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“PARTNERSHIP ACCOUNTS”
Q.1. RTP May 2018, November 2019 & May 2020 – Valuation of Goodwill
J and K are partners in a firm. Their capital are J Rs. 3,00,000 and K Rs. 2,00,000. During the year
ended 31st March, 2017 the firm earned a profit of Rs. 1,50,000. Assuming that the normal rate of
return is 20%, calculate the value of goodwill on the firm:
(i) By CapitalizationMethod; and
(ii) By Super Profit Method if the goodwill is valued at 2 years’ purchase of Super Profit.

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Q.2. RTP November 2018 & November 2019 – Valuation of Goodwill
Vasudevan, Sunderarajan and Agrawal are in partnership sharing profit and losses at the ratio of 2:5:3. The
Balance Sheet of the partnership as on 31.12.2017 was as follows:
Balance Sheet of M/s Vasudevan, Sunderarajan & Agrawal
LIABILITIES AMOUNT ASSETS AMOUNT
Capital Accounts: Sundry Fixed Assets 5,00,000
Vasudevan 85,000 Inventory 1,00,000
Sunderarajan 3,15,000 Trade receivables 50,000
Agrawal 2,25,000 Bank 5,000
Trade payables 30,000
TOTAL 6,55,000 TOTAL 6,55,000
The partnership earned profit Rs. 2,00,000 in 2017and the partners withdrew Rs. 1,50,000 during the year.
Normal rate of return 30%. You are required to calculate the value of goodwill on the basis of 5 years'
purchase of super profit. For this purpose calculate super profit using average capital employed.

Q.3. RTP May 2019 – Valuation of Goodwill

The profits and losses for the previous years are: 2015 Profit Rs. 10,000, 2016 Loss Rs. 17,000, 2017
Profit Rs. 50,000, 2018 Profit Rs. 75,000. The average Capital employed in the business is Rs. 2,00,000.
The rate of interest expected from capital invested is 10%. The remuneration from alternative
employment of the proprietorRs. 6,000 p.a. Calculate the value of goodwill on the basis of 2 years’
purchases of Super Profits based on the average of 3 years.

Q.4. RTP May 2020 – Admission of a Partner

Dinesh, Ramesh and Naresh are partners in a firm sharing profits and losses in the ratio of 3:2:1. Their
Balance Sheet as on 31stMarch, 2018 is as below:
LIABILITIES AMOUNT ASSETS AMOUNT
Trade payables 22,500 Land & Building 37,000
Outstanding Liabilities 2,200 Furniture & Fixtures 7,200
General Reserve 7,800 Closing Stock 12,600
Capital Accounts: Trade Receivables 10,700
Dinesh 15,000 Cash in Hand 2,800
Ramesh 15,000 Cash at Bank 2,200
Naresh 10,000
TOTAL 72,500 TOTAL 72,500
The partners have agreed to take Suresh as a partner with effect from 1 April, 2018 on the following
st

items:
(i) Suresh shall bring Rs. 8,000 towards his capital.
(ii) The value of stock to be increased to Rs. 14,000 and Furniture & Fixtures to be depreciated by
10%.
(iii) Provision for bad and doubtful debts should be provided at 5% of the trade receivables.
(iv) The value of Land & Buildings to be increased by Rs. 5,600 and the value of the goodwill be fixed at
Rs. 18,000.
(v) The new profit sharing ratio shall be divided equally among the partners. The outstanding liabilities
include Rs. 700 due to Ram which has been paid by Dinesh. Necessary entries were not made in
the books.
Prepare (i) Revaluation Account, (ii) Capital Accounts of the partners, (iii) Balance Sheet of the firm
after admission of Suresh.
“पढ़ते रहो, सीखते रहो, आगे बढ़ते रहो, क्ोोंकि पढ़ना बोंद तो सीखना बोंद और सीखना बोंद तो आगे बढ़ना बोंद।”
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Q.5. RTP May 2018 – Retirement of a Partner
On 31st March, 2017, the Balance Sheet of P, Q and R sharing profits and losses in proportion to their Capital
stood as below:
LIABILITIES AMOUNT ASSETS AMOUNT
Capital Accounts: Land & Building 30,000
Mr. P 20,000 Plant & Machinery 20,000
Mr. Q 30,000 Stock of Goods 12,000
Mr. R 20,000 Sundry Debtors 11,000
Sundry Creditors 10,000 Cash & Bank Balances 7,000
TOTAL 80,000 TOTAL 80,000

