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M.150 An Aid to Accountancy—CBSE XII

12. X, Y and Z entered into partnership on 1st April, 2016 to share profits and losses in
the ratio of 12 : 8 : 5. Z was a technically qualified person who left his job to join the

firm as partner. Hence, it was agreed that Z’s share in profit will not be less than
` 1,00,000 p.a. Profits and losses for the period ended 31st March, 2017 and 2018 were
` 4,00,000 and ` 4,00,000 (Loss) respectively.
Pass the necessary Journal entries in the books of the firm. (4)

13. Balance Sheet of X, Y and Z who were sharing profits in the ratio of 2 : 3 : 1 as at
31st March, 2018 is given below:

Liabilities ` Assets `
Workmen Compensation Reserve 50,000 Goodwill 30,000
Investment Fluctuation Reserve 25,000 Land and Building 6,25,000
Sundry Creditors 7,50,000 Investments (Market value ` 1,15,000) 1,25,000
Employees’ Provident Fund 1,50,000 Stock 2,00,000
Capital A/cs: Debtors 7,50,000
X 2,50,000 Less: Provision for Doubtful Debts 25,000 7,25,000
Y 5,00,000 Bank 7,40,000
Z 7,50,000 15,00,000 Advertisement Suspense A/c 30,000
24,75,000 24,75,000

X, Y and Z decide to alter their profit-sharing ratio as 3 : 2 : 1 w.e.f. 1st April, 2018.
They have agreed upon the following terms:
(i) Goodwill is to be valued at 2 years’ purchase of average profits of the last three

completed years. The profits were Year—I: ` 1,20,000; Year—II: ` 2,32,500;
Year —III: ` 3,45,000.
(ii) Land and Building was found undervalued by ` 50,000 and stock was found
overvalued by ` 95,000.
(iii) Provision for Doubtful Debts is to be made equal to 5% of the debtors.

(iv) 10% of the sundry creditors be written back as no longer payable.
(v) Claim on account of Workmen Compensation is ` 20,000.
(vi) Out of total insurance premium paid ` 12,500 is prepaid insurance. This amount

was earlier debited to Profit and Loss Account.
You are required to prepare Revaluation Account, the Capital Accounts of the partners
and Balance Sheet of the new firm. (6)
14. X, Y and Z were partners in a firm sharing profits and losses in the ratio of 2 : 2 : 1.

They decided to dissolve the firm on 1st August, 2018. From the information given
below, complete Realisation Account, Partners’ Capital Accounts and Cash Account: