Note: since no information regarding
how Ankit will compensate, will be compensated
through Ankit’s current account.
Question 56:Vimal and Nirmal
are partners in a firm sharing profits and losses in the ratio of 5:3. They
admit Kailash into the firm on 1st April, 2024, when
their Balance Sheet was as follows:
|
Liabilities
|
` |
Assets |
` |
|
Vimal's Capital |
32,000 |
Goodwill |
8,000 |
|
Nirmal's Capital |
34,000 |
Machinery |
38,000 |
|
General Reserve |
8,000 |
Furniture |
5,000 |
|
Bank Loan |
6,000 |
Debtors |
23,000 |
|
Creditors |
6,000 |
Stock |
7,000 |
|
|
|
Cash |
5,000 |
|
|
|
|
|
|
|
86,000 |
|
86,000 |
Terms of Kailash's admission were as follows:
(i) Kailash will bring ` 30,000 as his share of capital and
will be entitled to 1/3rd share in the profits.
(ii) Kailash is not to bring goodwill in cash,
Vimal and Nirmal raise the
goodwill in the books.
(iii)
Goodwill of the firm is valued on the basis of 2 years' purchase of the average
profit of the last three years. Average profit of the last three years is ` 6,000.
(iv) Machinery and stock are revalued at ` 45,000 and ` 8,000 respectively.
Prepare a
Revaluation Account and Partners' Capital Accounts incorporating the above
adjustments.
Answer:
|
Revaluation Account |
|||
|
Particulars |
` |
Particulars |
` |
|
Gain |
8,000 |
Machinery |
7,000 |
|
Vimal’s cap-5,000 |
|
Stock |
1,000 |
|
Nirmal’s cap- 3,000 |
|
|
|
|
|
8,000 |
|
8,000 |
|
Capital account |
|||||||
|
Particulars |
Vimal |
Nirmal |
Kailash |
Particulars |
Vimal |
Nirmal |
Kailash |
|
To Goodwill A/c |
5,000 |
3,000 |
- |
By Balance b/d |
32,000 |
34,000 |
- |
|
To Goodwill A/c |
5,000 |
3,000 |
- |
By Cash A/c |
- |
- |
30,000 |
|
To
Balance c/d |
39,500 |
38,500 |
30,000 |
By Goodwill A/c |
7,500 |
4,500 |
- |
|
|
|
|
|
By Revaluation A/c |
5,000 |
3,000 |
- |
|
|
|
|
|
By General reserve A/c |
5,000 |
3,000 |
|
|
|
49,500 |
44,500 |
30,000 |
|
49,500 |
44,500 |
30,000 |
|
|
|
|
|
|
|
|
|
Working note:
1.
Goodwill valuation
Goodwill = 6,000×2=12,000
2.
Goodwill 12,000 raised in 3:2 in sacrificing ratio
Vimal =12,000×3/5=7,500
Nirmal =12,000×2/5=4,500
|
Goodwill
A/c |
Dr. |
12,000 |
|
|
To Vimal’s capital
A/c |
|
|
7,500 |
|
To Nirmal’s
capital A/c |
|
|
4,500 |
|
(Being goodwill raised) |
|
|
|
Goodwill 12,000 written
off in 5:3:4 in sacrificing ratio
Vimal =12,000×5/12=5,000
Nirmal =12,000×3/12=3,000
Kailash = 12,000×4/12=4,000
|
Vimal’s capital A/c |
Dr. |
5,000 |
|
|
Nirmal’s capital A/c |
Dr. |
3,000 |
|
|
Kailash’s current A/c |
Dr. |
4,000 |
|
|
To Goodwill
A/c |
|
|
12,000 |
|
(Being goodwill written off) |
|
|
|
1.
Profit of
Revaluation shared in old ratio (3:2)
Vimal =8,000×3/5=5,000
Nirmal =8,000×3/5=3,000
2.
