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Question
Vrushali and Leena are equal partners in the business. Their Balance sheet as on 31 March 2018 stood as under.
| Balance Sheet as on 31 March 2018 | |||||
| Liabilities | Amt. (₹) | Amt. (₹) | Assets | Amt. (₹) | Amt. (₹) |
| Sundry Creditors | 90,000 | 90,000 | Cash in Bank | 62,000 | |
| Capitals: | Debtors | 31,000 | |||
| Vrushali | 45,000 | 75,000 | Less: R.D.D | 1,000 | 30,000 |
| Leena | 30,000 | Building | 55,000 | ||
| General Reserves | 18,000 | Machinery | 24,000 | ||
| Bills Receivable | 12,000 | ||||
| 1,83,000 | 1,83,000 | ||||
They decided to admit Aparna on 1st April 2018 on the following terms:
1. The Machinery and Building be depreciated by 10%. Reserve for Doubtful Debts to be increased by ₹ 5,000
2. Bills Receivable are taken over by Vrushali at the discount of 10%
3. Aparna should bring Rs. 60,000 as capital for her 1/4th share in future profits.
4. The capital accounts of all the partners be adjusted in proportion to the new profit-sharing ratio by opening the current accounts of the partners.
Prepare Profit and Loss Adjustment A/c, Partner’s Capital A/c, Balance sheet of the new firm.
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Solution
| Dr. | Profit and Loss Adjustment Account | Cr. | ||||
| Particulars | Amount (₹) | Particulars | Amount (₹) | |||
| To Machinery A/c | 2,400 | By Loss on Revaluation | ||||
| To Building A/c | 5,500 | Transferred to Partners’ Capital A/cs : | ||||
| To R.D.D. A/c | 5,000 |
Vrushali |
7,050 |
|||
|
Leena |
7,050 |
14,100 | ||||
| To Bills Receivable A/c (Discount) | 1,200 | |||||
| 14,100 | 14,100 | |||||
| Dr. | Partners’ Capital Accounts | Cr. | |||||||
| Particulars | Vrushali (₹) | Leena (₹) | Aparna (₹) | Particulars | Vrushali (₹) | Leena (₹) | Aparna (₹) | ||
| To Revaluation A/c (Loss) | 7,050 | 7,050 | By Balance b/d | 45,000 | 30,000 | ||||
|
To Bills Receivable A/c |
10,800 | By Bank A/c | 60,000 | ||||||
| To Balance c/d | 90,000 | 90,000 | 60,000 | By General Reserve A/c | 9,000 | 9,000 | |||
| By Partner’s Current A/c | 53,850 | 58,050 | |||||||
| 1,07,850 | 97,050 | 60,000 | 1,07,850 | 97,050 | 60,000 | ||||
| Balance Sheet as on 1st April 2018 | |||||
| Liabilities | Amount (₹) | Amount (₹) | Assets | Amount (₹) | Amount (₹) |
|
Capital A/cs : |
Cash in Bank | 1,22,000 | |||
|
Vrushali |
90,000 |
|
Debtors |
31,000 |
|
|
Leena |
90,000 |
|
Less : R.D.D. (1000 + 5000) |
6,000 |
25,000 |
|
Aparna |
60,000 |
2,40,000 |
Building |
55,000 |
|
| Sundry Creditors | 90,000 |
Less: Depreciation |
5,500 |
49,500 |
|
|
Machinery |
24,000 |
|
|||
|
Less: Depreciation |
2,400 |
21,600 |
|||
|
Partners’ Current A/cs : |
|
||||
|
Vrushali |
53,850 |
|
|||
|
Leena |
58,050 |
1,11,900 |
|||
| 3,30,000 | 3,30,000 | ||||
Working Notes :
(1) R.D.D. to be increased by ₹ 5,000 means subtract 5,000 from Debtors.
(2) Bills receivable taken by Vrushali at 10 % discount i.e. 12,000 – 1,200 = ₹ 10,800. Write this amount in the debit side of partners Capital Account in Vrushali’s column.
