CLASS XII
ACCOUNTANCY ASSIGNMENT
RETIREMENT AND DEATH OF A PARTNER
1. Kumar, Lakshya, Manoj and Naresh are partners sharing profits in the ratio of 3 : 2 : 1 : 4. Kumar
retires and his share is acquired by Lakshya and Manoj in the ratio of 3:2. Calculate new profit sharing
ratio and gaining ratio of the remaining partners.
2. Hanny, Pammy and Sunny are partners sharing profits in the ratio of 3 : 2 : 1. Goodwill is appearing in
the books at a value of Rs. 60,000. Pammy retires and at the time of Pammy’s retirement, goodwill is
valued at Rs. 84,000. Hanny and Sunny decided to share future profits in the ratio of 2:1. Record the
necessary journal entries.
3. The Balance Sheet of Vinod, Mohan and Rohan on 31-3-2007 was as follows:
Liabilities
Creditors
Vinod’s Capital
Mohan’s Capital
Rohan’s Capital
Amount
1,00,000
1,60,000
1,60,000
1,20,000
Assets
Cash
Debtors
Motor Car
Plant and Machinery
Land and Building
Profit and Loss A/c
5,40,000
Amount
4,000
96,000
1,08,000
1,12,000
1,60,000
60,000
5,40,000
The following terms were agreed upon for Vinod’s retirement:
(a)
Goodwill to be valued at Rs.84,000 and not to be shown in the books after Vinod’s
retirement.
(b)
Land and Buildings to be appreciated by Rs.40,000.
(c)
Plant and machinery to be reduced to Rs.92,000
(d)
Provision for doubtful debts to be created at 5% on debtors
(e)
Create a provision of Rs.2,800 for discount for creditors
(f)
The sum payable to Vinod to be brought in by Mohan and Rohan in such a manner that their
capitals are in proportion to the profit sharing ratio.
Prepare Revaluation Account, Partners capital account and Balance Sheet.
4. AK, KK and VK were partners in a firm sharing profits and losses in the ratio of their Capitals. On
31.3.2009 their Balance Sheet was as follows:
Liabilities
Creditors
Profit and Loss A/c
Investment Fluctuation Fund
General Reserve
Capitals : LK 1,00,000
MK 80,000
NK 40,000
Amount
42,000
30,000
20,000
50,000
Assets
Premises
Motor Vans
Investment
Plant
Stock
Debtors
80,000
2,20,000 Less: Provision 6,000
Cash
3,62,000
Amount
1,24,000
40,000
38,000
24,000
30,000
74,000
32,000
3,62,000
On 31.3.2009 AK retired from the business. On AK’s retirement, the assets and liabilities were
revalued as follows:
(i)
(ii)
(iii)
(iv)
(v)
Land and Building to be appreciated by 30%
Machinery be appreciated by 20%
There were bad debts of Rs.4,250
The claim on account of workmen compensation was estimated at Rs.2,000
Goodwill of the firm was valued at Rs.35,000 and AK’s share of Goodwill be adjusted against
the Capital Accounts of the continuing partners KK and VK who have decided to share future
profits in the ratio of 4:3 respectively.
(vi)
Capital of the new firm in total will be the same as before the retirement of AK and will be in
the new profit sharing ratio of the continuing partners.
(vii)
Amount due to AK be settled by paying Rs.12,500 in cash and the balance by transferring to
her loan account which will be paid latter on.
Prepare Revaluation Account, Partners capital account and Balance Sheet.
5. FK, GK and HK were partners in a firm sharing profits in the ratio of 5: 3: 2 respectively. The Balance
Sheet of the firm on 31st March 2013 stood as follows:
Liabilities
Creditors
Bills Payable
Profit and Loss A/c
Capitals : FK 1,30,000
GK 1,00,000
HK 80,000
Amount
44,000
16,000
30,000
3,10,000
4,00,000
Assets
Fixed Assets
Stock
Debtors
Cash
Amount
2,00,000
90,000
90,000
20,000
4,00,000
FK retired from the firm on the above date subject to the following conditions:
(i)
Goodwill of the firm be valued at Rs.50,000
(ii)
Fixed Assets were valued at Rs.2,50,000
(iii)
Stock was considered worth Rs.80,000
FK is to be paid in cash brought in by GK and HK in such a way so as to make their capitals
proportionate to their new profit sharing ratio, which is 3:2 respectively. Minimum cash balance is to
be maintained at Rs.14,000.
Prepare Revaluation Account, Partners capital account and Balance Sheet.
6. The Balance Sheet of AK, BK and CK who are sharing profits and losses in the ratio of 1/2; 1/3; and 1/6
respectively, was as follows on 31.3.2010:
Liabilities
Bills Payable
Creditors
General Reserve
Capitals : AK 80,000
BK 80,000
CK 60,000
Amount
Assets
32,000 Cash in hand
60,000 Book Debts
50000
24,000 Less: Provision 6000
Stock
Furniture
2,20,000 Machinery
Goodwill
3,36,000
Amount
36,000
44,000
36,000
60,000
1,40,000
20,000
3,36,000
BK retires on the above date on following terms:
(i)
Provision for doubtful debts be raised by Rs.2,000
(ii)
Stock to be depreciated by 10% and furniture by 5%
(iii)
There is an outstanding claim of damages of Rs.2,200 and it is to be provided for.
