Plus Two Accountancy Chapter Wise Previous Questions Chapter 3 Reconstitution of a Partnership Firm – Admission of Partner

Kerala Plus Two Accountancy Chapter Wise Previous Questions Chapter 3 Reconstitution of a Partnership Firm – Admission of Partner

Plus Two Accountancy Reconstitution of a Partnership Firm – Admission of Partner 1 Marks Important Questions

Question 1.
While transferring the reserves or accumulated profits of the firm on reconstitution, the account to be – credited is (March 2010)
a) New partner’s capital account
b) Old partner’s capital account
c) All partner’s capital account
Answer:
b or c (Old Partner’s capital a/c or All Partner’s capital a/c)

Question 2.
“Profit available in the Balance sheet at the time of admission of a partner is to be credited to all partners’ capitals in new profit sharing ratio.” – Justify this argument. (June 2010)
Answer:
The statement is wrong, because profit available in the balance sheet at the time of admission of a partner is credited only to old partners capital account in old ratio.

Question 3.
At the time of reconstitution of the firm, the value of machinery is found less by 10%. What journal entry will be passed for giving effect to the above? (June 2010)
Answer:
Revaluation a/c Dr.
To Machinery A/c

Question 4.
At the time of admission of a partner in a firm, unrecorded assets will be (March 2012)
a) Debited to Revaluation Account
b) Credited to Revaluation Account
c) Credited to Asset Account
d) None of the above
Answer:
b) Credited to Revaluation Account

Question 5.
Which of the following case do not result in the re-constitution of a firm? (March 2012)
a) Change in profit sharing ratio
b) Change in the location of business
c) Retirement of a partner
d) Amalgamation of two partnership firms
Answer:
b – Change in location of business

Question 6.
Share of Goodwill brought in cash by the new partner is called (March 2012)
Answer:
Premium / Goodwill / Premium for goodwill

Question 7.
Which one of the following is not an occasion for the reconstitution of a partnership firm? (Say 2013)
a) Admission of a new partner.
b) Retirement of an existing partner
c) Death of an existing partner
d) Dissolution of the firm
Answer:
d) Dissolution of the firm

Question 8.
On the date of admission of Mr. Vivek as an equal partner, Mr. Vimal an existing partner has taken over the Plant and Machinery worth Rs. 10,000 at Rs. 12,000. Identify from the following journal entry to record thisiransaction. (Say 2013) 

i) Vimai’s Capital A/c Dr 12,000
Plant and machinery A/c 10,000
Revaluation A/c 2,000

ii) Vimai’s Capital A/c Dr 12,000
Plant and machinery A/c 12,000

iii) Plant and Machinery A/c Dr 12,000
Vimai’s Capital A/c 12,000

iv) Vimai’s Capital A/c Dr 12,000
Revaluation A/c 12,000
Answer:
i) Vimal’s Capital A/c Dr 12,000
Plant and machinery A/c 10,000
Revaluation A/c 2,000

Question 9.
Which of the following is not an element of reconstitution of partnership? (March 2013)
a) Admission
b) Change in profit sharing
c) Death
d) Dissolution of firm
Answer:
d) Dissolution of firm

Question 10.
Biju and Lijo are partners in a firm sharing profits and losess in the ratio of 5:3. They admit Rajan for 1/6 share. The total goodwill of the firm is Rs. 50,000. Existing goodwill is Rs. 25,000. Find the share of goodwill to be brought in by Rajan.  (March 2013)
Answer:
Goodwill to be brought in by Rajan = 50,000 x 1/6 = 8,333

Question 11.
X, Y and Z are partners in a firm. If ‘B’ is to be admitted as a new partner.  (March 2013)
a) Old partnership has to be dissolved.
b) Old firm has to be dissolved.
c) Both old firm and partnership have to be dissolved.
d) Neither firm nor partnership needs to be dissolved.
Answer:
a) Old partnership has to be dissolved.

