GOODWILL Commerce Coaching
PARTNERSHIP SET 02
Class 12 - Accountancy
Time Allowed: 3 hours Maximum Marks: 80
1. In case of partnership the act of any partner is: [1]
a) Binding on that partner only b) Binding on all partners except that
particular partner
c) Binding on all partners d) Binding on remaining partner
2. What will be the Interest on drawing of Mr. Pranav from the following information as on 31.03.2021 Mr. Pranav [1]
withdrew ₹1200 per month at the middle of each month Partnership deed is silent on interest on drawings.
Interest on drawings:
a) 864 b) 432
c) No interest on drawings d) 720
3. A and B were partners in a firm. Their capitals at the end of the year ending on 31.3.2023 were ₹ 3,00,000 and ₹ [1]
1,50,000 respectively. During the year B withdrew ₹ 10,000 which was debited to his capital account. Profit for
the year ended 31st March 2023 was ₹ 32,000 which was credited to their capital accounts. During the year B
introduced additional capital ₹ 32,000. What was B's capital on 1.4.2022?
a) ₹ 1,52,000 b) ₹ 1,50,000
c) ₹ 1,12,000 d) ₹ 1,60,000
4. X, Y and Z are partners in a firm in 5 : 3 : 2. Z is guaranteed that he will get minimum of ₹ 40,000 as his share [1]
of profit every year. Deficiency if any will be borne by X only. The profit during the year was ₹ 1,50,000. How
much profit will X get?
a) 80,000 b) 40,000
c) 75,000 d) 65,000
5. Ram and Rohit shared profit and loss in the ratio of 3:2. With effect from 01/04/2012, they agreed to share [1]
profits equally. The goodwill of the firm was valued at 30000. Which partner account should be debited in this
case for the adjustment.
a) Both Rohit Rs.3,000 and Ram Rs.1,500 b) Ram Rs.3,000
c) Rohit Rs.30,000 d) Rohit Rs.3,000
6. Match the followings: [1]
(a) Stock is overvalued by ₹ 10,000 (i) Revaluation Profit = ₹ 10,000
(b) Stock is undervalued by ₹ 10,000 (ii) Revaluation loss = ₹ 12,000
(c) Unrecorded asset ₹ 12,000 (iii) Revaluation loss = ₹ 10,000
(d) Unrecorded liability = ₹ 12,000 (iv) Revaluation Profit = ₹ 12,000
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a) (a) - (iii); (b) - (i); (c) - (iv); (d) - (ii) b) (a) - (iii); (b) - (i); (c) - (ii); (d) - (iv)
c) (a) - (ii); (b) - (iii); (c) - (iv); (d) - (i) d) (a) - (iv); (b) - (i); (c) - (iii); (d) - (ii)
7. Re-assessment of liabilities means: [1]
a) Change in the values of assets b) Change in the values of liabilities
c) Only decrease in the values of liabilities d) Only increase in the values of liabilities
8. A, B and C are partners sharing profits in the ratio of 5 : 3 : 2. They decide to share future profits in the ratio of 2 [1]
: 3 : 5. What will be the accounting treatment of Workmen Compensation Reserve appearing in the Balance
Sheet on that date when no information is available for the same?
a) Distributed among the partners in their b) Distributed among the partners in their new
capital ratio. profit-sharing ratio.
c) Carried forward to new Balance Sheet. d) Distributed among the partners in their old
profit-sharing ratio.
9. New profit sharing ratio means [1]
a) All partner (excluding old) share future b) Two partner (including new) share future
profit and losses profit and losses
c) Partners will share future profits equally d) All partner(including new) share future
profit and losses in this new ratio
10. Kiya and Leela are partners sharing profits in the ratio of 3 : 2. Kiran was admitted as a new partner with 1 th [1]
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share in the profits and brought in ₹ 24,000 as her share of goodwill premium that was credited to the capital
accounts of Kiya and Leela respectively with ₹ 18,000 and ₹ 6,000.
New profit sharing ratio of Kiya, Leela and Kiran:
a) 9 : 4 : 7 b) 3 : 2 : 1
c) 9 : 7 : 4 d) 1 : 1 : 1
11. If goodwill is not brought in cash by the new partner, it should be debited to his ________ Account. [1]
a) Both Current or Capital b) Loan
c) Capital d) Current
12. Kabir and Farid are partners in a firm sharing profits in the ratio of 3 : 1 on 1-4-2019 they admitted Manik into [1]
partnership for l/4th share in the profits of the firm. Manik brought his share of goodwill premium in cash.