(3) Calculation of new ratio = 1 – share of new partner
= `1 – 1/ 4`
= `3 /4` Remaining share
New ratio = Old ratio × Balance 1 (Remaining Share)
Vrushali’s new ratio = `1/2 xx3/4 = 3/8`
Leena’s new ratio = `1/2 xx3/ 4 = 3/8`
Aparna’s ratio = `1/4`
Partner’s new profit and loss ratio =` 3/8: 3/8: 1/4`
= 3: 3: 2
Now, capital amount to be adjusted in partners new profit and loss ratio.
Total capital of the firm = (Reciprocal of New Partner’s Share) × (New Partner’s Capital)
= (Reciprocal of `1/4` ) × 60,000 = 4 × 60,000 = ₹ 2,40,000
Vrushali’s capital balance =` 3/8 xx2,40,000 = ₹ 90,000`
Leela’s capital balance = `3/8xx2,40,000 = ₹ 90,000`
Deficit of these capital balance are to be adjusted through Current account.
To keep balance of Vrushali’s and Leena’s capital ₹ 90,000 each, deficit of ₹ 53,850 and ₹ 58,050 are incurred which is transferred to respective Partner’s Current A/cs and recorded on Asset side of Balance Sheet [As it is to be recovered from Partners].
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RELATED QUESTIONS
Mrs Shehal and Mrs Meenal are equal partners in a business. Their balance sheet is as follows.
| Balance Sheet as on 31st March 2013 | |||
| Liabilities | Amount Rs. | Assets | Amount Rs. |
|
Capital A/c's Snehal 80,000 Meenal 45,000 Creditors General reserve
|
1,25,000 46,000 20,000
|
Premises Investments Equipments Bills Receivable Debtors 1,10,000 ( - ) R.D.D. 11,000 Bank Balance |
20,500 10,500 5,000 18,000
99,000 38,000 |
| 1,91,000 | 1,91,000 | ||
They agreed to admit Mr Komal on 1st April 2013 on the following terms:
(1) Komal should bring Rs. 50,000 towards her capital for one fourth (1/4th) Share in future profit.
(2) Goodwill to be raised in the books of the firm for Rs. 40,000.
(3) R.D.D. to be maintained at 5% on debtors.
(4) Premises to be valued at Rs. 30,000 and equipment to be written off fully.
(5) Creditors allowed a discount of Rs. 1,000 and they were paid off immediately.
Prepare Profit and Loss Adjustment Account, Partner's Capital Accounts and Balance Sheet of the new firm.
Anil and Sunil were partners sharing profits and losses in the ratio of 2:1 respectively. Their Balance Sheet was as follows:
| Balance Sheet as on 31st March 2010 | |||
| Liabilities | Amount (Rs) | Assets | Amount (Rs) |
| Capital A/c | Cash at Bank | 4,000 | |
| Anil | 24,000 | Debtors | 15,000 |
| Sunil | 16,000 | Stock | 23,500 |
| Trade Creditors | 26,000 | Furniture | 5,000 |
| Anil’s Loan A/c | 6,500 | Building | 25,000 |
| 72,500 | 72,500 | ||
On 1st April 2010, Ram is admitted in the partnership on the following terms:
(1) Ram should bring in cash of Rs. 12,000 as capital for 1/5th share in future profit.
(2) Goodwill A/c is raised in the books of the firm for Rs. 4,500.
(3) A building is revalued at Rs. 28,000 and the value of stock be reduced by Rs. 1,500.
(4) Reserve for doubtful debts is provided at 5% on debtors.
Prepare:
(a) Profit and Loss Adjustment account.
(b) Capital Accounts of partners.
(c) Balance Sheet of the new firm.
Why does a firm revaluate its assets and reassess its liabilities on retirement or death of a partner?
Answer in one sentence only.
What is revaluation account?
