Time – 50 mins
Q1. On 31st March 2015 the Balance Sheet of Punit, Rahul and Seema was as follows
They were sharing Profit and loss in the ratio 5:3:2. Seema died on October 1, 2015. It was agreed between her executors and the remaining partners that:
i. Goodwill be valued at 2 years’ purchase of the average profits of the previous five years, which were: 2010-11: 30,000; 2011-12: 26,000; 2012-13: 24,000; 2013-14: 30,000 and 2014-15: 40,000.
ii. Patents be valued at 16,000; Machinery at 56,000; Buildings at 60,000.
iii. Profit for the year 2015-16 be taken as having been accrued at the same rate as that in the previous year.
iv. Interest on capital be provided at 10% p. a.
v. A sum of 15,500 was paid to her executors immediately.
Prepare Revaluation Account, Seema’s Capital Account and Seema’s executors Account. (6 mark)
Q2. A, B and C are partners in a firm sharing profits in the ratio of 5 : 3 : 2 respectively. Their Balance Sheet as on 31st December, 2012 was as follows :
P & L
A died on 1st October, 2013, due to illness. It was agreed between the firm and A‖s executors that the amount due to A will be used for construction of a Charitable Hospital in a village. As per the agreement :
(i) Goodwill was valued at 2 years purchase of average profits of last 4 years, which were : 2009 – Rs. 1,00,000; 2010 – Rs. 1,60,000; 2011 – Rs. 1,80,000
(ii) Patents were revalued at Rs. 90,000; Machinery at Rs. 2,80,000 and Building at Rs. 2,50,000.
(iii) A‖s share of profit till the date of his death will be calculated on the basis of the profit of the year 2012.
(iv) Interest on capital will be provided at 10% p.a.
(v) Amount due to A’s executors will be transferred to Charity account.
Prepare a capital account to be presented to his executor. (6 mark)
Q3. Nithya, Sathya and Mithya were partners sharing profits and losses in the ratio of 5:3:2. Their Balance Sheet as on December 31, 2002 was as follows :
Balance Sheet at December 31, 2002
Mithya dies on May 1, 2002. The agreement between the executors of Mithya and the partners stated that :
(a) Goodwill of the firm be valued at 2 ½ times the average profits of last four years. The profits of four years were : in 1998, Rs.13,000; in 1999, Rs.12,000; in 2000, Rs.16,000; and in 2001, Rs.15,000.
(b) The patents are to be valued at Rs.8,000, Machinery at Rs.25,000 and Premises at Rs.25,000.
(c) The share of profit of Mithya should be calculated on the basis of the profit of 2002.
(d) Provide interest @ 12% p.a. on capital. (6 mark)