Vishwashanti Foundations

Empowering Nation

O X

F O R D

COLLEGE

Kusugal Road Sholapur Highway Keshwapur Hubli- 23

MID-TERM Exam October 2017

Section A (2 Marks Answers)
1)

Depreciation
Depreciation can be defined as "the gradual and permanent decrease in the value of a fixed asset due to
constant use, wear and tear, obsolescence, efflux of time, accidents, etc."
In fact depreciation is the value lost on an asset due to constant use.

2)

Any two types of Reserve

1) General Reserve 2) Capital Reserve

3)

Contents of Partnership Deed

a)
Name and Address of each partner,
b)
Amount of capital contributed by each partner,

4)

Fluctuating capital method

This is the method where adjustments like interest on capital, salary, commission, or any other types of
remuneration payable to partners are directly credited to partners capital account, drawings & interest
on drawings are debited; here current accounts are not prepared, and the Capital amounts are not fixed,

5)

Revaluation A/c .DR

To Asset A/c

6)

Methods of valuation of Goodwill

1) Simple Average Profit Method
2) Weighted average profit method

7)

The balancing figure of Revaluation A/c transferring it to Capital Accounts

Revaluation A/cDr
XXX
Partners Capital A/c
XXX
To Partners Capital A/c
XXX
To Revaluation A/cDr
XXX
(Being Profit transferred to capital A/c)
(Being Loss transferred to capital A/c)

8)

Gaining Ratio (Benefit Ratio)

When a partner retires continuing partners can get some gain/benefit of the retired partners share, the
Ratio in which old partners got the benefit is called Gaining Ratio (Benefit Ratio)
Gaining Ratio (Benefit Ratio) = New share Old share

9)

Who is an Executor?
Executor are the legal representatives of the deceased partner, when a partner dies, the final balance due
to the deceased partner will be paid to his legal heirs called Executor,

10)

Deceased partners capital A/C .DR

To Deceased partners Executors loan A/C

11)

Date
01-06-15
01-06-15
30-09-15
30-11-15

Amount
8,000
6,000
12,000
4,000

No of months
10
10
06
04

Product
80,000
60,000
72,000
16,000
2,28,000

Interest on Drawings = Rate x Product x 1/12 = 8/100 x 2,28,000 x 1/12 = 1,520

12)

Dr

P&L Appropriation A/C for the year ending 31-03-2008

To Interest on capital,
A
B

Cr

By P&L A/C
( Profit before adjustment)

5,000
4,000

9,000
By Interest on drawings ,
A
1500
4,000 B
1000

To Salary to partners,
B
To Partners capital A/C,
A
10,500
B
5,250

Ram Ravi Robert

5
: 3
3
: 2 : 1

Old share
New share
Sacrificing Ratio
Ram

Sacrifice Ratio

6
3

14)
-

Old share
Sacrifice Ratio

New share
Arun
Varun

=2
35
75

28,750
Total
8
6

= Old Share - New Share

=5

3
=
8
6
=3

2
=
8
6

Ravi

:
:

30 24
48
18 16
48

=
=

6
48
2
48

2
1

Arun Varun
3
: 2
2
: 1 :

Tarun

Total
5

1/5

= Old Share Sacrifice Ratio

=3

1x2 =
45 10
5
5 3
75

1x1 =
30 5
=
5
5 3
75
25
75

2,500

15,750
28,750

13)

26,250

1
5

35
75

25
75

35
75

25
75
:

15
75

New Ratio
15)

=7

Average Profit

= Total Profit
No. of Years
= 16,000 + 12,000 + 8,000
3
= 36,000
3
= 12,000

Goodwill

= Average Profits No. of years purchased

= Rs.12,000 2
= Rs 24,000

16)
Old share
New share

M
4
5

Benefit Ratio
M
O
Gaining Ratio
17

DR
To Drawings
To Interest on Drawings
To Deceased partners
Executors A/C.
(balance transferred)

N
3

:
:

O
2
3

Total
9
8

= Old Share - New Share

=5

4
=
8
9
=3

2
=
8
9
13

45 32
72
27 16
48

13
72
11
72

11

Deceased partners ( Ys ) capital A/C

By Balance..b/d
By Goodwill
2/5 x 84,000
By salary 1,500 x 9
By Interest on capital
1,28.700 8/100 x 60,000 x 9/12
By P&L Suspense A/C
2/5 x 60,000 x 9/12
1,28.700

CR
60,000
33,600
13,500
3,600
18,000
1,28.700

Section C (14 Marks answer)

18)

