Question

13. A and B are partners in a firm sharing profit and loss in the ratio of 4:1. Balance sheet of their
firm on 31-3-2017 was as under:
Prepare necessary accounts and halance sheet after admission of partners.
goodwill.
unts and balance sheet after admission Give
0
0
0
Balance Sheet
Liabilities
0
Amt. )
Capital account:
Assets
$
%
А
75,000
25,000
Land Building
Furniture
B
1,00,000 Investments
Current account:
35,000
30,000
25,000
Stock
А
8000
Debtors
B
15,000
ed
2000
10,000
5500
Workmen accident compensation fund
Bad debt reserve
5000 Bills receivable
500
5000
Creditors
4000 Cash-Bank
2000
Bills payable
1000 Goodwill
3000
m
5000
1,20,000
1,20,000
They admitted C as a new partner on above date on the following conditions. They decided to
keep their new profit-loss sharing ratio at 3:1:1:
(1) C will bring 20,000 as capital for his ſth share of profit and * 5000 as his share of
goodwill in cash. Out of goodwill half amount is to be withdrawn by the old partners.
(2) Value of land and building is to be increased by 10 %. While value of furniture and stock
is to be decreased by 5 %.
Market value of investment is 35,000. Which is to be shown in the books,
(4) Provision for doubtfull debt is to be made at 10% on debtors.
5) Workmen accident compensation claim is accepted ? 1000.
6) Dishonour expense of bills receivable 150 and bank charges R 300 which are paid but not
recorded in the books.
Rey
To cash​

Answer 1

Answer:

ANSWER

(i) JOURNAL

1. Cash a/c... Dr. 10500

To C's Capital a/c 7500

To Premium for goodwill a/c 3000

(Being capital and premium for goodwill brought in by C)

2. Premium for goodwill a/c... Dr. 3000

To A's Capital a/c 2000

To B's Capital a/c 1000

(Being premium for goodwill distributed among the partners in the ratio of 2:1)

3. Building a/c... Dr. 2500

To Revaluation a/c 2500

(Being increase in asset transferred to revaluation account)

4. Revaluation a/c.... Dr. 1750

To Plant and Machinery a/c 875

To Stock a/c 500

To Provision for doubtful debts a/c 375

(Being decrease in assets and increase in liabilities transferred to revaluation account)

5. Revaluation a/c... Dr. 750

To A's Capital a/c 500

To B's Capital a/c 250

(Being profit on revaluation transferred to the partner's capital accounts)

(ii) REVALUATION A/C

Dr. Cr.

Particulars Amount

(in Rs.) Particulars Amount

(in Rs.)

To Stock a/c 500 By Building a/c 2500

To Plant and Machinery a/c 875

To Provision for doubtful debts a/c 375

To Profit transferred to

- A's Capital a/c

- B's Capital a/c

500

250

TOTAL 2500 TOTAL 2500

(iii) PARTNER'S CAPITAL A/C

Particulars A B C Particulars A B C

By Balance b/d 15000 10000 -

By Cash a/c - - 7500

To Balance c/d 17500 11250 7500 By Premium for goodwill a/c 2000 1000 -

By Revaluation a/c 500 250 -

(iv) BALANCE SHEET

(after admission of C)

Liabilities Amount

(in Rs.) Assets Amount

(in Rs.)

Building (25000+2500) 27500

Capital

- A

- B

- C

17500

11250

7500 Plant and Machinery (17500-875) 16625

Sundry Creditors 32950 Stock (10000-500) 9500

Debtors 4850

-- Provision for Doubtful debts (375) 4475

Cash (600+10500) 11100

TOTAL 69200 TOTAL 69200