Past Adjustments

Q.

Pranav, Karan and Rahim were partners in a firm sharing profits and losses in the ratio of 2:2:1. On 31st March, 2017, their Balance Sheet was as follows :

BALANCE SHEET OF PRANAV, KARAN AND RAHIM
as on 31st March, 2017
$\begin{array}{cccc}\text{Liabilities}& \text{Amount}& \text{Assets}& \text{Amount}\\ & \text{(Rs)}& & \text{(Rs)}\\ \text{Creditors}& 3,00,000& \text{Fixed Assets}& 4,50,000\\ \text{General Reserve}& 1,50,000& \text{Sotck}& 1,50,000\\ \text{Capitals :}& & \text{Debtors}& 2,00,000\\ \text{Pranav}& 2,00,000& \text{Bank}& 1,50,000\\ \text{Karan}& 2,00,000& & \\ \text{Rahim}& 1,00,000& & \\ \text{Total}& 9,50,000& \text{Total}& 9,50,000\end{array}$

Karan died on 12-6-2017. Accoring to the partnership deed, the legal representatives of the deceased partner were entitled to the following:

(i) Balance in his Capital Account.

(ii) Interest on his Capital @ 12% p.a.

(iii) Share of goodwill. Goodwill of the firm on Karan's death was valued at Rs 60, 000.

(iv) Share in the profits of the firm till the date of his death, calculated on the basis of last year's profit. The profit of the firm for the year ended 31-3-2017 was Rs 5, 00, 000.

Prepare Karan's Capital Account to be presented to his representatives.

Q.

Mannu and Shristhi are partners in a firm sharing profit in the ratio of 3:2. Following is the balance sheet of the firm as on March 31, 2006.

Balance Sheet

as on March 31, 2006

$\begin{array}{cccccc}\text{Liabilities}& & \text{Amt. (Rs)}& \text{Assets}& & \text{Amt. (Rs)}\\ \text{Mannu's Capital}& 30,000& & \text{Drawings}& & \\ \text{Shristhi's Capital}& \underset{–}{10,000}& 40,000& \text{Mannu}& 4,000& \\ & & & \text{Shristhi}& \underset{–}{2,000}& 5,000\\ & & & \text{Other Assets}& & 34,000\\ & & \underset{–}{\overline{\underset{–}{40,000}}}& & & \underset{–}{\overline{\underset{–}{40,000}}}\end{array}$

Profit for the year ended March 31, 2006 was Rs 5, 000 which was divided in the agreed ratio, but interest @5% pa on capital and @ 6% pa on drawings was inadvertently enquired. Adjust interest on drawings on an average basis for 6 months. Give the adjustment entry.

Q.

A, B & C are partners in a firm sharing profits & losses in ratio of 2:3:5. Their fixed capitals were Rs. 15, 00, 000, Rs. 30, 00, 000 & Rs. 60, 00, 000 respectively.. For the year ended 31st March 2015, interest was credited @12% instead of 10%. Pass the necessary adjustment entry.

1. B's Capital A/c Dr 15, 000
   To A's Capital A/c 3, 000
   To C's Capital A/c 12, 000

2. C's Capital A/c Dr 15, 000
   To B's Capital A/c 3, 000
   To A's Capital A/c 12, 000

3. A's Capital A/c Dr 15, 000
   To B's Capital A/c 3, 000
   To C's Capital A/c 12, 000

4. None of these

Q.

Ramesh and Suresh were partners in a firm sharing profits in the ratio of their capitals contributed on commencement business which were Rs 80, 000 and Rs 60, 000 respectively. The firm started business on April 1, 2005. According to the partnership agreement, interest on capital and drawings are 12% and 10% pa respectively. Ramesh and Suresh are to get a monthly salary of Rs 2, 000 and Rs 3, 000 respectively.

The profits for year ended March 31, 2006 before making above appropriations was Rs 1, 00, 300. The drawings of Ramesh and Suresh were Rs 40, 000 and Rs 50, 000 respectively. Interest on amounted to Rs 2, 000 for Ramesh and Rs 2, 500 for Suresh. Prepare profit and loss appropriation account and partners' capital accounts, assuming that their capitals are fluctuating.

Q.

