SHAPERS EDUCATION

Class Test
Class : 12th CBSE Subject: Accounts (Ch. 2 & 3) Max. Marks : 30

Q1. Calculate goodwill of the firm on the basis of 3 year’s purchase of the average profits of 2
the last five years the profits of the last five years were:
Year Amount (₹)
2013-14 4,00,000
2014-15 5,00,000
2015-16 (60,000)
2016-17 1.50,000
2017-18 2,50,000
Additional information:
(i) On 1st January, 2016, a fire broke out which resulted into of goods of ₹ 3,00,00.
A claim of ₹70,000 was received from the insurance company
(ii) During the year ended 31st march, 2018 the firm received an unexpected tax
refund of ₹ 80,000.
Q2. On 1st April,2023 an existing firm had assets of ₹2,00,000 including cash of ₹ 4,000. Its 3
creditors amounted to ₹10,000 on that date. The partner’s capital accounts showed a
balance of ₹ 1,60,000 while the general reserve amounted to ₹ 30,000. If the normal rate
of return is 15% and the goodwill of the firm is valued at ₹ 36,000 at 3 year’s purchase of
super profit, find the average profits of the firm.
Q3. A, B and C are partners sharing profits and losses in the ratio of 5:4:1. It was decided that 3
with effect from 1st April, 2021 the profit-sharing ratio will be 9:6:5. Goodwill is to be valued
at 2 year’s purchase of average of 3 year’s profits. The profits for 2018-19, 2019-20 and
2020-21 were ₹ 48,000, ₹ 42,000, ₹ 60,000 respectively.
Pass the necessary journal entry for the treatment of goodwill.
Q4. P, Q and R sharing profits and losses in the ratio of 3:2:1, decide to share future profit and 4
losses in the ratio of 4:3:2 with effect from 1st April, 2022. Following is an extract of their
balance sheet as 31st march, 2022:
Liabilities ₹ Assets ₹
Workmen Compensation 60.000
Reserve
Show the accounting treatment under the following alternative cases:
Case (i) If there is no other information.
Case(ii) If claim on account of workmen’s compensation is estimated at ₹ 24,000.
Case(iii) If a claim on account of workmen’s compensation is estimated at ₹ 60,000.
Case(iv) If a claim on account of workmen’s compensation estimates at ₹ 75,000.
Q5. It was agreed to calculate the value of goodwill of a firm at three years’ purchase of the 4
weighted average profits of the past four years. The appropriate weights to be used to
each year ended on 31st march are: 2018 – 1; 2019 – 2; 2020 – 3; 2021 – 4.
The profits for these years ended on 31st march are: 2018 ₹ 20,200; 2019 ₹ 24,800; 2020
₹ 20,000; and 2021 ₹ 30,000.
On a scrutiny of the accounts the following matters are revealed; --
(i) On 1st December, 2019 a major repair was made in respect of the plant incurring ₹
6,000 which amount was charged to revenue. The paid sum is agreed to be
capitalised for goodwill calculation subject to adjustment of depreciation of 10%
p.a. on reducing balance method.
(ii) The closing stock for the year ending on 31st march 2019 was over-valued by ₹
2,400
(iii) To cover management cost an annual charge of ₹ 4,800 should be made for the
purpose of goodwill valuation.
 Compute the value of goodwill.
Q6. P, Q and R are partners running a department store and sharing profits equally. R started 4
a new business of his own and since R was unable to devote any time to the existing
business, they decided that R will get 1/5th in future profits. They also decided to make
adjustment for goodwill on the basis of 3 years purchase of super profits of last 5 years.
Capital investment of the firm is ₹ 15,00,000 and a fair return on capital is 12% profits of
the last 5 years were as follows:
Year profit (₹)
st
Profit for the year ended 31 March 2016 1,60,000
Profit for the year ended 31st March 2017 (3,00,000)
Profit for the year ended 31st March 2018 4,60,000 (including an abnormal gain of ₹
60,000)
Profit for the year ended 31st March 2019 4,00,000 (after charging an abnormal loss
of ₹40,000)
st
Profit for the year ended 31 March 2020 3,00,000

