Accounts Notes Ecom Final 409 Pages

O MTEX CLASSES
BISMILL AH
11 years of success
BOOK KEEPING
AND
ACCOUNTANCY
Name: ________________________
Roll No: _______________________
College: _______________________
TOPPERS IN ACCOUNTS
1. SIDRA KHAN (S.N.D.T) = 99%
2. KALPANA (A.E.S) = 98%
3. AZIM (S.I.W.S) = 98%
4. VAIKUNDAPATHI (SIWS) = 98%
5. PRINCEE (K.J.KHILANI) = 97%
6. KHAN AYAZ (K.J.KHILANI) = 96%
7. JEBA (ARYAN) = 96%
8. SUBHASHINI (S.I.W.S) = 95%
9. PRISKILLA (W.R ) = 95%
10. KAMALA (S.I.W.S) = 95%
11. SAINI (ARYAN) = 95 %
12. USHA (S.I.W.S) = 94 %
13. VIJAY (S.I.W.S) = 93%
14. SUNDARI (SNDT) = 92%
15. AMALI (S.I.W.S) = 92 %
16. ALAM (MMK) = 92%
17. ZAINAB = 91%
18. MUTHU MANI = 90 %
19. SAMINA (RAJSHREE) = 90 %
20. RANJEETA (S.N.D.T) = 90%
21. FATHIMA (RIZVI) = 90%
22. RAMA (ANDHRA) = 90%
23. KAVITHA (SNDT) = 90%

Answer in one sentence each
1. What is partnership?
Ans. Partnership is a form of business organisation in which two or more persons enter into an
agreement, contribute certain capital, undertake certain lawful business to earn profit and share
the profits or losses in agreed proportion.
2. What is partnership deed?
Ans. A partnership deed is a written agreement duly stamped and signed document containing the
terms and conditions of the partnership.
3. State the meaning of a Balance Sheet.
Ans. A balance sheet is a statement showing the financial position of the business in the form of
its assets and liability on a particular date.
4. When are partners’ current accounts opened?
Ans. When partnership form adopts fixed capital method, it opens partners‟ current accounts to
record dealing of partners with partnership firm.
5. Write the meaning of bad debts?
Ans. The debt or its part which cannot be recovered from a debtor is called bad debts.
6. State the meaning of closing stock.

Ans. The unsold goods remained in the business at the end of the accounting year is known as
closing stock.
7. How is closing stock valued?
Ans. Closing stock is valued at cost price or market price whichever is less.
8. What is Trial Balance?
Ans. Trial balance is a statement showing the list debit and credit balances of all the ledger
accounts on a particular date.
9.What do you mean by Fluctuating Capital Method?
Ans. Fluctuating capital method is one in which capital balances of the partners go on changing
every year due to entries for adjustments like drawings, interest on capital and drawings, salaries,
commission, allowances, etc. Recorded in their capital accounts.
10. If the partnership deed is silent, what is the profit sharing of the partners?
Ans. If the partnership deed is silent, partners will share profits and losses in equal ratio.
11. Which account shows Net Profit or Net Loss of the business?
Ans. Profit and Loss account shows Net Profit or Net Loss of the business.
12. What do you mean by direct expenses?
Ans. The expenses which are directly related with production or purchase of goods or services are
called direct expenses.
13. What do you mean by accrued income?

Ans. The income which is due but not yet received is called accrued income.
14. To which account is gross profit transferred?
Ans. Gross profit is transferred to Profit and Loss account.
15. A person who is engaged in day – to – day activities of the business.
Ans. Active or Working Partner.
16. What type of institutions / concerns prepares Income and Expenditure

Account?
Ans. „Not for profit‟ concerns such as Sports clubs, Charitable Hospitals, Schools, Colleges,
Universities, Welfare Associations, Religious Concerns, Professional Institutions, etc. Prepare
Income and Expenditure Account.
17. What do you mean by non – recurring expenses?
Ans. Non – recurring expenditure is any capital expenditure which is spent for acquisition of fixed
assets like purchase of land or furniture, in order to run the concern and it gives benefits for a
long period say more than 3 years.
18. What do you mean by recurring expenses?
Ans. Recurring expenditure is that expenditure of which benefit lasts for a maximum period of one
year and is incurred on purchase of goods or services, in order to carry out the main activity of the
concern.
19. Which ‘ Final Accounts’ do the ‘Not for Profit’ Concerns prepare?
Ans. The „Not for Profit‟ concerns prepare Income and Expenditure Account and Balance sheet in
their final accounts.
20. Which account is prepared by the ‘Not for Profit’ concerns for finding out
surplus or deficit of the financial year?
Ans. Income and expenditure Account is prepared by the „Not for Profit‟ concerns to find out
surplus or deficit of the financial year.
21. Which account ‘Not for Profit’ concerns prepares instead of Cash account?
Ans. „Not for profit‟ concerns prepare „Receipts and Payments‟ Account instead of Cash account.
22. What do you mean by ‘Not for Profit’ concern?
Ans. A concern or an organisation which is formed and established to serve society or general
public by undertaking various activities without any profit motive is called a „not for profit‟
concerns.
23. State the meaning of Capital Receipts.
Ans. Capital Receipts are those receipts which are non – recurring in nature and not forming a
part of regular flow of income of a concern. E.g. specific donation received for construction of a
building.
24. Write the meaning of Revenue Receipts.
Ans. Revenue Receipts are those receipts which are recurring in nature and such receipts give a
regular flow of income of a concern, e.g. subscriptions received from members.
25. State the meaning of Revenue expenditure.
Ans. An expenditure which is incurred for carrying day – to – day business activities and
maintaining fixed assets in working condition is called revenuer expenditure.
26. What do you mean by Capital expenditure?
Ans. An expenditure which is non – recurring in nature and incurred to purchase new fixed assets
to increase earning capacity, efficiency and working life of the existing fixed assets and to achieve
economy of operation of an existing fixed assets is called capital expenditure.
27. What is Legacy?
Ans. Any asset, property or amount of cash which „Not for Profit‟ concern receives as per the
provisions made in the will of the donor after his death is called legacy.
28. What do you mean by capital fund?
Ans. Capital fund consists of contributions, entrance fees, surplus income, legacies and donations
specifically received for capital fund.
29. State the meaning of Entrance Fees.
Ans. Specific amount received from the member only once usually at the time of his entry into „Not
for profit‟ concern is called entrance fees.
30. What do mean by ‘Special donation’?
Ans. Donations which are given for a specific purpose like donation for building fund are called as
special donations and such donations are to be utilised for the same purpose for which they have
been collected.
31. What is an ‘Endowment Fund’?
Ans. A fund created by „Not for profit‟ concern from the gift or donation given by the donor, the
income of which is used or devoted for specific purpose is called endowment fund.
32. What is ‘Life Membership Fee’?

Ans. The fee paid by a person who desired to become a member of the organisation for his whole
life is called as „Life Membership Fee‟.
33. What do you mean by Single Entry System?
Ans. A book – keeping system that only records one aspect of each business transaction. i.e. either
debit or credit is called single entry system.
34. Which accounts are normally kept under the single entry system?
Ans. Generally, the personal accounts relating to debtors and creditors and cash – book are kept
under the single entry system.
35. Which statement is prepared under the single entry system to ascertain the
capital?
Ans. Statement of Affairs is prepared under the single entry system to ascertain the capital.
36. What is Statement of Affairs?
Ans. A statement which is prepared under the single entry system on the basis of estimated
balances of various assets and liabilities is called „Statement of Affairs‟.
37. Which statement is prepared under the single entry system to ascertain
profit?
Ans. Statement of Profit or Loss is prepared under the single entry system to ascertain profit.
38. What do you mean by qualified acceptance?

Ans. If the drawee of a bill of exchange accepts it on condition that the time or amount of the bill
be changed or adds some other conditions to the bill, his acceptance is called a qualified
acceptance.
39. What is the term of the bill of exchange?
Ans. The period for which the bill of exchange is drawn and accepted is called the term of the bill of
exchange.
40. What is bill of exchange?
According to Section 5 of the Negotiable Instrument Act, 1881, "A Bill of Exchange is an instrument in
writing and containing an unconditional order, signed by the maker, directing a certain person to pay
on demand or at a future date a certain sum of money only, to the order of a certain person or to the
bearer of the instrument".
41. Who is drawer?
The maker of a bill of exchange is called the "Drawer". He is a creditor.
42. Who is drawee?
The person, on whom the bill is drawn is called the "Drawee". He is a debtor.
43. Who is payee?
Payee is the person or party to whom the amount of bill is made payable.
44. What is the due date of bill?

The date on which the payment of the bill becomes due is known as due date.
45. What is an acceptance to bill of exchange?

Bill is said to be accepted when drawee writes the word "accepted" and puts his signature and date on
bill.
46. What is qualified acceptance?
When the acceptor accepts the bill with certain condition, then the acceptance is said to be qualified
acceptance.
47. When the bill is said to be honoured?

When the acceptor pays the amount of the bill on its due date the bill is said to be honoured.
48. When the bill is said to be dishonoured?

When drawee refuses to make a payment of bill, then the bill is said to be dishonoured.
49. What is inland bill of exchange?

Bill of Exchange which is drafted, accepted and made payable within the territory of same country is
called inland bill.
50. What is foreign bill of exchange?

A bill of exchange which is drawn in one country and made payable in another country is called
"Foreign bill of exchange".
51. What are noting charges?

The fees charged by the notary public for noting and protesting the bill are termed as noting charges.
52. When is the amount of bill of exchange payable to specific person?

When bill is endorsed by drawer or holder to a specific person, the amount of the bill is payable to
specific person whose name is mentioned on the bill.
53. What is discounting of a bill?

Discounting of a bill means selling a bill to bank before due date for cash.
54. Who bears noting charges when a bill of exchange is dishonoured?

The Drawee bears the noting charges when a bill of exchange is dishonoured?
55. Mention the parties to a bill of exchange.

There are three parties to a bill of exchange i.e. Drawer, Drawee and Payee.
56. If the endorsed bill is dishonoured, from whom the amount is collected by
the endorser.
If the endorsed bill is dishonoured, then the amount of bill is collected from the endorser.
57. What is retirement of a bill of exchange?

When the payment of a bill is made before the due date it is known as retirement of a bill of exchange.
58. Who is Notary Public?
A notary public is a public officer authorised to note and protest the cause of dishonour of a bill.
59. Which account is credited in the books of the acceptor on dishonour of a

bill?
The account of the drawer is credited by the acceptor on dishonour of the bill.
60. What is endorsement of a bill?

When the holder of bill transfers its ownership to another person by signing the instrument on the
back, it is known as endorsement of bill.
61. What is noting of bill of exchange?

When the bill is dishonoured notary public records the fact and reasons of dishonoured bill and issues
noting certificate, it is called noting of bill.
62. What is draft?

A bill of exchange before acceptance is called a draft.
63. What is the relation between drawer and drawee?

The relation between the drawer and drawee is that of creditor and debtor.
64. What are days of grace?

Three additional days allowed for payment of bill are known as days of grace.
65. What do you mean by renewal of a bill?

Renewal of bill means cancellation of old bill and drawing of a new bill.
CHOOSE THE CORRECT OPTION
SINGLE ENTRY ACCOUNTING SYSTEM
1. When closing capital is greater than opening capital it denotes ______
a. Profit
b. Loss
c. No Profit, No Loss
d. Asset
2. Generally incomplete records are maintained by ______

a. Trader
b. Company
c. Society
d. Government
3. The capital in the beginning of the accounting year is ascertained by

preparing ________
a. Receipt and Payment Account
b. Cash Account
c. Opening Statement of Affairs.

d. Statement of Profit or Loss
4. Under Single Entry System only ________
a. Personal Accounts are opened
b. Real Accounts are opened
c. Nominal Accounts are opened
d. Real and Nominal accounts are opened.
5. The Capital balances are ascertained by preparing _________
a. Statement of Affairs
b. Cash account
c. Drawing Account
d. Debtors account
6. Further Capital introduced during the year is ________ from closing

capital in order to find out the correct profit.
a. added
b. deducted
c. divided
d. ignored
7. In statement of Profit or Loss interest on capital is shown as _______
a. addition
b. subtraction
c. ignored
d. multiplied
8. If opening capital is Rs. 40,000, closing capital is Rs. 90,000,

withdrawal is Rs. 5,000 and additional capital brought in is Rs. 10,000,
Profit is Rs. __________
a. 45,000
b. 55,000
c. 35,000
d. 75,000
9. Under Single Entry System, Opening Capital = Opening Assets Less

____________
c. closing assets
b. opening liabilities
c. opening assets
d. closing liabilities
10. In __________ book – keeping system, in every business transactions
we find two accounts.
a. Single Entry
b. Double Entry
c, Triple Entry
d. Fixed Instalment.
Bill of Exchange
1. There are _________ parties to a promissory note.

a. one
b. two
c. three
d. four
2. The acceptor is allowed _______ days of grace to meet the bill in time.
a. 2
b. 3
c. 4
d. no
3. The party which is ordered to pay the amount of bill is known as

____________
a. drawee
b. payee
c. drawer
d. endorser
4. The person in whose favour a bill is endorsed is known as

______________
a. drawer
b. drawee
c. endorsee
d. endorser
5. Bill of exchange can be discounted with the _______________

a. bank
b. money lender
c. agent
d. broker
6. The person who endorses a bill is called an ________

a. endorser
b. endorsee
c. drawer
d. drawee
7. If a bill falls due for payment on 15th August, it will be paid on _____
a. 14th August,
b. 15th August,
c, 16th August,
d. 18th August,
8. If a bill falls due for payment on 26th January, then the payment must
be made on _________ January.
a. 25th
b. 26th
c. 27th
d. 23rd
9. There are ________ parties to a Bill of Exchange.
a. 1
b. 2
c. 3
d. 4
10. A person in whose favour the bill is drawn, is called as _______
a. drawer
b. drawee
c. payee
d. bank
11. A person on whom a bill of exchange is drawn, is called as _______
a. Drawer
b. Drawee
c. Payee
d. Endorsee
Accounting for shares
1. Nominal value of shares allotted to the public is called __________

capital
a. authorised
b. reserve
c. paid up
d. nominal
2. Paid up value of shares allotted is called ______ capital

a. uncalled
b. issued
c. subscribed
d. nominal
3. As per section 69 (3) of the Companies Act, 1956, the minimum

amount payable on share application should be __________
a. 10
b. 5
c. 20
d. 5
4. As per SEBI guidelines, the minimum amount payable on share

application should be ___________ on nominal value of shares.
a. 10
b. 20
c. 25
d. 5
5. As per table A, the amount on call on a share must not exceed

__________ percent.
a. 5
b. 10
c. 20
d. 25
6. If articles are silent regarding interest on calls – in – arrears, the
minimum rate of interest to be charged is _________
a. 5% p.a.
b. 6% p.a.
c. 8% p.a.
d. None of these.
7. If articles are silent regarding interest on calls - in - advance, the

minimum rate of interest to be charged is _______
a. 6%
b. 10%
c. 20%
d. 25%
8. The document inviting offers from public to subscribe its share is

called _______
a. Prospectus
b. Share Certificate
c. Both (a) and (b)
c. none of these
9. If shares are issued at its face value, its is called as issue at _______
a. premium
b. discount
c. par
c. none of these
10. _________ is deducted from the share capital to know paid up value of
shares.
a. calls - in advance
b. calls - in arrears
c. Forfeited shares
d. Discount on issue.
11. Interest on Calls - in = arrears is ________ for the company.

a. Income
b. Expenditure
c. Gain
d. Loss
12. When shares are forfeited, share capital account is _______

a. debited
b. credited
c. adjusted
d. none of these.
13. The excess price received over the par value of shares, should be
__________ to securities premium a/c.
a. debited
b. credited
c. adjusted
d. none of these
Accounting for debentures
1. _____ is acknowledgment of debt under common seal of company.

a. share
b. debenture
c. cheque
d. bond
2. The issue of debenture at its face value is called the issue __________
a. at par
b. at discount
c. at premium
d. none of these
3. _________ which are recorded in register of company.

a. Simple debentures
b. Registered debentures
c. Bearer debentures
d. Open debentures
4. The issue of debentures less than face value is called _________
a. at par
b. at premium
c. at discount
d. none of these
5. The debentures which are converted into shares is called ________

a. convertible debentures
b. non - convertible debentures
c. bearer debentures
d. unsecured debentures
6. The issue of debentures more than face value is called ________

a. at par
b. at discount
c. at premium
d. none of these
7. _______ debentures of which the amount is repaid after specific

period.
a. Redeemable
b. Irredemable
c. Secured
d. Non - convertible.
8. __________ debentures which are not secured against any charge on
assets of the company.
a. Secured.
b. Unsecured
c. Redeemable
d. Convertible
10. The debenture holder is __________ of the company.

a. debtor
b. creditor
c. owner
d. supplier
Analysis of Financial Statements:
1. The methodical classification of financial statement is called

___________.
a. an interpretation
b. an analysis
c. ratio
d. profit and loss a/c
2. The common size statement requires _________.

a. choose of common size
b. journal entries
c. cash flow
d. current ratio
3. The short term deposits are ________

a. net cash
b. cash equivalent
c. cash flow
d. cash outflow
4. Cash proceeds from issue of debentures is _________

a. financial activity
b. non - financial activity
c. operating activity
d. trading activity
5. Bills payable is _______
a. Long term loan
b. Current liability
c. Liquid asset
d. Net loss
6. Generally current ratio should be _________
a. 2 : 1
b. 1 : 1
c. 3 : 1
d. 1 : 1
7. The relationship between net profit before tax, interest and dividend
and capital employed is known from ________
a. current ratio
b. quick ratio
c. ROI
d. ROCE
8. From financial statement analysis, the creditors are interested to know

______
a. liquidity
b. profit
c. sale
d. Share capital
TRUE OR FALSE
Introduction to Partnership
There is no maximum limit to the number of partners in a firm. (False)
Each partner has a right to take part in the conduct of the business firm. (True)
Sleeping partners is one who takes active part in the conduct of business. (False)
Partnership agreement must be in written form. (False)
Partnership firm is a trading concern. (True)
Partners must share profits and losses equally. (False)
The interest on drawings is an income of the partnership firm. (True)
Partner's current account is opened, when fluctuating capital method is adopted.

(False)
A partner who provides only capital to the form is called as nominal partner.
(False)
An interest on capital is an expenditure of the partnership firm. (True)
The balance of capital account remains constant under fixed capital method.
(True)
If the partnership deed is silent, partners share profits and losses equally. (True)
Partnership is an association of two or more persons. (True)
Partnership current account always shows credit balance. (False)
The liability of minor partner is limited. (True)

Capital account always shows credit balance. (False)
Partners are entitled to get salary or commission. (False)
Partnership Final Accounts

Adjustments to Partners' Capital are passed through current accounts when the
capitals are fluctuating. (False)
Interest on capital of partner is debited to Profit and Loss A/c (True)
Interest on drawings is an income to the partnership firm. (True)
Capital account always shows a credit balance. (False)
In the absence of an agreement to the contrary, partners share profits in

proportion to their capitals. (False)
Prepaid expenses is a liability. (False)
Balance sheet is a statement showing financial position of the concern on a

particular date. (True)
Income earned but not received is a liability. (False)
Partners are entitled to salary. (False)
Every adjustment has to be recorded at two places. (True)
Closing stock is to be valued at cost or market price whichever is more. (False)
Partnership is a non – trading concern. (False)
Balance Sheet is an account of business result. (False)
Bad debts appearing in the Trial Balance are reduced from the amount of Sundry
Debtors in the Balance Sheet. (False)
Admission of Partner
When goodwill is paid privately, no entry in the books of account is required.
(True)
The goodwill brought in by a new partner is shared by the old partners. (True)
The goodwill brought in by a new partner is shared by all partners. (False)
Profit on revaluation account is distributed between the old partners on admission

of a partner. (True)
The new partner must pay his share of goodwill in cash only. (False)
A new partner is admitted in the firm for getting additional capital and skill. (True)
The credit balance of revaluation account means loss on revaluation account.

(False)
If the goodwill account is raised up, goodwill account is debited. (True)
When goodwill is written off, goodwill amount is debited to all partners capital
account in new ratio. (True)
On admission of a partner, the amount of goodwill brought in cash is credited to

goodwill account. (True)
Retirement of Partner
Gain ratio means old ratio minus new ratio. (False)
Retiring partners share in profit upto the date of his retirement will be debited to
profit and loss suspense account. (True)
Amount due to a retiring partner if not paid appears as his loan in the book of the
firm. (True)
Revaluation account is also called as realisation account. (False)
Retirement of a partner leads to dissolution of the firm unless otherwise agreed

upon. (True)
Profit on revaluation account is transferred to continuing partners capital account

only. (False)
Gain Ratio = New Ratio – Old Ratio. (True)
Revaluation account is also known as Profit and Loss Adjustment Account. (True)
Death of Partner
Retiring partner is entitled to his share of goodwill. (True)
Retiring partner is not entitled to his share of general reserve. (False)
The Capital account of a retiring partner always shows a debit balance. (False)
An amount due to a deceased partner is transferred to his executor's loan A/c

(True)
If goodwill is written off a retiring partner's capital account is debited. (False)
Death of a partner is like a compulsory retirement. (True)
Total amount due to deceased partner is paid in cash to executor immediately

after his death. (False)
On the death of a partner, his share in the goodwill is divided equally among
continuing partners. (False)
Deceased partner's share in profit upto the date of his death will be debited to his
capital A/c. (False)
Dissolution of Partnership Firm

The firm is dissolved automatically on the retirement of a partner. (False)
On dissolution Cash or Bank Account is closed automatically. (True)
On dissolution Bank Overdraft is transferred to Realisation Account.(False)
A Solvent Partner having debit balance to his Capital Account does not share the
deficiency of Insolvent partner's Capital Account. (False)
At the time of dissolution of Partnership Firm all assets should be transferred to

Realisation A/c. (False)
Debit balance of insolvent Partner's Capital A/c is known as Capital deficiency.

(True)
At the time of dissolution, loan from partner will be transferred to Realisation

Account. (False)
Dissolution takes place when the relation among the partners comes to an end.
(True)
The insolvency loss at the time of dissolution of the firm is shared by the solvent
Partner's in their profit sharing ratio. (True)
Realisation loss is not transferred to insolvent Partner's Capital Account. (False)
Single Entry System

Statement of profit is just like Profit and Loss Account. (False)
Single Entry system is based on certain rules and principles. (False)
All transactions are recorded in Single Entry System. (False)
Arithmetical accuracy cannot be checked in Single Entry. (True)
Under Single Entry System it is not possible to prepare Trial Balance. (True)
Only cash transactions and personal transactions are recorded in Single Entry.
(True)
Drawings made during the year decreases the profit under Single Entry System.
(False)
Statement of Profit shows Financial position of business. (False)
Double Entry System is scientific method of books of accounts. (True)
Single Entry System is not useful for large business. (True)
Not for Profit Concerns

'Not for Profit' concerns do not have profit motive. (True)
Not for Profit concerns concentrate their efforts on maximising their profit. (False)
Every year, 'Bal Vikas mandir', a primary school, prepares Income and
Expenditure Account. (True)
Charitable Institutions prepare Profit and Loss Account, at the end of every
financial year. (False)
There is no difference between Receipts and Payments Account and Income and
Expenditure Account. (False)
All receipts are the items of revenue income. (False)

Income and Expenditure Account, prepared by 'Not for Profit' concerns, must be
accompanied by Balance Sheet. (True)
In the Income and Expenditure Account, all incomes received during the year,
irrespective of the year for which thery are received, are to be recorded. (False)
The final balancing amount of Income and Expenditure Account, represents either
Surplus or Deficit. (True)
Receipts and Payments Account do not have any opening balance. (False)
Analysis of Financial Statements

Financial statements include only balance sheet. (False)
Analysis of financial statement is a tool but not a remedy. (True)
Purchase of fixed assets is operating cash flow. (False)
Gross Profit depends upon net sales. (True)
Ratio is calculated on ownership capital only. (False)
Net Profit shows quick ratio. (False)
Government is not interested in analysis of financial statement. (False)
Ratio Analysis is useful for inter – firm comparison. (True)
Accounting for Debentures

The debenture holder is owner of the company. (False)
The acknowledgment of debt under common seal of company is termed as share.
(False)
The amount of irredeemable debentures is not paid in the lifetime of the company.
(True)
The issue of debentures less than face value of debenture is termed as issue of
debentures at discount. (True)
The debentures are known as creditorship capital of the company. (True)
The unregistered debentures are known as naked debentures. (True)
The rate of interest of debentures is attached to the debentures. (True)
Unsecured debentures are safer than secured debentures. (False)
The issue of debentures more than face value is termed on issue of debentures at
par. (False)
Premium on issue of debentures is recorded on the assets side of Balance Sheet.

(False)

The liability of a shareholder of public limited company is limited. (True)
Equity shareholder enjoys preferential rights. (False)
Equity share is a guarantee fixed rate of dividend. (False)
In private placement shares are issued to public through prospectus. (False)
Private placement method saves time and cost. (True)
In public issue whole amount of share capital is called at once. (False)
Shares are always issued at par. (False)

A public company can issue shares at only rate of discount. (False)
A public company forfeits share on nonpayment of final call only. (False)
Forfeited shares are reissued at par only. (False)
Share forfeited balance is transferred to Capital Reserve Account. (True)
Shares are issued for cash only. (False)
Bill of Exchange
Bill of exchange is an instrument in writing, containing an unconditional order.

(True)
A bill of exchange is signed by the person on whom it is drawn. (False)
A person to whom or as per his order, amount of bill is payable is a payee. (True)
Honour of a bill means payment in accordance with the apparent tenor of the bill.
(True)
Acceptance without making any change in the terms of the bill is called general
acceptance. (True)
Acceptance with some change as regards the terms of a bill is called general
acceptance. (False)
A bill of which payment to make on fixed period is after date bill. (False)
Drawee is a person who holds the title of the bill in due course. (False)
The inland bill which is drawn in and payable in the same country. (True)
Discounting means encashment of the bill before due date. (True)
Drawee can transfer the ownership of the bill. (False)

Endorsee is person in whose favour the bill is transferred. (True)
Endorsement means transfer of title of the bill from debtor to creditor. (True)
Retirement of bill means payment of the bill before due date. (True)
Noting charges are payable to the Notary public on honour of a bill. (False)
Payee is official person appointed by Central Government for noting of dishonour

bill. (False)
Renewal is a request by drawee to extend the credit period of the bill. (True)
A bill can't be deposited into bank for collection. (False)

Write the word / term / phrases which can substitute
each of the following statements:
COMPANY ACCOUNTS : Analysis of financial statements
1. Critical evaluation of financial statement to measure profitability. (Analysis of financial statement)

2. The statement showing profitability of two different periods and its percentage change. (comparative
income statement)
3. The tool for analysis of financial statement where, individual figures of balance sheet is converted
into percentage. (Common size balance sheet)
4. The type of activity in cash flow analysis, involving purchase of fixed assets. (Investing activity)
5. A Particular mathematical number showing relationship between two accounting figures. (Ratio)
6. An asset which can be converted into cash immediately. (Liquid asset)
7. The ratio measuring the relationship between gross profit and net sales. (Gross Profit ratio)
8. The ratio measuring the relationship between net profit and ownership capital employed. (ROCE)
9. The statements showing the financial position for different periods as previous year and current
year. (Comparative Balance sheet)
10. Statement showing changes in cash and cash equivalent during a particular period. (Cash Flow
Statement)
11. The short term highly liquid investments which can be readily converted into cash and with the
least risk of change in values. (Cash equivalent)
12. Activities related to acquisition or disposal of long term assets and investments. (Financing
activity)
13. The ratio that establishes the relationship between quick assets and current liabilities. (Liquid
ratio)
14. The ratio that establishes the relationship between current assets and current liabilities. (Current
ratio)
15.The ratio that measures a relationship between net profit before tax, interest and capital invested.
(ROI ratio)
Accounting for Debentures

1. The debentures where a charge created on the assets of company. (Secured debentures)
2. The debentures where no charge is created on the assets of company. (Unsecured debentures)
3. The acknowledgment of debt under common seal of company. (Debentures)
4. The debentures of which payment is made on the expiry of specified period. (Redeemable
debentures)
5. The debentures of which payment is not made until the winding up of the company. (Irredeemable
debentures)
6. The debentures which are converted into shares. (Convertible debentures)
7. The debentures which are not converted into shares. ((Non - convertible debentures)
8. The debentures which are registered in the register of company. (Registered debentures)
9. The debentures which are transferred by way of delivery. (Bearer debentures)
10. The issue of debentures more than face value of debentures. (Issue of debentures at premium)
11. A certificate issued to the debenture holders after allotment of debentures. (Debenture certificate)
12. The type of debenture, in which the amount is returnable after fixed period of time. (Redeemable
debenture)
13. The type of debenture, which cannot be transferred by mere delivery. (Registered debentures)
14. The debentures, which are also called a naked debentures. (unsecured debentures)
15. The debentures, which are also called as mortgaged debentures. (Secured debentures)
16. The debenture, which is issued by public corporation. (Secured debentures)

1. Capital stated in the capital clause of Memorandum of Association.
2. The portion of subscribed capital which has not yet been called up.
3. The capital which is not disclosed in the balance sheet.
4. Preference share on which arrears of dividend accumulate.
5. A preference share having right of conversion into equity.
6. Issue of share above face value.
7. the account to which excess amount on share forfeited A/c is transferred.
8. The maximum amount beyond which a company is not allowed to raise funds.
9. Deduction made from share capital to find out paid up capital.
10. Amount called on shares by the company but not received.
11. The capital on which dividend is paid.
12. Shares having voting rights.
13. Shares having first right on surplus assets at the time of liquidation.
14. Official signature of the company.
15. An invitation to make an offer to subscribe the shares.
16. Issue of shares at their face value.
17. Issue of shares at the value lesser than their face value.
18. Distribution of shares to the applicants in specific proportion to the number of shares applied
for.
19. Account to which the excess price received over the face value of shares is transferred.
20. If no. of shares subscribed is less that shares offered by the company.
21. If no. of shares subscribed is greater than shares offered by the company.
Ans.
1. Authorised capital
2. Uncalled up Capital.
3. Reserve Capital
4. Cumulative Preference share
5. Convertible Preference Share
6. Issue of shares at Premium
7. Capital Reserve Account
8. Authorised / Nominal Capital
9. Calls in - arrears
10. Calls - in - arrears
11. Paid up Capital
12. Equity Shares
13. Preference Shares
14. Common Seal
15. Prospectus
16. Issue of shares at par
17. Issue of shares at discount
18. Pro - rata allotment
19. Securities Premium Account
20. Under Subscription
21. Over Subscription.
Dissolution of Partnership Firm

1. Debit balance of realisation account.
2. Winding up of partnership business
3. An account opened to find out the Profit and Loss on Sale of Assets and Settlement of
Liabilities.
4. Debit balance of an Insolvent Partner‟s Capital Account.
5. Credit balance in realisation account.
6. Conversion of assets into cash on dissolution of firm.
7. Liability likely to arise in future on happening of certain events.
8. Assets which are not recorded in the books of accounts.
9. The accounts which show realisation of assets and discharge of liabilities.
10. Expenses incurred on dissolution of a firm.
11. complete closure of partnership firm.
Answers:
1. Realisation loss
2. Dissolution of partnership
3. Realisation A/c
4. Capital Deficiency
5. Realisation Profit
6. Realisation
7. Contingent Liabilities
8. Unrecorded Assets
9. Realisation A/c
10. Dissolution / Realisation Expenses
11. Dissolution of Partnership.
Death of partner.
1. The account which shows revaluation of assets and liabilities.
2. Excess of credit side over debit side of revaluation account.
3. The method under which payment is made to retiring partner in instalment.
4. Excess of proportionate at capital over actual capital.
5. The account to which deceased partner‟s capital balance is transferred.
6. The partner who died.
7. A person who represents the deceased partner.
8. Person to whom, balance due to deceased partner is payable.
9. Ratio by which surviving partners are benefitted on the death of the partner.
10. Accumulated past profit kept in the form of reserve.
11. Withdrawal of cash or goods by partner for personal use.
12. Account where profit or loss on revaluation is transferred.
Ans.
1. Revaluation A/c or Profit and loss Adjustment A/c
2. Profit on Revaluation
3. Instalment method
4. Deficit
5. Deceased partner‟s legal representatives Loan A/c or Executor‟s Loan Account.
6. Deceased partner
7. Legal heir or executor
8. Legal heir / executor
9. Gain or benefit ratio
10. General Reserve
11. Drawings
12. Partner‟s Capital or Current Account.
Retirement of Partner
1. The account which shows revaluation of assets and liabilities.
2. Debit balance of revaluation account
3. The proportion in which the continuing partners benefit due to retirement of partner.
4. Excess of actual capital over proportionate capital.
5. The method under which amount payable to the retiring partners is paid off at a time.
6. Capital Account of a retiring partner always shows balance.
7. Credit balance of revaluation account.
8. An account which is opened to record the changes to the value of assets and liabilities.
9. Process in which partner severs the relation with the partnership firm due to old age.
10. Ratio by which remaining partners are benefited on retirement of any partner.
11. Ratio which is obtained by deducting old ratio from new ratio.
Ans.
1. Revaluation account
2. Loss on Revaluation
3. Gain ratio
4. Surplus
5. Lump - sump method
6. Credit Balance
7. Profit on revaluation
8. Revaluation account
9. Retirement of Partner.
10. Gain ratio
11. Gain ratio
Admission of Partner
1. The account which shows change in the value of assets.
2. Credit balance on revaluation account.
3. The proportion in which old partners make a sacrifice.
4. Excess of actual capital over proportionate capital.
5. Name of intangible asset having value.
6. Account which is debited when new partner brings cash for his share of goodwill.
7. Account which is credited when goodwill is withdrawn by old partners.
8. Profit and Loss Account appearing on the assets side of a Balance Sheet.
9. Account which is opened to record the gains and losses on revaluation.
10. Change in the relationship between the partners.
11. Debit balance of revaluation account
12. Account opened for revaluation of assets and liability.
13. Excess of average profit over normal profit.
14. Ratio which is surrendered by old partners in favour of new partner.
Answer:
1. Revaluation or Profit and Loss Adjustment A/c
2. Profit on Revaluation of A/c
3. Ratio of Sacrifice
4. Surplus Capital
5. Goodwill
6. Cash/Bank A/c
7. Cash/Bank A/c
8. Undistributed loss
9. Profit and Loss Adjustment A/c
10. Reconstitution of Partnership
11. Loss on revaluation
12. Revaluation A/c or Profit and Loss Adjustment A/c
13. Super Profit
14. Sacrifice ratio
Final Account Objectives

1. A statement showing the financial position of the concern/business on a particular day.
2. A group of different accounts. viz. Trading A/c , P/L A/c and Balance Sheet.
3. Account prepared on the basis of direct expenses and direct income to ascertain gross profit or
gross loss made in the business.
4. Debit balance of Trading A/c
5. Credit balance of Trading A/c
6. Expenses which have direct relation with the production and they are necessarily incurred in
the factory.
7. Account prepared on the basis of indirect expenses and indirect incomes to ascertain net profit
or net loss made in the business.
8. Debit balance of Profit and Loss A/c
9. Assets which remain in the business for a long period of time and which are used for
production of goods and services.
10. Assets which remain in the business for a long period of time and which are used for
production of goods and services.
11. Assets which remain in the business for very short period of time and which are used for
maintaining liquidity of the business.
12. Stock of goods at the end of the accounting period.
13. Stock of goods in the beginning of the accounting period
14. Such capital method in which both a Capital A/c and a Current A/c are maintained for each
partner.
15. List of Debit and Credit Balance on the ledger accounts.
16. The balance which cannot be receivable from the debtors.
17. The part of sundry debtors which are definitely not recoverable.
18. Expenses due but not paid.
19. Expenses paid in advance for the period which has not expired.
20. Income received in advance before its due date.
21. Income occurred yet not received.
22. The account to which all adjustments are made if capital is fixed.
23. Amount or Goods withdrawn by the partners for personal use.
24. The transport expenses incurred to carry the goods purchased by the firm.
25. A provision which is created on sundry debtors.
26. The accounts which are prepared at the end of each financial year.
1. Balance sheet
2. Final accounts
3. Trading Account
4. Gross Loss
5. Gross Profit
6. Direct Expenses
7. Profit and Loss A/c
8. Net loss
9. Net profit
10. Fixed assets
11. Current assets
12. Closing Stock
13. Opening Stock
14. Fixed capital method
15. Trial Balance
16. Bad debts
17. Bad debts
18. Outstanding expenses
19. Prepaid Expenses
20. Pre - received income
21. Outstanding income
22. Current account
23. Drawings of a partner
24. Carriage inward
25. Reserve for doubtful debts
26. Final accounts.
Ch. No. 1. BILLS OF EXCHANGE
Journal Entries in the books of Drawer Journal Entries in the Books of Drawee
1. When the goods are Sold. 1. When the goods are purchased.
Debtor‟s A/c……… Dr. Purchase A/c ……… Dr.
To Sales A/c To Creditor‟s A/c
2. When the bill is drawn. 2. When the bill is drawn.

Bills Receivable A/c ……… Dr. Drawer‟s A/c ……… Dr.
To Drawee‟s A/c To Bills payable‟s A/c
3. Different ways of keeping Bill. 3. Different ways of keeping Bill.

a. Kept with Drawer himself. a. Kept with Drawer himself.
No entry No entry
b. Discounted with the bank. b. Discounted with the bank.
Cash / Bank A/c ……… Dr. No entry
Discount A/c ………Dr.
To Bills Receivable A/c
c. Endorsed c. Endorsed
Endorsee‟s A/c ………Dr. No entry
d. Sent to bank for collection. d. Sent to bank for collection.
Bank for collection A/c ………Dr. No entry
4. When the Bill is Dishonoured. 4. When the Bill is Dishonoured.

Drawee‟s a/c ……… Dr. Bills payable a/c ……… Dr.
To Bills Receivable A/c To Drawer‟s A/c
To Cash / Bank A/c To Drawer‟s A/c
To Endorsee‟s A/c To Drawer‟s A/c
To Bank for collection A/c To Drawer‟s A/c
5. When the Bill is Honoured. 5. When the Bill is Honoured.

Cash / Bank A/c ……… Dr. Bills payable‟s A/c ……… Dr.
To Bills receivable A/c To Cash/ Bank A/c
No entry Bills payable‟s A/c ……… Dr.
To Cash/ Bank A/c
No entry Bills payable‟s A/c ……… Dr.
To Cash/ Bank A/c
Cash /Bank A/c ……… Dr. Bills payable‟s A/c ……… Dr.
To Bank for collection A/c To Cash/ Bank A/c
6. When the part payment is made 6. When the part payment is made
Cash / bank A/c ……… Dr. Drawer‟s A/c ……… Dr.
To Drawee‟s A/c To Cash/ Bank A/c
7. When the interest is charged. 7. When the interest is charged.

Drawee‟s A/c ……… Dr. Interest A/c ……… Dr.
To Interest A/c To Drawer‟s A/c
8. When the Bill is retired. 8. When the Bill is retired.

Cash / Bank A/c ……… Dr. Bills payable‟s A/c ……… Dr.
Rebate‟s A/c ……… Dr To Cash / Bank A/c
To Bill‟s Receivable A/c To Discount A/c
9. When the drawee become insolvent. 9. When the drawee become insolvent.
Cash / bank A/c ……… Dr. Drawer‟s A/c ……… Dr.
Bad debts A/c ……… Dr. To Cash/ Bank A/c
To Drawee‟s A/c To Deficiency A/c
10. When the noting charge is charged. 10. When the noting charge is charged.
The amount of noting charges will be added Noting charges a/c ……… Dr.
to the dishonoured bill and no separate entry To Drawer‟s A/c
would be passed.
PREPARE A BILL OF EXCHANGE FROM THE FOLLOWING DETAILS.
1. Drawer : Soundariya, Neelam Bhawan, 2. On 10th March, 2014 Rajesh Bhoyar,

Kalyan. Gandhinagar, Nagpur draws a 2 months
Drawee: Sugandi, Dastur Nagar, Amaravati bill for Rs. 3,000 on Samir Choudhary,
Payee : Umesh , Deogad Main Road, and Belapur. Samir Choudhary
Period : 90 days accepted the bill on 15th March 2014.
Amount : Rs. 7,555
Date of bill : 15th March 2014
Accepted on : 20th March 2014
3. Drawer :Mr. Avadhoot Raktade, 586. Main 4. Drawer: Vilas Pstil, 44, M.G. Road, Nanded.
Road, Ajara Drawee: Pankaj Pawar, 70, Bhavani Galli, Solapur.
Drawee:Mr. Mukund Aglawe, 133, Chandni Payee: Ramchandra, Rampur.
Chowk, Panvel. Period :60 days.
Amount:Rs. 8,800. Date of Bill : 28th January, 2014
Period : Two Months. Date of Acceptance : 29th January, 2014
Date of Bill:1 st May, 2014. Amount of the Bill : Rs. 2,800/-
Date of Acceptance: 5 th May, 2014.
5. Drawer : Shekhar Desai, Shastri Road, 6. Drawer: Vijay Bhat, Main Road, Nagpur.
Mahad. Drawee: Ashok Kulkarni, M.G. Road, Nagpur.
Drawee : Sharad Verma, Narayanpeth, Pune Payee: Anil Jadhav, Pune.
Payee : Mukund Pande, Panvel. Amount : Rs. 6,950.
Amount :Rs. 3,500/- Period: 80 days.
Period : 3months. Date of Bill: 7th March, 2014.
Date of Bill :21st June, 2014 Accepted on: 10th March, 2014. For 90 days.
Bill accepted :For Rs. 3,000 on 25th June, 2014.
7. Drawer: Priti Chavan, Chandika Road, 8. Drawer: Shri Ravindra Patil, Housing Society,
Malvan. Ambajogai
Drawee: Snehlata Patil, Prashant Nagar, Drawee : Shri Bhaurao Deshmukh, Bazar
Ambajogai Chauk, Dhamangaon
Amount of Bill : Rs, 10,000/- Payee: Shri Prasad Shendage, Malvan
Period: 2 months. Amount : Rs. 7,500/-
Date of Bill: 1st January, 2014 Period: 3 months
Date of Acceptance: 5th January, 2014 Date of Bill: 1st January, 2014
Date of Acceptance: 5th January, 2014
9. Drawer : Abhijit Patil, Vikram nagar, Patna. 10. Drawer: Yamini Gupta, Sarvapriya Vihar, Delhi
Drawee : Tejas Kapare, Kothrud, Pune. Drawee – Kamini Sharma, Raj baug, Agra.
Payee : Amey Patki, Nagpur. Period – 100 days.
Amount : Rs. 7500 Term – After acceptance
Period : 60 days Date of Bill – 1st January, 2013
Term :After sight Amount – Rs. 10,500/-
Date of Bill Drawn : 1st June 2014 Date of Acceptance – 3rd January, 2013
Date of Acceptance : 11th June 2014
Accepted bill for Rs. : 7000 only
Homework
11. Mr. Shantanu of Malkapur draws a Bill of 12. Mr. B. Husen Hasanpuri of Nipani draws a bill
Exchange of Rs. 3600 for two months after date of exchange Rs. 5000 on Mr. A. Arjun, Main Road
on 11th February, 2014 on Mr. Hemant, Main of Aurangabad, payable three months after date.
Road, Jalgaon who accepted the bill on 15th Mr. Arjun, Main Road of Augangabad accepted the
February, 2014. bill on 10th January, 2014.
13. Mr. K. Lal of Mumbai, draws a bill of 14. Drawer: Vishal Maheshwari, 10, Jathar Peth,
exchange on Mr. Kishore kale of Nashik on 1st Akola
January, 2014 for a period of 60 days, for Rs. Drawee: Vishwas Patel, 5, Gokhale Path, Thane
2500. Mr. Kishore Kale accepted the bill on 5th (West)
January, 2014. `` Amount: Rs. 5000/-
Date of Acceptance: 13th January, 2014
Period : 3 Months
Date of Bill: 10th January, 2014.
Drawer: Yamini Gupta, Sarvapriya Vihar, Delhi
Drawee – Kamini Sharma, Raj baug, Agra.
Period – 100 days.
Term – After acceptance
Date of Bill – 1st January, 2013
Amount – Rs. 10,500/-
Date of Acceptance – 3rd January, 2013

Drawer : Abhijit Patil, Vikram nagar, Patna.
Drawee : Tejas Kapare, Kothrud, Pune.
Payee : Amey Patki, Nagpur.
Amount : Rs. 7500
Period : 60 days
Term :After sight
Date of Bill Drawn : 1st June 2014
Date of Acceptance : 11th June 2014
Accepted bill for Rs. : 7000 only

Drawer: Vijay Bhat, Main Road, Nagpur.
Drawee: Ashok Kulkarni, M.G. Road, Nagpur.
Payee: Anil Jadhav, Pune.
Amount : Rs. 6,950.
Period: 80 days.
Date of Bill: 7th March, 2014.
Accepted on: 10th March, 2014. For 90 days.

