CBSE Class 12th Accountancy exam is scheduled for 5th March 2020. In this article we have complied a list of important questions from Chapter 4: Reconstitution of a Partnership Firm – Retirement/Death of a Partner. Questions given below are important questions and are expected to be asked in Class 12 Accountancy board exam 2019-20
Ques 1 State the basis of calculating the amount of profit payable to the legal representative of a deceased partner in the year of death.
Solution: Profit may be estimated
(a) On the basis of Last year’s profit/ Average profits of last given no. of years
(b) On the basis of Turnover/ Sales.
Ques 2 What is meant by ‘Gaining Ratio’ on retirement of a partner ?
Solution: Gaining ratio is the ratio in which the remaining partners acquire the retiring partner’s share.
Ques 3 A, B and C were partners in a firm. A died on 31.3.2018 and the Balance Sheet of the firm on that date was as under :
On A’s death it was found that patents were valueless, furniture was to be brought down to < 24,000, plant was to be reduced by < 10,000 and there was a liability of < 7,000 on account of workmen’s compensation.
Pass the necessary journal entries for the above at the time of A’s death.
Ques 4 A, B and C were partners in a firm sharing profits and losses in the ratio of 4 : 3 : 2. B retired and his share was taken over by A and C equally.
Calculate the gaining ratio.
Solution: Gaining Ratio of A and C is 1:1 as they have taken over B’s Share equally.
Ques 5 P, Q and R were partners in a firm. On 31st March, 2018 R retired. The amount payable to R ` 2,17,000 was transferred to his loan account. R agreed to receive interest on this amount as per the provisions of Partnership Act, 1932. State the rate at which interest will be paid to R.
Solution: 6% p.a.
Ques 6 Mohan, Vinay and Nitya were partners in a firm sharing profits and losses in the proportion of 1/2,1/3 and 1/6 respectively. On 31st March, 2018, their Balance Sheet was as follows :
Mohan retired on the above date and it was agreed that :
(i) Plant and machinery will be depreciated by 5%.
(ii) An old computer previously written off was sold for < 4,000.
(iii) Bad debts amounting to < 3,000 will be written off and a provision of 5% on debtors for bad and doubtful debts will be maintained.
(iv) Goodwill of the firm was valued at < 1,80,000 and Mohan’s share of the same was credited in his account by debiting Vinay’s and Nitya’s accounts.
(v) The capital of the new firm was to be fixed at < 90,000 and necessary adjustments were to be made by bringing in or paying off cash as the case may be.
(vi) Vinay and Nitya will share future profits in the ratio of 3 : 2. Prepare Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of the reconstituted firm.
Ques 7 Sushma, Gautam and Kanika were partners in a firm sharing profits in the ratio of 5 : 3 : 2. On 31st March, 2018, their Balance Sheet was as follows :
On the above date, Sushma retired and it was agreed that :
(i) Fixed Assets will be reduced to < 2,90,000.
(ii) A provision of 5% on debtors for bad and doubtful debts will be created.
(iii) Stock was to be valued at < 2,18,000. Sushma took over the stock at this value.
(iv) Goodwill of the firm on Sushma’s retirement was valued at < 8,00,000. Sushma’s share of goodwill was treated by debiting Gautam and Kanika’s Capital Accounts.
(v) Sushma was paid cash brought by Gautam and Kanika in such a way that their capitals became in profit sharing ratio and a balance of < 58,000 was left in the bank.
(vi) Gautam and Kanika will share the future profits in the ratio of 2 : 3.
Prepare Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of the reconstituted firm.
Ques 8 A firm earned average profit of ` 3,00,000 during the last few years. The normal rate of return of the industry is 15%. The assets of the business were ` 17,00,000 and its liabilities were ` 2,00,000. Calculate the goodwill of the firm by capitalisation of average profits.
Solution Actual profits = Rs.3,00,000
Net Tangible Assets = Assets – Liabilities
= Rs.17,00,000 – Rs.2,00,000
Capitalised value of the firm= (Average Profits x 100)/ Normal rate of return
= (Rs.3,00,000 x 100)/15
Goodwill= Capitalised value of the firm – Net Tangible Assets
= Rs.20,00,000 - Rs.15,00,000
Ques 9 Giriija, Yatin and Zubin were partners sharing profits in the ratio 5 : 3 : 2. Zubin died on 1St August, 2015. Amount due to Zubin’s executor after all adjustments was Rs.90,300. The executor was paid Rs. 10,300 in cash immediately and the balance in two equal annual instalments with interest @ 6% p.a. starting from 31st March, 2017. Accounts are closed on 31st March each year.
Prepare Zubin’s Executors Account till he is finally paid.
Ques 10 Mita, Gopal and Farhan were partners sharing profits and losses in the ratio 3 : 2 : 1. On 31st March, 2018 they decided to change the profit sharing ratio to 5 : 3 : 2. On this date, the Balance Sheet showed deferred advertisement expenditure < 30,000 and contingency reserve < 9,000. Goodwill was valued at < 4,80,000. Pass the necessary journal entries for the above transactions in the books of the firm on its reconstitution.