TS Grewal i (2014) Solutions for Class 12 Commerce Accountancy Chapter 5 Retirement/Death Of A Partner are provided here with simple step-by-step explanations. These solutions for Retirement/Death Of A Partner are extremely popular among class 12 Commerce students for Accountancy Retirement/Death Of A Partner Solutions come handy for quickly completing your homework and preparing for exams. All questions and answers from the TS Grewal i (2014) Book of class 12 Commerce Accountancy Chapter 5 are provided here for you for free. You will also love the ad-free experience on Meritnation’s TS Grewal i (2014) Solutions. All TS Grewal i (2014) Solutions for class 12 Commerce Accountancy are prepared by experts and are 100% accurate.

Page No 5.76:

Question 1:

Answer:

Old Ratio (A, B and C) = or 5 : 4 : 1

As we can see, no information is given as to how A and B are acquiring C's profit share after his retirement, so the new profit sharing ratio between A and B is calculated just by crossing out the C’s share. That is, the new ratio becomes 5 : 4.

∴New Profit Ratio (A and B) = 5 : 4

 

Page No 5.76:

Question 2:

Old Ratio (A, B and C) = or 5 : 4 : 1

As we can see, no information is given as to how A and B are acquiring C's profit share after his retirement, so the new profit sharing ratio between A and B is calculated just by crossing out the C’s share. That is, the new ratio becomes 5 : 4.

∴New Profit Ratio (A and B) = 5 : 4

 

Answer:

Old Ratio (Ram, Mohan and Sohan) = or 3 : 5 : 7

Sohan’s Profit Share =

Ram and Mohan decided to take his share in the ratio of 3 : 2

New Profit Share = Old Profit Share  +  Share taken from Sohan

∴ New Profit Ratio (Ram and Mohan) = 36 : 39 or 12 : 13

 

Page No 5.76:

Question 3:

Old Ratio (Ram, Mohan and Sohan) = or 3 : 5 : 7

Sohan’s Profit Share =

Ram and Mohan decided to take his share in the ratio of 3 : 2

New Profit Share = Old Profit Share  +  Share taken from Sohan

∴ New Profit Ratio (Ram and Mohan) = 36 : 39 or 12 : 13

 

Answer:

(a)

Old Ratio (Shiv, Mohan and Hari) = 5 : 5 : 4

Mohan’s Profit Share =

His share is divided between Shiv and Hari equally i.e. in the ratio of 1: 1

New Profit Share = Old Profit Share  +  Share taken from Mohan

∴ New Profit Ratio (Shiv and Hari) = 15 : 13

(b)

Old Ratio (P, Q and R) = 5 : 4 : 1

P’s Profit Share =

As we can see, no information is given as to how Q and R are acquiring P's profit share after his retirement, so the new profit sharing ratio between Q and R is calculated just by crossing out the P’s share. That is, the new ratio becomes 4 : 1

∴New Profit Ratio (Q and R) = 4 : 1

Page No 5.76:

Question 4:

(a)

Old Ratio (Shiv, Mohan and Hari) = 5 : 5 : 4

Mohan’s Profit Share =

His share is divided between Shiv and Hari equally i.e. in the ratio of 1: 1

New Profit Share = Old Profit Share  +  Share taken from Mohan

∴ New Profit Ratio (Shiv and Hari) = 15 : 13

(b)

Old Ratio (P, Q and R) = 5 : 4 : 1

P’s Profit Share =

As we can see, no information is given as to how Q and R are acquiring P's profit share after his retirement, so the new profit sharing ratio between Q and R is calculated just by crossing out the P’s share. That is, the new ratio becomes 4 : 1

∴New Profit Ratio (Q and R) = 4 : 1

Answer:

Old Ratio (A, B and C) = 4 : 3 : 2

New Ratio (B and C) = 2 : 1

Gaining RatioNew Ratio − Old Ratio

∴Gaining Ratio = 3 : 1

Page No 5.76:

Question 5:

Old Ratio (A, B and C) = 4 : 3 : 2

New Ratio (B and C) = 2 : 1

Gaining RatioNew Ratio − Old Ratio

∴Gaining Ratio = 3 : 1

Answer:

Old Ratio (Kangli, Mangli and Sanvali) = 4 : 3 : 2

New Ratio (Mangli and Sanvali) = 5 : 3

Gaining RatioNew Ratio − Old Ratio

∴Gaining Ratio = 21 : 11

Page No 5.76:

Question 6:

Old Ratio (Kangli, Mangli and Sanvali) = 4 : 3 : 2

New Ratio (Mangli and Sanvali) = 5 : 3

Gaining RatioNew Ratio − Old Ratio

∴Gaining Ratio = 21 : 11

Answer:

(a)

Old Ratio (W, X, Y and Z) = or 2 : 1 : 2 : 1

New Ratio (W, X and Z) = 1 : 1 : 1

Gaining Ratio = New Ratio − Old Ratio

∴Gaining Ratio = 0 : 1 : 1

(b)

Old Ratio (A, B and C) = 4 : 3 : 2

C’s Profit Share =

A acquires 4/9 of C’s Share and remaining share is acquired by B.

New Profit Share = Old Profit Share +  Share acquired from C

∴ New Profit Ratio (A and B) = 44 : 37

Gaining Ratio = New Ratio − Old Ratio

∴Gaining Ratio = 8 : 10 or 4 : 5

Page No 5.76:

Question 7:

(a)

Old Ratio (W, X, Y and Z) = or 2 : 1 : 2 : 1

New Ratio (W, X and Z) = 1 : 1 : 1

Gaining Ratio = New Ratio − Old Ratio

∴Gaining Ratio = 0 : 1 : 1

(b)

Old Ratio (A, B and C) = 4 : 3 : 2

C’s Profit Share =

A acquires 4/9 of C’s Share and remaining share is acquired by B.

New Profit Share = Old Profit Share +  Share acquired from C

∴ New Profit Ratio (A and B) = 44 : 37

Gaining Ratio = New Ratio − Old Ratio

∴Gaining Ratio = 8 : 10 or 4 : 5

Answer:

Old Ratio (Sita, Geeta and Meeta) = 7 : 6 : 7

Geeta’s Profit Share =

Her share is divided between Sita and Meeta equally i.e. in the ratio of 1: 1

New Profit Share = Old Profit Share  +  Share taken from Geeta

∴ New Profit Ratio (Sita and Meeta) = 20 : 20 or 1 : 1

Page No 5.76:

Question 8:

Old Ratio (Sita, Geeta and Meeta) = 7 : 6 : 7

Geeta’s Profit Share =

Her share is divided between Sita and Meeta equally i.e. in the ratio of 1: 1

New Profit Share = Old Profit Share  +  Share taken from Geeta

∴ New Profit Ratio (Sita and Meeta) = 20 : 20 or 1 : 1

Answer:

Old Ratio (A, B, C and D) = 5 : 3 : 2 : 2

B’s Profit Share =

C’s Profit Share =

B’s Share was acquired by D and C’s share was acquired by A.

∴D’s New Share = D’s Old share + Share of B

A’s New Share = A’s Old Share + Share of C

∴ New Profit Ratio (A and D) = 7 : 5

Page No 5.76:

Question 9:

Old Ratio (A, B, C and D) = 5 : 3 : 2 : 2

B’s Profit Share =

C’s Profit Share =

B’s Share was acquired by D and C’s share was acquired by A.

∴D’s New Share = D’s Old share + Share of B

A’s New Share = A’s Old Share + Share of C

∴ New Profit Ratio (A and D) = 7 : 5

Answer:

Old Ratio (A, B and C) = 4 : 3 : 2

B retires from the firm.

His profit share =

Case (a) B gives his share to A and C in their original ratio.

Original Share (A and C) = 4 : 2

New Ratio = Old Ratio + Share acquired from B

 

∴ New Profit Ratio (A and C) = 36 : 18 or 2 : 1

Case (b) B gives his share to A and C in equal proportion.

New Ratio = Old Ratio + Share acquired from B

 

∴ New Profit Ratio (A and C) = 11 : 7

Case (c) B gives his to A and C in the ratio 3 : 1.

New Ratio = Old Ratio + Share acquired from B

∴ New Profit Ratio (A and C) = 25 : 11

Case (d) B gives his share to A only.

 

A’s New Share = A’s Old Share + Share of B

C’s Share

∴ New Profit Ratio (A and C) = 7 : 2

 



Page No 5.77:

Question 10:

Old Ratio (A, B and C) = 4 : 3 : 2

B retires from the firm.

His profit share =

Case (a) B gives his share to A and C in their original ratio.

Original Share (A and C) = 4 : 2

New Ratio = Old Ratio + Share acquired from B

 

∴ New Profit Ratio (A and C) = 36 : 18 or 2 : 1

Case (b) B gives his share to A and C in equal proportion.

New Ratio = Old Ratio + Share acquired from B

 

∴ New Profit Ratio (A and C) = 11 : 7

Case (c) B gives his to A and C in the ratio 3 : 1.

New Ratio = Old Ratio + Share acquired from B

∴ New Profit Ratio (A and C) = 25 : 11

Case (d) B gives his share to A only.

 

A’s New Share = A’s Old Share + Share of B

C’s Share

∴ New Profit Ratio (A and C) = 7 : 2

 

Answer:

Old Profit Sharing Ratio amongst Partner’s (A, B and C) - 5 : 3 : 2
B retires and his share was taken by A and C in ratio of 2 : 1
Gaining Ratio of A and C is 2 : 1


New Ratio between A and C is 21 : 9 or 7 : 3
After this D is admitted for 25% share
Half of this 25% was gifted by A and remaining half was provided by A and C equally
It means 75% (50% + ½ of remaining 50%) of 25% (given to D) was actually given by A and rest 25% was given by C.

Page No 5.77:

Question 11:

Old Profit Sharing Ratio amongst Partner’s (A, B and C) - 5 : 3 : 2
B retires and his share was taken by A and C in ratio of 2 : 1
Gaining Ratio of A and C is 2 : 1


New Ratio between A and C is 21 : 9 or 7 : 3
After this D is admitted for 25% share
Half of this 25% was gifted by A and remaining half was provided by A and C equally
It means 75% (50% + ½ of remaining 50%) of 25% (given to D) was actually given by A and rest 25% was given by C.

Answer:

 

Journal

Particulars

L.F.

Date

Amount

Rs

Credit

amount

Rs

L’s Capital A/c

Dr.

 

13,000

 

O’s Capital A/c

Dr.

 

11,000

 

To M’s Capital A/c

 

 

24,000

(Adjustment M’s share of goodwill made)

 

 

 

 

 

 

 

Working Note:

WN 1 Calculation of Gaining Ratio

Old Ratio (L, M and O) = 4 : 3 : 2

M retires from the firm.

New Ratio (L and O) = 5 : 3

Gaining RatioNew Ratio − Old Ratio

∴Gaining Ratio = 13 : 11

 

WN 2 Adjustment of Goodwill

Goodwill of the firm = Rs 72,000

This share of goodwill is to be debited to remaining Partners’ Capital Accounts in their gaining ratio (i.e. 13 : 11).

Page No 5.77:

Question 12:

 

Journal

Particulars

L.F.

Date

Amount

Rs

Credit

amount

Rs

L’s Capital A/c

Dr.

 

13,000

 

O’s Capital A/c

Dr.

 

11,000

 

To M’s Capital A/c

 

 

24,000

(Adjustment M’s share of goodwill made)

 

 

 

 

 

 

 

Working Note:

WN 1 Calculation of Gaining Ratio

Old Ratio (L, M and O) = 4 : 3 : 2

M retires from the firm.

New Ratio (L and O) = 5 : 3

Gaining RatioNew Ratio − Old Ratio

∴Gaining Ratio = 13 : 11

 

WN 2 Adjustment of Goodwill

Goodwill of the firm = Rs 72,000

This share of goodwill is to be debited to remaining Partners’ Capital Accounts in their gaining ratio (i.e. 13 : 11).

Answer:

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

R’s Capital A/c

Dr.

 

10,000

 

To Q’s Capital A/c

 

 

10,000

(Adjustment of Q’s share of goodwill is made)

 

 

 

Working Notes:

WN 1 Calculation of Gaining Ratio

Old Ratio (P, Q and R) = 2 : 1 : 1

Q retires from the firm.

New Ratio (P and R) = 1 : 1

Gaining RatioNew Ratio − Old Ratio

Here, only R is gaining.

WN 2 Adjustment of Goodwill

Goodwill of the firm = Rs 40,000

Q’s share of goodwill

This share of goodwill is to be debited to R’s Capital Account.

Page No 5.77:

Question 13:

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

R’s Capital A/c

Dr.

 

10,000

 

To Q’s Capital A/c

 

 

10,000

(Adjustment of Q’s share of goodwill is made)

 

 

 

Working Notes:

WN 1 Calculation of Gaining Ratio

Old Ratio (P, Q and R) = 2 : 1 : 1

Q retires from the firm.

New Ratio (P and R) = 1 : 1

Gaining RatioNew Ratio − Old Ratio

Here, only R is gaining.

WN 2 Adjustment of Goodwill

Goodwill of the firm = Rs 40,000

Q’s share of goodwill

This share of goodwill is to be debited to R’s Capital Account.

Answer:

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

A’s Capital A/c

Dr.

 

1,950

 

C’s Capital A/c

Dr.

 

1,650

 

To B’s Capital A/c

 

 

3,600

(Adjustment B’s share of goodwill made)

 

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Gaining Ratio

Old Ratio (A, B and C) = 4 : 3 : 2

B retires from the firm.

New Ratio (A and C) = 5 : 3

Gaining RatioNew Ratio − Old Ratio

∴Gaining Ratio = 13 : 11

WN 2 Adjustment of Goodwill

Goodwill of the firm = Rs 10,800

This share of goodwill is to be debited to remaining Partners’ Capital Accounts in their gaining ratio (i.e. 13 : 11).

Page No 5.77:

Question 14:

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

A’s Capital A/c

Dr.

 

1,950

 

C’s Capital A/c

Dr.

 

1,650

 

To B’s Capital A/c

 

 

3,600

(Adjustment B’s share of goodwill made)

 

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Gaining Ratio

Old Ratio (A, B and C) = 4 : 3 : 2

B retires from the firm.

New Ratio (A and C) = 5 : 3

Gaining RatioNew Ratio − Old Ratio

∴Gaining Ratio = 13 : 11

WN 2 Adjustment of Goodwill

Goodwill of the firm = Rs 10,800

This share of goodwill is to be debited to remaining Partners’ Capital Accounts in their gaining ratio (i.e. 13 : 11).

Answer:

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

A’s Capital A/c

Dr.

 

15,000

 

C’s Capital A/c

Dr.

 

15,000

 

To B’s Capital A/s

 

 

30,000

(Adjustment B’s share of goodwill made)

 

 

 

Working Notes:

WN 1 Calculation of Gaining Ratio

Old Ratio (A, B and C) = 3 : 2 : 1

B retires from the firm.

New Ratio (A and C) = 2 : 1

Gaining RatioNew Ratio − Old Ratio

∴Gaining Ratio = 1 : 1

WN 2 Adjustment of Goodwill

Goodwill of the firm = Rs 90,000

B’s share of goodwill

This share of goodwill is to be debited to remaining Partners’ Capital Accounts in their gaining ratio (i.e. 1 : 1).

Page No 5.77:

Question 15:

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

A’s Capital A/c

Dr.

 

15,000

 

C’s Capital A/c

Dr.

 

15,000

 

To B’s Capital A/s

 

 

30,000

(Adjustment B’s share of goodwill made)

 

 

 

Working Notes:

WN 1 Calculation of Gaining Ratio

Old Ratio (A, B and C) = 3 : 2 : 1

B retires from the firm.

New Ratio (A and C) = 2 : 1

Gaining RatioNew Ratio − Old Ratio

∴Gaining Ratio = 1 : 1

WN 2 Adjustment of Goodwill

Goodwill of the firm = Rs 90,000

B’s share of goodwill

This share of goodwill is to be debited to remaining Partners’ Capital Accounts in their gaining ratio (i.e. 1 : 1).

Answer:

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

Naresh’s Capital A/c

Dr.

 

15,000

 

Yogesh’s Capital A/c

Dr.

 

15,000

 

To Mukesh’s Capital A/c

 

 

30,000

(Adjustment Mukesh’s share of goodwill made)

 

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Gaining Ratio

Old Ratio = 2 : 2 : 1 : 1

Mukesh retires from the firm.

New Ratio = 1 : 1 : 1

Gaining RatioNew Ratio − Old Ratio

∴Gaining Ratio (Naresh and Yogesh) = 1 : 1

WN 2 Adjustment of Goodwill

Goodwill of the firm = Rs 90,000

Mukesh’s share of goodwill

This share of goodwill is to be debited to remaining Partners’ Capital Accounts in their gaining ratio (i.e. 1 : 1).

Page No 5.77:

Question 16:

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

Naresh’s Capital A/c

Dr.

 

15,000

 

Yogesh’s Capital A/c

Dr.

 

15,000

 

To Mukesh’s Capital A/c

 

 

30,000

(Adjustment Mukesh’s share of goodwill made)

 

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Gaining Ratio

Old Ratio = 2 : 2 : 1 : 1

Mukesh retires from the firm.

New Ratio = 1 : 1 : 1

Gaining RatioNew Ratio − Old Ratio

∴Gaining Ratio (Naresh and Yogesh) = 1 : 1

WN 2 Adjustment of Goodwill

Goodwill of the firm = Rs 90,000

Mukesh’s share of goodwill

This share of goodwill is to be debited to remaining Partners’ Capital Accounts in their gaining ratio (i.e. 1 : 1).

Answer:

Journal

 

Date

Particulars

L.F.

Debit

Amount

Rs

Credit Amount

Rs

 

A’s Capital A/c

Dr.

 

5,850

 

 

C’s Capital A/c

Dr.

 

4,950

 

 

    To B’s Capital A/c

 

 

 

10,800

 

(Adjustment of B’s share of goodwill)

 

 

 

 


Working Notes

  1. Calculation of B’s share of goodwill

A, B and C are sharing profits in ratio 4/9 : 3/9 : 2/9
B retires from the firm. Remaining partners agreed to pay him Rs 1,50,000
B’s capital after making necessary adjustments Rs 1,39,200
Therefore, Hidden Goodwill is Rs (1,50,000 – 1,39,200) i.e. Rs 10,800
ii Gaining Ratio
New profit sharing ratio between A and B is 5:3



Thus, B’s share of goodwill will be brought in by A and C in the gaining ratio 13:11 i.e.

Page No 5.77:

Question 17:

Journal

 

Date

Particulars

L.F.

Debit

Amount

Rs

Credit Amount

Rs

 

A’s Capital A/c

Dr.

 

5,850

 

 

C’s Capital A/c

Dr.

 

4,950

 

 

    To B’s Capital A/c

 

 

 

10,800

 

(Adjustment of B’s share of goodwill)

 

 

 

 


Working Notes

  1. Calculation of B’s share of goodwill

A, B and C are sharing profits in ratio 4/9 : 3/9 : 2/9
B retires from the firm. Remaining partners agreed to pay him Rs 1,50,000
B’s capital after making necessary adjustments Rs 1,39,200
Therefore, Hidden Goodwill is Rs (1,50,000 – 1,39,200) i.e. Rs 10,800
ii Gaining Ratio
New profit sharing ratio between A and B is 5:3



Thus, B’s share of goodwill will be brought in by A and C in the gaining ratio 13:11 i.e.

Answer:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Plant and Machinery (40,000 × 10%)

4,000

Building (1,00,000 × 20%)

20,000

Provision for Doubtful Debts

1,000

Stock of Finished Goods

5,000

Stock of Raw Materials

2,000

Computer

2,000

Workmen’s Compensation Claim

5,000

 

 

Profit transferred to:

 

 

 

  A’s Capital A/c

6,000

 

 

 

B’s Capital A/c

6,000

 

 

 

C’s Capital A/c

3,000

15,000

 

 

 

27,000

 

27,000

 

 

 

 

 

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

Building A/c     

Dr.

 

20,000

 

Stock of Finished Good A/c

Dr.

 

5,000

 

Computer A/c

Dr.

 

2,000

 

To Revaluation A/c

 

 

27,000

(Increase in value Assets transferred to Revaluation Account)

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

12,000

 

To Plant and Machinery A/c

 

 

4,000

To Provision for Doubtful Debts A/c

 

 

1,000

To Stock of Raw Material A/c

 

 

2,000

To Workmen’s Compensation Claim A/c

 

 

5,000

( Decrease in value of Assets and increase in Liabilities transferred to Revaluation Account)

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

15,000

 

To A’s Capital A/c

 

 

6,000

To B’s Capital A/c

 

 

6,000

To C’s Capital A/c

 

 

3,000

(Revalution Profit transferred to Partners’ Capital accounts)

 

 

 

 

 

 

 

 



Page No 5.78:

Question 18:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Plant and Machinery (40,000 × 10%)

4,000

Building (1,00,000 × 20%)

20,000

Provision for Doubtful Debts

1,000

Stock of Finished Goods

5,000

Stock of Raw Materials

2,000

Computer

2,000

Workmen’s Compensation Claim

5,000

 

 

Profit transferred to:

 

 

 

  A’s Capital A/c

6,000

 

 

 

B’s Capital A/c

6,000

 

 

 

C’s Capital A/c

3,000

15,000

 

 

 

27,000

 

27,000

 

 

 

 

 

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

Building A/c     

Dr.

 

20,000

 

Stock of Finished Good A/c

Dr.

 

5,000

 

Computer A/c

Dr.

 

2,000

 

To Revaluation A/c

 

 

27,000

(Increase in value Assets transferred to Revaluation Account)

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

12,000

 

To Plant and Machinery A/c

 

 

4,000

To Provision for Doubtful Debts A/c

 

 

1,000

To Stock of Raw Material A/c

 

 

2,000

To Workmen’s Compensation Claim A/c

 

 

5,000

( Decrease in value of Assets and increase in Liabilities transferred to Revaluation Account)

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

15,000

 

To A’s Capital A/c

 

 

6,000

To B’s Capital A/c

 

 

6,000

To C’s Capital A/c

 

 

3,000

(Revalution Profit transferred to Partners’ Capital accounts)

 

 

 

 

 

 

 

 

Answer:

Revaluation of assets and liabilities is made at the time of Ramesh’s retirement and not after his retirement. Therefore, profits on revaluation will be distributed among all the partners in their old profit sharing ratio. In the absence of partnership deed, profits are distributed equally among all the partners.

