Q.

NO QUESTION
1 X, Y and Z are partners in a firm sharing profits in the ratio of 3 : 2 : 1. They
decided to share future profits equally. The Profit and Loss Account showed a
Credit balance of ₹60,000 and a General Reserve of ₹30,000. If these are not to
be shown in balance sheet, in the journal entry :
(A) Cr. X by ₹15,000: Dr. Z by ₹15,000
(B) Dr. X by ₹15,000; Cr. Z by ₹15,000
(C) Cr. X by ₹45,000; Cr. Y by ₹30,000; Cr. Z by ₹15,000
(D) Cr. X by ₹30,000; Cr. Y by ₹30,000; Cr. Z by ₹30,000
2 Assertion (A):- Commission provided to partner is shown in Profit and Loss A/c.
Reason (R):- Commission provided to partner is charge against profits and is to
be provided at fixed rate.
a) (A) is correct but (R) is wrong
b) Both (A) and (R) are correct, but (R) is not the correct explanation of (A)
c) Both (A) and (R) are incorrect.
d) Both (A) and (R) are correct, and (R) is the correct explanation of (A)
3 Samiksha, Arshiya and Divya were partners in a firm sharing profits and losses
in the ratio of 5: 3: 2. With effect from 1st April 2022, they agreed to share
future profits and losses in the ratio of 2: 5: 3. Their Balance Sheet showed a
debit balance of ₹ 50,000 in the Profit and Loss Account and a balance of ₹
40,000 in the Investment Fluctuation Fund. The market value of an investment
is ₹30,000 against the book value of ₹50,000. Partners have decided, not to
show revised valued in the balance sheet and to pass an adjusting entry for it.
Which of the following is the correct treatment of the above?
a) Samiksha’s Capital A/c. Dr. 9,000
To Arshiya’s Capital A/c. 6,000
To Divya’s Capital A/c 3,000
b) Arshiya’s Capital A/c. Dr. 5,000
To Samiksha’s Capital A/c. 2,000
To Divya’s Capital A/c. 3,000
c) Arshiya’s Capital A/c. Dr. 2,000
Divya’s Capital A/c. Dr. 1,000
To Samiksha’s Capital A/c 3,000
d) Arshiya’s Capital A/c. Dr. 6,000
Divya’s Capital A/c. Dr. 3,000
To Samiksha’s Capital A/c 9,000
OR

X Y and Z are partners sharing profits and losses in the ratio 5 : 3 : 2. They
decide to share the future profits in the ratio 3 : 2 : 1. Workmen compensation
reserve appearing in the balance sheet on the date if no information is available
for the same will be :
(A) Distributed to the partners in old profit sharing ratio
(B) Distributed to the partners in new profit sharing ratio
(C) Distributed to the partners in capital ratio
(D) Carried forward to new balance sheet without any adjustment

Amay, Bina and Chander are partners in a firm with capital balances of ₹
50,000, ₹ 70,000 and ₹ 80,000 respectively on 31st March, 2022. Amay decides
to retire from the firm on 31st March, 2022. With the help of the information
provided, calculate the amount to be paid to Amay on his retirement. There
1
 existed a general reserve of ₹ 7,500 in the balance sheet on that date.
The goodwill of the firm was valued at ₹ 30,000.
Gain on revaluation was ₹24,000.
a) ₹ 88,500 b) ₹ 90,500
c) ₹ 65,375 d) ₹ 70,500

Or

X, Y, and Z are partners in a firm. At the time of division of profit for the year,
there was dispute between the partners. Profit before interest on partner’s capital
was ₹6,00,000 and Z demanded minimum profit of ₹5,00,000 as his financial
position was not good. However, there was no written agreement on this point.
(A) Other partners will pay Z the minimum profit and will share the loss equally.
(B) Other partners will pay Z the minimum profit and will share the loss in capital
ratio.
(C) X and T will take ₹50,000 each and Z will take ₹5,00,000.
(D) ₹2,00,000 to each of the partners.
4 A and B are partners in partnership firm without any agreement. A has given a
loan of ₹50,000 to the firm. At the end of year loss was incurred in the business.
Following interest may be paid to A by the firm :
(A) @5% Per Annum
(B) @ 6% Per Annum
(C) @ 6% Per Month
(D) As there is a loss in the business, interest can’t be paid
5 Features of a partnership firm are :
(A) Two or more persons are carrying common business under an agreement.
(B) They are sharing profits and losses in the fixed ratio.
(C) Business is carried by all or any of them acting tor all as an agent.
(D) All of the above.
6 Types of Guarantee Division of Profits.
(i) Guarantee by Firm to Partners
(ii) Guarantee by Partners to Firm
(iii) Guarantee by Partner to Partner
(iv) All of the above
12 A, B and C were Partners with capitals of ₹50,000; ₹40,000 and ? 30,000
respectively carrying on business in partnership. The firm’s reported profit for
the year was ₹80,000. As per provision of the Indian Partnership Act, 1932, find
out the share of each partner in the above amount after taking into account that no
interest has been provided on an advance by A of ₹20,000 in addition to his
capital contribution.
(A) ₹26,267 for Partner B and C and ₹27,466 for Partner A.
(B) ₹26,667 each partner.
(C) ₹33,333 for A ₹26,667 for B and ₹20,000 for C.
(D) ₹30,000 each partner.
7 A, B, C, D are in partnership sharing profits and losses in the ratio of 9 : 6 : 5 : 5.
E joins the partnership for 20% share. A. B, C and D would in future share profits
among themselves as 3/10 : 4/10 : 2/10 : 1/10. The new profit sharing ratio will
be:
(A) 3:4:2: 1:5
(B) 9:6:5:5:5
(C) 6 : 8 : 4 : 2 : 5
2
 (D) 8 : 6 : 4 : 2 : 5
88 A and B are partners. A draws a fixed amount at the beginning of every month.
Interest on drawings is charged @8% p.a. At the end of the year interest on A’s
drawings amounts to ₹ 2,600. Monthly drawings of A were:
a) ₹ 8,000
b) ₹ 60,000
c) ₹ 7,000
d) ₹ 5,000

