ACCOUNTING FOR PARTNERSHIP FIRMS- WORK SHEET

ACCOUNTANCY (055)
Total marks- 50

1 A and B are partners sharing profits and losses in the ratio of 3:2. The firm maintains fluctuating [1]
capital accounts and the balance of the same as on 31st March 2023 is ₹4,00,000 and ₹ 5,00,000
for A and B respectively. Drawings during the year were ₹50,000 and ₹ 70,000 respectively.
Divisible profits during the year 2023-24 was ₹ 1,50,000. Calculate the opening capital of A.
(a) ₹3,00,000
(b) ₹ 3,60,000
(c) ₹ 4,00,000
(d) ₹ 3,10,000

2 Vihaan and Mann are partners sharing profits and losses in the ratio of 3:2. The firm [1]
maintains fluctuating capital accounts and the balance of the same as on 31st March
2023 is ₹ 4,00,000 and ₹ 4,65,000 for Vihaan and Mann respectively. Drawings during
the year were ₹ 65,000 each. As per the partnership Deed, Interest on capital @ 10%
p.a. on Opening Capital has been allowed to them. Calculate the opening capital of
Vihaan given that the divisible profits during the year 2022-23 was ₹ 2,25,000.

(a) ₹ 3,30,000
(b) ₹ 4,40,000
(c) ₹ 4,00,000
(d) ₹ 3,00,000

3 In the event of loss incurred by the firm which among the following will be provided by the firm [1]
to the partner
(a) Interest on capital.
(b) Salary to partner.
(c) Rent to partner.
(d) Commission to partner

4 A, B & C are partners in a firm sharing profits in the ratio 2:2:1. C was given a guarantee that [1]
his share of profits will not be less than Rs.45,000 every year. Deficiency if any will be borne by
A & B equally. Calculate the amount of deficiency if profit earned by the firm amounted to Rs.
2,00,000.
(a) ₹ 10,000
(b) ₹ 5,000
(c) ₹9,000 (d) No deficiency.

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 5 A, B and C are in partnership business. A used ₹2,00,000 belonging to the firm without the [1]
information to other partners and made a profit of ₹35,000 by using this amount. Which decision
should be taken by the firm to rectify this situation?
(a) A need to return only ₹2,00,000 to the firm.
(b) A is required to return ₹35,000 to the firm.
(c) A is required to pay back ₹35,000 only equally to B and C.
(d) A need to return ₹2,35,000 to the firm.

6 On 1st January 2023, a partner advanced a loan of ₹1,00,000 to the firm. In the absence of [1]
agreement, interest on loan on 31st March 2023 will be:

(a) ₹3,000
(b) Nil
(c) ₹1,500
(d) ₹6,000

7 In the absence of an agreement, partners are entitled to: [1]

i) Profit share in capital ratio.
ii) Commission for making additional sale.
iii) Interest on Loan & Advances by them to the firm.
iv) Salary for working extra hours.
v) Interest on Capital.
Choose the correct option:

(a) Only i), iv) and v).

(b) Only ii) and iii).
(c) Only iii).
(d) Only i) and iii).

8 Interest on Partner’s loan is credited to: [1]

(a) Partner’s Fixed capital account.
(b) Partner’s Current account.
(c) Partner’s Loan Account.
(d) Partner’s Drawings Account.

9 Amal and Bimal are partners in a partnership firm without any agreement. Amal devotes more [1]
time for the firm as compare to Bimal. Amal will get the following commission in addition to
profit in the firm’s profit:
(a) 6% of profit
(b) 4% of profit
(c) 5% of profit
(d) None of the above

10 Annu, Banu and Chanu are partners, Chanu has been given a guarantee of minimum profit of [1]
₹8,000 by the firm. Firm suffered a loss of ₹5,000 during the year. Capital account of Banu will
be by₹ .

