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Solution - L, M and N Were Partners in a Firm Sharing Profit in the Ratio of 3:2:1. Their Balance Sheet on 31.3.2015 Was as Follows - CBSE (Science) Class 12 - Accountancy

ConceptPreparation of Revaluation Account and Balance Sheet

Question

L, M and N were partners in a firm sharing profit in the ratio of 3:2:1. Their Balance Sheet on 31.3.2015 was as follows :

Balance Sheet of L,M and N as on 31-3-2015

 Liabilities Amount(Rs.) Assets Amount(Rs.) Creditors General Reserve Capitals      L                               1,20,000      M                                 80,000      N                                  40,000 1,68,000 42,000       2,40,000 Bank Debtors Stock Investments Furniture Machinery 34,000 46,000 2,20,000 60,000 20,000 70,000 4,50,000 4,50,000

On the above date O was admitted as a new partner and it was decided that:

(i) The new profit sharing ratio between L, M, N and 0 will be 2: 2: 1: 1.

(ii) Goodwill of the firm was valued at Rs.1,80,000 and O brought his share of goodwill premium in cash.

(iii) The market value of investments was Rs.36,000.

(iv) Machinery will be reduced to Rs.58,000.

(v) A creditor of Rs.6,000 was not likely to claim the amount and hence to be written-off.

(vi) O will bring proportionate capital so as to give him 1/6th share in the profits of the firm.

Prepare Revaluation Account. Partner's Capital Accounts and the Balance Sheet of the New Firm

Solution

Revaluation Account

Dr.                                                                                                                                    Cr.

 Particulars Amount(Rs.) Particulars Amount(Rs.) To Investment To Machinery 24,000 12,000 By Creditors   By Loss on Revaluation         L’s Capital A/c         15,000         M’s Capital A/c        10,000         N’s Capital A/c          5,000 6,000         30,000 36,000 36,000

Partner’s Capital Account

Dr.                                                                                                                                                                                                                 Cr.

 Particulars L(Rs.) M(Rs.) N(Rs.) O(Rs.) Particulars L(Rs.) M(Rs.) N(Rs.) O(Rs.) To Reval. A/c   To Balance c/d 15,000   1,56,000 10,000   84,000 5,000   42,000 56,400 By Balance c/d General Reserve Prem For G/w Cash A/c 1,20,000 21,000 30,000 80,000 14,000 40,000 7,000 56,400 1,71,000 94,000 47,000 56,400 1,71,000 94,000 47,000 56,400

Balance Sheet

as on March 31,2015

 Liabilities Amount (Rs.) Assets Amount (Rs.) Creditors Capitals :    L                                1,56,000    M                                  84,000    N                                  42,000    O                                  56,400 1,62,000         3,38,400 Bank (34,000 + 56,400 + 30,000) Debtors Stock Investments Furniture Machinery 1,20,400 46,000 2,20,000 36,000 20,000 58,000 5,00400 5,00400

Working Notes :

WN1 : Calculation of Sacrificing Ratio

Sacrificing Ratio = Old Ratio - New Ratio

L's = (3/6) - (2/6) = 1/6

M's = (2/6) - (2/6) = Nil

N's = (1/6) - (1/6) = Nil

O's Share of Goodwill = 1,80,000 x (1/6) = 30,000

30,000 will be credited to L's Capital A/c, as he is the only sacrificing partner

WN 3: Calculation of O’s Proportionate Capital

Adjusted Old Capital of L = 1, 20,000 + 21,000 + 30,000 – 15,000 = 1, 56,000

Adjusted Old Capital of M = 80,000 + 14,000 – 10,000 =

Adjusted Old Capital of M = 80,000 + 14,000 – 10,000 = 

Adjusted Old Capital of M = 80,000 + 14,000 – 10,000 = 84,000

Adjusted Old Capital of N = 40,000 + 7,000 – 5,000 = 

Adjusted Old Capital of N = 40,000 + 7,000 – 5,000 = 42,000

Total Adjusted Capital = 1, 56,000 + 84,000 + 42,000 = 

Total Adjusted Capital = 1, 56,000 + 84,000 + 42,000 =

Total Adjusted Capital = 1, 56,000 + 84,000 + 42,000 = 2, 82,000

O’s Proportionate Capital = Total Adjusted Capital x O’s Profit Share x Reciprocal of Combined New Share of Old Partners

= 282000xx1/6xx6/5=56400`

Is there an error in this question or solution?
Solution for question: L, M and N Were Partners in a Firm Sharing Profit in the Ratio of 3:2:1. Their Balance Sheet on 31.3.2015 Was as Follows concept: null - Preparation of Revaluation Account and Balance Sheet. For the courses CBSE (Science), CBSE (Commerce), CBSE (Arts)
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