Class 12 Accounts CA Parag Gupta

Chapter 1: Accounting for Partnership Firms -
Fundamentals
Q 1.Arti and Bharti are partners in a firm sharing profits in the ratio of 3 : 2. The following trial balance
was extracted from their books as at 31st March, 2019:
TRIAL BALANCE as at 31st March, 2019
Dr. Balances Rs. Cr. Balances Rs.
Opening Stock 36,000 Sales 9,40,000
Purchases 6,20,000 Returns Outwards 4,000
Returns Inwards 12,000 Sundry Creditors 43,000
Sundry Debtors 1,25,000 Interest 1,000
Computer 50,000 Arti’s Capital 3,00,000
Rent (for 11 months) 22,000 Bharti’s Capital 1,50,000
Salary to Staff 1,20,000
Land & Building 3,52,000
Wages 16,000
General Charges 30,000
Cash at Bank 25,000
Arti’s Drawings 20,000
Bharti’s Drawings 10,000
14,38,000 14,38,000
You are required to prepare the Profit and Loss Account and Profit and Loss Appropriation Account
for the year ended 31st March, 2019 and a Balance Sheet as on that date, taking into account the
following adjustments :
(i) Stock on 31st March, 2019 was valued at Rs.60,000.
(ii) Rent for the month of March 2018 has not been paid.
(iii) Depreciate Computer by 20%.
(iv) Bharti is to be allowed a salary of Rs.5,000 per month and partners are entitled to interest on Capital
@ 6% p.a.
Q 2.Arun and Barun are partners in a firm sharing profits and losses equally. Their capitals on 1st April,
2015 were Rs.4,80,000 and Rs.5,40,000. On 1st October, 2015, they decided that the total capital of the
firm should be Rs. 10,00,000 to be contributed equally by both of them. According to the partnership
deed, interest on capital is allowed to the partners @6% p.a.
You are required to compute interest on capital for the year ending 31st March, 2016. (ISC
Sample Paper 2017)
Q 3.A and B are partners in a firm. Their capital accounts showed the balance on April 1, 2015 as
Rs.4,00,000 and Rs.3,00,000 respectively. On August 1, 2015 they introduced further capitals of
Rs.50,000 and Rs.40,000 respectively. B withdrew Rs. 15,000 from his capital on March 1, 2016.
Interest is allowed @ 6% p.a. on the capitals. Compute interest on capitals for the year ending March
31,2016.
Q 4.A and B are partners sharing profits and losses in the ratio of 3 : 1, Their capitals at the end of the
financial year 2016-17 were Rs.6,00,000 and Rs.3,00,000. During the year 2016-2017, A’s drawings
were Rs.80,000 and the drawings of B were Rs.40,000, which had been duly debited to partner's capital
accounts. Profit before charging interest on capital for the year was Rs.80,000. The same had also been
credited in their profit sharing ratio. B had brought additional capital of Rs.70,000 on October 1, 2016.
Calculate interest on capital @ 12% p.a. for the year 2016-17.
Q 5.(Fluctuating Capitals)Shiv and Hari entered into partnership on 1st April, 2017, contributing
Rs.5,00,000 and Rs.2,00,000 respectively. Hari also introduced Rs. 1,00,000 as additional capital on 1st
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July, 2017. They agreed to share profits and losses in the ratio of 3 : 2. Following information is provided
regarding the partnership :
(i) Shiv and Hari, each are allowed a salary of Rs.5,000 per quarter.
(ii) Interest is to be allowed on Capitals @ 8% p.a. and charged on drawings at 10%p.a.
Drawings of Shiv and Hari during the year were Rs. 12,000 and Rs. 10,000 respectively. Profit as at
31st March, 2018 before the above mentioned adjustments was Rs. 1,96,000.
Prepare :
(i) Necessary journal entries relating to appropriation of profits,
(ii) Profit and Loss Appropriation A/c, and
(iii) Partner’s Capital A/cs.
Q 6.Sarita and Vandana were partners in a firm sharing profits in the ratio of their capitals contributed
on commencement of business which were Rs.4,00,000 and Rs.3,00,000 respectively. The firm started
business on April 1, 2018. According to the partnership agreement:
(i) Every year, in case of profit, Rs. 50,000 or 10% of the profit, whichever is more, will be donated for
providing school fees of specially abled children.
(ii) Interest on capital is to be allowed at 12% p.a. and interest on Drawings is to be charged at 10% p.a.
(iii) Sarita and Vandana are to get a monthly salary of Rs. 10,000 and Rs. 15,000 respectively.
The profits for year ended March 31, 2019 before making above appropriations was Rs.6,00,000. The
drawings of Sarita and Vandana were Rs.2,00,000 and Rs.2,50,000, respectively. Interest on drawings
amounted to Rs.10,000 for Sarita and Rs.12,500 for Vandana.
You are required to prepare Profit and Loss Appropriation Account and Partner’s Capital Accounts
assuming that their capitals are fluctuating.
Q 7.(Manager’s Commission)
A and B are partners sharing profits in the ratio of 3 : 2, with Capitals of Rs. 5,00,000 and Rs.3,00,000
respectively. Interest on Capital is agreed @ 6% p.a. B is to be allowed an annual salary of Rs.60,000.
During the year 2018-19, the profits prior to the calculation of interest on capital but after charging B’s
salary amounted to Rs. 1,80,000. A provision of 5% of the profit is to be made in respect of commission
to the Manager.
Prepare Profit and Loss Appropriation account showing the distribution of profit and the partner’s
capital accounts for the year ending March 31, 2019.
Q 8. (Partner’s Commission)
A and B are partners in a firm. A is entitled to a salary of Rs. 15,000 p.m. and a commission of 10% of
net profit before charging any commission. B is entitled to a commission of 10% of net profit after
charging his commission. Net profit for the year ended 31 st March 2018 was Rs.4,40,000.
You are required to show the distribution of profit.
Q 9.A and B are partners in a firm sharing profits and losses in the ratio of 3 : 2 with capitals of
Rs.5,00,000 and Rs.2,50,000 respectively on 1st April, 2017. Each partner is entitled to 10% p.a. interest
on his capital. A is entitled to a commission of 10% on net profit remaining after deducting interest on
capitals but before charging any commission. B is entitled to a commission of 8% of net profit remaining
after deducting interest on capitals and after charging all commissions. The profits for the year ended
31st March, 2018 prior to calculation of interest on capital was Rs.3,75,000.
Prepare necessary journal entries.
Q 10.A and B are partners sharing profits and losses in the ratio of 2 : 1 with capitals of Rs. 10,00,000
and Rs.5,00,000 respectively on 1st April, 2018. Each partner is entitled to 8% p.a. interest on his
capital. B is entitled to a salary of Rs.3,500 p.m. together with a commission of 10% of Net Profit
remaining after deducting interest on capitals and salary and after charging his commission. The profits
for the year ended 31st March, 2019 prior to calculation of interest on capital but after charging salary
of B amounted to Rs.4,50,000. Show the division of profit, pass journal entries and prepare Partner’s
Capital Accounts : (i) When capitals are fixed, and (ii) When capitals are fluctuating.

Q 11.X and Y are partners in a firm. Their capitals as on April 1, 2017 were Rs.2,50,000 and Rs.
1,80,000 respectively. They share profits equally. On July 1, 2017, they decided that their capitals
should be Rs.2,00,000 each. The necessary adjustments in the capitals were made by withdrawing or
introducing cash. According to the partnership deed, interest on Capital is to be allowed at 8% p.a. X is
to get an annual salary of Rs.4,000 and Yis allowed a monthly salary of Rs.800, It was found that Y
was regularly withdrawing his monthly salary.
The manager of the firm is entitled to a commission of 10% of the profit before any adjustment is made
according to the partnership deed.
Net profit for the year ended on 31st March, 2018, before charging interest on capital and salary, was
Rs. 80,000. Prepare the profit and loss appropriation account, partner’s capital accounts and current
accounts.
Q 12.A, B and C were partners in a firm having capitals of Rs.60,000; Rs.60,000 and Rs.80,000
respectively. Their Current Account balances were A : Rs. 10,000; B : Rs.5,000 and C : Rs.2,000 (Dr.).
According to the partnership deed 10% of the profit is to be transferred to General Reserve and the
partners were entitled to interest on capital @ 5% p.a. C being the working partner was also entitled to
a salary of Rs. 12,000 p.a. The profits were to be divided as follows :
(a) The first Rs.20,000 in proportion to their capitals.
(b) Next Rs.30,000 in the ratio of 5 : 3 : 2.
(c) Remaining profits to be shared equally.
The firm made a profit of Rs. 1,80,000 for the year ended 31st March, 2019 before charging any of the
above items. Prepare the Profit & Loss Appropriation Account and pass necessary journal entry for
apportionment of profit.
Q 13.The partnership agreement of Maneesh and Girish provides that

(i) Profits will be shared equally.
(ii) Maneesh will be allowed a salary of Rs.400 p.m.
(iii) Girish who manages the sales department will be allowed a commission equal to 10% of the net
profit after allowing Maneesh’s salary.
(iv) 7% interest will be allowed on partner’s fixed capital.
(v) 5% interest will be charged on partner’s annual drawings.
(vi) The fixed capitals of Maneesh and Girish are Rs. 1,00,000 and Rs.80,000 respectively. Their annual
drawings were Rs. 16,000 and Rs. 14,000 respectively. The net profit for the year ending March 31,
2019 amounted to Rs.40,000.
Prepare firm’s Profit and Loss Appropriation Account.
Q 14.A and B entered into partnership on 1st April, 2017 without any partnership deed. They introduced
capitals of Rs.5,00,000 and Rs.3,00,000 respectively. On 31st October 2017, A advanced Rs.2,00,000
by way of loan to the firm without any agreement as to interest.
The Profit and Loss Account for the year ended 31.3.2018 showed a profit of Rs.4,30,000, but the
partners could not agree upon the amount of interest on loan to be charged and the basis of division of
profits. Pass necessary journal entries and prepare the Capital A/cs of both the partners and Loan A/c
of A.
Q 15.A and B are partners with capitals of Rs.5,00,000 and Rs.3,00,000 respectively. The profit for the
year ended 31st March 2019 was Rs.3,46,000 before allowing interest on partner’s loan. Show the
distribution of profit after taking the following into consideration:
(i) Interest onA’s Loan of Rs.1,50,000 to the firm provided on 1st April, 2018.
(ii) Interest on capital to be allowed @ 5% p.a.
(iii) Interest on drawings @ 6% p.a. Drawings were A Rs.60,000 and B Rs.40,000.
(iv) B is to be allowed a Commission of 2% on sales. Sales for the year were Rs.30,00,000.
(v) 10% of the divisible profits is to be kept in a Reserve Account.
Q 16.X and Y are partners with a profit sharing ratio of 1 : 2 with capitals of Rs.4,00,000 and
Rs.6,00,000 respectively. On 1st October, 2018Xand Ygranted loans of Rs. 1,00,000 and Rs.60,000

respectively to the firm. Distribute the profit/losses amongst the partners for the year ended 31st March,
2019 in each of the following cases:
Case (a) If the profit before interest for the year amounted to Rs. 12,000.
(b) If the profit before interest for the year amounted to Rs.3,000.
(c) If the loss before interest for the year amounted to Rs.7,500.
Q 17.A and B are partners sharing profits in the ratio of 3 : 2. On 1st April, 2018 their capitals were Rs.
5,00,000 and Rs. 3,00,000 respectively. A was in need of funds and hence took a loan of Rs.1,00,000
from the firm on 1st July, 2018, agreed rate of interest being 12% p.a.
Profit for the year ended 31st March, 2019 amounted to Rs.1,50,000 before charging interest on loan to
A.
Pass Journal Entries for interest and prepare Partner’s Capital Accounts.
Q 18.Akshra and Samiksha are in partnership. Business is being carried from the property owned by
Akshra on a monthly rent of Rs.5,000. Akshra is entitled to a salary of Rs.40,000 per quarter and
Samiksha is to get commission of 4% on net sales, which during the year was Rs.50,00,000. Net Profit
for the year ended 31 st March, 2018 before providing for rent was Rs.6,00,000.
You are required to prepare Profit and Loss Appropriation Account for the year ended 31 st March,
2018.
Q 19.Rahim and Sudesh, the two partners of a business firm, agreed to appropriate the profits of their
firm on the following terms :
(a) Interest is payable on capital @ 5% per annum.
(b) Rahim will be entitled to a salary of Rs.500 per month.
(c) Loan advanced by a partner to the firm is to carry interest @ 10% per annum.
(d) Interest on drawings to be charged from the partners @ 5% per annum.
(e) Sudesh will get commission @ 1% on the sales made during the year.
(f) Rahim is entitled to a rent of Rs.25,000 per annum for allowing the firm to carry on the business in
his premises.
The net profit of the firm for the year ended 31st March, 2019, was Rs. 1,75,500 before taking into
account any of the above terms.
Particulars Rahim Sudesh
Rs. Rs.
Capital Balances on 1st April, 2018 1,50,000 1,40,000
Loan advanced to the Firm on 1st October, 2018 — 1,00,000
Drawings made during the year 40,000 30,000
Loan taken from the firm on 1st July 2018 @ 12% p.a. 50,000
During the year 2018-19, sales of the firm amounted to Rs. 7,00,000. From the above information,
prepare :
(a) Profit and Loss Appropriation Account.
(b) Partner’s Capital Accounts.
(c) Rent Payable Account.
Q 20.A and B are partners in a firm. On 1st April, 2018 their Capitals were Rs.3,00,000 and Rs.2,00,000
respectively. On 1st October, 2018 A granted a loan of Rs.50,000 to the firm. B had allowed the firm
to use his property for business for a monthly rent of Rs. 10,000. The partnership deed provides that
interest on capital will be allowed @ 9% p.a. and B is to be allowed an annual salary of Rs. 1,00,000.
The firm incurred a loss of Rs.28,500 for the year ended 31 st March 2019 before any adjustment is
made according to the partnership deed.
Prepare an account showing the distribution of profit/loss.
Q 21.P and Q are partners in a firm sharing profits and losses in the ratio of 2 : 3. Their fixed capitals
as on 1st April, 2018 were Rs.6,00,000 and Rs.8,00,000 respectively. As per partnership deed both
partners are to get monthly salary of Rs.25,000 each and interest on capital @ 8% p.a. They are to be

charged interest on drawings @ 10% p.a. Drawings during the year ended 31st March 2019 were : P
Rs. 10,000 per month and Q Rs. 1,20,000 during the year.
Firm incurred a loss of Rs. 1,00,000 during the year before above adjustments.
Pass journal entries and prepare an account showing the distribution of profit/loss.
Q 22.A and B are partners sharing profits and losses in the ratio of 2 : 1. A is a non-working partner and
has contributed Rs. 12,00,000 as his capital. B is a working partner. The partnership deed provides for
interest on capital @ 10% p.a. and salary of Rs.7,500 per month to the working partner. The net profit
for the year ended 31st March, 2016 before providing for interest on capital and salary amounted to
Rs.70,000. You are required to show the distribution of profit.
Q 23.X, Land Zare partners with fixed capitals of Rs. 1,50,000, Rs.1,20,000 and Rs.1,00,000
respectively. The Balance of current accounts on 1st April, 2015 were X Rs. 8,000 (Cr.); Y Rs.3,000
(Cr.) and Z Rs.2,000 (Dr.). X advanced Rs.20,000 on October 1, 2015. The partnership deed provided
for the following :
(a) Interest on Capital at 5% p,a.
(b) Interest on drawings at 6% p.a. Each partner drew Rs.10,000 on October 1, 2015.
(c) Rs.20,000 is to be transferred to a Reserve Account.
(d) Profit and Loss to be shared in the proportion of 3 : 2 : 1 upto Rs. 60,000 and above Rs.60,000
equally.
Net profit of the firm for the year ended 31st March, 2016 before above adjustments was Rs. 1,15,400.
From the above information, prepare Profit and Loss Appropriation Account, Capital and Current
Accounts of the partners.
Q 24.Charu is a partner in a firm. She withdrew the following amounts during the year ended on 31st
March, 2018 :—
Rs.
May 1 20,000
July 31 10,000
September 30 30,000
November 30 40,000
January 1 20,000
March 31 25,000
Interest on drawings is to be charged @ 9% p.a. Calculate interest on drawings.
Q 25.A, B and C are partners in a firm. You are informed that:

(i) A draws Rs. 10,000 from the firm in the beginning of every month,
(ii) B draws Rs. 10,000 from the firm at the end of every month, and
(iii) C draws Rs. 10,000 from the firm in the middle of every month.
Interest on drawings is to be charged @ 8% p.a. Calculate interest on partner’s drawings.
Q 26.Calculate the interest on drawings of Mr. Arun @ 10% p.a. for the year ended 31st March, 2017
in each of the following alternative cases :
Case (a) If he withdrew Rs.5,000 p.m. in the beginning of every month;
Case (b) If he withdrew Rs.5,000 p.m. at the end of every month;
Case (c) If he withdrew Rs.5,000 p.m. during the year;
Case (d) If he withdrew Rs.60,000 during the year;
Case (e) If he withdrew as follows :
Rs.
1st June, 2016 20,000
31st August, 2016 10,000
31st Oct, 2016 18,000
1st Feb., 2017 12,000
Case (f) If he withdrew Rs. 15,000 in the beginning of each quarter;
Case (g) If he withdrew Rs. 15,000 at the end of each quarter;

Case (h) If he withdrew Rs.15,000 during the middle of each quarter.
Q 27.A, B and C started business on 1st July, 2015. You find that:
(i) A drew Rs. 8,000 in the beginning of every month for 9 months ending 31st March, 2016.
(ii) B drew Rs.8,000 at the end of every month for 9 months ending 31st March, 2016.
(iii) C drew Rs.8,000 every month for 9 months ending 31st March, 2016.
Calculate interest on drawings @ 10% p.a.
Q 28.The Capital Accounts of X and Y showed balances of Rs.40,000 and Rs.20,000 on 1st April, 2017.
They shared profits in the ratio of 3 : 2. They are allowed interest on Capitals @ 10% p.a. and are
charged interest on drawings @ 12% p.a. X also advanced a loan of Rs. 10,000 to the firm on 1st August,
2017.
During the year X withdrew Rs. 1,000 per month in the beginning of every month, whereas Y withdrew
Rs. 1,000 per month at the end of every month.
The profits for the year ended 31st March, 2018, before the above mentioned adjustments were
Rs.20,960. Show the distribution of profits and prepare the partner’s Capital Accounts.
Q 29.A, B and C are in partnership. On 1st April, 2018 their capitals were : A Rs.5,00,000 (Credit), B
Rs.3,00,000 (Credit) and C Rs.40,000 (Debit). As per partnership deed Interest on Capital is to be
allowed @ 6% p.a. and Interest on drawings is to be charged @ 8% pa.
You find that:
(i) On 1st July 2018, A withdrew Rs.1,00,000 against capital;
(ii) B withdrew Rs.5,000 p.m. during the year.
(iii) C withdrew Rs.60,000 during the year.
The profit for the year ended 31st March, 2019 amounted to Rs.3,84,000.
You are required to prepare journal entries for the above transactions and also prepare partner’s capital
accounts.
Q 30.Oh 1st April, 2018, A, B and C started a business with capitals of Rs.5,00,000, Rs.4,50,000 and
Rs.2,50,000 respectively. According to partnership agreement:
(i) Profit earned in any year will be distributed as under :
Upto Rs.3,00,000 equally.
Excess over Rs.3,00,000 - l/5th to A, 2/5th to B and 2/5 to C.
(ii) Allow interest on capital @5% p.a. and charge interest on drawings @8% p.a.
(iii) A and C are entitled to get monthly salaries of Rs.4,500 and Rs.5,500 respectively. In addition to
salaries, both are entitled to get a commission of 4% (each) on net profit after taking into consideration
salaries, interest and all commissions.
Drawings of the partners during the year were :
A withdrew regularly Rs.9,000 at the end of every month.
B withdrew regularly Rs. 8,000 at the beginning of every month.
C withdrew Rs.50,000 during the year.
The profit of the firm for the year before charging all of the above adjustments was Rs.5,47,880.
Distribute the profit among the partners and prepare partner’s current accounts when Capitals are fixed.
Q 31.A and B share profits in the ratio of 3 : 2. Their drawings for the year ending 31st March, 2016
were as under:
A Rs. B Rs.
1st May, 2015 6,000 1st April, 2015 5,000
30th November, 2015 8,000 31st August, 2015 6,000
31 st January, 2016 7,000 31st October, 2015 4,000
1st February, 2016 2,000
31st March, 2016 3,000
Calculate interest on drawings @ 15% p.a. for the year ended on 31 st March, 2016 and pass the
necessary journal entries for the same.

Q32. (HOTS)A and B are partners sharing the profits and losses in the ratio of 3 : 2 with capitals of
Rs.2,00,000 and Rs. 1,00,000 respectively. Show the distribution of profits in each of the following
alternative cases :
Case (i) If the partnership deed is silent as to the Interest on Capital and the profits for the year are
Rs.50,000.
Case (ii) If the partnership deed provides for Interest on Capital @ 8% p.a. and the losses for the year
are Rs.50,000.
Case (iii) If the partnership deed provides for Interest on Capital @ 8% p.a. and the profits for the year
are Rs.50,000.
Case (iv) If the partnership deed provides for Interest on Capital @ 8% p.a. and the profits for the year
are Rs. 15,000.
Case (v) If the partnership deed provides for Interest on Capital @ 8% p.a. even if it involves the firm
in loss and the profits for the year are Rs. 15,000.
Q33.(HOTS)A and B contribute Rs.5,00,000 and Rs.3,00,000 respectively by way of capital on . which
they agree to allow interest at 6% p.a. Their respective share of profit is 3 :2 and the profit for the year
is Rs.40,000 before allowing interest on capitals. Prepare the necessary account to allocate interest on
capitals in the following cases :
(i) When the partnership deed is silent about the treatment of interest on capital, and
(ii) When interest is a charge as per the Partnership Deed.
Q 34.On 1-4-2013, Jay and Vijay entered into partnership for supplying laboratory equipments to
government schools situated in remote and backward areas. They contributed capitals of Rs. 80,000 and
Rs. 50,000 respectively and agreed to share the profits in the ratio of 3 : 2. The partnership deed provided
that interest on capital shall be allowed at 9% per annum. During the year the firm earned a profit of
Rs.7,800.
Showing your calculations clearly, prepare ‘Profit and Loss Appropriation Account’ of Jay and Vijay
for the year ended 31-3-2014.
(C.B.S.E. 2015)
Q 35.A and B entered into partnership with capitals of Rs.4,00,000 and Rs.2,00,000 respectively and
agreed to share profits & losses in the ratio of 3 : 2. Their partnership deed provided that interest on
capital shall be allowed at 6% ρ,a. and it is to be treated as a charge against profits. Prepare the relevant
account to allocate the profit in the following alternative cases :
(i) If profit for the year is Rs.80,000;
(ii) If profit for the year is Rs.20,000;
(iii) If loss for the year is Rs.20,000.
Q36. (HOTS)Shikha and Fatima were partners in a firm sharing profits in the ratio of 5 : 3. Their fixed
capitals on 1.4.2017 were : Shikha Rs.3,00,000 and Fatima Rs.4,00,000. They agreed to allow interest
on capital @ 12% per annum and to charge on drawings @15% per annum. The profit of the firm for
the year ended 31.3.2018 before all above adjustments were Rs.63,000. The drawings made by Shikha
were Rs.10,000 and by Fatima Rs.20,000 during the year. Prepare Profit and Loss Appropriation
Account. The interest on capital will be allowed even if the firm incurs a loss.
Q 37.A, B and C started a business in partnership. A contributes Rs.50,000 for the whole year. B
introduces Rs.40,000 at first and increased it to Rs.46,000 at the end of four months but withdraws Rs.
16,000 at the end of nine months. C invests Rs. 80,000 at first but withdraws Rs.20,000 at the end of
five months.
Firm earned a profit of Rs.23,750 during the year. You are required to show the division of profits on
the basis of the effective capital employed by each partner during the year.
Q 38.A, B, C and D are equal partners in a firm. Their capitals on 1st April, 2018 were Rs.50,000;
Rs.30,000; Rs.25,000 and Rs. 15,000 respectively. After closing the accounts for the year ended 31st

March, 2019 it was discovered that according to the partnership deed interest @ 10% per annum on
partner’s Capitals was not provided before distribution of profits. It was agreed among the partners to
make the adjusting entry at the beginning of the next year rather than to alter the Balance Sheet. Pass
the necessary journal entry assuming that the capitals are not fixed.
Q 39.A, B and C are partners in a firm. They have omitted interest on capital @ 10% p.a. for three years
ended 31st March, 2019. Their fixed capitals on which interest was to be calculated throughout were :
A Rs. 1,00,000
B Rs. 80,000
C Rs. 70,000
Give the necessary adjusting journal entry with working notes.
Q 40.X, Y and Z are partners sharing profits and losses in the ratio of 3 : 2 : 1. After the final accounts
have been prepared, it was discovered that interest on drawings @ 5% p.a. had not been taken into
consideration. The drawings of the Partners were : X Rs.1,50,000; Y Rs.1,26,000; Z Rs.1,20,000. Give
the necessary adjusting journal entry.
Q 41.R and S were partners in a firm sharing profits in 3 : 2 ratio. Their respective fixed capitals were
Rs. 10,00,000 and Rs. 15,00,000. The partnership deed provided the following:
(/) Interest on capital @ 10% p.a.
(ii) Interest on drawing @ 12% p.a.
During the year ended 31-3-2016, R’s drawings were Rs. 10,000 per month drawn at the end of every
month and S’s drawings were Rs.20,000 per month drawn in the beginning of the every month. After
the preparation of final accounts for the year ended 31-3-2016 it was discovered that interest on R’s
drawings was not taken into consideration.
Calculate interest on R’s drawings and give necessary adjusting entry for the same.
Q 42.L, M and N partners have omitted interest on capitals for three years ended on 31st March, 2017.
Their fixed capitals in three years were L Rs.40,000, MRs.25,000, N Rs. 15,000. Rate of interest on
capital is 12% p.a.Their profit sharing ratios were 2015 — 5:2:1, 2016 — 3:2:1, 2017 — 2:1:1. Give
the necessary adjusting entry.
Q 43.Mudit and Uday are partners in a firm sharing profits in the ratio 2:3. Their capital accounts as on
April 1, 2015 showed balances of Rs.70,000 and Rs.60,000 respectively. The drawings of Mudit and
Uday during the year 2015-16 were Rs. 16,000 and Rs. 12,000 respectively. Both the amounts were
withdrawn on 1st January 2016. It was subsequently found that the following items had been omitted
while preparing the final accounts for the year ended 31st march 2016.
(a) Interest on capitals @ 6% p.a.;
(b) Interest on drawings @ 6% p.a.;
(c) Mudit was entitled to a commission of Rs.4,000 for the whole year.
Showing your workings clearly pass a rectifying entry in the books of the firm.
(C.B.S.E. 2017, Comptt.)
Q 44.The net profit of a firm for the year ended 31st March, 2017, was Rs.3 0,000, which has been duly
distributed amongst its three partners A, B and C in their agreed proportions of 3 : 1 : 1 respectively. It
was discovered on 10th April, 2017 that the undermentioned transactions were not passed through the
books of accounts of the firm for the year ended 31 st March, 2017, which stood duly closed on that
date :
(a) Interest on capital at 10% p.a.
(b) Interest on drawings : A Rs.350; B Rs.250; C Rs. 150.
(c) Salary of Rs.5,000 to A and Rs.7,500 to B.
(d) Commission due to A on a special transaction, Rs.3,000.
The capital accounts of the partners on 1st April, 2016 were : A Rs.25,000; B Rs.20,000; CRs. 15,000.

You are required to suggest a journal entry to be passed on 10th April, 2017 which will not affect the
Profit and Loss Appropriation Account of the firm for the year ended 31st March, 2017 and at the same
time will rectify the position of the partners.
Q 45.Praveen, Sahil and Riya are partners having fixed capitals of Rs.2,00,000, Rs. 1,60,000 and Rs.
1,20,000 respectively. They share profits in the ratio of 3 : 1 : 1. The Partnership Deed provided for the
following which were not recorded in the books :
(i) Interest on Capital @5% p.a.
(ii) Salary to Praveen Rs. 1,500 p.m. and to Riya Rs. 1,000 p.m.
(iii) Transfer of profit to General Reserve Rs. 10,000. Net Profit for the year ended 31st March, 2015
distributed among the partners was Rs.1,00,000.
Pass necessary rectifying entry for the above adjustments in the books of the firm. Also show your
workings clearly. (C.B.S.E. 2016 Comptt., All India)
Q 46.Ravi and Mohan were partners in a firm sharing profits in the ratio of 7 : 5. Their respective fixed
capitals were Ravi Rs. 10,00,000 and Mohan Rs.7,00,000. The partnership deed provided for the
following :
(i) Interest on Capital @ 12% p.a.
(ii) Ravi’s salary Rs.6,000 per month and Mohan’s salaiy Rs.60,000 per year.
The profit for the year ended 31-3-2019 was Rs.5,04,000 which was distributed equally, without
providing for the above. Pass an adjustment entry.
Q 47.X, Y and Z were partners in a firm. On 1st April, 2018 their capitals stood at Rs.6,00,000,
Rs.4,00,000 and Rs.2,00,000 respectively. As per provisions of the partnership deed:
(i) Y was entitled for commission of Rs. 12,000 p.a.
(ii) X was entitled for a salary of Rs. 1,200 per month.
(iii) Partners were entitled to interest on Capital @ 8% p.a.
(iv) Profits were to be shared in the ratio of Capitals.
Net profit for the year ended 31.03.2019 was Rs.4,22,400 which was distributed equally, without taking
into consideration the above provisions. Showing your workings clearly, pass necessary adjustment
entry for the above.
Q 48.A, B and C were partners. Their capitals were Rs.30,000; Rs.20,000 and Rs. 10,000 respectively
on 1st April, 2018. According to the partnership deed they were entitled to an interest on capital at 5%
p.a. In addition B was also entitled to draw a salary of Rs. 500 per month. C was entitled to a commission
of 5% on the profits after charging the interest on capital, but before charging the salary payable to B.
The net profits for the year ended 31st March, 2019 were Rs.30,000, distributed in the ratio of their
capitals without providing for any of the above adjustments. The profits were to be shared in the ratio
of 2 :2 : 1. Pass the necessary adjustment entry showing the workings clearly.
Q 49.The partners of a firm distributed the profits for the year ended 31st March, 2019, Rs. 90,000 in
the ratio of 3 : 2 : 1 without providing for the following adjustments :
(i) A and B were entitled to a salary of Rs. 1,500 each per annum.
(ii) B was entitled to a commission of Rs.4,500.
(iii) B and C had guaranteed a minimum profit of Rs.35,000 p.a. to A.
(iv) Profits were to be shared in the ratio of 3 : 3 :2.
Pass necessary journal entry for the above adjustments in the books of the firm.
Q 50.Rajeev and Sanjeev were partners in a firm. Their partnership deed provided that the profits shall
be divided as follows :
First Rs.20,000 to Rajeev and the balance in the ratio of 4 : 1. The profits for the year ended 31st March,
2017 were Rs.60,000 which had been distributed among the partners. On 1-4-2016 their capitals were
Rajeev Rs.90,000 and Sanjeev Rs.80,000. Interest on capital was to be provided @6% p.a. While
preparing the profit and loss appropriation interest on capital was omitted.
Pass necessary rectifying entry for the same. Show your workings clearly.

Q 51.Ram, Shyam and Mohan are partners in a firm sharing profits and losses in the ratio of 2 : 1 : 2,
Their fixed capitals were Rs.3,00,000; Rs.1,00,000 and Rs.2,00,000 respectively. Interest on capital for
the year ended 31st March, 2018 was credited to them @ 9% p.a. instead of 10% p.a. The profit for the
year before charging interest was Rs.2,50,000. Prepare necessary adjustment entry.
Q 52A, B and C are partners in a firm sharing profits and losses in the ratio of 2 : 3 : 5. Their fixed
capitals were Rs. 15,00,000, Rs.30,00,000 and Rs.60,00,000 respectively. For the year ended 31st
March, 2018 interest on capital was credited to them @ 12% instead of 10%. Pass the necessary
adjustment entry.
Q 53.A, B and C are partners in a firm. After the accounts of partnership have been drawn up and the
books closed off, it is discovered that for the years ended 31st March 2016 and 2017, interest has been
allowed to the partners upon their Capitals @ 6% p.a. although there is no provision for interest in the
partnership deed. Their fixed capitals on which interest was calculated were Rs. 1,00,000; Rs.80,000
and Rs.60,000 respectively.
During the last two years, they have shared the profits as follows :—
2016 3:2:1
2017 5:3:2
You are required to give necessary adjusting entry on 1st April, 2017.
(C.B.S.E. Sample Paper, 2017)
Q 54.X, Y and Z have been sharing profits in the ratio of 2 : 2 : 1 respectively. Z wants that he should
be given equal share in profits with X and Y and he further wants that the change in the profits sharing
ratio should come into effect retrospectively for the last three years. X and Y have no objection to this.
The profit for last three years were, Rs.52,000, Rs.44,200 and Rs.51,610.
Show the adjustment of profit for the last three years by means of a Journal entry.
Q 55.On March 31,2018 the capital accounts of Elvin, Monu and Ahmed after making adjustments for
profits, drawings, etc. were as, Elvin — Rs.80,000; Monu — Rs.60,000; and Ahmed — Rs.40,000.
Subsequently, it was discovered that interest on capital and interest on drawings had been omitted. The
partners were entitled to interest on capital @ 5% p.a. The drawings during the year were : Elvin —
Rs.20,000; Monu— Rs. 15,000; and Ahmed — Rs.9,000. Interest on drawings chargeable to the
partners was Elvin — Rs.500; Monu — Rs.360 and Ahmed — Rs.200. The net profit for the year ended
31st March, 2018 amounted to Rs. 1,20,000. The profit sharing ratio of the partners was 3:2:1.
Record the necessary adjustment entry for rectifying the above errors of omission. Show your workings.
Q 56.On 31st March, 2014, the balances in the Capital Accounts of A, B and C after making adjustments
for profits and drawings were Rs. 1,60,000, Rs. 1,20,000 and Rs. 80,000 respectively. Subsequently, it
was discovered that the interest on capital and drawings had been omitted.
• The profit for the year ended 31st March, 2014 was Rs.40,000.
• During the year, A and B each withdrew a total sum of Rs.24,000 in equal instalments in the
beginning of each month and C withdrew a total sum of Rs.48,000 in equal instalments at the end of
each month.
• The interest on drawings was to be charged @5% p.a. and interest on capital was to be allowed
@10% p.a.
• The profit-sharing ratio among the partners was 2:1:1.
Showing your working notes clearly, pass the necessary rectifying entry.
Q 57.Piya and Bina are partners in a firm sharing profits and losses in the ratio of 3 : 2. Following was
the Balance Sheet of the firm as on 31-3-2016 :
Liabilities Amount Assets Amount
Capitals : Rs. Sundry Assets Rs.
1,20,000

Piya 80,000
Bina 40,000 1,20,000
1,20,000 1,20,000
The profits Rs.30,000 for the year ended 31-3-2016 were divided between the partners without allowing
interest on capital @ 12% p.a. and salary to Piya @ Rs. 1,000 per month. During the year Piya withdrew
Rs.8,000 and Bina withdrew Rs.4,000. Showing your working notes clearly, pass the necessary
rectifying entry.
(C.B.S.E. 2017 Comptt.)
Q 58.Himanshu and Vikrant are partners in a firm and share profits equally. Their Balance Sheet as at
March 31, 2017 is as follows :
BALANCE SHEET as at March 31, 2017
Rs. Rs.
Capitals : Fixed Assets 3,60,000
Himanshu 2,00,000 Current Assets 40,000
Vikrant 1,40,000 3,40,000
Creditors 60,000 4,00,000
4,00,000
During the year 2016-17, Himanshu’s Drawings were Rs.30,000 and Vikrant’s Drawings were
Rs.40,000. During the year 2016-17 the firm earned profit of Rs. 1,00,000. While distributing profits
for the year 2016-17, interest on capital @ 5% per annum and interest on drawings @12% per annum
were ignored.
Showing your workings clearly, pass necessary rectifying entry.
Q 59.Mannu and Shristhi are partners in a firm sharing profits in the ratio of 3 : 2. Following is the
balance sheet of the firm as at 31st March, 2019 :
Liabilities Rs. Assets Rs.
Mannu’s Capital 3,00,000 Drawings :
Shristhi’s Capital 1,00,000 4,00,000 Mannu 40,000
Shristhi 20,000 60,000
Other Assets 3,40,000
4,00,000 4,00,000
Profit for the year ending 31st March, 2019 Rs. 50,000 was divided between the partners in the agreed
ratio, but interest on capital at 5% p.a. and on drawings at 6% p.a. was inadvertently ignored. Adjust
interest on drawings on an average basis for 6 months. Give the adjustment entry. (NCERT\ Modified)
Q 60.From the following Balance Sheet of A and B, calculate interest on capital @ 5% p.a. payable to
A and B for the year ending 31st March, 2019 :
A’s Capital 1,00,000 Sundry Assets 1,92,000
B’s Capital 80,000 Drawings : A 18,000
P & L Appropriation A/c
— 2018-19 30,000
2,10,000 2,10,000
During the year ending 31st March, 2019, Λ’s drawings were Rs.18,000 and B's drawings Rs. 12,000.
Profit during the year ending 31st March, 2019 was Rs.58,000.
Q 61.The Capital Accounts of Amar and Harsh stood at Rs.2,00,000 and Rs.3,00,000 respectively after
the necessary adjustments in respect of drawings and net profit for the year ended 31st march 2017. It
was subsequently ascertained that interest on capital @ 12% per annum was not taken into account
while arriving at the divisible profits for the year.
During the year 2016-17, Amar had withdrawn Rs.20,000 and Harsh’s drawings were Rs. 10,000.
The net profit for the year amounted to Rs. 1,50,000.

The partners shared profits and losses in the ratio of 3 : 2.
You are required to pass the necessary journal entries to rectify the error in accounting. (I.S.C.2018)
Q 62.X presents the following Profit and Loss Appropriation Account to his partner Y:
Dr. Cr.
Particulars Rs. Particulars Rs.
To Salary to X 24,000 By Profit & Loss A/c
To Salary to Y 12,000 (Profit for the year) 92,200

To Interest on Capital @ 6% p.a.
Aon Rs.2,00,000 12,000
Ton Rs. 50,000 3,000 15,000
To Interest on A Loan @ 12% p.a. 1,200
To Profit transferred to :
3/4th to As
Capital A/c 30,000
1/4th to Ts
Capital A/c 10,000 40,000
92,200 92,200
There is no Partnership Deed between X and Y. Y feels that he has not been treated fairly. You are
required to prepare a new Profit and Loss Appropriation Account according to the provisions of
Partnership Act.
Q 63.Ram, Raj and George are partners sharing profits in the ratio 5:3:2. According to the partnership
agreement George is to get a minimum amount of Rs. 10,000 as his share of profits every year. The net
profit for the year ended 31st March, 2018 amounted to Rs.40,000.
Prepare the Profit and Loss Appropriation Account.
Q 64.Aman, Babita and Suresh are partners in a firm. Their profit-sharing ratio is 2:2:1. However,
Suresh is guaranteed a minimum amount of Rs. 10,000 as share of profit every year. Any deficiency
arising on that account shall be met by Babita. The profits for the two years ending 31st March, 2016
and 2017 were Rs.40,000 and Rs.60,000 respectively. Prepare Profit and Loss Appropriation Account
for the two years.
Q65.A, B and C are partners sharing profits in the ratio of 5 : 4 : 1. C is given a guarantee that his share
of profits in any given year would be Rs.5,000. Deficiency if any, would be borne by A and B equally.
The profit for the year ended 31st March, 2016 amounted to Rs.40,000. Pass necessary entries in the
books of the firm.
Q 66.P and Q were partners in a firm sharing profits in the ratio of 5 : 3. On 1-4-2014 they admitted if
as a new partner for l/8th share in the profits with a guaranteed profit of Rs.75,000. The new profit
sharing ratio between P and 0 will remain the same but they agreed to bear any deficiency on account
of guarantee to if in the ratio 3 : 2. The profit of the firm for the year ended 31-3-2015 was Rs.4,00,000.
Prepare Profit & Loss Appropriation A/c of P, Q and if for the year ended 31-3-2015. ‘
(C.B.S.E. 2016)
Q 67.Mita, Rita and Sandra were partners in a firm, sharing profits and losses in the ratio of 2 ; 2 : 1.
Mita had personally guaranteed that in any year Sandra’s share of profit, after allowing interest on
capital to all the partners @5% per annum and charging interest on drawings @4% per annum, would
not be less than Rs. 10,000.
The capitals of the partners on 1st April, 2015 were :
Mita Rs.80,000, Rita Rs.50,000 and Sandra Rs. 30,000.
The net profit for the year ended 31st March, 2016, before allowing or charging any interest amounted
to Rs.40,000.
Mita had withdrawn Rs.4,000 on 1st April, 2015, while Sandra withdrew Rs.5,000 during the year.

You are required to prepare the Profit and Loss Appropriation Account for the year2015-16.
(I.S.C. 2017)
Q 68Moli, Bhola and Raj were partners in a firm sharing profits and losses in the ratio of 3 : 3 : 4. Their
partnership deed provided for the following :
Interest on capital @5% p.a.
(ii) Interest on drawing @12% p.a.
(iii) Interest on partners loan @ 6% p.a.
(iv) Moli was allowed an annual salary of Rs.4,000; Bhola was allowed a commission of 10% of net
profit as shown by Profit and Loss Account and Raj was guaranteed a profit of Rs. 1,50,000 after making
all the adjustments as provided in the partnership agreement.
Their fixed capitals were Moli : Rs.5,00,000; Bhola : Rs.8,00,000 and Raj : Rs.4,00,000. On 1st April,
2016 Bhola extended a loan of Rs.1,00,000 to the firm. The net profit of the firm for the year ended 31st
March, 2017 before interest on Bhola’s loan was Rs.3,06,000.
Prepare Profit and Loss Appropriation Account of Moli, Bhola and Raj for the year ended 31 st March,
2017 and their Current Accounts assuming that Bhola withdrew Rs. 5,000 at the end of each month,
Moli withdrew Rs. 10,000 at the end of each quarter and Raj withdrew Rs.40,000 at the end of each
half year. (C.B.S.E. 2018)
Q 69.Asha and Lata are partners with Capitals of Rs.5,00,000 and Rs.4,00,000 respectively, on which
they are entitled to interest at 10% p.a. They divide profits in the ratio of 2:1. They take Sudha, Manager
of the business for the past 15 years, as partner in the firm with l/4th share of profits and guaranteed that
her share of profits will not be less than Rs.2,00,000. Sudha brought Rs.3,00,000 as her capital. Any
excess profits received by Sudha over her 1 /4th share will be borne by Asha and Lata in the ratio of 4 :
1. Profits for the year ended 31st March 2019 before allowing interest on capitals amounted to
Rs.7,20,000. Distribute the profits. What value has been fulfilled by Asha and Lata?
Q 70.Ankur and Bobby were into the business of providing software solutions in India.
1
They were sharing profits and losses in the ratio 3 : 2. They admitted Rohit for 5th share in the firm.
Rohit, an alumni of IIT, Chennai would help them to expand their business to various South African
countries where he had been working earlier. Rohit is guaranteed a minimum profit of Rs.2,00,000 for
the year. Any deficiency in Rohit’s share is to be borne by Ankur and Bobby in the ratio 4:1. Losses for
the year were Rs. 1,00,000. Pass the necessary journal entries.
(C.B.S.E. Sample Question Paper, 2015)
Q 71.Anil, Sunil and Ravinder entered into a partnership on 1st April 2018 to share profits in the ratio
of 2 : 1 : 1. It was provided in the deed that Ravinder’s share of profit will not be less than Rs.70,000
per annum. The losses for the year ended 31st March, 2019 were Rs.2,00,000 before allowing interest
Rs.8,000 on Anil’s Loan which is due for the current year.
You are required to show necessary account for division of loss and also pass the necessary journal
entries.
Q 72.Ahmad, Bheem and Daniel are partners in a firm. On 1st April, 2011 the balance in their capital
accounts stood at Rs.8,00,000, Rs.6,00,000 and Rs.4,00,000 respectively. They shared profits in the
proportion of 5 : 3 : 2 respectively. Partners are entitled to interest on capital @ 5% per annum and
salary to Bheem @ Rs. 3,000 per month and a commission of Rs. 12,000 to Daniel as per the provisions
of the partnership deed.
Ahmad’s share of profit, excluding interest on capital, is guaranteed at not less than Rs.25,000 p.a.
Bheem’s share of profit, including interest on capital but excluding salary, is guaranteed at not less than
Rs.55,000 p.a. Any deficiency arising on that account shall be met by Daniel. The profits of the firm
for the year ended 31st March 2012 amounted to Rs.2,16,000. Prepare ‘Profit and Loss Appropriation
Account’ for the year ended 31st March 2012. (C.B.S.E. 2013, Outside Delhi)
Q 73.A and B are in partnership sharing profits and losses in the ratio of 3 : 2. They decided to admit
C, their manager, as a partner with effect from 1st April, 2016, giving one-fourth share of profits.

C, while a manager, was in receipt of salary of Rs.27,000 per annum and a commission ofl0% of the
net profits after charging such salary and commission.
In terms of the partnership deed, any excess amount which C will be entitled to receive as a partner over
the amount which would have been due to him if he continued to be the manager, would have to be
personally borne by A out of his share of profit. Profit for the year ended 31 st March, 2017, amounted
to Rs.2,25,000, before payment of salary and commission.
You are required to show the Profit & Loss Appropriation Account for the year ended 31st March,
2017.
Q 74.A, B and C are in partnership. A and B sharing profits in the ratio of 3 : 1 and C receiving an
1
annual salary of Rs.32,000 plus 5% of the profits after charging his salary and commission, or 4th of
the profit of the firm whichever is more. Any excess of the latter over the former received by C is, under
the partnership deed, to be borne by A and B in the ratio of 3 : 2. The profit for the year ended 31st
March, 2017 came to Rs. 1,68,000 after charging C’s salary.
Show the distribution of profits among the partners.
Q 75.A, B and C entered into partnership on 1st July, 2017 to share Profit and Losses in the ratio of 5 :
3 : 2. A personally guaranteed that C's share of profit after charging interest on capital @8% per annum
would not be less than 1,60,000 p.a. The capital contributed were : A — Rs.4,00,000; B — Rs.3,00,000
and C— Rs.2,00,000. Profit for the year ended on 31 st March, 2018 was Rs.4,74,000. Prepare Profit
and Loss Appropriation Account.
Q 76.A, B and C are partners in a firm.

They do not have a Partnership Deed.
(i) A, who has contributed more capital than other partners, demands interest on capital at 10% p.a. But
B and C do not agree with him.
(ii) B has devoted full time to run the business and demands a salary of Rs. 5,000 p.m. But A and C do
not agree with him.
(iii) C demands interest on the loan of Rs. 50,000 advanced by him at the market rate of interest which
is 12% p.a.
(iv) A has drawn Rs. 10,000 from the firm for personal use. B and C demand that interest should be
charged @ 10% per annum.
(v) Net Profit before taking into account any of the above claims amounted to Rs. 50,000 at the end of
the first year of the business. A demands share of profit in the capital ratio.
How will the disputes be settled?
Q 77. X and Y are partners in a firm.

They do not have Partnership Deed. What shall be the position in the following cases?
(i) X devotes more time than Y in the business. X claims that he should get a salary of Rs. 6,000 per
month for it.
(ii) Y has provided a capital of Rs. 50,000 whereas X has provided Rs. 5,000 only as capital. X, however,
has advanced Rs. 10,000 as loan to the firm. What interest, if any, will be given to X and Y?
(iii) X wants to introduce his son Z into their business. Y objects to his proposal.
(iv) Y wants that profit should be distributed in the ratio of the capitals but X wants that it should be
distributed equally.
Q 78. Harry and Garry are partners in a firm. They have not entered into Partnership Deed but had
agreed on following:
(i) Salary will be paid to Harry @ Rs. 10,000 per month.
(ii) Garry will get commission @ 10% of Net Profit.
(iii) Interest will be allowed on capitals @ 10% p.a.
(iv) Interest will be charged on drawings @ 10% p.a.
(v) Partner cannot be admitted without the consent of both the partners.
How will be the following disputes resolved?

1. Garry demands to be paid salary as Harry is being paid because his commission is lower.
2. Harry demands that his son Sherry be admitted as partner for 25% share to be given out of his share
of profits to which Garry disagrees.
Q 79.A, B and C are partners sharing profits and losses equally. A and C have granted loan to the firm
on 1st October, 2016 of Rs. 1,00,000 and Rs. 1,50,000 respectively. It is agreed that interest @ 9% p.a.
will be paid on loan. Books of account of the firm are closed on 31st March every year. Interest on loan
is yet to be paid as on 31st March, 2017. You are required to pass Journal entries in the books of account
of the firm and prepare ledger accounts of the two partners.
Q 80.A and B are partners sharing profits and losses in ratio of 2 : 3 with capitals of Rs. 2,00,000 and
Rs. 1,00,000 respectively. On 1st October, 2017, A and B granted loans of Rs. 4,00,000 and Rs. 2,00,000
respectively to the firm. The Partnership Deed is silent as to the interest on
Partner's Loan. Determine the amount of profit/loss for the year ended 31st March, 2018 in each of the
following cases to be distributed among partners:
Case 1: If the Profit before interest for the year amounted to Rs. 25,000.
Case 2: If the Profit before interest for the year amounted to Rs. 15,000.
Case 3: If the Loss before interest for the year amounted to Rs. 25,000.
Q 81.Ayub and Amit are partners in M/s Amrit Papers sharing profits and losses equally. Following
trial balance is prepared from the books of account as at 31st March, 2018:
Particulars Dr. (Rs.) Particulars Cr. (Rs.)
Opening Stock 45,000 Sales 12,50,000
Purchases 7,60,000 Purchases Return 10,000
Sales Return 25,000 Sundry Creditors 90,000
Salary and Wages 1,80,000 Capital Accounts:
Rent 1,10,000 Ayub 4,00,000
General Expenses 35,000 Amit 3,85,000
Sundry Debtors 2,00,000
Furniture and Fixture 50,000
Computers 2,20,000
Machinery 3,00,000
Cash at Bank 75,000
Cash in Hand 25,000
Drawings: Ayub 60,000
Amit 50,000
21,35,000 21,35,000
Prepare Trading Account, Profit and Loss Account and Profit and Loss Appropriation Account for the
year ended 31st March, 2018 and Balance Sheet as at that date accounting the following adjustments:
(i) Stock as at 31st March, 2018 was Rs. 50,000;
(ii) Rent is Rs. 10,000 per month;
(iii) Depreciate Furniture and Fixture and Computers @ 20% p.a., Machinery @ 10% p.a.; and
(iv) Interest on Capitals is allowed @ 6% p.a.
Q 82.A and B entered into partnership on 1st April, 2017 without any Partnership Deed. They
introduced capitals of Rs. 5,00,000 and Rs. 3,00,000 respectively. On 31st October, 2017, A advanced
Rs. 2,00,000 by way of loan to the firm without any agreement as to interest.
The Profit and Loss Account for the year ended 31st March, 2018 showed a profit of Rs. 4,30,000, but
the partners could not agree upon the amount of interest on loan to be charged and the basis of division
of profits.
Pass a Journal entry for distribution of the profit between the partners and prepare Capital Accounts of
both the partners and Loan Account of A. (Al 2011, Dates Modified)

Q83. A and B are partners sharing profits equally. Business is being carried from the property owned
by A on a yearly rent of Rs. 24,000. A is to get salary of Rs. 1,20,000 p.a. and B is to get commission
@ 5% of net sales, which during the year was Rs. 30,00,000. Net profit for the year ended 31st March,
2018 before providing for rent was Rs. 5,00,000.
You are required to draw Profit and Loss Appropriation Account for the year ended 31st March, 2018.
Q 84.A and B are partners sharing profits and losses in the ratio of 3 : 2 with capitals of Rs. 4,00,000
and Rs. 3,00,000 respectively. Interest on capital is agreed @ 5% p.a. B is to be allowed an annual
salary of Rs. 30,000 which has not been withdrawn. Profit for the year ending 31st March, 2018 prior
to calculation of interest on capital but after charging B's salary is Rs. 1,20,000. A provision of 5% of
the profit is to be made in respect of commission to the manager. Prepare an account showing the
appropriation of profit.
Q 85. A and B started a business on 1st April, 2017 with capitals of Rs. 3,00,000 and Rs. 2,00,000
respectively. According to the Partnership Deed, B is to get salary of Rs. 5,000 per month, A is to get
10% commission on Profit after allowing salary to B and interest is to be allowed on capitals @ 6% p.a.
Profit-sharing ratio between the two partners is 3 : 2. During the year, the firm earned a profit of Rs.
2,50,000.
Pass Journal entries for division of profits and prepare Profit and Loss Appropriation Account. The firm
closes its accounts on 31st March every year.
Q 86.X and Y started business on 1st April, 2017 with capitals of Rs. 5,00,000 each. As per the
Partnership Deed, both X and Y are to get monthly salary of Rs. 10,000 each and interest on capitals @
10% p.a. Drawings during the year were X—Rs. 60,000 and Y—Rs. 1,00,000; interest being chargeable
@ 10% p.a.
During the year, the firm incurred a loss of Rs. 2,00,000.
Pass Journal entries for the above and prepare Profit and Loss Appropriation Account. The firm closes
its accounts on 31st March, every year.
Q 87.Arun and Arora were partners in a firm sharing profits in the ratio of 5 : 3. Their fixed capitals on
1st April, 2010 were; Arun Rs. 60,000 and Arora Rs. 80,000. They agreed to allow interest on capital
@ 12% p.a. and to charge on drawings @ 15% p.a. The profit of the firm for the year ended 31st March,
2011 before all above adjustments was Rs. 12,600. The drawings made by Arun were Rs. 2,000 and by
Arora Rs. 4,000 during the year. Prepare Profit and Loss Appropriation Account of Arun and Arora.
Show your calculations clearly. The interest on capital will be allowed even if the firm incurs a loss.
(CBSE 2012)
Q 88. X and Yare partners sharing profits and losses in the ratio of 3 : 2. X is a non-working partner
and contributes Rs. 20,00,000 as his capital. Y is a working partner of the firm. The Partnership Deed
provides for interest on capital @ 8% p.a. and salary to every working partner @ Rs. 8,000 per month.
Net profit before providing for interest on capital and partner's salary for the year ended 31st March,
2018 was Rs. 80,000. Show the distribution of profit.
Q 89. A and B are partners with capitals of Rs. 60,000 and Rs. 20,000 respectively on 1st April, 2017.
Net profit (before taking into account the provisions of the Deed) for the year ended 31st March, 2018
was Rs. 24,000. The Partnership Deed provides for the following:
(a) B is entitled to a salary of Rs. 6,000 p.a.
(b) Interest on capitals is to be allowed @ 6% p.a.
(c) Interest on drawings is to be charged @ 5% p.a.
The drawings of the partners A and B were Rs. 6,000 and Rs. 4,000 respectively and interest on
drawings for A being Rs. 200 and for B Rs. 100.
Pass the Journal entries for the above and show how profit will be divided between A and B and also
show the Capital Accounts of the partners along with their Drawings Accounts:
if they are fixed, and (ii) if they are fluctuating.

Q 90.X and Y are partners in a firm. X is to get a commission of 10% of net profit before charging any
commission. Y is to get a commission of 10% on net profit after charging all commissions. Net profit
for the year ended 31st March, 2018, before charging any commission was Rs. 55,000.
Find the commission of X and Y. Also, show the distribution of profit.
Q 91.A, B, and C are partners in a firm. According to the Partnership Deed, the partners are entitled to
draw Rs. 7,000 per month. On the 1st day of every month A, B and C drew Rs. 7,000; Rs. 6,000 and
Rs. 5,000 respectively. Interest on capitals and interest on drawings are fixed @ 8% and 10%
respectively. Profit for the year ended 31st March, 2018 was Rs. 7,55,000 out of which Rs. 2,00,000
are to be transferred to General Reserve. B and C are entitled to receive salary of Rs. 30,000 and Rs.
45,000 p.a. respectively and A is entitled to receive commission @ 10% on net distributable profits
after charging such commission. On 1st April, 2017, the balances of their Capital Accounts were Rs.
5,00,000; Rs. 4,00,000 and Rs. 3,50,000 respectively.
Prepare Profit and Loss Appropriation Account for the year ended 31st March, 2018 and Capital
Accounts of Partners in the books of the firm.
Q 92. In a partnership, partners are charged interest on drawings @ 15% p.a. During the year ended
31st March, 2018, a partner drew as follows:
Date 1st May, 1st August, 30th September, 31st January, 2018 31st March, 2018
2017 2017 2017
Amount 2,000 5,000 2,000 6,000 2,000
(Rs.)
What is the interest chargeable from the partner?
Q 93.A, B and C are partners sharing profits equally. A drew regularly Rs. 6,000 in the beginning of
every month for the six months ended 30th September, 2017. B drew regularly Rs. 6,000 at the end of
every month for the six months ended 30th September, 2017. C drew regularly Rs. 6,000 in the middle
of every month for the six months ended 30th September, 2017. Calculate interest on drawings @ 5%
p.a. when the books are closed on 31st March every year.
Q94 A, B and C started a firm on 1st October, 2017 sharing profits equally. A drew regularly Rs. 4,000
in the beginning of every month for the six months ended 31st March, 2018. B drew regularly Rs. 4,000
at the end of every month for the six months ended 31st March, 2018. C drew regularly Rs. 4,000 in the
middle of every month for the six months ended 31st March, 2018.
Calculate interest on drawings @ 5% p.a. for the period ending 31st March, 2018.
Q 95.X and V are partners sharing profits and losses in the ratio of 2 : 3 with capitals
of Rs. 2,00,000 and Rs. 1,00,000 respectively. Pass the necessary Journal entry or entries for
distribution of profit/loss for the year ended 31st March, 2018 in each of the alternative cases:
Case 1. If Partnership Deed is silent as to the interest on capital and the profit for the year is Rs. 20,000.
Case 2. If Partnership Deed provides for interest on capital @ 6% p.a. and loss for the year is Rs. 15,000.
Case 3. If Partnership Deed provides for interest on capital @ 6% p.a. and the profit for the year is Rs.
21,000.
Case 4 If Partnership Deed provides for interest on capital @ 6% p.a. as a charge on profit and the profit
for the year is Rs. 20,000.
Case 5. If Partnership Deed provides for interest on capital @ 6% p.a. as a charge on profit and the
profit for the year is Rs. 2,000.
Case 6. If Partnership Deed provides for interest on capital @ 6% p.a. as a charge on profit and the
profit for the year is Rs. 18,000.
Q 96.A and B are partners in a business and their capitals at the end of the year were Rs. 7,00,000 and
Rs. 6,00,000 respectively. Calculate their opening capitals considering the following information:
(a) Drawings of A and B for the year were Rs. 75,000 and Rs. 50,000 respectively.
(b) B introduced capital of Rs. 1,00,000 during the year.

(c) Interest on capital credited to the Capital Accounts of A and B were Rs. 15,000 and Rs. 10,000
respectively.
(d) Interest on drawings debited to the Capital Accounts of A and B were Rs. 7,500 and Rs. 5,000
respectively.
(e) Share of profit credited to Capital Accounts was Rs. 1,00,000 each.
Q 97.A and B are partners in a business and their capitals at the end of the year were Rs. 7,00,000 and
Rs. 6,00,000 respectively. Calculate their opening capitals considering the following information:
(a) Drawings of A and B for the year were Rs. 75,000 and Rs. 50,000 respectively.
(b) B introduced capital of Rs. 1,00,000 during the year.
(c) Interest on capital credited to the Capital Accounts of A and B were Rs. 15,000 and Rs. 10,000
respectively.
(d) Interest on drawings debited to the Capital Accounts of A and B were Rs. 7,500 and Rs. 5,000
respectively.
(e) Share of loss debited to Capital Accounts was Rs. 20,000 each.
Q98.A and B started business on 1st April, 2017 with capitals of Rs. 6,00,000 and Rs. 4,00,000
respectively. During the year, A introduced Rs. 1,00,000 to the firm as additional capital on 1st October,
2017. They withdrew Rs. 50,000 per month for household expenses against profits. Interest on capital
is to be allowed @ 10% per annum. Calculate interest payable to A and B for the year ended 31st March,
2018.
esh and Naresh are partners in a firm. Their capitals as on 1st April, 2017 were Rs. 2,50,000 and Rs.
1,50,000 respectively. They share profits equally. On 1st July, 2017, they decided that their capitals
should be Rs. 2,00,000 each. The necessary adjustment in the capitals were made by introducing or
withdrawing capital. Interest on capital is allowed @ 8% p.a. Compute interest on capital for both the
partners for the year ended 31st March, 2018.
Q 99.Ramesh and Naresh are partners in a firm. Their capitals as on 1st April, 2017 were Rs. 2,50,000
and Rs. 1,50,000 respectively. They share profits equally. On 1st July, 2017, they decided that their
capitals should be Rs. 2,00,000 each. The necessary adjustment in the capitals were made by introducing
or withdrawing capital. Interest on capital is allowed @ 8% p.a. Compute interest on capital for both
the partners for the year ended 31st March, 2018.
Q 100.From the following Balance Sheet of X and Y, calculate interest on capital @ 5% p.a. for the
year ended 31st March, 2018:
BALANCE SHEET as at 31st March, 2018
X's Capital A/c 90,000 Sundry Assets 2,10,000
Y's Capital A/c 80,000
Reserve 40,000
2,10,000 2,10,000
During the year ended 31st March, 2018, X's drawings were Rs. 10,000 and Y's drawings were Rs.
30,000. Profit for the year ended 31st March, 2018 was Rs. 60,000. The amount of Reserve, i.e., Rs.
40,000 is transferred from Current Year's profit to strengthen the financial position of the firm.
Q 101. X and Y are partners sharing profits in the ratio of 3 : 2. On 31st March, 2017 after closing the
books of account, their capitals are Rs. 10,00,000 and Rs. 12,50,000 respectively. On 1st May, 2016, X
had introduced an additional capital of Rs. 2,50,000 and Y withdrew Rs. 1,25,000 from his capital. On
1st October, 2016, X withdrew Rs. 5,00,000 from his capital and Y introduced Rs. 6,25,000. After
closing the accounts, it was discovered that Interest on Capital @ 6% p.a. has been omitted. During the
year ended 31st March, 2017, X's drawings and Y's drawings were Rs. 2,50,000 and Rs. 1,25,000.
Profits (before interest on Capital) during the year were Rs. 5,00,000.
Calculate Interest on Capital if the capitals are (a) fixed and (b) fluctuating.

Q 102.X and Y are partners sharing profits and losses in the ratio of 7 : 3. Their Capital Accounts as at
1st April, 2017 stood at X—Rs. 5,00,000; Y—Rs. 4,00,000. The partners are allowed interest on capital
@ 5% p.a. The drawings of the partners during the year ended 31st March, 2018 amounted to Rs. 72,000
and Rs. 50,000 respectively. The profit for the year before allowing interest on capital and salary to Y
@ Rs. 5,000 per month amounted to Rs. 8,00,000. 10% of the net profit is to be set aside as General
Reserve.
Pass the Journal entries for Appropriation. Prepare Profit and Loss Appropriation Account for the year
ended 31st March, 2018, and Capital and Current Accounts of the partners.
Q103. X and Y are partners sharing profits and losses in the ratio of 7 : 3. Their Capital Accounts as at
1st April, 2017 stood at X—Rs. 5,00,000; Y— Rs. 4,00,000. The partners are allowed interest on capital
@ 5% p.a. The drawings of the partners during the year ended 31st March, 2018 amounted to Rs. 72,000
and Rs. 50,000 respectively. The profit for the year before allowing interest on capital and salary to Y
@ Rs. 5,000 per month amounted to Rs. 8,00,000. 10% of the divisible profit is to be set aside as General
Reserve.
Prepare an account showing the allocation of profits, Partners' Capital and Current Accounts.
Q 104Ram and Mohan are partners in a firm. They admitted Rakhi as a partner without capital for l/3rd
share in the profit of the firm. She is blind by birth but having good management qualities. The new
partnership agreement provides for the following:
(i) 10% of the trading profit will be donated to Prime Minister's Relief Fund.
(ii) 5% of the trading profit will be donated to the National Blind Relief Fund.
(iii) Products will be sold at a discount of 15% on Maximum Retail Price to the people living below
poverty line.
(iv) New retail shops will be opened in the Naxal affected areas of the country.
(v) New jobs of sales persons will be reserved for the girls belonging to Scheduled Castes and Scheduled
Tribes.
Trading profit of the firm for the year ended 31st March, 2012 was Rs. 10,00,000, identify any four
values considered by Ram, Mohan and Rakhi while preparing new Partnership Deed and also prepare
'Profit and Loss Appropriation Account' of Ram, Mohan and Rakhi for the year ended 31st March,
2012. (Delhi 2013 C)
Q 105.On 1st April, 2017, Precious, Noble and Perfect entered into partnership with capitals of Rs.
60,000, Rs. 50,000 and Rs. 30,000 respectively.
Perfect advanced Rs. 10,000 as loan to the partnership on 1st October, 2017. The Partnership Deed
contained the following clauses:
(i) Interest on capital @ 6% p.a.
(ii) Interest on drawings @ 6% p.a. Each drew Rs. 4,000 at the end of each quarter commencing from
30th June, 2017.
(iii) Working partners Precious and Noble to get a salary of Rs. 200 and Rs. 300 per month respectively.
(iv) Interest on loan was given to Perfect @ 6% p.a.
(v) Noble is to get rent of Rs. 2,000 per month for use of his building by the firm. It is paid to him by
cheque at the end of every month.
(vi) Profits and losses are to be shared in the ratio of 4 : 2 : 1 up to Rs. 70,000 and above Rs. 70,000
equally.
Net profit of the firm for the year ended 31st March, 2018 (before the above adjustments) was Rs.
1,35,000. Prepare Profit and Loss Appropriation Account and Capital Accounts of Partners assuming
capitals to be fixed.
Q 106.P and Q were partners in a firm sharing profits equally. Their fixed capitals were Rs. 1,00,000
and Rs. 50,000 respectively. The Partnership Deed provided for Interest on Capital at the rate of 10%
per annum. For the year ended 31st March, 2016, the profits of the firm were distributed without
providing Interest on Capital.
Pass necessary adjustment entry to rectify the error. (Delhi 2017)

Q 107. A and B are partners in a firm sharing profits and losses in the ratio of 3 : 2. Following was the
Balance Sheet of the firm as at 31st March, 2018:
Capital A/cs: Sundry Assets 80,000
A 60,000
B 20,000
80,000 80,000
Profit Rs. 30,000 for the year ended 31st March, 2018 was divided between the partners without
allowing interest on capitals @ 12% p.a. and salary to A @ Rs. 1,000 per month. During the year, A
withdrew Rs. 10,000 and B Rs. 20,000.
Pass necessary adjustment Journal entry and show your working clearly. (Delhi 2011, Modified)
Q 108.Mannu and Shristhi are partners in a firm sharing profits in the ratio of 3 : 2. Following is the
Balance Sheet of the firm as on 31st March, 2018:
Mannu's Capital 30,000 Drawings:
Shristhi's Capital 10,000 40,000 Mannu 4,000
Shristhi 2,000 6,000
Other Assets 34,000
40,000 40,000
Profit for the year ended 31st March, 2018 was Rs. 5,000 which was divided in the agreed ratio, but
interest @ 5% p.a. on capital and 6% p.a. on drawings was inadvertently omitted. Adjust interest on
drawings on an average basis for 6 months. Give the adjustment entry. (NCERT, Modified Years)
Q 109. On 31st March, 2014, balances in the Capital Accounts of Eleen, Monu and Ahmad after making
adjustments for profits and drawings were Rs. 1,60,000, Rs. 1,20,000 and Rs. 80,000 respectively.
Subsequently, it was discovered that the interest on capital and drawings had been omitted.
(i) The profit for the year ended 31st March, 2014 was Rs. 40,000.
(ii) During the year, Eleen and Monu each withdrew a total sum of Rs. 24,000 in equal instalments in
the beginning of each month and Ahmad withdrew a total sum of Rs. 48,000 in equal instalments at the
end of each month.
(iii) The interest on drawings was to be charged @ 5% p.a. and interest on capital was to be allowed @
10% p.a.
(iv) The profit-sharing ratio among the partners was 2:1:1.
Showing your working notes clearly, pass the necessary rectifying entry. (Delhi 2015 C)
Q 110.X, Y and Z are partners. They have omitted interest on capital @ 10% p.a. for three years ended
31st March, 2018. Their fixed capitals on which interest was to be calculated throughout were: X—Rs.
10,000;
Y—Rs. 8,000 and Z—Rs. 7,000. Their profit-sharing ratios were: 2016—1:2 : 2; 2017—5 :3 : 2; 2018—
4:5:1. The firm earned profit of Rs. 2,500 in each year. Pass necessary adjustment Journal entry.
Q 111.On 31st March, 2018, 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
found that interest on capital and interest on drawings had been omitted. The 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. The net profit during the year amounted to Rs. 12,00,000. The profit-sharing ratio of the
partners was 3:2:1.
Pass necessary adjustment entry for rectifying the above errors of omission. Show your workings.

Q 112.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,
2018, 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.
Q 113.A, B and C are partners in a firm sharing profits and losses in the ratio of 2 : 2 : 1. Their capitals
(fixed) are Rs. 1,00,000; Rs. 80,000 and Rs. 70,000 respectively. For the year 2017-18, interest on
capital was credited to them @ 9% p.a. instead of 12%. Give the adjustment Journal entry. (Foreign
2004, Modified)
Q 114.A, B and C are partners in a firm. Though there is no provision in the Partnership Deed for
interest on capital, this has been provided to the accounts @ 5% p.a. for the two years ended 31st March,
2017 and 31st March, 2018. Their fixed capitals on which interest was calculated throughout were: A—
Rs. 50,000; B—Rs. 40,000 and C—Rs. 30,000. During the two years, they shared profits as follows:
2016- 17 - 5:3:2
2017- 18 - 2:2:1
You are required to pass an adjustment entry as at 1st April, 2018.
Q 115. A, B, C and D are partners sharing profits and losses in the ratio of 4 : 3 : 3 : 2 and their respective
capitals on 31st March, 2018 were Rs. 30,000; Rs. 45,000; Rs. 60,000 and Rs. 45,000. After closing
and finalizing the accounts, it was found that interest on capital @ 6% p.a. was omitted. Instead of
altering the signed accounts it was decided to pass a single adjustment entry on 1st April, 2018 crediting
or debiting the respective Partners' Capital/Current Accounts.
Q 116. P, Q and R are partners in a firm. Their Capital Accounts stood at Rs. 30,000; Rs. 15,000 and
Rs. 15,000 respectively on 1st April, 2017.
As per the provisions of the Deed; (i) R was to be allowed a remuneration of Rs. 3,000 per annum, (ii)
Interest @ 5% p.a. was to be provided on capital and (iii) Profits were to be divided in the ratio of 2;
2:1. Ignoring the above terms, net profit of Rs. 18,000 for the year ended 31st March, 2018 was
distributed among the three partners equally.
Pass an adjustment entry to rectify the error. Show the workings clearly.
Q 117.A, B and C were partners. Their capitals were A—Rs. 30,000; B—Rs. 20,000 and C—Rs. 10,000
respectively. According to the Partnership Deed, they were entitled to an interest on capital at 5% p.a.
In addition, B was also entitled to draw a salary of Rs. 500 per month. C was entitled to a commission
Net profit for the year was Rs. 30,000 distributed in the ratio of capitals without providing for any of
the above adjustments. The profits were to be shared in the ratio of 5 : 2 : 3.
Pass necessary adjustment entry showing the workings clearly. (Delhi 2010)
Q 118.The capitals of X,Y and Z as on 31st March, 2018 amounted to Rs. 1,50,000, Rs. 5,50,000 and
Rs. 11,00,000 respectively. The profits amounting to Rs. 3,00,000 for the year 2017-18 were distributed
in the ratio of 4 : 1 : 1 after allowing interest on capital @ 10% p.a. During the year, each partner
withdrew Rs. 50,000 per month in the beginning of each month. The Partnership Deed was silent as to
profit sharing ratio and interest on drawings but provided for interest on capital @ 12% p.a. Showing
your working clearly, pass the necessary adjustment entry to rectify the above error.
Q 119.P, Q and R are partners in a firm. Their Capital Accounts stood at Rs. 3,00,000; Rs. 1,50,000 and
Rs. 1,50,000 respectively on 1st April, 2017.
As per the provisions of the Deed: (i) R was to be allowed a remuneration of Rs. 36,000 per annum, (ii)
Interest @ 5% p.a. was to be provided on capital and (iii) Profits were to be distributed in the ratio of 2
: 2 : 1. Ignoring the above terms, net profit of Rs. 1,80,000 for the year ended 31st March, 2018 was
distributed among the three partners equally.
Pass the Journal entries to rectify the above errors.

Q 120.A and B are partners sharing profits and losses in the ratio of 3 : 2. At the end of the year, i.e.,
on 31st March, 2018, (after division of the year's profit), they decided to take C into partnership with
effect from 1st April, 2015. As C was getting annual salary of Rs. 45,000, he had also advanced Rs.
3,00,000 to the firm by way of a loan on which he is getting interest @ 10% p.a. During the three
financial years, firm's profits after adjusting salary to C, interest on loan and interest on the capital of
the partners were:
Year Ended
31st March, 2016 Profit Rs. 4,00,000
31st March, 2017 Loss Rs. 2,00,000
According to the new agreement, C is to be given annual salary of Rs. 35,000 and l/5th share in the
profits of the firm. C's loan shall be treated as his capital from the beginning and similar to other
partners, his capital will carry interest @ 6% p.a.
Record necessary entries to give effect to the above arrangement.
Q 121.P and Q were partners in a firm sharing profits in the ratio of 5 :3. On 1st April, 2014 they
admitted R as a new partner for l/8th share in the profits with a guaranteed profit of Rs. 75,000. The
new profit-sharing ratio between P and Q will remain the same but they agreed to bear any deficiency
on account of guarantee to R in the ratio 3 : 2. The profit of the firm for the year ended 31st March,
2015 was Rs. 4,00,000.
Prepare Profit and Loss Appropriation Account of P, Q and R for the year ended 31st March, 2015.
{Delhi 2016)
Q 122 P, Q and R are partners sharing profits in the ratio of 5 ; 4 :1 respectively. R is guaranteed that
his share of profit in any year will not be less than Rs. 50,000. The profit for the year ending 31st March,
2018 is Rs. 3,50,000. Amount of shortfall in the profits of R will be borne by P and Q in the ratio of 3
: 2 respectively. Pass necessary Journal entry regarding deficiency borne by P and Q.
Q 123.X, Y and Z are partners in a firm. Their profit- sharing ratio is 5 : 3 : 2. Z is guaranteed a minimum
profit of Rs. 10,000 every year. Any deficiency arising is to be met by Y. The profits for the two years
ended 31st March, 2017 and 2018 were Rs. 40,000 and Rs. 60,000 respectively. Prepare Profit and Loss
Appropriation Account for the two years.
Q 124.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. 4,000 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. (Delhi 2013)
Q 125.X, Y and Z entered into partnership on 1st July, 2016 to share Profit and Losses in the ratio of
3:2 :1. X personally guaranteed that Z's share of profit after charging interest on capital @ 6% per
annum would not be less than Rs. 36,000 p.a. The capital contributed by X—Rs. 2,00,000; Y—Rs.
1,00,000 and Z—Rs. 1,00,000. Profit for the year ended on 31st March, 2017 was Rs. 1,38,000. Prepare
Profit and Loss Appropriation Account.
Q 126. A, B and C are partners having capitals of Rs. 10,00,000; Rs. 8,00,000 and Rs. 6,00,000
respectively in a firm and sharing profits and losses equally. C is guaranteed a minimum profit of Rs.
1,00,000 as share of profit every year. The firm incurred a loss of Rs. 3,00,000 for the year ended 31st

March, 2018. You are required to show the necessary accounts for division of loss and giving effect to
minimum guaranteed profit to C.
Q 127.A, B and C are partners in a firm sharing profits and losses in the ratio of 12 : 8 : 5. Partner C is
guaranteed a minimum profit of Rs. 50,000 p.a. by the firm. The profits and losses for the years ended
31st March were: 2016—Profit Rs. 2,00,000; 2017-Profit Rs. 3,00,000, and 2018-Loss Rs. 2,00,000.
Pass necessary Journal entries in the books of the firm.
Q 128.Three Chartered Accountants X, Y and Z form a partnership, sharing profits and losses in the
ratio of 3 : 2 : 1 subject to the following conditions:
(i) Z's share of profits is guaranteed to be not less than Rs. 30,000 p.a.
(ii) Y gives a guarantee to the effect that the gross fee earned by him for the firm shall not be less than
the average gross fee earned by him during the preceding five years when he was carrying on the
profession alone (the average of which works out at Rs. 50,000).
Profit for the first year (year ended 31st March, 2018) of the partnership is Rs. 1,50,000. The gross fee
earned by Y for the firm is Rs. 32,000.
Prepare Profit and Loss Appropriation Account after giving effect to the above.
Q 129.Suresh, Sahil and Sumit are partners sharing profits in the ratio of 5 : 3 : 2. During the year ended
31st March, 2018, the firm earned profit of Rs. 3,50,000. Prepare Profit and Loss Appropriation Account
giving effect to the following:
(i) Each of the partner is to get remuneration of Rs. 60,000 p.a.
(ii) Interest on Capital is to be allowed @ 10% p.a. Capitals of Suresh, Sahil and Sumit as on 1st April,
2017 were—Rs. 5,00,000; Rs. 5,00,000 and Rs. 7,50,000 respectively.
(iii) Interest on Drawings charged was: Suresh—Rs. 10,000; Sahil—Rs. 20,000; and Sumit—Rs.
25,000.
(iv) Sumit is guaranteed minimum profit of Rs. 1,50,000 after above appropriations.
Q 130. X and Y are partners in a firm sharing profits in the ratio of 4 : 1. They decide to admit Z, their
manager, as a partner with effect from 1st April, 2017 for l/8th share in profits. Z, as a manager, was
getting salary of Rs. 8,000 per month and commission of 5% of the net profits after charging such salary
and commission.
As per the terms of the Partnership Deed, any excess amount which Z shall be entitled to receive as a
partner over the amount which have been due to him as a manager, would be borne by X out of his
share of profit.
Profit for the year ended 31st March, 2018, amounted to Rs. 13,56,000 before salary and commission.
Prepare the Profit and Loss Appropriation Account for the period ending 31st March, 2018.
Q. 131. X and Y are partners sharing profits in the ratio of 2 : 1. The undermentioned trial balance was
extracted from their books as at 31st March, 2019 :
Dr. Balances Cr. Balances
Rs. Rs.
X’s Capital 3,20,000
Y’s Capital . 2,40,000
X’s Drawings 40,000
Y’s Drawings 32,000
Stock (1st April, 2016) 45,200
Purchases and Sales 8,68,000 12,45,000
Debtors and Creditors 1,52,000 48,000
Buildings 6,00,000
Cash in hand 5,900
Bank Overdraft 27,500
Salaries to Staff 74,700
Rent 26,400
Advertising Expenditure 5,000
Travelling Expenses 31,300

18,80,500 18,80,500
You are required to prepare the Profit and Loss Account and Profit and Loss Appropriation Account
for the year ended 31st March, 2019 and a Balance Sheet as on that date. The following adjustments
are to be made :
(i) The value of stock on March 31, 2019 was Rs.64,000.
(ii) Charge depreciation on Buildings at 10%.
(iii) Provide for outstanding rent Rs.2,400.
(iv) Partners are entitled to interest on Capital @ 5% and X is entitled to a salary of Rs.48,000 p.a.
Q. 132.. Girish and Satish are partners in a firm. Their Capitals on April 1,2018 were Rs.5,60,000 and
Rs.4,75,000 respectively. On August 1, 2018 they decided that their Capitals should be Rs.5,00,000
each. The necessary adjustment in the Capitals were made by introducing or withdrawing cash. Interest
on Capital is allowed at 6% p.a. You are required to compute interest on Capital for the year ending
March 31, 2019.
Q. 133. X, Y and Z are partners in a firm. Their Capitals as on April 1 , 2016 were Rs.5,00,000;
Rs.4,00,000 and Rs.3,00,000 respectively. On July 1, 2016 they introduced further Capitals of Rs.
1,00,000; Rs.80,000and Rs.50,000 respectively. On February 1,2017 Y withthrew Rs. 15,000 from his
Capital. Interest is to be allowed @ 8% p.a. on the Capitals. Compute interest on Capitals for the year
ending March 31, 2017.
Q. 134. On March 31,2016 after the close of accounts, the capitals of Mountain, Hill and Rock stood in
the books of the firm at Rs.4,00,000; Rs.3,00,000 and Rs.2,00,000 respectively. Subsequently, it was
discovered that the interest on capital @ 10% p.a. had been omitted. The profit for the year amounted
to Rs. 1,50,000 and the partner’s drawings had been Mountain : Rs.20,000; Hill Rs. 15,000 and Rock
Rs. 10,000.
Calculate interest on capital.
Q. 135 (A); On 1st April, 2016 A and B commenced business with Capitals of Rs.6,00,000 and
Rs.2,00,000 respectively. On 31st March, 2019 the trading profit (before taking into account the
provisions of deed) was Rs.2,40,000. Interest on capitals is to be allowed at 6% p.a. B was entitled to a
salary of Rs.60,000 p.a. The drawings of the partners A and B were Rs.60,000 and Rs.40,000
respectively. The interest on Drawings for A being Rs.2,000 and B Rs. 1,000. Assuming that A and B
are equal partners, prepare the
Profit & Loss Appropriation A/c and Partner’s Capital Accounts as at 31st March, 2019.
Q. 135(B). Anubha and Kajal entered into partnership sharing profits and losses in the ratio of 2 : 1.
Their capitals were Rs.90,000 and Rs.60,000. The profit during the year were Rs.45,000. According to
partnership deed, both partners are allowed salary, Rs.700 per month to Anubha and Rs.500 per month
to Kajal. Interest is allowed on capital @ 5% p.a. The drawings during the period were Rs.8,500 for
Anubha and Rs.6,500 for Kajal. Interest is to be charged @ 5% p.a. on drawings. Prepare partners
capital accounts, assuming that the capital accounts are fluctuating.
Q136. A and B started a partnership business on 1 st April ,2018. They contributed Rs.6,00,000 and
Rs.4,00,000 respectively, as their capitals. The terms of the partnership agreement are as under :
(i) Interest on capital and drawings 6% per annum.
(ii) B is to get a monthly salary of Rs.2,500.
(iii) Sharing of profit or loss will be in the ratio of their capital contribution.
The profit for the year ended 31st March, 2019, before making above appropriations was Rs.2,07,400.
The drawings of A and B were Rs.48,000 and Rs.40,000 respectively. Interest on drawings amounted
to Rs. 1,500 for A and Rs. 1,100 for B.
Prepare profit and loss appropriation account and partner’s capital accounts assuming that their capitals
are fluctuating.

Q. 137. Xand Yare partners with capitals of Rs. 1,00,000 and Rs.80,000 respectively on 1st April, 2016
and their profit sharing ratio is 2 : 1. Interest on capital is agreed @ 12% p.a. Y is to be allowed an
annual salary of Rs.6,000. The profit for the year ended 31st March, 2017 amounted to Rs. 50,000.
Manager is entitled to a commission of 10% of the profits.
Prepare Profit and Loss Appropriation Account and Capital Accounts.
Q 138. Asha and Lata are partners sharing profits in the ratio of 1 : 2. Asha is entitled to a salary of
Rs.2,00,000 p.a. and a commission of 8% of net profit before charging any commission. Lata is entitled
to a commission of 8% of net profit after charging her commission. Net Profit for the year ended 31st
March, 2018 amounted to Rs.5,40,000.
Prepare Profit & Loss Appropriation Account.
Q139. A and B are partners in a firm sharing profits or losses in the ratio of 2 : 3 with capitals of
Rs.4,00,000 and Rs.8,00,000 respectively on 1st April, 2016. Each partner is entitled to 10% p.a. interest
on his capital. B is entitled a commission of 10% on net profit remaining after deducting interest on
capital but before charging any commission. A is entitled a commission of 8% of net profit remaining
after deducting interest on capital and after charging all commissions. The profit for the year ended 31st
March, 2017 prior to calculation of interest on capital was Rs.6,00,000.
Prepare Profit and Loss Appropriation Account.
Q140. Land Z are partners with capitals of Rs.25,000 and Rs. 15,000 respectively on 1st April, 2016.
Each partner is entitled to 9% p.a. interest on his capital. Z is entitled to a salary of Rs.6,000 p.a. together
with a commission of 6% of Net Profit remaining after deducting interest on capitals and salary and
after charging his commission. The profits for the year ended 31 st March, 2017 before making any of
the above mentioned adjustments amount to Rs.30,800. Prepare Partner’s Capital Accounts : (i) when
capitals are fixed, and (ii) when capitals are fluctuating.
Q. 141 (A). (Fixed Capital). L, M and N are partners in a firm sharing profits & losses in the ratio of 2
: 3 : 5.
On April 1, 2016 their fixed capitals were Rs.2,00,000, Rs.3,00,000 and Rs.4,00,000 respectively. Their
partnership deed provided for the following:
(i) Interest on capital @ 9% per annum.
(ii) Interest on Drawings @ 12% per annum.
(iii) Interest on partner’s loan @ 12% per annum.
On July 1, 2016, L brought Rs. 1,00,000 as additional capital and N withdrew Rs. 1,00,000 from his
capital. During the year L, M and N withdrew Rs.12,000, Rs.18,000 and Rs.24,000 respectively for
their personal use. On January 1, 2017 the firm obtained a Loan of Rs. 1,50,000 from M. The Net profit
of the firm for the year ended March 31, 2017 after charging interest on Af s Loan was Rs.85,000.
Prepare Profit & Loss Appropriation Account and Partner’s Capital Accounts.
Q. 141 (B) M and B are partners in a firm. Their capitals as on 1st April, 2016 were Rs.2,10,000 and
Rs.90,000 respectively. They share profits in the ratio of 2 : 1. On 1st August, 2016, they decided that
their capitals should be readjusted according to their profit sharing ratio. The necessary adjustments in
the capitals were made by withdrawing or introducing cash. Interest on capital is allowed at 12% p.a.
Compute interest on capitals for the year ending on 31st March, 2017.
Q142.A, B and C were partners in a firm having capitals of Rs.2,00,000; Rs.2,00,000 and Rs.80,000
respectively on 1 st April, 2015. Their Current Account balances were A : Rs.20,000; B : Rs. 10,000
and C : Rs.5,000 (Dr.). According to the partnership deed the partners were entitled to interest on capital
@ 10% p.a. B being the working partner was also entitled to a salary of Rs.6,000 per quarter. The profits
were to be divided as follows :
(a) The first Rs.60,000 in proportion to their capitals.
(b) Next Rs. 1,00,000 in the ratio of 4 : 3 : 1.

The firm made a profit of Rs.2,80,000 for the year ended 31st March, 2016 before charging any of the
apportionment of profits.
Q. 143. A, B and C are partners with Fixed Capitals of Rs. 1,00,000; Rs.2,00,000 and Rs.3,00,000
respectively. Their partnership deed provides that:
(a) A is to be allowed a monthly salary of Rs.600 and B is to be allowed a monthly salary of Rs.400.
(b) C will be allowed a commission of 5% of the net profit after allowing salaries of A and B.
(c) Interest is to be allowed on Capitals @ 6%.
(d) Interest will be charged on partner’s annual drawings at 4%.
(e) The annual drawings were : B Rs. 10,000 and C Rs. 15,000.
The net profit for the year ending 31 st March, 2016 amounted to Rs. 1,72,000.
Q. 144. A, B and C entered into partnership on 1st April 2016 with capitals of Rs. 10,00,000,
Rs.8,00,000 and Rs.5,00,000 respectively. On 1st July 2016, B advanced Rs.2,00,000 and on 1st
December 2016 C advanced Rs. 1,00,000 by way of loans to the firm.
The Profit and Loss Account for the year ended 31.3.2017 disclosed a profit of Rs.7,70,000 but the
partners could not agree upon the rate of interest on loans and the profit sharing ratio. Prepare partner’s
Capital A/cs and Loan A/cs.
Q145. Lata and Mamta are partners with capitals of Rs.3,00,000 and Rs.2,00,000 respectively sharing
profits as Lata 70% and Mamta 30%. During the year ended 31st March 2016 they earned a profit of
Rs.2,26,440 before allowing interest on partner’s loan. The terms of partnership are as follows:
(i) Interest on Capital is to be allowed @ 7% p.a.
(ii) Lata to get a salary of Rs.2,500 per month.
(iii) Interest on Mamta’s Loan account of Rs.80,000 for the whole year.
(iv) Interest on drawings of partners at 8% per annum. Drawings being Lata Rs.36,000 and Mamta
Rs.48,000.
(v) 1/10th of the distributable profit should be transferred to General Reserve.
Prepare the Profit and Loss Appropriation Account.
Q146. A, B and C are partners sharing the profits and losses in the ratio of 2 : 3 : 5. On 1st July, 2018,
A and B granted loans of Rs.2,00,000 and Rs.1,00,000 respectively to the firm. Show the distribution
of profits/losses for the year ended 31st March, 2019, in the following cases :
Case (a) If the profits before interest for the year amounted to Rs.7,500.
(b) If the loss before interest for the year amounted to Rs.7,500.
Q147. A, B and C are partners in a firm sharing profits and losses equally. On 1st April, 2018 their fixed
capitals were Rs.8,00,000, Rs.6,00,000 and Rs.6,00,000 respectively. On 1st October 2018, A advanced
Rs.1,00,000 to the firm whereas C took a loan of Rs. 1,50,000 from the firm on the same date. It was
agreed among the partners that C will pay interest @ 10% p.a.
Profit for the year ended 31 st March, 2019 amounted to Rs.4,20,000 before allowing or charging
interest on loans. Pass journal entries for interest on loans and prepare Current Accounts of the partners.
Q148. Radha and Rukmani are partners in a firm with fixed capitals of Rs.2,00,000 and Rs.3,00,000
respectively.
They share profits in the ratio of 1 : 2. Both partners are entitled to interest on capitals @ 8% per annum.
In addition, Rukmani is entitled to a salary of Rs.20,000 per month. Business is being carried from the
property owned by Radha on a yearly rent of Rs. 1,20,000. Net Profit for the year ended 31st March
2018 before providing for rent was Rs.5,50,000.
You are required to draw Profit & Loss Appropriation Account for the year ended 31st March, 2018.
Q149. P and Q are partners sharing profits and losses in the ratio of 60 : 40. On 1st April, 2014, their
capitals were : P— Rs.5,00,000 and Q — Rs.3,00,000. During the year ended 31st March, 2015, they
earned a profit of Rs.7,60,000. The terms of partnership are :
(i) Interest on the capital is to be charged @ 8% p.a.

(ii) P will get commisson @ 3% on turnover.
(iii) Q will get a salary of Rs.5,000 per month.
(iv) Q will get commission of 5% on profits after deduction of interest, salary and commission
(including his own commission).
(v) P is entitled to a rent of Rs.20,000 per month for the use of his premises by the firm.
Partner’s drawings for the year were : P — Rs.40,000 and Q — Rs.30,000. Turnover for the year was
Rs.20,00,000. After considering the above factors, you are required to prepare the Profit and loss
Appropriation Account and the Capital Accounts of the Partners.
Q150. A and B are partners sharing profits and loss in the ratio of their capitals which were Rs.6,00,000
and Rs.4,00,000 respectively on 1st April 2018. The partnership deed provides that:
(i) Both partners will get monthly salary of Rs.20,000 each;
(ii) Interest on capital will be allowed @ 8% p.a.;
(iii) A will get a quarterly rent of Rs. 24,000 for the use of his property by the firm.
On 1 st July, 2018 A and B granted loans of Rs. 1,00,000 and Rs.50,000 respectively to the firm. During
the year ended 31 st March 2019, the firm incurred a loss of Rs. 17,250 before any adjustment is made
as per partnership deed.
Prepare an account showing the distribution of profit/loss.
Q151. A and B are partners in a firm sharing profits in the ratio of 1 : 2. Their capitals on 1st April 2018
were Rs.4,00,000 and Rs.6,00,000 respectively. As per partnership deed, A is to get a monthly salary
of Rs. 15,000 and interest on capitals is to be provided @ 10% p.a. and charged on drawings @ 12%
p.a. During the year A withdrew Rs. 30,000 and B withdrew Rs. 50,000.
The firm incurred a loss of Rs.60,000 during the year ended 31st March, 2019 before above adjustments.
You are required to prepare an account showing the distribution of profit/loss.
Q152.Pooja and Archna are partners in a firm sharing profits and losses in the ratio of 2 : 1. Their capital
accounts as on 1st April, 2017 stand at Rs.70,000 and Rs.3 0,000 respectively. The partners are allowed
interest on capital @ 10% p.a. The drawings of the partners during the year ended 31st March, 2018
amounted to Rs.4,800 and Rs.3,600 respectively. Interest is charged on drawings at the rate of 10% p.a.
Pooja has given a loan to firm as on 1st November, 2017 of Rs.20,000.
The profit of the firm for the year ended 31st March, 2018 before above adjustments was Rs.80,000.
10% of this profit is to be kept in a Reserve Account.
Current A/c balances on 1st April, 2017 were Pooja Rs.5,000 (Cr.); Archna Rs.23,000 (Dr.).
Prepare Profit and Loss Appropriation Account and Partner’s Current Accounts.
Q. 153 (A). Mr. Ashok Gupta is a partner in a firm. He withdrew the following amounts during the year
ended 31 st March, 2018:—
Rs.
April 30 8,000
June 30 6,000
Sept. 30 5,000
Dec. 31 12,000
Jan. 31 10,000
Calculate interest on drawings @ 9% p.a. for the year ended on 31st March, 2018.
Q. 154(B). A is a partner in a firm. During the year ended 31st March, 2018, Λ’s
drawings were : Rs.
1 st June 1,000
1st August 750
1st October 1,250
1st December 500
1st February 500
Interest on drawings is charged @ 10% per annum. Calculate interest on drawings of A for the year
ended 31 st March, 2018.

Q. 155. Calculate the interest on drawings of Mr. Aditya @ 8% p.a. for the year ended 31st March,
2016, in each of the following alternative cases :
Case (0 If he withdrew Rs. 5,000 in the beginning of each quarter.
(ii) If he withdrew Rs.6,000 at the end of each quarter.
(iii) If he withdrew Rs.10,000 during the middle of each quarter.
Q156.Calculate the interest on drawings of Sh. Ganesh @ 9% p.a. for the year ended 31st March, 2016,
in each of the following alternative cases :
Case (i) If he withdrew Rs.4,000 p.m. in the beginning of every month;
(ii) If he withdrew Rs.5,000 p.m. at the end of every month.;
(iii) If he withdrew Rs.6,000 p.m;
(iv) If he withdrew Rs.72,000 during the year;
(v) If he withdrew as follows :
Rs.
30th April, 2015 10,000
1st July, 2015 15,000
1st Oct., 2015 18,000
30th Nov., 2015 12,000
31st March, 2016 20,000
(vi) If he withdrew Rs. 12,000 in the beginning of each quarter;
(vii) If he withdrew Rs. 18,000 at the end of each quarter;
(viii) If he withdrew Rs. 18,000 during the middle of each quarter.
Q157 (A). A, B and C started business on 1st July, 2015. Calculate interest on drawings of Mi. A @
9% p.a. for nine months ending 31st March, 2016, if he withdrew Rs. 10,000 p.m. in the beginning of
every month.
Q157 (B). A, B and C started business on 1st July 2015. Calculate interest on drawings of Mr. B @ 9%
p.a. for nine months ending 31st March, 2016, if he withdrew Rs. 10,000 p.m. at the end of every month.
Q157 (C). A, B and C started business on 1st July, 2015. Calculate interest on drawings of Mr. C @ 9%
p. a. for nine months ending 31st March, 2016, if he withdrew Rs. 10,000 p.m.
Q158.Current Account’s Balances as on 1st April, 2017 were as :— Amit : Rs.5,000 (Cr.), Namit:
Rs.2,000 (Cr.) and Ruchi : Rs. 1,000 (Dr.). Profit sharing ratio was 3:2:1. Amit gets a monthly salary
of Rs. 1,500.
Amit draws Rs.2,000 on the first day of each month and Namit draws Rs.2,000 on the last date of each
month while Ruchi draws Rs.6,000 at the end of each quarter. Interest on drawings is to be charged @
12% p.a. Profits for the year ended 31st March, 2018 before adjustments of interest on drawings and of
salary were Rs. 74,040. Show Current Accounts.
Q159.P, Q and R were partners and the balance of their capital accounts on 1st April 2015 were
Rs.8,00,000 (Credit); Rs.5,00,000 (Credit) and Rs.20,000 (Debit) respectively. As per the terms of
partnership agreement interest on capitals is to be allowed @ 10% p.a. and is to be charged on drawings
@ 12% p.a.
Partners withdrew as follows :
(i) P withdrew Rs. 10,000 p.m. at the end of each month;
(ii) Q withdrew Rs.1,20,000 out of capital on 1st January 2016;
(iii) R withdrew Rs.1,20,000 during the year.
The profit for the year ended 31st March, 2016 amounted to Rs.4,30,000.
You are required to prepare journal entries and partner’s capital accounts.
Q160.Active, Blunt and Circle started a business on 1st April, 2017 with capitals of Rs.4,50,000,
Rs.6,00,000 and Rs.3,50,000 respectively. According to partnership agreement:
Upto Rs.2,70,000 —equally
Excess over Rs.2,70,000 — one-half to Active, one-sixth to Blunt and one-third to Circle.

(ii) Provide interest on capital and drawing @6% p.a.
(iii) Circle is entitled to get a monthly salary of Rs.4,000 and Blunt is entitled to get a monthly salary
of Rs.6,000. In addition to above, Circle and Blunt are entitled to get a commission of 5% each on net
profit after taking into consideration salary, interest and all commissions.
— Active withdrew regularly Rs.5,000 at the beginning of every month.
— Blunt withdrew regularly Rs.7,000 at the end of every month.
— Circle withdrew Rs. 80,000 during the year.
The profit of the firm for the year ending 31st March, 2018 before charging all of the above adjustments
was Rs.5,93,120.
Distribute the profit among the partners and prepare partners’ Current A./cs.
Q161. A and B are partners sharing profits and losses equally with capitals of Rs.3,00,000 and
Rs.2,00,000 respectively. Their drawings during the year ending on 31st March, 2018 are as follows :
A’s drawings on 30-06-2017 Rs.
20,000
31-07-2017 10,000
01-10-2017 10,000
01-03-2018 16,000
B drew Rs.6,000 at the end of each month. The deed provides interest on capitals and drawings at 10%
p.a. Calculate interest on capitals and drawings.
Q162. X and Y are partners sharing the profits and losses in the ratio of 2 : 1 with capitals of Rs.50,000
and Rs.30,000 respectively. Show the distribution of profits in each of the following alternative cases :
(i) If the partnership deed is silent as to the Interest on Capital and the profits for the year are
Rs.9,000.
(ii) If the partnership deed provides for Interest on Capital @ 6% p.a. and the losses for the year
are Rs.6,000.
(iii) If the partnership deed provides for Interest on Capital @ 6% p.a. and the profits for the year are
Rs.9,000.
(iv) If the partnership deed provides for Interest on Capital @ 6% p.a. and the profits for the year
are Rs.3,000.
(v) If the partnership deed provides for Interest on Capital @ 6% p.a. even if it involves the firm
in loss and the profits for the year are Rs.3,000.
Q163.A and B contribute Rs.4,00,000 and Rs.3,00,000 respectively as their capitals. They decide to
allow interest on capital @ 8% p.a. Their respective share of profit is 3 : 2 and the profit for the year is
Rs.42,000 before allowing for interest on capitals. Show the distribution of profits (I) Where there is no
agreement except for interest on capitals, and (II) Where there is a clear agreement that the interest on
capitals will be allowed even if it involves the firm in loss.
Q164.On 1-4-2013, Brij and Nandan entered into partnership to construct toilets in government girls
schools in the remote areas of Uttarakhand. They contributed capitals of Rs.10,00,000 and Rs.15,00,000
respectively. Their profit sharing ratio was 2 : 3 and interest allowed on capital as provided in the
Partnership Deed was 12% per annum. During the year ended 31.3.2014, the firm earned a profit of
Rs.2,00,000.
Prepare Profit and Loss Appropriation Account of Brij and Nandan for the year ended 31.3.2014.
(C.B.S.E. 2015, All India)
Q165. Kavita and Leela are partners with capitals of Rs.6,00,000 and Rs.4,00,000 and sharing profits
& losses in the ratio of 2 : 1. Their partnership deed provides that interest on capitals shall be provided
@8% p.a. and it is to be treated as a charge against profits. Prepare relevant account to allocate the
profit in the following alternative cases :
(i) If profit for the year is Rs. 1,10,000
(ii) If profit for the year is Rs. 35,000

(iii) If loss for the year is Rs. 10,000
Q166.Lalan and Balan were partners in a firm sharing profits in the ratio of 3 : 2. Their fixed capitals
on 1st April, 2017 were : Lalan Rs. 1,00,000 and Balan Rs.2,00,000. They agreed to allow interest on
capital @12% per annum and to charge on drawings @15% per annum. The firm earned a profit, before
all above adjustments, of Rs.30,000 for the year ended 31st March, 2018. The drawings of Lalan and
Balan during the year were Rs.3,000 and Rs.5,000 respectively. Showing you calculations clearly,
prepare Profit and Loss Appropriation Account of Lalan and Balan. The interest on capital will be
allowed even if the firm incurs a loss.
Q167.On 1st April, 2018 X, Y and Z started a business in partnership. X contributes Rs.90,000 at first
but withdraws Rs.30,000 at the end of six months. Y introduces Rs.75,000 at first and increases it to
Rs.90,000 at the end of four months, but withdraws Rs.30,000 at the end of eight months. Z brings in
Rs.75,000 at first but increases it by Rs. 60,000 at the end of seven months.
During the year ended 31 st March, 2019, they make a net profit of Rs.42,000. Show how the partners
should divide this amount on the basis of effective capital employed by each partner.
Q.168(A). After the accounts of the partnership have been drawn up and the books closed off, it is
discovered that interest on capitals @ 8% p.a. as provided in the partnership agreement has been omitted
to be recorded. Their capital accounts at the beginning of the year stood as follows : A Rs.8,00,000; B
Rs.4,00,000; C Rs.3,00,000. Their profit sharing ratio was 2:1:1. Instead of altering the Balance Sheet
it is decided to pass necessary adjusting entry at the beginning of the next year.
You are required to give the necessary journal entry.
Q. 168(B). Roshan, Mahesh, Gopi and Jai are partners sharing profits and losses in the ratio of 3 : 3 : 2
: 2.
The balances of capital accounts on 1st April, 2015 were : Roshan Rs.8,00,000, Mahesh Rs.5,00,000,
Gopi Rs.6,00,000 and Jai Rs.6,00,000.
After the accounts for the year ended 31st March, 2016 were prepared, it was discovered that interest
on capital @10% per annum as provided in the partnership deed had not been credited to the partners’
capital accounts before the distribution of profits.
You are required to rectify the error by passing a single adjusting journal entry.
(ISC 2017)
Q. 169. A, B and C are partners sharing profits and losses in the ratio of 1 : 2 : 3.
They have omitted interest on capital @ 8% p.a. for two years ended 31 st March, 2016. Their fixed
capitals were Rs.4,00,000, Rs.6,00,000 and Rs.8,00,000 respectively. Pass the necessary adjusting
entry.
Q.170 A, B and C are partners sharing profits and losses in the ratio of 5 : 3 : 1. After the final accounts
have been prepared, it was discovered that interest on drawings had not been taken into consideration.
The interest on drawing of partners amounted to A Rs.8,000, B Rs.6,000 and C Rs.4,000. Give the
necessary adjusting journal entry.
Q180. A, B, C and D are partners sharing profits and losses in 2 : 2 : 3 : 3 respectively. After the accounts
of the year had been closed, it was found that interest on drawings @ 6% p.a. has not been taken into
consideration. The drawings of the partners were : A Rs.20,000; B Rs.24,000; C Rs.32,000 and D
Rs.44,000. Give the necessary adjusting entry.
Q181. A and B were partners sharing profits in 2 : 1 ratio. During the year ended 31st March, 2016, A’s
drawings were Rs.50,000 per month drawn in the beginning of every month and B’s drawings were
Rs.25,000 per month drawn at the end of every month. After the preparation of final accounts, it was
discovered that interest on Λ’s drawings @ 12% p.a. was not taken into consideration. Give the
necessary adjusting entry on 1st April, 2016.

Q182.Anil, Sunil and Sanjay have omitted interest on Capitals for two years ended on 31st March,
2016. Their fixed capitals in two years were Anil Rs.8,00,000, Sunil Rs.7,00,000 and Sanjay
Rs.3,00,000. Rate of interest on Capital is 10% p.a. Their profit Sharing ratios were in first year 4:3:2
and in second year 3:2:1.
Give necessary adjusting entry at the beginning of next year.
Q183. P, Q and R are partners sharing profits in the ratio of 2 : 1 : 1. Their capitals as on 1st April, 2017
were Rs.50,000, Rs.30,000 and Rs.20,000 respectively. At the end of the year ending 31 st March, 2018
it was found out that interest on capitals @ 12% p.a., salaries to P, Rs.500 per month and R Rs. 1,000
per month were not adjusted from the profits. Show adjusting entry to be made in the next year for
above adjustments.
Q.184(A). On 1st April, 2015 the Capitals of A and B were Rs.4,00,000 and Rs.2,00,000 respectively.
They divided profits in their capital ratio. Profits for the year ended 31st March, 2016 were Rs.3,00,000
which have been duly distributed among the partners, but the following transactions were not passed
through the books :—
(a) Interest on Capitals @ 12% p.a.
(b) Interest on Drawings Λ Rs. 12,000; B Rs. 10,000.
(c) Commission due to B Rs.20,000 on a special transaction.
(d) A is to be paid a salary of Rs.50,000.
You are required to pass a journal entry on 10th April, 2016 which will not affect the P & L A/c of the
firm and at the same time will rectify the errors.
Q. 184 (B). Kumar and Raja were partners in a firm sharing profits in the ratio of 7 : 3. Their fixed
capitals were : Kumar Rs.9,00,000 and Raja Rs.4,00,000. The partnership deed provided for the
following but the profit for the year was distributed without providing for:
(ii) Kumar’s salary Rs.50,000 per year and Raja’s salary Rs.3,000 per month.
The profit for the year ended 31.3.2018 was Rs.2,78,000.
Pass the adjustment entry.
Q185. A, B and C are partners sharing profits in. the ratio of 2 : 2 : 1. Their fixed capitals were
Rs.4,00,000, Rs.2,50,000 and Rs. 1,00,000 respectively. Net profit for the year ending 31st March, 2017
amounted to Rs.2,20,000 which was distributed without providing for the following :
(i) Salary to B Rs. 5,000 p.m. and to C Rs. 10,000 per quarter.
(ii) Interest on capital @6% p.a.
(iii) Commission to Manager @10% after charging such commission.
Pass necessary rectifying entry.
Q186. Suresh and Ramesh were partners in a firm sharing profits in the ratio of 3 : 2. Their fixed capitals
were : Suresh Rs.9,00,000 and Ramesh Rs.6,00,000. The partnership deed provided for the following :
(ii) Rs.60,000 per annum salary to Suresh and salary Rs.2,000 per month to Ramesh. The profit earned
by the firm for the year ended 31-3-2018 was Rs.2,34,000.
The profits were divided equally without providing for the above.
Pass adjustment entry
Q187.A, B and C were partners in a firm. On 1-4-2015 their capitals stood at Rs.5,00,000, Rs.2,50,000
and Rs.2,50,000 respectively. As per the provisions of the partnership deed :
(a) C was entitled for a salary of Rs. 10,000 p.m.
(b) Partners were entitled to interest on capital at 5% p.a.
(c) Profits were to be shared in the ratios of capitals.
The net profit for the year ended 31.3.2016 of Rs.3,30,000 was divided equally without providing for
the above terms.
Pass an adjustment entry to rectify the above error.

Q188. A, B and C were partners in a firm. Their capitals were A Rs. 1,00,000, B Rs.2,00,000 and C
Rs.3,00,000 respectively on 1st April, 2017. According to the partnership deed they were entitled to an
interest on capital @ 5% p.a. In addition A was also entitled to draw a salary of Rs.5,000 per month. C
was entitled to a commission of 5% on the profits after charging the interest on capital but before
charging the salary payable to A. The net profits for the year ending 31st March, 2018 were Rs.3,60,000
distributed in the ratio of their capitals without providing for any of the above adjustments. The profits
were to be shared in the ratio 2:3:5. Pass the necessary adjustment entry showing the workings clearly.
Q189. The partners of a firm distributed the profits for the year ended 31 st March, 2016, Rs. 1,50,000
in the ratio of 2 : 2 : 1 without providing for the following adjustments:
(i) A and B were entitled to a salary of Rs. 1,500 per quarter.
(ii) C was entitled to a commission of Rs. 18,000.
(iii) A and C had guaranteed a minimum profit of Rs.50,000 p.a. to B.
(iv) Profits were to be shared in the ratio of 3 : 3 : 2.
Pass necessary journal entry for the above adjustments in the books of the firm.
Q190. A, B and C were partners in a firm. Their partnership deed provided that the profits shall be
divided as follows :
First Rs.60,000 in the ratio of 3 : 2 : 1;
Remaining profits will be shared equally.
The profits for the year ended 31st March, 2019 were Rs.1,50,000 which had been distributed among
the partners. On 1st April, 2018 their Capitals were A Rs.4,00,000, B Rs.3,00,000 and C Rs.2,00,000.
Interest on Capital was to be provided @ 8% p.a. which was omitted to be provided before distribution
of profits.
Pass necessary rectifying entiy for the same.
Q191. X, Y and Z are partners in a firm sharing profits and losses in the ratio 5:3:2. Their capitals
(fixed) are Rs.2,00,000; Rs. 1,50,000; Rs. 1,25,000 respectively. For the year ended 31st March, 2018
interest on capital was credited to them @ 8% instead of 10%.
Give adjusting journal entry.
Q192. A, B and C are partners in a firm sharing profits and losses in the ratio of 4:3:3. Their fixed
capitals were Rs. 1,00,000, Rs.2,00,000 and Rs.3,00,000 respectively. For the year ended 31st March,
2018 interest on capital was credited to them @ 10% instead of 9% p.a. Pass the necessary adjusting
journal entry.
Q193. After the accounts of a partnership have been drawn up and the books closed off, it is discovered
that for the years ended 31 st March, 2016 and 2017, interest has been credited to the partners upon
their capitals at 5% per annum although, no provision for interest is made in the partnership agreement.
The amounts involved are :
Interest Credited
Year A B C
Rs. Rs. Rs.
2016 4,200 2,400 1,320
2017 4,320 2,520 1,320
You are required to put through adjusting entry as on 1st April, 2017, if the profits were shared as
follows in 2016, 2:2:1 and in 2017, 3:4:3.
Q194. Sachin, Kapil and Rashmi have been sharing profits in the ratio of 3 : 2 : 1 respectively. Rashmi
wants that she should share profits equally along with Sachin and Kapil and she further wants that
change in profit sharing ratio should be applicable retrospectively for the last three years. Other partners
have no objection to this. The profits for the last three years were Rs.60,000, Rs.47,000 and Rs.55,000.
Record the adjustment by means of a journal entry.

Q. 195 (A). Mohan, Vijay and Anil are partners, their capitals being Rs. 30,000, Rs.25,000 and
Rs.20,000 respectively. In arriving at these figures, the profits for the year ended, 31st March, 2018
Rs.24,000 has already been credited to the partners in the proportion in which they share profits. Their
drawings were Rs.5,000 (Mohan); Rs.4,000 (Vijay) and Rs.3,000 (Anil) for the year ending 31st March,
2018. Subsequently the following omissions were noticed and it was decided to bring them into
Account.
(i) Interest on Capital at 10% p.a.
(ii) Interest on Drawings Mohan Rs.250, Vijay Rs.200 and Anil Rs. 150.
Make the necessary journal entry and prepare Capital Accounts of Partner’s.
Q.196(B). The capitals of A, B and C stood at Rs.20,000, Rs.15,000 and Rs. 10,000 respectively after
the necessary adjustment in respect of drawings and net profits. Subsequently, it was discovered that
interest on capital at 10% p.a. and interest on drawings Rs. 130, Rs.90 and Rs.50 respectively have been
ignored. Profit of the year already adjusted was Rs. 10,000. Drawings of the partners were Rs. 1,000,
Rs.800 and Rs.500 respectively. They share profits and losses in the ratio of 2 : 1 : 1. Give necessary
journal entry to rectify the accounts.
Q. 196 (C). A and B are partners in a business sharing profits and losses in the ratio of 3 : 2. Their
capitals on 31st March, 2018, after the adjustment of net profits and drawings amounted to Rs.2,00,000
and Rs. 1,50,000 respectively. Later on, it was discovered that interest on Capital at 8% per annum, as
provided for in the partnership deed, had not been credited to the partner’s capital accounts before the
distribution of profits. The year’s net profit amounted to Rs.75,000 and the partners had withdrawn
Rs.24,000 each. Instead of altering the signed balance sheet, it was decided to make an adjustment entry
at the beginning of the new year crediting or debiting the Partner’s Accounts. Give the necessary journal
entry as also a statement of details arriving at the amount of adjusting entry.
Q.197 Assuming the capitals are fixed in Question 196 (A), (B) and (C), give the necessary adjusting
journal entry.
Q198. On 31st March, 2014, the balances in the capital accounts of Esha, Manav and Daman after
making adjustments for profits and drawings were Rs.3,20,000, Rs.2,40,000 and Rs. 1,60,000
respectively. Subsequently, it was discovered that the interest on capital and drawings had been omitted.
* The profit for the year ended on 31st March, 2014 was Rs.90,000.
* During the year, Esha and Manav each withdrew a sum of Rs.48,000 in equal instalments in
the middle of every month and Daman withdrew Rs.60,000.
* The interest on drawings was to be charged @5% per annum and interest on capital was to be
allowed @10% per annum.
* The profit-sharing ratio of the partners was 3:2: 1.
Showing your workings clearly, pass the necessary rectifying entry.
(C.B.S.E. 2015, Comptt. All India)
Q199. A and B are partners in a firm sharing profits and losses in the ratio of 2 : 1. The following was
the Balance Sheet of the firm as at 31.3.2016.
Capitals: A 6,00,000 Sundry Assets 10,00,000
4,00,000
10,00,000 10,00,000
The profits Rs.4,50,000 for the year ended 31.3.2016 were divided between the partners without
allowing interest on capital @9% p.a. and without charging interest on drawings @12% p.a. During the
year A withdrew Rs. 1,00,000 and B Rs. 50,000.
Pass the necessary adjustment journal entry and show your working clearly.
Q200. A and B are partners in a firm sharing profits and losses in the ratio of 2 : 3. The following was
the Balance Sheet of the firm as at 31.3.2016.

Capitals: A 4,90,000 Sundry Assets 7,90,000
B 3,00,000 7,90,000
7,90,000 7,90,000
Profits Rs.2,00,000 for the year ended 31.3.2016 were divided between the partners without allowing
interest on capital @6% p.a., interest on drawings @10% p.a. and salary to B @ Rs.5,000 per month.
During the year 4 withdrew Rs.40,000 and B withdrew Rs. 20,000.
Showing your working notes clearly, pass the necessary rectifying entry.
Q201. A and B are partners sharing profits and losses in the ratio of 3 : 1. Following is the Balance
Sheet of the firm as at 31st March, 2015.
A’s Capital 90,000 Drawings :
B’s Capital 30,000 A 12,000
B 6,000 18,000
Sundry Assets 1,02,000
1,20,000 1,20,000
Profit for the year ended 31st March, 2015 Rs.24,000 was divided between the partners in their profit
sharing ratio, but interest on capital at 5% p.a. and on drawings at 6% p.a. was inadvertently ignored.
Give the necessary adjustment entry for the adjustment of interest. Interest on drawings may be
calculated on an average basis for 6 months.
Q202. From the following Balance Sheet of A and B, calculate interest on capital at 5% p.a. for the year
ending 31 st March, 2015:
A's Capital 1,00,000 Fixed Assets 1,40,000
B’s Capital 80,000 Current Assets 60,000
P and L Appropriation A/c
2014-15 40,000 Drawings — B 20,000
2,20,000 2,20,000
Profit during the year ended 31 st March, 2015 was Rs.70,000. A and B share profits in the ratio of 2 :
1. Drawings during the year ended 31st March, 2015 were A Rs. 16,000 and B Rs.20,000.
Q204. The Capital Accounts of P, Q and R stood at Rs.2,00,000; Rs. 1,50,000 and Rs. 1,00,000
respectively after the necessary adjustments in respect of drawings and net profit for the year ended
31st March, 2019. It was subsequently ascertained that interest on capital @ 10% p.a. was not taken
into account while arriving at the divisible profits for the year.
Drawings during the year 2018-19 had been : P Rs.5,000 per month; Q Rs. 15,000 quarterly and R Rs.3
0,000.
The net profit for the year amounted to Rs. 1,80,000 and partners shared profits and losses in the ratio
of 2 : 2 : 1. You are required to pass the necessary journal entries to rectify the lapse in accounting.
Q205. A and B were in partnership. They do not have any partnership deed. A presented the following
Profit and Loss Appropriation Account:—
PROFIT AND LOSS APPROPRIATION ACCOUNT
Dr. for the year ended 31st March, 2019 Cr.
To Interest on Capital @ 10% p.a. By Profit & Loss A/c
A on Rs.2,00,000 20,000 (Profit for the year) 1,08,300
B on Rs. 1,00,000 10,000 30,000 By Interest on Drawings
To Salary to A 12,000 @ 10% p.a.
To Interest on A’s Loan @ 15% p.a. 3,000 A on Rs. 15,000 1,500
To Profit: B on Rs. 12,000 1,200 2,700

A’s Capital Ale 2/3 44,000
B’s Capital A/c 1/3 22,000 66,000
1,11,000 1,11,000
Should B accept it? In case you don’t advise him to accept it then, redraw it.
Q206(A), A, B and C were in Partnership sharing profits four-seventh, two- seventh and one-seventh
respectively. It being provided that in no year C’s share be less than Rs. 1,80,000.
The Profit for the year ending 31st March, 2016 amounted to Rs. 10,50,000. You are required to show
the appropriation of profit between the partners.
Q.206(B). A, B and C are partners with capitals of Rs.8,00,000, Rs.6,00,000 and Rs.5,00,000
1 1 1
respectively. After providing interest on capital at 8% p.a. they divide profits in the ratio of : : . A
2 3 6
and B have guaranteed that C’s share shall not be less than Rs. 1,00,000.
During the year A and B have each withdrawn Rs.2,00,000 and C Rs. 1,00,000. The net profit for the
year, before providing interest on partner’s capitals was Rs.5,12,000. You are required to show the
Current Accounts of the partners.
Q207 (A). A, B and C are partners in a firm. Their profit sharing ratio is 3 : 2 : 1. However, C is
guaranteed a minimum amount of Rs. 10,000 as share of profits every year. Any deficiency arising on
that account shall be met by A. The profits for the two years ending 31st March, 2015 and 2016 were
Rs.30,000 and Rs.90,000 respectively. Prepare Profit and Loss Appropriation Account for the two
years.
Q207(B). X, Y and Z are partners with capitals of Rs.4,00,000; Rs.3,00,000 and Rs.2,00,000
respectively. They charge 8% p.a. interest on their capitals and divide the profits in the ratio of 3 : 2 :
1. Alias guaranteed that 72 s share shall not amount to less than Rs.50,000 in any one year.
Their Drawings during the year were Rs.50,000; Rs.40,000 and Rs.35,000 respectively. Net profits for
the year before providing interest on capitals was Rs.2,52,000. Prepare P & L Appropriation A/c and
capital accounts.
Q208.S', T, W and X are partners sharing profits in the ratio of 4 : 3 : 2 : 1, X is given a guarantee that
his share of profits in any given year would be Rs. 80,000. Deficiency if any, would be borne by other
partners equally. The profits for the year ended 31st March, 2016 amounted to Rs.6,50,000. Pass
necessary entries in the books of the firm.
Q209.Vikas and Vivek were partners in a firm sharing profits in the ratio of 3 : 2. On 1-4-2014 they
admit Vandana as a new partner for l/8th share in the profits with a guaranteed profit of Rs. 1,50,000.
The new profit sharing ratio between Vikas and Vivek will remain the same but they decided to bear
any deficiency on account of guarantee to Vandana in the ratio 2 : 3. The profit of the firm for the year
ended 31-3-2015 was Rs.9,00,000, Prepare Profit and Loss Appropriation Account of Vikas, Vivek and
Vandana for the year ended 31-3-2015. (C.B.S.E. 2016, All India)
Q210. A, B and C were partners sharing profits and losses in the ratio of 3 : 2 : 1. Their capitals on 1st
April, 2017 were :
A Rs.5,00,000; B Rs.3,00,000 and C Rs.2,00,000.
A had personally guaranteed that in any year C’s share of profit after allowing interest on capital to all
partners @8% p.a. and charging interest on drawings @10% p.a. will not be less than Rs.1,00,000.
The net profit for the year ended 31st March, 2018, before allowing or charging any interest amounted
to Rs.4,32,000.
A has withdrawn Rs.5,000 at the end of every month.
B has withdrawn Rs. 15,000 at the end of every quarter.
C has withdrawn Rs.60,000 during the year.
Prepare Profit and Loss Appropriation Account for the year 2017-18.

Q211. A, B and C were in partnership sharing profits in the ratio of 1 : 2 : 3. Their fixed capitals on 1st
April, 2018 were : A Rs.3,00,000; B Rs.4,50,000 and C Rs.10,00,000. Their partnership deed provided
for the following :
(i) A provides his personal office to the firm for business use charging yearly rent of Rs. 1,50,000.
(ii) Interest on capita! @ 8% p.a. and interest on drawings @ 10% p.a.
(iii) A was allowed salary @ Rs. 10,000 per month.
(iv) B was allowed a commission of 10% of net profit as shown by Profit & Loss Account, after
charging such commission.
(v) C was guaranteed a profit of Rs.3,00,000 after making all the adjustments.
The net profit of the firm for the year ended 31st March, 2019 was Rs. 10,30,000 before making above
adjustments.
You are informed that A has withdrawn Rs.5,000 at the beginning of each month, B has withdrawn
Rs.5,000 at the end of each month and C has withdrawn Rs.24,000 at the beginning of each quarter.
Prepare Profit and Loss Appropriation Account and Partner’s Current Accounts.
Q212. Ram, Mohan and Sohan were partners. They admit Rakesh as a partner and guaranteed that his
share of profit shall not be less than Rs.70,000, Profits are to be shared in the ratio of 4 : 3 : 2 ; 1 but
excess claimed by Rakesh over his normal share has been guaranteed by Ram and Mohan in the ratio
of 2 : 1. If total profits were Rs.4,00,000, prepare a statement showing distribution.
1
Q213. X and Y were sharing profits in the ratio of 2 ; 1. On 1st April, 2014 they admitted Z for 4 th
share in the profits. Z is guaranteed a minimum profit of Rs. 1,00,000 for the year. Any deficiency in
Z’s share is to be borne by X and Y in the ratio of 3 : 2. Losses for the year ending 31st March, 2015
amounted to Rs.1,20,000. Record necessary entries.
Q214. A, B and C are partners sharing profits in the ratio of 4 : 3 : 2. It was provided that B's share of
profit will not be less than Rs. 1,50,000 per annum. The losses for the year ended 31st March, 2015
were Rs.85,000, before allowing interest on Loan of Rs. 1,00,000 taken from A on 1st June, 2014.
You are required to show necessary account for division of loss and pass necessary journal entries.
Q215. Ali, Bimal and Deepak are partners in a firm. On 1 st April, 2011 their capital accounts stood at
Rs.4,00,000, Rs.3,00,000 and Rs.2,00,000 respectively. They shared profits and losses in the proportion
of 5 : 3 : 2. Partners are entitled to interest on capital @10% per annum and salary to Bimal and Deepak
@ Rs.2,000 per month and Rs.3,000 per quarter respectively as per the provisions of the partnership
deed.
Bimal’s share of profit (excluding interest on capital but including salary) is guaranteed at a minimum
of Rs.50,000 p.a. Any deficiency arising on that account shall be met by Deepak. The profits of the firm
for the year ended 31st March, 2012 amounted to Rs.2,00,000. Prepare Profit & Loss Appropriation
Account for the year ended on 31st March, 2012.
(C.B.S.E. 2013)
Q216.Ajoo and Bajoo were in partnership sharing profits and losses in the proportion of 4/5 and 1/5
respectively. In appreciation of the services of their employee Sajoo who was in receipt of salary of
Rs.2,400 p.a. and a commission of 5% on the net profits after charging such salary and commission,
they took him into partnership as from 1-4-2018 giving him l/8th share of the profit.
The agreement provided that any excess over his former remuneration to which Sajoo becomes entitled
will be paid out of Ajoo’s share of profits.
The profits for the year ended 31st March, 2019 amounted to Rs.57,000. Divide this between the
partners.
Q217 (HOTS) P, Q and R are in partnership. P and Q sharing profits in the ratio of 4 : 3 and R receiving
a salary of Rs.20,000 p.a. plus a commission of 10% of the profits after charging his salary and
1
commission, or 6 th of the profit of the firm 6 whichever is more. Any excess of the latter over the

former received by R is, under the partnership deed, to be borne by P and Q in the ratio of 3 : 2. The
profit for the year ending 31st March, 2019 came to Rs.3,85,000 after charging R's salary.
Divide the profits among partners.
Q218. Asif and Ravi are partners in a firm sharing profits and losses in the ratio of 3 : 2. Their fixed
capitals as on 1st April, 2016, were Rs.6,00,000 and Rs.4,00,000 respectively.
Their partnership deed provided for the following :
(a) Partners are to be allowed interest on their capitals @ 10% per annum.
(b) They are to be charged interest on drawings @ 4% per annum.
(c) Asif is entitled to a salary of Rs.2,000 per month.
(d) Ravi is entitled to a commission of 5% of the correct net profit of the firm before charging such
commission.
(e) Asif is entitled to a rent of Rs.3,000 per month for the use of his premises by the firm.
The net profit of the firm for the year ended 31st March, 2017, before providing for any of the above
clauses was Rs.4,00,000.
Both partners withdrew Rs.5,000 at the beginning of every month for the entire year.
You are required to prepare a Profit and Loss Appropriation Account for the year ended 31 st March,
2017. (IS. C. 2018)
Q219. Shankar and Manu are partners in a firm. On 1st April, 2014, their fixed capital accounts showed
a balance of Rs.2,00,000 and Rs.4,00,000 respectively.
On this date, their current account balances were Rs.50,000 and Rs. 1,00,000 respectively.
On 1st January, 2015, Shankar introduced additional capital of Rs.2,00,000 while Manu gave a loan of
Rs. 1,50,000 to the firm.
The clauses of their partnership deed provided for :
(a) Interest on capital to be allowed at the rate of 10% per annum.
(b) Interest on drawings to be charged at the rate of 12% per annum.
(c) Profits to be shared by them in the ratio of 3 : 2.
(d) 10% of the correct net profit to be transferred to General Reserve.
During the financial year 2014-15, both partners withdrew Rs.6,000 each at the beginning of every
quarter.
The net profit of the firm, before any interest, for the financial year 2014-15 was Rs.5,00,000.
You are required to prepare for the year 2014-15 :
(i) Profit and Loss Appropriation Account.
(ii) Partners’ Fixed Capital Accounts.
(iii) Partners’ Current Accounts.
(iv) Partner’s Loan Account. (I.S.C. 2016)
Q220. D, E and F were partners in a firm sharing profits in the ratio of 5 : 7 : 8. Their fixed capitals on
1st April, 2015 were D Rs.5,00,000, E Rs.7,00,000 and F Rs.8,00,000. Their partnership Deed provided
for the following :
(i) Interest on capital @10% p.a.
(ii) Salary of Rs. 10,000 per month to F.
(iii) Interest on drawing @12% p.a.
D withdrew Rs.40,000 on 30th April, 2015; E withdrew Rs.50,000 on 30th June 2015 and F withdrew
Rs. 30,000 on 31st March, 2016.
During the year ended 31st March, 2016 the firm earned a profit of Rs.3,50,000.
Prepare the Profit and Loss Appropriation Account for the year ended 31st March, 2016.
Q221.. Simmi and Sonu are partners in a firm, sharing profits and losses in the ratio of 3 : 1. The profit
and loss account of the firm for the year ending March 31, 2016 shows a net profit of Rs. 1,50,000.
Prepare the Profit and Loss Appropriation Account by taking into consideration the following
information :
(i) Partners capital on April l, 2015 :
Simmi Rs.30,000; Sonu Rs.60,000.

