Question

Q.81. (Value Based) A and B are partners sharing profits in the proportion of
3:2. Their Balance Sheet as at 31st March, 2012 was as follows:
Liabilities
Sundry Creditors
63.000 Cash at Bank
5,000
Outstanding Salaries
4,000 Sundry Debtors
30,000
General Reserve
10,000 Less : Provision
1,000 29,000
Capitals:
A
50,000 Stock
40,000
В
30.000 Trade Marks
8,000
Building
75.000
1,57,000
1,57,000
LOL
10,0
They agree to admit C as a new partner on the following terms :
(1) C will be given 2/9th share of profit and he will bring 50,000 for his share er
capital and goodwill.
(2) Goodwill of the firm will be calculated at 25 year's purchase of the average
super profits of last four years. Profits of the last four years are 340,000;
40,000; 355,000 and 365,000 respectively. Normal profits that can be
earned with the capital employed are 14,000.
(3) Half the amount of goodwill is withdrawn by old partners.
(4) 15% of the general reserve is to remain as a provision against doubtful debts.
20 (5) Outstanding salaries be increased to 236,000, Stock is to be reduced by 20%
and Buildings be increased by 20%. Trade Marks be written off by 50%.
1700
9700
8500
*
4000
Do 400​

Answer 1

Answer:

(i) REVALUATION A/C

Dr. Cr.

Particulars Amount Particulars Amount

To Provision for Doubtful Debts 1700 By Prepaid advertisement Expenses 1200

To A's Capital

(revenue expense) 2100 By B's Capital

(personal expenses) 2000

By Loss transferred to:

- A's Capital a/c

- B's Capital a/c

- C's Capital a/c

300

200

100

3800 3800

(ii) PARTNER'S CAPITAL A/C

Dr. Cr.

Particulars A B C D Particulars A B C D

To Revaluation a/c

(personal) 2000 By Balance b/d 60000 40000 40000

To Revaluation a/c

(loss) 300 200 100 By Cash a/c 40000

To Balance c/d 61800 37800 39900 50000 By Creditors 10000

By revaluation expenses 2100

62100 40000 40000 50000 62100 40000 40000 50000

(iii) BALANCE SHEET

Dr. Cr.

Liabilities Amount Assets Amount

Capital a/cs:

- A

- B

- C

- D

61800

57800

39900

50000 Land and Building 50000

Bills Payable 10000 Plant and Machinery 40000

Creditors 30000

(-) D's Capital (10000) 20000 Furniture 30000

Stock 20000

Prepaid Advertisement

Expenses 1200

Debtors 30000

(-) Provision for (1700)

Doubtful debts

(+) Bills receivable 4000

dishonoured 32300

Bills receivable 20000

Bank (10000+40000-4000) 46000

239500 239500

Answer 2

Explanation:

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