Commerce Foundation

207, 208 J9 Highstreet, Surat

PARTNERSHIP
Class 12 - Accountancy
Time Allowed: 3 hours Maximum Marks: 80

1. A, B and C are partners. A’s capital is ₹ 3,00,000 and B’s capital is ₹ 1,00,000. C has not invested any amount as [1]
capital but he alone manages the whole business. C wants ₹ 30,000 p.a. as salary. Firm earned a profit of ₹
1,50,000. How much will be each partner’s share of profit:

a) A ₹ 50,000; B ₹ 50,000; C ₹ 50,000 b) A ₹ 90,000; B ₹ 30,000; C ₹ Nil

c) A ₹ 40,000; B ₹ 40,000; C ₹ 40,000 d) A ₹ 60,000; B ₹ 60,000; C ₹ Nil

2. A and B were partners in a firm sharing profits and losses in the ratio of 7 : 1. A withdrew a fixed amount of ₹ [1]
12,000 at the beginning of each quarter. Interest on drawings is charged @ 6% p.a. The journal entry for
charging interest on drawings at the end of the year will be:

a) Interest on drawings A/c Dr. ₹ 1,800 b) Profit and Loss Appropriation A/c ₹

Dr. 1,800
To A's Current A/c ₹ 1,800
₹
To Interest on drawings A/c
1,800

c) A's Capital A/c Dr. ₹ 1,800 d) Interest on drawings A/c Dr. ₹ 1,800

To Interest on drawings A/c ₹ 1,800 To A's Capital A/c ₹ 1,800

3. If, at the time of change in profit sharing ratio among existing partners, Revaluation Account shows a loss, [1]
where will you debit the same?
4. Neema, Diksha and Kusum were equal partners. They decided to change the profit sharing ratio to 4 : 3 : 2. For [1]
this purpose the goodwill of the firm was valued at ₹ 90,000. The journal entry for the treatment of Goodwill on
change in profit sharing ratio will be:

a) Debit Credit b) Debit Credit

Particular Particular
(₹) (₹) Amt. (₹) Amt. (₹)

Kusuml’s Capital Diksha’s

Dr. 10,000 Dr. 10,000
A/c. Capital A/c

To Neema’s Capital To Neema’s

10,000 10,000
A/c Capital A/c

c) Debit Credit d) Debit Credit

Particular Particular
Amt. (₹) Amt. (₹) Amt. (₹) Amt. (₹)

Neema’s Neema’s
Dr. 10,000 Dr. 90,000
Capital A/c Capital A/c

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 To Kusum’s 10,000 To Kusum’s 90,000
Capital A/c Capital A/c

5. Due to change in the profit sharing ratio, Pooja's gain is 1

5
th while Sonu’s sacrifice is 1

5
th. They decided to [1]
adjust the following without affecting their book values, by passing a single adjustment entry:

General Reserve ₹ 20,000

Profit & Loss Account (Dr.) ₹ 30,000

The necessary adjustment entry will be:

a) Debit Sonu’s capital account by ₹ 10,000 b) Debit Pooja’s capital account by ₹ 2,000
and credit Pooja’s capital account by ₹ and credit Sonu’s capital account by ₹
10,000. 2,000.

c) Debit Sonu’s capital account by ₹ 2,000 and d) Debit Pooja's capital account by ₹ 10,000
credit Pooja’s capital account by ₹ 2,000. and credit Sonu’s capital account by ₹
10,000.
6. Rahul and Pankaj are partners sharing profits in the ratio of 3 : 2. They changed their profit-sharing ratio to 2 : 3 [1]

w.e.f. 1st April, 2022. The Balance Sheet as on the date of change in profit-sharing ratio showed credit balance in
Profit & Loss Account of ₹ 1,00,000, which the partners decide to carry forward and not distribute. The balance
of ₹ 1,00,000 will be adjusted by
i. Crediting Rahul's Capital Account and Debiting Pankaj's Capital Account by ₹ 1,00,000.
ii. Crediting Rahul's Capital Account and Debiting Pankaj's Capital Account by ₹ 20,000.
iii. Debiting Rahul's Capital Account and Crediting Pankaj's Capital Account by ₹ 1,00,000.
iv. Debiting Rahul's Capital Account and Crediting Pankaj's Capital Account by ₹ 20,000

a) Statement (iv) is correct. b) Statement (iii) is correct.

c) Statement (i) is correct. d) Statement (ii) is correct.