A, B and C are in partnership. On 1st April, 2015 their capitals were : A Rs 5, 00, 000 (Credit), B Rs 3, 00, 000 (Credit) and C Rs 40, 000 (Debit). As per partnership deed Interest on Capital is to be allowed at 6% p.a. and Interest on drawings is to be charged at 8% p.a.

You find that :

(i) On 1st July 2015, A withdrew Rs 1, 00, 000 against capital;

(ii) B withdrew Rs 5, 000 p.m. during the year.

(iii) C withdrew Rs 60, 000 during the year.

The profit for the year ended 31st March, 2016 amounted to Rs 3, 84, 000.

You are required to prepare journal entries for the above transactions and also prepare partner's capital accounts.

Q.

A and B are partners sharing profits in the ratio of 3:2, with Capitals of Rs 5, 00, 000 and 3, 00, 000 respectively. Interest on Capital is agreed at 6% p.a. B is to be allowed an annual salary of Rs 60, 000. During the year 2016-17, the profits prior to the calculation of interest on capital but after charging B's salary amounted to Rs 1, 80, 000. A provision of 5% of the profit is to be made in respect of commission to the Manager.

Prepare Profit and Loss Appropriation account showing the distribution of profit and the partner's capital accounts for the year ending March 31, 2017.

Q.

Simmi and Sonu are partners in a firm, sharing profits and losses in the ratio of 3:1. The profit and loss account of the firm for the year ending March 31, 2006 shows a net profit of Rs 1, 50, 000. Prepare the profit and loss appropriation account by taking into consideration the following information

(i) Partners capital on April 1, 2005; Simmi, Rs 30, 000; Sonu, Rs 60, 000;

(ii) Current accounts balances on April 1, 2005; Simmi, Rs 30, 000 (Cr); Sonu, Rs 15, 000 (Cr);

(iii) Partners drawings during the year amounted to Simmi, Rs 20, 000; Sonu, Rs 15, 000;

(iv) Interest on capital was allowed at 5% pa.

(v) Interest on drawing was to be charged at 6% pa at an average of six months;

(vi) Partners' Salaries; Simmi Rs 12, 000 and Sonu Rs 9, 000. Also show the partners' current accounts.

Q.

Shiv and Hari entered into partnership on 1st April, 2015, contributing Rs 5, 00, 000 and Rs 2, 00, 000 respectively. Hari also introduced Rs 1, 00, 000 as additional capital on 1st July, 2015. They agreed to share profits and losses in the ratio of 3:2. The following information is provided regarding the partnership :

(i) Shiv and Hari, each are allowed a salary of Rs 5, 000 per quarter.

(ii) Interest is to be allowed on Capitals at 8% p.a. and charged on drawings at 10% p.a.

Drawings of Shiv and Hari during the year were Rs 12, 000 and Rs 10, 000 respectively. Profit as at 31st March, 2016 before the above mentioned adjustments was Rs 1, 96, 000.

Prepare :

(i) Necessary journal entries relating to appropriation of profits,

(ii) Profit and Loss Appropriation A/c, and

(iii) Partner's Capital A/cs.

Q.

Arun and Arora were partners in a firm sharing profits in the ratio of 5:3, their fixed capital on 1-4-2010 were: Arun Rs 60, 000 and Arora Rs 80, 000. They agreed to allow interest on capital @ 12 % p.a. and to charge on drawing @ 15% p.a. The profit of the firm for the year ended 31-3-2011 before all the above adjustments were Rs 12, 600. The drawing made by Arun were Rs 2, 000 and by Arora Rs 4, 000 during the year. Prepare Profit and Loss Appropriation A/c of Arun and Arora. Show your calculation clearly. The interest on capital will be allowed even if the firm incurs loss.

Q.

Lokesh and Azad are partners sharing profits in the ratio 3:2, with capitals of Rs 50, 000 and 30, 000, respectively. Interest on capital is agreed to be paid at 6% pa. Azad is allowed a salary of Rs 2, 500 pa. During 2006, the profits prior to the calculation of interest on capital but after charging Azad's salary amounted to Rs 12, 500. A provision of 5% of profits is to be made in respect of manager's commission. Prepare accounts showing the allocation of profits and partner's capital accounts.

Q.

