The following purchases were made by a business house having three departments.

Dept. A - 1,000 units

Dept. B - 1,000 units at a total cost of Rs. 1,00,000
Dept. C - 1,000 units
Stock on 1st January were:
Dept. A - 120 units
Dept. B - 80 units
Dept. C - 152 units
Sales were:
Dept. A - 1020 units at Rs.20 each
Dept. B -1920 units at Rs.22.50 each
Dept.C - 2496 units at Rs.25 each
The rate of gross profit is same in each case. Prepare Departmental trading account.

From the following details, prepare departmental trading accounts.

Dept. A Dept.B
Opening Stock 9,000 8,400
Total purchases 27,000 21,600
Total Sales 42,000 36,000
Closing Stock 10,800 4,800
Credit purchases 17,000 10,600
Credit sales 5,000 6,000
You are given the following particulars of a business having three departments.
Purchase Opening Stock Closing Stock
Dept. A 1,500 units 200 units 100 units
Dept. B 1,000 units 300 units 160 units
Dept. C 2,000 units 150 units 200 units

Additional information:
a) Purchases were made at a total cost of Rs.92,000
b) The percentage of gross profit on turnover is the same in each case.
c) Purchase and sale price are constant for the last 2 years
d) Selling price per unit:
Dept. A –Rs.20
Dept. B-Rs.25
Dept. C- Rs.30
You are required to prepare Department Trading Account.

The following information is given by balan, a merchant, for the year ended 31.12.1996.
Rs Rs.
Sales: Dept. I 70,000 Purchases: Dept. I 43,000
Dept.II 30,000 Dept. II 25,000
Stock (1.1.1996) Salary 5,400
Dept. I 3,400
Dept.II 1,100
Debtors 23,000 Commission 2,200
Office furniture 1,080 Advertisement 5,800
Rent 1,800 Bank charges 120
Insurance 2,400 Stationery 2,700
Wages 10,000

Provide depreciation at 10% on furniture. Bad debts Rs.300. Create 10% provision for
discount on debtors. Stock position on 31-12-1996. Dept.I Rs.4,000 and Dept. II Rs.1680.
From the above information prepare the departmental trading and profit and loss account.
Expenses are allocated on the basis of sales.
Prepare departmental trading accounts of a firm.
Dept.I Dept.II
Stock on 1.1.2009 15,000 18,000
Purchase 23,000 30,000
Sales 40,000 60,000
Gross profit ratio 20% 30%

Mehta Ram Nagar purchased goods for his three departments as follows.
Dept. X - 200 units
Dept. Y - 1,400 units at a total cost of Rs. 5,100
Dept. Z - 400 units
Stock on 1st January were:
Dept. X - 100 units
Dept. Y - 400 units
Dept. Z - 60 units
Sales were:
Dept. X - 180 units at Rs.15 each
Dept. Y - 1,500 units at Rs.18 each
Dept. Z - 450 units at Rs.6 each
The rate of gross profit is same in each case. Prepare Departmental trading account.
 From the following data prepare Departmental trading and Profit and loss account and
thereafter the combined income account reveling the concern’s true results for the year ended
31.12.1989.
Dept.A Dept.B
Stock (1st January) 40,000 -
Purchases from outside 2,00,000 20,000
Wages 10,000 1,000
Transfer of goods from Dept. A - 50,000
Stock (31.12.1989) 30,000 10,000
Sales to outsiders 2,00,000 71,000

B’s entire stock represents goods from Dept. A transfers them at 25% above the cost.
Administrative expenses came to Rs.15,000 to be allocated to A and B in the ratio of 4:1
respectively.

A firm had two departments M and N, M department supplies goods to N department at

its usual selling price. From the following figures, prepare Departmental Trading and Profit and
Loss A/c for the year 2000.
Particulars Department-M Department-N
Rs. Rs.
Opening stock 1-1-2000 30,000 -
Purchases 2,10,000 -
Transfer to N department 50,000 50,000
Sales 2,00,000 60,000
Closing stock (31.12.2000) 40,000 10,000
Salaries 12,000 1,000
Other expenses 3,000 500
Postage 500 100
Discounts received 2,500 1,000
 M/s.Vijay cloth stores submitted the following particulars and information about their
departmental stores for the year ended 31st December 1986.
Particulars Hosiery Garments Cloth Rs.
Rs. Rs.
Opening stock 33,000 27,000 1,05,000
Purchases less returns 90,000 60,000 2,25,000
Sales less returns 1,80,000 1,20,000 2,70,000
Wages 15,000 9,000 -
Closing stock 21,000 72,000 81,000