Or

Vidyadhar, a partner withdrew ₹ 5,000 in the beginning of each quarter and

interest on drawings was calculated as ₹ 1,500 at the end of accounting year 31
March 2022. What is the rate of interest on drawings charged?
a) 6% p.a.
b) 8% p.a.
c) 10% p.a.
d) 12% p.a.
9 A and B were partners in 3:2. On 1st April 2020, their capital balances were rupees
3,00,000 and rupees 5,00,000 respectively.
Following were the terms of the partnership deed:
1) Interest on capital @ 10% p.a.
2) Interest on drawing @ 5% on their annual drawings.
3) Salary to A @ rupees 2,500 per month
4) Commission to B @ 5% on net profit remaining after interest on capital and after
charging his commission.
5) 10% of the distributable profit should be transferred to general reserve.
Annual drawings of the partners being rupees 60,000 each.
Net profit earned by the firm at the end of the year 31st March 2021 amounting to rupees
2,90,000.
Prepare profit and loss appropriation account.
.

3
 WORKSHEET-1
CHAPTER: FUNDAMENTALS OF PARTNERSHIP
SUB TOPICS: PROFIT AND LOSS APPROPRIATION ACCOUNT;
CALCULATION ON INTEREST ON CAPITAL; CALCULATION ON INT. ON
DRAWINGS
Time allowed: 20 minutes Max. Marks-20
S.N. QUESTIONS MARKS
1 Sohan and Mohan are partners sharing profits and losses in the ratio of 2:3 with 1
the capitals of 5,00,000 and 6,00,000 respectively. On 1st January 2022, Sohan
and Mohan granted loans of 20,000 and 10,000 respectively to the firm.
Determine the amount of loss to be borne by each partner for the year ended 31st
March 2022 if the loss before interest for the year amounted to ₹2,500.
a) Share of Loss Sohan-1,250 Mohan -₹1,250
b) Share of Loss Sohan-₹ 1,000 Mohan -₹1,500
c) Share of Loss Sohan 820 Mohan-₹1,230
d) Share of Loss Sohan-1,180 Mohan-1,770
2 Given below are two statements, one labelled as Assertion (A) and the other 1
labelled as Reason (R) Assertion (A): Rent paid to partner is shown in P & L
Appropriation A/c. Reason (R): Rent paid to partner is a charge against the
profits. In the context of the above statements, which one of the following is
correct?
(A) (A) is correct, but (R) is wrong. (B) Both (A) and (R) are correct.
(C) (A) is wrong, but (R) is correct. (D) Both (A) and (R) are wrong.
3 How much interest will be charged on drawings of 6000 half yearly at the end of 1
each half year if rate on interest on drawings is 6% p.a. however partnership deed
is silent regarding any kind of interest?
(A) 720 (B) 360 (C) 180 (D) NIL
4 A partner withdrew Rs. 4,000 per month in the beginning of every month and 1
interest on drawings was calculated as Rs. 1,560 at the end of accounting year
31stMarch 2025. What is the rate of interest on drawings charged?
a) 6% p.a. b) 8% p.a. c) 10% p.a. d) 12% p.a
5 Given below are two statements, one labelled as Assertion (A) and the other 1
labelled as Reason (R) Assertion (A): Transfer to reserves is shown in P & L
Appropriation A/c. Reason (R): Reserves are not a charge against the profits. In
the context of the above statements, which one of the following is correct?
(A) (A) is correct, but (R) is wrong.
(B) Both (A) and (R) are correct and R is the correct explanation of A
(C) (A) is wrong, but (R) is correct.
(D) Both (A) and (R) are wrong.
6 A partnership firm earned divisible profit of 5,00,000, interest on capital is to be 1
provided to partner is 3,00,000, interest on loan taken from partner is 50,000 and
profit -sharing ratio of partners is 5:3. Sequence the following in correct way:
1. Distribute profits between partners
2. Charge interest on loan to Profit and Loss A/c
3. Calculate the net profit Transfer to Profit and Loss appropriation A/C.
4. Provide interest on capital

