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Model Test Papers M.257

(c) Other assets realised as follows: Investment 20% less; and goodwill 60% of book value.
(d) One of the creditors for ` 5,000 was paid ` 3,000.
(e) Building was auctioned for ` 30,000 and the auctioneer’s commission paid was ` 1,000.
(f) Y took part of stock at ` 4,000 (being 20% less than book value); balance stock
realised 50%.
(g) Realisation expenses were ` 2,000.
Prepare: (i) Realisation Account; (ii) Partners’ Capital Accounts; and (iii) Bank Account. (6)
15. Ram, Rahim and Robert were partners sharing profits in the ratio of 2 : 3 : 1. Robert died on
30th September, 2017. On 31st March, 2017, their Balance Sheet was as follows:
Liabilities ` Assets `
Creditors 3,60,000 Cash 14,000
Workmen Compensation Reserve 20,000 Bank 2,96,000
Capital A/cs: Stock 80,000
Ram 1,00,000 Debtors 3,00,000
Rahim 2,00,000 Less: Provision for Doubtful Debts 10,000 2,90,000
Robert 3,00,000 6,00,000 Investments 50,000
Land 2,50,000
9,80,000 9,80,000
On the date of Robert’s death, i.e., 30th September, 2017, following was agreed upon:
(i) Goodwill is to be valued at two years’ purchase of average profit of last three
years, i.e., 2014–15—` 45,000; 2015–16—` 90,000 and 2016–17—` 1,35,000.
(ii) Robert’s share of profit till the date of his death will be calculated on the basis
of average profit of last three years.
(iii) Land was undervalued by ` 25,000 and Stock overvalued by ` 8,000.
(iv) Provision for Doubtful Debts is to be made at 5% of Debtors.
(v) Claim of Workmen Compensation is estimated at ` 5,000.
Robert’s Executor was paid the sum due in two equal annual instalments along with
interest @ 10% p.a.
Prepare Robert’s Capital Account to be presented to his executor. Also prepare his Executor’s
Account till the settlement of the amount due. (6)
16. A and B are partners in a firm sharing profits in 2 : 1 ratio. They admitted C for 1/4th
share in profits on 1st April, 2018. C was to bring ` 30,000 as capital and capitals of
A and B were to be adjusted in the profit-sharing ratio on the basis of C’s Capital. The
Balance Sheet of A and B as at 31st March, 2018 (before C’s admission) was:

Liabilities ` Assets `
Sundry Creditors 20,000 Cash 2,000
Bills Payable 19,000 Sundry Debtors 50,000
General Reserve 6,000 Stock 10,000
Workmen Compensation Reserve 10,000 Machinery 25,000
Capital A/cs: Building 40,000
A 50,000 Goodwill 10,000
B 32,000 82,000
1,37,000 1,37,000