A and B are partners sharing 3:2.They decided to share in future equally. On that date, Reserve Rs. 50,000, Workmen Compensation Fund Rs. 40,000, Profit and Loss Account (Credit) Rs. 20,000, Investment Fluctuation Reserve Rs. 1,00,000 was shown in book. Pass a Single Adjustment Entry for it.
Answers
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tX and Y are partners sharing profits and losses equally. Their Balance Sheet as on 31st March, 2018 is given below:
Liabilities
₹
Assets
₹
Capital A/cs:
Land and Building
1,50,000
X
1,50,000
Plant and Machinery 1,00,000
Y
1,00,000
2,50,000
Furniture and Fittings 25,000
Current A/cs: Stock
75,000
X
40,000
Debtors
75,000
Y 30,000 70,000 Less: 5% Reserve for D. Debts 5,000 70,000
Creditors
1,30,000 Bill Receivalbe
30,000
Bill Payable
50,000
Bank
50,000
5,00,000
5,00,000
Z is admitted as a new partner for 1/4th share under the following terms :
(a) Z is to introduce ₹ 1,25,000 as capital .
(b) Goodwill of the firm was valued at nil.
(c) It is found that the creditors included a sum of ₹ 7,500 which was not to be paid . But it was also found that there was a liability for compensation to Workmen amounting to ₹ 10,000.
(d) Provision for Doubtful Debts is to be created @ 10% on debtors.
(e) In regard to the Partners' Capital Accounts present fixed capital method is to be converted into fluctuating capital method .
(f) Bills of ₹ 20,000 accepted from creditors were not recorded in the books.
(g) X provides ₹ 50,000 loan to the business carrying interest @ 10% p.a.
You are required to prepare Revaluation Account , Partners' Capital Accounts, Bank Account and the Balance Sheet of the new firm.
ANSWER:
Revaluation Account
Dr.
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
Reserve for D. Debts
2,500
Creditors
7,500
Liability for WCF 10,000
Loss transferred to
X’s Current A/c
2,500
Y’s Current A/c
2,500
12,500
12,500