Partner's Capital Account Adjustments(Death)

Q.

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 will bring in Rs. 30, 000 for capital and the requisite amount of goodwill 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?

Q.

Ram, Raj, and George are partners sharing profits in the ratio 5:3:2. According to the partnership agreement George is to get a minimum amount of Rs 10, 000 as his share of profits every year. The net profit for the year 2006 amounted to Rs 40, 000. Prepare the profit and loss appropriation account.

Q.

Aman, Babita and Suresh are partners in a firm. Their profit sharing ratio is 2 : 2 : 1. Suresh is guaranteed a minimum amount of Rs 10, 000 as share of profit, every year. Any deficiency on that account shall be met by Babita. The profits for two years ending December 31, 2005 and December 31, 2006 were Rs 40, 000 and Rs 60, 000 respectively. Prepare the profit and loss appropriation account for the two years.

Q.

A, B and C were partners in a firm sharing profits in 3 : 2 : 1 ratio. The firm closes its books on 31st March every year. B died on 12-6-2007. On B's death the goodwill of the firm was valued at Rs 60, 000. On B's death his share in the profits of the firm till the time of his death was to be calculated on the basis of previous year's profit which was Rs 1, 50, 000. Calculate B's share in the profit of the firm. Pass necessary journal entries for the treatment of goodwill and B's share of profit at the time of his death.

Q.

Give Journal entries for forfeiture and re-issue of shares:

(i) A Ltd. forfeited 1, 000 shares of Rs 10 each, Rs 7 called up, issued at a premium of 20% (to be paid at the time of allotment) for non-payment of a first call of Rs 2 per share. Out of these, 600 shares were re-issued as Rs 7 paid up for Rs 4 per share.

(ii) B Ltd. forfeited 1, 000 shares of Rs 10 each, Rs 7 called up, issued at a premium of 20% (to be paid at the time of allotment) for non-payment of allotment money of Rs 4 per share (including premium) and first call of Rs 2 per share. Out of these, 600 shares were re-issued as fully paid in such a way that Rs 900 were transferred to capital reserve.

Q.

Pass journal entries for the following transactions :

(i) Realisation expenses amounted to Rs. 5, 000.

(ii) Realisation expenses amounted to Rs. 8, 000 were paid by partner X.

(iii) Realisation expenses amounted to Rs. 10, 000 were paid by the firm on behalf of a partner.

(iv) Realisation expenses amounted to Rs. 15, 000 were paid by the firm. Mr. X, one of the partners, has to bear these expenses.

(v) Realisation expenses amounted to Rs. 20, 000 were paid by the firm. Rs. 8, 000 were to be borne by the firm and the balance by Maruti, a partner.

Q.

(a) Ravi Ltd. forfeited 800 shares of Rs 10 each, Rs 7.50 paid, for non-payment of Final Call of Rs 2.50 per share. Out of these, 600 shares were re-issued as fully paid up in such a way that Rs 2, 100 were transferred to capital reserve. Pass necessary journal entries.

(b) X Ltd. forfeited 800 shares of Rs 10 each, Rs 7.50 called-up, for non-payment of Final Call of Rs 2.50 per share. Out of these, 600 shares were re-issued for Rs 6 per share as Rs 7.50 paid up. Pass necessary journal entries.

(c) 400 shares of Rs 10, on which Rs 8 has been called and Rs 6 has been paid, are forfeited. Out of these, 300 are re-issued for Rs 7 as fully paid. Pass necessary journal entries.

Q. The Orient Company offered for public subscription 20, 000 equity shares of Rs.10 each at a premium of 10% payable at Rs.2 on application; Rs.4 on allotment including premium; Rs.3 on first call and Rs.2 on second and final call. Applications for 26, 000 shares were received. Applications for 4, 000 shares were rejected. Pro-rata allotment was made to the remaining applicants. Both the calls were made and all the money were received except the final call on 500 shares which were forfeited. 300 of the forfeited shares were later on issued as fully paid at Rs. 9 per share. Give journal entries and prepare the balance sheet.

Q.

