Mid-Term Examination in ACCOUNTANCY

Std. 12 Time : 3 hrs.

17-9-2018 SET - 2 Max. Marks :80
Total printed pages : 05
Roll No: Total printed questions : 23

1. Define Super profit. (1)

2. X and Y are partners with capitals of Rs 13,00,000 and 20,00,000. They share profits in the
ratio of 1:2. They admit Z as a partner with 1/5 share in the profits of the firm. Z brings in
Rs 12,00,000 as his share of capital. The profit and loss account showed a credit balance of
Rs 6,00,000 as on the date of admission.
Give the necessary journal entry to record the goodwill. (1)

3. A, B and C are in a firm whose books closed on 31st march each year. A died on 30th June
2018 and according to the agreement the share of profit of a deceased partner up to the date
death is to be calculated on the basis of the average profits for the last five years. The net
profits for the last 5 years are 14,000; 18,000; 16,000; 10,000 (loss) and 16,000. Calculate
A’s share of the profits up to the date of death. (1)

4. When memorandum revaluation account is prepared? (1)

5. A, B and C are partners in a firm. They have omitted interest on capital @ 10% p.a. for
three years ended 31st march 2017. Their fixed capitals on which interest was to be calculated
throughout were: A- Rs 1,00,000; B-Rs 80,000 and C- Rs 70,000. Give the necessary adjusting
entry. (1)

6. Anil and Sunil are partners sharing profits and losses in the ratio of 3:2. They admit Charan
as a new partner from 1st April 2018. Anil gives 1/3rd of his share while Sunil gives 1/10th from
his share to Charan. Calculate the sacrificing ratio and new ratios. (1)

7. Differentiate between fixed capital and fluctuating capital on the basis of their capital balance. (1)

8. How the goodwill is valued under capitalisation of average profit method? (1)

9. Asin and Shreyas are partners in a firm. They admit Ajay as a new partner with 1/5 share
in the profit of the firm. Ajay brings Rs 5,00,000 as his share of capital. The value of total
assets of the firm wasRs 15,00,000 and outside liabilities were valued at Rs 5,00,000 on
that date. Give the necessary journal entry to record goodwill at the time of Ajay’s admission.
Also show your workings. (3)

10. Differentiate between Realisation Account and Revaluation Account on the basis of its
contents, purpose and time. (3)

11. On 31st March 2014 the balances in their fluctuating capital account of Eleen, Monu and
Ahmad after making adjustments for profits and drawings were Rs 1,60,000 Rs 1,20,000 and
Rs 80,000 respectively. Subsequently it was discovered that the Interest on capital and drawings
had been omitted. The profit for the year ended 31st March, 2014 was Rs 40,000. During the
year, Eleen and Monu each withdrew a total sum of Rs24,000 in equal instalments in the
beginning of each month and Ahmad withdrew a total sum of Rs 48,000 in equal instalments
at the end of each month. The interest on drawings was to be charged @5% p.a. and interest
on capital was to be allowed @10% p.a. The profit sharing ratio among the partners was
2:1:1. Show your working notes clearly, pass the necessary rectifying entry. (3)

12. Differentiate between Capital Account and Current Account on the basis of its nature,
balance and transactions. (3)

13. A and B are partners sharing profit and losses in the ratio of 2:1. C and D are admitted and
profit sharing ratio becomes 4:2:3:1. Goodwill share of D is Rs 20,000. D brings required
goodwill and Rs 50,000 cash for capital. C brings in Rs 50,000 cash and Rs 40,000 worth
stock as his capital in addition to the required amount of goodwill in cash.
Show the necessary journal entries. (4)
Page 2 Mid-Term Examination in Accountancy - Std.

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14. Prem and Suresh were partners in a firm sharing profit and losses in the ratio of 7:8. On
1st April 2018 their firm was diisolved. After transferring assets (other than cash) and
outsider’s liabilities to realisation account, you are given the following information:
(a) Raman a creditor of Rs 4,00,000 accepted land valued at Rs 7,00,000 and paid
Rs 3,00,000 to the firm. (b) Gopal a second creditor for Rs 1,05,000 accepted Rs 90,000
in cash and investments of Rs 14,000 in full settlement of his account. (c) Hari a third
creditor amounting to Rs 75,000 accepted stock of the book value of Rs 60,000 for Rs 45,000
and the balance was paid to him by cheque. (d) Loss on dissolution was Rs 45,000.
Pass necessary journal entries. (4)