General reserve
shared in old ratio (3:2)
Vimal =8,000×3/5=5,000
Nirmal =8,000×3/5=3,000
Note: Since, Kailash is not to bring goodwill in cash,will
be compensated through Kailash’s current
account.
Question
57:
X, Y and Z are equal partners with capitals of
`15,000; `17,500 and `20,000 respectively. They agree to
admit W into equal partnership upon payment in cash `15,000 for 1/4th share of the
goodwill and `18,000 as his capital, both sums to remain in the business.
The liabilities of the old firm were `30,000 and the assets, apart from
cash, consist of Motors `12,000, Furniture `4,000, Stock `26,500 and Debtors `37,800. The Motors and Furniture were
revalued at `9,500 and `3,800 respectively.
Pass Journal entries to give effect to the above arrangement
and also show Balance Sheet of the new firm.
Answer:
|
Journal |
|||||
|
Date |
Particulars |
L.F. |
Debit ` |
Credit ` |
|
|
|
|
|
|
|
|
|
|
Cash
A/c |
Dr. |
|
3,3000 |
|
|
|
To W’s capital A/c To Premium for Goodwill
A/c |
|
|
|
1,8000 1,5000 |
|
|
(Being
C’s brought his share of goodwill and capital in cash) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Premium
for Goodwill A/c |
Dr. |
|
1,5000 |
|
|
|
To X’s Capital A/c To Y’s Capital A/c To Z’s Capital A/c |
|
|
|
5000 5000 5000 |
|
|
(Being
w’s share of Goodwill transferred in their
sacrificing Ratio) |
|
|
|
|
|
Revaluation
A/c
Dr. To Motor A/c To Furniture A/c (Being
decrease in value assets transferred to Revaluation A/c) |
2700 |
2500 200 |
|||
|
X’s
Capital A/c
Dr. Y’s
Capital A/c
Dr. Z’s
Capital A/c
Dr. To Revaluation A/c (Being
loss of Revaluation of transferred to old partners capital A/c) |
900 900 900 |
2700 |
|||
|
|
|
|
|
|
|
Balance
sheet of new firm
|
||||
|
Liabilities |
` |
Assets |
` |
|
|
Liabilities |
30,000 |
Cash
balance (2,200+33,000) |
35,200 |
|
|
X's Capital |
19,100 |
|
Motor |
9,500 |
|
Y's Capital Z’s Capital |
21,600 24,100 |
|
furniture Stock |
3,800 26,500 |
|
Z’s Capital |
18,000 |
82,800 |
Debtors |
37,800 |
|
|
1,12,800 |
1,12,800 |
||
|
|
|
|
|
|
Working notes;
WN-1
Memorandum
balance sheet is prepared to find out Cash balance.
|
Liabilities |
` |
Assets |
` |
|
|
Liabilities |
30,000 |
Cash
balance (Balancing
figure) |
2200 |
|
|
X's Capital |
15,000 |
|
Motor |
12,000 |
|
Y's Capital Z’s Capital |
17,500 20,000 |
52,500 |
furniture Stock |
4,000 26,500 |
|
|
|
|
Debtors |
37,800 |
|
|
82,500 |
82,500 |
||
|
|
|
|
|
|
WN-2
Old ratio
of X:Y:Z=1;1;1
W is
admitted for ¼ share
Let total
profit =1
Remaining
profit after W’s admission= 1-1/4=3/4
X=3/4×1/3=3/12
Y=3/4×1/3=3/12
Z=3/4×1/3=3/12
W=1/4×3/3=3/12
Therefore
share of X, Y , Z and W=3:3:3:3=1:1:1:1
Sacrificing
ratio= old –new
X=1/3-1/4=1/12
Y=1/3-1/4=1/12
Z=1/3-1/4=1/12
Sacrificing
ratio of X, Y , Z = 1:1:1
