Accountancy. Class Chapter 1 (Partnership Accounts (Fundamentals)

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1 Accountancy Class - +2 Chapter 1 (Partnership Accounts (Fundamentals) Questions : - 1. Jain and Gupta Were Partners in a firm sharing profits in 3 : 2 ratio. Their fixed capitals were Jain Rs. 1,00,000 And Gupta Rs. 1,50,000. After the accounts of the year had been closed it was discovered that interest on capital at 10% per annum as provided in the partnership agreement has not been credited to the capital accounts of the partners before distribution of profits. Pass the necessary journal entry to rectify the error. Ans. Jain debited and Gupta credited by Rs. 5, R, S and T were partners in a firm sharing profits in the ratio 5 : 3 : 2 with capitals of Rs. 50,000, Rs. 24,000 and Rs. 26,000 respectively. Partners were entitled for an 6% per annum on their capitals. R and S had guaranteed T that his share of profits in any year would not be less than Rs. 10,000 excluding interest. During the year the firm had earned a profit of Rs. 48,000 before charging the interest on capital. R and S had also withdrawn Rs. 5,000 and Rs. 7,400 respectively. Prepare the P & L Appropriation Account. Ans. Share of Profit- R: Rs. 20,000, S: Rs. 12,000 and T: Rs. 10, Mohan, Neeraj and Peeyush are partners in a firm. They contributed Rs. 75,000 each as capital three years ago. At that time Peeyush agreed to look after the business as Mohan and Neeraj were busy. The profits for the past three years were Rs. 45,000, Rs. 30,000 and Rs. 60,000 respectively. While going through the books of accounts. Mohan noticed that profit had been distributed in 1 : 1: 2 ratio. When he enquired from Peeyush about this, Peeyush answered that since he looked after the business he should get more profit. Mohan disagreed and it was decided to distributed profits equally with retrospective effect for the last three years. (a) You are required to make necessary corrections in the books of accounts of Mohan, Neeraj and Peeyush by passing and adjustment entry. (b) Identify the value which is being ignored by Peeyush. Ans. (a) Mohan and Neeraj both credited with Rs. 11,250 each by debiting Peeyush with Rs. 22, L, M and N were partners in a firm sharing profits in the ratio of 3 : 4 : 5. Their fixed capitals were L-Rs. 4,00,000, M- Rs. 5,00,000 and N- Rs. 6,00,000 respectively. The partnership deed provided or the following : (i) Interest on 6% p.a. (ii) Salary of Rs. 30,000 p.a. to N. (iii) Interest on partner s drawings will 12% p.a. Online Guess Papers : Mobile : ,

2 During the year ended the firm earned a profit of Rs, 2,70,000. L withdrew Rs. 10,000 on , M withdrew Rs. 12,000 on and N withdrew Rs. 15,000 on Prepare Profit and Loss Appropriation Accounts for the year ended Ans. Net Profit Rs. 1,52,370 Hints. Interest on drawing- L Rs. 1,200, M Rs. 7820, N Rs A and B entered into partnership on 1 st April 2009 without any partnership deed. They introduced capitals of Rs. 5,00,000 and Rs. 3,00,000 respectively. On 31 st October 2009, 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 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 the distribution of the profit between the partners and prepare the Capital A/cs of both the partners and Loan A/c of A. Ans. Share of profit- A: Rs.2,12,500; B: Rs. 2,12,500, Balance of Capital Account- A: Rs. 7,12,500; B: Rs. 5,12,500; Balance of A s Loan A/c: Rs. 2,05,000 6.A,B,C And D are partners sharing Profits and Losses in the ratio of 4 : 3 : 3: 2. Their respective fixed capitals on were Rs. 60,000, Rs. 90,000, Rs. 1,20,000, and Rs. 90,000. After preparing the final accounts for the year ended it was discovered that interest on 12% p.a. was not allowed and interest on drawings amounting to Rs. 2,000, Rs. 2,500, Rs. 1,500 and Rs. 1,000 respectively was also not charged. Pass the necessary adjustment journal entry showing your workings clearly. Ans. A- Dr. 6,867; B- Dr. Rs. 750; C-Cr. Rs. 3,850; D-Cr. Rs. 3, A, B and C were partners in a firm. On their fixed capitals stood at Rs. 50,000, Rs. 25,000 and Rs. 25,000 respectively. As per the provisions of the partnership deed: (a) B was entitled for a salary of Rs. 5,000 p.a. (b) All the partners were entitled to interest on capital at 5% p.a. (c) Profits were to be shared in the ratio of capitals. The net profit for the year ending of Rs. 33,000 and of Rs. 45,000, was divided equally without Journal entry to rectify the above error. Pass an adjustment Journal entry to rectify the above error. Ans. A- Cr. Rs. 8,000; B- Cr. Rs. 1,000; C- Dr. Rs. 9,000 Online Guess Papers : Mobile : ,

