Ex.

1
Following is the Balance Sheet of M/s Lalwani Bros. and M/s Motwani Bros. as on 31 st March, 2017.
M/s Lalwani Brothers
Balance Sheet

Liabilities ₹ Assets ₹
Sundry creditors 50,000 Cash in hand 12,000
Loan from Vijaya Bank 10,000 Stock in trade 58,000
Capital : Furniture and fixtures 20,000
Anil 1,00,000 Office Premises 90,000
Sunil 50,000 Debtors 30,000
2,10,000 2,10,000

M/s Motwani Brothers

Balance Sheet

Liabilities ₹ Assets ₹
Sundry Creditors 60,000 Cash in hand 16,000
Capitals: Stock in trade 44,000
Ajay 60,000 Sundry Debtors 50,000
Vijay 40,000 Furniture and fittings 10,000
5% National Savings Certificates 40,000
1,60,000 1,60,000
They shared profits & losses in proportion to their capitals. They decided to amalgamate their
business with effect from 1st april, 2017, as per the following terms and conditions:
1. That the name of the new firm shall be VANEE TRADING CORPORATION.
2. That the Vijaya Bank Loan be repaid.
3. That 5% National Savings certificates not to be taken over by new firm to be distributed between
partners equally at Book Value.
4. That goodwill of M/s Lalwani Bros. and M/s Motwani Bros. are fixed at ₹ 21,000 and ₹ 25,000
respectively.
5. That office premises are valued at ₹ 99,000.
6. That stock in trade of M/s Lalwani Bros. be reduced by ₹ 9,000 and that of M/s. Motwani Bros.
increased by ₹ 5,000.
7. That a Reserve for Bad Debts be created at the rate of 5% on debts of both the firms.
8. That the total capital of the firm of “ Vanee Trading Corporation” will be ₹ 1,80,000 and the capital
of each partner will be in his profit sharing ratio which will be as follows:
Anil 30%, Ajay 30%, Sunil 20%, Vijay 20%.
9. Goodwill account in the new firm should be written off.
 You are required to close the books of M/s Lalwani Bros. and M/s. Motwani Bros. to give effect
to the above arrangement.
Also give opening entries in the books of VANEE TRADING CORPORATION and their Balance Sheet
on 1st April, 2017.

Ex. 2
Two firms were carrying on business under the styles of Blue. & Co. and Pink & Co. respectively, decided
to amalgamate into Green and Co. with effect from 1st April, 2017. Their respective Balance sheets as on
31st March, 2017 were as follows:
Balance Sheet
As on 31st March, 2017

Liabilities Blue & Co. Pink & Co. Assets Blue & Co. Pink & Co.
Creditors 22,000 28,000 Goodwill - 10,000
Bank O.D. 15,000 - Machinery 10,000 -
B’s Capital - Stock 20,000 5,000
P’s Capital 3,000 Debtors 10,000 10,000
R’s Capital 2,000 Cash 3,000 3,000
Bank 4,000 5,000
- A’s Capital 5,000 -
52,000 33,000 52,000 33,000
A and B shares Profits and Losses in the ratio of 1:2. The following additional information is given
to you:
1. Goodwill of Blue and Co. is fixed at ₹ 15,000 and that of Pink & Co. at ₹ 20,000. No Goodwill
Account will remain in the books of Green & Co.
2. Blue & Co. owes ₹ 5,000 to Pink & Co.
3. Stock of blue & Co. includes ₹ 6,000 worth of goods purchased from Pink & Co. whose practice
is to sell goods at cost plus 20%.
4. The partners in the new firm will share Profits and Losses equally.
5. The total capital of Green & Co. will be ₹ 50,000 and each partner will contribute his
proportionate capital, adjusting in cash.
Show the Balance Sheet of the new firm after amalgamation.
Ex.3
M and N were partners sharing profits and losses in the ratio of 2:4 and O and P were partners sharing
equally. Following were their Balance Sheet as on 31st March,2017.
Balance Sheet as on 31st March, 2017