WN-4
|
Particulars |
` |
Particulars |
` |
|
To Motors A/c To Furniture A/c |
2500 200 |
By Loss Capital A/c (In old Ratio) X=2700×1/3=900 Y=2700×1/3=900 Z=2700×1/3=900 |
2700 |
|
|
2700 |
|
2700 |
WN-5
|
Partners’ Capital A/c |
|||||||||
|
Particulars |
X ` |
Y ` |
Z ` |
W ` |
Particulars |
X ` |
Y ` |
Z ` |
W ` |
|
To ravaluation A/c To balance c/d |
900 19,100 |
900 21,600 |
900 24,100 |
- 1,8000 |
By Balance b/d By Cash A/c By Premium A/c |
15,000 - 5000 |
17,500 - 5000 |
20,000 - 5000 |
- 18,000 - |
|
|
20,000 |
22,500 |
25,000 |
18,000 |
|
20,000 |
22,500 |
25,000 |
18,000 |
Question 58:
Following
was the Balance Sheet of A and B who were sharing profits in
the ratio of 2 : 1 as at 31st March, 2024:
|
|
||||
|
Liabilities |
` |
Assets |
` |
|
|
Capital A/c’s: |
|
Building |
25,000 |
|
|
A |
15,000 |
|
Plant and Machinery |
17,500 |
|
B |
10,000 |
25,000 |
Stock |
10,000 |
|
Sundry Creditors |
|
32,950 |
Sundry Debtors |
4,850 |
|
|
|
|
Cash in Hand |
600 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
57,950 |
|
57,950 |
|
|
|
|
|
|
They admit C into partnership on the following
terms:
(a) C was to bring ` 7,500 as his capital and `3,000 as goodwill
for 1/4th share in the firm.
(b) Values of the Stock and Plant and Machinery were to be reduced by 5%.
(c) A Provision for Doubtful Debts was to be created in respect of Sundry
Debtor `375.
(d) Building was to be appreciated by 10%.
Pass necessary Journal entries to give effect to the arrangements. Prepare
Profit and Loss Adjustment Account (or Revaluation Account), Partners' Capital
Accounts and Balance Sheet of the new firm.
Answer:
|
Journal |
|||||
|
Date |
Particulars |
L.F. |
Debit ` |
Credit ` |
|
|
|
|
|
|
|
|
|
|
Profit
and Loss Adjustment A/c |
Dr. |
|
1,750 |
|
|
|
To Stock A/c |
|
|
500 |
|
|
|
To Plant and Machinery
A/c |
|
|
875 |
|
|
|
To Reserve for Doubtful
Debts A/c |
|
|
375 |
|
|
|
(Decrease
in stock and Plant and creation of Reserve for Doubtful Debt transferred to
Profit and Loss Adjustment Account) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Building
A/c |
Dr. |
|
2,500 |
|
|
|
To Profit and Loss
Adjustment A/c |
|
|
2,500 |
|
|
|
(Increase
in value of Building of transferred to Profit and loss Adjustment Accounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit
and Loss Adjustment A/c |
|
750 |
|
|
|
|
To A’s Capital A/c |
|
|
500 |
|
|
|
To B’s Capital A/c |
|
|
250 |
|
|
|
(Profit
on revaluation of asset and liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
A/c |
Dr. |
|
10,500 |
|
|
|
To C’s Capital A/c |
|
|
7,500 |
|
|
|
To Premium for Goodwill
A/c |
|
|
3,000 |
|
|
|
(C
brought capital and share of goodwill) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Premium
for Goodwill A/c |
Dr. |
|
3,000 |
|