(ii) Current accounts balances on April 1,2015 :
Simmi Rs.30,000 (Cr.); Sonu Rs. 15,000 (Cr.).
(iii) Partners drawings during the year amounted to :
Simmi Rs.20,000; Sonu Rs. 15,000.
(iv) Interest on capital was allowed @ 5% p.a.
(v) Interest on drawing was to be charged @ 6% p.a. at an average of six months.
(iv) Partner’s salaries : Simmi Rs. 12,000 and Sonu Rs.9,000. Also show the partner’s current accounts.
Q222. Pappu and Munna are partners in a firm sharing profits in the ratio of 3 : 2. The partnership deed
provided that Pappu was to be paid salary of Rs.2,500 per month and Munna was to get a commission
of Rs. 10,000 per year. Interest on capital was to be allowed @ 5% per annum and interest on drawings
was to be charged @ 6% per annum. Interest on Pappu’s drawings was Rs. 1,250 and on Munna’s
drawings Rs.425.
Capital of the partners were Rs.2,00,000 and Rs. 1,50,000 respectively, and were fixed. The firm earned
a profit of Rs.90,575 for the year ended 31-3-2016.
Prepare Profit and Loss Appropriation Account of the firm.
Q223. A, B and C were partners in a firm having capitals of Rs. 1,00,000; Rs. 1,00,000 and Rs.2,00,000
respectively. According to the partnership deed the partners were entitled to interest on capital @ 6%
p.a. A being the working partner was also entitled to a salary of Rs.5,000 per month. The profits were
to be divided as follows :
(a) The first Rs.40,000 in the ratio of 2 : 3 : 5.
(b) Next Rs. 80,000 in the proportion of their capitals.
The firm made a profit of Rs.2,70,000 for the year ended 31st March, 2018 before charging any of the
apportionment of profits.
Q224. X, Y and Z are in the partnership and on 1st April, 2015, their respective capitals were
Rs.2,00,000; Rs.l,20,000and Rs.1,00,000. Tis entitled to a salary of Rs.25,000 and Z Rs.20,000 per
annum, payable before division of profits. Interest is allowed on capital at 5% per annum but is not
charged on drawings. Of the net divisible profits of the first Rs. 1,00,000; X is entitled to 40 per cent;
Y to 35 per cent and Z to 25 per cent, over that amount profits are shared equally. The profit for the
year ended 31st March, 2016, after debiting partnership salaries, but before charging interest on capitals,
was Rs. 1,81,000 and the partners had drawn Rs.8,000 each. Prepare partner’s capital accounts for the
year.
Q225. Tulsi and Kabir are partners sharing profits in proportion of 3 : 2 with capitals of Rs.8,00,000
and Rs.6,00,000 respectively. Interest on capitals is agreed at 6% p.a. Tulsi is to be allowed a salary of
Rs.6,000 per month. For the year ended 31st March, 2018, the profits prior to calculation of interest on
capital but after charging Tulsi’s salary amounted to Rs.2,28,000. Manager is to be allowed a
commission of 10% of the profits.
Prepare an account showing the allocation of profits.
Q.226 On 1st April, 2017 the balances of A and B were as follows :—

Capital Account Current Account
Rs. Rs.
A 1,00,000 (Cr.) 8,420
B 40,000 (Dr.) 3,200
On 1st July, 2017, A withdrew Rs.20,000 from his capital and B introduced Rs. 10,000 as further capital
on the same date. According to the deed, interest on capitals is to be allowed at 8% p.a. but no interest
3 2
is to be allowed or charged on current account balances and drawings. A is entitled to 5 and B 5 of the
profit. The manager of the firm is entitled to a commission of 10% of the profit before any adjustment
is made according to the deed. For the year ended 31st March, 2018, the profit was Rs.40,000 and the

drawings of A and B were Rs. 12,000 and Rs. 10,000 respectively. Prepare the P & L Appropriation
A/c, Capital Accounts and Current Accounts.
Q227. A and B are partners in a firm sharing profits and losses in the ratio of 3 : 2. The balance in their
capital and current accounts as on 1-4-2017 were as under :
A B
(Rs.) (Rs.)
Capital Account 40,000 20,000
Current Account (Cr.) 16,000 12,000
The partnership deed provided that A is to be paid salary @ Rs.500 p.m. whereas B is to get commission
of Rs.4,000 for the year.
interest on capital is to be allowed @ 6% p.a. The drawings of A and B for the year were Rs.5,000 and
Rs.2,000, respectively. Interest on drawings for A and B works out at Rs.225 and Rs.75 respectively.
The net profit of the firm for the year ended 31st March, 2018 before making these adjustments was
Rs.35,700.
Prepare the Profit and Loss Appropriation Account and the Partners Capital and Current Accounts.
Q228. Calculate the interest on Drawings of Tarun @ 8% p.a. for the year ended 31st March, 2018 in
each of the following alternative cases :
Case (a) if his drawings during the year were Rs.60,000;
Case (b) if he withdrew Rs.5,000 p.m. in the beginning of every month;
Case (c) if he withdrew Rs.5,000 p.m. at the end of every month;
Case (d) if he withdrew Rs.5,000 p.m. during the year;
Case (e) if he withdrew the following amounts as under :
2015 June, 1 : Rs. 10,000; August 31 : Rs. 12,000; November 1 : Rs. 16,000; December 31 : Rs. 13,000;
February 1, 2016 : Rs.9,000.
Q229.A, B and Chave Capitals of Rs.60,000, Rs.30,000 and Rs.20,000 respectively on 1st April, 2017,
on which they are entitled to interest @ 6% p.a. They share profits in the ratio of 5 : 3 : 2. A is entitled
to receive a salary of Rs.500 per month. Drawings during the year were as follows :—
A B C
Rs. Rs. Rs.
1st June, 2017 2,000 2,000 1,000
1st Oct, 2017 1,000 1,500 1,000
1st Dec., 2017 500 1,000 500
The rate of interest on Drawings is 6% p.a. Profit for the year ended 31st March, 2018 was Rs.24,605
before charging salary, interest on Capital and Drawings. Assuming that the Capitals are (a) Fixed, (b)
Floating, show the Partner’s Capital Accounts, Current Accounts and Profit and Loss Appropriation
Account.
Q230. On 1st April, 2017 P, Q and R started a business with capitals of Rs.6,00,000; Rs.4,50,000 and
Rs.3,50,000 respectively. According to partnership agreement:
Upto Rs.1,80,000 equally
Excess over Rs. 1,80,000 one-third to P, one-sixth to Q and one-half to R.
(ii) Allow interest on capital @6% p.a. and charge interest on drawings @8% p.a.
(iii) P is entitled to get a salary of Rs.4,000 per month together with a commission of 5% on net profit
remaining after considering salary and interest but before charging any commission.
(iv) O is entitled to get a salary of Rs.5,000 per month together with a commission of 5% on net profit
remaining after considering salary, interest and after charging all commissions.
P withdrew regularly Rs.5,000 at the beginning of the every month.
Q withdrew regularly Rs.7,500 at the end of the every month.
R withdrew Rs.70,000 during the year. The profit for the year ended 31st March, 2018 before all of the
above adjustments was Rs.4,96,310.

Distribute the profit among the partners and prepare partners’ capital accounts when Capitals are
fluctuating.
Q231. X, Yand Z contribute Rs.3,00,000, Rs.2,00,000and Rs. 1,00,000 respectively by way of capital
on which they agree to allow interest at 12% p.a. They share profits and losses in the ratio of 5 : 3 : 2.
Profit for the year ended 31st March, 2016 is Rs.60,000 before allowing interest on capitals. Prepare a
Profit & Loss Appropriation Account if (i) partnership deed is silent as to the treatment of interest as a
charge or appropriation, and (ii) partnership deed provides for interest even if it involves the firm in
loss.
Q232.Arun and Arora were partners in a firm sharing profits in the ratio of 5 : 3. Their fixed capitals on
1.4.2010 were : Arun Rs.60,000 and Arora Rs.80,000. They agreed to allow interest on capital @ 12%
per annum and to charge on drawings @15% per annum. The profit of the firm for the year ended
31.3.2011 before all above adjustments were Rs. 12,600. The drawings made by Arun were Rs.2,000
and by Arora Rs.4,000 during the year. Prepare Profit and Loss Appropriation Account of Arun and
Arora. Show your calculations clearly. The interest on capital will be allowed even if the firm incurs a
loss. (C.B.S.E. 2012)
Q233. Raja, Roopa and Mala sharing profits and losses equally have fixed capitals of Rs. 12,00,000
Rs.9,00,000 and Rs.6,00,000 respectively. For the year ended 31st March, 2016, interest was credited to
them @ 6% instead of 5% p.a. Give adjusting entry.
Q234. P and Q were partners in a firm sharing profits in 7 : 3 ratio. Their fixed capitals were P
Rs.5,00,000 and Q Rs.8,00,000. For the year ended 31st March, 2018, interest on capital was credited
@ 12% instead of 10%. Show the necessary adjusting entry for the rectification of the error. Also show
the working notes clearly.
Q235.A, B and C are partners. Their fixed capitals as on 31st March, 2018 were A Rs.2,00,000, B
Rs.3,00,000 and C Rs.4,00,000. Profits for the year ended 31st March, 2018 amounting to Rs. 1,80,000
were distributed. Give the necessary adjusting entry in each of the following alternative cases :
Case (a) Interest on capital was credited @ 8% p.a. though there was no such provision in the partnership
deed.
Case (b) Interest on capital was not credited @ 8% p.a. though there was such provision in the
partnership deed.
Case (c) Interest on capital was credited @ 8% p.a. instead of 10% p.a.
Case (d) Interest on capital was credited @ 10% p.a. instead of 8% p.a.
Q236.E, F and G were partners in a firm sharing profits in the ratio of 3 : 2 : 1. After division of the
profits for the year ended 31-3-2016 their capitals were: E Rs.2,95,000; F Rs.3,30,000; and G
Rs.3,35,000. During the year they withdrew Rs.40,000 each. The profit of the year was Rs. 1,80,000.
The partnership deed provided that interest on capital will be allowed @ 12% p.a. While preparing the
final accounts, interest on partner’s capital was not allowed.
You are required to calculate the capital of E, F and G as on 1-4-2015 and pass the necessary adjustment
entry for providing interest on capital. Show your workings clearly.
Q237.A and B are partners in a business. Their capitals at the end of the year were Rs.6,40,000 and
Rs.4,60,000 respectively. During the year ending 31st March, 2016, A’s drawings and B’s drawings
were Rs.1,20,000 and Rs.1,40,000 respectively. Profits (before charging interest on capital) during the
year were Rs.4,00,000. Calculate interest on capital @ 12% p.a. for the year ending 31 st March, 2016.
Q238.. Pretn, Param and Priya were partners in a firm. Their fixed capitals were Prem Rs.2,00,000;
Param Rs.3,00,000 and Priya Rs.5,00,000. They were sharing profits in the ratio of their capitals. It was
decided that the new profit sharing ratio will be 2:1:2 and its effect will be introduced retrospectively
for the last four years. The profits of the last four years were Rs.2,00,000; Rs.3,50,000; Rs.4,75,000 and
Rs.5,25,000 respectively.

Showing your calculations clearly, pass a necessary adjustment entry to give effect to the new
agreement between Prem, Param and Priya.
Q239(HOTS) Alex, John and Sam are partners in a firm. Their capital accounts on 1st April, 2018,
stood at Rs.1,00,000, Rs.80,000 and Rs.60,000 respectively.
Each partner withdrew Rs.5,000 during the financial year 2018-19.
As per the provisions of their partnership deed :
(a) John was entitled to a salary of Rs. 1,000 per month.
(b) Interest on capital was to be allowed @10% per annum.
(c) Interest on drawings was to be charged @4% per annum.
(d) Profits and losses were to be shared in the ratio of their capitals.
The net profit of Rs.75,000 for the year ended 31st March 2019, was divided equally amongst the
partners without providing for the terms of the deed.
You are required to pass a Single Adjusting Journal Entry to rectify the error. (Show the working
clearly)
Q240. A, B and C were partners in a firm. On 1st April, 2018 their capitals stood as Rs.5,00,000;
Rs.2,50,000 and Rs.2,50,000 respectively. As per provisions of the partnership deed :
(i) C was entitled for a salary of Rs.5,000 per month.
(ii) A was entitled for a commission of Rs. 80,000 p.a.
(iii) Partners were entitled to interest on capital @6% p.a.
(iv) Partners will share profits in the ratio of capitals.
Net profit for the year ended 31.03.2019 was Rs.3,00,000 which was distributed equally, without taking
into consideration the above provisions. Showing your workings clearly, pass necessary adjustment
entry for the above.
Q241.ft. X, Y and Z are partners sharing profits and losses in the ratio of 16 : 12 : 7 with a minimum
profit of Rs. 10,000 for Z The profits for the year ended March 31,2018 amounted to Rs.39,500. Pass
necessary journal entries in the books of the firm.
Q242.. Pranshu and Himanshu are partners sharing profits and losses in the ratio of 3 : 2 respectively.
They admit Anshu as partner with 1/6 share in the profits of firm. Pranshu personally guaranteed that
Anshu’s share of profit would not be less than Rs.30,000 in any year. The net profit of the firm for the
year ending 31st March, 2019 was Rs.90,000. Prepare Profit and Loss Appropriation Account.
Q243.. A, B and C are partners in a firm sharing profits in the ratio of 2 : 2 : 1. According to the terms
of the partnership agreement C has to get a minimum of Rs.6,000 irrespective of the profits of the firm.
Any excess payable to C on account of such guarantee shall be borne by A. Profits earned during the
year ended 31st March, 2018 were Rs.25,000. Pass journal entries in the books of the firm.
Q244. A, B and C are partners sharing profits in the ratio of 5 : 4 : 1. C is given a guarantee that his
share of profits in any year will not be less than Rs.20,000. The profit for the year ending 31st March
2016 amounts to Rs. 1,40,000. Amount of shortfall in the profits given to C will be borne by A and B
in the ratio of 3 : 2. Pass necessary journal entry regarding deficiency borne by A and B.
Q245.Xand Yare in partnership sharing profits and losses in the ratio of 2 : 1. They decided to admit Z,
1
their manager, as a partner giving him 5th share of profit.
Z, while a manager, was receiving a salary of Rs.25,000 per annum plus a commission of 10% of the
net profits after charging such salary and commission.
It was also agreed that any excess amount which Z receives as a partner (over his salary and
commission) will be borne by X. Profit for the year amounted to Rs.3,22,000, before payment of salary
and commission. Prepare a Profit & Loss Appropriation Account.

Q246.. X, Y and Z were in partnership. X and Y sharing profits in the proportion of 2 : 1 and Z receiving
a salary of Rs. 1,790 per month plus 5% of the profit after charging his salary and commission or jth of
the profit of the firm whichever is more.
Any excess of the latter over the former received by Z is, under the partnership deed, to be borne by X.
The profit for the year ended 31st March, 2018 amounted to Rs. 1,28,520 after charging Z’s salary.
Prepare the Profit and Loss Appropriation Account showing the division of the profit of the year.
Q247. Following differences have arisen among P, Q and R. State who is correct in each case:
(a) P used Rs. 20,000 belonging to the firm and made a profit of Rs. 5,000. Q and R want the amount
to be given to the firm?
(b) 0 used Rs. 5,000 belonging to the firm and suffered a loss of Rs. 1,000. He wants the firm to bear
the loss?
(c) P and Q want to purchase goods from A Ltd., R does not agree?
(d) Q and R want to admit C as partner, P does not agree?
Q248.A, B and C are partners in a firm. They do not have a Partnership Deed. At the end of the first
year of the commencement of the firm, they have faced the following problems:
(a) A wants that interest on capital should be allowed to the partners but B and C do not agree.
(b) B wants that the partners should be allowed to draw salary but A and C do not agree.
(c) C wants that the loan given by him to the firm should bear interest @ 10% p.a. but A and B do not
agree.
(d) A and B having contributed larger amounts of capital, desire that the profits should be divided in
the ratio of their capital contribution but C does not agree.
State how you will settle these disputes if the partners approach you for the purpose.
Q249.Jaspal and Rosy were partners with capital contribution of Rs. 10,00,000 and Rs. 5,00,000
respectively. They do not have a Partnership Deed. Jaspal wants that profits of the firm should be shared
in their capital ratio. Rosy convinced Jaspal that profits should be shared equally. Explain how Rosy
would have convinced Jaspal for sharing the profit equally.
Q250. Harshad and Dhiman are in partnership since 1 st April, 2017. No partnership agreement was
made. They contributed Rs. 4,00,000 and 1,00,000 respectively as capital. In addition, Harshad
advanced an amount of Rs. 1,00,000 to the firm on 1st October, 2017. Due to long illness, Harshad
could not participate in business activities from 1st August to 30th September, 2017. The profit for the
year ended 31st March, 2018 amounted to Rs. 1,80,000. Dispute has arisen between Harshad and
Dhiman.
Harshad Claims:
(i) He should be given interest @ 10% per annum on capital and loan;
(ii) Profit should be distributed in proportion of capital;
Dhiman Claims:
(i) Profits should be distributed equally;
(ii) He should be allowed Rs. 2,000 p.m. as remuneration for the period he managed the business in the
absence of Harshad;
(iii) Interest on Capital and loan should be allowed @ 6% p.a.
You are required to settle the dispute between Harshad and Dhiman. Also prepare Profit and Loss
Appropriation Account. (NCERT, Modified)
Q251.A and B are partners from 1st April, 2017, without a Partnership Deed and they introduced
capitals of Rs. 35,000 and Rs. 20,000 respectively. On 1 st October, 2017, A advances a loan of Rs.
8,000 to the firm without any agreement as to interest. The Profit and Loss Account for the year ended
31st March, 2018 shows a profit of Rs. 15,000 but the partners cannot agree on payment of interest and
on the basis of division of profits.
You are required to divide the profits between them giving reasons for your method.

Q252.A and B are partners in a firm sharing profits in the ratio of 3 : 2. They had advanced to the firm
a sum of Rs. 30,000 as a loan in their profit-sharing ratio on 1st October, 2017. The Partnership Deed
is silent on interest on loans from partners. Compute interest payable by the firm to the partners,
assuming the firm closes its books every year on 31st March.
Q253 A and B are partners in a firm sharing profits equally. They had advanced to the firm a sum of
Rs. 30,000 as a loan in their profit-sharing ratio on 1 st October, 2017. The Partnership Deed is silent
on the question of interest on the loan from partners. Compute the interest payable by the firm to the
partners, assuming the firm closes its books on 31 st March each year.
Q254.X and Y are partners sharing profits and losses in the ratio of 2:3 with capitals of Rs. 2,00,000
and Rs. 3,00,000 respectively. On 1 st October, 2017, X and Y granted loans of Rs. 80,000 and Rs.
40,000 respectively to the firm. Show distribution of profits/losses for the year ended 31st March, 2018
in each of the following alternative cases:
Case 1. If the profits before interest for the year amounted to Rs. 21,000.
Case 4. If the loss before interest for the year amounted to Rs. 1,400.
Q255. Bat and Ball are partners sharing the profits in the ratio of 2 : 3 with capitals of Rs. 1,20,000 and
Rs. 60,000 respectively. On 1 st October, 2017, Bat and Ball granted loans of Rs. 2,40,000 and Rs.
1,20,000 respectively to the firm. Bat had allowed the firm to use his property for business for a monthly
rent of Rs. 5,000. The loss for the year ended 31st March, 2018 before rent and interest amounted to
Rs. 9,000. Show distribution of profit/loss.
Q256. X, Y and Z are partners in a firm sharing profits in 2 : 2 : 1 ratio. The fixed capitals of the partners
were: XRs. 5,00,000; /Rs. 5,00,000 and ZRs. 2,50,000 respectively. The Partnership Deed provides that
interest on capital is to be allowed @ 10% p.a. Z is to be allowed a salary of Rs. 2,000 per month. The
profit of the firm for the year ended 31st March, 2018 after debiting Z's salary was Rs. 4,00,000.
Q257. X and / are partners sharing profits in the ratio of 3 :2 with capitals of Rs. 80,000 and Rs. 60,000
respectively. Interest on capital is agreed @ 5% p.a. / is to be allowed an annual salary of Rs. 6,000
which has not been withdrawn. Profit for the year ended 31st March, 2018 before interest on capital but
after charging Y's salary amounted to Rs. 24,000.
A provision of 5% of the profit is to be made in respect of commission to the Manager. Prepare an
account showing the allocation of profits.
Q258. Prem and Manoj are partners in a firm sharing profits in the ratio of 3 : 2. The Partnership Deed
provided that Prem was to be paid salary of Rs. 2,500 per month and Manoj was to get a commission
of Rs. 10,000 per year. Interest on capital was to be allowed @ 5% p.a. and interest on drawings was to
be charged @ 6% p.a. Interest on Prem's drawings was Rs. 1,250 and on Manoj's drawings was Rs. 425.
Interest on Capitals of the partners were Rs. 10,000 and Rs. 7,500 respectively. The firm earned a profit
of Rs. 90,575 for the year ended 31 st March, 2018.
Prepare Profit and Loss Appropriation Account of the firm.
Q259. Reema and Seema are partners sharing profits equally. The Partnership Deed provides that both
Reema and Seema will get monthly salary of Rs. 15,000 each, Interest on Capital will be allowed @
5% p.a. and Interest on Drawings will be charged @ 10% p.a. Their capitals were Rs. 5,00,000 each
and drawings during the year were Rs. 60,000 each.
The firm incurred a loss of Rs. 1,00,000 during the year ended 31st March, 2018.
Prepare Profit and Loss Appropriation Account for the year ended 31st March, 2018.
Q260. Bhanu and Partap are partners sharings profits equally. Their fixed capitals as on 1st April, 2017
are Rs. 8,00,000 and Rs. 10,00,000 respectively. Their drawings during the year were Rs. 50,000 and

Rs. 1,00,000 respectively. Interest on Capital is a charge and is to be allowed @ 10% p.a. and interest
on drawings is to be charged @ 15% p.a. Profit for the year ended 31st March, 2018 was Rs. 1,20,000.
Q261. Amar and Bimal entered into partnership on 1st April, 2017 contributing Rs. 1,50,000 and Rs.
2,50,000 respecitvely towards capital. The Partnership Deed provided for interest on capital @ 10%
p.a. It also provided that Capital Accounts shall be maintained following Fixed Capital Accounts
method. The firm earned net profit of Rs. 1,00,000 for the year ended 31st March, 2018.
Pass the Journal entry for interest on capital.
Q262. Kamal and Kapil are partners having fixed capitals of Rs. 5,00,000 each as on 31st March, 2017.
Kamal introduced further captial of Rs. 1,00,000 on 1st October, 2017 whereas Kapil withdrew Rs.
1,00,000 on 1 st October, 2017 out of capital.
Interest on capital is to be allowed @ 10% p.a.
The firm earned net profit of Rs. 6,00,000 for the year ended 31st March, 2018.
Pass the Journal entry for interest on capital and prepare Profit and Loss Appropriation Account.
Q263. Simran and Reema are partners sharing profits in the ratio of 3 : 2. Their capitals as on 31st
March, 2017 were Rs. 2,00,000 each whereas Current Accounts had balances of Rs. 50,000 and Rs.
25,000 respectively. Interest is to be allowed @ 5% p.a. on balances in Capital Accounts. The firm
earned net profit of Rs. 3,00,000 for the year ended 31st March, 2018.
Pass the Journal entries for interest on capital and distribution of profit. Also prepare Profit and Loss
Appropriation Account for the year.
Q264.Anita and Ankita are partners sharing profits equally. Their capitals, maintained following
Fluctuating Capital Accounts Method, as on 31st March, 2017 were Rs. 5,00,000 and Rs. 4,00,000
respectively. Partnership Deed provided to allow interest on capital @ 10% p.a. The firm earned net
profit of Rs. 2,00,000 for the year ended 31 st March, 2018.
Pass the Journal entry for interest on capital.
Q265. Ashish and Aakash are partners sharing profit in the ratio of 3 :2. Their Capital Accounts showed
a credit balance of Rs. 5,00,000 and Rs. 6,00,000 respectively as on 31st March, 2018 after debit of
drawings during the year of Rs. 1,50,000 and Rs. 1,00,000 respectively. Net profit for the year ended
31 st March was Rs. 5,00,000. Interest on capital is to be allowed @ 10% p.a.
Pass the journal entry for interest on capital and prepare Profit and Loss Appropriation Account.
Q267. Naresh and Sukesh are partners with capitals of Rs. 3,00,000 each as on 31st March, 2018. Naresh
had withdrawn Rs. 50,000 against capital on 1 st October, 2017 and also Rs. 1,00,000 besides the
drawings against capital. Sukesh also had drawings of Rs. 1,00,000.
Interest on capital is to be allowed @ 10% p.a.
Net profit for the year was Rs. 2,00,000, which is yet to be distributed.
Pass the Journal entries for interest on capital and distribution of profit.
Q268. On 1 st April, 2013, Jay and Vijay entered into partnership for supplying laboratory equipments
to government schools situated in remote and backward areas. They contributed capitals of Rs. 80,000
and Rs. 50,000 respectively and agreed to share the profits in the ratio of 3 : 2. The Partnership Deed
provided that interest on capital shall be allowed at 9% per annum. During the year the firm earned a
profit of Rs. 7,800. Showing your calculations clearly, prepare 'Profit and Loss Appropriation Account'
of Jay and Vijay for the year ended 31st March, 2014. (Delhi 2015)
Q269. A, B, C and D are partners in a firm sharing profits as 4 : 3 : 2 : 1 respectively. It earned a profit
of Rs. 1,80,000 for the year ended 31st March, 2018. As per the Partnership Deed, they are to charge a
commission @ 20% of the profit after charging such commission which they will share as 2 : 3 : 2 : 3.
You are required to show appropriation of profits among the partners.

Q270. X and Y are partners in a firm. X is entitled to a salary of Rs. 10,000 per month and commission
of 10% of the net profit after partners' salaries but before charging commission. Y is entitled to a salary
of Rs. 25,000 p.a. and commission of 10% of the net profit after charging all commission and partners'
salaries. Net profit before providing for partners' salaries and commission for the year ended 31st
March, 2018 was Rs. 4,20,000. Show distribution of profit.
Q271.B and M are partners in a firm. They withdrew Rs. 48,000 and Rs. 36,000 respectively during the
year evenly in the middle of every month. According to the partnership agreement, interest on drawings
is to be charged @ 10% p.a.
Calculate interest on drawings of the partners using the appropriate formula.
Q272. A and B are partners sharing profits equally. A drew regularly Rs. 4,000 in the beginning of
every month for six months ended 30th September, 2018. Calculate interest on drawings @ 5% p.a. for
a period of six months.
Q273.A and B are partners sharing profits equally. A drew regularly Rs. 4,000 at the end of every month
for six months ended 30th September, 2018. Calculate interest on drawings @ 5% p.a. for a period of
six months.
Q274. Calculate interest on drawings of Mr. Ashok @ 10% p.a. for the year ended 31st March, 2018,
in each of the following alternative cases:
Case 1. If he withdrew Rs. 7,500 in the beginning of each quarter.
Case 2, If he withdrew Rs. 7,500 at the end of each quarter.
Case 3. If he withdrew Rs. 7,500 during the middle of each quarter.
Q275. Kanika and Gautam are partners doing a dry-cleaning business in Lucknow, sharing profits in
the ratio 2 :1 with capitals Rs. 5,00,000 and Rs. 4,00,000 respectively. Kanika withdrew the following
amounts during the year to pay the hostel expenses of her son:
1st April Rs. 10,000
1st June Rs. 9,000
1st November Rs. 14,000
1st December Rs. 5,000
Gautam withdrew Rs. 15,000 on the first day of April, July, October and January to pay rent for the
accommodation of his family. He also paid Rs. 20,000 per month as rent for the office of partnership
which was in a nearby shopping complex.
Calculate interest on drawings @ 6% p.a. (CBSE Sample Question Paper 2014-15)
Q276. A and B are partners sharing Profit and Loss in the ratio of 3 : 2 having Capital Account balances
of Rs. 50,000 and Rs. 40,000 on 1 st April, 2017. On 1 st July, 2017, A introduced Rs. 10,000 as his
additional capital whereas B introduced only Rs. 1,000. Interest on capital is allowed to partners @ 10%
p.a.
Calculate interest on capital for the financial year ended 31st March, 2018.
Q277. Ram and Mohan are partners in a business. Their capitals at the end of the year were Rs. 24,000
and Rs. 18,000 respectively. During the year, Ram's drawings and Mohan's drawings were Rs. 4,000
and Rs. 6,000 respectively. Profit (before charging interest on capital) during the year was Rs. 16,000.
Calculate interest on capital @ 5% p.a. for the year ended 31st March, 2018.
Q278. Following is the extract of the Balance Sheet of Neelkant and Mahadev as on 31st March, 2018:
Neelkant's Capital 10,00,000 Sundry Assets 30,00,000
Mahadev's Capital 10,00,000

Neelkant's Current A/c 1,00,000
Mahadev' Current A/c 1,00,000
Profit and Loss Appropriation A/c 8,00,000
(March 2018)
30,00,000 30,00,000
During the year, Mahadev's drawings were Rs. 30,000. Profits during the year ended 31st March, 2018
is Rs. 10,00,000. Calculate interest on capital @ 5% p.a. for the year ending 31 st March, 2018.
(NCERT, Modified)
Q279. From the following Balance Sheet of Long and Short, calculate interest on capital @ 8% p.a. for
the year ended 31st March, 2018:
Long's Capital A/c 1,20,000 Fixed Assets 3,00,000
Short's Capital A/c 1,40,000 Other Assets 60,000
General Reserve 1,00,000
3,60,000 3,60,000
During the year, Long withdrew Rs. 40,000 and Short withdrew Rs. 50,000. Profit for the year was Rs.
1,50,000 out of which Rs. 1,00,000 was transferred to General Reserve.
Q280. X and Y contribute Rs. 20,000 and Rs. 10,000 respectively towards capital. They decide to allow
interest on capital @ 6% p.a. Their respective share of profits is 2 : 3 and the net profit for the year is
Rs. 1,500. Show distribution of profits:
*. (i) where there is no agreement except for interest on capitals; and
(ii) where there is an agreement that the interest on capital as a charge.
Q281.A and B started business on 1st April, 2017 with capitals of Rs. 15,00,000 and Rs. 9,00,000
respectively. On 1st October, 2017, they decided that their capitals should be Rs. 12,00,000 each. The
necessary adjustments in capitals were made by introducing or withdrawing by cheque. Interest on
capital is allowed @ 8% p.a. Compute interest on capital for the year ended 31st March, 2018.
Q282. X and Y are partners in a firm sharing profits and losses in the ratio of 3 : 2. On 31st March,
2018 after closing the books of account, their Capital Accounts stood at Rs. 4,80,000 and Rs. 6,00,000
respectively. On 1 st May, 2017, X introduced an additional capital of Rs. 1,20,000 and Y withdrew Rs.
60,000 from his capital. On 1st October, 2017, X withdrew Rs. 2,40,000 from his capital and Y
introduced Rs. 3,00,000. Interest on capital is allowed at 6% p.a. Subsequently, it was discovered that
interest on capital @ 6% p.a. had been omitted. The profits for the year ended 31st March, 2018
amounted to Rs. 2,40,000 and the partners' drawings had been: X—Rs. 1,20,000 and Y—Rs. 60,000.
Compute the interest on capital if the capitals are
(a) fixed, and (b) fluctuating.
Q283. Amit and Vijay started a partnership business on 1st April, 2017. Their capital contributions were
Rs. 2,00,000 and Rs. 1,50,000 respectively. The Partnership Deed provided that:
(a) Interest on capital be allowed @ 10% p.a.
(b) Amit to get a salary of Rs. 2,000 per month and Vijay Rs. 3,000 per month.
(c) Profits are to be shared in the ratio of 3 : 2.
Profit for the year ended 31st March, 2018 before above appropriations was Rs. 2,16,000. Interest on
drawings amounted to Rs. 2,200 for Amit and Rs. 2,500 for Vijay.
Q284. Show how the following will be recorded in the Capital Accounts of the Partners Sohan and
Mohan when
their capitals are fluctuating: Sohan (Rs.) Mohan (Rs.)

Capitals on 1 st April, 2017 4,00,000 3,00,000
Drawings during 2017-18 50,000 30,000
Interest on Capital 5% 5%
Interest on Drawings 1,250 750
Share of Profit for 2017-18 60,000 50,000
Partner's Salary 36,000
Commission 5,000 3,000
Q285. Sajal and Kajal are partners sharing profits and losses in the ratio of 2:1. On 1 st April, 2017 their
Capitals were: Sajal—Rs. 50,000 and Kajal—Rs. 40,000.
Prepare Profit and Loss Appropriation Account and the Partners' Capital Accounts at the end of the year
after considering the following items:
(a) Interest on Capital is to be allowed @ 5% p.a.
(b) Interest on the loan advanced by Kajal for the whole year, the amount of loan being Rs. 30,000.
(c) Interest on partners' drawings @ 6% p.a. Drawings: Sajal Rs. 10,000 and Kajal Rs. 8,000.
(d) 10% of the divisible profit is to be transferred to Reserve.
The net profit for the year ended 31 st March, 2018 Rs. 68,460.
Note: Net profit means net profit after debit of interest on loan by the partner.
Q287. On 1 st April, 2017, A and B entered into partnership contributing Rs. 60,000 and Rs. 45,000
respectively. They agreed to share profits and losses in the ratio of 3 : 2. B is allowed salary of Rs.
12,000 per year. Interest on capital is to be allowed @ 10% p.a. During the year, A withdrew Rs. 9,000
and B withdrew Rs. 18,000 as drawings. Interest on drawings paid by A and B were Rs. 150 and Rs.
210 respectively. Profit for the year ended 31st March, 2018 before the above adjustments was Rs.
35,000. Show distribution of profits by preparing Profit and Loss Appropriation Account of the firm.
Prepare Partners' Capital Accounts also.
Q288. A and B are partners sharing profits and losses in the ratio of 3 :1. On 1 st April, 2017, their
capitals were: A Rs. 50,000 and B Rs. 30,000. During the year ended 31 st March, 2018 they earned a
net profit of Rs. 50,000. The terms of partnership are:
(a) Interest on capital is to be allowed @ 6% p.a.
(b) A will get a commission @ 2% on turnover.
(c) B will get a salary of Rs. 500 per month.
(d) B will get commission of 5% on profits after deduction of all expenses including such commission.
Partners' drawings for the year were: A Rs. 8,000 and B Rs. 6,000. Turnover for the year was Rs.
3,00,000.
After considering the above facts, you are required to prepare Profit and Loss Appropriation Account
and Partners' Capital Accounts.
Q289. A, B and C were partners in a firm having capitals of Rs. 50,000; Rs. 50,000 and Rs. 1,00,000
respectively. Their Current Account balances were A: Rs. 10,000; B: Rs. 5,000 and C: Rs. 2,000 (Dr.).
According to the Partnership Deed the partners were entitled to an interest on Capital @ 10% p.a. C
being the working partner was also entitled to a salary of Rs. 12,000 p.a. The profits were to be divided
as:
(a) The first Rs. 20,000 in proportion to their capitals.
(b) Next Rs. 30,000 in the ratio of 5 : 3 : 2.
The firm earned net profit of Rs. 1,72,000 before charging any of the above items.
Prepare Profit and Loss Appropriation Account and pass necessary Journal entry for the appropriation
of profits. (Foreign 2009)
Q290. A and B are partners sharing profits in the ratio of 3 :2 with capitals of Rs. 50,000 and Rs. 30,000
respectively. Interest on capital is agreed @ 6% p.a. B is to be allowed an annual salary of Rs. 2,500.
During the year profit prior to interest on capital but after charging B's salary amounted to Rs. 12,500.
A provision of 5% of the profits is to be made in respect of Manager's Commission.

Prepare an account showing the allocation of profits and the Partners' Capital Accounts.
Q291. P, 0 and P are in a partnership and as at 1 st April, 2017 their respective capitals were:Rs. 40,000,
Rs. 30,000 and Rs. 30,000. Q is entitled to a salary of Rs. 6,000 and R Rs. 4,000 p.a. payable before
division of profits. Interest is allowed on capital @ 5% p.a. and is not charged on drawings. Of the
divisible profits, P is entitled to 50% of the first Rs. 10,000, Q to 30% and R to 20%, rest of the profits
are shared equally. Profits for the year ended 31st March, 2018, after debiting partners' salaries but
before charging interest on capital was Rs. 21,000 and the partners had drawn Rs. 10,000 each on
account of salaries, interest and profit.
Prepare Profit and Loss Appropriation Account for the year ended 31st March, 2018 showing the
distribution of profit and the Capital Accounts of the Partners.
Q292. A, B and C are partners sharing profits and losses in the ratio of A 1/2, B 3/10, C 1/5 after
providing for interest @ 5% on their respective capitals, viz., A Rs. 50,000; 8Rs. 30,000 and CRs.
20,000 and allowing B and C a salary of Rs. 5,000 each per annum. During the year ended 31st March,
2018, A has drawn Rs. 10,000 and B and C in addition to their salaries have drawn Rs. 2,500 and Rs.
1,000 respectively. The Profit and Loss Account for the year ended 31st March, 2018 showed a net
profit ofRs. 45,000 before charging (a) interest on capital and (b) partners' salaries. On 1st April, 2017,
the balances in the Current Accounts of the partners were A (Cr.) Rs. 4,500; B (Cr.) Rs. 1,500 and C
(Cr.) Rs. 1,000. Interest is not charged on Drawings or Current Account balances. Show Partners'
Capital and Current Accounts as at 31st March, 2018 after division of profits in accordance with the
partnership agreement.
Q293. Ali and Bahadur are partners in a firm sharing profits and losses as Ali 70% and Bahadur 30%.
Their respective capitals as at 1st April, 2017 stand as Ali Rs. 25,000 and Bahadur Rs. 20,000. The
partners are allowed interest on capitals @ 5% p.a. Drawings of the partners during the year ended 31st
March, 2018 amounted to Rs. 3,500 and Rs. 2,500 respectively.
Profit for the year, before charging interest on capital and annual salary of Bahadur @ Rs. 3,000,
amounted to Rs. 40,000,10% of divisible profit is to be transferred to Reserve.
You are asked to show Partners' Current Accounts and Capital Accounts recording the above
transactions.
Q294. Amal, Bimal and Kamal are three partners. On 1 st April, 2017, their Capitals stood as: Amal
Rs. 40,000, Bimal Rs. 30,000 and Kamal Rs. 25,000. It was decided that:
(a) they would receive interest on Capital @ 5% p.a.,
(b) Amal would get a salary of Rs. 250 per month,
(c) Bimal would receive commission @ 4% 0n net profit after deducting commission, interest on capital
and salary, and
(d) After deducting all of these 10% of the profit should be transferred to the General Reserve.
Before the above items were taken into account, the profit for the year ended 31st March, 2018 was Rs.
33,360. Prepare Profit and Loss Appropriation Account and the Capital Accounts of the Partners.
Q295. Amit, Binita and Charu are three partners. On 1st April, 2017, their Capitals stood as: Amit Rs.
1,00,000, Binita Rs. 2,00,000 and Charu Rs. 3,00,000. It was decided that:
(b) Amit would get a salary of Rs. 10,000 per month,
(c) Binita would receive commission @ 5% of net profit after deduction of commission, and
(d) 10% of the net profit would be transferred to the General Reserve.
5,00,000. Prepare Profit and Loss Appropriation Account and the Capital Accounts of the Partners.
Q296. Anita, Bimla and Cherry are three partners. On 1st April, 2017, their Capitals stood as: Anita Rs.
1,00,000, Bimla Rs. 2,00,000 and Cherry Rs. 3,00,000. It was decided that:
(b) Anita would get a salary of Rs. 5,000 per month,

(c) Bimla would receive commission @ 5% of net profit after deduction of commission, and
(d) 10% of the divisible profit would be transferred to the General Reserve.
5,00,000. Prepare Profit and Loss Appropriation Account and the Capital Accounts of the Partners.
Q297. Anshul and Asha are partners sharing profits and losses in the ratio of 3 : 2. Anshul being a non-
working partner contributed Rs. 8,00,000 as her capital. Asha being a working partner did not contribute
capital. The Partnership Deed provides for interest on capital @ 5% and salary to every working partner
@ Rs. 2,000 per month. Net profit before providing for interest on capital and partner's salary for the
year ended 31st March, 2018 was Rs. 32,000.
Show distribution of profits.
Q298. X and / entered into partnership on 1 st April, 2017 and contributed Rs. 2,00,000 and Rs. 1,50,000
respectively as their capitals. On 1 st October, 2017, X provided Rs. 50,000 as loan to the firm. As per
the provisions of the Partnership Deed:
(i) 20% of Profits before charging Interest on Drawings but after making appropriations to be transferred
to General Reserve.
(ii) Interest on capital at 12% p.a. and Interest on Drawings @ 10% p.a.
(iii) X to get monthly salary of Rs. 5,000 and / to get salary of Rs. 22,500 per quarter.
(iv) X is entitled to a commission of 5% on sales. Sales for the year were Rs. 3,50,000.
(v) Profit and Loss to be shared in the ratio of their capital contribution up to Rs. 1,75,000 and above
Rs. 1,75,000 equally.
The profit for the year ended 31st March, 2018, before providing for any interest was Rs. 4,61,000. The
drawings of X and / were Rs. 1,00,000 and Rs. 1,25,000 respectively.
Pass the necessary Journal entries relating to appropriation out of profits. Prepare Profit and Loss
Appropriation Account and the Partners' Capital Accounts.
Q299. P and Q were partners in a firm sharing profits and losses equally. Their fixed capitals were Rs.
2,00,000 and Rs. 3,00,000 respectively. The Partnership Deed provided for interest on capital @ 12%
per annum. For the year ended 31st March, 2016, the profits of the firm were distributed without
providing interest on capital.
Pass necessary adjustment entry to rectify the error. (Outside Delhi 2017)
Q300. Reya, Mona and Nisha shared profits in the ratio of 3 : 2 : 1. The profits for the last three years
were Rs. 1,40,000; Rs. 84,000 and Rs. 1,06,000 respectively. These profits were by mistake shared
equally for all the three years. It is now decided to correct the error.
Give necessary Journal entry for the same.
Q301. Profits earned by a partnership firm for the year ended 31st March, 2017 were distributed equally
between the partners—Pankaj and Anu—without allowing interest on capital. Interest due on capital
was Pankaj—Rs. 3,000 and Anu—Rs. 1,000.
Pass necessary adjustment entry.
Q302. Azad and Benny are equal partners. Their capitals are Rs. 40,000 and Rs. 80,000 respectively.
After
the accounts for the year have been prepared, it is discovered that interest @ 5% p.a. as provided in the
partnership agreement has not been credited to the Capital Accounts before distribution of profits. It is
decided to make an adjustment entry in the beginning of the next year. Record the necessary Journal
entry. (NCERT)
Q303. Ram and Mohan are equal partners. Their capitals are Rs. 4,000 and Rs. 8,000 respectively. After
the accounts for the year are prepared it is discovered that interest @ 5% p.a. on capital as provided in
the Partnership Deed has not been credited to the Capital Accounts before distribution of profits. It is
decided to make an adjusting entry in the beginning of the next year.
Give necessary adjustment entry.

Q304. Mita and Usha are partners in a firm sharing profits in the ratio of 2 : 3. Their Capital Accounts
as on 1 st April, 2015 showed balances of Rs. 1,40,000 and Rs. 1,20,000 respectively. The drawings of
Mita and Usha during the year 2015-16 were Rs. 32,000 and Rs. 24,000 respectively. Both the amounts
were withdrawn on 1st January 2016. It was subsequently found that the following items had been
omitted while preparing the final accounts for the year ended 31st March, 2016:
(a) Interest on Capital @ 6% p.a.
(b) Interest on Drawings @ 6% p.a.
(c) Mita was entitled to a commission of Rs. 8,000 for the whole year.
Showing your working clearly, pass a rectifying entry in the books of the firm. [A! 2017 C)
Q305. Mohan, Vijay and Anil are partners, the balances of their Capital Accounts being Rs. 30,000, Rs.
25,000 and Rs. 20,000 respectively. In arriving at these figures, the profits for the year ended 31 st
March, 2016, Rs. 24,000 had already been credited to partners in the proportion in which they shared
profits. Their drawings were Rs. 5,000 (Mohan), Rs. 4,000 (Vijay) and Rs. 3,000 (Anil) during the year.
Subsequently, the following omissions were noticed and it was decided to bring them into account:
(a) Interest on capital @ 10% p.a.
(b) Interest on drawings: Mohan Rs. 250, Vijay Rs. 200 and Anil Rs. 150.
Make necessary corrections through a Journal entry and show your workings clearly.
Q306. Piya and Bina are partners in a firm sharing profits and losses in the ratio of 3 : 2. Following was
the Balance Sheet of the firm as on 31st March, 2016:
Capitals: Sundry Assets 1,20,000
Piya 80,000
Bina 40,000 1,20,000
1,20,000 1,20,000
The profits Rs. 30,000 for the year ended 31st March, 2016 were divided between the partners without
allowing interest on capital @ 12% p.a. and salary to Piya @ Rs. 1,000 per month. During the year Piya
withdrew Rs. 8,000 and Bina withdrew Rs. 4,000. Showing your working notes clearly, pass the
necessary rectifying entry. (Delhi 2017 Q
Q307. The firm of Harry, Porter and Ali, who have been sharing profits in the ratio of 2 : 2 :1, have
existed for same years. Ali wants that he should get equal share in the profits with Harry and Porter and
he further wishes that the change in the profit-sharing ratio should come into effect retrospectively were
for the three years. Harry and Porter have agreement on this account. The profits for the last three years
were:
Year 2015-16 2016-17 2017-18
PrgfiliRs.) 2,20,000 2,40,000 2,90,000
Show adjustment of profits by means of a single adjustment Journal entry. (NCERT, Modified)
Q308. On 31 st March, 2018, after the closing of the accounts, the Capital Accounts of P, Q and R stood
in the books of the firm at Rs. 40,000; Rs. 30,000 and Rs. 20,000 respectively. Subsequently, it was
discovered that interest on capital @ 5% had been omitted. Profit for the year ended 31st March, 2018
amounted to Rs. 60,000 and the partners' drawings had been P—Rs. 10,000, Q—Rs. 7,500 and R—Rs.
4,500. The profit-sharing ratio of P, Q and R is 3 :2 :1. Give necessary adjustment entry.
Q309. A, B and C were partners. Their capitals were A—Rs. 30,000; B—Rs. 20,000 and C—Rs. 10,000
respectively. According to the Partnership Deed, they were entitled to an interest on capital @ 5% p.a.
In addition, B was also entitled to draw a salary of Rs. 500 per month. C was entitled to a commission

The net profit for the year were Rs. 30,000 distributed in the ratio of capitals without providing for any
of the above adjustments. The profits were to be shared in the ratio of 5 : 3 : 2.
Pass necessary adjustment entry showing the workings clearly. (Delhi2010)
Q310. Mannu and Shristhi are partners in a firm sharing profit in the ratio of 3 : 2. Following is the
balance Sheet of the firm as on 31st March, 2018:
Mannu's Capital 30,000 Drawings:
Shristhi's Capital 10,000 40,000 Mannu 4,000
Shristhi 2,000 6,000
Other Assets 34,000
40,000 40,000
Profit for the year ended 31st March, 2018 was Rs. 5,000 which was divided in the agreed ratio, but
interest @ 5% p.a. on capital and @ 6% p.a. on drawings was inadvertently enquired. Adjust interest
on drawings on an average basis for 6 months. Give the adjustment entry. (NCERT, Modified)
Q311. A, B and C are partners in a firm. Net profit of the firm for the year ended 31 st March, 2018 is
Rs. 30,000, which has been duly distributed among the partners, in their agreed ratio of 3 : 1 : 1
respectively. It is discovered on 10th April, 2018 that the undermentioned transactions were not passed
through the books of account of the firm for the year ended 31st March, 2018.
(a) Interest on Capital @ 6% per annum, the capital of A, B and C being Rs. 50,000; Rs. 40,000 and
Rs. 30,000 respectively.
(b) Interest on drawings: A Rs. 350; B Rs. 250; C Rs. 150.
(c) Partners' Salaries: A Rs. 5,000; B Rs. 7,500.
(d) Commission due to A (for some special transaction) Rs. 3,000.
You are required to pass a Journal entry, which will not affect Profit and Loss Account of the firm and
rectify the position of partners inter se.
Q312. On 31st March, 2014, the balances in the Capital Accounts of Saroj, Mahinder and Umar after
making adjustments for profits and drawings, etc., were Rs. 80,000, Rs. 60,000 and Rs. 40,000
respectively. Subsequently, it was discovered that the interest on capital and drawings has been omitted.
(a) The profit for the year ended 31st March, 2014 was Rs. 80,000.
(b) During the year Saroj and Mahinder each withdrew a sum of Rs. 24,000 in equal instalments in the
end of each month and Umar withdrew Rs. 36,000.
(c) The interest on drawings was to be charged @ 5% p.a. and interest on capital was to be allowed @
10% p.a.
(d) The profit-sharing ratio among partners was 4:3:1.
Showing your workings clearly, pass the necessary rectifying entry. (Delhi2015 Q
Q313. The Capitals of A, B and C as on 31st March, 2018 amounted to Rs. 90,000, Rs. 3,30,000 and
Rs. 6,60,000 respectively. The profits amounting Rs. 1,80,000 for the year 2017-18 were distributed in
the ratio of 4:1:1 after allowing Interest on Capital @ 10% p.a. During the year, each partner withdrew
Rs. 3,60,000. The Partnership Deed was silent as to profit-sharing ratio but provided for interest on
capital @ 12%.
Pass the necessary adjustment entry showing the working clearly.
Q314. The Capital Accounts of A and B stood at Rs. 4,00,000 and Rs. 3,00,000 respectively after
necessary adjustments in respect of the drawings and the net profit for the year ended 31st March, 2018.
It was subsequently discovered that 5% p.a. interest on capital and also drawings were not taken into
account in arriving at the distributable profit. The drawings of the partners had been: A—Rs. 12,000
drawn at the end of each quarter and B—Rs. 18,000 drawn at the end of each half year.

The profit for the year as adjusted amounted to Rs. 2,00,000. The partners share profits in the ratio of 3
: 2. You are required to pass Journal entries and show adjusted Capital Accounts of the partners.
Q315. X and Y are partners sharing profits and losses in the ratio of 3 : 2. They employed Z as their
Manager to whom they paid a salary of Rs. 7,500 per month. Z had deposited Rs. 2,00,000 on which
interest was payable @ 9% p.a. At the end off the accounting year (i.e., 31st March, 2018) 2017-18
(after division of the year's profits), it was decided that Z should be treated as a partner with effect from
1 st April, 2014 with 1 /6th share of profits, his deposit being considered as capital carrying interest @
6% p.a. like capitals of other partners. The firm's profits and losses after allowing interest on capitals
were—2014-15: Profit Rs. 5,90,000; 2015-16: Profit Rs. 6,26,000; 2016-17: Loss Rs. 40,000 and 2017-
18: Profit Rs. 7,80,000. Record necessary Journal entries to give effect to the above.
Note: Interest on capital is to be allowed as a charge.
Q316. A and B are partners sharing profits in the ratio of 2 : 1. They decided to admit C, their manager,
as a partner from 1 st April, 2017, giving him 1 /5th share of profit. C, while a manager, was getting a
salary of Rs. 50,000 p.a. plus a commission of 10% of the net profit after charging such salary and
commission. It was also agreed that any excess amount which C receives as a partner (over his salary
and commission) will be borne by A. Profit for the year ended 31st March, 2018 amounted to Rs.
6,44,000, before payment of salary and commission. Prepare Profit and Loss Appropriation Account.
Q317. Xand Yare partners in a firm sharing profits in the ratio of 3:2. They have a manager, Z, who
gets Rs. 10,000 p.m. salary plus commission of 5% of the profit after charging his salary and
commission. Now, they decide to admitZasa partner, giving him 1 /5th share in the profits of the firm.
Any excess amount which Z receives as a partner (over his salary and commission) will be borne by X.
The profit for the year ended 31 st March, 2018 amounted to Rs. 8,40,000 after charging Z's salary.
Prepare Profit and Loss Appropriation Account showing the division of profit for the year.
Q318. A, B and C were in partnership sharing profits and losses in the ratio of 4 : 2 : 1 respectively. It
was provided that C's share in profit for a year would not be less than Rs. 7,500. The profit for the year
ended 31 st March, 2018 amounted to Rs. 31,500. You are required to show the appropriation among
the partners. The Profit and Loss Appropriation Account is not required.
Q319. A and B are partners sharing profits in the ratio of 3 : 2. C was admitted for 1 /6th share of profit
with a minimum guaranteed amount of Rs. 10,000. At the close of the first financial year the firm earned
a profit of Rs. 54,000. Find out the share of profit which A, B and C will get. (Foreign 2010)
Q320. X, YandZentered into partnership on 1st October, 2017 to share profits and losses in the ratio of
4: 3 :3. X, personally guaranteed that Z's share of profit after charging interest on capital @ 10% p.a.
would not be less than Rs. 80,000 in any year. The capital contributions were: X—Rs. 3,00,000, Y—
Rs. 2,00,000 and Z—Rs. 1,50,000.
The profit for the year ended 31st March, 2018 amounted to Rs. 1,60,000. Prepare Profit and Loss
Appropriation Account.
Q321. A, B and C are partners in a firm. Their profit-sharing ratio is 2 : 2 :1. C is guaranteed a minimum
amount of Rs. 10,000 as share of profit every year. Any deficiency arising on that amount shall be met
by B. The profits for the two years ended 31st March, 2017 and 2018 were Rs. 40,000 and Rs. 60,000
respectively. Prepare Profit and Loss Appropriation Account for the two years.
Q322. A, B and C are partners sharing profits in the ratio of 5:4:1. C is given a guarantee that his
minimum share of profit in any given year would be at least Rs. 5,000. Deficiency, if any, would be
borne by A and B equally. The profit for the year 2017-18 amounted to Rs. 40,000.
Pass necessary Journal entries in the books of the firm.
Q323. Vikas and Vivek were partners in a firm sharing profits in the ratio of 3 : 2. On 1st April, 2017,
they admitted Vandana as a new partner for 1/8th share in the profits with a guaranteed profit of Rs.

1,50,000. The new profit- sharing ratio between Vikas and Vivek will remain same but they decided to
bear any deficiency on account of guarantee to Vandana in the ratio 3:2. The profit of the firm for the
year ended 31 st March, 2018 was Rs. 9,00,000. Prepare Profit and Loss Appropriation Account of
Vikas, Vivek and Vandana for the year ended 31st March, 2018. [A! 2016, Modified)
Q324. Pranshu and Himanshu are partners sharing profits and losses in the ratio of 3:2 respectively.
They admit Anshu as partner with 1/6 share in the profits of the firm. Pranshu personally guaranteed
that Anshu's share of profit would not be less than Rs. 30,000 in any year. The net profit of the firm for
the year ending 31 st March, 2013 was Rs. 90,000. Prepare Profit and Loss Appropriation Account.
(AI2014 C)
Q325. A, B and C are partners in a firm sharing profits in the ratio of 3 : 2 : 1. They earned a profit of
Rs. 30,000 during 2017-18. Distribute profit among A, B and C if:
(a) C's share of profit is guaranteed to be Rs. 6,000 minimum.
(b) Minimum profit payable to C amounting to Rs. 6,000 is guaranteed by A.
(c) Guaranteed minimum profit of Rs. 6,000 payable to C is guranteed by B.
(d) Any deficiency after making payment of guaranteed Rs. 6,000 will be borne by A and B in the ratio
of 3 :1.
Q326. A and B are in partnership sharing profits and losses in the ratio of 3 : 2. They decided to admit
C, their Manager, as a partner with effect from 1st April, 2017, giving him 1 /4th share of profits.
C, while a Manager, was in receipt of a salary of Rs. 27,000 p.a. and a commission of 10% of the net
profits after charging such salary and commission.
In terms of the Partnership Deed, any excess amount, which C will be entitled to receive as a partner
over the amount which would have been due to him if he continued to be the Manager, would have to
be personally borne by A out of his share of profit. Profit for the year ended 31 st March, 2018 amounted
to Rs. 2,25,000. You are required to show Profit and Loss Appropriation Account for the year ended
31st March, 2018.
Q327. Asgar, Chaman and Dholu are partners in a firm. Their Capital Accounts stood at Rs. 6,00,000;
Rs. 5,00,000 and Rs. 4,00,000 respectively on 1 st April, 2017. They shared Profits and Losses in the
proportion of 4 : 2 : 3. Partners are entitled to interest on capital @ 8% per annum and salary to Chaman
and Dholu @Rs. 7,000 per month and Rs. 10,000 per quarter respectively as per the provision of the
Partnership Deed. Dholu's share of profit (excluding interest on capital but including salary) is
guaranteed at a minimum of Rs. 1,10,000 p.a. Any deficiency arising on that account shall be met by
Asgar. The profit for the year ended 31 st March, 2018 amounted to Rs. 4,24,000.
Prepare Profit and Loss Appropriation Account for the year ended 31 st March, 2018. (Delhi 2013,
Modified)
Q328. Ankur, Bhavna and Disha are partners in a firm. On 1 st April, 2017, the balance in their Capital
Accounts stood at Rs. 14,00,000, Rs. 6,00,000 and Rs. 4,00,000 respectively. They shared profits in the
proportion of 7:3:2 respectively. Partners are entitled to interest on capital @ 6% per annum and salary
to Bhavna @ Rs. 50,000 p.a. and a commission of Rs. 3,000 per month to Disha as per the provisions
of the Partnership Deed. Bhavna's share of profit (excluding interest on capital) is guaranteed at not less
than Rs. 1,70,000 p.a. Disha's share of profit (including interest on capital but excluding commission)
is guaranteed at not less than Rs. 1,50,000 p.a. Any deficiency arising on that account shall be met by
Ankur. The profit of the firm for the year ended 31st March, 2018 amounted to Rs. 9,50,000.
Prepare 'Profit and Loss Appropriation Account'for the year ended 31st March, 2018. (Al2013,
Modified)
Q329.Ankur and Bobby were into the business of providing software solutions in India. They were
sharing profits and losses in the ratio 3 :2. They admitted Rohitfor a 1/5 share in the firm. Rohit, an
alumni of I IT, Chennai would help them to expand their business to various South African countries
where he had been working earlier. Rohit is guaranteed a minimum profit of Rs. 2,00,000 for the year.

Any deficiency in Rohit's share is to be borne by Ankur and Bobby in the ratio 4:1. Loss for the year
was Rs. 10,00,000. Pass the necessary Journal entries. [CBSESample Paper 2015)
Q330.Ajay, Binay and Chetan were partners sharing profits in the ratio of 3 : 3 : 2. The Partnership
Deed provided for the following:
(i) Salary of Rs. 2,000 per quarter to Ajay and Binay.
(ii) Chetan was entitled to a commission of Rs. 8,000.
(iii) Binay was guaranteed a profit of Rs. 50,000 p.a.
The profit of the firm for the year ended 31st March, 2015 was Rs. 1,50,000 which was distributed
among Ajay, Binay and Chetan in the ratio of 2 : 2 : 1, without taking into consideration the provisions
of Partnership Deed. Pass necessary rectifying entry for the above adjustments in the books of the firm.
Show your workings clearly. (Delhi2016 Q
Q331. P, Q and R entered into partnership on 1 st April, 2015 to share profits and losses in the ratio of
12 : 8 : 5. It was provided that in no case R's share in profit be less than Rs. 30,000 p.a. The profits and
losses for the period ended 31 st March were: 2015-16 Profit Rs. 1,20,000; 2016-17 Profit Rs. 1,80,000;
2017-18 Loss Rs. 1,20,000. Pass the necessary Journal entries in the books of the firm.
Q332.Three Chartered Accountants A, B and C form a partnership, profits being shared in the ratio of
3 : 2 : 1 subject to the following:
(a) C's share of profit guaranteed to be not less than Rs. 15,000 p.a.
(b) 6 gives a guarantee to the effect that gross fee earned by him for the firm shall be equal to his average
gross fee of the preceeding five years when he was carrying on profession alone, which on an average
works out at Rs. 25,000.
The profit for the first year of the partnership are Rs. 75,000. The gross fee earned by B for the firm is
Rs. 16,000. You are required to show Profit and Loss Appropriation Account after giving effect to the
above.
(NCERT, Modified)
Q333.Fill in the missing figures in the following Accounts :

PROFIT AND LOSS ACCOUNT
Dr for the year ended 31st March, 2018 Cr.
To Manager’s Commission By Profit for the year —
10% of Rs. — 6,000
To Net Profit transferred to —
Profit & Loss Appropriation A/c
To Interest on Capitals @ 8% p.a.: By Profit & Loss A/c |
X 12,000
Y 8,000 —
To Salary to Y —
X Capital A/c 3/5 —
T Capital A/c 2/5 10,000 —
— —
Dr. PARTNER’S CAPITAL ACCOUNTS Cr.

Particulars X Y Particulars X Y
Rs. Rs. Rs. Rs.
To Balance c/d — — By Balance b/d — —
By Interest on Capital — —

By Salary — —
By P & L Appropriation — —
A/c
— - — .
Q334.Charu and Divya are partners in a firm. Chain was to get a commission of 10% on the net profits
before charging any commission. However, Divya was to get a commission of 10% on the net profits
after charging all commissions. Fill in the missing figures in the following Profit and Loss
Appropriation Account for the year ended 31 st March 2018:
To Cham’s Commision By Profit & Loss A/c —
10 44,000
(𝑅𝑠. … × )
100
To Divya’s Commission —
Cham’s Capital A/c —
Divya’s Capital A/c —
—
Q335.A and B are partners with capitals of Rs.5,00,000 and Rs.3,00,000 respectively sharing profits in
the ratio of 2 : 1. The terms of partnership are as follows :
(i) Interest on Capital is to be allowed @ 9% p.a.
(ii) A is to get a salary of Rs.4,000 per month.
(iii) Interest on B’s Loan account of Rs.2,00,000 for the whole year.
(iv) Interest on drawings of partners at 12% per annum. Drawings being A Rs.60,000 and B
Rs.72,000.
(v) 5% of the distributable profit should be transferred to General Reserve.
Fill in the missing figures in the following accounts :
PROFIT AND LOSS ACCOUNT
To Interest on B’s Loan — By Profit before interest
To Profit transferred to Profit &
Loss Appropriation A/c —
— —
To Interest on Capital: By Profit & Loss A/c —
A Net Profit —
B — By Interest on Drawings :
To Salary (A) —A
To General Reserve A/c —B —
A’s Capital A/c 1,14,000
B’s Capital A/c —
— —
Q336.X and Y are partners in a firm sharing profits in the ratio of 3 : 2. On 1-4-2017 they decide to
1
admit Z for 5 th share in profits with a minimum guaranteed amount. Any deficiency arising on that
account shall be met by X.
Fill up the missing figures in the following Profit and Loss Appropriation Account:

Dr. for the year ended on 31st March, 2018 Cr.
To Xs Capital A/c By Profit & Loss A/c
(4,50,000 x —) (Profit for the year) 4,50,000
Less : Transferred to Z —
To fs Capital A/c
(4,50,000 × —) —
To Z’s Capital A/c
(4,50,000 x —) —
Add: From A 1,20,000
4,50,000 4,50,000
Q337.A and B are partners sharing profits in the ratio of 3 : 2. Interest on Capital is allowed at 10% p.a.
and charged on drawings at the same rate. Fill up the missing figures in the following accounts :
To Salary to B — By Profit & Loss A/c {Net Profit) —
To — By Interest on Drawings :
To Profit transferred to : A 2,500
B 1,500 —
1,20,000
— 2,84,000

Particulars A B Particulars A B
Rs. Rs. Rs. Rs.
To — — By
Dr. PARTNER’S CURRENT ACCOUNTS Cr.

Rs. Rs. Rs. Rs.
To — By Balance b/d 16,000 22,000
To — — By —
To — — By Int. on Capital 80,000 60,000
By — —
— — — —
Q338.A and B are partners. As per the terms of agreement interest is allowed on capitals @8% p.a. and
charged on drawings @10% p.a. A withdrew Rs. 10,000 per month at the end of each month and B
withdrew Rs.30,000 at the end of each quarter. You are required to fill up the missing figures in the
following accounts :

To — By Profit & Loss A/c (Net Profit) —
To Interest on Capital: By Interest on Drawings
A 40,000 A —
B — 72,000 B — —
A’s Capital A/c (2/3) —
B’s Capital A/c (1/3) 70,000 — —

Dr. CAPITAL ACCOUNTS Cr.
Rs. Rs. Rs.
To — — By — —
To — — By Salary 90,000 —
To — — By — —
By — —
— — — —

Chapter 2 : Valuation of Goodwill & Change in the profit
sharing ratio among the existing partners
Q 1.A and B were partners in a firm sharing profits and losses in the ratio of 2 : 1. With effect from 1st
April, 2019 they agreed to share profits and losses equally. Calculate the individual partner’s gain or
sacrifice due to change in ratio.
Q 2.A, B and C were partners in a firm sharing profits and losses in the ratio of 3 : 2 :1.The partners
decide to share future profits and losses in the ratio of 2 : 2 : 1. Indicate each partner’s gain or sacrifice
due to change in ratio.
Q 3.The total capital of the firm of Saurabh, Mohit and Nikhil was Rs. 1,00,000. The net profits for the
last 3 years were : 2013-14 Rs.40,000; 2014-15 Rs.46,000 and 2015-16 Rs.52,000. There was an
abnormal loss of Rs.3,000 in 2014-15. Goodwill of the firm was to be valued at 2 years purchase of the
average profits of the last three years. Calculate the goodwill of the firm. (C.B.S.E. 2017, Comptt.)
Q4.A and B are partners sharing profits equally. They agree to admit C for equal share. For this purpose
goodwill is to be valued at 150% of the average annual profits of the last 5 year’s profits.
Profits were :
It was observed that:
Year ended Rs.
31 st March-2015 40,000
” 2016 60,000
” 2017 1,00,000
” 2018 20,000 (Loss)
” 2019 1,50,000
(1) During the year ended 31st March 2016, an asset of the original cost of Rs.2,00,000 with book
value of Rs. 1,50,000 was sold for Rs. 1,24,000.
(2) During the year ended 31 st March, 2017, firm ’ s assets were not insured due to oversight.
Insurance premium being Rs.20,000.
(3) On 1 st April, 2017,2 Computer’s costing Rs. 1,00,000 were purchased and were wrongly
debited to Travelling Expenses. Depreciation on Computers was to be charged @ 20% p.a. on written
down value basis.
Calculate the value of goodwill.
Q 5.A and B are partners in a firm sharing profits and losses in the ratio of 2 : 1. They decide to take C
into partnership for l/5th share on 1st April 2017. For this purpose goodwill is to be valued at 80% of
the average annual profits of the previous three or four years, whichever is higher.
The average profits for the last four years are :
Rs.
Year ending on 31st March 2014 98,000
Year ending on 31 st March 2015 80,000
Year ending on 31 st March 2016 76,000
Year ending on 31 st March 2017 1,20,000
Calculate the value of Goodwill.
Q 6.A and B are partners sharing profits and losses in the ratio of 3 : 2. They agree to take C into
partnership for 1/3rd share. For this purpose, goodwill is to be valued at two year’s purchase of the
average profit of last four years which were as follows :
Rs.
Year ending on 31 st March 2014 50,000 (Profit)
Year ending on 31 st March 2015 1,20,000 (Profit)
Year ending on 31 st March 2016 1,80,000 (Profit)

Year ending on 31 st March 2017 70,000 (Loss)
On 1st April, 2016 a Motor bike costing Rs. 50,000 was purchased and debited to travelling expenses
account, on which depreciation is to be charged @ 20% p.a. calculate the value of goodwill.
Q 7.The profits of a firm for the last five years were as follows :
Year ended 31st March Profits (Rs.)
2011 43,000
2012 50,000
2013 52,000
2014 65,000
2015 85,000
You are required to calculate the value of goodwill on the basis of two year’s purchase of weighted
average profits. The weights to be used are :
2011 — 1; 2012 — 2; 2013 — 3; 2014 — 4; 2015 — 5.
Q8.It was agreed to calculate the value of goodwill of a firm at three years’ purchase of the weighted
average profits of the past four years. The appropriate weights to be used to each year ended on 31st
March are : 2012—1; 2013—2; 2014 — 3; 2015 — 4.
The profits for these years ended on 31st March are : 2012 Rs.20,200; 2013 Rs.24,800; 2014 Rs.20,000;
and 2015 Rs.30,000.
On a scrutiny of the accounts the following matters are revealed :—
(i) On 1st December, 2013 a major repair was made in respect of the plant incurring Rs.6,000 which
amount was charged to revenue. The paid sum is agreed to be capitalised for goodwill calculation
subject to adjustment of depreciation of 10% p.a. on reducing balance method.
(ii) The closing stock for the year ending on 31st March 2013 was over-valued by Rs.2,400,
(iii) To cover management cost an annual charge of Rs.4,800 should be made for the purpose of
goodwill valuation.
Compute the value of goodwill.
Q 9.Calculate the goodwill of a firm on the basis of two year’s purchase of the weighted average profits
of the last five years. Weights assigned to each year would be: 1, 2, 3,4 and 5 respectively to the profits
ended 31 st March 2015, 2016,2017,2018 and 2019.
The Profits for these five years were :
Year ended 31st 31st 31st 31st 31st
March, March, March, March, March,
2015 2016 2017 2018 2019
Profits (Rs.) 36,000 1,70,000 1,90,000 2,00,000 3,50,000
Scrutiny of books of accounts revealed the following :
(i) An abnormal loss of Rs.50,000 was incurred during the year ended 31st March, 2015.
(ii) An abnormal gain of Rs.30,000 was earned during the year ended 31st March, 2016.
(iii) Repairs to Car amounting to Rs.40,000 was wrongly debited to Vehicles A/c on 1st January, 2018.
Depreciation was charged on Vehicles @ 10% p.a. on Straight Line Method.
(iv) Closing Stock as on 31st March 2018 was undervalued by Rs.50,000.
Q 10.A firm earned net profits during the last seven years as follows :
2009 Rs. 20,000 Profit 2010 Rs. 70,000 Loss
2011 Rs. 40,000 Loss 2012 Rs.2,50,000 Profit
2013 Rs.2,70,000 Profit 2014 Rs.3,00,000 Profit
2015 Rs.3,20,000 Profit
The Capital invested in the firm is Rs. 12,00,000. Normal rate of return in the similar type of business
1
is 10%. Calculate the value of goodwill on the basis of 2 2 years’ purchases of average super profits
earned during the above mentioned seven years.

Q 11.The average Net Profits expected in the future by ABC Firm are Rs.36,000 per year. The average
capital employed in the business by the firm is Rs.2,00,000. The rate of return expected from capital
invested in this class of business is 10%. The remuneration of the partners is estimated to be Rs.6,000
per annum. Find out the value of goodwill on the basis of two years’ purchase of Super Profits.
Q 12.Amit and Kartik are partners sharing profits and losses equally. They decided to admit Saurabh
for an equal share in the profits. For this purpose the goodwill of the firm was to be valued at four years’
purchase of super profits.
The Balance Sheet of the firm on Saurabh’s admission was as follows :
Rs. Rs.
Capitals : Machinery 75,000
Amit 90,000 Furniture 15,000
Kartik 50,000 1,40,000 Stock 30,000
Reserve 20,000 Sundry Debtors 20,000
Loan 25,000 Cash 50,000
Sundry Creditors 5,000
1,90,000 1,90,000
The normal rate of return is 12% per annum. Average profits of the firm for the last four years was
Rs.30,000. Calculate Saurabh’s share of goodwill.
.
Q 13.On 1st April, 2018 an existing firm had assets of Rs.2,00,000 including cash of Rs.4,000. Its
creditors amounted to Rs. 10,000 on that date. The partner’s capital accounts showed a balance of Rs.
1,60,000 while the general reserve amounted to Rs.30,000. If the normal rate of return is 15% and the
goodwill of the firm is valued at Rs.36,000 at 3 year’s purchase of super profit, find the average profits
of the firm.
Q 14.From the figures given below, calculate goodwill according to the capitalisation of Average Profits
Method :
Actual Average Profits = Rs.72,000
Normal Rate of Return = 10%
Assets = Rs.9,70,000
Liabilities = Rs.4,00,000
Q 15(A).From the following information, calculate goodwill by (i) Capitalisation Method and (ii) at 3
year’s purchase of super profits :
Total Assets Rs. 10,00,000
External Liabilities Rs. 1,80,000
(iii) Normal Rate of Return 10%
(iv) Average Net Profit of last five years Rs. 1,00,000
Q 15 (B).The following information relates to a partnership firm :

(a) Profits for the last five years :
2012 Rs. 80,000 2015 Rs.1,50,000
2013 Rs.1,00,000 2016 Rs.2,70,000
2014 Rs.2,00,000
(b) Average Capital Employed is Rs.5,00,000.
(c) Rate of normal profit 20%.
Find out the value of goodwill on the basis of
Three year’s purchase of average profits
Three year’s purchase of super profits.
Capitalisation of super profits.

Q 16.A and B were partners in a firm sharing profits in the ratio of 3 :2. With effect from 1 st April
2016 they agreed to share profits equally. For this purpose the goodwill of the firm was valued at
Rs.30,000. Pass the necessary journal entry.
Q 17.A, B and C are partners sharing profits and losses in the ratio of 5 : 4 : 1. It was decided that with
effect from 1st April, 2016 the profit sharing ratio will be 9 : 6 : 5. Goodwill is to be valued at 2 year’s
purchase of average of 3 year’s profits. The profits for 2013-14, 2014-15 and 2015-16 were Rs.48,000,
Rs.42,000 and Rs.60,000 respectively.
Pass the necessary journal entry for the treatment of goodwill.
1
Q18(a) P, Q and R are partners sharing profits equally. They decided that in future R will get 5 th share
in profits. On the day of change, firm’s goodwill is valued at Rs.3,00,000. Make the necessary journal
entry.
Q18 (b) A, B and C shared profits and losses in the ratio of 3 : 2 : 1 respectively. With effect from 1st
April, 2018, they agreed to share profits equally. The goodwill of the firm was valued at ₹ 18,000.
Pass necessary Journal entries when:
(a) Goodwill Account is not opened; and
(b) Goodwill Account is opened.
Q18 (c) Jai and Raj are partners sharing profits in the ratio of 3 : 2. With effect from 1st April, 2018,
they decided to share profits equally. Goodwill appeared in the books at ₹ 25,000. As on 1st April,
2018, it was valued at ₹ 1,00,000. They decided to carry goodwill in the books of the firm.
Pass the journal entry giving effect to the above.
Q 19.X and Y were partners sharing profits and losses in the ratio of 3 : 1. They decided that with effect
from 1st April 2016, they would share profits and losses in the ratio of 5:3. The partnership deed
provides that in the event of any change in profit sharing ratio, the goodwill should be valued at the
total of two year’s profits preceding the date the decision became effective. The profits for 2013-14,
2014-15 and 2015-16 were Rs.60,000, Rs.70,000 and Rs.90,000 respectively. Pass the necessary
Journal entry to give effect to the above arrangement.
Q 20.X, Y and Z are partners sharing profits in the ratio of 4 : 3 : 2. From April 1,2017, they decided to
share the profits equally. On that date their books showed the following items :
Rs.
Profit & Loss Account (Cr.) 1,20,000
General Reserve 45,000
Workmen Compensation Reserve 60,000
Advertisement Suspense Account (Dr.) 90,000
Record the necessary Journal entries.-
Q 21.A and B are partners sharing profits and losses in the ratio of 2 : 1. From April 1, 2017, they
decided to share the profits in the ratio of 3 : 2. On that date, profit and loss account showed a debit
balance of Rs.60,000. Record the necessary journal entry for the distribution of the balance in the Profit
and Loss Account.
Q 22.P, Q and R sharing profits and losses in the ratio of 3 : 2 : 1, decide to share future profits and
losses in the ratio of 4 : 3 : 2 with effect from 1st April, 2017. Following is an extract of their Balance
Sheet as at 31 st March, 2017:
Show the accounting treatment under the following alternative cases :
Case (i) If there is no other information.
Case (ii) If a claim on account of workmen’s compensation is estimated at Rs. 24,000.

Case (iii) If a claim on account of workmen’s compensation is estimated at Rs.60,000.
Case (iv) If a claim on account of workmen’s compensation is estimated at Rs.75,000.
Q 23.P, Q and R sharing profits and losses in the ratio of 3 : 2 : 1, decide to share profits and losses
equally with effect from 1st April, 2017. Following is an extract of their Balance Sheet as at 31st March,
2017 :
Investment Fluctuation Reserve 30,000 Investments (At Cost) 5,00,000
Case (ii) If the market value of Investments is Rs.5,00,000.
Case (iii) If the market value of Investments is Rs.4,88,000.
Case (iv) I f the market value of Investments is Rs.4,46,000.
Case (v) If the market value of Investments is Rs.5,06,000.
Q 24.A and B are partners in a firm sharing profits in the ratio of 4 : 3. On March 31, 2016 their Balance
Sheet showed a General Reserve of Rs.35,000. On that date they decided to admit Sewak as a new
partner and the new profit-sharing ratio will be 5:3:2. Record necessary journal entries in the books of
the firm under the following circumstances:
(i) When they want to transfer the general reserve to their capital accounts.
(ii) When they don’t want to transfer general reserve in their capital accounts but prefer to record an
adjustment entry for the same.
Q 25.X, Y and Z sharing profits and losses in the ratio of 1 : 2 : 2, decide to share future profits equally
with effect from 1st April, 2016. On that date, Profit & Loss Account showed a credit balance of Rs.
1,20,000. Partners do not want to distribute the profit but prefer to record the change in the profit sharing
ratio by passing an adjustment entry. You are required to give the adjusting entry.
Q 26.A, B and C are partners sharing profits and losses in the ratio of 2 : 3 : 4. They decided to share
future profits and losses in the ratio of 4 : 3 : 2. They also decided to record the effect of the following
without affecting their book values :
Rs.
Profit & Loss A/c 20,000
Advertisement Suspense A/c 15,000
You are required to give the necessary single journal entry.
Q 27.A, B, C and D are partners in a firm sharing profits and losses in the ratio of 2 : 2 : 1 : 1. They
decided to share profits in future in the ratio of 4 : 3 : 2 : 1. For this purpose goodwill of the firm was
valued at Rs. 1,80,000. There was also a reserve of Rs.60,000 in the books of the firm.
Find out sacrifice and gaining ratio and pass necessary journal entry assuming that partners do not want
to distribute the reserve.
Q 28.Divya and Pooja are partners in a firm, sharing profits and losses in the ratio of 3 : 2. On 31st
March, 2015, their Balance Sheet was as under :
BALANCE SHEET OF DIVYA AND POOJA as at 31st March, 2015
Sundry Creditors 9,800 Goodwill 16,000
General Reserve 23,400 Land and Building 20,000
Profit and Loss A/c 4,000 Investments 66,000
Investment Fluctuation Fund 12,600 Sundry Debtors 18,600
Capital A/cs: Bills Receivables 7,400
Divya 60,000 Cash in Hand 11,100
Pooja 40,000 1,00,000 Advertisement Suspense A/c 10,700

1,49,800 1,49,800
The partners decided that with effect from 1st April, 2015, they would share profits and losses equally.
For this purpose, they decided that:
(α) Investments to be valued at Rs.60,000.
(b) Goodwill to be valued at Rs.24,000.
(c) General Reserve not to be distributed between the partners.
You are required to :
(i) Pass journal entries
(ii) Prepare the revised Balance Sheet of the firm. (I.S.C. 2016)
Q 29.A, B & C were partners in a firm sharing profits & losses in the ratio of 3 : 2 : i. On March 31,
2017, their Balance Sheet was as follows:
Rs. Rs.
Capitals: Fixed Assets 1,50,000
A 50,000 Current Assets 65,000
B 40,000
C 30,000 1,20,000
Reserve Fund 18,000
Creditors 27,000
Employees Provident Fund 50,000
2,15,000 2,15,000
From April 1, 2017, they decided to share future profits equally. For this purpose the followings were
agreed upon:
(i) Goodwill of the firm was valued at Rs.3,00,000.
(ii) Fixed Assets will be depreciated by 10%.
(iii) Expenses of Rs.3,000 were paid by the firm for getting the value of fixed assets certified.
(iv) Capitals of the partners will be in proportion to their new profit sharing ratio. For this purpose
Current Accounts will be opened.
Pass necessary Journal entries for the above transactions in the books of the firm.
Q 30.Ashok, Bhim and Chetan were partners in a firm sharing profits in the ratio of 3:2:1. Their Balance
Sheet as at 31 -3-2015 was as follows :
Balance Sheet of Ashok, Bhim and Chetan as at 31-3-2015
Creditors 1,00,000 Land 1,00,000
Bills Payable 40,000 Building 1,00,000
General Reserve 60,000 Plant 2,00,000
Capitals : Stock 80,000
Ashok 2,00,000 Debtors 60,000
Bhim 1,00,000 Bank 10,000
Chetan 50,000 3,50,000
5,50,000 5,50,000
Ashok, Bhim and Chetan decided to share the future profits equally, w.e.f., April 1, 2015. For this it
was agreed that:
(i) Goodwill of the firm be valued at Rs.3,00,000.
(ii) Land be revalued at Rs. 1,60,000 and building be depreciated by 6%.
(iii) Creditors of Rs. 12,000 were not likely to be claimed and hence be written off.
Prepare Revaluation Account, Partners’ Capital Accounts and Balance Sheet of the reconstituted firm.
(C.B.S.E. 2016)

Q 31.A, B, C and D were partners in a firm sharing profits in the ratio of 3 : 2 : 3 : 2. On 1.4,2016, their
Balance Sheet was as follows ;
BALANCE SHEET of A, B, C and D as on 1.4.2016
Rs. Rs.
A 2,00,000 Current Assets 3,00,000
B 2,50,000
C 2,50,000
D 3,10,000 10,10,000
11,25,000 11,25,000
From the above date the partners decided to share the future profits in the ratio of 4 : 3 : 2 : 1. For this
purpose the goodwill of the firm was valued at Rs.2,70,000. It was also considered that:
(i) The claim against Workmen Compensation Reserve has been estimated at Rs.30,000 and fixed
assets will be depreciated by Rs.25,000.
(ii) Adjust the capitals of the partners according to the new profit sharing ratio by opening Current
Accounts of the partners.
Prepare Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of the reconstituted
firm. (C.B.S.E. 2017, Outside Delhi)
Q 32.A, B and C are partners sharing profits and losses in the ratio of 5 : 3 : 2. From 1st April, 2018,
they dedide to share future profits and losses equally. Their Balance Sheet as at 31st March, 2018 stood
as follows :
Sundry Creditors 50,000 Land and Buildings 4,00,000
Salaries Payable 25,000 Computers 60,000
Outstanding Expenses 20,000 Stock 2,00,000
General Reserve 50,000 Sundry Debtors 3,00,000
Workmen Compensation Reserve 70,000 Less: Provision for
Capital Accounts : doubtful debts 2,75,000
25,000
A 4,00,000 Cash at Bank 30,000
B 2,50,000 Cash in Hand 10,000
C 1,50,000 8,00,000 Advertisement Suspense 40,000
10,15,000 10,15,000
Partners agreed that:
(i) Value of Land and Building be increased to Rs.5,00,000 and stock be decreased by Rs.20,000.
(ii) Provision for doubtful debts to be written back, since all debtors are good.
(iii) Out of salaries payable, Rs. 15,000 was not payable.
(iv) Outstanding expenses are to be written back, being not payable.
(v) A provision for Workmen Compensation Claim be made for Rs.30,000.
(vi) Goodwill is valued at Rs.60,000.
(vii) B was to carry out the work for reconstitution of the firm at a remuneration (including expenses)
of Rs. 10,000. Expenses paid by B amounted to Rs.4,000.
Pass journal entries and prepare Revaluation Account.
Q33.Parth, Raman and Zaisha are partners in a firm manufacturing furniture. They have been sharing
profits and losses in the ratio of 5 : 3 : 2. From 1st April, 2017 they decided to share future profits and
losses in the ratio of 2 : 5 : 3. Their Balance Sheet showed a debit balance of Rs.4,000 in Profit & Loss
Account; balance of Rs.36,000 in General Reserve and a Balance of Rs. 12,000 in Workmen’s
Compensation Reserve. It was agreed that—
(i) The goodwill of the firm be valued at Rs.76,000.

(ii) The Stock (book value of Rs.40,000) was to be depreciated by 8%.
(iii) Creditors amounting to Rs.900 were not likely to be claimed.
(iv) Claim on account of Workmen’s Compensation amounted to Rs.20,000.
(v) Investments (book value Rs.38,000) were revalued at Rs.40,000.
Pass necessary Journal entries for the above. (C.B.S.E. 2018)
Q34.A, B and C are partners sharing profits and losses in the ratio of 3 : 3 : 2. Their balance sheet as at
31 st March 2019 was as follows :
Sundry Creditors 24,000 Cash at Bank 37,000
General Reserve 36,000 Sundry Debtors 44,000
Capital Accounts: Stock 1,20,000
A 2,00,000 Machinery 1,59,000
B 1,50,000 Building 2,00,000
C 1,50,000 5,00,000
5,60,000 5,60,000
Partners decided that with effect from 1 st April 2019, they would share profits and losses in the ratio
of 4 : 3 : 2. It was agreed that:
(i) Stock be valued at Rs. 1,10,000.
(ii) Machinery is to be depreciated by 10%.
(iii) A provision for doubtful debts is to be made on debtors @ 5%.
(iv) Building to be appreciated by 20%.
(v) A liability for Rs.2,500 included in sundry creditors is not likely to arise.
Partners agreed that the revised values are to be recorded in the books. They do not, however want to
distribute the general reserve. You are required to prepare journal entries, capital accounts of the
partners and the revised balance sheet.
Q 35.Continuing Q 34, the partners agreed that the revised values of assets and liabilities are not to be
recorded in the books and they also do not want to distribute the general reserve. You are required to
record the change by passing a single journal entry with necessary working note. Also prepare the
revised balance sheet.
Q 36.Brijesh, Cham and Dilip are partners sharing profits and losses in the ratio of 3:2:1. Their balance
sheet as at 31st March, 2016 was as follows :
Creditors 87,000 Cash 30,000
Reserves 42,000 Debtors 62,000
Profit & Loss A/c (Profits) 21,000 Less: Provision for
Capital Accounts: doubtful debs 2,000 60,000
Brijesh 3,00,000 Stock 1,80,000
Charu 3,00,000 Furniture 30,000
Dilip 50,000 6,50,000 Plant 2,00,000
Building 3,00,000
8,00,000 8,00,000
The partners agreed that from 1st April, 2016 they will share profits and losses in the ratio of 4 : 4 : 1.
They agreed that:
(i) Stock is to be valued at 20% less.
(ii) Provision for doubtful debts to be increased by Rs. 1,500.
(iii) Furniture is to be depreciated by 20% and plant by 15%.
(iv) Rs.3,500 are outstanding for salaries.
(v) Building is to be valued at Rs.3,50,000.
(vi) Goodwill is valued at Rs.45,000.
Partners do not want to record the altered values of assets and liabilities in the books and want to leave
the reserves and profits undisturbed.

You are required to pass a single journal entry to give effect to the above. Also prepare the revised
balance sheet.
Q 37.Shanker, Babita and Vishal are partners in a firm in the ratio of 5 : 4 : 2. On 1st April, 2019 they
decided to share profits in future in the ratio of 4 : 3 : 2. On this date general reserve was Rs.34,900 and
loss on revaluation of assets and liabilities was Rs.5,200. It was decided that adjustment should be made
without altering the figures of assets and liabilities in the Balance Sheet. Make adjustment by a single
journal entry.
Q 38.A, B and C were partners in a film sharing Profits in the ratio of 2 : 2 : 1. Their Balance Sheet as
at March 31, 2019 was as follows :
BALANCE SHEET OF FIRM A, B AND C as at March 31, 2019
Rs. Rs.
Creditors 30,000 Land 85,000
Bills Payable 20,000 Building 50,000
Outstanding Expenses 25,000 Plant 1,00,000
General Reserve 50,000 Stock 40,000
Capital : Debtors 25,000
A 50,000 Cash 5,000
B 60,000
C 70,000 1,80,000
3,05,000 3,05,000
From April 1,2019 the partners decided to share profits in the ratio of 1 : 2 : 3. For this purpose it was
agreed that :
(i) The goodwill of the firm should be valued at Rs.60,000.
(ii) Land should be revalued at Rs. 1,00,000. Building should be depreciated by 6%.
(iii) Creditors amounting to Rs.3,000 were not to be paid.
(i) Record the necessary journal entries to give effect to the above agreement.
(ii) Prepare the capital accounts of the partners.
(iii) Prepare the balance sheet of the reconstituted firm.
Partners decide that ‘General Reserve’ will be transferred to Capital Accounts whereas revised values
of assets and liabilities are not to be recorded in the books.
Q 39 Simran purchased Anita's business on 1st April, 2018. It was agreed to value goodwill at three
years' purchase of average normal profit of the last four years. The profits of Anita's business for the
last four years were:
Year Ended Rs.
31st March, 2015 90,000
31st March, 2016 1,60,000
31st March, 2017 1,80,000
31st March, 2018 2,20,000
It was observed from the books of account that:
1. During the year ended 31st March, 2015, an asset was sold at a gain (profit) of Rs. 10,000.
2. During the year ended 31st March, 2016, a machine got destroyed in accident and Rs. 30,000 was
written off as loss in Profit and Loss Account.
3. During the year ended 31st March, 2017, firm's assets were not insured due to oversight. Insurance
premium being Rs. 10,000.
Q 40.A, B and C are partners in a firm sharing profits and losses in the ratio of 3 : 2 :1. They decide to
take D into partnership from 1st April, 2018 for l/4th share in the profits. For this purpose, goodwill is
to be valued at twice the average annual profit of the previous three or four years, whichever is higher.

The annual profit for the purpose of goodwill for the past four years were:
Year Ended Rs.
31st March, 2018 48,000
31st March, 2017 30,300
31st March, 2016 31,200
31st March, 2015 42,200
Calculate value of goodwill.
Q 41.A, B and C are partners sharing profits and losses equally. They agree to admit D for equal share.
For this purpose, goodwill is to be valued at four years' purchase of average profit of last five years.
Profits for the past five years were:
Year Ended 31st March, 31st March, 31st March, 2016 31st March, 2017 31st March,
2014 2015 2018
Profit/(Loss) 30,000 70,000 1,00,000 1,40,000 (1,20,000)
(Rs.)
On 1st April, 2017,5 cycles costing Rs. 20,000 were purchased and were wrongly debited to Travelling
Expenses. Depreciation on cycles was to be charged @ 25%. Calculate value of goodwill.
Q 42.A and B are partners sharing profits equally. They admit C into partnership for equal share.
Goodwill was agreed to be valued at two years' purchase of average profit of last four years. Profits for
the last four years were:
Year Ended Rs.
31st March, 2015 70,000
31st March, 2016 1,00,000
31st March, 2017 55,000 (Loss)
31st March, 2018 1,50,000
The books of account of the firm revealed as follows:
1. The firm had abnormal gain of Rs. 10,000 during the year ended 31st March, 2015.
2. The firm incurred abnormal loss of Rs. 20,000 during the year ended 31st March, 2016.
3. Repairs to car amounting to Rs. 50,000 was wrongly debited to vehicles on 1st May, 2016.
Depreciation was charged on vehicles @ 10% on Straight Line Method.
4. A Bad Debt of Rs. 5,000 was omitted to be written off in the year 2017-18.
Q 43.Calculate the goodwill of a firm on the basis of three years' purchase of the weighted average
profit of the last four years. Profits of these four years ended 31st March were:
Year Ended 31st March, 2012 31st March, 2013 31st March, 2014 31st March, 2015
Profit (Rs.) 40,400 49,600 40,000 60,000
The weights assigned to each year ended 31st March are: 2012—1; 2013—2; 2014—3 and 2015—4.
You are provided with the following additional information:
(i) On 31st March, 2014, a major plant repair was undertaken for Rs. 12,000 which was charged to
revenue. The said sum is to be capitalised for goodwill calculation subject to adjustment of depreciation
of 10% p.a. on Reducing Balance Method.
(ii) The Closing Stock for the year ended 31st March, 2013 was overvalued by Rs. 4,800. (Hi) To cover
management cost an annual charge of Rs. 9,600 should be made for the purpose of goodwill valuation.
Q44. Alok and Aakash are partners in M/s Mega Enterprises. They admit Ashish as partner w.e.f. 1st
April, 2018. 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, 2014 2,00,000 (Including gain of Rs. 25,000 from sale of fixed asset)
31st March, 2015 1,70,000 (Including abnormal loss of Rs. 50,000)
31st March, 2016 2,10,000

31st March, 2017 2,30,000
31st March, 2018 2,50,000
Capital employed in the firm is Rs. 15,00,000 and normal rate of return in similar business is 10%.
Q45.Average net profit of XYZ expected in the future is Rs. 54,000 per year. The average capital
employed in the business is Rs. 3,00,000. Normal profit expected from capital invested in this class of
business is 10%. The remuneration of the partners is estimated to be Rs. 9,000 p.a.
Find out the value of goodwill on the basis of two years' purchase of super profit.
Q46.On 1st April, 2016, a firm had assets of Rs. 3,00,000 including cash of Rs. 5,000. The Partners'
Capital Accounts showed a balance of Rs. 2,00,000 and the Reserve constituted the rest. If the normal
rate of return is 10% and the goodwill of the firm is valued at Rs. 2,00,000 at four years' purchase of
super profit, find the average profit of the firm.
Q 47.The average profit earned by a firm is Rs. 2,50,000 which includes overvaluation of stock of Rs.
10,000 on an average basis. The capital invested in the business is Rs. 14,00,000 and the normal rate of
return is 15%.
Calculate goodwill of the firm on the basis of 4 times the super profit. (AI2015 C)
Q 48.A firm earned Rs. 60,000 as profit, the 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.
Q 49.Puneet and Tarun are in restaurant business having credit balance in their fixed Capital Accounts
as Rs. 2,50,000 each. They have credit balances in their Current Accounts of Rs. 30,000 and Rs. 20,000
respectively. The firm does not have any liability. They are regularly earning profits and their average
profit of last 5 years is Rs. 1,00,000. If the normal rate of return is 10%, find the value of goodwill by
capitalisation of Average Profit Method.
Q 50. Average profit of the firm is Rs. 1,50,000. Total tangible assets in the firm are Rs. 14,00,000 and
outside liabilities are Rs. 4,00,000. In the same type of business, the normal rate of return is 10% of the
capital employed.
Calculate value of goodwill by Capitalisation of Super Profit Method.
Q 51.A business has earned average profit of Rs. 1,00,000 during the last few years and the normal rate
of return in similar business is 10%. Find out the value of Goodwill by:
(i) Capitalisation of Super Profit Method; and
(ii) Super Profit Method if the goodwill is valued at 3 years' purchase of super profit.
Assets of the business were Rs. 10,00,000 and its external liabilities Rs. 1,80,000. (Delhi 2011)
Q 52. J and K are partners in a firm. Their capitals are: J Rs. 3,00,000 and K Rs. 2,00,000. During the
year ended 31st March, 2010 the firm earned a profit of Rs. 1,50,000. Assuming that the normal rate of
return is 20%, calculate the value of goodwill of the firm:
(i) By Capitalisation Method; and
(ii) By Super Profit Method if the goodwill is valued at 2 years' purchase of super profit.
(Foreign 2011)
Q 53.From the following information, calculate value of goodwill of M/s. Sharma and Gupta:
(i) At three years' purchase of Average Profit.
(ii) At three years' purchase of Super Profit.
(iii) On the basis of Capitalisation of Super Profit.
(iv) On the basis of Capitalisation of Average Profit.
Information:
(a) Average Capital Employed—Rs. 10,00,000.

(b) Net Profit/Loss of the firm for the past years: 2015—Rs. 1,60,000 (Profit); 2016—Rs. 1,40,000
(Profit); 2017-Rs. 2,70,000 (Profit).
(c) Normal Rate of Return on capital is 11%.
(d) Remuneration to each partner for his service to be treated as a charge on profit—Rs. 2,500 per
month.
(e) Assets (excluding goodwill)—Rs. 11,00,000; Liabilities—Rs. 1,00,000.
Q 54.X, Y and Z are partners sharing profits in the ratio of 5 : 3 : 2. Calculate new profit-sharing ratio,
sacrificing ratio, gaining ratio in each of the following cases:
Case 1. If Z acquires 1/5th share from X.
Case 2. If Z acquires 1/5th share equally from X and Y.
Case 3. If X, Y and Z decide to share the future profits and losses equally.
Case 4. If Z acquires l/5th share of X and l/6th Share of Y.
Q 55.A and B shared profits and losses in the ratio of 3 : 2. With effect from 1st April, 2018, they agreed
to share profits equally. Goodwill of the firm was valued at Rs. 50,000. Pass necessary Journal entries
for the accounting of goodwill:
(a) When goodwill is adjusted through Partners' Capital Accounts;
(b) When Goodwill Account is opened.
Q 56.Kumar, Gupta and Kavita were partners in a firm sharing-profits and losses equally. The firm was
engaged in the storage and distribution of canned juice and its godowns were located at three different
places in the city. Each godown was being managed individually by Kumar, Gupta and Kavita. Because
of increase in business activities at the godown managed by Gupta, he had to devote more time. Gupta
demanded that his share in the profits of the firm be increased, to which Kumar and Kavita agreed. The
new profit-sharing ratio was agreed to be 1 : 2 : 1. For this purpose, goodwill of the firm was valued at
two years' purchase of the average profits of last five years. The profits of the last five years were as
follows:
Year I ii Iii IV V
Profit (Rs.) 4,00,000 4,80,000 7,33,000 (33,000) Loss 2,20,000
You are required to:
(a) Calculate the goodwill of the firm.
(b) Pass necessary Journal entry for the treatment of goodwill on change in profit-sharing
ratio of Kumar, Gupta and Kavita. (Delhi 2015)
Q 57.A, B and C sharing profits and losses in the ratio of 5 : 3 : 2 decided to share profits and losses
equally with effect from 1st April, 2018. Goodwill of the firm is valued at Rs. 90,000. Pass Journal
entries under each of the following alternative cases:
Case1. When goodwill does not appear in the books.
Case 2. When goodwill appears in the books at Rs. 60,000.
Q 58.Reema and Seema are partners sharing profits and losses in the ratio of 4 : 1. They decided to
share profits in the ratio of 3 : 2 w.e.f 1st April, 2017. However, the decision to change the profit-sharing
ratio was taken after crediting share of profit for the year ended 31st March, 2018 to respective Capital
Accounts, which was Rs. 1,00,000.
Goodwill of the firm as at 1st April, 2017 was valued at Rs. 75,000. Capital Accounts credit balances
as at 31st March, 2018 were Reema—Rs. 5,00,000 and Seema—Rs. 6,00,000.
Pass necessary Journal entries and prepare Capital Accounts.
Q 59.A, B and C sharing profits and losses in the ratio of 4 : 3 : 2, decided to share the future profits
and losses in the ratio of 2 : 3 : 4 with effect from 1st April, 2018. An extract of their Balance Sheet as
at 31st March, 2018 is:

Show the accounting treatment under the following alternative cases:
Case 1 If no information as to claim is given.
Case 2 If there is no claim.
Case 3. If a claim on account of workmen compensation is estimated at Rs. 45,000.
Case 4 If a claim on account of workmen compensation is estimated at Rs. 99,000.
Case 5. If a claim on account of workmen compensation is estimated at Rs. 90,000.
Case 6. If a claim on account of workmen compensation is determined at Rs. 36,000.
Q 60.A, B and C sharing profits and losses in the ratio of 4 : 3 : 2, decided to share future profits and
losses in the ratio of 2 : 3 : 4 with effect from 1st April, 2018. An extract of their Balance Sheet as at
31st March, 2018 is:
Investments Fluctuation Reserve 18,000 Investments (At cost) 2,00,000
Show the accounting treatment under the following alternative cases:
Case 1. If there is no other information.
Case 2. If the market value of investments is Rs. 2,00,000.
Q 61.X and Y are partners in a firm sharing profits in the ratio of 3 : 2. They decided to share future
profits equally. On the date of change in the profit-sharing ratio, Profit and Loss Account showed a
debit balance of Rs. 50,000. Pass Journal entry for distribution of balance in Profit and Loss Account
immediately before change in the profit-sharing ratio.
Q 62.A, B and C are partners in a firm sharing profits in the ratio of 3 : 3 : 2. They decided to share
profits equally w.e.f 1st April, 2018. On that date, Profit and Loss Account showed credit balance of
Rs. 72,000. Instead of closing the Profit and Loss Account, it was decided to record an adjustment entry
reflecting the change in the profit-sharing ratio. Pass Journal entry to give effect to the same.
Q 63.D, E and F are sharing profits and losses in the ratio of 5 : 3 : 2. They decide to share profits and
losses in the ratio of 2 : 3 : 5 with effect from 1st April, 2018. They also decide to record the effect of
the following without affecting their book values, by passing an adjustment entry:
Book Value (Rs.)
Contingency Reserve 25,000
Profit and Loss A/c (Cr.) 75,000
Advertisement Suspense A/c (Dr.) 1,00,000
Q 64. Anil, Manvi and Payal are partners sharing profits and losses in the ratio 5:3:2. Their Balance
Sheet as at 31st March, 2018 stood as follows:
Capital A/cs: Land and Building 2,60,000
Anil 3,50,000 Machinery 3,50,000
Manvi 2,50,000 Stock 90,000
Payal 3,00,000 9,00,000 Bills Receivable 70,000
General Reserve 20,000 Sundry Debtors 1,00,000
Workmen Compensation 30,000 Cash in Hand 25,000
Reserve
Sundry Creditors 50,000 Cash at Bank 1,05,000

10,00,000 10,00,000
They decided to share profits and losses in the ratio of 2 : 2 : 1 w.e.f 1st April, 2018. They agreed that:
(i) Land and Building be appreciated by 10%.
(ii) Machinery be depreciated by 15%.
(iii) Stock be increased to Rs. 1,00,000.
(iv) A Provision for Doubtful Debts be created @ 5% on Sundry Debtors.
(v) A Creditor of Rs. 5,000 is not to claim the dues.
(vi) A claim on account of Workmen Compensation is estimated at Rs. 10,000.
(vii) An expense of Rs. 2,000 was paid by the firm for getting the value of Land and Building certified
from a Chartered Engineer.
Pass the Journal entries and prepare Revaluation Account.
Q 65.A, B and C are sharing profits and losses in the ratio of 5 :3 : 2. They decided to share future
profits and losses in the ratio of 2 : 3 : 5 with effect from 1st April, 2018. They also decide to record the
effect of the following revaluations without affecting the book value of the assets and liabilities by
passing a Single Adjustment Entry:
Book Value (Rs.) Revised Value (Rs.)
Land and Building 5,00,000 5,50,000
Plant and Machinery 2,50,000 2,40,000
Sundry Creditors 60,000 55,000
Outstanding Expenses 60,000 75,000
Pass necessary Single Adjustment Entry.
Q 66.Ashok, Bhim and Chetan were partners in a firm sharing profits in the ratio of 3 : 2 : 1. Their
Balance Sheet as on 31st March, 2015 was as follows:
BALANCE SHEET OF ASHOK, BHIM AND CHETAN as on 31st March, 2015
Creditors 1,00,000 Land 1,00,000
Capital A/cs: Ashok 2,00,000 Stock 80,000
Bhim 1,00,000 Debtors 60,000
Chetan 50,000 3,50,000 Bank 10,000
5,50,000 5,50,000
Ashok, Bhim and Chetan decided to share the future profits equally, w.e.f. 1st April, 2015. For this it
was agreed that:
(a) Goodwill of the firm be valued at Rs. 3,00,000.
(b) Land be revalued at Rs. 1,60,000 and building be depreciated by 6%.
(c) Creditors of Rs. 12,000 were not likely to be claimed and hence be written off.
Prepare Revaluation Account, Partners' Capital Accounts and Balance Sheet of the reconstituted firm.
(Delhi 2016)
Q 67.Amar, Tarun and Akhil are partners sharing profits and losses in the ratio of 5 : 3 : 2. Their Balance
Sheet as at 31st March, 2018 was as follows:
Sundry Creditors 1,60,000 Cash in Hand 25,000
Salaries Payable 30,000 Bank Balance 1,25,000
Reserves 80,000 Bills Receivable 10,000
Profit and Loss A/c 30,000 Sundry Debtors 1,00,000
Capital A/cs: Less: Provision for Doubtful 10,000 90,000
Debts
Amar 3,00,000 Stock 2,00,000

Tarun 1,80,000 Furniture 50,000
Akhil 1,20,000 6,00,000 Computers 3,00,000
Air-Conditioners 1,00,000
9,00,000 9,00,000
Profit-sharing ratio among the partners was agreed to be 2 : 2 : 1 w.e.f 1st April, 2018. They agreed to
the following:
(i) Stock to be increased to Rs. 2, 20,000.
(ii) Provision for Doubtful Debts to be reduced by Rs. 2,000.
(iii) Furniture to be reduced by 20%.
(iv) Computers to be reduced to Rs. 2, 70,000.
(v) Goodwill of the firm is valued at Rs. 1, 00,000.
The partners decided to carry the assets and liabilities at their existing values. They also decided that
Reserves and Profit and Loss Account balance be carried at the same values. Pass an Adjustment entry
giving effect to the above arrangement and prepare Balance Sheet after adjustments.
Q 68 .P, Q, R and S were partners in a firm sharing profits in the ratio of 1 : 4 : 2 : 3. On 1st April, 2016,
their Balance Sheet was as follows:
BALANCE SHEET OF P, Q, R AND S as on 1st April, 2016
Capital Fixed Assets 12,70,000
A/cs:
P 2,00,000 Current Assets 5,30,000
Q 3,00,000
R
5 4,00,000
5,00,000 14,00,000
Sundry Creditors 2,30,000
Workmen Compensation Reserve 1,70,000
18,00,000 18,00,000
From the above date, partners decided to share the future profits equally. For this purpose the goodwill
of the firm was valued at Rs. 2,70,000.
The partners also agreed for the following:
(i) Claim against Workmen Compensation Reserve was estimated at Rs. 2,00,000.
(ii) Capitals of the partners were to be adjusted according to the new profit-sharing ratio by bringing or
paying cash as the case, may be.
Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet of the reconstituted
firm. (Delhi 2017)
Q 69.S, T, U and V were partners in a firm sharing profits in the ratio of 4 : 3 : 2 : 1. On 1st April, 2016,
BALANCE SHEET OF S, T, U AND 1/ as on 1st April, 2016
Capitals: 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
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 reconsituted
firm. (Delhi 2017)
Q 70.Aman, Chaman and Daman are partners sharing profits and losses in the ratio of 5 : 4 : 1. Their
Balance Sheet as at 31st March, 2018 was as follows:
Sundry Creditors 1,10,000 Cash at Bank 2,10,000
Salaries Payable 30,000 Sundry Debtors 1,00,000
Outstanding Expenses 10,000 Less: Provision for Doubtful 10,000 90,000
Debts
Capital A/cs: Furniture 40,000
Aman 3,00,000 Computers 2,00,000
Chaman 1,50,000 Car 2,00,000
Daman 1,50,000 6,00,000
7,90,000 7,90,000
—
Profit-sharing ratio w.e.f. 1st April, 2018 was decided to be equal. It was agreed among the partners to
carry out following adjustments:
(i) Stock to be reduced to Rs. 40,000.
(ii) Provision for Doubtful Debts to be written back, since all debtors are good.
(iii) Computers to be reduced by Rs. 20,000.
(iv) Out of the Salaries Payable, Rs. 10,000 was not payable as the employee left without notice.
(v) Outstanding Expenses were not payable anymore.
(vi) An unrecorded asset (Motor Cycle) valued at Rs. 10,000 to be accounted.
(vii) Goodwill of the firm was valued at Rs. 50,000.
(viii) Total capital of the firm Rs. 6,00,000 was to be in profit-sharing ratio, excess capital to be
withdrawn and shortfall to be made good.
Prepare Revaluation Account, Partners' Capital Accounts and Balance Sheet of the new firm.
Q71(a) X and Y were partners in a firm sharing profits in the ratio of 5 : 3. With effect from 1st April,
2019 they agreed to share profits equally. Calculate the individual partner’s gain or sacrifice due to
change in ratio.
1
[Ans. X sacrifices and Y gains 8th share.]
(b) A and B were in partnership sharing profits equally. With effect from 1 st April, 2019 they agreed
to share profits in the ratio of 4 : 3. Calculate the individual partner’s gain or sacrifice due to change in
ratio.
Q72. (a) A, B and C were in partnership sharing profits in the ratio of 4 : 3 : 1. The partners agreed to
share future profits in the ratio of 5 : 4 : 3. Calculate each partner’s gain or sacrifice due to change in
ratio.
2 1 3
[Ans. A sacrifices 24, B sacrifices 24 and C gains 24.]
(b) Mahesh, Naresh and Om were partners sharing profits in the ratio of 2 : 3 : 4. With effect from 1st
April, 2016 they agreed to share profits in the ratio of 1 : 2 : 3. Calculate each partner’s gain or sacrifice
due to change in ratio.
Q73. X purchased the business of Y from 1st April, 2019. For this purpose goodwill is to be valued at
100% of the average annual profits of the last four years. The profits shown by T s business for the last
four years were :
Year ended Rs.

31st March, 2016 Profit (after debiting loss of stock by fire
” 2017 Loss 1,50,000 Rs. 50,000)
(includes voluntary retirement
” 2018 Profit 1,50,000 compensation paid Rs. 80,000)
” 2019 Profit 2,00,000
Verification of books of accounts revealed the following :
(i) During the year ended 31st March, 2017, a machine got destroyed in accident and Rs.60,000 was
written off as loss in Profit & Loss Account.
(ii) On 1st July 2017, Two Computers costing Rs.40,000 each were purchased and were debited to
Travelling Expenses Account on which depreciation is to be charged @ 10% p.a. on Straight Line
Method.
Q74. A, B and C are partners in a firm sharing profits and losses in the ratio of 3:2:1. They decide to
take D into partnership for 1/4th share on 1st April, 2017. For this purpose, goodwill is to be valued at
3 times the average annual profits of the previous four or five years whichever is higher. The agreed
profits for goodwill purpose of the past five years are as follows:
Year ending on 31st March 2013 Rs.
1,30,000
Year ending on 31st March 2015 1,50,000
Year ending on 31st March 2017 2,00,000
Q75.A, B and C are partners sharing profits and losses equally. They agree to admit D for equal share.
For this purpose goodwill is to be valued at 3 year’s purchase of average profits of last 5 years which
were as follows :
Rs.
Year ending on 31st March 2013 60,000 (Profit)
Year ending on 31st March 2014 1,50,000 (Profit)
Year ending on 31st March 2015 20,000 (Loss)
On 1st October, 2016 a computer costing Rs.40,000 was purchased and debited to office expenses
account on which depreciation is to be charged @25% p.a. Calculate the value of goodwill.
Q76. The profits earned by a firm during the last four years were as follows :
Year ended 31st March Profits (Rs.)
2013 80,000
2014 1,00,000
2015 1,10,000
2016 1,50,000
Calculate the value of goodwill on the basis of three year’s purchase of weighted average profits.
Weights to be used are 1,2, 3 and 4 respectively to the profits for 2013, 2014, 2015 and 2016.
Q77. Following information is available about the business of a firm :

(i) Profits : In 2013, Rs.40,000; In 2014, Rs.50,000; In 2015, Rs.60,000, (ii) Nonrecurring income of
Rs. 1,000 is included in the profits of 2014, (iii) Profits of 2013 have been reduced by Rs.6,000 because
goods were destroyed by fire, (iv) Goods have not been insured but it is thought to insure them in future.
The insurance premium is estimated at Rs.400 per year, (v) Reasonable remuneration of the proprietor
of business is Rs.6,000 per year, but it has not been taken into account for calculation of above
mentioned profits, (vi) Profits of 2015 include Rs.5,000 income on investment.
Goodwill is agreed to be valued at two year’s purchase of the weighted average profits of the past three
years. The appropriate weights to be used are :—

2013 1; 2014 2; 2015 3.
Q78.Calculate the value of goodwill on the basis of three year’s purchase of the weighted average profits
of the last five years. Profits to be weighted 1, 2, 3, 4 and 5, the greatest weightage to be given to last
year. Profits of the last five years were :
Year ended (Rs.)
31st March, 2015 : Profit 80,000
” 2016: Profit 1,05,000 (after considering abnormal loss
of Rs.41,500)
” 2017: Loss 20,000 (after considering abnormal gain
of Rs.40,000)
” 2018: Profit 1,80,000
2019: Profit 2,00,000
Books of Accounts of the firm revealed that:
(i) Closing Stock as on 31st March, 2015 was overvalued by Rs.40,000.
(ii) Repairs to Machinery Rs.60,000 were wrongly debited to Machinery Account on 1st July, 2017.
Depreciation was charged on Machinery @ 20% p.a. on diminishing balance method.
Q79. A firm earned profits of Rs.80,000, Rs. 1,00,000, Rs. 1,20,000 and Rs. 1,80,000 during 2010-11,
2011-12, 2012-13 and 2013-14 respectively. The firm has capital investment of Rs.5,00,000. A fair rate
of return on investment is 15% p.a. Calculate goodwill of the firm based on three years’ purchase of
average super profits of last four years. (C.B.S.E. Sample Question Paper, 2015)
Q80. The average net profits expected in the future by ABC firm are Rs. 1,00,000 per year. The average
capital employed in the business by the firm is 5,00,000. The rate of interest expected from capital
invested in this class of business is 15%. The remuneration of the Partners is estimated to be Rs. 1 0,000
per annum. Find out the value of Goodwill on the basis of two year’s purchase of super profits.
1
Q81. A and B are partners. They admit C for th share in profits. For this purpose goodwill is to be
4
valued at three year’s purchase of super profits.
Following information is provided to you :
Rs.
A’s Capital 5,00,000
B’s Capital 4,00,000
Profit & Loss A/c (Cr.) 30,000
The normal rate of return is 15% p.a. Average Profits are Rs.2,00,000 per year. You are required to
calculate C’s share of goodwill.
Q82. On 1st April, 2014, a firm had assets of Rs. 1,00,000 excluding stock of Rs.20,000. Partners’
Capital Accounts showed a balance of Rs.60,000. The current liabilities were Rs. 10,000 and the balance
constituted the reserve. If the normal rate of return is 8%, the ‘Goodwill’ of the firm is valued at
Rs.60,000 at four years purchase of super profit, find the average profit of the firm. (C.B.S.E.
2015, Comptt.)
Q83. On April 1 st 2015, an existing firm had assets of Rs.5,00,000 including cash of Rs.20,000. the
firm had a General Reserve of Rs.90,000, partner’s capital accounts showed a balance of Rs.3,80,000
and creditors amounted to Rs.30,000. If the normal rate of return is 20% and the goodwill of the firm is
valued at Rs. 64,000 at 4 year’s purchase of super profit, find the average profits of the firm.
Q84. The average profits of a firm is Rs.48,000. The total assets of the firm are Rs.8,00,000. Value of
other liabilities is Rs.5,00,000. Average rate of return in the same business is 12%.
Calculate goodwill from capitalisation of average profits method.

Q85. Anupma, Pumima and Ruchika are partners in a business. Balances in their Canital and Current
Accounts as on 31st March. 2019 were :
Capital Account Current Account
(Rs.) (Rs.)
Anupma 6,00,000 60,000 (Dr.)
Pumima 5,00,000 30,000 (Dr.)
Ruchika 5,00,000 10,000 (Cr.)
The firm earned an average profit of Rs.2,40,000. If the normal rate of return is 12%, find the value of
goodwill by (a)Capitalisation of Average Profit Method.(b) Capitalisation of super profits
Q86.. The following information relates to a partnership firm :

(a) Profits/Losses for the last six years :
1st year Rs.20,000 Profit 4th year Rs.60,000 Profit
2nd year Rs.60,000 Profit 5th year Rs.50,000 Profit
3rd year Rs.10,000 Loss 6th year Rs.72,000 Profit
(b) Average Capital Employed is Rs.2,00,000.
(c) Rate of normal profit is 15%.
Find out the value of goodwill on the basis of:
(i) Four year’s purchase of average profits.
(ii) Four year’s purchase of super profits.
(iii) Capitalisation of super profits.
Q87. X and Y were partners sharing profits in the ratio of 2 : 1. With effect from 1st April, 2016, they
decided to share profits in the ratio of 3 : 1. For this purpose the goodwill of the firm is valued at Rs.
1,80,000. Give the necessary journal entry.
Q88. A and B are partners sharing profits and losses in the ratio of 3 : 1. It was decided that with effect
from 1st April, 2015 the profit sharing ratio will be 5 : 3. Goodwill is to be valued at 2 year’s purchase
of average of 3 year’s profits. The profits for the years ending 31st March 2013, 2014 and 2015 were
Rs.36,000, Rs.32,000 and Rs.40,000 respectively.
Pass the necessary journal entry for the treatment of goodwill.
Q89. P, Q and R are partners sharing profits equally. They decided that in future R will get 1/7 share in
profits. On the day of change, firm’s Goodwill is valued at Rs.42,000. Give Journal Entries arising on
account of change in profit sharing ratio.
Q90. A, B and C were partners sharing profits and losses in the ratio of 7 : 3 : 2. From 1st April 2015,
they decided to share profits and losses in the ratio of 8 : 4 : 3. Goodwill is to be valued at the average
of three year’s profits preceding the date of change in profit sharing ratio. The profits for the years
ending 31st March 2012,2013, 2014 and 2015 were Rs.52,000, Rs.48,000, Rs.60,000 and Rs.90,000
respectively. Give the necessary journal entry.
Q91 A and B are partners in a firm sharing profits in the ratio of 3 : 2. They decided to share profits in
the ratio of 3 : 4 w.e.f., April 1, 2016. On that date there was a credit balance of Rs. 70,000 in their
Profit and Loss Account. Pass the necessary journal entry assuming that partners decide to distribute
the profits.
Q92. A, B and C are partners sharing profits and losses in the ratio of 1 : 2 : 3. From April 1, 2016, they
decided to share the profits in the ratio of 2 : 3 : 4. On that date, Profit and Loss Account disclosed a
debit balance of Rs.90,000. Record the necessary journal entry for the distribution of the balance in the
Profit and Loss Account.
Q93. A and B sharing profits and losses in the ratio of 2 : 3, decide to share future profits and losses
equally with effect from 1st April, 2016. An extract of their Balance Sheet as at 31st March, 2016 is as
follows :

Case (ii) If a claim on account of workmen’s compensation is estimated at Rs.25,000.
Case (iii) If a claim on account of workmen’s compensation is estimated at Rs.40,000.
Case (iv) If a claim on account of workmen’s compensation is estimated at Rs.50,000.
Q94. A, B and C sharing profits and losses in the ratio of 4 : 3 : 2, decide to share profits and losses in
the ratio of 2 : 3 : 4 with effect from 1st April, 2016. Following is an extract of their Balance Sheet as
at 31 st March, 2016:
Investment Fluctuation Reserve 54,000 Investments (At Cost) 6,00,000
Case (j) If there is no other information.
Case (ii) If the market value of Investments is Rs.6,00,000.
Case (iii) If the market value of Investments is Rs.5,91,000.
Case (iv) If the market value of Investments is Rs.5,28,000.
Case (v) If the market value of Investments is Rs.6,60,000.
Q95. A and B are partners in a firm sharing profits in the ratio of 3 : 2. On March 31, 2016, their Balance
Sheet showed a general reserve of Rs. 54,000. On that date they decided to admit C as a new partner.
The new profit sharing ratio between A, B and C will be 4 : 3 : 2. Record the necessary journal entry in
the books of the firm under the following circumstances:
(i) When they want to transfer the general reserve in their capital accounts.
(ii) When they don’t want to transfer general reserve in their capital accounts and prefer to record an
adjustment entry for the same.
[Ans. (i) Dr. General Reserve by Rs.54,000
Cr. A’s Capital A/c by Rs.32,400
Cr. B’s Capital A/c by Rs.21,600
(ii) Dr. C’s Capital A/c by Rs. 12,000
Cr. Λ’s Capital A/c By Rs. 8,400
Cr. B’s Capital A/c by Rs. 3,600]
Q96. A, B and C are partners sharing profits equally. From 1st April, 2017, they decided to share profits
in the ratio of 3 : 4 : 5. On that date, Profit and Loss Account showed a credit balance of Rs. 90,000.
Partners do not want to distribute the Profit and Loss Account balance but prefer to record the change
by an adjustment entry. You are required to give the adjusting entry.
Q97. X, Y and Z were sharing profits and losses in the ratio of 5 : 3 : 2. They decided to share future
profits and losses in the ratio of 2 : 3 : 5 with effect from 1.4.2017. They decided to record the effect of
the following, without effecting their book values:—
(i) Profit and Loss Account Rs.24,000
(ii) Advertisement Suspense Account Rs. 12,000
Pass the necessary adjusting entry.
Q98 (A). A, B, C and D are partners in a firm sharing profits and losses in the ratio of 2 :2 : 1 : 1. They
decided to share future profits and losses in the ratio of 3 : 2 : 2 : 3. For this purpose goodwill of the
firm valued at Rs. 1,50,000. There was also a reserve of Rs.60,000 in the books of the firm.
Find out sacrifice ratio and gaining ratio and pass necessary journal entry assuming that reserve is not
to be distributed.
Q98 (B). Arun and Vanin were in partnership sharing profits in the ratio of 2 : 3. With effect from 1st
May 2016 they agreed to share profits in the ratio of 1 : 2. For this purpose the goodwill of the firm is

to be valued at two year’s purchase of the average profits of last three years, which were Rs.1,50,000,
Rs. 1,40,000 and Rs.2,20,000 respectively. Reserves appear in the books at Rs. 1,10,000. Partners do
not want to distribute the reserves. You are required to give effect to the change by passing a single
journal entry.
Q99. X, Y and Z are partners sharing profits and losses in the ratio of 7 : 5 : 4. Their balance sheet as at
31st March 2016 stood as follows :
Capital Accounts : Sundry Assets 6,00,000
X 2,00,000
Y 1,50,000
Z 1,20,000 4,70,000
Profit & Loss A/c (Profits) 15,000
Creditors 40,000
6,00,000 6,00,000
Partners decided that with effect from 1st April 2016, they will share profits and losses in the ratio of 3
: 2 : 1. For this purpose goodwill of the firm was valued at Rs.1,50,000. The partners do not want to
distribute the general reserve and profits.
Pass a single journal entry to record the change and prepare a revised balance sheet.
Q100. A, B &C were partners in a firm sharing profits & losses in the ratio of 2 : 2 : 1. On March
31,2018, their Balance Sheet was as follows :
Capitals: Land & Building 3,00,000
A 2,00,000 Stock 1,60,000
B 1,50,000 Debtors 80,000
C 90,000 4,40,000 Cash at Bank 10,000
Creditors 70,000
5,50,000 5,50,000
From April 1, 2018, they decided to share future profits in the ratio of 1 :2 : 3. For this purpose the
following were agreed upon :
(i) Goodwill of the firm was valued at Rs.4,50,000.
(ii) Land & Building will be appreciated by 20%.
(iii) Capitals of the partners will be in proportion to their new profit sharing ratio.
For this purpose Current Accounts will be opened.
Pass necessary Journal entries for the above transactions in the books of the firm.
Q101. A, B and C are partners in a firm sharing profits in the ratio of 3 : 2 : 1. Their Balance Sheet as
at 31st March, 2017 is as under :
Sundry Creditors 2,00,000 Premises 3,00,000
General Reserve 1,20,000 Machinery 1,80,000
Capitals : Stock 1,20,000
A 3,00,000 Debtors 2,50,000
B 1,50,000 Bank 20,000
C 1,00,000 5,50,000
8,70,000 8,70,000
From 1st April, 2017, the partners agreed to share future profits in the ratio of 4:3:3 and make the
(i) Premises will be appreciated by 10% and stock by Rs. 10,000.
(ii) A provision for doubtful debts is to be made on debtors @4%.

(iii) Sundry Creditors be reduced by Rs. 15,000.
(iv) Machinery will be depreciated by 5%.
(v) Goodwill of the firm is valued at Rs.48,000.
Prepare Revaluation Account, Partner’s Capital Accounts and Balance Sheet of the reconstituted firm.
Q102. 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 :
BALANCE SHEET OF S, T, U AND V as at 1-4-2016
Liabilities Amount Assets s
Rs.
S 2,00,000 Current Assets 2,00,000
T 1,50,000
U 1,00,000
V 50,000 5,00,000
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 Revalution Account, Partners’ Capital Accounts and the Balance Sheet of the reconstituted
firm. (C.B.S.E. 2017, Delhi)
Q103. P, Q and R were partners sharing profits in the ratio of 1 : 3 : 2. Following was their Balance
Sheet as at 31st March, 2018 :
Sundry Creditors 2,80,000 Land and Building 5,00,000
Outstanding Expenses 15,000 Investments
Workmen Compensation Reserve 60,000 (Market Value Rs. 1,10,000) 1,25,000
Investment Fluctuation Reserve 45,000 Stock 2,20,000
Capital Accounts: Sundry Debtors 3,20,000
P 2,00,000 Bank Balance 1,60,000
Q 5,00,000 Advertisement Suspense 75,000
R 3,00,000 10,00,000
14,00,000 14,00,000
On 1st April, 2018 they decided to share future profits in the ratio of 4 : 6 : 5. It was agreed that:
(i) Claim for Workmen Compensation has been estimated at Rs. 1,00,000.
(ii) A motor cycle valued at Rs. 30,000 was unrecorded and is now to be recorded in the books.
(iii) Outstanding expenses were not payable anymore.
(iv) Value of stock be increased to Rs.2,90,000.
(v) A provision for doubtful debts be created @ 5% on Sundry Debtors.
(vi) Goodwill is valued at Rs. 1,00,000.
(vii) The work of reconstitution was assigned to firm’s auditors. They were paid Rs.20,000 for this
work.
Pass journal entries and prepare Revaluation Account.
Q104. A, B and C are partners sharing profits and losses in the ratio of 2 : 2 : 1. From 1st April, 2019
they decided to share future profits and losses equally.
Following balances appeared in their books :
Profit and Loss A/c (Cr.) Rs.
20,000

Advertisement Suspense A/c (Dr.) 15,000
It was agreed that:
(i) Goodwill should be valued at two year’s purchase of super profits. Firm’s average profits. Finn’s
average profits are Rs.75,000. Capital invested in the business is Rs.6,00,000 and normal rate of return
is 10%.
(ii) Furniture (book value of Rs.50,000) be reduced to Rs.30,000.
(iii) Computers (book value of Rs.40,000) be reduced by Rs. 10,000.
(iv) Claim on account of Workmen’s Compensation amounted to Rs.50,000.
(v) Investments (book value of Rs.30,000) were revalued at Rs.25,000.
Pass necessary journal entries for the above.
Q105 X and Yare partners sharing profits and losses in the ratio of 4 : 3. Their Balance Sheet as at 31st
March, 2016 stood as follows :
Sundry Creditors 28,000 Cash 20,000
Reserve 42,000 Sundry Debtors 1,20,000
Capital Accounts : Stock 1,40,000
X 2,40,000 Fixed Assets 1,50,000
Y 1,20,000 3,60,000
4,30,000 4,30,000
They decided that with effect from 1st April, 2016, they will share profits and losses in the ratio of 2 :
1. For this purpose they decided that:
(i) Fixed assets are to be depreciated by 10%.
(ii) A provision of 6% be made on debtors for doubtful debts.
(iii) Stock be valued at Rs. 1,90,000.
(iv) An amount of Rs.3,700 included in creditors is not likely to be claimed.
Partners decided to record the revised values in the books. However, they do not want to disturb the
reserves. You are required to prepare journal entries, capital accounts of the partners and the revised
balance sheet.
Q106. P, Q and R are in partnership sharing profits and losses in the ratio of 5 : 4 : 3. On 31st March
2019, their balance sheet was as follows :
Outstanding Expenses 5,000 Sundry Debtors 2,10,000
General Reserve 75,000 Stock 3,00,000
Capital Accounts : Furniture 60,000
P 4,00,000 Plant & Machinery 4,20,000
Q 3,00,000
R 2,00,000 9,00,000
10,30,000 10,30,000
It was decided that with effect from 1st April 2019, the profit sharing ratio will be 4:3:2. For this purpose
the following revaluations were made :
(i) Furniture be taken at 80% of its value.
(ii) Stock be appreciated by 20%.
(iii) Plant & Machinery be valued at Rs.4,00,000.
(iv)Create provision for doubtful debts for Rs. 10,000 on debtors.
(v)Outstanding expenses be increased by Rs.3,000.
Partners agreed that altered values are not to be recorded in the books and they also do not want to
distribute the general reserve.
You are required to post a single journal entry to give effect to the above. Also prepare the revised
Balance Sheet.

