ANGAD SINGH CLASSES

4A/13, Tilak Nagar, Above TVS Showroom

FUNDAMENTALS
1. In the absence of Partnership Deed, what are the rules relating to salaries of partners.
(1)

2. X and Y are partners sharing profits and losses in the ratio 7:3. Capitals of the partners
were Rs 0 and Rs 60,00,000. Interest on Capital is provided @ 20% p.a. X is also entitled
to a salary of 1,00,000 P.a. Show the distribution of profits in following cases by
preparing necessary account: (12)
CASE-1 : Profit of Rs 10,00,000
CASE-2 : Profits of Rs 20,00,000 and Interest on Capital and salary is a charge.
CASE-3 : Profit of Rs. 2,60,000
CASE-4 : Profit of Rs. 18,00,000 and Interest on Capital and salary is a charge.
CASE-5 : Loss of Rs 1,00,000.
CASE-6 : Loss of Rs 4,00,000 and Interest on Capital and salary is a charge.

3. A, B and C are partners sharing profits and losses in the ratio 10:6:4. Profits for the year
was Rs.2,00,000 and C was guarantee a minimum profit of Rs.50,000. Show the
distribution of profits by preparing necessary account: (4)
CASE – 1: Any deficiency will be borne by Mr. A and Mr. B in 3:2
CASE – 2: C was given guarantee of Rs.50,000 the question is silent

4. X, Y and Z are partners started business on 1/October/2018 sharing profits and losses in
the ratio 7:2:1. Losses for the year was Rs.20,000 and Z was guaranteed a minimum
profit of Rs.40,000. Show the distribution of profits if Any deficiency to Mr. Z will be
borne by Y. Year ends on 31st march 2019. (2)

5. X , Y and Z are partners sharing profits and losses in the ratio of 5:4:1. Their Capital
Accounts as at 1st April, 2022 stood at X – Rs.3,00,000; Y – Rs.2,00,000 and Z –
Rs.1,00,000. Partners are allowed interest on capital @ 5% p.a. Drawings of the partners
during the year ended 31st March, 2023 were Rs.60,000, Rs.40,000 and Rs.40,000
respectively. Profit for the year before allowing interest on capital and salary to Y @
Rs.7,000 per month was Rs.10,00,000. 25% of the net distributable profit is to be set
aside as General Reserve. Prepare Profit and Loss Appropriation Account for the year
ended 31st March, 2023 and Capital and Current Accounts of the partners. Partner’s
current account balances are: Rs1,00,000, Rs. 1,00,000 and Rs.2,00,000(Dr.) respectively.
(8)

6. Who cannot be admitted as partner? (1)

P.T.O

#9999-403-274 #9999-254-274
ANGAD SINGH CLASSES
4A/13, Tilak Nagar, Above TVS Showroom

7. Under which act the maximum number of partners in a partnership firm is given? (1)

8. Find interest on drawings if Mr. A withdraws Rs.5,000 in the middle of each alternate
month starting from 15/jan, rate = 36%p.a. year ends on 31/dec. (2)

9. X, Y and Z are partners in a firm sharing profits in the ratio 2:1:2 having capitals
Rs.10,00,000, Rs.20,00,000 and Rs.30,00,000 respectively. Interest on capital is to be
charged @ 10% p.a. Salaries of the partners are Rs.12,000, Rs.10,000 and Rs.15,000 per
month respectively. X withdrew Rs.4,000 per month for personal use, Y withdrew
Rs.6,000 per quarter for personal use and Z withdrew Rs.8,000 per month for six months
for personal use. Interest on drawings is 20% p.a. The profits for the year ending is
Rs.96,00,000. Ignoring the above ratio and terms the profits were distributed in equal
ratio. Pass the necessary rectified entry. (4)

10.X,Y and Z are partners in a firm sharing profits and losses in the ratio of 5:3:2. Their fixed
capitals were Rs.3,00,000; Rs.2,00,000 and Rs.1,00,000 respectively. For the year ended
31st March, 2020, interest on capital was credited to them @ 10% p.a. instead of 8% p.a.
Showing your working notes clearly, pass necessary adjustment Journal entry. (3)

11.X and Y are partners sharing profits and losses in the ratio 7:3. Capital of X and Y are Rs
3,00,000 and Rs 7,00,000 respectively. Interest on capital is @10% p.a. X and Y withdraw
Rs 30,000 and Rs 50,000 respectively. Interest on Drawings of X and Y are Rs 15,000 and
Rs 25,000 respectively. Salary of X is Rs 1,00,000 per quarter and Y Rs 1,00,000 p.a. Net
profits for the year ending were Rs 20,00,000. Pass necessary journal entry. (4)

12.Calculate the amount of Ram's monthly drawings for the year ended 31st March, 2023
When interest on drawings is 1,300 and he withdrew a fixed amount in the beginning of
each month and when the partnership deed provides for interest on drawings @ 10%
p.a. (2)

