ACCOUNTANCY CLASS—XII

SYLLABUS FOR THE YEAR 2022-23

TERM I

1.Accounting for Partnership---Fundamentals of Partnership

2. Reconstitution of Partnership
a) Change in Profit Sharing Ratio among the existing partners
b) Admission of a Partner
c) Retirement of a Partner
d) Death of a Partner
3. Dissolution of partnership

SYLLABUS FOR PERIODIC TEST -1

1.Accounting for Partnership---- Fundamentals of Partnership
2. Valuation of Goodwill
3. Reconstitution of Partnership
Admission of a Partner---effect of admission of a partner on change in the profit sharing ratio,
treatment of goodwill (as per AS 26)

SYLLABUS FOR Term -1

1. ENTIRE SYLLABUS FOR TERM-1

PROJECT Term-1 --- Comprehensive Project as per CBSE Guidelines

TERM -II
1. Accounting for Share Capital
2. Accounting for Debenture—Issue of Debentures
3.Analysis of Financial Statement
(a) Financial Statements of a Company: Balance Sheet of a Company in the prescribed form
with major headings only (Schedule VI).
(b) Financial Analysis: Meaning, Significance and Purpose, Limitations.
(c) Accounting Ratios
4. Cash Flow statement

SYLLABUS FOR PRE-BOARD-1

1. ENTIRE SYLLABUS FOR TERM-1 AND TERM-2 With more weightage to syllabus of Term-2

PROJECT Term -2 ---Specific Project as per CBSE Guidelines

SYLLABUS FOR PRE-BOARD EXAMINATION Entire syllabus as per CBSE

Curriculum
 Accountancy
CLASS XII

Assignment - I
Topic—Fundamentals of Partnership
1. Define Partnership.
2. What are the essential elements of Partnership?
3. Define Partnership deed.
4. What are the essential elements of the Partnership Deed?
5. i) In the absence of Partnership deed, how are Mutual relations between partners
governed.
(ii) In the absence of Partnership deed, what are the rules governing the claims of partners.
6. Give an example of two transactions which are debited to the fluctuating capital accounts
of a partner.
7. Write the features of Goodwill.
8. What are the factors affecting the value of Goodwill?

9. Why does the need for valuation of Goodwill arise in relation to a Partnership firm?
10. Give two circumstances in which fixed capitals of Partners may change.
11. What is the difference between fixed and fluctuating capital A/Cs?
12. X, Y and Z are partners with Rs. 72,000, Rs. 80,000 and Rs. 1,00,000 as their
capitals respectively. The profit for the year ending March 31, 2012 was Rs.7,20,000.
Before distributing profits they donated 10% of profits to a=Non-Govt. organization’s
charity for welfare of the educationally backward section of the society. Out of the
remaining profit, Rs. 4,00,000 is divisible as 5:3:2 ratio and the remaining is to be
divided amongst them equally. Identify the value involves by the partnership form of
X,Y and Z.
Prepare Profit and Loss appropriation Account and partner’s Capital Account.
13. Distinguish between fixed and fluctuating capitals of partners.
14. Why is ‘Profit and Loss Appropriation Account’ prepared?
15. Raju and Jai commenced business in partnership on April 1, 2021. No partnership
agreement was made whether oral or written. They contributed Rs. 4,00,000 and
Rs.1,00,000 respectively as capitals. In addition, Raju advanced Rs. 2,00,000 as loan to the firm
on October 1, 2021. Raju met with an accident on July 1, 2021 and could not attend the business
until September 30, 2021. The profit for the year ended March 31, 2021 amounted to Rs, 50,600.
Disputes have arisen between them on sharing the profits of the firm.
Raju Claims: (i) He should be given interest at 10% p.a. on capital and so also on loan, (ii) Profit
should be distributed in the proportion of capitals.
Jai Claims: (i) Net profit should be shared equally, (ii) He should be allowed remuneration of Rs
1,000 p.a. During the period of Raju’s illness, (iii) Interest on capital and loan should be given @
6% p.a.
State the correct position on each issue as per the provisions of the partnership Act. 1932.

16. Pappu and Munna are partners in a firm sharing profits in the ratio of 3 : 2. The partnership
deed provided that Pappu was to be paid a salary of Rs. 2,500 per month and Munna was to get
a commission of Rs. 10,000 per year. Interest on capital was to be allowed @5% per annum and
interest on drawings was to be charged @ 6% per annum. Interest on Pappu’s drawings was Rs.
1,250 and on Munna’s drawings Rs. 425. Capital of the partners were Rs. 2,00,000 and Rs. 1,250
respectively, and were fixed. The firm earned a profit of Rs. 90,575 for the year ended 31.3.2022
Prepare Profit and Loss Appropriation Account of the firm.

17. X and Y are partners in a firm sharing profits equally. Their capital accounts as on March 31,
2018 showed balances of Rs. 70,000 and Rs. 60:000 respectively. The drawings of X and Y
during the year 2020-2021 were Rs 8,000 and Rs 6,000 respectively. After taking into account the
profits of the year 2020-2021 which amounted to Rs 40,000, it was subsequently found that the
following items have been left out while Preparing the final accounts of the year ended 2020-2021
(i) The partners were entitled to interest on capitals @ 6% p.a. (ii) The interest on drawings was
also to be charged @ 5% p.a.
(iii) X was entitled to a salary of Rs 10,000 and Y a commission of Rs 4,000 for the whole
year. It was decided to make the necessary adjustments to record the above omissions. Give
a single adjusting entry if adjustments are made through capital accounts.
18. X, Y and Z entered into partnership on 1st April 2016 to share profits and losses at a
ratio of 12:8:5. It was provided that in no case Z’s share in profits be less Rs 25,000 p.a. The
profits and losses for the period ended 31st March were: 2020 profit Rs 1,00,000. 2021 profit
Rs 1,50,000, 2022 loss Rs 1,00,000. Pass necessary journal entries in the books of the firm if
any excess amount payable Z on account of guarantee is to be borne by — (a) by X alone
(b) by Y alone (c) by X and Yin the ratio of 2:3
• Practice Work : Exercise from T.S. Grewal

