1.Madan and Gopal are partners sharing profits in the ratio of 3 : 2.

They admit Sooraj for 1/3rd

share in profits on 1st April, 2019. They also decide to share
future profits equally. Goodwill of the firm was valued at Rs. 5,50,000. Goodwill existed in the
books of account at Rs. 1,00,000, Which the partners decide to carry
forward.
Sooraj is unable to bring his share of goodwill. Pass the necessary journal entries on
admission of sooraj, if:
(a) Goodwill is not to be raised and written off; and
(b) Goodwill is to be raised and written off.

2.Verma and Sharma are partners in a firm sharing profits and losses in the ratio of 5 : 3. They
admitted Ghosh as a new partner for 1/5th share of profits.
Ghosh is to bring in Rs. 20,000 as capital and Rs. 4,000 as his share of goodwill premium. Give
the necessary journal entries:
(a) When the amount of goodwill is retained in the business.
(b) When the amount of goodwill is fully withdrawn.
(c) When 50% of the amount of goodwill is withdrawn.
(d) When goodwill is paid privately.

3. 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:

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.

4. 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.

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 A/c and Partners' Capital A/cs,
and show the Balance Sheet after the admission of C
RETIREMNET

1.A, B and C are partners in a firm sharing profits and losses in the ratio of 4:3:2 . B decides to
retire from the firm. Calculate new profit-sharing ratio
of A and C in the following circumstances:
(a) If B gives his share to A and C in the original ratio of A and C .
(b) If B gives his share to A and C in equal proportion.
(c) If B gives his share to A and C in the ratio of 3:1.
(d) If B gives his share to A onlY

2.P, Q, R and S were partners in a firm sharing profits in the ratio of 5 : 3 : 1 : 1. On 1st
January, 2017, S retired from the firm. On S's retirement the goodwill of
the firm was valued at Rs 4,20,000. The new profit-sharing ratio between P, Q and R will be 4 :
3 : 3. Showing your working notes clearly, pass necessary journal entry for
the treatment of goodwill in the books of the firm on S's retirement.

3.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

4.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 preceding completed years.
(c) half the amount of the goodwill of the firm calculated at 112/112 times the average profit of
the three preceding completed years.
C gave a notice on 31st 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?

5.X, Y and Z were in partnership sharing profits and losses in the proportions of 3 : 2 : 1 . On
1st April, 2018 Y retires from the firm. On that date, their Balance
Sheet was:
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.

5. Pankaj, Naresh and Saurabh are partners sharing profits in the ratio of 3 : 2 : 1. On 31st
March, 2019, Naresh and on that date, Balance Sheet of the firm was as follows:
Additional Information:
(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
Answer