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Ashish, Aakash and Amit Are Partners Sharing Profits and Losses Equally. the Balance Sheet as at 31st March, 2019 Was as Follows: - CBSE (Arts) Class 12 - Accountancy

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Question

Ashish, Aakash and Amit are partners sharing profits and losses equally. The Balance Sheet as at 31st March, 2019 was as follows:

Liabilities

Amount
(₹)

Assets

Amount
(₹)

Sundry Creditors 75,000 Cash in Hand 24,000
General Reserve 90,000 Cash at Bank 1,40,000
Capital A/cs:   Sundry Debtors

80,000

  Ashish

3,00,000

  Stock 1,40,000
  Aakash 3,00,000   Land and Building 4,00,000
  Amit

2,75,000

8,75,000 Machinery 2,50,000
      Advertisement Suspense 6,000
    10,40,000   10,40,000


​The partners decided to share profits in the ratio of 2 : 2 : 1 w.e.f. 1st April, 2019. They also decided that:
(i) Value of stock to be reduced to ₹ 1,25,000.
(ii) Value of machinery to be decreased by 10%.
(iii) Land and Building to be appreciated by ₹ 62,000.
(iv) Provision for Doubtful Debts to be made @ 5% on Sundry Debtors.
(v) Aakash was to carry out reconstitution of the firm at a remuneration of ₹ 10,000. 
Pass necessary Journal entries to give effect to the above.

Solution

Journal

Date
 

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

April 1

General Reserve A/c

Dr.

 

90,000

 

 

      To Ashish’s Capital A/c

 

 

 

30,000

 

      To Akash’s Capital A/c

 

 

 

30,000

 

      To Amit’s Capital A/c

 

 

 

30,000

 

(Reserve distributed)

 

 

 

 

April 1

Ashish’s Capital A/c

Dr.

 

2,000

 

 

Akash’s Capital A/c

Dr.

 

2,000

 

 

Amit’s Capital A/c

Dr.

 

2,000

 

 

     To Advertisement Suspense A/c

 

 

 

6,000

 

(Advertisement Suspense distributed)

 

 

 

 

April 1

Revaluation A/c

Dr.

 

54,000

 

 

     To Stock A/c

 

 

 

15,000

 

     To Machinery A/c

 

 

 

25,000

 

     To Provision for Doubtful Debts A/c

 

 

 

4,000

 

     To Akash’s Capital A/c (Remuneration)

 

 

 

10,000

 

(Assets revalued)

 

 

 

 

April 1

Land & Building A/c

Dr.

 

62,000

 

 

    To Revaluation A/c

 

 

 

62,000

 

(Assets revalued)

 

 

 

 

April 1

Revaluation A/c

Dr.

 

8,000

 

 

      To Ashish’s Capital A/c

 

 

 

2,666

 

      To Akash’s Capital A/c

 

 

 

2,666

 

      To Amit’s Capital A/c

 

 

 

2,667

 

(Profit made)

 

 

 

 

  Is there an error in this question or solution?

APPEARS IN

Solution Ashish, Aakash and Amit Are Partners Sharing Profits and Losses Equally. the Balance Sheet as at 31st March, 2019 Was as Follows: Concept: Retirement and Death of a Partner - Calculation of New Profit Sharing Ratio.
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