Following is the Balance sheet of Harsha and Versha’s firm on 31st March, 2016. They share profit and losses in the ratio of 3 : 2. Balance sheet as on 31st March, 2016 Liabilities Amount (₹) Assets Amount (₹) Capital A/c: Land & building 2,00,000 Harsha 2,80,000 Furniture 76,000 Varsha 2,80,000 Sundry debtors 3,00,000 Sundry creditors 4,00,000 Stock 1,60,000 Cash at bank 2,24,000 9,60,000 9,60,000 They decided to admit Asha on 1st April, 2016, into partnership on the following terms: Asha should bring Rs. 80,000 as her share of goodwill, which is to be retained in the business. She should bring Rs. 1,00,000 as her capital for 1/4th share in future profits. land and building to be valued at Rs. 2,40,000 and furniture be reduced by 10%. A provision of 5% on debtors to be made for doubtful debts. The stock is to be taken at a value of Rs. 2,00,000. The excess of capital of Harsha and Varsha over their due proportion of sharing profits in the firm is to be transferred to their respective loan accounts. Prepare: Profit and Loss Adjustment Account, Partner’s Capital Account and new Balance Sheet of the firm.

In the books of Harsha and Varsha Dr. Profit and Loss Adjustment A/c Cr. Particulars Amount (₹) Amount (₹) Particulars Amount (₹) To Furniture A/c 7,600 By Land and Building A/c 40,000 To R.D.D A/c 15,000 By Stock A/c 40,000 To Profit on Revaluation transferred to partners capital A/c Harsha 34,440 Varsha 22,960 57,400 80,000 80,000 Dr. Partner's Capital A/c Cr. Particulars Harsha Varsha Asha Particulars Harsha Varsha Asha Varsha's Loan A/c[Balancing Fig] 214,960 By Balance b/d 280,000 280,000 Harsha's Loan A/c[Balancing Fig.] 182,440 By Goodwill A/c 48,000 32,000 To Balance c/d[Working Note] 180,000 120,000 100,000 By Bank A/c 100,000 By Profit or Loss Adjustment A/c [Profit] 34,440 22,960 362,440 334,960 100,000 362,440 334,960 100,000 Balance Sheet of New Firm Liabilities Amount (₹) Amount (₹) Assets Amount (₹) Amount (₹) Sundry Creditors 4,00,000 Land & Building 2,00,000 Harsha’s Loan A/c 1,82,240 (+) Appreciation 40,000 2,40,000 Varsha’s Loan A/c 2,14,960 Furniture 76,000 Capital A/c[Working Note] (-) Depreciation @ 10% (7,600) 68,400 Harsha 1,80,000 Sundry Debtors 3,00,000 Varsha 1,20,000 (-) R.D.D. @ 5% (15,000) 2,85,000 Asha 1,00,000 4,00,000 Stock 1,60,000 (+) Appreciation 40,000 2,00,000 Bank Balance 4,04,000 11,97,400 11,97,400 Dr. Bank A/c Cr. Particulars Amount (₹) Particulars Amount (₹) To Balance b/d 2,24,000 By Balance c/d 4,04,000 To Goodwill A/c 80,000 To Asha’s Capital A/c 1,00,000 4,04,000 4,04,000 Dr. Goodwill A/c Cr. Particulars Amount (₹) Amount (₹) Particulars Amount (₹) To Harsha’s Capital A/c 48,000 By Bank A/c 80,000 To Varsha’s Capital A/c 32,000 80,000 80,000 80,000 Working Note: Calculation of New Ratio and Proportionate Capital Balance Ratio = 1 – Share Given to New Partner Therefore, Balance Ratio = 1 – 1/4 = 3/4 Harsha’s New Ratio = B.R. – O.R. = `3/4 xx 3/5 = 9/20` Varsha’s New Ratio = B.R. × O.R. = `3/4 xx 2/5 = 6/20` Asha’s New Ratio = `1/4 xx 5/5 = 5/20` Therefore, their New Ratio = 9 : 6 : 5 New Partner brought Rs. 1,00,000 as her new capital Therefore, their proportionate capital are Harsha’s Capital = Rs. 1,80,000 Varsha’s Capital = Rs. 1,20,000 Asha’s Capital = Rs. 1,00,000

Following is the Balance Sheet of Harsha and Versha'S Firm on 31st March, 2016. They Share Profit and Losses in the Ratio of 3 : 2. They Decided to Admit Asha on 1st April, 2016,

Question

Following is the Balance sheet of Harsha and Versha’s firm on 31st March, 2016. They share profit and losses in the ratio of 3 : 2.

Balance sheet as on 31st March, 2016
Liabilities	Amount (₹)	Assets	Amount (₹)
Capital A/c:		Land & building	2,00,000
Harsha	2,80,000	Furniture	76,000
Varsha	2,80,000	Sundry debtors	3,00,000
Sundry creditors	4,00,000	Stock	1,60,000
		Cash at bank	2,24,000
	9,60,000		9,60,000

They decided to admit Asha on 1st April, 2016, into partnership on the following terms:

Asha should bring Rs. 80,000 as her share of goodwill, which is to be retained in the business.
She should bring Rs. 1,00,000 as her capital for 1/4th share in future profits.
land and building to be valued at Rs. 2,40,000 and furniture be reduced by 10%.
A provision of 5% on debtors to be made for doubtful debts.
The stock is to be taken at a value of Rs. 2,00,000.
The excess of capital of Harsha and Varsha over their due proportion of sharing profits in the firm is to be transferred to their respective loan accounts.