Drawer : Shekhar Desai, Shastri Road, Mahad.
Drawee : Sharad Verma, Narayanpeth, Pune
Payee : Mukund Pande, Panvel.
Amount :Rs. 3,500/-
Period : 3months.
Date of Bill :21st June, 2014
Bill accepted :For Rs. 3,000 on 25th June, 2014.

Drawer: Vilas Pstil, 44, M.G. Road, Nanded.
Drawee: Pankaj Pawar, 70, Bhavani Galli, Solapur.
Payee: Ramchandra, Rampur.
Period :60 days.
Date of Bill : 28th January, 2014
Date of Acceptance : 29th January, 2014
Amount of the Bill : Rs. 2,800/-

Drawer :Mr. Avadhoot Raktade, 586. Main Road, Ajara
Drawee:Mr. Mukund Aglawe, 133, Chandni Chowk, Panvel.
Amount:Rs. 8,800.
Period : Two Months.
Date of Bill:1 st May, 2014.
Date of Acceptance: 5 th May, 2014.

On 10th March, 2014 Rajesh Bhoyar,
Gandhinagar, Nagpur draws a 2 months
bill for Rs. 3,000 on Samir Choudhary,
Main Road, and Belapur. Samir Choudhary
accepted the bill on 15th March 2014.

Drawer : Soundariya, Neelam Bhawan, Kalyan.
Drawee: Sugandi, Dastur Nagar, Amaravati
Payee : Umesh , Deogad
Period : 90 days
Amount : Rs. 7,555
Date of bill : 15th March 2014
Accepted on : 20th March 2014

TRADE BILLS
1. On 1st March, 2013. Ramchandra sold goods to Raman worth Rs. 8,000/- and
Raman accepted the Bill for Rs. 8,000/- at 3 months drawn by Ramchandra.
Ramchandra discounted the bill with his bank @ 6% p.a. On due date the bill
was dishonoured and Raman requested Ramchandra to accept Rs. 4,000/-
immediately and draw upon him a new bill for the remaining amount at 3
months together with an interest @ 10% p.a. Ramchandra agreed. The second
Bill was duly honoured. Give Journal entries in the books of Ramchandra.
Solution:
Journal entries in the Books of Ramchandra.
Date Particulars LF Debit Credit
(Rs) (Rs)
1.3.13 Raman's A/c ... Dr. 8000
To Sales A/c 8000
[Being the goods are sold]
1.3.13 Bills Receivable A/c …Dr. 8000
To Raman's A/c 8000
[Being the Bill is drawn]
1.3.13 Bank A/c …Dr. 7880
Discount A/c … Dr. 120
To Bills Receivable A/c 8000
[Being the Bill is discounted with the bank @ 6% p.a. ]
4.6.13 Raman's A/c … Dr. 8000
To Bank's A/c 8000
[Being the discounted bill is dishonoured]
4.6.13 Raman's A/c … Dr. 100
To Interest A/c 100
[Being Interest is charged on balance amount]
4.6.13 Cash / Bank A/c … Dr. 4000
To Raman's A/c 4000
[Being the part payment is made]
4.6.13 Bills Receivable A/c …Dr. 4100
To Raman's A/c 4100
[Being the New bill is drawn along with balance and interest on balance
amount]
7.9.13 Cash/Bank A/c …… Dr. 4100
[Being the second bill is duly honoured]
2. Premlal sold goods to Sunderlal worth Rs. 10,000/- and Sunderlal accepted
the bill for Rs. 10,000/- at 3 months drawn by Premlal. Premlal discounted the
bill with his bank @ 6 % p.a. On due date the bill was dishonoured and Sunderlal
requested Premlal to accept Rs. 4,000 immediately and draw upon him a new
bill for the remaining amount at 3months together with an interest at 10% p.a.
Premlal agreed and the second bill was duly honoured. Give the Journal entries
in the books of Premlal.
Solution:
Journal Entries in the booms of Premlal.
(Rs) (Rs)
? 1. Sunderlal's A/c … Dr. 10000
To Sales A/c 10000
2. Bills Receivable A/c …Dr. 10000
To Sunderlal's A/c 10000
3. Bank A/c …Dr. 9850
[Being the Bill is discounted with the bank @ 6% p.a. ]
4. Sunderlal's A/c … Dr. 10000
To Bank's A/c 10000
5. Sunderlal's A/c … Dr. 150
To Interest A/c 150
6. Cash / Bank A/c … Dr. 4000
[Being the New bill is drawn along with balance and interest on balance
amount]
8. Cash/Bank A/c …… Dr. 6150
3. Archana purchased goods from Babita on credit for Rs. 20,000. On next day
Archana paid Rs. 10,000 to Babita and accepted a bill drawn by Babita for the
balance amount for four months. Babita discounted the bill with her bank for
Rs. 9600/-. Before the due date Archana approached Babita with a request to
renew the Bill. Babita agreed with the condition that Archana should pay Rs.
6000 along with interest of Rs. 120 and accept a new bill for the balance. These
arrangements were duly carried out. New bill is met on the due date. Pass
journal entries in the books of Babita. [Ans.]
Solution:
Journal Entries in the booms of Babita.
(Rs) (Rs)
? 1. Archana's A/c … Dr. 20000
To Sales A/c 20000
2. Cash/Bank A/c … Dr. 10000
To Archana's A/c 10000
3. Bank A/c …Dr. 9600
[Being the Bill is discounted with the bank]
4. Archana's A/c … Dr. 10000
To Bank's A/c 10000
5. Archana's A/c … Dr. 120
To Interest A/c 120
[Being the part payment is made along with interest]
[Being the New bill is drawn for balance amount]
8. Cash/Bank A/c …… Dr. 4000
4. Bhagyashri sold goods to Rupa worth Rs. 24,000 to Rupa. On the next day
Rupa paid Rs. 10,000 in cash and accepted 4 months bill for balance amount
drawn by Bhagyashri. Bhagyashri discounted the bill at 10% p.a. after one
month with her bank. On due date Rupa dishonoured her acceptance and noting
charges amounted to Rs. 200. Rupa paid half the amount of the bill and full
amount of noting charges. Rupa accepted a new bill at 2 months for the balance
amount plus interest Rs. 100. Pass necessary journal entries in the books of
Bhagyashri.
Solution:
Journal Entries in the booms of Bhagyashri
(Rs) (Rs)
? 1. Rupa's A/c … Dr. 24000
To Sales A/c 24000
2. Cash/Bank A/c … Dr. 10000
To Rupa's A/c 10000
To Rupa's A/c 14000
3. Bank A/c …Dr. 13650
4. Rupa's A/c … Dr. 14200
To Bank's A/c 14200
[Being the discounted bill is dishonoured along with noting charges]
5. Rupa's A/c … Dr. 100
To Interest A/c 100
To Rupa's A/c 7200
[Being the part payment is made along with noting charges]
To Rupa's A/c 7100
[Being the New bill is drawn for balance amount along with interest]
5. Baloo owes Kaloo Rs.8000. Kaloo then draws a bill for Rs. 8000 on Baloo for a
period of three months. Baloo accepts and return it to Kaloo. Kaloo discounted
the bill with his bank @ 12 % p.a. On due date, the bill was dishonoured noting
charges amount to Rs. 30. Kaloo then draws a bill for the balance plus interest
of Rs. 170. Before the due date of this bill Baloo pays the amount at a discount
of Rs. 40 to retire the bill. Pass Journal Entries in the books of Kaloo.
Solution:
Journal Entries in the booms of Kaloo.
(Rs) (Rs)
To Baloo's A/c 8000
2. Bank A/c …Dr. 7760
3. Baloo's A/c … Dr. 8030
To Bank's A/c 8030
[Being the discounted bill is dishonoured along with noting charges]
4. Baloo's A/c … Dr. 170
To Interest A/c 170
To Baloo's A/c 8200
[Being the New bill is drawn for balance amount along with interest and
noting charges]
Rebate's A/c … Dr. 40
[Being the second bill is retired]
6. Minal draws a bill on Usha for Rs. 5,000 at 3 months. Usha accepts the bill
and return to Minal. Minal discounted the bill @ 12 % p.a. with the bank. On
Maturity Usha finds herself unable to make payment of the bill and
requested Minal to renew the bill. Minal accepts the proposal on the
condition that Usha should Pay Rs. 2,000 in cash and accept a new bill at
one month along with interest at 10% p.a. These arrangements were carried
through. Usha retires the bill by paying Rs. 3015/- Pass Journal Entries in
the books of Minal.
Solution:
Journal Entries in the booms of Minal.
(Rs) (Rs)
To Usha's A/c 5000
2. Bank A/c …Dr. 4850
3. Usha's A/c … Dr. 5000
To Bank's A/c 5000
4. Usha's A/c … Dr. 25
To Interest A/c 25
5. Cash A/c ……… Dr. 2000
To Usha's A/c 2000
To Usha's A/c 3025
[Being the New bill is drawn for balance amount along with interest and
noting charges]
Rebate's A/c … Dr. 10
[Being the second bill is retired]
7. Sonia draws a bill on Moni for Rs. 6,000 at 4 months. Moni accepts the bill
and returns it to Sonia who discounts the bill with the bank at a discount of
8% p.a. Before the due date of Bill Moni requested Sonia to accept Rs. 4000
in cash and draw a bill for the balance plus interest at 12% p.a. for two
months. Sonia draws a bill as the request is agreed. The bill is sent to bank
for collection. On the due date the bill was honoured. Pass the necessary
journal entries in the books of Sonia.
Solution:
Journal Entries in the booms of Sonia
(Rs) (Rs)
To Moni's A/c 6000
2. Bank A/c …Dr. 5840
3. Moni's A/c … Dr. 6000
To Bank's A/c 6000
4. Moni's A/c … Dr. 40
To Interest A/c 40
5. Cash A/c ……… Dr. 4000
To Moni's A/c 4000
To Moni's A/c 2040
[Being the New bill is drawn for balance amount along with interest]
7. Bank for collection A/c …… Dr. 2040
[Being the second bill is sent to bank for collection ]
8. Bank A/c ……… Dr. 2040
To Bank for collection A/c 2040
[Being the sent to bank for collection bill is honoured]
8. Prakash drew a bill for Rs. 4,000 on Anand on 1st May, 2013 for three
months. This was for the amount which Anand owed to Prakash. Anand
accepts the same and return it to Prakash who discounted at his bank for Rs.
3,900. On 1st Aug, 2013 Anand requested Prakash to renew the bill and
Prakash agreed on the condition that Rs. 1,000 is paid immediately and
Anand should accept the new bill for 3 months for the balance payable plus
interest of Rs. 45. These arrangements were carried through. However, on 1st
October, 2013, Anand retired his acceptance for Rs. 3, 035. Pass journal
entries in the books of Anand.
Journal Entries in the Books of Anand

(Rs) (Rs)
1.5.13 Prakash's A/c ....Dr. 4000
To Bills Payable A/c 4000
[Being the bill is accepted]
1.8.13 Bills Payable A/c ....Dr. 4000
To Prakash's A/c 4000
[Being the bill is dishonoured]
1.8.13 Interest A/c ....Dr. 45
To Prakash's A/c 45
[Being the Interest is charged]
1.8.13 Prakash's A/c 1000
To Bank A/c 1000
[Being the part – payment is made]
1.8.13 Prakash's A/c ....Dr. 3045
[Being the new bill is accepted]
1.10.13 Bills Payable A/c ....Dr. 3045
To Bank A/c 3035
To Discount A/c 10
[Being the new bill is retired]
9. Rupali accepted a bill for Rs. 2,000/- drawn by Deepali at three months.
Deepali got the bill discounted with her bank for Rs. 1,900. Before the due date
Rupali approached Deepali for renewal of the bill. Deepali agreed on the
condition that Rs. 1,000/- be paid immediately together with interest on the
remaining amount at 6% p.a. For balance Rupali should accept a new bill for
three months. These arrangements were carried through but afterwards, Rupali
become Insolvent and only 40 % of the amount could be recovered from her
estate. Give journal entries in the books of Rupali.
Journal Entries in the Books of Rupali
(Rs) (Rs)
?1 Deepali's A/c ....Dr. 2000
2 Bills Payable A/c ....Dr. 2000
To Deepali's A/c 2000
3 Interest A/c ....Dr. 15
To Deepali's A/c 15
[Being the interest is charged]
4 Deepali's A/c ....Dr. 1015
To Bank A/c 1015
[Being the part – payment is made along with interest]
6 Bills payable A/c ....Dr. 1000
To Deepali's A/c 1000
[Being the new bill is dishonoured]
To Bank A/c 400
To Deficiency A/c 600
[Being the drawee become insolvent and only 40% of the amount could be
recovered from our estate]
10. Chanda accepted a bill for Rs. 6,000 drawn by Nanda at three months.
Nanda got the bill discounted with his bank for Rs. 5,700. Before the due
date, Chanda approached Nanda for renewal of the Bill. Nanda agreed on the
condition that Rs. 3,000 is paid immediately together with an interest on
remaining amount at 18% p.a. for four months and for the balance Chanda
should accept a new bill. But afterwards Chanda become insolvent and only
25% of the amount could be recovered from her estate. Pass journal entries
in the books of Chanda.
Journal Entries In the Books of Chanda.

(Rs) (Rs)
?1 Nanda's A/c ....Dr. 6000
To Nanda's A/c 6000
To Nanda's A/c 180
4 Nanda's A/c ....Dr. 3180
To Bank A/c 3180
[Being the part payment is charged along with interest]
5 Nanda's A/c ....Dr. 3000
To Nanda's A/c 3000
7 Nanda's A/c ....Dr. 3000
To Bank A/c 750
[Being the drawee become insolvent and only 40 % of the amount could
be received from our estate]
11. Pankaj draws a bill on Anil worth Rs. 8,000 for three months which was
accepted by Anil. On the same date Pankaj discounted the bill with his bank
@ 10 % p.a. On the due date Anil dishonoured his acceptance. Anil paid Rs.
4,000/- to Pankaj and accepted a fresh bill for two months for the balance
including interest of Rs. 40. Anil became insolvent before the maturity of the
bill and 50 paise in a rupee was received at first and final dividend from his
estate. Give Journal entries in the books of Anil.
Journal Entries In the Books of Anil.

(Rs) (Rs)
?1 Pankaj's A/c ....Dr. 8000
To Pankaj's A/c 8000
3. Interest A/c ....Dr. 40
To Pankaj's A/c 40
4 Pankaj's A/c ....Dr. 4000
To Bank's A/c 4000
[Being the new bill is accepted along with interest]
6. Bills Payable A/c ....Dr. 4040
To Pankaj's A/c 4040
To Bank A/c 2020
[Being the drawee become insolvent and only 50% of the amount could be
received from our estate]
12. On 1st January, 1988 Vandana drew a bill for Rs. 6,000 for 2 months
periods on Lata. Lata duly accepted the bill. On 4th January 1988 Vandana
discounted the bill with her bank for Rs. 5850. However, on the due date the
bill was dishonoured. Lata agreed to accept a new bill with an interest of Rs.
100 for a period of one month. The bill was duly met on the due date. Give
the journal entries in the books of Vandana and show Vandana’s account in
the books of Lata.
Journal Entries In the Books of Vandana

(Rs) (Rs)
1.1.88 Bills Receivable A/c ....Dr. 6000
To Lata's A/c 6000
[Being the bill is drawn]
4.1.88 Bank A/c ....Dr. 5850
Discount A/c ....Dr. 150
[Being the bill is discounted]
4.3.88 Lata's A/c ....Dr. 6000
To Bank A/c 6000
[Being the Discounted bill is dishonoured]
4.3.88 Lata's A/c ....Dr. 100
To Interest A/c 100
[Being the Interest is Charged]
To Lata's A/c 6400
[Being the new bill is drawn along with interest]
7.4.88 Bank A/c ....Dr. 6100
[Being the new bill is duly honoured]
In the Books of Lata
Vandana's A/c
Date Particulars J Amount Date Particulars J Amount

F F
1.1.88 To Bills Payable A/c 6000 1.1.88 By Balance b/d 6000
4.3.88 To Bills Payable A/c 6100 4.3.88 By Bills Payable A/c 6000
4.3.88 By Interest A/c
12100 12100
13. Mukund owes (be obligated) Prakash Rs. 4000 for which Prakash draws a
bill for 2 months on 1st February, 1989. Mukund accepts it and returns it to
Prakash. On 4th March, 1989, Mukund approaches Prakash and request him
to accept Rs. 1000 in cash and draw a fresh bill for 3 months for the balance
plus interest @ 10% p.a. Prakash accepts the request and draw a bill
accordingly which is accepted by Mukund. On 1st June 1989 Mukund retired
his acceptance under discount of Rs. 30/-. Pass journal entries in the books
of Prakash and prepare Prakash account in the ledger of Mukund.
Journal Entries in the Books of Prakash

(Rs) (Rs)
1.2.89 Bills Receivable A/c ....Dr 4000
To Mukund's A/c 4000
4.3.89 Mukund's A/c ....Dr 4000
4.3.89 Mukund's A/c ....Dr 75
To Interest A/c 75
[Being the Interest is Charged]
4.3.89 Cash A/c ....Dr 1000
4.3.89 Bills Receivable A/c ....Dr 3075
[Being the bill is drawn along with Interest]
1.6.89 Bank A/c ....Dr 3045
Rebate A/c ....Dr 30
In the Books of Mukund
Prakash's A/c
Date Particulars J Amount Date Particulars J Amount

F F
1.2.89 To Bills Payable A/c 4000 1.2.89 By Balance b/d 4000
4.3.89 To Cash A/c 1000 4.3.89 By Bills Payable A/c 4000
4.3.89 To Bills Payable A/c 3075 4.3.89 By Interest A/c 75
8075 8075
14. On 1st March, 2014. Bheem sold goods to Raju worth Rs. 10,000/- and Raju
accepted the Bill for Rs. 10,000/- at 3 months drawn by Bheem. Bheem
discounted the bill with his bank @ 10% p.a. On due date the bill was
dishonoured and Raju requested Bheem to accept Rs. 4,000/- immediately and
draw upon him a new bill for the remaining amount at 3 months together with
an interest @ 10% p.a. Bheem agreed. The second Bill was duly honoured. Give
Journal entries in the books of Bheem.
Journal Entries in the Books of Bheem (Drawer)

Date Particulars LF Debit (Rs.) Credit (Rs.)
1.3.14 Raju's A/c …… Dr. 10000
To Sales A/c 10000
1.3.14 Bills Receivable A/c ..... Dr. 10000
To Raju's A/c 10000
1.3.14 Bank A/c ..... Dr. 9750
Discount A/c .... Dr. 250
4.6.14 Raju's A/c ...... Dr. 10000
To Bank A/c 10000
4.6.14 Raju's A/c ....Dr. 150
To Interest A/c 150
4.6.14 Bank A/c ... Dr. 4000
To Raju's A/c 4000
4.6.14 Bills receivable A/c ......Dr. 6150
To Raju's A/c 6150
7.9.14 Bank A/c ..... Dr. 6150
15. Sachin sold goods to Dhoni worth Rs. 1,00,000/- and Dhoni accepted the
bill for Rs. 1,00,000/- at 3 months drawn by Sachin. Sachin discounted the bill
with his bank @ 10 % p.a. On due date the bill was dishonoured and Dhoni
requested Sachin to accept Rs. 40,000 immediately and draw upon him a new
bill for the remaining amount at 3months together with an interest at 10% p.a.
Sachin agreed and the second bill was duly honoured. Give the Journal entries
in the books of Dhoni.
Journal Entries in the books of Dhoni

Date Particulars LF Debit (Rs.) Credit(Rs.)
?1 Purchase A/c ..... Dr. 100000
To Sachin's A/c 100000
[Being the goods are purchased]
2 Sachin's A/c ..... Dr. 100000
3 Bills payable A/c ..... Dr. 100000
4 Interest A/c ..... Dr. 1500
[Being the interest in charged]
5 Sachin's A/c ..... Dr. 40000
To Bank A/c 40000
6 Sachin's A/c ..... Dr. 61500
To Bills payable A/c 61500
7 Bills payable A/c ..... Dr. 61500
To Bank A/c 61500
16. Rose purchased goods from Lilly on credit for Rs. 2,000. On next day Rose
paid Rs. 1,000 to Lilly and accepted a bill drawn by Lilly for the balance amount
for four months. Lilly discounted the bill with her bank for Rs. 960/-. Before
the due date Rose approached Lilly with a request to renew the Bill. Lilly agreed
with the condition that Rose should pay Rs. 600 along with interest of Rs. 12
and accept a new bill for the balance. These arrangements were duly carried
out. New bill is met on the due date. Pass journal entries books of Lilly.
Journal Entries in the books of Lilly.

(RS) (Rs)
?1 Rose's A/c 2000
To Sales A/c 2000
2 Bank A/c ..... Dr. 1000
To Rose's A/c 1000
3 Bills Receivable A/c ..... Dr. 1000
To Rose's A/c 1000
[Being the bill is drawn by balance amount]
4 Bank A/c ..... Dr. 960
Discount A/c ..... Dr. 40
To Bills receivable A/c 1000
5 Rose's A/c ..... Dr. 1000
to Bank A/c 1000
6 Rose's A/c ..... Dr. 12
To Interest A/c 12
7 Bank A/c …..... Dr. 612
To Rose's A/c 612
[Being the part payment is made along with
Interest]
8 Bills Receivable A/c ..... Dr. 400
To Rose's A/c 400
[Being the new bill is drawn]
9 Bank A/c ..... Dr. 400
17. Kaveri sold goods to Ganga worth Rs. 4,000 to Ganga. On the next day
Ganga paid Rs. 1,000 in cash and accepted 4 months bill for balance amount
drawn by Kaveri. Kaveri discounted the bill at 10% p.a. after one month with
her bank. On due date Ganga dishonoured her acceptance and noting charges
amounted to Rs. 20. Ganga paid half the amount of the bill and full amount of
noting charges. Ganga accepted a new bill at 2 months for the balance amount
plus interest Rs. 100. Pass necessary journal entries in the books of Kaveri.

(Rs) (Rs)
?1 Ganga's A/c ..... Dr. 4000
To Sales A/c 4000
2 Cash A/c ... ..... Dr. 1000
To Ganga's A/c 1000
3 Bills receivable A/c ..... Dr. 3000
To Ganga's A/c 3000
[Being the bill is drawn for balance amount]
4 Bank A/c ..... Dr. 2925
Discount A/c ..... Dr. 75
5 Ganga's A/c ..... Dr. 3020
To Bank A/c 3020
[Being the discounted bill is dishonoured along with
noting charges]
6 Ganga's A/c ..... Dr. 100
To Interest A/c 100
7 Bank A/c ..... Dr. 1520
To Ganga's A/c 1520
[Being the part payment is made along with noting
charged]
8 Bills receivable A/c ..... Dr. 1600
To Ganga's A/c 1600
18. Ronaldo owes Ricardo Rs.80,000. Ricardo then draws a bill for Rs. 80,000
on Ronaldo for a period of three months. Ronaldo accepts and return it to
Ricardo. Ricardo discounted the bill with his bank @ 10 % p.a. On due date, the
bill was dishonoured noting charges amount to Rs. 300. Ricardo then draws a
bill for the balance plus interest of Rs. 1700. Before the due date of this bill
Ronaldo pays the amount at a discount of Rs. 400 to retire the bill. Journal
Entries Ronaldo.
Journal Entries in the Books of Ronaldo.

(Rs. ) (Rs.)
1 Ricardo's A/c ..... Dr. 80000
2 Bills Payable A/c ..... Dr. 80000
To Ricardo's A/c 80000
3 Noting charges A/c ..... Dr. 300
[Being the Noting Charges is Charged]
4 Interest A/c ..... Dr. 1700
5 Ricardo's A/c ..... Dr. 82000
[Being the new bill is accepted together with noting
charges and interest]
6 Bills Payable A/c ..... Dr. 82000
To Bank A/c 81600
To Discount A/c 400
19. Sun draws a bill on Moon for Rs. 15,000 at 3 months. Moon accepts the bill
and return to Sun. Sun discounted the bill @ 10 % p.a. with the bank. On
Maturity Moon finds herself unable to make payment of the bill and requested
Sun to renew the bill. Sun accepts the proposal on the condition that Moon
should Pay Rs. 12,000 in cash and accept a new bill at one month along with
interest at 10% p.a. These arrangements were carried through. Moon retires the
bill by paying Rs. 3015/- Pass Journal Entries in the books of Sun.
Journal Entries in the books of Sun

Date Particulars LR Debit (Rs) Credit (Rs)
?1 Bills Receivable A/c ......Dr. 15000
To Moon's A/c 15000
2 Bank A/c ......Dr. 14625
Discount A/c ......Dr. 375
3. Moon's A/c ......Dr. 15000
To Bank's A/c 15000
4 Moon's A/c ......Dr. 25
To Interest A/c 25
5 Cash A/c ......Dr. 12000
To Moon's A/c 12000
6 Bills Receivable A/c ......Dr. 3025
To Moon's A/c 3025
7 Bank A/c ......Dr. 3015
Rebate A/c ......Dr. 10
[Being the new bill is retires]
20. Nazriya draws a bill on Anitha for Rs. 60,000 at 4 months. Anitha accepts
the bill and returns it to Nazriya who discounts the bill with the bank at a
discount of 10% p.a. Before the due date of Bill Anitha requested Nazriya to
accept Rs. 40000 in cash and draw a bill for the balance plus interest at 12%
p.a. for two months. Nazriya draws a bill as the request is agreed. The bill is
sent to bank for collection. On the due date the bill was honoured. Pass the
necessary journal entries in the books of Anitha.
Journal Entries in the Books of Anitha

1 Nazriya's A/c ......Dr. 60000
2 Bills Payable A/c ......Dr. 60000
To Nazriya's A/c 60000
3 Interest A/c ......Dr. 400
To Nazriya's A/c 400
4 Nazriya's A/c ......Dr. 40000
To Cash A/c 40000
5 Nazriya's A/c ......Dr. 20400
6 Bills payable A/c ......Dr. 20400
To Bank A/c 20400
21. Anil drew a bill for Rs. 4,000 on Navin on 1st May, 2013 for three months.
This was for the amount which Navin owed to Anil. Navin accepts the same and
return it to Anil who discounted at his bank for Rs. 3,900. On 1st Aug, 2013
Navin requested Anil to renew the bill and Anil agreed on the condition that Rs.
1,000 is paid immediately and Navin should accept the new bill for 3 months
for the balance payable plus interest of Rs. 45. These arrangements were
carried through. However, on 1st October, 2013, Navin retired his acceptance
for Rs. 3, 035. Pass journal entries in the books of Anil.
Journal Entries in the Books of Anil

(Rs.) (Rs.)
To Navin's A/c 4000
1.5.13 Bank A/c ....Dr. 3900
Discount A/c ....Dr. 100
1.8.13 Navin's A/c ....Dr. 4000
To Bank A/c 4000
1.8.13 Navin's A/c ....Dr. 45
To Interest A/c 45
1.8.13 Bank A/c ....Dr. 1000
To Navin's A/c 1000
To Navin's A/c 3045
[Being the new bill is drawn along with Interest
]
1.8.13 Bank A/c ....Dr. 3035
Rebate A/c ....Dr. 10
22. Karthik accepted a bill for Rs. 20,000/- drawn by Jones at three months.
Jones got the bill discounted with his bank for Rs. 19,900. Before the due date
Karthik approached Jones for renewal of the bill. Jones agreed on the condition
that Rs. 10,000/- be paid immediately together with interest on the remaining
amount at 6% p.a. For balance Karthik should accept a new bill for three
months. These arrangements were carried through but afterwards, Karthik
become Insolvent and only 80 % of the amount could be recovered from his
estate. Give journal entries in the books of Karthik.
Journal Entries in the Books of Karthik

(Rs) (Rs)
1 Jones A/c ....Dr. 20000
To Jones A/c 20000
To Jones's A/c 150
4 Jones A/c ....Dr. 10150
To Bank A/c 10150
5 Jones A/c ....Dr. 10000
6 Bills payable A/c ....Dr. 10000
To Jones's A/c 10000
7 Jones's A/c ....Dr. 10000
To Bank A/c 8000
[being the drawee become insolvent and only 80% of
the amount could be recovered from her estate]
23. Ajith accepted a bill for Rs. 10,000 drawn by Surya at three months. Surya
got the bill discounted with his bank for Rs. 9,700. Before the due date, Ajith
approached Surya for renewal of the Bill. Surya agreed on the condition that Rs.
7,000 is paid immediately together with an interest on remaining amount at
18% p.a. for four months and for the balance Ajith should accept a new bill. But
afterwards Ajith become insolvent and only 25% of the amount could be
recovered from her estate. Pass journal entries in the books of Surya.
Journal Entries in the books of Surya

(Rs) (Rs)
?1 Bills Receivable A/c .......Dr. 10000
To Ajith's A/c 10,000
2 Bank A/c .......Dr. 9700
Discount A/c .......Dr. 300
3 Ajith's A/c .......Dr. 10000
To Bank A/c 10000
4 Ajith's A/c .......Dr. 180
To Interest A/c 180
5 Bank A/c .......Dr. 7180
To Ajith's A/c 7180
6 Bills Receivable A/c .......Dr. 3000
To Ajith's a/c 3000
[Being the new bill is drawn]
7 Ajith's A/c .......Dr. 3000
8 Bank A/c .......Dr. 750
Bad debts A/c .......Dr. 2250
To Ajith's A/c 3000
[Being the drawee become insolvent and only 25% of
the amount could be recovered from her estate]
24. Salman draws a bill on Amithab worth Rs. 90,000 for three months which
was accepted by Amithab. On the same date Salman discounted the bill with his
bank @ 10 % p.a. On the due date Amithab dishonoured his acceptance.
Amithab paid Rs. 40,000/- to Salman and accepted a fresh bill for two months
for the balance including interest of Rs. 4000. Amithab became insolvent before
the maturity of the bill and 50 paise in a rupee was received at first and final
dividend from his estate. Journal entries books of Amithab.
Journal Entries in the Books of Amithab.

(Rs.) (Rs.)
?1 Salman's A/c ....Dr. 90000
To Bills Payable A/c 90,000
To Salman's A/c 90000
4 Salman's A/c ....Dr. 40000
To Bank A/c 40000
5 Salman's A/c ....Dr. 54000
[Being the new bill is accepted together with interest]
7 Salman's A/c ....Dr. 54000
To Bank A/c 27000
[Being the drawee become Insolvent and only 50% of
the amount could be recovered from his estate. ]
25. On 1st January, 2014 Archana drew a bill for Rs. 6,000 for 2 months periods
on Ramya. Ramya duly accepted the bill. On 4th January 2014 Archana
discounted the bill with her bank for Rs. 5850. However, on the due date the
bill was dishonoured. Ramya agreed to accept a new bill with an interest of Rs.
150 for a period of one month. The bill was duly met on the due date. Give the
journal entries in the books of Archana and show Archana’s account in the
books of Ramya.
Journal Entries in the Books of Ramya.
Date Particulars LF Debit (Rs) Credit (Rs)

1.1.14 Bills Receivable A/c ...Dr. 6000
To Ramya's A/c 6000
4.1.14 Bank A/c ...Dr. 5850
Discount A/c ...Dr. 150
4.3.14 Ramya's A/c ...Dr. 6000
To Bank A/c 6000
4.3.14 Ramya's A/c ...Dr. 150
To Interest A/c 150
To Ramya's A/c 6150
7.4.14 Bank A/c ...Dr. 6150
In the Books of Ramya

Archana's A/c
Date Particulars JF Amount Date Particulars JF Amount
1.1.14 To Bills Payable 6000 1.1.14 By Balance b/d 6000
A/c
4.3.14 To Bills Payable 6150 4.3.14 By Bills Payable 6000
A/c A/c
4.3.14 By Interest A/c 150
12150 12150
26. Mukesh owes Anil Rs. 40000 for which Anil draws a bill for 2 months on 1st
February, 2014. Mukesh accepts it and returns it to Anil. On 4th March, 2014,
Mukesh approaches Anil and request him to accept Rs. 10000 in cash and draw
a fresh bill for 3 months for the balance plus interest @ 10% p.a. Anil accepts
the request and draw a bill accordingly which is accepted by Mukesh. On 1st
June 2014 Mukesh retired his acceptance under discount of Rs. 30/-. Pass
journal entries in the books of Anil and prepare Anil account in the ledger of
Mukesh.
Journal Entries in the books of Anil.

Date Particulars LF Debit (Rs) Credit (Rs)
To Mukesh's A/c 40000
4.3.14 Mukesh's A/c ...Dr. 40000
4.3.14 Mukesh's A/c ...Dr. 750
To Interest A/c 750
4.3.14 Cash A/c ...Dr. 10000
To Mukesh's A/c 10000
To Mukesh's 30750
1.6.14 Bank A/c ...Dr. 30720
Rebate A/c ...Dr. 30
In the Books of Mukesh

Anil's A/c
Date Particulars JF Amount Date Particulars JF Amount
1.2.14 To Bills Payable 40000 1.2.14 By Balance b/d 40000
A/c
4.3.14 To Cash A/c 10000 4.3.14 By Bills payable 40000
A/c
4.3.14 To Bills Payable 30750 4.3.14 By Interest A/c 750
A/c
80750 80750
Pro forma of Trading Account
In the Books of _______________ and __________
Trading Account for the year ended 31st March, ______________

Particulars Rs. Rs. Particulars Rs. Rs.
To Opening Stock By Sales
(-) Sales Return
(-) Return Inwards
To Purchases By Goods destroyed by Fire
(-) Purchase Return.
(-) Return Outwards
To Wages By Goods Distributed as Free Samples
To Productive Wages By Goods withdrawn by partners for

personal use
To Manufacturing Wages By Goods lost by theft
To Wages and Salaries By Closing Stock
To Works Manager's Salary By Gross Profit C/d
To Carriage
To Carriage Inwards
To Carriage on Purchases
To Factory Expenses
To Factory Insurance
To Factory Rent
To Factory Lighting
To Factory Salary
To Import Duty
To Octroi and Cartage
To Customs charges
To Freight
To dock dues charges
To Gas, Coal, Water, Fuel and

Power
To Motive Power
To Royalty
To Royalty on Purchases
To Manufacturing Expenses
To Trade Expenses
To Heating and Lighting
To Gross Profit C/d

Pro forma of Profit and Loss Account
To Gross Loss b/d By Gross Profit b/d
To Salaries By Commission Received
To Salaries and Wages By Commission Earned
To Unproductive Wages By Discount Received
To Non – Productive Wages By Discount Earned
To Office Expenses By Interest Received
To Rent By Interest Earned
To Office Rent By Income from other sources
To Rent , Rates & Taxes By Bad debts recovered
To Lighting By Provisions for Discount on

Creditors
To Office Lighting By Dividends Received
To Electricity Charges By Miscellaneous Incomes
To Insurance By Sundry Incomes
To Postage and Telegrams By Rent Received
To Loss on Sale of Assets By Profit on Sale of Assets
To Loss on Sale of Investments By Profit on Sale of Investments
To Interest on Partners' Capitals By Interest on Partners' Drawings
To Telephone and Fax Charges By O.R.D.D.
To Bad Debts (-) Bad Debts
(+) F.B.D. (-) F.B.D.
(+) N.R.D.D. (-) N.R.D.D.
(-) O.R.D.D.
To Courier Charges By Net Loss C/d
To Printing & Stationery

To Legal Expenses
To Trade Expenses
To Sales Tax
To Repairs and Renewals
To Audit Fees
To Depreciation
To Sundry Expenses
To General Expenses
To Miscellaneous Expenses
To Provident Fund Contribution
To Travelling Expenses
To Conveyance Expenses
To Commission & Allowances
To Brokerage
To Carriage Outwards
To Carriage on Sales
To Storage Charges
To Warehouse Charges
To Godown Charges
To Packing Expenses
To Packing Charges
To Advertisement Expenses
To Delivery Van Charges
to Export Duties
To Bank Charges
To Entertainment Charges
To Interest Paid
To Discount allowed on Debtors
To Discount on Bills
To Provisions for Discount on

Debtors
To Net Loss by Fire
To Net Loss by Theft
To Donations
To Charity
To Professional Charges
To General Reserve (Transfer)
To Interest on loans
To Net Profit C/d

Pro forma of Balance Sheet
Liabilities Rs. Rs. Assets Rs. Rs.
Partners' Capital A/c Goodwill
Partners' Current A/c Patents & Patterns
General Reserve Trade Marks
Reserve Fund Copyrights
Provident Fund Freehold Property
(+) Interest on Provident fund

Investments (if any)
Loan from Partners Leasehold Property
Loan from Bank Premises
Bank Overdraft Land & Building
Sundry Creditors Plant & Machinery
Bills Payable Delivery Van
Outstanding Expenses Motor Vehicle
Income received in Advance Furniture
Fixtures
Office Equipments
Loose Tools
Investments
Provident Fund Investments
Interest Accrued on
Investments
Loans (given)
Sundry Debtors
Stock of Stationery
Stock of Postal Stamps

Closing Stock
Bills Receivable
Insurance Claim Receivable
Cash in Hand
Cash at Bank
Prepaid expenses
Incomes Receivables
Partners' Current Account

Final Account Adjustments and their double Effects
Adjustments Ist Effects II nd Effect
1. Closing Stock Trading A/c Credit Side Asset Side
2. Outstanding Expenses Add to the Respective Liability Side

Expense on Debit Side
3. Prepaid Expenses Deduct from the Asset Side

Respective Expenses on
the Debit Side
4. Income Received in Deduct from the Liability Side

Advance Respective Income on the
Credit Side
5. Income Receivable Add to the Respective Asset side

Income on the Credit Side
6. Depreciation Debit side of Profit and Deduct Depreciation from

Loss A/c the Respective Assets
7. Interest on Capital Debit side of Profit & Loss Partners' Capital or Current
A/c A/c Credit Side
8. Interest on Drawings Credit side of Profit & Loss Partners' Capital or Current
A/c A/c Debit Side
9. Interest on Loan Debit side of Profit & Loss Add Interest to Loan on
A/c Liability Side
10. Interest on Investments Credit Side of Profit & Add Interest to Investments
Loss A/c on Asset Side
11. Insured Goods Destroyed, Full Value of goods to Insurance Claim admitted
Damaged, Stolen and Credit side of Trading to Asset Side and the
Insurance Claim admitted Account Balance amount to Profit &
Loss A/c Debit side.
12. Uninsured goods Destroyed Full Value of goods to Full value of goods to Debit
, Damaged, stolen Credit side of Trading side of Profit & Loss A/c.
Account
13. Goods distributed as free Trading A/c Credit side Profit & Loss A/c Debit Side
samples
14. Goods withdrawn by a Trading A/c Credit Side Debit side of Partners'
partner Capital / Current A/c
15. Unrecorded purchase of Add to Purchases on the Add to Sundry Creditors on
goods Debit side of Trading the Liability side
Account
16. Unrecorded Sales Add to Sales on the Credit Add to Debtors on the Asset
side of Trading Account side
17. Commission to Partners as Debit side of Profit & Loss Partners' Capital / Current
percentage to Gross Profit A/c A/c Credit Side
18. Sale of goods Included in Add to Sales on the Credit Add to respective Asset on
the Sale of Asset Side of Trading Account the Asset Side.
19. Sale of an Asset included in Deduct from Sales on the Deduct from respective
the Sale of Goods Credit side of Trading Asset on the Asset Side.
Account
20. Advertisement Expenses Show Current year The balance amount of

paid for More than One amount of Advertisement Advertisement is to be
years on the Debit side of Profit shown on the Asset Side.
& Loss Account
21. Carriage Paid on purchase Deduct from carriage Add the Same amount to
of new machinery included inward on the debit side of Machinery on the Asset
in carriage inwards the Trading Account. Side.
22. Goods Purchased for the Deduct from the Add the same amount to
construction of Building Purchases on the debit Buildings on the Asset side.
included in Purchases side of Trading Account
23. Repairs to Asset included Profit & Loss Account Deduct from respective
in Asset Debit Side Asset on the Asset side
before calculating
depreciation.
24. Bills Receivable included a Deduct from Bills Add to Debtors

dishonoured bill Receivable
25. Bills Payable included a Deduct from Bills Payable Add to Creditors
dishonoured bill
1. From the following Trial Balance of M/s Bheem and Raju, you are
required to prepare Trading Profit and Loss Account for the year
ended 31st March, 2014 and the Balance sheet as on that date. Trial
Balance as on 31.3.2014
Particulars Debit (Rs.) Credit (Rs.)
Bheem‟s Capital 2, 00, 000
Raju‟s capital 2, 00, 000
Bheem‟s Drawing 15, 000
Raju‟s Drawing 10, 000
Opening Stock 1, 00, 000
Bills Receivable 25, 000
Purchases 3, 75, 000
Sales 4, 00, 000
Bills Payable 10, 000
Return In ward 5, 000
Return Outward 4, 500
Plant and Machinery 1, 00, 000
Loose Tools 25, 000
Patents 25, 000
Sundry Debtors 1, 25, 000
Sundry Creditors 1, 20, 000
Cash at Bank 77, 500
Wages 19, 000
Salaries 17, 000
Rent and Taxes 7, 500
Insurance 3, 000
Printing and Stationery 2, 000
Power and Fuel 3, 500

9, 34, 500 9, 34, 500
Adjustments:
1. Stock as on 31st March, 2014 Rs. 30,000 and its market value were Rs. 40,000.
2. Write off Rs. 1000 for bad & Provide for Bad and Doubtful debts at 5% on Sundry
Debtors.
3. Goods worth Rs. 1000 were distributed as free samples.
4. Prepaid Insurance Rs. 750.
5. Depreciate Plant and Machinery by 10% p.a. and Patent by 15% p.a.
6. Outstanding Salaries Rs. 2,500, Rent Rs. 2,500, Printing Rs. 3000.
7. Uninsured goods worth Rs 10000 were lost by fire.
Solution: In the books of Bheem and Raju
Trading A/c for the year ended 31.03.14
Particulars Amount Amount Particulars Amount Amount
To Opening 100000 By Sales 400000