3 8. Lalan and Balan were partners in a firm sharing profits in the ratio of 3 : 2. Their fixed capitals on were Lalan Rs. 1,00,000 and Balan Rs. 2,00,000. They agreed to allow interest on 12% per annum and to charge on 15% per annum. The firm earned a profit, before all above adjustments, of Rs. 30,000 for the year ended The drawings of Lalan and Balan during the year were Rs. 3,000 and Rs. 5,000 respectively. Showing your calculations, clearly prepare Profit and Loss Appropriation A/c of Lalan and Balan. The interest on capital will be allowed even if the firm incurs a loss. Ans. Share of Loss- Lalan Rs. 3,240; Balan Rs. 2,160. Hint. Interest on Drawing will be 15% p.a. for six months because the actual date of drawing is not given. 9. Anit, Sunil and Ravinder entered into a Partnership on 1 st January 2011 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 December 31 st 2011 were Rs. 2,00,000 before allowing interest Rs. 8,000 on Anit s loan which is due for the current year. Prepare Profit and Loss appropriation Account for the year ended 31 st December Ans. Share of Loss- Anit Rs. 1,85,333; Sunil Rs. 92, Ravi and Jain are partners in a firm. Their fixed capitals are Rs. 3,00,000 and Rs. 4,00,000 respectively. They admitted Gupta as a new partner for 1/4 th share in the profits. According to the conditions of partnership deed, Gupta was given a guarantee of profit of Rs. 50,000. Deficit in the guaranteed amount to Gupta will be borne by Ravi and Jain in the ratio of 3 : 2. The firm earned a profit of Rs. 1,60,000 for the year ended Prepare the Profit and Loss Appropriation Account and show your working clearly. Ans. Share of Profit- Ravi Rs. 54,000; Jain Rs. 56,000; Gupta Rs. 50,000 Hint. Profit Sharing Ratio of Ravi and Jain is equal. 11. Rehman, Suleman and Hanuman were partners in a firm sharing profits in the ratio o 7 : 2 : 1 respectively. Their fixed capitals were as follows: Rehman Rs. 3,00,000; Suleman Rs. 2,00,000 and Hanuman Rs. 1,00,000. The partnership deed provided for the following for the division of profit: (i) 10% of the trading profits will be transferred to Reserve Account. (ii) Hanuman was guaranteed a profit of Rs. 50,000. Any loss because of guarantee to Hanuman will be shared by Rehman and Suleman equally. The trading profit of the firm for the year ended was Rs. 2,00,000. Prepare the Profit and Loss Appropriation Account of Rehman, Suleman and Hanuman for the year ended Online Guess Papers : Mobile : ,

4 Ans. Share of Profit- Rehman Rs. 1,10,000l; Suleman Rs. 20,000; Hanuman Rs. 50, Ahmed, Bheem and Daniel are Partners in a firm. On 1 st 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 5% per annum and salary to Rs. 3,000 per month and a commission of Rs. 12,000 to Daniel as per the provisions of the partnership deed. Ahmed 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 31 st March 2012 amounted to Rs. 2,16,000. Prepare Profit and Loss Appropriation Account for the year ended 31 st March Ans. Share of profit- Ahmed Rs. 39,000; Bheem Rs. 25,000; Denial Rs. 14, Sita and Geeta were partners in a firm. On 1 st April, 2011 hey admitted Neha as a partner for 1/3 share in the profits of the firm. She is differently abled. The new partnership deed provides for the following: (i) 5% of the trading profit will be donated to Red Cross Society. (ii) 10% of the trading profit will be donated to the Prime Minister s Relief Fund. (iii) Products will be sold to people below poverty line at a discount of 15% on maximum retail price. (iv) New retail shops will be opened in the backward areas of the country. (v) New recruitment of salespersons will be reserved for the girls belonging to Scheduled Castes and Scheduled Tribes. The trading profit of the firm for the year ended was Rs. 12,00,000. Identify any four values that were kept in mind by Sita, Geeta and Neha while preparing the new partnership deed. Also prepare the Profit and Loss Appropriation Account of the firm for the year ended Questions : - Chapter 2 Partnership Accounts (Goodwill- Nature and Valuation) 1. A Partnership firm earned net profit during the last three years as follows: Years Net profit ,90, ,20, ,50,000 Online Guess Papers : Mobile : ,

5 The Capital employed in the firm throughout the above mentioned period has been Rs. 4,00,000. Having regard to 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 capitalization method. Ans. (i) 1,20,000; (ii) 4,00, The capital employed in a firm is Rs. 10,00,000 and the market rate of interest is 15% Annual salary of the partners is Rs. 80,000. The profits of the last three years were Rs. 3,00,000; Rs. 4,00,000 and Rs. 5,00,000 respectively. Calculate the value of goodwill on the basis of two years purchase of the average super profits of last three years. Ans RS Questions : - Chapter 3 Partnership Accounts (Reconstitution) 1. A, B and C were partners in a firm. They had no partnership deed. They had been in business for 4 years and their P & L for this period was : year ending March 2004 Rs. 39,000, March 2005 Rs. 54,000, March 2006 Rs. 18,000 (loss) and March 2007 Rs. 75,000. During the year , they agreed to share profits and losses in the ratio of 2 : 2 : 1 with retrospective effect from the year It was also decided that an interest (charge) of 5% p.a. was to be provided on capitals (fixed). Their capitals were Rs. 80,000, Rs. 60,000 and Rs. 60,000 respectively. Pass a single adjustment entry to adjust the capital accounts of the partners. Ans. C debited Rs. 16,000 by crediting A Rs. 10,000 and B Rs. 6,000 Questions : - Chapter 4 Partnership Accounts (Admission) 1. A and B are partners with capitals of Rs. 90,000 and Rs. 1,00,000 respectively. They decide to admit C into the partnership for 1/4 th share in the future profits. C is to bring in a sum of Rs. 80,000 as his capital. Calculate the amount of goodwill. Ans. Rs. 50, A and B are partners sharing profits in the ratio of 5 : 4. They admit C for a 1/3 rd share, which he acquires in equal proportion from both. Find the new profit sharing ratio. Online Guess Papers : Mobile : ,

