Dissolution + Single Entry

CA-FOUNDATION PRINCIPLES & PRACTICE OF ACCOUNTING
Accounting for Incomplete Records

1. A trader keeps his books of account under single entry system. On 31st March, 2023 his statement
of affairs stood as follows :
Receipts Rs. Payments Rs.
Cash in Hand and at Bank on 1 st 80,000 Payments to trade creditors 75,07,000
April, 2022 Payments for Bills Payable 8,15,000
Cash Sales 73,80,000 Sundry Expenses Paid 6,20,700
Receipts from Trade Debtors 15,10,000 Drawings 2,40,000
Receipts for Bills Receivable 3,40,000 Cash in Hand and at Bank om 31 st 1,27,300
March, 2023
93,10,000 93,10,000
Discount allowed to trade debtors and received from trade creditors amounted to Rs. 36,000 and Rs.
28,000 respectively. Bills endorsed amounted to Rs. 15,000. Annual Fire Insurance Premium of Rs. 6,000
was paid every year on 1st August for the renewal of the policy. Furniture, fixtures and fittings were subject
to depreciation @ 15 per annum on diminishing balances method.
You are also informed about the following balances as on 31 st March, 2023 :
Particulars Rs.
Stock 6,50,000
Trade Debtors 1,52,000
Bills Receivable 75,000
Bills Payable 1,40,000
Outstanding Expenses 5,000
The trader maintains a steady gross profit ratio of 10% on sales.
Prepare Trading and Profit and Loss Account for the year ended 31 st March, 2023 and Balance
Sheet as at that date.
2. The books of account of Ruk Ruk Maan of Mumbai showed the following figures:
Particulars 31.3.2018 Rs. 31.3.2019 Rs.
Furniture and Fixtures 2,60,000 2,34,000
Stock 2,45,000 3,20,000
Debtors 1,25,000 ?
Cash in Hand and Bank 1,10,000 ?
Creditors 1,35,000 1,90,000
Bills Payable 70,000 80,000
Outstanding Salaries 19,000 20,000
An analysis of the cash book revealed the following :

Particulars Rs.
Cash sales 16,20,000
Collection from debtors 10,58,000
Discount allowed to debtors 20,000
Cash purchases 6,15,000
Payment to Creditors 9,73,000
Discount received from creditors 32,000
Payment for bills payable 4,30,000
Drawings for domestic expenses 1,20,000
Salaries paid 2,36,000
Rent Paid 1,32,000
Sundry trade expenses 81,000
CA NIKHIL JAJU Page |1

Depreciation is provided on furniture & fixtures @ 10% p.a. on diminishing balance method. Ruk Ruk
Maan maintains a steady gross profit rate of 25% on sales.
You are required to prepare trading and profit and loss account for the year ended 31 st March,
2019 and balance Sheet as on that date.
3. The details of Assets and Liabilities of Mr. ‘A’ as on 31-3-2022 and 31-3-2023 are as follows:
Particulars 31.3.2022 31.3.2023
Rs. Rs.
Assets:
Furniture 50,000 ?
Building 1,00,000 ?
Stock 1,00,000 2,50,000
Sundry Debtors 60,000 1,10,000
Cash in hand 11,200 13,200
Cash at Bank 60,000 75,000
Liabilities:
Loans 90,000 70,000
Sundry Creditors 50,000 80,000
Mr. ‘A’ decided to provide depreciation on building by 2.5% and furniture by 10% for the period ended
on 31-3-2023. Mr. ‘A’ purchased jewellery for Rs. 24,000 for his daughter in December 2022. He sold his
car on 30-3-2023 and the amount of Rs. 40,000 is retained in the business.
You are required to :
(i) Prepare statement of affairs as on 31-3-2022 and 31-3-2023.
(ii) Calculate the profit received by ‘A’ during the year ended 31-3-2023.
4. Ram carried on business as retail merchant. He has not maintained regular account books. However, he
always maintained Rs. 10,000 in cash and deposited the balance into the bank account. He inform you
that he has sold goods at profit of 25% on sales.
Following information is given to you:
Assets and Liabilities As on 1.4.2020 As on 31.3.2021
Cash in Hand 10,000 10,000
Cash at Bank 50,000 (Cr.) 80,000 (Dr.)
Sundry Debtors 1,00,000 3,50,000
Stock in Trade 2,80,000 ?
Ram’s Capital 3,00,000 ?
Analysis of his bank pass book reveals the following information :
(a) Payment to creditors Rs. 7,00,000.
(b) Payment for business expenses Rs. 1,20,000.
(c) Receipts from debtors Rs. 7,50,000.
(d) Loan Rs. 1,00,000 taken on 1.10.2020 at 10% per annum.
(e) Cash deposited in the bank Rs. 1,00,000.
He informs you that he paid creditors for goods Rs. 20,000 in cash and salaries Rs. 40,000 in cash. He
has drawn 80,000 in cash for personal expenses. During the year Ram had not introduced any additional
capital Surplus cash, if any, to be taken as cash sales. All purchases are on credit basis.
Prepare Trading and Profit and Loss Account and Balance Sheet as at 31 st March, 2021.
5. From the following details furnished by Mittal ji, prepare Trading and Profit and Loss account for
the year ended 31.3.2021. Also draft his Balance Sheet as at 31. 3. 2021:

