INTERNATIONAL INDIAN SCHOOL, RIYADH

WORKSHEET (2023-2024)

GRADE - XII – ACCOUNTANCY - FIRST TERM

CHAPTER: 1 ACCOUNTING FOR PARTNERSHIP FIRMS –

FUNDEMENTALS

1. State the provisions of Partnership Act ,1932 in the absence of partnership

deed.
2. A and B are partners sharing profits and losses in the ratio of 2:3 with
capitals of Rs 2,80,000 and 1,40, 000 respectively. On 1st July 2013 A and B
advanced loans of Rs56,000 and Rs 28,000 to the firm . Show the
distribution of profit s/Losses for the year ended 31-12 -2013 , if the profit
before interest for the year amounted to Rs 2,100.
3. Arun , Arjun and Ayush are partners having capitals of Rs 120,000 Rs
120,000 and Rs 160,000 respectively. Their current account balances were
Rs 20,000, Rs 10,000 and Rs 4,000.respectively.
According to the partnership deed, the partners were entitled to interest on
capital @5% per annum. The profits were to be divided as follows:
(a) The first Rs 40,000 in proportion to their capitals.
(b) Next Rs 60,000 in the ratio of 5:3:2.
(c) Remaining profits to be shared equally
The firm made a profit of Rs 3, 12,000 before charging the above items.
Prepare profit and loss appropriation account .and show your workings
clearly.
4. On 31st march 2014 after the close of books of accounts, the capital accounts
of A , B and C stood at Rs 24,000 Rs 20,000 and Rs 12,000 respectively.
The profit for the year was Rs 36,000 which was distributed equally.

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 Subsequently, it was discovered that interest on capital @ 5% p.a had been
omitted. The profit sharing ratio was 2:2:1. Pass an adjustment entry.
5. Three Chartered Accountants X ,Y and Z form a partnership firm sharing
profits and losses equally, subject to the following conditions:
(a) Z ‘s share of profit is guaranteed to be not less than Rs 90,000 p.a.
(b) Y gives guarantee to the effect that the gross fees earned by him shall not
be less than Rs 80,000.
Profit for the first year is Rs 2, 00,000. The gross fees earned by Y are Rs
67,000.

Prepare Profit and Loss appropriation Account.

6. E , F and G are partners where fixed capitals were Rs 30,000 and Rs 24,000
and Rs 18,000 respectively . As per partnership agreement, there is a
provision for allowing interest on capitals @ 5% per year but entries for the
same have not been made for the last two years. The profit sharing ratio
during these years is as follows.

Year E F G

2011 4 3 2
2012 3 2 1
2013 1 1 1

Make the necessary adjustment entry at the beginning of the third year (Jan
2014).Show your workings clearly.
7. Nivin , Safwan and Fouzan are partners in a firm. The partnership deed
provided that interst on drawings will be charged @ 6% p.a. during the year
ended 31-12 -2012 ,Nivin witdraws Rs 6,000 in the beginning of each
quarter and safwan withdraws Rs 6,000 in the middle of each quarter and
Fouzan withdraws Rs 6,000 at the end of each quarter . calculate interest on
partners drawings.
8. A ,B and C entered into partnership on October 1 2014 to share profits and
losses in the ratio of 3:2:1. A ,.however personally guaranteed that C’s share
of profit after charging interest on capitals at 5% p.a wuld not be less than
Rs 30,000 in any year. The capital contributions were A RSs 3,00,000, B RS

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 2,00,000 and C Rs 1,00,000. The profits for the period ended March 31st
2015 were Rs 1,20,000. Show the distribution of profits.
9. X and Y are partners in a business their capitals at the end of the year were
Rs 96,000and Rs 72,000 respectively. During the year ended 31-Dec
2013 , X’s drawings were Rs 16,000 and Rs 24,000 respectively. Profits
before charging interest on capital during the year were Rs 64,000.
Calculate interest on capital @5% for the year ended 31st December 2013,
assuming that the capitals were fixed.
10.A ,B and C were partners in a firm on 1st Jan 2015 their fixed capitals were
Rs 1,00,000, Rs 50,000 and Rs 50,000 respectively. As per the provisions of
partnership ded:
(a) All the partners were entitled to receive 5% interest per annum on their
capital.
(b) Profits were to be divided in their capital ratio.
(c) B was entitled for a salary of Rs 7,500 per annum
The net profits for the year ended 31st December 2014 and 31st December
2015 were Rs 58, 500 and 75,000 respectively.net profits were divided
equally without providing for the above terms.
Pass an adjustment entry to rectify the above error.

