ANSWERS

1. (b) 1 : 2.
Working Note:
Calculation of Gaining Ratio:
Kris = 5/9 – 4/9 = 1/9; Peter = 4/9 – 2/9 = 2/9.
Gaining Ratio = 1/9 : 2/9 = 1 : 2.
2. (a) 13 : 14.
Working Note:
Anna Teena
4 2
A. Their Existing Share
9 9
1 1 1 8 1 8
B. Share Surrendered by Bina    
9 3 27 9 3 27
4 1 13 2 8 14
C. New Profit Share of Anna and Teena (A + B)    
9 27 27 9 27 27
New Profit-sharing Ratio of Anna and Teena = 13 : 14.

3. (c) Credit Lisa’s Capital Account with ` 2,00,000 and Debit Monika’s Capital Account with ` 50,000 and
Nisha’s Capital Account with ` 1,50,000.

Working Note:
Gain of a Partner = New Profit Share – Old Profit Share
1 3 76 1
Monika’s Gain =   
2 7 14 14
1 2 74 3
Nisha’s Gain =   
2 7 14 14
Gaining Ratio of Monika and Nisha = 1 : 3
2
Lisa’s Share of Goodwill = ` 7,00,000 ×
= ` 2,00,000 shall be contributed by Monika and Nisha
7
in their gaining ratio.
1
Monika’s contribution = ` 2,00,000 × = ` 50,000,
4
3
Nisha’s contribution = ` 2,00,000 × = ` 1,50,000.
4
4. (d) Both Assertion (A) and Reason (R) are correct, and Reason (R) is the correct explanation of Assertion (A).

5. (b) ` 37,500.
Working Note:
Balance of Workmen Compensation Reserve = ` 1,50,000
Less: Liability = ` 37,500
Surplus available = ` 1,50,000 – ` 37,500 = ` 1,12,500
1
Akash‘s Share in surplus of Workmen Compensation Reserve = ` 1,12,500 × = ` 37,500.
3

1
6. Total Capital of New Firm = Adjusted capitals of all partners
= ` 33,000 + ` 70,500 + ` 90,500 = ` 1,94,000.

CALCULATION OF ACTUAL CASH TO BE PAID OFF OR BROUGHT IN

Particulars David (`) Aslam (`)
(a) New Capital (` 1,94,000 in the ratio of 2 : 3) 77,600 1,16,400
(b) Adjusted Old Capital 33,000 70,500
(c) Cash to be brought in (a – b) 44,600 45,900

JOURNAL
Date Particulars L.F. Dr. (`) Cr. (`)
Bank A/c ...Dr. 90,500
To David’s Capital A/c 44,600
To Aslam’s Capital A/c 45,900
(Shortage in cash brought in by remaining partners)

Naresh’s Capital A/c ...Dr. 90,500

To Bank A/c 90,500
(Payment made to Naresh)

7. JOURNAL
Date Particulars L.F. Dr. (`) Cr. (`)
Bad Debts A/c ...Dr. 7,500
To Debtors A/c 7,500
(Bad Debts written-off)

Provision for Doubtful Debts A/c ...Dr. 7,500

To Bad Debts A/c 7,500
(Bad Debts transferred to Provision for Doubtful Debts Account)

Revaluation A/c ...Dr. 1,875

To Provision for Doubtful Debts A/c 1,875
[5% (` 95,000 – ` 7,500) – (` 10,000 – ` 7,500)]
(Short Provision for Doubtful Debts Created)
X’s Capital A/c ...Dr. 750
Y’s Capital A/c ...Dr. 750
Z’s Capital A/c ...Dr. 375
To Revaluation A/c 1,875
(Loss on revaluation transferred to Partners’ Capital Accounts in their
old profit-sharing ratio)

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 8. JOURNAL
Date Particulars L.F. Dr. (`) Cr. (`)
(a) (i) Goodwill A/c ...Dr. 10,800
To Aditi’s Capital A/c 5,400
To Bhavya’s Capital A/c 3,600
To Cris’s Capital A/c 1,800
(Goodwill raised at full value)

