31st March, 2019 was as follows:
12. Ashish, Aakash and Amit are partners sharing profits and losses equally. The Balance Sheet as at
Change in Prohit Sharing Ratlo Among the existing Partners 4.41
₹
Assets
lities
75,000
90,000
sundry Creditors
General Reserve
Ospital Nos
Cash In Hand
Cash at Bank
Sundry Debtors
Stock
Land and Building
Machinery
Advertisement Suspense
3,00,000
3,00,000
2,75,000
Achish
Aslash
24,000
140,000
80,000
1,40,000
4,00,000
2,50,000
6,000
10,40,000
8,75,000
Amit
10,40,000
The partners decided to share profits in the ratio of 2:2:1 w.e.f. 1st April, 2019. They also decided that:
(0) Value of stock to be reduced to 1,25,000.
() Value of machinery to be decreased by 10%.
(in) Land and Building to be appreciated by 62,000.
(iv) Provision for Doubtful Debts to be made @5% on Sundry Debtors.
(v) Aakash was to carry out reconstitution of the firm at a remuneration of R10,000.
Pass necessary Journal entries to give effect to the above.
Answers
Answer:
.
Explanation:
Ashish, Aakash and Amit are partners sharing profits and losses equally. The Balance Sheet as at 31st March, 2018 was as follows :
Liabilities Rs. Assets Rs.
Sundry Creditors 75,000 Cash in Hand 24,000
General Reserve 90,000 Cash at Bank 1,40,000
Capital A/c's:
Sundry Debtors 80,000
Ashish 3,00,000 Stock 1,40,000
Aakash 3,00,000 Land and Building 4,00,000
Amit 2,75,000 8,75,000 Machinery 2,50,000
Advertisement 6,000
10,40,000 10,40,000
The partners decided to share profits in the ratio of 2:2:1 w.e.f. 1st April, 2018 . They also decided that :
(i) Value of stock to be reduced to Rs. 1,25,000 .
(ii) Value of machinery to be decreased by 10% .
(iii) Land and Building to be appreciated by Rs. 62,000 .
(iv) Provision for Doubtful Debts to be made @5%
(v) Aakash was to carry out reconstruction of the firm at a remuneration of Rs. 10,000.
Pass necessary Journal entries to give effect to the above.
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ANSWER
Journal entries:
1. Revaluation A/c Dr. 15000
To Stock A/c 15000
(Being Value of stock to be reduced to Rs. 1,25,000)
2. Revaluation A/c Dr. 25000
To machinery A/c 25000
(Being Value of machinery to be decreased by 10%)
3. Land and Building A/c Dr. 62000
To Revaluation A/c 62000
(Being Value of machinery to be decreased by 10%)
4. Revaluation A/c Dr. 4000
To Provision for Doubtful Debts A/c 4000
(Being Provision for Doubtful Debts is created @ 5% on debtors)
5. Revaluation A/c Dr. 10000
To Akash's capital A/c 10000
(Being remuneration for carry out reconstruction paid)
6. Revaluation A/c Dr. 8000
To Ashish's capital A/c 2666
To Aakash's capital A/c 2666
To Amit's capital A/c 2668
(Being profit on revaluation is distributed among partners in their old ratio)
7. General Reserver A/c Dr. 90000
To Ashish's capital A/c 2666
To Aakash's capital A/c 2666
To Amit's capital A/c 2668
(Being general reserve is distributed among partners in their old ratio)
10% . 10% . 1,25,00
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