RECONSTITUTION
OF PARTNERSHIP
ADMISSION OF A PARTNER
Q.1 On what
occasions does the need for valuation of goodwill arise?
Q.2 Why is it
necessary to revalue assets and reassess liabilities at the time of
admission of new partner?
Q.3 What is
meant by sacrificing ratio?
Q.4 State two
occasions when sacrificing ratio may be applied.
Q.5 A business
has earned average profit of Rs. 60,000 during the last few years. The assets
of the business are Rs. 5,40,000 and its external liabilities are Rs. 80,000. The
normal rate of return is 10%. Calculate the value of goodwill on the basis of
capitalisation of super profits.
Q.6 The capital
of a firm of Arpit and Prajwal is Rs. 10,00,000. The market rate of return is
15% and the goodwill of the firm has been valued Rs. 1,80,000 at two years
purchase of super profits. Find the average profits of the firm.
Q.7 The average
profits for last 5 years of a firm are Rs. 20,000 and goodwill has been worked
out Rs. 24,000 calculated at 3 years purchase of super profits. Calculate the
amount of capital employed assuming the normal rate of interest is 8 %.
Q.8 X and Y are
partners sharing profits in the ratio of 5:4. They admit Z in the firm for 1/3rd
profit, which he takes 2/9th from X and 1/9th from Y and
brings Rs. 1500 as premium. Pass the necessary Journal entries on Z’s
admission.
Q.9 Ranzeet and
Priya are two partners sharing profits in the ratio of 3:2. They admit Nilu as
a partner, who pays Rs. 60,000 as capital. The new ratio is fixed as 3:1:1. The
value of goodwill of the firm was determined at Rs. 50,000. Show journal
entries if Nilu brings goodwill for her share in cash.
Q.10 A and B are
partners sharing profits equally. They admit C into partnership, C paying only
Rs. 1000 for premium out of his share of premium of Rs. 1800 for 1/4th
share of profit. Goodwill account
appears in the books at Rs. 6000. All the partners have decided that goodwill
should not appear in the new firms books.
Q.11 A and B are partners sharing profits in the
ratio of 3:2. Their books showed goodwill at Rs. 2000. C is admitted with 1/4th
share of profits and brings Rs. 10,000 as his capital but is not able to bring
in cash goodwill Rs. 3000. Give necessary Journal entries.
Q.12 A and B are
partners sharing profits in the ratio of 3:2. They admit C into partnership for
1/4th share. C is unable to bring his share of goodwill in cash. The
goodwill of the firm is valued at Rs. 21,000. give journal entry for the
treatment of goodwill on C’s admission.
Q13 A and B are
partners with capitals of Rs. 13,000 and Rs. 9000 respectively. They admit C as
a partner with 1/5th share in
the profits of the firm. C brings Rs. 8000 as his capital. Give journal
entries to record goodwill.
Q.14 A, B and C
were partners in the ratio of 5:4:1. On 31st Dec. 2006 their balance
sheet showed a reserve fund of Rs. 65,000, P&L A/C (Loss) of Rs. 45,000. On
1st January, 2007, the partners decided to change their profit
sharing ratio to 9:6:5. For this purpose goodwill was valued at Rs. 1,50,000. The partners do not want to distribute
reserves and losses and also do not want to record goodwill. You are required to pass single journal entry
for the above.
Q15 A and B were
partners in the ratio of 3:2. They admit C for 3/13th share. New
profit ratio after C’s admission will be 5:5:3. C brought some assets in the
form of his capital and for the share of his goodwill.
Following
were the assets:
Assets Rs.
Stock 2,44,000
Building 2,40,000
Plant
and Machinery 1,40,000
At the time of admission of C goodwill of the firm was valued at Rs.
12,48,000.
Pass necessary journal entries.
Q.16 X, Y and Z are sharing profits and losses in the ratio of
5:3:2. They decide to share future profits and losses in the ratio of 2:3:5
with effect from 1st April, 2002. They also decide to record the
effect of the reserves without affecting their book figures, by passing a
single adjusting entry.
Book
Figure
General Reserve Rs.
40,000
Profit 2 loss A/C (Cr) Rs.
10,000
Advertisement Suspense A/C(Dr) Rs.
20,000
Pass the necessary single adjusting entry.
RETIREMENT /DEATH
OF A PARTNER
Q.1
Distinguish between Sacrificing Ratio and Gaining Ratio.
