 15000 – By Balance B/d 33,730 31,243 –
To Madhav’s A/c By current A/c 15000 – –
capital A/c To Bal. c/d 48,730 16,243 –
3,15,000 3,15,000 48730 31243 – 48,730 31,243 –
Balance Sheet (of N & S) Dr. Leela’s Loan Account Cr.

Liabilities (`) Liabilities (`) Date Particulars (`) Date Particulars (`)
Capitals Freehold premises 48,000 30.6.20 To Bank A/c 36,750 1.4.20 By Leela’s Capital A/c 70,000
N 48,730 Machinery 27,000 30.9.20 To Bank A/c 35,875 30.6.20 By Interest A/c 1,750
S 16,243 64,973 Furniture 11,160 30.9.20 By Interest A/c 875
Bills Payable 12,000 Stock 25,300 72,625 72,625
Sundry Creditors 18,000 Sundry Debtors 20,000
N’s Current A/c Less: Provision 2,500 Self Assessment Test - 3.5
15,000 17,500
B’s Loan A/c 40987 Cash 7,000 3. Journal
S’s Current A/c 15,000 Date Particulars L.F. Dr. (`) Cr. (`)
1,50,960 1,50,960
Ashu’s Capital A/c Dr. 36,000
Self Assessment Test - 3.4 Sonal’s Capital A/c Dr. 27,000
Divya’s Capital A/c Dr. 18,000
3. David’s adjusted capital `33,000 To Goodwill A/c 81,000
Aslam’s adjusted capital `70,500 (For the existing goodwill written off in
Amount payable to Naresh `90,500 the old ratio)
Total Capital of the new firm `1,94,000
General Reserve A/c Dr. 54,000
David (`) Aslam (`)
To Ashu’s Capital A/c 24,000
New capitals (`1,94,000 divided in 2 : 3) 77,600 1,16,400
To Sonal’s Capital A/c 18,000
Adjusted capitals 33,000 70,500
To Divya’s Capital A/c 12,000
Cash brought in 44,600 `45,900 (For the amount of general reserve
Journal distributed among the partners in old
ratio)
Goodwill A/c (1,35,000 – 81,000) Dr. 54,000
2013 Cash/Bank A/c Dr. 90,500 To Ashu’s Capital A/c 24,000
1 April To David’s capital A/c 44,600 To Sonal’s Capital A/c 18,000
To Aslam’s capital A/c 45,900 To Divya’s Capital A/c 12,000
( Being cash brought in by continuing
(Being increase in value of goodwill
partners to make their capitals
credited to all partners’ capital
proportionate to their new ratio)
accounts in old ratio 4 : 3 : 2)
Naresh’s Capital Ac/ Dr. 90,500
To Cash/Bank A/c 90,500 Sonal’s Capital A/c Dr. 45,000
(Being cash paid to Naresh for his total Divya’s Capital A/c Dr. 90,000
claim on retirement) To Goodwill A/c 1,35,000
(Being full value of goodwill written off
4. Prem's Capital A/c in new ratio 1 : 2)
Particulars (`) Particulars (`) 4. Dr. Revaluation Account Cr.
To Prem's 2,44,000 By Balance b/d 1,50,000
Executor's A/c By Interest on Capital 15,000
By Pawan's Current A/c 30,000 To Machinery 4,000 By Patents 4,000
By Poonam's Current A/c 30,000 To Profit Distributed: By Buildings 20,000
By Profit and Loss 19,000 Punit 10,000
Appropriation A/c Rahul 6,000
2,44,000 2,44,000 Seema 4,000 20,000
Prem's Executor's A/c 24,000 24,000
Date Particulars (`) Date Particulars (`)

Dr. Seema’s Capital Account Cr.
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
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
5. Dr. Revaluation A/c Cr.

iii. Shalini’s Capital A/c Dr. 48,000
Particulars (`) Particulars (`) To Naveen’s Capital A/c 36,000
To Provision for 600 By Building 10,000 To Asha’s Capital A/c 12,000
doubtful debts 7,200 By Creditors 1,800 (For the adjustment made for goodwill
To Machinery 3,000 By Prepaid 2,000 on Karan’s retirement)
To Provision for insurance orking Notes: Calculation of Gaining / Sacrificing Ratio
W
outstanding repairs Asha = 5/10 – 2/5 = 1/10 (Sacrifice); Shalini = 2/10 – 3/5 = – 4/10 (Gain)
To Profit tr. to:
A 1,500 9. Goodwill = 60,000 × 2 = `1,20,000. Naresh's share = `48,000
B 1,000 Dr. Naresh's Capital A/c Cr.
C 500 3,000
13,800 13,800
To P&L A/c 64,000 By Balance c/d 3,00,000
Partners’ capital A/c
To P/L Suspense A/c 16,000 By General Reserve 12,000
Particulars A B C Particulars A B C (1,60,000 × 3 × 2/5) By Ramesh's Capital A/c 32,000
To B’s 9,000 3,000 By balance b/d 90,000 60,000 30,000 To Naresh's Executor's A/c 1,80,000 By Suresh's Capital A/c 16,000
capital A/c 3,60,000 3,60,000
To cash 9,000 By Revaluation 1,500 1,000 500
11. Dr. Profit and Loss Appropriation A/c Cr.
To B’s loan 66,000 By A’s capital 9,000
To bal. c/d 90,000 30,000 By C’s capital 3,000
To Interest on Capital By Profit and Loss A/c 2,82,860
By Reserve 3,000 2,000 1,000
X’s Current A/c 18,000 (Net Profit)
By Cash 4,500 1,500
Y’s Current A/c 24,000 42,000 By Interest on Drawings
99,000 75,000 33,000 99,000 75,000 33,000 To Salary – Y’s Current A/c X’s Current A/c 600
To Profit transferred to: 15,000 Y’s Current A/c 540 1,140
Balance Sheet
X’s Current A/c 1,20,000
Liabilities Amt. (`) Assets Amt. (`) Y’s Current A/c 80,000 2,00,000
Provision for outstanding Cash 13,000 2,84,000 2,84,000
repairs 3,000 Debtors 19,000
Dr. Partners’ Capital Accounts Cr.
Creditors 13,800 Stock 18,000
Capitals: Prepaid 2,000 Particulars X (`) Y (`) Particulars X (`) Y (`)
A 90,000 insurance
C 30,000 1,20,000 Machinery 40,800 To balance c/d 1,80,000 2,40,000 By balance b/d 1,80,000 2,40,000
B’s loan 66,000 Building 1,10,000 1,80,000 2,40,000 1,80,000 2,40,000
2,02,800 2,02,800 Dr. Partners’ Capital Accounts Cr.
Working Notes: 1. Firm’s Capital = 1,20,000.
Particulars X (`) Y (`) Particulars X (`) Y (`)
A’s capital = 1,20,000 × 3/4 = 90,000; C’s capital = 1,20,000 × 1/4 = `30,000
2. Cash balance = 16,000 + 4,500 + 1,500 – 9,000 = `13,000
To Bank A/c 10,000 9,000 By balance b/d 78,000 69,000
Self Assessment Test - 3.6 (Drawings) By Interest on
To Interest on 600 540 Capital 18,000 24,000
7. I Part :
Opening Stock of Sports Material 87,000 drawings By Salary - 42,000
Add: Sports material purchased 4,94,000 To balance c/d 2,05,400 2,05,460 By P/L
Total 5,81,000 App. A/c-Profit 1,20,000 80,000
Less: Closing stock of Sports Material (1,07,000)
Sport Material Consumed during the year 4,74,000 1,80,000 2,40,000 1,80,000 2,40,000
II Part: Balance Sheet of Queen’s Club as on 31st March 2019 (An extract)
13. I Part: Dr. Revaluation A/c Cr.
Capital Fund : 10,80,000 10% Building 4,80,000
To Profit transferred: By Land & Building 15,000
Add: Transferred from Fund Investments X 11,400 By Provision for D/D 1,050
Building Fund 3,60,000 14,40,000 Building 3,60,000 Y 8,550 By Stock 9,600
Building Fund : 4,80,000
Z 5,700 26,650
Add: Donations 6,00,000
Add: Interest 48,000 26,650 26,650
11,28,000 Partner’s Capital A/c
Less: Expenditure on ( 3,60,000) 7,68,000 Particulars Xavier Yusuf Zaman Particulars Xavier Yusuf Zaman
construction transferred to
To Yusuf’s 12,000 ___ 6,000 By Bal. b/d 1,20,000 90,000 60,000
Capital fund capital A/c
To Yusuf’s ___ 1,16,550 ___ By Rev. A/c 11,400 8,550 5,700
10. I Part: Journal Loan A/c
To balance 1,19,400 ___ 59,700 By Xavier’s ___ 12,000 ___
Date Particulars L.F. Dr. (`) Cr. (`) c/d Capital A/c
i. Asha’s Capital A/c Dr. 40,000 By Zaman’s ___ 6,000 ___

Naveen’s Capital A/c Dr. 24,000 Capital A/c
Shalini’s Capital A/c Dr. 16,000 1,31,400 1,16,550 65,700 1,31,400 1,16,550 65,700
(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
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 (`)
To Rev. A/c 750 250 By Balance b/d 54,000 35,000

To Goodwill 36,000 12,000 16,000 By Workmen’s
7. Balance Sheet (an extract) To Bal. c/d 39,450 30,150 7,200 Comp. Fund 3,000 1,000
By Goodwill A/c 18,000 6,000
Liabilities (`) Assets (`) By Investment
Prize Fund 5% Prize Fund 60,000 Fluct. Fund 1,200 400
Opening Balance 60,000 Investment By Cash A/c 23,200
Add: Donation for Prize Fund 14,000 Accrued Interest 1,500 76,200 42,400 23,200 76,200 42,400 23,200
Add: Interest Received on Prize Fund
on Prize Fund Investment 1,500 Investment 13. I Part: Average Profit of last 3 years = `1,20,000
Add: Interest Accrued 1,500 Q’s share of Profit = 1,20,000 × 2/12 × 1/5 = `4,000
Less: Cost of Prizes (20,750) 56,250 Goodwill = 3,60,000/3 × 2 = `2,40,000; Q’s share = `48,000
Dr. Income and Expenditure Account Cr. Journal

To Match Expenses 35,150 By General Donation 8,000 Profit & Loss Suspense A/c Dr. 4,000
To Q’s Capital A/c 4,000
8. Journal (Profit upto the date of death credited to Q)
Date Particulars L.F. Dr. (`) Cr. (`) P’s Capital A/c Dr. 36,000
A’s Capital A/c Dr. 2,03,000 R’s Capital A/c Dr. 12,000
To B’s Capital A/c 77,000 To Q’s Capital A/c 48,000
To C’s Capital A/c 77,000 (Share of Goodwill of Q adjusted in Gaining
ratio)
To D’s Capital A/c 49,000
(Being adjustment for Land A/c Dr. 1,00,000
goodwill on D’s retirement)
To Revalution A/c 1,00,000
(The value of Land increased)
A B C D
New Ratio 5/7 1/7 1/7 - To Plant & machinery A/c 68,000
Old Ratio 3/10 3/10 3/10 1/10 (To value of Plant decreased)
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)
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)
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

Journal
(a) Realisation A/c Dr. 12,000 2020 Bank A/c Dr. 3,00,000
To Bank A/c 12,000 Apr. 1 To Realisation A/c 3,00,000
(Being bank loan discharged) (Being payment received from creditors)
(b) Realisation A/c Dr. 400 Realisation A/c Dr. 90,000

To A’s Capital A/c 400 To Cash A/c 90,000
(Being commission credited to A) (Being partial payment made to
creditors)
(c) A’s Capital A/c Dr. 20,000 Realisation A/c Dr. 30,000
B’s Capital A/c Dr. 8,000 To Bank A/c 30,000
To Deferred Advertisement 28,000 (Being partial payment made to
Expenditure A/c creditors)
(Being the deferred advertisement
Prem’s Capital A/c Dr. 21,000
expenditure written off)
Suresh’s Capital A/c Dr. 24,000
(d) B’s Capital A/c Dr. 1,200 To Realisation A/c 45,000
To stock A/c 1,200 (Being loss on realisation transferred
(Being stock taken our by B at `1,200) to partners’ capital A/c)
(e) Bank A/c Dr. 7,000 Do it yourself 5.5

To Realisation A/c 7,000 Journal
(Being unrecorded computer sold for
`7,000) Date Particulars L.F. Dr. (`) Cr. (`)
(i) Realisation A/c Dr. 800
(f) Realisation A/c Dr. 2,000
To Cash/ Bank A/c 800
To Bank A/c 2,000 (Being dissolution expenses paid)
(Being outstanding repair bill paid)
(ii) Realisation A/c Dr. 800
To Prabhu’s Capital A/c 800
Do it yourself 5.2 (Being dissolution expenses paid by
partner)
Journal
(iii) Realisation A/c Dr. 10,000
Date Particulars L.F. Dr. (`) Cr. (`) To Geeta’s Capital A/c 10,000
Realisation A/c Dr. 50,000 (Being dissolution expenses paid by Geeta
To Bank A/c 50,000 and compensated by firm)
(Bank loan paid) (iv)a. Realisation A/c Dr. 5,000
Bank A/c Dr. 17,000 To Janki’s Capital A/c 5,000
(Being dissolution expenses paid by Janki
To Realisation A/c 17,000 and compensated by firm)
(unrecorded asset sold)
b. Janki’s Capital A/c Dr. 5,500
Rohan’s capital A/c Dr. 14,000 To Mohan’s Capital A/c 5,500
To Realisation A/c 14,000 (Being Mohan paid dissolution expenses on
(Stock taken over by Rohan) behalf of Janki)
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.
(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
(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)
(e) (i) Realisation A/c Dr. 1,000 Do it yourself 5.11