Q107. L, M and N are partners sharing profits and losses in equal proportion. On 31 st March 2016,
their balance sheet was as follows :
Reserve and Surplus 42,000 Debtors 75,000
Capital Accounts: Less: Provision for
L 2,00,000 Doubtful debts 3,000 72,000
M 1,00,000 Stock 1,80,000
N 80,000 3,80,000 Fixed Assets 2,20,000
4,80,000 4,80,000
The partners decided that with effect from 1st April 2016, they will share profits and losses in the ratio
of 4 : 2 : 1. For this purpose goodwill is to be valued at 2 year’s purchase of the average profits of the
last four years, which were :
Rs.
Year ending 31st March 2013 20,000 (Loss)
Year ending 31st March 2014 48,000 (Profit)
Year ending 31 st March 2015 60,000 (Profit)
Year ending 31st March 2016 80,000 (Profit)
They further agreed that:
(i) Provision for doubtful debts be increased by Rs.2,000.
(ii) Stock be appreciated by 20% and fixed assets be depreciated by 10%.
(iii) Creditors be taken at Rs.49,000.
Partners do not desire to record the revised values of assets and liabilities in the books. They also desire
to leave the reserve and surplus undisturbed.
You are required to give effect to the change in profit sharing ratio by passing a single journal entry.
Also prepare the revised balance sheet.
Q108. Amit, Archit and Akshat are partners in a firm in the ratio of 3 : 2 : 1. On 1st April, 2019 they
decided to share the profits in future in the ratio of 7 : 5 : 4. On this date General Reserve is Rs. 3 8,000
and profit on revaluation of assets and liabilities being Rs.34,000. It was decided that adjustment should
be made without altering the figures in the Balance Sheet. Make adjustment by one single journal entry.
Q109. Anshu, Anju and Anupma are partners in a firm sharing profit in the ratio of 2 : 2 : I. Their
Balance Sheet as at March 31, 2019 was as follows :
Creditors 65,000 Land 2,00,000
Capital: Stock 2,10,000
Anshu 2,40,000 Debtors 50,000
Anju 2,00,000 Cash 20,000
Anupma 1,60,000 6,00,000
7,20,000 7,20,000
Anshu, Anju and Anupma decided to share the profit equally, w.e.f. April 1,2019. For this purpose it
was agreed that:
(i) The goodwill of the firm should be valued at Rs.60,000.
(ii) Land should be revalued at Rs.3,00,000 and building and plant should be depreciated by 5%. Stock
be valued at Rs.2,25,000.
(iii) Creditors amounting to Rs.2,000 were not likely to be claimed and hence should be written off.
(a) Record the necessary journal entries to give effect to the above agreement, without opening
revaluation account;
(b) Prepare the capital accounts of the partners; and

(c) Prepare the balance sheet of the firm after reconstitution.
Partners decide that General Reserve is to be transferred to Capital Accounts whereas revised values of
assets and liabilities are not to be recorded in the books.
Q110. The total capita! of the firm of Sakshi, Mehak and Megha is Rs. 1,00,000 and the market rate of
interest is 15%. The net profits for the last 3 years were Rs.3 0,000; Rs.36,000 and Rs.42,000. Goodwill
is to be valued at 2 year’s purchase of the last 3 years’ super profits. Calculate the goodwill of the firm.
Q111. The average profit earned by a firm is Rs.75,000 which includes undervaluation of stock of
Rs.5,000 on an average basis. The capital invested in the business is Rs.7,00,000 and the normal rate of
return is 7%. Calculate goodwill of the firm on the basis of 5 times the super profit. (C.B.S.E.
2015, Comptt.)
1
Q112. Calculate the value of goodwill as on 1st April, 2015, on the basis of 2 year’s purchase of the
2
average profits of the last five years. The profits and losses for the years ending 31st March were: 2010
Rs.80,000; 2011 Rs.1,00,000; 2012 Loss Rs.30,000; 2013 Rs. 1,70,000;2014 Rs. 1,60,000 and 2015
Rs.1,80,000. You are informed that the profits of the year ending 31st March 2014 included profit on
sale of a fixed asset amounting to Rs. 5 0,000 and the profits for the year 2015 were effected by a loss
due to fire amounting to Rs.20,000.
Q113. Calculate the value of goodwill at 2 year’s purchase of the average profits of the last 3 years. The
profit for the first year was Rs.50,000, for second year twice the profit of first year and for the third year
one and half times the profit of the second year.
Q114. A firm earns a profit of Rs.37,000 per year. In the same business a 10% return is generally
expected. The total assets of the firm are Rs.4,00,000. The value of other liabilities is Rs.90,000. Find
out the value of goodwill.
Q115. An existing firm had assets of Rs.4,00,000 including cash of Rs. 15,000. Its creditors amounted
to Rs.20,000 on that date. The partner’s capital accounts showed a balance of Rs.3,00,000 and reserves
amounted to Rs.80,000. If the normal rate of return is 10% and the goodwill of the firm is valued at
Rs.75,000 at 3 year’s purchase of super profits, find the average profits of the firm.
Q116. A business has earned average profits of Rs.1,00,000 during the last few years and the normal
rate of return in similar business is 10%. Find out the value of Goodwill by
(i) Capitalisation of super profit method and
(ii) Super profit method if the goodwill is valued at 3 years purchase of super profit.
The assets of the business were Rs.10,00,000 and its external liabilities Rs. 1,80,000.
(C.B.S.E. 2011)
Q117. A partnership firm earned net profits during the last three years as follows:
Years Net Profit
Rs.
2007-2008 1,90,000
2008-2009 2,20,000
2009-2010 2,50,000
The capital employed in the firm throughout the above mentioned period has been Rs.4,00,000. Having
regard to the risk involved, 15% is considered to be a fair return on the capital. The remuneration of all
the partners during this period is estimated to be Rs. 1,00,000 per annum.
Calculate the value of goodwill on the basis of (i) two year’s purchase of super profits earned on average
basis during the above mentioned three years and (ii) by capitalisation of average profits method.
(C.B.S.E. 2011, Outside Delhi)

Q118. The following information relates to a partnership firm :
(a) Sundry Assets of the firm Rs.6,80,000. Outside Liabilities Rs.60,000.
(b) Profits and losses for the past years : Profit 2013 Rs.50,000; Loss 2014 Rs. 10,000; Profit 2015
Rs. 1,64,000 and Profit 2016 ? 1,80,000.
(c) The normal rate of return in a similar type of business is 12%.
Calculate the value of goodwill on the basis of:
(i) Three year’s purchase of average profits.
(ii) Three year’s purchase of super profits.
(iii) Capitalisation of average profits, and
(iv) Capitalisation of super profits.
Q119 X, Y and Z are partners sharing profits in the ratio of 5 : 4 : 1. It is now agreed that they will share
future profits in the ratio of 3 : 3 : 4, Goodwill is valued at Rs. 1,00,000. You are required to pass a
single journal entry for the treatment of goodwill.
Q120. Chain and Dinesh have been sharing profits in the ratio of 3 : 1. The net profits for the past four
years have been Rs.60,000; Rs.50,000; Rs.90,000 and Rs. 1,20,000 respectively. It is now agreed that
in future Dinesh is to have 2/5th share in profits and for that purpose goodwill is to be valued on the
1
basis of 2 2 year’s purchase of average profits of the past four years. Give journal entry for the treatment
of goodwill.
Q121. A, B and C are partners sharing profits in the ratio of 5 : 3 : 2. It is now agreed that they will
share profits in the ratio of 5 : 4 : 3. Goodwill is valued at Rs. 1,20,000. Pass a single journal entry for
the treatment of goodwill.
Q122. P, Q and R are partners sharing profits and losses in the ratio of 5 : 3 : 2. From 1st April, 2016,
they decide to share profits and losses in equal proportions. The partnership deed provides that in the
event of any change in profit sharing ratio, the goodwill should be valued at three year’s purchase of
the average of five year’s profits. The profits and losses of the preceding five years ending 31st March
are :
Profits : 2012 : Rs.60,000, 2013 : Rs.1,50,000, 2014 : Rs.1,70,000, 2015 : Rs.1,90,000. Loss : 2016 :
Rs.70,000.
Give the necessary journal entry to record the above change.
Q123. A and B have been carrying on business in partnership with fixed capitals of Rs.2,40,000 and
Rs. 1,20,000 respectively and sharing profits in the same proportion. They decided that with effect from
April 1, 2016 they would share profits and losses in the ratio of 3 : 2. For this purpose goodwill is to be
valued at three year’s purchase of the average of preceding three year’s profits. The profits for the years
ending 31st March were 2013 : Rs.75,000; 2014 : Rs.60,000; 2015 Rs.80,000 and 2016 Rs.1,30,000.
Give the necessary journal entry.
Q124. A, B and C were partners in a firm sharing profits in the ratio of 1 : 3 : 2. They decided that with
effect from 1st April, 2016, they will share profits in the ratio of 4 : 6 : 5. For this purpose the goodwill
of the firm is valued at the total of preceding three year’s profits. The profits were :
Rs.
2011-12 40,000
2012-13 10,000 (Loss)
2013-14 80,000 (Loss)
2014-15 1,20,000
2015-16 1,40,000
Reserves and Profits appeared in the balance sheet at Rs.40,000 and Rs.30,000 respectively. Partners
do not want to distribute the reserves and profits appearing in the balance sheet. Pass a single journal
entry to record the change.

Q125. X, Y and Z are partners sharing profits and losses in the ratio of 5 : 3 : 2. Their position as at 31st
March 2019 was as follows :
Sundry Creditors 44,000 Cash in Hand 8,000
Outstanding Expenses 10,000 Cash at Bank 22,000
Capitals : Debtors 56,000
X 2,80,000 Less: Provision 6,000 50,000
Y 2,80,000 Stock 2,80,000
Z 1,00,000 6,60,000 Machinery 1,54,000
Building 2,00,000
7,14,000 7,14,000
It was decided that with effect from 1st April 2019, profit and loss sharing ratio will be 3 : 3 : 1. They
agreed on the following terms :
(i) Goodwill of the firm be valued at two year’s purchase of the average super profits of last three years.
Average profits of the last three years are Rs. 1,08,000, while the normal profits may be taken at
Rs.66,000.
(ii) Provision on debtors be reduced by Rs.2,000.
(iii) Value of stock be increased by 10% and machinery be valued at Rs.1,00,000.
(iv) An item of Rs.3,000 included in sundry creditors is not likely to be claimed.
Partners do not want to record the altered values of assets and liabilities in the books. Pass an entry to
give effect to the above and prepare the revised balance sheet.
'
Q 126The following is the balance sheet of a firm as at 31st March, 2019 :
Capital Accounts: Building 6,50,000
A 4,00,000 Plant and Machinery 5,00,000
B 4,00,000 Stock 3,00,000
C 3,00,000 Debtors 2,40,000
D 3,00,000 14,00,000 Bills Receivable 10,000
Reserves 1,50,000 Cash at bank 20,000
Profit & Loss A/c (Profits) 90,000
Creditors 80,000
17,20,000 17,20,000
On 1st April, 2019, the assets and liabilities were revalued as under : Rs.
Building 8,00,000
Plant and Machinery 3,20,000
Stock 2,60,000
Creditors 84,000
A provision of 5% was required on debtors. Goodwill of the firm is valued at Rs. 1,70,000. Partners
agreed that from 1st April, 2019 they will share profits in the ratio of 4 : 3 : 2 : 1 instead of their former
ratio of 5 : 4 : 2 : 1. They do not want to record the revised values of assets and liabilities in the books.
They also do not want to disturb the reserves and Profit & Loss A/c.
Pass a single journal entry to give effect to the above.
Q127. The profit for the five years ending on 31st March, are as follows:
Year 2014—Rs. 4,00,000; Year 2015—Rs. 3,98,000; Year 2016—Rs. 4,50,000; Year 2017—Rs.
4,45,000 and Year 2018—Rs. 5,00,000.
Calculate goodwill of the firm on the basis of 4 years' purchase of 5 years' average profit.
(NCERT, Modified)
Q128. Calculate the value of firm's goodwill on the basis of one and half years' purchase of the average
profit of the last three years. The profit for first year was Rs. 1,00,000, profit for the second year was

twice the profit of the first year and for the third year profit was one and halftimes of the profit of the
second year.
Q129. A and B are partners sharing profits in the ratio of 3 : 2. They decided to admit C as a partner
from 1st April, 2018 on the following terms:
(i) C will be given 2/5th share of the profit.
(ii) Goodwill of the firm will be valued at two years' purchase of three years' normal average profit of
the firm.
Profits of the previous three years ended 31st March, were:
2018—Profit Rs. 30,000 (after debiting loss of stock by fire Rs. 40,000).
2017—Loss Rs. 80,000 (includes voluntary retirement compensation paid Rs. 1,10,000).
2016—Profit Rs. 1,10,000 (including a gain (profit) of Rs. 30,000 on the sale of fixed assets).
You are required to value the goodwill.
Q130. X and Y are partners sharing profits and losses in the ratio of 3 : 2. They admit Z into partnership
for 1 /4th share in goodwill. Z brings in his share of goodwill in cash. Goodwill for this purpose is to
be calculated at two years' purchase of the average normal profit of past three years. Profits of the last
three years eR3e3”Tlst March, were:
2016— Profit Rs. 50,000 (including profit on sale of assets Rs. 5,000).
2017— Loss Rs. 20,000 (including loss by fire Rs. 30,000).
2018— Profit Rs. 70,000 (including insurance claim received Rs. 18,000 and interest on investments
and Dividend received Rs. 8,000):
Calculate value of goodwill. Also, calculate goodwill brought in by Z.
Q131. A and B are partners in a firm sharing profits and losses in the ratio of 2 : 1. They decide to take
C into partnership for 1 /4th share on 1st April, 2018. For this purpose, goodwill is to be valued at four
times the average annual profit of the previous four or five years whichever is higher. The agreed profits
for goodwill purpose of the past five years are:
Year 2013-14 2014-15 2015-16 2016-17 2017-18
Profit (Rs.) 14,000 15,500 10,000 16,000 15,000
Find the value of goodwill.
Q132. Sumit purchased Amit's business on 1st April, 2018. Goodwill was decided to be valued at two
years' purchase of average normal profit of last four years. The profits for the past four years were:
Year Ended 31st March, 2015 31st March, 2016 31st March, 2017 31st March, 2018
Profit (Rs.) 80,000 1,45,000 1,60,000 2,00,000
Books of Account revealed that:
(i) Abnormal loss of Rs. 20,Oθd) v)as debited to Profit and Loss Account for the year ended 31 st
March, 2015.
(ii) A fixed asset was sold in the year ended 31 st March, 2016 and gain (profit) of Rs. 25,000 was
credited to Profit and Loss Account. ~
(iii) In the year ended 31st March, 2017 assets of the firm were not insured due to oversight. Insurance
premium not paid was Rs. 15,000.
Q133. X and Y are partners in a firm. They admit Z into partnership for equal share. It was agreed that
goodwill will be valued at three years' purchase of average profit of last five years. Profits for the last
five years were:
Year Ended 31st March, 2014 31st March, 2015 31st March, 2016 31st March, 2017 31st March, 2018
Profit (Rs.) 90,000 (Loss) 1,60,000 1,50,000 65,000 1,77,000
Books of Account of the firm revealed that:
(i) The firm had gain (profit) of Rs. 50,000 from sale of machinery sold in the year ended 31 st March,
2015. The gain (profit) was credited in Profit and Loss Account.

(ii) There was an abnormal loss of Rs. 20,000 incurred in the year ended 31st March, 2016 because of
a machine becoming obsolete in accident.
(iii) Overhauling cost of second hand machinery purchased on 1st July, 2016 amounting to Rs. 1,00,000
was debited to Repairs Account. Depreciation is charged @ 20% p.a. on Written Down Value Method.
Q134. A and B are partners sharing profits and losses in the ratio of 5 : 3. On 1st April, 2018, C is
admitted to the partnership for 1 /4th share of profits. For this purpose, goodwill is to be valued at two
years' purchase of last three years' profits (after allowing partners' remuneration). Profits to be weighted
1 : 2 : 3, the greatest weight being given to last year. Net profit before partners' remuneration were:
2015-16: Rs. 2,00,000; 2016-17: Rs. 2,30,000; 2017-18: Rs. 2,50,000. The remuneration of the partners
is estimated to be Rs. 90,000 p.a. Calculate amount of goodwill.
Q135. Manbir and Nimrat are partners and they admit Anahat into partnership. It was agreed to value
goodwill at three years' purchase bn Weighted Average Profit Method taking profits of last five years!
Weights assigned to each year as 1, 2, 3, 4 and 5 respectively to profits for the year ended 31st March,
2014 to 2018. The profits for these years were: Rs. 70,000, Rs. 1,40,000, Rs. 1,00,000, Rs. 1,60,000
and Rs. 1,65,000 respectively.
Scrutiny of books of account revealed following information:
(i) There was an abnormal loss of Rs. 20,000 in the year ended 31st March, 2014.
(ii) There'was an abnormal gain (profit) of Rs. 30,000 in the year ended 31st March, 2015.
(iii) Closing Stock as on 31st March, 2017 was overvaluedjay Rs. 10,000.
Q136. Calculate the goodwill of a firm on the basis of three years' purchase of the weighted average
profit of the last four years. The appropriate weights to be used and profits are:
Year 2014-15 2015-16 2016-17 2017-18
Profit (Rs.) 1,01,000 1,24,000 1,00,000 1,40,000
Weight 1 2 3 4
On a scrutiny of the accounts, the following matters are revealed:
(i) On 1st December, 2016{ a major repair was made in respect of the plant incurring Rs. 30,000 which
was charged to revenue. The said sum is agreed to be capitalised for goodwill calculation subject to
adjustment of depreciation of 10% p.a. on reducing balance method.
(ii) The closing stock for the year 2015-16 was overvalued by Rs. 12,000.
(iii) To cover management cost, an annual charge of Rs. 24,000 should be made for the purpose of
goodwill valuation.
(iv) On 1st April, 2015, a machine having a book value of Rs. 10,t)00 was sold for Rs. fl,000 but-the
proceeds were wrongly credited to Profit and Loss Account. No effect has been given to rectify the
same. Depreciation is charged on machine @ 10% p.a. on reducing balance method.
Q137. Gupta and Bose had a firm in which they had invested Rs. 50,000. On an average, the profits
were Rs. 16,000. The normal rate of return in the industry is 15%. Goodwill is to be valued at four years'
purchase of profits in excess of profits @15% on the money invested. Value the goodwill.
Q138. The total capital of the firm of Sakshi, Mehak and Megha is Rs. 1,00,000 and the market rate of
interest is 15%. The net profits for the last 3 years were Rs. 30,000; Rs. 36,000 and Rs. 42,000. Goodwill
is to be valued at 2 years' purchase of the last 3 years' super profits. Calculate the goodwill of the firm.
(Delhi 2017 C)
Q139. The average net profit expected in future by XYZ firm is Rs. 36,000 per year. Average capital
employed
in the business by the firm is Rs. 2,00,000. The normal rate of return from capital invested in this class
of business is 10%. Remuneration of the partners is estimated to be Rs. 6,000 p.a. Find out the value of
goodwill on the basis of two years' purchase of super profit.

Q140. A partnership firm earned net profits during the last three years ended 31st March, as follows:
2016—Rs. 17,000; 2017—Rs. 20,000; 2018—Rs. 23,000.
The capital investment in the firm throughout the above-mentioned period has been Rs. 80,000. Having
regard to the risk involved, 15% is considered to be a fair return on the capital.
Y Calculate value of goodwill on the basis of two years' purchase of average super profit earned during
the above-mentioned three years.
Q141. A partnership firm earned net profits during the past three years as follows:
Year ended 31st March, 2018 31st March, 2017 31st March, 2016
Net Profit (Rs.) 2,30,000 2,00,000 1,70,000
Capital investment in the firm throughout the above-mentioned period has been Rs. 4,00,000. Having
regard to the risk involved, 15% is considered to be a fair return on the capital. The remuneration of the
partners during this period is estimated to be Rs. 1,00,000 p.a.
Calculate value of goodwill on the basis of two years' purchase of average super profit earned during
the above-mentioned three years.
Q142. A business earned an average profit of Rs. 8,00,000 during the last few years. The normal rate
of profit in the similar type of business is 10%. The total value of assets and liabilities of the business
were Rs. 22,00,000 and Rs. 5,60,000 respectively. Calculate the value of goodwill of the firm by super
profit method if it is valued at 2Vi years' purchase of super profits. (Delhi 2014 C)
Q143. Capital of the firm of Sharma and Verma is Rs. 2,00,000 and the market rate of interest is 15%.
Annual \ / salary to partners is Rs. 12,000 each. The profits for the last three years were Rs. 60,000; Rs.
72,000 and Rs. 84,000. Goodwill is to be valued at 2 years' purchase of last 3 years' average super profit.
Calculate goodwill of the firm. (Delhi 2013 C)
Q144. A and B are equal partners. They decide to admit C for 1/3rd share. For the purpose of admission
of C, goodwill of the firm is to be valued at four years' purchase of super profit. Average capital
employed in the firm is Rs. 1,50,000. Normal rate of return may be taken as 15% p.a. Average profit of
the firm is Rs. 40,000. Calculate value of goodwill.
Q145.On 1st April, 2018, an existing firm had assets of Rs. 75,000 including cash of Rs. 5,000. Its
creditors amounted to Rs. 5,000 on that date. The firm had a Reserve of Rs. 10,000 while Partners'
Capital Accounts showed a balance of Rs. 60,000. If Normal Rate of Return is 20% and goodwill of the
firm is valued at Rs. 24,000 at four years' purchase of super profit, find average profit per year of the
existing firm.
Q146. The average profit earned by a firm is Rs. 1,00,000 which includes undervaluation of stock of
Rs. 40,000 on an average basis. The capital invested in the business is Rs. 6,30,000 and the normal rate
of return is 5%. Calculate goodwill of the firm on the basis of 5 times the super profit. (Al 2015 C)
Q147. The average profit earned by a firm is Rs. 7,50,000 which includes overvaluation of stock of Rs.
30,000 on an average basis. The capital invested in the business is Rs. 42,00,000 and the normal rate of
return is 15%. Calculate goodwill of the firm on the basis of 3 times the super profit.
Q148. Ayub and Amit are partners in a firm and they admit Jaspal into partnership w.e.f. 1st April,
2018. They agreed to value goodwill at 3 years' purchase of Super Profit Method for which they decided
to average profit of last 5 years. The profits for the last 5 years were:
Year Ended Net Profit (Rs.)
31st March, 2014 1,50,000
31st March, 2015 1,80,000
31st March, 2016 1,00,000 (Including abnormal loss of Rs. 1,00,000)
31st March, 2017 2,60,000 (Including abnormal gain (profit) of Rs. 40,000)

31st March, 2018 2,40,000
The firm has total assets of Rs. 20,00,000 and Outside Liabilities of Rs. 5,00,000 as on that date. Normal
Rate of Return in similar business is 10%.
Q149. A business has earned average profit ofRs. 1,00,000 during the last few years. Find out the value
of goodwill by capitalisation method, given that the assets of the business are Rs. 10,00,000 and its
external liabilities are Rs. 1,80,000. The normal rate of return is 10%. (NCERT)
Q150. From the following particulars, calculate value of goodwill of a firm by applying Capitalisation
of Average A Profit Method:
(i) Profits of last five consecutive years ending 31st March are: 2018—Rs. 54,000; 2017—Rs. 42,000;
2016—Rs. 39,000; 2015—Rs. 67,000 and 2014—Rs. 59,000.
(ii) Capitalisation rate 20%.
(iii) Net assets of the firm Rs. 2,00,000.
Q151. A business has earned average profit of Rs. 4,00,000 during the last few years and the normal
rate of return in similar business is 10%. Find value of goodwill by:
(i) Capitalisation of Super Profit Method, and
(ii) Super Profit Method if the goodwill is valued at 3 years' purchase of super profits.
Assets of the business were Rs. 40,00,000 and its external liabilities Rs. 7,20,000. (Delhi 2013 C)
Q152. Affirm earns profit of Rs. 5,00,000. Normal Rate of Return in a similar type of business is 10%.
The value / of total assets (excluding goodwill) and total outsiders' liabilities as on the date of goodwill
are Rs. 55,00,000 and Rs. 14,00,000 respectively. Calculate value of goodwill according to
Capitalisation of Super Profit Method as well as Capitalisation of Average Profit Method.
Q153. Average profit of the firm is Rs. 2,00,000. Total assets of the firm are Rs. 15,00,000 whereas
Partners' Capital is Rs. 12,00,000. If normal rate of return in a similar business is 10% of the capital
employed, what is the value of goodwill by Capitalisation of Super Profit?
Q154. Rajan and Rajani are partners in a firm. Their capitals were Rajan Rs. 3,00,000; Rajani Rs.
2,00,000. During the year 2017-18, the firm earned a profit of Rs. 1,50,000. Calculate the value of
goodwill of the firm by capitalisation of super profit assuming that the normal rate of return is 20%.
(NCERT, Modified)
Q155. Average profit of GS & Co. is Rs. 50,000 per year. Average capital employed in the business is
Rs. 3,00,000. If the normal rate of return on capital employed is 10%, calculate goodwill of the firm by:
(i) Super Profit Method at three years' purchase; and
(ii) Capitalisation of Super Profit Method.
Q156. From the following information, calculate value of goodwill of the firm:
(i) At three years' purchase of Average Profit.
(ii) At three years' purchase of Super Profit.
(iii) On the basis of Capitalisation of Super Profit.
(iv) On the basis of Capitalisation of Average Profit.
Information:
(a) Average Capital Employed is Rs. 6,00,000.
(b) Net Profit/(Loss) of the firm for the last three years ended are:
31 st March, 2018—Rs. 2,00,000, 31 st March, 2017—Rs. 1,80,000, and 31 st March, 2016—Rs.
1,60,000.
(c) Normal Rate of Return in similar business is 10%.
(d) Remuneration of Rs. 1,00,000 to partners is to be taken as charge against profit.
(e) Assets of the firm (excluding goodwill, fictitious assets and non-trade investments) is Rs. 7,00,000
whereas Partners' Capital is Rs. 6,00,000 and Outside Liabilities Rs. 1,00,000.

Q157. A, B and C are partners sharing profits and losses in the ratio of 5 : 4 : 1. Calculate new profit-
sharing ratio, sacrificing ratio and gaining ratio in each of the following cases:
Case 1. C acquires 1 /5th share from A.
Case 2. C acquires 1 /5th share equally from A and B.
Case 3. A, B and C will share future profits and losses equally.
Case 4. C acquires 1 /10th share of A and 1/2 share of B.
Q158. A, B and C shared profits and losses in the ratio of 3 : 2 : 1 respectively. With effect from 1st
April, 2018, they agreed to share profits equally. The goodwill of the firm was valued at Rs. 18,000.
Pass necessary Journal entries when: (a) Goodwill Account is not opened; and (b) Goodwill Account is
opened.
Q159. X, Y and Z are partners sharing profits and losses in the ratio of 5 : 3 : 2. From 1st April, 2018,
they decided to share profits and losses equally. The Partnership Deed provides that in the event of any
change in the profit-sharing ratio, the goodwill should be valued at two years' purchase of the average
profit of the preceding five years. The profits and losses of the preceding years are:
Year 2013-14 2014-15 2015-16 2016-17 2017-18
Profit (Rs.) 70,000 85,000 45,000 35,000 10,000 (Loss)
You are required to calculate goodwill and pass Journal entry.
Q160. Mandeep, Vinod and Abbas are partners sharing profits and losses in the ratio of 3 :2 :1. From 1
st April, 2018 they decided to share profits equally. The Partnership Deed provides that in the event of
any change in profit-sharing ratio, goodwill shall be valued at three years' purchase of average profit of
last five years. The profits and losses of past five years are:
Profit—Year ended 31st March, 2014—Rs. 1,00,000; 2015—Rs. 1,50,000; 2017—Rs. 2,00,000;
2018—Rs. 2,00,000. Loss—Year ended 31st March, 2016—Rs. 50,000.
Pass the Journal entry showing the working.
Q161 X, Y and Z are partners sharing profits and losses in the ratio of 5:3:2, decided to share future
profits and losses equally with effect from 1st April, 2018. On that date, the goodwill appeared in the
books at Rs. 12,000. But it was revalued at Rs. 30,000. Pass Journal entries assuming that goodwill will
not appear in the books of account.
Q162. A and B are partners in a firm sharing profits in the ratio of 2 :1. They decided with effect from
1 st April, 2017, that they would share profits in the ratio of 3 : 2. But, this decision was taken after the
profit for the year 2017-18 amounting to Rs. 90,000 was distributed in the old ratio.
Value of firm's goodwill was estimated on the basis of aggregate of two years' profits preceding the
date decision became effective.
The profits for 2015-16 and 2016-17 were Rs. 60,000 and Rs. 75,000 respectively. It was decided that
Goodwill Account will not be opened in the books of the firm and necessary adjustment be made
through Capital Accounts which, on 31st March, 2018 stood, at Rs. 1,50,000 for A and Rs. 90,000 for
B. Pass necessary Journal entries and prepare Capital Accounts.
Q163. Jai and Raj are partners sharing profits in the ratio of 3 : 2. With effect from 1 st April, 2018,
they decided to share profits equally. Goodwill appeared in the books at Rs. 25,000. As on 1st April,
2018, it was valued at Rs. 1,00,000. They decided to carry goodwill in the books of the firm.
Pass the Journal entry giving effect to the above.
Q164. X and Y are partners in a firm sharing profits and losses in the ratio of 3 : 2. With effect from 1
st April, 2018, they decided to share future profits equally. On the date of change in the profit-sharing
ratio, the Profit and Loss Account showed a credit balance of Rs. 1,50,000. Record the necessary Journal
entry for the distribution of the balance in the Profit and Loss Account immediately before the change
in the profit-sharing ratio.

Q165. A and B are partners in a firm sharing profits in the ratio of 4 : 1. They decided to share future
profits in the ratio of 3 : 2 w.e.f. 1st April, 2018. On that day, Profit and Loss Account showed a debit
balance of Rs. 1,00,000. Pass Journal entry to give effect to the above.
Q166. X, Y and Z are sharing profits and losses in the ratio of 5 :3 :2. They decide to share future profits
and losses in the ratio of 2 : 3 : 5 with effect from 1 st April, 2018. They also decide to record the effect
of the following accumulated profits, losses and reserves without affecting their book values by passing
a single entry.
Book Value (Rs.)
Profit and Loss A/c (Credit) 24,000
Pass an Adjustment Entry.
Q167. A, B and C who are presently sharing profits and losses in the ratio of 5 : 3 : 2 decide to share
future profits and losses in the ratio of 2 : 3 : 5. Give the Journal entry to distribute 'Workmen
Compensation Reserve' of Rs. 1,20,000 at the time of change in profit-sharing ratio, when:
(i) no information is given; (ii) there is no claim against it.
Q168. X, /and Z who are presently sharing profits and losses in the ratio of 5 : 3 : 2 decide to share
future profits and losses in the ratio of 2 : 3 : 5. Give the Journal entry to distribute 'Workmen
Compensation Reserve' of Rs. 1,20,000 at the time of change in profit-sharing ratio, when there is a
claim of Rs. 80,000 against it.
Q169. X, Yand Z who are sharing profits in the ratio of 5 :3 :2, decide to share profits in the ratio of 2:3
:5 with effect from 1st April, 2018. Workmen Compensation Reserve appears at Rs. 1,20,000 in the
Balance Sheet as at 31st March, 2018 and Workmen Compensation Claim is estimated at Rs. 1,50,000.
Pass Journal entries for the accounting treatment of Workmen Compensation Reserve.
Q170. A, B and C who are presently sharing profits and losses in the ratio of 5 : 3 : 2 decide to share
future profits and losses in the ratio of 2 : 3 : 5. Give the Journal entry to distribute 'Investments
Fluctuation Reserve' of Rs. 20,000 at the time of change in profit-sharing ratio, when investment
(market value Rs. 95,000) appears in the books at Rs. 1,00,000.
Q170 (b) Nitin, Tarun and Amar are partners sharing profits equally and decide to share profits in the
ratio of 2:2:1 w.e.f. 1st April, 2018. The extract of Balance Sheet as at 31st March, 2018 is as follows:
Investments Fluctuation Reserve 60,000 Investments (At Cost) 4,00,000
Pass the Journal entries in each of the following situations:
(i) When its Market Value is not given;
(ii) When its Market Value is given as Rs. 4,00,000;
(iii) When its Market Value is given as Rs. 4,24,000;
(iv) When its Market Value is given as Rs. 3,70,000;
(v) When its Market Value is given as Rs. 3,10,000.
Q171. Xand /are partners sharing profits in the ratio of 2 ; 1. On 31st March, 2018, their Balance Sheet
showed General Reserve of Rs. 60,000. It was decided that in future they will share profits and losses
in the ratio of 3 : 2. Pass necessary Journal entry in each of the following alternative cases:
(i) If General Reserve is not to be shown in the new Balance Sheet.
(ii) If General Reserve is to be shown in the new Balance Sheet.
Q172. X and / are in partnership sharing profits in the ratio of 2 : 3. With effect from 1st April, 2018,
they agreed to share profits in the ratio of 1 : 2. For this purpose, goodwill of the firm is to be valued at

two years' purchase of the average profit of last three years, which were Rs. 1,50,000; Rs. 1,60,000 and
Rs. 2,00,000 respectively. The reserves appear in the books at Rs. 1,10,000. Partners decide to continue
showing Reserves in the books. You are required to give effect to the change by passing a single Journal
entry.
Q173. X, Y and Z share profits as 5 : 3 : 2. They decide to share their future profits as 4 : 3 : 3 with
effect from 1st April, 2018. On this date the following revaluations have taken place:
Investments 22,000 25,000
Plant and Machinery 25,000 20,000
Land and Building 40,000 50,000
Sundry Debtors 60,000 50,000
Trade 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.
Q174. Ashish, Aakash and Amit are partners sharing profits and losses equally. The Balance Sheet as
at 31st March, 2018 was as follows:
Sundry 75,000 Cash in Hand 24,000
Creditors
General 90,000 Cash at Bank 1,40,000
Reserve
Capital A/cs: Sundry Debtors 80,000
Ashish 3,00,000 Stock 1,40,000
Aakash 3,00,000 Land and Building 4,00,000
Amit 2,75,000 8,75,000 Machinery 2,50,000
Advertisement Suspense 6,000
10,40,000 10,40,000
The partners decided to share profits in the ratio of 2 : 2 :1 w.e.f. 1 st April, 2018. They also decided
that:
(i) Value of stock to be reduced to Rs. 1,25,000.
(ii) Value of machinery to be decreased by 10%.
(iii) Land and Building to be appreciated by Rs. 62,000.
(iv) Provision for Doubtful Debts to be made @ 5% on Sundry Debtors.
(v) Aakash was to carry out reconstitution of the firm at a remuneration of Rs. 10,000. Pass necessary
Journal entries to give effect to the above.
Q175. A, B and C are partners sharing profits and losses in the ratio of 5 : 3 : 2. Their Balance Sheet as
at 31st March, 2017 stood as follows:
A 2,50,000 Machinery 2,40,000
B 2,50,000 Computers 70,000
C 2,00,000 7,00,000 Investments (Market Value Rs. 90,000) 1,00,000
Investments Fluctuation 30,000 Cash in Hand 10,000
Reserve
8,80,000 8,80,000
They decided to share profits equally w.e.f. 1st April, 2017. They also agreed that:

(i) Value of Land and Building be decreased by 5%.
(ii) Value of Machinery be increased by 5%.
(iii) A Provision for Doubtful Debts be created @ 5% on Sundry Debtors.
(iv) A Motor Cycle valued at Rs. 20,000 was unrecorded and is now to be recorded in the books.
(v) Out of Sundry Creditors, Rs. 10,000 is not payable.
(vi) Goodwill is to be valued at 2 years' purchase of last 3 years profits. Profits being for 2016-17— Rs.
50,000 (Loss); 2015-16—Rs. 2,50,000 and 2014-15—Rs. 2,50,000.
(vii) C was to carry out the work for reconstituting the firm at a remuneration (including expenses) of
Rs. 5,000. Expenses came to Rs. 3,000.
Pass Journal entries and prepare Revaluation Account.
Q176. A, B and C are sharing profits and losses in the ratio of 2 : 2 : 1. They decided to share profit
w.e.f. 1 st April, 2018 in the ratio of 5 : 3 : 2. They also decided not to change the values of assets and
liabilities in the books of account. The book values and revised values of asset and liabilities as on the
date of change were as follows:
Machinery 2,50,000 3,00,000
Computers 2,00,000 1,75,000
Sundry Creditors 90,000 75,000
Pass an adjustment entry. [Ans.: Dr. A’s Capital A/c and Cr. B's Capital A/c—f 3,000.]
Preparation of Balance Sheet
Q177. X, Y and Z are partners sharing profits and losses in the ratio of 7 : 5 : 4. Their Balance Sheet as
at 31st March, 2018 stood as:
Capital A/cs: Sundry Assets 7,00,000
X 2,10,000
Y 1,50,000
Z 1,20,000 4,80,000
Profit and Loss A/c 25,000
Creditors 1,30,000
7,00,000 7,00,000
Partners decided that with effect from 1 st April, 2018, they will share profits and losses in the ratio of
3:2:1. For this purpose, goodwill of the firm was valued at Rs. 1,50,000. The partners neither want to
record the goodwill nor want to distribute the General Reserve and profits.
Pass a Journal entry to record the change and prepare revised Balance Sheet.
Q178. A, B and C were partners in a firm sharing profits in the ratio of 3 : 2 : 1. Their Balance Sheet as
on
31st March, 2015 was as follows:
Liablities Rs. Assets Rs.
Creditors 50,000 Land 50,000
Capital A/cs: Stock 40,000
A 1,00,000 Debtors 30,000
B 50,000 Bank 5,000
C 25,000 1,75,000
2,75,000 2,75,000
From 1st April, 2015, A, B and C decided to share profits equally. For this it was agreed that:

(i) Goodwill of the firm will be valued at Rs. 1,50,000.
(ii) Land will be revalued at Rs. 80,000 and building be depreciated by 6%.
(iii) Creditors of Rs. 6,000 were not likely to be claimed and hence should be written off.
Prepare Revaluation Account, Partners' Capital Accounts and Balance Sheet of the reconstituted firm.
(Delhi 2016)
Q179. A and B are partners sharing profits in the ratio of 4: 3. Their Balance Sheet as at 31st March,
2018 stood as:
Sundry 28,000 Cash 20,000
Creditors
Reserve 42,000 Sundry Debtors 1,20,000
Capital A/cs: Stock 1,40,000
A 2,40,000 Fixed Assets 1,50,000
B 1,20,000 3,60,000
4,30,000 4,30,000
They decided that with effect from 1st April, 2018, they will share profits and losses in the ratio of 2 :
1. For this purpose they decided that:
(i) Fixed Assets are to be depreciated by 10%.
(ii) A Provision for Doubtful Debts of 6% be made on Sundry Debtors.
(iii) Stock be valued at Rs. 1,90,000.
(iv) An amount of Rs. 3,700 included in Creditors is not likely to be claimed.
Partners decided to record the revised values in the books. However, they do not want to disturb the
Reserve. You are required to pass Journal entries, prepare Capital Accounts of Partners and the revised
Balance Sheet
Q180. X, Y and Z are partners in a firm sharing profits and losses as 5 : 4 : 3. Their Balance Sheet as at
31st March, 2018 was:
X 4,00,000 Plant and Machinery 4,20,000
Y 3,00,000
Z 2,00,000 9,00,000
10,30,000 10,30,000
From 1st April, 2018, they agree to alter their profit-sharing ratio as 4 : 3 : 2. It is also decided that:
(a) Furniture be taken at 80% of its value.
(b) Stock be appreciated by 20%.
(c) Plant and Machinery be valued at Rs. 4,00,000.
(d) Outstanding Expenses be increased by Rs. 13,000.
Partners agreed that altered values are not to be recorded in the books and they also do not want to
distribute the General Reserve.
You are required to pass a single Journal entry to give effect to the above. Also, prepare Balance Sheet
of the new firm.
Q181 Balance Sheet of X and Y, who share profits and losses as 5 : 3, as at 1st April, 2017 is:
X's Capital 52,000 Goodwill 8,000
Y's Capital 54,000 Machinery 38,000
General Reserve 4,800 Furniture 15,000

Sundry Creditors 5,000 Sundry Debtors 33,000
Employees' Provident Fund 1,000 Stock 7,000
Workmen Compensation Reserve 10,000 Bank 25,000
Advertisement Suspense A/c 800
1,26,800 1,26,800
On the above date, they decided to change their profit-sharing ratio to 3 :5 and agreed upon the
following:
(a) Goodwill be valued on the basis of two years' purchase of the average profit of the last three years.
Profits for 2014-15—Rs. 7,500; 2015-16—Rs. 4,000; 2016-17—Rs. 6,500.
(b) Machinery and Stock be revalued at Rs. 45,000 and Rs. 8,000 respectively.
(c) Claim on account of workmen compensation is Rs. 6,000.
Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet of the new firm.
Q182. Ram, Mohan, Sohan and Hari were partners in a firm sharing profits in the ratio of 4 : 3 : 2 : 1.
On 1st April, 2016, their Balance Sheet was as follows:
BALANCE SHEET OF RAM, MOHAN, SOHAN AND HARI as on 1st April, 2016
Capital A/cs: Fixed Assets 9,00,000
Ram 4,00,000 Current Assets 5,20,000
Mohan 4,50,000
Sohan 2,50,000
Hari 2,00,000 13,00,000
14,20,000 14,20,000
From the above date, the partners decided to share the future profits in the ratio of 1 : 2 : 3 : 4. For this
purpose the goodwill of the firm was valued at Rs. 1,80,000. The partners also agreed for the following:
(a) The claim for workmen compensation has been estimated at Rs. 1,50,000.
(b) Adjust the capitals of the partners according to new profit-sharing ratio by opening Partners' Current
Accounts.
firm.
(Delhi 2017)
Q183. Suresh, Ramesh, Mahesh and Ganesh were partners in a firm sharing profits in the ratio of 2 : 2
: 3 : 3. On 1st April, 2016, their Balance Sheet was as follows:
BALANCE SHEET OF SURESH, RAMESH, MAHESH AND GANESH as on 1st April, 2016
Suresh 1,00,000 Current Assets 3,45,000
Ramesh 1,50,000
Mahesh 2,00,000
Ganesh 2,50,000 7,00,000
Workmen Compensation 75,000
Reserve 9,45,000 9,45,000
From the above date, the partners decided to share the future profits equally. For this purpose the
goodwill of the firm was valued at Rs. 90,000. It was also agreed that:
(a) Claim against Workmen Compensation Reserve will be estimated at Rs. 1,00,000 and fixed assets
will be depreciated by 10%.
(b) The Capitals of the partners will be adjusted according to the new profit-sharing ratio. For this,
necessary cash will be brought or paid by the partners as the case may be.

firm.
(A! 2017)
Q184. Following is the Balance Sheet of A and B, who shared Profits and Losses in the ratio of 2 : 1,
as at 1st April, 2018:
BALANCE SHEET OF A AND B as on 1st April, 2018
Capital A/cs: Land and Buildings 2,90,000
A 3,00,000 Furniture 80,000
B 2,00,000 5,00,000 Stock 2,40,000
Reserve 1,50,000 Debtors 1,50,000
Creditors 2,00,000 Bank 60,000
Cash 30,000
8,50,000 8,50,000
On the above date, the partners changed their profit-sharing ratio to 3 :2. For this purpose, the goodwill
of the firm was valued at Rs. 3,00,000. The partners also agreed for the following:
(a) The value of Land and Building will be Rs. 5,00,000;
(b) Reserve is to be maintained at Rs. 3,00,000.
(c) The total capital of the partners in the new firm will be Rs. 6,00,000, which will be shared by the
partners in their new profit-sharing ratio.
firm.
Q185.A, B and C were partners sharing profits and losses in the ratio of 7 : 5 : 4. From 1 st April,
2016, they decided to share profits and losses in the ratio of 3 : 2 : 1. You are required to fill up the
following journal entry :
JOURNAL
Date Particulars L.F. Dr. (Rs.) Cr. (Rs.)
2016 A’s Capital A/c Dr.
April 1
B’s Capital A/c Dr. —
ToCs Capital A/c 7,200
(Adjustment for goodwill due to change in profit sharing
ratio)
Q186.A, B and C are partners sharing profit and loss in the ratio of 2 : 5 : 5. From 1st January, 2019,
they decided to share profit and loss in the ratio of 3 : 5 : 7.
You are required to fill up the following journal entry :
Date Particulars L.F. Dr (Rs.) Cr. (Rs.)
2019 Rs. Rs.
Jan. 1 A’s Capital A/c Dr.
C’s Capital A/c Dr. 90,000
To B’s Capital A/c —
(Adjustment for goodwill due to change in profit sharing
ratio)

Chapter 3: Admission of a Partner
𝟑 𝟐 𝟏
Q 1.A, B and C are partners in proportion of 𝟔 , 𝟔 and 𝟔 respectively. D was admitted in the firm as a
𝟏
new partner with 𝟔th share. Calculate the new profit sharing ratios of the partners.
𝟕 𝟓
Q 2.(a) Ram and Shyam are partners sharing profits and losses in the ratio of 𝟏𝟐 : 𝟏𝟐 They admit Gopi
as a new partner for 1/6 th share, which he acquires equally from Ram and Shyam. Calculate the new
profit sharing ratios of the partners.
(b) A, B and C were partners in a firm sharing profits in the ratio of 3 : 2 : 1. They admitted D as a
new partner for 1/8th share in the profits, which he acquired 1/16th from B and 1/16th from C.
Calculate the new profit sharing ratio of A, B, C and D. (C.B.S.E. 2016)
Q 3.Suresh and Ramesh were partners in a firm sharing profits in 5 : 3 ratio. On 1-4-2018 they admitted
Deepak as a new partner for l/4th share. On 31st July, 2018 Karan was admitted as a new partner for
l/6th share which he acquired equally from Suresh, Ramesh and Deepak. Calculate the new profit
sharing ratio of Suresh, Ramesh, Deepak and Karan.
𝟑
Q 4.(a) A and B are partners sharing profits in the ratio of 7 : 3. C was admitted with 𝟕 th
𝟐 𝟏
share in the profits which he took th from A and th from B. Calculate new ratio of partners.
𝟕 𝟕
Q 5.(a) Lucy and Zeny were partners in a firm sharing profits in 4 : 3 ratio. They admitted Allen as a
new partner for 20% of share in the profits. Allen acquired his share of profits in the ratio of 1 : 2 from
Lucy and Zeny. Calculate the new profit sharing ratio of Lucy, Zeny and Allen.
(b) A, B and C are partners sharing profits in 3 : 2 : 2 ratio. They admitted D as a new partner for 1/5
share which he acquired from A, B and C in 2 : 2 : 1 ratio respectively. Calculate new profit sharing
ratio.
Q6.A and B are partners in a firm sharing profits and losses in the ratio of 3 : 2. C is admitted for l/5th
share in profits of the firm. Calculate the new profit sharing ratio of the partners if,
(a) C gets it equally from A and B
(b) C gets it from A and B in the ratio of 2 : 1
(c) C gets it wholly from A
(d) C gets it wholly from B
(e) C gets it 3/20 from A and 1/20 from B.
Q7.A and B are partners in a firm sharing profits in the ratio of 7 : 3. C is admitted as a new partner. A
sacrifices 2/7th of his share in profits in favour of C and B 1/7th of his share in favour of C. Calculate
the new profit sharing ratio between A, B and C.
Q8.Arun, Bhushan and Chetan are partners in a firm sharing profits in 3 : 2 : 3 ratio. They decide to
admit Sehzad as a partner. Arun surrendered 1/3 of his share in favour of Sehzad, Bhushan surrendered
1/4 of his share in favour of Sehzad and Chetan surrendered 1/5 of his share in favour of Sehzad.
Calculate new profit sharing ratio.
Q9.Ram and Mohan were partners in a firm sharing profits in 3 : 2 ratio. On 1st April 2016, they
admitted Sita and Radha as new partners. Ram sacrificed 1/3rd of his share in favour of Sita and Mohan
sacrificed 1/2 of his share in favour of Radha. Profit of the firm for the year ended 31st March 2017
amounted to Rs.3,60,000. Prepare necessary journal entries for distribution of profit.

Q 10.On 1-4-2010 Sahil and Chant entered into partnership for sharing profits in the ratio of 4 : 3. They
𝟏
admitted Tanu as a new partner on 1-4-2012 for 𝟓th share which she acquired equally from Sahil and
Chant. Sahil, Chant and Tanu earned profits at a higher rate than the normal rate of return for the year
ended 31-3-2013. Therefore, they decided to expand their business. To meet the requirements of
𝟏
additional capital they admitted Puneet as a new partner on 1-4-2013 for 𝟕th share in profits which he
acquired from Sahil and Charu in 7 : 3 ratio.
Calculate :
(i) New profit sharing ratio of Sahil, Charu and Tanu for the year 2012-13.
(ii) New profit sharing ratio of Sahil, Charu, Tanu and Puneet on Puneet’s admission. (C.B.S.E,
2015)
Q11.A and B are equal partners. They admit C and D as partners with 1/5 and 1/6 share respectively.
What is the profit sharing ratio of all the partners?
Q 12.X, Y and Z share profits in the ratio of 4 : 3 : 2. P was admitted in the firm as a partner with 1/10th
share of profits. Calculate sacrificing ratios of the partners.
Q I3.A and B are partners sharing profits in the ratio of 4 : 1. A surrenders l/4th of his share and B
surrenders 1/2 of his share in favour of C, a new partner. What is the sacrificing ratio and the new ratio?
Q14.Anil and Sunil are partners sharing profits and losses in the ratio of 3 : 2. They admit Charan as a
new partner from 1st April, 2019. Anil gives l/3rd of his share while Sunil gives 1/10th from his share
to Charan. Calculate the sacrificing ratios and the new ratios.
Q15.Find out the sacrificing ratio and new ratio in the following cases :
𝟏
(a) A and B are partners sharing profits and losses in the ratio of 3 :2. C is admitted for th share. A and
𝟒
B decide to share equally in future.
𝟏
(b) A and B are partners. They admit C’ for th share. In future the ratio between A and B would be 2 :
𝟒
1.
Q 16.X and Y are sharing profits and losses in the ratio of 5 : 3. Z is admitted and it is decided that the
profit sharing ratio between Y and Z shall be the same as existing between X and Y. Calculate the new
profit sharing ratio and the sacrificing ratio.
𝟏
Q17.K, L and Mpartners sharing in the ratio of 3 : 2 : 1. They admit N for th share. It is agreed that M
𝟔
would retain his original share. Calculate the new ratios and sacrificing ratios.
Q 18.A, B and C are partners sharing profits and losses in the ratio of 9 : 6 : 5. D is admitted as a new
partner for 1/4th share. B sacrifices 1/20th from his share in favour of D and rest of the sacrifice was
made by A and C in the ratio of 3 : 1. Calculate sacrificing ratio and new profit sharing ratio.
Q 19.A and B are partners in a firm, sharing Profits and Losses in the ratio of 3 : 2. Their capitals are
Rs. 1,80,000 and Rs. 1,40,000 respectively. They admit Ain partnership on the conditions that he will
bring Rs.67,500 as goodwill and Rs. 1,50,000 as capital and will get 1/4 share in the profits of the firm.
Assuming that the capital and goodwill have been brought in cash by the new partner, pass the necessary
journal entries and find out new profit sharing ratio of partners when (A) Goodwill is retained in the
firm and (B) Goodwill is withdrawn by old partners.
Q 20.X and Y are partners sharing profit and losses in the ratio of 2 : 1. They admit Z into partnership
with l/4th share in profits which he acquires equally from X and Y. Z brings in Rs. 1,65,000 as capital
and Rs.30,000 as goodwill in cash.
Pass entries and calculate new profit sharing ratios.

Q21.Ram and Shyam are partners. Their profit-sharing ratio is 3 : 2. Mohan joins the partnership for
1/4th share in profits (of which he acquires 2/3 from Ram and 1/3 from Shyam). Mohan brings in
Rs.6,00,000 for capital and Rs.2,40,000 for goodwill. 1/4 of the amount of goodwill is withdrawn by
old partners.
Pass necessary Journal entries and find out new profit sharing ratio.
Q22.B and C were partners in a firm sharing profits and losses in the ratio of 4 : 3. They admitted D as
a new partner for l/4th share in the profits which he acquired from B and Cin 3 : 4 ratio. D brought Rs.
1,80,000 for his capital and Rs.42,000 for his l/4th share in goodwill. Calculate new profit ratio of B, C
and D and pass necessary journal entries for the above transactions on D’s admission in the books of
the firm.
Q 23.A and B are partners sharing profits in the ratio of 3 : 2. They admit C into the firm for 3/7th profit
which he takes 2/7th from A and 1/7th from B. C brings Rs.60,000 for his share of goodwill and
Rs.2,00,000 for his capital.
Give necessary Journal entries. Also calculate new profit sharing ratio.
Q 24.A and B share profits and losses in the ratio of 5 : 3. They admit C as a partner who pays Rs.
𝟏
54,000 as premium for goodwill for th share in the future profits of the firm.
𝟓
Pass Journal Entries appropriating the premium money and show the new profit sharing ratio in each of
the following cases :
(i) if he acquires his share of profits in the original ratio of existing partners;
(ii) if he acquires his share of profits in equal proportions from the existing partners;
(iii) if he acquires his share in the ratio of 3 : 1 from the existing partners;
(iv) if he acquires his share of profits as l/6th from A and l/30th from B.
Q 25.Singh, Gupta and Malik are partners in a firm sharing profits and losses in the ratio of 3 : 2 : 3.
They admitted Lai as new partner, who brings Rs.3,00,000 as capital and Rs. 1,05,000 as his share in
Goodwill in cash. Singh surrendered 1/3rd of his share, Gupta surrendered 1/4th of his share and Malik
surrendered 1/5th of his share in favour of Lal.
Find out Sacrifice Ratio and Pass necessary journal entries for the above.
Also calculate new profit sharing ratio.
Q 26.A and B are partners in a firm. Their profit sharing ratio is 5 : 3. They admit C into partnership for
1/4th share. As between themselves A and B decide to share profits equally in future. C brings in Rs.
1,20,000 as his capital and Rs.60,000 as premium. Calculate the sacrificing ratio and record the
necessary journal entries on the assumption that the amount of premium brought in by C is retained in
business.
Q27.Gahlot and Harrison are partners in a firm sharing profits in the ratio of 3 : 2. Thomas is admitted
into partnership for l/5th share in profits. He brings in Rs.3 0,000 as his share of goodwill premium.
The new profit sharing ratio between Gahlot, Harrison and Thomas is 11 : 9 : 5. No goodwill account
appears in the books. Show how the amount of premium brought in by Thomas will be shared by Gahl
ot and Harrison and record journal entries for each of the following cases :
(i) The amount is retained in the firm.
(ii) The amount is withdrawn fully by the old partners.
(iii) The old partners withdraw the amount to the extent of 50% of what is credited to them.
Q28.A and B are partners sharing profits in the ratio of 3 : 1. On 1st April 2017, they admit C into
𝟏
partnership for 𝟓th share who pays Rs.50,000 as premium privately. On 1st April 2018, they admit D
𝟏
into partnership for 𝟔
th share who brings Rs.40,000 as premium 75% of which is withdrawn by the

𝟏
existing partners. On 1st April 2019, A is admitted as a partner for 𝟕 th share who brings Rs. 60,000 as
premium which is retained in the business.
Pass journal entries for the above.
Q29.A and B are partners sharing profits & losses as 2 : 1. C and D are admitted and profit sharing ratio
becomes 4 : 2 : 3 : 1. Goodwill is valued at Rs.2,00,000. D brings required goodwill and Rs.50,000 cash
for Capital. C brings in Rs.50,000 cash and Rs.40,000 worth stock as his capital in addition to the
required amount of goodwill in cash.
Show the necessary journal entries.
Q30.A and B are partners sharing profits and losses in the ratio of 2 : 1. They admit C as a partner for
𝟏
𝟓
th share. Cbrings in Rs.5,00,000 as his capital and his share of goodwill in cash. For this purpose, the
goodwill of the firm is to be calculated at three year’s purchase of the average profits of the total last
four years. The profits of the last four years ending 31st March were :
Profit (Rs.)
Year
2015-16 1,60,000 (after charging loss of Rs.25,440 on sale of plant)
2016-17 1,40,000 (after charging voluntary retirement compensation
of Rs.50,000)
2017-18 2,50,000
2018-19 2,40,000
The following information is provided:
(i) On 1st October 2016, the firm had purchased a Computer for Rs.60,000 and it was debited to
stationery expenses. Depreciation is to be charged on Computer @ 20% p.a. on the Diminishing Balance
Method.
(ii) The Closing Stock ending 31st March 2017 and 2018 were overvalued by Rs.20,000 and Rs.30,000
respectively.
(iii) To cover the operating cost, an annual charge of Rs. 10,000 should be made for the purpose of
valuation of goodwill.
Pass necessary journal entries on admission of C.
Q31.A and B are partners in a firm sharing profits in the ratio of 7 : 5. On April 1,2017 they admit
𝟏
C as a new partner for 𝟔th share. The new ratio will be 13:7:4.
C contributed the following assets towards his capital and for his share of goodwill : Stock Rs.60,000;
Debtors Rs.80,000; Land Rs.2,00,000; Plant and Machinery Rs. 1,20,000. On the date of admission of
C, the goodwill of the firm was valued at Rs.7,50,000. Record necessary journal entries in the books of
the firm on C’s admission and prepare C’s capital account.
Q32.Arti and Bharti are partners in a firm sharing profits in 3 : 2 ratio. The admitted Sarthi as a new
partner and the new profit-sharing ratio will be 2 : 1 : 1. Sarthi brought Rs. 1,00,000 for her share of
goodwill. Goodwill already appeared in the books of Arti and Bharti at Rs.60,000.
Pass the necessary Journal entries in the books of the new firm for the above transactions.
𝟏
Q33.A and B are partners sharing profits in the ratio of 3 : 2. They admit C into the partnership with 𝟒th
share in future profits. The new profit sharing ratio is 5:4:3. C brings into the business Rs. 50,000 for
his capital but could not bring any amount for goodwill. The firm’s goodwill on C’s admission was
valued at Rs.48,000. Pass journal entries.
Q34.Cake and Muffin are partners sharing profits and losses in the ratio of 5 : 4. On 1st April, 2016,
they admit Cookie as a new partner for 1/6th share in the profits of the firm and the new ratio agreed
upon is 3 : 2 : 1.

Goodwill, at the time of Cookie’s admission is to be valued on the basis of capitalisation of the average
profits of the last three years. Profits for the last three years were :
Year ended 31st March, 2014 Rs.39,000 (including an abnormal loss of Rs. 9,000).
Year ended 31st March, 2015 Rs.83,000 (including an abnormal gain of Rs.8,000).
Year ended 31st March, 2016 Rs.72,000.
On 1st April, 2016, the firm had assets of Rs.8,00,000. Its creditors amounted to Rs.3,60,000. The firm
had a Reserve Fund of Rs.40,000 while Partners’ Capital Accounts showed a balance of Rs.4,00,000.
The normal rate of return expected from this class of business is 13%.
Cookie brings in Rs.2,00,000 for her capital but is unable to bring in cash for her share of goodwill.
(i) Calculate Cookie’s share of Goodwill in the firm (Show your workings clearly).
(ii) Pass Journal entries at the time of Cookie’s admission.
(ISC Sample Paper 2017)
Q35.Xand Y are partners in a firm sharing profits in the ratio of 5 : 3. On March 1, 2017 they admitted
Z as a new partner. The new profit sharing ratio will be 4 : 3 : 2. Z brought in Rs. 1,00,000 in cash as
his share of capital but could not bring any amount for goodwill in cash. The firm’s goodwill on Z’s
admission was valued at Rs. 1,80,000. X and Y decided that Z can bring his share of premium for
goodwill later or it can be adjusted against his share of profits. At the time of Z’s admission goodwill
existed in the books of the firm at Rs.2,40,000.
You are required to pass necessary journal entries in the books of the firm on Z’s admission.
Q36.George and Henry are partners sharing profits in the ratio of 3 :2. They decided to admit David as
a new partner and to share future profits and losses equally.
David brings in Rs.50,000 as his capital. Goodwill of the firm is valued at Rs.60,000. Record the
necessary journal entries :
(a) When no goodwill appears in the books
(b) When goodwill appears at Rs. 50,000, and
(c) When goodwill appears at Rs. 1,00,000.
Q37.P and Q share profits in the ratio of 7 : 3. R is admitted for 2/7th share in profits. Goodwill already
appears in the balance sheet at Rs. 1,00,000. Pass the necessary journal entries if:
(1) R cannot bring cash for his share of goodwill Rs.80,000.
(2) R brings in cash Rs.80,000 for his share of goodwill.
When new partner brings in only a part of his share of goodwill/premium
Q38.A and B are partners sharing profits in the ratio of 3 : 2. They admit C into the firm for l/4th share
in profit which he takes 1/6th from A and 1/12th from B. C brings Rs. 50,000 as goodwill out of his
share of Rs.90,000. No goodwill account appears in the books of the firm. Pass necessary journal entries
to record this arrangement.
Q39.A and B are partners sharing profits equally. They admit C into partnership, C paying only
Rs.60,000 for premium out of his share of premium of Rs. 1,08,000 for 1/4th share of profit. Goodwill
account appears in the books at Rs.3,00,000. Give the necessary journal entries.
Q40.Vimal and Kamal are partners sharing profits in the ratio of 4 :1. They admit Amal as a new partner
who brings Rs. 1,50,000 as his share of goodwill (premium). Amal is entitled to l/3rd share in profits.
As between themselves, Vimal and Kamal agree to share future profits and losses equally.
(a) Calculate the new profit sharing ratio.
(b) Record journal entries showing the appropriation of premium.
Q41.Hari, Ravi and Kavi were partners in a firm sharing profits in the ratio of 3 : 2 : 1. They admitted
Guru as a new partner for 1/7th share in the profits. The new profit-sharing ratio will be 2 : 2 : 2 : 1
respectively. Guru brought Rs.3,00,000 for his capital and Rs.45,000 for his 1/7th share of goodwill.

Showing your working clearly, pass the necessary Journal entries in the books of the firm for the above
mentioned transactions.
Q42.E and F were partners in a firm sharing profits in the ratio of 3 : 1. They admitted G as a new
partner on 1-3-2017 for 1/3rd share. It was decided that E, F and G will share future profits equally. G
brought Rs.50,000 in cash and machinery worth Rs.70,000 for his share of profit as premium for
goodwill. Showing your calculations clearly, pass necessary journal entries in the books of the firm.
Q43.Pass journal entries to record the following transactions on the admission of a new partner:
(i) Stock is undervalued by 10% (Book Value of Stock Rs.54,000)
(ii) Stock is overvalued by 10% (Book Value of Stock Rs.66,000)
(iii) Value of Land & Building is to be increased to Rs.5,00,000 (Book Value Rs.4,00,000)
(iv) Value of Land & Building is to be increased by Rs.5,00,000 (Book Value Rs.4,00,000)
(v) A debtor whose due of Rs.40,000 was written off as bad debts last year, paid Rs.30,000 in full
settlement.
(vi) An old customer, whose account was written off as bad debts has promised to pay Rs. 15,000 in
full settlement of his account of Rs.25,000.
(vii) A liability for claim, included in creditors for Rs.20,000 is settled at Rs. 16,000.
(viii) A computer purchased on 1st October 2016 for Rs.40,000 debited to Office Expenses Account is
to be brought into account on 31st March 2018 charging depreciation @10% p.a. on written down value
basis.
When new partner brings the amount of goodwill/premium in cash :
Q44.The following was the Balance Sheet of Anurag and Bhawna, who were sharing profits in the ratio
of 2/3 and 1/3 as at 31st March, 2017 :—
Capitals : Sundry Debtors 9,700
Anurag 30,000 Stock 20,000
Bhawna 20,000 Plant & Machinery 35,000
Building 50,000
1,15,900 1,15,900
On 1st April, 2017 they agreed to admit Monika into partnership on the following terms :—
(a) Monika was to be given 1/3 share in profits, and was to bring Rs. 15,000 as capital and Rs.6,000
as share of goodwill.
(b) That the value of stock and plant & machinery were to be reduced by 10%.
(c) That a provision of 5% was to be created for doubtful debts.
(d) That the building account was to be appreciated by 20%.
(e) Investments worth Rs. 1,400 (not mentioned in the Balance Sheet) were to be taken into
account.
(f) That the amount of goodwill was to be withdrawn by the old partners.
Pass necessary journal entries and prepare the Revaluation A/c, Capital Accounts and the Opening
Balance Sheet of the new firm.
Q45.Leela and Meeta were partners in a firm sharing profits and losses in the ratio of 5 : 3, On 1st April,
2018 they admitted Om as a new partner. On the date of Om’s admission the balance sheet of Leela and
Meeta showed a balance of Rs. 1,60,000 in General reserve and Rs.2,40,000 (Cr.) in Profit and Loss
Account. Record necessary journal entries for the treatment of these items on Om’s admission. The new
profit sharing ratio between Leela, Meeta and Om was 5:3:2.
Q46.Ram and Mohan were partners in a firm sharing profits in the ratio of 4 : 1. On 1-3-2018, they
admitted Sohan as a new partner for l/3rd share in the profits of the firm. They fixed the new profit
sharing ratio as 4 : 2 : 3.
The P & L A/c on the date of admission showed a Balance of Rs.32,000 (Dr.). The firm also had a
reserve of Rs. 1,00,000. Sohan is to bring Rs.60,000 as premium for his share of goodwill.

Showing your calculations clearly, pass necessary journal entries to record the above transactions.
Q47.A, B and C are partners sharing profits and losses in the ratio of 2 : 2 : 1. They admitted D for l/4th
share with effect from 1st April, 2017. An extract of their Balance Sheet as at 31st March, 2017 is as
follows :
Case 2 If a claim for workmen compensation is estimated at Rs.50,000.
Case 3. If a claim for workmen compensation is estimated at Rs.80,000.
Case 4. If a claim for workmen compensation is estimated at Rs. 1,00,000.
Q48.P and Q are partners sharing profits in the ratio of 3 : 2. They admitted R for 1/4th share. On this
date, General Reserve appeared in the books at Rs. 1,00,000 out of which 25% is to be retained as
‘Provision for Workmen Compensation Claim’. Record necessary journal entry.
Q49.Krishna and Suresh were partners in a firm sharing profits in the ratio of 3 : 1. On 1st April, 2015
they admitted Rahul as a new partner for l/5th share in profits of the firm. On the date of Rahul’s
admission the Balance Sheet of Krishna and Suresh showed a General Reserve of Rs. 1,20,000, a debit
balance of Rs.60,000 in Profit and Loss A/c and Workmen Compensation Reserve of Rs. 1,50,000.
The following was agreed upon on Rahul’s admission :
(i) Rahul will bring Rs. 1,50,000 as his capital and his share of goodwill premium in cash.
(ii) Goodwill of the firm be valued at Rs.2,40,000.
(iii) There was a claim of Workmen Compensation for Rs. 1,70,000,
(iv) The partners decided to share future profits in the ratio of 3 : 1 : 1.
Pass the necessary Journal entries for the above on Rahul’s admission.
(C.B.S.E. 2016 Comptt., All India)
Q 50.A, B and C sharing profits and losses in the ratio of 3 : 2 : 1 decide to admit D for 1/5th share with
effect from 1st April, 2017. An extract of their Balance Sheet as at 31st March, 2017 is:
Investments Fluctuation Reserve 30,000 Investments (At cost) 5,00,000
Case 2. If the market value of investments is Rs.5,00,000.
Q51.Anil and Beena were partners in a firm sharing profits in the ratio of 4 : 3. On 1st April, 2015 they
admitted Chahat as a new partner for l/4th share in the profits of the firm. On the date of Chahat’s
admission, the Balance Sheet of Anil and Beena showed a General Reserve of Rs.70,000, a debit
balance of Rs.7,000 in the Profit and Loss Account and an Investment Fluctuation Reserve of Rs.
10,000.
The following was agreed upon, on Chahat’s admission :
(a) Chahat will bring Rs.80,000 as her capital and her share of goodwill premium of Rs.21,000 in
cash.
(b) The market value of investments was Rs. 17,000 less than the book value.
(c) New profit-sharing ratio was agreed at 2 : 1 : 1.
Pass the necessary Journal entries for the above on Chahat’s admission.
(C.B.S.E. 2016 Comptt. Delhi)

Q52.X and Y were partners in a firm sharing profits and losses in the ratio of 3 : 2. Their Balance Sheet
as at 31st March, 2017 was as follows :
Creditors 42,000 Current Assets 2,00,000
Employee’s Provident Fund 20,000 Investments 50,000
Contingency Reserve 30,000 Furniture 20,000
Profit & Loss Account 45,000 Machinery 90,000
Workmen Compensation Reserve 18,000 Advertisement Expenditure
Investment Fluctuation Reserve 25,000 (Deferred Revenue Expenditure) 20,000
Capitals : X 1,20,000
Y 80,000 2,00,000
3,80,000 3,80,000
They admit Z into partnership on 1st April, 2017 and the new profit sharing ratio is agreed at 2 : 1 : 1.
It is estimated that:
(i) Claim on account of Workmen’s Compensation is estimated at Rs. 10,000.
(ii) Market value of Investments is Rs.46,000.
Give necessary journal entries to adjust accumulated profits and losses.
Q 57.X and Y are in partnership sharing profits and losses in the ratio of 3 : 2. Their balance sheet as at
31st March, 2018, was as under :
General Reserve 12,000 Debtors 20,000
Capital Accounts: Less : Provision 800 19,200
X 60,000 Patents 14,800
Y 30,000 Investments 8,000
Current Accounts: Fixed Assets 72,000
X 10,000 Goodwill 10,000
Y 2,000
1,29,000 1,29,000
They admit Z on 1st April, 2018 on the following terms :
1. A provision of 5% is to be created on Debtors.
2. Accrued Income of Rs. 1,500 does not appear in the books and Rs.5,000 are outstanding for
salaries.
3. Present market value of Investments is Rs.6,000. X takes over the Investments at this value.
4. New profit sharing ratio of partners will be 4 : 3 : 2. Z will bring in Rs.20,000 as his capital.
5. Z is to pay in cash an amount equal to his share in firm’s goodwill valued at twice the average
profits of the last 3 years which were Rs.30,000; Rs.26,000 and Rs.25,000 respectively.
6. Half the amount of goodwill is withdrawn by old partners.
You are required to pass Journal entries, prepare Revaluation A/c, Capital A/cs, Current A/cs and the
opening Balance Sheet of the new firm.
Q 58.A and B share the profits of a business in the ratio of 5 : 3. They admit C, into the firm for 1/4th
share in the profits to be contributed equally by A and B. On the date of admission of C, the Balance
Sheet of the firm was as follows :
A’s Capital 40,000 Machinery 30,000
B’s Capital 30,000 Furniture 20,000
Workmen’s Compensation Reserve 4,000 Stock 15,000
Creditors 2,000 Debtors 15,000
Provident Fund 10,000 Bank 6,000
86,000 86,000
Terms of C’s admission were as follows :
(i) C will bring Rs.30,000 for his share of capital and goodwill.

(ii) Goodwill of the firm has been valued at 3 year’s purchase of the average super profits of last four
years. Average profits of the last four years are Rs.20,000 while the normal profits that can be earned
with the capital employed are Rs. 12,000.
(iii) Furniture is undervalued by Rs. 12,000 and the value of stock is reduced to Rs. 13,000. Provident
Fund be raised by Rs. 1,000.
(iv) Creditors are unrecorded to the extent of Rs.6,000.
Prepare Revaluation Account, Partner’s Capital Accounts and the new Balance Sheet of A, B and C.
Q 59.Murari and Vohra of Chandigarh were partners in a firm with capitals of Rs. 1,20,000 and Rs.
1,60,000 respectively. On 1.4.2018 they admitted their manager, Robin Gurung of Meghalaya, as a
partner for one-fourth share in profits on his payment of Rs.2,00,000 as his capital and Rs.90,000 for
his one-fourth share of goodwill.
On that date the creditors of Murari and Vohra were Rs.60,000 and Bank overdraft was Rs. 15,000.
Their assets apart from cash included Stock Rs.10,000; Debtors Rs.40,000;
Plant and Machinery Rs.80,000; Land and Building Rs.2,00,000. It was agreed that stock should be
depreciated by Rs.2,000; Plant and Machinery by 20%, Rs.5,000 should be written off as bad debts and
Land and Building should be appreciated by 25%.
Prepare Revaluation Account, Capital Accounts of Murari, Vohra and Gurung and the Balance Sheet
of the new firm.
Q 60.A and B are partners sharing profits in the ratio of 2 : 1. C is admitted as a new partner and the
new ratio is decided as 5 : 3 : 2. The assets and liabilities are revalued as :
(i) Building was appreciated by 25% (Book value of Building Rs.4,00,000).
(ii) The provision for doubtful debts was reduced from Rs.5,000 to Rs.3,000.
(iii) A provision for Rs.4,000 was to be made for an outstanding bill for repairs.
(iv) Unrecorded investments were worth Rs. 10,000.
(v) Unrecorded liability towards suppliers was Rs. 12,000.
Pass the necessary journal entries.
Q 61.The following is the Balance Sheet at 31st March, 2018, of A and B who are in partnership and
share profits and losses in the proportion of three-fifth and two-fifth respectively.
Creditors 15,000 Freehold Premises 10,000
Bills Payable 4,310 Machinery and Plant 4,500
Provision for Doubtful Debts 4,000 Furniture 900
Capital Accounts : Stock 12,500
A 24,000 Debtors 22,500
B 9,000 33,000 Investments 4,250
Cash 1,660
56,310 56,310
They admit C into partnership from 1 st April, 2018. The terms of agreement are as under:
(i) C to bring in Rs.6,000 as capital and Rs.4,800 for goodwill in order to get two-seventh share in profit.
(ii) Rs.4,800 paid by C to be credited to the Loan Accounts of A and B in respective proportions.
(iii) Freehold Premises is undervalued by Rs.5,000.
(iv) Machinery and Plant is overvalued by Rs.500.
(v) Stock to be discounted at 10% and Provision for Doubtful Debts be reduced by Rs. 1,000.
(vi) Investments are to be brought down at their market price, it being Rs.3,200.
Prepare Journal entries, capital accounts and opening balance sheet. Also calculate the new ratio.
Q 63.Following is the Balance Sheet of A, B and C who share profits and losses of the business in the
ratio of 3 : 2 : 1.
BALANCE SHEET
as at 31st March, 2016

A 1,20,000 Business Premises 2,05,000
B 1,20,000 Stock-in-Trade 40,000
C 1,20,000 3,60,000 Debtors 28,000
Outstanding Salaries and Wages 7,200 Cash in Hand 4,200
3,87,200 3,87,200
On 1st April, 2016, they admit D as a partner on the following conditions :
(i) D will bring Rs.1,20,000 as his Capital and also Rs.30,000 as Goodwill premium for a quarter of the
share in the future profit/loss of the firm.
(ii) The values of the fixed assets of the firm will be increased by 10% before the admission of D.
(iii) The future profits and losses of the firm will be shared equally by the partners.
Show Journal entries, Revaluation Account, Partner’s Capital Accounts and the opening Balance Sheet
of the new firm to include the above-mentioned transactions assuming that the conditions were duly
satisfied.
When new partner does not bring his share of goodwill in cash :
Q 64 (A).A and B are partners in a firm. Their balance sheet as at 31 st March, 2018 was as follows:
Provision for Doubtful Debts 4,000 Cash 10,000
Workmen Compensation Reserve 5,600 Sundry Debtors 80,000
Outstanding Expenses 3,000 Stock 20,000
Creditors 30,000 Fixed Assets 38,600
Capitals: A 50,000 Profit & Loss A/c 4,000
B 60,000
1,52,600 1,52,600
C was taken into partnership as from 1st April, 2018. C brought Rs.40,000 as his capital but he is unable
to bring any amount for goodwill. New profit sharing ratio is 3:2:1. Following terms were agreed upon
:
1. Claim on account of Workmen’s Compensation is Rs.3,000.
2. To write off Bad Debts amounting to Rs.6,000.
3. Creditors are to be paid Rs.2,000 more.
4. Rs.2,000 be provided for an unforeseen liability.
5. Outstanding expenses be brought down to Rs. 1,200.
𝟏
6. Goodwill is valued at 1𝟐 year’s purchase of the average profits of last three years. Profits of 3
years amounted to Rs.8,000; Rs. 10,000 and Rs. 18,000.
Prepare Journal entries, capital accounts and opening Balance Sheet.
Q 64 (B).X and Y are in partnership, sharing profits in the ratio of 5 : 3 respectively. Their balance sheet
is as follows :
Creditors 28,000 Cash at Bank 15,800
Workmen’s Compensation Debtors 40,000
Reserve 12,000 Less: Provision 1,800 38,200
Z’s Loan A/c 30,000 Stock 56,000
Capital A/cs : Investments 10,000
X 50,000 Goodwill 10,000
Y 40,000 Plant 30,000
1,60,000 1,60,000
Z is admitted into partnership on the following terms :
(1) The new profit-sharing ratio will be 4 : 3 : 2 between X, Y and Z respectively.
(2) Z’s loan should be treated as his capital.
(3) Goodwill of the firm is valued at Rs.27,000.
(4) Rs.8,000 of investments were to be taken over by Xand Y in their profit sharing ratio.

(5) Stock be reduced by 10%.
(6) Provision for doubtful debts should be @ 5% on debtors and a provision for discount on debtors
@ 2% should also be made.
(7) The liability of Workmen’s Compensation Reserve was determined to be Rs. 15,000.
(8) X is to withdraw Rs.6,000 in cash.
Give journal entries to record the above and prepare balance sheet of the new firm.
Q 65.Alfa and Beta were partners in a firm. On 1st April, 2013 they admitted Gama into the partnership.
The Balance Sheet of Alfa and Beta as at 31st March, 2013 was as follows :
BALANCE SHEET OF ALFA AND BETA
Provision for Doubtful Debts 40,000 Cash 1,00,000
Workmen’s Compensation Reserve 56,000
Creditors 3,00,000 Stock 2,00,000
Capitals: Machinery 3,86,000
Alfa 5,00,000
Beta 6,00,000 11,00,000
15,26,000 15,26,000
Gama was admitted in the firm on the following terms :
(i) Gama will bring in Rs.4,00,000 as his share of capital, but he was unable to bring any amount for
goodwill.
(ii) The new profit sharing ratio between Alfa, Beta and Gama will be 3 : 2 : 1.
(iii) Claim on account of workmen compensation was Rs.30,000.
(iv) To write off bad debts amounting to Rs.40,000.
(v) A liability of Rs.20,000 included in creditors is not likely to arise.
(vi) Outstanding expenses be brought down to Rs. 12,000.
(vii) Rs.20,000 be provided for an unforeseen liability.
(viii) Goodwill of the firm was valued at Rs. 1,80,000.
Prepare Revaluation Account, Capital Accounts of Partners and the opening Balance Sheet of the new
firm. (C.B.S.E. 2014, Comptt.)
Q 66.A and B are partners in a firm sharing profits and losses in the ratio of 3 :2. On 31st March, 2017,
their Balance Sheet was as under :
Creditors 70,000 Bank 40,000
Capital A/cs : Debtors 1,20,000
A 1,50,000 Stock 60,000
B 80,000 2,30,000 Furniture 50,000
Goodwill 30,000
3,00,000 3,00,000
On the above date C is admitted as a partner. A surrendered 1/6th of his share and B 1/3rd of his share
in favour of C. Goodwill is valued at Rs. 1,20,000. C brings in only 1/2 of his share of goodwill in cash
and Rs. 1,00,000 as his capital. Following adjustments are agreed upon :
(i) Stock is to be reduced to Rs.56,000 and furniture by Rs.5,000,
(ii) There is an unrecorded asset worth Rs.20,000.
(iii) One month’s rent of Rs. 15,000 is outstanding.
(iv) A creditor for goods purchased for Rs. 10,000 had been omitted to be recorded although the
goods had been correctly included in stock.
(v) Insurance premium amounting to Rs. 8,000 was debited to P&L A/c, of which Rs.2,000 is
related to the period after 31st March, 2017.

You are required to prepare Revaluation Account, Partner’s Capital Accounts and the Balance Sheet of
the new firm. Also calculate the new profit sharing ratio.
Q 67.Saloni and Shrishti were partners in a firm sharing profits in the ratio of 7 :3. Their capitals were
Rs.2,00,000 and Rs. 1,50,000 respectively. They admitted Aditi on 1st April, 2013 as a new partner for
𝟏
𝟔
th share in future profits. Aditi brought Rs. 1,00,000 as her capital. Calculate the value of goodwill of
the firm and record necessary journal entries for the above transaction on Aditi’s admission.
(C.B.S.E. 2014)
Q 68.Abhay and Beena are partners in a firm. They admit Chetan as a partner with 1/4th share in the
profits of the firm. Chetan brings Rs.2,00,000 as his share of capital. The value of the total assets of the
firm is Rs.5,40,000 and outside liabilities are valued at Rs. 1,00,000 on that date. Give the necessary
entry to record goodwill at the time of Chetan’s admission. Also show your working notes.
(C.B.S.E. 2013)
Q 69.Balance Sheet of P and Q who share profits and losses in the ratio of 5 : 3 as at 31st March, 2018
was as follows :
Capital Accounts : Land & Building 3,00,000
P 2,50,000 Machinery 2,00,000
Q 1,50,000 Stock 70,000
Profit and Loss A/c 1,30,000 Debtors 30,000
Workmen Compensation Reserve 60,000 Cash 10,000
Sundry Creditors 50,000 Advertisement Expenditure
(Deferred Revenue) 30,000
6,40,000 6,40,000
𝟏
They admit if as a partner for 𝟑rd share in the profits of the firm which he acquires from P and Q in the
ratio of 3 : 1. if brings in Rs.4,00,000 as his capital. Ascertain the amount of goodwill and pass journal
entries on the admission of R.
Q 70.Following is the balance sheet of A and B who share profits and losses in the ratio of 2 : 1 as at
31st March, 2018:
A’s Capital 3,00,000 Cash and Bank 25,000
B’s Capital 2,00,000 Sundry Debtors 2,00,000
Reserves 70,000 Stock 2,15,000
Profit and Loss A/c 50,000 Plant and Machinery 1,80,000
Advertisement Expenditure 20,000
7,00,000 7,00,000
𝟏
They admit C as a partner from 1st April 2018 with 𝟒th share in the profits of the firm. C brings
Rs.3,20,000 as his Capital. Give journal entries for the adjustment of goodwill.
Q 71.Deepika and Rajshree are partners in a firm sharing profits and losses in the ratio of 3 : 2. On 31st
Public Deposits 61,000 Cash at Bank 2,800
Bank Overdraft 6,000 Stock 32,000
Outstanding Liabilities 2,000 Prepaid Insurance 1,000
Capital Accounts : Sundry Debtors 28,800
Deepika 48,000 Less: Provision for

Rajshree 40,000 88,000 Doubtful Debts 28,000
800
Plant and Machinery 48,000
Land and Building 50,000
Furniture 10,000
1,73,000 1,73,000
On the above date, the partners decide to admit Anshu as a partner on the following terms :
(i) The new profit-sharing ratio of Deepika, Rajshree and Anshu will be 5 : 3 : 2, respectively.
(ii) Anshu shall bring Rs.32,000 as his capital.
(iii) Anshu is unable to bring in any cash for his share of goodwill. Partners, therefore, decide to
calculate goodwill on the basis of Anshu’s share in the profits and the capital contribution made by him
to the firm.
(iv) Plant and Machinery would be increased by Rs. 12,000.
(v) Stock would be increased to Rs.40,000.
(vi) Provision for Doubtful Debts is to be maintained at Rs.4,000. Value of Land and Building has
appreciated by 20%. Furniture has depredated by 10%.
(vii) There is an additional liability of Rs.8,000 being outstanding salary payable to employees of the
firm. This liability is not included in the outstanding liabilities, stated in the above Balance Sheet.
Partners decide to show this liability in the books of accounts of the reconstituted new firm.
Prepare Revaluation Account, Partner’s Capital Accounts and the Balance Sheet of Deepika, Rajshree
and Anshu.
Q 72.C and D are partners in a firm sharing profits in the ratio of 4 : 1. On 31.3.2016, their Balance
Sheet was as follows :
BALANCE SHEET OF C AND D
as at 31.3.2016
Rs. Rs.
Provision for Bad Debts 4,000 Debtors 36,000
Outstanding Salary 6,000 Stock 40,000
Capitals : Plant and Machinery 80,000
C 1,20,000
D 80,000 2,00,000
2,60,000 2,60,000
𝟏
On the above date, E was admitted for 𝟒th share in the profits on the following terms:
(i) E will bring Rs. 1,00,000 as his capital and Rs.20,000 for his share of goodwill premium, half of
which will be withdrawn by C and D.
(ii) Debtors Rs.2,000 will be written off as bad debts and a provision of 4% will be created on debtors
for bad and doubtful debts.
(iii) Stock will be reduced by Rs.2,000, furniture will be depreciated by Rs.4,000 and 10% depreciation
will be charged on plant and machinery.
(iv) Investments of Rs.7,000 not shown in the Balance Sheet will be taken into account.
(v) There was an outstanding repairs bill of Rs.2,300 which will be recorded in the books.
Pass necessary journal entries for the above transactions in the books of the firm on E's admission.
Q 73.The following is the Balance Sheet of A and B as at 31st March, 2018 who share profits in the
ratio of 2 : 1.
Bank Overdraft 15,000 Sundry
Debtors
40,000

Reserve Fund 12,000 Less : Provision 36,400
3,600
Sundry Creditors 20,000 Stock 20,000
Capitals: A 40,000 Building 25,000
B 30,000 Patents 2,000
Machinery 33,600
1,17,000 1,17,000
𝟑 𝟐 𝟏
They admitted C into partnership on 1st April, 2018. New profit sharing ratio is agreed as 𝟔 : 𝟔 : 𝟔. C
brings in proportionate capital after the following adjustments:
(1) C brings in Rs. 10,000 in cash as his share of Goodwill.
(2) Provision for doubtful debts is to be reduced by Rs.2,000.
(3) There is an old typewriter valued Rs.2,600. It does not appear in the books of the firm. It is now
to be recorded.
(4) Patents are valueless.
(5) 2% discount is to be received from creditors.
Prepare Revaluation A/c, Capital A/cs and the opening Balance Sheet.
Q 74.Jain and Gupta were partners sharing profits in the ratio of 3 : 2. Their Balance Sheet as at 31st
Bills Payable 3,000 Debtors 20,500
Bank Overdraft 17,000 Less . Provision for
Reserve 15,000 Bad Debts 300 20,200
Jain’s Capital 70,000 Stock 44,000
Gupta’s Capital 60,000 Plant 40,000
Building 75,000
Motor Vehicles 20,000
2,14,000 2,14,000
They agreed to admit Mishra for 1/4th share from 1-4-2018 subject to the following terms :
(a) Mishra to bring in capital equal to 1/4th of the total capital of Jain and Gupta after all adjustments
including premium for goodwill.
(b) Building is undervalued by 25% and Stock is overvalued by 10%.
(c) Provision for Bad debts on Debtors to be raised to Rs. 1,000.
(d) A provision be made for Rs. 14,800 for outstanding legal charges.
(e) Mishra’s share of goodwill/premium was calculated at Rs. 10,000 which is brought by him in
cash.
Prepare Revaluation Account, Partner’s Capital Accounts and the Balance Sheet of the new firm on
Mishra’s admission.
𝟏
Q 75.A and B are partners in a firm sharing profits and losses in the ratio 3:1. They admit C for th
𝟒
share on 31st March 2014 when their Balance Sheet was as follows :
Employee’s Provident Fund 17,000 Stock 15,000
Workmen’s Compensation Debtors
50,000
Reserve 6,000 Less : Provision for
Investment Fluctuation Reserve 4,100 Doubtful debts 48,000
2,000
Capitals: A 54,000 Investments 7,000
B 35,000 Cash 6,100
Goodwill 40,000
1,16,100 1,16,100

The following adjustments were agreed upon :
(a) C brings in Rs. 16,000 as goodwill and proportionate capital.
(b) Bad debts amounted to Rs.3,000.
(c) Market value of investments is Rs.4,500.
(d) Liability on account of workmen’s compensation reserve amounted to Rs.2,000.
Prepare Revaluation A/c and Partner’s Capital A/cs.
(C.B.S.E. Sample Question Paper, 2015)
Q 76.On 31st March 2017, the Balance Sheet of Abhir and Divya, who were sharing profits in the ratio
of 3 : 1 was as follows :
Balance Sheet of Abhir and Divya
at 31st March, 2017
Rs. Rs.
Creditors 2,20,000 Cash at Bank 1,40,000
Employees’ Provident Fund 1,00,000 Debtors 6,50,000
Investment Fluctuation Fund 1,00,000 Less : Provision for bad
General Reserve 1,20,000 debts 50,000 6,00,000
Abhir 6,00,000 Investments
Divya 4,00,000 10,00,000 (market value Rs.4,40,000) 5,00,000
15,40,000 15,40,000
They decided to admit Vibhor on April 1,2017 for 1/5th share.
(a) Vibhor shall bring Rs. 80,000 as his share of goodwill premium.
(b) Stock was overvalued by Rs.20,000.
(c) A debtor whose dues of Rs.5,000 were written off as bad debts, paid Rs.4,000 in full settlement,
(d) Two months salary @Rs.6,000 per month was outstanding.
(e) Vibhor was to bring in Capital to the extent of 1/5th of the total capital of the new firm.
Prepare Revaluation A/c, Partners’ Capital A/cs and the Balance Sheet of the reconstituted firm.
𝟏 𝟏 𝟏
Q 77.A and B are partners and the profit is divided as follows : to A; to B and carried to a Reserve
𝟐 𝟑 𝟔
Account. They admit C as a partner on 1st April, 2017 at which date the Balance Sheet of the firm was
as under :
Creditors 1,60,000 Cash at Bank 20,000
Outstanding Expenses 12,000 Debtors 2,20,000
Reserve 90,000 Stock 1,80,000
Capital A/cs : Plant and Machinery 1,50,000
A 3,18,000 Buildings 2,00,000
B 2,00,000 5,18,000 Advertisement Expenditure 10,000
7,80,000 7,80,000
Following terms were agreed upon:
(i) Stock is undervalued by 10%.
(ii) Depreciation of Rs.30,000 had been omitted on plant and machinery for the year ended 31st March,
2017.
(iii) Creditors include a contingent liability of Rs. 50,000 which has been decided by the Court at
Rs.43,000.
(iv) In respect of debtors, the following debts proved bad or doubtful:
Rs. 15,000 due from Ram — bad to the full extent;
Rs.20,000 due from Shyam — insolvent, estate expected to pay only 40%.
(v) Goodwill of the firm is valued at Rs.60,000. However, C is unable to bring his share of goodwill
in cash,

(vi) C is given 1/5th share of profits which he acquires equally from A and B. C is to bring in capital
proportionate to his share of profits in the firm.
You are required to prepare Revaluation Account, Capital Accounts and the new balance sheet of the
firm.
Q 78.A and B are partners sharing profits and losses in the ratio of 3 : 2. Their Balance Sheet as at 31st
March, 2018 stood as under :
A 70,000 Furniture 30,000
B 60,000 Investments 40,000
Bank Loan 18,000 Debtors 38,000
Creditors 72,000 Less : Provision 4,000 34,000
Cash 24,000
2,40,000 2,40,000
On 1st April, 2018 they admitted C for 25% share in profits on following terms : (i) C brings in capital
proportionate to his share after all adjustments and Rs. 8,000 for goodwill out of his share of Rs. 14,000.
(ii) Depreciate furniture by 10%.
(iii) Half of investments were to be taken over by A and B in their profit sharing ratio and remaining
valued at Rs.26,000.
(iv) New ratio will be 3 : 3 : 2.
Prepare Revaluation Account, Capital Accounts and Balance Sheet after C’s admission.
Q 79.Given below is the Balance Sheet of Mr. Raymond as at 31st March, 2018:
Capital 4,00,000 Plant and Machinery 1,05,000
Bank Overdraft 60,000 Building 1,95,000

Bills Payable 15,000 Furniture and Fixtures 50,000
Creditors 50,000 Investments 25,000
Stock 45,000
Sundry Debtors 40,000
Cash at Bank 65,000
5,25,000 5,25,000
Raymond with a view to extend his business, negotiated with Simon, who entered into the partnership
on 1st April, 2018 to share profits and losses in the ratio of 2 : 1.
The arrangement made between them was as follows :
(a) Furniture and fixtures are to be taken at 90% of their value.
(b) Buildings and Plant and Machinery are to be taken at an appreciated value of 10%.
(c) Rs.4,000 of Sundry Debtors are bad and there was doubtful amount of Rs.1,500.
(d) A creditor for Rs.3,000 is not traceable for a number of years and the amount is to be written
off.
(e) Stock is to be taken at Rs.42,000.
(f) Investments and bank overdraft not to be taken over by the new partnership. An amount of Rs.40,000
to be brought in by Simon as premium for goodwill.
Simon to bring in further cash to make his capital equal to that of Raymonds after making therein the
adjustments mentioned above.
Make the necessary Journal entries to record the above transactions and prepare the opening Balance
Sheet of the partnership.
Q 80.The following is the balance sheet of A, B and C sharing profits and losses in proportion of 6 : 5
: 3 respectively :—

Capitals :— 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 agreed to take D into partnership and give him 1/8th share on the following terms :—
(1) That Furniture be depreciated by Rs.2,920.
(2) An Old Customer, whose account was written off as bad, has promised to pay Rs.2,000 in full
settlement of his full debt.
(3) That a provision of Rs. 1,320 be made for outstanding repair bills.
(4) That the value of land and building having appreciated be brought upto Rs.56,910.
(5) That D should bring in Rs. 14,700 as his capital.
(6) That D should bring in Rs. 14,070 as his share of goodwill.
(7) That after making the above adjustments, 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.
Pass the necessary journal entries and prepare the balance sheet of the new firm.
Q 81. (HOTS)A, B and C are partners in a firm sharing profits and losses in the ratio of 3 : 2 : 1. D is
admitted as a new partner for 1/4 share in the profits of the firm, which he gets 1/8 from A, and 1/16
each from B and C. The total capital of the new firm after D's admission will be Rs.2,40,000. D is
required to bring in cash equal to 1/4 of the total capital of the new firm. The capitals of the old partners
also have to be adjusted in proportion of their profit sharing ratio. The capitals of A, B and C after all
adjustments in respect of goodwill and revaluation of assets and liabilities have been made are A Rs.
80,000, B Rs.30,000 and C Rs.28,000. Calculate the capitals of all the partners and record the necessary
journal entries for doing adjustments in respect of capitals according to the agreement between the
partners.
𝟏 𝟏 𝟏 𝟏
D’s share is 𝟒 which he acquires 𝟖 from A, 𝟏𝟔 from B and 𝟏𝟔 from C
Q 82.Bakul and Gokul were partners in a firm sharing profits and losses in the ratio of 2 : 1 with capitals
of Rs.40,000 and Rs.30,000 respectively. They decided to admit Nakul into partnership on conditions
that he would bring in Rs.20,000 as his capital and Rs.6,000 for his share of goodwill for 1/4th share of
profits. Half of the amount of goodwill was withdrawn by the existing partners. The capital of the
partners in the New firm were to be arranged in profit sharing ratio on the basis of Nakul’s Capital and
excess or deficit capital to be adjusted in cash.
Give the necessary journal entries to record the transactions and show the capital accounts of the
partners and the cash account.
Q 83.Had and Kavi are partners sharing profits and losses in the ratio of 3 : 2. They admit Ravi as a
partner who contributes Rs.30,000 as his capital for 1/5th share in the profits of the firm. It is decided
that after Ravi’s admission, the capitals of the Hari and Kavi will be adjusted on the basis of Ravi’s
share of capital in the business, any surplus or deficiency to be adjusted through current accounts.
Before any adjustments were made, the capitals of Hari and Kavi were : Rs.59,000 and Rs.35,000
respectively.
At the time of Ravi’s admission :
(a) The firm’s goodwill was valued at Rs.40,000.
(b) General Reserve was Rs.25,000.
(c) Loss on revaluation of assets and liabilities was Rs.4,000.
You are required to pass the necessary journal entries on Ravi’s admission.
(ISC Specimen Question Paper, 2018)

Q 84.Ishu and Vishu are partners sharing profits in the ratio of 3 : 2. Their Balance sheet as at 31st
Investment Fluctuation Fund 5,000 Less: Provision for
Capitals : doubtful debts 7,000 35,000
Ishu 1,19,000 Investments (market
Vishu 1,12,000 2,31,000 price 19,000) 21,000
Buildings 98,000
Plant & Machinery 70,000
3,11,000 3,11,000
Nishu was admitted on 1st April, 2018 for 1/6th share on the following terms :
(i) Nishu will bring Rs.56,000 as his share of capital.
(ii) Goodwill of the firm is valued at Rs.84,000 and Nishu will bring his share of goodwill in cash.
(iii) Plant and Machinery be appreciated by 20%.
(iv) All debtors are good.
(v) There is a liability of Rs.9,800 included in Creditors that is not likely to arise.
(vi) Capital of Ishu and Vishu will be adjusted on the basis of Nishu’s capital and any excess or
deficiency will be made by withdrawing or bringing in cash by the concerned partner.
Prepare the Revaluation Account, the Partners’ Capital Accounts and the Balance Sheet of the firm after
the above adjustments.
Q 85.A, B and C are partners in a firm sharing profits and losses in the ratio of 3 : 2 : 1. Their Balance
Sheet as at 31st March, 2018 is as follows :
Bank Overdraft 20,000 Sundry Debtors 50,000
Reserve 15,000 Less: Provision 2,500 47,500
Capital Accounts: Stock 60,000
A 60,000 Patents 6,000
B 60,000 Fixed Assets 98,500
C 50,000 1,70,000 Goodwill 15,000
2,41,000 2,41,000
On 1st April, 2018, D is admitted into the firm with 1/4th share in the profits, which he gets 1/8th from
A and 1/8th from B. Other terms of agreement are as under :
(a) D will introduce Rs.60,000 as his capital and pay Rs. 18,000 as his share of goodwill.
(b) 20% of the reserve is to remain as a provision against bad and doubtful debts.
(c) A liability to the extent of Rs. 1,000 be created in respect of a claim for damages against the
firm.
(d) An item of Rs.4,000 included in sundry creditors is not likely to be claimed.
(e) Stock is to be reduced by 30% and patents to be written off in full.
(f) A is to pay off the Bank Overdraft.
After making the above adjustments the capital accounts of the old partners be adjusted on the basis of
D’s capital to his share in the business, i.e., actual cash to be paid off to, or brought in by, the old
partners, as the case may be.
Prepare journal entries, Capital Accounts and the Balance Sheet of the new firm.
Q 86.X and Y share profits in the ratio of 3 : 1. Their Balance Sheet as at 31st March, 2018, was as
under :
Outstanding Expenses 5,000 Cash 7,800
Provision for Doubtful Debts 800 Stock 5,000

Capital Accounts : Fixed Assets 80,000
X 68,000 Goodwill 8,000
Y 31,000 P&LA/c 16,000
1,40,800 1,40,800
On 1st April, 2018 Z is admitted into partnership on the following terms :—
(i) Fixed assets are overvalued by 25%.
(ii) Provision for doubtful debts should remain at 5% on debtors.
(iii) The new profit sharing ratio will be 5 : 3 : 2.
(iv) Z will pay Rs.20,000 as capital and the capitals of old partners will be adjusted on the basis of new
partner’s capital and his share in the business, actual cash to be brought in or withdrawn by old partners,
as the case may be.
(v) Goodwill of the firm is valued at Rs.20,000.
Prepare journal entries, capital accounts and the opening Balance Sheet of the new firm.
Q87. (HOTS)X and Y were partners in a firm sharing profits in 5 : 3 ratio. They admitted Z as a new
partner for 1/3rd share in the profits. Z was to contribute Rs.20,000 as his capital. The Balance Sheet of
X and Y as at 1-4-2018 the date of Z’s admission was as follows:
Creditors 27,000 Land and Building 25,000
Capital: Plant and Machinery 30,000
X 50,000 Stock 15,000
Y 35,000 85,000 Debtors 20,000
General Reserve 16,000 Less: Provision for
doubtful debts 1,500 18,500
Investment 20,000
Cash 19,500
1,28,000 1,28,000
Other terms agreed upon were :
(i) Goodwill of the firm was valued at Rs. 12,000.
(ii) Land and Building were to be valued at Rs.35,000 and Plant and Machinery at Rs.25,000.
(iii) The provision for doubtful debts was found to be in excess by Rs.400.
(iv) A liability for Rs. 1,000 included in creditors was not likely to arise.
(v) The capitals of the partners be adjusted on the basis of Z’s contribution of capital in the firm.
(vi) Excess or shortfall if any to be transferred to current accounts.
Prepare Revaluation Account, Parmer’s Capital Accounts and the Balance Sheet of the new firm.
Q 88:Chain and Harsha were partners in a firm sharing profits in the ratio of 3 : 2. On 1-4-2014 their
Balance Sheet of Charu and Harsha as on 1st April, 2014
Rs. Rs.
Workmen Compensation Fund 9,000 Investments 20,000
Investment Fluctuation Fund 11,000 Plant 14,000
Provision for bad debts 2,000 Land and Building 38,000
Capitals :
Charu 30,000
Harsha 20,000 50,000
93,000 93,000
On the above date Vaishali was admitted for 1/4th share in the profits of the firm on the following terms
:
(a) Vaishali will bring Rs.20,000 for her capital and Rs.4,000 for her share of goodwill premium.
(b) All debtors were considered good.

(c) The market value of investments was Rs. 15,000.
(d) There was a liability of Rs.6,000 for workmen compensation.
(e) Capital accounts of Charu and Harsha are to be adjusted on the basis of Vaishali’s capital by
opening current accounts.
Prepare Revaluation Account and Partners’ Capital Accounts. (C.B.S.E., 2015)
Q 89.P & K were partners in a firm. On March 31, 2017 their Balance Sheet was as follows:
Capitals : Bank 18,000
P 3,00,000 Stock 19,000
K 2,00,000 5,00,000 Debtors
22,000
General Reserve 1,00,000 Less : Provision for D.D. 20,500
1,500
Creditors 50,000 Unexpired Insurance 5,000
Outstanding Expenses 8,000 Shares in K Limited 65,000
C’s Loan 1,20,000 Plant & Machinery 1,45,500
Profit & Loss Account Land & Building 5,60,000
(Profit for 2016-17) 55,000
8,33,000 8,33,000
On April 1, 2017, they decided to admit C as a new partner for 1/4th share in profits on the following
terms:
(i) C’s Loan will be converted into his capital.
(ii) C will bring his share of goodwill premium by Cheque. Goodwill of the firm will be calculated on
the basis of Average Profits of previous three years. Profits for the year ended March 31, 2015 and
March 31, 2016 were Rs. 55,000 and Rs. 1,00,000 respectively.
(iii) 10% depreciation will be charged on Plant & Machinery and Land & Building will be appreciated
by 5%.
(iv) Capitals of P & K will be adjusted on the basis C’s capital. Adjustments be done through bank and
if required, overdraft facility be availed.
Pass necessary Journal entries on C’s admission. (C.B.S.E. Sample Paper, 2018)
Q 90.Annie and Bonnie are partners in a firm, sharing profits and losses equally. Their Balance Sheet
BALANCE SHEET OF ANNIE AND BONNIE
Rs. Rs.
Capital A/cs : Less : Provision for
Annie 45,000 Doubtful
Bonnie 40,000 85,000 Debts (1,000) 21,000
Stock 10,000
Plant & Machinery 60,000
1,21,000 Goodwill 10,000
1,21,000
𝟏
Carl was to be taken as a partner for 𝟒th share in the profits of the firm, with effect from 1st April, 2017
on the following terms :
(α) Bad Debts amounting to Rs. 1,500 to be written off.
(b) Stock to be taken over by Annie at Rs. 12,000.
(c) Plant and Machinery to be valued at Rs. 50,000.
(d) Goodwill of the firm to be valued at Rs.20,000.

(e) Carl to bring in Rs.50,000 as his capital. He was unable to bring in cash his share of goodwill.
(f) General Reserve not to be distributed. For this, it was decided that Carl would compensate the old
partners through his current account.
(i) Pass journal entries on the date of Carl’s admission.
(ii) Prepare the Capital Accounts and the Balance Sheet of the reconstituted firm,
(I.S. C. 2018)
Q91. A and B are partners sharing profits in the ratio of 5 : 3. C is admitted for l/4th share in the profits.
Calculate New Profit-sharing Ratio of the partners.
Q92.On 1st April, 2010, Sahil and Charu entered into partnership for sharing profits in the ratio of 4 :
3. They admitted Tanu as a new partner on 1st April, 2012 for l/5th share which she acquired equally
from Sahil and Charu. Sahil, Charu and Tanu earned profits at a higher rate than the normal rate of
return for the year ended 31st March, 2013. Therefore, they decided to expand their business. To meet
the requirements of additional capital, they admitted Puneet as a new partner on 1st April, 2013 for l/7th
share in profits which he acquired from Sahil and Charu in 7 : 3 ratio.
ratio of Sahil, Charu, Tanu and Puneet on Puneet's admission.
Q 93.A and B are partners sharing profits in the ratio of 5 : 3. C is admitted for 3/10th share of profits
out of which half share was gifted by A and the remaining share was taken by C equally from A and B.
Calculate new profit-sharing ratio.
Q94.Bharat and Bhushan are partners in a firm sharing profits and losses in the ratio of 5 : 3. They admit
Bhagat for l/5th share in profits. Calculate the new profit-sharing ratio of the partners when:
(i) Bhagat gets his share equally from the old partners;
(ii) Bhagat gets his share from Bharat and Bhushan in the ratio of 3 : 5;
(iii) Bhagat gets his share from Bharat alone;
(iv) Bhagat gets his share from Bhushan alone; and
(v) Bhagat gets his share from Bharat 5/40 and from Bhushan 3/40.
Q95.X and Y are partners sharing profits and losses in the ratio of 7 : 5. They admit Z, a new partner,
who acquires l/12th from X and l/6th from Y as his share. Calculate new profit-sharing ratio and the
sacrificing ratio.
(Foreign 2003)
Q96.A and B are partners in a firm sharing profits and losses in the ratio of 5 : 3. A surrenders l/20th of
his share, whereas B surrenders l/24th of his share in favour of C, a new partner.
Calculate new profit-sharing ratio and the sacrificing ratio.
(AI 2001)
.
Q97.L and M are partners in a firm sharing profits in the ratio of 5 : 3. They admit N and decide that
the profit-sharing ratio between M and N shall be same as existing between L and M. Calculate new
profit-sharing ratio and the sacrificing ratio.
Q98.X and Y are partners in a firm sharing profits and losses in the ratio of 3 : 2. They admit Z as
partner for l/4th share. Z paid Rs. 80,000 directly to X and Y as his share of goodwill. Pass the necessary
Journal entry in the books of firm.
Q99.A and B are partners in the firm sharing profits in the ratio of 3 : 2. A and B surrender 1/2 of their
respective shares in favour of C. C is to bring his share of premium for goodwill in cash. Goodwill of
the firm is valued at Rs. 40,000.
Pass necessary Journal entries for recording goodwill in the above case.
Q100A and B are partners in a firm sharing profits in the ratio of 2 : 1. On 1st April, 2018, their capitals
are Rs. 4,00,000 and Rs. 2,00,000 respectively. On that date, they admitted C as a new partner for l/5th

share in future profits. New profit-sharing ratio of A, B and C will be 3 : 1 : 1. C brought in Rs. 1,00,000
as his capital and Rs. 21,000 as his share of premium for Goodwill.
Pass Journal entries and show the Capital Accounts of all the Partners.
Q 101Ram and Shyam are partners sharing profits and losses in the ratio of 4 : 1. They agreed to admit
Mohan into the partnership on 1st April, 2018 for l/3rd share in profits. It was agreed that Ram, Shyam
and Mohan would share profits equally in future. Mohan brought in Rs. 50,000 as goodwill (premium)
for his l/3rd share in profits. Pass necessary Journal entries in the books of the firm.
Q102.X and Y are partners in a firm sharing profits in the ratio of 4 : 3. On 1st April, 2018, they admitted
Z as a partner. Z brought in Rs. 1,00,000 for his capital and Rs. 21,000 for l/3rd share of goodwill
premium. On Z's admission, goodwill appeared in the books of the firm at Rs. 28,000.
Pass necessary Journal entries on Z's admission.
Q103.Following is the Balance Sheet as at 1st April, 2018 of Sushil and Satish who are in partnership
sharing profits and losses in the ratio of 5 : 2:
Liabilities Assets Rs.
Sundry Creditors 1,30,000 Bank 10,000
Sushil 80,000 Debtors 30,500
Satish 70,000 1,50,000 Less: Provision for Doubtful Debts 500 30,000
Building 1,70,000
2,80,000 2,80,000
On the above date, they admitted Samir as new partner on the following terms:
(i) That Samir will bring in Rs. 1,00,000 for his capital and the necessary amount of goodwill/ premium
for goodwill for 3/8th share in the future profits.
(ii) Goodwill of the firm on Samir's admission was valued at Rs. 1,40,000.
(iii) That new profit-sharing ratio will be 2 : 3 : 3.
Pass necessary Journal entries to carry out these and prepare Balance Sheet of the firm after Samir's
admission as a partner.
Q104.Strong and Weak are partners sharing profits and losses in the ratio of 2 : 3. On 1st April, 2018,
they admit Able into partnership for l/4th share in profits. Able brought in Rs. 1,00,000 for his capital
and Rs. 36,000 as premium for his l/4th share in the profits. New profit-sharing ratio of Strong, Weak
and Able is agreed to be 3 : 3 : 2. Strong and Weak withdraw the premium for goodwill from the
business. Pass necessary Journal entries.
Q105.A and B were partners in a firm sharing profits in the ratio of 4 : 3. They admitted C as a new
partner for 3/7th share in the profits of the firm. New profit-sharing ratio will be 2 : 2 : 3. C brought Rs.
2,00,000 as his capital and Rs. 60,000 for his share of premium for goodwill, half of which was
withdrawn by A and B from the firm.
Calculate sacrificing ratio and pass necessary Journal entries in the books of the firm for the above
transactions. (AI 2009 C)
Q106.X and Y are partners in a firm sharing profits in the ratio of 3 : 2. On 1st April, 2018, 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.
Q107. Karan and Varun were partners in a firm sharing profits and losses in the ratio of 1 : 2. Their
fixed capitals were Rs. 2,00,000 and Rs. 3,00,000 respectively. On 1st April, 2016, Kishore was

admitted as a new partner for l/4th share in the profits. Kishore brought Rs. 2,00,000 for his capital
which was to be kept fixed like the capitals of Karan and Varun. Kishore acquired his share of profit
from Varun.
Calculate goodwill of the firm on Kishore's admission and the new profit-sharing ratio of Karan, Varun
and Kishore. Also, pass necessary Journal entry for the treatment of Goodwill on Kishore's admission
considering that Kishore did not bring his share of goodwill premium in cash.
(Delhi 2017)
Q108.A and B are partners sharing profits and losses in the ratio of 3 : 2. They admit C into partnership
for l/4th share, which he takes l/6th from A and l/12th from B. Goodwill already appears in the books
at Rs. 20,000. C brings Rs. 18,000 as goodwill out of his share of Rs. 30,000. It was decided that
shortfall in amount shall be debited to C's Current Account.
Pass necessary Journal entries for the above.
Q109.X and Y are partners sharing profits and losses in the ratio of 3 : 2. They agree to admit Z as a
partner for l/5th share. Z acquires his share from X and Y in the ratio of 2 : 3. Goodwill of the firm is
valued at Rs. 50,000. Z brings in only 60% of his share of goodwill and Rs. 2,00,000 as his capital
through cheque. Pass necessary Journal entries under each of the following alternative cases:
Case 1. When goodwill does not appear in the books.
Case 2. When goodwill appears in the books at Rs. 20,000.
Q110.A and B who share profits in the ratio of 3 : 2 had capitals of Rs. 2,00,000 and Rs. 1,50,000
respectively. They agree to admit C into partnership from 1st April, 2018 on the following terms for
l/3rd share in future profits:
(i) That C to bring Rs. 2,00,000 as capital.
(ii) That C is unable to bring his share of goodwill, goodwill of the firm is valued at Rs. 1,50,000. Pass
necessary Journal entries in the books of the firm.
Q111.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. Profits are to be shared in the ratio of 3 : 4 : 2 : 2 : 1 respectively.
D is to pay Rs. 30,000 for his share of goodwill but E is unable to pay for goodwill. Both the new
partners introduced Rs. 40,000 each as their capital. Pass necessary Journal entries.
Q112.A and B are partners in a firm sharing profits and losses in the proportion of 3/4th and l/4th
respectively. On 1st April, 2018, they take C into partnership for l/5th share of profits. C acquires his
share from A and B in the ratio of 2 : 1. Value of goodwill is determined at Rs. 24,000. At present, C is
not in a position to bring amount towards goodwill.
Give necessary Journal entries under the following alternative cases:
Case 1. When the Goodwill Account appears at Rs. 10,000 in the books of the firm.
Case 2. When Goodwill Account is not appearing in the books of the firm.
Q113.A and B are partners with capitals of Rs. 1,60,000 and Rs. 1,20,000 respectively. They admit C
as a partner on 1st April, 2018 for l/4th share in the profits of the firm. C brings in Rs. 1,60,000 as his
share of capital.
Pass Journal entries on C's admission.
Q114.Abhay and Beena are partners in a firm. They admit Chetan as a partner with l/4th share in the
profits of the firm. Chetan brings Rs. 2,00,000 as his share of capital. Value of the total assets of the
firm is Rs. 5,40,000 and outside liabilities are valued at Rs. 1,00,000 on that date. Give necessary entry
to record goodwill at the time of Chetan's admission. Also,
show your working notes. (Delhi 2013)
Q115.Balance Sheet of X and Y who share profits and losses in the ratio of 3 : 2 as at 31st March, 2018
was:

Sundry Creditors 1,00,000 Cash at Bank 10,000
Reserve 60,000 Debtors 50,000
Profit and Loss A/c 25,000 Stock 70,000
X's Capital 48,000 Furniture 20,000
Y's Capital 32,000 80,000 Plant and Machinery 1,00,000
2,65,000 2,65,000
They admit Z as a partner from 1st April, 2018 for l/5th share in the profits of the firm. Z brings in Rs.
50,000 as his capital. Give Journal entry for the adjustment of goodwill.
Q116.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 l/5th share in the future profits. Somesh brought Rs. 1,20,000 as his capital. Calculate the
value of goodwill of the firm and record necessary Journal entries for the above transactions on
Somesh's admission. (AI 2014)
Q117.Pass entries in firm's Journal for the following on the admission of a partner:
(i) Unrecorded Investments worth Rs. 5,000.
(ii) Unrecorded liabilities towards suppliers for Rs. 1,500.
(iii) A creditor of Rs. 600 is not likely to be claimed, hence is to be written back.
Q118.Pass Journal entries to record following transactions on the admission of Z, as a partner in the
Journal of X and Y, who are sharing profits in the ratio of 2 : 3.
(i) The value of furniture is to be increased by Rs. 10,000 (Book value of furniture: Rs. 50,000).
(ii) The value of furniture is to be increased to Rs. 40,000 (Book value of furniture: Rs. 20,000).
(iii) The value of furniture has to be brought up to 120% of its value. (Book value of furniture: Rs.
50,000).
(iv) Stock is undervalued by 10% (Book value of stock: Rs. 18,000).
(v) Stock is overvalued by 10% (Book value of stock: Rs. 22,000).
(Vi) The market value of stock is Rs. 25,000 (Book value of stock: Rs. 20,000).
(vii) Machinery is taken over by X for Rs. 80,000 (Book value of machinery: Rs. 60,000).
(viii) One-third of machinery is taken over by Y for Rs. 30,000 and balance is revalued at Rs. 57,600
(Book value of machinery: Rs. 72,000).
(ix) Out of the amount of insurance premium which was debited to Profit and Loss Account, Rs.
5,000 to be carried forward to next year.
(x) Expenses on revaluation amount to Rs. 5,000 paid by X.
(xi) A debtor whose due of Rs. 14,000 were written off as bad debts last year, paid Rs. 10,000 in full
settlement.
Note: No need to calculate Gain/Loss on Revaluation of Assets and Reassessment of Liabilities.
Q119.Swadesh and Swaraj were partners sharing profits equally. Their Balance Sheet as at 31st March,
2018 was:
Bills Payable 15,000 Cash at Bank 15,000
Outstanding Expenses 3,000 Debtors 20,000
Capital A/cs: Less: Provision for Doubtful Debts 500 19,500
Swadesh 60,000 Stock 20,000

Swaraj 40,000 1,00,000 Furniture 10,000
Machinery Land and Building 18,000
73,500
1,68,000 ' 1,68,000
Sambhav is admitted as a partner from 1st April, 2018 on the following terms:
(i) Sambhav will get l/5th share in profits and he will bring in Rs. 20,000 as his capital and Rs. 5,000
as his share of goodwill.
(ii) Goodwill brought in by Sambhav will be withdrawn by Swadesh and Swaraj.
(hi) Provision for Doubtful Debts should be brought up to 5% on Debtors.
(iv) Machinery be depreciated by Rs. 2,000 and Furniture by 12.5%.
(v) Stock be valued at Rs. 23,000.
(Vi) Land and Building be appreciated by 20%.
(vii) Investments of Rs. 2,000 which did not appear in books should be recorded.
(viii) Out of the amount of insurance premium which was debited to Profit and Loss Account, Rs.
5,000 be carried forward as unexpired insurance.
(ix) A bill for Rs. 5,000 for Electricity Expenses was omitted to be accounted.
Record necessary Journal entries and prepare Balance Sheet of the new firm.
Q120.Ram and Rahim are partners in a firm. They share profits and losses in the ratio of 3 : 2. Their
Balance Sheet as at 31st March, 2018 was:
Creditors 1,50,000 Cash at Bank 1,20,000
Bills Payable 80,000 Debtors 2,00,000
Outstanding Rent 20,000 Less: Provision for
Capital A/cs: Doubtful Debts 20,000 1,80,000
Ram 3,00,000 Stock 50,000
Rahim 1,50,000 4,50,000 Prepaid Expenses 10,000
Plant and Machinery 3,40,000
7,00,000 7,00,000
They admitted Prabhu as a new partner on 1st April, 2018 on the following terms:
(i) Prabhu will bring in Rs. 2,00,000 as capital and the necessary amount for goodwill.
(ii) The new profit-sharing ratio among Ram, Rahim and Prabhu will be 5 : 3 : 2.
(iii) The amount of goodwill is to be based on Prabhu's share in profits and capital contributed by
him.
(iv) Stock to be depreciated by 10%.
(v) Provision for Doubtful Debts is to be only Rs. 5,000.
(vi) Plant and Machinery are to be depreciated by 5%.
(vii) Expenses on revaluation of assets and reassessment of liabilities amounting to Rs. 1,400 is paid
by firm.
(viii) An unaccounted Accrued Income of Rs. 1,400 be accounted.
Prepare Revaluation Account, Bank Account, Partners' Capital Accounts and the Balance Sheet of the
New Firm.
Q121.Following was the Balance Sheet of A, B and C who were equal partners as at 31st March, 2018:
Bills Payable 3,300 Cash 600
Capital A/cs: Stock π,400
B 12,600 Building 19,500

C 6,000 35,400
44,700 44,700
They agreed to take D into partnership from 1st April, 2018 and give him l/4th share in the profits on
the following terms:
(i) D should bring in Rs. 9,000 for goodwill and Rs. 15,000 as capital.
(ii) Stock and Furniture be depreciated by 10%.
(iii) A Provision of 5% on Debtors be created for Doubtful Debts.
(iv) A liability for Rs. 1,080 be created against bills discounted.
(v) The value of the Building is undervalued by Rs. 8,500.
(vi) The values of liabilities and assets other than cash are not to be altered.
Give necessary entries to give effect to the above stated arrangement and prepare Opening Balance
Sheet of the firm as newly constituted.
Q122.A and B are partners in a firm sharing profits and losses in the ratio of 5 : 3. C was admitted for
l/3rd share in the profits. On the date of C's admission, the Balance Sheet of A and B showed a General
Reserve of Rs. 60,000 and a balance of Rs. 20,000 in the Profit and Loss Account on the assets side of
the Balance Sheet. Pass necessary Journal entries on the treatment of these items on C's admission.
Q123.P, Q and R were on partnership terms sharing profits and losses in the ratio of 6:3:1. They decide
to take S into partnership with effect from 1st April, 2018. The new profit-sharing ratio between P, Q,
R and S will be 3 : 3 : 3 : 1. They also decide to record the effect of the following without affecting their
book values, by passing a single adjustment entry:
Book Value (Rs.)
Pass the necessary single adjustment entry.
Q124.W and R are partners in a firm sharing profits in the ratio of 3 : 2. Their Balance Sheet as on 31st
March, 2016 was as follows:
BALANCE SHEET OF W AND R as on 31st March, 2016
General Reserve Capitals: 5,000 Furniture 40,000
W 60,000 Plant and Machinery 40,000
R 40,000 1,00,000
1,30,000 1,30,000
On the above date, C was admitted for l/6th share in the profits on the following terms:
(i) C will bring Rs. 30,000 as his capital and Rs. 10,000 for his share of goodwill premium, half of
which will be withdrawn by W and R.
(ii) Debtors Rs. 1,500 will be written off as bad debts and a provision of 5% will be created for bad and
doubtful debts.
(iii) Outstanding salary will be paid off.
(iv) Stock will be depreciated by 10%, furniture by Rs. 500 and Plant and Machinery by 8%.
(v) Investments Rs. 2,500 not mentioned in the Balance Sheet were to be taken into account.
(vi) A creditor of Rs. 2,100 not recorded in the books was to be taken into account.
Pass necessary Journal entries for the above transactions in the books of the firm on C's admission.
(Delhi 2017)

Q125.A and B are partners sharing profits and losses in the ratio of 3 : 2. On 31st March, 2018, their
Balance Sheet was as follows:
Creditors 2,50,000 Cash in Hand 25,000
Bills Payable 1,00,000 Cash at Bank 5,75,000
General Reserve 1,50,000 Debtors 50,000
A 8,00,000 Building 5,00,000
B 4,00,000 12,00,000 Machinery 2,00,000
Goodwill 50,000
17,00,000 17,00,000
They agree to admit C as a partner with effect from 1st April, 2018 with l/3rd share on the following
terms:
(i) C will bring in Rs. 5,00,000 as capital and Rs. 2,00,000 as his share of goodwill but he actually
contributed only Rs. 1,20,000 towards goodwill.
(ii) Building and Machinery to be depreciated by 5%.
(iii) Stock to be revalued at Rs. 4,00,000.
(iv) There is an unrecorded asset worth Rs. 1,20,000.
(v) One month salary of Rs. 30,000 is outstanding.
Prepare Revaluation Account, Bank Account, Capital Accounts of Partners and the Balance Sheet after
the admission of C.
Q126.Murari and Vohra were partners in a firm with capital of Rs. 1,20,000 and Rs. 1,60,000
respectively. On 1st April, 2010 they admitted Yadav as a partner for one-fourth share in profits on his
payment of Rs. 2,00,000 as his capital and Rs. 90,000 for his one-fourth share of goodwill.
On that date the creditors of Murari and Vohra were Rs. 60,000 and Bank overdraft was Rs. 15,000.
Their assets apart from cash included Stock Rs. 10,000; Debtors Rs. 40,000; Plant and Machinery Rs.
80,000; Land and Building Rs. 2,00,000. It was agreed that Stock should be depreciated by Rs. 2,000;
Plant and Machinery by 20%, Rs. 5,000 should be written off as Bad Debts and Land and Building
should be appreciated by 25%.
Prepare Revaluation Account, Capital Accounts of Murari, Vohra and Yadav and the Balance Sheet of
the new firm. (AI 2011)
Q127.Following is the Balance Sheet of Subash and Asha as at 31st March, 2018 sharing profits in the
ratio of 3 : 2:
Employees' Provident Fund 8,000 Less: Provision for Doubtful 1,000 21,000
Debts
Workmen Compensation 15,000 Bank 21,000
Reserve
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, 2018 for l/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) A Bill of Exchange of Rs. 10,000 which was previously discounted with the banker, was
dishonoured on 31st March, 2018 but no entry has been passed for dishonour.

(v) Liability against Workmen Compensation Reserve was determined at Rs. 20,000.
(vi) Tanya brought in as her share of goodwill Rs. 10,000 by cheque.
(vii) Tanya was to bring in further cheque of Rs. 15,000 as her capital.
Q128.A and B are partners in a firm. Their Balance Sheet as at 31st March, 2018 was:
Workmen Compensation 5,600 Cash 10,000
Reserve
Outstanding Expenses 3,000 Sundry Debtors 80,000
Creditors 30,000 Less: Provision for Doubtful 4,000 76,000
Debts
Capital A/cs: A 50,000 Stock 20,000
B 60,000 1,10,000 Machinery 38,600
1,48,600 1,48,600
On 1st April, 2018, they admitted C as a new partner on the following conditions:
(i) C brings in Rs. 40,000 as his share of capital but he is unable to bring any amount for goodwill. C's
Share of goodwill is adjusted by opening his Current Account.
(ii) The new profit-sharing ratio between A, B and C will be 3 : 2 : 1.
(iii) Claim towards Workmen Compensation is Rs. 3,000.
(iv) Bad Debts amounting to Rs. 6,000 are to be written off.
(v) Creditors are to be paid Rs. 2,000 more.
(vi) Rs. 2,000 be provided for an unforeseen liability.
(vii) Outstanding Expenses be brought down to Rs. 1,200.
(viii) Shikha, an old customer whose account was written off as bad debts, has promised to pay Rs.
2,500 in settlement of her dues.
(ix) Goodwill is valued at VA years' purchase of the average profit of last three years, less Rs. 12,000.
The profits of last three years amounted to Rs. 10,000; Rs. 20,000 and Rs. 30,000 respectively.
Prepare Revaluation Account, Capital Accounts of Partners and the Opening Balance Sheet.
Q129.Following is the Balance Sheet of A and B as at 31st March, 2018 who are partners in a firm
sharing profits and losses in the ratio of 3 : 2 respectively:
General Reserve 60,000 Debtors 1,00,000
Capital A/cs: Less: Provision for Doubtful Debts 4,000 96,000
A 3,00,000 Stock 74,000
B 1,50,000 4,50,000 Investments 40,000
Current A/cs: Fixed Assets (Tangible) 3,60,000
A 50,000 Goodwill 50,000
B 10,000 60,000
6,45,000 6,45,000
C is admitted as a new partner on 1st April, 2018 on the following terms:
(i) Provision for doubtful debts is to be maintained at 5% on Debtors.
(ii) An outstanding bill for repairs Rs. 25,000 will be brought into books.
(iii) An unaccounted Accrued Income of Rs. 7,500 be provided for.
(iv) A takes over the Investments at an agreed value of Rs. 30,000.
(v) Expenses on revaluation amounting to Rs. 5,000 are paid by A.
(vi) Stock is revalued at Rs. 79,000.
(vii) New profit-sharing ratio of partners will be 4 : 3 : 2.
(viii) C will bring in Rs. 1,00,000 as his capital.

(ix) C is to pay an amount equal to his share in firm's goodwill valued at twice the average profit of the
last three years which were Rs. 1,50,000, Rs. 1,30,000 and Rs. 1,25,000 respectively.
(x) Half of the amount of goodwill is to be withdrawn by A and B.
Prepare Revaluation Account, Partners' Capital and Current Accounts, and the Balance Sheet of the
new firm.
Q130.A and B are partners sharing profits and losses equally. Their Balance Sheet as at 31st March,
2018 is given below:
A 3,00,000 Plant and Machinery 2,00,000
B 2,00,000 5,00,000 Furniture and Fittings 50,000
Current A/cs: Stock 1,50,000
A 80,000 Debtors 1,50,000
B 60,000 1,40,000 Less: Provision for Doubtful 10,000 1,40,000
Debts
Creditors 2,60,000 Bills Receivable 60,000
Bills Payable 1,00,000 Bank 1,00,000
10,00,000 10,00,000
C is admitted as a partner for 1/4th share on 1st April, 2018, under the following terms:
(i) C is to introduce Rs. 2,50,000 as capital.
(ii) Goodwill is agreed to be nil.
(iii) It is found that the creditors included a sum of Rs. 15,000 which was not to be paid.
(iv) A liability for compensation to workmen amounting to Rs. 20,000.
(v) Provision for doubtful debts is to be created @ 10% on debtors.
(vi) It was decided to henceforth follow fluctuating capital method.
(vii) Bills accepted worth Rs. 40,000 issued by creditors were not recorded in the books.
(viii) A provides Rs. 1,00,000 loan to the business carrying interest @ 12% p.a.
Prepare Revaluation Account, Partners' Current Accounts, Partners' Capital Accounts and Balance
Sheet of the new firm.
Q 131. 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 Rs. 80,000 and Rs. 60,000 respectively. They admit Z as a partner on his
contribution of Rs. 35,000 as capital for l/5th share of profits to be acquired equally from both X and
Y. The Capital Accounts 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 off or brought in by
the old partners for the purpose.
Q132.Charu and Harsha were partners in a firm sharing profits in the ratio of 3 : 2. On 1st April, 2014,
Workmen Compensation 9,000 Investments 20,000
Fund
Investment Fluctuation Fund 11,000 Plant 14,000
Provision for Bad Debts 30,000 2,000 Land and Building 38,000
Capital A/cs: Charu
Harsha 20,000 50,000
93,000 93,000
On the above date Vaishali was admitted for l/4th share in the profits of the firm on the following terms:
(i) Vaishali will bring Rs. 20,000 for her capital and Rs. 4,000 for her share of goodwill premium.

(ii) All debtors were considered good.
(iii) The market value of investments was Rs. 15,000.
(iv) There was a liability of Rs. 6,000 for Workmen Compensation.
(v) Capital Accounts of Charu and Harsha are to be adjusted on the basis of Vaishali's capital by opening
Current Accounts.
Prepare Revaluation Account and Partners' Capital Accounts. (Delhi 2015)
Q133.On 31st March, 2010, the Balance Sheet of W and R who shared profits in 3 : 2 ratio was as
follows:
Profit and Loss A/c 15,000 Sundry Debtors 20,000
Capital A/cs: Less: Provision 700 19,300
W 40,000 Stock 25,000
R 30,000 70,000 Plant and Machinery 35,000
% Patents 20,700
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 2Vz years' purchase 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 profits of the firm for the years 2007, 2008 and 2009 were Rs. 20,000; Rs. 14,000 and Rs.
17,000 respectively.
Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet of the new firm. (Delhi
2011)
Q134.A and B are in partnership sharing profits and losses in the ratio of 3 : 2. Their Balance Sheet as
on 31st March, 2018 is as under:
A's Capital 88,000 Goodwill 5,000
B’s Capital 1,27,000 2,15,000 Land and Building 30,000
Workmen Compensation 10,000 Investments (Market Value Rs. 22,500) 25,000
Reserve
Investment Fluctuation 5,000 Debtors 50,000
Reserve
Employees' Provident Fund 5,000 Less: Provision for Doubtful Debts 5,000 45,000
C's Loan 1,50,000 Stock 1,50,000
Bank Balance 1,25,000
3,85,000 3,85,000
On 1st April, 2018, they agree to take C as a partner to increase the capital base of the firm, under the
following terms:
(i) A will sacrifice l/3rd of his share while B sacrifices 1/10 from his share in favour of C.
(ii) C's loan will be converted into his capital.
(iii) C brings in 60% of his share of goodwill in cash.
(iv) Goodwill is to be valued at 2 years' purchase of super profit of last three completed years. Profits
for the last three years ended 31st March, are as follows:

2016—Rs. 2,40,000; 2017-Rs. 4,65,000; and 2018-Rs. 6,90,000.
The normal profit is Rs. 3,15,000 with same amount of capital invested in similar industry.
(v) Land and Building was found undervalued by Rs. 25,000, Stock was found overvalued by Rs. 35,000
and Provision for Doubtful Debts is to be made equal to 5% of the debtors.
(vi) Claim on account of Workmen Compensation is Rs. 5,000. An unrecorded accrued income of Rs.
5,000 be provided for. A debtor whose dues of Rs. 25,000 were written off as bad debts, paid Rs. 20,000
in full settlement.
(vii) Capital Accounts of the partners to be readjusted on the basis of their profit-sharing ratio and any
excess or deficiency be adjusted by payment or receipt of amount.
Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet.
Q135.A, B and C are partners in a firm sharing profits in the ratio of 3 : 2 : 1. On 1st April, 2018, their
Balance Sheet is as follows:
BALANCE SHEET OF A, B AND C as at 1st April, 2018
Capital A/cs: B's Current Account 14,000
A 3,50,000 Land and Building 3,50,000
B 3,00,000 Plant and Machinery 1,35,000
C 2,50,000 9,00,000 Furniture 1,60,000
Current A/cs: Investments 73,000
A 8,000 Bills Receivable 34,000
C 12,000 20,000 Sundry Debtors 87,000
Profit and Loss Account 14,000 Bank 87,000
Creditors 1,60,000
Bills Payable 90,000
12,14,000 12,14,000
On the above date, D is admitted on the following terms:
(i) D will bring Rs. 1,00,000 as his capital and will get l/6th share in profits.
(ii) He will bring necessary cash for his share of goodwill premium. The goodwill of the firm was valued
at Rs. 1,80,000.
(iii) The new profit-sharing ratio will be 2 : 2 : 1 : 1.
(iv) A Bill Receivable of Rs. 14,008 discounted with Bank was dishonoured, which is to be recorded in
the books of account.
(v) The value of Stock, Furniture and Investments is reduced by 20% whereas the value of Land and
Building and Plant and Machinery will be appreciated by 20% and 10% respectively.
(vi) The Capital Accounts of the partners will be adjusted on the basis of D's capital through their
Current Accounts.
Prepare Revaluation Account, Partners' Current Accounts, Capital Accounts and Balance Sheet.
Q136.Following is the Balance Sheet of A and B, who had been sharing profits in proportion of 3/4th
and l/4th as at 31st March, 2017:
General Reserve 6,000 Bills Receivable 3,000
Capital A/cs: Debtors 16,000
A 28,500 Stock 20,000
B 15,500 44,000 Office Furniture 1,000
87,500 87,500
They agree to take C into partnership on 1st April, 2017 on the following terms:
(i) C pays Rs. 14,000 as his capital for l/5th share in the future profits.

