J. K.

SHAH CLASSES
BRANCH – SET - B TIME : 2 hrs. TOTAL MARKS : 40

Q1) (A) Select the most appropriate alternative from those given below: (5m)

(1) In case of dissolution assets and liabilities are transferred to ____________A/c

(a) Bank A/c (b) Partner’s capital A/c (c) Realisation A/c (d) Partner’s current A/c

(2) Dissolution expenses are credited to ___________A/c.

(a) Realisation A/c (b) Cash/Bank A/c
(c) Partner’s Capital a/c (d) Partner’s CurrentA/c

(3) Deficiency of Insolvent partner will be suffered by solvent partners in their

____________ratio.
(a) Capital ratio (b) Profit – sharing ratio (c) Sale ratio (d) Liquidity ratio

(4) If any asset is taken over by partner from firm his Capital A/c will be _____________.
(a) Credited (b) Debited (c) _Added (d) None of these

(5) If any unrecorded liability is paid on dissolution of the firm _________ account is
debited.
(a) Cash/Bank A/c (b) Realisation A/c (c) Partner’s Capital A/c (d) Loan A/c

(B) State whether the following statements are True or False. (5m)
(1) Debit balance of insolvent Partner’s Capital A/c is known as Capital Deficiency.
(2) At the time of dissolution loan from partner will be transferred to Realisation Account.
(3) Dissolution takes place when the relation among the partner’s comes to an end.
(4) The insolvency loss at the time of dissolution of the firm is shared by the Solvent
Partner’s in their Profit – sharing ratio.
(5) Realisation loss is not transferred to insolvent partner’s Capital Account.

(C) Write the word / term / phrase, which can substitute each of the following statement.
(5m)
(1) Debit balance in realisation account.
(2) Winding up of partnership business.
(3) An account opened to find out the Profit or Loss on Sale of Assets and Settlement of
Liabilities
(4) Debit balance of an Insolvent Partner’s Capital Account.
(5) Credit balance in realisation account.

(D) Find out the value of goodwill from the following information, under super profit method. (5m)
a) The trading results of the partnership firm for the last five years were as follows.
Year Amount ` Year Amount ` Year Amount `
2005 75,000 (Profit) 2007 60,000 (Profit) 2009 90,000 (Profit)
2006 25,000 (Loss) 2008 1, 00,000 (Profit)

b) Capital employed is ` 4, 50,000

c) Normal rate of return is 10%
d) Goodwill is to be valued at two year’s purchased of super profit

Q2) Paresh and Naresh were partners sharing profits and losses into ratio of 3/5 and 2/5. On 31 st
March, 2012 their balance sheet was as follows: (10m)

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 Balance Sheet as on 31st March, 2012
Liabilities Amt. ` Assets Amt. `
Sundry Creditors 30,000 Cash 500
Reserve Fund 10,000 Sundry Debtors 45,000
Capital A/c’s Less : R. D. D. 500 44, 500
Paresh 72,000 Stock 17, 000
Naresh 48,000 Investments 24, 000
Plant 30, 000
Building 44, 000
1, 60,000 1, 60,000
st
On 1 April, 2012 Dinesh was admitted to partnership on the following terms:
1) Dinesh should bring ` 36, 000 as capital for 1/5th share in future profits.
1
2) Valuation of Goodwill of the firm was to be made as 2 years purchase of the average profit
2
of the last three years which were as follows:
I year - ` 32, 000, II year - ` 54, 000 and III year - ` 49, 000 Dinesh is to bring the goodwill in
cash equal to his share in future profit.
3) R.D.D. is to be raised upto ` 1, 000
4) Closing stock is to be valued at ` 15, 000/-
5) Building to be appreciated by 5%.

Pass necessary journal entries in to book of the firm and prepare Balance Sheet after the
admission of Dinesh.

Q3) Ganga, Yamuna and Venna were partners sharing profits and losses in the ratio of 1 : 2 : 3
respectively. Their Balance Sheet as on 31st March, 2011 was as follows: (10m)

Balance sheet as on 31st March, 2011

Liabilities Amount ` Assets Amount `
Capital Account Machinery 29, 000
Ganga 8,000 Furniture 7, 000
Yamuna 16,000 Fixtures 12, 000
Venna 26, 000 Investments 12, 000
Contingency Reserve 6, 000 Stock 15, 000
Workmen’s compensation fund 3, 500 Trade Debtors 9, 000
Creditors 14, 000 Cash in hand 3, 000
Ganga’s Husband’s Loan 10, 000 Profit and Loss A/c 4, 500
Yamuna’s Husband’s Loan 8, 000
91,500 91,500
The firm was dissolved as on that date and the assets realised as follows:
1) Machinery ` 20, 000, investments ` 7, 000 and debtors ` 7, 000.
2) Ganga took over her Husband’s Loan.
3) Stock was taken over by Yamuna at ` 14, 000.
4) Yamuna’s Husband’s Loan was paid in full.
5) Furniture and fixtures were taken over by Venna at 10% less than the book value.
6) Realisation expenses amounted to ` 1, 900.
7) In addition an outstanding liability for ` 2, 500 was finally settled at ` 2, 200 and paid off
immediately.
8) Liability towards workmen’s compensation fund is estimated to be ` 2, 000 and has to be
paid off.
9) The creditors were paid ` 12, 000 in full settlement of their claims.

Prepare the necessary Ledger Accounts in the books of the firm.

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