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GOBIND KUMAR JHA 9874411552

B. Com. (Semester – III)

Financial Accounting – II Final Discussion
Admission of a Partner

1. A and B are partners in a firm sharing profits and losses in the ratio of 4:1. Their Balance Sheet as on
31st March, 2021 is as under:
Liabilities ₹ Assets ₹
Capital Accounts: Furniture 25,000
A 30,000 Stock 50,000
B 70,000 Bills Receivable 12,000
Reserve 25,000 Debtors 40,000
Creditors 30,000 Cash at Bank 38,000
Bills Payable 10,000
1,65,000 1,65,000
st
They agreed to take C as a partner with effect from 1 April, 2021 on the following terms:-
a) A, B and C will share profits and losses in the ratio of 5:3:2.
b) C will bring ₹ 15,000 as premium for goodwill and ₹ 35,000 as capital.
c) The assets will be revalued as follows: Furniture - ₹ 35,000; Stock - ₹ 48,500 and Debtors - ₹
38,500.
d) A creditor for ₹ 15,000 has agreed to forgo his claim by ₹ 4,000.
e) After making the above adjustments, the Capital Account of A and B should be adjusted on the
basis of C’s Capital by bringing cash or withdrawing cash as the case may be.
Show Revaluation Account and Partner’s Capital Account and prepare Balance Sheet of the new
firm on 1st April, 2021.

2. X and Y are in a partnership sharing profits and losses in ratio 3:2. Z was admitted as the new partner.
Before admitting Z into partnership, the Balance Sheet of X and Y was as under:
Balance Sheet as on 31.12.2018
Liabilities ₹ Assets ₹
X’s Capital 15,000 Land and Building 12,000
Y’s Capital 12,000 Plant and Machinery 15,000
Sundry Creditors 18,000 Stock 18,000
General Reserve 24,000 Sundry Debtors 16,000
Workmen’s Compensation Fund 6,000 Cash 14,000
75,000 75,000
st
On 1 January, 2019, Z was admitted to partnership on the following conditions:-
a) The future profit sharing ratio will be: X 2/5th; Y 2/5th and Z 1/5th.
b) Revaluation of assets – Land and Building ₹ 27,000 and Stock ₹ 24,000.
c) The actual liability of Workmen’s Compensation Fund is estimated at ₹ 3,000.
d) Z brought in ₹ 15,000 as his share of Goodwill in cash.
e) Z would bring further cash as would be necessary so as to make his capital equal to 20% of
combined capital of partners X and Y after above revaluation and adjustments are carried out.
GOBIND KUMAR JHA 9874411552

Prepare Revaluation Account, Partner’s Capital Accounts and Balance Sheet of the firm after the
admission of the new partner.

Retirement of a Partner

3. A, B and C are equal partners. C retires on 31.3.2018. The Balance Sheet of the firm as on 31.12.2017.
stood as follows:
Liabilities ₹ Assets ₹
Creditors 12,900 Cash in hand 1,000
Contingency Reserve 4,000 Cash at bank 4,000
Investment Fluctuation Fund 1,200 Debtors 10,000
Partner’s Capitals: Less: PBD 800 9,200
A 30,000 Stock 10,000
B 20,000 Investments (Cost) 5,000
C 20,000 70,000 Land and Building 40,000
Goodwill 18,900
88,100 88,100
In order to arrive at the balance due to C, it was mutually agreed that:
a) Land and Building be valued at ₹ 50,000.
b) Investment Fluctuation Fund be brought to ₹ 500.
c) Debtors are all good.
d) Stock be taken at ₹ 9,400.
e) Goodwill be valued at one year’s purchase of the average profits of the past five years.
f) C’s share of profit to the date of retirement be calculated on the basis of average profit of the
preceding three years.
The profits for the preceding five years were as under:-
2013 - ₹ 11,500; 2014 - ₹ 14,000; 2015 - ₹ 9,000; 2016 - ₹ 8,000; 2017 - ₹ 10,000.
Prepare Revaluation Account, Partner’s Capital Account and the revised Balance Sheet.

4. On 31st December, 2015, the Balance Sheet of the partnership business of A, B and C sharing profits
and losses in the ratio of 1:1:1 stands as follows:
Liabilities ₹ Assets ₹
Capital Accounts:- Land and Buildings 70,000
A 40,000 Plant and Machinery 60,000
B 50,000 Furniture 10,000
C 60,000 1,50,000 Stock 21,000
General Reserve 24,000 Sundry Debtors 40,000
Sundry Creditors 20,000 Bank 8,000
Bills Payable 15,000
2,09,000 2,09,000
A retires from the business on 31.12.2015 as per the following terms and conditions. B and C will
continue the business sharing profits and losses in the ratio of 3:2.
a) Depreciation is to be written off at 15% on Machinery and 10% on Furniture.
b) The value of Building is to be increased to ₹ 90,000 and the value of Stock is to be increased by
₹ 7,000.
c) A provision of ₹ 2,000 is to be created for Bad and Doubtful Debts.
GOBIND KUMAR JHA 9874411552

d) Goodwill of the firm is valued at ₹ 45,000.

e) B and C have to adjust their capitals in their new profit sharing ratio and bring in cash to pay off
A and leave ₹ 20,000 in bank for working capital.
f) The goodwill account is to be closed after retirement of A.
Prepare Revaluation Account, Partner’s Capital Account and the Balance Sheet of the new firm.

Retirement of a Partner

5. R, S and T were partners sharing profits and losses in the ratio of 5:3:2 respectively. On 31st December,
2018, their Balance Sheet stood as under:
Liabilities ₹ Assets ₹
Sundry Creditors 55,000 Leasehold 1,00,000
Reserve Fund 30,000 Patents 30,000
Capital Accounts: Machinery 1,50,000
R 1,50,000 Stock 50,000
S 1,25,000 Debtors 40,000
T 75,000 3,50,000 Cash at Bank 65,000
4,35,000 4,35,000
T dies on 1st May, 2019. It was agreed that:-
a) Goodwill be valued at 2½ years purchase of last four years profits which were –
2015 - ₹ 55,000; 2016 - ₹ 50,000; 2017 - ₹ 60,000 and 2018 - ₹ 75,000.
b) Machinery be valued at ₹ 1,40,000. Patents be valued at ₹ 40,000; Leasehold be valued at ₹
1,25,000 on 1st May, 2019.
c) For the purpose of calculating T’s share in the profits of 2019, the profits in 2019 should be
taken to have accrued on the same scale as in 2018.
d) A sum of ₹ 21,000 to be paid immediately to the executors of T and the balance to be paid in
four equal half-yearly instalments together with interest @ 10% p.a.
You are required to prepare T’s Executor Account.

Dissolution of Firm

6. Amal, Bimal, Charu and Deben were partners in a firm sharing profits and losses in the ratio of 3:3:2:2.
The following was their Balance Sheet as at 31st December, 2019:
Liabilities ₹ Assets ₹
Partner’s Capital: Furniture 14,000
Amal 20,000 Debtors 22,000
Bimal 15,000 Less: PBD 1,000 21,000
Amal’s Loan 12,500 Cash at Bank 3,000
Sundry Creditors 25,000 Stock 12,500
Capital:
Charu 16,000
Deben 6,000
72,500 72,500
The firm was dissolved on 31.12.2019. Bimal was appointed to realise the assets and pay off the
liabilities and was entitled to receive 5% of the amount realised from the assets.
GOBIND KUMAR JHA 9874411552

The assets realised as follows:

Furniture - ₹ 11,000; Debtors - ₹ 16,500 and Stock - ₹ 10,500.
Sundry Creditors were paid in full including a contingent liability of ₹ 3,500. Realisation Expenses of ₹
1,500 were paid by the firm. Charu was insolvent and ₹ 5,000 could be recovered from his private
estate.
Prepare Realisation Account, Bank Account and Capital Accounts of the partners following the rules
given in Garner vs. Murray.

7. Sachin, Rahul and Laxman was three partners in a firm. They shared profits and losses equally. Their
Balance Sheet as on 31st March, 2018 was as follows:
Liabilities ₹ Assets ₹
Capital Accounts: Land and Building 30,000
Sachin 47,000 Plant and Machinery 35,000
Laxman 35,000 82,000 Furniture 5,000
Sachin’s Loan 20,000 Stock 5,000
Creditors 65,000 Debtors 5,000
P & L Account 37,000
Capital Account: Rahul 50,000
1,67,000 1,67,000
Due to weak financial condition, the partners decided to dissolve the firm. The assets realised as
follows:- ₹
Land and Building 26,000
Plant and Machinery 30,000
Furniture 3,000
Stock 3,000
Debtors 2,000
Expenses of realisation amounted to ₹ 3,500.
Further information regarding partners are stated below:-
Private Estates Private Liabilities
Sachin 33,000 35,000
Rahul 27,000 36,000
Laxman 27,000 25,000
Prepare the necessary ledger accounts to close the books of the firm.