Asha and Lata are partners with Capitals of Rs 5, 00, 000 and Rs 4, 00, 000 respectively, on which they are entitled to interest at 10% p.a. They divide profits in the ratio of 2:1. They take Sudha, Manager of the business for the past 15 years, as partner in the firm with $\frac{1}{4}$th share of profits and guaranteed that her share of profits will not be less than Rs 2, 00, 000. Sudha brought Rs 3, 00, 000 as her capital. Any excess profits received by Sudha over her $\frac{1}{4}$th share will be borne by Asha and Lata in the ratio of 4:1. Profits at the end of the year before allowing interest on capitals amounted to Rs 7, 20, 000. Distribute the profits. What value has been fulfilled by Asha and Lata?

Q.

Rakesh and Roshan are partners, sharing profits in the ratio of 3 : 2 with capitals of Rs 40, 000 and Rs 30, 000, respectively. They withdrew from the firm the following amounts, for their personal use

$\begin{array}{ccc}\text{Rakesh}& \text{Month}& \text{Amt. (Rs)}\\ & \text{May 31, 2006}& 600\\ & \text{June 30, 2006}& 500\\ & \text{August 31, 2006}& 1,000\\ & \text{November 1, 2006}& 400\\ & \text{December 31, 2006}& 1,500\\ & \text{January 31, 2007}& 300\\ & \text{March 1, 2007}& 700\\ \text{Rohan}& \text{At the beginning of each month}& 400\end{array}$

Interest is to be charged @ 6% pa. Calculate interest on drawings, assuming that book of accounts are closed on March 31, 2007, every year.

Q.

Anil, Sunil and Ravinder entered into a partnership on 1st April 2015 to share profits in the ratio of 2:1:1. It was provided in the deed that Ravinder's share of profit will not be less than Rs 70, 000 per annum. The losses for the year ended 31st March, 2016 were Rs 2, 00, 000 before allowing interest Rs 8, 000 on Anil's Loan which is due for the current year.

You are required to show necessary account for division of loss and also pass the necessary journal entries.

Q.

Srijan, Raman and Manan were partners in a firm sharing profits and losses in the ratio of 2:2:1. On 31st March, 2017 their Balance Sheet was as follows:

BALANCE SHEET OF SRIJAN, RAMAN AND MANAN
as on 31-03-2017
$\begin{array}{cccc}\text{Liabilities}& \text{Amount}& \text{Assets}& \text{Amount}\\ & \left(Rs\right)& & \left(Rs\right)\\ \text{Capitals :}& & \text{Capital :}& \\ \text{Srijan}2,00,000& & \text{Manan}& 10,000\\ \text{Raman}\underset{–}{1,50,000}& 3,50,000& \text{Plant}& 2,20,000\\ \text{Creditors}& 75,000& \text{Investments}& 70,000\\ \text{Bills payable}& 40,000& \text{Stock}& 50,000\\ \text{Outstanding Salary}& 35,000& \text{Debtors}& 60,000\\ & & \text{Bank}& 10,000\\ & & \text{Profit and Loss}& 80,000\\ \text{Total}& 5,00,000& \text{Total}& 5,00,000\end{array}$

On the above date they decided to dissolve the firm:

(i) Srijan was appointed to realise the assets and discharge the liabilities. Srijan was to receive 5% commission on sale of assets (except cash) and was to bear all expenses of realisation.

(ii) Assets were realised as follows : Plant Rs 85, 000; Stock Rs 33, 000; Debtors Rs 47, 000.

(iii) Investments were realised at 95% of the book value.

(iv) The firm had to pay Rs 7, 500 for an outstanding repair bill not provided for earlier.

(v) A contingent liability in respect of bills receivable, discounted with the bank has also materialised and had to be discharged for Rs 15, 000.

(vi) Expenses of realisation amounting to Rs 3, 000 were paid by Srijan.

Prepare Realisation Account, Partner's Capital Accounts and Bank Account.

OR

Moli, Bhola and Raj were partners in a firm sharing profits and losses in the ratio of 3:3:4. Their partnership deed provided for the following:

(i) Interest on capital @ 5% p.a.

(ii) Interest on drawing @12% p.a.

(iii) Interest on partner's loan @6% p.a.

Moli was allowed an annual salar of Rs 4, 000. Bhola was allowed a commission of 10% of net profit as shown by Profit and Loss Account and Raj was guaranteed a profit of Rs 1, 50, 000 after making all the adjustments as provided in the partnership agreement.

