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Tamil Nadu Board of Secondary EducationHSC Commerce Class 12

Sundar and Suresh are partners sharing profits in the ratio of 3 : 2. Their balance sheet as on 1st January, 2017 was as follows: - Accountancy

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Question

Sundar and Suresh are partners sharing profits in the ratio of 3 : 2. Their balance sheet as on 1st January, 2017 was as follows:

Liabilities Assets
Capital accounts:     Buildings 40,000
Sundar 30,000   Furniture 13,000
Suresh 20,000 50,000 Stock 25,000
Creditors   50,000 Debtors 15,000
General reserve   10,000 Bills receivable 14,000
Workmen compensation fund   15,000 Bank 18,000
    1,25,000   1,25,000

They decided to admit Sugumar into partnership for 1/4 share in the profits on the following terms:

  1. Sugumar has to bring in ₹ 30,000 as capital. His share of goodwill is valued at ₹ 5,000. He could not bring cash towards goodwill.
  2. That the stock be valued at ₹ 20,000.
  3. That the furniture be depreciated by ₹ 2,000.
  4. That the value of building be depreciated by 20%.

Prepare necessary ledger accounts and the balance sheet after admission.

Ledger
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Solution

Dr. Revaluation Account Cr.
Particulars Particulars
To Building 8,000 Loss transferred to  
To Furniture 2,000 Sundar capital 9,000  
To Stock 5,000 Suresh capital 6,000 15,000
  15,000     15,000

 

Dr. Capital Account Cr.
Particulars Sundar Suresh Sugumar Particulars Sundar Suresh Sugumar
To Revaluation
Loss
9,000 6,000 - By Balance b/d 30,000 20,000 -
By General Reserve 6,000 4,000 -
To Balance c/d 39,000 26,000 25,000 By Workers compensation fund 9,000 6,000 -
        By Bank - - 25,000
        By Goodwill 3,000 2,000 -
  48,000 32,000 25,000   48,000 32,000 25,000

Balance Sheet as on 31.12.17

Liabilities Assets
Creditors   50,000 Buildings 40,000  
Capital Account     (−) Revalued 8,000 32,000
Sundar Cap 39,000   Furniture 13,000  
Suresh Cap 26,000   (−) Revalued 2,000 11,000
Sugumar Cap 25000 90,000 Stock 25,000  
      (−) Revalued 5,000 20,000
      Debtors   15,000
      Bills Receivable   14,000
      Bank 18,000  
      (+) Sugumar Cap 25000 43,000
      Goodwill   5,000
    1,40,000     1,40,000
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Chapter 5: Admission of a partner - Exercises [Page 179]

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Samacheer Kalvi Accountancy [English] Class 12 TN Board
Chapter 5 Admission of a partner
Exercises | Q IV 25. | Page 179

RELATED QUESTIONS

Answer in one sentence only.

What is revaluation account?


Write the word/term or phrase which can substitute the following statement.
Credit balance on revaluation account.


State 'True' or 'False'.

The credit balance of revaluation account means loss on revaluation account.


______ is credited when an unrecorded asset is brought into the business.


Find the Odd one.


Amalendu and Sameer share profits and losses in the ratio 3:2 respectively Their balance sheet as on 31st March 2017 was as under.

Balance Sheet as on 31st March 2017

Liabilities Amount (₹) Assets Amount (₹)
Sundry Creditors 10,000 Cash at bank 12,000
Amlendu capital 60,000 Sundry debtors 24,000
Sameer capital 40,000 Land & Building 50,000
General reserve 20,000 Stock 16,000
    Plant and machinery 20,000
    Furniture & fixture 8,000
  1,30,000   1,30,000

On 1st April 2017, they admit Paresh into partnership. The term being that:

  1. He shall pay ₹16,000 as his share of Goodwill 50% amount of Goodwill shall be withdrawn by the old partners.
  2. He shall have to bring in ₹ 20,000 as his Capital for 1/4 share in future profits.
  3. For the purpose of Paresh’s admission, it was agreed that the assets would be revalued as follows.

A) Land and Building is to be valued at ₹ 60,000
B) Plant and Machinery to be valued at ₹ 16,000
C) Stock valued at ₹ 20,000 and Furniture and Fixtures at ₹ 4,000.
D) A Provision of 5% on Debtors would be made for Doubtful Debts.

Pass the necessary Journal Entries in the Books of a New Firm.


The balance sheet of Medha and Radha who share profit and loss in the ratio 3: 1 is as follows:

Balance Sheet as on 31 March 2018
Liabilities Amount (₹) Assets Amount (₹)
Sundry Creditors 80,000 Cash 78,000
Bills Payable 20,000 Sundry debtors 64,000
Bank overdraft 20,000 Stock 40,000
Capital A/c:   Plant and Machinery 60,000
Medha 1,20,000 Furniture 22,000
Radha 40,000 Land and Building 32,000
General reserve 16,000    
  2,96,000   2,96,000

 They decided to admit Krutika on 1st April 2018 on the following terms:

  1. Krutika is taken as partner on 1st April 2017. She will pay 40,000 as her capital for 1/5th share in future profits and Rs. 2,500 as goodwill.
  2. A 5% provision for bad and doubtful debt be created on debtors.
  3. Furniture be depreciated by 20%.
  4. Stocks be appreciated by 5% and plant and machinery by 20%.
  5. The Capital accounts of all partners be adjusted in their new profit sharing ratio by adjusting the amount through current account.
  6. The new profit sharing ratio will be 3/5:1/5:1/5 respectively.

You are required to prepare profit and loss adjustment A/c, Partner’s Capital A/c, Balance Sheet of the new firm.


Balance in the Investment Fluctuation Reserve, after meeting the loss on revaluation of Investments, at the time of admission of a partner will be transferred to:


Which account will be prepared to record the adjusting amount of assets and liabilities?


Following is the Balance Sheet of Mukesh and Anil sharing profit and losses in the ratio of 3:2 as on 31st March, 2019.

Balance Sheet as on 31st March, 2019
Liabilities   Amount (₹) Assets   Amount (₹)
Capital A/c:     Building   72,000
Mukesh 80,000 1,80,000 Plant & Machinery   60,000
Anil 1,00,000 Stock   48,000
Sundry Creditors   60,000 Debtors 42,000 40,000
Bills Payable   10,000 Less: RDD 2,000
      Bank   20,000
      Furniture   10,000
    2,50,000     2,50,000

On 1st April, 2019 Neeta is admitted on the following terms:

  1. She will pay ₹ 1,00,000 of her capital and ₹ 40,000 as her share of Goodwill.
  2. The new profit sharing ratio is to be 5 : 3 : 2.
  3. The assets are to be revalued as under: Building ₹ 1,00,000, Plant & Machinery ₹ 48,000.
  4. RDD to be increased up to ₹ 4,000.
  5. The old partners decided to retain half of the amount of goodwill in the business.
  6. Sundry creditors should be revalued at ₹ 66,000.

Give Revaluation Account, Capitals Accounts and Balance Sheet of New firm.


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