To Aman’s CapitalA/c 1,000
(Remuneration given to Aman for Dr. Realisation Account Cr.
completing dissolution work) Particulars (`) Particulars (`)
(ii) Aman’s Capital A/c Dr. 800 To Stock 45,000 By Loan 12,000
To Bank A/c 800
(Expenses paid by the firm but borne by
To Furniture 16,000 By Creditors 18,000
Aman) To Debtors 70,000 By Sonu’s capital 60,000
To Plant and Machinery 52,000 (plant & machinery)
(f) Aman’s Capital A/c Dr. 36,000
To Bank (creditors) 17,100 By Ashu’s capital 69,000
Rajat’s Capital A/c Dr. 18,000
To Sonu’s capital (loan) 12,000 (debtors)
(Loss on realization)
To Bank A/c 1,600 By Bank:
(realisation expenses) Stock 42,000
To Profit transferred to: Furniture 13,900 55,900
Do it yourself 5.7
Journal Sonu’s capital 900
Ashu’s capital 300 1,200
Date Particulars L.F. Dr. (`) Cr.(`) 2,14,900 2,14,900
Bank A/c Dr. 52,000
A’s Capital A/c Dr. 80,000 Dr. Partners Capital Accounts Cr.
To Realisation A/c 1,32,000 Particulars Sonu Ashu Particulars Sonu Ashu
(Being Assets realised and some taken
over by Partner A) To Realisation A/c 60,000 – By Balance b/d 1,10,000 68,000
(plant and By Realisation A/c 12,000 –
machinery) (loan)
Do it yourself 5.8 To Realisation A/c – 69,000 By Realisation A/c 900 300
Journal (debtors) (profit)
To Bank A/c 62,900 – By Bank A/c – 700
1,22,900 69,000 1,22,900 69,000
(a) Realisation A/c Dr. 15,000
To Sharma’s Capital A/c 15,000
(Remuneration credited to Sharma’s Dr. Bank Account Cr.
capital A/c)
(b) Realisation A/c Dr. 5,000 To Balance b/d 25,000 By Realisation A/c 17,100
To Bank A/c 5,000 To Realisation A/c 55,900 (creditor)
(Realisation Expenses incurred)
(assets realised) By Realisation A/c (expenses) 1,600
(c) Realisation A/c Dr. 2,84,000 To Ashu’s capital A/c 700 By Sonu’s capital A/c 62,900
To Bank A/c 2,84,000
(Creditors paid in full settlement) 81,600 81,600
(d) Jain’s capital A/c Dr. 4,500 Do it yourself 5.12
Sharma’s capital A/c Dr. 9,000 Journal
Verma’s capital A/c Dr. 4,500 Date Particulars L.F. Dr. (`) Cr. (`)
(Loss on Realisation debited to Partners’ Realisation A/c Dr. 10,000
Capital A/c) To Stock A/c 2,500
Do it yourself 5.9 To Debtors A/c 2,000
Journal To Plant and Machinery 4,500
Date Particulars L.F. Dr. (`) Cr. (`) (Assets transferred to Realisation A/c)
(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 )
(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
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
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
Bank A/c Dr. 53,000 3,70,000 2,00,000 1,70,000

(Assets realised)
Dr. Bank Account Cr. Dr. Partners’ Capital A/cs Cr.

Particulars (`) Particulars (`) Particulars Sanjay Tarun Vineet Particulars Sanjay Tarun Vineet
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
6,60,000 6,60,000 Dr. Cash A/c Cr.

Do it yourself 5.16 To Balance b/d 32,000 By Realisation A/c 1,10,000
To Realisation A/c 3,05,000 By Sanjay’s Capital A/c 87,650
Dr. Realisation Account Cr. By Tarun’s capital A/c 79,567
Particulars (`) Particulars (`) By Vineet’s capital A/c 59,783
3,37,000 3,37,000
To Buildings 30,000 By Creditors 30,000
To Machinery 30,000 By Bills payable 30,000
To Stock 1,20,000 By Bank loan 1,20,000 Do it yourself 5.18
To Bills receivable 1,30,000 By Sonia’s husband’s loan 1,30,000
To Furniture 80,000 By Bank A/c:
To Bank A/c (Bank Loan) 1,30,000 Buildings 1,90,000 Particulars (`) Particulars (`)
To Bank A/c 54,000 Bills receivable 1,10,000 To Debtors 70,000 By Bank loan 60,000
(creditors and Bills payable) Stock 1,50,000 To Stock 2,00,000 By Creditors 80,000
To Bank A/c 1,30,000 Machinery 48,000 To Investments 1,40,000 By Bills payable 40,000
(Sonia’s husbands loan) Furniture 75,000 5,73,000 To Buildings 60,000 By Romesh’s Capital A/c 8,100
To Rohit’s capital A/c 12,000 By Loss tr. to capital A/c: To Bank A/c (bills payable) 40,000 (investment)
(Commission) Sonia 21,500 To Bank A/c (creditors) 63,000 By Bhawan’s Capital A/c 1,17,000
Rohit 12,900 To Bhawan’s capital A/c 63,600 (investment)
Udit 8,600 43,000 (loan with interest) By Bank A/c:
9,26,000 9,26,000 To Bank A/c 5,000 Debtors 66,500
(unrecorded liabilities) Stock 2,00,000
Buildings 51,000 3,17,500
Dr. Partner’s Capital Accounts Cr. By Loss tr. to capital A/c:
Particulars Sonia Rohit Udit Particulars Sonia Rohit Udit Romesh 11,400
Bhawan 7,600 19,000
To 21,500 12,900 8,600 By Bal. b/d 70,000 90,000 1,10,000
Realisation By Realisation 6,41,600 6,41,600
A/c (Loss) A/c (expenses) — 12,000 —
To Bank 88,500 1,13,100 1,17,400 By General Dr. Partner’s Capital Account Cr.
A/c reserve A/c 40,000 24,000 16,000
Particulars Romesh Bhawan Particulars Romesh Bhawan
1,10,000 1,26,000 1,26,000 1,10,000 1,26,000 1,26,000 To Realisation 8,100 1,17,000 By Balance b/d 1,00,000 2,00,000
(investment) By Realisation 63,600
Dr. Bank Account Cr. To Realisation 11,400 7,600 (bank loan)
(loss)
Particulars (`) Particulars (`) Bank 80,500 1,39,000
To Balance b/d 60,000 By Realisation A/c (bank loan) 1,30,000 1,00,000 2,63,600 1,00,000 2,63,600
To Realisation A/c 5,73,000 By Realisation A/c 54,000
(assets realised) (creditors and bills payable) Dr. Bank Account Cr.
By Realisation A/c 1,30,000
(Sonia’s husband loan)
By Sonia’s Capital A/c 88,500 To Balance b/d 30,000 By Realisation A/c (creditor) 63,000
By Rohit’s Capital A/c 1,13,100 To Realisation A/c 3,17,500 By Realisation A/c 5,000
By Udit’s Capital A/c 1,17,400 (assets realised) (unrecorded liability)
6,33,000 6,33,000 By Bhawan's Loan A/c 20,000
By Realisation A/c (B/P) 40,000
Note: No entry has been recorded in firm’s books for the actual realisation By Romesh‘s capital A/c 80,500
expenses incurred by Rohit because he gets `12,000 as his remuneration By Bhawan’s capital A/c 1,39,000
which has been duly accounted for.
3,47,500 3,47,500
Dr. Realisation A/c Cr. Dr. Realisation A/c Cr.
Particulars (`) Particulars (`) Particulars (`) Particulars (`)
To Assets transferred: By External Liabilities: To Building 1,20,000 By Provision on Debtors 4,000
Plant 90,000 Creditors 80,000
To Investment 30,600 By Creditors 80,000
Debtors 60,000 Bills payable 30,000 1,10,000
Furniture 32,000 By Cash A/c To Debtors 34,000 By Mrs Pradeep’s Loan 40,000
Stock 60,000 Plant 72,000 To Bills Receivable 37,400 By Investment 8,000
Investment 70,000 Debtors 54,000 To Goodwill 4,000 Fluctuation Fund
Bills receivable 36,000 3,48,000 Furniture 18,000 To Pradeep’s Current A/c 40,000 By Bank A/c
To Sanjay’s capital A/c 18,300 Stock 54,000 To Bank (expenses) 2,500 Debtors 12,000
(commission) (6% of Investment 76,000 To Bank (creditors) 59,000 Building 1,52,000
3,05,0000) Bills receivable 31,000 3,05,000
To Pradeep’s Current A/c 1,000 Bill Recievable 36,000 2,00,000
To Cash A/c: By Loss tr. to Capital A/c:
Creditors 80,000 Sanjay 30,650 To Partner’s Current A/c: By Bank A/c 27,000
Bills Payable 30,000 1,10,000 Tarun 20,433 Pradeep 18,300
Vineet 10,217 61,300 Rajesh 12,200 30,500
4,76,300 4,76,300 3,59,000 3,59,000
Payment to creditors = (80,000 – 20,000) – (60,000 × 10/100 × 2/12)
= 60,000 – 1,000 = `59,000)
Do it yourself 5.20 Dr. Partner’s Capital Account Cr.

