Reassessment of Liabilities

Q. Simran and Reema are partners sharing profits in the ratio of 3 : 2. Their capitals as on 31st March, 2017 were ₹ 2, 00, 000 each whereas Current Accounts had balances of ₹ 50, 000 and ₹ 25, 000 respectively interest is to be allowed @ 5% p.a. on balances in Capital Accounts. The firm earned net profit of ₹ 3, 00, 000 for the year ended 31st March 2018.
Pass the journal entries for interest on capital and distibution of profit. Also prepare Profit and Loss Appropriation Account for the year.

Q. A, B, C, and D are partners in a firm sharing profits as 4 : 3 : 2 : 1 respectively. It earned a profit of ₹ 1, 80, 000 for the year ended 31st March, 2018. As per the Partnership Deed, they are to charge a commission @ 20% of the profit after charging such commission which they will share as 2 : 3 : 2 : 3. You are required to show appropriation of profits among the partners.

Q. Asgar, Chaman and Dholu are partners in a firm. Their Capital Accounts stood at ₹ 6, 00, 000; ₹ 5, 00, 000 and ₹ 4, 00, 000 respectively on 1st April, 2017. They shared Profits and Losses in the proportion of 4 : 2 : 3. Partners are entitled to interest on capital @ 8% per annum and salary to Chaman and Dholu @ ₹ 7, 000 per month and ₹ 10, 000 per quarter respectively as per the provision of the Partnership Deed. Sholus share of profit ( excluding interest on capital but including salary) is guaranteed at a minimum of ₹ 1, 10, 000 p.a. Any deficiency arising on that account shall be met by Asgar. The profit for the year ended 31st March, 2018 amounted to ₹ 4, 24, 000.
Prepare Profit and Loss Appropriation Account for the year ended 31st March, 2018.

Q. Ankur, Bhavns and Disha are partners in a firm. On 1st April, 2017, the balance in their Capital Accounts stood at ₹ 14, 00, 000, ₹ 6, 00, 000 and ₹ 4, 00, 000 respectively. They shared profits in the proportion of 7 : 3 : 2 respectively. Partners are entitled to interest on capital @ 6% per annum and salary to Bhavna @ ₹ 50, 000 p.a. and a commission of ₹ 3, 000 per month to Disha as per the provisions of the partnership Deed. Bhavnas share of profit (excluding interest on capital) is guaranteed at not less than ₹ 1, 70, 000 p.a. Dishas share of profit (including interest on capital but excluding commission) is guaranteed at not less than ₹ 1, 50, 000 p.a. Any deficiency arising on that account shall be met by Ankur. The profit of the firm for the year ended 31st March, 2018 amounted to ₹ 9, 50, 000.
Prepare Profit and Loss Appropriation Account for the year ended 31st March, 2018.

Q. Calculate Debt to Equity Ratio: Equity Share Capital ₹ 5, 00, 000; General Reserve ₹ 90, 000; Accumulated Profits ₹ 50, 000; 10% Debentures ₹ 1, 30, 000; Current Liabilities ₹ 1, 00, 000.

Q. From the following information, calculate value of goodwill of the firm by applying Capitalisation Method: Total Capital of the firm ₹ 16, 00, 000.
Normal rate of return 10%. Profit for the year ₹ 2, 00, 000.

Q. L, M and N were partners in a firm sharing profits in the ratio of 3 : 2 : 1. Their Balance Sheet on 31st March, 2015 was as follows:

Liabilities		₹	Assets	₹
Creditors		1, 68, 000	Bank	34, 000
General Reserve		42, 000	Debtors	46, 000
Capitals A/cs: L	1, 20, 000		Stock	2, 20, 000
M	80, 000		Investments	60, 000
N	40, 000	2, 40, 000	Furniture	20, 000
			Machinery	70, 000
		4, 50, 000		4, 50, 000

On the above date, O was admitted as a new partner and it was decided that:
(i) The new profit-sharing ratio between L, M, N and O will be 2 : 2 : 1 : 1.
(ii) Goodwill of the firm was valued at ₹ 1, 80, 000 and O brought his share of goodwill premium in cash.
(iii) The market value of investments was ₹ 36, 000.
(iv) Machinery will be reduced to ₹ 58, 000.
(v) A creditor of ₹ 6, 000 was not likely to claim the amount and hence was to be written off.
(vi) O will bring proportionate capital so as to give him 1/6th share in the profits of the firm.
Prepare Revaluation Account, Partners Capital Accounts and the Balance Sheet of the new firm.