13.A, B and C are partners in a firm sharing profits and losses in the ratio 12:5:3. Their
capitals are Rs.4,00,000, Rs.6,00,000 and Rs.8,00,000 respectively. Interest on capital is
to be provided @20% p.a. Interest on capital is a charge. A gives the guarantee to the
firm that he will bring customer’s worth Rs.60,000 but only brings customer worth
Rs.40,000. The firm incurred loss of Rs.1,00,000. Prepare P and L and P and L
appropriation account. (4)

14.Find interest on drawings if rate of interest on drawings is 36 % and A withdraws Rs

10,000 in the end of each month. (2)
P.T.O

#9999-403-274 #9999-254-274
ANGAD SINGH CLASSES
4A/13, Tilak Nagar, Above TVS Showroom

15.A, B and C were partners in the firm sharing profit ad losses in the ratio 11:6:3. On 1st
April their capital was Rs.5,00,000, Rs.1,00,000 and Rs.6,00,000.
Prepare P and L account and profit and loss appropriation account and partner’s capital
accounts at the end of year after considering the following items:
(a) Interest on capital to be allowed 20% p.a
(b) Interest on loan advanced by B for 9 months amounting Rs.2,00,000 and by C for
whole year amounting Rs. 3,00,000.
(c) Interest on Partner’s drawing @24% p.a. Drawings:
A – Rs.8,000 in the middle of each month
B – Rs.10,000 in the end of each quarter
C – Rs.40,000
(d) Mr. A has also given his personal space for Rent @Rs.20,000 per month for 10
months.
(e) Salaries are Rs.40,000, Rs.30,000 and Rs. 20,000 respectively.
(f) Profits for the year ended 31st march was Rs.70,00,000. (8)

16. On 31st March, 2023, Capital Accounts of E, M and A after making adjustments for
profits, drawings, etc., were as E—Rs. 8,00,000; M—Rs. 6,00,000 and A—Rs. 4,00,000.
Subsequently, it was noticed that interest on capital and interest on drawings had been
omitted. Partners were entitled to interest on capital @ 5% p.a. Drawings during the
year were: E—Rs. 2,00,000; M—Rs. 1,50,000 and A—Rs. 90,000. Interest on drawings
chargeable to the partners were: E—Rs. 5,000; M—Rs. 3,600 and A—Rs. 2,000. Net
profit during the year was Rs. 12,00,000.
Profit-sharing ratio of the partners was 3 : 2 : 1. Pass necessary adjustment entry for
rectifying the above omission. Show your workings. (3)

17.Anwar, Biswas and Divya are partners in a firm. Their Capital Accounts stood at
Rs.8,00,000; Rs.6,00,000 and Rs.4,00,000 respectively on 1st April, 2013. They shared
profits and losses in the ratio of 3:2:1 respectively. Partners are entitled to interest on
capital @ 6% per annum and salary to Biswas and Divya @ Rs.4000 per month and
Rs.6,000 per quarter respectively as per the provisions of Partnership Deed.
Biswas’s share of profit including interest on capital but excluding salary is guaranteed at
a minimum of Rs.82,000 p.a. Any deficiency arising on that account shall be met by
Divya. Profit for the year ended 31st March, 2014 amounted to Rs.3,12,000. Prepare
Profit and Loss Appropriation Account for the year ended 31st March, 2014. (3)

P.T.O

#9999-403-274 #9999-254-274
ANGAD SINGH CLASSES
4A/13, Tilak Nagar, Above TVS Showroom

18.Calculate Interest on Drawings of Mr A by using product method if rate of interest on

drawings is 24% p.a. and year ends on 31st December every year: (3)
Date Amount
1 April Rs.6,000
31 August Rs.9,000
1 September Rs.12,000
1 October Rs.15,000
1 December Rs.8,000
31 December Rs.7,000

19.Rohit, Sohit and Praveen are partners in a firm. Their Capital Account stood at
Rs.7,00,000; Rs.2,00,000 and Rs.4,50,000 respectively on 1st April, 2019.As per the
provisions of the Deed : (i) Rohit was to be allowed a remuneration of Rs.1,08,000 per
annum, (ii) Interest @ 10% p.a. was to be provided on capitals and (iii) Profits were to be
distributed in the ratio of 9:6:5. Ignoring the above terms, net profit of Rs 5,40,000 for
the year ended 31st March, 2020 was distributed among the three partners in 5:3:2.Pass
the Journal entries to rectify the above errors. (3)

#9999-403-274 #9999-254-274
ANGAD SINGH CLASSES
4A/13, Tilak Nagar, Above TVS Showroom

