Question 41:
Lisa, Monika and Nisha
were partners in a firm sharing profits and losses in the ratio of 2: 2: 1. On
31st March, 2019, their Balance Sheet was as follows:
BALANCE
SHEET OF
LISA, MONIKA and NISHA as at 31st
March, 2019 |
||||
Liabilities |
|
` |
Assets |
` |
Trade
Creditors |
|
1,60,000 |
Land
and Building |
10,00,000 |
Bills
Payable |
|
2,44,000 |
Machinery
|
12,00,000 |
Employees'
Provident Fund |
|
76,000 |
Stock
|
10,00,000 |
Capitals:
|
|
|
Sundry
Debtors |
4,00,000 |
Lisa
14,00,000 |
14,00,000 |
|
Bank
|
40,000 |
Monika
|
3,60,000 |
31,60,000 |
|
|
Nisha
|
|
|
|
|
|
|
36,40,000 |
|
36,40,000 |
On
31st March, 2019, Monika retired from the firm and the remaining partners
decided to carry on the business. It was agreed that:
(I)
Land and building be appreciated by `2,40,000
and machinery be depreciated by 10%
(ii)
50% of the stock was taken over by the retiring partner at book value.
(iii)
Provision for doubtful debts was to be made at 5% on debtors
(iv)
Goodwill of the firm be valued at `3,00,000
and Monika's share of goodwill be adjusted in the accounts of Lisa and Nisha.
(v)
The total capital of the new firm be fixed at `27,00,000
which will be in the proportion of the new profit Sharing ratio of Lisa and
Nisha. For this purpose, Current Accounts of the partners were to be opened.
Prepare
Revaluation Account, Partners' Capital Accounts and the Balance Sheet of the
reconstituted firm on Monika's retirement. (CBSE 2019)
Answer:
Revaluation Account |
||||||
Dr. |
|
Cr. |
||||
Particulars |
(`) |
Particulars |
(`) |
|||
To provision for doubtful debts |
20,000 |
By land and building |
2,40,000 |
|||
To Machinery a/c |
1,20,000 |
|||||
To capital a/c Lisa’s
=1,00,000×2/5=40,000 Monika’s
=1,00,000×2/5=40,000 Nisha’s
=1,00,000×1/5=20,000 (In old ratio) |
1,00,000 |
|
||||
2,40,000 |
2,40,000 |
|||||
|
|
|
||||
|
|
|
|
|
|
|
Partners’ Capital Accounts |
|
|||||||||||||||
Dr. |
|
Cr. |
|
|||||||||||||
Particulars |
Lisa |
Monika |
Nisha |
Particulars |
Lisa |
Monika |
Nisha |
|||||||||
To Monika’s capital a/c To stock To Monika’s loan a/c To balance c/d |
80,000 13,60,000 |
5,00,000 10,60,000 |
40,000 3,40,000 |
By Balance b/d By Lisa’s capital a/c By Nisha’s capital a/c By revaluation a/c |
14,00,000 40,000 |
14,00,000 80,000 40,000 40,000 |
3,60,000 20,000 |
|||||||||
14,40,000 |
15,60,000 |
3,80,000 |
14,40,000 |
15,60,000 |
3,80,000 |
|||||||||||
To balance c/d |
18,00,000 |
9,00,000 |
By Balance b/d By current a/c |
13,60,000 4,40,000 |
|
3,40,000 5,60,000 |
||||||||||
18,00,000 |
9,00,000 |
18,00,000 |
9,00,000 |
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||
Balance Sheet as on April 01, 2019 after Monika’s retirement |
|||||
Liabilities |
(`) |
Assets |
(`) |
||
Trade creditors Bills payables Employees provident fund Capital a/c Lisa= 18,00,000 Nisha= 9,00,000 |
1,60,000 2,44,000 76,000 27,00,000 |
Land and building Machinery Stock Sundry debtors 4,00,000 Less; Provision 20,000 for Doubtful debts Bank Lisa’s current a/c Nisha’s current a/c |
12,40,000 10,80,000 5,00,000 3,80,000 40,000 4,40,000 5,60,000 |
||
Monika’s loan |
10.,60,000 |
||||
42,40,000 |
42,40,000 |
||||
|
|
Working notes;
WN -1
Calculation of
gaining and sacrificing ratio
|
Lisa |
|
Monika |
|
Nisha |
Old ratio = |
2 |
: |
2 |
: |
1 |
New ratio = |
2 |
|
: |
|
1 |
Gaining ratio = New
ratio – Old ratio
Lisa’s gain =
2/3-2/5=10-6/15=4/15
Nisha’s gain =
1/3-1/5=5-3/15=2/15
Gaining ratio of
Lisa and Nisha = 4:2=2:1
WN-2 Treatment of goodwill;
Firm’s goodwill =3,00,000
Monika will be
compensated = 1,20,000×2/5=1,20,000
Lisa will
compensate =1,20,000×2/3 = 80,000
Nisha will
compensate =1,20,000×1/3 = 40,000
Condition for goodwill remaining partner to retiring
partner
WN -3
Lisa’s capital = 27,00,000×2/3=18,00,000
Nisha’s capital =
27,00,000×1/3=9,00,000
Question 42:
On 31st March, 2024, the Balance Sheet of A, B
and C who were sharing profits and losses in proportion to their capitals stood
as:
Liabilities |
|
` |
Assets
|
|
` |
Creditors
|
|
10,800 |
Cash
at Bank |
|
13,000 |
Bills
Payable |
|
5,000 |
Debtors
|
10,000 |
|
Capital
A/cs: |
|
|
Less:
Provision for Doubtful Debts |
200 |
9,800 |
A
|
45,000 |
|
Stock
|
|
9,000 |
B
|
15,000 |
|
Machinery
|
|
24,000 |
C |
30,000 |
90,000 |
Freehold
Premises |
|
50,000 |
|
|
1,05,800 |
|
|
1,05,800 |
B
retired on 1st April, 2024 and following adjustments were agreed to determine
the amount payable to B:
(a) Out of the amount of insurance premium debited to Profit
and Loss Account, `1,000 be carried forward as prepaid Insurance.
