Question 61:
Balance Sheet of J and K who share profits in the ratio of 3 : 2 is as follows:
|
BALANCE SHEET as at 31st March, 2026 |
||||
|
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, 2026 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 ₹ |
|
|
2026 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, 2026 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 ₹ |
|
|
2026 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, 2026 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 62:
Given below is the Balance Sheet of A and B, who are carrying on partnership business on 31st March, 2026. 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, 2026 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. |
₹ |
₹ |
|
|
2026 |
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, 2026 |
|||||
|
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.
Question 63:
The Balance Sheet of Madhu and Vidhi who are sharing profits in the ratio of 2 : 3 as at 31st March, 2016 is given below:
|
|
|||||
|
Liabilities |
₹ |
Assets |
₹ |
||
|
Madhu's Capital |
5,20,000 |
Land and Building |
3,00,000 |
||
|
Vidhi's Capital |
3,00,000 |
Machinery |
2,80,000 |
||
|
General Reserve |
30,000 |
Stock |
80,000 |
||
|
Bills Payable |
1,50,000 |
Debtors |
3,00,000 |
|
|
|
|
|
|
Less: Provision |
10,000 |
2,90,000 |
|
|
|
|
|
|
|
|
|
|
|
Bank |
50,000 |
|
|
|
|
|
|
||
|
|
|
|
|
||
|
|
10,00,000 |
|
10,00,000 |
||
|
|
|
|
|
||
Madhu and Vidhi decided to admit Gayatri as a new partner from 1st April, 2016
and their new profit-sharing ratio will be 2 : 3 : 5. Gayatri brought ₹ 4,00,000 as her
capital and her share of goodwill premium in cash.
(a) Goodwill of the firm was valued at ₹ 3,00,000.
(b) Land and Building was found undervalued by ₹ 26,000.
(c) Provision for doubtful debts was to be made equal to 5% of the
debtors.
(d) There was a claim of ₹ 6,000 on account of workmen
compensation.
Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet
of the reconstituted firm.
Answer:
|
Revaluation Account |
|||||||
|
Dr. |
|
Cr. |
|||||
|
Particulars |
₹ |
Particulars |
₹ |
||||
|
Provision for Doubtful Debts |
5,000 |
Land &Building |
26,000 |
||||
|
Claim against Workmen Compensation |
6,000 |
|
|
||||
|
Revaluation Profit |
|
|
|
||||
|
|
Madhu’s Capital |
6,000 |
|
|
|
||
|
|
Vidhi’s Capital |
9,000 |
15,000 |
|
|
||
|
|
26,000 |
|
26,000 |
||||
|
|
|
|
|
||||
|
Partners’ Capital Account |
||||||||
|
Dr. |
Cr. |
|||||||
|
Particulars |
Madhu |
Vidhi |
Gayatri |
Particulars |
Madhu |
Vidhi |
Gayatri |
|
|
Balance c/d |
5,98,000 |
4,17,000 |
4,00,000 |
Balance b/d |
5,20,000 |
3,00,000 |
|
|
|
|
|
|
|
Bank |
|
|
4,00,000 |
|
|
|
|
|
|
General Reserve |
12,000 |
18,000 |
|
|
|
|
|
|
|
Premium for Goodwill |
60,000 |
90,000 |
|
|
|
|
|
|
|
Revaluation |
6,000 |
9,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,98,000 |
4,17,000 |
4,00,000 |
|
5,98,000 |
4,17,000 |
4,00,000 |
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet as on March 31, 2016 |
|||||
|
Liabilities |
₹ |
Assets |
₹ |
||
|
Bills Payable |
1,50,000 |
Bank (50,000 + 4,00,000 + 1,50,000) |
|
6,00,000 |
|
|
Claim for Workmen Compensation |
6,000 |
Sundry Debtors |
3,00,000 |
|
|
|
Capital: |
|
Less: Provision for Doubtful Debt |
15,000 |
2,85,000 |
|
|
Madhu |
5,98,000 |
|
Stock |
80,000 |
|
|
Vidhi |
4,17,000 |
|
Machinery |
2,80,000 |
|
|
Gayatri |
4,00,000 |
14,15,000 |
Land &Building |
3,26,000 |
|
|
|
15,71,000 |
|
15,71,000 |
||
|
|
|
|
|
||
Working Notes:
WN1: Calculation of Gayatri’s Share of
Goodwill
Gayatri's share=3,00,000×5/10=1,50,000 to be shared in 2:3
WN1: Calculation of Sacrificing Ratio
Sacrificing Ratio = Old Ratio – New Ratio
Madhu=2/5−2/10=2/10
Vidhi=3/5−3/10=−3/10
Question 64:
On 31st March, 2019, the Balance Sheet of A and B, who were sharing profits in the ratio of 3 : 2 was as follows:
|
Liabilities |
₹ |
Assets |
₹ |
|
||
|
Creditors Investment Fluctuation Fund General Reserve Capitals A/cs: |
30,000 12,000 25,000 |
Cash at Bank |
20,000 |
|
||
|
Debtors Less: Provision for Bad Debts |
85,000 5,000 |
80,000 |
|
|||
|
Stock Investments Furniture |
1,30,000 60,000 77,000 |
|||||
|
A B |
1,60,000 1,40,000 |
3,00,000 |
|
|||
|
|
3,67,000 |
|
3,67,000 |
|
||
|
||||||
On 1st April, 2019, they decided to admit C as a new partner for 1/5th share in the profits on the following terms:
(i) C brought ₹1,00,000 as his capital and ₹50,000 as his share of premium for goodwill.
(ii) Outstanding salaries of ₹2,000 be provided for.
(iii) The market value of investments was ₹50,000.
(iv) A debtor whose dues of ₹18,000 were written off as bad debts paid ₹12,000 in full settlement.
Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet of the new firm.
(CBSE 2020)
Answer:
|
Revaluation A/c |
||||
|
Particulars |
₹ |
Particulars |
₹ |
|
|
To Outstanding salary To Gain transferred to: (WN1) |
2,000
10,000 |
By Bad debts Recovered A/c |
12,000 |
|
|
A’s Capital A/c B’s Capital A/c |
6,000 4,000 |
|||
|
|
12,000 |
|
12,000 |
|
|
Capital A/c |
|||||||
|
Particulars |
A |
B |
C |
Particulars |
A |
B |
C |
|
To Balance c/d |
2,12,200 |
1,74,800 |
1,00,000 |
By Balance b/d By revaluation A/c By Investment Fluctuation Fund (WN2) By General Reserve A/c(WN3) By Bank A/c By Premium A/c (WN4) |
1,60,000 6,000 1,200 15,000 - 30,000 |
140,000 4,000 800 10,000 - 20,000 |
- - - - 1,00,000 - |
|
|
2,12,200 |
1,74,800 |
1,00,000 |
|
2,12,200 |
1,74,800 |
1,00,000 |
|
Balance Sheet |
||||||
|
Particulars |
₹ |
Particulars |
₹ |
|||
|
Creditors O/s Salary
Capitals A/cs: |
30,000 2,000
4,87,000 |
Cash (WN5) |
1,82,000 |
|||
|
Debtors Less: Pro. D. D. |
85,000 5,000 |
80,000 |
||||
|
Stock Investment Furniture |
1,30,000 50,000 77,000 |
|||||
|
A B C |
2,12,200 1,74,800 1,00,000 |
|||||
|
|
|
|||||
|
|
5,19,000 |
|
5,19,000 |
|||
|
||||||
Working Notes;
WN1 Distribution of Revaluation Gain in 3:2
A=10,000×3/5=6,000
B=10,000×2/5=4,000
WN2 Investment fluctuation Reserve in 3:2
A = 2,000×3/5 = 1,200
B = 2,000×2/5 = 800
WN3 General Reserve in 3:2
A = 25,000×3/5 = 15,000
B = 25,000×2/5 = 10,000
\
WN4 Distribution of Premium in Sacrificing Ratio 3:2
A = 50,000×3/5 = 30,000
B = 50,000×2/5 = 20,000
WN5 Cash balance
Cash Balance = 20,000+1,00,000+50,000+12,000
Cash Balance = 1,82,000
Question 65:
X and Y share profits in the ratio of 5 : 3. Their Balance Sheet as at 31st March, 2026 was:
|
Liabilities |
₹ |
Assets |
₹ |
||
|
Creditors |
15,000 |
Cash at Bank |
5,000 |
||
|
Employees' Provident Fund |
10,000 |
Sundry Debtors |
20,000 |
|
|
|
Workmen Compensation Reserve |
5,800 |
Less: Provision for Doubtful Debts |
600 |
19,400 |
|
|
Capital A/cs: |
|
Stock |
|
25,000 |
|
|
X |
70,000 |
|
Fixed Assets |
80,000 |
|
|
Y |
31,000 |
1,01,000 |
Profit and Loss A/c |
2,400 |
|
|
|
|
|
|
|
|
|
|
1,31,800 |
|
1,31,800 |
||
|
|
|
|
|
||
They admit Z
into partnership with 1/8th share in profits on 1st April, 2026. Z brings
₹ 20,000 as his capital and ₹ 12,000 for goodwill in cash. Z acquires his share
from X.