Dr. Realisation A/c Cr.
To Real. A/c 18,000 14,200 8,100 By Bal. b/d 27,500 10,000 7,000
To Real. 4,182 1,394 1,394 By Realisa- 6,000 – 1,800
Particulars (`) Particulars (`) A/c (loss) tion A/c
To Assets transferred: By Liabilities transsfered: To Cash A/c 11,318 – – By Cash A/c – 5,594 694
S. Debtors 58,000 S. Creditors 20,000 33,500 15,594 9,494 33,500 15,594 9,494
Stock 39,500 Bills payable 25,500 45,500
Machinery 48,000 By Partners’ Current A/c Dr. Cash A/c Cr.
Investment 42,000 Ashok (investment) 40,000
Freehold property 50,500 2,38,000 Babu (Machinery) 45,000 Liabilities (`) Assets (`)
To Bank A/c (expenses) Chetan (properties) 55,000 1,40,000 To Balance b/d 3,200 By Realization A/c 270
To Bank A/c 3,000 By Bank A/c: To Realisation A/c 2100 (Expenses)
S. Creditors 18,600 S. Debtors 56,500
Bills payable 25,500 44,100 Stock 36,500
To B’s Capital A/c 5594 By A’s Capital A/c 11,318
To Profit tr. to partners’ Office computer 9,000 1,02,000 To C’s Capital A/c 694
Current A/c 11,588 11,588
Ashok 1200
Babu 800
Do it yourself 5.22
Chetan 400 2,400
2,87,500 2,87,500 Dr. Realisation Account Cr.
Dr. Partners’ Current A/cs Cr. Particulars (`) Particulars (`)

To Sundry Assets : By Provision for D/D 1,000
Particulars Ashok Babu Chetan Particulars Ashok Babu Chetan
Machinery 10,000 By Sundry Creditors 15,000
To 40000 45000 55000 By Bal. b/d 10,000 5,000 3,000 Stock 21,000 By Sheela’s Loan 13,000
Realisation By Real. A/c 1,200 800 400 Debtors 20,000 By Repairs and 1,200
A/c By Partners’ 28,800 39,200 51,600 Prepaid Insurance 400 Renewals Reserve
capital A/c
Investments 3,000 54,400 By Cash A/c
40,000 45,000 55,000 40,000 45,000 55,000 To Mala’s Capital A/c 13,000 Machinery 8,000
(Sheela’s Loan) Stock 14,000
Dr. Partners’ Capital A/cs Cr.
To Cash A/c (Creditors) 15,000 Debtors 16,000 38,000
Particulars Ashok Babu Chetan Particulars Ashok Babu Chetan To Cash A/c 5,000 By Mala’s Capital
To Partners’ 28,800 39,200 51,600 By Bal. b/d 70,000 55,000 27,000 (Dishonoured bill paid) (Investments) 2,000
Current A/c By Bank A/c – – 24,600 To Cash A/c (Expenses) 800 By Loss Transferred to 18,000
To Bank A/c 41,200 15,800 – Partners’ Capital A/c:
70,000 55,000 51,600 70,000 55,000 51,600
Mala 9,000
Neela 6,000
Dr. Bank A/c Cr. Kala 3,000
Particulars (`) Particulars (`) 88,200 88,200

To Balance b/d 7,500 By Realisation A/c 3,000 Dr. Capital Accounts Cr.
To Realisation A/c 1,02,000 (expenses)
Particulars Mala Neela Kala Particulars Mala Neela Kala
To Chetan’s 24,600 By Realisation A/c 44,100
capital A/c (liabilities) To Realisa- 9,000 6,000 3,000 By Bal. b/d 10,000 15,000 2,000
By Babu’s Loan A/c 30,000 tion A/c By Realisation 13,000 – –
To Realisa- 2,000 – – A/c
By Ashok’s capital A/c 41,200 tion A/c By Cash – – 1,000
By Babu’s capital A/c 15,800 To Cash 12,000 9,000 –
1,34,100 1,34,100 23,000 15,000 3,000 23,000 15,000 3,000
Dr. Cash Account Cr.

Do it yourself 5.21 Particulars (`) Particulars (`)
Dr. Realisation Account Cr. To Balance b/d 2,800 By Realisation A/c 15,000
To Realisation A/c 38,000 (Creditors paid)
Particulars (`) Particulars (`) (Sale of assets) By Realisation A/c (Dis- 5,000
To Sundry Assets A/c 17,000 By Provision for D/D A/c 1,200 To Kala’s Capital A/c 1,000 honoured bill paid)
To Debtors A/c 24,200 By Creditors A/c 6,000 By Realisation A/c 800
To Stock in Trade A/c 7,800 By Loan A/c 1,500 (Expenses)
To B/R A/c 1,000 By A’s Capital A/c By Mala’s Capital A/c 12,000
To A’s Capital A/c 6,000 B/R 800 By Neela’s Capital A/c 9,000
(Creditors) Debtors 17,200 18,000 41,800 41,800
To C’s Capital A/c 1,800 By B’s Capital A/c
(Loan 1,500+ Accrued Stock in Trade 7,000 Do it yourself 5.23
Interest 300) Sundry Assets 7,200 14,200 Dr. Realisation A/c Cr.
To Cash A/c 270 By C’s Capital A/c 8,100
(Realisation Expenses) (Sundry Assets) Particulars (`) Assets (`)
By Cash A/c (Debtors) 2,100 To Sundry Assets By Sundry liabilities:
By Loss tr. to Capital A/c Building 5,00,000 Loan 70,000
A 4,182 Stock 30,000 5,30,000 Creditors 1,30,000 2,00,000
B 1,394 To Cash A/c By Cash A/c
C 1,394 6,970 Creditors 1,29,000 Building 6,50,000
58,070 58,070 Loan 70,000 1,99,000 Stock 12,000
To Profit transferred: JLP 1,27,000 7,89,000
Samta 1,95,000
Mamta 65,000 2,60,000
9,89,000 9,89,000
Dr. Partners' Capital Accounts Cr.