ASSIGNMENT-2 TOPIC— Valuation Of GW

Q.1 The goodwill of 2 years’ purchase from last year’s profits of Rs. 12,500 is: (a)Rs.
30,000 (b) Rs. 15,000 (c) P.s. 40,000(d) Rs. 25,000
Q.2 The goodwill on the basis of 3 years’ purchase from last four years profits of Rs, 2,000;
Rs. 5,000; Rs. 8,000 and P.s. 5,000 is:
(a)Rs. 10,000 (b) Rs. 18,000 (c) Ps. 12,000 (d) Rs. 5,000
Q.3 The total assets of a firm were Rs. 2,50,000 and Rs. 40,000 of outsiders liability. Actual profits
are Rs. 30,000. Find total capitalized value, If rate of return is 10%.
(a)Rs. 3,00,000(b)Rs. 2,00,000(c) Rs. 5,00,000(d) Rs. 7,00,000
Q.4 A firm earns Rs. 10,000 annual profit, the rate of return is 10%. The assets are of Rs.
80,000. The value of goodwill is Rs. 45,000. The outsiders liability is:
(a) Rs. 30,000 (b) Rs. 40,000 (c) Rs. 25,000 (d) Rs. 45,000
Q.5 A firm had Rs. 5,00,000 assets and Rs. 2,10,000 liabilities. The normal profit rate is
15%. The normal profits are:
(a)Rs. 43,500 (b) Rs. 50,000 (c) Rs. 37,500 (d) Rs.52,500
Q.6 If super profits are Rs. 1,500 and rate of return is 15%. The goodwill on the basis of
capitalizing the super profits is:
(a)Rs. 1,000 (b)Rs. 9,000 (c)Rs. 10,000 (d) Rs.. 225
Q.7 Assets worth Rs 10,00000 & liabilities Ps 400,000 Annual profit is Rs 60,000 Normal profit
being 10% The goodwill by capitalization of super profit method is
a) Rs. 5,000 (b)Rs. 50,000 (c)NIL (d) None of these

Q.8 In a firm the goodwill was to be calculated by average profit method. The profits of the last 5
years were (i) Rs. 10,000; (ii) Rs. 12,000; (iii) Rs.. 16,000 (iv) Rs. 15,000; (v) Rs.. 17,000. The
goodwill for 3 years purchase of last 5 years’ profits is:
a) Rs. 52,000(b) Rs.. 40,000 (c) Rs. 42,000 (d) Rs. 55,00
Q.9 The profits of the last five years were 2002—Rs.32,000; 2003—Rs. 21,000; 2004—
Rs.28,000;2005— Rs.26,000 and 2006— Rs.25,000. The weights assigned to each year are
1,2,3,4,5
You are informed that—i) On Oct.l, 2006 a scooter shed was constructed for Rs.40,000. The
same was charged to revenue. Depreciation @10%p.a. was also not charged on this.
(ii) The closing stock for the year 2005 was undervalued by Rs.3000
iii) Profits for the year 2004 were distributed to partners in the ratio of 2:2:1 instead of
Rs.3:2:1.
iv) An annual insurance premium of Rs.5,000 has not been taken into account during
any of its years. The same should be taken into consideration for the purpose of
valuation of goodwill.
Calculate the goodwill of the firm on the basis of three years purchase of the weighted
average profits of the last five years.
10. Capital employed in a business is Rs. 2,00,000. The normal rate of return on capital
employed is 15%. During the year 2002 the firm earned a profit of Rs. 48,000. Calculate goodwill
on the basis of 3 years purchase of super profit?

ASSIGNMENT-3 TOPIC—ADMISSION – Calculation of New Ratio

1. X and Y are partners sharing profits and losses in proportion of 2:1. They admit a new
partner Z whom they give 1/6th share in profits. Calculate new profit sharing ratio.

2. X and Y are partners sharing profits in the proportion of 7:5. They agree to admit Z into
partnership who is to get l/6th share in profits. He acquires this share as l/24th from X
 and 1/8 from Y. Calculate new profit sharing ratio.
3. A and B share profits in the ratio of 7:3. C was admitted as a partner. A surrendered l/7th
of his share and B 1/3rd of his share in favor of C. Calculate new profit sharing ratio.
4. Ram and Shyam are partners sharing profits and losses in the ratio of 3:1. They agreed
to admit Mohan into the partnership firm. Mohan is given 1/4th share of future profits,
which he acquires in the ratio of 2:1 from Ram and Shyam. Calculate new profit sharing
ratio.
5. Lucy and Zeny were partners in a firm sharing profits in 4:3 ratio. They admitted Allen as a new
partner for 20% of share in profits.Allen Acquired his share of profits the ratio of 1:2
from Lucy and Zeny. Calculate The Profit sharing ratio of Lucy ,Zeny and Allen.
6. Gopal and Govinda were partners in a firm sharing profits in 11:8 ratio. They admitted
Krishna as a new partner. The new profit sharing ratio of Gopal, Govinda and Krishna
was 12:5:4.
Calculate the sacrificing ratio of Gopal and Krishna. 7. A, B and C are partners sharing profits in
a 3:2:2 ratio. They admitted D as a new partner for 1/5 share which he acquired from A, B and C
in 2:2:1 ratio respectively. Calculate new profit sharing ratio?
8. Amar and Bahadur are partners in a firm sharing profits in the ratio of 3:2. They admitted
Marry as a new partner for 1/4 share. The new profit sharing ratio between Amar and
Bahadur will be 2:1. Calculate their sacrificing ratio.
9. Radha and Rukmani are partners in a firm sharing profits in 3:2 ratio. They admitted Gopi
as a new partner. Radha surrendered 1/3 of her share in favor of Gopi Rukmani
surrendered 1/4 of her share in favor of Gopi. Calculate new profit sharing ratio?
10. Singh, Gupta and Khan are partners in a firm sharing profits in 3:2:3 ratio. They
admitted Jain as a new partner. Singh surrendered 1/3 of his share in favor of Jain: Gupta
surrendered 1/4 of his share in favor of Jain and Khan surrendered 1/5 in favor of Jain.
Calculate new profit sharing ratio?
Practice Questions from T S Grewal