GOODWILL
1. Capital employed by a partnership fir is Rs.5,00,000. Its normal average business profit is Rs.60,000.
The normal rate of return in similar type of business is 10%. The amount of super profit is: (1)
(a) Rs.50,000 (b) Rs.10,000 (c) Rs.6,000 (d) Rs.56,000
2. Amrit Co. is a partnership firm. Ajay is admitted as a partner. Its Goodwill is to be valued by Average
Profit method. Average business profit for the past 5 years is Rs.1,50,000 and Goodwill is being valued
at 3 years’ purchase of average business profit, value of goodwill of the firm will be: (1)
(a) Rs.4,50,000 (b) Rs.1,50,000 (c) Rs.3,00,000 (d) Rs.6,00,000
3. A firm earns Rs.1,20,000 as its annual profits. The normal rate of profit being 10%. Assets of firm
excluding goodwill Rs.14,40,000 and external liabilities are Rs4,40,000. Find the value of goodwill by
capitalisation of average profit method: (1)
(a) Rs.4,00,000 (b) Rs.2,80,000 (c) Rs.2,00,000 (d) Rs.3,60,000
4. Amit and Sumit were partners in a firm with capital of Rs.3,00,000 and Rs.2,00,000 respectively. The
normal rate of return was 20% and the capitalised value of average profits was Rs.8,50,000. The
goodwill of the firm by capitalisation of average profit method will be : (1)
(a) Rs.10,00,000 (b) Rs.1,50,000 (c) Rs.3,50,000 (d) Rs.5,00,000
5. Which of the following factor(s) affect goodwill? (1)
(a) Nature of business (c) Location
(b) Efficiency of management (d) All of the above
6. If a firm deals in a business where demand is ………….. supply, then profits will increase and therefore
goodwill will increase. (1)
(a) Higher than (c) Similar to
(b) Lower than (d) Both a and b
7. A partnership firm has capital employed of Rs.8,00,000. Its average profits are Rs.60,000. Normal rate
of return in similar type of business is 10%. The amount of super profit is : (1)
(a) Rs.60,000 (b) Rs.8,000 (c) Nil (d) Rs.52,000
8. X and Y are in partnership sharing profits and losses equally. They agreed to take Z into partnership
from 1st April, 2025 for ¼ share in profits. For this purpose, goodwill is to be valued at 4 times the
average annual profit of the previous four or five years, whichever is higher. Profits of past 5 years are
as follows:
Year 2020-21 2021-22 2022-23 2023-24 2024-25
Profit/Loss 14,000 15,500 10,000 16,000 15,000
The value of goodwill is:
(a) Rs.56,400 (c) Rs.56,600
(b) Rs.56,500 (d) Rs.56,700
9. A firm earned Rs.60,000 as profit, normal rate of return being 10%. Assets of the firm are Rs.7,20,000
(excluding goodwill) and liabilities are Rs.2,40,000. Find the value of goodwill by Capitalisation of
average profit method.
(a) Rs.2,00,000 (c) Rs.3,50,000
(b) Rs.3,00,000. (d) Rs.1,20,000

#9999-403-274 #9999-254-274
ANGAD SINGH CLASSES
4A/13, Tilak Nagar, Above TVS Showroom
10. Jagat and Kamal are partners in a firm. Their Capitals are : Jagat Rs.3,00,000 and Kamal Rs.2,00,000.
During the year ended 31st March,2025, the firm earned profit of Rs.1,50,000. Normal rate of return is
20%. Calculate the value of Goodwill of the firm by capitalisation method: (1)
(a) Rs.2,00,000 (c) Rs.3,50,000
(b) Rs.5,00,000 (d) Rs.2,50,000
11. The profits of a firm for the year ended 31st march for the last four years were: 2014 Rs.1,00,000;
2015 Rs.1,28,000; 2016 Rs.1,00,000 and 2017 Rs.1,50,000. Calculate the value of goodwill of the firm
on the basis 3 years of the weighted average profits after assigning weights 1,2,3,4.
Additional information: (3)
(i) Closing stock for the year 2015 was overvalued by Rs.12,000
(ii) To cover management cost an annual charge of Rs.24,000 should be made for the purpose of the
valuation of goodwill.
(iii) An abnormal loss of Rs.1,000 was incurred during the year 2014.
(iv) An abnormal gain of Rs.4,000 was earned during the year 2015.
12. Alok and Aakash are partners in M/s Mega Enterprises. They admit Ashish as partner w.e.f 1st April,
2020. They agreed to value goodwill at 3 years’ purchase by Super Profit Method for which they
decided to take average of last 5 years profits. The profits for the last five years were:
Year Ended Rs.
31st March, 2016 2,00,000 (Including gain of Rs.25,000 from sale of fixed asset);
31st March, 2017 1,70,000 (Including abnormal loss of Rs.50,000);
31st March, 2018 2,10,000;
31st March, 2019 2,30,000;
31st March, 2020 2,50,000;
Capital employed in the firm is Rs.15,00,000 and normal rate of return in similar business is 10%.
Calculate value of goodwill. (4)
13. Profits for 4 years were as follows (8)
Year Profits
2008 Rs 10,00,000
2009 Rs 12,00,000
2010 Rs 20,00,000
2011 Rs 2,00,000 (Loss)
Adjustments:
• Capital Employed Rs 80,00,000.
• Normal Rate of Return is 5%
• Assets = 50,00,000 (excluding goodwill) and Outside Liabilities = Rs 15,00,000
• No of years purchased 2
• Remuneration for one year is Rs 1,00,000. Calculate Goodwill of the firm with
i) Average Profit method
ii) Weighted Average Profit Method
iii) Super profit method
iv) Capitalisation of Average Profit Method
v) Capitalisation of Super Profit Method.