Therefore, Profit Share of each Partner =

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

Revaluation A/c

Dr.

 

12000

 

To Ramesh’s Capital A/c

 

 

4000

To Mohan’s Capital A/c

 

 

4000

To Rahul’s Capital A/c

 

 

4000

(Revaluation profit distributed among all the partners in their old ratio)

 

 

 

 

 

 

 

 

Page No 5.78:

Question 19:

Revaluation of assets and liabilities is made at the time of Ramesh’s retirement and not after his retirement. Therefore, profits on revaluation will be distributed among all the partners in their old profit sharing ratio. In the absence of partnership deed, profits are distributed equally among all the partners.

Therefore, Profit Share of each Partner =

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

Revaluation A/c

Dr.

 

12000

 

To Ramesh’s Capital A/c

 

 

4000

To Mohan’s Capital A/c

 

 

4000

To Rahul’s Capital A/c

 

 

4000

(Revaluation profit distributed among all the partners in their old ratio)

 

 

 

 

 

 

 

 

Answer:

Journal

Date

Particulars

L.F.

Debit

Amount

(Rs)

Credit

Amount

(Rs)

 

General Reserve A/c

Dr.

 

1,80,000

 

 

Workmen Compensation Reserve A/c

Dr.

 

24,000

 

 

  To X’s Capital A/c

 

 

 

1,02,000

 

  To Y’s Capital A/c

 

 

 

68,000

 

  To Z’s Capital A/c

 

 

 

34,000

 

(Accumulated profits distributed among partners in old ratio)

 

 

 

 

 

 

 

 

 

 

 

X’s Capital A/c

Dr.

 

15,000

 

 

Y’s Capital A/c

Dr.

 

10,000

 

 

Z’s Capital A/c

Dr.

 

5,000

 

 

  To Profit and Loss A/c

 

 

 

30,000

 

(Debit balance in Profit and Loss A/c distributed among partners in old ratio)

 

 

 

 

 

 

 

 

 

Working Notes:

WN1: Calculation of Share in Credit Balance of Reserves

Total Credit Balance of Reserves = General Reserve + WCF

                                                = 1,80,000 + 24,000 = 2,04,000

 

WN2: Calculation of Share in Debit Balance of Profit and Loss A/c

Note: Employees’ Provident Fund will not be distributed as it is a liability and not accumulated profit.

Page No 5.78:

Question 20:

Journal

Date

Particulars

L.F.

Debit

Amount

(Rs)

Credit

Amount

(Rs)

 

General Reserve A/c

Dr.

 

1,80,000

 

 

Workmen Compensation Reserve A/c

Dr.

 

24,000

 

 

  To X’s Capital A/c

 

 

 

1,02,000

 

  To Y’s Capital A/c

 

 

 

68,000

 

  To Z’s Capital A/c

 

 

 

34,000

 

(Accumulated profits distributed among partners in old ratio)

 

 

 

 

 

 

 

 

 

 

 

X’s Capital A/c

Dr.

 

15,000

 

 

Y’s Capital A/c

Dr.

 

10,000

 

 

Z’s Capital A/c

Dr.

 

5,000

 

 

  To Profit and Loss A/c

 

 

 

30,000

 

(Debit balance in Profit and Loss A/c distributed among partners in old ratio)

 

 

 

 

 

 

 

 

 

Working Notes:

WN1: Calculation of Share in Credit Balance of Reserves

Total Credit Balance of Reserves = General Reserve + WCF

                                                = 1,80,000 + 24,000 = 2,04,000

 

WN2: Calculation of Share in Debit Balance of Profit and Loss A/c

Note: Employees’ Provident Fund will not be distributed as it is a liability and not accumulated profit.

Answer:

C’s Capital Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

C’s Loan A/c

7,700

Balance b/d

6,000

 

 

C’s Current A/c

1,700

 

7,700

 

7,700

 

 

 

 

 

C’s Current Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Balance b/d

500

Profit and Loss Suspense A/c (Share of profit) (WN 1)

550

C’s Capital A/c (balancing figure)

1,700

D’s Current A/c (Share of goodwill) (WN 2)

1,650

 

2,200

 

2,200

 

 

 

 

Working Notes:

WN 1 Calculation of Profit (from April 01, 2014 to Sept. 30, 2014)

WN 2 Calculation of Goodwill 

Goodwill = Average Profit × 1.5

= 2,200 × 1.5 = Rs 3,300

C’s Share of Goodwill

Page No 5.78:

Question 21:

C’s Capital Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

C’s Loan A/c

7,700

Balance b/d

6,000

 

 

C’s Current A/c

1,700

 

7,700

 

7,700

 

 

 

 

 

C’s Current Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Balance b/d

500

Profit and Loss Suspense A/c (Share of profit) (WN 1)

550

C’s Capital A/c (balancing figure)

1,700

D’s Current A/c (Share of goodwill) (WN 2)

1,650

 

2,200

 

2,200

 

 

 

 

Working Notes:

WN 1 Calculation of Profit (from April 01, 2014 to Sept. 30, 2014)

WN 2 Calculation of Goodwill 

Goodwill = Average Profit × 1.5

= 2,200 × 1.5 = Rs 3,300

C’s Share of Goodwill

Answer:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Bad Debts

2,000

Loss transferred to:

 

Patents

9,000

X’s Capital A/c

4,400

 

 

 

Y’s Capital A/c

4,400

 

 

 

Z’s Capital A/c

2,200

11,000

 

11,000

 

11,000

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

X

Y

Z

Particulars

X

Y

Z

Revaluation A/c (Loss)

4,400

4,400

2,200

Balance b/d

82,000

60,000

75,500

Y’s Capital A/c (Goodwill)

18,667

9,333

Reserve

(Old Ratio)

7,400

7,400

3,700

Y’s Loan A/c

91,000

X’s Capital A/c  (Goodwill)

18,667

Balance c/d

66,333

67,667

Z’s Capital A/c

(Goodwill)

9,333

 

89,400

95,400

79,200

 

89,400

95,400

79,200

 

 

 

 

 

 

 

 

 

Balance Sheet

as on March 31, 2014 (after Y’s Retirement)

Liabilities

Amount

Rs

Assets

Amount

Rs

Creditors

49,000

Cash

8,000

Y’s Loan

91,000

Debtors (19000-2000)

17,000

Capital A/cs:

 

Stock

42,000

X

66,333

 

Building

2,07,000

Z

67,667

1,34,000

 

 

 

2,74,000

 

2,74,000

 

 

 

 

Working Notes:

WN 1 Calculation of Gaining Ratio

Old Ratio (X, Y and Z) = 2 : 2 : 1

Y retires from the firm.

∴Gaining Ratio = 2 : 1

WN 2 Adjustment of Goodwill

Goodwill of the firm = Rs 70,000

Y’s Share of Goodwill =

This share of goodwill is to be distributed between X and Z in their gaining ratio (i.e. 2 : 1).

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

X’s Capital A/c

Dr.

 

18,667

 

Z’s Capital A/c

Dr.

 

9,333

 

To Y’s Capital A/c

 

 

28,000

(Adjustment of goodwill made on Y’s retirement)

 

 

 

 

 

 

 

 



Page No 5.79:

Question 22:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Bad Debts

2,000

Loss transferred to:

 

Patents

9,000

X’s Capital A/c

4,400

 

 

 

Y’s Capital A/c

4,400

 

 

 

Z’s Capital A/c

2,200

11,000

 

11,000

 

11,000

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

X

Y

Z

Particulars

X

Y

Z

Revaluation A/c (Loss)

4,400

4,400

2,200

Balance b/d

82,000

60,000

75,500

Y’s Capital A/c (Goodwill)

18,667

9,333

Reserve

(Old Ratio)

7,400

7,400

3,700

Y’s Loan A/c

91,000

X’s Capital A/c  (Goodwill)

18,667

Balance c/d

66,333

67,667

Z’s Capital A/c

(Goodwill)

9,333

 

89,400

95,400

79,200

 

89,400

95,400

79,200

 

 

 

 

 

 

 

 

 

Balance Sheet

as on March 31, 2014 (after Y’s Retirement)

Liabilities

Amount

Rs

Assets

Amount

Rs

Creditors

49,000

Cash

8,000

Y’s Loan

91,000

Debtors (19000-2000)

17,000

Capital A/cs:

 

Stock

42,000

X

66,333

 

Building

2,07,000

Z

67,667

1,34,000

 

 

 

2,74,000

 

2,74,000

 

 

 

 

Working Notes:

WN 1 Calculation of Gaining Ratio

Old Ratio (X, Y and Z) = 2 : 2 : 1

Y retires from the firm.

∴Gaining Ratio = 2 : 1

WN 2 Adjustment of Goodwill

Goodwill of the firm = Rs 70,000

Y’s Share of Goodwill =

This share of goodwill is to be distributed between X and Z in their gaining ratio (i.e. 2 : 1).

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

X’s Capital A/c

Dr.

 

18,667

 

Z’s Capital A/c

Dr.

 

9,333

 

To Y’s Capital A/c

 

 

28,000

(Adjustment of goodwill made on Y’s retirement)

 

 

 

 

 

 

 

 

Answer:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount Rs

Particulars

Amount

Rs

Plant (35,000 × 10%)

3,500

Stock (25,000 × 20%)

5,000

Motor Vans (8,000 × 15%)

1,200

Building (45,000 × 10%)

4,500

Provision for Doubtful Debts

1,950

 

 

Profit transferred to:

 

 

 

X’s Capital A/c

1,425

 

 

 

Y’s Capital A/c

950

 

 

 

Z’s Capital A/c

475

2,850

 

 

 

9,500

 

9,500

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

X

Y

Z

Particulars

X

Y

Z

Y’s Capital A/c

4,500

 

1,500

Balance b/d

40,000

30,000

25,000

Y’s Loan A/c

 

40,950

 

Reserve Fund

6,000

4,000

2,000

 

 

 

 

Revaluation A/c (Profit)

1,425

950

475

Balance c/d

42,925

 

25,975

X’s Capital A/c (Goodwill)

 

4,500

 

 

 

 

 

Z’s Capital A/c (Goodwill)

 

1,500

 

 

47,425

40,950

27,425

 

47,425

40,950

27,425

 

 

 

 

 

 

 

 

 

Balance Sheet

as on April 01, 2014 (after Y’s Retirement)

Liabilities

Amount

Assets

Amount

Sundry Creditors

24,000

Cash at Bank

2,500

Y’s Loan

40,950

Debtors

 

16,000

 

 

Capital A/cs:

 

 

Less: Provision for Doubtful Debts (500 + 1,950)

 

(2,450)

 

13,550

X

42,925

 

Stock (25,000 + 5,000)

30,000

Z

25,975

68,900

Motor Vans (8,000 – 1,200)

6,800

 

 

Plant and Machinery (35,000 – 3,500)

31,500

 

 

Factory Building (4,5000 + 4,500)

49,500

 

1,33,850

 

1,33,850

 

 

 

 


Values involved are:

  1. Charity
  2. Fulfilling responsibility towards nation.
  3. Helping the firm for meeting requirement of funds

Working Notes:

WN 1 Calculation of Gaining Ratio

Old Ratio (X, Y and Z) = or 3 : 2 : 1

Y retires from the firm.

New Ratio (X and Z) = 3: 1

Gaining RatioNew Ratio − Old Ratio

∴Gaining Ratio = 3 : 1

WN 2 Adjustment of Goodwill

Goodwill of the firm = Rs 18,000

Y’s Share of Goodwill =

This share of goodwill is to be distributed between X and Z in their gaining ratio (i.e. 3 : 1).

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

X’s Capital A/c

Dr.

 

4,500

 

Z’s Capital A/c

Dr.

 

1,500

 

To Y’s Capital A/c

 

 

6,000

(Adjustment of goodwill made on Y’s retirement)

 

 

 

 

 

 

 

 

Page No 5.79:

Question 23:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount Rs

Particulars

Amount

Rs

Plant (35,000 × 10%)

3,500

Stock (25,000 × 20%)

5,000

Motor Vans (8,000 × 15%)

1,200

Building (45,000 × 10%)

4,500

Provision for Doubtful Debts

1,950

 

 

Profit transferred to:

 

 

 

X’s Capital A/c

1,425

 

 

 

Y’s Capital A/c

950

 

 

 

Z’s Capital A/c

475

2,850

 

 

 

9,500

 

9,500

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

X

Y

Z

Particulars

X

Y

Z

Y’s Capital A/c

4,500

 

1,500

Balance b/d

40,000

30,000

25,000

Y’s Loan A/c

 

40,950

 

Reserve Fund

6,000

4,000

2,000

 

 

 

 

Revaluation A/c (Profit)

1,425

950

475

Balance c/d

42,925

 

25,975

X’s Capital A/c (Goodwill)

 

4,500

 

 

 

 

 

Z’s Capital A/c (Goodwill)

 

1,500

 

 

47,425

40,950

27,425

 

47,425

40,950

27,425

 

 

 

 

 

 

 

 

 

Balance Sheet

as on April 01, 2014 (after Y’s Retirement)

Liabilities

Amount

Assets

Amount

Sundry Creditors

24,000

Cash at Bank

2,500

Y’s Loan

40,950

Debtors

 

16,000

 

 

Capital A/cs:

 

 

Less: Provision for Doubtful Debts (500 + 1,950)

 

(2,450)

 

13,550

X

42,925

 

Stock (25,000 + 5,000)

30,000

Z

25,975

68,900

Motor Vans (8,000 – 1,200)

6,800

 

 

Plant and Machinery (35,000 – 3,500)

31,500

 

 

Factory Building (4,5000 + 4,500)

49,500

 

1,33,850

 

1,33,850

 

 

 

 


Values involved are:

  1. Charity
  2. Fulfilling responsibility towards nation.
  3. Helping the firm for meeting requirement of funds

Working Notes:

WN 1 Calculation of Gaining Ratio

Old Ratio (X, Y and Z) = or 3 : 2 : 1

Y retires from the firm.

New Ratio (X and Z) = 3: 1

Gaining RatioNew Ratio − Old Ratio

∴Gaining Ratio = 3 : 1

WN 2 Adjustment of Goodwill

Goodwill of the firm = Rs 18,000

Y’s Share of Goodwill =

This share of goodwill is to be distributed between X and Z in their gaining ratio (i.e. 3 : 1).

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

X’s Capital A/c

Dr.

 

4,500

 

Z’s Capital A/c

Dr.

 

1,500

 

To Y’s Capital A/c

 

 

6,000

(Adjustment of goodwill made on Y’s retirement)

 

 

 

 

 

 

 

 

Answer:

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

Revaluation A/c

Dr.

 

3,900

 

To Investments A/c

 

 

300

To Stock A/c

 

 

600

To Provision For Doubtful Debts A/c

 

 

1000

To Trademark A/c

 

 

2000

(Decrease in value of Assets and Provision for Doubt Debts transferred to Revaluation Account)

 

 

 

 

 

 

 

 

Freehold Property A/c

Dr.

 

18,000

 

Creditors A/c

Dr.

 

1,200

 

To Revaluation A/c

 

 

19,200

(Increase in value of Freehold Property and decrease in creditors transferred to Revaluation Account)

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

15,300

 

To X’s Capital A/c

 

 

5,100

To Y’s Capital A/c

 

 

5,100

To Z’s Capital A/c

 

 

5,100

(Revaluation profit distributed among X,Y and Z in their old ratio)

 

 

 

 

 

 

 

 

General Reserve A/c

Dr.

 

6,000

 

To X’s Capital A/c

 

 

2,000

To Y’s Capital A/c

 

 

2,000

To Z’s Capital A/c

 

 

2,000

(General Reserve distributed among X,Y and Z in their old ratio )

 

 

 

 

 

 

 

 

X’s Capital A/c

Dr.

 

1,100

 

Y’s Capital A/c

Dr.

 

1,100

 

Z’s Capital A/c

Dr.

 

1,100

 

To Goodwill A/c

 

 

3,300

(Goodwill written off)

 

 

 

 

 

 

 

X’s Capital A/c

Dr.

 

1,750

 

Y’s Capital A/c

Dr.

 

1,750

 

To Z’s Capital A/c

 

 

3,500

(Adjustment of Goodwill made at the time of  Z’s retirement )

 

 

 

 

 

 

 

 

Z’s Capital A/c

Dr.

 

29,500

 

To Z’s Loan A/c

 

 

29,500

(Z’s capital balance transferred to his loan account)

 

 

 

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

X

Y

Z

Particulars

X

Y

Z

Goodwill A/c

1,100

1,100

1,100

Balance B/d

30,000

20,000

20,000

Y’s Capital A/c (Goodwill)

1,750

1,750

 

General Reserve

2,000

2,000

2,000

Z’s Loan

 

 

29,500

X’s Capital A/c (Goodwill)

 

 

1,750

 

 

 

 

Y’s Capital A/c (Goodwill)

 

 

1,750

Balance c/d

34,250

24,250

 

Revaluation A/c (Profit)

5,100

5,100

5,100

 

37,100

27,100

30,600

 

37,100

27,100

30,600

 

 

 

 

 

 

 

 

 

Balance Sheet

as on April 01, 2014 (after Z’s Retirement)

Liabilities

Amount

Rs

Assets

Amount

Rs

Creditors (10,900 – 1,200)

9,700

Cash in Hand and Cash at Bank

8,600

 

 

Debtors

20,000

 

Provident Fund

2,000

Less: Provision for Doubtful Debts

(1000)

19,000

Z’s Loan

29,500

Stock

9,400

Capital A/c s:

 

 

 

 

X

34,250

 

Investments

4,700

Y

24,250

58,500

Freehold Property

58,000

 

99,700

 

99,700

 

 

 

 

Working Notes:

WN 1

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Investments

300

Freehold Property

18,000

Stock

600

Creditors

1,200

Provision for Doubtful Debts (20,000 × 5%)

1,000

 

 

Trademarks

2,000

 

 

Profit transferred to:

 

 

 

X’s Capital A/c

5,100

 

 

 

Y’s Capital A/c

5,100

 

 

 

Z’s Capital A/c

5,100

15,300

 

 

 

19,200

 

19,200

 

 

 

 

WN 2 Calculation of Gaining Ratio

Old Ratio (X, Y and Z) = 1 : 1 : 1

Z retires from the firm.

∴Gaining Ratio (X and Y) = 1 : 1

WN 3 Calculation of Goodwill

Goodwill = Average Profit × Number of years purchase

∴Goodwill = 10,500 × 1 = Rs 10,500

WN 4 Adjustment of Goodwill

Z’s Share of Goodwill =

This share of goodwill is to be distributed between X and Y in their gaining ratio (i.e. 1 : 1).



Page No 5.80:

Question 24:

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

Revaluation A/c

Dr.

 

3,900

 

To Investments A/c

 

 

300

To Stock A/c

 

 

600

To Provision For Doubtful Debts A/c

 

 

1000

To Trademark A/c

 

 

2000

(Decrease in value of Assets and Provision for Doubt Debts transferred to Revaluation Account)

 

 

 

 

 

 

 

 

Freehold Property A/c

Dr.

 

18,000

 

Creditors A/c

Dr.

 

1,200

 

To Revaluation A/c

 

 

19,200

(Increase in value of Freehold Property and decrease in creditors transferred to Revaluation Account)

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

15,300

 

To X’s Capital A/c

 

 

5,100

To Y’s Capital A/c

 

 

5,100

To Z’s Capital A/c

 

 

5,100

(Revaluation profit distributed among X,Y and Z in their old ratio)

 

 

 

 

 

 

 

 

General Reserve A/c

Dr.

 

6,000

 

To X’s Capital A/c

 

 

2,000

To Y’s Capital A/c

 

 

2,000

To Z’s Capital A/c

 

 

2,000

(General Reserve distributed among X,Y and Z in their old ratio )

 

 

 

 

 

 

 

 

X’s Capital A/c

Dr.

 

1,100

 

Y’s Capital A/c

Dr.

 

1,100

 

Z’s Capital A/c

Dr.

 

1,100

 

To Goodwill A/c

 

 

3,300

(Goodwill written off)

 

 

 

 

 

 

 

X’s Capital A/c

Dr.

 

1,750

 

Y’s Capital A/c

Dr.

 

1,750

 

To Z’s Capital A/c

 

 

3,500

(Adjustment of Goodwill made at the time of  Z’s retirement )

 

 

 

 

 

 

 

 

Z’s Capital A/c

Dr.

 

29,500

 

To Z’s Loan A/c

 

 

29,500

(Z’s capital balance transferred to his loan account)

 

 

 

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

X

Y

Z

Particulars

X

Y

Z

Goodwill A/c

1,100

1,100

1,100

Balance B/d

30,000

20,000

20,000

Y’s Capital A/c (Goodwill)

1,750

1,750

 

General Reserve

2,000

2,000

2,000

Z’s Loan

 

 

29,500

X’s Capital A/c (Goodwill)

 

 

1,750

 

 

 

 

Y’s Capital A/c (Goodwill)

 

 

1,750

Balance c/d

34,250

24,250

 

Revaluation A/c (Profit)

5,100

5,100

5,100

 

37,100

27,100

30,600

 

37,100

27,100

30,600

 

 

 

 

 

 

 

 

 

Balance Sheet

as on April 01, 2014 (after Z’s Retirement)

Liabilities

Amount

Rs

Assets

Amount

Rs

Creditors (10,900 – 1,200)

9,700

Cash in Hand and Cash at Bank

8,600

 

 

Debtors

20,000

 

Provident Fund

2,000

Less: Provision for Doubtful Debts

(1000)

19,000

Z’s Loan

29,500

Stock

9,400

Capital A/c s:

 

 

 

 

X

34,250

 

Investments

4,700

Y

24,250

58,500

Freehold Property

58,000

 

99,700

 

99,700

 

 

 

 

Working Notes:

WN 1

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Investments

300

Freehold Property

18,000

Stock

600

Creditors

1,200

Provision for Doubtful Debts (20,000 × 5%)

1,000

 

 

Trademarks

2,000

 

 

Profit transferred to:

 

 

 

X’s Capital A/c

5,100

 

 

 

Y’s Capital A/c

5,100

 

 

 

Z’s Capital A/c

5,100

15,300

 

 

 

19,200

 

19,200

 

 

 

 

WN 2 Calculation of Gaining Ratio

Old Ratio (X, Y and Z) = 1 : 1 : 1

Z retires from the firm.