General Reserve A/c Dr. 2,000 1,000
Particulars Samta Mamta Particulars Samta Mamta To Ramesh’s Capital A/c 1,000
To P & L A/c 45,000 15,000 By Balance b/d 3,00,000 1,10,000
To Raman’s Capital A/c
To Cash A/c 4,50,000 1,60,000 By Realisation 1,95,000 65,000 (General reserve distributed)
A/c (profit) Raman’s Capital A/c Dr. 2,000
4,95,000 1,75,000 4,95,000 1,75,000 Ramesh’s Capital A/c Dr. 2,000
To Profit and Loss A/c 4,000
Dr. Cash A/c Cr. (Transfer of loss to partners’
capital accounts)
Particulars Amount (`) Particulars Amount (`)
Raman’s Capital A/c Dr. 35,900
To Balance b/d 20,000 By Realisation A/c 1,99,000
Ramesh’s Capital A/c Dr. 13,900
To Realisation 7,89,000 By Samta’s capital A/c 4,50,000
To Bank A/c 49,800
A/c By Mamta’s capital A/c 1,60,000
(Final payment to partners)
8,09,000 8,09,000
Do it yourself 5.25
Do it yourself 5.24
Journal Balance Sheet (on the date of dissolution)
Date Particulars L.F. Dr. (`) Cr. (`) Particulars (`) Assets (`)
2020 Realization A/c Dr. 1,11,000 Capitals: Loan to Y 6,400
June To Investment 15,300 X 20,000 Cash 5,400
30 To Stock 8,700 Y 10,000 30,000 S. Assets (other than 76,200
To Bills Receivables 10,000 X's Loan 8,000 Loan to Y and Cash)
To Debtors 17,000 Creditors 50,000
To Plant and Fittings 25,000 88,000 88,000
To Buildings 10,000
To Goodwill
(Sundry asset accounts closed by Particulars (`) Particulars (`)
transferring to Realization accounts)
To S. Assets 76,200 By Creditors 50,000
Provision for bad and Dr. 2,000 To Cash A/c 2,000 By Cash A/c (Assets realised) 59,200
doubtful debts A/c 20,000 (realisation expenses) By Loss tr. to:
Sundry Creditors Dr. 20,000 To Cash A/c (Creditors) 50,000 X's Captial 11,400
Bills payable Dr. 10,000 Y's Capital 7,600 19,000
Bank overdraft Dr. 20,000
Mrs. Raman’s loan Dr. 1,200 1,28,000 1,28,000
Employees provident Dr. 2,800 Dr. Partners' Capital Accounts Cr.
Investment fluctuation fund 76,000
To Realization A/c Particulars X Y Particulars X Y
(Sundry external liabilities transferred To Loan to Y – 6,400 By Bal. b/d 20,000 10,000
to Realization account) To Realisation 11,400 7,600 By Cash A/c – 4,000
A/c (loss)
Realization A/c Dr. 38,000
To Cash A/c 8,600 –
To Bank A/c 38,000
(Payment to creditors and bills payable) 20,000 14,000 20,000 14,000
Realization A/c Dr. 11,200

Dr. Cash A/c Cr.
To Bank A/c 11,200
(Payment of bank overdraft and Particulars (`) Particulars (`)
employees’ provident fund)
To Balance b/d 5,400 By X's Loan A/c 8,000
Realization A/c Dr. 2,000 To Realisation A/c 59,200 By Realisation A/c (expenses) 2,000
To Bank A/c 2,000 To Y's Capital A/c 4,000 By Realisation A/c (Creditors) 50,000
(Payment of realization expenses)
By X's Capital A/c 8,600
Realization A/c Dr. 20,000 68,600 68,600
To Raman’s Capital A/c 20,000
(Mrs. Raman’s loan paid off by Raman)
Bank A/c Dr. 88,000
To Realization A/c 88,000
3. Journal
(Assets realized)
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)
Realization A/c Dr. 9,800 (ii) No Entry

To Ramesh’s Capital A/c 4,900 Cash A/c Dr. 22,500
(iii)
To Ramana’s Capital A/c 4,900
(Profit on realization)
(Being stock sold for cash)
Ramesh’s loan A/c Dr. 10,000
(iv) Realisation A/c Dr. 45,000
To Ramesh’s Capital A/c 10,000
(Ramesh’s loan transferred to his To Cash A/c 45,000
capital) (Being creditors paid in cash at a
discount of 10%)
4. Journal
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)
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%)
(Being stock sold for `90,000.) 5.Dr. Realisation A/c Cr.
Sanjay’s Capital A/c Dr. 2,000 Particulars (`) Particulars (`)

Sameer’s Capital A/c Dr. 3,000 To Stock 50,000 By Shivika’s Sister Loan 20,000
To Realisation A/c 5,000 To Debtors 27,000 By Sundry Creditors 80,000
(Being the loss on realisation To Furniture 2,20,000 By Bank A/c (assets realised)
transferred to Partner’sCapital)
To Bank A/c Furniture 1,05,000
Workman Compensation fund Dr. 1,00,000 (Sundry creditors) 80,000 Debtors 26,000 1,31,000
To Sanjay’s Capital A/c 40,000 To Bank A/c (Sister 22,000 By Parth’s Capital A/c 88,000
To Sameer’s Capital A/c 60,000 Loan+ Interest) (Furniture)
(Being WCF transferred to Part- To Bank (Experiment) 5,000 By Shivika’s Capital A/c 29,000
ner’s capital A/c) (Stock)
Sanjay’s Capital A/c Dr. 2,38,000 By Loss Transferred to
Sameer’s Capital A/c Dr. 3,57,000 Partners’ Capital A/c:
To Bank A/c 5,95,000 Parth 33,600
(Being final payment made) Shivika 22,400 56,000
4,04,000 4,04,000
5.Dr. Realisation A/c Cr.
Dr. Partner’s Capital A/c Cr.
Particulars Parth Shivika Particulars Parth Shivika
To sundry assets: By sundry liabilities:
Plant 2,20,000 Creditors 75,000 To Realisa- 88,000 – By Bal. b/d 1,75,000 1,94,000
Investments 70,000 Bills Payable 40,000 tion A/c
Stock 50,000 Outstanding salary 35,000 1,50,000
To Realisa- – 29,000
Debtors 60,000 4,00,000 By Bank A/c:
To Bank A/c: Plant 85,000 tion A/c
Creditors 75,000 Stock 33,000 To Realisa- 33,600 22,400
Bills Payable 40,000 Debtors 47,000 tion A/c
Outsanding expenses 7,500 Investments 66,500 To Bank A/c 53,400 1,42,600
Contingent liability 15,000 By Loss transferred to 2,31,500
Outstanding salary 35,000 Partners’ Capital A/c: 1,75,000 1,94,000 1,75,000 1,94,000
To Srijan’s Capital A/c 1,72,500 Srijan 81,030
— commission Raman 81,030 Dr. Bank A/c Cr.
11,575 Manan 40,515 2,02,575
5,84,075 5,84,075
To Bal. b/d 1,72,000 By Realisation 22,000
Dr. Partners’ Capital A/c Cr. To Realisation (loan + interest)
(assets realized) By Realisation 80,000
Particulars Srijan Raman Manan Particulars Srijan Raman Manan
Furniture 1,05,000 (creditors)
To Bal. b/d – – 10,000 By Bal. b/d 2,00,000 1,50,000 – Debtors 26,000 1,31,000 By Realisation A/c 5,000
To P/L A/c 32,000 32,000 16,000 By Realisa- 11,575 – –
(Expenses)
To Realisa- 81,030 81,030 40,515 tion A/c
tion A/c By Bank A/c – – 66,515 By Parth’s Capital A/c 53,400
To Bank A/c 98,545 36,970 – By Shivika’s Capital A/c 1,42,600
2,11,575 1,50,000 66,515 2,11,575 1,50,000 66,515 3,03,000 3,03,000
Dr. Bank A/c Cr. 6. Journal
Particulars (`) Particulars (`) Date Particulars L.F. Dr. (`) Cr. (`)
To Balance b/d 10,000 By Realisation A/c 1,72,500 2020 Realisation A/c Dr. 6,00,000
To Realisation A/c 2,31,500 By Srijan’s capital A/c 98,545 March To Building A/c 2,00,000
To Manan’s capital A/c 66,515 By Raman’s capital A/c 36,970 31 To Machinery A/c 40,000
To Stock A/c 1,60,000
3,08,015 3,08,015
To Bills Receivable A/c 1,20,000
(For transfer of assets)
Creditors A/c Dr. 30,000 Realisation A/c Dr. 2,000

