Solution
PARTNERSHIP IMPORTANT QUESTIONS
Class 12 - Accountancy
1.
(d) Interest on Drawings
Explanation: Interest on Drawings is shown on the credit side of Profit & Loss Appropriation A/c.
2.
(c)
N’s Current A/c ... Dr.
15,000
To L’s Current A/c
12,000
To M’s Current A/c
3,000
Explanation:
Adjustment of amounts will be done as follows:
Amount wrongly taken (2%) L Rs.30,000 M Rs.60,000 N Rs.1,20,000 = Total Rs.2,10,000
Adjust 2,10,000 in 2:3:5 ratio L Rs.42,000 M Rs.63,000 N Rs.1,05,000
L has already taken Rs.30,000 but he should get 42,000, so credit him for Rs.12,000
M has already taken Rs.60,000 but he should get 63,000, so credit him for Rs.3,000
N has already taken Rs.1,20,000 but he should get 1,05,000, so Debit him for Rs.15,000
Entry will be:
L’s Current A/c ... Dr.
15000
To N’s Current A/c
12000
To M’s Current A/c
3000
3.
(a) Revaluation of assets
Explanation: When reconstitution of a firm takes place, it is necessary to revalue the assets and re-assess the liabilities. The
process of recording change in the value of assets and liabilities is called revaluation. Profit or loss calculated through
revaluation is distributed among the partners Capital / Current A/c (in case of Fixed Capital A/c) in their profit sharing ratio.
4.
(b) Amount of compensation = value’s of firm goodwill × share of profit sacrificed
Explanation: Due to change in the profit sharing ratio among the partners, the share of one or more partner may increase and
consequently share of one or more partner may decrease. therefore, gaining partner should compensate for sacrificing partner
by paying goodwill to him. amount of goodwill of the firm will be paid to the sacrificing partner, which will be called as
compensation, to the extent of share in profit sacrificed by him.
Journal entry
Gaining partner's capital A/c ... Dr.
To Sacrificing partner's capital A/c
5.
(a) 27:16:17
Explanation: Calculation of new ratio of Partners are:
Ram’s old Share and Shyam’s old share
3
2
5
5
Share surrendered by Ram =
Ram’s new share =
3
5
-
3
20
=
Share Surrender by Shyam =
Shyam’s new share =
2
5
-
2
15
1
4
9
20
1
3
=
of
or
of
4
15
=
3
5
3
20
27
60
2
5
or
=
2
15
16
60
Ghanshyam share = share received from ram + share receive from shyam
=
3
20
+
2
15
=
9+8
60
=
17
60
New Ratio of Ram, Shyam & Ghanshyam are = 27:16:17
6.
(b) 12,000
Explanation: Amount payable to B = Rs. 30,000
Total Capital of new firm = 23,000 + 30,000 + 17,000 = Rs. 70,000
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As they are distributing capital equal so,
The new capital of A and C will be = Rs.35,000 each
A will bring = 35,000 - 23,000 = Rs.12,000
7.
(c) Credited Rs.1500
Explanation: Share of profit of T will be calculated as follows:
Profit = Rs.24,000
Profit for 3 months (from the last balance sheet till the date of his death) = 24,000 ×
T's share =
3
12
= Rs.6,000
4
16
T’s share of profit for 3 months = 6,000 ×
4
16
= Rs. 1,500
Profit received by T as he died so credited in his account.
8.
In the books of Firm
Profit and Loss Appropriation Account
for the year ended March 31, 2013
Amount
(₹)
Particulars
To Profit transferred to:(See W.N.)
Pranshu’s Capital A/c
30,000
Himanshu’s Capital A/c
30,000
Anshu’s Capital A/c
30,000
Total
Amount
(₹)
Particulars
By Profit & Loss A/c (Given)
90,000
Total
90,000
90,000
90,000
Working Notes:
WN1: Calculation of New Profit Sharing Ratio
Old ratio = 3 : 2
Let the total share of the firm be Re 1
Anshu is admitted for 1/6th share in profits
Remaining Share = 1 − =
1
5
6
Pranshu's New Share =
3
5
Himanshu's New Share =
Anshu's share =
1
6
or
6
×
2
5
5
6
15
=
×
5
6
30
=
10
30
5
30
New Profit Sharing Ratio = 15: 10: 5 or 3: 2: 1
WN2
Distribution of Profit
Ansh's Share of Profit = 10, 000 × = ₹ 15,000
1
6
Deficiency of ₹ 15,000 in Anshu's share of profit will be borne by Pranshu
Pranshu's Share of Profit = 90, 000 ×
3
6
=₹ 45,000
Pranshu's actual share of profit (after bearing deficiency) ₹= ₹ 30,000 (45,000 - 15,000)
Himanshu's Share of Profit = 90, 000 × = ₹ 30,000
2
6
9.
