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Model Test Papers M.385

The firm was dissolved on 1st April, 2018 on the following terms:

(a) Investments were valued at ` 18,000 and A took the Investments at this value.
(b) Fixed Assets realised ` 29,700 whereas Stock and Debtors realised ` 80,000.
(c) Expenses of realisation were ` 1,300.
(d) Creditors allowed discount of ` 800.
(e) One Bill Receivable for ` 1,500 under discount was dishonoured as the acceptor had
become insolvent and was unable to pay any amount and hence the liability had to
be paid by the firm.
Prepare Realisation Account, Partners’ Capital Accounts and Cash Account showing
how the accounts would finally be settled among the partners. (6)
16. The Balance Sheet of X, Y and Z who were sharing profits in the ratio of 5 : 3 : 2 as at
31st March, 2018 is as follows:

Liabilities ` Assets `
Creditors 50,000 Cash at Bank 40,000
Employees’ Provident Fund 10,000 Sundry Debtors 1,00,000
Workmen Compensation Reserve 50,000 Stock 80,000
Profit and Loss A/c 85,000 Fixed Assets 60,000
X’s Capital 40,000 Goodwill 50,000
Y’s Capital 62,000
Z’s Capital 33,000 1,35,000
3,30,000 3,30,000

X retired on the same date on the following terms:
(a) Goodwill of the firm is to be valued at ` 80,000 and X’s share of the same be
adjusted to that of Y and Z who are going to share the future profits in the ratio
of 2 : 3 (Goodwill Account is not to be raised).
(b) Fixed Assets are to be reduced to ` 57,500.
(c) Make a Provision for Doubtful Debts at 5% on Sundry Debtors.
(d) A liability for claim, included in Creditors for ` 10,000 is settled at ` 8,000.

(e) ` 22,000 for insurance premium was debited in the Profit and Loss Account for
the year ended 31st March, 2018, out of which ` 10,000 relates to the period after
31st March, 2018.

(f ) Stock was overvalued by ` 10,000.
(g) The amount to be paid to X by Y and Z in such a way that their capitals are
proportionate to their profit-sharing ratio and leave a balance of ` 15,000 in the
Bank Account.
Prepare Revaluation Account, Partners’ Capital Accounts and the Balance Sheet
of new firm.