Liabilities M&N O&P ASSETS M&N O&P

₹ ₹ ₹ ₹
Capital Accounts: Goodwill 40,000 -
M 3,00,000 Plant & Machinery 2,00,000 2,70,000
N 3,00,000 Furniture 80,000 90,000
O - 2,50,000 Stocks 2,00,000 2,40,000
P - 3,20,000 Debtors of ‘ 1,90,000 1,70,000
Creditors 1,00,000 1,50,000 Fixtures 16,000 12,000
Bills Payable 40,000 80,000 Bank 30,000 26,000
Outstanding Rent 20,000 15,0000 Cash 4,000 7,000
7,60,000 8,15,000 7,60,000 8,15,000
The firms are amalgamated on the following terms:
1. Outstanding Rent was paid by cheques in full by the respective firms.
2. Creditors of both the firms were taken by the new firm at a discount of 5%.
3. Plant & Machinery is subject to 5% depreciated of both the firms.
4. Furniture of ‘O’ and ‘P’ was sold in the market for 80,000 and furniture of ‘M’ and ‘N’ not taken
over by the new firm.
5. Fixtures were not taken over by the new firm.
6. Stock of ‘M’ and ‘N’ was valued at 2,21,000 and that of ‘O’ and ‘P’ was valued at 2,01,000.
7. Goodwill of M/s ‘M’ and ‘N’ is valued at ₹ 60,000 and that of M/s O and P at ₹ 80,000. Goodwill
account is not being retained in the books of the new firm.
8. Capital of each partner in the new firm is to be maintained at ₹ 2,50,000 by bringing cash or
playing cash, as the case may be.
You are required to prepare :
1. Realisation A/c and
2. Partners Capital A/c in the books of both the firms and
3. Amalgamated Balance Sheet of the new firm.
Ex. 4
Avadhut and Vibhu are in partnership as AV and Co. In the similar type of business OM and Nagesh are
in partnership as ON and Co. It was agreed that on 1st April, 2017 the partnership be amalgamated into
one firm, as AVON and Co. Avadhut and Vibhu were sharing profits and losses in the ratio of 3:2 and OM
and Nagesh as 2 : 1.
Their respective Balance Sheet of the firm were as follows:
Balance Sheet
As on 31st March, 2017

Liabilities AV & Co. OM & Co. Assets AV & Co. OM & Co.
Capitals : Land & Buildings 2,10,000 3,90,000
Avadhut 2,85,000 - Plant & Machinery 1,95,000 4,20,000
Vibhu 2,25,000 - Furniture 36,000 54,000
OM - 5,40,000 Motor Car 1,29,000 1,56,000
Nagesh - 4,50,000 Investments 72,000 -
General Reserve 1,35,000 1,62,000 Stock 1,06,200 1,63,200
Bills Payable 1,16,100 1,36,000 Debtors 2,04,600 1,81,200
Creditors 2,66,400 1,74,000 Bills Receivable 59,400 81,600
Outstanding Wages 22,500 38,000 Cash & Bank 37,800 54,000
10,50,000 10,50,000 10,50,000 10,50,000
The following was the scheme of amalgamation :
1. All the Assets ( except investments) and Liabilities will be taken over by new firm.
2. Om took over the firm’s investment at 60,000.
3. The new profit sharing ratio of the new firm should be 5: 3: 8 respectively to Avadhut, Vibhu, OM
and Nagesh.
4. The Assets and Liabilities were valued as under :
Particulars AV and Co. OM and Co.
Goodwill 1,20,000 2,40,000
Land & Building 2,85,000 4,80,000
Furniture 30,000 45,000
Plant & Machinery 1,80,000 4,02,000
Stock 1,14,000 It 1,68,000
Motor Car 1,05,000 1,35,000
Debtors 1,95,000 1,74,000
Creditors 2,40,000 1,62,000
Outstanding Wages 20,100 32,400
5. It was further decided that:
a) Goodwill Account in the new firm shall be written off.
b) The capital of the new firm was Fixed at 19,20,000 to be adjusted according to their new
profit sharing ratios, any adjustment to be made in cash.
Ex. 5

Mr. Bill and Mr. Will are partners in BW & Co. In a similar type of business Mr. Mill and Mr. Gill are partner in MG
& Co. It was agreed that on 1st April, 2017 the old firms be amalgamated into new firm BMW Group.