Particulars 1.4.2020 31.3.2021
Rs. Rs.
Creditors 3,15,400 2,48,000
Expenses outstanding 12,000 6,600
Plant and Machinery 2,32,200 2,40,800
Stock in hand 1,60,800 2,22,400
Cash in hand 59,200 24,000
Cash at Bank 80,000 1,37,600
Sundry Debtors 3,30,600 ?
Details of the year’s transactions are as follows:
Cash and discount credited to debtors 12,80,000
Returns from debtors 29,000
Bad debts 8,400
Sales (Both cash and credit) 14,36,200
Discount allowed by creditors 14,000
Returns to creditors 8,000
Capital introduced by cheque 1,70,000
Collection from debtors ( Deposited into bank after receiving cash) 12,50,000
Cash purchases 20,600
Expenses paid by cash 1,91,400
Drawings by cheque 8,600
Machinery acquired by cheque 63,600
Cash deposited into bank 1,00,000
Cash withdrawn from bank 1,84,800
Cash Sales 92,000
Payment to creditors by cheque 12,05,400
Note : Mittalji has not sold any machinery during the year.
6. The following balances appeared in the books of M/s Sunshine Traders :

Particulars As on 31-03-2018 As on 31-03-2019
Rs. Rs.
Land and Building 2,50,000 2,50,000
Plant and Machinery 1,10,000 1,65,000
Office Equipment 52,500 42,500
Sundry Debtors 77,750 1,10,250
Creditors for Purchases 47,500 ?
Provision for office expenses 10,000 7,500
Stock ? 32,500
Long Term loan from ABC Bank @ 10% p.a. 62,500 50,000
Bank 12,500 ?
Capital 4,65,200 ?
Other information was as follows:

Particulars In (Rs.)
Collection from Sundry Debtors 4,62,500
Payment to Creditors for Purchases 2,62,500
Payment of office Expenses 21,000
Salary paid 16,000
Selling Expenses paid 7,500
Total sales 6,25,000
Credit sales (80% of Total sales)
Credit Purchases 2,70,000
Cash Purchases (40% of Total Purchases)
Gross Profit Margin was 25% on cost
Discount Allowed 2,750
Discount Received 2,250
Bad debts 2,250
a. Depreciation to be provided as follows:
i. Land and Building – 5% p.a.
ii. Plant and Machinery – 10% p.a.
iii. Office Equipment – 15% p.a.
b. On 01. 10. 2018 the firm sold machine having book value, Rs. 20,000 at a loss of Rs. 7,500. New
machine was purchased on 01. 01. 2019.
c. Office equipment was sold at its book value on 01. 04. 2018.
d. Loan was partly repaid on 31. 03. 2019 together with interest for the year.
You are required to prepare to Trading and Profit and Loss account for the year ended 31 st March
and Balance Sheet as on 31 st March, 2019.
7. Archana Enterprises maintain their books of account under single entry system. The Balance Sheet
as on 31st March, 2018 was as follows:
Liabilities Amount (Rs.) Assets Amount (Rs.)
Capital A/c 6,75,000 Furniture and Fixtures 1,50,000
Trade creditors 7,57,500 Stock 9,15,000
Outstanding expenses 67,500 Trade debtors 3,12,000
Prepaid Insurance 3,000
Cash in hand and at bank 1,20,000
15,00,000 15,00,000
The following was the summary of cash and bank book for the year ended 31 st March, 2019:
Receipts Amount (Rs.) Payments Amount
(Rs.)
Cash in hand & at Bank on 1 st 1,20,000 Payment to trade creditors 1,24,83,000
April, 2018 Sundry Expenses paid 9,31,050
Cash Sales 1,10,70,000 Drawings 3,60,000
Receipts from trade Debtors 27,75,000 Cash in hand & at Bank on 31st 1,90,950
March, 2019
1,39,65,000 1,39,65,000
Additional Information:
(i) Discount allowed to trade debtors and received from trade creditors amounted to Rs. 54,000 and
Rs. 42,500 respectively (for the year ended 31 st March, 2019).
(ii) Annual fire insurance premium of 9,000 was paid every year on 1 st August for renewal of the policy.
(iii) Furniture and Fixtures were subject to depreciation @ 15% p.a. on diminishing balance method.
(iv) Stock Rs. 9,75,000
Trade debtors Rs. 3,43,000
Outstanding expenses Rs. 55,200
(v) Gross profit ratio of 10% on sales is maintained throughout the year.
You are required to prepare Trading and Profit & Loss account for the year ended 31 st March, 2019
and Balance Sheet as on that date.

8. Mr. Prakash furnishes following information for his readymade garments business :
(i) Receipts and Payments during 2019-20:
Receipts Amount Rs. Payments Amount Rs.
Bank Balance as on 1-4-2019 16,250 Payment to Sundry
Received from Sundry Debtors 4,81,000 Creditors 3,43,000
Cash Sales 1,70,800 Salaries 75,000
Capital introduced during the year 50,000 General Expenses 22,500
Interest on Investments Received 9,750 Rent and taxes 11,800
Drawings 96,000
Cash Purchases 1,22,750
Balance at Bank on 31-03-2020 36,600
Cash in hand on 31-03-2020 20,150
7,27,800 7,27,800
(ii) Particulars of other Assets and Liabilities are as follows:

Particulars 1st April, 2019 31st March, 2020
(Rs.) (Rs.)
Machinery 85,000 85,000
Furniture 24,500 24,500
Trade Debtors 1,55,000 ?
Trade Creditors 60,200 ?
Stock 38,600 55,700
12% Investment 85,000 85,000
Outstanding Salaries 12,000 14,000
Additional information:
(i) 20% of Total sales and 20% of total purchases are in cash.
(ii) Of the Debtors, a sum of 7,200 should be written off as Bad debts and further a problem for doubtful
debts is to be provided @ 2%.
(iii) Provide depreciation @ 10% p.a. on Machinery and Furniture.
You are required to prepare Trading and Profit and Loss account for the year ended 31 st March,
2020 and Balance Sheet as on that date.
9. Mr. Aman is running a business of readymade garments. He does not maintain his books of
accounts under double entry system. While assessing the income of Mr. Aman for the financial
year 2018-19, Income Tax Officer feels that he has not disclosed the full income earned by him
from his business. He provides you the following information:
On 31st March, 2018
Sundry Assets Rs. 16,65,000
Liabilities Rs. 4,13,000
On 31 March, 2019
st
Sundry Assets Rs. 28,40,000

Liabilities Rs.5,80,000
Mr. Aman’s drawings for the year 2018-19 Rs. 32,000 per month
Income declared to the Income Tax Officer Rs. 9,12,000
During the year 2018-19, one life insurance policy of Mr. Aman was matured and amount received Rs.
50,000 was retained in the business.
State whether the Income Tax Officer’s contention is correct. Explain by giving your working.
10. Prepare necessary statements showing profit (OR loss) made during the year 2022 and the
balance sheet as at December 31, 2022 from the following information:

01-01-2022 31-12-2022
Cash 5,000 6,000
Bank 15,000 18,000
Debtors 10,000 8,000
Stock 8,000 12,000
Furniture 12,000 12,000
Creditors 4,000 6,000
During the year, the proprietor introduced Rs. 4,000 as further capital in the business. He has withdrawn
cash Rs. 20,000 out of which he spent Rs. 15,000 on 1-7-2022 for purchase of a scooter for business use.
Calculate net profit after making following adjustments.
a) Depreciation furniture @10% p.a.
b) Depreciate scooter @20% p.a.
c) Create provision for doubtful debts @ 5% of debtors balance as on 31-12-2022, and
d) Provide interest on capital in the beginning of the year @ 18%.
11. Prem commenced a business on 1st April, 2021 with a capital of Rs. 1,00,000. He immediately purchased
furniture and fixtures for Rs. 20,000. On 30 th September, 2021, he borrowed Rs. 50,000 from his wife @
9% per annum (interest not yet paid) and introduced a further capital of his own amounting to Rs. 11,500.
Prem drew @ Rs. 3,000 per month at the end of each month for the household expenses. On 31 st March,
2002, his position was as follows:
Cash in hand Rs. 28,000 sundry debtors Rs. 48,000, stock Rs. 68,000; bills receivables Rs. 16,000; creditors
Rs. 5,000; owing for rent Rs. 1,500.
Furniture and fixtures is to be depreciated by 10%.
Ascertain the profit or loss made by Prem during the year ended 31 st March, 2022.
12. Following information is available from records kept by Mr. A on single entry basis:
Particulars 1-1-2001 31-12-2001
Cash 20,000 18,000
Bank 30,000 33,000
Debtors 17,000 25,000
Stock 40,000 60,000
Fixed Assets 29,000 29,000
Creditors 52,000 32,000
Loan 10,000 10,000
Rs. 5,000 p.m. was withdrawn by the proprietor for household expenses. Interest on drawings is to be
charged on the amount withdrawn during the year @ 18% p.a. Rs. 30,000 realised by the proprietor as
maturity value of National Saving Certificates was invested in the business. He further introduced in the
business Rs. 15,000 borrowed from his wife. Manager was given salary for the month of January, 2002
in advance. Manager is entitled to a salary @ Rs. 6,000 p.m.
An unrecorded liability of Rs. 5,000 relating to year 2000 was paid during the year 2001.
Depreciate fixed assets @ 15% p.a., provide Rs. 1,000 for doubtful debts.
Prepare a statement showing net profit/loss and prepare balance sheet as at 31-12-2001.
13. From the following information supplied by Mr. X, calculate total sales:
Rs.
Capital in the beginning 1,20,000
Cash in hand in the beginning 40,000
B/R in the beginning 7,800
Debtors (opening) 30,800

Cash received from Y as loan 10,000
Cash received from Debtors 70,000
B/R encashed during the year 20,900
Bad Debts written off 2,800
Returns outward 10,000
Credit purchases 1,50,000
Cash paid to suppliers 30,000
Returns inward 8,700
B/R dishonoured 1,800
B/R at the end of the year 6,000
Debtors at the end of the year 25,500
Cash sales 40,900
Cash received from a customer whose account was closed last year because of his insolvency Rs. 500.
14. Following information is available from incomplete records kept by Mr. X :

Opening Closing
Cash 1,000 ?
Bank 32,500 ?
Debtors 73,600 82,500
Stock 91,000 92,600
Furniture 42,500 42,500
Creditors 45,400 52,600
Analysis of Pass Book reveals the following :

