Aarth's Academy of Commerce

2-C/53 NIT Faridabad, 9910355359

ASSIGNMENT FUNDAMENTALS AND CHANGE IN PSR

Class 12 - Accountancy
Time Allowed: 3 hours Maximum Marks: 135

1. A, B and C are partners sharing profits in the ratio of 5 : 4 : 1. C is given guarantee that his minimum share of [4]
profit in any year would be at least ₹ 50,000. Deficiency, if any, would be borne by A and B equally. Profit for

the year ended 31st March, 2023 was ₹ 4,00,000. Pass necessary Journal entries in the books of the firm.
2. A, B and C started a business in partnership. A contributes ₹ 50,000 for the whole year. B introduces ₹ 40,000 at [4]
first and increased it to ₹ 46,000 at the end of four months but withdraws ₹ 16,000 at the end of nine months. C
invests ₹ 80,000 at first but withdraws ₹ 20,000 at the end of five months.
Firm earned a profit of ₹ 23,750 during the year. You are required to show the division of profits on the basis of

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the effective capital employed by each partner during the year.
3. State whether the claim is valid if the partnership deed is silent in the following cases, give reason in support of [4]
your answer:
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i. Anil and Priya are partners in a firm. Anil had advanced a loan to the firm. He claims interest @ 9% p.a.
ii. S and V are partners in a firm. S wants interest on capital @ 8% p.a.
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4. A, B and C were partners in a firm having capitals of ₹60,000; ₹60,000 and ₹80,000 respectively. Their Current [4]
Account balances were A: ₹10,000; B: ₹5,000 and C: ₹2,000 (Dr.). According to the partnership deed 10% of
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the profit is to be transferred to General Reserve and the partners were entitled to interest on capital @ 5% p.a. C
being the working partner was also entitled to a salary of ₹12,000 p.a. The profits were to be divided as follows:
i. The first ₹20,000 in proportion to their capitals.
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ii. Next ₹30,000 in the ratio of 5 : 3 : 2.

iii. Remaining profits to be shared equally.

The firm made a profit of ₹1,80,000 for the year ended 31st March, 2023 before charging any of the above items.
Prepare the Profit & Loss Appropriation Account and pass necessary journal entry for apportionment of divisible
profit.
5. Amitabh and Babul are partners sharing profits in the ratio of 3:2, with capitals of ₹ 50,000 and ₹ 30,000 [6]
respectively. Interest on capital is agreed @ 6% p.a. Babul is to be allowed an annual salary of ₹ 2,500. Manager
is to be allowed commission ₹ 5,000. Amitabh has also given a Loan on April 01, 2019 of ₹ 50,000 to the firm
without any agreement. During the year 2019-20, the profits earned is ₹ 22,250.
Prepare Profit and Loss Appropriation account showing the distribution of profit and the partners’ capital
accounts for the year ending March 31, 2020.
6. A, B and C are partners in a firm sharing profits and losses in the ratio of 12 : 8 : 5. Partner C is guaranteed a [6]

minimum profit of ₹ 50,000 p.a. by the firm. The profits and losses for the years ended 31st March were: 2021 -
Profit ₹ 2,00,000; 2022 - Profit ₹ 3,00,000, and 2023 - Loss ₹ 2,00,000. Pass necessary Journal entries in the
books of the firm.
7. Naveen, Seerat and Hina were partners in a firm manufacturing blanket. They were sharing profits in the ratio of [6]

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 5: 3: 2. Their capitals on 1st April, 2019 were Rs 2,00,000; Rs 3,00,000 and Rs 6,00,000 respectively. After the
floods in Uttarakhand, all partners decided to help the flood victims personally.
For this, Naveen withdrew Rs 10,000 from the firm on 1st September 2019. Seerat, instead of withdrawing cash
from the firm took blankets amounting to Rs 12,000 from the firm and distributed to the flood victims. On the
other hand, Hina withdrew Rs 2,00,000 form her capital on 1st January 2020 and set up a centre to provide
medical facilities in the flood-affected area. The partnership deed provides for charging interest on drawings
@6% per annum. After the final accounts were prepared, it was discovered that interest in drawings had not
been charged.
Give the necessary adjusting journal entry and show the working notes clearly. Also, state any two values that
the partners wanted to communicate to society.
8. On 1st April, 2022 the balances of A and B were as follows: [6]

