Accounts of Partnership Firms-Fundamentals — Accountancy STD 12 — Question

From the following information, calculate the value of goodwill on the basis of 3 years purchase of average profits of last four years.

Year	Result	Amount (₹)
2015	Profit	5,000
2016	Profit	8,000
2017	Loss	3,000
2018	Profit	6,000

Kavin, Madhan, and Ranjith are partners sharing profits and losses in the ratio of 4:3:3 respectively. Kavin retires from the firm on 31st December 2018. On the date of retirement, his capital account shows a credit balance of ₹ 1,50,000. Pass journal entries if:

1. The amount due is paid off immediately.
2. The amount due is not paid immediately.
3. ₹ 1,00,000 is paid and the balance in the future.

Rani, Jaya and Rathi are partners sharing profits and losses in the ratio of 2:2:1. On 31.3.2018, Rathi retired from the partnership. Profit of the preceding years is as follows: 2014: ₹ 10,000; 2015; ₹ 20,000; 2016; ₹ 18,000 and 2017; ₹ 32,000.
Find out the share of profit of Rathi for the year 2018 till the date of retirement if

1. profit is to be distributed on the basis of the previous year’s profit
2. Profit is to be distributed on the basis of the average profit of the past 4 years.

Also pass necessary journal entries by assuming partners’ capitals are fluctuating.

What is annuity factor?

Malathi and Shobana are partners sharing profits and losses in the ratio of 5 : 4. They admit Jayasri into a partnership for 1/3 share of profit. Jayasri pays cash ₹ 6,000 towards her share of goodwill. The new ratio is 3 : 2 : 1. Pass necessary journal entry for adjusting goodwill on the assumption that the fixed capital method is followed.

Anjali Flour Ltd. with a registered capital of ₹ 4,00,000 in equity shares of ₹ 10 each, issued 30,0 of such shares; payable ₹ 2 per share on the application, ₹ 5 per share on the allotment, and ₹ 3 shares on the first call. The issue was duly subscribed.
All the money payable was duly received but on the allotment, one shareholder paid the entire balance on his holding of 500 shares. Give journal entries to record the I transactions.

Explain the objectives of financial statement analysis.

Janani, Kamali and Lakshmi are partners in a firm sharing profits and losses equally. As per the terms of the partnership deed, Kamali is allowed a monthly salary of ₹ 10,000 and Lakshmi is allowed a commission of ₹ 40,000 per annum for their contribution to the business of the firm. You are required to pass the necessary journal entry. Assume that their capitals are fluctuating.

Balu, Chandru and Nirmal are partners in a firm sharing profits and losses in the ratio of 5:3:2 on 31st March 2018, Nirmal retires from the firm. On the date of Nirmal’s retirement, goodwill appeared in the books of the firm at ₹ 60,000 By assuming fluctuating capital account, pass the necessary journal entry if the partners decide to

1. write off the entire amount of existing goodwill
2. write off half of the existing goodwill.