|
|
To A’s Capital A/c |
|
|
2,000 |
|
|
|
To B’s Capital A/c |
|
|
1,000 |
|
|
|
(Premium
for Goodwill distributed between |
|
|
|
|
|
|
|
|
|
|
|
|
Profit and Loss Adjustment Account |
|||
|
Dr. |
|
Cr. |
|
|
Particulars |
` |
Particulars |
` |
|
Stock |
500 |
|
|
|
Plant
and Machinery |
875 |
Building |
2,500 |
|
Reserve
for Doubtful Debts |
375 |
|
|
|
Profit
transferred to |
|
|
|
|
A Capital |
500 |
|
|
|
B Capital |
250 |
|
|
|
|
2,500 |
|
2,500 |
|
|
|
|
|
|
Partners’ Capital Accounts |
|||||||
|
Dr. |
|
Cr. |
|||||
|
Particulars |
A |
B |
C |
Particulars |
A |
B |
C |
|
|
|
|
|
Balance
b/d |
15,000 |
10,000 |
|
|
|
|
|
|
Cash |
|
|
7,500 |
|
|
|
|
|
Premium
for Goodwill |
2,000 |
1,000 |
|
|
Balance
c/d |
17,500 |
11,250 |
7,500 |
Profit
and Loss Adjustment (Profit) |
500 |
250 |
|
|
|
17,500 |
11,250 |
7,500 |
|
17,500 |
11,250 |
7,500 |
|
|
|
|
|
|
|
|
|
|
Balance Sheet as on March 31, 2024 after admission of C |
|||||
|
Liabilities |
` |
Assets |
` |
||
|
|
|
|
|
||
|
Capital
Accounts: |
|
Building
(25,000 + 2,500) |
27,500 |
||
|
A |
17,500 |
|
Plant
and Machinery (17,500 – 875) |
16,625 |
|
|
B |
11,250 |
|
Stock
(10,000 – 500) |
9,500 |
|
|
C |
7,500 |
36,250 |
|
||
|
Sundry
Creditors |
32,950 |
Sundry
Debtors |
4,850 |
|
|
|
|
|
Less: Provision for D. Debts |
375 |
4,475 |
|
|
|
|
Cash
in Hand (600 + 10,500) |
11,100 |
||
|
|
69,200 |
|
69,200 |
||
|
|
|
|
|
||
Working Notes:
WN1
|
|
A |
B |
|
Sacrificing
ratio |
2 : |
1 |
WN2
Distribution of Premium for Goodwill (in sacrificing ratio)
A will get =3,000×2/3=2,000
B will get =3,000×1/3=1,000
WN3
Distribution of Profit from Profit and loss Adjustment Account (in old ratio)
A will get =750×2/3=500
B will get =750×1/3=250
Question 59:
Balance
Sheet of J and K who share profits in the ratio of 3 : 2 is as follows:
|
BALANCE SHEET as at 31st March, 2024 |
||||
|
Liabilities |
` |
Assets |
` |
|
|
Reserve |
1,00,000 |
Cash |
2,00,000 |
|
|
J's Capital |
1,50,000 |
|
Other Assets |
1,50,000 |
|
K's Capital |
1,00,000 |
2,50,000 |
|
|
|
|
3,50,000 |
|
3,50,000 |
|
|
|
|
|
|
|
M joins the firm from 1st April,
2024 for a half share in the future profits. He is to pay` 1,00,000 for goodwill and `3,00,000 for
capital. Draft the Journal entries and prepare Balance Sheet in each of the
following cases:
(a) If M acquires his share of profit from
the firm in the profit-sharing ratios of the partners.
(b) If M acquires his share of profits from
the firm in equal proportions from the original partners.
(c) If M acquires his share of profit in
the ratio of 3 : 1 from the original partners,
ascertain the future profit-sharing ratio of the partners in each case.
Answer:
(a) If M acquires his share of profit
from the firm in the original ratios of the partners.
