ACCOUNTANCY – Test Paper 04

(Time 80 minutes - Partnership Admission) M.M 40

Q1. What is meant by reconstitution of partnership? (2)
Q2. State two differences between dissolution of partnership & dissolution of firm. (2)
Q3a. Can a minor partner be admitted in a partnership firm, State Yes/No, giving reasons for the same.
Q3b. Can a partnership be started with a minor, State Yes/No, giving reasons for the same. (2)
Q4. State one right other than “Right to share profits”. (2)
Q5. Under what circumstances sacrificing ratio can be :
(a) Zero (b) Negative (2)
Q6. State the nature and other name for revaluation account. (2)
Q7. Give journal entries for the following:
(a) Increase in the value of Asset (b) Increase in the value of Liability
(c) Unrecorded asset, now to be recorded (b) Decrease in the value of Debtors (2)
Q8a. What is the need for distribution of Accumulated gains among old partners on admission?
Q8b. State the ratio in which profit / loss on revaluation is distributred. (2)
Q9a. How will you calculate new partner’s share of goodwill, if goodwill of the firm is given?
Q9b. Give one similarity between Revaluation account & P/L appropriation a/c.
Q9c. A and B agree to value goodwill at 2.5 years purchase of average profits of the last four years for admitting
C as a partner.
Profits of the last four years were Rs. 20,000; Rs. 30,000 (Loss); Rs. 50,000 and Rs. 60,000 respectively.
What amount should C contribute towards goodwill in order to get 1/5th share. (4)
Q10a. State any four adjustments made in the books on admission of a partner?
Q10b. State any 4 factors on which goodwill depends.
Q10c. Calculate the sacrifice ratio in the following:
i. X and Y are sharing profits in the ratio of 4 : 3 Z joins and the new ratio is 7 : 4 : 3.
ii. X and Y are old partners sharing profits in the ratio of 3 : 2. Z joins with 1/7 the share of the profit. (6)
Q11. A and B partners sharing profits and losses in the ratio of 3:2. Their Balance Sheet as at 31.03.2020 is given
below:
Rs. Rs.
Creditors 40,000 Freehold premises 3,00,000
General reserve 10,000 Plant 50,000
Capital A/c: Office equipment 40,000
A 2,40,000 Stock 30,000
B 1,70,000 Debtors 25,000
Bank 15,000
4,60,000 4,60,000
On 1.4.2020, they admit C as a partner, who contributes Rs. 1,00,000 as capital. The following were agreed
upon:
1. C is to get 1/5th share in the firm 2. Provision for bad debts is to be made on debtors @2%.
3. Stock to be written down by 10%. 4. Investment to be recorded at Rs. 5,000
5. Freehold premises is to be revalued at Rs. 3,40,000, Plant Rs. 35,000 and office equipment Rs. 42,500.
Calculate new profit sharing ratio, sacrificing ratio, Pass necessary journal entries and prepare revaluation
account only. (6)
Q12. The following is the Balance Sheet of A and B who had been sharing profits in proportion of three-fourth
and one-fourths, on 31st December, 2020.
Liabilities Rs. Assets Rs.
Creditors 30,000 Cash at Bank 22,500
Employees’ Fund 7,500 Bills Receivable 3,000
Workmen Compensation Reserve 6,000 Debtors 16,000
A’s Capital 30,000 Stock 20,000
B’s Capital 16,000 Furniture 1,000
Land & Building 25,000
Advertisement Exp. 2,000
89,500 89,500
They agreed to take C into partnership on 1st January, 2021 on the following terms:
a. That C acquires his share of profit equally from A & B,
b. That C pays Rs. 40,000 as his capital for one-fourth share in the future profits,
c. That a claim on account of Workmen Compensation is estimated to be Rs. 10,000,
d. That stock and furniture be reduced by 20% and 5% provision for doubtful debts be created on debtors,
e. That the value of land and building be appreciated by 30%. Calculate new profit sharing ratio, sacrificing
ratio, Pass necessary journal entries, prepare revaluation account Partner’s Capital Accounts. (8)
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