Dr
Date
1-4-10

1-4-11
1-10-11

Particulars
To Cash A/c

To balanceb/d
To Cash A/c

Machinery A/c
Amount Date
40,000 31-12-10

40,000
------ 31-03-12
50,000

Particulars
By Depreciation
10% x 40,000 x 9/12
By Cash A/c
By P&L A/c
By balance.c/d
By Depreciation
10% x 50,000 x 9/12
By balance.c/d

50,000
1-4-12

To balanceb/d

47,500 31-12-07

To Machinery A/c

31-03-12

To Machinery A/c

31-03-13

To Machinery A/c

Depreciation A/c
3,000 31-12-10
3,000
2,500 31-03-12
2,500
5,000 31-03-13
5,000

34,500
2,500
------40,000
2,500
47,500
50,000

By Depreciation
10% x 50,000
By balance.c/d

47,500
Dr
31-12-10

Cr
Amount
3,000

5,000
42,500
47,500

By P&L A /c
By P&L A /c
By P&L A /c

Cr
3,000
3,000
2,500
2,500
5,000
5,000

19)

Dr
Date
1-1-10

Machinery A/c
Amount Date
50,000 31-03-10

Particulars
To Cash A/c

Particulars
By Depreciation
10% x 50,000 x 3/12
By balance.c/d

50,000
1-4-10
1-07-10

To balanceb/d
To Cash A/c

Cr
Amount
1,250
48,750
50,000

48,750 31-03-11
60,000
31-03-11

By Depreciation
10% x 48,750
By Depreciation
10% x 60,000 X 9/12

4,875
4,500

31-03-11
By Depreciation
10% x 50,000 x 9/12
By balance.c/d
1,08,750
1-4-11
31-08-11

To balanceb/d
To P&L A/c

1,08,750

99,375 31-08-11
37,953
31-08-11
31-03-12
31-03-12

1-4-12

1,37,328
49,950 31-03-12

To balanceb/d

By Depreciation
10% x 43,875 x 5/12
By Cash A/c
By Depreciation
10% x 55,500
By balance.c/d
By Depreciation
10% x 49,950
By balance.c/d

49,950

31-03-10

To Machinery A/c

31-03-11

To Machinery A/c

31-08-11
31-03-12

To Machinery A/c
To Machinery A/c

31-03-13

To Machinery A/c

Less Depreciation (10-11) 10 % x 48,750

Less Depreciation (11-12) 10% x 43,875 for 5 months
Book value

1,828
80,000
5,550
49,950
1,37,328
4,995
44,955
49,950

Depreciation A/c
1,250 31-03-10
1,250
9,375 31-03-11
9,375
1,828 31-03-12
5,550
7,378
4,995 31-03-13
4,995

Original Cost
Less Depreciation (09-10) 10% x 50,000 for 3 months

99,375

50,000
1,250
48,750
4,875
43,875
1,828
42,047

By P&L A /c
By P&L A /c
By P&L A /c
By P&L A/c

1,250
1,250
9,375
9,375
7,378
7,378
4,995
4,995

Selling Price
Profit
20)

Dr
Date
01-04-08
31-03-09

Particulars
To Cash A/c
To Interest A/c

80,000
37,953

Lease A/c
Rs
Ps Date
1,25,000 00 01-04-08
12,500 00 31-03-09

Particulars
By Depreciation A/c
By Balance..C/d

Rs

Cr
Ps
32,974 63
1,04,525 37

01-04-09
31-03-10

To Balance. b/d
To Interest A/c

1,37,500 00
1,04,525 37
10452 54

01-04-09
31-03-10

By Depreciation A/c
By Balance..C/d

1,37,500 00
32,974 63
82003 28

01-04-10
31-03-11

To Balance. b/d
To Interest A/c

1,14,977 91
82003 28
8200 32

01-04-10
31-03-11

By Depreciation A/c
By Balance..C/d

1,14,977 91
32,974 63
57,228 97

01-04-11
31-03-12

To Balance. b/d
To Interest A/c

90,203 60
57,228 97
5,722 90

01-04-11
31-03-12

By Depreciation A/c
By Balance..C/d

90,203 60
32,974 63
29,977 24

01-04-12
31-03-13

To Balance. b/d
To Interest A/c
(Balancing figure)

62,951 87
29,977 24
2,997 39

01-04-12
31-03-13

By Depreciation A/c
By Balance..C/d

32,974 63
Dr
31-03-08

To P&L A /c

31-03-09

To P&L A /c

31-08-10

To P&L A /c

31-03-11

To P&L A /c

31-03-12

To P&L A /c

Interest A/c
12,500.00 31-03-08
12,500.00
10,452.54 31-03-09
10,452.54
8,200.32 31-08-10
8,200.32
5,722.90 31-03-11
5,722.90
2,997.39 31-03-12
2997.39

