given below is the balance sheet of a and b who are carrying on partnership business on 31st march 2006 a and b profit sharing ratio is 2:1 c is added as a partner as on that dayn
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Answer:
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.
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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
Answer:
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