Expenses paid:
Particulars Rs.
Salaries 60,000
Rent 10,800
Printing 4,800
Electricity 2,160
Sundry expenses 2,850

1. Transfers from cloth department to hosiery Rs.6,000 and to Garments Rs.63,000

2. Salaries Rs.48,000 were paid to 20 salesmen on an uniform scale. The number of
salesmen in the three departments were 4,5 and 11 respectively. Allocate the remaining
salary in equal proportion to the three departments.
3. Space occupied by the departments was equal.
4. Printing expenses were to be apportioned in 1:1:2 ratio respectively.
5. The electricity points in each department were 3,4 and 9 respectively.
Prepare the departmental trading and profit and loss account for the year ended. 31st
December 1986.
A company carries on its business through five departments viz, A,B,C,D and E. The
Trial Balance on 31.12.1984 was as follows:
A B C D E
Opening Stock 10,000 6,000 15,000 8,000 9,000
Purchases 1,00,000 60,000 20,000 52,000 60,000
Sales 96,000 62,000 19,000 46,000 60,000
Closing Stock 23,000 8,000 6,000 2,000 11,000

The opening and closing stock have been valued at cost. The expenses, which are to be
charged to each department in proportion to the cost of goods sold in the respective
departments are as follows.
Salaries and Commission Rs.11,020
Rent and Rates Rs. 2,900
Miscellaneous expenses Rs. 2,610
Insurance Rs. 1,160
Show the final result and the percentage on sales in each department and also the
combined result with percentage on sales.

Dissolution of Firm

Ram, Rahim and Suresh share profits in the ratio 3:2:1. On 31.12.1994, their Balance
Sheet was as follows:
Liabilities Rs Assets Rs.
Capital: Machinery 25,0000
Ram 20,000 Stock 11,000
Rahim 15,000 Debtors 9,500
Suresh 10,000 Goodwill 13,000
General Reserve 3,000 Cash 1,500
Creditors 12,000
60,000 60,000

On the above date, the firm was dissolved, The assets except cash realized Rs.60,000.
The Creditors were settled at Rs.11,500. Dissolution expenses amounted to Ts.800. Give
necessary ledger A/Cs.
A,B and C are in partners sharing profits and losses in the proportion of 4:3:2. Their
balance sheet on 31-12-1996 stood as follows.
Liabilities Rs. Assets Rs.
Capital Accounts: Land and Building 5,500
A 4,000 Stock in trade 2,000
B 2,000 Debtors 1,000
C 500 Cash in hand 1,500
Creditors 3,500
10,000 10,000

They agree to dissolve partnership as from 31st Dec.1996. ‘A’ agrees to take over the
stock at a valuation of Rs.1,500 and the debtors at a valuation of Rs. 700 (no cash
passes). The land and building are sold at auction for Rs.2,700. Close the books of the
firm.

S and W are partners in a firm sharing profits and losses in the ratio of 4:1. They decided
to dissolve the partnership on 31.3.1993 on which date their Balance sheet stood as
under:

Liabilities Rs. Assets Rs.

Capitals: Plant 1,20,000
S 1,60,000 Furniture 4,000
W 60,000 Debtors 90,000
Less: Provision 4,000 86,000
Bank loan 20,000 Trade Marks 12,000
Creditors 80,000 Stock 60,000
Cash 28,000
Advertisement Suspense 10,000
3,20,000 3,20,000

The realization showed the following results:

i) Debtors realized 90% of the book value.
ii) Trade mark Rs.8,000.
iii) Goodwill was sold for Rs.10,000
iv) Plant and stock were taken over by S for Rs. 1,44,000 and Rs.36,000 respectively.
v) An unrecorded asset estimated at Rs.6,000 was sold for Rs.2,000.
Discounts amounting to Rs.800 were allowed by creditors while paying their
claims. Expenses of realization amounted to Rs.4,000. Prepare Realization A/C,
Bank A/C and Partners Capital accounts assuming that settlement was made on
1.4.1993.
Following is the Balance Sheet of M/s. A, B and C who share profits and losses in the
ratio of 2:2:1.
Liabilities Rs. Assets Rs.
Sundry creditors 15,000 2,000
Capitals: 12,000
A 15,000 22,000
B 12,000 10,000
C 4,000
46,000 46,000

The firm was dissolved and assets were realized gradually, Rs.10,000 were received
once, Rs.15,000 another time and Rs.9,000 finally. Show how each installment is to be
paid.