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 (a) Credited, ₹6,500.
(b) Debited, ₹6,500.
(c) Credited, ₹1,500.
(d) Debited, ₹1,500

11 Assertion (A): Rent payable to partner is credited to Partner’s Capital account. [1]
Reason(R): Rent is payable to partner for letting the firm use his personal property for
business.

(a) Both (A) and (R) are true and (R) is the correct explanation of (A)
(b) Both (A) and (R) are true and (R) is not the correct explanation of (A)
(c) (A) is true, but (R) is false
(d) (A) is false, but (R) is true

Read the following hypothetical situation, Answer Question No. 12 and 13.
Ram and Mohan are partners in 3:2. Their capital balances as on 1st April 2022 amounting to
₹2,00,000 each. On 1st February, 2023, Ram contributed an additional capital of ₹1,00,000.
Following are the terms of deed:
1. Interest on capital @ 6% per annum
2. Interest on drawings @ 8% per annum
3. Salary to Ram ₹1500 per month
4. Commission to Mohan @10% on net profit after charging interest on capital, salary
and his commission. Drawings of the partners were ₹20,000 and ₹30,000 respectively
during the year. Net profit earned by the firm was ₹2,08,000.
12 What is the amount of commission payable to Mohan? [1]

(a) ₹ 15,000
(b) ₹ 16,500
(c) ₹ 20,800
(d) None of these

13 What is Ram's share in the net divisible profit? [1]

(a) ₹ 1,24,400
(b) ₹ 83,600
(c) ₹ 91,200
(d) d) ₹ 60,800
14 Match the following details of interest on drawings. [1]

I Drawings in the beginning of each quarter A 6.5

II Drawings in the beginning of each month B 4.5
III Drawings in the end of each quarter C 7.5
(a) I-A; II-B; III-C
(b) I-B; II-A; III-C
(c) I-C; II-B; III-A
(d) I-C; II-A; III-B

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15 Emil and Rima are partners. Emil draws a fixed amount at the beginning of every quarter. Interest [1]
on drawings is charged @10% p.a. At the end of the year, interest on Emil’s drawings amounted
to ₹ 7,500. Drawings of Emil were:
(a) ₹ 34,000 per quarter.
(b) ₹ 44,000 per quarter
(c) ₹ 30,000 per quarter
(d) ₹ 60,000 per quarter

16 One of the partners in a partnership firm has withdrawn ₹ 9,000 at the middle of each quarter, [1]
throughout the year. Calculate the rate of interest if his interest on drawings is ₹1080.

(a) 10%
(b) 6%
(c) 8%
(d) 5%

17 A and B are partners. B draws a fixed amount at the end of every quarter. Interest on drawings [1]
is charged @15% p.a. At the end of the year interest on B’s drawings amounted to ₹9,000.
Drawings of B were:
(a) ₹24,000 per quarter.
(b) ₹40,000 per quarter
(c) ₹30,000 per quarter
(d) ₹80,000 per quarter

18 Shyam, Gopal & Arjun are partners carrying on garment business. Shyam withdrew ₹ 10,000 in [1]
the beginning of each quarter. Gopal, withdrew garments amounting to ₹ 15,000 to distribute it
to flood victims, and Arjun withdrew ₹ 20,000 from his capital account. The partnership deed
provides for interest on drawings @ 10% p.a. The interest on drawing charged from Shyam,
Gopal & Arjun at the end of the year will be
(a) Shyam- ₹ 4,800; Gopal- ₹ 1,000; Arjun- ₹ 2,000.
(b) Shyam- ₹ 4,800; Gopal- ₹ 1,000; Arjun- ₹ 2,000.
(c) Shyam- ₹ 2,500; Gopal- ₹ 750; Arjun- Nil.
(d) Shyam- ₹ 4,800; Gopal- Nil; Arjun- Nil.

