Dissolution of a Partnership Firm — Accountancy STD 12 Commerce — Question

Sikha and Tanu are partners in a firm sharing profits in the ratio of 3 : 2· with capitals of ₹ 5,00,000. and ₹ 4,00,000 respectively. As a gesture of goodwill they admitted their old classmate, Varsha who hails from an economically weaker section of the society and who brings in ₹ 25,000 as capital. She is also able to contribute a petty sum of ₹ 10,000 as goodwill in cash. It is further agreed that partners will share the profits equally. You are required to:

1. Identify the values involved in the above case.
2. Pass journal entries to record these transactions in the books of the firm.

A business has earned average profit of ₹ 4,00,000 during the last few years and the normal rate of return in similar business is 10%. Find value of goodwill by:

1. Capitalisation of Super Profit Method.
2. Super Profit Method if the goodwill is valued at 3 years' purchase of super profits.

Assets of the business were ₹ 40,00,000 and its external liabilities ₹ 7,20,000.

Mannu and shristhi are partners in a firm sharing profit in the ratio of 3 : 2. Following is the balance sheet of the firm as on 31st March 2018:

Profit for the year ended 31st March, 2018 was ₹ 5,000 which was divided in the agreed ratio, but interest @ 5% p.a. on capital and @ 6% p.a. on drawings was inadvertently enquired. Adjust interest on drawings on an average basis for 6 months. Give the adjustment entry.

How will you deal with the Entrance Fees while preparing the final accounts for the year ended 31st March 2017, in each of the following alternative cases:
Case 1: During the year 2016-17, Entrance Fees received ₹ 1,50,900
Case 2: During the year 2016-17, Entrance Fees received ₹ 1,50,900. It is the policy of the club to treat the Entrance Fees as revenue receipt.
Case 3: During the year 2016-17, Entrance Fees received ₹ 1,50,900. It is the policy of the club to treat the Entrance Fees as capital receipt.
Case 4: During the year 2016-17, Entrance Fees received ₹ 1,50,900. According to the policy of the club 40% of the Entrance Fees is to be capitalised.

L, M, N and O are partners in a firm sharing profits and losses in the ratio of 2 : 2 : 1 : 1. M and O decided to retire from the firm. The goodwill of the firm was valued at ₹ 3,60,000. L and N decided to share future profit equally.
Find out gaining ratio and pass necessary journal entry for the treatement of goodwill.

Vikas, Gagan and Momita were partners in a firm sharing profits in the ratio of 2 : 2 : 1. The firm closes its books on 31st March every year. On 30th September, 2014 Momita died. According to the provisions of partnership deed the legal representatives of a deceased partner are entitled for the following in the event of his/her death:

1. Capital as per the last Balance Sheet.
2. Interest on capital at 6% p.a. till the date of her death.
3. Her share of profit to the date of death calculated on the basis of average profits of last four years.
4. Her share of goodwill to be determined on the basis of three years purchase of the average profits of last four years. The profits of last four years were:

Year	Profit
	₹
2010-2011	30,000
2011-2012	50,000
2012-2013	40,000
2013-2014	60,000

The balance in Momita’s capital account on 31-3-2014 was ₹ 60,000 and she had withdrawn ₹ 10,000 till the date of her death. Interest on her drawings were ₹ 300. Prepare Momita’s Capital Account to be presented to her executors.

A, B and C are partners sharing profit and losses equally. They agree to admit D for equal share. For this purpose goodwill is to be valued at 3 year's purchase of average profit of last 5 years which were as follows:

	₹
Year ending on 31st March 2013	60,000(Profit)
Year ending on 31st March 2014	1,50,000(Profit)
Year ending on 31st March 2015	20,000(Loss)
Year ending on 31st March 2016	2,00,000(Profit)
Year ending on 31st March 2017	1,85,000(Profit)

1 st October,2016 a computer costing ₹ 40,000 was purchased and debited to office expenses account on Which depreciation is to be changed @25% p.a Calculate the value of goodwill.

Sunny, Honey and Rupesh were partners in a firm. On 31st March, 2014, their Balance Sheet was as follows:

Honey died on 31st December, 2014. The Partnership Deed provided that the representative of the deceased partner shall be entitled to:

1. Balance in the Capital Account of the deceased partner.
2. Interest on Capital @ 6% per annum up to the date of his death.
3. His share in the ubdistributed profits or losses as per the Balance Sheet.
4. His share in the profits of the firm till the date of his death, calculated on the basis of rate of net profit on sales of the previous year. The rate of net profit on sales of previous year was 20%. Sales of the firm during the year till 31st December, 2014 was ₹ 6,00,000.

Prepare Honey's Capital Account to be presented to his executors.

X, Y and Z were partners in a firm sharing profits in the ratio of 2 : 2 : 1. On 31st March, 2018, their Balance Sheet was as follows:
Y died on 30th June, 2018. The Partnership Deed provided for the following on the death of a partner:

1. Goodwill of the business was to be calculated on the basis of 2 times the average profit of the past 5 years. The profits for the years ended 31st March, 2018, 31st March, 2017, 31st March, 2016, 31st March, 2015 and 31st March, 2014 were ₹ 3,20,000 (Loss) ; ₹ 1,00,000; ₹ 1,60,000; ₹ 2,20,000 and ₹ 4,40,000 respectively.
2. Y's share of profit or loss from 1st April, 2018 till his death was to be calculated on the basis of the profit or loss for the year ended 31st March, 2018

Y You are required to calculate the following:

1. Goodwill of the firm and Y's share of goodwill at the time of his death.
2. Y's share in the profit or loss of the firm till the date of his death.
3. Prepare Y's Capital Account at the time of his death to be presented to his executors.