6 Ans. 7 : 5 : 6 3. Sumit and Puneet are partners in a firm sharing profits in the ratio of 3 : 2 respectively. The fixed capital of sumit is Rs. 2,40,000 and Puneet is Rs. 1,50,000. On they admitted Kashish as a new partner for 1/5 th share in future profits. Kashish brought Rs. 1,50,000 as his capital. Calculate the value of goodwill of the firm and record necessary Journal Entries on Kashish s admission. Ans. Value of Goodwill Rs. 2,10,000; Kashish debited by Rs. 42,000; Sumit and Puneet credited by Rs. 25,200 and Rs. 16,200 respectively, for share of goodwill. 4. Anil and Sunil are partners in a firm with fixed capitals of Rs. 3,20,000 and Rs. 2,40,000 respectively. They admitted Charu as a new partner for 1/4 th Share in the profits of the firm on 1 st April, Charu brought Rs. 3,20,000 as her share of capital. Calculate the value of the goodwill of the firm and record necessary Journal Entries. Ans. Value of goodwill Rs. 4,00,000; Charu debited by Rs. 1,00,000; Anil & Sunil credited by Rs. 50,000 each for share of goodwill. 5. A and B are partners in a firm sharing profits in the ratio of 3 : 1. They admitted C as a new partner. The new profits sharing ratio of A, B and C will be 2 : 1 : 1. C brought Rs. 2,50,000 for his capital but could not bring his share of goodwill (premium) Rs. 10,000 in cash. Pass necessary journal entries in the books of the firm for the amount of capital brought in by C and for the treatment of goodwill. Ans. trf. From C s capital A/c capital A/c for C s share of goodwill of Rs. 10, A and B are partners in a firm sharing profits in the ratio of 3 : 4. They admit C for 3/10 th share of profits which he acquires, in equal proportions from both of them. Find the new profit sharing ratio. (b) C brings Rs. 42,000 as his share of premium for goodwill in cash. Pas journal entries for recording goodwill. Ans. (a) 39 : 59 : 42 (b) C s share of goodwill trf. to-a: Rs. 21,000; B : Rs. 21, A and B were partners in a firm sharing profits in the ratio of 4 : 3. They admitted C as a new partner for 3/7 th share in the profits of the firm. The 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 as 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. Ans. Sacrificing ration = 2 : 1 Online Guess Papers : Mobile : ,

7 8. Asin and Shreyas are partners in a firm. They admit ajay as a new partner with 1/5 th 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 the date. Give the necessary Journal entry to record goodwill ate the time of Ajay s admission. Also show your workings. Ans. Ajay s share of goodwill of Rs. 2,00,000 transfer to Asin and Shreyas equally. 9. L and M were partners in a firm sharing profits in 4 : 3 ratio. They admitted O as a new partner. The new profit sharing ratio of L, M and O will be 3 : 3 4. O brought Rs. 2,00,000 for his capital. The goodwill of the firm on O s admission was valued at Rs. 70,000. O brought his share of goodwill in cash. Calculate sacrificing ration of L and M and pass necessary journal entries for the above transaction on O s admission. Ans. Sacrificing ratio = 19 : 9; O s share of goodwill of Rs. 28,000 credited to L Rs. 19,000 and M Rs. 9, X and Y were partners in a firm sharing profits in 3 : 1 ratio. They admitted Z as a new partner for 1/4 th share in the profits. Z was to bring Rs. 20,000 as his capital and the capitals of X and Y were to be adjusted on the basis of Z s capital in the profit sharing ratio. The Balance Sheet of X and Y on was as follows: Balance Sheet of X and Y on Liabilities Assets Creditors 18,000 Cash 5,000 Bills payable 10,000 Debtors 17,000 General reserve 12,000 Stock 12,000 X s capital 25,000 Machinery 21,000 Y s capital 10,000 Building 20,000 75,000 75,000 Others terms of agreement on Z s admission were as follows: (i) Z will bring Rs for his share of goodwill. (ii) Building will be valued ate Rs. 25,000 and machinery at Rs. 19,000. (iii) A provision at 5% on debtors will be created for bad debts. (iv) Capital accounts of X and Y were adjusted by opening current accounts. Prepare Revaluation Account, Partners Capital Accounts and the Balance Sheet of X, Y and Z. Online Guess Papers : Mobile : ,

8 Ans. Profit on revaluation = Rs. 2,150; Capital accounts- X: Rs. 45,000; Y : Rs. 15,000; Z : Rs. 20,000; B/S Total Rs. 1,08,037 Hint. Balance of Current Accounts- X: Rs. 4,887 (Dr); Y: Rs. 37 (Cr) 11.Jain and Gupta were partners sharing profits in the ratio of 3 : 2. Their Balance Sheet on was as follows: Liabilities Assets Creditors 20,000 Cash 14,800 Bills payable 3,000 Debtors 20,500 Bank overdraft 17,000 Less Prov. For doubtful debts ,200 Reserve 15,000 Stock 20,200 Jain s Capital 70,000 Plant 40,000 Gupta s Capital 60,000 Buildings 70,000 Motor Vehicles 20,000 1,85,000 1,85,000 They agree to admit Mishra for 1/4 th share from subject to following terms : (a) Mishra to bring in capital equal to 1/4/th of the total capital of Jain and Gupta after all adjustments including premium for goodwill. (b) Buildings to be appreciated by Rs. 14,000 and stock to be depreciated by Rs. 6,000/ (c) Provision for doubtful debts (on debtors) to be raised to Rs. 1,000. (d) A provision be made for Rs. 1,800 for outstanding legal charges. (e) Mishra s share of goodwill/premium was calculated at Rs. 10,000. Prepare Revaluation Account, Partners Capital Accounts and the Balance Sheet of the new firm on Mishra s Admission. Ans. Profit on Revaluation Rs. 5,500; Balance of capital accounts- Jain Rs. 88,300; Gupta Rs. 72,200; Mishra Rs. 30,125; B/S total Rs. 2,32,425 Hint. Cash bring in by Mishra as capital Rs. 40, Rao and Reddy were partners in a firm sharing profits in the ratio of 3 : 1. They admitted Kutty as a new partner for 3/8 th share in the profits. The new Profit sharing ratio will be 3 : 2 : 3. Kutty brought Rs. 2,00,000 for his capital and Rs. 50,000 for his share of premium for goodwill. On , the date of Kutty s admission. The Balance Sheet of Rao and Reddy was as follows : Online Guess Papers : Mobile : ,