Prepare:

Profit and Loss Adjustment Account, Partner’s Capital Account and new Balance Sheet of the firm.

Ledger

Solution

In the books of Harsha and Varsha
Dr.	Profit and Loss Adjustment A/c			Cr.
Particulars	Amount (₹)	Amount (₹)	Particulars	Amount (₹)
To Furniture A/c		7,600	By Land and Building A/c	40,000
To R.D.D A/c		15,000	By Stock A/c	40,000
To Profit on Revaluation transferred to partners capital A/c
Harsha	34,440
Varsha	22,960	57,400
		80,000		80,000

Dr.	Partner's Capital A/c						Cr.
Particulars	Harsha	Varsha	Asha	Particulars	Harsha	Varsha	Asha
Varsha's Loan A/c [Balancing Fig]		214,960		By Balance b/d	280,000	280,000
Harsha's Loan A/c [Balancing Fig.]	182,440			By Goodwill A/c	48,000	32,000
To Balance c/d [Working Note]	180,000	120,000	100,000	By Bank A/c			100,000
				By Profit or Loss Adjustment A/c [Profit]	34,440	22,960
	362,440	334,960	100,000		362,440	334,960	100,000

Balance Sheet of New Firm
Liabilities	Amount (₹)	Amount (₹)	Assets	Amount (₹)	Amount (₹)
Sundry Creditors		4,00,000	Land & Building	2,00,000
Harsha’s Loan A/c		1,82,240	(+) Appreciation	40,000	2,40,000
Varsha’s Loan A/c		2,14,960	Furniture	76,000
Capital A/c [Working Note]			(-) Depreciation @ 10%	(7,600)	68,400
Harsha	1,80,000		Sundry Debtors	3,00,000
Varsha	1,20,000		(-) R.D.D. @ 5%	(15,000)	2,85,000
Asha	1,00,000	4,00,000	Stock	1,60,000
			(+) Appreciation	40,000	2,00,000
			Bank Balance		4,04,000
		11,97,400			11,97,400

Dr.	Bank A/c		Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
To Balance b/d	2,24,000	By Balance c/d	4,04,000
To Goodwill A/c	80,000
To Asha’s Capital A/c	1,00,000
	4,04,000		4,04,000

Dr.	Goodwill A/c			Cr.
Particulars	Amount (₹)	Amount (₹)	Particulars	Amount (₹)
To Harsha’s Capital A/c	48,000		By Bank A/c	80,000
To Varsha’s Capital A/c	32,000	80,000
		80,000		80,000

Working Note:

Calculation of New Ratio and Proportionate Capital

Balance Ratio = 1 – Share Given to New Partner

Therefore, Balance Ratio = 1 – 1/4 = 3/4

Harsha’s New Ratio = B.R. – O.R. = `3/4 xx 3/5 = 9/20`

Varsha’s New Ratio = B.R. × O.R. = `3/4 xx 2/5 = 6/20`

Asha’s New Ratio = `1/4 xx 5/5 = 5/20`

Therefore, their New Ratio = 9 : 6 : 5

New Partner brought Rs. 1,00,000 as her new capital

Therefore, their proportionate capital are

Harsha’s Capital = Rs. 1,80,000

Varsha’s Capital = Rs. 1,20,000

Asha’s Capital = Rs. 1,00,000

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Partnership Final Accounts

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From the following Trading Balance of M/s Ajay and Vijay you are required to prepared Trading and Profit and Loss Account for the year ended 31st March, 2009 and Balance Sheet as on that date

Trial Balance as on 31st March , 2009

Particulars	Debit Amount Rs.	Credit Amount Rs.
Capital A/c's Ajay Vijay		60000 35000
Purchases and Sales	46,700	85,000
Sundry Debtors and Creditors	28000	25000
Bills Receivable and payable	5000	6000
Commission	4600	1800
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Postage and Telegrams	3600
Insurance	1200
Plant and Machinery	40700
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Cash in hand	2500
Carriage	3200
Bad debts	400
Prepaid Rent	7000
Salaries	10500

Adjustments:

1) The closing stock is valued at Rs 31,000.

2) Outstanding expenses were wages Rs. 1,400, salaries Rs 800.

3) Depreciate Plant and Machinery by 10%.

4) Insurance at Rs 500 is paid in advance.

5) Provide for further bad debts of Rs 1,500.

6) Commission due but not received Rs 1,200.

