Keshav and Madhav Were Partners Sharing the Profits and Losses in the Ratio of 2:3. Their Balance Sheet is as Follows:

Question

Keshav and Madhav were partners sharing the profits and losses in the ratio of 2:3. Their Balance Sheet is as follows:

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
		Profit and Loss A/c		15000
		Closing Stock		104500
		Cash in Hand		86000
	518500			518500

On 1^st April, 2011 they admitted Uddhav on the following terms:

1) The new profit sharing ratio is equal.

2) Uddhav brings Rs 2,00,000 as his capital and Rs 80,000 as share of goodwill in cash.

3) Prepaid insurance of Rs 7,500 was not recorded in the books.

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

5) All debtors are considered as good and out of creditors Rs 500 is no longer payable.

6) The market Value of Investment is 50% more than its book value.

Prepare, Profit and Loss Adjustment in A/c, Capital Accounts of partners and Balance Sheet of the new firm.

Ledger

Solution

Profit and Loss Adjustment Account
Dr. Cr.

Particulars		Amount (Rs)	Particulars	Amount (Rs)
Building		18000	Prepaid Insurance	7500
Profit transferred to:			Loose Tools	2000
Keshav's Capital	13000		Reserve for Debtors	18000
Madhav's Capital	19500		Investments	22500
			Creditors	500
		50500		50500

Partners' Capital Accounts
Dr. Cr.

Particulars	Keshav	Mashav	Uddhav	Particulars	Keshav	Mashav	Uddhav
Profit and Loss A/c (Dr.)	6000	9000		Balance b/d	250000	260000
Balance c/d	273000	334500	200000	Profit and Loss Adjustment (Profit)	13000	19500
				Cash			200000
				Premium for Goodwill	16000	64000
	279000	343500	200000		279000	343500	200000

Balance Sheet

as on April 01, 2011 after Uddhav’s admission

Liabilities		Amount (Rs)	Assets	Amount (Rs)
Creditors		8000	Live Stock	20000
Capital:			Building	1,20,000
Keshav	273000	807500	Investments	67,500
Madhav	334500		Loose Tools	40,000
Uddhav	200000		Debtors	90,000
			Prepaid Insurance	7500
			Closing Stock	104500
			Cash	366000
		815500		815500

Working Notes:

New profit sharing ratio of keshav , Madhav and Uddhav = 1:1:1

Old ratio of Keshav and Madhav = 2 : 3

Sacrificing Ratio = Old Ratio - New Ratio

Keshav's Sacrifice = `2/5 - 1/3 = 1/15`

Madhav's Sacrifice = `3/5 - 1/3 = 4/15`

Sacrificing Ratio = 1 : 4

WN 1: Distribution of Profit and Loss A/c (Dr.)

Keshav will get = `15000 xx 2/5 = "Rs." 6000`

Madhav's will get = `15000 xx 3/5 = "Rs." 9000`

WN 2: Distribution of Uddhav’s Share of Goodwill

Keshav will get = `80000 xx 1/5 = "Rs." 16000`

Madhav will get = `80000 xx 4/5 = "Rs." 64000`

WN 3: Cash Account

Cash Account
Dr. Cr.

Particulars	Amount (Rs)	Particulars	Amount (Rs)
Balance b/d	86000	Balance c/d	366000
Premium for Goodwill	80000
Uddhav’s Capital A/c	200000
	366000		366000

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Partnership Final Accounts

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Chapter 2: Partnership Final Accounts - Practical Problems [Page 110]

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Micheal Vaz Book Keeping and Accountancy [English] 12 Standard HSC Maharashtra State Board

Chapter 2 Partnership Final Accounts
Practical Problems | Q 5 | Page 110

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Trial Balance as on 31^st March, 2012

Debit Balance	Amount Rs	Credit Balance	Amount Rs
Stock on 1^st April, 2011	52000	Provident fund	50000
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Adjustments:

1) Stock on 31st March, 2012 was valued at Rs 80,000.

2) Goods of Rs 6,000 were sold and despatched on 27th March, 2012, but no entry was made in the books of accounts.

3) Write off Bad debts of Rs 4,000 and provide for R.D.D. at 5% on sundry debtors.

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Trial Balance as on 31^st March, 2010

Particulars	Debit Amount Rs.	Credit Amount Rs
Partner’s Capital A/c-
Mohini		120000
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
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Warehouse rent	6,000
Import duty	11,500
Cash in hand	5,000
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	728500	728500

Adjustments:

1) Closing stock was valued at market price Rs 92,000 which is 15% above its cost price.

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.

4) Outstanding Wages were Rs 2,500.

5) Goods of Rs 2,000 were taken by Mohini for personal use but no entry was made in the books of account.

6) Maintain R.D.D at 5% on Sundry Debtors.

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Balance sheet as on 31st March, 2016
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Asha should bring Rs. 80,000 as her share of goodwill, which is to be retained in the business.
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Profit and Loss Adjustment Account, Partner’s Capital Account and new Balance Sheet of the firm.

Darshan and Amar were partners sharing profit and losses in the proportion of 2: 1. Their balance sheet is as follows:

Balance sheet as on 31st March 2016

Liabilities	Amt(Rs)	Amt(Rs)	Assets	Amt(Rs)	Amt(Rs)
Capital A/cs:			Building		1,00,000
Darshan	96,000		Furniture		20,000
Amar	64,000	1,60,000	Equipments		10,000
General reserve		18,000	Debtors	63,000
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(1) Ranjit should bring in cash Rs 48,000 as capital for 1/5th share in future profits.
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(3) Building is revalued st RS 1,12,000 and tghe value of stock to be reduced by Rs 6,000
(4) Reserve for doubtful debts be maintained at Rs 1,800.
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(2) Capital A/cs of partners and
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Trial Balance as on 31.03.2013

Particulars	Amount Rs.	Particulars	Amount Rs.
Opening Stock	32,000	Sales	1,93,500
Purchases	64,000	Sundry Creditors	16,500
Plant and Machinery	30,000	Return Outward	2,500
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Wages	30,000	Suraj	50,000
Bills Receivable	5,000
Sundry Debtors	32,000
Conveyance	4,000
Salaries	10,500
Cash in hand	14,750
Land and Building	83,500
Bad debts	1,750
Patents	25,000
	352,500		352,500

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(2) An amount of Rs. 3,500 spent for repairs to building is debited to building account.

(3) Depreciate plant and machinery and building at 5% p.a.

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