Stock
To Purchases 375000 (-) Returns (5000) 395000
(-) Returns (4500) 370500 By Goods distributed as free 1000

samples
To wages 19000 By Goods lost by fire 10000
By Closing stock 30000
By Gross loss c/d 57000
493000 493000
Profit and Loss A/c for the year ended 31 – 3 – 14
To Gross loss b/d 57000
To Salaries 17000
(+) Outstanding 2500 19500
To Rent & Taxes 7500
To Insurance 3000
(-) Prepaid 750 2250
To Printing & Stationery 2000
To Bad debts -
(+) F.B.D. 1000
(+) N.R.D.D. 6200
(-) O.R.D.D. - 7200
To Advertisement 1000
To Depreciation 10000
on Plant and Machinery
On Patent 3750 13750
To Goods lost by fire 10000 By Net loss C/d
Bheem 62850
Raju 62850 125700
125700 125700
Partners Capital A/c
Particulars Bheem Raju Particulars Bheem Raju
To Drawings 15000 10000 By Balance b/d 200000 200000
To Net loss b/d 62850 62850
To Balance b/d 122150 127150

200000 200000 200000 200000
Balance Sheet as on 31.3.14
Liabilities Amount Amount Assets Amount Amount
Capital A/c Bills Receivable 25000
Bheem 122150 Plant & Machinery 100000
Raju 127150 249300 (-) Depreciation (10000) 90000
Bills Payable 10000 Loose Tools 25000
Sundry creditors 120000 Patents 25000
Outstanding Expenses (-) Depreciation (3750) 21250
Salaries 2500 Sundry debtors 125000
Rent & Taxes 2500 (-) F.B.D. (1000)
Printing & Stationery 3000 8000 124000
(-) N.R.D.D. (6200) 117800
Cash at Bank 77500
Closing Stock 30000
Prepaid Insurance 750
387300 387300
2. Nivedha and Suganya are partners sharing profits and losses in
the ratio of 2 : 1. From the following Trial Balance prepare Trading
and Profit and loss account for the year ending 31st March, 2014.
Trial Balance as on 31.3.2014
Stock 20, 000
Sundry Debtors 18, 000
Bills payable 10, 000
Purchases 40, 000
Wages 8, 500
Returns Outward 2, 500
Salaries 2, 700
Office Expenses 2, 400
Insurance 1, 300
Plant & Machinery 30, 000
Sundry Creditors 21, 500
Rent 1, 800
Sales 60, 000
Reserve for Doubtful Debts 500
Travelling Expenses 1, 500
Returns Inward 3, 500
Land and Building 44, 800
Bank 6, 600
Nivedha‟s capital 60, 000
Suganya‟s capital 30, 000
1, 84, 500 1, 84, 500

1. Closing stock was valued at Rs. 26,500.
2. Provide 10% Depreciation on Plant and Machinery.
5. Maintain Reserve for Doubtful debts at 1% of Sundry debtors.
6. Outstanding rent for the current year Rs. 200.
7. Goods worth Rs. 100 were taken over by Nivedha for her personal use, but no entry is
made in the books.
Solution: In the books of Nivedha and Suganya

Stock
To Purchases 40000 (-) Returns -3500 56500
(-) Returns -2500 37500 By Goods distributed as free 1000

samples
To wages 8500 By Goods withdrawn by Partner 100

Nivedha
By Closing stock 26500
To Gross Profit 18100

C/d
84100 84100
To Salaries 2700 By Gross Profit b/d 18100
To Office Expenses 2400 By O.R.D.D. 500
To Insurance 1300 (-) N.R.D.D. 180

(-) Prepaid (300) 1000 (-) F.B.D. -
To Rent 1800 (-) Bad debts - 320
To Travelling Expenses 1500
To Depreciation on 3000
Plant and Machinery
To Net Profit C/d
Nivedha 3213
Suganya 1607 4820
18420 18420
Particulars Nivedha Suganya Particulars Nivedha Suganya
To Drawings (Goods) 100 - By Balance b/d 60000 30000
To Balance C/d 63113 31607 By Net Profit b/d 3123 1607
63213 31607 63213 31607
Capital A/c Sundry Debtors 18000
Nivedha 63113 (-) N.R.D.D. -180 17820
Suganya 31607 94720 Plant & Machinery 30000
Bills Payable 10000 (-) Depreciation -3000 27000

Sundry Creditors 21500 Land & Building 44800
Outstanding rent 200 Bills Receivable 3400
Bank 6600
Closing Stock 26500
126420 126420
3. Ravi and Magesh are in a Partnership firm. The trial Balance of
the firm on 31st March, 2014 was as follows. Prepare Trading and
Profit & Loss account for the year ended 31st March, 2014 and a
Balance sheet as on that date. Trial Balance as on 31st March, 2014.
Capitals:
Ravi 15000
Magesh 10000
Drawings:
Ravi 500
Magesh 200
Buildings 20000
Plant and Machinery 6000
Cash at Bank 600
Purchases and Sales 47500 75500
Returns 1500 1000
Carriage 350
Opening Stock 11000
Wages 6000
Debtors and Creditors 17600 12600
Salaries 2500
Rent and Insurance 400
Postage and Telegrams 200
Bad Debts 250
Discount 100 50
Reserve for Bad Debts 750
Outstanding Salaries 100

Trade Expenses 300
115000 115000
1. Partners share Profits and Losses in the ratio of their capitals.
2. Write off Rs. 450 for Bad debts & Reserve for Bad and Doubtful Debts is to be
maintained at 5% on the Debtors.
3. Goods worth Rs. 1, 000 were destroyed by fire and the insurance company admitted a
claim for Rs. 800.
4. Stock as on 31st December, 2004 was valued at Rs. 8, 000.
6. Wages outstanding Rs. 1000
Solution: In the books of Ravi & Magesh
To Opening Stock 11000 By Sales 75500
(-) Returns -1000 46500 By Goods Lost by Fire 1000
To Carriage 350 By Goods distributed as free 1000

sample
To Wages 6000
To Gross Profit 19150 By Closing Stock 8000

c/d
84000 84000

To Rent & Insurance 400 By Discount 50
To Postage and Telegrams 200
To Bad debts 250
(+) F.B.D. 450
(+) N.R.D.D. 858
(-) O.R.D.D. (750) 808
To Discount 100
To Trade Expenses 300
To Goods lost by fire 200
To Advertisements 1000
To Net Profit
Ravi 8215
Magesh 5477 13692
19200 19200
Particulars Ravi Magesh Particulars Ravi Magesh
To Balance c/d 22715 15477 By Net Profit b/d 8215 5477
23215 15477 23215 15477
Capital A/c Buildings 20000

Ravi 22715 Plant and Machinery 6000
Magesh 15277 37992 Cash at Bank 600
Creditors 12600 Debtors 17600
Outstanding Salaries 100 (-) F.B.D. (450)
Outstanding Wages 1000 17150
(-) N.R.D.D. (858) 16292
Insurance Claim 800
Closing Stock 8000
51692 51692
4. Sharma and Varma are in partnership sharing profit and losses in
the ratio of 2: 1 from the following information of Trial balance and
adjustments you are required to prepare profit and loss account,
trading account and Balance sheet as on 31 st March 2014.
Trial Balance as on 31st March, 2014
Insurance 1, 000
R.B.D.D 500
Discount 400
Postage and Telephones 1, 600
Salaries 28, 000
Debtors 33, 000
Creditors 34, 000
Wages 12, 000
Opening Stock 24, 000
Carriage 500
Return Inward 2,800
Purchase and sales 96, 600 1, 50, 800
Bank Overdraft 60, 400
Plant and Machinery 12, 000
Drawings:-
Sharma 4,000
Varma 2,000
Capitals:-
Sharma 30, 000

Varma 26, 000
3, 06, 300 3, 06, 300
1. Write off Rs. 1,000 for bad debts and provide for R.B.D.D @ 5% on debtors.
2. Goods worth Rs. 2,000 were distributed as free samples.
3. Closing Stock 31 – 03- 2014 was valued at cost Rs. 28, 000 while its market value is Rs.
30,000/-.
4. Salaries were outstanding Rs. 1,000.
5. Depreciate Land and Building @ 5% p.a. and Plant and Machinery @ 10% p.a.
6. Goods worth Rs. 3,000 were destroyed by fire, but insurance company admitted the
claim for Rs. 400 only.
7. Varma had taken goods worth Rs. 1000 for his own use, but no entry is made in the
books.
Solution: In the books of Sharma & Varma

Stock
(-) Returns -4600 92000 By Goods Distributed as free 2000

sample
To Wages 12000 By Goods Destroyed by fire 3000
To Carriage 500 By Goods Withdrawn by Partner 1000

Varma

c/d
182000 182000
To Insurance 1000 By Gross Profit b/d 53500
To Bad Debts -
(+) F.B.D. 1000
(+) N.R.D.D. 1600
(-) O.R.D.D. -500 2100
To Discount 400
To Postage and Telephone 1600
To Salaries 28000
To Depreciation
On land and building 4400
On Plant and Machinery 1200 5600
To Net Profit C/d
Sharma 6133
Varma 3067 9200
53500 53500
Particulars Sharma Varma Particulars Sharma Varma
To Drawings 1000 By Net Profit b/d 6133 3067

[Goods]
To Balance c/d 32133 26067
36133 29067 36133 29067
Capital A/c Prepaid Insurance 400
Sharma 32133 Debtors 33000
Varma 26067 58200 (-) F.B.D. -1000
Creditors 34000 32000
Bank Overdraft 60400 (-) N.R.D.D. -1600 30400
Outstanding Salaries 1000 Plant & Machinery 12000
(-) Depreciation -1200 10800
Land & Building 88000
Closing Stock 28000
Insurance Claim 400
153600 153600
5. From the following information you are required to prepare the
Trading account, profit and loss account and Balance sheet as on
31st March, 2014. Trial Balance as on 31st March, 2014
Ronaldo Capital 1, 00, 000
Ricardo‟s capital 2, 30, 000
Ronaldo‟s Drawing 4, 000
Ricardo‟s Drawing 1, 000
Stock on 1 –4 – 2013 2, 20, 000
Sales 2, 00, 000
Bills Payable 1, 60, 000
Loose Tools 24, 000
Patents 25, 000
Wages 19, 000
Salaries 17, 500
Insurance 3, 000

9, 34, 500 9, 34, 500
1. Stock on 31st March, 2014 is valued at Rs. 30,000 but is market value is Rs. 35,000.
2. Depreciate plant and machinery @ 5% p.a. Patents by 20%.
3. Insurance were prepaid for Rs. 200.
4. Salaries outstanding amounted to Rs. 800.
6. Goods worth Rs. 5000 were destroyed by fire and the insurance company admitted a
7. Ronaldo has withdrawn goods worth Rs. 500 for his own use, but no entry is passed in
the books.
Solution: In the books of Ronaldo & Ricardo

Stock
To Purchases 295000 (-) Return -5000 195000
(-) Return -4500 290500 By Goods destroyed by fire 5000
To Wages 19000 By Goods withdrawn by Partner 500

Ronaldo
To Power & 3500

Fuel
By Closing Stock 30000
By Gross Loss C/d 302500
533000 533000

To Gross Loss b/d 302500
To Salaries 17500
To Insurance 3000
(-) Prepaid -200 2800
To Bad debts -
(+) F.B.D. -
(+) N.R.D.D. 12500
(-) O.R.D.D. - 12500
To Depreciation
On Plant & Machinery 5000
On Patents 5000 10000
To Goods lost on fire 2000
By Net Loss c/d
Ronaldo 179025
Ricardo 179025 358050
358050 358050
Particulars Ronaldo Ricardo Particulars Ronaldo Ricardo
To Drawings 500 -
[Goods]
To Net Loss b/d 179025 179025
To balance c/d - 49975 By Balance c/d 83525 -
183525 230000 183525 230000
Ronaldo - Plant & Machinery 100000
Ricardo 49975 49975 (-) Depreciation (5000) 95000
Sundry Creditors 240000 Patents 25000
Outstanding Salaries 800 (-) Depreciation -5000 20000
Sundry Debtors 125000
(-) N.R.D.D. -12500 112500
Cash at Bank 77550
Insurance Claim 3000
Closing Stock 30000
Ronaldo's Capital 83525
450775 450775
6. Following is the Trial Balance of Mano and Prakash as on 31 st
March, 2014 who share Profits and Loses to the ratio of 3:2. Interest
on capital was allowed at 5% p.a. Prepare Trading A/c and Profit &
Loss A/c for the year ending 31 st March, 2014 and a balance sheet
as on that date. Trial Balance as on 31st March, 2014
Debit Balance Rs. Credit Balance Rs.
Opening Stock 10000 Return Outward 1250
Sundry Debtors 14100 Sundry Creditors 15800
Purchases 20000 Sales 35000
Wages 4250 R.B.D.D. A/c. 200
Salaries 1350 Capital A/c.
Office expenses 1223 Mano 35000
Discount 650 Prakash 10000
Rent, Rates & Taxes 900 Loan at 9% 2000
Plant & Machinery 15000 (Taken on 1.10.2004)
Return Inward 1750
Cash at Bank 7327
Current A/c :
Mano 2100
Prakash 600
99250 99250
Additional Information
2. Unpaid wages Rs. 750.
3. Outstanding salary Rs. 657.
4. Provide depreciation on Plant & Machinery at 10% p.a. and on land & building at 5% p.a.
5. Write of Rs. 100 as bad debts and provide R.B.D.D. at 5% on debtors.

6. Rent, Rates and Taxes prepaid Rs. 100.
Solution: In the books of Mano & Prakash
(-) Returns -1250 18750
To Wages 4250
To Gross Profit c/d 20000 By Closing Stock 20500
53750 53750
To Office Expenses 1223
To Discount 650
To Rent, Rates & Taxes 900
(-) Prepaid -100 800
To Bad debts -
(+) F.B.D. 100
(+) N.R.D.D. 700
(-) O.R.D.D. -200 600
To Depreciation
On Plant and Machinery 1500
On Land & Building 1000 2500
To Interest on Loan 90
To Interest on Capital
Mano 1750
Prakash 500 2250
To Net Profit c/d
Mano 5928
Prakash 3952 9880
20000 20000
Partners Current A/c
Particulars Ravi Magesh Particulars Ravi Magesh
To Balance b/d 2100 600 By Interest on Capital 1750 500
7678 4452 7678 4452
Capial a/c Sundry Debtors 14100
Mano 35000 (-) F.B.D. 100
Prakash 10000 45000 14000
Current A/c (-) N.R.D.D. -700 13300
Mano 5578 Plant and Machinery 15000
Prakash 3852 9430 (-) Depreciation -1500 13500

Loan @ 9% 2000 (-) Depreciation 1000 19000
(+) Interest 90 2090 Cash at Bank 7327
Outstanding Closing Stock 20500

Expenses
Wages 750 Prepaid Rent, Rates & 100

Taxes
Salary 657 1407
73727 73727
7. Following is the Trial Balance of Devi and Sridevi sharing profits
and losses equally. Prepare a Trading and Profit & Loss account for
the year ending 31st March, 2014 and a Balance Sheet as on that
date after considering the adjustment given below.
Trial Balance as on 31st March,
Particulars Rs. Particulars Rs.
(Debit) (Credit)
Stock (1-4-1995) 44000 Capital A/c
Purchases 170000 Devi 80000
Returns Inwards 10000 Sridevi 80000
Carriage 4000 Sales 320000
Motive Power 6000 Creditors 40000
Wages 56000 Commission 4000
Trade Expenses 4000 Bank Loan 32000
Salaries 38000
Insurance 2400
Postage 3600
Commission 5000
Plant & Machinery 60000
Furniture 16000
Advertising 8000
Office Rent (10 months) 10000
Drawings
Devi 14000
Sridevi 6000
Building 24000
Cash in Hand 3000

556000 556000
Adjustments
1. Stock on 31.3.1996 was valued at cost price Rs. 80,000 and market price Rs. 72,000.
2. Insurance has been paid for one year ending 31.6.1996.
3. Goods withdrawn by Devi amounting to Rs. 10,000 during the year were not recorded in
the books.
4. Bad debts were Rs. 2000 and an R.D.D. is to be created at 5% on debtors.
5. Goods of Rs. 6000 were purchased on 30.3.1996 and also included in the closing stock,
but the purchase was not recorded in the books of account
Solution: In the books of Devi & Sridevi
(+) Unrecorded 6000 176000 By Goods withdrawn by 10000

partner Devi
To Carriage 4000
To Motive Power 6000
To Wages 56000

C/d
392000 392000
To Trade Expenses 4000 By Gross Profit C/d 106000

To Salaries 38000 By Commission 4000
To Insurance 2400
(-) Prepaid -600 1800
To Postage 3600
To Commission 5000
To Advertising 8000
To Office Rent 10000
To Bad Debts -
(+) F.B.D. 2000
(+) N.R.D.D. 3500
(-) O.R.D.D. - 5500
To Net Profit C/d
Devi 16050
Sridevi 16050 32100
110000 110000
Particulars Devi Sridevi Particulars Devi Sridevi
To Drawings 14000 6000 By Balance C/d 80000 80000
To Drawings 10000 - By Net Profit b/d 16050 16050
[Goods]
To Balance C/d 72050 90050
96050 96050 96050 96050

Devi 72050 (-) F.B.D. -2000
Sridevi 90050 162100 70000
Creditors 40000 (-) N.R.D.D. 3500 66500
(+) Unrecorded Purchase 6000 46000 Plant & Machinery 60000
Bank Loan 32000 Furniture 16000
Outstanding Rent 2000 Building 24000
Cash in Hand 3000
Closing Stock 72000
242100 242100
8. From the following Trial Balance of Meena and Reena being equal
partners, you are required to prepare Trading and Profit & Loss A/c
for the year ended 31st March, 2014 and Balance Sheet as on that
date after taking into consideration the additional information. Trial
Balance as on 31st March, 2014
(Debit) (Credit)
Opening Stock 60000 Capital A/c
Drawings: Meena 22000
Meena 1000 Reena 18000
Reena 1500 Reserve Fund 21600
Insurance 600 Sales 130000
Salaries and Wages 4500 Bills Payable 1000
Carriage 2500 Creditors 16000
Purchase 65000 Returns 500
Bills Receivable 600 Reserve for Bad & 800
Rent 3500 Doubtful Debts
Debtors 18000
Returns 1000
Machinery 12000
Travelling Expenses 3000
Cash at Bank 1000
Building 30000
Office Expenses 2700
Advertisement 3000
(for 3 years)
209900 209900
Adjustments:
1. Closing stock: cost Rs. 25,000 and market price Rs. 30,000.
2. Allow interest on capital at 10% p.a.
3. Prepaid insurance Rs. 50.
4. Provide for R.B.D.D. at 5% on debtors.
5. Uninsured goods costing Rs. 3000 were destroyed by fire.
6. Outstanding expenses: Salaries Rs. 1000; Rent Rs. 500.
7. Provide depreciation on Machinery at 20%; Building 2 ½ %.
Solution: In the books of Meena & Reena
(-) Return -500 64500 By Goods lost by fire 3000
To Carriage 2500
To Gross Profit C/d 30000 By Closing Stock 25000
157000 157000
To Insurance 600 By Gross Profit c/d 30000
(-) Prepaid -50 550
To Salaries & Wages 4500

To Rent 3500
To Travelling Expenses 3000
(-) Prepaid -2000 1000
To Bad debts -
(+) F.B.D, -
(-) N.R.D.D. 900
(-) O.R.D.D. -800 100
To Depreciation
On Machinery 2400
On Building 750 3150
Meena 2200
Reena 1800 4000
To Net Profit C/d
Meena 1500
Reena 1500 3000
30000 30000
Particulars Meena Reena Particulars Meena Reena
To Balance c/d 24700 19800 By Interest on Capital 2200 1800

By Net Profit b/d 1500 1500
25700 21300 25700 21300
Meena 24700 Debtors 18000
Reena 19800 44500 (-)N.R.D.D. -900 17100
Reserve Fund 21600 Machinery 12000
Creditors 16000 Cash at bank 1000
Outstanding Expenses Building 30000
Salaries 1000 (-) Depreciation 750 29250
Rent 500 1500 Closing Stock 25000
Prepaid Advertisement 2000
84600 84600
9. Karthik and Jones are partners sharing profits and losses in equal
ratio. From the following Trial Balance you are required to prepare
Trading and Profit & Loss account for the year ended 31 st March,
2014 and Balance Sheet as on that date after taking into
consideration the additional information. Trial Balance as on 31 st
March, 2014.
Particulars Amount Particulars Amount
(Debit) (Credit)
Land and Building 44500 Capitals
Plant 9750 Karthik 60000
Drawings Jones 40000
Karthik 3000 Sales 57000
Jones 2000 Suppliers 9500
Opening Stock 26000 Account
Wages 5000 Reserve for
Purchases 34500 Doubtful Debts 500
Carriage 700 Outstanding
Office Expenses 2270 Expenses 500
Rent, Rates & Taxes 1750
Insurance 480
Motor van 20000
Salaries 1750
Bad debts 950
Customers Account 14600
Cash at Bank 250
167500 167500
Additional Information:
1. Closing stock on 31st March, 1998 was at cost Rs. 60,000 and Market price Rs. 50,000.
2. Provide 10% p.a. interest on Capital.
3. Depreciate plant at 10% p.a.
4. Jones‟s withdrawal of goods worth Rs. 1,000 for personal use but not recorded in the
books.
Solution: In the books of Karthik & Jones
To Purchases 34500 By Goods withdrawn by 1000

Jones
To Wages 5000
To Carriage 700

C/d
108000 108000
To Office Expenses 2270 By Gross Profit b/d 41800
To Insurance 480
To Salaries 1750
To Bad debts 950
(+) F.B.D. -
(+) N.R.D.D. -
(-) O.R.D.D. -500 450
To Depreciation on Plant 975
Karthik 6000
Jones 4000 10000
To Net Profit C/d
Karthik 12063
Jones 12062 24125
41800 41800
Particulars Karthik Jones Particulars Karthik Jones
To Drawings 3000 2000 By Balance b/d 60,000 40,000
To Drawing - 1000 By Interest on Capital 6000 4000
[Goods]
78062 56062 78063 56062
Capital A/c Land & Building 44500
Karthik 75063 Plant 9750
Jones 53062 128125 (-) Depreciation -975 8775
Creditors 9500 Motor Van 20000
Outstanding Expenses 500 Debtors 14600

Cash at bank 250
Closing Stock 50000
138125 138125
10. Mani and Sonu are the partners sharing profits and losses
equally. You are required to prepare the Trading and profit and loss
account for the year ended 31st March, 2014 and a Balance sheet as
at that date after making the necessary adjustments. Trial Balance
as on 31st March, 2014.
Debit Balance Amount Credit Balance Amount
Buildings 70000 Mani‟s Capital 80000
Plant and Machinery 60000 Sonu‟s Capital 100000
Furniture 16000 Discount Received 1800
Sundry Debtors 28800 Loan From Vijay 30500
Return Inwards 6000 Sales 120000
Discount 2600 Sundry Creditors 30000
Printing and Stationery 1500 Reserve for Bad Debts 2000
Insurance Charges 1600 Return Outward 3700
Bad debts 1400
Salaries 19300
Purchases 98000
Cash at Bank 25800
Stock ( on 1.4.2013) 20000
Carriage Inwards 2500
Legal Charges 500
Mani‟s Drawings 8000

Sonu‟s Drawings 6000
3,68,000 3,68,000
Adjustments:
1. The stock on 31.03.14 was of the value of Rs. 44,000 which is less than its market value
by 2,000.
2. Goods worth Rs. 4,000 were received on 31 st December, 1997 and were included in the
closing stock, but purchase invoice was omitted to be entered in the books.
3. Make reserve for discount at 5% on debtors and creditors.
Solution: In the books of Mani & Sonu
(-) Returns -3700
94300
(+) Unrecorded 4000 98300
To Carriage inward 2500
158000 158000
To Discount 2600 By Gross Profit b/d 37200

To Printing & Stationery 1500 By O.R.D.D. 2000
To Insurance Charges 1600 (-) N.R.D.D. -
To Salaries 19300 (-) F.B.D. -
To Legal Charges 500 (-) Bad debts 1400 600
To Discount on Debtors 1440 By Discount on Creditors 1700
To Net Profit C/d
Mani 7180
Sonu 7180 14360
41300 41300
Particulars Mani Sonu Particulars Mani Sonu
To Balance b/d 79180 101180 By Net Profit b/d 7180 7180
87180 107180 87180 107180
Mani 101180 Plant & Machinery 60000
Sonu 79180 180360 Furniture 16000
Loan from Vijay 30500 Sundry Debtors 28800
Sundry Creditors 30000 (-) Discount -1440 27360
(+) Unrecorded Sales 4000 Cash at Bank 25800
34000 Closing Stock 44000

(-) Discount -1700 32300
243160 243160
11. From the following Trial Balance of Rajini and Kamal, You are
required to prepare a Trading and Profit and Loss account for the
year ended 31st March, 2014 and Balance sheet as on that date after
taking into consideration the additional information. They share
profits and losses in their capital ratio. Trial Balance as on 31st
March, 2014
Particulars Amounts Particulars Amounts
Drawings Capital Account
Rajini 2000 Rajini 40000
Kamal 1000 Kamal 1000
Opening Stock 12000 Creditors 30000
Office Salaries 6000 Return Outwards 2400
Royalties 2000 Return Outwards 2400
Trade Expenses 1400 Bills Payable 6000
Advertisement 5200 Reserve Fund 4000
Wages & Salaries 10400
Cash in Hand 8000
Debtors 50000
Bad debts 400
Investments 16000
Motor Van 30000
Furniture 10000
Office Rent 3400
Freehold Property 16000
Bills Receivable 4000
Discount 1600
2, 83, 400 2, 83, 400
Adjustments:
1. Closing stock was valued at Rs. 17, 600
2. Audit Fee for the year was outstanding Rs. 2, 400
3. Create R.D.D at 5% on Debtors.
4. The goods for Rs. 5, 600 purchased and received on 25 th March, 2014 were not recorded
in the purchase book.
5. Depreciate freehold property at 10% and Motor Van at 25%
Solution: In the books of Rajini and Kamal
To Purchases 80000
(-) Return -2400
77600
To Royalties 2000
To Wages & Salaries 10400 By Closing Stock 17600
To Gross Profit C/d 50000

157600 157600
To Office Salaries 6000 By Gross Profit b/d 58000
To Bad debts 400
(+) F.B.D. -
(+) N.R.D.D. 2500
(-) O.R.D.D. -1000 1900
To Office Rent 3400
To Discount 1600
To Outstanding Audit Fees 2400
To Net Profit C/d
Rajini 11240
Kamal 16860 28100
50000 50000
Particulars Rajini Kamal Particulars Rajini Kamal
To balance c/d 49240 75860 By Net Profit b/d 11240 16860
51240 76860 51240 76860

Capital A/c Cash in hand 8000
Rajini 49240 Debtors 50000
Kamal 75860 125100 (-) N.R.D.D. -2500 47500
Creditors 30000 Investments 16000
(+) Unrecorded Purchases 5600 35600 Motor Van 30000
Bills Payable 6000 Furniture 10000
Reserve Fund 4000 Plant & Machinery 24000
Outstanding Audit Fees 2400 Freehold Property 16000
Closing Stock 17600
173100 173100
12. Ajith, Vijay and Surya were partners sharing profits and losses
equally. Following is their Trial Balance for the year ended
31st March, 2006. Trial Balance as on 31 st March, 2006
Particulars Debit Credit
Rs. Rs.
Purchase and Sales 100000 200000
Salaries 11300
Stock (1.4.2005) 28000
Bills receivable and Bills Payable 60400 18100
Land and Building 48300
Returns 6300
Wages 25100
Cash at Bank 30000
Insurance 4500
Advertisement 9300
Furniture 20700
Rent & Taxes 4700
Interest 2700
Capital : Ajith 60000
Vijay 40000
Surya 20000
376800 376800
1. Closing stock is valued at Rs. 37,500.
2. Depreciate Furniture @10% p.a. and Land and Building @5% p.a.
3. Goods of Rs. 3,000 are purchased on 31.3.2006 are included in the closing stock but
the entry is not passed in the books.
4. Insurance is prepaid to the extent of Rs. 1,500.
5. Salaries of Rs. 3,400 and wages of Rs. 4,700 are outstanding.
6. Write off Rs. 1200 as bad debts from Debtors and provide 5% for Reserve for Doubtful
Debts.
Prepare: Trading A/c and Profit and Loss A/c for the year ended 31 st March, 2006 and
Balance Sheet as on that date.
Solution: In the books of Ajith, Vijay & Surya
(+) Unrecorded 3000 103000
To Wages 25100
(+) Outstanding 4700 29800 By Closing Stock 37500
231200 231200

(+) Outstanding 3400 14700 By Interest 2700
To Insurance 4500
(-) Prepaid -1500 3000
To Bad debts -
To F.B.D. 1200
To N.R.D.D. 1350
To O.R.D.D. - 2550
To Depreciation
On Furniture 2070
On Land & Building 2415 4485
To Net Profit c/d
Ajith 11455
Vijay 11455
Surya 11455 34365
73100 73100
Particulars Ajith Vijay Surya Particulars Ajith Vijay Surya
To Balance c/d 71455 51455 31455 By balance b/d 60000 40000 20000
By Net Profit b/d 11455 11455 11455
71455 51455 31455 71455 51455 31455

Ajith 71455 (-) F.B.D. -1200
Vijay 51455 27000
Surya 31455 154365 (-) N.R. D.D. -1350 25650
Bills Payable 18100 Bills Receivable 60400
(+) Unrecorded 3000 39000 (-) Depreciation 2415 45885
Purchase
Outstanding Expenses Cash at bank 30000
Wages 4700 Furniture 20700
Salaries 3400 8100 (-) Depreciation -2070 18630
Closing Stock 37500
219565 219565
13. Following is the Trial Balance of Jitesh and Pritesh. The
partners share profits and losses equally. [March 2012]
Trial balance as on 31st March, 2010
Particulars Debit balances Credit balances
Capital – Jitesh 200000
Pritesh 120000
Bills Receivable and Bills Payable 40000 50000
Opening Stock 70000
Purchases and Sales 194000
Returns 3000 4000
Salaries 15600
Wages 28400
Conveyance 2200
Commission 6000
Miscellaneous Expenses 3200
Warehouse Rent 9000
Brokerage 3000
Dock charges 4200
Insurance 4800
Goodwill 76000
Shares in Bajaj Ltd. 50000
Cash in hand 3600
Sundry Debtors and Creditors 56000 60000
Motor van 60000
803000 803000
Adjustments
1. Closing stock was valued at Rs. 75000.
2. Depreciate land and building and motor van at 5% p.a.
3. Insurance is paid for the year ended 31st May, 2010.
4. Jitesh has taken goods of Rs. 3000 for his personal use.
5. Goods of Rs. 8,000 were destroyed by fire and the Insurance Company admitted a claim
of Rs. 6,400 only.
6. Commission due but not received Rs. 1600
Prepare after taking into account the adjustments. Trading and Profit and Loss account for
the year ended 31st March 2010 and Balance sheet as on that date.
Solution: In the books of Jitesh & Pritesh
(-) Return -4000 190000 By Goods taken over by 3000

Jitesh
To Wages 28400 By Goods destroyed by fire 8000
To Dock Charges 4200

C/d
446000 446000

To Miscellaneous Expenses 3200 By Commission 6000
To Warehouse Rent 9000 (+) Outstanding 1600 7600
To Brokerage 3000
To Insurance 4800
(-) Prepaid -800 4000
To Depreciation
Motor Van 3000 12000
To Loss by Fire 1600
To Conveyance 2200
To Net Profit C/d
Jitesh 55200
Pritesh 55200 110400
161000 161000
Particulars Jitesh Pritesh Particulars Jitesh Pritesh
To Drawings 3000 By Balance b/d 200000 120000
[Goods]
To Balance c/d 252200 175200
255200 175200 255200 175200

Jitesh 252200 Outstanding Commission 1600
Pritesh 175200 427400 Goodwill 76000
Bills Payable 50000 Land & Building 180000
Sundry Creditors 60000 (-) Depreciation @ 5% -9000 171000
Shares in Bajaj Ltd. 50000
Cash in hand 3600
Motor Van 60000
(-) Depreciation @5% -3000 57000
Closing Stock 75000
537400 537400
14. Following is the Trial Balance of Kalavati and Lilavati as on
31st March, 2005 who share profits and losses in the ration of 3:2.
Interest on capital was allowed @5% p.a.
Opening Stock 10000 Return Outwards 1250
Sundry debtors 14100 Sundry Creditors 15800
Wages 4250 R.D.D. 200
Salaries 1350 Capital Account
Office Expenses 1223 Kalavati 35000
Discount 350 Lilavati 10000
Rent, Rates and Taxes 900 Loan @ 9% p.a. 2000
(Taken on 1-10-2004)
Plant & machinery 15000 Bills Payable 12000
Return inwards 1750
Land and Buildings 32000
Cash at bank 4327
Current Account
Kalavati 2100
Lilavati 600
Government bonds 3000
111250 111250
Additional information:
2. Unpaid wages Rs. 750; Outstanding salary Rs. 657.
3. Write off Rs. 100 as bad debts and provide R.D.D. at 5% on debtors.
4. Provide depreciation and plant and machinery at 10% p.a. and on Land and building at
5% p.a.
5. Rent, Rates & Taxes were prepaid Rs. 100.
6. Bills payable included a dishonoured bill of Rs. 3000.
Prepare Trading account and profit and loss account for the year ending 31 st March, 2005
and a balance sheet as on that date. (October 2006 board exam questions.)
In the books of Kalavati & Lilavati
Trading account for the year ended 31st March, 2005.
To Purchases 20000 (-) Return (1750) 33250
(-) Return (1250) 18750 By Closing Stock 20500
To Wages 4250
53750 53750
Profit and loss account for the year ended 31st March, 2005
To Salaries 1350 By Gross Profit 30000

b/d
To office Expenses 1223

To Discount 650
(-) Prepaid (100) 800
To Bad debts -
(+) F. B.D. 100
(+) NRDD 700
(-) ORDD (200) 600
To Depreciation
Land & Buildings 1600 3100
Kalavati 1750
Lilavati 500 2250
To Net Profit Transferred to

Current A/c
Kalavati 5568
Lilavati 3712 9280
20000 20000
Partners’ current accounts
Particulars Kalavati Lilavati Particulars Kalavati Lilavati
7318 4212 7318 4212

Balance sheet as on 31st March, 2005
Capital Account Land & Building 32000
Kalavati 35000 (-) Depreciation @ 5% (1600) 30400
Lilavati 10000 45000 Plant & Machinery 15000
Current Account (-) Depreciation @ 10% (1500) 13500
Kalavati 5218 Sundry Debtors 14100
Lilavati 3612 8830 (-) F.B.D. (100)
Sundry Creditors 15800 14000
(+) Bills Payable Dishonoured 3000 18800 (-) N.R.D.D. (700) 13300
Bills Payable 12000 Closing Stock 20500
(-) Bills Payable Dishonoured (3000) 9000 Prepaid Rent, Rates & Tax 100
Outstanding Cash at Bank 4327
Salaries 657 Government bonds 3000
Wages 750 1407
Loan @9% 2000
(+) Interest 90 2090
85127 85127
15. From the following Trial Balance of M/s Sonia and Sufi, you are
required to prepare Trading Profit and Loss Account for the year
ended 31st March, 2014 and the Balance sheet as on that date. Trial
Sonia‟s Capital 1, 80, 000
Sufi‟s capital 1, 50, 000

Sonia‟s Drawing 14, 450
Sufi‟s Drawing 10, 000
Opening Stock 2, 00, 000
Sales 4, 00, 000
Loose Tools 25, 000
Patents 25, 000
Wages 19, 000
Salaries 17, 500
Insurance 3, 000
9, 34, 500 9, 34, 500
Adjustments:
1. Stock as on 31st March, 2014 Rs. 1, 30,000 and its market value were Rs. 1, 40,000.
2. Write off Rs. 1000 for bad & Provide for Bad and Doubtful debts at 5% on Sundry
Debtors.

5. Depreciate Plant and Machinery by 10% p.a. and Patent by 15% p.a.
6. Outstanding Salaries Rs. 2,500.
7. Uninsured goods worth Rs 1200 were lost by fire.
Solution:
In the books of M/s Sonia and Sufi
Trading Account for the year ended 31.03.2014
Particulars Amt. Amt. Particulars Amt. Amt.
(-) Return (4500) 270500 By Goods distributed as free 1000

samples
To Power and 3500 By Closing Stock 130000

Fuel

C/d
527200 527200
Profit and Loss Account for the year ended 31.03.2014
To Depreciation By Gross Profit b/d 34200
Patent 3750 13750
To Bad debts -
(+) FBD 1000
(+) NRDD 6200
(-) ORDD - 7200
To Salaries 17500
(+) Out Standing 2500 20000
To Rent and Taxes 7500
To Insurance 3000
(-) Prepaid (750) 2250
To Printing and Stationery 2000
To Loss on Fire 1200
By Net Loss c/d
Sonia 10350
Sufi 10350 20700
54900 54900
Partners Capital Account
Particulars Sonia. Sufi Particulars Sonia Sufi
To Drawings 14450 10000 By balance b/d 180000 150000
To Net Loss b/d 10350 10350
To Balance c/d 155200 129650
180000 150000 180000 150000
Liability Amt. Amt. Assets Amt. Amt.

Sonia 155200 Plant and Machinery 100000
Sufi 129650 284850 (-) Depreciation @10% (10000) 90000
Bills Payable 60000 Loose tools 25000
Outstanding Salaries 20000 (-) Depreciation @15% 3750 21250
(-) FBD (1000)
124000
(-) NRDD @ 5% (6200) 117800
Cash at bank 77550
Closing Stock 130000
504850 504850
16. Misha and Latha are partners sharing profits and losses in the
ratio of 2 : 1. From the following Trial Balance prepare Trading and
Profit and loss account for the year ending 31st March, 2014. Trial
Stock 10, 000
Bills payable 10, 101
Purchases 40, 000
Wages 8, 500
Returns Outward 2, 500
Salaries 2, 700
Office Expenses 2, 446
Insurance 1, 300
Plant & Machinery 30, 000
Rent 1, 800
Sales 60, 000
Reserve for Doubtful Debts 400
Travelling Expenses 1, 400
Returns Inward 3, 500
Bank 6, 655
Misha‟s capital 60, 000
Latha‟s capital 30, 000
1, 84, 501 1, 84, 501

2. Provide 10% Depreciation on Plant and Machinery.
6. Outstanding rent for the current year Rs. 200.
7. Goods worth Rs. 100 were taken over by Latha for her personal use, but no entry is made
in the books.
Solution:
In the books of M/s Misha and Latha

samples

Fuel

C/d
527200 527200

To Depreciation By Gross Profit b/d 34200
Patent 3750 13750
To Bad debts -
(+) FBD 1000
(+) NRDD 6200
(-) ORDD - 7200
To Salaries 17500
(+) Out Standing 2500 20000
To Insurance 3000
(-) Prepaid (750) 2250
To Loss on Fire 1200
By Net Loss c/d
Sonia 10350
Sufi 10350 20700
54900 54900
Particulars Sonia. Sufi Particulars Sonia Sufi

To Balance c/d 155200 129650
180000 150000 180000 150000
Sonia 155200 Plant and Machinery 100000
Sufi 129650 284850 (-) Depreciation @10% (10000) 90000
Outstanding Salaries 20000 (-) Depreciation @15% 3750 21250
(-) FBD (1000)
124000
(-) NRDD @ 5% (6200) 117800
Cash at bank 77550
504850 504850
17. Surya and Abhijeet are in a Partnership firm. The trial Balance
of the firm on 31st March, 2014 was as follows. Prepare Trading and
Profit & Loss account for the year ended 31st March, 2014 and a
Balance sheet as on that date. Trial Balance as on 31st March, 2014.
Capitals:
Surya 15000
Abhijeet 10000
Drawings:
Surya 500
Abhijeet 200
Buildings 20000
Cash at Bank 600
Returns 1500 1000
Carriage 350
Opening Stock 11000
Wages 6000
Salaries 2500
Rent and Insurance 400
Postage and Telegrams 200
Bad Debts 250
Discount 100 50
Reserve for Bad Debts 750

Outstanding Salaries 100
Trade Expenses 300
115000 115000
1, 15, 000 1, 15, 000
1. Partners share Profits and Losses in the ratio of their capitals.
2. Write off Rs. 450 for Bad debts & Reserve for Bad and Doubtful Debts is to be maintained
at 5% on the Debtors.
3. Goods worth Rs. 1, 000 were destroyed by fire and the insurance company admitted a
claim for Rs. 800.
4. Stock as on 31st December, 2004 was valued at Rs. 8, 000.
6. Wages outstanding Rs. 1000.
Solution:
In the books of M/s Surya and Abhijeet
(-) Return (1000) 46500 By Goods distributed as free samples 1000
To Carriage 350 By Goods destroyed by fire 1000
To Wages 6000 By Closing Stock 8000
(+) Out standing 1000 7000

84000 84000
To Rent and Insurance 400 By Discount 50
To Postage and Telegram 200
To Bad debts 250
(+) F.B.D. 450
(+) N.R.D.D. 858
(-) O.R.D.D. (750) 808
To Discount 100
To Trade expenses 300
[1000 – 800]
To Net Profit C/d
Surya 8215
Abhijeet 5477 13692
19200 19200
Particulars Surya Abhijeet Particulars Surya Abhijeet
23215 15477 23215 15477

Surya 22715 Plant and Machinery 6000
Abjijeet 15277 37992 Cash at bank 600
Outstanding Salaries 100 (-) F.B.D. (450)
Outstanding Wages 1000 17150
(-) N.R.D.D. (858) 16292
Insurance Claim 800
Closing Stock 8000
51692 51692
18. Agarkar and Dravid are in partnership sharing profit and losses
in the ratio of 2: 1 from the following information of Trial balance
and adjustments you are required to prepare profit and loss account,
trading account and Balance sheet as on 31 st March 2014. Trial
Balance as on 31st March, 2014
Insurance 1, 000
R.B.D.D 500
Discount 400
Postage and Telephones 1, 600
Salaries 28, 000
Debtors 33, 000
Creditors 34, 000
Wages 12, 000
Opening Stock 24, 000
Carriage 500
Return Inward 2,800
Purchase and sales 96, 600 1, 50, 800
Bank Overdraft 60, 400
Plant and Machinery 12, 000
Drawings:-
Agarkar 4,000
Dravid 2,000
Capitals:-
Agarkar 30, 000

Dravid 26, 000
3, 06, 300 3, 06, 300
1. Write off Rs. 1,000 for bad debts and provide for R.B.D.D @ 5% on debtors.
2. Goods worth Rs. 2,000 were distributed as free samples.
3. Closing Stock 31 – 03- 2014 was valued at cost Rs. 28, 000 while its market value is Rs.
30,000/-.
4. Salaries were outstanding Rs. 1,000.
5. Depreciate Land and Building @ 5% p.a. and Plant and Machinery @ 10% p.a.
6. Goods worth Rs. 3,000 were destroyed by fire, but insurance company admitted the claim
for Rs. 400 only.
7. Dravid had taken goods worth Rs. 1000 for his own use, but no entry is made in the
books.
Solution:
In the books of M/s Agarkar and Dravid

samples
To Carriage 500 By Goods taken over by partner 1000

Dravid

C/d
182000 182000
To Discount 400
To Postage and Telephone 1600
To Bad debts -
(+) F.B.D. 1000
(+) N.R.D.D. 1600
(-) O.R.D.D. (500) 2100
To Salaries 28000
To Depreciation
Land and Building 4400 5600
[3000 – 400]
To New Profit C/d
Agarkar 6133
Dravid 3067 9200
53500 53500
Particulars Agarkar Dravid Particulars Agarkar Dravid

[Goods]
36133 29067 36133 29067
Capital A/c Prepaid Insurance 400
Agarkar 32133 Debtors 33000
Dravid 26067 58200 (-) F.B.D. (1000)
Bank Over draft 60400 32000
Creditors 34000 (-) N.R.D.D. (1600) 30400
Outstanding Salaries 1000 Plant and Machinery 12000
(-) Depreciation @10% 1200 10800
(-) Depreciation (4400) 83600
Closing Stock 28000
Insurance Claim 400
153600 153600
19. From the following information you are required to prepare the
Trading account, profit and loss account and Balance sheet as on
31st March, 2005.
Sachin‟s Capital 1, 00, 000
Ganguly‟s capital 2, 30, 000
Sachin‟s Drawing 4, 000
Ganguly‟s Drawing 1, 000
Stock on 1 – 1 – 2004 2, 20, 000
Sales 2, 00, 000
Bills Payable 1, 60, 000
Loose Tools 24, 000
Patents 25, 000
Wages 19, 000
Salaries 17, 500
Insurance 3, 000

9, 34, 500 9, 34, 500
1. Stock on 31st March, 2004 is valued at Rs. 30,000 but is market value is Rs. 35,000.
2. Depreciate plant and machinery @ 5% p.a. Patents by 20%.
3. Insurance were prepaid for Rs. 200.
4. Salaries outstanding amounted to Rs. 800.
6. Goods worth Rs. 5000 were destroyed by fire and the insurance company admitted a
7. Sachin has withdrawn goods worth Rs. 500 for his own use, but no entry is passed in the
books.
Solution:
In the books of M/s Sachin and Ganguly

Stock
(-) Return (4500) 290500 By Goods withdrawn by Partner 500

Sachin

Fuel
By Gross Loss c/d 302500
527200 527200
To Gross Loss b/d 302500
To Salaries 17500
To Insurance 3000
(-) Prepaid (200) 2800
To Depreciation
Patents 5000 10000
To Bad debts -
(+) FBD -
(+) NRDD 12500
(-) ORDD - 12500
(5000 – 3000)
By Net Loss C/d
Sachin 179025
Ganguly 179025 358050
358050 358050
Particulars Sachin Ganguly Particulars Sachin Ganguly
To Drawings 500
To Net Loss b/d 179025 179025
To Balance c/d - 49975 By Balance c/d 83525 -
183525 230000 180000 150000
Sachin - Plant and Machinery 100000
Ganguly 49975 49975 (-) Depreciation @5% (5000) 95000
Outstanding Salaries 800 (-) Depreciation @20% (5000) 20000
(-) NRDD @ 10% (12500) 112500
Cash at bank 77550
Closing Stock 30000
Sachin's Capital 83525
450775 450775
20. Mr. Kale and Mr. Gore were partners sharing profits and losses
equally. The Trial Balance of their firm was as under: Prepare
Trading and Profit and Loss Account for the year ended on 31 st
March, 2004 and Balance Sheet as on that date: Trial Balance as on
31st March, 2004.
Opening Stock 30000 Capitals:
Wages 9500 Mr. Kale 30000
Purchases 52500 Mr. Gore 60000
Investments 10000 Current Accounts:
Postage 1000 Mr. Kale 2100
Printing & Stationery 2500 Mr. Gore 1400
Carriage Outwards 1300 Bills Payable 7500
Insurance 3200 10% Bank Loan(Taken on 1.10.2003) 10000
Debtors 35000 Bank Overdraft 6500
Furniture 5500 Creditors 25000
Bad Debts 1200 Sales 70500
Carriage Inwards 1800 R.D.D. 3000
Cash in Hand 5400 Returns Outward 500
Machinery (Purchased on 1.7.03) 32000
Salaries (For 10 months) 15000
Sundry Expenses 2100
Bills receivable 8500
216500 216500
2. Printing and Stationery included Rs. 500 paid for purchase of postal stamps.
3. Depreciate Furniture and Machinery at 10% p.a.

