Question

Pai, Amba and Manoj are partners in a firm sharing profit and losses in the proportion to their capitals. Their Balance Sheet as on 31.3.2012 is as follow: 

        Balance Sheet as on 31^st March, 2012

 

Liabilities	Amount (Rs)	Assets	Amount (Rs)
Capitals		Cash	3,000
Pai	30,000	Stock	12,000
Amba	30,000	Debtors	20,000
Manoj	15,000	Plant	13,000
Creditors	7,000	Building	20,000
Outstanding expenses	15,000	Motor Van	31,000
Profit and Loss A/c	20,000	Goodwill	18,000
	1,17,000		1,17,000

On the above date Pai retired and the following adjustments have been agreed upon

1) Goodwill was revalued at Rs 15,000

2) Assets and Liabilities were revalued as under debtors Rs 17,000 stock at 90% of book value Building Rs 35,000 Plant Rs 11,500 Motor Van Rs 29, 500, Outstanding expenses Rs 18,000

3) Amba and Manoj contributed additional capital of Rs 20,000 and Rs 10,000 respectively

4) Balance due to Mr. Pai is transferred to his loan account after paying him Rs 1,000/-

Prepare:- Profit and Loss adjustment A/c,. Partner’s Capital A/c’s and Balance Sheet of new firm

Answer 1

            Profit and Loss Adjustment Account
Dr.                                                                             Cr.

Particulars		Amount (Rs)	Particulars	Amount (Rs)
Reserve for Discount on Debtors		3,000	Building	15,000
Stock		1,200
Plant		1,500
Motor Van		1,500
Outstanding Expenses		3,000
Goodwill		3,000
Profit transferred to:
Pai's Capital	720	1,800
Amba's Capital	720
Manoj's Capital	360
		15,000		15,000

                   Partners’ Capital Accounts

Dr.                                                                                Cr.

Particulars	Pai	Amba	Manoj	Particulars	Pai	Amba	Manoj
Cash A/c	1,000			Balance b/d	30,000	30,000	15,000
Loan A/c	37,720			Profit and Loss Adjustment A/c (Profit)	720	720	360
Balance c/d		58,720	29,360	Profit and Loss A/c	8,000	8,000	8,000
				Cash A/c		20,000	10,000
	38,720	58,720	29,360		38,720	58,720	29,360

 

Balance Sheet

as on April 01, 2012 after Pai’s retirement

Liabilities		Amount (Rs)	Assets		Amount (Rs)
Creditors		7,000	Stock	12,000	10,800
Outstanding Expenses		18,000	Less : Depreciation	1,200
Capital A/cs:			Building		35,000
Amba	58,720	88,080	Debtors	20,000	17,000
Manoj	29,360		Less : Reserve for Doubtful Debts	3,000
Loan A/c of Pai		37,720	Motor Van	31,000	29,500
			Less : Depreciation	1,500
			Goodwill		15,000
			Plant	13,000	11,500
			Less : Depreciation	1,500
			Cash		32,000
		1,50,800			1,50,800

Working Notes:

WN 1: Distribution of Profit and Loss A/c 

Pai will get = `20,000 xx 2/5 = "Rs" 8,000`

Amba will get = `20,000 xx 2/5 = "Rs" 8,000`

Manoj will get = `20,000 xx 1/5 = "Rs" 4,000`

                                 Cash Account 
Dr.                                                                              Cr.

Particulars	Amount (Rs)	Particulars	Amount (Rs)
Balance b/d	3,000	Pai's Capital A/c	1,000
Capital A/cs:		Balance c/d	32,000
Amba	20,000
Manoj	10,000
	33,000		33,000