CA.

Naresh Aggarwal’s
ACADEMY of ACCOUNTS
Accounting • Costing • Taxation • Financial Management
West Patel Nagar, New Delhi. Ph:8800215448. Website: www.academyofaccounts.org

For Eenquiries
Call or whatsapp: 8800215448

AoA
Retirement and (Whatsapp anytime, Calls only between 3.00 pm to 8.00 pm)

Email: ca.naresh.vc@gmail.com
Death of Partner Website: academyofaccounts.org

Watch us on

https://www.youtube.com/CaNareshAggarwal
 (1) (2)

CA. Naresh Aggarwal’s Q-6: Seeta, Geeta and Meeta were partners in a firm sharing profits in the ratio of

ACADEMY of ACCOUNTS 3 : 2 : 1. Geeta retired and her share was divided equally between Seeta and Meeta.
Calculate new and gaining ratio of Seeta and Meeta.
Accounting • Costing • Taxation • Financial Management [New Ratio 2 : 1; Gaining Ratio 1 : 1]
West Patel Nagar, New Delhi. Ph:8800215448. Website: www.academyofaccounts.org
Q-7: Ajay, Vijay and Sanjay were partners in a firm sharing profits in the ratio of
2 : 2 : 1. Ajay retired and his share was divided between Vijay and Sanjay in 3 : 1.
Calculation of New Ratio & Gaining Ratio Calculate new and gaining ratio of Vijay and Sanjay.
[New Ratio 7 : 3; Gaining Ratio 3 : 1]

Q-1: Ram, Shyam and Mohan are partners sharing profit in the ratio of 3 : 2 : 1.
Q-8: A, B and C are partners with capital of Rs. 1,00,000, Rs. 75,000 and Rs. 50,000
Calculate new and gaining ratio after retirement of a partner as per the following
respectively. On C’s retirement, his share is acquired by A and B in the ratio of 2 : 1
situations:
respectively. Ascertain the new profit sharing ratio and gaining ratio.
(a) If Ram retires.
[New Ratio 5 : 4; Gaining Ratio 2 : 1]
(b) If Shyam retires.
(c) If Mohan retires.
Q-9: X, Y and Z were partners in a firm. Y retired and his share was taken over by X
[If Ram retires- New Ratio 2 : 1; Gaining Ratio 2 : 1]

AoA
and Z in the ratio of 6 : 4. Calculate new and gaining ratio of X and Z.
[If Shyam retires- New Ratio 3 : 1; Gaining Ratio 3 : 1]
[New Ratio 8 : 7; Gaining Ratio 3 : 2]
[If Mohan retires- New Ratio 3 : 2; Gaining Ratio 3 : 2]
Q-10: A, B, C and D are partners in the ratio of 4 : 3 : 2 : 1. On B’s retirement, his
Q-2: A, B and C are partners sharing profit in the ratio of 1/2, 3/10 and 1/5 respectively.
share is taken by C and D in the ratio of 1 : 2. Ascertain the new profit sharing ratio and
Calculate new and gaining ratio after retirement of a partner as per the following
gaining ratio.
situations:
[New Ratio 4 : 3 : 3; Gaining Ratio of C & D 1 : 2]
(a) If A retires.
(b) If B retires.
Q-11: P, Q, R and S are partners in the ratio of 5 : 4 : 2 : 1. On Q’s retirement, his
(c) If C retires.
share is taken by R and S in equal ratio. Ascertain the new profit sharing ratio and
[If A retires- New Ratio of B and C will be 3 : 2; Gaining Ratio 3 : 2]
gaining ratio.
[If B retires- New Ratio of A and C will be 5 : 2; Gaining Ratio 5 : 2]
[New Ratio 5 : 4 : 3; Gaining Ratio of R & S 1 : 1]
[If C retires- New Ratio of A and B will be 5 : 3; Gaining Ratio 5 : 3]
Q-12: K, L and M are three partners sharing profits in the ratio of 4: 3 : 2. K retires, L
Q-3: A, B and C are partners sharing profit in the ratio of 5 : 3 : 2. B retires and his
and M decided to share profits in future in the ratio of 5 : 3. Calculate gaining ratio.
share is taken up by A and C in the ratio of 2 : 1. Find out the new and gaining ratio.
[Gaining Ratio 21 : 11]
[New Ratio 7 : 3; Gaining Ratio 2 : 1]
Q-13: X, Y and Z are partners sharing profits in the ratio of 5: 3 : 2. X retires and other
Q-4: X, Y and Z were partners in a firm sharing profits in the ratio of 8 : 7 : 5. Y retired
partners decided to share profits in future in the ratio of 2 : 1. Calculate gaining ratio.
and his share was taken over by X and Z in the ratio of 1 : 2. Calculate new and
[Gaining Ratio 11 : 4]
gaining ratio of X and Y.
[New Ratio 31 : 29; Gaining Ratio 1 : 2]
Q-14: A, B and C are partners in a business and divide profit and loss in the ratio of 15
: 9 : 8 respectively, C retires. A and B decide to share profits in equal proportion.
Q-5: L, M and N were partners in a firm sharing profits in the ratio of 8 : 7 : 5. N retired
Calculate the gaining ratio.
and his share was taken over by L and M in the ratio of 3 : 2. Calculate new and
[Gaining Ratio 1 : 7]
gaining ratio of L and M.
[New Ratio 11 : 9; Gaining Ratio 3 : 2]
 (3) (4)

CA. Naresh Aggarwal’s Q-19: M, N and O who are partners in a firm share profits in the ratio of 3 : 2 : 1.
ACADEMY of ACCOUNTS Goodwill has been valued at Rs. 60,000. On N’s retirement M and O agree to take his
share equally. Goodwill Account is appearing in the books at Rs.24,000. Pass
Accounting • Costing • Taxation • Financial Management necessary journal entry for treatment of N’s share of goodwill.
West Patel Nagar, New Delhi. Ph:8800215448. Website: www.academyofaccounts.org [Hint: Gaining Ratio 1 : 1]

Q-20: A, B and C were partners sharing profits in the ratio of 3 : 2 : 1. B retired and the
new profit sharing ratio between A and C was 2 : 1. The goodwill of the firm was valued
Q-15: Anita, Babita and Sunita were partners in a business. Sunita retires, Anita and at Rs. 90,000. Goodwill was not appearing in the books. Pass necessary journal entry
Babita decide to share profits in the proportion of 3 : 2 in future. Calculate the gaining for the treatment of goodwill on B’s retirement.
ratio. [Hint: Gaining Ratio 1 : 1]
[Gaining Ratio 4 : 1]
Q-21: Ravi, Mukesh, Dinesh and Yogesh are partners in a firm sharing profits in the
ratio of 2 : 2 : 1 : 1. On Mukesh’s retirement, the goodwill of the firm is valued at Rs.
90,000. Ravi, Dinesh and Yogesh decided to share future profits equally. Pass the
necessary journal entry for the treatment of goodwill.

AoA
•••••••••••••••••••••• [Hint: Gaining Ratio of Ravi, Dinesh and Yogesh is 0 : 1 : 1]

Q-22: X, Y and Z were partners in a firm sharing profits in the ratio of 8 : 7 : 5. Y retired
and his share was taken over by X and Z in the ratio of 1 : 2. Goodwill of the firm is
valued at Rs.45,000. Pass the necessary journal entry for the treatment of goodwill.
[Hint: Gaining Ratio 1 : 2]

(Treatment of Goodwill) Q-23: A, B and C are partners with capital of Rs. 1,00,000, Rs. 75,000 and Rs.
50,000 respectively. On C’s retirement, goodwill of the firm is valued at Rs.18,000.
Q-16: A, B and C are partners sharing profits in the ratio of 2 : 2 : 1. On 01.01.2012, His share is acquired by A and B in the ratio of 2 : 1 respectively. Goodwill was
Goodwill of the firm was valued at Rs. 45,000. Goodwill does not appear in books. On appearing in the books at Rs.30,000. Pass the necessary journal entry for the treatment
this date A retires. Calculate gaining ratio and pass Journal Entry regarding goodwill. of goodwill.
[Gaining Ratio 2 : 1] [Hint: Gaining Ratio 2 : 1]

Q-17: X, Y and Z are partners sharing profits in the ratio of 3 : 2 : 1. On 31.03.2012, Q-24: A, B, C and D are partners in the ratio of 4 : 3 : 2 : 1. On B’s retirement, his
Goodwill of the firm was valued at Rs. 60,000. Goodwill does not appear in books. On share is taken by C and D in the ratio of 1 : 2. Goodwill of the firm is valued at
this date Y retires. Calculate gaining ratio and pass Journal Entry for treatment of Rs.40,000. Pass the necessary journal entry for the treatment of goodwill.
goodwill. [Hint: Gaining Ratio of A, C & D is 0 : 1 : 2]
[Gaining Ratio 3 : 1]
Q-25: P, Q, R and S are partners in the ratio of 5 : 4 : 2 : 1. On Q’s retirement, his
Q-18: L, M and O are partners sharing profits and losses in the ratio of 4 : 3 : 2. M share is taken by R and S in equal ratio. Goodwill of the firm is valued at Rs.45,000.
retires and the goodwill is valued at Rs. 72,000 but it was already appearing in the It was appearing in books at Rs.36,000. Pass the necessary journal entry for the
books at Rs.45,000. L and O decided to share future profits and losses in the ratio of treatment of goodwill.
5 : 3. Calculate M’s share of goodwill and pass necessary journal entry for the same. [Hint: Gaining Ratio of Q, R & S is 0 : 1 : 1]
[Hint: Gaining Ratio 13 : 11]
Q-26: A, B, C and D are partners in the ratio of 4 : 3 : 2 : 1. B retires from the firm and
 (5) (6)

