Following is the balance sheet of Asit and Bidesh for the year ended 31st March, 2020 who share profits
in the ratio of 2.1
Assets
60.000 Land and building
58.000
| Badesh's capital acount
40.000 Furniture
20.000
42.000 Current assets
62.000
38.000 Cash
40.000
180.000
1.80.000
The partners decided to change the profit sharing ratio to 3 : 2 from 1st April, 2000. They further agreed
Land and building to be agreed at 1.000.000
The entire capital of the firm to be agreed at 1.20.000
Prepare Parmens Capital Account and revised Balance sheet
Answers
ACCOUNTANCY
Following is the Balance Sheet of X and Y as at 31
st
March,2018 who are partners in a firm sharing profits and losses in the ratio of 3:2 respectively:
Liabilities (Rs.) Assets (Rs.)
Creditors
General Reserve
Capital A/cs:
X 1,80,000
Y 90,000
Current A/cs:
X 30,000
Y 6,000 45,000
36,000
2,70,000
36,000 Cash at Bank
Debtors 60,000
Less: Provision for Doubtful Debts 2,400
Patents
Investments
Fixed Assets
Goodwill 15,000
57,600
44,400
24,000
2,16,000
30,000
3,87,000 3,87,000
Z is admitted as a new partner on 1
st
April,2018 on the following terms:
(a) Provision for doubtful debts is to be maintained at 5% on Debtors.
(b) Outstanding rent amounted to Rs.15,000.
(c) An accrued income of Rs.4,500 does not appear in the books of the firm. It is now to be recorded.
(d) X takes over the Investments at an agreed value of Rs.18,000.
(e) New Profit-Sharing Ratio of partners will be 4:3:2.
(f) Z will bring in Rs.60,000 as his capital by cheque.
(g) Z is to pay an amount equal to his share in firm's goodwill valued at twice the average profits of the last three years which were Rs.90,000;Rs.78,000 and Rs.75,000 respectively.
(h) Half of the amount of goodwill is to be withdrawn by X and Y.
You are required to pass Journal entries, prepare Revaluation Account, Partners Capital and Current Accounts and the Balance Sheet of the new firm.
Share
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ANSWER
(i) JOURNAL
1. Bank a/c........ Dr. 96000
To Z's Capital a/c 60000
To Premium for Goodwill a/c 36000
(Being capital and premium for goodwill brought in by Z)
2. Premium for Goodwill a/c.... Dr. 36000
To X's Current a/c 25200
To Y's Current a/c 10800
(Being premium for goodwill distributed among the partners in the ratio of 7:3)
3. X's Current a/c...... Dr. 12600
Y's Current a/c...... Dr. 5400
To Bank a/c 18000
(Being half of the premium for goodwill withdrawn by the partners)
(ii) REVALUATION ACCOUNT
Dr. Cr.
Particulars Amount Particulars Amount
To Provision for
Doubtful debts a/c 600 By Accrued Income a/c 4500
To Outstanding Rent a/c 15000 By Loss on revaluation
- X's Capital a/c
- Y's Capital a/c
10260
6840
To Investment a/c 6000
21600 21600
(iii) PARTNER'S CAPITAL A/C
Dr. Cr.
Particulars X Y Z Particulars X Y Z
By Balance b/d 180000 90000
To Balance c/d 180000 90000 60000 By Bank a/c 60000
180000 90000 60000 180000 90000 60000
(iv) PARTNER'S CURRENT A/C
Dr. Cr.
Particulars X Y Z Particulars X Y Z
To Revaluation a/c 10260 6840 By Balance b/d 30000 6000
To Goodwill a/c 18000 12000 By General Reserve a/c 21600 14400
To Bank a/c 12600 5400 By Premium for
Goodwill a/c 25200 10800
To Investment a/c 18000
To Balance b/d 17940 6960
76800 31200 76800 31200
(v) BALANCE SHEET
Liabilities Amount Assets Amount
Capital a/cs:
- X
- Y
- Z
180000
90000
60000 Patents 44000
Outstanding Rent 15000 Fixed Assets 216000
Current a/cs:
- X
- Y
17940
6960 Accrued Income 4500
Creditors 45000 Cash at Bank
(15000+96000-18000) 93000
Debtors (60000-3000) 57000
414900 414900
Working Note:
1. Calculation of amount of Goodwill:
Average Profit= [90000+78000+75000]/3
= 81000
Goodwill= 81000 * 2
= 162000
Z's share of goodwill= 162000* 2/9
= 36000
2. Sacrificing ratio:
X's sacrifice= 3/5-4/9= 7/45
Y's sacrifice= 2/5-3/9= 3/45
Sacrificing ratio= 7:3