Commerce Academy

Kharghar sector 13

XII FULL PARTNERSHIP PP2

Class 12 - Accountancy
Time Allowed: 4 hours Maximum Marks: 100

1. The following differences have arisen among A, B and C. Give your decision regarding the same:- [3]
i. A used ₹ 1,00,000 belonging to the firm and made a profit of ₹ 75,000 in speculation. B and C want that A
should return ₹ 1,75,000 to the firm, while A wants to return ₹ 1,00,000 only.
ii. A used ₹ 50,000 belonging to the firm and suffered a loss of ₹ 20,000 in speculation. He wants to return only

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₹ 30,000.

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iii. A and B want to admit Ravi as a new partner, but C does not agree.
iv. A and B want to purchase goods from Rohit for the firm but C does not agree.

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2. Yogesh and Ram are partners sharing profits and losses in ratio of 2 : 3 with capitals of ₹ 2,00,000 and ₹ [3]
1,00,000 respectively. On 1st October, 2022, Yogesh and Ram gave loans of ₹ 4,00,000 and ₹ 2,00,000

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respectively to the firm. The partners have not agreed to the rate of interest payable on the loan by partner.
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Determine the amount of profit or loss for the year ended 31st March, 2023 in each of the following cases to be
distributed between the partners:
Case 1. If the Profit before interest for the year amounted to ₹ 25,000.
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Case 2. If the Profit before interest for the year amounted to ₹ 15,000.
Case 3. If the Loss before interest for the year amounted to ₹ 25,000.
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3. A, B and C started business on 1st July, 2015. You find that: [3]
i. A drew ₹8,000 in the beginning of every month for 9 months ending 31st March, 2016.
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ii. B drew ₹8,000 at the end of every month for 9 months ending 31st March, 2016.
iii. C drew ₹8,000 every month for 9 months ending 31st March, 2016.
Calculate interest on drawings @ 10% p.a.
4. P, Q, and R are the three partners of a business. On 3 Dec. 2000 after all the necessary adjustments, the capital [3]
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account of P, Q and R stood as Rs 50,000, Rs 30,000, Rs 20,000 respectively.

It was discovered that interest on capital @ 5% per annum had been omitted. The profit for the same year
amounted to ^ 70,000 and the partner’s drawings had been Rs 10,000, Rs 7,500, and Rs 4,500 respectively for P,
Q, and R. The profit sharing ratio for P, Q, R is 4: 1: 2. Calculate the Interest on Capital.
5. A and B are partners in a firm. A is entitled to a salary of ₹15,000 p.m. and a commission of 10% of net profit [3]
before charging any commission. B is entitled to a commission of 10% of net profit after charging his
commission. Net profit for the year ended 31st March 2023 was ₹4,40,000.
You are required to show the distribution of profit.
6. A, B and C were partners in a firm. On 1st April, 2008, their fixed capitals stood at Rs 50,000, Rs 25,000 and Rs [3]
25,000 respectively. As per the provisions of the partnership deed
i. B was entitled for a salary of Rs 5,000 per annum.
ii. All the partners were entitled to interest on capital at 5% per annum.

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 iii. Profits were to be shared in the ratio of capitals.
The net profit for the year ending 31st March 2009 of Rs33,000 and 31st March, 2010 of Rs45,000 was divided
equally without providing for the above terms. Pass an adjustment journal entry to rectify the above error.
7. The average profits of a firm is ₹ 48,000. The total assets of the firm are ₹ 8,00,000. Value of other liabilities is ₹ [3]
5,00,000. Average rate of return in the same business is 12%.
Calculate goodwill from capitalisation of average profits method.
8. X, Y and Z are partners sharing profits and losses in the ratio of 6 : 3 :1. They admitted W into partnership with [3]
effect from 1st April, 2019. New profit-sharing ratio between X, Y, Z and W was agreed to be 3 : 3 : 3 : 1. They
also decide to record the effect of following revaluations without affecting the book values of the assets and
liabilities by passing an adjustment entry:

Book Values (₹) Revised Values (₹)

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Plant and Machinery 3,50,000 3,40,000

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Land and Building 5,00,000 5,50,000

Trade Creditors 1,00,000 90,000

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Outstanding Expenses 85,000 1,00,000

Pass necessary adjustment entry.

