Grade XII Commerce Accountancy

Holiday Homework

Q.1 Amit & Sumit entered into partnership on 1 st April, 2022 and invested Rs. 150,000 and Rs. 250,000
respectively as capitals. The partnership deed provided for interest on capital @ 10% p.a. It also provided that
accounts shall be maintained following fixed capital accounts method. The firm earned net profit of Rs. 100,000
for the year ended 31st March, 2023.
Pass journal entry for interest on capital and distribution of profit.
Q.2 Ram, Mohan and Sohan were partners sharing profits and losses in the ratio of 2:1:1. Ram withdrew Rs.
3,000 every month and Mohan withdrew Rs. 4,000 every month. Interest on drawings @ 6% p.a. was wrongly
charged, whereas the partnership deed was silent about interest on drawings. Show your working clearly and
pass necessary adjustment entry to rectify the error.

Q.3 A, B & C who are sharing profits and losses in the ratio of 5:3:2 decide to share future profits in the ratio of
2:3:5. Give the journal entry to distribute Investment Fluctuation Fund of Rs. 20,000 at the time of change in
PSR, when Investment appears in the books at Rs. 100,000 and market value stood at Rs. 93,000.

Q.4 Madan and Mohan are partners in a firm sharing profits in the ratio of 3:2. Gopal is admitted as a new
partner for 3/10th share of profits half of which is gifted by madan and the remaining share is taken by gopal,
equally from madan and mohan.
Calculate the new PSR.

Q.5 Himanshu and Rishabh are partners sharing profits in the ratio of 3:2. They admitted Nitin as a partner for
1/4th share in profit. He brings Rs. 20,000 as his share of goodwill, out of which Rs. 12,000 is adjusted in
Himanshu’s account and Rs. 8,000 in Rishabh’s account. From the given information, calculate sacrificing ratio
and New PSR.

Q.6 Profits for 5 years ending 31st March are as follows:

Year 2019 Rs. 400,000
Year 2020 Rs. 350,000
Year 2021 (Rs. 420,000)
Year 2022 Rs. 150,000
Year 2023 Rs. 250,000
Calculate goodwill of the firm on the basis of 5 years purchase of last 4 years average profit.

Q.7 Divya, Neha and Mahak are partners in a firm sharing profits and losses in the ratio fo 12:8:5. Mahak is
guaranteed a minimum profit of Rs. 50,000 p.a. by the firm. The profits and losses for the years ended 31 st
March, 2021: Rs. 200,000, 31st March, 2022: 300,000 and 31st March, 2023: Loss Rs. 200,000. Pass necessary
journal entries related with distribution of profit in the books of the firm for year 2021, 2022 and 2023.
Q.8 Nimrat, Maira and Kabir are partners sharing profits in the ratio of 2:2:1. Nimrat is guranteed minimum
profit of Rs.1,60,000 per annum. Net profit for the year ended 31st March 2022 is Rs.1,00,000.
Q.9 Average profit earned by a firm is Rs.2,50,000 which includes overvaluation of stock of Rs.10,000 on
average basis. Capital invested in the business is Rs.14,00,000 and the normal rate of return is 15%. Calculate
goodwill of the firm on the basis of 4 times the super profit. Q. Average profit of the firm is Rs.1,50,000. Total
Tangible assets in the firm are Rs.14,00,000 and Outside Liabilities are Rs.2,00,000. In the same type of
business, the normal rate of return is 10% of the capital employed. Calculate value of goodwill by capitalisation
of super profit method.
Q.10 Lalit, Mukul and Chetan are partners sharing profits and losses equally. It was decided that in future
Chetan will get 1/5th share in profit. Calculate the New PSR and sacrifice or gain ratio of the partners.
Q.11 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 2022. They also decide to record the effect of the following
accumulated profits, losses and reserves without affecting the book values by passing a single entry.
General Reserve Rs.6,000
Profit and losses(Cr.) Rs.24,000
Advertisement Suspense A/c Rs.12,000
Pass an Adjustment Entry.
Q.12 Geeta and Sunita are partners in a firm sharing profits and losses in the ratio of 3:2. They admitted ankita
as a new partner. The new PSR between Geeta, Sunita and Ankita will be 5:3:2. Ankita brought in Rs.25,000
for her share of premium for Goodwill. Pass necessary journal entries for the treatment of goodwill.
Q.13 Anil and Sunil are partners in a firm with fixed capital of Rs.320,000 and Rs.240,000 respectively. They
admitted Charu as a new partner for 1/4th share in the profits of the firm on 1st April 2012. Charu brought
Rs.320,000 as her share of capital. Calculate value of godwill and record necessary journal entries.
Pawan and Parul are partners in a firm. As per the partnership deed, Pawan is to get salary of Rs.30,000 per
month and commission of 10% of net profit before charging any commission. Parul is to get a salary of
Rs.50,000p.a. and commission of 8% of the net profit after charging all commission. Profit after partner’s salary
but before commission to partners for the year ended 31st March 2022 was Rs.550,000. Show the distribution of
profit using profit and loss appropriation account.

Q.14 The firm of Harry, Porter and Ali, who have been sharing profits in the ratio of 2 : 2 : 1, have existed for
same years. Ali wants that he should get equal share in the profits with Harry and Porter and he further wishes
that the change in the profit-sharing ratio should come into effect retrospectively were for the three years. Harry
and Porter have agreement on this account. The profits for the last three years were:
 Year 2015-16 2016-17 2017-18
Profit (₹) 2,20,000 2,40,000 2,90,000

Show adjustment of profits by means of a single adjustment Journal entry.