∴Gaining Ratio (X and Y) = 1 : 1

WN 3 Calculation of Goodwill

Goodwill = Average Profit × Number of years purchase

∴Goodwill = 10,500 × 1 = Rs 10,500

WN 4 Adjustment of Goodwill

Z’s Share of Goodwill =

This share of goodwill is to be distributed between X and Y in their gaining ratio (i.e. 1 : 1).

Answer:

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

Revaluation A/c

Dr.

 

4,300

 

To Provision for Doubtful Debts A/c

 

 

300

To Provision for Outstanding Repair Bills  A/c

 

 

4,000

(Provisions transferred to Revaluation Account)

 

 

 

 

 

 

 

Prepaid Insurance A/c

Dr.

 

1,500

 

Land and Building A/c

Dr.

 

10,000

 

To Revaluation A/c

 

 

11,500

(Increase in value of Assets transferred to Revaluation Account)

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

7,200

 

To X’s Capital A/c

 

 

3,600

To Y’s Capital A/c

 

 

2,400

To Z’s Capital A/c

 

 

1,200

( Revaluation profit distributed among X, Y and Z in their old ratio )

 

 

 

 

 

 

 

X’s Capital A/c

Dr.

 

5,400

 

Z’s Capital A/c

Dr.

 

1,800

 

To Y’s Capital A/c

 

 

7,200

(Y’s share of goodwill adjusted)

 

 

 

 

 

 

 

Y’s Capital A/c

Dr.

 

39,600

 

To Y’s loan A/c

 

 

39,600

(Y’s capital balance after all adjustment transferred to his Loan Account)

 

 

 

 

 

 

 

 

Balance Sheet

as on March 31, 2014 (after Y’s Retirement)

Liabilities

Amount

Rs

Assets

Amount

Rs

Sundry Creditors

13,800

Cash at Bank

11,000

Provision for Outstanding Repair Bills

4,000

Sundry Debtors

10,000

 

 

 

Less: Provision for Doubtful Debts

 

(500)

 

9,500

Y’s Loan

39,600

Stock

16,000

Capital A/cs:

 

Prepaid Insurance

1,500

X

43,200

 

Plant and Machinery

17,000

Z

14,400

57,600

Land and Building

60,000

 

1,15,000

 

1,15,000

 

 

 

 

Working Notes:

WN 1

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Provision for Doubtful Debts

 

Prepaid Insurance

1,500

(500 – 200)

300

Land And Building (50,000 × 20%)

10,000

Provision For Outstanding Repairs Bills

4,000

 

 

Profit transferred to:

 

 

 

X’s Capital A/c

3,600

 

 

 

Y’s Capital A/c

2,400

 

 

 

Z’s Capital A/c

1,200

7,200

 

 

 

11,500

 

11,500

 

 

 

 

WN 2

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

X

Y

Z

Particulars

X

Y

Z

Y’s Capital A/c

5,400

 

1,800

Balance b/d

45,000

30,000

15,000

 

 

 

 

Revaluation A/c

3,600

2,400

1,200

Y’s Loan

 

39,600

 

X’s Capital A/c

 

5,400

 

Balance c/d

43,200

 

14,400

Z’s Capital A/c

 

1,800

 

 

48,600

39,600

16,200

 

48,600

39,600

16,200

 

 

 

 

 

 

 

 

WN 3 Calculation of Ratios

∴Old Ratio (X, Y and Z) = 3 : 2 : 1

Y retires from the firm.

New Ratio (X and Z) = 3 : 1

Gaining Ratio = New Ratio − Old Ratio

∴Gaining Ratio = 3 : 1

WN 4 Adjustment of Goodwill

Goodwill of the firm = 21,600

Y’s Share of Goodwill =

This share of goodwill is to be distributed between X and Z in their gaining ratio (i.e. 3 : 1).

Page No 5.80:

Question 25:

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

Revaluation A/c

Dr.

 

4,300

 

To Provision for Doubtful Debts A/c

 

 

300

To Provision for Outstanding Repair Bills  A/c

 

 

4,000

(Provisions transferred to Revaluation Account)

 

 

 

 

 

 

 

Prepaid Insurance A/c

Dr.

 

1,500

 

Land and Building A/c

Dr.

 

10,000

 

To Revaluation A/c

 

 

11,500

(Increase in value of Assets transferred to Revaluation Account)

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

7,200

 

To X’s Capital A/c

 

 

3,600

To Y’s Capital A/c

 

 

2,400

To Z’s Capital A/c

 

 

1,200

( Revaluation profit distributed among X, Y and Z in their old ratio )

 

 

 

 

 

 

 

X’s Capital A/c

Dr.

 

5,400

 

Z’s Capital A/c

Dr.

 

1,800

 

To Y’s Capital A/c

 

 

7,200

(Y’s share of goodwill adjusted)

 

 

 

 

 

 

 

Y’s Capital A/c

Dr.

 

39,600

 

To Y’s loan A/c

 

 

39,600

(Y’s capital balance after all adjustment transferred to his Loan Account)

 

 

 

 

 

 

 

 

Balance Sheet

as on March 31, 2014 (after Y’s Retirement)

Liabilities

Amount

Rs

Assets

Amount

Rs

Sundry Creditors

13,800

Cash at Bank

11,000

Provision for Outstanding Repair Bills

4,000

Sundry Debtors

10,000

 

 

 

Less: Provision for Doubtful Debts

 

(500)

 

9,500

Y’s Loan

39,600

Stock

16,000

Capital A/cs:

 

Prepaid Insurance

1,500

X

43,200

 

Plant and Machinery

17,000

Z

14,400

57,600

Land and Building

60,000

 

1,15,000

 

1,15,000

 

 

 

 

Working Notes:

WN 1

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Provision for Doubtful Debts

 

Prepaid Insurance

1,500

(500 – 200)

300

Land And Building (50,000 × 20%)

10,000

Provision For Outstanding Repairs Bills

4,000

 

 

Profit transferred to:

 

 

 

X’s Capital A/c

3,600

 

 

 

Y’s Capital A/c

2,400

 

 

 

Z’s Capital A/c

1,200

7,200

 

 

 

11,500

 

11,500

 

 

 

 

WN 2

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

X

Y

Z

Particulars

X

Y

Z

Y’s Capital A/c

5,400

 

1,800

Balance b/d

45,000

30,000

15,000

 

 

 

 

Revaluation A/c

3,600

2,400

1,200

Y’s Loan

 

39,600

 

X’s Capital A/c

 

5,400

 

Balance c/d

43,200

 

14,400

Z’s Capital A/c

 

1,800

 

 

48,600

39,600

16,200

 

48,600

39,600

16,200

 

 

 

 

 

 

 

 

WN 3 Calculation of Ratios

∴Old Ratio (X, Y and Z) = 3 : 2 : 1

Y retires from the firm.

New Ratio (X and Z) = 3 : 1

Gaining Ratio = New Ratio − Old Ratio

∴Gaining Ratio = 3 : 1

WN 4 Adjustment of Goodwill

Goodwill of the firm = 21,600

Y’s Share of Goodwill =

This share of goodwill is to be distributed between X and Z in their gaining ratio (i.e. 3 : 1).

Answer:

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

Profit and Loss Adjustment A/c

Dr.

 

6,000

 

To Plant and Machinery A/c

 

 

4,000

To Provision for Doubtful Debts A/c

 

 

1,500

To Furniture A/c

 

 

500

(Decrease in value of Assets and provision for doubtful debts transferred to Profit and Loss Adjustment Account)

 

 

 

 

 

 

 

Stock A/c

Dr.

 

3,750

 

Factory Building A/c

Dr.

 

5,000

 

To Profit and Loss Adjustment A/c

 

 

8,750

( Increase in value of Assets transferred to Profit and Loss Adjustment Account)

 

 

 

 

 

 

 

Profit and Loss Adjustment A/c

Dr.

 

2,750

 

To A’s Capital A/c

 

 

917

To B’s Capital A/c

 

 

1,375

To C’s Capital A/c

 

 

458

( Profit distributed among A, B and C in their old ratio )

 

 

 

 

 

 

 

A’s Capital A/c

Dr.

 

6,400

 

To B’s Capital A/c

 

 

2,400

To C’s Capital A/c

 

 

4,000

(C’s share of goodwill and B’s gain in goodwill adjusted)

 

 

 

 

 

 

 

C’s Capital A/c

Dr.

 

32,125

 

To C’s Loan A/c

 

 

32,125

(C’s capital balance after all adjustment transferred to his Loan Account)

 

 

 

 

 

 

 

Reserve Fund A/c

Dr.

 

16,000

 

To A’s Capital A/c

 

 

5,333

To B’s Capital A/c

 

 

8,000

To C’s Capital A/c

 

 

2,667

(Reserve Fund distributed among partners in their old ratio)

 

 

 

 

 

 

 

 

Profit and Loss Adjustment Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Plant and Machinery

 

Stock (25,000 × 15%)

3,750

(40,000 × 10%)

4,000

Factory Building (50,000 × 10%)

5,000

Furniture (10,000 × 5%))

500

 

 

Provision for Doubtful Debts

 

 

 

(2,000 – 500)

1,500

 

 

Profit transferred to:

 

 

 

A’s Capital A/c

917

 

 

 

B’s Capital A/c

1,375

 

 

 

C’s Capital A/c

458

2,750

 

 

 

 

 

 

 

8,750

 

8,750

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

A

B

C

Particulars

A

B

C

B’s Capital A/c (Goodwill)

2,400

 

 

Balance b/d

30,000

40,000

25,000

C’s Capital A/c (Goodwill)

4,000

 

 

Reserve Fund

5,333

8,000

2,667

C’s Loan A/c

 

 

32,125

Revaluation A/c (Profit)

917

1,375

458

Balance c/d

29,850

51,775

 

A’s Capital A/c (Goodwill)

 

2,400

4,000

 

36,250

51,775

32,125

 

36,250

51,775

32,125

 

 

 

 

 

 

 

 

 

Balance Sheet

as on March 31, 2014 (after C’s Retirement)

Liabilities

Amounts

Rs

Assets

Amounts

Rs

Sundry Creditors

25,000

Factory Building

55,000

Loan Payable

15,000

Plant and Machinery

36,000

C’s Loan

32,125

Furniture

9,500

Capital A/cs:

 

Stock

28,750

A

29,850

 

Debtors

18,000

 

B

51,775

81,625

Less: Provision for Doubtful Debts

(2,000)

16,000

 

 

Cash in Hand

8,500

 

1,53,750

 

1,53,750

 

 

 

 

Working Notes:

WN 1 Calculation of Gaining Ratio

Old Ratio (A, B and C) = or 2 : 3 : 1

C retires from the firm.

New Ratio (A and B) = 3: 2

Gaining RatioNew Ratio − Old Ratio

WN 2 Adjustment of Goodwill

Goodwill of the firm = Rs 24,000

C’s Share of Goodwill =

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

A

B

C

Particulars

A

B

C

C’s Capital A/c (Goodwill)

1,600

2,400

 

Balance b/d

30,000

40,000

25,000

 

 

 

 

Reserve Fund

5,333

8,000

2,667

B’s Loan A/c

 

 

32,125

Revaluation A/c (Profit)

917

1,375

458

Balance c/d

34,650

46,975

 

A’s Capital A/c (Goodwill)

 

 

4,000

 

36,250

49,375

32,125

 

36,250

49,375

32,125

 

 

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Gaining Ratio

Old Ratio (A, B and C) = or 2 : 3 : 1

C retires from the firm.

New Ratio (A and B) = 2: 3

Gaining RatioNew Ratio − Old Ratio

WN 2 Adjustment of Goodwill

Goodwill of the firm = Rs 24,000

C’s Share of Goodwill =



Page No 5.81:

Question 26:

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

Profit and Loss Adjustment A/c

Dr.

 

6,000

 

To Plant and Machinery A/c

 

 

4,000

To Provision for Doubtful Debts A/c

 

 

1,500

To Furniture A/c

 

 

500

(Decrease in value of Assets and provision for doubtful debts transferred to Profit and Loss Adjustment Account)

 

 

 

 

 

 

 

Stock A/c

Dr.

 

3,750

 

Factory Building A/c

Dr.

 

5,000

 

To Profit and Loss Adjustment A/c

 

 

8,750

( Increase in value of Assets transferred to Profit and Loss Adjustment Account)

 

 

 

 

 

 

 

Profit and Loss Adjustment A/c

Dr.

 

2,750

 

To A’s Capital A/c

 

 

917

To B’s Capital A/c

 

 

1,375

To C’s Capital A/c

 

 

458

( Profit distributed among A, B and C in their old ratio )

 

 

 

 

 

 

 

A’s Capital A/c

Dr.

 

6,400

 

To B’s Capital A/c

 

 

2,400

To C’s Capital A/c

 

 

4,000

(C’s share of goodwill and B’s gain in goodwill adjusted)

 

 

 

 

 

 

 

C’s Capital A/c

Dr.

 

32,125

 

To C’s Loan A/c

 

 

32,125

(C’s capital balance after all adjustment transferred to his Loan Account)

 

 

 

 

 

 

 

Reserve Fund A/c

Dr.

 

16,000

 

To A’s Capital A/c

 

 

5,333

To B’s Capital A/c

 

 

8,000

To C’s Capital A/c

 

 

2,667

(Reserve Fund distributed among partners in their old ratio)

 

 

 

 

 

 

 

 

Profit and Loss Adjustment Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Plant and Machinery

 

Stock (25,000 × 15%)

3,750

(40,000 × 10%)

4,000

Factory Building (50,000 × 10%)

5,000

Furniture (10,000 × 5%))

500

 

 

Provision for Doubtful Debts

 

 

 

(2,000 – 500)

1,500

 

 

Profit transferred to:

 

 

 

A’s Capital A/c

917

 

 

 

B’s Capital A/c

1,375

 

 

 

C’s Capital A/c

458

2,750

 

 

 

 

 

 

 

8,750

 

8,750

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

A

B

C

Particulars

A

B

C

B’s Capital A/c (Goodwill)

2,400

 

 

Balance b/d

30,000

40,000

25,000

C’s Capital A/c (Goodwill)

4,000

 

 

Reserve Fund

5,333

8,000

2,667

C’s Loan A/c

 

 

32,125

Revaluation A/c (Profit)

917

1,375

458

Balance c/d

29,850

51,775

 

A’s Capital A/c (Goodwill)

 

2,400

4,000

 

36,250

51,775

32,125

 

36,250

51,775

32,125

 

 

 

 

 

 

 

 

 

Balance Sheet

as on March 31, 2014 (after C’s Retirement)

Liabilities

Amounts

Rs

Assets

Amounts

Rs

Sundry Creditors

25,000

Factory Building

55,000

Loan Payable

15,000

Plant and Machinery

36,000

C’s Loan

32,125

Furniture

9,500

Capital A/cs:

 

Stock

28,750

A

29,850

 

Debtors

18,000

 

B

51,775

81,625

Less: Provision for Doubtful Debts

(2,000)

16,000

 

 

Cash in Hand

8,500

 

1,53,750

 

1,53,750

 

 

 

 

Working Notes:

WN 1 Calculation of Gaining Ratio

Old Ratio (A, B and C) = or 2 : 3 : 1

C retires from the firm.

New Ratio (A and B) = 3: 2

Gaining RatioNew Ratio − Old Ratio

WN 2 Adjustment of Goodwill

Goodwill of the firm = Rs 24,000

C’s Share of Goodwill =

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

A

B

C

Particulars

A

B

C

C’s Capital A/c (Goodwill)

1,600

2,400

 

Balance b/d

30,000

40,000

25,000

 

 

 

 

Reserve Fund

5,333

8,000

2,667

B’s Loan A/c

 

 

32,125

Revaluation A/c (Profit)

917

1,375

458

Balance c/d

34,650

46,975

 

A’s Capital A/c (Goodwill)

 

 

4,000

 

36,250

49,375

32,125

 

36,250

49,375

32,125

 

 

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Gaining Ratio

Old Ratio (A, B and C) = or 2 : 3 : 1

C retires from the firm.

New Ratio (A and B) = 2: 3

Gaining RatioNew Ratio − Old Ratio

WN 2 Adjustment of Goodwill

Goodwill of the firm = Rs 24,000

C’s Share of Goodwill =

Answer:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Machinery (8,000 × 10%)

800

Expenses Owing (4,500 –3,750)

750

Loose Tools (4,000 × 10%)

400

Factory Premises (24,300 – 22,500)

1,800

Profit transferred to:

 

 

 

X’s Capital A/c

675

 

 

 

Y’s Capital A/c

450

 

 

 

Z’s Capital A/c

225

1,350

 

 

 

2,550

 

2,550

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

X

Y

Z

Particulars

X

Y

Z

Y’s Capital A/c (Goodwill)

3,375

 

1,125

Balance b/d

15,000

15,000

15,000

 

 

 

 

Reserve Fund

6,750

4,500

2,250

Y’s Loan A/c

 

24,450

 

Revaluation A/c

675

450

225

 

 

 

 

X’s Capital A/c  (Goodwill)

 

3,375

 

Balance c/d

19,050

 

16,350

Z’s Capital A/c (Goodwill)

 

1,125

 

 

22,425

24,450

17,475

 

22,425

24,450

17,475

 

 

 

 

 

 

 

 

 

Balance Sheet

as on January 01, 2014 (after Y’s Retirement)

Liabilities

Amount

Rs

Assets

Amount

Rs

Trade Creditors

3,000

Cash in Hand

1,500

Bills Payable

4,500

Cash at Bank

7,500

Expenses Owing

3,750

Debtors

15,000

Y’s Loan

24,450

Stock

12,000

Capital A/c

 

Factory Premises

24,300

X

19,050

 

Machinery (8000 – 800)

7,200

Z

16,350

35,400

Loss tools (4,000 – 400)

3,600

 

71,100

 

71,100

 

 

 

 

Working Notes:

WN 1 Calculation of Gaining Ratio

Old Ratio (X, Y and Z) = 3 : 2 : 1

Y retires from the firm.

∴Gaining Ratio = 3: 1

WN 2 Adjustment of Goodwill

Goodwill of the firm = Rs 13,500

Y’s Share of Goodwill =

This share of goodwill is to be distributed between X and Z in their gaining ratio (i.e. 3 : 1).

Page No 5.81:

Question 27:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Machinery (8,000 × 10%)

800

Expenses Owing (4,500 –3,750)

750

Loose Tools (4,000 × 10%)

400

Factory Premises (24,300 – 22,500)

1,800

Profit transferred to:

 

 

 

X’s Capital A/c

675

 

 

 

Y’s Capital A/c

450

 

 

 

Z’s Capital A/c

225

1,350

 

 

 

2,550

 

2,550

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

X

Y

Z

Particulars

X

Y

Z

Y’s Capital A/c (Goodwill)

3,375

 

1,125

Balance b/d

15,000

15,000

15,000

 

 

 

 

Reserve Fund

6,750

4,500

2,250

Y’s Loan A/c

 

24,450

 

Revaluation A/c

675

450

225

 

 

 

 

X’s Capital A/c  (Goodwill)

 

3,375

 

Balance c/d

19,050

 

16,350

Z’s Capital A/c (Goodwill)

 

1,125

 

 

22,425

24,450

17,475

 

22,425

24,450

17,475

 

 

 

 

 

 

 

 

 

Balance Sheet

as on January 01, 2014 (after Y’s Retirement)

Liabilities

Amount

Rs

Assets

Amount

Rs

Trade Creditors

3,000

Cash in Hand

1,500

Bills Payable

4,500

Cash at Bank

7,500

Expenses Owing

3,750

Debtors

15,000

Y’s Loan

24,450

Stock

12,000

Capital A/c

 

Factory Premises

24,300

X

19,050

 

Machinery (8000 – 800)

7,200

Z

16,350

35,400

Loss tools (4,000 – 400)

3,600

 

71,100

 

71,100

 

 

 

 

Working Notes:

WN 1 Calculation of Gaining Ratio

Old Ratio (X, Y and Z) = 3 : 2 : 1

Y retires from the firm.

∴Gaining Ratio = 3: 1

WN 2 Adjustment of Goodwill

Goodwill of the firm = Rs 13,500

Y’s Share of Goodwill =

This share of goodwill is to be distributed between X and Z in their gaining ratio (i.e. 3 : 1).

Answer:

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs.

Revaluation A/c

Dr.

 

350

 

To Provision for Doubtful Debts A/c

 

 

350

( Provision for doubtful debts created)

 

 

 

 

 

 

 

Building A/c

Dr.

 

8,800

 

To Revaluation A/c

 

 

8,800

(Increase in value of Building transferred to Revaluation Account)

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

8,450

 

To R’s Capital A/c

 

 

4,225

To S’s Capital A/c

 

 

2,817

To M's Capital A/c

 

 

1,408

(Revaluation profit distributed between partners in their old ratio)

 

 

 

 

 

 

 

R’ Capital A/c

Dr.

 

2,250

 

M’s Capital A/c

Dr.

 

7,50

 

To S’s Capital

 

 

3,000

( S’s share of goodwill adjusted)

 

 

 

 

 

 

 

S’s Capital A/c

Dr.

 

13,317

 

To 6% Loan A/c

 

 

8,317

To Bank A/c

 

 

5,000

(Rs 5,000 paid to S and balance of S’s Capital transferred to his Loan Account)

 

 

 

 

Balance Sheet

as on March 31, 2014 (after S’s Retirement)

Liabilities

Amount

Rs

Assets

Amount

Rs

Sundry Creditors

16,000

Building (23,000 + 8,800)

31,800

 

 

Debtors

7,000

 

 

 

Less: Provision for Doubtful Debts

 

(350)

 

6,650

S’S Loan

8,317

Stock

12,000

Capital A/cs:

 

Patents

8,000

R

21,975

 

 

 

M

13,158

35,133

Bank (6,000 – 5,000)

1,000

 

59,450

 

59,450

 

 

 

 

Working Notes:

WN 1 Calculation of Gaining Ratio

Old Ratio (R, S and M) = 3 : 2 : 1

S retires from the firm.