9 Balance Sheet of Rao and Reddy as on Liabilities Assets Creditors 60,000 Cash 90,000 Bills Payable 20,000 Debtors 80,000 Capitals: Stock 1,50,000 Rao 4,00,000 Furniture 50,000 Reddy 1,00,000 5,00,000 Machinery 2,10,000 5,80,000 5,80,000 It was agreed that : (i) Stock is valued at Rs. 2,00,000. (ii) Machinery will be depreciated by 12% (iii) Furniture will be depreciated by Rs. 2,000. (iv) A provision of 5% for bad and doubtful debts will be made on debtors. (v) The Capital Accounts of all the partners were adjusted in the new profit sharing ratio after admission. For surplus or deficiency, the Current Accounts were to be opened. Prepare Revaluation Account, Partners Capital Accounts and the Balance Sheet of the new firm. Ans. Profit on revaluation Rs. 18,800; Balance of Capital A/c- Rao Rs. 2,88,300; Reddy Rs. 1,92,200; Kutty Rs. 2,88,300; B/S Total Rs. 10,24,600 Hint. Balance of Current A/c- Rao Rs. 1,75,800 (Cr); Reddy Rs. 87,500 (Dr); Kutty Rs. 88,300 (Dr). 13. The Balance Sheet of Ram and Shyam, Who were sharing profits in the ratio of 3 : 1, on 31dt March 2009 was as follows: Liabilities Assets Online Guess Papers : Mobile : ,

10 Creditors 2,800 Cash at bank 2,000 Employees Provident Fund 12,00 Debtors 20,500 General Reserve 2,000 Less Reserve for Capitals: Doubtful debts (-) 500 6,000 Ram 6,000 Stock 3,000 Shyam 4,000 10,000 Investments 5,000 16,000 16,000 They decided to admit Mohan on April 1 st 2009 for 1/5 th share on the following terms : (i) Mohan shall bring Rs. 6,000 as his share of premium. (ii) That unaccounted accrued income of Rs. 100 be provided for. (iii) The market value of investments was Rs. 4,500. (iv) A debtor whose dues of Rs. 500 was written off as bad debts paid Rs. 400 in full settlement. (v) Mohan to bring in capital to the extent of 1/5 th of the total capital of the new firm. Prepare Revaluation A/c, Partners Capital A/cs and the Balance Sheet of the new firm. Ans. Profit on revaluation = Nil; Capital introduce by Mohan Rs. 4,500; B/S Total Rs. 26, Ishu and Vishu are partners sharing profits in the ratio of 3 : 2. Their Balance Sheet on 31 st March was as follows. Liabilities Assets Creditors 66,000 Cash at bank 87,000 Employees Provident Fund General Reserve Capitals: Ishu 1,19,000 Vishu 1,12,000 10,000 4,000 2,31,000 Debtors 42,000 -) Prov. For Doubtful debts 7,000 Investments (market price 19,000) Buildings 35,000 21,000 98,000 70,000 3,11,000 Plant & Machinery 3,11,000 Nishu was admitted on that date for 1/6 th 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% Online Guess Papers : Mobile : ,

11 (iv) All debtors are good. (v) There is a liability of Rs. 9,800 included in Sundry 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 Partner s Capital Accounts and the Balance Sheet of the firm after the above adjustments. Ans. Profit on Revaluation Rs. 32,800; Cash bring in by Ishu Rs. 14,920; Cash paid to Vishu Rs. 22,720; B/S Total Rs. 3,92,200. Hint. Balance of Capital Accounts- Ishu Rs. 1,68,000; Vishu Rs. 1,12,000; Nishu Rs. 56,000; Net Balance of Investment Fluctuation Fund of Rs. 2,000 credited to Revaluation Account. 15. Murari and Vohra were partners in a firm with capitals of Rs. 1,20,000 and Rs. 1,60,000 respectively. On 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 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. Ans. Profit on Revaluation Rs. 27,000 Balance of Partner s Capital A/c-Murari Rs. 1,78,500; Vohra Rs. 2,18,500: Yadav Rs. 2,00,000; Balance Sheet Total Rs. 6,72,000. Hint. Cash balance before admission of Yadav = Rs. 25, The Balance Sheet of Madan and Mohan who share profits and losses in the ratio of 3 : 2 on was as follows: Liabilities Assets Creditors 28,000 Cash at bank 10,000 Workmen s Compensation Fund General Reserve Capitals: Rs. Madan 60,000 12,000 20,000 1,00,000 Debtors 65,000 Less: Reserve for Doubtful debts 5,000 Stock 60,000 30,000 50,000 Online Guess Papers : Mobile : ,

