CBSE Class 12 Accountancy Retirement or Death of a Partner MCQs Set C

Question. A, B and C are equal partners in a firm. B retires and the remaining partners decide to share the profits of the new firm in the ratio of 5 : 4. Gaining ratio will be :
(a) 1 :1
(b) 1 : 2
(c) 2 : 1
(d) 5 : 4

Answer : C

Question. A, B and C are partners sharing profits and losses in the ratio of 3 : 2 :1. On 1.3.2016 C died. The average profits of the firm for last four years were ₹ 72,000 Books are closed on 31st December. C’s share of profit till the date of his death will be:
(a) ₹ 2,000
(b) ₹ 12,000
(c) ₹ 1,400
(d) ₹ 24,000

Answer : A

Question. On retirement of a partner, goodwill will be credited to the Capital Account of:
(a) Retiring Partner
(b) Remaining Partners
(c) All Partners
(d) None of the options

Answer : A

Question.Retiring partner is compensated by the continuing partners in their
(a) Gaining Ratio.
(b) Capital Ratio.
(c) Sacrificing Ratio.
(d) Profit-sharing Ratio.

Answer : A

Question. A, B and C are equal partners in a firm. B retires and the remaining partners decide to share the profits of the new firm in the ratio of 5 : 4. Gaining ratio will be :
(a) 1 :1
(b) 1 : 2
(c) 2 : 1
(d) 5 : 4

Answer : C

Question.A, B and C are partners sharing profit or loss in the ratio of 3 : 2 : 1. B retires and after B’s retirement A and C agreed to share profit or loss in the ratio of 3 : 2 in future. Their gaining ratio will be :
(a) 3 : 1
(b) 1 : 3
(c) 3:7
(d) None of the options

Answer : C

Question.A, B and C are partners sharing profit or loss in the ratio of 4 : 3 : 2. C retires and after C’s retirement A and B agreed to share profit or loss in the ratio of 4 : 3 in future. Their gaining ratio will be :
(a) 3 : 2
(b) 4 : 3
(c) 3 : 4
(d) 1 : 1

Answer : B

Question. Sacrificing ratio is used to distribute —————— in case of admission of a partner.
(a) Goodwill
(b) Revaluation Profit or Loss
(c) Profit and Loss Account (Credit Balance)
(d) Both b and c

Answer : A

Question. Himanshu and Naman share profits & losses equally. Their capitals were Rs.1,20,000 and Rs. 80,000 respectively. There was also a balance of Rs. 60,000 in General reserve and revaluation gain amounted to Rs. 15,000. They admit friend Ashish with 1/5 share. Ashish brings Rs.90,000 as capital. Calculate the amount of goodwill of the firm.
(a) Rs.1,00,000
(b) Rs. 85,000
(c) Rs.20,000
(d) None of the options

Answer : B

Question. Yash and Manan are partners sharing profits in the ratio of 2:1. They admit Kushagra into partnership for 25% share of profit. Kushagra acquired the share from old partners in the ratio of 3:2. The new profit sharing ratio will be:
(a) 14:31:15
(b) 3:2:1
(c) 31:14:15
(d) 2:3:1

Answer : C

Question. Aryaman and Bholu are partners sharing profit and losses in ratio of 5:3. Chirag is admitted for 1/4th share. On the date of reconstitution, the debtors stood at Rs 40,000, bill receivable stood at Rs. 10,000 and the provision for doubtful debts appeared at Rs. 4000. A bill receivable, of Rs 10,000 which was discounted from the bank, earlier has been reported to be dishonored. The firm has sold, the debtor so arising to a debt collection agency at a loss of 40%. If bad debts now have arisen for Rs 6,000 and firm decides to maintain provisions at same rate as before then amount of Provision to be debited to Revaluation Account would be:
(a) Rs 4,400
(b)Rs 4,000
(c) Rs.3,400
(d) None of the options

Answer : C

Question. Revaluation Account is a ———— Account.
(a) Real
(b) Nominal
(c) Personal
(d) Liability

Answer : B

Question. Sacrificing ratio is calculated because:
(a) Profit shown by Revaluation Account can be credited to sacrificing partners
(b) Goodwill brought in by the incoming partner can be credited to the new partner
(c) Goodwill brought in by the incoming partner can be credited to the sacrificing partners
(d) Both a and c

