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Model Test Papers M.205

(iii) Profit for the year 2017–18 be taken as having accrued at the same rate as that
of the previous year.

(iv) Interest on capital be provided at 10% p.a.
(v) Half of the amount due to Anil be paid immediately.
Prepare Anil’s Capital Account and Anil’s Executor’s Account as on 1st October, 2017.
Or
(a) Ram, Ghanshyam and Vrinda were partners in a firm sharing profits in the ratio of
4 : 3 : 1. The firm closes its books on 31st March every year. On 1st February, 2015
Ghanshyam died and it was decided that the new profit-sharing ratio between Ram
and Vrinda will be equal. The Partnership Deed provided for the following on the death
of a partner:
(i) His share of goodwill be calculated on the basis of half of the profits credited
to his account during the previous four completed years.
The firm’s profit for the last four years was:

2010–11—` 1,20,000, 2011–12—` 80,000, 2012–13—` 40,000, and 2013–14—
` 80,000.

(ii) His share of profit in the year of his death was to be computed on the basis of
average profits of past two years.
Pass necessary Journal entries relating to goodwill and profit to be transferred to
Ghanshyam’s Capital Account. Also show your workings clearly.
(b) How can a partner retire from firm? (3 + 3)
15. Rohit, Kunal and Sarthak are partners in a firm. They decided to dissolve their firm.
Pass necessary Journal entries for the following after various assets (other than cash
and bank) and the third party liability have been transferred to Realisation Account:
(i) Kunal agreed to pay off his wife’s loan of ` 20,000.
(ii) Total creditors of the firm were ` 40,000. Creditors worth ` 10,000 were given a
piece of furniture costing ` 8,000 in full and final settlement. Remaining creditors
allowed a discount of 10%.
(iii) Rohit had given a loan of ` 70,000 to the firm which was duly paid.

(iv) A machine which was not recorded in the books was taken over by Kunal at
` 3,000, whereas its expected value was ` 5,000.

(v) The firm had a debit balance of ` 30,000 in the Profit and Loss Account on the
date of dissolution.
(vi) Sarthak paid realisation expenses of ` 18,000 out of his private funds, who was
to get remuneration of ` 15,000 for completing the dissolution process and was
responsible to bear all the realisation expenses. (6)