Sanjay and Sudhir are partners sharing profit and losses in the ratio 3: 2. The Trial Balance of the firm on 31st March, 2010 was follows:

Trial Balance as on 31st March, 2010
Particulars	Amount (Rs.)	Particulars	Amount (Rs.)
Opening stock	20,000	Capital A/c's
Purchases	30,000	Sanjay	40,000
Debtors	12,000	Sudhir	30,000
Wages	5,000	Sales	70,000
Salaries	10,000	Sundry Creditors	21,000
Land and building	30,000	Bills Payable	20,000
Plant and machinery	25,000	Discount	5,000
Furniture	16,000	Outstanding Rent	1,500
Advertisement (for 2 years)	6,000
Bills Receivable	8,000
Insurance	2,000
Drawings:
Sanjay	2,000
Sudhir	3,000
Cash in hand	5,500
Rent	10,000
Power and Fuel	3,000
	1,87,500		1,87,500

Adjustments:

1) Stock on hand on 31st March, 2010 was at Rs. 35,000.

2) Write off Rs. 2,000, for further Bad debts and maintain R.D.D. at 5% on debtors.

3) Depreciate Land and Building at 5% and Machinery at 10%.

4) Outstanding expenses were wages Rs 2,000 and salary Rs 1,000.

5) Credit purchases amounted to Rs 4,000 were not recorded in the books of accounts.

6) Provide interest on Partners Capital at 5% p.a.

From the above Trial Balance and adjustments prepare Trading and Profit and Loss Account for the year ended 31st March, 2010 and Balance Sheet as on that data.

Rohan and Roshan are partners in ‘Shan Traders’ sharing profits and losses in the ratio of 2:1. From the following Trial Balance and adjustments prepare Trading and Profit and Loss Account for the year ended 31st March, 2011 and Balance Sheet as on that date

Trial Balance as on 31st March, 2011
Particulars	Amount (₹)	Particulars	Amount (₹)
Opening stock	32,000	Sales	1,93,500
Purchases	64,000	Sundry Creditors	15,000
Plant and Machinery	30,000	Unpaid Wages	1,500
Furniture	18,500	Return outward	2,500
Carriage	1,500	Capital A/c:
Wages and Salaries	35,000	Rohan	90,000
Bills Receivable	5,000	Roshan	50,000
Sundry Debtors	32,000
Conveyance	4,000
Rent, Rates and Taxes	2,000
Return Inward	3,500
Cash in hand	14,750
Land and Building	83,500
Bad debts	1,750
Patents	25,000
	3,52,500		3,52,500

Adjustments:

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An amount of Rs 3,500 spent for repairs to Building is debited to Building account.
Depreciate plant and Machinery and Building at 5% p.a.
Goods of Rs 750 taken by Roshan for this personal use.
Included in wages advances given to workers Rs 3,000.
Provide Rs 1,500 for bad and doubtful debts on Debtors.

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Trial Balance as on 31st March, 2012
Debit Balance	Amount (₹)	Credit Balance	Amount (₹)
Building	4,00,000	Capital A/cs -
Plant and Machinery	1,20,000	Madhuri	3,00,000
Purchases	6,50,000	Minakshi	2,00,000
Carriage	7,000	Sales	8,10,000
Opening stock	90,000	Sundry Creditors	1,00,000
Wages	35,000	Outstanding salaries	4,200
Sundry Debtors	1,50,000	8% Bank loan (Taken on 1.10.2011)	1,00,000
Salaries	28,000
Postage and Telegram	4,000
Insurance	5,000
Bad debts	3,000
Rent	4,000
Discount	3,200
Drawing A/c-
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Minakshi	5,000
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Adjustments:

Stock on hand on 31st March, 2010 was valued at Rs 1,10,000.
Depreciate Plant and Machinery at 10% p.a. and Building at 5% p.a.
Prepaid Insurance Rs 1,500.
Create R.D.D at 5% on Sundry Debtors.
Partners are allowed interest at 5% p.a. on their capitals.
Salaries include Rs 2,500 as advance to workers.

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Trial Balance as on 31^st March, 2010

Particulars	Debit Amount Rs.	Credit Amount Rs
Partner’s Capital A/c-
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Rohini		90000
Purchases and Sales	220000	430000
Sundry Debtors and Creditors	45000	35000
Bills Receivable and Bills Payable	45000	50000
Discount	4000	3500
Opening stock	25000
Wages and Salaries	23000
Manufacturing Expenses	9,000
Factory Insurances	5,000
Factory Building	1,40,000
Plant and Machinery	75,000
Advertisement (for 2years w.e.f. 1^st Jan. 2010)	10,000
Salaries and Wages	45,000
Warehouse rent	6,000
Import duty	11,500
Cash in hand	5,000
10% Government Bond (Purchased on 1st July 2009)	60000
	728500	728500

Adjustments:

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2) Goods costing Rs 3,000 purchased and received on 31st March, 2010 were not recorded in purchase book.

3) Depreciate Machinery at 10% p.a.

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Balance Sheet as on 31^st March, 2011

Liabilities	Amount (Rs)	Assets		Amount (Rs)
Capital Accounts :		Live stock		20000
Keshav	250000	Building		138000
Madhav	260000	Investment		45000
Creditors	8500	Loose Tools		38000
		Debtors	90000	72000
		(-)R.D.D	18000	72000
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		Cash in Hand		86000
	518500			518500

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4) Loose tools were found undervalued by 5% and Building was found overvalued by 15% in the books.

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