(b)
Freehold Premises be appreciated by 10%.
(c)
Provision for Doubtful Debts is brought up to 5% on Debtors.
(d)
Machinery be reduced by 5%.
(e)
Liability for Workmen Compensation to the extent of `1,500 would be created.
(f)
Goodwill of the firm be fixed at `18,000 and B's share of the
same be adjusted into the Capital Accounts of A and C, who will share future
profits in the ratio of 3/4th and 1/4th.
(g)Total
capital of the firm as newly constituted be fixed at `60,000 between A and C in
the proportion of 3/4th and 1/4th after passing entries in their accounts for
adjustments, i.e., actual cash to be paid or to be brought in by continuing
partners as the case may be.
(h)
B be paid `5,000 in cash and the balance be transferred to his
Loan Account.
Prepare
Capital Accounts of Partners and the Balance Sheet of the firm of A and C.
Answer:
Revaluation
a/c
Dr.
Cr.
|
|||
Particulars
|
`
|
Particulars
|
`
|
To provision for doubtful debts
|
300
|
By unexpired insurance
|
1,000
|
To Machinery
|
1,200
|
By freehold premises
|
5,000
|
To workers’ compensation liabilities
|
1,500
|
|
|
To capital a/c -profit transferred to :
|
|
|
|
A=3,000×3/6=1,500
|
|
|
|
B=3,000×2/6=1,000
|
|
|
|
C=3,000×1/6=500
|
3,000
|
|
|
|
6,000
|
|
6,000
|
|
|
|
|
Partners’ Capital Accounts |
|||||||||
Dr. |
|
Cr. |
|||||||
Particulars |
A |
B |
C |
Particulars |
A |
B |
C |
||
To B’s capital a/c |
4,500 |
1,500 |
By Balance b/d |
45,000 |
30,000 |
15,000 |
|||
To cash a/c |
5,000 |
By A’s capital |
4,500 |
||||||
To B’s loan a/c |
32,000 |
By C’s Capital |
1,500 |
||||||
To balance c/d |
42,000 |
14,000 |
By Revaluation a/c |
1,500 |
1,000 |
500 |
|||
46,500 |
37,000 |
15,500 |
46,500 |
37,000 |
15,500 |
||||
To balance c/d |
45,000 |
|
15,000 |
By Balance b/d |
42,000 |
14,000 |
|||
By Bank a/c |
3,000 |
1,000 |
|||||||
|
45,000 |
|
15,000 |
|
45,000 |
|
15,000 |
||
Balance Sheet as on April 01, 2024 after Z’s retirement |
|||||
Liabilities |
(`) |
Assets |
(`) |
||
Creditors |
10,800 |
Cash at bank |
12,000 |
||
Bills payables |
5,000 |
Debtors 10,000 |
|||
Workers’ Compensation liabilities |
1,5000 |
Less; prov. For D.D. 500 |
9,500 |
||
Capital a/c |
|||||
A |
45,000 |
||||
C |
15,000 |
60,000 |
Stock |
9,000 |
|
B’s loan |
32,000 |
Unexpired insurance |
1,000 |
||
Machinery |
22,800 |
||||
|
Freehold premises |
55,000 |
|||
1,,09,300 |
1,,09,300 |
Working notes;
WN-1 Calculation of new and gaining ratio
Old ratio of A,B
and C =45,0000:30,000:15,000=3:2:1
New ratio of A and C= 3:1
Gaining ratio= New ratio- Old ratio
A’s gain = ¾- 3/6 =18-12/24=6/24
C’s gain =1/4-1/6=6-4/24=2/24
Gaining ratio of A:C
= 6:2=3:1
WN-2 treatment of Goodwill
Goodwill of the firm= 18,000
B will be compensated for
18,000×2/6=6,000
A will compensate =6,000×3/4=4,500
C will compensate =6,000×3/4=1,500
Condition for goodwill treatment:
Remaining partner to retiring partner
WN-3 Capital adjustment
A’s capital = 60,000×3/4=45,000
C’s capital = 60,000×1/4=15,000
WN-4
Closing bank
balance= 13,000-5,000+3,000+1,000=12,000
Question 43: X, Y and Z were
in partnership sharing profits in proportion to their capitals. Their Balance
Sheet as on
31st March, 2018 was as
follows:
Liabilities |
|
` |
Assets |
|
` |
Sundry Creditors |
|
16,600 |
Cash |
|
15,000 |
Workmen's Compensation Fund
|
|
9,000 |
Debtors |
21,000 |
|
General Reserve |
|
6,000 |
Less: Provision for
Doubtful Debts |
(1,400) |
19,600 |
Capitals: |
|
|
Stock |
|
19,000 |
X Y Z |
90,000 60,000 30,000 |
1,80,000 |
Machinery Building |
|
58,000 1,00,000 |
|
|
|
|
|
|
|
|
2,11,600 |
|
|
2,11,600 |
On the above date, Y retired
owing to ill health. The following adjustments were agreed upon for calculation
of amount due to Y:
(a) Provision for Doubtful
Debts to be increased to 10% of Debtors.