Q.2 Kamal,
Kishore and Kunal are partners in a firm sharing profits equally. Kishore
retires from the firm. Kamal and Kunal decide to share the profits in future in
the ratio 4:3. Calculate the Gaining Ratio.
Q.3 P, Q and
R are partners sharing profits in the ratio of 7:2:1. P retires and the new
profit sharing ratio between Q and R is 2:1. State the Gaining Ratio.
Q.4 A, B
and C are partners in a firm sharing profits in the ration of 2:2:1. B retires
and his share is acquired by A and C equally. Calculate new profit sharing
ratio of A and C.
Q.5 X, Y and
Z are partners sharing profits in the ratio of 4/9, 1/3 and 2/9. X retires and
surrenders 2/3rd of his share in favour of Y and remaining in favour
of Z. Calculate new profit sharing ratio and gaining ratio.
Q.6 Ramesh,
Naresh and Suresh were partners in a firm sharing profits in the ratio of
5:3:2. Naresh retired and the new profit sharing ratio between Ramesh and
Suresh was 2:3. On Naresh retirement the goodwill of the firm was valued at Rs.
120000. Pass necessary journal entry for the treat.
Q.7 L, M and O
were partners in a firm sharing profits in the ratio of 1:3:2. L retired and
the new profit sharing ratio between M and O was 1:2. On L’s retirement the
goodwill of the firm was valued Rs. 120000. Pass necessary journal entry for
the treatment of goodwill.
Q.8 State the
journal entry for treatment of deceased partners share of profit in the year of
death.
Q9 X, Y and Z were partners in a firm sharing profits
and losses in the ratio of 3:2:1. The profit of the firm for the year ended 31st
March, 2007 was Rs. 3,00000. Y dies on 1st July 2007. Calculate Y’s
share of profit up to date of death assuming that profits in the year 2007-
2008 have been accured on the same scale as in the year 2006-07 and pass
necessary journal entry.
Q.10. A, B and C were partners in a firm sharing
profits in 3:2:1 ratio. The firm closes its books on 31st March
every year. B died on 12-06-2007. On B’s death the goodwill of the firm was
valued at Rs. 60000. On B’s death his share in the profit of the firm till the
time of his death was to be calculated on the basis of previous years which was
Rs.150000. Calculate B’s share in the profit of the firm. Pass necessary
journal entries for the treatment of goodwill and B’s share of profit at the
time of his death.
DISSOLUTION OF
PARTNERSHIP FIRM
Q.1 All partners wish to dissolve the firm. Yastin, a
partner wants that her loan of Rs. 2,00000 must be paid off before the payment
of capitals to the partners. But, Amart, another partner wants that the capital
must be paid before the payment of Yastin’s loan. You are required to settle
the conflict giving reasons.
Q.2 On a firms dissolution debtors as shown in the
Balance sheet were Rs. 17000 out of these Rs. 2000 became bad. One debtor of
Rs. 6000 became insolvent and 40% could be recovered from him. Full recovery
was made from the balance debtors. Calculate the amount received from debtors
and pass necessary journal entry.
Q.3 On dissolution of a firm, Kamal’s capital account
shows a debit balance of Rs. 16000. His share of profit on realization is Rs.
11000. He has taken over firms creditors at Rs. 9000. Calculate the final
payment due to /from him and pass journal entry.
Q.4 A and B were partners in a firm sharing profits
and losses equally. Their firm was dissolved on 15th March, 2004,
which resulted in a loss of Rs. 30,000. On that date the capital A/C of A
showed a credit balance of Rs. 20,000 and that of B a credit balance of Rs.
30000. The cash account has a balance of Rs. 20000. You are required to pass
the necessary journal entries for the (i) Transfer of loss to the capital
accounts and (ii) making final payment to the partners.
Q.5 What journal entries would be passed in the books
of A and B who are partners in a firm, sharing profits in the ratio of 5:2, for
the following transactions on the dissolution of the firm after various assets
(other than cash) and third party liabilities have been transferred to
Realisation Account?
(a)
Bank loan Rs. 12,000 is paid.
(b)
Stock worth Rs. 6000 is taken
over by B.
(c)
Loss on Realisation Rs. 14,000.
(d)
Realisation expenses amounted
to Rs. 2,000, B has to bear these expenses.