Answer : C

Question. Gaining ratio is used to distribute —————— in case of retirement of a partner.
(a) Goodwill
(b) Revaluation Profit or Loss
(c) Profit and Loss Account (Credit Balance)
(d) Both b and c

Answer : A

Question. X, Y and Z are partners in a firm. Y retires and his claim including his capital and his share of goodwill is R. 1,20,000. He is paid partly in cash and partly in kind. A vehicle at Rs. 60,000 unrecorded in the books of the firm and the balance in cash is given to him to settle his account. The amount of cash to be paid to Y will be:
(a) Rs. 80,000
(b) Rs. 60,000
(c) Rs. 40,000
(d) Rs. 30,000

Answer : A

Question. X, Y and Z were partners in a firm sharing profits in the ratio of 3 : 2 : 1. X retired and the new profit sharing ratio between Yand Z will be 5 : 4. On Xs retirement the goodwill of the firm was valued at ₹54,000. Journal entry will be :
(a) Y’s Capital A/c Dr. 24,000 Z’s Capital A/c Dr. 30,000 To X’s Capital A/c 54,000
(b) Y’s Capital A/c Dr. 15,000 Z’s Capital A/c Dr. 12,000 To X’s Capital A/c 27,000
(c) Y’s Capital A/c Dr. 12,000 Z’s Capital A/c Dr. 15,000 To X’s Capital A/c 27,000
(d) X’s Capital A/c Dr. 27,000 To Y’s Capital A/c 12,000 To Z’s Capital A/c 15,000

Answer : C

Question. At the time of retirement of a partner, if goodwill appears in the balance sheet, it must be written off, the capital accounts of all partners are debited in
(a) None of the options
(b) The new profit sharing ratio
(c) The capital ratio
(d) The old profit sharing ratio

Answer : D

Question. A, B and C were partners sharing profits and losses in the ratio of 2 : 2 : 1. Books are closed on 31st March every year. C dies on 5th November, 2018. Under the partnership deed, the executors of the deceased partner are entitled to his share of profit to the date of death, calculated on the basis of last year’s profit. Profit for the year ended 31 st March, 2018 was Rs.2,40,000. C s share of profit will be :
(a) Rs.28,000
(b) Rs.32,000
(c) Rs.28,800
(d) Rs.48,000

Answer : C

Question.How goodwill is recorded on the retirement of a partner?
(a) Remaining Partner’s Capital A/cs Dr. (In Gaining Ratio) To Retiring Partner’s Capital A/c (with his share of goodwill)
(b) Remaining Partner’s Capital A/cs Dr. (In New Ratio) To Retiring Partner’s Capital A/c (with his share of goodwill)
(c) Goodwill A/c Dr. To All Partner’s Capital A/cs (In Old Ratio)
(d) Goodwill A/c Dr. To Retiring Partner’s Capital A/c (with his share)

Answer : A

Question.Choose the odd one:
(a) Revaluation Account
(b) Realisation of assets.
(c) Adjustment of goodwill.
(d) Gaining ratio.

Answer : B

Question.P, Q and R are partners sharing profits in the ratio of 4 : 3 : 2.Q retires and his share was taken up by P and R in the ratio 3 : 2. New profit sharing ratio will be:
(a) 16 : 29
(b) 29 : 16
(c) 3 : 2
(d) 2 : 3

Answer : B

Question. Premium brought by newly admitted partner should be:
(a) Credited to sacrificing partners
(b) Credited to all partners in the new profit sharing ratio
(c) Credited to old partners in the old profit sharing ratio
(d) Credited to only gaining partners

Answer : A

Question. The firm of P, Q and R with profit sharing ratio of 6:3:1, had the balance in General Reserve Account amounting Rs. 1,80,000. S joined as a new partner and the new profit sharing ratio was decided to be 3:3:3:1. Partners decide to keep the General Reserve unchanged in the books of accounts. The effect will be:
(a) P will be credited by Rs. 54,000
(b) P will be debited by Rs. 54,000
(c) P will be credited by Rs. 36.000
(d) P will be credited by Rs. 36,000

Answer : A

Question. A and B were partners. They shared profits as A- ½; B- 1/3 and carried to reserve 1/6. B died. The balance of reserve on the date of death was Rs. 30,000. B’s share of reserve will be:
(a) Rs. 10,000
(b) Rs. 8,000
(c) Rs. 12,000
(d) Rs. 9,000

Answer : C

Question. A, Band Care partners sharing profit and losses in the ratio of 2:2:1.B died, at that time goodwill of the firm valued at Rs. 30,000. What contribution has to be made by A and C in order to pay B’s Executor?
(a) Rs. 20,000 and Rs. 10,000.
(b) Rs. 15,000 and Rs. 15,000.
(c) Rs. 8,000 and Rs. 4,000.
(d) Rs. 6,000 and Rs. 6,000.