ASSIGNMENT-4 TOPIC—ADMISSION – Theory & Treatment of GW

1. Why is it necessary to ascertain a new profit sharing ratio even for old partners when a
new partner is admitted?
2. What is the sacrificing ratio? Why is it calculated?

3. On what occasions sacrificing ratio is used?

4. Verma and Sharma are partners in a firm sharing profits and losses in the ratio of 5:3.
They admitted Ghosh as a new partner for 1/5 share of profits. Ghosh is to bring in Rs.
20,000 as capital and Rs. 4,000 as his share of goodwill premium. Give the necessary
journal entries:

a) When the amount of goodwill is retained in the business.

 b) When the amount of goodwill is fully withdrawn.
c) When 50% of the amount of goodwill is withdrawn.
d) When goodwill is paid privately.
5. Aditya and Balan are partners sharing profits and losses in a 3:2 ratio. They admitted
Christopher for 1/4 share in the profits. The new profit sharing ratio agreed was 2:1:1.
Christopher brought Rs. 50,000 for his capital. His share of goodwill was agreed to at Rs.
15,000 Christopher could bring only Rs. 10,000 out of his share of goodwill. Record
necessary journal entries in the books of the firm?
6. A and B are partners in a firm sharing profits in the ratio of 3:2. They admit C into
partnership for l/5th share of profits in the firm. The goodwill of the firm is valued at Rs.
11,000. He is unable to bring in his share of goodwill. Give the journal entries.
Practice Questions from T S Grewal

ASSIGNMENT-5 TOPIC—ADMISSION – Final Accounts

1. Identify the various matters that need adjustments at the time of admission of a Partner?
2. What is a Revaluation account ? Why is it prepared?
3. What is Hidden Goodwill ? How is it adjusted on the admission of a partner?
4. If the new partner brings in his share of Goodwill in Cash and if goodwill also appears in the
books, how will you deal with the existing amount of Goodwill?
5. How are the capitals of the old partners adjusted on the basis of the New partner’s capital
account. Explain with an example.
6. Deepa and Shweta are friends and after completion of their study they started a business of
readymade Garments by constituting a partnership firm with a profit sharing ratio as 3:2
respectively. Their partnership firm earns huge profits during a few years. They decided to start a
scholarship of Rs.10,000 p.a. for meritorious and poor students. On January 1, 2012 they
admitted Joney, their manager as a new partner with l/5th share in future profits. The value of
goodwill of the form is Rs. 3,50,000 and Joney is not able to bring his share of goodwill in cash.
Joney belongs to a Religious minority community and is expert in business management. He
contributes Rs.50,000 as his capital and old partners want to pass an adjusting entry for the
treatment of goodwill.
Pass the journal entries on admission of Joney. Also calculate the new profit sharing ratio.

Q.7 Land M were partners in a firm sharing profits and losses in the ratio of 5 : 3. On 1st
January, 2000, they admitted O as a new partner. On the date of O’s admission, the
balance sheet of L and M showed a balance of Rs 16,000 in general reserve and debit
balance of Rs 24,000 in profit and loss account Pass the necessary journal entries for
the treatment of these items on O’s admission.

Q.8 A and B are partners in a firm sharing profit in the ratio of 2:1. The balance sheet of the
firm on 31st March 2019 was as follows.
 Liabilities RS. Assets RS.

Creditors 1400 Bank 1004

Investment fluctuation fund 400 Bill receivable 2500
Workman 1200 Debtors 4000 3500
Compensation Fund 2100 Less - Provision
General Reserve 500
Stock 3000
Capital A 6000 10,900 Investments 5000
______ 996__
B 4900 16,000 Goodwill
16,000

On the above date C is admitted for 2/5th share in the profits of the firm. Following re-
valuations were made at the time of admission :-
1. Accrued income not appearing in the books Rs.100 2. Market value of Investment is
RS. 4500 3. Claim on account of compensation is estimated at Rs.150 4. Provision for
doubtful debts is required at Rs. 600 5. X, an old customer, whose account was written
off as bad, has promised to pay RS. 350 in settlement of his full claim. 6. A
and B had purchased machinery on credit for Rs. 3000 of which Rs. 100 are still to be paid. Both
machinery and these liabilities did not appear in the balance sheet. 7. C is required to bring in Rs.
10,000 as Capital. His share of goodwill was calculated at Rs.24000. you are requested to
prepare the relevant accounts balance sheet after giving effect to the above.
Practice Work T.S. Grewal’s exercise

ASSIGNMENT 6 TOPIC—CHANGE IN PROFIT SHARING RATIO

1. What is meant by Reconstitution of Partnership Firm?

2. State the occasions on which reconstitution of Partnership firms can take place.
3. Why is it necessary to revalue the assets and liabilities on the reconstitution of a Partnership
firm?
4. Is it necessary to distribute accumulated profits, losses and reserves if there is a change in the
profit sharing ratio of the existing partners? Give reasons.
5. X, Y and Z are partners sharing profits & losses in the ratio of 5 : 3: 2. On 31st March 2016,
they decided to share profits and losses in the ratio of 2 : 5 Partnership deed provided that in the
event of any change in profit sharing, the goodwill should be valued at two years’ purchase of the
average profit preceding 5 years. The profits and losses of the preceding years are Rs 39,000,
Profit Rs 57,000, Profit Rs 24,000, Profit. Loss Rs 12,000. Give the necessary single adjusting
entry to the above transactions.
6.A and B were partners in a firm sharing profits & losses in the ratio of 2 : 1 decided that with
effect from 1st April 20X4 they would share profits and losses in the ratio of 3 : 2. But this decision
was taken after the profits for the year amounting to Rs 60,000 had been distributed in the old
ratio. Goodwill was valued at the aggregate of two year's profits preceding the date the decision
became effective. The profit for 20X1, 20X2 and 20X3 were Rs 30,000, Rs. 40,000 and Rs.
50,000 respectively. It was declared that no goodwill would be raised and the necessary
adjustment be made through Capital accounts which on Dec, 31st stood at Rs.1,00,000 for A and
Rs.60,000 for B. Give necessary journal entries.

7. X, Y and Z are sharing profits & losses in the ratio of 5:3:2. They decide to share future profits
& losses in the ratio of 2: 3: 5 with effect from 1st April, 20X2. They also decide to record the
effect of the following accumulated profits, losses & reserves without affecting their book figures,
by passing a single adjusting entry.
Book Figure—General Reserve As 24,000; Profit & Loss A/c Rs 6,000 Advertisement
Suspense A/c (Dr.) As 12,000
Required: Pass the necessary single adjusting entry.
8. X, Y and Z are partners sharing profits and losses in the ratio of 5:3:2. they decided to
share future profits & losses in the ratio of 2:3:5. Their capitals remaining after
adjustments relating to goodwill, profit/loss on revaluation and accumulated profits and
losses & reserves are Rs. 35,400, Rs. 18,000 and Rs. 6,600 respectively. They decide
that their capitals should also be in their new profit sharing ratio.
Required: Calculate the amount of actual cash to be paid off or brought in by the old
partners for this adjustment and pass the necessary journal entries.

Practice Work — T.S. Grewal’s exercise.

ASSIGNMENT-7 TOPIC—RETIREMENT OF A PARTNER

1. How can a partner retire?
2. Is a retiring partner liable for the firm’s acts before his retirement?
3. Is a retiring partner liable for the firm’s acts after his retirement?
4. What are the methods in which payment can be made to an outgoing partner?

6. How will you calculate the outgoing partner’s share in profits, when he retires during the
accounting year?
7. In case the amount due to an outgoing partner is taken as a loan, is the outgoing partner
entitled to interest? If yes, at what rate?
8. Is it possible that an outgoing partner takes a share in profits instead of interest?
9. Explain provisions of Sec 37 of the Indian Partnership Accounts
10. Rita, Puneeta and Gita are partners sharing profits in the ratio of 1 : 2 : 3. Rita retires
on the date of balance sheet on the following terms : (a) A computer costing Rs.
40,000 which was not recorded earlier, to be recorded now. (b) A liability of
compensation towards an employee for Rs. 16,000 has also been finalized for
payment. Record necessary entries to record the above arrangement. (Knowledge) 2.
P,Q,R were partners sharing in proportion of their capitals. Their balance sheet as on
31st March was as follows
LIABILITIES ASSETS

Bills Payable 8000 Land and building 50000

Creditors 12000 BANK 30000

General Reserve 6000 Debtors 10000

Capitals:- Less PBD (200)

P 30000 Stock 14000

Q 30000 Machinery 8200

R 15000 P/L a/c 6000

Employees 17000
Provident Fund

1,18,000 1,18,000

Q retires and following readjustments are agreed upon:-

1. That out of the insurance which was debited entirely to Profit and Loss account, Rs.1292/
be carried forward as unexpired insurance.
2. The land and Building be appreciated by 10%
3. That the provision for doubtful debts be brought up to 5% on debtors 4.
That machinery be depreciated by 6%
5. That a provision of Rs. 1500 will have to be made in respect of an outstanding bill for
printing and stationary
6. That be goodwill of the firm will be valued at Rs. 18000
7. That the entire capital of the firm as newly constituted be fixed at Rs. 60,000 between P
and R in the proportion of three-fourth and one-fourth after passing entries in their
accounts for adjustment, i.e. actual cash to be paid off or to be brought in by continuing
partners as the case may be that Q be paid Rs.5000 in cash and the balance be
transferred to his loan account payable in two equal installments along with interest 8%
p.a. Prepare Revaluation account, capital accounts and balance sheet.
Practice Work: Exercise from T.S. Grewal
ASSIGNMENT-8 TOPIC—DEATH OF A PARTNER

1 Briefly explain the methods for calculating the share of a deceased partner in the profits
of the firm.
2. T, S and N were partners in a firm two years ago when S died. Later on, T and N had
decided to carry on the partnership amongst them sharing profits in the ratio of 2:1.
However, in wake of the deteriorating financial position of the family of S, both T and N
agreed upon admitting the minor daughter of S named M into the firm. The mother of M
consented to act as the legal guardian of the child until she attained the age of
majority.