Following revaluations are also made:
(a) Employees' Provident Fund liability is to be increased by ₹ 5,000.
(b) All Debtors are good.
(c) Stock includes ₹ 3,000 for obsolete items.
(d) Creditors are to be paid ₹ 1,000 more.
(e) Fixed Assets are to be revalued at ₹ 70,000.
Prepare Journal entries, necessary accounts and new Balance Sheet. Also,
calculate new profit-sharing ratio.
Answer:
|
Revaluation Account |
|||
|
Dr. |
|
Cr. |
|
|
Particulars |
₹ |
Particulars |
₹ |
|
Stock |
3,000 |
Provision for D. Debts |
600 |
|
Creditors |
1,000 |
|
|
|
Fixed Assets |
10,000 |
Loss transferred to |
|
|
Provident Fund |
5,000 |
X Capital |
11,500 |
|
|
|
Y Capital |
6,900 |
|
|
19,000 |
|
19,000 |
|
|
|
|
|
|
Partners’ Capital Accounts |
|||||||
|
Dr. |
|
Cr. |
|||||
|
Particulars |
X |
Y |
Z |
Particulars |
X |
Y |
Z |
|
Revaluation (Loss) |
11,500 |
6,900 |
|
Balance b/d |
70,000 |
31,000 |
|
|
Profit and Loss |
1,500 |
900 |
|
Workmen’s
Comp. |
3,625 |
2,175 |
|
|
Balance c/d |
72,625 |
25,375 |
20,000 |
Cash |
|
|
20,000 |
|
|
|
|
|
Premium for Goodwill |
12,000 |
|
|
|
|
85,625 |
33,175 |
20,000 |
|
85,625 |
33,175 |
20,000 |
|
|
|
|
|
|
|
|
|
|
Balance Sheet as on March 31, 2026 after Z’s admission |
||||
|
Particulars |
₹ |
Assets |
₹ |
|
|
Creditors (15,000 + 1,000) |
16,000 |
Land and Building |
5,000 |
|
|
Provident Fund (10,000 + 5,000) |
15,000 |
Sundry Debtors |
20,000 |
|
|
Capital A/cs: |
|
Stock (25,000 – 3,000) |
22,000 |
|
|
X |
72,625 |
|
Fixed Assets (80,000 – 10,000) |
70,000 |
|
Y |
25,375 |
|
Cash |
32,000 |
|
Z |
20,000 |
1,18,000 |
|
|
|
|
1,49,000 |
|
1,49,000 |
|
|
|
|
|
|
|
Working Notes
WN1: Distribution of Revaluation
Loss
X’s capital will be debited =18,400×5/8=11,500
Y’s capital will be debited =18,400×3/8=6,900
WN2: Distribution Accumulated
Loss
X’s capital will be debited =2,400×5/8=1,500
Y’s capital will be Credited =2,400×3/8=900
WN3: Distribution of Workmen’s
Compensation Fund
X’s capital will be credited =5,800×5/8=3,625
Y’s capital will be Credited =5,800×3/8=2,175
WN4: Z’s premium for
goodwill will be transferred to X’s Capital Account because Z receives his
entire share from X.
WN5: Calculation of New Profit Sharing
Ratio
Z acquired 1/8th share from X
New share of X=5/8-1/8=4/8
New share of Y=3/8
New share of Z=1/8
New profit sharing ratio= 4;3:1
Ts Grewal Solution 2026-2027
Click below for more Questions
Class 12 / Volume – I