Capital Account Current Account

₹ ₹

A 1,00,000 (Cr.) 8,420

B 40,000 (Dr.) 3,200

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On 1st July, 2022, A withdrew ₹ 20,000 from his capital and B introduced ₹ 10,000 as further capital on the
same date. According to the deed, interest on capitals is to be allowed at 8% p.a. but no interest is to be allowed
or charged on current account balances and drawings. A is entitled to 3
and B of the profit. The manager of
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5 5

the firm is entitled to a commission of 10% of the profit before any adjustment is made according to the deed.
For the year ended 31st March, 2023, the profit was ₹ 40,000 and the drawings of A and B were ₹ 12,000 and ₹
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10,000 respectively. Prepare the P & L Appropriation A/c, Capital Accounts and Current Accounts
9. Anita, Bimla and Cherry are three partners. On 1 st April, 2018, their Capitals stood as: Anita ₹ 1,00,000, Bimla [6]
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₹ 2,00,000 and Cherry ₹ 3,00,000. It was decided that:

1. they would receive interest on Capital @ 5% p.a.,
2. Anita would get a salary of ₹ 5,000 per month,
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3. Bimla would receive commission @ 5% of net profit after deduction of commission, and
4. 10% of the divisible profit would be transferred to the General Reserve
Before the above items were taken into account, the profit for the year ended 31st March, 2019 was ₹ 5,00,000.
Prepare Profit and Loss Appropriation Account and the Capital Accounts of the Partners.
10. Ram and Gopal were partners in a firm sharing profits in the ratio of 3 : 2. On 1st January 2007, their fixed [6]
capital were Rs 100,000 and Rs 1,50,000 respectively. On 31 March, 2007 they decided that their total capital
(fixed) should be Rs 3,00,000. It was further decided that the capital (fixed) should be in their profit sharing
ratio. Accordingly, they introduced or withdrew the necessary capital. The partnership deed provided the
following.
i. Interest on capital @ 12% pa
ii. Interest on drawings @ 18% p.a.
iii. Monthly salary to Ram @ Rs 2,000 per month and to Gopal @ 3,000 per month.
The drawings of Ram and Gopal during the year were as follows :

Date Ram Gopal

July 1, 2007 10,000 12,000

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 September 30, 2007 15,000 12,000

The profit earned by the firm for the year ended 31st December, 2007 was Rs 2,00,000. 10% of this profit was to
be kept in a reserve. You are required to prepare
i. Profit and loss appropriation account,
ii. Capital of Ram and Gopal and
iii. Current account of Ram and Gopal.

11. A, B and C have Capitals of ₹ 60,000, ₹ 30,000 and ₹ 20,000 respectively on 1st April, 2022, on which they are [6]
entitled to interest @ 6% p.a. They share profits in the ratio of 5 : 3 : 2. A is entitled to receive a salary of ₹ 500
per month. Drawings during the year were as follows:

A B C
₹ ₹ ₹

1st June, 2022 2,000 2,000 1,000

1st Oct, 2022 1,000 1,500 1,000

1st Dec., 2022 500 1,000 500

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The rate of interest on Drawings is 6% p.a. Profit for the year ended 31st March, 2023 was ₹ 24,605 before
charging salary, interest on Capital and Drawings. Assuming that the Capitals are (a) Fixed, (b) Floating, show
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the Partner’s Capital Accounts, Current Accounts and Profit and Loss Appropriation Account.
12. Kajol and Sunny were partners sharing profits and losses in the ratio of 3:2. The following Balances were [6]
extracted from the books of account for the year ended March 31, 2015.
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Debit Amount Credit Amount

Particulars
Rs Rs
10

Capital: .