15. Three Chartered Accountants Suresh, Sahil and Sumit form a partnership sharing profits
and losses in the ratio of 3:2:1 subject to the following conditions. (a) Sumit’s share of
profits is guaranteed to be not less than 30,000 p.a. (b) Sahil gives a guarantee to the effect
that the gross fee earned by him for the firm shall not be less than the average gross fee
earned by him during the preceding five years when he was carrying on the profession alone
(the average of which works out at Rs 50,000) Profit for the first year ended 31st march 2018
of the partnership is 1,50,000. The gross fee earned by Sahil for the firm is 32,000.
Prepare profit and loss appropriation account after giving effect to the above. (4)

16. Anil, Sunil and Daniel are partners in a firm sharing profit and losses of 4:5:6. On 31st March
2014, Sunil retired. On that date the capitals of Anil, Sunil and Daniel before necessary
adjustments stood at Rs 2,00,000. Rs 1,00,000 and Rs 50,000 respectively. On Sunil’s
retirement, goodwill of the firm was valued at Rs 1,14,000. Revaluation of assets and
re-assessment of liabilities resulted in a profit of Rs 6,000. General reserve stood in the books
of the firm at Rs 30,000. The amount payable to Sunil was transferred to his loan account.
Anil and Daniel agreed to pay Sunil two yearly instalments of Rs 75,000 each including
interest @ 10% p.a. on the outstanding balance during the first two years and the balance
including interest in the third year. The firm closes its books on 31st March every year.
Prepare Sunil’s loan account till it is finally paid showing the working notes clearly. (4)

17. Rajan and Rajani are partners in a firm sharing profit and losses in the ratio of 3:1. They
decided to admit Ragini for 1/5 share in the profit. On her admission it was agreed to
calculate the value of goodwill of the firm at three years’ purchase of the weighted average
profits of the past four years. The appropriate weights to be used to each year ended on
31st March are: 2012--1, 2013--2, 2014--3, 2015--4. The profits for these years ended on
31st march are: 2012 Rs 20,200; 2013 Rs24,800 ; 2014 Rs 20,000; and 2015 Rs 30,000.
On the scrutiny of accounts the following matters are revealed. (a) on 1st December 2013
a major repair was made in respect of the plant incurring Rs 6,000 which amount was
charged to revenue. The paid sum is agreed to be capitalised for goodwill calculation subject
to adjustment of depreciation of 10% p.a. on diminishing balance method. (b) The closing
stock for the year 2013 was overvalued by Rs 2,400. (c) To cover management cost an
annual charge of Rs 4,800 should be made for the purpose of goodwill valuation.
Compute the value of goodwill. (4)

18. Brijesh, Charu and Dileep are partners sharing profit and losses in the ratio of 3:2:1.
Their balance sheet as at 31st March 2018 were was as follows:
Liabilities Amount Assets Amount
Creditors 87,000 Cash at bank 30,000
General Reserve 42,000 Debtors
Profit and Loss account 21,000 62,000 60,000
Capitals: Less provision 1,80,000
BrijeshRs 3,00,000 2,000 30,000
CharuRs 3,00,000 Stock 2,00,000
DileepRs50,000 6,50,000 Furniture 3,00,000
Plant
Building

Total 8,00,000 Total 8,00,000

The partners agreed that from 1st April 2018 they will share profits and losses in the ratio
of 4:4:1. They agreed that:
i) Stock is to be valued at 20% less.
ii) Provision for doubtful debts to be increased by 1,500.
 iii) Furniture is to be depreciated by 20% and plant by 15%.
iv) Rs 3,500 are outstanding for salaries.
v) Building is to be valued at Rs 3,50,000.
vi) Goodwill is valued at Rs 45,000.
Page 3 Mid-Term Examination in Accountancy - Std.