CHAPTER 2: ADMISSION OF A PARTNER

1. Singh, Gupta and Khan are partners in a firm sharing profits in 3:2:3 ratio.
They admitted Jain as a new partner. Singh surrendered 1/3 of his share in
favour of Jain: Gupta surrendered 1/4 of his share in favour of Jain and Khan
surrendered 1/5 in favour of Jain. Calculate new profit sharing ratio?
2. Sandeep and Navdeep are partners in a firm sharing profits in 5:3 ratio. They
admit C into the firm and the new profit sharing ratio was agreed at 4:2:1.
Calculate the sacrificing ratio?
3. Rao and Swami are partners in a firm sharing profits and losses in 3:2 ratio.
They admit Ravi as a new partner for 1/8 share in the profits. The new profit
sharing ratio between Rao and Swami is 4:3. Calculate new profit sharing
ratio and sacrificing ratio?
4. Compute the value of goodwill on the basis of four years’ purchase of the
average profits based on the last five years? The profits for the last five years
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 were as follows:

5. Capital employed in a business is Rs. 2,00,000. The normal rate of return on

capital employed is 15%. During the year 2002 the firm earned a profit of
Rs. 48,000. Calculate goodwill on the basis of 3 years purchase of super
profit?
6. The books of Ram and Bharat showed that the capital employed on
31.12.2002 was Rs. 5,00,000 and the profits for the last 5 years : 2002 Rs.
40,000; 2003 Rs. 50,000; 2004 Rs. 55,000; 2005 Rs. 70,000 and 2006 Rs.
85,000. Calculate the value of goodwill on the basis of 3 years purchase of
the average super profits of the last 5 years assuming that the normal rate of
return is 10%?
7. Rajan and Rajani are partners in a firm. Their capitals were Rajan Rs.
3,00,000; Rajani Rs. 2,00,000. During the year 2002 the firm earned a profit
of Rs. 1,50,000. Calculate the value of goodwill of the firm assuming that
the normal rate of return is 20%?
8. A business has earned average profits of Rs. 1,00,000 during the last few
years. Find out the value of goodwill by capitalisation method, given that the
assets of the business are Rs. 10,00,000 and its external liabilities are Rs.
1,80,000. The normal rate of return is 10%?
9. Verma and Sharma are partners in a firm sharing profits and losses in the
ratio of 5:3. They admitted Ghosh as a new partner for 1/5 share of profits.
Ghosh is to bring in Rs. 20,000 as capital and Rs. 4,000 as his share of
goodwill premium. Give the necessary journal entries:
a) When the amount of goodwill is retained in the business.
b) When the amount of goodwill is fully withdrawn.
c) When 50% of the amount of goodwill is withdrawn.
d) When goodwill is paid privately
10.A and B are partners in a firm sharing profits and losses in the ratio of 3:2.
They decide to admit C into partnership with 1/4 share in profits. C will
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 bring in Rs. 30,000 for capital and the requisite amount of goodwill
premium in cash. The goodwill of the firm is valued at Rs, 20,000. The new
profit sharing ratio is 2:1:1. A and B withdraw their share of goodwill. Give
necessary journal entries?
11.Arty and Bharti are partners in a firm sharing profits in 3:2 ratio, They
admitted Sarthi for 1/4 share in the profits of the firm. Sarthi brings Rs.
50,000 for his capital and Rs. 10,000 for his 1/4 share of goodwill. Goodwill
already appears in the books of Arti and Bharti at Rs. 5,000. the new profit
sharing ratio between Arti, Bharti and Sarthi will be 2:1:1. Record the
necessary journal entries in the books of the new firm?

