Reg.

No 20UCO3CC5

JAMAL MOHAMED COLLEGE (Autonomous)

TIRUCHIRAPPALLI – 620 020

B.Com. DEGREE EXAMINATION, NOVEMBER 2021

COMMERCE
THIRD SEMESTER
CORE : ADVANCED ACCOUNTS I

Time: Three Hours Maximum: 75 Marks

SECTION-A (20×1=20)
Answer ALL the questions, (Multiple Choice).
1. The object of partnership is to:
a) earn Profit b) not to earn profit
c) welfare of members d) none of these
2. Capital of the partners are maintained by:
a) Fixed Capital Method b) Fluctuating capital Method
c) By any Two above Methods d) None of these
3. In the absence of Partnership Deed, the interest is allowed on the
capital of the partner
a) No Interest allowed b) 9% per annum
c) 5% per annum d) 6% per annum

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4. To keep the accounts of partners on fluctuating Capital Method the
accounts opened in the firm’s, books are:
a) Partners Capital accounts
b) Only Partners Current accounts
c) Partners Drawings accounts and Current accounts
d) Partners Capital accounts and Partners Current accounts
5. At the time of admission of a new partner, general reserve is
a) Debited to capital of old partners
b) Credited to capital of old partners
c) Allowed to remain is balance sheet
d) Debited to Current account
6. Good will of the firm is valued Rs. 30000. C an incoming partner
purchase ¼ share of total profit Good will be raised in the books
a) Rs 30,000 b) Rs 7,500
c) Rs 1,20,000 d) Rs 7,000
7. The balance of Revaluation Account or Profit and Loss Adjustment
Account is transferred to Old partner’s Capital Accounts in their:
a) Old Profit sharing Ratio b) New Profit sharing Ratio
c) Equal Ratio d) None of these
8. On the admission of a new partner:
a) Old firm has to be dissolved
b) Old partnership has to be dissolved
c) Both old firm and partnership have to be dissolved
d) Neither partnership nor firm has to be dissolved.
9. Section 37 of partnership act provided interest on the amount left by
retiring or decreased partner at
a) 5% b) 10%
c) 6% d) Bank Rate

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10. On the death of a partner, the amount of joint life policy should be
credited to the capital account of
a) all the partners including the deceased partner in their profit
sharing ratio
b) remaining partners in the new profit sharing ratio
c) gaining Ratio
d) neither the deceased partner nor the remaining partners
11. A retiring partner is entitled to his share in the goodwill of the firm as
per the
a) agreement between the Partners
b) Profit Sharing ratio
c) Gaining Ratio
d) None of these
12. Profit or loss on revaluation is transferred to Partner’s Capital A/cs:
a) Old b) New
c) All d) Continuing
13. If a partner takes over an asset of the firm, his capital account
a) Will be debited with the amount as agreed
b) Will be credited with the market value of the asset
c) Will be debited with book value of the asset
d) None of the above
14. When all partners are insolvent creditors will be
a) paid fully b) paid rateably
c) Taken over by the Partners d) Paid by Government
15. At the time of dissolution all the assets of firm are transferred to the
realization A/c
a) Market value b) Book value
c) Cost value d) Bale value
16. Unrecorded liability when paid on dissolution of a firm is debited to
a) Realisation a/c b) Revaluation A/C
c) Capital aA/c d) None of the above

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17. Company to the partners
a) lumpsum method b) net payment method
c) Net assets method d) none of the above
18. In the case of sale of a firm to a company, Good Will =
a) Purchase consideration – Net Assets
b) Net Assets – Purchase consideration
c) Assets - Liabilities
d) None of the above
19. Retirement or death of a partner.
a) acquisition b) sale toa company
c) absoption d)amalgamation
20. The agreement among partners which set out the terms on which they
had agreed to form a partnership is called:
a) Partnersip deed b) Partnership at will
c) None of these d) Arbitration clause

SECTION-B (5×5=25)
Answer ALL the questions.
21. a) What are the Accounts of Partnership Firm?
(or)
b) A and B started business on 1 Jan 2015, contributing Rs 50,000 and
Rs 40,000. On 30th June 2015, B made a further contribution of
Rs 10,000 towards his capital. Drawings during the year come to
Rs 4,000 by A and Rs 5,000 by B.6% Interest is to be charged on
Capital and no interest on Drawings.B is to be allowed a Salary of
Rs 500 p.m. The Profit for the year Rs 32,000 before charging salary
and interest on capital .Show the Profit & loss Appropriation
Account.

