CHEMISTRY HOLIDAY HOMEWORK FOR CLASS XII- 2015-16
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Investigatory Project
Prepare an investigatory project of chemistry which should be experiment based. It should
be a research based project where every aspect of the topic selected should be discussed in
terms of chemistry. The project should have the following key aspects:
 Certificate
 Acknowledgement
 Why this was selected? (related to daily life)
 Introduction
 Details of the project(research related to the topic)
 Experiment (detailed manner including procedure)
 Observations
 Analysis
 Result
 Bibliography (mention the links)
Complete the assignment and back exercise questions of the chapters 10-14. Assignments
are already uploaded in edmodo
Practice for the following topics in chemistry notebook:
a) Nomenclature (minimum 20 organic compounds)
b) Mechanisms done in organic
c) Minimum 15 pairs of compounds for distinguishing between covering all the chemical
tests done( Heisenberg, lucas, carbylamine, iodoform, 2,4-DNP , neutral FeCl3 test,
bromine water test etc)
d) Name reactions(all)
e) Complete the reactions(minimum 20)
f) Word problems(minimum 10)
Holiday homework for class XII biology
Investigatory project to be done with well defined headings:
a) Aim/ objective
b) introduction/ history
c) procedure/ study
d) result of your study or project
e) conclusion
f) bibliography
please note that it has to be handwritten and attatch the pictures and the reports
whereever needed.
2. complete the assignment for chapter five- principles of inheritance.
3. collect the water samples for the next experimental study in lab in july- sewage
water, rain water, lake water.
Holiday homework for class XII Engineering Graphics
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Prepare sheets for blocks 1-15 (cbse prescribed) in the taught format. The
homework has to be completed in 8 half-imperial catridge sheets which have to be
used on both the sides. To be submitted when school re-opens .
English Holiday Homework (2015-16)
Class XII
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1. Complete all the assignments till ‘The Enemy’ in your notebook.
2. Read novels- Silas Marner by George Eliot and The Invisible Man by H.G. Wells.
3. Watch movie- The Weaver of Raveloe based on novel Silas Marner to get better
understanding of the novel.
MATHS HOLIDAY HOME WORK
CLASS XII
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Complete Maths notebook from chapter 1 to 5.
Complete all the assignments of chapter 1 to 4.
Do the holiday work assignment.
Revise all the chapters done till now.
All the assignments will be uploaded on edmodo.
Holiday Homework for class XII Physics
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1) Investigatory project with a well defined headings
a) Aim/Objective
b) Introduction/History
c) Procedure/Study
d) Result of the study
e) Conclusion
f) Bibliography
Please note that it has to be handwritten and attach the necessary reports and
pictures wherever required.
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2) Complete the following assignments in your notebook:
a) Chapter-2 Electric Potential and Capacitance
b) Chapter-3 Current Electricity
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3) Complete the record file with the apt diagrams of the experiments done in class.
Note: There should be 4 experiments recorded in your record file.
Holidays Home Work (session 2015-16)
Class – XII/ECONOMICS
Activity based:
All the students of a class XII need to prepare these questions in a Word file and send it to me and the
same to be pasted in your notebook for evidence.
1. Two Value based questions with answers, (3/4 marks)
2. Two High order thinking questions with answers (3/4 marks)
3. Two Application based questions with answers (4 marks)
4. Five MCQ’s with answers. (1 marks each)
5. Five MDQ’s with answers. (1 marks each)
 Roll no. 1-16 unit-1(Send a word document and paste it in your notebook)
 Roll no. 17-32 unit-2(Send a word document and paste it in your notebook)
 Roll no. 33-48 unit-3(Send a word document and paste it in your notebook)
Assignment – Economics
Units – Introduction to Micro Economics, Consumer’s behavior and Producer’s behavior.
Very short questions (1 Marks each)
1. When PPC shift towards right ?
2. Define point where MPP reaches to the maximum.
3. What change will take place in marginal product, when total product increases at a diminishing
rate ?
4. Write the guiding principal for finding the solution for the problem ‘How to produce’?.
5. Define MRT with reference to PPC.
6. Define APP.
7. Four units of labour produce 100 units of output and 5 units of labour produce 120 units of
output. Calculate MP of the labour
8. Define cost function.
9. Define per unit total Variable cost.
10. Define Short run.
11. What is meant by multiplicity of human wants ?
12. Why PPC is downward sloping ?
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Define real cost.
Define MPP.
What is scarcity ?.
How is total utility derived from marginal utilities ?
. What will be the shape of PPC , if MOC is constant
Define Marginal Cost.
State the factors on which budget line depend.
What is MRSxy ?
Define implicit cost.
State the condition for consumer’s equilibrium on the basis of indifference curve analysis.
State any four examples of explicit costs.
What is a demand schedule ?
In which phase of law of variable proportions, a rational firm aims to operate ?
How is TVC derived from MC schedule ?
Define negative returns to a factor.
Write the slope of budget line.
What will be the shape of IC if MRSxy will be constant ?
Write down the equation of budget line.
Short Answer questions (3/4 Marks)
31. Explain the problem of ‘What to produce’ with the help of PPC.
32. Distinguish between “ Change in demand “ and “Change in quantity demanded” of a commodity.
33. What is fixed cost ? Draw a fixed cost curve with help of an imaginary schedule, also give two
examples.
34. Explain the relationship between AC and MC.
35. “An economy always produces on, but not inside, a PPC”. Comment.
36. What is meant by returns to a factor ? State the law of diminishing Returns to a variable factor.
37. In which phase a rational producer will operate in the short run and why ?
38. What does a PPC curve show ? When will it shift to the right ?
39. Explain with examples interdependence between microeconomics and macroeconomics.
40. Discuss the relationship between TVC and MC.
41. Conside the demand curve D(p)= 10-3p. What is the elasticity at price 5/3 ?
42. Suppose the price elasticity of demand for a good is -0.2 . How will the expenditure on the good
be affected if there is a 10% in increase in the price of the good ?
43. Why does the vertical distance between AC curve and AVC curve gradually decline ?
44. State the law of Demand. Briefly explain the causes behind it.
45. How does an increase in income affect the demand curve for an inferior good ?
46. TFC is 12, calculate the costs from the schedule.
Output (units)
1 2 3 4 5 6
MC
9 7 2 4 8 12
47. Define price elasticity of demand. Explain any three factors on which elasticity of demand for a
commodity.
48. Calculate TFC, TVC, AC, AFC, AVC and MC.
Output (units) 0 1 2
3
4
5
6
TC
60 80 100 111 116 130 150
Long Answer question (6 marks)
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Explain Law of variable proportions with reasons of all three phases.
Explain all degrees of price elasticity of demand with diagram.
Define market demand. Explain the factors that affect it.
Explain the relationship between TPP and MPP.
Explain consumer’s equilibrium with the help of an indifference curve.
Explain the consumer’s equilibrium in case of single commodity with the help of a schedule and
diagram.
How is the demand of a commodity affected by the change in the price of related goods ? explain
with the help of diagrams.
Explain a method measuring price elasticity of demand along a linear demand curve.
State the expenditure method of measuring price elasticity of demand with the help of numeric
example and diagram.
A consumer spends Rs. 80 on a commodity when its price is Re. 1 per unit and spends Rs. 96
when its price is Rs. 2 per unit. What is the price elasticity of demand for a commodity ?
A consumer buys 100 units of a good at price of Rs. 5 per unit. When price changes then he buys
140 units . what is the new price if price elasticity of demand is -2 ?
A 5% fall in the price of good X leads to a10% rise in demand of X. A 2% rise in the price of Y leads
to a 6% fall in the demand of Y. Calculate price elasticity of demand of X andY ?
Price elasticity of demand of a good is -3. IF the price rises from Rs. 10 per unit to Rs. 12 per unit,
what is the percentage change in demand ?
Explain the consumer’s equilibrium in case of single commodity with the help of a schedule and
diagram.
Entrepreneurship Holidays Home Work (Class-XII)
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Project I: Market Survey – Choose any ONE of the following Surveys:
a.
Survey 1:
b.
Survey 2:
c.
Survey 3:
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A Simple market research with the objective of estimating the demand
for an existing product in the market and also gives innovative
suggestion for the product’s improvement.
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Conduct a survey for a NEW INNOVATIVE product
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Conduct a survey for a study on:
a. Smoking habits
b. Skill trading option in an economically backward neighborhood
c. Wearing helmets
d. Attitudes of road users
e. Conservation of electricity
f. Re-harvesting of rain water
g. Any other relevant social issue
Note:
1. All the necessary guidelines are already given to all students in class only.
2. (Please confirm with Shishupal Sir-9999115178 before opting any topic)
HOLIDAY HOMEWORK
POLITICAL SCIENCE
CLASS XII
1. Read Newspaper daily and collect some information regarding your subject and topics.
2. Prepare for the special examination and the syllabus is given below:
BOOK 1
1) Ch 1 Cold War Era
2) Ch 2 The End of bipolarity
3) Ch 3 US Hegemony
4) Ch 4 Alternative centre of power
5) Ch 5 Contemporary South Asia
BOOK 2
6) Ch 1 Challenges to nation building
7) Ch 2 Era of one party dominance
3. Do the question bank given below in your political science notebook after learning.
Cold War Era
Q.1 Define cold war?
Q.2 Define the term deterrence?
Q.3 Who are the founder members of NAM?
Q.4 Name –Allied force and Axis powers in World War 2.
Q.5 Explain the concept of arms control?
Q.6 What do you understand by eastern & western alliance?
Q7 Write two objectives of NAM?
Q8 Explain equi-distance theory?
Q.9 Give meaning of non-alliance?
Q.10 Why the superpowers needed any alliance?
Q.11 How non alliance countries played a vital role in reduce cold war conflicts & averting some grave
crisis?
Q.12 Why small countries wanted to join superpowers?
Q.13 What led to end of second world war?
Q.14 Give full form of UNCTAD?
Q.16 Why India’s policy of non alignment was criticized?
Q.17 Bring out the difference between non-alignment & neutrality?
Q.18 Mention the reforms introduced by UNCTAD under NIEO initiative.
Q.19 Briefly explain the Cuban missile crisis.
The End Of Bipolarity
Q.1 What led to the end of cold war?
Q.2 Mention some changes that took place east European countries after Second World War?
Q.3 Mention some positive changes that took place in Soviet Union after Second World War.
Q.4 Mention some reform introduced by Gorbachev?
Q.5 State some changes introduced by Boris Yeltsin?
Q.6 What led to the disintegration of USSR?
Q.7 Why USSR system become weak & why did their economy became stagnant?
Q.8 Explain consequences of disintegration of Soviet Union?
Q.9 Why did Soviet Union collapse inspite of Gorbachev’s accurate diagnosis of the problem & his
attempt to implement reforms?
Q.10 Define shock therapy & mention its features?
Q.11 List in the consequences of shock therapy?
Q.12 Discuss India’s relation with Russia?
Q.13 What do you understand by “largest garage sale in history”?
U.S Hegemony
Q.1 Explain the process by which US Hegemony got established more closely?
Q.2 What policy decisions were taken in Clinton years?
Q.3 What action was taken by Clinton against Al-Qaeda?
Q.4 Write a note on “9/11 attack” in America?
Q.5 Why Iraq invasion is considered a political and military failure?
Q.6 How US responded to 9/11 attack?
Q.7 Write a note of Iraq invasion?
Q.8 What does hegemony means?
Q.9 Give meaning of unipolar system?
Q.10 From where the word hegemony originated?
Q.11 Explain US Hegemony as Hard Power?
Q.12 Which four tasks has been accomplished by military forces of imperial power?
Q.13Explain US Hegemony as structure power?
Q14 Explain US Hegemony as Hard Power?
Q.15 Mention some constraint on American power?
Q.16 Discuss India relationship with the US?