CHAPTER 3: RETIREMENT OF A PARTNER

Q.1 State any two items of deduction that may have to be made from the amount
payable to a retiring partner.
Q.2 A, B and C are partners sharing profits in the ratio of 3:2:1. B retires and the
new profit sharing ratio between A and C is 3:1. State the gaining ratio.

Q.3 How can a partner retire from a firm?

Q.4 A, B and C were partners in a firm sharing profits in the ratio of 6:5:4. C
retires and his share is taken up equally by A and B. Find the new profit
sharing ratio.

Q.5 Why are ‘Reserves and Surplus’ distributed at the time of reconstitution of
the firm.

Q.6 R,S and N are partners sharing profits 2/5,2/5, and 1/5. M decides to retire
from the business, and his share is taken by R and S 2:1. Calculate the new
profit sharing ratio.

Q.7 X, Y and Z are partners in a firm sharing profits and losses in the ratio of
3:2:1. On 01.04.2009, Z retires from the firm. X and Y agree that the capital
of the new firm shall be fixed at Rs. 210,000 in the profit sharing ratio. The
capital accounts of X and Y after all adjustments on the date of retirement
showed balance of Rs. 145,000 and Rs. 63,000 respectively. State the

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 amount of actual cash to be brought in or to be paid off to the partners.

Q.8 A, B and C were partners in a firm sharing profits in the ratio of 6:5:4. Their
capitals were A, Rs.100,000 B, Rs.80,000 and C, Rs. 60,000 respectively.
On 1st April 2009 A retired from the firm and the new profit sharing ratio
between B and C was decided as 1:4. On A’s retirement the goodwill of the
firm was valued at Rs. 180,000. Showing your calculations clearly, pass
necessary journal entry for the treatment of goodwill on A’s retirement.

( note* if any partner sacrifices at the time of reconstitution , the sacrificing

partner has the right to get share of goodwill from gaining partner)

Q.9 The Balance Sheet of A, B and C on 31. 3. 2007 was as follows:

Liabilities Amount. Assets. Amount.

Rs. Rs.

Creditors 50,000 P& L Account 30,000

A’s Capital 80,000 Land and Buildings 80,000
B’s Capital 80,000 Plant & Machinery 56,000
C’s Capital 60,000 Motor car 54,000
Debtors 48,000

Cash 2,000

270,000 270,000

The following terms were agreed upon for A’s retirement:

(a) Goodwill to be valued at Rs. 42,000 and not to be shown in the books
after A’s retirement.
(b) Land and Buildings to be appreciated by Rs. 20,000.
(c) Plant and Machinery to be reduced to Rs. 46,000.
(d) Provision for doubtful debts to be created at 5% on Debtors.
(e) Create a provision of Rs. 1,400 for discount on creditors.
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 Prepare Revaluation Account, Partners’ Capital Accounts and the
Balance Sheetto give effect to the above.

Q.10 A, B and C were in partnership sharing profits in proportion to their capitals.

Their balance sheet on 31.3.2008. was as follows.

Liabilities Rs. Assets. Rs.

Creditors 15,600 Buildings 100,000

Reserve 6,000 Machinery 48,000
A’s Capital 90,000 Stock 18,000
B’s Capital 60,000 Debtors 20,000

C’s Capital 30,000 Less provision

For doubtful debts 400 19,600

Cash 16,000

201,600 201,600

On the above date B retired owing to ill health and the following
adjustments were agreed upon:

(a) Buildings be appreciated by 10%

(b) Provision for doubtful debts be increased to 5% of debtors.
(c) Machinery be depreciated by 15%.
(d) Goodwill of the firm be valued at Rs. 36,000 and be adjusted into the
Capital Accounts of A and C who will share profits in future in the
ratio of 3:1.
(e) A provision be made for outstanding repairs bill of Rs.3,000.
(f) Included in the value of creditors is Rs. 1,800 for an outstanding legal
claim which is not likely to arise.
(g) Out of the insurance premium paid Rs. 2,000 is for the next year. The
amount was debited to P and L A/c.

(i) B to be paid Rs. 9,000 in cash and the balance to be transferred to his
Loan account.