∴Gaining Ratio = 3: 1

WN 2 Adjustment of Goodwill

Goodwill of the firm = Rs 9,000

S’s Share of Goodwill =

This share of goodwill is to be distributed between R and M in their gaining ratio (i.e. 3 : 1).

WN 3

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Provision for Doubtful Debts (7000 × 5%)

350

Building

8,800

Profit transferred to:

 

 

 

R’s Capital A/c

4,225

 

 

 

S’s Capital A/c

2,817

 

 

 

M’s Capital A/c

1,408

8,450

 

 

 

8,800

 

8,800

 

 

 

 

WN 4

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

R

S

M

Particulars

R

S

M

S’s Capital A/c

2,250

 

750

Balance b/d

20,000

7,500

12,500

Bank A/c

 

5,000

 

Revaluation A/c

4,225

2,817

1,408

6% S’s Loan A/c

 

8,317

 

R’s Capital A/c

 

2,250

 

Balance c/d

21,975

 

13,158

M’s Capital A/c

 

750

 

 

24,225

13,317

13,908

 

24,225

13,317

13,908

 

 

 

 

 

 

 

 

 



Page No 5.82:

Question 28:

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs.

Revaluation A/c

Dr.

 

350

 

To Provision for Doubtful Debts A/c

 

 

350

( Provision for doubtful debts created)

 

 

 

 

 

 

 

Building A/c

Dr.

 

8,800

 

To Revaluation A/c

 

 

8,800

(Increase in value of Building transferred to Revaluation Account)

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

8,450

 

To R’s Capital A/c

 

 

4,225

To S’s Capital A/c

 

 

2,817

To M's Capital A/c

 

 

1,408

(Revaluation profit distributed between partners in their old ratio)

 

 

 

 

 

 

 

R’ Capital A/c

Dr.

 

2,250

 

M’s Capital A/c

Dr.

 

7,50

 

To S’s Capital

 

 

3,000

( S’s share of goodwill adjusted)

 

 

 

 

 

 

 

S’s Capital A/c

Dr.

 

13,317

 

To 6% Loan A/c

 

 

8,317

To Bank A/c

 

 

5,000

(Rs 5,000 paid to S and balance of S’s Capital transferred to his Loan Account)

 

 

 

 

Balance Sheet

as on March 31, 2014 (after S’s Retirement)

Liabilities

Amount

Rs

Assets

Amount

Rs

Sundry Creditors

16,000

Building (23,000 + 8,800)

31,800

 

 

Debtors

7,000

 

 

 

Less: Provision for Doubtful Debts

 

(350)

 

6,650

S’S Loan

8,317

Stock

12,000

Capital A/cs:

 

Patents

8,000

R

21,975

 

 

 

M

13,158

35,133

Bank (6,000 – 5,000)

1,000

 

59,450

 

59,450

 

 

 

 

Working Notes:

WN 1 Calculation of Gaining Ratio

Old Ratio (R, S and M) = 3 : 2 : 1

S retires from the firm.

∴Gaining Ratio = 3: 1

WN 2 Adjustment of Goodwill

Goodwill of the firm = Rs 9,000

S’s Share of Goodwill =

This share of goodwill is to be distributed between R and M in their gaining ratio (i.e. 3 : 1).

WN 3

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Provision for Doubtful Debts (7000 × 5%)

350

Building

8,800

Profit transferred to:

 

 

 

R’s Capital A/c

4,225

 

 

 

S’s Capital A/c

2,817

 

 

 

M’s Capital A/c

1,408

8,450

 

 

 

8,800

 

8,800

 

 

 

 

WN 4

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

R

S

M

Particulars

R

S

M

S’s Capital A/c

2,250

 

750

Balance b/d

20,000

7,500

12,500

Bank A/c

 

5,000

 

Revaluation A/c

4,225

2,817

1,408

6% S’s Loan A/c

 

8,317

 

R’s Capital A/c

 

2,250

 

Balance c/d

21,975

 

13,158

M’s Capital A/c

 

750

 

 

24,225

13,317

13,908

 

24,225

13,317

13,908

 

 

 

 

 

 

 

 

 

Answer:

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

2014

 

 

 

 

 

March 31

Profit and Loss A/c

Dr.

 

4,500

 

 

To M’s Capital A/c

 

 

2,250

 

To N’s Capital A/c

 

 

1,500

 

To O’s Capital A/c

 

 

750

 

(Profit distrusted among partners in their old ratio)

 

 

 

 

 

 

 

 

March 31

Revaluation A/c

Dr.

 

8,400

 

 

To Stock A/c

 

 

2,300

 

To Furniture A/c

 

 

500

 

To Plant and Machinery A/c

 

 

750

 

To Building A/c

 

 

4,000

 

To Provision for Doubtful Debts A/c

 

 

850

 

(Decrease in assets and creation of provision against doubtful debtors transferred to Revaluation Account)

 

 

 

 

 

 

 

 

 

M’s Capital A/c

Dr.

 

4,200

 

 

N’s Capital A/c

Dr.

 

2,800

 

 

O’s Capital A/c

Dr.

 

1,400

 

 

To Revaluation A/c

 

 

8,400

 

(Revaluation loss distributed between M, N and O in their old ratio)

 

 

 

 

 

 

 

 

 

M’s Capital A/c

Dr.

 

41,050

 

 

To Bank A/c

 

 

11,050

 

To M’s Loan A/c

 

 

30,000

 

(Rs 11,050 paid to M and balance of S’s Capital transferred to his Loan Account)

 

 

 

 

 

 

 

 

 

N’s Capital A/c

Dr.

 

2,000

 

 

O’s Capital A/c

Dr.

 

1,000

 

 

M’s Capital A/c

 

 

3,000

 

(Adjustment of goodwill made on M’s retirement)

 

 

 

 

 

 

 

 

 

M’s Capital Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Revaluation A/c

4,200

Balance b/d

40,000

Bank A/c

11,050

Profit and Loss A/c

2,250

 

 

N’s Capital A/c

2,000

M’s Loan A/c

30,000

O’s Capital A/c

1,000

 

45,250

 

45,250

 

 

 

 

 

M’s Loan Account

Dr.

 

Cr.

Date

Particulars

Amount

Rs

Date

Particulars

Amount

Rs

2015

 

 

2014

 

 

March 31

Bank A/c (10,000 + 1,500)

11,500

April

M’s Capital A/c

30,000

 

 

 

2015

 

 

March 31

Balance c/d

20,000

March 31

Interest (30,000 × 5%)

1,500

 

 

31,500

 

 

31,500

2016

 

 

2015

 

 

March 31

Bank A/c (10,000 + 1,000)

11,000

April

Balance b/d

20,000

 

 

 

2016

 

 

March 31

Balance c/d

10,000

March 31

Interest (20,000 × 5%)

1,000

 

 

21,000

 

 

21,000

2017

 

 

2016

 

 

March 31

Bank A/c (10,000 + 500)

10,500

April

Balance b/d

10,000

 

 

 

2017

 

 

 

 

 

March 31

Interest (10,000× 5%)

500

 

 

10,500

 

 

10,500

 

 

 

 

 

 

Working Notes:

WN 1 Adjustment of Goodwill

Old Ratio (M, N and O) = or 3 : 2 : 1

M retires from the firm.

∴Gaining Ratio = 2 : 1

Goodwill of the firm = Rs 6,000

M’s Share of Goodwill =

This share of goodwill is to be distributed between N and O in their gaining ratio (i.e. 2 : 1).

WN 2

Amount of M’s Loan = Rs 30,000

Amount of each instalment =

Page No 5.82:

Question 29:

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

2014

 

 

 

 

 

March 31

Profit and Loss A/c

Dr.

 

4,500

 

 

To M’s Capital A/c

 

 

2,250

 

To N’s Capital A/c

 

 

1,500

 

To O’s Capital A/c

 

 

750

 

(Profit distrusted among partners in their old ratio)

 

 

 

 

 

 

 

 

March 31

Revaluation A/c

Dr.

 

8,400

 

 

To Stock A/c

 

 

2,300

 

To Furniture A/c

 

 

500

 

To Plant and Machinery A/c

 

 

750

 

To Building A/c

 

 

4,000

 

To Provision for Doubtful Debts A/c

 

 

850

 

(Decrease in assets and creation of provision against doubtful debtors transferred to Revaluation Account)

 

 

 

 

 

 

 

 

 

M’s Capital A/c

Dr.

 

4,200

 

 

N’s Capital A/c

Dr.

 

2,800

 

 

O’s Capital A/c

Dr.

 

1,400

 

 

To Revaluation A/c

 

 

8,400

 

(Revaluation loss distributed between M, N and O in their old ratio)

 

 

 

 

 

 

 

 

 

M’s Capital A/c

Dr.

 

41,050

 

 

To Bank A/c

 

 

11,050

 

To M’s Loan A/c

 

 

30,000

 

(Rs 11,050 paid to M and balance of S’s Capital transferred to his Loan Account)

 

 

 

 

 

 

 

 

 

N’s Capital A/c

Dr.

 

2,000

 

 

O’s Capital A/c

Dr.

 

1,000

 

 

M’s Capital A/c

 

 

3,000

 

(Adjustment of goodwill made on M’s retirement)

 

 

 

 

 

 

 

 

 

M’s Capital Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Revaluation A/c

4,200

Balance b/d

40,000

Bank A/c

11,050

Profit and Loss A/c

2,250

 

 

N’s Capital A/c

2,000

M’s Loan A/c

30,000

O’s Capital A/c

1,000

 

45,250

 

45,250

 

 

 

 

 

M’s Loan Account

Dr.

 

Cr.

Date

Particulars

Amount

Rs

Date

Particulars

Amount

Rs

2015

 

 

2014

 

 

March 31

Bank A/c (10,000 + 1,500)

11,500

April

M’s Capital A/c

30,000

 

 

 

2015

 

 

March 31

Balance c/d

20,000

March 31

Interest (30,000 × 5%)

1,500

 

 

31,500

 

 

31,500

2016

 

 

2015

 

 

March 31

Bank A/c (10,000 + 1,000)

11,000

April

Balance b/d

20,000

 

 

 

2016

 

 

March 31

Balance c/d

10,000

March 31

Interest (20,000 × 5%)

1,000

 

 

21,000

 

 

21,000

2017

 

 

2016

 

 

March 31

Bank A/c (10,000 + 500)

10,500

April

Balance b/d

10,000

 

 

 

2017

 

 

 

 

 

March 31

Interest (10,000× 5%)

500

 

 

10,500

 

 

10,500

 

 

 

 

 

 

Working Notes:

WN 1 Adjustment of Goodwill

Old Ratio (M, N and O) = or 3 : 2 : 1

M retires from the firm.

∴Gaining Ratio = 2 : 1

Goodwill of the firm = Rs 6,000

M’s Share of Goodwill =

This share of goodwill is to be distributed between N and O in their gaining ratio (i.e. 2 : 1).

WN 2

Amount of M’s Loan = Rs 30,000

Amount of each instalment =

Answer:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Stock (40,000 × 10%)

4,000

Building (2,00,000× 20%)

40,000

Furniture (80,000 × 20%)

16,000

 

 

Plant and Machinery (1,20,000 × 5%)

6,000

 

 

Profit transferred to:

 

 

 

X’s Capital A/c

5,600

 

 

 

Y’s Capital A/c

5,600

 

 

 

Z’s Capital A/c

2,800

14,000

 

 

 

40,000

 

40,000

 

 

 

 

 

Partner’s Capital Accounts

Dr.

 

Cr.

Particulars

X

Y

Z

Particulars

X

Y

Z

X’s Capital A/c (Goodwill)

 

16,000

8,000

Balance b/d

80,000

80,000

65,000

Cash A/c

19,600

 

 

Profit and Loss A/c

30,000

30,000

15,000

X’s Loan A/c

1,20,000

 

 

Revaluation A/c (Profit)

5,600

5,600

2,800

Balance c/d

 

99,600

74,800

Y’s Capital A/c (Goodwill)

16,000

 

 

 

 

 

 

Z’s Capital A/c (Goodwill)

8,000

 

 

 

1,39,600

1,15,600

82,800

 

1,39,600

1,15,600

82,800

 

 

 

 

 

 

 

 

 

Balance Sheet

as on April 01, 2014 (after X’s Retirement)

Liabilities

Amount

Rs

Assets

Amount

Rs

Bills Payable

98,000

Cash (30,000 - 19,600)

10,400

Sundry Creditors

1,02,000

Bills Receivable

9,000

X’s Loan

1,20,000

Debtors

21,000

Capital A/cs:

 

Stock (40,000 – 4,000)

36,000

Y

99,600

 

Furniture (80,000 – 16,000)

64,000

Z

74,800

1,74,400

Plant and Machinery(1,20,000 – 6,000)

1,14,000

 

 

Building (2,00,000 + 40,000)

2,40,000

 

4,94,400

 

4,94,400

 

 

 

 

 

X’s Loan Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

 

 

X’s Capital A/c

1,20,000

Balance c/d

1,20,000

 

 

 

1,20,000

 

1,20,000

 

 

 

 

Working Note:

Adjustment of Goodwill

Old Ratio (X, Y and Z) = 2 : 2 : 1

X retires from the firm.

∴Gaining Ratio = 2 : 1

Goodwill of the firm = Rs 60,000

X’s Share of Goodwill =

This share of goodwill is to be distributed between Y and Z in their gaining ratio (i.e.2 : 1).



Page No 5.83:

Question 30:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Stock (40,000 × 10%)

4,000

Building (2,00,000× 20%)

40,000

Furniture (80,000 × 20%)

16,000

 

 

Plant and Machinery (1,20,000 × 5%)

6,000

 

 

Profit transferred to:

 

 

 

X’s Capital A/c

5,600

 

 

 

Y’s Capital A/c

5,600

 

 

 

Z’s Capital A/c

2,800

14,000

 

 

 

40,000

 

40,000

 

 

 

 

 

Partner’s Capital Accounts

Dr.

 

Cr.

Particulars

X

Y

Z

Particulars

X

Y

Z

X’s Capital A/c (Goodwill)

 

16,000

8,000

Balance b/d

80,000

80,000

65,000

Cash A/c

19,600

 

 

Profit and Loss A/c

30,000

30,000

15,000

X’s Loan A/c

1,20,000

 

 

Revaluation A/c (Profit)

5,600

5,600

2,800

Balance c/d

 

99,600

74,800

Y’s Capital A/c (Goodwill)

16,000

 

 

 

 

 

 

Z’s Capital A/c (Goodwill)

8,000

 

 

 

1,39,600

1,15,600

82,800

 

1,39,600

1,15,600

82,800

 

 

 

 

 

 

 

 

 

Balance Sheet

as on April 01, 2014 (after X’s Retirement)

Liabilities

Amount

Rs

Assets

Amount

Rs

Bills Payable

98,000

Cash (30,000 - 19,600)

10,400

Sundry Creditors

1,02,000

Bills Receivable

9,000

X’s Loan

1,20,000

Debtors

21,000

Capital A/cs:

 

Stock (40,000 – 4,000)

36,000

Y

99,600

 

Furniture (80,000 – 16,000)

64,000

Z

74,800

1,74,400

Plant and Machinery(1,20,000 – 6,000)

1,14,000

 

 

Building (2,00,000 + 40,000)

2,40,000

 

4,94,400

 

4,94,400

 

 

 

 

 

X’s Loan Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

 

 

X’s Capital A/c

1,20,000

Balance c/d

1,20,000

 

 

 

1,20,000

 

1,20,000

 

 

 

 

Working Note:

Adjustment of Goodwill

Old Ratio (X, Y and Z) = 2 : 2 : 1

X retires from the firm.

∴Gaining Ratio = 2 : 1

Goodwill of the firm = Rs 60,000

X’s Share of Goodwill =

This share of goodwill is to be distributed between Y and Z in their gaining ratio (i.e.2 : 1).

Answer:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Profit transferred to :

 

Land and Building (15,000 × 10%)

1,500

X’s Capital A/c

1,140

 

Provision for Doubtful Debts

105

Y’s Capital A/c

855

 

Stock (4,800 × 20%)

960

Z’s Capital A/c

570

2,565

 

 

 

2,565

 

2,565

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

X

Y

Z

Particulars

X

Y

Z

Y’s Capital A/c

1,200

 

600

Balance b/d

12,000

9,000

6,000

X’s Capital A/c (Rectification)

 

420

 

Revaluation A/c (Profit)

1,140

855

570

Z’s Capital A/c (Rectification)

 

390

 

X’s Capital A/c (Goodwill)

 

1,200

 

Y’s Loan A/c

 

10,845

 

Z’s Capital A/c (Goodwill)

 

600

 

Balanced c/d

12,360

 

6,360

Z’s Capital A/c (Rectification)

420

 

390

 

13,560

11,655

6,960

 

13,560

11,655

6,960

 

 

 

 

 

 

 

 

 

Balance Sheet

as on March 31, 2014 (after Y’s Retirement)

Liabilities

Amount

Rs

Assets

Amount

Rs

Creditors

4,140

Cash at Bank

3,300

 

 

Sundry debtors

3,045

Y’s Loan

10,845

Stock (4,800 + 960)

5,760

Capital A/cs:

 

Plant and Machinery

5,100

X

12,360

 

 

 

Z

6,360

18,720

Land and Building (15,000 + 1,500)

16,500

 

33,705

 

33,705

 

 

 

 

Working Note:

Adjustment of Goodwill

Old Ratio (X, Y and Z) = 4 : 3 : 2

Y retires from the firm.

∴Gaining Ratio = 4 : 2 or 2 : 1

Goodwill of the firm = Rs 5,400

Y’s Share of Goodwill =

This share of goodwill is to be distributed between X and Z in their gaining ratio (i.e. 2 : 1).

Page No 5.83:

Question 31:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Profit transferred to :

 

Land and Building (15,000 × 10%)

1,500

X’s Capital A/c

1,140

 

Provision for Doubtful Debts

105

Y’s Capital A/c

855

 

Stock (4,800 × 20%)

960

Z’s Capital A/c

570

2,565

 

 

 

2,565

 

2,565

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

X

Y

Z

Particulars

X

Y

Z

Y’s Capital A/c

1,200

 

600

Balance b/d

12,000

9,000

6,000

X’s Capital A/c (Rectification)

 

420

 

Revaluation A/c (Profit)

1,140

855

570

Z’s Capital A/c (Rectification)

 

390

 

X’s Capital A/c (Goodwill)

 

1,200

 

Y’s Loan A/c

 

10,845

 

Z’s Capital A/c (Goodwill)

 

600

 

Balanced c/d

12,360

 

6,360

Z’s Capital A/c (Rectification)

420

 

390

 

13,560

11,655

6,960

 

13,560

11,655

6,960

 

 

 

 

 

 

 

 

 

Balance Sheet

as on March 31, 2014 (after Y’s Retirement)

Liabilities

Amount

Rs

Assets

Amount

Rs

Creditors

4,140

Cash at Bank

3,300

 

 

Sundry debtors

3,045

Y’s Loan

10,845

Stock (4,800 + 960)

5,760

Capital A/cs:

 

Plant and Machinery

5,100

X

12,360

 

 

 

Z

6,360

18,720

Land and Building (15,000 + 1,500)

16,500

 

33,705

 

33,705

 

 

 

 

Working Note:

Adjustment of Goodwill

Old Ratio (X, Y and Z) = 4 : 3 : 2

Y retires from the firm.

∴Gaining Ratio = 4 : 2 or 2 : 1

Goodwill of the firm = Rs 5,400

Y’s Share of Goodwill =

This share of goodwill is to be distributed between X and Z in their gaining ratio (i.e. 2 : 1).

Answer:

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

Revaluation A/c

Dr.

 

3,000

 

To Fixed Assets A/c

 

 

2,000

To Provision for doubtful Debts A/c

 

 

1,000

(Decrease in value of Fixed Assets and provision for doubtful debts transferred to Revaluation Account)

 

 

 

 

 

 

 

P’s Capital A/c

Dr.

 

1,200

 

Q’s Capital A/c

Dr.

 

900

 

R’s Capital A/c

Dr.

 

900

 

To Revaluation A/c

 

 

3,000

(Revaluation loss distributed among partners in their old ratio)

 

 

 

 

 

 

 

Workmen’s Compensation Reserve A/c

Dr.

 

10,000

 

To Outstanding Workmen’s Compensation A/c

 

 

4,000

To P’s Capital A/c

 

 

2,400

To Q’s Capital A/c

 

 

1,800

To R’s Capital A/c

 

 

1,800

(Workmen Compensation claim adjusted against Workmen’s Compensation Reserve and the balance amount is distributed among the partners)

 

 

 

 

 

 

 

Reserves A/c

Dr.

 

10,000

 

To R’s Capital A/c

 

 

4,000

To Q’s Capital A/c

 

 

3,000

To R’s Capital A/c

 

 

3,000

(Reserve distributed among all the partners in their old ratio)

 

 

 

 

 

 

 

P’s Capital A/c

Dr.

 

13,333

 

Q’s Capital A/c

Dr.

 

1,667

 

To R’s Capital A/c

 

 

15,000

(R’s share of goodwill adjusted)

 

 

 

 

 

 

 

R’s Capital A/c

Dr.

 

27,900

 

To R’s Loan A/c

 

 

27,900

(R’s capital balance transferred to his Loan Account)

 

 

 

 

 

 

 

 

 

Balance Sheet

as on March 31,2010 (after R’s Retirement)

Liabilities

Amount

Rs

Assets

Amount

Rs

Creditors

10,000

Cash at Bank

20,000

Employees’ Provident Fund

20,000

Debtors

15,000

 

Outstanding Workmen’s Compensation Reserve

4,000

Less: Provision for Doubtful Debts

(1,000)

14,000

R’s Loan

27,900

Stock

17,000

Capital A/cs:

 

Fixed Assets (52,000 – 2,000)

50,000

P

21,867

 

 

 

Q

17,233

39,100

 

 

 

 

1,01,000

 

1,01,000

 

 

 

 

 

R’s Loan Account

Dr.

 

Cr.

