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Sunil Panda Commerce Classes (SPCC) Accounts Term 2 Home Work Retirement & Death

The document contains 7 questions related to accounting for partnerships. The questions cover topics like retirement and death of partners, calculation of goodwill, revaluation of assets, adjustment of capital accounts and preparation of balance sheets on admission, retirement or death of a partner. Detailed journal entries are required to be passed for recording transactions related to change in constitution of partnerships.

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359 views

Sunil Panda Commerce Classes (SPCC) Accounts Term 2 Home Work Retirement & Death

The document contains 7 questions related to accounting for partnerships. The questions cover topics like retirement and death of partners, calculation of goodwill, revaluation of assets, adjustment of capital accounts and preparation of balance sheets on admission, retirement or death of a partner. Detailed journal entries are required to be passed for recording transactions related to change in constitution of partnerships.

Uploaded by

Binoy Trevadia
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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SUNIL PANDA COMMERCE CLASSES (SPCC)

ACCOUNTS TERM 2
HOME WORK RETIREMENT & DEATH
Q.1) X, Y and Z were partners in a firm with profit-sharing ratio of ½ , 1/3 and 1/6 respectively. The
balance sheet of the firm as at 31-3-2021 was as follows:

Liabilities Amount Assets Amount


Trade creditors 2,10,000 Cash at bank 57,500
WCR 1,20,000 Debtors 4,00,000
Employee’s provident fund 60,000 Less PFDD 20,000 3,80,000
IFR 60,000 Stock 3,76,500
Capital a/c Investment (market value 1,76,000) 1,50,000
X 6,80,000 Patents 1,00,000
Y 3,20,000 Machinery 5,00,000
Z 2,10,000 12,10,000 Advertisement expenditure 36,000
Goodwill 60,000
16,60,000 16,60,000
st
Z retired on 1 April, 2021 on the following terms:

(i) Goodwill of the firm is valued at 3,00,000


(ii) Value of patents is to be reduced by 20% and that of machinery to 90%
(iii) Provision for Doubtful Debts is to be raised to 6%
(iv) Liability for workmen compensation to the extent of 60,000 is to be created.
(v) Z took the investment at market value
(vi) Amount due to Z is to be settled on the following basis:
50% on retirement, 50% of the balance within one year and the balance by a bill of
exchange (without interest) at 3 months.
You are required to show entries for the treatment of goodwill, revaluation account,
partners capital account and the balance sheet of X and Y after Z’s retirement.

Q.2) A, B and C are sharing profit in the ratio of 2:2:1. B died on 30th June,2021. Book of account are
closed on 31st march every year. Sales for the year ended 31st march, 2021 was 3,00,000. Sales of
1,00,000 amounted between the period from 1st April,2021 to 30th June, 2021. Profit for the year
ended 31st march,2021 was 30,000.

Calculated deceased partner’s share in the profit of the firm.

Q.3) Ram, Ghanshyam and Vrinda were partners in a firm sharing profits in the ratio of 4:3:1. The
firm closes its book on 31st march every year. On 1st February,2017, Ghanshyam died and it was
decided that the new profit-sharing ratio between Ram and Vrinda will be equal. The partnership
deed provided for the following on the death of a partner.

a) His share of goodwill be calculated on the basis of half of the profits credited to his account during
the previous four completed years.

The firm’s profits for the last four years were:

2012-13 1,20,000; 2013-14 80,000; 2014-15 40,000; 2015-16 80,000


b) His share of profit in the year of his death was to be computed on the basis of average profit of
past two years.

Pass necessary journal entries relating to goodwill and profit to be transferred to Ghanshyam’s
capital account. Also show your working clearly.
Q.4) Amar, Bhuwan and Chaman were partners sharing profits and losses in the ratio of 3:2:1.
Bhuwan died on 30th June, 2021. Loss from the beginning of the accounting year till the date of his
death was estimated at 1,80,000. Amar and Chaman decided to share future profits in the ratio of
3:2 on 1st July,2021.

Pass the necessary journal entries to record Bhuwan’s shre of profit/loss up to the date of death.

Q.5) Alia, Karan and Shilpa were partners in a firm sharing profits in the ratio of 5:3:2. Goodwill
appeared in their book at a value of 60,000 and General reserve at 20,000. Karan decided to retire
form the firm. On the date of his retirement, goodwill of the firm was valued at 2,40,000. The new
profit-sharing ratio decided among Alia and Shilpa was 2:3. Record necessary journal entries on
Karna’s retirement.

Q.6) Danish, Ana and Pranjal are partners in a firm sharing profits and losses in the ratio of 5:3:2.
Their books are closed on march 31st every year.

Danish died on September 30th 2019. The executor of Danish are entitled to:

i) His share of capital i.e. 5,00,000 along with his share or goodwill. The total goodwill of
the firm was valued at 60,000.
ii) His share of profit upto his date of death on the basis of sales till date. Sales for the year
ended march 31, 2019 was 2,00,000 and profit for the same year was 10% on sale. Sales
shows a growth trend of 20% and percentage of profit earning is reduced by 1%
iii) Amount payable of Danish was transferred to his executors.
Pass necessary journal entries and show the working clearly.

Q.7) Ativ, Meha and Nupur were partners sharing profits and losses in the ratio of 5:3:2. On 31-3-
2016 their balance sheet was as under:

Liabilities Amount Assets Amount


Trade creditors 26,500 Bank 25,000
Employee’s provident fund 23,500 Debtors 30,000
Ativ capital 1,00,000 Stock 55,000
Meha capital 50,000 Fixed assets 1,20,000
Nupur capital 40,000 Advertisement expenditure 10,000
2,40,000 2,40,000
Ativ retired on 1-4-2016. For this purpose, following adjustments were agreed upon:

i) Goodwill of the firm was to be valued at 2 years purchase of the average profit of 3
completed year preceding the date of retirement. The profits for previous years were:
2013-14 55,000; 2014-15 65,000; 2015-16 60,000
ii) Fixed assets were to be increased by 25,000
iii) Stock was overvalued by 5,000
iv) 20,000 were immediately paid to Ativ and the balance was transferred to his loan
account.
Prepare revaluation account, partners capital account and the balance sheet of the
reconstituted firm.

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