Question 12.
Consider the following information and ascertain the value of Goodwill.  (March 2014)
Total Capital Employed Rs. 5,00,000
Normal Rate of Return 8%
Average Profit the last 5 years Rs. 60,000
Remuneration to partners Rs. 15,000
Goodwill is estimated at 3 years purchase of super-profits.
Answer:
Average profit = 60000
Remuneration to partner = 15000
Average actual profit = 60000 – 15000 = 45000
Normal profit = Capital employed x Normal rate of Return
= 500000×8/100 = 40000
Super profit = Average Actual profit – Normal Profit
= 45000 – 40000 = 5000
Goodwill = Super profit x No. of years purchase
= 5000×3 = 15000

Question 13.
Which one of the following term is used to denote a chnage in the relationship among the partners which leads to change in the constitution of partnership?  (March 2014)
i) Amalgamation
ii) Reconstitution
iii) Dissolution
iv) Revaluation
Answer:
ii) Reconstitution

Question 14.
Find the odd one out: (March 2014)
A) Superprofit B) Average Profit
C) Capitalization Method
D) Weighted Capitalisation Method
Answer:
D) Weighted Capitalisation Method

Question 15.
The ratio in which the old partners agree to sacrifice their share of profit in favour of incoming partner is (March 2017)
a) New ratio
b) Old ratio
c) Sacrificing ratio
d) Gaining ratio
Answer:
c) Sacrificing ratio

Question 16.
Sanu and Binu are partners in a firm sharing profit and losses in the ratio of 3:1. They admit Jinu for 3/ 7 share. Calculate the new profit sharing ratio. (March 2017)
Answer:
3:1:3

Plus Two Accountancy Accounting for Not For Profit Organisation 2 Marks Important Questions

Question 17.
Balamony, a Plus Two student, prepared the follow-ing journal entries in connection with the reconstitu-tion of partnership firm.  (March 2009)

(i) For increase in the value of assets.
Revaluation Account Dr.
Asset Account

(ii) For decrease in the value of liability
Liability Account Dr.
Revaluation Account

(iii) For recording unrecorded asset Partner’s
Capital Account Dr.
Revaluation account

(iv) For transferring loss on revaluation on Partner’s
Capital account.
Cash Account Dr.
Old Partner’s Capital Account

After evaluating the above journal entries, make necessary corrections (if any) and rewrite them. (Score:2)
Answer:
a. Asset A/c Dr
To Revaluation A/c

b. Liability A/c Dr
To Revaluaton A/c

c. Asset A/c Dr
To Revaluaton A/c

d. Old Partner’s
Capital A/c Dr
To Revaluaton A/c

Question 18.
A firm runs by Akhil, Nikhii and Mukil earns a net profit of Rs. 12,000/- per year. Normally the firms in same type of business earns at a rate of 10%. If the firm’s total assets are of Rs. 1,50,000/- and external liabilities are for Rs. 50,000, what will be its value of Goodwill?  (June 2009) (Say)
Answer:
Value of goodwill = Total value of business – Net assets
Total value of business
Net Assets = Assets – Liabilities
= 1,50,000 – 50,000 = 1,00,000
Goodwill = 1,20,000 -1,00,000 = 20,000

Question 19.
Merin and Mallu are partners sharing profits in the ratio 3:2. They admit Dillan as a partner for 1 /6th share and he brings Rs.40000 as his capital and could not bring any amount as goodwill. Even then the share of goodwill of Dillan is valued at Rs.10,000/-.  (June 2010)

Pass necessary entries regarding the above.
Answer:
Journal

Note: Since the ratio of the old partner’s does not change, the sacrificing ratio issimilarto old ratio ie. 3:2.
Dillan’s share of goodwill = 10000
Merin’s share of goodwill = 10000 x 3/5 = 6000
Mallu’s share of goodwill = 10000×2/5 = 4000

Question 20.
“At the time of admission of a partner revaluation of assets and liabilities will always benefit old partners”. Is this statement correct? Why?  (March 2010)
Answer:
Yes, when a partner admitted, he acquires the ownership rights of the assets and also makes himself responsible for the firms liabilities. He should not get any benefit from any appreciation in the value of assets or reduction of liabilities nor should he suffer because of any fall or depreciation in the value of assets or -increase of liabilities as on the date of admission. The result of revaluation (May be either profit or loss. It should be credited or debited to Old Partners Capital Account in their old ratio. It must be clearly understood that result of revalution does not concern the new partner, it always goes to old partners.

Question 21.
In the event of admission whether the incoming partner is entitled to the profit on revaluation of assets effected as on the data of admission. Offer your comments.  (March 2011)
Answer:
No. The profit or loss on revaluation should be . transformed to old partners capital account in old profit sharing ratio.