Kajol 1,15,000
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Sunny 91,000

Current accounts [on 1-04-2005*]

Kajol 4,500

Sunny 3,200

Drawings

Kajol 6,000

Sunny 3,000

Opening stock 22,700

Purchases and Sales 1,65,000 2,35,800

Freight inward 1,200

Returns 2,000 3,200

Printing and Stationery 900

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 Wages 5,500

Bills receivables and Bills Payables 25,000 21,000

Discount 400 800

Salaries 6,000

Rent 7,200

Insurance premium 2,000

Traveling expenses 700

Sundry expenses 1,100

Commission 1,600

Debtors and Creditors 74,000 78,000

Building 85,000

Plant and Machinery 70,000

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Motor car 60,000

Furniture and Fixtures 15,000

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Bad debts 1,500

Provision for doubtful debts 2,200

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Loan 25,000

Legal expenses 300

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Audit fee 900

Cash in hand 7,500

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Cash at bank 12,000

5,78,100 5,78,100

Prepare final accounts for the year ended March 31, 2015, with the following adjustments:
i. Stock on March 31, 2015, was Rs 37,500.
ii. Bad debts Rs 3,000; Provision for bad debts is to be made at 5% on debtors
iii. Rent Prepaid was Rs 1,200.
iv. Wages outstanding were Rs 2,200.
v. Interest on capital to be allowed on capital at 6% per annum and interest on drawings to be charged @ 5%
per annum.
vi. Kajol is entitled to a Salary of Rs 1,500 per annum.
vii. Prepaid insurance was Rs 500.
viii. Depreciation was charged on Building, @ 4%; Plant and Machinery, @ 5%; Motor car, @ 10% and furniture
and fixture, @ 5%.
ix. Goods worth Rs 7,000 were destroyed by fire on January 20, 2015. The Insurance company agreed to pay Rs
5,000 in full settlement of the claim.

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13. The Capital Accounts of X and Y showed balances of ₹40,000 and ₹20,000 on 1st April, 2017. They shared [6]
profits in the ratio of 3 : 2. They are allowed interest on Capitals @ 10% p.a. and are charged interest on
drawings @ 12% p.a. X also advanced a loan of ₹10,000 to the firm on 1st August, 2017.
During the year X withdrew ₹1,000 per month in the beginning of every month, whereas Y withdrew 1 1,000
per month at the end of every month.
The profits for the year ended 31st March, 2018, before the above mentioned adjustments were ₹20,960. Show
the distribution of profits and prepare the partner’s Capital Accounts.
14. Archna, Suresh and Deepak are partners in a firm. On 1st April, 2011 the balance in their capital accounts stood [6]
at Rs 6,00,000, Rs 5,00,000 and Rs 4,00,000 respectively. They shared profits in the proportion of 4 : 2 : 3.
Partners are entitled to interest on capital @ 7% per annum and salary of Suresh @ Rs 10,000 per quarter and a
commission of Rs 2,000 p.m. to Deepak as per the provisions of the partnership deed.
Suresh’s share of profits excluding interest on capital is guaranteed at Rs 30,000 p.a. Deepak’s share of profit
including interest on capital but excluding salary is guaranteed at Rs 60,000 p.a. Any deficiency arising on that
account shall be met by Archna. The profit of the firm for the year ended 31st March, 2012 amounted to Rs
2,59,000.
Prepare ‘Profit and Loss Appropriation Account’ for the year ended 31st March, 2012.

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15. On what occasions sacrificing ratio is used? [3]

16. Sanjeev, Ranjan and Somesh are partners sharing profits and losses in a specified ratio. With effect from 1st [3]

April, 2023, they decided to share profits in the ratio of 9 : 5 : 6. To arrive at the new ratio, Somesh acquires
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1

10
th share equally from Sanjeev and Ranjan. Calculate the old profit-sharing ratio.
17. Shweta, Meenu and Asha were partners in a firm sharing profits and losses in the ratio of 3 : 5 : 2. Meenu retired [3]
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on 1st April, 2022. After making all adjustments relating to revaluation, goodwill and accumulated profits, etc.,
the capital accounts of Shweta and Asha showed credit balance of ₹ 3,00,000 and ₹ 1,00,000 respectively. It was
10

decided to adjust the capitals of Shweta and Asha in their new profit sharing ratio.
Pass necessary journal entries for bringing in or withdrawal of the necessary amounts involved. Show your
working clearly.
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18. Mita, Geeta and Mohit were partners in a firm sharing profits and losses in the ratio of 5 : 3 : 2. With effect from [3]

