# Important Questions - Partnership Fundamentals Notes | Study Crash Course of Accountancy - Class 12 - Commerce

## Commerce: Important Questions - Partnership Fundamentals Notes | Study Crash Course of Accountancy - Class 12 - Commerce

The document Important Questions - Partnership Fundamentals Notes | Study Crash Course of Accountancy - Class 12 - Commerce is a part of the Commerce Course Crash Course of Accountancy - Class 12.
All you need of Commerce at this link: Commerce

Question: 1
X,Y and Z are partners sharing profits in the ratio of 1/9 : 1/3 and 5/9, Calculate new ratio and gaining ratio. a) X retires b) Y retires and Z acquires full share of Y c) Z retires and X & Y acquires Z’s share equally d) Z retires and surrender 3/4th of this share in favour  of X and remaining in favour of Y

Question: 2
P,R and S are in partnership sharing profits 4/8, 3/8 and respectively . It is provided under the partnership deed that on the death of any partner his share of goodwill is to be valued at one-half of the net profits credited to his account during the last 4 completed years (books of accounts are closed on 31st December R doed pm 1st January, 1985. The firm’s profits for the last 4 years were as follows: 1981 (Profit Rs.1,20,000); 1982 (Profits Rs.60,000);1983 (losses Rs.20,000) and 1984 (Profits Rs.80,000). 1. Determine the amount that should be credited to R in respect of his share of goodwill. 2. Pass a journal entry without raising goodwill account for its adjustment, assuring that profit sharing ratio between P and S in future will be 3:2 show your working clearly.

Question: 3
Arjun, Bhim and Nakul are partners sharing profits and losses in the ratio of 14: 5 : 6 respectively. Bhim retires and surrenders his 5/25th share in favour of Arjun. The goodwill of the firm is valued at 2 years purchase of super profits based on average profits of last 3 years. The profits for the last 3 years are Rs.50,000, Rs.55,000 and Rs.60,000 respectively. The normal profits for the similar firm are Rs.30,000. Goodwill already appears in the books of the firm at Rs.75,000. The profit for the first year after Bhim’s retirement was Rs.1,00,000. Give the necessary journal entries to adjust Goodwill and to distribute profits showing your workings clearly.

Question: 4
A,B and C and D are partners sharing profit in the ratio of 5:3:1. On retirement of C, goodwill was valued at Rs.3,60,000. C’s share of goodwill will adjusted into the Capital accounts of A,B and D. Pass necessary entry for the treatment of goodwill when new profit sharing ratio is decided at 9:2:1.

Question: 5
X,Y and Z are partners sharing profile and losses in the ratio of 3:2:1 retires selling his share to X and Z for Rs.16,000, Rs.10,000 being paid by X and Rs.6,000 by Z The profit for the year Y’s retirement is Rs.24,000 Pass entries to (a) record the sale of Y’s share to X and Z, and (b) distribute profit between X and Z.

Question: 6
A,B and C were partners. Their partnership deed provided that they were in share profits thus; A26 per cent; B34 per cent; C40 per cent; and that if a partner died, his capital should remain in the business for a stated period at a fixed rate of interest, but the deceased partner’s share should be credited with an amount Goodwill, based upon one and a half year’s average profits, for the five years prior to his death, but be subject to deduction of 5 per cent from the book debts. C died, and the profits of the firm for five years were agreed at Rs.20,000; Rs.30,000; Rs.15,000 (loss); Rs.5,000 (loss); and Rs.45,000 respectively. Book Debts stood at Rs.90,000.

Prepare a statement showing the amount of Goodwill to be credited to C’s Account and give the Journal entry in the firm’s book necessary to carry out the transactions.
(Hint: Total Goodwill Rs.22,500
Net Goodwill = 22,500-4,500(5% of book Debts) = Rs.18,000
C’s Share = 18,000∗ 40/100 = Rs.7,200)

Question: 7
The Balance Sheet of A, B & C who are partners in a firm sharing profits according to their capitals was as under:

 Liabilities Rs. Assets Rs. Creditors 12,600 Buildings 60,000 A's Capital 48,000 Machinery 30,000 B's Capital 24,000 Stock 10,800 C's Capital 24,000 Debtors 12,000 General Reserve 12,000 Less: Provision 600 11,400 Cash at Bank 8,400 1,20,600 1,20,600

On that date B decided to retire from the firm and was paid for his share in the firm subject to the following:
(a) Building to be appreciated by 20%.
(b) Provision for Doubtful Debts to be increased to 15% on Debtors.
(c) Machinery to be depreciated by 20%.
(d) Goodwill of the firm is valued at Rs. 43,200 and the retiring partner's share is adjusted through the Capital Accounts of remaining partners.
(e) The Capital of the new firm be fixed at Rs. 72,000.