The respective Balance Sheets of the old firms as on 31st March, 2017 were as follows:

Liabilities BW & Co. MG & Co. Assets BW & Co. MG & Co.
Capitals : Land and Building 29,600 40,000
Bill 61,200 Furniture 7,200 5,600
Will 44,000 Vehicle 12,000 7,200
Mill 45,200 Stock 33,200 26,400
Gill 29,600 Investments 3,200 -
Creditors 20,800 24,000 Debtors 27,200 23,200
Bank Overdraft 3,600 Bank 13,600 -
1,26,000 1,02,400 1,26,000 1,02,400
Profit Sharing Ratio :

Bill Will Mill Gill

Old Firms 4 3 3 2

New Firms 6 5 4 3

Terms and conditions of amalgamation :

1. Provision for doubtful debts @ 5% to be made on Debtors.

2. Rebate on the liabilities of creditors to be provided @ 2%.
3. New firm to take over the assets of old firms as under :
BW & Co. MG & Co.
Assets :
Stock 33,800 25,560
Vehicles 11,200 5,200
Furniture 6,400
Land and Building 40,000
Goodwill 25,200 18,000
4. Furniture and land and building not taken over by New Firm were sold for 54,000
On 1st April, 2017 by MG & Co.
5. Mr. Will to take over investments for 3,040.
6. Bank balance / overdraft to be taken over at book value.
7. The Capitals of the Partners in the New Firm were to be 2,16,000 to be contributed in profit sharing ratio,
any adjustment to be made in cash.

You are required to close the books of the Old Firms and prepare the Opening Balance Sheet of the New Firm.
Ex. 6

A and B were Partners sharing profits and losses in the ratio of 3 : 1 and C and D were partners sharing equally.

Following were their Balance Sheet as on 31st March, 2017.

Balance Sheet as on 31st March, 2017

Liabilities A and B C and D Assets A and B C and D

Capital Accounts : Goodwill 4,000 -
A 30,000 - Plant and Machinery 20,000 27,000
B 30,000 - Furniture 8,000 9,000
C - 25,000 Stock 20,000 24,000
D - 32,000 Debtors 19,000 17000
Creditors 10,000 15,000 Fixtures 1,600 1,200
Bills Payable 4,000 8,000 Cash 3,400 3,300
Outstanding Rent 2,000 1,500
76,000 81,500 76,000 81500
The firms are amalgamated on the following terms :

1. Outstanding Rent was paid in fully by the respective firms.

2. Creditors of both the firms were taken by the new firm at a discount of 5%.
3. Plant and Machinery is subject to 5% depreciation of both the firms.
4. Furniture of ‘C’ and ‘D’ was sold in the market for 8,000 and furniture of ‘A’ and ‘B’ was not taken over
by the new firm.
5. Fixtures were not taken over by the new firm.
6. Stock of ‘A’ and ‘B’ was valued at 22,100 and that of ‘C’ and ‘D’ was valued at 21,000.
7. Goodwill of M/s. A and B is valued at 6,000 and that of M/s. C and D at 8,000. Goodwill account is not
to be retained in the books of the new firm.
8. Capital of each partner in the new firm is to be maintained at 25,000 by bringing cash or paying cash, as
the may be.

You are required to prepare

1. Realisation A/c and

2. Partner’s Capital A/c’s in the books of both the firms and
3. Amalgamated Balance Sheet of the new firm.
Ex. 7

Desai Bros. and Shah Traders decided to amalgamate and form a new firm called Desha & Co. on the following
terms and conditions on 1st March, 2017 when their Balance Sheets were as follows :

Particulars Desai Shah Particulars Desai Shah

Bros. Traders Bros. Traders
Arun’s Capital 60,000 - Building 20,000 41,000
Barun’s Capital 30,000 - Furniture 6,000 -
Tarun’s Capital - 40,000 Investments 30,000 12,000
Varun’s Capital - 65,000 Stock 34,000 46,600
Creditors 20,000 46,000 Debtors 20,000 75,000
Bank Loan 10,000 34,000 Cash at Bank 10,000 10,400
1,20,000 1,85,000 1,20,000 1,85,000
Terms of amalgamation :