Bills Payable A/c Dr. 30,000 To Bank A/c 2,000
Bank Loan A/c Dr. 1,20,000 (For realisation expenses)
Sonia’s Spouse’s Loan A/c Dr. 1,30,000
Meena’s Capital A/c Dr. 12,600
To Realisation A/c 3,10,000
Tina’s Capital A/c Dr. 8,400
(For transfer of liabilities)
General Reserve A/c Dr. 80,000 (For loss on realisation =
To Sonia’s capital A/c 40,000 2,45,000 + 2000 – 80,000 –
To Rothit’s capital A/c 24,000 50,000 – 5,000 – 51,000 =
To Udit’s capital A/c 16,000 `21,000)
(Being General Reserve
Meena’s capital A/c Dr. 32,400
distributed)
Tina’s capital A/c Dr. 21,600
Bank A/c Dr. 5,73,000 To Bank A/c 54,000
To Realisation A/c 5,73,000 (Being final payments to partners capital:
(Being assets realised) Meena = 90,000 – 45,0000 – 2,600
= `32,400
Realisation A/c Dr. 3,14,000 Tina = 80,000 – 50,000 – 8,400
To Bank A/c 3,14,000 = `21,600
(Being liabilities paid: Bank 5. Dr. Realisation A/c Cr.
loan `1,30,000 creditors
`27,000, B/P `27,000, Sum- Particulars (`) Particulars (`)
it’s spouse’ loan `1,30,000)
To Debtors A/c 17,000 By Provision for D/D A/c 2,000
Realisation A/c Dr. 12,000 To Stock A/c 15,000 By Sundry Creditors A/c 8,000
To Rohit’s capital A/c 12,000 To Investments A/c 25,000 By Bank Overdraft/Loan A/c 6,000
(For remuneration to Rohit) To Buildings A/c 25,000 By X’s Brother’s Loan A/c 8,000
Note: No Journal entry To Goodwill A/c 10,000 By Investment Fluctuation 5,000
for payment of realisation To X’s Capital A/c 8,000 Fund A/c
expenses by Rohit (X’s Brother Loan) By Bank A/c (Assets Realised)
Sonia’s capital A/c Dr. 21,500 To Bank A/c Debtors 12,000
Rohit’s capital A/c Dr. 12,900 (Payment of Liabilities) Investments 20,000
Udit’s capital A/c Dr. 8,600 Bank Overdraft/ 6,500 Goodwill 6,000
To Realisation A/c 43,000 Loan Building 29,000
(Being loss on realisation Creditors 6,000 Stock 5000 72,000
= 6,00,000 + 3,14,000 (3,000+3,000) By Y’s Capital A/c (Stock) 4,000
+ 12,000 – 3,10,000 – To Y’s Capital A/c By Loss tr. to Capital A/c
5,73,000 = `43,000) Expenses 2,000 X 7,600
Building 29,000 Y 1,900 9,500
Sonia’s capital A/c Dr. 88,500 (30,000 – 1,000)
Rohit’s capital A/c Dr. 1,13,100
Udit’ capital A/c Dr. 1,17,400 1,14,500 1,14,500
To Bank A/c 3,19,000
(Being final payment to partners: Dr. Partner’s Capital A/c Cr.
Sonia = 70,000 + 40,000 –
21,500 = `88,500 Particulars X (`) Y (`) Particulars X (`) Y (`)
Rohit = 90,000 + 24,000 +
12,000 – 12,900 = `1,13,100 To P/L A/c 8,000 2,000 By Balance b/d 50,000 40,000
Udit = 1,10,000 + 16,000 – To Realisation – 4,000 By Realisation A/c 8,000 2,000
8,600 = `1,17,400) A/c (stock) (liabilities/
To Realisation 7,600 1,900 expenses paid)
Self Assessment Test - 5.3 A/c (loss)
To Bank A/c 42,400 34,100
4. Journal
58,000 42,000 58,000 42,000
Date Particulars L.F. Dr. ` Cr. `

Realisation A/c Dr. 2,45,000 Dr. Bank A/c Cr.
To Machinery A/c 70,000
To Investment A/c 50,000 Particulars (`) Particulars (`)
To Stock A/c 22,000 To Balance b/d 20,000 By Y’s Loan A/c 3,000
To Debtors A/c 1,03,000
To Realisation A/c 72,000 By Realisation A/c 12,500
(For transfer of assets)
(Assets realised) (liabilities paid)
Creditors A/c Dr. 60,000
By X’s Capital A/c 42,400
Bills payable A/c Dr. 20,000
To Rrealiation A/c 80,000 By Y’s Capital A/c 34,100
(For transfer of external liabilition) 92,000 92,000
Tina’s capital A/c Dr. 50,000
(Being investment taken over)
Meena’s capital A/c Dr. 45,000
(Being debtors taken)
Bank A/c Dr. 51,000
(For realisation of debtors)
Dr.
Partner’s Capital A/c Cr.
5. Journal
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
3,21,000 3,21,000 To Investments 10,000 By Sundry Creditors 30,000

To Debtors 20,000 By Bills Payable 8,000
To Plant & Machinery 20,000 By Mrs A’s Loan 5,000
To Building 15,000 By Mrs B’s Loan 10,000
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
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
10. Excellent Cricket Club

Dr. Cash/Bank A/c Cr.
Dr. Income and Expenditure Account Cr.
Particulars (`) Particulars (`) for the year ending on March 31, 2020
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
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
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
Yadav’s share of goodwill = `3,60,000 × 1/4 = `90,000.