62,951 87
32,974 63
32,974 63

By Lease A/c
By Lease A/c
By Lease A/c
By Lease A/c
By Lease A/c

Cr
12,500.00
12,500.00
10,452.54
10,452.54
8,200.32
8,200.32
5,722.90
5,722.90
2,997.39
2997.39

21)

Dr

Revaluation A/C

To Depreciation on Machinery
To Depreciation on Furniture
To New P.D.D on Debtors
To Old partners capital A/C
Xs capital
2,100
Ys capital
1,400

Cr

2,500 By Appreciation on Building

1,000 By Prepaid Insurance
6,000 By Old P.D.D

8,000
2,000
3,000

3,500
13,000

Dr
Particulars
To P&L A/C (Loss)
To Goodwill(withdrawn)
To balance .c/d

13,000

Old Partners Capital A/C

Ramya
Rajesh
Particulars
By balance .b/d
By General Reserve
By P&L A/C
92,100
51,400 By Goodwill
By Revaluation A/C
92,100
51,400

Ramya
60,000
12,000
3,000
15,000
2,100
92,100

Cr
Rajesh
30,000
8,000
2,000
10,000
1,400
51,400

New Balance sheet

Liabilities
Capitals
Ramya
Rajesh
Tamya
Creditors
Bills payable

92,100
51,400
40,000

Rs Assets
Land & Building
Add Appreciation@ 20%
1,83,500 Furniture & Fixture
Less Depreciation@10%
57,000
Machinery
20,500 Less Depreciation@10%
Debtors
Less New P.D.D

Rs
40,000
8,000

48,000

10,000
1,000

9,000

25,000
2,500

22,500

60,000
6,000

54,000

B/R

4,000

Stock
Cash
+ Tamyas Capital
+ Goodwill
Prepaid Insurance
2,61,000

35,000
21,500
40,000
25,000

86,500
2,000
2,61,000

Note
Goodwill brought by New partner CR to Old partners capital Account in Sacrificing Ratio i.e 3 : 2

22)

Dr

Revaluation A/C

To Depreciation on Machinery
To New P.D.D on Debtors
To New P.D.D on B/R

Dr
Particulars
To P&L A/C (Loss)
To Goodwill(withdrawn)
To Revaluation A/c
(Loss)
To balance .c/d

4,500 By Appreciation on Stock

1,100 By Prepaid Rent
1,000 By Unrecorded Investment
By Old partners capital A/C
Rams capital
900
Gopals capital
900

2,800
600
1,400

6,600

6,600

Old Partners Capital A/C

Ram
Gopal
Particulars
By balance .b/d
3,000
3,000 By General Reserve
900
900 By P&L A/C
By Goodwill
1,00,600
1,04,500

Cr

60,600
64,500

1,800

Ram
1,00,000

Cr
Gopal
60,000

4,500

4,500

1,04,500

64,500

New Balance sheet

Liabilities
Capitals
Ram
Gopal
Varma 40,000 - 3000
Creditors
Bills payable

Rs Assets
Land
100,600
60,600
37,000

Rs
1,50,000

Machinery
1,98,200 Less Depreciation@10%

45,000
4,500

40,500

60,000 Debtors
Less New P.D.D@ 5 %
50,000
B/R
Less New P.D.D@ 5 %

22,000
1,100

20,900

20,000
1,000

19,000

28,000
2,800

30,800

Stock
Add Appreciation@ 10%
Bank
Cash
+ Varmas Capital
Investments
Prepaid Rent
3,08,200

4,000
1,000
40,000

41,000
1,400
600
3,08,200

Note
Goodwill raised Cr to partners capital A/c in Old Ratio and written off Dr to all partners capital A/c in New Ratio
It is assumed that Goodwill is written off After Varmas Admission

23)

Dr

Revaluation A/C

To Depreciation on Machinery
To Depreciation on Motor car
To New P.D.D on Debtors
To O/s Power charges

Dr
Particulars
To Goodwill
(written off)
To Revaluation A/c
(Loss)
To Suris Loan A/c
To balance .c/d

Hari
25,000
1,500
55,375
81,875

Cr

2,500 By Appreciation on Stock

1,400 By Old P.D.D
3,000 By Old partners capital A/C
1,100
Haris capital
1,500
Giris capital
600
Suris Capital
300

4,000
1600

6,600

6,600

Old Partners Capital A/C

Giri
Suri
Particulars
By balance .b/d
10,000
By General Reserve
By P&L A/C
6,00
300 By Goodwill
16,075
32,150
42,750 16,375

