Chapters - 2 , 3 , 4 , 5
Marks - 80
Time - 3 hrs
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Q1. Answer the questions as instructed / choose the correct alternative.
(10)
1. List any one difference between Average Profit and Super Profit.
2. A& B are partners sharing profits and losses in the ratio of 3:2. C is admitted for 1⁄4 and for which
₹30,000 and ₹10,000 are credited as a premium for goodwill to A and B respectively. The new profitsharing ratio of A:B:C will be:
a) 3:2:1​​
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c) 9:6:5
b) 12:8:5
d) 33:27:20
3. Deepak, Farukh and Lilly were partners in a firm sharing profits in the ratio of 3 : 2 : 1. On 28th
February, 2023, Farukh retired from the firm. On Farukh’s retirement, there was a balance of ₹12,000 in
Workmen’s Compensation Reserve against which there was no liability. On Farukh’s retirement, this
amount will be
(a) Debited to Capital Accounts of all the partners (including Retiring Partner) in
their profit-sharing ratio.
(b) Credited to Capital Accounts of all the partners (including Retiring Partner) in
their profit-sharing ratio.
(c) Credited to Capital Accounts of Deepak and Lilly in their profit-sharing ratio.
(d) Credited to Capital Account of Farukh.
4. G, S and T were partners sharing profits in the ratio 3:2:1. G retired and his dues towards the firm
including Capital balance, Accumulated profits and losses share, Revaluation Gain amounted to
₹5,80,000. G was being paid ₹ 7,00,000 in full settlement. For giving that additional amount of
₹1,20,000, S was debited for ₹ 40,000. Determine goodwill of the firm.
a)₹ 1,20,000
c) ₹2,40,000
b)₹80,000
d)₹ 3,60,000
5. Rani and Adi who are in partnership sharing profits and losses in the ratio of 3 : 2 admit Manu as a
partner for 1/5th share in profits. The capitals of Rani and Adi after adjustments are ₹60,000 and
₹40,000 respectively. Manu is to bring 20% of the total capital of the new firm. How much amount
should Manu bring as capital?
6. A, B and C who were sharing profits and losses in the ratio of 4:3:2 decided to share the future profits
and losses in the ratio to 2:3:4 with effect from 1st April 2023. An extract of their Balance Sheet as at
31st March 2023 is:
Liabilities
Assets
Amount(₹)
Workmen
Compensation
Reserve
Amount(₹)
65,000
At the time of reconstitution, a certain amount of Claim on workmen compensation was determined for
which B’s share of loss amounted to₹5,000. The Claim for workmen compensation would be:
a) ₹15,000
c) ₹50,000
b) ₹70,000
d) ₹80,000
7. Arun, Varun and Karan were partners in a firm sharing profits in the ratio of their capitals, which stood
as follows: Arun—₹4,00,000; Varun— ₹6,00,000 and Karan—₹4,00,000.
Arun retired from the firm, Varun and Karan to share future profits equally. Goodwill
of the firm is valued at ₹2,80,000. What will be the treatment of Goodwill?
(a) Credit Partners’ Capital Accounts with old profit-sharing ratio by ₹2,80,000.
(b) Credit Partners’ Capital Accounts with new profit-sharing ratio by ₹2,80,000.
(c) Credit Arun’s Capital A/c by ` 80,000 and debit Varun’s Capital A/c by ₹20,000
and Karan’s Capital A/c by ₹ 60,000.
(d) Credit Partners’ Capital Accounts with gaining ratio by ₹2,80,000.
8. Neil, Nitin and Nitesh were partners in the firm sharing profits and losses equally. Neil retires
from the firm and on his retirement, he is entitled for the payment due to him after all the
adjustments.
