On 31st March 2020 the balance sheet of w and r who shared profit in 3: 2 ratio was as follow s:
Liabilities. Amount. Assets. Amount
Creditors. 20000 Cash. 5000
Profit & loss a/c. 15000 Sundry debtors. 20000
Capital accounts:. Less: provision. 700. 19300
W. 40000 Stock. 25000
R. 30000 Plant and machinery. 35000
Patents. 20700
105000 105000
On this date B was admitted as a partner the following conditions;
a) B will get 4/15th share of profit.
b) B had to bring rupees 30000 as his capital to which amount other partners capital shall have to be adjusted.
c) He would pay cash for his share of goodwill which would be based on 2 and half years purchase of average profits of past 4 years.
d) The acids would be revalued as under:
Sanjay debtors at book value less 5% provision for bad debts.stock at rs. 20,000, plant and machinery at rupees 40000.
e) The profit of the firm for the year ending 31st March 2017, 2018, 2019 were rs. 20,000, 14000, and rs. 17000 respectively.
Prepare revaluation account and partners capital account.
Answers
Answer:
see below
Explanation:
(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