|
Journal |
|||||
|
Date |
Particulars |
L.F. |
Debit ` |
Credit ` |
|
|
2024 Apr.1 |
|
|
|
|
|
|
|
To M’s Capital A/c |
|
|
3,00,000 |
|
|
|
To Premium for Goodwill
A/c |
|
|
1,00,000 |
|
|
|
(M
brought capital and his of goodwill in cash) |
|
|
|
|
|
|
|
|
|
|
|
|
Apr.1 |
Premium
for Goodwill A/c |
Dr. |
|
1,00,000 |
|
|
|
To J’s Capital A/c |
|
|
60,000 |
|
|
|
To K’s Capital A/c |
|
|
40,000 |
|
|
|
(Premium
for Goodwill distributed between |
|
|
|
|
|
|
|
|
|
|
|
|
Apr.1 |
Reserve
A/c |
Dr. |
|
1,00,000 |
|
|
|
To J’s Capital A/c |
|
|
60,000 |
|
|
|
To K’s Capital A/c |
|
|
40,000 |
|
|
|
(Reserve
distribution between M and J in their old ratio) |
|
|
|
|
|
|
|
|
|
|
|
|
Partners’ Capital Accounts |
|||||||
|
Dr. |
|
|
|
|
|
|
Cr. |
|
Particulars |
J |
K |
M |
Particulars |
J |
K |
M |
|
|
|
|
|
Balance
b/d |
1,50,000 |
1,00,000 |
|
|
|
|
|
|
Cash |
|
|
3,00,000 |
|
|
|
|
|
Premium
for |
60,000 |
40,000 |
|
|
Balance
c/d |
2,70,000 |
1,80,000 |
3,00,000 |
Reserve |
60,000 |
40,000 |
|
|
|
2,70,000 |
1,80,000 |
3,00,000 |
|
2,70,000 |
1,80,000 |
3,00,000 |
|
|
|
|
|
|
|
|
|
|
Balance Sheet as on April 01, 2024 after M’s admission |
|||
|
Liabilities |
` |
Assets |
` |
|
|
|
Cash
(2,00,000 + 4,00,000) |
6,00,000 |
|
J’s Capital |
2,70,000 |
Other
Assets |
1,50,000 |
|
K’s Capital |
1,80,000 |
|
|
|
M’s
Capital |
3,00,000 |
|
|
|
|
7,50,000 |
|
7,50,000 |
|
|
|
|
|
Calculation of Future (New) Profit Sharing Ratio
|
|
M |
J |
|
OLD
RATION |
3 : |
2 : |
M is admitted for ½ share of
profit
Let the combined share of all partners after admission of M be = 1
Combined share of J and K after M’s admission = 1 − M’s share
=1-1/2
=1/2
New ratio= old ratio –Combined
share of B and C
J= 3/5×1/2=3/10
k=2/5×1/2=2/10
|
|
J |
|
K |
|
M |
|
New
profit sharing ratio= |
3/10 |
: |
2/10 |
: |
1/2 |
|
= |
3/10 |
: |
2/10 |
: |
5/10 |
|
= |
3 |
: |
2 |
: |
5 |
Working Notes-
WN1
Distribution of Premium for Goodwill (in sacrificing ratio)
J will get =1,00,000×3/5=60,000
K will get =1,00,000×2/5=40,000
WN2
Distribution of General Reserve (in old ratio)
J will get =1,00,000×3/5=60,000
K will get =1,00,000×2/5=40,000
(b)
If M acquires his share
of profit from the firm in equal proportions from the original partners.