Question 22.
Fill up the empty boxes with correct answers.  (March 2013)

Answer:
I) Assets A/c Dr.
To Revaluation A/c

ii) LiabilityAlc Dr.
To Revaluation a/c.

iii) Asset A/c Dr.
To Revaluation a/c.

iv) Old partners capital a/cl Partners capital a/c Dr.
To Revaluation A/c.

Question 23.
Consider the following information and calculate Goodwill by super profit method.  (Say 2013)
1) Total capital employed
2) Normal Rate of Return 8%
3) Average Profit for the last 5 years Rs. 12,000
4) Remuneration to partners Rs. 3,000
5) Goodwill is estimated at 3 years purchase of super profits.
Answer:
Goodwill = Super profit x No. of years of purchase.
Superprofit = Average profit-Normal profit
Average profit = 12000-3000 (Remuneration) = 9000
Normal profit = Capital x Rate /100
= 100000×8/100 = 8000
Super profit = 9000 – 8000 = 1000
Goodwill = 1000×3 = 3000

Question 24.
On the date of admission of Mr.Baby Raj as an equal partner, Mr. Santhosh an existing partner has taken over the Plant and Machinery worth Rs. 30,000 at Rs. 36,000. The journal entry to record this will be (March 2014)

i) Santhosh’s Capital A/c Dr. Rs. 36,000
Plant and Machinery Rs. 30,000
Revaluation a/c Rs. 6,000

ii) Santhosh’s Capital A/c Dr. Rs. 30,000
Revaluation A/c Dr. Rs. 6,000
Plant and Machinery Rs.36,000

iii) Plant and Machinery Dr. Rs. 36,000
Santhosh Capital A/c Rs. 30,000
Revaluation A/c Rs. 6,000

iv) Santhosh’s Capital A/c Dr. Rs. 36,000
Revaluation A/c Rs.36,000
Answer:
i) Santhosh’s Capital A/c Dr. Rs. 36,000
Plant and Machinery Rs. 30,000
Revaluation a/c Rs. 6,000

Question 25.
General Reserve of ₹ 24,000 and Profit and Loss Account (Debit Balance) of ₹ 6,000 appearing in the balance sheet of partner’s P and Q on the admission of R is to be adjusted. Give the journal entries assuming that P and Q are equal partners. (Say 2016)
Answer:
i) General reserve a/c Dr 24,000
P’s capital a/c Q’s capital a/

ii) P’s capital a/c Dr 3000
Q’s capital a/c Dr 3000
To P/L a/c

Plus Two Accountancy Accounting for Not For Profit Organisation 3 Marks Important Questions

Question 26.
The capital balances of Ram & Gopal at the time of admission of Menon stood as follows: (June 2009) (Say)
Capital (Cr.)
Ram – 25,000/-
Gopal – 15,000/-
Other Relevant information:
General Reserve – 10,000/-
Profit & Loss A/c (Dr.) – 5000/-
Profit on revaluation – 3,850/-
Premium forgoodwill contributed by Menon – 5000/-

Profit sharing ratio of Ram & Gopal before the admission of Menon -3 : 2.
Agreed share of profit to Menon – 1/6.

If Ram & Gopal asked Mr. Menon to bring in sufficient cash for capital on the basis of their capitals and new profit sharing ratio, find the capital to be brought in by Menon.
Answer:
Capital accounts of Ram and Gopal

Old ratio = 3:2
New Partner (Menon)s share = 1/6
Ram’s new ratio = 5/6 x 3/5 = 15/30
Gopal’s new ratio = 5/6 x 2/5 = 10/30
Menon’s share = 1/6 = 5/30
Newratio= 15 : 10 : 5 = 3:2:1
Capitals of Ram and Gopal = 6/6 = 33310 + 20540 = 53850
Total capital = 53850 x 6/5 = 10770 x 6 = 64620
Capital to be brought In by Menon = 64620 – 5380 = 10770

Question 27.
Basheer and Firos started business by contributing capitals in the ratio 3: 2, which is their profit sharing ratio too.
TheirAsset – Liability position as on 31 March 2007 is as shown below:  (June 2009 (Say)
Fixed Assets – 43,000
Current Assets (including cash Rs. 5,000) – 37,000
Current Liabilities – 30,000
They admit James into Partnership on the date of the Balance Sheet for 1 I 6 share, and agreed the following:
Capital to be contributed by James – 20,000
Revalued figures of Assets & Liabilities:
Fixed Assets – 43,200
Current assets excluding cash – 39,000
Current liabilities – 28,500
Unrecorded items: lnvements – 3,000
Repair bill outstanding – 800
Find the revaluation P & L
Answer:
Revaluation