12 Mohan 40,000 Investments Patents 10,000 1,60,000 1,60,000 They decided to admit Gopal on for 1/4 th share on the following terms: (i) Gopal shall bring Rs. 20,000 as his. Share or premium for goodwill. (ii) That unaccounted accrued income of Rs. 1,000 be provided for. (iii) The market value of investments was Rs. 45,000. (iv) A debtor whose dues of Rs. 5,000 were written of as bad debts paid Rs. 4,000 in full settlement. (v) A claim of Rs. 3,000 on account of workmen s compensation to be provided for. (vi) Patents are over-valued by Rs. 2,000. (vii) Gopal to bring in capital equal to 1/4 th of the total capital of the firm after all adjustments. Prepare the Revaluation Account, Capital Accounts of the partners and the Balance Sheet of the new firm. Ans. Loss on Revaluation Rs. 2,000; Balance of Capital Accounts- Madan Rs. 88,200; Mohan Rs. 58,800; Gopal to bring capital Rs. 49,000 (i.e. 88,200 + Rs. 59,800) x4/3x1/4)); B/S Total Rs. 2,27, Atal and Madan were partners in a firm sharing profits in the ratio of 5 : 3. On they admitted Mehra as a new partner for 1/5 th share in the profits. The new profit sharing ratio was 5 : 3 : 2. On Mehra s admission the Balance Sheet of the firm was as follows: Liabilities Assets Capital : Land and Building 1,50,000 Atal : 1,50,000 Machinery 40,000 Madan : 90,000 2,40,000 Patents 5,000 Provision for bad debts 1,200 Stock 27,000 Creditors 20,000 Debtors 47,000 Workmen Fund Compensation 32,000 Cash Profit and Loss Account 4,200 20,000 On Mehra s admission it was agreed that 2,93,200 2,93,200 (i) Mehra will bring Rs. 40,000 as his capital and Rs. 16,000 for his share of goodwill premium, half of which was withdrawn by Atal and Madan; (ii) A provision of 21/2% for bad and doubtful debts was to be created; Online Guess Papers : Mobile : ,

13 (iii) Included in the sundry creditors was on item of Rs. 2,500 which was not to be paid; (iv) A provision to be made for an outstanding bill for electricity Rs. 3,000; (v) A claim of Rs.325 for damages against the firm was likely to be admitted. Provision for the same was to be made. After the above adjustments, the capitals of Atal and Madan were to be adjusted on the basis of Mehra s capital. Actual cash was to be brought in or to be paid off to Atal and Madan as the case may be. Prepare Revaluation Account, Capital Accounts of the partners and the Balance Sheet of the new firm. Ans. Loss on Revaluation Rs. 800; Balance of Capital Accounts- Atal Rs. 1,00,000; Madan Rs. 60,000; Mehra Rs. 40,000; B/S Total Rs. 2,67,825. Hint. Final payment made to- Atal Rs. 62,000; Madan Rs. 37,200 by arranging overdraft of Rs. 47, Raghu and Rishu are partners sharing profits in the ratio of 3 : 2. Their Balance Sheet as on 31 st March 2009 was as follows : Balance Sheet of Raghu and Rishu as on 31 st March 2009 Liabilities Assets Creditors 86,000 Cash in hand 77,000 Employee provident Fund 10,000 Debtors 42,000 Investment Fluctuation Fund 4,000 Less: Reserve for Capitals: Raghu : 1,19,000 Rishu : 1,12,000 Doubtful debts - 35,000 7,000 21,000 2,31,000 Investments 98,000 Buildings 1,00,000 Plant and Machinery 3,31,000 3,31,000 Rishabh was admitted on that date for 1/4 th share of profit on the following terms : (i) Rishab will bring Rs. 50,000 as his share of capital. (ii) Goodwill of the firm is valued at Rs. 42,000 and Rishabh will bring his share of Goodwill in cash. (iii) Buildings were appreciated by 20% (iv) All debtors were good. (v) There was a liability of Rs. 10,800 included in creditors which was not likely to arise. (vi) New profit sharing ratio will be 2 : 1 : 1. (vii) Capital of Raghu and Rishu will be adjusted on the basis of Rishab 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, Partner s Capital Accounts and the Balance Sheet of the new firm. Online Guess Papers : Mobile : ,

14 Ans. Profit on Revaluation Rs. 41,400; Balance of Capital Accounts- Raghu Rs. 1,00,000; Rishu Rs. 50,000; Rishabh Rs. 50,000; B/S Total Rs. 2,85,200. Hint. Cash withdrawn by- Raghu Rs. 48,040; Rishu Rs. 84,860; Market Value of Investment is assumed to be same as Cost Price and Investment Fluctuation Fund of Rs. 4,000 transfer to Revaluation Account. 19. Sarthak and Vansh are partners sharing profits 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. Mansi, a common friend, decides to help them. Therefore they admit her into partnership for 1/3 rd share in profits. She brings Rs. 60,000 for goodwill and proportionate capital. At the time of admission of Mansi, the Balance Sheet of Sarthak and Vansh was a under : Liabilities Assets Capital Accounts : Plant 66,000 Sarthak : 70, 000 Furniture 30,000 Vansh : 60, 000 1,30,000 Investments 40,000 General Reserve 18,000 Stock 46,000 Bank Loan Creditors 18, Debtors 38,000 Less: Provision for Bad Debts - 4,000 34,000 22,000 2,38,000 Cash 2,38,000 It was decided to : (i) Reduce the value of Stock by Rs. 10,000 (ii) Plant is to be valued at Rs. 80,000. (iii) An amount of Rs. 3,000 included in Creditors was not payable. (iv) Half of the Investments were taken over by Sarthak and remaining were valued at Rs. 25,000. Prepare Revaluation Account, Partners Capital Accounts and Balance Sheet of reconstituted firm. Identify the value being conveyed in the question. Ans. Profit on Revaluation Rs. 12,000; Balance of Capital Account- Sarthak Rs. 1,10,000; Vansh Rs. 90,000; B/S Total Rs. 3,87,000 Hint. Capital introduced by Mansi Rs. 1,00,000 Online Guess Papers : Mobile : ,