4. 5% interest is to be allowed on capital.
5. Of the debtors Rs. 500 were bad and should be written off, and R.D.D. should be
maintained at 5%.
6. Goods of Rs. 7,500 were purchased on 30th March, 2004 and included in the closing
stock but those purchases were not recorded in the books of accounts.
7. Bills receivable include a dishonoured bill of Rs. 500.
Solution:
In the books of M/s Kale and Gore
To opening stock 30000 By Sales 70500
To Purchases 52500
(-) Return (500)
52000
To Wages 9500
To Carriage inward 1800 By Closing Stock 616500
132000 132000
To Postage 1000 By Gross Profit b/d 31200
(+) Postal Stamp 500 1500

(-) Wrongly recorded (500) 2000
To Carriage Outward 1300
To Insurance 3200
To Bad Debts 1200
(+) FBD 500
(+) NRDD 1750
(-) ORDD (3000) 450
To Salaries 15000
To Sundry Expenses 2100
To Depreciation
Machinery 2400
Furniture 550 2950
Kale 1500
Gore 3000 4500
To Interest on Bank Loan 500
By Net loss c/d
Kale 2650
Gore 2650 5300
36500 36500
Partners Current Account
Particulars Kale Gore Particulars Kale Gore

To Net Loss b/d 2650 2650 By Balance b/d 2100 1400
By Interest on Capital 1500 3000
3600 4400 3600 4400
Capital A/c Investments 10000
Kale 30000 Debtors 350000
Gore 60000 90000 (-) FBD (500)
Current A/c 34500
Kale 950 (+) Bills receivable 500

Dishonoured
Gore 1750 2700 35000
Bills Payable 7500 (-) NRDD (1750) 33250
10% Bank Loan 10000 Furniture 5500
(+) Interest 500 10500 (-) Depreciation (550) 4950
Bank Overdraft 6500 Cash in hand 5400
Creditors 25000 Machinery 32000
(+) Unrecorded 7500 32500 (-) Depreciation (2400) 29600

Purchase
Outstanding Salaries 3000 Bills receivable 8500
(-) Dishonoured (500) 8000
Closing Stock 61500
152700 152700
21. Following is the Trial Balance of Kalavati and Lilavati as on 31 st
March, 2005 who share Profits and Loses to the ratio of 3:2. Interest
on capital was allowed at 5% p.a. Prepare Trading A/c and Profit &
Loss A/c for the year ending 31 st March, 2005 and a balance sheet
as on that date. Trial Balance as on 31st March, 2005
Opening Stock 10000 Return Outward 1250
Sundry Debtors 14100 Sundry Creditors 15800
Wages 4250 R.B.D.D. A/c. 200
Salaries 1350 Capital A/c.
Office expenses 1223 Kalavati 35000
Rent, Rates & Taxes 900 Loan at 9% 2000
Plant & Machinery 15000 (Taken on 1.10.2004)
Return Inward 1750
Cash at Bank 7327
Current A/c :
Kalavati 2100
Lilavati 600
99250 99250
Additional Information
2. Unpaid wages Rs. 750.
3. Outstanding salary Rs. 657.

4. Provide depreciation on Plant & Machinery at 10% p.a. and on land & building at 5% p.a.
5. Write of Rs. 100 as bad debts and provide R.B.D.D. at 5% on debtors.
6. Rent, Rates and Taxes prepaid Rs. 100.
Solution:
In the books of M/s Kalavati and Lilavati
(-) Return (1250) 18750
To Wages 4250
(+) Unpaid 750 5000
To Discount` 650
(-) Prepaid (100) 800
To Bad debts -
(+) FBD 100

(+) NRDD 700
(-) ORDD (200) 600
To Depreciation
Land & Building 1000 2500
Kalavati 1750
Lilavati 500 2250
To Interest on loan 90
To Net Profit C/d
Kalavati 5928
Lilavati 3952 9880
20000 20000
Particulars Kalavarti Lilavati Particulars Kalavati Lilavati
7678 4452 7678 4452
Kalavati 35000 (-) FBD (100)
Lilavati 10000 45000 14000
Current A/c (-) NRDD (700) 13300

Kalavati 5578 Cash at bank 7327
Sundry Creditors 15800 (-) Depreciation (1500) 13500
Loan at 9% 2000 Land & Building 20000
(+) Interest 90 2090 (-) Depreciation (1000) 19000
Unpaid Wages 750 Closing Stock 20500
Outstanding 657 Prepaid Rent, Rates 100
Salaries & Taxes
73727 73727
22. From the following Trial balance of M/s Sanjay and Vijay, you
are required to prepare Trading and Profit and Loss account for the
year ended on 31st March, 2010 and Balance Sheet as on that date
after taking into consideration the additional information given
below.
Balances Balances
Sundry Debtors and Creditors 45800 72700
Bills Receivable and Bills Payable 28200 40000
Return Inward 2000
Salaries & Wages 26000
Carriage Outward 1800
Insurance Premium 2200
Postage and Telegram 1750
Advertisement 3000
Import Duty 2100
Bad Debts 1000
Printing & Stationery 2400
Cash in Hand 1850
Leasehold Premises 80000
Opening Stock 12000
Dividend received 1500

Outstanding Audit Fees 4400
10% Bank Loan (Taken on 1.10.09) 60000
Capital : Sanjay 45000
Vijay 45000
378600 378600
Closing stock was valued at Rs. 25000
Unused Postage Stamps of Rs. 250
Uninsured goods worth Rs. 8000 were stolen from the godown.
Leasehold property is to be run for 10 years w.e.f. 1. 10. 2009.
Depreciate Plant and Machinery at 10% p.a.
Our customer Mr. Ajay became insolvent and could not pay his debts of Rs. 2000.
Solution:
In the books of M/s Sanjay & Ajay
To Import Duty 2100 By Goods lost by Stolen 8000
141000 141000

To Salaries & Wages 26000 By Gross Profit b/d 28400
To Carriage Outward 1800 By Dividend Received 1500
To Insurance Premium 2200
To Postage & Telegram 1750
(-) Unused Postal Stamp -250 1500
To Bad Debts 1000
(+) F.B.D. 2000
(+) N.R.D.D. -
(-) O.R.D.D. - 3000
To Goods Lost By Stolen 8000
To Depreciation
Leasehold Premises 4000
Plant and Machinery 7000 11000
To Interest on Bank Loan 3000 By Net Loss C/d
Sanjay 16000
Vijay 16000 32000
65900 65900
Particulars Sanjay Vijay Particulars Sanjay Vijay
To Net Loss B/d 16000 16000 By Balance b/d 45000 45000
45000 45000 45000 45000

Sanjay 29000 (-) F.B.D. -2000 43800
Vijay 29000 58000 Bills Receivable 28200
Sundry Creditors 72700 Plant & machinery 70000
Outstanding Audit Fees 4400 Cash in Hand 1850
10% Bank Loan 60000 Leasehold Premises 80000
(+) Interest 3000 63000 (-) Depreciation -4000 76000
Closing Stock 25000
Stock of Postal Stamp 250
238100 238100
23. From the following Trial Balance of Kamlesh and Mahajan and
given adjustments, prepare a Trading Account, Profit and Loss
account for the year ended 31st March, 2007 and a Balance Sheet as
on that date. Trial Balance as on 31st March 2007
Particulars Amt.Rs. Particulars Amt. Rs.
Opening Stock 45,000 Capital A/c
Purchases 2,25,000 Kamlesh 25,000
Plant and Machinery 75,000 Mahajan 20,000
Carriage 16,800 Sales 4,50,000
Factory Rent 1,500 Discount Received 750
Insurance 1,050 Sundry Creditors 15,000
Sundry Debtors 60,000 Bad debts Reserve 200
Office Rent 3,000 Bills Payable 2,000
Advertisement 15,000
Bills Receivable 3,000
Drawings: Kamlesh 3,500
Mahajan 2,500
Salaries 18,000
Wages 20,000
Furniture 7,500
Royalty 1,000
Cash at Bank 14,500
5,12,950 5,12,950
(1) Closing stock was valued at Cost price Rs. 35,000 and Market Price 40,000.
(2) Plant– Machinery & Furniture are to be depreciated at 6% & 10% p.a respectively.
(3) Maintain Reserve for Doubtful Debts @ 2 ½ % on Sundry Debtors.
(4) Outstanding Expenses: Factory Rent Rs. 300; Office Rent Rs. 600.
(5) Interest on capital to be allowed at 6% p.a.
(6) Prepaid insurance was Rs. 100.
Solution:
In the books of M/s Kamlesh and Mahajan
To Opening stock 45000 By Sales 450000
To Purchases 225000
To Carriage 16800
To Factory Rent 1500
To Wages 20000
To Royalty 1000 By Closing Stock 35000
To Gross Profit c/d 485000 485000
(-) Prepaid (100) 950 By Discount Received 750
To Office Rent 3000
To Salaries 18000
To Bad debts -
(+) FBD -
(+) NRDD 1500
(-) ORDD (200) 1300
To Depreciation
Furniture 750 5250
Kamlesh 1500
Mahajan 1200 2700
To Net Profit C/d
Kamlesh 64375
Mahajan 64375 128750
176150 176150
Particulars Kamlesh Mahajan Particulars Kamlesh Mahajan
By interest on Capital 1500 1200
90875 85575 90875 85575
Capital Plant & Machinery 75000
Kamlesh 87375 (-) Depreciation @ 6% (4500) 70500

Mahajan 83075 170450 Sundry Debtors 60000
Sundry Creditors 15000 (-) NRDD (1500) 58500
Outstanding Expenses Furniture 7500
Factory Rent 300 (-) Depreciation @10% (750) 6750
Office Rent 600 900 Cash at bank 14500
Closing Stock 35000
188350 188350
24. Ganga and Godawari are partners sharing profits and losses
equally the Trial Balance of their firm on 31st March, 2007 was as
following. Trial Balance as on 31 st March, 2007
Particulars Debit Rs. Credit Rs.
Stock (1-4-2006) 80000
Purchases & Sales 400000 768000
Return Inward 30000
Carriage 7500
Power & Fuel 40000
Wages 35000
Trade Expenses 8000
Salaries 72000
Insurance 6000
Postage 6000
Commission 8000 12000
Furniture 80000
Advertisement 15000
Building 400000
Drawings
Ganga 8000
Godawari 10000
Capital
Ganga 250000
Godawari 250000
12% Bank loan 150000

taken on 1.10.2006
Cash in hand 7500
1490000 1490000
Adjustments:
1. Stock on 31.3.2007 was valued at Cost price Rs. 1,00,000 and Market price Rs.
1,20,000.
2. Depreciate plant and Machinery and Buildings at 20% and 10% respectively.
3. Insurance is paid for one year ending on 30.06.2007.
4. Goods withdrawn by Ganga for her personal use of Rs. 10,000 during the year were
not recorded in the books.
5. Provide Rs. 10,000 as Bad debts and Reserve for Doubtful Debts is to be maintained at
5% on Debtors.
Prepare : Trading Account, Profit and Loss Account for the year ending on 31 st March, 2007
and Balance Sheet as on that date after making the above adjustments.
Solution:
In the books of M/s Ganga & Godawari
To Opening stock 80000 By Sales 768000
To Carriage 7500 By Goods withdrawn by the Partner 10000

Ganga
To Power and 40000

Fuel
To Wages 35000
C/d
848000 848000
To Trade Expenses 8000 By Gross Profit b/d 285500
To Salaries 72000 By Commission 12000
To Insurance 6000
(-) Prepaid -1500 4500
To Postage 3000
To Commission 8000
To Depreciation
Plant and machinery 40000
Building 40000 80000
To Bad Debts -
(+)F.B.D. 10000
(+) N.R.D.D. 3500
(-) O.R.D.D. - 13500
To Interest on Bank Loan 9000
To Net Profit
Ganga 42250
Godawari 42250 84500
292500 292500

Particulars Ganga Godawari Particulars Ganaga Godawari
To Drawings 10000 - By Net Profit b/d 42250 42250
[Goods]
To Balance C/d 274250 282250
292250 292250 292250 292250
Capital A/c Debtors 80000
Ganga 274250 (-) F.B.D. -10000
Godawari 282250 556500 70000
Creditors 60000 (-) N.R.D.D. -3500 66500
12% Bank Loan 150000 Plant & Machinery 200000
(+) Interest 9000 159000 (-) Depreciation -40000 160000
Furniture 80000
Building 400000
Cash in hand 7500
775500 775500
25. Swati, Swity and Sweta were partners sharing profits and losses
equally. Following is their Trial Balance for the year ended
31st March, 2006. Trial Balance as on 31 st March, 2006.
Particulars Debit Rs. Credit Rs.
Purchase and Sales 104000 195300
Salaries 11300
Stock (1.4.2005) 28000
Debtors & Creditors 24200 36000
Bills Receivable & Bills Payable 62400 18100
Returns 6300 2600
Wages 25100
Cash at Bank 30000
Insurance 4500
Advertisement 9300
Furniture 18700
Rent & Taxes 4700
Interest 4800
Capitals :Swati 60000
Swity 40000
Sweta 20000
376800 376800
1. Closing stock is valued at Rs. 37,500.

2. Depreciate Furniture @10% p.a. and Land and Building @5% p.a.
3. Goods of Rs. 3,000 are purchased on 31.3.2006 are included in the closing stock
but the entry is not passed in the books.
4. Insurance is prepaid to the extent of Rs. 1,500.
5. Salaries of Rs. 3,400 and wages of Rs. 4,700 are outstanding.
6. Write off Rs. 1200 as bad debts from Debtors and provide 5% for Reserve for
Doubtful Debts.
Prepare: Trading A/c and Profit and Loss A/c for the year ended 31st March, 2006
and Balance Sheet as on that date.
Solution:
In the books of M/s Swati, Swity and Sweta

(-) Return -2600
101400
(+) Unrecorded 3000 104400
To Wages 25100
226500 226500

(+) Outstanding 3400 14700 By Interest 4800
To Insurance 4500
(-) Prepaid -1500 3000
To Depreciation
Furniture 1870
Land & Building 2415 4285
To Bad Debts -
(+) F.B.D. 1200
(+) N.R.D.D. 1150
(-) O.R.D.D. - 2350
To Net Profit C/d

Swati 10255
Swity 10255
Sweta 10255 30765
69100 69100
Particulars Swati Swity Sweta Particulars Swati Swity Sweta

By Balance b/d 60000 40000 20000
By Net Profit b/d 10255 10255 10255
To Balance c/d 70255 50255 30255
70255 50255 30255 70255 50255 30255

Capital A/c Debtors 24200
Swati 70255 (-) F.B.D. -1200
Swity 50255 23000
Sweta 30255 (-) N.R.D.D. -1150 21850
Creditors 36000 Bills Receivable 62400
(+) Unrecorded Purchase 3000 39000 Land & Building 48300
Outstanding Expenses Cash at Bank 30000
Salaries 3400 Furniture 18700
Wages 4700 8100 (-) Depreciation -1870 16830
215965 215965
26. Prepare Trading and Profit & Loss account for the year ended
31st March, 2014 and Balance sheet as on that date from the
following Trial Balance of Kaveri and Narmada
Kaveri‟s Drawings 4,000 Kaveri‟s Capital 12,000
Narmada‟s Drawings 4,000 Narmada‟s Capital 20,000
Land & Building 21,000 Bills Payable 6,790
Plant & Machinery 12,600 Creditors 14,600
Stock(1.4.2013) 8,000 Purchase Returns 500
Purchases 12,000 Sales 43,000
Wages 5,000
Carriage Outward 500
Carriage Inward 400
Coal 1,260
Salary 7,500
Rent, Rates & Taxes 560
Discount Allowed 300
Cash & Bank Balance 5,080
Sundry Debtors 9,000
Bad Debts 240
Advertisement 1,750
Sales Return 400
Furniture 1,240
Bills Receivable 1,600
96,890 96,890
Adjustments:
1. Closing Stock is valued at Rs. 10,000/- at cost whose market value was Rs.
15,000/-
2. Provision for doubtful debts should be maintained at 5% on sundry debtors.
3. Kaveri has withdrawn goods for his personal use Rs. 500 for which no entry is
passed.
4. Fire occurred in the Godown and goods worth Rs. 5, 000 were destroyed, but
Insurance Company admitted Claim for Rs. 3, 500.
5. Rates prepaid Rs. 60.
Solution:
In the books of M/s KAVERI & NARMADA
To Purchases 12000 (-) Return 400 42600
(-) Return 500 11500 By Goods taken over by

Partners
To Wages 5000 Kaveri 500
To Carriage 400 By Goods destroyed on fire 5000

inward
To Coal 1260
To Gross profit 31940

c/d
58100 58100
To carriage outward 500 By Gross Profit b/d 31940
To Salary 7500
(-) Prepaid 60 500
To Discount Allowed 300
To Bad debts 240
(+) FBD -
(+) NRDD 450
(-) ORDD - 690
[5000 – 3500]
To Net Profit c/d
Kaveri 9370
Narmada 9370 18740
31940 31940

Particulars Kaveri Narmada Particulars Kaveri Narmada
[Goods]
21370 29370 21370 29370
Kaveri 16870 Plant & Machinery 12600
Narmada 25370 42240 Cash & Bank 5080
Bills Payable 6790 Sundry Debtors 9000
Creditors 14600 (-) NRDD 450 8550
Furniture 1240
Closing Stock 10000
Prepaid Rates 60
63630 63630
27. Kamesh and Mani are partners sharing profits and losses in
equal ratio. From the following Trial Balance you are required to
prepare Trading and profit and Loss Account for the year ended 31 st
December, 2005 and Balance sheet as on that date after taking into
consideration the additional information.
Land and Building 44500 Capital : Kamesh 60000
Plant 9750 Mani 40000
Drawings: Kamesh 3000 Sales 57000
Mani 2000 Sundry Creditors 9500
Opening Stock 26000 Reserve for Doubtful 500

Debts
Wages 5000 Outstanding Expenses 500
Purchases 34500
Carriage inwards 700
Office expenses 2270
Rent, Rates and Taxes 1750
Insurance 480
Motor Van (addition on 1st July Rs. 20,000

10,000)
Salaries 1750
Bad debts 950
Debtors 14600
Cash at Bank 250
167500 167500
1. Closing stock on 31st December, 2005 was at cost Rs, 40, 000/- and Market price
Rs. 50,000/-
2. Depreciate Plant at 10% p.a. and Land and Building @ 20% p.a. Depreciate Motor
van by 10% p.a.
3. The goods for Rs. 5, 600 purchases and received on 25th December, 2002 were not
recorded in the purchase book.
4. Insurance is paid for the year ended 31st March 2005.
Solution:
In the books of M/s Kamesh and Mani
To Purchases 34500
To Wages 5000
To Carriage Inward 700
97000 97000

To Office Expenss 2270 By Gross Profit b/d 25200
To Rent, Rates and Taxes 1750
To Insurance 480
(+) Outstanding for 9 months 360 840
To Salaries 1750
To Bad debts 950
(+) F.D.D. -
(+) N.R.D.D. -
(-) O.R.D.D. -500 450
To Depreciation
Plant 975
Motor Van 1500 11375
To Net Profit C/d
Kamesh 3383
Mani 3382 6765
25200 25200
Particulars Kamesh Mani Particulars Kamesh Mani

63383 43382 63383 43382
Kamesh 60383 (-) Depreciation -8900 3600
Mani 41382 101765 Plant 9750
Sundry Creditors 9500 (-) Depreciation -975 8775
(+) Unrecorded 5600 15100 Motor Van 20000
Outstanding Expenses 500 (-) Depreciation -1500 18500
Outstanding Insurance 360 Debtors 14680
Cash at Bank 250
Closing Stock 40000
117725 117725
28. From the following Trial Balance of Shyam and Sundar, You are
required to prepare a Trading and Profit and Loss account for the
year ended 31st December, 2002 and Balance sheet as on that date
after taking into consideration the additional information. They
share profits and losses in their capital ratio. Trial Balance as on
31st December, 2002
Particulars Amounts Particulars Amounts
Drawings Capital Accounts
Shyam 2000 Shyam 40000
Sundar 1000 Sundar 60000
Opening Stock 12000 Creditors 30000
Office Salaries 6000 R.D.D. 1000
Royalties 2000 Return Outwards 2400
Trade Expenses 1400 Bills Payable 6000
Advertisement 5200 Reserve Fund 4000
Wages and Salaries 10400
Cash in Hand 8000
Debtors 50000
Bad Debts 400
Investments 16000
Motor Van 30000
Furniture 10000
Office Rent 3400

Discount 1600
283400 283400
Adjustments:
6. Closing stock was valued at Rs. 17, 600
7. Audit Fee for the year was outstanding Rs. 2, 400
8. Create R.D.D at 5% on Debtors.
9. The goods for Rs. 5, 600 purchased and received on 25th December, 2002 were not
recorded in the purchase book.
10. Depreciate freehold property at 10% and Motor Van at 25%
In the books of M/s Shyam and Sundar
To Purchases 80000
(-) Return -2400
77600
(+) Unrecorded Purchase 5600 83200
To Royalties 2000
To Wages & Salaries 10400
157600 157600
To Office Salaries 6000 By Gross Profit b/d 50000
To Office Rent 3400
To Discount Allowed 1600
To Bad Debts 400
(+) F.B.D. -
(+) N.R.D.D. 2500
(-) O.R.D.D. -1000 1900
To Outstanding Audit Fees 2400
To Depreciation
Freehold property 1600
Motor Van 7500 9100
To Net Profit C/d
Shyam 7600
Sundar 11400 19000
50000 50000
Particulars Shyam Sundar Particulars Shyam Sundar

47600 71400 47600 71400
Capital A/c Cash in Hand 8000
Shyam 45600 Debtors 50000
Sundar 70400 116000 (-) N.R.D.D. -2500 47500
Creditors 30000 Investments 16000
(+) Unrecorded Purchase 5600 35600 Motor Van 30000
Bills Payable 6000 (-) Depreciation 7500 22500
Reserve Fund 4000 Furniture 10000
Outstanding Audit Fees 2400 Plant & machinery 24000
Closing Stock 17600
164000 164000
29. From the following Trial Balance of Somnath and Ambadas being
equal partners, you are required to prepare Trading and Profit &
Loss A/c for the year ended 31st March, 2005 and Balance Sheet as
on that date after taking into consideration the additional
information.
(Debit) (Credit)
Opening Stock 60000 Capital A/c
Drawings: Somnath 22000
Somnath 1000 Ambadas 18000
Ambadas 1500 Reserve Fund 21600
Insurance 600 Sales 130000
Salaries and Wages 4500 Bills Payable 1000
Carriage 2500 Creditors 16000
Purchase 65000 Returns 500
Bills Receivable 600 Reserve for Bad & 800
Rent 3500 Doubtful Debts
Debtors 18000
Returns 1000
Machinery 12000
Travelling Expenses 3000
Cash at Bank 1000
Building 30000
Office Expenses 2700
Advertisement 3000
(for 3 years)
209900 209900
Adjustments:
8. Closing stock: cost Rs. 25,000 and market price Rs. 30,000.
9. Allow interest on capital at 10% p.a.
10. Prepaid insurance Rs. 50.
11. Provide for R.B.D.D. at 5% on debtors.
12. Uninsured goods costing Rs. 3000 were destroyed by fire.
13. Outstanding expenses: Salaries Rs. 1000; Rent Rs. 500.
14. Provide depreciation on Machinery at 20%; Building 2 ½ %.
Solution:
In the books of M/s Somnath and Ambadas
To Purchases 65000 (-) Returns (1000) 129000
(-) Returns (500) 64500 By Goods lost 3000
by fire
To Carriage 2500
To Gross Profit c/d 30000
157000 157000
To Insurance 600 By Gross Profit B/d 30000
(-) Prepaid (50) 550
To Salaries and 4500
Wages
To Rent 3500
To Travelling 3000
To Bad Debts -
(+) FBD -
(+) NRDD 900
(-) ORDD (800 100
(-) Prepaid (2000) 1000
Somnath 2200
Ambadas 1800 4000
To Depreciation
Building 750
Machinery 2400 3150
To Net Profit c/d

Somnath 1500
Maroti 1500 3000
30000 30000
Particulars Somnath Ambadas Particulars Somnath Ambadas
To Balance C/d 24700 19800 By Interest on 2200 1800
Capital
25700 21300 25700 21300
Somnath 24700 Debtors 18000
Ambadas 19800 44500 (-) NRDD (900) 17100
Reserve Fund 21600 Machinery 12000
Bills Payable 1000 (-) Depreciation (2400) 9600
Creditors 16000 Cash at bank 1000
Outstanding salary 1000 Building 30000
Outstanding Rent 500 1500 (-) Depreciation (750) 29250
Closing Stock 25000
Prepaid Advertisement 2000

84600 84600
30. Asha and Nisha are the partners sharing profits and losses
equally. You are required to prepare the Trading and profit and loss
account for the year ended 31st December, 1997 and a Balance sheet
as at that date after making the necessary adjustments. Trial
Balance as on 31st December, 1997.
Buildings 70000 Asha‟s Capital 80000
Plant and Machinery 60000 Nisha‟s Capital 100000
Furniture 16000 Discount Received 1800
Sundry Debtors 28800 Loan From Vijay 30500
Return Inwards 6000 Sales 120000
Discount 2600 Sundry Creditors 30000
Printing and Stationery 1500 Reserve for Bad Debts 2000
Insurance Charges 1600 Return Outward 3700
Bad debts 1400
Salaries 19300
Purchases 98000
Cash at Bank 25800
Stock ( on 1.1.97) 20000
Carriage Inwards 2500
Legal Charges 500
Asha‟s Drawings 8000
Nisha‟s Drawings 6000
3,68,000 3,68,000
Adjustments:
4. The stock on 31.12.97 was of the value of Rs. 44,000 which is less than its market
value by 2,000.
5. On 24th December, 1997 stock of the value of Rs. 6,000 was stolen Insurance
company admitted the claim for Rs. 4,000 only and paid the amount on 7th Jan
1998.
6. Goods worth Rs. 4,000 were received on 31st December, 1997 and were included
in the closing stock, but purchase invoice was omitted to be entered in the books.
7. Make reserve for discount at 5% on debtors and creditors.
Solution:
In the books of M/s Asha and Nisha
(-) Return (3700) By Goods was Stolen 6000
94300
To Carriage inward 2500 By Closing Stock 44000
164000 164000
To Discount 2600 By Discount received 1800
To Printing & Stationery 1500 By Discount on Creditors 1700
To Insurance Charges 1600 By O.R.D.D. 2000
To Legal Charges 500 (-) Old Bad debts (1400)
To Loss on Goods Stolen 2000 (-) F.B.D. -
To Discount on Debtors 1440 (-) N.R.D.D. - 600
To Net Profit C/d
Asha 9180
Nisha 9180 18360
47300 47300
Particulars Asha Nisha Particulars Asha Nisha
89180 109180 89180 109180
Asha 81180 Plant and Machinery 60000

Nisha 103180 184360 Furniture 16000
Loan from Vijay 30500 Sundry debtors 28800
Sundry Creditors 30000 (-) Discount (1440) 27360
(+) Unrecorded 4000 Cash at bank 25800
34000 Closing Stock 44000
(-) Discount (1700) 32300 Insurance Claim 4000
247160 247160
31. From the following Trial Balance of M/s Kale and Gore your are
required to prepare Trading and Profit and Loss account for the year
ended 31st December, 1997 and the Balance sheet as on that date
after taking into account the necessary adjustments. Trial Balance
as on 31st December, 1997
Kale‟s Capital 1, 80, 000
Gore‟s capital 1, 50, 000
Kale‟s Drawing 14, 450
Gore‟s Drawing 10, 000
Stock on 1 – 1 – 2004 2, 00,000
Sales 4, 00, 000

Loose Tools 25, 000
Patents 25, 000
Wages 19, 000
Salaries 17, 500
Insurance 3, 000
8, 34, 500 8, 34, 500
Adjustments:
1. Depreciate Plant and Machinery by 5% and Patents by 15%.
2. Provide for Bad and Doubtful debts @ 5% on Sundry debtors.
3. Prepaid Insurance Rs. 750
4. Outstanding expenses :
a. Salaries Rs. 2,500
b. Wages Rs. 1,000
c. Printing and Stationery Rs. 500.
5. Stock as at 31st December 1997 Rs. 1,30,000.
6. Kale and Gore have taken goods worth Rs. 2,000 and Rs. 3,000 respectively for
their personal use. No entry has been passed in the books.
Solution:
In the books of M/s Kale and Gore
(-) Return (4500) 270500 By Goods taken over by

Partners
To Wages 19000 Kale 2000
(+) Outstanding 1000 20000 Gore 3000 5000

Fuel

C/d
530000 530000
To rent and taxes 7500
To Insurance 3000
(-) Prepaid (750) 2250

To depreciation
Patent 3750 8750
To Bad debts -
(+) FBD -
(+) NRDD 2750
(-)ORDD - 2750
By Net loss C/d
Kale 3875
Gore 3875 7750
43750 43750
Particulars Kale Gore Particulars Kale Gore
To Drawings 2000 3000
[Goods]
To Balance c/d 159675 133125
180000 150000 180000 150000
Capital Bills Receivable 25000

Kale 159675 Plant & Machinery 100000
Gore 133125 292800 (-) Depreciation @5% (5000) 95000
Sundry Creditor 40000 Patents 25000
Outstanding Expenses (-) Depreciation @15% (3750) 21250
Salaries 2500 Sundry debtors 55000
Wages 1000 (-) NRDD @ 5% (2750) 52250
Printing and Stationery 500 4000 Cash at Bank 47550
396800 396800
SINGLE ENTRY ACCOUNTING SYSTEM
1. Following records of Mr. Raj were kept on single entry system. (March 2009)
Particular 31.03.2013 31.03.2014
Stock 15000 14000
Furniture 53500 44000
Plant and 42500 55500
Machinery
Loan Taken 21000 21000
Bank Balance 1900 2100
Debtors 43000 35000
Mr. Raj invested Rs. 4000 in the business. Also he had withdrawn Rs. 15,000 for his
private expenses from business. Rs. 500 to be provided for bad debts. Depreciate
plant and machinery @ 5% and furniture @5% Prepare: i. Statement of Affairs as on
31.3.2013. ii. Statement of Affairs as on 31.3.2014. iii. Statement of Profit and Loss
for the year ended on 31.3.2014.
Solution: In the books of Mr. Raj
Statement of Affairs as on 31.03.2013 and 31.03.2014
Liability 31.3.2013 31.3.2014 Assets 31.03.2013 31.03.2014
Capital 116900 114700 Stock 15000 14000
(Bal. Fig.)
Plant and 42500 55500
Machinery
Loan Taken 21000 21000 Bank Balance 1900 2100
Creditors 18000 14900 Debors 43000 35000
155900 150600 155900 150600
Statement of Profit or Loss for the year ended 31.03.2014
Particulars Rs. Rs.
Capital at the end of the year 114700
Add: Drawings:
Amount withdrawn for Private Expenses 15000
129700
Less: Additional Capital Introduced
Amount Invested by Mr. Raj. -4000
125700
Less: Capital at the beginning of the year -116900
Trading Profit 8800
Less: Depreciation:
55500 × 5% = 2775
On Furniture 2200 -4975
44000 × 5% = 2200
3825
Less: Bad debts -500
Net Profit 3325

2. The following information is available from Ram’s records:
Particulars 1.4.13 31.3.14
Creditors 5000 8000
Bank Overdraft - 15000
Bank Balance 10000 -
Plant and Machinery 10000 20000
Furniture 4000 4000
Debtors 30000 52000
Stock 34000 28000
Ram had withdrawn Rs.5000 for personal expenses and Rs. 4000 for son‟s marriage.
Out of business funds, he had also purchased a residential building costing
Rs.20000, which is not shown in the above balance. Dep. at 10 %p.a. should be
provided on plant and machinery. Find out Ram‟s net profit for the year ended 31st
march 14.
Solution: In the books of Ram
Capital 83000 81000 Bank Balance 10000 -
[Bal. Fig.]
Plant and 10000 20000

Machinery
Creditors 5000 8000 Furniture 4000 4000
Bank - 15000 Debtors 30000 52000

Overdraft
Stock 34000 28000
88000 104000 88000 104000

Particulars Rs. Rs.
Add: Drawings:
Amount withdrawn for Personal Expenses 5000
Son's Marriage 4000
Purchased Residential Building 20000 29000
110000
Less: Capital at the beginning of the year 83000
Trading Profit 27000
Less: Depreciation:
On Plant and Machinery -2000
20000 × 10% = 2000
Net Profit 25000

3. On 01/04/13, Mr. Bannerjee commenced business with a capital of
Rs.25,000.
During the year 20013-14, he withdrew for his personal use goods worth Rs.2,
000 and cash Rs.3,000. He also gave a donation of Rs. 500 to Shri Ramakrishna
mission. He paid Life Insurance premium of Rs.1000. During the year, he
received a gift of Rs.5000 from his father by cheque which was deposited in the
bank account of the business. On 31/3/14; his position was as under:
Particulars Rs.
Machinery 20000
Furniture 2000
Stock 5000
Debtors 8000
Balance at bank 1500
Prepaid insurance 200
Payable to creditors 3000
Liabilities for expenses 700
Find out the profit earned by him after providing for depreciation at 10% on plant &
Machinery and furniture and Rs.400 as reserve for Doubtful Debt. Also prepare
statement of affair as on 31.03.014.
Solution: In the books of Mr. Bannerjee
Statement of Affairs as on 31.03.2014
Liability 31.3.2014 Assets 31.03.2014
Capital 33000 Machinery 20000
[Bal. Fig.]
Furniture 2000
Payable to 3000 Stock 5000
Creditors
Liabilities for 700 Debtors 8000
expenses
Balance at 1500
Bank
Prepaid Indurance 200
36700 36700
Particulars Rs. Rs.
Add: Drawings:
Personal use [Goods] 2000
Personal use [Cash] 3000
Donation to Shri Ramakrishna Mission 500
Premium for Life Insurance 1000 6500
39500
Gift Received from Father Used for Business -5000
34500
Less: Capital at the beginning of the year 25000
Trading Profit 9500
Less: Depreciation:
On Plant and Machinery -2000
20000 × 10% = 2000

On Furniture -200 -2200
2000× 10%
7300
Less: R.D.D. -400
Net Profit 6900

4. Rani keeps her books on single entry & following information is disclosed.
Cash 18,000 27,000
Stock 15,000 18,750
Debtors 30,000 45,000
Furniture 7,500 7,500
Sundry creditors 26,250 31,500
Bills payable - 9,000
Loan from „y‟ - 3,000
Investments - 15,000
Rani transferred Rs150 each month during first half year and Rs.100 each month for
the remaining period from her business to her private banking account by way of
drawing, and took away Rs.350 worth of goods for private use. She sold her private
car for Rs.3, 500 and proceeds were utilised for business. Furniture to be depreciated
by 10% and Reserve for Doubtful debts to be maintained at 5% on debtors. Prepare
opening and closing statement of affairs and also profit and loss statement for the
year ending 31/03/14.
Solution: In the books of Rani
Capital 44250 69750 Cash 18000 27000
(Bal. Fig.)
Stock 15000 18750
Sundry Creditors 26250 31500 Debtors 30000 45000
Bills Payable - 9000 Furniture 7500 7500
Loan from 'y' - 3000 Investments - 15000

70500 113250
Particulars Rs. Rs.
Add: Drawings:
First Six Months 900
6 months × Rs. 150
Next Six Months 600
6 months × Rs. 100
Private Use [Goods withdrawn] 350 1850
71600
Private car sold and proceeds were -3500
utilized for business
68100
Less: Depreciation:
On Furniture -750
7500 × 10% = 750
23100
Less: R.D.D. @ 5% on Debtors -2250
45000×5% = 2250
Net Profit 20850

5. Mr. Ganesh keeps his books by single entry method. His financial position on
1.01.04 and 31.12.04 was as under.
Cash 10,000 16,000
Bank 20,000 36,000
Stock 16,000 24,000
Debtors 24,000 30,000
Creditors 15,000 18,000
Plant and machinery 60,000 90,000
Furniture and fitting 18,000 18,000
During the year Mr. Ganesh withdrew Rs.8,000 for his private purpose and he had
used 2,000 worth of stock also for his private purpose. On 1.10.13 he sold some of
his house hold furniture for Rs.2,000 and paid this amount into his Bank A/c of
business. Prepare a statement of profit & loss for the year ended 31.3.14 and a
statement of affairs after taking into consideration the following:
1. Provide interest on capital @ 5% p.a on opening balance and Interest on drawing

( only on cash drawings) @10% p.a. (on an average of 6 months)
2. Depreciate plant and machinery @10 %( assuming addition were made on 1.10.13)
and furniture at 5%.
3. stock on 31.12.04 was overvalued by Rs.2,000.
4. Write off bad debts Rs.2,000 and provide Reserve for Doubtful debts at 10 % on
debtors.
Solution: In the books of Mr. Ganesh
Statement of Affairs as on 1-4-16 and 31.03.14
Liability 1-4-13 31.3.14 Assets 1.4.13 31.3.14

Capital 133000 196000 Cash 10000 16000
(Bal. Fig.)
Creditors 15000 18000 Bank 20000 36000
Stock 16000 24000
Debtors 24000 30000
Plant and 60000 90000

Machinery
Furniture and 18000 18000

Fittings
148000 214000 148000 214000
Particulars Rs. Rs.
Add: Drawings:
Cash Withdrawn 8000
Stock 2000 10000
206000
Household furniture sold and proceeds utilized for business -2000
204000
Less: Depreciation
On Opening Machinery
60000 × 10%× 12 months
On Additional Machinery 1500
30000 × 10% × 6 months
On Furniture 900 -8400
18000 × 5%
62600
60600
Less: R.D.D. @ 10% on debtors -2800
(30000 – 2000) × 10%
57800
Less: Stock overvalued -2000
55800
Less: Interest on Capital
On Opening Capital -6650
133000 × 5%
49150
Add: Interest on Drawings 400
On Cash drawings
8000 × 10% × 6 months
Net Profit 49550

6. Mr. Prabhakar is a retail trader. He had no proper methods of accounting But
the following information is made available to you.
Particulars Rs. Rs.
1.04.09 31.03.10
Sundry Debtors 45000 50000
Bank Overdraft 80000 40000
Stock 65000 80000
Cash in hand 2000 8000
Bills Receivable 60000 80000
Motor van 80000 80000
Computer 60000 120000
10% Govt. Bonds 10000
On 1st October, 2009, Mr. Prabhakar had withdrawn Rs. 40000 for his personal use.
He had also withdrawn Rs. 30000 for his daughter‟s marriage. 10% Government
Bonds were purchased of Rs. 10,000 on 1st October, 2009. Depreciate furniture by
10% and write off Rs. 2000 from motor van. Rs. 2000 is written off as bad debts and
provide 5% R.D.D. on debtors. Allow interest on capital at 10% p.a. Charge interest
on drawings Rs. 2,000. Prepare Opening statement of affairs of 1.4.2009. Closing
statement of affairs of 31.3.2010. Statement showing Profit or Loss for the year
ended on 31.3.2010.
Solution: In the books of Mr. Prabhakar
Liability 1 – 4 – 09 31 – 3 – 10 Assets 1 – 4 – 09 31 – 3 – 10
Capital 182000 328000 Sundry 45000 50000