4
 A. 1 - 2 - 3 - 4 B. 2 - 3 - 4 - 2 C. 2 - 3 - 4 - 1 D. 3 - 1 - 4 – 2
7 V and M were partners in a firm sharing profits and losses in the ratio of 5:3. 1
Their capitals were Rs.6,00,000 and Rs.3,00,000 respectively. They were entitled
to interest on capital @ 10 %. The firm earned profit of Rs.75,000 during the year
.The interest on V capital will be
(a) 50,000 (b) 60,000 (c) 30,000 (d) 25,000
8 Anmol & Yashraj are partners Sharing profits in the ratio of 3:2. Capital account 3
showed balance of ₹1,50,000 and ₹2,00,000 respectively on 1st April 2024 Firm
earned a net profit of ₹74,050. Layout of Partnership Deed Interest on Capital
@8% p.a., Interest on Drawings Yashraj ₹2400 and Anmol ₹250. Partners have
withdrawn amount on different dates. Anmol is entitled to get a Salary ₹1200 p.m.
for three quarters. Yashraj is entitled to get a commission @10% . During the year
firms record an surplus sale of ₹4,50,000 for which an extra commission @1%
each the partners will get. Accounting year ends 31st March every year.
Prepare Profit & Loss appropriation Account.
9 Read the following information carefully and answer the questions that follow: 4
A and B are partners in 3:2. Their capital balances as on 1st April 2024 amounting
to 2,00,000 each. On 1st February, 2025, A contributed an additional capital of
1,00,000. Following are the terms of deed:
a) Interest on capital @ 6% per annum
b) Interest on drawings @ 8% per annum
c) Salary to A 1500 per month
d) Commission to B @10% on net profit after charging interest on capital, salary
and his commission. Drawings of the partners were 20,000 and 30,000 respectively
during the year. Net profit earned by the firm was 2,08,000. Choose the correct
option based on the above information:

Q1. What is the amount of Interest on capitals of A and B:

a) 12,000 each b) 12,000 to A and 13,000 to B
c) 13,000 to A and 12,000 to B d) None of the above.

Q2. What is the amount of interest on drawings of A and B:

a) 1200 and 1800 respectively b) 800 and 1200 respectively
c) 1200 and 800 respectively d) 1600 and 2400 respectively

Q3. What is the amount of commission payable to B?

a) 15000 b) 16500
c) 20800 d) None of these

Q4. What is A's share in the net divisible profit?

a) 124400 b) 83600
c) 91200 d) 60800
10 A and B are partners sharing profit and loss in the ratio 50%:50% and contributed 6
fixed capital of 2,00,000 each and B having current balance of 20000.
Accumulated profit 50000 Goodwill in the books 20,000. Partnership deed
provides Salary to A 12,000 p.a B’s commission 5000 Partnership firms only
runs for six months. Firms earned a net profit 25,000. Prepare Partners capital
Account. Show working clearly.

5
 HINT ANSWERS – WORKSHEET-1
1 D 4 A 7 A
2 C 5 B
3 D 6 C
8 Profit and Loss Appropriation Account
Dr. For the Year ended 31st March 2025
Cr.
Particulars (Dr) Amount Particulars (Cr.) Amount
(Rs.) (Rs.)
To IOC A/c 28,000 By Profit and Loss A/c 74,050
To Anmol’s Salary 10800 By IOD (2400+250) 2650
To Commission
Anmol 4500
Yashraj 4500+7405 16405
To Profit transferred
Anmol 12897
Yashraj 8598
76700 76700
9 1 (C) 2 (b) 3 (a) 4(c)
10 Divisible Profit:14,000 (A rs 70000 and B Rs7000)
Partners’ Capital Account Balance b/d Cr Side A- 200000 and B – 200000
Partners Current account Dr side B-balance b/d 20000 Cr side A’s salary-6000/-; B’s
Comm- 5000 and A’s Divisible Profit 7000; B’s Divisible Profit 7000

