CAREER CLASSES COMPILED BY: CS MAYANK ACHARYA

MPILED BY: PROF.NIA MAKHIJA

Q1. The following is the Balance Sheet of M/s. ABC Bros as at 31st December, 2015.
Balance Sheet as at 31st December, 2015
Liabilities Rs. Assets Rs.
Capital A/cs: Machinery 5000
Aman 4100 Furniture 2800
Bharat 4100 Fixture 2100
Chitra 4500 Cash 1500
General Reserve 1500 Inventories 950
Trade payables 2350 Trade receivables 4500
Less: Provision for
Doubtful debts 300 4200
16550 16550
Chitra died on 3rd January, 2016 and the following agreement was to be put into effect.
(a) Assets were to be revalued: Machinery to Rs. 5,850; Furniture to Rs. 2,300; Inventory to Rs. 750.
(b) Goodwill was valued at Rs. 3,000 and was to be credited with his share, without using a Goodwill Account.
(c) Rs. 1,000 was to be paid away to the executors of the dead partner on 5th January, 2016.
Required to show:
(i) The Journal Entry for Goodwill adjustment.
(ii) The Revaluation Account and Capital Accounts of the partners.
(iii) Which account would be debited and which account credited if the provision for doubtful debts in the Balance
Sheet was to be found unnecessary to maintain at the death of Chitra.

Q2. The following was the Balance Sheet of Om & Co. in which Priya, Shubha, Ritu were partners sharing profits and
losses in the ratio of 1:2:2 as on 31.3.2016. Ritu died on 31st December, 2016. His account has to be settled under the
following terms.
Balance Sheet of Om & Co. as on 31,3,2016
Liabilities Rs. Assets Rs.
Capital A/cs: Goodwill 30000
Priya 40000 Building 120000
Shubha 80000 Computers 80000
Ritu 80000 Inventories 20000
General Reserve 30000 Trade receivables 20000
Trade payables 20000 Cash at bank 20000
Bank loan 50000 Investments 10000

300000 300000
Goodwill is to be calculated at the rate of two years purchase on the basis of average of three years' profits and losses.
The profits and losses for the three years were detailed as below:
Year ending on profit/loss
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 CAREER CLASSES COMPILED BY: CS MAYANK ACHARYA
MPILED BY: PROF.NIA MAKHIJA

31.3.2016 30,000
31.3.2015 20,000
31.3.2014 (10,000) Loss

Profit for the period from 1.4.2016 to 31.12.2016 shall be ascertained proportionately on the basis of average profits
and losses of the preceding three years.
During the year ending on 31.3.2016 a car costing Rs. 40,000 was purchased on 1.4.2015 and debited to traveling
expenses account on which depreciation is to be calculated at 20% p.a. This asset is to be brought into account at the
depreciated value.
Other values of assets were agreed as follows:
Inventory at Rs. 16,000, building at Rs. 1,40,000, computers at Rs. 50,000; investments at Rs. 6,000. Trade receivables
were considered good.
Required:
(i) Calculate goodwill and Ritu 's share in the profits of the firm for the period 1.4.2016 to 31.12.2016.
(ii) Prepare revaluation account assuming that other items of assets and liabilities remained the same.
(iii) Prepare partners' capital accounts and balance sheet of the firm Om & Co, as on 31.12.2016.

Q3. Alisha, Garima and Kriti are in partnership sharing profits and losses at the ratio of 5:3:2. The balance sheet of the
firm on 31.12.2015 was as follows:
Balance Sheet
Liabilities Rs. Assets Rs.
Capital A/cs: Sundry Fixed Assets 80000
Alisha 50000 Joint Life Policy 20000
Garima 40000 Bank 10000
Kriti 30000 Inventories 50000
Trade payables 30000 Trade receivables 30000
Bank loan 40000
190000 190000
On 1.1.2016, Alisha wants to retire, Garima and Kriti agreed to continue at 2:1. Joint Life Policy was taken on 1.1.2010
for Rs. 1,00,000 and its surrender value as on 31.12.2015 was Rs. 25,000. For the purpose of Alisha's retirement
goodwill was raised for Rs. 1,00,000. Sundry Fixed Assets was revalued for Rs. 1,10,000. But Garima and Kriti did not
prefer to show such increase in assets in the Balance Sheet. Also they agreed to bring necessary cash to discharge 50%
of the Alisha's claim, to make the bank balance Rs. 25,000 and to make their capital proportionate.
Required: Prepare necessary journal entries.

Q4. Kamal, Lalit & Madhv are partners sharing profits and losses in the ratio 5:3:2. Due to illness, Lalit wanted to retire
from the firm on 31.3.2015 and admit his son Navnit in his place.

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 CAREER CLASSES COMPILED BY: CS MAYANK ACHARYA
MPILED BY: PROF.NIA MAKHIJA

Balance Sheet of K, L and M as on 31.3.2015

Liabilities Rs. Assets Rs.
Capital A/cs: Goodwill 30000
Kamal 40000 Furniture 20000
Lalit 60000 Trade receivables 50000
Madhv 30000 Inventory in Trade 50000
Trade payables 20000 Cash and Bank balances 50000
Reserve 50000
200000 200000
On retirement of Lalit assets were revalued: Goodwill Rs. 50,000, furniture Rs. 10,000 and Inventory in trade Rs.
30,000. 50% of the amount due to Lalit was paid off in cash and the balance was retained in the firm as capital of
Navnit. On admission of the new partner, goodwill has been written off. Madhv is paid off his extra balance to make
capital proportionate.
You are required to give:
(i) Necessary journal entries;
(ii) Balance sheet of M/s Kamal, Lalit and Madhu as on 1.4.2015;
(iii) Capital accounts of partners.

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