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Model Test Papers M.441

(iv) Nusrat was to bring further cash as would make her capital equal to 20% of the
combined capital of Mohan and Mahesh after above revaluation and adjustments
are carried out.

(v) The future profit-sharing proportions will be Mohan 2/5th, Mahesh 2/5th and
Nusrat 1/5th.
Pass Journal entries for the above arrangements and give Balance Sheet of the new
firm. Also, show clearly the calculation of Capital brought by Nusrat.
Or

Kushal, Kumar and Kavita were partners in a firm sharing profits in the ratio of
3 : 1 : 1. On 1st April, 2018, their Balance Sheet was as follows:
BALANCE SHEET OF KUSHAL, KUMAR AND KAVITA
as at 1st April, 2018
Liabilities ` Assets `
Creditors 1,20,000 Cash 70,000
Bills Payable 1,80,000 Debtors 2,00,000
General Reserve 1,40,000 Less: Provision for doubtful debts 10,000 1,90,000
Capital A/cs: Stock 2,20,000
Kushal 3,00,000 Furniture 1,20,000
Kumar 2,80,000 Building 3,00,000
Kavita 3,00,000 8,80,000 Land 4,00,000
Advertisement Expenditure 20,000
13,20,000 13,20,000
On the above date Kavita retired and the following was agreed:

(i) Goodwill of the firm was valued at ` 40,000 and Kavita’s share of the same be
adjusted in the accounts of Kushal and Kumar who decide to share future profits
in the proportion of 3/4th and 1/4th respectively.

(ii) Land was to be appreciated by 30% and building was to be depreciated by ` 1,00,000.
(iii) Value of furniture was to be reduced by ` 20,000.

(iv) Provision for Doubtful Debts is to be increased to ` 15,000.
(v) 10% of the amount payable to Kavita was paid in cash and the balance was
transferred to her Loan Account.
(vi) Capitals of Kushal and Kumar will be in proportion to their new profit-sharing
ratio. The surplus/deficit, if any, in their Capital Accounts will be adjusted through
Current Accounts.
Prepare Revaluation Account, Partners’ Capital Accounts and Balance Sheet of Kushal
and Kumar after Kavita’s retirement. (8)