Answer : C

Question.P,Q and R were partners sharing profits in the ratio of their Capital contribution which were Rs.6,00,000; Rs.4,00,000 and Rs.5,00,000 respectively. Their books are closed on 31st March every year. P dies on 24th August, 2018. Under the partnership deed, deceased partner is entitled to his share of profit/loss to the date of death based on the average profits of preceding three years. Profits were 2015 Rs.50,000; 2016 Rs. 1,20,000 (Loss); 2017 Rs.30,000 and 2018 Rs.60,000. P’s share of profit/loss will be :
(a) Rs.3,200
(b) Rs.6,400
(c) Rs. 12,000
(d) Rs. 4,800

Answer : D

Question.On the retirement of Hari from the firm of Hari, Ram and Sharma, the Balance Sheet showed a debit balance of Rs. 12,000 in the Profit and Loss Account. For calculating the amount payable to Hari, this balance will be transferred
(a) to the credit of the Capital Accounts of Hari, Ram and Sharma equally.
(b) to the debit of the Capital Accounts of Hari, Ram and Sharma equally.
(c) to the debit of the Capital Accounts of Ram and Sharma equally.
(d) to the credit of the Capital Accounts of Ram and Sharma equally.

Answer : B

Question. Heena and Sudha share Profit & Loss equally. Their capitals were Rs.1,20,000 and Rs. 80,000 respectively. There was also a balance of Rs. 60,000 in General reserve and revaluation gain amounted to Rs. 15,000. They admit friend Teena with 1/5 share. Teena brings Rs.90,000 as capital. Calculate the amount of goodwill of the firm.
(a) Rs.85,000
(b) Rs.1,00,000
(c) Rs.20,000
(d) None of the options

Answer : A

Question. At the time of admission of a partner, Employees Provident Fund is:
(a) Distributed to partners in the old profit sharing ratio
(b) Distributed to partners in the new profit sharing ratio
(c) Adjusted through gaining ratio
(d) None of the options

Answer : D

Question. At the time of admission of a new partner, the balance of Workmen Compensation Reserve will be transferred to:
(a) Old partners in the old profit sharing ratio
(b) Sacrificing partners in the sacrificing ratio
(c) Revaluation Account
(d) All partners in the new profit sharing ratio

Answer : A

Question.L, P and G are three partners sharing profits in the ratio 15 : 9 : 8. G retires. L and P decided to share profits in equal ratio. Gaining ratio will be :
(a) 15: 9
(b) 9:15
(c) 7 : 1
(d) 1 : 7

Answer : D

Question.On retirement of a partner, goodwill will be credited to the Capital Account of:
(a) Retiring Partner
(b) Remaining Partners
(c) All Partners
(d) None of the options

Answer : A

Question. On the death of a partner, the amount due to him will be credited to :
(a) All partner’s Capital Accounts
(b) Remaining partner’s Capital Accounts
(c) His Executor’s Account
(d) Governments’ Revenue Account

Answer : C

Question.P, Q and R have been sharing profits and losses in the ratio of 5 : 3 : 2. Q retires. His share is taken by P and R in the ratio of 2 : 1. New profit sharing ratio will be:
(a) 6:4
(b) 7:3
(c) 7 : 2
(d) 6 : 3

Answer : B

Question. Which statement is true with respect to AS-26?
(a) Purchased goodwill can be shown in the Balance Sheet
(b) Revalued goodwill can be shown in the Balance Sheet
(c) Both purchased goodwill and revalued can be shown in the Balance Sheet
(d) None of the options

Answer : A

Question. Gaining Ratio means the ratio by which the share in profit stands increased. It is computed by deducting old ratio from the ------------------------
Answer: New Ratio

Question. Give the Journal entry to distribute the ‘Workmen Compensation Reserve’ of Rs. 60,000 at the time of retirement of Vinod, when there is no claim against it. There are three partners.
Answer:
Workmen Compensation Reserve A/c Dr. 60,000
To Partner 1 Capital A/c
To Partner 2 Capital A/c
To Vinod’s Capital A/c
(Being workmen compensation reserve distributed among partners in their old profit sharing ratio)

Question. Define the term sacrificing partner and gaining partner.
Answer: A sacrificing partner is a partner whose share of profit decreases due to a change in the profit-sharing ratio or the admission of a new partner. A gaining partner is a partner whose share of profit increases due to a change in the profit-sharing ratio, the retirement, or the death of a partner.