At the time of retirement, if nothing is mentioned about the payment made due to him, in
which account, the amount will be transferred:
(a) Retiring Partner’s Current A/c
(b) Retiring Partner’s Capital A/c
(c) Retiring Partner’s Loan A/c
(d) Retiring Partner’s Bank A/c
9. Navya and Radhey were partners sharing profits and losses in the ratio of 3: 1.
Shreya was admitted for 1/5th share in the profits. Shreya was unable to bring
her share of goodwill premium in cash. The journal entry recorded for goodwill
premium is given below:
Date
Particulars
Shreya’s Current A/c. Dr.
To Navya’s Capital A/c.
To Radhey’s Capital A/c
(Being entry for goodwill treatment passed)
L.F
Dr. (₹)
Cr. (₹)
24,000
8,000
16,000
The new profit-sharing ratio of Navya, Radhey and Shreya will be:
a) 41: 7: 12
b) 13:12: 10
c) 3:1: 1
d) 5:3: 2
10. Which of the following transactions is debited to Revaluation Account?
(a) Increase in the value of Furniture
(b) Increase in Provision for Doubtful Debts
(c) Creditors discharged at a discount
(d) Loss on revaluation of all assets and reassessment of all liabilities
Q2. Anshul, Babita and Chander were partners in a firm running a successful business of
(3)
car accessories.They had agreed to share profits and losses in the ratio of 1/2 : 1/3 : 1/6 respectively.
After running business successfully and without any disputes for 10 years,Babita decided to retire due to
old age and Anshul and Chander decided to share future profits and losses in the ratio of 3 : 2. The
accountant passed the following journal entry for Babita share of goodwill and missed some information.
Fill in the missing figures in the following Journal entry and calculate the gaining ratio.
Date
Particulars
L.F
Anshul’s Capital A/c Dr
Chander’s Capital A/c Dr
To Babita’s Capital A/c
(Chander’s share of Goodwill
debited to the amounts of continuing
partners in their gaining ratio)
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Dr.
Cr.
---------21,000
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(accountancy sqp cbse)
Q3. Aruna and Karuna are partners in a firm. They admit Varuna on 1st April, 2023 for 1/4th
(3)
share in the profits of the firm. On an average, profit earned by Aruna and Karuna is ₹1,00,000. Average
capital employed by the firm is ₹8,00,000. Normal rate of return in a similar type of business is 10%.
Value of firm’s goodwill is to be determined on the basis of Capitalisation of Super Profit.
You are required to:
(i) Calculate goodwill of the firm.
(ii) Pass the Journal entries in the books of the firm if Varuna brings her share of
goodwill in cash.
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(model test paper 1)
Q4. Nirmala, Divisha and Sara were partners in a firm sharing profits and losses in
(3)
the 3:4:3. Books were closed on 31st March every year. Sara died on 1st February, 2022. As per the
partnership deed Sara's executors are entitled to her share of profit till the date of death on the basis of
Sales turnover. Sales for the year ended 31st March 2021 was ₹ 10,00,000 and profit for the same year
was ₹ 1,20,000. Sales show a positive trend of 20% and percentage of profit earning is reduced by 2%.
Journalise the transaction along with the working notes.
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(accountancy sqp 22-23)
Q5. Xavier and Yusuf are partners sharing profits in the ratio of 3 : 2. They admit
(3)
Zaman for 1/5th share in profits as a partner on 1st April, 2022. Zaman brings ₹5,00,000 as his capital
and the share of goodwill by cheque. For this purpose, goodwill of the firm is valued at two years’
purchase on the basis of average net profit (corrected) of the last three years. Profits for the last three
years were as follows:
Year
2019–20
2020–21
2021–22
Profits (₹)
3,71,000
4,20,000
3,60,000
Additional Information:
A machinery was purchased on 1st April, 2020 for ₹60,000 but it was debited to Office Expenses
Account. Depreciation is charged @ 10% following diminishing balance method.
You are required to:
(i) Calculate the value of firm’s goodwill.
(ii) Pass the necessary Journal entries in the books of the firm.