(b) Goodwill of the firm be
valued at 36,000 and be adjusted into the Capital Accounts of X and Z, who will
share profits in future in the ratio of 3 :1.
(c)Included in the value of
Sundry Creditors was `2,500 for an outstanding legal claim, which will not
arise.
(d) X and Z also decided that
the total capital of the new firm will be `1,20,000 in their profit-sharing ratio. Actual cash to be
brought in or to be paid off as the case may be.
(e) Y to be paid `9,000 immediately and balance to be transferred to his
Loan Account.
Prepare Revaluation Account,
Partners' Capital Accounts and Balance Sheet of the new firm after Y's
retirement.
(CBSE Sample Paper 2019)
Answer:
Revaluation Account |
||||||
Dr. |
|
Cr. |
||||
Particulars |
(`) |
Particulars |
(`) |
|||
To provision for doubtful debts |
700 |
By sundry creditors |
2,500 |
|||
To capital a/c – Profit transferred; X=1800×3/6=900 |
||||||
y=1800×2/6=600 |
||||||
Z=1800×1/6=300 |
1,800 |
|||||
2,500 |
2,500 |
|||||
|
|
|
|
|||
|
|
|
|
|
|
|
Partners’ Capital Accounts |
|||||||||
Dr. |
|
Cr. |
|||||||
Particulars |
X |
Y |
Z |
Particulars |
X |
Y |
Z |
||
To Y’s capital a/c |
9,000 |
- |
3,000 |
By Balance b/c |
90,000 |
60,000 |
30,000 |
||
To Cash a/c |
- |
9,000 |
- |
By X’s Capital a/c |
- |
9,000 |
- |
||
To Y’s loan a/c |
- |
68,600 |
- |
By Z’s Capital a/c |
- |
3,000 |
- |
||
To
Balance C/d |
89,400 |
- |
29,800 |
By Workers’ compensation fund |
4,500 |
3,000 |
1,500 |
||
By General reserve |
3,000 |
2,000 |
1,000 |
||||||
By Revaluation a/c |
900 |
600 |
300 |
||||||
98,400 |
77,600 |
32,800 |
98,400 |
77,600 |
32,800 |
||||
To
Balance C/d |
90,000 |
- |
30,000 |
By Balance b/d |
89,400 |
- |
29,800 |
||
By Cash a/c |
600 |
- |
200 |
||||||
|
90,000 |
- |
30,000 |
90,000 |
- |
30,000 |
|||
Balance Sheet as on April 01, 2018 after Z’s retirement |
|||||
Liabilities |
(`) |
Assets |
(`) |
||
Sundry creditors |
14,100 |
Cash a/c (15,000-9000+600+200) |
6,800 |
||
Capital a/c |
Debtors 21,000 Less; Prov. For D.D. 2,100 |
18,900 |
|||
X= 90,000 Z= 30,000 |
1,20,000 |
Stock Machinery |
19,000 58,000 |
||
Y’s loan a/c |
68,600 |
Buildings |
1,00,000 |
||
2,02,700 |
2,02,700 |
||||
|
|
Working notes;
WN-1 Calculation of new and gaining
ratio
Old ratio of X,Y and Z
=90,0000:60,000:30,000=3:2:1
New ratio of X and Z= 3:1
Gaining ratio= New ratio- Old ratio
X’s gain = ¾- 3/6 =18-12/24=6/24
Z’s gain =1/4-1/6=6-4/24=2/24
Gaining ratio of A:C = 6:2=3:1
WN-2 treatment of Goodwill
Goodwill of the firm= 36,000
Y will be compensated for 36,000×2/6=12,000
X will compensate =12,000×3/4=9,000
Z will compensate =12,000×1/4=3,000
Condition for goodwill treatment: Remaining partner to
retiring partner
X’s capital
a/c |
Dr. |
9,000 |
|
Z’s capital
a/c |
Dr. |
3,000 |
|
To Y’s capital
a/c |
|
|
12,000 |
WN-3 Capital adjustment
X’s capital = 1,20,000×3/4=90,000
Z’s capital = 1,20,000×1/4=30,000
When existing total capital of remaining partners is
to be in New Profit-sharing Ratio
Question 44:
Shweta, Meenu and Asha were partners in a firm sharing profits and losses in
the ratio of 3:5:2. Meenu retired on 1st April, 2022. After making all
adjustments relating to revaluation, goodwill and accumulated profits, etc.,
Capital Accounts of Shweta and Asha showed credit balance of 3,00,000 and 1,00,000 respectively. It was decided to adjust
the capitals of Shweta and Asha in their new profit-sharing ratio.