Question 28.
Prepare a revaluation account from the following:  (June 2010)
Assets:
Plant and Machinery – 10000
Furniture – 3000
Patents – 7000
Stock – 3000
Liabilities: Creditors – 15000

The above items were revalued as follows:
a) Fixed assets revalued at 10% less.
b) Stock damaged wholly by a fire occurred and become valueless.
c) Claims received against the loss of value of stock Rs.2000.
d) Repair bill of Rs.1000 is not in the books of accounts remain unpaid.
Answer:
Revaluation a/c

Question 29.
List out the circumstances in which reconstitution of partnership firm can take place. (March 2011)
Answer:
a) Change in the profit sharing ratio of the existing partners
b) Admission of a new partner
c) Retirement of an existing partner
d) Death of a partner.
e) Amalgamation of two partnership firms.

Question 30.
Profits of Amco Ltd. for the year ended 31st March for the last five years were given below: (Say 2011)
Year – Profit
1999 – 25,000
2000 – 40,000
2001 – 75,000
2002 – 35,000
2003 – 45,000
Calculate the value of the Goodwill on the basis of 3 years purchase of the weighted average profit, after weights 1, 2, 3, 4 & 5 respectively to the profit for 1999, 2000, 2001, 2002 & 2003.
Answer:
Goodwill= Weighted Average Profit x No. of years of purchase

Weight Average Profit = \(\frac { 695000 }{ 15 } =\quad 46333\)
Goodwill = 46333 x 3 = 138999

Question 31.
A, B, C are partners in a firm sharing profits and losses in the ratio of 3:2:1, D is admitted into partnership for a %th share in the future profits, which he gets 1/8the form A and 1/8th form B. The total capital of the firm is agreed upon Rs. 1,20,000 and D is to bring in cash equivalent 1/4th of this amount as his capital. The capital of other-partners are to be adjusted in the ratio of their respective shares in the profit and losses. The respective capital of partners after all adjustment have been : A Rs. 40,000, B Rs. 35,000 & C Rs. 30,000. Calculate Final Capital of A, B & C.  (Say 2011)
Answer:
New Ratio

18 : 10 : 8 : 12 → 9 : 5 : 4 : 6 Total Capital = 120000 Balance c/d = Total Capital x New Ratio
A = 120000 x 9/24 = 45000
B = 120000 x 5/24 = 25000
C = 120000 x 4/24 = 20000
D = 120000 x 6/24 = 30000
Final Capital of A, B & C
A = 45000 B = 25000 C = 20000

Question 32.
Aditya and Arjun are partners in a firm, sharing profits/ losses in the ratio of 3 : 2. They admitted Abhishek in the partnership for 1/6th share in future profit. Abhishek brought Rs. 24,000/- as his share of goodwill. Out of this goodwill, half of the amount was withdrawn by Aditya and Arjun. (March 2012)

Pass necessary journal entries in the books of the firm.
Answer:
Journal

Question 33.
The profits of Mahesh and Co. for the last five years were: (March 2013)
2005 – Rs. 35,000
2006 – Rs. 30,000
2007 – Rs. 27,500
2008 – Rs.25,000
2009 – Rs.20,000

The capital employed in the firm is Rs. 5,00,000. You are required to calculate the goodwill at 3 years purchase of super-profits. The normal rate of return on capital employed is 5%.
Answer:
Average Profit = \(\frac { 35000 + 30000 + 27500 + 25000 + 20000 }{ 5 }\)
= 27500
Capital employed = 500000
Normal Profit = Capital employed x Normal Rate of Return
= 500000 x 5/100 = 25000
Super Profit = Average Profit – Normal Profit
= 27500 – 25000 = 2500
Goodwill = Super profit x No. of years purchase
= 2500 x 3 = 7500

Question 34.
Menon and Varma are partners sharing profits and losses in the ratio 2:3. They admit Jyothi for2/5th shares which she acquired equally from Menon and Varma. Calculate the new ratio and sacrificing ratio. (Say 2013)
Answer:
Old ratio = 2:3
Jyothi’s share of profit = 2/5
Menon’s sacrifice = \(\frac { 2 }{ 5 } +\frac { 1 }{ 2 } +\frac { 2 }{ 10 }\)
Varma’s sacrifice = \(\frac { 2 }{ 5 } +\frac { 1 }{ 2 } +\frac { 2 }{ 10 }\)
Menon’s new share = old share – his sacrifice

