A and B were partners in a firm, On 31st March, 2018 they decided to admit C as a new partner.
On 31st March, 2018 the Balance Sheet of A and B stood as follows:
Liabilities Rs. Assets Rs.
Creditors
General Reserve
Capital A/c s:
A 30,000
B 15,000
18,000
2,000
45,000
65,000
Cash at Bank
Debtors
Stock
Furniture
Freehold Property
1,000
40,000
6,000
3,000
15,000
65,000
They agreed to admit C as a new partner subject to the following terms and conditions.
a) C will bring in Rs.20,000 of which Rs.4,500 will be treated as his share of goodwill.
b) C will be entitled to 1/4th share of the profits in the firm.
c) A provision for doubtful debts was to be created at 5% on the debtors.
d) Furniture was to be depreciated by 5%, Stock was to be revalued at Rs.5,000.
Prepare Revaluation Account, Partner’s Capital Accounts and Opening Balance Sheet of the new
firm. ( *guys help me*..)
Answers
Answer:
(i) JOURNAL
1. Cash a/c... Dr. 160000
To C's Capital a/c 100000
To Premium for Goodwill a/c 60000
(Being capital and premium for goodwill brought in by C)
2. Premium for Goodwill a/c... Dr. 60000
To A's Capital a/c 40000
To B's Capital a/c 20000
(Being premium for goodwill distributed among the partners in the ratio of 2:1)
3. Revaluation a/c.... Dr. 8000
To Stock a/c 4000
To Provision for doubtful debts a/c 3000
To Creditors a/c 1000
(Being decrease in assets and increase in liabilities transferred to revaluation account)
4. Plant a/c.... Dr. 20000
Building a/c... Dr. 15000
To Revaluation a/c 35000
(Being increase in assets transferred to revaluation account)
5. Revaluation a/c... Dr. 27000
To A's Capital a/c 18000
To B's Capital a/c 9000
(Being profit on revaluation transferred to the partner's capital account)
(ii) REVALUATION A/C
Dr. Cr.
Particulars Amount
(in Rs.) Particulars Amount
(in Rs.)
To Stock a/c 4000 By Plant a/c 20000
To Provision for
doubtful debts a/c 3000 By Building a/c 15000
To Creditors a/c 1000
To Profit on Revaluation
- A's Capital a/c
- B's Capital a/c
18000
9000
TOTAL 35000 TOTAL 35000
(iii) PARTNER'S CAPITAL A/C
Dr. Cr.
Particulars A B C Particulars A B C
By Balance b/d 180000 150000
By Cash a/c 100000
By Premium for Goodwill a/c 40000 20000
To Balance c/d 238000 179000 100000 By Profit on revaluation a/c 18000 9000
TOTAL 238000 179000 100000 TOTAL 238000 179000 100000
(iv) BALANCE SHEET
(After admission of C)
Liabilities Amount
(in Rs.) Assets Amount
(in Rs.)
Bills Payable 10000 Cash in Hand (10000+160000) 170000
Creditors (58000+1000) 59000 Cash at Bank 40000
Outstanding Expenses 2000 Sundry Debtors (60000-3000) 57000
Capital
- A
- B
- C
238000
179000
100000 Stock (40000-4000) 36000
Plant (100000+20000) 120000
Building (150000+15000) 165000
TOTAL 588000 TOTAL 588000