Question

Dave DEELNE
60. Given be
2020. A and B share
Liabilities
Below is the Balance Sheet of A and B, who are carrying on partnership business
and B share prohts and losses in the ratio of 2:1.
10 are carrying on partnership business on 31st March,
BALANCE SHEET OF A AND B as at 31st March, 2020
Assets
10,000 Cash in Hand
10,000
58,000 Cash at Bank
40,000
2,000
60,000
Sundry Debtors
40,000
Stock
1,00,000
1,80,000
Plant
1,50,000
1,50,000 3,30,000 Building
4,00,000
4,00,000
Bills Payable
Creditors
Outstanding Expenses
Capital A/cs:
admitted as a partner on 1st April, 2020 on the following terms:
C will bring 1,00,000 as his capital and * 60,000 as his share of goodwill for 1/4th share in the profits.
in plant is to be appreciated to 1,20,000 and the value of building is to be appreciated by 10%.
(c) Stock is found overvalued by 4,000.
provision for doubtful debts is to be created at 5% of sundry debtors.
(e) Creditors were unrecorded to the extent of 1,000.
ce the necessary Journal entries, prepare the Revaluation Account and Partners' Capital Accounts, and
(NCERT, Modified)
tha Ralance Sheet after the admission of C.
is as follows:
(d) A provision for doub​

Answer 1

Explanation:

ACCOUNTANCY

Given below is the Balance Sheet of A and B, who are carrying on partnership business on 31

st

March,2018. A and B share profits and losses in the ratio of 2:1.

Balance Sheet Of A and B as at 31

st

March,2018.

Liabilities (Rs.) Assets (Rs.)

Bills Payable

Creditors

Outstanding Expenses

Capital A/cs:

A 1,80,000

B 1,50,000 10,000

58,000

2,000

3,30,000 Cash in Hand

Cash at Bank

Sundry Debtors

Stock

Plant

Building 10,000

40,000

60,000

40,000

1,00,000

1,50,000

4,00,000 4,00,000

C is admitted as a partner on the date of the Balance sheet on the following terms:

(a) C will bring in Rs.1,00,000 as his capital and Rs.60,000 as his share of goodwill for 1/4

th

share in the profits.

(b) Plant is to be appreciated to Rs.1,20,000 and the value of building is to be appreciated by 10% .

(c) Stock is found overvalued by Rs.4,000.

(d) A provision for doubtful debts is to be created at 5% of sundry debtors.

(e) Creditors were unrecorded to the extent of Rs.1,000.

Pass the necessary Journal entries, prepare the Revaluation Account and Partner's Capital Accounts, and show the Balance Sheet after the admission of C.

December 26, 2019avatar

Sanjay Santhanam

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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