|
Journal |
|||||
|
Date |
Particulars |
L.F. |
Debit ` |
Credit ` |
|
|
2022 |
|
|
|
|
|
|
April
1 |
Reserve
A/c |
Dr. |
|
1,00,000 |
|
|
|
To J’s Capital A/c |
|
|
60,000 |
|
|
|
To K’s Capital A/c |
|
|
40,000 |
|
|
|
(Reserve
distributed between J and K in old ratio) |
|
|
|
|
|
|
|
|
|
|
|
|
April
1 |
Cash
A/c |
Dr. |
|
4,00,000 |
|
|
|
To M’s Capital A/c |
|
|
3,00,000 |
|
|
|
To J’s Premium for
Goodwill A/c |
|
|
1,00,000 |
|
|
|
(M
brought capital and his share of goodwill) |
|
|
|
|
|
|
|
|
|
|
|
|
April
1 |
Premium
for Goodwill A/c |
Dr. |
|
1,00,000 |
|
|
|
To J’s Capital A/c |
|
|
50,000 |
|
|
|
To K’s Capital A/c |
|
|
50,000 |
|
|
|
(Premium
for Goodwill distributed between J and K in sacrificing Raito i.e 1:1) |
|
|
|
|
|
|
|
|
|
|
|
|
Partners’ Capital Accounts |
|||||||
|
Dr. |
|
Cr. |
|||||
|
Particulars |
J |
K |
M |
Particulars |
J |
K |
M |
|
|
|
|
|
Balance
b/d |
1,50,000 |
1,00,000 |
|
|
|
|
|
|
Cash |
|
|
3,00,000 |
|
|
|
|
|
Premium
for |
50,000 |
50,000 |
|
|
Balance
c/d |
2,60,000 |
1,90,000 |
3,00,000 |
Reserve |
60,000 |
40,000 |
|
|
|
2,60,000 |
1,90,000 |
3,00,000 |
|
2,60,000 |
1,90,000 |
3,00,000 |
|
|
|
|
|
|
|
|
|
|
Balance Sheet as on April 01, 2022 after M’s admission |
|||
|
Liabilities |
` |
Assets |
` |
|
J’s Capital |
2,60,000 |
Cash
(2,00,000 + 4,00,000) |
6,00,000 |
|
K’s Capital |
1,90,000 |
Others
Assets |
1,50,000 |
|
M’s
Capital |
3,00,000 |
|
|
|
|
7,50,000 |
|
7,50,000 |
|
|
|
|
|
Calculation of future (new) profit sharing ratio
|
|
J |
K |
|
Old
ratio |
3 : |
2 |
M is admitted for ½ share of profit
J and K each will sacrifice in favour of M=1/2×1/2=1/4
New ratio= old ratio – Sacrificing Ratio
|
J’s |
=3/5-1/4 |
|
|||||
|
|
=7/20 |
|
|||||
|
k’s |
=2/5-1/4 |
|
|||||
|
|
=3/20 |
|
|||||
|
|
J |
|
K |
|
M |
|||
|
New
profit sharing ratio= |
7/20 |
: |
3/20 |
: |
1/2 |
|||
|
= |
7/20 |
: |
3/20 |
: |
10/20 |
|||
|
= |
7 |
: |
3 |
: |
10 |
|||
|
|
J |
|
K |
|
|
Sacrificing ratio= |
1/4 |
: |
1/4 |
=1:1 |
Working Notes:
WN1
Distribution of Premium for Goodwill (in Sacrificingratio)
J and K each will get =1,00,000×1/2=50,000
WN2
Distribution of General Reserve (in old ratio)
J will get =1,00,000×3/5=60,000
K will get =1,00,000×2/5=40,000
(c)If M acquires his share of profit in the ratio of 3:1 from the original
partner
|
Journal |
|||||
|
Date |
Particulars |
L.F. |
Debit ` |
Credit ` |
|
|
2022 Apr.1 |
|
|
|
|
|
|
|
To J’s Capital A/c |
|
|
60,000 |
|
|
|
(Reserve
distributed between J and K at the time of M’s admission) |
|
|
|
|
|
|
|
|
|
|
|
|
April
1 |
Cash
A/c |
Dr. |
|
4,00,000 |
|
|
|
To M’s Capital A/c |
|
|
3,00,000 |
|
|
|
To Premium for Goodwill
A/c |
|
|
1,00,000 |
|
|
|
(M
brought Capital his share of Goodwill) |
|
|
|
|
|
|
|
|
|
|
|
|
April
1 |
Premium
for Goodwill A/c |
Dr. |
|
1,00,000 |
|
|
|