15 20. Karim and Rehman are partners in a firm sharing profits in the ratio of 2 : 3 respectively. They admitted Naval as a new partner for 1/2 share in the profits. Naval will bring Rs. 5,00,000 for his capital and the capitals of Karim and Rehman will be adjusted in the profit sharing ratio. Fr this Current Accounts will be opened. The Balance Sheet of the firm as at before Naval s admission was as follows : Balance Sheet of Karim and Rehman as at Liabilities Assets Creditors 1,20,000 Cash in hand 40,000 Bills Payable 1,60,000 Sundry Debtors 2,00,000 General Reserve 80,000 Furniture 2,00,000 Capitals: Rs. Machinery 3,10,000 Karim : 3,75,000 Building 1,10,000 Rehman : 1,25,000 5,00,000 The other terms of the agreement were as follows : 8,60,000 8,60,000 (i) Naval will bring Rs. 1,75,000 for his share of goodwill. (ii) Building will be revalued at Rs. 3,90,000 and Rs. 70,000 depreciation will be charged on machinery. (iii) A provision of 2% was to be made on debtors for bad debts. Prepare Revaluation Account, Partners Capital Accounts, Partners Current Accounts and the Balance Sheet of the new firm. Ans. Profit on Revaluation Rs. 2,06,000; Balance of Capital Accounts- Karim Rs. 2,00,000; Rehman Rs. 3,00,000; Naval Rs. 5,00,000; Balance of Current Accounts- Karim Rs, 3,59,400(cr); Rehman Rs. 1,01,600(cr); B/S Total Rs. 17,41,000 Questions : - Chapter 5 Partnership Accounts (Retirement and Death) 1. P, /Q and R were partners in a firm sharing profits in the ratio of 5 : 4: 3. Their capitals were Rs. 40,000, Rs. 50,000 and Rs. 1,00,000 respectively. State the ratio in which the goodwill of the firm amounting to Rs. 1,20,000 will be adjusted on the retirement of R. Ans. 5 : 4 Online Guess Papers : Mobile : ,

16 2. 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. Hint. Raveena, Neeti and Rajat credited by Rs. 15,000 each by debiting Workmen Compensation Resave A/c. 3. A, B and C were partners in a firm sharing profits in the ratio of 5 : 4 : 3. B retires and his share is taken up equally by A and C. Find the new profit sharing ratio. Ans. 7 : 5 4. R, S and M are partners sharing profits in the ratio of 2/5, 2/5 and 1/5. M decides to retire from the business, and his share is taken by R and S in the ratio of 2 : 1. Calculate the new profit sharing ratio. Ans. 8 : 7 5. X, Y and Z were partners sharing profits in the ratio of 3 : 2 : 1. On , their Balance Sheet stood as under. Liabilities Assets Capitals : Cash at bank 70,000 X : 75,000 Investments 50,000 Y : 70,000 Patents 15,000 Z : 50,000 1,95,000 Stock 25,000 Creditors 72,000 Debtors 20,000 General Reserve 24,000 Buildings 75,000 Machinery 36,000 X died on It was agreed that: 2,91,000 2,91,000 (a) Goodwill was valued at 3 years purchase of the average profits of the last five years, which were, 2003 : Rs. 40,000; 2004 : Rs. 40,000; 2005 : Rs. 30,000; 2006 : Rs. 40,000 and 2007 : 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 X 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. Online Guess Papers : Mobile : ,

17 Prepare X s Capital Account to be rendered to his executor and also a journal entry for the settlement of the amount due to the executor. Ans. paid to Executor of X Rs. 1,65,750 Hint. Profit on revaluation Rs. 30, Ramesh, Suresh and Dinesh were partners in a firm sharing profits in the ratio of 3 : 3 : 4. Their capitals were Rs. 5,00,000; Rs. 4,00,000 and Rs. 5,00,000 respectively. The firm closes its books on 31 st March every year. On Ramesh died. The executor of a deceased partner, according to the agreement, was entitled for the following: (i) Interest on capital from the first day of the accounting year till the date of his 9% p.a. (ii) His share of goodwill- The goodwill of the firm on Ramesh s death was valued at Rs. 1,80,000. (iii) His share of profits- The profit of the firm for the year ended was Rs. 1,20,000. Ramesh s executor was paid the sum due in two equal annual installments with 10% p.a. Prepare Ramesh s Capital Account as on to be presented to his executor and his executor s loan account for the years ending and Ans. due to Ramesh s Executor Rs. 6,35,000; paid on Rs. 3,81,000; on : Rs. 3,49, (a) X, Y and Z are partners in a firm sharing profits in the ratio of 3 : 2 : 1. On April 1 st 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 f 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. (b) A, B and C are partners in a firm shoes books are closed on March 31 st each year. B died on 30 th June 2009 and according to the agreement, the share of profits of a deceased partner up to the date of the death is to be calculated on the basis of the average profits for the last five years. The net profits for the last 5 years have been : 2005, Rs. 14,000; 2006, Rs. 18,000; 2007, Rs. 16,000; 2008, Rs. 10,000 (loss) and 2009, Rs. 16,000. Calculate B s share of the profits upto the date of death and pass necessary journal entry. Ans. (a) Cash brought in by X-Rs. 12,500, cash paid to Z-Rs. 10,500 (b) Ramesh, Naresh and Sudesh were partners in a firm sharing profits in the ratio of 2 : 2 : 1. On their Balance Sheet was as follows: Liabilities Assets Online Guess Papers : Mobile : ,

