ACCOUNTS

Q.1. M, P and A are partners in a firm having fixed capital of Rs.80,000, 40,000 and 50,000 respectively haring profits as
7:6:4. The rate of interest on capital was agreed at 10% per annum but was wrongly credited to them as 12%p.a. Give
necessary entry to adjust the balances of partner’s capital account.

Q.2. .Ram & Mohan were partners in a firm sharing profits in ratios of 4:1 on 1st April 2007 they admitted Sohan as a
new partner for 1/3 share in profits of firm. They fixed the new profit sharing ratio as 4:2:3. The profit and loss account
on date of admission showed a balance of Rs.32,000(Dr.). The firm had a General Reserve of Rs.1,00,000. Sohan is to
bring Rs.60,000 as premium for his share of goodwill. Show calculation clearly passes necessary journal entries to record
above transaction.

Q.3. Anupam and Abhishek are partners sharing profits and losses in the ratio of 3: 2. Their capital accounts showed
balances of Rs. 1,50,000 and Rs. 2,00,000 respectively on Jan 01, 2003. Show the treatment of interest on capital for the
year ending 31-12-06 in each of the following alternatives:
(a) If the partnership deed is silent as to the payment of interest on capital and the profit for the year is Rs. 50,000;
(b) If partnership deed provides for interest on capital @ 8% p.a. and the firm incurred a loss of Rs. 10,000 during the
year;
(c) If partnership deed provides for interest on capital @ 8% p.a. and the firm earned a profit of Rs. 50,000 during the
year;
(d) If the partnership deed provides for interest on capital @ 8% p.a. and the firm earned a profit of Rs. 14,000 during
the year.

Q.4. A, B, and C are partners sharing profit in the ratio of 1/2:1/3:1/6. D is admitted in the firm for 1/6. C share will
remain unchanged, calculate new ratio.

Q.5. X and Y are partners sharing profits in the proportion of 7: 5. They agree to admit Z into partnership who is to get
1/6th share in profits. He acquires this share as 1/24th from X and 1/8 from Y. Calculate new profit sharing ratio.

Q.6. Anita, Asha and Amrit are partners sharing profits in the ratio of 3 : 2 : 1 respectively. From 1-1-10, they decided to
share profits in the ratio 2: 3: 1. The Partnership Deed provides that in the event of any change in pro sharing ratio, the
goodwill should be valued at three years' purchase of average of five years profits. The profits and losses of the
preceding five years Profits: 2005- Rs.1, 20,000; 2006- Rs. 3, 00,000; 2007- Rs. 3, 40,000; 2008- Rs. 3,80,000, Loss:
2009— Rs. 1,40,000. Showing the working clearly, give the necessary Journal entry to record the above change.

Q.7. Rini & Nikita are in partnership sharing profits in the ratio of 2:3 with effect from 1-4-09 they agreed to share profits
in the ratio of 1:2. For this purpose, the goodwill of the firm is to be valued at 2 yrs purchase of the average profits of
last 3 yrs, which were Rs. 3,00,000; Rs. 3,20,000 and Rs. 4,00,000 respectively. The reserves appear in the books at Rs.
2,20,000. Partners neither want to show the goodwill in the books nor to distribute the reserve. You are required to give
effect to the change by passing a single Journal Entry.

Proprietor: Murtaza Jamali

Mobile: 8976752676 Email: murtazaj.52@gmail.com
Address: Rm. No. 2, Kush apartment, Near State Bank of India, khatiwala tank, Indore-452014
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Q.8. The following is the balance sheet of A,B and C sharing profits and losses in Proportion of 6:5:3:-
Liabilities Rs. Assets Rs.
Creditors 18,900 Cash at Bank 1,890
Bills payable 6,300 Debtors 26,460
General reserve 10,500 stock 29,400
Capital Accounts: Furniture 7,350
A 35,400 Land & building 45,150
B 29,850 Goodwill 5,250
C 14,550 79,800
1,15,500 1,15,500
They decided to admit D for 1/8th share on the following terms:-
a. That furniture be depreciated by Rs.920.
b. An old customer, whose account was written off as bad, has promised to pay Rs.2,000 in full
settlement of his debt.
c. That a provision of Rs.1,320 be made for outstanding repair bills.
d. That the value of Land & building having appreciated be brought upto Rs.54,910.
e. That D should bring in Rs.14,700 as his capital.
f. That D should bring in Rs.14,070 as his share of goodwill.
g. That after making the above adjustment the capital accounts of old partners be adjusted on the
basis of the proportion of D’s capital to his share in business i.e.,actual cash to be paid off or
brought in by the old partners, as the case may be.
Prepare the necessary ledger accounts.

Q.9. KB, MB and GB were partners in a firm whose Balance sheet as on 31st march, 2012 was as below:
Liabilities Amt. (Rs.) Assets Amt. (Rs.)
General Reserve 3,000 Cash at Bank 6,496
Sundry Creditors 7,096 Stock 10,600
Capitals A/cs: Debtors 9,000
KB 8,000 Furniture 2,000
MB 6,000
GB 4,000 18,000
28,096 28,096
MB retired on that date and in this connection it was decided to make the following adjustments:
a) To reduce stock and furniture by 5% and 10% respectively; and
b) To provide for doubtful debts at 5% on debtors.
c) Rent outstanding (not provided for as yet) was valued at Rs. 260. Goodwill was valued at Rs.4,200.
KB and GB decided:
i) To share profits and losses in 5:3 respectively.
ii) Not to show goodwill in the books.
iii) To readjust their capitals in their profit sharing ratio; and

Proprietor: Murtaza Jamali

Mobile: 8976752676 Email: murtazaj.52@gmail.com
Address: Rm. No. 2, Kush apartment, Near State Bank of India, khatiwala tank, Indore-452014
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iv) To bring in sufficient cash to pay off MB immediately and to leave a balance of Rs.1,000 in the bank. MB
was paid off.
Give journal entries to record the above and draft the balance sheet of the new firm

Proprietor: Murtaza Jamali

Mobile: 8976752676 Email: murtazaj.52@gmail.com
Address: Rm. No. 2, Kush apartment, Near State Bank of India, khatiwala tank, Indore-452014
Page 3