ADJUSTMENT ENTRY
Date
Particulars
LF
Amt(₹)
Praveen's Current A/c
10,400
Sahil's Current A/c
4,800
Amt(₹)
To Riya's current A/c
5,200
To General Reserve A/c
(Being the adjustment entry passed)
10,000
STATEMENT SHOWING ADJUSTMENT TO BE MADE
Particulars
I. Amount already Recorded
Praveen(₹)
Sahil(₹)
Riya(₹)
Total
60,000
20,000
20,000
1,00,000
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Share of Profit i.e, ₹1,00,000 in 3: 1: 1
II.The amount which should have been Recorded
Interest on Capital
10,000
Salary
18,000
Share of profit i.e, 36,000 in 3: 1: 1
21,600
III. Balance to be adjusted(Net Effect) [I - II]
8,000
6,000
24,000
12,000
30,000
7,200
7,200
36,000
49,600
15,200
25,200
90,000
10,400(Dr)
4,800(Dr)
5,200(Cr)
10,000(Cr)
Calculation of Adjusted Profits
Adjusted Profits = Given Profit - Transfer to Reserve - Interest on Capital - Salary
= 1,00,000 - 10,000 - 24,000(10,000 + 8,000 + 6,000) - 30,000 (18,000 + 12,000)= ₹36,000
Calculation of Interest on Capital
Praveen = 2,00,000 ×
= ₹10,000, Sahil×
5
5
100
100
× 1,60,000 = ₹8,000, Riya = 120,000 ×
5
100
= ₹6,000
Salary : Praveen (1,500 × 12) = ₹18,000, Riya (1,000 × 12) = ₹12,000
Distribution of profit
Praveen = 36000 × 3/5 = 21,000, Sahil = 36,000 × 1/5 = 7200, Riya = 36,000 × 1/5 = 7,200.
10.
Journal Entries
Date
Particulars
P & L A/c......Dr.
Dr. (Rs.)
Cr. (Rs.)
9,000
To P's Capital A/c
2,250
To Q's Capital A/c
2,250
To R's Capital A/c
4,500
(Being Profit and Loss Account written off.)
Workmen's Compensation Reserve A/c.......Dr.
64,000
To Workmen's Compensation Claim A/c
30,000
To P's Capital A/c
8,500
To Q's Capital A/c
8,500
To R's Capital A/c
17,000
(Being Workmen's Compensation Reserve adjusted.)
P's Capital A/c.......Dr
60,000
Q's Capital A/c.......Dr.
60,000
To R's Capital A/c
1,20,000
(Being adjustment entry made for goodwill.)
11.
IN THE BOOKS OF FIRM
JOURNAL ENTRIES
Date
Particulars
L.F.
Dr.
(₹)
Cr.
(₹)
2018
April
Reserve A/c
1
Dr.
15,000
To Provision for Doubtful Debts A/c
3,000
To A's Capital A/c
6,000
To B's Capital A/c
4,000
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To C's Capital A/c
2,000
(20% of Reserve retained as provision for doubtful debts and the balance credited to old
partners in 3: 2: 1)
Revaluation A/c
Dr.
25,000
To Claim for Damages A/c
1,000
To Stock A/c
18,000
To Patents A/c
6,000
(Recording the liability for damages and decrease in the value of stock and patents through
revaluation account)
Sundry Creditors A/c
Dr.
4,000
To Revaluation A/c
4,000
(Decrease in the creditors recorded through revaluation account)
A's Capital A/c
Dr.
10,500
B's Capital A/c
Dr.
7,000
C's Capital A/c
Dr.
3,500
To Revaluation A/c
21,000
(The transfer of loss on revaluation to old partners in old ratio)
Bank Overdraft A/c
Dr.
20,000
To A's Capital A/c
20,000
(Bank Overdraft paid off by A credited to his capital A/c)
A's Capital A/c
Dr.
7,500
B's Capital A/c
Dr.
5,000
C's Capital A/c
Dr.
2,500
Dr.