Q.17 Which new factors have emerged in Indo-US relation in recent years?
Q.18 Discuss three possible strategies to overcome US Hegemony.
Alternative Centre’s of power
Q.1Which country made the Marshall plan?
Q.2 What was the objective of Marshall plan?
Q.3 How European union has evolved over the time from an economic union to an increasingly political
one?
Q.4 Discuss political & diplomatic influence of EU?
Q.5 Describe military influence of EU?
Q.6 ‘In many areas its member states have their own foreign relations & defense policies’ Explain.
Q.7 What led to the formation of south east Asian nation?(ASEAN)
Q.8 When was ASEAN formed & what is its objective?
Q.9 Which countries joined ASEAN later?
Q.10 Explain the three pillars of ASEAN community?
Q.11 How Chinese Economy has developed?
Q.12 Which factors are responsible for the growth of Chinese economy?
Q.13 How the Chinese economy before 1970 was different from the Chinese economy after 1970?
Q.14 Discuss briefly India’s relation with China before 1978?
Q.15 Mention the changes that took place between India & china relations after the end of cold war?
Contemporary South Asia
Q.1 Name the south Asian countries.
Q.2 Mention the mixed political record of all the south Asian countries.
Q.3What is SAARC and SAFTA?
Q.4Mention the member states that form the SAARC
Q.5What was the IPKF?
Q.6Name two army dictators in Pakistan
Q.7The movement for freedom in Bangladesh was led by which leader in the 1970’s
Q.8What are some of the commonalities and differences between Bangladesh and Pakistan in their
democratic experiences?
Q.9 List three challenges to democracy in Nepal.
Q.10 Name the principal players in the ethnic conflict in Sri Lanka. How do you assess the prospects of
the resolution of this conflict?
Q.11How are the external powers influencing bilateral relations in South Asia? Write and give examples
to illustrate your point
Q.12 Discuss the role and the limitations of SAARC as a forum for facilitating economic cooperation
among the South Asian countries. What are the factors that have made our neighbors suspicious of
India’s role in the association?
Q.13India’s neighbors often think that the Indian government tries to dominate and interfere in the
domestic affairs of the smaller countries of the region. Is this a correct impression? Give your opinion.
Challenges to the Nation Building
Q.1 What were the challenges before India at the time of independence?
Q.2 Who was Potti Sriramulu?
Q.3What was the SRC who were its members and when did it come into existence?
Q.4On the map mark 1.Junagadh 2. Manipur 3. Hyderabad 4. Mysore
Q.5What were the main concerns/ challenges of partition?
Q.6 Discuss Sardar Patel’s role in the integration of Princely states into the Indian Union.
Q.7Name the parent states and year of formation for 1. Nagaland 2. Gujarat 3. Arunachal Pradesh 4.
Jharkhand?
Q.8What was the Vishal Andhra movement how did language evolve into a political controversy?
Q.9 Discuss Nehru’s approach to nation building? Do you think his reasons were prudential or
sentimental?
Q.10How was the Princely states integrated? Were they willing to join India or were they coerced?
Q.11How did poets influence Indian unity?
Q.12How did Manipur integrate with India?
Q.13It is said that a nation is an “imagined community” held together by shared political beliefs
aspirations, and imagination. Identify the features that make India a nation.
Q.14Discuss the government’s approach to the integration of Hyderabad and Manipur
Q.15Discuss the major differences to nation building for the Eastern and Western regions of the country
at the time of independence .
Era of one party dominance
Q.1 What is the congress system?
Q.2 How was the communist victory in Kerala unique?
Q.3 Write a short note on the Swatantra party?
Q.4 Who is the founder of BJS? Was it powerful force in Indian politics?
Q.5 Was Opposition needed in the years after independence?
Q.6 Describe the nature of party system in India between 1947-67.
Q.7 Highlight some of the features of Swatantra party.
Q.8 Who was Sukumar Sen?
Q.9 How was the victory in Kerala unique? Discuss
Q.10 Who was Shyama Prasad Mukherjee? What was his role?
Q.11Did the prevalence of a ‘one party dominant system’ affects adversely the democratic nature of
Indian politics?
Q.12Bring out three differences each between Socialist parties and the Communist party and between
Bharatiya Jana Sangh and Swatantra Party.
ACCOUNTANCY HOLIDAY HOMEWORK
PART I : Accountancy Project Work
Objectives
 To enable students to complete the accounting process in real business situations (of sole
proprietorships, partnership firms or joint stock companies)
 To develop competence of reading accounting data of business firms and interpret information
on the basis of given guidelines to present the desired information in the form of a Project File
As per the CBSE guidelines students are required to cover the following projects during the year:
Accountancy Project Work Comprehensive - Case Study
Specific 1 - Accounting Ratios , Specific 2 - Cash Flow
Project File
 Use A4-size coloured sheets
 Do not punch the sheets. Use a clip file/folder
 Leave a left margin of at least 1.5 inches for spiral binding
 Final versions of the project files (after correction and finalization of all sections in Sep/Oct
2015) are to be spiral bound
During the summer vacations, students are required to complete (FINAL DRAFTS) the following:
xi).
o Introductory Pages:
 Acknowledgement
 Certificate
 Introduction
 Index
 Introduction to Project work
 Accounting Concepts
 Golden Rules of Dr. & Cr.
 Information / Data used for the project’ (like your case study)
. Introduction to Accounting Tools used (accounting ratios, comparative and common size statements
o Comprehensive Project
 Case study (done in class xi)
 Journal Proper
 Cash Book (if required)
 Ledger Accounts
 Trial Balance
 Final Accounts – Trading, Profit & Loss A/c & Balance Sheet
 Analysis of the Financial Statements using Accounting ratios to enable you to comment on
the liquidity, solvency, activity and profitability positions to be done once the chapter
Accounting Ratios is completed
Specific 1 and 2:
1. Identify a Joint Stock Company that you want to study.
2. Finalization of the company will be on a first-come-first basis. Students are required to propose
the company they plan to study by 05-June and mail a copy of the statement of profit and loss
& Balance Sheet for approval.
3. After approval include the following in your project
 A brief history of the company.
 The Statement of P/L & balance sheet of the company published for the
financial year 2014-15.
 Company’s cash flow statement.
PART II : REVIEW OF TOPICS COVERED
NOTE: MAKE A SEPARATE NOTEBOOK FOR THE HOLIDAY HOMEWORK
MULTI DISCIPLINERY QUESTIONS
A and B are partners sharing profits in the ratio of 3:2 with capitals of Rs. 3,20,000 and Rs.
2,60,000.On 1stApril,2013,they admit C into the partnership. A surrenders 1/5thof his share
and B surrenders 2/5thof his share in favor of C.C brings in Rs. 1,40,000 for goodwill and the
proportionate amount of Capital in cash. Partner’s are entitled to interest on capital @5% p.a.
Profits for the year ending 31stMarch,2014 before allowing interest on capitals amounted to
Rs. 3,00,000. Pass journal entries for the above mentioned transactions.
The partners of a firm distributed the profits for the year ended 31stMarch,2013,Rs. 7,50,000
equally without providing for the following adjustments:
(1) A and B were entitled to a salary of Rs. 10,000 each per month.
(2) B was entitled to a commission of Rs. 60,000.
(3) Profits were to be shared in the ratio of 3:2:1.
Partners decided to pass an adjusting entry on 1STApril,2013 rectifying the same.
On the same date, they admitted D as a new partner for 1/7thshare in the profits. The new
profit sharing ratio will be 2:2:2:1respectively. D brought Rs. 3,00,000 for his capital and Rs.
45,000 for his 1/7thshare of goodwill. Showing your workings clearly, pass the necessary
journal entries in the books of the firm for the above mentioned transactions.
Q.4.A,B and C were in partnership sharing profits and losses in the proportions of 3 : 2 : 1. On
1stApril,2011,B retires from the firm. On that date , their Balance Sheet was as follows :
Liabilities
Trade Creditors
Expenses owing
Reserve Fund
Workmen’s
Compensation
Reserve
Capitals :
A :1,95,000
B : 1,57,000
C : 81,000
(Rs)
69,000
45,000
1,05,000
48,000
4,33,000
7,00,000
Assets
Cash in hand
Debtors 1,60,000
Less: Provision
10,000
Stock
Factory Premises
Investments
Loose Tools
(Rs)
85,000
1,50,000
1,20,000
2,25,000
80,000
40,000
7,00,000
The terms were :
(1)Goodwill of the firm to be valued at 2 times of Average Super Profits of last three years .
Taking into consideration the risk of the business, normal profits of the firm are estimated at
5,00,000 every year. But actual profits three years ending 31stmarch were as 2009 : 6,00,000 ,
2010 : 5,50,000 , 2011 : 5,75,000.
(2)Expenses owing to be brought down to 37,500.
(3)Investments are valued at 72,000.A took over investments at this value.
(4)Factory premises is to be revalued at 2,43,000;and Loose tools at 36,000.
(5)Provision for doubtful Debt to be increased by 19,500.
(6)Claim on account of workmen’s compensation is 18,000.
(7)B be paid 50,000 in cash and balance due to him treated as a loan carrying interest @ 6%
per annum.
As per partnership deed, partners are allowed 6% p.a. interest on their capitals. Profits for the
year ending 31stmarch 2012 before allowing interest on the loan and capitals amounted to
22,000.
Show Journal entry for goodwill adjustments, prepare Revaluation Account and Capital
Accounts as on 1stApril 2011 and the distribution of profit for the year ended 31stMarch,2012.
VALUE BASED QUESTIONS
X, Y and Z are partners with ` 72,000, ` 80,000 and ` 1,00,000 as their capitals respectively. The
profit for the year ending March 31, 2012 was ` 7,20,000. Before distributing profits they
donated 10% of profits to a ‗Non-Govt. organization‘ as charity for welfare of educationally
backward section of the society. Out of the remaining profit, ` 4,00,000 is divisible as 5:3:2
ratio and the remaining is to be divided amongst them equally. Identify the value involves by
the partnership form of X,Y and Z. Prepare Profit and Loss appropriation Account and partner‘s
Capital Account.
Ramesh and Gurmeet are two friends belonging to Hindu and Sikh
religion respectively. They started a business of wire manufacturing
in the form of a partnership firm. They know that the factory of
wire manufacturing pollutes the environment. Therefore there are
two options available before them. First option is that the factory
can be opened in rural area where local residents are poor and
illiterate. Second option is that an advanced pollution control plant
can be installed in their factory to control the pollution. They
decided to choose the second option which involves an additional
cost of ` 2, 00,000. To arrange this amount, they admitted their fast
friend John as a new partner for equal share in the future profits.
John brought` 2,50,000 as his share of capital. Ramesh and
Gurmeet gave him a guarantee that his share of profit will not be
less than ` 60,000 p. a. At the end of first year the firm earns a
profit of ` 1,50,000.
Mention the value involved in this question. Write the effects of
choosing option available before Ramesh and Gurmeet. Prepare
the Profit and Loss Appropriation Account for the first year.
• A, B and C are partners in a firm. C used firm‘s money to buy
shares without disclosing it other partners. Which value C is
violating and what will be the treatment of profit earned by C?
• After completing MBA, Arun and Radha want to start a new
business but they don‘t have sufficient capital. They contacted their
common friend Sita, a rich lady with low vision. They decided to
form a partnership firm with a capital of Rs.25,00,000 with a ratio
of 80% by Sita, 10% each by Arun and Radha respectively. The
partnership deed provided as follows:• Interest on capital @12% p.a.
• Salary to active partners Arun and Radha @ 9,000 p.m.
The firm earned a net profit of 9,66,000 during the year. Sita
decided to donate half of her profits to a school for differently
abled children.
State which values are being reflected in the above case and also
prepare Profit and loss appropriation a/c for the year.