Write the word/term or phrase which can substitute the following statement.
The account which shows change in the values of assets.
Write the word/term or phrase which can substitute the following statement.
Account which is opened to record the gains and losses on revaluation.
State 'True' or 'False'.
The credit balance of revaluation account means loss on revaluation account.
Answer the following question in one sentence.
What shows credit balance of revaluation account ?
Shanti, Samadhan and Sangarsh were sharing profits and losses in the ratio of 7: 5: 4. Their balance sheet as on 31st .03.2013 was as follows:
|
Liabilities
|
Amount
|
Assets
|
Amount
|
|
Capitals:
|
Furniture
|
17000
|
|
|
Shanti
|
23000
|
Machinery
|
18000
|
|
Samadhan
|
15000
|
Building
|
16000
|
|
Sangharsh
|
12000
|
Cash
|
37000
|
|
Bills Payable
|
4000
|
||
|
Creditors
|
8000
|
||
|
Loan
|
10000
|
||
|
General Reserve
|
16000
|
||
|
88000
|
88000
|
If the asset is taken over by the partner ______ account is debited.
Write a word/phrase/term which can substitute the following statement.
An account that is debited when the partner takes over the asset.
Write a word/phrase/term which can substitute the following statement.
Profit and Loss Account balance appearing on the liability side of the Balance Sheet.
Find the Odd one.
A and B are partners in a firm sharing profits and losses in the ratio of 1:1. C is admitted. A surrenders `1/4`th share and B surrenders `1/5`th of his share in favor of C. Calculate the new profit sharing ratio.
What does the excess of debit over credits in the Profit and Loss Adjustment Account indicate?
_____________ =`"Total profit"/"Number of years"`
The stock showed in Balance Sheet → Stock undervalued by 20% → Cost of Stock
₹1,60,000 → __________→ __________
Mr. Kishor & Mr. Lal were in partnership sharing profits & losses in the proportion of 3/4 and 1/4 respectively.
| Balance Sheet as on 31 March 2018 | |||||
| Liabilities | Amt (₹) |
Amt (₹) |
Assets | Amt (₹) |
Amt (₹) |
| Creditors | 1,20,000 | Land and Building | 75,000 | ||
| General Reserve | 12,000 | Furniture | 6,000 | ||
| Capital A/c: | Stock | 60,000 | |||
| Kishor | 90,000 | Debtors | 60,000 | ||
| Lal | 48,000 | 1,38,000 | Bills Receivable | 39,000 | |
| Cash at Bank | 30,000 | ||||
| 2,70,000 | 2,70,000 | ||||
They decided to admit Ram on 1 April 2018 on following terms:
- He should be given 1/5th share in profit and for that he brought in ₹ 60,000 as capital through RTGS.
- Goodwill should be raised at ₹ 60,000.
- Appreciate Land and Building by 20%.
- Furniture and Stock are to be depreciated by 10%.
- The Capitals of all partners should be adjusted in their new profit sharing ratio through Bank A/c.
Pass necessary Journal Entries in the books of the Partnership firm and a Balance sheet of the 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:
- 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.
- A 5% provision for bad and doubtful debt be created on debtors.
- Furniture be depreciated by 20%.
- Stocks be appreciated by 5% and plant and machinery by 20%.
- The Capital accounts of all partners be adjusted in their new profit sharing ratio by adjusting the amount through current account.
- 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.
