Maharashtra State BoardHSC Commerce 12th Board Exam
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Following is the Balance Sheet of Dhiraj and Niraj Who Shared Profits and Losses Equally. - Book Keeping and Accountancy

Ledger

Following is the Balance Sheet of Dhiraj and Niraj who shared profits and losses equally.

                  Balance Sheet as on 31st March, 2013

Liabilities Amount (Rs) Assets Amount (Rs)
Capital A/c’s   Plant and Machinery 45000
Dhiraj 125000 Land and Building 84000
Niraj 35000 Patents 3400
Creditors 86200 Stock 47800
Bills Payable 28,000 Furniture 10600
General Reserve 6800 Debtors 80000
    Cash 10200
  281000   281000

On 1st April, 2013 they agreed to admit Suraj on the following terms and conditions:

1) Suraj to bring for 1/3rd share in future profit in cash Rs 90,000 towards his capital.

2) The firms goodwill should be raised to Rs 90,000 and it is to be written off after Suraj admission in new profit ratio.

3) Plant and Machinery was found undervalued by 10% and Land and Building was found overvalued by 20%.

4) Stock to be increased by Rs 2,200 and furniture to be reduced to Rs 10,000/-

5) Out of creditors Rs 1,200 is no more payable.

6) The Capital A/c to be adjusted in new profit sharing ratio by opening the current accounts.

Prepare Revaluation A/c, Capital A/c and New Balance Sheet.

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Solution

                      Profit and Loss Adjustment Account
Dr.                                                                                           Cr.

Particulars Amount (Rs) Particulars Amount (Rs)
Land and Building 14000 Plant and Machinery 5000
Furniture 600 Stock 2200
    Creditors 1200
  Loss transferred to:  
  Dhiraj’s Capital 3100 6200
  Niraj’s Capital 3100
  14600   14600

                        Partners' Capital Accounts

Dr.                                                                                        Cr. 

Particulars Dhiraj Niraj Suraj Particulars Dhiraj Niraj Suraj
Goodwill (Written off)  30000 30000 30000 Balance b/d 125000 35000  
Profit and Loss Adjustment (Loss)  3100 3100   General Reserve 3400 3400  
Current A/c 50300    

Premium for Goodwill

45000 45000  
Balance c/d 90000 50300 60000 Cash     90000
  173400 83400 90000   173400 83400 90000
Balance b/d 90000 90000 90000 Balance b/d 90000 50300 60000
        Current A/c   39700 30000
  90000 90000 90000   90000 90000 90000
 
Balance Sheet
as on April 01, 2013 after Suraj’s admission 
Liabilities Amount (Rs) Assets Amount (Rs)
Capital A/c:   Plant and Machinery 50000
Dhiraj 90000   Land and Building 70000
Niraj 90000   Patents 3400
Suraj 90000   Stock 50000
A's Current A/c 50300 Furniture 10600 10000
Bills Payable 28000 Less : Depreciation 600
Creditors 86200   Debtors 80000
Less : Not Payable 1200   Cash (Rs 10200 + Rs 90000) 100200
    Current A/c:  
  Niraj 39700 69700
  Dhiraj 39700
  433300   433300

Working Notes:
Calculation of New Profit Sharing Ratio 

Old Ratio = Dhiraj : Niraj = 1 : 1

Manoj's Share = `1/3`

Let the total share of firm = 1

Remaining share of the firm = `1-1/3 = 2/3`

Old -Profit Sharing Ratio = 1 : 1

Calculation of New Profit Sharing Ratio :

Dhiraj's New Share =`2/3 - 1/2 = 2/6`

Niraj's New Share = `2/3 - 1/2 = 2/6`

New profit sharing ratio of Dhiraj , Niraj and Suraj =`2/6 : 2/6 : 1/3` = 1 : 1 : 1

Sacrificing Ratio = Old Ratio - New Ratio

Dhiraj's Sacrifice =`1/2 - 1/3 = 1/6`

Niraj's Sacrifice = `1/2 - 1/3 = 1/6`

Sacrificing Ratio Dhiraj's and Niraj's = 1:1

WN 1: Calculation of Plant and Machinery Undercasted 

Plant and Machinery Undercast =`45000/90 xx 10 = 5000`

WN 2: Calculation of Land and Building Overcasted 

Land and building Overvalued = `84000/120 xx 20 ="Rs" 14000`

WN 3: Distribution of General Reserve 

Dhiraj will get =`6800 xx 1/2 = "Rs" 3400`

Niraj will get = `6800 xx 1/2 = "Rs" 3400`

WN 4: Distribution of Suraj’s Share of Goodwill 

Dhiraj will get =`90000 xx 1/2 = "Rs" 45000`

cwill get = `90000 xx 1/2 = "Rs" 45000`

WN 5 : Writing off Goodwill

Dhiraj's Capital Account will be debited = `90000 xx 1/3 = "Rs" 30000`

Niraj's Capital Account will be debited = `90000 xx 1/3 = "Rs" 30000`

Suraj's Capital Account will be debited = `90000 xx 1/3 = "Rs" 30000`

WN 6: Calculation of New Capital

Total Capital of the Firm
= Share of Capital brought in by Suraj × Reciprocal of Suraj's share suraj's capital = Rs 90000

Total Capital of the firm = `90000 xx 3/1 = "Rs."  270000`

Dhiraj's New Capital = Rs `270000 xx 1/3 = "Rs"  90000`

Niraj's New Capital = Rs. `270000 xx 1/3 = "Rs"   90000`j's New Capital = Rs. `270000 xx 1/3 = "Rs" 90000`

  Is there an error in this question or solution?
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APPEARS IN

Micheal Vaz Accounts - Book Keeping and Accountancy HSC 12th Standard Maharashtra State Board
Chapter 3 Reconstitution of Partnership (Admission of Partner)
Practical Problems | Q 7 | Page 111
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