6
 WORKSHEET-2
CHAPTER: FUNDAMENTALS OF PARTNERSHIP
SUB TOPICS: PAST ADJUSTMENT AND GURANTEE OF PROFIT
Time allowed: 20 minutes Max. Marks-20
S.N. QUESTIONS MARKS
1 A, B and C are partners sharing profits in the ratio of 3:3:2. As per the 1
partnership agreement, C is to get a minimum amount of 80,000 as his
share of profits every year and any deficiency on this account is to be
personally borne by A & B in 3:2. The net profit for the year ended 31st
March, 2025 amounted to 3,12,000. How much of deficiency to be
borne by A?
a.1,200 b. 2,000 c. 800 d. None of these
2 Assertion (A): Guarantee of minimum profit may be given to a partner. 1
Reason(R): It is compulsory as per Indian Partnership Act, 1932.
a) Both (A) and (R) are true and (R) is the correct explanation of (A)
b) Both (A) and (R) are true and (R) is not the correct explanation of (A)
c) (A) is true, but (R) is false
d) (A) is false, but (R) is true.
3 P, Q, and R are partners in the ratio of 6 : 4 : 1. In the firm, P has 1
guaranteed R for his minimum profit of 15,000. Firm’s profit was
99,000. In the firm profit Ps share will be :
(a) 30,000 (b) 15,000 (c) 48,000 (d) 45,000
4 A, B, and C are partner’s sharing profits in the ratio of 5:3:2 1
According to the partnership agreement C is to get a minimum
amount of 10,000 as his share of profits every year. The net profit
for the year ended 31st March, 2025 amounted to 40,000. How much
amount contributed by A?

a) 1,350 b) 1,250 c) 750 d) 1,225

5 A and V are equal partners with fixed capitals of 5,00,000 and 2,00,000 1
respectively. After closing the accounts for the year ending 31st March
2025 it was discovered that interest on capitals was provided @ 6%
instead of 5% p.a. In the adjusting entry:
(a) A will be debited by 1,500 and V will be credited by 1,500;
(b) A will be credited by 1,500 and V will be debited by 1,500;
(c) A will be debited by 5,000 and V will be debited by 2,000;
(d) A will be credited by 5,000 and V will be credited by 2,000;
6 A, B, and C are partners in the ratio of 4 : 3 : 2. Salary to A 15,000 and 1
to C 3,000 omitted and profits distributed. For rectification, now A will
be credited:
(a) 15,000 (b) 1,000 (c) 12,000 (d) 7,000
7 When a partner is given guarantee by other partners, loss on such 1
guarantee will be borne by :
(a) Partnership firm (b) All the other partners
(c) Partners who give the guarantee (d) Partner with highest profit-
sharing ratio.

7
8 M & S are partners Sharing profits in the ratio of 3:2. R was admitted for 3
1/6th share of profit with a minimum guaranteed profit of Rs.10,000. At
the close of the first financial year on 31st March 2025, the firm earned
profit of Rs. 54,000. Find the share of profit which M, S & R will get.
Prepare Profit & Loss appropriation Account.
9 The partners of the firm A , B & C distributed the profits for the year 4
ended 31st March 2025 Rs.80,000 in the ratio of 3 : 3 : 2 without providing
for the following adjustments:-
(a) A and C were entitled to a salary of Rs 1,500 p.m.
(b) B was entitled for a commission of Rs. 4,000
(c) B and C had guaranteed a minimum profit of Rs.35,000 to A. Any
deficiency to be borne by equally by B & C.
Pass necessary journal entry for the above adjustments in the books
of the firm. Show your working clearly.
10 On 31st March 2025, the balances in the Capital Account of A, B and V, 6
after making adjustments for profits and drawings were Rs.8,00,000,
Rs.6,00,000 and Rs.4,00,000 respectively.
Subsequently, it was discovered that interest on capital and interest on
drawings had been omitted. The partners were entitled to interest on
capital @10% p.a. and were to be charged interest on drawings @6%p.a.
The drawings during the year were: A- Rs. 20,000 drawn at the end of
each month, B- Rs.50,000 drawn at the beginning of every half year and
V – Rs.1,00,000 withdrawn on 31st October 2024. The net profit for the
year ended 31st march 2025 was Rs.1,50,000. The profit-sharing ratio was
2: 2: 1.
Pass necessary adjusting entry for the above adjustments in the
books of the firm. Also show your working clearly.

8
 HINT ANSWERS – WORKSHEET-2
1 A 4 (b) Rs 1,250 7 C
2 C 5 A
3 C 6 D
8 Profit and Loss Appropriation Account
Dr. For the Year ended 31st March 2025 Cr.
Particulars (Dr) Amount Particulars (Cr.) Amount
(Rs.) (Rs.)
To Partner’s Capital A/c 54,000 By Profit and Loss A/c 54,000
M- 19,500
S- 15,500
R- 10,000
54,000 54,000
9
Date Particulars L.F. Dr. Cr.
(Rs.) (Rs.)
2025 B’s Capital A/c Dr. 21,000
April C’s Capital A/c Dr 2,000
1 To A’s Capital A/c 23,000
(Adjustment Entry for made)
10 Date Particulars L.F. Dr. Cr.
(Rs.) (Rs.)
2025 B’s Capital A/c Dr. 14,402
April To A’s Capital A/c 10,112
1 To V’s Capital A/c 4,290
(Adjustment Entry for Interest on Capitals
made)