Required: Prepare Revaluation Account, Capital Accounts of the partners and the Balance Sheet after retirement of B.

Question: 8
The Balance Sheet of X, Y and Z who were sharing profits in the ratio of 5 : 3 : 2 as at 31st March, 2016 is as follows:

 Liabilities Rs. Assets Rs. Creditors 50,000 Cash at Bank 40,000 Employees' Provident Fund 10,000 Sundry Debtors 1,00,000 Profit and Loss A/c 85,000 Stock 80,000 Capital A/cs:X 40,000 Fixed Assets 60,000 Y 62,000 Z 33,000 1,35,000 2,80,000 2,80,000

X retired on 31st March, 2016 and Y and Z decided to share profits in future in the ratio of 3:2 respectively.

The other terms on retirement were:
(a) Goodwill of the firm is to be valued at  Rs. 80,000.
(b) Fixed Assets are to be depreciated to  Rs. 57,500.
(c) Make a Provision for Doubtful Debts at 5% on Debtors.
(d) A liability for claim, included in Creditors for  Rs. 10,000, is settled at  Rs. 8,000.

The amount to be paid to X by Y and Z in such a way that their Capitals are proportionate to their profit-sharing ratio and leave a balance of  Rs. 15,000 in the Bank Account.

Prepare Profit and Loss Adjustment Account , Partners' Capital Accounts & balance sheet.

Question: 9
X, Y and Z are partners in a firm sharing profits in the ratio of 3 :1 : 2. On 31st March, 2016, their Balance Sheet was:

 Liabilities Rs. Assets Rs. Bills Payable 12,000 Freehold Premises 40,000 Sundry Creditors 28,000 Machinery 30,000 General Reserve 12,000 Furniture 12,000 Capital A/cs: Stock 22,000 X 30,000 Sundry Debtors 20,000 Y 20,000 Less: Provision for DoubtfulDebts 1,000 19,000 Z 28,000 78,000 Cash 7,000 1,30,000 1,30,000

Z retires from the business and the partners agree to the following:
(a) Freehold premises and Stock are to be appreciated by 20% and 15% respectively.
(b) Machinery and Furniture are to be depreciated by 10% and 7% respectively.
(c) Provision for Doubtful Debts is to be increased to  Rs. 1,500.
(d) Goodwill of the firm is valued at  Rs. 21,000 on Z's retirement.
(e) The continuing partners have decided to adjust their capitals in their new profit-sharing ratio after retirement of Z. Surplus/deficit, if any, in their Capital Accounts will be adjusted through cash a/c .

Question: 10
The Balance Sheet of X. , Y and Z sharing profits and losses in the ratio of 2 : 3 : 2, is given below:

 Liabilities Rs. Assets Rs. Capital Accounts: Land and Buildings 2,40,000 X 2,40,000 Machinery 3,60,000 Y 3,60,000 Closing Stock 1,20,000 Z 2,40,000 Sundry Debtors 1,32,000 Workmen Compensation Reserve 18,000 Less: Provision 12,000 1,20,000 Sundry Creditors 60,000 Cash at Bank 1,20,000 Employee Provident Fund 42,000 9,60,000 9,60,000

On same date X desired to retire on the following terms:
(a) Land & Buildings be appreciated by 30%.
(b) Machinery be depreciated by 30%.
(d) The claim on account of Workmen Compensation Fund was estimated at Rs. 9,600.
(e) Goodwill of the entire firm be valued at Rs. 1,68,000. Y and Z decided to share the future profits & losses in the ratio of 3 : 4.
(f) The total capital of the firm is to be the same as before retirement. Individual capitals be in their profit sharing ratio.
(g) Amount due to X is to be settled by paying Rs. 60,000 in cash and balance by transferring to loan account.

Required: Prepare Revaluation Account, Capital Accounts of Partners, Balance Sheet of New Firm.