7. A and B are partners sharing profits in the ratio of 2 : 1. C was admitted for 1

4
share of profits of which 2

12
was [1]
gifted by A. The remaining was contributed by B. Goodwill of the firm is valued at ₹ 60,000. How much amount
for goodwill will be Credited to B’s Capital Account?

a) ₹ 15,000 b) ₹ 60,000

c) ₹ 10,000 d) ₹ 5,000
8. A and B are partners sharing profits in the ratio of 5 : 2. They decided to admit Girish as a new partner and new [1]
profit sharing ratio is 3 : 3 : 1. Girish Paid ₹ 10,000 as his share of goodwill. B's Capital account is to be
credited/debited with:

a) 2850 (Cr) b) 10,000 (Dr)

c) 2850 (Dr) d) 10,000 (Cr)

9. Akbar and Raju were partners in a firm with capitals of ₹ 3,00,000 and ₹ 2,00,000, respectively. Neha was [1]
admitted as a new partner for 1

4
th share in the profits of the firm. Neha brought ₹ 1,20,000 for her share of
goodwill premium and ₹ 2,40,000 for her capital. The amount of goodwill premium credited to Akbar will be:

a) ₹ 60,000 b) ₹ 72,000

c) ₹ 30,000 d) ₹ 40,000

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10. If the old ratio and the new ratio of remaining partners are different then in such case outgoing partners profit [1]
share will be adjusted through which account?

a) The Capital Accounts of gaining partners b) The Current Accounts of gaining partners

c) The Current Accounts of all partners d) The Capital Accounts of all partners
11. A, B and C are partners sharing profit and losses in the ratio of 2 : 2 : 1. B retires from the firm, at that time [1]
goodwill of the firm was valued at ₹30,000. What contribution has to be made by A and C in order to pay B?

a) ₹ 20,000 and ₹ 10,000 b) ₹ 8,000 and ₹ 4,000

c) ₹ 6,000 and ₹ 6,000 d) ₹ 15,000 and ₹ 15,000

12. Unrecorded asset when realised is credited to: [1]

a) Realisation Account b) Partners' Capital Account

c) unrecorded Assets a/c-To record the assets d) Both Realisation Account and Partners'
in the bóok. Capital Account
13. A firm is dissolved, Pankaj, a partner is to carry out dissolution. ₹ 50,000 is fixed as his remuneration excluding [1]
Realisation Expenses which were ₹ 25,000, and were paid by Pankaj. Pankaj's Capital Account will be credited
by

a) ₹ 25,000 b) ₹ 50,000

c) ₹ 1,00,000 d) ₹ 75,000
14. If the Partner’s Capital Accounts are fixed, where will you record the following items:- [3]
a. Drawings made by a partner.
b. Salary payable to a partner.
c. Fresh capital introduced by a partner.
d. Share of Profit.
e. Interest on Drawings.
15. A and B are partners in a firm sharing profits in the ratio of 3 : 2. C is admitted into the firm for 1

4
share in [3]
profits. The total capital of the firm is agreed upon as ₹ 2,00,000 and C is to bring in cash equivalent to of this
1

amount as his capital. The capitals of other partners are also to be adjusted in the ratio of their respective share in
profits. The capitals of A and B after all adjustments are ₹ 60,000 and ₹ 45,000 respectively.
Calculate the new capitals of A and B and pass necessary journal entries.
16. Ram, Manohar, and Joshi were partners in a firm. Manohar retired and his claim including his capital and share [3]
of goodwill was ₹ 1,80,000. There was a piece of unrecorded furniture estimated at ₹ 9,000, half of which was
given for an unrecorded liability of ₹ 18,000 in settlement of the claim of ₹ 9,000, and the remaining half was
taken by Manohar at a discount of 10% in part satisfaction of his claim. The balance of Manohar's claim was
discharged by bank draft. Pass necessary Journal entries to record the above transactions.
17. P, R, and S are in partnership sharing profits in the ratio of 4: 3: 1 respectively. It is provided in the partnership [3]
deed that, on the death of any partner, Deceased Partners share of goodwill is to be valued at half of the profits
credited to his account during the previous four completed years.

R died on 1st April, 2023. The firm’s profits/losses for the last four years ended 31st March, are: 2020—₹
1,20,000; 2021 -₹ 60,000; 2022 -₹ 20,000 (loss): 2023 -₹ 80,000.
i. Determine the amount that should be credited to R's capital account as his share of goodwill.