Question. Calculation of sharing of profit upto date of death will be calculated on the basis of-
(a) Yearly basis
(b) Time basis
(c) Turnover basis
(d) Both Time basis and Turnover basis
Answer: (d)

Question. Insurance premium amounting to Rs. 8,000 was debited to P&L A/c, of which Rs. 2,000 is related to the period after \(31^{st}\) March, 2009. You are required to prepare revaluation account, partners’ capital account and the balance sheet of the new firm. Also calculate the new profit sharing ratio.
Answer: [This is a partial problem context requiring specific values not fully provided in the snippet, but for digitization, the prompt asks for clean HTML. Revaluation would show a credit for Prepaid Insurance of Rs. 2,000.]

Question. A, B and C are partners in a firm sharing profits and losses in the ratio of \(3:2:1\). Their Balance Sheet as at \(31^{st}\) March, 2013 is as follows:
Balance Sheet
Liabilities: Sundry Creditors Rs. 36,000; Bank Overdraft Rs. 20,000; Reserve Rs. 15,000; Capital A/cs: A Rs. 60,000, B Rs. 60,000, C Rs. 50,000. Total: Rs. 2,41,000.
Assets: Cash Rs. 14,000; Sundry Debtors Rs. 50,000 Less: Provisions Rs. 2,500 (Net Rs. 47,500); Stock Rs. 60,000; Patents Rs. 6,000; Fixed Assets Rs. 98,500; Goodwill Rs. 15,000. Total: Rs. 2,41,000.
On \(1^{st}\) April, 2013, D is admitted into the firm with \(1/4^{th}\) share in the profits, which he gets \(1/8\) from A and \(1/8^{th}\) from B. Other terms of agreement are as under:
a. D will introduce Rs. 60,000 as his capital and pay Rs. 18,000 as his share of goodwill.
b. 20% of the reserve is to remain as a provision against bad and doubtful debts.
c. A liability to the extent of Rs. 1,000 to be created in respect of a claim for damages against the firm.
d. An item of Rs. 4,000 included in sundry creditors is not likely to be claimed.
e. Stock is to be reduced by 30% and patents to be written off in full.
f. A is to pay off the Bank Overdraft.
After making the above adjustments the capital accounts of the old partners be adjusted on the basis of D’s Capital to his share in the business, i.e., actual cash to be paid off to, or brought in by, the old partners, as the case may be.
Prepare Revaluation Account, Partners’ Capital Accounts and Balance Sheet of the new firm.
Answer: [Detailed solution involving Revaluation loss, adjusted capital balances based on D's total firm capital of Rs. 2,40,000, and final Balance Sheet balances.]

Question. Dinkar, Navita and Vani were partners sharing profits and losses in the ratio of \(3:2:1\). Navita died on \(30^{th}\) June, 2017. Her share of profit for the intervening period was based on the sales during that period, which were Rs. 6,00,000. The rate of profit during the past four years had been 10% on sales. The firm closes its books on \(31^{st}\) March every year.
Answer: Sales = Rs. 6,00,000. Profit = 10% of 6,00,000 = Rs. 60,000. Navita’s share = \(60,000 \times 2/6 = Rs. 20,000\). Journal Entry: Profit & Loss Suspense A/c Dr. 20,000 To Navita’s Capital A/c 20,000.

Question. If the retiring partner is not paid the full amounts due to him immediately on retirement, how should his Capital Account be shown in subsequent Balance Sheet.
Answer: It should be shown as the Retiring Partner's Loan Account under the Liabilities side of the Balance Sheet.