Question 35.
A business has earned average profits of Rs.1,44,000 during the last few years and the normal rate of return in similar type of business is 12%. The net assets of the firm are Rs, 8,20,000. Arun dnd company are decided to acquire the business. Help him to calculate the goodwill of the business by capitalization method. (March 2014)
Answer:
Goodwill calculation by Capitalisation of Averacie profit
Goodwill = Total value of the business – Net assets

Question 36.
A and B are partners in a firm sharing profits and losses in the ratio of 3 : 2. They decide to admit ‘C’ into partnership with 1/4 share in profits. C brings in Rs.30,000 for capital and the requisite amount of premium in cash. The goodwill of the firm is valued at Rs.20,000. The new profit sharing ratio is 2.: 1:1. A and B withdraw their share of goodwill. Give necessary journal entries. (March 2016)
Answer:
The good will of the firm = 20,000
C’s share of good will = 20,000 x 1/4 = 5000
Old ratio = 3:2
New ratio = 2:1:1
A’s sacrifice = \(\frac { 3 }{ 5 } +\frac { 2 }{ 4 } +\frac { 12-10 }{ 20 } =\quad \frac { 2 }{ 20 }\)
B’s sacrifice = \(\frac { 2 }{ 5 } -\frac { 1 }{ 4 } =\frac { 8-5 }{ 20 } =\frac { 3 }{ 20 }\)
Sacrificing ratio: 2:3

Journal Entries

Question 37.
Anju and Manju are partners sharing profits in the ratio of 2:1. Sanju is admitted into the firm for 1/4 share of profits. Sanju brings in Rs.20,000 in respect of his capital. The capitals of old partners Anju and Manju, after all adjustments relating to goodwill, revaluation of assets and liabilities etc., are Rs. (March 2016)

45.0 and Rs.15,000 respectively. It is agreed that partners capitals should be according to the new profit sharing ratio.

Determine the new capitals of Anju and Manju and record the necessary journal entries assuming that the partner whose capital falls short, brings in the amount of deficiency and the partner who has an excess, withdraws the excess amount.
Answer:
New ratio = Balance share x old ratio
Anju’s new share \(=3 / 4 \times \frac{2}{3}=\frac{6}{12}\)
Manju’s new share \(=\frac{3}{4} \times \frac{1}{3}=\frac{3}{12}\)
Sanju’s share of profit \(=\frac{1}{4}=\frac{3}{12}\)
New ratio = 6:3:3 = 2:1:1
Total capital of the new firm = 20,000 x 4/1 = 80,000
Anju’s new capital = 80,000 x 2/4 = 40,000
Manju’s new capital = 80,000 x 1/4 = 20,000
The existing capital of Anju = 45000
Excess (Anju) = 5000
The existing capital of maju = 15,000
Deficit (Maju) = 5000

Journal Entries

Question 38.
The capital of the firm of Mohan and Rissam is Rs. 75,0 and the rate of interest is 15%. Annual salary to partners is Rs. 5,000 each. The profit forthe last 3 years were Rs.36,000,38,000 and 31,000. Goodwill is to be valued at 2 years purchase of the last 3 years average super profits. Calculate goodwill of the firm. (March 2017)
Answer:
Goodwill = Super profit x No. of years purchase.
Super profit = Actual /Average profit – Normal Profit
Average profit = \(\frac{36,000+38,000+31,000}{3}\)
= 35,000
Normal profit = Interest on capital + Partner’s salary

Plus Two Accountancy Accounting for Not For Profit Organisation 5 Marks Important Questions

Question 39.
Suma and Josephine carried on business in partnership since 1995 sharing profits and losses in the ratio of 2:1 respectively. They admitted John on 1st April, 1999 for 2/7 share. The actual value of goodwill, however, on that date was Rs. 21,000. John contributed the following assets towards payment of his capital and goodwill. (March 2010)

Cash – Rs. 1,000
Sundry Debtors – Rs. 5,000
Stock – Rs. 6,000 and
Goodwill – Rs. 5,000

Pass necessary journal entries to give effect to the above. Also give the new profit sharing ratio of the new partners.