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 ii. Pass the journal entry for adjustment of goodwill assuming that profit sharing ratio between P and S in the
future will be 3: 2.
18. Pass Journal entries for the following: [3]
a. Realisation expenses of ₹ 10,000 were to be borne by Manoj, a partner, but were paid by the firm.
b. Mukesh, a partner, was paid remuneration of ₹ 25,000 and he was to meet all expenses.
c. Suraj, a partner, was paid remuneration of ₹ 20,000 and he was to meet all expenses. Firm paid an expense of
₹ 5,000.
19. Anju, Manju and Mamta are partners whose fixed capitals were ₹ 10,000, ₹ 8,000 and ₹ 6,000, respectively. As [4]
per the partnership agreement, there is a provision for allowing interest on capitals @ 5% p.a. but entries for the
same have not been made for the last three years. The profit-sharing ratio during there years remained as
follows:

Year Anju Manju Mamta

2016 4 3 5

2017 3 2 1

2018 1 1 1

Make necessary and adjustment entry at the beginning of the fourth year i.e. April 2019.
20. Saurav, Narendra and Prakash are partners sharing profits and losses in an agreed ratio. With effect from 1st [4]

April, 2023, they agreed to share profits equally. On that date, their Balance Sheet showed:
i. Profit & Loss A/c (Cr.) ₹ 1,75,000
ii. Advertisement Suspense Account ₹ 25,000
Following Journal entry is recorded in the books to give effect to the adjustment for accumulated profits, losses
and reserve:
JOURNAL

Date Particulars L.F. Dr.(₹) Cr.(₹)

2023

April 1 Prakash's Capital A/c 25,000

To Saurav's Capital A/c 25,000

(Adjustment made for accumulated profits, losses and reserve)

Calculate each partner's gain or sacrifice due to change in profit-sharing ratio and old profit-sharing ratio.
21. Following is the Balance Sheet of Ashwani and Bharat on March 31, 2017. [4]
Balance Sheet Ashwani and Bharat
as on March 31, 2017

Liabilities Amount ₹ Assets Amount ₹

Creditors 76,000 Cash and Bank 17,000

Mr. Ashwani’s loan 10,000 Stock 10,000

Mr. Bharat loan 20,000 Investments 20,000

Investment fluctuation reserve 2,000 Debtors 40,000

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 General Reserve 20,000 Less: Provision for doubtful debts 4,000 36,000

Capitals: Buildings 70,000

Ashwani 20,000 Goodwill 15,000

Bharat 20,000 40,000

1,68,000 1,68,000

The firm was dissolved on that date. The following was agreed transactions took place.
i. Ashwani promised to pay Mrs. Ashwani’s loan and took away stock for ₹ 8,000.
ii. Bharat took away half of the investment at 10% less. Debtors realised for ₹ 38,000. Creditors were paid at
less of ₹ 380. Buildings realised for ₹ 1,30,000, Goodwill ₹ 12,000 and the remaining Investment were sold
at ₹ 9,000. An old typewriter not recorded in the books was taken over by Bharat for ₹ 600. Realisation
expenses amounted to ₹ 2,000. Prepare Realisation Account, Partner’s Capital Account and Bank Account

Question No. 22 to 25 are based on the given text. Read the text carefully and answer the questions: [4]
On 31st March, 2019 the Balance Sheet of Mohit and Manoj who share profits and losses in the ratio of 3:2 was as
follows:
Balance Sheet of Mohit and Manoj as at 31st March, 2019

Liabilities Amount ₹ Assets Amount ₹

Creditors 28,000 Cash at Bank 10,000

General Reserve 10,000 Debtors 65,000

Employees Provident Fund 22,000 Less: Provision for Doubtful debts 5,000 60,000

Capitals

Mohit 60,000 Stock 33,000

Manoj 40,000 1,00,000 Patents 57,000

1,60,000 1,60,000

They decided to admit Govind on 1st April, 2019 for th share which Govind acquired wholly from Manoj on the
1

following terms:
i. Govind shall bring ₹ 10,000 as his share of premium for Goodwill.
ii. A debtor whose dues of ₹ 3,000 were written off as bad debt paid ₹ 2,000 in full settlement.
iii. A Claim of ₹ 5,000 on account of workmen’s compensation was to be provided for.
iv. Patents were undervalued by ₹ 2,000. Stock in the books was valued 10% more than its market value.
v. Govind was to bring in capital equal to 20% of the combined capitals of Mohit and Manoj after all adjustments.