(e)
Deferred Revenue Advertising Expenditure
appeared at Rs. 28,000.
(f)
A typewriter completely written
off in the books of the firm was sold for Rs. 200.
ACCOUNTING
FOR SHARE CAPITAL & DEBENTURE
Q.1 Gupta Ltd
has incurred a loss of Rs. 8,00,000
before payment of interest on debentures. The directors of the company are of
the opinion that interest on debentures is payable only when company earn
profit. Do you agree?
Q.2 What is the
nature of receipt of premium on issue of shares?
Q.3 Krishna Ltd.
With paid-up share capital of Rs. 60,00,000 has a balance of Rs. 15,00,000 in
securities premium account. The company management does not want to carry over
this balance. You are required to suggest the method for utilizing this premium
money that would achieve the objectives of the management and maximize the
return to shareholders.
Q.4 State in
brief, the SEBI guidelines regarding Debenture Redemption Reserve(DRR).
Q.5 Which
companies are exempted from the obligation of creating DRR by SEBI?
Q.6 X Ltd took over the assets of Rs. 6,60,000 and liabilities of
Rs. 80,000, Y Ltd for Rs. 600,000. Show the necessary journal entries in the
book of X Ltd. assuming that
Case-I : The consideration was payable 10% in cash
and the balance in 54000 equity shares of
Rs. 10 each.
Case-II : The consideration was payable 10% in cash
and the balance in 45000 equity shares of
Rs. 10 each.
Case-III : The consideration was payable 10% in cash
and the balance in 60,000 equity shares of Rs. 10 each.
Q.7 X ltd. was formed with a capital of Rs. 500,000
divided into shares of Rs. 10 each out of these 2000 shares were issued to the
vendors as fully paid as purchase consideration for a building acquired, 1000
shares were issued to signatories to the memorandum of association as fully
paid. The directors offered 6500 shares to the public and called up Rs. 6 per
and received the entry called up amount
on share allotted. Show these transaction in the Balance sheet of a company.
Q.8 X Ltd.
invited applications for 11,000 shares of Rs. 10 each issued at 10% premium
payable as:
On application Rs.
3 (including Rs. 1 premium)
On allotment Rs.
4 (including Rs. 1 premium)
On 1st Call Rs.
3
On 2nd & final call Rs.
2
Application were received for 24000 shares.
Category I : One fourth of the shares applied for allotted 2000
shares.
Category II: Three fourth the shares applied for allotted 9000
shares.
Remaining applicants were rejected. Mr. Mohan holding 300 shares out
of category II failed to pay allotment and two calls and his shares were re
issued @ Rs. 11 fully paid-up. Pass necessary journal entries.
Q.9A company forfeited 240 shares of Rs. 10 each
issued to raj at a a premium of 20%. Raman had applied for 300 shares and had
not paid anything after paying Rs 6 per share including premium on application.
180 shares were reissued at Rs. 11 per share fully paid up. Pass journal
entries relating to forfeiture and reissue of shares.
Q.10 TPT Ltd. invited applications for issuing
1,00,000 equity shares of Rs. 10 each at a premium of Rs. 3 per share. The
whole amount was payable on application. The issue was over subscribed by
30,000 shares and allotment was made on pro-rata basis. Pass necessary journal
entries in the books of the company.
Q.11 Pass
journal entries for the following at the time of issue of debentures:
(a) B Ltd. issues 30,000, 12% Debentures of Rs. 100
each at a discount of 5 % to be repaid at par at the end of 5 years.
(b) E Ltd. issues Rs. 60,000, 12% Debentures of Rs. 100 each at a discount of 5
% repayable at a premium of 10% at the end of 5 years.
(c) F Ltd. issues Rs. 70,000, 12% Debentures of Rs.
100 each at a premium of 5 % redeemable at 110%.
Q.12 500 shares of Rs. 100 each issued at a discount
of 10% were forfeited for the non-payment of allotment money of Rs. 50 per
share. The first and final call of Rs.10 per share on these shares were not
made. The forfeited shares were reissued at Rs. 80 per share fully paid-up.
Q.13 200 shares of Rs. 100 each issued at a discount
of 10% were forfeited for the non payment of allotment money of Rs. 50 per
share. The first and final call of Rs. 10 per share on these shares were not made. The forfeited share were
reissued at Rs. 14 per share fully paid up.
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