Debtors
(Bal. Fig.)
Stock 65000 80000
Bills 60000 80000

Receivable
Motor van 80000 80000
Sundry 60000 70000 Computer 60000 120000

Creditors
Bank 80000 40000 10% Govt. - 10000

Overdraft Bonds
322000 438000 322000 438000
Particulars Rs. Rs.
Add: Drawings:
Personal use 40000
Prabhakar's Daughter Marriage 30000 70000
398000
Less: Depreciation
On Furniture 1000
10000 × 10%
On Motor van 2000 3000
213000
211000
Less: RDD @ 5% on Debtors
(50000 – 2000) × 5% -2400
208600
Add: Interest on 10% Govt. Bonds
10000 × 10% × 6 months 500
209100
On opening capital -18200
182000 × 10%
190900
Add: Interest on drawings 2000
Net Profit 192900

7. Prem a trader keeps his books by the single entry Method. His financial
position on 1st April 06 and on 31st March, 07 were as follows:
Particulars 1.04.06 31.03.07
Cash in hand 1,500 1,600
Bank balance 1,200(Dr.) 1,800(Cr.)
Stock in trade 4,000 4,650
Debtors 3,400 3,800
Creditors 2,400 3,600
Machinery 6,000 8,000
Furniture 1,200 1,600
During the year, Prem had withdrawn Rs.75 per month for his household use. From
the above information ascertain his profit or loss for the year ended and also give his
statement of affairs as on 31.03.07 after taking into account the following further
information:
1. Depreciate plant and machinery by 15% and furniture by 12 ½ % p.a (assume the
addition on 30th September,2006)
2. Of the debtors Rs100 are bad and to be written off.
3. Create a reserve for Discount on Debtors at 2% and a reserve for Doubtful debts
at 5%.
4. Allow interest on capital at 5% and charge interest on Drawing at 6%p.a
Solution: In the books of Mr. Prem
Liability 1-4-06 31-3-07 Assets 1-4-06 31-3-07
Capital 14900 14250 Cash in hand 1500 1600
(Bal. Fig.)
Bank - 1800 Cash in bank 1200 -
Overdraft
Creditors 2400 3600 Stock in trade 4000 4650
Debtors 3400 3800
Machinery 6000 8000
Furniture 1200 1600
17300 19650 17300 19650
Particulars Rs. Rs.
Add: Drawings:
Amount withdrawn for Household use 900
Rs. 75 × 12 months
15150
Trading Profit 250
Less: Depreciation:
On Opening Machinery:
6000 × 15%
On Additional Machinery 150
2000 × 15% × 6 months
On Furniture 150
On opening Furniture
1200 × 12.5%
On Additional Machinery 25 -1225
400 × 12.5% × 6 months
-975
-1075
Less: R.D.D. @ 5% on Debtors -185
(3800 – 100) × 5%
-1260
Less: Discount on Debtors @ 2% 70.30 -70
(3800 – 100 – 185) × 2%
-1330
Less: Interest on Capital -745
On opening Capital
14900 × 5%
-2075
Add: Interest on drawings 27
900 × 6% × 6 months
Net Loss -2048

8. Mr. Gopal maintained his books on single entry. The following statement of
affairs had been Prepared as on 31.03.06
Liabilities Amt Asset Amt
Capital account 28,000 Leasehold land 2,075
Sundry creditors 3,170 Plant and Machinery 4,940
Bill payable 2,150 Stock in trade 9,673
Book debts 15,550
Cash in hand 1,082
33,320 33,320
On 31.03.07 it was learnt that he had introduced further capital of Rs1,000 on 1st
july,06 and he drawn Rs1,580 on various dates during the year. It was also
ascertained that the proprietor had taken Rs.75 worth of goods for his own use.
Statement prepared on the same date disclosed that book debts were Rs.14,640,
Creditors were Rs.2,309 and Bills payable were Rs.1,775. The stock was valued at
Rs.11,417 and cash in hand amounted Rs.917 on the same date.
Prepare: 1. Statement of profit for the year 06-07. 2. Statement of affairs as on

31.03.07 taking in to consideration the following: 5% Reserve to be created on Book
debts. 5% Depreciation to be written off on plant and machinery. Rs.125 to be written
off the lease. Interest at 5% p.a. to be provided on the capital.
Solution: In the books of Mr. Gopal
Statement of Affairs as on 31.3.07
Liability Rs. Assets Rs.
Capital 29905 Book Debts 14640
(Bal. Fig.)
Creditors 2309 Stock 11417

Bills 1775 Cash in hand 917
Payable
Leasehold 2075
land
Plant and 4940

Machinery
33989 33989
Particulars Rs. Rs.
Add: Drawings:
Cash Withdrawn 1580
Goods Withdrawn 75 1655
31560
Less: Additional Capital introduced -1000
30560
Trading Profit 2560
Less: Depreciation 247
On Plant and Machinery
4940 × 5%
On Leasehold Land 125 -372
2188
Less: RDD @ 5 % on Book Debts

14640 × 5% -732
1456
On Opening Capital
28000 × 5% 1400
On Additional Capital
1000 × 5% × 9 months 38 -1438
NET PROFIT 18
9. Mr. Suryakant maintains books on single entry and who gives you the
following information.
Particulars 31-3-2013 31-3-2014
Cash at bank 2500 5000
Stock 20000 30000
Sundry debtors 25000 40000
Investments 20000 20000
Machinery 25000 40000
Sundry creditors 10000 10000
Outstanding expenses 3000 2000
1. Mr. Suryakant introduced further capital of Rs. 20000 on 1st July, 2013 and
had withdrawn Rs. 10,000 during the year.
2. Interest on capital is allowed at 10% p.a.
3. Additions to furniture and machinery were made on 1st October, 2013. Write of
deprecation on furniture and machinery at 10% p.a.
4. Create reserve for doubtful debts at 5% on debtors.
Solution: In the books of Mr. Suryakant
Capital 90000 150000 Cash in hand 500 2000
(Bal. Fig.)
Cash at Bank 2500 5000
Stock 20000 30000

Sundry 10000 10000 Sundry 25000 40000
Creditors Debtors
Outstanding 3000 2000 Investments 20000 20000

expenses
103000 162000 103000 162000
Particulars Rs. Rs.
Add: Drawings:
Amount withdrawn for Private Expenses 10000
160000
Further Capital Introduced -20000
140000
Less: Depreciation:
On Furniture 1000
On Opening Balance:
10000 × 10%
On Additional Furniture 750
15000 × 10% × 6 months
On Machinery 2500
On Opening Balance:
25000 × 10%
On Additional Machinery 750 -5000
15000 × 10% × 6 months
45000
Less: R.D.D. @ 5% On Debtors -2000
40000 × 5%
43000
Less: Interest on Capital 9000
On opening Balance:
90000 × 10%
On Additional Capital 1500 -10500
20000 × 10% × 9 months
Net Profit 32500

10. Mrs. Archana keeps her books on single entry system and gives the
following information.
Particulars 31-3-13 31 – 3 – 14
Cash at bank 5000 32000
Stock in trade 30000 50000
Bills payable 5000 5000
Sundry creditors 15000 20000
1. Mrs. Archana withdrew from business Rs. 15,000 for personal use.
2. She further introduced fresh capital of Rs. 25,000.
3. Depreciation is to be charged @10% p.a. on Furniture and Machinery.
Solution: In the books of Mrs. Archana
Capital 110000 167000 Cash at bank 5000 32000
(Bal. Fig.)
Sundry 25000 40000

Debtors
Stock in Trade 30000 50000
Bills 5000 5000 Furniture 20000 20000

payable
Sundry 15000 20000 Machinery 50000 50000

creditors
130000 192000 130000 192000
Particulars Rs. Rs.
Add: Drawings:
Amount withdrawn for Personal Expenses 15000
182000
Further Capital Introduced -25000
157000
Less: Depreciation:
On Furniture 2000
20000× 10%
On Machinery 5000 -7000
50000× 10%
Net Profit 40000

ADMISSION OF A
PARTNER
IN THE FIRM
1. The Balance Sheet of Rajkumar and Rajendra kumar as on 31st March, 2012
is set out below, they share profits and losses in the ratio of 2:1.
Liabilities Amount Assets Amount

Rajkumar 200000 Furniture 30000
Rajendrakumar 150000 Stock 60000
General Reserve 120000 Debtors 300000
Creditors 80000 Cash 30000
Profit & Loss A/c 30000
550000 550000
They agreed to admit Dhirajkumar on 1st April, 2012 as a partner into the firm on
the following terms.
1. Dhirajkumar to bring Rs. 60000 as capital and Rs. 45000 as goodwill, which is to
be retained in the business. He will be entitled to 1/4 th share of profit of the firm.
2. 50% of General Reserve is to remain as Reserve for doubtful debts.
3. Furniture is to be depreciated by 5%
4. Stock is to be revalued at Rs. 65,000.
5. Creditors of Rs. 5000 are not likely to claim and hence should be written of.
6. Rent of Rs. 2,000 due but not received has not been recorded in the books.
Pass necessary journal entries in the books of new firm and prepare Balance Sheet of
the new firm.
Solution:

1. Rajkumar's Capital A/c … Dr. 2000
Rajendra Kumar's Capital Ac/ 1000
To Profit and Loss A/c 3000
[Being debit balance of Profit & Loss Account is
transferred to Partners Capital Account in Old Ratio]
2. General Reserve A/c ....... Dr. 60000
To Rajkumar's Capital A/c 40000
To Rajendra Kumar's Capital A/c 20000
[Being Credit Balance in General Reserve is transferred
to Old Partners Capital Account in old ratio]
3. Cash/ Bank A/c .... Dr. 105000
To Dhirajkumar's Capital A/c 60000
To Goodwill A/c 45000
[Being Capital and Goodwill brought in by the new
partner]
4. Goodwill A/c .... Dr. 45000
[Being Goodwill is retained in the business]
5. General Reserve A/c ... Dr. 60000
To R.D.D. A/c 60000
[Being R.D.D. is created by transferring fund from
General Reserve A/c]
6. Revaluation A/c ... Dr. 1500
To Furniture A/c 1500
[Being depreciation is charged on furniture]
7. Stock A/c ....Dr. 5000
Creditors A/c 5000
Rent receivable A/c .... Dr. 2000
To Revaluation A/c 12000
[Being Asset appreciated, Creditors written off and
income receivable recorded.]
[Being Profit on revaluation account is transferred to old
partners capital A/c]
Balance Sheet as on 1st April, 2012

Rajendrakumar 178500 (-) Depreciation @5% 1500 28500
Dhirajkumar 60000 495500 Stock 60000
Creditors 80000 (+) Appreciation 5000 65000
(-)Claims written -5000 75000 Debtors 300000
off
(-) R.D.D. -60000 240000
Cash in Hand 135000
(30000 + 60000 +
45000)
Rent Due but not 2000
received
570500 570500
1. Working Note
Revaluation A/c
Debit Credit
1500 12000
10500
12000 12000
2. The Balance Sheet of Ramakant and Shyamkant who shared the profits in
the ratio of 2:1 is as under:
Balance Sheet as on 31 st March, 2012

Capital: Ramakant 134000 Leasehold Property 20000
Shyamkant 120000 254000 Livestock 6600
Creditors 51000 Loose Tools 90200
Rent Outstanding 10000 Stock 84800
Reserve Fund 7200 Debtors 48000
Current A/c: 2800 (-) R.D.D. -2000 46000
Ramakant
Bank 75400
Current A/c: 2000
Shyamkant
On 1st April, 2012 Umakant was admitted as 1/4th partner on the following terms:
1. He brings equipments of Rs. 80,000 as his capital.
2. Firm's Goodwill is valued at Rs. 1,44,000 and Umakant agreed to bring his share
in firm's goodwill by cheque.
3. R.D.D. should be maintained at 7.5% on debtors.
4. Increase the value of livestock by Rs. 2,600 and write off loose tools by 20%.
5. Outstanding rent paid Rs. 9040 in full settlement.
Pass necessary journal entries to record the above scheme of admission.
Solution:
Journal Entries in the books of New Partnership firm.
Date Particulars L.F. Debit Credit

2012 Reserve Fund A/c ....Dr. 7200
April
1.
To Ramakant's Current A/c 4800
To Shyamkant's Current A/c 2400
[Being balance in Reserve Fund transferred to
Partners Current A/c]
April Equipment A/c ....Dr. 80000
1.
To Umakant's Capital A/c 80000
[Being Capital contributed in the form of equipment by
new partner]
April Bank A/c ....Dr. 36000
1.
[Being goodwill brought in by Umakant by Cheque]
April Goodwill A/c ....Dr. 36000
1.
To Ramakant's Current A/c 24000
To Shyamkant's Current A/c 12000
[Being Goodwill credited to old partner's current A/c ]
April. Profit & Loss Adjustment A/c ....Dr. 19640
1.
To R.D.D.A/c 1600
To Loose Tools A/c 18040
[Being R.D.D. raised and Loose Tools written off by
20%]
April Outstanding Rent A/c ....Dr. 10,000
1.
To Bank A/c 9040
To Profit & Loss Adjustment A/c 960
[Being outstanding rent paid under discount]
April Livestock A/c ....Dr. 2600
1.
[Being the Value of livestock increased by Rs. 2600]
April. Ramkant's Current A/c ....Dr. 10720
1
Shyamkant's Current A/c ....Dr. 5360
To Profit and Loss Adjustment A/c 16080
[Being loss on revaluation of assets and liabilities
transferred to old partners' current A/c]
3. Snehal and Meenal are equal partners in a business. Their Balance Sheet is as
follows:
Balance Sheet as on 31st March, 2012

Capital A/c Premises 20500
Snehal 80000 Investments 10500
Meenal 45000 125000 Equipments 5000
Creditors 26000 Bills Receivable 18000
Bank Loan 40000 Debtors 110000
(Taken on 1.1.2012)
(-) R.D.D. -11000 99000
Bank 31400
191000 191000
They agreed to admit Kamal on 1st April, 2012 on the following terms:
1. She should bring Rs. 50000 towards her capital for ¼ th share in future profit.
2. Goodwill A/c be raised in the books of the firm for Rs. 40,000.
3. R.D.D. to be maintained at 5% on debtors.
4. Premises to be valued at Rs. 30,000 and Equipments to be written off fully.
5. Interest at the rate of 15% p.a. is due on bank loan.
6. Creditors allowed a discount of Rs. 1,100 and they were paid off immediately.
Pass necessary Journal Entries to record the above scheme of admission.
Solution:
Journal Entries in the Books of New Partnership Firm.

2012 3300
April Snehal's Capital A/c ....Dr.
1.
Meenal's Capital A/c ....Dr. 3300
[Being debit balance of Profit and Loss A/c transferred
to old partners' capital A/c ]
1. Bank A/c ....Dr. 50000
To Kamal's Capital A/c 50000
[Being Capital bought in by Kamal]
1. Goodwill A/c ....Dr. 40000
To Snehal's Capital A/c 20000
To Meenal's Capital A/c 20000
[Being Goodwill raised]
1. Profit & Loss Adjustment A/c ....Dr. 6500
To Equipment A/c 5000
To Interest on Bank Loan A/c 1500
[Being the value of equipment written off and interest
due on Bank Loan]
1. R.D.D. A/c ....Dr. 5500
Premises A/c 9500
[Being R.D.D. reduced and the value of premises
increased]
1. Creditors A/c ....Dr. 26000
To Bank A/c 24900
[Being creditors paid under discount]
1. Profit & Loss Adjustment A/c ....Dr. 9600
To Snehal's Capital A/c 4800
To Meenal's Capital A/c 4800
[Being Profit on revaluation divided and transferred to
old partners capital account]
4. Suresh and Ramesh are partners in a business sharing profits and Losses in
the ratio of 2:1 respectively. Their Balance Sheet as on 31st March, 2013 is as
follows:

Capital A/c Building 30000
Suresh 50000 Machinery 10000
Ramesh 24000 74000 Furniture 9500
Bills Payable 20000 (-) R.D.D. -1000 39000
Reserve Fund 9000 Stock 30000
Cash at Bank 33900
160000 160000
They admitted Kailash on 1st April, 2013 as a partner on the following terms:
1. Kailash will bring Rs. 30,000 as his capital for ¼ th share in future profit and Rs.
12000 as goodwill which will be withdrawn by old partners.
2. Stock and Machinery are to be depreciated by 10%.
3. R.D.D. is to be maintained at 5% on debtors.
4. Building is to be appreciated by 20% and furniture is revalued at Rs. 10,000.
Prepare Profit & Loss Adjustment Account, Partners Capital Account and Balance
Sheet of the New firm.
Solution:
In the books of new Partnership firm.
Profit and Loss Adjustment Account.

To Machinery A/c 1000 By Building A/c 6000
To Stock A/c 3000 By Furniture A/c 500
To R.D.D. A/c 1000
To Partners' Capital A/c
(Profit of Revaluation)
Suresh 1000
Ramesh 500 1500
6500 6500
Partner's capital Accounts
Particulars Suresh Ramesh Kailash Particulars Suresh Ramesh Kailash

To Bank A/c 8000 4000 By Balance b/d 50000 24000
To Balance 57000 27500 30000 By Reserve Fund 6000 3000
c/d
By Bank A/c 30000
By Goodwill A/c 8000 4000
By Profit & Loss 1000 500
Adjustment A/c
65000 31500 30000 65000 31500 30000

Partners' Capital Building 30000
Account
Suresh 57,000 (+) Appreciation @ 6000 36000
20%
Ramesh 27,500 Machinery 10000
Kailash 30,000 114500 (-) Depreciation @ 10% -1000 9000
Creditors 57000 Furniture 9500
Bills Payable 20000 (+) Appreciation 500 10000
Stock 30000
(-) Reduction in value -3000 27000
by 10%
Debtors 40000
(-) R.D.D. -2000 38000
Cash at Bank 63900
191500 191500
5. Following is the balance sheet of Harish and Girish:

Creditors 38000 Cash in Hand 37000
Bills Payable 46000 Stock 21000
Profit & Loss A/c 16000 Debtors 46000
Capital A/c (-) R.D.D. -6000 40000
Harish 100000 Equipments 12000
Girish 140000 240000 Furniture 25000
Plant 85000
Buildings 120000
340000 340000
They admitted Shirish on 1st April, 2010 on the following conditions:
1. For his 1/3 rd share in the future profits, Shirish brings Rs. 2,00,000 as his
capital.
2. It is decided to raise goodwill by Rs. 90,000 and write off fully after Shirish's
Admission.
3. Equipments and Plant are to be depreciated by 20% and 10 % respectively and

Building is to be appreciated by 15%.
4. Bills Payable were retired for Rs. 35,000.
5. All debtors are to be considered good.
6. Furniture of the book value Rs. 12,000 was taken over by Harish at 40% of the
book value.
Prepare, Revaluation A/c. Partners' Capital A/c and Balance Sheet of the new firm.
Solution:
In the books of Partnership firm.
Revaluation A/c

To Equipment A/c 2400 By Buildings A/c 18000
To Plant A/c 8500 By Bills Payable A/c 11000
[Rebate Earned]
To Furniture A/c 7200 By R.D.D. A/c 6000
(Profit)
Harish 8450
Girish 8450 16900
35000 35000
Partner's capital Accounts
Particulars Harish Girish Shirish Particulars Harish Girish Shirish

To Furniture 4800 By Balance b/d 100000 140000
A/c
To Goodwill 30000 30000 30000
A/c A/c
To Balance C/d 126650 171450 170000 By Cash A/c - - 200000
By Goodwill A/c 45000 45000 -
By Revaluation 8450 8450 -
A/c
161450 201450 200000 161450 201450 200000

Partners' Capital Buildings 120000
A/c
Harish 126650 (+) Appreciation @ 18000 138000
15%
Girish 171450 Plant 85000
Shirish 170000 468100 (-) Depreciation @ -8500 76500
10%
Creditors 38000 Equipments 12000
Bills Payable 46000 (-) Depreciation @ -2400 9600
20%
Less: Rebate -11000 Furniture 25000
35000 (-) Furniture taken -12000 13000
over
(-) Cash Paid 35000 NIL Debtors 46000
Stock 21000
Cash in Hand 202000
506100 506100
6. Keshav and Madhav were partners sharing profits and losses in the ratio of
2:3.
Their Balance Sheet is as follows:

Rs. Rs. Rs. Rs.
Capital A/c Livestock 20000
Keshav 250000 Building 138000
Madhav 260000 Investments 45000
Creditors 8500 Loose Tools 38000
Debtors 90000
(-) R.D.D. -18000 72000
Cash in Hand 86,000
518500 518500
On 1st April, 2011 they admitted Uddhav on the following terms:
1. The new profit sharing ratio is equal.
2. Uddhav brings Rs. 2,00,000 as his capital and Rs. 80,000 as share of goodwill in
cash.
3. Prepaid insurance of Rs. 7500 was not recorded in the books.
4. Loose Tools were found undervalued by 5% and Buildings was found overvalued by
15% in the books.
5. All debtors are considered as good and out of creditors Rs. 500 is longer payable.
6. The market value of investment is 50% more than its book value.
Prepare, Profit & Loss Adjustment A/c, Capital Accounts of partners and Balance
Sheet of the new firm.
Solution:
Profit and Loss Adjustment Account

To Building A/c 18000 By Prepaid Insurance 7500
To Partners' Capital A/c By Loose Tool 2000
(Profit)
Keshav 13000 By R.D.D. A/c 18000
Madhav 19500 32500 By Creditors A/c 500
By Investment A/c 22500
50500 50500
Partner's Capital Accounts
Particulars Keshav Madhav Uddhav Particulars Keshav Madhav Uddhav

To Profit & 6000 9000 - By Balance b/d 250000 260000 -
Loss A/c
To Balance 273000 334500 200000 By Cash A/c - - 200000
C/d
By Profit and 13000 19500 -
Loss Adjustment
A/c
279000 343500 200000 279000 343500 200000

Partners' Building 138000
Capital A/c
Keshav 273000 (-) Overvaluation by 15% -18000 120000
Madhav 334500 Loose Tools 38000
Uddhav 200000 807500 (+) Undervaluation by 5% +2000 40000
Creditors 8500 Livestock 20000
(-) Claims -500 8000 Investment 45000
Waived
(+) Increase in Market 22500 67500
value by 50%
Debtors 90000
Cash in Hand 366000
815500 815500
7. Raj and Dev are partners sharing profits and losses 3:2 respectively. Their position
on 31 st March, 2011 is as follows:
Their Balance Sheet is as follows:

Rs. Rs. Rs. Rs.
Raj 100000 Furniture 10000
Dev 75000 Stock 31000
Bills Payable 5000 (-) R.D.D. -1000 49000
General Reserve 15000 Bank Balance 15000
205000 205000
1. On 1st April, 2011 they admitted Manoj on following terms:
2. Building should be revalued for Rs. 1,25,000.
3. Depreciate furniture at 12 ½ % p.a. and stock at 10% p.a.
4. R.D.D. should be maintained as it is.
5. The Capital Accounts of partners should be adjusted in their new profit sharing
ratio through bank account.
Prepare, Profit & Loss Adjustment A/c, Capital Accounts of partners and Balance
Sheet of the new firm and show how you have calculated new ratio and new capital.
Solution:

To Furniture A/c 1250 By Buildings A/c 25000
To Stock A/c 3100
[Profit]
Raj 12390
Dev 8260 20650
25000 25000
Particulars Raj Dev Manoj Particulars Raj Dev Manoj

To Balance 240000 160000 100000 By Balance b/d 100000 75000 -
c/d
By General 9000 6000 -
Reserve
By Bank A/c - - 100000
By Profit & Loss 12390 8260 -
Adjustment A/c
By Bank A/c 103610 60740 -
(Additional capital
)
240000 160000 100000 240000 160000 100000

Partners' Capital Buildings 100000
A/c
Raj 240000 (+) Appreciation 25000 125000
Dev 160000 Furniture 10000
Manoj 100000 500000 (-) Depreciation @ 12 ½ -1250 8750
%
Bills Payable 5000 (-) Depreciation @ 10% -3100 27900
Debtors 50000
(-) R.D.D. -1000 49000
Bank Balance 304350
515000 515000
Calculation of New Ratio:
Old Ratio of Raj and Dev is 3:2
Share given to New partner Manoj is 1/5.
We know that,
New Ratio = (Balance Ratio of 1) × Old Ratio.
∴ Raj's New Ratio = (1 – 1/5 )× 3/5 = 12/25
∴ Dev's New Ratio = (1 – 1/5) × 2/5 = 8/25
And Manoj's New Ratio = (1/5 ) × (5/5) {To Make Base 25}
∴ Manoj's New Ratio = 5/25
∴ New ratio of Raj, Dev and Manoj is (12/25) :(8/25): (5/25)
i.e. 12:8:5.
Now, Capital balance of all partners will be adjusted in their new profit sharing ratio through bank
account as follows:
Total Capital of the Firm = New partner's Capital × Reciprocal of new partner's profit sharing
ratio.
∴ Total Capital of the Firm = 1,00,000 × (5/1) = Rs. 5,00,000
Now, Raj's New Capital = 5,00,000 × (12/25) = Rs. 2,40,000
Dev's New Capital = 5,00,000 × (8/25) = Rs. 1,60,000
We Know the New Capital of Manoj and that is Rs. 1,00,000.
∴ New capital of Raj, Dev and Manoj are Rs. 2,40,000, Rs. 1,.60,000 and Rs. 1,00,000 respectively.
8. Following is the Balance Sheet of Dhiraj and Niraj who shared profits and
losses equally:

Capitals Plant and Machinery 45000
Dhiraj 125000 Land and Building 84000
Niraj 35000 Patents 3400
Cash 10200
281000 281000
On 1st April, 2013 they agreed to admit Suraj on the following terms and conditions:
i. Suraj to bring for 1/3 rd share in future profit in cash Rs. 90,000 towards his
capital.
ii. The firm's goodwill should be raised to Rs. 90,000 and it is to be written off after
Suraj admission in new profit ratio.
iii. Plant and Machinery was found undervalued by 10% and Land and Building was
found overvalued by 20%.
iv. Stock is to be increased by Rs. 2,200 and furniture to be reduced to Rs. 10,000.
v. Out of creditors Rs. 1200 is no more payable.
vi. The Capital Accounts to be adjusted in new profit sharing ratio by opening the
current accounts.
Prepare Revaluation Account, Capital Accounts and New Balance Sheet.
Solution:

To Land & Buildings A/c 14000 By Plant & Machinery A/c 5000
(Overvaluation ) (Undervaluation)
To Furniture A/c 600 By Stock A/c 2200
(Depreciation ) (Increase in value)
By Creditors A/c 1200
[Claim waived]
By Partner's Capital A/c
Dhiraj 3100
Niraj 3100 6200
14600 14600
Particulars Dhiraj Niraj Suraj Particulars Dhiraj Niraj Suraj

To Goodwill A/c 30000 30000 30000 By Balance 125000 35000 -
[Written off] b/d
To Profit & Loss 3100 3100 - By General 3400 3400 -
Adjustment A/c Reserve
To Balance C/d 90000 90000 90000 By Cash A/c - - 90000
To Partner's 50300 - - By Goodwill 45000 45000 -
Current A/c A/c
By Partners' - 39700 30000
Current A/c
173400 123100 120000 173400 123100 12000

Partners' Capital Land & Building 84000
A/c
Dhiraj 90000 (-) Overvaluation by (14000) 70000
20%
Niraj 90000 Plant & Machinery 45000
Suraj 90,000 270000 (+) Under valuation 5000 50000
by 10%
Dhiraj's Current A/c 50300 Furniture 10600
Creditors 86200 Patents 3400
(-) Claim waived by -1200 85000 Stock 47800
creditors
(+) Increase in value 2200 50000
Debtors 80000
Cash 100200
Current A/c
Niraj 39700
Suraj 30000 69700
433300 433300
9. Vaibhav and Vikas were partners sharing profit and losses in the ratio of 2:3
respectively. Their Balance Sheet as on 31st March, 2012 was as follows:

Vaibhav 50000 Plant 30000
Vilas 50000 Furniture 2000
Debtors 58000
Cash 5000
170000 170000
They agreed to admit Vivek as a partner on 1st April, 2012 on the following terms.
1. Vivek will have ¼ th share in future profits for which he shall bring Rs. 25,000 as
his capital and Rs. 20,000 as his share of goodwill.
2. Land and Building are valued at Rs. 30,000 wh8ile stock is valued at Rs. 55,000.
3. Plant is taken over by Vilas at 10% Discount.
4. Depreciate furniture by 10%.
5. Provision for bad and doubtful debts is to be maintained at 5% on debtors.
6. The capital accounts of all the partners to be adjusted in their new profit sharing
ratio and excess amount to be transferred to their loan accounts.
Prepare Profit and Loss Adjustment Account, Partner's Capital Accounts and Balance
Sheet of New Firm.
Solution.

To Plant 3000 By Land & Building A/c 5000
To Furniture A/c 200 By Stock 5000
To R.D.D. A/c 2900
Vaibhav 1560
Vilas 2340 3900
10000 10000
Particulars Vaibhav Vilas Vivek Particulars Vaibhav Vilas Vivek

To Plant A/c - 27000 - By Balance b/d 50000 50000 -
To Partner's 29560 - - By Cash A/c - - 25000
Loan A/c
To Balance 30000 45000 25000 By Goodwill A/c 8000 12000 -
C/d
Adjustment A/c
By Partner's Loan - 7660 -
A/c
[Deficit Transferred]
59560 72000 25000 59560 72000 25000

Partners' Land & Building 25000
Capital A/c
Vaibhav 30000 (+) Appreciation 5000 30000
Vilas 45000 Plant 30000
Vivek 25000 100000 (-) Discount @ 10% -3000
Loan from 29560 27000
Vaibhav
Creditors 70000 (-) Plant taken over by Vilas 27000 NIL
Furniture 2000
(-) Depreciation @ 10% -200 1800
Debtors 58000
(-) Less Provision for bad -2900 55100
and Doubtful debts @ 5%
Stock 50000
(+) Increase in Value 5000 55000
Cash 50000
Loan to Vilas 7660
199560 199560
10. Manoj and Rahul are equal partners in a business. Their Balance Sheet as on
31st March, 2013 stood as under.

Sundry 180000 Cash at 120000
Creditors Bank
General 36000 Debtors 62000
Reserve
Capitals: (-) R.D.D. -2000 60000
Manoj 90000 Bills 24000
Receivable
Rahul 60000 Buildings 114000
Machinery 48000
366000 366000
They decided to admit Amit on 1st April, 2013 on the following terms:
1. The Machinery & Building be depreciated by 10%.
2. Reserve for doubtful debts be increased to Rs. 5000.
3. Bills Receivable are taken over by Manoj at a discount of 5%.
4. The amount of creditors paid at a discount of 10%.
5. The Capital Accounts of all partners be adjusted in proportion to new profit

sharing ratio by opening current account of partners.
6. Amit should bring Rs. 80,000 as capital for his 1/4th in future profits and goodwill
account be opened in the books of the firm at RS. 40,000.
Prepare Profit and Loss Adjustment A/c, Partners' capital Account and Balance sheet
of the firm.
Solution:
In the books of Partnership Firm
Profit & Loss Adjustment Account

To Machinery A/c 4800 By Creditors A/c 18000
To Building A/c 11400 By Partners' Capital A/c
To R.D.D. A/c 3000 Manoj 1200
To Bills Receivable 1200 Rahul 1200 2400
20400 20400
Particulars Manoj Rahul Amit Particulars Manoj Rahul Amit

To Bills 22800 By Balance b/d 90000 60000 -
Receivable
To Profit & Loss 1200 1200 By General 18000 18000 -
Adjustment A/c Reserve
To Balance C/d 120000 120000 80000 By Bank A/c - - 80000
By Goodwill 20000 20000 -
A/c
By Partner's 16000 23200 -
Current A/c
144000 121200 80000 144000 121200 80000

Partners' Capital Goodwill 40000
A/c
Manoj 120000 Building 114000
Rahul 120000 (-) Depreciation @ 10% -11400 102600
Amit 80000 320000 Machinery 48000
Sundry Creditors 180000 (-) Depreciation @ 10% -4800 43200
(-) Discount @ -18000 Debtors 62000
10%
162000 (-) R.D.D. -5000 57000
(-) Amount paid 162000 NIL Bills Receivable 24000
to creditors
(-) Discount @ 5% -1200
22800
(-) Bills Receivable -22800 NIL
Taken over by Manoj
Cash at Bank 38000
Current Accounts:
Manoj 16000
Rahul 23200 39200
320000 320000
HOME WORK
SECTION OF
ADMISSION
OF PARTNER
1. The balance sheet of Shrihas and Madan as on 31st March, 2012 is set out
below, they share profits and losses in the ratio of 2:1.
Shrihas's Capital 40000 Building 20000

Madan's capital 30000 Furniture 6000
General Reserve 24000 Stock 12000
Cash 6000
110000 110000
On 1st April, 2012, they agreed to admit Prasanna as a partner into the firm on the
following terms:
1. Prasanna to bring Rs. 12,000 as capital and Rs. 9,000 as a Goodwill which is to
ratained in the business. He will be entitled to 1/4th share of profits of the firm.
2. 50% of General Reserve is to remain as Reserve for Doubtful Debts.
3. Furniture is to be depreciated by 5%.
4. Stock is to be revalued Rs. 13,000.
5. Creditors of Rs. 1000 are not likely to claim and hence should be written off.
6. Rent of Rs. 400 due not received has not been recorded in the books.
Prepare Profit and Loss Adjustment A/c, Partner's Capital A/c and Balance sheet of
the firm after admission of Prasanna.
Ans.
Profit and loss adjustment a/c Profit: 2100
Balance sheet total Rs. 114100
Cash A/c Balance 27000
Capital A/c
Shrihas 51400
Madan 35700
Prasanna
2. Nandkishor and Nandlal are in partnership sharing profits and losses in the
proportion of ¾ and ¼ respectively. Their Balance Sheet as on 31st March,
2014 was as under.
Liabilities Rs. Assets Rs.

Nandkishor Capital 30000 Land and Building 25000
Nandlal Capital 16000 Furniture 2000
Sundry Creditors 40000 Sundry Debtors 20000
Bank Balance 10000
90000 90000
On 1st April, 2014, they decided to admit Nandram on the following terms.
1. He should be given 1/5th share in profit and for that he should bring in Rs. 20,000
as capital.
2. Goodwill should be raised at Rs. 20,000.
3. Depreciate Furniture and stock by 10% and Create 5% R.D.d. on Debtors
4. Appreciate Land and Building by 20%.
5. The Capitals of all partners should be adjusted in their profit sharing proportion.
Pass the necessary journal entries in the books of the partnership firm and prepare a
Balance Sheet of the new firm.
Ans.
Profit and loss adjustment a/c Profit: 1800
Balance sheet total 140000
Bank Balance 38200
Capital A/c
Nandkishor 60000
Nandlal 20000
Nandram 20000
New Profit Sharing Ratio 3:1:1
3. Ranade and Kanade were partners and shared the profits in the ratio of 3/5
th and 2/5th. On 31st March, 2014 their Balance Sheet was as follows.

Sundry Creditors 15000 Bank 250
Reserve Fund 5000 Sundry Debtors 22500
Capital Accounts Less: RDD 250 22250
Ranade 36000 Stock 8500
Kanade 24000 Investments 12000
Plant 15000
Building 22000
80000 80000
On 1st April 2014, Mr. Hegade was admitted to partnership on the following terms.
1. He should bring Rs. 18650 as his capital for his 1/5 share.
2. Valuation of the goodwill of the firm was to be made at twice the average profit of
the last three years. The profits were as follows.
2011 – 12 = Rs. 16000
2010 – 11 = Rs. 27000 and
2009 – 10 = Rs. 24500
Hegade is to bring the goodwill in cash equal to his share.
3. Before admitting Hedage, R.D.D. was to be raised upto Rs. 500 only.
4. Closing stock was to be valued at Rs. 7,500.
5. Appreciate Building by 5%.
Prepare Profit and Loss Adjustment Account, Capital Account of the Partners and
Ans.
Profit and loss adjustment a/c Loss: Rs. 150

Bank Balance 27900
Capital A/c
Ranade 44310
Kanade 29540
Hegade 18650
Share of goodwill bought by Hegade 9000
4. Amar and Akbar are the partners in a business sharing profits and losses in
the ratio 3:2 respectively. Their Balance Sheet as on 31st March, 2012 stood as
under.

Sundry Creditors 12600 Land and Building 25000
Amar Capital A/c 27000 Furniture 3700
Akbar Capital A/c 18000 Stock 14500
Cash at Bank 1000
57600 57600
They admitted Amit on 1.4.2012 as a partner on the following terms.
1. Depreciate Furniture by Rs. 800 and stock by 10%.
2. Reserve of 5% on debtors be created for bad and doubtful debts.
3. Amit should bring in Rs. 7000 as capital and Rs. 4000 as Goodwill.
4. Amit will receive 1/8 th share in future profits.
5. The value of Land and Building be raised upto Rs. 32,000
6. The Capital accounts of all the partners be adjusted in proportion to their profit
sharing ratio and excess amount be refunded to partner.
Prepare Profit and Loss Adjustment Account, Capital Accounts of Partners and
Ans.
Profit and loss adjustment a/c Profit 4080
Bank Balance 7920
Capital A/c
Amar 29400
Akbar 19600
Amit 7000
New ratio 21:14:5
5. The following is the Balance Sheet of M/s Sukhadeo and Hanumant on 31st
March, 2012. They share profits and losses in the proportion of 3/5 and 2/5
respectively.

Creditors 124000 Cash at Bank 10000
Capital A/c Land and Building 50000
Sukhadeo 70,000 Plant and Machinery 70,000
Hanumant 70,000 Furniture 3000
Stock 41000
Debtors 90000
264000 264000
They take Shakuntala into partnership on 1st April, 2012. The terms being:
1. That she shall pay Rs. 10000 as her share of goodwill, the amount to be retained
in the business.
2. That she shall bring in Rs. 30000 as capital for one – fourth share in the future
profits.
3. The firm's assets were to be revalued as under:

a. Land and Building to be valued at Rs. 60,000; Plant and Machinery and Furniture
to be reduced by 10%.
b. A provision of 5% on Debtors is to be made for doubtful debts.
c. The Stock is to be taken at a value of Rs. 50,000.
4. The excess of capital of Sukhadeo and Hanumant over their due proportion of
sharing profit in the firm is to be transferred to their respective loan accounts.
Prepare Profit and loss Adjustment Account, Capital account of all partners and
Opening Balance sheet of the firm.
Ans.
Profit and loss adjustment a/c Profit Rs. 7200
Bank Balance 50000
Capital A/c
Sukhadeo 54000
Hanumant 36000
Shakuntala Rs. 30000
6. Sharad and Pankaj sharing profits in proportion of 3/5 and 2/5 respectively
admit Nilesh into partnership on 1st April 2012 giving him ¼ share in profits on
his agreeing to bring Rs. 10000 as capital. The old Partners guarantee the
assets and liabilities as per the Balance Sheet given below.
You are required to draw up Profit & Loss Adjustment account and show the
Balance sheet of the new Partnership after considering the other adjustments.
Balance sheet as on 31.03.2012

Capital A/c Investments 3000
Sharad 12000 Debtors 6000 5500
(-) Reserve (- 500)
Pankaj 4000 Stock 4500
21000 21000
It was later on discovered that:
1. A contingent liability of Rs. 500 not included in the above Balance Sheet had to be
cleared.
2. Bad debts were expected to be Rs. 700.
3. Stock was revalued at Rs. 3000 because a part of it had been eaten by white ants.
4. Investments had been valued at Rs. 2700
Ans.
Profit and loss adjustment a/c Loss Rs. 2500
Cash A/c Bal. 10500
Capital A/c
Sharad 10500
Pankaj 3000
Nilesh 10000
7. Rajan & Padam are equal partners in a business. Their Balance Sheet as on
31st March, 2012 stood as under.

Sundry Creditors 40000 Cash at Bank 60000
Bank Overdraft 20000 Debtors 30000
Reserve 18000 Machinery 24000
Capitals: Building 27000
Rajan 45000
Padam 30000
183000 183000
On 1st April, 2012, they decide to admit Sharad on the following terms:
1. The Machinery, Building & Furniture be depreciated by 5%.
2. The Reserve at 5% be created for doubtful debts on debtors.
3. The Goodwill account for Rs. 30,000 be opened in the firm's book.
4. Sharad should bring Rs. 40000 as capital for his ¼ th share in the future profits.
5. The capital accounts of all the partners be adjusted in proportion to the new profit
sharing ratio.
Prepare Profit & Loss Adjustment account and the balance sheet of the firm after
admission of Sharad.
Ans.
Bank A/c Bal 103150
Capital A/c
Rajan 60000
Padam 60000
Sharad 40000
8. The following is the Balance Sheet of Ram and Laxman who share profits in
the ratio 3:2 respectively as on 31st March, 2012.

Creditors 15000 Plant and Machinery 24000
Capital Accounts: Furniture 2000
Ram 30000 Debtors 30000
Laxman 20000 Cash at bank 4000
76000 76000
On this date Bharat was admitted on the following terms.

1. He has to pay Rs. 21,000 as his capital and Rs. 17,000 as his share of goodwill for
1/5 th share in future profits.
2. The amount of goodwill will be retained in the business.
3. Plant and Machinery and stock to be depreciated @ 10% and 5% respectively.
4. A provision of 6% on debtors be made for bad and doubtful debts.
5. Furniture to be revalued @ Rs. 3000
6. It was found that there was a liability for Rs. 1000 for credit purchases which was
not recorded in the books of accounts.
Prepare Profit and Loss Adjustment account and Balance sheet of the firm after the
admission of Bharat.
Ans.
Bank A/c Bal 42000
Capital A/c
Ram 43800
Laxman 29200
Bharat 21000
9. Mr. Baba and Mr. Kaka were in partnership sharing profits and losses in the
proportion of 3:2 respectively. Their Balance Sheet as on 31st March, 2012
stood as follows:
Balance sheet as on 31. 03.2012

Capital A/c Business Premises 140000
Mr. Baba 100000 Furniture & Fixtures 11400
Mr. Kaka 60000 160000 Stock 27000
Current A/c Debtors 9100
Mr. Baba 1200 Cash at Bank 1100
Mr. Kaka 1400 2600
Loan From Mr. Chacha 20000
Creditors 6000
188600 188600
On 1st April 2012 Mr. Anna was admitted to the firm on the following terms:
(i) Business Premises were to be valued at Rs. 170000 and furniture and fixtures at
Rs. 10400. A provision for Bad debts of Rs. 1000 was to be made. Stock should be
revalued at Rs. 29,000.
(ii) Mr. Anna should bring in Rs. 40,000 as Capital and Rs. 10,000 as his share of
goodwill and it was retained in the business and he should be given one – fourth
share in the future profits.
(iii) The loan from Mr. Chacha was to be repaid.
Prepare Profit and Loss Adjustment Account, Partners Current accounts and Balance
Ans.
Profit and loss adjustment a/c Profit Rs. 30,000
Bank A/c Bal 31100
Current A/c
Baba 25200
Kaka 17400
10. Amol and Abhijeet share Profits and Losses in the ratio of 3:2 in partnership
firm. Their Balance Sheet as on 31st March, 2012 was as under.

