NCERT Solutions for Class 12 Accountancy (Part 1) Chapter 3 Reconstitution of a Partnership Firm – Retirement / Death of a Partner
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Page 1
NCERT
SOLUTIONS
CLASS - 12th
aglase .co
SOLUTIONS
CLASS - 12th
aglase .co
Page 2
Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
Class : 12th
Subject : Accountancy
Chapter : 4
Chapter Name : Reconstitution of a Partnership Firm – Retirement/Death of a Partner
Q1 What are the different ways in which a partner can retire from the firm.
Answer. A partner can retire from the firm in the following ways:
i) Retirement through mutual consent : By mutual consent of all the partners, a partner can
retire from the firm.
ii) Through provision in partnership deed: A partner can retire by expressing his willingness to
retire stating the reason of retiring if provision is there in partnership deed.
iii) Through written notice : Any partner can retire by giving a written notice and stating the
intention for retiring when the partnership is at will.
Page : 213 , Block Name : Short Answer Question
Q2 Write the various matters that need adjustments at the time of retirement of a partners.
Answer. The following matters need adjustment at time of retirement of partners:
i) Calculating gaining ratio and new profit showing ratio
ii) Ascertainment of goodwill
iii) Revaluation of assets and liabilities.
iv) Distribution of accumulated profits /reserves to old partner’s capital a/c
Page 1 of 57
Class : 12th
Subject : Accountancy
Chapter : 4
Chapter Name : Reconstitution of a Partnership Firm – Retirement/Death of a Partner
Q1 What are the different ways in which a partner can retire from the firm.
Answer. A partner can retire from the firm in the following ways:
i) Retirement through mutual consent : By mutual consent of all the partners, a partner can
retire from the firm.
ii) Through provision in partnership deed: A partner can retire by expressing his willingness to
retire stating the reason of retiring if provision is there in partnership deed.
iii) Through written notice : Any partner can retire by giving a written notice and stating the
intention for retiring when the partnership is at will.
Page : 213 , Block Name : Short Answer Question
Q2 Write the various matters that need adjustments at the time of retirement of a partners.
Answer. The following matters need adjustment at time of retirement of partners:
i) Calculating gaining ratio and new profit showing ratio
ii) Ascertainment of goodwill
iii) Revaluation of assets and liabilities.
iv) Distribution of accumulated profits /reserves to old partner’s capital a/c
Page 1 of 57
Page 3
Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
v) Ascertainment of share of profit till date of retirement.
vi) Adjustment of capital.
vii) Settlement of the amount due to the retiring partner.
Page : 213 , Block Name : Short Answer Question
Q3 Distinguish between sacrificing ratio and gaining tab.
Answer.
Sacrificing ratio Gaining ratio
i) It is the ratio at which old partners i) It is the ratio at which continuing
agree to sacrifice their share of profit in partner acquire share of retiring or
favour of a new partner. deceased partner.
ii) It is calculated as : old ratio less new ii) It is calculated as : new ratio less old
ratio. ratio.
iii) It is calculated during admission of a iii) It is calculated during retirement or
new partner. death of old partner.
iv) It results in a decrease in the share iv) It results in an increase in the share
of existing partners. of existing partners.
Page : 213 , Block Name : Short Answer Question
Q4 Why do firm reevaluate assets and reassess their liabilities on retirement or on the event of
death of a partner.
Page 2 of 57
v) Ascertainment of share of profit till date of retirement.
vi) Adjustment of capital.
vii) Settlement of the amount due to the retiring partner.
Page : 213 , Block Name : Short Answer Question
Q3 Distinguish between sacrificing ratio and gaining tab.
Answer.
Sacrificing ratio Gaining ratio
i) It is the ratio at which old partners i) It is the ratio at which continuing
agree to sacrifice their share of profit in partner acquire share of retiring or
favour of a new partner. deceased partner.
ii) It is calculated as : old ratio less new ii) It is calculated as : new ratio less old
ratio. ratio.
iii) It is calculated during admission of a iii) It is calculated during retirement or
new partner. death of old partner.
iv) It results in a decrease in the share iv) It results in an increase in the share
of existing partners. of existing partners.
Page : 213 , Block Name : Short Answer Question
Q4 Why do firm reevaluate assets and reassess their liabilities on retirement or on the event of
death of a partner.
Page 2 of 57
Page 4
Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
Answer. Firms evaluate assets and reassess their liabilities on retirement or in the event of
death of a partner so as to record the true and correct value of assets and liabilities at that time.
With due time, value of assets may increase or may decrease or certain assets and liabilities
may be unrecorded , so the retiring or deceased partner may be benefitted or may bear loss so
it is necessary to revalue the assets and liabilities.
Page : 214 , Block Name : Short Answer Question
Q5 Why a retiring/deceased partner is entitled to a share of goodwill of the firm.
Answer. When a partner retires or is deceased , he sacrifices his share of profits In the form
which is acquired by the continuing partners. So, on return of such gain, the gaining partners
need to compensate the retiring or deceased partner for their sacrifice. Thus evaluation of
goodwill of a firm is necessary.
Page : 214 , Block Name : Short Answer Questions
Q1 Explain the modes of payment to a retiring partner.
Answer. 1) lump sum : In full settlement, lump sum payment is made to the retiring partner.
In this case the following entry is passed:
Retiring partner capital A/c Dr
To bank a/c
(Being payment made to retired partners.)
Page 3 of 57
Answer. Firms evaluate assets and reassess their liabilities on retirement or in the event of
death of a partner so as to record the true and correct value of assets and liabilities at that time.
With due time, value of assets may increase or may decrease or certain assets and liabilities
may be unrecorded , so the retiring or deceased partner may be benefitted or may bear loss so
it is necessary to revalue the assets and liabilities.
Page : 214 , Block Name : Short Answer Question
Q5 Why a retiring/deceased partner is entitled to a share of goodwill of the firm.
Answer. When a partner retires or is deceased , he sacrifices his share of profits In the form
which is acquired by the continuing partners. So, on return of such gain, the gaining partners
need to compensate the retiring or deceased partner for their sacrifice. Thus evaluation of
goodwill of a firm is necessary.
Page : 214 , Block Name : Short Answer Questions
Q1 Explain the modes of payment to a retiring partner.
Answer. 1) lump sum : In full settlement, lump sum payment is made to the retiring partner.
In this case the following entry is passed:
Retiring partner capital A/c Dr
To bank a/c
(Being payment made to retired partners.)
Page 3 of 57
Page 5
Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
2) Transfer to loan a/c : The balance amount of retiring partner is transferred to his loan account
and then the amount is paid in instalments. The retiring partners receive equal instalments
along with interest on the amount due.
The following entry is passed:
Retiring partner capital A/c Dr
To retiring partner loan A/c
(Being amount transferred to loan a/c)
3) Some payment in cash and some in instalment: Sometimes the amount is partly paid in
cash and partly in equal instalment by transferring to loan a/c .
Following journal entry is passed:
Retiring partner A/c Dr
To bank A/c
To retiring partner loan A/c
(Being partly paid in cash partly in equal instalments)
Page : 214 , Block Name : Long Answer Question
Q2 How will you compute the amount payable to a deceased partner?
Answer. The capital balance is added up with his share of profit or loss, interest on capital ,
reserves , profit on revaluation etc and the drawings, interest on drawing is decreased to
calculate the final balance amount which is either paid or transferred to his executor’s loan a/c.
Deceased partner’s capital account
Page 4 of 57
2) Transfer to loan a/c : The balance amount of retiring partner is transferred to his loan account
and then the amount is paid in instalments. The retiring partners receive equal instalments
along with interest on the amount due.
The following entry is passed:
Retiring partner capital A/c Dr
To retiring partner loan A/c
(Being amount transferred to loan a/c)
3) Some payment in cash and some in instalment: Sometimes the amount is partly paid in
cash and partly in equal instalment by transferring to loan a/c .
Following journal entry is passed:
Retiring partner A/c Dr
To bank A/c
To retiring partner loan A/c
(Being partly paid in cash partly in equal instalments)
Page : 214 , Block Name : Long Answer Question
Q2 How will you compute the amount payable to a deceased partner?
Answer. The capital balance is added up with his share of profit or loss, interest on capital ,
reserves , profit on revaluation etc and the drawings, interest on drawing is decreased to
calculate the final balance amount which is either paid or transferred to his executor’s loan a/c.
Deceased partner’s capital account
Page 4 of 57
Page 6
Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
Particulars Amount Particulars Amount
To loss on revaluation XXX By balance b/d XXX
To accumulated XXX By profit on XXX
losses revaluation
To goodwill(written off) XXX By general reserve XXX
To partner’s executor XXX By accumulated XXX
a/c profit
(balancing figure) XXX By interest on capital XXX
By gaining partner XXX
capital a/c
Page : 214 , Block Name : Long Answer Question
Q3 Explain the treatment of goodwill at the time of retirement or in the event of death of a
partner?
Answer. The share of goodwill of retiring or deceased is calculated first. Then the gaining
partners compensate with that amount to the retiring or deceased partner .
i) If goodwill already exist in books of account :
The existing goodwill is written off among old partners of the firm in old ratio.following journal
entry is passed:
All partner's capital account --------Dr
Page 5 of 57
Particulars Amount Particulars Amount
To loss on revaluation XXX By balance b/d XXX
To accumulated XXX By profit on XXX
losses revaluation
To goodwill(written off) XXX By general reserve XXX
To partner’s executor XXX By accumulated XXX
a/c profit
(balancing figure) XXX By interest on capital XXX
By gaining partner XXX
capital a/c
Page : 214 , Block Name : Long Answer Question
Q3 Explain the treatment of goodwill at the time of retirement or in the event of death of a
partner?
Answer. The share of goodwill of retiring or deceased is calculated first. Then the gaining
partners compensate with that amount to the retiring or deceased partner .
i) If goodwill already exist in books of account :
The existing goodwill is written off among old partners of the firm in old ratio.following journal
entry is passed:
All partner's capital account --------Dr
Page 5 of 57
Page 7
Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
To goodwill a/c
(Being goodwill written off)
ii) Adjusting goodwill through partner’s capital account : After goodwill in the books is written off ,
the share of goodwill or retiring or deceased partner is adjusted by the gaining partner in
gaining ratio. Following entry is passed:
Gaining partner’s capital a/c--------Dr
To retiring/deceased partner
(Being goodwill adjusted to capital a/c in gaining ratio)
Page : 214 , Block Name : Long Answer Question
Q4 Discuss the various methods of computing the share in profits in the event of death of a
partner.
Answer. The various methods of computing the share in profit in the event of death of partner
are:
1) On basis of time- Under this method profit of last few years is considered and either
average profit is calculated or profit of previous year is taken. The share of deceased
/retiring partner is calculated on the basis of profit taken up to the date of retirement on
death.
1) On basis of sale- Under this method , the sale upto date of retirement or death is
ascertained first and then the rate of profit percentage on the basis of previous year
sales is taken. On this basis, profit upto the date of death is calculated and considering
the old ratio of partners, share of deceased/retiring partner is finally computed.
Page : 214 , Block Name : Long answer Question
Q1 Aparna ,Manisha and Sonia are partners sharing profits in the ratio of 3 : 2 : 1. Manisha
retires and goodwill of the firm is valued at Rs. 1,80,000.Aparna and Sonia decided to share
future in the ratio of 3 : 2. Pass necessary journal entries.