2,400

Cr
Hari
Giri
Suri
50,000
30,000
10,000
10,000
4,000
2,000
21,875

8,750

4,375

81,875

42,750

16,375

New Balance sheet

Liabilities
Capitals
Hari
Giri
Suris Loan A/c
Creditors
Bills payable
O/s Power charges

55,375
32,150

Rs Assets
Machinery
Less Depreciation@5%
87,525
Motor car
16,075 Less Depreciation@10%
15,000 Debtors
Less New P.D.D@ 5 %
9,000
B/R
1,100
Stock
Add Appreciation@ 20%
Cash @ Bank
1,28,700

Rs
50,000
2,500

47,500

14,000
1,400

12,600

30,000
3,000

27,000
12,600

20,000
4,000

24,000
5,000
1,28,700

Note
Goodwill of the firm Cr to all partners capital A/c in Old Ratio (I.e 5:2:1)and written off after Suris retirement Dr
to continuing partners capital A/c in New Ratio (I.e 5:2)

24)

Dr

Revaluation A/C

To Depreciation on Machinery
To Depreciation on Motor car
To Depreciation on Furniture
To New P.D.D on Debtors
To O/s Salaries

5,500
2,000
2,800
8,000
3,000

Cr

By Appreciation on Building
By Appreciation on Stock
By Old P.D.D
By Old partners capital A/C
Anjus capital
2,210
Sanjus capital
3,315
Manjus Capital
5,525

4,000
1,250
5,000

11,050
21,300

21,300
Dr
Particulars
To P&L A/c
To Anjus A/c
To Revaluation A/c
(Loss)
To Bank A/c
To Bank overdraft

Anju
5,000
2,210
45,000
41,790

To balance .c/d
94,000

Old Partners Capital A/C

Sanju Manju
Particulars
7,500 12,500 By balance .b/d
3,000
5,000 By General Reserve
By P&L A/C
3,315
5,525 By Sanju
By Manju
65,185
79,000

51,975
75,000

Anju
80,000
6,000

Sanju
70,000
9,000

Cr
Manju
60,000
15,000

79,000

75,000

3,000
5,000

94,000

New Balance sheet

Liabilities
Capitals
Anju
Sanju
Bonk Overdraft
Creditors
Bills payable
O/s Salaries

65,185
51,975

Rs Assets
Building
Add Appreciation@ 20%
1,17,160
Machinery
41,790 Less Depreciation@ 10%

Rs
80,000
4,000

84,000

55,000
5,500

49,500

20,000
2,000

18,000

28,000
2,800

25,200

Debtors
Less New P.D.D@ 5 %

40,000
8,000

32,000

Stock
Add Appreciation@ 20%

25,000
1,250

26,250

Cash @ Bank
Less Anjus Capital paid

45,000
45,000

---------

38,000 Motor car

Less Depreciation@10%
35,000
Furniture
3,000 Less Depreciation@ 10%

2,34,950
Note
Goodwill of the firm = 40,000
Anjus share = 2/10 x 40,000 = 8,000
Sanjus A/c Dr 3,000
Manjus A/c...Dr 5,000
To Anjus A/c
8,000
Retired partners share of Goodwill Dr to continuing partners capital A/c in Gaining Ratio

2,34,950

Section D (5 marks)

25)

Provision of Indian Partnership act 1932 in the Absence of Partnership Deed

a)
No partner is entitled for interest on capital,
b)
No interest is to be charges on Drawings
c)
Maximum rate of interest payable to partners loan is @6% p.a only,
d)
All partners share profits or losses equally,
e)
No partner is entitled for salary,

26)

Dr
Particulars
To Drawings
To Interest on Drawings
To Balance c/d
[ Balancing figure ]

27)

Dr
Date
30-6-15
30-6-15
30-6-16
30-6-16

PARTNER'S CAPITAL A/C

A
B
Particulars
4,000
1,000 By Balance b/d
By Interest on capital
By Salary / Commission
By Share of Profit
70,000
50,000
74,000
51,000

Deceased partners Executors Loan A/c

Particulars
Amount Date
Particulars
To Cash A/c
12,000 30-6-14 By Capital A/c
(10,000 + 2,000)
30-6-15 By Interest at 10 %
To Balance .c/d
10,000
To Cash A/c
(10,000 + 1,000)
To Balance .c/d

22,000 01-7-15
11,000 30-6-16

By Balance ..b/d
By Interest at 10 %

A
60,000
6,000
5,000
3,000

Cr
B
40,000
4,000
5,000
2,000

74,000

51,000

Cr
Amount
20,000
2,000
22,000
10,000
1,000

Nil
11,000

11,000