Pass necessary Journal
entries for bringing in or withdrawal of the necessary amounts involved. Show
your working clearly. (CBSE 2024)
Answer:
Date |
Particulars |
|
Dr. (`) |
Cr. (`) |
(i) |
Bank A/c |
Dr. |
60,000 |
|
|
To Aastha 's Capital A/c |
|
|
60,000 |
|
(Being amount brought) |
|
|
|
(ii) |
Shweta's Capital A/c |
|
60,000 |
|
|
To Bank A/c |
|
|
60,000 |
|
(Being amount withdrawn) |
|
|
|
Total Capital of Shweta and Asha showed credit
balance of 3,00,000+1,00,000=4,00,000
New Ratio of Shweta and Asha
= 3:2
New Capital as per New Ratio
of Shweta and Asha
Shweta = 4,00,000×3/5=2,40,000
Asha = 4,00,000×2/5=1,60,000
Capital adjustment requirement
Shweta |
Adjusted Capital |
3,00,000 |
|
New Capital |
2,40,000 |
|
Amount withdrawn |
60,000 |
|
|
|
Aastha |
Adjusted Capital |
1,00,000 |
|
New Capital |
1,60,000 |
|
Amount brought |
60,000 |
Question 45:
Amit,
Balan and Chander were partners in a firm sharing profits in the proportion of
1/2, 1/3 and 1/6 respectively. Chander retired on 1st April, 2014. The Balance
Sheet of the firm on the date of Chander's retirement was as follows:
Liabilities |
(`) |
Assets |
(`) |
||
Sundry Creditors |
12,600 |
Bank |
4,100 |
||
Provident Fund |
3,000 |
Debtors |
30,000 |
|
|
General Reserve |
9,000 |
Less: Provision |
1,000 |
29,000 |
|
Capital A/cs: |
|
|
|
|
|
Amit |
40,000 |
|
Stock |
25,000 |
|
Balan |
36,500 |
|
Investments |
10,000 |
|
Chander |
20,000 |
96,500 |
Patents |
5,000 |
|
|
|
|
Machinery |
48,000 |
|
|
1,21,100 |
|
1,21,100 |
||
|
|
|
|
It was agreed that:
(i) Goodwill will be valued at
` 27,000.
(ii) Depreciation of 10% was to be provided on Machinery.
(iii) Patents were to be reduced by 20%.
(iv) Liability on account of Provident Fund was estimated at ` 2,400.
(v) Chander took over Investments for ` 15,800.
(vi) Amit and Balan decided to adjust their capitals
in proportion of their profit-sharing ratio by opening Current Accounts.
Prepare Revaluation Account and Partners' Capital Accounts on Chander's
retirement.
(Delhi 2015,
Modified)
Answer:
Revaluation Account |
||||||
Dr. |
|
Cr. |
||||
Particulars |
` |
Particulars |
` |
|||
Machinery |
4,800 |
Investments
A/c |
5,800 |
|||
Patents |
1,000 |
Provident
Fund A/c |
600 |
|||
Profit
transferred to: |
|
|
|
|||
Amit’s Capital A/c |
300 |
|
|
|
||
Balan’s Capital A/c |
200 |
|
|
|
||
Chander’s Capital A/c |
100 |
600 |
|
|
||
|
6,400 |
|
6,400 |
|||
|
|
|
|
|||
|
|
|
|
|
|
|
Partners’ Capital Account |
|||||||
Dr. |
Cr. |
||||||
Particulars |
Amit |
Balan |
Chander |
Particulars |
Amit |
Balan |
Chander |
Investments
A/c |
|
|
15,800 |
Balance
b/d |
40,000 |
36,500 |
20,000 |
Chander’s
Capital A/c |
2,700 |
1,800 |
|
Revaluation
A/c (Profit) |
300 |
200 |
100 |
Loan
A/c |
|
|
10,300 |
General
Reserve |
4,500 |
3,000 |
1,500 |
Current
A/c |
|
5,900 |
|
Amit’s
Capital A/c |
|
|
2,700 |
Balance
c/d |
48,000 |
32,000 |
|
Balan’s
Capital A/c |
|
|
1,800 |
|
|
|
|
Current
A/c |
5,900 |
|
|
|
50,700 |
39,700 |
26,100 |
|
50,700 |
39,700 |
26,100 |
|
|
|
|
|
|
|
|
Working Notes:
WN1: Adjustment of Goodwill
Chander’s
share of Goodwill =27,000 ×1/6=4,500
Amit wil pay=4,500×3/5=2,700
Balan wil pay=4,500×2/5=1,800
WN2 Adjustment of Capital
Adjusted Old Capital of Amit=44,800 (40,000+4,500+300)-2,700=` 42,100
Adjusted Old Capital of Balan=39,700 (36,500+3,000+200)-1,800=` 37,900
Total Adjusted Capital=42,100+37,900=` 80,000
New Profit Sharing Ratio=3:2
Amit's New Capital=80,000×3/5=` 48,000
Balan's New Capital=80,000×2/5=` 32,000
Note: Since, here no information is given
regarding the share acquired by Amit and Balan, therefore, their gaining ratio
is same as their new profit sharing ratio i.e. 3 : 2.