CA. Naresh Aggarwal’s Preparation of Revaluation A/c and Balance Sheet

ACADEMY of ACCOUNTS Q-1: Balance Sheet of A, B and C sharing profits in the ratio of 3 : 2 : 1 is given below:
Accounting • Costing • Taxation • Financial Management Balance Sheet
West Patel Nagar, New Delhi. Ph:8800215448. Website: www.academyofaccounts.org
Liabilities Amount Assets Amount
A’s Capital 80,000 Bank 13,000
new ratio of all the partners decided to be equal. Goodwill of the firm is valued at B’s Capital 50,000 Debtors 46,000
Rs.33,000. Pass the necessary journal entry for the treatment of goodwill. C’s Capital 40,000 Less: Provision 2,000 44,000
[Hint: A’s Sacrifice 1/15; Gaining Ratio of C & D is 4 : 7] General Reserve 18,000 Stock 12,000
Workers Comp. Fund 10,000 Machinery 60,000
Q-27: Ram, Shyam, Mohan and Dinesh are partners in the ratio of 5 : 4 : 2 : 1. On Trade Creditors 52,000 Furniture 26,000
Mohan’s retirement, future ratio of the remaining partners decided to be equal. Goodwill Land & Building 80,000
of the firm is valued at Rs.36,000. No goodwill was appearing. Pass the necessary Goodwill 15,000
journal entry for the treatment of goodwill.
[Hint: Ram’s Sacrifice 1/12; Shyam’s Gain is Nil; Dinesh’s Gain 3/12] 2,50,000 2,50,000

AoA
On that date, C decides to retire from the firm and following adjustments are made:
Q-28: K, L and M are three partners sharing profits in the ratio of 4: 2 : 1. M retires, K (a) Goodwill of the firm is valued at Rs.30,000.
and L decided to share profits in future in the equal ratio. Goodwill was valued at (b) Provision for bad and doubtful debts to be increase by Rs.3,000.
Rs.28,000 and it was appearing at Rs.35,000. Pass the necessary journal entry for (c) Machinery is revalued at Rs. 50,000 and Land & building is revalued at Rs 1,00,000.
the treatment of goodwill. (d) Creditors amounted to Rs. 2,000 are not likely to arise, therefor written off.
[Hint: K’s Sacrifice 1/14; L’s Gain 3/14] (e) There is an unrecorded liability for outstanding salary of Rs.2,000 and an
unrecorded Typewriter is worth Rs.5,000.
(f) Liability for workers compensation determined at Rs.4,000.
Prepare Revaluation A/c, Capital accounts and Balance Sheet of the new firm.
[Revaluation Profit: Rs.12,000; Balance Sheet: Rs.2,47,000
Capitals: A-Rs.87,500; B-Rs.55,000; C’s Loan: Rs.48,500]

•••••••••••••••••••••• Q-2: A, B and C are partners in a business sharing profits and losses in the ratio of
5 : 3 : 2. Their Balance Sheet as on 31.12.2012 is given as follows:
Balance Sheet

Liabilities Amount Assets Amount

Profit and Loss A/c 8,000 Goodwill 20,000
Bills Payable 2,000 Debtors 5,000
Creditors 30,000 Stock 13,000
Capitals: Furniture 20,000
A- 50,000 Machinery 30,000
B- 30,000 Building 40,000
C- 20,000 1,00,000 Bank 12,000

1,40,000 1,40,000
 (7) (8)

(e) Land and Buildings are appreciated by 20% and Machinery is depreciated by
CA. Naresh Aggarwal’s 10%.
ACADEMY of ACCOUNTS (f) Value of the stock reduced by Rs.4,300 and Furniture depreciated to Rs.5,000.
Prepare Revaluation A/c, Capital accounts and Balance Sheet of the new firm.
Accounting • Costing • Taxation • Financial Management [Revaluation Loss: Rs.4,800; Balance Sheet: Rs.1,42,200
West Patel Nagar, New Delhi. Ph:8800215448. Website: www.academyofaccounts.org Capitals: A-Rs.40,100; C-Rs.21,700; B’s Loan: Rs.35,400]

On 01.01.2013, C is retired and following adjustments are made: Q-4: The following is the Balance Sheet of Ajay, Vijay and Sanjay on 31.12.2012.
(a) Goodwill of the firm is valued at Rs.40,000. Balance Sheet
(b) Machinery is valued at Rs. 25,000 and Building is valued at Rs. 50,000.
Liabilities Amount Assets Amount
(c) Furniture is depreciated by Rs.2,000 and stock is appreciated by Rs.3,000.
(d) A provision of 10% is required on debtors. Creditors 37,500 Cash at Bank 21,500
(e) Creditors amounted to Rs. 1,500 are not likely to arise, therefor written off. Bills Payable 4,000 Bills Receivable 4,000
(f) There is an unrecorded liability for outstanding salary of Rs.4,000 and Capital Accounts Debtors 16,000
unrecorded investments are worth Rs.2,000. Ajay 30,000 Stock 20,000
Prepare Revaluation A/c, Capital accounts and Balance Sheet of the new firm. Vijay 25,000 Office Furniture 1,000
[Revaluation Profit: Rs.5,000; Balance Sheet: Rs.1,27,500 Sanjay 20,000 75,000 Plant & Machinery 20,000

AoA
Capitals: A-Rs.41,500; B-Rs.24,900; C’s Loan: Rs.26,600] Workers Comp. Fund 6,000 Land & Buildings 25,000
Goodwill 15,000
Q-3: A, B and C were partners in a firm sharing profits in the ratio of 3 : 2 : 1. Their
1,22,500 1,22,500
Balance Sheet was as follows:
Balance Sheet On 01.01.2013, Ajay decides to retire and following adjustments are made:
As on 31.03.2012 (a) Stock to be reduced by 10%.
(b) Land and Buildings appreciated by 20%.
Liabilities Amount Assets Amount
(c) 5% provision doubtful debts be created on debtors and Bills Receivables.
Capitals: Patents 4,000 (d) Creditors of Rs. 2,500 should be written off and Bills Payable are valued at
A 50,000 Machinery 32,000 Rs.5,000.
B 30,000 Furniture 7,000 (e) Unexpired Insurance was Rs. 1,000.
C 25,000 1,05,000 Land and Buildings 40,000 (f) Goodwill of the firm is valued at Rs.18,000.
Bank Overdraft 7,000 Cash 15,700 Prepare Revaluation A/c, Capital accounts and Balance Sheet of the new firm.
Creditors 30,000 Debtors 30,000 [Revaluation Profit: Rs.4,500; Balance Sheet: Rs.1,10,500
Bills Payable 8,000 Stock 14,300 Capitals: Vijay-Rs.20,500; Sanjay-Rs.15,500; Ajay’s Loan: Rs.34,500]
Contingency Reserve 9,000 Bills Receivables 4,000
Profit and Loss A/c 12,000 Q-5: A, B and C are partners in a business sharing profits and losses in the ratio of
4 : 3 : 2. Their Balance Sheet as on 31.12.2012 is given as follows:
1,59,000 1,59,000
Balance Sheet
On 01.04.2012, B retired and following adjustments are made:
Liabilities Amount Assets Amount
(a) Goodwill of the firm is valued at Rs.24,000.
(b) Provision for doubtful debts is to be created at the rate of 5% on debtors and Bills Profit and Loss A/c 9,000 Goodwill 3,600
Receivables. Creditors 40,000 Cash 16,400
(c) There is an old typewriter valued at Rs 2,400. It does not appear in the books of Bills Payable 11,000 Stock 20,000
the firm. It is now to be recorded. Capitals: Furniture 15,000
(d) Patents are valueless. A- 50,000 Plant & Machinery 70,000
 (9) (10)

CA. Naresh Aggarwal’s

ACADEMY of ACCOUNTS (1) B and C agreed to share future profits in the ratio of 3 : 2.
(2) Goodwill of the firm is valued at Rs. 30,000.
Accounting • Costing • Taxation • Financial Management (3) Provision for doubtful debts is found excess by Rs. 600 and a provision on
West Patel Nagar, New Delhi. Ph:8800215448. Website: www.academyofaccounts.org creditors will be created @ 8%.
(4) Furniture is found undervalued by Rs. 2,000 and Machinery is found
overvalued by Rs. 6,000.
B- 40,000 Sundry Debtors 30,000 (5) A dispute with customer was pending claiming Rs. 4,000; now settled at
C- 30,000 1,20,000 Land and Buildings 20,000 Rs. 1,000. This liability is not provided in the above Balance Sheet.
Investment 5,000 (6) Investments are valued at Rs. 5,000.
1,80,000 1,80,000 [Loss: Rs.3,000 Balance Sheet: Rs.1,21,600
Capitals: B-Rs.24,000; C-Rs.25,000; A’s Loan: Rs.52,000; Gaining Ratio 4 : 1]
On 01.01.2013, A decides to retire and following adjustments are made:
(a) Remaining partners agreed to share future profits in equal ratio. Q-7: Ram, Shyam and Mohan are partners in a firm sharing profits and losses in the
(b) Goodwill of the firm is valued at Rs.45,000. ratio of 5 : 3 : 2. On 31st March, 2012, their Balance Sheet was as follows:
(c) Furniture is depreciated by 10% and Investments are appreciated by 20%. Balance Sheet

AoA
(d) One customer who owed the firm Rs. 2,000 become insolvent and nothing could
be realized from him therefor should be written off. Liabilities Amount Assets Amount
(e) Creditors will be written back by Rs. 2,000. Ram’s Capital 30,000 Goodwill 10,000
(f) Outstanding bill for repair Rs. 1,000 will be provided for. Shyam’s Capital 25,000 Machinery 30,000
(g) Interest accrued on investment is Rs. 2,400. Mohan’s Capital 20,000 Land & Building 40,000
You are required to show Journal Entries and Prepare necessary accounts. Contingency Reserve 8,000 Furniture 5,000
[Revaluation Profit: Rs.900 Balance Sheet: Rs.1,76,300 Bank Loan 25,000 Debtors 20,000
Capitals: B-Rs.34,600; C-Rs.18,900; A’s Loan: Rs.72,800; Gaining Ratio 3 : 5] Creditors 10,000 Stock 8,000
Bank 5,000
Q-6: A, B and C are partners in a firm. Their Balance Sheet as on 31.12.2012 is
given as follows: 1,18,000 1,18,000
Balance Sheet On 01.04.2012, Ram decides to retire and following adjustments are made:
Liabilities Amount Assets Amount (a) Goodwill is valued on the basis of three years purchase of the average profits of
the last three years. Average profit worked out is Rs. 5,000.
Capitals: Investments 4,000 (b) Machinery and stock are revalued at Rs 25,000 and Rs 10,000.
A- 45,000 Machinery 21,000 (c) A reserve of probable bad debts is required at the rate of 5%.
B- 35,000 Furniture 10,000 (d) Ram will be paid Rs.15,000 and other partner bring the same amount in their profit
C- 30,000 1,10,000 Building 30,000 sharing ratio.
Bank Overdraft 10,000 Cash 11,000 Prepare Revaluation A/c, Partners Capital A/c and Balance Sheet of the firm new.
Outstanding Expenses 2,000 Debtors 40,000 [Revaluation Loss: Rs.4,000; Bank: Rs.5,000; Balance Sheet: Rs.1,04,000
Creditors 5,000 Less: Provision 2,000 38,000 Capitals: Shyam-Rs.27,700; Mohan-Rs.21,800; Ram’s Loan: Rs.19,500]
Bills Payable 3,000 Stock 10,000
Profit and Loss A/c 6,000 Q-8: P, Q and R were partners in a firm sharing profits and losses in the ratio of
4 : 3 : 2. The following is the Balance Sheet of the firm as on 31st December 2012.
1,30,000 1,30,000

