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Model Test Papers M.103
12. A partnership firm earned net profits during the last three years as follows:

Year 2015–16 2016–17 2017–18
Profit (`) 3,80,000 4,40,000 5,00,000
The capital employed in the firm throughout the above mentioned period has been
` 8,00,000. Having regard to the risk involved, 15% is considered to be a fair return
on the capital. Remuneration of all the partners during this period is estimated to be
` 2,00,000 per annum. Calculate the value of goodwill on the basis of (i) two years’
purchase of super profits earned on average basis during the above mentioned three
years and (ii) by capitalisation method. (4)
13. From the following Receipts and Payments Account of South India Club and additional
information, prepare Income and Expenditure Account for the year ending 31st March,
2018 and Balance Sheet as on that date:

RECEIPTS AND PAYMENTS ACCOUNT
Dr. for the year ending 31st March, 2018 Cr.
Receipts ` Payments `
To Balance b/f 1,14,000 By Salaries 1,98,000
To Subscriptions 3,96,000 By Sports Equipment 2,40,000
To Interest on Investments @ 8% p.a. for full year 24,000 By Balance c/f 96,000
5,34,000 5,34,000
Additional Information:
(i) The club had received ` 12,000 for subscription in the year ended 31st March,
2017 for the year ending 31st March, 2018.
(ii) Salaries had been paid for 11 months.
(iii) Stock of Sports Equipment on 31st March, 2017 was ` 1,80,000 and on
31st March, 2018 ` 3,90,000. (6)
14. Pass the necessary Journal entries for the following transactions on the dissolution of
the firm of Sudha and Shiva after all the assets (other than cash) and outside liabilities
have been transferred to Realisation Account:
(i) Sudha agreed to pay her husband’s loan of ` 19,000.
(ii) A debtor whose debt of ` 9,000 was written off in the books, paid ` 7,500 in full
settlement.
(iii) Shiva took over all investments at ` 13,300.
(iv) Sundry creditors ` 10,000 were paid at 9% discount.
(v) Realisation expenses ` 3,200 were paid by Sudha for which she was allowed ` 3,000.
(vi) Loss of realisation ` 10,000 was divided between Sudha and Shiva in the
ratio of 3 : 2. (6)
15. A, B and C are partners sharing profits in the ratio of 3 : 2 : 1. From 1st April, 2018
they decided to share profits in the ratio of 2 : 3 : 1. The Partnership Deed provides
that in the event of any change in profit-sharing ratio, goodwill shall be valued at three
years’ purchase of the average of five years’ profits.
The profits and losses of the preceding five years are:
Profit: I—` 72,000; II—` 1,80,000; III—` 2,04,000; IV—` 2,28,000; Loss: V—` 84,000.