#9999-403-274 #9999-254-274
ANGAD SINGH CLASSES
4A/13, Tilak Nagar, Above TVS Showroom

CHANGE IN PSR
Q1. X,Y and Z who are presently sharing profits and losses in the ratio of 5:3:2 decide the share future
profits and losses in the ratio of 2:3:5. An extract of their balance sheet as at 31 st march is :
liabilities Rs. Assets Rs.
General reserve 75,000 Advertisement 50,000
P and L A/c 37,500 suspense account
Workmen compensation reserve 12,500
Pass necessary journal entry.

Q2. S, T, U and V were partners in a firm sharing profits in the ratio of 4:3:2:1. On 1-4-2016 their Balance
Sheet was as follows:
Liabilities Rs Assets Rs
Capital A/cs: Fixed assets 4,40,000
S 2,00,000 Current assets 2,00,000
T 1,50,000
U 1,00,000
V 50,000 5,00,000
Workmen compensation 60,000
reserve 80,000
Creditors 6,40,000 6,40,000
From the above date partners decided to share the future profits in 3:1:2:4 ratio. For this purpose,
the goodwill of the firm was valued at Rs.90,000.
The partners also agreed for the following:
(i) The claim for workmen compensation has been estimated at Rs.70.000.
(ii) To adjust the capitals of the partners according to new profit-sharing ratio by opening partners
current accounts. Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet
of the reconstituted firm.

#9999-254-274 #9999-403-274 1
ANGAD SINGH CLASSES
ADMISSION
1. A firm has an unrecorded investment of ₹10,000. Journal entry to record the unrecorded investment on
admission of a partner will be:
(a) Revaluation A/c Dr. To Unrecorded Investment A/c
(b) Plant and Machinery A/c Dr. To Revaluation A/c
(c) Partner's Capital A/c Dr. To Revaluation A/c
(d) None of the above
2. On admission of a new partner, the old partners share the gain or loss on revaluation of assets and
reassessment of liabilities in which of the following ratio?
(a) Old profit-sharing ratio (b) New profit-sharing ratio
(c) Sacrificing ratio (d) Gaining ratio
3. A and B are partners sharing profits in the ratio of 3:2. They admitted C for 1/4th share in the profits. C
brought ₹ 30,000 as capital and ₹ 10,000 as premium for goodwill. The amount of goodwill will be:
(a) ₹ 40,000 (c) ₹ 10,000
(b) ₹ 30,000 (d) ₹ 20,000
4. X and Y are partners in a firm sharing profits in the ratio of 5 : 3. They admitted Z as a new partner. The
new profit sharing ratio will be 4 : 3 : 2. The firm’s goodwill on Z’s admission was valued at ₹1,26,000. But Z
could not bring any amount of goodwill in Cash. Credit will be given to :
(A) X ₹17,500; Y ₹10,500 (C) X ₹22,750; Y ₹5,250
(B) X ₹16,000; Y ₹12,000 (D) A ₹1,02,375; Y ₹23,625
5. If at the time of admission, there is some unrecorded liability, it will be :
(A) Debited to Revaluation Account (C) Debited to Goodwill Account
(B) Credited to Revaluation Account (D) Credited to partners’ Capital Accounts
6. X and Y are partners sharing profits in the ratio 5:3. They admitted Z for 1/5th profits, for which he paid
₹60,000 against capital and ₹30,000 against goodwill. Find the capital balance for each partner taking Z’s
capital as base capital.
(A) ₹1,50,000; ₹60,000 and ₹60,000 (C) ₹1,50,000; ₹90,000 and ₹60,000
(B) ₹1,50,000; ₹60,000 and ₹90,000 (D) ₹1,50,000; ₹90,000 and ₹90,000
7. Capital adjustment may result in:
A. Cash introduced/withdrawn C. Profit only
B. Capital increase only D. Goodwill increase
8. Partner brings only part of premium. Rest is:
A. Treated as goodwill C. Ignored
B. Adjusted through capital D. Shown as loss
9. If C gets 1/5 from A and B equally, total sacrifice =
A. 1/10 B. 1/5 C. 2/5 D. 3/5
10. Goodwill premium is not brought in. Capital account of new partner is:
A. Debited C. Not affected
B. Credited D. Transferred
11. According to which section of the Indian partnership act,1932 a person can be admitted as partner? (1)
12. X and Y are partners in a firm sharing profits and losses in the ratio of 5:3. They admit Z as a partner for
1/4th share. Z paid Rs.80,000 privately to X and Y as his share of goodwill. Pass the necessary journal
entries on Z’s admission. (2)
13. X and Y are partners in a firm sharing profits and losses in the ratio of 5:3. They admit Z into the
partnership. X surrenders 2/5 of his share in favor of Z and Y surrenders 3/5 of his share in favor of Z.
Calculate new profit-sharing ratio. (3)

