Case Based MCQs of Death of Partner Class 12 with Answers
Case Based MCQs of Death of Partner Class 12 with Answers
A, B and C are partners in a firm sharing profits and losses in the ratio of 3 : 2 : 1. Their books are closed on March 31st every year.
B died on September 30th, 2023 and A and C decided to share future profits in 3 : 2. The executors of B are entitled to:
(i) His share of Capital i.e., ₹ 25,000 along-with his share of goodwill. The total goodwill of the firm was valued at ₹ 1,20,000.
(ii) His share of profit up to his date of death on the basis of sales till date of death. Sales for the year ended March 31, 2023 was ₹ 3,00,000 and profit for the same year was 10% on sales. Sales show a growth trend of 20% and percentage of profit earning is reduced by 1%.
You are required to give answer to the following questions:
Q. 1. In respect of goodwill:
(A) A and C will be debited by ₹ 30,000 and ₹ 10,000 respectively
(B) A and C will be debited by ₹ 28,000 and ₹ 12,000 respectively
(C) A and C will be debited by ₹ 12,000 and ₹ 28,000 respectively
(D) A and C will be debited by ₹ 36,000 and ₹ 84,000 respectively
Ans:- (C)
Q. 2. In respect of B’s share of profit:
(A) Profit and Loss Suspense Account will be debited by ₹ 5,400
(B) Profit and Loss Suspense Account will be debited by ₹ 16,200
(C) A and C will be debited by ₹ 4050 and ₹ 1,350 respectively
(D) A and C will be debited by ₹ 1,620 and ₹ 3,780 respectively
Ans:- (D)
Q. 3. On death of a partner, the amount due to him will be transferred to:
(A) His Capital Account
(B) His Current Account
(C) His Executor’s Account
(D) His Loan Account
Ans:- (C)
Q. 4. Choose the odd one:
(A) Revaluation Account
(B) Gaining Ratio
(C) Realisation of Assets
(D) Adjustment of Goodwill
Ans:- (C)
A, B and C used to work in a Call Center in the night shift where they became friends. After completing their graduation through correspondence, they decided to quit their jobs and start their own business. They opened a Readers’ Cafe in a famous mall. They were earning well. On 30th June, 2024, fire broke out in the kitchen of Cafe and B met with an accident and lost his life.
Their previous year’s Balance Sheet of the firm as at 31st March, 2024 is as follows:
| Liabilities | ₹ | Assets | ₹ |
| Capital A/cs: A B C | 2,00,000 2,00,000 2,00,000 | Cooking Utensils | 1,20,000 |
| Workmen’s Compensation Reserve | 1,20,000 | Ovens | 40,000 |
| Creditors | 1,02,500 | Books | 1,60,000 |
| Bills Payable | 30,000 | Motor Bikes | 2,10,000 |
| Outstanding Expenses | 17,500 | Furniture & Fixtures | 1,80,000 |
| Debtors | 60,000 | ||
| Inventories | 25,000 | ||
| Bank | 33,000 | ||
| Profit & Loss Account (Loss for the Y/E 31st March, 2024) | 42,000 | ||
| 8,70,000 | 8,70,000 |
According to the Partnership Deed, in addition to the Deceased Partner’s Capital, the executors are entitled to the following:
(i) Goodwill is to be valued at 3 years’ purchase of the average profit of the last five years ended 31st March, which were:
| Year | Profit |
| 2020 | 50,000 |
| 2021 | 40,000 |
| 2022 | 80,000 |
| 2023 | 90,000 |
(ii) B’s share of goodwill be adjusted against the Capital Accounts of continuing partners A and C who have decided to share future profits in the ratio of 5 : 3.
(iii) Cooking Utensils were found undervalued by 20%; Ovens were revalued at 90% and Inventories at ₹ 35,000.
(iv) A liability on account of workmen compensation is determined at ₹ 1,08,000.
(v) B’s share of profit or loss up to the date of death on the basis of average profits of the last two years.