Branch Accounting

8. Radhe Pvt. Ltd. of Kolkata has a branch at Delhi. Goods are sent by the head office to the branch at
selling price which is cost plus 25%. All expenses of the branch are paid by H. O. All cash collected by
the branch (from customers and from cash sales) is deposited to H. O. account with the bank. From the
following particulars, prepare Branch Stock Account, Branch Adjustment Account, Branch Debtors
Account and Branch Profit & Loss Account in the books of head office.
Stock on 1.4.2018 (at I. P.) 80,000
Stock on 31.3.2019 (at I. P.) 1,00,000
Debtors on 1.4.2018 60,000
Debtors on 31.3.2019 ?
Cash sales during the year 3,00,000
Credit sales during the year 7,50,000
GOBIND KUMAR JHA 9874411552

Total amount deposited in the H. O. during the year 9,80,000

Goods returned by Branch to H. O. (at I. P.) 20,000
Expenses paid 56,000
Discount allowed to customers 13,000
Bad debts written off 7,000
Spoilage (Abnormal) (at I. P.) 10,000
Goods send to Branch (at I. P.) ?

9. Head Office invoiced to their Halfia Branch goods at selling price (being 33⅓% added to cost) to ₹
74,000 during the year. The credit sales of the Branch were ₹ 31,000 and cash sales ₹ 17,000. The
Branch returned to H. O. ₹ 2,000 stock at selling price and received goods returned from customers ₹
1,000. The discounts allowed to customers by Branch amounted to ₹ 1,200. The Branch remitted to
Head Office ₹ 38,600 being the amount of cash sales and receipts from customers. The opening and
closing stock of the Branch were ₹ 15,000 (cost ₹ 11,250) and ₹ 39,000 (cost ₹ 29,250). The Branch had
Debtors of ₹ 12,000 at the beginning and ₹ 19,200 at the end. Loss through pilferage was ascertained to
be ₹ 1,000 (cost ₹ 750).
Prepare Branch Trading and Profit & Loss Account in the books of Head Office.

10. The Head Office, Kolkata invoiced goods to their Mumbai Branch at I. P. which is the wholesale price.
The I. P. is cost plus 40%. The branch is required to sell the goods at 125% of I. P., the head office,
however, sells goods at wholesale price to its customers in Kolkata. From the following particulars
ascertain the profit earned by the H. O. and Branch preparing a columnar Trading and Profit & Loss
Account:
Particulars Kolkata Mumbai
Opening Stock 40,000 35,000
Purchases 3,00,000 -
Goods sent to Branch (at cost) 80,000 -
Goods received from H. O. (at I. P.) - 1,33,000
Sales 2,80,000 1,57,500
Trade Expenses 18,000 11,000
Selling Expenses 10,000 6,000
Stock at H. O. are valued at cost price but those of branch are valued at I. P.

Departmental Accounting

11. A hotel proprietor has two departments, viz., (i) Apartment Department, and (ii) Meals Department.
Following is the Trial Balance of the business as on 31.03.2020:
Particulars Dr. (₹) Cr. (₹)
Food & Provision 15,500
Opening Stock of Provisions 1,020
Cash at Bank 10,000
Income from Apartment Dept. 46,000
Customers Account 800
Income from Meals Dept. 32,000
Capital 2,20,000
Building (1/10 is used for Meals Dept.) 2,10,000
Suppliers Account 9,800
GOBIND KUMAR JHA 9874411552

Provision for Depreciation on Building 20,000

General Expenses 27,410
Provision for Depreciation on Furniture 4,000
Furniture and Equipment 60,000
Accrued interest 200
Interest 1,130
Drawings 2,000
Wages 6,000
3,32,960 3,32,960
Additional Information:-
a) The servants of the Apartment Dept. had occupied a room for 5 days @ ₹ 120 per day and took
meals worth ₹ 600. Similarly the servants of the Meals Dept. had occupied a room for 6 days @
₹ 120 per day and took meals worth ₹ 900.
b) Wages are charged in the portion of ½ to the Apartment Dept., ¼ to the Meals Dept. and the
remaining to the General Profit & Loss Account.
c) Increase provision for depreciation on building to ₹ 28,000 and on furniture & equipment by ₹
1,000.
d) A sum of ₹ 800 representing accommodation ₹ 240 and meals ₹ 560 is to be charged to the hotel
proprietor.
You are required to prepare Departmental Trading and Profit & Loss Account for the year ended
31.03.2020.