Date

Particulars

Amount

Rs

Date

Particulars

Amount

Rs

2011

 

 

2011

 

 

March 31

Bank (9,300 + 2,790)

12,090

April 01

R’s Capital A/c

27,900

March 31

Balance c/d

18,600

March 31

Interest (27,900 × 10%)

2,790

 

 

30,690

 

 

30,690

2012

 

 

2011

 

 

March 31

Bank (9,300 + 1,860)

11,160

April 01

Balance b/d

18,600

 

 

 

2012

 

 

March 31

Balance c/d

9,300

March 31

Interest (18,600 × 10%)

1,860

 

 

20,460

 

 

20,460

2013

 

 

2012

 

 

March 31

Bank (9,300 + 930)

10,230

April 01

Balance b/d

9,300

 

 

 

2013

 

 

 

 

 

March 31

Interest (9,300 × 10%)

930

 

 

 

 

 

 

 

 

10,230

 

 

10,230

 

 

 

 

 

 

Value involved are:

  1. Social Welfare
  2. Charity
  3. Motivating education

Working Notes:

WN 1

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Fixed Assets

2,000

Loss transferred to:

 

Provision for Doubtful Debts

1,000

P’s Capital A/c

1,200

 

 

 

Q’s Capital A/c

900

 

 

 

R’s Capital A/c

900

3,000

 

3,000

 

3,000

 

 

 

 

WN 2

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

P

Q

R

Particulars

P

Q

R

Drawings A/c

 

 

6,000

Balance b/d

30,000

15,000

15,000

R’s Capital A/c (Goodwill)

13,333

1,667

 

Workmen’s Compensation Reserve

2,400

1,800

1,800

Revaluation A/c

1,200

900

900

Reserves

4,000

3,000

3,000

R’s Loan A/c

 

 

27,900

P’s Capital A/c (Goodwill)

 

 

13,333

Balance c/d

21,867

17,233

 

Q’s Capital A/c (Goodwill)

 

 

1,667

 

36,400

19,800

34,800

 

36,400

19,800

34,800

 

 

 

 

 

 

 

 

WN 3

Calculation of Gaining Ratio

Old Ratio (P, Q and R) = 4 : 3 : 3

New Ratio (P and Q) = 2 : 1

R retires from the firm.

Gaining Ratio = New Ratio − Old Ratio

∴Gaining Ratio = 8 : 1

WN 4

Adjustment of Goodwill

Goodwill of the firm = Rs 50,000

R’s Share of Goodwill =

This share of goodwill is to be distributed between P and R in their gaining ratio (i.e. 8 : 1).



Page No 5.84:

Question 32:

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

Revaluation A/c

Dr.

 

3,000

 

To Fixed Assets A/c

 

 

2,000

To Provision for doubtful Debts A/c

 

 

1,000

(Decrease in value of Fixed Assets and provision for doubtful debts transferred to Revaluation Account)

 

 

 

 

 

 

 

P’s Capital A/c

Dr.

 

1,200

 

Q’s Capital A/c

Dr.

 

900

 

R’s Capital A/c

Dr.

 

900

 

To Revaluation A/c

 

 

3,000

(Revaluation loss distributed among partners in their old ratio)

 

 

 

 

 

 

 

Workmen’s Compensation Reserve A/c

Dr.

 

10,000

 

To Outstanding Workmen’s Compensation A/c

 

 

4,000

To P’s Capital A/c

 

 

2,400

To Q’s Capital A/c

 

 

1,800

To R’s Capital A/c

 

 

1,800

(Workmen Compensation claim adjusted against Workmen’s Compensation Reserve and the balance amount is distributed among the partners)

 

 

 

 

 

 

 

Reserves A/c

Dr.

 

10,000

 

To R’s Capital A/c

 

 

4,000

To Q’s Capital A/c

 

 

3,000

To R’s Capital A/c

 

 

3,000

(Reserve distributed among all the partners in their old ratio)

 

 

 

 

 

 

 

P’s Capital A/c

Dr.

 

13,333

 

Q’s Capital A/c

Dr.

 

1,667

 

To R’s Capital A/c

 

 

15,000

(R’s share of goodwill adjusted)

 

 

 

 

 

 

 

R’s Capital A/c

Dr.

 

27,900

 

To R’s Loan A/c

 

 

27,900

(R’s capital balance transferred to his Loan Account)

 

 

 

 

 

 

 

 

 

Balance Sheet

as on March 31,2010 (after R’s Retirement)

Liabilities

Amount

Rs

Assets

Amount

Rs

Creditors

10,000

Cash at Bank

20,000

Employees’ Provident Fund

20,000

Debtors

15,000

 

Outstanding Workmen’s Compensation Reserve

4,000

Less: Provision for Doubtful Debts

(1,000)

14,000

R’s Loan

27,900

Stock

17,000

Capital A/cs:

 

Fixed Assets (52,000 – 2,000)

50,000

P

21,867

 

 

 

Q

17,233

39,100

 

 

 

 

1,01,000

 

1,01,000

 

 

 

 

 

R’s Loan Account

Dr.

 

Cr.

Date

Particulars

Amount

Rs

Date

Particulars

Amount

Rs

2011

 

 

2011

 

 

March 31

Bank (9,300 + 2,790)

12,090

April 01

R’s Capital A/c

27,900

March 31

Balance c/d

18,600

March 31

Interest (27,900 × 10%)

2,790

 

 

30,690

 

 

30,690

2012

 

 

2011

 

 

March 31

Bank (9,300 + 1,860)

11,160

April 01

Balance b/d

18,600

 

 

 

2012

 

 

March 31

Balance c/d

9,300

March 31

Interest (18,600 × 10%)

1,860

 

 

20,460

 

 

20,460

2013

 

 

2012

 

 

March 31

Bank (9,300 + 930)

10,230

April 01

Balance b/d

9,300

 

 

 

2013

 

 

 

 

 

March 31

Interest (9,300 × 10%)

930

 

 

 

 

 

 

 

 

10,230

 

 

10,230

 

 

 

 

 

 

Value involved are:

  1. Social Welfare
  2. Charity
  3. Motivating education

Working Notes:

WN 1

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Fixed Assets

2,000

Loss transferred to:

 

Provision for Doubtful Debts

1,000

P’s Capital A/c

1,200

 

 

 

Q’s Capital A/c

900

 

 

 

R’s Capital A/c

900

3,000

 

3,000

 

3,000

 

 

 

 

WN 2

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

P

Q

R

Particulars

P

Q

R

Drawings A/c

 

 

6,000

Balance b/d

30,000

15,000

15,000

R’s Capital A/c (Goodwill)

13,333

1,667

 

Workmen’s Compensation Reserve

2,400

1,800

1,800

Revaluation A/c

1,200

900

900

Reserves

4,000

3,000

3,000

R’s Loan A/c

 

 

27,900

P’s Capital A/c (Goodwill)

 

 

13,333

Balance c/d

21,867

17,233

 

Q’s Capital A/c (Goodwill)

 

 

1,667

 

36,400

19,800

34,800

 

36,400

19,800

34,800

 

 

 

 

 

 

 

 

WN 3

Calculation of Gaining Ratio

Old Ratio (P, Q and R) = 4 : 3 : 3

New Ratio (P and Q) = 2 : 1

R retires from the firm.

Gaining Ratio = New Ratio − Old Ratio

∴Gaining Ratio = 8 : 1

WN 4

Adjustment of Goodwill

Goodwill of the firm = Rs 50,000

R’s Share of Goodwill =

This share of goodwill is to be distributed between P and R in their gaining ratio (i.e. 8 : 1).

Answer:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Plant and Machinery (28,000 × 10%)

2,800

Stock (20,000 × 10%)

2,000

Electronic Typewriter (8,000 × 10%)

800

Land and Building (36,000 × 10%)

3,600

Outstanding Salary

2,000

Provision for Doubtful Debts

2,000

Profit transferred to:

 

 

 

A’s Capital A/c

800

 

 

 

B’s Capital A/c

600

 

 

 

C’s Capital A/c

600

2,000

 

 

 

 

 

 

 

7,600

 

7,600

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

A

B

C

Particulars

A

B

C

B’s Capital A/c

2,400

 

1,800

Balance b/d

32,000

24,000

20,000

 

 

 

 

Reserves

8,000

6,000

6,000

B’s Loan A/c

 

34,800

 

Revaluation A/c

800

600

600

 

 

 

 

A’s Capital A/c

 

2,400

 

Balance c/d

38,400

 

24,800

C’s Capital A/c

 

1,800

 

 

40,800

34,800

26,600

 

40,800

34,800

26,600

 

 

 

 

 

 

 

 

 

Balance Sheet

an on April 01, 2014 (after B’s Retirement)

Liabilities

Amount

Rs

Assets

Amount

Rs

Creditors

7,000

Land and Building (36,000 + 3,600)

39,600

Bills Payable

3,000

Plant and Machinery (28,000 – 2,800)

25,200

B’s Loan

34,800

Electronic Typewriter (8000 – 800)

7,200

Capital A/cs:

 

Stock (20,000 + 2,000)

22,000

A

38,400

Sundry Debtors

14,000

C

24,800

Bank

2000

Outstanding Salary

2,000

 

 

 

1,10,000

 

1,10,000

 

 

 

 

Working Note:

Adjustment of Goodwill

Old Ratio (A, B and C) = 4 : 3 : 3

B retires from the firm.

∴Gaining Ratio = 4 : 3

Goodwill of the firm = Rs 14,000

B’s Share of Goodwill =

This share of goodwill is to be distributed between A and C in their gaining ratio (i.e. 4 : 3).

Page No 5.84:

Question 33:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Plant and Machinery (28,000 × 10%)

2,800

Stock (20,000 × 10%)

2,000

Electronic Typewriter (8,000 × 10%)

800

Land and Building (36,000 × 10%)

3,600

Outstanding Salary

2,000

Provision for Doubtful Debts

2,000

Profit transferred to:

 

 

 

A’s Capital A/c

800

 

 

 

B’s Capital A/c

600

 

 

 

C’s Capital A/c

600

2,000

 

 

 

 

 

 

 

7,600

 

7,600

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

A

B

C

Particulars

A

B

C

B’s Capital A/c

2,400

 

1,800

Balance b/d

32,000

24,000

20,000

 

 

 

 

Reserves

8,000

6,000

6,000

B’s Loan A/c

 

34,800

 

Revaluation A/c

800

600

600

 

 

 

 

A’s Capital A/c

 

2,400

 

Balance c/d

38,400

 

24,800

C’s Capital A/c

 

1,800

 

 

40,800

34,800

26,600

 

40,800

34,800

26,600

 

 

 

 

 

 

 

 

 

Balance Sheet

an on April 01, 2014 (after B’s Retirement)

Liabilities

Amount

Rs

Assets

Amount

Rs

Creditors

7,000

Land and Building (36,000 + 3,600)

39,600

Bills Payable

3,000

Plant and Machinery (28,000 – 2,800)

25,200

B’s Loan

34,800

Electronic Typewriter (8000 – 800)

7,200

Capital A/cs:

 

Stock (20,000 + 2,000)

22,000

A

38,400

Sundry Debtors

14,000

C

24,800

Bank

2000

Outstanding Salary

2,000

 

 

 

1,10,000

 

1,10,000

 

 

 

 

Working Note:

Adjustment of Goodwill

Old Ratio (A, B and C) = 4 : 3 : 3

B retires from the firm.

∴Gaining Ratio = 4 : 3

Goodwill of the firm = Rs 14,000

B’s Share of Goodwill =

This share of goodwill is to be distributed between A and C in their gaining ratio (i.e. 4 : 3).

Answer:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Stock

12,000

Fixed Assets (3,00,000 × 10%)

30,000

Provision for Doubtful Debts (6,000 4,000)

2,000

 

 

Profit transferred to:

 

 

 

X’s Capital A/c

6,000

 

 

 

Y’s Capital A/c

6,000

 

 

 

Z’s Capital A/c

4,000

16,000

 

 

 

30,000

 

30,000

 

 

 

 

 

Partners’ Capital Account

Dr.

 

Cr.

Particulars

X

Y

Z

Particulars

X

Y

Z

Profit and Loss A/c

1,500

1,500

1,000

Balance b/d

1,00,000

60,000

50,000

Advertise Suspense A/c

6,000

6,000

4,000

General Reserve

30,000

30,000

20,000

Y’s Capital A/c

18,000

 

12,000

Revaluation A/c

6,000

6,000

4,000

Y’s Loan A/c

 

1,18,500

 

X’s Capital A/c

 

18,000

 

Balance c/d

1,10,500

 

57,000

 

 

 

 

 

 

 

 

Z’s Capital A/c

 

12,000

 

 

1,36,000

1,26,000

74,000

 

1,36,000

1,26,000

74,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as on April 01, 2013 (after Y’s Retirement)

Liabilities

Amount

Rs

Assets

Amount

Rs

Sundry Creditors

2,50,000

Cash at Bank

50,000

X’s Loan

50,000

Bills Receivable

60,000

Y’s Loan

1,58,500

Debtors

80,000

 

Capital A/c :

 

Less: Prov. For D. Debts

(6,000)

74,000

X

1,10,500

 

Stock (1,24,000 – 12,000)

1,12,000

Z

57,000

1,67,500

Fixed Assets (3,00,000 + 30,000)

3,30,000

 

 

 

 

 

6,26,000

 

6,26,000

 

 

 

 

                        

Y’s Loan Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

 

 

Balance b/d

40,000

Balance c/d

1,58,500

Y’s Capital A/c

1,18,500

 

1,58,500

 

1,58,500

 

 

 

 

Working Notes:

WN 1 Adjustment of Goodwill

WN 2 Distribution of General Reserve

WN3 Writing-off Advisement Suspense

WN4 Writing-off Profit and Loss (Loss)



Page No 5.85:

Question 34:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Stock

12,000

Fixed Assets (3,00,000 × 10%)

30,000

Provision for Doubtful Debts (6,000 4,000)

2,000

 

 

Profit transferred to:

 

 

 

X’s Capital A/c

6,000

 

 

 

Y’s Capital A/c

6,000

 

 

 

Z’s Capital A/c

4,000

16,000

 

 

 

30,000

 

30,000

 

 

 

 

 

Partners’ Capital Account

Dr.

 

Cr.

Particulars

X

Y

Z

Particulars

X

Y

Z

Profit and Loss A/c

1,500

1,500

1,000

Balance b/d

1,00,000

60,000

50,000

Advertise Suspense A/c

6,000

6,000

4,000

General Reserve

30,000

30,000

20,000

Y’s Capital A/c

18,000

 

12,000

Revaluation A/c

6,000

6,000

4,000

Y’s Loan A/c

 

1,18,500

 

X’s Capital A/c

 

18,000

 

Balance c/d

1,10,500

 

57,000

 

 

 

 

 

 

 

 

Z’s Capital A/c

 

12,000

 

 

1,36,000

1,26,000

74,000

 

1,36,000

1,26,000

74,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as on April 01, 2013 (after Y’s Retirement)

Liabilities

Amount

Rs

Assets

Amount

Rs

Sundry Creditors

2,50,000

Cash at Bank

50,000

X’s Loan

50,000

Bills Receivable

60,000

Y’s Loan

1,58,500

Debtors

80,000

 

Capital A/c :

 

Less: Prov. For D. Debts

(6,000)

74,000

X

1,10,500

 

Stock (1,24,000 – 12,000)

1,12,000

Z

57,000

1,67,500

Fixed Assets (3,00,000 + 30,000)

3,30,000

 

 

 

 

 

6,26,000

 

6,26,000

 

 

 

 

                        

Y’s Loan Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

 

 

Balance b/d

40,000

Balance c/d

1,58,500

Y’s Capital A/c

1,18,500

 

1,58,500

 

1,58,500

 

 

 

 

Working Notes:

WN 1 Adjustment of Goodwill

WN 2 Distribution of General Reserve

WN3 Writing-off Advisement Suspense

WN4 Writing-off Profit and Loss (Loss)

Answer:

Revaluation Account

Dr.

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Stock

10,000

Plant & Machinery

1,00,000

Debtors

15,000

 

 

Profit on Revaluation transferred to:

 

 

 

P

37,500

 

 

 

Q

25,000

 

 

 

R

12,500

75,000

 

 

 

1,00,000

 

1,00,000

 

 

 

 

 

Partners’ Capital Account

Dr.

Cr.

Particulars

P

Q

R

Particulars

P

Q

R

Q’s Capital

50,000

Balance b/d

2,00,000

1,50,000

1,00,000

Q’s Loan

2,25,000

Revaluation A/c

(Profit)

37,500

25,000

12,500

Balance c/d

2,37,500

62,500

R’s Capital

50,000

 

2,37,500

2,25,000

1,12,500

 

2,37,500

2,25,000

1,12,500

 

 

 

 

 

 

 

 

 

Balance Sheet

as at March 31, 2014

Liabilities

Amount

Rs

Assets

Amount

Rs

Creditors

50,000

Plant and Machinery (2,00,000 + 1,00,00)

3,00,000

Q’s Loan

2,25,000

Stock (1,00,000 – 10,000)

90,000

Capital A/c :

 

Debtors (1,00,000 – 15,000)

85,000

P

2,37,500

 

Cash

1,00,000

R

62,500

3,00,000

 

 

 

5,75,000

 

5,75,000

 

 

 

 


Values involved are:

  1. Charity
  2. Fulfilling responsibility towards society

Working Notes

 

WN 1 Calculation of Gaining Ratio

Old Ratio (P, Q and R) = 3:2:1

New Ratio (P and R) =1:1

Gaining Ratio = New Ratio – Old Ratio

 

WN2 Adjustment of Goodwill

Total Goodwill of the Firm = 1,50,000

It is to be adjusted by the Gaining partners i.e. only by R

Page No 5.85:

Question 35:

Revaluation Account

Dr.

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Stock

10,000

Plant & Machinery

1,00,000

Debtors

15,000

 

 

Profit on Revaluation transferred to:

 

 

 

P

37,500

 

 

 

Q

25,000

 

 

 

R

12,500

75,000

 

 

 

1,00,000

 

1,00,000

 

 

 

 

 

Partners’ Capital Account

Dr.

Cr.

Particulars

P

Q

R

Particulars

P

Q

R

Q’s Capital

50,000

Balance b/d

2,00,000

1,50,000

1,00,000

Q’s Loan

2,25,000

Revaluation A/c

(Profit)

37,500

25,000

12,500

Balance c/d

2,37,500

62,500

R’s Capital

50,000

 

2,37,500

2,25,000

1,12,500

 

2,37,500

2,25,000

1,12,500

 

 

 

 

 

 

 

 

 

Balance Sheet

as at March 31, 2014

Liabilities

Amount

Rs

Assets

Amount

Rs

Creditors

50,000

Plant and Machinery (2,00,000 + 1,00,00)

3,00,000

Q’s Loan

2,25,000

Stock (1,00,000 – 10,000)

90,000

Capital A/c :

 

Debtors (1,00,000 – 15,000)

85,000

P

2,37,500

 

Cash

1,00,000

R

62,500

3,00,000

 

 

 

5,75,000

 

5,75,000

 

 

 

 


Values involved are:

  1. Charity
  2. Fulfilling responsibility towards society

Working Notes

 

WN 1 Calculation of Gaining Ratio

Old Ratio (P, Q and R) = 3:2:1

New Ratio (P and R) =1:1

Gaining Ratio = New Ratio – Old Ratio

 

WN2 Adjustment of Goodwill

Total Goodwill of the Firm = 1,50,000

It is to be adjusted by the Gaining partners i.e. only by R

Answer:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Plant (30,000 × 10%)

3,000

Expenses Owing (2,000 – 1,500)

500

 

 

Patents (4,000 – 3,000)

1,000

 

 

Loss transferred to:

 

 

 

Manoj’s Capital A/c

750

 

 

 

Naveen’s Capital A/c

500

 

 

 

Deepak’s Capital A/c

250

1,500

 

3,000

 

3,000

 

 

 

 

 

Partners’ Capital Account

Dr.

 

Cr.

Particulars

Manoj

Naveen

Deepak

Particulars

Manoj

Naveen

Deepak

Revaluation

750

500

250

Balance b/d

12,000

10,000

9,000

Naveen’s Capital A/c

1,200

 

2,800

General Reserve

3,000

2,000

1,000

Naveen’s Loan A/c

 

15,500

 

Manoj Capital A/c

 

1,200

 

Balance c/d

13,050

 

6,950

Deepak Capital A/c

 

2,800

 

 

15,000

16,000

10,000

 

15,000

16,000

10,000

 

 

 

 

Balance b/d

13,050

 

6,950

Balance c/d

15,000

 

10,000

Cash A/c

1,950

 

3,050

 

15,000

 

10,000

 

15,000

 

10,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as on March 31, 2014

Liabilities

Amount

Rs

Assets

Amount

Rs

Expense Owing

1,500

Plant (30,000 – 3,000)

27,000

Bills Payable

5,000

Patents

4,000

Creditors

10,000

Debtors

9,500

Naveen’s Loan

15,500

Stock

11,000

Capital A/cs:

 

Cash (WN 4)

5,500

Manoj

15,000

 

 

 

Deepak

10,000

25,000

 

 

 

57,000

 

57,000

 

 

 

 

Working Notes:

WN 1 Calculation of Gaining Ratio

Old Ratio =  3 : 2 : 1

Naveen retires from the firm.

New Ratio = 3 : 2

           

Gaining Ratio = New Ratio – Old Ratio

∴ Gaining Ratio = 3: 7

                       

WN 2 Adjustment of Goodwill

Goodwill of the firm = Rs 12,000

Naveen’s Share of Goodwill =

 

This share of goodwill is to be distributed between Manoj and Deepak in their gaining ratio (i.e.3 : 7).

WN 3 Adjustment of Capital

WN 4

Cash Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Balance b/d

500

 

 

Manoj’s Capital

1,950

 

 

Deepak’s Capital

3,050

Balance c/d

5,500

 

5,500

 

5,500

       

 



Page No 5.86:

Question 36:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Plant (30,000 × 10%)

3,000

Expenses Owing (2,000 – 1,500)

500

 

 

Patents (4,000 – 3,000)

1,000

 

 

Loss transferred to:

 

 

 

Manoj’s Capital A/c

750

 

 

 

Naveen’s Capital A/c

500

 

 

 

Deepak’s Capital A/c

250

1,500

 

3,000

 

3,000

 

 

 

 

 

Partners’ Capital Account

Dr.

 

Cr.