19 Poojit, Joel & Tejus were partners in a firm sharing profits in the ratio 5:3:2. Their fixed capitals [3]
were ₹350,000; ₹400,000 & ₹250,000 respectively. As per partnership deed partners were
entitled to Interest on capital @10% p.a. And salary to Joel at₹ 10,000 p.a. Profit for the year
ended 31st March 2023 was distributed among the partners without providing for interest on
capital. Record adjustment entry to rectify the error.
20 Sahil, Vishal, and Anand are partners in a firm sharing profits and losses in the ratio of 2:1:2. [3]
Their fixed capitals were ₹3,00,000; ₹6,00,000, and ₹12,00,000, respectively. Interest on
capital for the year 2022-23 was credited to them @ 10% p.a. instead of 8% p.a. The profit for
the year after charging interest was ₹6,00,000. Prepare the adjustment table and pass the
adjustment entry.

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21 The net profit of X, Y and Z for the year ended March 31, 2024 was ₹ 60,000 and the same was [3]
distributed among them in their agreed ratio of 3:1:1. It was subsequently discovered that the
under mentioned transactions were not recorded in the books:
(i) Interest on Capital @ 5% p.a.
(ii) Interest on drawings amounting to X ₹ 700, Y ₹ 500 and Z ₹ 300.
(iii)Partner’s Salary: X ₹ 1000, Y ₹ 1500 p.a.
The capital accounts of partners were: X ₹ 1,00,000, Y ₹ 80,000 and Z ₹ 60,000.
Record the adjustment entry through Profit and Loss adjustment account

22 P, Q and R were partners with fixed capital of ₹ 40,000, ₹32,000and ₹24,000.After distributing [3]
the profit of ₹48,000 for the year ended 31st March 2024 in their agreed ratio of 3 : 1 : 1it was
observed that:
a. Interest on capital was provided at 10% p.a. instead of 8% p.a.
b. Salary of ₹ 12,000 was credited to P instead of Q.
You are required to pass a single journal entry in the beginning of the next year to rectify the
above omissions.

23 Cheese and Slice are equal partners. Their capitals as on April 01, 2022 were Rs. 50,000 and Rs. [3]
1,00,000 respectively. After the accounts for the financial year ending March 31, 2023 have been
prepared, it is observed that interest on capital @ 6% per annum and salary to Cheese @ ₹5,000
per annum, as provided in the partnership deed has not been credited to the partners’ capital
accounts before distribution of profits. You are required to give necessary rectifying entries using
P&L adjustment account.

Read the following hypothetical situation, answer question no. 24 and 25.

Richa and Anmol are partners sharing profits in the ratio of 3:2 with capitals of ₹2,50,000 and
₹1,50,000 respectively. Interest on capital is agreed @ 6% p.a. Anmol is to be allowed an annual
salary of 12,500. During the year ended 31st March 2023, the profits of the year prior to
calculation of interest on capital but after charging Anmol’s salary amounted to ₹62,000. A
provision of 5% of this profit is to be made in respect of manager’s commission. Following is
their Profit & Loss Appropriation Account

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24 The amount to be reflected in blank (1) will be: [1]
(a) ₹37,200
(b) ₹44,700
(c) ₹22,800
(d) ₹20,940

25 The amount to be reflected in blank (2) will be: [1]

(a) ₹62,000.
(b) ₹74,500.
(c) ₹71,400.
(d) ₹70,775.

26 Pinki, Deepti and Kaku are partner’s sharing profits in the ratio of 5:4:1. Kaku is given a [3]
guarantee that his share of profits in any given year would not be less than ₹ 5,000. Deficiency,
if any, would be borne by Pinki and Deepti equally. Profits for the year amounted to ₹ 40,000.
Record necessary journal entries in the books of the firm showing the distribution of profit.

27 Abhay, Siddharth and Kusum are partners in a firm, sharing profits in the ratio of 5:3:2. Kusum [3]
is guaranteed ₹ 10,000 as her share in the profits. Any deficiency arising on that account shall be
met by Siddharth. Profits for the years ending March 31, 2024 was 60,000. Prepare Profit and
Loss Appropriation Account.

