Balance Sheet Total 3,88,300.]
120. A and B share the profits of a business in the ratio of 5:3. They admit
Cinto the firm for a 1/4th share in the profits to be contributed equally by A and B. On
the date of admission of C, the Balance Sheet of the firm was as follows:
Liabilities
₹
Assets
₹
A's Capital
3,00,000 Machinery
2,60,000
B's Capital
2,00,000 Furniture
1,60,000
Workmen's Compensation Reserve 40,000 Stock
1,20,000
Bank Loan
1,20,000 Debtors
80,000
Creditors
20,000 Bank
60,000
6,80,000
6,80,000
Terms of C's admission were as follows:
(i) C will bring 3,30,000 for his share of capital and goodwill.
(ii) Goodwill of the firm has been valued at 4 year's purchase of the average super
profits of last three years. Average profits of the last three years are *2,20,000
while the normal profits that can be earned with the capital employed are
31,40,000.
(iii) Furniture is to be appreciated by 360,000 and the value of stock is to be
reduced by 320,000.
Prepare Revaluation Account, Partner's Capital Accounts and the new Balance
Sheet of A, B and C.
Answers
Answer:
Answer
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
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