22. a) A and B are partners sharing profits and losses in the ratio of 7:5.
They take C into the Partnership. C is given 1/6th share which he

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 acquires 1/24 from A and 1/8 from B.Calculate the future Profit
Sharing Ratio and also Sacrificing Ratio.
(or)
b) A,B and c are partners sharing profits and losses in the ratio of
3:2:1. They admit D ang gave him a quarter share of profit. This
share was contributed by all of them in the ratio of 2;3;1. Find out
new profit-sharing ratio of all.

23. a) A and B are partners in a business sharing profit and losses as A

3/5th and B 2/5th. Their Balance sheet as on January 2020 is given
below:
Liabilities Rs Assets Rs
Capital A 20,000 Machinery 19,500
B 15,000 35,000 Stock 16,000
Reserve 15,000 Debtors 15,000
Sundry Creditors 7,500 Cash at bank 6,000
Cash in hand 1,000
57,500 57,500

B decides to retire from the business owing to illness and A takes it

over and the following valuation are made:
a) Goodwill of the firm is valued at Rs. 15,000
b) Depreciate Machinery by 7.5% and stock by 15%
c) A Bad debts provision is raised against Debtors at 5% and a
Discount Reserve against Creditors at 2.5%.
Journalise the above transaction in the books of the firm, prepare
ledger accounts and the balance sheet of A.
(or)
b) X,Y and Z were partners sharing profits in the ratio of 2:2:1. Z
retires and his share was taken up by X and Y in the ratio of 3:2.
Calculate new profit sharing ratio of X and Y.

24. a) A, B and C sharing profits in the Ratio of 3:2:1, agreed upon

Dissolution of a Firm.A was appointed to to realise the Asstes and
pay off the liabilities for which he was entitled to a lump sum of Rs
1,000.

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 The Balance Sheet of the firm on 31st Dec 2020 was as under:

Liabilities Rs Assets Rs
Capitals: A 50,000 Machinery 40,500
B 20,000 Stock 7,500
Creditors 18,500 Investments 20,000
Investment 6,000 Debtors 9,300
Fluctuation
Fund
Less:Provision 8,700
600
C’s Capital 11,500
Cash 6,300
94,500 94,500
The Investments are taken over by A for Rs 18,000. B takes over all
the stocks at Rs 7,000 and Debtors amounted to Rs 5,000 at Rs
4,500. Machinery is sold for Rs 55,000. The remaining Debtors
realise 50% of the Book value.
Prepare ledger accounts on completion of the Dissolution of the
Firm.

(or)
b) A, B and C are Partners Sharing Profit & Losses as 3:2:1. The
Following is their Balance Sheet as at 31 Dec 2021 when they
dissolve the Business.

Liabilities Rs Rs Assets Rs
Creditors 90,000 Land & 80,000
Buildings
General 6,000 Furniture & 12,000
Reserve Fittings

Bank 30,000 Plant & 30,000

Overdraft Machinery

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 Capital Stock in 18,000
Account Trade
A 54,000
B 40,000 Sundry 60,000
Debtors
C 25,000 1,19,000 Investments 35,000
Cash & 10,000
Bank
Balance
2,45,000 2,45,000
The Assets are realized gradually. After meeting the expenses of
realization, the first Instalment of realization includes Cash and
Bank Balance fetches Rs 75,000, the second Rs 32,000, the third
Rs 60,000 and fourth Rs 63,000.
If Distribution amongst partners to be made after each Instalment
of Realisation,as far as possible, prepare a statement showing the
distribution of to Partners.

25. a) A and B are in partnership sharing profits and losses as to two-

thirds and one-third respectively. Their account since on 31st
December 2021 on which date they have agreed to convert their
partners into private company as follows:

Liabilities Rs Assets Rs
Sundry creditors 30,000 Cash 7,000
Household premises 10,000 Sundry debtors 26,000
A 20,000 Stock 16,000
B 10,000 30,000 Plant and machinery 5,000
Freehold machinery 16,000

70,000 70,000

The company takes over all the assets and liabilities with the
exception of the mortgage on freehold premises, the purchase price
being Rs,60,000 payable as to Rs.12,000 in cash, Rs 24,000 in
debentures and the balance in equity share of the company.
Close the books of the firm after the above transaction have been

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 carried out including the payment of mortgage. The partners agree
to share the debentures and shares in proportion of their capital.

(or)
b) Blue, white and grey are in partnership. Their profit-sharing ratio
is 1/2, 1/3 and 1/6 respectively. They decided to convert their firm
into a private limited company as BWG private Limited on 31st
March 2021. Their balance sheet as at the date was as follows:
Liabilities Rs Assets Rs
Creditors 8,000 Land and 11,400
Building
Capital: Stock 10,000

Blue 17,400
Debtors
10,000
Grey 8,000 Less: Provision 9,000
1,000
White 6,000 Cash 6,000
P&L 3,000
39,400 39,400
BWG Private Ltd was incorporated on 31st March 2021 with an
Authorised capital of Rs.50,000 (500 shares of Rs.100 each) for the
purpose of purchasing and continuing the partnership business of
Blue, Grey and White. Rs.32,900 was the purchases price, which was
paid by allotment of 180 share (fully paid) in BWG Private Ltd and
the balance in cash. The company then issued the remaining shares
to Pink and Orange in equal proportion, who paid for them in full.
Pass the journal entries necessary to close the books.