Calculation of New Profit sharing ratio Old ratio = 2:1
New partners share of profit = 2/7
New ratio = Old ratio x Balance share
New ratio of Suma = 2/3 x 5/7 = 10/21
New ratio of Josephine = 1 /3 x 5/7 = 5/21
John’s ratio = 2/7 = 6/21
New ratio = 10 : 5 : 6

Journal

Question 40.
M and N are partners sharing profits and losses in the ratio of 2:1. Their Balance Sheet as on 31st December 2010) was as follows: (March 2012)

Balance Sheet

‘P’ is admitted into the firm with %th share in profits on the following terms.
a) Market value of Investments are to be taken at Rs. 4,500.
b) Claim on account of workmen’s compensation is estimated at Rs. 250.
c) Accrued Income not appearing in the books Rs. 100.
d) Building were found undervalued by Rs. 5,000.
e) Patents should be written off
f) Provision for doubtful debts be increased to 10% of debtors
g) P bring Rs. 30,000 as capital and Rs. 10,000 as his share of goodwill.

Pass Journal entries and prepare the Revaluation Account and ascertain the revaluation profit.
Answer:
Journal

Revaluation A/c

Qn. 41.
Violet’ and indigo’ are partners in a flim shanng proirts and losses in the ratio of 5:3 with a capital of Rs. 45,000 and Rs. 35,000 respectively. They admit ‘blue’ as a partner and the new profits sharing ratio becomes 5:3:2. Blue is asked to contribute to proportionate capital. (March 2013)

a) Calculate the amount of capital to be contributed by ‘Blue’.
b) What adjustments are to be made in the capitals of ‘Violet’ and ‘Indigo’ if it is agreed that the capitals of Violet and Indigo, as between themselves, are also to be adjusted in profit sharing ratio by either paying in or withdrawing cash?

Hint: Calculate the total capital of the firm. Then find out the shortage or surplus in the capitals of ‘Violet’ and ‘Indigo’.
Answer:
Total capital of violet and Indigo = 45000 + 35000 = 80000

Question 42.
P & Q are partners sharing profits and losses in the ratio of 3:2. On 1st Jan. 2012) they admitted ‘R’ into the firm. ‘R’ brought in Rs. 2,00,000 for his capital, but he was not in a position to bring his share of goodwill. The goodwill of the firm was valued at Rs. 3.0. 000. Existing goodwill in the book is for Rs. 6.0. 000. The new profit sharing ratio is 2:1:1. Pass necessary entries at the time of admission. (March 2013)
Answer:
Sacrificing ratio = old ratio – new ratio
\(P’s sacrifice =3 /{ }_{5}-2 / 4=2 / 20
Q’s sacrifice =2 /{ }_{6}-1 /{ }_{4}={ }^{3} /{ }_{20}\)
R’s ratio = 1/4
Sacrificing ratio = 2:3
R’s share of goodwill = 300000 x 1/4 = 75000

Question 43.
Anju and Manju were in partnership, who were sharing profits and losses equally. Their Balance Sheet as on 31 -03-2012 was as follows : (Say 2013)

Balance Sheet as on 31-03-2012

Sanju is admitted as a partner on 31-03-2012) on the following terms.
a) Sanju will bring in Rs. 40,000 as his capital
b) Plant and Machinery will be increased by Rs. 5,000
c) Furniture should be appreciated by 20%
d) Stock should be reduced by Rs. 3,000
e) Creditors be reduced by Rs. 1000
Answer:
Revaluation A/c

Partners Capital A/c

Question 44.
J and K are partners in a firm, sharing profit and losses in the ratio of 3:2. (March 2017)

Balance sheet of J & K as on 1st April, 2016

L is admitted on the following terms:
1) L will bring Rs. 15,000 as capital and Rs.5,000 as premium for goodwill for 1/6 share.
2) The value of stock is reduced by 10% and plant and machinery increased by 5%.
3) Investment worth Rs.1,500 (not mentioned in the Balance Sheet) is to be taken into account. Prepare revaluation account and capital account of partners.
Answer:
Revaluation A/c

Plus Two Accountancy Accounting for Not For Profit Organisation 8 Marks Important Questions

Question 45.
Asif, Biju and Britto trading in partnership and sharing profits and losses in the proportion of 1/2,1/3 and 1/ 6 respectively desire to keep up a working partner when their balance sheet stood as follows: (March 2009)