(ii) Goodwill Account be valued at Rs. 20,000. C is unable to bring cash for his share of goodwill.
(iii) Stock and Furniture be reduced by 10% and 5% Provision for Doubtful Debts be created on
Debtors.
(iv) Land and Building be appreciated by 20%.
(v) Capital Accounts of the partners be readjusted on the basis of their profit-sharing arrangement and
any excess or deficiency is to be transferred to their Current Accounts.
Q137. X and Y are in partnership sharing profits and losses in the ratio of 3 : 2. The capitals of X and
Y after adjustment are Rs. 80,000 and Rs. 60,000 respectively. They admit Z as a third partner who is
to contribute proportionate capital to acquire a l/5th share of total capital of the new firm equally from
both the partners X and Y. Calculate capital to be brought in by Z. Also, calculate new profit-sharing
ratio of the partners in the new firm.
Q138 Following is the Balance Sheet as at 31st March, 2018 of A and B, who share profits and losses
in the ratio of 3 : 2:
Capital A/cs: A 10,000 Plant and Machinery 10,000
B 10,000 20,000 Land and Building 8,000
Workmen Compensation 5,000 Less: Provision for Doubtful 1,000 11,000
Reserve Debts
Creditors 10,000 Stock 12,000
Cash 9,000
50,000 50,000
On 1st April, 2018, they agreed to admit C into partnership on the following terms:
(i) Provision for Doubtful Debts would be increased by Rs. 2,000.
(ii) Value of Land and Building would be increased to Rs. 18,000.
(iii) The value of Stock would be increased by Rs. 4,000.
(iv) The liability against the Workmen Compensation Reserve is determined at Rs. 2,000.
(v) C brought in as his share of goodwill Rs. 10,000 in cash.
(vi) C would bring in further cash as would make his capital equal to 20% of the total capital of the new
firm after the above revaluation and adjustments are carried out.
Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet of the firm after C's
admission.
Q139. The Balance Sheet of Madan and Mohan who share profits and losses in the ratio of 3 : 2, as at
31st March, 2010 was as follows:
Workmen's Compensation 12,000 Debtors 65,000
Reserve
General Reserve 20,000 Less: Reserve for Doubtful 5,000 60,000
Debts
Madan 60,000 Investments 50,000
Mohan 40,000 1,00,000 Patents 10,000
1,60,000 1,60,000
They decided to admit Gopal on 1st April, 2010 for l/4th share on the following terms:
(i) Gopal shall bring Rs. 25,000 as his share of premium for goodwill.
(ii) That unaccounted Accrued Income of Rs. 500 be provided for.
(iii) The market value of Investments was Rs. 45,000.
(iv) A Debtor whose dues of Rs. 1,000 were written off as Bad Debts paid Rs. 800 in full settlement.

(v) A claim of Rs. 2,000 on account of Workmen Compensation to be provided for.
(vi) Patents are undervalued by Rs. 5,000.
(vii) Gopal to bring in capital equal to l/4th of the total capital of the new firm after all adjustments.
Prepare Revaluation Account, Capital Accounts of Partners and the Balance Sheet of the new firm.
(Delhi 2011 C)
Q140.Sahaj and Nimish are partners in a firm. They share profits and losses in the ratio of 2 : 1. Since
both of them are specially abled, sometimes they find it difficult to run the business on their own. Gauri,
a common friend decides to help them. Therefore, they admitted her into partnership for a l/3rd share.
She brought her share of goodwill in cash and proportionate capital. At the time of Gauri's admission,
the Balance Sheet of Sahaj and Nimish was as under:
Capital A/cs: Machinery 1,20,000
Sahaj 1,20,000 Furniture 80,000
Nimish 80,000 2,00,000 Stock 50,000
Employees' Provident 40,000
Fund
3,00,000 3,00,000
It was decided to:
(i) Reduce the value of stock by Rs. 5,000.
(ii) Depreciate furniture by 10% and appreciate machinery by 5%.
(iii) Rs. 3,000 of the debtors proved bad. A provision of 5% was to be created on Sundry Debtors for
doubtful debts.
(iv) Goodwill of the firm was valued at Rs. 45,000.
firm. Identify the value being conveyed in the question. (Delhi 2013)
Q141 A, B and C were partners in a firm sharing profits in the ratio of 3 : 2 : 1. On 31st March, 2015,
their alance Sheet was as follows:
BALANCE SHEET OF A, B AND C as on 31st March, 2015
Capital A/cs: A 60,000 Stock 1,10,000
B 40,000 Investments 30,000
C 20,000 1,20,000 Furniture and Fittings 10,000
Machinery 35,000
2,25,000 2,25,000
On the above date, D was admitted as a new partner and it was decided that:
(i) The new profit-sharing ratio between A, B, C and D will be 2 : 2 : 1 : 1.
(ii) Goodwill of the firm was valued at Rs. 90,000 and D brought his share of goodwill premium in
cash.
(iv) Machinery will be reduced to Rs. 29,000.
(v) A creditor of Rs. 3,000 was not likely to claim the amount and hence to be written off.
(vi) D will bring proportionate capital so as to give him l/6th share in the profits of the firm.
Prepare Revaluation Account, Partner's Capital Accounts and the Balance Sheet of the reconstituted
firm. (Delhi 2016)

Q142.X and Y are partners in a firm sharing profits and losses in the ratio of 3 : 2 with capitals of Rs.
1,20,000 and Rs. 80,000 respectively. Interest on capital is allowed @ 10%. They admit Z into the
partnership with effect from 1st January, 2018 on the following terms:
(i) Z is to bring in Rs. 10,000 for his share of goodwill in cash.
(ii) Z is to contribute Rs. 1,25,000 as his share of capital.
(iii) Partners' capitals will carry interest @ 12% p.a.
(iv) New profit-sharing ratio of X, Y and Z will be 9 : 6 : 4.
(v) X will be entitled to 5% commission on the net profit.
(vi) The profit for the year ended 31st March, 2018 before providing for X's commission and interest
on partners' capitals amounted to Rs. 80,000.
Prepare Profit and Loss Appropriation Account for the year ended 31st March, 2018.
Q143.(A). A and B are partners sharing profits in the ratio of 5 : 3. C is admitted to the partnership for
1/4th share of future profits. Calculate the new profit sharing ratio.
Q143.(B). A and B were partners sharing profits in the ratio of 21 : 9. C was admitted on 9/21 share in
the profits. Calculate new profit sharing ratio of the partners.
Q144.(A). P and Q are partners sharing profits and losses in the ratio of 4 : 3. They admit R as partner
for a 1/7th share in profits which he acquires equally from P and Q. Calculate new profit sharing ratio
of the partners.
Q144 (B). R and S share profits in the ratio of 3 : 2. They admitted T as partner for 1/8 share which will
be borne by R and S equally. Find out the new profit sharing ratio.
Q144(C). P, Q and R were partners in a firm sharing profits in the ratio of 3 : 2 :1. They admitted S as
a new partner for 1/8th share in the profits which he acquired 1/16th from P and 1/16th from Q. Calculate
new profit sharing ratio of P, Q, R and S.
Q145. A and B were partners in a firm sharing profits in 3 : 2. On 1-4-2018 they admitted C as a new
partner for 1/4th share. On 1-4-2019 D was admitted as a new partner for 1/5th share which he acquired
equally from A, B and C. Calculate the new profit sharing ratio.
Q146.(A). Afand Fare partners sharing profits in the ratio of 2 : 1. Z is admitted with 5/11th share which
he takes 3/11th fromXand 2/11th from Y. Calculate the new profit sharing ratio of the partners.
Q146.(B). A and B are partners sharing profits in the ratio of 5 : 3. They admit C on 1/4th share which
he acquires 1/6th from A and 1/12th from B. Calculate the new profit sharing ratio of the partners.
Q147.A. B and C were partners in a firm sharing profits in 1 : 2 : 3 ratio. They admitted D as a new
𝟏 𝟏 𝟏 𝟏
partner for 𝟔th share. D acquired his share 𝟐𝟒 from A, 𝟐𝟒 from B and 𝟏𝟐 from C. Calculate new profit
sharing ratio.
Q148. A and B are partners sharing profits in the ratio of 3 : 2. They admit C into partnership giving
him 1/2 share in profits which he acquires from A and B in the ratio of 3 : 1. Calculate the new profit
ratio.
Q149. X and Yare partners sharing profits and losses in the ratio of 3 :2. They admit Zas a new partner
who gets 1/5th share. Calculate the new profit sharing ratio in each of the following
cases :
(i) If Z acquires his share from X and Y in their profit sharing ratio; (ii) If he acquires 3/20th from
X and 1/20th from 7; (iii) If he acquires 1/10th from X and 1/10th from Y; (iv) If he acquires 1/20th
from X and 3/20th from Y: (v) If he acquires his share entirely from X: (vi) If he acquires his share
entirely from Y.
Q150.(A). A and B are partners in a firm sharing profits in the ratio of 2 : 1. C joins the firm. A
surrenders 1/4th of his share and B 1/5th of his share in favour of C. Find the new profit sharing ratio.

Q150.(B). A and B share profits in the ratio of 3 : 2. They agreed to admit C on the condition that A
will sacrifice 3/20th of his share of profit in favour of C and B will sacrifice 1/20th of his profits in
favour of C. Calculate new profit sharing ratio.
Q150.(C). X and Y are partners in a firm sharing profits and losses in the ratio of 9 : 6. A new partner
Z is admitted. X surrenders 3/15th share of his profit in favour of Z and Y 6/15th of his share in favour
of Z. Calculate new profit sharing ratio.
Q151. A, B and C are partners in a firm sharing profits in 4 : 3 : 3 ratio. They decided to admit their
𝟏 𝟏
manager D into partnership. A surrendered of his share in favour of D; B surrendered of his share in
𝟒 𝟓
𝟏
favour of D and C surrendered 𝟔 of his share in favour of D. Calculate new profit sharing ratio.
Q152. A and B are partners sharing profits and losses in the ratio of 3 : 2. They admit X and Y as new
partners. A surrendered 1/3rd of his share in favour of X and B surrendered 1/4th of his share in favour
of Y. Calculate the new profit sharing ratio of A, B, X and Y.
Q153. A and B share profits and losses in the ratio of 3 : 2. They admit C as a new partner for 1/3rd
share in the profits of the firm which he acquired from A and B in the ratio of 2 : 3. After some time,
they admitted D as a new partner for jth share in the profits which he acquired equally from A and C.
Calculate :
(i) New profit sharing ratio of A, B and C;
(ii) New profit sharing ratio of A, B, C and D.
𝟏 𝟏
Q154. P and Q share profits in 3 : 2. On 1st April, 2016, they admit R and S with 𝟒 and 𝟓 share
respectively. The profit of the firm for the year ended 31st March 2017 amounted to Rs.2,00,000.
Prepare necessary journal entries for the distribution of profit.
Q. 155 (A). Saurabh and Gaurav are equal partners. They admit Chunmun as a partner in their firm and
the new ratio of all the three has been decided upon as 4:3:2. Find the sacrificing ratio.
Q155(B). A, B and C share profit and losses in the ratio of 3 : 2 : 1. Upon admission of D, they agreed
to share as follows :
(i) 4 : 4 : 2 : 2
(ii) 2 : 4 : 2 : 4
Calculate sacrificing ratios.
Q.156 (A). A, B and C are partners sharing profits in the ratio of 2 : 2 : 1 respectively. They admit D
for 1/6th share in the firm. Calculate the sacrificing ratio.
Q. 156 (B). A and B are partners sharing profit in the ratio of 5 : 3. C is admitted to the partnership for
1/4th share of future profits. Calculate the new profit sharing ratio and the sacrificing ratio.
Q157.A and B are partners sharing profits in the ratio of 7 : 3. C was admitted. A surrendered 1/7th of
his share and B 1/3rd of his share in favour of C. Calculate the sacrificing ratio and the new profit-
sharing ratios of the partners.
Q158.(A). A and B are partners in a firm sharing profits and losses in the ratio of 3 : 2. C is admitted
𝟏
into partnership. A sacrifices 1/3 of his share and B 𝟏𝟎 from his share in favour of C. Determine the
sacrificing ratio and the new profit sharing ratio.
Q158.(B). A and B are partners in a firm sharing profits and losses in the ratio of 5:3. They admit C and
𝟏
D as new partners. A sacrifices 𝟐 of his share in favour of C and B sacrifices i from his share in favour
of D. Calculate their new profit sharing ratio. (Haryana Board 2017, Set A)

Q159. Find out the sacrificing ratio and new ratio in the following cases :
(i) A and B are partners sharing profits and losses in the ratio of 4 : 3. C is admitted for 1/5th share.
A and B decided to share equally in future. Calculate the new ratio and sacrificing ratio.
(ii) A, B, C and D are in partnership sharing profits and losses in the ratio of 36 : 24 : 20 : 20
respectively. 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 and 1/10. Calculate the new profit sharing ratio after E's admission.
Q160. A and B are partners in a firm sharing profits in the ratio of 3 : 1. They admit C and decide that
the profit-sharing ratio between B and C shall be same as existing between ,4 and B. Calculate new
profit-sharing ratio and the sacrificing ratio.
Q161. A, B and C are partners sharing in the ratio of 4 : 3 : 2. They admit D for 1/9th share. It is agreed
that A would retain his original share. Calculate the new ratios and sacrificing ratios.
Q162. P, Q and R are partners sharing profits and losses in the ratio of 5 : 3 : 2. S is admitted as a new
𝟏 𝟏
partner for 𝟓th share. P sacrifices 𝟏𝟎th from his share in favour of S and remaining sacrifice was made
by Q and R in the ratio of 2 : 1. Calculate sacrificing ratio and new profit sharing ratio.
Q163. L, M and N are partners sharing profits in the ratio of 3 : 2 : 1. They admit O into partnership. O
brings in cash Rs.4,50,000 as capital and Rs. 1,50,000 as goodwill for 1/5th share of profits. Pass journal
entries and find out new profit sharing ratios when: (a) Goodwill is retained in the firm; (b) goodwill is
withdrawn by old partners.
Q164. P and Q are partners sharing profits and losses in the ratio of 2 : 1. They admit R into partnership
for 4/9th share in profits which he acquires equally from P and Q. R brings in cash Rs.2,50,000 as
capital and Rs. 1,80,000 as goodwill.
Pass journal entries and find out new profit sharing ratios.
Q165. Xand Yare partners sharing profits in the ratio of 4 : 3. Z joins partnership for 2/7th share in the
profits (of which he acquires 3/4th from X and 1/4th from Y). Z brings in Rs.3,00,000 for his capital
and Rs. 1,20,000 for goodwill. Half of the amount of goodwill is withdrawn by the old partners.
Pass necessary Journal entries and find out new profit sharing ratio.
Q166. K and Y were partners in a firm sharing profits in 3 : 2 ratio. They admitted Z as a new partner
for 1/3rd share in the profits of the firm. Z acquired his share from K and Y in 2 : 3 ratio. Z brought
Rs.80,000 for his capital and Rs.30,000 for his 1/3rd share as premium. Calculate the new profit sharing
ratio of K, Y and Z and pass necessary journal entries for the above transactions in the books of the
firm.
Q167. Anju and Manju are partners, sharing profits and losses in the proportion of 7 : 5. They agreed
to admit Meenu, their manager, into partnership, who is to get one sixth share in the business. Meenu
brings in Rs.2,00,000 for her capital and Rs.96,000 for 1/6th share of goodwill which she acquires
1/24th from Anju and 1/8th from Manju. The profit for the first year of the new partnership amount to
Rs.4,80,000.
Make the necessary Journal entries in connection with Meenu’s admission and divide the profit between
the partners.
Q168. X and Y share profits and losses in the ratio of 3 : 2. They admit Z as a partner who pays
Rs.72,000 as premium for goodwill for 1/4th share in the future profits of the firm.
Pass Journal entries appropriating the premium money and show the new profit sharing ratio in each of
the following cases :
(i) if he acquires his share of profits in the original ratio of existing partners.
(ii) if he acquires his share of profits in equal proportions from the existing partners.

(iii) if he acquires his share in the ratio of 2 : 3 from the existing partners.
𝟕 𝟏
(iv) if he acquires his share of profits as 𝟑𝟐th from X and 𝟑𝟐th from Y.
Q169. A, B and C are partners in a firm sharing profits and losses in the ratio of 5:3:2. They admitted
D as a new partner, who brings Rs.5,00,000 as capital and Rs.2,10,000 as his share of goodwill in cash.
𝟏 𝟏 𝟏
A surrendered 𝟓th of his share, B surrendered 𝟔th of his share and C surrendered 𝟖th of his share in
favour of D.
Find out sacrifice ratio and Pass necessary journal entries for the above.
Q170. Partners A, B and C share the profit of a business in the ratio of 3 : 2 : 1 respectively. For one-
sixth share they admit D who brings in Rs.2,00,000 including Rs.60,000 for his share of goodwill. Show
the journal entries if A, B, C and D decide to share the profits respectively in the ratio of (a) 15 : 10:5:6;
(b) 5 : 3 : 2 : 2, and (c) 2 : 2 : 1 : 1. Assume that the entire cash brought in by D remains in the business.
Give Journal entries.
Q171. X and Y are partners sharing profits and losses in the ratio of 3 : 2. They admit Z into partnership,
Z paying a premium of Rs. 1,00,000 for 1/4 share of the profits while X and Y as between themselves
sharing profits and losses equally. Give Journal entries.
Q172. X and F are partners sharing profits and losses in the ratio of 2 : 1. They agree to admit Z into
partnership who gets 1/3rd share in the profits. Z brings in Rs. 50,000 for his capita! and the necessary
amount for goodwill in cash. Goodwill of the firm is valued at Rs.36,000. X, Y and Z agree to share
future profits equally. The amount of goodwill is withdrawn from the business. Pass entries.
Q173. A and B are partners sharing profits and losses as 2 : 1. On 1st April, 2016 they admit C as a
partner for 1/4th share who pays Rs.4,50,000 as goodwill privately. On 1st April, 2017, they take Pas a
partner for 3/5th share who brings Rs.4,00,000 as goodwill, out of which half is withdrawn by the
existing partners. On 1st April, 2018, E is admitted as a partner for 1/6th share who brings Rs.5,00,000
as goodwill which is retained in the business.
Journalise the above transactions in the books of the firm.
Q174. P and Q are partners sharing profits & losses as 2 : 3. R and S are admitted and profit sharing
ratio becomes 3 : 4 : 3 : 2. Goodwill is valued at Rs.3,00,000, R brings required goodwill and
Rs.2,00,000 cash for Capital. S brings in Rs. 1,00,000 cash and Motor Vehicle for Rs.80,000 as his
capital in addition to the required amount of goodwill in cash.
Show the necessary journal entries.
Q175. Asha and Aditi are partners in a firm sharing profits and losses in the ratio of 3 : 2. They admit
Raghav as a partner for 1/4th share in the profits of the firm. Raghav brings Rs.6,00,000 as his capital
and his share of goodwill in cash. Goodwill of the firm is to be valued at two years’ purchase of average
profits of the last four years.
The profits of the firm during the last four years are given below :
Year Profit (Rs.)
2013-14 3,50,000
2014-15 4,75,000
2015-16 6,70,000
2016-17 7,45,000
The following additional information is given :
(i) To cover management cost an annual charge of Rs. 5 6,250 should be made for the purpose of
valuation of goodwill.
(ii) The closing stock for the year ended 31.3.2017 was overvalued by Rs. 15,000.
Pass necessary journal entries on Raghav’s admission showing the working notes clearly. (C.B.S.E.
2018)

Q176. Ram and Rahim are partners in a firm sharing profits in the ratio of 3 : 2. On April 1, 2016 they
admit Raj as a new' partner for 3/13th share in the profits. The new ratio will be 5 : 5 : 3. Raj contributed
the following assets towards his capital and for his share of goodwill : Land Rs.2,50,000; Plant &
Machinery Rs. 1,50,000; Stock Rs.80,000 and Debtors Rs.70,000. On the date of admission of Raj, the
goodwill of the firm was valued at Rs.5,20,000. Record necessary journal entries in the books of the
firm.
Q.177 (A). A and B are partners, sharing profit and losses in the ratio of 3 : 2. Goodwill appears in their
Balance Sheet at Rs.24,000, when C is admitted into partnership for 1/5th share in profit. He pays
Rs.50,000 for capital and Rs.8,000 as goodwill. The ratio of the partners A, B and C in the new firm
would be 2 : 2 : 1.
Pass journal entries in the books of the new firm to record above adjustments.
Q177(B). P and S are partners sharing profits in the ratio of 3 : 2. Their books showed goodwill at
Rs.20,000, R is admitted with 1/5th share which he acquires equally from P and S. R brings Rs.20,000
as his capital and Rs. 10,000 as his share of goodwill. Profits at the end of the year were of the amount
of Rs. 1,00,000. You are required to give journal entries to carry out the above arrangement.
Q177 (C). A and B carrying on business as partners used to share profits and losses thus; A 4/7ths and
B 3/7ths, and goodwill appeared in the books of the firm at Rs.2,80,000 when C was admitted as a
partner having 1/7th share in profits and losses. C was asked to pay a premium of Rs.75,000 for
goodwill, and the profit-sharing ratio as between A and B remained unchanged.
Show entries in the journal of the firm.
Q178. A and B are partners sharing profits and losses in 3 : 2. They admit C into partnership for 1/5th
share in the profits. C pays in cash Rs.40,000 for his capital. Goodwill of the firm is valued at Rs.25,000
but C is unable to bring his share of goodwill in cash. Pass the necessary journal entries.
Q179. A and B are partners sharing profits in the ratio of 3 : 2. On 1st April, 2018 they admit C as a
𝟏 𝟏
new partner for 𝟒th share. C acquires 𝟓th of his share from A.
Goodwill on C’s admission is to be valued on the basis of capitalisation of average profits of the last
five years. Profits were :
Year ended
31st March, 2014 Profit Rs.50,000
31st March, 2015 Profit Rs. 1,20,000 (including gain of Rs.40,000 from sale of fixed assets)
31st March, 2016 Loss Rs.60,000 (after charging Loss by Fire Rs.50,000)
31st March, 2017 Loss Rs. 1,00,000 (after charging voluntary retirement compensation paid
Rs.1,50,000)
On 1st April, 2018, the firm had assets of Rs.7,00,000 and external liabilities of Rs.2,20,000.
The normal rate of return on capital is 12%.
C brings in Rs.1,25,000 for his capital but is unable to bring his share of goodwill in cash.
(i) You are required to calculate C’s share of goodwill,
(ii) Pass necessary journal entries, and
(iii) Calculate new profit sharing ratios.
Q180. P, Q and R share profits in the ratio of 5 : 3 : 2. S was admitted into partnership. S brings in
Rs.30,000 as his capital. S is entitled for 1/5th share in profits which he acquires equally from P, Q and
R. Goodwill of the firm is to be valued at three years’ purchase of last four years’ average profits. The
profits of the last four years’ are Rs.32,000, Rs.38,000, Rs.35,000 and Rs.31,000 respectively. S cannot
bring goodwill in cash. Goodwill already appears in the books at Rs.50,000. Give Journal entries.

Q181. A and B are partners in a firm sharing profits and losses in the ratio of 3 : 2. They admit C into
partnership for 1/3rd share of profits. C brings Capital of Rs.2,00,000. Goodwill is valued at Rs.
1,50,000. Show what entries shall be made in the following cases:
(i) Goodwill does not appear in the books;
(ii) Goodwill appears in the books at Rs.90,000;
(iii) Goodwill appears in the books at Rs. 1,80,000.
Q182. X and F are partners sharing profits in the ratio of 3 : 2. Goodwill appears in their balance sheet
at Rs.60,000. Z is admitted as a partner for 1/4th share in the profits. The total goodwill of the firm is
valued at Rs.2,00,000.
Pass journal entries if:
1. Z cannot bring in cash his share of goodwill.
2. Z brings in cash his share of goodwill.
Q183. X, Y and Z were partners sharing profits and losses as to X one-half; F one-third; and Z one-
sixth. As from 1st April, 2019, they agreed to admit A into partnership for one-sixth share in profits and
losses, which he acquires equally from A and F, and is to bring in Rs.50,000 for his capital and
Rs.20,000 as premium for goodwill. A paid in his capital money but in respect of premium for goodwill,
he could bring in only Rs. 15,000.
(i) give the Journal entries to carry out the above arrangements, and
(ii) work out the new profit-sharing ratio of the partners.
Q184. (HOTS) A and B are partners sharing profits in the ratio of 3 : 1. C is admitted as a partner with
2/9th share; A and B will in future get 4/9th and 3/9th share of profits. C pays Rs.2,00,000 for goodwill.
Q185. (HOTS) X and Y are partners sharing profits in the ratio of 3 : 1. Z is admitted as a partner for
which he pays Rs.30,000 for goodwill in cash. X, Y and Z decided to share future profits in equal
proportion. You are required to pass necessary journal entries to give effect to the above.
Q186. (HOTS) A, B and C were partners in a firm sharing profits in the ratio of 2:2:1. They admitted
𝟏
D for th share in the profits. The new profit sharing ratio will be 13 : 8 : 4 : 5 respectively. D brought
𝟔
Rs.5,00,000 for his capital and Rs.60,000 for his share of goodwill. Pass necessary entries.
Q187(HOTS) A and B were partners in a firm sharing profits in the ratio of 4 : 1. They admitted C as a
𝟏
new partner on 1-3-2019 for 𝟓th share. It was decided that A, B and C will share future profits in the
ratio of 5 : 3 : 2. C brought Rs.20,000 in cash and machinery worth Rs.60,000 for his share of profit as
premium for goodwill. Showing your calculations clearly, pass necessary journal entries in the books
of the firm.
Q188.. Pass journal entries to record the following transactions on the admission of a new partner:
(i) Land and Building is undervalued by Rs.2,00,000.
(ii) Stock is overvalued by 20% (Book Value of Stock Rs.60,000)
(iii) Provision to be made for compensation of Rs.20,000 to an ex-employee.
(iv) Sundry Debtors appeared in the books at Rs.1,50,000. They are estimated to produce not more
than Rs. 1,30,000.
(v) Creditors include an amount of Rs. 10,000 received as commission.
(vi) A bill of exchange of Rs.40,000 which was previously discounted with the banker, was dishonoured
on 31st March, 2018 but no entry has been passed for it.
(vii) Value of Machinery is to be decreased to Rs. 1,20,000 (Book Value Rs.2,00,000)
(viii) Value of Machinery is to be decreased by Rs. 1,20,000 (Book Value Rs.2,00,000)
(ix) Expenses on revaluation amount to Rs.8,000 have been paid by partner A.

Q189. A and B were in partnership sharing profits and losses in the ratio of 3 : 1. On 1st April, 2018
they admit C as a partner on the following terms :
(a) That C brings Rs. 1,00,000 as his capital and Rs.50,000 for goodwill, half of which to be
withdrawn by A and B.
(b) That the value of land and buildings to be appreciated by 15 per cent and that of stocks and
machinery & fixtures to be reduced by 7 and 5 per cent respectively.
(c) That provision for doubtful debts be made at 5 per cent.
(d) That Rs. 15,000 be provided for an unforeseen liability.
(e) That C to be given 1/5th share and the profit sharing ratio between A and B to remain the same.
(f) That Rs. 11,000 is to be received as commission, hence to be accounted for.
The Balance Sheet of the old partnership as at 31st March, 2018 stood as :
Sundry Creditors 3,50,000 Cash in hand 40,000
Capital Accounts: Book Debts 2,00,000
A 4,00,000 Stock 1,80,000
B 2,00,000 6,00,000 Machinery & Fixtures 2,00,000
Land & Building 3,30,000
9,50,000 9,50,000
Give necessary Journal entries, ledger accounts and the balance sheet of the newly constituted firm.
Q190. Khushi and Sukhi are partners in a firm sharing profits in the ratio of 5 : 4. On April 1,2019, they
admit Muskan as a new partner and the new ratio is agreed at 3 : 2 : 1. On that date there was a balance
of Rs.63,000 in the profit and loss account and a balance of Rs.45,000 in genera! reserve. Record the
necessary journal entries.
Q191. X and Y are partners in a firm. On 1st April, 2017, they admitted Z as a partner and new profit
sharing ratio is agreed at 3 : 2 : 1. Their Balance Sheet disclosed
‘Workmen Compensation Reserve’ amounting to Rs. 1,00,000 on this date. Show the accounting
treatment, if
(i) Claim for Workmen Compensation is estimated at Rs. 1,20,000.
(ii) Claim for Workmen Compensation is estimated at Rs.90,000.
Q192.. A, B and C are partners sharing profits in 2 : 2 : 1. On 1st April, 2017, they admitted Z for 1/4th
share. On the date of admission, the following items appeared in their Balance Sheet:
Rs.
Profit & Loss A/c (Cr.) 60,000
Advertisement Suspense A/c (Dr.) 25,000
Pass necessary journal entries.
Q193. P and Q were partners sharing profits in the ratio of 2 : 1. On 1 st April, 2017, they admitted R
as a new partner and the new profit sharing ratio of P, Q and R is agreed at 3 : 1 : 1. R brought in
Rs.2,00,000 as his capital and Rs.60,000 as his share of premium for goodwill.
On the date of R’s admission, the Balance Sheet of P and Q showed a credit balance of Rs.45,000 in
Profit and Loss A/c and Workmen Compensation Reserve of Rs.80,000. It was agreed that there was a
claim of Workmen Compensation for Rs.50,000.
Pass necessary jouranl entries on R's admission.
Q194. A and B sharing profits and losses in the ratio of 3 : 2 decide to admit C for 1/3rd share. On this
date, their Balance Sheet disclosed the following items :
Rs.
Investments Fluctuation Reserve 40,000
Investments (at cost) 3,00,000
Show the accounting treatment in the following cases :

Case (i) If the market value of investments is Rs.2,90,000
Case (ii) If the market value of investments is Rs.2,45,000
Case (iii) If the market value of investments is Rs.3,00,000
Case (iv) If the market value of investments is Rs.3,25,000
Q195. Charu and Deepika were partners sharing profits in the ratio of 3 : 2. They admitted Esha, as a
new partner and the new ratio is agreed at 4 : 3 : 2. On the date of Esha’s admission, the Balance Sheet
of Charu and Deepika disclosed General Reserve Rs. 1,20,000; Dr. balance in Profit & Loss Account
Rs.40,000; Investments Rs.2,00,000 and Investment Fluctuation Reserve Rs.60,000.
The following was agreed upon Eshas’ admission :
(i) Esha will bring Rs.3,00,000 as her Capital and her share of goodwill premium in cash.
(ii) Goodwill of the firm be valued Rs. 1,80,000.
(iii) The market value of investments was Rs.2,30,000.
Q196. A, B and C were partners in a firm sharing profits and losses in the ratio of 2:2:1. Their Balance
Sheet as at 31st March, 2018 was as follows :
Creditors 20,000 Cash & Bank 30,000
Workmen Compensation Reserve 35,000 Investments (Market Value Rs.32,000)
Investment Fluctuation Reserve 10,000 40,000
Capital Accounts : Plant & Machinery 2,60,000
A 2,00,000 Profit & Loss Account 20,000
B 1,50,000
C 1,00,000 4,50,000
5,60,000 5,60,000
𝟏
They admit D into partnership for th share on 1st April, 2018. Give necessary journal entries to adjust
𝟒
the accumulated profits and losses.
Q197 (A). Vimal and Nirmal are partners sharing profits in the ratio of 3 : 2. Following was the position
of their business as at 31st March, 2018 :
Capital Accounts: Debtors 18,000
Vimal 60,000 Plant & Machinery 50,000
Nirmal 32,000 Stock 40,000
Profit & Loss Ale 20,000 Goodwill 10,000
1,32,000 1,32,000
On 1st April, 2018, Kailash agrees to join the business on the following terms and conditions :
(i) He will introduce Rs.40,000 as his capital and pay Rs.20,000 to the existing partners for his share of
goodwill.
(ii) The new profit sharing ratio will be 2 : 1 : 1 respectively for Vimal, Nirmal and Kailash.
(iii) A revaluation of assets will be made by reducing plant and machinery to Rs.35,000 and stock by
10%. Provision of Rs. 1,000 is to be created for bad and doubtful debts.
Pass journal entries for the above arrangements and give the balance sheet of the newly constituted firm.
Also specify the sacrificing ratio.
Q197(B). A and B are partners sharing profits in the ratio of 3 : 1. They admitted C as a partner by
giving him 1/4th share of profits which he acquired from A and B in the ratio of 2 : 1. C brings in Rs.
1,00,000 as Capital and Rs.36,000 as goodwill in cash. At the time of admission of C, general reserve
appeared in their balance sheet at Rs.50,000.
Following revaluations are also made :

I. Value of Plant is to be reduced by Rs. 10,000.
II. Bad Debts Provision is to be reduced from Rs.4,000 to Rs.3,000.
III. Rs.2,000 Out of total Creditors of Rs.20,000 are not to be paid.
IV. There is an outstanding bill for repairs for Rs. 1,200.
Pass necessary journal entries and prepare a Revaluation Account. Also calculate the new profit sharing
ratios.
Q198. X and Y share profits in the ratio of 5 : 3. Their balance sheet as at 31st March, 2018 was as
follows :
Provident Fund 10,000 Sundry Debtors 20,000
Workmen’s Compensation Less: Provision 600 19,400
Reserve 5,800 Stock 25,000
Capitals: Fixed Assets 80,000
X 70,000 Profit & Loss A/c 2,400
Y 31,000
1,31,800 1,31,800
They admit Z into partnership on 1st April, 2018 with 1 /8th share in profits. Z brings Rs.20,000 as his
capital and Rs. 12,000 for goodwill in cash. Z acquires his share entirely from X. Following revaluations
are also made :
1. Provident fund is to be increased by Rs.5,000.
2. Debtors are all good. Therefore, no provision is required on debtors.
3. Stock includes Rs.3,000 for obsolete items.
4. Creditors are to be paid Rs. 1,000 more.
5. Fixed Assets are to be revalued at Rs.70,000.
Prepare Journal entries, necessary accounts and new balance sheet. Also calculate the new profit sharing
ratio.
Q199. X and Y were partners with capitals of Rs.4,00,000 and Rs.3,50,000. They shared profits in the
ratio of 3 : 2. On 1st April, 2017, they admitted Z for 1/5th share. On this date their creditors were
Rs.3,20,000 and general reserve Rs. 1,80,000.
Their assets apart from cash consisted of Debtors Rs.4,32,000; Stock Rs.3,00,000, Patents Rs.74,000
and Building Rs.2,04,000.
Z is to bring in Rs.3,00,000 as his Capital and to bring in his share of Goodwill in Cash subject to the
following terms :
(a) Goodwill of the firm to be valued at Rs.5,00,000.
(b) Stock be valued at Rs.2,94,000.
(c) Patents are valueless.
(d) There was a claim against the firm for damages amounting to Rs.20,000. The claim has now
been accepted.
Prepare Revaluation Account, Partner’s Capital Accounts and the Balance Sheet of the new firm.
Q200. Xand Yare partners. They admit Z as a partner and new profit sharing ratio is agreed at 3 : 2 : 1.
The assets and liabilities are revalued as :
(i) A provision for doubtful debts @ 5% be made on Sundry Debtors. (Sundry Debtors Rs.60,000).
(ii) Building was found under valued by Rs.50,000 and Machinery overvalued by Rs.20,000.
(iii) Part of the stock which had been included at a cost of Rs. 10,000 had been badly damaged in storage
and could only expect to realise Rs.2,000.
(iv) Creditors were written off Rs.6,000.
Pass necessary journal entries.
Q201. X, Y and Z are equal partners with capitals of Rs. 1,50,000, Rs. 1,75,000 and Rs.2,00,000
respectively. They agree to admit W into equal partnership upon payment in cash of Rs.1,50,000 for
one-fourth share of the goodwill and Rs. 1,80,000 as his capital, both sums to remain in the business.

The liabilities of the old firm amount to Rs.3,00,000 and the assets apart from cash, consist of Motors
Rs. 1,20,000; Furniture Rs.40,000; Stock Rs.2,65,000; Debtors Rs.3,78,000.
The Motors and Furniture were revalued at Rs.95,000 and Rs.38,000 respectively.
Draft Journal entries necessary to give effect to the above arrangement and show the initial Balance
Sheet of the new firm.
Q202. A and B are in partnership sharing profits and losses in the ratio of 3 : 1. Their Balance Sheet as
at 31st Jan., 2016 was as follows :
Capital Accounts: Cash at Bank 34,000
A 4,50,000 Sundry Debtors 1,66,000
B 2,00,000 6,50,000 Stock 2,60,000
Sundry Creditors 30,000 Fixed Assets 2,20,000
6,80,000 6,80,000
As from 1st February, 2016 they agree to admit C as a partner. Share of A, B and C in the new firm will
be 3 : 2 : 1 respectively. C to contribute Rs. 1,20,000 as his capital and Rs.30,000 as his share of
goodwill.
The value of the fixed assets of the firm will be increased by 10% before the admission of C.
Pass entries and prepare the opening balance sheet of the firm.
Q203. Gautam and Rahul are partners in a firm, sharing profits and losses in the ratio of 2 : 3. Their
Balance Sheet as at 31st March, 2014, was as follows :
BALANCE SHEET
Bills Payable 15,000 Furniture 25,000
Capital A/cs : Sundry Debtors 12,000
Gautam 30,000 Less : Provision for
Rahul 40,000 70,000 Doubtful Debts 2,000 10,000
Cash in hand 40,000
1,00,000 1,00,000
Karim was to be taken as a partner with effect from 1st April, 2014, on the following terms :
(a) The new profit sharing ratio of Gautam, Rahul and Karim would be 5 : 3 : 2.
(b) Provision for Doubtful Debts would be raised to 20% of debtors.
(c) Karim would bring in cash, his share of capital of Rs.40,000 and his share of goodwill valued
at Rs. 10,000.
(d) Gautam would take over the furniture at Rs.22,000.
(i) Pass journal entries at the time of Karim’s admission.
(ii) Prepare the Balance Sheet of the reconstituted firm. (ISC, 2015)
Q204. A and B are in partnership sharing profits and losses in the ratio of 3 : 2. On 1st April 2018, they
admitted C into partnership. He paid Rs.50,000 as his capital but nothing for Goodwill which was valued
at Rs.40,000 for the time. He acquired 1/5th share in the profits, equally from both partners. It was also
decided that:
(i) Land and Building be written off by Rs.20,000;
(ii) Stock be written down by Rs.3,200.
(iii) A provision of Rs. 1,000 be created for doubtful debts; and
(iv) An amount of Rs. 1,200, included in Sundry Creditors, be written off as it is no longer payable.
The Balance Sheet of A and B as at 31 st March, 2018 was as under :
BALANCE SHEET

Capital Accounts : Goodwill 10,000
A 86,000 Land and Building 60,000
B 64,000 1,50,000 Plant and Machinery 70,000
Cash at Bank 4,000
Cash in hand 1,200
2,01,200 2,01,200
Prepare Revaluation Account, Partner’s Capital Accounts and new Balance Sheet of the firm.
Q205. X and Y share profits as X 60% and Y 40%. The Balance Sheet of the firm as at April 1, 2018
was as follows :
Provision for Doubtful Debts 3,000 Freehold Premises 2,00,000
Creditors 39,000 Plant 1,00,000
Provident Fund 18,000 Furniture 16,000
Reserve Fund 15,000 Prepaid Expenses 4,000
Capitals : Debtors 1,00,000
X 2,50,000 Stock 40,000
Y 1,50,000 4,00,000 Cash 5,000
Goodwill 10,000
4,75,000 4,75,000
On this date Z was admitted as a partner on the following terms :
(1) He was to get 4/15ths of profits.
(2) He was to introduce Rs.2,00,000 as capital and his share of goodwill in cash. Goodwill brought
by Z shall be withdrawn by X and Y.
(3) Goodwill shall be valued on the basis of years purchase of the average profits of the last four years,
which were :
2015 Rs.20,000 2017 Rs. 15,000 (Loss)
2016 Rs.35,000 2018 Rs.40,000
(4) It is further agreed that Y shall introduce additional capital of Rs.40,000.
(5) Assets are to be revalued as : Freehold Premises Rs.2,50,000; Plant at Rs.80,000; Prepaid
Expenses Nil;
(6) It is decided to write off Bad Debts amounting to Rs.8,000.
(7) Creditors proved at Rs.45,000, one bill for goods purchased having been omitted from the
books.
Give Journal entries and Ledger Accounts to record the above and the Balance Sheet after Z’s
admission.
Q206. X and Y are partners in a firm sharing profits and losses in the ratio of 5 : 3. On 31st March,
2018, their Balance Sheet was as under :
Provident Fund 15,000 Debtors 1,80,000
Workmen’s Compensation Stock 1,25,000
Reserve 40,000 Premises 1,50,000
Capitals A/cs : Advertisement Expenses 16,000
X 2,60,000
Y 1,35,000 3,95,000
5,00,000 5,00,000

𝟏 1
On 1st April, 2018, Z is admitted as a partner. X surrenders 𝟒th of his share and Y 3rd of his share in
2
favour of Z. Goodwill is valued at Rs. 1,60,000. Z brings in only 5th of his share of goodwill in cash
and Rs. 1,50,000 as his capital. Following terms are agreed upon:
(i) Premises is to be increased to Rs.2,00,000 and stock by Rs.5,000.
(ii) Creditors proved at Rs.60,000, one bill for goods purchased having been omitted from the
books.
(iii) Outstanding rent amounted to Rs. 12,000 and prepaid salaries Rs.2,000.
(iv) Liability on account of provident fund was only Rs. 10,000.
(v) Liability for Workmen’s Compensation Claim was Rs. 16,000.
Prepare Revaluation A/c, Capital A/cs and the opening Balance Sheet. Also calculate the new profit
sharing ratios.
Q207 (A). 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 1/5 share in the future profits. Somesh brought Rs. 1,20,000 as his capital. Calculate the
value of goodwill of the firm and record necessary journal entries for the above transactions on
Somesh’s admission.
Q207 (B). X and Y are partners with capital of Rs. 13,00,000 and Rs.20,00,000. They share profits in
the ratio of 1 : 2. They admit Z as a partner with 1/5th share in the profits of the firm. Z brings in Rs.
12,00,000 as his share of capital. The Profit and Loss Account showed a credit balance of Rs.6,00,000
as on the date of admission of Z. Give the necessary Journal entries to record the goodwill.
Q208. Asin and Shreya are partners in a firm. They admit Ajay as a new partner with 1/5th share in the
profits of the firm. Ajay brings Rs.5,00,000 as his share of capital. The value of the total assets of the
firm was Rs. 15,00,000 and outside liabilities were valued at Rs.5,00,000 on that date. Give the
necessary Journal entry to record goodwill at the time of Ajay’s admission. Also show your workings.
Q209. Following figures have been extracted from the books of A and Y who share profit and losses in
the ratio of 7 : 3.
Rs.
X’s Capital 3,00,000
Y’s Capital 1,50,000
Reserve 1,60,000
Profit & Loss Account 40,000
1
On this date, they admit Z for 5th share and the new profit sharing ratio is agreed at 3 : 1 : 1. Z brings
in Rs.3,00,000 as his Capital. Pass journal entry for recording goodwill.
Q210. Following is the Balance Sheet of X and Y who share profits and losses in the ratio of 3 : 2 as at
31st March, 2018:
Reserve 1,00,000 Debtors 70,000
Profit & Loss Account 40,000 Stock 1,80,000
Capital Accounts : Machinery 3,50,000
X 2,70,000 Goodwill 30,000
Y 1,60,000 4,30,000
6,50,000 6,50,000
1 1
On 1st April 2018, Z is admitted as a new partner. X surrenders 3rd of his share and Y surrenders 4th
of his share in favour of Z. Z brings in Rs.3,60,000 for his share of Capital. Pass journal entries for
recording goodwill.

Q211. Rajesh and Ravi are partners sharing profits in the ratio of 3 : 2. Their Balance Sheet stood as
under as at 31st March, 2018.
BALANCE SHEET
Creditors 3,85,000 Cash 20,000
Outstanding liabilities 40,000 Stock 1,50,000
Capitals : Prepaid Insurance 15,000
Rajesh 2,90,000 Debtors 94,000
Ravi 1,50,000 4,40,000 Less: Provision 4,000 90,000
Machinery 1,90,000
Buildings 3,50,000
Furniture 50,000
8,65,000 8,65,000
Raman is admitted as a new partner introducing a capital of Rs. 1,60,000. The new profit-sharing ratio
is decided as 5 : 3 : 2. Raman is unable to bring in any cash for Goodwill. So, it is decided to value the
goodwill on the basis of Raman’s share in the profits and the capital contributed by him. Following
revaluations are made :
(i) Stock to depreciate 5%.
(ii) Provision for doubtful debts is to be Rs.5,000.
(iii) Furniture to depreciate 10%.
(iv) Buildings are valued at Rs.4,00,000.
Show the necessary Ledger Accounts and the Balance Sheet of the new firm.
Q212. W and R are partners in a firm sharing profits in the ratio of 3 : 2. Their Balance Sheet as at 31st
March, 2016 was as follows :
Balance Sheet of W and R as at 31-3-2016
Capitals : Plant & Machinery 40,000
W 60,000
R 40,000 1,00,000
1,30,000 1,30,000
On the above date C was admitted for 1/6th share in the profits on the following terms :
(i) C will bring Rs.30,000 as his capital and Rs. 10,000 for his share of goodwill premium, half of which
will be withdrawn by W and R.
(ii) Debtors Rs. 1,500 will be written off as bad debts and a provision of 5% will be created for bad and
doubtful debts.
(iii) Outstanding salary will be paid off.
(iv) Stock will be depreciated by 10%, furniture by Rs.500 and Plant and Machinery by 8%.
(v) Investments Rs.2,500 not mentioned in the balance sheet were to be taken into account.
(v) A creditor of Rs.2,100 not recorded in the books was to be taken into account.
Pass necessary Journal Entries for the above transactions in the books of the firm on C’s admission.
(C.B.S.E. 2017, Delhi)
Q213 (A). Nem and Khem sharing profits in the ratio of 3 : 2 admit Prem as a partner with 1/3 share in
profits. He had to contribute proportionate capital. They had following financial position :
Creditors 40,000 Cash at bank 5,000
Reserve Fund 50,000 Debtors 60,000

Nem 50,000 Plant and Machinery 80,000
Khem 40,000
1,80,000 1,80,000
*They agreed to admit Prem as a partner on the following terms :
(1) Plant and Machinery to be reduced by 10%.
(2) Stock to be increased by Rs.3,000.
(3) Bad debts provision was to be created at 5%.
(4) Accrued incomes not appearing in the books Rs.900.
(5) Prem was to introduce Rs.20,000 as premium for goodwill for 1/3rd share of the future profits
of the firm.
Prepare Profit and Loss Adjustment Account, Capital Accounts and Balance Sheet of the new firm.
Also calculate new profit sharing ratio.
Q213 (B). Mohan and Sohan are in partnership sharing profits in the proportion of 3/5 and 2/5
respectively.
The Balance Sheet is as follows :
Capitals : Cash 65,000
Mohan 2,00,000 Debtors 1,00,000
Sohan 1,00,000 3,00,000 Less : Provision 40,000 60,000
Creditors 40,000 Stock 1,50,000
Plant 65,000
3,40,000 3,40,000
They decide to admit Rohan to 1/3rd share on the terms that he is to pay into the business Rs. 1,00,000
as Goodwill and sufficient capital to give him 1/3rd share of the total capital of the new firm. It was
agreed that Provision for bad debts be reduced to Rs. 10,000, that the stock be revalued at Rs.2,00,000;
and that the plant be reduced to Rs.50,000.
Prepare necessary ledger accounts and show the balance sheet of the new partnership.
Q214. A and Y were partners sharing profits in the ratio of 1 : 2. Their Balance Sheet as at 31st March,
2018 was as follows :
Outstanding Expenses 4,000 Debtors 40,000
Capitals : Less: Provision for
A 1,50,000 Bad Debts 500 39,500
Y 3,00,000 4,50,000 Stock 1,20,000
Furniture 30,000
Plant 2,72,500
Patents 8,000
4,90,000 4,90,000
They agreed to admit Z for jth share from 1st April, 2018 on the following terms:
(i) Goodwill of the firm was valued at Rs.60,000 and Z to bring in his share of premium for goodwill
in cash.
(ii) Provision for bad debts be raised by Rs. 1,500.
(iii) Patents are valueless.
(iv) Stock be reduced by 10%.
(v) Outstanding expenses be increased by Rs.6,000.
(vi) Rs.2,500 be provided for an unforeseen liability.
(vii) Z to bring in Capital equal to yth of the combined capital of A and Y,
Prepare Revaluation Account, Partner’s Capital Accounts and the Opening Balance Sheet.
Q215. Mohan and Mahesh were partners in a firm sharing profits in the ratio of 3 : 2. On 1st April, 2012
they admitted Nusrat as a partner in the firm. The Balance Sheet of Mohan and Mahesh on that date
was as under :

BALANCE SHEET OF MOHAN AND MAHESH
as at 1st April, 2012
Rs. Rs.
Creditors 2,10,000 Cash in hand 1,40,000
Workmen’s Compensation Fund 2,50,000 Debtors 1,60,000
General Reserve 1,60,000 Stock 1,20,000
Capitals : Machinery 1,00,000
Mohan 1,00,000 Building 2,80,000
Mahesh 80,000 1,80,000
8,00,000 8,00,000
It was agreed that:
(i) The value of Building is to be appreciated to Rs.3,80,000.
(ii) Stock is undervalued by 25%.
(iii) The liability of workmen’s compensation fund was determined at Rs.2,30,000. (;V) Nusrat brought
in her share of goodwill Rs. 1,00,000 in cash.
(v) Nusrat was to bring further cash as would make her capital equal to 20% of the combined capital
of Mohan and Mahesh after above revaluation and adjustments are carried out.
(vi) The future profit sharing ratio will be Mohan 2/5th, Mahesh 2/5th, Nusrat 1/5th.
Prepare Revaluation Account, Partner’s Capital Accounts and Balance Sheet of the new firm. Also
show clearly the calculation of capital brought by Nusrat.
(C.B.S.E. 2014)
Q216. On 31st March 2019, the Balance Sheet of A and B, who were sharing profits in the ratio of 3 :
2 was as follows :
Rs. Rs.
Investment Fluctuation Reserve 50,000 Sundry Debtors 7,50,000
Capitals : Less : Provision 30,000 7,20,000
A 10,00,000 Stock 4,50,000
B 8,00,000 18,00,000 Investments 2,00,000
Plant & Machinery 6,00,000
21,00,000 21,00,000
2 1
They decide to admit C as a partner. A sacrifices 15 from his share while B sacrifices 6th of his share in
favour of C.
The following adjustments were agreed upon :
(i) C shall bring Rs. 1,50,000 as his share of goodwill premium and shall bring in proportionate capital.
(ii) Stock was undervalued by 10% and Plant and Machinery was overvalued by 20%.
(iii) Market value of investments is Rs.2,20,000,
(iv) Debtors to the extent of Rs. 10,000 were unrecorded.
(v) 5% provision for doubtful debts is required on sundry debtors.
Prepare Revaluation Account, Partner’s Capital Accounts and the Balance Sheet of the reconstituted
firm.
Q217. P and Q are partners sharing profits in 3 : 1. R is admitted and the partners decide to share the
future profits in the ratio of 2 : 1 : 1. The Balance Sheet of P and Q as at 31st March, 2018 was as under
:
Profit & Loss Account 60,000 Debtors 60,000
Capital A/cs : Stock 1,50,000
P 3,50,000 Prepaid Expenses 20,000
Q 2,20,000 5,70,000 Plant & Machinery 1,40,000

Premises 2,75,000
6,60,000 6,60,000
It was decided that:
(i) Part of the stock which has been included at a cost of Rs.8,000 had been badly damaged in storage
and could realise only Rs.2,000.
(ii) A bill for Rs.7,000 for electric charges has been omitted to be recorded.
(iii) Plant & Machinery was found overvalued by Rs.20,000. Premises be appreciated to Rs.3,00,000.
(iv) Prepaid expenses be brought down to 40%.
(v) R’s share of goodwill is valued at Rs.20,000 but he is unable to bring it in cash.
(vi) R brings in capital proportionate to his share of profit in the firm.
Prepare Revaluation A/c, Capital A/cs and the opening Balance Sheet.
Q218. X and Y are partners in a firm. They share profits and losses in the ratio of 2:1. Their Balance
Sheet as at 31st March, 2016 stood as under :
Capitals : Plant and Machinery 1,75,000
X 1,40,000 Furniture and Fixture 65,000
Y 1,00,000 Stock 35,000
Workmen Compensation Reserve 40,000 Bills Receivable 12,000
Creditors 1,50,000 Debtors 1,10,000
Bills Payable 10,000 Less: Provision for
Doubtful debts 7,000 1,03,000
Cash & Bank Balance 50,000
4,40,000 4,40,000
2 1
Z is admitted in the partnership. X surrenders 5th ot his share and Y surrenders, 5th of his share in favour
of Z. The following information is given about the firm :
(i) Plant and Machinery be reduced by Rs.35,000 and furniture and fixture be reduced to Rs.58,500.
(ii) Provision for bad and doubtful debts is to be increased by Rs.3,000.
(iii) Actual liability for workmen compensation claim is Rs. 16,000.
(iv) A liability of Rs.2,500 included in creditors is not likely to arise.
(v) Z’s share of goodwill is valued at Rs.40,000 but he is unable to bring it in cash.
(vi) Z is to bring in Capital proportionate to his share after all adjustments.
Prepare Revaluation Account, Capital Accounts and Balance Sheet after Ts admission. Also calculate
the new profit sharing ratio.
Q219. Given below is the Balance Sheet of S'as at 31st March, 2016 :
Capital 2,00,000 Building 1,50,000
Sundry Creditors 75,000 Furniture and Fittings 50,000
Bills Receivable 10,000
Sundry Debtors 25,000
Less : Provision for
Doubtful debts 5,000 20,000
Cash at Bank 45,000
2,75,000 2,75,000
T was admitted as a partner for a half share of profits on the following conditions:
(1) Building to be appreciated by 20%.
(2) Furniture and fittings to be written down to Rs.45,000.
(3) Bills receivable not to be taken over by the new partnership.
(4) Provision for doubtful debts was found to be in excess by Rs.3,000.
(5) A liability of Rs.2,000 included in creditors was not likely to arise.
(6) There is an additional liability of Rs.5,000 being outstanding salary payable to employees of
the firm.

3
T is to bring Rs.30,000 as premium for goodwill and further cash to make his capital equal to 5th of S’s
capital.
Pass journal entries and prepare the opening Balance Sheet of the partnership.
Q220. X and Y are partners sharing profits in the ratio of 2 : 1. T heir balance sheet as at 31st March,
Sundry Creditors 25,000 Cash at bank 5,000
Reserve Fund 18,000 Sundry Debtors 15,000
Capital Accounts : Stock 10,000
X 75,000 Investments 8,000
Y 62,000 Typewriter 5,000
Fixed Assets 1,37,000
1,80,000 1,80,000
They admit Z into partnership from 1 st April, 2018 on the following terms :
I. Z brings in Rs.40,000 as his capital and he is given 1/4th share in profits.
II. Z brings in Rs. 15,000 for goodwill, half of which is withdrawn by old partners.
III. Investments are valued at Rs. 10,000. X takes over Investments at this value.
IV. Typewriter is to be depreciated by 20% and fixed Assets by 10%.
V. An old customer, whose account was written off as bad debts, has promised to pay Rs. 1,000.
VI. By bringing in or withdrawing cash, the Capitals of X and Y are to be made proportionate to
that of Z on their profit sharing basis.
Pass Journal entries, prepare capital accounts and new B/S of the firm.
Q221. A, B and C are partners in a firm sharing profits in the ratio of 5 : 3 : 2. D is admitted into the
firm for 1/4 share in profits, which he gets as 1/8 from A and 1 /8 from B, The total capital of the firm
is agreed upon as Rs.3,20,000 and D is to bring in cash equivalent to 1/4 of this amount as his capital.
The capitals of other partners are also to be adjusted in the ratio of their respective shares in profits. The
capitals of A, B and C after all adjustments are Rs. 1,00,000, Rs.75,000 and Rs.60,000 respectively.
Calculate the new capitals of A, B and C, and record the necessary journal entries.
Q222. A, B and C are partners in a firm sharing profits in the ratio of 3 : 2 : 1 with Capitals of Rs.70,000;
Rs.60,000 and Rs.40,000 respectively. D is admitted in the firm for 1/4th share in profits, which he
acquires 1/8 th from A and 1/8 th from B. D brings in Rs.60,000 as his capital and Rs.32,000 for his
share of goodwill in cash. 3/4th of the amount of goodwill was withdrawn by A and B. The Capitals of
the partners in the new firm are to be adjusted in profit sharing ratio on the basis of D’s capital and
excess or deficit capital to be adjusted in cash.
Prepare necessary journal entries, Capital Accounts of the partner’s and Cash Account.
1
Q223. A and B are partners sharing profits in the ratio of 5 : 3. C was admitted for 4th share in profits.
3 1
C acquires this share as 16 from A and 4th of his share from B. C brings in Rs. 1,00,000 as his capital.
At the time of C’s admission :
(i) The firm’s goodwill was valued at Rs.2,40,000.
(ii) General Reserve was Rs.40,000.
(iii) Profit on revaluation of assets and liabilities was Rs. 24,000.
Before any adjustments were made, the Capitals of A and B were Rs. 1,20,000 and Rs. 70,000
respectively.
It is decided that after C’s admission, the Capitals of A and B be adjusted on the basis of C’s Capital,
any excess or shortfall to be adjusted by withdrawing or bringing in Cash by the old partners. You are
required to pass necessary journal entries on C’s admission.
Q224. A and B are partners sharing profits in the ratio of 2 : 1. Following items appeared in their Balance
Sheet as at 31 st March, 2018:

A’s Capital Rs.48,000; B's Capital Rs.30,000; Creditors Rs. 15,000; Bank balance Rs.5,000; Debtors
Rs.20,000; Machinery Rs.36,000; Stock Rs.44,000.
They admit C into partnership on 1st April, 2018 with 1/6th share in profits, which he acquires equally
from A and B. He brings in Rs.20,000 as his capital and Rs. 18,000 as goodwill in cash.
Following revaluations were made :
I. 5% provision be made for doubtful debts on Debtors and a provision of 2% be made on Debtors
and Creditors for discount.
II. Rs. 1,000 are prepaid for insurance.
III. Rs.5,000 are outstanding for salaries.
IV. Rs. 1,480 for accrued income are to be shown in the books.
V. Investments for Rs.6,000 have been omitted to be recorded in the books.
A and B decide to have their capitals in proportion to their share in profits, based on C’s share. Any
excess of capital was to be withdrawn and deficit to be paid in Cash.
Prepare the partner’s capital accounts and give the new balance sheet of the firm
Q225. A and B are partners sharing profits in the proportion of 3 : 2. Their Balance Sheet as at 31st
March, 2018 was as follows :
Outstanding Salaries 4,000 Sundry Debtors 30,000
General Reserve 10,000 Less : Provision 1,000 29,000
Capitals: A 50,000 Stock 40,000
B 30,000 Trade Marks 8,000
Building 75,000
1,57,000 1,57,000
They agree to admit C as a new partner on the following terms :
(1) C will be given 2/9th share of profit and he will bring Rs. 50,000 for his share of capital and
goodwill.
1
(2) Goodwill of the firm will be calculated at 2 2 year’s purchase of the average super profits of
last four years. Profits of the last four years are Rs.40,000; Rs.40,000; Rs.55,000 and Rs.65,000
respectively. Normal profits that can be earned with the capital employed are Rs. 14,000.
(3) Half the amount of goodwill is withdrawn by old partners.
(4) 15% of the general reserve is to remain as a provision against doubtful debts.
(5) Outstanding salaries be increased to Rs. 16,000, Stock is overvalued by 25% and Building is
undervalued by 25%. Trade Marks be written off by 50%.
(6) New profit sharing ratio of partners will be 4 : 3 : 2 and the capital accounts of A and B will be
adjusted on the basis of C’s capital by bringing in or withdrawing cash, as the case may be.
Prepare necessary accounts and the opening balance sheet of the firm.
Q226. Ashok and Biju were partners sharing profits and losses in the ratio of 3 : 1 respectively. The
following was their balance sheet as at 31st March, 2018 :
Creditors 1,20,000 Sundry Debtors 2,00,000
Bank Overdraft 1,50,000 Stock 2,20,000

Ashok’s Capital 1,50,000 Furniture 40,000
Biju’s Capital 1,00,000 Machinery 60,000
5,20,000 5,20,000
On 1st April, 2018, Chandra was admitted to the firm on the following terms :
(i) Chandra would provide Rs. 1,00,000 as a capital and pay Rs.20,000 as goodwill for his one-
third share in future profits.
(ii) Ashok, Biju and Chandra would share profits equally.
(iii) Machinery would be reduced by 10% and Rs.5,000 would be provided for bad debts. Stock would
be valued at Rs.2,49,400.

(iv) Capital accounts of old partners would be adjusted in the profit sharing ratio on the basis of
Chandra’s capital by bringing in or taking out cash.
Pass necessary journal entries and prepare partner’s capital accounts and balance sheet of the new firm.
Q227 (A). (HOTS) D and E were partners in a firm sharing profits in 3 : 1 ratio. On 1-4-2018 they
admitted fas a new partner for 1/4th share in the firm which he acquired from D. Their Balance Sheet
as at that date was as follows:
Capitals: Machinery 60,000
D 1,00,000 Stock 15,000
E 70,000 1,70,000 Debtors 40,000 ∴.
General Reserve 32,000 Less: Provision for
bad debts 3,000 37,000
Investments 50,000
Cash 44,000
2,56,000 2,56,000
F will bring Rs.40,000 as his capital and the other terms agreed upon were :
(i) Goodwill of the firm was valued at Rs.24,000.
(ii) Land and Building were valued at Rs.70,000.
(iii) Provision for bad debts was found to be in excess by Rs.800.
(iv) A liability for Rs.2,000 included in creditors was not likely to arise.
(v) The capital of the partners be adjusted on the basis of F's contribution of capital to the firm.
(vi) Excess or shortfall, if any, to be transferred to current accounts.
Q227 (B). (HOTS) A and B are partners in a firm sharing profits and losses in the ratio of 3 : 2. Their
balance sheet as at 1st April, 2018 was as follows :
BALANCE SHEET
Sundry Creditors 15,000 Plant 30,000
Capital Accounts: Patents 10,000
A 30,000 Stock 20,000
B 25,000 55,000 Debtors 18,000
General Reserve 10,000 Cash 2,000
80,000 80,000
C is admitted as partner on the above date on the following terms :
(i) He will pay Rs. 10,000 as goodwill for one-fourth share in the profits of the firm.
(ii) The assets are to be valued as under :
Plant at Rs.32,000; Stock at Rs. 18,000; Debtors at book figure less a provision of 5 per cent for Bad
Debts.
(iii) It was found that the creditors included a sum of Rs. 1,400 which was not to be paid. But it was
also found that there was a liability for compensation to workers amounting to Rs.2,000.
(iv) C was to introduce Rs. 20,000 as capital and the capitals of other partners were to be adjusted in
the new profit sharing ratio. For this purpose, current accounts were to be opened.
Give Journal entries to record the above and Balance Sheet after C’s admission. (Ledger accounts are
not required)
Q227 (C). (HOTS) The following was the Balance Sheet of Ram, Shyam and Mohan sharing profits
6 5 3
and losses in the proportion of 14 : 14 : 14 respectively :
BALANCE SHEET
Creditors 18,900 Land & Buildings 50,400

Ram 39,900 Cash at Bank 8,890
Shyam 33,600
Mohan 16,800 90,300
1,22,500 1,22,500
They agreed to take Sohan into partnership and give him 1/8th share of profits on the following terms :
(a) That Sohan brings in Rs. 16,000 as his Capital.
(b) That Furniture be written down by Rs.920 and stock be depreciated by 10%.
(c) That a Provision of Rs. 1,320 be made for outstanding repair bills.
(d) That the value of Land and Buildings be written upto Rs.65,100.
(e) That Sohan’s share of Goodwill be fixed at Rs.8,820. Sohan brings this amount in Cash.
(f) That the Capitals of Ram, Shyam and Mohan be adjusted on the basis of Sohan’s Capital by opening
the necessary Current Accounts.
Give the Necessary Journal Entries, the Revaluation Account, Capital Accounts and also the Balance
Sheet of the firm as newly constituted.
Q228 (A). Om, Ram and Shanti were partners in a firm sharing profits in the ratio of 3 : 2 : 1. On 1st
April, 2014 their Balance Sheet was as follows :
Rs. Rs.
Capital Accounts: Land and Building 3,64,000
Om Plant and Machinery 2,95,000
3,58,000
Ram Furniture 2,33,000
3,00,000
Shanti 9,20,000 Bills Receivables 38,000
2,62,000
Creditors 1,60,000 Stock 1,11,000
Bills Payable 90,000 Bank 87,000
12,18,000 12,18,000
On the above date Hanuman was admitted on the following terms :
(i) He will bring Rs. 1,00,000 for his capital and will get 1/10th share in the profits.
(ii) He will bring necessary cash for his share of goodwill premium. The goodwill of the firm was valued
at Rs.3,00,000.
(iii) A liability of Rs. 18,000 will be created against bills receivables discounted.
(iv) The value of stock and furniture will be reduced by 20%.
(v) The value of land and building will be increased by 10%.
(vi) Capital accounts of the partners will be adjusted on the basis of Hanuman’s capital in their
profit sharing ratio by opening current accounts.
Prepare Revaluation Account and Partners’ Capital Accounts.
Q228 (B) Following is the Balance Sheet of Amit and Vidya as at 31st March, 2014:
Rs. Rs.
Employees Provident Fund 16,000 Stock 30,000
Workmen’s Compensation Debtors 44,000
Reserve 30,000 Less: Provision for
Capital A/cs : Amit 1,10,000 Bad Debts 2,000 42,000
Vidya 60,000 1,70,000 Plant and Machinery 1,20,000
Goodwill 20,000

Profit and Loss Account 10,000
2,42,000 2,42,000
On the above date, Chintan was admitted as a partner for 1/4th share in the profits of the firm with the
following terms :
(a) Rs.2,900 will be written off as Bad Debts.
(b) Stock was taken over by Vidya at Rs.35,000.
(c) Goodwill of the firm was valued at Rs.40,000. Chintan brought his share of goodwill premium
in cash.
(d) Chintan brought proportionate capital and the capitals of the other partners were adjusted on
the basis of Chintan’s Capital. For this necessary cash was to be brought in or paid off to the partners
as the case may be.
Prepare Revaluation Account and Partners’ Capital Accounts.
(C.B.S.E. 2015 Comptt, All India)
Q229. Rekha, Sunita and Teena are partners in a firm sharing profits in the ratio of 3 : 2 : 1. Samiksha
1 1 1
joins the firm. Rekha surrenders 4th of her share; Sunita surrenders 3rd of her share and Teena 5th of
her share in favour of Samiksha. Find the new profit-sharing ratio.
Q230 (a) Rohan and Mohan are partners in a firm sharing profits in the ratio of 5 : 3 respectively. They
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admit Bhim as a partner for 7th share in the profit. The new profit sharing ratio will be 4 : 2 : 1. Calculate
the sacrificing ratio of Rohan and Mohan.
(b) Amla and Kamla are partners in a firm sharing profits in the ratio of 4 : 1 respectively.
1
They admitted Bimla as a new partner for th share in the profits, which she acquired wholly from
4
Amla. Determine the new profit sharing ratio of the partners.
Q231. On 1st April, 2018, A and B, sharing profits 2/3 and 1/3 respectively, agree to admit C into
partnership on condition that he pays Rs.3,00,000 as capital and Rs.90,000 for 1/6 share of goodwill
which he acquires equally from A and B. Subsequently, half amount of goodwill is withdrawn by the
old partners.
Give Journal entries necessary to record these transactions.
Q232. Kumar and Rao were partners in a firm sharing profits equally. They admitted Ghosh as a new
partner for 1/4th share in profits. Ghosh acquired his 1/4th share from Kumar and Rao in the ratio of 3
: 2 respectively. Ghosh brought Rs.2,70,000 for his capital and Rs.39,000 for 1/4th share of goodwill.
Calculate new profit sharing ratio of Kumar, Rao and Ghosh and pass necessaiy journal entries for the
above transactions in the books of the firm.
Q233. A and B are partners sharing profits and losses in the proportion of 3 : 2. They agree to admit C
into partnership who is to get 1/5th share in the business. C brings in Rs. 1,00,000 for his capital and
Rs.40,000 for 1/5th share of goodwill which he acquires 3/20 from A and 1/20 from B. The profit for
the first year of the new partnership amounted to Rs.2,00,000.
Make the necessary Journal entries in connection with C’s admission and apportion the profit between
the partners.
Q234. A and B are partners sharing profits and losses in the ratio of 3 : 2 respectively. Goodwill appears
in their books at Rs.3,00,000. They admit C into partnership. C paying a premium of Rs. 1,00,000 for
one-fourth share of the profits while A and B as between themselves sharing profits and losses as before.
Give Journal entries to record the above arrangement in the books of the firm.
Q235. X and Y are partners sharing profits in the ratio of 2 : 1. Their books showed goodwill at
Rs.50,000, Z is admitted with 1/5th share of profits which he acquires equally from X and Y. He brings

Rs.7,50,000 as his capital but is not able to bring in cash his share of goodwill Rs.40,000. Give Journal
entries.
Q236. A and B are partners sharing profits in the ratio of 5 : 3. They admit C as a partner for 1/3rd
share. His share of Goodwill is Rs.32,000. Give journal entries in the following cases:
(a) When the amount of goodwill is paid privately.
(b) When the goodwill is received in cash and retained in the business.
(e) When the goodwill is received in cash and withdrawn by old partners.
(d) When C is unable to bring the goodwill in cash.
Q237. A and B are partners. They admit C as partner who pays Rs.50,000 as capital. The new ratio is
to be 4 : 3 : 2. The goodwill of the firm is to be based on 2 year’s purchase of the average of 3 year’s
profits which were Rs.30,000; Rs.35,000 and Rs.43,000. Show Journal entries, if:
(a) C pays for goodwill in cash; and
(b) He is unable to bring cash for goodwill.
Q238. A and B are partners sharing profits in the ratio of 2 : 1. They admit C for 1/4th share in profits.
C brings Rs.30,000 for his capital and Rs.8,000 out of his share of Rs. 10,000 for goodwill. Before
admission goodwill appeared in books at Rs. 18,000. Give Journal entries to give effect to above
arrangement.
Q239. A and B share profits in the proportions of 3/4 and 1/4. Their Balance Sheet as at March 31, 2018
was as follows :
Reserve Fund 40,000 Bills Receivable 30,000
Capital Accounts : Debtors 1,60,000
A 3,00,000 Stock 2,00,000
B 1,60,000 Fixtures 10,000
Land and Buildings 2,50,000
9,15,000 9,15,000
On April 1,2018, C was admitted into partnership for 1/4th share on the following terms :
(a) That C pays Rs. 1,00,000 as his capital.
(b) That C pays Rs. 50,000 for goodwill. Half of this sum is to be withdrawn by A and B.
(c) That stock and fixtures be reduced by 10% and a 5% provision for doubtful debts be created on
Sundry Debtors and Bills Receivable.
(d) That the value of land and buildings be appreciated by 20%.
(e) There being a claim against the firm for damages, a liability to the extent of Rs. 10,000 should
be created.
(f) An item of Rs.6,500 included in sundry creditors is not likely to be claimed and hence should be
written back.
Record the above transactions (journal entries) in the books of the firm assuming that the profit sharing
ratio between A and B has not changed. Prepare the new Balance Sheet on the admission of Mr. C.
Q240. A and B are partners sharing profits in the ratio of 3 : 1. Their Balance Sheet as at 31-3-2018 was
as follows :
A 90,000 Debtors 60,000
B 30,000 Stock 30,000
Creditors 20,000 Investments 50,000
Workmen’s Compensation Reserve 20,000 Goodwill 10,000
1,60,000 1,60,000
C is admitted for 2/5 share in future profits. For this purpose following adjustments are agreed upon :

C will bring Rs.80,000 for Capital and Rs.20,000 for Goodwill.
Market value of investments is Rs.45,000; claim on account of workmen’s compensation is Rs. 10,000.
Prepare ledger accounts, i.e., Revaluation Account, Partner’s Capital Accounts to record the above and
show the Balance Sheet.
Q241. Following is the Balance Sheet of Shashi and Ashu sharing profits as 3:2.
General Reserve 2,50,000 Less : Provision for
Workmen’s Compensation Doubtful Debts 10,000 2,10,000
Reserve 1,50,000 Land & Building 1,80,000
Capital: Shashi 1,50,000 Plants & Machinery 1,20,000
Ashu 1,00,000 Stock 1,10,000
Bank 2,10,000
8,30,000 8,30,000
—
On admission of Tanya for 1/6th share in the profits it was decided that:
(i) Provision for doubtful debts to be increased by Rs. 15,000.
(ii) Value of land and building to be increased to Rs.2,10,000.
(iii) Value of stock to be increased by Rs.25,000.
(iv) The liability of workmen’s compensation claim was determined to be Rs. 1,20,000.
(v) Tanya brought in as her share of goodwill Rs. 1,00,000 in cash.
(vi) Tanya was to bring further cash of Rs. 1,50,000 for her capital.
Prepare Revaluation A/c, Capital A/cs and Balance Sheet of the new firm.
Q242. P and S were partners in a firm sharing profits in the ratio of 3 : 2. Their Balance Sheet as at 31-
3-2016 was as follows :
Bank Overdraft 20,000 Cash 8,000
Provision for bad debts 1,000 Bills Receivable 40,000
Fs Loan 20,000 Building 90,000
Capitals : Land 1,48,000
P 1,00,000
S 1,80,000 2,80,000
3,66,000 3,66,000
On 1-4-2016 they admitted Fas a new partner on the following conditions :
(i) V will get 1/8th share in the profits of the firm.
(ii) Vs loan will be converted into his capital.
(iii) The goodwill of the firm was valued at Rs. 80,000 and V brought his share of goodwill premium
in cash.
(iv) Provision for bad 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 Revaluation Account, Capital Accounts of P, S and V and the Balance Sheet of the new firm
as on 1-4-2016.
Q243. A and B share the profits of a business in the ratio of 5:3. They admit C into the firm for a 1/4th
share in the profits to be contributed equally by A and B. On the date of admission of C, the Balance
Sheet of the firm was as follows :
A’s Capital 3,00,000 Machinery 2,60,000
B's Capital 2,00,000 Furniture 1,60,000

Workmen’s Compensation Reserve 40,000 Stock 1,20,000
Bank Loan 1,20,000 Debtors 80,000
6,80,000 6,80,000
Terms of C’s admission were as follows :
(i) C will bring Rs. 3,30,000 for his share of capital and goodwill.
(ii) Goodwill of the firm has been valued at 4 year’s purchase of the average super profits of last
three years. Average profits of the last three years are Rs. 2,20,000 while the normal profits that can be
earned with the capital employed are Rs. 1,40,000.
(iii) Furniture is to be appreciated by Rs.60,000 and the value of stock is to be reduced by Rs.20,000.
Prepare Revaluation Account, Partner’s Capital Accounts and the new Balance Sheet of A, B and C.
Q244. A and B are partners in a firm sharing profits and losses as 5 : 3. The position of the firm as at
31st March, 2018 was as follows :
Capital Accounts: Plant and Machinery 40,000
A 30,000 Stock 30,000
B 20,000 50,000 Sundry Debtors 20,000
Sundry Creditors 15,000 Bills Receivable 10,000
Bank Overdraft 42,500 Cash at Bank 7,500
1,07,500 1,07,500
On 1st April, 2018, C joins them on condition that he will share 3/4thofthe future profits, the balance
of profits being shared by A and B as 5 : 3. He introduces Rs.40,000 by way of capital and further
Rs.4,000 by way of premium for goodwill. He also provides loan to the firm to pay off bank overdraft.
A and B agree to depreciate Plant by 10% and to raise a reserve against Sundry Debtors @ 5%.
You are asked to journalise the entries in the books of the firm and show the resultant Balance Sheet.
How will the partners share future profits?
Q245. Rohit and Bal sharing profits in the ratio of 5 : 3 had the following Balance Sheet as at March
31, 2018 :
BALANCE SHEET
Creditors 1,00,000 Goodwill 1,50,000
General Reserve 1,40,000 Plant 1,35,000
Capital Accounts : Furniture 20,000
Rohit 4,00,000 Debtors 1,65,000
Bal 2,00,000 Bills Receivables 75,000
Stock 1,10,000
Bank 55,000
8,80,000 8,80,000
On April 1st, 2018, they decided to admit Khosla into the partnership giving him 1/5th share. He brings
in Rs.2,50,000 as his share of capital. The partners decide to revalue the Assets as follows :
Goodwill Rs.2,50,000; Plant Rs. 1,25,000; Debtors Rs. 1,55,000; Stock Rs. 1,62,500; Building
Rs.2,00,000; Furniture Rs. 10,000; Bills Receivable Rs.62,500.
You are required to show the journal entries and prepare the Revaluation A/c.
Q246. The following was the Balance Sheet of Ajay, Vijay and Kamal as at 31 st March, 2018 :
Capital Accounts: Stock 30,000
Ajay 40,000 Debtors 26,500
Vijay 33,500 Cash 1,500

Kamal 25,000 98,500
1,15,500 1,15,500
They share profits and losses in the ratio of 6 : 5 : 3. On 1st April, 2018 they agreed to admit Subodh
into partnership and give him a share of 10 paise in a rupee on the following terms :
(i) That Subodh should bring in Rs. 14,000 as capital.
(ii) That stock be depreciated by 10% and furniture by Rs.900.
(iii) That a reserve of Rs. 1,300 be made for outstanding repair bill.
(iv) That the value of Land and Buildings be brought up to Rs.65,000.
(v) That the Goodwill of the firm be valued at Rs.8,400.
Pass necessary journal entries to record the above arrangements and prepare the new Balance Sheet of
the firm.
Q247. (HOTS) A and B are partners in a firm. Their Balance Sheet as at 31st March, 2018 was as
follows :
Capital : Cash 10,000
A 50,000 Sundry Debtors 80,000
B 60,000 Stock 20,000
Outstanding Exp. 3,000 P & L A/c 4,000
Insurance Fund 7,000
Provident Fund 1,000
Employees Saving Fund 5,000
Workmen Profit Sharing Fund 2,000
Provision for Doubtful Debts 4,000
1,52,600 1,52,600
C was taken into partnership as from 1-4-2018 on following terms for 1/6 share :
1. C will bring Rs.40,000 as his capital.
2. Goodwill is valued at Rs. 12,000 and admitting partner is unable to bring his share of goodwill
in cash.
3. Claim an account of Workmen’s Compensation is Rs.3,000.
4. Creditors are to be paid Rs.2,000 more.
5. 2% Provision for Discount on Debtors is required.
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6. The share of A in new firm will be 12 times of B.
Prepare Revaluation A/c, Capital Accounts and Balance Sheet.
Q248. B and C are partners in a firm, sharing profits and losses in the ratio of 5:3. They admit A into
the firm on 1st April, 2018, when their Balance Sheet was as follows :
B’s Capital 32,000 Goodwill 8,000
C’s Capital 34,000 Machinery 38,000
Batik 5,000
86,000 86,000
Terms of A’s admission were as follows :
(i) A will bring Rs.30,000, through cheque, as his share of capital and will be entitled to 1/3rd share in
the profits.
(ii) A is not to bring goodwill in cash. Goodwill is valued on the basis of 2 years purchase of the average
profits of the last three years.
(iii) Average profits of the last three years are Rs.6,000.
(iv) Machinery and stock are revalued at Rs.45,000 and Rs.8,000 respectively.

Prepare Revaluation Account and Partner’s Capital Accounts incorporating the above adjustments and
also the Balance Sheet of the firm after the above adjustments.
Q249. The Balance Sheet of ft and B as at 31st March, 2018 is given below :
A’s Capital 60,000 Freehold Property 20,000
B’s Capital 30,000 Furniture 6,000
Cash 12,000
1,30,000 1,30,000
A and B share profits and losses in the ratio of 2 : 1. They agree to admit P into the firm subject to the
following terms and conditions :
(a) P will bring in Rs.21,000 of which Rs.9,000 will be treated as his share of Goodwill to be
retained in the business.
(b) P will be entitled to 1/4 share of profits of the firm .
(c) 50% of the General Reserv e is to remain as a provision for bad and doubtful debts.
(d) Furniture is to be depreciated by 5%.
(e) Stock is to be revalued at Rs. 10,500.
Prepare Revaluation Account, Capital Accounts and Opening Balance Sheet of the new firm.
Q250. A and B are partners sharing profits and losses in the ratio of 3 :2. On April 1,2018, their Balance
Workmen Compensation Reserve 4,000 Plant 75,000
Capitals: Patents 8,000
A 1,00,000 Stock 80,000
B 1,20,000 2,20,000 Debtors 62,000
Cash 20,000
2,75,000 2,75,000
On this date they agree to admit C on the following terms :
(i) C will be entitled to 3/10 share in the profits which he acquires 1/5 from A and 1/10 from B. He will
bring in Rs.60,000 as his capital.
(ii) Goodwill of the firm was valued at Rs.40,000.
(iii) Plant is valued at Rs.60,000 and Stock at Rs.70,000.
(iv) Claim on account of Workmen’s Compensation is Rs.6,000.
(v) Patents should be written off.
(vi) Investments of Rs.5,000 which did not appear in the books should be duly recorded.
(vii) B is to withdraw Rs.20,000 in cash.
Give journal entries and the Balance Sheet of the new firm.
Q251. Anil and Sunil are partners in a firm with fixed capitals of Rs.3,20,000 and Rs.2,40,000
respectively. They admitted Chant as a new partner for 1/4th share in the profits of the firm on 1st April
2018. Chant brought Rs.3,20,000 as her share of capital. Calculate value of goodwill and record
necessary journal entries.
Q252. (a) Ashok and Ramu are partners sharing profits in the ratio of 7 : 3 respectively. Their capitals
on 1st January, 2018 were Rs.8,00,000 and Rs.6,00,000 respectively. They admitted Vijay into the
partnership on that date giving him a 1/5th share in the future profits, which he acquired equally from
Ashok and Ramu. Vijay is to bring in Rs.5,00,000 as his share of capital. Find the new profit-sharing
ratio and value of the goodwill of the firm.
(b) Record the necessary Journal entries on Vijay’s admission from the above mentioned transactions.

Q253. David and Bimal are partners sharing profits and losses in the ratio of 3 : 2. Their Balance Sheet
as at 31st March 2016, was as follows :
BALANCE SHEET
Sundry Creditors 8,20,000 Cash 3,20,000
Capital Acs : Debtors 94,000
David 1,80,000 Less: Provision for
Bimal 1,20,000 3,00,000 Doubtful Debts 4,000 90,000
Building 5,50,000
Furniture 40,000
11,50,000 11,50,000
They admitted Chander as a new partner on 1 -4-2016 and the new profit sharing ratio became 5:3:2.
Chander introduced a capital of Rs. 1,60,000. Chander was unable to bring any cash for goodwill and
so it was decided to value the goodwill on the basis of his share in the profits and the capital contributed
by him. Adjustment for the same should be made through a current account opened in the name of
Chander. The following revaluations were made at the time of Chander’s admission :
(i) Stock had been overvalued by Rs.7,500 and furniture by Rs.5,000.
(ii) Provision for doubtful debts to be increased by Rs. 1,000.
(iii) A creditor for Rs.23,500 was paid off by Bimal privately for which no entry was passed in the
books of the firm.
Prepare the Revaluation Account, Partner’s Capital Accounts and a Balance Sheet of the new firm on
the date of Chander’s admission. Show your workings clearly.
Q254. A, B and C were partners in a firm sharing profits in the ratio of 3 : 2 : 1. On 31-3-2015 their
BALANCE SHEET of A, B and C
as at 31-3-2015
A 60,000 Investments 30,000
B 40,000 Furniture & Fittings 10,000
C 20,000 1,20,000 Machinery 35,000
2,25,000 2,25,000
On the above date D was admitted as a new partner and it was decided that:
(i) The new profit sharing ratio between A, B, C and D will be 2 : 2 : 1 : 1.
(ii) Goodwill of the firm was valued at Rs.90,000 and D brought his share of goodwill premium in cash.
(iii) The market value of investments was Rs.24,000.
(iv) Machinery will be reduced to Rs.29,000.
(v) A creditor of Rs.3,000 was not likely to claim the amount and hence to be written-off.
(vi) D will bring proportionate capital so as to give him 1/6th share in the profits of the firm.
Q255. Pappu and Dhanraj were partners in a firm sharing profits in the ratio of 3:1. Their Balance Sheet
as at 31-3-2016 was as follows :
Rs. Rs.
Bills Payable 1,000 Less: Provision 5,000 45,000

Reserve Fund 16,000 Stock 30,000
Outstanding Salary 3,000 Bills Receivable 10,000
Capitals : Patents 1,000
Pappu 60,000 Machinery 40,000
Dhanraj 20,000 80,000 Cash 4,000
1,30,000 1,30,000
They admitted Leander as a new partner on 1st April, 2016. New profit sharing ratio is agreed as 3 : 2
: 3. Leander brings in proportionate capita! after the following adjustments :
(i) Leander brings Rs. 16,000 as his share of goodwill,
(ii) Provision for doubtful debts is to be reduced by Rs.2,000.
(iii) There is an old typewriter valued at Rs.2,400. It does not appear in the books of the firm. It is
now to be recorded.
(iv) Patents are valueless.
Prepare Revaluation Account, Capital Accounts and the Opening Balance Sheet of Pappu, Dhanraj and
Leander.
Q256. A and B are partners in a firm. They share profits and losses as 4/5th and 1/5th respectively.
Below is given the Balance Sheet of the firm as at 31st March, 2018 :
Capital Accounts: Plant 75,000
A 1,15,000 Stock 80,000
B 35,000 1,50,000 Debtors 60,000
Bills Payable 15,000 Goodwill 20,000
Reserve 30,000
2,60,000 2,60,000
C wants to join the firm from 1st April, 2018. He is willing to pay goodwill premium to partners
amounting to Rs.20,000. In return he will be allowed to share 1/5th of the future profits of the firm
which he acquires equally from A and B. The following revaluation of the assets is agreed upon : Plant
to be reduced to Rs. 60,000, stock to Rs.65,000 and debtors to Rs.50,000 (Rs. 10,000 proved bad debts).
The new partner is to introduce 50% of the adjusted capitals of the existing partners. You are required
to give journal entries recording the above transactions. Give also the opening balance sheet of the new
firm and new profit-sharing ratio.
Q257. A and B are partners in a firm sharing profit and losses in the ratio of 3 : 1. On 1st April, 2018
their position was as given below :
Capital Accounts: Goodwill 20,000
A Plant 1,00,000
2,00,000
B 2,80,000 Patents 10,000
80,000
Sundry Creditors 70,000 Stock 1,42,000
Cash 18,000
3,60,000 3,60,000
They admit C into partnership with 1/6th share in profits upon the following terms:
(I) Goodwill is to be valued at one year’s purchase of the five year’s average profits which were
Rs.20,000; Rs.30,000; Rs.30,000; Rs.40,000 and Rs.60,000 respectively.
(II) C agrees to contribute 1/4 of the combined capital of A and B in the new firm.
(III) Plant is to be written down to Rs.80,000 and Patents written up to Rs. 12,000. A provision of
2% on debtors is required. A liability of Rs.5,000 included in Sundry Creditors is not likely to arise.
Give the Journal entries and Balance Sheet after the admission of C.

Q258. Rajat and Ravi are partners in a firm sharing profits and losses in the ratio of 7 : 3. Their Balance
Sheet as at 31st March, 2018 is as follows :
Creditors 60,000 Cash in hand 36,000
Reserve 10,000 Cash at Bank 90,000
Rajat 1,00,000 Furniture 30,000
Ravi 80,000 1,80,000 Stock 50,000
2,50,000 2,50,000
On 1st April, 2018, they admit Rohan on the following terms :
(i) Goodwill is valued at Rs.40,000 and Rohan is to bring in the necessary amount in cash as premium
for goodwill and Rs.60,000 as Capital for 1/4 share in profits.
(ii) Stock is to be reduced by 40% and furniture is to be reduced to 40%.
(iii) Capitals of the partners shall be proportionate to their Profit Sharing Ratio taking Rohan’s Capital
as base. Adjustments of Capitals to be made by cash.
Requirements : Prepare Revaluation Account, Partner’s Capital Accounts and Cash Account.
Q259. Balance Sheet as at 31st March, 2018 of Ramesh, Kumar and Pappu who were sharing profits
and losses in the ratio of 2 : 3 : 5.
Ramesh 36,000 Bills Receivable 24,000
Kumar 44,000 Furniture 28,000
Pappu 52,000 Stock 44,000
Bills Payable 32,000 Investments 32,000
Profit & Loss A/c 14,000 Machinery 34,000
Goodwill 20,000
2,42,000 2,42,000
On 1 st April, 2018 they admit Shilpa into partnership on the following terms :
1. Furniture, Investments and Machinery to be reduced by 15%.
2. The value of stock to be taken at Rs.48,000.
3. Shilpa will bring in Rs.26,000 as her share of goodwill.
4. Shilpa to bring Rs.32,000 towards capital for 1/6th share and old partners to adjust their capitals
accordingly.
5. Outstanding rent amounted to Rs. 1,800.
6. Prepaid salaries Rs.800.
7. Adjustments of capitals to be made by cash.
Prepare Revaluation Account, Capital Accounts, Cash Account and the Balance Sheet of the new firm.
Q260. A and B share profits in the ratio of 2 : 1. Their balance sheet as at 31st March, 2018 was as
follows :
Provision for Doubtful Debts 800 Cash at Bank 6,000
Bank Overdraft 24,000 Sundry Debtors 20,000
Capitals: A 60,000 Building 66,000
B 40,000 1,00,000 P & L Account 18,000
1,50,000 1,50,000
C is admitted into partnership on 1st April, 2018 on the following terms :
(i) New profit sharing ratio will be 4 : 3 : 2 and C will pay Rs.40,000 as his capital.
(ii) Goodwill of the firm is valued at Rs.45,000 but C is unable to bring any amount for goodwill.
(iii) The provision for doubtful debts is to be raised to Rs.2,000.
(iv) Stock be depreciated by Rs.5,000.

(v) Provision be made for outstanding expenses amounting to Rs.2,800.
(vi) Capitals of A and B be adjusted on the basis of new partner’s capital and the actual cash to be
paid off or brought in, as the case may be.
Prepare Journal entries, capital accounts, and the opening Balance Sheet of the new firm.
Q261. A and B are partners in a firm sharing profits in the ratio of 3 : 1 with capitals of Rs.60,000 and
Rs.20,000 respectively. They admitted C as a partner with Rs.30,000 as capital for 1/4th share in the
profits which he acquires equally from A and B. The capital accounts of old partners are to be adjusted
on the basis of proportion of C’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 necessary entries.
Q262.4 and B sharing profits in the ratio of 3 : 2 have capitals of Rs. 1,00,000 and Rs.45,000
respectively. They admit a new partner C with 2/9th share of profits. C is required to bring Rs.40,000
as capital. The loss on revaluation of assets and liabilities is Rs. 10,000. It is agreed that capitals of
partners should be in the new profit sharing ratio. Any excess or deficit amount should be transferred
to their current accounts. Pass a suitable adjusting entry or entries.
Q263. X and Y are equal partners in a firm. On 31st March, 2018 their balance sheet stood as follows:
Bank Overdraft 56,800 Cash in Hand 3,000
Creditors 70,000 Debtors 1,14,000
Provident Fund 13,200 Stock 55,000
Capitals : Investments 60,000
X 65,000 Furniture 8,000
Y 45,000 1,10,000 Profit & Loss A/c 10,000
2,50,000 2,50,000
On 1st April, 2018 they admit Z into partnership on the following terms :
(i) Create provision for doubtful debts at 5% on Debtors.
(ii) Write down furniture by 25%.
(iii) Increase the value of investments by Rs. 14,000.
(iv) Goodwill of the firm is valued at Rs.30,000.
(v) Decrease the value of stock by 10%.
(vi) Liability towards Provident Fund be increased by Rs.4,000.
Z then introduced Rs.60,000 for his one-third share of profit and it has been agreed that the capitals of
other partners are to be adjusted on the basis of Z’s Capital.
Prepare Revaluation Account, Partner’s Capital Accounts and the opening balance sheet of the new
firm.
Q264. On 31st March, 2018 the Balance Sheet of W and R who shared profits in 3 :2 ratio was as
follows :
Profit and Loss Account 15,000 Sundry Debtors 20,000
Capital Accounts : Less : Provision 700 19,300
W 40,000 Stock 25,000
R 30,000 70,000 Plant and Machinery 35,000
Plants 20,700
1,05,000 1,05,000
On 1st April, 2018 B was admitted as a partner on the following conditions :
(a) B will get 4/15th share of profits.
(b) B had to bring Rs.30,000 as his capital to which amount other Partners capitals shall have to be
adjusted.

1
(c) He would pay cash for his share of goodwill which would be based on 22 years purchase of
average profits of past 4 years.
(d) 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.
(e) The profits of the firm for the years 2015, 2016 and 2017 were Rs.20,000; Rs. 14,000 and Rs. 17,000
respectively.
Q265. A and B were partners in a firm sharing profits in the ratio of 3 : 2. They admitted C as a new
partner for 1/6th share in the profits. C was to bring Rs.40,000 as his capital and the capitals of A and
B were to be adjusted on the basis of C’s capital having regard to profit sharing ratio. The Balance Sheet
of/f and B as at 31.3.2016 was as follows :
BALANCE SHEET OF A AND B
as at 31-3-2016
A 1,50,000 Building 2,00,000
B 80,000 2,30,000
3,10,000 3,10,000
The other terms of agreement on C’s admission were as follows :
(i) C will bring Rs. 12,000 for his share of goodwill.
(ii) Building will be valued at Rs. 1,85,000 and machinery at Rs.40,000.
(iii) A provision of 6% will be created on debtors for bad debts.
(iv) Capital accounts of A and B will be adjusted by opening Current Accounts.
Prepare Revaluation Account, Partners Capital Accounts and the Balance Sheet of A , B and C.
Q266. A and B are partners sharing profits in the ratio of 2 : 3. Their balance sheet as at 31 st March,
P & L Account 10,000 Debtors 40,000
Capitals : Less: Provision 5,000 35,000
A 1,00,000 Furniture 40,000
B 1,05,000 2,05,000 Building 80,000
Machinery 1,00,000
Investments 2,000
2,72,000 2,72,000
On 1st April, 2018 they admitted C for 1/5 share in profits which he acquires wholly from B. The other
terms of agreement were :
(i) Goodwill of the firm was to be valued at two year’s purchase of the average of the last 3 year’s
profits. The profit for the last 3 years were Rs.58,000; Rs.66,000and Rs.56,000 respectively.
(ii) Provision for Doubtful debts was found in excess by Rs.2,000.
(iii) Buildings were found undervalued by Rs.20,000 and furniture overvalued by Rs.5,000.
(iv) Rs.5,000 for damages claimed by a customer had been disputed by the firm. It was agreed at
Rs.2,000 by a compromise between the customer and the firm.
(v) C was to bring in Rs.60,000 as his capital and the necessary amount for his share of goodwill.
(vi) Capitals of A and B were to be adjusted in the new profit sharing ratio by opening necessary current
accounts.
Prepare journal entries, capital accounts and the opening balance sheet.

Q267. Abha and Bimal are partners in a firm sharing profits and losses in the ratio of 3 : 2. On 31st
March, 2015 they admitted Chintu into partnership for 1/5th share in the profits of the firm. On that
date their Balance sheet stood as under :
BALANCE SHEET
as at 31 st March, 2015
Liabilities Amount Amount Assets Amount
Rs. Rs.
Capitals: Abha 1,20,000 Plant and Machinery 1,30,000
Bimal 1,00,000 2,20,000 Furniture 25,000
General Reserve 20,000 Investments 1,00,000
Sundry Creditors 1,00,000 Sundry Debtors 50,000
Bank 35,000
3,40,000 3,40,000
Chintu was admitted on the following terms :
(i) He will bring Rs.80,000 as capital and Rs.30,000 for his share of goodwill premium,
(ii) Partners will share future profits in the ratio of 5 : 3 : 2.
(iii) Profit on revaluation of assets and reassessment of liabilities was Rs.7,000.
(iv) After making adjustments, the Capital Accounts of the partners will be in proportion to Chintu’s
capital. Balance to be paid off or brought in by the old partners by cheque as the case may be.
Prepare the Capital Accounts of the partners and Bank Account.
(C.B.S.E. 2016 Comptt., AH India)
Q268. Juliet and Rabani are partners in a firm, sharing profits and losses in the ratio of 3 : 1. On 31st
BALANCE SHEET OF JULIET AND RABANI
As at 31st March, 2016
Sundry Creditors 70,000 Plant and Machinery 1,76,000
General Reserve 30,000 Inventory 26,000
Provident Fund 40,000 Sundry Debtors 57,000
Capital A/cs Less: Provision for
Juliet 1,10,000 Doubtful Debts
Rabani 90,000 2,00,000 3,000 54,000
Cash at Bank 68,000
3,40,000 3,40,000
Mike was taken as a partner for √th share, with effect from 1st April, 2016, subject to the following
adjustments :
(a) Plant and Machinery was found to be overvalued by Rs. 16,000. It was to be shown in the books
at the correct value.
(b) Provision for Doubtful Debts was to be reduced by Rs.2,000.
(c) Creditors included an amount of Rs.2,000 received as commission from Malini. The necessary
adjustment was required to be made.
(d) Goodwill of the firm was valued at Rs.60,000. Mike was to being in cash, his share of goodwill
along with his capital of Rs. 1,00,000.
(e) Capital Accounts of Juliet and Rabani were to be readjusted in the new profit sharing
arrangement on the basis of Mike’s capital, any surplus to be adjusted through current account and any
deficiency through cash.
You are required to prepare :
(i) Revaluation Account,
(ii) Partner’s Capital Accounts, and
(iii) Balance Sheet of the reconstituted firm. (I.S. C. 2017)

Q269. Dhruv and Ansh are partners in a firm sharing profits and losses : Dhruv 75% and Ansh 25%
respectively.
Their Balance Sheet as at 31st March, 2016 is given below :
Rs. Rs.
Profit & Loss Account 10,000 Less: Provision for
Capital Accounts: Dhruv 30,000 Doubtful Debts (1,500) 17,000
Ansh 20,000 50,000 Stock 37,000
Furniture 5,000
Land & Buildings 25,000
Goodwill 10,000
1,04,000 1,04,000
On 1st April, 2016, Kavi is admitted as a new partner on the following terms :
(i) The value of stock is to be increased to Rs.42,000.
(ii) Land and Building is to be reduced by 20%.
(iii) Bad Debts amounting to Rs. 1,800 are to be written off.
(iv) Creditors include an amount of Rs.5,000 received as commission from Amar. The necessary
adjustment is required to be made.
(v) The liability of Workmen Compensation Reserve is determined at Rs.3,000.
(vi) Kavi is to pay Rs. 15,000 to the existing partners as premium for Goodwill for 20% of the future
profits of the firm. He is also to bring in capital equal to ^th of the combined capitals of Dhruv and
Ansh.
(i) Pass journal entries on the date of Kavi’s admission.
(ii) Prepare the opening Balance Sheet of the new firm on the completion of the transactions.
(I.S.C. Specimen Question Paper, 2017)
Q270. Chander and Damini were partners in a firm sharing profits and losses equally. On 31st March,
2017 their Balance Sheet was as follows :
Balance Sheet of Chander and Damini as at 31.3.2017
Rs. Rs.
Capitals : Bills Receivable 45,000
Chander 2,50,000 Debtors 75,000
Damini 2,16,000 4,66,000 Furniture 1,10,000
Land and Building 3,10,000
5,70,000 5,70,000
On 1.4.2017, they admitted Elina as a new partner for 1/3rd share in the profits on the following
conditions :
(i) Elina will bring Rs.3,00,000 as her capital and Rs.50,000 as her share of goodwill premium, half of
which will be withdrawn by Chander and Damini.
(ii) Debtors to the extent of Rs.5,000 were unrecorded.
(iii) Furniture will be reduced by 10% and 5% provision for bad and doubtful debts will be created on
bills receivables and debtors.
(iv) Value of land and building will be appreciated by 20%.
(v) There being a claim against the firm for damages, a liability to the extent of Rs. 8,000 will be
created for the same.
Prepare Revalution Account and Partners’ Capital Accounts. (C.B.S.E. 2018)
Q271. E and F were partners in a firm sharing profits in the ratio of 3 : 1. They admitted G as a new
partner on 1st April, 2018 for 1 /3rd share. It was decided that E, F and G will share future profits

equally. G brought Rs. 50,000 in cash and machinery worth Rs. 70,000 for his share of profit as premium
of goodwill. Pass necessary Journal entries in the books of the firm.
Q272. Mr. A commenced business with a capital of Rs. 2,50,000 on 1st April, 2013. During the five
years ended 31st March, 2018, the following profits and losses were made:
31st March, 2014—Loss Rs. 5,000 31st March, 2017—Profit Rs. 20,000
31st March, 2015—Profit Rs. 13,000 31st March, 2018—Profit Rs. 25,000
31st March, 2016—Profit Rs. 17,000
During this period he had drawn Rs. 40,000 for his personal use. On 1st April, 2018, he admitted B into
partnership on the following terms:
B to bring for his half share in the business, capital equal to A's Capital on 31st March, 2018 and to pay
for the one-half share of goodwill of the business, on the basis of three times the average profit of the
last five years. Prepare the statement showing what amount B should invest to become a partner and
pass entries to record the transactions relating to admission.
Q273. Pass entries in the firm's Journal for the following on admission of a partner:
(i) Machinery be depreciated by Rs. 16,000 and Building be appreciated by Rs. 40,000.
(ii) A provision be created for Doubtful Debts @ 5% of Debtors amounting to Rs. 80,000.
(iii) Provision for warranty claims be increased by Rs. 12,000.
Q274. Pass entries in firm's Journal for the following on admission of a partner:
(i) Unrecorded Investments worth Rs. 20,000.
(ii) Unrecorded liability towards suppliers for Rs. 5,000.
(iii) An item of Rs. 1,600 included in Sundry Creditors is not likely to be claimed and hence should be
written back.
Q275. X and Y are partners in a firm sharing profits in the ratio of 3 : 2. They admitted Z as a new
partner and fixed the new profit-sharing ratio as 3 : 2 : 1. At the time of admission of Z, Debtors and
Provision for Doubtful Debts appeared at Rs. 50,000 and Rs. 5,000 respectively all debtors are good.
Pass the necessary Journal entries.
Q276. X and / are partners in a firm sharing profits in the ratio of 3 : 2. They admitted Z as a new partner
for 1 /4th share. At the time of admission of Z, Stock (Book Value Rs. 1,00,000) is to be reduced by
40% and Furniture (Book Value Rs. 60,000) is to be reduced to 40%. Pass the necessary Journal entries.
Q277. X and Yare partners sharing profits in the ratio of 3 : 2. They admitted Z as a new partner for 1
/4th share of profits. At the time of admission of Z, Investments appeared at Rs. 80,000. Half of the
investments to be taken over by X and Y in their profit-sharing ratio at book value. Remaining
investments were valued at Rs. 50,000. Pass the necessary Journal entries.
Q278. X and Y are partners in a firm sharing profits in the ratio of 3 : 2. They admitted Z as a new
partner for 1 /4th share of profits. At the time of admission of Z, Debtors and Provision for Doubtful
Debts appeared at Rs. 76,000 and Rs. 8,000 respectively. Rs. 6,000 of the debtors proved bad. A
provision of 5% is to be created on Sundry Debtors for doubtful debts. Pass the necessary Journal
entries.
Q279. X, Y and Z are partners sharing profits and losses in the ratio of 6 : 3 : 1. They decide to take W
into partnership with effect from 1st April, 2018. The new profit-sharing ratio between X, Y, Z and W
will be 3 : 3 : 3 : 1. They also decide to record the effect of following revaluations without affecting the
book values of the assets and liabilities by passing a single adjustment entry:
Plant and Machinery Land and Building Trade Creditors Outstanding Expenses
3,50,000 3,40,000
5,00,000 5,50,000

1,00,000 90,000
85,000 1,00,000
Pass necessary adjustment entry.
Q280. At the time of admission of a new partner C, the assets and liabilities of A and B were revalued
as follows:
(a) A Provision for Doubtful Debts @10% was made on Sundry Debtors (Sundry Debtors Rs. 50,000).
(b) Creditors were written back by Rs. 5,000.
(c) Building was appreciated by 20% (Book value of Building Rs. 2,00,000).
(d) Unrecorded Investments were worth Rs. 15,000.
(e) A Provision of Rs. 2,000 was made for an Outstanding Bill for repairs.
(f) Unrecorded Liability towards suppliers was Rs. 3,000.
Pass necessary Journal entries.
Q281. X and Y are partners in a firm sharing profits and losses in the ratio of 3 :2. On 1 st April, 2018,
they admit
Zas a new partner for 1 /5th share in profits. On that date, there was a balance of Rs. 1,50,000 in General
Reserve and a debit balance of Rs. 20,000 in the Profit and Loss Account of the firm. Pass necessary
Journal entries regarding adjustment of reserve and accumulated profit/loss.
Q282. X and Y were partners in a firm sharing profits and losses in the ratio of 2 : 1. Z was admitted
for 1 /3rd share in the profits. On the date of Z's admission, the Balance Sheet of Zand / showed General
Reserve of Rs. 2,50,000 and a credit balance of Rs. 50,000 in Profit and Loss Account. Pass necessary
Journal entries on the treatment of these items on Z's admission.
Q283. (a) X, Y and Z are partners sharing profits and losses in the ratio of 5 : 3 : 2. They decide to admit
W for
1 /6th share. Following is the extract of the Balance Sheet on the date of admission:
General Reserve 36,000 Advertisement Suspense A/c 24,000
Pass necessary Journal entries.
(b) A and B were partners in a firm sharing profit in 4 : 3 ratio. On 1st April, 2018, they admitted C as
a new partner. On the date of C's admission, the Balance Sheet of A and B showed a General Reserve
of Rs. 84,000 and a debit balance of Rs. 8,400 in the 'Profit and Loss Account'. Pass necessary Journal
entries for the treatment of these items on C's admission.
(c) Give the Journal entry to distribute 'Workmen Compensation Reserve' of Rs. 72,000 at the time of
admission of Z, when there is no claim against it. The firm has two partners X and Y.
(d) Give the Journal entry to distribute 'Workmen Compensation Reserve' of Rs. 72,000 at the time of
admission of Z, when there is claim of Rs. 48,000 against it. The firm has two partners X and Y.
(e) Give the Journal entry to distribute 'Investment Fluctuation Reserve' of Rs. 24,000 at the time of
admission of Z, when Investment (Market Value Rs. 1,10,000) appears at Rs.1,20,000. The firm has
two partners X and Y.
(f) Give the Journal entry to distribute 'General Reserve' of Rs. 4,800 at the time of admission of Z,
when 20% of General Reserve is to be transferred to Investment Fluctuation Reserve. The firm has two
partners X and Y.
(g) A, B and C were partners sharing profits and losses in the ratio of 6 : 3 : 1. They decide to take D
into partnership with effect from 1st April, 2018. The new profit-sharing ratio between A, B, C and D
will be 3 : 3 : 3 : 1. They also decide to record the effect of the following without affecting their book
values, by passing a single adjustment entry:
Book Value (Rs.)

Pass the necessary single adjustment entry, through the Partner's Current Account.
Q284. A and B, carrying on business in partnership and sharing profits and losses in the ratio of 3 : 2,
require a partner, when their Balance Sheet stood as:
A's Capital 51,450 Stock 28,000
B's Capital 36,750 88,200 Debtors 19,500
Furniture 2,500
Machinery 48,500
1,00,000 1,00,000
They admit C into partnership and give him 1 /8th share in the future profits on the following terms:
(a) Goodwill of the firm be valued at twice the average of the last three years' profits which amounted
to Rs. 21,000; Rs. 24,000 and Rs. 25,560.
(b) C is to bring in cash for the amount of his share of goodwill.
(c) C is to bring in cash Rs. 15,000 as his capital.
Pass Journal entries recording these transactions, draw out the Balance Sheet of the new firm and state
new profit-sharing ratio
Q285. X, Y and Z are equal partners with capitals of Rs. 1,500; Rs. 1,750 and Rs. 2,000 respectively.
They agree to admit W into equal partnership upon payment in cash Rs. 1,500 for 1 /4th share of the
goodwill and Rs. 1,800 as his capital, both sums to remain in the business. The liabilities of the old firm
amounted to Rs. 3,000 and the assets, apart from cash, consist of Motors Rs. 1,200, Furniture Rs. 400,
Stock Rs. 2,650 and Debtors Rs. 3,780. The Motors and Furniture were revalued at Rs. 950 and Rs. 380
respectively.
Pass Journal entries to give effect to the above arrangement and also show Balance Sheet of the new
firm
Q286. Following was the Balance Sheet of A and B who were sharing profits in the ratio of 2 : 1 as at
31st March, 2018:
Capital A/cs: Building 25,000
A 15,000 Plant and Machinery 17,500
B 10,000 25,000 Stock 10,000
Cash in Hand 600
57,950 57,950
They agree to admit C into the partnership on the following terms:
(a) C was to bring in Rs. 7,500 as his capital and Rs. 3,000 as goodwill for 1 /4th share in the firm.
(b) Values of the Stock and Plant and Machinery were to be reduced by 5%.
(c) A Provision for Doubtful Debts was to be created in respect of Sundry Debtors Rs. 375.
(d) Building Account was to be appreciated by 10%.
Pass necessary Journal entries to give effect to the arrangements. Prepare Profit and Loss Adjustment
Account (or Revaluation Account), Capital Accounts and Balance Sheet of the new firm.
Q287. Given below is the Balance Sheet of A and B, who are carrying on partnership business on 31st
March, 2018. A and B share profits and losses in the ratio of 2 : 1.
BALANCE SHEET OF A AND B as at 31st March, 2018

Bills Payable 10,000 Cash in Hand 10,000
Outstanding 2,000 Sundry Debtors 60,000
Expenses
A 1,80,000 Plant 1,00,000
B 1,50,000 3,30,000 Building 1,50,000
4,00,000 4,00,000
C is admitted as a partner on the date of the Balance Sheet on the following terms:
(a) C will bring in Rs. 1,00,000 as his capital and Rs. 60,000 as his share of goodwill for 1 /4th share in
the profits.
(b) Plant is to be appreciated to Rs. 1,20,000 and the value of building is to be appreciated by 10%.
(c) Stock is found overvalued by Rs. 4,000.
(d) A provision for doubtful debts is to be created at 5% of sundry debtors.
(e) Creditors were unrecorded to the extent of Rs. 1,000.
Pass the necessary Journal entries, prepare the Revaluation Account and Partners' Capital Accounts,
and show the Balance Sheet after the admission of C. (NCERT, Modified)
Q288. Balance Sheet of J and K who share profits in the ratio of 3 : 2 is as follows:
Reserve 1,00,000 Cash 2,00,000
J's Capital 1,50,000 Other Assets 1,50,000
K's Capital 1,00,000 2,50,000
3,50,000 3,50,000
M joins the firm from 1st April, 2018 for a half share in the future profits. He is to pay Rs. 1,00,000 for
goodwill and Rs. 3,00,000 for capital. Draft the Journal entries and prepare Balance Sheet in each of
the following cases:
(a) If M acquires his share of profit from the firm in the profit-sharing ratios of the partners.
(b) If M acquires his share of profits from the firm in equal proportions from the original partners.
(c) If M acquires his share of profit in the ratio of 3 : 1 from the original partners, ascertain the future
profit-sharing ratio of the partners in each case.
Q289. The Balance Sheet of Madhu and Vidhi who are sharing profits in the ratio of 2 : 3 as at 31st
March, 2016 is given below:
Madhu's Capital 5,20,000 Land and Building 3,00,000
Vidhi's Capital 3,00,000 Machinery 2,80,000
Bills Payable 1,50,000 Debtors 3,00,000
Less: Provision 10,000 2,90,000
Bank 50,000
10,00,000 10,00,000
Madhu and Vidhi decided to admit Gayatri as a new partner from 1 st April, 2016 and their new profit-
sharing ratio will be 2 : 3 :5. Gayatri brought Rs. 4,00,000 as her capital and her share of goodwill
premium in cash.
(a) Goodwill of the firm was valued at Rs. 3,00,000.
(b) Land and Building was found undervalued by Rs. 26,000.
(c) Provision for doubtful debts was to be made equal to 5% of the debtors.
(d) There was a claim of Rs. 6,000 on account of workmen compensation.
firm.

(Delhi 2017 C)
Q290. Shyamlal and Sanjay were in partnership business sharing profits and losses in the ratio of 2 : 3
respectively. Their Balance Sheet as at 31st March, 2018 was:
Sundry Creditors 12,435 Cash in Hand 710
Capital A/cs: Cash at Bank 11,925
Shyamlal Sundry Debtors 5,500
34,050
Sanjay 68,100 Stock 18,000
34,050
Furniture 4,400
Building 40,000
80,535 80,535
On 1st April, 2018, they admitted Shanker into partnership for 1 /3rd share in the future profits on the
following terms:
(a) Shanker is to bring in Rs. 30,000 as his capital and Rs. 20,000 as goodwill which is to remain in the
business.
(b) Stock and Furniture are to be reduced in value by 10%.
(c) Building is to be appreciated by Rs. 15,000.
(d) Provision of 5% is to be made on Sundry Debtors for Doubtful Debts.
(e) Unaccounted Accrued Income of Rs. 2,400 to be provided for. A debtor, whose dues of Rs. 4,800
were written off as bad debts, paid 50% in full settlement.
(f) Outstanding Rent amounted to Rs. 4,800.
Show Profit and Loss Adjustment Account (Revaluation Account), Capital Accounts of Partners and
Q291. A, B and C are partners sharing profits and losses in the ratio of 3 :2 :1 respectively. Their
Balance Sheet as at 31st March, 2018 is as follows:
4 60,000 Plant and Machinery 40,000
B 60,000 Furniture 30,000
C 40,000 1,60,000 Stock 20,000
Bills Payable 10,000 Bills Receivable 20,000
Bank 10,000
2,00,000 2,00,000
D is admitted as a new partner on 1st April, 2018 for an equal share and is to pay Rs. 50,000 as capital.
Following are the adjustments required on D's admission:
(a) Out of the Creditors, a sum of Rs. 10,000 is due to D which will be transferred to his capital Account.
(b) Advertisement Expenses of Rs. 1,200 are to be carried forward to next accounting period as Prepaid
Expenses.
(c) Expenses debited in the Profit and Loss Account includes a sum of Rs. 2,000 paid for B's personal
expenses.
(d) A Bill of Exchange of Rs. 4,000, which was previously discounted with the banker, was dishonoured
on 31st March, 2018 but no entry has been passed for that.
(e) A Provision for Doubtful Debts @ 5% is to be created against Debtors.
(f) Expenses on Revaluation amounted to Rs. 2,100 is paid by A.
Prepare necessary Ledger Accounts and Balance Sheet after D's admission.
Q292. X and Y share profits in the ratio of 5 : 3. Their Balance Sheet as at 31st March, 2018 was:

Employees' Provident Fund 10,000 Sundry Debtors 20,000
Workmen Compensation 5,800 Less: Provision for Doubtful 600 19,400
Reserve Debts
X 70,000 Fixed Assets 80,000
Y 31,000 1,01,000 Profit and Loss A/c 2,400
1,31,800 1,31,800
They admit Z into partnership with 1 /8th share in profits on this date. Z brings Rs. 20,000 as his capital
and Rs. 12,000 for goodwill in cash. Z acquires his share entirely from X. Following revaluations are
also made:
(a) Employees' Provident Fund liability is to be increased by Rs. 5,000.
(b) All Debtors are good. Therefore, no provision is required on Debtors.
(c) Stock includes Rs. 3,000 for obsolete items.
(d) Creditors are to be paid Rs. 1,000 more.
(e) Fixed Assets are to be revalued at Rs. 70,000.
Prepare Journal entries, necessary accounts and new Balance Sheet. Also, calculate new profit-sharing
ratio
Q293. Balance Sheet of Ram and Shyam who share profits in proportion to their capitals as at 31st
March, 2018 is:
Capital A/cs: Freehold Premises 20,000
Ram 30,000 Plant and Machinery 13,500
Shyam 25,000 55,000 Fixture and Fittings 1,750
Current A/cs: Vehicles 1,350
Ram 2,000 Stock 14,100
Shyam 1,800 3,800 Bills Receivable 13,060
Cash 950
93,800 93,800
On 1st April, 2018, they admitted Arjun into partnership on the following terms:
(a) Arjun to bring in Rs. 20,000 as capital and Rs. 6,600 for goodwill, which is to be left in the business
and he is to receive 1 /4th share of the profits.
(b) Provision for Doubtful Debts is to be 2% on Debtors.
(c) Value of Stock to be written down by 5%.
(d) Freehold Premises are to be taken at valuation of Rs. 22,400; Plant and Machinery Rs. 11,800;
Fixtures and Fittings Rs. 1,540 and Vehicles Rs. 800.
You are required to make necessary adjustment entries in the firm, give Balance Sheet of the new firm
as at 1st April, 2018 and also give the proportions in which the partners will share profits, there being
no change in the proportions of Ram and Shyam.
Q294. X and Y are partners in a firm sharing profits in the ratio of 3 : 2. Their Balance Sheet as at 31st
Outstanding Rent 13,000 Cash 10,000
Creditors 20,000 Sundry Debtors 80,000
Workmen Compensation Reserve 5,600 Less: Provision for Doubtful Debts 4,000 76,000
Capital A/cs: X 50,000 Stock 20,000

Y 60,000 1,10,000 Profit and Loss A/c 4,000
Machinery 38,600
1,48,600 1,48,600
On 1st April, 2018, they admitted Z as a partner for 1 /6th share on the following terms:
(i) Z brings in Rs. 40,000 as his share of Capital but he is unable to bring any amount for Goodwill.
(ii) Claim on account of Workmen Compensation is Rs. 3,000.
(iii) To write off Bad Debts amounted to Rs. 6,000.
(iv) Creditors are to be paid Rs. 2,000 more.
(v) There being a claim against the firm for damages, liabilities to the extent of Rs. 2,000 should be
created.
(vi) Outstanding rent be brought down to Rs. 11,200.
(vii) Goodwill is valued at VΔ years' purchase of the average profits 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.
Pass Journal entries, prepare Capital Accounts and opening Balance Sheet.
Q295. Following is the Balance Sheet of X and Y as at 31st March, 2018 who are partners in a firm
sharing profits and losses in the ratio of 3 : 2 respectively:
Debts
X 1,80,000 Patents 44,400
Y 90,000 2,70,000 Investments 24,000
Current A/cs: Fixed Assets 2,16,000
X 30,000 Goodwill 30,000
Y 36,000
6,000
3,87,000 3,87,000
Z is admitted as a new partner on 1st April, 2018 on the following terms:
(a) Provision for doubtful debts is to be maintained at 5% on Debtors.
(b) Outstanding rent amounted to Rs. 15,000.
(c) An accrued income of Rs. 4,500 does not appear in the books of the firm. It is now to be recorded.
(d) X takes over the Investments at an agreed value of Rs. 18,000.
(e) New Profit-sharing Ratio of partners will be 4 : 3 : 2.
(f) Z will bring in Rs. 60,000 as his capital by cheque.
(g) Z is to pay an amount equal to his share in firm's goodwill valued at twice the average profits of the
last three years which were Rs. 90,000; Rs. 78,000 and Rs. 75,000 respectively.
(h) Half of the amount of goodwill is to be withdrawn by X and Y.
You are required to pass Journal entries, prepare Revaluation Account, Partners' Capital and Current
Accounts and the Balance Sheet of the new firm.
Q296. X and Y are partners sharing profits and losses equally. Their Balance Sheet as on 31st March,
2018 is given below:
X 1,50,000 Plant and Machinery 1,00,000
Y 1,00,000 2,50,000 Furniture and Fittings 25,000
Current A/cs: Stock 75,000
X 40,000 Debtors 75,000
Y 30,000 70,000 Less: Provision for Doubtful Debts 5,000 70,000
Creditors 1,30,000 Bills Receivable 30,000

5,00,000 5,00,000
Z is admitted as a new partner for 1 /4th share under the following terms:
(a) Z is to introduce Rs. 1,25,000 as capital.
(b) Goodwill of the firm was valued at nil.
(c) It is found that the creditors included a sum of Rs. 7,500 which was not to be paid. But it was also
found that there was a liability for Compensation to Workmen amounting to Rs. 10,000.
(d) Provision for doubtful debts is to be created @ 10% on debtors.
(e) In regard to the Partners' Capital Accounts, present fixed capital method is to be converted into
fluctuating capital method.
(f) Bills of Rs. 20,000 accepted from creditors were not recorded in the books.
(g) X provides Rs. 50,000 loan to the business carrying interest @ 10% p.a.
You are required to prepare Revaluation Account, Partners' Capital Accounts, Bank Account and the
Q297. Rajesh and Ravi are partners sharing profits in the ratio of 3 :2. Their Balance Sheet at 31 st
March, 2018 stood as:
Outstanding Rent 4,000 Stock 15,000
Capital A/cs: Prepaid Insurance 1,500
Rajesh 29,000 Debtors 9,400
Ravi 15,000 44,000 Less: Provision for Doubtful 400 9,000
Debts
Machinery 19,000
Building 35,000
Furniture 5,000
86,500 86,500
Raman is admitted as a new partner introducing a capital of Rs. 16,000. The new profit-sharing ratio is
decided as 5 : 3 : 2. Raman is unable to bring in any cash for goodwill. So, it is decided to value the
goodwill on the basis of Raman's share in the profits and the capital contributed by him. Following
revaluations are made: (a) Stock to depreciate by 5%; (b) Provision for Doubtful Debts is to be Rs. 500;
(c) Furniture to depreciate by 10%; (d) Building is valued at Rs. 40,000.
Show necessary Ledger Accounts and Balance Sheet of new firm.
Q298. A and B are partners in a firm sharing profits in the ratio of 3 : 2. They admit C as a partner on
1 st April, 2018 on which date the Balance Sheet of the firm was:
B 40,000 1,00,000 Stock 20,000
Bank 10,000
1,20,000 1,20,000
You are required to prepare the Revaluation Account, Partners' Capital Accounts and Balance Sheet of
the new firm after considering the following:
(a) C brings in Rs. 30,000 as capital for 1 /4th share. He also brings Rs. 10,000 for his share of goodwill.
(b) Part of the Stock which had been included at cost of Rs. 2,000 had been badly damaged in storage
and could only expect to realise Rs. 400.
(c) Bank charges had been overlooked and amounted to Rs. 200 for the year 2017-18.
(d) Depreciation on Building of Rs. 3,000 had been omitted for the year 2017-18.

(e) A credit for goods for Rs. 800 had been omitted from both purchases and creditors although the
goods had been correctly included in Stock.
(f) An expense of Rs. 1,200 for insurance premium was debited in the Profit and Loss Account of 2017-
18 but Rs. 600 of this are related to the period after 31st March, 2018.
Q299. A and B are partners in a firm. The net profit of the firm is divided as follows: 1/2 to A, 1/3 to B
and 1/6 carried to a Reserve. They admit C as a partner on 1st April, 2018 on which date, the Balance
Sheet of the firm was:
4 50,000 Plant and Machinery 30,000
B 40,000 90,000 Stock 18,000
Outstanding Expenses 5,000
1,25,000 1,25,000
Following are the required adjustments on admission of C:
(a) C brings in Rs. 25,000 towards his capital.
(b) C also brings in Rs. 5,000 for 1 /5th share of goodwill.
(c) Stock is undervalued by 10%.
(d) Creditors include a contingent liability of Rs. 4,000, which has been decided by the court at Rs.
3,200.
(e) In regard to the Debtors, the following Debts proved Bad or Doubtful—
Rs. 2,000 due from X—bad to the full extent;
Rs. 4,000 due from Y—insolvent, estate expected to pay only 50%.
You are required to prepare Revaluation Account, Partners' Capital Accounts and Balance Sheet of the
new firm.
Q300. Following is the Balance Sheet of the firm, Ashirvad, owned by A, B and C who share profits
and losses of the business in the ratio of 3 : 2 : 1:
A 1,20,000 Business Premises 2,05,000
B 1,20,000 Stock-in-Trade 40,000
C 1,20,000 3,60,000 Debtors 28,000
Outstanding Salaries and 7,200 Cash in Hand 4,200
Wages
3,87,200 3,87,200
On 1st April, 2018, they admit D as a partner on the following conditions:
(a) D will bring in Rs. 1,20,000 as his capital and also Rs. 30,000 as goodwill premium for a quarter of
the share in the future profits/losses of the firm.
(b) The values of the fixed assets of the firm will be increased by 10% before the admission of D.
(c) Mohan, an old customer whose account was written off as bad debts, has promised to pay Rs. 3,000
in full settlement of his dues.
(d) The future profits and losses of the firm will be shared equally by all the partners.
Pass the necessary Journal entries and prepare Revaluation Account, Partners' Capital Accounts and
Q301. A and B are partners in a firm sharing profits and losses in the ratio of 3 : 2. Following is their
Balance
Sheet as at 31st March, 2018:

A 50,000 Machinery 25,000
B 30,000 80,000 Stock 15,000
Investments 5,000
Bank 5,000
1,00,000 1,00,000
C is admitted as a partner on 1st April, 2018 on the following terms:
(a) C is to pay Rs. 20,000 as capital for 1 /4th share. He also pays Rs. 5,000 as premium for goodwill.
(b) Debtors amounted to Rs. 3,000 is to be written off as bad and a Provision of 10% is created against
Doubtful Debts on the remaining amount.
(c) No entry has been passed in respect of a debt of Rs. 300 recovered by A from a customer, which
was previously written off as bad in previous year. The amount is to be paid by A.
(d) Investments are taken over by B at their market value of Rs. 4,900 against cash payment.
You are required to prepare Revaluation Account, Partners' Capital Accounts and new Balance Sheet.
Q302. X and Y are partners sharing profits and losses in the ratio of 3/4 and 1/4. Their Balance Sheet
as at 31st March, 2018 is:
X 1,50,000 Furniture 5,000
Y 80,000 2,30,000 Stock 1,00,000
Workmen Compensation 20,000 Sundry Debtors 80,000
Reserve
Sundry Creditors 1,50,000 Bills Receivable 15,000
Bills Payable 37,500 Cash at Bank 1,00,000
T Cash in Hand 12,500
4,37,500 4,37,500
They admit Z into partnership on 1st April, 2018 on the following terms:
(a) Goodwill is to be valued at Rs. 1,00,000.
(b) Stock and Furniture to be reduced by 10%.
(c) A Provision for Doubtful Debts is to be created @ 5% on Sundry Debtors.
(d) The value of Land and Building is to be appreciated by 20%.
(e) Z pays Rs. 50,000 as his capital for 1 /5th share in the future profits.
You are required to show Revaluation Account, Partners' Capital Accounts and Balance Sheet of the
new firm.
Q303. Deepika and Rajshree are partners in a firm sharing profits and losses in the ratio of 3 : 2. On
31st March,
2018 their Balance Sheet was:
Public Deposits 61,000 Cash at Bank 2,800
Bank Overdraft 6,000 Stock 32,000
Outstanding Liabilities 2,000 Prepaid Insurance 1,000
Deepika Less: Provision for Doubtful Debts 800 28,000
48,000
Rajshree 40,000 88,000 Plant and Machinery 48,000
Furniture 10,000

1,73,000 1,73,000
On the above date, the partners decided to admit Anshu as a partner on the following terms:
(a) The new profit-sharing ratio of Deepika, Rajshree and Anshu will be 5 : 3 : 2 respectively.
(b) Anshu shall bring in Rs. 32,000 as his capital.
(c) Anshu is unable to bring in any cash for his share of goodwill. Partners, therefore, decide to calculate
the goodwill on the basis of Anshu's share in the profits and the capital contribution made by her to the
firm.
(d) Plant and Machinery is to be valued at Rs. 60,000, Stock at Rs. 40,000 and the Provision for Doubtful
Debts is to be maintained at Rs. 4,000. Value of Land and Building has appreciated by 20%. Furniture
has been depreciated by 10%.
(e) There is an additional liability of Rs. 8,000 being outstanding salary payable to employees of the
firm. This liability is not included in the outstanding liabilities, stated in the above Balance Sheet.
Partners decide to show this liability in the books of account of the reconstituted firm.
Prepare Revaluation Account, Partners' Capital Accounts and Balance Sheet of Deepika, Rajshree and
Anshu
Q304. X and Y are partners sharing profits in the ratio of 2 :1. Their Balance Sheet as at 31 st March,
2018 was:
Sundry Creditors 25,000 Cash/Bank 5,000

Y 62,000 1,37,000 Typewriter 5,000
Fixed Assets 1,37,000
1,80,000 1,80,000
They admit Z into partnership on the same date on the following terms:
(a) Z brings in Rs. 40,000 as his capital and he is given 1 /4th share in profits.
(b) Z brings in Rs. 15,000 for goodwill, half of which is withdrawn by old partners.
(c) Investments are valued at Rs. 10,000. X takes over Investments at this value.
(d) Typewriter is to be depreciated by 20% and Fixed Assets by 10%.
(e) An unrecorded stock of Stationery on 31st March, 2018 is Rs. 1,000.
(f) By bringing in or withdrawing cash, the Capitals of X and / are to be made proportionate to that of
Z on their profit-sharing basis.
Pass Journal entries, prepare Revaluation Account, Capital Accounts and new Balance Sheet of the
firm.
Q305. A and B are in partnership sharing profits and losses in the proportion of 2/3rd and 1 /3rd
respectively. Their Balance Sheet as at 31st March, 2018 was: Cash Rs. 1,000; Sundry Debtors Rs.
15,000; Stock Rs. 22,000; Plant and Machinery Rs. 4,000; Sundry Creditors Rs. 2,000; Bank Overdraft
Rs. 15,000; A's Capital Rs. 15,000; B's Capital Rs. 10,000. On 1st April, 2018, they admitted C into
partnership on the following terms:
(a) C to purchase one-quarter of the goodwill for Rs. 3,000 and provide Rs. 10,000 as capital. C brings
in necessary cash for goodwill and capital.
(b) Profits and losses are to be shared in the proportion of one-half to A, one-quarter to B and one
quarter to C.
(c) Plant and Machinery is to be reduced by 10% and Rs. 500 are to be provided for estimated Bad
Debts. Stock is to be taken at a valuation of Rs. 24,940.
(d) By bringing in or withdrawing cash the capitals of A and B are to be made proportionate to that of
C on their profit-sharing basis.

