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Abbay Carrying on Business on 31/3/16, Balance Sheet Was as Under: - Financial Accounting(Financial Accounting and Auditing 9)

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Abbay carrying on business On 31/3/16, Balance Sheet was as under:

Balance Sheet as on .1st March 2016

Liabilities Rs. Assets Rs.
Capital 1,80,000 Vehicle 15,000
Creditors 45,000 Investment 3,000
Bills Payable 15,000 Plant & Machinery 90,000
Abhay's Loan 60,000 Building 60,000
    Stock 50,000
    Cash 32,000
    Debtor 50,000
  3,00,000   3,00,000

On the above date, a LLP was incorporated to take over the above business on the following terms and conditions :On the above date, a LLP was incorporated to take over the above business on the
following terms and conditions :
(i) All assets (except cash and vehicle) and all liabilities (except Abhay's loan) to be taken over by the company for which all assets are valued at par except building and stock which  are .considered worth   75.,000 and 60;000 respectively.
(ii) Goodwill is valued at 1,00,000 .
(iii) Abbay and Vasant will be the partners of LLP sharing profits equally. They contributed 1,60,000 each.
(iv) Abhay's loan is  to be partly settled by his taking over the cash and vehicle at  par.
(v) The purchase consideration is received in cash.
Show Ledger Accounts to close the books of the firm, Journal Entries in the books of Purchaser and Statement of Assets and Liabilities. 

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In the books of Abhay
Statement of Purchase Consideration

  Particulars Rs.
(A) Assets Taken Over :  
  Investment 3,000
  Plant and Machinery 90,000
  Debtors 50,000
  Building 75,000
  Stock 60,000
  Goodwill 1,00,000
  (i) Total 3,78,000
(B) Liabilities Taken Over :  
  Creditors 45,000
  Bills Payable 15,000
  (ii) Total 60,000
  Purchase Consideration (i) - (ii) 3,18,000

Realisation A/c

Particulars Rs Particulars Rs
To Sundry Assets :   By Sundry Liabilities :  
Building 60,000    
Plant & Machinery 90,000 Creditors 45,000
Stock 50,000 Bills Payable 15,000
Debtors 50,000 By LLP A/c 3,18,000
Investments 3,000    
To Capital A/c 1,25,000    
(Profit on Dissolution transferred to Capital A/c)      
  3,78,000   3,78,000

Abhay 's Loan A/c

Particulars Rs. Particulars Rs.
To Vehicle A/c 15,000 By Bal. b/d 60,000
To Cash/Bank A/c 45,000    
  60.000   60,000

LLP Co's A/c

Particulars Rs. Particulars Rs.
To Realisation A/c 3,18,000 By Cash/Bank A/c 3,18,000
  3,18,000   3.18,000

Cash /Bank A/c

Particulars Rs. Particulars Rs.
To Bal. b/d 32,000 By Abhay's Loan A/c 45,000
To LLP Co's A/c 3,18,000 BY Capital A/c 3,05,000
  3,50,000   3,50,000

Capital A/c

Particulars Rs. Particulars Rs.
To Cash/Bank A/c 3,05,000 By Bal b/d 1,80,000
    By Realisation A/c 1,25,000
  3,05,000   3,05,000

In the books of Abbay and V asant LLP Co.
Journal Entries (31/3/2016)

Date Particulars L/F Dr. Rs. Cr. Rs.
1. Business Purchase A/c Dr.   3,18,000 -
  To Vendor's A/c   - 3,18,000
  (Being Purchase of business recorded)      
2. Investn1ent A/c         Dr.   3,000 -
  Plant & Machinery A/c Dr.   90,000 -
  Debtors A/c              Dr.   50,000 -
  Building A/c              Dr.   75,000 -
  Stock                        Dr.   60,000 -
  Goodwill A/c              Dr.   1,00,000 -
  To Creditors A/c   - 45,000
  To Bills Payable A/c   - 15,000
  To Business Purchase A/c   - 3,18,000
3. Bank A/c                  Dr.   3,20,000 -
  To Abhay's Capital A/c   - 1,60,000
  To Vasant's Capital A/c   - 1,60,000
  (Being Capital contributed by the partners)      
4. Vendor's A/c                Dr.   3,18,000 -
  To Bank A/c   - 3,18,000
  (Being purchase consideration settled)      

Part B : Statement of Account
Statement of Assets & Liabilities of Abbay and V asant LLP as on 31.3.2016 :

  Particulars Figures as at the end of the current reportin2 period
(I) Contribution and Liabilities :  
1. 1. Partner' fund :  
  (a) Contribution 3,20,000
  (b) Reserve & Surplus -
2. Liabilities : -
  (a) Secured Loan -
  (b) Unsecured Loan -
  (c) Short-term borrowings -
  (d) Creditorsffrade Payables 60,000
  Advance from Customers  
  (e) Other Liabilities (to specify) -
  (f) Provisions : -
  (i) For Taxation -
  (ii) For Contingencies -
  (iii) For Insurance -
  (iv) Other Provisions (if any) -
  Total 3,80,000
(II)  Assets:  
  (a) Fixed Assets  
  (b) Investments  
  (c) Loans &  Advances  
  (d) Inventories  
  ( e) Debtors /Trade Receivables  
  (f) Cash/Cash Equivalents  
  (g) Other Assets (to specify)  
  Total 3,80,000
Concept: Limited Liability Partnership Problems
  Is there an error in this question or solution?
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