Their fixed capital were Moli - Rs 5, 00, 000; Bhola : Rs 8, 00, 000 and Raj Rs 4, 00, 000. On 1st April, 2016 Bhola extended a loan of Rs 1, 00, 000 to the firm. The net profit of the firm for the year ended 31st March , 2017 before interest on Bhola's loan was Rs 3, 06, 000. Prepare Profit and Loss Appropriation Account of Moli, Bhola and Raj for the year ended 31st March 2017, assuming that Bhola withdrew Rs 5, 000 at the end of the end of each month, Moli withdrew Rs 10, 000 at the end of each quarter and Raj withdrew Rs 40, 000 at the end of each half year.

Q.

The net profit of a firm for the year ended 31st March 2017, was Rs 30, 000, which has been duly distributed amongst its three partners A, B and C in their agreed proportions of 3:1:1 respectively. It was discovered on 10th April 2017 that the undermentioned transactions were not passed through the books of accounts of the firm for the year ended 31st March 2017, which stood duly closed on that date:

(a) Interest on capital at 10% p.a.

(b) Interest on drawings : A Rs 350; B Rs 250; C Rs 150.

(c) Salary of Rs 5, 000 to A and Rs 7, 500 to B.

(d) Commission due to A on a special transaction, Rs 3, 000.

The capital accounts of the partners on 1st April, 2016 were : A Rs 25, 000; B Rs 20, 000; C Rs 15, 000.

You are required to suggest a journal entry to be passed on 10th April, 2017 which will not affect the Profit and Loss Appropriation Account of the firm for the year ended 31st March, 2017 and at the same time will rectify the position of the partners.

Q.

The following was the balance sheet of Arun, Bablu and Chetan sharing profits and losses in the ratio of $\frac{6}{14}:\frac{5}{14}:\frac{3}{14}$ respectively.

$\begin{array}{cccc}\text{Capital and Liabilities}& \text{Amt. (Rs)}& \text{Assets}& \text{Amt. (Rs)}\\ \text{Creditors}& 9,000& \text{Land and Building}& 24,000\\ \text{Bills Payable}& 3,000& \text{Furniture}& 3,500\\ \text{Capital Accounts}& & \text{Stock}& 14,000\\ \text{Arun}19,000& & \text{Debtors}& 12,600\\ \text{Bablu}16,000& & \text{Cash}& 900\\ \text{Chetan}\underset{–}{8,000}& 43,000& & \\ & \overline{\underset{–}{\underset{–}{55,000}}}& & \overline{\underset{–}{\underset{–}{55,000}}}\end{array}$

They agreed to take Deepak into partnership and give him a share of $\frac{1}{8}$ on the following terms

(a) that Deepak should bring in Rs.4, 200 as goodwill and Rs. 7, 000 as his capital;

(b) that furniture be depreciated by 12% ;

(c) that stock be depreciated by 10%;

(d) that a reserve of 5% be created for doubtful debts;

(e) that the value of land and buildings having apprec iated be brought upto Rs. 31, 000 ;

(f) that after making the adjustments, the Capital accounts of the old partners (who continue to share in the same proportion as before) be adjusted on the basis of the proportion of Deepak'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 cash account, profit and loss adjustment account. (revaluation account) and the opening balance sheet of the new firm.

Q.

Narang, Suri and Bajaj are partners in a firm sharing profits and losses in proportion of 12, 16 and 13 respectively. The Balance Sheet on April 1, 2007 was as follows

Balance SheetDr as on March 31, 2007 CrCapital and LiabilitiesAmt.(Rs)AssetsAmt.(Rs)Bills Payable12, 000Freehold Premises40, 000Sundry Creditors18, 000Machinery30, 000Reserves12, 000Furniture12, 000Capital Account12, 000Stock22, 000Narang30, 000Sundry Debtors20, 000Suri30, 000(-)Reserve for Bad(1, 000)––––––––19, 000Bajaj28, 000––––––––88, 000DebtCash7, 000¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯1, 30, 000––––––––––––––––––––¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯1, 30, 000––––––––––––––––––––

Bajaj retires from the business and the partners agree to the following

(a) Freehold premises and stock are to be appreciated by 20% and 15% respectively.

(b) Machinery and furniture are to be depreciated by 10% and 7% respectively.

(c) Bad Debts reserve is to be increased to Rs.1, 500.

(d) Goodwill is valued at Rs. 21, 000 on Bajajs retirement.