9.
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Hemant retired from the firm. The amount due to him was determined at ₹ 90,000. It was decided to pay the due [3]
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amount as follows:
On the date of retirement - ₹ 30,000
Balance in three yearly instalments - First two instalments being of ₹ 26,000, including interest; and Balance
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amount as last instalment.

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Interest was payable @ 10% p.a. Prepare retiring Partner's Loan Account.
10. Yogesh, Ram and Ravi were partners sharing profits in the ratio of 5 : 3 : 2. Ram died on 30th September, 2023 [3]
and Yogesh and Ravi decided to continue business sharing profits equally. In terms of the Partnership Deed,
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accounts were prepared as on 30th September, 2023. Profit for the period up to 30th September, 2023 was
determined at ₹ 9,00,000. Pass the Journal entry distributing the profit for the period of six months ended 30th
September, 2023.
11. Anil, Ram and Karan were partners in a firm sharing profits in the ratio 4 : 3 : 3. The firm was dissolved on 31- [3]
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3-2023. Pass the necessary Journal entries for the following transactions after various assets (other than cash and
bank) and third party liabilities had been transferred to Realisation Account:
i. The firm had stock of ₹ 80,000. Anil took over 50% of the stock at a discount of 20% while the remaining
stock was sold off at a profit of 30% on cost.
ii. A liability under a suit for damages included in creditors was settled at ₹ 32,000 as against only ₹ 13,000
provided in the books. Total creditors of the firm were ₹ 50,000.
iii. Ram’s sister’s loan of ₹ 20,000 was paid off along with interest of ₹ 2,000.
iv. Karan’s Loan of ₹ 12,000 was settled at ₹ 12,500.
12. Harshit and Himanshu are partners sharing profits equally. They admit Sunil into partnership for equal share. [3]
Goodwill was agreed to be valued at two years' purchase of average profit of last four years. Profits for the last
four years were:

Year Ended Normal Profit/(Loss) (₹)

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 31st March, 2020 70,000;

31st March, 2021 1,00,000;

31st March, 2022 55,000 (Loss);

31st March, 2023 1,45,000.

The books of account of the firm revealed as follows:

i. Firm had abnormal gain of ₹ 10,000 during the year ended 31st March, 2020.
ii. Firm incurred abnormal loss of ₹ 20,000 during the year ended 31st March, 2021.
iii. Repairs to car amounting to ₹ 50,000 was wrongly debited to vehicles on 1st May, 2022. Depreciation was
charged on vehicles @ 10% on Straight Line Method.

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Calculate the value of Goodwill.
13. Average profit of the firm is ₹ 3,00,000. Total assets of the firm are ₹ 24,00,000 whereas Partner's Capital is ₹ [3]

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20,00,000. If normal rate of return in a similar business is 12% of the capital employed, what is the value of
goodwill by Capitalisation of Super Profit?

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14. A and B are partners in a business and their capitals at the end of the year were ₹ 7,00,000 and ₹ 6,00,000 [4]
respectively. Calculate their opening capitals considering the following information:

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i. Drawings of A and B for the year were ₹ 75,000 and ₹ 50,000 respectively.
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ii. B introduced a capital of ₹ 1,00,000 during the year.
iii. Interest on capital credited to the Capital Accounts of A and B were ₹ 15,000 and ₹ 10,000 respectively.
iv. Interest on drawings debited to the Capital Accounts of A and B were ₹ 7,500 and ₹ 5,000 respectively.
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v. Share of profit credited to Capital Accounts was ₹ 1,00,000 each.

