Multi Disciplinary Questions
ACCOUNTANCY
CLASS 12
QUESTION NO-1
• A and B are partners sharing profits in the ratio of 3:2
with capitals of Rs. 3,20,000 and Rs. 2,60,000.On 1st
April,2013,they admit C into the partnership. A
surrenders 1/5th of his share and B surrenders 2/5th of
his share in favor of C.C brings in Rs. 1,40,000 for
goodwill and the proportionate amount of Capital in
cash. Partner’s are entitled to interest on capital @5%
p.a.
Profits for the year ending 31st March,2014 before
allowing interest on capitals amounted to Rs. 3,00,000.
Pass journal entries for the above mentioned
transactions.
Date
Particulars
L.F.
Dr.(R.s)
Cr.(Rs.)
2013
Apr-01Bank A/c
Dr.
4,20,000
To C's Capital A/c
2,80,000
To premium for goodwill A/c
1,40,000
(the amount of capital and goodwill/premium
brought in cash)
Apr-01Premium for Goodwill A/c
Dr.
1,40,000
To A's Capital A/c
60,000
To B's Capital A/c
80,000
(Goodwill credited to old partners in sacrificing ratio
i.e., 3 : 4)
2014
Mar-31Profit & loss A/c
Dr.
3,00,000
To Profit and Loss appropriation A/c
3,00,000
(Transfer of profit & loss to appropriation A/c)
Mar-31Interest on Capital A/c
Dr.
50,000
To A's Capital A/c
19,000
To B's Capital A/c
17,000
To C's Capital A/c
14,000
(Interest on partner's Capitals)
Mar-31Profit and Loss Appropriation A/c
Dr.
50,000
To interest on Capital A/c
50,000
(Transfer of interest on capital to appropriation A/c)
Mar-31Profit and Loss Appropriation A/c
Dr.
2,50,000
To A's Capital A/c
1,20,000
To B's Capital A/c
60,000
To C's Capital A/c
70,000
Transfer of balance of appropriation A/c to capital
accounts in the profit sharing ratio i.e., 12 : 6: 7)
Working notes
1. share surrendered by A: 1/5th of 3/5 =3/25
Share surrendered by B : 2/5th of 2/5 = 4/25
Sacrificing ratio 3/25 : 4/25 = 3 : 4
A’s new share
= 3/5 – 3/25 = 15-3/25 =12/25
B’s new share
= 2/5 – 4/25 = 10-4/ 25 = 6/25
C’s share
= 3/25 +4/25 = 7/25
hence., new ratios of A, B and C = 12 : 6 : 7
2. adjusted capital of A = Rs. 3,20,000 + share of goodwill Rs. 60,000 = Rs.
3,80,000
adjusted capital of B = Rs. 2,60,000 + share of goodwill Rs. 80,000 = Rs.
3,40,000
Total adjusted capital of A and B for 18/25th share = Rs. 3,80,000 + Rs.
3,40,000
= Rs. 7,20,000
total capital of new firm : Rs. 7,20,000 × 25/18 = Rs. 10,00,000
Proportionate capital of C = Rs. 10,00,000 × 7/25 = Rs. 2,80,000
3. interest on capitals :
A 5% on Rs. 3,80,000 = Rs. 19,000
B 5% on Rs. 3,40,000 = Rs. 17,000
C 5% on Rs. 2,80,000 = Rs. 14,000
Rs. 50,000
4. net profit after interest on capital = Rs. 3,00,000 –Rs. 50,000 = Rs.
2,50,000
QUESTION NO-2
• The partners of a firm distributed the profits for the year ended
31st March,2013,Rs. 7,50,000 equally without providing for the
following adjustments:
(1) A and B were entitled to a salary of Rs. 10,000 each per month.
(2) B was entitled to a commission of Rs. 60,000.
(3) Profits were to be shared in the ratio of 3:2:1.
Partners decided to pass an adjusting entry on 1ST April,2013
rectifying the same.
On the same date, they admitted D as a new partner for 1/7th
share in the profits. The new profit sharing ratio will be
2:2:2:1respectively. D brought Rs. 3,00,000 for his capital and Rs.
45,000 for his 1/7th share of goodwill. Showing your workings
clearly, pass the necessary journal entries in the books of the firm
for the above mentioned transactions.
DATE
PARTICULAR
L.F.
Dr.(RS)
2013
C’s Capital A/c
Dr.
APRIL 1
To A’s Capital A/c
To B’s Capital A/c
(Adjustment for wrong appropriation of profit)
1,75,000
APRIL 1 Bank A/c
Dr.
