Computation of sacrificing ratio and new profit sharing ratio
Old share = 5:3 that is prema \(\frac{5}{8}\) amd Chandra \(\frac{3}{8}\)
Share scarified =Old share x Proportion of share sacrificed
Prema \(=\frac { 5 }{ 8 } \times \frac { 1 }{ 8 } =\frac { 5 }{ 64 } \)
Chandra \(=\frac { 3 }{ 8 } \times \frac { 1 }{ 8 } =\frac { 3 }{ 64 } \)
Sacrificing ratio of Prema and Chandra is \(\frac{5}{64}\)and \(\frac{3}{64}\) that is 5:3
New share = Old share - Share sacrificed
Prema \(=\frac { 5 }{ 8 } -\frac { 5 }{ 64 } =\frac { 40-5 }{ 64 } =\frac { 35 }{ 64 } \)
Chandra \(=\frac { 3 }{ 8 } -\frac { 3 }{ 64 } =\frac { 24-3 }{ 64 } =\frac { 21 }{ 64 } \)
Share of new partner = Sum of shares sacrificed by Prema and Chandra
Hema \(=\frac { 5 }{ 24 } +\frac { 3 }{ 64 } =\frac { 5+3 }{ 64 } =\frac { 8 }{ 64 } \)
New profit sharing ratio of Prema, Chandra and Hema \(=\frac { 35 }{ 64 } :\frac { 21 }{ 64 } :\frac { 8 }{ 64 } \), that is 35:21:8

Journal entry

Date	Particulars		L.F	Debit Rs	Credit Rs
2018	Rosi A/c (45,000)	Dr		15,000
January	Rathi A/c	Dr		15,000
	Rani A/c	Dr		15,000
	To Profit and loss A/c				45,000
	(Accumulated loss transferred to all
	partner's capital account in the old profit sharing ratio)

Current ratio = \(\frac{Current\ assets}{Current\ liabilities}\) = \(\frac{8,00,000}{4,00,000}\) = 2:1
Current assets = Current investments + Inventories + Trade receivables + Cash and cash equivalents + Prepaid expenses
= 80,000 + 1,60,000 + 4,00,000 + 1,20,000 + 40,000 = Rs.8,00,000
Current liabilities = Trade creditors + Bills payable + Expenses payable
= 1,60,000 + 1,00,000 + 1,40,000 = Rs.4,00,000
(ii) Quick ratio
Quick ratio gives the proportion of quick assets to current liabilities. It indicates whether the business concern is in a position to pay its current liabilities as and when they become due, out of its quick assets. Quick assets are current assets excluding inventories and prepaid expenses. It is otherwise called liquid ratio or acid test ratio. It is calculated as follows:
Quick ratio = \(\frac{Quick\ assets}{Current\ liabilities}\)
Quick assets = Current assets – Inventories – Prepaid expenses
Higher the quick ratio, better is the short-term financial position of an enterprise.

(i) Ratio is a mathematical expression of relationship between two related or interdependent items.
(ii) It is the numerical or quantitative relationship between two items
(iii) It is calculated by dividing one item by the other related item.
(iv) When ratios are calculated on the basis of accounting information, these are called 'accounting ratios'.

Journal entry

Date	Particulars		L.F	Debit Rs.	Credit RS.
2019 January 1	Mary’s capital A/c	Dr.		25,000
	Meena’s capital A/c	Dr.		25,000
	Mariam’s capital A/c	Dr.		25,000
	To Profit and loss a/c				75,000
	(Accumulated loss transferred to all partners’ capital account in the old profit sharing ratio)

(i) Automated accounting is an approach to maintain up-to-date accounting records with the aid of accounting software.
(ii) Under manual accounting system entries are made in different books of accounts while accounting software packages sallow manual entry in one field or one place.

Comparative income statement of Tharun Co. Ltd for the years ended 31^st March, 2017 and 31^st March, 2018

Particulars	2016-17	2017-18	Absolute amount of increase ( +) or decrease (–)	Percentage increase (+) or decrease (–)
	Rs.	Rs.	Rs.
Revenue from operations	2,00,000	2,50,000	+50,000	+25
Add: Other income	50,000	40,000	–10,000	–20
Total revenue	2,50,000	2,90,000	+40,000	+16
Less: Expenses	1,50,000	1,20,000	–30,000	–20
Profit before tax	1,00,000	1,70,000	+70,000	+70

Computation of percentage increase for revenue from operations
\(\cfrac { Absolute\ amount\ of\ increase\ or\ decrease }{ Year\ 1\ amount } \times 100=\cfrac { 50,000 }{ 2,00,000 } \times 100=25%\)

