Mr. Deep & Mr. Karan were in Partnership sharing Profits & Losses in the proportion of
3:1 respectively. Their Balance Sheet On 31 March 2018 Stood as follows.
Balance Sheet as on 31st March, 2018
Liabilities
Amount Amount
Assets
Amount Amount
Sundry Creditors
40,000 Cash
40,000
Bill Payable
10,000 Sundry debtors
32,000
Bank Overdraft
11,000 Land & Building
16,000
Capital A/c:
Steek
20,000
Deep
60.000
Plant and machinery
30,000
Karan
20,000 80,000 Furniture
11,000
General Reserve
8,000
1,49,000
1,49,000
They admit Shubham into Partnership on 1 April, 2018 The term being that:
1. He shall have to bring in 20,000 as his capital for 1/5 Share in future profits & 10,000
as his share of Goodwill.
2. A Provision for 5% doubtful debts to be created on Sundry Debtors.
3. Furniture to be depreciated by 20%
Stock should be appreciated by 5% and Building be appreciated by 20%
5. Capital A/c of all partners be adjusted in their new profit sharing ratio through cash ac-
count.
Prepare Profit and Loss Adjustment A/c, Partner's capital A/c, Balance sheet of new
firm.
(Ans : Revaluation Profit - 400, Cash transferred to Deep 13800, to Karan 4,600,
Balance Sheet total 1,61,000)
Answers
Answer:
(i) JOURNAL
1. Cash a/c... Dr. 10500
To C's Capital a/c 7500
To Premium for goodwill a/c 3000
(Being capital and premium for goodwill brought in by C)
2. Premium for goodwill a/c... Dr. 3000
To A's Capital a/c 2000
To B's Capital a/c 1000
(Being premium for goodwill distributed among the partners in the ratio of 2:1)
3. Building a/c... Dr. 2500
To Revaluation a/c 2500
(Being increase in asset transferred to revaluation account)
4. Revaluation a/c.... Dr. 1750
To Plant and Machinery a/c 875
To Stock a/c 500
To Provision for doubtful debts a/c 375
(Being decrease in assets and increase in liabilities transferred to revaluation account)
5. Revaluation a/c... Dr. 750
To A's Capital a/c 500
To B's Capital a/c 250
(Being profit on revaluation transferred to the partner's capital accounts)
(ii) REVALUATION A/C
Dr. Cr.
Particulars Amount
(in Rs.) Particulars Amount
(in Rs.)
To Stock a/c 500 By Building a/c 2500
To Plant and Machinery a/c 875
To Provision for doubtful debts a/c 375
To Profit transferred to
- A's Capital a/c
- B's Capital a/c
500
250
TOTAL 2500 TOTAL 2500
(iii) PARTNER'S CAPITAL A/C
Particulars A B C Particulars A B C
By Balance b/d 15000 10000 -
By Cash a/c - - 7500
To Balance c/d 17500 11250 7500 By Premium for goodwill a/c 2000 1000 -
By Revaluation a/c 500 250 -
(iv) BALANCE SHEET
(after admission of C)
Liabilities Amount
(in Rs.) Assets Amount
(in Rs.)
Building (25000+2500) 27500
Capital
- A
- B
- C
17500
11250
7500 Plant and Machinery (17500-875) 16625
Sundry Creditors 32950 Stock (10000-500) 9500
Debtors 4850
-- Provision for Doubtful debts (375) 4475
Cash (600+10500) 11100
TOTAL 69200 TOTAL 69200