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 Prepare the Revaluation Account, Partners’ Capital Accounts and the
Balance Sheet of the new firm after B’s retirement.
CHAPTER: DEATH OF A PARTNER
Q.1 State any two deductions that may have to be made from the amount payable
to the legal representative of a deceased partner.
Q.2 What is the need for treatment of goodwill on the death of a partner?

Q.3 A, B and C are partners in a firm whose books are closed on March 31st
each year. C died on 30th June 2009 and according to the agreement, the
share of profits of a deceased partner up to the date of the death is to be
calculated on the basis of the average profits for the last five years. The net
profits for the last 5 years have been: 2005, Rs.14,000; 2006, Rs.18,000;
2007, Rs.16,000; 2008, Rs.10,000 (loss) and 2009, Rs.16,000. Calculate C’s
share of the profits upto the date of death and pass necessary journal entry.

Q.4 P, Q and R were partners n a firm sharing profits in 2:2:1 ratio. The
partnership deed provided that on the death of a partner his executors will be
entitled for the following:

(i) Interest on capital @ 12% p.a.

(ii) Interest on drawings @ 18% p.a.
(iii) Salary of Rs. 12,000 p.a.
(iv) Share in the profit of the firm (upto the date of death) on the basis of
previous year’s profit.

P died on 31.5.2006. His capital was Rs. 80,000. He had withdrawn Rs.
15,000 and interest on his drawings was calculated as Rs. 1,200. The profit
of the firm for the previous year ended 31.3.2006 was Rs. 30,000.
Prepare P’s capital account to be presented to his executors.

Q.5 Indu and Hema were partners. The partnership deed provided for:

(a) Profits to be divided as Indu 1/2 , Hema 1/3 and 1/6th to be transferred
to reserves.
(b) The accounts are closed on March 31st each year.
(c) In the event of the death of a partner the executors will be entitled to:

(i) Capital to the credit on the date of the death.

(ii) Interest on capital at 12% p.a

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 (iii) Proportion of profit to the date of death based on the average
profits credited for the last 3 years.
(iv) Share of goodwill based on three years purchase of the average
profits of the preceding 3 years.

The following information is provided to you:

(Indu’s Capital Rs. 120,000, Hema’s Capital Rs. 80,000, Reserves Rs.
30,000, Cash Rs. 110,000, Investments Rs. 70,000)

Prepare Indu’s capital account to be presented to her executors who died on

April 30th,2007. The profits for the three preceding years were Rs. 84,000
Rs. 90,000 and Rs. 99,000.

Q.6 X, Y and Z were partners sharing profits in the ratio of 3:2:1. On 31st March
2008, their balance sheet stood as under.

Liabilities Rs. Assets Rs.

Capitals: Cash at bank 70,000

X : 75,000 Investments 50,000

Y : 70,000 Patents 15,000

Z : 50,000 195,000 Stock 25,000

Debtors 20,000
Creditors 72,000 Buildings 75,000
General reserve 24,000 Machinery 36,000

291,000 291,000

Y died on 31st May 2008. It was agreed that:,

(a) Goodwill was valued at 3 years’ purchase of the average profits of the
last five years, which were, 2003: Rs. 40,000; 2004 : Rs. 40,000
2005 : Rs.30,000; 2006: Rs. 40,000 and 2007; Rs. 50,000.

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 (b) Machinery was valued at Rs. 70,000, Patents at Rs. 20,000 and
buildings at Rs. 66,000.
(c) For the purpose of calculating Y’s share of profits till the date of his
death, it was agreed that the same be calculated based on the average
profits for the last 2 years.
(d) The executor of deceased partner is to be paid the entire amount due
by means of cheque.
Prepare Y’s capital account to be rendered to is executor and also a journal
entry for the settlement of the amount due to the executor.

Q.7 Ramesh, Suresh and Dinesh were partners in a firm sharing profits in the
ratio of 3:3:4. Their capitals were Rs. 500,000; Rs. 400,000 and Rs. 500,000
respectively. The firm closes its books on 31st March every year. On
31.3.2006 Ramesh died. The executor of a deceased partner, according to
the agreement, was entitled for the following:

(i) Interest on capital from the first day of the accounting year till the
date of his death @ 9% p.a.
(ii) His share of goodwill – The goodwill of the firm on Ramesh’s death
was valued at Rs. 180,000.
(iii) His share of profits. The profit of the firm for the year ended
31.3.2006 was Rs. 120,000.

