Question

A and Z are partners in a firm sharing profits in the ratio of 7 : 3. Their Balance Sheet as on 31.3.2016 was as follows was as follows: 

Balance Sheet of A and Z                                        as on 31.3.2016
Liabilities		Amount (Rs)	Assets	Amount (Rs)
Sundry Creditors		60,000	Cash	36,000
Provision for Bad Debts		6,000	Debtors	54,000
Outstanding Wages		9,000	Stock	60,000
General Reserve		15,000	Furniture	1,20,000
			Plant & Machinery	120,000
Capitals:
A	1,20,000
Z	1,80,000	3,00,000
		3,90,000		3,90,000

On the above date B was admitted for `1/4` share in the profits on the following terms:
(i) B will bring Rs 90,000 as his capital and Rs 30,000 as his share of goodwill premium, half of which will be withdrawn by A and Z.
(ii) Debtors Rs 4,500 will be written off and a provision of 5% will be created on debtors for bad and doubtful debts.
(iii) Outstanding wages will be paid off.
(iv) Stock will be depreciated by 10%, furniture by Rs 1,500 and Machinery by 8%.

(v) Investments of 7,500 not shown in the Balance Sheet will be reccorded.

(vi) A creditor of Rs 6,300 not recorded in the books was to be taken into account.

Pass necessary journal entries for the above transactions in the books of the firm on B’s admission.

OR

N, S and G were partners in a firm sharing profits and losses in the ratio of 2 : 3 : 5. On 31.3.2016 their Balance Sheet was as under:

Answer 1

Journal
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
	Cash A/c	Dr.		1,20,000
	To B’s Capital A/c				90,000
	To Premium for Goodwill A/c				30,000
	(Capital & goodwill brought in cash)
	Premium for Goodwill A/c	Dr.		30,000
	To A’s Capital A/c				21,000
	To Z’s Capital A/c				9,000
	(Goodwill shared in sacrificing ratio of 7 : 3)
	A’s Capital A/c	Dr.		10,500
	Z’s Capital A/c	Dr.		4,500
	To Cash A/c				15,000
	(Goodwill withdrawn)
	General Reserve A/c	Dr.		15,000
	To A’s Capital A/c				10,500
	To Z’s Capital A/c				4,500
	(General reserve shared among old partners in old ratio)
	Outstanding Wages A/c	Dr.		9,000
	To Cash A/c				9,000
	(Outstanding wages paid)
	Revaluation A/c	Dr.		24,375
	To Provision for Doubtful Debts A/c				975
	To Stock A/c				6,000
	To Furniture A/c				1,500
	To Plant & Machinery A/c				9,600
	To Creditors A/c				6,300
	(Decrease in assets and increase in liabilities debited to Revaluation A/c)
	Investments A/c	Dr.		7,500
	To Revaluation A/c				7,500
	(Assets revalued)
	A’s Capital A/c	Dr.		11,812.50
	Z’s Capital A/c	Dr.		5,062.50
	To Revaluation A/c				16,875
	(Loss on revaluation debited to old partners in old ratio)