12. A firm has two departments – Raw materials and Manufacturing. The finished goods are produced by
the manufacturing department with raw materials supplied by Raw Materials Department at selling
price. From the following information, prepare Departmental Trading and Profit & Loss Account for the
year ended on 31st March, 2022:
Particulars Raw Materials Manufacturing
Department (₹) Department (₹)
Opening Stock 60,000 10,000
Purchases 4,00,000 3,000
Raw materials transferred to Manufacturing Dept. 60,000 -
Sales 4,40,000 90,000
Manufacturing Expenses - 12,000
Selling Expenses 800 400
Closing Stock 40,000 12,000
It is estimated that the cost of closing stock of Manufacturing Department consists of 75% of raw
materials and 25% for manufacturing expenses. The rate of gross profit earned during the preceding year
by the Raw Materials Department was 10%. After allocating the following expenses on reasonable basis
between the two departments work out the net profit of the firm as a whole:
a) Salaries ₹ 2,500.
b) Insurance Premium ₹ 800.

Investment Account

13. Mr. Raju held 260, 12% Debentures in Jocker Ltd. @ ₹ 110 on 01.04.2021. The face value of each
debenture was ₹ 100. Interest on debentures are payable annually on 31st March every year. The
following were his transactions in the same debenture during 2021-22:
GOBIND KUMAR JHA 9874411552

01.07.2021 Bought 400 Debentures cum-interest @ ₹ 108.

01.09.2021 Bought 240 Debentures ex-interest @ ₹ 105.
01.01.2022 Sold 360 Debentures cum-interest @ ₹ 115.
He paid brokerage on purchase price/sale proceeds on debentures @ ₹ 0.02 for a rupee.
Prepare Investment Account in the books of Mr. Raju.

14. From the following information, prepare Equity Shares of X Ltd. Account in the investment ledger of
Mr. Raj for the year 2019-20:
❖ On 01.04.2019, Mr. Raj had 8,000 equity shares of ₹ 10 each in X Ltd. These shares were
purchased for ₹ 1,08,000 on 07.09.2017.
❖ On 01.08.2019, Mr. Raj purchased 2,000 shares in X Ltd. @ ₹ 14 per share from the secondary
market.
❖ On 15.09.2019, X Ltd. paid a dividend of 20% for the year ending on 31.03.2019 and Mr. Raj
received ₹ 20,000 dividend on 10,000 shares held by him.
❖ On 15.10.2019, X Ltd. made a bonus issue and Mr. Raj received 5,000 bonus shares from the
company.
❖ On 12.01.2020, X Ltd. offered right shares @ ₹ 12 per share and Mr. Raj purchased 3,000 of
such right shares at the price offered.
❖ On 20.02.2020, Mr. Raj sold 4,500 shares @ ₹ 19 per share.

Conversion of Firm

15. Ram and Shyam are partners in a firm sharing profits and losses in the ratio 3:2. The Balance Sheet of
the firm as at 31st December, 2021 is given here:-
Balance Sheet as at 31.12.2021
Liabilities ₹ Assets ₹
Capital Accounts: Land and Building 75,000
Ram 1,20,000 Plant and Machinery 1,05,600
Shyam 80,000 Bills Receivable 12,000
Bank Overdraft 65,000 Stock 31,400
Creditors 44,800 Sundry Debtors 80,500
Cash in Hand 5,300
3,09,800 3,09,800
The partners agree to convert the partnership firm into a Limited Company on 31.12.2021. The
following terms and conditions will be applicable for the purpose:
a) The authorised capital of the company will be ₹ 5,00,000 consisting of 30,000 Equity Shares of ₹
10 each and 2,000 Preference Shares of ₹ 100 each.
b) All assets and liabilities to be takenover by the company at the following values:-
Land and Building - ₹ 95,000; Plant and Machinery - ₹ 92,000; Bills Receivable - ₹ 12,000;
Stock - ₹ 36,000; Cash in Hand - ₹ 5,300; Sundry Debtors to be taken with provision of 10%.
Creditors - ₹ 40,000; Bank Overdraft - ₹ 65,000; Goodwill (to be newly taken) - ₹ 15,000.
c) The purchase consideration is to be discharged by the issue of 12,000 equity shares of ₹ 10 each
at a premium of ₹ 2 each and 750 preference shares of ₹ 100 each. The balance of purchase
consideration is to be satisfied by cash payment.
Calculate purchase consideration and prepare the opening Balance Sheet in the books of the new
company.
GOBIND KUMAR JHA 9874411552