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15. Ravi, Rahul and Mohit are partners sharing profits equally. Rahul is guaranteed minimum profit of ₹ 2,00,000 [4]
per annum. Salary is payable to Rahul of ₹ 10,000 per month. Net Profit for the year ended 31st March, 2023 is ₹
6,60,000. Prepare Profit & Loss Appropriation Account for the year.
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16. A, B and C were partners in a firm. Their partnership deed provided that the profits shall be divided as follows: [4]
First ₹ 60,000 in the ratio of 3 : 2 : 1;
Remaining profits will be shared equally.
The profits for the year ended 31st March, 2023 were ₹ 1,50,000 which had been distributed among the partners.
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On 1st April, 2022 their Capitals were A ₹ 4,00,000, B ₹ 3,00,000 and C ₹ 2,00,000. Interest on Capital was to
be provided @ 8% p.a. which was omitted to be provided before distribution of profits.
Pass necessary rectifying entry for the same.
17. Nisha, Kusum and Minakshi were partners in a firm sharing profits and losses in the ratio of 2 : 3 : 1. With effect [4]
from 1st April, 2023, they decided to share future profits and losses in the ratio of 3 : 2 :1. On that date their
Balance Sheet showed a debit balance of ₹ 24,000 in Profit & Loss Account and a balance of ₹ 1,44,000 in
General Reserve.
It was also agreed that:
i. The goodwill of the firm be valued at ₹ 1,80,000.
ii. The Land (having book value of ₹ 3,00,000) will be valued at ₹ 4,80,000.
Pass the necessary Journal entries for the above changes.

18. Rohit, Vishal and Neelam are partners in a firm sharing profits and losses in the ratio of 5 : 3 : 2. From 1st April [4]

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 2023 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. That investment (having a book value of ₹ 50,000) were valued at ₹ 35,000.
iii. That 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.
19. Rakesh and Mukesh are partners in a firm sharing profit in the ratio of 3 : 2. Their Balance Sheet as at 31st [4]

March, 2023 was as follows:

Liabilities ₹ Assets ₹

Rakesh's Capital A/c 54,000 Cash 18,000

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Mukesh's Capital A/c 36,000 Machinery 36,000

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Creditors 36,000 Building 72,000

1,26,000 1,26,000

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Goodwill of the firm is valued at ₹ 36,000 and the building at ₹ 90,000 on 31st March, 2023. The partners decide
to share profits equally with effect from 1st April, 2023.
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Pass the necessary accounting entries without affecting the existing figure of building.
20. Harsh, Pankaj and Manoj were three partners sharing profits and losses in the ratio of 5 : 4 : 1. Pankaj retired on [4]

31st March, 2022. His capital as on 1st April, 2021, was ₹ 80,000. During the year 2021-22, he made drawings of
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₹ 5,000. He was to be charged interest on drawings ₹ 100. The partnership deed provides that on the retirement
of a partner, he will be entitled to:
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i. His share of capital.

ii. Interest on capital @ 10% per annum.
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iii. His share of profit in the year of retirement.

iv. His share of goodwill of the firm.
v. His share in the profit/loss on revaluation of assets and liabilities.
Additional information:
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a. Pankaj’s share in the profits of the firm for the year 2021-22 was ₹ 20,000.
b. Goodwill of the firm was valued at ₹ 24,000.
c. The firm suffered a loss of ₹ 12,000 on the revaluation of assets and liabilities.
d. It was decided to transfer the amount due to Pankaj to his loan account bearing interest @ 6% per annum.

The loan was to be repaid in two equal annual instalments, the first instalment to be paid on 31st March,
2023.
You are required to prepare:
i. Pankaj’s Capital Account.
ii. Pankaj’s Loan Account till it is finally closed.
21. Ramesh, Rajesh and Raman are partners in a firm sharing profits and losses in the ratio of 2 : 2 : 1. On 30th [4]
June, 2021, Ramesh died. Sales for the year ended 31st March, 2021 were ₹ 12,00,000 and profits were ₹

1,20,000. The sales for the period from 1st April, 2021 to 30th June, 2021 amounted to ₹ 4,00,000. Accounts are

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 closed on 31st March every year. Calculate Ramesh's share of profit till the date of his death and pass the
necessary journal entry for the same in the books of the firm.
22. Read the text carefully and answer the questions: [5]
Rekha and Mansi were partners in a firm sharing profits and losses equally. They dissolved their firm on 31st
March, 2018.
On this date, the Balance Sheet of the firm, apart from realizable assets and outside liabilities showed the
following:

Rekha's Capital 40,000 (Cr.)