1st April, 2022, they mutually agreed to share profits and losses in the ratio of 2 : 2 : 1. It was agreed that:
i. Goodwill of the firm was valued at ₹ 1,40,000.
ii. Profit on revaluation of assets and re-assessment of liabilities amounted to ₹ 1,20,000.
Pass necessary journal entries for the above transactions in the books of the firm. Show your working notes
clearly.
19. A, B and C were in partnership sharing profits in the ratio of 4 : 3 : 1. The partners agreed to share future profits [3]
in the ratio of 5 : 4 : 3. Calculate each partner’s gain or sacrifice due to change in ratio.
20. A, B and C are partners sharing profits and losses in the ratio 3 : 2 : 1 . From 1st April, 2007 they decide to share [4]
future profits and losses equally. Calculate the sacrificing ratio.
21. Neha, Priyanka and Yogesh were partners in a firm. From 1st April, 2023 they decided to share the profits in the [4]
ratio of 2 : 3 : 5. On this date the Balance Sheet of the firm showed a balance of ₹ 60,000 in Contingency
Reserve and debit balance of ₹ 1,20,000 in Profit and Loss Account. The Goodwill of the firm was valued at ₹
3,60,000.
Pass necessary journal entries for the above transactions in the books of the firm. Also show your workings
clearly.

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22. Suraj, Aryan, Sachin and Yogesh were partners in a firm sharing profits in the ratio of 2 : 2 : 3 : 3. On 1st April, [6]

2022, their Balance Sheet was as follows:

Liabilities ₹ Assets ₹

Capital A/cs: Fixed Assets 6,00,000

Suraj 1,00,000 Current Assets 3,45,000

Aryan 1,50,000

Sachin 2,00,000

Yogesh 2,50,000 7,00,000

Sundry Creditors 1,70,000

Workmen Compensation Reserve 75,000

9,45,000 9,45,000

From the above date, the partners decided to share future profits equally. For this purpose, the goodwill of the
firm was valued at ₹ 90,000. It was also agreed that:

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a. Claim against Workmen Compensation Reserve will be estimated at ₹ 1,00,000 and fixed assets will be
depreciated by 10%.
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b. The Capitals of the partners will be adjusted according to the new profit-sharing ratio. For this, necessary
cash will be brought or paid by the partners as the case may be.
Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet of the reconstituted firm.
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23. A, B and C sharing profits and losses in the ratio of 4 : 3 : 2, decide to share future profits and losses in the ratio [6]
of 2 : 3 : 4 with effect from 1st April, 2023. An extract of their Balance Sheet as at 31st March, 2023 is:
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Liabilities ₹ Assets ₹

Investments Fluctuation Reserve 18,000 Investments (At cost) 2,00,000

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Show the accounting treatment under the following alternative cases:

Case 1. When there is no other information.
Case 2. When market value of investments is ₹ 2,00,000.
Case 3. When market value of investments is ₹ 1,91,000.
Case 4. When market value of investments is ₹ 2,18,000.
Case 5. When market value of investments is ₹ 1,73,000.
24. Parth, Raman, and Zaisha are partners in firm manufacturing furniture. They have been sharing profits and [6]
losses in the ratio of 5 : 3 : 2. From 1st April 2017, they decided to share future profits and losses in the ratio of
2 : 5 : 3. Their Balance Sheet showed a debit balance of ₹ 4,000 in the Profit & Loss Account; the balance of ₹
36,000 in the General Reserve and a Balance of ₹ 12,000 in the Workmen's Compensation Reserve. It was
agreed that
i. The goodwill of the firm is valued at ₹ 76,000.
ii. The Stock (book value of ₹ 40,000) was to be depreciated by 8%.
iii. Creditors amounting to ₹ 900 were not likely to be claimed.
iv. Claim on account of Workmen's Compensation amounted to ₹ 20,000.