Page 6 of 57
To goodwill a/c
(Being goodwill written off)
ii) Adjusting goodwill through partner’s capital account : After goodwill in the books is written off ,
the share of goodwill or retiring or deceased partner is adjusted by the gaining partner in
gaining ratio. Following entry is passed:
Gaining partner’s capital a/c--------Dr
To retiring/deceased partner
(Being goodwill adjusted to capital a/c in gaining ratio)
Page : 214 , Block Name : Long Answer Question
Q4 Discuss the various methods of computing the share in profits in the event of death of a
partner.
Answer. The various methods of computing the share in profit in the event of death of partner
are:
1) On basis of time- Under this method profit of last few years is considered and either
average profit is calculated or profit of previous year is taken. The share of deceased
/retiring partner is calculated on the basis of profit taken up to the date of retirement on
death.
1) On basis of sale- Under this method , the sale upto date of retirement or death is
ascertained first and then the rate of profit percentage on the basis of previous year
sales is taken. On this basis, profit upto the date of death is calculated and considering
the old ratio of partners, share of deceased/retiring partner is finally computed.
Page : 214 , Block Name : Long answer Question
Q1 Aparna ,Manisha and Sonia are partners sharing profits in the ratio of 3 : 2 : 1. Manisha
retires and goodwill of the firm is valued at Rs. 1,80,000.Aparna and Sonia decided to share
future in the ratio of 3 : 2. Pass necessary journal entries.
Page 6 of 57
Page 8
Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
Answer. Old Ratio = 3 : 2 : 1
New Ratio = 3 : 2
Gaining ratio = New Ratio – Old Ratio
Aparna’s Gain = = =
Sonia’s Gain = = =
Journal Entries
Particulars Dr. Amount Cr. Amount
₹ ₹
Aparna’s capital A/c Dr 18000
Sonia’s capital A/c Dr 42000
To Manisha’s capital A/c 60,000
( Being gaining partners compensating retiring
partner in gaining ratio 3 : 7)
Working Note:
Goodwill of firm = 1,80,000
Manisha’s share of goodwill =
Gaining ratio = 3 : 7.
Page : 214 , Block Name : Numerical questions
Page 7 of 57
Answer. Old Ratio = 3 : 2 : 1
New Ratio = 3 : 2
Gaining ratio = New Ratio – Old Ratio
Aparna’s Gain = = =
Sonia’s Gain = = =
Journal Entries
Particulars Dr. Amount Cr. Amount
₹ ₹
Aparna’s capital A/c Dr 18000
Sonia’s capital A/c Dr 42000
To Manisha’s capital A/c 60,000
( Being gaining partners compensating retiring
partner in gaining ratio 3 : 7)
Working Note:
Goodwill of firm = 1,80,000
Manisha’s share of goodwill =
Gaining ratio = 3 : 7.
Page : 214 , Block Name : Numerical questions
Page 7 of 57
Page 9
Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
Q2 Sanhgeeta, Saroj and Shanti are partners sharing profit in the ratio 2 : 3 : 5 . Goodwill is
appearing in the books at the value of Rs. 60,000. Sangeeta retires and Goodwill is valued at
Rs. 90,000.Saroj and Shanti decided to share future profits equally . Record necessary journal
entries.
Answer.
Journal Entries
Particulars Dr. amount Cr. amount
₹ ₹
Sangeeta’s capital A/c Dr 12,000
Saroj’s capital A/c Dr 18,000
Shanti’s capital A/c Dr 30,000
To Goodwill account A/c 60,000
(Being goodwill in books written off to old partners capital
account old ratio)
Saroj's capital A/c Dr 18,000
To Sangeeta's capital A/c 18,000
( Being Gaining partner compensating retiring partner)
Working Note :
Old Ratio : 2 : 3 : 5
New Ratio : 1 : 1
Gaining Ratio: New ratio – Old Ratio
Saroj's gain in share = = = =
Shanti’s Gain in share =
Page 8 of 57
Q2 Sanhgeeta, Saroj and Shanti are partners sharing profit in the ratio 2 : 3 : 5 . Goodwill is
appearing in the books at the value of Rs. 60,000. Sangeeta retires and Goodwill is valued at
Rs. 90,000.Saroj and Shanti decided to share future profits equally . Record necessary journal
entries.
Answer.
Journal Entries
Particulars Dr. amount Cr. amount
₹ ₹
Sangeeta’s capital A/c Dr 12,000
Saroj’s capital A/c Dr 18,000
Shanti’s capital A/c Dr 30,000
To Goodwill account A/c 60,000
(Being goodwill in books written off to old partners capital
account old ratio)
Saroj's capital A/c Dr 18,000
To Sangeeta's capital A/c 18,000
( Being Gaining partner compensating retiring partner)
Working Note :
Old Ratio : 2 : 3 : 5
New Ratio : 1 : 1
Gaining Ratio: New ratio – Old Ratio
Saroj's gain in share = = = =
Shanti’s Gain in share =
Page 8 of 57
Page 10
Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
Thus only Saroj is gaining share on Retirement of Sangeeta . So Saroj will compensate
Sangeeta .
Goodwill of Firm = 90,000
Sangeeta’s share of goodwill = = 18,000
Page : 214 , Block Name: Numerical Questions.
Q3 Himanshu, Gagan and Naman are partners sharing profits and losses in the ratio of 3:2:1.
On march 31,2017. Naman retires
The various assets and liabilities of the firm on the date were as follows:
Cash Rs. 10,000, Building Rs. 1,00,000.plant and machinery Rs. 40,000. Stock Rs. 20,000 and
Investments Rs. 30,000.
The following was agreed upon between the partner’s on Naman’s Retirement
i) Building to be appreciated by 20%
ii) Plant and building to be depreciated by 10%
iii) A provision of 5% on debtors to be created for bad and doubtful debts .
iv) Stock was to be valued at Rs.18,000 and Investment at Rs.35,000.
Record the necessary journal entries to the above effect and prepare the revaluation account
Answer.
Journal Entries
Particulars Dr. amount Cr. amount
₹ ₹
i) Building A/c Dr 20,000
Investment account Dr 5000
Page 9 of 57
Thus only Saroj is gaining share on Retirement of Sangeeta . So Saroj will compensate
Sangeeta .
Goodwill of Firm = 90,000
Sangeeta’s share of goodwill = = 18,000
Page : 214 , Block Name: Numerical Questions.
Q3 Himanshu, Gagan and Naman are partners sharing profits and losses in the ratio of 3:2:1.
On march 31,2017. Naman retires
The various assets and liabilities of the firm on the date were as follows:
Cash Rs. 10,000, Building Rs. 1,00,000.plant and machinery Rs. 40,000. Stock Rs. 20,000 and
Investments Rs. 30,000.
The following was agreed upon between the partner’s on Naman’s Retirement
i) Building to be appreciated by 20%
ii) Plant and building to be depreciated by 10%
iii) A provision of 5% on debtors to be created for bad and doubtful debts .
iv) Stock was to be valued at Rs.18,000 and Investment at Rs.35,000.
Record the necessary journal entries to the above effect and prepare the revaluation account
Answer.
Journal Entries
Particulars Dr. amount Cr. amount
₹ ₹
i) Building A/c Dr 20,000
Investment account Dr 5000
Page 9 of 57
Page 11
Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
To revaluation account 25,000
(Being increase in the value of assets)
ii) Revaluation A/c Dr 7000
To plant and machinery A/c 4000
To provision for doubtful debt A/c 1000
To stock A/c 2000
(Being decrease in the value of assets on revaluation)
iii) Revaluation A/c Dr 18000
To himanshu’s capital A/c 9000
To gagan’s capital A/c 6000
To naman's capital A/c 3000
(Being profit on revaluation transferred to old partners in
old ratio 3:2:1)
Revaluation account
Particulars Amount Particulars Amount
₹ ₹
To plants machinery 4000 By building 20,000
To provision for doubtful 1000 By investment 5000
debts
To stock 2000
Page 10 of 57
To revaluation account 25,000
(Being increase in the value of assets)
ii) Revaluation A/c Dr 7000
To plant and machinery A/c 4000
To provision for doubtful debt A/c 1000
To stock A/c 2000
(Being decrease in the value of assets on revaluation)
iii) Revaluation A/c Dr 18000
To himanshu’s capital A/c 9000
To gagan’s capital A/c 6000
To naman's capital A/c 3000
(Being profit on revaluation transferred to old partners in
old ratio 3:2:1)
Revaluation account
Particulars Amount Particulars Amount
₹ ₹
To plants machinery 4000 By building 20,000
To provision for doubtful 1000 By investment 5000
debts
To stock 2000
Page 10 of 57
Page 12
Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
To profit on revaluation:
Himanshu : 9000
Gagan : 6000
Naman : 3000 18000
25000 25000
Page : 214 , Block Name : Numerical Questions
Q4 Naresh, Raj Kumar and Bishwajeet are equal partners. Raj kumar decides to retire. On the
date of his retirement , the balance sheet of the firm showed the following : General reserves
Rs.36000 and profit and loss account (Dr.) Rs.15,000.
Pass necessary journal entries to the above effect.
Answer.
Journal entries
Particulars Dr. amount Cr.amount
₹ ₹
General reserves A/c Dr 36000
To Naresh's capital A/c 12000
To Raj kumar's capital A/c 12000
To Bishwajeet’s capital A/c 12000
(Being general reserves transfer to old partners in old
ratio 1:1:1)
Page 11 of 57
To profit on revaluation:
Himanshu : 9000
Gagan : 6000
Naman : 3000 18000
25000 25000
Page : 214 , Block Name : Numerical Questions
Q4 Naresh, Raj Kumar and Bishwajeet are equal partners. Raj kumar decides to retire. On the
date of his retirement , the balance sheet of the firm showed the following : General reserves
Rs.36000 and profit and loss account (Dr.) Rs.15,000.
Pass necessary journal entries to the above effect.
Answer.
Journal entries
Particulars Dr. amount Cr.amount
₹ ₹
General reserves A/c Dr 36000
To Naresh's capital A/c 12000
To Raj kumar's capital A/c 12000
To Bishwajeet’s capital A/c 12000
(Being general reserves transfer to old partners in old
ratio 1:1:1)
Page 11 of 57
Page 13
Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
Naresh's capital A/c Dr 5000
Raj kumar's capital A/c Dr 5000
Bishwajeet's capital A/c Dr 5000
To A/c not mention 15000
(Being debit balance of P & L A/c transferred to old
partners)
Page : 214 , Block Name : Numerical Questions
Q5 Digvijay , Brijesh and Parakaram were partners in a firm sharing profits in the ratio of 2:2:1 .
Their balance sheet as on March 31,2017 was as follows:
Liabilities Amount Assets Amount
₹ ₹
Creditors 49,000 Cash 8,000
Reserves 18,500 Debtors 19,000
Digvijay’s capital 82,000 Stock 42,000
Brijesh’s capital 60,000 Buildings 2,07,000
Parakaram’s capital 75,000 Patents 9,000
2,85,000 2,85,000
Brijesh retired on March 31, 2017 on the following terms:
Page 12 of 57
Naresh's capital A/c Dr 5000
Raj kumar's capital A/c Dr 5000
Bishwajeet's capital A/c Dr 5000
To A/c not mention 15000
(Being debit balance of P & L A/c transferred to old
partners)
Page : 214 , Block Name : Numerical Questions
Q5 Digvijay , Brijesh and Parakaram were partners in a firm sharing profits in the ratio of 2:2:1 .