(ii) Aditi’s Capital A/c ...Dr. 5,400

Cris’s Capital A/c ...Dr. 5,400
To Goodwill A/c 10,800
(Goodwill written off in new profit-sharing ratio)

(b) (i) Goodwill A/c ...Dr. 3,600

To Bhavya’s Capital A/c 3,600
(Goodwill raised with retiring partner’s share)

(ii) Cris’s Capital A/c ...Dr. 3,600

To Goodwill A/c 3,600
(Goodwill written-off in gaining ratio)
(c) Cris’s Capital A/c ...Dr. 3,600
To Bhavya’s Capital A/c 3,600
(1/3rd share of firm’s goodwill credited to Bhavya’s Capital and debited
to Cris’s Account as he is sole beneficiary of the goodwill)

Note: Calculation of Gaining Ratio:

Gain of a Partner = New Profit Share – Old Profit Share

1 3
Aditi’s Gain =  0
2 6

1 1 3 1 2 1
Cris’s Gain =    or
2 6 6 6 3
Hence Cris alone gains 1/3rd share of Bhavya’s share of Goodwill.

9.
Dr. REVALUATION ACCOUNT Cr.
Particulars ` Particulars `
To Fixed Assets A/c 2,500 By Creditors A/c 2,000
To Provision for Doubtful Debts A/c 5,000 By Loss transferred to:
Hanny’s Capital A/c (` 5,500 × 5/10) 2,750
Pammy’s Capital A/c (` 5,500 × 3/10) 1,650
Sunny’s Capital A/c (` 5,500 × 2/10) 1,100
7,500 7,500

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Dr. PARTNERS’ CAPITAL ACCOUNTS Cr.
Particulars Hanny Pammy Sunny Particulars Hanny Pammy Sunny
` ` ` ` ` `
To Goodwill A/c 25,000 15,000 10,000 By Balance b/d 1,07,500 1,02,500 60,000
To Revaluation A/c (Loss) 2,750 1,650 1,100 By Pammy’s Capital A/c 8,000 ... ...
To Hanny’s Capital A/c ... 8,000 32,000 (Goodwill)
(Adjustment of Goodwill) By Sunny’s Capital A/c 32,000 ... ...
To Bank A/c (Bal. Fig.) 1,19,750 ... ... (Goodwill)
To Balance c/d (WN 3 and 4) ... 79,000 1,18,500 By Bank A/c (Bal. Fig.) ... 1,150 1,01,600
1,47,500 1,03,650 1,61,600 1,47,500 1,03,650 1,61,600

Working Notes:
1. Gain/(Sacrifice) = New Profit Share – Old Profit Share
Pammy’s Gain = 2/5 – 3/10 = 1/10; Sunny’s Gain = 3/5 – 2/10 = 4/10; Gaining Ratio = 1 : 4.

2. Hanny’s share of goodwill = ` 80,000 × 5/10 = ` 40,000 to be contributed by gaining partners in the gaining
ratio, i.e., 1 : 4. Pammy’s contribution = ` 40,000 × 1/5 = ` 8,000 and Sunny’s contribution = ` 40,000 × 4/5
= ` 32,000.

3. Calculation of Total Capital of New Firm after Hanny’s retirement: `

Amount payable to Hanny 1,19,750
Adjusted old capital of Pammy (` 1,02,500 – ` 15,000 – ` 1,650 – ` 8,000) 77,850
Adjusted old capital of Sunny (60,000 – 10,000 – 1,100 – 32,000) 16,900
Bank balance required in new firm 15,000
Existing bank balance [` 40,000 – ` 8,000 (claim of creditors settled)] (32,000)
Total capital of new firm 1,97,500

4. Pammy’s capital in new firm = ` 1,97,500 × 2/5 = ` 79,000

Sunny’s capital in new firm = ` 1,97,500 × 3/5 = ` 1,18,500.