16. Lalita Stores is owned by Mrs. Lalita. On 31.03.2019, the business is acquired by a limited company
called Super Ltd. on the below mentioned items:-
a) Land and Building & Plant and Machinery to be valued at 150% and 140% of book value.
b) Stock is to be written off by 10%.
c) Other assets and liabilities will be taken at their book value.
d) The proprietor will receive 13,000 equity shares of ₹ 10 each at 20% premium, 700, 8%
Preference Shares of ₹ 100 each at par and ₹ 24,000 in cash.
Balance Sheet of Lalita Stores as on 31.03.2019
Liabilities ₹ Assets ₹
Capital Account 1,60,000 Land and Building 1,00,000
Bank Loan 4,80,000 Plant and Machinery 2,00,000
Creditors 90,000 Stock 3,00,000
Debtors 1,00,000
Cash and Bank 30,000
7,30,000 7,30,000
Calculate purchase consideration. Show necessary journal entries in the books of Super Ltd. for the
acquisition.

Pre & Post Incorporation of Business

17. Calculate the ratio of sales between pre-incorporation and post-incorporation period for each of the
following independent cases:-
a) P Ltd. was incorporated on 1.7.2018 and took over the business of Gandhi Co. with retrospective
effect from 1.4.2018; it closes the books on 31st March every year. Sales for the year 2018-19 was ₹
24,00,000 of which ₹ 9,00,000 were sold during the first 6 months of the year.
b) Q Ltd. was incorporated on 1.8.2017 and took over the business of A & Co. with retrospective effect
from 1.4.2017; it closes its books on 31st March every year.
Sales for the year 2017-18 was ₹ 56,00,000. It is ascertained that monthly sales for June and July is
double the monthly sales of other months.
c) R Ltd. was incorporated on 1.9.2017 and took over the business of C Bros. with retrospective effect
from 1.4.2017; it closes its books on 31st March every year.
Sales for the year 2017-18 was ₹ 24,00,000 and monthly sales after the date of certificate of
incorporation recorded an increase of 2/3 over monthly sales during period before incorporation.
d) S Ltd. was incorporated on 1.8.2017 and took over the business of Mr. A with retrospective effect
from 1.4.2017; it closes its books on 31st March every year.
Sales for the year 2017-18 were ₹ 12,00,000. It is ascertained that monthly sales for September and
October is double the average monthly sales for the year.

18. X Ltd. was incorporated on 01.08.2020 to takeover the business of Mr. Ranjan Singh with effect from
01.04.2020; certificate for commencement of business was, however, received on 01.10.2020. Profit &
Loss Account of Mr. Ranjan Singh for the year ended 31.03.2021 was as follows:
Particulars ₹ Particulars ₹
Office salaries 42,000 Gross Profit 2,40,000
Office rent 19,200
Audit Fees 1,200
Director’s Fees 2,000
Office Expenses 36,000
GOBIND KUMAR JHA 9874411552

Commission on sales 8,000

Preliminary Expenses 1,400
Debenture Interest 3,200
Interest on Capital 3,600
Insurance 4,200
Net Profit 1,19,200
2,40,000 2,40,000
Additional Information:-
Sales for the year evenly up to the date of certificate of commencement, thereafter sales were increased
evenly by 2/3rd GP rate was also uniform.
Office rent was paid @ ₹ 16,800 p.a. up to 30.09.2020 and thereafter @ ₹ 21,600 p.a.
Show the amount of pre and post incorporation profit from the above mentioned information.

Hire Purchase Accounting

19. Gada Electronics which sells a popular product on hire-purchase system, has the following balances:-
2017 ₹
Jan. 1 Stock out on hire at hire purchase price 30,000
Stock in hand (at the shop) 7,000
Instalment due (Customers still paying) 3,300
Dec. 31 Stock out on hire at hire purchase price 20,000
Stock in hand (at the shop) 9,000
Instalment due (Customers still paying) 3,600
Prepare the H. P. Trading Account in the books of Gada Electronics for the year ending on 31.12.2017,
if cash of ₹ 35,000 is received during the year by way of instalments and gross profit rate is 50% on
cost.