78,000
15,000
(Goodwill already existing in the books written off in the old ratio)
Cash A/c
To D's Capital A/c
60,000
To Premium for Goodwill A/c
18,000
(D brings for his capital and as his share of goodwill)
Premium for Goodwill A/c
Dr.
18,000
To A's Capital A/c
9,000
To B's Capital A/c
9,000
(The amount of goodwill shared by A and B in their sacrificing ratio i.e. 1: 1 )
Cash A/c
Dr.
13,000
To A’s Capital A/c
13,000
(Deficit capital brought in by A)
B's Capital A/c
Dr.
11,000
C's Capital A/c
Dr.
6,000
To Cash A/c
17,000
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(Surplus capital withdrawn by B and C)
PARTNER'S CAPITAL ACCOUNTS
Dr.
Cr.
Particulars
A
B
C
D
₹
₹
₹
₹
Particulars
A
B
C
D
₹
₹
₹
₹
To Revaluation A/c
10,500 7,000
3,500
---
By Balance b/d
60,000 60,000 50,000 ---
To Goodwill
7,500
2,500
---
By ReserveA/c
6,000
To Balance c/d
77,000 61,000 46,000 60,000 By Overdraft
5,000
4,000
20,000 ---
2,000
---
---
---
By Cash A/c
60,000
By Premium for Goodwill A/c
9,000
95,000 73,000 52,000 60,000
11,000 6,000
---
9,000
---
---
95,000 73,000 52,000 60,000
To Cash (b/f)
---
By Balance b/d
77,000 61,000 46,000 60,000
To Balance c/d
90,000 50,000 40,000 60,000 By Cash (b/f)
13,000 --
90,000 61,000 46,000 60,000
90,000 61,000 46,000 60,000
--
--
BALANCE SHEET
as at 1st April, 2018
₹
Liabilities
₹
Assets
Sundry Creditors
32.000
Cash
Claim for Damages
1,000
Sundry Debtors
50,000
Less: Provision
5,500
Capital Accounts :
88,000
44,500
A
90,000
Stock
42,000
B
50,000
Fixed Assets
98,500
C
40,000
D
60,000
2,73,000
2,73,000
Working Notes :
1. New Profit sharing ratios :
A= − =
3
1
6
8
B=
2
C=
1
D=
1
6
−
1
8
3
8
=
5
24
6
4
Hence, the new profit sharing ratio between A, B, C and D will be :
3
8
:
5
24
:
1
6
:
1
4
or
9
24
:
5
24
:
4
24
:
6
24
or 9 : 5 : 4 : 6
D brings in ₹60,000 as his capital according to his 1/4th share of profit. Therefore, based on D’s capital, the total capital of the
new firm will be 60,000 × = ₹2,40,000
4
1
∴
A's Capital in the new firm = 2,40,000 ×
B’s Capital in the new firm = 2,40,000 ×
C’s Capital in the new firm = 2,40,000 ×
D’s Capital in the new firm = 2,40,000 ×
5
24
4
24
6
24
9
24
= ₹90,000
= ₹50,000
= ₹40,000
= ₹60,000
Hence, A will bring in ₹90,000 - ₹77,000 = ₹13,000
B will withdraw ₹61,000 - ₹50,000 = ₹11,000
C will withdraw ₹46,000 - ₹40,000 = ₹6,000
2. Cash Balance = ₹14,000 + ₹78,000 + ₹13,000 - ₹11,000 - ₹6,000
= ₹88,000
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12.
Revaluation Account
Dr.
Cr.
₹
Particulars
₹
Particulars
To Fixed Assets A/c (60,000 - 57,500)
2,500
By Creditors A/c (10,000 - 8,000)
To Provision for Doubtful Debts A/c
5,000
By Loss on Revaluation transferred to:
X's capital A/c
2,750
Y's capital A/c
1,650
Z's capital A/c
1,100
5,500
7,500
7,500
Partners' Capital Account
Dr.
Cr.