Particulars

Manoj

Naveen

Deepak

Particulars

Manoj

Naveen

Deepak

Revaluation

750

500

250

Balance b/d

12,000

10,000

9,000

Naveen’s Capital A/c

1,200

 

2,800

General Reserve

3,000

2,000

1,000

Naveen’s Loan A/c

 

15,500

 

Manoj Capital A/c

 

1,200

 

Balance c/d

13,050

 

6,950

Deepak Capital A/c

 

2,800

 

 

15,000

16,000

10,000

 

15,000

16,000

10,000

 

 

 

 

Balance b/d

13,050

 

6,950

Balance c/d

15,000

 

10,000

Cash A/c

1,950

 

3,050

 

15,000

 

10,000

 

15,000

 

10,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as on March 31, 2014

Liabilities

Amount

Rs

Assets

Amount

Rs

Expense Owing

1,500

Plant (30,000 – 3,000)

27,000

Bills Payable

5,000

Patents

4,000

Creditors

10,000

Debtors

9,500

Naveen’s Loan

15,500

Stock

11,000

Capital A/cs:

 

Cash (WN 4)

5,500

Manoj

15,000

 

 

 

Deepak

10,000

25,000

 

 

 

57,000

 

57,000

 

 

 

 

Working Notes:

WN 1 Calculation of Gaining Ratio

Old Ratio =  3 : 2 : 1

Naveen retires from the firm.

New Ratio = 3 : 2

           

Gaining Ratio = New Ratio – Old Ratio

∴ Gaining Ratio = 3: 7

                       

WN 2 Adjustment of Goodwill

Goodwill of the firm = Rs 12,000

Naveen’s Share of Goodwill =

 

This share of goodwill is to be distributed between Manoj and Deepak in their gaining ratio (i.e.3 : 7).

WN 3 Adjustment of Capital

WN 4

Cash Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Balance b/d

500

 

 

Manoj’s Capital

1,950

 

 

Deepak’s Capital

3,050

Balance c/d

5,500

 

5,500

 

5,500

       

 

Answer:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Stock (4,000 ×6%)

240

Factory Building (12,500 × 20%)

2,500

Provision for Doubtful Debts (125 – 50)

75

 

 

Reserve for Legal Charges

385

 

 

Profit transferred to:

 

 

 

A’s Capital A/c

800

 

 

 

B’s Capital A/c

600

 

 

 

C’s Capital A/c

400

1,800

 

 

 

2,500

 

2,500

 

 

 

 

 

Partners’ Capital Account

Dr.   Cr.

Particulars

A

B

C

Particulars

A

B

C

B’s Capital A/c (Goodwill)

1,200

 

600

Balance b/d

10,000

7,500

5,000

 

 

 

 

Revaluation A/c

800

600

400

B’s Loan

 

9,900

 

A’s Capital A/c (Goodwill)

 

1,200

 

 

 

 

 

C’s Capital A/c (Goodwill)

 

600

 

Balance c/d

9,600

 

4,800

 

 

 

 

 

10,800

9,900

5,400

 

10,800

9,900

5,400

Cash A/c

266

 

134

Balance b/d

9,600

 

4,800

Balance c/d (WN 3)

9,334

 

4,666

 

 

 

 

 

9,600

 

4,800

 

9,600

 

4,800

 

 

 

 

 

 

 

 

 

Balance Sheet

as on March 31, 2014 (after B’s retirement)

Liabilities

Amount

Rs

Assets

Amount

Rs

Bills Payable

1,000

Bank Balance

2,350

Sundry Creditors

2,450

Debtors

2,500

 

Reserve for Legal Charges

385

Less: Provision for Doubtful Debts

 

(125)

 

2,375

B’s Loan

9,900

Stock (4,000 – 240)

3,760

Capital A/cs:

 

Plant and Machinery

4,250

A

9,334

 

Factory Building (12,500 + 12,500)

15,000

C

4,666

14,000

 

 

 

27,735

 

27,735

 

 

 

 

 

Bank Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Balance b/d

2,750

A’s Capital A/c

266

 

 

B’s Capital A/c

134

 

 

Balance c/d

2,350

 

2,750

 

2,750

 

 

 

 

Working Notes

WN 1 Calculation of Profit Sharing Ratio

B retires from the firm.

∴New Ratio (A and C) = 4 : 2 or 2 : 1 and

Gaining Ratio = 4 : 2 or 2 : 1

WN 2 Adjustment of Goodwill

Goodwill of the firm = Rs 5,400

B’s Share of Goodwill =

This share of goodwill is to be distributed between A and C in their gaining ratio (i.e. 2 : 1).

WN 3 Adjustment of Partners’ Capital after B’s Retirement

Total Capital of the New Firm (after B’s retirement) = Rs 14,000

New Ratio = 2 : 1

Page No 5.86:

Question 37:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Stock (4,000 ×6%)

240

Factory Building (12,500 × 20%)

2,500

Provision for Doubtful Debts (125 – 50)

75

 

 

Reserve for Legal Charges

385

 

 

Profit transferred to:

 

 

 

A’s Capital A/c

800

 

 

 

B’s Capital A/c

600

 

 

 

C’s Capital A/c

400

1,800

 

 

 

2,500

 

2,500

 

 

 

 

 

Partners’ Capital Account

Dr.   Cr.

Particulars

A

B

C

Particulars

A

B

C

B’s Capital A/c (Goodwill)

1,200

 

600

Balance b/d

10,000

7,500

5,000

 

 

 

 

Revaluation A/c

800

600

400

B’s Loan

 

9,900

 

A’s Capital A/c (Goodwill)

 

1,200

 

 

 

 

 

C’s Capital A/c (Goodwill)

 

600

 

Balance c/d

9,600

 

4,800

 

 

 

 

 

10,800

9,900

5,400

 

10,800

9,900

5,400

Cash A/c

266

 

134

Balance b/d

9,600

 

4,800

Balance c/d (WN 3)

9,334

 

4,666

 

 

 

 

 

9,600

 

4,800

 

9,600

 

4,800

 

 

 

 

 

 

 

 

 

Balance Sheet

as on March 31, 2014 (after B’s retirement)

Liabilities

Amount

Rs

Assets

Amount

Rs

Bills Payable

1,000

Bank Balance

2,350

Sundry Creditors

2,450

Debtors

2,500

 

Reserve for Legal Charges

385

Less: Provision for Doubtful Debts

 

(125)

 

2,375

B’s Loan

9,900

Stock (4,000 – 240)

3,760

Capital A/cs:

 

Plant and Machinery

4,250

A

9,334

 

Factory Building (12,500 + 12,500)

15,000

C

4,666

14,000

 

 

 

27,735

 

27,735

 

 

 

 

 

Bank Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Balance b/d

2,750

A’s Capital A/c

266

 

 

B’s Capital A/c

134

 

 

Balance c/d

2,350

 

2,750

 

2,750

 

 

 

 

Working Notes

WN 1 Calculation of Profit Sharing Ratio

B retires from the firm.

∴New Ratio (A and C) = 4 : 2 or 2 : 1 and

Gaining Ratio = 4 : 2 or 2 : 1

WN 2 Adjustment of Goodwill

Goodwill of the firm = Rs 5,400

B’s Share of Goodwill =

This share of goodwill is to be distributed between A and C in their gaining ratio (i.e. 2 : 1).

WN 3 Adjustment of Partners’ Capital after B’s Retirement

Total Capital of the New Firm (after B’s retirement) = Rs 14,000

New Ratio = 2 : 1

Answer:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Provision for Douibtful Debts (500 – 200)

300

Prepaid Insurance

1,000

Machinery (24,000 × 5%)

1,200

Freehold Premises

5,000

Outstanding Workmen’s Compensation

1,500

(50,000 × 10%)

 

Profit transferred to:

 

 

 

A’s Capital A/c

1,500

 

 

 

B’s Capital A/c

1,000

 

 

 

C’s Capital A/c

500

3,000

 

 

 

6,000

 

6,000

 

 

 

 

 

Partners’ Capital Account

Dr.

 

Cr.

Particulars

A

B

C

Particulars

A

B

C

B’s Capital A/c (Goodwill)

4,500

 

1,500

Balance b/d

45,000

30,000

15,000

Bank A/c

 

5,000

 

Revaluation A/c (Profit)

1,500

1,000

500

B’s Loan A/c

 

32,000

 

A’s Capital A/c (Goodwill)

 

4,500

 

Balance c/d

42,000

 

14,000

C’s Capital A/c (Goodwill)

 

1,500

 

 

46,500

37,000

15,500

 

46,500

37,000

15,500

 

 

 

 

Balance b/d

42,000

 

14,000

Balance c/d (WN 3)

45,000

 

15,000

Cash A/c

3,000

 

1,000

 

45,000

 

15,000

 

45,000

 

15,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as on March 31, 2014 (after B’s retirement)

 

 

 

Liabilities

Amount

Rs

Assets

Amount

Rs

Creditors

10,800

Cash at Bank

12,000

Bills Payable

5,000

Debtors

10,000

 

Outstanding Workmen Compensation

1,500

Less: Provision for Doubtful Debts

 

(500)

 

9,500

B’s Loan

32,000

Stock

9,000

Capital A/cs:

 

Machinery (24,000 – 1,200)

22,800

A

45,000

 

Freehold Premises (50,000 + 5,000)

55,000

C

15,000

60,000

Prepaid Insurance

1,000

 

1,09,300

 

1,09,300

 

 

 

 

 

Bank Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Balance b/d

13,000

B’s Capital A/c

5,000

A’s Capital A/c

3,000

Balance c/d

12,000

C’s Capital A/c

1,000

 

 

 

17,000

 

17,000

 

 

 

 

Working Notes

WN 1 Calculation of Profit Sharing Ratio

B retires from the firm.

∴New Ratio (A and C) = 3 : 1 and

Gaining Ratio = 3 : 1

WN 2 Adjustment of Goodwill

Goodwill of the firm = Rs 18,000

B’s Share of Goodwill =

This share of goodwill is to be distributed between A and C in their gaining ratio (i.e. 3 : 1).

WN 3 Adjustment of Partners’ Capital after B’s Retirement

Total Capital of the New Firm (after B’s retirement) = Rs 60,000

New Ratio = 3 : 1



Page No 5.87:

Question 38:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Provision for Douibtful Debts (500 – 200)

300

Prepaid Insurance

1,000

Machinery (24,000 × 5%)

1,200

Freehold Premises

5,000

Outstanding Workmen’s Compensation

1,500

(50,000 × 10%)

 

Profit transferred to:

 

 

 

A’s Capital A/c

1,500

 

 

 

B’s Capital A/c

1,000

 

 

 

C’s Capital A/c

500

3,000

 

 

 

6,000

 

6,000

 

 

 

 

 

Partners’ Capital Account

Dr.

 

Cr.

Particulars

A

B

C

Particulars

A

B

C

B’s Capital A/c (Goodwill)

4,500

 

1,500

Balance b/d

45,000

30,000

15,000

Bank A/c

 

5,000

 

Revaluation A/c (Profit)

1,500

1,000

500

B’s Loan A/c

 

32,000

 

A’s Capital A/c (Goodwill)

 

4,500

 

Balance c/d

42,000

 

14,000

C’s Capital A/c (Goodwill)

 

1,500

 

 

46,500

37,000

15,500

 

46,500

37,000

15,500

 

 

 

 

Balance b/d

42,000

 

14,000

Balance c/d (WN 3)

45,000

 

15,000

Cash A/c

3,000

 

1,000

 

45,000

 

15,000

 

45,000

 

15,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as on March 31, 2014 (after B’s retirement)

 

 

 

Liabilities

Amount

Rs

Assets

Amount

Rs

Creditors

10,800

Cash at Bank

12,000

Bills Payable

5,000

Debtors

10,000

 

Outstanding Workmen Compensation

1,500

Less: Provision for Doubtful Debts

 

(500)

 

9,500

B’s Loan

32,000

Stock

9,000

Capital A/cs:

 

Machinery (24,000 – 1,200)

22,800

A

45,000

 

Freehold Premises (50,000 + 5,000)

55,000

C

15,000

60,000

Prepaid Insurance

1,000

 

1,09,300

 

1,09,300

 

 

 

 

 

Bank Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Balance b/d

13,000

B’s Capital A/c

5,000

A’s Capital A/c

3,000

Balance c/d

12,000

C’s Capital A/c

1,000

 

 

 

17,000

 

17,000

 

 

 

 

Working Notes

WN 1 Calculation of Profit Sharing Ratio

B retires from the firm.

∴New Ratio (A and C) = 3 : 1 and

Gaining Ratio = 3 : 1

WN 2 Adjustment of Goodwill

Goodwill of the firm = Rs 18,000

B’s Share of Goodwill =

This share of goodwill is to be distributed between A and C in their gaining ratio (i.e. 3 : 1).

WN 3 Adjustment of Partners’ Capital after B’s Retirement

Total Capital of the New Firm (after B’s retirement) = Rs 60,000

New Ratio = 3 : 1

Answer:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Stock (32,000 × 6%)

1,920

Building (1,00,000 × 20%)

20,000

Provision for Doubtful Debts (1,000 – 400)

600

 

 

Provision for Legal Charges

3,080

 

 

Profit transferred to:

 

 

 

A’s Capital A/c

6,400

 

 

 

B’s Capital A/c

4,800

 

 

 

C’s Capital A/c

3,200

14,400

 

 

 

20,000

 

20,000

 

 

 

 

 

Partners’ Capital Account

Dr.

 

Cr.

Particulars

A

B

C

Particulars

A

B

C

B’s Capital A/c (Goodwill)

7,800

 

6,600

Balance b/d

80,000

60,000

40,000

B’s Loan

 

79,200

 

Revaluation A/c (Profit)

6,400

4,800

3,200

Balance c/d

78,600

 

36,600

A’s Capital A/c (Goodwill)

 

7,800

 

 

 

 

 

B’s Capital A/c (Goodwill)

 

6,600

 

 

86,400

79,200

43,200

 

86,400

79,200

43,200

Cash A/c

8,600

 

 

Balance b/d

78,600

 

36,600

Balance c/d (WN 3)

70,000

 

42,000

Cash A/c

 

 

5,400

 

78,600

 

42,000

 

78,600

 

42,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as on April 01,2014 (after B’s Retirement)

Liabilities

Amount

Rs

Assets

Amount

Rs

Creditors

27,600

Cash at Bank

18,800

Provision for Legal Charges

3,080

Debtors

20,000

 

B’s Loan

79,200

Less: Provision for Doubtful Debts

 

(1,000)

 

19,000

Capital A/cs:

 

Stock (32,000 – 1,920)

30,080

A

70,000

 

Machinery

34,000

C

42,000

1,12,000

Building (1,00,000 + 20,000)

1,20,000

 

2,21,880

 

2,21,880

 

 

 

 

 

Bank Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Balance b/d

22,000

A’s Capital A/c

8,600

C’s Capital A/c

5,400

Balance c/d

18,800

 

27,400

 

27,400

 

 

 

 

Working Notes

WN 1 Calculation of Profit Sharing Ratio

B retires from the firm.

New Ratio (A and C) = 5 : 3

Gaining Ratio = New Ratio − Old Ratio

∴Gaining Ratio = 13 : 11

WN 2 Adjustment of Goodwill

Goodwill of the firm = Rs 43,200

B’s Share of Goodwill =

This share of goodwill is to be distributed between A and C in their gaining ratio (i.e. 13 : 11).

WN 3 Adjustment of Partners’ Capital after B’s Retirement

Total Capital of the New Firm (after B’s retirement) = Rs 1,12,000

New Ratio = 5 : 3

Page No 5.87:

Question 39:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Stock (32,000 × 6%)

1,920

Building (1,00,000 × 20%)

20,000

Provision for Doubtful Debts (1,000 – 400)

600

 

 

Provision for Legal Charges

3,080

 

 

Profit transferred to:

 

 

 

A’s Capital A/c

6,400

 

 

 

B’s Capital A/c

4,800

 

 

 

C’s Capital A/c

3,200

14,400

 

 

 

20,000

 

20,000

 

 

 

 

 

Partners’ Capital Account

Dr.

 

Cr.

Particulars

A

B

C

Particulars

A

B

C

B’s Capital A/c (Goodwill)

7,800

 

6,600

Balance b/d

80,000

60,000

40,000

B’s Loan

 

79,200

 

Revaluation A/c (Profit)

6,400

4,800

3,200

Balance c/d

78,600

 

36,600

A’s Capital A/c (Goodwill)

 

7,800

 

 

 

 

 

B’s Capital A/c (Goodwill)

 

6,600

 

 

86,400

79,200

43,200

 

86,400

79,200

43,200

Cash A/c

8,600

 

 

Balance b/d

78,600

 

36,600

Balance c/d (WN 3)

70,000

 

42,000

Cash A/c

 

 

5,400

 

78,600

 

42,000

 

78,600

 

42,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as on April 01,2014 (after B’s Retirement)

Liabilities

Amount

Rs

Assets

Amount

Rs

Creditors

27,600

Cash at Bank

18,800

Provision for Legal Charges

3,080

Debtors

20,000

 

B’s Loan

79,200

Less: Provision for Doubtful Debts

 

(1,000)

 

19,000

Capital A/cs:

 

Stock (32,000 – 1,920)

30,080

A

70,000

 

Machinery

34,000

C

42,000

1,12,000

Building (1,00,000 + 20,000)

1,20,000

 

2,21,880

 

2,21,880

 

 

 

 

 

Bank Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Balance b/d

22,000

A’s Capital A/c

8,600

C’s Capital A/c

5,400

Balance c/d

18,800

 

27,400

 

27,400

 

 

 

 

Working Notes

WN 1 Calculation of Profit Sharing Ratio

B retires from the firm.

New Ratio (A and C) = 5 : 3

Gaining Ratio = New Ratio − Old Ratio

∴Gaining Ratio = 13 : 11

WN 2 Adjustment of Goodwill

Goodwill of the firm = Rs 43,200

B’s Share of Goodwill =

This share of goodwill is to be distributed between A and C in their gaining ratio (i.e. 13 : 11).

WN 3 Adjustment of Partners’ Capital after B’s Retirement

Total Capital of the New Firm (after B’s retirement) = Rs 1,12,000

New Ratio = 5 : 3

Answer:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Machinery (30,000 × 10%)

3,000

Freehold Premises (40,000 × 20%)

8,000

Furniture (12,000 × 7%)

840

Stock (22,000 × 15%)

3,300

Provision for Doubtful Debts (1,500 – 1,000)

500

 

 

Profit transferred to:

 

 

 

X’s Capital A/c

3,480

 

 

 

Y’s Capital A/c

1,160

 

 

 

Z’s Capital A/c

2,320

6,960

 

 

 

11,300

 

11,300

 

 

 

 

 

Partner’s Capital Accounts

Dr.

 

Cr.

Particulars

X

Y

Z

Particulars

X

Y

Z

Z’s Capital A/c

5,250

1,750

 

Balance b/d

30,000

20,000

28,000

 

 

 

 

General Reserve

6,000

2,000

4,000

Z’s Loan A/c

 

 

41,320

X’s Capital A/c (Goodwill)

 

 

5,250

 

 

 

 

Y’s Capital A/c (Goodwill)

 

 

1,750

Balance c/d

34,230

21,410

 

Revaluation A/c (Profit)

3,480

1,160

2,320

 

39,480

23,160

41,320

 

39,480

23,160

41,320

Y’s Current A/c

 

7,500

 

Balance b/d

34,230

21,410

 

Balance c/d (WN 3)

41,730

13,910

 

X’s Current A/c

7,500

 

 

 

41,730

21,410

 

 

41,730

21,410

 

 

 

 

 

 

 

 

 

 

Balance Sheet

Liabilities

Amount

Rs

Assets

Amount

Rs

Bills Payable

12,000

Freehold Premises (40,000 + 8,000)

48,000

Sundry Creditors

28,000

Machinery (30,000 – 3,000)

27,000

Z’s Loan

41,320

Furniture (12,000 – 840)

11,160

Capital A/cs:

 

Stock (22,000 + 3,300)

25,300

X

41,730

 

Sundry Debtors

20,000

 

Y

13,910

55,640

Less: Provision for Doubtful Debts

 

(1,500)

 

18,500

Y’s Current A/c

7,500

Cash

7,000

 

 

X’s Current A/c

7,500

 

1,44,460

 

1,44,460

 

 

 

 

Working Notes

WN 1 Calculation of Profit Sharing Ratio

Old Ratio (X, Y and Z) = 3 : 1 : 2

Z retires from the firm.

∴New Ratio (X and Y) = 3 : 1 and

Gaining Ratio = 3 : 1

WN 2 Adjustment of Goodwill

Goodwill of the firm = Rs 21,000

Z’s Share of Goodwill =

This share of goodwill is to be distributed between X and Y in their gaining ratio (i.e. 3 : 1).

WN 3 Adjustment of Partners’ Capital after Z’s Retirement

Combined Capital of X and Y after all adjustments = 34,230 + 21,410 = Rs. 55,640

New Ratio = 3 : 1

 



Page No 5.88:

Question 40:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Machinery (30,000 × 10%)

3,000

Freehold Premises (40,000 × 20%)

8,000

Furniture (12,000 × 7%)

840

Stock (22,000 × 15%)

3,300

Provision for Doubtful Debts (1,500 – 1,000)

500

 

 

Profit transferred to:

 

 

 

X’s Capital A/c

3,480

 

 

 

Y’s Capital A/c

1,160

 

 

 

Z’s Capital A/c

2,320

6,960

 

 

 

11,300

 

11,300

 

 

 

 

 

Partner’s Capital Accounts

Dr.

 

Cr.

Particulars

X

Y

Z

Particulars

X

Y

Z

Z’s Capital A/c

5,250

1,750

 

Balance b/d

30,000

20,000

28,000

 

 

 

 

General Reserve

6,000

2,000

4,000

Z’s Loan A/c

 

 

41,320

X’s Capital A/c (Goodwill)

 

 

5,250

 

 

 

 

Y’s Capital A/c (Goodwill)

 

 

1,750

Balance c/d

34,230

21,410

 

Revaluation A/c (Profit)

3,480

1,160

2,320

 

39,480

23,160

41,320

 

39,480

23,160

41,320

Y’s Current A/c

 

7,500

 

Balance b/d

34,230

21,410

 

Balance c/d (WN 3)

41,730

13,910

 

X’s Current A/c

7,500

 

 

 

41,730

21,410

 

 

41,730

21,410

 

 

 

 

 

 

 

 

 

 

Balance Sheet

Liabilities

Amount

Rs

Assets

Amount

Rs

Bills Payable

12,000

Freehold Premises (40,000 + 8,000)

48,000

Sundry Creditors

28,000

Machinery (30,000 – 3,000)

27,000

Z’s Loan

41,320

Furniture (12,000 – 840)

11,160

Capital A/cs:

 

Stock (22,000 + 3,300)

25,300

X

41,730

 

Sundry Debtors

20,000

 

Y

13,910

55,640

Less: Provision for Doubtful Debts

 

(1,500)

 

18,500

Y’s Current A/c

7,500

Cash

7,000

 

 

X’s Current A/c

7,500

 

1,44,460

 

1,44,460

 

 

 

 

Working Notes

WN 1 Calculation of Profit Sharing Ratio

Old Ratio (X, Y and Z) = 3 : 1 : 2

Z retires from the firm.