20. Credit Ltd. sells goods on hire purchase basis at cost plus 50%. From the following particulars, you are
required to prepare HP Stock Account, HP Debtors Account, Repossessed Stock Account and HP
Adjustment Account to ascertain the profit made for the year ended 31.03.2018: ₹
Stock on hire with customers at S. P. on 01.04.2017 1,35,000
Instalments due on 01.04.2017 75,000
Cash received from customers 9,00,000
Instalments due on 31.03.2018 from paying customers 1,35,000
Goods repossessed (instalment due ₹ 6,000) valued as 1,800
Purchase made during the year 2017-18 9,20,000
Goods sent on hire purchase at S. P. 12,93,000

21. Pushpa Transporters purchases two motor vans costing ₹ 4,80,000 each from Gopal Garage on 1st
January, 2016 on hire purchase system. The terms of payment were as follows:
Payment of ₹ 1,20,000 for each motor van on delivery and the remainder in three equal instalments
together with interest @ 10% p.a. to be paid at the end of each year.
Pushpa Transporters writes off depreciation @ 20% p.a. each year on diminishing balance method. The
hire purchaser paid two instalments due on 31.12.2016 and 31.12.2017 but could not pay the final
instalment.
GOBIND KUMAR JHA 9874411552

Gopal Garage then repossessed one motor van adjusting its value against the amount due. For the
purpose of repossession the motor van was valued by charging depreciation @ 25% p.a. under fixed
instalment.
Write up the Motor Van Account and Gopal Garage Account in the books of Pushpa Transporters.

Theory Suggestion which may come in Exam

1) Write a note on profit prior to incorporation.
2) How is profit prior to incorporation treated in accounts?
3) State the objectives of maintaining Investment Ledger.
4) What do you mean by cum-interest and ex-interest price in debentures?
5) Explain circumstances under which a partnership firm is dissolved.
6) State the order of priority of distribution of assets realised when a partnership firm is dissolved.
7) State the objectives of preparation of departmental accounts.
8) Discuss the major differences between synthetic method and analytical method of branch accounting.
9) Mention the differences between Hire Purchase and Installment Purchase System.
10) State the purposes of preparing Branch Adjustment Account.
11) What do you mean by ‘Garner vs. Murray’ rule in case of insolvency of a partner?
12) Distinguish between Operating Lease and Finance Lease.
13) How would you allocate the following indirect expenses between different departments?
a) Sales Manager’s Salary
b) Insurance on Stock
c) Carriage Inwards
d) Labour Welfare Expenses
e) Rent Paid
f) Depreciation
g) Lighting
h) Advertisement
i) Canteen Expenses
j) Discount Allowed
14) What are the different types of Branches?
15) What are the treatment of Normal and Abnormal Loss in Branch Accounts?
 Or
A, B andCare partners sharing Profit and Losses in the ratio of 4:3:1. They dissolved the firm on
31* March, 2021. Their capitals are to be repaid as and when the assets are realized. On the date of
dissolution the balance Sheet of the firm was as under:
Balance Sheet as at 31.03.2021
Liabilities Amount Assets Amount

Sundry Creditors 52,500 Building 1,00,000

Bank Overdraft (Unsecured) 17,500 Plant and Machinery 40,000
Capital Accounts Stock 1,10,000
AR 1,40,000 Sundry Debtors 1,20,000
B 60,000
CR 1,00,000 3,00,000
3,70,000 3,70,000

46

GOBIND KUMAR JHA 9874411552

The following net amounts of the assets realized and it was immediately
distributed:2021:
May 31, 40,000;
July 31, R 30,000;
Sep. 30R 50,000;
Oct, 31, R 80,000 and
Dec. 31, R 1,30,000.
No further sums could be realized.
Prepare a statement showing piecemeal distribution of cash according to the Maximum Possible Loss
Method.
 Question 7(Piecemeal):
A, B and C were partners in a firm sharing profits and losses in 3:2:1. The partnership was dissolved on
30.09.2021, when the Balance Sheet (in ) was as follows:
Capital: 12,000 Cash 16,000
B 14,000 Debtors 38,000
C 2,000 Stock 80,000
Loan: (A -12,000; B- 20,000) 32,000
Reserves and profits 36,000
Creditors 38,000
1,34,000 1,34,000

It was agreed that net realizations should be distributed in due order at the end of each month starting from
October 2021. The realizations from assets and expenses (in ) were as follows:
Oct. Nov. Dec. Jan. Feb.

Debtors 10,000 6,000 10,000 4,000 6,000

Stock 16,000 16,000 24,000 20,000 2,000
Expenses 2,000 1,000 1,000 800 400

The partners decided to distribute cash as and when available. Show the distribution thereof.