Page 70 - ISCDEBK-12

3.28 Double Entry Book Keeping (Section A)—ISC XII

Unsolved Questions

1. A and B are partners in a firm sharing Profits and Losses in the ratio of 17 : 16. They admit C as a partner on
1st April, 2016 on the basis of his buying 5/17th of A’s share and 4/16th of B’s share. On 1st April, 2018 they
permit C to purchase further 1/12th of their remaining shares. Goodwill is agreed to be valued at 2 years’
purchase of the average profits of 3 years immediately before any change. Profits for the 5 years ended
31st March, 2018 are:

Years Ended 31st March, 2014 31st March, 2015 31st March, 2016 31st March, 2017 31st March, 2018
Profits (`) 61,560 64,520 81,660 94,140 1,15,120

You are required to determine the amount to be paid by C to each partner on both the occasions and their
ultimate Profit-sharing Ratio.
2. A and B are partners sharing profits in the ratio of 3 : 2. They admit C into the firm for 3/7th share in profits
which he takes 2/7th from A and 1/7th from B and brings ` 10,000 as premium out of his share of ` 16,000.
Pass Journal entries for the above.
3. On the admission of Rao, it was agreed that the goodwill of Murty and Shah should be valued at ` 30,000.
Rao is to get 1/4th share of profits. Previously Murty and Shah shared profits in the ratio of 3 : 2. Rao cannot
bring his share of Goodwill. Give Journal entries in the books of Murty and Shah when: (i) there is no Goodwill
Account; (ii) Goodwill appears at ` 10,000.
4. Following is the Balance Sheet of the firm, Ashirvad, owned by A, B and C who share profits and losses of
the business in the ratio of 3 : 2 : 1:

BALANCE SHEET
as at 31st March, 2018

Liabilities ` Assets `
Capital A/cs: Furniture 95,000
A 1,20,000 Business Premises 2,05,000
B 1,20,000 Stock-in-Trade 40,000
C 1,20,000 3,60,000 Debtors 28,000
Sundry Creditors 20,000 Cash at Bank 15,000
Outstanding Salaries and Wages 7,200 Cash in Hand 4,200
3,87,200 3,87,200

On 1st April, 2018, they admit D as a partner on the following conditions:
(i) D will bring ` 1,20,000 as his Capital and also ` 30,000 as Goodwill premium for a quarter of the
share in the future profit/loss of the firm.
(ii) The values of the fixed assets of the firm will be increased by 10% before the admission of D.
(iii) The future profits and losses of the firm will be shared equally by all the partners.
Show 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.