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 SECTION-C (3×10=30)
Answer any THREE questions.
26. A, B and C are Partners in a Firm with a Capital of Rs 40,000, Rs
24,000, Rs 20,000 respectively on 1.1.2015. The Partnership Deed
contains the following Clauses:
1. Interest on Capital @ 5% p.a
2. Interest on Drawings @ 4% p.a
3. A to get a Salary@ Rs 400 per month
4. B and C to get 10% Commission each on the Net Profit
5. P&L to be shared : (i) Upto Rs 4,500 in the Ratio of 4:3:2
(ii) Above Rs 4,500 equally
The Net Profit of the firm for the year ended 31 Dec 2015 amounts to
Rs 20,500 and the Drawings of the Partners are: A Rs 2,400; B Rs 1,600
and C Rs 1,000.
Prepare P&L Appropriation account and capital accounts of the
Partners assuming (i) Capitals are fixed (ii) Capitals are fluctuating.

27. X and Y were in Partnership sharing Profits and Losses in the ratio of
3:1. On 31st December 2021, Balance Sheet stood as under:
Balance Sheet of X and Y
as on 31st December 2021

Rs. Rs.
Sundry Creditors 37,500 Cash at Bank 22,500
Capitals: Bills Receivable 3,000
X 40,000 Sundry Debtors 16,000
Y 10,000 Stock 20,000
Furniture 1,000
Buildings 25,000

87,500 87,500
On that date they admit Z as a new partner on the following terms:
(a) To Create a goodwill in the firm for Rs. 20,000

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 (b) Stock and Furniture to be depreciated by 10%
(c) Buildings to be Appreciated by 20%
(d) Reserve for doubtful debts to be created to the extent of 5% on
Debtors.
Z pays Rs.10,000 as his share of capital.
Pass journal entries to give effect to these arrangements, and show
the revaluation Account, Capital Accounts and the Balance sheet of
the new firm.

28. A, B and C were carrying on a business in partnership sharing profits

and losses in the ratio of 2:2:1. On 31st December, 2021 Balance sheet
was as. follows:

Rs Assets Rs
Liabilities
Capital A 30,000 Sundry 55,000
Assets
B 20,000 Bank 15,000
C 10,000
Creditors 10,000
70,000 70,000
On that Date, C decides to retire. The value of Goodwill to be
Rs 15,000 and Sundry Assets are taken to have increased in value by
Rs 25,000.
On C’s retirement, D is admitted as a partner. He pays no premium
for Goodwill but brings in Rs 15,000 as Capital. P&L are to be shared
in the Ratio of 4:3:3.
Show Capital accounts.

29. A and B were in equal Partnership. Balance sheet as on 31st

December 2021 when the firm was Dissolved.

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 Liabilities Rs Assets Rs
Creditors 3,200 Machinery 1,200
A’s Capital 400 Furniture 300
Debtors 500
Stock 400
Cash 180
B’s Drawings 1,020
3,600 3,600
The Assets realized as under:
Machinery Rs 600 Debtors Rs 400
Furniture Rs 100 Stock Rs 300
The Expenses of Realisation amount to Rs 140. A’s Private estate is
not sufficient to pay his Private Debts, whereas in B’s Private estate
there is a Surplus of Rs 140 only.
Give necessary accounts to Close the Books of the Firm.

30. S, D and B are partners in a firm, sharing profits and losses in the
ratio 3 : 2 : 1, respectively. The balance sheet of the firm as on 31st
December, 2020, in given below:
Liabilities Rs. Assets Rs.
Sundry Creditors 30,000 Plant & Equipment 60,000
Capital Account: Debtors 50,000
S 60,000 Bills receivables 8,000
D 40,000 Stock 25,000
B 20,000 1,20,000 Cash at Bank 5,000
Cash in hand 2,000
1,50,000 1,50,000

The partners agree to sell the Business to a limited company which

was incorporated with 65,000 shares of Rs.10 each. The purchasing
company agrees to take over the assets and liabilities and discharge
the purchase consideration by the issue of 8,250 shares of Rs.10 each

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and cash Rs. 56,000. The cost of dissolution Rs.2,500 is paid by the
firm and balance amount of cash is distributed among the partners.
You are asked to prepare Journal entries and necessary ledger
Accounts in the books of the firm and opening Journal entries in the
Books of Ltd. Co.

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