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Section A

I.

Answer all the questions:


(1*10=10)
1. Define Partnership.
2. What do you understand by Admission of a new partner?
3. What is Sacrificing ratio?
4. What is Gaining ratio?
5. What is Revaluation account?
6. What do you mean by dissolution of a partnership firm?
7. What is Realization Account?
8. Who is an Insolvent Partner?
9. What do you understand by Garner vs. Murray rule?
10.
What do you understand by Death of a Partner?
Section B
II.
Answer all the questions:
(4*5=20)
11.
A) What are the essential features of Partnership?
(OR)
B) P and Q are partners sharing profits in the ratio of 3:2. They admit R
as a partner for 1/5th share in future profit. Calculate new Ratio and
Sacrificing Ratio.
12.
A) Calculate the amount of goodwill at three years purchase of
last five years average profits. The profits were:
I year RS. 9,600 II year Rs. 14,400
III year Rs. 20,000
IV
year Rs. 6,000
V year Rs. 10,000.
(OR)
B) M, N and O are partners sharing profits and losses in the ratio of
2:2:1. O retires and his share was taken up by M and N in the ratio of
3:2. Calculate the gaining ratio of X and Y?
13.
A) A and B are partners in a business sharing profits in the ratio
of 5:3. They decide to admit C into the firm giving him 1/6 th share.
Calculate the new profit sharing ratio and sacrificing ratio of the
partners.
(OR)
B) X, Y and Z are partners in a firm sharing profits and losses in the
ratio of 5:3:2. Y retires from the firm and his share was taken up by X
and Z in the ratio of 2:1. Calculate the new profit sharing ratio.
14.
A) Describe the different Modes of Dissolution.
(OR)
B) Goodwill is valued on the basis of 2 years purchase of average
profits of the preceding three years. The profits of the previous three
years were: 2004: Rs. 44,000; 2005: Rs. 56,000; 2006: Rs. 68,000.
Calculate: a) Average Profit; b) Value of goodwill.

15.
A) What Journal entries would you pass for the following
assuming all assets and liabilities are already transferred to realization
account:
i) Unrecorded asset realizes Rs. 5,000
ii) Unrecorded liability paid Rs. 3,000
iii) A liability taken over by partner X Rs. 8000.
(OR)
B) Distinguish between Revaluation Account and Realization Account.
Section B
III.
Answer any three of the questions:
(10*3=10)
16.
On 1st January 2012, Kavitha and Sumathy entered into
partnership and Contributed Rs. 80,000 and Rs. 60,000 respectively.
They share profits and losses in the ratio of 3:2. Sumathy is to be
allowed a salary of Rs. 16,000 per year. Interest on Capitals is to be
allowed at 5% per annum. 5% interest is to be charged on drawings.
During the year, Kavitha withdraw Rs. 12,000 and Sumathy Rs. 24,000,
Interest being kavitha Rs.280 and Sumathy Rs. 200. Profit in 1991
before the above noted adjustments was Rs. 42,320. Show the
distribution of profits between the partners and prepare capital
accounts. (i) When they are fluctuating and (ii) When they are fixed.
17.
A and B are partners in a firm. They share profits and losses in
the ratio of 3:1. Their balance sheet is as follows:
Liabilities
Capital A
B
Reserve
Creditors
Bills Payable

Rs.
80000
40000
40000
60000
20000
24000
0

Assets
Buildings
Plant
Stock
Debtors
Cash

Rs.
100000
25000
40000
70000
5000
24000
0

C is admitted into partnership for 1/5 th share of the business on


the following terms:
a) Building is revalued at Rs. 120000
b) Plant is depreciated to 80%
c) Provision for bad debts is made at 5%
d) Stock is revalued at Rs. 30000
e) C Should introduce 50% of the adjusted capitals of both A and B.
Open various accounts and the new Balance sheet after the
admission of C.

18.
Sunil, Devan and Ravi are equal partners in a firm and their
balance sheet as on 31.12.90 is given below.
Liabilities
Capital: Sunil
Devan
Ravi
Reserve
Creditors

Rs.
15000
12000
18000
4500
40500
90000

Assets
Machinery
Furniture
Debtors
Stock

Rs.
43500
1500
30000
15000
90000

Ravi retired on 31.12.90 and assets were revalued as under:


Machinery Rs. 51000, Furniture Rs. 1200, Debtors Rs. 28500, Stock Rs.
14700, Good will of the firm is valued at Rs.9000 and Ravis share of
goodwill is to be adjusted to continuing partners capital accounts.
Give journal entries; prepare necessary ledger accounts and new
balance sheet.
19.
A, B and C are in partnership sharing profits and losses in the
proportion of 4:3:2. Their balance sheet on Dec. 31 1996 stood as
follows:
Liabilities
Capital Accounts:
A
4000
B
2000
C
500
Creditors

Rs.

6500
3500
10000

Assets
Rs.
Land
& 5500
2000
Buildings
1000
Stock in trade
1500
Debtors
Cash in hand
10000

They agree to dissolve partnership as from 31st Dec. 1996. A


agrees to take over the stock at a valuation of Rs. 1500 and the
debtors at valuation of Rs. 700 (no cash passes). The Land &
Building are sold at auction for Rs. 2700. Close the books of the
firm.
20.
Why is it necessary to revalue assets and liabilities on
Admission? Give necessary specimen of Journal Entries.
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