Goodwill of the firm was valued on the basis of 2 years purchase of last three years average profits. The profits
of last three years were:
2016 - 17 90,000
2017 - 18 1,30,000
2018 - 19 86,000
During the year 2018-19 there was a loss of ₹ 20,000 due to fire which was not accounted for while calculating
the profit.
Goodwill of the firm:
a) 1,08,667 b) 1,02,000
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c) 2,04,000 d) 2,00,000
13. P, Q and R were partners in a firm. On 31.03.2022, R died. R's share was taken over by P. P's new share in the [1]
profits of the firm will be:
a) b)
3 2
4 3
c) 1
3
d) 1
14. L, M and N are partners sharing ratio 3:2:1. M died and N is of opinion that the profit of the firm is shared [1]
between L and N equally. L does not agree because there is a partnership deed which is showing old profit
sharing ratio 3:2:1. What should be new profit sharing ratio?
a) Distribute profit between L and N in the b) Distribute profit between L and N in the
ratio of 3:1 ratio of 3:2
c) Distribute profit between L and N equally d) Distribute profit between L and N in the
ratio of 1:11
15. On the death of a partner, the amount due to him will be credited to: [1]
a) All partner’s Capital Accounts b) Governments’ Revenue Account
c) Remaining partner’s Capital Accounts d) His Executor’s Account
16. When a Partner died he will not be able to take his due amount then, will the due amount of deceased be paid [1]
and if yes to whom it is paid?
a) His Executor b) Sacrificing partner
c) Remaining Partners d) Not payable to anyone
17. What journal entry will take place when a loan of partner ₹60,000 is paid at the time of dissolution? [1]
a) Partner’s Capital A/c Dr. b) Realisation A/c Dr.
To Cash/Bank A/c To Cash/Bank A/c
c) Partner’s Loan A/c Dr. d) Cash/Bank A/c Dr
To Cash/Bank A/c To Realisation A/c
18. Bank Loan ₹29,000 was paid at the time of dissolution. What journal entry will be recorded for the same? [1]
a) Realisation b) Bank A/c Dr. 29,000
Dr. 29,000
A/c
To Realisation
29,000
To Bank A/c 29,000 A/c
c) Bank Loan d) Partner's
Dr. 29,000 Dr. 29,000
A/c Capital A/c
To Bank To Bank A/c 29,000
29,000
A/c
19. In which circumstances partners’ can dissolve the firm without the interference of the court? [1]
a) When a partner has become of unsound b) When business of the firm cannot be carried
mind on except at a loss
c) When a partner is found guilty of breath of d) Mutual Agreement
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contract frequently
20. There was an Unrecorded asset of ₹ 2,000 which was taken over by a partner at ₹ 1,500. Partner’s Capital [1]
Account will be debited by ________.
a) ₹ 3,500 b) ₹ 500
c) ₹ 1,500 d) ₹ 2,000
21. Mr. Yogesh sharma is a partner in a firm. He withdrew the following amounts during the year ended 31st March, [3]
2023:-
April 30 8,000
June 30 6,000
Sept. 30 5,000
Dec. 31 12,000
Jan. 31 10,000
Calculate interest on drawings @ 9% p.a. for the year ended on 31st March, 2023.
22. Yogesh, Mohit and Ram are partners sharing profits equally. Yogesh is guaranteed minimum annual profit of ₹ [3]
1,00,000. Ram is to get Commission @ 5% of Net Sales and the commission is determined at ₹ 25,000. Net
Profit for the year ended 31st March, 2023 is ₹ 1,25,000. Prepare Profit & Loss Appropriation Account for the
year.
23. A, B and C are partners sharing profit and loss in the ratio of 2 : 5 : 5. From 1st January, 2023, they decided to [3]
share profit and loss in the ratio of 3 : 5 : 7. You are required to fill up the following journal entry:
JOURNAL
Date Particulars L.F. Dr. ₹ Cr. ₹
2023 Jan. 1 A's Capital A/c Dr. -
C's Capital A/c Dr. 90,000
To B's Capital A/c
-
(Adjustment for goodwill due to change in profit sharing ratio)
24. A and B carrying on business as partners used to share profits and losses thus; A = ths and B = ths, and [3]
4 3
7 7
goodwill appeared in the books of the firm at ₹ 2,80,000 when C was admitted as a partner having 1
7
th share in
profits and losses. C was asked to pay a premium of ₹ 75,000 for goodwill, and the profit-sharing ratio as
between A and B remained unchanged. Show entries in the journal of the firm.