Cash Sales (Payment received by cheque) 67,300
Received from Debtors 3,26,500
Additional Capital Introduced 3,500
Payment to Creditors 2,16,000
Business Expenses 83,500
Personal Expenses 46,000
Income Tax 12,300
In addition, cash sales, cash purchases and cash expenses amounted to Rs. 12,500, Rs. 3,800 and Rs.
8,100. Respectively.
Prepare final accounts after taking into account the following:
a. Depreciation on furniture Rs. 2,500.
b. Bad Debts not recorded Rs. 3,500.
c. Outstanding Expenses Rs. 700.
15. From the following records kept on single entry basis, prepare final accounts for the year ending
December 31.
Opening Closing
Cash ? 5,000
Debtors 20,000 30,000
Stock 10,000 30,000
Fixed Assets 50,000 60,000
Creditors 15,000 25,000
Summary of transaction during the year is as follows:

a. Total Sales 30,000
b. Cash Purchases 12,000
c. Drawings 8,000

d. Cash for expenses 15,000
e. Purchases of Fixed Assets 10,000
f. Credit Sales Two third of total sales
g. Credit Purchases 22,000
h. Fresh capital 32,000
Adjustment to be made:
i. Depreciation on fixed asset at 10%. No depreciation is charged in the year of purchase of fixed assets.
ii. Prepaid business expenses on at the end amounted to Rs. 1,000.
iii. Provide 5% for doubtful debts.
16. Mr. Mukherjee commenced business on 1 st January, 2022, with a capital of Rs. 45,000. He immediately
purchased Furniture of Rs. 24,000. During the year he received from his uncle a gift of Rs. 3,000 and he
borrowed from his father a sum of Rs. 5,000. He had withdrawn Rs. 600 per month for his household
expansion. He had no Bank account and dealings were in cash. He did not maintain any books but
following information is given.
Particulars Rs.
Sales (including cash sales Rs. 30,000) 1,00,000
Purchases (including cash purchases Rs. 10,000) 75,000
Carriage Inwards 700
Wages 300
Discount allowed to Debtors 800
Salaries 6,200
Bad Debts written off 1,500
Trade Expenses 1,200
Advertisement 2,200
He used goods worth Rs. 1,300 for personal purposes and paid Rs. 500 to his son for examination and
college Fees. On 31st December, 2022, his Debtors were worth Rs. 21,000 and Creditors Rs. 15,000. Stock-
in-trade was valued at Rs. 10,000. Furniture to be depreciated by 10% p.a.
Prepare Trading and Profits and Loss Account for the year ended on 31 st December, 2022 and
Balance Sheet as at 31 st December, 2022.
17. M/s Rohan & Sons runs a business of Electrical goods on wholesale basis. The books of account
are closed on 31st March every year. The Balance Sheet as on 31 st March, 2019 is as follows:
Liabilities Rs. Assets Rs.
Capital 12,50,000
Fixed Assets 6,50,000
Trade Creditors 1,90,000
Closing Stock 3,75,000
Profit and Loss A/c 1,45,000
Trade Debtors 3,65,000
Cash and Bank 1,95,000
Total 15,85,000 Total 15,85,000
The management estimates the purchase & sales for the year ended 31 March, 2020 as under :
st
Particulars Upto 31. 01. 2020 February 2020 March 2020

(Rs.) (Rs.) (Rs)
Purchases 16,20,000 1,40,000 1,25,000
Sales 20,75,000 2,10,000 1,75,000
All sales and purchases are on credit basis. It was decided to invest Rs. 1,50,000 in purchase of Fixed
assets, which are depreciated @ 10% on book value. A Fixed Asset of book value as on 01.04.2019, Rs.
60,000 was sold for Rs. 56,000 on 31 st March, 2020.
The time lag for payment to Trade Creditors for purchases is one month and receipt from Trade debtors
for sales, is two months. The business earns a gross profit of 25% on turnover. The expenses against

gross profit amounts to 15% of the turnover. The amount of depreciation is not included in these
expenses.
Prepare Trading and Profit and Loss Account for the year ending 31 st March, 2020 and draft a
Balance Sheet as at 31 st March, 2020 assuming that creditors are all Trade creditors for purchases
and debtors are all Trade debtors for sales and there is no other current asset and liability apart
from stock and cash and bank balances. Prepare Cash and Bank account and Fixed Assets account
for the year ending 31 st March, 2020.
18. Mr. Arun runs a business of readymade garments. He closes the books of accounts on 31 st March.
The Balance Sheet as on 31 st March, 2020 was as follows:
Capital A/c 5,05,000 Furniture 50,000
Creditors 1,02,500 Closing Stock 3,50,000
Debtors 1,25,000
Cash in Hand 35,000
Cash at Bank 47,500
6,07,500 6,07,500
You are furnished with following information:
(1) His sales, for the year ended 31 st March, 2021 were 20% higher than the sales of previous year, out
of which 20% sales was cash sales.
(2) Total Sales during the year 2019-20 were Rs. 6,25,000.
(3) Payments for all the purchases were made by cheques only.
(4) Goods were sold for cash and credit both. Credit customers pay by cheques only.
(5) Depreciation on furniture is to be charged 10% p.a.
(6) Mr. Arun sent to the bank the collection of the month at the last date of each month after paying
salary of Rs. 2,500 to the clerk, office expenses Rs. 1,500 and personal expenses Rs. 625.
Analysis of bank pass book for the year ending 31 st March, 2021 disclosed the following:
Particulars Rs.
Payment to creditors 3,75,000
Payment to rent up to 31st March, 2021 20,000
Cash deposited into bank during the year 1,00,000
The following are the balances on 31 st March, 2021:

Particulars Rs.
Stock 2,00,000
Debtors 1,50,000
Creditors for goods 1,82,500
On the evening of 31st March, 2021, the cashier absconded with the available cash in the cash book.
You are required to prepare Trading and Profit and Loss A/c for the year ended 31 st March, 2021
and Balance Sheet as on that date. All the working should form part of the answer.
19. Following information was made available from the books of Mr. X:
Particulars 31-3-2024 31-3-2025
Cash at bank 3,500 8,500
Cash in hand 410 850
Stock 22,500 25,500
Sundry Debtors 18,000 ?
Bills Payable 20,000 18,000
Furniture and fittings 5,000 ?
Outstanding salary 200 -
The Cash Book analysis showed the following figures amongst others:
Receipts from customers 1,05,000 Furniture purchased (01-10-2024) 1,000
Discount allowed 1,300 Drawings 6,000
Salary upto 31-3-2025 2,600 Payment to creditors 19,000
Rent 3,600 Discount received 2,600
Trade expenses 8,500 Bills payable paid 80,000
Depreciation is provided on furniture and fittings @ 10% p.a. Mr. X informs you that he maintains a
steady gross Profit rate of 25% on sales.
Prepare final accounts for the year 2024-2025.
20. The following balances are available from the Books of a trader:
Opening Closing
Debtors ? 24,000
Creditors 16,000 ?
Stock ? 17,000
Building 30,000 30,000
Machinery 60,000 65,000
Furniture 5,000 5,000
Bank loan 10,000 8,000
Cash and Bank balance 14,000 11,000
Cash transactions during the year (excluding certain other items)

