Advertisements
Advertisements
Question
State whether the following statements is true or false :
Retiring partner’s share in profit up to the date of his retirement will be debited to profit and loss suspense account.
Options
True
False
Solution
True
Explanation: The retiring partner is entitled to his share of profits or losses that have arisen till the date of his retirement. Such shares are dispensed to the retiring partner by debiting the Profit & Loss Suspense Account and crediting the Retiring Partner’s Capital Account. Profit and Loss Suspense Account is opened if any partner retires during the middle of the year as against the usual case of retirement at the year end.
APPEARS IN
RELATED QUESTIONS
| Balance Sheet as on 31st March 2012 | |||
| Liabilities | Amount (Rs) | Assets | Amount (Rs) |
| Capital A/c | Land and Building | 50000 | |
| Supriya | 40000 | Stock | 30000 |
| Surekha | 40000 | Debtors 37500 | |
| Sujata | 20000 | (–) R.D.D. 2500 | 35000 |
| Reserve Fund | 10000 | Furniture | 10000 |
| Creditors | 16000 | Cash at Bank | 5000 |
| Outstanding Expenses | 4000 | ||
| 1,30,000 | 1,30,000 | ||
Sujata died on 1st July 2012 and the adjustments were agreed to as per the deed as follows:
(1) Land and Building to be valued at Rs. 60,000 and all debtors were good.
(2) Stock be depreciated by 10%.
(3) The drawings of Sujata up to the date of her death amounted to Rs. 2,000.
(4) Interest on capital was to be allowed at 10% p.a.
(5) The deceased partner’s share of goodwill is to be valued at 2 years’ purchase of average profit of last 3 years.
The profits were:
2009 – 10 = Rs. 15,000
2010 – 11 = Rs. 17,000
2011 – 12 = Rs. 13,000
(6) The deceased partner’s share of profit up to the date of her death should be based on the average profit of the last two years.
You are required to prepare:
(a) Profit and Loss Adjustment Account.
(b) Sujata’s Capital Account showing the balance payable to her Executor’s Loan Account.
(c) Working notes for calculation of (a) Goodwill and (b) Profit till the date of Sujata’s death.
5. If the profit sharing ratio is not decided by the co-venturers, in which ratio will they share profits and losses?
Following is the Balance Sheet of Usha and Sushila who share profits and losses equally.
|
Balance Sheet as on 31st March, 2010 |
|||
|
Liabilities |
Amount Rs. |
Assets |
Amount Rs. |
|
Capital: |
|
Land and Building |
1,50,000 |
|
Usha |
2,00,000 |
Machinery |
1,00,000 |
|
Sushila |
1,00,000 |
Debtors |
80,000 |
|
Creditors |
60,000 |
Stock |
40,000 |
|
Bills Payable |
40,000 |
Bank |
30,000 |
|
|
4,00,000 |
|
4,00,000 |
The net profits for the last three years were Rs. 60,000, Rs. 80,000 and Rs. 1,00,000. It was decided to calculate the value of goodwill at\[2\frac{1}{2}\] years’ purchase of super profit taking into consideration the standard rate of return on the capital employed at 15%. Calculate the value of goodwill.
Following is the balance sheet of the firm of Sonu , Monu and Piyu who share profits and losses in the ratio of their capital :
Balance sheet as on 31st March, 2013
| Liabilities | Amount (₹) | Assets | Amount (₹) |
|
| Capital A/c | Plant and Machinery | 20000 | ||
| Sonu | 50000 | Land and Building | 55000 | |
| Monu | 20000 | Stock | 12000 | |
| Piyu | 30000 | Debtors | 12000 | 11000 |
| Creditors | 15000 | Less : R.D.D | (1000) | |
| Cash | 17000 | |||
| 115000 | 115000 | |||
Piyu retires from the business on 31st March 2013 and the following adjustments were agreed :
(1) The stock is to be valued at 92% of its book value.
(2) R.D.D. is to be maintained at 10 % on debtors.
(3) The value of land and buildings is to be appreciated by 20 %.
(4) The goodwill of the firm to be fixed at ₹ 12000. Piyu share in the same be adjusted in the account of accounting partners in gain ratio.
(5) The entire capital of the new firm be fixed at ₹ 160000 between Sonu and Monu in their new profit sharing ratio which is fixed at 3 : 1 by making adjustment for difference in cash and amount payable to piyu paid in cash.
Prepare : Profit and loss adjustment account , Partners' capital account and balance sheet after retirement of piyu.
According to which section of the Indian Partnership Act, 1932 states that the outgoing partner has an option to receive either interest @ 6% p.a. till the date of payment or such share of profits which has been earned with his/her money (i.e., based on capital ratio)?
Anil, Bimal and Chetan are partners sharing their profits and losses in the ratio of 4 : 3 : 2. On 1.7.2019, Chetan retired and on that date, the capitals of Anil, Bimal and Chetan after all necessary adjustments stood at ₹ 75,000, ₹ 65,000 and ₹ 45,000 respectively. Anil and Bimal continued to carry the business for 6 months without settling Chetan's account. During the period of six months ending 31st December 2019, a profit of ₹ 50,000 is earned by the firm. Keeping Chetan's interest in mind, the amount payable to Chetan will be:
As per ______ of the Indian Partnership Act, a retiring partner becomes entitled to profits after retirement if his dues remain unpaid.
On the retirement of Hari from the firm of 'Hari, Ram and Sharma' the Balance Sheet showed a debit balance of ₹ 12,000 in the Profit and Loss Account. For calculating the amount payable to Hari this balance will be transferred:
In the case of retirement, if full or part of the amount payable to the retiring partner still remains to be paid, and there is no agreement among the partners then the retiring partner will get:
(i) Interest @6% p.a. on the Balance amount.
(ii) Share of profit earned proportionate to his amount outstanding to the total capital of the firm.
(iii) Interest @9% p.a. on the balance amount.
Which out of the following is correct?
On the death of a partner, his share in the profits of the firm till the date of his death is transferred to the ______
In case of retirement, if full or part of the amount payable to the retiring partner still remains to be paid, and there is no agreement among the partners then retiring partner will get:
- Interest @ 6% p.a. on the balance amount.
- Share of profit earned proportionate to his amount outstanding to total capital of the firm.
- Interest @ 9% p.a. on the balance amount.
Which out of the following is correct?
What Journal Entry will be passed on dissolution of a partnership firm when a partner agreed to bear the dissolution expenses for ₹ 10,000?
Actual expenses paid by partner were ₹ 15,000.
Madhu, Shilpi and Renuka were partners in a firm sharing profits in the ratio 2 : 2: 1. The firm doses its books on 31st March every year. Shilpi died on 30th June, 2021. On Shilpi's death, the goodwill of the firm was valued at ₹ 30,000. On Shilpi's death, her share in the profits of the firm till the date of her death was to be calculated on the basis of previous year's profit which wast ₹ 60,000.
- Calculate Shilpi's share in the profits of the firm till her death.
- Pass necessary journal entries for the treatment of goodwill without opening goodwill account and Shilpi's share of profit till the date of her death.