(e) The continuing partners have decided to adjust their capitals in their new profit sharing ratio after retirement of Bajaj, Surplus/deficit, if any, in their capital accounts will be adjusted through current accounts.

Prepare necessary ledger accounts and draw the Balance Sheet of the reconstituted firm.

Q.

Amar and Samar were partners in a firm sharing profits and losses in 3 :1 ratio. They admitted Kanwar for $\frac{1}{4}$ share of profit. Kanwar could not bring his share of goodwill premium in cash. The goodwill of the firm was valued at Rs. 80, 000 on Kanwar's admission. Record necessary journal entry for goodwill on Kanwar's admission.

Q. Journalise the following transaction in the books Bhushan Oil Ltd
(a) 200 shares of Rs. 100 each issued at a premium of Rs. 10 were forfeited for the non-payment of allotment money of Rs. 60 per share. The first and final call of Rs. 20 per share on these shares were not made. The forfeited shares were reissued at Rs. 70 per share as fully paid-up.
(b) 150 shares of Rs. 10 each issued at a premium of Rs. 4 per share payable with allotment were forfeited for non-payment of allotment money of Rs. 8 per share including premium. The first and final call of Rs. 4 per share were not made. The forfeited share were reissued at Rs. 15 per share fully paid-up.
(c) 400 share of Rs. 50 each issued at par were forfeited for non-payment of final call of Rs. 10 per share. These share were reissued at Rs. 45 per share fully paid-up.

Q.

Ram, Shyam and Mohan shared profits in the ratio of 2 : 2 : 1. Following is their Balance Sheet on the date of dissolution :

$\begin{array}{cccc}\text{Capital and Liabilities}& \text{Amount (Rs.)}& \text{Assets}& \text{Amount (Rs.)}\\ \text{Creditors}& 40,000& \text{Cash at Bank}& 44,000\\ \text{Bills Payable}& 2,600& \text{Debtors}& 15,000\\ \text{Provision for Depreciation}& 15,000& \text{Stock}& 50,000\\ \text{Ram's Loan}& 40,000& \text{Plant}& 75,000\\ \text{Capital Accounts :}& & \text{Patents}& 20,000\\ \text{Ram}& 1,35,000& \text{100 Shares in X Co.}& 5,000\\ \text{Shyam}& 30,000& \text{300 Shares in Y Co.}& 18,000\\ \text{Mohan}& 10,000& \text{Goodwill}& 15,600\\ & & \text{Advertisement Suspense A/c}& 30,000\\ & \overline{\underset{–}{\underset{–}{2,72,600}}}& & \overline{\underset{–}{\underset{–}{2,72,600}}}\end{array}$

1. Ram takes over Debtors at Rs 10, 000; Stock at a 20% less value; and Plant at Rs 30, 000.

2. One of the Creditors took some of the patents whose book value was Rs 8, 000, at a valuation of Rs 4, 800. Balance of the creditors were paid at a discount of Rs 1, 200.

3. Ram's has made full payment of his loan

4. Shares in X Co. were agreed to be taken over by Shyam at Rs 30 per share.

5. Shares in Y Co. were valued at Rs 12, 000. All partners divided these shares in their profit sharing ratio.

6. Balance of the Patents realised 70% of their book value.

Prepare realisation account.

Q.

Azad and Babli are partners in a firm sharing profits & losses in the ratio of 2 :1. Chintan is admitted in to the firm with $\frac{1}{4}$ Share in profits. Chintan will bring in 30, 000 as his capital and :ttie Capitals of Azad and Babli are to be adjusted in the profit sharing ratio. The Balance Sheet of Azad and Babli as on December 31, 2006 (Before Chintan's admission) was as follows

$\text{Balance Sheet of A and B}$
$\text{as on 31.12.2016}$
$\begin{array}{cccc}\text{Capital and Liabilities}& \text{Amt. (Rs)}& \text{Assets}& \text{Amt. (Rs)}\\ \text{Creditors}& 8,000& \text{Cash in hand}& 2,000\\ \text{Bills Payable}& 4,000& \text{Cash at bank}& 10,000\\ \text{General Reserve}& 6,000& \text{Sundry Debtors}& 8,000\\ \text{Capital Accounts}& & \text{Stock}& 10,000\\ \text{Azad}50,000& & \text{Furniture}& 5,000\\ \text{Babli}\underset{–}{32,000}& 82,000& \text{Machinery}& 25,000\\ & & \text{Buildings}& 40,000\\ & \overline{\underset{–}{\underset{–}{1,00,000}}}& & \overline{\underset{–}{\underset{–}{1,00,000}}}\end{array}$

It was agreed that :

(i) Chintan will bring in Rs. 12, 000 as his share of good will premium.

