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Question
Amal and Vimal are partners in a firm sharing profits and losses in the ratio of 7 : 5. Their balance sheet as on 31st March, 2019, is as follows:
| Liabilities | ₹ | ₹ | Assets | ₹ |
| Capital accounts: | Land | 80,000 | ||
| Amal | 70,000 | Furniture | 20,000 | |
| Vimal | 50,000 | 1,20,000 | Stock | 25,000 |
| Sundry creditors | 30,000 | Debtors | 30,000 | |
| Profit and loss A/c | 24,000 | Debtors | 19,000 | |
| 1,74,000 | 1,74,000 |
Nirmal is admitted as a new partner on 1.4.2018 by introducing a capital of ₹ 30,000 for 1/3 share in the future profit subject to the following adjustments.
- Stock to be depreciated by ₹ 5,000
- Provision for doubtful debts to be created for ₹ 3,000
- Land to be appreciated by ₹ 20,000
Prepare revaluation account and capital account of partners after admission.
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Solution
| Dr. | Revaluation Account | Cr. | ||
| Particulars | ₹ | Particulars | ₹ | |
| To Stock A/c | 5,000 | By Land | 20,000 | |
| To Prov. for bad and doubtful | 3,000 | |||
| To Amal's Cap A/c | 7,000 | |||
| To Vimal's Cap A/c | 5,000 | 12,000 | ||
| 20,000 | 20,000 | |||
| Dr. | Capital Account | Cr. | |||||
| Particulars | Amal | Vimal | Nirmal | Particulars | Amal | Vimal | Nirmal |
| To Balance c/d | 91,000 | 65,000 | 30,000 | By Balance b d | 70,000 | 50,000 | - |
| By Profit and Loss A/c | 14,000 | 10,000 | - | ||||
| By Revaluation A/c | 7,000 | 5,000 | - | ||||
| By Bank A/c | - | - | 30,000 | ||||
| 91,000 | 65,000 | 30,000 | 91,000 | 65,000 | 30,000 | ||
| By Balance b/d | 91,000 | 65,000 | 30,000 | ||||
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RELATED QUESTIONS
Mrs Shehal and Mrs Meenal are equal partners in a business. Their balance sheet is as follows.
| Balance Sheet as on 31st March 2013 | |||
| Liabilities | Amount Rs. | Assets | Amount Rs. |
|
Capital A/c's Snehal 80,000 Meenal 45,000 Creditors General reserve
|
1,25,000 46,000 20,000
|
Premises Investments Equipments Bills Receivable Debtors 1,10,000 ( - ) R.D.D. 11,000 Bank Balance |
20,500 10,500 5,000 18,000
99,000 38,000 |
| 1,91,000 | 1,91,000 | ||
They agreed to admit Mr Komal on 1st April 2013 on the following terms:
(1) Komal should bring Rs. 50,000 towards her capital for one fourth (1/4th) Share in future profit.
(2) Goodwill to be raised in the books of the firm for Rs. 40,000.
(3) R.D.D. to be maintained at 5% on debtors.
(4) Premises to be valued at Rs. 30,000 and equipment to be written off fully.
(5) Creditors allowed a discount of Rs. 1,000 and they were paid off immediately.
Prepare Profit and Loss Adjustment Account, Partner's Capital Accounts and Balance Sheet of the new firm.
A and B are partners in a firm sharing profits and losses in the ratio of 1:1. C is admitted. A surrenders `1/4`th share and B surrenders `1/5`th of his share in favor of C. Calculate the new profit sharing ratio.
State whether the following will be debited or credited in the revaluation account.
- Depreciation on assets
- Unrecorded liability
- Provision for outstanding expenses
- Appreciation of assets
What are the journal entries to be passed on revaluation of assets and liabilities?
Rajan and Selva are partners sharing profits and losses in the ratio of 3 : 1. Their balance sheet as on 31st March 2017 is as under:
| Liabilities | ₹ | ₹ | Assets | ₹ |
| Capital accounts: | Building | 25,000 | ||
| Rajan | 30,000 | Furniture | 1,000 | |
| Selva | 16,000 | 46,000 | Stock | 20,000 |
| General reserve | 4,000 | Debtors | 16,000 | |
| Creditors | 37,500 | Bills receivable | 3,000 | |
| Cash at bank | 12,500 | |||
| Profit and loss account | 10,000 | |||
| 87,500 | 87,500 |
On 1.4.2017, they admit Ganesan as a new partner on the following arrangements:
- Ganesan brings ₹ 10,000 as capital for 1/5 share of profit.
- Stock and furniture is to be reduced by 10%, a reserve of 5% on debtors for doubtful debts is to be created.
- Appreciate buildings by 20%.
Prepare revaluation account, partners’ capital account and the balance sheet of the firm after admission.
Ram and Shyam were in partnership sharing profits and Losses in the proportion of 3 : 1 respectively. Their Balance sheet as on 31st March, 2020 stood as follows:
| Balance Sheet as on 31st March, 2020 | ||||
| Liabilities | Amount (₹) | Assets | Amount (₹) | |
| Sundry Creditors | 80,000 | Cash | 80,000 | |
| Bills Payable | 42,000 | Sundry Debtors | 64,000 | |
| Capital Accounts: | Land and Building | 32,000 | ||
| Ram | 1,20,000 | 1,60,000 | Stock | 40,000 |
| Shyam | 40,000 | Plant and Machinery | 60,000 | |
| General Reserve | 16,000 | Furniture | 22,000 | |
| 2,98,000 | 2,98,000 | |||
They admit Bharat into partnership on 1st April 2020. The term is that
- He shall have to bring in cash ₹ 40,000 as his Capital for 1/5th share in future profit and ₹ 20,000 as his share of Goodwill.
