Page 312 - MA-12

Model Test Papers M.3

4. (a) Priya, Riya and Siya are partners sharing profits in the ratio of 6 : 3 : 1. They admitted
Miya into partnership with effect from 1st April, 2019. New profit-sharing ratio
among Priya, Riya, Siya and Miya will be 3 : 3 : 3 : 1. Partners decide to record
the effect of the following without affecting the book values (after the required
adjustment from Workmen Compensation Reserve and Investment Fluctuation
Reserve) by passing an adjustment entry:
Book Values (`)
General Reserve 1,40,000
Profit and Loss (Cr.) 60,000
Advertisement Suspense A/c 50,000
Workmen Compensation Reserve 30,000
Investment Fluctuation Reserve 20,000
Additional Information:
(i) Claim on account of Workmen Compensation is ` 20,000.
(ii) Book value of Investment is ` 1,00,000 (Market Value ` 85,000).
Pass the required adjustment entry.
(b) Rose, Daisy and Lily were partners in a firm sharing profits and losses in the ratio of
5 : 3 : 2. On 31st March, 2019, their Balance Sheet was as under:
BALANCE SHEET as at 31st March, 2019
Liabilities ` Assets `
Creditors 55,000 Cash 40,000
General Reserve 30,000 Debtors 45,000
Capitals: Less: Provision 5,000 40,000
Rose 1,50,000 Stock 50,000
Daisy 1,25,000 Machinery 1,50,000
Lily 75,000 3,50,000 Patents 30,000
Building 1,00,000
Profit and Loss A/c 25,000
4,35,000 4,35,000

Rose retired on 1st April, 2019 and it was agreed that:
(i) Debtors of ` 2,000 will be written off as bad debts and a provision of 5% on debtors
for bad and doubtful debts will be maintained.
(ii) Patents will be written off and stock, machinery and building will be reduced by 5%.
(iii) An unrecorded creditor of ` 10,000 will be accounted.
(iv) Goodwill is valued at ` 3,00,000.
(v) Daisy and Lily will share future profits in the ratio of 2 : 3.
Pass necessary Journal entries for the above transactions in the books of the firm on
Rose’s retirement. [4 + 8 = 12]
5. (a) Partners Strong, Weak and Feeble of a firm distributed profit for the year ended
31st March, 2019 ` 1,40,000 in the ratio of 2 : 2 : 1 without providing for the following:
(i) Strong and Weak each were to get salary of ` 1,500 per quarter.
(ii) Feeble was to get a commission of ` 8,000.
(iii) Strong and Feeble had guaranteed a minimum profit of ` 50,000 p.a. to Weak.
(iv) Profits were to be shared in the ratio of 3 : 3 : 2.
Pass necessary Journal entry for the above adjustments in the books of the firm.