(ii) Buildings were valued at Rs. 45, 000 and machinery at Rs. 23, 000.

(iii) A provision for doubtful debts is to be created @ 6% on debtors.

(iv) The capital accounts of Mad and Babb are to be adjusted by opening current accounts.

Record necessary journal entries, show necessary ledger accounts and prepare the balance sheet after admission.

Q.

Ram and Mohan were partners in a firm sharing profits in the ratio of 4:1. On 1-3-2015, they admitted Sohan as a new partner for $\frac{1}{3}rd$ share in the profits of the firm. They fixed the new profit sharing ratio as 4:2:3.

The P & L A/c on the date of admission showed a Balance of Rs 32, 000 (Dr.) The firm also had a reserve of Rs 1, 00, 000. Sohan is to bring Rs 60, 000 as premium for his share of goodwill.

Showing your calculations clearly, pass necessary journal entries to record the above transactions.

Q.

Om, Ram and Shanti were partners in firm sharing profits in the ratio of 3:2:1. On 1st April, 2014 their Balance sheet are as follows:

$\begin{array}{ccccc}\text{Liabilities}& & \text{Amount}& \text{Assets}& \text{Amount}\\ & & \text{(Rs)}& & \text{(Rs)}\\ \text{Capital Accounts :}& & & \text{Land and building}& 3,64,000\\ \text{Om}& 3,58,000& & \text{Plane and Machiery}& 2,95,000\\ \text{Ram}& 3,00,000& & \text{Furniture}& 2,33,000\\ \text{Shanti}& 2,62,000& 9,20,000& \text{Bills Receivable}& 38,000\\ \text{General Reserve}& & 48,000& \text{Sundry Debtors}& 90,000\\ \text{Creditors}& & 1,60,000& \text{Stock}& 1,11,000\\ \text{Bills Payable}& & \underset{–}{90,000}& \text{Bank}& \underset{–}{87,000}\\ & & 12,18,000& & 12,18,000\end{array}$

On the above date, Hanuman was admitted on the following terms:

(i) He will bring Rs 1, 00, 000 for his capital and will get 1/10th share in the profits.

(ii) He will bring necessary amount in cash for his good will premium. The goodwill of the firm was valued at Rs 3, 00, 000.

(iii) A liability of Rs 18, 000 will be created against Bill Receivable discountd.

(iv) The value of stock and furniture will be reduced by 20%.

(v) The value of land and buildings will be increased by 10%.

(vi) Capital accounts of the partners will be adjusted on the basis of Hanuman's capital in their profit sharing ratio by opening curent accounts. Prepare Revaluation Account and Partner's Capital Accounts.

OR

Xavier, Yusuf and Zaman were parners in a firm sharing profits in the ratio of 4:3:2. On 1-4-2014, their Balance Sheet was as follows:

$\begin{array}{cccccc}\text{Liabilities}& & \text{Amount}& \text{Assets}& & \text{Amout}\\ & & \text{(Rs)}& & & \text{(Rs)}\\ \text{Sundry Creditors}& & 41,400& \text{Cash at Bank}& & 33,000\\ \text{Capital Accounts:}& & & \text{Sundry Debtors}& 30,450& \\ \text{Xavier}& 1,20,000& & \text{Less : Provision for Bad}& & \\ \text{Yusuf}& 90,000& & \text{Debts}& \underset{–}{1050}& 29,400\\ \text{Zaman}& \underset{–}{60,000}& 2,70,000& \text{Stock}& & 48,000\\ & & & \text{Plant and Machinery}& & 51,000\\ & & & \text{Land and Building}& & \underset{–}{1,50,000}\\ & & \overline{3,11,400}& & & 3,11,000\end{array}$

Yusuf had been suffering from ill health and thus gave notice of retirement from the firm, An agreement was, therefore, entered into as on 1-4-2014, the terms of which were as follows.

(i) That land and building be appreciated by 10%.

(ii) That provision for bad debts in no longer necessary.