1. In case of Desai Bros.

a) Goodwill was valued at 20,000.
b) Desai Bros. should pay its Bank Loan.
c) Building was taken to be worth 60,000.
d) Stock to be valued at 30,000.
e) Provision for doubtful debts to be created at 5% on debtors.
2. In case of Shah Traders
a) Goodwill was valued at 10,000.
b) Building was taken to be worth 80,000.
c) Investments were not taken over by the new firm, which were taken over by the Varun at 10,000.
d) Stock was valued at 10,000.
e) Provision for doubtful debts to be created at 5% on debtors.

You are required to show necessary ledger accounts in the books of Desai Bros. and Shah Traders and
prepare Balance Sheet of New Firm after Amalgamation.
Ex. 8

Shri Bala and Shri Wala are in partnership as ‘Lala & Co.’. In the similar type of business Shri Fail and Shri
Shirish are in partnership as ‘Farish & Co.’. It was agreed that on 1st April, 2017 the partnership be amalgamated
into one firm ‘Larish & Co.’. The profit sharing ratio in the Old firm and New firm are as below :

Bala Wala Fail Shirish

Old firm : 2 3 3 2
New firm : 6 5 3 4
As on 31st March, 2017 the Balance Sheets of their firm were as follows :

Balance Sheet

As on 31st March, 2017

Liabilities Lala & Co. Farish & Co. Assets Lala & Co. Farish & Co.
Capital : Land 45,000 54,000
Bala 60,000 - Furniture 13,000 9,500
Wala 90,000 - Vehicles 15,000 7,750
Fail - 60,000 Stock 44,900 26,000
Shirish - 40,000 Investments 4,000 -
Creditors 30,000 33,000 Debtors 52,500 42,250
Bank Overdraft - 6,500 Bank 5,600 -
1,80,000 1,39,500 1,80,000 1,39,500
The amalgamation was made on the following terms :

New firm to take over Old Firms assets as under :

Lala & Co. Farish & Co.

Stock 46,000 34,500
Vehicle 15,000 8,000
Furniture 8,500 7,500
Land 54,000 54,000
Goodwill 40,000 30,000
Shri Bala to take over Investments for 8,000.

The Capitals of the partners in the New Firm to be 3,00,000 and to be contributed by their Profits Sharing
Ratio and adjustments to be made in cash.

You required to show necessary ledger accounts in the books of ‘Lala & Co’ and prepare Balance Sheet of
New firm after Amalgamation.
Ex. 9

Vijay and Sanjay were carrying on business of supply of hardware as sole traders. Their Balance Sheets as on 31st
March, 2017 are given below :

Vijay Sanjay Vijay Sanjay

Bills Payable 50,000 40,000 Fixed Assets 40,000 50,000
Bank Overdraft 25,000 - Stock 50,000 22,000
Capital A/c 75,000 1,00,000 Book Debts 60,000 55,000
- - Cash Balance - 10,000
1,50,000 1,40,000 1,50,000 1,40,000
Both the parties decided to amalgamate their business and form a new partnership firm under the name
of M/s. Jay on 1st April, 2017. The terms of amalgamation were as follows :

1. Fixed assets were to be reduced by 10%.

2. Stock of Mr. Vijay to be reduced by 20% and that of Sanjay increased by 10%.
3. A reserve for 2% to be created against book debts.
4. Both the parties to be credited with goodwill of 25,000 each.
5. The bank overdraft of Mr. Vijay is to be paid by him.

