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Model Test Papers M.83
16. P, Q and R were partners in a firm sharing profits in the ratio of 7 : 2 : 1. On 1st April,
2018 their Balance Sheet was as follows:

BALANCE SHEET OF P, Q AND R as on 1st April, 2018
Liabilities ` Assets `
Capital A/cs: Land 12,00,000
P 9,00,000 Building 9,00,000
Q 8,40,000 Furniture 3,60,000
R 9,00,000 26,40,000 Stock 6,60,000
General Reserve 3,60,000 Debtors 6,00,000
Workmen’s Compensation Reserve 5,40,000 Less: Provision for Doubtful Debts 30,000 5,70,000
Creditors 3,60,000 Cash at Bank 2,10,000
39,00,000 39,00,000
On the above date Q retired.
Following was agreed:
(i) Goodwill of the firm was valued at ` 12,00,000.
(ii) Land was to be appreciated by 30% and Building was to be depreciated by
` 3,00,000.
(iii) Value of furniture was to be reduced by ` 60,000.
(iv) Liability for Workmen’s Compensation was determined at ` 1,40,000.
(v) Amount payable to Q was transferred to his loan account. His loan should be
paid after two years with interest due @ 12% p.a. Q decided to donate interest to
an NGO engaged in Women Empowerment.
(vi) Capitals of P and R were to be adjusted in their new profit-sharing ratio and for
this purpose Current Accounts of the partners will be opened.
Prepare Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of
the new firm.

Or
A and B were partners in a firm sharing profits in ratio of 3 : 1. They admitted C, an
old employee as a partner for 1/4th share in the profits. C was to bring ` 60,000 for
his capital but was not in a position to bring amount of goodwill. Balance Sheet A and
B on 1st April, 2018, the date on which C was admitted, was as follows:

Liabilities ` Assets `
Sundry Creditors 70,000 Land and Building 40,000
Workmen Compensation Reserve 40,000 Goodwill 40,000
General Reserve 10,000 Plant and Machinery 70,000
Capital A/cs: Stock 30,000
A 50,000 Debtors 35,000
B 80,000 1,30,000 Less: Provision for Doubtful Debts 1,000 34,000
Investments 26,000
Cash 10,000
2,50,000 2,50,000