3. On 31st March 2019 the Balance Sheet of T and N stood as follows:

Liabilities Rs. Assets Rs.

T’s Capital 30,000 Freehold 10,000

Property

N’s Capital 15,000 Furniture 3,000

General 12,000 Stock 6,000

Reserve

Creditors 8,000 Debtors 40,000

Cash 6,000

65,000 65,000

T & N share profits and losses in the ration 2 : 1. They agree to admit M into the frim
subject to the following terms and conditions:
(a) M will bring Rs. 10,500 of which Rs. 4,500 will be treated as his share of goodwill to
be retained in the business.
(b) M will be entitled to 1/4th share of profits in the firm.
(c) A reserve for bad and doubtful debts is to be created at 3% on the debtors.
(d) Furniture is to be depreciated by 5%.
(e) Stock is to be revalued at Rs. 5,250.
(i) Mention the values displayed by T and N in admitting M into the partnership. (ii)
mention the provision of Partnership Act affected by the admission of M and the clauses
governing this provision.
(iii) Prepare Revaluation Account, Partner’s Capital Accounts and Opening Balance Sheet of the
new firm.

4. Following is the balance sheet of Tony, Sony and Romy as on March 31, 2022

Liabilities Amount Assets Amount

Sundry Creditors 16,000 Bills Receivable 16,000

General Reserve 6,000 Furniture 22,600

Capital Accounts: Stock 20,400

Tony 30,000 Sundry debtors 22,000

Sony 20,000 Cash at Bank 18,000

Romy 20,000 Cash in Hand 3,000

Total 1,02,000 Total 1,02,000

Sony died on June 30, 2022. Under the terms of the partnership deed, the executors of a
deceased partner were entitled to :
a) Amount standing to the credit of the partner’s capital account,
b) Interest on capital at 5% per annum.
c) Share of goodwill on the basis of twice the average of the past three years’ profit,
and d) Share of profit from the closing of the last financial year to the date of death
on the basis of the last three year’s profit. Profits for 2019, 2020 and 2021were Rs.
12,000, Rs. 16,000 and Rs. 14,000 respectively. Profits were shared in the ratio of
capitals. Record the necessary journal entries and draw up the Sony’s Account to
be rendered to his executors.
5. A, B and C are partners in a firm. B dies. His share has been estimated as Rs.80,000/ A
and C promised to pay him in instalments every year. Prepare B’s Loan account in the
following cases:
a) Four yearly installments plus interest @10% p.a
b) they agree to pay the installments of Rs. 25,000 including interest @12% p.a. on the
outstanding balance for the first three years and balance including interest in the fourth year.
ASSIGNMENT—9 TOPIC— DISSOLUTION
1. State the difference between dissolution of partnership and dissolution of partnership firm.
2. State the accounting treatment for:
i. Unrecorded assets ii. Unrecorded liabilities
3. On dissolution, how will you deal with a partner's loan if it appears on the (a) assets side
of the balance sheet, (b) liabilities side of the balance sheet.
4. Distinguish between a firm's debts and a partner's private debts.
5. State the order of settlement of accounts on dissolution.

6. On what account the Realization Account differs from Revaluation Account.

7. Reproduce the format of Realization Account.

8. How is the deficiency of Creditors paid off?

9. Record necessary journal entries in the following cases:

[a] Creditors worth Rs.85,000 accepted Rs.40,000 as cash and Investment worth
Rs.43,000, in full settlement of their claim, [b] Creditors were Rs.16,000. They accepted
Machinery valued at Rs.18,000 in settlement of their claim, [c] Creditors were
Rs.90,000. They accepted Buildings valued Rs.1,20,000 and paid cash to the firm
Rs.30,000.
10. There was an old computer which was written-off in the books of accounts in the
previous year. The same has been taken over by a partner Nitin for Rs.3,000.
Journalise the transaction, supposing. That the firm has been dissolved. (Knowledge)
3. What journal entries will be recorded for the following transactions on the dissolution of a
firm:
[a] Payment of unrecorded liabilities of Rs.3,200. [b] Stock worth Rs.7,500 is taken by a
partner Rohit. [c]Profit on Realization amounting to Rs.18,000 is to be distributed
between the partners Ashish and Tarun in the ratio of 5:7. [d] An unrecorded asset
realized Rs.5,500.
4. Journalise the following transactions regarding realization expenses :
[a] Realization expenses amounted to Rs.2,500. [b] Realization expenses amounting to
Rs.3,000 were paid by Ashok, one of the partners, [c] Realization expenses Rs.2,300
borne by Tarun, personally. [d] Amit, a partner was appointed to realize the assets, at a
cost of Rs.4,000. The actual amount of realization amounted to Rs.3,000.
5. Give journal entries for the following transactions :
A Firm has a Stock of Rs. 1,60,000. Aziz, a partner took over 50% of the Stock at a
discount of 20%, Remaining Stock was sold at a profit of 30% on cost, Land and
 Building (book value Rs. 1,60,000) sold for Rs. 3,00,000 through a broker who charged
2%, commission on the deal, Plant and Machinery (book value Rs. 60,000) was handed
over to a Creditor at an agreed valuation of 10% less than the book value, Investment
whose face value was Rs. 4,000 was realized at 50%.
2. The following is the Balance sheet of Tanu and Manu, who shares profit and losses in the
ratio of 5:3, On March 31, 2022:
Balance Sheet of Tanu and Manu
as on March 31, 2022

Liabilities Amount Assets Amount

(Rs.) (Rs.)