28 Radha, Mary and Fatima are partners sharing profits in the ratio of 5:4:1. Fatima is given a [3]
guarantee that her share of profit, in any year will not be less than ₹ 5,000. The profits for the
year ending March 31, 2024 amounted to ₹ 35,000. Shortfall if any, in the profits guaranteed to
Fatima is to be borne by Radha and Mary in the ratio of 3:2. Record necessary journal entry to
show distribution of profit among the partner.

29 A and B are partners in the ratio of 2:3 with a capital of ₹ 4, 00,000 and ₹ 2,00,000 respectively. [3]
Interest is to be allowed @ 6% p.a. Profit before allowing interest on capitals is ₹ 30,000. Prepare
Profit and Loss Appropriation Account to distribute profit or loss if interest on capital is
considered to be a charge.

30 Arun and Arora were partners in a firm sharing profits in the ratio of 5:3. Their fixed capitals on [3]
1.4.2022 were: Arun ₹ 60,000 and Arora ₹ 80,000. They agreed to allow interest on capital @
12% p.a. and to charge on drawings @15% p.a. The profit of the firm for the year ended 31st
March, 2023 before all above adjustments was ₹ 12,600. The drawings made by Arun were₹
2,000 and by Arora ₹ 4,000 during the year. Prepare Profit and Loss Appropriation A/c of Arun
and Arora. Show your calculations clearly. The interest on capital will be allowed even if the
firm incurs loss.

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 METHODS AND VALUATION OF GOODWILL- WORK SHEET
ACCOUNTANCY Total marks- 50
1 Madhu and Vidhi are partners sharing profts in the ratio of 3:2. They decided to admit Manu [3]
as a partner from 1st April, 2023 on the following terms
(i) Manu will be given 2/5th share of the profit.
(ii) Goodwill of the firm will be valued at two years' purchase of three years' normal average
profit of the firm.
Profits of the previous three years ended 31st March, were
2023-Profit ₹ 30,000 (after debiting loss of stock by fire ₹ 40,000).
2022- Loss ₹ 80,000 (includes voluntary retirement compensation paid ₹ 1,10,000).
2021-Profit ₹ 1,10,000 (including a gain (profit) of ₹ 30,000 on the sale of fixed assets).
Calculate the value of goodwill.

2 Tarang purchased Jyoti's business with effect from 1st April, 2023. Profits shown [3]
by Jyoti's business for the last three financial years were:
2021 : ₹1,00,000 (including an abnormal gain of ₹ 12,500).
2022 : ₹ 1,25,000 (after charging an abnormal loss of ₹ 25,000).
2023 : ₹ 1,12,500 (excluding ₹ 12,500 as insurance premium on firm's property- now to be
insured).
Calculate the value of firm's goodwill on the basis of two year's purchase of the average profit
of the last three years.

3 Abhay, Babu and Charu are partners sharing profits and losses equally. They agree to admit [3]
Daman for equal share of profit. For this purpose, the value of goodwill is to be calculated on
the basis of four years' purchase of average profit of last five years. These profits for the year
ended 31st March, were:
Year 2019 2020 2021 2022 2023

Profit/(Loss)
1,50,000 3,50,000 5,00,000 7,10,000 (5,90,000)
(₹)

On 1st April, 2022, a car costing ₹ 1,00,000 was purchased and debited to Travelling
Expenses Account, on which depreciation is to be charged @ 25%. Interest of ₹ 10,000 on
Non-trade Investments is credit to income for the year ended 31st March, 2022 and 2023.
Calculate the value of goodwill after adjusting the above.

4 The profits of a firm for the last five years were: [3]
Year 2019 2020 2021 2022 2023
Profits (₹) 45,000 50,000 52,000 65,000 85,000
Calculate the value of goodwill on the basis of two years of purchase of weighted average
profits, the weights to be used are 2019-1, 2020 -2, 2021-3, 2022 -4 and 2023 -5

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5 Average profit earned by a firm is ₹1,00,000 which includes undervaluation of stock [3]
of ₹40,000 on an average basis. The capital invested in the business is ₹6,30,000 and the
normal rate of return is 5%. Calculate goodwill of the firm on the basis of 5 times the super
profit.
6 Average profit earned by a firm is ₹ 7,50,000 which includes overvaluation of stock of [3]
₹ 30,000 on an average basis. The capital invested in the business is ₹ 42,00,000 and the
normal rate of return is 15%. Calculate goodwill of the firm on the basis of 3 time the super
profit.

7 Ayub and Amit are partners in a firm and they admit Jaspal into partnership w.e.f. 1st April, [3]
2023. They agreed to value goodwill at 3 years' purchase of Super Profit Method for which
they decided to average profit of last 5 years. The profits for the last 5 years were:

Net Profit
Year Ended
(₹)
31st March, 2019 1,50,000
31st March, 2020 1,80,000
31st March, 2021 1,00,000 (Including abnormal loss of ₹ 1,00,000)
31st March, 2022 2,60,000 (Including abnormal gain (profit) of ₹ 40,000)
31st March, 2023 2,40,000
The firm has total assets of ₹ 20,00,000 and Outside Liabilities of ₹ 5,00,000 as on that date.
Normal Rate of Return in similar business is 10%.
Calculate value of goodwill.

8 On 1st April, 2023, a firm had assets of ₹ 1,00,000 excluding stock of ₹ 20,000. The current [3]
liabilities were ₹ 10,000 and the balance constituted Partners' Capital Accounts. If the normal
rate of return is 8%, the Goodwill of the firm is valued of ₹ 60,000 at four years' purchase of
super profit, find the actual profits of the firm.

9 Average profit of a firm during the last few years is ₹ 1,50,000. In similar business, the normal [3]
rate of return is 10% of the capital employed. Calculate the value of goodwill
by capitalisation of super profit method if super profits of the firm are ₹ 50,000.

10 Raja Brothers earn an average profit of ₹ 30,000 with a capital of ₹ 2,00,000. The normal rate [2]
of return in the business is 10%. Using capitalisation of super profit method, workout the
value of the goodwill of the firm.

11 Rajan and Rajani are partners in a firm. Their capital were Rajan ₹ 3,00,000; Rajani ₹ 2,00,000. [3]
During the year 31st March, 2023, the firm earned a profit of ₹ 1,50,000. Calculate the value of
goodwill of the firm by capitalisation of super profit assuming that the normal rate of return is
20%.

12 Average profit of GS & Co. is ₹ 50,000 per year. Average capital employed in the [3]
business is ₹ 3,00,000. If the normal rate of return on capital employed is 10%, calculate
goodwill of the firm by:

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 (i) Super Profit Method at three years' purchase; and
(ii) Capitalisation of Super Profit Method.

13 A and B were partners in a firm with capitals of ₹3,00,000 and ₹2,00,000 respectively. The [3]
normal rate of return was 20% and the capitalised value of average profits was ₹7,50,000.
Calculate goodwill of the firm by capitalisation of average profits method.

14 Puneet and Tarun are in restaurant business having credit balances in their fixed Capital [3]
Accounts as ₹2,50,000 each. They have credit balances in their Current Accounts of ₹30,000
and ₹20,000 respectively. The firm does not have any liability. They are regularly earning
profits and their average profit of last 5 years is ₹1,00,000. if the normal rate of return is 10%,
find the value of goodwill by Capitalisation of Average Profit Method.

15 Form the following particulars, calculate value of goodwill of a firm by [3]

applying Capitalisation of Average Profit Method:
(i) Profits of last five consecutive years ending 31st March are: 2023 − ₹54,000; 2022 − ₹
42,000; 2021 − ₹ 39,000; 2020 − ₹ 67,000 and 2019 − ₹59,000.
(ii) Capitalisation rate 20%.
(iii) Net assets of the firm ₹ 2,00,000.

16 A business has earned average profit of ₹ 4,00,000 during the last few years and the normal [3]
rate of return in similar business is 10%. Find value of goodwill by:
(i) Capitalisation of Super Profit Method, and
(ii) Super Profit Method if the goodwill is valued at 3 years' purchase of super profits.
Assets of the business were ₹ 40,00,000 and its external liabilities

17 A firm earns profit of ₹ 5,00,000. Normal Rate of Return in a similar type of business is 10%. [3]
The value of total assets (excluding goodwill) and total outsiders' liabilities as on the date of
goodwill are ₹ 55,00,000 and ₹ 14,00,000 respectively. Calculate value of goodwill according
to Capitalisation of Super Profit Method as well as Capitalisation of Average Profit Method.

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 GRADE 12- ACCOUNTANCY
Chapter-3 Change in profit sharing ratio-Worksheet
Max Marks: 5
1 The partner whose share has increased as a result of change is called, [1]
a) Gaining partner
b) Sacrificing partner
c) Sacrificing ratio
d) Gaining ratio

2 AK, BK and CK are sharing profits in the ratio of 2:1:1. They have decided to share future [1]
profits in the ratio of 3:2:1. Find out the gainer partner.
a) Both AK is the gainer partner and CK is the gainer partner
b) CK is the gainer partner
c) BK is the gainer partner
d) AK is the gainer partner

3 Change in relationship among partners is called, [1]

a) dissolution of firm
b) reconstitution of firm
c) insolvency of firm
d) None of these

4 The entry to be passed for adjustment of goodwill when there is a change in profit (loss) sharing [1]
ratio of partners, without opening goodwill account is,

a) Sacrificing Partners’ Capital A/c Dr

To Gaining Partners’ Capital A/c

b) Gaining Partners’ Capital A/c Dr

To Sacrificing Partners’ Capital

c) Gaining Partners’ Current A/c Dr

To Sacrificing Partners’ Current

d) Either (b) or (c)

5 When a firm is reconstituted, reserves and accumulated profits are distributed among partners [1]
by passing the following journal entry.

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 (a) Reserves/Profit and Loss A/c Dr
Workmen’s Compensation Reserve A/c Dr
Investment Fluctuation Reserve A/c Dr
To All Partner’s Capital A/c

(b) Reserves/Profit and Loss A/c Dr

Workmen’s Compensation Reserve A/c Dr
Investment Fluctuation Reserve A/c Dr
To All Partner’s Current A/c

(c) Either (a) or (b)

(d) None of the above

6 Whenever revaluation account is prepared, the journal entry for unrecorded assets is, [1]
a) Unrecorded Assets A/c Dr
To Revaluation A/c
b) Revaluation A/c Dr
To Unrecorded Assets A/c
c) Revaluation A/c Dr
To Partner’s Capital A/c
d) None of the above

7 If Assets are increasing but liabilities decreasing; in such a case Revaluation A/c will [1]
show
a) do not prepare Revaluation A/c
b) neither Gain or Loss
c) profit
d) net loss
8 A, B and C are partners sharing profits in the ratio of capitals (old 5:3:2 and new 2:3:5).Their [1]
capital after adjustment in new capital ratio are ` 20,000, ` 30000, ` 50000. Who will bring the
amount of actual cash for adjustment?
a) None of these
b) C
c) B
d) A
9 P and Q are sharing profit and losses equally .With effects from current year they decided to [1]
share profits in the ratio of 4:3.Calculate individual partner’s gain and Sacrifice.
a) P gains 1/12th share and Q sacrifices 1/14th share
b) P gains 1/14th share and Q sacrifices 1/14th share
c) P gains 1/10th share and Q sacrifices 1/14th share
d) P gains 1/15th share and Q sacrifices 1/14th share

10 Satish and Taruna were partners in a firm sharing profits and losses in the ratio of 3 : 2. From 1st [3]
April, 2018 they decided to share profits equally. On that date, their Balance Sheet showed a
credit balance of ₹ 35,000 in workmen compensation fund and ₹ 40,000 in general reserve. The
goodwill of the firm on that date was valued at ₹ 50,000. The firm accepted a claim of ₹ 40,000

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 for workmen compensation.
Pass necessary journal entries for the above transactions on the reconstitution of the firm.

11 Hari, Kunal and Uma are partners in a firm sharing profits and losses in the ratio of 5 : 3 : 2. [3]
From 1st April, 2018 they decided to share future profits and losses in the ratio of 2 : 5 : 3. Their
Balance Sheet showed a balance of? 75,000 in the Profit and Loss Account and a balance of?
15,000 in Investment Fluctuation Fund. For this purpose, it was agreed that:
(i) Goodwill of the firm was valued at ₹ 3,00,000.
(ii) Investments (having a book value of ₹ 50,000 were valued at ₹ 35,000.
(in) Stock having a book value of ₹ 50,000 be depreciated by 10%.
Pass the necessary journal entries for the above in the books of the firm.

12 L, M and N were partners in a firm sharing profits in the ratio of 2 : 3 : 5. From 1st April, 2018 [3]
they decided to share the profits in the ratio of 1: 2 : 2. On this date, the Balance Sheet showed a
credit balance of ₹ 1,17,000 in General Reserve and a debit balance of ₹ 35,000 in profit and
loss account. The goodwill of the firm was valued at ₹ 5,00,000. The revaluation of assets and
reassessment of liabilities resulted into a gain of ₹ 30,000.
Pass necessary journal entries for the above transactions on the reconstitution of the firm.

13 P, Q and R were partners in a firm sharing profits in the ratio of 1 : 1 : 2. On 31st March, 2018, [3]
their balance sheet showed a credit balance of ₹ 9,000 in the profit and loss account and a
Workmen Compensation Fund of ₹ 64,000. From 1st April, 2018 they decided to share profits in
the ratio of 2 : 2 : 1. For this purpose it was agreed that:
(a) Goodwill of the firm was valued at ₹ 4,00,000.
(b) A claim on account of workmen compensation of ₹ 30,000 was admitted.
Pass necessary journal entries on reconstitution of the firm

14 Aman, Bobby and Chandni were partners in a firm sharing profit and losses in the ratio of 5 : 4 [3]
: 1. From 1st April, 2018 they decided to share profit equally. The revaluation of assets and re-
assessment of liabilities resulted in a loss ₹ 5,000. The goodwill of the firm on its reconstitution
was valued at ₹ 1,20,000. The firm had a balance 20,000 in general reserve.
Showing your workings clearly pass necessary journal entries on the reconstitution of the firm

15 Anita, Asha and Amrit are partners sharing profits in the ratio of 3 : 2 : 1 respectively. From 1st [3]
January, 2010, they decided to share profits in the ratio of 1: 1 : 1. The partnership deed
provided that in the event of any change in profit sharing ratio, the goodwill should be valued at
three years’ purchase of the average of five years’ profits. The profits and losses of the
preceding five years are,

Year Profit (₹)

2005 1,20,000
2006 3,00,000
2007 3,40,000
2008 3,80,000
2009 1,40,000 (Loss)

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 Showing the working clearly, give the necessary journal entry to record the above change

16 X, Y and Z share profits as 5 : 3 : 2. They decide to share their future profits as 4 : 3 : 3 with [3]
effect from 1st April, 2019. On this date the following revaluations have taken place:

Book Values (₹) Revised Values (₹)

Investments 22,000 25,000
Plant and Machinery 25,000 20,000
Land and Building 40,000 50,000
Outstanding Expenses 5,600 6,000
Sundry Debtors 60,000 50,000
Trade Creditors 70,000 60,000