Particulars
X
To Revaluation A/c
Y
2,750
X's Capital A/c
To Balance c/d
1,19,750
1,22,500
To Bank A/c
Z
Particulars
Z
1,100
By Balance b/d
40,000
62,000
33,000
24,000
16,000
By Profit and Loss A/c
42,500
25,500
17,000
61,850
32,900
By Y's Capital A/c
24,000
By Z's Capital A/c
16,000
1,22,500
87,500
50,000
1,19,750
61,850
32,900
56,650
46,100
1,18,500
79,000
50,000
1,19,750
By Balance b/d
1,19,750
Y
1,650
87,500
To Balance c/d
X
1,18,500
79,000
1,18,500
79,000
By Bank A/c
1,19,750
W.N:
i. Gaining Ratio = New Ratio - Old Ratio
Y
′
s=
′
Z s=
3
5
2
5
−
−
3
=
10
2
=
10
6−3
10
4−2
10
3
=
=
10
2
10
Gaining Ratio (Y and Z) = 3:2
ii. Total Goodwill of the Firm = 80,000
X's Share in Goodwill =
Y's = 40,000×
3
Z's = 40,000×
2
×
80,000 = 40,000
= 24,000
5
5
5
10
= 16,000
X's share of goodwill is to be distributed between Y and Z in their = 3:2
iii. Total Capital of New Firm = X's Capital + Y's Capital + Z's Capital + Closing balance of Bank Account - Available Bank
Balance = 1,19,750 + 61,850 + 32,900 + 15,000 - 32,000 = ₹ 1,97,500
New Profit Sharing Ratio = 3: 2
Y's Capital = × 1,97,500 = 1,18,500
5
3
Z's Capital =
2
5
×
1,97,500 = 79,500
Particulars
X
Z
New Capital Balance
1,18,500
79,000
Adjusted Old Capital Balance
(61,850)
(32,900)
Cash Brought in by the Partner
56,650
46,100
iv. Cash at Bank A/c
Dr.
Cr.
Particulars
₹
Particulars
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To Balance b/d
40,000
By Creditors A/c
8,000
To Y's Capital A/c
56,650
By X's Capital A/c
1,19,750
To Z's Capital A/c
46,100
By Balance c/d
15,000
1,42,750
13.
1,42,750
IN THE BOOKS OF THE FIRM
JOURNAL ENTRIES
Date
Particulars
L.F.
Dr.
(₹)
Cr.
(₹)
2014
June
30
Workmen Compensation Reserve A/c
Dr.
6,400
To B's Capital A/c
6,400
(Transfer of B's share of reserve to his Capital Ac)
June
30
Interest on Capital A/c
Dr.
375
To B's Capital A/c
375
(Interest credited to his Capital A/c provided for)
June
30
A's Capital A/c
Dr.
10,500
C's Capital A/c
Dr.
10,500
To B's Capital A/c
21,000
(Adjustment of B's share of goodwill into the Capital A/cs of A and C in their gaining ratio
i.e., equally)
June
30
Profit & Loss Suspense A/c
Dr.
2,625
To B's Capital A/c
2,625
(Transfer of profit till his death)
June
30
B's Capital A/c
Dr.
60,400
To B's Executor's A/c
60,400
(Amount due to B transferred to his Executor's A/c)
July 1 B's Executor's A/c
Dr.
To Bank A/c
20,400
20,400
(Amount paid to B's Executor)
B's CAPITAL A/C
Dr.
Date
Cr.
Particulars
₹
2014
June 30
Date
₹
Particulars
2014
To B's Executor's A/c
60,400
April 1
By Balance b/d
30,000
June 30
By Workmen Compensation Reserve A/c
6,400
June 30
By Interest on Capital A/c
375
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June 30
By A's Capital A/c
10,500
June 30
By C's Capital A/c
10,500
June 30
By Profit & Loss Suspense A/c
2,625
60,400
60,400
B's EXECUTOR'S A/C
Dr.
Cr.