Their balance sheet as on March 31,2017 was as follows:
Liabilities Amount Assets Amount
₹ ₹
Creditors 49,000 Cash 8,000
Reserves 18,500 Debtors 19,000
Digvijay’s capital 82,000 Stock 42,000
Brijesh’s capital 60,000 Buildings 2,07,000
Parakaram’s capital 75,000 Patents 9,000
2,85,000 2,85,000
Brijesh retired on March 31, 2017 on the following terms:
Page 12 of 57
Page 14
Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
i) Goodwill of the firm was valued at Rs. 70,000 and was not to appear in the books.
ii) Bad debts amounting to Rs 2,000 were to be written off.
iii) Patents were considered as valueless.
Prepare revaluation account, partner’s capital accounts and the balance sheet of Digvijay and
Parakaram after Brijesh retirement.
Answer.
Revaluation account
Particulars Amount Particulars Amount
₹ ₹
To patents 9000 By loss on revaluation
To bad debts 2000 Digvijay : 44000
Brijesh : 44000
Parakaram : 22000 11,000
11000 11,000
Partners capital account
Particulars Digvijay Brijesh Parakar Particulars Digvijay Brijesh Parakara
am m
To brijesh 18667 9333 By balance 82000 60,000 75500
A/c b/d
Page 13 of 57
i) Goodwill of the firm was valued at Rs. 70,000 and was not to appear in the books.
ii) Bad debts amounting to Rs 2,000 were to be written off.
iii) Patents were considered as valueless.
Prepare revaluation account, partner’s capital accounts and the balance sheet of Digvijay and
Parakaram after Brijesh retirement.
Answer.
Revaluation account
Particulars Amount Particulars Amount
₹ ₹
To patents 9000 By loss on revaluation
To bad debts 2000 Digvijay : 44000
Brijesh : 44000
Parakaram : 22000 11,000
11000 11,000
Partners capital account
Particulars Digvijay Brijesh Parakar Particulars Digvijay Brijesh Parakara
am m
To brijesh 18667 9333 By balance 82000 60,000 75500
A/c b/d
Page 13 of 57
Page 15
Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
To loss on 4400 4400 By Digvijay 18667
revaluation A/c
To Brijesh 91000 By 9333
loan A/c Parakaram
A/c
To balance 66333 67667 By reserves 7400 7400 3700
c/d
89400 95400 79200 89400 95400 79200
Balance sheet
Liabilities Amount Assets Amount
₹ ₹
Creditors 49000 Cash 8000
Partner’s capital A/c Debtors : 19000
Digvijay : 66333 Loss: bad debts : 2000 17000
Parakaram : 67667 134000 Stock 42000
Brijesh loan A/c 91000 Building 207000
274000 274000
Working note :
Page 14 of 57
To loss on 4400 4400 By Digvijay 18667
revaluation A/c
To Brijesh 91000 By 9333
loan A/c Parakaram
A/c
To balance 66333 67667 By reserves 7400 7400 3700
c/d
89400 95400 79200 89400 95400 79200
Balance sheet
Liabilities Amount Assets Amount
₹ ₹
Creditors 49000 Cash 8000
Partner’s capital A/c Debtors : 19000
Digvijay : 66333 Loss: bad debts : 2000 17000
Parakaram : 67667 134000 Stock 42000
Brijesh loan A/c 91000 Building 207000
274000 274000
Working note :
Page 14 of 57
Page 16
Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
Old ratio = 2:2:1
Goodwill of firm = 70,000
Brijesh share of goodwill =
= 28,000
Since new ratio is not mentioned .
Old ratio is taken as gaining ratio
Therefore gaining ratio = 2:1
Therefore
Particular Dr Amount Cr Amount
₹ ₹
Digvijay's capital A/c Dr 18667
Parakaram's capital A/c Dr 9333
To Brijesh's capital A/c 28000
(Being gaining partner compensating retiring partner
)
Page : 215 , Block Name : Numerical Question
Q6 Radha, Sheela and Meena were in partnership sharing profits and losses in the proportion
3:2:1. On April 1, 2017. Sheela retires from the firm. On that date ,their balance sheet was as
follows
Liabilities Amount (Rs.) Assets Amount (Rs.)
Trade creditors 3,000 Cash- in - hand 1,500
Page 15 of 57
Old ratio = 2:2:1
Goodwill of firm = 70,000
Brijesh share of goodwill =
= 28,000
Since new ratio is not mentioned .
Old ratio is taken as gaining ratio
Therefore gaining ratio = 2:1
Therefore
Particular Dr Amount Cr Amount
₹ ₹
Digvijay's capital A/c Dr 18667
Parakaram's capital A/c Dr 9333
To Brijesh's capital A/c 28000
(Being gaining partner compensating retiring partner
)
Page : 215 , Block Name : Numerical Question
Q6 Radha, Sheela and Meena were in partnership sharing profits and losses in the proportion
3:2:1. On April 1, 2017. Sheela retires from the firm. On that date ,their balance sheet was as
follows
Liabilities Amount (Rs.) Assets Amount (Rs.)
Trade creditors 3,000 Cash- in - hand 1,500
Page 15 of 57
Page 17
Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
Bills payment 4,500 Cash at bank 7,500
Expenses owing 4,500 Debtors 15,000
General reserves 13,500 Stock 12,000
Capitals: Factory premises 22,500
Radha 15000 Machinery 8,000
Sheela 15000 Losse tools 4,000
Meena 15000 45,000
70,500 70,500
The terms were:
i) Goodwill of the firm was valued at Rs.13,500.
ii) Expenses owing to be brought down to Rs.3,750.
iii) Machinery and loose tools are to be valued at 10% less than their book value.
iv) Factory premises are to be revalued at Rs, 24,300.
Prepare:
1) Revaluation account
2) Partner’s capital account and
3) Balance sheet of the firm after retirement of sheela.
Answer.
Revaluation A/c
Page 16 of 57
Bills payment 4,500 Cash at bank 7,500
Expenses owing 4,500 Debtors 15,000
General reserves 13,500 Stock 12,000
Capitals: Factory premises 22,500
Radha 15000 Machinery 8,000
Sheela 15000 Losse tools 4,000
Meena 15000 45,000
70,500 70,500
The terms were:
i) Goodwill of the firm was valued at Rs.13,500.
ii) Expenses owing to be brought down to Rs.3,750.
iii) Machinery and loose tools are to be valued at 10% less than their book value.
iv) Factory premises are to be revalued at Rs, 24,300.
Prepare:
1) Revaluation account
2) Partner’s capital account and
3) Balance sheet of the firm after retirement of sheela.
Answer.
Revaluation A/c
Page 16 of 57
Page 18
Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
Particulars Amount Particulars Amount
₹ ₹
To machinery 800 By expenses 750
To loose tools 400 By factory premises 1800
To profit on revaluation:
Radha 675
Sheela 450
Meena 225 1350
2550 2550
Partner’s capital A/c
Particulars Radha Sheela Meena Particulars Radha Sheela Meena
To sheela 3375 1125 By bal c/d 15000 15000 15000
capital a/c
To bal c/d 19050 24450 16350 By radha 3375
capital a/c
By meena 1125
capital a/c
By profit on 675 450 225
revaluation
Page 17 of 57
Particulars Amount Particulars Amount
₹ ₹
To machinery 800 By expenses 750
To loose tools 400 By factory premises 1800
To profit on revaluation:
Radha 675
Sheela 450
Meena 225 1350
2550 2550
Partner’s capital A/c
Particulars Radha Sheela Meena Particulars Radha Sheela Meena
To sheela 3375 1125 By bal c/d 15000 15000 15000
capital a/c
To bal c/d 19050 24450 16350 By radha 3375
capital a/c
By meena 1125
capital a/c
By profit on 675 450 225
revaluation
Page 17 of 57
Page 19
Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
By general 6750 4500 2250
reserve
22425 24450 17475 22425 24450 17475
Balance sheet
Liabilities Amount Assets Amount
₹ ₹
Creditors 3000 Cash in hand 1500
Bill payable 4500 Cash at bank 7500
Expense owing 3750 Debtors 15000
Capitals : Stock 12000
Radha 19050 Factory premises 24300
Meena 16350 35400 Machinery 7200
Sheela’s loan A/c 24450 Loose tools 3600
71100 71100
Working note :
1) Goodwill of form = 13,500.
Sheela’s share = .
Page 18 of 57
By general 6750 4500 2250
reserve
22425 24450 17475 22425 24450 17475
Balance sheet
Liabilities Amount Assets Amount
₹ ₹
Creditors 3000 Cash in hand 1500
Bill payable 4500 Cash at bank 7500
Expense owing 3750 Debtors 15000
Capitals : Stock 12000
Radha 19050 Factory premises 24300
Meena 16350 35400 Machinery 7200
Sheela’s loan A/c 24450 Loose tools 3600
71100 71100
Working note :
1) Goodwill of form = 13,500.
Sheela’s share = .
Page 18 of 57
Page 20
Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
Old ratio = 3:2:1
Gaining ratio will be same as old ratio, as nothing is mentioned in question.
Therefore, Gaining ratio = 3:1
Particulars Dr Amount Cr Amount
₹ ₹
Radha's capital A/c Dr 3375
Meena's capital A/c Dr 1125
To sheela's capital A/c 4500
(Being gaining partner compensating sacrificing
partner)
Page : 215 , Block Name : Numerical Question
Q7 Pankaj, Naresh and Saurabh are partners sharing profits in the ratio 3:2:1. Naresh retired
from the firm due to his illness. On that date the balance sheet of the firm was as follows:
Books of Pankaj , Naresh and Saurabh
Balance sheet as on March 31,2017
Liabilities Amount Assets Amount
₹ ₹
General reserve 12,000 Bank 7,600
Sundry creditors 15,000 Debtors 6,000
Less: provision for doubtful 5,600
debt 400
Page 19 of 57
Old ratio = 3:2:1
Gaining ratio will be same as old ratio, as nothing is mentioned in question.
Therefore, Gaining ratio = 3:1
Particulars Dr Amount Cr Amount
₹ ₹
Radha's capital A/c Dr 3375
Meena's capital A/c Dr 1125
To sheela's capital A/c 4500
(Being gaining partner compensating sacrificing
partner)
Page : 215 , Block Name : Numerical Question
Q7 Pankaj, Naresh and Saurabh are partners sharing profits in the ratio 3:2:1. Naresh retired
from the firm due to his illness. On that date the balance sheet of the firm was as follows:
Books of Pankaj , Naresh and Saurabh
Balance sheet as on March 31,2017
Liabilities Amount Assets Amount
₹ ₹
General reserve 12,000 Bank 7,600
Sundry creditors 15,000 Debtors 6,000
Less: provision for doubtful 5,600
debt 400
Page 19 of 57
Page 21
Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
Bills payable 12,000 Stock 9000
Outstanding salary 2,200
Provision for legal 6,000
damages
Capital : Furniture 41,000
Pankaj 46,000 Premises 80,000
Naresh 30,000
Saurabh 20,000 96,000
1,43,200 1,43,200
Additional information
i) Premises have appreciated by 20%,stock depreciated by 10% and provision for doubtful debts
was to be made 5% on debtors. Further , provision for legal damages is to be made for Rs.
1,200 and furniture to be brought up to Rs. 45,000.
ii) Goodwill of the firm to be valued at Rs.42,000
iii) Rs.26,000 from Naresh capital account be transferred to his loan account and balance be
paid through bank : if required, necessary loan may be obtained from bank .
iv) New profit sharing ratio of Pankaj and Saurabh is decided to be 5:1.
Give necessary ledger accounts and balance sheet of the firm after Naresh’s retirement .
Answer.