Mansi's Capital 20,000 (Dr.)

Profit & Loss Account 10,000 (Dr.)

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Rekha's loan to the firm 15,000

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Contingency Reserve 7,000

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On the date of dissolution of the firm:
a. Rekha's loan was repaid by the firm along with interest of ₹ 500.

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b. The dissolution expenses of ₹ 1,000 were paid by the firm on behalf of Rekha who had to bear these
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expenses.
c. An unrecorded asset of ₹ 2,000 was taken over by Mansi while Rekha discharged an unrecorded liability of ₹
3,000.
d. The dissolution resulted in a loss of ₹ 60,000 from the realization of assets and settlement of liabilities.
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(a) The amount of Profit and Loss Account to be transferred to the Partner's Capital Account is:
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a) ₹ 6,000 Rekha and ₹ 4,000 Mansi b) Insufficient data

c) ₹ 5,000 each d) ₹ 4,000 Rekha and ₹ 6,000 Mansi

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(b) The contingency fund will be debited or credited to which account?

a) Profit and Loss Account b) Realisation Account

c) Bank account d) Partners' Capital Account

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(c) The unrecorded asset taken by Mansi will be:

a) Debited to Mansi's Capital Account b) Both Debited to Mansi's Capital

Account and Credited to Realisation
Account

c) In the balance sheet d) Credited to Realisation Account

(d) How much loan amount will be paid to the Rekha?

a) ₹ 15,500 b) ₹ 16,500

c) ₹ 500 d) ₹ 15,000
(e) Which account should be credited while recording realisation expenses in above case.

a) bank account b) realisation account

c) no entry d) partner's capital account

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23. On 1st April, 2022 the balances of A and B were as follows: [6]

Capital Account Current Account

₹ ₹

A 1,00,000 (Cr.) 8,420

B 40,000 (Dr.) 3,200

On 1st July, 2022, A withdrew ₹ 20,000 from his capital and B introduced ₹ 10,000 as further capital on the
same date. According to the deed, interest on capitals is to be allowed at 8% p.a. but no interest is to be allowed
or charged on current account balances and drawings. A is entitled to and B of the profit. The manager of
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the firm is entitled to a commission of 10% of the profit before any adjustment is made according to the deed.
For the year ended 31st March, 2023, the profit was ₹ 40,000 and the drawings of A and B were ₹ 12,000 and ₹
10,000 respectively. Prepare the P & L Appropriation A/c, Capital Accounts and Current Accounts

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24. A, B and C were carrying on business with the following assets with effect from 1st April, 2023: Furniture ₹ [6]

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18,000; Machine ₹ 72,000; Cash ₹ 10,000; Debtors ₹ 20,000. Their profit-sharing ratio was 5 : 3 : 2. Capital is
also shared in the same ratio. B died on 30th September, 2023. His son claimed his father’s interest in the firm.
The following was the settlement:

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i. Allow his capital to his credit on the date of death.
ii. Give 5% p.a. interest on his capital.
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iii. He had been drawing @ ₹ 600 per month which he withdrew at the beginning of each month. He be allowed
to retain these drawings as a part of his share of profit.
iv. Interest @ 6% p.a. be charged on his drawings.
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v. Goodwill was evaluated twice the average of profits which were ₹ 21,000. Prepare B’s Personal Account.
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25. The following is the Balance Sheet of A and B as at 31st March, 2023: [6]

Liabilities ₹ Assets ₹

Mrs. A’s Loan 15,000 Cash 4,200

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Mrs. B's Loan 10,000 Bank 3,400

Trade Creditors 30,000 Debtors 30,000

Less: Provision for

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Bills Payable 10,000 (2,000) 28,000

doubtful debt

Outstanding Expenses 5,000 Investments 10,000

A: Capital 1,00,000 Stock 40,000

B: Capital 80,000 Truck 75,000

Plant and Machinery 80,000

B: Drawings 9,400

2,50,000 2,50,000

Firm was dissolved on this date.

i. Half the stock was sold at 10% less than the book value and the remaining half was taken over by A at 20%
more than the book value.