Journal entry

Date	Particulars	L.E.	Debit Rs.	Credit Rs.
2019	Kavitha’s capital A/c Dr.		40,000
January 1	Radha’s capital A/c Dr.		30,000
	To Profit and loss a/c (Accumulated loss transferred to old partners’ capital account in the old profit sharing ratio)			70,000

Super profit is the excess of average profit over the normal profit. Average profit is calculated by dividing the total adjusted actual profit of certain number of years by the total number of such years. Normal profit is the profit earned by the similar business, firms under normal conditions.
Normal profit = Capital employed \(\times\) Normal rate of return.
Capital employed = Fixed assets + Current assets - Current liabilities.

Total capitalised value of the average profit = \(\frac { Average\ profit }{ Normal\ rate\ of\ return } \)\(\times\) 100
=\(\frac { 60,000 }{ 10 } \) \(\times\) 100
= Rs. 6,00,000
Goodwill = Total capitalised value of the average profit – Capital employed
= 6,00,000 – 4,50,000
= Rs. 1,50,000

Calculation of interest on capital:
Interest on Antony’s capital:

On opening capital for 1 year	60,000 \(\times\) \(\frac{6}{100}\)	Rs. 3,600
On additional capital for 9 months	10,000 \(\times\) \(\frac{6}{100}\) \(\times\) \(\frac{9}{12}\)	Rs. 450
Interest on capital		Rs. 4,050

 Interest on Akbar’s capital:

On opening capital for 1 year	40,000 \(\times\) \(\frac{6}{100}\)	Rs. 2,400
On additional capital for 6 months	5,000 \(\times\) \(\frac{6}{100}\) \(\times\) \(\frac{6}{12}\)	Rs. 150
Interest on capital		Rs. 2,550

 Note: Since the date of additional capital introduced by Akbar is not given, interest on additional capital is calculated for an average period of 6 months.

Statement of profit or loss for the year ended 31^st March, 2017

Particulars	Rs.
Closing capital (as on 31.3.2017)	3,50,000 40,000
Add: Drawings during the year
	3,90,000
Less: Additional capital introduced during the year	70,000
Adjusted closing capital	3,20,000 2,00,000
Less: Opening capital (as on 1.4.2016)
Profit made during the year	1,20,000

In the books of Ooty Recreation Club

Dr. Income and Expenditure Account for the year ended 31st March, 2018 Cr

Expenditure	Rs.	Income	Rs.
To Sports materials purchased	10,000	By Rent received	10,000
To Stationery paid	7,000	By Subscription received	54,000
To Salaries	20,000
To Surplus	27,000
(Excess of income over expenditure)
	64,000		64,000

Comparative balance sheet of Malar Ltd as on 31^st March 2016, and 31^st March 2017 Particulars 2015-16 2016-17 Absolute amount
of increase ( +)
or decrease (–) Percentage
increase (+) or
decrease (–)   Rs. Rs.     I EQUITY AND LIABILITIES         1. Shareholders’ Fund         a) Share capital 2,00,000 2,50,000 +50,000 +25 b) Reserves and surplus 50,000 50,000     2. Non-current liabilities         Long-term borrowings 30,000 60,000 +30,000 +100 3. Current liabilities         Trade payables 20,000 60,000 +40,000 +200 Total 3,00,000 4,20,000 +1,20,000 +40 II ASSETS         1. Non-current assets         a) Fixed assets 1,00,000 1,50,000 +50,000 +50 b) Non-current investments 50,000 75,000 +25,000 +50 2. Current assets         Inventories 75,000 1,50,000 +75,000 +100 Cash and cash equivalents 75,000 45,000 –30,000 –40 Total 3,00,000 4,20,000 +1,20,000 +40

In the books of Joy Company Journal entries

Date	Particulars		L.F.	Debit Rs.	Credit Rs.
	Bank A/c (9,000 × 5)	Dr.		45,000
	To Equity share application A/c				45,000
	(Application money received)
	Equity share application A/c	Dr.		45,000
	To Equity share capital A/c				45,000
	(Transfer of application money to share capital A/c)
	Equity share allotment A/c	Dr.		27,000
	To Equity share capital A/c				27,000
	(Allotment money due)
	Bank A/c	Dr.		27,000
	To Equity share allotment A/c				27,000
	(Allotment money received)
	Equity share first and final call A/c	Dr.		18,000
	To Equity share capital A/c				18,000
	(Call money due)
	Bank A/c	Dr.		18,000
	To Equity share first and final call A/c				18,000
	(Call money received)