Creditors 12500 Bank 7500
Bank Loan 16000 Debtors 20800
General Reserve 2500 Less: R.D.D. 800 20000
Capitals: Stock 12000
Amol 15000 Furniture 4700
Abhijeet 12000 27000 Machinery 5000
Building 15000
68000 68000
On 1.4.2012 they admitted Ashok on the following terms:
(i) For 1/5 th share in profit in future. Ashok should being Rs. 10,000 for capital and
Rs. 5000 for goodwill in cash.
(ii) Half of the amount of goodwill be withdrawn by old partners.
(iii) The stock is to be depreciated by 10% and Machinery by 5%.
(iv) R.D.D. be maintained at Rs. 1000
(v) Furniture should be appreciated to Rs. 5350 and building be appreciated by 20%.
Pass the necessary journal entries and open Revaluation A/c and Goodwill A/c in the
books of the firm.
Ans.
Profit and loss adjustment a/c Profit Rs. 2000
Bank A/c Bal 20000
Capital A/c
Amol 19200
Abhijeet 14800
Ashok 10000
11. The following is the Balance Sheet of the firm Sangam Traders as on 31st
March, 2012. Ganga and Yamuna are the partners of the firm who share profits
and losses in the ratio of 3 : 2 respectively.

Capital : Building 10,000
Ganga 14000 Machinery 14000
Yamuna 14000 28000 Furniture 600
Stock 8200
Debtors 18000
52800 52800
They take Saraswati into partnership on 1st April, 2012 the terms being:
(i) That the new firm is to be retained as "Triveni Traders"
(ii) That Saraswati shall pay Rs. 2000 as her share of goodwill, the amount to be
retained in business.
(iii) That she shall bring Rs. 6000 as capital for ¼ th share in the future profits.
(iv) The firm's assets were to be revalued as under:

Building to be valued at Rs. 12000; Machinery and Furniture to be reduced by 10%.
A provision of 5% on debtors is to be made for doubtful debts. the stock is to be
taken at a value of Rs. 10,000.
(v) The excess of capital of Ganga and Yamuna over their due proportion of sharing
profits in the new firm is to be transferred to their respective loan account.
Prepare Profit and Loss Adjustment Account, Capital Account of Partners and
Opening Balance Sheet of Triveni Traders.
Ans.
Profit and loss adjustment a/c Profit. Rs. 1440
Bank A/c Bal 10000
Capital A/c
Ganga 10800
Yamuna 7200
Saraswati 6000
12. Ram, Shyam and Bharat were partners sharing profits and losses in the
ration of 2:3:3 respectively. Their Balance Sheet on 31st March, 2012 was as
follows.

Bills Payable 10000 Cash in Hand 500
Trade Creditors 30000 Cash at Bank 22000
Loan from 'Usha' 20000 Bills Receivable 4500
General Reserve 16000 Trade Debtors 60000
Capital Account: Stock in Trade 35000
Ram 20000 Furniture 2000
Shyam 27000 Building 29000
Bharat 30000 77000
153000 153000
On 1st April, 2012 they admitted Laxman into prtnership for ¼ th share on the
following terms.
(i) Laxman should bring Rs. 25,000 as capital.
(ii) A goodwill account be opened in the books for Rs. 40,000 and the old partners be
credited in their profit sharing ratio.
(iii) The value of stock in trade be reduced by 10%.

(iv) Building be appreciated by 15%.
(v) A provision for Bad Debts of Rs. 4000 be made.
(vi) An item of Rs. 502 included in Trade Creditors is not likely to be claimed and
hence should be written off.
(vii) There being a claim for damages against the firm, a liability to the extent of Rs.
1000 should be created.
(viii) After Laxman's Admission in the firm Goodwill account should be written off.
Prepare (a) Profit and Loss Adjustment Account. (b) Balance Sheet of the new
firm.
Ans.
Profit and loss adjustment a/c Profit. Rs. 3648
Bank A/c Bal 47000
Capital A/c
Ram 25588
Shyam 35382
Bharat 38382
Laxman 15000
13. Veena and Leela of Udgir are equal partners in a business. Their Balance
Sheet as on 31st March, 2012 stood as under.

Sundry Creditor 180000 Cash at Bank 120000
Capitals: Less: RDD 2000 60000
Veena 90000 Bills Receivable 24000
Leela 60000 150000 Building 114000
Machinery 48000
366000 366000
They decided to admit Asha on 1st April, 2012 on the following terms.
(i) The machinery and the building be depreciated by 10% and Reserve for doubtful
debts to be increased to Rs. 5000.
(ii) Bills Receivable are taken over by Veena at a discount of 10%.
(iii) Asha should bring Rs. 80,000 as capital for her ¼ th share in future profits.
(iv) The Capital accounts of all the partners be adjusted in proportion to the new
profit sharing ratio by opening current accounts of the partners.
Prepare Profit and Loss Adjustment A/c Partners Capital Account and New
Balance Sheet of the firm.
Ans.
Bank A/c Bal 200000
Capital A/c
Veena 120000
Leela 120000
Asha 80000
14. Raja and Rani were partners sharing profits and losses in proportion of their
capitals. Their Balance Sheet on 31st March, 2012 was as under:

Particulars Rs. particulars Rs.
Capitals: Building 8000
Raja 14000 Furniture 2000
Rani 7000 Debtors 16000
Bills Payable 3000 Cash in Hand 3000
Creditors 10000
40000 40000
On 1st April, 2012 they decided to admit Kanchan to partnership on the
following terms:
(i) Kanchan to bring Rs. 12000 as capital for ¼ th share in future profits.
(ii) The goodwill of the firm to be valued at two years purchase of the average profit
for the last 4 years and Kanchan to bring in her share of goodwill in cash.
(iii) The trading results for the last 4 years were: 2008-09 Rs. 18000 Profit, 2009 – 10
Rs. 18000 Profit, 2010 – 11 Rs. 9000 Loss and 2011 – 12 Rs. 21000 Profit.
(iv) The stock to be revalued at 90% of its book value.
(v) Building and Furniture to be depreciated by 10%.
(vi) The capitals of all partners in the new firm be adjusted in their new profit sharing
ratio by making adjustments in cash and taking Kanchan's Capital as base.
You are required to prepare a profit and loss adjustment A/c the capital A/c of
the partners and the Balance Sheet of the new firm.
Ans.
Profit and loss adjustment a/c Loss 2100
Cash A/c Bal 26100
Capital A/c
Raja 24000
Rani 12000
Kanchan 12000
15. The following is the Balance Sheet of Shubha and Leena of Aurangabad who
share profits in the ration 3:2 respectively as on 31.03.2012.

Creditors 15000 Plant and Machinery 24000
Capital Accounts Furniture 2000
Shubha 30000 Debtors 30000
Leena 20000 Cash at Bank 4000
76000 76000
They decided to admit Manjusha on 1st April, 2012 on the following terms:
1. She has to pay Rs. 20,000 as her capital and Rs. 17,000 as her share of Goodwill
for 1/5 th share in future profits.
2. The amount of Goodwill to be retained in the business.
3. Plant and Machinery and Stock in trade to be depreciated @ 10% and 5%

respectively.
4. A provision of 6% on debtors be made for Bad and Doubtful debts.

5. Furniture is to be revalued @ Rs. 3000.
Prepare Profit & Loss Adjustment Account, Partners capital Account and
Balance Sheet of the firm after the admission of Manjusha.
Profit and Loss Adjustment Account:

Loss: 4000
Balance sheet total = 1,10,000
Bank A/c Bal. Bank A/c Bal.
CA 42000
Capital Account
Subha 44000
Leena 29600
Manjusha 21000
16. Madhu and Amar are partners in a firm sharing profits and losses in the
proportion of 3/5 and 2/5 respectively. Their Balance Sheet as on 31st March,
2012 was as follows:

Madhu's Capital 35000 Sundry Debtors 45000
Amar's Capital 35000 Land and Building 25000
Sundry Creditors 62000 Stock 20500
Cash at Bank 5000
furniture and Fixtures 1500
132000 132000
They have admitted Vasant into Partnership. the terms being that:
1. He shall pay Rs. 5000 as his share of goodwill, the amount of goodwill retained
into business.
2. He shall bring Rs. 15000 as his capital for ¼ share in future profits.
3. For the purpose of Vasant's admission, it was agreed that the assets would be
revalued as follows:
a. Land and Building to be taken at Rs. 30,000.
b. Plant and Machinery to be valued at Rs. 32000.
c. A provision of 5% on debtors would be made against doubtful debts.
d. The value of stock at Rs. 25000.

Prepare Profit and Loss Adjustment Account. Partners Capital Account and Balance
Ans.
Profit & Loss Adjustment A/c Profit = Rs. 4250
Balance Sheet Total 156250
Bank A/c Balance 25000
Capital A/c
Madhu 40550
Amar 38700
Vasant 15000
17. Manish and Nitin are partners in a firm sharing Profits and Losses in the
ratio of 3:1. Their Balance Sheet as on 31st March, 2012 was as follows:

Manish's Capital 30000 Cash in Hand 2500
Nitin's Capital 16000 Bills Receivable 6000
Bills Payable 3000 Stock 20000
General Reserve 4000 Furniture 1500
71000 71000
Sachin is admitted as a partner in the firm on 1st April, 2012 on the following
terms:
1. Sachin is to pay Rs. 20,000 as capital for 1/5 th share in future profit and he
should bring Rs. 4000 for goodwill.
2. Stock and Furniture to be reduced by 10%.
3. R.D.D. is to be made at 5% on the debtors.
4. Land and Building is to be appreciated by 20%.
You are required to prepare Profit and Loss Adjustment A/c, partner's Capital
Accounts and Balance Sheet of the new firm.
Ans.
Profit & Loss Adjustment A/c Profit Rs. 2050
Balance Sheet Total Rs. 97050
Cash A/c Rs. 25600
Capital A/c
Manish Rs. 37538
Nitin Rs. 18512
Sachin Rs. 20000
DISSOLUTION OF
PARTNERSHIP
FIRM
1. Ganesh and Chandan were partners sharing profits and losses in the proportion of 3:2. They
dissolve partnership firm on 31st March, 2011 when their position was as follows:
Sundry Creditors 25000 Debtors 112500
Bank Overdraft 20000 Less: R.D.D. -12500 100000
Reserve Fund 30000 Stock 225000
Capital A/c Furniture 50000
Ganesh 230000 Motor Car 75000
Chandan 150000 Cash in Hand 5000
455000 455000
The Assets realised as follows: Debtors Rs. 90,000, Stock Rs. 2,00,000, and Goodwill Rs. 25000,,
Motor Car was taken over by Ganesh for Rs. 70,000 and Furniture by Chandan for Rs. 60,000.
The Creditors were paid Rs. 22500 in full settlement. The expenses of realisation amounted to Rs.
10,000.
Pass necessary journal entries in the books of the firm.
Solution:
In the Journal of Partnership Firm
31.3.2011 Realisation A/c ....Dr. 462500
To Debtors A/c 112500
To Stock A/c 225000
To Motor Car A/c 75000
[Being assets transferred at their book values to Realisation A/c ]
31.3.2011 Sundry Creditors A/c ....Dr. 25000
Bank Overdraft A/c ....Dr. 20000
To Realisation A/c 45000
[Being external liabilities transferred at their book valued to

realisation A/c ]
31.3.2011 R.D.D. A/c ....Dr. 12500
[Being R.D.D. transferred to Realisation A/c ]
31.3.2011 Reserve Fund A/c ....Dr. 30000
To Ganesh's Capital A/c 18000
To Chandan's Capital A/c 12000
[Being Balance in reserve transferred to Capital A/c in their profit

sharing ratio]
31.3.2011 Cash A/c ....Dr. 315000
[Being assets realised into cash]
31.3.2011 Ganesh's Capital A/c ....Dr. 70000
Chandan's Capital A/c ....Dr. 60000
[Being Motor car and furniture taken over by the partners

respectively]
To Cash A/ c 42500
[Being creditors and Bank overdraft paid in cash ]
To Cash A/c 10000
[Being expenses of realisation paid in cash]
Chandan's Capital A/c ....Dr. 5000
[Being loss incurred on realisation adjusted to Partners' Capital

A/c in the ratio of 3:2]
Chandan's Capital A/c 97000
To Cash A/c 267500
[Being balance in capital A/c paid]

2. X and Y are equal partners. The following is their Balance Sheet as on 31st March, 2012.
X’s Capital 40000 Building 30000
Y’s Capital 30000 Machinery 10000
X’s Loan 2000 Debtors 8800
Creditors 15000 Less: R.D.D. - 800 8000
Stock 20000
Investments 4000
Commission REceivable 1000
Bank 10000
95000 95000
The firm was dissolved on 31st March, 2012
(i) The Assets realised as follows:
Stock Rs. 19,000, Debtors Rs. 7,500, Machinery Rs. 11,000, Building Rs. 14,000
ii. Y took over the investments Rs. 5000 and Furniture at Book Value.
iii. X agreed to accept Rs. 1500 in full settlement of his Loan Account.
iv. Dissolution expenses amounted to Rs. 2000.
v. Commission Receivable could not be recovered.
Prepare Realisation Account, X’s Loan Account, Capital Accounts and Bank Account.
Solution:
Realisation Account
Particulars Rs. Rs. Particulars Rs. Rs
To Sundry Assets By Sundry Liabilities
Building 30000 Creditors 15000

Machinery 10000 By R.D.D. A/c 800
Furniture 12000 By Bank A/c
Debtors 8800 Stock 19000
Stock 20000 Debtors 7500
Investments 4000 Machinery 11000
Commission Receivable 1000 85800 Building 14000 51500
To Bank A/c 2000 BY Y’s Capital A/c
(Dissolution Expenses) Investments 5000
To Bank A/c Furniture 12000 17000
Creditors 15000 By X’s Loan A/c 500
By Loss on Realisation A/C
X 9000
Y 9000 18000
102800 102800
Particulars X Y Particulars X Y
To Realisation A/c 17000 By Balance b/d 40000 30000
To Realisation A/c 9000 9000 By Reserve Fund (1:1) 4000 4000
(loss)
To Bank A/c 35000 8000
44000 34000 44000 34000
X’s Loan Account
To Bank A/c 1500 By Balance b/d 2000
2000 2000
Bank Account
To Balance b/d 10000 By Realisation A/c 2000
To Realisation A/c 51500 By Realisation A/c 15000
By X’s Loan A/c 1500
By X’s Capital A/c 35000
By Y’s Capital A/c 8000
61500 61500
3. Devendra and Ganesh were partners sharing profits and losses in the ratio of 3:2. They
dissolved the partnership firm on 31st March, 2013 when their position was as follows.:
Balance Sheet as on 31. 03. 2013
Sundry Creditors 12,500 Debtors 56250
Bank overdraft 10,000 (-) R.D.D. ( - ) 6250 50,000
Reserve Fund 15,000 Stock 1,12,500
Capital Accounts Furniture 25,000
Devendra 1,15,000 Motor Car 37,500
Ganesh 75000 190000 Cash in hand 2500
227500 227500
The assets realised as follows:
(1) Debtors Rs. 45,000, stock Rs. 1,00,000 and goodwill Rs. 12,500
(2) Motor car was taken over by Devendra for Rs. 35,000 and furniture by Ganesh for Rs. 30,000.
(3) The creditors were paid Rs. 11,250 in full settlement.
(4) The realisation expenses were Rs. 5,000.
Solution:
1. Reserve Fund A/c ……… Dr. 15,000

To Devendra's Capital A/c 9000
[Being the Reserve fund Transferred to Partners' capital account at the

time of Realisation]
2. Realisation A/c …………Dr. 231250
To Debtors 56250
To Stock 112500
To Furniture 25000
Motor car 37500
[Being the Sundry Assets Transferred to Realisation A/c at book value]
3. Sundry Creditors A/c .... Dr. 12500
[Being the Sundry Liabilities transferred to Realisation A/c]
4. Cash A/c ……… Dr. 157500
To Realisation A/c [W.N. 1] 1,57,500
[Being the Sundry Assets Realised]
5. Devendra's A/c ………… Dr. 35000
Ganesh's A/c …………… Dr. 30,000
To Realisation A/c 65,000
[Being Motor car and Furniture were taken over by former and later
respectively]
6. Realisation A/c ………… Dr. 11,250
To Cash A/c 11250
[Being the Creditors were paid at a discount on Realisation]
7. Realisation A/c ………… Dr. 5000
To Cash A/c 5000
[Being the realisation expenses incurred and paid]
8. Bank Overdraft A/c ………… Dr. 10000
To Cash A/c 10000

9. Devendra's Capital A/c .... Dr. 3750
Ganesh's capital A/c .... Dr. 2500
[Being loss made on Realisation A/c Transferred to Partners Capital

A/c]
10. Devendra's capital A/c ……… Dr 85250
Ganesh's Capital A/c ………… Dr. 48500
To Cash A/c 133750
[Being the final settlement is made between the partners on

Realisation]
W.N. 1. Realisation A/c
To Sundry Assets A/c By Sundry Liabilities A/c
Debtors 56250 Sundry Creditors 12,500
Stock 112500
Furniture 25000 By R.D.D. 6250
Motor Car 37500 231250
To Cash A/c 11,250 By Cash A/c
[Creditors were paid] Debtors 45000
Stock 100000
To Cash A/c 5000 Goodwill 12500 157500
[Realisation expenses paid]
By Devendra's Capital A/c 35000
[Motor Car Taken Over]
By Ganesh 's Capital A/c 30,000
[Furniture Taken Over]

By Loss On Realisation A/c [3:2]
Devendra 3750
Ganesh 2500 6250
247500 247500
W.N. 2. Partners Capital A/c
Particulars Devendra Ganesh Particulars Devendra Ganesh
To Realisation A/c 35000 30000 By Balance B/d 115000 75000
To Realisation A/c [3:2] 3750 2500 By Reserve Fund 9000 6000
[Loss on Realisation] [3:2]
To Cash A/c 85250 48500
[Balancing Fig.]
124000 81000 124000 81000
W.N. 3. Cash A/c
To balance B/d 2500 By Realisation A/c 11250
By Ganesh's Capital A/c 48500
By Bank's Over Draft A/c 10,000
160000 160000
W.N. 4. Bank Overdraft A/c
To Cash A/c 10,000 By Balance B/d 10,000
10000 10000
4. Pannalal, Babulal and Hiralal were partners sharing profits and losses in the proportion of 2:
2: 1. Following is their Balance Sheet as on 31 st March, 2008: (Textbook Problem No. 6)

Capital A/c Machinery 25000
Pannalal 30000 Stock 10000
Babulal 10000 Debtors 27500
Hiralal 10000 (-) R.D.D. -1500 26000
General Reserve 3000 Investments 12000
Creditors 20000 Profit & Loss A/c 9000
Pannalal’s Loan A/c 4000 Bank 2000
Bills Payable 7000
84000 84000
On the above date the partners decided to dissolve the firm:
1. Assets were realised: Machinery Rs. 22500, Stock Rs. 9000, Investments Rs. 10,500, Debtors Rs.
22500.
2. Dissolution expenses were Rs. 1,500.
3. Goodwill of the firm realised Rs. 12000.
Pass the necessary Journal Entries in the Books of the firm.
Solution:
Journal Entries in the books of the firm.

31.3.2008 General Reserve A/c ……. Dr. 3000
To Pannalal’s A/c 1200
To Babulal’s A/c 1200
To Hiralal’s A/c 600
[Being balance in general reserve transferred ]
31.3.2008 Pannalal’s Capital A/c ……. Dr. 3600
Babulal’s Capital A/c ……. Dr. 3600
Hiralal’s Capital A/c ……. Dr. 1800
To Profit & Loss A/c 9000
[Being Accumulated losses transferred]
31.3.2008 Realisation A/c ……. Dr. 74500
To Machinery A/c 25000
To Stock A/c 10000
To Investments A/c 12000
[Being assets transferred to Realisation A/c at their book value]
31.3.2008 Creditors A/c ……. Dr. 20000
Bills Payable A/c ……. Dr. 7000
R.D.D. A/c ……. Dr. 1500
[Being outsiders liabilities transferred to Realisation A/c at their
book value)
31.3.2008 Bank A/c ……. Dr. 76500
[Being assets were realised]
To Bank A/c 28500
[Being outsiders liabilities and realisation expenses paid]
31.3.2008 Pannalal’s Loan A/c ……. Dr. 4000
To Bank A/c 4000
[Being Partners loan paid ]
To Pannalal’s Capital A/c 800
To Babulal’s Capital A/c 800
To Hiralal’s Capital A/c 400
[Being Profit on realisation is recorded]
31.3.2008 Pannalal’s Capital A/c ……. Dr. 28400
Babulal’s Capital A/c ……. Dr. 8400
Hiralal’s Capital A/c ……. Dr. 9200
To Bank A/c 46000
[Being the final settlement is made]
Final
Accounts of
NPO
Write the correct word for the given statement
1. The organization formed for providing services only.
2. An account, which is prepared by “Not for profit concern” instead of Profit and Loss
account.
3. Concerns established for rendering services to its members or to the society and do
not earn profit.
4. The account opened by non - trading concerns for recording cash receipts and cash
payments.
5. The concern which prepares Income and Expenditure account instead of Profit and
Loss account.
6. Fees paid by persons for becoming a member of a “Not for Profit Concern”
7. Monthly contribution by a person for becoming a member of “Not for Profit Concern”.
8. Donations received for specific purpose.
9. A special fund created for a certain purpose only.
10. The receipt which is not recurring in nature.
11. The receipt which is recurring in nature.
12. Fees received in lumpsum at once in case of “Not for Profit Concern”
13. An account which records only revenue items in case of “Not for Profit Concern”
14. Account which records only cash transactions in case of “Not for Profit Concern”.
15. The income which is earned during the year, but it has not been received during the
year.
16. A fund created out of specific amount earmarked, gifted or donated and the income of
this fund is to be used for specific purpose.
17. A statement showing the financial position of a concern on a particular date.
18. The expenditure which is recurring in nature or an expenditure which is incurred for
carrying the day to day business activities.
19. The debit balance of Income and Expenditure account.
20. The credit balance of Income and Expenditure account.
21. The gift received from legal representative as per the will of a deceased person.
22. Excess of income over expenditure.
23. Excess of expenditure over income.
24. The excess of total assets over liabilities of a “Not for Profit Concern”.
25. The account opened by a non - trading concern to find out surplus/ deficit during the
particular financial year.
26. All such receipts which are non - recurring in nature and not forming a part of regular
flow of income of a concern.
Answer:
1. Not for profit concern.
2. Income and
Expenditure account.
3. Not for Profit Concern.
4. Receipts and
Payments account.
5. Not for profit concern
6. Entrance fees or
admission fees
7. Subscription
8. specific donations
9. Specific fund
10. Capital receipt
11. revenue receipt
12. Life membership fees
13. Income and
expenditure account
14. Receipts and
Payments account
15. Outstanding income
16. Endowment fund
17. Balance Sheet
18. Revenue expenditure
19. deficit
20. surplus
21. Legacy
22. Surplus
23. Deficit
24. Capital fund
25. Income and
Expenditure account
26. Capital Receipts.
OMTEX CLASSES ACCOUNTS NOTES
True or False
1. 'Not for Profit' concerns do not have profit motive. (True)
2. Not for Profit concerns concentrate their efforts on maximising their profit. (False)
3. Every year, 'Bal Vikas mandir', a primary school, prepares Income and Expenditure
Account. (True)
4. Charitable Institutions prepare Profit and Loss Account, at the end of every
financial year. (False)
5. There is no difference between Receipts and Payments Account and Income and
Expenditure Account. (False)
6. All receipts are the items of revenue income. (False)
7. Income and Expenditure Account, prepared by 'Not for Profit' concerns, must be
accompanied by Balance Sheet. (True)
8. In the Income and Expenditure Account, all incomes received during the year,
irrespective of the year for which thery are received, are to be recorded. (False)
9. The final balancing amount of Income and Expenditure Account, represents either
Surplus or Deficit. (True)
10. Receipts and Payments Account do not have any opening balance. (False)
Choose the Correct alternative

1. Income and Expenditure account is a ______________
a. capital account
b. real account
c. personal account
d. nominal account
2. Outstanding subscription at the end of the accounting year represents _________

a. a liability
b. an expenditure
c. an asset
d. a capital fund
3. Excess of income over expenditure is termed as ___________

a. deficit
b. profit
c. surplus
d. loss
4. Not for Profit Concerns prepares _________________ Account instead of Profit and
Loss account.
a. trading
b. income and expenditure
c. cash
d. receipts and payments.
5. Usually _____________ is a major source of revenue income for 'Not for Profit
Concers'
a. subscriptions
b. donations
c. legacies
d. entrance fees
290
6. Non cash items are not recorded in __________________
a. Receipts and Payments account
b. Income and Expenditure Account
c. Balance sheet
d. Profit and Loss account.
7. The excess of assets over liabilities is termed as __________

a. surplus
b. deficit
c. capital fund
d. loan
8. For sports club, expenditure on the purchase of sports machinery / equipments is a

___________
a. revenue
b. recurring
c. general
d. capital
9. Purchase of stationery is a ____________________ expenditure

a. capital
b. revenue
c. long term
d. deferred revenue
10. An Income and Expenditure account and a Balance Sheet is prepared as final
accounts by a __________________
a. Not for Profit Concern
b. Trading Concern
c. Commercial Organisation
d. Public Limited Company.
291
1. Dr. Narendra commenced practice in the month of April 2007. He prepared
the following Receipts & Payments Account for the year ended 31st March, 2008.
Receipts and Payments A/c For the year ended 31st March, 2008
Receipts Amounts Payments Amounts
To Cash 10000 By Furniture 1500
To Visits 7000 By Equipment 2500
To Sundry Receipts 400 By Drugs 2000
By Salaries 1000
By Rent 500
By Conveyance 700
By Stationery 100
By Lighting 125
By Periodicals 100
By Drawings 4375
By Balance c/d 4500
17400 17400
1. Rs 200 were to be received on account of visits.
2. Unpaid Salaries Rs. 200
3. 60% of conveyance is for private purposes.
4. Value of drugs on hand was estimated at Rs. 1,000.
5. Depreciate furniture and equipment by 10%
6. Prepare Income and Expenditure account and balance sheet.
Solution: In the books of Dr. Narendra
Income and Expenditure A/c for the year ended 31.03.08
Expenditure Amount Amount Income Amount Amount

To Drugs 1000 By Visits 7000
To Salaries 1000 (+) Outstanding 200 7200
(+) Outstanding 200 1200 By Sundry 400
Receipt
To Rent 500
To Conveyance 700
(-) Drawings -420 280
To Stationery 100
To Lighting 125
To Periodicals 100
To Depreciation
Furniture 150
292
Equipment 250 400
To Surplus 3895
[Income over
Expenditure]
7600 7600
Liability Amount Amount Asset Amount Amount

Capital Fund 10000 Furniture 1500
(-) Drawings -4375 (-) Depreciation -150 1350
5625 Equipment 2500
(-) Drawings Conveyance -420 (-) Depreciation -250 2250
5205 Stock of Drugs 1000
(+) Surplus 3895 9100 Cash Balance 4500
Outstanding Salaries 200 Outstanding Visit 200
9300 9300
293
2. Dr. Subhash Raje started practice as a medical practitioner on 1 st April, 2007.
He gives you the Receipts & Payments Accounts for the year 2007 – 08 and the
adjustments to be made. Prepare his Income and Expenditure Account and
Balance sheet for 2007 -08.
Receipts and payments account for the year ended 31st March, 2008.
Receipts Amount Payments Amount
To Cash Introduced 107500 By Furniture 50000
To Receipts From Dispensary 64000 By Drugs 35000
To Sundry Receipts 12000 By Salary 24000
By Rent 6000
By Conveyance 18000
By Stationery 5600
By Lighting 10000
By Journals 1200
By Drawings 37700
By Balance C/f 40000
267500 267500
Adjustments:
1. Receipts in arrears are: Visits Rs. 11,500 and Dispensary Rs. 9,000.
2. The outstanding salaries are Rs. 1,800 and the outstanding expenses on drugs are
also Rs. 3,000.
3. 40% of the amount spent on conveyance was for domestic use.
4. Stock of drugs in hand at the close of the year was worth Rs. 4,200.
5. Depreciate furniture at 5% p.a. and equipments at 10% p.a. Furniture and
equipment purchased on 1st April 2007.
Solution: In the books of Dr. Subhash Raje

(+) Outstanding 3000 33800 (+) Outstanding 11500 95500
To Salary 24000 By Receipts from 64000
Dispensary
To Rent 6000 By Sundry Receipts 12000
To Conveyances 18000
(-) Drawings -7200 10800
To Stationery 5600
To Lighting 10000
To Journals 1200
To Depreciation
Furniture 2500
Equipment 4000 6500
294
To Surplus 80800
[Income over
Expenditure]
180500 180500

(-) Drawings -37700 (-) Depreciation - 2500 47500
69800 Equipment 40000
(-) Conveyance Drawings -7200 (-) Depreciation - 4000 36000
(+) Surplus 80800 143400 Cash balance 40000
Outstanding Outstanding
Salary 1800 Visit 11500
Drugs 3000 4800 Dispensary 9000 20500
148200 148200
295
3. Dr. Arjun Patil commenced Medical practice on 1.4.2006. He has prepared the
following Receipts and payments account for the years 31.3.2007. [September,
2009]
Receipts and payments account for the year 31st March 2007
To Cash Introduced (Capital Fund) 30000 By Furniture 40000
To Income from Visits 40000 By Honorarium to Doctor 10000
To Receipts from Dispensary 80000 By Equipments 50000
To Miscellaneous receipts 1000 By Purchase of Drugs 10000
To Interest on Investments 500 By Compounders Salary 12000
To Receipts from Operation Fees 10000 By Rent of Dispensary 6000
By Conveyance Charges 2000
By Stationery 600
By Operation Expenses 8000
By Lighting 400
By Journals and Newspapers 800
By Telephone Expenses 500
By Investments 7200
By Balance C/d 14000
161500 161500
Adjustments.
i. Rs. 5000 were still to be received on account of the visits.
ii. Compounder salary of Rs. 3000 and Bill of stationary Rs. 1000 and Rent of
dispensary Rs. 1000 are outstanding.
iii. 25% amount of conveyance charges were for private use.
iv. Stock of Drugs on hand was estimated at Rs. 2000.
v. Furniture and Equipments are to be depreciated at 10%.
Prepare Income and expenditure account for the year ended 31st March 2007 and
Balance sheet as on that date from the above information.
Solution: In the books of Dr. Arjun Patil
Expenditure Amt. Amt Income Amt. Amt.

To Honorarium to 10000 By income from Visits 40000
Doctor
To Drugs 8000 (+) Outstanding 5000 45000
To Compounder 12000 By Receipts from 80000
Salary Dispensary
(+) Outstanding 3000 15000 By Miscellaneous 1000
receipts
To Rent of Dispensary 6000 By Interest on 500
Investment
(+) Outstanding 1000 7000 By Receipts from 10000
operation fees
To Conveyance 2000
296
Charges
(-) Drawings -500 1500
To Stationery 600
To Operation 8000
Expenses
To Lighting 400
To Journal & 800
Newspapers
To Telephone 500
Expenses
To Depreciation
Furniture 4000
Equipment 5000 9000
To Surplus 74700
[Income Over
Expenditure]
136500 136500

(-)Conveyance Drawings -500 (-) Depreciation -4000 36000
29500 Equipments 50000
(+) Surplus 74700 104200 (-) Depreciation -5000 45000
Outstanding Investments 7200
Salaries 3000 Cash Balance 14000
Rent 1000 Outstanding Visits 5000
Stationery 1000 5000 Stock of Drugs 2000
109200 109200
297
4. From the following Receipts and payments account of Western Gymkhana for
the year ended 31st March, 2007 and other information, prepare Income and
Expenditure account for the year ended on and a Balance Sheet as at that date.

To Balance B/f 1040 By Salaries 1300
To Subscriptions for : By Entertainment Expenses 645
2006 85 By Electric Charges 234
2007 4000 By General Expenses 350
2008 103 By Rates & Taxes 120
To Donations 1200 By Investments 3000
To Entertainment Receipts 876 By Stationery & Printing 241
To Interest 81 By Expenses of 2006 600
To Entrance Fees 1000 By Fixed Deposit 1000
By Balance C/f 895
8385 8385
i. The Gymkhana has 450 members paying an annual subscription of Rs. 10/-
each.
ii. Rs. 20/- is still in arrears towards subscription for the year 2006.
iii. Carry forward Rs. 20/- or rates paid in advance.
iv. Provide Rs. 200/- for salaries outstanding.
v. The Gymkhana owns Land and Building standing in the books of Rs.
15,000/- and Furniture standing at Rs. 1,150, on which depreciation at 5%
and 20% respectively is to be written off.
vi. The Capital Fund as on 1st April, 2006 was Rs. 16,695/-
vii. 50% of the Entrance Fees is to be capitalised. Donations are capitalised.
Solution: In the books of Western Gymkhana
Expenditure Amt. Amt. Income Amt. Amt.

To Salaries 1300 By Subscription 4000
To Entertainment Expenses 645 By Donations 1200
to Electric Charges 234 (-) Capitalized -1200 NIL
To General Expenses 350 By Entertainment Receipts 876
To Rates & Taxes 120 By Interest 81
(-) Prepaid -20 100 By Entrance Fees 1000
To Stationery & Printing 241 (-) Capitalized -500 500
To Depreciation
Land & Building 750
Furniture 230 980
To Surplus 1907
[Income Over Expenditure]
5957 5957
298

Capital Fund 16695 Outstanding 500
Subscription of
current year
(+) Entrance Fees 500 Outstanding 20
Subscription of Last
Year
17195 Investments 3000
(+) Donations 1200 Fixed Deposits 1000
18395 Cash Balance 895
(+) Surplus 1907 20302 Prepaid Rates 20
Advance 103 Land & Building 15000
Subscription of
Next Year
O/S Salaries 200 (-) Depreciation -750 14250
Furniture 1150
20605 20605
299
5. Following is the Receipts and Payments Account and additional information of
Kalpana Hospital, Sakri. (March 2012)
Receipts and Payments account for the year ended 31st March, 2010

To Balance b/d 6000 By Medicines 10000
To Subscriptions By Honorarium to Doctors 75000
2008 – 2009 7500 By Ambulance Maintenance 44000
2009 – 2010 95000 By Hospital Equipments Purchased 33000
2010 – 2011 15000 By Furniture Purchased 25000
To Donations 55000 By Fixed Deposits 100000
To Life Membership Fees 150000 By Balance C/d 69500
353500 353500
i. Outstanding subscription for 200 9 – 2010 is amounted to Rs. 5000.
ii. Hospital Equipments and Furniture were purchased on 1.10.2009 and both
were to be depreciated at 20% p.a.
iii. Life membership fees are to be capitalized.
iv. Donations represent donations for Building fund.
v. Staff salary for the current year is outstanding Rs. 7500.
vi. On 1.4.2009, the hospital had the following assets and liabilities: Land and
Building Rs. 250000, Investments Rs. 50000, Ambulance Rs. 1,02,500, Bank
Loan Rs. 2,00,000.
vii. Capital fund as on 1.4.2009 was amounted to Rs. 2,16,000.
Prepare: Income and Expenditure Account for the year ending 31 st March, 2010 and
the Balance Sheet as on that date.
Solution: In the books of Kalpana Hospital, Sakri

To Medicine 10000 By Subscriptions 95000
To Honorarium to 75000 (+) Outstanding 5000 100000
Doctors
To Ambulance 44000 By Donations 55000
Maintenance
To Depreciation (-) Building Fund (55000) NIL
Equipments 3000 By Life Membership 25000
Fees
Furniture 2500 5500 (-) Capitalised (25000) NIL
To Outstanding Staff 7500 By Hospital Receipts 150000
Salary
To Surplus 108000
[Income over
Expenditure]
250000 250000
300

Capital Fund 216000 Hospital Equipment 30000
(+) Life Membership (25000) (-) Depreciation (3000) 27000
Fees
241000 Furniture 25000
(+) Surplus 108000 349000 (-) Depreciation (2500) 22500
Advance 15000 Fixed Deposits 100000
Subscription of
Next Year
Building Fund 55000 Cash Balance 69500
Outstanding Staff 7500 Outstanding 5000
Salary Subscription for
current year
Bank Loan 200000 Land & Building 250000
Investments 50000
Ambulance 102500
626500 626500
301
6. From the following Receipts and Payments Accounts of Sangameshwar Sports
Club for the year ending 31st March, 2007 and Balance Sheet as on that date.
Receipts and Payments Account For the year ended on 31st March, 2007.

To Balance (1-4-06) By Salaries 40000
Cash in Hand 15000 By Wages 40000
Cash at Bank 215000 By Postage and Telegram 15000
To Subscriptions 125000 By Printing & Stationery 25000
To Donations 225000 By Hire of Ground 15000
To Entrance Fees 125000 By Sports Material 200000
[Purchased on 1-1-07]
To Interest 15000 By Insurance 50000
To Miscellaneous Receipts 15000 BY Balance (31.03.07)
Cash in Hand 10000
Cash at Bank 340000
735000 735000
Adjustment
i. Subscriptions include Rs. 2000 received for the year 2005 – 2006 and
subscription of Rs. 5000 is due to for current year but not received yet.
ii. Assets as on 1st April, 2006 were as follows.
a. Building Rs. 300000
b. Sports Material Rs. 250000
c. Investments Rs. 150000
d. Furniture Rs. 150000.
iii. Provide depreciation on Building, Sports Material and Furniture at 5% p.a.
iv. Capitalise 50 % of Donations and Entrance Fees.
v. Insurance of Rs. 5000 is paid in advance.
vi. Salaries are outstanding at Rs. 5000 and Interest Rs. 5000 is due but not
received.
vii. Capital fund was Rs. 10,82,000 as on 1-4-2006.
Solution: In the books of Sangameshwar Sports Club,

(+) Outstanding 5000 45000 (-) Last Year Amount (2000)
To Wages 40000 123000
To Postage & 15000 (+) Outstanding 5000 128000
Telegram
To Printing & 25000 By Donations 225000
Stationary
To Hire of Ground 15000 (-) Capitalized (112500) 112500
To Insurance 50000 By Entrance Fees 125000
(-) Prepaid (5000) 45000 (-) Capitalized (62500) 62500
302
To Depreciation By Interest 15000
Sports Material 15000 (+) Outstanding 5000 20000
Building 15000 By Miscellaneous 15000
Receipts
To Surplus 115500
[Income over
Expenditure]
338000 338000

Capital Fund 1082000 Sports materials 450000
(+) Donations 112500 (-) Depreciation -15000 435000
1194500 Cash in Hand 10000
(+) Entrance 62500 Cash at Bank 340000
Fees
1257000 Outstanding 5000
Subscription for Current
year
(+) Surplus 115500 1372500 Building 300000
Outstanding 5000 (-) Depreciation -15000 285000
Salary
Investment 150000
Furniture 150000
Outstanding Interest 5000
1377500 1377500
303
7. Following is the summary of Receipts and Payments of Jay Bajrangbali

Vyayam Shala, Ajara for the year ending 31.03.2007. (March 2010)
Receipts and payments Account for the year ended on 31st March 2007.
To Balance b/d 41600 By Salary 55000
To Subscription By Lighting 10000
2005 – 06 4120 By General Expenses 15360
2006 – 07 160000 By Entertainment Expenses 25800
To Donation for Building 50000 By Taxes Paid 5000
To Receipts from 36440 By Printing and Stationery 9440
Entertainments
To Interest 3240 By Expenses of 2005 – 2006 24000
To Entrance Fees 45000 By Investment 120000
By Fixed Deposit with Ajara Urban 40000
Bank
By Balance C/d 35800
340400 340400
Adjustments:
i. Jay Bajrangbali Vyayam Shala has 4500 members paying annual subscription
of Rs. 40 each.
ii. Provide for outstanding salary Rs. 5000.
iii. On 1.4.2006 the assets stood as under:
a. Land and building Rs. 60,000.
b. Furniture Rs. 46000
Depreciate the above assets at 10% p.a.
iv. Interest on Investment Rs. 2000 is not received.
v. Capital Fund was Rs. 1,27,720 on 1-4-2006..
vi. 50% of the entrance fees is to be capitalised.
Prepare: Income and Expenditure account for the year ended 31 st march 2007 and
balance sheet as on that date.
Solution: In the books of Jay Bajrangbali Vyayam Shala, Ajara

To Salary 55000 By Subscription 160000
To Lighting 10000 By Receipts from 36440
Entertainment
To General Expenses 15360 By Interest 3240
To Entertainment 25800 (+) Outstanding Interest 2000 5240
Expenses
To Taxes Paid 5000 By Entrance Fees 45000
304
To Printing & 9440 (-) Capitalised -22500 22500
Stationery
To Depreciation
To Surplus 107980
[Income over
Expenditure]
244180 244180

Capital Fund 127720 Investments 120000
(+) Entrance Fees 22500 (+) Interest 2000 122000
150220 Fixed Deposits 40000
Outstanding 20000
Subscription
Donation for 50000 Land & Building 60000
Building
Outstanding 5000 (-) Depreciation -6000 54000
Salaries
Furniture 46000
313200 313200
305
8. The following is the Receipts and payments Account of Modern Sports Club,
Satara, for the year ended on 31st March, 2007. (March 2009)
Receipts and Payments Account for the year ended on 31st March, 2007.

To Balance b/d 1490 By Upkeep of Garden 9500
To Subscription 13600 By Wages 2360
To Entrance Fees 520 By Salary 7000
To Interest on Investments 840 By Ground Rent 210
To Proceeds from Matches 5180 By Printing 930
To Life Member Fees 5000 By Postage 190
By Bank Balance 5000
By Balance C/d 1440
26630 26630
Adjustments:
1. Ledger balances of the club as on 31.3.2006 were
Capital fund Rs. 66,430, Club house and ground Rs. 40,000, Investments Rs. 18,640,
furniture Rs. 6,400, and outstanding subscription Rs. 600.
2. Printing includes Rs. 200, Upkeep of garden includes Rs. 500 and Subscription
includes Rs. 400 for the previous year.
3. Entrance fees are to be capitalized.
4. The Rotary club of Satara owed Rs. 210 for the use of club hall.
5. Provide 10% depreciation on furniture.
6. Subscriptions outstanding for the current year were Rs. 1,000.
Prepare _
Income and Expenditure account for the year ended 31 st March, 2007 and Balance
Sheet as on that date.
Solution: In the books of Modern Sports Club, Satara

To Upkeep of 9500 By Subscription 13600
Garden
(-) Last year (500) 9000 (-) Last year Amount (400)
Amount
To Wages 2360 13200
To Salary 7000 (+) Outstanding of 1000 14200
Current Year
To Ground rent 210 By Entrance Fees 520
To Printing 930 (-) Capitalised -520 NIL
(-) Last Year -200 730 By Interest on 840
Amount Investment
To Postage 190 By Proceeds from 5180
Matches
306
To Depreciation 640 By Amount receivable 210
on Furniture from Rotary Club,
Satara
To Surplus 300
[Income over
Expenditure]
20430 20430

Capital Fund 66430 Bank Balance 5000
(+) Entrance 520 Cash Balance 1440
Fees
66950 Ground & Club House 40000
(+) Surplus 300 67250 Investments 18640
Furniture 6400
Life 5000 (-) Depreciation -640 5760
Membership
Fees
Outstanding Subscription 200
of Last Year
[600 – 400]
Amount Receivable from 210
Rotary club of Satara for
the use of Club hall
Outstanding Subscription 1000
of Current year
72250 72250
307
9. From the following Balance sheet and Receipts and Payments Account of
Padmavati High School, Thane, prepare Income and Expenditure account for the
year ended 31-03-2007 and balance sheet as on that date. (September 2008)
(Rs.) (Rs.)
Entrance fees 30000 Furniture 84000
Capital fund 519000 Computer laboratory 100000
Library 125000
Investment 200000
Cash in hand 5000
Cash at bank 15000
Outstanding Tuition Fees 20000
549000 549000
Receipts and Payment Account for the year ended 31st March, 2007
(Rs.) (Rs.)
To balance b/d By Furniture purchased 52000
Cash in hand 5000 By Salaries 300000
Cash at bank 15000 By rent 140000
To Tuition Fees 400000 By Sundry expenses 27000
To Term Fees 120000 By Stationery 49000
To Government Grant (salary) 104500 By Annual gathering expenses 24000
To Sundry receipts 11000 By repairs of buildings 32500
To sale of old newspapers 500 By Insurance 20000
To interest on investments 10000 By Balance c/d
To Donation of library 150000 Cash in Hand 44500
Cash at Bank 127000
816000 816000
Adjustments:
1. Tuition fees receivable Rs. 150000
2. Salary still payable Rs. 150000
3. Rent paid in advance Rs. 20000
4. Insurance premium is paid for one year ending 30-9-07
5. Depreciate furniture and library at 10% and computer laboratory at 20%.
Depreciation is to be charged on the closing balance of assets.
Solution: In the books of Padmavati High School, Thane.