Pass necessary adjustment entry to be made because of the above changes in the values of assets
and liabilities. However, old values will continue in the books
17 A, B and C are sharing profits and losses in the ratio of 2 : 2 : 1. They decided to share [3]
profit w.e.f. 1st April, 2019 in the ratio of 5 : 3 : 2. They also decided not to change the values of
assets and liabilities in the books of account. The book values and revised values of assets and
liabilities as on the date of change were as follows:

Book values (₹) Revised values (₹)

Machinery 2,50,000 3,00,000
Computers 2,00,000 1,75,000
Sundry Creditors 90,000 75,000
Outstanding Expenses 15,000 25,000

Pass an adjustment entry.

18 A, B and C were partners in a firm sharing profits in the ratio of 3 : 2 : 1. Their Balance Sheet as [5]
on 31st March, 2015 was as follows:

Amount Amount
Liabilities Assets
(₹) (₹)
Creditors 50,000 Land 50,000
Bills Payable 20,000 Building 50,000
General Reserve 30,000 Plant 1,00,000
Capital A/cs: Stock 40,000
A 1,00,000 Debtors 30,000
B 50,000 Bank 5,000
C 25,000 1,75,000
2,75,000 2,75,000

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 From 1st April, 2015, A, B and C decided to share profits equally. For this it was agreed that:
(i) Goodwill of the firm will be valued at ₹ 1,50,000.
(ii) Land will be revalued at ₹ 80,000 and building be depreciated by 6%.
(iii) Creditors of ₹ 6,000 were not likely to be claimed and hence should be written off.
Prepare revaluation account, partners' capital accounts and balance sheet of the reconstituted firm.

19 A and B are partners sharing profits in the ratio of 4 : 3. Their Balance Sheet as at 31st March, [6]
2019 stood as:

Amount Amount
Liabilities Assets
(₹) (₹)
Sundry Creditors 28,000 Cash 20,000
Reserve 42,000 Sundry Debtors 1,20,000
Capital A/cs: Stock 1,40,000
A 2,40,000 Fixed Assets 1,50,000
B 1,20,000 3,60,000
4,30,000 4,30,000

They decided that with effect from 1st April, 2019, they will share profits and losses in the ratio
of 2:1. For this purpose they decided that:
(i) Fixed Assets are to be reduced by 10%.
(ii) A Provision for Doubtful Debts of 6% be made on Sundry Debtors.
(iii) Stock be valued at ₹ 1,90,000.
(iv) An amount of ₹ 3,700 included in Creditors is not likely to be claimed.
Partners decided to record the revised values in the books. However, they do not want to disturb
the Reserve. Capitals of the partners was to be adjusted according to the new ratio by opening
their current account. You are required to pass Journal entries, prepare revaluation account,
capital account of partners and the revised balance sheet.
20 X, Y and Z are partners in a firm sharing profits and losses as 5 : 4 : 3. Their Balance Sheet as at [6]
31st March, 2019 was:
Amount Amount
Liabilities Assets
(₹) (₹)
Sundry Creditors 40,000 Cash at Bank 40,000
Outstanding Expenses 15,000 Sundry Debtors 2,10,000
General Reserve 75,000 Stock 3,00,000
Capital A/cs: Furniture 60,000
X 4,00,000 Plant and Machinery 4,20,000
Y 3,00,000
Z 2,00,000 9,00,000
10,30,000 10,30,000

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 From 1st April, 2019, they agree to alter their profit-sharing ratio as 4 : 3 : 2. It is also decided
that:
(a) Furniture be taken at 80% of its value.
(b) Stock be appreciated by 20%.
(c) Plant and Machinery be valued at ₹ 4,00,000.
(d) Outstanding Expenses be increased by ₹ 13,000.
Partners agreed that altered values are not to be recorded in the books and they also do not want
to distribute the general reserve.
You are required to pass a single Journal entry to give effect to the above. Also, prepare balance
Sheet of the new firm.

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