Total Assets brought by Yadav = `2,50,000 + `40,000 = `2,90,000 13. I Part: Dr. Revaluation A/c Cr.
Therefore, Yadav’s Capital = `2,90,000 – `90,000 = `2,00,000
Particulars Amt (`) Particulars Amt (`)
Dr. Revaluation A/c Cr. To Provisions for doubtful debts 2,000 By Buildings 20,000
Particulars (`) Particulars (`) To Machinery
To Profit tr. to Partners’ Capital A/c 10,000
To Stock 2,000 By Land and 50,000 Mohit 4,000
Neeraj 2,000
To Plant & Machinery 16,000 Building
Sohan 2,000 8,000
To Bad Debts 5,000
20,000 20,000
To Profit transferred to:
Muraris Capital A/c 13,500 27,000 Dr. Partner’s capital A/cs Cr.
Vohra’s Capital A/c 13,500 Particulars Mohit Neeraj Sohan Particulars Mohit Neeraj Sohan
50,000 50,000 (`) (`) (`) (`) (`) (`)
To Neeraj’s 12,000 6,000 By Balance b/d 80,000 40,000 40,000
Dr. Partners’ Capital A/cs Cr. Capital A/c By G. Reserve 10,000 5,000 5,000
To Bank A/c 65,000 By Revaluation A/c 4,000 2,000 2,000
Particulars Murari Vohra Yadav Particulars Murari Vohra Yadav
To Balance 82,000 41,000 By Mohan’s Capital 12,000
To 1,78,500 2,18,500 2,00,000 By Balance b/d 1,20,000 1,60,000 c/d By Sohan’s Capital 6,000
Balance By Assets (Land & 2,00,000 94,000 65,000 47,000 94,000 65,000 47,000
c/d
Building and Stock) To Bank A/c 2,000 1,000 By Balance b/d 82,000 41,000
By Premium for 45,000 45,000 To Bal. c/d 80,000 40,000
goodwill 82,000 41,000 82,000 41,000
By Revaluation A/c 13,500 13,500
II Part: Bharti’s share of profit = 1,00,000 × 10% × 2/6 = `3,333
1,78,500 2,18,500 2,00,000 1,78,500 2,18,500 2,00,000
Goodwill = 9,000 × 2 = `18,000.
Balance Sheet of Murari, Vohra and Yadav as on 1st April 2020 Bharti’s share of goodwill = (2/6 × 18,000) – 20% = 6,000 – 1,200 = `4,800
Liabilities Amt. (`) Assets Amt. (`) Dr. Revaluation A/c Cr.
Capital A/cs Cash in hand 25,000 Particulars Amt. (`) Particulars Amt. (`)
Murari 1,78,500 Plant & Machinery 64,000 To Profit distributed: By Cash A/c 2,950
Vohra 2,18,500 Land & Building 5,00,000 Arti 1,475 (Investments)
Bharti 983
Yadav 2,00,000 5,97,000 (2,00,000 + 50,000
Seema 492 2,950
Bank Overdraft 15,000 + 2,50,000)
2,950 2,950
Creditors 60,000 Stock (10,000 –
2,000 + 40,000) 48,000 Dr. Bharti’s Capital A/c Cr.
Debtors 35,000
6,72,000 6,72,000
To Bharti’s 25,356 By Balance b/d 12,000
Executors' A/c By General Reserve 4,000
12. Dr. Realisation Account Cr. By Revaluation A/c 983
Particulars ` Particulars ` By Arti’s Capital A/c 3,600
By Seema’s Capital A/c 1,200
To Assets A/c By Creditors A/c 10,000 By P/L Suspense A/c 3,333
Furniture 37,000 By Investment Fluctuation 4,500 By Interest on Capital
Stock 5,500 Fund A/c 240
Investments 15,000 57,500 By Prachi’s Capital A/c 12,500 (12,000 × 10/100 × 73/365)
To Cash A/c (Investment) 25,356 25,356
Creditors 10,000 By Cash A/c 41,500
Compensation 8,000 18,000 By Ritika’s Capital A/c 3,000
To Cash A/c (Realisa- 1,000 (Old Furniture take over) Dr. Bharti’s Executors’ A/c Cr.
tion Exp.) By Loss Transferred to: Particulars Amt. (`) Particulars Amt. (`)
To Prachi Capital A/c 1,000 Prachi Cap A/c 3,000
To Cash A/c 25,356 By Bharti’s Capital A/c 25,356
(Commission) Ritika Cap A/c 1,800
Ishita Cap A/c 1,200 6,000 25,356 25,356
77,500 77,500
Dr. Partner’s Capital Account Cr. Self Assessment Test - 5.7
Particulars Sahaj Nimish Gauri Particulars Sahaj Nimish Gauri

8. Subscription A/c
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 -
41,000 30,000 19,200 41,000 30,000 19,200

9. Journal
Dr. Cash A/c Cr. Date Particulars L.F. Dr. (`) Cr. (`)
(i) Cash/Bank A/c Dr. 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%)
Total amount to be paid = 84,000 + 46,000 = `1,30,000.

(iv) A’s Capital A/c Dr. 80,000
(a) Since profits available (including interest on drawings) = 1,20,000 + 1,500 =
To Cash/Bank A/c 80,000
`1,21,500, therefore, appropriations will be made to the extent of `1,21,500 only in
(Being final payment to A)
the ratio of 84,000 : 46,000 = 42 : 23.
(b) Cash/Bank A/c Dr. 15,000 12. Journal
(Being cash brought by B) Date Particulars L.F. Dr. (`) Cr. (`)
10.Dr. Income and Expenditure A/c Cr. 2020 C’s Capital A/c Dr. 50,000
Expenditure (`) Income (`) 1 Jan. To A’s Capital A/c 50,000
(Adjustment of goodwill)
To Loss on Sale of Furniture 1,300 By Subscriptions 28,200
Reserve Fund A/c Dr. 18,000
To Salary 3,600 Less: Opening O/s (2,000) To A’s Capital A/c 9,000
Add: Closing O/s 600 4,200 Add: Closing O/s 2,300 To B’s Capital A/c 6,000
To Rent 6,500 Less: Closing advance (500) 28,000 To C’s Capital A/c 3,000
Less: Prepaid (500) 6,000 By Sale of Old Newspapers 1,250 (Reserve fund transferred)
To Newspapers 1,850 By Government Grants 12,000
To Electricity 3,000 By Interest on F.D. 450
To Fixed Assets 18,000
To General Expenses 3,200 Add: Accrued 450 900
(Fixed assets depreciated)
To Postage Charges 300
To Surplus 22,300 A’s Capital A/c Dr. 9,000
B’s Capital A/c Dr. 6,000
42,150 42,150
C’s Capital A/c Dr. 3,000
Balance Sheet as on 31 Dec., 2020 To Revaluation A/c 18,000
(Loss on revaluation debited to
Liabilities (`) Assets (`) partners’ capital accounts in old ratio
Salary outstanding 600 Furniture 12,000 3 : 2 : 1)
Advance Subscription 500 Add: Purchases 10,500 A’s Capital A/c Dr. 60,000
Capital Fund 38,550 Less: Sale (5,000) 17,500 To A’s Current A/c 60,000
Add: Surplus 22,300 60,850 Books 5,000 (Excess capital of A transferred to A’s
Add: Purchases 7,000 12,000 current account)
Prepaid Rent 500 C’s Current A/c Dr. 60,000
Subscription outstanding To C’s Capital A/c 60,000
For 2019: `800 (Shortage of C’s capital transferred to
For 2020: `1,500 2,300 C’s current account)
Accrued Interest on F.D. 450
Working Notes: (i)
Calculation of sacrifice/gain of partners: Sacrificing
F.D. with Bank @10% p.a. 18,000
Cash in hand 3,000
ratio = Old ratio – New ratio
Cash at bank 8,200 A’s = 3/6 – 1/3 = 1/6 (sacrifice); B’s = 2/6 – 1/3 = Nil; C’s =
61,950 42,150
1/3 – 1/6 = 1/6 (gain)
(ii) Adjustment of capitals of A, B and C:
Notes: Balance Sheet as on 31 Dec., 2019
Liabilities (`) Assets (`) Particulars A (`) B (`) C (`) Total (`)
Capital Fund 38,550 Cash in hand 4,000 Opening capital 50,000 40,000 30,000
Cash at bank 15,550 Reserve Fund 9,000 6,000 3,000
Subscriptions outstanding 2,000 Adjustment of Goodwill 50,000 (50,000)
Furniture 12,000
Loss on Revaluation (9,000) (6,000) (3,000)
Books 5,000
38,550 38,550 Adjusted capital 1,00,000 40,000 (20,000) 1,20,000
New capitals
11. Dr. Profit And Loss Appropriation A/c Cr. (`1,20,000 divided 40,000 40,000 40,000 1,20,000
Particulars (`) Particulars (`) equally)
To Partners’ Current A/c By Profit and Loss A/c 1,20,000 Excess Shortage
Adjustment of
Shreya 78,508 By Interest on Drawings capital of capital
Shreya’s Current A/c 450 capital
Vivek 42,992 1,21,500 60,000 60,000
Vivek’s Current A/c 1050 1,500
13. (a) Mithya’s share of goodwill = 56,000/4 × 2.5 × 2/10 = `7,000.
1,21,500 1,21,500
Mithya’s share of profit = 15,000 × 4/12 × 2/10 = `1,000
Particulars Shreya (`) Vivek (`) Particulars Shreya (`) Vivek (`)
To Bal. c/d 3,00,000 2,00,000 By Bal. b/d 3,00,000 2,00,000
To Machinery 5,000 By Patents 2,000
3,00,000 2,00,000 3,00,000 2,00,000 To Profit distributed: By Premises 5,000
Nithya 1,000
Dr. Partner’s Current A/c Cr. Sathya 600
Particulars Shreya Vivek Particulars Shreya Vivek Mithya 400 2,000
To Balance b/d – 28,000 By Balance b/d 1,00,000 – 7,000 7,000