Prepare necessary Ledger Accounts in the books of the firm relating to the above arrangement and
submit the opening Balance Sheet of the new firm.
Q306. A and B were partners in a firm sharing profits in 3 :1 ratio. They admitted Cas a partner for 1
/4th share in the future profit. C was to bring Rs. 60,000 for his capital. The Balance Sheet of A and B
as at 1st April, 2018, the date on which C was admitted, was:
B 80,000 1,30,000 Stock 30,000
Creditors 70,000 Less: Provision for Doubtful 1,000 34,000
Debts
Investments 26,000
Cash 10,000
2,10,000 2,10,000
The other terms agreed upon were:
(a) Goodwill of the firm was valued at Rs. 24,000.
(b) Land and Building were valued at Rs. 65,000 and Plant and Machinery at Rs. 60,000.
(c) Provision for Doubtful Debts was found in excess by Rs. 400.
(d) A liability of Rs. 1,200 included in Sundry Creditors was not likely to arise.
(e) The capitals of the partners be adjusted on the basis of C's contribution of capital to the firm.
(f) Excess or shortfall, if any, be transferred to Current Accounts.
Q307. The Balance Sheet of X, Y and Z who share profits and losses in the ratio of 3 : 2 :1, as on 1 st
April, 2018 is as follows:
Capital A/cs: Y’s Current Account 7,000
X 1,75,000 Land and Building 1,75,000
Y 1,50,000 Plant and Machinery 67,500
Z 1,25,000 4,50,000 Furniture 80,000
Current A/cs: Investment 36,500
X 4,000 Bills Receivable 17,000
Z 6,000 10,000 Sundry Debtors 43,500
Profit and Loss A/c 7,000 Bank 43,500
Creditors 80,000
Bills Payable 45,000
6,07,000 6,07,000
On the above date, W is admitted as a partner on the following terms:
(a) W will bring Rs. 50,000 as his capital and get 1 /6th share in the profits.
(b) He will bring necessary amount for his share of goodwill premium. Goodwill of the firm is valued
at Rs. 90,000.
(c) New profit-sharing ratio will be 2 : 2 : 1 : 1.
(d) A liability of Rs. 7,004 will be created against bills receivable discounted earlier but now
dishonoured.
(e) The value of stock, furniture and investments is reduced by 20%, whereas the value of Land and
Building and Plant and Machinery will be appreciated by 20% and 10% respectively.
(f) Capital Accounts of the partners will be adjusted on the basis of Ws Capital through their Current
Accounts. Prepare Revaluation Account, Partners' Current Accounts and Capital Accounts.

Q308. Shikhar and Rohit were partners in a firm sharing profits in the ratio of 7 : 3. On 1st April, 2013,
they admitted Kavi as a new partner for 1 /4th share in profits of the firm. Kavi brought Rs. 4,30,000 as
his capital and Rs. 25,000 for his share of goodwill premium. The Balance Sheet of Shikhar and Rohit
as on 1st April, 2013 was as follows:
BALANCE SHEET OF SHIKHAR AND ROHIT as at 1st April, 2013
Shikhar 8,00,000 Machinery 4,50,000
Rohit 3,50,000 11,50,000 Debtors 2,20,000
General Reserve 1,00,000 Less: Provision 20,000 2,00,000
Workmen's Compensation 1,00,000 Stock 3,50,000
Fund
Creditors 1,50,000 Cash 1,50,000
15,00,000 15,00,000
It was agreed that:
(a) the value of Land and Building will be appreciated by 20%.
(b) the value of Machinery will be depreciated by 10%.
(c) the liabilities of Workmen's Compensation Fund were determined at Rs. 50,000.
(d) capitals of Shikhar and Rohit will be adjusted on the basis of Kavi's capital and actual cash to be
brought in or to be paid off as the case may be.
(A! 2014)
Q309. Raghu and Rishu are partners sharing profits in the ratio 3 : 2. Their Balance Sheet as at 31 st
BALANCE SHEET OF RAGHU AND RISHU as at 31st March, 2009
Creditors 86,000 Cash in Hand 77,000
Employees' Provident Fund 10,000 Debtors 42,000
Investments Fluctuation 4,000 Less: Provision for Doubtful 7,000 35,000
Reserve Debts
Capital A/cs: Investments 21,000
Raghu 1,19,000 Buildings 98,000
Rishu 1,12,000 2,31,000 Plant and Machinery 1,00,000
3,31,000 3,31,000
Rishabh was admitted on that date for 1 /4th share of profit on the following terms:
(a) Rishabh will bring Rs. 50,000 as his share of capital.
(b) Goodwill of the firm is valued at Rs. 42,000 and Rishabh will bring his share of goodwill in cash.
(c) Buildings were appreciated by 20%.
(d) All Debtors were good.
(e) There was a liability of Rs. 10,800 included in Creditors which was not likely to arise.
(f) New profit-sharing ratio will be 2 : 1 : 1.
(g) Capital of Raghu and Rishu will be adjusted on the basis of Rishabh's share of capital and any excess
or deficiency will be made by withdrawing or bringing in cash by the concerned partners as the case
may be.
Prepare Revaluation Account, Partners' Capital Accounts and Balance Sheet of the new firm. (A! 2012
C)
Q310. Following is the Balance Sheet of Abha and Binay as at 31st March, 2014:
Employees' Provident Fund 8,000 Debtors 22,000

Workmen's Compensation 15,000 Less: Provision for Doubtful 1,000 21,000
Fund Debts
Abha 55,000 Plant and Machinery 60,000
Binay 30,000 85,000 Goodwill 10,000
Profit and Loss 5,000
1,21,000 1,21,000
Chitra was admitted as a partner for 1 /4th share in the profits of the firm. It was decided that:
(a) Bad Debts amounted to Rs. 1,500 will be written off.
(b) Stock worth Rs. 8,000 was taken over by Abha and Binay at Book Value in their profit-sharing ratio.
The remaining stock was valued at Rs. 2,500.
(c) Plant and Machinery and Goodwill were valued at Rs. 32,000 and Rs. 20,000 respectively.
(d) Chitra brought her share of goodwill in cash.
(e) Chitra will bring proportionate capital and the capitals of Abha and Binay will be adjusted in their
profit-sharing ratio by bringing in or paying off cash as the case may be.
Prepare Revaluation Account and Partners' Capital Accounts. (Delhi 2015 C)
Q311. L, M and N were partners in a firm sharing profits in the ratio of 3 : 2 : 1. Their Balance Sheet
on 31st March, 2015 was as follows:
Capital A/cs: L 1,20,000 Stock 2,20,000
M 80,000 Investments 60,000
N 40,000 2,40,000 Furniture 20,000
Machinery 70,000
4,50,000 4,50,000
On the above date, O was admitted as a new partner and it was decided that:
(i) The new profit-sharing ratio between L, M, N and O will be 2 : 2 : 1 : 1.
(ii) Goodwill of the firm was valued at Rs. 1,80,000 and O brought his share of goodwill premium in
cash.
(iv) Machinery will be reduced to Rs. 58,000.
(v) A creditor of Rs. 6,000 was not likely to claim the amount and hence was to be written off.
(vi) O will bring proportionate capital so as to give him 1 /6th share in the profits of the firm.
Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet of the new firm. (Al
2016)
Q312. A and B are partners in a firm sharing profits and losses in the ratio 3:1. They admit C for 1 /4th
share on 31st March, 2014 when their Balance Sheet was as follows:
Employees' Provident Fund 17,000 Cash 6,100
Workmen Compensation 6,000 Stock 15,000
Reserve
Investment Fluctuation 4,100 Debtors 50,000
Reserve
Capital A/cs: A 54,000 Less: Provision for Doubtful 2,000 48,000
Debts
B 35,000 89,000 Investments 7,000
Goodwill 40,000
1,16,100 1,16,100
The following adjustments were agreed upon:

(a) C brings in Rs. 16,000 as goodwill and proportionate capital.
(b) Bad debts amounted to Rs. 3,000.
(c) Market value of investment is Rs. 4,500.
(d) Liability on account of workmen compensation reserve amounted to Rs. 2,000.
Prepare Revaluation A/c and Partners' Capital Accounts. (CBSE Sample Paper 2015)
Q313. Pradeep and Dhanraj were partners in a firm sharing profits in the ratio of 3 :1. Their Balance
Sheet on
31st March, 2018 was:
Reserve Fund 16,000 Less: Provision for Doubtful 5,000 45,000
Debts
Capital A/cs: Bills Receivable 10,000
Pradeep 60,000 Patents 1,000
Dhanraj 20,000 80,000 Machinery 40,000
1,30,000 1,30,000
They admitted Leander as a new partner on this date. New profit-sharing ratio is agreed as 3:2:3.
Leander brings in proportionate capital after the following adjustments:
(a) Leander brings Rs. 16,000 as his share of goodwill.
(b) Provision for Doubtful Debts is to be reduced by Rs. 2,000.
(c) There is an Old Typewriter valued at Rs. 2,400. It does not appear in the books of the firm. It is now
to be recorded.
(d) Patents are valueless.
Prepare Revaluation Account, Capital Accounts and opening Balance Sheet of Pradeep, Dhanraj and
Leander.
Q314. Mohan and Sohan are in partnership sharing profits in the proportion of 3/5th and 2/5th
respectively. Their Balance Sheet as at 31st March, 2018 was:
Mohan's Capital 2,000 Plant 650
Sohan's Capital 1,000 Cash 650
3,000
Creditors 400 Debtors 1,000
Less: Provision for Doubtful Debts 400 600
Stock 1,500
3,400 3,400
They decide to admit Rohan to a 1 /3rd share upon the terms that he is to pay into the business Rs. 1,000
as Goodwill and sufficient Capital to give him a 1 /3rd share of the total capital of the new firm. It was
agreed that the Provision for Doubtful Debts be reduced to Rs. 100 and the Stock be revalued at Rs.
2,000 and that the Plant be reduced to Rs. 500.
You are required to record the above in the Ledger of the firm and show Balance Sheet of the new
partnership.
Q315. Following is the Balance Sheet of X and Y as at 31st March, 2018, Z is admitted as a partner on
that date when the position of X and Y was:
X's Capital 10,000 Cash in Hand 9,000
Y's Capital 8,000 18,000 Debtors 11,000

General Reserve 16,000 Building 8,000
Workmen Compensation 4,000 Machinery 10,000
Reserve 50000 50,000
X and Y share profits in the proportion of 3 : 2. The following terms of admission are agreed upon:
(a) Revaluation of assets: Building Rs. 18,000; Stock Rs. 16,000.
(b) The liability on Workmen Compensation Reserve is determined at Rs. 2,000.
(c) Z brought in as his share of goodwill Rs. 10,000 in cash.
(d) Z was to bring in further cash as would make his capital equal to 20% of the combined capital of X
and Y after above revaluation and adjustments are carried out.
(e) The future profit-sharing proportions were: X—2/5th, Y—2/5th and Z—1 /5th.
Prepare new Balance Sheet of the firm and Capital Accounts of the Partners.
Q316. A and B are partners sharing profits in the ratio of 3 : 2. They admit C as a new partner from 1st
April, 2018. They have decided to share future profits in the ratio of 4 : 3 : 3. The Balance Sheet as at
31st March, 2018 is given below:
4's Capital 1,76,000 Goodwill 34,000

B’s Capital 2,54,000 4,30,000 Land and Building 60,000
Workmen Compensation 20,000 Investment (Market value Rs. 50,000
Reserve 45,000)
Investment Fluctuation 10,000 Debtors 1,00,000
Reserve
Debts
C's Loan 3,00,000 Stock 3,00,000
Bank Balance 2,50,000
7,94,000 7,94,000
Terms of C's admission are as follows:
(i) C contributes proportionate capital and 60% of his share of goodwill in cash.
(ii) Goodwill is to be valued at 2 years' purchase of super profit of last three completed years. Profits
for the years ended 31st March were:
2016—Rs. 4,80,000; 2017—Rs. 9,30,000; 2018—Rs. 13,80,000.
The normal profit is Rs. 5,30,000 with same amount of capital invested in similar industry.
(iii) Land and Building was found undervalued by Rs. 1,00,000.
(iv) Stock was found overvalued by Rs. 31,000.
(v) Provision for Doubtful Debts is to be made equal to 5% of the debtors.
(vi) Claim on account of Workmen Compensation is Rs. 11,000.
Prepare Revaluation Account, Partners' Capital Accounts and Balance Sheet.
Q317. Kalpana and Kanika were partners in a firm sharing profits in the ratio of 3 : 2. On 1st April,
2018, they admitted Karuna as a new partner for 1 /5th share in the profits of the firm. The Balance
Sheet of Kalpana and Kanika as on 1st April, 2018 was as follows:
BALANCE SHEET OF KALPANA AND KANIKA as on 1st April, 2018
Kalpana 4,80,000 Plant 2,70,000
Kanika 2,10,000 6,90,000 Stock 2,10,000
Workmen's Compensation 1,00,000 Less: Provision 12,000 1,20,000
Fund

Creditors 90,000 Cash 1,30,000
9,40,000 9,40,000
It was agreed that;
(a) the value of Land and Building will be appreciated by 20%.
(b) the value of plant be increased by Rs. 60,000.
(c) Karuna will bring Rs. 80,000 for her share of goodwill premium.
(d) the liabilities of Workmen's Compensation Fund were determined at Rs. 60,000.
(e) Karuna will bring in cash as capital to the extent of 1 /5th share of the total capital of the new firm.
(Foreign 2014, Modified)
Q318.M and N were partners in a firm sharing profits in the ratio of 3 : 1. ‘O’ was admitted as a
partner on 1st April, 2018.
From the information given below complete Revaluation Account, Partners’ Capital Accounts and the
Dr. REVALUATION ACCOUNT Cr.
To Stock 6,000 By Plant A/c
To Provision for doubtful debts 3,000 By Land and Building A/c 7,500
To Creditors —
To Profit on Revaluation transferred to:
M’s Capital A/c —
IPs Capital A/c 6,000 —
37,500 —

Particulars M N O Particulars M N O
Rs. Rs. Rs. Rs. Rs. Rs.
To Balance c/d — — By -– 2,00,000 1,30,000
By — — —
By Cash A/c 1,50,000
By Premium for
Goodwill A/c 67,500 22,500
— — — — — —
BALANCE SHEET (After Admission)
Creditors 32,500 Cash —
Bills Payable 40,000 Debtors
60,000
Outstanding Salary — Less :
Capital Accounts: — 57,000
M — Stock 34,000
N — Plant 1,30,000
O — — Land and Building 1,57,500
6,68,500 _____
Q319.A and B share the profits of a business in the ratio of 5 : 3. They admit C into the firm for a
1/4th share in the profits to be contributed equally by A and B. On the date of admission of C, the
Balance Sheet of the firm was as follows :
A's Capital 3,00,000 Machinery 2,60,000
B’s Capital 2,00,000 Furniture 1,60,000

Workmen’s Compensation Fund 40,000 Stock 1,20,000
Creditors 1,40,000 Debtors 80,000
Bank 60,000
6,80,000 6,80,000
From the information given below, complete Revaluation Account, Partners’ Capital Accounts and
the new Balance Sheet of A, B and C.
To Stock A/c — By Furniture A/c
A’s Capital A/c —
60,000 —

Particulars A B C Particulars A B C
To Bal. c/d — — — By — —
By — —
By Revaluation 25,000
A/c
By Bank A/c —
By Premium for 40,000
Goodwill A/c
— –– — — — 2,50,000
BALANCE SHEET
(After Admission)
Creditors -– Bank
Capitals : Debtors —
A— Stock —
B— Furniture —
C — Machinery —
Q320.Given below is the Balance Sheet of A and B, who are carrying on partnership business as on
March 31, 2018. 4 and B share profits and losses in the ratio of 3 : 2.
Bills Payable 6,000 Cash 28,750
Creditors 30,000 Sundry Debtors 80,000
Outstanding Expenses 14,000 Stock 30,000
Capitals Plant 1,00,000
A 2,00,000 Buildings 1,50,000
B 1,50,000 3,50,000 Goodwill 11,250
4,00,000 4,00,000
On that date, they agree to admit C as a partner on the following terms :
(a) C will get 1/4th share in profits.
(b) New profit sharing ratio shall be 3 : 3 : 2,
1
(c) Goodwill shall be valued on 22 years’ purchase of the past four years’ average profits, which were
Rs. 17,000; Rs. 14,000; Rs. 15,000 and Rs.20,000 respectively. C is not to bring goodwill in Cash.
Complete the revaluation account, partner’s capital accounts and the opening Balance Sheet given
below:

To Stock A/c — By Plant A/c 20,000
To Creditors A/c — By Building A/c —
A’s Capital A/c
20,400
— —

Rs. Rs.
Rs. Rs. Rs. Rs.
To Goodwill A/c By Balance b/d — —
(Written off) — — By —
To Balance c/d — — 40,000 By C’s Current
A/c (Goodwill) — ––
By Cash A/c —
— — 40,000 –– –– ––
BALANCE SHEET (After Admission) as at 1st April, 2018
Bills Payable — Cash —
Creditors 31,000 Sundry Debtors —
Outstanding Expenses — Stock 25,000
Capitals : Plant —
A — Buildings —
B — C’s Current A/c —
C —
— —
Q321.Atal and Madan were partners in a firm sharing profits in the ratio of 5 : 3. On 31.3.2018 they
admitted Mehra as a new partner for 1/4th share in the profits. The new profit sharing ratio was 2:1:1.
From the information given below, complete the Revaluation Account, Partners’ Capital Accounts
and the Balance Sheet.
To Provision for outstanding By Provision for Bad & Doubtful
Electricity Bill 3,000 Debts:
To Provision for Claim for damages Existing 1,200
— Less: Required 1,175
By Sundiy Creditors 2,500
By
— —
Dr. PARTNERS’ CAPITAL ACCOUNTS Cr.

Particulars Atal Madan Mehra Particulars Atal Madan Mehra
To Profit & Loss By Balance b/d 1,50,000 90,000
A/c 12,500 _ By Workmen
To Revaluation Compensation
A/c — 300 Fund — 12,000
To Balance c/d — — By Cash A/c 40,000
By Premium for
Goodwill A/c 4,000 —
— _ — — —

Capitals : Land & Building 1,50,000
Atal — Machinery 40,000
Madan — Patents 5,000
Mehra — Stock 27,000
Sundry Creditors 17,500 Debtors —
Provision for Outstanding Less : Provision for
Electricity Bill — Bad Debts 45,825
Provision for Claim for Damages — Cash —
—
Q322.P and Q are partners sharing profits in 3 : 1. R is admitted and the partners decide to share the
future profits in the ratio of 2 : 1 : 1. The Balance Sheet of P and Q as at 31st March, 2016 was as
under :
Profit & Loss Account 60,000 Debtors 60,000
P 3,50,000 Prepaid Expenses 20,000
Q 2,20,000 5,70,000 Plant & Machinery 1,40,000
Premises 2,75,000
6,60,000 6,60,000
Following terms are agreed upon :
(i) R’s share of goodwill is valued at Rs.20,000 but he is unable to bring it in cash.
(ii) R brings in capital proportionate to his share of profit in the firm.
From the information given below, complete Revaluation Account, Capital Accounts and the Balance
Sheet.
To —
To —
To —
To — —
— —

Particulars P Q R Particulars P Q R
To — — By Bal. b/d
To Bal. c/d — — — By — — —
By R’s –– –– ––
Current A/c
By Bank A/c ––
— — –– — — —
BALANCE SHEET (After Admission) as at 1st April, 2016
Creditors 30,000 Bank —
Electric Charges Outstanding 7,000 Debtors 60,000
P— Prepaid Expenses 8,000
Q- Plant & Machinery 1,20,000
R — Premises 3,00,000
R’s Current A/c
— —

Chapter 4: Retirement or Death of a Partner
Q 1.(i) A, B and C 1are partners sharing profits in the ratio of 1/2 : 1/3 : 1/6. Find out the new ratio if B
retires.
P, Q and R are partners sharing profits in the ratio of 1/2 : 2/5 : 1/10. Find out the new ratio if P retires.
Q 2.A, B and C are partners in a firm sharing profits in the ratio of 5 : 4 : 3. B retired and his share was
divided equally between A and C. Calculate the new profit sharing ratio of/1 and C.
Q 3.A, B and C are partners sharing profits in the ratio of 1/4 : 2/5 : 7/20. A retires and his share is taken
up by B and C in the ratio of 1 : 2. Calculate the new ratio.
Q 4.P, Q and R are partners sharing profits in the ratio of 5 : 3 : 2. R retires and his share is entirely
taken by P. Calculate new profit sharing ratio of P and Q.
7 1 1
Q 5.A, B and C are partners in a firm sharing profits and losses as ,
15 3
and 5
respectively. B retires
1
and his share is taken by A and C in the ratio of 3 : 2. Immediately, D is admitted for 3 rd share of profit,
1
3
th of which was given by A and the remaining share was taken equally from A and C. Calculate new
profit-sharing ratio after D’s admission.
1 1 10
Q 6.Sharma, Verma and Neetu were partners sharing profits and losses in proportion of 4 , 8 and 16.
Calculate the new profit sharing ratio between continuing partners if, (a) Sharma retires, (b) Verma
retires, (c) Neetu retires. Also calculate their gaining ratio in each of the above situation.
Q 7.A, B, Cand D are partners sharing profits and losses in the ratio of 1/3, 1/6, 1/3 and 1/6 respectively.
C retires and A, B and D decide to share the profits and losses equally in future. Calculate the gaining
ratio.
Q 8.Madhu, Surabhi and Nikhil are partners without any partnership deed. Madhu retires. Calculate the
future ratio of continuing partners if they agreed to acquire her share (i) in the ratio 5 : 3 (ii) equally.
Also mention their gaining ratio.
Q 9.A, B and C were partners sharing profits in the ratio of 2/6, 1/2 and 1/6. A retires and surrenders
2/3 of his share in favour of B and remaining in favour of C. Calculate new ratio and gaining ratio.
Q 10.A, B, C and D were partners in a firm sharing profits and losses in the ratio of 3:2:1 : 4. A decide
to retire from the firm and his share is acquired by B and C in the ratio of 3 : 2 according to agreement.
Calculate the New Profit sharing ratio and the gaining ratio. (Haryana Board, 2017)
Q 11.On 1-1-2008, Uday and Kaushal entered into partnership with fixed capitals of Rs.7,00,000 and
Rs.3,00,000 respectively. They were doing good business and were interested in its expansion but could
not do the same because of lack of capital. Therefore, to have more capital, they admitted Govind as a
new partner on 1-1-2010. Govind brought Rs. 10,00,000 as capital and the new profit sharing ratio
decided was 3 : 2 : 5. On 1-1-2012, another new partner Hari was admitted with a capital of Rs.8,00,000
for 1/10th share in the profits, which he acquired equally from Uday, Kaushal and Govind. On 1-4-2014
Govind died and his share was taken over by Uday and Hari equally.
Calculate :
(i) The sacrificing ratio of Uday and Kaushal on Govind’s admission.
(ii) New profit sharing ratio of Uday, Kaushal, Govind and Hari on Hari’s admission.
(iii) New profit sharing ratio of Uday, Kaushal and Hari on Govind’s death.

Q 12.A, B and C are partners sharing profits in the ratio of 4 : 3 : 2. A retires from the firm and it is
decided that profit-sharing ratio between B and C will be same as existing between A and B. Calculate
new ratio and gaining ratio.
Q 13.P, Q and R are equal partners in a firm. R retires and the goodwill of the firm is valued at
Rs.3,60,000. No goodwill account appears as yet in the books of the firm. P and Q agree to share future
profits in the ratio of 3 : 2. Pass necessary journal entry for goodwill.
Q 14 (a) X, Yand Zare partners sharing profits in the ratio of 2 : 3 : 5. Goodwill is appearing in their
books at a value of Rs. 6,00,000. X retires and on the day of As retirement Goodwill is valued at
Rs.4,50,000. Yand Z decided to share future profits equally. Pass the necessary Journal entries.
Q14 (b) X, Y and Z are partners sharing profits in the ratio of 3 : 2 : 1. Goodwill is appearing in the
books at a value of ₹ 60,000. Y retires and at the time of Y’s retirement, goodwill is valued at ₹ 84,000.
X and Z decide to share future profits in the ratio of 2 : 1. Pass the necessary journal entries through
Goodwill Account.
Q 15.Apurva, Dimple, Komal and Saloni are partners in a firm sharing profits and losses in the ratio of
2 : 2 : 1 : 1. Dimple and Komal decided to retire from the firm. The goodwill of the firm was valued at
Rs.9,00,000. Apurva and Saloni decided to share future profits and losses in the ratio of 3 : 2.
Pass necessary journal entry for the treatment of goodwill.
Q 16.S, T and U were partners in a firm sharing profits in the ratio of 1 : 2 : 2. On 15-2-2018 S died and
the new profit sharing ratio of T and U was 3 : 2. On S’s death the goodwill of the firm was valued at
Rs.6,00,000.
Calculate the gaining ratio and pass necessary journal entry on S’s death for the treatment of goodwill.
Q 17.A, B, C and D are partners sharing profits in the ratio of 3 : 4 : 3 : 2, On the retirement of C, the
goodwill was valued at Rs.6,00,000. A, B and D decided to share future profits equally. Pass the
necessary journal entry for the treatment of goodwill.
Q 18.A, B and C are partners sharing profits in the ratio of 4 : 3 : 2. B decides to retire and surrenders
his share to A and C in the ratio of 3 : 1. The goodwill of the firm is valued at 1.5 years purchase of
super profits based on average profits of the last three years which were Rs.2,00,000, Rs.2,40,000 and
Rs.3,10,000 respectively. The normal profits for the similar firm are Rs. 1,70,000. Goodwill already
appears in the books of the firm at Rs.72,000. The profit for the first year after B's retirement was
Rs.5,40,000. Give the necessary journal entries to adjust goodwill and to distribute profits.
Q 19.Kavi, Ravi, Kumar and Guru were partners in a firm sharing profits in the ratio of 3 : 2 : 2 : 1. On
1.2,2017, Guru retired and the new profit sharing ratio decided between Kavi, Ravi and Kumar was 3:1
: 1. On Guru’s retirement the goodwill of the firm was valued at Rs.3,60,000.
Showing your working notes clearly, pass necessary journal entry in the books of the firm for the
treatment of goodwill on Guru’s retirement.
Q 20.A, B, C and D are partners sharing profits in the ratio of 1 : 4 : 3 : 2. D retired and the goodwill is
valued at Rs.2,00,000. Z)’s share of goodwill is to be adjusted into the capital accounts of A, B and C
who decide to share future profits in the ratio of 4:3 : 3. Pass necessary journal entry.
Q21. (HOTS).A, B, C and D are partners in a firm sharing profits in the ratio of 3 : 3 : 2 : 2 respectively.
D retires and A, B and C decide to share the future profits in the ratio of 3:2:1. Goodwill of the firm is
valued at Rs.6,00,000. Goodwill already appears in the books at Rs.4,50,000. The profits for the first
year after D’s retirement amount to Rs. 12,00,000.
Give the necessary journal entries to record Goodwill and to distribute the profits. Show your
calculations clearly. (C.B.S.E. 2012, Outside Delhi)

Q22. (HOTS).A, B and C are partners sharing profits and losses in the ratio of 4 : 3 : 1 respectively. B
retires, selling his share of profit to A and C for Rs.81,000; Rs.36,000 being paid by A and Rs.45,000
by C. The profit for the year after b’s retirement was Rs. 1,05,000.
You are required (i) to give necessary journal entries to record the above said sale of b’s share to A and
C, (ii) to calculate the new profit sharing ratio, and (iii) distribute the profit between A and C.
Q 23.Kami, Manu and Akansha are partners sharing profits as 20%, 30% and 50%. Kami decided to
retire with the consent of other partners and sold her share to Manu. Goodwill was valued at two and a
half years purchase of the average profits of three years. Profits of these three years were Rs.50,000,
Rs.70,000 and Rs.60,000. Reserve fund stood in the balance sheet at Rs.30,000 at the time of her
retirement. You are required to record necessary journal entries to record above adjustments on Kanu’s
retirement. Also prepare her capital account to find out the amount due to her when her capital balance
in the balance sheet was Rs. 1,00,000 before any above adjustment.
Q 24.A, B and C are partners in a firm sharing profits in the ratio of 2 : 3 : 4. On 31st March 2019, A
retires and B and C decided to share future profits in the ratio of 2 : 1. Following balances appeared in
their books on this date :
Rs.
Profit and Loss (Dr.) 72,000
Employee’s Provident Fund 1,50,000
It is agreed that (i) workmen Compensation Reserve is no more required, and (ii) 25% of the General
Reserve is to be transferred to Investment Fluctuation Reseve.
Pass journal entries for the adjustment of these items on A’s retirement.
Q 25.A, B and C are partners in a firm sharing profits and losses in the ratio of 3 : 2 : 1.
C retires from the firm and A and B agree to share future profits equally. Give journal entries on C’s
retirement in the following cases :
(a) Workmen Compensation Reserve appears in the books at Rs. 1,00,000, when there is a claim
of Rs.40,000 against it.
(b) Workmen Compensation Reserve appears in the books at Rs.2,00,000, when there is a claim of
Rs.2,75,000 against it.
(c) Investment Fluctuation Reserve appears in the books at Rs.50,000, when Investments (market
value Rs. 1,80,000) appear at Rs.2,00,000.
(d) Investment Fluctuation Reserve appears in the books at Rs.20,000, when Investments (market value
Rs. 1,20,000) appear at Rs.2,00,000.
Q 26.A, B, C and D were partners sharing profits in the ratio of 1 : 2 : 3 : 4. D retired and his share was
acquired by A and B equally. Goodwill was valued at 3 years’ purchase of average profits of last 4
years, which were Rs.40,000. General Reserve showed a balance of Rs. 1,30,000 and D’s Capital in the
Balance Sheet was Rs.3,00,000 at the time of D's retirement. You are required to record necessary
Journal entries in the books of the firm and prepare D’s Capital Account on his retirement.
(C.B.S.E. Sample paper, 2017)
Q 27.Ram, Shy am and Mohan were in partnership sharing profits and losses in the proportions of 3 : 2
: 1. On 1st April, 2018, Shyam retires from the firm. On that date, their Balance Sheet was as follows :
Trade Creditors 30,000 Cash in hand 90,000
Expenses owing 45,000 Less: Provision 10,000 1,50,000
Reserve Fund 1,05,000 Stock 1,20,000
Workmen’s Compensation Factory Premises 2,25,000
Reserve 48,000 Investments 80,000

Capitals : Loose Tools 40,000
Ram 2,00,000
Shyam 1,50,000
Mohan 1,00,000 4,50,000
7,05,000 7,05,000
The terms were:
(1) Goodwill of the firm to be valued at 2 times of Average Super Profits of last three years. Taking
into consideration the risk of the business, normal profits of the firm are estimated at Rs.5,00,000 every
year. But actual profits of last three years ending 31st March were as 2016 : Rs.6,00,000, 2017 :
Rs.5,50,000, 2018 : Rs.5,75,000.
(2) Expenses owing to be brought down to Rs.37,500.
(3) Investments are revalued at Rs.72,000. Ram took over investments at this value.
(4) Factory premises is to be revalued at Rs.2,43,000; and Loose tools at Rs.36,000.
(5) Provision for doubtful Debts to be increased by Rs. 19,500.
(6) Claim on account of Workmen’s Compensation is Rs.18,000.
(7) Shyam be paid Rs.50,000 in cash and balance due to him treated as a loan carrying interest @
6% per annum.
Show Journal entry for goodwill adjustment, prepare necessary ledger accounts and opening balance
sheet of the continuing partners.
Q 28.M, N and G were partners in a firm sharing profits and losses in the ratio of 5 : 3 : 2. On 31-3-
2016 their Balance Sheet was as under :
BALANCE SHEET OF M, N AND G as at 31-3-2016
Capitals : Less : Provision 5,000 40,000
M 1,50,000 Stock 50,000
N 1,25,000 Machinery 1,50,000
G 75,000 3,50,000 Patents 30,000
Building 1,00,000
4,35,000 4,35,000
M retired on the above date and it was agreed that:
(i) Debtors of Rs.2,000 will be written off as bad debts and a provision of 5% on debtors for bad and
doubtful debts will be maintained.
(ii) Patents will be completely written off and stock, machinery and building will be depreciated by 5%.
(iii) An unrecorded creditor of Rs. 10,000 will be taken into account.
(iv) N and G will share the future profits in the ratio of 2 : 3.
(v) Goodwill of the firm on AT s retirement was valued at Rs.3,00,000.
Pass necessary Journal Entries for the above transactions in the books of the firm on A/c retirement.
(C.B.S.E. 2017, Delhi)
Q 29.Pankaj, Naresh and Saurabh are partners sharing profits in the ratio of 3 : 2 : 1. Naresh retired
from the firm due to his illness. On that date the balance sheet of the firm was as follows:
Books of Pankaj, Naresh and Saurabh
General Reserve 12,000 Bank 7,600
Sundry Creditors 28,000 Debtors 6,000
Bills Payable 12,000 Less: Provision for
Outstanding Salary 2,200 Doubtful Debts 400 5,600
Provision for Legal Damages 6,000 Stock 22,000
Capitals : Furniture 41,000

Pankaj 46,000 Premises 80,000
Naresh 30,000
Saurabh 20,000 96,000
1,56,200 1,56,200
Additional Information :
(i) Premises are undervalued by 20%, stock is overvalued by 10% and provision for doubtful debts was
to be made 5% on debtors. Further provision for legal damages is to be made for Rs.4,100 and furniture
to be brought up to Rs.45,000.
(ii) Goodwill of the firm be valued at Rs.42,000.
(iii) Rs.26,000 from Naresh’s Capital account be transferred to his loan account bearing interest @ 12%
p.a. and balance be paid through bank; if required, necessary loan may be obtained from Bank.
(iv) New profit sharing ratio of Pankaj and Saurabh is decided to be 5 : 1.
Give necessary ledger accounts and balance sheet of the firm after Naresh’s retirement.
Q 30.X, Y and Z are in partnership sharing profits in the ratio of 5 : 3 : 2, Their Balance Sheet as at 1st
April, 2018, the day Y decided to retire was as follows :
X’s Capital 30,000 Buildings 25,000
Y’s Capital 20,000 Plant & Machinery 15,000
Z’s Capital 20,000 Investments 10,000
90,000 90,000
The terms of retirement were :
(a) Y sells his share of goodwill to X for Rs.8,000 and to Z for Rs.4,000.
(b) Stock to be appreciated by 20% and buildings by Rs.5,000.
(c) Investments were sold for Rs.22,000.
(d) Y is paid off in cash.
Prepare Revaluation Account, Capital Accounts of Partners and the Balance Sheet of the new firm.
Q 31.A, B & C were partners in a firm sharing profits & losses in proportion to their fixed capitals.
Their Balance Sheet as at March 31, 2017 was as follows:
A 5,00,000 Stock 9,000
B 3,00,000 Debtors 15,000
C 2,00,000 10,00,000 Less: Provision for
General Reserve 75,000 Doubtful Debts 1,500 13,500
Creditors 23,000 A’s Loan 35,500
Outstanding Salary 7,000 Plant & Machinery 2,00,000
B's Loan 15,000 Land & Building 6,00,000
Profit & Loss Account (for the year 2,41,000
ending 31st March,2017)
11,20,000 11,20,000
On the date of above Balance Sheet, C retired from the firm on the following terms:
(i) Goodwill of the firm will be valued at two year’s purchase of the Average Profits of last three years.
The Profits for the year ended March 31, 2015 & March 31, 2016 were Rs.4,00,000 & Rs.3,00,000
respectively.
(ii) Provision for Bad Debts will be maintained at 5% of the Debtors.
(iii) Land & Building will be appreciated by Rs.90,000 and Plant & Machinery Will be reduced to Rs.
1,80,000.
(iv) A agreed to repay his Loan.

(v) The loan repaid by A was to be utilized to pay C. The balance of the amount payable to C was
transferred to his Loan Account bearing interest @ 12% per annum.
Prepare Revaluation Account, Partner’s Current Accounts, Partner’s Capital Accounts and the Balance
Sheet of the reconstituted firm.
Q 32.Following is the balance sheet of Jain, Gupta and Malik as at March 31, 2016 :
Rs. Rs.
Creditors 19,800 Land and Buildings 26,000
Telephone bills outstanding 300 Bonds 14,370
Accounts Payable 8,950 Cash 5,500
Accumulated Profits 16,750 Bills Receivables 23,450
Capital Accounts: Sundry Debtors 26,700
Jain 40,000 Stock 18,300
Gupta 60,000 Office Furniture 18,250
Malik 20,000 1,20,000 Plant and Machinery 20,230
Computers 13,200
1,65,800 1,65,800
The partners have been sharing profits in the ratio of 5 : 3 : 2. Malik decides to retire from business on
April 1, 2016 and his share in the business is to be calculated as per the following terms of revaluation
of assets and liabilities :
Stock Rs.20,000; Office furniture Rs. 14,250; Plant and machinery Rs.23,530; Land and buildings
Rs.20,000.
A provision of Rs. 1,700 to be created for doubtful debts. The goodwill of the firm is valued at Rs.9,000.
The continuing partners agreed to pay Rs. 16,500 as cash on retirement of Malik, to be contributed by
continuing partners in their new profit sharing ratio which is 3 : 2. The balance in the capital account of
Malik will be treated as loan.
Prepare Revaluation account, capital accounts, and balance sheet of the reconstituted firm.
Q 33.Parth, Angad and Leesha are partners in a firm sharing profits and losses in the ratio of 3 : 2 : 1
respectively. Angad retires and his claim, including Capital and entitlements from the firm including
his share of Goodwill of the firm, is Rs. 50,000.
After this amount was determined, it was found that there was an unrecorded piece of furniture valued
at Rs. 12,000 which had to be recorded.
Upon recording this piece of furniture, the revised amount due to Angad was determined and settled by
giving him this piece of furniture and the balance in cash.
You are required to give the journal entries for recording the payment to Angad in the books of the firm.
(I.S.C. 2018)
Q 34.Leena, Madan and Naresh were partners in a firm sharing profits and losses in the ratio of 2 : 2 :
3. On 31st March, 2015, their Balance Sheet was as follows :
Trade Creditors 1,60,000 Land and Building 10,00,000
Bank Overdraft 44,000 Machinery 5,00,000
Long-term Debts 4,00,000 Furniture 7,00,000
Employees’ Provident Fund 76,000 Investments 2,00,000
Capitals: Leena 12,50,000 Closing Stock 8,00,000
Madan 8,00,000 Sundry Debtors 4,00,000
Naresh 10,50,000 31,00,000 Bank 80,000
Deferred Advertisement
Expenditure 1,00,000
37,80,000 37,80,000

On 31st March, 2015, Madan retired from the firm and the remaining partners decided to carry on the
business. It was decided to revalue assets and liabilities as under:
(i) Land and Building be appreciated by Rs.2,40,000 and Machinery be depreciated by 10%.
(ii) 50% of Investments were taken over by the retiring partner at book value.
(iii) An old customer Mohit whose account was written off as bad debt has promised to pay Rs.7,000
in settlement of his full debt of Rs.10,000.
(iv) Provision for Doubtful Debts was to be made at 5% on debtors.
(v) Closing Stock will be valued at market price which is Rs. 1,00,000 less than the book value.
(vi) Goodwill of the firm be valued at Rs.5,60,000 and Madan’s share of goodwill be adjusted in the
accounts of Leena and Naresh. Leena and Naresh decided to share future profits and losses in the ratio
of 3 : 2.
(vii) The total capital of the new firm will be Rs.32,00,000 which will be in the proportion of the profit-
sharing ratio of Leena and Naresh.
(viii) Amount due to Madan was settled by accepting a Bill of Exchange in his favour payable after 4
months.
Prepare Revaluation Account, Partners’ Capital Accounts and Balance Sheet of the firm after Madan’s
retirement. (C.B.S.E. 2016, Comptt. All India)
Q 35.A, B and C are partners sharing profits in the ratio of 2:2:1. A retires and after all adjustments
relating to revaluation, goodwill and accumulated profits the capita! account of B showed a credit
balance of Rs. 1,40,000 and that of C Rs. 1,00,000. It was decided to adjust the capitals of B and C in
their profit sharing ratio. Calculate the new capitals of the partners and record necessary entry for
bringing in or withdrawing cash.
Q 36.X, Y and Z are partners in a firm sharing profits in the ratio of 3 : 2 : 1. On April 1st 2018, V
retires from the firm. X and Z agree that the capital of the new firm shall be fixed at Rs.2,10,000 in the
profit sharing ratio. The capital accounts of X and Z after all adjustments on the date of retirement
showed balances of Rs. 1,45,000 and Rs.63,000 respectively. State the amount of actual cash to be
brought in or to be paid off to the partners.
Q 37.Following is the Balance Sheet of Aruna, Karuna and Varuna as at 31st March, 2018, who have
agreed to share profits and losses in proportion of their capitals.
Balance Sheet of Aruna, Karuna and Varuna as at 31st March, 2018
Capitals : Land and Building 2,00,000
Aruna 2,00,000 Machinery 3,00,000
Karuna 3,00,000 Closing Stock 1,00,000
Varuna 2,00,000 7,00,000 Sundry Debtors 1,10,000
General Reserve 35,000 Less : Provision for
Workmen Compensation Reserve 15,000 Doubtful debts 10,000 1,00,000
Sundry Creditors 50,000 Cash at Bank 1,00,000
8,00,000 8,00,000
On 31st March, 2018 Aruna desired to retire from the firm and the remaining partners decided to carry
on the business. It was agreed to revalue the assets and re-assess the liabilities on the following basis :
(i) Land and building to be appreciated by 30%.
(iii) There were bad debts of Rs. 17,000.
(iv) The claim on account of workmen’s compensation was estimated at Rs.8,000. (v) Goodwill of the
firm was valued at Rs. 1,40,000 and Aruna’s share of Goodwill be adjusted against the Capital Accounts
of the continuing partners Karuna and Varuna who have decided to share future profits in the ratio of 4
: 3 respectively.
(vi) Capital of the new firm in total will be the same as before the retirement of Aruna and will be in
the new profit sharing ratio of the continuing partners.

(yii) Amount due to Aruna be settled by paying Rs.50,000 in cash and the balance by transferring to her
loan account which will be paid later on.
Prepare Revaluation Account, Capital Accounts of partners and Balance Sheet of the firm after Aruna’s
retirement.
Q 38.Pihu, Geeta and Nita are partners in a firm, sharing profits and losses in the ratio of 3 : 2 : 1. On
31st March, 2015, their Balance Sheet was as under :
BALANCE SHEET OF PIHU, GEETA AND NITA as at 31st March, 2015
Capital A/cs Less : Provision for
Pihu 79,000 Doubtful Debts (1300) 23,700
Geeta 70,000 Stock 14,300
Nita 61,000 2,10,000 Plant and Machinety 60,000
2,34,000 2,34,000
Nita retires on 1st April, 2015, subject to the following adjustments:
(a) Land and Building to be reduced by 10%.
(b) Goodwill to be valued at Rs. 54,000.
(c) Provision for Doubtful Debts to be raised to 10% of the debtors, the excess provision being
created from General Reserve. The balance of the General Reserve to be distributed amongst the
partners.
(d) Creditors of Rs.3,000 were paid by Pihu for which she is not to be reimbursed.
(e) The continuing partners to share profits and losses in future in the ratio of 5:4.
(f) Nita to be paid Rs.29,800 on retirement and the remaining amount in two equal annual instalments
together with interest @10% per annum on the outstanding balance. The first instalment ofNita’s loan
to be paid on 31st March, 2016.
(i) Revaluation Account.
(ii) Partners’ Capital Accounts.
(iii) Nita’s Loan Account till it is finally closed. (I.S.C. 2016)
Q 39.Khushboo, Leela and Meena were partners in a firm sharing profits in the ratio of 5:3:2. Their
Balance Sheet on 31st March, 2015 was as follows :
BALANCE SHEET OF KHUSHBOO, LEELA AND MEENA
Khushboo 90,000 Stock 60,000
Leela 56,000 Building 1,40,000
Meena 60,000 2,06,000 Profit and Loss A/c 8,000
2,76,000 2,76,000
On April 1, 2015 Leela retired on the following terms :
(i) Building was to be depreciated by Rs. 10,000.
(ii) A Provision of 5% was to be made on debtors for doubtful debts.
(iii) Salary outstanding was Rs.4,800.
(iv) Goodwill of the firm was valued at Rs. 1,40,000.
(v) Leela was to be paid Rs.20,800 through cheque and the balance was to be paid in two equal quarterly
instalments (starting from 30th June, 2015) along with interest @ 10% per annum.
Prepare Revaluation Account, Leela’s Capital Account and her Loan Account till it is finally paid.

Q 40.X, Y and Z were in partnership sharing profits in the ratio of 3 : 2 : 1. On 1st April, 2015 the
Balance Sheet of the firm stood as follows :
Provision for Doubtful Debts 1,300 Cash at Bank 10,000
X 78,750 Machinery 60,000
Y 70,000 Land and Building 1,20,000
Z 61,250 2,10,000
2,26,300 2,26,300
Z retires on the above date and the new profit sharing ratio between X and Y will be 5 : 4. Following
terms were agreed :
(1) Land and Buildings be reduced by 10%.
(2) Out of the insurance premium paid during the year Rs. 5,000 be carried forward as unexpired.
(3) There is no need of any provision for doubtful debts.
(4) Goodwill of the firm be valued at Rs.54,000.
(5) X and Y decided that their capitals will be adjusted in their new profit sharing ratio, by bringing
in or paying cash to the partners. Z’s a/c will be transferred to his loan a/c.
(α) Pass necessary journal entries; prepare the capital accounts and the new balance sheet.
(b) Z is paid Rs.9,300 on the date of retirement and the remaining amount in three equal instalments
together with interest at the rate of 10% p.a. on the outstanding balance. Show Z’s loan a/c for 3 years
,
Q 41.Banwari, Girdhari and Murari are partners in a firm sharing profits and losses in the ratio of 4 : 5
: 6. On 31st March, 2014, Girdhari retired. On that date the capitals of Banwari, Girdhari and Murari
before the necessary adjustments stood at Rs.2,00,000, Rs. 1,00,000 and Rs.50,000 respectively. On
Girdhari’s retirement, goodwill of the firm was valued at Rs. 1,14,000. Revaluation of assets and re-
assessment of liabilities resulted in a profit of Rs.6,000. General Reserve stood in the books of the firm
at Rs.30,000.
The amount payable to Girdhari was transferred to his loan account. Banwari and Murari agreed to pay
Girdhari two yearly instalments of Rs.75,000 each including interest @10% p.a. on the outstanding
balance during the first two years and the balance including interest in the third year. The firm closes
its books on 31st March every year.
Prepare Girdhari’s loan account till it is finally paid showing the working notes clearly. (C.B.S.E.
2018)
Q 42.X, Y and Z were partners in a firm sharing profits as in the ratio of 5 : 3 : 2. On 31-3-2015 their
Balance Sheet of X, Y and Z as at 31st March, 2015
Investment Fluctuation Fund 10,000 Motor Vans 20,000
Profit & Loss Account 40,000 Investments 19,000
X 50,000 Stock 15,000
Y 40,000 Debtors 40,000
Z 20,000 1,10,000 Less : Provision 3,000 37,000
Cash 16,000
1,81,000 1,81,000
On the above date, Y retired and X and Z agreed to continue the business on the following terms:
1. Goodwill of the firm was valued at Rs.51,000.
2. There was a claim of Rs.4,000 for Workmen’s Compensation.
3. Provision for bad debts was to be reduced by Rs. 1,000.
4. Y will be paid Rs.8,200 in cash and the balance will be transferred in his loan account which
will be paid in four equal yearly instalments together with interest @10% p.a.

5. The new profit sharing ratio between X and Z will be 3 : 2 and their capitals will be in their
new profit sharing ratio. The capital adjustments will be done by opening current accounts.
Q 43.Naresh, David and Aslam are partners sharing profits in the ratio of 5 : 3 : 7. On April 1st, 2012,
Naresh gave a notice to retire from the firm. David and Aslam decided to share future profits in the ratio
of 2 : 3. The adjusted capital accounts of David and Aslam show a balance of Rs.33,000 and Rs.70,500
respectively. The total amount to be paid to Naresh is Rs.90,500. This amount is to be paid by David
and Aslam in such a way that their capital become proportionate to their new profit sharing ratio. Pass
necessary journal entries for the above transactions in the books of the firm. Show your working clearly.
(C.B.S.E. 2013)
Q 44.A, B and C are partners sharing profits in the ratio of 1 : 2 : 3. C retires and his capital, after
making adjustments for reserves and profit on revaluation stands at Rs. 1,20,000. A and B agreed to
pay him Rs. 1,50,000 in full settlement of his claim. Record necessary journal entry for the treatment
of goodwill if the new profit sharing ratio is decided at 1 : 3.
Q 45.A, B and C were partners in a firm sharing profits in 3 : 2 : 1 ratio. The firm closes its books on
31st March every year. B died on 12-6-2017. On B’s death the goodwill of the firm was valued at
Rs.60,000. On B’s death his share in the profits of the firm till the time of his death was to be calculated
on the basis of previous year’s profit which was Rs. 1,50,000. Calculate B’s share in the profit of the
firm. Pass necessary journal entries for the treatment of goodwill and B’s share of profit at the time of
his death.
Q 46.On 31st March, 2015, the Balance Sheet of Punit, Rahul and Seema was as follows:
BALANCE SHEET OF PUNIT, RAHUL AND SEEMA as at 31st March, 2015
Capitals: Punit 60,000 Buildings 40,000
Rahul 50,000 Machinery 60,000
Seema 30,000 1,40,000 Patents 12,000
Reserves 20,000 Stock 20,000
1,74,000 1,74,000
They were sharing profit and loss in the ratio 5:3:2. Seema died on 1st October, 2015. It was agreed
between her executors and the remaining partners that:
(i) Goodwill be valued at 2 years’ purchase of the average profit of the previous five years, which were
: 2010-11 : Rs.30,000; 2011-12 : Rs.26,000; 2012-13 : Rs.24,000; 2013-14 : Rs.30,000 and 2014-15 :
Rs.40,000.
(ii) Patents be valued at Rs. 16,000; Machinery at Rs.56,000; Buildings at Rs.60,000.
(iii) Profit for the year 2015-16 be taken as having been accrued at the same rate as that in the previous
year.
(iv) Interest on capital be provided at 10% per annum.
(v) A sum of Rs. 15,500 was paid to her executors immediately.
Prepare Revaluation Account, Seema’s Capital Account and Seema’s Executor’s Account.
Q 47.Sita, Reeta and Geeta are partners in a firm sharing profits and losses in the ratio of 4 : 3 : 1. As
per the terms of Partnership deed on the death of any partner, Goodwill of deceased Partner was to be
valued at 50% of the net profits credited to that Partner’s Capital A/c during the last three completed
years before her death. Books are closed on 31st December each year. Sita died on 29th February 2016.
The profits for the last five years were :
2011 — Rs.60,000, 2012 — Rs.97,000, 2013 — Rs.1,05,000, 2014 — Rs.30,000 and 2015 —Rs.84,000

On the date of Sita’s death, Building was found under valued by Rs.80,000, which was to be considered.
Calculate the amount of Sita’s share of Goodwill in the firm and record the adjustment Journal Entries
of Goodwill and revaluation of Building, The new profit sharing ratio between Reeta and Geeta will be
equal.
Q 48.Vikas, Vishal and Vaibhav were partners in a firm sharing profits in the ratio of 2:2: 1. The firm
closes its books on 31st March, every year. On 31-12-2015 Vaibhav died. On that date his Capital
account showed a credit balance of Rs.3,80,000 and Goodwill of the firm was valued at Rs. 1,20,000.
There was a debit balance of Rs.50,000 in the Profit & Loss A/c. Vaibhav’s share of profit in the year
of his death was to be calculated on the basis of the average profit of last five years. The average profit
of last five years was Rs.75,000.
Pass necessary journal entries in the books of the firm on Vaibhav’s death.
(C.B.S.E. 2016)
Q 49.D, E, F, P and Z were partners in a firm sharing profits in the ratio 5 : 4 : 3 : 2 : 1 respectively.
Unfortunately, P and Z met with a tragic car accident in which both of them died.
The goodwill of the firm was valued at Rs. 1,50,000 and D, E and F decided to share future profits in
the ratio of 4 : 6 : 5 respectively.
Give journal entry to record goodwill.
Q 50.Ram, Rahim and Robert were partners sharing profits in 2 : 3 : 1 ratio respectively.
Due to ill health Robert died on 30th September, 2013 the Balance Sheet of Ram, Rahim and Robert on
31st March, 2013 was as follows :
BALANCE SHEET as at 31.03.2013
Capital: Ram 1,00,000 Cash 14,000
Rahim 2,00,000 Bank 2,96,000
Robert 3,00,000 Stock 80,000
Workmen’s Compensation Investments 50,000
Reserve 20,000 Land 2,50,000
Provision for doubtful debts 10,000
9,90,000 9,90,000
On the date of Robert’s death i.e., 30th September, 2013, the following was agreed upon:
(i) Goodwill is to be valued at two years’ purchase of average profits of last three completed years i.e.,
2010-11 — Rs.45,000; 2011-12 — Rs.90,000 and 2012-13 — Rs. 1,35,000.
(ii) Robert’s share of profit till the date of his death will be calculated the basis of average profits of last
three years.
(iii) Land was undervalued by Rs.25,000 and stock overvalued by Rs.8,000.
(iv) Provision for doubtful debts is to be made at 5% of Debtors.
(v) Claim of workmen compensation was estimated at Rs. 5,000.
Prepare Robert’s capital account to be presented to his executors.
Q 51.Following is the Balance Sheet of Pushpa, Rashi and Seema who are sharing profits in 2 : 1 : 2 as
at March 31, 2018 :
Creditors 38,000 Goodwill 40,000
Employee’s Provident Fund 2,000 Land & Building 2,00,000
Profit & Loss Account 60,000 Stock 65,000
Pushpa 1,20,000 Cash and Bank 65,000
Rashi 80,000
Seema 1,00,000 3,00,000

4,00,000 4,00,000
Pushpa died on June 12, 2018. According to partnership deed, the executors are entitled to:
(i) Her capital as per Balance Sheet;
(ii) Interest on capital @ 8% p.a. upto the date of death.
(iii) Her share of profit upto the date of death on the basis of average profits for the past 3 years.
(iv) Her share of goodwill valued on the basis of two times the average profits of the past 3 years.
Profits for the past three years were Rs.30,000; Rs.70,000 and Rs.80,000 respectively. Rashi and Seema
acquired Pushpa’s share in the ratio of 1 : 5.
Prepare Pushpa’s A/c to be rendered to her executor’s. Also calculate the new profit sharing ratios.
Q 52.A, B and C were partners sharing profits in the proportion of one-half, one-fourth and one-fourth
respectively. Their Balance Sheet as at 31st March, 2018 was as follows :
As Capital 1,00,000 Sundry Debtors 45,000
B’s Capital 60,000 Stock-in-Trade 55,000
C’s Capital 40,000 Loan to A 30,000
Freehold Premises 1,00,000
2,40,000 2,40,000
A died on 1st April, 2018. According to the partnership agreement, the goodwill was to be calculated
at two year’s purchase of average profits of three completed years preceding the death or retirement of
a partner. The deceased partner’s share of capital and goodwill, etc., was paid out in cash on 4th April,
2018, the available cash balance being supplemented by a loan from film’s banker on the security of
the freehold property. The net profits of the years ending 31st March, 2016, 2017 and 2018 were
Rs.55,000, Rs.48,000 and Rs.65,000 respectively.
You are required to show the Journal entries, the Capital accounts of the partners and As Executor’s
Account.
Q 53. (HOTS).On 31 st March, 2018, the Balance Sheet of P,Q and R who were partners in a firm, was
as under:
Sundry Creditors 21,000 Buildings 26,000
Employee’s Provident Fund 4,000 Investment 15,000
Employee’s Compensation Debtors 15,000
Reserve 8,000 Bills Receivable 6,000
Contingency Reserve 12,000 Stock 12,000
P 15,000
Q 10,000
R 10,000 35,000
80,000 80,000
The partnership deed provides that the profits be shared in the ratio of 2 : 1 : 1 and that in the event of
death of any partner, his executors will be entitled to be paid out:
(a) The capital to his credit at the date of last Balance Sheet;
(b) His proportion of Reserve at the date of last Balance Sheet;
(c) His proportion of profits to the date of death based on the average profits of the last three
completed years, plus 10%, and
(d) By way of goodwill, his proportion of the total profits for the three preceding years.
(e) The net profit for the last three years ending 31 st March were :
2016 Rs. 16,000
2017 Rs. 16,000
2018 Rs. 15,400
R died on 1st July, 2018. He had withdrawn Rs.5,000 to the date of his death. The investments were
sold at par and R’s executors were paid off.

Prepare Partner’s Capital Accounts, R’s Executor’s Account and Balance Sheet of the surviving
partners P and Q.
Q 54.Arti, Bharti and Seema are partners sharing profits in the proportion of 3 : 2 : 1 and their Balance
Sheet on March 31, 2015 stood as follows :
Rs. Rs.
Bills Payable 12,000 Buildings 21,000
Contingency Reserve 12,000 Bank 13,700
Arti 20,000 Bills Receivable 4,300
Bharti 12,000 Stock 1,750
Seema 8,000 40,000 Investment 13,250
78,000 78,000
Bharti died on June 12,2015 and according to the deed of the said partnership her executors are entitled
to be paid as under :
(i) The capital to her credit at the time of her death and interest thereon @ 10% per annum.
(ii) Her proportionate share of reserve fund.
(iii) Her share of profits for the intervening period will be based on the sales during that period, which
were calculated as Rs. 1,00,000. The rate of profit during past three years had been 10% on sales.
(iv) Goodwill according to her share of profit to be calculated by taking twice the amount of the average
profit of the last three years less 20%. The profits of the previous years were:
2013 Rs.8,200
2014 Rs.9,000
2015 Rs.9,800
The investments were sold at par and her executors were paid out. Pass the necessary journal entries
and write the account of the executors of Bharti.
Q 55.Following is the Balance Sheet of Punita, Rashi and Seema who are sharing profits in the ratio 2
: I : 2 as on 31st March, 2013.
Creditors 38,000 Building 2,40,000
Bills Payable 2,000 Stock 65,000
Punita 1,44,000 Cash at Bank 5,000
Rashi 92,000 Profit and Loss Account 60,000
Seema 1,24,000 3,60,000
4,00,000 4,00,000
Punita died on 30th September 2013. She had withdrawn Rs.44,000 from her capital on July 1,2013.
According to the partnership agreement, she was entitled to interest on capital @8% p.a. Her share of
profit till the date of death was to be calculated on the basis of the average profits of the last three years.
Goodwill was to be calculated on the basis of three times the average profits of the last four years. The
profits for the years ended 2009-10, 2010-11 and 2011-12 were Rs.30,000, Rs.70,000 and Rs.80,000
respectively.
Prepare Punita’s account to be rendered to her executors.
Q 56. (HOTS).Khanna, Seth and Mehta were partners in a firm sharing profits in the ratio of 3:2:5. On
31-12-2018 the Balance Sheet of Khanna, Seth and Mehta was as follows:
Capitals : Goodwill 3,00,000
Khanna Rs.3,00,000 Land and Building 5,00,000

Seth Rs.2,00,000 Machinery 1,70,000
Mehta Rs.5,00,000 10,00,000 Stock 30,000
General Reserve 1,00,000 Debtors 1,20,000
Loan from Seth 50,000 Cash 45,000
Creditors 75,000 Profit and Loss Account 60,000
12,25,000 12,25,000
On 14th March 2019, 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 2,5% 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 and Seth’s Executors A/c. Khanna and Mehta
decided to continue the business keeping their capital balances in their new profit sharing ratio. Any
surplus or deficit to be transferred to current accounts of the partners.
Q 57. (When all the Remaining Partners Gain and Goodwill Appears in the Books). Arjun, Bhim and
Nakul are partners sharing profits and losses in the ratio of 14 : 5 : 6 respectively. Bhim retires and
surrenders 5/25th of his share in favour of Arjun and remaining share in favour of Nakul. 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. 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 distribute profits showing your workings. (CBSE 2012, Modified)
Q 58.Balance Sheet of A, B and C sharing profits and losses in the ratio of 5 : 3 : 2 as at 31st March,
2018 was:
A 46,000 Less: Provision for Doubtful 800 15,200
Debts
B 34,000 Stock 12,800
C 25,000 1,05,000 Plant and Machinery 35,000
1,20,000 1,20,000
B retires from the firm on 1st April, 2018. A and C decided to share future profits and losses in the ratio
of 3 : 1 respectively. Following adjustments are agreed:
(i) An amount of Rs. 1,100 included in Debtors be written off as it is no longer receivable.
(ii) Provision for Doubtful Debts be maintained at the existing rate.
(iii) Stock be written down by Rs. 1,055.
(iv) Land and Building be written up by Rs. 11,000.
(v) Plant and Machinery be reduced to Rs. 34,000.
(vi) An amount of Rs. 700 included in Sundry Creditors be written back as no longer payable.
(vii) A provision of Rs. 600 be made for repairs.
(viii) An old computer previously written off was sold for Rs. 2,000 as scrap.
(ix) Firm had to pay Rs. 5,000 to an employee injured in an accident.

To give effect to the above adjustments, you are required to pass necessary Journal entries. Also, prepare
the Revaluation Account.
Q 59. Balance Sheet of M/s. AVS as at 31st March, 2018 of which Atul, Vikas and Sanjeev are partners
sharing profits and losses in the ratio of 5 : 3 : 2 was:
Atul 92,000 Plant and Machinery 70,000
Vikas 68,000 Stock 25,600
Sanjeev 50,000 2,10,000 Debtors 32,000
Sundry Creditors 25,000 Less: Provision for Doubtful 1,600 30,400
Debts
Expenses Payable 5,000 Cash in Hand 5,500
Cash at Bank 48,500
2,40,000 2,40,000
On that day, Vikas retires from the firm and Atul and Sanjeev decide to share future profits and losses
in the ratio of 3 : 2 respectively. Following adjustments are agreed:
(i) An amount of Rs. 2,200 included in Sundry Debtors be written off, being not recoverable.
(ii) Provision for Doubtful Debts be maintained at existing rate.
(iii) Stock is valued at Rs. 23,500.
(iv) Land and Building are valued at Rs. 82,000 and Plant and Machinery at Rs. 68,000.
(v) Sundry Creditors be reduced by Rs. 1,400, being a liability not payable.
Atul and Sanjeev also decided that assets and liabilities shall continue to be shown at existing values.
Prepare Memorandum Revaluation Account.
Q 60.(a) Give the Journal entry to distribute 'Workmen Compensation Reserve' of Rs. 70,000 at the
time of retirement of Neeti, when there is a claim of Rs. 25,000 against it. The firm has three partners
Raveena, Neeti and Rajat. (Delhi 2013)
(b) Give the Journal entry to distribute 'Workmen Compensation Reserve' of Rs. 60,000 at the
time of retirement of Sajjan, when there is no claim against it. The firm has three partners Rajat, Sajjan
and Kavita. (AI2013)
(c) Give the Journal entry to distribute 'Investment Fluctuation Reserve' of Rs. 4,000 at the time of
retirement of Z, when Investments (market value Rs. 19,000) appears at Rs. 20,000. The firm has three
partners X, Y, and Z. (CBSE 2013)
Q 61.Alia, Karan and Shilpa were partners in a firm sharing profits in the ratio of 5:3:2. Goodwill
appeared in their books at a value of Rs. 60,000 and General Reserve at Rs. 20,000. Karan decided to
retire from the firm. On the date of his retirement, goodwill of the firm was valued at Rs. 2,40,000. The
new profit-sharing ratio decided among Alia and Shilpa was 2 : 3. Record necessary Journal entries on
Karan's retirement. (Delhi 2015 C)
Q 62. On 31st March, 2018, the Balance Sheet of M/s. A, B and C, sharing profits and losses in
proportion to their capitals, stood as follows:
Capital A/cs: Less: Provision for Doubtful 98,000
Debts 2,000
A 4,50,000 Stock 90,000
B 3,00,000 Machinery 2,40,000
C 1,50,000 9,00,000 Land and Building 5,00,000

10,20,000 10,20,000
B retires from the firm on 1st April, 2018 and the remaining partners decide to carry on the partnership.
Following adjustments of assets and liabilities have been agreed upon before the ascertainment of the
amount payable to B:
(i) That out of the Fire Insurance Premium paid during the year, Rs. 10,000 be carried forward as
unexpired.
(ii) Land and Building be appreciated by 10%.
(iii) Provision for Doubtful Debts be brought up to 5% of Debtors.
(iv) Machinery be decreased by 5%.
(v) Provision of Rs. 15,000 be made for repairs.
(vi) Goodwill of the entire firm be fixed at Rs. 1,80,000 and B's share of the same be adjusted in the
accounts of A and C who share the future profits in the proportion of 3/4th and l/4th respectively.
(vii) B be paid Rs. 50,000 in cash and the balance be transferred to his Loan Account.
Prepare Revaluation Account, Capital Accounts of Partners and the Balance Sheet of the firm of A and
C.
Q 63.X, Y and Z were partners in a firm with profit-sharing ratio of 1/2, 1/3 and 1/6
Respectively. The Balance Sheet of the firm as at 31st March, 2018 was as follows:
Trade Creditors 21,000 Cash at Bank 5,750
Workmen Compensation 12,000 Debtors 40,000
Reserve
Employees' Provident Fund 6,000 Less: Provision for Doubtful 38,000
Debts 2,000
Investments Fluctuation 6,000 Stock 37,650
Reserve
Capital A/cs: Investments (Market value Rs. 15,000
17,600)
X 68,000 Patents 10,000
Y 32,000 Machinery 50,000
Z 21,000 1,21,000 Advertisement Expenditure 3,600
Goodwill 6,000
1,66,000 1,66,000
Z retired on 1st April, 2018 on the following terms:
(ii) Value of Patents was to be reduced by 20% and that of Machinery to 90%.
(iii) Provision for Doubtful Debts was to be raised to 6%.
(iv) Liability for Workmen Compensation to the extent of Rs. 6,000 is to be created.
(v) Z took over the Investments at market value.
(vi) Amount due to Z is to be settled on the following basis:
50% on retirement, 50% of the balance within one year and the balance by a bill of exchange (without
interest) at 3 months.
You are required to show entries for the treatment of Goodwill, Revaluation Account, Partners' Capital
Accounts and the Balance Sheet of X and Y after Z's retirement.
Q 64. (Capitals to be Proportionate to Profit-Sharing Ratio). X, Y and Z were partners sharing profits
and losses in the ratio of 4 : 3 : 2 respectively. Y retired on 1st April, 2018. On that date capitals of X,
Y and Z after all necessary adjustments stood at Rs. 19,650; Rs. 19,800 and Rs. 9,150 respectively. The
total capital of the firm as newly constituted is fixed at Rs. 28,000 between X and Z in the proportion
of 5/8th and 3/8th after passing entries in their accounts for adjustments. Calculate amount to be paid
or to be brought by the continuing partners and pass necessary Journal entries.

Q 65. (Capitals in Future Profit-sharing Ratio). X, Y and Z were partners sharing profits and losses in
the ratio of 4 : 3 : 2 respectively. Y retired on 1st April, 2018 on which date the capitals of X, Y and Z
after all the necessary adjustments stood at Rs. 65,800; Rs. 57,225 and Rs. 33,800 respectively. Capital
of the reconstituted firm will be readjusted by bringing in or paying cash so that the future capitals of
X and Z be in their future profit-sharing ratio. Calculate the amount of cash to be paid or to be brought
in by the continuing partners.
Q 66. (Wlten Total Capital of New Firm is to be same as before the Retirement). Following is the
Balance Sheet of Aruna, Karuna and Varuna as at 31st March, 2009, who have agreed to share profits
and losses in proportion of their capitals:
BALANCE SHEET OF ARUNA, KARUNA AND VARUNA as at 31st March, 2009
Aruna 2,00,000 Machinery 3,00,000
Karuna 3,00,000 Closing Stock 1,00,000
Varuna 2,00,000 7,00,000 Sundry Debtors 1,10,000
General Reserve 35,000 Less: Provision for Doubtful 10,000 1,00,000
Debts
Workmen's Compensation 15,000 Cash at Bank 1,00,000
Fund
8,00,000 8,00,000
On 31st March, 2009, Aruna desired to retire from the firm and the remaining partners decided to carry
on the business. It was agreed to revalue the assets and reassess the liabilities on the following basis:
(i) Land and Building to be appreciated by 30%.
(iii) There were Bad Debts of Rs. 17,000.
(iv) The claim on account of Workmen's Compensation was estimated at Rs. 8,000.
(v) Goodwill of the firm was valued at Rs. 1,40,000 and Aruna's share of Goodwill be adjusted against
the Capital Accounts of the continuing partners Karuna and Varuna who have decided to share future
profits in the ratio of 4 : 3 respectively.
(vi) Capital of the new firm in total will be the same as before the retirement of Aruna and will be in
the new profit-sharing ratio of the continuing partners.
(vii) Amount due to Aruna be settled by paying Rs. 50,000 in cash and the balance by transferring to
her Loan Account which will be paid later on.
Prepare Revaluation Account, Capital Accounts of Partners and Balance Sheet of the firm after Aruna's
retirement. (Delhi 2012 C)
Q 67. X, Y and Z were partners sharing profits in the ratio of 5 : 3 : 2 respectively. Y retired on 31st
March, 2018. On that date the capitals of X, Y and Z after all necessary adjustments stood at Rs. 43,200;
Rs. 36,600 and Rs. 11,200 respectively. The cash and bank balances on 31st March, 2018 amounted to
Rs. 4,000. Y was to be paid through cash brought in by X and Z in such a way as to make their capitals
proportionate to their new profit-sharing ratio which was to be X 3/5th and Z 2/5th. Calculate amount
of cash to be paid or to be brought in by the continuing partners assuming that a minimum cash and
bank balance of Rs. 3,000 was to be maintained.
Q 68.A, B and C were equal partners. Their Balance Sheet as at 31st March, 2018 was:
Profit and Loss A/c 6,000 Debtors 45,000

Debts
A 60,000 Land and Building 1,20,000
B 40,000
C 32,000 1,32,000
2,28,000 2,28,000
B retired on 1st April, 2018. A and C decided to continue the business as equal partners on the following
terms:
(ii) The Provision for Doubtful Debts to be maintained @ 10% on Debtors.
(iii) Land and Building to be increased to Rs. 1,32,000.
(iv) Furniture to be reduced by Rs. 8,000.
(v) Rent Outstanding (not provided for as yet) was Rs. 1,500.
The remaining partners decided to bring in sufficient amount to pay B and to maintain a bank balance
of Rs. 24,800. They also decided to readjust their capitals as per their new profit-sharing ratio.
Prepare the necessary Ledger Accounts and the Balance Sheet.
Q 69.L, M and N were partners in a firm sharing profits in the ratio of 2 :1:1. On 1st April, 2013, their
Balance Sheet was as follows:
Capital A/cs: Land 8,00,000
L 6,00,000 Building 6,00,000
M 4,80,000 Furniture 2,40,000
N 4,80,000 15,60,000 Debtors 4,00,000
General Reserve 4,40,000 Less: Provision 20,000 3,80,000
Workmen Compensation 3,60,000 Stock 4,40,000
Fund
26,00,000 26,00,000
On the above date N retired. The following was agreed:
(i) Goodwill of the firm was valued at Rs. 6,00,000.
(ii) Land was to be appreciated by 40% and Building was to be depreciated by Rs. 1,00,000.
(iii) Furniture was to be depreciated by Rs. 30,000.
(iv) The liabilities for Workmen's Compensation Fund were determined at Rs. 1,60,000.
(v) Amount payable to N was transferred to his Loan Account.
(vi) Capital of L and M were to be adjusted in their new profit-sharing ratio and for this purpose Current
Account of the partners will be opened.
(AI2014)
Q 70.X, Y and Z were partners in a firm sharing profits in the ratio of 5 : 3 : 2. On 31st March, 2015,
BALANCE SHEET OF X, Y AND Z as on 31st March, 2015
Investment Fluctuation Fund 10,000 Motor Vans 20,000
Profit and Loss A/c 40,000 Investments 19,000
Capital A/cs: X 50,000 Machinery 12,000
Y 40,000 Stock 15,000
Z 20,000 1,10,000 Debtors 40,000
Less: Provision 3,000 37,000
Cash 16,000

1,81,000 1,81,000
On the above date, Y retired and X and Z agreed to continue the business on the following terms:
(a) Goodwill of the firm was valued at Rs. 51,000.
(b) There was a claim of Rs. 4,000 for Workmen's Compensation.
(c) Provision for bad debts was to be reduced by Rs. 1,000.
(d) Y will be paid Rs. 8,200 in cash and the balance will be transferred in his Loan Account which will
be paid in four equal yearly instalments together with interest @ 10% p.a.
(e) The new profit-sharing ratio between X and Z will be 3 : 2 and their capitals will be in their new
profit-sharing ratio. The capital adjustments will be done by opening Current Accounts.
firm. (Delhi 2016)
Q 71.Leena, Madan and Naresh were partners in a firm sharing profits and losses in the ratio of 2 : 2 :
3. On 31st March, 2015, their Balance Sheet was as follows:
BALANCE SHEET as at 31st Ma rch, 2015
Trade Creditors 1,60,000 Land and Building 10,00,000
Bank Overdraft 44,000 Machinery 5,00,000
Long-term Debts 4,00,000 Furniture 7,00,000
Employees' Provident 76,000 Investments 2,00,000
Fund
Capitals: Leena 12,50,000 Closing Stock 8,00,000
Madan 8,00,000 Sundry Debtors 4,00,000
Naresh 10,50,000 31,00,000 Bank 80,000
Deferred Advertisement Expenditure 1,00,000
37,80,000 37,80,000
On 31st March, 2015, Madan retired from the firm and the remaining partners decided to carry on the
business. It was decided to revalue assets and liabilities as under:
(i) Land and Building be appreciated by Rs. 2,40,000 and Machinery be depreciated by 10%.
(ii) 50% of Investments were taken over by the retiring partner at book value.
(iii) An old customer Mohit whose account was written off as bad debt had promised to pay Rs. 7,000
in settlement of his full debt of Rs. 10,000.
(iv) Provision for Doubtful Debts was to be made at 5% on debtors.
(v) Closing Stock will be valued at market price which is Rs. 1,00,000 less than the book value.
(vi) Goodwill of the firm be valued at Rs. 5,60,000 and Madan's share of goodwill be adjusted in the
accounts of Leena and Naresh. Leena and Naresh decided to share future profits and losses in the ratio
of 3 : 2.
(vii) The total capital of the new firm will be Rs. 32,00,000 which will be in the proportion of the profit-
sharing ratio of Leena and Naresh.
(viii) Amount due to Madan was settled by accepting a Bill of Exchange in his favour payable after 4
months.
Prepare Revaluation Account, Partners' Capital Accounts and Balance Sheet of the firm after Madan's
retirement. (AI2016 C)
Q 72. A, B and C are partners, sharing profits and losses in the ratio of 2:2:1. C retires on 30th June,
2018. The Balance Sheet of the firm as at 31st March, 2018 stood as follows:
A 6,00,000 Investments 1,25,000
B 6,00,000 Stock 2,50,000
C 4,00,000 16,00,000 Sundry Debtors 4,00,000
General Reserve 4,00,000 Cash in Hand 1,00,000

21,00,000 21,00,000
In order to arrive at the balance due to C, it was mutually agreed that:
(i) Land and Building be valued at Rs. 12,00,000.
(ii) Investments to be valued at Rs. 1,00,000.
(iii) Stock be taken at Rs. 3,00,000.
(iv) Goodwill be valued at two years7 purchase of the average profit of the past five years.
(v) C's share of profits up to the date of retirement be calculated on the basis of average profit of the
preceding three years.
The profits of the preceding five years ended 31st March, were as under:
Year 2014 2015 2016 2017 2018
Profits (Rs.) 2,00,000 2,35,000 3,00,000 2,75,000 3,25,000
(vi) Amount payable to C to be transferred to his Loan Account carrying interest @ 10% p.a. You are
required to prepare Revaluation Account, Partners7 Capital Accounts, and the Balance Sheet as at 30th
June, 2018.
Q 73.A, B and C are partners sharing profit and losses in the ratio of 3 : 2 : 1 respectively. B died on
30th June, 2018. The profit from 1st April, 2018 to 30th June, 2018 was estimated at Rs. 90,000. A and
C decided to share future profits in the ratio of 3 : 2 with effect from 1st July, 2018. Give the necessary
Journal entry to record the B's share of profit till the date of death.
Q 74.P, R and S are partners, sharing profits in the ratio of 4 : 3 :1. It is provided in the Partnership
Deed that, on the death of any partner, Deceased Partners' share of goodwill will be valued at half of
the profits credited to his account during the previous four completed years. R died on 1st April, 2018.
The firm's profits/losses for the last four years ended 31st March, 2015 are: Rs. 1,20,000; 2016: Rs.
60,000; 2017: Rs. 20,000 (loss): 2018: Rs. 80,000.
(i) Determine the amount that should be credited to R in respect of his share of goodwill.
(ii) Pass Journal entry for adjustment of goodwill assuming that profit-sharing ratio between P and S in
future will be 3 : 2, when:
(a) Goodwill Account is not opened; and
(b) Goodwill Account is opened.
Q 75.Sita, Reeta and Geeta are partners in a firm sharing profits and losses in the ratio of 4 : 3 : 1. As
per the terms of Partnership Deed on the death of any partner, Goodwill was to be valued at 50% of the
net profits credited to that Partner's Capital Account during the last three completed years before her
death. Sita died on 28th February, 2012. The profits for the last five years were: 2007 —Rs. 60,000;
2008 —Rs. 97,000; 2009 —Rs. 1,05,000; 2010 —Rs. 30,000 and 2011-Rs. 84,000.
On the date of Sita's death, Building was found undervalued by Rs. 80,000, which was to be considered.
Calculate amount of Sita's share of Goodwill in the firm and record the adjustment Journal entries of
Goodwill and revaluation of Building. The new profit-sharing ratio between Reeta and Geeta will be
equal. (Delhi 2012 C)
Q 76. (Deceased Partner's Share of Goodwill and Profit). Ram, Ghanshyam and Vrinda were partners
in a firm sharing profits in the ratio of 4 : 3 : 1. The firm closes its books on 31st March every year. On
1st February, 2017 Ghanshyam died and it was decided that the new profit-sharing ratio between Ram
and Vrinda will be equal. The Partnership Deed provided for the following on the death of a partner:
(a) His share of goodwill be calculated on the basis of half of the profits credited to his account during
the previous four completed years.
The firm's profits for the last four years were:
2012-13—Rs. 1,20,000, 2013-14—Rs. 80,000, 2014-15-Rs. 40,000, and 2015-16-Rs. 80,000.
(b) His share of profit in the year of his death was to be computed on the basis of average profits of past
two years.

Pass necessary Journal entries relating to goodwill and profit to be transferred to Ghanshyam's Capital
Account. Also show your workings clearly. (Delhi 2016 C)
Q 77.A, B and C were partners sharing profits and losses in the ratio of 5 : 3 : 2. On 31st March, 2018
Capital A/cs: Goodwill 5,000
A 67,500 Patents 26,000
B 47,500 Machinery 31,200
C 37,000 1,52,000 Investments 3,000
Investment Fluctuation 3,500 Stock 10,000
Reserve
Workmen Compensation 3,500 Sundry Debtors 12,000
Reserve
Sundry Creditors 51,000 Loan to C 41,000
Cash at Bank 5,800
Profit and Loss A/c (2017-18) 75,000
2,10,000 2,10,000
Q 78.A, B and C were partners in a firm sharing profits and losses in the ratio of
5:3:2 respectively. A died on 28th February, 2018. The Balance Sheet at that date was:
Capital A/cs: Machinery 35,000
B 16,000 Stock 15,000
C 12,000 40,000 Debtors 15,000
Creditors 22,000
74,000 74,000
The Partnership Deed provided that on the death of a partner the assets and liabilities are to be revalued.
Assets and liabilities were revalued as follows on A's death:
(i) Machinery Rs. 45,000 and Furniture Rs. 7,000.
(ii) A Provision of 10% was created for Doubtful Debts.
(iii) A Provision of Rs. 15,000 was made for Tax.
(iv) The goodwill of the firm was valued at Rs. 15,000 on A's death.
The amount payable to A was transferred to his Executors' Account. You are required to prepare
Revaluation Account, Capital Accounts of Partners and the Balance Sheet of B and C.
Q 79. (Value Based). The Balance Sheet of Joy, Julie and Saraha who were sharing
profits in the ratio of 4 : 3 : 3 as on 31st March, 2013 was as follows:

Bills Payable 30,000 Stock 1,32,000
Loan 36,000 Investments 1,41,000
Joy 1,80,000 Joy's Loan 30,000
Julie 1,50,000
Saraha 1,20,000 4,50,000
5,31,000 5,31,000
Joy died on 31st May, 2013. The Partnership Deed provided for the following on the death of a partner:

(i) Goodwill of the firm was to be valued at two years' purchase of average profits for the last three
years which were Rs. 1,20,000.
(ii) Joy's share of profit till the date of his death was to be calculated on the basis last year's profit. Sales
for the year ended 31st March, 2013 amounted to Rs. 12,00,000 and from 1st April to 31st May, 2013
Rs. 4,50,000. Profit for the year ended 31st March, 2013 was Rs. 3,00,000.
(iii) Interest on capital was to be provided @ 6% p.a.
(iv) According to Joy's will, the executor should donate his share to 'Roshan' a Not-for-Profit
organisation for blinds.
Prepare Joy's Capital Account to be rendered to executor. Also identify the value being highlighted in
the question. (Foreign 2013)
Q 80.X, Y and Z are in partnership sharing profits equally. Z died on 30th June, 2018. The Balance
Sheet of the firm as at 31st March, 2018 stood as follows:
Contingency Reserve 9,000 Bank 10,000
Investments Fluctuation 3,000 Debtors 25,000
Reserve
Debts
X 75,000 Stock 25,000
Y 50,000 Investments (At cost) 12,500
Z 50,000 1,75,000 Land and Building 1,00,000
Goodwill 47,250
2,20,250 2,20,250
In order to arrive at the balance due to Z, it was mutually agreed that:
(i) Land and Building be valued at Rs. 1,25,000.
(ii) Investments Fluctuation Reserve be brought to Rs. 1,350.
(iii) All Debtors were good, no provision is required.
(iv) Stock is valued at Rs. 23,500.
(v) Goodwill be valued at one year's purchase of the average profits of the past five years.
(vi) Z's share of profits to the date of death be calculated on the basis of average profit of the preceding
three years.
The profits of the preceding five years ended 31st March were: 2014: Rs. 28,750; 2015: Rs. 35,000;
2016: Rs. 22,500; 2017: Rs. 20,000 and 2018: Rs. 25,000.
You are required to show Revaluation Account, Partners' Capital Accounts and the Balance Sheet of
the new firm as at 1st July, 2018.
Q 81. Manav, Nath and Narayan were partners in a firm sharing profits in the ratio of 1 : 2 : 1. The firm
closes its books on 31st March every year. On 30th September, 2015 Nath died. On that date his Capital
Account showed a debit balance of Rs. 5,000. There was a debit balance of Rs. 30,000 in the Profit and
Loss Account. The goodwill of the firm was valued at Rs. 3,80,000. Nath's share of profit in the year of
his death was to be calculated on the basis of average profit of last 5 years, which was Rs. 90,000.
Pass necessary Journal entries in the books of the firm on Nath's death. (AI2016)
Q 82. Sharma, Verma and Goyal are partners in a firm. On 1st April, 2012 the balances in their Capital
Accounts were as follows:
Sharma Rs. 4,00,000; Verma Rs. 4,20,000 and Goyal Rs. 3,70,000. Firm closes its accounts every year
on 31st March. Verma died on 30th September, 2012. In the event of death of any partner following are
the provisions in the Partnership Deed:
(i) Interest on Capital will be calculated at the rate of 10% p.a.
(ii) The deceased partner's legal representative will be paid Rs. 35,000 for his share of goodwill.

(iii) Firm had a Reserve Fund of Rs. 2,10,000. The deceased partner will be paid his share in the Reserve
Fund.
(iv) His share of profit till the date of death will be calculated on the basis of sales. It is also specified
that the sales during the year 2011-12 were Rs. 15,00,000. The sales from 1st April, 2012 to 30th
September, 2012 were Rs. 3,00,000. The profit of the firm for the year ending 31st March, 2012 was
Rs. 3,00,000.
Prepare Verma's Capital Account to be presented to his representative. (Al 2013 C)
Q 83. (Value Based). The Balance Sheet of Sadhu, Raja and Karan who were sharing profits in the ratio
of 4 : 2 : 4 as on 31st March, 2012 was as follows:
Bill Payable 20,000 Stock 64,000
Loan 22,000 Investments 85,000
Sadhu 80,000 Sadhu's loan 20,000
Raja 60,000
Karan 1,00,000 2,40,000
2,92,000 2,92,000
Sadhu died on 31st July, 2012. The Partnership Deed provided for the following on the death of a
partner:
(i) Goodwill of the firm be valued at two years' purchase of average profits for the last three years.
(ii) Sadhu's share of profit or loss 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 Rs. 4,50,000 and that from 1st April to 31st July
2012 to Rs. 2,70,000. The profit for the year ended 31st March, 2012 was calculated as Rs. 1,25,000.
(iii) Interest on capital was to be provided @ 5% p.a.
(iv) The average profits of the last three years were Rs. 55,000.
(v) According to Sadhu's will, the executors should donate his share to "Matri Chaya—An Orphanage
for Girls".
Prepare Sadhu's Capital Account to be rendered to his executor. Also identify the value being
highlighted in the question. (Delhi 2013)
Q 84.(Value Based). Ram, Rahim and Robert partners sharing profits in 2 : 3 :1 ratio respectively. The
Partnership Deed provided that in case of death of a partner the deceased partner's share of capital will
be donated for the construction of a hospital in the tribal area.
Due to ill health Robert died on 30th September, 2013. The Balance Sheet of Ram, Rahim and Robert
Capital A/cs: Cash 14,000
Ram 1,00,000 Bank 2,96,000
Rahim 2,00,000 Stock 80,000
Robert 3,00,000 6,00,000 Debtors 3,00,000
Creditors 3,60,000 Investments 50,000
Workmen Compensation 20,000 Land 2,50,000
Fund
Provision for Doubtful Debts 10,000
9,90,000 9,90,000
On the date of Robert's death, i.e., 30th September, 2013, the following was agreed upon:
(i) Goodwill is to be valued at two years' purchase of average profits of last three completed years, i.e.,
2010-2011—Rs. 45,000; 2011-2012—Rs. 90,000 and 2012-2013—Rs. 1,35,000.

(ii) Robert's share of profits till the date of his death will be calculated on the basis of average profits of
last three years.
(hi) Land was undervalued by Rs. 25,000 and Stock overvalued by Rs. 8,000.
(iv) Provision for doubtful debts is to be made at 5% of Debtors.
(v) Claim of workmen compensation estimated at Rs. 5,000.
Prepare Robert's Capital Account to be presented to his executors. Also identify a value that Ram,
Rahim and Robert wanted to communicate to the society. (AI2014 C)
Q 85.On 1st April, 2014 the Balance Sheet of Anant, Sampat and Gunvant was as follows:
Sundry Creditors 9,000 Bank 15,600
Capital A/cs: Anant 30,000 Stock 18,000
Sampat 15,000 Tools 3,000
Gunvant 15,000 60,000 Furniture 24,000
78,600 78,600
Gunvant died on 30th September, 2014. Under the terms of Partnership Deed, the executors of the
deceased partner were entitled to:
(i) Amount standing to the credit of Partner's Capital Account.
(ii) Interest on Capital @ 12% per annum.
(iii) Share of Goodwill on the basis of twice the average of past three years profits.
(iv) Share of Profit from closing of last financial year to the date of death on the basis of last year's
profit. The profits of the last three years were as follows:
Year 2011-12 2012-13 2013-14
Profit (Rs.) 18,000 21,000 24,000
The firm closes its books on 31st March every year. Partners share profits in the ratio of their capitals.
Prepare Gunvant's Capital Account to be presented to his executors. (AI2015)
Q 86. On 31st March, 2014, the Balance Sheet of Pooja, Qureshi and Ross, who were partners in a firm
was as under:
Sundry Creditors 2,50,000 Building 2,60,000
Reserve Fund 2,00,000 Investment 1,10,000
Capital A/cs: Pooja 1,50,000 Qureshi's Loan 1,00,000
Qureshi 1,00,000 Debtors 1,50,000
Ross 1,00,000 3,50,000 Stock 1,20,000
Cash 60,000
8,00,000 8,00,000
Qureshi died on 1st July, 2014. The profit-sharing ratio of the partners was 2:1:1. On the death of a
partner, the partnership deed provided for the following:
His share in th
e profits of the firm till the date of his death will be calculated on the basis of average profits of last
three completed years.
(ii) Goodwill of the firm will be calculated on the basis of total profit of last two years.
(iii) Interest on loan given by the firm to a partner will be charged at the rate of 6% p.a. or Rs. 4,000,
whichever is more.
(iv) Profits for the last three years were Rs. 45,000; Rs. 48,000 and Rs. 33,000.
Prepare Qureshi's Capital Account to be rendered to his executors. (Delhi 2015 C)
Q 87.A, B and C are partners in a firm. Their Balance Sheet as at 31st March, 2018 is given below:

Creditors 10,000 Plant and Machinery 20,000
General Reserve 10,000 Furniture and Fixtures 2,500
A's Capital 20,000 Stock 10,500
B's Capital 15,000 Debtors 15,000
C's Capital 5,000 40,000 Investments 12,000
60,000 60,000
B died on 30th September, 2018. The Partnership Deed provides that the representatives of the deceased
partner shall be entitled to:
(i) Deceased Partner's Capital as appearing in last Balance Sheet.
(ii) Interest on Capital @ 6% p.a. up to the date of death.
(iii) His share of profit up to the date of death on the average of last three years' profit.
(iv) His share of any undistributed profits and losses as per last Balance Sheet.
(v) Interest on his Drawings up to the date of death will be charged @ 10% p.a.
Profits for the last three years were Rs. 65,000; Rs. 64,000 and Rs. 69,000. B's drawings up to the date
of death amounting to Rs. 10,000. Ascertain the amount payable to the legal representative of B
(Goodwill excluded).
Q 88.A, B and C were partners sharing profits and losses in the ratio of 4 : 3 : 2. C retired on 1st July,
2013 on which date the capitals of A, B and C after all necessary adjustments stood at Rs. 75,000; Rs.
65,000 and Rs. 45,000 respectively. A and B continued to carry on the business for 6 months without
settling the account of C. During the period of 6 months ended 31st December, 2013, a profit of Rs.
50,000 is earned by the firm.
State which of the two options available with C under Section 37 of the Indian Partnership Act, 1932
should be exercised?
Q. 89. (A). A, B and C are partners sharing profits in the ratio of 6 : 5 : 4. Calculate new profit sharing
ratios if (i) A retires; (ii) B retires; (iii) C retires.
Q. 89. (B). A, B, C and D are partners sharing profits in the ratio of 5 : 3 : 1 : 2. Calculate the new profit
sharing ratio if B and C retire from the firm.
ns. 5 : 2]
Q.91. X, Y and Z are partners sharing profits in the ratio of 2/3 : 1/4: 1/12. Calculate the new ratio if X
retires.
Q. 92. L, M and O were partners in a firm sharing profits in the ratio of 3 : 2 : 2. M retired and his share
was divided equally between L and O. Calculate the new profit sharing ratio of L and O.
Q. 93. A, B and C are partners sharing profits in the ratio of 4 : 3 : 2. B retires and his share was taken
up by A and C in the ratio of 3 : 2. Find out the new ratio.
Q. 94. (A). A, B and C are partners sharing profits in the ratio of 4 : 3 : 1. A retires and his share is taken
over by B and C equally. Calculate the new ratio.
Q. 94.(B). A, band C are partners sharing profits in the ratio of 1/2 : 1/3 : 1/6. B retires and his share is
taken by A and C in the ratio of 5 : 3. Calculate the new ratio.
Q. 95. X, Y and Z are partners sharing in the ratio of 2 : 2 : 1. Y retires and his share is entirely taken
by Z. Calculate the new ratio.
Q.96. P, Q and R are in partnership sharing profits and losses as 1/2, 2/6 and 1/6 respectively. R retires
and his share is taken by P and Q in the ratio of 2 : 1. Immediately, S is admitted for 1/4th share of
profit, l/3rd of which was given by P and the remaining share was taken equally from P and Q. Calculate
new profit-sharing ratio after S's admission.

Q. 97. (A). A, B and C were partners sharing profits in the ratio of 7 : 5 : 3. Find out the gaining ratio
and new ratios when (i) A retires, (ii) B retires or (iii) C retires.
Q. 97. (B). X, Y and Z share profits in the ratio of 1/2, 3/10, 1/5. Calculate the gaining ratio and new
ratios when :
(i) X dies, (ii) Y dies or (iii) Z dies.
Q. 98. (C). P, Q, R and S were partners sharing profits in the ratio of 5 : 4 : 3 : 1. P and S retire from
the firm. Calculate the gaining ratio and new profit sharing ratio of Q and R.
Q. 99. (A). On 1st April, 2018 Ashish, Namish and Aman were partners sharing profits and losses in
the ratio of 2/5, 2/5 and 1/5 respectively. On this date Namish retires. The new profit sharing ratio of
Ashish and Aman will be 3/4 and 1/4 respectively. Calculate gaining ratio.
Q. 99. (B). On 1 st April, 2018 A, B and C were partners sharing profits and losses in the ratio of A
5/10, B 3/10 and C 2/10 respectively. On this date B retires. The new profit sharing ratio of A and C
will be A 3/5 and C 2/5. Calculate gaining ratio.
Q. 100. (A). A, B and C are partners sharing profits in the ratio of 1/2 : 1/3 : 1/6. C retires and A and B
decide to share future profits equally. Calculate the gaining ratio.
Q 100. (B). A, B, C and D are partners sharing profits in the ratio of 5:4:3: 2. A retires and B, C and D
decide to share the profits and losses equally in future. Calculate the gaining ratio.
[Ans. Gaining Ratio 2:5:8]
Q. 101. Rekha, Ruchi and Suruchi are partners. Ruchi retires. Calculate new ratio if continuing partners
acquired her share in the ratio of 2 : 3. Also mention the gaining ratio.
Q. 102.X, Y and Z are partners sharing profits in the ratio of 1/9 : 1/3 and 5/9. Z retires and surrenders
3/4th of this share in favour of A and remaining in favour of Y. Calculate new ratio and gaining ratio.
Q. 103. P, Q, R and S were partners sharing profits in the ratio of 2 : 3 : 5 : 2. S retires and his share is
acquired by Q and R in the ratio of 3 : 2. Calculate new ratio and gaining ratio.
Q. 104. A and B were partners sharing profits in the ratio of 5 : 3. On 1st April, 2014 they admitted C
as a new partner for l/4th share which he acquired fromZ and B in the ratio of 3 : 2. On 1st April 2015,
another new partner D was admitted for 1/6th share which he acquires 1/10 from A and 1/15 from C.
On 1st April, 2016 A dies and his share was taken over by B, C and D equally.
Calculate:
(i) New profit sharing ratio of A, B and C on C’s admission.
(ii) New profit sharing ratio of A, B, C and D on D’s admission.
(iii) New profit sharing ratio of B, C and D on A’s death.
Q. 105. X. Y and Z are partners sharing profits in the ratio of 5 : 4 : 3. X retires from the firm and it is
decided that new profit-sharing ratio between Y and Z will be same as existing between X and Y.
Calculate new ratio and gaining ratio.
Q. 106. (A). L, M and N are three partners sharing profits in the ratio of 4 : 3 : 2 respectively. M retires
and the goodwill is valued at Rs. 1,08,000. No goodwill account appears as yet in the books of the firm.
L and A will share profits in future in the ratio of 5 : 3 respectively. Pass Journal Entry for goodwill.
Q. 106 .(B). Ashok, Rakesh and Mukesh were partners sharing profits and losses in the ratio of 2 : 2 :
1. On 1st April, 2018, their goodwill was valued at Rs.3,00,000: there being no account for it in the
books. On this date Rakesh retired. Pass the Journal Entry to record goodwill.

Q. 107. A, B, C and D are partners sharing profits in the ratio of 2 :4 : 3 : 1. Cretires and for this purpose
goodwill is valued at two year’s purchase of average super profits of last four years, which are as under
:
I Year Rs. 40,000
II Year Rs. 10,000 (Loss)
III Year Rs. 1,00,000
IV Year Rs. 1,50,000
The normal profits for similar firms is Rs.56,000.
Record necessary entry for goodwill on retirement of C.
Q. 108. A, B and C are sharing profits in the ratio of 4 : 3 : 2. Goodwill is appearing in the books at a
value of Rs.42,000. C retires and on the day of C’s retirement Goodwill is valued at Rs.63,000. Pass
the necessary journal entries.
Q. 109. (A). P, Q and R are equal partners. Goodwill is appearing in their books at Rs.4,00,000. R retires
and on the day of R’s retirement Goodwill is valued at Rs.2,50,000. Pass the necessary journal entries.
Q. 109.(B). A, B and C are partners sharing profits and losses in the ratio of 2:2:1. C decided to retire
and on this date goodwill of the firm is valued at Rs.2,00,000. Pass entries when goodwill account is
already appearing in the books at Rs. 1,50,000.
Q. 110. (A). P, R and S are in partnership sharing profits 4/8, 3/8 and 1/8 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 March).
R died on 1st April, 2018. The firm’s profits for the last 4 years were as follows: 2015 (Profits Rs.
1,20,000); 2016 (Profits Rs.60,000); 2017 (Losses Rs.20,000) and 2018 (Profits Rs. 80,000).
1. Determine the amount that should be credited to R in respect of his share of goodwill.
2. Pass journal entry for the adjustment of goodwill, assuming that profit sharing ratio between P
and S in future will be 3 : 2. Show your working clearly.
Q. 110 .(B ).A, B, C and D are partners in a firm sharing profits and losses in the ratio of 2 : 2 : 1 : 1. A
and C decided to retire from the firm. The goodwill of the firm was valued at Rs.90,000. B and D
decided to share future profits in the ratio of 5 : 3.
Pass necessary journal entry for the treatment of goodwill.
Q. 111. A, B and C were partners sharing profits in the ratio of 2 : 3 : 4. On 15th March 2018 B died
and the new profit sharing ratio of A and C was 5 : 4. On B’s death the goodwill of the firm was valued
at Rs.75,000. Pass the necessary journal entry for the treatment of goodwill.
Q. 112. Surender, Ramesh, Naresh and Mohan are partners in a firm sharing profits in 2 : 1 : 2 : 1 ratio.
On the retirement of Naresh, the Goodwill was valued at Rs. 72,000. Surender, Ramesh and Mohan
decided to share future profits equally. Pass the necessary journal entry for the treatment of goodwill.
Q. 113. 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.60,000 and Rs.55,000 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.
Q. 114 .(A). A, B and C were partners sharing profits in the ratio of 6 : 4 : 5. Their capitals were A —
Rs. 1,00,000, B — Rs. 80,000 and C — Rs.60,000 .On 1st April 2018, B retired from the firm and the

new profit sharing ratio between A and C was decided as 11 :4. On B's retirement the goodwill of the
firm was valued at Rs. 1,80,000. Showing your calculations clearly pass necessary journal entry for the
treatment of goodwill on B's retirement.
Q. 114(B). X, Y and Z were partners in a firm sharing profits in the ratio of 3 : 2 : 1. Z retired and the
new profit sharing ratio between X and Y was 1 : 2. On Z’s retirement the goodwill of the firm was
valued at Rs.30,000. Pass necessary journal entry for the treatment of goodwill on Z’s retirement.
Q. 115. A, B, C and D are partners sharing profits in the ratio of 5 : 3 : 3 : 1. On the retirement of C,
goodwill was valued at Rs.3,60,000. C’s share of goodwill will be 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.
Q. 116. A, B, C and D are partners sharing profits in the ratio of 4 : 3 : 2 : 1. On the retirement of B,
Goodwill was valued at Rs.3,00,000. A, C and D decide to continue the firm sharing profits equally.
Pass the necessary journal entry.
Q. 117. X, Y and Z are partners sharing profits and losses in the ratio of 3 : 2 : 1. Y retires selling his
share to X and Z for Rs. 1,60,000, Rs. 1,00,000 being paid by X and Rs.60,000 by Z. The profit for the
year after P’s retirement is Rs.2,40,000.
Pass entries to (a) record the sale of Y s share to X and Z, and (b) distribute the profit between X and
Z.
Q. 118. X, V and Z are partners sharing profits in the ratio of 4 : 5 : 6. X retires. Y and Z decided to
share future profits equally. On that date, there was a balance of Rs.75,000 in general reserve and a
balance of Rs.30,000 in the profit and loss account of the firm. Record the necessary'journal entry.
Q. 119. A, B, C and D are partners sharing profits in the ratio of 1 : 2 : 3 : 4. D retires and his share is
taken up by A and B equally. Goodwill was valued at 3 year’s purchase of average profits which were
Rs.20,000. General Reserve showed a balance of Rs.65,000 at the time of D’s retirement.
You are required to record necessary journal entries to record the above adjustments on D’s retirement.
You are also required to prepare his capital account to find out the amount due to him when his capital
balance in the balance sheet was Rs. 1,50,000 before any adjustment. Also calculate the new profit
sharing ratios.
Q. 120. A, B, C and D are partners sharing profits in the ratio of 4 : 3 : 2 : 2. C retires and the remaining
partners decided to share future profits in 5 : 3 :2. On the date of C’s retirement there was a debit balance
of Rs.30,800 in the profit and loss account. Show the necessary journal entry for the treatment of profit
and loss account balance.
Q. 121. .4, B and C are partners sharing profits and losses in the ratio of 2 : 2 : 1. A retires and the new
ratio between B and Cis agreed at 3 : 2. Give journal entries on A’s retirement in the following cases :
(a) Workmen Compensation Reserve appears in the books at Rs. 1,20,000 and there is a claim of
Rs. 1,50,000 against it.
(b) Investment Fluctuation Reserve appears in the books at Rs.40,000, when Investments (market
value Rs. 1,00,000) appear at Rs.85,000.
Q. 122. A, B and C are partners sharing profits in the ratio of 3 : 2 : 1. C retires and new profit sharing
ratio is agreed at 3 : 1. They also decided to record the effect of the following without affecting their
book values :
Rs.
Advertisement Suspense Account 25,000
You are required to pass the necessary single adjusting entry.

Q. 123. A, B and C are partners sharing profits in the ratio of 5 : 3 : 2. C retires and A and B agree to
share future profits in the ratio of 6 : 4. Goodwill is to be taken at two year’s purchase of the average
profits of the last 5 years, which were Rs.10,000; Rs.25,000; Rs. 15,000 (loss); Rs.36,000and Rs.44,000
respectively.
At the date of C’s retirement, following balances appeared in the books of the firm:
Rs.
Profit & Loss Account (Dr.) 30,000
C’s Capital 2,00,000
You are required to record necessary journal entries in the books of the firm and prepare C’s Capital
Account on his retirement.
Q. 124. (A). X, Y and Z are partners in a firm sharing profits and losses equally. The balance sheet of
the firm as at 31st March, 2018 stood as follows :
Creditors 1,09,000 Cash in hand and Cash at Bank 86,000
Provident Fund 20,000 Stock 1,00,000
Capitals: Investments (at cost) 50,000
X 3,00,000 Freehold Property 4,00,000
Y 2,00,000 Trade Marks 20,000
Z 2,00,000 7,00,000 Goodwill 33,000
8,89,000 8,89,000
Z retires on 1st April, 2018 subject to the following adjustments :
(i) Freehold Property be valued at Rs.5,80,000.
(II) Investments be valued at Rs.47,000; and stocks be valued at Rs.94,000;
(iii) A provision of 5% be made for doubtful debts.
(iv) Trade Marks are valueless.
(v) An item of Rs. 12,000 included in creditors is not likely to be claimed.
(vi) Goodwill be valued at one year’s purchase of the average profit of the past three years. Profits
ending 31st March were: 2016 Rs. 1,20,000; 2017 Rs. 1,00,000 and 2018 Rs.95,000.
Pass journal entries, give capital accounts and the balance sheet of the remaining partners.
Q. 124. (B). The Balance Sheet of A, B and C who were sharing profits in proportion to their Capitals
stood as follows as at 1st April, 2018 :
Sundry Creditors 20,000 Bank Balance 16,000
Outstanding Expenses 2,000 Sundry Debtors 15,000
Profit & Loss A/c 15,000 Less: Provision 1,000 14,000
B 30,000 Fixed Assets 50,000
C 15,000
1,27,000 1,27,000
C retires on the above date on the following conditions :
I. Fixed Assets be reduced by 10%.
II. Investments are revalued at Rs. 10,000.
III. Debtors were all good.
iv, Outstanding expenses be increased by Rs.600.
V. Interest accrued on Investments Rs. 1,800.
VI. Goodwill of the firm be valued at Rs.9,000.
Prepare capital accounts and the revised balance sheet.

Q. 125. Manoj, Naveen and Deepak were partners sharing profits and losses in the ratio of 4 : 3 : 2. As
at 1 st April 2018, their Balance Sheet was as follows:
Manoj 50,000 Less: Provision 1,400 17,600
Naveen 39,000 Stock 13,500
Deepak 30,000 1,19,000 Plant and Machinery 18,000
Motor Car 20,000
Buildings 48,000
Goodwill 3,000
1,26,000 1,26,000
Deepak retired on the above date as per the following terms :
1. Goodwill of the firm was valued at Rs.21,000.
2. Stock to be appreciated by 10%.
3. Provision for doubtful debts should be 5% on debtors.
4. Machinery is to be valued at 5% more than its book value.
5. Motor Car is revalued at Rs. 15,500. Retiring partner took over Motor Car at this value.
6. Deepak be paid Rs.2,000 in cash and balance be transferred to his loan account. Show necessary
journal entries. Prepare Revaluation Account, Capital Accounts and Opening Balance Sheet of
continuing partners.
Q. 126. The following was the Balance Sheet of Ram and Shy am as at 31 st March, 2018:
Ram’s Capital 30,000 Plant & Machinery 50,000
Shyam’s Capital 27,500 Patents 2,000
Reserve 6,000 Stock in Trade 23,000
Employee’s Provident Fund 500 Debtors 4,000
Net Profits 6,000
80,000 80,000
Ram retired from the business on 1st April, 2018. Goodwill is to be valued at Rs. 10,000. The Patents
were valueless, Plant and Machinery is to be depreciated by 10%. A provision of 5% for Doubtful Debts
is to be created on Book Debts. Assuming that these adjustments are duly carried out, show the Capital
Accounts and Balance Sheet of Shyam after Ram has been paid off. Shyam borrows money from his
bank on security of Plant and Machinery to pay off Ram.
Q. 127. Sameer, Yasmin and Saloni were partners in a firm sharing profits and losses in the ratio of 4 :
3 : 3. On 31.3.2016, their Balance Sheet was as follows :
BALANCE SHEET OF SAMEER, YASMIN AND SALONI as at 31.3.2016
Rs. Rs.
Capitals : Less: Provision 10,000 80,000
Sameer 3,00,000 Stock 1,00,000
Yasmin 2,50,000 Machinery 3,00,000
Saloni 1,50,000 7,00,000 Building 2,00,000
Patents 60,000
8,70,000 8,70,000
On the above date, Sameer retired and it was agreed that:
(i) Debtors of Rs.4,000 will be written off as bad debts and a provision of 5% on debtors for bad and

(ii) An unrecorded creditor of Rs.20,000 will be recorded.
(iii) Patents will be completely written off and 5% depreciation will be charged on stock, machinery
and building.
(iv) Yasmin and Saloni will share future profits in the ratio of 3 : 2.
(v) Goodwill of the firm on Sameer’s retirement was valued at Rs.5,40,000.
Pass necessary journal entries for the above transactions in the books of the firm on Sameer’s retirement.
(C.B.S.E. 2017. Outside Delhi)
Q. 128. Following is the Balance Sheet of X, Y and Z as at 31st March, 2018. They shared profits in
the ratio of 3 : 3 : 2.
Partners Loan A/cs : Debtors 80,000
X 50,000 Less : Provision for
Y 40,000 Bad debts 4,000 76,000
X 1,00,000 Fixed Assets 3,00,000
Y 60,000 Advertisement Suspense A/c 16,000
Z 50,000 2,10,000 Profit and Loss A/c 4,000
6,30,000 6,30,000
On 1st April, 2018 Y decided to retire from the firm on the following terms :
(a) Stock to be depreciated by Rs. 12,000.
(b) Advertisement Suspense Account to be written off.
(c) Provision for Bad and Doubtful Debts to be increased to Rs.6,000.
(d) Fixed Assets be appreciated by 10%.
(e) Goodwill of the firm be valued at Rs.80,000 and the amount due to the retiring partner be
adjusted in A”s and Z’s Capital Accounts.
Prepare the Revaluation Account, Partner’s Capital Accounts and the Balance Sheet to give effect to
the above.
Q. 129 .(A). X, Y and Z were partners in a firm sharing profits in 5 : 3 : 2 ratio. On 31st March, 2016 Z
retired from the firm. On the date of Z’s retirement the Balance Sheet of the firm was as follows :
BALANCE SHEET OF X, Y AND Z as at 31st March, 2016
Outstanding Rent 22,500 Less: Provision for
Provision for Legal Claims 57,500 Doubtful Debts 500 19,500
X 1,27,000 Furniture 87,500
Y 90,000 Land and Building 2,00,000
Z 71,000 2,88,000
4,08,000 4,08,000
On Z’s retirement it was agreed that:
(i) Land and Building will be appreciated by 5% and furniture will be depreciated by 20%.
(ii) Provision for doubtful debts will be made at 5% on debtors and provision for legal claims will
be made Rs.60,000.
(iii) Goodwill of the firm was valued at Rs.60,000.
(iv) Rs.70,000 from Z’s Capital Account will be transferred to his loan account and the balance will be
paid to him by cheque.
Prepare Revaluation Account, Partner’s Capital Accounts and Balance Sheet of A and Y after T s
retirement.

Q. 129 .(B). A, B and C are partners sharing profits in the ratio of their Capitals. Their Balance Sheet
as at March 31, 2016 is as under :
Capitals: Bank 44,800
A 2,00,000 Sundry Debtors 1,72,000
B 2,00,000 Stock 3,00,000
C 1,00,000 5,00,000 Furniture and fittings 46,000
Reserve Fund 40,000
Outstanding Expenses 2,800
5,62,800 5,62,800
A retired on this date.
Additional Information:
(i) Furniture and fittings were undervalued by Rs.4,000.
(ii) An amount of Rs. 12,000 due from Mr. Arun, a debtor, was doubtful and a provision for the
same is required.
(iii) Stock be valued at 90%.
(iv) Goodwill of the firm be valued at Rs.60,000.
(v) Rs. 1,00,000 be transferred to A’s loan account bearing interest @ 10% p.a, and balance be paid
through bank. Bank overdraft be arranged, if required.
(vi) B and C will share future profits in 5 : 3.
Prepare necessary ledger accounts and balance sheet of the firm after A's retirement.
Q. 130. A, B and C are in partnership sharing profits in the ratio of 3 : 2 : 1. On 28th February, 2017 C
retires from the firm. Their Balance Sheet on this date was as follows:
Sundry Creditors 1,20,000 Bank 25,000
Outstanding Expenses 10,000 Debtors 1,65,000
Profit & Loss Account 1,50,000 Stock 2,50,000
Capital Accounts: Investments 3,00,000
A 5,00,000 Fixed Assets 5,40,000
B 3,00,000
C 2,00,000 10,00,000
12,80,000 12,80,000
The following was agreed upon :
(i) Goodwill of the firm is valued at Rs. 1,50,000. C sells his share of goodwill to A and B in the ratio
of 4 : 1.
(ii) Stock is revalued at Rs.3,00,000 and debtors are revalued at Rs. 1,50,000.
(iii) Outstanding expenses be brought down to Rs.3,000.
(iv) Investments are sold at a loss of 10%.
(v) C is paid off in full.
Prepare Revaluation Account, Capital Accounts and the Balance Sheet of the new firm.
Q. 131. On 31 st March, 2018 the Balance Sheet of M/s A, B and C sharing profits and losses in
proportion to their fixed capitals stood as follows :
General Reserve 1,80,000 Debtors 1,00,000
Capital A/cs : Less: Provision 2,000 98,000
A 3,60,000 Stock 90,000
B 2,40,000 Machinery 2,40,000
C 1,20,000 7,20,000 Land and Buildings 5,00,000
10,08,000 10,08,000

On 1st April, 2018, B wants to retire from the firm and the remaining partners decide to carry on. The
following re-adjustments of assets and liabilities have been agreed upon before the ascertainment of the
amount payable to B :
(i) that, out of the Fire Insurance Premium paid during 2017-18, Rs. 10,000 be carried forward as
unexpired.
(ii) that the land and buildings be appreciated by 10%.
(iii) that provision for doubtful debts be brought upto 5% on debtors.
(iv) that the machinery be depreciated by 5%.
(v) that a provision for Rs. 15,000 be made in respect of an outstanding bill for repairs.
(vi) that the goodwill of the entire firm be at Rs. 1,80,000 and B’s share of the same adjusted in the
A/cs of A and C who share future profits in the proportion of 3/4th and 1/4th respectively; and
(vii) that B be paid Rs.50,000 in cash and the balance be transferred to his Loan A/c.
Prepare Revaluation A/c, Partner’s Current Accounts, Capital Accounts and the Balance Sheet of the
firm of A and C.
Q. 132. A, B and C were in partnership sharing profits and losses in the ratio of 3:2:1. Their Balance
Sheet as at 31st March, 2018 was as follows :
Capital Accounts: Plant & Machinery 30,000
B 16,000 Trade Debtors 35,000
C 10,000 44,000 Less: Provision 2,000 33,000
Workmen’s Accident Profit & Loss A/c 3,000
Compensation Reserve 5,000
82,000 82,000
C retired on 1 st Apri 1, 2018. It was agreed that:
(i) Plant and Machinery is to be revalued at Rs.40,000; the existing provision for bad debts is to be
increased by 50% and liability for workmen’s compensation was decided at Rs.2,000.
(ii) Creditors are to be paid Rs.3,000 more.
(iii) C’s share of goodwill was valued at Rs.8,000.
(iv) The total amount payable to C was brought in by A and B in their new profit sharing ratio which is
5 : 3.
You are required to prepare (i) revaluation account, (ii) partner’s capital accounts, and (iii) revised
balance sheet after all adjustments are carried out.
Q. 133. Anand, Bihari and Shivin are equal partners in a firm. Bihari retires and his claim including his
capital and his share of goodwill is Rs.40,000. He is paid in kind, a vehicle valued at Rs.20,000 which
is unrecorded in the books of the firm till the date of retirement and the balance in cash.
You are required to give the journal entries for recording the payment to Bihari in the books of the firm.
(I.S.C. Sample Question Paper 2015)
Q. 134. The Balance Sheet of X, Y and Z who were sharing profit in proportion of capitals is as follows
:
Capital A/cs: S. Debtors 5,000
X 25,000 Less: Provision 100 4,900
Y 20,000 Stock 10,000
Z 15,000 Plant and Machinery 11,500
67,000 67,000
Y retires and the following adjustments of the assets and liabilities have been made before the
ascertainment of the amount payable by the firm to Y:
(i) That the stock be depreciated by 5%.

(ii) That the provision for doubtful debts be increased to 5% on debtors.
(iii) That the land and building be appreciated by 20%.
(iv) That a provision of Rs.750 be made in respect of outstanding legal charges.
(v) That the Goodwill of the entire firm be fixed at Rs. 16,200 and Y s share of the same be adjusted
into the Accounts of X and Z.
(vi) That X and Z decide to share future profits of the firm in equal proportion.
(vii) That the entire capital of the new firm is fixed at Rs.48,000 between X and Z in equal proportions.
For the purpose, actual cash is to be brought in or paid off.
You are required to prepare the Revaluation Account, Partner’s Capital Accounts, Bank account and
revised balance sheet after P s retirement. Also indicate the gaining ratio.
Q. 135. On 31st March, 2015, the Balance Sheet of Saman, Harish and Meeta who were sharing profits
and losses in the ratio of 2 : 3 : 2, stood as follows :
Capitals: Saman 10,00,000 Land and Buildings 19,00,000
Harish 15,00,000 Machinery 5,00,000
Meeta 10,00,000 35,00,000 Furniture 7,70,000
Workmen Compensation Reserve 8,40,000 Closing Stock 5,00,000
Sundry Creditors 5,10,000 Sundry Debtors 7,00,000
Cash 4,80,000
48,50,000 48,50,000
On 31st March, 2015, Harish retired from the firm and the remaining partners decided to carry on the
business. It was agreed to revalue the assets and liabilities as follows :
(i) Land and buildings be appreciated by 20%.
(iii) Closing stock be valued at Rs.4,50,000.
(iv) Provision for Doubtful Debts be made at 5% on Debtors,
(v) Sundry creditors of Rs.65,000 be written off.
(vi) Goodwill of the firm be valued at Rs.5,60,000 and Harish’s share of the goodwill be adjusted in the
accounts of Saman and Meeta who will share the future profits and losses in the ratio of 3 :2.
(vii) The total capital of the newly constituted firm will be Rs.35,00,000, which will be adjusted by
opening Current Accounts.
(viii) Amount due to Harish was settled by accepting a bill of exchange in his favour payable after 4
months.
Prepare Revaluation Account, Partners’ Capital Accounts and Balance Sheet of the new firm on
Harish’s retirement. (C.B.S.E, 2016 Comptt. Delhi)
Q. 136. Ajay, Vijay and Sanjay are partners in a firm sharing profits and losses in the ratio of 5 : 4 : 3.
Vijay retires. After making all adjustments relating to revaluation, goodwill and accumulated profits,
etc. the capital account of Ajay showed a credit balance of Rs.2,00,000 and that of Sanjay Rs.1,00,000.
It was decided to adjust the capitals of Ajay and Sanjay in their profit sharing ratio. You are required to
calculate the new capital of the partner’s and record necessary entry for surplus/deficit.
Q. 137. X Y and 7 are partners in a firm sharing profits in the ratio of 3 : 2 : 1. On April 1st 2018, X
retires from the firm, Y and 7 agree that the capital of the new firm shall be fixed at Rs. 2,10,000 in the
profit sharing ratio. The Capital Accounts of Y and Z after all adjustments on the date of retirement
showed balances of Rs. 1,45,000 and Rs.63,000 respectively. State the amount of actual cash to be
brought in or to be paid to the partners.
Q. 138. Following is the Balance Sheet of Kusum, Sneh and Usha as at 31st March 2018, who have
agreed to share profits and losses in proportion of their capitals.
Balance Sheet of Kusum, Sneh and Usha as at 31st March, 2018

Capitals: Land and Building 4,00,000
Kusum : 4,00,000 Machinery 6,00,000
Sneh : 6,00,000 Closing Stock 2,00,000
Usha : 4,00,000 14,00,000 Sundry Debtors 2,20,000
Employee’s Provident Fund 70,000 Less: Provision for
Workmen Compensation Doubtful debts 20,000 2,00,000
Reserve 30,000 Cash at Bank 2,00,000
16,00,000 16,00,000
On 31st March, 2018 Kusum desired to retire from the firm and the remaining partners decided to carry
on the business. It was agreed to revalue the assets and re-assess the liabilities on that date, on the
following basis :
(i) L and and Building be appreciated by 30%.
(iii) There were Bad debts of Rs.35,000.
(iv) The claim on account of Workmen Compensation Reserve was estimated at Rs. 15,000.
(v) Goodwill of the firm was valued at Rs.2,80,000 and Kusum’s share of goodwill was adjusted
against the Capital Accounts of the continuing partners Sneh and Usha who have decided to share future
profits in the ratio of 3 : 4 respectively.
(vi) Capital of the new firm in total will be the same as before the retirement of Kusum and will be
in the new profit sharing ratio of the continuing partners.
(vii) Amount due to Kusum be settled by paying Rs. 1,00,000 in cash and balance by transferring to her
loan A/c which will be paid later on.
Prepare Revaluation Account, Capital Accounts Partners and Balance Sheet of the new firm after
Kusum’s retirement.
Q. 139. A, B and C are partners sharing profits in 4 : 3 : 3. Their Balance Sheet as at 31st March 2018
was as follows :
Sundry Creditors 1,20,000 Land and Building 5,00,000
Capital Accounts : Debtors 1,50,000
A 4,00,000 Less: Provision for
B 2,00,000 Doubtful
C 2,00,000 8,00,000 Debts 30,000 1,20,000
Cash at Bank 1,00,000
9,60,000 9,60,000
C retires on 1st April, 2018 and A and B decide to share future profits in the ratio of 6 : 4. It is agreed
that:
(i) Goodwill of the firm is valued at Rs.80,000.
(ii) Land & Building is undervalued by Rs. 1,00,000 and Stock is overvalued by 20%.
(iii) Provision for Doubtful Debts is to be decreased to Rs. 10,000.
(iv) Computer valued Rs.30,000 was unrecorded in the books.
It was decided to pay off C by giving him this computer and the balance in annual instalments of Rs.
1,00,000 together with interest @ 10% p.a.
(a) Revaluation Account,
(b) C’s Capital Account, and
(c) C’s Loan Account till it is finally closed.
Q. 140. Lalit, Madhur and Neena were partners sharing profits as 50%, 30% and 20% respectively. On
31st March, 2013, their Balance Sheet was as follows :

Provident Fund 10,000 Debtors 47,000
Investment Fluctuation Fund 10,000 Less : Provision for Bad
Capital A/cs : and Doubtful Debts 3,000 44,000
Lalit 50,000 Stock 15,000
Madhur 40,000 Investment 40,000
Neena 25,000 1,15,000 Goodwill 20,000
1,63,000 1,63,000
On this date, Madhur retired and Lalit and Neena agreed to continue on the following terms:
(a) The goodwill of the firm was valued at Rs.51,000.
(b) There was a claim for Workmen’s Compensation to the extent of Rs.6,000.
(c) Investment were brought down to Rs. 15,000.
(d) Provision for bad debts was reduced by Rs. 1,000.
(e) Madhur was paid Rs. 10,300 in cash and the balance was transferred to his loan account payable
in two equal instalments together with interest @12% p.a.
Prepare Revaluation Account, Partners’ Capital Accounts and Madhur’s Loan Account till the loan is
finally paid off. (C.B.S.E. 2015, Comptt.)
Q. 141. R, S and T were partners in a firm sharing profits in 2 : 2 : 1 ratio. On 1-4-2017 their Balance
Bank Loan 12,800 Cash 51,300
Sundry Creditors 25,000 Bills Receivable 10,800
R 80,000 Stock 44,600
S 50,000 Furniture 7,000
T 40,000 1,70,000 Plant and Machinery 19,500
Profit and Loss A/c 9,000 Building 48,000
2,16,800 2,16,800
S retired from the firm on 1-4-2017 and his share was ascertained on the revaluation of assets as
follows :
Stock Rs.40,000; Furniture Rs.6,000; Plant and Machinery Rs. 18,000; Building Rs.40,000; Rs. 1,700
were to be provided for doubtful debts. The goodwill of the firm was valued at Rs. 12,000.
S was to be paid Rs.21,680 in cash on retirement and the balance in three equal quarterly instalments
(starting from 30th June 2017) along with interest @ 12% p.a.
Prepare Revaluation Account, Partner’s Capital Accounts, S's Loan Account and Balance Sheet on 1-
4-2017.
Q. 142. Following is the Balance Sheet of G, K & IF as at 31st March, 2015 who share profits in the
ratio of 3 : 2 : 1.
Capital Accounts: Goodwill 7,500
G 22,000 Stock 12,500
K 13,000 Sundry Debtors 12,000
W 9,000 44,000 Land and Buildings 15,000
Sundry Creditors 10,000 Plant and Machinery 18,000
Bills Payable 4,000 Motor Vehicle 5,000
70,000 70,000
On 1st April, 2015, G retired and the following arrangements were agreed upon :
(1) Goodwill of the firm is to be valued at Rs. 15,000.
(2) The assets and liabilities are to be valued as under : Stock Rs. 10,000; Sundry Debtors Rs. 11,500;
Land and Buildings Rs. 18,000; Plant and Machinery Rs. 16,500; and Sundry Creditors Rs.9,200.
(3) Liability for Workmen’s Compensation amounting to Rs.500 is to be brought into the books.

(4) The entire capital of the firm as newly constituted be fixed at Rs.35,000 between K and W in
the proportion of 4 : 3 and the actual cash to be paid off or to be brought in by continuing partners as
the case may be.
(5) Rs. 13,150 were paid to G. The balance due to him was to be paid in three equal instalments
annually together with interest @ 12% per annum.
Give necessary ledger accounts, the Balance Sheet of the firm after G’s retirement and G’s Loan
Account till it is finally paid off.
Q. 143 (A). The Balance Sheet of X, Y and Z who are sharing profits & losses in the proportion of 1/2
: 1/3 : 1/6 respectively was as follows as at 31st March, 2015 :
Bills Payable 6,000 Bills Receivable 5,400
Reserve Fund 1,500 Book Debts 17,800
Profit & Loss A/c 3,000 Stock 22,300
Capitals: Furniture 3,500
X 40,000 Buildings 24,000
Z 20,000
1,08,400 1,08,400
X retires from the business from 1st April, 2015 and his share in the firm is to be ascertained on a
revaluation of the assets as follows : Stock Rs.20,000; Furniture Rs.3,000; Machinery Rs.9,000;
Building Rs.20,000; and Rs.850 are to be provided for doubtful debts. The goodwill of the firm is agreed
to be valued at Rs.6,000. X is to be paid Rs.l 1,050 in cash on retirement and the balance in three equal
annual instalments with interest at 5% p.a.
Show Revaluation Account, A’s Capital Account and his Loan Account till final payment.
Q. 143 (B). P, Q and R were partners sharing profits and losses in the ratio of 5:3:2 respectively. As at
31st March, 2018 the Balance Sheet of the firm stood as follows:
Sundry Creditors 5,300 Fixed Assets 25,000
Expenses Outstanding 700 Stock 11,000
Reserve 3,000 Book Debts 9,000
Capitals: Cash at Bank 2,000
P 20,000
Q 10,000
R 8,000 38,000
47,000 47,000
On this date Q decided to retire and for this purpose :
(a) Goodwill was valued at Rs.19,000;
(b) Fixed assets were valued at Rs.30,000;
(c) Stock was considered as worth Rs. 10,000.
Q was to be paid through cash, brought in by P and R, in such a way as to make their capitals
proportionate to their new profit sharing ratio which was to be P 3/5 and
R 2/5.
Record these matters in the journal of the firm and prepare the resultant Balance Sheet.
Q. 144. P, Q and R are partners in a firm. R retires from the firm. On the date of retirement, Rs.3,00,000
is due to him. It is agreed to pay him in instalments every year at the end of the year. Prepare R’s Loan
Account in the following cases :
(i) Five yearly instalments plus interest @ 15% p.a.
(ii) Instalments of Rs. 1,00,000 which already includes interest @ 15% p.a. on the outstanding balance
for the first four years and the balance including interest in the fifth year.