Mr. Amit and Baban share profits and losses in the ratio 2:3 respectively. Their balance sheet as on 31st March 2018 was as under
| Balance Sheet as On 31st March 2018 | |||
| Liabilities | Amount (₹) | Assets | Amount (₹) |
| Creditors | 1,40,000 | Cash | 110,000 |
| Capital: | Land and Building | 50,000 | |
| Amit | 100,000 | Plant | 60,000 |
| Baban | 100,000 | Furniture | 4,000 |
| Stock | 100,000 | ||
| Debtors | 16,000 | ||
| 3,40,000 | 3,40,000 | ||
They agreed decided to admit Kamal on 1st April 2018 on the following terms:
1. Kamal shall have 1/4th share in future profits.
2. They agreed to admit Kamal as a partner on 1st April 2018 on the following terms:
3. She shall bring 50,000 as her capital and 40,000 as her share of goodwill.
4. Land and building to be valued at 60,000 and furniture to be depreciated by 10%
5. Provision for bad and doubtful debts is to be maintained at 5% on the sundry debtors.
6. Stocks to be valued 1,10,000 The capital A/c of all partners to be adjusted in their new profit and loss ratio and excess amount be transferred to their loan accounts.
Prepare profit and loss adjustment A/c, Capital A/cs, and New Balance Sheet.
The following is the Balance Sheet of Om and Jay on 31st March 2018, they share profits and losses in the ratio 3:2
| Balance Sheet As On 31st March 2018 |
|||
| Liabilities | Amount (₹) | Assets | Amount (₹) |
| Creditors | 30,000 | Cash | 3,000 |
| Capital A/c | Building | 15,000 | |
| Om | 21,000 | Machinery | 21,000 |
| Jay | 21,000 | Furniture | 900 |
| Current A/c | Stock | 12,300 | |
| Om | 3,750 | Debtors | 27,000 |
| Jay | 3,450 | ||
| 79,200 | 79,200 | ||
They take Jagdish into partnership on 1st April 2018 the terms being:
- Jagdish should pay 3,000 as his share of Goodwill. 50% of goodwill withdrawn by partners in cash.
- He should bring 9,000 as capital for 1/4th share in future profits.
- Building to be valued at 18,000, Machinery and Furniture to be reduced by 10%.
- A Provision of 5% on debtors to be made for doubtful debts.
- Stock is to be taken at a value of 15,000.
Prepare profit and loss A/c, Partner’s Current A/c, Balance Sheet of the new firm.
On revaluation, the increase in the value of assets leads to _________.
State whether the following will be debited or credited in the revaluation account.
- Depreciation on assets
- Unrecorded liability
- Provision for outstanding expenses
- Appreciation of assets
What are the journal entries to be passed on revaluation of assets and liabilities?
Hari, Madhavan and Kesavan are partners, sharing profits and losses in the ratio of 5 : 3 : 2. As from 1st April 2017, Vanmathi is admitted into the partnership and the new profit sharing ratio is decided as 4 : 3 : 2 : 1. The following adjustments are to be made.
- Increase the value of premises by ₹ 60,000.
- Depreciate stock by ₹ 5,000, furniture by ₹ 2,000 and machinery by ₹ 2,500.
- Provide for an outstanding liability of ₹ 500.
Pass journal entries and prepare a revaluation account.
Seenu and Siva are partners sharing profits and losses in the ratio of 5 : 3. In view of Kowsalya admission, they decided
- To increase the value of building by ₹ 40,000.
- To bring into record investments at ₹ 10,000, which have not so far been brought into account.
- To decrease the value of machinery by ₹ 14,000 and furniture by ₹ 12,000.
- To write off sundry creditors by ₹ 16,000.
Pass journal entries and prepare a revaluation account.
Sai and Shankar are partners, sharing profits and losses in the ratio of 5 : 3. The firm’s balance sheet as on 31st December, 2017, was as follows:
| Liabilities | ₹ | ₹ | Assets | ₹ | ₹ |
| Capital accounts: | Building | 34,000 | |||
| Sai | 48,000 | Furniture | 6,000 | ||
| Shankar | 40,000 | 88,000 | Investment | 20,000 | |
| Creditors | 37,000 | Debtors | 40,000 | ||
| Outstanding wages | 8,000 | Less: Provision for bad debts | 3,000 | 37,000 | |
| Bills receivable | 12,000 | ||||
| Stock | 16,000 | ||||
| Bank | 8,000 | ||||
| 1,33,000 | 1,33,000 |
On 31st December, 2017 Shanmugam was admitted into the partnership for 1/4 share of profit with ₹ 12,000 as capital subject to the following adjustments.