P, Q and R share profits in the proportions of ½ , ¼ and 1/4 . on the dissolution, the
Balance sheet showed as follows:
Liabilities Rs. Assets Rs.
Creditors 14,000 Sundry Assets 40,000
Capital
P 10,000
Q 10,000
R 6,000
40,000 40,000

The assets realized Rs.34,000 which were received in instalments of Rs.14,000,

Rs.10,000 and Rs.10,000 respectively. Show how the proceeds should be distributed as
and when received.
 Ammu, Bimmu and Chammu are in partnership. The following is their balance
sheet as at 31.12.94 on which date they dissolve partnership. They share profits in the
ratio of 5:3:2.
Liabilities Rs. Assets Rs.
Creditors 40,000 Premises 68,000
Ammu’s loan 10,000 Furniture 2,000
Capitals: Stock 30,000
Ammu 50,000 Debtors 60,000
Bimmu 25,000
Chammu 35,000
1,60,000 1,60,000
It was agreed to repay the amount due to the partners as and when the assets were
realized viz.,
Rs.
March 1, 1995: 30,000
April 1,1995 10,000
June 1,1995 50,000
Prepare a statement showing how the distribution should be made and write up the cash A/c.

X, Y and Z are in partnership sharing profits and losses as 3:2:1. They decide to dissolve their
partnership and the balance sheet as at the date is as follows:
Liabilities Rs. Assets Rs.
Capitals: Buildings 26,000
X 30,000 Furniture 8,000
Y 20,000 Debtors 40,000
X’s loan A/c 15,000 Stock 17,000
Creditors 35,000 Cash 4,000
C’s Capital 5,000
1,00,000 1,00,000
The assets other than cash realize Rs.80,000 and expenses of winding up amount Rs.10,000. X
and Y are solvent but “Z” is unable to bring anything. Close the books of the firm.
P, Q and R share profits in the proportions of 1/2, 1/4 and 1/4. On the dissolution, the Balance
sheet showed as follows:
Liabilities Rs. Assets Rs.
Creditors 14,000 Sundry Assets 40,000
Capital
P 10,000
Q 10,000
R 6,000
40,000 40,000

The assets realized Rs.35,500. Creditors were paid in full. Realization expenses
amounted to Rs.1,500. Close the books of the firm.

A and B equal partners in a manufacturing business, agreed to dissolve the partnership as on 31st
December 1994. On that date their balance sheet was as follows:

Liabilities Rs. Assets Rs.

Capital A 19,000 Freehold premises 18,000
Capital B 7,000 Goodwill 2,000
Creditors 6,400 Furniture and fittings 2,400
Loan from A 4,000 Sundry debtors 5,840
Stock in trade 4,530
Cash 3,630
36,400 36,400

It was agreed that A should take over the freehold premises at a valuation of Rs.15,500
and that B should take over stock at a discount of 10%. The sundry debtors realized 95%
of the book value. Furniture and fittings realised Rs.1,470 and the goodwill of the
business was sold only for Rs.500. the expenses of realization were Rs.827. you are
required to show the result of the Realization account and the capital accounts.
A, B and C are equal partners in a firm and on 31st Dec.2000, their balance sheet stood as follow:
Liabilities Rs. Assets Rs.
Creditors 10,000 Bank 200
Bills Payable 3,200 Debtors 16,000
General Reserve 9,000 Stock 25,000
Capital Accounts: Bills Receivable 5,000
A 21,000 Machinery 15,000
B 13,000
C 5,000
61,200 61,200

“C” became insolvent and his private estate could pay only Rs.100. the firm was
dissolved. Assets realized Rs.31,000 realization expenses came to Rs.600. prepare
necessary ledger A/c to close the books of the firm. (Apply GARNER Vs. MURRY) rule.

ADMISSION
X and Y are partners sharing profits in the Ratio of 3:2. They admit Z as a partner
for 1/5th share in future profit. Calculate ne Ratio.

Goodwill is valued on the basis of 2 years purchase of average profits of the

preceding three years. The profits of the previous three years were: 2004 Rs.44,000;
2005:Rs.56,000; Rs.68,000.
Calculate (a) Average Profit, (b) Value of Goodwill.
Calculate the amount of goodwill in the following case:
The year’s purchase of the last four years average profit is agreed as the
goodwill value. The profits and losses for the four years are:
Rs. Rs.
I year 5,000 II year 8,000
III year 3,000 (loss) IV year 6,000

From the following information, calculate the value of goodwill, at 3 years

purchase of super profit.
a) Average capital employed in the business Rs.6,00,000
b) Net trading profit of the firms for the past three years were Rs.1,07,600,
Rs.90,700 and Rs.1,12,500
 c) Rate of interest expected from capital having regard to the risk involved is
12%.
d) Fair remuneration to the partners for their services Rs.12,000 p.a.