• A and B are partners in a firm having a workmen compensation
reserve of 10,00,000. A worker, Rohan died in an accident while
working for the firm. The firm paid 500,000 as compensation to his
family and offered a job to his wife and also arranged for the
education of his son. State which values are being reflected in the
above case and also show the treatment of workmen compensation
reserve if A and B now decide to change their profit sharing ratio
from 3:1 to equal ratio. Workmen compensation reserve will not be
shown in the books of new firms.
• A and B are partners in a firm. A manages all business as a
representative of firm. For execution of a sales order to a valuable
customer A incurred ` 5,000 for delivery in quick time. B is not
agreeing to reimburse the above expenses from the firm‘s accounts.
Explain the treatment of above expense and describe which value is
violatedby the partners.
• What are the values involved in the formation of a partnership
firm?
• What are the values disclosed by a Partnership Deed?
• In the absence of partnership deed, interest on Advances/Loan by a
partner is to be paid @ 6% p.a. What value is depicted in this
provision of Indian Partnership Act, 1932?
• XYZ Cycles Ltd., a manufacturer of cycles and tri-cycles has
decided to donate 100 tri-cycles worth ˆ 3,00,000 to differently
abled children in the CWSN (Children with special needs)
assessment camp organized by Directorate of Education, Delhi
on 3rd December on occasion of “World Disabled Day”
State the values that are being reflected in the above case.
A,B and C were partners in a firm. A died in a road accident. A‘s family
has no other source of income. B and C has decided to admit A‘s son D ,
a minor, in the partnership firm .. Firm guaranteed that his share in
profits will not be less than ˆ 1,00,000 in a year.
State the values that are being reflected in the above case.
ABC Ltd., a manufacturer of very popular liquid soap, has decided to
supply its popular product ‗Safe Hand Wash‘ worth ˆ 50,000 to 25
schools in the different areas of the city on the occasion of „Global
Handwash Day‟ on the 15th October at free of cost.
State the values that are being reflected in the above case.
Sita and Geeta are working as marketing executive in a MNC dealing in
cosmetic products. After working for 5 years in MNC, both of them
realized that they should start their own business, but both of them
individually don‘t have sufficient funds for starting the business.
Therefore, they have decided to form a partnership firm with equal
amount of capital. Both are agreed that they will actively participate in
the operation of the business and to share the profits or losses of the
business equally. They have decided to appoint Sangeeta, their common
friend, as a manager.
State the values that are being reflected in the above case.
•
Ram is a graduate in Business Administration. After completing B.B.A.,
he tried very hard for a job but he didn‘t get any opportunity to work due
to recession in the economy. Then he realized that he should start his
own business at the ground floor of his house lying vacant. Since he
didn‘t have sufficient funds to invest in the business, he cannot start the
business alone.
• A, B and C are in a partnership. A is appointed for carrying on the
business of the firm by the other partners. A has decided to
purchase the goods from a firm in which his wife and his son are
partners at a double rate then the prevailing market rate without
disclosing this fact to others partners of the firm.
State which values have been violated by A by not disclosing this
information to B and C.
A, B and C are partners in a firm which deals in woolen garments.
D who runs a NGO and also a friend of C contacted him for
supplying 1,000 woolen jackets for distributing among the students
of EWS (Economical Weaker Section) of the society studying in
a school for „out of school children‟ run under SSA program. D
requested C to provide the jackets at the lowest possible rate. C
discussed the matter with the other partners of the firm and the firm
decided to provide required no. of jackets at ‗No Profit No Loss‘ to
the NGO of D.
State the values that are being reflected in the above case.
X and Y are partners with capitals of Rs. 1,20,000 and Rs. 40,000 respectively on 1st April, 2005. the
treading Profit (before taking into account the provisions of the deed) for the year ended 31st March,
2006 was Rs. 48,000. Interest on capitals is to be allowed at 6% per annum. Y is entitled to a salary of Rs.
12,000 per annum. The drawings of the partners were Rs. 12,000 and Rs. 8,000; the interest for X being
Rs. 400 and for Y Rs. 200. Show how the profit will be divided between X and Y and also show the capital
accounts (i) if they are fluctuating and (ii) if they are fixed.
Ans. Profit – X-Rs.13,500; Y-Rs.13,500 Fluctuating cap. X-Rs.1,28,300; Y-Rs.59,700; Fixed cap. XRs.1,20,000; Y-Rs.40,000; Current A/c –X-Rs.8,300; Y-Rs.19,700
Q 2. Shiv and Hari entered into partnership on 1st January 2009 Contributing Rs.5,00,000 and
Rs.2,00,000 respectively. Hari also introduced Rs.1,00,000 as additional capital on 1st April,2009. They
agreed to share profits and losses in the ratio of 3:2. Following information is provided regarding the
partnership:
Shiv and Hari, each are allowed a salary of Rs. 5,000 per quarter.
Interest is to be allowed on Capitals @ 8% p.a. and charged on drawings 600 & 500.
Drawings of Shiv and Hari during the year were Rs. 12,000 and Rs. 10,000 respectively. Profit as at 31st
December, 2009 before the above mentioned adjustments was Rs. 1,96,000.
Prepare: Necessary journal entries relating to appropriation of profits. profit and Loss Appropriation A/c.
and Partner’s Capital A/cs. Fluctuating (2) Fixed
Q 3. Sonu and Monu entered into partnership with a capital contribution of Rs. 1,20,000 and Rs. 40,000
respectively as on 1.4.2006. The net profit earned during the year 2006-07 (before taking into
consideration the clauses of partnership deed) was Rs. 48,000.Partnership Deed provided that:Monu is
entitled to a Salary of Rs. 12,000 per annum. Interest on capital to be allowed to the partners @ 6% per
annum. Partners draw Rs. 500 and Rs. 400 per month from the firm as drawings. Prepare the Profit and
Loss Appropriation Account and partner’s Capital Account in the following cases:-When Partners’
Capitals are fixed. When Partners’ Capitals are fluctuating.
Q 4. The following differences have arisen among A, B and C. State who is correct in each case:
i)A used Rs. 40,000 belonging to the firm and made a profit of Rs. 10,000. B and C
want the amount to be given to the firm.
ii)B used Rs. 10,000 belonging to the firm and suffered a loss of Rs. 2,000. He wants
the firm to bear the loss.
iii) A and B want to purchase goods from S Ltd., C does not agree.
iv) B and C want to admit D as partner, A does not agree.
Q 5. P, Q and R are partners in a firm. They have no partnership agreement for their guidance. At the
end of the first year of the commencement of the firm they have faced the following problems:
P wants that interest on capital should be allowed to the partners, but Q and R do not agree.
Q wants that the partners should be allowed to draw salary, but P and R do not agree.
R wants that loan given by him to the firm should bear interest @ 10% per annum but P and Q do not
agree.
P and Q having contributed larger amounts of capital, desire that the profit should be divided in the
ratio of their capital contribution, but R does not agree.
State how you will settle these disputes if the partners approach you for the purpose.
Q 6. X and Y are Partners in a firm. On 1/1/05, their capitals were Rs 1,00,000 and Rs 30,000
respectively. Their current account balances were Rs 10,000 (credit) and Rs 2000 (debit). On 1/7/05, X
withdrew Rs.20,000 from his capital and Y introduced Rs 10,000 as additional capital on the same date.
During the year the drawings of X and Y were Rs 10,000 & Rs 5,000 respectively. Interest on capital is to
be allowed @ 12% p.a. commission to be provided to the manager @ 10% on profit. Prepare P& L app.
Account & partner’s capital A/c and Current A/c. Net Profit for the year ended 31/12/2005 were Rs.
1,00,000
Q 7. X and Y are partners in a firm. Their capitals as on April 1, 2009 were Rs. 2,50,000 and Rs. 1,80,000
respectively. They share profits equally. On July 1, 2009. X withdraw Rs. 50,000 & Y introduced 20,000 as
additional capital. The necessary adjustments in the capitals were made by withdrawing or introducing
cash. According to the partnership deed, interest on Capital is to be allowed at 8% p.a. X is to get an
annual salary of Rs. 4,000 and Y is allowed a monthly salary of Rs. 800. It was found that Y was regularly
withdrawing his monthly salary.
Net Profit for the year ended on 31st March, 2010. Before charging interest on capital and salary, was
Rs. 72,000. Prepare the profit and loss appropriation account, partner’s capital accounts and current
accounts.
Q 8. Sohan is a partner in a firm. He withdraws the following amounts during the year 2005:
Rs.
February 1
8,000
May 1
20,000
June 30
8,000
October 31
24,000
December 1
8,000
Interest on drawings is to be charged @ 7 ½% per annum.
Calculate the amount of interest to be charged on Mohan’s drawings for the year 2005.
Ans. Rs.2,200
Q 9. (Calculation of Interest on drawings by Simple Interest and Product Method). In a partnership,
Partners are charged interest on drawings at 15 per cent per annum. During the year ended 31st
December, 2007 a partner drew as follows:
Rs.
February 1
2,000
May 1
5,000
June 30
2,000
October 31
6,000
December 31
2,000
What is the interest chargeable to the partner?
Ans. Rs. 1,075
Q 10. Rishi is a partner in a firm. He withdrew the following amounts during the year ended on 31st Dec.
2001:
Rs.
February 1
12,000
April 30
6,000
June 30
9,000
August 31
12,000
October 1
8,000
December 31 7,000
Interest on drawings is to be charged @ 9% p.a. Calculate interest on drawings.
Q 11. X withdrew Rs.1,000 p.m. Calculate Interest on Drawings @ 10% p.a. in each of the following
cases:
Case a If he withdrew in the beginning of every month
Case b If he withdrew in the middle of every month
Case c If he withdrew at the end of every month.
Q 12.X draws Rs.10,000 quarterly. Calculate interest on drawing @ 15% p.a. in each of the following
cases:
Case A – If he draws in the beginning of each quarter.
Case B – If he draws in the middle of each quarter.
Case C – If he draws at the end of each quarter.
Ans. Rs.(A) Rs.3,750 ; (B) Rs.3,000 ; (C) Rs.2,250
Q 13. Mr X and Y started business on 1st April, 20×3 with capitals of Rs. 5,00,000 and Rs. 3,00,000
respectively. Calculate the interest on Drawings of Mr X @ 10% p.a. for the year ended 31st Dec. 20×4 if
he withdrew as follows:
During the first three months he withdrew Rs. 2,000 in the beginning of every month,
During the next three months he withdrew Rs. 2,000 at the end of every month,
During the remaining months he withdrew Rs. 2,000 p.m.
14. P and Q are partners in a firm. They withdrew Rs. 96,000 and Rs. 72,000 respectively during the year
evenly at the middle of every month. According to the partnership agreement, interest on drawing is to
be charged @ 10% per annum.
Calculate the interest on drawings of the partners using appropriate formula.
Ans. P -Rs.4,800 ; Q –Rs.3,600
Q 15. X and Y are two partners sharing profits equally. X drew regularly Rs. 800 at the beginning of every
month for the six months ending 30th June. 2006. Calculate interest on drawings at 5% per annum.
Ans. Rs.70
Q 16. X and Y are two partners sharing profits equally. X drew regularly Rs. 800 at the end of every
month for the six months ending 30th June. 2006. Calculate interest on drawings at 5% per annum.
Q 17. Calculate the Interest on Drawings of Ram @ 10% p.a. for the year ended 31st Dec. 20×2 in each of
the following alternative cases:
Case (a) If his drawings during the year were Rs. 24,000;
Case (b) If he withdrew Rs. 2,000 p.m. in the beginning of every month;
Case (c) If he withdrew Rs. 2,000 p.m. at the end of every month;
Case (d) If he withdrew Rs. 2,000 p.m.;
Case (e) If he withdrew the following amounts as follows:
Jan. 31 Rs. 6,000, Mar. 31Rs 4,000, July 1 Rs. 8,000,
Sept. 30 Rs. 3,000. Nov. 1 Rs. 5,000.