Question 41:
Lisa, Monika and Nisha
were partners in a firm sharing profits and losses in the ratio of 2: 2: 1. On
31st March, 2019, their Balance Sheet was as follows:
BALANCE
SHEET OF
LISA, MONIKA and NISHA as at 31st
March, 2019 |
||||
Liabilities |
|
` |
Assets |
` |
Trade
Creditors |
|
1,60,000 |
Land
and Building |
10,00,000 |
Bills
Payable |
|
2,44,000 |
Machinery
|
12,00,000 |
Employees'
Provident Fund |
|
76,000 |
Stock
|
10,00,000 |
Capitals:
|
|
|
Sundry
Debtors |
4,00,000 |
Lisa
14,00,000 |
14,00,000 |
|
Bank
|
40,000 |
Monika
|
3,60,000 |
31,60,000 |
|
|
Nisha
|
|
|
|
|
|
|
36,40,000 |
|
36,40,000 |
On
31st March, 2019, Monika retired from the firm and the remaining partners
decided to carry on the business. It was agreed that:
(I)
Land and building be appreciated by `2,40,000
and machinery be depreciated by 10%
(ii)
50% of the stock was taken over by the retiring partner at book value.
(iii)
Provision for doubtful debts was to be made at 5% on debtors
(iv)
Goodwill of the firm be valued at `3,00,000
and Monika's share of goodwill be adjusted in the accounts of Lisa and Nisha.
(v)
The total capital of the new firm be fixed at `27,00,000
which will be in the proportion of the new profit Sharing ratio of Lisa and
Nisha. For this purpose, Current Accounts of the partners were to be opened.
Prepare
Revaluation Account, Partners' Capital Accounts and the Balance Sheet of the
reconstituted firm on Monika's retirement. (CBSE 2019)
Answer:
Revaluation Account |
||||||
Dr. |
|
Cr. |
||||
Particulars |
(`) |
Particulars |
(`) |
|||
To provision for doubtful debts |
20,000 |
By land and building |
2,40,000 |
|||
To Machinery a/c |
1,20,000 |
|||||
To capital a/c Lisa’s
=1,00,000×2/5=40,000 Monika’s
=1,00,000×2/5=40,000 Nisha’s
=1,00,000×1/5=20,000 (In old ratio) |
1,00,000 |
|
||||
2,40,000 |
2,40,000 |
|||||
|
|
|
||||
|
|
|
|
|
|
|
Partners’ Capital Accounts |
|
|||||||||||||||
Dr. |
|
Cr. |
|
|||||||||||||
Particulars |
Lisa |
Monika |
Nisha |
Particulars |
Lisa |
Monika |
Nisha |
|||||||||
To Monika’s capital a/c To stock To Monika’s loan a/c To balance c/d |
80,000 13,60,000 |
5,00,000 10,60,000 |
40,000 3,40,000 |
By Balance b/d By Lisa’s capital a/c By Nisha’s capital a/c By revaluation a/c |
14,00,000 40,000 |
14,00,000 80,000 40,000 40,000 |
3,60,000 20,000 |
|||||||||
14,40,000 |
15,60,000 |
3,80,000 |
14,40,000 |
15,60,000 |
3,80,000 |
|||||||||||
To balance c/d |
18,00,000 |
9,00,000 |
By Balance b/d By current a/c |
13,60,000 4,40,000 |
|
3,40,000 5,60,000 |
||||||||||
18,00,000 |
9,00,000 |
18,00,000 |
9,00,000 |
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||
Balance Sheet as on April 01, 2019 after Monika’s retirement |
|||||
Liabilities |
(`) |
Assets |
(`) |
||
Trade creditors Bills payables Employees provident fund Capital a/c Lisa= 18,00,000 Nisha= 9,00,000 |
1,60,000 2,44,000 76,000 27,00,000 |
Land and building Machinery Stock Sundry debtors 4,00,000 Less; Provision 20,000 for Doubtful debts Bank Lisa’s current a/c Nisha’s current a/c |
12,40,000 10,80,000 5,00,000 3,80,000 40,000 4,40,000 5,60,000 |
||
Monika’s loan |
10.,60,000 |
||||
42,40,000 |
42,40,000 |
||||
|
|
Working notes;
WN -1
Calculation of
gaining and sacrificing ratio
|
Lisa |
|
Monika |
|
Nisha |
Old ratio = |
2 |
: |
2 |
: |
1 |
New ratio = |
2 |
|
: |
|
1 |
Gaining ratio = New
ratio – Old ratio
Lisa’s gain =
2/3-2/5=10-6/15=4/15
Nisha’s gain =
1/3-1/5=5-3/15=2/15
Gaining ratio of
Lisa and Nisha = 4:2=2:1
WN-2 Treatment of goodwill;
Firm’s goodwill =3,00,000
Monika will be
compensated = 1,20,000×2/5=1,20,000
Lisa will
compensate =1,20,000×2/3 = 80,000
Nisha will
compensate =1,20,000×1/3 = 40,000
Condition for goodwill remaining partner to retiring
partner
WN -3
Lisa’s capital = 27,00,000×2/3=18,00,000
Nisha’s capital =
27,00,000×1/3=9,00,000
Question 42:
On 31st March, 2024, the Balance Sheet of A, B
and C who were sharing profits and losses in proportion to their capitals stood
as:
Liabilities |
|
` |
Assets
|
|
` |
Creditors
|
|
10,800 |
Cash
at Bank |
|
13,000 |
Bills
Payable |
|
5,000 |
Debtors
|
10,000 |
|
Capital
A/cs: |
|
|
Less:
Provision for Doubtful Debts |
200 |
9,800 |
A
|
45,000 |
|
Stock
|
|
9,000 |
B
|
15,000 |
|
Machinery
|
|
24,000 |
C |
30,000 |
90,000 |
Freehold
Premises |
|
50,000 |
|
|
1,05,800 |
|
|
1,05,800 |
B
retired on 1st April, 2024 and following adjustments were agreed to determine
the amount payable to B:
(a) Out of the amount of insurance premium debited to Profit
and Loss Account, `1,000 be carried forward as prepaid Insurance.