To Salaries 300000 By Tuition Fees 400000
(+) Outstanding 150000 450000 (-) Last Year -20000
Amount
To Rent 140000 380000
(-) Prepaid -20000 120000 (+) Outstanding 150000 530000
To Sundry Expenses 27000 By Term Fees 120000
308
To Stationary 49000 By Government 104500
Grant
[Salary]
To Annual gathering 24000 By Sundry receipts 11000
expenses
To Repairs of 32500 By Sale of Old 500
Buildings Newspapers
To Insurance 20000 By Interest on 10000
Investments
(-) Prepaid -10000 10000
To Depreciation
Furniture 13600
Library 22500
Computer Lab. 20000 46100
To surplus 17400
[Income Over
Expenditure]
776000 776000

Donation of 150000 Cash in Hand 44500
Library
Entrance Fees 30000 Cash at Bank 127000
Outstanding 150000 Computer Laboratory 100000
Salary
Library 125000
Investments 200000
Outstanding Tuition 150000
Fees
Prepaid Rent 20000
866400 866400
309
10. Following is the Balance sheet and receipts and payments account of the
Memorial Hospital, Sawantwadi. Prepare Income and expenditure account for the
year ended on 31.3.2010 and the balance sheet as on that date. (March 2011)
Capital fund 1004000 Cash in hand 6000
Outstanding Cash at bank 34000
Salaries 22000 Land and Building 800000
Medicine Bill unpaid 6000 Furniture 70000
Equipments 120000
Outstanding Subscriptions 2000
1032000 1032000
Receipt and payments account For the year ending 31.3.2010
(Rs.) (Rs.)
To Balance b/d By Salaries (including of 110000
the previous year)
Cash in hand 6000 By Medicines 52000
Cash at bank 34000 By Equipments purchases 20000
To subscription (includes Rs. 2000 130000 By Taxes 3000
received for previous year)
to Sale of Furniture (Book Value Rs. 20000 By General Expenses 8600
30000)
To Donations (Revenue) 44000 By Balance C/d
To Life membership Fees 25000 Cash in Hand 15400
Cash at bank 50000
259000 259000
Consider the following adjustments.
1. Outstanding subscription Rs. 12000.
2. Capitalize the amount of membership fees.
3. Prepaid taxes Rs. 500.
4. Outstanding Salary Rs. 12000.
5. Write off depreciation Rs. 20000 from Land and Building and Rs. 30000 from
Equipments.
6. Outstanding Medicine bill as on 1.4.09 is still due.
Solution: In the books of Memorial Hospital, Sawantwadi.

To Loss on sale of 10000 By Subscription 130000
Furniture
To Salaries 110000 (-) Last year Amount -2000
(-) Last Year Amount -22000 128000
88000 (+) Outstanding 12000 140000
310
(+) Outstanding 12000 100000 By Donations 44000
To Medicines 52000
To Taxes 3000
(-) Prepaid -500 2500
To General Expenses 8600
To Depreciation
Equipments 30000 50000 By Deficit 39100
[Expenditure Over
Income]
223100 223100

(+) Membership 25000 Equipments 140000
Fees
1029000 (-) Depreciation -30000 110000
(-) Deficit 39100 989900 Cash in hand 15400
Outstanding 6000 Cash at bank 50000
Medicine Bill of Last
Year
Life Membership 25000 Land & Building 80000
Fees
(-) Capitalisation -25000 NIL (-) Depreciation 20000 780000
Outstanding 12000 Outstanding 12000
Salaries of Current Subscription of
Year Current year
Prepaid Taxes 500
1007900 1007900
311
11. From the following balance Sheet and Receipts and Payments account of
Nanavati Hospital, Mumbai, prepare Income and Expenditure account for the
year ending on 31st March, 2007 and the Balance sheet as on that date.

Salaries Unpaid 2000 Cash 11000
Medicines Bill Unpaid 1500 Securities 150000
Equipments 15000
Subscriptions Due 5000
Interest Accrued 1500
386500 386500
Receipts and Payment Account for the year ended 31st March, 2007
To Cash balance b/f 11000 By Furniture (Purchased on 1 – 4 1900
– 2006)
To Subscription 30000 By Salaries (including Rs. 2000 of 23000
last year)
To Interest (Rs. 1500/- for 5000 By Equipment (Purchased on 1 – 7500
last year) 4 – 06)
To Donations (Revenue) 4300 By Dispensary expenses 4700
To Life Membership fees 10000 By Medicines 5500
By Taxes 500
By Cash balance c/f 17200
60300 60300
Adjustments.
1. Capitalise the amount of life membership fees.
2. Interest earned but not received Rs. 1,000/-
3. Subscription include Rs.1000/- for 2008 and outstanding subscription for 31 st
march, 2007 is 4,200
4. Unpaid salary for the year 2007 is Rs. 2500/-
5. Provide for depreciation on furniture 10%, Land and Building 5%, Equipments
20%.
6. Prepaid taxes Rs. 100/-
Solution: In the books of Nanavati Hospital, Mumbai.
312
(-) Last year -2000 (-) Last Year Amount -5000
Amount
21000 25000
(+) Outstanding 2500 23500 (-) Subscription Received -1000
in Advance of Next Year
To Dispensary 4700 24000
Expenses
To Medicines 5500 (+) Outstanding 4200 28200
(-) Last Year -1500 4000 By Interest 5000
Amount
To Taxes 500 (-) Last Year Amount -1500
(-) Prepaid -100 400 3500
To Depreciation (+) Outstanding 1000 4500
Furniture 590 By Donation 4300
Equipments 4500 By Life Membership Fees 10000
Land & Building 10000 15090 (-) Capitalized -10000 NIL
By Deficit 10690
[Expenditure Over
Income]
47690 47690

(+) Life Membership 10000 (-) Depreciation -590 5310
Fees
(-) Deficit -10690 382310 (-) Depreciation -4500 18000
Subscription for
Next year
Securities 150000
Cash 17200
Outstanding 4200
Subscription of
Current year
Outstanding Interest 1000
Prepaid Taxes 100
385810 385810
313
12. The Balance Sheet as at 1st April, 2006 and the Receipts and Payments
account for the year ended 31st March, 2007 of the Young Sports Club, Dadar are
as under.
Young Sports Club – Balance Sheet as on 1st April, 2006

Capital Fund 30000 Building 9500
Outstanding Expenses Furniture 5000
Salaries 400 Entrance Fee Receivable 200
Printing 300 700 Subscriptions Fee receivable 800
Income and Expenditure 23300 Sports Material & 28000
A/c Equipments
Cash in Hand 4200
Cash at Bank 6300
54000 54000
Young Sports Club, Dadar, Receipts and Payments A/c for the year ending 31 st
March, 2007
Receipts Rs. Payments Rs.
To Opening Balance By Cricket Tournament 16460
Expenditure
Cash in Hand 4200 By Printing & Stationery 860
Cash in Hand 6300 10500 By Salaries and Honorarium 1600
To Subscriptions 18000 By Repairs to Building 500
To Receipts from Cricket 14520 By Newspapers and Periodicals 470
Tournament
To Entrance Fees 4000 By Advertising Expenses 300
To Interest on Bank A/c 300 By Insurance 400
By Investments 15000
By Closing Balance
Cash in Hand 5280
47320 47320
You are also given the following additional information.

1. Subscriptions of the amount of Rs. 800 were receivable as on 31 st March, 2007
2. Subscriptions Rs. 200 and Entrance Fees Rs. 300 were received in advance.
3. Outstanding Expenses were: Salaries and Honorarium Rs. 100; Insurance Rs.
50; Cricket Tournament Expenses Rs. 250.
You are required to prepare Income & Expenditure account for the year ending 31 st
March, 2007 and a Balance Sheet as on that date.
Solution: In the books of Young Sports Club, Dadar

To Cricket 16460 By Subscription 18000
314
Tournament
Expenditure
(+) Outstanding 250 16710 (-) Last Year Amount -800
To Printing & 860 17200
Stationery
(-) Last Year -300 560 (-) Next Year Amount -200
Amount Received in Advance
To Salaries & 1600 17000
Honorarium
(-) Last Year -400 (+) Outstanding of 800 17800
Amount Current Year
1200 By Receipts from 14520
Cricket tournament
(+) Outstanding of 100 1300 By Entrance Fees 4000
Current Year
To Repairs to 500 (-) Last year Amount -200
Buildings
To Newspapers and 470 3800
Periodicals
To Advertising 300 (-) Next Year Amount -300 3500
Expenses Received in Advance
To Insurances 400 By Interest on Bank 300
A/c
To Surplus 15830
[Income Over
Expenditure]
36120 36120

Capital Fund 30000 Investments 15000
(+) Surplus of Last 23300 Cash in Hand 5280
year
53300 Cash at Bank 6450
(+) Surplus 15830 69130 Building 9500
Furniture 5000
Advance 200 Sports Materials & 28000
Subscription of Next Equipments
Year
Advance Entrance 300 Outstanding 800
fees of Next Year Subscription of
Current year
Outstanding
Expenses
Salaries & 100
Honorarium
315
Insurance 50
Cricket Tournament 250 400
Expenses
70030 70030
316
13. Following is the Receipts and Payments Account of Chamber of Commerce,
Amaravati for the year ending 31st March, 2012 and some additional
information.
Receipts and Payments A/c For the year ended 31.03.2012
To balance b/d 11,960 By Printing and Stationery 6950
(Cash at bank)
To subscription 36500 By Repairs 2100
(Including Rs. 2500 for 2010 – 11)
To Sale of furniture 12000 By Rent 8500
(Books value Rs. 18,000)
To Donation for building fund 27000 By Books 20000
To Admission fees 5050 By Travelling expenses 2000
(Revenue)
By Investments 40,000
By Insurance 1700
By Balance c/d 11260
(Cash at bank)
92510 92510
Particulars 1.04.2011 31.03.2012
Outstanding subscription 3000 5000
Building fund 145000
Capital fund 151960
Investment 250000
Prepare Income and Expenditure A/c for the year ended 31 st March, 2012 and balance
sheet as on that date.
Solution:
In the books of Chamber of Commerce, Amaravati
Expenditure Rs. Rs. Income Rs. Rs.
To Loss on Sale of Furniture 6000 By Subscription 36500

[18000 – 12000] [Loss = C.P. –
S.P.]
To Printing and stationery 6950 ( - ) Last year amount -2500

received in this year.
To Repairs 2100 (+) Outstanding for the +5000 39000

current year
317
To Rent 8500
To Books 20,000 By Admission Fees 5050
[Revenue]
To Travelling expenses 2000
To Insurance 1700
To Depreciation on Furniture 1400
By Expenditure Over 4600

Income (Deficit)
48650 48650
Capital Fund 151960 Outstanding subscription for 500

the Last year still receivable
[3000 – 2500]
(-) Deficit -4600 147360 Outstanding subscription for 5000

the Current year
Furniture 32,000
(-) Sale of Furniture [Book -18000

Value]
Building Fund 145000
(+) Fund received +27000 172000 Investments 250000

during current
year
(+) New investments 40000 290000

purchased
318
Cash at Bank 11260
319360 319360
319
14. From the following Receipt and Payment account of Patan Sports
Association, Patan and the adjustments. You are required to prepare Income and
Expenditure Account for the year ended 31st March, 2004 and a Balance sheet as
on that date. (12)
Receipts and Payments Account for the year ended 31st March 2004.
(Rs.) (Rs.)
To Balance b/d 4160 By Salaries 5500
To Subscription: By Entertainment Expenses. 2580
2003 – 04 16000 By Lighting 1000
To Donation 2000 By Taxes 500
To Receipts from Entertainment 3644 By Investments 12000
To Interest on Investment 324 By Printing and Stationery 944
To Entrance Fees 4500 By Expenses of 2002 – 03 2400
To Prize Fund 3000 By Fixed Deposit 4000
By Balance C/d 580
34040 34040
Adjustments:
(1) There are 450 members paying an annual subscription of Rs. 40 each.
(2) Salary outstanding on 31st March, 2004 was Rs. 1,000.
(3) Building stood in books Rs. 60,000 and furniture at Rs. 4,600 on 1st April,
2003. Write off depreciation on these assets @ 2% and 10% respectively.
(4) Interest on investment @ 5% has accrued for 3 months.
320
(5) The capital fund was Rs. 66,360 on 1 st April, 2003.
(6) 60% of the entrance fee is to be capitalised.
Income & Expenditure A/c for the years ended 31-3-2004

To Entertainment 2580 By Donation 2000
Expenses
To Salaries 5500 By Receipt from 3644
Entertainment
Add: Outstanding 1000 6500 By Interest on Investment 324
To Lighting 1000 Add: O/S Interest 150 474
To General Expenses 1536 By Entrance Fees 4500
To Taxes 500 Less: Capitalised (2700) 1800
To Printing & Stationery 944 By Surplus 18000
To Depreciation
Building 1200
Furniture 460 1660
To Surplus 11198
(Income over
Expenditure)
25918 25918
Balance Sheet as on 31-3-2004

Add: Entrance Fees 2700 Less: Depreciation (1200) 58800
Add: Surplus 11198 80258 Less: Depreciation (460) 4140
Prize Fund 3000 Investments 12000
Outstanding Salary 1000 Add: Interest 150 12150
Subscription paid in 412 Fixed Deposit 4000
advance
Bank Balance 3000
Cash 580
Subscription 2000
receivable
84670 84670
321
16.Dr. Manohar commenced practice in the month of April 2007. He prepared
the following Receipts & Payments Account for the year ended 31st March, 2008.
Receipts and Payments A/c For the year ended 31st March, 2008
Receipts Amounts Payments Amounts
To Cash 5000 By Furniture 2500
To Sundry Receipts 2400 By Drugs 1000
By Salaries 2000
By Rent 300
By Conveyance 900
By Stationery 100
By Lighting 125
By Periodicals 1000
By Drawings 3975
By Balance c/d 4000
17400 17400
Rs 500 were to be received on account of visits.
Unpaid Salaries Rs. 300
50% of conveyance is for private purposes.
Value of drugs on hand was estimated at Rs. 100.
Depreciate furniture and equipment by 10%
Prepare Income and Expenditure account and balance sheet.
Solution: In the books of Dr. Manohar

To Salaries 2000 (+) Outstanding 500 10500
(+) Outstanding 300 2300 By Sundry 2400
322
Receipt
To Rent 300
To Conveyance 900
(-) Drawings -450 450
To Stationery 100
To Lighting 125
To Periodicals 1000
To Depreciation
Furniture 250
Equipment 150 400
To Surplus 7325
[Income over
Expenditure]
12900 12900

1025 Equipment 1500
(-) Drawings Conveyance -450 (-) Depreciation -150 1350
(+) Surplus 7325 7900 Cash Balance 4000
Outstanding Salaries 300 Outstanding Visit 500
8200 8200
323
17. Dr. Shah started practice as a medical practitioner on 1st April, 2007. He
gives you the Receipts & Payments Accounts for the year 2007 – 08 and the
adjustments to be made. Prepare his Income and Expenditure Account and
Balance sheet for 2007 -08.
Receipts and payments account for the year ended 31st March, 2008.
To Cash Introduced 100000 By Furniture 150000
To Receipts From Dispensary 54500 By Drugs 15000
To Sundry Receipts 13000 By Salary 4000
By Rent 6000
By Conveyance 8000
By Stationery 5600
By Lighting 10000
By Journals 1200
By Drawings 17700
By Balance C/f 30000
267500 267500
Adjustments:
Receipts in arrears are: Visits Rs. 1,500 and Dispensary Rs. 19,000.
The outstanding salaries are Rs. 1,800 and the outstanding expenses on drugs are
also Rs. 3,000.
50% of the amount spent on conveyance was for domestic use.
Stock of drugs in hand at the close of the year was worth Rs. 200.
Depreciate furniture at 5% p.a. and equipments at 10% p.a. Furniture and

equipment purchased on 1st April 2007.
Solution: In the books of Dr. Shah
324
To Salary 4000 By Receipts from 54500
Dispensary
To Rent 6000 By Sundry Receipts 13000
To Conveyances 8000
(-) Drawings -4000 4000
To Stationery 5600
To Lighting 10000
To Journals 1200
To Depreciation
Furniture 7500
Equipment 2000 9500
To Surplus 128100
[Income over
Expenditure]
188200 188200

82300 Equipment 20000
(-) Conveyance -4000 (-) Depreciation -2000 18000
Drawings
Outstanding Expenses Outstanding
Incomes
Salary 1800 Visit 1500
Drugs 3000 4800 Dispensary 19000 20500
211200 211200
325
18. Dr. Vinod commenced Medical practice on 1.4.2006. He has prepared the
following Receipts and payments account for the years 31.3.2007. [September,
2009]
Receipts and payments account for the year 31st March 2007
To Cash Introduced (Capital Fund) 35000 By Furniture 30000
To Income from Visits 35000 By Honorarium to Doctor 20000
To Receipts from Dispensary 75000 By Equipments 40000
To Miscellaneous receipts 6000 By Purchase of Drugs 20000
To Interest on Investments 1500 By Compounders Salary 22000
To Receipts from Operation Fees 9000 By Rent of Dispensary 6000
By Conveyance Charges 2000
By Stationery 600
By Operation Expenses 8000
By Lighting 400
By Journals and Newspapers 800
By Telephone Expenses 500
By Investments 7200
By Balance C/d 4000
161500 161500
Adjustments.
vi. Rs. 50000 were still to be received on account of the visits.
vii. Compounder salary of Rs. 300 and Bill of stationary Rs. 10000 and Rent of
dispensary Rs. 10000 are outstanding.
viii. 50% amount of conveyance charges were for private use.
ix. Stock of Drugs on hand was estimated at Rs. 4000.
x. Furniture and Equipments are to be depreciated at 10%.
Prepare Income and expenditure account for the year ended 31 st March 2007 and
Balance sheet as on that date from the above information.
Solution: In the books of Dr. Vinod

To Honorarium to 20000 By income from Visits 35000
Doctor
To Drugs 16000 (+) Outstanding 50000 85000
To Compounder 22000 By Receipts from 75000
326
Salary Dispensary
(+) Outstanding 300 22300 By Miscellaneous 6000
receipts
To Rent of 6000 By Interest on 1500
Dispensary Investment
(+) Outstanding 10000 16000 By Receipts from 9000
operation fees
To Conveyance 2000
Charges
(-) Drawings -1000 1000
To Stationery 600
To Operation 8000
Expenses
To Lighting 400
To Journal & 800
Newspapers
To Telephone 500
Expenses
To Depreciation
Furniture 3000
Equipment 4000 7000
To Surplus 73900
[Income Over
Expenditure]
176500 176500

(-)Conveyance Drawings -1000 (-) Depreciation -3000 27000
Outstanding Investments 7200
Compounder salary 300 Cash Balance 4000
Stationery 10000 Outstanding Visits 50000
Rent of Dispensary 10000 20300 Stock of Drugs 4000
128200 128200
327
19. From the following Receipts and payments account of Omtex Sports Club,
Dadar for the year ended 31st March, 2007 and other information, prepare
Income and Expenditure account for the year ended on and a Balance Sheet as at
that date.

To Balance B/f 1040 By Salaries 2100
To Subscriptions for : By Entertainment Expenses 45
2006 85 By Electric Charges 234
2007 3000 By General Expenses 350
2008 103 By Rates & Taxes 120
To Donations 2200 By Investments 900
To Entertainment Receipts 76 By Stationery & Printing 241
To Interest 981 By Expenses of 2006 600
To Entrance Fees 900 By Fixed Deposit 2900
By Balance C/f 895
8385 8385
The Gymkhana has 450 members paying an annual subscription of Rs. 15/- each.
Rs. 20/- is still in arrears towards subscription for the year 2006.
Carry forward Rs. 50/- or rates paid in advance.
Provide Rs. 2000/- for salaries outstanding.
The Gymkhana owns Land and Building standing in the books of Rs. 15,000/- and
Furniture standing at Rs. 1,150, on which depreciation at 5% and 20% respectively
is to be written off.
The Capital Fund as on 1st April, 2006 was Rs. 16,695/-
50% of the Entrance Fees is to be capitalised. Donations are capitalised.
Solution: In the books of Omtex Sports Club, Dadar.

To Entertainment 45 By Donations 2200
328
Expenses
To Electric Charges 234 (-) Capitalized -2200 NIL
To General Expenses 350 By Entertainment 76
Receipts
To Rates & Taxes 120 By Interest 981
(-) Prepaid -50 70 By Entrance Fees 900
To Stationery & 241 (-) Capitalized -450 450
Printing
To Depreciation
Land & Building 750
Furniture 230 980
To Surplus 2237
[Income Over
Expenditure]
8257 8257

Subscription of
current year
(+) Entrance Fees 450 Outstanding 20
Subscription of Last
Year
17145 Investments 900
(+) Donations 2200 Fixed Deposits 2900
19345 Cash Balance 895
(+) Surplus 2237 21582 Prepaid Rates 50
Subscription of
Next Year
O/S Salaries 2000 (-) Depreciation -750 14250
Furniture 1150
23685 23685
329
Accounts Board Paper Feb. 2014
Q. 1. Attempt any Three of the following. [15]
A. Answer in one sentence only:
1. What do you mean by 'carriage inward'?
Ans. The expenses incurred to bring raw materials inside the factory is known
as carriage inward. It is a direct expenses and its recorded in the Debit side of
Trading A/c.
2. What is 'due date of a bill'?
Ans. The date on which the bill will become mature for pay is known as due
date the bill.
3. What is 'deficit'?
Ans. Debit balance of Income and Expenditure account is known as Deficit, it

is the expenditure over income of a 'Not for Profit' Concern.
4. What do you mean by 'sacrifice ratio'?
Ans. The proportion of future profit shared by old partners to the new partner
during the admission of a new partner in some ratio is known as Sacrifice
ratio. Its formula is_
Sacrifice ratio = Old Ratio – New Ratio
330
5. Which statement is prepared under single entry system to ascertain profit?
Ans. Statement of Profit or loss is prepared under single entry system to

ascertain profit.
B. Write the word / Term / Phrase which can substitute each of the following
statement:
1. The debit balance of trading account. (Gross loss)
2. The excess of total assets over total liabilities of a 'not for profit concern'.
(Capital Fund)
3. Expenses incurred on dissolution of a partnership firm. (Realisation

expenses)
4. Transfer of title of a bill from a debtor to a creditor. (Endorsement of bill of

exchange)
5. The statement showing profitability of two different periods and its

percentage change. (Comparative income statement)
C. Select the most appropriate alternative from the given below and rewrite the
statement:
1. When shares are forfeited, share capital account is _____________
a. debited
b. credited
c. adjusted
d. none of the above
2. A bill drawn and accepted on 23rd November, 2012 for two months will
payable on _____________
331
a. 23rd January, 2012
b. 23rd January, 2013
c. 25th January, 2013
d. 26th January, 2013
3. If the opening capital is Rs. 80,000, closing capital is Rs. 1,80,000,

withdrawals are Rs. 10,000 and additional capital brought in is Rs. 20,000, the
profit will be Rs. ______________
a. 90,000
b. 1,10,000
c. 70,000
d. 1,50,000
4. Assets and liabilities are transferred to Realisation Account at their _________

value.
a. market
b. purchase
c. sale
d. book.
5. Share of profit or a deceased partner till the date of his death is ____________
a. debited to profit and loss adjustment account
b. credited to profit and loss adjustment account.
c. debited to profit and loss suspense account.
d. credited to profit and loss suspense account.
332
D. State whether the following statements are True or False.
1. Honour of bill means payment in accordance with the apparent tenor of the
bill. (True)
2. The issue of debenture more than the face value is termed as issue of
debenture at par. (False)
3. Return inward is deducted from purchases. (False)
4. Ratio analysis is useful for inter – firm comparison. (True)
5. Renewal is a request by drawee to cancel the old bill and draw a new bill by
extending the credit period. (True)
E. Prepare a bill of exchange from the following details.
Drawer : Ramesh Mishra, L.B.S. Road, Ghatkopar, Mumbai
Drawee : Nandkumar Sharma, Laxmi Road, Pune
Payee: Rupesh Kumar Pande, Rajkamal Chowk, Amaravati.
Period of bill: 90 days
Amount of bill : Rs. 25,000
Date of Bill: 17th February, 2014
Date of Acceptance: 20th February, 2014
Accepted for : Rs. 20,000 only.
333
334
Q2. Mr. Keshav keeps his books on single entry system and disclosed the
following information of his business. [8 MARKS]
Particular 1 st April, 12 (Rs.) 31 st March, 13

(Rs.)
Investments 30000
Bills payable 18000
Debtors 60,000 90,000
Stock in Trade 30,000 37,500
Cash at Bank 36,000 54,000
Additional information
(1) Mr. Keshav transferred Rs. 3,000 per month during the first half year and
Rs. 2000 per month for the second half year from business account to his
personal account.
(2) he also took goods worth Rs. 7,000 for private use.
(3) He sold his private asset for Rs. 27,000 and brought the proceeds into his
business.
(4) Furniture to be depreciated by 10%
(5) Provide reserve for doubtful debts at 5% on debtors.
Prepare: (i) Opening statement of affairs.
(ii) Closing statement of affairs.
(iii) Statement of Profit and Loss for the year ended 31st March, 2013.
Solution:
Opening statement of affairs as on 1st April, 2012

Capital at the Beginning of the Year. 88,500 Furniture 15,000
Creditors 52500 Debtors 60,000
Stock in trade 30,000
Cash at bank 36,000
1,41,000 1,41,000
335
Closing Statement of affairs as on 31st March, 2013

Capital at the End of the year. 169500 Investments 30,000
Bills Payable 18000 Furniture 45,000
Creditors 69,000 Debtors 90,000
Stock in Trade 37,500
Cash at bank 54,000
256500 256500
Statement of Profit and Loss for the year ended 31st March, 2013
Particulars Rs. Rs.

Add: Drawings
First 6 months = 6 Months × Rs. 3000 18,000
Next 6 months = 6 months × Rs. 2,000 12,000
Goods 7000 + 37,000
2,06,500
Sale Proceeds of private asset utilized in the business - 27,000
1,79,500
Less: Capital at the beginning of the year. -88,500
Trading Profit 91,000
Less: Depreciation
On Furniture
45,000 × 10% - 4500
86500
Less: R.D.D.
On Debtors
90,000 × 5% - 4500
Net Profit 82,000
336
OR
Q2. A. What are the different 'Cash inflows' and 'Cash outflows' of operating
activity? (4)
B. State and explain any 'four objectives' of financial statement analysis from
business point of view. (4)
Q3. Mrs. Shehal and Mrs. Meenal are equal partners in a business. Their
balance sheet is as follows.
Balance Sheet as on 31st March, 2013 [10 MARKS]
Liabilities Amount Rs. Assets Amount Rs.
Capital A/cs Premises 20,500
Snehal 80000 Investments 10,500
Meenal 45000 125000 Equipments 5,000
Creditors 46,000 Bills Receivable 18,000
General reserve 20,000 Debtors 110000
( - ) R.D.D. 11000 99000
Bank Balance 38,000
191,000 191,000
They agreed to admit Mr. Komal on 1st April, 2013 on the following terms:
337
(1) Komal should bring Rs. 50,000 towards her capital for one fourth (1/4th
)Share in future profit.
(2) Goodwill to be raised in the books of the firm for Rs. 40,000.
(3) R.D.D. to be maintained at 5% on debtors.
(4) Premises to be valued at Rs. 30,000 and equipments to be written off fully.
(5) Creditors allowed a discount of Rs. 1,000 and they were paid off
immediately.
Prepare: Profit and Loss Adjustment Account, Partner's Capital Accounts and
Solution:
Profit and Loss Adjustments Account.

To Equipment 5000 By R.D.D. 5,500
[11,000 – 5,500]
To Profit on Revaluation A/c By Premises 9500
Snehal's Capital A/c 5500 By Creditors 1000
Meenal's Capital A/c 5500 11000
16000 16,000
338
Partners' Capital Accounts
Particulars Snehal Meenal Komal Particulars Snehal Meenal Komal

By Balance 80,000 45,000 -
b/d
By General 10,000 10,000 -
Reserve A/c
By Bank 50,000
A/c
By Goodwill 20,000 20,000 -
A/c
By 5500 5500 -
Revaluation
A/c
(Profit)
To Balance 115500 80500 50000
c/d
114500 79500 50000 115500 80500 50000
Balance Sheet of the new firm as on 1st April, 2013

Capital A/c Premises 20500
Snehal 115500 (+) Appreciation 9500 30000
Meenal 80500 Investments 10,500
Komal 50000 246000 Equipments 5,000
( - ) Written off - 5000 Nil
Creditors 46,000 Bills Receivable 18,000
( - ) Discount - 1000 Debtors 1,10,000
45,000 ( - ) R.D.D. @ 5%. p.a. - 5,500 1,04,500
( - ) Paid off 45,000 Nil Goodwill [W.N. 1] 40,000
Bank Balance [W.N. 2] 43,000
246000 246000
339
Working Note No. 1.
Goodwill A/c

To Snehal's Capital A/c 20,000
To Meenal's Capital A/c 20,000
By Balance c/d 40,000
40,000 40,000
Bank A/c

To Balance b/d 38,000 By Creditors 45000
To Komal's Capital A/c 50,000
By balance c/d 43,000
88000 88000
OR
Pravin, Prakash and Paresh were partners sharing profits and losses in the
proportion to their capitals. their balance sheet of the firm on 31st March, 2013
was as under.

(Rs.) (Rs.)
Capital A/cs Land and Building 80,000
Pravin 60,000 Investments 40,000
Prakash 40,000 Debtors 32000
Less: R.D.D. -4000 28000
Reserve Fund 36000 Cash 28000
212000 212000
Paresh died on 1st August, 2013 and the following adjustments were made:
(1) Assets were valued as – Land and building Rs. 88,000. Investments Rs.
36,000 and Stock Rs. 34,000.
(2) All debtors were good.
340
(3) Goodwill of the firm valued at two times the average profit of the last 4
years' profit.
(4) Paresh's share of profit upto his death to be calculated on the basis of
average profit of the last two years.
(5) Profits for the last four years were: Rs. 12,000, Rs. 24000, Rs. 14000 and
Rs. 22000.
Prepare: (i) Profit and Loss Adjustment Account.
(ii) Paresh's Capital Account, showing the amount payable to his executor.
(iii) Give working of Paresh's share in Goodwill and Profit.
Q4. Journalise the following transactions in the books of Kedarnath:
1. Badrinath informs Kedarnath that Aloknath's Acceptance of Rs. 16,000

endorsed to Badrinath has been dishonoured and noting charges amounted to
Rs. 500.
2. Somnath renews his acceptance of Rs. 14,400 to Kedarnath by paying cash

Rs. 4,400 and accepting a new bill for 2 months for the balance plus interest @
12% p.a.
3. Vishwanath retired his acceptance for Rs. 10,500 to Kedarnath by paying in

cash Rs. 10,250
4. Recovered only 50% of the amount due from his private estate of Ramnath,
who declared as insolvent, against his bill of Rs. 12,500. [10 MARKS]

A. Aloknath's A/c ……………Dr. 16500
To Badrinath's A/c 16500
[Being the endorsed bill is dishonoured along
with noting charges.]
B.
(i) Somnath's A/c ……… Dr. 14400
341
(ii) Cash a/c ………… Dr. 4400
To Somnath's A/c 4400
[Being the Part Payment is Made]
(iii) Somnath's A/c ………… Dr. 200

To Interest A/c 200
[Being the Interest is charged on balance
amount]
(iv) Bills Receivable A/c ………… Dr. 10200

To Somnath's A/c 10200
(C) Cash A/c ……………… Dr. 10,250

Rebate's A/c ………… Dr. 250
To Bills Receivable's A/c 10,500
[Being the Bill is retired]
(D)
(i) Ramnath's A/c ……………………… Dr. 12500
[Being the Bill is dishonoured]
(ii) Cash/ Bank A/c …………Dr. 6250

Bad Debts A/c …………… Dr. 6250
To Ramnath's A/c 12500
[Being the Drawee Ramnath become insolvent
and only 50% of the amount could be recovered
from his private estate]
342
Q5. Devendra and Ganesh were partners sharing profits and losses in the ratio
of 3:2. They dissolved the partnership firm on 31st March, 2013 when their
position was as follows.:
Balance Sheet as on 31. 03. 2013
Sundry Creditors 12,500 Debtors 56250
Bank overdraft 10,000 (-) R.D.D. ( - ) 6250 50,000
Reserve Fund 15,000 Stock 1,12,500
Capital Accounts Furniture 25,000
Devendra 1,15,000 Motor Car 37,500
Ganesh 75000 190000 Cash in hand 2500
227500 227500
The assets realised as follows:
(1) Debtors Rs. 45,000, stock Rs. 1,00,000 and goodwill Rs. 12,500
(2) Motor car was taken over by Devendra for Rs. 35,000 and furniture by
Ganesh for Rs. 30,000.
(3) The creditors were paid Rs. 11,250 in full settlement.
(4) The realisation expenses were Rs. 5,000.
343
Solution:

1. Reserve Fund A/c ……… Dr. 15,000
To Devendra's Capital A/c 9000
[Being the Reserve fund Transferred to Partners'
capital account at the time of Realisation]
2. Realisation A/c …………Dr. 231250

To Debtors 56250
To Stock 112500
To Furniture 25000
Motor car 37500
[Being the Sundry Assets Transferred to
Realisation A/c at book value]
3. Sundry Creditors A/c .... Dr. 12500

[Being the Sundry Liabilities transferred to
Realisation A/c]
4. Cash A/c ……… Dr. 157500

To Realisation A/c [W.N. 1] 1,57,500
[Being the Sundry Assets Realised]
5. Devendra's A/c ………… Dr. 35000

Ganesh's A/c …………… Dr. 30,000
To Realisation A/c 65,000
[Being Motor car and Furniture were taken over
by former and later respectively]
6. Realisation A/c ………… Dr. 11,250

To Cash A/c 11250
[Being the Creditors were paid at a discount on
Realisation]
7. Realisation A/c ………… Dr. 5000

To Cash A/c 5000
[Being the realisation expenses incurred and
paid]
8. Bank Overdraft A/c ………… Dr. 10000
344
To Cash A/c 10000
9. Devendra's Capital A/c .... Dr. 3750

Ganesh's capital A/c .... Dr. 2500
[Being loss made on Realisation A/c Transferred
to Partners Capital A/c]
10. Devendra's capital A/c ……… Dr 85250

Ganesh's Capital A/c ………… Dr. 48500
To Cash A/c 133750
[Being the final settlement is made between the
partners on Realisation]
W.N. 1. Realisation A/c

A/c A/c
Debtors 56250 Sundry Creditors 12,500
Stock 112500
Furniture 25000 By R.D.D. 6250
Motor Car 37500 231250
To Cash A/c 11,250 By Cash A/c

[Creditors were Debtors 45000
paid]
Stock 100000
To Cash A/c 5000 Goodwill 12500 157500
[Realisation
expenses paid]
By Devendra's 35000
Capital A/c
[Motor Car Taken
Over]
By Ganesh 's Capital 30,000

A/c
[Furniture Taken
Over]
By Loss On
Realisation A/c [3:2]
Devendra 3750
345
Ganesh 2500 6250
247500 247500
W.N. 2. Partners Capital A/c
Particulars Devendra Ganesh Particulars Devendra Ganesh

To Realisation A/c 35000 30000 By Balance 115000 75000
B/d
To Realisation A/c 3750 2500 By Reserve 9000 6000
[3:2] Fund
[Loss on Realisation] [3:2]
To Cash A/c 85250 48500

[Balancing Fig.]
124000 81000 124000 81000
W.N. 3. Cash A/c

To balance B/d 2500 By Realisation A/c 11250
By Ganesh's Capital A/c 48500
By Bank's Over Draft A/c 10,000
160000 160000
W.N. 4. Bank Overdraft A/c

To Cash A/c 10,000 By Balance B/d 10,000
10000 10000
346
OR
Khandelwal Co. Ltd. made an issue of 40,000 equity shares of Rs. 20 each,
payable as follows:
Application : Rs. 5 per share
Allotment : Rs. 10 per share.
First call: Rs. 3 per share.
Second and Final call: Rs. 2 per share.
The company received applications for 45,000 shares of which applications for
5000 shares were rejected and the money refunded. All the shareholders paid
upto second call except Sachin, the allottee of 2,000 shares, failed to pay final
call.
Pass Journal Entries for the above transactions in the books of Khandelwal Co.
Ltd.
Q6. Following is the Receipts and Payments Account of Chamber of Commerce,

Amaravati for the year ending 31st March, 2012 and some additional
information. [12 MARKS]
Receipts and Payments A/c For the year ended 31.03.2012

To balance b/d 11,960 By Printing and 6950
(Cash at bank) Stationery
To subscription 36500 By Repairs 2100
(Including Rs. 2500 for 2010 –
11)
To Sale of furniture 12000 By Rent 8500
(Books value Rs. 18,000)
To Donation for building fund 27000 By Books 20000
To Admission fees 5050 By Travelling expenses 2000
(Revenue)
By Investments 40,000
By Insurance 1700
347
By Balance c/d 11260
(Cash at bank)
92510 92510
Particulars 1.04.2011 31.03.2012

Outstanding 3000 5000
subscription
Building fund 145000
Capital fund 151960
Investment 2500000
Prepare Income and Expenditure A/c for the year ended 31st March, 2012 and
balance sheet as on that date.
Solution:
Expenditure JF Rs. Rs. Income JF Rs. Rs.

To Loss on Sale of 6000 By Subscription 36500
Furniture [18000 –
12000] [Loss = C.P. –
S.P.]
To Printing and 6950 ( - ) Last year -2500
stationery amount received
in this year.
To Repairs 2100 (+) Outstanding +5000 39000
for the current
year
To Rent 8500
To Books 20,000 By Admission 5050
Fees
[Revenue]
To Travelling 2000
expenses
To Insurance 1700
To Depreciation on 1400
Furniture
By Expenditure 4600
Over Income
(Deficit)
348
48650 48650

subscription for the Last
year still receivable
[3000 – 2500]
(-) Deficit -4600 147360 Outstanding 5000
subscription for the
Current year
Furniture 32,000
(-) Sale of Furniture -18000
[Book Value]
Building Fund 145000
(+) Fund +27000 172000 Investments 250000
received
during current
year
(+) New investments 40000 290000
purchased
Cash at Bank 11260
319360 319360
349
Q7. Miss Meena and Miss Reena are in partnership sharing profits and losses
in the ratio of 3:2.
From the following trial balance and adjustments, you are required to prepare
Trading Account, Profit and Loss Account for the year ended 31st March, 2013
and Balance Sheet as on that date.
Trial Balance as on 31.03.2013

(Rs.) (Rs.)
Building 400000 Capital Accounts
Plant and machinery 120000 Meena 300000
Purchases 650000 Reena 200000 500000
Carriage 7000 Sales 814000
Opening Stock 90000 Sundry creditors 180000
Wages 35000 Bank overdraft 20000
Sundry debtors 150000
Salaries 28000
Postage and telegram 4000
Insurance 5000
Bad debts 3000
Rent 4000
Discount 3000
Drawings
Meena 10000
Reena 5000 15000
1514000 1514000
Adjustments:
1. Stock on hand on 31st March, 2013 was valued at Rs. 1,10,000.
2. Depreciate plant and machinery at 10% p.a.
3. Create reserve for doubtful debts at 5% on sundry debtors.
4. Salaries include Rs. 2500 as advance to workers.
5. Partners are allowed interest at 5% p.a. on their capitals.
Solution:
350
Trading A/c for the year ended 31st March, 2013
Dr. Cr.
To Opening Stock 90,000 By Sales 8,14,000
To Purchases 6,50,000
To Carriage 7,000
To Wages 35,000
By Closing Stock 1,10,000
To Gross Profit c/d 142000
9,24,000 9,24,000
Profit and Loss A/c for the year ended 31st March, 2013
Dr. Cr.
To Salaries 28,000 By Gross 142000
Profit C/d
(-) Advances (- 25,500
)2,500
To Postage and Telegram 4,000
To Insurance 5,000
To Bad debts 3,000
(+) F.B.D. -
(+) N.R.D.D. 7,500
(-) O.R.D.D. - 10,500
To Rent 4,000
To Discount 3,000
To Depreciation on Plant 12,000
and Machinery
Meena 15,000
[300000 × 5%]
Reena 10,000 25,000
[200000 × 5%]
To Net Profit Transferred

to Partners Capital A/c
Meena 31800
Renna 21200 53000
142000
351
Partners' Capital A/c
Dr. Cr.
Particulars Meena Reena Particulars Meena Reena
Rs. Rs. Rs. Rs.
To Drawings 10,000 5,000 By Balance b/d 3,00,000 2,00,000
By Interest on Capital 15,000 10,000
By Net Profit b/d 31800
Balance Sheet as on 31 March, 2013
Liability Rs. Rs. Assets Rs. Rs.

Capital A/c Building 4,00,000
Meena Plant and Machinery 1,20,000
Reena (-) Depreciation @ 10% -12,000 1,08,000
Sundry Debtors 1,50,000
Sundry 1,80,000 (-) N.R.D.D.@ 5% (-)7,500 1,42,500
Creditors
Bank Over 20,000 Closing Stock 1,10,000
Draft
Advance Salaries paid 2,500
to workers
352
ACCOUNTS PAPER TWO
AS PER NEW SYLLABUS MARKS: 80 MARKS
Q1. Attempt any THREE of the following. (15

marks)
A. Answer in one sentence only: (5 MARKS)
(1) What is Partnership Deed?
Ans: A partnership deed is a written agreement duly stamped, signed and

registered document containing the terms and conditions of the partnership.
(2) What is Bill of Exchange?
Ans. A bill of exchange is a negotiable instrument containing an unconditional

order signed by the maker directing a certain person to pay a certain sum of
money only to the bearer of the instrument.
(3) What do you mean by Scrap Value of an asset?
Ans: The net amount which is expected to be realised on the final disposal of
a fixed asset is called „scrap value‟.
(4) What are Noting Charges?
Ans: Noting charges are the fees charged by the Notary Public for noting the
dishonour on the face of the bill and in his official register.
(5) What is Single Entry System?
353
Ans. It is an unscientific system of recording transactions where only one
aspect of the transaction is recorded.
B. Write the word / Term / Phrase which can substitute each of the
following statement:
1. A person who draws a bill of exchange. (Drawer)
2. Winding up of partnership business. (Dissolution of partnership firm)
3. The credit balance of Profit and Loss Account. (Net Profit)
4. An excess of assets over liabilities. (Capital)
5. The account which shows change in the values of assets. (Revaluation

Account)
C. Select the most appropriate alternative from the given below and
rewrite the statement: (5 MARKS)
1. There are ______ parties to a bill exchange. (Three)
a. Three b. Two c. Four d. Five
2. In case of dissolution assets and liabilities are transferred to ____ account.