Case (f) If he withdrew Rs. 6,000 in the beginning of each quarter.
Case (g) If he withdrew Rs. 6,000 at the end of each quarter.
Case (h) If he withdrew Rs. 6,000 during the middle of each quarter.
Q 18. X withdrew Rs.10,000. Calculate interest on drawings @10%p.a.
Q 19. X withdrew Rs.10,000. Calculate interest on drawings @10%
Q 20. X and Y are partners sharing Profit or Loss in the ratio of 3 : 2. having capital balances of Rs.
1,00,000 and Rs. 80,000 on 1.4.2003. On 1st July, 2003 X introduced Rs. 20,000 as his additional capital
whereas Y introduced only Rs. 2,000. If the interest on capital is allowed to partners @ 10% per annum
calculate the interest on capital if the financial year closes on 31st of March every year.
Ans. X – Rs.11,500 ; Y – Rs.8,150
Q 21. X and Y started business on 1st April, 20 × 3 with capitals of Rs. 5,00,000 and Rs. 3,00,000
respectively.
On 1st May 20 × 3, X introduced an additional capital of Rs. 1,00,000 and Y withdrew Rs. 50,000 from his
capital. On 1st October 20×3, X withdrew Rs. 2,00,000 from his capital and Y introduced Rs. 2,50,000.
Interest on capital is allowed @ 6% p.a. calculate the interest on capital for the year ending 31st March,
20×4.
Q 22. From the following Balance Sheet of X and Y, calculate Interest on capital @ 5% per annum
payable to Y for the year ending 31st March, 2006:
Liabilities
Rs.
Assets
Rs.
X’s Capital
10,000
Sundry Assets
22,000
Y’s Capital
8,000
Profit and Loss App. A/c 2005-06
4,000
22,000
22,000
During the year Y’s Drawings were Rs. 3,000 and Profits during the year ended 31st March, 2006 were
Rs. 6,000
Ans. Rs.500
Q 23. Ajay and Vijay are partners in a business. Their capitals at the end of the year were Rs. 48,000 and
Rs. 36,000 respectively. During the year 2005, Ajay’s drawings and Vijay’s drawings were Rs. 8,000 and
Rs. 12,000 respectively. Profit (before charging interest on capital) during the year were Rs. 32,000,
Calculate interest on capital @ 5% per annum for the year ending 31st December, 2005.
Ans. Ajay - Rs.2,000 ; Vijay – Rs.1,600
Q 24. On 31st march. 20 × 4 after the close of the accounts, the capital accounts of X and Y stood in the
books of the firm at Rs. 4,00,000 and Rs. 5,00,000 respectively. On 1st May 20×3, X introduced an
additional capital of Rs. 1,00,000 and Y withdrew Rs. 50,000 from his capital On 1st October 20×3, X
withdrew Rs. 2,00,000 from his capital and Y introduced Rs. 2,50,000. Interest on capital is allowed @
6% p.a. calculate the interest on capital for the year ending 31st March. 20×4. Subsequently. It was
discovered that interest on capital @ 6% p.a. had been omitted. The profits for the year ended 31st
March, 20×4 amounted to Rs. 2,00,000 and the partners drawings had been: X Rs 1,00,000 and Y – Rs.
50,000. The Profit sharing ratio of X and Y was 3 : 2.
Required: Calculate the interest on Capital it the capitals are (a) fixed (b) fluctuating.
Q 25. A and B contribute Rs. 40,000 and Rs. 20,000 respectively. They decide to allow interest on capital
@ 6% per annum. Their respective share of profits is 2:3 and the business profit (before interest) for the
year is Rs. 3,000. Show the distribution of profits (a) where there is no agreement except for interest on
capitals, and (b) where there is a clear agreement that the interest on capitals will be allowed even if it
involves the firm in loss.
Ans. (a) A-Rs.2,000 ; B-Rs.1,000 ; (b) Loss A-Rs.240 ; B-Rs.360
Q 26. Calculation of Intrest on capital when the profits are inadequate)
A and B contribute Rs. 50,000 and Rs. 30,000 respectively by way of capital on which they agree to allow
interest at 6% p.a. Their respective share of profit is 3:2 and the profit for the year is Rs. 4,000 before
allowing interest on capitals. Prepare the necessary account to allocate interest on capitals.
Q 27. (Interest on Capital when Profit is Inadequate). A and B contribute Rs. 40,000 and Rs. 20,000
respectively by way of capital on which they agree to pay interest at 6 per cent per annum. their
respective share of profit is 2:3 and the business profits (before interest) for the year are Rs. 3,000.
Show the relevant account to allocate interest on capitals: (i) if the partnership deed is silent about the
treatment of interest on capital, and (ii) if interest is a charge as per partnership deed.
Ans. (i) A-Rs.2,000;B-Rs.1,000 (ii) loss A-Rs.240;B-Rs.360
Salary or Commission to Partners
Q 28. A, B and C are partners sharing profits and losses equally. As per partnership deed, C is entitled to
a commission of 10% on net profit after charging such commission. Net Profit before charging
commission is Rs. 4,40,000. Find out commission payable to C.
Ans. Rs.40,000
Q 29. P, Q and R are partners sharing profits and losses in the ratio of 2 : 2 : 1 respectively. P is entitled
to a commission of 10% on net profit before charging such commission. Net profit before charging
commission is Rs. 2,20,000. Find out commission payable to P.
Ans. Rs.22,000
Q 30. X and Y are partners in a firm. X is entitled to a salary of Rs. 2,000 p.m. together with a commission
of 10% of Net Profit before charging any commission, Y is entitled to a salary of Rs. 5,000 p.a. together
with a commission of 10% of Net Profit after charging all commissions. Net Profit before charging any
commission for the year 20×2 was Rs. 55,000, Show the distribution of Profit.
Q 31. A and B are partners in a firm. A is entitled to a salary of Rs. 20,000 per month together with a
commission of 10% of Net Profit after partners’ salaries but before charging any commission B is entitled
to a salary of Rs. 50,000 per annum together with a commission of 10% of Net Profit after charging all
commission and partners’ salaries. Net profit before providing for partners’ salaries and commission for
the year 2005 was Rs. 8,40,000. Show the distribution of profit.
Ans. A -Rs.2,25,000 ; B-Rs.2,25,000
Interest on Partner’s Loan
Q 32. A and B are partners sharing profits and losses in the ratio of 2:3 with capitals of Rs. 4,00,000 and
Rs. 6,00,000 respectively. On 1st October, 2005 A and B granted loans of Rs. 1,60,000 and Rs. 80,000
respectively to the firm. Show the distribution of profits/losses for the year ending March 31, 2006 in
each of the following alternative cases:
Case 1 If the profits before any interest for the year amounted to Rs. 42,000.
Case 2 If the profits before any interest for the year amounted to Rs. 6,000.
Case 3 If the profits before any interest for the year amounted to Rs. 10,000.
Q 33. X and Y are partners sharing the profits and losses in the ratio of 2 : 3 with capitals of Rs. 20,000
and Rs 10,000 respectively. On 1st July, 20×2 X and Y granted loans of Rs. 40,000 and Rs. 20,000
respectively to the firm. Show the distribution of profits/losses for the year 20×2 in each of the following
alternative cases:
Case A If the Profits before any interest for the year amounted to Rs. 2,100.
Case B If the profits before any interest for the year amounted to Rs. 1,500.
Case C If the losses before any interest for the year amounted to Rs. 1,500.
Q 34. A and B are partner The partnership deed provides the following:
1. Provide manager’s commission @ 10% on Net Profit.
2. A gives loan of Rs. 4,00,000 on 1-7-2001. Interest on loan not yet paid
3. Manager’s salary Rs. 18,000
4. Interest on capital @ 12% p.a. to A & B. capitals Rs.2,00,000 & Rs.1,00,000 respectively.
5. Interest on drawings @ 12% p.a. Drawings A – 1000 p.m. in the beginning of every month. B – 1,000
p.m. at the end of every month.
6. Salary to A & B 1,000 p.m. each
7. Commission to A – 10% of profit
8. Transfer to GR – 10% of Profit
9. Commission to B – 10% of Profit after all adjustments
Net profit before above adjustments 2,00,000
Prepare P & L appropriation account & partners capital account.
Q 35. A, B and C are partners with capital of Rs. 2,00,000; Rs. 1,20,000 and Rs. 80,000 respectively Their
Partnership Deed Provides that
Interest on partners’ Capital should be provided @ 5% per annum.
Interest on Partners’ Drawings should be provided @ 10% per annum.
(Drawings: A Rs. 20,000; B Rs. 12,000 and C Rs. 8,000)
The partners are entitled to a partnership salary of Rs. 10,000 each per annum.
A is entitled to a commission @ 10% on the profit before charging the above provisions.
C is entitled to a commission @ 10% on the net profit (after charging the above provisions) after
charging his commission.
25% of the net profit (after charging all the above provisions) should be transferred to Reserve Fund.
Partners will share profits or losses in the ratio of their capitals.
The Profit for the year ended March 31, 2006 amounted to Rs. 1,20,000.
Prepare Profit and Loss Appropriation Account and the partners’ Capital Accounts.
Q 36. Rita, Gita and Sita are three partners in a firm: According to Partnership Deed, the partners are
entitled to draw Rs. 1,400 per month. On 1st day of every month Rita, Gita and Sita draw Rs. 1,400, Rs.
1,200 and Rs. 1,000 respectively. Interest on capital and interest on drawings are fixed at 8% per annum
and 10% per annum, respectively. Profit during the year 2005 was Rs. 1,51,000 out of which Rs. 40,000 is
transferred to General Reserve. Gita and Sita are entitled to receive salary of Rs. 6,000 and Rs. 9,000 per
annum respectively and Rita is entitled to receive commission oat 10% on net distributable profit after
charging such commission. On 1st January, 2005, the balances of their Capital Accounts were Rs.
1,00,000, Rs. 80,000 and Rs. 70,000 respectively.
You are required to show Profit and Loss Appropriation Account for the year ended 31st December,
2005, and Capital Accounts of Partners in the books of the firm.
Q 37. X and Y started a partnership business on 1st January, 20×4. they contributed Rs. 80,000 and Rs.
60,000 respectively as their capitals. The terms of the partnership agreement are as given follows:20% of profits to be transferred to General Reserve.
(b) Interest on Capital @ 12% p.a. and interest on Drawings @ 10% p.a.
(c) X and Y to get a monthly salary of Rs. 2,000 and Rs. 3,000 respectively.
(d) X is entitled to a commission of Rs. 7,000.
(e) Sharing of profit or loss will be in the ratio of their capital contribution.
The profit for the year ended 31st December, 20×4, before making above appropriations was Rs.
1,25,375. The drawings of X and Y were Rs. 40,000 and Rs. 50,000 respectively.
Required: Give the necessary journal entries relating to appropriations out of profits. Prepare profit and
Loss Appropriation Account and partners’ Capital Accounts assuming that their capitals are (a)
fluctuating (b) fixed.
GOODWILL
Q 1. P and Q are partners sharing profits and losses in the ratio of 3 : 2. They admit R into partnership for
1/4th share in goodwill. Z brings his share of goodwill in cash. Goodwill for this purpose shall be
calculated at two years’ purchase of the average normal profit of past three years. Profits of the last
three years were:
2004 – Profit Rs. 1,00,000 (including profit on sale of assets Rs. 10,000)
2005 – Loss Rs. 40,000 (including loss by fire Rs. 60,000)
2006 – Profit Rs. 1,40,000 (including insurance claim received Rs. 36,000 and interest on investments
and dividend received Rs. 16,000)
Calculate the value of goodwill. Also calculate the goodwill brought in by R.
Ans. Rs.1,32,000
Q 2. The following were the profits of a firm for the last three years.