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Partners do not want to record the altered values of assets and liabilities in the books and want
to leave the reserves and profits undisturbed. You are require to pass a single journal entry to
give the effect to the above and also prepare the revised balance sheet. (6)

19. Rohit, Kunal and Sarthak are partners in a firm. They decided to dissolve their firm.
Pass necessary journal entries for the following after various assets (other than cash and bank)
and third party liabilities have been transferred to Realisation account.
i) Kunal agreed to pay off his wife’s loan of Rs 60,000.
ii) Total creditors of the form were Rs 40,000. Creditors worth Rs 10,000 were give a
piece of furniture costing Rs 8,000 in full and final settlement. Remaining creditors
allowed a discount of 10%.
iii) Rohit had given a loan of Rs 70,000 to the firm which was duly paid.
iv) A machine which was not recorded in the books was taken over by Kunal at Rs 3,000
where as its expected value was Rs 5,000.
v) The firm had a debit balance of Rs 15,000 in the profit and loss account on the date
of dissolution.
vi) Sarthak paid the realisation expenses of Rs 16,000 out of his private funds, who was
to get a remuneration of Rs 15,000 for completing dissolution process and was
responsible to bear all the realisation expenses. (6)

20. Anoop, Binu and Cyril were partners in a firm whose balance sheet on 31st March 2012
was as below:
Liabilities Amount Assets Amount
Creditors 7,096 Cash at bank 6,496
General Reserve 3,000 Debtors 9,000
Capitals: Stock 10,600
AnoopRs 8,000 Furniture 2,000
BinuRs 6,000
Cyril Rs 4,000 18,000
Total 28,096 Total 28,096

B retired on that date and in this connection it was decided to make the following adjustments:
i) To reduce the stock and furniture by 5% and 10% respectively.
ii) To provide for doubtful debts at 5% on debtors.
iii) Rent outstanding (not provided for as yet) was Rs 260.
iv) Goodwill was valued at Rs 4,200.
v) Anoop and Cyril decided to share profit and losses in 5:3 respectively and to readjust
their capitals in the profit sharing ratio and to bring in sufficient cash to pay off Binu
immediately and to leave a balance of Rs 1,000 in the bank. Binu was paid off.
Give journal entries to record the above. (6)

21. Following is the balance sheet of Punita, Rashi and Seema who were sharing profits in the
ratio of 2:1:2 as on 31st March, 2017.
Liabilities Amount Assets Amount
Creditors 38,000 Cash at bank 5,000
Bills payable 2,000 Debtors 30,000
Capitals: Stock 65,000
PunitaRs 1,44,000 Building 2,40,000
RashiRs92,000 Profit and Loss Account 60,000
SeemaRs 1,24,000 3,60,000
Total 4,00,000 Total 4,00,000

Punita died on 30the September 2017. She had withdrawn Rs 44,000 from her capital on
July 1st 2017. According to the partnership agreement, she was entitled to interest on capital
@8% p.a. her share of profit till the date of death was to be calculated on the basis of the
average profit of the last three years. Goodwill was to be calculated on the basis of three
times the average profit of the last four years. The profit for the years ended 2014, 2015 and
2016 were Rs 30,000; Rs 70,000 and Rs 80,000 respectively. Prepare Punita’s capital account
to be rendered to her executors. (6)
Page 4 Mid-Term Examination in Accountancy - Std.
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22. Alia, Aishwarya and Priyanka were partners sharing profit and losses in the ratio of 3:1:1.
On 31st March 2017 they decided to dissolve their firm. At that date their balance sheet was
as under:
Liabilities Amount Assets Amount
Creditors 60,000 Cash at bank 52,000
Loan 15,000 Cash 10,000
Workmen Compensation Debtors 2,42,000
Reserve 30,000 Less provision 12,000 2,30,000
Capitals: Stock in trade 78,000
Alia Rs 2,75,000 Furniture 10,000
AishwaryaRs 1,00,000 Sundry Assets 1,70,000
Priyanka Rs 70,000 4,45,000
Total 5,50,000 Total 5,50,000

It is agreed that:
i) Alia is to take over furniture at Rs 8,000 and debtors amounting to Rs 2,00,000 at
Rs 1,82,000; the creditors of Rs 60,000 to be paid by him at this figure.
ii) Aishwarya is to take over all the stock in trade at Rs 70,000 and some of the sundry
assets at Rs 72,000 (being 10% less than the book value).
iii) Priyanka is to take over the remaining sundry assets at 90% of the book value, less
Rs 1,000 as discount and assume the responsibility for the discharge of the loan together
with accrued interest of Rs 300 which has not been recorded in the books.
iv) The expenses of dissolution were Rs 2,700. The remaining debtors were sold to a
debt collecting agency for 50% of the book value.
v) Rs 40,000 had to be paid for workmen compensation.
Prepare necessary ledger accounts to close the books of the firm. (8)
(OR)
A, B, C and D were partners in a firm sharing profits and losses in the ratio of 4:1:2:3.
Their Balance Sheet on 31st March 2018 was as follows:
Liabilities Amount Assets Amount
Creditors 30,000 Cash in hand 15,000
A’s wife Loan 20,000 Debtors 35,000
Capitals: Less provision 5,000 30,000
A Rs 70,000 Stock 20,000
B Rs 30,000 Furniture 28,000
C Rs 20,000 Motor car 28,000
D Rs 2,000 1,22,000 Other Assets 51,000