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On 1stApril, 2017, P desired to retire from the firm and remaining partners decided to carry on the
business. It was agreed to revalue the assets and liabilities on that date on the following basis:
(i) Land and Building be appreciated by 20%.
(ii) Plant and Machinery be depreciated by 30%.
(iii) Stock of goods to be valued at Rs. 10,000.
(iv) Old credit balances of Sundry creditors, Rs. 2,000 to be written back.
(iv) Provisions for bad debts should be provided at 5%.
(v) Joint life policy of the partners surrendered and cash obtained Rs. 7,550.
(vi) Goodwill of the entire firm is valued at Rs. 14,000 and P’s share of the goodwill is adjusted in
the A/cs of Q and R, who would share the future profits equally. No goodwill account being
raised.
(vii) The total capital of the firm is to be the same as before retirement. Individual capital is in their profit
sharing ratio.
(viii) Amount due to Mr. P is to be settled on the following basis: 50% on retirement and the balance 50%
within one year.
Prepare (a) Revaluation account, (b) The Capital accounts of the partners, (c) Cash account and (d)
Balance Sheet of the new firm M/s Q & R as on 1.04.2017.

Q.6. RTP November 2018 – Simultaneous Admission + Retirement

Neha & Co. is a partnership firm with partners Mr.P, Mr. Q and Mr. R, sharing profits and losses in the
ratio of 10:6:4. The balance sheet of the firm as at 31st March, 2018 is as under:
LIABILITIES AMOUNT ASSETS AMOUNT
Capital Accounts: Land 10,000
Mr. P 80,000 Building 2,00,000
Mr. Q 20,000 Plant & Machinery 1,30,000
Mr. R 30,000 Furniture 43,000
Reserves 20,000 Investments 12,000
(Unappropriated Profits)
Long Term Debt 3,00,000 Inventories 1,30,000
Bank Overdraft 44,000 Trade Receivables 1,39,000
Trade payables 1,70,000
TOTAL 6,64,000 TOTAL 6,64,000
It was mutually agreed that Mr. Q will retire from partnership and in his place Mr. T will be admitted as a
partner with effect from 1stApril, 2018. For this purpose, the following adjustments are to be made:
(a) Goodwill is to be valued at Rs. 1 lakh but the same will not appear as an asset in the books of the
reconstituted firm.
(b) Buildings and plant and machinery are to be depreciated by 5% and 20% respectively.
Investments are to be taken over by the retiring partner at Rs. 15,000. Provision of 20% is to be
made on Trade receivables to cover doubtful debts.
(c) In the reconstituted firm, the total capital will be Rs. 2 lakhs which will be contributed by Mr. P, Mr. R
and Mr. T in their new profit sharing ratio, which is 2:2:1.(i)The surplus funds, if any, will be used for
repaying bank overdraft.(ii)The amount due to retiring partner shall be transferred to his loan
account.
Required: Prepare (a)Revaluation account; (b)Partners’ capital accounts; (c)Bank account; and (d)Balance
sheet of the reconstituted firm as on 1st April, 2018.

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Q.7. ICAI Study Material Illustration-1 – Dissolution of Partnership Firm
X, Y, and Z are partners of the firm XYZ and Co., sharing Profits and Losses in the ratio of 4: 3:
2. Following is the Balance Sheet of the firm as on 31 st March, 2022:
LIABILITIES AMOUNT ASSETS AMOUNT
Partner’s Capitals: Fixed Assets 5,00,000
X 4,00,000 Stock in Trade 3,00,000
Y 3,00,000 Sundry Debtors 5,00,000
Z 2,00,000 Cash in Hand 10,000
General Reserve 90,000
Sundry Creditors 3,20,000

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TOTAL 13,10,000 TOTAL 13,10,000
Partners of the firm decided to dissolve the firm on the above-said date.
Fixed assets realized Rs. 5,20,000 and book debts Rs. 4,40,000. Stocks were valued at Rs. 2,50,000 and it
was taken over by partner Y. Creditors allowed discount of 5% and the expenses of realization amounted
to Rs. 6,000.
You are required to prepare:
(i) Realization account;
(ii) Partners capital account; and
(iii) Cash account.

Q.8. ICAI Study Material Illustration-7 – Dissolution of Partnership Firm – Piecemeal Dissolution
The following is the Balance Sheet of A, B, C on 31st December, 2022 when they decided to dissolve the
partnership:
LIABILITIES AMOUNT ASSETS AMOUNT
Creditors 2,000 Sundry Assets 48,500
A’s Loan 5,000 Cash 500
Capital Accounts -
A 15,000
B 8,000
C 9,000
TOTAL 49,000 TOTAL 49,000
The assets realized the following sums in installments:
I Rs. 1,000
II Rs. 3,000
III Rs. 3,900
IV Rs. 6,000
V Rs. 20,100
TOTAL Rs. 34,000
The expenses of realization were expected to be Rs. 500 but ultimately amounted to Rs. 400 only. Show
how at each stage the cash received should be distributed between partners. They share profits in the ratio
of 2:2:1.

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“पढ़ते रहो, सीखते रहो, आगे बढ़ते रहो, क्ोोंकि पढ़ना बोंद तो सीखना बोंद और सीखना बोंद तो आगे बढ़ना बोंद।”