You are required to prepare necessary Ledger Accounts in the books of Vijay & Sanjay.
Ex. 10

Miss Charu and Miss Paru are in partnership as ‘Maru & Co. in the similar type of business Miss Palak and Miss
Zalak are in partnership as ‘Malak Associates’. It was agreed that 1st April, 2017 the partnership be amalgamated
into one firm ‘Charmalak & Co’. the profit sharing ratio in the Old firm and new firm are as below :

Charu Paru Palak Zalak

Old firm 2 3 3 2
New firm 6 5 3 4
As on 31st March,2017 the Balance Sheets of their firm were as follows :

Balance Sheet

As on 31st March, 2017

Liabilities Maru Malak Assets Maru Malak

& Co. Assoc. & Co. Assoc.
Capital : Charu 80,000 - Land 65,000 84,000
Paru 1,20,000 - Furniture 38,000 30,500
Palak - 70,000 Vehicles 25,000 27,250
Zalak - 70,000 Stock 49,900 66,000
Creditors 50,000 83,500 Investments 14,000 -
Bank overdraft - 36,500 Debtors 52,500 52,250
Bank 5,600 -
2,50,000 2,60,000 2,50,000 2,60,000
The amalgamation was made on the following terms :
New firm to take over the Old Firms assets as under :
Maru & Co. Malak Associates
Stock 45,000 65,000
Vehicle 20,000 20,000
Furniture 35,000 28,000
Land 1,25,000 1,65,000
Goodwill 40,000 30,000
Miss. Charu to take over Investments for 12,000.

The Capitals of the partners in the New Firm to be 4,00,000 and to be contributed by their Profit Sharing
Ratio and adjustments to be made in cash.

You are required to show necessary ledger accounts in the books of ‘Maru & Co.’ and ‘Malak Associates’
and prepare Balance Sheet of Charmalak and Co.
Ex. 11

Amit Traders and Sumit Bros. decided to amalgamate on the following terms and conditions on 1 st April, 2017
when their Balance Sheet were as follows :

Liabilities Amit Sumit Assets Amit Sumit

Traders Bros. Traders Bros.
Amit’s Capital 26,400 - Buildings 25,000 -
Anil’s Capital 33,600 - Furniture 11,500 27,000
Sumit’s Capital - 72,300 Investments - 22,500
Sunil’s Capital - 42,200 Stocks 13,600 32,600
Creditors 21,500 51,500 Debtors 32,000 62,000
Bank Loan 12,000 - Cash at Bank 11,400 21,900
93,500 1,66,000 93,500 1,66,000

Terms of Amalgamation :

1. In case of Amit Traders :

a) Goodwill was valued at 20,000.
b) Amit took over Bank Loan.
c) Building was taken to be worth 60,000.
d) stock to be valued at 12,600.
e) Provision for doubtful debts to be created at 5% on debtors.
2. In case of Sumit Bros.
a) Goodwill was valued at 30,000.
b) Investments were taken over by the new firm at 30,000.
c) Stock was valued at 32,000.
d) Provision for doubtful debts to be created at 5% on debtors.
3. It was further that the total capital pf the new firm shall be 2,00,000 and the capital of each partner shall
be in profit sharing proportion i.e. 1:3:3:3 the difference to be transferred the Current Accounts.
You are required to show necessary ledger accounts in the books of Amit Traders and Sumit Bros. and
prepare Balance Sheet of the New firm after Amalgamation.
Ex. 12

Following is the Balance Sheet of two firms as at 31stMarch, 2017 :

Balance Sheets as on 31st March, 2017

Liabilities Prem & Co. Raj & Co. Assets Prem & Co. Raj & Co.
Capital A/cs Premises - 5,000
Prem 11,500 - Computers 10,000 -
Anil 11,500 - Furniture 5,000 7,000
Raj - 18,000 Inventory 9,000 8,000
Shyam - 12,000 Debtors 6,000 14,000
General Reserve - 3,000 Bank Balance 2,000 4,000
Creditors 5,000 4,000 Cash Balance 1,000 2,000
Bills Payable 5,000 3,000
Total 33,000 40,000 33,000 40,000
It was mutually agreed to amalgamate the businesses from 1st April, 2017.

The terms of amalgamation were as follows :

1. Premises was valued at 10,000 and computers at 12,000.

2. Furniture was not taken over by new firm.
3. A reserve at 5% to be created against debtors.
4. Goodwill was valued as : M/s. Prem & Co. at 10,000 and that M/s. Raj & Co. at 15,000.
5. The new firm also assumed other Assets and Liabilities of old firms at book value.
6. Raj and Shyam share in 3:2 ratio.
Show necessary ledger accounts in the books of old firms.