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Model Test Papers M.383

11. X, Y and Z were partners in a firm sharing profits in proportion of their capitals. On
31st March, 2018, their Balance Sheet was:

Liabilities ` Assets `
X’s Capital A/c 40,000 Goodwill 20,000
Y’s Capital A/c 60,000 Building 1,40,000
Z’s Capital A/c 1,00,000 Machinery 60,000
Employees’ Provident Fund 16,000 Stock 8,000
Workmen Compensation Reserve 12,000 Debtors 12,000
Creditors 20,000 Cash 8,000
2,48,000 2,48,000
Y died on 30th June, 2018. Under the partnership agreement, the executors of a
deceased partner were entitled to the following:
(i) Amount standing to the credit of deceased Partner’s Capital Account.
(ii) Interest on capital @ 10% p.a.
(iii) Share of goodwill. The goodwill of the firm on Y’s death was valued at ` 2,40,000.
(iv) Share of profit from the closing of last financial year to the date of death on the
basis of last year’s profit. Profit of the year ended 31st March, 2018 was ` 15,000.
(v) Executors agreed to take the due amount after 6 months keeping in view the
financial position of the firm.
Prepare Y’s Capital Account to be rendered to his executors and Y’s Executors’ Account. (4)
12. X, Y and Z are equal partners, the balances in their Capital Accounts being ` 30,000,
` 25,000 and ` 20,000 respectively. In arriving at these values, profits for the year ended
31st March, 2018, ` 24,000 had already been credited to partners in the proportion in
which they share profits. Their drawings were X—` 5,000; Y—` 4,000 and Z—` 3,000
during the year ended 31st March, 2018. Subsequently, following omissions were
noticed and it was decided to bring them into account:
(i) Interest on Capital at 10% per annum.
(ii) Interest on Drawings at 10% per annum.
Pass necessary adjustment Journal entry. (4)
13. (a) Rita, Geeta and Ashish share profits and losses in the ratio of 5 : 3 : 2 respectively.
Geeta retires and Rita and Ashish decide to share future profits and losses in the
ratio of 3 : 5. At the time of retirement of Geeta, Stock (Book Value ` 60,000) is to
be reduced by 40% and Furniture (Book Value ` 50,000) is to be reduced to 40%.
Pass necessary Journal entries.
(b) A and B are partners in a firm sharing profits and losses in the ratio of 3 : 2. They
admit C as a partner with effect from 1st April, 2018 for 1/5th share. C acquires
his share from A and B in the ratio of 2 : 3. Goodwill of the firm is valued at
5 years’ purchase of Super Profits based on Average Profits of last 3 years. Average
Profit and Normal Profits are ` 3,50,000 and ` 2,00,000 respectively. Goodwill
already appears in the books at ` 50,000. C brings in only 60% of his share of
firm’s goodwill and ` 10,00,000 as his capital by bank draft. 50% of the goodwill
is withdrawn by the partners.
Pass the necessary Journal entries. (6)