Year ending March 31 Profit (Rs.)
2001 5,00.000 (including an abnormal gain of Rs. 1,50,000)
2002 4,00,000 (after charging an abnormal loss of Rs. 2,00,000)
2003 6,00,000 (Excluding Rs. 2,00,000 payable on the insurance of plant and machinery)
Calculate the value of firm’s goodwill on the bests of four years’ purchase of the average profits for the
last three years.
Q 3. A purchased B’s business with effect from 1st January, 2010. It was agreed that the firm’s goodwill
is to be valued at two years’ purchase of normal average profit of the last three years. The profits of B’s
business for the last three years were:
2007 – Rs. 80,000 (including an abnormal gain of Rs. 10,000).
2008 – Rs. 1,00,000 (after charging an abnormal loss of Rs. 20,000).
2009 – Rs. 90,000 excluding Rs. 10,000 as insurance premium of firm’s property now to be insured).
Calculate the value of the firm’s goodwill.
Q 4. Calculate the value of goodwill on the basis of three years’ purchases of average profits of the
preceding five years which were as follows:
Year ending 31-3-2006 Rs. 16,00,000
Year ending 31-3-2005 Rs. 30,00,000
Year ending 31-3-2004 Rs. 36,00,000
Year ending 31-3-2003 Rs. 8,00,000 (Loss)
Year ending 31-3-2002 Rs. 26,00,000
Ans.: 60,00,000
Weighted Average Profit Method
Q 5. The Profit of a firm for the year ended 31st March for the last five years were as follows:
Year 2002 2003 2004 2005 2006
Profit (Rs.) 40,000 48,000 60,000 50,000 36,000
Calculate the value of goodwill on the basis of three years purchase of weighted average profits after
weights 1, 2, 3, 4 and 5 respectively to the profits for 2002, 2003, 2004, 2005 and 2006.
Ans.: 1,39,200
Q 6. The Profits of a firm for the year ended 31st March for the last five years were as follows:
Year Profit (Rs.)
1999 20,000
2000 30,000
2001 40,000
2002 50,000
2003 55,000
Calculate the value of goodwill on the basis of three years’ purchase of weighted average profits after
weights 1, 2, 3, 4 and 5 respectively to the profits for 1999, 2000, 2001, 2002 and 2003.
Ans. 1,35,000
Q 8. Calculate the goodwill of a firm on the basis of three years’ purchase of the weighted average profit
of the last four years. Profits of these four years ended 31st March were:
2006 2007 2008 2009
Rs. 40,400
Rs. 49,600
Rs. 40,000
Rs. 60,000
The weights assigned to each year ended 31st March are: 2006 – 1; 2007 – 2: 2008 – 3 and 2009 – 4
You are provided with the following additional information:
(i)On 31st March, 2008 a major plant repair was undertaken for Rs. 12,000 which was charged to
revenue. The said sum is to be capitalized for goodwill calculation subject to adjustment of depreciation
of 10% p.a. on Reducing Balance Method.
(ii) The closing Stock for the year 2006-2007 was overvalued by Rs. 4,800.
(iii)To cover management cost an annual charge of Rs. 9,600 should be made for the purpose of goodwill
valuation.
Super Profit Method
Q 9. X and Y had a firm in which they had invested Rs. 1,00,000. on an average the profits were Rs.
32,000. The usual rate of earning in the industry is 15%. Goodwill is to be valued at four years’ purchase
of profits in excess of profits @ 15% on the money invested. Value the goodwill.
Ans.: 68,000
Q 10. On 1st April, 20×1 an existing firm had assets of Rs. 75,000 including cash of Rs. 5,000. Its creditors
amounted to Rs. 5,000 on that date. The firm had a Reserve Fund of Rs. 10,000 while partner’s Capital
accounts showed a balance of Rs. 60,000. If the Normal Rate of Return is 20% and the goodwill of the
firm is valued at Rs. 24,000, at four year’s purchase of super profit, find the average profits per year, of
the existing firm.
Ans.: 20,000
Q 11. The Profits and losses for the last Years are 20×1 Profit 10,000. 20×2 Loss Rs. 17,000, 20×3 Profit
Rs. 50,000. 20×4 Profit Rs. 75,000. The average Capital employed in the business is Rs. 2,00,000, the rate
of interest expected from capital invested is 10%. The remuneration of partners is estimated to be Rs.
6,000 p.a. Calculate the value of goodwill on the basis of 2 years’ purchases of super Profits based on the
average of 3 years.
Q 12. The average net profits expected in the future by AB firm are Rs. 72,000 per year. The average
capital employed in the business by the firm is Rs. 4,00,000. The rate of interest expected from capital
invested in this class of business is 10%. The remuneration of the partners is estimated to be Rs. 12,000
per annum. Find out the value of goodwill on the basis of two years’ purchase of super profits.
Ans.: 40,000
Q 13. Calculate goodwill on the basis 4 year purchase on the basis of super profit of last 3 years(super
profit)
Year
profit Amount
1
Profit 10,000
2
profit 20,000
3
profit 30,000
4
profit 40,000
Assets & Liabilities on 31-12-2004 Rs 1,50,000 and Rs 40,000 respectively. Bank rate of interest is 7% risk
involved in this type of business 3%.
Q 14. A firm earns Rs. 6,00,000 as its annual profits, the rate of return being 12%. The assets and the
liabilities of the firm amount to Rs. 72,00,000, Rs. 24,00,000 respectively. Calculate the value of goodwill
by capitalisation method.
Q 15. A firm earns profits of Rs. 1,00,000. the Normal Rate of Return in a similar type of business is 10%.
The value of total assets (excluding goodwill) and total outsiders’ liabilities as on the date of valuation of
goodwill are Rs. 11,00,000 and Rs. 2,80,000 respectively Calculate the value of goodwill according to
Capitalization of super profits method.
Change in PSR
Q 1. X, Y and Z shared profits and losses in the ratio of 3 : 2 : 1. respectively. With effect from 1st
January, 2006, they agreed to share profits equally. The goodwill of the firm was valued at Rs. 18,000.
Make the necessary Journal entries or entry:
Q 2. X, Y and Z who are presently sharing profits & Losses in the ratio of 5:3:2. decide to share future
profits & losses equally with effect from 1st April, 20×2. The goodwill of the firm has been valued at Rs.
1,80,000. show the necessary accounting treatment under each of the following alternative cases:
Case A When no goodwill appears in the books.
Case B When goodwill already appears in the books at Rs. 1,80,000.
Case C When goodwill already in the books at Rs. 30,000.
Case D When goodwill already appears in the books at Rs. 2,10,000.
Q 3. X, Y and Z are partners sharing profit and loss in the ratio of 5 : 3 : 2. From 1st January, 2006, they
decided to share profit and loss equally. The Partnership Deed provides that in the event of any change
in profit-sharing ratio, the goodwill should be valued at two years purchase of the average profits of the
preceding five years. The profits and losses of the preceding years are given below: Year 2001 2002
2003 2004 2005
Profit (Rs.)
70,000 85,000 45,000 35,000 10,000 (Loss)
It is the practice of the firm not to show goodwill in the books.
Q 4. A, B and C are partners sharing profits in the ratio of 5:3:2. Now they changed their profit sharing
ratio to 2:1:2. Book value of goodwill is Rs.1,00,000 and goodwill is valued at Rs.5,00,000. Pass journal
entries.
Q 5. A, B and C are partners sharing profits in the ratio of 3:2:1. Now they changed their profit sharing
ratio to 1:3:2. Book value of goodwill is Rs.50,000 and goodwill is valued at Rs.1,00,000. Pass journal
entries.
Accounting Treatment of Reserves and Accumulated Profits When there is Change in the Profit-Sharing
Ratio of Existing Partners.
Q 6. A, B and C are partners in a firm sharing profits in the ratio of 5:3:2. on March 31, 2008, their
Balance Sheet showed a general reserve of Rs. 50,000. On that date they decided to change their profit
sharing ratio as 2:3:5. Record the necessary Journal entry in the books of the firm under the following
circumstances.
(a) When they want to transfer the general reserve in their capital accounts.
(b) When they don’t want to transfer general reserve in their capital accounts and prefer to record an
adjustment entry for the same.
Q 7. A, B and C are partners in a firm sharing profits in the ratio of 5:3:2. on March 31, 2009, their
Balance Sheet showed P&L (debit) of Rs. 50,000. On that date they decided to change their profit
sharing ratio as 2:3:5. Record the necessary Journal entry in the books of the firm under the following
circumstances.
(a) When they want to transfer the loss in their capital accounts.
(b) When they don’t want to distribute the loss and prefer to record an adjustment entry for the same.
Q 8(a). X, Y and Z are sharing profits & losses in the ratio of 5: 3: 2. They decide to share future profits &
losses in the ratio of 2:3:5 with effect from 1st April, 20×2. They also decide to record the effect of the
following accumulated profits, losses & reserves without affecting their book figures, by passing a single
adjusting entry.
Book Figure
General Reserve
Rs. 40,000
Profit & Loss A/c (Cr.)
Rs. 10,000
Advertisement Suspense A/c (Dr.)
Rs. 20,000
Required: Pass the necessary single adjusting entry.
Q 8(b). All the profits and losses to be distributed amongst partnes.
Q 9(a). L, M and N shared profits and loss equally. They mutually decided to change their ratio to 5 : 3 :
2. respectively. On the date of the change in ratio, they had the following undistributed profits, which
need to be adjusted because of the change in their ratio.
Rs.
(a) General Reserve 68,000
(b) Contingency Reserve 76,000
(c) Profit and Loss Account (Credit) 1,52,000
(d) Joint Life Policy Reserve 1,30,000
Give one Journal entry for all reserve to make the necessary adjustments.
L Dr. 71,000
To M 14,200
To N 56,800
Q 9(b). All the profits and reserves to be distributed amongst partners.
Preparation of Balance Sheet
Q 10(a). Pass journal entry & prepare balance sheet if there is no restriction on distribution of
undistributed profits or losses.
Liabilities
Amount Assets
Amount
Capital
20,000
Building
20,000
A
20,000
Machinery
20,000
B
10,000
Stock
20,000
C
20,000
Cash
65,000
Creditors
70,000
P&L
15,000
General Reserves
1,40,000
1,40,000
Profit Sharing Ratios of A:B:C is 2:2:1 Changed into 1:3:1 on 1-1-08.
Machinery is valued Rs 25,000, Building Rs 25,000 Stock is depreciated by 25%.
Creditors decreased to Rs 15,000, O/S Expense found Rs 5,000
Accrued Income found Rs 10,000, goodwill of the firm valued Rs 5,000.
Pass Journal Entries & Prepare Balance Sheet.
Ans.: B/s 1,40,000
Q 10(b). Revised values of assets and liabilities not to be shown in new balance sheet and reserves and
losses are not to be distributed. Pass journal entries and prepare Balance sheet.
Q 10(c). Revised values of assets and liabilities not to be shown in new balance sheet and reserves and
losses are not to be distributed. Pass a single journal entry and prepare Balance sheet.
Q 11. A and B are partners sharing profits in the ratio of 1:1. The new profit sharing ratio will be 3:1.
Their Balance sheet as on 31st March, 2006 stood as follows:
Liabilities
Rs.
Assets
Rs.
Sundry Creditors
O/s expenses
Capital A/cs;
A 15,000
B 15,000
10,000
10,000
30,000 Cash
Furniture
Machinery
Land
Stock 10,000
10,000
10,000
10,000
10,000
50,000 50,000
Additional information:
Stock is to be reduced to Rs.3,000.
Furniture is to be reduced by Rs.3,000.
Land is to be appreciated by Rs.11,000.
Machinery is to be appreciated to Rs.11,000.
Creditors is to be increased to Rs.12,000.
O/s expenses is to be increased by Rs.12,000.