(b)
Freehold Premises be appreciated by 10%.
(c)
Provision for Doubtful Debts is brought up to 5% on Debtors.
(d)
Machinery be reduced by 5%.
(e)
Liability for Workmen Compensation to the extent of `1,500 would be created.
(f)
Goodwill of the firm be fixed at `18,000 and B's share of the
same be adjusted into the Capital Accounts of A and C, who will share future
profits in the ratio of 3/4th and 1/4th.
(g)Total
capital of the firm as newly constituted be fixed at `60,000 between A and C in
the proportion of 3/4th and 1/4th after passing entries in their accounts for
adjustments, i.e., actual cash to be paid or to be brought in by continuing
partners as the case may be.
(h)
B be paid `5,000 in cash and the balance be transferred to his
Loan Account.
Prepare
Capital Accounts of Partners and the Balance Sheet of the firm of A and C.
Answer:
Revaluation
a/c
Dr.
Cr.
|
|||
Particulars
|
`
|
Particulars
|
`
|
To provision for doubtful debts
|
300
|
By unexpired insurance
|
1,000
|
To Machinery
|
1,200
|
By freehold premises
|
5,000
|
To workers’ compensation liabilities
|
1,500
|
|
|
To capital a/c -profit transferred to :
|
|
|
|
A=3,000×3/6=1,500
|
|
|
|
B=3,000×2/6=1,000
|
|
|
|
C=3,000×1/6=500
|
3,000
|
|
|
|
6,000
|
|
6,000
|
|
|
|
|
Partners’ Capital Accounts |
|||||||||
Dr. |
|
Cr. |
|||||||
Particulars |
A |
B |
C |
Particulars |
A |
B |
C |
||
To B’s capital a/c |
4,500 |
1,500 |
By Balance b/d |
45,000 |
30,000 |
15,000 |
|||
To cash a/c |
5,000 |
By A’s capital |
4,500 |
||||||
To B’s loan a/c |
32,000 |
By C’s Capital |
1,500 |
||||||
To balance c/d |
42,000 |
14,000 |
By Revaluation a/c |
1,500 |
1,000 |
500 |
|||
46,500 |
37,000 |
15,500 |
46,500 |
37,000 |
15,500 |
||||
To balance c/d |
45,000 |
|
15,000 |
By Balance b/d |
42,000 |
14,000 |
|||
By Bank a/c |
3,000 |
1,000 |
|||||||
|
45,000 |
|
15,000 |
|
45,000 |
|
15,000 |
||
Balance Sheet as on April 01, 2024 after Z’s retirement |
|||||
Liabilities |
(`) |
Assets |
(`) |
||
Creditors |
10,800 |
Cash at bank |
12,000 |
||
Bills payables |
5,000 |
Debtors 10,000 |
|||
Workers’ Compensation liabilities |
1,5000 |
Less; prov. For D.D. 500 |
9,500 |
||
Capital a/c |
|||||
A |
45,000 |
||||
C |
15,000 |
60,000 |
Stock |
9,000 |
|
B’s loan |
32,000 |
Unexpired insurance |
1,000 |
||
Machinery |
22,800 |
||||
|
Freehold premises |
55,000 |
|||
1,,09,300 |
1,,09,300 |
Working notes;
WN-1 Calculation of new and gaining ratio
Old ratio of A,B
and C =45,0000:30,000:15,000=3:2:1
New ratio of A and C= 3:1
Gaining ratio= New ratio- Old ratio
A’s gain = ¾- 3/6 =18-12/24=6/24
C’s gain =1/4-1/6=6-4/24=2/24
Gaining ratio of A:C
= 6:2=3:1
WN-2 treatment of Goodwill
Goodwill of the firm= 18,000
B will be compensated for
18,000×2/6=6,000
A will compensate =6,000×3/4=4,500
C will compensate =6,000×3/4=1,500
Condition for goodwill treatment:
Remaining partner to retiring partner
WN-3 Capital adjustment
A’s capital = 60,000×3/4=45,000
C’s capital = 60,000×1/4=15,000
WN-4
Closing bank
balance= 13,000-5,000+3,000+1,000=12,000
Question 43: X, Y and Z were
in partnership sharing profits in proportion to their capitals. Their Balance
Sheet as on
31st March, 2018 was as
follows:
Liabilities |
|
` |
Assets |
|
` |
Sundry Creditors |
|
16,600 |
Cash |
|
15,000 |
Workmen's Compensation Fund
|
|
9,000 |
Debtors |
21,000 |
|
General Reserve |
|
6,000 |
Less: Provision for
Doubtful Debts |
(1,400) |
19,600 |
Capitals: |
|
|
Stock |
|
19,000 |
X Y Z |
90,000 60,000 30,000 |
1,80,000 |
Machinery Building |
|
58,000 1,00,000 |
|
|
|
|
|
|
|
|
2,11,600 |
|
|
2,11,600 |
On the above date, Y retired
owing to ill health. The following adjustments were agreed upon for calculation
of amount due to Y:
(a) Provision for Doubtful
Debts to be increased to 10% of Debtors.