22. What is Mohit’s Share of profit/loss on revaluation?

a) profit ₹ 2,400 b) ₹ 1,600 loss

c) loss ₹ 2,400 d) profit ₹ 1,600

23. What is the scarifying ratio of Mohit and Manoj?

a) 2:3 b) 0:1

c) 1:2 d) 3:2

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24. What is the cash balance available after the admission of Govind?

a) ₹ 45,200 b) ₹ 54,000

c) ₹ 24,200 d) ₹ 45,000
25. What is the closing capital of Manoj?

a) ₹ 63,600 b) ₹ 52,400

c) ₹ 23,200 d) ₹ 51,000
26. Amar, Tarim and Akhil are partners sharing profits and losses in the ratio of 5 : 3 : 2. Their Balance Sheet as at [6]
31st March, 2019 was as follows:

Liabilities ₹ Assets ₹

Sundry Creditors 1,60,000 Cash in Hand 25,000

Salaries Payable 30,000 Bank Balance 1,25,000

Reserves 80,000 Bills Receivable 10,000

Profit and Loss A/c 30,000 Sundry Debtors 1,00,000

Capital A/cs: Less: Provision for Doubtful Debts 10,000 90,000

Amar 3,00,000 Stock 2,00,000

Tarun 1,80,000 Furniture 50,000

Akhil 1,20,000 6,00,000 Computers 3,00,000

Air-Conditioners 1,00,000

9,00,000 9,00,000

Profit-sharing ratio among the partners was agreed to be 2 : 2 : 1 w.e.f 1st April, 2019. They agreed to the
following:
i. Stock to be increased to ₹2,20,000.
ii. Provision for Doubtful Debts to be reduced by ₹2,000.
iii. Furniture to be reduced by 20%.
iv. Computers to be reduced to ₹2,70,000.
v. Goodwill of the firm is valued at ₹1,00,000.
The partners decided to carry the assets and liabilities at their existing values. They also decided that Reserves
and Profit and Loss Account balance be carried at the same values.
Pass an Adjustment entry giving effect to the above arrangement and prepare Balance Sheet after adjustments.
27. P and S were partners in a firm sharing profits in the ratio of 3 : 2. Their Balance Sheet as at 31-3-2023 was as [6]
follows:

Liabilities ₹ Assets ₹

Bank Overdraft 20,000 Cash 8,000

Creditors 30,000 Debtors 30,000

Provision for Bad debts 1,000 Bills Receivable 40,000

General Reserve 15,000 Stock 50,000

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 V's Loan 20,000 Building 90,000

Capitals: Land 1,48,000

P 1,00,000

S 1,80,000 2,80,000

3,66,000 3,66,000

On 1-4-2023 they admitted V as a new partner on the following conditions:

i. V will get 1

8
th share in the profits of the firm.
ii. V’s loan will be converted into his capital.
iii. The goodwill of the firm was valued at ₹ 80,000 and V brought his share of goodwill premium in cash.
iv. Provision for bad debts was to be made equal to 5% of the debtors.
v. Stock was to be depreciated by 5%.
vi. Land was to be appreciated by 10%.
Prepare Revaluation Account, Capital Accounts of P, S and V and the Balance Sheet of the new firm as on 1-4-
2023.

28. On 31st March, 2023, the Balance Sheet of Sanjay, Harsh and Meena who were sharing profits and losses in the [6]
ratio of 2 : 3 : 2, stood as follows:
BALANCE SHEET

as at 31st March, 2023

Liabilities ₹ Assets ₹

Capitals: Sanjay 10,00,000 Land and Buildings 19,00,000

Harsh 15,00,000 Machinery 5,00,000

Meena 10,00,000 35,00,000 Furniture 7,70,000

Workmen Compensation Reserve 8,40,000 Closing Stock 5,00,000

Sundry Creditors 5,10,000 Sundry Debtors 7,00,000

Cash 4,80,000

48,50,000 48,50,000

On 31st March, 2023, Harsh retired from the firm and the remaining partners decided to carry on the business. It
was agreed to revalue the assets and liabilities as follows:
i. Land and buildings be appreciated by 20%.
ii. Machinery be depreciated by 20%.
iii. Closing stock be valued at ₹ 4,50,000.
iv. Provision for Doubtful Debts be made at 5% on Debtors.
v. Sundry creditors of ₹ 65,000 be written off.
vi. Goodwill of the firm be valued at ₹ 5,60,000 and Harsh’s share of the goodwill be adjusted in the accounts of
Sanjay and Meena who will share the future profits and losses in the ratio of 3 : 2.
vii. The total capital of the newly constituted firm will be ₹ 35,00,000, which will be adjusted by opening
Current Accounts.