Pass journal entries, prepare Revaluation A/c, Capital A/c and Balance Sheet.
Q 12. A and B are partners sharing profits in the ratio of 4 : 3. their Balance sheet as on 31st March, 2006
stood as follows:
Liabilities
Rs.
Assets Rs
Sundry Creditors
28,000
Cash
20,000
Reserve
42,000
Sundry Debtors
1,20,000
Capital A/cs;
3,60,000
Stock
1,40,000
A 2,40,000
Fixed Assets
1,50,000
B 1,20,000
4,30,000
4,30,000
They decided that with effect from 1st April, 2006, they will share profits and losses in the ratio of 2 : 1.
For this purpose they decided that:
(a) Fixed assets are to be depreciated by 10%.
(b) A Provision of 6% be made on debtors for doubtful debts.
(c) Stock be valued at Rs. 1,90,000.
(d) An amount of Rs. 3,700 included in creditors is not likely to be claimed.
Partners decided to record the revised values in the books. However, they do not want to disturb the
reserves. You are required to prepare Journal entries, capital accounts of the partners and the revised
balance sheet.
Ans.: 4,57,800
Q 13. A , B and C are partners in a firm sharing profits and losses in the ratio of 2 : 2: 1. Their Balance
sheet as on 31st March, 2005 was as follows:
BALANCE SHEET
As on March 31, 2005
Liabilities
Rs.
Assets
Rs.
Creditors
Bills payable
General Reserve;
A 4,80,000
B 4,00,000
C 3,20,000
1,10,000
34,000
96,000
12,00,000
Land
Building
Plant
Stock
Debtors
Cash
4,00,000
1,60,000
3,20,000
4,20,000
1,20,000
20,000
14,40,000
14,40,000
From 1st April, 2005 the partners decided to share the profits equally. For this purpose following
adjustments were agreed upon:
(a) The goodwill of the firm should be valued at Rs. 1,20,000.
(b) Land should be valued at Rs. 6,00,000 and building and plant should be depreciated by 5%. Stock be
valued at Rs. 4,50,000.
(c) Creditors amounting to Rs. 4,000 were not likely to be claimed and hence should be written off you
are required to:
(i) Record the necessary journal entry to give effect to the above agreement, without opening
revaluation account;
(ii) Prepare the capital accounts of the partners; and
(iii) Prepare the balance sheet of the firm after reconstitution.
Note: General Reserve not transferred to Capital Accounts whereas goodwill and revised value of assets
and liabilities are not recorded in the books.
Q 14. A, B and C are in partnership sharing profits and losses as 8 : 5 : 3. Their Balance Sheet as on 31st
March, 2006 was as under:
Liabilities
Rs.
Assets
Rs.
Sundry Creditors
General Reserve
Partners’ Capital A/cs;
A 10,000
B 8,000
C 6,000
55,000
15,000
16,000
24,000
Cash
Stock
Sundry Debtors
Fixed Assets
6,000
10,000
11,000
28,000
55,000
With effect from 1st April, 2006 they agreed to alter their profit-sharing ratio to 5 : 6 : 5. It is decided
that:
(a) The fixed assets should be valued at Rs. 36,000 and the same should be incorporated in the accounts.
(b) The general reserve should be continued on in the books of accounts but the effects of the change in
the profit-sharing ratio on partners’ interest be settled in cash and the amount retained in the business.
(c) Goodwill of the firm at this date be valued at three years’ purchase of the average profits of the last
three years. profit of last three years were Rs. 14,000. Rs. 11,200 and Rs. 6,800 respectively, but no
goodwill would be kept in the books.
Required:
(i) Journal entries to give effect to the above adjustments.
(ii) Balance Sheet after the above adjustments.
Q 15. X , Y and Z are partners in a firm sharing profits and losses in the ratio of 5 : 4: 3. Their Balance
sheet as on 31st March, 2010 was as follows:
BALANCE SHEET As on March 31, 2010
Liabilities
Rs.
Assets
Rs.
Creditors
O/s expenses
General Reserve;
X 4,00,000
40,000
15,000
75,000
9,00,000
Cash at bank
S. Debtors
Stock
Furniture
40,000
2,10,000
3,00,000
60,000
Y 3,00,000
Z 2,00,000
Plant & machinery
10,30,000
10,30,000
4,20,000
From 1st April, 2010 the partners decided to share the profits as 4:3:2. For this purpose following
adjustments were agreed upon:
(a) Furniture be taken at 80% of its value.
(b) Stock be appreciated by 20%.
(c) Plant and machinery be valued at Rs.4,00,000.
(d) O/s expenses be increased by Rs.13,000.
Partners agreed that altered values are not to be recorded in the books and they also do not want to
distribute the General reserve.
You are required to pass a single journal entry to give effect to the above. Prepare the revised balance
sheet.
Q 16. A , B and C are partners in a firm sharing profits and losses equally. Their Balance sheet as on 31st
March, 2010 was as follows:
BALANCE SHEET As on March 31, 2010
Liabilities
Rs.
Assets
Rs
Creditors
Bills payable
Capitals
A 30,000
B 20,000
C 20,000
1,00,000
25,000
5,000
70,000
Land and building
Furniture
Stock
Debtors
Cash at bank
50,000
20,000
10,000
15,000
5,000
1,00,000
From 1st April, 2010 the partners decided to share the profits as 2:2:1. For this purpose following
adjustments were agreed upon:
(a) The goodwill of the firm should be valued at Rs. 30,000.
(b) Land and Building are to be increased by Rs.4,000 and furniture is to be decreased by Rs.10,000.
(c) The total capital of the partners will be Rs.1,00,000 which will be shared by them in their profit
sharing ratio. Any deficiency is to be brought in cash and surplus is to be withdrawn.
Prepare the necessary Ledger accounts. Also prepare the balance sheet of the new firm.
Q 1. A and B are partners sharing profits in the ratio of 5 : 3. C is admitted to the partnership for 1/4th
share of future profits. Calculate the new profit-sharing ratio and the sacrificing ratio.
Ans.: NR 15:9:8
Q 2. X and Y are partners in a firm sharing profits and losses in the ratio of 3 : 2. Z is admitted as partner
with 1/5 share in the profit. Calculate the new profit sharing ratio and the sacrificing ratio.
Solution:
(a) Let the total share be = 1
(b) Share of incoming partner = 1/5
(c) Remaining share [(a) – (b)] = 1 – 1/5 = 4/5
(d) Existing partners shares are calculated by dividing the remaining share in their future profit sharing
ratio (which in this case is old ratio since nothing is given as to how Z gets his share from X and Y) as
under:
X’s Share = 3/5 of 4/5 = 12/25;
Y’s Share = 2/5 of 4/5 = 8/25.
(e) New ratio of X, Y & z = 12/25 : 8/25: 5/25 = 12 : 8 : 5.
The sacrificing ratio is the same as the old ratio 3 : 2. on the presumption that the existing partners
make sacrifice in their old profit sharing ratio.
Q 3. X, Y and Z are three partners sharing profits and losses in the ratio of 6/14, 5/14 and 3/14. A is
admitted as a partner and is given 1/8th share of profit. What is the new profit-sharing ratio?
Case 2. When new partner acquired his share from old partners in a particular ratio.
Sometimes, a new partner acquires a part of his share of profits from one partner and a part of his share
of profits from another partner. In such a case, the existing partner’s profit-sharing ratio will change
after admission of the new partner. Existing partner’s share of profit in the reconstituted firm is
ascertained by deducting sacrifice made from the existing share of profit.
Q 4. A and B are partners sharing profits in the ratio of 7:3. They admit C as a new partner for 3/10th
share. A sacrifices 2/10 from his share and B sacrifices 1/10 from his share. Calculate new ratio and
sacrificing ratio.
Q 5. Ajay and Vijay are sharing profits in the ratio of 7 : 3. they admit Rajiv on 3/7th share in the firm
when he takes 2/7th from Ajay and 1/7th from Vijay. Calculate the new profit. Sharing ratio.
Ans.: 29:11:30
Q 6. X and Y are partners sharing profits and losses in the ratio of 7 : 5. they admit Z. a new partner, who
acquires his share as 1/12th from x and 1/8th from Y. Calculate the new profit sharing ratio and the
sacrificing ratio.
Q 7. E and F are partners sharing profits and losses in the proportion of 7 : 5. They agree to admit G,
their manager, into partnership who is to get 1/6th share in the profits. He acquires this share as 1/24th
from E and 1/8th from F. Calculate new profit-sharing ratio.
Ans.: 13:7:4
Q 8. A and B are partners sharing profits in the ratio of 5:3. They admit C as a new partner. A sacrifices
5/32 from his share and B sacrifices 3/40 from his share. Calculate new ratio and sacrificing ratio.
Case 3. When new partner acquires his share by surrender of a particular fraction of their shares by old
partners.
In this case, shares surrendered by the old partners in favour of a new partner are added. It is the share
of the new partner. The share surrendered by the old partner is deducted from his old share to
determine old partners’ share in the reconstituted firm.
Q 9. A and B are partners sharing profits in the ratio of 7:3. They admit C as a new partner for 3/10th
share. A surrendered 2/7 of his share and B surrendered 1/3 of his share. Calculate new ratio and
sacrificing ratio.
Q 10. A and B are partners sharing profits in the ratio of 5:3. They admit C as a new partner for 2/8th
share. A surrendered 1/5 of his share and B surrendered 1/3 of his share. Calculate new ratio and
sacrificing ratio.
Q 11. W and X are partners sharing profits in the ratio of 5 : 3. Y Joins the firm as a new partner. W gives
1/4th of his share and X gives 1/5th of his share to the new partner. Find out the new ratio.
Ans.: 75:48:37
Q 12. X and Y are partners sharing profits and losses in the ratio of 7 : 3. X surrenders 1/7th from his
share and Y surrenders 1/3rd of his share in favour of Z, a new partner. Calculate the new profit sharing
ratio and the sacrificing ratio.
.
Ans.: 24:18:12:6
Miscellaneous Cases
Q 14. A and B are partners sharing profits in the ratio of 3:1. They admit C as a new partner for 1/3rd
share. A and B decided to share profits equally in future. Calculate new ratio and sacrificing ratio.
Q 15. A, B, C and D are in partnership sharing profits and losses in the ratio of 36 : 24 : 20 : 20
respectively. E joins the partnership for 20% share and A, B, C and D would in future share profits among
themselves as 3/10: 4/10: 2/10: 1/10. Calculate the new profit-sharing ratio after E’s admission.
Ans.: 6:8:4:2:5
Q 16. A, B, C and D are partners sharing profits in the ratio of 2:3:2:3. They admit E as a new partner for
20 paise in a rupee. New ratio of A,B,C and D will be 40%,10%,30% and 20% respectively. Calculate new
ratio and sacrificing ratio.
Q 17. A and B are partners sharing profits in the ratio of 3:2. They admit C as a new partner for 1/5th
share. Sacrificing ratio of A and B is 1:1. Calculate new ratio.
Q 18. A and B are partners sharing profits in the ratio of 5:3. They admit C as a new partner for 3/8th
share. Sacrificing ratio of A and B is 2:1. Calculate new ratio.
Q 19. A,B and C are partners sharing profits in the ratio of 3:2:1. D is admitted for 1/6th share. C would
retain his original share. Calculate new ratio and sacrificing ratio.
Q 20. X and Y are in partnership sharing profits and losses as 3 : 2. Z is admitted for 1/4th shares
Afterwards A enters for 20 paise in the rupee. Compute the profit-sharing ratio of X, Y, Z and A after A’s
admission.