Based on the above information, answer the following questions:
Q. 1. Gaining Ratio of A and C would be
(a) 1 : 1
(b) 5 : 3
(c) 7 : 1
(d) 3 : 2
Ans:- (c)
Q. 2. B’s share in Gain (Profit)/Loss on Revaluation of Assets and Reassessment of Liabilities would be
(a) ₹ 36,000 (Gain)
(b) ₹ 30,000 (Gain)
(c) ₹ 10,000 (Gain)
(d) ₹ 12,000 (Gain)
Ans:- (d)
Q. 3. B’s share of Goodwill would be
(a) ₹ 1,30,000
(b) ₹ 43,600
(c) ₹ 72,000
(d) ₹ 24,000
Ans:- (b)
Q. 4. Entry for adjusting B’s share of profit or loss till the date of death would be:
(a)
A’s Capital A/c Dr. 38,150
C’s Capital A/c Dr. 5,450
To B’s Capital A/c 43,600
(b)
A’s Capital A/c 1,750
B’s Capital A/c 250
To C’s Capital A/c 2,000
(c)
A’s Capital A/c Dr. 21,000
C’s Capital A/c Dr. 3,000
To B’s Capital A/c 24,000
(d)
Profit & Loss Suspense A/c Dr. 2,000
To B’s Capital A/c 2,000
Ans:- (b)
Q. 5. Amount transferred to B’s Executor’s Account will be
(a) ₹ 2,47,600
(b) ₹ 2,61,600
(c) ₹ 2,59,600
(d) ₹ 2,45,600
Ans:- (a)
P, Q and R are partners in a firm sharing profits & losses in the ratio of 7 : 8 : 5. They are engaged in a business of making laptop foldable tables. Before lockdown, their business was quite promising as they had long-term contracts with suppliers to get raw materials at cheaper rates. However, after lockdown not only the cost of raw materials rose but also skilled labour were not available even at higher wages. On 30th June, 2024, Q died. Balance Sheet of the firm as at 31st March, 2024 was as follows:
| Liabilities | ₹ | Assets | ₹ |
| Capital A/cs: P Q R | 2,40,000 2,10,000 1,80,000 | Building | 1,30,000 |
| General Reserve | 60,000 | Machinery | 1,50,000 |
| Investment Fluctuation Reserve | 60,000 | Motor Vehicles | 90,000 |
| Creditors | 1,30,000 | Furniture | 45,000 |
| Debtors | 1,50,000 | ||
| Stock | 60,000 | ||
| Investment | 1,80,000 | ||
| Bank | 15,000 | ||
| Profit & Loss Account (Loss for the year) | 60,000 | ||
| 8,80,000 | 8,80,000 |
According to the Partnership Deed, in addition to the deceased partner’s capital, the executors are entitled to the following:
(i) Goodwill is to be valued at 3 years’ purchase of the average profit of the last five years ended 31st March, which were:
| Year | Profit (₹) |
| 2020 | 40,000 |
| 2021 | 60,000 |
| 2022 | 80,000 |
| 2023 | 90,000 |
(ii) Q’s share of goodwill be adjusted against the Capital Accounts of continuing partners P and R who have decided to share future profits in the ratio of 3 : 2
(iii) Stock was found undervalued by 20%; Motor Vehicles were revalued at 80% and Furniture at ₹ 35,000.
(iv) Market Value of Investment is ₹ 1,60,000.
(v) Q’s share of profit or loss up to the date of death on the basis of average profit of the last four years.
Based on the above information, answer the following questions:
Q. 1. Gaining Ratio of P and R would be
(a) 1 : 1
(b) 7 : 5
(c) 3 : 2
(d) 5 : 3
Ans:- (d)
Q. 2. Gain (Profit)/Loss on Revaluation of Assets and Reassessment of Liabilities would be
(a) ₹ 12,000 (Loss)
(b) ₹ 18,000 (Loss)
(c) ₹ 13,000 (Loss)
(d) ₹ 28,000 (Loss)
Ans:- (c)
Q. 3. On Q’s death, share of goodwill contributed by P and R are
(a) ₹ 50,400 and Nil respectively
(b) ₹ 31,500 and ₹ 18,900 respectively
(c) ₹ 18,900 and ₹ 31,500 respectively
(d) ₹ Nil and ₹ 50,400 respectively
Ans:- (b)
Q. 4. Q’s share of profit or loss till the date of his death is
(a) ₹ 17,000 (Profit)
(b) ₹ 4,250 (Profit)
(c) ₹ 42,500 (Profit)
(d) ₹ 10,625 (Profit)
Ans:- (b)
Q. 5. Calculate the amount transferred to Q’s Executor’s Account.
(a) ₹ 2,80,650
(b) ₹ 2,75,450
(c) ₹ 2,83,450
(d) ₹ 2,71,200
Ans:- (b)