(Realisation)
a. Bank b. Partner's Capital c. Realisation d. Partner's Current.
3. When goodwill is withdrawn by old partners _________ Account is credited.

(Cash or Bank)
a. Cash or bank b. Capital c. Revaluation d. Profit and Loss adjustment.
4. Generally incomplete records are maintained by ______ (Trader)
a. Trader b. Company c. Society d. Government
354
5. Excess of income over expenditure is termed as _____(Surplus)
a. Deficit, b. Profit c. Surplus d. Loss
D. State whether the following statements are True or False. (5 MARKS)
1. Single entry system is based on certain rules and regulations. (False)
2. Not for profit concern do not have profit motive. (True)
3. Bill of exchange is an instrument in writing, containing an unconditional

order. (True)
4. A bill of exchange is signed by the person on whom it is drawn. (True)
5. Realisation loss is not transferred to insolvent partner's capital account. .

(False)
E. Prepare bill of exchange from the following details. (5 marks)
Drawer - Shekhar Desai, Shastri Road, Mahad.
Drawee – Sharad Verma, Narayan Peth, Pune.
Amount - Rs. 3500/-
Period - 3 months.
Payee - Mukund Pande, Panvel
Date of Bill Drawn – 21st June, 2007
Date of Acceptance - 23rd June, 2007
355
356
Q2. Following is the records of Mr. Raj were kept on single entry system. (
March 2009 board exam questions)
Particulars 31.3.2006 31.3.2007
Stock 15000 14000
Plant and machinery 42500 55500
Loan taken 21000 21000
Bank balance 1900 2100
Debtors 43000 35000
Mr. Raj invested Rs. 4000 in the business. Also he had withdrawn Rs. 15000
for his private expenses from business. Rs. 500 to be provided for bad debts.
Depreciate plant and machinery @5% and furniture @ 5%.
Prepare : (1) statement of affairs as on 31.3.2006. (2) statement of affairs as on

31.3.2007. (3) statement of profit and loss for the year ended on 31.3.2007.
In the books of Mr. Raj
Statement of affairs as on 31st March, 2006
Loan taken 21000 Stock 15000
Capital at the beginning of the year 116900 Plant and machinery 42500
Bank balance 1900
Debtors 43000
357
155900 155900
Statement of affairs as on 31st March, 2007
Loan taken 21000 Stock 14000
Capital at the end of the year 114700 Plant and machinery 55500
Bank balance 2100
Debtors 35000
150600 150600
Statement of profit or loss for the year ended 31st March, 2007
Particulars Amount
Add: Drawings 15000
129700
Less: Additional capital introduced (4000)
125700
Less: Capital at the beginning of the year (116900)
GROSS PROFIT 8800
Less: Depreciation
On Machinery = (55000)(5/100)(12/12) = 2775
On Furniture = (44000)(5/100)(12/12) = 2200 (4975)
3825
LESS: BAD DEBTS (500)
358
NET PROFIT 3325
OR
Q2. A. State the Objectives of Analysis of Financial Statements.(4)
(B) What is Cash Flow Analysis? (4)
Q3. The Balance Sheet of Rajkumar and Rajendra kumar as on 31st

March, 2012 is set out below, they share profits and losses in the ratio of
2:1.
Liabilities Amount Rs. Assets Amount Rs.

Rajendrakumar 150000 Stock 60000
Profit and Loss A/c 30000
550000 550000
They agreed to admit Dhirajkumar on 1st April, 2012 as a partner into the firm
on the following terms.
359
1. Dhirajkumar to bring Rs. 60000 as capital and Rs. 45000 as goodwill,
which is to be retained in the business. He will be entitled to 1/4 th share of
profit of the firm.
2. 50% of General Reserve is to remain as Reserve for doubtful debts.
3. Furniture is to be depreciated by 5%
4. Stock is to be revalued at Rs. 65,000.
5. Creditors of Rs. 5000 are not likely to claim and hence should be written
of.
6. Rent of Rs. 2,000 due but not received has not been recorded in the books.
Pass necessary journal entries in the books of new firm.
Solution:
1. Rajkumar's Capital A/c … Dr. 2000
Rajendra Kumar's Capital Ac/ 1000
[Being debit balance of Profit & Loss Account is

transferred to Partners Capital Account in Old
Ratio]
2. General Reserve A/c ....... Dr. 60000
[Being Credit Balance in General Reserve is

transferred to Old Partners Capital Account in old
ratio]
360
3. Cash/ Bank A/c .... Dr. 105000
To Dhirajkumar's Capital A/c 60000
[Being Capital and Goodwill brought in by the new

partner]
4. Goodwill A/c .... Dr. 45000
[Being Goodwill is retained in the business]
5. General Reserve A/c ... Dr. 60000
To R.D.D. A/c 60000
[Being R.D.D. is created by transferring fund from

General Reserve A/c]
[Being depreciation is charged on furniture]
7. Stock A/c ....Dr. 5000
Creditors A/c 5000
Rent receivable A/c .... Dr. 2000
To Revaluation A/c 12000
[Being Asset appreciated, Creditors written off and

income receivable recorded.]
361
[Being Profit on revaluation account is transferred
to old partners capital A/c]
1. Working Note
Revaluation A/c
Debit Credit
1500 12000
10500
12000 12000
OR
Sanil, Nitish, Sapna were partners in a firm sharing profits and losses in
the proportion of 1/2 , 1/3, 1/6 respectively. Their Balance Sheet as on
31st March, 2012 was as follows:
Balance Sheet as on 31 - 03 - 2012
Bills Payable 30000 Machinery 40000
Capitals: Furniture 5000
Sanil 80000 Sundry Assets 60000
362
Nitish 50000 Stock 30000
Sapna 30000 Debtors 32000
Bank 23000
190000 190000
Sapna decided to retire on 1st April, 2012 on following terms:
1. Goodwill of the firm will be valued at Rs. 30,000.
2. Furniture war taken over by Sanil for Rs. 4,700.
3. Make a Provision for unpaid expenses Rs. 1,700.
4. Out of the amount due to Sapna Rs. 7,500 to be paid by cheque and the
remaining amount to be transferred to her loan account.
Prepare Profit and Loss Adjustment Account, Partners‟ Capital Accounts and
Balance sheet of New firm on 1st April, 2012.
4. Anjali of Nagpur sold goods worth Rs. 25,000 to Rupali of Amaravati.

On next day Ruapali paid Rs. 10,000 in cash and accepted two months bill
for the balance drawn by Anjali. Anjali discounted the bill at 12% p.a. with
her bank. Before due date, Rupali finds herself unable to make payment of
the bill; and requests Anjali to renew it. Anjali accepts the proposal on the
condition that Rupali should pay Rs. 5,000 in cash and accept new bill for
one month along with interest Rs. 200 for the balance. These
arrangements were carried through. The new bill was met on due date.
Give journal entries in the books of Anjali.
Journal of Anjali
Date Particulars L Debit Credit
?1 Rupali‟s A/c………Dr. 25000
363
To Sales A/c 25000
(Being the goods are sold)
2 Cash / bank a/c ………Dr 10000
Bills Receivable A/c ……… Dr. 15000
To Rupali‟s A/c 25000
(Being the part payment is made and bill is drawn)
3 Cash/ Bank A/c ……… Dr. 14700
Discount A/c ………… Dr. 300
(being the bill is discounted)
4 Rupali‟s A/c ……… Dr 15000
To Cash/Bank A/c 15000
(being the bill is dishonored)
5 Cash/ bank a/c………… Dr 5000
(being the part payment is made)
6 Rupali‟s A/c ……… Dr. 200
To Interest a/c 200
(being the interest is charged on balance amount)
7 Bills Receivable A/c ………… Dr. 10200
(being the new bill is drawn along with interest)
8 Cash/ bank a/c ……… Dr. 10200
To Bills receivable a/c 10200
364
(being the new bill is honored)
Q5. X and Y are equal partners.
The following is their Balance Sheet as on 31st March, 2012.
X‟s Capital 40000 Building 30000
Y‟s Capital 30000 Machinery 10000
X‟s Loan 2000 Debtors 8800
Creditors 15000 Less: R.D.D. - 800 8000
Stock 20000
Investments 4000
Commission Receivable 1000
Bank 10000
95000 95000
The firm was dissolved on 31st March, 2012
(i) The Assets realised as follows:
Stock Rs. 19,000, Debtors Rs. 7,500, Machinery Rs. 11,000, Building Rs.
14,000
ii. Y took over the investments Rs. 5000 and Furniture at Book Value.
iii. X agreed to accept Rs. 1500 in full settlement of his Loan Account.
iv. Dissolution expenses amounted to Rs. 2000.
v. Commission Receivable could not be recovered.
365
Prepare Realisation Account, X‟s Loan Account, Capital Accounts and Bank
Account.
Solution:
Realisation Account
Building 30000 Creditors 15000
Machinery 10000 By R.D.D. A/c 800
Furniture 12000 By Bank A/c
Debtors 8800 Stock 19000
Stock 20000 Debtors 7500
Investments 4000 Machinery 11000
Commission 1000 85800 Building 14000 51500

Receivable
To Bank A/c 2000 BY Y‟s Capital A/c
(Dissolution Investments 5000
366
Expenses)
To Bank A/c Furniture 12000 17000
Creditors 15000 By X‟s Loan A/c 500
By Loss on Realisation
A/C
X 9000
Y 9000 18000
102800 102800
Particulars X Y Particulars X Y
To Realisation A/c 17000 By Balance b/d 40000 30000
To Realisation A/c 9000 9000 By Reserve Fund (1:1) 4000 4000
(loss)
To Bank A/c 35000 8000
44000 34000 44000 34000
367
X‟s Loan Account
To Bank A/c 1500 By Balance b/d 2000
2000 2000
Bank Account
To Balance b/d 10000 By Realisation A/c 2000
By X‟s Loan A/c 1500
By X‟s Capital A/c 35000
By Y‟s Capital A/c 8000
61500 61500
368
Q6. From the following Receipt and Payment account of Patan Sports
Association, Patan and the adjustments. You are required to prepare
Income and Expenditure Account for the year ended 31st March, 2004
and a Balance sheet as on that date. (12)
Receipts and Payments Account for the year ended 31st March 2004.
(Rs.) (Rs.)
To Balance b/d 4160 By Salaries 5500
To Subscription: By Entertainment 2580

Expenses.
2003 – 04 16000 By Lighting 1000
To Donation 2000 By Taxes 500
To Receipts from 3644 By Investments 12000

Entertainment
To Interest on Investment 324 By Printing and Stationery 944
To Entrance Fees 4500 By Expenses of 2002 – 03 2400
To Prize Fund 3000 By Fixed Deposit 4000
By Balance C/d 580
34040 34040
Adjustments:
369
(1) There are 450 members paying an annual subscription of Rs. 40
each.
(2) Salary outstanding on 31st March, 2004 was Rs. 1,000.
(3) Building stood in books Rs. 60,000 and furniture at Rs. 4,600 on
1st April, 2003. Write off depreciation on these assets @ 2% and 10%
respectively.
(4) Interest on investment @ 5% has accrued for 3 months.
(5) The capital fund was Rs. 66,360 on 1st April, 2003.
(6) 60% of the entrance fee is to be capitalised.
Income & Expenditure A/c for the years ended 31-3-2004
To Entertainment 2580 By Donation 2000

Expenses
To Salaries 5500 By Receipt from 3644

Entertainment
Add: Outstanding 1000 6500 By Interest on 324

Investment
To Lighting 1000 Add: O/S Interest 150 474
To General Expenses 1536 By Entrance Fees 4500
To Taxes 500 Less: Capitalised (2700) 1800
To Printing & 944 By Surplus 18000

Stationery
To Depreciation
Building 1200
370
Furniture 460 1660
To Surplus 11198
(Income over
Expenditure)
25918 25918
Balance Sheet as on 31-3-2004
Add: Entrance Fees 2700 Less: Depreciation (1200) 58800
Add: Surplus 11198 80258 Less: Depreciation (460) 4140
Prize Fund 3000 Investments 12000
Outstanding Salary 1000 Add: Interest 150 12150
Subscription paid in 412 Fixed Deposit 4000

advance
Bank Balance 3000
Cash 580
Subscription 2000
receivable
84670 84670
371
Q7. Following is the Trial Balance of Kalavati and Lilavati as on 31st
March, 2005 who share profits and losses in the ration of 3:2. Interest on
capital was allowed @5% p.a.
Opening Stock 10000 Return Outwards 1250
Sundry debtors 14100 Sundry Creditors 15800
Wages 4250 R.D.D. 200
Salaries 1350 Capital Account
Office Expenses 1223 Kalavati 35000
Rent, Rates and Taxes 900 Loan @ 9% p.a. 2000
(Taken on 1-10-2004)
Plant & machinery 15000 Bills Payable 12000
Return inwards 1750
Cash at bank 4327
Current Account
Kalavati 2100
Lilavati 600
Government bonds 3000
111250 111250
372
2. Unpaid wages Rs. 750; outstanding salary Rs. 657.
3. Write off Rs. 100 as bad debts and provide R.D.D. at 5% on debtors.
4. Provide depreciation and plant and machinery at 10% p.a. and on Land
and building at 5% p.a.
5. Rent, Rates & Taxes were prepaid Rs. 100.
6. Bills payable included a dishonoured bill of Rs. 3000.
Prepare Trading account and profit and loss account for the year ending
31st March, 2005 and a balance sheet as on that date. (October 2006 board
exam questions.)
In the books of Kalavati & Lilavati
Trading account for the year ended 31st March, 2005.
(-) Return (1250) 18750 By Closing Stock 20500
To Wages 4250
53750 53750
373
Profit and loss account for the year ended 31st March, 2005
To Salaries 1350 By Gross 30000

Profit b/d
To office Expenses 1223
To Discount 650
(-) Prepaid (100) 800
To Bad debts -
(+) F. B.D. 100
(+) NRDD 700
(-) ORDD (200) 600
To Depreciation
Land & Buildings 1600 3100
Kalavati 1750
Lilavati 500 2250
To Net Profit
Transferred to Current
A/c
Kalavati 5568
Lilavati 3712 9280
374
20000 20000
Partners‟ current accounts
Particulars Kalavati Lilavati Particulars Kalavati Lilavati
7318 4212 7318 4212
Capital Account Land & Building 32000
Kalavati 35000 (-) Depreciation @ (1600) 30400

5%
Current Account (-) Depreciation @ (1500) 13500

10%
Kalavati 5218 Sundry Debtors 14100
Lilavati 3612 8830 (-) F.B.D. (100)
(+) Bills Payable 3000 18800 (-) N.R.D.D. (700) 13300

Dishonoured
Bills Payable 12000 Closing Stock 20500
375
(-) Bills Payable (3000) 9000 Prepaid Rent, Rates 100
Dishonoured & Tax
Outstanding Cash at Bank 4327
Salaries 657 Government bonds 3000
Wages 750 1407
Loan @9% 2000
(+) Interest 90 2090
85127 85127
376
Omtex classes Accounts Paper Solution
Accounts October `2014 Board Question Paper Solution
Q1. Attempt any Three of the Following sub – questions: [15]
(A) Answer the following in ‘one’ sentence each: [5]
(1) What is ‘balance sheet’?
Ans. A Balance Sheet is a statement showing the financial position of the business in the form of its
assets and liabilities on a particular date.
(2) What is ‘deficit’?
Ans. Excess of expenditure over income shown by Income and Expenditure Account represents deficit for
the financial year.
(3) What is ‘Sacrifice ratio’?
Ans. A ratio which is surrendered or given up by the old partners in favour of a newly admitted partner is
called sacrifice ratio.
Formula: Sacrifice Ratio = Old Ratio – New Ratio.
(4) What is ‘allotment of shares’?
Ans. Allotment of shares means after considering the demand of the applicants, accepting application
forms up to certain fixed number as per the resolution passed in the meeting of the board of directors.
(5) Who is a ‘drawer’?
The person who draws or makes the bill of exchange is called the drawer. He is the creditor. He will
receive the money from debtor.
(B) Write a word / term / phrase which can substitute each of the following
statements: [5]
(1) Debit balance on realisation account.
Ans. loss on realisation of Assets and Liabilities
(2) The three extra days which are allowed over and above the period of the
bill.
Ans. Days of grace or Grace days.
(3) Expenses which are due but not paid at the end of the year.
Ans. Outstanding expenses.
(4) A statement similar to a balance sheet.
Ans. Statement of Affairs.
(5) An asset which can be converted into cash immediately.
Ans. Liquid asset.

(C) Select the most appropriate answer from the alternatives given below and
rewrite the sentences: [5]
(1) The profit or loss from revaluation on retirement of partners is shared by

_____________
(a) all the partners
(b) the remaining partners
(c) only the retiring partners
(d) none of these
(2) Purchase of stationery is a ________ expenditure.
(a) capital
(b) revenue
(c) long term
(d) deferred revenue
(3) _____________ means payment of the bill before due date.
(a) Discounting of bill
(b) Retirement of bill
(c) Renewal of bill
(d) Endorsement of bill

(4) Generally incomplete records are maintained by the __________
(a) trader
(b) company
(c) society
(d) government
(5) The interest on drawings is transferred to ___________ side of the profit

and loss account.
(a) debit
(b) credit
(c) asset
(d) liability
(D) State whether the following statements are True or False: [5]
(1) The debenture holder is the owner of the company. [False]
(2) The person, to whom or as per his order amount of bill is payable, is a payee. [True]
(3) Government is not interested in the analysis of financial statement. [False]
(4) On its dissolution the cash or bank account is closed automatically. [True]
(5) A bill can’t be deposited into a bank for collection. [False]
(E) Prepare a specimen of a Bill of Exchange from the following information.

[5]
Drawer: Rahul Chaudhari, 105 Ghodbunder Road, Thane.
Drawee: Prakash Patil, 207, Ganga Road, Nashik.
Payee: Sonal Chaudhari, M.G. Road, Dhule.
Period of Bill: 60 days.
Amount of bill: Rs. 10,000
Date of Bill : 15th December, 2013
Date of acceptance: 18th December, 2013.

Q2. Mrs. Asha keeps her books on Single Entry System and gives the
following information: [8] [Click Here For Answer]
Particulars 31.3.2011 31.3.2012
Stock in Trade 60000 10000
Machinery 100000 100000
Bills Payable 10000 10000
Mrs. Asha withdrew from business Rs. 30,000 for personal use. She further introduced fresh capital of Rs.
50,000.
Depreciation is to be charged @ 10% p.a. on furniture and machinery.
Prepare:
(a) Statement of affairs as on 31.3.2011
(b) Statement of affairs as on 31.3.2012
(c) Statement of Profit or Loss for the year ending 31.3.2012.
Solution: In the Books of Mrs. Asha
Statement of Affairs as on 31st March, 2011 and 31st March, 2012

Liabilities 31.3.11 31.3.12 Assets 31.3.11 31.3.12
Bills payable 10000 10000 Cash at Bank 10000 64000
Sundry creditors 30000 40000 Sundry Debtors 50000 80000
Capital Funds 220000 3,34000 Stock in Trade 60000 100000
Machinery 100000 100000
260000 384000 260000 384000
Statement of Profit or Loss for the year ended 31st March, 2012.
Particulars Amount Amount
Capital at the end of the Year 334000
Add: Drawings +30000
364000
Less: Additional Capital Introduced -50000
314000
Less: Capital at the End of the Year 220000
Trading Profit 94,000
Less: Depreciation
On Furniture = 40000 × 10% 4000
On Machinery = 100000 × 10% 10000 - 14000
Net Profit 80,000

Or
(A) What are the investing activities of cash flow? [4]
Ans. Investing Activities are related to purchase and sale of long term assets (Fixed Assets) as machinery,
furniture, land and building etc.
Investing Activities of cash inflow include the following:
(i) Sale of Property including intangibles.
(ii) Disposal of shares and other investments
(iii) Interest and dividend received.
Investing Activities of cash outflow include the following:
(i) Purchase of fixed assets.
(ii) Cash Payment for acquiring the shares and other investments.
(iii) Payment of brokerage/ commission for buying the investments.
(B) State the limitations of analysis of financial statements. [4]
Ans. Limitations of Financial Statement Analysis are
(i) Historical information: The information supplied by financial statement are historical one, because it
is prepared on the basis of historical cost and book values of assets. It never considers the changes in price
level.
(ii) Incomplete Information: The financial statements are just study of interim reports. It is totally based
on accounting principles, concepts and conventions, i.e. Assets shown in balance sheet are on the basis of
going concerns but they may not realise the stated values, profit and loss of concerns, based on
conventions of conservation hence it fails to represent exact profit and loss i.e. Depreciation, provision for
bad & doubtful debts are based on estimates.
(iii) Qualitative Information is ignored: In financial statements only monetary aspects are measured.
Non-monetary aspect such as harmony, efficiency of management, completion etc. are ignores. Actually
it is important for achievement of business.
(iv) It is only the tool but not the remedy: Analysis of financial statement is the tool to measure the
solvency, profitability, financial strength etc. It does not give any solution to overcome the drawbacks of
business.
(v) Influence of personal judgement: The financial statements and its conclusions are derived by
personal decisions, such as method of depreciation, Inventory valuation, writing off of deferred expenses,
etc. So its reliability depends upon the experience, ability & honesty of accountant.
Q3. Anil and Sunil were partners sharing profits and losses in the ratio of 2:1
respectively. Their Balance Sheet was as follows: [10] [Click Here for Answer]
Capital A/cs Cash at Bank 4000
Anil 24000 Debtors 15000
Sunil 16000 Stock 23500
Trade Creditors 26000 Furniture 5000
Anil’s Loan A/c 6500 Building 25,000
72,500 72,500
On 1st April, 2010, Ram is admitted in the partnership on the following terms:
(1) Ram should bring in cash of Rs. 12,000 as capital for 1/5th share in future profit.
(2) Goodwill A/c is raised in the books of the firm for Rs. 4,500.
(3) Building is revalued at Rs. 28,000 and the value of stock be reduced by Rs. 1,500.
(4) Reserve for doubtful debts be provided at 5% on debtors.
Prepare:
(a) Profit and Loss Adjustment account.
(b) Capital Accounts of partners.
(c) Balance Sheet of the new firm.
Solution:
Profit & Loss Adjustment Account
To Stock A/c 1500 By Building A/c 3000
[Reduction in Value] [Appreciation in value)
To R.D.D. A/c 750
(RDD created)
To Partners’ Capital A/c
Anil 500
Sunil 250 750
3000 3000
Partners’ Capital Accounts
Particulars Anil Sunil Ram Particulars Anil Sunil Ram
By Balance C/d 24000 16000 -
By Bank A/c 12000
[Capital Contributed]
[Transfer]
By Profit & Loss Adjustment A/c 500 250 -
[Accumulated Profit]
To Balance c/d 27500 17750 12000
27500 17750 12000 27500 17750 12000
Trade Creditors 26000 Building 25000
Anil’s Loan 6500 Add: Appreciation 3000 28000
Partners’ Capital A/c Furniture 5000
Anil 27500 Stock 23500
Sunil 17750 Less: Reduction in value -1500 22000
Ram 12000 57250 Debtors 15000
Less: RDD @ 5% 750 14250

Cash at bank 16000
Goodwill 4500
89750 89750
Working Notes:
(i) Transfer of Goodwill in the ration 2:1
Anil’s Capital A/c = (2 ÷ 3) × 4500 = Rs. 3000
Sunil’s Capital A/c = (1÷ 3) × 4500 = Rs. 1500
Goodwill A/c
To Anil’s Capital A/c 3000
To Sunil’s Capital A/c 1500 By Balance C/d 4500
4500 4500
Now, the Balance in Goodwill A/c is shown on the Assets side of Balance Sheet.
Working Note: Transfer of Profit on Revaluation A/c in the ratio of 2:1
Anil’s Capital A/c = (2÷ 3) × 750 = Rs. 500
Sunil’s Capital A/c = (1÷ 3) × 750 = Rs. 250.
OR
Q3. Supriya, Surakha and Sujata were partners sharing profits and Losses in
the ration of 2:2:1 respectively. Their Balance Sheet as on 31st March, 2012
was as follows: [10] [Click Here for Answer]
Balance Sheet as on 31st march, 2012
Capital A/c Land and Building 50000
Supriya 40000 Stock 30000
Surekha 40000 Debtors 37500
Sujata 20000 (-) R.D.D. -2500 35000
Outstanding Expenses 4000
130000 130000
Sujata died on 1st July, 2012 and the adjustments were agreed to as per the deed as follows:
(1) Land and Building to be valued at Rs. 60,000 and all debtors were good.
(2) Stock be depreciated by 10%.
(3) The drawing of Sujata up to the date of her death amounted to Rs. 2,000.
(4) Interest on capital was to be allowed at 10% p.a.

(5) The deceased partner’s share of goodwill is to be valued at 2years’ purchase of average profit of last 3
years.
The profits were:
2009 – 10 = Rs. 15000
2010 – 11 = Rs. 17000
2011 – 12 = Rs. 13000
(6) The deceased partner’s share of profit up to the date of her death should be based on average profit of
the last two years.
You are required to prepare:
(a) Profit and Loss Adjustment Account.
(b) Sujata’s Capital Account showing the balance payable to her Executor’s Loan Account.
(c) Working notes for calculation of (a) Goodwill and (b) Profit till the date of Sujata’s death.
Solution:
To Stock A/c 3000 By Land & Building A/c 10000
(Depreciation) (Increase in value)
To Partners’ Capital A/c By Debtors A/c 2500
[RDD Cancelled]
Supriya 3800
Surekha 3800
Sujata 1900 9500
12500 12500
Sujata’s Capital A/c
To Drawings A/c 2000 By Balance b/d 20000
By Reserve Fund A/c 2000
By Profit & Loss Adjustment A/c 1900
By Interest on Capital A/c 500
By Goodwill A/c 6000
(Share in firm’s goodwill)
By Profit & Loss Suspense A/c 750
31150 31150
Working Notes:
(i) Valuation of Goodwill:
Average Profit = (13000+17000+15000) ÷ 3 = 45000 ÷ 3 = Rs. 15000
Goodwill = Average Profit × No. of years’ purchase
∴ Goodwill = 15000 × 2 = Rs. 30,000
Sujata’s Share in Goodwill = Value of firm’s Goodwill × Sujata’s share in profit

Sujata’s Share in Goodwill = 30000 × (1/5) = Rs. 6000.
Working Profit:
Profit till the date of death of Sujata = Average Profit of 2 years × Period
Profit till the date of death of Sujata = [(13000 + 17000) ÷ 2 ] [3months ÷ 12 months] = Rs. 3750/-
Sujata’s share in profit = (Firm’s Profit) × Sujata’s Share in profit = 3750 × (1/5) = Rs. 750
Q4. On 14th May, 2012 Rohit sold goods on credit to Devidas for Rs. 30,000
on the same date Rohit draws a bill on Devidas for Rs. 30,000 at 4 months.
Devidas accepted it an returned to Rohit. [Click Here for Answer]
On 17th June, 2012 rohit discounted the bill with his bank @ 10% p.a.
On due date Devidas finds himself unable to make payment of the bill and requests Rphit to renew it.
Rohit accepted the proposal on the condition that Devidas should pay Rs. 10,000 on account along with
interest Rs. 500 in cash and should accept a new bill for the balance at 2 months.
These arrangements were carried though.
Give Journal Entries in the Books of Rohit.
Solution:
Journal Entries in the Books of Rohit.
No.
14.5.12 Devidas’s A/c ……… Dr. 30000

To Sales A/c 30000
[Being goods sold on credit]
14.5.12 Bills Receivable A/c ……… Dr. 30000
To Devidas’s A/c 30000
17.6.12 Bank A/c ……… Dr. 29250
Discount A/c ……… Dr. 750
17.9.12 Devidas’s A/c ……… Dr. 30000
To Bank A/c 30000
17.9.12 Devidas’s A/c ……… Dr. 500
To Interest A.c 500
[Being the Interest is charged on balance amount]
17.9.12 Cash A/c ……… Dr. 10500
[Being Part payment along with interest received ]
17.9.13 Bills Receivable A/c ………Dr. 20000
[Being the new bill is drawn for the balance amount]
Working Notes:
(1) Discount charged by the bank = Amount of Bill × Period × Rate of Discount
∴ Discount Charged by the Bank = 30000 × (3/12) × (10/100) = Rs. 750
[Note: Period of the bill is for 4 months but it is discounted one month after, therefore the period of the
bill is to be considered for 3 months only.]
(2) Amount of New Bill = Amount of Dishonoured bill + Interest on balance Amount – Part Payment.
∴ Amount of New Bill = 30000 + 500 – 10500 = Rs. 20,000.
Q5. Uday and Prabhakar are partners sharing profit and losses in the
proportion of 3/5 and 2/5 respectively. They dissolved their partnership firm
on 31st March, 2012 when their financial position was as under.
Sundry creditors 15000 Cash at bank 3000
Uday’s wife’s loan 30000 Debtors 67500
Capital A/c (-) R.D.D. -7500 60000
Uday 138000 Stock 135000
Prabhakar 90000 Machinery 45000
Furniture 30000
273000 273000
The assets were realised as under:
Goodwill Rs. 15,000, Stock Rs. 1,20000 and Debtors Rs. 54,000.
Machinery was taken over by Prabhakar at Rs. 40000 and furniture by Uday at book value.
Uday agreed to discharge his wife’s loan.
The creditors were paid at a rebate of Rs. 3,000
The expenses of dissolution amounted to Rs. 6000
Pass necessary Journal Entries in the books of the firm.
Solution:
Journal Entries In the Books of the Firm.
Date Particulars LF. Debit Credit
31 Match 2012 Realisation A/c ………Dr. 277500
To Stock A/c 135000
To Machinery A/c 45000
[Being assets transferred at their book value]
31st March, Sundry creditors A/c ………Dr. 15000

2012
Uday’s wife’s Loan A/c ………Dr. 30000
[Being outsiders liabilities transferred]
31st March, R.D.D. A/c ………Dr. 7500

2012
31st March, Bank A/c ………Dr. 189000

2011
31st March, Bank A/c ………Dr. 189000

2011
[Being the assets realised]
31st March, Prabhakar’s Capital A/c ………Dr. 40000

2012
Uday’s Capital A/c ………Dr. 30000
[Being the assets are taken over by Partners]
31st March, Realisation A/c ………Dr. 30000

2012
To Uday’s Capital A/c 30000
[Being the loand from Uday’s wife discharged by Uday]
31st March, Realisation A/c ………Dr. 18000

2012
To bank A/c 18000
[Being liabilities and expenses are paid in cash]

31st March, Uday’s Capital A/c ………Dr. 8400

2012
Prabhakar’s Capital A/c ………Dr. 5600
[Being loss on realisation transferred to Partners Capital

A/c]
31st March, Uday’s Capital A/c ………Dr. 129600

2012
Prabhakar’s Capital A/c 44400
To Bank A/c 174000
[Being the Final settlement is made between the partners]
Working Notes
Realisation A/c
Debit Credit
277500 52500
30000 189000
18000 40000
30000
14000 [Loss on Realisation A/c Transferred to

Partners Capital A/c ]
325500 325500
Working Note: Division of loss on Realisation A/c in the Ratio of 3: 2.
Uday = (3/5) × 14000 = 8400
Prabhakar = (2/5) × 14000 = 5600
Working Note: Partners Capital A/c
Particulars Uday Prabhakar Particular Uday Prabhakar
To Realisation A/c 30000 40000 By Balance b/d 138000 90000
To Realisation A/c 8400 5600 By Realisation A/c 30000 -
To Bank A/c 129600 44400
[Bal. Fig.]
168000 90000 168000 90000
OR
Q5. Milind and Co. Ltd. Issued 20,000 equity shares of Rs. 100 each payable
as under: [10]
On Application Rs. 20 per share.
On Allotment Rs. 35 per share.
On First Call Rs. 25 per share.
On Second call Rs. 20 per share.
The Company received applications for 30,000 equity shares. Applications for 20,000 shares were
accepted and allotted shares. Applications for 10,000 shares were rejected and refunded in full.
The money due on allotment and both the calls was received in full.
The expenses of issue amounted to Rs. 5000.
Pass necessary journal entries in the books of the company.
Solution: Journal Entries In the Books Milind and Co. Ltd.
1 Bank A/c ……….Dr. 600000
To Equity Share Application A/c 600000
[Being application money received]
2 Equity Share Application A/c ……….Dr. 400000
To Equity Share Capital A/c 400000
[Being application money transferred to share capital A/c
3 Equity Share Application A/c ……….Dr. 200000
To Bank A/c 200000
[Being excess application money refunded]
4 Equity Share Allotment A/c ……….Dr. 700000
[Being allotment money due from shareholders]
5 Bank A/c ……….Dr. 700000
To Equity Share Allotment A/c 700000
[Being allotment money received]
6 Equity Share First Call A/c ……….Dr. 500000
[Being First call money due from shareholders]

7 Bank A/c ……….Dr. 500000
To Equity Share First Call A/c 500000
[Being equity share First Call money received from shareholders]
8 Equity share second call A/c ……….Dr. 400000
[Being Second call money due from equity shareholders]
9 Bank A/c ……….Dr. 400000
To Equity Share Second Call A/c 400000
[Being Second call money received from shareholders]
10 Expenses of Issue A/c ……….Dr. 5000
To Bank A/c 5000
[Being expenses of issue paid]
Working Note:
1. Calculation of Application money refunded to Share applicants.
Application money received from public
(30000 × 20) = 600000
Less: Application money transferred to share capital
(20000 × 20) = 400000
Excess application money refunded = 600000 – 400000 = 200000
2. Allotment money received (20000 × 35) = 7,00,000
3. First Call money received (20000 × 25) = 5,00,000
4. Second Call Money received (20,000 × 20) = 4,00,000

Q6. From the following Balance Sheet and Receipts and Payments A/c of
Vidya mandir High School, Alibag. Prepare Income and Expenditure Account
for the year ended 31st March, 2008 and Balance Sheet as on that date.
Entrance Fees 6000 Furniture 16800
Capital Fund 103800 Laboratory 20000
Library 25000
Investment 40000
Cash in hand 1000
Cash at bank 3000
Outstanding Tuition Fees 4000
109800 109800
Receipts and Payments Account for the year ended 31st March, 2008
To Balance b/d By Furniture Purchased 5400

Cash in hand 1000 By Salaries 60000
Cash at bank 3000 By Rent 28000
To Tuition Fees 80000 By Sundry Expenses 15200
To Term Fees 26200 By Annual gathering expenses 11300
To Government grant 16000 By Insurance 4000
To Donation of library 30000 By closing Balance
To Interest on Investment 2000 Cash at bank 34300
158200 158200
Adjustments:
1. Tuition fees still receivable are Rs. 10,000.
2. Salaries still payable are Rs. 30,000
3. Insurance premium is paid for one year ending 30.9.2008.
4. Rent paid in advance Rs. 4000.
5. Depreciate furniture and library at 10%.
Depreciation to be charged on the closing balances of the assets.
Solution:
In the Books of Vidya Mandir High School, Alibag
Income & Expenditure A.c for the Year Ended 31st March, 2008
To Salaried 60000 By Tuition Fees 80000
(+) Outstanding 30000 90000 (-) Last Year Amount -4000
To Rent 28000 76000
(-) Prepaid -4000 24000 (+) Outstanding of Current Year 10000 86000
To Sundry Expenses 15200 By Tern Fees 26200
To Annual gathering 11300 By Government grant 16000

Expenses
To Insurance 4000 By Interest on Investment 2000
Less: Prepaid 2000 2000
To Depreciation
On Furniture 2220
On Library 2500 4720 By Excess of Expenditure over 17020

Income [Deficit]
147220 147220
Less: Deficit 17020 86780 Add: Purchase new furniture 5400
Entrance Fees 6000 22200
Library Fund 30000 Less: Depreciation @ 10% 2220 19980

Outstanding Salaries 30000 Laboratory 20000
Library 25000
Less: Depreciation @ 10% 2500 22500
Investment 40000
Cash at Bank 34300
Tuition Fees receivable 10000
Prepaid Rent 4000
152780 152780
Working Notes:
1. Last year’s outstanding tuition fees of Rs. 4000 are deducted from tuition fees of Rs. 80000 and there
will be no second effect. At the same time Outstanding tuition fees of Rs. 10000 for the current year is
added to tuition on the credit side of Income and Expenditure A/c and then shown the same on the Asset
side of the Balance Sheet.
2. Outstanding Salaries of Rs. 30,000 is first added to salaries on the debit side of Income and
Expenditure A/c and then shown the same on the liability side of the balance sheet.
3. Insurance for 6 months i.e. from 1.4.2008 to 3.09.2009 is paid in advance it means 6 months prepaid.
Insurance prepaid = (6/12) × 4000 = RS. 2000.
5. Calculation of Depreciation:
On Furniture = 10% of (16800 + 5400) = 10% × 22200 = 2220
On Library = 10% × 25000 = 2500
6. Entrance Fees of Rs. 6000 given in the opening balance sheet is carried forward and shown on the
liabilities side of new balance sheet.
Q7. Jitesh and Lailesh are in partnership sharing profits and losses in the
ratio of 2:1. From the following Trial Balance and adjustments given below,
you are required to prepare Trading and Profit and Loss A/c for the year
ended 31st March, 2013 and the Balance Sheet as on that date: [15]
Trial Balance as on 31st March, 2013.
Insurance 2000
R.B.D.D. 1000
Discount 800
Postage and telephone 3200
Salaries 56000
Wages 24000
Opening Stock 48000
Carriage 1000

Return inwards and outwards 5600 9200
Bank overdraft 120800
Capital
Jitesh 52000
Lailesh 48000
Total 600600 600600
Adjustments:
1. Write off Rs. 2000 for bad debts and provide R.B.D.D. 5% on debtors.
3. Closing stock on 31.03.2013 was valued at the cost Rs. 56000 while its market price was Rs. 60,000.
4. Salaries were outstanding Rs. 2000.
5. Depreciate :
Land and Building @ 5% p.a. and
Plant & Machinery @ 10% p.a.
Solution:
In the Books of Partnership Firm

Trading A/c For the Year Ended 31st March, 20136
To Purchases 193200 Less: Return Inwards 5600 296000
Less: Return 9200 184000 By Goods distributed as Free 4000

Outwards Samples
To Wages 24000 By Closing Stock 56000
To Carriage 1000
356000 356000
Profit and Loss A/c For the year ended 31st March, 2013
To Salaries 56000 By Gross Profit 99000

b/d
Add: Outstanding 2000 58000
To Insurance 2000
To Discount 800
To Postage & Telephones 3200
To Depreciation
On Land and Building 8800 11200

To Advertisement A/c 4000
To Bad debts -
Add: F.B.D. 2000
Add: N.R.D.D. 3200
Less: O.R.D.D. 1000 4200
To Net Profit Transferred to Partners

Capital A/c
Jitesh 10400
Lailesh 5200 15600
99000 99000
Partners’ Capital Account
Particulars Jitesh Lailesh Particulars Jitesh Lailesh
To Balance c/d 62400 53200 By Balance b/d 52000 48000
By Profit & Loss A/c 10400 5200
[Net Profit]
62400 53200 62400 53200
Partners’ Capital A/c Land & Building 176000
Jitesh 62400 Less: Depreciation @5% 8800 167200
Lailesh 53200 115600 Plant & Machinery 24000

Bank Overdraft 120800 Less: Depreciation @ 10% 2400 21600
Outstanding Salaries 2000 Less: F.B.D. 2000
64000
Less: N.R.D.D. -3200 60800
Closing Stock 56000
306400 306400
Working Notes:
1. Prepaid insurance Rs. 800 given in the trial balance is shown only on the asset side of Balance Sheet.
2. Closing stock is shown at cost price of Rs. 56000 which is lower than its market price of Rs. 60000.
3. Goods costing Rs. 4000 distributed as free samples are first shown on the credit side of Trading A/c
and then again they are shown on the debit side of Profit and Loss A/c.
4. Outstanding salaries of Rs. 2000 are first added to salaries on the debit side of profit and loss account
and then shown the same on the liabilities side of balance sheet.
5. N.R.D.D. = 5% on Net Debtors = 5% × 64000 = 3200
6. Division of Net Profit:
Jitesh = (2/3)× 15600 = 10400
Lailesh = (1/3) × 15600 = 5200

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O MTEX CLASSES

Roll No: _______________________

2. KALPANA (A.E.S) = 98%

3. AZIM (S.I.W.S) = 98%

4. VAIKUNDAPATHI (SIWS) = 98%

5. PRINCEE (K.J.KHILANI) = 97%

6. KHAN AYAZ (K.J.KHILANI) = 96%

7. JEBA (ARYAN) = 96%

8. SUBHASHINI (S.I.W.S) = 95%

9. PRISKILLA (W.R ) = 95%

10. KAMALA (S.I.W.S) = 95%

11. SAINI (ARYAN) = 95 %

12. USHA (S.I.W.S) = 94 %

13. VIJAY (S.I.W.S) = 93%

14. SUNDARI (SNDT) = 92%

15. AMALI (S.I.W.S) = 92 %

16. ALAM (MMK) = 92%

17. ZAINAB = 91%

18. MUTHU MANI = 90 %

19. SAMINA (RAJSHREE) = 90 %

20. RANJEETA (S.N.D.T) = 90%

21. FATHIMA (RIZVI) = 90%

22. RAMA (ANDHRA) = 90%

23. KAVITHA (SNDT) = 90%

2. What is partnership deed?

3. State the meaning of a Balance Sheet.

4. When are partners’ current accounts opened?

5. Write the meaning of bad debts?

6. State the meaning of closing stock.

7. How is closing stock valued?

8. What is Trial Balance?

9.What do you mean by Fluctuating Capital Method?

12. What do you mean by direct expenses?

13. What do you mean by accrued income?

14. To which account is gross profit transferred?

Ans. Gross profit is transferred to Profit and Loss account.

15. A person who is engaged in day – to – day activities of the business.

Ans. Active or Working Partner.

16. What type of institutions / concerns prepares Income and Expenditure

17. What do you mean by non – recurring expenses?

18. What do you mean by recurring expenses?

22. What do you mean by ‘Not for Profit’ concern?

23. State the meaning of Capital Receipts.

24. Write the meaning of Revenue Receipts.

25. State the meaning of Revenue expenditure.

27. What is Legacy?

28. What do you mean by capital fund?

29. State the meaning of Entrance Fees.

30. What do mean by ‘Special donation’?

31. What is an ‘Endowment Fund’?

32. What is ‘Life Membership Fee’?

33. What do you mean by Single Entry System?

36. What is Statement of Affairs?

38. What do you mean by qualified acceptance?

39. What is the term of the bill of exchange?

40. What is bill of exchange?

41. Who is drawer?

The maker of a bill of exchange is called the "Drawer". He is a creditor.

42. Who is drawee?

43. Who is payee?

44. What is the due date of bill?

45. What is an acceptance to bill of exchange?

47. When the bill is said to be honoured?

48. When the bill is said to be dishonoured?