(b) Goodwill of the firm be
valued at 36,000 and be adjusted into the Capital Accounts of X and Z, who will
share profits in future in the ratio of 3 :1.
(c)Included in the value of
Sundry Creditors was `2,500 for an outstanding legal claim, which will not
arise.
(d) X and Z also decided that
the total capital of the new firm will be `1,20,000 in their profit-sharing ratio. Actual cash to be
brought in or to be paid off as the case may be.
(e) Y to be paid `9,000 immediately and balance to be transferred to his
Loan Account.
Prepare Revaluation Account,
Partners' Capital Accounts and Balance Sheet of the new firm after Y's
retirement.
(CBSE Sample Paper 2019)
Answer:
Revaluation Account |
||||||
Dr. |
|
Cr. |
||||
Particulars |
(`) |
Particulars |
(`) |
|||
To provision for doubtful debts |
700 |
By sundry creditors |
2,500 |
|||
To capital a/c – Profit transferred; X=1800×3/6=900 |
||||||
y=1800×2/6=600 |
||||||
Z=1800×1/6=300 |
1,800 |
|||||
2,500 |
2,500 |
|||||
|
|
|
|
|||
|
|
|
|
|
|
|
Partners’ Capital Accounts |
|||||||||
Dr. |
|
Cr. |
|||||||
Particulars |
X |
Y |
Z |
Particulars |
X |
Y |
Z |
||
To Y’s capital a/c |
9,000 |
- |
3,000 |
By Balance b/c |
90,000 |
60,000 |
30,000 |
||
To Cash a/c |
- |
9,000 |
- |
By X’s Capital a/c |
- |
9,000 |
- |
||
To Y’s loan a/c |
- |
68,600 |
- |
By Z’s Capital a/c |
- |
3,000 |
- |
||
To
Balance C/d |
89,400 |
- |
29,800 |
By Workers’ compensation fund |
4,500 |
3,000 |
1,500 |
||
By General reserve |
3,000 |
2,000 |
1,000 |
||||||
By Revaluation a/c |
900 |
600 |
300 |
||||||
98,400 |
77,600 |
32,800 |
98,400 |
77,600 |
32,800 |
||||
To
Balance C/d |
90,000 |
- |
30,000 |
By Balance b/d |
89,400 |
- |
29,800 |
||
By Cash a/c |
600 |
- |
200 |
||||||
|
90,000 |
- |
30,000 |
90,000 |
- |
30,000 |
|||
Balance Sheet as on April 01, 2018 after Z’s retirement |
|||||
Liabilities |
(`) |
Assets |
(`) |
||
Sundry creditors |
14,100 |
Cash a/c (15,000-9000+600+200) |
6,800 |
||
Capital a/c |
Debtors 21,000 Less; Prov. For D.D. 2,100 |
18,900 |
|||
X= 90,000 Z= 30,000 |
1,20,000 |
Stock Machinery |
19,000 58,000 |
||
Y’s loan a/c |
68,600 |
Buildings |
1,00,000 |
||
2,02,700 |
2,02,700 |
||||
|
|
Working notes;
WN-1 Calculation of new and gaining
ratio
Old ratio of X,Y and Z
=90,0000:60,000:30,000=3:2:1
New ratio of X and Z= 3:1
Gaining ratio= New ratio- Old ratio
X’s gain = ¾- 3/6 =18-12/24=6/24
Z’s gain =1/4-1/6=6-4/24=2/24
Gaining ratio of A:C = 6:2=3:1
WN-2 treatment of Goodwill
Goodwill of the firm= 36,000
Y will be compensated for 36,000×2/6=12,000
X will compensate =12,000×3/4=9,000
Z will compensate =12,000×1/4=3,000
Condition for goodwill treatment: Remaining partner to
retiring partner
X’s capital
a/c |
Dr. |
9,000 |
|
Z’s capital
a/c |
Dr. |
3,000 |
|
To Y’s capital
a/c |
|
|
12,000 |
WN-3 Capital adjustment
X’s capital = 1,20,000×3/4=90,000
Z’s capital = 1,20,000×1/4=30,000
When existing total capital of remaining partners is
to be in New Profit-sharing Ratio
Question 44:
Shweta, Meenu and Asha were partners in a firm sharing profits and losses in
the ratio of 3:5:2. Meenu retired on 1st April, 2022. After making all
adjustments relating to revaluation, goodwill and accumulated profits, etc.,
Capital Accounts of Shweta and Asha showed credit balance of 3,00,000 and 1,00,000 respectively. It was decided to adjust
the capitals of Shweta and Asha in their new profit-sharing ratio.