Collection from debtors 93,000 Business Expenses 10,000
Drawings 10,000 Payment to Creditors 61,000
Sale of Machinery (Book value 5,000) 3,000 Cash Purchases 16,000
Additional Information:
1. The Trader sells his goods at cost plus 33-1/3%
2. Discount allowed by creditors Rs. 1,000.
3. Credit purchases during the year were 80% of the total purchases and cash sales amounted to 10%
of sales Credit sales amounted to Rs. 90,000.
4. Depreciation on Machinery & Furniture by 10% and Building by 2% is to be charged.
5. Full year depreciation on fixed assets and no depreciation on fixed assets sold during the year is to
be charged.
Prepare Final Accounts of the Trader.
CA NIKHIL JAJU P a g e | 10
Dissolution of Partnership Firm
1. P, Q, and R were partners sharing profits and losses in the ratio of 3: 2: 1, no partnership salary or interest
on capital being allowed. Their balance sheet on 30th June, 2022 is as follows:
Fixed Capital: 50,000Fixed Assets:
P 20,000 Trademark 40,000
Q 20,000 Freehold Property 8,000
R 10,000 Plant and Equipment 12,800
Current Capital: 9,500 Motor Vehicle 700
P 500 Current Assets:
Q 9,000 Stock Trade 3,900
Loan from P 8,000 Debtors 2,000
Sundry Creditors 12,400 Less: Provision (100) 1,900
Cash at Bank 200
Miscellaneous losses
R's Current Account 400
Profit & Loss A/c 12,000
79,900 79,900
On 1st July, 2022 the partnership was dissolved. Motor Vehicle was taken over by Q at a value of Rs. 500
but no cash passed specifically in respect of this transaction. Sale of other assets realized the following
amounts:
Trademark Nil
Freehold Property 7,000
Plant and Equipment 5,000
Stock 3,000
Trade Debtors 1,600
Trade Creditors were paid Rs. 11,700 in full settlement of their debts. The costs of dissolution amounted
to Rs. 1,500. The loan from P was repaid, P and Q were both fully solvent and able to bring in any cash
required but R was forced into bankruptcy and was only able to bring 1/3 of the amount due.
You are required to prepare:
(i) Realization account (ii) Cash account
(iii) Partners Fixed Capital Accounts (after transferring Current Accounts’ balances)
2. Amal and Bimal are in equal partnership. Their Balance Sheet stood as under on 31st March, 2021:
Sundry Creditors 4,800 Plant & Machinery 2,500
Amal's Capital A/c 750 Furniture 500
Debtors 1,000
Stock 800
Cash 200
Bimal's drawings 550
5,500 5,500
The assets realized as under:
Plant & Machinery 1250
Furniture 150
Debtors 400
Stock 500
The expenses of realization amounted to Rs. 175. Amal's private estate is not sufficient even to pay his
private debts, whereas Bimal's private estate has a surplus of Rs. 200 only.
Show necessary ledger accounts to close the books of the firm.
3. A, B, C, and D sharing profits in the ratio of 4:3:2:1 decided to dissolve their partnership on 31st
March 2022 when their balance sheet was as under:
Sundry Creditors 15,700 Bank 535
Employees Provident Fund 6,300 Debtors 15,850
Capital Accounts: Stock 25,200
A 40,000 Prepaid Expenses 800
B 20,000 60,000 Plant & Machinery 20,000
Patents 8,000
C’s Capital A/c 3,200
D’s Capital A/c 8,415
82,000 82,000
Following information is given to you:
a. One of the creditors took some of the patents whose book value was Rs. 5,000 at a valuation of Rs.
3,200. Balance of the creditors were paid at a discount of Rs. 400.
b. There was a joint life policy of Rs. 20,000 which was surrendered for Rs. 4,500.
c. The remaining assets were realized at the following values:
Debtors Rs. 10,800; Stock Rs. 15,600; Plant and Machinery Rs. 12,000; and Patents at 60% of their
book-values. Expenses of realization amounted to Rs. 1,500.
d. D became insolvent and a dividend of 25 paise in a rupee was received against his estate.
Prepare necessary ledger accounts.
4. X, Y and Z are Partners of the Firm XYZ and Co. sharing profits and Losses in the ratio of 4 : 3 : 2.
Following is the Balance Sheet of the Firm as at 31st March :
Capital and Liabilities Rs. Properties and Assets Rs.
Partner’s Capital: Fixed Assets 5,00,000
X 4,00,000 Stock-in-Trade 3,00,000
Y 3,00,000 Sundry Debtors 5,00,000
Z 2,00,000 Cash in Hand 10,000
General Reserve 90,000
Sundry Creditors 3,20,000
13,10,000 13,10,000
Partners of the Firm decided to dissolve the Firm on the above date. It was found that a credit purchase
of Rs. 20,000 in March had not been recorded in the Books of the Firm.
a. Fixed Assets realized Rs. 5,20,000 and Book Debts Rs. 4,40,000.
b. Stock was valued at Rs. 2,50,000 and it was taken over by Partner Y
c. Creditors allowed discount of 5% and the expenses of realization amounted to Rs. 6,000.
Prepare Realisation Account, Partners Capital Account and Cash Account.
5. Ram, Sugriv and Hanuman were in Partnership sharing profits and losses in the ratio 3 : 2 : 1
respectively. They decided to dissolve the Partnership Firm on 31 st March, when the Balance Sheet
of the Firm appeared as under:
Sundry Creditors 5,67,000 Goodwill 4,56,300
Bank Overdraft 6,06,450 Plant and Machinery 6,07,500
Joint Life Policies 2,65,500 Furniture 64.650
Loan from Mrs. Ram 1,50,000 Stock 2,36,700
Ram’s Capital A/c 4,20,000 Sundry Debtors 5,34,000
Sugriv’s Capital A/c 2,25,000 Joint Life Policy 2,65,000
Hanuman’s Capital A/c 1,20,000 Commission Receivable 1,40,550
Cash on Hand 48,750
23,53,950 23,53,950
The following details are relevant for distribution:
1. The Joint Life Policy was surrendered for Rs. 2,32,500.
2. Ram took over Goodwill, Plant and Machinery for Rs. 9,00,000.
3. Furniture and Stocks were divided equally between Ram and Sugriv for Rs. 3,60,000.
4. Ram also agreed to discharge Bank overdraft and Loan from Mrs. Ram.
5. Sundry debtors were assigned to Firm’s creditors in full satisfaction of their claims.
6. Commission Receivable was received in Toto in time.
7. A Bills Discounted was subsequently returned dishonoured and proved valuation Rs. 30,750 (incl.
Rs. 500 Noting charges).
8. Ram paid the expenses of dissolution amounting to Rs. 18,000.
9. Hanuman agreed to receive Rs. 1,50,000 in full satisfaction of his rights, title and interest in the Firm.
You are required to show accounts relating to closing of books on dissolution of the Firm.
6. P, Q and R are Partners sharing Profit and Losses in the Ratio 2 : 2 : 1. The Partners decide to
