Question

(ADMISSION OF PARTNERSHIP FIRM)
Q. 1. Arun and Varun share profits and losses in the ratio of 3:2 in partnership firm.
Their balance sheet
Balance Sheet as on 1st April, 2017
Liability
Amount
Assets
Amount
Creditors
25,000 Cash in hand
5,000
Bills Payable
20,000 Bills Receivable
7,600
Bank Loan
32,000 Debtors 41,600
General Reserve
5,000 Less: R.D.D 1.600
40,000
Capital A/C
Stock
24,000
Arun
30,000 Furniture
9,400
Varun
24,000 Machinery
20,000
Building
30,000
1,36,000
1,36,000
On 1st April, 2017, they admitted Tarun on the following terms:
1. For 1/5th share in future profits, Tarun should bring Rs. 20,000 for his capital
and Rs. 10,000 for goodwill in cash
2. Half of the amount of goodwill be withdrawn by old partners.
3. The stock is to be depreciated by 10% and Machinery by 5%
4. R. D.D. be maintained at Rs. 2,000
5. Furniture should be appreciated upto Rs. 10,700 and Building be appreciated by
20%
Prepare necessary ledger accounts.​

Answer 1

Answer:

see below

Explanation:

Profit And Loss Account

Particulars  Amount Particulars   Amount

To Manager;s  

commission

(15000*5/100)  750  By profit before B's Salary

(12500+2500)  15000

To Net profit T/f to

P/L Appropriation

Account  14250    

Total  15000  Total  15000

                            Profit And Loss Appropriation Account

Particulars  Amount  Particulars Amount  

To Interest on capital

A = 50000*6% = 3000

B=30000*6% = 1800  4800  By net profit  14250

B's Salary  2500    

To profit T/f to

A's Capital A/c = 4170

B's Capital A/c = 2780  6950    

Total  14250  Total  14250

       

                                     Partners  capital account

Particulars  A  B  Particulars  A  B

      By bal b/d 50000   30000

      By Int on capital  3000  1800

      salary    2500

To bal c/d  57170  37080  By P/L Appr A/c  4170  2780

Total  57170  37080  Total  57170  37080

           

Answer 2

The total amount is 20,400

First, let's calculate the value of goodwill and the new profit sharing ratio:

Goodwill = 10,000 (half of which will be withdrawn by Arun and Varun) = 5,000

Total capital after admission of Tarun = 30,000 (Arun) + 24,000 (Varun) + 20,000 (Tarun) = 74,000

New profit sharing ratio = 3:2:1 (Arun:Varun:Tarun)

Now, let's prepare the necessary ledger accounts:

Tarun's Capital Account(Figure 1)

Arun's Capital Account(Figure 2)

Varun's Capital Account(Figure 3)

Profit and Loss Appropriation Account (Figure 4)

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