To Drawings 12,000 30,000 By P & L App. 78,508 42,992
To IOD 450 1,050 By Balance c/d – 16,058 Dr. Partner’s capital A/c Cr.
To Balance c/d 1,66,058 –
Particulars Nithya Sathya Mithya Particulars Nithya Sathya Mithya
1,78,508 59,050 1,78,508 59,050
To Goodwill 2,500 1,500 1,000 By Balance b/d 30,000 30,000 20,000
To Mithya’s By Reserve Fund A/c 3,000 1,800 1,200
Particulars Shreya (`) Vivek (`) Capital A/c 4,375 2,625 - By Revaluation A/c 1,000 600 400
To Mithya’s By Nithya’s Capital A/c - - 4,375
Interest on Capital 24,000 16,000 Executors - - 28,600 By Sathya’s Capital A/c - - 2,625
To Bal. c/d 27,125 28,275 - By P&L Suspense A/c - - 1,000
Salary X 60,000 –
Commission – 30,000 34,000 32,400 29,600 34,000 32,400 29,600
Amount to be paid 84,000 46,000

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CHAPTER 1 Accounting for Not-for-Profit Organisations - SOLUTIONS 1

Do it yourself 1.1 Do it yourself 1.5

Do it yourself 1.10 Do it yourself 1.15

Dr. Balance Sheet as on 31 March 2020 Cr. Particulars (`)

To Salary 16,000 By Subscriptions 90,000 Notes: Calculation of opening capital fund:

Balance Sheet as on 31 March 2020 Balance Sheet as on 31 March, 2020

Balance Sheet of Gems Club as on 31st March 2020 Do it yourself 1.30

7. Balance Sheet as on 31.3.2020

Liabilities (`) Assets (`) To Depreciation: By Subscriptions 32,500

6. Income And Expenditure Account 6. Income & Expenditure A/c

Particulars (`) Particulars (`) Particulars (`) Particulars (`)

Balance Sheet as on Dec. 31, 2020 Liabilities (`) Assets (`)

Liabilities (`) Assets (`) Tournament fund 40,000

4,95,000 4,95,000 80,500 80,500

Do it yourself 2.1 Dr. Partners’ Capital A/c Cr.

Dr. Profit and Loss Appropriation A/c Cr. 25,000 25,000

Particulars ` Particulars ` Dr. Partner’s Capital Account Cr.

Date Particulars L.F. Dr. (`) Cr. (`) Particulars ` Particulars `

Date Particulars L.F. Dr. (`) Cr. (`) 21,990 21,990

Dr. Partner's Current A/c Cr. Do it yourself 2.17

Date Particulars L.F. Dr. (`) Cr. (`) 2,00,000 2,00,000

Do it yourself 2.21 Do it yourself 2.24

Past Adjustment Table Priyanka’s Capital A/c Dr. 15,000

Adjustment Table Working Notes:

Do it yourself 2.28 Working Notes: Calculation of Opening Capital:

Working Notes: A B C Total (`) Closing Capitals 1,30,000 1,00,000

Working Notes 2: Adjustment Table Closing Capital 2,00,000 1,40,000

Interest on Raj’s capital = (2,50,000 × 8/100 × 3/12 + 2,00,000 × 8/100 × 9/12

Self Assessment Test - 2.2 Self Assessment Test - 2.3

Dr. Partner’s Capital Accounts Cr. II Part: Adjustment Entry

Self Assessment Test - 2.6 Details As Manager As Partner

II Part: Journal Balance Sheet as on 31st March 2020

2. Past Adjustment Table

Do it yourself 3.1 Do it yourself 3.7

Do it yourself 3.16 Do it yourself 3.20

(i) David’s share of goodwill = 1/3 × `60,000 = ` 20,000

Do it yourself 3.24 Do it yourself 3.30

(a) C’s Capital A/c Dr. 4,000 Do it yourself 3.39

Do it yourself 3.37 Cash/Bank Accounts

35,000 35,000 Capitals : Land 7,50,000

Particulars (`) Particulars (`)

5,650 5,650 6,58,000 5,07,000 4,00,000 6,58,000 5,07,000 4,00,000

Balance sheet (after C’s admission) 14,21,000 14,21,000

Liabilities (`) Assets (`)

Claim for Damages 1,000 Stock 18,000 Do it yourself 3.41

Partner’s Capital Account

(viii) Revaluation A/c Dr. 14,000 Cash A/c

Balance sheet (As on 31st March 2020)

Partner’s Capital Accounts 2,10,300 2,10,300

Creditors 36,000 Building 1,85,000 Particulars (`) Particulars (`)

22,800 22,800 Balance sheet (As on 31st March 2020)

1,050 1,050 Partners’ Capital A/c

Balance Sheet of the Reconstituted firm as at April 1, 2020

Capitals: Cash 1,37,400 Particulars (`) Particulars (`)

Do it yourself 3.50 Balance sheet of Sahaj, Nimish & Gauri

1,89,600 1,16,400 1,32,000 1,89,600 1,16,400 1,32,000

Partner’s Capital A/c Journal

M’s gain = 1/10; N’s Sacrifice = 1/10

Balance Sheet of as at 31st March 2020

General Reserve A/c Dr. 20,000 Do it yourself 3.64

Do it yourself 3.68 Journal

W’s Capital A/c Dr. 3,300

5. Revaluation A/c Plant and Machinery A/c Dr. 5,000

By current 16,170 ---- 2,310

i. Asha’s Capital A/c Dr. 40,000 By Zaman’s _ 6,000 _