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Question 13 of 35
Q.

(a) Charles, Muthu and Sekar are partners, sharing profits in the ratio of 3 : 4 : 2. Their balance sheet as on 31st December, 2018 is as under :

Liabilities₹Assets₹
Capital accounts: Charles 30,000; Muthu 40,000; Sekar 20,00090,000Furniture20,000
Sundry creditors33,000Stock40,000
Debtors30,000
Cash at bank33,000
1,23,0001,23,000

On 1.1.2019, Charles retired from the partnership firm on the following arrangements :

  1. Stock to be appreciated by 10%.
  2. To provide ₹ 1,300 for bad debts.
  3. The final amount due to Charles was paid immediately. Prepare revaluation account, partner's capital account and the balance sheet of the firm after retirement. OR

(b) From the following trading activities of Naveen Ltd., calculate :

(i) Gross Profit Ratio

(ii) Operating Cost Ratio

(iii) Operating Profit Ratio

Statement of Profit and Loss

Particulars₹
I Revenue from operations20,000
II Other income: Income from investments200
III Total revenues (I + II)20,200
IV Expenses:
Purchase of stock-in-trade17,000
Changes in inventories(-) 1,000
Finance costs300
Other expenses (administration and selling)2,400
Total expenses18,700
V Profit before tax (III - IV)1,500
Tamil Nadu DgeTamil Nadu HSC (DGE) Commerce Board 2020Subjective· 5mImportance★★★★★
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(a) Revaluation profit Rs. 2,700 (3:4:2); Charles is paid Rs. 30,900 immediately and the new Balance Sheet totals Rs. 94,800. (b) Gross profit ratio 20%, operating cost ratio 92%, operating profit ratio 8%.

PART (a) - Charles, Muthu and Sekar (Retirement of Charles)

Stock appreciated 10% = 40,000 x 10% = 4,000 (gain); provision for bad debts 1,300 (loss).

Revaluation Account

Dr (Losses)Rs.Cr (Gains)Rs.
To Provision for bad debts A/c1,300By Stock A/c4,000
To Profit transferred to:
  Charles (3/9)900
  Muthu (4/9)1,200
  Sekar (2/9)600
4,0004,000

Partners' Capital Accounts

ParticularsCharles (Rs.)Muthu (Rs.)Sekar (Rs.)ParticularsCharles (Rs.)Muthu (Rs.)Sekar (Rs.)
To Bank A/c (final payment)30,900--By Balance b/d30,00040,00020,000
To Balance c/d-41,20020,600By Revaluation A/c (profit)9001,200600
30,90041,20020,60030,90041,20020,600

Balance Sheet after retirement (as on 1.1.2019)

LiabilitiesRs.AssetsRs.
Capital accounts: Muthu 41,200; Sekar 20,60061,800Furniture20,000
Sundry creditors33,000Stock 40,000 + 4,00044,000
Debtors 30,000 - 1,300 provision28,700
Cash at bank 33,000 - 30,9002,100
94,80094,800

PART (b) - Naveen Ltd.: Ratios

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