To J’s Capital A/c |
|
|
75,000 |
|
|
|
To K’s Capital A/c |
|
|
25,000 |
|
|
|
(Premium
for Goodwill distributed between |
|
|
|
|
|
|
|
|
|
|
|
|
Partners’ Capital Accounts |
|||||||
|
Dr. |
|
Cr. |
|||||
|
Particulars |
J |
K |
M |
Particulars |
J |
K |
M |
|
|
|
|
|
Balance
b/d |
1,50,000 |
1,00,000 |
|
|
|
|
|
|
Cash |
|
|
3,00,000 |
|
|
|
|
|
Premium
for |
75,000 |
25,000 |
|
|
|
|
|
|
Reserve |
60,000 |
40,000 |
|
|
Balance
c/d |
2,85,000 |
1,65,000 |
3,00,000 |
|
|
|
|
|
|
2,85,000 |
1,65,000 |
3,00,000 |
|
2,85,000 |
1,65,000 |
3,00,000 |
|
|
|
|
|
|
|
|
|
|
Balance Sheet as on April 01, 2022 after M’s admission |
|||
|
Liabilities |
` |
Assets |
` |
|
J’s Capital |
2,85,000 |
Cash
(2,00,000 + 4,00,000) |
6,00,000 |
|
K’s
Capital |
1,65,000 |
Other
Assets |
1,50,000 |
|
M’s
Capital |
3,00,000 |
|
|
|
|
7,50,000 |
|
7,50,000 |
|
|
|
|
|
Calculation of Future (New) Profit Sharing Ratio
|
|
J |
K |
|
Old
ratio |
3 : |
2 |
M is admitted for ½ share
of profit
|
J’s sacrificing rato |
=1/2×3/4 |
|
|
=2/8 |
|
K’s sacrificing rato |
=1/2×1/4 |
|
|
=1/8 |
New Ratio = Old Ratio − Sacrificing Ratio
|
J’s |
=3/5-3/8 |
|
|||||
|
|
=9/40 |
|
|||||
|
K’s |
=2/5-1//8 |
|
|||||
|
|
=11/40 |
|
|||||
|
|
J |
|
K |
|
M |
||
|
New
profit sharing ratio= |
9/40 |
: |
11/40 |
: |
1/2 |
||
|
= |
9/40 |
: |
11/40 |
: |
20/40 |
||
|
= |
9 |
: |
11 |
: |
20 |
||
Working Notes:
WN1
Distribution of Premium for Goodwill (in sacrificing ratio)
J will get =1,00,000×3/4=75,000
K will get =1,00,000×1/4=25,000
WN2
Distribution of Reserve (in old ratio)
J will get =1,00,000×3/5=60,000
K will get =1,00,000×2/5=40,000
Question 60:
Given
below is the Balance Sheet of A and B, who are carrying on
partnership business on 31st March, 2025. A and B share
profits and losses in the ratio of 2 : 1.
|
BALANCE SHEET OF A AND B |
||||
|
Liabilities |
` |
Assets |
` |
|
|
Bills
Payable |
10,000 |
Cash
in Hand |
10,000 |
|
|
Creditors |
58,000 |
Cash
at Bank |
40,000 |
|
|
Outstanding
Expenses |
2,000 |
Sundry Debtors |
60,000 |
|
|
Capital
A/cs: |
|
Stock |
40,000 |
|
|
A |
1,80,000 |
|
Plant |
1,00,000 |
|
B |
1,50,000 |
3,30,000 |
Building |
1,50,000 |
|
|
4,00,000 |
|
4,00,000 |
|
|
|
|
|
|
|
C is admitted as a partner on 1st
April, 2024 on the following terms:
(a) C will bring ` 1,00,000 as his capital
and ` 60,000 as his share of goodwill for
1/4th share in the profits.
(b) Plant is to be appreciated to ` 1,20,000 and the value of building is to be appreciated by
10%.
(c) Stock is found overvalued by ` 4,000.
(d) A provision for doubtful debts is to be created at 5% of sundry debtors.
(e) Creditors were unrecorded to the extent of ` 1,000.
Pass the necessary Journal entries, prepare the Revaluation Account and
Partners' Capital Accounts, and show the Balance Sheet after the admission of C.