Question. A, B and C are partners with profit sharing ratio of \(4:3:2\). B retired and goodwill was valued Rs. 1,08,000. If A & C share profits in \(5:3\), find out the goodwill shared by A and C in favour of B.
(a) Rs. 22,500 and Rs. 13,500
(b) Rs. 16,500 and Rs. 19,500
(c) Rs. 67,500 and Rs. 40,500
(d) Rs. 19,500 and Rs. 16,500
Answer: (d)

Question. A, B and C are equal partners in a firm whose books are closed on \(31^{st}\) December every year. A died on 31.03.1991 and according to agreement his share of profit upto date of death is to be calculated on the basis of average profits of last 3 years. Net profits for the last 3 years were Rs. 8,000, Rs. 1,000 and Rs. 17,000. Calculate A’s share of profit and pass necessary journal entry.
Answer: Average Profit = \((8,000 + 1,000 + 17,000) / 3 = Rs. 8,667\). Profit for 3 months = \(8,667 \times 3/12 = Rs. 2,166.75\). A’s share = \(2,166.75 \times 1/3 = Rs. 722.25\). Journal Entry: Profit and Loss Suspense A/c Dr. 722 To A’s Capital A/c 722.

Question. Ram, Mohan and Sohan are partners in a firm sharing profits in the ratio of \(2:2:1\). Sohan retires and the Balance sheet of the firm on that date showed the following balances:
General Reserve Rs. 60,000
Profit and Loss A/c Rs. 15,000
Workmen’s compensation fund Rs. 10,000.
Pass journal entries for the above balances
Answer:
General Reserve A/c Dr. 60,000
Profit and Loss A/c Dr. 15,000
Workmen’s Compensation Fund A/c Dr. 10,000
To Ram’s Capital A/c 34,000
To Mohan’s Capital A/c 34,000
To Sohan’s Capital A/c 17,000
(Being accumulated profits and reserves distributed in old ratio \(2:2:1\))

Question. A, B, C are partners sharing profits in the ratio of \(3:2:1\). C dies on 30 June 2011. Accounts are closed on \(31^{st}\) March every year. Sales for the year ending \(31^{st}\) March 2011 was Rs. 6,00,000. Sales from \(1^{st}\) April 2011 to \(30^{th}\) June 2011 was Rs. 2,40,000. The profit for the year ended \(31^{st}\) March 2011 was Rs. 30,000.
Answer: Profit percentage = \((30,000 / 6,00,000) \times 100 = 5%\). Profit up to death = \(5% \text{ of } 2,40,000 = Rs. 12,000\). C’s share = \(12,000 \times 1/6 = Rs. 2,000\).

Question. A, B and C are partners sharing profits in the ratio of \(5:2:1\). If the new ratio on the retirement of A is \(3:2\), what will be the gaining ratio?
(a) \(11:14\)
(b) \(3:2\)
(c) \(2:3\)
(d) \(14:11\)
Answer: (d)

Question. Retiring partner is compensated for parting with the firm’s future in favour of remaining partners. The remaining partners contribute to such compensation amount in :
(a) Gaining Ratio
(b) Capital Ratio
(c) Sacrificing Ratio
(d) Profit sharing Ratio
Answer: (a)

Question. Alia, Karan and Shilpa were partners in a firm sharing profits in the ratio of \(5 : 3 : 2\). Goodwill appeared in their books at a value of Rs. 60,000 and general reserve at Rs. 20,000. Karan decided to retire from the firm. On the date of his retirement goodwill of the firm was valued at Rs. 2,40,000. The new profit sharing ratio decided among Alia and Shilpa was \(2 : 3\). Record necessary Journal Entries on Karan’s retirement
Answer:
1. Alia’s Cap A/c Dr. 30,000, Karan’s Cap A/c Dr. 18,000, Shilpa’s Cap A/c Dr. 12,000 To Goodwill A/c 60,000.
2. General Reserve A/c Dr. 20,000 To Alia’s Cap 10,000, To Karan’s Cap 6,000, To Shilpa’s Cap 4,000.
3. Shilpa’s Cap A/c Dr. 72,000 To Karan’s Cap A/c 72,000 (Adjustment for valued goodwill; Alia's gain is nil as her new share \(2/5\) equals her old share \(5/10\); Shilpa gains \(3/5 - 2/10 = 4/10\)).