Ramesh’s executor was paid the sum due in two equal annual instalments
with interest @ 10% p.a.
Prepare Ramesh’s capital account as on 31.3.2006 to be presented to his
executor and his executor’s loan account for the years ending 31.3.2007 and
31.3.2008.

Q.8 A, B and C are partners in a trading firm. The firm has a fixed capital of
Rs.60,000 held equally by all the partners. Under the partnership deed the
partners were entitled to:

(a) A and B to a salary of Rs.1,800 and Rs.1,600 per month respectively.

(b) In the event of death of a partner, goodwill was to be valued at 2 years
purchase of the average profit of the last 3 years.
(c) Profit upto the date of death based on the profits of the previous year.
(d) Partners were to be charged interest on drawings at 5% p.a and
allowed interest on capitals at 6% p.a.

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 A died on January 1st 2011. His drawings to the date of death were
Rs.2,000 and the interest thereon was Rs.60. The profits of three years
ending March 31st 2008, 2009 and 2010 were: Rs.21,200, 3,200 (Dr) and
Rs.9,000 respectively. Prepare A’s capital account to calculate the amount
to be paid to his executors.

Q.9 A, B and C were partners in a firm sharing profits in the ratio of 2:1:1. Their
Balance Sheet as on 31.3.2010 was as follows.

Amount. Amount.

Liabilities. Rs. Assets. Rs.

Capital accounts: Furniture 9,000

A 10,000 Stock 4,000

B 5,000 Debtors 6,000

C 5,000 20,000 Bills Receivable 2,000

General Reserve 3,200 Cash at Bank 5,000
Creditors 3,000 Cash in hand 200

26,200 26,200

On 30.6.2010 C died. Under the provisions of partnership deed the

executors of a deceased partner were entitled to the following:

(i) Amount standing to the credit of partners capital account.

(ii) Interest on Capital @ 5% p.a.
(iii) Share of goodwill on the basis of two years purchase of the average
profits of last three years.
(iv) Share of profit in the year of his death, till the date of his death on the
basis of the last year’s profit.

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 The profits of the firm during the previous three years were as follows:

Year Profit

Rs.

2007-2008 5,000

2008-2009 9,000

2009-2010 7,000

C’s executors were paid Rs. 800 on 1.7.2010 and the balance in three equal
instalments of equal intervals of 6 months starting from 31.12.2010 with
interest @ 10% per annum.

Pass necessary journal entries, at the time of C’s death, prepare C’s Capital
Account.

Q. 10. A, B, C and D are partners sharing profits in the ratio of 3: 2:1:4 A

dies and his share is acquired by B and C in the ratio of 3:2.

Calculate new profit-sharing ratio and gaining ratio. Also write entry related
to goodwill valued at Rs. 30,000 on the death of A.

CHAPTER: DISSOLUTION OF PARTNERSHIP FIRM

Q.1 Give any one difference between reconstitution of a firm and dissolution of a
firm.
Q.2 When an asset taken over by a partner, why is his capital account debited?

Q.3 When a liability is to be discharged by a partner, why is his capital account

credited?
Q.4 Pass the necessary journal entries for the following transactions of the
dissolution of the firm of R and L after the various assets (other than cash)
and outside liabilities have been transferred to Realisation Account:
(i) R paid creditors Rs. 17,000 in full settlement of their claim of
Rs. 20,000.
(ii) L agreed to pay his wife’s loan Rs. 17,000
(iii) Stock Rs. 40,000 was taken over by R for Rs. 39,000
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 (iv) Other assets realised Rs. 39,000
(v) Expenses of realisation Rs. 4,900 were paid by L.
(vi) Loss on dissolution Rs. 9,000 was divided between R and L in the
ratio of 3:1.
Q.5 A,B and C were partners sharing profits in the ratio of 3:1:1. Their Balance
Sheet as on March 31st 2009, the date on which they dissolve their firm, was
a follows.