Ans.: 9:6:5:5
Q 21. (a) A and B are partners, sharing profits in the ratio of 5:3. They admit C with 1/5 share in profits,
which he acquires equally from both, i.e., from A and from B. Calculate the new profit sharing ratio. 1 10
1 10
Ans.: 42:22:16
(b) Ram and Shyam are partners sharing profits and losses in the ratio of . They admit Gopi as a new
partner for th share. Which he acquires equally from Ram and Shyam. Calculate the new Profit sharing
ratios of the partners. 7 5 ; 12 12 16
Ans.: 3:2:1
Q 22. Suresh and Ramesh were partners in a firm sharing profits in 5 : 3 ratio. On 1.4.2003 they admitted
Deepak as a new partner for 1/4th share. On 31st July, 2003 Karan was admitted as a new partner for th
share which he acquired equally from Suresh, Ramesh and Deepak. Calculate the new profit sharing
ratio of Suresh, Ramesh Deepak and Karan. 16
Ans.: 119:65:56:48
Q 23. (a) A and B are [partners sharing profits in the ratio of 7 : 3. C was admitted with Share in the
profits which he took from A and from B. Calculate new ratio of Partners. 37 th 27 th 17 th
Ans.: 29:11:30
(b) Ram and Shyam are partners in a firm sharing profits in the ratio of 7:5. Mohan is admitted on 16 th
share which he takes from Ram and from Shyam. Calculate the new profit sharing ratio of the partners.
1 24 th 18 th
Ans.: 26:14:8
Q 24. Lucy and Zeny were partners in a firm sharing profits in 4 : 3 ratio. They admitted Allen as a new
partner for 20% of share in the profits. Allen acquired his share of profits in the ratio of 1 : 2. from Lucy
and Zeny. Calculate the new profit sharing ratio of Lucy, Zeny and Allen.
Ans.: 53:31:21
Q 25. A and B are partners in a firm sharing profits and losses in the ratio of 3 : 2. C is admitted for 1/5th
share in profits of the firm. Calculate the new profit sharing ratio of the partners if,
(a) C gets it equally from A and B
(b) C gets it from A and B in the ratio of 2 : 1.
(c) C gets it wholly from A
(d) C gets it wholly from B
(e) C gets it 3/20 from A and 1/20 from B.
Ans.: (a) 5:3:2:2,(b) 7:5:3, (c) 2:2:1, (d) 3:1:1, (e) 9:7:4
Q 26. K, L and M partners sharing in the ratio of 3:2:1. they admit N for share. It is agreed that M would
retain his original share. Calculate the new ratios and sacrificing ratios. 16 th
Ans 12: 8 :5 :5
Q 27. A and B are partners sharing profits in the ratio of 3:2. They admit C for 1/5th share in the profit. C
acquires 1/5th of his share from A. Calculate the new profit sharing ratio and sacrificing ratio.
Ans 14 : 6 :5
Q 28. A and B are partners sharing profits in the ratio of 3:2. They admit C, a new partner who acquires
1/5th of his share from A and 4/25th share from B. Calculate the new profit sharing ratio and sacrificing
ratio
Ans 14 :6 :5
Q 29. X and Y share profits and losses in the ratio of 5 : 3. Z is admitted for 3/10th share of profits half of
which was gifted by X and the remaining share was taken by z equally from X and Y. Calculate the new
profit sharing ratio.
Q 30. X and Y are sharing profits and losses in the ratio of 5: 3. They admit Z and decide that the profit
sharing ratio between Y and Z shall be the same as existing between X and Y. Calculate the new profit
sharing ratio and the sacrificing ratio.
Ans 25 : 16 :9
Treatment of Goodwill at the time of admission of a partner
Q 31. A and B are partners sharing profits in the ratio of 3:2. They admit C as a new partner for 1/5th
share. New ratio of A,B and C is 5:3:2. Book value of Goodwill is nil. Goodwill is valued at Rs.1,00,000. C
brings Rs.70,000 for his share in capital and Rs.20,000 for his share in Goodwill. Pass journal entries.
Q 32. A and B are partners sharing profits in the ratio of 3:2. They admit C as a new partner for 1/5th
share. New ratio of A,B and C is 3:1:1. Book value of Goodwill is nil. Goodwill is valued at Rs.1,00,000. C
brings Rs.70,000 for his share in capital and Rs.20,000 for his share in Goodwill. Pass journal entries.
Q 33. A and B are partners sharing profits in the ratio of 3:2. They admit C as a new partner for 1/5th
share. Book value of Goodwill is nil. Goodwill is valued at Rs.1,00,000. C brings Rs.70,000 for his share in
capital and Rs.20,000 for his share in Goodwill. Pass journal entries.
Q 34. A and B are partners sharing profits in the ratio of 3:1. They admit C as a new partner for 1/3rd
share. New ratio of A and B is 1:1. C brings Rs.50,000 for his share in capital and Rs.15,000 for his share
in Goodwill. Pass journal entries.
Q 35. A, B and C are partners sharing profits in the ratio of 3:2:1. They admit D as a new partner for
1/4th share. New ratio of A,B and C is 1:1:1. Book value of Goodwill is Rs.60,000. D brings Rs.1,20,000
for his share in capital and Rs.30,000 for his share in Goodwill. Pass journal entries.
Q 36. A and B are partners sharing profits in the ratio of 3:2. They admit C as a new partner for 1/6th
share. Book value of Goodwill is Rs.50,000. C brings Rs.1,00,000 for his share in capital but does not
bring his share in Goodwill which is Rs.20,000. Pass journal entries.
Q 42. A and B are partners sharing profits & Losses as 2 : 1. C and D are admitted and profit sharing ratio
becomes 4 : 2: 3: 1. Goodwill is valued at Rs. 20,000. D brings required goodwill and Rs. 5,000 cash for
capital. C brings in Rs. 5,000 cash and Rs. 4,000 worth stock as his capital in addition to the required
amount of goodwill in cash.
Show the Necessary Journal Entries.
Q 43. A and B are partners in a firm sharing profits in the ratio of 7 : 5. On April 1, 2004 they admit C as a
new partner for share. The new ratio will be 13 : 7 : 4. C contributed the following assets towards his
capital and for his share of goodwill: Stock Rs. 60,000; Debtors Rs. 80,000; Land Rs. 2,00,000; Plant and
Machinery Rs. 1,20,000. On the date of admission of C, the goodwill of the firm was valued at Rs.
7,50,000. Record necessary journal entries in the books of the firm on C’s admission and prepare C’s
capital account. 16 th
Q 44. A, B and C are partners sharing profits and losses in the ratio of 3 : 2 : 1. D is admitted. The new
profit sharing ratio between A, B, C and D will be 3 : 3 : 2 : 2. Goodwill of the firm is valued at Rs.
3,00,000. goodwill already appears in the books at Rs. 6,000. D brings his share of firm’s goodwill in
cash. The amount of goodwill is withdrawn by the concerned partners to the extent of 30% of what is
credited to them. Give the journal entries relating to adjustment of goodwill.
FULL LENGTH QUESTIONS
Q 45. Sumit and Taruna share profits in the ratio 3 : 1. The Balance Sheet of the firm on 31st March,
2006 was as under:
Liabilities
Rs.
Assets
Rs.
Sundry Creditors
Capital A/cs;
Sumit 6,000
Taruna 3,200
General Reserve
8,300
9,200
1,000
18,500
Cash at Bank
Bills Receivable
Book Debts
Stock
Furniture
Buildings
5,500
600
3,200
4,000
200
5,000
18,500
On 1st April, 2006, Amit was admitted into partnership on the following terms:
(a) Amit pays Rs. 2,000 as capital and Rs. 1,000 as goodwill for 1/5th share. Half the
amount of goodwill is to be withdrawn by Sumit and Taruna.
(b) Stock and furniture be reduced by 10% and 5% provision for Doubtful Debts be
created on Book Debts and Bills Receivable.
(c) Value of Buildings be increased by 20%.
(d) A liability to the extent of Rs. 200 be created in respect of a claim for damages
against the firm.
(e) An item of Rs. 130 included in sundry Creditors is not likely to be claimed.
Give the necessary Journal entries in the books of the firm assuming that the profit-sharing ratio as
between Sumit and Taruna remains unchanged. Also prepare the Balance sheet of the new firm.
Ans revaluation – sumit=240, taruna=80, capital – sumit= 7365, taruna= 3655, amit= 2000, balance sheet
total= 21,390
Q 46. X and Y are in partnership sharing profits and losses in the ratio of 3 : 2. On 1st April, 2006, they
admitted Z into partnership. He paid Rs. 1,00,000 as his capital but nothing for Goodwill which was
valued at Rs. 80,000 for the firm. He acquired 1/5th share in the profits, equally from both partners. It
was also decided that:
(a) Land and Building be written off by Rs. 40,000;
(b) Stock be written down by Rs. 6,400.
(c) A provision of Rs. 2,000 be created for doubtful debts; and
(d) An amount of Rs. 2,400 included in Sundry Creditors, be written back as it is no longer payable.
The Balance Sheet of X and Y on 31st March, 2006 was as under:
BALANCE SHEET
as on 31st March, 2006
Liabilities
Rs.
Capital A/cs;
X 1,72,000
Y 1,28,000
General Reserve
Sundry Creditors
3,00,000
40,000
62,400
4,02,400
Assets
Rs.
Goodwill
Land & Building
Plant & Machinery
Stock
Sundry Debtors
Cash at Bank
Cash at Hand
4,02,400
20,000
1,20,000
1,40,000
72,000
40,000
8,000
2,400
Prepare Revaluation Account, Partners’ Capital Account and new Balance Sheet of the firm.
Ans: Rev loss – X=27600, Y=18400, capital bal. X=164400, Y= 125600, Z= 84000 Balance sheet= 434000
Q 47. V and N were partners in a firm sharing profits in the ratio of 7 : 3. their Balance Sheet on 31st
March, 2006 was as follows:
Liabilities
Rs.
Assets
Rs.
Creditors
Bills Payable
Provision for Bad Debts
General Reserve
P’s Loan
Capital A/cs:
V 1,50,000
N 50,000
3,15,500
10,000
15,000
500
10,000
80,000
2,00,000
Cash
Debtors
Bills Receivable
Stock
Building
Land
15,500
20,000
50,000
30,000
1,00,000
1,00,000
3,15,500
On 1st April, 2006 they admitted P as a new partner on the following terms:
(a) P will get 1/5th share in the profits of the firm.
(b) P’s Loan will be converted into her capital.
(c) The goodwill of the firm was valued at Rs. 2,00,000 and P brought her share of goodwill premium in
cash.
(d) Provision for bad debts was to be made equal to 4% of debtors.
(e) Stock was to be depreciated by 5%
(f) Land was to be appreciated by 10%.
Prepare Revaluation account, Capital Accounts of V, N and P and the Balance Sheet of the new firm as
on 1st April, 2006.
Ans. Revaluation – 5,740/ 2460, Capital – 1,90,740/ 67,460/ 80,000 Balance Sheet 3,63,200.
48. Following is the Balance Sheet of the firm owned by A, B and C who share profits and losses of the
business in the ratio of 3 : 2 : 1.
BALANCE SHEET
as on 31st March, 2006
Liabilities
Rs.
Assets
Rs.
Capital A/cs;
3,60,000
A 1,20,000
20,000
B 1,20,000
7,200
C 1,20,000
Sundry Creditors
Outstanding Salaries and
Wages
3,87,200
Furniture
Business Premises
Stock in Trade
Debtors
Cash at Bank
Cash in Hand
95,000
2,05,000
40,000
28,000
15,000
4,200
3,87,200
On 1st April, 2006, they admit D as a partner on the following conditions:
(a) D will bring Rs. 1,20,000 as his capital and also Rs. 30,000 as goodwill premium for a quarter of the
share in the future profit/loss of the firm.
(b) The values of the fixed assets of the firm will be increased by 10% before the admission of D.
(c) The future profits and losses of the firm will be shared equally all the partners. Show the Journal
entries, Revaluation Account, partners’ Capital Accounts and the opening Balance Sheet of the new firm
to include the above mentioned transactions assuming that the conditions were
duly satisfied.