#9999-254-274 #9999-403-274
ANGAD SINGH CLASSES
14. P and Q are partners sharing profits in the ratio of 3:2. They admit R into partnership who acquires 1/5th
of his share from P and 4/25th share from Q. Calculate New Profit-sharing Ratio. (3)
15. Sushil and Satish are partners in a firm sharing profits in the ratio of 3 : 2. Their Balance Sheet as at 31st
March, 2024 was as follows: (8)
Liabilities Rs. Assets Rs.
Creditors 20,000 Cash 10,000
Outstanding rent 13,000 Sundry Debtors 80,000
Workmen compensation reserve 5,600 Less: Bad Debts 4,000 76,000
Capital A/cs: Stock 20,000
Sushil 50,000 1,10,000 Profit and loss A/c 4,000
Satish 60,000 Machinery 38,600
1,48,600 1,48,600
On 1st April, 2024, they admitted Samir as a partner on the following terms:
(i) Samir will bring Rs. 40,000 through cheque as his share of capital and will be entitled to 1/6th share in
the profits.
(ii) Samir is not to bring goodwill in cash, which is valued at 1.5 years’ purchase of the average profit of last
3 years, less Rs. 12,000. Profits for the last 3 years amounted to Rs. 10,000; Rs. 20,000 and Rs. 30,000.
(iii) Claim on account of Workmen Compensation is Rs. 3,000.
(iv) To write off Bad Debts of Rs. 6,000.
(v) Creditors are to be paid Rs. 2,000 more.
(vi) There being a claim against the firm for damages, liabilities to the extent of Rs. 2,000 should be
created.
(vii) Outstanding rent be brought down to Rs. 11,200.
(viii) Capital of old partners are to be adjusted on the basis of new partner capital by opening current
account.
Pass Journal entries, prepare Partners’ Capital Accounts and opening Balance Sheet.
16. X and Y are partners sharing profits and losses in the ratio of 3:2. They admit Z as a new partner for 1/5th
share. Z gets his share from X and Y in the ratio of 2:3 Goodwill of the firm is valued at Rs 50,000 Z brings
60% of his share of goodwill and Rs 2,00,000 as capital through cheque. Goodwill exists in the books at Rs
20,000. Pass the necessary journal entries assuming the capital is fixed. (3)
17. G and S are partners in a firm sharing profits and losses in the ratio of 3:2. They admit M for 5/9 share in
profit which he takes from G and S in the ratio of 2:1. Find new profit-sharing ratio. (3)
18. P and Q are partners in a firm sharing profits in the ratio of 4:3. S was admitted for 1/9th share in the
profits out of which 50% was gifted by P and the remaining share was given by P and Q in the ratio of 3:2.
Calculate the sacrificing ratio of P and Q. (3)
19. Hemant and Nishant were partners in a firm sharing profits in the ratio of 3:2. Their capitals were
Rs.1,60,000 and Rs.1,00,000 respectively. They admitted Somesh on 1st April, 2013 as a new partner for
1/5th share in the future profits. Somesh brought Rs.1,20,000 as his capital. Calculate the new value of
goodwill of the firm and record necessary Journal entries for the above transactions on Somesh’s
admission. (3)
20. X and Y are partners in a firm sharing profits in the ratio of 3:2. On 1st April, 2019, they admit Z as new
partner for 3/13th share in the profits. New ratio will be 5:5:3. Z contributed the following assets to his
capital and his share for goodwill; Stock Rs.80,000; Debtors Rs.1,20,000; Land Rs.2,00,000; Plant and
Machinery Rs.1,20, 000.On the date of admission of Z, goodwill of the firm was valued at Rs.10,40,000.
Pass necessary Journal entries in the books of the firm on Z’s admission. (3)

