14. X and Y are partners sharing profits and losses in the ratio of their capitals. Their balance
sheet as on 31 March 2019 was as under;
Liabilities
Amount
Assets
Amount
₹
Land 30.000
turel - 51
X
25,000
Capitals:
10.000
30,000
Furniture
Y
10,000
20,000
Stock (+) 14,000
20.000
General Reserve
10,000
Debtors S.
30.000
Trade creditors
30,000 Cash at Bank
Bills payable
5,000
95,000
95,000
They admitted Z as new partner for 1/3rd share in the profits. The conditions of admission are;
(a) Z should bring 20,000 as capital.
(b) Stock valued at 11,000 and Land at 30,000.
(c) Depreciate furniture by 5%.
(d) Provide for bad debts @5% on debtors.
(e) Goodwill of the firm is valued at 2 years purchase of average profit of last 3 years. The profit
last 3 years was 5,000, 11,000 and 8,000. Prepare necessary ledger accounts ar
balance sheet of X, Y and Z.
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12th
Accountancy
Reconstitution of a Partnership Firm - Admission of a Partner
Adjustment ofCapital
Balance Sheet of Ram and Sh...
ACCOUNTANCY
Balance Sheet of Ram and Shyam who share profits in proportions to their capitals as at 31
st
March,2018 is:
Liabilities (Rs.) Assets (Rs.)
Capital A/cs:
Ram 30,000
Shyam 25,000
Current A/cs:
Ram 2,000
Shyam 1,800
Creditors
Bills Payable 55,000
3,800
19,000
16,000
Freehold Premises
Plant and Machinery
Fixture and Fittings
Vehicle
Stock
Bills Receivable
Debtors
Bank
Cash 20,000
13,500
1,750
1,350
14,100
13,060
27,500
1,590
950
93,800 93,800
On 1
st
April,2018, they admitted Arjun into partnership on the following terms:
(a) Arjun to bring in Rs.20,000 as capital and Rs.6,600 for goodwill, which is to be in the business and he is to receive 1/4
th
share of the profits.
(b) Provision for Doubtful Debts is to be 2% on Debtors.
(c) Value of Stock to be written down by 5%.
(d) Freehold Premises are to be taken at valuation of Rs.22,400; Plant and Machinery Rs.11,800; Fixtures and Fittings Rs.1,540 and Vehicles Rs.800.
You are required to make necessary adjustment entries in the firm, give Balance Sheet of the new firm as at 1st April,2018 and also give the proportions in which the partners will share profits, there being no change in the proportions of Ram and Shyam.
EASY
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ANSWER
(i) JOURNAL
1. Cash a/c.... Dr. 26600
To Arjun's Capital a/c 20000
To Premium for Goodwill a/c 6600
(Being capital and premium for goodwill brought in by Arjun)
2. Premium for Goodwill a/c.... Dr. 6600
To Ram's Current a/c 3600
To Shyam's Current a/c 3000
(Being premium for goodwill distributed among the partners in the ratio of 6:5)
(ii) REVALUATION ACCOUNT
Dr. Cr.
Particulars Amount Particulars Amount
To Provision for
Doubtful debts a/c 550 By Freehold
Premises a/c 2400
To Stock a/c 705 By Loss transferred to:
- Ram's Current a/c
- Shyam's Current a/c
717
598
To Plant and Machinery a/c 1700
To Fixture and Fittings a/c 210
To Vehicles a/c 550
3715 3715
(iii) PARTNER'S CAPITAL A/C
Dr. Cr.
Particulars Ram Shyam Arjun Particulars Ram Shyam Arjun
By Balance b/d 30000 25000
To Balance c/d 30000 25000 20000 By Cash a/c 20000
30000 25000 20000 30000 25000 20000
(iv) PARTNER'S CURRENT A/C
Dr. Cr.
Particulars Ram Shyam Arjun Particulars Ram Shyam Arjun
To Revaluation a/c 717 598 By Balance b/d 2000 1800
By Premium
for Goodwill a/c 3600 3000
To Balance c/d 4883 4202
5600 4800 5600 4800
(v) BALANCE SHEET
Liabilities Amount Assets Amount
Capital a/cs:
- Ram
- Shyam
- Arjun
30000
25000
20000 Freehold Premises 22400
Creditors 19000 Plant and Machinery 11800
Bills Payable 16000 Fixture and Fittings 1540
Current a/cs:
- Ram
- Shyam
4883
4202 Vehicle 800
Stock (14100-705) 13395
Bills Receivable 13060
Debtors 27500
(-) Provision for (550)
doubtful debts 26950
Bank 1590
Cash (950+20000+6600) 27550
119085 119085
Working Note:
Old ratio= 30000:25000
= 6:5
Arjun is admitted for 1/4th share
Remaining share= 3/4
Ram's new share= 6/11 * 3/4
= 18/44
Shyam's new share= 5/11 * 3/4
= 15/44
New profit sharing ratio= 18:15:11
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