A & B were partners sharing profits in the ratio 3:2. On 31 March 2015, the Balance Sheet of the firm as follows:
Liabilities: Capitals: A 3,00,000 , B 2,00,000 ; Creditors 1,17,000. Assets: Building 2,40,000 ; Furniture 1,75,000 ; Debtors 80,000 ; Stock 75,000 ; Cash 47,000.
The firm was dissolved & the assets & the liabilities were settled as follows:
(i) Building was taken over by Creditors
(ii) Furniture was taken over by B for a Cash payment as 5% less than the book value
(iii) Debtors were collected by a debt collecting agency at a cost of Rs 5,000
(iv) Stocks realized Rs 70,500
(v) B was Rs 500 as he is beating all realization expenses
Prepare the necessary accounts to close the books of the firm
Answers
Answer:
. 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