25. Discuss the method of treatment of Goodwill at the time of retirement of a partner. [3]
26. Pass Journal entries for following transactions on dissolution of a firm of partners A and B, after various assets [3]
(other than cash) and outside liabilities have been transferred to Realisation Account?
i. A took 50% of the stock at a discount of 20%. Remaining stock was sold at a profit of 30% on cost. (Book
value of stock given in the Balance Sheet before dissolution was ₹ 4,00,000).
ii. Debtors ₹ 2,64,000. Provision for Doubtful Debts: ₹ 24,000, ₹ 48,000 of the book debts proved bad.
iii. Furniture (Book value ₹ 50,000) and Building (Book value ₹ 5,00,000). Building realised ₹ 8,00,000.
iv. Machinery (Book value ₹ 6,00,000) was given to a creditor at a discount of 20% in settlement.
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v. Investments (Book value ₹ 40,000) realised at 150%.
27. Ashu, Aaku and Ami are partners, sharing profits and losses equally. The Balance Sheet as at 31st March, 2023 [4]
was as follows:
Liabilities ₹ Assets ₹
Sundry Creditors 1,35,000 Cash in Hand 84,000
General Reserve 90,000 Cash at Bank 1,40,000
Capital A/cs: Sundry Debtors 80,000
Ashu 3,00,000 Stock 1,40,000
Aaku 3,00,000 Land and Building 4,00,000
Ami 2,75,000 8,75,000 Machinery 2,50,000
Advertisement Suspense 6,000
11,00,000 11,00,000
The partners decided to share profits in the ratio of 2 : 2 : 1 w.e.f. 1st April, 2023. They also decided that:
i. Value of stock to be reduced to ₹ 1,25,000.
ii. Value of machinery to be decreased by 10%.
iii. Land and Building to be appreciated by ₹ 62,000.
iv. Provision for Doubtful Debts to be made @ 5 % on Sundry Debtors.
v. Aaku was to carry out reconstitution of the firm at a remuneration of ₹ 10,000.
Pass necessary Journal entries to give effect to the above
28. Sarita and Tara are partners in a firm sharing profits and losses in the ratio of 3 : 2. Their Balance Sheet as at 31st [4]
March, 2022 stood as follows:
BALANCE SHEET
Liabilities ₹ Assets ₹
Capital Accounts: Plant & Machinery 1,20,000
Sarita 60,000 Land and Building 1,40,000
Tara 80,000 1,40,000 Debtors 1,90,000
Current Accounts: Less: Provision for Doubtful Debts (40,000) 1,50,000
Sarita 10,000 Stock 40,000
Tara 30,000 40,000 Cash 30,000
General Reserve 1,20,000 Goodwill 20,000
Workmen's Compensation Reserve 50,000
Creditors 1,50,000
5,00,000 5,00,000
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They agreed to admit Prashant into a partnership for 1
5
th share of profits on 1st April, 2022, on the following
terms:
a. All Debtors are good.
b. Value of land and building to be increased to ₹ 1,80,000.
c. Value of plant and machinery to be reduced by ₹ 20,000.
d. The liability against Workmen’s Compensation Reserve is determined at ₹ 20,000 which is to be paid later in
the year.
e. Mr. Amit, to whom ₹ 40,000 were payable (already included in above creditors), drew a bill of exchange for
3 months which was duly accepted.
f. Prashant to bring in capital of ₹ 1,00,000 and ₹ 10,000 as premium for goodwill in cash. Journalize.
29. A, B and C are partners in a firm whose books are closed on March 31st each year. A died on 30th June 2023 and [4]
according to the agreement the share of profits of a deceased partner up to the date of the 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 have been:
2019 ₹ 14,000; 2020 ₹ 18,000; 2021 ₹ 16,000; 2022 ₹ 10,000 (loss) and 2023 ₹ 16,000. Calculate A’s share of
the profits up to the date of death and pass necessary journal entry assuming:
i. there is no change in the profit sharing ratio of remaining partners;
ii. there is change in the profit sharing ratio of remaining partners, new ratio being 3 : 2.
30. Ram, Raj and Mohit were partners sharing profits in the ratio 5 : 3 : 2. Their Capitals were ₹ 6,00,000; ₹ [6]
8,00,000 and ₹ 11,00,000 as on 1st April, 2022. As per Partnership deed, Interest on Capitals were to be provided
@ 10% p.a. For the year ended 31st March, 2023, Profit of ₹ 2,00,000 was distributed without providing for
Interest on Capitals.