Give Journal entries to record the following transactions of forfeiture and re-issue of shares and open share forfeited account:

L Ltd. forfeited 470 Equity Shares of Rs 10 each issued at a premium of Rs 5 per share for non-payment of allotment money of Rs 8 per share (including share premium Rs 5 per share) and the first and final call of Rs 5 per share. Out of these, 60 Equity Shares were subsequently re-issued at Rs 14 per share.

Q.

A and B were partners in a firm sharing profits and losses equally. Their firm was dissolve on 15th March, 2014, which resulted in a loss of Rs. 30, 000. On that date the capital account of A showed a credit balance of Rs. 20, 000 and that of B a credit balance of Rs. 30, 000. The cash account had a balance of Rs. 20, 000.
You are required to pass the necessary journal entries for the:
(i) Transfer of loss to the capital accounts of the partners and
(ii) Making final payment to the partners.

Q.

X, Y and Z are partners sharing profits in the ratio of 2 : 3 : 5. Goodwill is appearing in their books at a value of Rs 60, 000. X retires and on the day of X's retirement Goodwill is valued at Rs 45, 000. Y and Z decided to share future profits equally. Pass the necessary Journal entries.

Q.

Give the necessary journal entries in each of the following alternative cases :

(i) Realisation expenses amounted to Rs. 500.

(ii) Realisation expenses paid by the firm amounted to Rs. 500 and the partner has to bear the realisation expenses.

(iii) 'A' one of the partners was to bear all the realisation expenses for which he was given a commission of 2% of net cash realised from dissolution. Cash realised from assets was Rs 25, 000 and cash paid for liabilities amounted to Rs 5, 000

Q.

A and B are partners in a firm, sharing Profits and Losses in the ratio of 3 : 2. Their capitals are Rs 1, 80, 000 and Rs 1, 40, 000 respectively. They admit X in partnership on the conditions that he will bring Rs 67, 500 as goodwill and Rs 1, 50, 000 as capital and will get $\frac{1}{4}$ share in the profits of the firm. Assuming that the capital and goodwill have been brought in cash by the new partner, pass the necessary journal entries and find out new profit sharing ratio of partners when (A) Goodwill is retained in the firm and (B) Goodwill is withdrawn by old partners.

Q. State giving reasons, which of the following transactions would improve, reduce or not change the Current Ratio, if Current Ratio of a company is (i) 1:1; or (ii) 0.8:1:
(a) Cash paid to Trade Payables.
(b) Purchase of Stock-in-Trade on credit.
(c) Purchase of Stock-in-Trade for cash.
(d) Payment of Dividend payable.
(e) Bills Payable discharged.
(f) Bills Receivable endorsed to a Creditor.
(g) Bills Receivable endorsed to a Creditor dishonoured.

Q.

Following is the Balance Sheet of A, B and C who share profits and losses of the business in the ratio of 3:2:1.

BALANCE SHEET

as at 31st March, 2016

$\begin{array}{cccc}\text{Capital and Liabilities}& \text{Rs}& \text{Assets}& \text{Rs}\\ \text{Capital A/cs:}& & \text{Furniture}& 95,000\\ A1,20,000& & \text{Business Premises}& 2,05,000\\ B1,20,000& & \text{Stock-in-Trade}& 40,000\\ C\underset{–}{1,20,000}& 3,60,000& \text{Debtors}& 28,000\\ \text{Sundry Creditors}& 20,000& \text{Cash at Bank}& 15,000\\ \text{Outstanding Salaries and Wages}& 7,200& \text{Cash in Hand}& 4,200\\ & \underset{–}{\overline{3,87,200}}& & \underset{–}{\overline{3,87,200}}\end{array}$

On 1st April, 2016, they admit D as partner on the following conditions:

(i) D will bring Rs 1, 20, 000 as his Capital and also Rs 30, 000 as Goodwill premium for a quarter of the share in the future profit/loss of the firm.

(ii) The values of the fixed assets and business premises of the firm will be increased by 10% before the admission of D.

(iii) The future profits and losses of the firm will be shared equally by the partners.