Revaluation A/c
Page 20 of 57
Bills payable 12,000 Stock 9000
Outstanding salary 2,200
Provision for legal 6,000
damages
Capital : Furniture 41,000
Pankaj 46,000 Premises 80,000
Naresh 30,000
Saurabh 20,000 96,000
1,43,200 1,43,200
Additional information
i) Premises have appreciated by 20%,stock depreciated by 10% and provision for doubtful debts
was to be made 5% on debtors. Further , provision for legal damages is to be made for Rs.
1,200 and furniture to be brought up to Rs. 45,000.
ii) Goodwill of the firm to be valued at Rs.42,000
iii) Rs.26,000 from Naresh capital account be transferred to his loan account and balance be
paid through bank : if required, necessary loan may be obtained from bank .
iv) New profit sharing ratio of Pankaj and Saurabh is decided to be 5:1.
Give necessary ledger accounts and balance sheet of the firm after Naresh’s retirement .
Answer.
Revaluation A/c
Page 20 of 57
Page 22
Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
Particulars Amount Particulars Amount
₹ ₹
To stock 900 By premises 16000
To provision for legal 1200 By provision for debtors 100
damage
To profit on revaluation: By furniture 4000
Pankaj 9000
Naresh 6000
Saurabh 3000 18000
20100 20100
Partner’s capital account
Particulars Pankaj Naresh Saurabh Particulars Pankaj Naresh Saurabh
To Naresh's 14000 By bal b/d 46000 30,000 20,000
A/c
To balance 47000 25000 By pankaj’s 14,000
c/d A/c
To naresh's 26000 By general 6000 4000 2000
A/c reserve
Page 21 of 57
Particulars Amount Particulars Amount
₹ ₹
To stock 900 By premises 16000
To provision for legal 1200 By provision for debtors 100
damage
To profit on revaluation: By furniture 4000
Pankaj 9000
Naresh 6000
Saurabh 3000 18000
20100 20100
Partner’s capital account
Particulars Pankaj Naresh Saurabh Particulars Pankaj Naresh Saurabh
To Naresh's 14000 By bal b/d 46000 30,000 20,000
A/c
To balance 47000 25000 By pankaj’s 14,000
c/d A/c
To naresh's 26000 By general 6000 4000 2000
A/c reserve
Page 21 of 57
Page 23
Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
To Loan a/c By profit on 9000 6000 3000
revaluation
To bank a/c 28000
61,000 54,000 25000 54000 25000
Balance sheet
Liabilities Amount Assets Amount
₹ ₹
To provision for legal 7200 Premises 96000
damage
Sundry creditors 15000 Stock 81000
Billo payable 12000 Debtors 6000
Outstanding salary 2200 Less: provision 300 5700
Naresh's loan A/c 26000 Furniture 45000
Capital A/c:
Pankaj: 47000
Saurabh: 25000 72000
Bank loan: 20400
Page 22 of 57
To Loan a/c By profit on 9000 6000 3000
revaluation
To bank a/c 28000
61,000 54,000 25000 54000 25000
Balance sheet
Liabilities Amount Assets Amount
₹ ₹
To provision for legal 7200 Premises 96000
damage
Sundry creditors 15000 Stock 81000
Billo payable 12000 Debtors 6000
Outstanding salary 2200 Less: provision 300 5700
Naresh's loan A/c 26000 Furniture 45000
Capital A/c:
Pankaj: 47000
Saurabh: 25000 72000
Bank loan: 20400
Page 22 of 57
Page 24
Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
154800 154800
Working note :
Goodwill of firm = 42,000
Goodwill of naresh =
Old ratio : 3:2:1
New ratio : 5:1
Gaining ratio = new ratio – old ratio
Pankaj gain =
Saurabh gain =
Therefore , Pankaj capital A/c Dr 14,000
To naresh capital A/c 14,000
Balance to be paid from bank = 28,000
Less: bank balance = 7,600
Bank loan to be taken = 28,000-7,600= 20,400
Page : 216 , Block Name : Numerical Question
Q8 Puneet, Pankaj and Pammy are partners in a business sharing profits and losses in the ratio
of 2:2:1 respectively. Their balance sheet as on March 31, 2017 was as follows:
Books of Puneet, Pankaj and Pammy
Balance sheet as on March 31,2017
Liabilities Amount (Rs) Assets Amount (Rs)
Page 23 of 57
154800 154800
Working note :
Goodwill of firm = 42,000
Goodwill of naresh =
Old ratio : 3:2:1
New ratio : 5:1
Gaining ratio = new ratio – old ratio
Pankaj gain =
Saurabh gain =
Therefore , Pankaj capital A/c Dr 14,000
To naresh capital A/c 14,000
Balance to be paid from bank = 28,000
Less: bank balance = 7,600
Bank loan to be taken = 28,000-7,600= 20,400
Page : 216 , Block Name : Numerical Question
Q8 Puneet, Pankaj and Pammy are partners in a business sharing profits and losses in the ratio
of 2:2:1 respectively. Their balance sheet as on March 31, 2017 was as follows:
Books of Puneet, Pankaj and Pammy
Balance sheet as on March 31,2017
Liabilities Amount (Rs) Assets Amount (Rs)
Page 23 of 57
Page 25
Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
Sundry creditors 1,00,000 Cash at bank 20,000
Capital account : stock 30,000
Puneet : 60,000 Sundry debtors 80,000
Pankaj : 1,00,000 Investments 70,000
Pammy : 40,000 2,00,000 Furniture 35,000
Reserve 50,000 Buildings 1,15,000
3,50,000 3,50,000
Mr. Pammy died on September 30,2017.the partnership deed provided the following :
i) The deceased partner will be entitled to his share of profit up to the date of death calculated
on the basis of previous year’s profit .
ii) He will be entitled to his share of goodwill of the firm calculated on the basis of 3 years’
purchase of average of last 4 years’ profit . the profit for the last four financial years are given
below:
for 2013-14: Rs. 80,000; for 2014-15: Rs.50,000; for 2015–16, Rs. 40,000; for 2016–17, Rs.
30,000.
The drawings of the deceased partner up to the date of death amounted to Rs. 10,000. Interest
on capital is to be allowed at 12% per annum. Surviving partners agreed that Rs. 15,400 should
be paid to the executors immediately and the balance in four equal yearly instalments with
interest at 12% p.a. on outstanding balance.
Show Mr. Pammy’s Capital account, his Executor’s account till the settlement of the amount
due.
Answer.
Mr. Pammy’s capital A/c
Page 24 of 57
Sundry creditors 1,00,000 Cash at bank 20,000
Capital account : stock 30,000
Puneet : 60,000 Sundry debtors 80,000
Pankaj : 1,00,000 Investments 70,000
Pammy : 40,000 2,00,000 Furniture 35,000
Reserve 50,000 Buildings 1,15,000
3,50,000 3,50,000
Mr. Pammy died on September 30,2017.the partnership deed provided the following :
i) The deceased partner will be entitled to his share of profit up to the date of death calculated
on the basis of previous year’s profit .
ii) He will be entitled to his share of goodwill of the firm calculated on the basis of 3 years’
purchase of average of last 4 years’ profit . the profit for the last four financial years are given
below:
for 2013-14: Rs. 80,000; for 2014-15: Rs.50,000; for 2015–16, Rs. 40,000; for 2016–17, Rs.
30,000.
The drawings of the deceased partner up to the date of death amounted to Rs. 10,000. Interest
on capital is to be allowed at 12% per annum. Surviving partners agreed that Rs. 15,400 should
be paid to the executors immediately and the balance in four equal yearly instalments with
interest at 12% p.a. on outstanding balance.
Show Mr. Pammy’s Capital account, his Executor’s account till the settlement of the amount
due.
Answer.
Mr. Pammy’s capital A/c
Page 24 of 57
Page 26
Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
Particulars Amount Particulars Amount
₹ ₹
To drawings 10,000 By balance b/d 40,000
To pammy’s executor A/c 75,400 By profit and loss suspense 3,000
A/c
By Pankaj capital A/c 15,000
By Puneet capital A/c 15,000
By Interest on capital 2,400
By Reserves 10,000
85400 85400
Working note :
i) Pammy died on September 30,2017.
Therefore No. of months from year ending till his death = 6 months .
Profit of last year = 30,000
Therefore pammy’s share of profit =
ii) Average profit of last 4 years =
=50,000
Goodwill =
Page 25 of 57
Particulars Amount Particulars Amount
₹ ₹
To drawings 10,000 By balance b/d 40,000
To pammy’s executor A/c 75,400 By profit and loss suspense 3,000
A/c
By Pankaj capital A/c 15,000
By Puneet capital A/c 15,000
By Interest on capital 2,400
By Reserves 10,000
85400 85400
Working note :
i) Pammy died on September 30,2017.
Therefore No. of months from year ending till his death = 6 months .
Profit of last year = 30,000
Therefore pammy’s share of profit =
ii) Average profit of last 4 years =
=50,000
Goodwill =
Page 25 of 57
Page 27
Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
Pammy’s share of goodwill for 6 months =
Old ratio = 2:2:1
Gaining ratio = 2:2 ( since nothing is mentioned in question, old ratio as taken as gaining ratio)
Interest on capital @12% =
Reserves = 50,000
Therefore, pammy’s share of reserve =
Instalment =
Pammy’s executor A/c
Date Particulars Amount Date Particulars Amount
₹ ₹
2017-18 2017-18
Sep 30 To bank A/c 15400 Sep 30 By Pammy 75400
capital A/c
Mar 31 To bal c/d 63600 Mar 31 By interest 3600
79000 79000
2018-19 2018-19
Ap 1 By bal b/d 63600
Sep 30 To bank 22200 Sep 30 By interest 3600
Page 26 of 57
Pammy’s share of goodwill for 6 months =
Old ratio = 2:2:1
Gaining ratio = 2:2 ( since nothing is mentioned in question, old ratio as taken as gaining ratio)
Interest on capital @12% =
Reserves = 50,000
Therefore, pammy’s share of reserve =
Instalment =
Pammy’s executor A/c
Date Particulars Amount Date Particulars Amount
₹ ₹
2017-18 2017-18
Sep 30 To bank A/c 15400 Sep 30 By Pammy 75400
capital A/c
Mar 31 To bal c/d 63600 Mar 31 By interest 3600
79000 79000
2018-19 2018-19
Ap 1 By bal b/d 63600
Sep 30 To bank 22200 Sep 30 By interest 3600
Page 26 of 57
Page 28
Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
Mar 31 To balance c/d 47700 Mar 31 By interest 2700
(@12Y.on
45000)
69900 69900
2019-20 2019-20 By bal b/d 47700
Ap 1
Sep 30 To bank 20400 Sep 30 By interest 2700
Mar 31 To bal c/d 31800 Mar 31 By interest 1800
(@12Y.on 30000
for 6 months)
52200 52200
2020-21 2020-21
Ap 1 By bal b/d 31800
Sep 30 To bank account 18600 Sep 30 By interest 1800
Mar 31 To bal c/d 15900 Mar 31 By interest 900
(@12Y.on 15000
for 6 months)
34500 34500
2021-22 2021-22
Ap 1 By bal b/d 15900
Page 27 of 57
Mar 31 To balance c/d 47700 Mar 31 By interest 2700
(@12Y.on
45000)
69900 69900
2019-20 2019-20 By bal b/d 47700
Ap 1
Sep 30 To bank 20400 Sep 30 By interest 2700
Mar 31 To bal c/d 31800 Mar 31 By interest 1800
(@12Y.on 30000
for 6 months)
52200 52200
2020-21 2020-21
Ap 1 By bal b/d 31800
Sep 30 To bank account 18600 Sep 30 By interest 1800
Mar 31 To bal c/d 15900 Mar 31 By interest 900
(@12Y.on 15000
for 6 months)
34500 34500
2021-22 2021-22
Ap 1 By bal b/d 15900
Page 27 of 57
Page 29
Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
Sep 30 To bank account 16800 Sep 30 By interest 900
16800 16800
Page : 217 , Block Name : Numerical questions.