(iii) That stock be appreciated by 20%

(iv) That good will of the firm be fixed, at Rs 54, 000. Yusuf's share of the same is adjustes from Xavier's and Zaman's capital accounts, who are going to share future profits in the ratio of 2:1.

(v) The entire capital of the newly constituted firm be redjusted by bringing in or paying necessary cash so that future capital of Xavier and Zaman will be in their profit sharing ratio. Prepare Revaluation Account and Partner's Capital Accounts.

Q.

Arti and Bharti are partners in a firm sharing profits in 3 : 2 ratio. They admitted Sarthi as a new partner and the new profit-sharing ratio will be 2 : 1 : 1. Sarthi brought Rs 1, 00, 000 for her share of goodwill. Goodwill already appeared in the books of Arti and Bharti at Rs 60, 000.

Pass the necessary Journal entries in the books of the new firm for the above transactions.

Q.

On March 31, 2014 the capital accounts of Elvin, Monu and Ahmed after making adjustments for profits, drawings, etc. were as, Elvin - Rs 80, 000; Monu - Rs 60, 000; and Ahmed - Rs 40, 000. Subsequently, it was discovered that interest on capital and interest on drawings had been omitted. The partners were entitled to interest on capital at 5% p.a. The drawings during the year were : Elvin - Rs 20, 000; Monu - Rs 15, 000; and Ahmed - Rs 9, 000. Interest on drawings chargeable to the partners was Elvin - Rs 500; Monu - Rs 360 and Ahmed - Rs 200. The net profit for the year ended 31st March, 2014 amounted to Rs 1, 20, 000. The profit sharing ratio of the partners was 3:2:1.

Record the necessary adjustment entry for rectifying the above errors of omission. Show your workings.

Q.

Digvijay, Brijesh and Parakaram were partners in a firm sharing profits in the ratio of 2 : 2 : 1. Their Balance Sheet as on March 31, 2007 was as follows

$\begin{array}{ccccc}\text{Capital and Liabilites}& & \text{Amt.(Rs)}& \text{Assets}& \text{Amt.(Rs)}\\ \text{Creditors}& & \text{49, 000}& \text{Cash}& \text{8, 000}\\ \text{Reserves}& & \text{18, 500}& \text{Debtors}& \text{19, 000}\\ \text{Digvijay's Capital}& & \text{82, 000}& \text{Stock}& \text{42, 000}\\ \text{Brijesh's Capital}& & \text{60, 000}& \text{Buildings}& \text{2, 07, 000}\\ \text{Parakaram's Capital}& & \text{75, 500}& \text{Patents}& \text{9, 000}\\ & & \underset{–}{\underset{–}{\overline{2,85,000}}}& & \underset{–}{\underset{–}{\overline{2,85,000}}}\end{array}$

Brijesh retired on March 31, 2007 on the following terms

(i) Goodwill of the firm was valued at Rs. 70, 000 and was not to appear in the books.

(ii) Bad debts amounting to Rs. 2, 000 were to be written off.

(iii) Patents were considered as valueless.

Prepare revaluation account, partners' capital accounts and the balance sheet of Digvijay and Parakaram after Brijesh's retirement.

Q.

Ram, Shyam & Mohan are partners in a firm sharing profits & losses in the ratio of 2:1:2. Their fixed capitals were 3, 00, 000, 1, 00, 000 and 2, 00, 000 respectively. Interest on capital for the year ending 31st March, 2015 was credited to them @ 9% p.a. instead of 10% p.a. The profits for the year before charging interest was 2, 50, 000. Prepare necessary adjustment entry

1. Shyam Cr 200 Mohan Dr 400 Ram Cr 600

2. Ram Cr 400 Shyam Dr 200 Mohan Dr 600

3. Shyam Dr 200 Mohan Dr 400 Ram Cr 600

4. Ram Dr 400 Shyam Dr 200 Mohan Cr 600

Q.

Manoj, Sahil and Dipankar are partners in a firm sharing profits and losses equally. They have omitted interest on Capital @ 10% per annum for three years on following capitals:

Manoj - 3, 00, 000

Sahil - 2, 00, 000

Dipankar - 1, 00, 000

Whose current account is to be debited?

1. None of these

2. Dipankar

3. Sahil

4. Manoj

Q.

Following is the Balance Sheet of Aruna, Karuna and Varuna as at 31st March, 2009, who have agreed to share profits and losses in proportion of their capitals.