Q. Rajesh and Ravi are partners sharing profits in the ratio of 3: 2 . Their Balance Sheet at 31st March , 2018 stood as:

BALANCE SHEET as at 31st March, 2018
Liabilities		₹	Assets		₹
Creditors		38, 500	Cash		2, 000
Outstanding Rent		4, 000	Stock		15, 000
Capital A/cs:			Prepaid Insurance		1, 500
			Debtors	9, 400
			Less : Provision for D.D.	400	9, 000
​Rajesh	29, 000
Ravi	15, 000	44, 000
			Machinery		19, 000
			Building		35, 000
			Furniture		5, 000
		86, 500			86, 500

​

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

Q. From the following information, calculate Debt to Equity Ratio:

	₹
10, 000 Equity Shares of ₹ 10 each fully paid	1, 00, 000
5, 000; 9% Preference Shares of ₹ 10 each fully paid	50, 000
General Reserve	45, 000
Surplus, i.e., Balance in Statement of Profit and Loss	20, 000
10% Debentures	75, 000
Current Liabilities	50, 000

Q. A and B are partners sharing profits in the ratio of 3 : 2 . They admit C as a new partner from 1st April, 2018 . They have decided to share future profits in the ratio of 4 : 3 : 3 . The Balance Sheet as at 31st March, 2018 is given below:

Liabilities		₹	Assets			₹
A's Capital	1, 76, 000		Goodwill			34, 00
B's Capital	2, 54, 000	4, 30, 000	Land and Building			60, 000
Workmen Compensation Reserve		20, 000	Investment ( Market value ₹ 45, 000)			50, 000
Investments Fluctuation Reserve		10, 000	Debtors		​1, 00, 000
Employee's Provident Fund		34, 000	Less: Provision for D.D		10, 000	90, 000
C's Loan		3, 00, 000	Stock			3, 00, 000
			Bank Balance			2, 50, 000
			Advertising Suspense A/c			10, 000
		7, 94, 000				7, 94, 000

Terms of C's admission are as follows:(i) C contributes proportionate capital and 60% of his share of goodwill in cash.(ii) Goodwill is to be valued at 2 years' purchase of super profit of last three completed years. Profits for the years ended 31st March were:2016long dash₹ 4, 80, 000; 2017long dash​₹ 9, 30, 000; 2018long dash​₹ 13, 80, 000.The normal profit is ​₹ 5, 30, 000 with same amount of capital invested in similar industry.(iii) Land and Building was found undervalued by ​₹ 1, 00, 000.(iv) Stock was found undervalued by ​₹ 31, 000.(v) Provision for Doubtful Debts is to be made equal to 5% of the debtors(vi) Claim on account of Workmen Compensation is ​₹ 11, 000 .Prepare Revaluation Account , Partners' Capital Accounts and Balance Sheet .

Q.

A, B and C are partners sharing profits and losses in the ratio of 4 : 3 : 3 respectively. Their Balance Sheet as at 31st March, 2018 is:

Liabilities		Amount (₹)	Assets		Amount (₹)
Creditors		7, 000	Land and Building		36, 000
Bills Payable		3, 000	Pland and Machinery		28, 000
Reserves		20, 000	Electronic Typewriter		8, 000
			Stock		20, 000
Capital A/cs:			Sundry Debtors	14, 000
A	32, 000		Less: Provision for D. Debts	2, 000	12, 000
B	24, 000		Bank		2, 000
C	20, 000	76, 000
		1, 06, 000			1, 06, 000

On 1st April, 2018, B retires from the firm on the following terms:
(a) Goodwill of the firm is to be valued at ₹ 14, 000.
(b) Stock, Land and Building are to be appreciated by 10%.
(c) Plant and Machinery and Electronic Typewriter are to be depreciated by 10%.
(d) Sundry Debtors are considered to be good.
(e) There is a liability of ₹ 2, 000 for the payment of outstanding salary to the employee of the firm . This liability has not been shown in the above Balance Sheet but the same is to be recorded now .
(f) Amount payable to B is to be transferred to his Loan Account.
Prepare Revaluation Account, Partners Capital Accounts and the Balance Sheet of A and C after Bs retirement.