Sundry Creditors 62,000 Cash at bank 16,000

Bills payable 32,000 Sundry Debtors 55,000

Bank loan 50,000 Stock 75,000

Reserve fund 16,000 Motor car 90,000

Capital Machinery 45,000

Tanu 1,10,000 Investment 70,000

Manu 90,000 2,00,000 Fixtures 9,000

3,60,000 3,60,000

On the above data the firm is dissolved and the following agreement was made:
Tanu agreed to pay the bank loan and took away the sundry debtors. Sundry creditors
accepted stock and paid Rs.10,000 to the firm. Machinery is taken over by Manu for
Rs.40,000 and agreed to pay off bills payable at a discount of 5%.. Motor car was taken
over by Tanu for Rs.60,000. Investment realized Rs.76,000 and fixtures Rs.4,000. The
expenses of dissolution amounted to Rs.2,200.
Prepare Realization Account, Bank Account and Partners Capital Accounts.

Practice Work: Exercise from T.S. Grewal

ASSIGNMENT—10 Topic - Issue of Shares

1. What is buyback of shares?
2. What are the provisions of law relating to calls in arrears and calls in advance?
3. Explain the term forfeiture of shares and give the accounting treatment.
 4. What is Reserve Capital? How is it different from the Capital Reserve?

5.Differentiate between forfeiture of Shares and Surrender of Shares.

6. Explain the Accounting treatment for the issue of Shares to Promoters. .

7. Can forfeited shares be reissued at discount. If so, what is the maximum permissible
discount?
8. What is the minimum subscription? How is it determined?
9. Tata Business Ltd. has made a public issue of 10,00,000 Equity shares of Rs. 10 each.
The issue is oversubscribed by 100 per cent. The company decided to reject applications for
5,00,000 equity shares and allot 2,50,000 shares to the applicants of 7,50,000 shares and
raise the full amount to the remaining applicants. Has the company in your opinion not
ignored any value?
10. Arvind Ltd. invited applications for issue of equity shares and decided to issue shares
only to the large applicants. Which value is being ignored by the company?
11. Srijan Limited issued Rs. 10,00,000 new capital divided into Rs. 100 shares at a
premium of 20 per share, payable as under:
On Application 10 per share
On Allotment 40 per share (including Premium of 10 per share)
On First and Final Call Balance
Overpayments on applications were to be applied towards sums due on allotment and first
and final call. Where no allotment was made, money was to be refunded in full.
The issue was oversubscribed to the extent of 13,000 shares. Applicants for 12,000 shares
were allotted only 2,000 shares and applicants for 3,000 shares were sent letters of
regret.
Shares were allotted in full to the remaining applicants. All the money due was duly
received.
(a) Which value has been affected by rejecting the applications of the applicants who had
applied for 3,000 shares? Suggest a better alternative for the same.
(b) Give Journal Entries to record the above transactions (including cash transactions) in the
books of the company.
12. Aneesh Ltd. invited applications for 40,000 shares of Rs. 100 each at a premium of Rs.
20 per share payable; on application Rs. 50; on allotment Rs. 25 (including premium):
on first call Rs. 25 and second and final call Rs. 20.
Application were received for 50,000 shares and allotment was made on prorate basis.
Excess money on application was adjusted on sums due on allotment. Rohit to whom
600 shares were allotted failed to pay the allotment money and his shares were forfeited
after allotment. Ashmita, who applied for 1000 shares failed to pay the Two calls and his
shares were forfeited after the second call. Of the shares forfeited, 1200 shares were
sold to Kapil for Rs. 85 per share as fully paid, the whole of Rohit’s shares being
 included.
Record necessary journal and cash book entries.
13. On January 1, 2022, the director of X Ltd. issued for public subscription 50,000 equity
shares of Rs. 10 each at Rs. 12 per share payable as to Rs. 5 on application (including
premium), Rs. 4 on allotment and the balance on call on May 01, 2202. The lists were closed
on February 10, 2022 by which date applications for 70,000 were received. Of the cash
received Rs. 40,000 was returned and Rs. 60,000 was applied to the amount due on
allotment, the balance of which was paid on February 16, 2022. All the shareholders paid
the call due on May 01, 2002 with the exception of an allottee of 500 shares.
These shares were forfeited on September 29, 2002 and reissued as fully paid at Rs. 8
per share on November 01, 2022.
The company, as a matter of policy, does not maintain a Calls-in-Arrears Account.
Give journal entries to record these share capital transactions in the books of X. Ltd.
14. Bharat Ltd. was formed with an authorized capital of Rs. 40,00,000 divided into equity
shares of Rs. 10 each.
a. The company issued 5000 shares to its promoters as remuneration of the services
rendered by them at par.
b. Company also issued shares at 10% premium to Mr. Manoj for the purchase of assets
of Rs. 5,50,000 from him. Give Journal entries.
15. Eee Ltd. forfeited 200 shares of Rs. 10 each (Rs. 8 called up) on which the holder had
paid application and allotment money of Rs. 5 per share. Out of these 50 shares were
re-issued to F as fully paid for Rs. 8 per share, Journalise.
16. Journalise the following transaction in the books Bhushan Oil Ltd:
(a) 150 shares of Rs. 10 each issued at a premium of Rs. 4 per share payable with allotment
were forfeited for non-payment of allotment money of Rs. 8 per share including premium.
The first and final call of Rs. 4 per share were not made. The forfeited shares were reissued
at Rs. 15 per share fully paid-up.
(b) 400 shares of Rs. 50 each issued at par were forfeited for non-payment of final call of Rs. 10
per share. These shares were reissued at Rs. 45 per share fully paid-up.