Question: 11
The Balance Sheet of A, B and C sharing profits in the ratio of 2:3:5 is given below:

 Liabilities Rs. Assets Rs. Creditors 42,000 Bank 27,000 A's Capital 48,000 Debtors 24,000 B's Capital 42,000 Less: Provision 3,000 21,000 C's Capital 36,000 Stock 30,000 Building 84,000 Profit & Loss A/c 6,000 1,68,000 1,68,000

On the above date C retired from the firm due to his illness on the following terms:
(a) Building was to be depreciated by Rs. 24,000.
(b) Provision for doubtful debts was to be maintained at 20% on debtors.
(c) Salary outstanding Rs. 3,000 was to be recorded and creditors Rs. 2,400 will not be claimed.
(d) Goodwill of the firm was valued at Rs. 43,200.
(e) C was to be paid Rs. 9,000 in cash, through bank and the balance was to be transferred to his loan account.

Required: Prepare Revaluation Account, Capital Accounts of Partners, Balance Sheet of New Firm.

Question: 12
P,Q and R are in partnership sharing profits in the ratio of 3:2:1. R retires. Following balance appeared in their books.

 Goodwill 12,000 Bank 10,000 Other Assets 70,000 Creditors 14,000 Capitals: PQ 40,000 R 92,000

20,000

18,000

92,000
Goodwill is agreed at Rs.30,000. Sufficient money is to be introduced so that R is paid off and leave Rs.4,000 in cash at bank. P and Q are to provide such sum as will make their capitals proportionate to their share to profits. Prepare necessary entries and the new balance sheet.

Question: 13
A, B and C are partners in a firm.  A retires on 1st January, 1993.  On the date of retirement, Rs. 80,000 is due to him in all.  It is agreed to pay him this amount in instalments every year at the end of the year.  Prepare A’s Loan a/c in the following cases:

(i) Four yearly instalments plus interest @10% p.a.
(ii) Three annual instalments of Rs. 25,000 each which already include interest @ 10% p.a. on the outstanding balance of each year and the balance including interest is paid in the fourth year.

Question: 14
Mishra, Puri and Khurana are partners in a firm sharing profits in proportion of 3:1:2 respectively.  The Balance Sheet on April 1, 2003 was as follows:

 Liabilities Rs. Asses Rs. Bills Payable 12,000 Freehold premise 40,000 Sundry Creditors 18,000 Machinery 30,000 Reserve 12,000 Furniture 12,000 Capital Accounts: Stock 22,000 Mishra 30,000 Sundry Debtor                 20,000 Puri 30,000 Less:      Reserve for Khurana 28,000 88,000 bad debts          1,000 19,000 Cash 7,000 1,30,000 _ 1,30,000

Khurana retires from the business and the partners agree to the following revaluation:
(a) Freehold premises and stock are to be appreciated by 20% and 15% respectively.
(b) Machinery and furniture are to be depreciated by 10% and 7% respectively.
(c) Bad debts reserve is to be increased to Rs. 1,5000.
(d) Goodwill is valued at Rs. 21,000 on Khurana’s retirement.
(e) The continuing partners have decided to adjust their capitals in their new profit sharing ratio after retirement of Khurana.  Surplus / deficit, if any, in their capital accounts will be adjusted through current accounts.

Prepare necessary ledger accounts and draw the Balance Sheet of reconstituted firm.

Question: 15
The Balance Sheet of Sindhu, Rahul and Kamlesh, who were sharing profits in the ratio of 3:3:4 respectively as on 31st March 2012 was as follows:

 Liabilities Amt (Rs) Assets Amt (Rs) General reserve 10,000 Cash 32,000 Bills payable 20,000 Stock 88,000 Loan 24,000 Investments 94,000 Capitals :Sindu         Rs 1,20,000Rahul         Rs 1,00,000Kamlesh    Rs 80,000 3,00,000 Land & BuildingSindu's Loan 1,20,00020,000 3,54,000 3,54,000

Sindhu died on 31st July 2012. The partnership deed provided for the following on the death of a partner:
(a) Goodwill of the firm be valued at two years' purchase of average profits for the last three years which were ₨ 80,000
(b) Sindhu's share of profit till the date of his death was to be calculated on the basis of sales. Sales for the year ended 31st March 2012 amounted to ₨ 8,00,000 and that from Is' April to 31st July 2012 ₨ 3,00,000. The profit, for the year ended 31st March 2012 was ₨ 2,00,000.
(c) Interest on capital was to be provided 6% p.a.
(d) According to Sindhu's will, the executors should donate his share to ‘MatriChhaya—an orphanage for girls'.
Prepare Sindhu's Capital Account to be rendered to his executor.
Also identify the value being highlighted in the question.

