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Bunty Decided to Convert His Business into a Llp Under the Name of Bunty and Babli Llp. the Balance· Sheet ·As at 31/3/2017 Was as Follows : - Financial Accounting(Financial Accounting and Auditing 9)

Numerical

Bunty decided to convert his Business into a LLP under the name of Bunty  and Babli LLP. The Balance· Sheet ·as at 31/3/2017 was as follows :

Balance Sheet as on 31st March, 2017

Liabilities Rs. Assets Rs.
Capital 72,500 Plant  45,000
General Reserve 15,000 Vehicle 20,000
Bank Overdraft 20,000 Copy Rights 5,000
Creditors 42,500 Stock 42,500
    Bills Receivable 30,000
    Debtors 7,500
  1,50,000   1,50,000

Bunty & Babli have decided to share profits equally. The capital contribution is Rs. 62,500 each.
other terms and con.ditions as follows : 
(i) Goodwill valued at Rs. 23,000.
(ii) Plant is to be taken over at Rs. 50,000.
(iii) LLP, to pay Bank Overdraft and Creditors immediately for which the LLP should sell stock at Rs. 43,000.
(iv) The LLP took a loan off 25,000 by mortgaging plant.
You are required to give :
(a) Necessary ledgers in the books of vendor.
(b) Journal Entries.and Balance Sheet in the books of Bunty and Babli LLP.

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Solution

Statement of Purchase Consideration

Particulars Rs.
(A) Assets Taken Over :  
Goodwill 23,000
Plant 50,000
Vehicle 20,000
Copy Rights 5,000
Stock 42,500
Bills Receivable  30,000
Sundry Debtors 7,500
  1,78,000
(B) Less : Liabilities Taken over  
Sundry Creditors 42,500
Bank Overdraft 20,000
Purchase Consideration 1,15,500

In the Books of Bunty
Realisation A/c

Particulars Rs. Particulars Rs.
To Sundry Assets 1,50,000 By Sundry Liabilities 62,500
To Capital A/c 28.000 By Cash/Bank A/c 1,15,500
(Profit on Dissolution) 1,78,00   1,78,000

Capital A/c 

Particulars Rs. Particulars Rs.
To Cash/Bank A/c 1,15,500 By Bal b/d 72,500
    By General Reserve 15,000
    By Realisation A/c  
  1,15,500   1,15,500

Cash/Bank A/c

Particulars Rs. Particulars Rs.
To Realisation A/c 1,15,500 By Capital A/c 1,15,500
(LLP)      
  1,15,500   1,15,500

In the Books of LLP
Journal Entries (31.3.17)

Date Particulars L/F Dr. Cr.
1. Business Purchase A/c Dr.   1,15,500 -
  To Vendor's A/c   - 1,15,500
2. Goodwill A/c             Dr.   23,000  
  Plant A/c                  Dr.   50,000  
  Copy Rights A/c        Dr.   5,000  
  Vehicle A/c               Dr.   20,000  
  Stock A/c                 Dr.   42,500  
  Bills Receivable A/c   Dr.   30,000  
  Sundry Debtors A/c   Dr.   7,500  
  To Sundry Creditors   - 42,500
  To Bank Overdraft A/c   - 20,000
  To Business Purchase A/c   - 1,15,500
  (Being assets and liabilities taken over)      
3. Bank A/c                  Dr.   1,25,000  
  To Bunty's Capital A/c   - 62,500
  To Babli's Capital A/c   - 62,500
  (Being Capital contributed)      
4. Bank A/c                  Dr.   25,000 -
  To Bank Loan A/c   - 25,000
5. Bank A/c                  Dr.   43,000 -
  To Stock A/c   - 43,000
  (Being stock sold off)      
6. Bank Overdraft A/c   Dr.   20,000 -
  Creditors A/c           Dr.   42,500 -
  To Bank A/c   - 62,500
7. Vendor's A/c              Dr.   1,15,500 -
  To Bank A/c   - 1,15,500
  (Being purchase consideration paid off)      

Part B : Statement of Account
Statement of Assets and Liabilities (In Rupees .... )

  Particulars Figures as at the 
end the current reporting period
  1 2
I. Contribution and Liabilities  
1. Partner's funds:  
  (a) Contribution 1,25,000
  (b) Reserves and Surplus 500
2. Liabilities :  
  (a) Secured Loans 25,000
  (b) Unsecured Loans  
  (c) Short-term borrowings  
  ( d) Creditorsffrade Payables -  
  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 1,50,500
(II) Assets:  
  (a) Fixed Assets 98,000
  (b) Investments  
  (c) Loans and Advances  
  (d) fuventories  
  (e) Debtorsffrade Receivables 37,500
  (f) Cash & Cash Equivalents 15,000
  (g) Other Assets (to specify)  
  Total 1,50,500
Concept: Limited Liability Partnership Problems
  Is there an error in this question or solution?
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