- Furniture is to be revalued at ₹ 5,000 and building is to be revalued at ₹ 50,000.
- Provision for doubtful debts is to be increased to ₹ 5,500
- An unrecorded investment of ₹ 6,000 is to be brought into account
- An unrecorded liability ₹ 2,500 has to be recorded now.
Pass journal entries and prepare the Revaluation Account and capital account of partners after admission.
Amal and Vimal are partners in a firm sharing profits and losses in the ratio of 7 : 5. Their balance sheet as on 31st March, 2019, is as follows:
| Liabilities | ₹ | ₹ | Assets | ₹ |
| Capital accounts: | Land | 80,000 | ||
| Amal | 70,000 | Furniture | 20,000 | |
| Vimal | 50,000 | 1,20,000 | Stock | 25,000 |
| Sundry creditors | 30,000 | Debtors | 30,000 | |
| Profit and loss A/c | 24,000 | Debtors | 19,000 | |
| 1,74,000 | 1,74,000 |
Nirmal is admitted as a new partner on 1.4.2018 by introducing a capital of ₹ 30,000 for 1/3 share in the future profit subject to the following adjustments.
- Stock to be depreciated by ₹ 5,000
- Provision for doubtful debts to be created for ₹ 3,000
- Land to be appreciated by ₹ 20,000
Prepare revaluation account and capital account of partners after admission.
Rajan and Selva are partners sharing profits and losses in the ratio of 3 : 1. Their balance sheet as on 31st March 2017 is as under:
| Liabilities | ₹ | ₹ | Assets | ₹ |
| Capital accounts: | Building | 25,000 | ||
| Rajan | 30,000 | Furniture | 1,000 | |
| Selva | 16,000 | 46,000 | Stock | 20,000 |
| General reserve | 4,000 | Debtors | 16,000 | |
| Creditors | 37,500 | Bills receivable | 3,000 | |
| Cash at bank | 12,500 | |||
| Profit and loss account | 10,000 | |||
| 87,500 | 87,500 |
On 1.4.2017, they admit Ganesan as a new partner on the following arrangements:
- Ganesan brings ₹ 10,000 as capital for 1/5 share of profit.
- Stock and furniture is to be reduced by 10%, a reserve of 5% on debtors for doubtful debts is to be created.
- Appreciate buildings by 20%.
Prepare revaluation account, partners’ capital account and the balance sheet of the firm after admission.
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:
- 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.
- That the stock be valued at ₹ 20,000.
- That the furniture be depreciated by ₹ 2,000.
- That the value of building be depreciated by 20%.
Prepare necessary ledger accounts and the balance sheet after admission.
The following is the balance sheet of James and Justina as on 1.1.2017. They share the profits and losses equally
| Liabilities | ₹ | ₹ | Assets | ₹ |
| Capital accounts: | Building | 70,000 | ||
| James | 40,000 | Stock | 30,000 | |
| Justina | 50,000 | 90,000 | Debtors | 20,000 |
| Creditors | 35,000 | Bank | 15,000 | |
| Reserve fund | 15,000 | Prepaid insurance | 5,000 | |
| 1,40,000 | 1,40,000 |
On the above date, Balan is admitted as a partner with a 1/5 share in future profits. Following are the terms for his admission:
- Balan brings ₹ 25,000 as capital.
- His share of goodwill is ₹ 10,000 and he brings cash for it.
- The assets are to be valued as under:
Building ₹ 80,000; Debtors ₹ 18,000; Stock ₹ 33,000
Prepare necessary ledger accounts and the balance sheet after admission.