17. PQR Ltd. issued equity shares of Rs. 10 each at a premium of Rs. 2 per share payable as to
Rs. 2 per share on application, Rs. 5 per share on allotment (including premium), Rs. 3 per share
on first call and Rs. 2 per share on final call. X, who applied for 1920 shares, was allotted 1600
shares. He failed to pay allotment money and calls money and his shares were forfeited. Y who
applied for 2,400 shares, was allotted 2,000 shares. He failed to pay the two calls and his shares
were forfeited. All these shares were re-issued to Z credited as fully paid at Rs. 8 per share. Give
Journal entries to record the forfeiture and re-issue of shares assuming that the company follows
the practice of adjusting excess application money towards other sums due on shares).

18. At what price can a company re-issue the forfeited shares?

19. Z Ltd. has an authorized capital of Rs. 2,00,000, which is divided into equity shares of Rs. 25
each. The company invited applications for 15,000 shares. Applications were received for 12,000
shares. Final call of Rs. 5 per share on 1,000 shares was not received. The directors of the
Company forfeited these shares and after some time re issued 800 of these shares at Rs. 28 per
share.
Show the Balance sheet of the company as per Schedule VI of the Companies Act.
Practice Work: Exercise from T.S. Grewal Book will be given for practice.

Assignment - 11 Topic - Issue of Debentures

1. What do you mean by issue of debentures as collateral security?
2. What do you mean by Trust deed in context of debentures?
3. What do you mean by issue of debentures for consideration other than Cash?
4. What is the nature of debenture interest? Give the accounting treatment of interest on
debenture?
5. Sinha Industries Ltd. issued 1,00,000 debentures of Rs. 100 each under the following
two arrangements wherein equal number of debentures were offered for sale.
(a) Debentures offered in Urban Open Markets: Issued at premium of 10%,
redeemable at par.
(b) Debentures offered to Small-scale Industrial Units: Issued at par, redeemable at a
premium of 10%.
I. Which needs of society are being met by these arrangements of Sinha Industries for
subscription of their debentures?
II. Pass journal entries for the above transactions in the Books of Sinha Industries.
6. The Board of Directors of Pearl Global Industries Ltd. wants to start a new unit at a
remote area of Assam. The new unit can be started in the form of labor intensive
with a capital of 5 crore or in the form of an automatic plant with a capital of 30
crore. Directors decided to start this unit in the form of labor intensive for generation
of employment opportunities in remote areas. Therefore, the company purchased
land for 2,00,00,000 and machinery for 3,00,00,000. In consideration of these
assets the Company issues 13% Debentures at part.
Journalize the transactions.
6. Give Journal Entries for the following:
1. Issue of Rs. 10,000, 9% debentures of Rs. 100 each and redeemable at par.
2. Issue of Rs. 10,000, 9% debentures of Rs. 100 each at premium of 5% but
redeemable at par.
3. Issue of Rs. 10,000, 9% debentures of Rs. 100 each at discount of 5% repayable at
par.
4. Issue of Rs. 10,000, 9% debentures of Rs. 100 each at par but repayable at a
premium of 5%.
 5. Issue of Rs. 10,000, 9% debentures of Rs. 100 each at discount of 5% but
redeemable at premium of 5%.
6. Issue of Rs. 10,000, 9% debentures of Rs. 100 each at premium of 5% and
redeemable at premium of 5% (Knowledge)
7. You are required to set out the journal entries relating to the issue of the debentures
in the books of X Ltd. and show how they would appear in its balance sheet under the following
cases:
(a) 120, 8% debentures of Rs. 1,000 each are issued at 5% discount and repayable at
par.
(b) 150, 7% debentures of Rs. 1,000 each are issued at 5% discount and repayable at
premium of 10%.
(c) 80, 9% debentures of Rs. 1,000 each are issued at 5% premium.
(d) Another 400, 8% debentures of Rs. 100 each are issued as collateral security
against a loan of Rs. 40,000.
3. A Ltd. issued 2000 10% debentures of Rs. 100 each on April 01, 2018 at a discount
of 10% Redeemable at a premium of 10%. Give journal entries relating to the issue
of debentures and debenture interest for the period ending March 31, 2019
assuming that interest was paid half yearly on September 30 and March 31 and tax
deducted at source is 10%. A Ltd. follows the calendar year as its accounting year.
8. Aashirwad Company Ltd. purchased assets of the book value of Rs. 2,00,000 from
another company and agreed to make the payment of purchase consideration by
issuing 2,000, 10% debentures of Rs. 100 each. Record the necessary journal entries.
9. National Packaging Company purchased assets of the value of Rs. 1,90,000 from another
company and agreed to make the payment of purchase consideration by issuing 2,000,
10% debentures of Rs. 100 each at a discount of 5%. Record necessary journal entries.
10. G.S. Rai company purchased assets of the book value of Rs. 99,000 from another firm.
It was agreed that purchase consideration be paid by issuing 11% debentures of Rs. 100
each. Assume debentures have been issued.
1. At par
2. At discount of 10%, and
3. At a premium of 10%
Record necessary journal entries.
11. Romi Ltd. acquired assets of Rs. 20 lakh and took over creditors of Rs. 2 lakh from Kapil
Enterprises. Romi Ltd. issued 8% debentures of Rs. 100 each at par as purchase consideration.
Record necessary journal entries in the books of Romi Ltd.
12. Blue Prints Ltd. Purchased building worth Rs. 1,50,000, machinery worth Rs. 1,40,000 and
furniture worth Rs. 10,000 from XYZ Co. and took over its liabilities of Rs. 20,000 for a purchase
consideration of Rs. 3,15,000. Blue Prints Ltd. paid the purchase consideration by issuing 12%
debentures of Rs. 100 each at a premium of 5%. Record necessary journal entries.
Practice Work: Exercise from T.S. Grewal Book will be given for practice.
ASSIGNMENT -12 Topic : Analysis of Financial Statements