Q. X, Y and Z are partners sharing profits and losses in the ratio of 3 : 2 : 1 . The Balance Sheet of the firm as at 31st March, 2018 stood as follows:

Liabilities		Amount (₹)	Assets		Amount (₹)
Creditors		21, 000	Cash at Bank		5, 750
Workmen's Compensation Reserve		12, 000	Debtors	40, 000
Investments Fluctuation Reserve		6, 000	Less: Provision for D. Debts	2, 000	38, 000
Capital A/cs:			Stock		30, 000
X	68, 000		Investments ( Market Value ₹ 17, 600)		15, 000
Y	32, 000		Patents		80, 000
Z	21, 000	1, 21, 000	Machinery		50, 000
			Advertisement Expenditure		5, 250
			Goodwill		6, 000
		1, 60, 000			1, 60, 000

Z retired on the above date on the following terms:

(a) Goodwill of the firm is to be valued at ₹ 34, 800.
(b) Value of Patents is to be reduced by 20% and that of machinery to 90%.
(c) Provision for Doubtful Debts is to be created @ 6% on debtors.
(d) Z took over the investment at market value .
(e) Liability for Workmen Compensation to the extent of ₹ 750 is to be created .
(f) A liability of ₹ 4, 000 included in creditors is not to be paid .
(g) Amount due to Z to be settled on the following basis: ₹ 5, 067 to be paid immediately , 50% of the balance within one year and the balance by a Bill of Exchange ( without interest ) at 3 Months.
Give necessary journal entries for the treatment of goodwill , prepare Revaluation Account , Capital Accounts and the Balance Sheet of the new firm.

Q. X Ltd. has a Current Ratio of 3.5 : 1 and Quick Ratio of 2 : 1. If the Inventories is ₹ 24, 000; calculate total Current Liabilities and Current Assets.

Q. A firm had Current Assets of ₹5, 00, 000. It paid Current Liabilities of ₹1, 00, 000 and the Current Ratio became 2:1. Determine Current Liabilities and Working Capital before and after the payment was made.

Q. A company issued 10, 000 Equity Shares of ₹ 10 each at a premium of ₹ 3 per share payable ₹ 5 on application, ₹ 5 (including premium) on allotment and the balance on first call . All the shares offered were applied for and allotted. All the money due on allotment was received except on 200 shares. Call was made. All the amount due thereon was received except on 300 shares. Directors forfeited 200 shares on which both allotment and call money were not received.
Pass necessary journal entries to record the above.

Q. Prepare Cash Flow Statement from the following Balance Sheet:

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

Notes to Accounts

Particulars	31st March, 2013 (₹)	31st March, 2012 (₹)
I. Reserves and Surplus
Surplus, i.e., Balance in Statement of Profit and Loss	4, 00, 000	2, 00, 000

Additional Information:
(i) An old machinery having book value of ₹50, 000 was sold for ₹60, 000.
(ii) Depreciation provided on Machinery during the year was ₹30, 000.

Q. A company had Current Assets of ₹4, 50, 000 and Current Liabilities of ₹2, 00, 000. Afterwards it purchased goods for ₹30, 000 on credit. Calculate Current Ratio after the purchase.

Q. Calculate Working Capital Turnover Ratio from the following information:
Revenue from Operations ₹ 30, 00, 000; Current Assets ₹ 12, 50, 000; Total Assets ₹ 20, 00, 000; Non-current Liabilities ₹ 10, 00, 000, Shareholders' Funds ₹ 5, 00, 000.

Q. Gross Profit at 25% on cost; Gross profit ₹ 5, 00, 000; Equity Share Capital ₹ 10, 00, 000; Reserves and Surplus 2, 00, 000; Long-term Loan 3, 00, 000; Fixed Assets (Net) ₹ 10, 00, 000. Calculate Working Capital Turnover Ratio

Q. Star Ltd. forfeited 500 Equity Shares of ₹ 100 each for non-payment of first call of ₹ 30 per share . The final call of ₹ 10 per share was not yet made. Out of these, 60% shares were reissued for ₹ 39, 000 fully paid. journalise the forfeiture and reissue of shares.

Q.

Amit, Sumit and Samiksha are in partnership sharing profits in the ratio of 3:2:1. Samiksha’ share in profit has been guaranteed by Amit and Sumit to be a minimum sum of Rs 8, 000. Profits for the year ended March 31, 2017 was Rs 36, 000. Divide profit among the partners.

Q. The Directors of a company forfeited 300 shares of ₹ 10 each issued at a premium of ₹ 3 per share , for the non-payment of the first call money of ₹ 2 per share . The final call of ₹ 2 per share has not been made. Half the forfeited shares were reissued at ₹ 1, 500 as fully paid-up. Record the journal entries for the forfeiture and reissue of shares.

Q. Pass journal entries in the following cases:

M Ltd forfeited 200 Equity Shares of ₹10 each , issued at a premium of ₹ 5 per share , held by Ram for non-payment of the final call of ₹ 3 per share . Of these , 100 shares were reissued to Vishu at a discount of ₹ 4 per share .

Q. A, B and C who are presently sharing profits and losses in the ratio of 5 : 3 : 2 decide to share future profits and losses in the ratio of 2 : 3 : 5 . Give the journal entry to distribute ' Workmen Compensation Reserve' of ₹ 1, 20, 000 at the time of change in profit-sharing ratio, when:
(i) no information is given (ii) there is no claim against it.