Pass necessary Journal
entries for bringing in or withdrawal of the necessary amounts involved. Show
your working clearly. (CBSE 2024)
Answer:
Date |
Particulars |
|
Dr. (`) |
Cr. (`) |
(i) |
Bank A/c |
Dr. |
60,000 |
|
|
To Aastha 's Capital A/c |
|
|
60,000 |
|
(Being amount brought) |
|
|
|
(ii) |
Shweta's Capital A/c |
|
60,000 |
|
|
To Bank A/c |
|
|
60,000 |
|
(Being amount withdrawn) |
|
|
|
Total Capital of Shweta and Asha showed credit
balance of 3,00,000+1,00,000=4,00,000
New Ratio of Shweta and Asha
= 3:2
New Capital as per New Ratio
of Shweta and Asha
Shweta = 4,00,000×3/5=2,40,000
Asha = 4,00,000×2/5=1,60,000
Capital adjustment requirement
Shweta |
Adjusted Capital |
3,00,000 |
|
New Capital |
2,40,000 |
|
Amount withdrawn |
60,000 |
|
|
|
Aastha |
Adjusted Capital |
1,00,000 |
|
New Capital |
1,60,000 |
|
Amount brought |
60,000 |
Question 45:
Amit,
Balan and Chander were partners in a firm sharing profits in the proportion of
1/2, 1/3 and 1/6 respectively. Chander retired on 1st April, 2014. The Balance
Sheet of the firm on the date of Chander's retirement was as follows:
Liabilities |
(`) |
Assets |
(`) |
||
Sundry Creditors |
12,600 |
Bank |
4,100 |
||
Provident Fund |
3,000 |
Debtors |
30,000 |
|
|
General Reserve |
9,000 |
Less: Provision |
1,000 |
29,000 |
|
Capital A/cs: |
|
|
|
|
|
Amit |
40,000 |
|
Stock |
25,000 |
|
Balan |
36,500 |
|
Investments |
10,000 |
|
Chander |
20,000 |
96,500 |
Patents |
5,000 |
|
|
|
|
Machinery |
48,000 |
|
|
1,21,100 |
|
1,21,100 |
||
|
|
|
|
It was agreed that:
(i) Goodwill will be valued at
` 27,000.
(ii) Depreciation of 10% was to be provided on Machinery.
(iii) Patents were to be reduced by 20%.
(iv) Liability on account of Provident Fund was estimated at ` 2,400.
(v) Chander took over Investments for ` 15,800.
(vi) Amit and Balan decided to adjust their capitals
in proportion of their profit-sharing ratio by opening Current Accounts.
Prepare Revaluation Account and Partners' Capital Accounts on Chander's
retirement.
(Delhi 2015,
Modified)
Answer:
Revaluation Account |
||||||
Dr. |
|
Cr. |
||||
Particulars |
` |
Particulars |
` |
|||
Machinery |
4,800 |
Investments
A/c |
5,800 |
|||
Patents |
1,000 |
Provident
Fund A/c |
600 |
|||
Profit
transferred to: |
|
|
|
|||
Amit’s Capital A/c |
300 |
|
|
|
||
Balan’s Capital A/c |
200 |
|
|
|
||
Chander’s Capital A/c |
100 |
600 |
|
|
||
|
6,400 |
|
6,400 |
|||
|
|
|
|
|||
|
|
|
|
|
|
|
Partners’ Capital Account |
|||||||
Dr. |
Cr. |
||||||
Particulars |
Amit |
Balan |
Chander |
Particulars |
Amit |
Balan |
Chander |
Investments
A/c |
|
|
15,800 |
Balance
b/d |
40,000 |
36,500 |
20,000 |
Chander’s
Capital A/c |
2,700 |
1,800 |
|
Revaluation
A/c (Profit) |
300 |
200 |
100 |
Loan
A/c |
|
|
10,300 |
General
Reserve |
4,500 |
3,000 |
1,500 |
Current
A/c |
|
5,900 |
|
Amit’s
Capital A/c |
|
|
2,700 |
Balance
c/d |
48,000 |
32,000 |
|
Balan’s
Capital A/c |
|
|
1,800 |
|
|
|
|
Current
A/c |
5,900 |
|
|
|
50,700 |
39,700 |
26,100 |
|
50,700 |
39,700 |
26,100 |
|
|
|
|
|
|
|
|
Working Notes:
WN1: Adjustment of Goodwill
Chander’s
share of Goodwill =27,000 ×1/6=4,500
Amit wil pay=4,500×3/5=2,700
Balan wil pay=4,500×2/5=1,800
WN2 Adjustment of Capital
Adjusted Old Capital of Amit=44,800 (40,000+4,500+300)-2,700=` 42,100
Adjusted Old Capital of Balan=39,700 (36,500+3,000+200)-1,800=` 37,900
Total Adjusted Capital=42,100+37,900=` 80,000
New Profit Sharing Ratio=3:2
Amit's New Capital=80,000×3/5=` 48,000
Balan's New Capital=80,000×2/5=` 32,000
Note