Question. Varun, Arun and Karan were partners in a firm sharing profits in the ratio of \(2:2:1\). The firm closes its books on \(31^{st}\) March every year. On 31-12-2015 Karan died. On that date his Capital account showed a credit balance of Rs. 3,80,000 and Goodwill of the firm was valued at Rs. 1,20,000. There was a debit balance of Rs. 50,000 in the profit and loss account. Karan’s share of profit in the year of his death was to be calculated on the basis of the average profit of last five years. The average profit of last five years was Rs. 75,000. Pass necessary journal entries in the books of the firm on Karan’s death.
Answer:
1. Varun’s Cap A/c Dr. 12,000, Arun’s Cap A/c Dr. 12,000 To Karan’s Cap A/c 24,000 (Goodwill adjustment: \(1,20,000 \times 1/5\)).
2. Varun’s Cap A/c Dr. 20,000, Arun’s Cap A/c Dr. 20,000, Karan’s Cap A/c Dr. 10,000 To P&L A/c 50,000.
3. P&L Suspense A/c Dr. 11,250 To Karan’s Cap A/c 11,250 (Profit: \(75,000 \times 9/12 \times 1/5\)).
4. Karan’s Cap A/c Dr. 4,05,250 To Karan’s Executor A/c 4,05,250.

Question. Radhey, Krishna & Gopal are partners sharing profits and losses in the ratio of \(3:2:1\). On \(1^{st}\) April, 2013 their capital balances were Radhey - ₹ 1,50,000; Krishna - ₹ 1,50,000; and Gopal - ₹ 1,00,000. Gopal retires on the same date and Goodwill is valued at ₹ 1,80,000. Radhey and Krishna decided to share profits or losses in the ratio of \(3:1\). Goodwill already appears in the books at ₹ 48,000 along with credit balance of ₹ 18,000 in General Reserve Account. Gopal requested the firm to pay off his dues immediately as he needs money for his daughter’s marriage. The firm accepted his request. Calculate amount payable to Gopal on his retirement.
Answer: Opening Capital ₹ 1,00,000 + Share of Reserve ₹ 3,000 + Share of Valued Goodwill ₹ 30,000 - Share of Existing Goodwill ₹ 8,000 = ₹ 1,25,000. Amount payable = ₹ 1,25,000.

Question. Dev, Swati and Sanskar were partners in a firm sharing profits in the ratio of \(2 : 2 : 1\). On \(31^{st}\) March, 2014 their balance sheet was as follows:
Liabilities: Trade Payables 17,000; Bank Loan 13,000; Capital A/cs: Dev 77,000, Swati 87,000, Sanskar 46,000 (Total 2,10,000). Total: 2,40,000.
Assets: Building 1,00,000; Inventory 20,000; Trade Receivables 23,000; Cash 40,000; Profit and Loss A/c 57,000. Total: 2,40,000.
On \(30^{th}\) June, 2014 Dev died. According to partnership agreement, Dev was entitled to interest on capital @ 12% per annum. His share of profit till the date of his death was to be calculated on the basis of the average profits of last four years. The profits of the last four years were: 2010-11: 2,04,000; 2011-12: 1,80,000; 2012-13: 90,000; 2013-14 loss: (57,000).
On \(1^{st}\) April, 2014, Dev withdrew Rs 15,000 to pay for his medical bills. Prepare Dev’s account to be presented to his executors.
Answer: [Solution involves calculating average profit (Rs. 1,04,250), Dev's profit share for 3 months (Rs. 10,425), interest on capital for 3 months (Rs. 2,310), deducting drawings and share of P&L debit balance, and transferring final balance to Executor's account.]

Question. Ashok, Babu and Chetan were partners in a firm sharing profits in the ratio of \(4:3:3\). The firm closes its books on \(31^{st}\) March every year. On \(31^{st}\) December, 2016, Ashok died. The partnership deed provided that on the death of a partner, his executors will be entitled to the following:
i. Balance in his capital account. On \(1^{st}\) April, 2016, there was a balance of Rs 90,000 in Ashok’s capital account.
ii. Interest on capital @ 12% per annum.
iii. His share in the profits of the firm in the year of his death will be calculated on the basis of rate of net profit on sales of the previous year, which was 25%. The sales of the firm till \(30^{th}\) December, 2016 were Rs 4,00,000.
iv. His share in the goodwill of the firm. The goodwill of the firm on Ashok’s death was valued at Rs 4,50,000.
v. His drawings in the year of his death. Ashok’s drawings till \(31^{st}\) December, 2016 were Rs 15,000.
vi. Interest on drawing @ 12% per annum which was calculated as Rs 1,500.
The accountant of the firm prepared Ashok’s capital account to be presented to the executor of Ashok but in a hurry he left it incomplete. You are required to complete Ashok’s capital account.
Answer: [Ashok's Capital A/c credits: Bal b/d 90,000, Int on Cap 8,100, Profit share 40,000 (\(4,00,000 \times 25% \times 4/10\)), Goodwill share 1,80,000. Debits: Drawings 15,000, Int on Drawings 1,500. Total to Executor = Rs. 3,01,600.]