Pass an adjustment entry and show the workings clearly.
31. Mohan and Ram are partners sharing profits and losses in the ratio of 3 : 2. They admit Raja as a partner who [6]
contributes ₹ 30,000 as his capital for 1
5
th share in the profits of the firm. It is decided that after Raja's
admission, the capitals of the Mohan and Ram will be adjusted on the basis of Raja's capital in the business, any
surplus or deficiency to be adjusted through current accounts. Before any adjustments were made, the capitals of
Mohan and Ram were: ₹ 59,000 and ₹ 35,000 respectively.
At the time of Raja's admission:
a. The firm's goodwill was valued at ₹ 40,000.
b. General Reserve was ₹ 25,000.
c. Loss on revaluation of assets and liabilities was ₹ 4,000.
You are required to pass the necessary journal entries on Raja's admission.
32. A, B and C are in partnership sharing profits in the ratio of 3 : 2 : 1. On 28th February, 2023 C retires from the [6]
firm. Their Balance Sheet on this date was as follows:
Liabilities ₹ Assets ₹
Sundry Creditors 1,20,000 Bank 25,000
Outstanding Expenses 10,000 Debtors 1,65,000
Profit & Loss Account 1,50,000 Stock 2,50,000
Capital Accounts: Investments 3,00,000
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A 5,00,000 Fixed Assets 5,40,000
B 3,00,000
C 2,00,000 10,00,000
12,80,000 12,80,000
The following was agreed upon:
i. Goodwill of the firm is valued at ₹ 1,50,000. C sells his share of goodwill to A and B in the ratio of 4 : 1.
ii. Stock is revalued at ₹ 3,00,000 and debtors are revalued at ₹ 1,50,000.
iii. Outstanding expenses be brought down to ₹ 3,000.
iv. Investments are sold at a loss of 10%.
v. C is paid off in full.
Prepare Revaluation Account, Capital Accounts and the Balance Sheet of the new firm.
33. Simar, Raja and Rita were partners in a firm sharing profits and losses in the ratio of 2 : 2 : 1. The firm was [6]
dissolved on 31st March, 2019. After the transfer of assets (other than cash) and external liabilities to the
Realisation Account, the following transactions took place:
i. A debtor whose debt of ₹ 90,000 had been written off as bad, paid ₹ 88,000 in full settlement.
ii. Creditors to whom ₹ 1,21,000 were due to be paid, accepted stock at ₹ 71,000 and the balance was paid to
them by a cheque.
iii. Raja had given a loan to the firm of ₹ 18,000. He was paid ₹ 17,000 in full settlement of his loan.
iv. Investments were ₹ 53,000 out of which investments worth ₹ 43,000 were taken over by Simar at ₹ 52,000
and the balance of the investments were sold for ₹ 12,000.
v. Expenses on dissolution amounted to ₹ 19,000 and the same were paid by the firm.
vi. Profit on dissolution amounted to ₹ 30,000.
Pass the necessary journal entries for the above transactions in the books of the firm.
34. Rita and Sobha are partners in a firm, Fancy Garments Exports, sharing profits and losses equally. On 1st April, [6]
2019 the Balance Sheet of the firm was:
Dr. Cr.
Liabilities ₹ Assets ₹
Sundry Creditors 75,000 Cash 6,000
Bills Payable 30,000 Bank 30,000
Rita's Loan 15,000 Stock 75,000
Reserve 24,000 Book Debts 66,000
Capital A/cs: Less: Provision for
Rita 90,000 Doubtful Debts 6,000 60,000
Sobha 30,000 1,20,000 Plant and Machinery 45,000
Land and Building 48,000
2,64,000 2,64,000
The firm was dissolved on the date given above.The following transactions took place:
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i. Rita took 25% of the Stock at a discount of 20% in settlement of her loan.
ii. Book Debts realised ₹ 54,000; balance of the Stock was sold at a profit of 30% on cost.
iii. Sundry Creditors were paid out at a discount of 10%. Bills Payable were paid in full.
iv. Plant and Machinery realised ₹ 75,000. Land and Building ₹ 1,20,000.
v. Rita took the goodwill of the firm at a value of ₹ 30,000.
vi. An unrecorded asset of ₹ 6,900 was handed over to an unrecorded liability of ₹ 6,000 in full settlement.
vii. Realisation expenses were ₹ 5,250.
Show Realisation Account, Partners'Capital Accounts and Bank Account in the books of the firm.
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