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(model test paper 2)
Q6. A, B and C were partners sharing P&L in the ratio 5:3:2. A died on 30th June,
2019. Entry for treatment of goodwill after his death was passed as follows:Date
Particulars
L.F
B’s Capital A/c
C’s Capital A/c
To A’s Capital A/c
(Entry for goodwill treatment passed at the
time of death of partner)
Dr. ₹
Dr.
Dr.
(6)
Cr. ₹
1,80,000
1,20,000
3,00,000
A’s profit till date of death was estimated as ₹ 1,20,000, based on the average profits of past three years.
Final dues payable to A’s executors on the date of death was calculated as ₹ 8,40,000 out of which
₹2,40,000 was paid immediately by giving him Furniture valued for the same and balance was to be paid
in three equal annual installments starting from 30 June, 2020, together with interest rate as specified in
Section 37 of Indian Partnership Act, 1932..
Pass necessary entry for profit share to be credited to A’s Capital and also
prepare A’s executors account till final settlement.
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(accountancy sqp 22-23)
Q7. Sonu and Monu are partners in a firm, sharing profits and losses equally.
Their Balance Sheet as at 31st March, 2023 is as follows:
Liabilities
Sundry Creditors
₹
25,000
Assets
Cash at Bank
(6)
₹
24,000
General Reserve
Capital Accounts:
Sonu
Monu
15,000
45,000
40,000
85,000
Sundry Debtors
Provision for Doubtful Debts
Stock
Machinery
Goodwill
22,000
1,000
1,25,000
21,000
10,000
60,000
10,000
1,25,000
On 1st April, 2023, Gopal is admitted as a partner for 1/4th share of the future profits on the following
terms and conditions:
(i) Bad debts amounting to ₹1,500 to be written off.
(ii) Stock to be taken by Sonu at ₹12,000.
(iii) Machinery to be valued at ₹50,000.
(iv) Goodwill of the firm to be valued at ₹20,000.
(v) Gopal to bring ₹50,000 as his capital. He was unable to bring his share of goodwill.
(vi) General Reserve not to be distributed. For this, it was decided that Gopal would
compensate the old partners through his Current Account.
You are required to prepare:
(a) Partners’ Capital Accounts.
(b) Balance Sheet of the reconstituted firm.
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(model test paper 1)
Q8. Xavier and Yogesh are partners sharing profits and losses in the ratio of 3 : 2.
On 31st March, 2022, their Balance Sheet was as follows:
BALANCE SHEET OF XAVIER AND YOGESH
as at 31st March, 2022
Liabilities
Creditors
Workmen Compensation Reserve
General Reserve
Capital A/cs:
Xavier
60,000
Yogesh
40,000
₹
28,000
12,000
50,000
1,00,000
1,90,000
(6)
₹
Assets
Cash at Bank
Debtors
Less: Provision for
Doubtful Debts
Stock
Investments
Goodwill
45,000
65,000
5,000
60,000
30,000
50,000
50,000
1,90,000
They admit Gopal as a partner on 1st April, 2022 on the following terms:
(i) Goodwill of the firm is valued at ₹ 1,25,000. Gopal shall bring his share of premium for goodwill by
cheque.
(ii) Unaccounted accrued commission of ₹ 500 will be accounted.
(iii) Market value of investments was ₹ 45,000.
(iv) A debtor whose dues of ₹ 16,000 were written off as bad debts paid ₹ 15,800.
(v) A claim of ₹ 2,000 for workmen’s compensation is to be provided.
(vi) Gopal will bring proportionate capital for 1/5th share in the profits of the firm.
You are required to prepare:
(a) Revaluation Account, and
(b) Capital Accounts of the Partners.
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(model test paper 2)
Q9. Amit and Sumit are partners sharing profits and losses in the ratio of 3 : 2.
