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Following is the Balance Sheet Of A And B, Who Shared Profits and Losses in the Ratio of 2 : 1, as at 1st April, 2019: - CBSE (Arts) Class 12 - Accountancy

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Question

Following is the Balance Sheet of A and B, who shared Profits and Losses in the ratio of 2 : 1, as at 1st April, 2019:

BALANCE SHEET OF A AND B

as on 1st April, 2019

Liabilities Amount
(₹)
Assets

Amount

(₹)

Capital A/cs:   Land ad Building 2,90,000
 A 3,00,000   Furniture 80,000
 B 2,00,000 5,00,000 Stock 2,40,000
Reserve   1,50,000 Debtors 1,50,000
Creditors   2,00,000 Bank 60,000
      Cash 30,000
    8,50,000   8,50,000

On the above date, the partners changed their profit-sharing ratio to 3 : 2. For this purpose, the goodwill of the firm was valued at ₹ 3,00,000. The partners also agreed for the following:
(a) The value of Land and Building will be ₹ 5,00,000;
(b) Reserve is to be maintained at ₹ 3,00,000.
(c) The total capital of the partners in the new firm will be ₹ 6,00,000, which will be shared by the partners in their new profit-sharing ratio.
Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet of the reconstituted firm.

Solution

Revaluation Account

Dr.

Cr.

Particulars

Amount

(₹)

Particulars

Amount

(₹)

Revaluation Profit

 

Land and Building

2,10,000

  A’s Capital A/c

1,40,000

 

 

 

  B’s Capital A/c

70,000

2,10,000

 

 

 

2,10,000

 

2,10,000

 

Partners’ Capital Accounts

Particulars

A

B

Particulars

A

B

Reserve

1,80,000

1,20,000

Balance b/d

3,00,000

2,00,000

Cash A/c (bal.fig.)

20,000

 

Reserve

1,00,000

50,000

A’s Capital

 

20,000

B’s Capital A/c

20,000

 

Balance c/d

3,60,000

2,40,000

Revaluation A/c

1,40,000

70,000

 

 

 

Cash A/c (bal.fig.)  

60,000

 

5,60,000

3,80,000

 

5,60,000

3,80,000

 

Balance Sheet

Liabilities

Amount

(₹)

Assets

Amount

(₹)

Capital A/c   Land and Building

5,00,000

  A

3,60,000

  Furniture

80,000

  B

2,40,000

6,00,000

Stock

2,40,000

Reserve

3,00,000

Debtors

1,50,000

Creditors

2,00,000

Bank

60,000

 

 

Cash (30,000 + 60,000 – 20,000)

70,000

 

11,00,000

 

11,00,000


Working Notes

WN1: Calculation of New Capital

WN2: Calculation of Gaining/Sacrificing Ratio& Adjustment for Goodwill


Adjustment for Goodwill

B’s Capital A/c

Dr.

20,000

 

  To A’s Capital A/c

   

20,000

(B will compensate A to the extent of his gain)

     
  Is there an error in this question or solution?

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Solution Following is the Balance Sheet Of A And B, Who Shared Profits and Losses in the Ratio of 2 : 1, as at 1st April, 2019: Concept: Retirement and Death of a Partner - Calculation of New Profit Sharing Ratio.
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