18 Creditors 60,000 Bank 90,000 Bills payable 40,000 Stock 70,000 General Reserve 30,000 Debtors 40,000 Capital :. Land and Building 5,00,000 Ramesh : 3,00,000 Profit and Loss A/c 1,60,000 Naresh : 3,00,000 Sudesh : 1,30,000 7,30,000 8,60,000 8,60,000 Naresh died on The partnership deed provided for the following on the death of a partner : (i) Goodwill of the firm was to be valued at 2 years purchase of the average profits of last 5 years. The profits for the years ending , , and were Rs. 50,000; Rs. 80,000; Rs. 1,10,000 and Rs. 2,20,000 respectively. (ii) Naresh s share of profit or loss till the date of his death was to be calculated on the basis of he profit or loss for the year ending Your are required to calculate the following : (i) Goodwill of the firm and Naresh s share of goodwill ate the time of his death. (ii) Naresh s share in the profit or loss of the firm till the date of his death. (iii) Prepare Naresh s Capital Account at the time of his death to be presented to his executors. Ans. (i) Rs. 1,20,000; Rs. 48,000 (ii) Loss Rs. 16,000 (iii) due to Naresh s executor Rs. 2,80, A, B and C are partners in a trading firm. The firm has a fixed total capital of Rs. 60,000 held equally by all the partners. Under the partnership deed the partners were entitled to, (a) A and B to a salary of Rs. 1,800 and Rs. 1,600 per month respectively. (b) In the event of the death of a partner, Goodwill was to be valued at 2 years purchase of the average profits of the last 3 years. (c) Profit upto the date of the death based on the profits of the previous year. (d) Partners were to be charged interest on drawings at 5% p.a. and allowed interest on capitals at 6% p.a. A died on His drawings to the date of death were Rs. 2,000 and the interest thereon was Rs. 60. The profits for the three years ending , 2009 and 2010 were, Rs. 21,200, Rs. 3,200 (Dr) and Rs. 9,000 respectively. Prepare A s Capital Account to calculate the amount to be paid to his executors. Online Guess Papers : Mobile : ,

19 Ans. paid to A s Executors : 43, The Balance Sheet of Sindhu, Rahul and Kamlesh, who were sharing profits in the ratio of 3 : 3 : 4 respectively, as on 31 st March 2012 was as follows: Liabilities Assets General Reserve 10,000 Cash 32,000 Bills payable 20,000 Stock 88,000 Loan 24,000 Investments 94,000 Capital :. Land and Building 1,20,000 Sindhu : 1,20,000 Sindhu s Loan 20,000 Rahul : 1,00,000 Kamlesh : 80,000 3,00,000 3,54,000 3,54,000 Sindhu died on 31 st July The partnership deed provided for the following on the death of a partner: (a) Goodwill of the firm be valued at two years 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 31 st March 2012 amounted to Rs. 8,00,000 and that from 1 st April to 31 st July 2012 Rs. 3,00,000. The profit for the year ended 31 st March 2012 was Rs. 2,00,000. (c) Interest on capital was to be 6% p.a. (d) According to Sindhu s will, the executors should donate his share to Matri Chaya-an orphanage for girls. Prepare Sindhu s Capital Account to be rendered to his executor. Also identify the value being highlighted in the question. Ans. Balance of Sindhu s Capital a/c Rs. 1,75, A, B and C were in partnership sharing profits in proportion to their capitals. Their Balance Sheet on b was as follows : Liabilities Assets Online Guess Papers : Mobile : ,

20 Creditors 15,600 Building 1,00,000 Reserve 6,000 Machinery 48,000 A s Capital 90,000 Stock 18,000 B s Capital 60,000 Debtors 20,000 C s Capital 30,000 Less Prov. For doubtful debts ,600 Cash 16,000 2,01,600 2,01,600 On the above date B retired owing to ill health and the following adjustments were agreed upon: (a) Buildings be appreciated by 10% (b) Provision for doubtful debts be increased to 5% of 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 Revaluation Account, Partners Capital Accounts and the Balance Sheet of the new firm after B s retirement. Ans. Profit on revaluation Rs. 3,000; Balance of Capital Accounts- A: Rs. 90,000; C: Rs. 30,000; B/S Total Rs. 2,02,800; trf. to B s Loan A/c Rs. 66, Following is the Balance Sheet of X, Y and Z as on They shared profits in the ratio 3 : 3 : 2. Balance sheet of X, Y and Z as on Liabilities Assets Sundry Creditors 2,50,000 Cash at Bank 50,000 General Reserve 80,000 Bills Receivables 60,000 Partners Loan A/c s Debtors 80,000 X 50,000 -) Prov. For bad debts 4,000 76,000 Y 40,000 Stock 1,24,000 Online Guess Papers : Mobile : ,

21 Capital A/c s Fixed Assets 3,00,000 X 1,00,000 Advertisement Suspense A/c 16,000 Y 60,000 Profit & Loss A/c 4,000 Z 50,000 6,30,000 6,30,000 On 1 st April, 2008, Y decided to retire from the firm on the following terms : (a) Stock to be depreciated by Rs. 12,000 (b) Advertisement Suspense A/c 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, valued at Rs. 80,000 & the amount due to the retiring partners be adjusted in X s & Z s Capital A/c s. Prepare Revaluation A/c, Partners Capital A/c s and the Balance Sheet to give effect to the above. Ans. Profit on Revaluation = Rs. 16,000; Balance of Capital A/c- X; Rs. 1,10,500; Z: Rs. 57,000; due to Y Rs. 1,58,500; B/S Total Rs. 6,26, X, Y and Z were partners in a firm sharing profits and losses in the ratio of 5 : 3 : 2. On their Balance Sheet was as follows : Liabilities Assets Capital Accounts: Building 50,000 X : 75,000 Patents 15,000 Y : 62,000 Machinery 75,000 Z : 37,500 1,75,000 Stock 37,500 Sundry Creditors 42,500 Debtors 20,000 Cash at Bank 20,000 Z died on It was agreed that : 2,17,500 2,17,500 (a) Goodwill be valued at 21/2 years purchase of the average profits of the last four years, which were as follows : Year Profits ,500 Online Guess Papers : Mobile : ,