They agreed to admit Pradeep into partnership and give him 1/10 share on the following terms.
(i) That Pradeep should bring in Rs. 30,000 as good-will and Rs. 1,28,000 as his capital.
(ii) That machinery is depreciated at 12%.
(iii) That stock be revalued at Rs. 2,61,000.
(iv) That a reserve of 5% be created fordoubtful debts.
(v) That the value of land and buildings be brought upto Rs. 6,20,000.
(vi) That after making the above adjustments the capital accounts of the old partners be adjusted on the basis of proportion of Pradeep’s Capital to his share in the business, (i.e. actual cash to be paid off or to be brought in by old partners, as the case (May be)

Prepare necessary ledger accounts and the balance sheet of the firm as newly constituted. Show your workings regarding determination of new profit shar-ing ratio and capital balances.

Answer:
(a) Revaluation Account

Capital Accounts

New Ratio = 9:6:3:2
Total Capital = 12,80,000

Balance Sheet

Question 46.
The Balance Sheet of Sheena and Shyja who were sharing profits in the ratio of 5:3 respectively as on 31st March, 2007 was as follows: (March 2009)

On the above date, Bindu was admitted on the fol-lowing terms:
(a) Bindu was to get 1/5 share in the profits.
(b) Bindu was to pay Rs. 50,000 as Capital and Rs. 16,0 for her share of goodwill.
(c) Machinery was to be depreciated by 10% and buildings was to be appreciated by 20%.
(d) Stock was revalued at 25% above cost. It was to be brought into the books of the new firm at cost price..
(e) There was a liability for repairs to furniture amounting to Rs. 600, the same was to be recorded in books.
(f) Capital accounts of the old partners were to be adjusted in the new profit sharing ratio by open-ing the necessary current accounts.

Prepare Revaluation Account, Capital Accounts and the initial Balance Sheet of the new firm. Scores:8
Answer:
Revaluation Ale

Capital Account

Balance Sheet

Question 47.
Vinu and Sonu are in partnership sharing in proportion of 3/5 and 2/5 respectively. Their balance sheet as on 31-03-2009) stood as under: (March 2011)

They admit Minu for 1/3 share of the firm upon the condition that she is to pay Rs. 1,000 for goodwill and sufficient capital to give her 1/3 share of the total capital of the new firm. Bad dept provision is to be reduced to Rs. 100, that the stock be revalued at Rs. 2,000 and plant be revalued at Rs. 500.

Pass journal entries to give effect to the above and show Balance Sheet of the new firm.
Answer:
Journal

Balance Sheet

Note:
Sacrificing ratio = 3: 2
New ratio calculation = Balance share x old ratio

Calculation of capital to be brouaht in by Minu based on old partners capital account.
Vinu’s capital after adjustment = 2990
Sonu’s capital after adjustment = 1660
Total capital of Vinu and Sonu = 4650
For 2/3 share in profit, capital required is = 4650
Therefore, total capital of the new firm should be

Question 48.
Sachin and Ganguly are partners in a firm sharing profits and losses equally. (June 2012)

The Balance Sheet on 31 st (March 2008 is given below:

On this date, they admitted Dravid as partner on the following terms:
a) Dravid should bring Rs. 20000 as capital for 1/3 share and Rs.10000 for goodwill.
b) Land and Buildings is revalued at Rs.100000 and Stock at 10% less than book value.
c) Debtors be provided Rs.2500 for doubtful debts. Prepare Revaluation a/c, Capital a/cs and Bal-ance sheet after the admission of Dravid.
Answer:
Revaluation a/c

Capital A/c

Balance sheet

Question 49.
Following is the Balance Sheet of A and B who were sharing profits in the ratio of 3 : 2. (March 2012)

Balance Sheet as on 1st July 2009

On that day C is admitted into the partnership on the following terms:
a) C should bring Rs. 40,000 as capital and Rs. 10,0 as premium for goodwill for 1/6th share of future profit.
b) Value of plant and machinery be reduced by 10%.
c) Stock in trade is revalued at Rs. 30,000.
d) Value of furniture is increased by Rs. 4,000.
e) It was found that creditors included a sum of Rs. 3,000 which was not to be paid.
f) A provision for doubtful debt is to be created on sundry debtors at 5% and Rs. 1,600 is to be created in respect of outstanding printing bill.

Show required journal entries and prepare Revalua-tion and Capital Accounts of Partners.
Answer:
Journal

Revaluation A/c Dr

Capital A/c

Question 50.
Given below is the Balance sheet of Jacob and Joseph who are sharing profits in the ratio of 3:2 as on March 31st 2011.