dissolve the Partnership on 31st March when their Balance Sheet was as under :
Liabilities Amount (Rs.) Assets Amount (Rs,)
Capital Accounts: Land and Building 90,000
P 40,000 Plant and Machinery 30,000
Q 40,000 Furniture 17,000
General Reserve 41,000 Investments 10,000
R’s Loan A/c 10,000 Book Debts 40,000
Loan From D 80,000 Less: Prov. for Bad debts (4,000) 36,000
Trade Creditors 20,000 Stock 24,000
Bills Payable 8,000 Bank 8,000
Outstanding Salary 5,000 Deferred Advertisement Expenses 8,000
Capital Withdrawn R. 20,000
2,44,000 2,44,000
The following information is given to you.
a. Realization Expenses amounted to Rs. 12,000 out of which Rs. 2,000 was borne by P.
b. A creditor agreed to takeover Furniture of book value Rs. 8,000 at Rs. 7,200. The rest of the Creditors
were paid off at a discount of 6.25%.
c. The other Assets realize as follows:
(i) Furniture - Remaining taken over by R at 90% of Book Value.
(ii) Stock - Realized 120% of Book Value.
(iii) Book Debts - Rs. 8,000 of Debts proved bad, remaining were fully realized.
(iv) Land and Building - Realized Rs. 1,10,000.
(v) Investments - Taken over by P at 15% Discount.
d. For half of his Loan, D accepted Plant and Machinery and Rs. 5,000 Cash. The remaining amount was
paid at a discount of 10%.
e. Bills Payable were due on an average basis of one month after 31st March, 2018, but they were paid
immediately on 31st March @ 6% discount per annum.
Prepare the Realisation A/c, Bank A/c and Partners Capital A/c in columnar format.
7. A, B, C and D had been carrying on business in Partnership, sharing Profits and Losses in the ratio
of 3 : 2 : 1 : 1. They decide to dissolve the Partnership on the basis of the following Balance Sheet
as on 31st March –
Capital A/c : Premises 1,20,000
A 1,00,000 Furniture 40,000
B 60,000 1,60,000 Stock 1,00,000
General Reserve 56,000 Debtors 40,000
Capital Reserve 14,000 Cash 8,000
Sundry Creditors 20,000 Capital Overdrawn :
Mortgage Loan 80,000 C 10,000
D 12,000 22,000
3,30,000 3,30,000
Other Information :
1. Assets realised as under:
(a) Debtors – Rs. 24,000, (b) Stock- Rs. 60,000, (c) Furniture = Rs. 16,000 and (d) Premises – Rs. 60,000.
2. Expenses of dissolution amounted to Rs. 4,000. Further Creditors of Rs. 12,000 has to be met.
3. General Reserve unlike Capital Reserve was built up by appropriation of profits.
You are required to draw up the Realisation A/c, Partners Capital A/c and the Cash A/c assuming
that C became insolvent and nothing was realised from the Private Estate, Apply the principles
laid down in Garner vs Murray.
8. P, Q, R and S had been carrying on business in Partnership Sharing Profit and Losses in the ratio
of 4 : 3 : 2 : 1. They decide to dissolve the Partnership on the basis of following Balance Sheet as
on 30th April –
Capital Accounts : Land and Building 2,46,000
P 1,68,000 Furniture and Fixtures 65,000
Q 1,08,000 2,76,000 Stock 1,00,000
General Reserve 95,000 Debtors 72,500
Capital Reserve 25,000 Cash in Hand 15,500
Sundry Creditors 36,000 Capital Overdrawn
Mortgage Loan 1,10,000 R 25,000
S 18,000 43,000
5,42,000 5,42,000
Other Information:
(i) The Assets were realised as under- Rs.
Land and Building 2,30,000 Furniture and Fixtures 42,000
Stock 72,000 Debtors 65,000
(ii) Expenses of Dissolution amounted to Rs. 7,800.
(iii) Further Creditors of Rs. 18,000 had to be met.
(iv) R became insolvent and nothing was realised from his Private Estate.
Applying the principles laid down in Garner Vs Murray Rule, you are required to prepare the
Realisation Account, Partners Capital Accounts and Cash Account.
9. M/s X, Y, and Z who were in partnership sharing profits and losses in the ratio of 2:2:1 respectively, had
the following Balance Sheet as on December 31, 2022:
Capital Accounts: Fixed Assets 40,000
X - 29,200 Stock Trade 25,000
Y - 10,800 Debtors 25,000
Z - 10,000 50,000 Less: Provision (5,000) 20,000
Z’s Loan 5,000 Cash 1000
Loan from Mrs. X 10,000 Advance to Y 4,000
Sundry Trade Creditors 25,000
90,000 90,000
a. The firm was dissolved on the date mentioned above due to continued losses. After drawing up
the balance sheet given above, it was discovered that goods amounting to Rs. 4,000 have been
purchased in November, 2022 and had been received but the purchase was not recorded in books.
b. Fixed assets realized Rs. 20,000; Stock Rs. 21,000 and Book Debt Rs. 20,500.
c. Similarly, the creditors allowed a discount of 2% on average.
d. The expenses of realization come to Rs. 1,080.
e. X agreed to take over the loan of Mrs. X.
f. Y is insolvent, and his estate is unable to contribute anything.
Give accounts to close the books; work according to the decision in Garner vs. Murray
10. A and B were partners in a firm sharing profit and losses in the ratio of 2 : 1. Their Balance Sheet on the
date of dissolution was as follows:
Sundry Creditors 5,000 Sundry Assets 20,000
Capital Accounts:
A 11,000
B 4,000
20,000 20,000
The assets were realised gradually as under:
First realisation Rs. 5,000
Second realisation Rs. 9,000
Third realisation Rs. 3,000
Show the distribution of each instalment under Relative capital method.
11. A, B and C were in partnership sharing profits and losses in the ratio of 3 : 2 : 1. Their Balance Sheet on
the date of dissolution was as follows :
Sundry Creditors 10,000 Cash in hand 1,000
Capital Accounts: Sundry Assets 54,000
A 26,000
B 14,000
C 5,000
55,000 55,000
The Sundry Assets were realised piecemeal as under:
First realisation … 9,000
Second realisation … 33,000
Third realisation … 6,000
12. X, Y and Z were partners in a firm sharing profits and losses in the proportion of 3/5, 1/5 and 1/5. Their
Balance Sheet on 31st December, 1990 was as under:
Sundry Creditors 50,000 Sundry Debtors 75,000
X’s Loan Account 20,000 Stock 90,000
Capital Accounts:
X 60,000
Y 25,000
Z 10,000
1,65,000 1,65,000
The firm was dissolved on the above date the assets were realised piecemeal as under:
Month Debtor Stock Expenses
January, 21 15,000 20,000 3,000
February, 21 25,000 17,000 2,000
March, 21 15,000 21,000 1,000
April, 21 10,000 15,000 2,000
13. P, Q and R were in partnership sharing profits and losses in the proportion of 1/2, 1/3 and 1/6.
Their Balance Sheet on the date of dissolution was as follows:
P’s Loan 5,000 Profit and Loss A/c 6,000
General Reserve 12,000