∴New Ratio (X and Y) = 3 : 1 and

Gaining Ratio = 3 : 1

WN 2 Adjustment of Goodwill

Goodwill of the firm = Rs 21,000

Z’s Share of Goodwill =

This share of goodwill is to be distributed between X and Y in their gaining ratio (i.e. 3 : 1).

WN 3 Adjustment of Partners’ Capital after Z’s Retirement

Combined Capital of X and Y after all adjustments = 34,230 + 21,410 = Rs. 55,640

New Ratio = 3 : 1

 

Answer:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Provision for Doubtful Debts

1,000

Creditors

6,000

Stock (18,000 × 10%)

1,800

 

 

Furniture (30,000 × 5%)

1,500

 

 

Outstanding Claim for Damages

1,100

 

 

Profit transferred to:

 

 

 

A’s Capital A/c

300

 

 

 

B’s Capital A/c

200

 

 

 

C’s Capital A/c

100

600

 

 

 

6,000

 

6,000

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

A

B

C

Particulars

A

B

C

B’s Capital A/c (Goodwill)

5,500

 

1,833

Balance b/d

40,000

40,000

30,000

Goodwill A/c

5,000

3,333

1,667

Revaluation A/c

300

200

100

Cash A/c

 

48,200

 

A’s Capital A/c (Goodwill)

 

5,500

 

Balance c/d

35,800

 

28,600

C’s Capital A/c (Goodwill)

 

1,833

 

 

 

 

 

General Reserve

6,000

4,000

2,000

 

46,300

51,533

32,100

 

46,300

51,533

32,100

 

 

 

 

 

 

 

 

Cash A/c

 

 

2,450

Balance b/d

35,800

 

28,600

Balance c/d (WN 3)

78,450

 

26,150

Cash A/c

42,650

 

 

 

78,450

 

28,600

 

78,450

 

28,600

 

 

 

 

 

 

 

 

 

Cash Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Balance b/d

18,000

B’s Capital A/c

48,200

A’s Capital A/c

42,650

C’s Capital A/c

2,450

 

 

Balance c/d

10,000

 

60,650

 

60,650

 

 

 

 

 

Balance Sheet

as on April 01,2014 (after B’s Retirement)

Liabilities

Amount

Rs

Assets

Amount

Rs

Creditors

24,000

Cash in Hand

10,000

Bills Payable

16,000

Debtors

25,000

 

Outstanding Claim for Damages

1,100

Less: Provision for Doubtful Debts

 

(4,000)

21,000

Capital A/cs:

 

Stock

16,200

A

78,450

 

Furniture

28,500

C

26,150

1,04,600

Machinery

70,000

 

1,45,700

 

1,45,700

 

 

 

 

Working Notes

WN 1 Calculation of Profit Sharing Ratio

Old Ratio (A, B and C) = 3 : 2 : 1

B retires from the firm.

∴New Ratio (A and C) = 3 : 1 and

Gaining Ratio = 3 : 1

WN 2 Adjustment of Goodwill

Goodwill of the firm = Rs 22,000

B’s Share of Goodwill =

This share of goodwill is to be distributed between A and C in their gaining ratio (i.e. 3 : 1).

WN 3 Adjustment of Partners’ Capital after B’s Retirement

Amount to be brought in by A and C = Cash to be paid to B + Minimum Balance of Cash − Existing Balance of Cash

                                                        = 48,200 + 10,000 − 18,000 = Rs 40,200

Combined Capital of A and C after of all adjustments = 35,800 + 28,600 = Rs 64,400

∴Total Capital of the Firm = Amount to be brought in by A and C + Combined Capital of A and C

                                        = 40,200 + 64,400 = 1,04,600

Page No 5.88:

Question 41:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Provision for Doubtful Debts

1,000

Creditors

6,000

Stock (18,000 × 10%)

1,800

 

 

Furniture (30,000 × 5%)

1,500

 

 

Outstanding Claim for Damages

1,100

 

 

Profit transferred to:

 

 

 

A’s Capital A/c

300

 

 

 

B’s Capital A/c

200

 

 

 

C’s Capital A/c

100

600

 

 

 

6,000

 

6,000

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

A

B

C

Particulars

A

B

C

B’s Capital A/c (Goodwill)

5,500

 

1,833

Balance b/d

40,000

40,000

30,000

Goodwill A/c

5,000

3,333

1,667

Revaluation A/c

300

200

100

Cash A/c

 

48,200

 

A’s Capital A/c (Goodwill)

 

5,500

 

Balance c/d

35,800

 

28,600

C’s Capital A/c (Goodwill)

 

1,833

 

 

 

 

 

General Reserve

6,000

4,000

2,000

 

46,300

51,533

32,100

 

46,300

51,533

32,100

 

 

 

 

 

 

 

 

Cash A/c

 

 

2,450

Balance b/d

35,800

 

28,600

Balance c/d (WN 3)

78,450

 

26,150

Cash A/c

42,650

 

 

 

78,450

 

28,600

 

78,450

 

28,600

 

 

 

 

 

 

 

 

 

Cash Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Balance b/d

18,000

B’s Capital A/c

48,200

A’s Capital A/c

42,650

C’s Capital A/c

2,450

 

 

Balance c/d

10,000

 

60,650

 

60,650

 

 

 

 

 

Balance Sheet

as on April 01,2014 (after B’s Retirement)

Liabilities

Amount

Rs

Assets

Amount

Rs

Creditors

24,000

Cash in Hand

10,000

Bills Payable

16,000

Debtors

25,000

 

Outstanding Claim for Damages

1,100

Less: Provision for Doubtful Debts

 

(4,000)

21,000

Capital A/cs:

 

Stock

16,200

A

78,450

 

Furniture

28,500

C

26,150

1,04,600

Machinery

70,000

 

1,45,700

 

1,45,700

 

 

 

 

Working Notes

WN 1 Calculation of Profit Sharing Ratio

Old Ratio (A, B and C) = 3 : 2 : 1

B retires from the firm.

∴New Ratio (A and C) = 3 : 1 and

Gaining Ratio = 3 : 1

WN 2 Adjustment of Goodwill

Goodwill of the firm = Rs 22,000

B’s Share of Goodwill =

This share of goodwill is to be distributed between A and C in their gaining ratio (i.e. 3 : 1).

WN 3 Adjustment of Partners’ Capital after B’s Retirement

Amount to be brought in by A and C = Cash to be paid to B + Minimum Balance of Cash − Existing Balance of Cash

                                                        = 48,200 + 10,000 − 18,000 = Rs 40,200

Combined Capital of A and C after of all adjustments = 35,800 + 28,600 = Rs 64,400

∴Total Capital of the Firm = Amount to be brought in by A and C + Combined Capital of A and C

                                        = 40,200 + 64,400 = 1,04,600

Answer:

Revaluation Account

Dr.

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Machinery A/c

1,80,000

Land and Building A/c

1,20,000

Bad Debts A/c (35,000 – 20,000)

15,000

Loss on Revaluation transferred to:

 

 

 

Kusum

21,429

 

 

 

Sneh

32,142

 

 

 

Usha

21,429

75,000

 

1,95,000

 

1,95,000

 

 

 

 

 

Partners’ Capital Account

Dr.

Cr.

Particulars

Kusum

Sneh

Usha

Particulars

Kusum

Sneh

Usha

Revaluation A/c (Loss)

21,429

32,142

21,429

Balance b/d

4,00,000

6,00,000

4,00,000

Usha’s Capital A/c

80,000

Workmen Compensation Fund

4,286

6,428

4,286

Bank A/c

1,00,000

Usha’s Capital A/c

80,000

Kusum’s Loan A/c

3,62,857

 

 

 

 

Balance c/d

5,74,286

3,02,857

 

 

 

 

 

4,84,286

6,06,428

4,04,286

 

4,84,286

6,06,428

4,04,286

Balance c/d

6,00,000

8,00,000

Balance b/d

5,74,286

3,02,857

 

 

 

 

Bank A/c (WN3)

25,714

4,97,143

 

6,00,000

8,00,000

 

6,00,000

8,00,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as at March 31, 2013

Liabilities

Amount

Rs

Assets

Amount

Rs

Creditors

1,00,000

Land & Building

5,20,000

Employee’s Provident Fund

70,000

Machinery (6,00,000 – 1,80,000)

4,20,000

Workmen’s Compensation Claim

15,000

Stock

2,00,000

Kusum’s Loan

3,62,857

Sundry Debtors (2,20,000 – 35,000)

1,85,000

Capital A/c :

 

Bank

6,22,857

Sneh

6,00,000

 

 

 

Usha

8,00,000

14,00,000

 

 

 

19,47,857

 

19,47,857

 

 

 

 

 

Working Notes

 

WN 1 Calculation of Gaining Ratio 

Old Ratio (Kusum, Sneh and Usha) = 2:3:2

New Ratio (Sneh and Usha) = 3:4

Gaining Ratio = New Ratio – Old Ratio

WN2 Adjustment of Goodwill

Total Goodwill of the Firm = 2,80,000

It is to be adjusted by the Gaining partners i.e. only by Usha

 

WN3 Adjustment of Capital

Particulars

Sneh

Usha

New Capital Balance

6,00,000

8,00,000

Adjusted Old Capital Balance

5,74,286

3,02,857

Cash brought in by the Partner

25,714

4,97,143

 

 

 

WN4

Cash at Bank A/c

Dr.

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Balance b/d

2,00,000

Kusum’s Capital A/c

1,00,000

Sneh’s Capital A/c

25,714

Balance c/d

6,22,857

Usha’s Capital A/c

4,97,143

 

 

 

7,22,857

 

7,22,857

 

 

 

 

 



Page No 5.89:

Question 42:

Revaluation Account

Dr.

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Machinery A/c

1,80,000

Land and Building A/c

1,20,000

Bad Debts A/c (35,000 – 20,000)

15,000

Loss on Revaluation transferred to:

 

 

 

Kusum

21,429

 

 

 

Sneh

32,142

 

 

 

Usha

21,429

75,000

 

1,95,000

 

1,95,000

 

 

 

 

 

Partners’ Capital Account

Dr.

Cr.

Particulars

Kusum

Sneh

Usha

Particulars

Kusum

Sneh

Usha

Revaluation A/c (Loss)

21,429

32,142

21,429

Balance b/d

4,00,000

6,00,000

4,00,000

Usha’s Capital A/c

80,000

Workmen Compensation Fund

4,286

6,428

4,286

Bank A/c

1,00,000

Usha’s Capital A/c

80,000

Kusum’s Loan A/c

3,62,857

 

 

 

 

Balance c/d

5,74,286

3,02,857

 

 

 

 

 

4,84,286

6,06,428

4,04,286

 

4,84,286

6,06,428

4,04,286

Balance c/d

6,00,000

8,00,000

Balance b/d

5,74,286

3,02,857

 

 

 

 

Bank A/c (WN3)

25,714

4,97,143

 

6,00,000

8,00,000

 

6,00,000

8,00,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as at March 31, 2013

Liabilities

Amount

Rs

Assets

Amount

Rs

Creditors

1,00,000

Land & Building

5,20,000

Employee’s Provident Fund

70,000

Machinery (6,00,000 – 1,80,000)

4,20,000

Workmen’s Compensation Claim

15,000

Stock

2,00,000

Kusum’s Loan

3,62,857

Sundry Debtors (2,20,000 – 35,000)

1,85,000

Capital A/c :

 

Bank

6,22,857

Sneh

6,00,000

 

 

 

Usha

8,00,000

14,00,000

 

 

 

19,47,857

 

19,47,857

 

 

 

 

 

Working Notes

 

WN 1 Calculation of Gaining Ratio 

Old Ratio (Kusum, Sneh and Usha) = 2:3:2

New Ratio (Sneh and Usha) = 3:4

Gaining Ratio = New Ratio – Old Ratio

WN2 Adjustment of Goodwill

Total Goodwill of the Firm = 2,80,000

It is to be adjusted by the Gaining partners i.e. only by Usha

 

WN3 Adjustment of Capital

Particulars

Sneh

Usha

New Capital Balance

6,00,000

8,00,000

Adjusted Old Capital Balance

5,74,286

3,02,857

Cash brought in by the Partner

25,714

4,97,143

 

 

 

WN4

Cash at Bank A/c

Dr.

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Balance b/d

2,00,000

Kusum’s Capital A/c

1,00,000

Sneh’s Capital A/c

25,714

Balance c/d

6,22,857

Usha’s Capital A/c

4,97,143

 

 

 

7,22,857

 

7,22,857

 

 

 

 

 

Answer:

Profit and Loss Adjustment Account

Dr.

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Fixed Assets A/c (60,000 – 57,500)

2,500

Creditors (10,000 – 8,000)

2,000

Provision for Doubtful Debts

5,000

Loss on Revaluation transferred to:

 

 

 

X

2,750

 

 

 

Y

1,650

 

 

 

Z

1,100

5,500

 

7,500

 

7,500

 

 

 

 

 

Partners’ Capital Account

Dr.

Cr.

Particulars

X

Y

Z

Particulars

X

Y

Z

Revaluation A/c (Loss)

2,750

1,650

1,100

Balance b/d

40,000

62,000

33,000

X’s Capital A/c

–

24,000

16,000

Profit & Loss A/c

42,500

25,500

17,000

Balance c/d

1,19,750

61,850

32,900

Y’s Capital A/c

24,000

– –

 

 

 

 

Z’s Capital A/c

16,000

– –

 

1,22,500

87,500

50,000

 

1,22,500

87,500

50,000

Bank A/c

1,19,750

– –

Balance b/d

1,19,750

61,850

32,900

Balance c/d

–

1,18,500

79,000

Bank A/c

–

56,650

46,100

 

1,19,750

1,18,500

79,000

 

1,19,750

1,18,500

79,000

 

 

 

 

 

 

 

 

 

Working Notes

 

WN 1 Calculation of Gaining Ratio 

Old Ratio (X, Y and Z) = 5:3:2

New Ratio (Y and Z) = 3:2

Gaining Ratio = New Ratio – Old Ratio

Hence, gaining ratio is 3 : 2.

 

WN2 Adjustment of Goodwill

Total Goodwill of the Firm = 80,000

To be borne by Gaining partners in their Gaining Ratio i.e. 3:2

 

WN3 Adjustment of Capital

X’s Capital before adjustment = 1,19,750

Y’s Capital before adjustment = 61,850

Z’s Capital before adjustment = 32,900

Particulars

Y

Z

 New Capital Balance

1,18,500

79,000

 Adjusted Old Capital Balance

61,850

32,900

Cash brought in by the Partner

56,650

46,100

 

 

 

WN4

Cash at Bank A/c

Dr.

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Balance b/d

40,000

Creditors

8,000

Y’s Capital A/c

56,650

X’s Capital A/c

1,19,750

Z’s Capital A/c

46,100

Balance c/d

15,000

 

1,42,750

 

1,42,750

 

 

 

 

 



Page No 5.90:

Question 43:

Profit and Loss Adjustment Account

Dr.

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Fixed Assets A/c (60,000 – 57,500)

2,500

Creditors (10,000 – 8,000)

2,000

Provision for Doubtful Debts

5,000

Loss on Revaluation transferred to:

 

 

 

X

2,750

 

 

 

Y

1,650

 

 

 

Z

1,100

5,500

 

7,500

 

7,500

 

 

 

 

 

Partners’ Capital Account

Dr.

Cr.

Particulars

X

Y

Z

Particulars

X

Y

Z

Revaluation A/c (Loss)

2,750

1,650

1,100

Balance b/d

40,000

62,000

33,000

X’s Capital A/c

–

24,000

16,000

Profit & Loss A/c

42,500

25,500

17,000

Balance c/d

1,19,750

61,850

32,900

Y’s Capital A/c

24,000

– –

 

 

 

 

Z’s Capital A/c

16,000

– –

 

1,22,500

87,500

50,000

 

1,22,500

87,500

50,000

Bank A/c

1,19,750

– –

Balance b/d

1,19,750

61,850

32,900

Balance c/d

–

1,18,500

79,000

Bank A/c

–

56,650

46,100

 

1,19,750

1,18,500

79,000

 

1,19,750

1,18,500

79,000

 

 

 

 

 

 

 

 

 

Working Notes

 

WN 1 Calculation of Gaining Ratio 

Old Ratio (X, Y and Z) = 5:3:2

New Ratio (Y and Z) = 3:2

Gaining Ratio = New Ratio – Old Ratio

Hence, gaining ratio is 3 : 2.

 

WN2 Adjustment of Goodwill

Total Goodwill of the Firm = 80,000

To be borne by Gaining partners in their Gaining Ratio i.e. 3:2

 

WN3 Adjustment of Capital

X’s Capital before adjustment = 1,19,750

Y’s Capital before adjustment = 61,850

Z’s Capital before adjustment = 32,900

Particulars

Y

Z

 New Capital Balance

1,18,500

79,000

 Adjusted Old Capital Balance

61,850

32,900

Cash brought in by the Partner

56,650

46,100

 

 

 

WN4

Cash at Bank A/c

Dr.

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Balance b/d

40,000

Creditors

8,000

Y’s Capital A/c

56,650

X’s Capital A/c

1,19,750

Z’s Capital A/c

46,100

Balance c/d

15,000

 

1,42,750

 

1,42,750

 

 

 

 

 

Answer:

Profit for the year 2013 = Rs 1,00,000

Sales for the year 2013 = Rs 10,00,000

 

Sales from Jan. to March 31, 2014 = Rs 1,50,000

∴Profit from Jan. 01 to March 31, 2014 on the basis of Profit Ratio of 2012

∴C’s Profit Share (from Jan. to March 31, 2014)

Page No 5.90:

Question 44:

Profit for the year 2013 = Rs 1,00,000

Sales for the year 2013 = Rs 10,00,000

 

Sales from Jan. to March 31, 2014 = Rs 1,50,000

∴Profit from Jan. 01 to March 31, 2014 on the basis of Profit Ratio of 2012

∴C’s Profit Share (from Jan. to March 31, 2014)

Answer:

Profit for the year 2011 before adjusting bad debts = Rs 14,000
Bad debts = Rs 2,000
Profits after adjusting bad debts= Rs (14,000 – 2,000) = Rs 12,000
Proportionate profits till 31st, March 2012

B’s share of profit (from Jan 01 till 31 March, 2012) is  Rs 1,000

Page No 5.90:

Question 45:

Profit for the year 2011 before adjusting bad debts = Rs 14,000
Bad debts = Rs 2,000
Profits after adjusting bad debts= Rs (14,000 – 2,000) = Rs 12,000
Proportionate profits till 31st, March 2012

B’s share of profit (from Jan 01 till 31 March, 2012) is  Rs 1,000

Answer:

PK’s Profit Share (from Jan. to May 31, 2012)

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

Profit and Loss Suspense A/c

Dr.

 

1,875

 

To PK’s Capital A/c

 

 

1,875

(PK’s profit share credited to his capital account )

 

 

 

 

Page No 5.90:

Question 46:

PK’s Profit Share (from Jan. to May 31, 2012)

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

Profit and Loss Suspense A/c

Dr.

 

1,875

 

To PK’s Capital A/c

 

 

1,875

(PK’s profit share credited to his capital account )

 

 

 

 

Answer:

Joshi’s Profit Share (from April 01 to May 31, 2014)

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

Profit and Loss Suspense A/c

Dr.

 

444

 

To Joshi’s Capital A/c

 

 

444

(Joshi’s profit share credited to his capital account )

 

 

 

 

Page No 5.90:

Question 47:

Joshi’s Profit Share (from April 01 to May 31, 2014)

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

Profit and Loss Suspense A/c

Dr.

 

444

 

To Joshi’s Capital A/c

 

 

444

(Joshi’s profit share credited to his capital account )

 

 

 

 

Answer:

Profit for the year 2011 = Rs 80,000

Sales for the year 2011 = Rs 4,00,000

∴Ratio of Profit to Sales in 2011

∴Profit from Jan. 01 to March 31, 2012 on the basis of Profit Ratio of 2011

∴Deceased Paertner’s Profit Share (from Jan. 01 to March 31, 2012)

Page No 5.90:

Question 48:

Profit for the year 2011 = Rs 80,000

Sales for the year 2011 = Rs 4,00,000

∴Ratio of Profit to Sales in 2011

∴Profit from Jan. 01 to March 31, 2012 on the basis of Profit Ratio of 2011

∴Deceased Paertner’s Profit Share (from Jan. 01 to March 31, 2012)

Answer:

(a) Calculation of R’s Share of Goodwill

Profit credited to R’s Capital Account in 4 years = Net profit for last four years × R’s Share

(b)

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

P’s Capital A/c

Dr.

 

48,000

 

S’s Capital A/c

Dr.

 

12,000

 

To R’s Capital A/c

 

 

60,000

(R’s share of goodwill adjusted )

 

 

 

Working Notes:

R’s Share of Goodwill = Rs 60,000

Old Ratio (P, R and S) = 4 : 3 : 1

R died.

∴Gaining Ratio = 4 : 1

This share of goodwill is to be distributed between P and S in their gaining ratio (i.e. 4 : 1)

Page No 5.90:

Question 49:

(a) Calculation of R’s Share of Goodwill

Profit credited to R’s Capital Account in 4 years = Net profit for last four years × R’s Share

(b)

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

P’s Capital A/c

Dr.

 

48,000

 

S’s Capital A/c

Dr.

 

12,000

 

To R’s Capital A/c

 

 

60,000

(R’s share of goodwill adjusted )

 

 

 

Working Notes:

R’s Share of Goodwill = Rs 60,000

Old Ratio (P, R and S) = 4 : 3 : 1

R died.