Question: 16
dev, Swati and Sanskar were partners in a firm sharing profits in the ratio of 2 : 2 : 1. On 31-3-2014 their Balance Sheet was as follows :

 Liabilities AmountRs Assets AmountRs Trade payables 17,000 Building 1,04,000 Bank Loan 13,000 Inventory 16,000 Capitals : Trade Receivables 23,000 Dev 77,000 Cash 40,000 Swati 37,000 Profit & Loss A/c 57,000 Sanskar 46,000 2,10,000 2,40,000 2,40,000

On 30th June, 2014 Dev died. According to partnership agreement Dev was entitled to interest on capital at 12% per annum. His share of profit till the date of his death was to be calculated on the basis of the average profits of last four years. The profit of the last four years were:

 Years Profit Rs 2010-2011 2,04,000 2011-2012 1,80,000 2012-2013 90,000

On 1-4-2014, Dev withdrew Rs 15,000 to pay for his medical bills. Prepare Dev's account to be presented to his executors.

Question: 17
Khanna, Seth and Mehta were partners in a firm sharing profits in the ratio of 3 : 2 : 5. On 31-12-2013 the Balance Sheet of Khanna, Seth and Mehta was as follows:

 Liabilities Rs. Assets Rs. Khanna's Capital 3,00,000 Goodwill 3,00,000 Seth's Capital 2,00,000 Land and Building 5,00,000 Mehta's Capital 5,00,000 Machinery 1,70,000 General Reserve 1,00,000 Stock 30,000 Loan from Seth 50,000 Debtors 1,20,000 Creditors 75,000 Cash 45,000 Profit and Loss A/c 60,000 12,25,000 12,25,000

On 14th March 2014, Seth died.

The partnership deed provided that on the death of a partner the executor of the deceased partner is entitled to:
(i) Balance in Capital Account;
(ii) Share in profits upto the date of death on the basis of last year's profit;
(iii) His share in profit/loss on revaluation of assets and re-assessment of liabilities which were as follows:
(a) Land and Building was to be appreciated by Rs. 1,20,000.
(b) Machinery was to be depreciated to Rs. 1,35,000 and Stock to Rs. 25,000.
(c) A provision of 2 1/2% for bad and doubtful debts was to created on debtors;
(iv) The net amount payable to Seth's executors was transferred to his loan account which was to be paid later.
Prepare Revaluation Account, Partners Capital Accounts, Seth's Executors A/c and the Balance Sheet of Khanna and Mehta.

Question: 19
X, Y and Z were partners in a firm sharing profits and losses in the ratio of 5 : 3 : 2. On 31st March, 2014 their Balance Sheet was as follows:

 Liabilities Rs. Assets Rs. x. 's Capital 75,000 Building 50,000 Y's Capital 62,500 Patents 15,000 Z's Capital 37,500 Machinery 75,000 Sundry Creditors 42,500 Stock 37,500 Debtors 20,000 Cash in Bank 20,000 2,17,500 2,17,500

Z died on 31st July, 2014. It was agreed that: (i) Goodwill will be valued at 2,5 years' purchase of the average profits of the years, which were : I Rs. 32,500, II Rs. 30,000, III Rs. 40,000, IV Rs. 37,500 (2013-2014). (ii) Machinery be valued at Rs. 70,000; Patents at Rs. 20,000 and Building at Rs. 62,500. (iii) For the purpose of calculating Z's share of profits in the year of his death the profits in 2014-2015 should be taken to have been accrued on the same as in 2013-2014. (iv) A sum of Rs. 17,500 was paid immediately to the executors of Z and the balance was paid in four half yearly installments together with interest @ 12% starting from 31st January, 2015.

Give the necessary Journal entries and Prepare Z's executors' account till the payment of instalment due on 31st January, 2015.

Questions: 20
Risha and Nisha were partners. The partnership deed provides:
i) That the accounts be balanced on 31st December each year.
ii) The profits be divided as follows: Risha one-half, Nisha one-third and carried to Reserve account one-sixth.
iii) That is the event of death a partner, her executor will be entitled to the following:
(a) The capital to her credit at the date of death.
(b) Her proportion of profit to date of death based on the average profits of the last three completed years.
(c) Her share of goodwill based on three years’ purchase of the average profits for the three preceding years.

On 31st December, 2006 the Trial Balance was as under:

The profits for the three years were : 2004 Rs.4,200;2005 Rs.3,900 and 2006 Rs.4,500 Nisha died on 31 st May, 2007. Draw up the deceased Partner’s Capital A/C and Executor’s A/C.

The document Important Questions - Partnership Fundamentals Notes | Study Crash Course of Accountancy - Class 12 - Commerce is a part of the Commerce Course Crash Course of Accountancy - Class 12.
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