- A provision for 5% doubtful debts to be created on sundry debtors.
- Stock should be appreciated by 5% and Land and Building be appreciated by 20%.
- Furniture to be depreciated by 20%.
- Capital Accounts of all partners be adjusted in their new profit-sharing ratio through Cash Account.
Prepare:
- Profit and Loss Adjustment Account
- Partners' Capital Account
- Balance Sheet of the new firm.
Navya and Radhey were partners sharing profits and losses in the ratio of 3 : 1. Shreya was admitted for 1/5th share in the profits. Shreya was unable to bring her share of goodwill premium in cash. The journal entry recorded for goodwill premium is given below:
| Date | Particulars | LF | Debit (₹) | Credit (₹) |
| Shreya’s Current A/c ...Dr. | 24,000 | |||
| To Navya’s Capital A/c | 8,000 | |||
| To Radhey’s Capital A/c | 16,000 | |||
| (Being entry for goodwill treatment passed) |
The new profit-sharing ratio of Navya, Radhey and Shreya will be ______.
Following is the Balance Sheet of Mukesh and Anil sharing profit and losses in the ratio of 3:2 as on 31st March, 2019.
| Balance Sheet as on 31st March, 2019 | |||||
| Liabilities | Amount (₹) | Assets | Amount (₹) | ||
| Capital A/c: | Building | 72,000 | |||
| Mukesh | 80,000 | 1,80,000 | Plant & Machinery | 60,000 | |
| Anil | 1,00,000 | Stock | 48,000 | ||
| Sundry Creditors | 60,000 | Debtors | 42,000 | 40,000 | |
| Bills Payable | 10,000 | Less: RDD | 2,000 | ||
| Bank | 20,000 | ||||
| Furniture | 10,000 | ||||
| 2,50,000 | 2,50,000 | ||||
On 1st April, 2019 Neeta is admitted on the following terms:
- She will pay ₹ 1,00,000 of her capital and ₹ 40,000 as her share of Goodwill.
- The new profit sharing ratio is to be 5 : 3 : 2.
- The assets are to be revalued as under: Building ₹ 1,00,000, Plant & Machinery ₹ 48,000.
- RDD to be increased up to ₹ 4,000.
- The old partners decided to retain half of the amount of goodwill in the business.
- Sundry creditors should be revalued at ₹ 66,000.
Give Revaluation Account, Capitals Accounts and Balance Sheet of New firm.
The following is the Balance Sheet of Vivaan and Vihaan sharing Profits and Losses in the ratio of 3 : 2 as on 31 March, 2023.
| Balance Sheet as on 31st March, 2023 | ||||
| Liabilities | Amount (₹) | Assets | Amount (₹) | Amount (₹) |
| Capital Accounts: | Building | 1,08,000 | ||
| Vivaan | 1,20,000 | Plant and Machinery | 90,000 | |
| Vihaan | 1,50,000 | Stock | 72,000 | |
| Sundry Creditors | 90,000 | Debtors | 63,000 | 60,000 |
| Bank Overdraft | 15,000 | Less: R.D .D. | 3,000 | |
| Bank | 30,000 | |||
| Investments | 15,000 | |||
| 3,75,000 | 3,75,000 | |||
On 1-4-2023, Prihaan is admitted on the following terms:
(1) He is to pay ₹ 1,50,000 as his capital and ₹ 60,000 as his share of Goodwill.
(2) The new profit sharing ratio is to be 5 : 3 : 2.
(3) The assets are to be revalued as under:
Building ₹ 1,50,000, Plant and Machinery ₹ 72,000.
(4) R.D.D. to be increased up to ₹ 6,000
(5) The old partners decided to keep half of the amount of goodwill in the business.
(6) Sundry creditors are to be revalued at ₹ 99,000.
Prepare Revaluation Account, Capital Accounts of Partners and Balance Sheet of new [um.
Seeta and Geeta share profits and losses in the ratio of 3:2 in Partnership Firm. Their Balance Sheet as on 31st March, 2020 was as under:
Balance Sheet as on 31st March, 2020
| Liabilities | Amount (₹) | Assets | Amount (₹) | ||
| Capitals: | 40,500 | Bank | 11,250 | ||
| Seeta | 22,500 | Bills Receivable | 5,700 | ||
| Geeta | 18,000 | Debtors | 31,200 | 30,000 | |
| Creditors | 18,750 | (-) R.D.D. | 1,200 | ||
| Biil Payable | 15,000 | Stock | 18,000 | ||
| Bank Loan | 24,000 | Furniture | 7,050 | ||
| General Reserve | 3,750 | Machinery | 7,500 | ||
| Building | 22,500 | ||||
| 1,02,000 | 1,02,000 |
On 1st April, 2020 they admitted Reeta on the following terms:
- For half (1/2) share in future profit Reeta should bring ₹ 15,000 as capital and ₹ 7,500 for goodwill in cash.
- Furniture should be appreciated up to ₹ 8,025 and building be appreciated by 20%.
- R.D.D. is to be maintained at ₹ 1,500.
- The stock is to be reduced by 10% and machinery depreciated by 5%.
- Half of amount of goodwill is withdrawn by old partners.
Pass the necessary Journal Entries in the books of the firm.