Q. Trade Payables ₹ 50, 000, Working Capital ₹ 9, 00, 000, Current Liabilities ₹ 3, 00, 000. Calculate Current Ratio.

Q. A and B are partners sharing profits in the ratio of 4 :3 . Their Balance Sheet as at 31st March, 2018 stood as:

Liabilities		₹	Assets	₹
Sundry Creditors		28, 000	Cash	20, 000
Reserve		42, 000	Sundry Debtors	1, 20, 000
Capital A/cs:			Stock	1, 40, 000
A	2, 40, 000		Fixed Assets	4, 20, 000
B	1, 20, 000	3, 60, 000
		4, 30, 000		4, 30, 000

​ They decided that with effect from 1st April, 2018, they will share profits and losses in the ratio of 2 : 1 . For this purpose they decided that:
(i) Fixed Assets are to be depreciated by 10%.
(ii) A Provision for Doubtful Debts of 6% be made on Sundry Debtors.
(iii) Stock be valued at ₹ 1, 90, 000.
(iv) An amount of ₹ 3, 700 included in Creditors is not likely to be claimed .
Partners decided to record the revised values in the books . However, they do not want to disturb the Reserve . You are required to pass journal entries , prepare Capital Accounts of Partners and the revised Balance Sheet.

Q. A and B are partners sharing profits and losses in the ratio of 3 : 1. On 1st April, 2017, their capitals were: A ₹ 50, 000 and B ₹ 30, 000. During the year ended 31st March, 2018 they earned a net profit of ₹ 50, 000. The terms of partnership are:
(a) Interest on capital is to allowed @ 6% p.a.
(b) A will get a commission @ 2% on turnover.
(c) B will get a salary of ₹ 500 per month.
(d) B will get commission of 5% on profits after deduction of all expenses including such commission.
Partners drawings for the year were: A ₹ 8, 000 and B ₹ 6, 000. Turnover for the year was ₹ 3, 00, 000. After considering the above facts, you are required to prepare Profit and Loss Appropriation Account and Partners Capital Accounts.

Q. Balance Sheet of X and Y , who share profits and losses as 5 : 3 , as at 1st April, 2017 is :

Liabilities	₹	Assets	₹
Xs Capital	52, 000	Goodwill	8, 000
Ys Capital	54, 000	Machinery	38, 000
General Reserve	4, 800	Furniture	15, 000
Sundry Creditors	5, 000	Sundry Debtors	33, 000
Employees Provident Fund	1, 000	Stock	7, 000
Workmen Compensation Reserve	10, 000	Bank	25, 000
		Advertisement Suspense A/c	800
	1, 26, 800		1, 26, 800

On the above date, they decided to change their profit-sharing ratio to 3 : 5 and agreed upon the following :
(a) Goodwill be valued on the basis of two years purchase of the average profit of the last three years .
Profits for 2014-15$—$₹ 7, 500; 2015-16$—$₹ 4, 000; 2016-17$—$₹ 6, 500.
(b) Machinery and Stock be revalued at ₹ 45, 000 and ₹ 8, 000 respectively.
(c) Claim on account of workmen compensation is ₹ 6, 000.
Prepare Revaluation Account Partners Capital Accounts and the Balance Sheeet of the new firm .

Q. Balance Sheet of J and K who share profits in the ratio of 3 : 2 is as follows:

BALANCE SHEET
as at 31st March, 2018

Liabilities		₹	Assets	₹
Reserve		1, 00, 000	Cash	2, 00, 000
Js Capital	1, 50, 000		Other Assets	1, 50, 000
Ks Capital	1, 00, 000	2, 50, 000
		3, 50, 000		3, 50, 000

M joins the firm from 1st April, 2018 for a half share in the future profits . He is to pay ₹ 1, 00, 000 for goodwill and ₹ 3, 00, 000 for capital. Draft the journal entries and prepare Balance Sheet in each of the following cases:
(a) If M acquires his share of profit from the firm in the profit -sharing ratios of the partners.
(b) If M acquires his share of profits from the firm in equal proportions from the original partners .
(c) If M acquires his share of profit in the ratio of 3 : 1 from the original partners, ascertain the future profit-sharing ratio of the partners in each case.

Q. X Ltd. forfeited 900 Equity Shares of ₹ 100 each for the non-payment of allotment money of ₹ 30 per share and the first call of ₹ 20 per share. The second and final call of ₹ 25 per share has not been made . The forfeited shares were reissued for ₹ 90 per share , ₹ 75 paid-up. Journalise the above.