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 v. Investments (book value ₹ 38,000 ) were revalued at ₹ 40,000.
Pass the necessary journal entries for the above.
25. X, Y and Z were in partnership sharing profits in the ratio of 1 : 2 : 2. Their Balance Sheet as at 31st March 2009 [6]
was as follows :
BALANCE SHEET
as at 31.3.2009

Liabilities (Rs) Assets (Rs)

Profit and loss A/c 16,000 Cash 26,000

Creditors 19,000 Debtors 20,000

Bills Payable 11,000 Stock 25,000

Capitals: Furniture 15,000

X 20,000 Investments 30,000

Y 30,000 Machinery 20,000

Z 40,000 90,000

59 1,36,000 1,36,000

All the partners decided to share profits in the ratio of 2 : 1 : 1 w.e.f. April 1,2009. It was further agreed that :
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i. Value of Stock and Machinery is to be reduced by Rs 3,000 and Rs 2,000 respectively. (ii) Value of Furniture
is to be increased to Rs 16,000.
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ii. The Goodwill of firm should be valued at Rs 25,000.

You are required to record the necessary journal entries to give effect the above arrangement without opening
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Revaluation account and to prepare Balance Sheet of the firm after reconstitution of the firm.
Question No. 26 to 31 are based on the given text. Read the text carefully and answer the questions: [6]
X, Y and Z are partners. Fixed Capitals balance on 1st April 2020: X ₹ 2,00,000; Y ₹ 75,000 and ₹ 3,50,000.
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Partnership deed provides:

i. Interest on capital @ 9% p.a. and Interest on drawings 6% p.a.
ii. Salary of 6,000 per month to Y
iii. Profit to be shared as: first 10,000 of profit in the ratio of 5 : 3 : 2; Next 12,000 profit in the ratio of 3 : 2 : 1 and
balance profit (if any) in equal ratio.
X withdrew during the year ₹ 25,000 and Y ₹ 15,000. Z withdrew ₹ 62,500 for his personal use on 1st December 2020.
Firm earned a profit of ₹ 1,70.000 for the year ending 31st March 2021.
26. Total interest on drawings to be shown in Profit and Loss Appropriation Account:

a) 2,450 b) 3,850

c) 3,650 d) 2,650
27. Total Interest on Capital to be shown in Profit and Loss Appropriation Account:

a) 57,250 b) 55,250

c) 56,250 d) 54,250
28. Salary payable to Y:

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 a) 72,000 b) 70,000

c) 6,000 d) 60,000
29. Profit share of Z will be:

a) 12,400 b) 11,400

c) 18,000 d) 20,000
30. Profit share of X will be:
15,400, 16,400, 17,400, 18,400

a) 16,400 b) 17,400

c) 15,400 d) 18,400
31. Profit share of Y will be:
14,400, 13,400, 12,400, 11,400

a) 12,400 b) 13,400

c) 14,400 d) 11,400

Question No. 32 to 37 are based on the given text. Read the text carefully and answer the questions: [6]

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X, Y and Z running business in partnership since last 8 years. They are sharing profits in the ratio of 2 : 1 : 1. It was
observed in the current year that there was problem in their accounts. It was discovered that the interest on capital and
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interest on drawings had been omitted.
On 31st March 2021, the balances in their capital accounts after making adjustments for profits and drawings were ₹
1,60,000; ₹ 1,20,000 and ₹ 80,000 respectively. The profit for the year ended 31st March 2021 was ₹ 40,000.
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During the year X and Y each withdrew a total sum of ₹ 24,000 in equal instalments in the beginning of each month
and Z withdrew a total sum of ₹ 48,000 in equal instalments at the end of each month. The interest on drawings was to
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be charged @5% p.a. and interest on capital was to be allowed @ 10% p.a.
32. Opening Capital of Z was:
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a) 1,34,000 b) 1,20,000

c) 1,18,000 d) 1,64,000
33. Opening Capital of Y was:

a) 1,64,000 b) 1,40,000

c) 1,34,000 d) 1,18,000
34. Opening Capital of X was:

a) 1,66,000 b) 1,50,000

c) 1,64,000 d) 1,60,000
35. At the time of final adjustment, Y's Capital Account will be:

a) Credited with ₹ 3,850 b) Credited with ₹ 900

c) Credited with ₹ 2,950 d) Credited with ₹ 13,400

36. At the time of final adjustment, Z's Capital Account will be:

a) Credited with ₹ 2,950 b) Debited with ₹ 3,850

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 c) Debited with ₹ 900 d) Credited with ₹ 900
37. At the time of final adjustment, X ’s Capital Account will be:

a) Debited with ₹ 3,850 b) Credited with ₹ 3,850

c) Credited with ₹ 900 d) Credited with ₹ 2,950

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