9
 WORKSHEET-3
CHAPTER: CHANGE IN PROFIT SHARING RATIO AMONG THE
EXISTING PARTNERS
SUB TOPICS: CHANGE IN RATIO AND ITS EFFECT ON ACCUMULATED
PROFIT AND LOSS AND REVALUATION OF ASSETS AND LIABILITIES
Time allowed: 20 minutes Max. Marks-20
S.N. QUESTIONS MARKS
1. Red, Blue and White were partners in a firm sharing profits in the ratio 1
1:2:2. They decided to share future profits in the ratio of 7:5:3 with effect
from 1st April, 2019. Their Balance Sheet as on that date showed a
balance of ₹22,500 in Deferred Revenue Expenditure Account. The
amount to be debited respectively to the capital accounts of Red, Blue and
White for writing off Deferred Revenue Expenditure will be
(A) ₹7,500, ₹7,500 and ₹7,500
(C) ₹10,500, ₹7,500 and ₹4,500
(B) ₹4,500, ₹9,000 and ₹9,000
(D) 11,250, Nil and 11,250
2. Assertion (A): Change in profit sharing ratio leads to dissolution 1
partnership and not the firm.
Reason (R): Change in profit sharing ratio leads to dissolution of old firm
and a new firm comes into existence.
In the context of the above two statements, which of the following is
correct
Codes:
(A) Both (A) and (R) are correct and (R) is the correct reason of (A)
(B) Both (A) and (R) are correct but (R) is not the correct reason of (A)
(C) Only (A) is correct.
(D) Both (A) and (R) are wrong.
3. AK, BK and CK are sharing profits in the ratio of 2:1:1. They have 1
decided to share future profits in the ratio of 3:2:1. Find out the gainer
partner.
a. Both AK is the gainer partner and CK is the gainer partner
b. CK is the gainer partner
c. BK is the gainer partner
d. AK is the gainer partner
4. P and Q are sharing profit and losses equally. With effects from current 1
year, they decided to share profits in the ratio of 4:3. Calculate individual
partner’s gain and Sacrifice
a. P gains 1/12 th share and Q sacrifices 1/14 th share
b. P gains 1/14 th share and Q sacrifices 1/14 th share
c. P gains 1/10 th share and Q sacrifices 1/14 th share
d. P gains 1/15th share and Q sacrifices 1/14 th share
5. Due to change in the profit sharing ratio, Anisha's gain is 1/5th while 1
Hari’s sacrifice is 1/5th. They decided to adjust the following without
affecting book values, by passing a single adjustment entry:
General Reserve Rs. 20,000

10
 Profit and Loss Account (Dr.) ₹30,000
The necessary adjustment entry will be
A) DR.Anisha's capital account by ₹2,000 and Credit Harit's capital by
Rs. 32,000
B) Dr. Anisha's capital account by 10,000 and Credit Harit's capital byRs.
10,000
C) Dr. Harit's capital account by 2.000 and Credit Anisha's capital by
Rs.2,000
D) Debit Harit's capital account by 10,000 and Credit Anisha's capital by
10,000
6. X,Y and Z share profits as 5 : 3 : 2. They decide to share their future 3
profits as 4 : 3 : 3 with effect from April 1, 2024,. On this date the
following revaluations have taken place:
BOOK VALUE REVISED VALUE
INVESTMENT 22,000 25,000
PLANT AND MACHINERY 25,000 20,000
LAND AND BUILDING 40,000 50,000
OUTSTANDING SALARY 5,600 6,000
SUNDRY DEBTORS 60,000 50,000
SUNDRY CREDITORS 70,000 60,000
Pass necessary adjustment entry to be made because of the above changes
in the values of assets and liabilities. However old values will continue in
the books.
7. Reeha, Meenu and Sara were partners in a partnership firm sharing profim 4
and losses in the ratio of 2:2: 1. With effect from Ist April, 2023, they
agreed to share profits and losses equally. On that date, there was a
General Reserve of ₹50,000 in the books of the firm. It was agreed that:
Goodwill of the firm be valued at 3,00,000.
(4) Profit on revaluation of assets and re-assessment of liabilities
amounted to 30,000
Pass necessary journal entries for the above transactions in the books of
the firm.
8. A. B and C are partners sharing profit and loss in the of 5:3:2. A was 4
unable to devote time to business due to his other commitments. Hence
adjustment was required in the agreed terms of partnership. They decided
to share future profit in the ratio 2:5:3
Following balances appeared in their books:
Advertisement Suspense A/c (Dr) Rs. 15,000
Workmen Compensation Reserve RS. 90,000
Investment Fluctuation Reserve Rs. 60,000
investments at Cost Rs. 5,00,000
It was agreed that
(i) Goodwill should be valued at three year's purchase of super profits.
Firm’s average profits are Rs. 1,00,000. Capital invested in the business
is 8,00,000 and normal rate of return is 10%
(ii) Claim on account of Workmen's Compensation has been estimated at
Rs. 80,000
Based on the above information, choose the correct options:

11
 Q.1. In respect of goodwill:
a) Credit A by ₹30,000; B by ₹18,000 and C. by 12,000
b) Credit A by 12,000; B by ₹300,000 and C' by ₹ 18,000
c) Credit A by 18,000, Debit B by 12,000 and C by ₹6,000c
d) Debit A by 18,000, Credit B by 12,000 and C by 6,000

Q2. In respect of Advertisement Suspense Account

a) Will be written off in new ratio
b) Will be carried forward in the books
c) Will be adjusted in sacrificing/ Gaining Ratio
d) Will be written off in old ratio
Q3. In respect of Workmen Compensation:
a) Cr. A by ₹5,000 ,B by 3,000 and C by ₹2,000
b) Cr. A by ₹2,000 ,B by ₹5,000 and C by ₹3,000
c) Cr. A by ₹3,000, Dr. B by ₹2,000 and Dr. C by 1,000
9. Ram, Shyam and Hari were in partnership sharing profits in the ratio of 4
3: 2 : 1. The Balance Sheet as at 31.3.2023 was as follows:
BALANCE SHEET AS ON 31.3.23
LIABILITIES AMOUNT ASSETS AMOUNT
BILL PAYABLE 20,000 CASH 40,000
CREDITORS 20,000 BILL 5,000
RECEIVABLE
GENERAL 30,000 DEBTORS 15,000
RESERVE
RAM’S CAPITAL 50,000 STOCK 50,000
SHYAM’S 30,000 MACHINERY 20,000
CAPITAL
HARI’S CAPITAL 25,000 FURNITURE 30,000
GOODWILL 15,000
1,75,000 1,75,000
On 1.4.2023 partners decided to share profits equally. For this purpose, it
was further agreed that.
1. Goodwill of the firm should be valued at Rs 30,000.
2. Furniture and Machinery is to be revalued at Rs 25,000 and Rs 35,000
respectively.
3. Value of Stock is to be reduced by Rs 4,000.
You are required to give necessary journal entries to give effect to the
above arrangement.

12
 HINT ANSWERS – WORKSHEET-3
1. (b) Rs. 4,500 , Rs. 9,000 ,and Rs. 9,000 1
2. ( c) only A is Correct 1
3. BK is the gainer partner, Explanation: Calculation of gain or sacrifice: Formula : 1
Old Share – New Share AK = 2/4 – 3/6 = No Sacrifice/ No Gain BK = 1/4 – 2/6 =
1/12 Gain CK = 1/4 - 1/6 = 1/12 Sacrifice
4. b. P gains 1/14 th share and Q sacrifices 1/14 th share 1
Explanation: Calculation of gain or sacrifice:
Formula: Old Share – New Share P = 1/2 – 4/7 = 1/14 Gain
Q = 1/2 – 3/7 = 1/14 Sacrifice
5. c)Dr. Harit's capital account by 2.000 and Credit Anisha's capital by Rs.2,000 1
6. Z’S CAPITAL a/C Dr. 760 3
To X’s Capital A/c 760
7. 4
Date Particular LF Amount Amount
Dr. Cr.

General reserve a/c Dr. 50,000

To Reeha’s capital A/c 20,000
To Menu’s capital A/c 20,000
To sara’s Capital A/ c 10,000
(general reserve distributed in old
ratio)
Sara’s capital A/c Dr. 40,000
To Reeha’s capital A/c 20,000
To Menu’s Capital A/c 20,000
(Goodwill Adjusted)
Revaluation A/c Dr. 30,000
To Reeha’s capital A/c 12,000
To Menu’s capital A/c 12,000
To sara’s Capital A/ c 6,000
( profit on revaluation credited to
partners )
8. 1) c) Credit A by 18,000, Debit B by 12,000 and C by ₹6,000 4
2) d) Will be written off in old ratio
3) a) Cr. A by ₹5,000 ,B by 3,000 and C by ₹2,000
b) Dr. A by 20,000 ,B by ₹12,000 and C by ₹8,000
9. Journal In the Books of Ram, Shyam and Hari 4

13
DATE PARTICULAR l/f Amount Amount
dr. cr.

Hari’s capital a/c Dr. 5,000

To Ram’s Capital 5,000

(being adjustment of
compensation due change in
profit sharing ratio)

Ram's Capital A/c 7,500

Shyam's Capital A/c 5,000

Hari's Capital A/c 2,500

To Goodwill A/c (Being old 15,000

goodwill written off between old
partners in their old ratio)

General Reserve A/c Dr. 30,000

To Ram's Capital A/c 15,000

To Shyam's Capital A/c 10,000

To Hari's Capital A/c 5,000

((Being general reserve

distributed among all partners in
their old ratio)

Machinery A/c Dr. 5,000

Furniture A/c Dr. 5,000

To Revaluation A/c 10,000

(Being increase in value of

assets recorded)

Revaluation A/c Dr. 4,000

To Stock A/c 4,000

(Being decrease in value of

assets recorded)