#9999-254-274 #9999-403-274
ANGAD SINGH CLASSES
21. On 31st March, 2010 the Balance Sheet of W and R who shared profits in 3:2 ratio was as follows: (8)
Liabilities Rs Assets Rs
Creditors 35,000 Cash 5,000
Capital A/cs: Sundry Debtors 17,000
W 40,000 Less: Provision 700 16,300
R 30,000 70,000 Stock 25,000
Plant & Machinery 35,000
Patents 20,700
Profit and Loss A/c 3,000
1,05,000 1,05,000
On this date B was admitted as a partner on the following conditions:
(i) B will get 4/15th share of profits.
(ii) B had to bring Rs.30,000 as his capital to which amount other partners’ capitals shall have to be
adjusted.
(iii) He would pay cash for his share of goodwill which would be based on 2 ½ years’ purchased of
average profits of past 4 years.
(iv) The assets would be revalued as under:
Sundry Debtors at book value less 5% Provision for Bad Debts. Stock at Rs.20,000, Plant and
Machinery at Rs.40,000.
(v) The profit of the firm for the years 2007, 2008 and 2009 were Rs.20,000; Rs.14,000 and
Rs.17,000 respectively.
Prepare the Revaluation Account, Partners’ Capital Account and the Balance Sheet of the new firm.
22. Tic and Tac were partners in a firm sharing profits in the ratio of 3:2. Their Balance Sheet as at 31st
March,2012 was: (8)
Liabilities Rs Assets Rs
Bank overdraft 20,000 Cash in hand 8,000
Creditors 30,000 Debtors 30,000
Provision for Doubtful debts 1,000 Bills Receivable 40,000
General Reserve 15,000 Stock 50,000
Toe’s Loan 20,000 Building 90,000
Capital A/cs: Land 1,48,000
Tic 1,00,000
Tac 1,80,000 2,80,000

3,66,000 3,66,000
On 1st April, 2012, they admitted Toe as a new partner on the following conditions:
(i) Toe will get 1/8th share in the profits of the firm.
(ii) Toe’s Loan will be converted into his capital.
(iii) The goodwill of the firm was valued at Rs.80,000 and Toe brought in his share of goodwill in cash.
(iv) A provision for Doubtful Debts was to be made equal to 5% of the Debtors.
(v) Stock was to be depreciated by 5%.
(vi) Land was to be appreciated by 10%.
Prepare the Revaluation Account, Partners’ Capital Account of Tic, Tac and Toe and the Balance Sheet of
the new firm as at 1st April, 2012.

#9999-254-274 #9999-403-274
ANGAD SINGH CLASSES
23. Following is the Balance Sheet of Subash and Asha as at 31st March, 2019 sharing profits in the ratio of
3:2. (8)
Liabilities (Rs.) Assets (Rs.)
Creditors 10,000 Debtors 22,000
Employees’ Provident Fund 8,000 Less : Provision for Doubtful debts 1,000 21,000
General Reserve 30,000 Stock 11,000
Workmen Compensation Reserve 15,000 Bank 21,000
Capital A/cs: Land and Building 18,000
Subash 15,000 Plant and Machinery 12,000
Asha 10,000 25,000 Advertisement Suspense 5,000
88,000 88,000
They admit Tanya as a partner on 1st April, 2019 for 1/6th share in the profits. It was decided that:
(i) Value of land and building be increased by Rs.3,000.
(ii) Value of stock be increased by Rs.2,500.
(iii) Provision for Doubtful Debts be increased by Rs.1,500.
(iv) Liability against Workmen Compensation Reserve was determined at Rs.20,000.
(v) Tanya brought in as her share of goodwill Rs.10,000 by cheque.
(vi) Tanya was to bring in further cheque of Rs.15,000 as her capital.
Prepare Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of the new firm.
24. A, B and C sharing profits and losses in the ratio of 4:3:2, decided to take D as a partner for 1/5th share in
the firm with effect from 1st April, 2019. An extract of their Balance Sheet as at 31st March, 2019 is: (3)
Liabilities (Rs.) Assets (Rs.)
Workmen Compensation Reserve 90,000
Show the accounting treatment of Workmen Compensation Reserve on the admission of D under following
alternative cases by preparing extract of necessary accounts:
Case 1. If there is no other information.
Case 2. If a claim on account of workmen compensation is estimated at Rs.54,000.
Case 3. If a claim on account of workmen compensation is estimated at Rs.99,000.
25. A and B are partners in a firm sharing profits in the ratio of 7:3. They admit C and decide that the profit-
sharing ratio between B and C shall be same as existing between A and B. Calculate new Profit-sharing
ratio and the sacrificing ratio. (3)
26. A, B and C are in partnership sharing profits and Losses in the ratio of 5 : 4 : 1 respectively. Two new
partners D and E are admitted. The profits are now to be shared in the ratio of 3 :4: 2 : 2 : 1 respectively.
Goodwill valued is Rs.1,20,000 and goodwill appeared in the books of account is 2,00,000. D is to pay for
his share of the goodwill but E has insufficient cash to pay for goodwill. Both the new partners introduced
Rs 40,000 each as their capital. You are required to pass the necessary journal entries. (5)
27. X and Y are partners in a firm sharing profits in the ratio of 3:2. The remaining capitals of X and Y after
adjustments are ₹80,000 and ₹60,000 respectively. They admit Z as a partner on his contribution of
₹35,000 as capital for 1/5th share of profit to be acquired equally from both X and Y. The Capital Account
of the old partners are to be adjusted on the basis of the proportion of Z’s Capital to his share in the
business. Calculate the amount of actual cash to be paid or brought in by the old partners for the purpose.
(3)