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 viii. Amount due to Harsh was settled by accepting a bill of exchange in his favour payable after 4 months.
Prepare Revaluation Account, Partners’ Capital Accounts and Balance Sheet of the new firm on Harsh’s
retirement.
29. Akhil, Nikhil and Sunil were partners sharing profits and losses equally. Following was their Balance Sheet as at [6]
31st March, 2018:

Liabilities ₹ Assets ₹

Trade Creditors 40,000 Building 2,00,000

General Reserve 45,000 Plant and Machinery 80,000

Capital A/c: Stock 35,000

Akhil 1,95,000 Debtors 80,000

Nikhil 1,20,000 Cash at Bank 85,000

Sunil 80,000 3,95,000

4,80,000 4,80,000

Sunil died on 1 st August, 2018. The Partnership Deed provided that the executor of a deceased partner was
entitled to:
i. Balance of Partners' Capital Account and his share of accumulated reserve.
ii. Share of prof its from the closure of the last accounting year till the date of death on the basis of the profit of
the preceding completed year before death.
iii. Share of goodwill calculated on the basis of three times the average profit of the last four years.
iv. Interest on deceased partner's capital @ 6% p.a.
v. ₹ 50,000 to be paid to deceased's executor immediately and the balance to remain in his Loan Account.
Profits and Losses for the preceding years were: 2014-15- ₹ 80,000 Profit; 2015-16- ₹ 1,00,000 Loss; 2016-17- ₹
1,20,000 Profit; 2017-18- ₹ 1,80,000 Profit.
Pass necessary Journal entries and prepare Sunil's Capital Account and Sunil's Executor's Account.
30. Following is the Balance Sheet of A, B and C as at 31st March, 2014: [6]

Liabilities ₹ Assets ₹

Sundry Creditors 18,000 Tools 6,000

Workmen Compensation Reserve 19,200 Furniture 48,000

Capital Accounts: Stock 36,000

A 60,000 Debtors 36,000

B 30,000 Cash at Bank 30,000

C 30,000 Cash in hand 1,200

1,57,200 1,57,200

B died on 30th June 2014. Under the partnership agreement, the executor of B was entitled to:
i. Amount standing to the credit of his Capital Account.
ii. Interest on Capital which amounted to ₹ 375
iii. His share of goodwill ₹ 21,000.

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 iv. His share of profit from the closing of the last financial year to the date of death which amounted to ₹ 2,625.
B’s executor was paid ₹ 20,400 on 1st July 2014 and the balance in four equal yearly instalments starting from
30th June, 2015 with interest @ 6% p.a.
Pass the necessary Journal entries and draw up B’s Account to be rendered to his executor and B's Executor’s
Account till it is finally paid.
31. Pass necessary Journal entries on the dissolution of a firm in the following case; [6]
i. Dinesh, a partner, was appointed to look after the process of dissolution at a remuneration of ₹ 12,000 and he
had to bear the dissolution expenses. Dissolution expenses ₹ 11,000 were paid by Dinesh.
ii. Jagdish, a partner, was appointed to look after the process of dissolution and was allowed a remuneration of
₹ 15,000. Jagdish agreed to bear dissolution expenses. Actual dissolution expenses ₹ 16,000 were paid by
Vinod, another partner on behalf of Jagdish.
iii. Disha, a partner, was to look after the process of dissolution and for this work she was allowed a
remuneration of ₹ 7,000. Disha agreed to bear dissolution expenses. Actual dissolution expenses ₹ 6,000
were paid from the firm's bank account.
iv. Deepak, a partner agreed to do the work of dissolution for ₹ 7,500. He took away stock of the same amount
as his commission. The stock had already been transferred to Realisation Account.
v. Jeet, a partner, agreed to do the work of dissolution for which he was allowed a commission of ₹ 10,000. He
agreed to bear the dissolution expenses. Actual dissolution expenses paid by Jeet were ₹ 12,000. These
expenses were paid by Jeet by drawing cash from the firm.
vi. A debtor of ₹ 8,000 already transferred to Realisation Account agreed to pay the realisation expenses of ₹
7,800 in full settlement of his account.

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