14
Revaluation A/c Dr. 6,000

To Ram's Capital A/c 3,000

To Shyam's Capital A/c 2,000

To Hari's Capital A/c 1,000

(Being revaluation profits

distributed among all partners in
their old ratio)

15
 WORKSHEET-4
CHAPTER: CHANGE IN PROFIT SHARING RATIO AMONG THE
EXISTING PARTNERS
SUB TOPICS: VALUATION AND TREATMENT OF GOODWILL
Time allowed: 20 minutes Max. Marks-20
S.N. QUESTIONS MARKS
1 Assertion (A): At the time of change in profit sharing ratio, Goodwill of
the form is valued.
Reason (R): Goodwill of the firm is valued at a time of change in profit 1
sharing ratio because the sacrificing partners are compensated by the
gaining partners.
a) Both assertion(A) and reason(R) are correct and reason(R) is the
correct explanation of assertion (A).
b) Both assertion(A) and reason(R) are correct and reason(R) is not the
correct explanation of assertion (A).
c) Assertion(A) is false and reason(R) is true.
d) Assertion(A) is true and reason(R) is false
2 Partnership firm has capital employed of Rs 8,00,000. Its average profits
are Rs 60,000. The normal rate of return in similar type of business is 1
10%. The amount of super profit is:
a) Rs 60,000 b) Rs 8,000 c) Rs 52,000
d) nil
3 P and Q were partners sharing profits and losses in the ratio of 3 : 2.
They decided that with effect from 1st January, 2023 they would share
profits and losses in the ratio of 5: 3. Goodwill is valued at Rs 1,28,000. 1
In adjustment entry:
(A) Cr. P by Rs 3,200; Dr. Q by Rs 3,200
(B) Cr. P by 37,000; Dr. Q by Rs 37,000
(C) Dr. P by 37,000; Cr. Q by Rs 37,000
(D) Dr. P by Rs 3,200; Cr. Q by Rs 3,200
4 If the capitalised value of a firm is Rs 6,00,000 and the actual capital
employed is Rs 4,50,000, what is the goodwill? 1
a) Rs 1,00,000
b) Rs 1,50,000
c) Rs 2,00,000
d) Rs 50,000
5 The profits of a firm for the last 4 years were:
2019: Rs 40,000
2020: Rs 45,000
2021: Rs 50,000
2022: Rs 65,000 3
Calculate the value of goodwill on the basis of 3 years’ purchase of the
weighted average profit. The weights are 1, 2, 3, and 4 respectively.
In 2022, closing stock was overvalued by Rs 5,000
6 Reeha, Meenu and Sara were partners in a partnership firm sharing prof
and losses in the ratio of 2:2:1. With effect from 1st April, 2023. agreed

16
 to share profits and losses equally. On that date, there was a General 3
Reserve of Rs. 50,000 in the books of the firm. It was agreed that:
(i) Goodwill of the firm be valued at Rs 3,00,000.
Pass necessary journal entries for the above transactions in the books of
the firm.
7 RG and MK are the partners in the firm. Their capitals are 3,
00,000 and 2,00,000. They decided to share future profits in ratio
of 2:3.During the year ended 31st March, 2025 the firm earned a 4
profit of 1,50,000. Assuming that the normal rate of return is 20%.
Calculate the value of goodwill of the firm by capitalization
method and pass necessary journal entry.
8 Anita and Banaya are partners sharing profits in the ratio of 3 : 2.
They decided to share future profits equally.. It was agreed to value
goodwill at three year’s purchase on the basis of average profit for
the past 5 years.
The profits of 5 years were:- 6

Year ended Profits

31st March, 2015 1,80,000
31st March, 2016 1,60,000
31st March, 2017 2,50,000
31st March, 2018 3,00,000
31st March, 2019 3,50,000

1. Book revealed:

a. An abnormal gain of Rs. 20,000 was earned in the

year ended 31st March, 2016.
b. An abnormal loss of Rs. 10,000 was incurred in the
year ended 31st March, 2017..

Calculate the value of goodwill. And pass necessary journal entry.

17
 HINT ANSWERS – WORKSHEET-4
1. A 2. Nil 3. Answer: a) 4. Answer: b) ₹1,50,000
5. Weighted average profit = 52000 ,Goodwill = 52000 X 3 =1,56,000
6. Reeha, Meenu sacrifices 1/15 each and Sara gains 2/15
7. RG gains and MK sacrifices
8. Goodwill 246000 X 3 = 7,38,000
Banaya gains1/10 and Anita sacrifices 1/10