Liabilities Amount Assets Amount

Rs. Rs.

Capitals: Sundry Assets 17,000

Stock 7,800
A: 27,500 Debtors 24,200
B: 10,000

C: 7,000 44,500 Less: Provision for

doubtful debts (−)1,200 23,000

Loan 1,500 Bills receivables 1,000
Creditors 6,000 Cash 3,200

52,000 52,000

It was agreed that:

(a) A to take over Bills Receivables at Rs. 800, debtors amounting to
Rs. 20,000 at Rs. 17,200 and the creditors of Rs. 6,000 were to be paid
by him at this figure.
(b) B is to take over all stock for Rs. 7,000 and some sundry assets at
Rs. 7,200 (being 10% less than the book value).
(c) C to take over remaining sundry assets at 90% of the book value
and assume the responsibility of discharge of loan together with
accrued interest of Rs. 300.
(d) The expenses of realisation were Rs. 270. The remaining debtors
were sold to a debt collecting agency at 50% of the book value.
Prepare Realisation A/c Partners Capital A/c and Cash A/c.
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Q.6 X,Y and Z were partners sharing profits in the ratio of 2:2:1. The Balance
Sheet on 31st March 2010 when they dissolved the firm was as follows:

Rs Assets Rs
Liabilities

X’s Capital 127,500 Other Sundry Assets 117,000

Y’s Capital 110,000 Furniture 11,000
Z’s Capital 17,000 Debtors 124200

Loan 11,500 Less provision

Creditors 16,000 for doubtful debts 1200 123,000

Stock 17,800

Cash 13,200

282,000 282,000

(a) Z to take over furniture at Rs.8,000 and debtors amounting to

Rs.120,000 at Rs.117,200 and the creditors of Rs.16,000 were to be
paid to him at this figure.
(b) X is to take over all stock for Rs.17,000 and some sundry assets at
Rs. 72,000 (being 10% less than the book value).
(c) Y to take over remaining sundry assets at 80% of the book value and
assume the responsibility of discharge of loan together with accrued
interest of Rs.2,300.
(d) The expenses of realisation were Rs.2,700. The remaining debtors
were sold to a debt collecting agency at 50% of the value.
Prepare necessary accounts to close the books of the firm.

Q.7 Pass the necessary journal entries for the following transactions on the
dissolution of the firm of James and Haider who were sharing profits and
losses in the ratio of 2:1. The various assets (other than cash) and outside
liabilities have been transferred to Realisation Account:

(i) James agreed to pay off his brother’s loan Rs. 10,000.
(ii) Haider took over all investments at Rs. 12,000.
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 (iii) Sundry creditors Rs. 20,000 were paid at 5% discount.
(iv) Loss on realisation was Rs. 10,200.
(v) A debtor whose debt of Rs. 9,300 was written off in the books paid
Rs. 7,500 in full settlement.
(vi) Realisation expenses Rs. 3,400 were paid by Sudha for which she was
allowed Rs. 3,000.
Q.8. Emil, Minhaj and Irfan decided to dissolve their partnership firm on
31.03.2011 when their position was as under.
Liabilities. Rs. Assets. Rs.

Sundry creditors 96,000 Loan to Emil 20,000

Capital Accounts Building 100,000

Emil 96,000 Investments 20,000

Minhaj 64,000 Machinery 40,000

Irfan 32,000 192,000 Stock 80,000

Current Accounts Sundry Debtors 65,000

Emil 40,000 Less: Reserve (5,000) 60,000

Irfan 30,000 70,000 Bank 28,000

Minhaj Current A/c 10,000

358,000 358,000

Minhaj took over building for Rs. 120,000, Emil took over investments for
Rs. 12,000, Machinery, Stock and Debtors realised Rs.35,000; Rs.70,000;
and Rs. 50,000 respectively.
The Creditor were paid off at a discount of 3% . There was a contingent
liability for a bill discounted for Rs. 5,000 was dishonoured and nothing will
be recovered from the drawee. Expenses of winding up were Rs.1,800.
Journalise the above and prepare necessary ledger accounts to close the
books of the firm.
Prepared by :
XI-XII Boys section.

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