#9999-254-274 #9999-403-274
ANGAD SINGH CLASSES
4A/13,Tilak Nagar, Above TVS Showroom
RETIREMENT
1. A,B and C were partners in a firm sharing profits in the ratio of 8:4:3. B retires and his share
is taken up equally by A and C. Find the new profit-sharing ratio. (1)

2. Farhan, Ashish and Samay were partners sharing profits in the ratio of 3: 2 : 1. Samay
retired from the firm on 1st April, 2023 on which date goodwill of the firm was valued at Rs.
2,40,000. Farhan and Ashish decided to share future profits in the ratio of 2 : 3 from that
date. Pass the necessary Journal entries raising Goodwill for retiring and sacrificing partner in
current value giving effect to it on Samay’s retirement. (3)

3. A, B and C were in partnership sharing profits in proportion to their capitals. Their Balance
Sheet as at 31-3-2018 was as follows : (8)
Liabilities Rs Assets Rs
Capital A/cs: Building 1,00,000
A 90,000 Machinery 48,000
B 60,000 Stock 18,000
C 30,000 1,80,000 Sundry Debtors 20,000
Reserve 6,000 Less: Provision for Doubtful Debts 400 19,600
Creditors 15,600 Cash 16,000
2,01,600 2,01,600

On the above date B retired owing to ill health and the following adjustments were agreed
upon :
(a) Buildings be appreciated by 10%.
(b) Provision for bad and doubtful debts be increased to 5% on debtors.
(c) Machinery be depreciated by 15%.
(d) Goodwill of the firm be valued at Rs.36,000 and be adjusted into the Capital Accounts of
A and C who will share profits in future in the ratio of 3 : 1.
(e) A provision be made for outstanding repairs bill of Rs.3,000.
(f) Included in the value of creditors is Rs.1,800 for an outstanding legal claim, which is not
likely to arise.
(g) Out of the insurance premium paid Rs.2,000 is for the next year. The amount was debited
to P & L Acc.
(h) The partners decide to fix the capital of the new firm as Rs.1,20,000 in the profit-sharing
ratio.
(i) B to be paid Rs.9,000 in cash and the balance to be transferred to his Loan Account.
Prepare the Revaluation Account, Partner’s Capital Accounts and the Balance Sheet of the
new firm after B’s retirement.

#9999-254-274 #9999-403-274
ANGAD SINGH CLASSES
4A/13,Tilak Nagar, Above TVS Showroom
4. Balance Sheet of X, Y and Z who shared profits in the ratio of 5 : 3 : 2, as on 31st March,
2024 was as follows:

Y retired on 1st April, 2024 and it was agreed that:

i) Goodwill of the firm is valued at ₹ 1,12,500 and Y’s share of it be adjusted into the Capital
Accounts of X and X who are going to share future profits in the ratio of 3 : 2.
ii) Fixed Assets be appreciated by 20%.
iii) Stock be reduced to ₹ 75,000.
iv) Y be paid amount brought by X and Z so as to make their capitals proportionate to their
new profit-sharing ratio.
Prepare Revaluation Account, Capital Accounts of all partners and the Balance Sheet of the
new Firm.

#9999-254-274 #9999-403-274
 ANGAD SINGH CLASSES
4A/13, Tilak Nagar, Above TVS Showroom
DEATH
1. Monika, Vedhant and Zoya are in partnership, sharing profits and losses equally. Zoya died on 30" June
2018. The Balance Sheet of Firm as at 31" March 2025 stood as: (6)
Liabilities ₹ Assets ₹
General Reserve 12,000 Bank 19,000
Creditors 20,000 Stock 15,000
Capitals: Debtors 35,000
Monika 1,00,000 Less: Provision 2,000 33,000
Yadhant 75,000 Investments 65,000
Zoya 75,000 2,50,000 Land and building 1,50,000
2,82,000 2,82,000
In order to arrive at the balance due to Zoya, it was mutually agreed that:
(i) Land and Building be valued at Rs. 1,75,000
(ii) Debtors were all good
(iii) Stock is valued at Rs. 13,500
(iv) Goodwill will be valued at one Year's purchase of the average profit of the past five years.
(v) Zoya's share of profit from 1st April 2025, to the date of death be calculated on the basis of average
profit of preceding three years.
(vi) The profit of the preceding five years ended 31st March were:
Year 2025 2024 2023 2022 2021
Profits (Rs.) 25,000 20,000 22,500 35,000 28,750