Show Journal entries, Revaluation Account, Partner's Capital Accounts and the opening Balance Sheet of the new firm to include the above-mentioned transactions assuming that the conditions were duly satisfied.

Q.

Hero Honda Limited made an issue of 1, 00, 000 Equity Shares of Rs 10 each, payable as follows:

On Application Rs 2.50 per share

On Allotment Rs 2.50 per share

On Call Balance Amount

Members holding 400 shares did not pay the call money and the shares were duly forfeited. 200 of the forfeited shares were reissued as fully paid at Rs 5 per share.

Draft necessary journal entries and prepare share capital and forfeited shares accounts in the books.

Q.

A, B and C are partners sharing profits and losses in the ratio of 3 : 2 : 1. With effect from 1st April, 2015, it was decided to change the profit sharing ratio to 4 : 3 : 2. Goodwill already appearing in the books as Rs 40, 000. Goodwill is to be valued at 2 years' purchase of average of 3 years profit. The profits were Rs 95, 000, Rs 85, 000 and Rs 90, 000. Pass necessary journal entry for goodwill without opening goodwill account assuming that the firm adopted fixed capital method.

Q.

A company forfeited 100 shares of Rs 10 each, Rs 7.50 per share called up on which Rs 5 per share had been paid. Directors decided to re-issue all the forfeited shares to B as Rs 7.50 paid up for Rs 7 each. Pass the necessary Journal entries.

Q.

Explain in brief the main categories in which the share capital of a company is divided.

Q.

A, T and R were partners in a firm sharing profits in the ratio of 5 : 6 : 7 respectively. Their capitals were Rs. 5, 00, 000; Rs. 6, 00, 000 and Rs. 7, 00, 000 respectively. State the ratio in which the goodwill of the firm amounting to Rs. 16, 00, 000 will be adjusted in the capital accounts of A and T in case of R’s death.

1. None of the above

2. Old Ratio

3. Gaining Ratio

4. Sacrificing ratio

Q.

S, T and U were partners in a firm sharing profits in the ratio of 1 : 2 : 2. On 15-2-2015 S died and the new profit sharing ratio of T and U was 3 : 2. On S's death the goodwill of the firm was valued at Rs 60, 000.

Calculate the gaining ratio and pass necessary journal entry on S's death for the treatment of goodwill.

Q. Anu, Manu and Tanu invested capitals in the ratio 4:6:9.Atthe end of the business term, they received the profits in the ratio 2:3:5.Find the ratio of time for which they invested their capitals. 1~ 9:9:10 2~10:9:9 3~9:10:9

Q. A person distributed his total property among his three son . The ratio of the total property , share of the first son and share of the second son is 15:3:7 . Find the central angle which represents the share of the third son .

Q.

Discuss the various methods of computing the share in profits in the event of death of a partner.

Q.

The firm comes to an end immediately whenever any partner dies. State true or false.

1. False

2. True

Q.

The deceased partner`s share in the firm is calculated in the same manner as in the case of a retiring partner. Is the statement true or false?

1. None of the above

2. Partially true

Q. $A$ and $B$ were partners in a firm sharing profits and losses in the ratio of $3:2$. They admitted $C$ as a new partner for $3/7^{th}$ share in the profit and new profit sharing ratio will be $2:2:3$. $C$ brought $Rs.2,00,000$ as his capital and $Rs.1,50,000$ as premium for goodwill. Half of their share of premium was withdrawn by $A$ and $B$ from the firm. Calculate sacrificing ratio and pass necessary Journal entries for the above transaction in the books of the firm.

Q.

The partnership comes to an end immediately, whenever a partner dies. State true or false.

1. None of the above

2. Partially true

Q.

The total profit as on 31.3.2018 is Rs. 1, 25, 000 and a partner died on 31st December 2018. Profit earned till 31st December is Rs. 93, 750. So what is his share of profit if the profit sharing ratio is equal.

1. Rs 1, 25000

2. Rs 62, 500

3. None of the above

4. Rs 31, 250

Q. A Ltd purchased for canellation Rs 50, 000 of its $15\%$ debentures at Rs 98. The expenses of purchase amounted to Rs 50.