Q. 145. A, B and C are partners in a firm sharing profits in the ratio of 3 : 2 : 1. On 31st March 2014 C
retired. Following balances were disclosed by the Firm’s Balance Sheet on this date :
(i) Capitals : A Rs. 10,00,000; B Rs.6,00,000 and C Rs.4,40,000.
(ii) Profit & Loss (Dr. Balance) Rs.45,000.
(iii) Advertisement Expenditure Rs. 15,000.
Revaluation of Assets and re-assessment of liabilities resulted in a loss of Rs.60,000. On the retirement
of C, goodwill is valued at Rs.1,80,000.
The amount payable to C is agreed to be paid in two yearly instalments of Rs.2,00,000 each including
intrest @ 10% p.a. on the outstanding balance during the first two years and the balance including
interest in the third year. Books are closed on 31st March every year.
Prepare C’s Loan Account till it is finally paid.
Q. 146. Kushal, Kumar and Kavita were partners in a firm sharing profits in the ratio of 3 : 1 : 1. On 1st
April, 2012 their Balance Sheet was as follows :
Balance Sheet of Kushal, Kumar and Kavita
Bills Payable 1,80,000 Debtors 2,00,000
General Reserve 1,20,000 Less : Provision 10,000 1,90,000
Kushal 3,00,000 Furniture 1,20,000
Kumar 2,80,000 Building 3,00,000
Kavita 3,00,000 8,80,000 Land 4,00,000
13,00,000 13,00,000
On the above date Kavita retired and the following was agreed :
(i) Goodwill of the firm was valued at Rs.40,000.
(ii) Land was to be appreciated by 30% and building was to be depreciated by Rs. 1,00,000.
(iii) Value of furniture was to be reduced by Rs.20,000.
(iv) Bad debts provision is to be increased to Rs. 15,000.
(v) 10% of the amount payable to Kavita was paid in cash and the balance was transferred to her Loan
Account.
(vi) Capitals of Kushal and Kumar will be in proportion to their new profit sharing ratio. The
surplus/deficit, if any in their Capital Accounts will be adjusted through Current Accounts.
Prepare Revaluation Account, Partner’s Capital Accounts and Balance Sheet of Kushal and Kumar after
Kavita’s retirement. (C.B.S.E. 2014)
Q. 147. A, B and C are partners sharing profits in the ratio of 50%, 30% and 20%. B retires and after
all adjustments relating to accumulated profits, goodwill and revaluation etc. their capitals stood at Rs.
1,90,000; Rs. 1,50,000 and Rs.80,000 respectively. It was decided that entire sum payable to B is to be
brought in by A and C in such a way so as to make their capitals proportionate to their profit sharing
ratio. Calculate the amount to be brought in by A and C and pass entries for the same. Also pass entry
relating to payment to B.
Q. 148. P, Q and R are in partnership sharing profits in the ratio of 3 : 2 : 1. R retires. Following balances
appeared in their books :
Rs. Rs.
Goodwill 12,000
Bank 10,000
Other Assets 70,000
Creditors 14,000
Capitals: P 40,000
Q 20,000
R 18,000

92,000 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 of profits.
Prepare necessary entries and the new balance sheet.
Q. 149. A, B and C were equal partners. Their Balance Sheet as at 31st March, 2017 was as under :
BALANCE SHEET as at 31-03-2017
B/P 20,000 Bank 20,000
P/L 6,000 Debtors 45,000
Capitals : Less: RBDD 5,000 40,000
A 60,000 Land & Building 1,20,000
B 40,000
C 32,000 1,32,000
2,28,000 2,28,000
B retired on 1st April, 2017. A and C decided to continue the business sharing profits in the ratio of 3 :
2. Following terms were agreed :
(a) Goodwill of the firm was valued at Rs.57,600.
(b) Reserve for bad and doubtful debts to be maintained at 10% on debtors.
(c) Land and building to be increased to Rs. 1,32,000.
(d) Furniture to be reduced by Rs. 8,000.
(e) Rent outstanding (not provided for as yet) was Rs. 1,500.
Remaining partners decided to bring sufficient cash in the business to pay off B and to maintain a bank
balance of Rs.24,800. They also decided to readjust their capitals as per their new profit sharing ratio.
Prepare necessary Ledger Accounts and Balance Sheet.
Q. 150. X, Y and Z are partners sharing profits in the ratio of 4 : 2 : 3. Y retires. On this date his Capital
after making adjustments for reserves and revaluation exists at Rs.2,00,000. X and Z agreed to pay him
Rs.2,40,000 in full settlement of his account.
Record necessary journal entry for the treatment of goodwill if X and Z decided to share future profits
equally.
Q. 151. A, B and C were partners in a firm. B died on 31st August, 2018. B's share of profit from the
closure of the last accounting year till the date of death was to be calculated on the basis of the average
of three completed years of profits before death. Profits for the years ending 31st March 2016, 2017
and 2018 were Rs.40,000; Rs.50,000 and Rs.72,000 respectively. The firm closes its books on 31st
March every year.
Calculate B's share of profit till the date of her death and pass the necessary journal entry for the same
assuming :
(i) There is no change in the profit sharing ratio of A and C
(ii) There is change in the profit sharing ratio of A and C and the new ratio is 7: 5.
Q. 152. Had, Mohan and Sohan were partners in a firm sharing profits in 2 : 2 : 1 ratio. The firm closes
its books on 31st March every year. Mohan died on 24-8-2017. On Mohan’s death the goodwill of the
firm was valued at Rs.75,000. The partnership deed provided that on the death of a partner his share in
the profits of the firm in the year of his death will be calculated on the basis of last year’s profit. The
profit of the firm for the year ended 31-3-2017 was Rs.2,00,000. Calculate Mohan’s share of profit till
the time of his death and pass the necessary journal entries for the treatment of goodwill and his share
of profit.

Q. 153. A, B and C are sharing profits in the ratio of 4 : 3 : 2. A dies on 31st December, 2017. Accounts
are closed on 31st March every year. Sales for the year ending 31st March, 2017 amounted to
Rs.4,00,000. Sales of Rs.3,30,000 amounted between the period from 1 st April 2017 to 31st December
2017. The profit for the year ending 31st March, 2017 amounted to Rs.60,000.
Calculate the deceased partner’s share in the current year’s profits of the firm.
Q. 154. The Balance Sheet of Sindhu, Rahul and Kamlesh, who were sharing profits in the ratio of 3 :
3 : 4 respectively, as at 31st March, 2012 was as follows :
General Reserve 10,000 32,000
Loan 24,000 Investments 94,000
Capitals: Sindhu : 1,20,000 Land & Building 1,20,000
Rahul 1,00,000 Sindhu’s loan 20,000
Kamlesh : 80,000 3,00,000
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 year’s purchase of average profits for the last three years
which were Rs.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 Rs.8,00,000 and that from 1st April to 31st July 2012
Rs.3,00,000. The profit for the year ended 31st March, 2012 was Rs.2,00,000.
(c) Interest on capital was to be provided @ 6% p.a.
Prepare Sindhu’s Capital Account to be rendered to his executor.
Q. 155. A, B and C are partners in a firm sharing profits in the ratio of 5 : 3 : 2. On 1st April, 2016 the
capitals of the partners were : Rs.5,00,000; Rs.3,00,000 and Rs.2,00,000 respectively. The firm closes
its books on 31st March every year. C dies on 5th April, 2016.
On that date :
(a) Goodwill of the firm was valued at Rs.30,000; and
(b) Gain on Revaluation was calculated at Rs. 8,000.
(c) Advertisement Suspense Account appearing in the books was Rs. 10,000.
(d) C’s share of profit till the date of his death was calculated as Rs.200.
Prepare C’s Capital A/c to be rendered to his executors.
Q. 156. A, B and C were partners in a firm sharing profits in the ratio of 5 : 3 : 2. The Balance Sheet as
at 31-3-2018 was as follows :
Creditors 12,000 Building 20,000
Reserves 6,000 Plant and Machinery 16,000
A’s Capital 24,000 Stock 5,100
B’s Capital 12,000 Debtors 6,000
C’s Capital 8,000 Cash at Bank 6,900
62,000 62,000
A died on 30-9-2018 and B and C decided to share future profits in the ratio of 7:3. Under the partnership
agreement the executors of a deceased partner were entitled to :
(a) Amount standing to the credit of partner’s capital account.
(b) Interest on capital at 12% per annum.
(c) Share of goodwill on the basis of four years purchase of last three years average profit.

(d) Share of profit from the closing of the last financial year to the date of death on the basis of last
year’s profit. Profits for the year 2016,2017 and 2018 were Rs.8,000; Rs. 12,000 and Rs.7,000
respectively.
Prepare A's Capital account to be rendered to his executors.
Q. 157.Ram, Ghanshyam and Vrinda were partners in a firm sharing profits in the ratio of 4 : 3 : 1. The
firm closes its books on 31st March every year. On 1st February, 2015 Ghanshyam died and it was
decided that the new profit-sharing ratio between Ram and Vrinda will be equal The Partnership Deed
provided for the following on the death of a partner :
the previous four completed years :
The firm’s profit for the last four years were.
2010-11 — Rs. 1,20,000, 2011-12 — Rs.80,000, 2012-13 — Rs.40,000, and 2013-14 —Rs.80,000.
(b) His share of profit in the year of his death was to be computed on the basis of average profits
of past two years.
Pass necessary Journal entries relating to goodwill and profit to be transferred to Ghanshyam’s Capital
Account. Also show your workings clearly.
(C.B.S.E. 2016 Comptt. Delhi)
Q. 158. Manav, Nath and Narayan were partners in a firm sharing profits in the ratio of 1 : 2 : 1. The
firm closes its books on 31st March every year. On 30th September, 2015 Nath died. On that date his
capital account showed a debit balance of Rs.5,000. There was a debit balance of Rs. 30,000 in the
Profit and Loss Account. The goodwill of the firm was valued at Rs.3,80,000. Nath’s share of profit in
the year of his death was to be calculated on the basis of average profit of 5 years, which was Rs.90,000.
Pass necessary Journal entries in the books of the firm on Nath’s death.
Q. 159. A, B, C and D were partners sharing profits in the ratio of 5 : 3 :2 :2. B died on 1st March, 2018.
Goodwill of the firm was valued at Rs. 6,00,000. A, C and D decided to share future profits equally.
Give necessary journal entry.
Q. 160 (A). Brown and Smith are partners. The partnership deed provides :
(i) That the Accounts be balanced on 31st December each year.
(ii) That the profits be divided as follows : Brown 1/2; Smith 1/3 and carried to a Reserve account 1/6.
(iii) That in the event of the death of a partner, his executors be entitled to be paid out:
(a) The Capital to his credit at the date of death.
(b) His proportion of Reserve at the date of last Balance Sheet.
(c) His proportion of profit to date of death based on the average profits of the last three completed
years.
(d) By way of goodwill his proportion of the total profits for the three preceding years.
On 31st December, 2017, the ledger balances were :
Rs.
Rs.
Brown’s Capita! 9,000
Smith’s Capital 6,000
Reserve 3,000
Creditors 3,000
Bills Receivable 2,000
Investments 5,000
Cash 14,000
21,000 21,000
The profits for three years were :
2015 Rs.4,200; 2016 Rs.3,900; 2017 Rs.4,500. Smith died on 1st May, 2018. Show the accounts as
between the firm and Smith’s executors as on May 1st, 2018.

Q. 160 (B). X and Y shared profits in the ratio of 2 : 1. Following is their Balance Rs. Sheet as at 31st
March, 2018 :
BALANCE SHEET
Workmen Compensation Reserve 18,000 Debtors 10,000
Capitals: X 50,000 Less: Provision 600 9,400
Y 27,000 B/R 2,000
Goodwill 9,000
Fixed Assets 70,000
1,01,200 1,01,200
Y died on 30th June, 2018. Besides his capital and reserves, his legal representatives are entitled to :
I. His share of goodwill based on 2 years purchase of the last 3 years average profits less 10%.
Last three years profits were Rs.9,000; Rs.20,000 and Rs.16,000.
II. Fixed Assets are revalued at Rs.76,000. There is no need of provision for doubtful debts, as the
debtors are all good.
III. He is to be allowed interest at 12% p.a. upto the date of death.
Prepare P’s A/c to be rendered to his legal representatives.
Q. 161. A, B and C are partners in a firm sharing profits in the ratio of 5 : 3 : 2 respectively. Their
Balance Sheet as at 31st March, 2018 was as follows :

Workmen Compensation Reserve 6,000 Stock 10,000
A 30,000 Buildings 20,000
B 20,000 Patents 6,000
C 15,000
87,000 87,000
On 1st October, 2018, due to illness B died. As per the agreement:
(i) Goodwill is to be valued at two years’ purchase of the average profits of previous five years, which
were : 2014 — Rs. 10,000; 2015 — Rs.13,000; 2016 — Rs. 12,000; 2017 — Rs. 15,000 and 2018 —
Rs.20,000.
(ii) Patents were valued at Rs.8,000; Machinery at Rs.28,000 and Buildings at Rs.30,000.
(iii) B’s share of profit till the date of his death will be calculated on the basis of profit of the year 2018.
(iv) Interest on capital will be provided at 10% p.a.
(v) Amount due to B’s executors will be transferred to Charity account.
Prepare B’s capital account to be presented to his executors.
Q. 162. A, B and C are in partnership, sharing profits in the proportion of two-thirds, one-sixth and one-
sixth respectively.
A died on the 30th June, 2018, three months after the annual accounts had been prepared and in
accordance with the partnership agreement, his share of the profits to the date of death was estimated
on the basis of the profit for the preceding year. In addition to this, the agreement provided for interest
on capital at 5 per cent per annum on the balance standing to the credit of the capital account at the date
of the last Balance Sheet, and also for goodwill, which was to be brought into account at two year’s
purchase of the average profits for the last three years.
A’s capital on 31st March, 2018 stood at Rs.1,20,000, and his drawings from then to the date of death
amounted to Rs.9,000.
The net profits of the business for the three preceding years amounted to Rs.33,500; Rs.41,500 and
Rs.40,500, respectively.

You are required to prepare A's Capital Account as at the date of death, for a settlement with his
executors.
Q. 163. You are given the Balance Sheet of A, B and C who are partners sharing profits in the ratio of
2 : 2 : 1 as at March 31, 2017.
Creditors 40,000 Goodwill 30,000
Reserve Fund 25,000 Fixed Assets 60,000
B 25,000 Cash at Bank 15,000
C 15,000 70,000
1,35,000 1,35,000
B died on June 15, 2017. According to the Deed, his legal representatives are entitled to :
(a) Balance in Capital Account;
(b) Share of goodwill valued on the basis of thrice the average of the past 4 year’s profits;
(c) Share in profits up to the date of death on the basis of average profits for the past 4 years;
(d) Interest on capital account @ 12% p.a.
Profits for the years ending on March 31 of 2014, 2015, 2016, 2017 respectively were Rs. 15,000, Rs.
17,000, Rs. 19,000 and Rs. 13,000.
B's legal representatives were to be paid the amount due. A and C continued as partners by taking over
B’s share equally. Work out the amount payable to B’s legal representatives.
Q. 164. Akhil, Nikhil and Sunil were partners sharing profits and losses equally. Following was their
Balance Sheet as at 31st March, 2018.
Trade Creditors 40,000 Buildings 2,00,000
General Reserve 45,000 Plant & Machinery 80,000
Akhil 1,95,000 Debtors 80,000
Nikhil 1,20,000 Cash at Bank 85,000
Sunil 80,000 3,95,000
4,80,000 4,80,000
Sunil died on 1st August, 2018. The partnership deed provided that the executor of a deceased partner
was entitled to :
(i) Balance of partner’s capital account and his share of the accumulated reserves.
(ii) Share of goodwill calculated on the basis of three times the average profits of the last four years.
(iii) Share of profit from the closure of the last accounting year till the date of death on the basis of the
profit of the preceding completed year before death,
(iv) Interest on deceased’s capital @ 6% per annum.
Rs.50,000 to be paid to deceased’s executor immediately and the balance to be kept in his loan account.
Profits and losses for the preceding years ending 31 st March were :
2015 — Rs. 80,000 profit
2016 — Rs. 1,00,000 loss
2017 — Rs. 1,20,000 profit
2018 — Rs. 1,80,000 profit
Pass the necessary journal entries and prepare Sunil’s Capital Account and Sunil’s Executor’s Account.
Q. 165. X, Y and Z were partners sharing profits in the ratio of 3 : 2 : 1. As at 31st March, 2018, their
Balance Sheet stood as under :
Reserve 90,000 Stock 1,20,000

X 2,00,000 Investments 2,50,000
Y 1,50,000 Fixed Assets 1,28,000
Z 1,00,000 4,50,000
5,84,000 5,84,000
Y died on 31st July, 2018. The partnership deed provides that the executors of the deceased partner are
entitled to :
(i) The Capital to his credit at the time of his death;
(ii) His share of reserves;
(iii) His share of profits to the date of death based on the average profits of the last three completed
years, less 10%, and
(iv) Goodwill according to his proportion of the total profits for the three preceding years, which were
Rs.80,000; Rs.1,30,000 and Rs.1,50,000 respectively.
The Investments were sold at par and Fs executor’s were paid off.
Prepare Partner’s Capital Accounts, Fs Executor’s Account and Balance Sheet of the surviving partners
X and Z.
Q.166. L, M and N were partners sharing profits and losses in the ratio of 5 : 3 : 2. Their Balance Sheet
as at 1.4.2015 was as under :
L 50,000 Machinery 67,000
M 30,000 Investments 12,000
N 20,000 1,00,000
1,29,000 1,29,000
N died on 5th November, 2015 and according to the partnership deed his executors were entitled to be
paid as under :
(a) The capital to his credit at the time of his death and interest thereon @ 8% per annum.
(b) His share of Reserves.
(c) His share of profits for the intervening period will be based on the sales during that period,
which were calculated as Rs.2,40,000. The rate of profit during past 4 years had been 15% on sales.
(d) Goodwill according to his share of profit to be calculated by taking thrice the amount of the average
profit of the last four years less 25%. The profits of the previous years were :
2012 Rs. 10,500
2013 Rs.12,000
2014 Rs. 12,500
2015 Rs. 13,000
The investments were sold at par and his executors were paid out. Pass the necessary journal entries
and write the account of the executors of N.
Q. 167. P, Q and R were partners in a firm sharing profits in the ratio of 5 : 6 : 9. On 31-3-2016, their
P 1,30,000 Building 2,00,000
Q 2,00,000 Land 3,00,000
R 4,00,000 7,30,000 Profit and Loss A/c 1,60,000
8,60,000 8,60,000
R died on 30th April, 2016. The partnership deed provided for the following on the death of a partner :

(i) Goodwill of the firm was to be valued at 3 year’s purchase of the average profits of the last 5
years. The profits for the years ending 31-3-2015, 31-3-2014, 31-3-2013 and 31-3-2012 were
Rs.80,000; Rs.80,000; Rs. 1,10,000 and Rs.2,20,000 respectively.
(ii) R’s share of profit or loss till the date of his death was to be calculated on the basis of the profit
or loss for the year ending 31-3-2016.
You are required to calculate the following :
(i) Goodwill of the firm and R’s share of goodwill at the time of his death.
(ii) R's share in the profit or loss of the firm till the date of his death.
Prepare R’s Capital Account also at the time of his death to be presented to his executors.
Q. 168. G, E and F were partners in a firm sharing profits in the ratio of 7 : 2 : 1. The Balance Sheet of
the firm as at 31st March, 2018 was as follows :
BALANCE SHEET OF G, E AND F
Capitals : Goodwill 40,000
G 70,000 Land & Buildings 60,000
E 20,000 Machinery 40,000
F 10,000 1,00,000 Stock 7,000
Loan from E 30,000 Cash 5,000
Creditors 14,000
1,64,000 1,64,000
E died on 24th August 2018. Partnership deed provides for the settlement of claims on the death of a
partner in addition to his capital as under :
(i) The share of profit of deceased partner to be computed upto the date of death on the basis of average
profits of the past three years which was Rs. 80,000.
(ii) His share in profit/loss on revaluation of assets and re-assessment of liabilities which were as
follows:
Land and Buildings were revalued at Rs.94,000, Machinery at Rs.38,000 and Stock at Rs.5,000. A
provision of 2.5% was to be created on debtors for bad and doubtful debts.
(iii) The net amount payable to E’s executors was transferred to his Loan Account, to be paid later
on.
Prepare Revaluation Account, Partner’s Capital Accounts and E’s Executor A/c. G and F decided to
continue the business keeping their capital balances in their new profit sharing ratio. Any surplus or
deficit to be transferred to current accounts of the partners.
Q. 169. The following is the Balance Sheet of Ram, Mohan and Sohan as at 31st March, 2017 :
Sundry Creditors 10,000 Tools 3,000
Reserve Fund 7,500 Furniture 18,000
Ram 20,000 Debtors 12,000
Mohan 10,000 Cash at Bank 8,000
Sohan 10,000 Cash in hand 500
57,500 57,500
Ram, Mohan and Sohan shared profits and losses in the ratio of 2 : 2 : 1. Sohan died on 30th June, 2017.
Under the partnership agreement the executor of Sohan was entitled to :
(a) Amount standing to the credit of his Capital Account.
(b) Interest on Capital which amounted to Rs. 150.
(c) His share of goodwill Rs.5,000.
(d) His share of profit from the closing of the last financial year to the date of death which amounted
to Rs.750.
Sohan’s executor was paid Rs. 1,400 on 1st July, 2017 and the balance in four equal yearly instalments
starting from 30th June, 2018 with interest @ 6% p.a.

Pass necessary Journal entries and draw up Sohan’s Account to be rendered to his executor and Sohan’s
Executor’s Account till it is finally paid.
Q. 170. Alia, Karan and Shilpa were partners in a firm sharing profits in the ratio of 5:3:2. Goodwill
appeared in their books at a value of Rs.60,000 and General Reserve at Rs.20,000. Karan decided to
retire from the firm. On the date of his retirement, goodwill of the firm was valued at Rs.2,40,000. The
new profit-sharing ratio decided among Alia and Shilpa was 2:3.
Record necessary Journal entries on Karan’s retirement. (C.B.S.E. 2015 Comptt.)
Q.171. M, N and O who are partners in a firm share profits in the ratio of 3 : 2 : 1. Goodwill has been
valued at Rs.60,000. On N’s retirement, M and O agree to share profits equally.
Pass necessary journal entry for treatment of N’s share of goodwill.
[Ans.
O's Capital A/c Dr. 20,000
To N’s Capital A/c 20,000]
Q. 94. Ravi, Mukesh, Naresh and Yogesh are partners in a firm sharing profits in the ratio of 2 : 2 : 1 :
I. On Mukesh’s retirement the goodwill of the firm is valued at Rs.90,000. Ravi, Naresh and Yogesh
decided to share future profits equally. Pass the necessary journal entry for the treatment of goodwill.
Q. 172. L, M, N and 0 are partners in a firm sharing profits and losses in the ratio of 2 : 2 : 1 : 1. M and
0 decided to retire from the firm. The goodwill of the firm was valued at Rs.3,60,000. L and TV decided
to share future profits equally.
Find out Gaining Ratio and Pass necessary journal entry for the treatment of goodwill.
Q. 173. (a) A, B and C are partners in a firm sharing profits in the ratio of 5 : 3 : 2. A retires and his
share is taken up by B and C equally. Find the new profit sharing ratio and the gaining ratio.
(b) The goodwill of the firm is valued at Rs.2,00,000. No goodwill account appears in the books. Pass
necessary journal entry for recording the goodwill in the above mentioned case.
Q. 174. X, Y and Z are in partnership sharing profits in the proportion of 3 : 2 : 1. There is no goodwill
A/c in the books of the firm.
As from 1st April, 2018, it was agreed that X should give only part of time, to the business and that in
consequence he should receive in future only one half of his previous share, the remaining half being
divided equally between Y and Z The goodwill to be valued for this purpose, at Rs.40,000.
Show the new share of partners and pass necessary journal entry.
Q. 175. Kavya, Manya and Navita were partners sharing profits as 50%, 30% and 20% respectively. On
31-3-2016, their Balance Sheet was as under :
Rs. Rs.
Creditors 1,40,000 Fixed Assets 8,90,000
General Reserve 1,00,000 Investments 2,00,000
Kavya 6,00,000 Debtors 4,00,000
Manya 5,00,000 Less : Provision for
Navita 4,00,000 15,00,000 bad debts 30,000 3,70,000
Bank 1,50,000
17,40,000 17,40,000
On the above date, Kavya retired and Manya and Navita agreed to continue the business on the
following terms :
(a) Firm’s goodwill was valued at Rs.60,000 and it was decided to adjust Kavya’s share of goodwill in
the capital accounts of continuing partners.

(b) There was a claim for workmen’s compensation to the extent of Rs.4,000.
(c) Investments were revalued at Rs.2,13,000.
(d) Fixed Assets were to be depreciated by 10%.
(e) Kavya was to be paid Rs.20,000 through a bank draft and the balance was transferred to her loan
account which will be paid in two equal annual instalments together with interest @10% p.a.
Prepare Revaluation A/c, Partner’s Capital accounts and Kavya’s Loan Account till it is finally paid.
Q. 176. Kanika, Disha and Kabir were partners sharing profits in the ratio 2:1:1. On 31-3-2016, their
Balance Sheet was as under :
Rs. Rs.
Trade creditors 53,000 Bank 60,000
Employees Provident Fund 47,000 Debtors 60,000
Kanika’s Capital 2,00,000 Stock 1,00,000
Disha’s Capital 1,00,000 Fixed Assets 2,40,000
Kabir’s Capital 80,000 Profit & Loss A/c 20,000
4,80,000 4,80,000
Kanika retired on 1-4-2016. For this purpose, the following adjustments were agreed upon:
(a) Goodwill of the firm was valued at 2 years’ purchase of average profits of three completed
years preceding the date of retirement. The profits for the year:
2013-14 were Rs. 1,00,000 and for 2014-15 were Rs.1,30,000.
(b) Fixed assets were to be increased to Rs.3,00,000.
(c) Stock was to be valued at 120%.
(d) The amount payable to Kanika was transferred to her loan account.
Prepare Revaluation Account, Capital Accounts of the partners and the Balance Sheet of the
reconstituted firm. (C.B.S.E. 2017 Comptt.)
Q. 177. K, L and M were partners in a firm sharing profits in the ratio of 5 : 3 : 2. On 31.3.2016 the
K’s Capital 40,000 Debtors 16,000
L’s Capital 36,000 Less : Provision for
M’s Capital 32,000 Bad Debts 2,000 14,000
Building 1,00,400
1,38,000 1,38,000
L retired from the firm on the following terms :
(i) The new profit sharing ratio between K and M will be 2 : 1.
(ii) Goodwill of the firm is valued at Rs.72,000.
(iii) Provision for bad debts is to be made at the rate of 10% on debtors.
(iv) Creditors of Rs.4,000 will not be claimed.
Prepare Revaluation Account, Partner’s Capital Accounts and Balance Sheet of A and Matter L’s
retirement.
1 1 1
Q. 178. X, Y and Z were partners in a firm sharing profits in the ratio of 2 : 3 : 6 respectively. The Balance
Sheet of the firm as at 31st March, 2018 stood as follows :
Reserve Fund 6,000 Less. Provision for
Capitals : Doubtful Debts 250 7,750
X 20,000 Stock 12,500

Y 15,000 Motor Vans 4,000
Z 12,500 47,500 Machinery 17,500
Buildings 22,500
65,500 65,500
Y retired from the firm on 1st April, 2018 subject to the following conditions :
(a) Goodwill of the firm be valued at Rs.9,000.
(b) Machinery would be depreciated by 10% and motor vans by 15%.
(c) Stock would be appreciated by 20% and Buildings by 10%.
(d) The provision for doubtful debts would be increased by Rs.975.
(e) Liability for workmen’s compensation to the extent of Rs.825 would be created.
It was agreed that X and Z would share profits in future in the ratio of 3 : 2 respectively.
You are required to prepare the Revaluation Account, Capital Accounts of the partners and the Balance
Sheet of the firm after the retirement of Y.
Q. 179. P, Q and R were partners in a firm sharing profits in the ratio of 2 : 3 : 5. On 31-3-2016 their
P 80,000 Less. Provision for
Q 70,000 doubtful debts 5,000 35,000
R 60,000 2,10,000 Stock 50,000
Building 1,40,000
2,80,000 2,80,000
On the above date R retired from the firm due to his illness on the following terms:
(i) Building was to be depreciated by Rs.40,000.
(ii) Provision for doubtful debts was to be maintained at 20% on debtors.
(iii) Salary outstanding Rs.5,000 was to be recorded and creditors Rs.4,000 will not be claimed.
(iv) Goodwill of the firm was valued at Rs.72,000.
(v) R was to be paid Rs. 15,000 in cash, through bank and the balance was to be transferred to his
loan account.
Prepare Revaluation Account, Partner’s Capital Accounts and the Balance Sheet of P and Q after R's
retirement.
Q. 180. 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 :
A's Capital 90,000 Less: Provision for
B's Capital 60,000 Doubtful Debts 400 19,600
C’s Capital 30,000 Stock 18,000
Machinery 48,000
Buildings 1,00,000
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
A/c.
(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.
Q. 181. Raja, Nawab and Badshah were partners sharing profits and losses in the ratio of 5 : 3 : 2. Their
Balance Sheet as at 1-4-2018 was as under :
Raja 20,000 Machinery 39,000
Nawab 15,000 Investments 8,000
Badshah 10,000
65,000 65,000
Nawab retired on that date and it was decided that Raja and Badshah would now on share the profit in
the ratio of 3 : 2. Goodwill was valued at Rs. 10,000; Machinery at Rs.45,000; Investments at Rs.7,000;
Stock at Rs. 10,000 and bad debts amounting to Rs.500 be written off.
It was decided to fix the capital of the new firm at Rs.40,000 and capital accounts of Raja and Badshah
be adjusted accordingly and any difference be either paid/brought in cash.
Prepare Revaluation Account, Capital Accounts and the Balance Sheet of new firm assuming that one-
third of the amount due to Nawab was paid in cash and balance was carried to Loan A/c.
Q. 182. The Balance Sheet of Messrs A, B and C showed as follows :

Trade Creditors 7,000 Freehold Property 49,000
Capital Accounts: Plant 15,000
A 22,575 Stock 5,500
B 30,000 Sundry Debtors 6,250
C 18,500 71,075 Less : Bad Debt Provision 100 6,150
Cash at Bank 2,425
78,075 78,075
B agrees to take over the business, A and C retiring on the following terms :
(a) That the goodwill of the firm be valued at Rs. 15,000
(b) That plant and stock be reduced by 10%.
(c) That freehold property be appreciated by Rs. 1,000.
(d) That Provision for doubtful debts be brought up to Rs.250.
(e) B has to bring in sufficient cash to pay off A and C. The partners used to share profits in the
proportion of 2/5, 2/5 and 1/5.
Show the necessary Journal entries, Partner’s Capital Accounts and Balance Sheet of B after the
retirement of A and C.
Q. 183. A, B and Care partners sharing profits and losses in the ratio of 3/6 : 2/6 : 1/6. Following is their
Balance Sheet as at 31st March, 2018 :
Creditors 52,000 Plant 2,50,000
Outstanding Expenses 10,000 Stock 1,50,000
A 2,00,000 Bank 70,000
B 1,60,000 Profit & Loss A/c 12,000

C 1,40,000 5,00,000
5,62,000 5,62,000
B retires on 1st April, 2018 and the following terms were agreed :
(i) The Goodwill of the firm has been valued at Rs. 1,50,000.
(ii) Plant and Machinery has been revalued at Rs.3,00,000 and stock revalued at Rs. 1,20,000.
(iii) A sum of Rs.3 0,000 out of debtors was agreed to be bad and was to be written off.
(iv) Liability for workmen’s compensation to the extent of Rs.8,000 is to be brought into the books.
(v) A and C will continue to carry on the business and shall share profits and losses equally in
future.
(vi) Amount payable to B shall remain in the business as loan carrying interest at 18% p.a.
(a) give journal entries to give effect to the above, and
(b) prepare the opening balance sheet of A and B at 1st April, 2018.
Q. 184. A, B and C were partners sharing profits in the ratio of 4 : 3 : 2. Their Balance Sheet as at 31 st
Expenses Owing 5,000 Debtors 20,000
Reserve Fund 18,000 Less: Provision 400 19,600
A 60,000 Patents 8,000
B 50,000 Machinery 1,20,000
C 40,000 1,50,000 Goodwill 9,000
1,93,000 1,93,000
B retired on the above date upon the following terms :
(i) Goodwill of the firm be valued at Rs.63,000.
(ii) Machinery be written down by 10% and the patents written up by 25%.
(III) Provision for doubtful debts be brought upto 5% on debtors and a provision of 2% on creditors be
made for discount.
(iv) Expenses owing are to be brought down to Rs.3,900.
(v) B is to be paid Rs.30,000 immediately, which is to be contributed by A and C in their new profit
sharing ratio which is 3 : 2.
Give journal entries to record the above and the Balance Sheet ofthe firm after B's retirement.
Q. 185. X, Y and Z are partners in a firm sharing profits in proportion of 1/2, 1/6 and 1/3 respectively.
The Balance Sheet as on April 1, 2014 was as follows :
Employee’s Provident Fund 12,000 Freehold Premises 40,000
Sundry Creditors 18,000 Machine 30,000
X 30,000 Debtors 20,000
Y 30,000 Less : Provision for
Z 28,000 Doubtful Debts 1,000 19,000
Cash 7,000
1,30,000 1,30,000
Z retires from the business and the partners agree that:
(a) Machinery is to be depreciated by 10%.
(b) Provision for bad debts is to be increased to Rs. 1,500.
(c) Furniture was taken over by Z for Rs. 14,000.
(d) Goodwill is valued at Rs.21,000 on Z’s retirement.

(e) The continuing partner’s have decided to adjust their capitals in their new profit sharing ratio
after retirement of Z. Surplus or deficit if any, in their capital accounts will be adjusted through their
current accounts.
Prepare Revaluation A/c and Partners’ Capital A/cs.
Q. 186. A, B and C are partners sharing profits and losses in the ratio of 5 : 3 : 2. Their Balance Sheet
Provision for Doubtful Debts 5,000 Debtors 80,000
Capitals: Investments 30,000
A 1,40,000 Land & Building 1,42,000
C 76,000 3,06,000 Patents 4,000
Cash at Bank 10,000
3,40,000 3,40,000
C retired on 1 st April, 2018 as per the following conditions :
(i) Goodwill of the firm is to be valued at three years purchase of the average profits of the last five
years which were Rs.20,000; Rs. 12,000; Rs.30,000; Rs.6,000 (loss) and Rs.34,000 respectively.
(ii) Machinery is to be reduced to Rs.40,000 and patents are valueless.
(iii) There is no need of any provision for doubtful debts.
(iv) An unclaimed liability of Rs. 2,000 is to be written off.
(v) Out of the total insurance premium paid, Rs. 1,000 be treated as pre-paid.
(vi) Investments are revalued at Rs. 16,000 and these are taken by C at this value.
Entire sum payable to C is to be brought in by A and B in such a way so as to make their capitals
proportionate to their new profit sharing ratio which is 2 : 1.
Prepare Revaluation Account, Capital Accounts and the opening Balance Sheet of A and B.
Q. 187. X, Y and Z are partners sharing profits and losses in the ratio of 3 : 2 : 1. Their Balance Sheet
Sundry Creditors 51,000 Buildings 2,00,000
Employee’s Provident Fund 9,000 Machinery 80,000
Capitals : Sundry Debtors 1,00,000
X 1,52,000 Less : Provision 10,000 90,000
Y 1,48,000 Stock 40,000
Z 84,000 3,84,000 Cash at Bank 22,000
4,44,000 4,44,000
X retired on that date and it was decided to make the following adjustments :
(i) Stock to be depreciated by 40% and sale of old papers and materials realised Rs. 1,000.
(ii) Provision for doubtful debts to be increased to 17% of Sundry Debtors.
(iii) Machinery be depreciated by 40% and buildings be appreciated by 20%.
(iv) Partners paid Rs. 10,000 to the family of an employee who died of an heart-attack.
(v) Goodwill is valued at Rs.30,000.
(vi) Y and Z decided to share future profits in the ratio of 3 : 2.
(vii) Y and Z would introduce sufficient capital to pay off X and have thereafter a sum of Rs.25,000
as Working Capital in a manner that their Capitals would be in proportion of their new profit sharing
ratio.
Pass journal entries and prepare the Balance Sheet of the new firm.
Q. 188. Harish, Paresh and Mahesh were three partners sharing profits and losses in the ratio of 5 : 4 :
1.

Paresh retired on 31st March, 2017. His capital as on 1st April, 2016, was Rs.80,000. During the year
2016-17, he made drawings of Rs.5,000. He was to be charged interest on drawings Rs. 100.
The partnership deed provides that on the retirement of a partner, he will be entitled to :
(i) His share of capital.
(ii) Interest on capital @ 10% per annum.
(iii) His share of profit in the year of retirement.
(iv) His share of goodwill of the firm.
(v) His share in the profit/loss on revaluation of assets and liabilities.
Additional information :
(a) Paresh’s share in the profits of the firm for the year 2016-17 was Rs.20,000.
(b) Goodwill of the firm was valued at Rs.24,000.
(c) The firm suffered a loss of Rs. 12,000 on the revaluation of assets and liabilities.
(d) It was decided to transfer the amount due to Paresh to his loan account bearing interest @ 6%
per annum. The loan was to be repaid in two equal annual instalments, the first instalment to be paid on
31st March, 2018.
(i) Paresh’s Capital Account.
(ii) Paresh’s Loan Account till it is finally closed. (I.S.C. 2018)
Q. 189. Ajay, Bhawna and Shreya were partners sharing profits in the ratio 2:2: 1. On July 1, 2017
Shreya died. The books of accounts are closed on March 31 every year. Sales for the year 2016-17
amounted to Rs.5,00,000 and that from 1st April to 30th June 2017 were Rs. 1,40,000. The rate of profit
during the past three years had been 10% on sales. Since Shreya’s legal representative was her only son,
who is specially abled, it was decided that the profit for the purpose of settling Shreya’s account is to
be calculated as 20% on sales.
Calculate Shreya’s share of profits till the date of her death and pass necessary journal entry for the
same. (C.B.S.E. 2018, Comptt.)
Q. 190. Dev, Swati and Sanskar were partners in a firm sharing profits in the ratio of 2 : 2 : 1. On 31-3-
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 87,000 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 profits of the last four years were :
Years Profit
Rs.
2010-11 2,04,000
2011-12 1,80,000
2012-13 90,000
2013-14 (Loss) 57,000
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. (C.B.S.E. 2015 Set 1)
Q. 191. Vikas, Gagan and Momita were partners in a firm sharing profits in the ratio of 2 : 2 : 1. The
firm closes its books on 31st March every year. On 30th September, 2014 Momita died. According to
the provisions of partnership deed the legal representatives of a deceased partner are entitled for the
following in the event of his/her death :
(i) Capital as per the last Balance Sheet.
(ii) Interest on capital at 6% p.a. till the date of her deam.

(iii) Her share of profit to the date of death calculated on the basis of average profits of last four years.
(iv) Her share of goodwill to be determined on the basis of three years purchase of the average profits
of last four years. The profits of last four years were :
Year Profit
Rs.
2010-11 30,000
2011-12 50,000
2012-13 40,000
2013-14 60,000
The balance in Momita’s capital account on 31-3-2014 was Rs.60,000 and she had withdrawn Rs.
10,000 till the date of her death. Interest on her drawings were Rs.300.
Prepare Momita’s Capital Account to be presented to her executors.
(C.B.S.E. 2015 Set II)
Q. 192. Babita, Chetan and David are partners in a firm sharing profits in the ratio of 2 :1 :1 respectively.
Firm closes its accounts on 31 st March every year. Chetan died on 30th September, 2012. There was a
balance of Rs. 1,25,000 in Chetan’s Capital Account in the beginning of the year. In the event of death
of any partner, the partnership deed provides for the following :
(i) Interest on capital will be calculated at the rate of 6% p.a.
(ii) The executor of deceased partner shall be paid Rs.24,000 for his share of goodwill.
(iii) His share of Reserve Fund which is Rs. 12,000; shall be paid to his executor.
(iv) His share of profit till the date of death will be calculated on the basis of sales. It is also specified
that the sales during the year 2011-12 were Rs.4,00,000. The sales from 1st April, 2012 to 30th
September, 2012 were Rs. 1,20,000, the profit of the firm for the year ending 31st March, 2012 was
Rs.2,00,000.
Prepare Chetan’s Capital Account to be presented to his executors.
(CBSE 2013 Comptt.)
Q. 193. Aman, Raman and Suman were partners sharing profits the ratio of 3:2:1 respectively. The
profit and sales for the year ended 31 March, 2017 were Rs.3 lakh and Rs.10 lakh respectively.
Aman died on 30th November, 2017. Calculate the share of deceased partner in the profits for the period
from 1st April, 2017 to 30th November, 2017, if the same is calculated:
(i) On the basis of sales which were Rs.8 lakh from 1st April, 2017 to 30th November, 2017.
(ii) On the basis of Time.
Also pass the necessary journal entry for the share.
Q. 194. Ram, Mohan and Sohan were partners sharing profits and losses in the ratio of 5 : 3 : 2. On 31st
March, 2017 their Balance Sheet was as under :
Capitals : Leasehold 1,25,000
Ram 1,50,000 Patents 30,000
Mohan 1,25,000 Machinery 1,50,000
Sohan 75,000 3,50,000 Stock 1,90,000
Workmen’s Compensation
Reserve 30,000
5,35,000 5,35,000
Sohan died on 1st August, 2017. It was agreed that:
(i) Goodwill of the firm is to be valued at Rs. 1,75,000.
(ii) Machinery be valued at Rs. 1,40,000; Patents at Rs.40,000; Leasehold at Rs. 1,50,000 on this date.
(iii) For the purpose of calculating Sohan’s share in the profits of 2017-18, the profits should be taken
to have accrued on the same scale as in 2016-17, which were Rs.75,000.
Prepare Sohan’s Capital Account and Revaluation Account.

Q. 195. 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 in the event of death of 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 year’s purchase of the average profits for the three
preceding completed years.
On 31st December, 2016 the Trial Balance was as under :
Particulars Dr. (Rs.) Cr. (Rs.)
Risha’s Capital 90,000
Nisha’s Capital 60,000
Reserves 30,000
Bills Receivables 50,000
Investments 40,000
Cash 1,10,000
Creditors 20,000
2,00,000 2,00,000
The profits for the three years were : 2014 Rs.4,200; 2015 Rs.3,900 and 2016 Rs.4,500. Nisha died on
31st May, 2017. Draw up the deceased Partner’s Capital A/c and Executor’s A/c.
Q. 196. In the partnership agreement between X, Y and Z who were sharing profits in the ratio of 5 : 3
: 2, the goodwill was to be valued on the death of any partner on the basis of such partner’s share of 2
year’s profits calculated on the average of 5 year’s profits immediately preceding the year of death less
10%. The firm’s profits were 2014 Rs. 10,000; 2015 Rs.30,000; 2016 Rs.43,000 and in 2017 and 2018
losses of Rs.6,000 and Rs.4,000 respectively. The deceased partner’s share of profits for the period of
his life-time in the year of death was to be based on the average of the profits of the previous 3 years
plus 10%.
X died on 31st August, 2018. His Capital A/c showed a credit of Rs.50,000 on 1st April, 2018 and he
had drawn Rs.4,000 since that date.
Calculate the amount due to his legal representatives.
Q. 197. A, B and C were partners. Their partnership deed provided that they were to share profits thus;
A 26 per cent; B 34 per cent; C 40 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 that the deceased partner’s share should be
credited with an amount for 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.
Q. 198. Bhatt and Seth were carrying on a business in partnership sharing profits and losses in the ratio
of 3 : 2 respectively. They dosed their books of accounts every year on 31st March. Their Balance Sheet
Bhatt’s Capital 90,000 Furniture 20,000
Seth’s Capital 60,000 Stock 1,00,000
2,00,000 2,00,000

Seth died on 1 st August, 2018. Partnership deed provided that in the event of death of a partner his
heirs would be entitled to be paid out:
(a) Capital to his credit at the date of death.
(b) His share of reserve at the date of the last Balance Sheet.
(c) His share of profits to the date of his death based on the average profits of the last three
accounting years.
(d) By way of goodwill his share of total profits for the preceding three accounting years.
The profits for the three preceding accounting years ending 31st March each year were as follows :
Rs.
2016 41,800
2017 39,200
2018 45,000
Prepare Seth’s Capital Account transferring amount due to Seth’s Heir’s Loan Account. Clearly show
your calculations.
Q. 199. A, B and C were partners in a firm sharing profits in the ratio of 5 : 3 : 2. On 31st March, 2015
their Balance Sheet was as under :
Creditors 7,000 Buildings 20,000
Reserves 10,000 Machinery 30,000
A’s Capital 30,000 Stock 10,000
S’s Capital 25,000 Patents 6,000
C’s Capital 15,000 70,000 Cash 21,000
87,000 87,000
C died on 1st October, 2015. It was agreed between his executors and the remaining partners that:
(a) Goodwill be valued at 2 year’s purchase of the average profits of the previous five years, which were
2011 : Rs. 15,000; 2012 : Rs.13,000; 2013 : Rs.12,000; 2014: Rs. 15,000 and 2015 : Rs.20,000.
(b) Patents be valued at Rs.8,000; Machinery at Rs.28,000; Buildings at Rs.30,000.
(c) Profit for the year 2015-2016 be taken as having accrued at the same rate as the previous year.
(d) Interest on capital be provided at 10% p.a.
(e) A sum of Rs.7,750 was paid to his executor’s immediately.
Prepare C’s Capital Account and his executor’s account at the time of his death.
Q.200. X, Y and Z were partners sharing profits in the ratio 3 : 2 : 1. On 31st March, 2018, their Balance
Sheet stood as under :
Capitals : Cash at Bank 70,000
Y 70,000 Patents 15,000
Z 50,000 1,95,000 Stock 25,000
General Reserve 24,000 Buildings 75,000
Machinery 36,000
2,91,000 2,91,000
Z died on May 31st 2018. It was agreed that:
(a) Goodwill was valued at 3 year’s purchase of the average profits of the last five years, which were
2014 : Rs.40,000; 2015 : Rs.40,000; 2016 : Rs.30,000; 2017 : Rs.40,000 and 2018 : Rs.50,000.
(b) Machinery was valued at Rs.70,000, Patents at Rs.20,000 and Buildings at Rs.66,000.
(c) For the purpose of calculating T s share of profits till the date of death, it was agreed that the
same be calculated based on the average profits for the last 2 years.
(d) The executor of the deceased partner is to be paid the entire amount due by means of a cheque.
Prepare Ts Capital Account to be rendered to the executor and also a Journal entry for the settlement of
the amount due to Z’s executors.

Q. 201. M, N and O were partners in a firm sharing profits and losses equally. Their Balance Sheet as
at 31st March, 2015 was as follows :
Capitals : Plant and Machinery 60,000
M Stock 30,000
70,000
N Sundry Debtors 95,000
70,000
O 70,000 2,10,000 Cash at Bank 40,000
General Reserve 30,000 Cash in Hand 35,000
Creditors 20,000
2,60,000 2,60,000
N died on 12th June, 2015. According to the Partnership Deed, executors of the deceased partner are
entitled to :
(i) Balance of partner’s capital account.
(ii) Interest on Capital @5% p.a.
(iii) Share of goodwill calculated on the basis of twice the average of past three year’s profits and
(iv) Share of profits from the closure of the last accounting year till the date of death on the basis of
twice the average of three completed year’s profits before death.
Profits for the years ended 31st March 2013, 2014 and 2015 were Rs.80,000, Rs.90,000 and Rs.
1,00,000 respectively. Show the working for deceased partner’s share of goodwill and profits till the
date of his death. Pass the necessary journal entries and prepare N’s Capital Account to be rendered to
his executors.
Q. 202. B, C and D were partners in a firm sharing profits in the ratio of 5 : 3 : 2. On 31st March, 2016,
their Balance Sheet was as follows :
B 40,000 Profit and Loss A/c 70,000
C 50,000
D 52,000 1,42,000
2,72,000 2,72,000
B died on 30th June, 2016. The partnership deed provided for the following on the death of a partner :
(i) Goodwill of the firm was to be valued at 3 years’ purchase of the average profits of last 5 years. The
profits for the years ending 31-3-2015, 31-3-2014, 31-3-2013 and 31-3-2012 were Rs.70,000;
Rs.60,000; Rs.50,000 and Rs.40,000 respectively.
(a) B’s share of profit or loss till the date of his death was to be calculated on the basis of the profit
or loss for the year ending 31st March, 2016.
You are required to calculate the following :
(i) Goodwill of the firm and b’s share of goodwill at the time of his death.
(ii) B’s share in the profit or loss of the firm till the date of his death.
(iii) Prepare B’s Capital A/c at the time of his death to be presented to his executors.
Q. 203. Hiren, Suren and Chaman were partners sharing profits and losses in the ratio of 2 : 1 : 1. They
closed their books on 31st March each year. Hiren died on 31st August, 2013, when their Balance Sheet
was as follows :
Profit for 5 months Advertisement Suspense A/c 6,400
— from 1-4-13 to 31-8-13

(before interest and salaries) 4,050
Capital Accounts:
Hiren 6,000
Suren 10,000
Chaman 4,000 20,000
35,000 35,000
According to the partnership deed :
(i) Interest on capital was allowed to all partners @ 6% p.a.
(ii) Hiren and Chaman were entitled to salaries at Rs. 100 and Rs.50 per month respectively.
(iii) In the event of death of a partner goodwill was to be valued at 3 year’s purchase of the average
net profits of 2 completed years preceding death. The net profits for the years 2011-12 and 2012-13
were Rs.4,000 and Rs.6,000 respectively.'
Hiren’s share was paid to his executors.
(i) Hiren’s Capital Account.
(ii) Hiren’s Executor’s Account. (l.S.C. Sample Question Paper 2015)
Q. 204. Arun, Varan and Karan were partners in a firm sharing profits in the ratio of 4 : 3 : 3. On 31-3-
2014, their Balance Sheet was as follows :
Karan’s Loan 28,000 Bills Receivables 9,000
Capitals : Furniture 27,000
Arun 70,000 Machinery 1,25,000
Varun 68,000 1,38,000 Karan’s Capital 13,000
1,95,000 1,95,000
On 30.9.2014, Karan died. The Partnership Deed provided for the following to the executors of the
deceased partner :
(a) His share in the goodwill of the firm calculated on the basis of three years’ purchase of the average
profits of the last four years. The profits of the last four years were Rs. 1,90,000; Rs. 1,70,000; Rs.
1,80,000 and Rs. 1,60,000 respectively.
(b) His share in the profits of the firm till the date of his death calculated on the basis of the average
profits of the last four years.
(c) Interest @ 8% p.a. on the credit balance, if any, in his Capital Account.
(d) Interest on his loan @12% p.a.
Prepare Karan’s Capital Account to be presented to his executors, assuming that his loan and interest
on loan were transferred to his Capital Account.
Q. 205. Ram, Krishna and Mohan are partners in a firm, sharing profits and losses in the ratio of 3 : 5 :
2. On 31st March, 2014, their Balance Sheet was as under :
General Reserve 16,000 Plant 72,000
Capital A/cs : Inventory 34,000
Ram 76,800 Trade Marks 26,400
Krishna 69,600 Bills Receivables 39,200
Mohan 54,000 2,00,400 Cash in Hand 24,000
2,55,600 2,55,600
Krishna died on 30th September, 2014. An agreement was reached amongst Ram, Mohan and Krishna’s
legal representative that:

(a) Goodwill to be valued at 2 year’s purchase of the average profits of the previous three years,
which were :
Year: 2011-12 2012-13 2013-14
Profit: Rs. 31,200 Rs.28,800 Rs.36,000
(b) Trade marks to be revalued at Rs. 19,200; plant at 80% of its book value and land building at
Rs.57,600.
(c) Krishna’s share of profit to the date of his death to be calculated on the basis of previous year’s
profit.
(d) Interest on capital to be provided @10% per annum.
(e) Rs.60,080 to be paid in cash to Krishna’s legal representative and balance to be transferred to
the legal representative’s loan account.
(i) Revaluation Account.
(ii) Krishna’s Capital Account, and
(III) Krishna’s Legal Representative’s Account. (I.S.C. 2015)
Q. 206. P, Q and R were partners sharing profits in the ratio of 2 : 2 : 1. The firm closes its books on
March 31 every year. On June 30, 2017, R died. The following information is provided on R's death:
(i) Balance in his capital account in the beginning of the year was Rs.6,50,000.
(ii) He withdrew Rs.60,000 on May 15, 2017 for his personal use.
On the date of death of a partner the partnership deed provided for the following:
(a) Interest on capital @ 10 % per annum.
(b) Interest on drawings @ 12 % per annum.
(c) His share in the profit of the firm till the date of death, to be calculated on the basis of the rate
of Net Profit on Sales of the previous year, which was 25 %. The Sales of the firm till June 30, 2017
were Rs.6,00,000.
Prepare R’s Capital Account on his death to be presented to his executors.
Q. 207. Rita, Nina and Mita are partners in a firm sharing profits and losses in the ratio of 3 : 2 : 1. Mita
dies on 1st April, 2017. On the date at her death, it was decided to value goodwill on the basis of two
year’s purchase of weighted average profits of the firm for the last three years.
The profits of the last three years and weights assigned were :
Year Profit (Rs.) Weights assigned
2014-15 30,000 1
(including gain from speculation
Rs. 10,000)
2015-16 80,000 2
2016-17 1,00,000 3
(i) Calculate the firm’s goodwill on the date of Mita’s death (Show the working with the formula).
(ii) Pass the necessary journal entry to credit Mita’s Capital Account with her share of goodwill.
(I.S.C. 2018)
Q. 208. Pranav, Karan and Rahim were partners in a firm sharing profits and losses in the ratio of 2 : 2
: 1. On 31st March, 2017 their Balance Sheet was as follows :
Balance Sheet of Pranav, Karan and Rahim as at 31.3.2017
Rs. Rs.
Creditors 3,00,000 Fixed Assets 4,50,000
Capitals : Debtors 2,00,000
Pranav 2,00,000 Bank 1,50,000
Karan 2,00,000

Rahim 1,00,000 5,00,000
9,50,000 9,50,000
Karan died on 12.6.2017. According to the partnership deed, the legal representatives of the deceased
partner were entitled to the following :
(j) Balance in his Capital Account.
(ii) Interest on Capital @12% p.a.
(iii) Share of goodwill. Goodwill of the firm on Karan’s death was valued at Rs.60,000.
(iv) Share in the profits of the firm till the date of his death, calculated on the basis of last year’s profit.
The profit of the firm for the year ended 31.3.2017 was Rs.5,00,000.
Prepare Karan’s Capital Account to be presented to his representatives.
(C.B.S.E. 2018)
Q209. A, B and C were partners in a firm sharing profits in the ratio of 6 : 5 :4. Their capitals were A—
Rs. 1,00,000;
B—Rs. 80,000 and C—Rs. 60,000 respectively. On 1 st April, 2009, A retired from the firm and the
new profit sharing ratio between B and C was decided as 1 :4. On A's retirement, the goodwill of the
firm was valued at Rs. 1,80,000. Showing your calculations clearly, pass the necessary Journal entry
for the treatment of goodwill on A's retirement. (Foreign 2010)
[Ans.: C's Gain—8/15, B's Sacrifice—2/15; Dr. C's Capital A/c by Rs.96,000;
Cr. A's Capital A/c by Rs.72,000 and B's Capital A/c by Rs.24,000.]
Revaluation Account
Q210. X, Y and Z are partners sharing profits and losses in the ratio of 5 : 3 : 2. Z retires and on the
date of his retirement, the following adjustments were agreed upon:
(a) The value of Furniture is to be increased by Rs. 12,000.
(b) The value of stock to be decreased by Rs. 10,000.
(c) Machinery of the book value of Rs. 50,000 is to be depreciated by 10%.
(d) A Provision for Doubtful Debts @ 5% is to be created on debtors of book value of Rs. 40,000.
(e) Unrecorded investment worth Rs. 10,000.
(f) An item of Rs. 1,000 included in bills payable is not likely to be claimed, hence should be written
back. Pass necessary Journal entries.
Q211. A, Sand Cwere partners, sharing profits and losses in the ratio of 2:2:1.6 decides to retire on 31
st March, 2018. On the date of his retirement, some of the assets and liabilities appeared in the books
as follows: Creditors Rs. 70,000; Building Rs. 1,00,000; Plant and Machinery Rs. 40,000; Stock of Raw
Materials Rs. 20,000; Stock of Finished Goods Rs. 30,000 and Debtors Rs. 20,000.
The following was agreed among the partners on B's retirement:
(a) Building to be appreciated by 20%.
(b) Plant and Machinery to be depreciated by 10%.
(c) A Provision of 5% on Debtors to be created for Doubtful Debts.
(d) Stock of Raw Materials to be valued at Rs. 18,000 and Finished Goods at Rs. 35,000.
(e) An Old Computer previously written off was sold for Rs. 2,000 as scrap.
(f) Firm had to pay Rs. 5,000 to an injured employee.
Pass necessary Journal entries to record the above adjustments and prepare the Revaluation Account.
Q212. Ramesh wants to retire from the firm. The gain (profit) on revaluation on that date was Rs.
12,000. Mohan and Rahul want to share this in their new profit-sharing ratio of 3 : 2. Ramesh wants
this to be shared equally. How is the profit to be shared? Give reasons. (Delhi 2001)
30. X, Y and Z are partners in a firm sharing profits and losses in the ratio of 3 :2 :1. Z retires from the
firm on 31 st March, 2018. On the date of Z's retirement, the following balances appeared in the books
of the firm:
General Reserve Rs. 1,80,000
Profit and Loss Account (Dr.) Rs. 30,000
Workmen Compensation Reserve Rs. 24,000 which was no more required Employees' Provident Fund
Rs. 20,000.
Pass necessary Journal entries for the adjustment of these items on Z's retirement.

Q213. Asha, Naveen and Shalini were partners in a firm sharing profits in the ratio of 5 :3 :2. Goodwill
appeared in their books at a value of Rs. 80,000 and General Reserve at Rs. 40,000. Naveen decided to
retire from the firm. On the date of his retirement, goodwill of the firm was valued at Rs. 1,20,000. The
new profit ratio decided among Asha and Shalini is 2 : 3.
Record necessary Journal entries on Naveen's retirement. (Delhi2015 C)
(e) Unrecorded investment worth Rs. 10,000.
(f) An item of Rs. 1,000 included in bills payable is not likely to be claimed, hence should be written
back. Pass necessary Journal entries.
Q214. A, Sand C were partners, sharing profits and losses in the ratio of 2:2:1.6 decides to retire on 31st
March, 2018. On the date of his retirement, some of the assets and liabilities appeared in the books as
follows: Creditors Rs. 70,000; Building Rs. 1,00,000; Plant and Machinery Rs. 40,000; Stock of Raw
Materials Rs. 20,000; Stock of Finished Goods Rs. 30,000 and Debtors Rs. 20,000.
The following was agreed among the partners on B's retirement:
(a) Building to be appreciated by 20%.
(b) Plant and Machinery to be depreciated by 10%.
(c) A Provision of 5% on Debtors to be created for Doubtful Debts.
(d) Stock of Raw Materials to be valued at Rs. 18,000 and Finished Goods at Rs. 35,000.
(e) An Old Computer previously written off was sold for Rs. 2,000 as scrap.
(f) Firm had to pay Rs. 5,000 to an injured employee.
Pass necessary Journal entries to record the above adjustments and prepare the Revaluation Account.
Q215. Ramesh wants to retire from the firm. The gain (profit) on revaluation on that date was Rs.
12,000. Mohan and Rahul want to share this in their new profit-sharing ratio of 3 : 2. Ramesh wants
this to be shared equally. How is the profit to be shared? Give reasons. (Delhi 2001)
Q216. X, Y and Zare partners in a firm sharing profits and losses in the ratio of 3 :2 :1. Z retires from
the firm on 31 st March, 2018. On the date of Z's retirement, the following balances appeared in the
books of the firm:
General Reserve Rs. 1,80,000
Profit and Loss Account (Dr.) Rs. 30,000
Workmen Compensation Reserve Rs. 24,000 which was no more required Employees' Provident Fund
Rs. 20,000.
Pass necessary Journal entries for the adjustment of these items on Z's retirement.
Q217. Ram, Laxman and Bharat are partners sharing profits in the ratio of 3 :2 :1. Goodwill is appearing
in the
books at a value of Rs. 1,80,000. Laxman retires and at the time of his retirement, goodwill is valued at
Rs. 2,52,000. Ram and Bharat decided to share future profits in the ratio of 2 :1. The Profit for the first
year after Laxman's retirement amount to Rs. 1,20,000. Give the necessary Journal entries to record
goodwill and to distribute the profit. Show your calculations clearly. (Foreign 2012)
Q218. The Partnership Deed of C and D, who are equal partners, has a clause that any partner may retire
from the firm on the following terms by giving a six-month notice in writing:
The retiring partner shall be paid—
(a) the amount standing to the credit of his Capital Account and Current Account.
(b) his share of profits to the date of retirement, calculated on the basis of the average profit of the three
(c) half the amount of the goodwill of the firm calculated at 1V2 times the average profit of the three
C gave a notice on 31 st March, 2017 to retire on 30th September, 2017, when the balance of his Capital
Account was Rs. 6,000 and his Current Account (Dr.) Rs. 500. The profits for the three preceding
completed years were: year ended 31st March, 2015 Rs. 2,800; year ended 31st March, 2016 Rs. 2,200

and year ended 31st March, 2017 Rs. 1,600. What amount is due to C in accordance with the partnership
agreement?
Q219. X, Y and Z were partners in a firm sharing profits in the ratio of 2 : 2 : 1. Their Balance Sheet as
at 31st March, 2018 was:
Capital X 82,000 Stock 42,000
A/cs:
Y 60,000 Building 2,07,000
Z 75,500 2,17,500 Patents 9,000
2,85,000 2,85,000
Y retired on 1st April, 2018 on the following terms:
(a) Goodwill of the firm was valued at Rs. 70,000 and was not to appear in the books.
(b) Bad Debts amounted to Rs. 2,000 were to be written off.
(c) Patents were considered as valueless.
Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet of X and Z after Y's
retirement. (Delhi2004 C, Modified)
Q220. Kanika, Disha and Kabir were partners sharing profits in the ratio of 2 :1 :1. On 31 st March,
2016, their Balance Sheet was as under:
Trade creditors 53,000 Bank 60,000
Employees' Provident 47,000 Debtors 60,000
Fund
Kanika's Capital 2,00,000 Stock 1,00,000
Disha's Capital 1,00,000 Fixed Assets 2,40,000
Kabir's Capital 80,000 Profit and Loss 20,000
A/c
4,80,000 4,80,000
Kanika retired on 1st April, 2016. For this purpose, the following adjustments were agreed upon:
(a) Goodwill of the firm was valued at 2 years' purchase of average profits of three completed years
preceding the date of retirement. The profits for the year:
2013-14 were Rs. 1,00,000 and for 2014-15 were Rs. 1,30,000.
(b) Fixed Assets were to be increased to Rs. 3,00,000.
(c) Stock was to be valued at 120%.
(d) The amount payable to Kanika was transferred to her Loan Account.
Prepare Revaluation Account, Capital Accounts of the partners and the Balance Sheet of the
reconstituted firm. [AI2017C]
Q221. The Balance Sheet of X, Y and Z who were sharing profits in proportion to their capitals stood
as follows at 31st March, 2018:
X 45,000 Less: Provision for Doubtful 200 9,800
Debts
Y 30,000 Stock 16,000
Z 15,000 90,000 Plant and Machinery 17,000

1,03,800 1,03,800
Y retires on 1st April, 2018 and the following readjustments were agreed upon:
(a) Out of insurance premium which was debited to the Profit and Loss Account, Rs. 1,500 be carried
forward as Unexpired Insurance.
(b) The Provision for Doubtful Debts be brought up to 5% of Debtors.
(c) The Land and Building be appreciated by 20%.
(d) A provision of Rs. 4,000 be made in respect of outstanding bills for repairs.
(e) The goodwill of the entire firm be fixed at Rs. 21,600.
Y's share of goodwill be adjusted to that of X and Z who are going to share in future profits in the ratio
of 3:1. Pass necessary Journal entries and give the Balance Sheet after Y’s retirement.
Q222. N, 5 and G were partners in a firm sharing profits and losses in the ratio of 2 : 3 : 5. On 31 st
March, 2016 their Balance Sheet was as under:
General 90,000 Debtors 1,35,000
Reserve
Capitals: Less: Provision 15,000 1,20,000
N 2,25,000 Stock 1,50,000
S 3,75,000 Machinery 4,50,000
G 4,50,000 10,50,000 Patents 90,000
Building 3,00,000
13,05,000 13,05,000
G retired on the above date and it was agreed that:
(a) Debtors of Rs. 6,000 will be written off as bad debts and a provision of 5% on debtors for bad and
(a) Patents will be completely written off and stock, machinery and building will be depreciated by 5%.
(c) An unrecorded creditor of Rs. 30,000 will be taken into account.
(d) N and S will share the future profits in 2 : 3 ratio.
(e) Goodwill of the firm on G's retirement was valued at Rs. 90,000.
Pass necessary Journal entries for the above transactions in the books of the firm on G's retirement.
(Foreign 2017)
Q223. A, B and C are partners in a firm, sharing profits and losses as A 1/3, B 1/2, and C 1/6
respectively. The Balance Sheet of the firm as at 31st March, 2018 was:
Capital A/cs: Factory Building 50,000
C 25,000 95,000 Stock 25,000
Sundry Creditors 25,000 Less: Provision for Doubtful 500 17,500
Debts
Loan Payable 15,000 Cash in Hand 8,500
1,51,000 1,51,000
C retires on 1 st April, 2018 subject to the following adjustments:
(a) Goodwill of the firm be valued at Rs. 24,000. C's share of goodwill be adjusted into the accounts of
A and B who are going to share in future in the ratio of 3 : 2.
(b) Plant and Machinery to be depreciated by 10% and Furniture by 5%.
(c) Stock to be appreciated by 15% and Factory Building by 10%.

(d) Provision for Doubtful Debts to be raised to Rs. 2,000.
You are required to pass Journal entries to record the above transactions in the books of the firm and
show the Profit and Loss Adjustment Account, Capital Account of C and the Balance Sheet of the firm
after C's retirement.
Q224. X, Y and Z were in partnership sharing profits and losses in the proportions of 3 : 2 : 1. On 1 st
April, 2018, Y retires from the firm. On that date, their Balance Sheet was:
Trade Creditors 3,000 Cash in Hand 1,500
Expenses Owing 4,500 Debtors 15,000
Reserve Fund 13,500 Stock 12,000
Capital A/cs: X 15,000 Factory Premises 22,500
Z 15,000 45,000 Loose Tools 4,000
70,500 70,500
The terms were:
(a) Goodwill of the firm was valued at Rs. 13,500 and adjustment in this respect was to be made in the
continuing Partners' Capital Accounts without raising Goodwill Account.
(b) Expenses Owing to be brought down to Rs. 3,750.
(c) Machinery and Loose Tools are to be valued @ 10% less than their book value.
(d) Factory Premises are to be revalued at Rs. 24,300.
Show Revaluation Account, Partners' Capital Accounts and prepare the Balance Sheet of the firm after
the retirement of Y.
Q225. Pankaj, Naresh and Saurabh are partners sharing profits in the ratio of 3 : 2 : 1. On 31st March,
2018, Naresh retired from the firm due to his illness. On that date, Balance Sheet of the firm was as
follows:
General Reserve 12,000 Bank 7,600
Bills Payable 12,000 Less: Provision for Doubtful 400 5,600
Debts
Provision for Legal 6,000 Furniture 41,000
Damages
Capital A/cs: Premises 80,000
Pankaj 46,000
Naresh 30,000
Saurabh 20,000 96,000
1,43,200 1,43,200
(a) Premises have appreciated by 20%, stock depreciated by 10% and provision for doubtful debts was
to be made 5% on debtors. Further, provision for legal damages is to be made for Rs. 1,200 and furniture
to be brought up to Rs. 45,000.
(b) Goodwill of the firm be valued at Rs. 42,000.
(c) Rs. 26,000 from Naresh's Capital Account be transferred to his Loan Account and balance be paid
through bank: if required, necessary loan may be obtained from bank.
(d) New profit-sharing ratio of Pankaj and Saurabh is decided to be 5 :1.
Give the necessary Ledger Accounts and Balance Sheet of the firm after Naresh's retirement.
(NCERT, Modified)

Q226. X, Y and Z are partners sharing profits in the ratio of 4 : 3 : 2. Their Balance Sheet as at 31st
March, 2018 stood as follows:
X 12,000 Less: Provision for Doubtful 105 2,940
Debts
Y 9,000 Stock 4,800
Z 6,000 27,000 Plant and Machinery 5,100
Y's Loan 20,000
51,140 51,140
Y having given notice to retire from the firm, the following adjustments in the books of the firm were
agreed upon:
(a) That the Land and Building be appreciated by 10%.
(b) That the Provision for Doubtful Debts is no longer necessary since all the debtors are considered
good.
(c) That the Stock be appreciated by 20%.
(d) That the adjustment be made in the accounts to rectify a mistake previously committed whereby Y
was credited in excess by Rs. 810, while X and Z were debited in excess of Rs. 420 and Rs. 390
respectively.
(e) Goodwill of the firm be fixed at Rs. 5,400 and Y's share of the same be adjusted to that of X and Z
who were going to share in the ratio of 2 :1.
(f) It was decided by X and Y to settle Y's account immediately on his retirement.
You are required to show: (i) Revaluation Account; (ii) Partners' Capital Accounts and (iii) Balance
Sheet of the firm after Y's retirement.
Q227. A, B and C are partners sharing profits and losses in the ratio of 4: 3 : 3 respectively. Their
Balance Sheet as at 31 st March, 2018 is:
Bills Payable 3,000 Plant and Machinery 28,000
Reserves 20,000 Electronic Typewriter 8,000
4 32,000 Sundry Debtors 14,000
B 24,000 Less: Provision for Doubtful 2,000 12,000
Debts
C 20,000 76,000 Bank 2,000
1,06,000 1,06,000
On 1st April, 2018, B retires from the firm on the following terms:
(a) Goodwill of the firm is to be valued at Rs. 14,000.
(b) Stock, Land and Building are to be appreciated by 10%.
(c) Plant and Machinery and Electronic Typewriter are to be depreciated by 10%.
(d) Sundry Debtors are considered to be good.
(e) There is a liability of Rs. 2,000 for the payment of outstanding salary to the employees of the firm.
This liability has not been shown in the above Balance Sheet but the same is to be recorded now.
(f) Amount payable to B is to be transferred to his Loan Account.
Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet of A and C after B's
retirement.
Q228. Following is the Balance Sheet of X, Y and Z as at 31st March, 2018. They shared profits in the
ratio of 3:3:2:

Partners' Loan A/cs: Debtors 80,000
X 50,000 Less: Provision for Doubtful 4,000 76,000
Debts
Y 40,000 Stock 1,24,000
X 1,00,000 Advertisement Suspense A/c 16,000
Y 60,000 Profit and Loss A/c 4,000
Z 50,000 2,10,000
6,30,000 6,30,000
On 1st April, 2018, Y decided to retire from the firm on the following terms:
(a) Stock to be depreciated by Rs. 12,000.
(b) Advertisement Suspense Account to be written off.
(c) Provision for Doubtful Debts to be increased to Rs. 6,000.
(d) Fixed Assets be appreciated by 10%.
(e) Goodwill of the firm, valued at Rs. 80,000 and the amount due to the retiring partners be adjusted
in X's and Z's Capital Accounts.
Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet to give effect to the
above. (Delhi, Al 2009 C, Modified)
Q229. X, Y and Z are partners sharing profits and losses in the ratio of 3 : 2 :1. The Balance Sheet of
the firm as at 31st March, 2018 stood as follows:
Workmen Compensation 12,000 Debtors 40,000
Reserve
Reserve Debts
X 68,000 Investment (Market Value Rs. 15,000
17,600)
Y 32,000 Patents 10,000
Z 21,000 1,21,000 Machinery 50,000
Goodwill 6,000
1,60,000 1,60,000
Z retired on the above date on the following terms:
(b) Value of Patents is to be reduced by 20% and that of machinery to 90%.
(c) Provision for doubtful debts is to be created @ 6% on debtors.
(d) Z took over the investment at market value.
(e) Liability for Workmen Compensation to the extent of Rs. 750 is to be created.
(f) A liability of Rs. 4,000 included in creditors is not to be paid.
(g) Amount due to Z to be settled on the following basis: Rs. 5,067 to be paid immediately, 50% of the
balance within one year and the balance by a Bill of Exchange (without interest) at 3 Months.
Give necessary Journal entries for the treatment of goodwill, prepare Revaluation Account, Capital
Accounts and the Balance Sheet of the new firm.
Q230. X, Y and Z are partners in a firm sharing profits in the ratio of 3 :2:1. On 1st April, 2009, Y
retires from the firm. X and Z agree that the capital of the new firm shall be fixed at Rs. 2,10,000 in the
profit-sharing ratio. The Capital Accounts of X and Z after all adjustments on the date of retirement
showed balance of Rs. 1,45,000 and Rs. 63,000 respectively. State the amount of actual cash to be
brought in or to be paid to the partners. (A! 2010)

Q231. On 31st March, 2018, the Balance Sheet of A, B and C who were sharing profits and losses in
proportion to their capitals stood as:
Capital A/cs: Less: Provision for Doubtful 200 9,800
Debts
A 45,000 Stock 9,000
C 15,000 90,000 Freehold Premises 50,000
1,05,800 1,05,800
B retires and following readjustments of assets and liabilities have been agreed upon before
ascertainment of the amount payable to B:
(a) Out of the amount of insurance premium which was debited to Profit and Loss Account, Rs. 1,000
be carried forward for Unexpired Insurance.
(b) Freehold Premises be appreciated by 10%.
(c) Provision for Doubtful Debts is brought up to 5% on Debtors.
(d) Machinery be depreciated by 5%.
(e) Liability for Workmen Compensation to the extent of Rs. 1,500 would be created.
(f) That the goodwill of the entire firm be fixed at Rs. 18,000 and B's share of the same be adjusted into
the accounts of A and C who are going to share future profits in the proportion of 3/4th and 1/4th
respectively.
(g) Total capital of the firm as newly constituted be fixed at Rs. 60,000 between A and C in the
proportion of 3/4th and 1 /4th after passing entries in their accounts for adjustments, i.e., actual cash to
be paid or to be brought in by continuing partners as the case may be.
(h) B be paid Rs. 5,000 in cash and the balance be transferred to his Loan Account.
Prepare Capital Accounts of Partners and the Balance Sheet of the firm of A and C.
Q232. Amit, Balan and Chander were partners in a firm sharing profits in the proportion of 1/2, 1/3 and
1/6 respectively. Chander retired on 1 st April, 2014. The Balance Sheet of the firm on the date of
Chander's retirement was as follows:
Provident Fund 3,000 Debtors 30,000
General Reserve 9,000 Less: Provision 1,000 29,000
Capital A/cs: Amit 40,000 Stock 25,000
Balan 36,500 Investments 10,000
Chander 20,000 96,500 Patents 5,000
Machinery 48,000
1,21,100 1,21,100
It was agreed that:
(i) Goodwill will be valued at Rs. 27,000.
(ii) Depreciation of 10% was to be provided on Machinery.
(iii) Patents were to be reduced by 20%.
(iv) Liability on account of Provident Fund was estimated at Rs. 2,400.
(v) Chander took over Investments for Rs. 15,800.
(vi) Amit and Balan decided to adjust their capitals in proportion of their profit-sharing ratio by opening
Current Accounts.
Prepare Revaluation Account and Partners' Capital Accounts on Chander's retirement. (Delhi2015)

Q233. J, Hand K (were partners in a firm sharing profits in the ratio of 5 :3 :2. On 31st March, 2015,
Creditors 42,000 Land and Building 1,24,000
Investment Fluctuation 20,000 Motor Vans 40,000
Fund
Profit and Loss Account 80,000 Investments 38,000
Capital A/cs: J 1,00,000 Machinery 24,000
H 80,000 Stock 30,000
K 40,000 2,20,000 Debtors 80,000
Less: Provision 6,000 74,000
Cash 32,000
3,62,000 3,62,000
On the above date, H retired and J and K agreed to continue the business on the following terms:
(i) Goodwill of the firm was valued at Rs. 1,02,000.
(ii) There was a claim of Rs. 8,000 for workmen's compensation.
(iii) Provision for bad debts was to be reduced by Rs. 2,000.
(iv) H will be paid Rs. 14,000 in cash and the balance will be transferred in his Loan Account which
will be paid in four equal yearly instalments together with interest @ 10% p.a.
(v) The new profit-sharing ratio between J and K will be 3:2 and their capitals will be in their new
profit- sharing ratio. The capital adjustments will be done by opening Current Accounts.
Prepare Revaluation Account, Partners' Capital Accounts and Balance Sheet of the new firm. (Al 2016)
Q234. X, Y and Z are partners in a firm sharing profits in the ratio of 3 :1 : 2. On 31st March, 2018,
their Balance Sheet was:
Bills Payable 12,000 Freehold Premises 40,000
Sundry Creditors 28,000 Machinery 30,000
X 30,000 Sundry Debtors 20,000
Y 20,000 Less: Provision for Doubtful 1,000 19,000
Debts
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 ofZ. Surplus/deficit, if any, in their Capital Accounts will be adjusted through Current
Accounts.
Prepare necessary Ledger Accounts and draw the Balance Sheet of the reconstituted firm.
Q235. Z, Y and Z are partners sharing profits in the ratio of 5:3:7. X retires from the firm. Y and Z
decided to share future profits in the ratio of 2:3. The adjusted Capital Accounts of / and Z showed
balance of Rs. 49,500 and Rs. 1,05,750 respectively. The total amount to be paid to X is Rs. 1,35,750.
This amount is to be paid by Y and Z in such a way that their capitals become proportionate to their
new profit-sharing ratio. Calculate the amount to be brought in or to be paid to partners
Q236. Z, Yand Z are partners sharing profits in the ratio of 5 : 3 : 2. / retires on 1 st April, 2018 from
the firm, on which date capitals of Z, / and Z after all adjustments are Rs. 1,03,680, Rs. 87,840 and Rs.

26,880 respectively. The Cash and Bank Balance on that date was Rs. 9,600. Y is to be paid through
amount brought in by Zand Z in such a way as to make their capitals proportionate to their new profit-
sharing ratio which will be Z3/5 and Z 2/5. Calculate the amount to be paid or to be brought in by the
continuing partners assuming that a minimum Cash and Bank balance of Rs. 7,200 was to be maintained
and pass the necessary Journal entries.
[Ans.: Z and Z will bring in Rs.25,920 and Rs.59,520 respectively.]
Q237. A, B and C are partners in a firm sharing profits and losses in the ratio of 3 :2 :1. Their Balance
Sheet as at 31st March, 2018 is:
General Reserve 12,000 Less: Provision for Doubtful 3,000 22,000
Debts
C 30,000 1,10,000 Goodwill 10,000
1,68,000 1,68,000
B retires on 1st April, 2018 on the following terms:
(a) Provision for Doubtful Debts be raised by Rs. 1,000.
(b) Stock to be depreciated by 10% and Furniture by 5%.
(c) There is an outstanding claim of damages of Rs. 1,100 and it is to be provided for.
(d) Creditors will be written back by Rs. 6,000.
(e) Goodwill of the firm is valued at Rs. 22,000.
(f) B is paid in full with the cash brought in by A and C in such a manner that their capitals are in
proportion to their profit-sharing ratio and Cash in Hand remains at Rs. 10,000.
Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet of A and C. (Foreign
2003, Modified)
Q238. Following is the Balance Sheet of Kusum, Sneh and Usha as on 31st March, 2018, who have
agreed to share profits and losses in proportion of their capitals:
Kusum 4,00,000 Machinery 6,00,000
Sneh 6,00,000 Closing Stock 2,00,000
Usha 4,00,000 14,00,000 Sundry Debtors 2,20,000
Employees' Provident Fund 70,000 Less: Provision for Doubtful 20,000 2,00,000
Debts
Workmen Compensation 30,000 Cash at Bank 2,00,000
Reserve
16,00,000 16,00,000
On 31st March, 2018, Kusum retired from the firm and the remaining partners decided to carry on the
business. It was agreed to revalue the assets and reassess the liabilities on that date, on the following
basis:
(a) Land and Building be appreciated by 30%.
(b) Machinery be depreciated by 30%.
(c) There were Bad Debts of Rs. 35,000.
(d) The claim against Workmen Compensation Reserve was estimated at Rs. 15,000.
(e) Goodwill of the firm was valued at Rs. 2,80,000 and Kusum's share of goodwill was adjusted against
the Capital Accounts of the continuing partners Sneh and Usha who have decided to share future profits
in the ratio of 3 :4 respectively.

(f) Capital of the new firm in total will be the same as before the retirement of Kusum and will be in
the new profit-sharing ratio of the continuing partners.
(g) Amount due to Kusum be settled by paying Rs. 1,00,000 in cash and balance by transferring to her
Loan Account which will be paid later on.
Prepare Revaluation Account, Capital Accounts of Partners and Balance Sheet of the new firm after
Kusum's retirement. (Al 2012 C, Modified)
Q239. The Balance Sheet of X, Y and Z who were sharing profits in the ratio of 5 :3 :2 as at 31st March,
2018 is as follows:
Employees' Provident 10,000 Sundry Debtors 1,00,000
Fund
Profit and Loss A/c 85,000 Stock 80,000
Capital A/cs: Fixed Assets 60,000
X 40,000
Y 62,000
Z 33,000 1,35,000
2,80,000 2,80,000
X retired on 31 st March, 2018 and Y and Z decided to share profits in future in the ratio of 3 :2
respectively. The other terms on retirement were:
(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 and Partners' Capital Accounts.
Q240. A, B and C are partners sharing profits in the ratio of 5 : 3 : 2. Their Balance Sheet as on 31 st
March, 2018 is given below:
Capital A/cs: Building 18,00,000
A 11,00,000 Investments 4,00,000
B 11,40,000 Stock 6,00,000
C 7,60,000 30,00,000 Debtors 10,00,000
Workmen Compensation 10,00,000 Cash and Bank 6,00,000
Reserve
Creditors 2,00,000
Employees' Provident Fund 2,00,000
44,00,000 44,00,000
C retires on 30th June, 2018 and it was mutually agreed that:
(a) Building be valued at Rs. 22,00,000.
(b) Investments to be valued at Rs. 3,00,000.
(c) Stock be taken at Rs. 8,00,000.
(d) Goodwill of the firm be valued at two years' purchase of the average profit of the past five years.
(e) C's share of profits up to the date of retirement be calculated on the basis of average profit of the
preceding three years.
The profits of the preceding five years were as under:
Year 2013-14 2014-15 2015-16 2016-17 2017-18
Profit (Rs.) 4,00,000 5,00,000 6,00,000 8,00,000 7,00,000
(f) Amount payable to C to be transferred to his Loan Account carrying interest @ 10% p.a.

Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet as at 30th June, 2018.
Q241. Kumar, Verma and Naresh were partners in a firm sharing Profit and Loss in the ratio of 3 : 2 :
2. On 23rd January, 2015 Verma died. Verma's share of profit till the date of his death was calculated
at Rs. 2,350. Pass necessary Journal entry for the same in the books of the firm.
(Delhi 2015)
Q242. A, B and C were partners sharing profits and losses in the ratio of 2:2:1. C died on 30th June,
2018. Profit and Sales for the year ended 31 st March, 2018 were Rs. 1,00,000 and Rs. 10,00,000
respectively. Sales during April to June, 2018 were Rs. 1,50,000. You are required to calculate share of
profit of C up to the date of his death.
Q243. A, B and C are partners sharing profits and losses in the ratio of 3:2:1. B died on 30th June, 2018.
For the year ended 31 st March, 2019, proportionate profit of 2018 is to be taken into consideration.
During the year ended 31 st March, 2018, bad debts of Rs. 2,000 had to be adjusted. The profit for the
year ended 31 st March, 2018 was Rs. 14,000 before adjustment of bad debts. Calculate S's share of
profit till the date of his death.
Q244. Ram, Manohar and Joshi were partners in a firm. Joshi died on 31 st May, 2018. His share of
profit from the closure of the last accounting yeartill the date of death was to be calculated on the basis
of the average of three completed years of profits before death. Profits for the years ended 31st March,
2016, 2017 and 2018 were Rs. 7,000; Rs. 8,000 and Rs. 9,000 respectively. Calculate Joshi's share of
profit till the date of his death and pass necessary Journal entry for the same.
Q245. X, Y and Z were partners sharing profits and losses in the ratio of 3 : 2 : 1 respectively. Y died
on 30th June, 2018. The profit from 1st April, 2018 to 30th June, 2018 amounted to Rs. 3,60,000. X
and Z decided to share the future profits in the ratio of 3 : 2 respectively with effect from 1 st July 2018.
Pass the necessary Journal entries to record Y's share of profit up to the date of death.
Q246. X, Y and Z were partners in a firm. Z died on 31st May, 2018. His share of profit from the closure
of the last accounting year till the date of death was to be calculated on the basis of the average of three
completed years of profits before death. Profits for the year ended 31st March, 2016, 2017 and 2018
were Rs. 18,000; Rs. 19,000 and Rs. 17,000 respectively.
Calculate Z's share of profit till his death and pass necessary Journal entry for the same assuming:
(a) there is no change in profit-sharing ratio of remaining partners, and
(b) there is change in profit-sharing ratio of remaining partners, new ratio being 3 : 2.
Q247. P, R and S are in partnership sharing profits 4/8, 3/8 and 1 /8 respectively. It is provided in the
Partnership Deed that on the death of any partner his share of goodwill is to be valued at one-half of the
net profit credited to his account during the last four completed years.
R died on 1 st January, 2018. The firm's profits for the last four years ended 31 st December, were as:
2014—Rs. 1,20,000; 2015—Rs. 80,000; 2016—Rs. 40,000; 2017—Rs. 80,000.
(a) Determine the amount that should be credited to R in respect of his share of Goodwill.
(b) Pass Journal entry without raising Goodwill Account for its adjustment.
Q248. X, Y and Z were partners in a firm sharing profit in 3 : 2 :1 ratio. The firm closes its books on
31 st March every year. Y died on 30th June, 2018. On Y's death the goodwill of the firm was valued
at Rs. 60,000. Ys share in the profits of the firm till the time of his death was to be calculated on the
basis of previous year's profit which was Rs. 1,50,000.
Pass necessary Journal entries for the treatment of goodwill and V"s share of profit at the time of his
death.
Q249. X, Y and Z were partners in a firm sharing profits in the ratio of 4 : 3 : 1. The firm closes its
books on 31 st March every year. On 1 st February, 2018, Y died and it was decided that the new profit-

sharing ratio between X and Z will be equal. Partnership Deed provided for the following on the death
of a partner:
the previous four completed years. The firm's profits for the last four years were:
Year 2013-14 2014-15 2015-16 2016-17
Profit (Rs.) 1,50,000 1,00,000 50,000 1,00,000
(b) His share of profit in the year of his death was to be computed on the basis of average profit of past
two years.
Pass necessary Journal entries relating to goodwill and profit to be transferred to Y's Capital Account.
Q250. X and Y are partners. The Partnership Deed provides inter alia:
(a) That the Accounts be balanced on 31 st March every year.
(b) That the profits be divided as: X one-half, Y one-third and carried to a Reserve one-sixth.
(c) That in the event of the death of a partner, his Executors be entitled to be paid out:
(i) The Capital to his credit till the date of death.
(ii) His proportion of profits till the date of death based on the average profits of the lost three completed
years.
(iii) By way of Goodwill, his proportion of the total profits for the three preceding years.
(d) BALANCE SHEET as at 31st March, 2018
Capital A/cs: X 9,000 Sundry Assets 21,000
Y 6,000 15,000
Reserve 3,000
Creditors 3,000
21,000 21,000
The Profits for three years were: 2015-16—Rs. 4,200; 2016-17—Rs. 3,900; 2017-18—Rs. 4,500. Y
died on 1 st August, 2018. Prepare necessary accounts
Q251. P, Q and R were partners in a firm sharing profits in 2 : 2 :1 ratio. The Partnership Deed provided
that on the death of a partner his executors will be entitled to the following:
(a) Interest on Capital @ 12% p.a.
(b) Interest on Drawings @ 18% p.a.
(c) Salary of Rs. 12,000 p.a.
(d) Share in the profit of the firm (up to the date of death) on the basis of previous year's profit.
P died on 31st May, 2018. His capital was Rs. 80,000. He had withdrawn Rs. 15,000 and interest on his
drawings was calculated as Rs. 1,200. Profit of the firm for the previous year ended 31 st March, 2018
was Rs. 30,000.
Prepare P's Capital Account to be rendered to his executors. (Foreign 2008, Modified)
Q252. Vikas, Gagan and Momita were partners in a firm sharing profits in the ratio of 2 : 2 :1. The firm
closes its books on 31st March every year. On 30th September, 2014 Momita died. According to the
provisions of Partnership Deed the legal representatives of a deceased partner are entitled for the
following in the event of his/her death:
(a) Capital as per the last Balance Sheet.
(b) Interest on capital at 6% per annum till the date of her death.
(c) Her share of profit to the date of death calculated on the basis of average profit of last four years.
(d) Her share of goodwill to be determined on the basis of three years' purchase of the average profit of
last four years. The profits of last four years were:
Year 2010-11 2011-12 2012-13 2013-14
Profit (Rs.) 30,000 50,000 40,000 60,000
The balance in Momita's Capital Account on 31st March, 2014 was Rs. 60,000 and she had withdrawn
Rs. 10,000 till date of her death. Interest on her drawings was Rs. 300.

Prepare Momita's Capital Account to be presented to her executors. (Delhi2015)
Q253. Iqbal and Kapoor are in partnership sharing profits and losses in 3 :2. Kapoor died three months
after the date of the last Balance Sheet. According to the Partnership Deed, the legal personal
representatives of Kapoor are entitled to the following payments:
(a) His capital as per the last Balance Sheet.
(b) Interest on above capital @ 3% p.a. till the date of death.
(c) His share of profits till the date of death calculated on the basis of last year's profits.
His drawings are to bear interest at an average rate of 2% on the amount irrespective of the period. The
net profits for the last three years, after charging insurance premium, were Rs. 20,000; Rs. 25,000 and
Rs. 30,000 respectively. Kapoor's capital as per Balance Sheet was Rs. 40,000 and his drawings till the
date of death were Rs. 5,000.
Draw Kapoor's Capital Account to be rendered to his representatives
Q254. A, Sand Cwere partners in a firm sharing profits in the ratio of 5 :3 :2. On 31st March, 2017,
Creditors 11,000 Building 20,000
Reserves 6,000 Machinery 30,000
Capital Stock 10,000
A/cs:
A Patents 11,000
B Debtors 8,000
C 70,000 Cash 8,000
87,000 87,000
A died on 1st October, 2017. It was agreed among his executors and the remaining partners that:
(i) Goodwill to be valued at 2V2 years' purchase of the average profit of the previous 4 years, which
were 2013-14: Rs. 13,000; 2014-15: Rs. 12,000; 2015-16: Rs. 20,000 and 2016-17: Rs. 15,000.
(ii) Patents be valued at Rs. 8,000; Machinery at Rs. 28,000; and Building at Rs. 25,000.
(iii) Profits for the year 2017-18 be taken as having accrued at the same rate as that of the previous year.
(iv) Interest on capital be provided @ 10% p.a.
(v) Half of the amount due to A to be paid immediately to the executors and the balance transferred to
his (Executors) Loan Account.
Prepare A's Capital Account and A's Executors' Account as on 1 st October, 2017. (Delhi, Al, Foreign
2004, Modified)
Q255. Virad, Vishad and Roma were partners in a firm sharing profits in the ratio of 5 : 3 : 2
respectively. On 31 st March, 2013, their Balance Sheet was as under:
Capital Buildings 2,00,000
A/cs:
Virad 3,00,000 Machinery 3,00,000
Vishad 2,50,000 Patents 1,10,000
Roma 1,50,000 7,00,000 Stock 1,00,000
Fund
8,70,000 8,70,000
Virad died on 1st October, 2013. It was agreed between his executors and the remaining partners that:
(i) Goodwill of the firm be valued at 2Vt years purchase of average profits for the last three years. The
average profits were Rs. 1,50,000.
(ii) interest on capital be provided at 10% p.a.

(iii) Profit for the 2013-14 be taken as having accrued at the same rate as that of the previous year which
was Rs. 1,50,000.
Prepare Virad's Capital Account to be presented to his Executors as on 1 st October, 2013. (Delhi 2014)
Q256. Kavita, Leena and Monica are partners in firm sharing profits in the ratio of 1 : 1 : 3 respectively.
Their
Capital Accounts showed the following balances on 31st March, 2012: Kavita Rs. 70,000; Leena Rs.
65,000 and Monica Rs. 2,10,000. Firm closes its accounts every year on 31st March. Kavita died on
30th September, 2012. In the event of death of any partner, the Partnership Deed provides for the
following:
(a) Interest on capital will be calculated at the rate of 6% p.a.
(b) The deceased partner's share in the goodwill of the firm will be calculated on the basis of 2 years'
purchase of the average profit of last three years. The profits of the firm for the last three years were
Rs. 90,000; Rs. 1,00,000 and Rs. 1,10,000 respectively.
(c) Her share in the Reserve Fund of the firm will be paid. The Reserve Fund of the firm was Rs. 60,000
at the time of Kavita's death.
(d) Her share of profit till the date of death will be calculated on the basis of sales. It is also specified
that the sales during the year 2011-12 were Rs. 20,00,000. The sales from 1 st April, 2012 to 30th
Rs. 2,00,000.
Prepare Kavita's Capital Account to be presented to his legal representative. (A! 2013 C)
Q257. A, B, and C are partners in a firm sharing profits in the proportion of 3 : 2 : 1. Their Balance
Sheet as at 31 st March, 2018 stood as follows:
Sundry 2,60,000 Cash in Hand 42,500
Creditors
General 1,20,000 Cash at Bank 2,14,500
Reserve
Capital A/cs: Debtors 1,63,000
A 2,00,000 Stock 17,500
B 1,20,000 investment 1,32,500
C 80,000 4,00,000 Building 2,10,000
7,80,000 7,80,000
B died on 30th June, 2018 and according to the deed of the said partnership his executors are entitled
to be paid as under:
(a) The capital to his credit at the time of his death and interest thereon @ 10% per annum.
(b) His proportionate share of General Reserve.
(c) His share of profits for the intervening period will be based on the sales during that period. Sales
from 1 st April, 2018 to 30th June, 2018 were as Rs. 12,00,000. The rate of profit during past three
years had been 10% on sales.
(d) Goodwill according to his share of profit to be calculated by taking twice the amount of profits of
the last three years less 20%. The profit of the previous three years were: 1st Year: Rs. 82,000; 2nd
year: Rs. 90,000; 3rd year Rs. 98,000.
(e) The investments were sold at par and his executors were paid out in full.
Prepare B's Capital Account and his Executors' Account.
Q258. Babita, Chetan and David are partners in a firm sharing profits in the ratio of 2 :1 : 1 respectively.
Firm closes its accounts on 31 st March every year. Chetan died on 30th September, 2012. There was a
balance of Rs. 1,25,000 in Chetan's Capital Account in the beginning of the year. In the event of death
of any partner, the Partnership Deed provides for the following:
(a) Interest on capital will be calculated at the rate of 6% p.a.
(b) The executor of deceased partner shall be paid Rs. 24,000 for his share of goodwill.
(c) His share of Reserve Fund of Rs. 12,000, shall be paid to his executor.

(d) His share of profit till the date of death will be calculated on the basis of sales. It is also specified
that the sales during the year 2011-12 were Rs. 4,00,000. The sales from 1 st April, 2012 to 30th
Rs. 2,00,000.
Prepare Chetan's Capital Account to be presented to his executor. (Delhi2013 C)
Q259. Sunny, Honey and Rupesh were partners in a firm. On 31st March, 2014, their Balance Sheet
was as follows:
General 30,000 Furniture 15,000
Reserve
Sunny 30,000 Debtors 20,000
Honey 30,000 Stock 25,000
Rupesh 20,000 80,000
1,20,000 1,20,000
Honey died on 31st December, 2014. The Partnership Deed provides that the representatives of the
deceased partner shall be entitled to:
(a) Balance in the Capital Account of the deceased partner.
(b) Interest on Capital @ 6% per annum up to the date of his death.
(c) His share in the undistributed profits or losses as per the Balance Sheet.
(d) His share in the profits of the firm till the date of his death, calculated on the basis of rate of net
profit on sales of the previous year. The rate of net profit on sales of previous year was 20%. Sales of
the firm during the year till 31st December, 2014 was Rs. 6,00,000.
Prepare Honey's Capital Account to be presented to his executors. (Delhi 2015)
Q260. R, S and Twere partners sharing profits and losses in the ratio of 5 :3 :2 respectively. On 31 st
March, 2018, their Balance Sheet stood as:
Bills Payable 15,000 Leasehold 1,00,000
Workmen Compensation 30,000 Patents 30,000
Reserve
R 1,50,000 Stock 50,000
S 1,25,000 Debtors 40,000
T 75,000 3,50,000 Cash at Bank 40,000
4,35,000 4,35,000
T died on 1 st August, 2018. It was agreed that:
(a) Goodwill be valued at 2Vi years' purchase of average of last 4 years' profits which were:
2014-15: Rs. 65,000; 2015-16: Rs. 60,000; 2016-17: Rs. 80,000 and 2017-18: Rs. 75,000.
(b) Machinery be valued at Rs. 1,40,000; Patents be valued at Rs. 40,000; Leasehold be valued at Rs.
1,25,000 on 1st August, 2018.
(c) For the purpose of calculating T's share in the profits of 2018-19, the profits in 2018-19 should be
taken to have accrued on the same scale as in 2017-18.
(d) A sum of Rs. 21,000 to be paid immediately to the Executors of T and the balance to be paid in four
equal half-yearly instalments together with interest @ 10% p.a.
Pass necessary Journal entries to record the above transactions and T's Executors' Account.
Q261. Akhil, Nikhil and Sunil were partners sharing profits and losses equally. Following was their
Balance Sheet as at 31st March, 2018:

Trade 40,000 Building 2,00,000
Creditors
General 45,000 Plant and 80,000
Reserve Machinery
Akhil 1,95,000 Debtors 80,000
Nikhil 1,20,000 Cash at Bank 85,000
Sunil 80,000 3,95,000
4,80,000 4,80,000
Sunil died on 1 st August, 2018. The Partnership Deed provided that the executor of a deceased partner
was entitled to:
(a) Balance of Partners' Capital Account and his share of accumulated reserve.
(b) Share of profits from the closure of the last accounting year till the date of death on the basis of the
profit of the preceding completed year before death.
(c) Share of goodwill calculated on the basis of three times the average profit of the last four years.
(d) Interest on deceased partner's capital @ 6% p.a.
(e) Rs. 50,000 to be paid to deceased's executor immediately and the balance to remain in his Loan
Account. Profits and Losses for the preceeding years were: 2014-15—Rs. 80,000 Profit; 2015-16—Rs.
1,00,000 Loss; 2016-17—Rs. 1,20,000 Profit; 2017-18—Rs. 1,80,000 Profit.
Pass necessary Journal entries and prepare Sunil's Capital Account and Sunil's Executor's Account.
Q262. B, C and D were partners in a firm sharing profits in the ratio of 5 : 3 : 2. On 31st December,
B died on 31 st March, 2009. The Partnership Deed provided for the following on the death of a partner:
(a) Goodwill of the firm was to be valued at 3 years' purchase of the average profit of last 5 years. The
profits for the years ended 31st December, 2007, 31st December, 2006, 31st December, 2005, and 31
st December, 2004 were Rs. 70,000; Rs. 60,000; Rs. 50,000 and Rs. 40,000 respectively.
(b) B's share of profit or loss till the date of his death was to be calculated on the basis of the profit or
loss for the year ended 31 st December, 2008.
You are required to calculate the following:
(i) Goodwill of the firm and B's share of goodwill at the time of his death.
(ii) B's share in the profit or loss of the firm till the date of his death.
(iii) Prepare B's Capital Account at the time of his death to be presented to his Executors. (Al 2010 C)
Q263. The Balance Sheet of X, Y andZ as at 31st March, 2018 was:

Employees' Provident Fund 5,000 Bills Receivable 800
Workmen Compensation 6,000 Stock 9,000
Reserve
Loans 7,100 Furniture 2,000
Capital A/cs: Plant and Machinery 6,500
X 22,750 Building 30,000
Y 15,250 Advertisement 6,000
Suspense
Z 12,000 50,000
76,100 76,100
The profit-sharing ratio was 3 : 2 :1. Z died on 31 st July, 2018. The Partnership Deed provides that:
(a) Goodwill is to be calculated on the basis of three years' purchase of the five years' average profit.
The profits were: 2017-18: Rs. 24,000; 2016-17: Rs. 16,000; 2015-16: Rs. 20,000; 2014-15: Rs. 10,000
and 2013-14: Rs. 5,000.

Bills payable 17,000 Stock 24,500
General 70,000 Debtors 27,300
Reserve
Β 40,000 Profit and Loss 70,000
A/c
C 50,000
D 52,000 1,42,000
2,72,000 2,72,000
(b) The deceased partner to be given share of profits till the date of death on the basis of profits for the
previous year.
(c) The Assets have been revalued as: Stock Rs. 10,000; Debtors Rs. 15,000; Furniture Rs. 1,500; Plant
and Machinery Rs. 5,000; Building Rs. 35,000. A Bill Receivable for Rs. 600 was found worthless.
(d) A sum of Rs. 12,233 was paid immediately to Z's Executors and the balance to be paid in two equal
annual instalments together with interest @ 10% p.a. on the amount outstanding.
Give Journal entries and show the Z’s Executors' Account till it is finally settled.
Q264. X, Y and Z were partners in a firm sharing profits and losses in the 5:4:3. Their Balance Sheet
Creditors 2,00,000 Building 2,00,000
Employees' Provident Fund 1,50,000 Machinery 3,00,000
General Reserve 36,000 Furniture 1,10,000
Investment Fluctuation 14,000 Investment (Market Value Rs. 86,000) 1,00,000
Reserve
X 3,00,000 Cash at Bank 1,90,000
Y 2,50,000 Advertisement Suspense 1,20,000
Z 1,50,000 7,00,000
11,00,000 11,00,000
X died on 1 st October, 2018 and Y and Z decide to share future profits in the ratio of 7 : 5. It was
agreed between his executors and the remaining partners that:
(i) Goodwill of the firm be valued at 2 years' purchase of average of four completed years' profit which
were:
Year 2014-15 2015-16 2016-17 2017-18
Profit (Rs.) 1,70,000 1,80,000 1,90,000 1,80,000
(ii) X's share of profit from the closure of last accounting year till date of death be calculated on the
basis of last year's profit.
(iii) Building undervalued by Rs. 2,00,000; Machinery overvalued by Rs. 1,50,000 and Furniture
overvalued by Rs. 46,000.
(iv) A provision of 5% be created on Debtors for Doubtful Debts.
(v) Interest on Capital to be provided at 10% p.a.
(vi) Half of the net amount payable to X's executor was paid immediately and the balance was
transferred to his loan account which was to be paid later.
Prepare Revaluation Account, X's Capital Account and X's Executor's Account as on 1st October, 2018.
Note: Firm enjoys bank overdraft facility.
Q265. X, Y and Z were partners in a firm sharing profits and losses in the ratio of 3 : 2 :1. Z died on
30th June,
2018. The Balance Sheet of the firm as at that 31st March, 2018 is as follows:

X's Capital A/c 2,40,000 Machinery 2,40,000
Y"s Capital 1,60,000 Furniture 1,50,000
A/c
Z's Capital A/c 80,000 4,80,000 Investments 40,000
X's Current 16,000 Stock 64,000
A/c
Y's Current 5,000 Sundry Debtors 50,000
A/c
Reserve 60,000 Bills 22,000
Receivable
Sundry 40,000 Cash in Hand 22,000
Creditors
Z's Current A/c 10,000
6,35,000 6,35,000
The following decisions were taken by the remaining partners:
(a) A Provision for Doubtful Debts is to be raised at 5% on Debtors.
(b) While Machinery to be decreased by 10%, Furniture and Stock are to be appreciated by 5% and
10% respectively.
(c) Advertising Expenses Rs. 4,200 are to be carried forward to the next accounting year and, therefore,
it is to be adjusted through the Revaluation Account.
(d) Goodwill of the firm is valued at Rs. 60,000.
(e) X and Y are to share profits and losses equally in future.
(f) Profit for the year ended 31st March, 2018 was Rs. 8,16,000 and Z's share of profit till the date of
death is to be determined on the basis of profit for the year ended 31st March, 2018.
(g) The Fixed Capital Method is to be converted into the Fluctuating Capital Method by transferring
the Current Account balances to the respective Partners' Capital Accounts.
Prepare the Revaluation Account, Partners' Capital Accounts and prepare C's Executor's Account to
show that C's Executors were paid in two half-yearly instalments plus interest of 10% p.a. on the unpaid
balance. The first instalment was paid on 31 st December, 2018.
Q266. X, Y and Z are partners in a firm sharing profits and losses in the ratio of 5 : 3 :2. Their Balance
Sheet as at 31st March, 2018 was as follows:
Investment Fluctuation 7,000 Patents 52,000
Reserve
Workmen Compensation 7,000 Machinery 62,400
Reserve
Capital A/cs: Investment 6,000
X 1,35,000 Stock 20,000
Y 95,000 Sundry Debtors 24,000
Z 74,000 3,04,000 Less: Provision for Doubtful 4,000 20,000
Debts
Loan to Z 1,000
Cash at Bank 600
Profit and Loss A/c 1,50,000
Z's Drawings 12,000
3,36,000 3,36,000
Z died on 1st April, 2018, X and Y decide to share future profits and losses in ratio of 3 : 5. It was
agreed that:
(i) Goodwill of the firm be valued 2Vi years' purchase of average of four completed years' profits which
were: 2014-15—Rs. 1,00,000; 2015-16—Rs. 80,000; 2016-17—Rs. 82,000.

(ii) • Stock undervalued by Rs. 14,000 and machinery overvalued by Rs. 13,600.
• All debtors are good. A debtor whose dues of Rs. 400 were written off as bad debts paid 50% in full
settlement.
• Out of the amount of insurance premium which was debited entirely to Profit and Loss Account, Rs.
2,200 be carried forward as an unexpired insurance premium.
• Rs. 1,000 included in Sundry Creditors is not likely to arise.
• A claim of Rs. 1,000 on account of Workmen Compensation to be provided for.
(iii) Investment be sold for Rs. 8,200 and a sum of Rs. 11,200 be paid to executors of Z immediately.
The balance to be paid in four equal half-yearly instalments together with interest @ 8% p.a. at half
year rest.
Show Revaluation Account, Capital Accounts of Partners and the Balance Sheet of the new firm.
Note: Firm enjoys bank overdraft facility.
Q267. X, Y and Z were partners in a firm sharing profits in the ratio of 2 :2:1. On 31 st March, 2018,
Trade 1,20,000 Cash at Bank 1,80,000
Creditors
General 60,000 Sundry Debtors 80,000
Reserve
Capital A/cs: Building 3,00,000
X 7,00,000 Advance to Y 7,00,000
Y 7,00,000 Profit and Loss 3,20,000
A/c
Z 60,000 14,60,000
17,20,000 17,20,000
Y died on 30th June, 2018. The Partnership Deed provided for the following on the death of a partner:
(i) Goodwill of the business was to be calculated on the basis of 2 times the average profit of the past 5
years. The profits for the years ended 31st March, 2018, 31st March, 2017, 31st March, 2016, 31st
March, 2015 and 31st March, 2014 were Rs. 3,20,000 (Loss); Rs. 1,00,000; Rs. 1,60,000; Rs. 2,20,000
and Rs. 4,40,000 respectively.
(ii) Y's share of profit or loss from 1st April, 2018 till his death was to be calculated on the basis of the
profit or loss for the year ended 31 st March, 2018.
You are required to calculate the following:
(a) Goodwill of the firm and Y's share of goodwill at the time of his death.
(b) Y's share in the profit or loss of the firm till the date of his death.
(c) Prepare Y's Capital Account at the time of his death to be presented to his executors.
1 1 1
Q268.A, B and C were partners sharing profits and losses in the ratio of : : respectively. C decided
2 3 6
to retire and the partners decided to share the future profits and losses in the ratio of 3 : 2. It was
decided that C’s share of goodwill be adjusted in the accounts of A and B. Fill in the missing figures
in the following Journal entry :
JOURNAL
Date Particulars L.F. Dr. (Rs.) Cr. (Rs.)
A's Capital A/c Dr.
B’s Capita! A/c Dr. 24,000
To C’s Capital A/c
(C’s share of Goodwill debited to the accounts of
continuing partners in their gaining ratio)
4 1 2
Q269.A, B and C are partners sharing profits in the ratio of 9 : 3 : 9 B retires and A and C decide to
share profits in the ratio of 1 : 2. It was decided to adjust B’s share of goodwill in the accounts of

continuing partners. Fill in the missing figures in the following Journal Entry. Also find out the total
goodwill of the firm.
JOURNAL
Date Particulars L.F. Dr.(Rs.) Cr. (Rs.)
C’s Capital A/c Dr. —
To A’s Capital A/c —
To B's Capital A/c 30,000
(C Compensates A and B for the loss in share of profits)
Q270.P, R and S are in partnership sharing profits in the ratio of 2 : 1 : 1 respectively.

R died on 1st February, 2018 and it is decided that profit sharing ratio between P and S in future will
be 2 : 3. You are required to fill in the missing figures in the following journal entry.
Also calculate the Total Value of firm’s goodwill.
JOURNAL
Date Particulars L.F. Dr. (Rs.) Cr (Rs.)
2018 Feb. S’s Capital A/c Dr. 56,000
1
To P's Capital A/c —
To R’s Capital A/c
(S Compensates P and R for the loss in share of profits)
Q271.On 31st December, 2018 the Balance Sheet of M/s P, Q and R sharing profits and losses in
1 1 1
proportion to : : : stood as follows :
2 3 6
Capital A/cs : Debtors 1,00,000
P 4,50,000 Less: Provision 2,000 98,000
Q 3,00,000 Stock 90,000
R 1,50,000 9,00,000 Machinery 2,40,000
10,08,000 10,08,000
On that date, Q wants to retire from the firm arid the remaining partners decide to carry on. P and R
4 3
decided to share future profits in the proportion of 7 and 7 respectively.
Fill in the missing figures in Revaluation A/c, and Capital A/cs of the partners and the Balance Sheet
of the firm of P and R .
To Provision for Doubtful Debts By - —
A/c 3,000 By - —
To — —
To Outstanding Repairs A/c 15,000
P’s Capital A/c —
Q’s Capital A/c —
R’s Capital A/c —
— —

Particulars P Q R Particulars P Q R
To 0’s Capital A/c By Balance b/d — — —
(Goodwill) 18,000 — By Revaluation — — —
To Bank A/c — By P’s Capital A/c

To 0’s Loan A/c — (Goodwill) —
To Balance c/d — — By R’s Capital A/c
(Goodwill)
— — — — — —
BALANCE SHEET OF THE FIRM (After 0’s Retirement) as at 31st Dec., 2018
Creditors — Cash at Bank —
Outstanding Repairs — Debtors 1,00,000
Q’s Loan 3,44,000 Less: Provision —
Capitals : Stock —
P— Unexpired Insurance 10,000
R— — Machinery 2,28,000
______ —
Q272.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 :

A’s Capital 90,000 Less: Provision for
B’s Capital 60,000 Doubtful Debts 400 19,600
C’s Capital 30,000 Stock 18,000
Machinery 48,000
Buildings 1,00,000
2,01,600 2,01,600
On the above date B retired.
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 : 2.
Fill in the missing information in the Revaluation Account, Partner’s Capital Accounts and the
Balance Sheet of the new firm after B’s retirement.
To Provision for Doubtful Debts 600 By Building 10,000
To — — By- —
To — — By- —
To Profit Transferred to :
B’s Capital A/c
C’s Capital A/c —
— ________

To A’s Capital A/c By Bal. b/d — — —
(Goodwill) — — By - — — —
To Cash A/c 9,000 By — — — —
To B’s loan A/c By T’s Capital
To Bal. c/d — — A/c (Goodwill) —
By C’s Capital
A/c (Goodwill) —
— — — — —

Creditors 13,800 Cash
Provision for Repairs 3,000 Debtors 20,000
B’s Loan — Less: Provision for
Capitals : Doubtful Debts 1,000 19,000
A— Stock
C— Machinery 40,800
Buildings —
Prepaid insurance 2,000
— —

Chapter 5: Dissolution of a Partnership Firm
Q 1.Pass necessary journal entries on the dissolution of a partnership firm in the following cases :
(i) Dissolution expenses were Rs.800.
(ii) Dissolution expenses Rs.800 were paid by Prabhu, a partner.
(iii) Geeta, a partner, was appointed to look after the dissolution work, for which she was allowed a
remuneration of Rs. 10,000. Geeta agreed to bear the dissolution expenses. Actual dissolution expenses
Rs.9,500 were paid by Geeta.
(iv) Janki, a partner, agreed to look after the dissolution work for a commission of Rs.5,000. Janki
agreed to bear the dissolution expenses. Actual dissolution expenses Rs.5,500 were paid by Mohan,
another partner, on behalf of Janki.
(v) A partner, Kavita, agreed to look after dissolution process for a commission of Rs.9,000. She also
agreed to bear the dissolution expenses. Kavita took over furniture of Rs.9,000 for her commission.
Furniture had already been transferred to realisation account.
(vi) A debtor, Ravinder, for Rs. 19,000 agreed to pay the dissolution expenses which were Rs.18,000
in full settlement of his debt. (C.B.S.E. 2017, Outside Delhi)
Q 2.Gurmeet, Harinder and Jagat are in partnership sharing profits and losses in the ratio of 5 : 3 : 2.
They agreed to dissolve the firm on March 31, 2018, when their Balance Sheet stood as follows :
Gurmeet, Harinder and Jagat BALANCE SHEET as at March 31, 2018
Rs. Rs.
Notes Payable 50,800 Land and Building 80,000
Advance from Harinder 40,000 Marketable Securities 20,000
Current Accounts: Sundry Debtors 50,000
Gurmeet 2,400 Less: Provision for
Harinder 1,460 3,860 Doubtful Debts 11,760 38,240
Gurmeet 50,000 Equipment 23,000
Harinder 30,000 Current Account: Jagat 1,740
Jagat 23,480 1,03,480
2,27,340 2,27,340
The assets realised as follows :
Land and buildings Rs.70,000; Marketable Securities Rs. 18,000; Sundry Debtors Rs.47,000; Stock
Rs.30,000; Equipment Rs.22,240.
Close the books of the firm showing the necessary ledger accounts.
Q 3.Following was the Balance Sheet of D, G and T as at 29.2.2016 :

Rs. Rs.
G’s Loan 8,000 Stock 20,000
R’s Loan 12,000 Furniture 15,000
Workmen Compensation Reserve 26,000 Land and Building 2,45,000
Capitals : G’s Capital 20,000
D 1,00,000
T 1,50,000 2,50,000
3,56,000 3,56,000
The firm was dissolved on the above date on the following terms:
(i) Debtors realized Rs.28,000; and creditors and bills payable were paid at a discount of 10%.
(ii) Stock was taken over by T for Rs. 15,000 and furniture was sold to N for Rs.12,000.
(iii) Land and building was sold for Rs.2,80,000.

(iv) R’s loan was paid by a cheque for the same amount,
(v) There was an unrecorded asset of Rs. 1,50,000 which was sold for Rs. 1,00,000.
(vi) Compensation to workmen paid by the firm amounted to Rs.20,000.
Prepare Realisation Account, Bank Account and Capital Accounts of D, G and T.
Q 4.A, B and C are partners sharing profits and losses in the ratio of 2 : 2 : 1. They agreed to dissolve
the firm. The Balance Sheet of the firm as at that date was as follows:
Bank Overdraft 4,000 Debtors 40,000
B/P 6,000 Furniture 2,000
B's Wife Loan 10,000 Computer 8,000
Capitals: A 70,000 Fixed Assets 41,000
B 70,000 Prepaid Expenses 1,000
C's Capital 8,000
1,90,000 1,90,000
1. Assets realised as follows : Stock Rs.32,000; Fixed Assets Rs.45,000 and full amount was
received from Debtors.
2. A agreed to take over furniture at Rs. 1,600 and also agrees to make the payment of B/P.
3. B agreed to discharge his wife’s loan.
4. There was an unrecorded asset of Rs. 10,000, which was taken over by C at Rs.7,000.
5. A B/R for Rs.5,000 was received from a customer Mohan and the bill was discounted from the
bank. Mohan became insolvent and 60 paise per rupee has been received from his estate.
6. Creditors were paid at a discount of Rs. 1,500.
Prepare necessary accounts.
Q 5.Following is the Balance Sheet of X and Y, who share profits and losses in the ratio of 4 : 1, as at
31st March, 2013 :
A’s Brother’s Loan 8,000 Less: Provision 2,000 15,000
Ts Loan 3,000 Stock 15,000
Investment Fluctuation Fund 5,000 Investments 25,000
Capital: Furniture 6,000
X 50,000 Buildings 19,000
Y 40,000 Goodwill 10,000
1,20,000 1,20,000
The firm was dissolved on the above date and the following arrangements were decided upon :
(i) X agreed to pay off his brother’s Loan.
(«) Debtors of Rs. 5,000 proved bad.
(iii) Other assets realised — Investments 20% less; and Goodwill at 60%.
(iv) One of the creditors of Rs.5,000 was paid only Rs.3,000.
(v) Buildings were auctioned for Rs.30,000 and the auctioneer’s commission amounted to Rs.
1,000.
(vi) Y took over part of stock at Rs.4,000 (being 20% less than the book value). Balance stock
realised 50%.
(vii) Realisation expenses amounted to Rs.2,000.
Prepare :
(i) Realisation Acount
(ii) Partner’s Capital Accounts, and
(iii) Bank Account. (C.B.S.E. Sample Paper 2013)

Q 6.A, B and C are three partners sharing profits in the ratio of 3 : 1 :1. On 31 st March, 2016, they
decided to dissolve their firm. At that date their balance sheet was as under:—
Loan 15,000 Cash 10,000
Workmen Compensation Reserve 30,000 Debtors 2,42,000
Capital A/cs: Less : Provision for
A 2,75,000 bad debts 12,000 2,30,000
B 1,00,000 Stock in trade 78,000
C 70,000 4,45,000 Furniture 10,000
5,50,000 5,50,000
It is agreed that:—
(i) A is to take over Furniture at Rs. 8,000 and Debtors amounting to Rs.2,00,000 at Rs. 1,82,000; the
Creditors of Rs.60,000 to be paid by him at this figure.
(ii) B is to take over all the Stock in Trade at Rs. 70,000 and some of the Sundry Assets at Rs.72,000
(being 10% less than book value).
(iii) C is to take over the remaining Sundry Assets at 90% of the book value, less Rs. 1,000 as discount
and assume the responsibility for the discharge of the loan together with accrued interest of Rs.300
which has not been recorded in the books.
(iv) The expenses of dissolution were Rs.2,700. The remaining debtors were sold to a debt
collecting agency for 50% of the book value.
(v) Rs.40,000 had to be paid for Workmen Compensation.
Prepare necessary accounts to close the books of the firm.
Q 7.Achal and Vichal were partners in a firm sharing profits in the ratio of 3 : 5. On 31.3.2018 their
Achal 3,00,000 Machinery 3,00,000
Vichal 5,00,000 8,00,000 Debtors 2,22,000
Employees Provident Fund 21,000
10,00,000 10,00,000
The firm was dissolved on 1.4.2018 and the assets and liabilities were settled as follows:
(i) Land and Building realised Rs.4,30,000;
(ii) Debtors realised Rs.2,25,000 (with interest) and Rs. 1,000 were recovered for bad debts written off
last year;
(iii) There was an unrecorded investment which was sold for Rs.25,000;
(iv) Vichal took-over machinery at Rs.2,80,000 for cash;
(v) 50% of the creditors were paid Rs.4,000 less in full settlement and the remaining creditors were
paid full amount.
Pass necessary journal entries for dissolution of the firm.
Q 8.L, M and N entered into partnership on 1st July 2017 sharing in the ratio of 4 : 3 : 3. Their Capitals
were Rs.60,000; Rs.40,000 and Rs.30,000 respectively. They decided to dissolve on 30th June 2018,
on which date their position was:
Bank Rs.7,000; Debtors Rs.40,000; B/R Rs.5,500; Stock Rs.43,000; Furniture Rs.2,500; Creditors
Rs.15,000 andB/P Rs.5,000.
L took over Debtors at 25% discount and took over the liabilities of the payment to creditors, Mtook
over stock at Rs. 13,000. N takes B/R at Rs.5,000 and furniture at 12% depreciation. B/P were due after
2 months; As such, a rebate of 18% p.a. was received on their payment.
10% p.a. interest is to be credited to each partner on his capital. Prepare necessary accounts.

Q 9.A, B and C started business on 1st April, 2017, sharing profits in the ratio of 3:2:1. Their combined
capital was Rs.96,000 which was shared in profit sharing ratio. They are entitled to 10% p.a. interest on
capitals. Profits for the year ending 31st March, 2018, before allowing interest on capitals were
Rs.39,600. They drew Rs. 10,000; Rs.7,500 and Rs.6,000 respectively during the year.
They decided to dissolve the firm on 31st March, 2018. Their creditors as on that date were Rs.50,000.
In addition, A had given a loan of Rs.5,000 to the firm. There were liabilities amounting to Rs. 12,000,
not shown in the books. These are also to be paid.
Assets realised for Rs. 1,20,000. Creditors for Rs.40,000 were taken over by A for Rs.36,000. Balance
of the creditors were paid at a discount of 5%.
Q 10. (HOTS).A & B were partners in a firm from 1.4.2016 with capitals of Rs.60,000 and Rs.40,000
respectively. They shared profits and losses in the ratio of 3 : 2. They carried on business for 2 years.
In the first year they made a profit of Rs.50,000 and in the 2nd year ending 31st March 2018, they
incurred a loss of Rs.20,000. As the business was no longer profitable they decided to wind up. Creditors
on that date were Rs.20,000. The partners withdrew Rs. 8,000 each per year for their personal expenses.
The assets realised Rs. 1,00,000. The expenses on realisation were Rs.3,000. Prepare Realization
Account and show your workings clearly.
Q 11.X, Y and Z commenced business on 1st April, 2013 with capitals of Rs. 1,00,000, Rs.80,000 and
Rs.60,000 respectively. Profit & losses were shared in the ratio of 4 : 3 : 3 respectively. Capitals carried
interest at 5% p.a.
During the years ended 31st March 2014 and 2015, they made profits of Rs.40,000 and Rs.50,000 before
allowing interest on capitals. Drawings of each partner were Rs. 10,000 per year.
On 31st March, 2015 the firm was dissolved. Creditors on that date were Rs.24,000. The assets realised
a net amount of Rs.2,60,000.
Prepare Capital Accounts of partners for two years till the books are finally closed and the Realisation
Account.
Q 12.A, B and C sharing profits equally, dissolved their firm on 30th June 2018, on which date their
Reserve for contingency 18,000 Debtors 55,000
Profit & Loss A/c 12,000 Stock 81,000
A’s Wife Loan 12,000 Furniture 20,000
Bank Loan at 12% 20,000 Plant 53,700
Capital Accounts : A 60,000 Current Account: C 22,000
B 50,000
C 20,000
Current Accounts :
A 10,000
B 5,000
2,38,000 2,38,000
(1) There is a bill for Rs.5,000 under discount. This bill was received from ‘J?’. R proved insolvent
and 60% were received from his estate.
(2) It was found that an investment not recorded in the books is worth Rs. 8,000. This is taken over
by one of the creditors at this value.
(3) A agreed to accept furniture in full settlement of his wife’s loan.
(4) Bank Loan was repaid alongwith interest for nine months.
(5) Assets realised as follows : Debtors Rs.24,500; Stock Rs.60,000; Plant Rs.28,000. Prepare
necessary accounts.

Q 13.Erica, Aditi and Tarini were partners in a firm sharing profits and losses in the ratio of 5 : 3 : 2.
Due to difference of opinion, they decided to dissolve the partnership with effect from 1st April, 2017,
on which date the firm’s Balance Sheet was as follows :
BALANCE SHEET OF ERICA, ADITI AND TARINI
Employees’ Provident Fund 8,000 Cash at Bank 20,000
Investment Fluctuation Reserve 4,000 Less : Prov. for d/d (2,000) 20,000
Current Accounts : Stock 12,000
Erica 8,000 Plant and Machinery 30,000
Aditi 10,000 18,000 Land & Building 45,000
Capital Accounts: Investments 35,000
Erica 60,000 Advertisement Suspense A/c 3,000
Aditi 40,000 Current Account:
Tarini 30,000 1,30,000 Tarini 5,000
1,70,000 1,70,000
The following additional information was given :
(a) Plant & Machinery costing Rs.20,000 was taken over by Erica at Rs. 16,000 and the remaining
machineries realised Rs.9,000.
(b) Land & Building realised Rs.42,000.
(c) Investments were taken over by Aditi at Rs.28,000.
(d) Sundry debtors included a bad debt for Rs. 1,000 and the amount was realised from the good
debtors subject to a cash discount of 10%.
(e) A creditor for Rs.2,000 was untraceable and other creditors accepted payments allowing 10%
discount.
(f) Erica was allowed to retain the whole of the stock as her remuneration for services rendered by her
in the course of dissolution of the firm.
(i) Realisation Account.
(ii) Partners’ Capital Accounts.
(iii) Bank Account. (ISC Specimen Question Paper 2018)
Q 14.Ram, Shyam and Mohan shared profits in the ratio of 2 : 2 : 1. Following is their Balance Sheet
on the date of dissolution :
Provision for Depreciation 15,000 Stock 50,000
Ram’s Loan 40,000 Plant 75,000
Capital Accounts: Patents 20,000
Ram 1,35,000 100 Shares in X Co. 5,000
Shyam 30,000 300 Shares in Y Co. 18,000
Mohan 10,000 Goodwill 15,600
2,72,600 2,72,600
1. Ram takes over Debtors at Rs. 10,000; Stock at a 20% less value; and Plant at Rs.30,000.
2. One of the Creditors took some of the patents whose book value was Rs.8,000, at a valuation
of Rs.4,800. Balance of the creditors were paid at a discount of Rs. 1,200.
3. There was an unrecorded asset of Rs. 15,000 (not mentioned in the Balance Sheet) which was
taken over by Ram at Rs. 10,000 in part payment of his loan.
4. Shares in XCo. were agreed to be taken over by Shyam at Rs.30 per share.

5. Shares in Y Co. were valued at Rs.12,000. All partners divided these shares in their profit
sharing ratio.
6. Balance of the Patents realised 70% of their book value.
Prepare necessary ledger accounts.
Q 15.Girija and Ganesh were partners in a firm sharing profits and losses in the ratio of 2 : 3. On 31st
March,.2017 their Balance Sheet was as follows :
Rs. Rs.
Girija’s Brother’s loan 77,000 Less : Provision for
Ganesh’s loan 28,000 Doubtful Debts 2,000 53,000
Investment Fluctuation Fund 15,000 Stock 78,000
Capitals : Investments 89,000
Girija 1,50,000 Buildings 2,50,000
Ganesh 1,00,000 2,50,000 Profit and Loss A/c 10,000
5,00,000 5,00,000
On the above date the firm was dissolved. The assets were realized and the liabilities were paid off as
follows :
(a) Debtors of Rs.6,000 were proved bad.
(b) Girija agreed to pay off her brother’s Loan.
(c) One of the creditors for Rs. 10,000 was paid only Rs.3,000 in full settlement of his account.
(d) Buildings were auctioned for Rs. 1,80,000 and the auctioneer’s commission amounted to
Rs.8,000.
(e) Ganesh took over part of stock at Rs.4,000 (being 20% less than the book value). Balance of
the Stock was handed over to the remaining creditors in full settlement of their account.
(i) Investments realized Rs.9,000 less.
(g) Realisation expenses amounted to Rs. 17,000 and were paid by Ganesh,
Prepare Realisation Account, Partners’ Capital Accounts and Bank Account.
Q 16.A, B and C shared profits in the ratio of 3 : 2 : 1. They dissolved the firm and appointed A to
realise the assets. A is to receive 5% commission on the sale of assets (except cash) and is to bear all
expenses of realisation. The position of the firm was as follows:
Liabilities Rs. Assets
Bank overdraft 25,000 Cash in Hand 22,500
Commission Received in Advance 8,000 Plant 91,200
Capitals : Profit & Loss A/c 54,000
A 90,000
B 60,000
C 10,000
2,71,000 2,71,000
Informations : I. A realised the assets as follows:— Debtors Rs.30,000; Stock Rs.26,000; Investments
at 75% value; Plant at Rs.42,750. Expenses of realisation met by A amounted to Rs.4,100.
2. Commission received in advance is returned to the customers after deducting Rs.3,000 for work
done.
3. Firm had to pay Rs. 7,200 for outstanding salaries, not provided for earlier.
4. Compensation to employees paid by the firm amounted to Rs.9,800. This liability was not
provided for in the above balance sheet.