Ans. Revaluation 15,000/ 10,000/5,000 Capital 1,65,000/ 1,40,000/ 1,15,000/1,20,000
Balance 5,67,200
Q 49. L and M are partners sharing profits in ratio 5 : 3. The Balance Sheet of the firm as at March 31,
20×3 is given below:
Balance Sheet of L and M as at March 31, 20×3
Liabilities
Rs.
Assets
Rs.
Capitals:
L 12,85,000
M 7,16,000
Reserve fund
Sundry Creditors
16,000
1,50,000
20,000
31,200
Land
Buildings
Other fixed Assets
Stock
Debtors
Cash at Bank
16,000
6,00,000
8,80,000
3,90,000
1,98,000
1,83,000
1,39,000
On April 1, 2003 N is admitted into partnership on the following terms:
(a) L, M and N will share profits in the ratio 7 : 5 : 3.
(b) The Assets were revalued for the purpose of admission: land Rs. 7,50,000, Buildings Rs. 8,00,000.
(c) Goodwill of the firm was valued at Rs. 3,60,000. N was to bring his share of goodwill in cash which
was to be retained in the business.
(d) N has to bring Rs. 6,00,000 towards his share of capital.
Required: prepare Revaluation A/c. Capital A/c, Cash A/c. and Balance Sheet of the reconstituted firm.
Q 50. A, B and C are equal partners with capitals of Rs.3,000, Rs. 3,500 and Rs. 4,000 respectively. They
agree to admit D into equal partnership upon payment in cash of Rs. 3,000 for one-fourth share of the
goodwill and Rs. 3,600 as his capital, both sums to remain in the business. The liabilities of the old firm
amount to Rs. 6,000 and the assets, apart from cash, consist of Motors Rs. 2,400. Furniture Rs. 800,
Stock Rs. 5,300, Debtors Rs. 7,560.The Motors and Furniture were revalued at Rs. 1,900 and Rs. 760
respectively, and the depreciation written off.
Draft Journal entries to give effect to the above arrangement, and also show the initial Balance Sheet of
the new firm.
Ans. Revaluation 540 (Loss), Capital 3820/4320/4820/3600 Balance Sheet 22,560
Q 51. Balance Sheet of A, B and C sharing profits in the ratio of 3 : 2 : 1. is given below:
Liabilities
Rs.
Assets
Rs.
A’s Capital
4,00,000
B’s Capital
4,00,000
C’s Capital
2,00,000
Contingency Reserve
60,000
Trade Creditors
1,60,000
Employees’ Provident
20,000
Fund
60,000
Workmen Compensation
Fund
13,00,000
Bank
Debtors 2,00,000
Less: Prov. 3,000
Stock
Furniture
Machinery
Building
40,000
1,97,000
2,03,000
30,000
5,30,000
3,00,000
13,00,000
It was decided to admit D into partnership on the following terms and conditions:
(i) New Profit sharing ratio between A, B, C and will be 3:3:2:2.
(ii) Goodwill of the firm is valued at Rs. 3,00,000. D brings his share of goodwill in cash which is credited
to the old partners.
(iii) D brings Rs. 1,50,000 as his share of capital.
(iv) Contingency Reserve is not required any more.
(v) provision for Doubtful debt to be raised to 5% on debtors.
(vi) Machinery is revalued at Rs. 5,00,000 and Building is revalued at Rs. 3,67,000.
Required: Prepare Revaluation A/c Capital A/cs. Of A, B, C and D, and the Balance Sheet of the firm after
D’s admission. Also show the calculation regarding goodwill.
Q 52. A and B are partners in a firm. The net profit of the firm is divided as follows: ½ to A, 1/3 to B and
1/6 carried to a Reserve Account. They admit C as a partner on 1st April, 2010 on which date, the
Balance Sheet of the firm was:
Liabilities
Rs.
Assets
Rs.
Capital A/cs:
A 50,000
B 40,000
Reserve
Creditors
Outstanding Exp.
1,25,000
90,000
10,000
20,000
5,000
Building
Plant & Machinery
Stock
Debtors
Bank
50,000
30,000
18,000
22,000
5,000
1,25,000
Following are the required adjustments on admission of C;
(a) C brings in Rs. 25,000 towards his capital.
(b) C also brings in Rs. 5,000 for 1/5th share of goodwill.
(c) Stock is undervalued by 10%.
(d) Creditors include a contingent liability of Rs. 4,000, which has been decided by the court at Rs. 3,200.
(e) In regard to the debtors, the following Debts proved bad or Doubtful
Rs. 2,000 due from X – bad to the full extent;
Rs. 4,000 due from Y – insolvent, estate expected to pay only 50%.
You are required to prepare the Revaluation Account, Partners’ Capital Accounts and the Balance Sheet
of the new firm.
Q 53. Rohit and Bal Sharing profits in the ratio of 5 : 3. had the following Balance sheet as on December
31, 20×1
Liabilities
Rs.
Assets
Rs.
Creditors
Employees’ Provident fund
Contingency reserve
Workmen compensation
Fund
Rohit’s Capital
Bal’s Capital
10,000
4,000
7,000
7,000
40,000
20,000
88,000
Goodwill
Building
Plant
Furniture
Debtors
Bills Receivable
Stock
Bank
88,000
15,000
17,000
13,500
2,000
16,500
7,500
11,000
5,500
On January 1st, 20×2. they decided to admit Khosla into the partnership giving him a 1/5th share. He
brings in Rs. 25,000 as his share of capital. The partners decide to revalue the Assets as follows:
Goodwill Rs. 25,000. Plant Rs. 12,500. Debtors Rs. 15,500, Stock Rs. 16,250, Building Rs. 20,000.
Furniture Rs. 1,000, Bills Receivable Rs. 6,250. No Goodwill is to appear in the books.
Q 54.
Balance sheet as on January 1, 1997 was as follows:
Liabilities
Rs.
Assets
Rs
Provision for doubtful
debts
Creditors s
Provident Fund
Reserve Fund
Capitals:
X 2,50,000
Y 1,50,000
3,000
39,000
18,000
15,000
4,00,000
4,75,000
Freehold premises
Plant
Furniture
Prepaid Expenses
Debtors
Stock
Cash
Goodwill
2,00,000
1,00,000
16,000
4,000
1,00,000
40,000
5,000
10,000
4,75,000
On this date Z was admitted as a partner on the following terms:
(i) He was to get 4/15 the profits.
(ii) He was to introduce Rs. 2,00,000 as capital and his share of goodwill in cash Goodwill brought by z
shall be withdrawn by X and Y
(iii) Goodwill shall be valued on the basis of 1 ½ Years purchase of the average profits of the last four
years, which were:
1993 Rs. 20,000 1995 Rs. 15,000 (Loss)
1994 Rs. 35,000 1996 Rs. 40,000 .
(iv) It is further agreed that Y shall introduce additional capital of Rs. 40,000.
(v) Assets are to be revalued as: Freehold Premises Rs. 2,50,000; Plant at Rs. 80,000;
Prepaid Expenses Nil;
(vi) it is decided to write off Bad Debts amounting to re. 8,000.
(vii) Creditors proved at Rs. 45,000, one bill for goods purchased having been omitted from the books.
Give Journal Entries and Ledger Accounts to record the above and the balance sheet after Z’s admission.
Q 55. A and B are partners in a firm sharing profits in the ratio of 3:2. They admit C as a partner on 1st
January, 2008 on which date the Balance Sheet of the firm was as under:
Liabilities
Rs.
Assets
Rs.
Capital
A 60,000
B 40,000
Creditors
1,00,000
20,000
1,20,000
Buildings
Plant and Machinery
Stock
Debtors
Bank
1,20,000
50,000
30,000
20,000
10,000
10,000
You are required to prepare Revaluation Account, partners’ Capital Accounts and the Balance Sheet of
the new firm after considering the following:
(a) C brings in Rs. 30,000 as capital for 1/4th share. He also brings Rs. 10,000 for his share of goodwill.
(b) Part of the stock which had been included at cost of Rs. 2,000 had been badly damaged in storage
and could only expected to realize Rs. 400.
(c) Bank charges had been overlooked and amounted to Rs. 200 for the year 2007.
(d) Depreciation on building of Rs. 3,000 had been omitted for the year 2007.
(e) A credit for goods for Rs. 800 had been omitted from both purchases and creditors although the
goods had been correctly included in stock.
(f) A charge of Rs. 1,200 for insurance premium was debited in the Profit and Loss Account of 2007, but
Rs. 600 of this applied to the period after 31st December, 2007.
Ans.: Loss on Revaluation – Rs. 5,000; Partners’ Capital Accounts; A – Rs. 63,000; B – Rs. 42,000; C – Rs.
30,000 and Balance Sheet Total – Rs. 1,55,800.
Q 56. M and S are partners sharing profits in the ratio of 2 : 1. Their Balance Sheet stood as under on
31st March, 2009.
BALANCE SHEET
Liabilities
Rs.
Assets
Rs.
Sundry Creditors
Capital A/cs:
M 30,000
S 20,000
94,000
44,000
50,000
Cash at Bank
Sundry Debtors
Bills Receivable
Stock
Furniture and Fixtures
Land and Building
94,000
17,000
15,000
4,000
25,000
3,000
30,000
R is admitted to partnership with effect from 1st April on the following terms:
(a) that he brings in Rs. 15,000 as his capital for 1/4th share and pays Rs. 6,000 for goodwill, half of
which is to be withdrawn by M and S;
(b) That there is likely to be a claim against the firm for damages for which a provision to the extent of
Rs. 1,500 is to be made;
(c) That a bill for Rs. 300 for electric charges has been omitted to be accounted. It should, therefore,
now be provided for;
(d) That the Stock is to be reduced to Rs. 23,000 and furniture and fixtures by Rs. 1,000;
(e) That 5% reserve for bad and doubtful debts to be created;
(f) The value of Land and Building is to be appreciated by 20%.
(g) That included in the sundry creditors is an item of Rs. 1,200 which is not paid and, therefore, has to
be written back; and
(h) That the profit-sharing ratio of the old firm will not change.
You are required to show the necessary account and the Balance sheet of the new firm stating the
proportion in which the partners will share profits in future.
Ans.: Profit on Revaluation – Rs. 1,650; Closing Balance of Capital Accounts; M – Rs. 33,100, S – Rs.
21,550 and Rs. 15,000 and Total of Balance Sheet – Rs. R 1,14,250.
Q 57. A and B are partners in a firm sharing profits and losses in the ratio of 3:2. following is their
Balance Sheet as on 31st March, 2008:
Liabilities
Rs.
Assets
Rs.
Capital A/cs:
A 50,000
B 30,000
Creditors
1,00,000
80,000
20,000
Buildings
Machinery
Stock
Debtors
Investments
Bank
1,00,000
35,000
25,000
15,000
15,000
5,000
5,000
C is admitted as a partner on 1st April, 2008 on the following terms:
(a) C is to pay Rs. 20,000 as capital for 1/4th share. He also pays Rs. 5,000 as premium for goodwill.
(b) Debtors amounting to Rs. 3,000 is to be written off as bad and a provision of 10% is created against
doubtful debts on the remaining amount.
(c) No entry has been made in respect of a debt of Rs. 300 recovered by A from a customer, which was
previously written off as bad in an early previous year. The amount is to be paid by A now.
(d) Investments are taken by B at Rs.4,900 and B paid cash for it.
You are required to prepare Revaluation Account, Partners’ Capital Accounts and the new Balance
Sheet.
Ans.: Loss on Revaluation – Rs. 4,000; Partners’ Capital A/cs; A – Rs. 50,600; B – Rs. 30,400; C – Rs.
20,000 and Balance Sheet Total – Rs. 1,21,000.