On 01.01.2013, A decides to retire and following adjustments are made:

 (11) (12)

B 25,000 Fixtures 10,000

CA. Naresh Aggarwal’s
C 20,000 75,000 Land & Buildings 51,000
ACADEMY of ACCOUNTS 1,10,000 1,10,000
Accounting • Costing • Taxation • Financial Management On 01.01.2013, B decides to retire and following adjustments are made:
West Patel Nagar, New Delhi. Ph:8800215448. Website: www.academyofaccounts.org (a) B’s Share will be taken by A and C in equal proportion.
(b) Goodwill of the firm is valued at Rs.30,000.
Balance Sheet (c) That stock and fixtures be reduced by 10% and 5% provision for doubtful debts
Liabilities Amount Assets Amount be created on sundry debtors and bills receivable.
(d) There being a claim against the firm for damages, a liability to the extent of Rs.1000
Sundry Creditors 20,000 Cash 15,300 should be created.
Bills Payable 3,000 Debtors 20,000 (e) An item of Rs. 1,600 included in sundry creditors is not likely to be claimed and
Bank Overdraft 17,000 Less: Provision 300 19,700 hence should be written back.
Capitals: Stock 20,000 (f) B will be paid Rs.20,000 and partners decide to utilise available cash and balance
P 70,000 Plant 62,000 brought by them in their profit sharing ratio.
Q 60,000 Buildings 75,000 Prepare Revaluation Account and the new Balance Sheet of the firm.
R 40,000 1,70,000 Profit and Loss A/c 18,000 [Revaluation Loss: Rs.3,600; Cash: Nil; Balance Sheet: Rs.1,00,800; New Ratio 2 : 1;

AoA
2,10,000 2,10,000 Capitals: A-Rs.35,200; C-Rs.20,067; B’s Loan: Rs.15,133; Gaining Ratio 1 : 1]

On 01.01.2013, Q decides to retire and following adjustments are made: Q-10: X, Y and Z share profits in the ratio of 5 : 3 : 2. Their Balance Sheet on 31st
(a) Share of Q’s Goodwill determined at Rs.12,000 which is to be adjusted from the December 2012 was as follows:
capital of P and R. Balance Sheet
(b) Provision for doubtful debts to be created to extent of 5% of debtors.
(c) Value of stock to be decreased to Rs 16,000 and Building is increased to Rs.85,000. Liabilities Amount Assets Amount
(d) The liability of workmen’s compensation fund was determined to be Rs.2,300. Creditors 18,000 Debtors 22,000
(e) Creditors amounted to Rs. 1,500 are not likely to arise, therefor written off. General Reserve 10,000 Less: Provision 1,000 21,000
(f) At the time of retirement Q will get Rs.50,000 which is brought by P and R in the Workmen's Comp. Fund 5,000 Land & Buildings 40,000
ratio of 2 : 3. X’s Capital 35,000 Goodwill 5,000
Prepare Revaluation Account, Partners Capital Accounts incorporating the above Y’s Capital 30,000 Plant & Machinery 25,000
adjustments, and also the Balance Sheet of the firm after the above adjustment. Z’s Capital 25,000 Bank 15,000
[Revaluation Profit: Rs.4,500; Cash: Rs.15,300; Balance Sheet: Rs.1,97,300 Stock 17,000
Capitals: P-Rs.76,000; R-Rs.63,000; Q’s Loan: Rs.17,500]
1,23,000 1,23,,000
Q-9: A, B and C share profits in the ratio of 3 : 2 : 1. Their Balance Sheet on 31st On 01.01.2013, Y decides to retire and following adjustments are made:
December 2012 was as follows: (a) Y’s Share will be taken by X and Z in the proportion of 1 : 2.
Balance Sheet (b) Goodwill of the firm is valued at Rs.40,000.
Liabilities Amount Assets Amount (c) Provision for doubtful debts to be increased by Rs 1,500.
(d) Value of land and building to be increased to Rs 45,000.
Sundry Creditors 31,000 Cash 5,000 (e) Value of stock to be increased by Rs 2,500.
Reserve Fund 4,000 Bills Receivable 8,000 (f) The liability of workmen’s compensation fund was determined to be Rs.7,000.
Capital Accounts: Debtors 16,000 (g) Y will be paid Rs.25,000 and partners decide to utilise available Bank balance and
A 30,000 Stock 20,000 balance brought by them in their new profit sharing ratio.
Prepare Revaluation Account and the new Balance Sheet of the firm.
 (13) (14)

Q-12: R, S and T were partners in a firm sharing profits in equal ratio. Their Balance
CA. Naresh Aggarwal’s Sheet on 31.03.2012 was as follows:
ACADEMY of ACCOUNTS Balance Sheet

Accounting • Costing • Taxation • Financial Management Liabilities Amount Assets Amount

West Patel Nagar, New Delhi. Ph:8800215448. Website: www.academyofaccounts.org Creditors 8,000 Goodwill 6,000
Bank Loan 80,000 Building 1,00,000
Capitals Land 1,30,000
[Revaluation Profit: Rs.4,000; Balance Sheet: Rs.1,09,000; New Ratio 3 : 2; R 90,000 Furniture 56,000
Capitals: X-Rs.41,500; Z-Rs.22,800; Y’s Loan: Rs.19,700; Bank: Nil] S 80,000 Stock 30,000
T 70,000 2,40,000 Cash 15,000
Q-11: A, B and C are partners in a firm sharing profits and losses in the ratio of General Reserve 9,000 Debtors 22,000
3 : 3 : 2. On 01.04.2012 B decided to retire from the firm. Their Balance Sheet on that Provident Fund 13,000 Less: Provision 2,000 20,000
date stood as under: Bills Payable 7,000
Balance Sheet
as on 01.04.2012 3,57,000 3,57,000

Liabilities Amount Assets Amount On 01.04.2012, R decides to retire and following adjustments are made:

AoA
(a) The new profit sharing ratio of S and T will be 3 : 2.
Capital Accounts Goodwill 8,000 (b) All the debtors are good.
A 50,000 Plant and Machinery 27,000 (c) Value of stock to be increased by Rs 5,000.
B 50,000 Furniture 15,000 (d) Value of Building depreciated to Rs.90,000.
C 40,000 1,40,000 Land and Building 65,000 (e) Goodwill of R is determined to Rs.20,000.
General Reserves 10,000 Investments 20,000 (f) All of R’s Due will be paid. Partners do not want to utilise available cash. They
Sundry Creditors 50,000 Stock 20,000 took a loan from the bank for the money needed.
Sundry Debtors 30,000 Prepare Revaluation Account and the new Balance Sheet of the firm.
Cash in hand 15,000 [Revaluation Loss: Rs.3,000; Cash: Rs.15,000; Balance Sheet: Rs.3,48,000; Gaining Ratio 4 : 1;
2,00,000 2,00,000 Capitals: S-Rs.64,000; T-Rs.66,000; Paid to R-Rs.1,10,000; Loan Taken: Rs.1,10,000]

The terms of retirements were as follows: Q-13: Following is the Balance Sheet of A, B and C sharing profit as 3 : 2 : 1.
(a) B’s Share will be taken by A and C in the proportion of 1 : 2. Balance Sheet
(b) Goodwill of the firm is valued at Rs.24,000.
(c) Investments will be appreciated by 25% and furniture depreciated by 10%. Liabilities Amount Assets Amount
(d) One customer who owed the firm Rs. 1,900 become insolvent and nothing could Creditors 18,000 Debtors 22,000
be realized from him. Bills Payable 13,000 Less: Provision 1,000 21,000
(e) All of B’s Due will be paid. Partners do not want to utilise available cash. They Contingency Fund 12,000 Land & Buildings 60,000
took a loan from the bank for the needed money. Provident Fund 20,000 Furniture and Fixtures 10,000
Prepare Revaluation Account and the new Balance Sheet of the firm. A’s Capital 40,000 Goodwill 6,000
[Revaluation Profit: Rs.1,600; Cash: Rs.15,000 Balance Sheet: Rs.1,93,600; New Ratio 1 : 1; B’s Capital 30,000 Plant & Machinery 32,000
Capitals: A-Rs.48,350; C-Rs.34,900; Paid to B: Rs.60,350; Loan Taken: Rs.60,350] C’s Capital 25,000 Bank 10,000
Stock 19,000

1,58,000 1,58,000
On 01.01.2013, C decides to retire and following adjustments are made:
(a) The new profit sharing ratio of A and B will be 3 : 2.
 (15) (16)

Q-15: Radha, Meera and Sudha are partners in a firm sharing profits and losses in
CA. Naresh Aggarwal’s the ratio of 5 : 3 : 2. On 31st March, 2012, their Balance Sheet was as follows:
ACADEMY of ACCOUNTS Balance Sheet
As on 31.03.2012
Accounting • Costing • Taxation • Financial Management
Liabilities Amount Assets Amount
West Patel Nagar, New Delhi. Ph:8800215448. Website: www.academyofaccounts.org
Radha’s Capital 50,000 Goodwill 6,000
(b) Value of land and building to be increased to Rs 70,000. Meera’s Capital 30,000 Machinery 58,000
(c) Provision for doubtful debts to be increased by Rs 1,500. Sudha’s Capital 25,000 Investments 10,000
(d) Value of stock to be increased by Rs 6,500. General Reserve 8,000 Furniture 10,000
(e) Rs. 7,500 will be paid to C immediately and balance transferred to his loan Account Bank Loan 6,000 Debtors 18,000
to be paid in three equal annual installments with interest @ 10% p.a. Creditors 4,000 Stock 7,000
Prepare Revaluation Account, Capital accounts, Balance Sheet of the new firm and Cash 14,000
C’s Loan Account till it is fully paid.
1,23,000 1,23,000
[Revaluation Profit: 15,000; Bank: Rs.2,500; Gaining Ratio 3 : 2;
Capitals: A-Rs.50,500; B-Rs.37,000; C’s Loan: Rs.21,000; B/S: Rs.1,59,500] On 01.04.2012, Sudha decides to retire and following adjustments are made:
(a) The new profit sharing ratio of Radha and Meera will be 2 : 1.