Their Balance Sheet as at 31st March, 2018 is given below:
₹
Liabilities
Capital A/cs:
Amit
1,76,000
Sumit
2,54,000
Loan from Puneet
General Reserve
Employees’ Provident Fund Creditors
Creditors
4,30,000
3,00,000
30,000
10,000
50,000
(10)
₹
Assets
Land and Building
Investments (Market Value ₹55,000)
Debtors
3,00,000
Less: Provision for Doubtful Debts 10,000
Stock
Cash at Bank
8,20,000
3,20,000
50,000
2,90,000
1,10,000
50,000
8,20,000
They decided to admit Puneet as a new partner from 1st April, 2018 on the following terms:
(i) Amit will give 1/3rd of his share and Sumit will give 1/4th of his share to Puneet.
(ii) Puneet’s Loan Account will be converted into his Capital.
(iii) The Goodwill of the firm is valued at ₹3,00,000. Puneet will bring his share of Goodwill in cash and
the same was immediately withdrawn by the partners.
(iv) Based on the valuation of an Architect, Land and Building was found undervalued by ₹1,00,000.
Architect was paid ₹10,000 as his fee for Valuation Report.
(v) Stock was found overvalued by ₹50,000.
(vi) Provision for Doubtful Debts will be made equal to 5% of Debtors.
(vii) Investments are to be valued at their market price.
It was decided that the total capital of the firm after admission of new partner would be ₹10,00,000.
Capital Accounts of Partners will be readjusted on the basis of their profit-sharing ratio and excess or
deficiency will be adjusted in cash.
Prepare (i) Revaluation Account; (ii) Partners’ Capital Accounts
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(Iscdebk12)
Q10. Kushal, Kumar and Kavita were partners in a firm sharing profits in the ratio of 3 : 1 : 1.
On 1st April, 2018, their Balance Sheet was as follows:
BALANCE SHEET OF KUSHAL, KUMAR AND KAVITA
as at 1st April, 2018
(10)
Liabilities
₹
Assets
₹
Creditors
1,20,000
Cash
70,000
Bills Payable
General Reserve
Capital A/cs:
Kushal
Kumar
Kavita
1,80,000
1,20,000
3,00,000
2,80,000
3,00,000
8,80,000
Debtors
Less: Provision for
doubtful debts
Stock
Furniture
Building
Land
2,00,000
10,000
13,00,000
1,90,000
2,20,000
1,20,000
3,00,000
4,00,000
13,00,000
On the above date Kavita retired and the following was agreed:
(i) Goodwill of the firm was valued at ₹40,000.
(ii) Land was to be appreciated by 30% and building was to be depreciated by ₹1,00,000.
(iii) Value of furniture was to be reduced by ₹20,000.
(iv) Provision for Doubtful Debts is to be increased to ₹15,000.
(v) 10% of the amount payable to Kavita was paid in cash and the balance was transferred to her Loan
Account.
(vi) It is decided by Kushal and Kumar that General Reserve is to appear in the books of the new firm at
₹80,000.
(vii) 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, Partners’ Capital Accounts and Balance Sheet of Kushal and
Kumar after Kavita’s retirement.
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(Iscdebk12)
Q11. (a)​Solve​ ​
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(3)
Calculate goodwill of a firm on the basis of three years purchases of the Weighted Average Profits of
the last four years. The profits of the last four years were:
Years (ending 31st march)
2020
2021
2022
2023
Amount
28,000
27,000
46,900
53,810
a) On 1st April, 2020 a major plant repair was undertaken for ₹10,000 which was charged to revenue.
The said sum is to be capitalized for goodwill calculation subject to adjustment of depreciation of 10% on
reducing balance method.
b) For the purpose of calculating Goodwill the company decided that the years ending 31.03.2020 and
31.03.2021 be weighted as 1 each (being COVID affected) and for year ending 31.03.2022 and
31.03.2023 weights be taken as 2 and 3 respectively.
