Suresh and Ramesh are sharing profits and losses equally. They agreed to admit Umesh with
1/5th share in partnership. He agreed to bring in cash his share of goodwill. It was decided
to value goodwill as per Capitalization method. The past profits of the firm for five years are
as follows:
Year Profits
2002 30000
2003 40000
2004 50000
2005 60000
2006 70000
Rate of normal profit is 10%. On 31/12/2006 Capital employed was Rs.400000. Calculate the
amount of cash that Umesh will bring as his share of goodwill.
a] Rs.166000 b] Rs.100000
c] Rs.166670 d] None of these
DIRECTIONS for questions 6 to 10: Read the following case study and answer the questions given below.
The Trial Balance showed a shortfall of Rs.1,481 in the debit column and is made to agree by putting
this difference against Suspense Account. Later, the following errors were discovered.
i] Goods worth Rs.350 were sold to Rohan on credit. This was recorded in the Sales book
but was not posted to Rohan's A/c in the ledger
.
ii] Goods worth Rs.115 were returned by Akash. The amount was credited to his account but
was not entered in the Return Inward book.
iii] Kirti Boutique paid Rs.150 but their account was credited for Rs.105.
iv] Goods costing Rs.425 purchased from Neev were wrongly entered in the Sales book.
v] An amount of Rs.500 owed from Sujith was omitted by the list of Sundry Debtors.
vi] The Purchase book was overcast by Rs.159.
vii] Cash Rs.670 paid to Shashank and Rs.760 to Sudhakar was debited to Shashank by Rs.760
and Sudhakar by Rs.670.
viii] A cheque of Rs.210 issued to Mr. Kapoor was entered in the Bank column of the Cash book
on the payment side and was posted to his credit in the ledger.
ix] An account of Rs.175 due from Rinku, which had been written off as Bad debts in the previous
year, was unexpectedly recovered and had been posted to her Personal account.
x] Discount allowed Rs.150 was credited to Discount received account.
xi] A cheque for Rs.950 received from Upen was dishonored and had been posted to the debit
of the Sales Return account.
6. What will be the rectifying entry for transaction (v)?
a] Sundry Debtors A/c……..Dr. 500
To Sales A/c. 500
b] Sundry Debtors A/c……..Dr. 500
To Suspense A/c. 500
c] Sales A/c………………...Dr. 500
To Sundry Debtors A/c. 500
d] Suspense A/c……………Dr. 500
To Sundry Debtors A/c. 500
7. What will be the impact on Net profit?
a] Net profit is decreased by Rs.19 b] Net profit is increased by Rs.19
c] Net profit is decreased by Rs.434 d] Net profit is increased by Rs.434
8. What will be the change in balance of Sundry Debtors?
a] Increase by Rs.380 b] Decrease by Rs.380
c] Increase by Rs.1,330 d] Decrease by Rs.1330
9. What is the total of Suspense A/c?
a] Rs.1,061 b] Rs.965 c] Rs.1,685 d] Rs.1,465
10. What will be the change in balance of Sundry Creditors?
a] Increase by Rs.835 b] Decrease by Rs.835
c] Increase by Rs.165 d] Decrease by Rs.165
consignment
Ajay & Co. sent 50 cases of Soaps valued at Rs.200 each to Amar for sale on consignment
basis. Ajay & Co. paid freight and insurance Rs.200. Each case contained 40 packets. Amar
sold 1,300 packets @ Rs.8 each partly on credit and partly on cash. Amar was entitled to 5%
normal commission and 1% del-credre commission. One customer who had purchased 100 packets
had paid only for 75 packets and the balance had become a bad debt.
Calculate the amount of Profit or Loss on Consignment?
a] Rs.9776 b] Rs.3,146 c] Rs.5,654 d] Rs.4,995
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