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 ii. During the course of dissolution a liability under action for damages was settled at ₹ 12,000 against ₹ 10,000
included in the creditors.
iii. Assets realised as follows:
Plant & Machinery - ₹ 1,00,000; Truck - ₹ 1,20,000; Goodwill was sold for ₹ 25,000; Bad Debts amounted
to ₹ 5,000. Half the investments were sold at book value.
iv. A promised to pay off Mrs. A's Loan and took away half the investments at 10% discount.
v. Trade Creditors and Bills Payable were due on average basis of one month after 31st March, but were paid
immediately on 31st March, at 12% discount per annum.
Prepare necessary accounts.
26. Read the text carefully and answer the questions: [6]
Gagan and Megha are partners, sharing profits in the ratio of 2 : 1. To meet the requirement of capital they
decided to admit a new partner Nishant for rd share in profit.
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At the time of admission, the Balance Sheet stood as follows:

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Liabilities ₹ Assets ₹

Capitals A/cs: Freehold Proeprty 2,40,000

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Gagan 2,10,000 Plant and Machinery 1,60,000

Megha 3,90,000 6,00,000

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Building 1,00,000
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Investment Fluctuation Reserve 18,000 Furniture 80,000

Creditors 25,000 Debtors 55,000

Bills Payable 42,000 Less: Provision for Doubtful debts 5,000 50,000
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Outstanding Salaries 15,000 Current investment 45,000

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Cash in hand 25,000

7,00,000 7,00,000
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Nishant brings ₹ 2,30,000 as his capital and ₹ 70,000 for premium for goodwill. Following adjustments to be
considered:
i. Freehold property to be appreciated by ₹ 30,000. Plant and Machinery reduced to 1,20,000. Building is
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appreciated to 130%. Insurance premium paid during the year included ₹ 2,000 unexpired insurance.
ii. A debtor whose account was written off as bad debts for ₹ 8,400 before two years, now paid 50% amount in
cash.
iii. A creditor to whom 9,000 was payable, draw a bill of exchange for 3 months, which was duly accepted.
iv. Megha took investment costing ₹ 12,000 and remaining investment valued at ₹ 38,000.
v. A claim received and accepted by the firm for workmen compensation ₹ 75,000.
(a) New Ratio among the partners:
i. 4 : 2 : 3
ii. 2 : 1 : 1
iii. 3 : 2 : 1
iv. 5 : 3 : 2

a) Option (iii) b) Option (iv)

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 c) Option (i) d) Option (ii)
(b) Value of Fixed Assets to be shown in the credit side of Revaluation Account:

a) 1,00,000 b) 1,60,000

c) 60,000 d) 30,000
(c) Investment to be shown in Revaluation Account:

a) 38,000 Credit side b) 5,000 Credit side

c) 26,000 Credit side d) 12,000 Debit Side

(d) Final value of creditors to be shown in Balance Sheet:

a) 9,000 b) 16,000

c) 25,000 d) 34,000

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(e) Debtors to be shown in the Balance Sheet:

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a) 55,000 - 5,000 + 4,200 = 54,200 b) 55,000 - 8,400 = 46,600

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c) 55,000 + 4,200 = 59,200 d) 55,000 - 5,000 = 50,000
(f) Gain OR Loss on Revaluation Account:

a) 43,800 Loss

a b) 33,200 Gain
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c) 46,800 Loss d) 47,800 Loss
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