5. Rs.25,000 had to be paid for Provident Fund.
1 1 1
Q 17.A, B and C are partners in a firm sharing profits and losses in the ratio of 2 : 3 : 6. On 31st March

Sundry Creditors 24,500 Plant 50,000
Mrs. C’s Loan 20,000 Freehold Property 1,12,000
Workmen Compensatio n Reserve 12,000 Patents 6,000
Capital A/ccounts: Stock 40,000
A 1,00,000 Sundry Debtors 40,000
B 80,000 Less: Provision 1,500 38,500
C 40,000 2,20,000 Prepaid Expenses 2,000
Cash at Bank 28,000
2,76,500 2,76,500
It was decided to dissolve the firm, A agreeing to take over the business (except cash at bank) at the
following valuations :
Plant at a depreciation of 20%; Freehold Property at Rs. 1,50,000; Goodwill at Rs. 10,000; Patents at
book value; Sundry Debtors at Rs.35,000 (Net); Half the Stock at 30% more than its book value and
the remaining half at 50% less than the book value.
Mrs. C’s loan was to be repaid and the Creditors were proved at Rs.22,000 and were taken over by A.
Expenses of dissolution came to Rs. 1,000.
Close the books of the firm and prepare the Balance Sheet of A.
Q 18.Give the necessary journal entries in each of the following alternative cases :
(i) Realization expenses amounted to Rs.500.
(ii) Realization expenses paid by the firm amounted to Rs.500 and the partner has to bear the realization
expenses.
(iii) ‘Z’ one of the partners was to bear all the realisation expenses for which he was given a commission
of 2% of net cash realised from dissolution. Cash realised from assets was Rs.25,000 and cash paid for
liabilities amounted to Rs.5,000.
Q 19.A and B share profits and losses in the ratio of 3 : 2. They have decided to dissolve the firm. Assets
and external liabilities have been transferred to Realisation A/c. Pass the journal entries to effect the
following :
(a) Bank Loan of Rs. 12,000 is paid off.
(b) A was to bear all expenses of realisation for which he is given a commission of Rs.400.
(c) Deferred Advertisement Expenditure A/c appeared in the books at Rs.28,000.
(d) Stock worth Rs. 1,600 was taken over by B at Rs. 1,200.
(e) An unrecorded computer realised Rs.7,000.
(f) There was an outstanding bill of repairs for Rs. 2000, which was paid off.
Q 20.Pass the necessary journal entries for the following transactions on the dissolution of the firm of
Sudha and Shiva after the various assets (other than cash) and outside liabilities have been transferred
to Realisation Account:
(i) Sudha agreed to pay off her husband’s loan Rs. 19,000.
(ii) A debtor whose debt of Rs.9,000 was written off in the books paid Rs.7,500 in full settlement.
(iii) Shiva took overall investments at Rs. 13,300.
(iv) Sundry creditors Rs. 10,000 were paid at 9% discount.
(v) Realisation expenses Rs.3,400 were paid by Sudha for which she was allowed Rs.3,000.
(vi) Loss on realisation Rs.9,400 was divided between Sudha and Shiva in 3 : 2 ratio.

Q 21.A and B were partners in a firm sharing profits and losses equally. Their firm was dissolved on
15th March, 2018, which resulted in a loss of Rs.30,000. On that date the capital account of A showed
a credit balance of Rs.20,000 and that of 5 a credit balance of Rs.30,000. The cash account had a balance
of Rs.20,000. You are required to pass the necessary journal entries for the (i) transfer of loss to the
capital accounts of the partners and (ii) making final payment to the partners.
Q 22.Pass necessary Journal entries for the following transactions at the time of dissolution of the firm
:
(a) Loan of Rs. 10,000 advanced by a partner to the firm was refunded.
(b) X, a partner takes over an unrecorded asset (Typewriter) at Rs.300.
(c) Undistributed Balance (Debit) of P & L A/c Rs.30,000. The firm has three partners X, F and Z.
(d) The assets of the firm realised Rs. 1,25,000.
(e) Y who undertakes to carry out the dissolution proceedings is paid Rs.2,000 for the same.
(f) Creditors paid Rs.28,000 in full settlement of their account of Rs. 30,000.
Q 23.Give the necessary journal entries for the following transactions on dissolution of the firm of Anita
and Ravi on 31st March 2016, after the various assets (other than cash) and the third party liabilities
have been transferred to Realisation Account. They shared profits and losses in the ratio 3:2.
(a) Ravi was to get a remuneration of Rs.23,000 for completing the dissolution process. He also agreed
to bear realization expenses. Realisation expenses of Rs. 10,000 were paid by Ravi from the firm’s cash.
(b) Amitesh, an old customer whose account for Rs.60,000 was written off as bad debt in the
previous year, paid 90%.
(c) Creditors of Rs.40,000, accepted furniture valued at Rs.38,000 in full settlement of their claim.
(d) Land and Building was sold for Rs. 3,00,000 through a broker who charged 2% commission.
(e) There were 500 shares of Rs.40 each in Vision Ltd., acquired at a cost of Rs.22,000 and had
been written off completely from the books. These shares are now valued at Rs.50 each and divided
among the partners in their profit sharing ratio.
(f) Profit on realization was Rs.45,000. (C.B.S.E. 2017, Comptt. Outside Delhi)
Q 24.Rohit, Kunal and Sarthak are partners in a firm. They decided to dissolve their firm. Pass necessary
Journal entries for the following after various assets (other then Cash and Bank) and the third party
liability have been transferred to Realisation Account:
(a) Kunal agreed to pay off his wife’s loan of Rs.6,000.
(b) Total Creditors of the firm were Rs.40,000. Creditors worth Rs. 10,000 were given a piece of
furniture costing Rs. 8,000 in full and final settlement. Remaining Creditors allowed a discount of 10%.
(c) Rohit had given a loan of Rs.70,000 to the firm which was duly paid.
(d) A machine which was not recorded in the books was taken over by Kunal at Rs.3,000, whereas
its expected value was Rs.5,000.
(e) The firm had a debit balance of Rs. 15,000 in the Profit and Loss Account on the date of
dissolution.
(f) Sarthak paid the realisation expenses of Rs. 16,000 out of his private funds, who was to get a
remuneration of Rs. 15,000 for completing dissolution process and was responsible to bear all the
realisation expenses.
Q 25.Parul, Payal and Priyanka are partners. They decided to dissolve their firm. Pass necessary journal
entries for the following after various assets (other than cash and bank) and the third party liabilities
have been transferred to Realisation Account:
(a) There were total debtors of Rs.76,000. A provision of bad and doubtful debts also stood in the
books at Rs.6,000. Rs. 12,000 debtors proved bad and rest paid the amount due.
(b) Parul agreed to pay off her husband’s loan of Rs.7,000 at a discount of 5%.
(c) A machine which was not recorded in the books was taken over by Payal at Rs.3,000, whereas
its expected value was Rs.5,000.
(d) A contingent liability (not provided for) of Rs.4,000 was also discharged.
(e) The firm had a debit balance of Rs.27,000 in the Profit and Loss Account on the date of dissolution.

(f) Priyanka paid the realisation expenses of Rs. 15,000 out of her pocket and she was to get a fixed
remuneration of Rs. 18,000 for completing the dissolution process. (C.B.S.E. 2012 C)
Q 26.Debtors appearing in the Balance Sheet of a firm were as follows :

Sundry Debtors 2,00,000
Less : Provision 10,000 1,90,000
On Dissolution, bad debts were Rs.25,000 and the remaining debtors were realised at 5% discount. How
much amount was realised from Debtors?
Q 27.P and Q were partners in a firm. Pass journal entries for the following transactions on dissolution
of the firm after various assets and external liabilities have been transferred to Realisation A/c :
(i) A an unrecorded creditor of Rs. 10,000 was paid by partner/1 at a discount of 20%. ‘ '
(ii) Y, an unrecorded creditor of Rs.25,000, took over Computer at Rs.30,000. Balance was paid by him
in Cash.
(iii) Computer of Rs.25,000 and a Vehicle of Rs. 10,000 were appearing in the Balance Sheet but no
other additional information was given regarding these items.
(iv) A creditor to whom Rs. 10,000 were to be paid accepted an unrecorded asset of Rs. 15,000 in full
settlement of his claim.
(v) An unrecorded asset of Rs. 3 5,000 was given to an unrecorded creditor of Rs.50,000 in settlement
of his claim of Rs.30,000 and the balance was paid to him in cash.
(vi) P’s loan was appearing on the liabilities side of the Balance Sheet at Rs.50,000. He accepted an
unrecorded asset of Rs.40,000 at Rs.35,000 and the balance was paid to him in Cash.
Q 28.Aman and Harsh were partners in a firm. They decided to dissolve their firm. Pass necessary
journal entries for the following after various assets (other than Cash and Bank) and third party liabilities
have been transferred to Realisation A/c.
(a) There was furniture worth Rs.50,000. Aman took over 50% of the furniture at 10% discount
and the remaining furniture was sold at 30% profit on book value.
(b) Profit and Loss Account was showing a credit balance of Rs. 15,000 which was distributed
between the partners.
(c) Harsh’s loan of Rs.6,000 was discharged at Rs.6,200.
(d) The firm paid realization expenses amounting to Rs. 5,000 on behalf of Harsh who had to bear
these expenses.
(e) There was a bill for Rs. 1,200 under discount. The bill was received from Soham who proved
insolvent and a first and final dividend of 25% was received from his estate.
(i) Creditors, to whom the firm owed Rs.6,000, accepted stock of Rs.5,000 at a discount of 5% and the
balance in cash.
(g) The loss on dissolution was Rs. 8,000.
Q 29.L and Afwere partners in a firm sharing profit in the ratio of 2 : 3. On 28-2-2016 the firm was
dissolved. After transferring assets (other than cash) and outsiders’ liabilities to realisation account you
are given the following information :
(a) A creditor for Rs. 1,40,000 accepted building valued at Rs. 1,80,000 and paid to the firm Rs.40,000.
(b) A second creditor for Rs.30,000 accepted machinery valued at Rs.28,000 in full settlement of
his claim.
(c) A third creditor amounting to Rs.70,000 accepted Rs.30,000 in cash and investments of the
book value of Rs.45,000 in full settlement of his claim.
(d) Loss on realisation was Rs.4,000.
Pass necessary Journal entries for the above transactions in the books of the firm assuming that all
payments were made by cheque. (C.B.S.E. 2016, Delhi)
Q 30. X and Y were partners sharing profits in the ratio of 3 : 2. Give Journal entries under following
situation at the time of dissolution of firm:

(i) Workmen Compensation Reserve stood at Rs. 75,000 in the Balance Sheet and there was no liability
towards Workmen Compensation.
(ii) Workmen Compensation Reserve stood at Rs. 60,000 and liability for it was ascertained at Rs.
35,000.
(iii) Workmen Compensation Reserve stood at Rs. 60,000 and liability in respect of it was ascertained
at Rs. 75,000.
(iv) Workmen Compensation Reserve stood at Rs. 60,000 and liability in respect of it was ascertained
at Rs. 60,000.
(v) There was no Workmen Compensation Reserve and firm had to pay Rs. 15,000 as compensation to
the workers.
Q 31.What Journal entries would be passed for the following transactions on the dissolution of a firm
of partners A and B, after various assets (other than cash) and third party liabilities have been transferred
to Realisation Account?
(i) 'A' took over 50% of the stock at a discount of 20%. Remaining stock was sold at a profit of 30% on
cost. (Book va'ue of stock given in the Balance Sheet before dissolution was Rs. 4,00,000).
(ii) Debtors Rs. 2,64,000. Provision for Doubtful Debts: Rs. 24,000, Rs. 48,000 of the book debts proved
bad.
(iii) Building (Book value Rs. 5,00,000) sold for Rs. 8,00,000 through a broker who charged 2%
commission.
(iv) Machinery (Book value Rs. 6,00,000) was given to a creditor at a discount of 20%.
(v) Investments (Book value Rs. 40,000) realised at 150%.
Q 32.What Journal entries would be passed for the following transactions on the dissolution of a firm
of partners A and B:
(i) Old furniture which had been written off completely in the books was sold for Rs. 20,000.
(ii) 'Z' an old customer whose account for Rs. 10,000 was written off as bad in the previous year, paid
70%.
(iii) ‘A’ agreed to takeover the firm's goodwill (Not recorded in the books of a firm) at Rs. 50,000.
(iv) There was an old computer which had been written off completely from the books. It was estimated
to realise Rs. 5,000. It is taken by ‘B’ a partner at the estimated price less 30%.
(v) Investments costing Rs. 20,000 (being 1,000 shares), had been written off from the books. These
investments (shares) are valued @ Rs. 15 each and divided among the partners in their profit-sharing
ratio.
Q 33.Pass Journal entries for the following transactions:

(i) Realisation expenses amounted to Rs. 10,000.
(ii) Realisation expenses amounted to Rs. 5,000 were paid by a partner.
(iii) Realisation expenses amounted to Rs. 5,000 were paid by the firm on behalf of a partner.
(iv) A partner was paid remuneration (including expenses) of Rs. 7,500 to carry out dissolution of the
firm. Actual expenses were Rs. 10,000.
(v) Dissolution expenses were Rs. 8,000. Out of the said expenses, Rs. 3,000 were to be borne by the
firm and the balance by a partner. Rs. 8,000 are paid by the firm.
(vi) Dissolution expenses were Rs. 8,000; Rs. 3,000 were to be borne by the firm and the balance by a
partner. The expenses were paid by a partner.
(vii) Realisation expenses of Rs. 5,000 were to be borne and paid by a partner.
(viii) X, the partner, is paid remuneration of Rs. 5,000 for dissolution of the firm. Realisation expenses
of Rs. 8,000 are met by the firm.
(ix) Realisation expenses of Rs. 5,000 were to be borne by X, a partner. However, it was paid by Y.
Q 34. Pass necessary Journal entries on the dissolution of a partnership firm in the following cases:
(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) Dissolution expenses were Rs. 5,000.

(iv) P, a partner, was appointed to look after the process of dissolution for which he was allowed a
remuneration of Rs. 7,000. P agreed to bear the dissolution expenses. Actual dissolution expenses Rs.
4,000 were paid by P.
(v) N, a partner, was appointed to look after the process of dissolution for which he was allowed a
remuneration of Rs. 9,000. N agreed to bear the dissolution expenses. Actual dissolution expenses Rs.
4,000 were paid by the firm.
(vi) Q, a partner, was appointed to look after the process of dissolution for which he was allowed a
remuneration of Rs. 18,000. Q agreed to take over stock worth Rs. 18,000 as his remuneration. The
stock had already been transferred to Realisation Account. (Delhi 2017)
Q 35.Pass necessary Journal entries for the following transactions in the books of X, Y and Z sharing
profits in the ratio of 3 : 2 : 1 at the time of dissolution of the firm:
(i) Realisation expenses Rs. 3,000 paid.
(ii) Realisation expenses amounting to Rs. 2,000 paid by Mr. X, a partner, who was to bear these
expenses.
(iii) Y, a partner to bear realisation expenses for which he will get Rs. 1,900. The actual expenses paid
by y were Rs. 1,500.
(iv) There was a balance of Rs. 18,000 in the General Reserve on the date of dissolution.
(v) y had taken a loan of Rs. 50,000 from the firm, which was paid fully by him to the firm.
(vi) y, a partner, took a machine for Rs. 20,000.
(vii) Z, a partner, agreed to take a creditor of Rs. 30,000 for Rs. 20,000.
(viii) A, a partner, has given loan to the firm of Rs. 10,000. It was paid back to him at the time of
dissolution.
(ix) There was a contingent liability of Rs. 37,000 in respect of bills discounted but not matured. All
the discounted bills were honoured but an acceptor of a bill of Rs. 5,000 became insolvent and fifty
paise in a rupee was received. The liability of the firm on account of this bill discounted and dishonoured
has not so far been recorded.
Q 36. L and M were partners in a firm sharing profits in the ratio of 2:3. On 28th February, 2016 the
firm was dissolved. After transferring assets (other than cash) and outsiders' liabilities to Realisation
Account you are given the following information:
(i) A creditor for Rs. 1,40,000 accepted building valued at Rs. 1,80,000 and paid to the firm Rs. 40,000.
(ii) A second creditor for Rs. 30,000 accepted machinery valued at Rs. 28,000 in full settlement of his
claim.
(iii) A third creditor amounting to Rs. 70,000 accepted Rs. 30,000 in cash and investments of the book
value of Rs. 45,000 in full settlement of his claim.
(iv) Loss on dissolution was Rs. 4,000.
Pass necessary Journal entries for the above transactions in the books of the firm assuming that all
payments were made by cheque. (Delhi 2016)
Q 37.Pass Journal entries for the following transactions on the dissolution of the
firm of T and P after various assets (other than cash) and outside liabilities have been transferred to
Realisation Account:
(i) Bank Loan Rs. 34,000 was paid.
(ii) Furniture worth Rs. 70,000 was taken by partner T at Rs. 43,000.
(hi) Partner P agreed to pay a creditor Rs. 7,500.
(iv) A computer previously written off fully, realised Rs. 3,900.
(v) Expenses of realisation Rs. 3,200 were paid by partner T.
(vi) Profit on realisation Rs. 4,800 was distributed between T and P in 5 : 3 ratio. (Delhi 2011)
Q 38. Parth and Shivika were partners in a firm sharing profits in the ratio of 3 : 2. The Balance Sheet
of the firm on 31st March, 2014 was as follows:
Sundry Creditors 80,000 Bank 1,72,000

Shivika's Sister's Loan 20,000 Debtors 27,000
Parth 1,75,000 Furniture 2,20,000
Shivika 1,94,000 3,69,000
4,69,000 4,69,000
On the above date, the firm was dissolved. The assets were realised and the liabilities were paid off as
follows:
(i) 50% of the furniture was taken over by Parth at 20% less than book value. The remaining furniture
was sold for Rs. 1,05,000.
(ii) Debtors realised Rs. 26,000.
(iii) Stock was taken over by Shivika for Rs. 29,000.
(iv) Shivika's sister's loan was paid off along with interest of Rs. 2,000.
(v) Expenses on realisation amounted to Rs. 5,000.
Prepare Realisation Account, Partners' Capital Accounts and Bank Account. (Delhi 2015 C)
Q 39.Parth and Shivika were partners in a firm sharing profits in the ratio of 3 : 2. The Balance Sheet
of the firm on 31st March, 2014 was as follows:
Sundry Creditors 80,000 Bank 1,72,000
Shivika's Sister's Loan 20,000 Debtors 27,000
Parth 1,75,000 Furniture 2,20,000
Shivika 1,94,000 3,69,000
4,69,000 4,69,000
On the above date, the firm was dissolved. The assets were realised and the liabilities were paid off as
follows:
(i) 50% of the furniture was taken over by Parth at 20% less than book value. The remaining furniture
was sold for Rs. 1,05,000.
(iii) Stock was taken over by Shivika for Rs. 29,000.
(iv) Shivika's sister's loan was paid off along with interest of Rs. 2,000.
(v) Expenses on realisation amounted to Rs. 5,000.
Prepare Realisation Account, Partners' Capital Accounts and Bank Account. (Delhi 2015 C)
Q 40.Following is the Balance Sheet of A and B as at 31st March, 2018:

Sundry Creditors 30,000 Cash in Hand 500
Mrs. A's Loan 5,000 Stock-in-Trade 5,000
Mrs. B's Loan 10,000 Investments 10,000
Investments Fluctuation Reserve 1,000 Less: Provision for Doubtful 2,000 18,000
Debts
A’s Capital 10,000 Plant and Machinery 20,000
B's Capital 10,000 Building 15,000
Goodwill 4,000
84,000 84,000
The firm was dissolved on 31st March, 2018 and following was agreed: (i) A promised to pay Mrs. A's
Loan and took Stock-in-Trade at Rs. 4,000. (ii) B took half the Investments @ 10% discount, (iii)
Debtors realised Rs. 19,000. (iv) Creditors and Bills Payable were due on an average basis of one month
after 31st March but they were paid immediately on 31st March @ 6% discount per annum, (v) Plant

realised Rs. 25,000; Building Rs. 40,000; Goodwill Rs. 6,000 and remaining Investments at Rs. 4,500.
(vi) There was an old typewriter in the firm which had been written off completely from the books. It
is now estimated to realise Rs. 300. It was taken away by B at this estimated price, (vii) Realisation
expenses were Rs. 1,000.
Show the Realisation Account, Bank Account and Partners' Capital Accounts in the books of the firm.
(CBSE 2001, 2003, Modified)
Q 41.(Dissolution and Unrecorded Asset). X, Y and Z who were sharing profits in the ratio of 3:2:1
decided to dissolve the firm on 31st March, 2018 when their Balance Sheet was as follows:
X 1,20,000 Stock 37,000
Y 90,000 Tools 8,000
Z 60,000 2,70,000 Car 12,000
Machinery 60,000
Building 1,00,000
3,04,000 3,04,000
Following transactions took place at the time of dissolution:
Assets realised are: Tools Rs. 5,000; Machinery Rs. 82,000; Building Rs. 84,000; Car Rs. 25,000;
Goodwill Rs. 60,000; Debtors Rs. 59,000.
Creditors agreed to take Stock in settlement of their dues. There was an unrecorded asset valued at Rs.
3,000, which was taken by X for Rs. 2,000.
There was an old furniture which had been written off from the books. V agreed to take it at Rs. 8,000.
Firm had to pay Rs. 8,000 for outstanding salary which were not provided earlier.
Prepare Realisation Account, Partners' Capital Accounts and Cash Account.
Q 42. (Value Based). Prashant and Rajesh were partners in a firm sharing profits in the ratio of 3 : 2. In
spite of repeated reminders by the authorities, they kept dumping hazardous material into a nearby river.
The court ordered for the dissolution of their partnership firm on 31st March, 2012. Prashant was
deputed to realise the assets and to pay the liabilities. He was paid Rs. 1,000 as commission for his
services. The financial position of the firm on 31st March, 2012 was as follows:
Creditors 80,000 Building 1,20,000
Mrs. Prashant's Loan 40,000 Investments 30,600
Rajesh's Loan 24,000 Debtors 34,000
Investments Fluctuation 8,000 Less: Provision for doubtful 4,000 30,000
Fund debts
Capital A/cs: Bills Receivable 37,400
Prashant 42,000 Cash 6,000
Rajesh 42,000 84,000 Profit and Loss A/c 8,000
Goodwill 4,000
2,36,000 2,36,000
Following was agreed upon:
(i) Prashant agreed to pay off his wife's loan.
(iii) Rajesh took all investments at Rs. 27,000.
(iv) Building realised Rs. 1,52,000.
(v) Creditors were payable after 2 months. They were paid immediately at 10% discount.
(vi) Bills Receivable were settled at a loss of Rs. 1,400.
(vii) Realisation expenses amounted to Rs. 2,500.

Prepare Realisation Account, Partners' Capital Accounts and Cash Account to close the books of the
firm. Identify the value being conveyed in the question. (AI2013)
Q 43.A, B and C are three partners sharing profits in the ratio of 3 : 1 : 1. On 31st March, 2018, they
decided to dissolve their firm. On that date their Balance Sheet was:
Loan 1,500 Debtors 24,200
Capital Less: Provision for Doubtful 1,200 23,000
A/cs: Debts
A 27,500 Stock-in-Trade 7,800
C 7,000 44,500 Sundry Assets 17,000
52,000 52,000
It is agreed that:
(i) A is to take Furniture at Rs. 800 and Debtors amounting to Rs. 20,000 at Rs. 17,200; the Creditors
of Rs. 6,000 to be paid by him at this amount.
(ii) B is to take all the Stock-in-Trade at Rs. 7,000 and some of the Sundry Assets at Rs. 7,200 (being
10% less than book value).
(iii) C is to take over the remaining Sundry Assets at 90% of the book value, less Rs. 100 as discount
and assume the responsibility for the discharge of the Loan together with accrued interest of Rs. 30
which has not been recorded in the books.
(iv) The expenses of dissolution were Rs. 270. The remaining Debtors were sold to. a debt collecting
agency for 50% of the book value.
Prepare necessary Ledger Accounts to close the books of the firm.
Q 44 .(Comprehensive). A and B sharing profits and losses in the ratio of 3 : 2 agreed upon the
dissolution of the firm on 31st March, 2018 at which date their Balance Sheet was as follows:
Trade Creditors 80,000 Cash 6,000
Loan from Mrs. B 15,000 Stock 80,000
Reserve 24,000 Sundry Debtors 66,000
Profit and Loss A/c 11,000 Less: Provision for Doubtful 6,000 60,000
Debts
A 90,000 Land and Building 33,000
B 30,000 1,20,000 Furniture 10,000
Goodwill 15,000
Prepaid Insurance 1,000
2,75,000 2,75,000
The firm was dissolved on the given date and following transactions took place:
(i) B undertook to pay Mrs. B's Loan.
(ii) A took 50% of the Stock at a discount of 20%.
(iii) Remaining Stock was sold at a profit of 30% on cost.
(iv) Rs. 12,000 of the Book Debts proved bad.
(v) Land and Building realised Rs. 1,40,000.
(vi) Half of the Trade Creditors accepted Plant and Machinery at 10% less than the book value and Cash
of Rs. 5,000 in full settlement of their claims.
(vii) Remaining Trade Creditors were paid out at a discount of 10%.
(viii) Bills Payable were paid in full.

(ix) Realisation expenses were Rs. 5,000.
(x) Z, an old customer, whose account was written off as bad in the previous year, paid Rs. 500 which
is not included in the above stated Book Debts.
(×i) A contingent liability (not provided for) of Rs. 1,000 was also discharged.
(xii) Furniture was sold for Rs. 10,000.
Prepare Realisation Account, Partners' Capital Accounts and Bank Account.
Q 45.Following was the Balance Sheet of D, T and G as at 31st March, 2018:

G's Loan 8,000 Stock 20,000
R's Loan 12,000 Furniture 15,000
General Reserve 20,000 Land and Building 2,45,000
Capital A/cs: G's Capital 20,000
D 1,00,000
T 1,50,000 2,50,000
3,50,000 3,50,000
(i) Debtors realised Rs. 28,000; Creditors and Bills Payable were paid at a discount of 10%.
(ii) Stock was taken by T for Rs. 15,000 and Furniture was sold to N for Rs. 12,000.
(iii) Land and Building was sold for Rs. 2,80,000.
(iv) R's Loan was paid by a cheque for the same amount.
(v) An unrecorded asset estimated at Rs. 1,20,000 was sold for Rs. 1,00,000.
Prepare Realisation Account, Capital Accounts of D, T and G and Bank Account.
Q 46.A, B and C are partners sharing profits in the ratio of 5 :3 : 2. Their Balance Sheet as at 31st March
2018, the date on which they dissolve the firm, was as follows:
A's Capital 2,00,000 Bank 70,000
B's Capital 1,50,000 Debtors 50,000
C's Capital 1,50,000 5,00,000 Stock 60,000
A's Current A/c 30,000 Furniture 25,000
B's Current A/c 20,000 Patents 35,000
Profit and Loss A/c 50,000 Machinery 1,00,000
Trade Creditors 70,000 Building 3,20,000
C's Current A/c 10,000
6,70,000 6,70,000
Following transactions took place at the time of dissolution:
(i) Realisation expenses were to be borne by A for which he is to get a credit of Rs. 10,000. Actual
realisation expenses paid out of firm's Bank Account amounted to Rs. 12,000.
(ii) B took stock for Rs. 55,000 and C took over Building for Rs. 4,00,000.
(iii) Other assets realised: Debtors Rs. 48,000; Furniture Rs. 17,000 and Machinery Rs. 80,000.
(iv) Trade Creditors were settled in full by paying them Rs. 65,000.
Prepare Realisation Account, Partners' Current Accounts, Capital Accounts and Bank Account.
Q 47. Following is the Balance Sheet of A and B as at 31st March, 2018 who share profits and losses
in the ratio of 3 : 2:

Mrs. A's Loan 25,000 Debtors 40,500

Workmen Compensation 8,000 Less: Provision for Doubtful 1,000 39,500
Reserve Debts
Bank Loan 50,000 Bills Receivable 15,000
General Reserve 27,000 Investments 60,000
A 30,000 Building 61,000
B 40,000 70,000
2,85,000 2,85,000
On the above date, the firm was dissolved and the following arrangements were made:
(i) A promised to pay Mrs. A's Loan and took half of the Investments @ 10% discount.
(ii) Stock and remaining Investments were sold @ 10% discount.
(iii) A and B agreed that B shall use the firm's name for which he will pay Rs. 40,000. He also agreed
to pay Bills Payable at a discount of 10%.
(iv) Debtors realised Rs. 35,000; Bills Receivable Rs. 13,500; Plant and Machinery Rs. 38,900 and
Building Rs. 1,20,000.
(v) There was a car in the firm, which was completely written off from the books. It was taken over by
A for Rs. 23,400.
(vi) Creditors were paid 90% in full and final settlement of their dues.
(vii) Expenses of dissolution amounted to Rs. 1,700.
Prepare Realisation Account, Capital Accounts of Partners and Bank Account in the books of the firm.
Q 48.X, Y and Z were partners sharing profits in the ratio of 2 : 2 : 1. The Balance Sheet as at 31st
March, 2018, when they dissolved the firm was as follows:
X's Capital 1,27,500 Other Sundry Assets 1,17,000
rs Capital 1,10,000 Furniture 11,000
Z's Capital 17,000 Debtors 1,24,200
Loan 11,500 Less: Provision for Doubtful 1,200 1,23,000
Debts
Cash 13,200
2,82,000 2,82,000
It was agreed that:
(i) X to take over furniture at Rs. 8,000 and debtors amounted to Rs. 1,20,000 at Rs. 1,17,200 and the
creditors of Rs. 16,000 were to be paid by him at this figure.
(ii) Y is to take over all stock for Rs. 17,000 and some sundry assets at Rs. 72,000 (being 10% less than
the book value).
(iii) Z to take over remaining sundry assets at 80% of the book value and assume the responsibility of
discharge of loan together with accrued interest of Rs. 2,300.
(iv) The expenses of realisation were Rs. 2,700. The remaining debtors were sold to a debt collecting
agency at 50% of the value.
Prepare necessary accounts to close the books of the firm. (Delhi 2011 C, Modified)
Q 49.(Comprehensive Q). A and B were partners from 1st April, 2016 with capitals of Rs. 60,000 and
Rs. 40,000 respectively. They shared profits in the ratio of 3 : 2. They carried on business for two years.
In the first year ended 31st March, 2017, they earned a profit of Rs. 50,000 but in the second year ended
31st March, 2018, a loss of Rs. 20,000 was incurred. As the business was no longer profitable, they
dissolved the firm on 31st March, 2018. Creditors on that date were Rs. 20,000. The partners withdrew
for personal use Rs. 8,000 per partner per year. The assets realised Rs. 1,00,000. The expenses of
realisation were Rs. 3,000.
(AI, Foreign 2004, Adapted)

Q 50.P, Q and R commenced business on 1st April, 2017 with capitals of: P-Rs. 2,00,000; Q-Rs.
2,00,000 and R-Rs. 1,00,000.
Profits are shared in the ratio of 4 : 3 : 3. Capital carried interest @ 5% p.a. During the year 2017-18,
the firm suffered a loss of Rs. 1,50,000 before allowing interest on capital. Drawings of each partner
during the year were Rs. 20,000.
On 31st March, 2018, the partners agreed to dissolve the firm as it was no longer profitable. The
creditors on that date were Rs. 40,000. The assets realised a net value of Rs. 3,20,000 and the expenses
of realisation were Rs. 7,000.
Prepare Realisation Account, Partners' Capital Accounts and Cash Account along with necessary
working to close the books of the firm. (Foreign 2005, Modified)
Q 51.X, Y and Z commenced business on 1st April, 2016 with capitals of Rs. 5,00,000; Rs. 4,00,000
and Rs. 3,00,000 respectively. Profits and losses were shared in the ratio of 4 : 3 : 3. Interest on Capitals
was paid at 5% p.a. During 2016-17 and 2017-18 they earned profit of Rs. 2,00,000 and Rs. 2,50,000
(before allowing interest on capital). Drawings of each partner were Rs. 50,000 per year. On 31st March,
2018 the firm was dissolved. Creditors on that date were Rs. 1,20,000. The assets realised Rs. 13,00,000
net.
Give necessary accounts to close the books of the firm.
Q 52.(Considering GST). Kumar, Sham and Ram were partners in a firm sharing profits and losses in
the ratio of 5 :3 : 2. Due to a difference of opinion, they decided to dissolve the firm with effect from
1st April, 2018 on which date its Balance Sheet was as under:
BALANCE SHEET as at 1st April, 2018
Kumar 60,000 Furniture 45,000
Sham 40,000 Car 25,000
Ram 30,000 1,30,000 Stock-in-Trade 30,000
Current A/cs: Sundry Debtors 71,000
Kumar 8,000 Cash at Bank 14,000
Sham 10,000 18,000 Current A/c:
Sundry Creditors 1,20,000 Ram 3,000
2,68,000 2,68,000
The following information is given:
(i) Plant and Machinery of book value Rs. 40,000 were taken by Kumar at an agreed value of Rs. 45,000
and the remaining Machinery realised Rs. 50,000.
(ii) Furniture realised Rs. 40,000.
(Hi) Car was taken by Sham for Rs. 30,000.
(iv) Sundry Debtors included a Bad Debt for Rs. 1,200 and the rest were realised at a cash discount of
10%.
(v) Stock worth Rs. 5,000 was taken by Ram for Rs. 5,200 and the rest realised at 20% above their book
value.
(vi) A Creditor for Rs. 2,000 was untraceable and other creditors accepted payment allowing 15%
discount.
(vii) Realisation Expenses paid to an agency carrying out dissolution amounted to Rs. 5,000.
(viii) Sale of Plant and Machinery, Furniture, Car, Stock and Realisation Expenses are subject to levy
of CGST and SGST @ 9% each.
You are required to pass the Journal entries, prepare Realisation Account, CGST and SGST
Accounts, Bank Account, and Partners' Capital Accounts showing final payments to them.
Q.53. Manoj and Nand were partners sharing profits in the ratio of 3 : 2. Pass journal entries under
following situations at the time of dissolution of firm :
(i) Workmen Compensation Reserve stood at Rs. 1,00,000 and there was no liability towards Workmen
Compensation.

(ii) Workmen Compensation Reserve stood at Rs. 1,00,000 and liability in respect of it was
acertained at Rs.75,000.
(iii) Workmen Compensation Reserve stood at Rs. 1,00,000 and liability in respect of it was
ascertained at Rs. 1,20,000.
(iv) Workmen Compensation Reserve stood at Rs. 1,00,000 and liability in respect of it was ascertained
at Rs. 1,00,000.
Q.54. (i) Expenses of realisation Rs. 8,000.

(ii) Expenses of realisation Rs. 10,000 were paid by a partner.
(iii) Realisation expenses of Rs. 12,000 were to be met by Tushar, a partner, but
were paid by the firm.
(iv) Suresh, a partner, was paid remuneration of Rs. 10,000 and he was to meet all expenses.
(v) Viru, a partner, was paid remuneration of Rs. 15,000 and he was to meet all expenses. Actual
Expenses amounted to Rs.20,000 which were paid by the firm.
(vi) Realisation expenses amounting to Rs. 15,000 were paid by the firm. Rs. 10,000 were to be borne
by a partner and the balance by the firm.
(vii) Gauri, a partner, was allowed a remuneration of Rs.25,000 and he was to meet all expenses. Firm
paid an expense of Rs.5,000.
Q. 55. Pass necessary Journal Entries on the dissolution of a partnership firm in the following cases :
(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) Dissolution expenses were Rs.5,000.
(iv) P, a partner, was appointed to look after the process of dissolution for which he was allowed a
remuneration of Rs.7,000. P agreed to bear the dissolution expenses. Actual dissolution expenses
Rs.4,000 were paid by P.
(v) A, a partner, was appointed to look after the process of dissolution for which he was allowed a
remuneration of Rs.9,000. N agreed to bear the dissolution expenses. Actual dissolution expenses
Rs.4,000 were paid by the firm.
(vi) Q a partner was appointed to look after the process of dissolution for which he was allowed a
remuneration of Rs. 18,000. Q agreed to take over stock worth Rs. 18,000 as his remuneration. The
stock had already been transferred to Realisation Account. (C.B.S.E. 2016, Delhi)
Q. 56. The following is the Balance Sheet of A and B as at 31st March, 2018. The profit sharing ratios
of the partners are 3 : 2.
Capital Accounts: Motor Vehicles 18,300
A 85,000 Stock 72,800
B 63,000 1,48,000 Debtors 1,13,200
Less: Provision for
Bad Debts 2,450 1,10,550
Cash at Bank 13,650
2,45,500 2,45,500
The partners decided to dissolve the firm on and from the date of the Balance Sheet. Motor Vehicles
and Stock were sold for cash at Rs. 16,950 and Rs.77,600 respectively and all Debtors were realised in
full. Land & Buildings were sold at Rs.43,500. Creditors were paid off subject to discount of Rs. 1,700.
Expenses of realisation were Rs. 1,250.
Prepare Realisation Account, Bank Account and Partners’ Capital Accounts to close the books of the
firm as a result of its dissolution.

Q. 57. P, Q and R are partners sharing profits and losses in the ratio of 2 : 1 : 1. They decide to dissolve
their firm on 31-03-2018, the date on which their Balance Sheet stands as under :
BALANCE SHEET as at 31.03.2018
Rs. Rs.
Loan from P 20,000 Debtors 88,000
Reserve Fund 8,000 Less: Provision 8,000 80,000
Capital Accounts: Investments 40,000
P 2,00,000 Furniture 30,000
Q 1,00,000 Machinery 90,000
R 2,000
4,20,000 4,20,000
The following additional information is given :

(i) Investments are taken over by P at book value.
(ii) Furniture is taken over by Q for Rs.20,000.
(iii) Creditors were paid off at a discount of 5%.
(iv) Other assets realised as follows :
Stock at 80%
Debtors Rs.65,000
Machinery at 30% less.
(v) Expenses of realisation amounted to Rs.2,000.
Prepare the necessary ledger accounts to close the books of the firm.
Q. 58. A and B were partners sharing profits and losses in 2 : 1. Their Balance Sheet as at 31 st March,
A’s Loan @12% p.a. 50,000 Sundry Debtors 1,80,000
General Reserve 90,000 Less : Provision for
A’s Capital 4,00,000 Doubtful Debts 10,000 1,70,000
B’s Capital 2,50,000 6,50,000 Stock 2,00,000
Investments 1,50,000
Plant & Machinery 4,00,000
B’s Loan 20,000
10,00,000 10,00,000
Partners decide to dissolve the firm on the above date. Assets and liabilities realised as follows :
(i) Plant & Machinery was taken over by A at 60% of the book value.
(ii) Investments were taken over by B at 120%.
(iii) Sundry Creditors were paid off by giving them stock at 75% of the book value and the balance in
cash.
(iv) Debtors realised 20% less of the amount due from them.
(v) A’s loan was paid off with interest for six months.
(vi) Realisation expenses amounted to Rs. 1,000.
(a) Realisation Account
(b) A’s Loan Account and B’s Loan Account
(c) Partner’s Capital Accounts, and
(d) Bank Account.
Q. 59. A, B and C were in partnership sharing profits in the ratio of 2 : 1 : 1. Their Balance Sheet showed
the following position on the date of dissolution :

4’s Loan 20,000 Debtors 30,000
Mrs. J’s Loan 16,000 Less : Provision 2,000 28,000
Workmen Compensation Reserve 20,000 Furniture 20,000
Capitals: A 40,000 Goodwill 18,000
B 20,000 Cash at Bank 10,000
C 20,000
1,86,000 1,86,000
I. A agreed to take over furniture at 20% less than the book value.
II. Fixed assets realised Rs.32,000 and stock Rs.55,000.
III. Bad Debts amounted to Rs.5,000.
IV. Expenses of realisation were Rs.3,000. Creditors were paid at a discount of 5%.
V. There was a claim of Rs.6,400 for damages against the firm. It had to be paid.
Q. 60. X, Y and Z are in partnership, sharing profits and losses equally. They decided to dissolve the
partnership on 31st March, 2018, at which date the Balance Sheet of the firm was as follows :
Capital A/cs : Premises 80,000
Y 60,000 Stock 40,000
Z 40,000 Sundry Debtors 30,000
Current A/cs: Bills Receivable 36,000
X 13,000 Cash at Bank 30,000
Y 4,000 Current A/c — Z 3,000
Advance from A 15,000
Advance from Y 5,000
2,87,000 , 2,87,000
The assets realised as under :
Premises 20% more; Machinery 40% less; Stock Rs.5,000 more, Sundry Debtors and Bills Receivable
at book values. Expenses of realisation amounted to Rs.2,000. Sundry Creditors agreed to accept
Rs.57,500 in full settlement.
Show necessary ledger accounts to close the books of the firm.
Q. 61. The following was the Balance Sheet of A Y and Z as at 28.2.2017 :

G’s Loan 18,000 Stock 19,000
F’s Loan 20,000 Furniture 43,000
Workmen Compensation Reserve 33,000 Land and Building 1,09,000
Capitals : A’s Capital 20,000
X 75,000
Y 85,000 1,60,000
2,71,000 2,71,000
The firm was dissolved on the above date on the following terms :
(i) Debtors realized Rs.29,000 and creditors and bills payable were paid at a discount of 10%.
(ii) Stock was taken over by X for Rs. 17,000 and furniture was sold to K for Rs.20,000.
(iii) Land and Building was sold for Rs.2,98,000.
(iv) G’s loan was paid by a cheque of the same amount.
(v) Compensation to workmen paid by the firm amounted to Rs. 15,000.

Prepare Realisation Account, Capital Accounts and Bank Account.
Q. 62 (A). Pritam and Naresh decided to dissolve their firm on September 30, 2018, when their Balance
Sheet stood as follows :
Capital Accounts: Cash at Bank 400
Pritam 40,000 Stock-in-Trade 21,500
Naresh 20,000 Bills Receivable 8,800
Loan Accounts: Sundry Debtors 45,000
Naresh 14,000 Uss: Provision for
Mrs. Pritam 10,000 Bad Debts 1,500 43,500
Sundry Creditors 36,000 Furniture 3,000
Outstanding Rent 500 Plant & Machinery 23,000
Goodwill 20,000
Prepaid Insurance 300
1,20,500 1,20,500
The assets were realised as follows : Stock Rs.20,000; Bills Receivable Rs.3,800; Furniture Rs.5,100;
Plant & Machinery Rs.35,000; Sundry Debtors at 10% less than book value.
Sundry Creditors allowed a discount of 5%. Pritam agreed to pay his wife’s loan. Naresh agreed to pay
outstanding rent. Expenses on dissolution came to Rs.800.
Pritam and Naresh shared profits and losses in the ratio of their Capitals. Accounts were finally settled.
Prepare Journal, Realisation Account, Capital Accounts and Bank Account.
Q. 62 (B) Mrs. Rita Chowdhary and Miss Shobha are partners in a firm, ‘Fancy Garments Exports’
sharing profits and losses equally. On 1st April, 2018, the Balance Sheet of the firm was as follows :
Mr. Chowdhary’s Loan 15,000 Book Debts 66,000
Reserve Fund 24,000 Less: Provision for
Mrs. Rita Chowdhary’s Capital 90,000 Doubtful Debts 6,000 60,000
Miss Shobha’s Capital 30,000 Plant & Machinery 45,000
Land & Buildings 48,000
2,64,000 2,64,000
The firm was dissolved on the date given above. The following transactions took place:
(i) Mrs. Rita Chowdhary undertook to pay Mr. Chowdhary’s Loan and took over 50 per cent of stock
at a discount of 20 per cent.
(ii) Book-debts realised Rs.54,000; balance of the stock was sold off at a profit of 30 per cent on cost.
(iii) Sundry Creditors were paid out at a discount of 10 per cent. Bills payable were paid in full.
(iv) Plant and Machinery realised Rs.75,000 and Land and Buildings Rs. 1,20,000.
(v) Mrs. Rita Chowdhary took over the goodwill of the firm at a valuation of
Rs.30,000.
(vi) Realisation expenses were Rs.5,250.
Show the Realisation Account, Bank Account and Partner’s Capital Accounts in the books of the firm.
Q. 63. The following is the Balance Sheet of A and B as at 31st March, 2018 :
Mrs. A’s Loan 15,000 Cash 4,200
Mrs. B’s Loan 10,000 Bank 3,400
Trade Creditors 30,000 Debtors , 30,000
Bills Payable 10,000 Less : Provision 2,000 28,000
Outstanding Expenses 5,000 Investments 10,000
A : Capital 1,00,000 Stock 40,000
B: Capital 80,000 Truck 75,000

B: Drawings 9,400
2,50,000 2,50,000
1. Half the stock was sold at 10% less than the book value and the remaining half was taken over
by A at 20% more than the book value.
2. During the course of dissolution a liability under action for damages was settled at Rs. 12,000
against Rs. 10,000 included in the creditors.
3. Assets realised as follows :
Plant & Machinery — Rs. 1,00,000; Truck— Rs. 1,20,000; Goodwill was sold for Rs.25,000; Bad Debts
amounted to Rs.5,000. Half the investments were sold at book value.
4. A promised to pay off Mrs. ,4’s Loan and took away half the investments at 10% discount.
5. Trade Creditors and Bills Payable were due on average basis of one month after 31st March, but were
paid immediately on 31st March, at 12% discount per annum.
Q. 64. The following is the Balance Sheet of A, B and C, as at 31st March, 2018 :
Mrs. A’s Loan 20,000 Bills Receivable 12,000
Investment Fluctuation Fund 10,000 Sundry Debtors 40,000
Reserves 12,000 Less: Provision for
Capital Accounts : Doubtful Debts 4,000 36,000
A 60,000 Land and Buildings 50,000
C 20,000 1,20,000 Typewriters 7,000
Investments 30,000
2,00,000
2,00,000
———
The profit and loss sharing ratios of the partners are 3 : 2 : 1. At the above date, partners decide to
dissolve the firm. The assets realised were as follows :
(i) Bills Receivable were realised at a discount of 5%. Debtors were all good; Stock realised Rs.32,000.
Land and Buildings realised at 40% higher than the book value.
(ii) Furniture was sold for Rs.6,000 by auction and auctioneer’s commission amounted to Rs.300.
(iii) Typewriters were taken over by A for an agreed valuation of Rs. 5,000.
(iv) Investments were sold in the open market at a price of Rs.25,000, for which a
commission of 2% was paid to the broker.
(v) Creditors agreed to accept 10% less. All other liabilities were paid off at their book value.
(vi) The firm retrenched their employees three months before the dissolution of the firm and the firm
had to pay Rs.25,000 as compensation. This liability was not appearing in the above Balance Sheet.
Close the books of the firm by preparing Realisation Account, Partner’s Capital Accounts, and Bank
Account.
Q. 65. Following is the Balance Sheet of Ramji Lal and Panna Lal as at 31st March, 2016 :
Capitals : Goodwill 4,000
Ramji Lal 16,000 Machinery 6,000
Panna Lal 10,000 Plant 12,800
Workmen Compensation Reserve 2,000 Less: Provision 800 10,000
Bills Payable 2,600
39,600 39,600

They decided to dissolve the firm. Assets are realised as follows :
(i) Machinery 10% less than book value; Plant Rs. 12,500 and Goodwill Rs.2,520,
(ii) Ramji Lal is to take over Debtors amounting to Rs.6,800 at Rs.6,000, remaining
Debtors were realised for 90% of the book value.
(iii) One bill of Rs.600 under discount having been dishonoured had to be taken up by them.
(iv) The Bill payable of Rs.2,600 to be assumed by Panna Lal at that figure.
(v) Creditors are paid off at a discount of 10%.
(vi) An amount of Rs.2,500 had to be paid for Workmen Compensation.
(vii) The liquidation expenses amounted to Rs.400.
You are required to show the Realisation Account, Capital Accounts and Bank Account.
Q. 66. Raman and Richa were partners in a firm sharing profits in the ratio of 7 : 3. On 31.3.2018 the
BALANCE SHEET OF RAMAN AND RICHA
as at 31.3.2018
Raman 7,00,000 Furniture 1,20,000
Richa 3,00,000 10,00,000 Debtors 1,32,000
Sundry Creditors 1,75,000 Stock 1,03,000
Cash 70,000
11,75,000 11,75,000
The firm was dissolved on 1.4.2018 and the assets and liabilities were settled as follows: .
(i) Land and building was taken over by Raman at a depreciation of 10% for cash:
(ii) Creditors of Rs. 1,25,000 took over stock and debtors in full settlement of their claim;
(iii) Remaining creditors were paid by Richa;
(iv) Furniture realised Rs.5,000 less than the book value.
(v) Expenses of realisation were Rs.400.
Q. 67. Verma and Sharma were partners in a firm sharing profits in the ratio of 3 : 1. On 31.3.2018 their
BALANCE SHEET OF VERMA AND SHARMA
as at 31.3.2018
Capitals : Land and Building 70,000
Verma 1,20,000 Machinery 60,000
Sharma 80,000 2,00,000 Debtors 80,000
2,70,000 2,70,000
The firm was dissolved on 1.4.2018 and the assets and liabilities were settled as follows:
(i) Creditors of Rs.50,000 took over Land and Building in full settlement of their claim;
(ii) Remaining creditors were paid in cash;
(iii) Machinery was sold at a depreciation of 30%;
(iv) Debtors were collected at a cost of Rs.500;
(v) Expenses of realisation were Rs. 1,700.
Pass necessaiy journal entries for dissolution of the firm.
Q. 68. Mala, Neela and Kala were partners sharing profits in the ratio of 3 : 2 : 1. On 1-3-2015 their
firm was dissolved. The assets were realized and liabilities were paid off. The accountant prepared
Realisation Account, Partner’s Capital Accounts and Cash Account, but forgot to post few amounts in
these accounts.
You are required to complete these below given accounts by posting correct amounts.
Dr. REALISATION ACCOUNT Cr.

Particulars Amount Particulars Amount
Rs. Rs.
To Sundry Assets: By Provision for bad debts 1,000
Machinery 10,000 By Sundry Creditors 15,000
Stock 21,000 By Sheela’s Loan 13,000
Debtors 20,000 By Repairs and Renewals Reserve 1,200
Prepaid Insurance 400 By Cash — Assets sold :
Investments 3,000 54,400 Machinery 8,000
To Maia’s Capital A/c Stock 14,000
— Sheela’s Loan 13,000 Debtors 16,000 38,000
To Cash — Creditors paid 15,000 By Maia’s Capital — Investments 2,000
To Cash — Dishonoured bill paid 5,000
To Cash — Expenses 800
88,200 88,200
Particulars Mala Neela Kala Particulars Mala Neela Kala

— — — —— —
To Cash 12,000 9,000 By Cash 1,000
23,000 15,000 3,000 23,000 15,000 3,000
Dr. CASH ACCOUNT Cr.
Particulars Amount Particulars Amount

Rs. Rs.
To Balance b/d 2,800 By Realisation A/c
To Realisation A/c — Creditors paid 15,000
— Sale of Assets 38,000 By Dishonoured bill 5,000
To Kala’s Capital A/c 1,000
By Maia’s Capital A/c 12,000
By Neela’s Capital A/c 9,000
41,800 41,800
Q. 69. 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.3,500 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. B had lent to the firm in addition to Capital
Rs.13,200. The assets realised Rs.45,670.
Prepare the Realisation Account and Partners’ Capital Accounts. Also show the Bank Account.
Q. 70. A and B who were in partnership sharing profits and losses in the proportion of 4/7 and 3/7
respectively, decided to dissolve the firm as on 31st March, 2018. At the time of dissolution A’s capital
was Rs. 1,25,030, B’s Rs.2,070; the creditors amounted to Rs.23,150 and cash Rs.4,520. Remaining
assets realised Rs. 1,24,910 and expenses of dissolution were Rs. 1,860. A & B both were solvent.
Prepare the Balance Sheet as on the date of dissolution and the accounts necessary to close the books
of the firm. Show the final adjustments of cash between partners.

Q. 71. Ashok and Kishore were in partnership sharing profits in the ratio of 3 : 1. They agreed to dissolve
the firm. The assets (other than cash of Rs.2,000) of the firm realised Rs. 1,10,000. The liabilities and
other particulars of the firm on that date were as follows :—
Rs.
Creditors 40,000
Ashok’s Capital 1,00,000
Kishore’s Capital 10,000 (Dr. balance)
Profit & Loss Account 8,000 (Dr. balance)
Realisation Expenses were 1,000
Creditors were settled in full settlement at Rs.3 8,000. Prepare Realisation and Cash Account.
Q. 72. X and Y were partners in a firm sharing profits and losses in the ratio of 5 : 3. They agreed to
dissolve the firm on June 30, 2018. On that date, the Capitals of X and Y were Rs.80,000 and Rs.40,000
respectively; the amount owed by X to the firm was Rs.32,000 and the amount owed by the firm to Y
was Rs.25,000; the creditors amounted to Rs.37,000 and balance at bank Rs. 10,000. The assets other
than the amount owing by X to the firm realised Rs.46,000. Realisation expenses amounted to Rs.2,000.
Prepare the Balance Sheet of the firm as on June 30, 2018 and necessary ledger accounts to close the
books of the firm.
Q. 73. On 1st April, 2017, A, B and C commenced business in partnership sharing profit and losses in
proportion of 1/2, 1/3 and 1/6 respectively. They paid into their Bank A/c as their capital Rs.22,000
being Rs. 10,000 by A, Rs.7,000 by B and Rs.5,000 by C. During the year they drew Rs.5,000, being
Rs. 1,900 by A, Rs. 1,700 by B and Rs. 1,400 by C.
On 31st March, 2018, they dissolved their firm. A taking up stock at an agreed valuation of Rs.5,000,
B taking up furniture at Rs.2,000 and C taking up debtors at Rs.3,000. After paying up their creditors,
there remained a balance of Rs. 1,000 at Bank. Prepare the necessary accounts showing the distribution
of the cash at the Bank and of the further cash brought in by any partner as the case required.
Q. 74. X, Y and Z entered into partnership on 1 st October 2017 sharing profits and losses in the
proportions of 4 : 3 : 2, respectively, and with capitals of Rs.30,000, Rs.20,000 and Rs. 10,000.
Their assets and liabilities on 1st October 2018, the date on which they decided to wind up their affairs,
were as follows:
Office Fixtures Rs.1,000; Debtors Rs.28,000; Bills Receivable Rs.5,000; and Stock-in-trade Rs.45,000.
Sundry creditors were Rs.30,000; Bills Payable Rs.4,000,
X agreed to take over the Stock-in-trade at a discount of 10% and pay off the Bills Payable.
Y agreed to take over the Book Debts at a discount of 20% and pay off the Creditors.
Z took over the Bills Receivable at Rs.4,877 and Office Fixtures at a depreciation of 10%.
5% p.a. interest is to be credited to each partner on his capital.
Prepare Realisation a/c and Capital a/cs of the partners and an account showing adjustment of profits
or losses in the business.
Q. 75. P, Q and R started business on 1st April, 2017. They shared profit and loss in the ratio of 2 : 2 :
1. Capitals contributed by them were P Rs.40,000; Q Rs.30,000 and R Rs.20,000. The partners were
entitled to interest on capital @ 6% p.a.
During the year the firm earned a profit (before interest) of Rs.25,000. The partners had withdrawn P
Rs. 10,000; Q Rs.8,000 and R Rs.5,000.
On 31st March, 2018 the firm was dissolved. The assets realised Rs. 1,00,000. The creditors of Rs.
15,000 were paid at a discount of 3%. Expenses incurred on realisation were Rs. 1,450.
Prepare Partner’s Capital Accounts, Realisation Account, Cash Account, Profit and Loss Appropriation
Account and Balance Sheet to close the books of the firm.
Q. 76. A, B and C were partners from 1st April 2016 with capitals of Rs.3,00,000; Rs.2,00,000 and Rs.
1,50,000 respectively. They shared profits in the ratio of 2 ; 2 ; 1. They carried on business for two
years. In the first year ending on 31st March, 2017, they made a profit of Rs.2,00,000 but in the second
year ending on 31 st March, 2018, a loss of Rs. 60,000 was incurred. As the business was no longer

profitable they dissolved the firm on 31st March, 2018, Creditors on that date were Rs.75,000. The
partners withdrew for personal use Rs.40,000 per partner per year. The assets realised Rs.4,00,000. The
expenses of realisation were Rs.5,000.
Prepare Realisation Account and show your workings clearly.
Q. 77. A, B and C entered into partnership on 1st April 2016. They contributed capitals of Rs.80,000;
Rs.60,000 and Rs.40,000 respectively. They shared profits in the ratio of 3 : 2 :1. Interest on Capital
was to be allowed at 5% p.a. and was to be charged on drawings at 6% p.a. Firm earned profits of
Rs.30,000 and Rs.24,000 in the years ending 31st March 2017 and 2018, before allowing or charging
interest on capital and drawings. The drawings of each partner were Rs. 12,000 per year.
The firm was dissolved on 31st March, 2018. On that date creditors amounted to Rs.40,000. Assets
realised Rs.2,40,000, other than cash of Rs.4,000.
Q. 78. (A). Following is the Balance Sheet of Deepak and Jyoti, who were sharing profit and losses in
the ratio of 3 : 2, as at March 31,2018 :—
Mrs. Deepak’s Loan 10,000 Bank 10,000
Capital A/cs : Less: Provision for
Deepak 10,000 Doubtful Debts 1,000 19,000
Jyoti 8,000 18,000 Stock 12,000
Current A/cs : Furniture 6,000
Deepak 2,000 Plant 30,000
Jyoti 500 2,500 P & L A/c (Dr. Balance) 5,000
83,500 83,500
The firm was dissolved on that date and the following arrangements were made:—
(i) Assets realised as follows : Debtors Rs. 18,000; Furniture Rs.5,500; Plant Rs.32,000.
(ii) Deepak agreed to take over stock in full settlement of his wife’s loan.
(iii) Creditors were paid at 2% discount and Bank Loan was discharged along with interest due for six
months @ 10% p.a. and
(iv) Expenses of realisation amounted to Rs. 1,800.
Show the necessary ledger accounts to close the books of the firm.
Q. 78. (B). A, B and C sharing profits in the proportion of 3 : 2 : 1 agreed upon dissolution of their
partnership firm on 31st March, 2018 on which date their balance sheet was as under :
Capital A/cs : Machinery 40,500
A 40,000 Stock-in-Trade 7,550
B 20,000 60,000 Investments 20,830
Mrs. T’s Loan 10,000 Debtors 9,300
Creditors 18,500 Less: Provision for
Investments Fluctuation Fund 6,000 Doubtful Debts 600 8,700
Current A/c—‘C’ 11,500
Cash at Bank 5,420
94,500 94,500
The investments are taken over by A for Rs. 17,500. A agrees to discharge his wife’s loan. B takes over
all the Stock at Rs.7,000 and debtors amounting to Rs.5,000 at Rs.4,000. Machinery is sold for
Rs.67,000. The remaining debtors realise 50% of book value. The expenses of realisation amount to
Rs.600.
It is found that an investment not recorded in the books is worth Rs.3,000 and it is taken over by one of
the creditors at this value.
Show the necessary ledger accounts on completion of the dissolution of firm.

Q. 79. Mehta and Menon were partners in a firm, sharing profits and losses in the ratio of 7 : 3.
They decided to dissolve their partnership firm on 31st March, 2016. On that date, their books showed
the following ledger account balances :
Rs.
Profit and Loss A/c (Dr.) 8,000
Cash in Hand 6,000
Bank Loan 20,000
Bills Payable 5,000
Capital A/cs :
Mehta 1,12,000
Menon , 48,000
(a) Bills Payable falling due on 31st May, 2016 were retired on the date of dissolution of the firm, at a
rebate of 6% per annum,
(b) The bankers accepted the furniture (included in sundry assets) having a book value of Rs.
18,000 in full settlement of the loan given by them.
(c) Remaining assets were sold for Rs. 1,50,000.
(d) Liability on account of outstanding salaty not recorded in the books, amounting to Rs. 15,000
was met.
(e) Menon agreed to take over the responsibility of completing the dissolution work and to bear all
expenses of realization at an agreed remuneration of Rs.2,000. The actual realization expenses were Rs.
1,500 which were paid by the firm on behalf of Menon.
(i) Realisation Account, and
(ii) Partners’Capital Accounts. (ISC 2017)
Q. 80(A). A Y and Z were in partnership sharing profits and losses in the ratio of 7:2:1 and the Balance
Sheet of the firm stood on 31st March, 2018, as under:—
Creditors 3,142 Cash in hand 244
Provision for Depreciation Debtors 1,746
on Machinery 4,000 Stock 3,498
Capital Accounts : 100 Shares in B Co. Ltd. 2,000
X 3,582 60 Shares in C Co. Ltd. 480
Y 2,720 Patents 7,600
Z 16,124 22,426 Machinery 6,000
Buildings 5,000
Goodwill 3,000
29,568 29,568
On 31st March, 2018, it was decided to dissolve the firm on the following terms:
(i) X is to take over the buildings at Rs.7,300.
(ii) Y, who will continue with business, to take over Goodwill, Stock and Debtors at book values,
Patents at Rs.6,500 and Machinery at Rs. 1,500. He also agreed to pay the Creditors.
(iii) Z agreed to take the shares in C Co. Ltd. at Rs.5 each.
(iv) The shares in B Co. Ltd. to be divided in profit sharing ratio.
Show the ledger accounts to record the dissolution.
Q. 80. (B) Following is the balance sheet of P, Q and R who were sharing profits and losses in the ratio
of 3 : 2 : 1.
Creditors 70,000 Less: Provision 1,200 18,800

Mrs. P’s Loan 25,800 Stock 40,000
Capital Accounts: 3,000 Shares in ‘A’ Ltd. 30,000
P 1,20,000 Motor Car 75,000
Q 95,000 Plant 80,000
R 5,000 Advertisement Suspense A/c 84,000
3,27,800 3,27,800
The firm was dissolved on that date and the following arrangements were made:
I. Assets realised as follows: Debtors Rs. 15,000; Plant at 30% discount.
II. Stock was valued at Rs.36,000 and this was taken over by P and Q equally.
III. Market value of the shares of A Ltd. is Rs. 16 per share. Half the shares were sold in the market and
the balance half were taken over by P and Q in their profit sharing ratio.
IV. A creditor for Rs.50,000 took over Motor Car in full settlement of his claim and the balance of
creditors were paid at a discount of 2%.
V. Expenses of realisation amounted to Rs.6,000. P agreed to discharge his wife’s Loan.
Prepare Journal entries and Ledger accounts.
Q. 81. p, Q and R were partners in a firm sharing profits in the ratio of 1 : 2 : 2. Their Balance Sheet as
BALANCE SHEET OF P, Q AND R
Creditors 2,10,000 Land and Buildings 5,00,000
Bank Overdraft 50,000 Office Equipment 8,000
Q's Loan 40,000 Stock 2,00,000
P 1,00,000 Less : Provision for
Q 2,00,000 Doubtful Debts 3,000 57,000
R 2,00,000 5,00,000 Bank 35,000
8,00,000 8,00,000
Partners agreed to dissolve the firm on that date. You are given the following information about
dissolution :
(i) One of the Debtors for Rs.20,000 paid Rs. 12,000 in full settlement of his account and debtors of
Rs.5,000 were proved bad.
(ii) Part of the stock was sold for Rs.20,000 (being 25% more than the book value).
(iii) Office Equipment was accepted by the creditor for Rs.7,000 in full settlement. Another creditor of
Rs.40,000 was paid only 40% in full settlement of his account and remaining creditors accepted
remaining stock in full settlement of their account.
(iv) An unrecorded asset of Rs.20,000 was handed over to an unrecorded liability of Rs. 15,000 in
full settlement.
(v) Land & Buildings were sold at a loss of 20%.
(vi) Q’s Loan was settled by payment of Rs.30,000.
(vii) Realistion expenses Rs. 16,000 were paid by R.
You are required to prepare the necessary accounts.

Q. 82. B and C were partners in a firm sharing profits & losses in the ratio of 2:2: 1. The Balance Sheet
of the firm at the date of dissolution was as follows:
Provident Fund 18,000 Investments 25,000
Capital Accounts: Machinery 80,000
A 1,05,000 Prepaid Expenses 3,200
B 42,000 Goodwill 38,800
C’s Capital Account 25,000
2,72,000 2,72,000
You are informed that:
(1) They appointed B to realise the assets. He is to receive 5% of the amounts realised from
Debtors, Stock and Machinery, and is to bear all expenses of realisation.
(2) Bad Debts amounted to Rs.2,000; Stock realised Rs.36,000 and Machinery realised Rs.46,000.
There was an unrecorded asset of Rs. 10,000 which was taken over by√l at Rs. 8,000.
(3) Market value of Investments was ascertained to be Rs.20,000, and one of the creditors agreed
to accept the Investments at this value. Remaining creditors were paid at a discount of Rs.6,000.
(4) An office typewriter, not shown in the books of accounts, realised Rs.20,000.
(5) There were outstanding expenses amounting to Rs.6,000. These were settled for Rs.4,500.
Expenses of realisation met by B amounted to Rs.2,000.
Q. 83. A, B and C are partners sharing profits and losses in the ratio of 4 : 2 : 1. On 31 st March 2018,
their Balance Sheet was as follows :
Mrs. B's Loan 15,000 Leasehold Premises 1,00,000
Capital Accounts: Plant and Machinery 60,000
A 1,30,000 Stock 60,000
B 1,02,700 Sundry Debtors 30,000
C 5,000 2,37,700 Less : Provision 700 29,300
Cash at Bank 17,700
2,88,100 2,88,100
It was decided to dissolve the firm, A agreeing to take over the business (except Cash at Bank) at the
following valuations :
Leasehold Premises at Rs.60,000
Plant and Machinery at Rs. 12,000 less than the book value.
1
1/4 th stock at 33 3 % more than its book value.
Remaining Stock at 20% more than the book value.
Sundry Debtors subject to a provision of 5%.
Mrs. B’s Loan was paid in full and the creditors were proved at Rs.32,000 and were taken over by A.
Expenses of dissolution came to Rs.900.
Prepare necessary accounts to close the books of the firm and prepare the Balance Sheet of A.
Q. 84. P and Q were partners in a firm sharing profits and losses equally. On 15th March, 2014 the firm
was dissolved. The dissolution resulted in a loss of Rs.60,000. On that date the Capital Accounts of P
and Q showed credit balances of Rs.70,000 and Rs.50,000 respectively. There was a bank balance of
Rs.60,000.
Pass the necessary Journal Entries for (i) the transfer of loss to the Capital accounts of the partners, and
(ii) making final payments to the partners.

Q. 85.Angad, Raman and Harshit were partners in a firm. They decided to dissolve their firm. Pass
necessary journal entries for the following after various assets (other than cash and bank) and the third
party liabilities have been transferred to Realisation Account:
(i) There was a stock of Rs.90,000. Raman took over 50% of the stock at 10% discount and remaining
stock was sold at 40% profit on book value.
(ii) Profit and Loss A/c was showing a debit balance of Rs. 15,000 which was distributed among the
partners.
(iii) A machinery which was not recorded in the books was sold for Rs.2,000.
(iv) Angad was paid only Rs.5,000 (in full settlement) for his loan to the firm which amounted to
Rs.5,500.
(v) Realisation expenses amounting to Rs.5,000 paid by Harshit.
(vi) There were 100 shares of Rs.10 each in DCM Ltd. acquired at a cost of Rs. 1,200 which had been
written off completely from the books. These shares are valued at Rs.9 each and divided among the
partners in their profit sharing ratio.
(C.B.S.E. 2012 C)
Q. 86. X and Y are partners. They decided to dissolve their firm. Pass necessary entries assuming that
various assets and external liabilities have been transferred to Realisation Account:
(1) A’s loan was appearing on the liabilities side of Balance Sheet at Rs.40,000. He accepted an
unrecorded asset of Rs. 60,000 in full settlement of his account.
(2) Raman, a Creditor to whom Rs.25,000 were due to be paid, accepted an unrecorded computer
of Rs. 18,000 at a discount of 10% and the balance was paid to him in Cash.
(3) Sudhir, an unrecorded creditor of Rs.40,000 accepted an unrecorded vehicle of Rs.20,000 at
Rs.25,000 and the balance was paid to him in Cash.
(4) There was a Contingent liability in respect of bill discounted but not matured Rs.20,000.
(5) Furniture of Rs.20,000 and goodwill of Rs.30,000 were appearing in the Balance Sheet but no
other information was provided regarding these two items.
Q. 87. Srijan, Raman and Manan were partners in a firm sharing profits and losses in the ratio of 2 : 2 :
1. On 31st March, 2017 their Balance Sheet was as follows :
Balance Sheet of Srijan, Raman and Manan as at 31-3-2017
Capitals : Capital: Manan 10,000
Srijan 2,00,000 Plant 2,20,000
Raman 1,50,000 3,50,000 Investments 70,000
Outstanding Salary 35,000 Bank 10,000
5,00,000 5,00,000
On the above date they decided to dissolve the firm.
(i) Srijan was appointed to realise the assets and discharge the liabilities. Srijan was to receive 5%
commission on sale of assets (except cash) and was to bear all expenses of realisation.
(ii) Assets were realised as follows :
(Rs.)
Plant 85,000
Stock 33,000
Debtors 47,000
(iii) Investments were realised at 95% of the book value.
(iv) The firm had to pay Rs.7,500 for an outstanding repair bill not provided for earlier.
(v) A contingent liability in respect of bills receivable, discounted with the bank had also materialised
and had to be discharged for Rs. 15,000.
(vi) Expenses of realisation amounting to Rs.3,000 were paid by Srijan.
Prepare Realisation Account, Partners’ Capital Accounts and Bank Account.

(C.B.S.E. 2018)
Q. 88. Hema and Garima were partners in a firm sharing profits in the ratio of 3 ; 2. On 31st March,
2015, their Balance Sheet was as follows :
BALANCE SHEET OF HEMA AND GARIMA
Liabilities Rs. : Assets Rs.
Garima’s Husband’s Loan 60,000 Debtors 76,000
Hema’s Loan 40,000 Stock 2,00,000
Capitals: Hema 2,00,000 Furniture 20,000
Garima 1,00,000 3,00,000 Leasehold Premises 1,00,000
4,36,000 4,36,000
On the above date the firm was dissolved. The various assets were realised and liabilities were settled
as under :
(i) Garima agreed to pay her husband’s loan.
(ii) Leasehold Premises realised Rs. 1,50,000 and Debtors Rs.2,000 less.
(iii) Half the creditors agreed to accept furniture of the firm in foil settlement of their claim and
remaining half agreed to accept 5% less.
(iv) 50% Stock was taken over by Hema on cash payment of Rs.90,000 and remaining stock was
sold for Rs.94,000.
(v) Realisation expenses Rs. 10,000 were paid by Garima on behalf of firm.
Pass necessary Journal entries for the dissolution of the firm.
Q. 89. Following is the Balance Sheet of Vinit and Yogesh as at 31st

March, 2015:
Mrs. Vinit’s Loan 60,000 Stock 70,000
Yogesh’s Loan 1,00,000 Investments 1,00,000
Investment Fluctuation Fund 30,000 Debtors 2,00,000
Capitals : Less: Provision for
Vinit 2,00,000 Doubtful Debts 20,000 1,80,000
Yogesh 1,00,000 3,00,000 Fixed Assets 3,80,000
8,50,000 8,50,000
The firm was dissolved on 31st March, 2015. The assets were realised and the liabilities were paid as
under :
(a) Vinit promised to pay off Mrs. Vinif s Loan and took away stock at 20% discount.
(b) Yogesh took away 90% of the investments at 10% discount.
(c) Sunil, a debtor of Rs.50,000 had to pay the amount due 3 months after the date of dissolution.
He was allowed a discount of 5% for making payment immediately.
The remaining debtors were collected in foil.
(d) Creditors were paid Rs.3,50,000 in full settlement of their claim.
(e) Fixed Assets realised Rs.2,82,000 and remaining investment realised Rs.7,500.
(f) There was an old furniture which has been written off completely from the books. Yogesh took away
the same for Rs.4,000.
(g) Realisation expenses Rs.2,000 were paid by Vinit.
Prepare Realisation A/c, Bank A/c and Partners’ Capital A/cs.
(C.B.S.E. 2016 Comptt., Delhi)

Q. 90. P, Q and R were partners in a firm sharing profits in the ratio of 1 : 2 : 2. Their Balance sheet as
BALANCE SHEET OF P, Q AND R
Accounts Payable 15,000 Land and Buildings 47,000
Bank Overdraft 12,000 Office Equipments 8,000
Q’s Loan 18,000 Stock 56,000
Capitals: Accounts Receivable 18,000
P 20,000 Bank 16,000
Q 40,000
R 40,000 1,00,000
1,45,000 1,45,000
Partners agreed to dissolve the firm on that date. You are given the following information about
dissolution :
(a) Office Equipment was accepted by a creditor for Rs.7,000 in full settlement. The remaining creditors
were paid in full by cheques.
(b) Assets realised as follows :
Land and Buildings Rs. 1,29,000
Stock Rs. 40,000
Accounts Receivable Rs. 15,000
(c) Other liabilities were paid in lull.
(d) Dissolution expenses amounted to Rs.3,000.
You are required to prepare Realisation Account, Bank Account and Capital Accounts of the Partners.
Q. 91. A, B and C are in partnership sharing profits and losses in the proportions of 1/2, 1/3 and 1/6
respectively. On 31st January', 2018 they decide to dissolve the partnership, and the position of the firm
on this date is represented by the following Balance Sheet:
Creditors 40,000 Land and Buildings 57,000
Loan Account: A 10,000 Stock 50,000
Capital Accounts : Sundry Debtors 50,000
A 60,000 Cash at Bank 3,000
B 40,000
C 10,000
1,60,000 1,60,000
During the course of realisation, a liability under a suit for damages is settled at Rs.20,000 as against
Rs. 5,000 only provided for in the books of the firm.
Land and Buildings were sold for Rs.40,000 and the Stock and Sundry Debtors realised Rs.30,000 and
Rs.42,000 respectively. The expenses of realisation amounted to Rs. 1,200. You are required to prepare
Realisation Account, Cash Account and Partners’ Capital Accounts in the books of the firm.
Q. 92. The following is the Balance Sheet of A and T as at 30th June, 2018.
Bills Payable 20,000 Buildings 25,000
Bank Overdraft 8,000 Plant 25,000
Outstanding Expenses 2,000 Investments 15,300
As brother’s Loan 20,000 Stock 8,700
Y’s Loan 10,000 Debtors 17,000
Investment Fluctuation Fund 2,800 Less: Provision 2,000 15,000
Employees’ Provident Fund 1,200 Bills Receivable 10,000

General Reserve 2,000 Cash at Bank 13,000
A”s Capital 20,000 Profit and Loss A/c (Dr. Balance) 4,000
L’s Capital 20,000
1,26,000 1,26,000
The firm was dissolved on 30th June, 2018 and the following arrangements were decided upon :
(a) X agreed to pay off his brother’s loan;
(b) Debtors realised Rs. 12,000;
(c) Y took over all the investments at Rs. 12,000.
(d) Other assets realised as follows :
Plant — Rs.20,000, Building — Rs.50,000, Goodwill — Rs.6,000
(e) Sundry Creditors and bills payable were settled at 5% discount, Y accepted Stock at Rs.8,000
and A took over Bills Receivable at 20% discount.
(i) Realisation Expenses amounted to Rs.2,000.
You are required to pass Journal Entries.
Q. 93. A, B and C were partners in a firm sharing profits in the ratio of 5 : 3 : 2. On 1-4-2018 they
decided to dissolve the firm. On that date A’s Capital was Rs.2,00,000, B’s Capital was Rs. 10,000
(Dr.) and C’s Capital was Rs.25,0,00 (Dr.). The Creditors amounted to Rs.80,000 and Cash balance was
Rs. 12,000. The assets realised Rs.2,00,000; Creditors were paid at a discount of 10% and the expenses
of dissolution were Rs. 1,240. All partners were solvent. Prepare realisation account, partner’s capital
accounts and the cash account.
Q. 94. The partnership between A and Y was dissolved on March 31,2018. On that date their respective
credits to the Capitals were Rs. 1,50,000 and Rs. 10,000. Rs. 1,20,000 were due to creditors. Rs. 60,000
were due for Bank Loan and Reserve has been maintained for Rs.20,000. X and Y shared profits in the
ratio of 4 : 1. Cash balance of Rs. 18,000 was also kept in the firm. Assets realised Rs.3,02,000. Prepare
Memorandum Balance Sheet, Realisation Account; Partner’s Capital Accounts and Cash Account.
Q. 95. Peter, Roberts and Sunny commenced business on 1st April 2016 with Capitals of Rs.60,000;
Rs.50,000 and Rs.40,000 respectively. Profit for the first year was Rs.48,000 while losses in the second
year amounted to Rs. 12,000. Drawings per partner were Rs.7,000 per annum.
The firm was dissolved on the first day of the third year, 1 st April 2018. Creditors on that day were Rs.
14,000 who were paid Rs. 12,500 in full and final settlement. Cash amounted to Rs.5,000 on that date.
Other assets realised Rs. 1,62,000. Expenses amounted to Rs.3,000.
Prepare the Realisation Account.
Q. 96. A and B dissolve their partnership. Their position as at 31st March, 2018 was as follows :
Rs.
A’s Capital 60,000
B’s Capital 40,000
Cash at Bank 2,000
The balance of A’s Loan Account to the firm stood at Rs.20,000. The realisation expenses amounted to
Rs.800. Stock realised Rs.40,000 and Debtors Rs.30,000. B took a machine at the agreed valuation of
Rs.20,000. Other fixed assets realised Rs.60,000.
Q97. The following was the Balance Sheet of Fox and Wolf as at 31st March, 2018, when they decided
to dissolve the firm :
Capital: Cash at Bank 4,500
Fox 30,000 Stock 18,000
Wolf 24,000 54,000 Debtors 42,000
Creditors 88,500 Furniture 12,000
Mrs. Wolfs Loan 40,000 Machinery 1,06,500

Bills Payable 23,000 Profit & Loss A/c 22,500
2,05,500 2,05,500
The assets realised :

Stock Rs. 10,500
Debtors Rs.27,750
Machinery Rs. 88,500
Furniture was taken over by Fox at Rs.7,500. Bills payable were paid in full, while creditors were settled
at 2% discount. Mrs. Wolf accepted Rs.38,500 in full settlement of her Loan Account.
There was a claim of damages against the firm for Rs.4,000 which was settled at Rs.2,000.
One customer, whose account was written off as bad, now paid Rs. 1,800, which is not included in
Rs.27,750 given above. Actual realisation expenses amounted to Rs.2,100.
Prepare (a) Realisation A/c, (b) Capital Accounts of Partners, (c) Bank Account to close the Books of
the firm.
Q98. J, S and R were in partnership sharing profits and losses in the ratio of 3:2:1. Their Balance Sheet
BALANCE SHEET
Capital Accounts: Buildings 10,000
J 12,000 Plant 22,000
S 8,600 Stock 12,200
R 10,400 Debtors 5,000
Reserve Fund 3,000 Accrued Interest 1,000
Employees’ Provident Fund 3,000 Cash 2,800
Depreciation Provision 5,000
Creditors 11,000
53,000 53,000
It was agreed to dissolve the firm, and the terms of the dissolution were :
(i) J took over Buildings at book value and agreed to pay off creditors.
(ii) Accrued interest was not collected whereas there was a contingent liability of Rs.600 which was
met.
(iii) Other assets realised : Plant: Rs.25,000, Stock : Rs. 11,200, Debtors : Rs.4,600.
(iv) Realisation expenses Rs.600.
Prepare Realisation Account, Capital Accounts and Cash Account.
Q99. Sanjay and Sameer were partners in a firm sharing profits in the ratio of 2:3. On 31.3.2018 their
BALANCE SHEET OF SANJAY AND SAMEER
as at 31.3.2018
Capitals : Land and Building 3,00,000
Sanjay 2,00,000 Stock 1,00,000
Sameer 3,00,000 5,00,000 Debtors 1,50,000
Creditors 1,05,000 Bank 1,55,000
7,05,000 7,05,000
The firm was dissolved on 1.4.2018 and the assets and liabilities were settled as follows :
(i) Sanjay agreed to take over land and building at Rs.3,50,000 by paying cash;
(ii) Stock was sold for Rs.90,000;
(iii) Creditors accepted Debtors in full settlement of their claim.

Q. 100. Arun, Tarunand Varun shared profits in the ratio of 2 : 2 : 1. On 31.12.2018 their Balance Sheet
was as follows :
Commission Received in Advance 12,000 Plant 90,000
Capitals : Profit & Loss A/c 34,000
Arun 50,000
Tarun 60,000
Varun 30,000 1,40,000
2,60,000 2,60,000
On this date the firm was dissolved. Arun was appointed to realise the assets. Arun was to receive 5%
commission on the sale of assets (except cash) and was to bear all expenses of realisation.
Arun realised the assets as follows :
Stock Rs.36,000, Debtors Rs.45,000, Investments 80% of the book value, Plant Rs.65,500. Expenses
of realisation amounted to Rs.5,500. Commission received in advance was returned to the customers
after deducting Rs.4,000. Firm had to pay Rs.8,000 for outstanding wages. This liability was not
provided for in the above Balance Sheet. Rs.20,000 had to be paid for provident fund.
Prepare Realisation Account, Capital Accounts and Cash Account.
Q101. Arnab, Ragini and Dhrupad were partners sharing profits in the ratio of 3 : 1 : 1. On 31st March,
2015, they decided to dissolve their firm. On that date their Balance Sheet was as under :
BALANCE SHEET OF ARNAB, RAGINI AND DHRUPAD
Arnab’s Brother’s Loan 95,000 Debtors 1,70,000
Dhrupad’s Loan 1,00,000 Less: Provision for
Investment Fluctuation Fund 50,000 Bad Debts 20,000 1,50,000
Capitals: Arnab 2,75,000 Stock 1,50,000
Ragini 2,00,000 Investments 2,50,000
Dhrupad 1,70,000 6,45,000 Building 3,00,000
9,50,000 9,50,000
The assets were realised and the liabilities were paid as under :
(i) Arnab agreed to pay his brother’s loan.
(ii) Investments realised 20% less.
(iii) Creditors were paid at 10% less.
(iv) Building was auctioned for Rs.3,55,000. Commission on auction was Rs.5,000.
(v) 50% of the stock was taken over by Ragini at market price which was 20% less than the book value
and the remaining was sold at market price.
(vi) Dissolution expenses were Rs.8,000. Rs.3,000 were to be borne by the firm and the balance by
Dhrupad. The expenses were paid by him.
Prepare Realisation Account, Bank Account and Partner’s Capital Accounts.
(C.B.S.E. 2016 Comptt., All India)
Q102. A, B and C sharing profits and losses in the ratio of 3 : 2 : 1 agreed to dissolve their partnership
firm on 31st March, 2018. A was asked to realise the assets and pay off liabilities. He had to bear the
realisation expenses for which he was promised a lump sum amount of Rs.3,000. Their financial
position on that date was as follows :

Accounts Payable 40,000 Goodwill 20,000
Mortgage Loan 30,000 Lease 75,000
Advance from B 25,000 Patents 6,000
Employees’ Saving Bank 16,000 Stock 50,000
Capitals : Accounts Receivable 25,000
A 80,000 Equipment 20,000
B 66,000 1,46,000 300 Shares in A Ltd. 36,000
Cash 13,000
C’s Capital 12,000
2,57,000 2,57,000
Informations:
(1) Stock was valued at Rs.40,000 and this was taken over by A and B equally. Lease realised Rs.
1, 10,000; Equipments at Rs. 18,000; and Accounts Receivable at Rs.20,000 and other assets proved
valueless.
(2) Actual realisation expenses paid by A amounted to Rs. 1,800.
(3) There was an unrecorded asset of Rs. 10,000 which was taken over by A at Rs. 12,000.
(4) A bill of Rs.3,200 due for sales tax was received during the course of realisation and this was
also paid.
(5) Sunil, an old customer whose account was written off as bad in the previous year, paid Rs.2,500
which is not included in the above stated accounts receivable.
(6) Market value of the Shares in X Ltd. is Rs. 100 per share. Half the shares weresold in the market
subject to a commission of 2% and the balance half were divided by all the partners in their profit
sharing ratio.
Q. 103. X, Y and Z decided to dissolve partnership. The position as at 31st December, 2018, the date
of dissolution was as follows :
Creditors 20,000 Freehold Property 40,000
Bank Loan 5,000 Machinery 40,000
Capitals: X 70,000 Investments 16,000
Y 40,000 Stock 30,000
Z 20,000 1,30,000 Debtors 30,000
Current Accounts: Cash 10,000
X 12,000 Loss in Business 20,000
Y 7,500 19,500 Current Account: Z 4,500
Reserve for Contingency 10,000
Commission Received in Advance 6,000
1,90,500 1,90,500
They shared profits in the ratio of X : 1/2, Y : 3/10 and Z : 1/5.
Xagreed to bear all realisation expenses. For this service A is paid Rs.2,000. Actual expenses amounted
to Rs.3,200 which was withdrawn by him from the firm.
Other informations are :
(1) Assets, with the exception of investments and Cash, are sold for Rs. 1,25,100, 75% of the
investments are taken over by X at 75% of their book value. He also agrees to discharge the Bank Loan.
The remaining investments were taken over by Y at the market value of 120%.
(2) There were outstanding expenses amounting to Rs.5,000. These were settled for Rs.2,000. '
(3) A B/R for Rs. 10,000 was received from a customer Mr. Surender Kumar and the bill was
discounted from the bank. Surender became insolvent and 75 paise per Rs. were received from his
estate.
(4) Commission received in advance was returned to the customers after deducting 60% for work done.
You are required to prepare the necessary accounts.

Q. 104. A and B shared profits in the ratio of 7 : 3. They dissolved the partnership and appointed A to
realise the assets. A is to receive 6% commission on the amount realised from Stock, Debtors, B/R and
Shares.
The position of the firm was as follows :
Repairs and Renewals Reserve 4,000 Prepaid Insurance 1,200
Bank Loan 20,000 Stock 60,000
A’s Capital A/c 50,000 100 Shares in D.C.M. Ltd. 5,000
B’s Capital A/c 20,000 Sundry Debtors 38,000
B/R 6,000
Cash at Bank 8,800
A’s Drawings 5,000
1,54,000 1,54,000
Informations :
1. A realised the assets as follows :— Full amount from Sundry Debtors and B/R except from one
for Rs.2,000 being insolvent. Stock realised Rs.52,000; Shares in D.C.M. were sold for Rs. 60 each.
2. Half the trade creditors accepted plant and machinery at an agreed valuation of 10% less than
the book value and cash of Rs.7,000 in full settlement of their claims.
3. Remaining creditors were paid off at a discount of 10%. Expenses of realisation amounted to
Rs.700.
4. One quarter’s tax amounting to Rs. 1,500 was due and had to be paid.
5. There was a contingent liability amounting to Rs. 13,000. It was settled for Rs.6,000.
6. Bank Loan was discharged along with interest due for two months @ 18% p.a.
Q. 105. E, F and G were partners in a firm sharing profits in the ratio of 2 : 2 : 1. On March 31,2017,
their firm was dissolved. On the date of dissolution, the Balance Sheet of the firm was as follows:
BALANCE SHEET
as at March 31, 2017
Rs. Rs.
Capitals : G’s Capital 500
E 1,30,000 Profit & Loss Account 10,000
F 1,00,000 2,30,000 Land & Building 1,00,000
Creditors 45,000 Furniture 50,000
Outstanding Expenses 17,000 Machinery 90,000
Debtors 36,500
Bank 5,000
2,92,000 2,92,000
F was appointed to undertake the process of dissolution for which he was allowed a remuneration of
Rs.5,000. F agreed to bear the dissolution expenses. Assets realized as follows:
(i) The Land & Building was sold for Rs. 1,08,900.
(ii) Furniture was sold at 25% of book value.
(iii) Machinery was sold as scrap for Rs.9,000.
(iv) All Debtors were realised at full value.
Creditors were payable on an average of 3 months from the date of dissolution. On discharging the
Creditors on the date of dissolution, they allowed a discount of 5%.
Pass necessary Journal entries for dissolution in the books of the firm.

Q. 106. A, B and C shared profits in the ratio of 1 : 2 : 2. Following is their Balance Sheet on the date
of dissolution :
Workmen Compensation Reserve 30,000 Less: Provision for
A’s Loan 1,00,000 Doubtful
Capital Accounts : Debts 20,000 3,80,000
A 3,00,000 Stock 20,000
B 5,00,000 8,00,000 Machinery 3,00,000
Land & Buildings 4,00,000
Advertisement Suspense Account 30,000
Capital Account: C 50,000
12,05,000 12,05,000
Informations :
(i) Land & Buildings were sold at 80% of the book value.
(ii) Stock was given to bills payable in full settlement.
(iii) Sundry creditors accepted machinery and paid Rs. 10,000 to the firm.
(iv) Debtors were all good.
(v) An unrecorded asset estimated at Rs.60,000 was taken over by partner B at Rs.50,000.
(vi) Firm had to pay Rs.40,000 as Workmen Compensation.
(vii) A’s Loan was settled by giving him an unrecorded asset of Rs.75,000 at Rs.60,000 and the balance
in cash.
(viii) Partner A is to be paid remuneration of Rs.20,000 for dissolution work. Realisation expenses of
Rs. 1 5,000 were paid by the firm.
Q. 107. Susan, Geeta and Rashi are partners sharing profits and losses in the ratio of 5 ; 3 : 2. Their
Balance Sheet as at 31st March, 2017, is as under :
BALANCE SHEET OF SUSAN, GEETA AND RASHI
Rs. Rs.
Employees Providend Fund 5,000 Less : Provision for
Bank Loan 55,000 Doubtful Debts (5,000) 60,000
Capital Acs Goodwill 50,000
Susan 2,20,000 Furniture 1,00,000
Geeta 1,70,000 Building 3,80,000
Rashi 1,35,000 5,25,000
6,60,000 6,60,000
The partners decided to dissolve their partnership on 31st March, 2017.
The following transactions took place at the time of dissolution :
(a) Realization expenses of Rs.2,000 were paid by Susan on behalf of the firm.
(b) Geeta took over the goodwill for her own business at Rs.40,000.
(c) Building was taken over by Rashi at Rs.3,00,000.
(d) Only 80% of the debtors paid their dues.
(e) Furniture was sold for Rs.97,000.
(f) Bank Loan was settled along with interest of Rs.5,000.
You are required to prepare the Realization Account. (I.S.C. 2018)
Q108. Pass Journal entries for the following transactions at the time of dissolution of the firm:

(a) Loan of Rs. 10,000 advanced by a partner to the firm was refunded.
(b) X, a partner, takes over an unrecorded asset (Typewriter) at Rs. 300.
(c) Undistributed balance (Debit) of Profit and Loss Account Rs. 30,000. The firm has three partners
X, Y and Z.
(d) Assets of the firm realised Rs. 1,25,000.
(e) Y who undertakes to carry out the dissolution proceedings is paid Rs. 2,000 for the same.
(f) Creditors are paid Rs. 28,000 in full settlement of their account of Rs. 30,000. (Delhi, Al, Foreign
2004)
Q109. Pass necessary Journal entries for the following transactions on the dissolution of the firm of P
and Q after the various assets (other than cash) and outside liabilities have been transferred to
Realisation Account:
(a) Bank Loan Rs. 12,000 was paid.
(b) Stock worth Rs. 16,000 was taken over by partner Q.
(c) Partner P paid a creditor Rs. 4,000.
(d) An asset not appearing in the books of accounts realised Rs. 1,200.
(e) Expenses of realisation Rs. 2,000 were paid by partner Q.
(f) Profit on realisation Rs. 36,000 was distributed between P and Q in 5 :4 ratio. (Delhi2011)
Q110. X, Yand Z are partners in a firm sharing profits in the ratio of 3 : 2 :1 respectively. The firm was
dissolved on 1 st March, 2013. After transferring assets (other than cash) and third party liabilities to
the 'Realisation Account' you are provided with the following information:
(a) There was a balance of Rs. 18,000 in the firm's Profit and Loss Account.
(b) There was an unrecorded bike of Rs. 50,000 which was taken over by X.
(c) Creditors of Rs. 5,000 were paid Rs. 4,000 in full settlement of accounts.
Pass necessary Journal entries for the above at the time of dissolution of firm. (Delhi 2013 C)
Q111. Book Value of assets (other than cash and bank) transferred to Realisation Account isRs.
1,00,000. 50% of the assets are taken over by a partner Atul, at a discount of 20%; 40% of the remaining
assets are sold at a profit of 30% on cost; 5% of the balance being obsolete, realised nothing and
remaining assets are handed over to a Creditor, in full settlement of his claim.
You are required to record the Journal entries for realisation of assets. (NCERT)
Q112. Lai and Pal were partners in a firm sharing profits in the ratio of 3 : 7. On 1st April, 2015 their
firm was dissolved. After transferring assets (other than cash) and outsider's liabilities to Realisation
Account, you are given the following information:
(a) A creditor of Rs. 3,60,000 accepted machinery valued at Rs. 5,00,000 and paid to the firm Rs.
1,40,000.
(b) A second creditor for Rs. 50,000 accepted stock at Rs. 45,000 in full settlement of his claim.
(c) A third creditor amounting to Rs. 90,000 accepted Rs. 45,000 in cash and investments worth Rs.
43,000 in full settlement of his claim.
(d) Loss on dissolution was Rs. 15,000.
Pass necessary Journal entries for the above transactions in the books of firm assuming that all payments
were made by cheque. (AI20)6)
Q113. Pass the Journal entries for the following transactions on the dissolution of the firm of P and Q
after various assets (other than cash) and outside liabilities have been transferred to Realisation
Account:
(a) Stock Rs. 2,00,000. 'P' took over 50% of stock at a discount of 10%. Remaining stock was sold at a
profit of 25% on cost.
(b) Debtors Rs. 2,25,000. Provision for Doubtful Debts Rs. 25,000. Rs. 20,000 of the book debts proved
bad.
(c) Land and Building (Book valueRs. 12,50,000) sold forRs. 15,00,000 through a broker who charged
2% commission.
(d) Machinery (Book value Rs. 6,00,000) was handed over to a creditor at a discount of 10%.

(e) Investment (Book value Rs. 60,000) realised at 125%.
(f) Goodwill of Rs. 75,000 and prepaid fire insurance of Rs. 10,000.
(g) There was an old furniture in the firm which had been written off completely in the books. This was
sold forRs. 10,000.
(h) 'Z'an old customer whose account forRs. 20,000 was written off as bad in the previous year, paid
60%.
(i) 'P' undertook to pay Mrs. P's loan of Rs. 50,000.
(j) Trade creditors Rs. 1,60,000. Half of the trade creditors accepted Plant and Machinery at an agreed
valuation of Rs. 54,000 and cash in full settlement of their claims after allowing a discount ofRs. 16,000.
Remaining trade creditors were paid 90% in final settlement.
Q114. What Journal entries would be passed for discharge of following unrecorded liabilities on the
dissolution of a firm of partners A and B:
(a) There was a contingent liability in respect of bills discounted but not matured of Rs. 18,500. An
acceptor of one bill of Rs. 2,500 became insolvent and fifty paise in a rupee was recovered. The liability
of the firm on account of this bill discounted and dishonoured has not so far been recorded.
(b) There was a contingent liability in respect of a claim for damages for Rs. 75,000, such liability was
settled for Rs. 50,000 and paid by the partner A.
(c) Firm will have to pay Rs. 10,000 as compensation to an injured employee, which was a contingent
liability not accepted by the firm.
(d) Rs. 5,000 for damages claimed by a customer has been disputed by the firm. It was settled at 70%
by a compromise between the customer and the firm.
Q115. Pass necessary Journal entries on the dissolution of a firm in the following cases:
(a) Dharam, a partner, was appointed to look after the process of dissolution at a remuneration of Rs.
12,000 and he had to bear the dissolution expenses. Dissolution expenses Rs. 11,000 were paid by
Dharam.
(b) Jay, a partner, was appointed to look afterthe process of dissolution and was allowed a remuneration
of Rs. 15,000. Jay agreed to bear dissolution expenses. Actual dissolution expenses Rs. 16,000 were
paid by Vijay, another partner on behalf of Jay.
(c) Deepa, a partner, was to look after the process of dissolution and for this work she was allowed a
remuneration of Rs. 7,000. Deepa agreed to bear dissolution expenses. Actual dissolution expenses Rs.
6,000 were paid from the firm's bank account.
(d) Dev, a partner, agreed to do the work of dissolution for Rs. 7,500. He took away stock of the same
amount as his commission. The stock had already been transferred to Realisation Account.
(e) Jeev, a partner, agreed to do the work of dissolution for which he was allowed a commission of Rs.
10,000. He agreed to bear the dissolution expenses. Actual dissolution expenses paid by Jeev were Rs.
12,000. These expenses were paid by Jeev by drawing cash from the firm.
(f) A debtor of Rs. 8,000 already transferred to Realisation Account agreed to pay the realisation
expenses of Rs. 7,800 in full settlement of his account. {Delhi2017)
Q116. Ramesh and Umesh were partners in a firm sharing profits in the ratio of their capitals. On 31st
March, 2013, their Balance Sheet was as follows:
Creditors 1,70,000 Bank 1,10,000
Workmen Compensation 2,10,000 Debtors 2,40,000
Reserve
Ramesh's Current Account 80,000 Furniture 2,00,000
Ramesh 7,00,000 Umesh's Current Account 50,000
Umesh 3,00,000 10,00,000
16,60,000 16,60,000
On the above date the firm was dissolved.

(a) Ramesh took over 50% of stock at Rs. 10,000 less than book value. The remaining stock was sold
at a loss of Rs. 15,000. Debtors were realised at a discount of 5%.
(b) Furniture was taken over by Umesh for Rs. 50,000 and machinery was sold for Rs. 4,50,000.
(c) Creditors were paid in full.
(d) There was an unrecorded bill for repairs for Rs. 1,60,000 which was settled at Rs. 1,40,000.
Prepare Realisation Account. (Foreign 2014)
Q117. Balance Sheet of a firm as at 31st March, 2018, when it was decided to dissolve the same, was:
Sundry Creditors 14,000 Cash at Bank 640
Reserve for Contingencies 500 Stock 4,740
Y 3,000 7,000
21,500 21,500
Rs. 19,500 were realised from all assets except Cash at Bank. The cost of winding up came to Rs. 440.
X and Y shared profits in the ratio of 2 :1 respectively.
Prepare Realisation Account and Capital Accounts of Partners.
Q118. Achal and Vichal were partners in a firm sharing profits in the ratio of 3 : 5. On 31st March,
Liabilities Rs Assets Rs.
Achal 3,00,000 Machinery 3,00,000
Vichal 5,00,000 8,00,000 Debtors 2,22,000
Employees' Provident 21,000
Fund
10,00,000 10,00,000
The firm was dissolved on 1st April, 2018 and the Assets and Liabilities were settled as follows:
(a) Land and Building realised Rs. 4,30,000.
(b) Debtors realised Rs. 2,25,000 (with interest) and Rs. 1,000 were recovered for Bad Debts written
off last year.
(c) There was an Unrecorded Investment which was sold for Rs. 25,000.
(d) Vichal took over Machinery at Rs. 2,80,000 for cash.
(e) 50% of the Creditors were paid Rs. 4,000 less in full settlement and the remaining Creditors were
paid full amount.
Pass necessary Journal entries for dissolution of the firm. (AI2012, Modified)
Q119. Bale and Yale are equal partners of a firm. They decide to dissolve their partnership on 31st
March, 2018
at which date their Balance Sheet stood as:

Bale 50,000 Machinery 15,000
Yale 40,000 90,000 Furniture 12,000
Bale's Loan A/c 3,000 Stock 24,000
1,15,000 1,15,000

(a) The assets realised were:
Stock Rs. 22,000; Debtors Rs. 7,500; Machinery Rs. 16,000; Building Rs. 35,000.
(b) Yale took over the Furniture at Rs. 9,000.
(c) Bale agreed to accept Rs. 2,500 in full settlement of his Loan Account.
(d) Dissolution Expenses amounted to Rs. 2,500.
Prepare the:
(i) Realisation Account; (ii) Capital Accounts of Partners;
(iii) Bale's Loan Account; (iv) Bank Account.
Q120. Shilpa, Meena and Nanda decided to dissolve their partnership on 31 st March, 2018. Their
profit-sharing ratio was 3:2:1 and their Balance Sheet was as under:
BALANCE SHEET OF SHILPA, MEENA AND NANDA as on 31st March, 2018
Capital A/cs: Land 81,000
Shilpa 80,000 Stock 56,760
Meena 40,000 1,20,000 Debtors 18,600
Bank Loan 20,000 Nanda's Capital 23,000
Provision for Doubtful 1,200
Debts
1,90,200 1,90,200
It is agreed as follows:
The stock of value of Rs. 41,660 are taken over by Shilpa forRs. 35,000 and she agreed to discharge
bank loan. The remaining stock was sold at Rs. 14,000 and debtors amounting to Rs. 10,000 realised
Rs. 8,000. Land is sold for Rs. 1,10,000. The remaining debtors realised 50% at their book value. Cost
of realisation amounted to Rs. 1,200. There was a typewriter not recorded in the books worth of Rs.
6,000 which were taken over by one of the Creditors at this value. Prepare Realisation Account,
Partners' Capital Accounts, and Cash Account to Close the books of the firm. (NCERT; Modified)
Q121. A and B are partners in a firm sharing profits and losses in the ratio of 3 : 2. On 31st March,
Mrs. A's Loan 10,000 Stock 6,000
B’s Loan 15,000 Debtors 19,000
Reserve 5,000 Furniture 4,000
A's Capital 10,000 Plant 28,000
B’s Capital 8,000 18,000 Investments 10,000
86,000 86,000
The firm was dissolved on 31 st March, 2018 and both the partners agreed to the following:
(a) A took Investments at an agreed value of Rs. 8,000. He also agreed to settle Mrs. A's Loan.
(b) Other assets realised as: Stock—Rs. 5,000; Debtors—Rs. 18,500; Furniture—Rs. 4,500; Plant—Rs.
25,000.
(c) Expenses of realisation came to Rs. 1,600.
(d) Creditors agreed to accept Rs. 37,000 in full settlement of their claims.
Prepare Realisation Account, Partners' Capital Accounts and Bank Account. (NCERTModified)
Q122. Balance Sheet of P, Q and R as at 31st March, 2018, who were sharing profits in the ratio of 5 :3
:1, was:

Loan from Bank 30,000 Stock 19,000
Reserve Fund 9,000 Sundry Debtors 42,000
Capital A/cs: Less: Provision for
P 44,000 Doubtful Debts 2,000 40,000
Q 36,000 Building 40,000
R 20,000 1,00,000 Plant and Machinery 40,000
1,79,000 1,79,000
The partners dissolved the business. Assets realised—Stock Rs. 23,400; Debtors 50%; Fixed Assets
10% less than their book value. Bills Payable were settled for Rs. 32,000. There was an Outstanding
Bill of Electricity Rs. 800 which was paid off. Realisation expenses Rs. 1,250 were also paid.
Q123. Vinod, Vijay and Venkat are partners sharing profits and losses in the ratio of 3:2:1. They decided
to dissolve their firm on 31 st March, 2018, the date on which their Balance Sheet stood as:
Vinod's Loan 5,300 Debtors 15,000
Debts
Vinod 25,000 Furniture 10,000
Vijay 11,000 Machinery 33,000
Venkat 8,000 44,000
84,300 84,300
The following additional information is given:
(a) The Investments are taken over by Vinod for Rs. 5,000.
(b) Assets realised as follows: Rs.
Stock 17,500
Debtors 14,500
Furniture 6,800
Machinery 30,300
(c) Expenses on realisation amounted to Rs. 2,000.
Close the books of the firm giving relevant Ledger Accounts.
Q124. P, Q and R were partners in a firm sharing profits and losses in the ratio of 5:3 :2. They agreed
to dissolve their partnership firm on 31 st March, 2018. P was deputed to realise the assets and pay the
liabilities. He was paid Rs. 1,000 as commission for his services. The financial position of the firm was:
Bills Payable 3,700 Investments 15,000
Investments Fluctuation 4,500 Debtors 7,100
Reserve
Capital A/cs: Less: Provision for Doubtful 450 6,650
Debts
P 37,550 Cash 5,600
Q 15,000 52,550 R's Capital A/c 8,000

70,750 70,750
P took over Investments for Rs. 12,500. Stock and Debtors realised Rs. 11,500. Plant and Machinery
were sold to Q for Rs. 22,500 for cash. Unrecorded assets realised Rs. 1,500. Realisation expenses paid
amounted to Rs. 900. Prepare necessary Ledger Accounts to close the books of the firm.
Q125. Ashu and Harish are partners sharing profit and losses as 3 : 2. They decided to dissolve the firm
on 31st March, 2018. Their Balance Sheet on the above date was:
Ashu 1,08,000 Machinery 70,000
Harish 54,000 1,62,000 Furniture 14,000
Bank Overdraft 50,000 Investments 60,000
Debtors 48,000
Cash in Hand 8,000
3,00,000 3,00,000
Ashu is to take over the building at Rs. 95,000 and Machinery and Furniture is taken over by Harish at
value of Rs. 80,000. Ashu agreed to pay Creditor and Harish agreed to meet Bank overdraft. Stock and
Investments are taken by both partner in profit-sharing ratio. Debtors realised for Rs. 46,000, expenses
of realisation amounted to Rs. 3,000. Prepare necessary Ledger Accounts. {NCERT, Modified)
Q126. A, B and C were equal partners. On 31 st March, 2018, their Balance Sheet stood as:
Capital A/cs: , Debtors 62,600
C 15,000 70,000 Building 23,500
1,32,400 1,32,400
(a) For the purpose of dissolution, Investments were valued at Rs. 18,000 and A took over the
Investments at this value.
(b) Fixed Assets realised Rs. 29,700 whereas Stock and Debtors realised Rs. 80,000.
(c) Expenses of realisation amounted to Rs. 1,300.
(d) Creditors allowed a discount of Rs. 800.
(e) One Bill Receivable for Rs. 1,500 under discount was dishonoured as the acceptor had become
insolvent and was unable to pay anything and hence the bill had to be met by the firm.
Prepare Realisation Account, Partners' Capital Accounts and Cash Account showing how the accounts
would finally be settled among the partners.
Q127. A, B and C are in partnership sharing profits and losses in the proportions of 1/2,1/3 and 1/6
respectively. On 31st March, 2018, they decide to dissolve the partnership and the position of the firm
on this date is represented by the following Balance Sheet:
Loan A/c: Stock 50,000
Workmen Compensation 21,000 Land and Building 57,000
Reserve
Capital A/cs: Profit and Loss A/c 15,000

A 60,000 Advertisement Suspense A/c 6,000
B 40,000
C 10,000 1,10,000
1,81,000 1,81,000
During the course of realisation, a liability under a suit for damages is settled at Rs. 20,000 as against
Rs. 5,000 only provided for in the books of the firm.
Land and Building were sold for Rs. 40,000 and the Stock and Sundry Debtors realised Rs. 30,000 and
Rs. 42,000 respectively. The expenses of realisation amounted to Rs. 1,200.
There was a car in the firm, which was completely written off from the books. It was taken over by A
for Rs. 20,000. He also agreed to pay Outstanding Salary of Rs. 20,000 not provided in books.
Prepare Realisation Account, Partners' Capital Accounts and Bank Account in the books of the firm.
Q128. A and B are partners in a firm sharing profits and losses in the ratio of 2 :1. On 31st March, 2018,
their
Balance Sheet was:
General Reserve 56,000 Bank Balance 10,000
Investments Fluctuation Reserve 20,000 Sundry Debtors 26,000
A's Loan 34,000 Less: Provision for
Capital A/c: Doubtful Debts 2,000 24,000
Stock 10,000
Furniture 10,000
Building 60,000
1,90,000 1,90,000
On that date, the partners decide to dissolve the firm. A took over Investments at an agreed valuation
of Rs. 35,000. Other assets were realised as follows:
Sundry Debtors: Full amount. The firm could realise Stock at 15% less and Furniture at 20% less than
the book value. Building was sold at Rs. 1,00,000.
Compensation to employees paid by the firm amounted to Rs. 10,000. This liability was not provided
for in the above Balance Sheet.
You are required to close the books of the firm by preparing Realisation Account, Partners' Capital
Accounts and Bank Account.
Q129. Ashok, Babu and Chetan are in partnership sharing proft in the proportion of 1/2,1/3,1/6
respectively. They dissolve the partnership of the 31st March, 2018 when the Balance Sheet of the firm
as under:
Bills Payable 25,500 Sundry Debtors 58,000
Babu's Loan 30,000 Stock 39,500
Capital A/cs: Machinery 48,000
Ashok 70,000 Investments 42,000
Babu 55,000 Freehold Property 50,500
Chetan 27,000 1,52,000
Current A/cs:
Ashok 10,000
Babu 5,000
Chetan 3,000 18,000
2,45,500 2,45,500

The Machinery was taken over by Babu for Rs. 45,000, Ashok took over the Investment for Rs. 40,000
and Freehold property took over by Chetan at Rs. 55,000. The remaining Assets realised as follows:
Sundry Debtors Rs. 56,500 and Stock Rs. 36,500. Sundry Creditors were settled at discount of 7%. A
Office computer, not shown in the books of accounts realised Rs. 9,000. Realisation expenses amounted
to Rs. 3,000.
Prepare Realisation Account, Partners' Capital Accounts and Bank Account. [NCERT, Modified)
Q130. X, Yand Zcarrying on business as merchants and sharing profits and losses in the ratio of 2:2:1,
dissolved their firm as at 31st March, 2018 on which date their Balance Sheet was as follows:
Debts
Investments Fluctuation 40,000 Investments 55,000
Reserve
Capital A/cs: Premises 1,51,500
X 75,000
Y 75,000
Z 15,000 1,65,000
3,56,500 3,56,500
A bill for Rs. 5,000 received from Mohan discounted from bank is not met on maturity.
The assets except Cash at Bank and Investments were sold to a company which paid Rs. 3,25,000 in
cash. The Investments were sold and Rs. 56,500 were received. Mohan proved insolvent and a dividend
of 50% was received from his estate. Sundry Creditors (including Bills Payable) were paid Rs. 57,500
in full settlement. Realisation Expenses amounted to Rs. 15,000.
Q131. Mrs. Rita Chowdhary and Miss Sobha are partners in a firm, Fancy Garments Exports, sharing
profits and losses equally. On 1st April, 2018, the Balance Sheet of the firm was:
Mr. Chowdhary's Loan 15,000 Stock 75,000
Mrs. Rita Chowdhary's Capital 90,000 Less: Provision for
Miss Sobha's Capital 30,000 Doubtful Debts 6,000 60,000
2,64,000 2,64,000
The firm was dissolved on the date given above. The following transactions took place:
(a) Mrs. Rita Chowdhary undertook to pay Mr. Chowdhary's Loan and took over 50% of the Stock at a
discount of 20%.
(b) Book Debts realised Rs. 54,000; balance of the Stock was sold off at a profit of 30% on cost.
(c) Sundry Creditors were paid out at a discount of 10%. Bills Payable were paid in full.
(d) Plant and Machinery realised Rs. 75,000. Land and Building Rs. 1,20,000.
(e) Mrs. Rita Chowdhary took over the goodwill of the firm at a valuation of Rs. 30,000.
(f) An unrecorded asset of Rs. 6,900 was handed over to an unrecorded liability of Rs. 6,000 in full
settlement.
(g) Realisation expenses were Rs. 5,250.
Show Realisation Account, Partners' Capital Accounts and Bank Account in the books of the firm.

Q132. Following is the Balance Sheet of Arvind and Balbir as at 31 st March, 2018:
Trade Creditors 45,000 Cash 750
Mrs. Arvind's Loan 7,500 Stock 7,500
Mrs. Balbir's Loan 15,000 Investments 15,000
Reserve Debts
Arvind 15,000 Plant 30,000
Balbir 15,000 30,000 Goodwill 6,000
1,26,000 1,26,000
The firm was dissolved on the above date under the following arrangement:
(a) Arvind promised to pay off Mrs. Arvind's Loan and took Stock at Rs. 6,000.
(b) Balbir took half the Investments @ 10% discount.
(c) Book Debts realised Rs. 28,500.
(d) Trade Creditors and Bills Payable were due on average basis of one month after 31st March, but
were paid immediately on 31 st March @ 2% discount per annum.
(e) Plant realised Rs. 37,500; Building Rs. 60,000; Goodwill Rs. 9,000 and remaining Investments Rs.
6,750.
(f) An old typewriter, written off completely from the firm's books, now estimated to realise Rs. 450. It
was taken by Balbir at this estimated price.
(g) Realisation expenses were Rs. 1,500.
Show Realisation Account, Capital Accounts of Partners and Bank Account.
Q133. Anju, Manju and Sanju were partners in a firm sharing profits in the ratio of 2 :2 :1. On 31 st
March, 2018, their Balance Sheet was:
Employees' Provident Fund 15,000 Stock 40,000
Investments Fluctuation 10,000 Investments 20,000
Reserve
Commission Received in 8,000 Plant 50,000
Advance
Capital A/cs: Profit and Loss A/c 3,000
Anju 50,000
Manju 50,000
Sanju 30,000 1,30,000
2,48,000 2,48,000
On this date, the firm was dissolved. Anju was appointed to realise the assets. Anju was to receive 5%
commission on the sale of assets (except cash) and was to bear all expenses of realisation.
Anju realised the assets as follows: Debtors Rs. 60,000; Stock Rs. 35,500; Investments Rs. 16,000;
Plant 90% of the book value. Expenses of Realisation amounted to Rs. 7,500. Commission received in
advance was returned to customers after deducting Rs. 3,000.
Firm had to pay Rs. 8,500 for Outstanding Salary, not provided for earlier. Compensation paid to
employees amounted to Rs. 17,000. This liability was not provided for in the above Balance Sheet. Rs.
20,000 had to be paid for Employees' Provident Fund.
Prepare Realisation Account, Capital Accounts of Partners and Cash Account.

Q134. A, B and C were in partnership sharing profits in the ratio of 7 :2 :1 and the Balance Sheet of the
firm as at 31st March, 2018 was:
A 12,410 Plant 31,220
B 8,650 Goodwill 10,000
C 80,620 1,01,680 100 Shares in X Ltd. (At cost) 2,400
Creditors 11,210 1,000 Shares in / Ltd. (At cost) 10,000
Reserve for Depreciation on 20,000 Stock 11,240
Plant
Debtors 8,740
Bank 1,210
Patents 38,080
1,32,890 1,32,890
It was agreed to dissolve the partnership as on 31st March, 2018 and the terms of dissolution were—
(a) A to take over the Building at an agreed amount ofRs. 31,500;
(b) β, who was to carry on the business, to take over the Goodwill, Stock and Debtors at book value,
the Patents at Rs. 30,000 and Plant at Rs. 5,000. He was also to pay the Creditors;
(c) C to take over shares in X Ltd. at Rs. 15 each and
(d) The shares in Y Ltd. to be divided in the profit-sharing ratio.
Show Ledger Accounts recording the dissolution in the books of the firm.
Q135. Following is the Balance Sheet of Vishnu, Sanjiv and Sudhir as at 31st March, 2018:
Bills Payable 20,000 Cash 8,000
Creditors 18,000 Bills Receivable 12,000
Mrs. Vishnu's Loan 20,000 Stock 25,000
Outstanding Salary 5,000 Sundry Debtors 40,000
Profit and Loss A/c 10,000 Less: Provision for
Workmen Compensation 15,000 Doubtful Debts 4,000 36,000
Reserve
Vishnu 40,000 Furniture 10,000
Sanjiv 30,000 Computers 5,000
Sudhir 18,000 88,000 Investments 30,000
1,76,000 1,76,000
Profit-sharing ratio of the partners is 5 :3 :2. At the above date, the partners decided to dissolve the firm.
The assets were realised as follows:
Bills Receivable were realised at a discount of 5%. All Debtors were good. Stock realised Rs. 22,000.
Land and Building realised 40% higher than the book value. Furniture was sold for Rs. 8,000 by auction
and auctioneer's commission amounted to Rs. 500.
Computers were taken by Vishnu for an agreed valuation of Rs. 3,000. Investments were sold in the
open market at a price of Rs. 45,000, for which commission of Rs. 600 was paid to the broker.
Bills Payable were paid at full amount. Creditors, however, agreed to accept 10% less. All other
liabilities were paid off at their book value.
The firm retrenched their employees three months before the dissolution of the firm and firm had to pay
Rs. 20,000 as compensation.
Q136. A, B and C were partners sharing profits in the ratio of 2 : 2 : 1. They decided to dissolve their
firm on
31 st March, 2018 when the Balance Sheet was:

Debts
Mrs. A's Loan 38,000 Stock 50,000
C's Loan 30,000 Investments 60,000
Investments Fluctuation 16,000 Furniture 42,000
Reserve
A 1,20,000 Land 1,00,000
Β 1,00,000 Goodwill 30,000
C 1,00,000 3,20,000
5,22,000 5,22,000
Following transactions took place:
(a) A took over Stock at Rs. 36,000. He also took over his wife's loan.
(b) B took over half of Debtors at Rs. 28,000.
(c) C took over Investments at Rs. 54,000 and half of Creditors at their book value.
(d) Remaining Debtors realised 60% of their book value. Furniture sold for Rs. 30,000; Machinery Rs.
82,000 and Land Rs. 1,20,000.
(e) An unrecorded asset was sold for Rs. 22,000.
(f) Realisation expenses amounted to Rs. 4,000.
Prepare necessary Ledger Accounts to close the books of the firm. (Foreign 2003, Adapted)
Q137. Krishna and Arjun are partners in a firm. They share profits in the ratio of 4:1. They decide to
dissolve the firm on 31 st March, 2018 at which date their Balance Sheet stood as:
Bank Loan 1,500 Trademarks 1,200
Creditors for Goods 8,000 Machinery 12,000
Bills Payable 500 Furniture 400
Krishna 16,000 Debtors 9,000
Arjun 6,000 22,000 Less: Provision for Bad Debts 400 8,600
Cash at Bank 2,800
32,000 32,000
The realisation shows the following results:
(a) Goodwill was sold for Rs. 1,000.
(b) Debtors were realised at book value less 10%.
(c) Trademarks were realised for Rs. 800.
(d) Machinery and Stock-in-Trade were taken over by Krishna for Rs. 14,400 and Rs. 3,600
respectively.
(e) An unrecorded asset estimated at Rs. 500 was sold for Rs. 200.
(f) Creditors for goods were settled at a discount of Rs. 80. The expenses on realisation were Rs. 800.
Q138. There are two partners X and Tina firm and their capitals are Rs. 50,000 and Rs. 40,000. The
creditors are Rs. 30,000. The assets of the firm realise Rs. 1,00,000. How much will X and Y receive?
Q139. A, B and C were partners sharing profits in the ratio of 5 : 3 : 2. On 31st March, 2018, A's Capital
and S's Capital were Rs. 30,000 and Rs. 20,000 respectively but C owed Rs. 5,000 to the firm. The
liabilities were Rs. 20,000. The assets of the firm realised Rs. 50,000.

Q140. A and B were partners sharing profits and losses as to 7/11th to A and 4/11th to B. They dissolved
the partnership on 30th May, 2018. As on that date their capitals were: A Rs. 7,000 and B Rs. 4,000.
There were also due on Loan A/c to A Rs. 4,500 and to B Rs. 750. The other liabilities amounted to Rs.
5,000. The assets proved to have been undervalued in the last Balance Sheet and actually realised Rs.
24,000.
Prepare necessary accounts showing the final settlement between partners.
Q141. A and B dissolve their partnership. Their position as at 31 st March, 2018 was:
Particulars Rs.
A's Capital 25,000
Cash in Hand and at Bank 750
The balance of A's Loan Account to the firm stood at Rs. 10,000. The realisation expenses amounted
to Rs. 350. Stock realised Rs. 20,000 and Debtors Rs. 25,000. B took a machine at the agreed valuation
of Rs. 7,500. Other fixed assets realised Rs. 20,000.
You are required to close the books of the firm.
Q142. Ashok and Kishore were in partnership sharing profits in the ratio of 3 : 1. They agreed to dissolve
the firm. The assets (other than cash of Rs. 2,000) of the firm realised Rs. 1,10,000. The liabilities and
other particulars on that date were:
Creditors Rs. 40,000
Ashok's Capital Rs. 1,00,000
Kishore's Capital Rs. 10,000 (Dr.
Balance)
Profit and Loss A/c Rs. 8,000 (Dr.
Balance)
Realisation Expenses Rs. 1,000
You are required to close the books of the firm.
Q143. X, Yand Zentered into a partnership and contributed Rs. 9,000; Rs. 6,000 and Rs. 3,000
respectively. They agreed to share profits and losses equally. The business lost heavily during the very
first year and they decided to dissolve the firm. After realising all assets and paying off liabilities, there
remained a cash balance of Rs. 6,000. Prepare Realisation Account and Partners' Capital Accounts.
Q144. A, B and C started business on 1st April, 2016 with capitals of Rs. 1,00,000; Rs. 80,000 and Rs.
60,000 respectively sharing profits (losses) in the ratio of 4: 3 : 3. For the year ended 31 st March, 2017,
the firm suffered a loss ofRs. 50,000. Each of the partners withdrew? 10,000 during the year.
On 31st March, 2017, the firm was dissolved, the creditors of the firm stood at Rs. 24,000 on that date
and Cash in Hand was Rs. 4,000. The assets realised Rs. 3,00,000 and Creditors were paid Rs. 23,500
in full settlement of their claims.
Prepare Realisation Account and show your workings clearly.
Q145. A, B and C were in partnership sharing profits and losses in the ratio of 2 :1 :1. They decided to
dissolve the partnership. On that date of dissolution, Sundry Assets (including cash Rs. 5,000) amounted
to Rs. 88,000, assets realised Rs. 80,000 (including an unrecorded asset which realised Rs. 4,000). A
contingent liability on account of bills discounted Rs. 8,000 was paid by the firm. The Capital Accounts
of A, B and C showed a balance of Rs. 20,000 each.
Q146. On 1 st April, 2017, A, B and C commenced business in partnership sharing profits and losses
in proportion of 1/2,1/3 and 1/6 respectively. They paid into their Bank A/c as their capitals Rs. 22,000;
Rs. 10,000 by A, Rs. 7,000 by β and Rs. 5,000 by C. During the year, they drew Rs. 5,000; being Rs.

1,900 by A, Rs. 1,700 by B and Rs. 1,400 by C. On 31st March, 2018, they dissolved their partnership,
A taking up Stock at an agreed valuation of Rs. 5,000, β taking up Furniture at Rs. 2,000 and C taking
up Debtors at Rs. 3,000. After paying up their Creditors, there remained a balance of Rs. 1,000 at Bank.
Prepare necessary accounts showing the distribution of the cash at the Bank and of the further cash
brought in by any partner or partners as the case required.
Q147. The partnership between A and B was dissolved on 31 st March, 2018. On that date the respective
credits to the capitals were A—Rs. 1,70,000 and B—Rs. 30,000. Rs. 20,000 were owed by B to the
firm; Rs. 1,00,000 were owed by the firm to A and Rs. 2,00,000 were due to the Trade Creditors. Profits
and losses were shared in the proportions of 2/3 to A, 1/3 to B.
The assets represented by the above stated net liabilities realised Rs. 4,50,000 exclusive of Rs. 20,000
owed by β. The liabilities were settled at book figures. Prepare Realisation Account, Partners' Capital
Accounts and Cash Account showing the distribution to the partners.
Q148. X and Y were partners sharing profits and losses in the ratio of 3 : 2. They decided to dissolve
the firm on 31 st March, 2018. On that date, their Capitals were X —Rs. 40,000 and Y—Rs. 30,000.
Creditors amounted to Rs. 24,000.
Assets were realised for Rs. 88,500. Creditors of Rs. 16,000 were taken over by X at Rs. 14,000.
Remaining Creditors were paid at Rs. 7,500. The cost of realisation came to Rs. 500.
Q149. P, Q and R are three partners sharing profits and losses in the ratio of 3 :3 :2 respectively. Their
respective capitals are in their profit-sharing proportions. On 1st April, 2017, the total capital of the
firm and the balance of General Reserve are Rs. 80,000 and Rs. 20,000 respectively. During the year
2017-18, the firm made a profit of Rs. 28,000 before charging interest on capital @ 5%. The drawings
of the partners are P—Rs. 8,000; Q—Rs. 7,000; and R—Rs. 5,000. On 31 st March, 2018, their
liabilities were Rs. 18,000.
On this date, they decided to dissolve the firm. The assets realised Rs. 1,08,600 and realisation expenses
amounted to Rs. 1,800.
Prepare necessary Ledger Accounts to close the books of the firm.
Q150. X, Y and Z entered into partnership on 1st April, 2016. They contributed capital Rs. 40,000, Rs.
30,000 and Rs. 20,000 respectively and agreed to share profits in the ratio of 3 : 2 : 1. Interest on capital
was to be allowed @ 15% p.a. and interest on drawings was to be charged at an average rate of 5%.
During the two years ended 31 st March, 2018, the firm made profit of Rs. 21,600 and Rs. 25,140
respectively before allowing or charging interest on capital and drawings. The drawings of each partner
were Rs. 6,000 per year.
On 31st March, 2018, the partners decided to dissolve the partnership due to difference of opinion. On
that date, the creditors amounted to Rs. 20,000. The assets, other than cash Rs. 2,000, realised Rs.
1,21,000. Expenses of dissolution amounted to Rs. 760.
Draw up necessary Ledger Accounts to close the books of the firm.
Q151.Ashish and Neha were partners in a firm sharing profits and losses in the ratio 4 : 3. They
decided to dissolve the firm on 1st May 2014. From the information given below, complete
Realisation A/c, Partner’s Capital Accounts and Bank A/c :
Dr. REALISATION AC Cr.
To Sundry Assets : By Sundry Liabilities :
Machinery 5,60,000 Creditors 40,000
Stock 90.000 Ashish's wife’s Ioan 25,000
Debtors 55,000 By Bank :
To Bank : Machinery 4,80,000
Creditors — Debtors 10,000
To Ashish’s Capital A/c : By Ashish’s Capital A/c :

Ashish’s wife’s loan 34,000 Stock 1,28,000
To Neha’s Capital A/c : Typewriter 70,000 1,98,000
Realisation Expenses 7,000 By Neha’s Capital A/c
To Profit transferred to : Debtors 40,000
Ashish’s Capital A/c 4,000
Neha’s Capital A/c 3,000 7,000
7,93,000 7,93,000
Particulars Ashish Neha Particulars Ashish Neha

(Rs.) (Rs.) (Rs.) (Rs.)
To Realisation A/c — — By - -
To Bank A/c 4,00,000 4,50,000 By —
By — —
— —
Dr. BANK A/C Cr.

To Balance b/d. — By Realisation A/c —
To Realisation A/c 4,90,000 By Ashish’s Loan A/c 4,000
By Ashish’s Capital A/c 4,00,000
By Neha’s Capital A/c
(CBSE Sample Paper, 2015)
Q152.Prakash, Kiran and Rishab are partners in a firm sharing profit and losses in the ratio of 3 : 2 : 1.
They decided to dissolve the firm on 1st November, 2018. From the information given below
complete Realisation A/c, Partner’s Capital Accounts and Bank A/c :

To Sundry Assets: By Creditors 27,000
Debtors 20,000 By Bills Payable 10,000
Stock 25,200 By Mrs. Prakash Loan 5,000 42,000
Investments 20,000 By Bank (Assets realised) : —
Bills Receivable 8,000 By Kiran’s Capital A/c
Machinery 60,000 (Bills Receivable) 7,000
Goodwill 6,000 1,39,200 By Bank (Unrecorded Asset) 1,200
To Kiran’s Capital A/c : By Bank (Goodwill) 5,000
Bills Payable 10,000 By Loss transferred to :
Realisation Expenses 2,100 12,100 Prakash’s Capital A/c —
To Prakash’s Capital A/c Kiran’s Capital A/c —
Wife’s Loan 5,000 Rishab’s Capital A/c — —
Contingent liability
for bill discounted 8,000 13,000
To Bank (Creditors) —
1,86,800 1,86,800
Particulars Prakash Kiran Rishab Particulars Prakash Kiran Rishab

Rs. Rs. Rs. Rs. Rs.

To Bal. b/d 6,000 By — 75,000 50,000
By Realisation
To P & L A/c 9,900 — 3,300 A/c (B/P and —
To Realisation Realisation
A/c (Bills exp.)
Receivable) — By Realisation
To Realisation A/c (Wife
A/c Loan &
(Loss) 19,200 12,800 6,400 contingent
To Bank A/c liability) —
(Final By Bank A/c
Payment) (Amount brought
in)
88,000 62,100 15,700 88,000 62,100 15,700
Dr. BANK ACCOUNT Cr.

To — By Realisation A/c (Creditors) —
To By Prakash’s Capital A/c —
— By Kiran’s Capital A/c 35,700
To
—
To
—
To Rishab’s Capital A/c —
1,17,100 1,17,100
Q153.A and B decided to dissolve their firm on 1st January 2019. From the information given below
complete the Realisation A/c, Capital A/c and the Bank A/c :

To Sundry Assets: By Sundry Liabilities :
Stock A/c 6,000 Creditors A/c 38,000
Debtors A/c 19,000 Mrs. A’s Loan A/c 10,000
Furniture A/c 4,000 Mrs. B’s Loan A/c 15,000 63,000
Plant A/c 28,000 By A’s Capital A/c
Investment A/c 10,000 67,000 (Investments taken over) —
To A’s Capital A/c By Bank A/c (Assets realised)
(Mrs. A’s loan taken over) 10,000 Stock 5,000
To — Debtors 18,500
To — Furniture 4,500
Plant 25,000 53,000
By Loss on realisation
transferred to :
3
A’s Capital A/c 5 —
2
B’s Capital A/c 5 — —
.......