P’s Capital Account 27,000
Q’s Capital Account 16,000
R’s Capital Account 13,000
86,000 86,000
The assets were realised as under:
First instalment … 10,500
Second instalment … 15,000
Third instalment … 21,000
Fourth instalment … 26,000
The expenses of realisation were Rs. 500; Rs. 1,000; Rs. 1,000 and Rs. 2,000.
Show the distributions of each instalment under Relative capital method.
14. A, B and C were partners in a firm sharing profits and losses in the proportion of 5/10, 2/10 and
3/10. Their Balance Sheet on the date of dissolution was as follows :
Sundry Creditors 20,000 Sundry Assets 1,14,000
Mrs. A’s Loan 5,000 C’s Capital A/c 1,000
B’s Loan 12,000
Capital Accounts:
A 50,000
B 28,000
1,15,000 1,15,000
The assets were realised as under :
First instalment … 15,000
Second instalment … 27,000
Third instalment … 66,000
Show the distribution of each instalment under proportionate capital method.
15. A, B and C were partners sharing profits and losses in the ratio of 1 : 4 : 5. Their Balance Sheet on
the date of dissolution was as follows :
Sundry Creditors 5,000 Sundry Assets 1,25,000
Capital Accounts :
A 10,000
B 50,000
C 60,000 1,20,000
1,25,000 1,25,000
The assets were realised as follows :
First Instalment … Rs. 5,000
Second Instalment … Rs. 50,000
Third Instalment … Rs. 30,000
Show the distribution of each instalment using the maximum loss method.
16. A, B and C were partners in a firm sharing profits and losses in the ratio of 2 : 1 : 1 respectively.
Their Balance Sheet on the date of dissolution was as follows:
Capital Accounts: C’s Capital A/c 2,000
A 15,000
B 10,000
30,000 30,000
(1) The sundry assets were realised in instalments:
First Instalment … Rs. 5,000
Second Instalment … Rs. 3,000
Third Instalment … Rs. 10,000
(2) C was insolvent and was unable to contribute anything from his private estate.
Show the distribution of each instalment using maximum possible loss method.
17. Mat, Ray and Pep are partners, sharing Profits and Losses in the ratio of 5 : 3 : 2. Their Capitals
Rs. 9,600, Rs. 6,000 and Rs. 8,400 respectively. After paying Creditors, the Liabilities and Assets of
the Firm were:
Liability for interest on loan from: Investments 1,000
-Spouses of Partners 2,000 Furniture 2,000
-Partners 1,000 Machinery 1,200
Stock 4,000
The assets realised in full in the order in which they are listed above. Ray is insolvent.
Prepare a statement showing the distribution of Cash as and when available, applying Maximum
Possible Loss Method.
18. Amar, Akbar and Antony are in Partnership. The following is their Balance Sheet as on which date
they dissolve partnership. They share profit in the ratio of 5 : 3 : 2.
Creditors 80,000 Plant and Machinery 60,000
Loan A/c- Amar 20,000 Premises 80,000
Capital A/c: Stock 60,000
Amar 1,00,000 Debtors 1,20,000
Akbar 30,000
Antony 90,000
3,20,000 3,20,000
It was agreed to repay the amount due to the Partners as and when the Assets were realised, viz.
15th April Rs. 60,000 1st March Rs. 1,46,000 31st May Rs. 94,000
Prepare a statement showing how the distribution should be made under Maximum Loss Method
and write up the Cash Account and Partner’s Capital Account.
19. E, F and G were Partners in a Firm, sharing Profits and Losses in the ratio of 3 : 2 : 1 respectively.
Due to extreme competition. It was decided to dissolve the Partnership on 31 st December. The
Balance Sheet on that date was as follows:
Capital Accounts: E 1,13,100 Machinery 1,54,000
F 35,400 Furniture and Fittings 25,800
G 31,500 1,80,000 Investments 5,400
Current Accounts: E 26,400 Stock 97,700
G 6,000 32,400 Debtors 56,400
Reserves 1,08,000 Bank 29,700
Loan Account: G 15,000 Current Account: F 18,000
Creditors 51,600
3,87,000 3,87,000
The realization of assets is spread over the next few months as follows:
February, Debtors Rs. 51,900;
March: Machinery Rs. 1,39,500;
April; Furniture etc. Rs. 18,000;
May: G agreed to take over investment at Rs. 6,300;
June: Stock Rs. 96,000.
Dissolution Expenses, originally provided were Rs. 13,500 but actually amounted to Rs. 9,600 and were
paid on 30th April. The Partners decide that after Creditors were settled for Rs. 50,400, all cash received
should be distributed at the end of each month. In the most equitable manner.
Prepare a statement of actual cash distribution as received using Maximum Loss basis.
20. The Firm of LMS was dissolved on 31 st March, at which date its Balance Sheet stood as follows :
Creditors 2,00,000 Fixed Assets 45,00,000
Bank Loan 5,00,000 Cash & Bank 2,00,000
Laxman’s Loan 10,00,000
Laxman Capital A/c 15,00,000
Mukund Capital A/c 10,00,000
Srinivas Capital A/c 5,00,000
47,00,000 47,00,000
Partners share profits equally. A Firm of Chartered Accountants is retained to realise the Assets and
distribute two Cash after discharge of Liabilities. Their fees which are to include all expenses is fixed at
1,00,000. No loss is expected on realisation since Fixed Assets include valuable Land and Building
realiations are as under:
Stage 1 2 3 4 5
Value in 5,00,000 (including 15,00,000 15,00,000 30,00,000 30,00,000
Rs. Cash Balance)
The Chartered Accountant Firm decided to pay off the Partners in Higher Relative Capital Method.
You are required to prepare a statement showing distribution of Cash with necessary workings.

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CA-FOUNDATION PRINCIPLES & PRACTICE OF ACCOUNTING

Accounting for Incomplete Records

An analysis of the cash book revealed the following :

CA NIKHIL JAJU Page |1

CA NIKHIL JAJU Page |2

6. The following balances appeared in the books of M/s Sunshine Traders :

Other information was as follows:

CA NIKHIL JAJU Page |4

(ii) Particulars of other Assets and Liabilities are as follows:

Sundry Assets Rs. 28,40,000

CA NIKHIL JAJU Page |5

CA NIKHIL JAJU Page |6

14. Following information is available from incomplete records kept by Mr. X :

Analysis of Pass Book reveals the following :

Summary of transaction during the year is as follows:

CA NIKHIL JAJU Page |7

Particulars Upto 31. 01. 2020 February 2020 March 2020

CA NIKHIL JAJU Page |8

The following are the balances on 31 st March, 2021:

Cash transactions during the year (excluding certain other items)

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