Raman and Laxman were partners sharing profit and losses in the ratio of 4:3. In view of
Velan’s admission, they decided to revalue the assets and liabilities as indicated below:
a) To increase the value of buildings by Rs.60,000
b) Provision for doubtful debts to be decreased by Rs.800.
c) To decrease machinery by Rs.16,000; Furniture by Rs.4,000 and stock by Rs.12,000.
d) A provision for outstanding liabilities to be created at Rs.800. Show the revaluation
account.

Sayee and Sekar are partners sharing profits in the ratio of 5:3. In view of Subbu’s
admission, they decided to revalue their assets and liabilities as indicated below:
a) To increase the value of building by Rs.32,000.
b) To bring into record at Rs.14,000, investments which have not so for been brought into
account.
c) To decrease stock by Rs.12,000 and furniture by Rs.11,000.
d) To write off sundry creditors by Rs.11,000. Show the profit or loss on revaluation.

A and B are partners sharing profits in the ratio of 3:2. Following is the balance sheet of
the firm as on 31.3.2000.
Liabilities Rs. Assets Rs.
Capitals: Cash 5,000
A 20,000 Stock 9,000
B 19,000 Debtors 20,000
Less: Provision 2,000 18,000
Salary outstanding 6,000 Bills receivable 7,500
 Creditors 19,000 Investments 7,000
Furniture 2,500
Building 15,000
64,000 64,000

At this date when ‘C’ is to be admitted, it is found that estimated value of provision for
doubtful debts is Rs.3,250, furniture Rs.2,250 and Building Rs.22,500 whilst investments
not recorded in the books were worth Rs.2,150 and a contingent liability of Rs.600 has
become a certain liability. Prepare revaluation account.

Lokesh and Rajesh are equal partners. Their Balance sheet on 31.12.2001 was as follows:
Liabilities Rs. Assets Rs.
Creditors 20,000 Bank 10,000
Capitals: Debtors 20,000
Lokesh 50,000 Stock at cost 15,000
Rajesh 30,000 Investments (Cost 12,000
Rs.15,000)
Fixed Assets 43,000
1,42,000 1,42,000

On the above date, Nitish was admitted on the following conditions:

i) The new profit sharing will be 5:3:2.
ii) Create 10% provision for discount on creditors.
iii) Write off Rs.2,000 as bad debts and create 5% provision for doubtful debts.
iv) Value stock at its market value or Rs.20,000.
v) Depreciate fixed assets by 15%.
vi) Record investment at its cost.
vii) Niitsh to bring Rs.20,000 as his capital.
Prepare Revaluation account, capital accounts of partners and new Balance sheet.

A, B and C are partners in a business sharing profits and losses in the ratio of 3:2:1. Their
Balance Sheet on 30.6.1988 was as follows:
Liabilities Rs. Assets Rs.
Creditors 1,600 Cash in hand 600
Reserve Fund 6,000 Cash at bank 1,000
Capitals: Sundry Debtors 9,000
A 10,000 Stock in trade 7,000
B 10,000 Machinery 6,000
 C 10,00 Factory Building 14,000
37,600 37,600

On that date C retires from business. It is Agreed to adjust the value of assets as follows:
a) To make a provision of 5% on Sundry debtors for doubtful debts.
b) To depreciate Stock by 5% and Machinery by 10%.
c) Factory building to be revalued at Rs.15,700.
Show the Revaluation A/C. Partners’ Capital A/C and Balance sheet of the new firm.

X,Y and Z were carrying on business in partnership sharing profits and losses in the ratio
of 3: 2: 1 respectively. On 31.12.2010 Balance Sheet of the firm were as follows:
Liabilities Rs. Assets Rs.
Creditors 40,770 Cash 17,700
Capitals: Debtors 24,000
X 45,000 Stock 35,070
Y 30,000 Building 69,000
Z 30,000
1,45,770 1,45,770

Y retired on the above mentioned date on the following terms.

i) Goodwill of the firm be valued at Rs.27,000.
ii) Buildings be appreciated by Rs.21,000.
iii) Reserve for a bad debtors be made @ 5% on debtors.
iv) Rs.15,000 be paid to Y immediately and the balance due to him be treated as loan
carrying interest at 6% p.a.
Show the necessary accounts.