Q9 Following is the Balance Sheet of Prateek, Rockey and Kushal as on March 31, 2017.
Books of Prateek, Rockey and Kushal
Balance Sheet as on March 31, 2017
Liabilities Amount Assets Amount
(Rs.) (Rs.)
Sundry creditors 16,000 Bills receivable 16,000
General reserve 16,000 Furniture 22,600
Capital accounts : Stock 20,400
Prateek : 30,000 Sundry debtors 22,000
Rockey : 20,000 Cash at hands 18,000
Kushal : 20,000 70,000 Cash in hand 3000
1,02,000 1,02,000
Rockey died on June 30, 2017. Under the terms of the partnership deed, the executors of a
deceased partner were entitled to:
Page 28 of 57
Sep 30 To bank account 16800 Sep 30 By interest 900
16800 16800
Page : 217 , Block Name : Numerical questions.
Q9 Following is the Balance Sheet of Prateek, Rockey and Kushal as on March 31, 2017.
Books of Prateek, Rockey and Kushal
Balance Sheet as on March 31, 2017
Liabilities Amount Assets Amount
(Rs.) (Rs.)
Sundry creditors 16,000 Bills receivable 16,000
General reserve 16,000 Furniture 22,600
Capital accounts : Stock 20,400
Prateek : 30,000 Sundry debtors 22,000
Rockey : 20,000 Cash at hands 18,000
Kushal : 20,000 70,000 Cash in hand 3000
1,02,000 1,02,000
Rockey died on June 30, 2017. Under the terms of the partnership deed, the executors of a
deceased partner were entitled to:
Page 28 of 57
Page 30
Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
a) Amount standing to the credit of the Partner’s Capital account.
b) Interest on capital at 5% per annum.
c) Share of goodwill on the basis of twice the average of the past three years’ profit and
d) Share of profit from the closing date of the last financial year to the date of death on the basis
of last year’s profit. Profits for the year ending on March 31, 2015, March 31, 2016 and March
31, 2017 were Rs. 12,000, Rs. 16,000 and Rs. 14,000 respectively. Profits were shared in the
ratio of capitals. Pass the necessary journal entries and draw up Rockey’s capital account to be
rendered to his executor.
Answer. Working notes :
No. of months till june 30 = 3 months .
i) Interest on capital at @5% for 3 months =
ii) Average profit of last 3 years =
therefore, goodwill =
therefore, rockey's share of goodwill =
Old ratio = 3:2:2
Gaining ratio = 3:2 (old ratio will be taken as gaining ratio)
iii) Profit of previous year = 14000
Rockey’s share of profit for 3 months =
Journal entries
Particulars Dr. Amount Cr. Amount
₹ ₹
i) Interest on capital A/c Dr 250
Page 29 of 57
a) Amount standing to the credit of the Partner’s Capital account.
b) Interest on capital at 5% per annum.
c) Share of goodwill on the basis of twice the average of the past three years’ profit and
d) Share of profit from the closing date of the last financial year to the date of death on the basis
of last year’s profit. Profits for the year ending on March 31, 2015, March 31, 2016 and March
31, 2017 were Rs. 12,000, Rs. 16,000 and Rs. 14,000 respectively. Profits were shared in the
ratio of capitals. Pass the necessary journal entries and draw up Rockey’s capital account to be
rendered to his executor.
Answer. Working notes :
No. of months till june 30 = 3 months .
i) Interest on capital at @5% for 3 months =
ii) Average profit of last 3 years =
therefore, goodwill =
therefore, rockey's share of goodwill =
Old ratio = 3:2:2
Gaining ratio = 3:2 (old ratio will be taken as gaining ratio)
iii) Profit of previous year = 14000
Rockey’s share of profit for 3 months =
Journal entries
Particulars Dr. Amount Cr. Amount
₹ ₹
i) Interest on capital A/c Dr 250
Page 29 of 57
Page 31
Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
To rockey’s capital A/c 250
(Being interest on capital received for 3 months )
ii) Prateek's capital A/c Dr 4800
Kushal's capital A/c Dr 3200
To rockey's capital A/c 8000
(Being gaining partner compensating for gain of
share)
iii) Profit and loss suspense A/c Dr 1000
To rockey's capital A/c 1000
(being profit transferred to partners capital account)
v) Rockey’s capital A/c Dr 33821
To rockey’s executorA/c 33821
(being amount transferred to executor a/c)
Rockey’s capital a/c
Particulars Amount Particulars Amount
₹ ₹
To Rockey’s executor 33821 By balance b/d 20,000
A/c
By interest on capital 250
By prateek's capital 4800
Page 30 of 57
To rockey’s capital A/c 250
(Being interest on capital received for 3 months )
ii) Prateek's capital A/c Dr 4800
Kushal's capital A/c Dr 3200
To rockey's capital A/c 8000
(Being gaining partner compensating for gain of
share)
iii) Profit and loss suspense A/c Dr 1000
To rockey's capital A/c 1000
(being profit transferred to partners capital account)
v) Rockey’s capital A/c Dr 33821
To rockey’s executorA/c 33821
(being amount transferred to executor a/c)
Rockey’s capital a/c
Particulars Amount Particulars Amount
₹ ₹
To Rockey’s executor 33821 By balance b/d 20,000
A/c
By interest on capital 250
By prateek's capital 4800
Page 30 of 57
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Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
By kushal's capital A/c 3200
By p/l suspense A/c 1000
By general reserve 4571
33821 33821
Page : 217 , Block Name : Numerical Questions
Q10 Narang, Suri and Bajaj are partners in a firm sharing profits and losses in proportion of
and respectively. The Balance Sheet on April 1, 2015 was as follows:
Books of Suri and Bajaj
Balance Sheet as on April 1, 2015
Liabilities Amount Assets Amount
₹ ₹
Bills payable 12,000 Freehold premises 40,000
Sundry creditors 18,000 Machinery 30,000
Reserves 12,000 Furniture 12,000
Capital account: Stock 22,000
Narang's 30,000 Sundry debtors 20000
Page 31 of 57
By kushal's capital A/c 3200
By p/l suspense A/c 1000
By general reserve 4571
33821 33821
Page : 217 , Block Name : Numerical Questions
Q10 Narang, Suri and Bajaj are partners in a firm sharing profits and losses in proportion of
and respectively. The Balance Sheet on April 1, 2015 was as follows:
Books of Suri and Bajaj
Balance Sheet as on April 1, 2015
Liabilities Amount Assets Amount
₹ ₹
Bills payable 12,000 Freehold premises 40,000
Sundry creditors 18,000 Machinery 30,000
Reserves 12,000 Furniture 12,000
Capital account: Stock 22,000
Narang's 30,000 Sundry debtors 20000
Page 31 of 57
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Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
Suri's. 30,000 Less:reserve for bad debt 19,000
1000
Bajaj's 28,000 88,000 Cash 7,000
1,30,000 1,30,000
Bajaj retires from the business and the partners agree to the following:
a) Freehold premises and stock are to be appreciated by 20% and 15% respectively.
b) Machinery and furniture are to be depreciated by 10% and 7% respectively.
c) Bad Debts reserve is to be increased to Rs.1,500.
d) Goodwill is valued at Rs. 21,000 on Bajaj’s retirement.
e) The continuing partners have decided to adjust their capitals in their new profit sharing ratio
after retirement of Bajaj. Surplus/deficit, if any, in their capital accounts will be adjusted through
current accounts. Prepare necessary ledger accounts and draw the Balance Sheet of the
reconstituted firm.
Answer.
Revaluation A/c
Particulars Amount Particulars Amount
₹ ₹
To machinery 3,000 By freehold premises 8000
To furniture 840 By stock 3300
To bad debts 500
To profit on revaluation:
Page 32 of 57
Suri's. 30,000 Less:reserve for bad debt 19,000
1000
Bajaj's 28,000 88,000 Cash 7,000
1,30,000 1,30,000
Bajaj retires from the business and the partners agree to the following:
a) Freehold premises and stock are to be appreciated by 20% and 15% respectively.
b) Machinery and furniture are to be depreciated by 10% and 7% respectively.
c) Bad Debts reserve is to be increased to Rs.1,500.
d) Goodwill is valued at Rs. 21,000 on Bajaj’s retirement.
e) The continuing partners have decided to adjust their capitals in their new profit sharing ratio
after retirement of Bajaj. Surplus/deficit, if any, in their capital accounts will be adjusted through
current accounts. Prepare necessary ledger accounts and draw the Balance Sheet of the
reconstituted firm.
Answer.
Revaluation A/c
Particulars Amount Particulars Amount
₹ ₹
To machinery 3,000 By freehold premises 8000
To furniture 840 By stock 3300
To bad debts 500
To profit on revaluation:
Page 32 of 57
Page 34
Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
Narang: 3480
Suri: 1160
Bajaj: 2320 6960
11300 11300
Partner’s capital a/c
Particulars Narang Suri Bajaj Particulars Narang Suri Bajaj
To bajaj a/c 5250 1750 By bal b/d 30,000 30,000 28,000
To bajaj loan 41320 By narang 5250
a/c
To bal c/d 34230 31410 By suri a/c 1750
By profit on 3480 1160 2320
revaluation
By reserves 6000 2000 4000
41000
39480 33160 41320 39480 33160 41320
To suri 15000 By bal b/d 34230 31410
current
Page 33 of 57
Narang: 3480
Suri: 1160
Bajaj: 2320 6960
11300 11300
Partner’s capital a/c
Particulars Narang Suri Bajaj Particulars Narang Suri Bajaj
To bajaj a/c 5250 1750 By bal b/d 30,000 30,000 28,000
To bajaj loan 41320 By narang 5250
a/c
To bal c/d 34230 31410 By suri a/c 1750
By profit on 3480 1160 2320
revaluation
By reserves 6000 2000 4000
41000
39480 33160 41320 39480 33160 41320
To suri 15000 By bal b/d 34230 31410
current
Page 33 of 57
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Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
To bal c/d 49230 16410 By narang 15000
capital a/c
49230 31410 49230 31410
Balance sheet
Liabilities Amount Assets Amount
₹ ₹
Bills payable 12000 Freehold premises 48000
Sundry creditors 18000 Stock 25300
Bajaj loan a/c 41320 Machinery 27000
Capital account: Furniture 11160
Narang: 49230 Debtors 20000
Suri: 16410 65640 Less : bad debts 1500 18500
Current account: suri 15000 Narang's current a/c 15000
151960 151960
Working note :
1) Goodwill of the firm = 21,000
Bajaj's share of goodwill :
Page 34 of 57
To bal c/d 49230 16410 By narang 15000
capital a/c
49230 31410 49230 31410
Balance sheet
Liabilities Amount Assets Amount
₹ ₹
Bills payable 12000 Freehold premises 48000
Sundry creditors 18000 Stock 25300
Bajaj loan a/c 41320 Machinery 27000
Capital account: Furniture 11160
Narang: 49230 Debtors 20000
Suri: 16410 65640 Less : bad debts 1500 18500
Current account: suri 15000 Narang's current a/c 15000
151960 151960
Working note :
1) Goodwill of the firm = 21,000
Bajaj's share of goodwill :
Page 34 of 57
Page 36
Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
Old ratio = 3:1:2
Gaining ratio = 3:1
Narang's capital A/c Dr 5250
Suri's capital A/c Dr 1750
To Bajaj's capital A/c 7000
(goodwill compensated by gaining partner)
2) Adjusted capital of narang = 34230
Adjusted capital of suri = 31410
Total capital of firm
Narang’s new capital =
Suri's new capital =
New ratio:
Narang = =
Suri = =
Therefore new ratio = 18:6 = 3:1
Page : 218 , Block Name : Numerical question
Q11 The Balance Sheet of Rajesh, Pramod and Nishant who were sharing profits in proportion
to their capitals stood as on March 31, 2015:
Books of Rajesh, Pramod and Nishant
Balance Sheet as on March 31, 2015
Page 35 of 57
Old ratio = 3:1:2
Gaining ratio = 3:1
Narang's capital A/c Dr 5250
Suri's capital A/c Dr 1750
To Bajaj's capital A/c 7000
(goodwill compensated by gaining partner)
2) Adjusted capital of narang = 34230
Adjusted capital of suri = 31410
Total capital of firm
Narang’s new capital =
Suri's new capital =
New ratio:
Narang = =
Suri = =
Therefore new ratio = 18:6 = 3:1
Page : 218 , Block Name : Numerical question
Q11 The Balance Sheet of Rajesh, Pramod and Nishant who were sharing profits in proportion
to their capitals stood as on March 31, 2015:
Books of Rajesh, Pramod and Nishant
Balance Sheet as on March 31, 2015
Page 35 of 57
Page 37
Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
Liabilities Amount (Rs.) Assets Amount (Rs.)