To D’s Capital A/c
To Premium for Goodwill A/c
(The amount of capital and goodwill/premium
brought in cash)
3,45,000
April 1
45,000
37,500
Premium for Goodwill A/c
Dr.
C’s Capital A/c
To A’s Capital A/c
To B’s Capital A/c
(Premium for goodwill brought in D credited to
A and B along with 5/45 of the goodwill to be
contributed by C due to gain in his profit
sharing ratio)
Cr.(RS)
95,000
80,000
3,00,000
45,000
67,500
15,000
Working Notes :
TABLE SHOWING ADJUSTMENTS
PARTICULAR
Salary
(Cr.)
Commission
(Cr.)
Remaining profit i.e.,
7,50,000-2,40,000-60,000=4,50,000
will be divided in 3 : 2 : 1
(Cr.)
Less : Profit already distributed equally
A
(RS)
B
(RS)
1,20,000
1,20,000
60,000
2,25,000
3,45,000
2,50,000
(Cr.)
95,000
1,50,000
3,30,000
2,50,000
(Cr.)
80,000
C
(RS)
TOTAL
(RS)
2,40,000
60,000
75,000
75,000
2,50,000
(Dr.)
1,75,000
4,50,000
7,50,000
7,50,000
---
On D’s admission C has also gained to the extent
5
of
42
.
Hence, he must also compensate A and B to the extent of
of the firm’s goodwill.
1
For share, goodwill brought in by D = Rs.45,000.
7
Total goodwill of the firm based on D’s share =
7
45,000 x = 3,15,000
1
5
42
5
42
C to compensate = 3,15,000 x
= 37,500.
Total Goodwill contributed by D and C (45,000 + 37,500) =
82,500 will be distributed between A and B in their sacrificing
ratio.
9
A’s share = 82,500 x
= 67,500.
B’s share = 82,500 x
11
2
11
= 15,000.
QUESTION NO-3
• A,B and C were partners in a firm sharing profits
in the ratio of 1:2:2. On 1st July,2014 A retired and
the new profit sharing ratio of B and C was 3:2.
Goodwill of the firm was valued at Rs. 4,00,000.
D is admitted as a partner . B and C surrenders ½
of their respective share in favor of D.
D is to bring his share of premium for the
goodwill in cash. Pass necessary entries for the
record of goodwill in the above case. Also
calculate the sacrificing ratios and new ratios.
JOURNAL
DATE
PARTICULAR
2014
July 1
B’s Capital A/c
Dr.
1
To A’s Capital A/c (5 th of 4,00,000)
(B’s Capital account debited as he alone has
gained on A’s retirement )(see Note 1)
80,000
July 1
Bank A/c
Dr.
To Premium for Goodwill A/c
(Premium for Goodwill brought in cash by D)
2,00,000
Premium for Goodwill A/c
Dr.
To B’s Capital A/c
To C’s Capital A/c
(Premium brought in by D credited to B and C in
the sacrificing ratio of 3 : 2)
2,00,000
July 1
L.F.
Dr.
(Rs)
Cr.
(Rs)
80,000
2,00,000
1,20,000
80,000
Working Notes :
(1)Calculation of Gaining Ratio :
3
Gaining Ratio of B =
−
Gaining Ratio of C
=
2
5
5
−
(2) B’s existing share
Share surrendered by B
C’s existing share
Share surrender by C
2
=
5
1
=
2
2
5
2
5
=
= 0
3
=
5
1
=
2
of
1
5
2
5
3
5
of =
=
2
10
3
10
3
2
Therefore, Sacrificing Ratio = A ∶ B = 3
10
10
3
3
6−3
3
New Ratio : B’s new share = − =
=
5
10
10
10
2
2
4−2
2
C’s new share = − =
=
5
10
10
10
D’s new share =
3
2
+
10
10
=
:2
5
10
Hence, new ratio of B,C and D =
3
10
∶
2
10
(3) D’s share of Goodwill = 4,00,000 x
∶
5
10
5
10
= 3 : 2: 5
= 2,00,000.