Q.15 A, B and C were partners in a firm. On 1st April, 2018, their capitals stood at Rs.400,000, Rs.300,000 and
Rs.200,000 respectively. As per the provisions of the partnership deed:
 A was entitled to a salary of Rs.5,000 per month.
 Partners were entitled to interest on capital @ 10% p.a.

The net profit for the year ended 31st March, 2019, Rs.300,000 was divided among the partners without
providing for the above items. Showing your working clearly, pass an adjustment entry to rectify the above
error.
Q.16 A Business has earned average profit of Rs.800,000 during the last few years and the normal rate of return
in similar business is 10%. Find the value of goodwill by:
 Capitalisation of Super Profit Method; and
 Super Profit Method if the goodwill is valued at 3 Years purchase of Super Profit.

Assets of the business were Rs.80,00,000 and its external liabilities Rs.14,40,000.
Q.17 A, B and C are partners in a firm sharing profits and losses in the ratio of 6:3:1. They admit D into
partnership with effect from 1st April, 2022. New PSR among A,B,C and D will be 3:3:3:1. Determine the
sacrificing ratio.
Q.18 Amrit and Bimal are partners sharing profits equally. Bimal has given his property on rent to the firm on
1st April, 2021 at a monthly rent of Rs.5,000. the firm paid him rent from April, 2021 to feburary, 2022 by
issuing a cheque on 1st March, 2022. Rent for the month of March was still payable. Pass the journal entries
starting from 1st March, 2022 till 31st March 2022.( 11 month rent, rent outstanding, rent charged to P/L).
Q.19 Karan, Nakul and Asha were partners in a firm sharing profits and losses in the ratio of 3:2:1. At the time
of admission of a partner, goodwill of the firm was valued at Rs.200,000. The accountant of the firm passed the
entry in the books of account and thereafter showed goodwill at Rs.200,000 as an asset in the balance sheet.
Was the accountant correct? Why?
Q.20 Doremon, Shinchan and Nobita are partners sharing profits and losses in the ratio of 3:2:1. With effect
from 1st April, 2022 they agree to share profits equally. For this purpose, goodwill is to be valued at two year’s
purchase of the average profit of last four years which were as follows:
Year ending on 31st March,2019 ₹ 50,000 (Profit)
Year ending on 31st March,2020 ₹ 1,20,000 (Profit)
Year ending on 31st March,2021 ₹ 1,80,000 (Profit)
Year ending on 31st March,2022 ₹ 70,000 (Loss)
On 1st April, 2021 a Motor Bike costing ₹ 50,000 was purchased and debited to travelling expenses account, on
which depreciation is to be charged @ 20% p.a by Straight Line Method. The firm also paid an annual
insurance premium of ₹ 20,000 which had already been charged to Profit and Loss Account for all the years.
Journalise the transaction along with the working notes.

Q.21 Nitin, Tarun and Amar are partners sharing profits equally and decide to share profits in the ratio of 2 : 2 :
1 w.e.f. 1st April, 2019. The extract of their Balance Sheet as at 31st March, 2019 is as follows:

Liabilities ₹ Assets ₹

Investments Fluctuation Reserve 60,000 Investments (At Cost) 4,00,000

Pass the Journal entries in each of the following situations:

(i) When its Market Value is not given;
(ii) When its Market Value is ₹ 4,00,000;
(iii) When its Market Value is ₹ 4,24,000;
(iv) When its Market Value is ₹ 3,70,000;
(v) When its Market Value is ₹ 3,10,000.

Q.22 X, Y and Z are partners sharing profits and losses in the ratio of 6 : 3 : 1. They admitted W into partnership
with effect from 1st April, 2019. New profit-sharing ratio between X, Y, Z and W was agreed to be 3:3 :3:1.
They also decide to record the effect of the following revaluations without affecting the book values of the
assets and liabilities by passing an adjustment entry:
Book Revised
Values (₹) Values (₹)
Plant and Machinery 3,50,000 3,40,000
Land and Building 5,00,000 5,50,000
Trade Creditors 1,00,000 90,000
Outstanding Expenses 85,000 1,00,000
Pass necessary adjustment entry.
Q.23 X and Y entered into partnership on 1st April, 2017. Their capitals as on 1st April, 2018 were ₹ 2,00,000
and ₹ 1,50,000 respectively. On 1st October, 2018, X gave ₹ 50,000 as loan to the firm. As per the provisions
of the partnership Deed:
(i) 20% of Profits before charging interest on Drawings but after making appropriations to be transferred to
General Reserve.
(ii) Interest on capital at 12% p.a. and Interest on Drawings @ 10% p.a.
(iii) X to get monthly salary of ₹ 5,000 and Y to get salary of ₹ 22,500 per quarter.
(iv) X is entitled to a commission of 5% on sales. Sales for the year were ₹ 3,50,000.
(v) Profit to be shared in the ratio of their capitals up to ₹ 1,75,000 and balance equally.
Profit for the year ended 31st March, 2019 before allowing or charging interest was ₹ 4,61,000. The drawings
of X and Y were ₹ 1,00,000 and ₹ 1,25,000 respectively.
Pass the necessary Journal entries relating to appropriation out of profit. Prepare Profit and Loss Appropriation
Account and the Partners' Capital Accounts.