Total 1,72,000 Total 1,72,000

The firm was dissolved on 31st March 2018 and the assets and liabilities settled as following:
i) A is to take over 60% of book debts at 70% and D is to take over the balance at 75%.
Further they are to be allowed Rs 1,200 and Rs 1,100 respectively to cover future loss.
ii) B is to realise other assets and to pay off creditors. He is to receive 5% gross commission
on the amounts finally payable to other partners but to bear expenses on realisation.
He reports the result of realisation as follows:
Other assets realise at a loss of 2% on net collection and pays off the creditors at a
discount of 30%. Realisation expenses amounted to Rs 3,000 but the same is paid by
the firm. Stock realised at 60% of its book value, and Motor car at 10% less than its
book value.
iii) Furniture was taken over by D for cash payment at 5%less than the book value.
Prepare necessary ledger accounts to close the books of the firm. (8)

23. Ajay and Vijay were partners in a firm sharing profits in the ratio of 5:3. They decided to admit
Zeeshan as a new partner for 1/3 share in the profits. Zeeshan was to contribute Rs 20,000 as
his capital. Their balance sheet as at 1st April 2017 the date of admission was as follows:
Liabilities Amount Assets Amount
Creditors 27,000 Cash at bank 19,500
General Reserve 16,000 Debtors 20,000
 Capitals: Less provision 1,500 18,500
Ajay Rs 50,000 Stock 15,000
Vijay Rs 35,000 Investment 20,000
85,000 Land and Building 25,000
Plant and Machinery 30,000

Total 1,28,000 Total 1,28,000

Page 5 Mid-Term Examination in Accountancy - Std. 12 (Set

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Other terms agreed upon were:

i) Goodwill of the firm was valued at Rs 12,000.
ii) Land and building were to be valued at Rs 35,000 and plant and machinery at Rs 25,000.
iii) The provision for doubtful debts was found to be in excess by Rs 400.
iv) A liability for Rs 1,000 included in creditors was not likely to arise.
v) The capitals of the partners be adjusted on the basis of Zeeshan’s contribution of capital
in the firm.
vi) Excess or shortfall if any to be transferred to current accounts.
vii) Prepare Revaluation Account, Partners capital account and the balance sheet of
the new firm. (8)
(OR)
Alfa and Beta were partners in a firm. They were trading artificial limbs. On 1st April 2018
they admitted Gama, a good friend of Beta into the partnership. Gama lost one hand in an
accident and Alfa and Beta decided to give one artificial hand free of cost to Gama.
The balance sheet of Alfa and Beta on 31st March 2018 was as follows:
Liabilities Amount Assets Amount
Provision for doubtful debts 40,000 Cash at bank 1,00,000
Workmen’s compensation Debtors 8,00,000
reserve 56,000 Stock 2,00,000
Outstanding expenses 30,000 Machinery 3,86,000
Creditors 3,00,000 Profit and loss account 40,000
Capitals:
Alfa Rs 5,00,000
Beta Rs 6,00,000 11,00,000
Total 15,26,000 Total 15,26,000

Gama was admitted in the firm on the following terms:

i) Gama will bring in Rs 4,00,000 as his share of capital, but he was unable to bring
any amount for goodwill.
ii) The new profit sharing ratio of Alfa, Beta and Gama will be 3:2:1.
iii) Claim on account of workmen compensation was Rs 30,000.
iv) To write off bad debts amounting to Rs 40,000.
v) A liability of Rs 20,000 included in creditors is not likely to arise.
vi) Outstanding expenses be brought down to Rs 12,000.
vii) Rs 20,000 be provided to an unforeseen liability.
viii) Goodwill of the firm was valued at Rs 1,80,000.
You are required to pass the necessary journal entries in the books of the firm. (8)

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