AoA
Q-14: X, Y and Z were partners in a firm sharing profits in equal ratio. On 31.12.2012 (b) Machinery and stock are revalued at Rs 65,000 and Rs 8,000.
their Balance Sheet was as under : (c) Furniture is found excess by Rs.2,000.
Balance Sheet (d) Rs. 6,600 will be paid to Sudha immediately and balance transferred to his loan
Account to be paid in four equal half yearly installments with interest at the rate of
Liabilities Amount Assets Amount
10% p.a.
Workers Comp. Fund 6,000 Cash 35,500 Prepare Revaluation Account, Capital accounts, Balance Sheet of the new firm and
Bills Payable 25,000 Debtors 21,500 Sudha’s Loan Account till it is fully paid.
Outstanding Expenses 12,500 Less: Provision 1,500 20,000 [Revaluation Profit: 6,000; Cash: Rs.7,400; Gaining Ratio 5 : 1; B/S: Rs.1,16,400]
General Reserve 12,000 Stock 55,000 Capitals: Radha-Rs.54,000; Meera-Rs.32,400; Sudha’s Loan: Rs.20,000]
Creditors 18,000 Investments 12,000
X’s Capital 80,000 Building 70,000 Q-16: Balance Sheet of A, B and C sharing profits in the ratio of 3 : 2 : 1 is given
Y’s Capital 70,000 Land 95,000 below:
Z’s Capital 70,000 Bills Receivables 6,000 Balance Sheet
As on 31.12.2012
2,93,500 2,93,500 Liabilities Amount Assets Amount
On 01.01.2013, Y decides to retire and following adjustments are made: A’s Capital 80,000 Bank 15,000
(a) The new profit sharing ratio of X and Z will be 3 : 2. B’s Capital 50,000 Debtors 46,000
(b) Goodwill of firm is determined to Rs.30,000. C’s Capital 40,000 Less: Provision 2,000 44,000
(c) Provision for doubtful debts to be increased to Rs 2,500. Contingency Reserve 30,000 Stock 25,000
(d) Value of Investments to be increased by Rs 4,000; taken by Y. Trade Creditors 50,000 Furniture 26,000
(e) Rs. 11,000 will be paid to Y immediately and balance transferred to his loan Account Machinery 60,000
to be paid in three equal annual installments with interest @ 6% p.a. Land & Building 80,000
Prepare Revaluation Account, Capital accounts, Balance Sheet of the new firm and
2,50,000 2,50,000
Y’s Loan Account till it is fully paid.
[Revaluation Profit: Rs.3,000; Cash: Rs.24,500; Gaining Ratio 4 : 1] On 01.01.2013, C decides to retire and following adjustments are made:
Capitals: X-Rs.79,000; Z-Rs.75,000; Y’s Loan: Rs.60,000; B/S: Rs.2,69,500] (a) Goodwill of the firm is valued at Rs.18,000 and Joint Life Policy had a surrender
 (17) (18)

Prepare Revaluation Account, Capital accounts, Balance Sheet of the new firm and
CA. Naresh Aggarwal’s Y’s Loan Account till it is fully paid.
ACADEMY of ACCOUNTS [Revaluation Loss: Rs.9,000; Balance Sheet: Rs.1,46,300; New Ratio 5 : 4;
Capitals: X-Rs.35,000; Z-Rs.28,000; Y’s Loan: Rs.40,000]
Accounting • Costing • Taxation • Financial Management
West Patel Nagar, New Delhi. Ph:8800215448. Website: www.academyofaccounts.org Q-18: Ram, Shyam and Mohan are partners in a firm sharing profits and losses in the
ratio of 5 : 3 : 2. On 31st March, 2012, their Balance Sheet was as follows:
value of Rs.12,000. Both will be adjusted with the capitals of the partners without Balance Sheet
raising their Accounts. As on 31.03.2012
(b) Contingency reserve is not required any more.
(c) Provision for bad and doubtful debts to be increase by Rs.4,000. Liabilities Amount Assets Amount
(d) Machinery is revalued at Rs 50,000 and building is revalued at Rs 1,00,000. Ram’s Capital 50,000 Goodwill 4,000
(e) Rs. 11,000 will be paid to C immediately and balance transferred to his loan Account Shyam’s Capital 40,000 Machinery 60,000
to be paid in four equal quarterly installments with interest @ 12% p.a. Mohan’s Capital 30,000 Investments 10,000
Prepare Revaluation Account, Capital accounts, Balance Sheet of the new firm and General Reserve 8,000 Furniture 10,000
C’s Loan Account till it is fully paid. Bank Loan 6,000 Debtors 20,000
[Revaluation Profit: 6,000, Bank: Rs.4,000; Balance Sheet: Rs.2,45,000; Creditors 5,000 Stock 7,000

AoA
Capitals: A-Rs.95,000; B-Rs.60,000; C’s Loan: Rs.40,000] Bank 28,000

Q-17: X, Y and Z were partners in a firm sharing profits and losses in the ratio of 1,39,000 1,39,000
4 : 3 : 2. The following is the Balance Sheet of the firm as on 31st December 2012. On 01.04.2012, Ram decides to retire and following adjustments are made:
Balance Sheet (a) Goodwill of the firm valued at Rs.12,000 and Joint Life Policy had a surrender
As on 31.12.2012 value of Rs.8,000. Both will be adjusted with capitals without raising their A/cs.
Liabilities Amount Assets Amount (b) Machinery and stock are revalued at Rs 65,000 and Rs 9,000.
(c) Furniture is found excess by Rs.3,000.
Creditors 7,000 Cash 15,300 (d) A provision @10% on debtors is provided out of General Reserve.
Bills Payable 16,000 Debtors 20,000 (e) Creditors of Rs. 1,000 are not likely to arise, therefore written off.
Bank Overdraft 17,000 Less: Provision 300 19,700 (g) Rs. 18,500 will be paid to Ram immediately and balance transferred to his loan
Capitals: Stock 20,000 Account to be paid in three equal semi-annual installments with interest at the rate
X 50,000 Plant 33,000 of 10% p.a.
Y 40,000 Buildings 64,000 Prepare Revaluation Account, Capital accounts, Balance Sheet of the new firm and
Z 40,000 1,30,000 Profit and Loss A/c 18,000 Ram’s Loan Account till it is fully paid.
1,70,000 1,70,000 [Revaluation Profit: 5,000, Bank: Rs.9,500; Balance Sheet: Rs.1,18,500;
Capitals: Shyam-Rs.36,100; Mohan-Rs.27,400; Ram’s Loan: Rs.45,000]
On 01.01.2013, Y decides to retire and following adjustments are made:
(a) Y’s share will be taken by X and Z in the ratio of 1 : 2. Q-19: Balance Sheet of A, B and C sharing profits in the ratio of 3 : 2 : 1 is given
(b) Goodwill of the firm valued at Rs.18,000 and Joint Life Policy had a surrender below:
value of Rs.9,000. Both will be adjusted with capitals without raising their A/cs. Balance Sheet
(c) Provision for doubtful debts to be created to extent of 5% of debtors. As on 31.03.2012
(d) Value of stock to be decreased to Rs 15,000.
(e) The liability of workmen’s compensation was determined to be Rs.4,800. Liabilities Amount Assets Amount
(f) Creditors amounted to Rs. 1,500 are not likely to arise, therefor written off. A’s Capital 80,000 Cash 13,000
(g) Balance of Y is be transferred to his loan Account to be paid in four equal quarterly B’s Capital 50,000 Debtors 46,000
installments with interest at the rate of 8% p.a. C’s Capital 40,000 Less: Provision 2,000 44,000
 (19) (20)

CA. Naresh Aggarwal’s (a) Goodwill of the firm is valued at Rs.40,000.

ACADEMY of ACCOUNTS (b)
(c)
Machinery is valued at Rs. 25,000 and Building is valued at Rs. 50,000.
Furniture is depreciated by Rs.2,000 and stock is appreciated by Rs.1,000.
Accounting • Costing • Taxation • Financial Management (d) A provision of 10% is required on Bills Receivables.
West Patel Nagar, New Delhi. Ph:8800215448. Website: www.academyofaccounts.org (e) Creditors amounted to Rs. 1,500 are not likely to arise, therefore written off.
(f) Capital of the firm is fixed at Rs.80,000 to be invested in by the partners in their
profit sharing ratio.
General Reserve 18,000 Stock 12,000 Prepare Revaluation A/c, Capital accounts and Balance Sheet of the new firm.
Contingency Reserve 10,000 Machinery 60,000 [Revaluation Profit: Rs.5,000; Bank: Rs.25,600; Balance Sheet: Rs.1,37,100;
Trade Creditors 52,000 Furniture 26,000 Capitals: A-50,000; B-30,000; C’s Loan: 26,600; A will bring: 8,500; B will bring: 5,100]
Land & Building 80,000
Deferred Revenue Expenditure 15,000 Q-21: A, B and C are partners in a business sharing profits and losses in the ratio of
4 : 3 : 2. Their Balance Sheet as on 31.12.2012 is given as follows:
2,50,000 2,50,000
Balance Sheet
C decides to retire from the firm and following adjustments are made:
Liabilities Amount Assets Amount
(a) Goodwill of the firm is valued at Rs.30,000.