Anbu and Shankar are partners in a business sharing profits and losses in the ratio of 7 : 5. The balance sheet of the partners on 31.03.2018 is as follows:
| Liabilities | ₹ | ₹ | Assets | ₹ |
| Capital accounts: | Computer | 40,000 | ||
| Anbu | 4,00,000 | Motor car | 1,60,000 | |
| Shankar | 3,00,000 | 7,00,000 | Stock | 4,00,000 |
| Profit and loss | 1,20,000 | Debtors | 3,60,000 | |
| Creditors | 1,20,000 | Bank | 40,000 | |
| Workmen compensation fund | 60,000 | |||
| 10,00,000 | 10,00,000 |
Rajesh is admitted for 1/5 share on the following terms:
- Goodwill of the firm is valued at ₹ 80,000 and Rajesh brought cash ₹ 6,000 for his share of goodwill.
- Rajesh is to bring ₹ 1,50,000 as his capital.
- Motor car is valued at ₹ 2,00,000; stock at ₹ 3,80,000 and debtors at ₹ 3,50,000.
- Anticipated claim on workmen compensation fund is ₹ 10,000
- Unrecorded investment of ₹ 5,000 has to be brought into account.
Prepare revaluation account, capital accounts and balance sheet after Rajesh’s admission.
At the time of admission of a partner, what will be the effect of the following information?
Balance in Workmen compensation reserve ₹40,000. Claim for workmen compensation ₹45,000.
A revaluation account is operated to find out the gain or loss at the time of ______
Ravi and Gaurav are partners in a firm. They want to admit Dhruv for `1/4`th share in profit. For this, they revalued their machinery from ₹ 30,000 to ₹ 40,000 and creditors from ₹ 1,10,000 to ₹ 1,00,000. What journal entry will be passed:
Karan and Saran are partners in a partnership. They admitted Mohit as a new partner for `1/4`th share in profits.
| Balance Sheet [Extract] | |||
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
| Creditors | 25,000 | ||
If 5% of creditors are not likely to claim their dues, what amount of creditors will be shown in the Balance Sheet on Mohit's admission?
If at the time of admission, there is some unrecorded liability, it will be:
Assertion (A): At the time of admission of a partner if there is any General Reserve, Reserve Fund or the balance of Profit & Loss Account appearing in the balance sheet, it should be transferred to old partners' capital/current accounts in their old profit sharing ratio.
Reason (R): The General reserve, Reserve Fund or the Balance of Profit and Loss Account are the result of the past profits when the new partner was not admitted.
Ram and Shyam were in partnership sharing profits and Losses in the proportion of 3 : 1 respectively. Their Balance sheet as on 31st March, 2020 stood as follows:
| Balance Sheet as on 31st March, 2020 | ||||
| Liabilities | Amount (₹) | Assets | Amount (₹) | |
| Sundry Creditors | 80,000 | Cash | 80,000 | |
| Bills Payable | 42,000 | Sundry Debtors | 64,000 | |
| Capital Accounts: | Land and Building | 32,000 | ||
| Ram | 1,20,000 | 1,60,000 | Stock | 40,000 |
| Shyam | 40,000 | Plant and Machinery | 60,000 | |
| General Reserve | 16,000 | Furniture | 22,000 | |
| 2,98,000 | 2,98,000 | |||
They admit Bharat into partnership on 1st April 2020. The term is that
- He shall have to bring in cash ₹ 40,000 as his Capital for 1/5th share in future profit and ₹ 20,000 as his share of Goodwill.
- A provision for 5% doubtful debts to be created on sundry debtors.
- Stock should be appreciated by 5% and Land and Building be appreciated by 20%.
- Furniture to be depreciated by 20%.
- Capital Accounts of all partners be adjusted in their new profit-sharing ratio through Cash Account.
Prepare:
- Profit and Loss Adjustment Account
- Partners' Capital Account
- Balance Sheet of the new firm.