Bills payable 6,250 Factory building 12,000
Sundry creditors 10,000 Debtors 10,500
Reserve funds 2,750 Less : reserve 500 10,000
Capital accounts: Bills receivable 7,000
Rajesh 20,000 Stock 15,500
Pramod 15,000 Plant and machinery 11,500
Nishant 15,000 50,000 Bank balance 13000
69000 69000
Pramod retired on the date of Balance Sheet and the following adjustments were made:
a) Stock was valued at 10% less than the book value.
b) Factory buildings were appreciated by 12%.
c) Reserve for doubtful debts be created up to 5%.
d) Reserve for legal charges to be made at Rs. 265.
e) The goodwill of the firm be fixed at Rs. 10,000.
f) The capital of the new firm be fixed at Rs. 30,000. The continuing partners decide to keep
their capitals in the new profit sharing ratio of 3 : 2.
Pass journal entries and prepare the balance sheet of the reconstituted firm after transferring
the balance in Pramod’s Capital account to his loan account.
Page 36 of 57
Liabilities Amount (Rs.) Assets Amount (Rs.)
Bills payable 6,250 Factory building 12,000
Sundry creditors 10,000 Debtors 10,500
Reserve funds 2,750 Less : reserve 500 10,000
Capital accounts: Bills receivable 7,000
Rajesh 20,000 Stock 15,500
Pramod 15,000 Plant and machinery 11,500
Nishant 15,000 50,000 Bank balance 13000
69000 69000
Pramod retired on the date of Balance Sheet and the following adjustments were made:
a) Stock was valued at 10% less than the book value.
b) Factory buildings were appreciated by 12%.
c) Reserve for doubtful debts be created up to 5%.
d) Reserve for legal charges to be made at Rs. 265.
e) The goodwill of the firm be fixed at Rs. 10,000.
f) The capital of the new firm be fixed at Rs. 30,000. The continuing partners decide to keep
their capitals in the new profit sharing ratio of 3 : 2.
Pass journal entries and prepare the balance sheet of the reconstituted firm after transferring
the balance in Pramod’s Capital account to his loan account.
Page 36 of 57
Page 38
Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
Answer.
Journal entries
Particulars Dr. Amount Cr. Amount
₹ ₹
i) Revaluation A/c Dr 1840
To stock A/c 1550
To reserve for doubtful debt 25
To reserve for legal charges 265
(being decrease in value of assets and increase in
liability)
ii) Factory building A/c Dr 1440
To Revaluation A/c 1440
(Being increase in value fassel)
iii) Rajesh's capital A/c Dr 160
Pramod's capital A/c Dr 120
Nishant's capital A/c Dr 120
To Revaluation A/c 400
(being loss on revaluation)
iv) General reserve A/c Dr 2750
To Rajesh's capital A/c 1100
To Pramod's capital A/c 825
To Nishant's capital A/c 825
Page 37 of 57
Answer.
Journal entries
Particulars Dr. Amount Cr. Amount
₹ ₹
i) Revaluation A/c Dr 1840
To stock A/c 1550
To reserve for doubtful debt 25
To reserve for legal charges 265
(being decrease in value of assets and increase in
liability)
ii) Factory building A/c Dr 1440
To Revaluation A/c 1440
(Being increase in value fassel)
iii) Rajesh's capital A/c Dr 160
Pramod's capital A/c Dr 120
Nishant's capital A/c Dr 120
To Revaluation A/c 400
(being loss on revaluation)
iv) General reserve A/c Dr 2750
To Rajesh's capital A/c 1100
To Pramod's capital A/c 825
To Nishant's capital A/c 825
Page 37 of 57
Page 39
Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
(Being general reserve distributed to old partners)
v) Rajesh's capital A/c Dr 2000
Nishant's capital A/c Dr 1000
To Pramod's capital A/c 3000
(being gaining partner compensating retiring partner
in ratio 2:1)
vi) Pramod's capital A/c Dr 18705
To parmod loan A/c 18705
(being balance of parmod transferred to loan a/c)
vii) Rajesh's capital A/c Dr 940
Nishant's capital A/c Dr 2705
To bank A/c 3645
(being excess capital withdrawn)
Revaluation a/c
Particulars Amount Particulars Amount
₹ ₹
To stock 1550 By factory building 1440
To reserve for doubtful 25 By loan on devaluation:
debts
To reserve for legal charge 265 Rajesh 160
Page 38 of 57
(Being general reserve distributed to old partners)
v) Rajesh's capital A/c Dr 2000
Nishant's capital A/c Dr 1000
To Pramod's capital A/c 3000
(being gaining partner compensating retiring partner
in ratio 2:1)
vi) Pramod's capital A/c Dr 18705
To parmod loan A/c 18705
(being balance of parmod transferred to loan a/c)
vii) Rajesh's capital A/c Dr 940
Nishant's capital A/c Dr 2705
To bank A/c 3645
(being excess capital withdrawn)
Revaluation a/c
Particulars Amount Particulars Amount
₹ ₹
To stock 1550 By factory building 1440
To reserve for doubtful 25 By loan on devaluation:
debts
To reserve for legal charge 265 Rajesh 160
Page 38 of 57
Page 40
Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
Pramod 120
Nishant 120 400
1840 1840
Partner’s capital a/c
Particulars Rajes Pramod Nishant Particulars Rajesh Pramod Nishant
h
To Pramod 2000 1000 By bal b/d 20,000 15,000 15000
To loss on 160 120 By reserve 1100 825 825
revaluation
To bank a/c 940 120 By Rajesh's 2000
a/c
To bal c/d 18000 2705 By 1000
nishant's
a/c
To 18705 12000
Pramod's
loan a/c
21100 18825 15825 21100 18825 15825
Balance sheet
liabilities Amount Assets Amount
Page 39 of 57
Pramod 120
Nishant 120 400
1840 1840
Partner’s capital a/c
Particulars Rajes Pramod Nishant Particulars Rajesh Pramod Nishant
h
To Pramod 2000 1000 By bal b/d 20,000 15,000 15000
To loss on 160 120 By reserve 1100 825 825
revaluation
To bank a/c 940 120 By Rajesh's 2000
a/c
To bal c/d 18000 2705 By 1000
nishant's
a/c
To 18705 12000
Pramod's
loan a/c
21100 18825 15825 21100 18825 15825
Balance sheet
liabilities Amount Assets Amount
Page 39 of 57
Page 41
Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
₹ ₹
Reserve for legal charge 265 Stock (15500-1550) 13950
Bills payable 6250 Factory (12000+1440) 13440
Sundry creditors 10,000 Debtors 10500
Capital a/c Less: reserve 525 9975
Rajesh : 18000 Bills receivable 7000
Nishant: 12000 30,000 Plant machinery 11,500
Pramod loan a/c 18705 Bank 9355
65220 65220
Working note :
1) Old ratio = 4:3:3
New ratio = 3:2
2) Goodwill of firm = 10,000
Pramod share =
Gain of rajesh = = =
Gain of nishant = = =
Therefore , gaining ratio = 10:5=2:1
Page 40 of 57
₹ ₹
Reserve for legal charge 265 Stock (15500-1550) 13950
Bills payable 6250 Factory (12000+1440) 13440
Sundry creditors 10,000 Debtors 10500
Capital a/c Less: reserve 525 9975
Rajesh : 18000 Bills receivable 7000
Nishant: 12000 30,000 Plant machinery 11,500
Pramod loan a/c 18705 Bank 9355
65220 65220
Working note :
1) Old ratio = 4:3:3
New ratio = 3:2
2) Goodwill of firm = 10,000
Pramod share =
Gain of rajesh = = =
Gain of nishant = = =
Therefore , gaining ratio = 10:5=2:1
Page 40 of 57
Page 42
Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
3) Total capital of firm = 30,000
Capital of rajesh = = 18,000
Capital of nishant = = 12,000
4) Bank balance = 1,30,000
Less: nishant capital = 2705
Less: rajesh capital = 940
=19355
Page : 219 , Block Name : Numerical Questions
Q12 Following is the Balance Sheet of Jain, Gupta and Malik as on March 31, 2016.
Books of Jain, Gupta and Malik
Balance Sheet as on March 31, 2016
Liabilities Amount (Rs.) Assets Amount(Rs.)
Sundry creditors 19,800 Land and building 26,000
Telephone bills 300 Bond 14,370
outstanding
Accounts payable 8,950 Cash 5500
Accumulatory profits 16,750 Bills receivable 23,450
Capitals: Sundry debtors 26,700
Jain : 40,000 Stock 18,100
Page 41 of 57
3) Total capital of firm = 30,000
Capital of rajesh = = 18,000
Capital of nishant = = 12,000
4) Bank balance = 1,30,000
Less: nishant capital = 2705
Less: rajesh capital = 940
=19355
Page : 219 , Block Name : Numerical Questions
Q12 Following is the Balance Sheet of Jain, Gupta and Malik as on March 31, 2016.
Books of Jain, Gupta and Malik
Balance Sheet as on March 31, 2016
Liabilities Amount (Rs.) Assets Amount(Rs.)
Sundry creditors 19,800 Land and building 26,000
Telephone bills 300 Bond 14,370
outstanding
Accounts payable 8,950 Cash 5500
Accumulatory profits 16,750 Bills receivable 23,450
Capitals: Sundry debtors 26,700
Jain : 40,000 Stock 18,100
Page 41 of 57
Page 43
Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
Gupta : 60,000 Office furniture 18,250
Malik : 20,000 1,20,000 Plants and machinery 20,230
Computers 13,200
1,65,800 1,65,800
The partners have been sharing profits in the ratio of 5:3:2. Malik decides to retire from business
on April 1, 2016 and his share in the business is to be calculated as per the following terms of
revaluation of assets and liabilities : Stock, Rs.20,000; Office furniture, Rs.14,250; Plant and
Machinery Rs.23,530; Land and Building Rs.20,000.