Balance Sheet of Aruna, Karuna and Varuna
as at 31st March, 2009
$\begin{array}{cccc}\text{Capital and Liabilities}& \text{Rs}& \text{Assets}& \text{Rs}\\ \text{Capitals:}& & \text{Land and Building}& 2,00,000\\ \text{Aruna}2,00,000& & \text{Machinery}& 3,00,000\\ \text{Karuna}3,00,000& & \text{Closing Stock}& 1,00,000\\ \text{Varuna}\underset{–}{2,00,000}& 7,00,000& \text{Sundry Debtors}1,10,000& \\ \text{General Reserve}& 35,000& \text{Less:Provision for}& \\ \text{Workmen Compensation Reserve}& 15,000& \text{Doubtful debts}\underset{–}{(10,000)}& 1,00,000\\ \text{Sundry Creditors}& \underset{–}{50,000}& \text{Cash at Bank}& \underset{–}{1,00,000}\\ & \underset{–}{8,00,000}& & \underset{–}{8,00,000}\end{array}$

On 31st March, 2009 Aruna desired to retire from the firm and the remaining partners decided to carry on the business. It was agreed to ravalue the assets and re-assess the liabilities on the following basis :

(i) Land and building to be appreciated by 30%

(ii) Machinery be depreciated by 20%.

(iii) There were bad debts of Rs 17, 000.

(iv) The claim on account of workmen's compensation was estimated at Rs 8, 000.

(v) Goodwill of the firm was valued at Rs 1, 40, 000 and Aruna's share of Goodwill be adjusted against the Capital Accounts of the continuing partners Karuna and Varuna who have decided to share future profits in the ratio of 4 : 3 respectively.

(vi) Capital of the new firm in total will be the same as before the retirement of Aruna and will be in the new profit sharing ratio of the continuing partners.

(vii) Amount due to Aruna be settled by paying Rs 50, 000 in cash and the balance by transferring to her loan account which will be paid later on.

Prepare Revaluation Account, Capital Accounts of partners and Balance Sheet of time firm after Aruna's retirement.

Q.

Puneet, Pankaj and Pammy are partners in a business sharing profits and losses in the ratio of 2 : 2 :1 respectively. Their balance sheet as on March 31, 2007 was as follow

$\begin{array}{ccccccc}& & & & & & \\ & & & & \text{Balance Sheet}& & \\ \text{Dr}& & & & \text{as on March 31, 2007}& & \text{Cr}\end{array}\begin{array}{cccccc}\text{Capital and Liabilities}& & \text{Amt.(Rs)}& \text{Assets}& & \text{Amt.(Rs)}\\ \text{Sundry Creditors}& & \text{1, 00, 000}& \text{Cash at Bank}& & \text{20, 000}\\ \text{Capital Accounts}& & & \text{Stock}& & \text{30, 000}\\ \text{Puneet}& \text{60, 000}& & \text{Sundry Debtors}& & \text{80, 000}\\ \text{Pankaj}& \text{1, 00, 000}& & \text{Investments}& & \text{70, 000}\\ \text{Pammy}& \underset{–}{40,000}& \text{2, 00, 000}& \text{Furniture}& & \text{35, 000}\\ \text{Reserve}& & \text{50, 000}& \text{Buildings}& & \text{1, 15, 000}\\ & & \overline{\underset{–}{\underset{–}{3,50,000}}}& & & \overline{\underset{–}{\underset{–}{3,50,000}}}\end{array}$

Mr Pammy died on September 30, 2007. The partnership deed piovided the following

(i) The deceased partner will be entitled to his share of profit up to the date of death calculated on the basis of previous year's profit.

(ii) He will be entitled to his share of goodwill of the firm calculated on the basis of 3 years' purchase of average of last 4 years profit. The profits for the last four financial years are given below for 2003-04; Rs. 80, 000; for 2004-05, Rs. 50, 000; for 2005-06, Rs. 40, 000; for 2006-07, Rs. 30, 000. The drawings of the deceased partner up to the date of death amounted to Rs. 10, 000. Interest on capital is to be allowed at 12% per annum.

Surviving partners agreed that Rs. 15, 400 should be paid to the executors immediately and the balance in four equal yearly instalments with interest at 12% pa on outstanding balance. Show Mr Pammy's capital account, his executor's account till the settlement of the amount due.