Question. Lalit, Madhur and Neena were partners sharing profits as \(3:2:5\). On March \(31^{st}\), 2013 their Balance Sheet was as follows:
Liabilities: Capitals (Lalit, Madhur, Neena) 3,00,000, 2,00,000, 5,00,000; Creditors 1,00,000; General Reserve 75,000; Loan from Seth 50,000. Total: 12,25,000.
Assets: Goodwill 3,00,000; Land and building 5,00,000; Machinery 1,70,000; Stock 30,000; Debtors 1,20,000; Cash 45,000; Profit and Loss A/c 6,00,000. Total: 12,25,000.
On 14th March Madhur died. The partnership deed provided that on the death of a partner the executor of the deceased partner is entitled to:
1) Balance in capital A/c
2) Share in profit up to death on the basis of last years profit
3) His share in profit/loss on revaluation of assets and liabilities as follows: Land and building was to be appreciated by Rs. 1,20,000; Machinery was to be depreciated to Rs. 1,35,000 and stock to 25,000. A provision of 2.5% for bad and doubtful debts was to be created on debtors.
4) The net amount payable to Madhurs executors was transferred to his Loan A/c.
Prepare Revaluation A/C, Partner’s capital Accounts and Madhur’s Executors A/c.
Answer: [Solution involves Revaluation calculation: Profit (1,20,000) - Losses (35,000 + 5,000 + 3,000) = Rs. 77,000. Share of losses from existing Goodwill and P&L balance will significantly impact the final executor amount.]

Question. Chinku, Shobha and Nikita were partners in a firm sharing profits and losses in the ratio of \(2:2:1\). Nikita died on \(30^{th}\) September 2014. According to the provisions of the partnership deed, the legal representatives of Nikita were entitled to the following:
i) Capital as per last balance sheet date
ii) Interest on capital @ 6% p.a.
iii) Her share of profits to the date of death calculated on the basis of the average profits of the last four years.
iv) Her share of goodwill to be determined on the basis of three years’ purchase of the average profits of last four years. The profits of last four years were: 2010-11: 30,000; 2011-12: 50,000; 2012-13: 40,000; 2013-14: 60,000.
The balance in Nikita’s capital account on 31-3-14 was Rs. 60,000 and she had withdrawn Rs. 10,000 till the date of her death. Interest on her drawings was to be charged @ 12% p.a. Prepare Nikita’s capital account.
Answer: Average Profit = 45,000. Nikita’s profit share (6 months) = \(45,000 \times 6/12 \times 1/5 = Rs. 4,500\). Goodwill = \(45,000 \times 3 = 1,35,000\); Nikita’s share = Rs. 27,000. Int on capital = \(60,000 \times 6% \times 6/12 = Rs. 1,800\). Int on drawings = Rs. 600. Final balance to Executor = Rs. 82,700.

Question. The Balance Sheet of X, Y and Z who are sharing profits in the ratio of \(2:3:1\), as at \(31^{st}\) March, 2013 is given below:
Liabilities: X’s Cap 2,00,000, Y’s Cap 4,00,000, Z’s Cap 6,00,000; Workmen’s compensation Fund 40,000; Investment fluctuation Fund 20,000; Provision for doubtful debts 20,000; Creditors 7,20,000. Total: 20,00,000.
Assets: Goodwill 24,000; Land and Building 5,00,000; Investments (M.V. 92,000) 1,00,000; Stock 1,60,000; Debtors 6,00,000; Bank 5,92,000; Advertising Suspense A/c 24,000. Total: 20,00,000.
Z died on \(1^{st}\) April, 2013 and X & Y decided to share future profits and losses in the ratio of \(3:2\). 50% of the amount payable to Z is to be paid immediately and the balance in two equal installments together with interest @ 10% p.a.
Other information: (i) Goodwill is to be valued at two years’ purchase of average profits of last three completed years. Profits: 2010-11 ₹ 90,000; 2011-12 ₹ 1,80,000 and 2012-13 ₹ 2,70,000. (ii) Land and Building undervalued by ₹ 50,000 and stock overvalued ₹ 16,000. (iii) Provision for doubtful debts to be equal to 5% of debtors. (iv) Claim on account of Workmen’s compensation is ₹ 16,000. Prepare revaluation account, Partners capital account and Balance Sheet of the new firm.
Answer: [Average Profit = Rs. 1,80,000. Firm Goodwill = Rs. 3,60,000. Z's share of Goodwill = Rs. 60,000. Revaluation profit/loss, adjustment of reserves and suspense will determine Z's final balance for installment payment.]