2. X ,Y and Z are partners in a business sharing profits as ¾,1/8 and 1/8 respectively and their Balance Sheet
as at 31st March ,2019 was :(6)
Liabilities Rs. Assets Rs.
Creditors 50,000 Cash 50,000
Bills Payable 50,000 Bank 2,50,000
General Reserve 50,000 Debtors 4,00,000
P and L Account 2,00,000 Stock 2,00,000
Capital A/cs: Plant 5,00,000
X 5,00,000
Y 3,00,000 10,50,000
Z 2,50,000 14,00,000 14,00,000

Z died on 31st December,2019 and the Partnership Deed provided the following: -
a) The deceased partner will be entitled to his share of profits up to the date of death, calculated on
the basis of previous year’s profits.
b) He will be entitled to his share of goodwill of firm calculated on the basis of three year’s purchase
of the average profits of the last four years. The net profits of last three years ended 31st March,
were: 2016- Rs 8,00,000 ,2017- Rs 6,00,000, 2018- Rs 4,00,000.
c) His drawings up to date of death was Rs 18,000.
Determine the amount payable to the legal representatives of the deceased partner by preparing
the necessary accounts.

#9999-254-274 #9999-403-274
 ANGAD SINGH CLASSES
4A/13, Tilak Nagar, Above TVS Showroom
3. A, B and C were partners sharing profits and losses in the ratio of 7:2:1. C died on 1st August 2023 on
which date the capitals of A, B and C after all necessary adjustments stood at ₹3,00,000; ₹4,00,000 and
₹5,00,000 respectively. A and B continued to carry on the business for 5 months without setting the
account of C. During the period of 5 months ended 31st December, 2023, a profit of ₹90,000 is earned by
the firm.
State which of the two-option available with C’s Executor under Section 37 of the Indian Partnership Act,
1932 should be exercised? (3)

4. A, B and C are partners in a firm sharing profits and losses in the ratio of 7:2:1. Year ends on 31st
march,2018. C died on 1 October, 2018. Sales for the year ending 31st March, 2018 was ₹20,00,000 and
profit for the year ending 31st March, 2018 was ₹6,00,000. Sales from 1 April, 2018 to 1st October ,2018 is
₹5,00,000. There is an upward trend of increase of 10% in profits. Goodwill appeared is ₹20,00,000 and
goodwill valued is ₹4,50,000. Find out C’s profit and pass the necessary journal entry. (3)

5. Profit for the period up to the date of death of a partner is: (1)
A) Transferred to Revaluation A/c
B) Ignored as it is not relevant
C) Shared in gaining ratio
D) Shared in the old profit-sharing ratio

6. Why is P and L Suspense a/c is debited instead of P and L A/c when share of profit is distributed is to the
deceased partner? Give reason (1)

#9999-254-274 #9999-403-274
ANGAD SINGH CLASSES
4A/13,Tilak Nagar, Above TVS Showroom
DISSOLUTION
1. Balance Sheet of P, Q and R as at 31st March, 2018, who were sharing profits in the ratio of 5 : 3 : 1 , was: (8)

The partners dissolved the business. Assets realized - Stock ₹ 23,400; Debtors 50%; Building and Plant and
Machinery 10% less than their book value. Creditors were settled for ₹ 32,000. There was an Outstanding Bill of
Electricity ₹ 800 which was paid off. Realization expenses ₹ 1,250 were also paid.
Prepare Realization Account, Partner's Capital Accounts and Bank Account.
2. A,B and C are in partnership sharing in 4:3:3. They decided to dissolve the partnership firm. At the date of
dissolution their creditors amounted to Rs.16,800 and in the course of dissolution a contingent liability of Rs.3500
not brought into the accounts matured and had to be met. Their capitals stood at Rs.12,000, Rs.10,000 and Rs.8,000
respectively. The assets realised Rs.45,670.
Prepare the Realization Account and Partners’ Capital Accounts. Also show the Bank Account. (6)
3. Pass necessary Journal entries on the dissolution of a partnership firm in the following cases: (11)
(i) L, a partner, was appointed to look after the dissolution process for which he was given a remuneration of
Rs.10,000.
(ii) Dissolution expenses Rs.8,000 were paid by the partner, M.
(iii) Motor car of book value Rs50,000 taken over by creditors of the book value of Rs40,000 in final settlement.
(iv) Payment of Liabilities - Rs10,000
(v) Profit on realisation Rs36,000 was distributed between P and Q (Partners in the firm) in 5:4 ratio.
(vi) There was an unrecorded typewriter of value Rs.20,000 taken over by Mr. A @Rs.16,000.
(vii) Total creditors of the firm were Rs.20,000. A creditor for Rs.2,000 was untraceable and other creditors
accepted payment allowing 10% discount.
(viii) Angad(Partner) was paid only Rs.5,000 (in full settlement) for his loan to the firm which amounted to
Rs.5500.
(ix) X (partner) has given a loan of Rs.50,000 to the firm, he has taken an unrecorded furniture worth Rs.60,000
against his loan.
(x) Realisation expenses Rs.3,000.
(xi) Sundry assets realised Rs.5,000.

#9999-254-274 #9999-403-274