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Model Test Papers M.129

Y died on 30th June, 2017. Partnership Deed provided for the following on death
of a partner:
(i) Goodwill of the firm was to be valued at 2 years’ purchase of the average profit of
last 5 years. The profits for the past four years were ` 50,000; ` 80,000; ` 1,10,000
and ` 2,20,000 respectively.
(ii) Share of profit or loss till the date of his death was to be calculated on the basis
of the profit or loss for the year ended 31st March, 2017.
As per Deceased partner’s will, the executors should donate his share to an NGO
engaged in Women Empowerment. Pass the necessary Journal entries and prepare
Y’s Capital Account at the time of his death to be presented to his executors. (6)

15. A firm of A, B and C is under dissolution. Pass Journal entries in the following cases:
(i) Realisation expenses of the firm amounting to ` 2,600 paid by partner A.
(ii) A creditor worth ` 4,500 took over stock valued at ` 5,200 in full satisfaction of
his claim.
(iii) An unrecorded asset realised ` 3,500.
(iv) Assets realised ` 79,000.
(v) On the date of dissolution, the balance of General Reserve was ` 6,000.
(vi) A bill discounted from bank of ` 5,000, was dishonoured as the debtor had become
bankrupt. No amount was recoverable from him.
Or
P and Q were partners in a firm sharing profits in the ratio of 3 : 2. On 31st March,
2018, their Balance Sheet was as follows:
Liabilities ` Assets `

Capital A/cs: Goodwill 80,000
P 80,000 Land and Building 80,000
Q 70,000 1,50,000 Stock 60,000
Creditors 50,000 Debtors 40,000
Workmen Compensation Reserve 80,000 Bank 20,000
2,80,000 2,80,000

The firm was dissolved on 1st April, 2018 and the Assets and Liabilities were settled
as follows:

(i) Creditors agreed to take Land and Building against their claim.
(ii) Stock was taken by Q at ` 50,000 for cash.
(iii) Bad Debts proved ` 5,000.
(iv) Goodwill was found valueless.
(v) Workmen Compensation claim was ` 80,000.

Pass necessary Journal entries for dissolution of the firm. (6)