A provision of Rs.1,700 to be created for doubtful debts. The goodwill of the firm is valued at
Rs.9,000.
The continuing partners agreed to pay Rs.16,500 as cash on retirement of Malik, to be
contributed by continuing partners in the ratio of 3:2. The balance in the capital account of Malik
will be treated as loan.
Prepare Revaluation account, capital accounts, and Balance Sheet of the reconstituted firm.
Answer .
Revaluation A/c
Particulars Amount Particulars Amount
₹ ₹
To furniture 4000 By stock 1900
To land and building 6000 By plant and machinery 3300
To provision for debt 1700 By loss on revaluation:
Page 42 of 57
Gupta : 60,000 Office furniture 18,250
Malik : 20,000 1,20,000 Plants and machinery 20,230
Computers 13,200
1,65,800 1,65,800
The partners have been sharing profits in the ratio of 5:3:2. Malik decides to retire from business
on April 1, 2016 and his share in the business is to be calculated as per the following terms of
revaluation of assets and liabilities : Stock, Rs.20,000; Office furniture, Rs.14,250; Plant and
Machinery Rs.23,530; Land and Building Rs.20,000.
A provision of Rs.1,700 to be created for doubtful debts. The goodwill of the firm is valued at
Rs.9,000.
The continuing partners agreed to pay Rs.16,500 as cash on retirement of Malik, to be
contributed by continuing partners in the ratio of 3:2. The balance in the capital account of Malik
will be treated as loan.
Prepare Revaluation account, capital accounts, and Balance Sheet of the reconstituted firm.
Answer .
Revaluation A/c
Particulars Amount Particulars Amount
₹ ₹
To furniture 4000 By stock 1900
To land and building 6000 By plant and machinery 3300
To provision for debt 1700 By loss on revaluation:
Page 42 of 57
Page 44
Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
Jain : 3250
Gupta : 1950
Malik : 1300 6500
11700 11700
Partner’s capital a/c
Particulars Jain Gupta Malik Particulars Jain Gupta Malik
To loss on 3250 1950 1300 By bal b/d 40000 60000 20000
revaluation
To malik 1125 675 By 8375 5025 3350
accumulated
profits
To cash 16500 By jain a/c 1125
To malik 7350 Bygupta a/c 675
loan
To bal c/d 53900 69000 By cash 9900 6600
58275 71625 25150 58275 71625 25150
Balance sheet
Page 43 of 57
Jain : 3250
Gupta : 1950
Malik : 1300 6500
11700 11700
Partner’s capital a/c
Particulars Jain Gupta Malik Particulars Jain Gupta Malik
To loss on 3250 1950 1300 By bal b/d 40000 60000 20000
revaluation
To malik 1125 675 By 8375 5025 3350
accumulated
profits
To cash 16500 By jain a/c 1125
To malik 7350 Bygupta a/c 675
loan
To bal c/d 53900 69000 By cash 9900 6600
58275 71625 25150 58275 71625 25150
Balance sheet
Page 43 of 57
Page 45
Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
Liabilities Amount Assets Amount
₹ ₹
Sundry creditors 19800 Stock 20,000
Telephone bills o/s 300 Office Furniture 14250
Accounts payable 8950 Plants and machinery 23530
Capital account: Land and building 20000
Jain : 53900 122900 Debtors 26700
Gupta : 69000 Less : provision 1700 25000
Malik loan a/c 7350 Bonds 14370
Bills receivable 23450
Computers 13200
Cash 5500
159300 159300
Working note :
i) Old ratio = 5:3:2
ii) Goodwill of firm = 9,000
therefore, malik share of goodwill =
Page 44 of 57
Liabilities Amount Assets Amount
₹ ₹
Sundry creditors 19800 Stock 20,000
Telephone bills o/s 300 Office Furniture 14250
Accounts payable 8950 Plants and machinery 23530
Capital account: Land and building 20000
Jain : 53900 122900 Debtors 26700
Gupta : 69000 Less : provision 1700 25000
Malik loan a/c 7350 Bonds 14370
Bills receivable 23450
Computers 13200
Cash 5500
159300 159300
Working note :
i) Old ratio = 5:3:2
ii) Goodwill of firm = 9,000
therefore, malik share of goodwill =
Page 44 of 57
Page 46
Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
gaining ratio will be same as old ratio i.e 5:3 as nothing is mentioned
Jain capital A/c Dr 1125
Gupta capital A/c Dr 675
To malik 1800
iii) Amount to pay malik in cash = 16500
therefore, by jain =
by gupta =
iv) Cash balance = 5500
Page : 219 , Block Name : Numerical Questions.
Q13 Arti, Bharti and Seema are partners sharing profits in the proportion of 3:2:1 and their
Balance Sheet as on March 31, 2016 stood as follows :
Books of Arti, Bharti and Seema
Balance Sheet as on March 31, 2016
Liabilities Amount (Rs.) Assets Amount (Rs.)
Bills payable 12,000 Buildings 21,000
Creditors 14,000 Cash in hand 12,000
General reserve 12,000 Bank 13,700
Capital : Debtors 12,000
Arti 20,000 Bills receivable 4,300
Bharti 12,000 Stock 1,750
Page 45 of 57
gaining ratio will be same as old ratio i.e 5:3 as nothing is mentioned
Jain capital A/c Dr 1125
Gupta capital A/c Dr 675
To malik 1800
iii) Amount to pay malik in cash = 16500
therefore, by jain =
by gupta =
iv) Cash balance = 5500
Page : 219 , Block Name : Numerical Questions.
Q13 Arti, Bharti and Seema are partners sharing profits in the proportion of 3:2:1 and their
Balance Sheet as on March 31, 2016 stood as follows :
Books of Arti, Bharti and Seema
Balance Sheet as on March 31, 2016
Liabilities Amount (Rs.) Assets Amount (Rs.)
Bills payable 12,000 Buildings 21,000
Creditors 14,000 Cash in hand 12,000
General reserve 12,000 Bank 13,700
Capital : Debtors 12,000
Arti 20,000 Bills receivable 4,300
Bharti 12,000 Stock 1,750
Page 45 of 57
Page 47
Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
Seema 8,000 40,000 Investment 13,250
78,000 78,000
Bharti died on June 12, 2016 and according to the deed of the said partnership, her executors
are entitled to be paid as under :
(a) The capital to her credit at the time of her death and interest thereon @ 10% per annum.
(b) Her proportionate share of reserve fund.
(c) Her share of profits for the intervening period will be based on the sales during that period,
which were calculated as Rs.1,00,000. The rate of profit during past three years had been 10%
on sales.
(d) Goodwill according to her share of profit to be calculated by taking twice the amount of the
average profit of the last three years less 20%. The profits of the previous years were :
2013 – Rs.8,200
2014 – Rs.9,000
2015 – Rs.9,800
The investments were sold for Rs.16,200 and her executors were paid out. Pass the necessary
journal entries and write the account of the executors of Bharti.
Answer. Working note :
1) Number of days till death from last financial years= 73 days .
2) Interest on capital of bharti for 73 days @10 Y .=
3) Bharti share of reserve =
4) Profit = 10% on sales
Page 46 of 57
Seema 8,000 40,000 Investment 13,250
78,000 78,000
Bharti died on June 12, 2016 and according to the deed of the said partnership, her executors
are entitled to be paid as under :
(a) The capital to her credit at the time of her death and interest thereon @ 10% per annum.
(b) Her proportionate share of reserve fund.
(c) Her share of profits for the intervening period will be based on the sales during that period,
which were calculated as Rs.1,00,000. The rate of profit during past three years had been 10%
on sales.
(d) Goodwill according to her share of profit to be calculated by taking twice the amount of the
average profit of the last three years less 20%. The profits of the previous years were :
2013 – Rs.8,200
2014 – Rs.9,000
2015 – Rs.9,800
The investments were sold for Rs.16,200 and her executors were paid out. Pass the necessary
journal entries and write the account of the executors of Bharti.
Answer. Working note :
1) Number of days till death from last financial years= 73 days .
2) Interest on capital of bharti for 73 days @10 Y .=
3) Bharti share of reserve =
4) Profit = 10% on sales
Page 46 of 57
Page 48
Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
5) Average profit of last 3 years = = = 9000
Goodwill =
Bharti’s share of goodwill =
Old ratio will only be the gaining ratio as nothing is mentioned as nothing is mentioned in
question
Therefore, gaining ratio = 3:1
Therefore,
Particulars L/F Dr Amount ₹ Cr Amount ₹
Arti capital A/c Dr 3600
Seema capital A/c Dr 1200
To bharti capital A/c 4800
Journal entries
Particulars Dr. amount ₹ Cr. Amount ₹
i) Interest on capital A/c Dr 240
To bharti capital A/c 240
(being interest on capital given)
ii) Reserves A/c Dr 4000
To bharti capital A/c 4000
(being reserves transferred to bharti capital a/c)
iii) P/L suspense A/c Dr 3333
To bharti capital A/c 3333
Page 47 of 57
5) Average profit of last 3 years = = = 9000
Goodwill =
Bharti’s share of goodwill =
Old ratio will only be the gaining ratio as nothing is mentioned as nothing is mentioned in
question
Therefore, gaining ratio = 3:1
Therefore,
Particulars L/F Dr Amount ₹ Cr Amount ₹
Arti capital A/c Dr 3600
Seema capital A/c Dr 1200
To bharti capital A/c 4800
Journal entries
Particulars Dr. amount ₹ Cr. Amount ₹
i) Interest on capital A/c Dr 240
To bharti capital A/c 240
(being interest on capital given)
ii) Reserves A/c Dr 4000
To bharti capital A/c 4000
(being reserves transferred to bharti capital a/c)
iii) P/L suspense A/c Dr 3333
To bharti capital A/c 3333
Page 47 of 57
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Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
(being his share of profit transferred)
iv) Arti capital A/c Dr 3600
Seema capital A/c Dr 1200
To bharti capital A/c 4800
(being gaining partner compensating sacrificing
partner)
v) Bank A/c Dr 16200
To investment A/c 13250
To profit on sale of investment 2950
(being investment sold)
vi) Bharti capital A/c Dr 24373
To bharti’s executor A/c 24373
(being amount transferred to executor’s account)
vii) Bharti executor A/c Dr 24373
To bank A/c 24373
(being executor paid)
Bharti capital a/c
Particulars Amount ₹ Particulars Amount ₹
To bharti executor a/c 24373 By balance b/d 12000
By interest on capital 240
Page 48 of 57
(being his share of profit transferred)
iv) Arti capital A/c Dr 3600
Seema capital A/c Dr 1200
To bharti capital A/c 4800
(being gaining partner compensating sacrificing
partner)
v) Bank A/c Dr 16200
To investment A/c 13250
To profit on sale of investment 2950
(being investment sold)
vi) Bharti capital A/c Dr 24373
To bharti’s executor A/c 24373
(being amount transferred to executor’s account)
vii) Bharti executor A/c Dr 24373
To bank A/c 24373
(being executor paid)
Bharti capital a/c
Particulars Amount ₹ Particulars Amount ₹
To bharti executor a/c 24373 By balance b/d 12000
By interest on capital 240
Page 48 of 57
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Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
By general reserve 4000
By p/l suspense a/c 3333
By Arti capital a/c 3600
By Seema capital a/c 1200
24373 24373
Bharti executor account
Particulars Amount ₹ Particulars Amount ₹
To bank a/c 24373 To bharti capital a/c 24373
24373 24373
Page : 220 , Block Name : Numerical Question
Q14 Nithya, Sathya and Mithya were partners sharing profits and losses in the ratio of 5:3:2.
