Accountancy, asked by bpushpita88, 9 months ago

X and Y share profits in the ratio of 5:3. Their Balance Sheet as at 31st March, 2020 was:
Liabilities
Assets
Creditors
15,000 Cash at Bank
Employees' Provident Fund
10,000 Sundry Debtors
20,000
Workmen Compensation Reserve
5,800 Less: Provision for Doubtful Debts 600
Capital A/cs:
Stock
70,000
Fixed Assets
31,000 1,01,000 Profit and Loss A/C
1,31,800
19,400
25,000
80,000
2,400
1,31,800
They admit Z into partnership with 1/8th share in profits on 1st April, 2020. Z brings * 20,000 as his capital
and 12,000 for goodwill in cash. Z acquires his share from X. Following revaluations are also made:
(a) Employees' Provident Fund liability is to be increased by 5,000.
(b) All Debtors are good.
(c) Stock includes 3,000 for obsolete items. Hence, are to be written off.
(d) Creditors are to be paid 1,000 more.
(e) Fixed Assets are to be revalued at 70,000.
Prepare Journal entries, necessary accounts and new Balance Sheet. Also, calculate new
profit-sharing ratio.​

Answers

Answered by Anonymous
12

The correct financial entries are -

Journal -

Cash A/c Dr.  32,000  

To Z’s Capital A/c   20,000

To Premium for goodwill  12,000    

(Being capital and goodwill brought in by Z)

Premium for goodwill A/c Dr. 12,000  

To X’s Capital A/c  12,000

(Being the premium given to X as he sacrificed his share in favour of Z)

Revaluation A/c

Particulars      Amount            Particulars                    Amount

Stock                3,000              Provision on debtors      600

Creditors          1,000               Loss transferred to:      

Fixed Assets     10,000            X capital A/c                  11,500

Provident Fund  5,000            Y capital A/c                    6,900

Total                19000                                                      19000

Balance Sheet

Liabilities     Amount                Assets                     Amount

Creditors       16,000                 Cash                         32,000

Capitals:                                     Fixed Assets            70,000

X                74,125                      Sundry Debtors       20,000

Y                26,275                     Land and Building   5,000

Z                20,000                     Stock                       22,000

Total         1,49,000                                                     1,49,000

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