Date
2014 July 1
₹
Particulars
To Bank A/c
2015 March 31 To Balance c/d
Date
₹
Particulars
20,400
2014 June 30
By B's Capital A/c
41,800
2015 March 31
By Interest A/c
(60,400 - 20,400) ×
60,400
6
100
×
1,800
9
12
62,200
2015 June 30
To Bank A/c
(10,000 + 1,800 + 600)
2016 March 31 To Balance c/d
62,200
12,400
2015 April 1
By Balance b/d
41,800
31,350
2015 June 30
By Interest A/c 40, 000 ×
2016 March 31 By Interest A/c 30, 000 ×
6
100
6
100
×
×
3
12
9
12
43,750
2016 June 30
To Bank A/c
(10,00 + 1,350 + 450)
2017 March 31 To Balance c/d
11,8000 2016 April 1
By Balance b/d
20,900
By Interest A/c 30, 000 ×
2016 June 30
31,350
6
100
6
100
×
×
3
12
9
12
32,700
To Bank A/c (10,000 + 900 + 300) 11,200
2018 March 31 To Balance c/d
10,450
2017 April 1
2017 June 30
By Balance b/d
900
20,900
By Interest A/c 20, 000 ×
6
100
6
100
×
×
3
12
9
12
21,650
To Bank A/c (10,000 + 450 + 150) 10,600
450
32,700
2018 March 31 By Interest A/c 10, 000 ×
2018 June 30
1,350
43,750
2017 March 31 By Interest A/c 20, 000 ×
2017 June 30
600
300
450
21,650
2018 April 1
2018 June 30
By Balance b/d
10,450
By Interest A/c 10, 000 ×
6
100
×
10,600
3
12
150
10,600
Notes:
i. Total amount due to B9s Executor’s is ₹ 40,000 payable in 4 instalments. Hence, yearly instalment = 40,000 ÷ 4 = ₹ 10,000
plus interest.
14.
Realisation Account
₹
Particulars
To Sundry Assets
₹
Particulars
By Creditors
50,400
18,000
Buildings
23,500
By A (investments)
Furniture
6,500
By Cash A/c (Assets Realised)
Stock
20,100
Fixed Assets
29,700
Debtors
62,600
Stock and Debtors
80,000
Investments
16,000
1,28,700
1,09,700
By Capital A/cs Losses
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To Cash A/c-
A
1,000
Creditors = (50,400 - 800) = 49,600
B
1,000
C
1,000
Bills dishonoured
1,500
Expenses
1,300
3,000
52,400
1,81,100
1,81,100
Cash Account
₹
Particulars
₹
Particulars
To Balance b/d
3,700
By Realisation A/c
52,400
To Realisation A/c
1,09,700
By Capital A/c A
25,000
To A's Loan A/c
10,000
B
28,000
C
18,000
71,000
1,23,400
1,23,400
Partner's Capital Accounts
Particulars
15.
A (₹)
B (₹)
C (₹)
Particulars
A (₹)
B (₹)
C (₹)
To Real. A/c
18,000
-
-
By Balance b/d
40,000
25,000
15,000
To Real. Loss
1,000
1,000
1,000
By Reserves
4,000
4,000
4,000
To Cash A/c
25,000
28,000
18,000
44,000
29,000
19,000
44,000
29,000
19,000
₹
Particulars
₹
Particulars
Building
1,20,000
By Provision for
Doubtful Debts
4,000
Investments
30,600
By Creditors
80,000
Debtors
34,000
By Mrs. Param's
Loan
84,000
Bills Receivable
37,400
By Investments
Fluctuation Reserve
8,000
Goodwill
40,000
By Cash A/c (Assets
Realised):
Param's Capital A/c
(Wife's loan)
84,000
Debtors
24,000
Building
1,52,000
Bills Receivable
36,000
Cash A/c:
Creditors
78,000
Realisation Expenses
2,500
Param's Capital A/c
80,500
By Raman's Capital
A/c
10,000
(Investments)
2,12,000
27,000
By Loss transferred
to:
(Remuneration)
Param's Capital A/c
12,900
Raman's Capital A/c
8,600
4,36,500
21,500
4,36,500
RAMAN'S LOAN ACCOUNT
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₹
Particulars
To Raman's Capital A/c
25,600
To Cash A/c
62,400
₹
Particulars
By Balance b/d
88,000
88,000
88,000
PARTNERS' CAPITAL ACCOUNTS
Particulars
To Profit and Loss
A/c
To Realisation A/c
(Investments)
To Realisation A/c
(Loss)
To Cash A/c
Param (₹)
Raman (₹)
48,000
32,000
-
27,000
12,900
8,600
75,100
-
1,36,000
67,600
Particulars
By Balance b/d
By Realisation A/c
(Remuneration)
By Realisation A/c
(Wife's Loan)
Param (₹)
Raman (₹)
42,000
42,000
10,000
-
84,000
-
By Raman's Loan A/c
25,600
1,36,000
67,600
CASH ACCOUNT
₹
Particulars
₹
Particulars
To Balance b/d
6,000
By Realisation A/c
80,500
To Realisation A/c
2,12,000
By Raman's Loan A/c
62,400
By Param's Capital A/c
75,100
2,18,000
2,18,000
16. i. (a) Richa
ii. (c) Profit ₹ 17,500
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