Sushil and Sahil are partners in a firm sharing profits in the ratio of 2:3.Their
Balance Sheet as at 31st March ,2019 was as follows : 8
Liabilities Rs Assets Rs
Bank Overdraft
Salary Outstanding
Creditors
General Reserve
Capital
Sushil 80,000
Sahil 1,20,000
10,000
5,000
13,000
5,000
2,00,000
2,33,000
Cash
Debtors 48,000
Less : Provision for
DoubtfulDebts (2,000)
Stock
Prepaid Expenses
Investments
Furniture
AdvertisementSuspenseA/c
32,000
46,000
35,000
21,000
60,000
38,000
1,000
2,33,000
On the above date they admitted Savita as a partner for 1/4th share in the
business which she acquires equally from Sushil and Sahil Following are the
required adjustments :
(a) Savita will contribute Rs 60,000 as her share of capital and Rs 30,000
towards goodwill .
(b)Stock is overvalued by Rs 5,000.
(c) Market value of investment is Rs 54,000.
(d)Provision for doubtful debts to be maintained at 5% on debtors.
Pass necessary journal entries on Savita’s admission .
Answers
Answer:
profits in the ratio of 2:3.Their
Balance Sheet as at 31st March ,2019 was as follows : 8
Liabilities Rs Assets Rs
Bank Overdraft
Salary Outstanding
Creditors
General Reserve
Answer:
The loss on revaluation will be Rs. 11,400/-
Premium for goodwill of both partners: Rs. 15,000/-
Explanation:
Journal Entries
Cash A/C Dr 90,000
To Savita's Capital A/C 60,000
To Premium for Goodwill 30,000
(Savita contributed Capital and premium for goodwill)
Premium for goodwill Dr 30,000
To Sushil Capital A/C 15,000
To Sahil Capital A/C 15,000
(Premium for goodwill distributed in the ratio 1:1 or sacrificing ratio)
Revaluation A/C Dr 5,000
To Stock A/C 5,000
(Stock overvalued by 5,000)
Revaluation A/C Dr 6,000
To investments 6,000
(Market value of investments decreased by Rs 6,000)
Revaluation A/C Dr 400
To provision for Doubtful Debts 400
(Provision for debts maintained @ 5% on Debtors)
General Reserve A/C Dr 5,000
To Sushil A/C 2,000
To Sahil A/C 3,000
(General Reserve distributed Among old partners)
Sushil A/C Dr 4,560
Sahil A/C Dr 6,840
To Revaluation A/C 11,400
(Loss on revaluation balance transferred to old partners in old ratio)
Corrected Question;
Sushil and Sahil are partners in a firm sharing profits in the ratio of 2:3.Their
Balance Sheet as at 31st March ,2019 is given.
On the above date they admitted Savita as a partner for 1/4th share in the
business which she acquires equally from Sushil and Sahil Following are the required adjustments :
(a) Savita will contribute Rs 60,000 as her share of capital and Rs 30,000
towards goodwill .
(b)Stock is overvalued by Rs 5,000.
(c) Market value of investment is Rs 54,000.
(d)Provision for doubtful debts to be maintained at 5% on debtors.
Pass necessary journal entries on Savita’s admission .
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