Question

10. Subhra and Bikash are partners in a firm sharing profits in the ratio of 2:3. The balance sheet of the firm
as on March 31, 2020 is given below :

Liabilities Assets
₹ ₹
Capital accounts: Land 5,00,000
Subhra 8,00,000 Building 6lakhs
Bikash 12,00,000 Plant 8,00,000 Creditors 3,10,000 Furniture 1,20,000
Outstanding expenses
₹ 70,000 Stock 1,80,000
Debtors 1,50,000
Cash 30,000

The partners decided to share profits in equal ratio with effect from April, 1, 2020. The following
adjustments were agreed upon :
(i) The goodwill of the firm was valued at 4,00,000 but it was not to appear in the books.
(ii) Land was valued at * 8,00,000, Plant at * 7,20,000 and Furniture at * 1,00,000 and were to appear at
revalued amount in the balance sheet.
Pass necessary Journal entries to give effect the above.​

Answer 1

Land A/c.........dr. 800000

To Revaluation A/c . 800000

Revaluation A/c.......dr. 820000

To furniture A/c 100000

To plant A/c 720000

Bikash's Cap.A/c...........dr. 40000

To Subhra's Cap.A/c 40000

explanation of goodwill treatment:

sacrificing ratio of bikash:-1/10

""" """ " "" :1/10

goodwill of firm is 200000

bikash's goodwill:200000×1/10:40000

subhra's " : " " ×"" : "