AoA
(b) Provision for bad and doubtful debts to be increased to Rs.3,000. Retained Earnings 9,000 Advertisement Expenditure 3,600
(c) Machinery is revalued at Rs. 50,000 and Land & building is revalued at Rs 1,00,000. Creditors 40,000 Cash 16,400
(d) There is an unrecorded liability for outstanding salary of Rs.2,000 and an Bills Payable 11,000 Stock 20,000
unrecorded Typewriter is worth Rs.5,000. Capitals: Furniture 15,000
(e) Liability for Contingencies determined at Rs.4,000. A- 40,000 Plant & Machinery 70,000
(f) Capital of the firm is fixed at Rs.1,50,000 to be invested in by the partners in their B- 40,000 Sundry Debtors 30,000
profit sharing ratio. C- 40,000 1,20,000 Land and Buildings 20,000
Prepare Revaluation A/c, Capital accounts and Balance Sheet of the new firm. Investment 5,000
[Revaluation Profit: Rs.12,000; Cash: Rs.20,500; Balance Sheet: Rs.2,56,500;
1,80,000 1,80,000
Capitals: A-90,000; B-60,000; C’s Loan: 48,500; A will bring: 2,500; B will bring: 5,000]
On 01.01.2013, A decides to retire and following adjustments are made:
Q-20: A, B and C are partners in a business sharing profits and losses in the ratio of (a) Remaining partners agreed to share future profits in equal ratio.
5 : 3 : 2. Their Balance Sheet as on 31.12.2012 is given as follows: (b) Goodwill of the firm is valued at Rs.45,000.
Balance Sheet (c) Furniture is depreciated by 10% and Investments are appreciated by 20%.
(d) Outstanding bill for repair Rs. 3,000 will be provided for.
Liabilities Amount Assets Amount
(e) Interest accrued on investment is Rs. 4,400.
Reserve & Surplus 8,000 Goodwill 20,000 (f) Advertisement Expenditure will be written off.
Bills Payable 2,000 Bills Receivables 5,000 (g) The total capital of the firm is decided to be Rs.60,000 and will be in the maintained
Creditors 30,000 Stock 13,000 in the profit sharing ratio of the partners.
Capitals: Furniture 20,000 You are required to show Journal Entries and Prepare necessary accounts.
A- 50,000 Machinery 30,000 [Revaluation Profit: Rs.900; Cash: Rs.12,900; Balance Sheet: Rs.1,76,800; Gaining Ratio 3 : 5;
B- 30,000 Building 40,000 Capitals: B-Rs.30,000; C-Rs.30,000; A’s Loan: 62,800; B will receive: 4,600; C will bring: 1,100]
C- 20,000 1,00,000 Bank 12,000
Q-22: X, Y and Z are partners in a firm sharing profits and losses in the ratio of
1,40,000 1,40,000
5 : 3 : 2. On 31st March, 2012, their Balance Sheet was as follows:
On 01.01.2013, C is retired and following adjustments are made:
 (21) (22)

On 01.01.2013, B decides to retire and following adjustments are made:

CA. Naresh Aggarwal’s (a) B’s Share will be taken by A and C in equal proportion.
ACADEMY of ACCOUNTS (b) Goodwill of the firm is valued at Rs.30,000.
(c) A provision of 5% will be created for doubtful debts on Debtors and Bills
Accounting • Costing • Taxation • Financial Management Receivables.
West Patel Nagar, New Delhi. Ph:8800215448. Website: www.academyofaccounts.org (d) There being a claim against the firm for damages, a liability to the extent of Rs.1,200
should be created.
Balance Sheet
(e) All of B’s due will be paid off.
Liabilities Amount Assets Amount (f) Partners decide to fix their capital at Rs.90,000 in the profit sharing ratio.
Prepare Revaluation Account and the new Balance Sheet of the firm.
X’s Capital 30,000 Goodwill 10,000
[Revaluation Loss: 2,400; Bank: 10,400; Balance Sheet: Rs.1,14,200; New Ratio 2 : 1;
Y’s Capital 25,000 Machinery 30,000
Capitals: A-60,000; C-30,000; Paid to B: 38,200; A will bring: 30,200; C will bring: 13,400]
Z’s Capital 20,000 Land & Building 40,000
Reserve Fund 8,000 Investments 5,000
Q-24: A, B and C are partners in a firm sharing profits and losses in the ratio of
Bank Loan 25,000 Debtors 20,000
3 : 3 : 2. On 01.04.2012 B decided to retire from the firm. Their Balance Sheet on that
Creditors 10,000 Stock 8,000
date stood as under:
Cash 5,000
Balance Sheet

AoA
1,18,000 1,18,000 as on 01.04.2012

On 01.04.2012, X decides to retire and following adjustments are made: Liabilities Amount Assets Amount
(a) Goodwill is valued at Rs.15,000.
Capital Accounts Deferred Expenditure 8,000
(b) Machinery and stock are revalued at Rs 25,000 and Rs 10,000.
A 50,000 Plant and Machinery 27,000
(c) A reserve of probable bad debts is required at the rate of 5%.
B 50,000 Furniture 15,000
(d) X will be paid Rs.20,000 immediately.
C 40,000 1,40,000 Land and Building 70,000
(e) Capital of the firm is fixed at Rs.60,000 and will be contributed by the partners in
Retained Earnings 10,000 Investments 20,000
their new ratio. Necessary adjustment is made in cash.
Sundry Creditors 50,000 Stock 20,000
Prepare Revaluation Account, Partners Capital Accounts incorporating the above
Sundry Debtors 30,000
adjustments, and also the Balance Sheet of the firm after the above adjustment.
Cash in hand 10,000
[Revaluation Loss: Rs.4,000; Cash: Rs.10,500; Balance Sheet: Rs.1,09,500;
Capitals: Y-Rs.36,000; Z-Rs.24,000; X’s Loan: Rs.14,500; Y will bring: 17,300; Z will bring: 8,200] 2,00,000 2,00,000
The terms of retirements were as follows:
Q-23: A, B and C share profits in the ratio of 3 : 2 : 1. Their Balance Sheet on 31st
(a) B’s Share will be taken by A and C in the proportion of 1 : 2.
December 2012 was as follows:
(b) Goodwill of the firm is valued at Rs.24,000.
Balance Sheet
(c) Investments will be appreciated by 25% and furniture depreciated by 10%.
Liabilities Amount Assets Amount (d) Goods purchased for Rs.1,900 on credit were omitted to be recorded in the
Supplier’s Account.
Sundry Creditors 23,000 Bank 5,000
(e) All of B’s Due will be paid off.
Reserve Fund 12,000 Bills Receivables 10,000
(f) Remaining partners decide to maintain their capital at Rs.1,50,000 in the new
Capital Accounts: Debtors 14,000
profit sharing ratio.
A 30,000 Stock 20,000
Prepare Revaluation Account and the new Balance Sheet of the firm.
B 25,000 Fixtures 10,000
[Revaluation Profit: Rs.1,600; Cash: Rs.16,400 Balance Sheet: Rs.2,01,900; New Ratio 1 : 1;
C 20,000 75,000 Land & Buildings 51,000
Capitals: A-Rs.75,000; C-Rs.75,000; Paid to B: Rs.60,350; A will bring: 26,650; C will bring: 40,100]
1,10,000 1,10,000
 (23) (24)

CA. Naresh Aggarwal’s Y 80,000 Stock 30,000

Z 70,000 2,40,000 Cash 15,000
ACADEMY of ACCOUNTS Workers Comp. Fund 9,000 Debtors 22,000
Accounting • Costing • Taxation • Financial Management Provident Fund 13,000 Less: Provision 2,000 20,000
Creditors 15,000 Goodwill 6,000
West Patel Nagar, New Delhi. Ph:8800215448. Website: www.academyofaccounts.org
3,57,000 3,57,000
Q-25: Balance Sheet of A, B and C sharing profits in the ratio of 3 : 2 : 1 is given On 01.04.2012, X decides to retire and following adjustments are made:
bellow: (a) The new profit sharing ratio of Y and Z will be 3 : 2.
Balance Sheet (as on 31.03.2012) (b) Goodwill of X is determined to Rs.20,000.
(c) All the debtors are good, therefor no provision is required anymore.
Liabilities Amount Assets Amount
(d) Value of stock to be increased by Rs 5,000 and value of Building depreciated to
A’s Capital 40,000 Bank 7,500 Rs.90,000.
B’s Capital 25,000 Debtors 23,000 (e) Rs. 50,000 will be paid to X immediately and balance transferred to his loan Account.
C’s Capital 20,000 Less: Provision 1,000 22,000 (f) Remaining partners want to maintain same Cash Balance after X’s retirement
Contingency Reserve 15,000 Stock 12,500 and also want to adjust their capital in their profit sharing ratio.
Trade Creditors 25,000 Furniture 13,000

AoA
Prepare Revaluation Account and the new Balance Sheet of the firm.
Machinery 30,000 [Revaluation Loss: Rs.3,000; Cash: Rs.15,000; Balance Sheet: Rs.3,48,000; Gaining Ratio 4 : 1;
Land & Building 40,000 Capitals: Y-Rs.1,08,000; Z-Rs.72,000; X’ Loan: Rs.60,000; Y will bring: 44,000; Z will bring: 6,000]

1,25,000 1,25,000
Q-27: The following is the Balance Sheet of X, Y and Z on 31.12.2012.
On 01.04.2012, C decides to retire and following adjustments are made: Balance Sheet
(a) Goodwill of the firm is valued at Rs 15,000. It will be adjusted with the capitals of
Liabilities Amount Assets Amount
the partners without raising Goodwill Account.
(b) Contingency reserve is not required any more. Creditors 75,000 Cash 43,000
(c) Provision for bad and doubtful debts to be increase by Rs.2,000. Bills Payable 8,000 Bills Receivable 8,000
(d) Machinery is revalued at Rs 25,000 and building is revalued at Rs 50,000. Capital Accounts Debtors 32,000
(e) Rs. 5,500 will be paid to C immediately and balance transferred to his loan Account. X 60,000 Stock 40,000
(f) Remaining partners want to maintain a Bank Balance of Rs.4,500 after C’s Y 50,000 Office Furniture 2,000
retirement and also want to adjust their capital in their profit sharing ratio. Z 40,000 1,50,000 Plant & Machinery 40,000
Prepare Revaluation Account, Capital accounts, Balance Sheet of the new firm. Accident Fund 12,000 Land & Buildings 50,000
[Revaluation Profit: 3,000, Bank: Rs.4,500; Balance Sheet: Rs.1,25,000; Goodwill 30,000
Capitals: A-48,000; B-32,000; C’s Loan: 20,000; A will bring: 500; B will bring: 2,000]
2,45,000 2,45,000
Q-26: X, Y and Z were partners in a firm sharing profits in equal ratio. Their Balance On 01.01.2013, X decides to retire and following adjustments are made:
Sheet on 31.03.2012 was as follows: (a) Stock to be reduced by 15%.
Balance Sheet (b) Land and Buildings appreciated by 20%.
(d) Creditors of Rs. 5,000 should be written off.
Liabilities Amount Assets Amount
(e) Goodwill of the firm is valued at Rs.36,000.
Bank Loan 80,000 Building 1,00,000 (f) All of X’s dues are be paid off.
Capitals Land 1,30,000 (g) Remaining partners want to maintain a Cash Balance of Rs.12,000 and also want
X 90,000 Furniture 56,000 to adjust their capital in their profit sharing ratio.
 (25) (26)