(iv)
Creditors will be written back by Rs.12,000
(v)
Goodwill of the firm is valued at Rs.44,000 and it should be adjusted through capital transfer.
(vi)
BK is paid in full with the cash brought in by AK and CK in such a manner that their capitals
are in proportion to their profits sharing ratio 3:2 and cash in hand remain Rs.20,000.
Prepare Revaluation Account, Capital Accounts; Balance Sheet
7. A, B and C were partners in a firm sharing profits in the ratio of 5:3:2. On 31.3.2005 their balance
sheet was:
Liabilities
Amount
Assets
Amount
Creditors
22,000 Building
40,000
General Reserve
12,000 Machinery
60,000
Capitals: A 60,000
Stock
20,000
B 50,000
22,000
Patents
C 30,000
16,000
Debtors
1,40,000
16,000
Cash
1,74,000
1,74,000
A died on 1.10.2005. It was agreed between his executors and the remaining partners
that:
(a) Goodwill be valued at 2 years purchase of the average profits of the previous
4 years, which were 2000-01 Rs.26,000; 2001-02 Rs.24,000; 2002-03 Rs.40,000;
2003-04 Rs.30,000.
(b) Patents be valued at Rs.16,000; Machinery at Rs.56,000; Building at Rs.50,000.
(c) Profits for the year 2005-06 are taken as having accrued at the same rate as
the previous year.
(d) Interest on capital is provided at 10% p.a.
(e) Half of the amount due to A to be paid immediately to the executor and the balance
transferred to the Executor’s Loan Account.
Prepare A’s Capital Account and his Executor’s Account at the time of his death.
8.
The Balance Sheet of DK, EK and FK as on 31 December 2009 :
Liabilities
Creditors
General Reserve
Capitals : DK 60,000
EK 50,000
FK 50,000
Amount
38,000
16,000
1,60,000
Assets
Tools
Furniture
Stock
Debtors
Cash at bank
Cash in hand
2,14,000
Amount
4,000
40,000
36,000
70,000
34,000
30,000
2,14,000
EK died on 31st March, 2010. Under the partnership agreement, the executor of EK was entitled to:
(a) Amount standing to the credit of his capital account
(b) Interest on capital which amounted to Rs.1,500
(c) His share of goodwill Rs.30,000
(d) His share of profit from the closing of last financial year to the date of his death which amounted to
Rs.10,500.
EK’s executor was paid Rs.32,000 on 1st April 2010 and the balance in four equal yearly
instalments starting from 31.3.2011 with interest @ 6% p.a. Pass the necessary Journal
entries and draw up EK’s account to be rendered to his executor and EK’s executor’s account
till it is finally paid.
9. X, Y and Z were partners sharing profits in the ratio of 3 : 2: 1. On 31.3.08 their balance sheet stood
as under:
Liabilities
Creditors
General Reserve
Amount
1,44,000
Assets
Cash at Bank
Amount
1,40,000
48,000
Investments
1,00,000
Capitals: X 1,50,000
Y 1,40,000
Z 1,00,000
5,82,000
3,90,000
Patents
30,000
Stock
Debtors
Buildings
Machinery
50,000
40,000
5,82,000
1,50,000
Z died on 31.5.2008. It was agreed that:
(a) Goodwill was valued at 3 years purchase of the average profits of the last five years,
72,000
which were, 2003 : Rs.80,000; 2004: Rs.80,000; 2005: Rs.60,000; 2006:
Rs.80,000 and 2007: Rs.1,00,000.
(b) Machinery was valued at Rs.1,40,000, Patents at Rs.40,000 and Buildings at
Rs.1,32,000.
(c) For the purpose of calculating Z’s share of profits till the date of death, it was agreed that
the same be calculated based on the average profits for the last 2 years.
(d) The executor of the deceased partner is to be paid the entire amount due by means of a
cheque.
Prepare Z’s Capital A/c to be rendered to his executor and also a Journal entry for the settlement
of the amount due to the executor.
10. X, Y and Z were partners in a firm sharing profits and losses in the ratio of 2 : 3: 5. On
31.12.2010 their Balance Sheet was as follows:
Liabilities
Creditors
Amount
55,000
General Reserve
Capitals:
X 1,50,000
Y 1,25,000
30,000
Assets
Goodwill
Amount
25,000
Building
Machinery
Patents
Stock
Debtors
Z 75,000
1,00,000
1,50,000
30,000
50,000
4,35,000
4,35,000
3,50,000 Cash at Bank
Z died on April 1, 2011. It was agreed that:
40,000
(a) Good will be valued at 2 ½ years’ purchase of the average profits of the last
40,000
four years which were as follows:
2007
65,000 (Profit)
2008
60,000 (Profit)
2009
80,000 (Profit)
2010
83,000 (Profit)
(b) Machinery be valued at Rs.1,40,000; Patents at Rs.40,000 and Building at
Rs.1,25,000.
(c) For the purpose of calculating Z’s share of profits in the year of his death
the profits in 2011 should be taken to have been accrued on the same scale as in
2010.
(d) A sum of Rs.31,800 was paid immediately to the executors of Z and the
balance was paid in two equal yearly installments together with interest at 12% p.a.
Give necessary Journal entries to record the above transactions and Z’s executors
account till the final payment.