Jack and Kelly are in partnership. They share profits and losses in the ratio of 2 : 5 respectively. The partners decided to admit Liam as a partner with effect from 1 July 2018. The partnership’s statement of financial position immediately prior to Liam’s admission was as follows. Jack and Kelly Summarised statement of financial position at 30 June 2018 $ Assets Non-current assets 91 400 Current assets 21 700 Total assets 113 100 Capital and liabilities Capital accounts Jack 33 000 Kelly 71 000 Current liabilities 9 100 Total capital and liabilities 113 100 The partners do not maintain separate current accounts. The following was agreed. 1 Assets were revalued upwards by $21 000. 2 Goodwill was valued at $52 500. No goodwill account was to be maintained in the partnership’s books of account. 3 In the future profits and losses would be shared in the ratio Jack : Kelly : Liam, 2 : 5 : 3 respectively. 4 The balances of the partners’ capital accounts immediately after Liam’s admission should total $120 000 and be in the same ratio as the profit sharing ratio. Each partner would either pay funds into, or withdraw funds from, the business bank account in order to achieve this requirement. REQUIRED (a) Prepare the partners’ capital accounts to record Liam’s admission as a partner on the next page. 9 © UCLES 2018 9706/22/O/N/18 [Turn over Partners’ Capital Accounts Liam $ [6] Kelly $ Jack $ Liam $ Kelly $ Jack $ 10 © UCLES 2018 9706/22/O/N/18 (b) State what is meant by the term ‘goodwill’. [1] (c) Explain why a partnership may make an adjustment for goodwill when they admit a new partner. [2] (d) Explain why partners may agree not to maintain a goodwill account in the books of the partnership on the admission of a new partner. [2] 11 © UCLES 2018 9706/22/O/N/18 [Turn over Additional information The partners forecast that profit for the year ending 30 June 2019 will be $60 000. This is an increase of 25% on the current year’s profit. The partners believe that Liam’s admission will result in an improved return on capital employed. REQUIRED (e) Advise the partners whether or not they are correct in believing that Liam’s admission will result in an improved return on capital employed in the year ending 30 June 2019. Support your answer with calculations. [4] [Total: 15]

Sandeep, Maheep and Amandeep were partners in a firm sharing profits in the ratio of 2: 2: 1. The firmcloses its books on 31st March every year. On 30th June, 2020Maheepdied. The partnership deedprovided that on the death of a partner his executors will be entitled to the following:a) Balance in his capital account which amounted to ₹1,15,000and interest on capital till date ofdeath which amounted to ₹5,000.b) His share in the profits of the firm till the date of his death amounted to ₹20,000.c) His share in the goodwill of the firm. The goodwill of the firm on Maheep’s death was valued at₹ 1,50,000.d) Loan to Maheep amounted ₹ 20,000.It was agreed that the amount will be paid to his executor in three equal yearly instalments w

Sandeep, Maheep and Amandeep were partners in a firm sharing profits in the ratio of 2: 2: 1. The firmcloses its books on 31st March every year. On 30th June, 2020Maheepdied. The partnership deedprovided that on the death of a partner his executors will be entitled to the following:a) Balance in his capital account which amounted to ₹1,15,000and interest on capital till date ofdeath which amounted to ₹5,000.b) His share in the profits of the firm till the date of his death amounted to ₹20,000.c) His share in the goodwill of the firm. The goodwill of the firm on Maheep’s death was valued at₹ 1,50,000.d) Loan to Maheep amounted ₹ 20,000.It was agreed that the amount will be paid to his executor in three equal yearly instalments with interest@10% p.a. The first instalment was to be paid on 30.06.2021.Calculate the amount to be transferred to Maheep’s executors Account and prepare theexecutor’s account till it is finally settled

P and Q were partners in a firm sharing profits in 3:1 ratio. Their respective fixed capitals were10,00,000 and 6,00,000. The partnership deed provided interest on capital @ 12% p.a. Thepartnership deed further provided that interest on capital will be allowed fully even if it will resultinto a loss to the firm. The net profit of the firm for the year ended 31st March, 2018 was 1,50,000.Pass necessary Journal Entries in the books of the firm allowing interest on capital and divisionof profit/loss among the partners.

A& B are partners sharing profits and losses in the ratio of 3:2. C is admitted for ¼ and for which₹30,000 and ₹10,000 are credited as a premium for goodwill to A and B respectively. The new profit-sharing ratio of A:B:C will be:a) 3:2:1b) 12:8:5c) 9:6:5d) 33:27:2012 Assertion: Batman, a partner in a firm with four partners has advanced a loan of ₹50,000 to the firm forlast six months of the financial year without any agreement. He claims an interest on loan of₹3,000 despite the firm being in loss for the year.Reasoning: In the absence of any agreement / provision in the partnership deed, provisions of IndianPartnership Act, 1932 would apply.a) Both A and R are correct, and R is the correct explanation of A.b) Both A and R are correct, but R is not the correct explanation of A.c) A is correct but R is incorrect.d) A is incorrect but R is correct.

The three partners A, B, and C decided to run a business together. All of them invested Rs. 20000, Rs. 30000 and Rs. 60000 respectively. B is the CEO and he manages all the work. The other two are sleeping partner. If B receives 3000 per month as a fixed salary and the total profit made by all of them was Rs. 1,35,000 in one year, then what was B’s total share of the profit?