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(accountancy sqp cbse)
(b) Choose the correct alternative / Calculate
1. Danish, Zaid and Mihir who were sharing profits and losses equally decided to share the future
profits and losses in the ratio to 5:4:3 with effect from 1st April 2023. An extract of their Balance
Sheet as at 31st March 2023 is:
(2)
Liabilities
Amount
Assets
Amount
Investment Fluctuation
Reserve
85,0000
Investments( At Cost)
8,00,000
At the time of reconstitution, if the market value of Investment was Rs. 7,06,000, the
Revaluation A/c will be:
(a) Debited with 15,000
(b) Debited with 9,000
(c) Credited with 2,000
(d) Credited with 12,000
2. Ravi, Vijay and Sujay were partners sharing profits in the ratio of 1/2: 1/3 : 1/6. Vijay decided to retire,
his share being taken up by the remaining partners in the ratio 1:4.On Vijay’s retirement, a loss of
₹12,000 was determined upon revaluation of assets and liabilities.You are required to: Calculate the new
profit-sharing ratio of the remaining partners.
Q12. Doremon, Shinchan and Nobita are partners sharing profits and losses in the
(3)
ratio of 3:2:1. With effect from 1st April, 2022 they agree to share profits equally. 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:
Year ending on 31st March,2019 ​
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₹ 50,000 (Profit)
Year ending on 31st March,2020 ​
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₹ 1,20,000 (Profit)
Year ending on 31st March,2021​​
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₹ 1,80,000 (Profit)
Year ending on 31st March,2022 ​
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₹ 70,000 (Loss)
On 1st April, 2021 a Motor Bike costing ₹ 50,000 was purchased and debited to traveling expenses
account, on which depreciation is to be charged @ 20% p.a by Straight Line Method. The firm also paid
an annual insurance premium of ₹ 20,000 which had already been charged to Profit and Loss Account for
all the years.
Journalise the transaction along with the working notes.
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(accountancy sqp 22-23)
Q13. Chander and Damini were partners in a firm sharing profits and losses equally.
On 31st March, 2023, their Balance Sheet was as follows:
BALANCE SHEET OF CHANDER AND DAMINI as at 31st March, 2023
₹
Liabilities
Sundry Creditors
Capitals:
Chander
Damini
1,04,000
2,50,000
2,16,000
4,66,000
Assets
Cash at Bank
Bills Receivable
Debtors
Furniture
Land and Building
(6)
₹
30,000
45,000
75,000
1,10,000
3,10,000
5,70,000
5,70,000
On 1st April, 2023, they admitted Elina as a new partner for 1/3rd share in the profits on the following
conditions:
(i) Elina will bring ₹3,00,000 as her capital and necessary amount for goodwill.
(ii) Debtors to the extent of ₹5,000 were unrecorded.
(iii) Furniture will be reduced by 10% and 5% provision for 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 ₹8,000
will be created for the same.
(vi) Value of the goodwill of the firm to be calculated on the basis of Elina’s share in profit
and capital contributed by her.
You are required to prepare Revaluation Account and Partners’ Capital Accounts.
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(model test paper 1)
Q14. Sandeep, Maheep and Amandeep were partners in a firm sharing profits
(6)
in the ratio of 2: 2: 1. The firm closes its books on 31st March every year. On 30th June, 2020 Maheep
died. The partnership deed provided that on the death of a partner his executors will be entitled to the
following:
a) Balance in his capital account which amounted to ₹1,15,000and interest on capital till date of
death which amounted to ₹5,000.
b) His share in the profits of the firm till the date of his death amounted to ₹20,000.
c) His share in the goodwill of the firm. The goodwill of the firm on Maheep’s death was valued at
₹ 1,50,000.
d) Loan to Maheep amounted ₹ 20,000.
It was agreed that the amount will be paid to his executor in three equal yearly installments with interest
@10% p.a. The first installment was to be paid on 30.06.2021.
Calculate the amount to be transferred to Maheep’s executors Account and prepare the
executor’s account till it is finally settled.
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(accountancy sqp cbse)
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