Answer:
|
Journal |
|||||
|
Date |
Particulars |
L.F. |
` |
` |
|
|
2025 |
Bank A/c |
Dr. |
|
1,60,000 |
|
|
Mar 31 |
To C’s Capital A/c |
|
|
1,00,000 |
|
|
|
To Premium for Goodwill A/c |
|
|
60,000 |
|
|
|
(Capital
and premium for goodwill brought by C for 1/4 share) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Premium
for Goodwill A/c |
Dr. |
|
60,000 |
|
|
|
To A’s Capital A/c |
|
|
|
40,000 |
|
|
To B’s Capital A/c |
|
|
|
20,000 |
|
|
(Premium
for Goodwill brought transferred to old partners’ capital account in their
sacrificing ratio) |
|
|
|
|
|
|
Plant
A/c |
Dr. |
|
20,000 |
|
|
|
Building A/c |
Dr. |
|
15,000 |
|
|
|
To Revaluation A/c |
|
|
|
35,000 |
|
|
(Increase in value of assets) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revaluation A/c |
Dr. |
|
8,000 |
|
|
|
To Stock |
|
|
|
4,000 |
|
|
To
Provision for Doubtful Debts A/c |
|
|
3,000 |
|
|
|
To
Creditors A/c (Unrecorded) |
|
|
|
1,000 |
|
|
(Assets and liabilities revalued) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revaluation A/c |
Dr. |
|
27,000 |
|
|
|
To A’s Capital A/c |
|
|
|
18,000 |
|
|
To B’s Capital A/c |
|
|
|
9,000 |
|
|
(Profit on revaluation transferred to old partners) |
|
|
|
|
|
Revaluation Account |
|||||
|
Dr. |
Cr. |
||||
|
Particulars |
` |
Particulars |
` |
||
|
Stock |
4,000 |
Plant |
20,000 |
||
|
Provision
for Doubtful Debts |
3,000 |
Building |
15,000 |
||
|
Creditors
(Unrecorded) |
1,000 |
|
|
||
|
Revaluation
Profit |
|
|
|
||
|
A’s Capital |
18,000 |
|
|
|
|
|
B’s Capital |
9,000 |
27,000 |
|
|
|
|
|
35,000 |
|
35,000 |
||
|
|
|
|
|
||
|
Partners’ Capital Account |
||||||||
|
Dr. |
Cr. |
|||||||
|
Particulars |
A |
B |
C |
Particulars |
A |
B |
C |
|
|
Balance
c/d |
2,38,000 |
1,79,000 |
1,00,000 |
Balance
b/d |
1,80,000 |
1,50,000 |
|
|
|
|
|
|
|
Bank |
|
|
1,00,000 |
|
|
|
|
|
|
Premium
for Goodwill |
40,000 |
20,000 |
|
|
|
|
|
|
|
Revaluation |
18,000 |
9,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,38,000 |
1,79,000 |
1,00,000 |
|
2,38,000 |
1,79,000 |
1,00,000 |
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet as on March 31,
2025 |
|||||
|
Liabilities |
` |
Assets |
` |
||
|
Bills Payable |
10,000 |
Cash in Hand |
10,000 |
||
|
Creditors |
59,000 |
Cash at Bank |
2,00,000 |
||
|
Outstanding Expenses |
2,000 |
Sundry Debtors |
60,000 |
|
|
|
Capital: |
|
Less:
Provision for Doubtful Debt |
3,000 |
57,000 |
|
|
A |
2,38,000 |
|
Stock |
36,000 |
|
|
B |
1,79,000 |
|
Plant |
1,20,000 |
|
|
C |
1,00,000 |
5,17,000 |
Building |
1,65,000 |
|
|
|
5,88,000 |
|
5,88,000 |
||
|
|
|
|
|
||
Note: Since no information is given about the share
of sacrifice, it is assumed that the old partners are sacrificing in their old
profit sharing ratio.
Ts Grewal Solution 2025-2026
Click below for more Questions
Class 12 / Volume – I