On the basis od above information, answer the following:

(i)Average maintainable profit will be :
A) 10,00,000 B) 3,20,000
C) 2,00,000 D) 2,08,000
(ii) Normal profit of the firm is:
A) 1,20,000 B) 3,00,000
C) 3,20,000 D) 1,80,000
(iii) Value of goodwill of the firm will be:
A) ₹ 60,000 B) ₹ 84,000
C) ₹ 80,000 D) ₹ 20,000
(iv) For adjustment of Goodwill:
A) Dr. P ₹ 4,000; Dr. Q ₹ 4,000; Cr. B) Cr. P ₹ 4,000; Cr. Q ₹ 4,000; Dr.
₹ 8,000 R ₹ 8,000
C) Dr. P ₹ 10,000; Dr. Q ₹ 4,000; Cr. D) Dr. P ₹ 6,000; Dr. Q ₹ 6,000; Cr.
R ₹ 20,000 R ₹ 12,000

Q7. A and B were partners sharing profits equally. Since A was devoting more time to the 4
business it was agreed that profit sharing ratio will be changed to 2:1 from 1st April 2022.
Following balances have been extracted from their books on this date:
₹
Capital: A 5,00,000
B 3,00,000
General reserve 90,000
Profit& Loss Account (Dr.) 30,000
It is agree between the partners that:
(i) Goodwill should be valued at ₹ 1,20,000
(ii) Profit & loss account (Dr.). balance is to be carried forward
(iii) Furniture (book value ₹ 50,000) be reduced to ₹ 30,000
(iv) Computers (book value ₹ 1,00,000) be reduced by ₹ 60,000
Based on the above information, choose the correct option:
(i)In respect of profit & loss (Dr.) Balance :
A) Dr. A and B by ₹ 15,000 each B) Dr. A by ₹ 20,000 and B by ₹
10,000
C) Dr. A by ₹ 5,000 and Cr. B by ₹ D) Cr. A by ₹ 5,000 and Dr. B by ₹
5,000 5,000
(ii) Loss on Revaluation will be :
A) ₹ 90,000 B) ₹ 60,000
C) ₹ 80,000 D) ₹ 70,000
(iii) In respect of goodwill:
 A) Cr. A and B by ₹ 60,000 each B) Cr. A by ₹ 40,000 and B by ₹
20,000
C) Dr. A by ₹ 20,000; Cr. B by ₹ D) Cr. A by ₹ 20,000; Dr. B by ₹
20,000 20,000
(iv) Balance of A’s Capital Account will be :
A) ₹ 4,45,000 B) ₹ 4,90,000
C) ₹ 4,80,000 D) ₹ 5,30,000
Q8. A,B and C are partners sharing profits and losses in the ratio of 5:3:2. From 1st April, 2021, 6
they decided to share future profits and losses equally. Their Balance sheet as at 31st
March, 2021 stood as follows:
Liabilities ₹ Assets ₹
Sundry creditors 50,000 Land and Building 4,00,000
Balance payable 25,000 Computers 60,000
Outstanding expenses 20,000 Stock 2,00,000
General Reserve 50,000 Sundry debtors 3,00,000
Workmen compensation 70,000 Less: Provision for
Reserve Doubtful Debts 25,000 2,75,000
Capital Accounts : Cash at bank 30,000
A 4,00,000 Cash in hand 10,000
B 2,50,000 Advertisement suspense 40,000
C 1,50,000 8,00,000
10,15,000 10,15,000
Partners agreed that:
(I) Value of land and building be increased to ₹ 5,00,000 and stock be decreased
by ₹ 20,000.
(II) Provision for doubtful debts to be written back, since all debtors are good.
(III) Out of salaries payable, ₹ 15,000 was not payable.
(IV) Outstanding expenses are to be written back, being not payable.
(V) A provision for workmen compensation claim be made for ₹ 30,000.
(VI) Goodwill is valued at ₹ 60,000.
(VII) B was to carry out the work for reconstitution of the firm at a remuneration
(including expenses) of ₹ 10,000. Expenses paid by B amounted to ₹ 4,000.
Pass journal entries and prepare Revaluation Account.
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