Rs. Rs. Rs. Rs.
To Profit and Loss A/c 4,500 — By — —
To Realisation A/c 8,000 By Reserve 3,000 —
To Realisation A/c (loss) - By —
To 6,540
— 10,000 — —

To — By Realisation A/c
To — (Creditors and B’s Loan) 52,000
By Realisation A/c
(Expenses of realisation) 1,600
By -
By
-
Q154.Ram, Rahim and Rehman were partners in a firm sharing profits in the ratio of 4 : 1 : 5. On
28.2.2019 the firm was dissolved. From the information given below complete Realisation Account,
Capital Accounts and Bank Account:

Debtors 2,74,000 Provision for Bad Debts 8,000
Stock 1,08,000 Bank Loan 4,34,000
Furniture 1,32,000 Creditors 3,80,000 8,22,000
Machinery 4,00,000 By Bank:
Building 30,00,000 39,14,000 (Assets realised) 35,61,800
To Bank (Payment of Bank Loan) 4,43,500 By Ram’s Capital (Furniture) —
To Bank (Payment of Creditors) — By Rehman’s Capital
To Rehman’s Capital A/c (Machinery taken) —
(Realisation Expenses) — By Loss transferred to :
Ram’s Capital A/c 29,080
Rahim’s Capital A/c —
Rehman’s Capital A/c — —
_ —
Particulars Ram Rahim Rehman Particulars Ram Rahim Rehman

To Realisation By — 6,00,000 10,00,000
A/c By General
(Furniture Reserve 56,000 — —
taken) 79,000 By
Realisation
To Realisation A/c
A/c (Exp. paid) —
(Machinery
taken)

To — — —
To Bank A/c — — —
7 14,56,000 — 10,77,000

To — By -
To — By Realisation A/c
(Payment of Creditors) 3,61,000
By —
By —
By —
— —
Q155.A, B and C are partners sharing profits and losses in the ratio of 3 : 2 : 1. They decided to
dissolve their firm on 1st Jan. 2019. Complete the Realisation Account, Loan Account, Capital
Accounts and Bank Account from the information given below:
Stock A/c 59,400 Provision for
Debtors A/c 57,000 Bad Debts A/c 3,000
Plant and Creditors A/c 46,200
Machinery A/c 1,31,100 2,47,500 Bills Payable A/c 10,800 60,000
To Bank A/c By —
(Liabilities paid off) — By Bank A/c
To — (Assets realised):
Stock 45,000
Goodwill 12,000
Debtors 34,200
Plant and Machinery 90,000 —
By Loss on realisation
transferred to :
C’s Capital A/c 9,450 —
— —
Dr. LOAN FROM A ACCOUNT Dr.

To — By Balance b/d —
—
Rs. Rs. Rs. Rs. Rs.
To — — — By — — —
To Bank A/c By Workmen
(Final Payment) — — Compensation

Reserve — 3,000 —
By Bank A/c
(Amount
brought in) — 3,900 —
— 18,900 — 64,500 — 61,500

To Balance b/d — By Realisation A/c
To Realisation A/c (Liabilities Paid) —
(Sale of unrecorded asset) 15,000 By Realisation A/c (Exp.) 2,400
To — By Loan from A A/c 57,000
To — By —
By —
— —

Chapter 6: Financial Statements for Not for profit
Organization
Q 1.From the following Receipts and Payments Account of Golden Cricket Club, New Delhi, prepare
the Income and Expenditure Account for the year ended March 31, 2019: ”
Receipts Rs. Payments Rs.
To Cash in hand as on By Printing and Stationery 38,750
April 1,2018 20,000 By Lighting 26,250
To Cash at Bank as on By Rates and Taxes 17,000
April 1,2018 35,000 By Telephone charges 2,600
To Subscriptions By Postage and Courier 2,000
2017-18 30,000 By Wages and Salaries 88,000
2018-19 2,25,000 By Insurance Premium 15,000
2019-20 10,000 2,65,000 By Purchase of Furniture 2,00,000
To donation for building 60,000 By Cash in hand as on
To Entrance fees 23,000 March 31,2019 23,400
To Life membership fee 20,000 By Cash at Bank as on
To Interest 18,000 March 31,2019 70,000
To Locker’s rent 42,000
4,83,000 4,83,000
Q 2.How will you deal with the Entrance Fees while preparing the final accounts of
New Delhi Sports Club for the year ended 31st March, 2017 in each of the following
cases :
Case 1. During the year 2016-17, Entrance Fees received Rs. 1,20,000.
Case 2. During the year 2016-17, Entrance Fees received Rs. 1,20,000. It is the policy of the club to
treat the Entrance Fees as ‘Revenue Receipt.
treat the Entrace Fees as ‘Capital Receipt’.
Case 4. During the year 2016-17, Entrance Fees received Rs. 1,20,000. According to the policy of the
club, 30% of the Entrance Fees is to be capitalised.
Q 3.Show how will you deal with the following items while preparing the Balance Sheet of a Club as
at 31st March, 2019.
Rs.
Sports Fund on 1st April, 2018 5,00,000
10% Sports Fund Investments on 1st April, 2018 5,00,000
Interest Received on Sports Fund Investments 37,500
Donations for Sports Fund 1,20,000
Sports prizes awarded 1,00,000
Expenses on sports events 15,000
Q 4.(a) Show the following information in financial statements of a ‘Not-for-Profit’ Organisation:

Details Amount (Rs.)
Match Expenses 8,00,000
Match Fund 4,00,000
Donation for Match Fund 2,40,000
Sale of Match tickets 3,60,000
(b) What will be the effect, if match expenses go up by Rs.2,50,000 other things remaining the same?

Q 5.Show how you would deal with the following items while preparing the Income & Expenditure
Account for the year ending on 31st March 2019 and a Balance Sheet as at that date in each of the
following alternative cases :
Case (i) Prizes awarded Rs.5,000.
Case (ii) Prizes awarded Rs.5,000; Prize Fund as on 31st March 2018 Rs.40,000; Donations for prizes
received during the year 2018-19 Rs.7,200.
Case (iii) Prizes awarded Rs.5,000; Prize Fund as on 31st March 2018 Rs.40,000; Donations for prizes
received during the year 2018-19 Rs.7,200; 9% Prize Fund Investments as on 31st March 2018
Rs.40,000; Interest received on Prize Fund Investments Rs.2,700.
Q 6.Following is the information relating to subscriptions of Savera Club for the year ended 31st March,
2016 :
Rs.
Subscriptions received during 2015-16 70,000
Subscriptions outstanding on 31st March, 2015 17,000
Subscriptions received in Advance on 31st March, 2015 3,250
Show the subscription in Income and Expenditure AJc for the year ended on 31st March, 2016 and in
the Opening and Closing Balance Sheets. (Delhi, 2017)
Q 7.Receipts and Payments Account of Young Association disclosed that it has received Rs.2,00,000
by way of subscriptions during the year ended on March 31, 2016.
Rs.
Subscription Outstanding as on 1-4-2015
(Out of which Rs.3,500 were received in 2015-16) 5,000
Subscription received in advance on 31-3-2015 3,000
Show how the subscription will appear in Income and Expenditure Account for the year ending March
31, 2016 and the Balance Sheet as at that date in each of the following alternative cases :
Case (a) If subscription outstanding for 2015-16 is Rs.6,400.
Case (b) If subscription outstanding as on 31-3-2016 is Rs.6,400.
Q8.From the following information calculate the amount of subscriptions to be credited to the Income
& Expenditure Account for the year 2016-17 :
Rs.
Subscriptions received during the year 80,000
Subscriptions received in Advance on 31-3-2016 15,000
Subscriptions received in Advance on 31-3-2017 Subscriptions of Rs.2,000 are still in 10,000
arrears for the year 2015-16
Q 9.In the year ended 31st March 2019, subscriptions received by Royal Club were Rs.5,00,000
including Rs. 16,000 for the year ended 31st March 2018, Rs.20,000 for the year ended 31st March
2020 and Rs.5,000 for the year ended 31st March, 2021.
Rs.
(i) Subscriptions Outstanding for the year ended 31st March, 2018 23,000
Subscriptions Outstanding for the year ended 31st March, 2019 40,000
(ii) Subscriptions Received in Advance as on 31st March, 2018 18,000
Show how the subscription wall appear in the Income & Expenditure Account for the year ending 31 st
March 2019 and in the Balance Sheet as at that date.

Q 10.From the following information, calculate the amount of subscriptions outstanding as on 31st
March, 2019 :
A club has 250 members each paying an annual subscription of Rs. 1,000, The Receipts & Payments
account for the year showed a sum of Rs.2,65,000 received as subscriptions. The following additional
information is provided :
Rs.
Subscriptions Outstanding on 31st March, 2018 40,000
Subscriptions Received in advance on 31st March, 2019 30,000
Q 11.Subscriptions received during the year ended March 31,2016 by Royal Club were as under :
Rs.
2014-15 3,000
2015-16 93,000
2016-17 2,000
98,000
The club has 500 members each paying @ Rs.200 as annual subscription. Subscriptions outstanding as
on March 31, 2015 were Rs.8,000. Calculate the amount of subscriptions to be shown as income in the
Income and Expenditure Account for the year ended March 31, 2016 and show the relevant data in the
Balance Sheet as at 31st March 2015 and 2016.
Q 12.Extracts of Receipts and Payments Account for the year ended March 31,2016 are given below :
Subscriptions:
2014-15 3,000
2015-16 96,000
2016-17 2,500
1,01,500
Rs.
Subscriptions Outstanding as on March 31, 2015 5,000
Total Subscriptions Outstanding as on March 31, 2016 12,000
Subscriptions received in advance as on March 31, 2015 2,800
Calculate the amount of subscriptions to be shown on the income side of Income and Expenditure A/c
and show the relevant data in the balance sheet as at 31st March 2015 and 2016.
Q 13.Following is the receipts and payments account of Modem Club, New Delhi for the year ending
31st March, 2019:
To Balance b/d on 1-4-2018 2,300 By Match Expenses 6,800
To Subscriptions 56,400 By Rent 9,600
To Interest 300 By Salaries 24,000
To Donation 6,000 By Sundry Expenses 3,600
To Donations for Building Fund 50,000 By Investments Purchased 30,000
To Match Fund 10,000 By Newspapers 750
To Miscellaneous receipts 430 By Sports Equipments 32,000
To Sale of Grass 100 By Balance c/d on 31-3-2019 18,780
1,25,530 1,25,530
Subscriptions outstanding on 31st March, 2018 were Rs.4,000 and on 31st March, 2019 were Rs.6,000.
Salaries outstanding on 31st March, 2018 and on 31st March, 2019 were Rs.2,000 and Rs.2,500
respectively.
On 31st March, 2018, the Club had Investments worth Rs.12,000; Furniture Rs. 10,000 and Sports
equipments valued at Rs.20,000.

Prepare Income & Expenditure Ale for the year ended 31st March, 2019 and a Balance Sheet as at that
date after depreciating furniture by 20% and sports equipments by 25%.
Q 14.From the following cash transactions relating to Royal Club, Green Park, prepare Income and
Expenditure account for the year ended 31st March, 2019 and a Balance Sheet as at that date :
To Cash in hand on 1st April, 2018 4,900 By Salaries 20,100
To Subscriptions (including Rs.800 By Travelling Expenses 8,600
for the year ending 31.3.2020) 52,100 By Printing & Stationery 1,720
To Donations 6,000 By Rent 16,600
To Proceeds from charity show 16,200 By Repairs 450
To Sale of Furniture By Building purchased 30,000
(Book value Rs.4,000) 1,600 By Government Bonds 5,000
To Life membership fees 9,000 By Balance c/d on 31.3,2019 32,130
To Interest on Investments
(Cost of Investments Rs.40,000) 4,800
To Sale of old car 20,000
1,14,600 1,14,600
On 1-4-2018, the club owned land and building valued at Rs.40,000 and furniture valued at Rs. 10,500.
There were 150 life members on that date, each of whom had paid subscription of Rs. 100. The book
value of car was Rs.25,000.
Subscriptions due on 31st March, 2018 and on 31st March, 2019 were Rs.3,400 and Rs.2,000
respectively. Similarly, interest on Investments due at the beginning of the year was Rs. 800 and at the
end of the year was Rs. 1,000.
Q 15.Following is the Receipts and Payments Account of Queen’s Club, Kolkata for the year ended
31st March, 2019 :
To Balance b/d (1-4-2018 ): By Rent, Rates & Taxes 15,000
Cash 3,600 By Advertisement 2,700
Current A/c with Bank 7,570 By Salaries 27,400
To Subscriptions 42,200 By Insurance Premium 1,200
To Entrance fees 3,800 By Electric Charges 2,500
To Life Membership Fees 6,000 By Telephone Expenses 2,400
To Interest on Investments 200 By Furniture (Purchased on
1st October, 2018) 8,000
,. By Balance c/d (31-3-2019)
Cash 2,400
Current A/c with Bank 1,770
63,370 63,370
Prepare Income and Expenditure A/c of the club for the year ended 31st March, 2019 and a Balance
Sheet as at that date having due regard to the following information :
Rs.
(1) Subscriptions Outstanding on 31st March, 2018 4,000
(2) Two months rent Rs.2,500 was due both at the beginning and end of the year.
(3) As on 31st March, 2018, Premises stood in the books at Rs.55,000 and Investments at
Rs.20,000. Depreciate furniture by 10% p.a.
Q 16.Following is the Receipt and Payment Account of Indian Sports Club for the year ended 31-3-
2014 :

Balance b/d 10,000 Salary 15,000
Subscriptions 52,000 Billiard Table 20,000
Entrance Fee 5,000 Office Expenses 6,000
Tournament Fund 26,000 Tournament Expenses 31,000
Sale of old newspapers 1,000 Sports Equipment 40,000
Legacy 37,000 Balance c/d 19,000
1,31,000 1,31,000
Other Information :
On 31-3-2014 subscription outstanding was Rs.2,000 and on 31-3-2013 subscription outstanding was
Rs.3,000. Salary outstanding on 31-3-2014 was Rs. 1,500.
On 1-4-2013 the club had building Rs.75,000, furniture Rs. 18,000, 12% investment Rs.30,000 and
sports equipment Rs.30,000. Depreciation charged on these items including Billiard Table was 10%.
Prepare Income and Expenditure Account of the Club for the year ended 31 -3-2014 and a Balance
Sheet as at that date.
Q 17.How will you deal with the following items while preparing the final accounts of a club :
April 1, 2016 March 31, 2017
Rs. Rs.
Stock of Stationer) 4,000 3,000
Creditors for Stationery 7,200 5,400
Amount paid for stationery during the year 2016-17 Rs.25,000
Q 18.On the basis of the information given below calculate the amount of Stationery to be debited to
the ‘Income and Expenditure Account’ of Good Health Sports Club for the year ended 31st March 2017
:
April 1. 2016 March 31, 2017
Rs. Rs.
Stock of Stationery 8,000 6,000
Creditors for Stationery 9,000 . 11,000
Stationery purchased during the year ended 31-3-2017 was Rs.47,000.
Q 19.From the following information of a not for profit organisation, show the ‘sports material’ items
in the ‘Income and Expenditure Account’ for the year ending 31st March, 2017 and the Balance Sheets
as at 31st March, 2016 and 31st March, 2017 :
31-3-2016 31-3-2017
Rs. Rs.
Stock of sports material 2,200 5,800
Creditors for sports material 7,800 9,200
Advance to Suppliers for sports material 15,000 25,000
Payment to suppliers for the sports materia! during the year was Rs. 1,20,000, there were no cash
purchases made.
Q 20.From the following information, calculate the amount that will appear against the item Stationery
Account, in the Income and Expenditure Account for the year ended 31st March, 2019 :
Particulars 01.04.2018 31.03.2019
(Rs.) (Rs.)
During 2018-19, payment made to creditors amounted to Rs. 1,26,000. Stationery purchased in cash
during the year was 20% of the total purchase of Stationery.
Q 21.Calculate the amount of sports material to be transferred to Income and Expenditure account of
Raman Bhalla Sports Club, Ludhiana, for the year ended 31st March, 2018:
Particulars (Rs.)

(i) Sports Material sold during the year (Book Value Rs.50,000) 56,000
(ii) Amount paid to creditors for sports material 91,000
(iii) Cash purchase of sports material 40,000
(iv) Stock of Sports material 1 as on 31.3.2017 50,000
(v) Stock of Sports material as on 31.3.2018 55,000
(iv) Creditors for sports material as on 31.3.2017 37,000
(vii) Creditors for sports material as on 31.3.2018 45,000
Q 22.From the following Receipts and Payments Account of a Cricket Club and the additional
information, prepare an Income and Expenditure Account for the year ended on 31st March, 2014 and
a Balance Sheet as at that date :
Rs. Rs.
To Balance b/d : By Crockery purchased 2,650
Cash 3,520 By Maintenance 6,820
Bank 27,380 By Match Expenses 13,240
Fixed Deposit at 6% p.a. 30,000 By Salaries 11,000
To Membership Subscription By Conveyance 820
(including Rs.6,000 for the year By Upkeep of lawn 4,240
year ending 31st March, 2013) 40,000 By Postage Stamps 1,050
To Entrance Fees 2,750 By Purchase of Cricket Materials 9,720
To Donation 5,010 By Sundry Expenses 2,000
To Interest on Fixed Deposit 900 By Investments 5,700
To Tournament Fund 20,000 By Tournament Expenses 18,800
To Sales of Crockery By Balance c/d:
(Book value Rs. 1,200 Cash 2,200
on 31st March, 2013) 2,000 Bank 23,320
Fixed Deposit at 6% p.a. 30,000 55,520
1,31,560 1,31,560
Informations :— (a) Monthly Salary is Rs. 1,000;
(b) The value of unused Postage Stamps is as follows :
31st March, 2013, Rs.750;
31st March, 2014, Rs.900.
(c) Stock of Cricket Materials is as follows :
31st March, 2013, Rs.3,210;
31st March, 2014, Rs.2,800.
(d) Arrear of membership subscriptions :
On 31st March, 2013, Rs.6,600;
On 31st March, 2014, (for 2013-14) Rs. 8,000.
(e) Donation and Entrance Fees are not to be capitalised.
Q 23.Following is the Receipts and Payments Account of the Chandigarh Club for the year ended on
31st March, 2013:
To Balance at Bank (1-4-2012) By Refreshment Expenses
Current Account 300 (Foodstuffs purchased) 8,000
Deposit Account 2,400 By Crockery purchased 3,000
To Interest 600 By Books purchased 2,000
To Subscription By Newspapers 200
(Rs.800 is for 2011-12) 12,500 By Salaries 11,000
To Profit on Entertainments 1,500 By General Expenses 1,200
To Refreshment Receipts By Audit Fees 800
(Food-stuffs sale) 12,000 By Balance at Bank (31-3-2013):
To Entrance Fee 2,000 Current Account 100

Deposit Account 5,000
31,300 31,300
Assets on 1-4-2012 were : Building Rs.20,000; Govt. Securities Rs.10,000 and Stock of Foodstuffs Rs.
1,800. There was also a Reserve Fund of Rs.3,500 on 1-4-2012.
Arrears of subscriptions for 2011-12 were Rs.900 and arrears of subscription for 2012-13 were Rs.
1,300. Stock of Foodstuffs at the close of the year was valued at Rs. 1,500.
The by-laws of the club provide that 50% of the entrance fees and 10% of the surplus of any year are
to be transferred to Reserve Fund.
Prepare Income and Expenditure Account of the club for the year ended 31st March, 2013 and a Balance
Q 24.Following is the Receipt and Payment Account of Literacy Club for the year ended 31-3-2016 :
Receipts Rs. Payment Rs.
Subscriptions : Newspapers 2,050
2014-2015 1,200 Electricity Bill 1,000
2015-2016 26,500 Fixed deposit
2016-2017 500 28,200 (on 1 -7-2015 @ 9% p.a.) 20,000
Sale of old newspapers 1,250 Books 10,600
Government Grants 10,000 Rent 6,800
Sale of old furniture Furniture 10,500
(Book value Rs.7,000) 5,700 Balance c/d 11,200
Interest on fixed deposits 450
65,150 65,150
(i) Subscriptions outstanding as on 31-3-2015 were Rs.2,000 and on 31-3-2016 Rs.2,500.
(ii) On 31-3-2016 salary outstanding was Rs.600 and rent outstanding was Rs. 1,200.
(iii) The Club owned furniture Rs. 15,000 and books Rs.7,000 on 1-4-2015.
Prepare Income and Expenditure Account of the Club for the year ended 31-3-2016 and ascertain
‘Capital Fund’ on 31-3-2015. Also prepare a Balance Sheet as at 31st March, 2016.
Q 25.Prepare Income and Expenditure Account from the following particulars of Youth Club for the
year ended on 31st March, 2018:
RECEIPTS AND PAYMENTS ACCOUNT for the year ended on 31st March, 2018
Receipts Amount Payments Amount
Rs. Rs.
To Balance b/d 32,500 By Salaries 31,500
To Subscription By Postage 1,250
2016-17 1,500 By Rent 9,000
2017-18 60,000 By Printing and Stationery 14,000
2018-19 1,800 63,300 By Sports Material 11,500
To Donations By Miscellaneous Expenses 3,100
(Billiards table) 90,000 By Furniture (1.10.2017) 20,000
To Entrance Fees 1,100 By 10% investment (1.10.2017) 70,000
To Sale of old magazines 450 By Balance c/d (31.3.2018) 27,000
1,87,350 1,87,350
(i) Subscription outstanding as at March 31st 2018 Rs. 16,200.
(ii) Rs. 1,200 is still in arrears for the year 2016-17 for subscription.
(iii) Value of sports material in the beginning and at the end of the year was Rs.3,000 and Rs.4,500
respectively.
(iv) Depreciation to be provided @ 10% p.a. on furniture.

Q 26.From the following Receipts and Payments Account of Sonic Club and from the given additional
information; prepare Income and Expenditure Account for the year ending 31st March, 2015 and the
Balance Sheet as at that date :
RECEIPTS AND PAYMENTS ACCOUNT
for the year ending list March, 2015
To Balance b/d 1,90,000 By Salaries 3,30,000
To Subscriptions 6,60,000 By Sports Materials 4,00,000
To Interest on Investments By Balance c/d 1,60,000
@ 8% p.a. for full year 40,000
8,90,000 8,90,000
(i) The club had received Rs.20,000 for subscription in 2013-14 for 2014-15.
(ii) Salaries had been paid only for 11 months.
(iii) Stock of Sports Materials on 31st March, 2014 was Rs.3,00,000 and on 31st March, 2015
Rs.6,50,000.
Q 27.The following is the receipts and payments account of Appollo Hospital, for the year ended 31st
March, 2015:
To Balance b/d 8,500 By Payment for medicines 33,000
To Subscriptions 48,000 By Fees to Doctors 24,000
To Donations 15,000 By Salaries 27,000
To Interest on Investments By Equipment Purchased 15,000
at 9% p.a. for the year 9,000 By Charity show expenses 4,000
To Proceeds from Charity show 12,000 By Sundry Expenses 1,200
To Grant in aid 20,000 By Balance c/d 8,300
1,12,500 1,12,500
Other Information : 1-4-2014 31-3-2015

Rs. Rs.
(a) Subscriptions due 500 1,000
(b) Subscriptions received in Advance 1,000 500
(c) Stock of Medicines 10,000 15,000
(d) Amount due to medicine suppliers 8,000 12,000
(e) Value of Equipments 25,000 33,000
(f) Value of Buildings 70,000 65,000
You are required to prepare :—
(/) Income and Expenditure Account for the year ended 31 st March, 2015, and (ii) Balance Sheet as at
that date.
Q 28.From the following information, show the salaries item in the income and Expenditure Account
for the year ending 31st March, 2015 and in the Balance Sheet as at 31 st March, 2014 and 31 st March,
2015:
AN EXTRACT OF RECEIPTS AND PAYMENTS ACCOUNT for the year ending 31st March. 2015
By Salaries 2,00,000
Additional Information
Rs.
(i) Salaries Outstanding on 31st March, 2014 18,000
(ii) Salaries Outstanding on 31st March, 2015 24,000
(iii) Salaries paid in advance on 31 st March, 2014 10,000
(iV) Salaries paid in advance on 31st March, 2015 15,000

Q 29.From the following Receipts and Payments Account of Sonic Club and from the given additional
information, prepare the expenditure on account of salaries for the year ending 31st March, 2015 and
show the salaries item in the Income and Expenditure Account and the Balance Sheet as at 31st March,
2014 and 31st March, 2015.
AN EXTRACT OF RECEIPTS AND PAYMENTS ACCOUNT for the year ending 31st March, 2015
By Salaries :
2013-14 20,000
2014-15 2,80,000
2015-16 18,000
Additional Information Rs.

(i) Salaries outstanding on 31st March, 2014 25,000
(ii) Salaries outstanding on 31 st March, 2015 45,000
(iii) Salaries paid in advance on 31st March, 2014 10,000
Q 30.The Receipts and Payments Account for the year ending 31st March, 2016 of the Netaji Subhash
Club is as follows :
To Cash Balance 50,000 By Salaries 20,000
To Membership Subscriptions : By Rent 15,000
2014-15 10,000 By Printing and Stationery 8,000
2015-16 1,00,000 By Water and Power 15,000
2016-17 5,000 1,15,000 By Newspapers and Periodicals 18.000
To Income from Entertainments 2,000 By Furniture 50,000
To Interest 1,500 By Repairs to Furniture 2,000
By Refreshments 10,000
By Closing Balance 30,500
1,68,500 1,68,500
(a) The number of members of the club was 500 and the membership subscription was Rs.20 per
month.
(b) The rent of the Club House was Rs. 1,500 per month.
(c) At the end of the year prepaid salary was Rs.2,000.
(d) In 2014-15, Rs.50,000 were deposited in Fixed Deposit Account for 3 years in a bank, carrying 6%
interest p.a.
(e) The other assets on 1st April, 2015 were as follows : Furniture Rs.80,000 and Sports equipments
Rs.40,000.
(f) Depreciation is to be provided @ 10% p.a. on Furniture and Sports equipments. Prepare Income and
Expenditure Account for the year ending 31st March, 2016 and Balance Sheet as at that date.
Q 31.The following particulars relate to Madura Club for the year 31st March, 2016 :
To Balance b/d 60,000 By Salaries 1,24,500
To Subscriptions : By Stationery 24,000
Arrear 2,400 By Rates & Taxes 36,000
Current 1,26,600 By Telephone Expenses 6,000
Advance 4,800 1,33,800 By Investments 75,000
To Profit from Canteen 90,000 By Advertisement 10,500
To Miscellaneous 4,500 By Postages 10,000
To Sale of Old Newspapers 11,200 By Sundry Expenses 50,000
To Dividends 48,500 By Balance c/d 1,72,000
To Donation 1,00,000
To Entrance Fee 60,000

5,08,000 5,08,000
You are required to prepare an Income and Expenditure Account and a Balance Sheet after making the
(i) There are 450 members each paying an annual subscription of Rs.300; Rs.2,700 being in arrears for
2014-15 at the beginning of this year.
(ii) A donation of Rs.20,000 was wrongly included in subscriptions of the current year.
3
(iii) Entire donation and 4 of entrance fees are to be capitalised.
(iv) Stock of Stationery on 31st March, 2015 was Rs.3,000; and on 31st March, 2016 Rs.5,400.
(v) Cost of Building is Rs.6,00,000. Depreciate it at 5% p.a.
Q 32.The following is the Receipts and Payments Account of ‘Vikas Club’ for the year ended on 31st
March, 2017 :
To Subscription : By Furniture (Purchased on
2015 — 2016 1,500 1st Jan. 2017) 10,000
2016 — 2017 96,000 By Sports Expenses 11,000
2017 — 2018 500 By Drama Expenses 18,400
To Entrance Fees 8,000 By Newspapers 2,500
To Sports Fund 15,000 By Municipal Taxes 3,600
To Sale of drama tickets 24,000 By Refreshments 32,200
To Sale of waste paper 150 By Lighting and Heating 6,000
To Interest on Investments 1,350 By Medicines Purchased 4,000
By Balance c/d 19,200
1,50,900 1,50,900
Prepare Income and Expenditure A/c for the year ended 31st March, 2017 and the Balance Sheet as at
that date, after taking the following information into account:
(i) The club has 200 members each paying an annual subscription of Rs.500 and the subscription of two
members is still in arrear for 2015- 2016.
(ii) Stock of medicines on31st March, 2017was Rs. 1,000.
(iii) Salaries are paid @ Rs.4,000 per month.
(iv) The other assets on 1st April, 2016 were : Furniture Rs.40,000 and 9% Investments Rs. 18,000
(Face value Rs.20,000).
(v) Depreciate furniture at 10% p.a. and provide upto date interest on investments.
Q 33.From the following Receipts and Payments A/c of a club for the year ended 31st March, 2015 and
from the informations supplied, prepare Income and Expenditure Account for the year ended 31 st
March, 2015 and the Balance Sheet as at that date :
To Subscriptions : By Entertainment Expenses 60,000
2013-14 10,000 By Electric Charges 20,000
2014-15 2,00,000 By General Expenses 30,000
2015-16 20,000 By Investments 1,00,000
To Entertainment Receipts 1,00,000 By Printing and Stationery 20,000
To Sale of Old Furniture By Newspapers 30,000
(Costing Rs. 10,000) 6,000 By Furniture 30,000
To Sale of Newspapers 4,000 By Miscellaneous Expenses 20,000
4,90,000 4,90,000
The club has 250 members, each paying an annual subscription of Rs. 1,000. Rs.5,000 are still in arrears
for subscriptions of 2013-14. In 2013-14, ten members had paid their subscriptions for 2014-15 as well.
Salaries paid include Rs. 10,000 for 2013-14 and Rs. 15,000 for 2015-16. Outstanding salaries for 2014-

15 amounted to Rs.20,000. On 1 -4-2014 the club owned land and building valued at Rs. 10,00,000 and
furniture valued at Rs. 1,10,000. Interest for 3 months at 6% p.a. has accrued on investments.
Q 34.Following is the Receipts and Payments Account of Aggarsain Club :

RECEIPTS AND PAYMENTS ACCOUNT for the year ending 31st March 2019
Rs. Rs.
To Balance b/d (Cash at Bank) 1,60,500 By Salary 60,000
To Subscriptions : By Printing & Stationery 12,000
2017-18 6,000 By Defence Bonds 1,20,000
2018-19 (90%) 90,000 By Rent 60,000
2019-20 8,000 1,04,000 By Help to needy students 42,000
To Entrance Fees : To Purchase of 6% Govt. Papers
2017-18 20,000 (On 1st Sept. 2018) 1,00,000
2018-19 80,000 1,00,000 To Prizes awarded 40,000
To Hall Rent 10,000 To Balance c/d
To Locker Rent (Cash at Bank) 1,16,000
(including Rs. 10,000
for 2017-18) 40,000
To Interest received on
Govt. Papers 1,500
To General Donation 75,000
To Donation for Prize Fund 50,000
To Interest received on
Prize Fund Investments 9,000
5,50,000 5,50,000
(i) The Club paid three months rent in advance both in the beginning and at the end of the year.
(ii) On 31st March 2019 Salary Outstanding was Rs. 10,000 and Locker Rent Outstanding was Rs.8,000.
(iii) The Club owned Sports Materials of the value of Rs.5,00,000 on 31st March 2018. This was valued
at Rs.4,50,000 on 31st March 2019. Stock includes Sports Materials of Rs.30,000, which is to be written
off being not useable.
(iv) Following balances appeared on 31st March, 2018 :
Prize Fund Rs. 1,50,000; 8% Prize Fund Investments Rs. 1,50,000.
Prepare Income & Expenditure Account for the year ended 31 st March 2019 and a Balance Sheet as at
that date.
Q 35.From the information given below, prepare Receipts and Payments Account of Friends Club,
Delhi, for the year ended 31st March, 2018:
Cash on 1st April, 2017 Rs. 44,000; Subscriptions Rs. 3,76,000; Donations Rs. 80,000; Entrance Fees
Rs. 43,000; Rent Realised from Club Hall Rs. 52,500; Electricity Charges Rs. 34,400; Taxes Rs. 5,000;
Salaries and Wages Rs. 2,15,000; Honorarium to Secretary Rs. 25,000; Interest Received on
Investments Rs. 29,500; Printing and Stationery Rs. 3,500; Petty Expenses Rs. 9,000; Insurance
Premium Paid Rs. 3,100.
Q 36.From the following information, prepare Income and Expenditure Account:

Particulars Rs.
(i) Fees collected, including Rs. 80,000 for the previous year 3,80,000
(ii) Fees outstanding for the year 10,000
(iii) Salary paid, including Rs. 3,000 for the previous year 28,000
(iv) Salary outstanding at the end of the year 1,000
(v) Entertainment Expenses 3,000
(vi) Tournament Expenses 12,000

(vii) Meeting Expenses 18,000
(viii) Travelling Expenses 6,000
(ix) Purchase of Books and Periodicals, including Rs. 19,000 for Purchase of Books 29,000
(x) Rent 10,000
(xi) Postage and Telephones 15,000
(xii) Printing and Stationery 4,000
(xiii) Donations Received 20,000
Q 37.How are following items accounted in a Not-for-Profit Organisation?

(i) Tournament Fund Rs. 2,00,000; Tournament Expenses Rs. 60,000; Receipts from Tournament Rs.
80,000.
(ii) Billiard Match Expenses Rs. 25,000.
(iii) Prize Fund Rs. 1,00,000; Interest on Prize Fund Investments Rs. 10,000; Prizes paid Rs. 20,000;
Prize Fund Investments Rs. 80,000.
(iv) Receipts from Cinema Show Tickets Rs. 50,000; Expenses on Cinema Show Rs. 15,000.
(v) Expenditure on construction of Pavilion during the year was Rs. 6,00,000. The construction work is
in progress and not yet completed. Pavilion Fund as on 31st March, 2017 Rs. 8,00,000. Donation for
Pavilion received on 15P September, 2017 Rs. 10,00,000; Capital Fund as at 31st March, 2017 Rs.
20,00,000.
Q 38.Following is the information given in respect of certain items of a sports club. Show them in the
Income and Expenditure Account and the Balance Sheet of the club as at 31st March, 2018.
Rs.
Sports Fund as at 1 st April, 2017 ……………………………………………. 10,00,000
Sports Fund Investments ……………………………………………. 10,00,000
Interest on Sports Fund Investments ……………………………………………. 1,00,000
Donation for Sports Fund ……………………………………………. 4,00,000
Sports Prizes Awarded ……………………………………………. 3,00,000
Expenses on Sports Events ……………………………………………. 1,00,000
General Fund ……………………………………………. 20,00,000
General Fund Investments ……………………………………………. 20,00,000
Interest on General Fund Investments ……………………………………………. 2,00,000
Q 39.From the following information of a club show the amounts of Match Expenses and Match Fund
in the Financial Statements of the Club for the years ended on 31st March, 2017 and 31st March, 2018:
Particulars Rs.
Match Expenses (paid during the year ended 31st March, 2018) 3,00,000
Match Fund (as on 31 st March, 2017) 1,70,000
Donation for Match Fund (Received during the year ended 31st March, 2018) 90,000
Proceeds from the sale of match tickets (Received during the year ended 31st March, 2018) 30,000
Q 40.Following is the extract from the Receipts and Payments Account of a sports club. You are
required to show different items in the Income and Expenditure Account and Balance Sheet of the club
for the year ended 31st March, 2018 after considering the additional information given below:
To Donation for Pavilion 10,00,000 By Governor's Party Expenses 2,40,000
To Contribution for Governor's Party 2,00,000
To Donations 5,000

(i) Amount spent on Pavilion Rs. 20,00,000. The construction work is in progress and has not yet
completed.
(ii) Outstanding subscriptions for Governor's Party Rs. 30,000.
(iii) Capital Fund as at 31st March, 2017 Rs. 10,00,000.
(iv) Pavilion Fund as at 31st March, 2017 Rs. 40,00,000.
Q 41.Prepare Furniture Account for the year ended 31st March, 2018 in the books of a social club under
the following alternative cases:
Case 1. Furniture as on 1st April, 2017—Rs. 2,20,000; Furniture (having a book value as on
1st April, 2017—Rs. 20,000) sold at a gain (profit) of 20% on 31st December, 2017. Furniture
purchased on 1st October, 2017 for Rs. 1,00,000; charge depreciation @ 10% p.a. on furniture.
Case 2. Furniture as on 31st March, 2017—Rs. 4,40,000; Furniture (having a book value as on 1st April,
2017—Rs. 40,000) sold at a loss of 20% on 31st December, 2017. Furniture is to be depreciated @ 10%
p.a. Furniture costing Rs. 3,00,000 was also purchased on 1st October, 2017.
Q42.From the following extract of Receipts and Payments Account and additional information,
compute income from subscriptions for the year ended 31st March, 2018 and show it in the Final
Accounts of the Club:
To Subscriptions 1,00,000
As at 31st March, As at 31st March,
2017 (Rs.) 2018 (Rs.)
Subscriptions Outstanding 20,000 40,000
Subscriptions Received in Advance 30,000 20,000
Q 43.In the year ended 31st March, 2018, subscriptions received were Rs. 21,00,000. These
subscriptions include Rs. 30,000 for the year ended 31st March, 2017 and Rs. 40,000 for the year ending
31st March, 2019. On 31st March, 2018, subscriptions due but not received were Rs. 50,000. The
corresponding amount on 1st April, 2017 was Rs. 60,000. Determine the amount that should be credited
to Income and Expenditure Account as subscriptions for the year ended 31st March, 2018.
Q 44.Subscriptions received during the year ended 31st March, 2017 are:
Rs. Rs.
For the year ended 31st March, 2016 4,000
For the year ended 31 st March, 2017 2,11,000
For the year ended 31st March, 2018 8,000 2,23,000
There are 450 members, each paying an annual subscription of Rs. 500. Rs. 4,500 were in arrears for
the year ended 31st March, 2016 in the beginning of the year ended 31st March, 2017. Calculate
subscriptions to be shown in Income and Expenditure Account for the year ended 31st March, 2017 and
also show treatment of subscriptions in the Income and Expenditure Account and Balance Sheet.
Q 45.From the following extract of the Receipts and Payments Account and the additional information,
you are required to compute income from subscriptions for the year ended 31st March, 2018 and show
it in the Final Accounts of the Club:
Dr. RECEIPTS AND PAYMENTS ACCOUNT for the year ended 31st March, 2018 Cr.
To Subscriptions:
2016-17 18,000
2017-18 1,00,000

2018-19 25,000
(i) Subscriptions outstanding as at 31st March, 2017: Rs. 20,000.
(ii) Subscriptions outstanding as at 31st March, 2018: Rs. 30,000.
(iii) Subscriptions received in advance as at 31st March, 2017: Rs. 20,000.
Q 46.From the following, determine the amount of subscriptions to be credited to Income and
Expenditure Account for the year ended 31st March, 2018. Subscriptions received during the year were
as follows:
For the year ended 31st March, 2017 Rs. 20,000
For the year ended 31st March, 2018 Rs. 3,00,000
For the year ended 31st March, 2019 Rs. 30,000
Subscriptions outstanding as at 31st March, 2017 were Rs. 35,000 out of which Rs. 5,000 were not
recoverable. On the same date, subscriptions received in advance for the year ended 31st March, 2018
were Rs. 20,000. Subscriptions still outstanding as at 31st March, 2018 amounted to Rs. 60,000.
Q 47.From the following information, determine the amount to be debited to Stationery Account in
Income and Expenditure Account for the year ended 31st March, 2018:
Rs.
Stock of stationery on 1 st April, 2017 30,000
Creditors for stationery on 1st April, 2017 20,000
Amount paid for stationery during the year ended 31st March, 2018 1,08,000
Stock of stationery on 31st March, 2018 5,000
Creditors for stationery on 31st March, 2018 13,000
Also, show the above items in the Income and Expenditure Account for the year ended 31st March,
2018 and in the Balance Sheet as at that date.
Q 48.On the basis of the information given below, calculate the amount of stationery to be debited to
Income and Expenditure Account of Good Health Sports Club for the year ended 31st March, 2018:
Particulars 1st April, 31st March,
2017(Rs.) 2018(Rs.)
Creditors for Stationery 90,000 1,10,000
Stationery purchased during the year ended 31st March, 2018 was Rs. 4,70,000.
Q 49.Punya Trust runs a charitable hospital. How will be the following items dealt while preparing
Income and Expenditure Account for the year ended 31st March, 2018 and Balance Sheet as at that
date?

2017(Rs.) 2018(Rs.)
Stock of Medicines 30,000 5,000
Creditors for Medicines 20,000 13,000
Advance paid for Medicines on 31 st March, 2018 … 13,000
Advance paid for Medicines carried from the year ended 31st March, … 2,000
2017
Amount paid for Medicines during the year … 1,08,000
Q 50.From the following information, calculate the amount that will be shown against Stationery
Account in Income and Expenditure Account for the year ended 31st March, 2018:
Particulars 1 st April, 31st March,

2017(Rs.) 2018(Rs.)
During the year ended 31st March, 2018, payment made to creditors amounted to Rs. 56,800. Stationery
purchased in cash during the year was 20% of the total purchase of stationery.
Q 51.How is the following case dealt with while preparing final accounts of a club for the year ended
31st March, 2018?
BALANCE SHEET (AN EXTRACT) as at 1st April, 2017
Creditors for Sports Materials 1,20,000 Stock of Sports Materials 1,60,000
Dr. RECEIPTS AND PAYMENTS ACCOUNT (AN EXTRACT) for the year ended Cr.
31st March, 2018
By Sports Materials 28,00,000
Additional Information: Sports Materials in hand on 31st March, 2018: Rs. 4,40,000.
Q 52.How are following cases dealt with while preparing final accounts of National Club for the year
ended 31st March, 2018?
RECEIPTS AND PAYMENTS ACCOUNT (AN EXTRACT)
To Sale of Sports Materials 1,30,000 By Creditors for Sports Materials 3,05,000
(Book Value Rs. 1,00,000) By Cash Purchases of Sports Materials 50,000
As at 1st April, 2017 (Rs.) As at 31st March, 2018 (Rs.)
Stock of Sports Material 1,00,000 1,25,000
Creditors for Sports Material 35,000 75,000
Q 53.From the following items of Receipts and Payments Account of Young Club, prepare Income
and Expenditure Account for the year ended 31st March, 2018: Rs.
Salaries Paid 5,00,000
Electricity Expenses 50,000
Printing and Stationery (including Rs. 5,000 for the previous year) Subscriptions 35,000
received (including Rs. 20,000 received in advance and
Rs. 50,000 for the previous year) 4,00,000
Net proceeds of Refreshment Room 4,50,000
Miscellaneous expenses 1,60,000
Interest paid on Loan for half year 12,000
Rent and Rates (including Rs. 10,000 prepaid) 75,000
Lockers rent received 45,000
Additional Information: Subscriptions in arrears on 31st March, 2018 were Rs. 80,000 and Half year's
interest on loan was also outstanding.
Q 54.From the following Receipts and Payments Account of Accountants Club, prepare Income and
Expenditure Account for the year ended 31st March, 2018:
Dr. RECEIPTS AND PAYMENTS ACCOUNT for the year ended 31 st March, 2018 Cr.

To Cash in Hand (Opening) 45,000 By Salaries 4,95,000
To Cash at Bank (Opening) 12,60,000 By Stationery 89,700
To Subscriptions 15,24,000 By Billiard Table 5,80,500
To Donations 7,20,000 By Investments 6,19,800
To Interest on Investments 18,000 By Miscellaneous Expenses 75,000
To Entrance Fees 1,80,000 By Furniture 12,30,000
To Interest Received from Bank 63,000 By Insurance Premium 27,000
To Sale of Old Newspapers 9,000 By Cash in Hand (Closing) 33,000
By Cash at Bank (Closing) 6,69,000
38,19,000 38,19,000
(i) Subscriptions in arrears for the year ended 31st March, 2018—Rs. 1,35,000 and Subscriptions
received in advance during the year ended 31st March, 2018—Rs. 39,000.
(ii) Insurance Premium prepaid is Rs. 3,000.
(iii) The detail with respect to Stationery of Accountants Club is as follows:
31st March, 1st April,
2018 (Rs.) 2017 (Rs.)
Advance for Stationery paid in 2017-18 7,000 …
Advance paid for Stationery carried from 2016-17 5,000 …
Q 55.From the following Receipts and Payments Account of Friends Club for the year ended 31st
March, 2018, prepare Income and Expenditure Account for the year ended 31st March, 2018 and
Balance Sheet as at that date:
To Balance bid (Cash in Fland) 1,41,300 By Rent and Taxes 86,100
To Entrance Fees 55,200 By Salaries 1,09,000
To Subscriptions 2,20,000 By Electricity Charges 6,200
To Donations 1,06,100 By General Expenses 12,500
To Interest 4,100 By Books 31,200
To Surplus from Cultural Programme 8,200 By Office Expenses 45,000
By Investments 1,40,000
By Balance c/d:
Cash at Bank 61,900
Cash in Hand 43,000
5,34,900 5,34,900
(i) In the beginning of the year, the club had Books of Rs. 3,00,000 and Furniture of Rs. 58,000.
(ii) Subscriptions in Arrears on 1st April, 2017 were Rs. 6,000 and Rs. 7,000 on 31st March, 2018.
(iii) Rs. 18,000 was due by way of Rent in the beginning as well as at the end of the year.
(iv) Write off Rs. 5,000 from Furniture and Rs. 30,000 from Books.
Q 56.From the following Receipts and Payments Account of Defence Club and from the information
supplied, prepare Income and Expenditure Account for the year ended 31st March, 2018 and Balance
Sheet as at that date:

To Balance as at 1st April, 3,50,000 By Salaries 14,00,000
2015
To Subscriptions: By General Expenses 3,00,000
2016-17 2,50,000 By Electricity Charges 2,00,000
2017-18 10,00,000 By Books 5,00,000
2018-19 2,00,000 14,50,000 By Newspapers 4,00,000
To Rent (From the use of 7,00,000 By Balance as at 31st March, 2018 2,00,000
Hall)
To Surplus from 4,00,000
Entertainment
To Sale of Old Newspapers 1,00,000
30,00,000 30,00,000
(i) The club has 50 members each paying an annual subscription of Rs. 25,000. Subscriptions
Outstanding on 31st March, 2017 were to the extent of Rs. 3,00,000.
(ii) On 31st March, 2018, Salaries Outstanding amounted to Rs. 1,00,000. Salaries paid in 2017-18
included Rs. 3,00,000 for the year 2016-17.
(iii) On 1st April, 2017, the club owned Building valued at Rs. 1,00,00,000, Furniture worth Rs.
10,00,000 and Books Rs. 10,00,000.
Q 57.Following is the Receipts and Payments Account of Indian Youth Association for the year ended
31st March, 2018:
To Balance b/d: By Salaries 3,00,000
In Hand 25,000 By Rent 60,000
At Bank 2,45,000 2,70,000 By Printing and Stationery 15,000
To Subscriptions 4,00,000 By Postage 4,000
To Bank Interest 2,000 By Typewriter 40,000
To Sale of Old Car 40,000 By Investments 80,000
By Balance c/d:
In Hand 13,000
At Bank 2,00,000 2,13,000
7,12,000 7,12,000
Investments were made on 1st October, 2017 and yielded interest @ 5% p.a. Subscriptions included Rs.
80,000 for the year ended 31st March, 2017 and Rs. 40,000 for the year ending 31st March, 2019.
Subscriptions for the year ended 31st March, 2018 Rs. 80,000 were still in arrears. Rent for March,
2018, Rs. 5,000 is still unpaid. Rs. 3,000 are payable against a bill for stationery. The book value of the
car was Rs. 55,000.
Prepare Income and Expenditure Account for the year ended 31st March, 2018 and Balance Sheet as at
that date.
Q 58.The Treasurer of Royal Tennis Club presented following Receipts and Payments Account for the
year ended 31st March, 2018:
Dr. for the year ended 31 st March, 2018 Cr.
To Balance bid (Cash at Bank) 1,02,000 By Purchases of Balls 40,000
To Subscriptions 2,40,000 By Creditors for Tennis Equipments 2,20,000
To Sale of Tennis Equipments 3,05,000 By Marking and Repairing of Tennis 38,000
Courts
To Court Hire 27,000 By Construction of New Court 2,50,000
To Sale of Balls 37,000 By Sundry Expenses 31,000
By Balance c/d (Cash at Bank) 1,32,000

7,11,000 7,11,000
He also provides the following additional information:
(i) The Club's Tennis Courts were valued at Rs. 10,00,000 on 1st April, 2017.
(ii)
2017 (Rs.) 2018(Rs.)
Tennis Balls in Hand (At cost) 4,000 9,000
Creditors for Tennis Equipments 40,000 30,000
Subscriptions Outstanding 20,000 35,000
Prepare Income and Expenditure Account for the year ended 31st March, 2018 and show Balance Sheet
as at that date.
Q 59.Following is the Receipts and Payments Account of Era Charitable Trust:

RECEIPTS AND PAYMENTS ACCOUNT for the year ended 31 st March, 2018
To Balance b/d: By Rent 60,000
Cash in Hand 1,40,000 By Salary 1,20,000
Cash at Bank 6,00,000 7,40,000 By Postage 3,000
To Subscriptions: By Electricity Charges 60,000
2016-17 50,000 By Furniture 2,00,000
2017-18 8,30,000 By Books 30,000
2018-19 30,000 9,10,000 By Defence Bonds 15,00,000
To Sale of Investment 9,00,000 By Help to Needy Students 2,20,000
To Interest on Investment 20,000 By Balance c/d:
To Sale of Furniture (Book value Rs. 32,000 Cash in Hand 1,09,000
30,000)
Cash at Bank 3,00,000 4,09,000
26,02,000 26,02,000
Prepare Income and Expenditure Account for the year ended 31st March, 2018 and Balance Sheet as
on that date after the following adjustments:
Subscription for the year ended 31st March, 2018 still due were Rs. 70,000. Interest due on Defence
Bonds was Rs. 70,000. Rent outstanding was Rs. 10,000. Book value of investment sold was Rs.
8,00,000, Rs. 3,00,000 of the investments were still in hand. Subscriptions received in the year ended
31st March, 2018 included Rs. 4,000 from a life member. Total furniture on 1st April, 2017 was worth
Rs. 1,20,000. Salary paid for the year ended 31st March, 2019 is Rs. 20,000.
Q 60.Following is the Receipts and Payments Account of Mumbai Club for the year ended 31st March,
2018:
To Balance b/d 30,000 By Rent 5,20,000
To Entrance Fees 55,000 By Stationery Expenses 3,06,800
To Subscriptions: By Wages 5,33,000
2016-17 20,000 By Billiards Table 3,90,000
2017-18 16,90,000 By Repairs and Renewals 80,600
2018-19 30,000 17,40,000 By Interest 1,50,000
To Locker Rent 50,000 By Balance c/d 2,39,600
To Subscriptions for
Governor's Party 3,45,000
22,20,000 22,20,000

(i) Stationery Expenses Rs. 31,200 related to the year ended 31st March, 2017, and outstanding for the
year ended 31st March, 2018 was Rs. 36,400.
(ii) Subscriptions unpaid for the year ended 31st March, 2018 Rs. 86,800; Subscriptions for Governor's
Party outstanding for the year ended 31st March, 2018 Rs. 55,000. Governor's party is to be held in
April, 2018.
(iii) The Club owned Sports Materials of the value Rs. 16,00,000 on 1st April, 2017. This was valued
at Rs. 13,50,000 on 31st March, 2018. Stock includes Sports Materials of Rs. 50,000, which is to be
written off being not useable. The Club took a loan of Rs. 20,00,000 in the year ended 31st March,
2017.
Prepare Income and Expenditure Account for the year ended on 31st March, 2018 and Balance
Q 61.Following is the Receipts and Payments Account of Indian Sports Club, prepare Income and
Expenditure Account and Balance Sheet as on 31st March, 2018:
RECEIPTS AND PAYMENTS ACCOUNT for the year ended 31st March, 2018
To Balance bid (Cash in Hand) 8,900 By Salary 1,10,000
To Balance bid (Cash at Bank) 70,000 By Electricity Charges 55,000
To Subscriptions 5,20,000 By Billiard Table 1,75,000
To Life Membership Fee 22,000 By Office Expenses 41,000
To Entrance Fee 32,000 By Printing and Stationery 23,000
To Tournament Fund 2,60,000 By Tournament Expenses 1,85,000
To Locker Rent 12,500 By Repair of Ground 20,000
To Sale of Old Sports Equipments 25,000 By Furniture (Purchased) 77,000
(Costing Rs. 22,000) By Sports Equipments 1,20,000
To Sale of Old Newspapers 7,500 By Balance c/d:
To Legacy 3,75,000 Cash in Hand 1,26,900
10% Fixed Deposit (On 1st January, 3,00,000
2018)
13,32,900 13,32,900
Other Information:
Subscription outstanding was on 31st March, 2017 Rs. 12,000 and Rs. 32,000 on 31st March, 2018.
Locker rent outstanding on 31st March, 2018 Rs. 2,500. Salary outstanding on 31st March, 2018 Rs.
10,000.
On 1st April, 2017, club has Building Rs. 3,60,000, furniture Rs. 1,20,000, Sports equipments
Rs. 1,75,000. Depreciation charged on these items @ 10% (including purchase).
Q 62.From the following Receipts and Payments Account prepare final accounts of Roshanara Club for
the year ended 31st March, 2018:
To Balance bid 1,50,000 By Furniture 1,80,000
To Sale of Old Furniture (Costing Rs. 40,000 By Library Books 1,00,000
60,000)
To Subscriptions: By Salaries 7,20,000
2016-17 1,80,000 By General Expenses 1,80,000
2017-18 6,00,000 By Electricity Charges 1,20,000
2018-19 1,20,000 9,00,000 By Newspapers 3,38,000
To Sale of Old Newspapers 1,08,000 By Postage 30,000
To Profit from Entertainment Event 4,40,000 By Stationery 4,00,000
To Rent 8,40,000 By Audit Fee 80,000
By Balance dd 3,30,000

24,78,000 24,78,000
Outstanding Salary 60,000 Cash 1,50,000
Capital Fund 69,40,000 Outstanding Subscription 1,80,000
Library Books 3,00,000
Furniture 3,70,000
70,00,000 70,00,000
(i) The Club had 500 members each paying an annual subscription of Rs. 1,500.
(ii) On 31st March, 2018, salaries outstanding amounted to Rs. 12,000 and salaries paid included Rs.
60,000 for the year 2016-17.
(iii) Provide 5% depreciation on Land and Building.
Q 63.Summary of Receipts and Payments of Medical Aid Society for the year ended 31st March, 2018
is given below:
To Balance bid (Cash in Hand) 20,000 By Medicines 2,50,000
To Balance bid (Cash at Bank) 50,000 By Medicines (Polio) 50,000
To Subscriptions 5,00,000 By Honorarium to Doctors 1,00,000
To Donations (General) 45,000 By Salaries 2,75,000
To Donations (Medical Camps) 1,00,000 By Sundry Expenses 5,000
To Interest on Investments @ 7% p.a. 70,000 By Equipments 1,50,000
To Charity Show Proceeds 30,000 By Charity Show Expenses 10,000
To Government Grant (Polio 70,000 By Balance c/d (Cash in Hand) 15,000
Eradication)
By Balance c/d (Cash at Bank) 30,000
8,85,000 8,85,000
1st April, 31st March, 1st April, 31st
March,
2017(Rs.) 2018(Rs.) 2017(Rs.) 2018(Rs.)
Subscriptions Due 5,000 10,000 Amount Due to Medicine 80,000 1,20,000
Suppliers
Subscriptions 10,000 5,000 Equipments 2,10,000 3,00,000
Received in
Advance
Stock of Medicines 1,00,000 1,50,000 Building 4,00,000 3,80,000
Prepare Income and Expenditure Account for the year ended 31st March, 2018 and Balance Sheet as at
that date.
Q. 64. From the following information, prepare Income and Expenditure A/c for the year ending on
31st March, 2019 of an Entertainment Club :
Cash Balance 1-4-2018 7,200 Rent 48,000
Life Membership Fees 50,000 Furniture Purchased 50,000
Locker’s Rent 22,000 Salary 2,40,000
Entrance Fees 5,700 Insurance Premium 12,600
Subscriptions Telephone Charges 18,200

2017-18 14,200 Printing 4,100
2018-19 3,46,000 Investments Purchased 3,00,000
2019-20 11,600 3,71,800 Cash Balance 31-3-2019 11,500
Donation for Swimming Pool 2,00,000
Interest 15,000
Miscellaneous Income 700
Income from Advertisement 12,000
6,84,400 6,84,400
Q. 65. How will you deal with the Entrance Fees while preparing the final accounts for the year ended
31 st March, 2017, in each of the following alternative cases :
Case 1. During the year 2016-17, Entrance Fees received Rs.1,50,000.
Case 2. During the year 2016-17, Entrance Fees received Rs.1,50,000. It is the policy of the club to treat
the Entrance Fees as revenue receipt.
treat the Entrance Fees as capital receipt.
Case 4. During the year 2016-17, Entrance Fees received Rs. 1,50,000. According to the policy of the
club 40% of the Entrance Fees is to be capitalised.
Q. 66. Show how will you deal with the following items in the final accounts of Chetak Club, Jaipur as
at 31st March, 2019 :
Rs.
Prize Fund on 1st April, 2018 80,000
Interest on Prize Fund Investments 6,000
Prizes given 10,000
Prize fund Investments on 1st April, 2018 60,000
Donations for Prize Fund 25,000
Q. 67. Show how would you deal with the following items while preparing the financial statements of
a ‘Not-for-Profif organisation :
Rs.
Tournament Fund 2,00,000
Contribution received for Tournament 40,000
Tournament expenses 80,000
Interest received on Tournament fund Investments 12,000
Receipts from Tournament Tickets 20,000
Q. 68.Show how you would deal with the following items in respect of a Club for the year ending on
31 st March, 2019 :
Rs.
Tournament Fund Balance as on 31st March, 2018 60,000
Donations towards Tournament Fund received during the year 12,000
Expenditure incurred during the year on conducting Tournaments 13,600
Interest received on Tournament Fund Investments 4,800
Q. 69. As per Receipts and Payments Account for the year ended on March 31, 2017, the subscriptions
received were Rs.6,00,000. Additional Information given is as follows :
1. Subscriptions outstanding on 1-4-2016 Rs.60,000.
2. Subscriptions outstanding on 31-3-2017 Rs.40,000.
3. Subscriptions Received in Advance as on 1-4-2016 Rs.32,000.
4. Subscriptions Received in Advance as on 31-3-2017 Rs.38,000.
Ascertain the amount of income from subscriptions for the year 2016-17 and show how' relevant items
of subscriptions will appear in opening and closing balance sheets.

Q. 70. The Chennai Sports Club received Rs.6,50,000 by way of subscriptions during the year ended
on March 31, 2017.
Additional information given is as follows : Rs.
Subscription outstanding on 1-4-2016
(Out of which Rs. 16,000 were received during 2016-17) 20,000
Subscription outstanding for 2016-17 25,000
Show how the subscription will appear in Income and Expenditure Account.
Q. 71. From the following information calculate the amount of subscription to be credited to the Income
and Expenditure Account for the year 2016-17 :
Rs.
Subscriptions received during the year 50,000
Subscriptions received in Advance on 31-3-2016 8,000
Subscriptions received in Advance on 31 -3-2017 Subscriptions of Rs. 1,500 are still in 9,000
arrears for the year 2015-16
Q. 72 (A). From the following particulars, calculate amount of subscriptions to be credited to the Income
& Expenditure Account for the year ended 31st March, 2019 and show the items in the Balance Sheet
as at that date.
Rs.
(a) Subscriptions in arrears on. 31st March, 2018 12,500
(b) Subscriptions received in advance on 31st March, 2018 for the year ended on 31st March, 2019
9,000
(c) Total subscriptions received during the year ended 31st March, 2019 (including Rs. 10,000 for
the year ended 31st March, 2018, Rs.8,000 for the year ended 31st March, 2020 and Rs.3,000 for the
year ended
31st March, 2021) 4,60,000
(d) Subscriptions outstanding for the year ended 31st March, 2019 20,000
Q.72(B). In the year ended 31st March, 2019, subscriptions received by Prince Club, Delhi were
Rs.2,50,000 including Rs. 15,000 for the year ended 31st March, 2018 and Rs. 13,000 for the year ended
31st March, 2020. At the end of the. year ended 31st March, 2019, subscriptions outstanding for the
year ended 31st March, 2019 were Rs.25,000. The subscriptions due but not received at the end of the
previous year, i.e., 31st March, 2018 were Rs.21,000, while subscriptions received in advance on the
same date were Rs. 16,500.
Show how the subscriptions will appear in Income and Expenditure Account for the year ended 31st
March, 2019 and in the Balance Sheet as at that date.
Q.73 From the following information calculate the amount of subscriptions outstanding as on 31st
March, 2017:
A club has 200 members each paying an annual subscription of Rs. 1,000. The Receipts and Payments
Account for the year showed a sum of Rs.2,05,000 received as subscriptions. The following additional
information is provided :
Rs.
Subscriptions Outstanding on 31st March 2016 30,000
Subscriptions Received in advance on 31st March 2017 40,000
Subscriptions Received in advance on 31st March 2016 14,000

Q74. Subscriptions received during the year ended March 31, 2017 by Hyderabad Arts Club were as
under :
Rs.
2015-16 5,000
2016-17 1,08,000
2017-18 3,000
1,16,000
Total number of members 240 Annual Subscription fee Rs.500.
Subscriptions Outstanding on April 1, 2016 Rs.9,000.
Show the amount of subscription in Income and Expenditure Account for the year ended 31st March
2017 and in the Balance Sheet as at that date.
Q75. From the following extract of Receipts and Payments Account and the additional information
given below, compute the amount of income from subscriptions and show as how they would appear in
the Income and Expenditure Account for the year ending March 31,2017 and the Balance Sheet as at
that date :
RECEIPTS AND PAYMENTS ACCOUNT for the year ending March 31, 2017
Subscriptions :
2015-16 7,000
2016-17 60,000
2017-18 5,000 72,000
1. Subscriptions outstanding March 31, 2016 . Rs.
10,000
2. Total Subscriptions outstanding March 31, 2017 25,000
3. Subscriptions received in advance as on March 31.2016 4.000
Q76. Following is the Receipts and Payments Account of Star Club for the year ended 31st March,
2019:
To Balance b/d on 1-4-2018 4,400 By Salaries 18,200
To Subscriptions 46,100 By Rent 15,000
To Interest 2,500 By Printing and Stationery 7,300
To Tournament Fund 12,000 By Expenses on Charity Show 16,100
To Donation 6,000 By Tournament Expenses 7,500
To Donation for Building extension 20,000 By Investments purchased 10,000
To Receipts from advertisement By Furniture 6,000
in the year book 5,200 By Balance c/d on 31-3-2019 16,100
96,200 96,200
Subscriptions outstanding on 31st March, 2018 were Rs.4,500 and on 31st March, 2019 were Rs.6,000.
Rent outstanding at the beginning of the year was Rs. 1,000 and in the end was Rs. 1,500. Furniture
was purchased on 1st July, 2018.
On 1st April, 2018 the Club had Furniture valued Rs. 8,000 and Investments valued Rs.15,000.
Prepare Income and Expenditure A/c for the year ended 31st March, 2019 and a Balance Sheet as at
that date, after depreciating furniture by 10% p.a.
Q77. From the following Receipts and Payments account of a Club, prepare Income & Expenditure
Account for the year ended 31st March, 2019 and a Balance Sheet as at that date :
To Balance b/d (Cash in hand) 6,000 By Salaries 15,400
To Subscriptions (Including By Rent 12,300
Rs.600 received in advance) 40,000 By Stationery 700

To Interest on Investments By Postages 400
(Cost of Investments Rs.50,000) 6,000 By Bicycle 1,800
To Bank Interest 200 By Govt. Bonds 12,500
To Sale of furniture By Balance c/d (Cash in hand) 19,600
(Book value Rs. 5,000) 2,400
To Life Membership fees 8,100
62,700 62,700
Subscriptions include Rs.3,200 for the last year; rent include Rs.900 paid for the last year. Subscriptions
outstanding of the current year are Rs.4,500. Rent outstanding for the month of March, 2019 is Rs.
1,000 and a payment for stationery is also due for Rs.250.
On 1-4-2018, Club had land valued Rs.50,000 and furniture valued at Rs. 15,000.
Q78. Following is the Receipts and Payments Account of Rajdhani Club for the year ended 31st March,
2015:
To Balance b/d : (1-4-2014) By Staff Salary 35,400
Cash in hand 4,000 By Canteen Expenses 3,500
Cash in Deposit Account 16,000 By Misc. Expenses 800
Cash in Current Account 5,200 By Insurance 2,000
To Subscriptions 80,000 By Telephone Expenses 4,800
To Entrance Fees 12,000 By Furniture Purchased 15,000
To Life Membership Fees 15,000 By Investments Purchased 46,000
To Newspapers (Sales) 200 By Balance c/d (3.1-3-2015):
To Canteen Collections 4,400 Cash in hand 6,700
To Interest on Deposits 1,600 Cash in Deposit Account 20,000
Cash in Current Account 4,200
1,38,400 1,38,400
Additional Information :— 31-3-2014 31-3-2015

Rs. . Rs.
(i) Outstanding Subscriptions 7,000 5,600
(ii) Subscriptions Received in advance 2,000 2,500
(iii) Salaries Outstanding 1,200 1,800
(iv) Furniture 10,000 —
(v) Sports Equipment 20,000 —.
Depreciate furniture by 20% and Sports Equipment by 30%.
You are required to prepare an Income and Expenditure Account for the year ended 31st March, 2015
and a Balance Sheet as at that date.
Q79. Following is the Receipt and Payment Account of Chennai Sports Club for the year ended 31-3-
2014 :
Subscriptions 26,000 Furniture 10,000
Entrance Fee 4,000 Office Expenses 8,000
Tournament Fund 15,000 Tournament Expenses 21,000
Sale of old newspapers 2,000 Sports Equipment 20,000
Legacy 35,000 Balance c/d 16,000
87,000 87,000
Other Information :
. On 31-3-2014 subscription outstanding was Rs.4,000 and on 31-3-2013 subscription outstanding was
Rs.3,000. Salary outstanding on 31-3-2014 was Rs.2,000.
On 1-4-2013 the club had building Rs.80,000, furniture Rs.20,000, 10% investment Rs.45,000 and
sports equipment Rs.25,000. Depreciation charged on these items including purchases was 10%.

Prepare Income and Expenditure Account of the Club for the year ended 31-3-2014 and ascertain the
Capital Fund on 31-3-2013. Also prepare a Balance Sheet as at 31st March, 2014.
Q80. Calculate the amount of sports material to be debited to the Income and Expenditure Account of
Capital Sports Club for the year ended 31-3-2019 on the basis of the following information :
April 1, 2018 March 31, 2019
Rs. Rs.
Stock of sports material 7,500 6,400
Creditors for sports material 2,000 2,600
Amount paid for sports material during the year was Rs. 19,000.
Q80. On the basis of the information given below calculate the amount of medicines to be debited to
the ‘Income and Expenditure Account’ of Good Health Hospital for the year ended 31-3-2019 :
April 1, 2018 March 31, 2019
Rs. Rs.
Stock of Medicines 1,75,750 1,44,650
Creditors for Medicines 15,06,900 18,20,700
Medicines purchased during the year ended 31-3-2019 were Rs.60,80,700.
Q81. Calculate what amount will be posted to Income & Expenditure A/c for the year ending 31st
March 2015:
Rs.
(i) Stock of stationery on 1st April, 2014 7,000
(ii) Creditors for stationery on 1st April, 2014 4,000
(iii) Advance paid for stationery carried forward on 1st April 2014 6,000
(iv) Stock of stationery oh 31st March, 2015 3,000
(v) Creditors for stationery on 31st March, 2015 8,000
(vi) Advance paid for stationery on 31st March, 2015 1,500
(vii) Amount paid for stationery during 2014-15 42,000
Q82. Calculate the amount that will appear against the item Stationery Account, in the Income &
Expenditure Account for the year ended 31st March, 2019 :
Particulars 01.04.2018 31.03.2019
(Rs.) (Rs.)
During 2018-19, the payment made to these creditors amounted to Rs. 1,62,000. Stationery purchased
in cash during the year was 25% of the total purchase of Stationery.
Q83. How are the following items treated while preparing the final accounts of a club for the year ended
31st March, 2019 :
RECEIPTS & PAYMENTS ACCOUNT
Rs. Rs.
To Sale of Sports Materials By Creditors for Sports Materials
(Book Value Rs. 1,10,000) 1,37,000 (Payment made) 3,00,000
By Cash Purchases of Sports
Materials 80,000
As at As at
31st March, 31st March,
2018 (Rs.) 2019 (Rs.)
Stock of Sports Materials 1,20,000 1,50,000

Creditors for Sports Materials 45,000 60,000
Q84. The following is the Receipts and Payments Account of Shri Mahabir Sports Club for the year
ended 31st March, 2014 :
To Balance b/d : By Salaries 17,000
Cash 800 By Upkeep of fields and pavilion 3,400
Bank 4,200 By Medicines Purchased 4,000
Fixed Deposit at 9% p.a. 10,000 By Match Expenses 8,800
To Members Subscription By Building Construction 30,000
(including Rs.800 for 2012-13) 96,000 By Maintenance Expenses 3,600
To Members Admission Fees 3,500 By Rent and Taxes 8,950
To Sale of Furniture 1,600 By Grass Seeds 500
To Sale of grass 200 By Cost of second hand car 40,000
To Donations 5,000 By Balance c/d :
To Match fund receipts 12,000 Cash 1,500
To Interest on fixed deposit 450 Bank 6,000
Fixed Deposit at 9% p.a. 10,000
1,33,750 . 1,33,750
Additional Information :—
(i) Subscriptions Receivable is as follows :
On 31st March, 2013 Rs. 1,000
On 31st March, 2014 (for 2013-14) Rs.2,500
(ii) Advance Subscriptions are as follows :
31st March, 2013 Rs. 600
31st March, 2014 Rs. 900
(iii) Stock of Medicines :
31st March, 2013 Rs. 480
31st March, 2014 Rs. 650
(iv) Staff Salary Payable :
31st March, 2013 Rs. 1,200
31st March, 2014 Rs. 1,400
(v) The total furniture on 1st April, 2013 was worth Rs.20,000 and book value of furniture sold was
Rs.5,000. Charge depreciation @ 10% on closing balance of furniture.
Prepare an Income and Expenditure Account for the year ended 31st March, 2014 and a Balance Sheet
as at that date.
Q85. Following is the Receipts and Payments Account of Maharaja Aggarsain Club, Bhiwani for the
year ended 31st March, 2015 :
To Balance b/d 6,800 By Purchase of foodstuffs 6,000
To Subscriptions By Postage Stamps 3,000
(including Rs.2,000 for 2013-14) 1,20,000 By Furniture Purchased 25,000
To Sale of foodstuffs 8,500 By Salaries 32,000
To Entrance Fees 15,000 By Books 41,500
To Hire of Grounds 7,100 By Newspapers 800
To Income from advertisements in By Rent, Rates and Insurance 24,200
Souvenier 22,000 By Sundry Expenses 4,000
By Travelling Expenses 18,500
By Printing of Souvenier 9,200
1,79,400 1,79,400
Other Information :

(i) Assets on 1-4-2014 were : Land and Building Rs.1,50,000; Stock of foodstuffs Rs.2,200 and
unused postage stamps Rs.800.
(ii) Subscription due on 31-3-2014 was Rs.2,400 and on 31-3-2015 (for 2014-15) was Rs.3,500.
(iii) On 31st March, 2015 stock of foodstuffs was Rs.3,800 and unused postage stamps were of the
value of Rs.600.
(iv) The By-laws of the club provide that 60% of the Entrance fees and 20% of the surplus of any year
are to be transferred to Reserve Fund.
Prepare an Income and Expenditure Account of the club for the year ended 31st March, 2015 and a
Balance Sheet as at that date.
Q86. From the following Receipt and Payment Account and additional information of Ashoka Club for
the year ended 31-3-2017 prepare :
(i) Income and Expenditure Account of the Club for the year ended 31-3-2017 and
(ii) Prepare the Balance Sheet as at 31-3-2017.
Subscriptions : Newspapers 4,100
2015-16 2,400 Electricity bill 2,000
2016-17 53,000 Fixed deposit
2017-18 1,000 56,400 (on 1-1-2017 @ 9% p.a.) 40,000
Entrance Fees 2,500 Books 21,200
Municipal Grant 20,000 Rent 13,600
Sale of old furniture Furniture 21,000
(Book value Rs. 8,000) 11,400 Balance c/d 7,400
1,15,300 1,15,300
(i) Subscriptions outstanding as on 31-3-2016 were Rs.3,000 and on 31-3-2017 Rs.6,000.
(ii) On 31-3-2016 salary outstanding was Rs.900 and on 31-3-2017 salary outstanding was Rs.
1,200.
(iii) The Club owned furniture Rs.30,000 and books Rs. 14,000 on 1-4-2016.
Q87. From the following Receipt and Payment A/c of a charitable dispensary, prepare Income and
Expenditure A/c for the year ended on 31st March, 2019 ;
Receipt and Payment A/c for the year ended on 31st March, 2019
Rs. Rs.
Balance b/d 65,000 Rent 1,10,000
Subscriptions : Salaries 60,000
2017-18 5,000 Medicines purchased 30,000
2018-19 2,00,000 Machinery
2019-20 20,000 2,25,000 (Purchased on 1st Oct., 2018) 1,00,000
Locker rent 30,000 Insurance Premium 30,000
Entrance Fees 20,000 Electricity 20,000
Life membership fee 60,000 Balance c/d 50,000
4,00,000 4,00,000
(i) Subscription of Rs. 1,500 is still in arrear for the year ended 31st March, 2018.
(ii) Subscription Outstanding as at 31st March, 2019 Rs.41,500.
(iii) Stock of medicines on 31st March, 2018 was Rs.6,000 and on 31st March, 2019 was Rs. 10,000.
(iv) One month rent is outstanding.
(v) Depreciation on Machinery to be charged @ 10% p.a.
Prepare Income & Expenditure Account for the year ended 31st March, 2019

Q88. Following is the Receipts and Payments Account of Citizen Club for the year ended 31st March,
2018 :
To Balance b/d 2,40,000 By Rent
To Subscriptions (including (paid for 11 months) 1,76,000
Rs.10,000 for 2018-19) 5,80,000 By Insurance 3,000
To Life Membership Fee 25,000 By Salaries 2,64,000
To Interest on Investments By Stationery purchased 60,000
(@ 7% p.a. for full year) 28,000 By Balance c/d 3,70,000
8,73,000 8,73,000
Prepare Income and Expenditure Account for the year ending 31st March, 2018 and the Balance Sheet
as at that date after considering the following information :
(i) Subscription in arrear on 31st March, 2017 were Rs.30,000 and on 31st March 2018 were
Rs.48,000.
(ii) Stock of stationery on 31st March, 2017 was Rs.5,000 and on 31st March, 2018 Rs.14,000.
(iii) Insurance was paid on 1st January 2018 to run for one year.
Q89. From the following particulars relating to Rama Krishna Mission Charitable Hospital, prepare
Income and Expenditure account for the year ended 31st March, 2019 and a balance sheet as at that date
:
RECEIPTS AND PAYMENTS ACCOUNT for the year ended 31st March, 2019
To Cash in hand on 1st April, 2018 71,300 By Medicines 3,05,900
To Subscriptions 4,79,960 By Doctor’s honorarium 90,000
To Donations 1,45,000 By Salaries 2,75,000
To Interest on Investments By Petty expenses 4,610
@ 7% p.a. for full year 70,000 By Equipment 1,50,000
To Proceeds from Charity Show 1,04,500 By Expenses on Charity show 7,500
By Cash in hand on 31-3-2019 37,750
8,70,760 8,70,760
Additional Information :— 1-4-2018 31-3-2019

Rs. Rs.
(i) Subscriptions due 2,400 2,800
(ii) Subscriptions received in advance 640 1,000
(iii) Stock of medicines 88,100 97,400
(iv) Estimated value of equipments 2,12,000 3,16,000
(v) Buildings (Cost less depreciation) 4,00,000 3,80,000
Q90. From the following information, show the salaries item in the Income and Expenditure Account
for the year ending 31st March, 2016 and in the Balance Sheet as at 31st March, 2015 and 31 st March,
2016:
By Salaries 1,60,000
Rs.
(i) Salaries outstanding on 31st March, 2015 15,000
(ii) Salaries outstanding on 31st March, 2016 25,000
(iv) Salaries paid in advance on 31st March, 2016 10,000

Q91. From the following Receipts and Payments Account of National Sports Club and from the given
additional information, show the salaries item in the Income and Expenditure Account for the year
ending 31st March, 2016 and the Balance Sheet as at 31 st March, 2015 and 31st March, 2016.
By Salaries
2014-15 30,000
2015-16 4,00,000
2016-17 6,000
Rs.
(i) Salaries outstanding on 31 st March, 2015 40,000
(II) Salaries outstanding on 31 st March, 2016 62,000
Q92. Following is the Receipt and Payments Account of Natraj Literary Society, Hyderabad for the
year ended 31st March, 2016 :
To Balance b/d 1-4-2015 7,200 By Salaries 16,500
To Donations 8,000 By Sundry Expenses 1,000
To Rent of the hall 15,400 By Charities 1,500
To Proceeds of lectures 4,700 By Cost of lectures 3,000
To Interest on Bonds 900 By Newspapers 3,800
To Journey Receipts 5,600 By Journey Expenses 4,400
To Sale of old newspapers 300 By Books 14,000
To Sale of old furniture 400 By Mowing Machine 10,000
(book value'Rs.2,000) (Purchased on 1-7-2015)
To Subscriptions : By Furniture 7,000
2014-15 1,500 By Postage 400
2015-16 38,000 By Conveyance 800
2016-17 800. 40,300 By Balance c/d 20,400
82,800 82,800
(1) There are 400 members each paying an annual subscription of Rs.100.
(2) On 31st March, 2015, the trust owned Buildings Rs.75,000; Furniture Rs. 10,000; Books
Rs.6,000 and 12% Bonds Rs. 10,000.
(3) Salaries of Rs.1,500 for March, 2016 were not paid until 7th April, 2016.
(4) Journey income receivable Rs.400.
(5) Charge depreciation @ 10% p.a. on Buildings and mowing machine and 20% p.a. on the closing
balance of furniture and books.
(6) It was decided to treat one-half of the amount received on account of donations as income.
Prepare Income and Expenditure Account for the year ending 31st March, 2016 and a Balance Sheet as
at that date.
Q93. The following is the receipts and payments account of the Rajasthan Society for the year ending
31st March, 2014 :
To Balance b/d 3,000 By Honorarium to Clerk 10,000
To Subscriptions : By Cost of Car 80,000
Arrear 600 By Car Expenses 4,200
Current 70,000 By Building advance 25,000
Advance 500 71,100 By Charities 2,000
To Donations 17,500 By Meeting Expenses 5,400

To Entrance Fees 15,000 By Electricity 4,800
To Endowment Fund Receipts 14,000 By Medicines etc. 800
To Life Membership Fees 6,000 By Investments 20,000
To Rent of the Hall 8,700 By Expenses on Charity show 6,200
To Grant from local authority 4,000 By Insurance Premium 1,200
To Proceeds of charity show 16,800 By Balance c/d 400
To Sundries 1,200
To Interest on Investments 2,700
1,60,000 1,60,000
(i) There are 600 members each paying a monthly subscription of Rs.10; Rs.800 being in arrear for
2012-13 at the beginning of the year.
(ii) A donation of Rs.2,500 was wrongly included in subscriptions of the current year.
(iii) Entire Donation and 2/3 of Entrance fee are to be capitalised.
(iv) Insurance Premium was paid in advance for three months.
(v) Interest on Investments Rs.300 though accrued was not actually received.
(vi) A bill of medicine purchased during the year amounting to Rs.200 was outstanding.
(vii) Gujarati cultural association owed Rs.2,000 for the use of society hall.
You are required to prepare an Income and Expenditure Account for the year ended 31st March, 2014
and a Balance Sheet as at that date.
Q94. Given below is the Receipts and Payments Account of ‘Old Men Association Club’ for the year
ended on 31-3-2017 :
To Subscription : By General Expenses 800
2015-2016 400 By Entertainment Expenses 3,500
2016-2017 20,500 By Newspapers 1,500
2017-2018 600 By Municipal Taxes 500
To Donations 9,500 By Charity 3,500
To Proceeds from Entertainment 5,400 By 12% Investments 20,000
To Sale of Newspapers 450 By Electricity Charges 1,400
By Balance c/'d 1,175
37,875 37,875
Prepare Income and Expenditure Account for the year ended 31st March, 2017 and the Balance Sheet
as at that date, after taking the following information into account:
(a) There are 500 members each paying an annual subscription of Rs.50, and Rs.500 is still in
arrear for 2015-2016.
(b) Rs. 1,000 for salaries is outstanding.
(c) Building stands in the books at Rs.50,000 and it is required to write off depreciation at 5% p.a.
(d) Interest on Investments is accrued for 5 months.
Q95. From the following Receipts and Payments A/c of Dramatic & Sports Club Ambala, prepare an
Income and Expenditure A/c for the year ended 31st March, 2013 and a Balance Sheet as at that date :
Cash in hand (1-4-2012) 3,400 Bank Overdraft (1-4-2012) 8,800
Subscriptions : Salaries 13,100
for 2011-12 3,000 Drama Expenses 6,000
for 2012-13 56,200 Sports Materials 18,000
for 2013-14 2,000 61,200 Prizes Distributed 5,600
Prize Fund 7,000 Charity Given 3,500
Charity Fund 5,000 Municipal Taxes 1,600
Proceeds of Drama tickets 16.000 Upkeep of land 3,000

Sale of waste paper 400 Office expenses 7,800
Endowment fund 32,000 Purchase of building 60,000
Legacies 20,000 Balance on 3 1 -3-2013
Cash in hand 5,000
Cash at Bank 12,600 17,600
1,45,000 1,45,000
Informations :—
(a) The club has 600 members, each paying an annual subscription of Rs.100. In 2011-12 ten
members had paid their subscription for 2012-13 as well. -
(b) Balance of sports materials on 31 March, 2013 was Rs.3,600.
(c) The Club had buildings amounting to Rs. 1,20,000 and Musical Instruments worth Rs.30,000
on 1-4-2012.
Q96. Following is the Receipts and Payments Account of Chennai Sports Club :
Dr. for the year ended 31st March, 2019
Rs. Rs.
Balance b/d 34,000 Municipal Taxes 20,000
Subscriptions 2,00,000 Charity 45,000
Govt. Grant 75,000 Rent 30,000
Legacies 1,50,000 Fixed Deposit with Bank
Donations 1,00,000 (on 1.07.2018 @ 10% p.a.) 3,00,000
Donations for Tournament 50,000 Meeting expenses 25,000
Sale of Defence Bonds 40,000 T.V. Set 40,000
Interest on Defence Bonds 6,000 Tournament Expenses 60,000
Interest received on F.D. 15,000 Furniture 15,000
Balance c/d 1,35,000
6,70,000 6,70,000
Prepare Income and Expenditure Account for the year ended 31st March, 2019 and a Balance Sheet as
at that date after the following adjustments ;
(i) Subscriptions received during the year included Rs. 10,000 from a life member and a Donation of
Rs.50,000 received for Building Fund.
(ii) Book value of Defence Bonds sold was Rs.30,000; Rs.60,000 of the Defence Bonds were still in
hand.
(iii) Municipal Taxes amounted to Rs.20,000 per year is paid upto 30th June.
(iv) Rent Rs.5,000 is related to the year ended 31st March 2018 and Rs.2,500 is still owing.
(v) It was decided to treat 40% of the amount received on account of Legacies and Donations as
income.
(vi) On 1st April 2018, the club owned furniture Rs. 1,10,000; Furniture is valued at Rs. 1,05,000
on 31st March, 2019,
Q.97. Show how would you deal with the following items in the final accounts of a Club :
Dr. Cr.
Amount Amount
Rs. Rs.
Prize Fund 2,00,000
Prize Fund Investments 2,00,000
Income from Prize Fund Investments 10,000
Prizes awarded 7,500
Donation for Prize Fund 40,000
Q98. Show how will you deal with the following items while preparing the Balance Sheet of a Club as
at 31st March, 2018 :

Rs.
Match Fund 6,00,000
8% Match Fund Investments 5,00,000
Interest received on Match Fund Investments 30,000
Expenses on Matches 20,000
Donations for Match Fund 1,50,000
Match Prizes awarded 90,000
Q99. Receipts and Payments Account of Shimla Sports Club showed that Rs. 82,000 were received by
way of subscriptions for the year ended on March 31, 2016.
The additional information was as under :
Subscription Outstanding as on March 31,2015 were Rs.8,400.
Subscription Outstanding as on March 31,2016 were Rs.9,200 Subscription received in advance as on
March 31,2015 were Rs.3,000. Subscription received in advance as on March 31, 2016 were Rs.5,000.
Show how the above information would appear in the final accounts for the year ended on March 31,
2016.
Q100. Subscriptions received during the year ended March 31, 2016 by a Club were as under :
Rs.
2014-15 1,500
2015-16 44,000
2016-17 4,000
49,500
The club has 100 members each paying @ Rs.500 as annual subscription. Subscriptions outstanding as
on March 31, 2015 were Rs.2,500. Calculate the amount of subscriptions to-be shown as income in the
Income and Expenditure Account for the year ended March 31, 2016 and show the relevant data in the
Balance Sheet as at 31st March, 2015 and 2016.
Q101. The Young Association submits to you its Receipts and Payments Account for the year ending
on 31st March, 2019. You are required to prepare the Income and Expenditure Account for the year and
the Balance Sheet as at that date.
Opening Balance: Cash in Hand 250 Establishment (includes Rs.400 for 6,000
2019-20)
Balance at Bank 20,550 Telephone charges 540
Subscription (including Rs.750 Electric charges 250
for 2019-20) 21,250 Stamps and Stationery 600
Hall Rent 1,250 Travelling 150
Interest on Securities 1,000 Meeting Expenses 500
Donation 10,000 Rent 5,400
Telephone receipts 50 Library 3,000
Donations 5,000
Closing Balance :
Cash in Hand 310
Balance at Bank 32,600
54,350 54,350
The Association also gives the following information :—
(i) The Association holds 6% Government Securities amounting to Rs.40,000 on 1st April, 2018.
(ii) The Library Account (Books) stood at Rs.20,000 on 1st April, 2018.
(iii) Half of the donations received is to be transferred to the Capital Fund.
(iv) Rent Rs.300 is still payable.
Q102. Calculate the amount of medicines to be debited in the Income and Expenditure Account of a
Hospital on the basis of the following information :

April 1, 2016 April 1, 2017
Rs. Rs.
Stock of Medicines 90,000 1,24,000
Creditors for Medicines 2,40,000 2,04,000
Amount paid for medicines during the year was Rs.6,79,000.
Q103.Prepare an Income and Expenditure Account for the year ended 31st March, 2016 and the Balance
Sheet as at that date from the following Receipts and Payments Account of a Club and from the
information supplied :
To Subscriptions By General Expenses 3,000
for 2014-15 2,500 By Electric Charges 2,000
for 2015-16 10,000 By Books - 1,000
for 2016-17 2,000 By Newspapers 4,000
To Sale of old furniture By Postage 500
(Costing Rs.1,000) 600 By Furniture 2,500
To Rent received for the use of Hall 7,400 By Balance c/d 5,000
To Entrance Fees 4,000
To Sale of Newspapers 1,000
30,000 30,000
Informations :—
(i) The club has 50 members, each paying annual subscription of Rs.250. Subscriptions
outstanding on 1st April, 2015 were Rs.3,000.
(ii) On 31 st March, 2016, Salaries outstanding amounted to Rs. 1,000. Salaries paid included
Rs.1,000 for the year 2014-15.
(iii) General Expenses include Insurance which is prepaid to the extent of Rs. 100.
(iv) On 31st March, 2015, the club owned Land and Building valued at Rs. 1,00,000, Furniture Rs.6,000
and Books Rs.5,000.
(v) 40% of Entrance Fees is to be capitalised.
Q104. From the following information, prepare Income and Expenditure A/c for the year ending on
31st March, 2016 and a Balance Sheet as at that date, of an Entertainment Club :
Cash Balance (1-4-2015) 7,200 Tournament Expenses 8,500
Life Membership Fees 10,000 Furniture Purchased 6,000
Donation 52,000 Building 43,200
Entry Fees 5,700 Sports Materials purchased 20,000
Subscriptions Restaurant Expenses 12,600
2014-15 4,200 Salary 18,200
2015-16 46,000 Printing 4,100
2016-17 1,600 51,800 Investments 20,000
Tournament Fund 12,200 Cash Balance (31-3-2016) 15,800
Restaurant Receipts 8,000
Miscellaneous Income 700
Interest 800
1,48,400 1,48,400
The Club had 500 members, each paying an annual subscription of Rs.100. Rs.4,500 were outstanding
subscriptions at the end of previous year and five members had paid their subscription for 2015-16 as
well in the previous year itself. On 31st March, 2016, Outstanding salaries were Rs. 1,500 and prepaid
salaries were Rs.2,000. 50% of the Entrance fees is revenue income and Donations and Life
Membership fees are to be capitalized. Accrued interest at the end of the year was Rs. 1,200. At the end
of the year Stock of Sports Material was Rs. 5,000 and stock at the refreshment room was Rs. 1,600.

Q105. Convert the following Receipts and Payment Account of the Delhi Nursing Society for the year
ended 31st March, 2017 into the Income and Expenditure Account:
RECEIPT AND PAYMENT ACCOUNT
To Balance of Bank By Salaries of Nurses 656
1st April, 2016 2,010 By Board, Laundry and
To Subscription 1,115 Domestic Help 380
To Fees from Non-members 270 By Rent, Rates and Taxes 200
To Municipal Grant 1,000 By Cost of Car 2,000
To Donations for Building Fund 1,560 By Expenses of Car 840
To Interest 38 By Drugs and Incidental Expenses 670
5,993 5,993
A donation of Rs.100 received for Building Fund was wrongly included in the Subscription Account.
A bill of medicines purchased during the year amounted to Rs. 128 was outstanding.
Q106. Following is the Receipts and Payments Account of a Club for the year ended 31st March, 2014:
To Subscriptions : By Office Expenses 8,000
2012-13 35,000 By Sports Equipments
2013-14 9,50,000 (Purchased on 1 October 2013) 6,00,000
2014-15 55,000 10,40,000 By Telephone Charges 12,000
To Donations 90,000 By Electricity Charges 18,000
To Entrance fees 60,000 By Travelling Expenses 6,000
To Locker Rent 20,000 By 10% Fixed Deposits
To Donation for Buildings 1,50,000 (Made on 1st July, 2013) 7,00,000
14,35,000 14,35,000
(i) Outstanding subscription for 2013-14 Rs.80,000.
(ii) Outstanding salaries as on 1st April, 2013 were Rs.2,000 and as at 31st March, 2014 were
Rs.4,000.
(iii) Locker Rent rate is Rs.2,000 per month.
(iv) Depreciation on sports equipment @10% p.a.
Prepare Income and Expenditure Account of the Club for the year ended 31st March, 2014.
Q107. From the following information supplied by the accountant of Lions Club for the year ended 31st
March 2014, prepare Income and Expenditure Account and Balance Sheet:
Receipt and Payment Account for the year ending 31.3.2014
To Balance b/d 10,000 By Investment @ 8% in
To Subscription : securities on 1.10.2013 10,000
2013-14 18,000 By Furniture 5,400
2014-15 500 By Salaries 4,500
To Entrance fee 350 By Stationery 1,200
To Income from entertainment 3,400 By Electric charges 2,400
To Sale of old Newspapers 150 By Balance c/d 8,900
32,400 32,400
(a) The club has 400 members each paying an annual subscription of Rs.50.
Subscription still outstanding for 2012-13 are Rs.200. .
(b) Stock of stationary on 31.3.2013 Rs.780and on 31.3.2014 Rs.860.

(c) On 1st April 2013 premises were Rs. 16,000. Depreciation on premises and furniture to be
charged @ 5% and 10% p.a. respectively.
‘
Q108. From the following receipts and payment account of a Club and from the given additional
information supplied, prepare income expenditure account for the year ending 31st March 2016 and the
balance sheet as at that date :
RECEIPTS AND PAYMENT ACCOUNT for the year ending 31st March 2016
To Balance b/d Rs. By Salaries Rs.
35,000 1,40,000
To Subscriptions By General Expenses 30,000
2014-15 25,000 By Electricity Charges 20,000
2015-16 1,00,000 By Books 50,000
2016-17 20,000 1,45,000 By Newspapers 40,000
To Rent (from the use of hall) 70,000 By Balance c/d 20,000
To Surplus from Entertainment 40,000
To Sale of Old Newspapers 10,000
3,00,000 3,00,000
Additional information :
(1) The club has 50 members each paying an annual subscription of Rs.2,500. Subscriptions
outstanding on 31st March 2015 were to the extent of Rs.30,000.
(2) On 31st March 2016 salaries outstanding amounted to Rs. 10,000. Salaries paid in 2015-16
included Rs.30,000 for the year 2014-15.
(3) On 1st April 2015, the club owned Building valued at Rs. 10,00,000, Furniture worth Rs.
1,00,000 and books Rs. 1,00,000.
Q109. Following is the Receipts and Payments Account of Delhi Health Club for the year ended 31st
December, 2018:
Dr. for the year ending on 31st Dec., 2018 Cr.
To Balance b/d 98,000 By Furniture 21,000
To Donations for Building 4,00,000 By Vehicles 1,00,000
To Entrance Fees 1,50,000 By Salaries 80,000
To Subscription 92,000 By Sundry Expenses 5,000
To Locker Rent 10,000 By Building 4,00,000
To Interest on Investment 10,000 By Investment
To Sale of Vehicles 78,000 (Purchased on April 1, 2018
(Book value Rs.90,000) @20% p.a.) 80,000
By Balance, c/d 1,52,000
8,38,000 8,38,000
, (i) Donations for Building include 20% general donations.
(ii) During the year, the club had 600 members and each paying an annual subscription of Rs.200.
(iii) Outstanding salaries as at January 1, 2018 were Rs. 15,000 and as on December 31, 2018 were Rs.
18,000.
Prepare Income and Expenditure Account of the club for the year ended 31st December, 2018.
Q110. Prepare Income & Expenditure Account for the year ended March 31,2019 and a Balance Sheet
as at that date from the following information.
RECEIPT AND PAYMENT ACCOUNT
for the year ending March 31, 2019
Rs. Rs.

Balance b/d 41,000 Salaries and Wages :
Subscriptions : 2017-18 4,800
2017-18 7,200 2018-19 83,200 88,000
2018-19 3,37,600 Sundry expenses 37,000
2019-20 12,000 3,56,800 Freehold land 60,000
Entrance fees 16,000 Stationery 16,000
Locker rent 58,000 Rates 24,000
Revenue from refreshment 48,000 Refreshment expenses 37,500
Income from investments 10,000 Telephone charges 4,000
Govt. Grant 40,000 Investments 2,50,000
Fess from Non-members 6,000 Audit fee 6,000
Balance c/d 53,300
5,75,800 5,75,800
The following additional information is provided to you :
1. There are 1,800 members, each paying an annual subscription of Rs.200, Rs.8,000 were in
arrears for 2017-18 as on April 1, 2018.
2. On March 31, 2019 the rates were prepaid to June 2019; the charge paid every year being
Rs.24,000.
3. There was an outstanding telephone bill for Rs.1,400 on March 31, 2019.
4. Outstanding sundry expenses as on March 31, 2018 to talled Rs.2,800.
5. Stock of stationery as on March 31, 2018 was Rs.2,000; on March 31, 2019, it was Rs.3,600.
Q111. From the following particulars of Evergreen Club, prepare Receipts and Payments Account for
the year
ended 31st March, 2018: Rs. Rs.
Cash in Hand on 1 st April, 2017 50,000 Newspapers and Magazines 87,000

Cash at Bank on 1 st April, 2017 3,40,000 Sale of Old Newspapers 12,000
Subscriptions Received 15,70,000 Books Purchased 3,40,000
Donations Received 2,80,000 Sports Materials Purchased 4,70,000
Investments Purchased 5,00,000 Interest on Investments Received 50,000
Rent Paid 50,000 Honorarium to Coaches 1,50,000
General Expenses 2,30,000 Cash in Hand on 31st March, 2018 30,000
Postage and Stationery 25,000 Cash at Bank on 31 st March, 2018 ?
[Ans.: Cash at Bank on 31st March, 20 -
78— f4,20,000.]
Q112How are the following dealt with in the accounts of a Not-for-Profit Organisation?
Case l Dr. (Rs.) Cr. (Rs.) Case II Dr. (Rs.) Cr. (Rs.)
Prize Fund 50,000 Match Fund 1,00,000
Prizes Paid 12,000 Match Expenses 35,000
Match Expenses 15,000 Investments of Match Fund 60,000
Interest on Match Fund
Investments 3,000
Prizes Paid 19,000
Q113. How are the following dealt with while preparing the final accounts of a club?
TRIAL BALANCE as at 31st March, 2018
Particulars Dr. (Rs.) Cr. (Rs.)
Match Fund 80,000
Match Fund Investments 72,000
Match Fund Bank Balance 3,500
Interest on Match Fund Investments 2,880

Match Expenses 5,500
Q114.From the following information of a club show the amounts of match expenses and match fund
in the appropriate Financial Statements of the club for the year ended on 31st March, 2018:
Details Rs.
Match expenses paid during the year ended 31st March, 2018 1,02,000
Match Fund as on 31st March, 2017 24,000
Donation for Match Fund (Received during the year ended 31st March, 2018) 40,000
Proceeds from the sale of match tickets (Received during the year ended 31 st March, 2018) 15,000
Q115. Show how are the following items dealt with while preparing the final accounts for the year
ended
31st March, 2018 of a Not-for-Profit Organisation:
Case I Expenditure on construction of Pavilion is Rs. 6,00,000. The construction work is in progress
and has not yet completed. Capital Fund as at 31st March, 2017 is Rs. 20,00,000.
Case II Expenditure on construction of Pavilion is Rs. 6,00,000. The construction work is in progress
and has not yet completed. Pavilion Fund as at 31 st March, 2017 is Rs. 10,00,000, and Capital Fund as
at 31 st March, 2017 is Rs. 20,00,000.
Case III Expenditure on construction of Pavilion is Rs. 6,00,000. The construction work is in progress
and has not yet completed. Pavilion Fund as at 31 st March, 2017 is Rs. 10,00,000, and Capital Fund as
at 31 st March, 2017 is Rs. 20,00,000. Donation Received for Pavilion on 1 st January, 2018 is Rs.
5,00,000.
Q116. How is Entrance Fees dealt with while preparing the final accounts for the year ended 31 st
March, 2018 in each of the following alternative cases?
Case I During the year ended 31 st March, 2018, Entrance Fees received was Rs. 1,00,000.
Case II During the year ended 31st March, 2018, Entrance Fees received was Rs. 1,00,000. Out of this,
Rs. 25,000 was received from individuals whose membership is not yet approved.
Q117. Subscriptions received during the year ended 31st March, 2018 are:
Rs. Rs.
For the year ended 31st March, 2017 1,600
For the year ended 31 st March, 2018 84,400
For the year ended 31st March, 2019 3,200 89,200
There are 450 members, each paying an annual subscription of Rs. 200; Rs. 1,800 were in arrears for
the year ended 31st March, 2017.
Calculate amount of subscriptions to be credited to Income and Expenditure Account for the year ended
31 st March, 2018. [Ans.: Subscriptions—Rs.90,000.]
Q118.In the year ended 31st March, 2018, subscriptions received by Kings Club, Delhi were Rs.
4,09,000 including Rs. 5,000 for the year ended 31st March, 2017 and Rs. 10,000 for the year ended
31st March, 2019. At the end of the year ended 31st March, 2018, subscriptions outstanding for the year
ended 31st March, 2018 were Rs. 15,000. The subscriptions due but not received at the end of the
previous year, i.e., 31st March, 2017 were Rs. 8,000, while subscriptions received in advance on the
same date were Rs. 18,000.
Calculate amount of subscriptions to be credited to Income and Expenditure Account for the year ended
31st March, 2018.
Q119.Calculate amount of subscriptions which will be treated as income for the year ended 31st March,
2018 for each of the following cases:
Particulars Rs.
Case I. (i) Subscriptions collected during the year ended 31 st March, 2018 2,50,000
(ii) Subscriptions in arrears for the year ended 31 st March, 2018 6,000

(iii) Subscriptions received in advance for the year ended 31 st March, 2019 5,000
Case II. (i) Subscriptions collected during the year ended 31st March, 2018 49,000
(ii) Subscriptions for the year ended 31 st March, 2018 collected in the year ended 3,000
31 st March, 2017
(iii) Subscriptions unpaid for the year ended 31 st March, 2018 2,000
Case III. (i) Subscriptions received during the year ended 31st March, 2018 25,000
(ii) Subscriptions outstanding in the beginning of the year ended 31st March, 2018 3,000
(iii) Subscriptions not yet collected for the year ended 31 st March, 2018 5,000
Case IV. (i) Subscriptions received during the year ended 31st March, 2018 80,000
(ii) Subscriptions outstanding in the beginning of the year ended 31st March, 2018 5,000
(iii) Subscriptions not yet collected for the year ended 31st March, 2018 8,000
(iv) Subscriptions for the year ended 31 st March, 2019 received in advance 2,000
Case V. (i) Subscriptions received during the year ended 31 st March, 2018 90,000
(ii) Subscriptions outstanding at the end of the year ended 31st March, 2017 5,000
(iii) Subscriptions received in advance on 31 st March, 2017 3,000
(iv) Subscriptions received in advance on 31 st March, 2018 4,000
(v) Subscriptions not yet collected for the year ended 31st March, 2018 6,000
Q120. From the following particulars, calculate amount of subscriptions to be credited to the Income
and
Expenditure Account for the year ended 31st March, 2018: Rs.
(a) Subscriptions in arrears on 31 st March, 2017 500
(b) Subscriptions received in advance on 31 st March, 2017 for the year ended on 1,100
31st March, 2018
(c) Total subscriptions received during the year ended 31st March, 2018 35,400
(including Rs. 400 for the year ended 31st March, 2017, Rs. 1,200 for the year ended
31 st March, 2019 and Rs. 300 for year ended 31 st March, 2020)
(d) Subscriptions outstanding for year ended 31st March, 2018 400
Q121. Receipts and Payments Account of Friends Club showed that Rs. 6,85,000 were received by way
of subscriptions for the year ended on 31st March, 2018.
The additional information was as under:
(a) Subscription outstanding as on 31 st March, 2017 were Rs. 65,000.
(b) Subscription received in advance as on 31 st March, 2017 were Rs. 41,000.
(c) Subscription outstanding as on 31st March, 2018 were Rs. 54,000.
(d) Subscription received in advance as on 31 st March, 2018 were Rs. 25,000.
Show how the above information would appear in the final accounts for the year ended on 31st March,
2018 of Friends Club.
Q122.How are the following items of subscriptions shown in the Income and Expenditure Account for
the year ended 31 st March, 2018 and Balance Sheets as at 31 st March, 2017 and 2018?
Rs.
Subscriptions received during the year ended 31st March, 2018 3,58,500
(including Rs. 12,500 for the year ended 31 st March, 2017)
Q123. From the following information, calculate amount of subscriptions outstanding for the year ended
31st March, 2018:
A club has 200 members each paying an annual subscription of Rs. 1,000. The Receipts and Payments
Account for the year showed a sum of Rs. 2,05,000 received as subscriptions. The following additional
information is provided: Rs.

Subscriptions Received in Advance on 31st March, 2018 40,000
Subscriptions Received in Advance on 31st March, 2017 14,000
Q124. On the basis of information given below, calculate the amount of medicines to be debited to the
Income and Expenditure Account of Good Health Hospital for the year ended 31 st March, 2018:
Medicines purchased during the year ended 31st March, 2018 were Rs. 60,80,700.
Q125. Calculate amount to be posted to the Income and Expenditure Account for the year ended 31 st
March, 2018:
(i) Amount paid for stationery during the year ended 31st March, 2018—Rs. 5,400; Stock of Stationery
in Hand on 31 st March, 2018—Rs. 250.
(ii) Stock of Stationery in Hand on 1st April, 2017—Rs. 1,500; Payment made for Stationery during the
year ended 31 st March, 2018—Rs. 5,400; Stock of Stationery in Hand on 31st March, 2018—Rs. 250.
Rs.
(iii) Stock of Stationery on 1 st April, 2017 1,500
Creditors for Stationery on 1st April, 2017 1,000
Amount paid for Stationery during the year 5,400
Stock of Stationery on 31st March, 2018 250
Q126. On the basis of the following information, calculate amount that will appear against the item
'Stationery Used'
in the Income and Expenditure Account for the year ended 31 st March, 2018:
Rs.
Stock of Stationery as at 1 st April, 2017 12,000
Creditors for Stationery as at 1 st April, 2017 25,600
Amount paid for Stationery during the year ended 31st March, 1,40,000
2018
Stock of Stationery as at 31 st March, 2018 23,200
Creditors for Stationery as at 31st March, 2018 24,000
Q127. Calculate the amount that will be posted to the Income and Expenditure Account for the year
ended
31st March, 2018: Rs.
Stock of Stationery on 1 st April, 2017 30,000
Creditors for Stationery on 1 st April, 2017 20,000
Advances paid for Stationery carried forward from the year ended 31 st March, 2017 2,000
Amount paid for Stationery during the year ended 31 st March, 1,08,000
2018
Stock of Stationery on 31 st March, 2018 5,000
Creditors for Stationery on 31st March, 2018 13,000
Advance paid for Stationery on 31 st March, 2018 3,000
Q128. How are the following dealt with while preparing the final accounts for the year ended 31 st
March, 2018?
Dr. RECEIPTS AND PAYMENTS ACCOUNT (AN EXTRACT) for the year ended Cr.
31st March, 2018
By Payment for Sports Materials 1,40,000
BALANCE SHEET (AN EXTRACT) as at 1st April, 2017

Creditors for Sports Materials 6,000 Sports Materials 8,000
Sports Materials in Hand on 31st March, 2018—Rs. 22,000.
Q129. How are the following dealt with while preparing the final accounts for the year ended 31 st
March, 2018?
Dr. RECEIPTS AND PAYMENTS ACCOUNT (AN EXTRACT) for the year ended 31st Cr.
March, 2018
By Payment for Medicines 1,50,000
As at 1st April, 2017 (Rs.) As at 31st March,
2018(Rs.)
Creditors for Medicines 40,000 60,000
Q130. How are the following dealt with while preparing the final accounts of a sports club for the year
ended 31st March, 2018?
To Sale of Sports Materials 26,000 By Creditors for Sports Materials 61,000
(Book value Rs. 20,000) By Cash purchase of Sports Materials 10,000
As at 31st March, 2017 (Rs.) As at 31st March, 2018 (Rs.)
Sports Materials 20,000 25,000
Q131. From the following information of a Not-for-Profit Organisation, show the 'Sports Materials'
item in the Income and Expenditure Account for the year ended 31st March, 2018 and Balance Sheets
as at 31 st March, 2017 and 31 st March, 2018:
Particulars 31st March, 31st March,
2017 2018
Rs. Rs.
Stock of Sports Materials 6,200 4,800
Advance to Suppliers for Sports Materials 11,000 19,000
Payment to suppliers for Sports Materials during the year was Rs. 1,02,000. There were no cash
purchases made.
Q132. The book value of furniture on 1st April, 2017 is Rs. 60,000. Half of this furniture is sold for Rs.
20,000 on 30th September, 2017. Depreciation is to be charged on furniture @ 10% p.a.
Calculate loss on sale of furniture. Show how the loss on sale and depreciation on furniture will be
shown in the Income and Expenditure Account for the year ended 31st March, 2018.
Q133. Delhi Youth Club has furniture at a value of Rs. 2,20,000 in its book on 31 st March, 2017. It
sold old furniture, having book value of Rs. 20,000 as at 1st April, 2017 at a loss of 20% on 31st

December, 2017. Furniture is to be depreciated @ 10% p.a. Furniture costing Rs. 1,50,000 was also
purchased on 1st October, 2017. Prepare Furniture Account for the year ended 31st March, 2018.
Q134. In the year ended 31 st March, 2018, salaries paid amounted to Rs. 2,04,000. Ascertain the
amount chargeable to the Income and Expenditure Account for the year ended 31 st March, 2018 from
the following additional
information: Rs.
Prepaid Salaries on 31 st March, 2017 24,000
Prepaid Salaries on 31st March, 2018 12,000
Outstanding Salaries on 31st March, 2017 18,000
Outstanding Salaries on 31st March, 2018 15,000
Q135. Prepare Income and Expenditure Account for the year ended 31 st March, 2018 from the
following:
To Balance bid (Cash) 1,80,000 By Salaries 4,80,000
To Subscriptions 9,00,000 By Rent 50,000
To Sale of Investments 2,00,000 By Stationery 20,000
To Sale of Old Furniture 30,000 By Defence Bonds 3,00,000
(Book Value Rs. 40,000) By Furniture 2,00,000
To Donations 10,000 By Bicycles 30,000
By Balance c/d (Cash) 2,40,000
13,20,000 13,20,000
Q136. Prepare Income and Expenditure Account from the following Receipts and Payments Account
of Delhi Nursing Society for the year ended 31 st March, 2018:
To Balance bid (Cash at Bank) 2,01,000 By Salaries of Nurses 65,600
To Subscriptions 1,11,500 By Board, Laundry and Domestic Help 38,000
To Fees from Non-members 27,000 By Rent, Rates and Taxes 20,000
To Government Grant 1,00,000 By Cost of Car 2,00,000
To Donations for Building Fund 1,56,000 By Expenses of Car 84,000
To Interest 3,800 By Drugs and Incidental Expenses 67,000
By Balance c/d (Cash at Bank) 1,24,700
5,99,300 5,99,300
Locker Rent received during the year ended 31st March, 2018—Rs. 52,000.
Q137 Following is the Receipts and Payments Account of You Bee Forty Club for the year ended 31 st
March, 2018:
To Balance bid (Cash) 1,50,000 By Salaries and Wages 1,60,000
To Subscriptions: By Office Expenses 35,000
2016-2017 60,000 By Sports Equipments 3,40,000
2017-2018 3,50,000 By Telephone Charges 24,000
To Donations 50,000 By Electricity Charges 32,000
To Entrance Fees 80,000 By Travelling Expenses 65,000
By Balance c/d (Cash) 34,000

6,90,000 6,90,000
(a) Outstanding Subscriptions for the year ended 31 st March, 2018—Rs. 55,000.
(b) Outstanding Salaries and Wages—Rs. 40,000.
(c) Depreciate Sports Equipments by 25%.
Prepare Income and Expenditure Account of the Club from the above particulars.
Q138. From the following Receipts and Payments Account of Jaipur Sports Club, prepare Income and
Expenditure Account for the year ended 31 st March, 2018:
To Balance b/d 2,00,000 By Rent 60,000
To Entrance Fees: (including Rs. 15,000 for 2016-17)
2016-17 10,000 By Insurance Premium 60,000
2017-18 50,000 60,000 (including Rs. 15,000 for 2018-19)
To Subscriptions: By Sports Equipments 50,000
2016-17 10,000 By Furniture 60,000
2017-18(90%) 90,000 (Purchased on 31st March, 2018)
2018-19 5,000 1,05,000 By 8% Fixed Deposit 1,20,000
To Life Membership Fees 20,000 (made on 1 st October, 2017)
To Donations 1,20,000 By Tournament Expenses 10,000
To Donations for Tournament 50,000 By Books 20,000
To Subscriptions for Governor's Party 15,000 By Newspapers 1,000
To Interest on 8% Fixed 2,400 By Printing and Stationery 19,000
Deposit
To Sale of Old Newspapers 300 By Balance c/d 1,80,000
To Sale of Old Sports 500
Materials
(Book Value Rs. 1,200)
To Locker Rent 6,800
(including Rs. 600 for 2016-
17)
5,80,000 5,80,000
Q139. Following is the Receipts and Payments Account of Delhi Football Club for the year ended 31
st March, 2018:
To Opening Cash 18,000 By Building 4,00,000
To Donations for Building 4,50,000 By Project Expenses (Young Talent 90,000
To Donations 50,000 Search and Development)
To Government Grant (Young Talent 1,00,000 By Match Expenses 90,000
Search and Development) By Furniture 1,21,000
To Life Membership Fees 40,000 By 10% Investments 1,60,000
To Match Fund 80,000 (Purchased on 1 st July, 2017)
To Subscriptions 52,000 By Salaries 70,000
To Locker Rent 4,000 By Insurance 3,500
To interest on Investments 10,000 By Sundry Expenses 4,700
To Sale of Furniture 1,00,000 By Closing Cash 4,800
(Book value Rs. 80,000) By Bank (Young Talent 10,000
To Entrance Fees 50,000 Search and Development)

9,54,000 9,54,000
(i) During the year ended 31st March, 2018, the Club had 550 members and each paying an annual
subscription of Rs. 100.
(ii) Salaries Outstanding as at 1 st April, 2017 were Rs. 10,000 and as at 31 st March, 2018 were Rs.
5,000. Prepare Income and Expenditure Account of the Club for the year ended 31 st March, 2018.
Q140. Following is the information given in respect of certain items of a Sports Club. Show these items
in the income and Expenditure Account and the Balance Sheet of the Club as at 31st March, 2018:
Particulars Rs.
Sports Fund as on 1st April, 2017 3,50,000
Sports Fund Investments 3,50,000
Interest on Sports Fund Investments 40,000
Donations for Sports Fund 1,50,000
Sports Prizes awarded 1,00,000
Expenses on Sports Events 40,000
General Fund 8,00,000
General Fund Investments 8,00,000
Interest on General Fund Investments 80,000
(NCERT, Modified)
Q141. Following is the summary of cash transactions of the Royal Club for the year ended 31st March,
2018:
Dr. RECEIPTS AND PAYMENTS ACCOUNT Cr.
To Balance bid 31,900 By Rent 16,800
To Entrance Fees 25,500 By Wages 24,500
To Donations 16,500 By Honorarium 43,500
To Life Membership Fees 25,000 By Books 21,300
To' Profit on Entertainment 5,600 By Office Expenses 45,000
By 3% Fixed Deposit 80,000
(1st October, 2017)
By Balance c/d (Cash at Bank) 24,200
By Balance c/d (Cash in Hand) 2,000
2,64,500 2,64,500
In the beginning of the year, the Club possessed Books of Rs. 2,00,000 and Furniture of Rs. 85,000.
Subscriptions in arrears in the beginning of the year amounted to Rs. 3,500 and at the end of the year
Rs. 4,500 and six months Rent Rs. 6,000 was due both in the beginning of the year and at the end of the
year. Prepare Income and Expenditure Account of the Club for the year ended 31 st March, 2018 and
its Balance Sheet as at that date after writing off Rs. 5,000 and Rs. 11,300 on Furniture and Books
respectively.
Q142. From the following Receipts and Payments Account of City Club and from the information
supplied, prepare Income and Expenditure Account for the year ended 31 st March, 2018 and Balance
To Subscriptions: By General Expenses 6,000

2016-17 5,000 By Electricity Charges 4,000
2017-18 20,000 By Books 10,000
2018-19 4,000 29,000 By Newspapers 8,000
To Rent 14,000 By Balance c/d 4,000
(Received from the Use of
Hall)
To Profit from Entertainment 8,000
To Sale of Old Newspapers 2,000
60,000 60,000
(a) The club has 50 members each paying an annual subscription of Rs. 500. Subscriptions Outstanding
on 31 st March, 2017 were Rs. 6,000.
(b) On 31st March, 2018, Salaries Outstanding amounted to Rs. 2,000. Salaries paid in the year ended
31st March, 2018 included Rs. 6,000 for the year ended 31st March, 2017.
(c) On 1 st April, 2017, the Club owned Building valued at Rs. 2,00,000; Furniture Rs. 20,000 and
Books Rs. 20,000.
(d) Provide depreciation on Furniture at 10%.
Q143. From the following Receipts and Payments Account and additional information given below,
prepare Income and Expenditure Account and Balance Sheet of Rural Literacy Society as on 31st
March, 2018:
To Balance b/d: By General Expenses 32,000
Cash in Hand 40,000 By Newspapers 18,500
Cash at Bank 1,55,500 By Electricity 30,000
To Subscriptions: By Fixed Deposit with Bank 1,80,000
2016-17 12,000 (on 30th September, 2017 @ 10% p.a.)
2017-18 2,65,000 By Books 70,000
2018-19 5,000 2,82,000 By Salary 36,000
To Sale of Old Newspapers 12,500 By Rent 65,000
To Government Grant 1,20,000 By Postage Charges 3,000
To Sale of Old Furniture 37,000 By Furniture (purchased) 1,05,000
(Book value Rs. 50,000) By Balance c/d:
To Interest received on Fixed Deposit 4,500 Cash in Hand 30,000
Cash at Bank 82,000
6,51,500 6,51,500
(i) Subscription outstanding as on 31st March, 2017 Rs. 20,000 and on 31st March, 2018 Rs. 15,000.
(ii) On 31 st March, 2018, salary outstanding Rs. 6,000 and one month rent paid in advance.
(iii) On 1 st April, 2017, society owned furniture Rs. 1,20,000 and books Rs. 50,000.
Q144. Modern Club's Balance Sheet as at 1 st April, 2017 was as under:

Capital Fund 2,00,000 Sports Equipments 50,000
Tournament Fund 60,000 Grounds 1,20,000
Subscriptions in Advance 6,000 Billiards Tables 60,000
Salaries Unpaid 11,000 Subscriptions Outstanding 8,000
Cash and Bank Balances 39,000
2,77,000 2,77,000
The Receipts and Payments Account for the year ended 31 st March, 2018 was:

To Opening Balance 39,000 By Wages and Salaries 60,000
To Subscriptions 1,81,000 By Upkeep of Grounds 10,000
To Sale of Old Materials 1,500 By Stationery 15,000
To Sale of Sports Equipment 6,000 By Audit Fee 2,000
(Costing Rs. 10,000) By Expenses on Teams 65,000
To Entrance Fees 2,000 By Sports Equipments 20,000
To Life Membership Fees 50,000 By 5% Investments 40,000
To Donations for Tournament 20,000 (On 1st October, 2017)
By Cash and Bank Balances 87,500
2,99,500 2,99,500
Subscriptions still to be received are Rs. 5,500 but subscriptions already received include Rs. 4,000 for
next year. Salaries still unpaid are Rs. 6,000. Sports Equipments are now valued at Rs. 45,000. Prepare
Income and Expenditure Account and the Balance Sheet, after charging 10% depreciation on Billiards
Tables.
Q145. From the following information relating to the Ganesh Cricket Club, prepare Income and
Expenditure Account for the year ended 31st March, 2018 and Balance Sheet as at that date. The
summary of cash transactions is:
To Opening Balance (Cash) 10,000 By Upkeep of Fields 20,000
To Opening Balance (Cash at Bank) 20,000 By Tournament Expenses 7,000
To Members' Subscriptions 50,000 By Rates and Insurance 2,000
To Admission Fee 3,000 By Telephone 500
To Sale of Old Bats, etc. 500 By Printing and Stationery 1,000
To Hire of Ground 3,000 By General Charges 500
To Subscriptions for Tournament 10,000 By Secretary's Honorarium 2,000
To Donations 1,00,000 By Bats, Balls, etc. 7,000
By Closing Balance (Cash) 1,00,000
By Closing Balance (Cash at Bank) 56,500
1,96,500 1,96,500
Assets on 1st April, 2017: Rs.

Stock of Bats and Balls 15,000
Printing and Stationery 2,000
Subscriptions Due 5,000
Subscriptions due on 31 st March, 2018 amounted to Rs. 7,500. Write off 50% of Bats, Balls (not
considering sale) and 25% of Printing and Stationery.
Q146. From the following Receipts and Payments Account of Mumbai Theatre Club, prepare Income
and Expenditure Account for the year ended 31 st March, 2018 and Balance Sheet as at that date:
To Cash in Hand 40,000 By Salary 20,000
To Cash at Bank 1,00,000 By Repair Expenses 5,000
To Donations 50,000 By Furniture 60,000
To Subscriptions 1,20,000 By Miscellaneous Expenses 5,000
To Entrance Fees 10,000 By Investments 60,000
To Interest on Investments 1,000 By Insurance Premium 2,000
To Interest Received from Bank 4,000 By Billiard Table 80,000
To Sale of Old Newspapers 1,500 By Paper, Ink, etc. 1,500

To Sale of Drama Tickets 10,500 By Drama Expenses 5,000
By Cash in Hand (Closing) 26,500
By Cash at Bank (Closing) 72,000
3,37,000 3,37,000
(i) Subscriptions in arrear for the year ended 31 st March, 2018 Rs. 9,000 and subscriptions in advance
for the year ended 31st March, 2019 Rs. 3,500.
(ii) Insurance Premium outstanding Rs. 400.
(iii) Miscellaneous expenses prepaid Rs. 900.
(iv) 8% interest has accrued on investment for five months.
(v) Billiard Table costing Rs. 3,00,000 was purchased during last year and Rs. 2,20,000 were paid for
it.
Q147. Following Receipts and Payments Account was prepared from the Cash Book of Delhi Charitable
Trust for the year ending 31 st March, 2018:
Dr. RECEIPTS AND PAYMENTS ACCOUNT for the year ending 31st March, 2018 Cr.
To Balance b/d: By Charity 1,15,000
Cash in Hand 1,15,000 By Rent and Taxes 32,000
Cash at Bank 1,26,000 By Salary 60,000
To Donation 90,000 By Printing 6,000
To Subscription 4,28,000 By Postage 3,000
To Legacies 1,80,000 By Advertisements 45,000
To Interest on Investment 45,000 By Insurance 20,000
To Sale of Old Newspapers 2,000 By Furniture 2,16,000
By Investment 2,30,000
By Balance c/d:
Cash in Hand 99,000
9,86,000 9,86,000
Prepare Income and Expenditure Account for the year ended 31 st March, 2018, and Balance Sheet as
on that date after the following adjustments:
(i) Insurance premium was paid in advance for three months.
(ii) Interest on investment Rs. 11,000 accrued was not received.
(iii) Rent Rs. 6,000; Salary Rs. 9,000 and advertisement expenses Rs. 10,000 outstanding as on 31 st
March, 2018.
(NCERT, Modified)
Q148. Given below is the Receipts and Payments Account of a Mayur Club for the year ended 31st
March, 2018:
To Balance b/d 1,02,500 By Salaries 60,000
To Subscriptions: By Expenses 7,500
2016-17 4,000 By Drama Expenses 45,000
2017-18 2,05,000 By Newspapers 15,000
2018-19 6,000 2,15,000 By Municipal Taxes 4,000
To Donations 54,000 By Charity 35,000
To Proceeds of Drama Tickets 95,000 By Investments 2,00,000
To Sale of Waste Paper 4,500 By Electricity Charges 14,500
4,71,000 4,71,000

Prepare club's Income and Expenditure Account for the year ended 31 st March, 2018 and Balance
Sheet as at that date after taking the following information into account:
(i) There are 500 members, each paying an annual subscription of Rs. 500, Rs. 5,000 are still in arrears
for the year ended 31 st March, 2017.
(ii) Municipal Taxes amounted to Rs. 4,000 per year is paid up to 30th June and Rs. 5,000 are
outstanding of salaries.
(iii) Building stands in the books at Rs. 5,00,000.
(iv) 6% interest has accrued on investments for five months.
Q149. From the following information and the Receipts and Payments Account of Delhi Medical
Society, prepare Income and Expenditure Account for the year ended 31st March, 2018 and Balance
To Balance b/d 31,900 By Rent 16,800
To Entrance Fees 5,500 By Wages 24,500
To Subscriptions 1,80,000 By Lighting Charges 7,200
To Donations 16,500 By Books 24,800
To Life Membership Fees 25,000 By Medicines (Polio Eradication 1,00,000
Project)
To Government Grant (Polio 2,00,000 By Salaries to Doctors (Polio 80,000
Eradication Project) Eradication Project)
To Proceeds of Seminar 23,200 By Office Expenses 45,000
To Interest on Deposits 2,400 By 8% Fixed Deposits 1,20,000
(On 1st October, 2017)
By Seminar Expenses 20,200
By Cash in Hand 26,000
By Bank A/c (Polio Eradication Project) 20,000
4,84,500 4,84,500
Other Information:
On 31 st March, 2017, the Club possessed books of Rs. 2,00,000 and Furniture of Rs. 85,000. Provide
depreciation on these assets @ 10% including the purchases during the year.
Subscriptions in arrears in the beginning of the year amounted to Rs. 3,500 and at the end of the year
Rs. 5,500 were outstanding.
The Club paid three months' rent in advance both in the beginning and at the end of the year.
Q150. From the following Receipts and Payments Account of Imran Khan Club and from the given
additional information, prepare Income and Expenditure Account for the year ending 31 st December,
2015 and the Balance Sheet as at that date:
Dr. RECEIPTS AND PAYMENTS ACCOUNT for the year ending 31st December, 2015 Cr.
To Subscriptions 6,60,000 By Sports Material 4,00,000
To Interest on Investments @ 8% p.a. 40,000 By Balance c/d 1,60,000
for full year
8,90,000 8,90,000
(i) The club had received Rs. 20,000 for subscription in 2014 for 2015.
(ii) Salaries had been paid only for 11 months.
(iii) Stock of sports materials on 31st December, 2014 was Rs. 3,00,000 and on 31st December, 2015
Rs. 6,50,000.

Q151. From the following particulars relating to the Ramakrishna Mission Charitable Hospital, prepare
Income and Expenditure Account for the year ended 31 st March, 2018 and Balance Sheet as at that
date:
To Cash in Hand on By Medicines 3,05,900
1st April, 2017 71,300 By Doctor's Honorarium 90,000
To Subscriptions 4,79,960 By Salaries 2,75,000
To Donations 1,45,000 By Petty Expenses 4,610
To Interest on Investments By Equipments 1,50,000
@ 7% for full year 70,000 By Expenses on Charity Show 7,500
To Proceeds from Charity Show 1,04,500 By Cash in Hand on 31 st March, 2018 37,750
8,70,760 8,70,760
As at 1 st April, 2017 (Rs.) As at 31st March, 2018 (Rs.)
Subscriptions Due 2,400 2,800
Subscriptions Received in Advance 640 1,000
Estimated value of Equipments 2,12,000 3,16,000
Building (cost less depreciation) 4,00,000 3,80,000
Q152. Following is the Receipt and Payment Account of Women's Welfare Club for the year ended
31st March, 2018:
Dr. for the year ended 31 st March, 2018 Cr.
To Cash in Hand 22,500 By Salary 1,25,000
To Cash at Bank 50,000 By Stationery 17,000
To Donations 30,000 By Insurance 75,000
To Government Grant 1,50,000 By Equipments 3,00,000
To Sale of Newspapers 3,000 By Petty Expenses 5,000
To Proceeds of Charity Show 1,65,000 By Expenses on Charity Show 1,29,000
To Interest on Investments @ 10% for 70,000 By Newspapers 10,000
full year
To Sundries Income 4,000 By Lectures Fee 1,65,000
By Honorarium to Secretary 1,20,000
By Cash in Hand 20,500
By Cash at Bank 2,50,000
13,12,000 13,12,000
2017(Rs.) 2018(Rs.)
Outstanding Salaries 12,000 18,000
Insurance Prepaid 7,000 3,000
Subscription Outstanding 37,500 25,000
Subscription received in advance 17,500 10,000

Electricity charges outstanding 12,500
Equipments 2,56,000 5,02,000
Building 12,00,000 11,40,000
Prepare Income and Expenditure Account for the year ended 31 st March, 2018, and Balance Sheet as
on that date. (NCERT, Modified)
Q153. Receipts and Payments Account of Shankar Sports Club is given below, for the year ended 31 st
March, 2018:
To Cash in Hand (Opening) 2,600 By Rent 18,000
To Entrance Fee 3,200 By Wages 7,000
To Donation for Building 23,000 By Billiard Table 14,000
To Locker Rent 1,200 By Furniture 10,000
To Life Membership Fee 7,000 By Interest 2,000
To Profit from Entertainment 3,000 By Postage 1,000
To Subscription 40,000 By Salary 24,000
By Cash in Hand (Closing) 4,000
80,000 80,000
Prepare Income and Expenditure Account and Balance Sheet with the help of following information:
Subscription outstanding on 31st March, 2017 is Rs. 1,200 and Rs. 2,300 on 31st March, 2018; opening
stock of postage stamps is Rs. 300 and closing stock is Rs. 200; Rent Rs. 1,500 related to the year ended
31st March, 2017 and Rs. 1,500 is still unpaid. On 1 st April, 2017 the club owned furniture Rs. 15,000,
Furniture valued at Rs. 22,500 on 31st March, 2018. The club has a loan of Rs. 20,000 (@ 10% p.a.)
which was taken, in year ended 31 st March, 2017. (NCERT, Modified)
Q154.In the following Income and Expenditure Account for the year ended 31st March, 2018 and
Balance Sheet as on that date, determine the missing information:
Dr. INCOME AND EXPENDITURE ACCOUNT for the year ended 31st March, 2018 Cr.
Expenditure Rs. Income Rs.
To Salaries 2,64,000 By Subscription 5,28,000
Add: Outstanding Salaries ? ? ? Advance Subscription in
To Depreciation on Sports Equipment 40,000 beginning of 2017-18 16,000 ?
To Surplus ? By Interest on Investment ?
(Excess of Income over Expenditure)
5,76,000 5,76,000
Capital Fund ? Investment 4,00,000
Add: Surplus ? ? Stock of Sports Material 5,20,000
Salaries Outstanding 24,000 Cash at Bank 1,28,000
? ?
Q155. In the following Income and Expenditure Account for the year ended 31st March, 2018 and
Balance Sheet as on that date, determine the missing information:
Dr. INCOME AND EXPENDITURE ACCOUNT for the year ended 31 st March, 2018 Cr.
Expenditure Rs. Income Rs.
To Rent 10,000 By Subscriptions 1,00,000
Add: Outstanding at the end ? 16,000 Add: Subscription due
To Salary 24,400 at the end 5,000 ?

Add: Outstanding at the end 1,000 7 By Entrance Fees 40,000
To Printing and Stationery 45,000 By Profit from Annual Dinner ?
To Honorarium 10,000 By Sale of Old Newspaper 5,000
To Conveyance 5,000 By Gain (Profit) on Sale of Crockery 10,000
To General Expenses 25,000
To Surplus ?
(Excess of income year expenditure) ? ?

Outstanding Rent ? Cash-in-Hand 25,600
Outstanding Salary 10,000 Cash at Bank 1,75,000
Legacies 1,20,000 Subscription Due ?
Capital Fund: Books 20,000
Life Membership Fee 90,000 Furniture 50,000
Add: Surplus ? ?
? ?

Class 12 Accounts CA Parag Gupta

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Chapter 1: Accounting for Partnership Firms -

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Q 13.The partnership agreement of Maneesh and Girish provides that

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Q 25.A, B and C are partners in a firm. You are informed that:

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To Salary to Y 12,000 (Profit for the year) 92,200

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Q 76.A, B and C are partners in a firm.

Q 77. X and Y are partners in a firm.

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Q.226 On 1st April, 2017 the balances of A and B were as follows :—

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Q333.Fill in the missing figures in the following Accounts :

Dr. PARTNER’S CAPITAL ACCOUNTS Cr.

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