James is admitted as a new partner on the above date on the following terms: (Say 2013)
a) James will bring Rs.10000 for his capital and the necessary amount of premium in cash for 2/7th share in future profits. The goodwill of the firm has been valued at Rs. 140000.
b) Stock revalued at Rs. 70,000.
c) Write down plant and machinery by 10%.
d) Provision for bad and doubtful debts should be increased to Rs. 3000
e) Unexpired insurance of Rs. 1500 should be brought into record.

Record the necessary journal entries and prepare Revaluation Account and Partners Capital Account and show the Balance Sheet after the admission of James.
Answer:
Revaluation A/c

Capital A/c

Balance sheet

Old ratio = 3:2
James’ share of profit = 2/7
Sacrificing ratio = 3:2
The Goodwill of the firm = 140000
James’ share of goodwill = 140000 x 2/7 = 40000
Share of Goodwill credited to Jacob’s capital a/c = 40000 x 3/5 = 24000
Share of Goodwill credited to Joseph’s capital a/c = 40000 x 2/5 = 16000

Question 51.
Aneesh and Akhil were in partnership, who were sharing profits and losses equally. Their Balance Sheet as on 31.03.2013) was as follows: (March 2014)

Balance Sheet as on 31.03.2013

Ajith is admitted as a partner on the date of the Balance Sheet on the following terms:

• Ajith will bring in Rs. 80000 as his capital.
• Plant and Machinery will be increased by Rs. 10,000
• Furniture should be appreciated by 20%.
• Stock should be reduced by Rs. 6,000.
• A provision for bad and doubtful debts is to be created at 5% on debtors.
• Creditors be reduced by Rs. 2,000.

Prepare Revaluation Account and Capital Accounts.
Answer:
Revaluation A/c

Capital A/c

Balance Sheet

Question 52.
Salim and Karim are partners in a firm sharing Profit and Losses equally. Their Balance sheet as on 31st (March 2013) was as follows: (March 2014)

On this day they admitted Rahim as a partner on the following terms:
a) Rahim should bring Rs.20,000 as capital for 1/3 share and Rs. 10,000 for goodwill.
b) Land and Buildings is revalued at Rs.100000 and stock at 10% less than book value.
c) Debtors are provided Rs.2,500 for Doubtful debts. Give journal entries and prepare Revaluation Account, Capital Account and Balance Sheet afterthe admission of Rahim.
Answer:
Journal

Revaluation A/c

Capital A/c

Balance Sheet

Question 53.
a) Dany, Johny and Shony are in partnership, sharing profits in the proportion of 4:3:3 respectively. The partnership agreement states that the goodwill of the firm shall be equal to three times of the average profits of the four years to the date of change. No goodwill account is to be maintained in the books. Profits of the firm have been: (Say 2016)
2001 – 12,000
2002 – 9,000
2003 – 15,000
2004 – 16,000
Glady was admitted in to the partnership on 1-01-2005 and the new profit sharing ratios were : Dany 3/10, Johny 3/10, Shony 2/10, and Gladyio 2/10.

Glady brought in to the partnership a Capital of 30,000. The Capital account balances of the old partners on 01-01-2005, were:

Dany ₹ 40,000
Johny ₹ 40,000
Shony ₹ 30,000

You are required to show the Capital accounts of the partners after the admission of Glady.
Answer:
Calculation of good will
Good will = Average profit x 3 years purchase Average Profit

Question 54.
A and B sharing profits and losses in the ratio of 3:2, admit ‘C’ as a partner who is asked to contribute ₹ 30,000 as capital for – share in the future profits of the firm. A and B have capitals of ₹ 60,000 and ₹ 25,000 respectively, after making all adjustments. It is agreed that capital contribution of each partner will be in the profit-sharing ratio taking ‘C’s contribution as basis.Any excess or deficit should be adjusted in cash. Calculate the amounts to be brought in by, or to be paid off to A and B. Also give journal entries for the above adjustments. (Say 2016)
Answer:
Total capital of the firm = 30,000 x 4 = 1,20,000
Old ratio = 3:2,

New capital of B = 1 ,20,000 x 6/20 = 36OOO
Existing capital of A = 60,000
A has surplus = 60,000 – 54000 = 6000
Existing capital of B = 25,000
B has deficit = 25000 – 36000 = 11,000

Journal Entry

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