Q.4. A,B and C were in partnership sharing profits
and losses in the proportions of 3 : 2 : 1. On 1st
April,2011,B retires from the firm. On that date ,
their Balance Sheet was as follows :
Liabilities
(Rs)
Trade Creditors
69,000
Expenses owing
45,000
Reserve Fund
1,05,000
Workmen’s Compensation
Reserve
48,000
Capitals :
A:
1,95,000
B:
1,57,000
C:
81,000 4,33,000
7,00,000
Assets
Cash in hand
Debtors
Less : Provision
Stock
Factory Premises
Investments
Loose Tools
(Rs)
85,000
1,60,000
10,000
1,50,000
1,20,000
2,25,000
80,000
40,000
7,00,000
The terms were :
(1) Goodwill of the firm to be valued at 2 times of Average
Super Profits of last three years . Taking into consideration
the risk of the business, normal profits of the firm are
estimated at 5,00,000 every year. But actual profits three
years ending 31st march were as 2009 : 6,00,000 , 2010 :
5,50,000 , 2011 : 5,75,000.
(2) Expenses owing to be brought down to 37,500.
(3) Investments are valued at 72,000.A took over investments
at this value.
(4) Factory premises is to be revalued at 2,43,000;and Loose
tools at 36,000.
(5) Provision for doubtful Debt to be increased by 19,500.
(6) Claim on account of workmen’s compensation is 18,000.
(7) B be paid 50,000 in cash and balance due to him treated
as a loan carrying interest @ 6% per annum.
As per partnership deed, partners are allowed 6% p.a.
interest on their capitals. Profits for the year ending
31st march 2012 before allowing interest on the loan
and capitals amounted to 22,000.
Show Journal entry for goodwill adjustments, prepare
Revaluation Account and Capital Accounts as on 1st
April 2011 and the distribution of profit for the year
ended 31st March,2012.
Calculation of Goodwill :
Average profits of the past three years
𝟔,𝟎𝟎,𝟎𝟎𝟎+𝟓,𝟓𝟎,𝟎𝟎𝟎+𝟓,𝟕𝟓,𝟎𝟎𝟎
=
𝟑
= 5,75,000.
Super profits = Actual profit – Normal profits
=5,75,000-5,00,000=75,000.
Goodwill at 2 years purchase of super profits =
75,000x2=1,50,000.
JOURNAL ENTRY FOR GOODWILL
DATE
2011
April 1
PARTICULAR
A’s Capital A/c
Dr.
C’s Capital A/c
Dr.
To B’s Capital A/c
(B’s share of goodwill adjusted to the accounts
of continuing partners in their gaining ratio 3 :
1)
L.F.
Dr.
(Rs)
Cr.
(Rs.)
37,500
12,500
50,000
REVALUATION ACCOUNT
PARTICULAR
To Investments
To Loose Tools
To Provision for doubtful debts
(Rs.)
8,000
4,000
19,500
31,500
PARTICULAR
By Expenses owing A/c
By Factory Premises
By Loss transferred to :
A
3,000
B
2,000
C
1,000
(Rs.)
7,500
18,000
6,000
31,500
TICULAR
pril 2011
evaluation A/c
’s capital A/c
vestments A/c
ash A/c
’s loan A/c
alance c/d
CAPITAL ACCOUNTS
A
(Rs.)
3,000
37,500
72,000
0
0
1,50,000
2,62,000
B
(Rs.)
C
(Rs.)
2,000 1,000
0 12,500
0
0
50,000
0
2,00,000
0
0 90,000
2,52,000 1,03,500
PARTICULAR
1st April 2011
By Balance b/d
By Reserve Fund
A/c
By Workmen’s
Compensation
Reserve A/c
By A’s Capital A/c
By C’s Capital A/c
A
(Rs.)
B
(Rs.)
1,95,000
1,57,000 81
52,500
35,000 17
15,000
0
0
2,62,000
10,000
37,500
12,500
2,52,000 1,
PROFIT & LOSS ACCOUNT
for the year ended 31st march, 2012
PARTICULAR
To Interest on B’s Loan
( 6% on 2,00,000)
To Profit transferred to P & L
Appropriation A/c
(Rs.)
PARTICULAR
By Profit (before interest)
(Rs.)
22,000
12,000
10,000
22,000
22,000
Since partnership deed is silent in treating on capital as a charge or appropriation it will be
treated as appropriation of profits.
PROFIT AND LOSS APPROPRIATION A/C
PARTICULAR
To Interest on Capital
A
10,000 x
B
10,000 x
(Rs.)
5
8
3
8
PARTICULAR
(Rs.)
By Profit & Loss A/c
10,000
6,250
3,750
10,000
10,000
Interest on A’s Capital 6% on 1,50,000
Interest on A’s Capital 6% on 90,000
9,000
5,400
14,400
The available profit is 10,000 whereas the interest due
on capitals is 14,400. Since the profit is less than
interest, the available profit will be distributed in the
ratio of interest, i.e., 9,000 : 5,400 or 5 : 3.