Partnership Account Terminologies: 1. Partnership 2. Partnership deed 3. Capital A/C : a) fixed capital b) Fluctuating capital c) Interest on capital 4. Drawings a)Interest on drawing 5. P/L appropriation A/C 6. Partners current A/C 7. Capital ratio 8. Valuation of goodwill: a) Average profit method b) Super profit method c) Capitalization method 9. Change in profit sharing ratio 10. Admission of new partner 11. New profit sharing ratio 12. Sacrifice ratio 13. Goodwill on admission: a) Premium method b) Revaluation method c) Memorandum revaluation method 14. Revaluation of assets and liabilities 15. Treatment of reserves 16. Adjustment of capital as new partners capital 17. Retirement of partners 18. Death of partners 19. Gaining ratio 20. Joint life policy 21. Mode of payment of retiring partner 22. Capital account adjustments 1. A and B are partners from 1st January, 2008 without any partnership agreement and they introduced capitals of Rs. 35000 and Rs. 20000 respectively. On 1st July, 2008, A advanced Rs. 7500 by way of loan to the firm without any agreement as to interest. The profit and loss account for the year discloses a profit of Rs. 8225: but the partners cannot agree upon questions of interest or upon the basis of division of profits. You are required to divide the profit between them giving reasons for your method. (Ans: interest on loan Rs.225, share of profit A Rs. 4000, B Rs. 4000) 2. Amit and Vijay started a partnership business on 1st January. 2011. Their capital contribution were Rs. 200000 and Rs. 150000 respectively. The partnership deed provided inter alia that i) Interest on capital at 10% per annum ii) Amit to get a salary of Rs. 2000 p.m. and Vijay Rs.3000 p.m. iii) Profits are to be shared in the ration of 3:2, The profits for the year ended 31st December,2011 before making above appropriation were Rs. 216000. Interest on drawings amounted Rs. 2200 for Amit and Rs. 2500 for Vijay. Find the share of profit of each partner. ( Ans: share of profit Amit Rs. 75420, Vijay Rs. 50280) 3. A and B are partners sharing profit and losses in the ratio of 3:1. C was admitted as a partner with 3/7th share in the future profits, calculate the new profit sharing in partners, ( Ans: new profit sharing ratio: 3:1:3) 4. A and S are partners sharing profits and losses in the ratio of 3:2. C is admitted into the partnership with 3/10 share in the future profits of which he acquires 2/10 from B. Calculate the new profit sharing ratio. ( Ans: new profit sharing ratio: 4:3:3) 5. A and B are partners sharing profits and losses in the ratio of 3:2. C was admitted as a partner. A surrendered 1/3rd of his share and B surrendered 1/2 of his share in favor of C. calculate the new profit sharing ratio. (Ans: new profit sharing ratio: 4:3:3) 6. A and B are partners sharing the profit in the ratio of 5;3. C is admitted into the partnership with 1/4th share of future profits. Calculate the new profit sharing ratio and the sacrifice ratio. ( Ans: new profit sharing ratio: 15:9:8 and A’s sacrifice 5/32 and B’s 3/32) 7. A and B are partners sharing profits in the ratio of 3:2. C is admitted as a partner. The new profit sharing ratio among A, B and C being 5:3:2. Find out the sacrifice ratio. (Ans: sacrifice ratio 1:1) 8. A and B are partners sharing profits and losses in the ratio of 3:1. C is admitted into the partnership with a 1/4th share of profit which he takes entirely from A. C brings I Rs. 10000 on account of capital and Rs. 6000 on account of goodwill. Pass journal entries. (Ans: transfer of goodwill to A’s capital Rs. 6000) 9. A and B are partners sharing profit and losses in the ratio of 3:1. C is admitted into the partnership with 1/4th share in the future profit. C brings in Rs. 10000 on account of capital and Rs. 6000 on account of goodwill. Pass journal entries. (Ans: transfer of goodwill to A’s capital Rs. 4500 and B”s capital Rs. 1500)) 10. A and B share profits and losses in the ratio of 5:3. They admitted C into partnership. C brought in Rs. 20000 as capital and Rs. 6000 as goodwill. The new profit sharing ratio is 7:4:3. Make journal entries. (Ans: transfer of goodwill to A’s capital Rs. 3500 and B’s capital Rs. 2500) 11. A and B are partners sharing profits and losses in the ratio of 2:1 with capital of Rs. 20000 and Rs. 15000 respectively. They decided to admit C for 1/4th share of future profit. C brought on Rs. 10000 as his capital and Rs. 3000 for his share of goodwill. Half the amount of goodwill is withdrawn by the partners. Give journal entries. (Ans: transfer of goodwill to A’s capital Rs. 2000 and B’s capital Rs. 1000) 12. A and B are partners in a firm sharing profits and losses in the ratio of 5:3. C is admitted in the firm for 1/5th share of future profits. He is to bring in Rs. 30000 as capital and rs. 8000 as his share of goodwill. Give necessary entries, a) When the amount of goodwill is retained in the business b) When the amount of goodwill is fully withdrawn c) When 50% of the amount of goodwill is withdrawn (Ans: transfer of goodwill to A’s capital Rs. 5and B’s capital Rs.3000) 13. A and B are partners sharing profit and losses in the ratio of 3:2. They admitted C into the partnership with a 1/4th share of profit. C brought Rs. 20000 non account of capital but unable to bring anything on account of goodwill. Goodwill of the firm is valued at two years purchase of the average profits of the last three years. The profits of the last three years were Rs. 8000, Rs. 10500 and Rs. 11500. Make journal entries. (Ans: value of goodwill Rs. 20000, transfer to A’s capital Rs.12000 and B’s capital Rs. 8000) 14. A and B are partners in a firm sharing profits and loss in the ratio of 3:2. They decided to admit C into partnership for 1/5th of profits which he acquires from A and B. Goodwill is valued at Rs. 30000. C brought in Rs. 16000 for his capital but is not in a position to bring any amount for goodwill. No goodwill account appears in the books of the firm. Pass the necessary journal entries. (Ans: transfer of goodwill to A’s capital Rs. 18000 and B’s capital Rs. 12000) 15. A and B are partners sharing profits and losses in the ratio of 3:1. They admitted C with 1/5th share in future profit. His share of goodwill is Rs. 10000. Give journal entries, a) When the incoming partner brings in the amount of goodwill in cash and it is retained in the business b) When the incoming partner brings the amount of goodwill in cash and the old partners withdraw the same c) When goodwill account is raised in the books d) When goodwill account is raised in the books and is immediately written off (Ans: a) transfer of goodwill to A’s capital Rs. 7500 and B’s capital Rs. 2500, b) withdrawn by A and B Rs. 7500 and Rs. 2500 respectively, c) goodwill valued Rs. 50000 transferred to A’s capital Rs. 37500 and B’s capital Rs. 12500,d) goodwill valued Rs. 50000 and transferred to A’s capital Rs. 30000, B’s capital Rs.10000 and C”s capital Rs. 10000) 16. A and B are partners sharing profits and losses in the ratio of 3:2. Goodwill appears in the books at Rs. 3000. They admitted C into partnership. C paid a premium of Rs. 1000 for 1/4th share of the profit while A and B as between themselves sharing profit and losses equally. Pass journal entries. (Ans: transfer of raised goodwill to A’s capital Rs. 1800 and B’s capital Rs. 1200, transfer of new goodwill to A’s capital Rs. 900 and B’s capital Rs. 100)
Posted on: Sat, 19 Oct 2013 12:22:42 +0000
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