Accounting for Partnership Firms-Partnership [CBSE (Central Board of Secondary Education) Class-12 Accountancy]: Questions 17 - 19 of 38

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Question 17

Write in Brief One Liner▾

When does the Joint Life Policy become due?

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Question 18

Write in Short Short Answer▾

A and B are partners sharing profits in the ratio of 3: 2 with capitals of ₹ 50,000 and ₹ 30,000 respectively. Interest on capital is agreed@6% p. a. B is to be allowed an annual salary of ₹ 2,500. During 2006, the profits of the year prior to calculation of interest on capital but after charging B՚s salary amounted to ₹ 12,500. A provision of 5% of the profits is to be made in respect of Manager՚s commission.

Prepare an account showing the allocation of profits and partners՚ capital accounts.

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Question 19

Describe in Detail Subjective▾

A, B and C were partners in a firm sharing profits equally: Their Balance Sheet on. 31.12. 2007 stood as:

Shows Balance of Assets and Liabilities of the Firm
LiabilitiesAssets
A30,000Goodwill18,000
B30,000Cash38,000
C20,00085,000Debtors43,000
Bills payable20,000Less: Bad Debt provision3,00040,000
Creditors18,000Bills Receivable25,000
Workers Compensation Fund8,000Land and Building60,000
Employees provident Fund60,000Plant and Machinery40,000
General Reserve30,000
2,21, 0002,21, 000

It was mutually agreed that C will retire from partnership and for this purpose following terms were agreed upon.

i) Goodwill to be valued on 3 years՚ purchase of average profit of last 4 years which were 2004: ₹ 50,000 (loss) ; 2005: ₹ 21,000; 2006: ₹ 52,000; 2007: ₹ 22,000.

ii) The Provision for Doubtful Debt was raised to ₹ 4,000.

iii) To appreciate Land by 15% .

iv) To decrease Plant and Machinery by 10% .

v) Create provision of Rs; 600 on Creditors.

vi) A sum of ₹ 5,000 of Bills Payable was not likely to be claimed.

vii) The continuing partners decided to show the firm՚s capital at 1,00, 000 which would be in their new profit sharing ratio which is 2: 3. Adjustments to be made in cash

Make necessary accounts and prepare the Balance Sheet of the new partners.

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Explanation

Shows Re-Valuated Amount of Assets and Liabilities
ParticularsParticulars
To Provision for Debts A/c1,000By Land A/c9,000
To Plant & Machinery A/c4,000By Provision on Creditors A/c600
To Profit transferred toBy Bills Payable A/c5,000
A՚s Capital A/c3,200
B՚s Capital A/c3,200
C՚s Capital A/c3,2009,600
14,60014,600
Shows Capital of Partners in the Firm

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