22 , , ,500 (b) Machinery be valued at Rs. 70,000: Patents at Rs. 20,000 and Building at Rs. 62,500. (c) For the purpose of calculating Z s share of profits in the year of his death the profits in should be taken to have been accrued on the same scale as in (d) A sum of Rs. 17,500 was paid immediately to the executors of Z and the balance was paid in four half yearly instilments together with interest at 12% p.a. starting from Give necessary journal entries to record the above transactions and Z s executors account till the payment of installments due on Ans. Profit on Revaluation Rs. 12,500; Balance of Z s Executor A/c on ; Rs. 31,875 Hint. Z s share of Goodwill : Rs. 17,500, Z s share of profit (upto ) Rs. 2, Khanna, Seth and Mehta were partners in a firm sharing profits in the ratio of 3 : 2 : 5. On the Balance Sheet of Khanna, Seth and Mehta was as follows : Liabilities Assets Capital: Goodwill 3,00,000 Khanna : 3,00,000 Land And Building 5,00,000 Seth : 2,00,000 Machinery 1,70,000 Mehta : 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 On 14 th March 2011, Seth died. 12,25,000 12,25,000 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 : Online Guess Papers : Mobile : ,

23 (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 21/2% 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, Seth s Executors A/c and the Balance Sheet of Khanna and Mehta who 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. Ans. Profit on Revaluation Rs. 77,000; Balance of Partner s Capital Account- Khanna Rs. 3,35,100 and Mehta Rs. 5,58,500; B/S Total Rs. 12,42,000; due to Seth s Executor Rs. 2,71, Hint. Share of Loss to Seth upto is Rs. 2,400 iers...60, Following is the Balance Sheet of Kusum, Sneh and Usha as on 31 st March 2009, who have agreed to share profits and losses in proportion of their capitals : Balance Sheet of Kusum, Sneh and Usha as on 31 st March 2009 Liabilities Assets Capital: 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 Employee provident Fund Workmen Compensation Fund Sundry Creditors 14,00,000 70,000 30,000 1,00,000 Sundry 2,20,000 Less Provision for Debtors Doubtful debts - 20,000 2,00,000 2,00,000 16,00,000 Cash at Bank 16,00,000 On March 31 st 2009, 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) Land and Building be appreciated by 30% (ii) Machinery be depreciated by 30% (iii) There were Bad debts of Rs. 35,000 Online Guess Papers : Mobile : ,

24 (iv) The claim on account of Workmen Compensation Fund 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) 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 of Partners and Balance Sheet of the new firm after Kusum s retirement. Ans. Loss on Revaluation Rs. 75,000; Balance of Capital Accounts- Sneh Rs. 6,00,000; Usha Rs. 8,00,000; Balance of Current Accounts- Sneh Rs. 25,714(Dr); Usha Rs. 4,97,143; B/S Total Rs. 19,47, The Balance Sheet of Lalit, Puneet and Rahul who are partners in a firm sharing profits according to their capital as on 31 st March, 2012 was as follows: Liabilities Assets Lalit capital 3,20,000 Building 4,00,000 Puneet s capital 1,60,000 Machinery 2,00,000 Rahul s capital 1,60,000 Stock 72,000 Debtors 80,000 General Reserve 80,000 Less : Provision for Creditors 84,000 Bad Debts -4,000 76,000 Cash in Bank 56,000 8,04,000 8,04,000 On that date Puneet decided to retire from the firm and was paid for his share in the firm subject to the following : (i) Buildings was to be appreciated by 20% (ii) Provision for Bad Debts to be increased to 15% on Debtors. (iii) Machinery to be depreciated by 20% (iv) Goodwill of the firm is valued at Rs. 2,88,000 and the retiring partner s share is adjusted through the capital accounts of remaining partners. (v) The capital of the new firm be fixed at Rs. 4,80,000. Online Guess Papers : Mobile : ,

25 Prepare Revaluation Account, Capital Accounts of the partners, Bank Account and the Balance Sheet after Puneet s retirement. Ans. Profit on Revaluation Rs. 32,000; Balance of Capital Accounts- Lalit Rs. 3,20,000; Rahul Rs. 1,60,000; B/S Total Rs. 7,80,000 Hint. (i) Final amount paid to Puneet Rs. 2,60,000 by arranging overdraft of Rs. 2,04,000 (ii) Balance of Current Account- Lalit Rs. 8,000(cr); Rahul Rs. 4,000(cr). Questions : - Chapter 6 Partnership Accounts (Dissolution) 1. B, C and D are partners in a firm sharing profits in the ratio of 2 : 1 : 2 respectively. On the firm was dissolved. After transferring assets (other than cash) and third party liabilities to the Realization Account you are provided with the following information : (i) There was a debit balance of Rs. 24,000 in the firm s Profit and Loss Account. (ii) A piece of Machinery not recorded in the books was sold for Rs. 4,000. (iii) Creditors of Rs. 50,000 were paid Rs. 45,000 in full settlement of accounts. Pass necessary Journal Entries for the above transactions in the books of the firm at the time of dissolution. 2. What journal entries would be passed for the following transaction on the dissolution of a partnership firm, after transferring various assets (other than cash) and third party liabilities to the Realization Account? (i) Bank loan Rs. 50,000 were paid. (ii) An unrecorded asset realized Rs. 17,000. (iii) Stock worth Rs. 20,000 was taken over by a partner Rohan for Rs. 14,000. (iv) Loss on realization was Rs. 14,000 which was distributed between the partners Rohan and Mohan in the ratio of 3 : Pass the necessary journal entries for the following transactions on the dissolution of the firm of James and Haider who were sharing profits and losses in the ratio of 2 : 1. The various assets (other than cash) and outside liabilities have been transferred to Realization Account : (i) James agreed to pay of his brother s loan Rs. 10,000 (ii) Debtors realized Rs. 12,000 (iii) Haider took over all investments at Rs. 12,000 Online Guess Papers : Mobile : ,