Bangalore University 2007 B.Com I Semester , ./. - Question Paper

The company also agreed to meet the dissolution expenses of Rs. 10,000

8. Prepare interest suspense account in the books of purchaser under instalment system.

Cash price of the assets Rs. 2,40,000
Instalment Price Rs. 2,82,000
Interest to be apportioned in the ratio of 4:2:1
Date of purchases 1.4.2002

The books are closed on 31st March every year. The 1st payment is made at the end of the first year.

9. What is the accounting procedure involved in the sale of firm to a limited company?

part – C

ans any three of the subsequent ques.. every carries 15 marks: (15x3=45)

10. subsequent is the balance sheet (31.3.05) of P and Q and R and S who share profits P and Q2:1 and R and S 3:2. The 2 firms decided to amalgamate.

Liabilities P & Q R & S Assets P & Q R & S

Capital A/c P 80,000 Land and Building - 1,00,000

Q 20,000 Plant & machinery 40,000 60,000

R 1,00,000 Patents 20,000 10,000

S 1,00,000 Stock 50,000 40,000

S/Creditors 32,000 46,0000 Debtors 20,000 32,000

Reserve 20,000 - Investments 10,000 -

Cash 12,000 4,000

1,52,000 2,46,000 1,52,000 2,46,000


a) Investment of P & Q were not to be taken over by the new firm, but were to be distributed ranging from partners.

b) Goodwill P & Q was Rs. 40,000 and R & S Rs. 80,000, however it was agreed that the total amount of goodwill in the new firm to be Rs. 1,00,000 only.

c) Assets and liabilities of P & Q were valued as follows:

Plant and machinery Rs. 30,000, patents Rs. 15,000, stock Rs. 40,000, debtors Rs. 15,000, creditors Rs. 30,000.

d) Asssets and liabilities of R & S were valued as follows:

Land and buildings 1,20,000, plant and machinery Rs. 55,000, patents Rs. 10,000, stock Rs. 45,000, debtors Rs. 30,000 and creditors Rs. 40,000.

e) Total Capital of the new firm to be Rs. 4,00,000. every partner shall introduce such sum as would make his capital equal to 1 4th of the total capital or withdraw excess capital P, Q, R, S are to be equal partners.

Prepare necessary ledger accounts in the books of old firm and show amalgamated balance sheet in the books of the new firm.

11. On 1.4.2003 Ramyashree Patel purchased a computer under hire purchase system. The cash price was Rs. 34,000 payable as Rs. 4,000 on signing the agreement and the balance in three instalments of Rs. 10,000 every together with interest at 8% p.a., on 31st March every year. The asset is depreciated at 10% p.a. on diminishing balance method.

provide necessary ledger accoutns in the books of Ramyashree Patel.

12. Jaishree found a lease of a few granite bearing land on first Jan 2004, the terms being a royalty of Rs. 700 per meter granite raised subject to minimum rent of Rs. 20,00,000 per annum with a right of recoupment of short workings over the first 3 years of the lease. The subsequent are the particualrs.

Year Sales in meter Closing stock/meter

2004 2200” 300
2005 3300” 500
2006 4800” 600
2007 6000” 700

You are needed to prepare royalty account, short workings A/c, landlord A/c to record the above transactions.

13. A and B are partners having profit sharing ratio of 2:1 and their balance sheet as on 31.3.2005 was as follows:

Liabilities Amount Assets Amount

Creditors 1,20,000 Cash 900
B.P. 30,000 Drs. 1,80,000
Less: reserve 9,000 1,71,000
Reserve fund 18,000 Bills receivable 15,000
A’s loan 60,000 Stock 1,31,100
Capital A 90,000 Machinery 60,000
B 60,000

3,78,000 3,78,000

They agreed to sell the business to a limited company and the company to take over the assets and liabilities as follows:

Machinery at Rs. 48,000, stock at Rs. 1,05,000, debtors at Rs. 1,52,100, B/R at Rs. 15,000 and goodwill at Rs. 18,000. The company agreed to take over creditors at Rs. 1,14,000 and Rs. 30,000. The firm received Rs. 1,20,000 of the purchase price in Rs. 10 fully paid equity shares and the balance in cash. Distribute the shares as per original capital ratio. Prepare the necessary ledger accounts in the books of the firm.

14. The bangalore transport company purchased a motor lorry from the Mysore motor company in deferred payment system on 1.1.2001 paying Rs. 60,000 on that day and agreed to pay the remaining amount in 3 annual instalment of Rs. 60,000 every with interest at 5% p.a.

Prepare necessary accounts in the books of the buyer assuming that:

1) Depreciation at 10% p.a. is charged on the diminishing balance.
2) Books are closed on 31 December.

Earning:   Approval pending.