1. What do you mean by Financial Statement Analysis? How is it important from the
viewpoint of creditors and management?
2. What are contingent liabilities? Where are they shown in the Balance Sheet? Mention
any two examples.
3. State the major heads in the required serial order on the Assets & Liabilities side of the
Balance Sheet as per Schedule III, Part I of the Indian Companies Act, 2013. (Knowledge)
4. Star Ltd Has the following balances of the borrowings 10% Term loan from SBI repayable
after 4 years. 9% Debentures of Rs. 100 each for Rs.20,00,000 repayable by 4 annual
installments by draw of lots. Interest has accrued and due but not paid so far. How will you
show these items in the Balance sheet of the company as at 31st March 2015.
5. State the objects of comparative financial statements. How are comparative Balance
Sheets and Profit and Loss Accounts prepared?
6. What is a common size financial
7. How is common size Balance Sheets and Profit & Loss accounts prepared?
.

ASSIGNMENT-13 TOPIC—RATIOS

1. What are the different ways of Presentation of Accounting Ratios?

2. What are the categories under which the various financial ratios are based on the basis
of objectives?
3. Why is Quick Ratio considered to be more dependable than Current Ratio?
4. What are the objectives of calculating Solvency Ratios?
5. What does the debt equity ratio indicate?
6. What are the implications of high and low stock turnover ratio?
7. How do we calculate the Operating Ratio ? What is the significance of this ratio?

8. Distinguish between cross sectional and time series analysis.

9. Calculate Debt Equity Ratio, from the following information :

Total external liabilities Rs.5,00,000 Balance Sheet Total Rs.10,10,0
00

Current liabilities Rs.1,00,000 Fictitious Assets Rs.10,000

10. Arti Ltd. had a current ratio of 4.5:1 and acid test ratio of 3:1. If its current liabilities are
Rs.16000. Find out Inventory and quick assets.
11.A company has a loan of 50,00,000/ as a part of capital employed. The interest payable
on the loan is 10% and ROI is 40%. The rate of tax is 50%. What is the gain to the
shareholders due to the loan raised by the company?
12. a) Why is the interest coverage ratio calculated?
b) Net profit after Interest and Tax Rs. 4,80,000/, 15% long-term debt Rs. 1,60,000 tax
@50%. Calculate the interest coverage ratio.

13.. From the following, Calculate Debt equity ratio, Total assets to Debt ratio and Proprietary
ratio . 10% preference share capital Rs. 5,00,000, Equity share Capital Rs.15,00,000, Securities
premium Rs. 1,00,000, General Reserves Rs. 4,00,000. Loan from IDBI Rs. 30,00,000/ Other
Miscellaneous expenditure Rs.80,000/ Preliminary expenses Rs.20,000. Trade creditors 11,000,
Other current liabilities Rs. 5,00,000/.

14. A firm made credit sales of Rs. 5,40,000 during the year. If the collection period is 40 days
calculate (i) Debtors Turnover ratio (ii)Average debtors (iii)Opening and closing debtors , if the
closing debtors are more than the opening debtors by 8000. Assume there are 360 days in a
year.

15. The operating ratio of a Co. is 40%. State whether the following transaction will: i) increase
(ii) decrease or (iii) not change it. Give reasons for your answer.
(a) Goods costing Rs.1000 withdrawn for personal use.
(b) Paid salary Rs. 16000
(c) Paid Income Tax Rs. 10,000

16. a) A firm normally has accounts receivables equal to two months credit sale During the
coming years it expects credit sales of Rs. 7,20,000 spread evenly over the year (12 months).
What is the estimated amount of account receivables at the end of the year? (Understanding)
b) The ratio of Current assets and Current Liabilities (4,00,000) is 2 : 5. The company is
interested in maintaining a current ratio of 2:1 by acquiring some current assets on short
term credit. You are required to suggest to him the amount of Current assets which he
should acquire. (Application)
c) A trader carries an average stock of RS.80,000. His stock turnover ratio is 8 times. It sells
goods at a profit of 20%on sales. Find out his profit. (Knowledge)

Practice Work : Exercise from T.S. Grewal

ASSIGNMENT-14 TOPIC—CASH FLOW STATEMENT

1. What do you understand about Cash in the context of a Cash Flow Statement?

2. How are various activities classified according to AS-3 while preparing the Cash Flow
Statement?
3. Explain how interest and dividend are treated in Cash Flow Statement?
4. What are extraordinary items? How are they treated while preparing a Cash Flow Statement?
Give an example of extraordinary items under each activity?
5. Write the treatment of increase in the value of goodwill, Receiving of dividend by a finance
company and increase in the value of discount on issue of debentures under Cash Flow
Statement?
6. What is the purpose of preparing a Cash Flow Statement?
7. What are the limitations of a Cash Flow Statement?

8.During the year 2003 Volcano ltd reported a net profit of Rs. 1,75,720 after adjusting the
following:
i) Depreciation written of as follows : Plant Rs.12800 and furniture Rs. 2500/ ii)
Profit on sale of fixed assets Rs.15,000/
iii) Discount on issue of Debentures written off Rs. 20000/
iv) Investment costing Rs.30000 were sold for Rs.28000/
v) Preliminary expenses appearing in the books Rs.40,000/: out of which 20% have
been written off
vi) Proposed Dividend Rs. 50,000/-
vii) Dividend received Rs. 2500/-
Calculate Cash from operation

. Practice Work: Exercise from T.S. Grewal.