Balance Sheet
CA. Naresh Aggarwal’s
Liabilities Amount Assets Amount
ACADEMY of ACCOUNTS Reserve & Surplus 16,000 Goodwill 40,000
Accounting • Costing • Taxation • Financial Management Bills Payable 4,000 Bills Receivables 10,000
West Patel Nagar, New Delhi. Ph:8800215448. Website: www.academyofaccounts.org Creditors 60,000 Stock 26,000
Capitals: Furniture 40,000
A- 90,000 Machinery 60,000
Prepare Revaluation A/c, Capital accounts and Balance Sheet of the new firm.
B- 70,000 Building 80,000
[Revaluation Profit: Rs.9,000; Balance Sheet: Rs.1,88,000; Paid to X: 69,000;
C- 40,000 2,00,000 Bank 24,000
Capitals: Y-55,000; Z-Rs.55,000; Y will bring: 14,000; Z will bring: 24,000]
2,80,000 2,80,000
Q-28: A, B and C are partners in a business sharing profits and losses in the ratio of
On 01.01.2013, C is retired and following adjustments are made:
4 : 3 : 2. Their Balance Sheet as on 31.12.2012 is given as follows:
(a) Goodwill of the firm is valued at Rs.80,000.
Balance Sheet
(b) Machinery is depreciated by 1/6 and Building is appreciated by 1/4.
Liabilities Amount Assets Amount (c) Stock is appreciated by Rs.2,000.
(d) A provision of 5% is required on Bills Receivables.

AoA
Profit and Loss A/c 4,500 Goodwill 1,800
(e) Remaining partners want to adjust their capital in their profit sharing ratio.
Creditors 20,000 Cash 8,150
Prepare Revaluation A/c, Capital accounts and Balance Sheet of the new firm.
Bills Payable 5,500 Stock 10,000
[Revaluation Profit: Rs.11,500; Bank: Rs.24,000; Balance Sheet: Rs.2,51,500;
Capitals: Furniture 7,500
Capitals: A-83,750; B-50,250; C’s Loan: 53,500; A will bring: 10,000; B will receive: 10,000]
A- 25,000 Plant & Machinery 35,000
B- 20,000 Sundry Debtors 15,050
Q-30: A, B and C share profits in the ratio of 3 : 2 : 1. Their Balance Sheet on 31st
C- 15,000 60,000 Land and Buildings 10,000
December 2012 was as follows:
Investment 2,500
Balance Sheet
90,000 90,000
Liabilities Amount Assets Amount
On 01.01.2013, A decides to retire and following adjustments are made:
Sundry Creditors 11,500 Bank 2,500
(a) Remaining partners agreed to share future profits in equal ratio.
Reserve Fund 6,000 Bills Receivables 5,500
(b) Goodwill of the firm is valued at Rs.22,500.
Capital Accounts: Debtors 12,000
(c) Furniture is depreciated by 10% and Investments are appreciated by 20%.
A 15,000 Stock 10,000
(d) Outstanding bill for repair Rs. 500 will be provided for.
B 12,500 Fixtures 5,000
(e) Interest accrued on investment is Rs. 1,200.
C 10,000 37,500 Land & Buildings 20,000
(f) All of A’s dues are be paid off.
(g) Remaining partners want to maintain a Cash Balance of Rs.5,000 and also want 55,000 55,000
to adjust their capital in their profit sharing ratio.
On 01.01.2013, B decides to retire and following adjustments are made:
You are required to show Journal Entries and Prepare necessary accounts.
(a) B’s Share will be taken by A and C in equal proportion.
[Revaluation Profit: Rs.450; Cash: Rs.5,000; Balance Sheet: Rs.86,000; Paid to A: 36,400;
(b) Goodwill of the firm is valued at Rs.18,000.
Capitals: B-30,000; C-30,000; Gaining Ratio 3 : 5; B will bring: 12,700; C will bring: 20,550]
(c) A provision of 5% will be created for doubtful debts on Debtors.
(d) There being a claim against the firm for damages, a liability to the extent of Rs.600
Q-29: A, B and C are partners in a business sharing profits and losses in the ratio of
should be created.
5 : 3 : 2. Their Balance Sheet as on 31.12.2012 is given as follows:
(e) Remaining partners want to adjust their capital in their profit sharing ratio.
Prepare Revaluation Account and the new Balance Sheet of the firm.
[Revaluation Loss: 1,200; Bank: 2,500; Balance Sheet: Rs.54,400; New Ratio 2 : 1;
 (27) (28)

B’s Capital 25,000 Patents 11,000

CA. Naresh Aggarwal’s C’s Capital 15,000 Debtors 8,000
ACADEMY of ACCOUNTS Cash 8,000

Accounting • Costing • Taxation • Financial Management 87,000 87,000

West Patel Nagar, New Delhi. Ph:8800215448. Website: www.academyofaccounts.org A retired on 1st October 2012. It was agreed between him and the remaining partners
that:
Capitals: A-Rs.14,800; C-Rs.7,400; B’s Loan: 20,100; A will bring: 400; C will receive: 400] (a) Goodwill to be valued at 2.5 years purchase of the average profits of the previous
four years, which were Rs.13,000; Rs.12,000; Rs.20,000 and Rs.15,000 for
Q-31: A, B and C were partners in a firm share profits in the ratio of 3 : 2 : 1. Their years 2009-2010; 2010-2011; 2011-2012 and 2012-2013 respectively.
Balance Sheet on 31st December 2012 was as follows: (b) Profit for the year 2012-2013 be taken as having accrued at the same rate as that
Balance Sheet of the previous year.
(c) Interest on Capital be provided at 10% p.a.
Liabilities Amount Assets Amount
(d) Half of the amount due to A to be paid immediately and the balance transferred to
Creditors 4,000 Goodwill 6,000 his Loan Account
Workers Compensation Fund 3,000 Building 20,000 Prepare A’s Capital A/c as on 1st October, 2012.
Reserves 9,000 Plant and Machinery 16,000 [A’s Loan: 28,500; Interest on Capital: 1,500; Share in profit: 3,750]

AoA
A’s Capital 24,000 Stock 5,100
B’s Capital 12,000 Debtors 6,000 Q-33: Ram, Shyam and Mohan were partners sharing profits and losses in the ratio
C’s Capital 8,000 Cash 6,900 of 4 : 3 : 2. On 31st December 2012, their balance sheet stood as follows :
Balance Sheet
60,000 60,000
A retired on 30.06.2013. The retiring partner were entitled to: Liabilities Amount Assets Amount
(a) Amount standing to the credit of his Capital A/c and accumulated profits. Creditors 4,000 Goodwill 3,600
(b) Interest on capital at 12% per annum. General Reserve 9,000 Plant & Machinery 14,000
(c) Share of goodwill on the basis of four years purchase of last three years average Capitals Stock 4,000
profit. Ram 10,000 Sundry Debtors 6,000
(d) Share of profit from the closing of the last financial year to the date of retirement Shyam 9,000 Cash at Bank 11,400
on the basis of last year’s profit. Mohan 7,600 26,000
Profits for the year 2010, 2011 and 2012 were Rs. 8,000, Rs. 12,000 and Rs. 7,000
39,000 39,000
respectively. Prepare A’s Capital Account.
[A’s Loan: Rs.48,190; Interest on Capital: Rs.1,440; Share in profit: Rs.1,750] Shyam retires on 15.3.2013. According to the Partnership Deed, retiring partner was
entitled to:
Q-32: A, B and C were partners in a firm sharing profits in the ratio of 5 : 3 : 2. On 31st (a) Balance his Capital A/c and his share of the accumulated reserves.
March, 2012 their Balance Sheet was as under: (b) Interest on capital @ 5% p.a.
Balance Sheet (c) Share of goodwill calculated on the basis of twice the average profits of the past
As on 31.03.2012 three completed years.
(d) Share of profit from the closure of the last accounting year till the date of retirement/
Liabilities Amount Assets Amount
death on the basis of the average profits of the 3 completed years before death/
Creditors 11,000 Buildings 20,000 retirement.
Reserves 8,000 Machinery 30,000 (e) Rs. 5,000 was to be paid to Shyam and the balance due to him was to be kept in
Profit and Loss A/c 3,000 Goodwill 5,000 his loan account.
A’s Capital 30,000 Stock 10,000 Profits for the three years 2010, 2011 and 2012 were Rs.9,600, Rs.12,800 and
 (29) (30)

Balance Sheet
CA. Naresh Aggarwal’s
Liabilities Amount Assets Amount
ACADEMY of ACCOUNTS Sundry Creditors 18,000 Tools 2,000
Accounting • Costing • Taxation • Financial Management Reserve Fund 9,000 Furniture 20,000
West Patel Nagar, New Delhi. Ph:8800215448. Website: www.academyofaccounts.org Capitals: Stock 18,000
X 30,000 Debtors 35,000
Y 25,000 Cash at Bank 17,000
Z 25,000 80,000 Cash in hand 15,000
Rs.10,000 respectively.
Pass the necessary journal entries and prepare Shyam’s Capital Account after the 1,07,000 1,07,000
above adjustments are made.
Y decide to retire on 31.03.2013. Under the partnership agreement, retiring partner or
[Shyam’s Loan: Rs.13,844; Interest on Capital: Rs.94; Share in profit: Rs.750]
the executor of the deceased partner was entitled to:
(a) Amount standing to the credit of his Capital A/c and accumulated profits.
Q-34: A, B and C were partners in a firm sharing profits and losses in the ratio of their
(b) Interest on capial which amounted to Rs. 750.
capitals. Their Balance Sheet on 31.12.2012 was as follows:
(c) His share of Goodwill Rs. 15,000.
Balance Sheet
(d) Remuneration at the rate of Rs.2,000 p.m.