Question. X, Y and Z were partners in a firm whose Balance sheet as on 31-03-2012 was as under:
Liabilities: Creditors 18,240; General reserve 7,500; Capitals: X 20,000, Y 14,500, Z 10,000. Total: 70,240.
Assets: Cash 16,240; Debtors 22,500; Stock 26,500; Furniture 5,000. Total: 70,240.
Y Retired on that date. Adjustments: a) Reduce stock and furniture by 5% and 10% respectively. b) Provision for doubtful debts @ 5% on debtors. c) Dispute with creditors settled at Rs. 9,050 (Rs. 6,000 already included). d) Goodwill Rs. 12,000. e) Future profits in \(5:3\). f) Y to be paid off, sum brought in by X and Z such that their capital is in profit sharing ratio. Prepare revaluation account, Partners capital account and Balance Sheet.
Answer: [Requires calculating cash to be brought in by X and Z to pay Y and maintain the \(5:3\) capital ratio.]

Question. Q and R were partners sharing profits in \(3:2:1\) on \(1^{st}\) April, 2007, Q retired. Balance Sheet: Liabilities: Gen Reserve 12,000, Exp Owing 4,000, Bills Payable 10,000, Creditors 20,000, Capitals (P, Q, R) 24,000, 20,000, 18,000. Assets: Plant 60,000, Patents 6,000, Debtors 19,000, Stock 22,000, Cash 1,000. Total: 1,08,000.
Terms: Goodwill Rs. 24,000, adjust Q's share in \(3:2\). Expenses owing reduced to Rs. 3,000; Plant 10% less, Patents Rs. 8,000. Total capital of new firm fixed at Rs. 50,000 in profit sharing ratio. Prepare accounts.
Answer: [New ratio between P and R will be used to distribute the fixed capital of Rs. 50,000.]

Question. Akshata, Preeti and Akansha are partners sharing profits and losses in the ratio of \(2:2:3\). On 31-3-2015, Preeti retired. Balance Sheet items: Land and Building 10,00,000, Machinery 5,00,000, Furniture 7,00,000, Investment 2,00,000, Closing Stock 8,00,000, Sundry Debtors 4,00,000, Bank 80,000. Revaluation: Land and building up Rs. 2,40,000, Machinery down 10%. 50% investments taken by Preeti. Bad debt recovery Rs. 7,000. Provision for DD @ 5%. Stock Rs. 1,00,000 less than book value. Goodwill Rs. 5,60,000. Total capital fixed at Rs. 32,00,000. Prepare accounts.
Answer: [Preeti's settlement by bill of exchange after 4 months is a key closing entry.]

Question. Bhavin, Ankit and Kartik were equal partners. On \(31^{st}\) March 2012 Ankit retired. Balance Sheet: Creditors 60,000, Reserve 30,000, P&L 6,000, Capitals 1,30,000. Assets: Cash 18,000, Stock 20,000, Furniture 28,000, Debtors 40,000, Land & Building 1,20,000. Terms: Goodwill Rs. 30,000. Provision for DD @ 10%. Land & Building to Rs. 1,42,000. Furniture reduced by Rs. 6,000. Rent outstanding Rs. 1,500. Prepare accounts.
Answer: [Standard retirement problem with specific revaluation adjustments and distribution of existing reserves and P&L.]

Question. X, Y and Z are partners sharing profits in proportion of \(1/2, 1/6\) and \(1/3\) respectively. Z retires on April 1, 2014. Balance Sheet: Liabilities: EPF 12,000, Creditors 18,000, Reserve 12,000, Capitals 88,000. Assets: Freehold Premises 40,000, Machinery 30,000, Furniture 12,000, Stock 22,000, Debtors (net) 19,000, Cash 7,000. Adjustments: Machinery down 10%, Provision for DD to Rs. 1,500, Furniture taken by Z for Rs. 14,000. Goodwill Rs. 21,000. Capital adjustment in new profit sharing ratio via current accounts.
Answer: [Final Step: Balance the capital accounts of X and Y to match the new ratio using Current Accounts.]