18
 WORKSHEET-5
CHAPTER: CHANGE IN PROFIT SHARING RATIO AMONG THE
EXISTING PARTNERS
SUB TOPICS: DISTRIBUTION OF ACCUMULATED PROFITS AND
RESERVES, WCR AND IFR
Time allowed: 20 minutes Max. Marks-20
S.N. QUESTIONS MARKS
1 Assertion (A): IFR can be used to write off losses on the sale of investments. 1
Reason (R): IFR is maintained to meet any possible decline in the market value of
investments.
A. Both A and R are true, and R is the correct explanation of A.
B. Both A and R are true, but R is not the correct explanation of A.
C. A is true, but R is false.
D. A is false, but R is true.
2 If a firm has an Investment Fluctuation Reserve of Rs.10,000 and the market value 1
of investment falls by Rs.7,000, the amount to be distributed among partners is:
A. Rs.10,000
B. Rs.3,000
C. Rs.7,000
D. Zero
3 Assertion (A): Accumulated profits can be distributed among partners in their old 1
profit-sharing ratio at the time of retirement.
Reason (R): Accumulated profits are considered as liabilities and not distributable
among partners.
• A. Both A and R are true, and R is the correct explanation of A.
• B. Both A and R are true, but R is not the correct explanation of A.
• C. A is true, but R is false.
• D. A is false, but R is true.

4 If there is a Workmen Compensation Reserve of Rs.15,000 and actual liability is 1

Rs.7,000, the balance amount of Rs.8,000 is:
A. Transferred to Revaluation A/c
B. Credited to old partners' capital accounts in old ratio
C. Distributed among all partners
D. Written off
5 If the fall in value of investments is less than the balance in IFR, the surplus is 1
among the partners in the ratio.
6 The firm has WCR of Rs.10,000. During reconstitution, a provision for liability of 1
Rs.12,000 is created. What is the accounting treatment?
A. Debit Rs.2,000 to Revaluation A/c
B. Credit Rs.2,000 to Revaluation A/c
C. Rs.2,000 is distributed among partners
D. No adjustment is made
7 At the time of retirement of a partner, how are undistributed profits and reserves 1
treated?
A. Transferred to the retiring partner only

19
 B. Ignored
C. Credited to all partners in the new ratio
D. Credited to all partners in the old profit-sharing ratio
8 A firm has a Workmen Compensation Reserve of Rs.10,000. At the time of 3
reconstitution, an actual liability of Rs.12,000 arises. How is this treated?
9 P,Q and R sharing profits and losses in the ratio of 3:2:1, decided to share profits 4
and losses equally w.e.f. 1st April, 2017. Following is an extract of their Balance
Sheet as at 31st March, 2017;
LIABILITIES ASSETS
IFR – 30,000 Investments(at cost) – 5,00,000
Show the accounting treatment under the following alternative cases-
(i) If there is no other information.
(ii) If the market value of Investment is Rs. 4,88,000.
(iii) If the market value of Investment is Rs. 4,46,000.
(i) IFR A/c Dr. 30,000
To P’s capital A/c ………
To Q’s capital A/c 10,000
To R’s capital A/c 5,000
(Transfer of IFR to capital A/Cs.)
(II) IFR A/c Dr. 30,000
To Investment A/c (5,00,000-4,88,000) ………
To P’s capital A/c 9,000
To Q’s capital A/c 6,000
To R’s capital A/c 3,000
(Transfer of IFR to capital A/Cs.)
(iii) IFR A/c Dr. 30,000
……………… Dr. 24,000
To Investment A/c 54,000
(Fall in the value of investment adjusted)

P,s Capital A/c Dr. 12,000

Q’s Capital A/c Dr. 8,000
R’s capital A/c Dr. 4,000
To ……………………….. 24,000
(Transfer of loss to revaluation A/c.)

10 P,Q and R sharing profits and losses in the ratio of 3:2:1, decide to share future 6
profits and losses in the ratio of 4:3:2 w.e.f. 1st April, 2017. Following is an
extract of their Balance Sheet as at 31st March, 2017;
Workmen compensation Reserve- Rs. 60,000
Show the accounting treatment under the following alternative cases-
Case-1. If there is no other information.
Case-2. If a claim on account of workmen’s compensation is estimated at Rs.
24,000.
Case-3. If a claim on account of workmen’s compensation is estimated at Rs.
60,000.
Case-4. If a claim on account of workmen’s compensation is estimated at Rs.
75,000.

20
 HINT ANSWERS – WORKSHEET-5
1 Answer- A. Both A and R are true, and R is the correct explanation of A. 1
2 Answer- B. Rs.3,000 1
3 Answer- C. A is true, but R is false. 1
4 Answer- B. Credited to old partners' capital accounts in old ratio. 1
5 Answer- distributed, old profit-sharing. 1
6 Answer- A. Debit Rs.2,000 to Revaluation A/c. 1
7 Answer- D. Credited to all partners in the old profit-sharing ratio. 1
8 Answer- (i)The entire WCR of Rs.10,000 is used. 3
(ii)The excess Rs.2,000 will be debited to the Revaluation A/c.
9 Hint Answers- (i) P- 15,000, 4
(ii) To Investement- 12,000
(iii) Revaluation A/c…..Dr
To Revaluation A/c
10 Case 1- One mark 6
Case 2- Two marks
Case 3- One mark
Case 4- Two marks

21
22