The following is the Balance sheet of partners Aditya and Chaitanya on 31st March, 2019 they share profits and losses in the ratio of 3 : 2:
Balance sheet as on 31st march 2019
| Liabilities |
Amount ₹ |
Assets | Amount ₹ |
| Creditors | 60,000 | Building | 30,000 |
| Capital Accounts: | Furniture | 1,800 | |
| Aditya | 42,000 | Machinery | 42,000 |
| Chaitanya | 42,000 | Stock | 24,600 |
| Current Accounts: | Debtors | 54,000 | |
| Aditya | 7,500 | Cash | 6,000 |
| Chaitanya | 6,900 | ||
| 1,58,400 | 1,58,400 |
Adjustments:
They admitted Sachin into partnership on 1st April, 2019 on the following terms:
- Building to be valued at ₹ 36,000, machinery and furniture to be reduced by 10%.
- Sachin should pay ₹ 6,000 as his share of Goodwill. 50% of goodwill withdrawn by partners in cash.
- A provision of 5% on debtors to be made for doubtful debts.
- He should bring ₹ 18,000 as capital for 1/4th share in future profit.
- Stock is to be taken at the value of ₹ 30,000.
Prepare:
- Profit and Loss Adjustment Account.
- Partners’ Current Account.
- Balance Sheet of the New Firm.
Indu, Vijay, and Pawan were partners in a firm sharing profits in the ratio of 4 : 3 : 3. They admitted Subhash into partnership with effect from 1st April, 2022. New profit sharing ratio among Indu, Vijay, Pawan, and Subhash will be 3 : 3 : 2 : 2. An extract of their Balance Sheet as at 31st March, 2022, is given below:
| Liabilities | Amount (₹) | Assets | Amount (₹) |
| Investment Fluctuation Reserve |
80,000 | Investment (Market Value ₹ 80,000) |
90,000 |
Which of the following is the correct accounting treatment of ‘investment fluctuation reserve’ at the time of Subhash’s admission?
A, B and C who were sharing profits and losses in the ratio of 4:3:2 decided to share the future profits and losses in the ratio to 2:3:4 with effect from 1st April 2023. An extract of their Balance Sheet as at 31st March 2023 is:
| Liabilities | Amount (₹) | Assets | Amount (₹) |
| Workmen Compensation Reserve | 65,000 |
At the time of reconstitution, a certain amount of Claim on workmen compensation was determined for which B’s share of loss amounted to ₹ 5,000. The Claim for workmen compensation would be:
X and Y are partners in a firm with capital of ₹ 18,000 and ₹ 20,000. Z brings ₹ 10,000 for his share of goodwill, and he is required to bring proportionate capital for `1/3`rd share in profits. The capital contribution of Z will be ______.
Hansa and Kavya share profits and losses in the ratio of 3: 2 respectively. Their Balance Sheet as on 31st March, 2023 was as under:
| Balance Sheet as on 31st March, 2023 | |||
| Liabilities | Amount (₹) | Assets | Amount (₹) |
| Bills Payable | 90,000 | Cash at Bank | 1,500 |
| Reserve fund | 60,000 | Sundry Debtors | 1,33,500 |
| Capital A/c: | Stock | 51,000 | |
| Hansa | 2,16,000 | Furniture | 72,000 |
| Kavya | 1,44,000 | Plant | 1,80,000 |
| Building | 72,000 | ||
| 5,10,000 | 5,10,000 | ||
They admit Munir into partnership on 1-4-2023. The terms being that:
(1) He shall have to bring in ₹ 1,20,000 as his Capital for 1/4th share in future profits.
(2) Value of Goodwill of the firm is to be fixed at the average profits for the last three years.
The Profits were:
| 2019-20 | ₹ 96,000 |
| 2020-21 | ₹ 1,62,000 |
| 2021-22 | ₹ 1,47,000 |
(3) Reserve for Doubtful debts is to be created at ₹ 3,000.
(4) Closing stock is valued at ₹ 45,000.
(5) Plant and Building is to be depreciated by 5%.
Prepare Profit and Loss Adjustment Alc, Capital Accounts of Partners and Balance Sheet of the new firm.