AoA
Liabilities Amount Assets Amount (e) His share of profit from the closing of last financial year to the date of his retirement/
death which amounted to Rs. 5,250.
Creditors 3,000 Furniture 8,000
Y was paid Rs. 19,000 at the time of his retirement and the balance in three equal half
Reserve Fund 3,200 Stock 6,000
yearly instalments starting from 30.9.2012 with interest @ 12% p.a.
Capitals: Debtors 6,000
Pass the necessary journal entries and draw up Y account till it is finally paid.
A 10,000 Bills Receivable 1,000
[Y’s Loan: Rs.36,000]
B 5,000 Cash 5,200
C 5,000 20,000
Q-36: X, Y and Z were partners sharing profits in the ratio of 2 : 3 : 5. On 31.12.2012,
26,200 26,200 their Balance Sheet stood as under:
Balance Sheet
A decide to retire on 01.04.2013. Under the terms of the partnership deed, the retiring
partner / executors of a deceased partner were entitled to: Liabilities Amount Assets Amount
(a) Amount standing to the credit of partner’s capital A/c and accumulated profits.
Capitals Cash 20,000
(b) Interest on capital @ 5% p.a. and salary @ 1,000 p.m.
X 75,000 Buildings 50,000
(c) Share of goodwill on the basis of twice the average of past three years profits.
Y 62,500 Patents 15,000
(d) Share of profit from the last financial year to the date of retirement on the basis of
Z 37,500 1,75,000 Stock 25,000
last year’s profits.
Creditors 27,500 Debtors 20,000
Profits for 2010, 2011 and 2012 were Rs.6,000, Rs.8,000 and Rs.7,000 respectively.
General Reserve 15,000 Machinery 75,000
A was paid Rs.1,600 on 01.04.2013 and the balance in three equal instalments with
Goodwill 12,500
interest @ 10% p.a.
Pass the necessary jourrial entries and draw up A’s account till it is fully paid. 2,17,500 2,17,500
[A’s Loan: Rs.21,000; Interest on Capital: Rs.125; Share in profit: Rs.875]
Z retires on 01.04.2013 and it was agreed that:
(a) Goodwill was valued at two years purchase of the average profits of the last four
Q-35: The following was the Balance Sheet of X, Y and Z as on 31.12.2012:
years, which were 2009: Rs.32,500; 2010: Rs.30,000; 2011: Rs.40,000 and 2012:
Rs.41,500.
(b) Machinery is valued at Rs. 70,000, Patents at Rs. 20,000 and Buildings at Rs.
62,500.
 (31) (32)

CA. Naresh Aggarwal’s Death of Partner

ACADEMY of ACCOUNTS Q-37: A, B and C were partners in a firm share profits in the ratio of 3 : 2 : 1. Their
Accounting • Costing • Taxation • Financial Management Balance Sheet on 31st December 2012 was as follows:
West Patel Nagar, New Delhi. Ph:8800215448. Website: www.academyofaccounts.org Balance Sheet

Liabilities Amount Assets Amount

Creditors 8,000 Building 40,000
(c) For the purpose of calculating Z’s share of profit for the year 2013, it was agreed Reserves 12,000 Plant and Machinery 32,000
that the same may be calculated based on the average profit of the last four
A’s Capital 48,000 Stock 10,200
years.
B’s Capital 24,000 Debtors 12,000
(d) A sum of Rs. 10,500 was paid in cash to Z and the balance in three equal annual
C’s Capital 16,000 Cash 13,800
instalments together with interest @ 10% p.a.
Give necessary journal entries to record the above transactions and prepare Z’s 1,08,000 1,08,000
Account till it is finally closed
A died on 30.04.2013. Under the partnership agreement the deceased partner was
[Z’s Loan: Rs.75,000; Share in profit: Rs.4,500; Revaluation Profit: Rs.12,500]
entitled to:

AoA
(a) Amount standing to the credit of his Capital Account.
(b) Interest on capital and drawings at 12% per annum.
(c) Share of goodwill on the basis of two years purchase of last three years average
profit.
(d) Share of profit from the last financial year to the date of death on the basis of last
•••••••••••••••••••••• three years average profit.
(e) Drawings of A before death were Rs.8,000 and interest thereon was Rs.400.
(f) Rs.15,000 will be paid to A’s executors immediately.
Profits for the year 2010, 2011 and 2012 were Rs.16,000, Rs.15,500 and Rs.22,500
respectively. Prepare A’s Executor Account.
[Bal. of A’s Executor: 53,520; Int. on Cap: 1,920; Share in profit: 3,000; Share in goodwill: 18,000]

Q-38: A, B and C were partners in a firm sharing profits in the ratio of 5 : 3 : 2. On 31st
March, 2012 their Balance Sheet was as under:
Balance Sheet

Liabilities Amount Assets Amount

Creditors 22,000 Buildings 40,000
Reserves 12,000 Machinery 60,000
A’s Capital 60,000 Stock 20,000
B’s Capital 50,000 Patents 22,000
C’s Capital 30,000 Debtors 16,000
Cash 16,000
1,74,000 1,74,000

A died on 1st October 2012. It was agreed between him and the remaining partners
that:
 (33) (34)

(f) Rs. 10,000 was to be paid to Vijay’s executor immediately and the balance due to
CA. Naresh Aggarwal’s him was to be kept in his loan account.
ACADEMY of ACCOUNTS Profits for the three years 2010, 2011 and 2012 were Rs.19,200, Rs.25,600 and
Rs.20,000 respectively.
Accounting • Costing • Taxation • Financial Management Pass the necessary journal entries and prepare Shyam’s Executor Account after the
West Patel Nagar, New Delhi. Ph:8800215448. Website: www.academyofaccounts.org above adjustments are made.
[Bal. of Vijay’s Executor: 20,450; Int. on Cap: 450; Share in profit: 3,000; Share in goodwill: 14,400]

(a) Goodwill to be valued at 2.5 years purchase of the average profits of the previous Q-40: A, B and C were partners in a firm sharing profits and losses in the ratio of their
four years, which were Rs.26,000; Rs.24,000; Rs.40,000 and Rs.30,000 for capitals. Their Balance Sheet on 31.12.2012 was as follows:
years 2009-2010; 2010-2011; 2011-2012 and 2012-2013 respectively. Balance Sheet
(b) Profit for the year 2012-2013 be taken as having accrued at the same rate as that
Liabilities Amount Assets Amount
of the previous year.
(c) Interest on Capital and drawings will be provided at 10% p.a. Creditors 6,000 Furniture 16,000
(d) A’s drawings before death were Rs.10,000 and interest thereon was Rs.500. Reserve Fund 6,400 Stock 12,000
(e) Rs.20,000 will be paid immediately and the balance transferred to his executor’s Capitals: Debtors 12,000
account. A 20,000 Bills Receivable 2,000

AoA
Prepare A’s Executor Account as on 1st October, 2012. .
B 10,000 Cash 10,400
[Bal. of A’s Executor: 83,500; Int. on Cap: 3,000; Share in profit: 7,500; Share in goodwill: 37,500] C 10,000 40,000
52,400 52,400
Q-39: Ajay, Vijay and Sanjay were partners sharing profits and losses in the ratio of
4 : 3 : 2. On 31st December 2012, their balance sheet stood as follows : C died on 31.03.2013. Under the terms of the partnership deed, executors of a
Balance Sheet deceased partner were entitled to:
(a) Amount standing to the credit of partner’s capital account.
Liabilities Amount Assets Amount
(b) Interest on capital @ 5% p.a. and remuneration @ 1,500 p.m.
Creditors 8,000 Goodwill 7,200 (c) Share of goodwill on the basis of twice the average of past three years profits.
General Reserve 18,000 Plant & Machinery 28,000 (d) Share of profit from the last financial year to the date of death on the basis of ratio
Capitals Stock 8,000 of turnover. Turnover of the last year was Rs.70,000 and during the current year,
Ajay 20,000 Sundry Debtors 12,000 before death it was Rs.40,000.
Vijay 18,000 Cash at Bank 22,800 Profits for 2010, 2011 and 2012 were Rs.12,000, Rs.10,000 and Rs.14,000
Sanjay 14,000 52,000 respectively. Rs.6,225 was paid on death and the balance in three equal installments
with interest @ 10% p.a.
78,000 78,000
Pass the necessary journal entries and draw up C’s executors account till it is fully
Vijay died on 31.03.2013. According to the Partnership Deed, executor of the deceased paid.
partner was entitled to: [Bal. of C’s Executor: 18,000; Int. on Cap: 125; Share in profit: 2,000; Share in goodwill: 6,000]
(a) Balance of his Capital A/c and his share of the accumulated reserves.
(b) Interest on capital @ 10% p.a. and monthly salary of Rs.2,000. Q-41: X, Y and Z share profits in the ratio of 5 : 3 : 2. Their Balance Sheet on 31st
(c) Share of goodwill calculated on the basis of twice the average profits of the past December 2012 was as follows:
three completed years. Balance Sheet
(d) Share of profit from the last financial year to the date of death on the basis of ratio
Liabilities Amount Assets Amount
of turnover. Turnover of the last year was Rs.1,00,000 and during the current
year, before death it was Rs.45,000. Creditors 18,000 Debtors 22,000
(e) Vijay’s drawings before death were Rs.15,000. General Reserve 10,000 Less: Provision 1,000 21,000
Workmen's Comp. Fund 5,000 Land & Buildings 40,000
 (35) (36)

(a) Goodwill is to be calculated on the basis of 3 years' purchase of the five year's
CA. Naresh Aggarwal’s average profits. The profits were: 2012-Rs.24,000; 2011-Rs.16,000; 2010-
ACADEMY of ACCOUNTS Rs.20,000; 2009-Rs.10,000; 2008-Rs.5,000.
(b) The deceased partner to be given share of profits upto the Date of Death on the
Accounting • Costing • Taxation • Financial Management basis of profits for the previous year.
West Patel Nagar, New Delhi. Ph:8800215448. Website: www.academyofaccounts.org (c) The Assets have been revalued as under:
Stock Rs 10,000; Debtors Rs. 15,000; Furniture Rs 1,500; Plant & Machinery Rs
X’s Capital 35,000 Goodwill 5,000 5,000; Building Rs. 35,000. A bill for Rs 600 was found worthless.
Y’s Capital 30,000 Plant & Machinery 25,000 (d) They also agreed that goodwill should not appear in Books of new firm.
Z’s Capital 25,000 Bank 15,000 (e) A sum of Rs.3,880 was paid immediately to C's executors and the balance to be
Stock 17,000 paid in four equal half yearly instalments together with interest at 10% p.a. on the
1,23,000 1,23,,000 amount outstanding.
Give Journal entries and show the C's Executor's Account till it is finally settled.
On 01.04.2013, Y died and following adjustments are made: [Profit on Revaluation Rs 2,400; C,s Executor’s A/c: Rs.20,000;
(a) Y’s Share will be taken by X and Z in the proportion of 1 : 2. Total Goodwill: Rs.45,000; C’s Share in 3 months profit: Rs.1,200]
(b) Goodwill of the firm is valued at Rs.40,000.
(c) Provision for doubtful debts to be increased by Rs 1,500. Q-43: A, B and C are partners sharing profits in the ratio of 3 : 1 : 1 and their Balance