Their Balance Sheet as on March 31, 2015 was as follows :
Books of Nithya, Sathya and Mithya
Balance Sheet at March 31, 2015
Liabilities Amount (Rs.) Assets Amount (Rs.)
Creditors 14,000 Investments 10,000
Page 49 of 57
By general reserve 4000
By p/l suspense a/c 3333
By Arti capital a/c 3600
By Seema capital a/c 1200
24373 24373
Bharti executor account
Particulars Amount ₹ Particulars Amount ₹
To bank a/c 24373 To bharti capital a/c 24373
24373 24373
Page : 220 , Block Name : Numerical Question
Q14 Nithya, Sathya and Mithya were partners sharing profits and losses in the ratio of 5:3:2.
Their Balance Sheet as on March 31, 2015 was as follows :
Books of Nithya, Sathya and Mithya
Balance Sheet at March 31, 2015
Liabilities Amount (Rs.) Assets Amount (Rs.)
Creditors 14,000 Investments 10,000
Page 49 of 57
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Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
Reserve fund 6,000 Goodwill 5,000
Capitals: Premises 20,000
Nithya :30,000 Patents 6,000
Sathya :20,000 Machinery 30,000
Mithya :20,000 80,000 stock 13,000
Debtors 8,000
Bank 8,000
1,00,000 1,00,000
Mithya dies on August 1, 2015. The agreement between the executors of Mithya and the
partners stated that :
(a) Goodwill of the firm be valued at 1 2 2 times the average profits of last four years. The profits
of four years were : in 2011-12, Rs.13,000; in 2012-13, Rs.12,000; in 2013-14, Rs.16,000; and
in 2014-15, Rs.15,000.
(b) The patents are to be valued at Rs.8,000, Machinery at Rs.25,000 and Premises at
Rs.25,000.
(c) The share of profit of Mithya should be calculated on the basis of the profit of 2014-15.
(d) Rs.4,200 should be paid immediately and the balance should be paid in 4 equal half-yearly
instalments carrying interest @ 10%.
Record the necessary journal entries to give effect to the above and write the executor’s
account till the amount is fully paid. Also prepare the Balance Sheet of Nithya and Sathya as it
would appear on August 1, 2015 after giving effect to the adjustments.
Answer.
Page 50 of 57
Reserve fund 6,000 Goodwill 5,000
Capitals: Premises 20,000
Nithya :30,000 Patents 6,000
Sathya :20,000 Machinery 30,000
Mithya :20,000 80,000 stock 13,000
Debtors 8,000
Bank 8,000
1,00,000 1,00,000
Mithya dies on August 1, 2015. The agreement between the executors of Mithya and the
partners stated that :
(a) Goodwill of the firm be valued at 1 2 2 times the average profits of last four years. The profits
of four years were : in 2011-12, Rs.13,000; in 2012-13, Rs.12,000; in 2013-14, Rs.16,000; and
in 2014-15, Rs.15,000.
(b) The patents are to be valued at Rs.8,000, Machinery at Rs.25,000 and Premises at
Rs.25,000.
(c) The share of profit of Mithya should be calculated on the basis of the profit of 2014-15.
(d) Rs.4,200 should be paid immediately and the balance should be paid in 4 equal half-yearly
instalments carrying interest @ 10%.
Record the necessary journal entries to give effect to the above and write the executor’s
account till the amount is fully paid. Also prepare the Balance Sheet of Nithya and Sathya as it
would appear on August 1, 2015 after giving effect to the adjustments.
Answer.
Page 50 of 57
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Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
Working note :
1) Number of month of death from last financial year = 4
2) Avg. profit of both years = = = 14,000
Therefore , goodwill
Mithya share of goodwill = = 7,000
Old ratio will be taken as gaining ratio since nothing is mentioned .
Therefore, gaining ratio = 5:3
3) Revaluation account
Particulars Amount Particulars Amount
₹ ₹
To machinery 5000 By patents 2000
To profit on revaluation By premises 5000
Nithya : 1000
Sathya : 600
Mithya : 400 2000
7000 7000
4) Profit of 2014-2015 = 15000
Mithya’s share in profit = = 1000
5) Mithya’s capital account
Particulars Amount Particulars Amount
Page 51 of 57
Working note :
1) Number of month of death from last financial year = 4
2) Avg. profit of both years = = = 14,000
Therefore , goodwill
Mithya share of goodwill = = 7,000
Old ratio will be taken as gaining ratio since nothing is mentioned .
Therefore, gaining ratio = 5:3
3) Revaluation account
Particulars Amount Particulars Amount
₹ ₹
To machinery 5000 By patents 2000
To profit on revaluation By premises 5000
Nithya : 1000
Sathya : 600
Mithya : 400 2000
7000 7000
4) Profit of 2014-2015 = 15000
Mithya’s share in profit = = 1000
5) Mithya’s capital account
Particulars Amount Particulars Amount
Page 51 of 57
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Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
₹ ₹
To mithya’s executor 28600 By balance b/d 20,000
To goodwill 1000 By reserve 1200
By nithya capital account 4375
By sathya capital account 2625
By p/l suspense 1000
By profit on revaluation 400
29600 29600
6) mithya’s executor a/c balance = 28600
Cash paid = 4200
Remaining balance = 28600-4200=24400
Therefore , each instalment value =
7) Partner’s capital a/c
Particulars Nithya Sathya Particulars Nithya Sathya
To goodwill 2500 1500 By bal b/d 30,000 30,000
To mithya 4375 2625 By general reserve 3000 1800
Page 52 of 57
₹ ₹
To mithya’s executor 28600 By balance b/d 20,000
To goodwill 1000 By reserve 1200
By nithya capital account 4375
By sathya capital account 2625
By p/l suspense 1000
By profit on revaluation 400
29600 29600
6) mithya’s executor a/c balance = 28600
Cash paid = 4200
Remaining balance = 28600-4200=24400
Therefore , each instalment value =
7) Partner’s capital a/c
Particulars Nithya Sathya Particulars Nithya Sathya
To goodwill 2500 1500 By bal b/d 30,000 30,000
To mithya 4375 2625 By general reserve 3000 1800
Page 52 of 57
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Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
To bal c/d 27125 28275 By profit on 1000 600
revaluation
34000 32400 34000 32400
Journal entries
Particulars Dr. amount ₹ Cr. Amount ₹
General reserve A/c Dr 1200
Profit on revaluation A/c Dr 400
P/L suspense A/c Dr 1000
To account name not mention 2600
(being profit transferred)
Mithya capital A/c Dr 1000
To goodwill A/c 1000
(being goodwill written off)
Nithya capital A/c Dr 4375
Sathya capital A/c Dr 2625
To mithya capital A/c 7000
(being gaining partners compensating dead
partners)
Mithya capital A/c Dr 28600
To mithya executor A/c 28600
Page 53 of 57
To bal c/d 27125 28275 By profit on 1000 600
revaluation
34000 32400 34000 32400
Journal entries
Particulars Dr. amount ₹ Cr. Amount ₹
General reserve A/c Dr 1200
Profit on revaluation A/c Dr 400
P/L suspense A/c Dr 1000
To account name not mention 2600
(being profit transferred)
Mithya capital A/c Dr 1000
To goodwill A/c 1000
(being goodwill written off)
Nithya capital A/c Dr 4375
Sathya capital A/c Dr 2625
To mithya capital A/c 7000
(being gaining partners compensating dead
partners)
Mithya capital A/c Dr 28600
To mithya executor A/c 28600
Page 53 of 57
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Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
(being capital account transferred to executor a/c
)
Mithya executor A/c Dr 4200
To bank A/c 4200
(being paid in cash 4200)
Profit on revaluation A/c Dr 1600
To nithya capital A/c 1000
To sathya capital A/c 600
(being profit on revaluation transferred to old
partners)
Mithya executor account
Date Particulars Amount Date Particulars Amount
₹ ₹
2015 2015
Aug 1 To bank a/c 4200 Aug 1 By mithya 28600
capital
Jan 31 To bank a/c 7320 Jan 31 By interest 1220
a/c
Mar 31 To bal c/d 78605 Mar 31 By interest 305
a/c
30125 30125
Page 54 of 57
(being capital account transferred to executor a/c
)
Mithya executor A/c Dr 4200
To bank A/c 4200
(being paid in cash 4200)
Profit on revaluation A/c Dr 1600
To nithya capital A/c 1000
To sathya capital A/c 600
(being profit on revaluation transferred to old
partners)
Mithya executor account
Date Particulars Amount Date Particulars Amount
₹ ₹
2015 2015
Aug 1 To bank a/c 4200 Aug 1 By mithya 28600
capital
Jan 31 To bank a/c 7320 Jan 31 By interest 1220
a/c
Mar 31 To bal c/d 78605 Mar 31 By interest 305
a/c
30125 30125
Page 54 of 57
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Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
2016 2016
July 31 By bank a/c 7015 Ap 1 By bal b/d 18605
Jul 31 By interest 610
Jan31 To bank a/c 6710 Jan 31 By interest 610
a/c
Mar 31 By interest 102
a/c
Mar 31 To bal c/d 6202
19927 19927
2017 2017
Jul 31 To bank a/c 6404 Ap 1 By bal b/d 6202
Jul 31 By interest 102
a/c
6404 6404
Balance sheet
Liabilities Amount Assets Amount
₹ ₹
Page 55 of 57
2016 2016
July 31 By bank a/c 7015 Ap 1 By bal b/d 18605
Jul 31 By interest 610
Jan31 To bank a/c 6710 Jan 31 By interest 610
a/c
Mar 31 By interest 102
a/c
Mar 31 To bal c/d 6202
19927 19927
2017 2017
Jul 31 To bank a/c 6404 Ap 1 By bal b/d 6202
Jul 31 By interest 102
a/c
6404 6404
Balance sheet
Liabilities Amount Assets Amount
₹ ₹
Page 55 of 57
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Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
Creditors 14000 Investment 10,000
Mithya executor loan a/c 24400 Premises 25000
Capital a/c : Machinery 25000
Nithya : 27125 Patent 8000
Sathya : 28275 55400 Stock 13000
Debtors 8000
Bank 8000
Less : 4200 3800
p/l suspense 1000
93800 93800
calculation of interest :
1) Interest on 24400 for 6 months @ 10% = 1220
2) Interest on 18300 for 6 month @ 10 % = 915
For 2 months = =305
For 4 months = = 610
3) Interest on 12200for 6 month @ 10% = 610
Page : 221 , Block Name : Numerical Question
Page 56 of 57
Creditors 14000 Investment 10,000
Mithya executor loan a/c 24400 Premises 25000
Capital a/c : Machinery 25000
Nithya : 27125 Patent 8000
Sathya : 28275 55400 Stock 13000
Debtors 8000
Bank 8000
Less : 4200 3800
p/l suspense 1000
93800 93800
calculation of interest :
1) Interest on 24400 for 6 months @ 10% = 1220
2) Interest on 18300 for 6 month @ 10 % = 915
For 2 months = =305
For 4 months = = 610
3) Interest on 12200for 6 month @ 10% = 610
Page : 221 , Block Name : Numerical Question
Page 56 of 57
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Book : Accountancy Part-I Ncert Solutions | Chapter - 4 Accountancy
Page 57 of 57
Page 57 of 57
Document Details
| Board / Org | NCERT |
| Exam | Class 12 |
| Type | Solution |
| Pages | 58 |
| Updated | 30 Apr 2026 |