AoA
(d) Value of land and building to be increased to Rs 45,000. Sheet on 31st December 2012 stood as follows:
(e) Value of stock to be increased by Rs 2,500. Balance Sheet
(f) The liability of workmen’s compensation fund was determined to be Rs.7,000. (as on 31.12.2012)
(g) Share of profit from the closure of the last accounting year till the date of retirement/
death on the basis of the average profits of the 3 completed years before death. Liabilities Amount Assets Amount
Average profit was calculated as Rs.20,000. Bills Payable 13,000 Goodwill 6,000
Prepare Y’s Executor Account. Creditors 10,000 Joint Life Policy 2,000
[Bal. of Ys Executor: 46,200; Share in profit: 1,500; Rev. Profit: 4,000; Share in goodwill: 12,000] Employees' Provident Fund 4,000 (Sum Assured Rs 20,000)
Workmen Compensation Res. 6,000 Buildings 13,000
Q-42: The Balance Sheet of A, B, C as on 31st December, 2012 was as follows: Contingency Reserve 3,000 Cash in Hand 13,000
Balance Sheet General Reserve 9,000 Bank 13,700
(as on 31.12.2012) Fixed Capital Accounts: Debtors 13,250
Liabilities Amount Assets Amount A 20,000 Bills Receivable 4,300
B 12,000 Stock 1,750
Bills Payable 2,000 Cash at Bank 5,800 C 8,000 40,000 Investments 18,000
Employees' Provident Fund 5,000 Bills Receivable 800
Workmen Compensation Res. 6,000 Stock 9,000 85,000 85,000
General Reserve 6,000 Sundry Debtors 16,000
Loans 7,100 Furniture 2,000 B died on 30th April, 2013 and according to the deed of the partnership his executors
Capitals: Plant & Machinery 6,500 are entitled to be paid as under:
A 22,750 Building 30,000 (a) The capital to his credit at the time of his death and interest @ 6% per annum.
B 15,250 Advertisement Suspense A/c 6,000 (b) His proportionate share of reserve.
C 12,000 50,000 (c) His share of profits for the period based on the figure of the previous year.
76,100 76,100 (d) Goodwill according to his share of profits to be calculated by taking twice the
amount of the average profits of the last three years. The profits of the previous
The profit sharing ratio was 2 : 2 : 1. C died on 1st April, 2013. The Partnership deed years were:- 2010 Rs 7,000; 2011 Rs 10,200; 2012 Rs 9,800.
provides that: The investments were sold for Rs 16,200 and his executors were paid out.
 (37) (38)

CA. Naresh Aggarwal’s Vijay’s legal representatives were to be paid the amount due. Ajay and Sanjay continued
ACADEMY of ACCOUNTS as partners by taking over Vijay’s share equally.
Work out the amount payable to Vijay’s legal representatives.
Accounting • Costing • Taxation • Financial Management [Amount due to Vijay’s legal representatives: Rs.59,892; Interest on Capital: Rs.625;
West Patel Nagar, New Delhi. Ph:8800215448. Website: www.academyofaccounts.org Share in Goodwill: Rs.9,600; Share in Profit: Rs.667]

Q-45: X and Y were partners. The partnership deed provides inter alia:
Before death B had withdrawn Rs. 3,000 as drawings.
(i) That the accounts be balanced on 31st December each year.
Pass the necessary journal entries and write the account of the executors of B.
(ii) That the profits be divided as follows:
[Amount payable to B’s executor: Rs.19,133; Interest on Capital: Rs.240;
X one-half, Y one-third and carried to Reserve account one-sixth.
Revaluation Loss: Rs.1,800; Share in Profit: Rs.653; Share in Goodwill: Rs.3,600]
(iii) That in the event of death of a partner, his executor will be entitled to the following:
(a) The capital to her credit at the date of death.
Q-44: You are given the Balance Sheet of Ajay, Vijay and Sanjay who are partners
(b) Her proportion of profit to date of death based on the average profits of the
sharing profits in the ratio of 3 : 1 : 1 as on 31st March 2012:
last three completed years.
Balance Sheet
(c) Her share of Goodwill based on three years' purchases of the average
(as on 31.03.2012)
profits for the three preceding completed years.

AoA
Liabilities Amount Assets Amount On 31st December 2012 the Trial Balance was as under:
Creditors 40,000 Goodwill 30,000 Particulars Dr. Amt. Cr. Amt.
Reserve Fund 25,000 Fixed Assets 60,000
X’s Capital .................................................. - 90,000
Capitals: Stock 10,000
Y’s Capital .................................................. - 60,000
Ajay 30,000 Sundry Debtors 20,000
Reserves .................................................. - 30,000
Vijay 25,000 Cash at Bank 15,000
Bills Receivable .................................................. 50,000 -
Sanjay 15,000 70,000
Investments .................................................. 40,000 -
Cash .................................................. 1,10,000 -
1,35,000 1,35,000
Creditors .................................................. - 20,000

Vijay died on 15 June 2012. According to the Deed, his legal representatives were
2,00,000 2,00,000
entitled to:
(i) Balance in Capital Account.
Y died on 1st May 2013.
(ii) Share of goodwill valued on the basis of thrice the average of the past 4 years'
The profits for the three years were: 2010-Rs.42,000; 2011-Rs.39,000 and 2012-
profits.
Rs.45,000.
(iii) Share in profits upto the date of death on the basis of average profits for the past
Show the calculation of Y’s :
4 years. Interest on Capital at the rate of 12% p.a.
(i) Share of Profits
Profits for the years ending on 31 March of 2009, 2010, 2011 and 2012 respectively
(ii) Share of Goodwill
were Rs. 15,000, Rs. 17,000, Rs.19,000 and Rs. 13,000.
(iii) draw up Y’s Executor’s Account as would appear in firm's ledger transferring the
The firm had taken Insurance Policies on the lives of the partners, premium being
amount to his Loan Account.
charged to profits every year. The policy amount and surrender value on 15.6.2012
[Y’s share of Profit: Rs.5,600; Y share of Goodwill: Rs.50,400; Y's Executor: Rs.1,28,000]
were as follows:
Partner Policy Amount Surrender Value
Q-46: A, B and C were partners in a firm sharing profits and losses in in the ratio of
Ajay 70,000 30,000
5 : 3 : 2 respectively. A died on 28th February, 2012. The Balance Sheet on that date
Vijay 70,000 30,000
was as follows:
Sanjay 60,000 25,000
 (39) (40)

Capitals :
CA. Naresh Aggarwal’s A 10,000
ACADEMY of ACCOUNTS B
C
6,000
5,000 21,000
Accounting • Costing • Taxation • Financial Management
31,500 31,500
West Patel Nagar, New Delhi. Ph:8800215448. Website: www.academyofaccounts.org
(a) Interest on capital is allowed @ 6% p.a. A and B are entitled to salaries at Rs.300
Balance Sheet (As on 28.02.2012) and Rs.250 p.m.
(b) In the event of death of a partner, goodwill was to be valued at two years’ purchase
Liabilities Amount Assets Amount
of the average profits of three completed years preceding the death. The net
Capital Goodwill 6,000 profits for the year 2010, 2011 and 2012 were Rs.5,500; Rs.4,800 and Rs.6,500
A 12,000 Machinery 35,000 respectively.
B 16,000 Furniture 6,000 (c) Firm had taken a Joint Life Policy (with profit policy) of Rs.10,000. The insurance
C 12,000 40,000 Stock 9,000 company admitted a claim of Rs.12,600 including bonus.
General Reserve 12,000 Debtors 15,000 (d) A’s share was paid to his executor. B and C continued the firm.
Creditors 22,000 Cash 3,000 Prepare Partner’s Capital A/c and Balance Sheet of the new firm.
[A.I.S.S.C. 1992 (Outside)]
74,000 74,000

AoA
[Amount paid to A’s Executor: Rs.19,500; Balance Sheet: Rs.17,000;
The firm had a joint life policy in the names of the partners, for insured value of Rs.60,000. B’s Capital: Rs.7,360; C’s Capital: Rs.5,850; Cash Balance: Rs.500]
The premium paid on the policy was debited to Profit & Loss Account. The Partnership
Deed provided that on the death of a partner, the assets and liabilities are to be revalued.
The assets and liabilities were revalued as follows:
(a) Machinery at Rs.45,000 and furniture at Rs.7,000
(b) A provision of 10% was credited for doubtful debts.
(c) A provision of Rs. 15,000 was made for taxation. Theoretical Questions
(d) The Goodwill of the firm was valued at Rs.21,000.
(e) Death claim for policy was realised in full.
The amount payable to A was transferred to his executor’s account. You are required Q-1*: What are the adjustments required on retirement of a partner from the firm ?
to prepare Revaluation Account, Capital Accounts and Balance Sheet of B and C.
[Revaluation Loss: Rs.5,500; Cash: Rs.63,000; Balance Sheet: Rs.1,37,500; Q-2*: Distinguish between sacrificing ratio and gaining ratio.
A’s Executor: Rs.52,750; B’s Capital: Rs.27,850; C’s Capital: Rs.19,900]
Q-3: Why is it necessary to distribute all accumulated profits and losses among old
Q-47: A, B and C were partners in a firm share profits in the ratio of 2 : 1 : 1. They partners at the time of retirement of a partner ?
closed their books on 31st December each year. A died on 28th February 2012, when
Q-4: What is the meaning of gaining ratio ? How is it calculated ?
their Balance Sheet was as follows:
Balance Sheet Q-5: How will you deal with the amount due to an outgoing partner in case it is not
Liabilities Amount Assets Amount paid immediately ?

Creditors 3,790 Cash 20,000

J.L.P. Reserve 3,600 Sundry Debtors 3,900 ••••••••••••••••••••••
Profit for two months 3,110 Loan to A 4,000
(before Interest and Salaries) Joint Life Policy 3,600