∴Gaining Ratio = 4 : 1

This share of goodwill is to be distributed between P and S in their gaining ratio (i.e. 4 : 1)

Answer:

Y’s Capital Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

 

 

Balance b/d

6,000

 

 

X’s Capital A/c (Reserve)

1,200

 

 

X’s Capital A/c (Goodwill)

5,040

Y’s Executor’s A/c

12,800

X’s Capital A/c (Profit)

560

 

12,800

 

12,800

 

 

 

 

Working Notes:

WN 1

Old Ratio (X and Y) =

WN 2

WN 3 Calculation Y’s Share of Profit 

Y’s Share of Profit (from Jan. 01to May 01, 2012)

WN 4 Calculation of Y’s Share of Goodwill 

Y’s share of Goodwill = Y’s Profit Share in last three year

Profit for last three years = 4,200 + 3,900 + 4,500 = Rs 12,600



Page No 5.91:

Question 50:

Y’s Capital Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

 

 

Balance b/d

6,000

 

 

X’s Capital A/c (Reserve)

1,200

 

 

X’s Capital A/c (Goodwill)

5,040

Y’s Executor’s A/c

12,800

X’s Capital A/c (Profit)

560

 

12,800

 

12,800

 

 

 

 

Working Notes:

WN 1

Old Ratio (X and Y) =

WN 2

WN 3 Calculation Y’s Share of Profit 

Y’s Share of Profit (from Jan. 01to May 01, 2012)

WN 4 Calculation of Y’s Share of Goodwill 

Y’s share of Goodwill = Y’s Profit Share in last three year

Profit for last three years = 4,200 + 3,900 + 4,500 = Rs 12,600

Answer:

P’s Capital Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Drawings A/c

15,000

Balance b/d

80,000

Interest on Drawings A/c

1,200

Interest on Capital A/c

1,600

P’s Executor’s A/c

69,400

Salary (12,000 × 2/12)

2,000

 

 

Profit and Loss Suspense A/c 

2,000

 

85,600

 

85,600

 

 

 

 

Working Notes:

WN 1 Calculation of Interest on Capital

P’s Capital Balance = Rs 80,000

Interest on Capital (for 2 months)

WN 2 Calculation of P’s Share of Profit

Profit for last year = Rs 30,000

∴P’s Share of Profit (for 2 Months)

Page No 5.91:

Question 51:

Answer:

A’s Capital Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Drawings A/c

1,500

Balance b/d

10,000

 

 

B’s Capital A/c (Goodwill)

6,570

A’s Executor’s A/c

24160.83

C’s Capital A/c (Goodwill)

6,570

 

 

Profit and Loss Suspense A/c

2520.83

 

25660.83

 

25660.83

 

 

 

 

Working Notes:

WN 1 Calculation of Goodwill

∴Goodwill = 13,140 × 2 = Rs 26,280

WN 2 Adjustment of Goodwill

Old Ratio (A, B and C) = 4 : 2 : 2

A died.

∴New Ratio = 2 : 2 or 1 : 1 and

Gaining Ratio = 2 : 2 or 1 : 1

A’s Share of Goodwill

This share of goodwill is to be distributed between B and C in their gaining ratio (i.e. 1: 1)

WN 3 Calculation of A’s Share of Profit

A’s Profit Share = Average Profit for last 3 previous years + 10% of Average Profit (for 5 months)

Average profit for last 3 years

10% of Average Profit = 11,000 × 10% = Rs 1,100

∴A’s Profit Share = Average Profit + 10% of Average Profit

 

Page No 5.91:

Question 52:

A’s Capital Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Drawings A/c

1,500

Balance b/d

10,000

 

 

B’s Capital A/c (Goodwill)

6,570

A’s Executor’s A/c

24160.83

C’s Capital A/c (Goodwill)

6,570

 

 

Profit and Loss Suspense A/c

2520.83

 

25660.83

 

25660.83

 

 

 

 

Working Notes:

WN 1 Calculation of Goodwill

∴Goodwill = 13,140 × 2 = Rs 26,280

WN 2 Adjustment of Goodwill

Old Ratio (A, B and C) = 4 : 2 : 2

A died.

∴New Ratio = 2 : 2 or 1 : 1 and

Gaining Ratio = 2 : 2 or 1 : 1

A’s Share of Goodwill

This share of goodwill is to be distributed between B and C in their gaining ratio (i.e. 1: 1)

WN 3 Calculation of A’s Share of Profit

A’s Profit Share = Average Profit for last 3 previous years + 10% of Average Profit (for 5 months)

Average profit for last 3 years

10% of Average Profit = 11,000 × 10% = Rs 1,100

∴A’s Profit Share = Average Profit + 10% of Average Profit

 

Answer:

Kapoor’s Account

Dr.

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Drawings A/c

5,000

Balance b/d

40,000

Interest on Drawings A/c

100

Interest on Capital A/c

300

Balance c/d

38,200

Profit and Loss Adjustment A/c

3,000

 

 

 

 

 

 

 

 

 

43,300

 

43,300

 

 

 

 

 

Working Notes

 

WN1 Calculation of Interest on Capita of Kapoor till date of his death

WN2Calculation of Share of Profit of Kapoor till date of his death

 

WN3Calculation of Interest on Drawings



Page No 5.92:

Question 53:

Kapoor’s Account

Dr.

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Drawings A/c

5,000

Balance b/d

40,000

Interest on Drawings A/c

100

Interest on Capital A/c

300

Balance c/d

38,200

Profit and Loss Adjustment A/c

3,000

 

 

 

 

 

 

 

 

 

43,300

 

43,300

 

 

 

 

 

Working Notes

 

WN1 Calculation of Interest on Capita of Kapoor till date of his death

WN2Calculation of Share of Profit of Kapoor till date of his death

 

WN3Calculation of Interest on Drawings

Answer:

C’s Capital Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Drawings A/c

4,500

Balance b/d

15,000

 

 

Interest on Capital A/c

1,350

 

 

Profit and Loss Suspense A/c

2,187

 

 

A’s Capital A/c (Goodwill)

3,500

C’s Executor’s A/c

19,870

B’s Capital A/c (Goodwill)

2,333

 

24,370

 

24,370

 

 

 

 

 

C’s Executor’s Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Balance c/d

19,870

C’s Capital A/c

19,870

 

 

 

 

 

19,870

 

19,870

 

 

 

 

 

Journal

Particulars

L.F.

Debit

Particulars

Rs

Credit

Amount

Rs

Interest on Capital A/c

Dr.

 

1,350

 

To C’s Capital A/c

 

 

1,350

(Interest on capital allowed)

 

 

 

 

 

 

 

Profit and Loss Suspense A/c

Dr.

 

2,187

 

To C’s Capital A/c

 

 

2,187

(Profit transferred to C’s Capital Account)

 

 

 

 

 

 

 

A’s Capital A/c

Dr.

 

3,500

 

B’s Capital A/c

Dr.

 

2,333

 

To C’s Capital A/c

 

 

5,833

(C’s share of goodwill adjusted)

 

 

 

 

 

 

 

C’s Capital A/c

Dr.

 

19,870

 

To C’s Executor’s A/c

 

 

19,870

(Amount due to C after all adjustments transferred to his Executor’s Account )

 

 

 

Working Notes:

WN 1 Calculation of Interest on Capital

C’s Capital Balance = Rs 15,000

∴Interest on Capital (for 9 months)

WN 2 Calculation of C’s Share of Profit

WN 3 Calculation of Goodwill

Goodwill = Average Profit × No. of years purchase

= 17,500 × 2 = Rs 35,000

WN 4 Adjustment of Goodwill

Old Ratio (A, B and C) = 3 : 2 : 1

C died.

∴New Ratio (A and B) = 3 : 2 and

Gaining Ratio = 3 : 2

This share of goodwill is to be distributed between A and B in their gaining ratio (i.e. 3 : 2)

Page No 5.92:

Question 54:

C’s Capital Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Drawings A/c

4,500

Balance b/d

15,000

 

 

Interest on Capital A/c

1,350

 

 

Profit and Loss Suspense A/c

2,187

 

 

A’s Capital A/c (Goodwill)

3,500

C’s Executor’s A/c

19,870

B’s Capital A/c (Goodwill)

2,333

 

24,370

 

24,370

 

 

 

 

 

C’s Executor’s Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Balance c/d

19,870

C’s Capital A/c

19,870

 

 

 

 

 

19,870

 

19,870

 

 

 

 

 

Journal

Particulars

L.F.

Debit

Particulars

Rs

Credit

Amount

Rs

Interest on Capital A/c

Dr.

 

1,350

 

To C’s Capital A/c

 

 

1,350

(Interest on capital allowed)

 

 

 

 

 

 

 

Profit and Loss Suspense A/c

Dr.

 

2,187

 

To C’s Capital A/c

 

 

2,187

(Profit transferred to C’s Capital Account)

 

 

 

 

 

 

 

A’s Capital A/c

Dr.

 

3,500

 

B’s Capital A/c

Dr.

 

2,333

 

To C’s Capital A/c

 

 

5,833

(C’s share of goodwill adjusted)

 

 

 

 

 

 

 

C’s Capital A/c

Dr.

 

19,870

 

To C’s Executor’s A/c

 

 

19,870

(Amount due to C after all adjustments transferred to his Executor’s Account )

 

 

 

Working Notes:

WN 1 Calculation of Interest on Capital

C’s Capital Balance = Rs 15,000

∴Interest on Capital (for 9 months)

WN 2 Calculation of C’s Share of Profit

WN 3 Calculation of Goodwill

Goodwill = Average Profit × No. of years purchase

= 17,500 × 2 = Rs 35,000

WN 4 Adjustment of Goodwill

Old Ratio (A, B and C) = 3 : 2 : 1

C died.

∴New Ratio (A and B) = 3 : 2 and

Gaining Ratio = 3 : 2

This share of goodwill is to be distributed between A and B in their gaining ratio (i.e. 3 : 2)

Answer:

Kavita’s Capital A/c

Dr.

 

Cr.

Particulars

Amount

(Rs)

Particulars

Amount

(Rs)

 

 

 

 

Kavita’s Executor’s A/c

1,32,100

Capital

70,000

 

 

Interest on Capital

2,100

 

 

Leena’s Capital A/c*

10,000

 

 

Monica’s Capital A/c*

30,000

 

 

Share of Reserve

12,000

 

 

Profit Share**

8,000

 

 

 

 

 

1,32,100

 

1,32,100

 

 

 

 

 

Working Note

*Calculation of Goodwill
On the basis of 2 yrs purchase of average 3 years profit


** Sales in the year 2011-12 = 20,00,000
Profit for year 2011-12 = 2,00,000 = 10% of Sales.
Therefore, Profit for the Period 1 Apr – 30th Sep = 10% of Sales of the same period
Share of Profit to be divided = 10% of Rs 4,00,000 = Rs 40,000
Kavita’s Share of Profit = 1/5th of Rs 40,000 = Rs 8,000

Page No 5.92:

Question 55:

Kavita’s Capital A/c

Dr.

 

Cr.

Particulars

Amount

(Rs)

Particulars

Amount

(Rs)

 

 

 

 

Kavita’s Executor’s A/c

1,32,100

Capital

70,000

 

 

Interest on Capital

2,100

 

 

Leena’s Capital A/c*

10,000

 

 

Monica’s Capital A/c*

30,000

 

 

Share of Reserve

12,000

 

 

Profit Share**

8,000

 

 

 

 

 

1,32,100

 

1,32,100

 

 

 

 

 

Working Note

*Calculation of Goodwill
On the basis of 2 yrs purchase of average 3 years profit


** Sales in the year 2011-12 = 20,00,000
Profit for year 2011-12 = 2,00,000 = 10% of Sales.
Therefore, Profit for the Period 1 Apr – 30th Sep = 10% of Sales of the same period
Share of Profit to be divided = 10% of Rs 4,00,000 = Rs 40,000
Kavita’s Share of Profit = 1/5th of Rs 40,000 = Rs 8,000

Answer:

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

A

B

C

Particulars

A

B

C

A’s Capital A/c

 

2,800

2,800

Balance b/d

10,000

6,000

4,000

 

 

 

 

Joint Life Policy

5,000

2,500

2,500

A’s Executor’s A/c

20,600

 

 

B’s Capital A/c (Goodwill)

2,800

 

 

Balance c/d

 

5,700

3,700

C’s Capital A/c (Goodwill)

2,800

 

 

 

20,600

8,500

6,500

 

20,600

8,500

6,500

 

 

 

 

 

 

 

 

 

A’s Executor’s Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

A’s Loan A/c

3,000

A’s Capital A/c

20,600

Cash A/c

17,600

 

 

 

20,600

 

20,600

 

 

 

 

 

Balance Sheet

as on June 01, 2012 (after A’s death)

Liabilities

Amount

Rs

Assets

Amount

Rs

Sundry Creditors

4,000

Sundry Debtors

4,500

Loan

6,600

Stock in Trade

5,500

Capital A/cs:

 

Building

10,000

B

5,700

 

 

 

C

3,700

9,400

 

 

 

20,000

 

20,000

 

 

 

 

Working Notes:

WN 1 Calculation of Goodwill

Goodwill = Average Profit × Number of Year’s Purchase

∴Goodwill = Average Profit × Number of Years’ Purchase

= 5,600 × 2 = 11,200

WN 2 Adjustment of Goodwill

Old Ratio (A, B and C) =

A died.

∴New Ratio (B and C) = 1 : 1 and

Gaining Ratio = 1 : 1

A’s Share in Goodwill =

This share of goodwill is to be distributed between B and C in their gaining ratio (i.e. 1 : 1).

WN 3

Cash Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Balance b/d

1,000

A’s Executor’s A/c

17,600

Insurance Co. (JLP)

10,000

 

 

Loan A/c

6,600

 

 

 

17,600

 

17,600

 

 

 

 

 



Page No 5.93:

Question 56:

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

A

B

C

Particulars

A

B

C

A’s Capital A/c

 

2,800

2,800

Balance b/d

10,000

6,000

4,000

 

 

 

 

Joint Life Policy

5,000

2,500

2,500

A’s Executor’s A/c

20,600

 

 

B’s Capital A/c (Goodwill)

2,800

 

 

Balance c/d

 

5,700

3,700

C’s Capital A/c (Goodwill)

2,800

 

 

 

20,600

8,500

6,500

 

20,600

8,500

6,500

 

 

 

 

 

 

 

 

 

A’s Executor’s Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

A’s Loan A/c

3,000

A’s Capital A/c

20,600

Cash A/c

17,600

 

 

 

20,600

 

20,600

 

 

 

 

 

Balance Sheet

as on June 01, 2012 (after A’s death)

Liabilities

Amount

Rs

Assets

Amount

Rs

Sundry Creditors

4,000

Sundry Debtors

4,500

Loan

6,600

Stock in Trade

5,500

Capital A/cs:

 

Building

10,000

B

5,700

 

 

 

C

3,700

9,400

 

 

 

20,000

 

20,000

 

 

 

 

Working Notes:

WN 1 Calculation of Goodwill

Goodwill = Average Profit × Number of Year’s Purchase

∴Goodwill = Average Profit × Number of Years’ Purchase

= 5,600 × 2 = 11,200

WN 2 Adjustment of Goodwill

Old Ratio (A, B and C) =

A died.

∴New Ratio (B and C) = 1 : 1 and

Gaining Ratio = 1 : 1

A’s Share in Goodwill =

This share of goodwill is to be distributed between B and C in their gaining ratio (i.e. 1 : 1).

WN 3

Cash Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Balance b/d

1,000

A’s Executor’s A/c

17,600

Insurance Co. (JLP)

10,000

 

 

Loan A/c

6,600

 

 

 

17,600

 

17,600

 

 

 

 

 

Answer:

Chetan’s Capital A/c

Dr.

Cr.

Particulars

Amount

(Rs)

Particulars

Amount

(Rs)

 

 

 

 

Chetan’s Executor’s A/c

1,79,500

Capital

1,25,000

 

 

Interest on Capital
(for 6 months)

3,750

 

 

Babita’s Share Capital A/c*

16,000

 

 

David’s Share Capital A/c*

8,000

 

 

Share of Reserve

12,000

 

 

Profit Share**

15,000

 

 

 

 

 

1,79,750

 

1,79,500

 

 

 

 

Working Note: *

 

**Sales in the year 2011-12 = 4,00,000
Profit for year 2011-12 = 2,00,000 = 50% of Sales.
Therefore, Profit for the Period Apr 01 to 30th Sep = 50% of Sales of the same period
Share of Profit to be divided = 50% of Rs 1,20,000 = Rs 60,000
Chetan’s Share of Profit = 1/4th of Rs 60,000 = Rs 15,000

Page No 5.93:

Question 57:

Chetan’s Capital A/c

Dr.

Cr.

Particulars

Amount

(Rs)

Particulars

Amount

(Rs)

 

 

 

 

Chetan’s Executor’s A/c

1,79,500

Capital

1,25,000

 

 

Interest on Capital
(for 6 months)

3,750

 

 

Babita’s Share Capital A/c*

16,000

 

 

David’s Share Capital A/c*

8,000

 

 

Share of Reserve

12,000

 

 

Profit Share**

15,000

 

 

 

 

 

1,79,750

 

1,79,500

 

 

 

 

Working Note: *

 

**Sales in the year 2011-12 = 4,00,000
Profit for year 2011-12 = 2,00,000 = 50% of Sales.
Therefore, Profit for the Period Apr 01 to 30th Sep = 50% of Sales of the same period
Share of Profit to be divided = 50% of Rs 1,20,000 = Rs 60,000
Chetan’s Share of Profit = 1/4th of Rs 60,000 = Rs 15,000

Answer:

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

General Reserve A/c

Dr.

 

10,000

 

To A’s Capital A/c

 

 

 

6,000

To B’s Capital

 

 

 

2,000

To C’s Capital A/c

 

 

 

2,000

(General reserve distributed among partners in their old ratio)

 

 

 

 

 

 

 

 

 

Land A/c

Dr.

 

1,00,000

 

To Revaluation A/c

 

 

 

1,00,000

(Increase in value of Land transferred to Revaluation Account )

 

 

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

68,000

 

To Plant and Machinery A/c

 

 

 

68,000

(Decrease in value of Plant and Machinery transferred to Revaluation Account )

 

 

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

32,000

 

To A’s Capital A/c

 

 

 

19,200

To B’s Capital A/c

 

 

 

6,400

To C’s Capital A/c

 

 

 

6,400

(Revaluation profit distributed among partners in their old ratio)

 

 

 

 

 

 

 

 

 

A’s Capital A/c

Dr.

 

36,000

 

C’s Capital A/c

Dr.

 

12,000

 

To B’s Capital A/c

 

 

 

48,000

(B’s share of goodwill adjusted)

 

 

 

 

 

 

 

 

 

B’s Capital A/c

Dr.

 

10,000

 

To B’s Drawings A/c

 

 

 

10,000

(B’s drawing charged from his capital account)

 

 

 

 

 

 

 

 

 

Profit and Loss Suspense A/c

Dr.

 

4,000

 

To B’s Capital A/c

 

 

 

4,000

(B’s share of profit transferred to his capital account)

 

 

 

 

 

 

 

 

 

B’s Capital A/c

Dr.

 

4,63,200

 

To B’s Executor’s A/c

 

 

 

4,63,200

(Amount due to B after all adjustments transferred to his Executor’s Account)

 

 

 

 

 

 

 

 

 


Values involved are:

  1. Charity
  2. Fulfilling responsibility towards environment

WN 1 Calculation of Goodwill

Goodwill = Average Profit × Number of Year’s Purchase

∴Goodwill = Average Profit × Number of Years’ Purchase

= 1,20,000 × 2 = Rs 2,40,000

WN 2 Adjustment of Goodwill

Old Ratio (A, B and C) = 3 : 1 : 1

B died.

∴New Ratio (A and C) = 3 : 1 and

Gaining Ratio = 3 : 1

B’s Share in Goodwill =

This share of goodwill is to be distributed between A and C in their gaining ratio (i.e. 3 : 1).

WN 3 Calculation of B’s Share of Profit

WN 4

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Plan and Machinery

68,000

Land

1,00,000

Profit transferred to:

 

 

 

A’s Capital A/c

19,200

 

 

 

B’s Capital A/c

6,400

 

 

 

C’s Capital A/c

6,400

32,000

 

 

 

1,00,000

 

1,00,000

 

 

 

 

WN 5

B’s Capital Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Drawings A/c

10,000

Balance b/d

4,12,800

B’s Executor’s A/c

4,63,200

General Reserve

2,000

 

 

Profit and Loss Suspense A/c

4,000

 

 

A’s Capital A/c

36,000

 

 

C’s Capital A/c

12,000

 

 

Revaluation A/c (Profit)

6,400

 

 

 

 

 

4,73,200

 

4,73,200

 

 

 

 

 



Page No 5.94:

Question 58:

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

General Reserve A/c

Dr.

 

10,000

 

To A’s Capital A/c

 

 

 

6,000

To B’s Capital

 

 

 

2,000

To C’s Capital A/c

 

 

 

2,000

(General reserve distributed among partners in their old ratio)

 

 

 

 

 

 

 

 

 

Land A/c

Dr.

 

1,00,000

 

To Revaluation A/c

 

 

 

1,00,000

(Increase in value of Land transferred to Revaluation Account )

 

 

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

68,000

 

To Plant and Machinery A/c

 

 

 

68,000

(Decrease in value of Plant and Machinery transferred to Revaluation Account )

 

 

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

32,000

 

To A’s Capital A/c

 

 

 

19,200

To B’s Capital A/c

 

 

 

6,400

To C’s Capital A/c

 

 

 

6,400

(Revaluation profit distributed among partners in their old ratio)

 

 

 

 

 

 

 

 

 

A’s Capital A/c

Dr.

 

36,000

 

C’s Capital A/c

Dr.

 

12,000

 

To B’s Capital A/c

 

 

 

48,000

(B’s share of goodwill adjusted)

 

 

 

 

 

 

 

 

 

B’s Capital A/c

Dr.

 

10,000

 

To B’s Drawings A/c

 

 

 

10,000

(B’s drawing charged from his capital account)

 

 

 

 

 

 

 

 

 

Profit and Loss Suspense A/c

Dr.

 

4,000

 

To B’s Capital A/c

 

 

 

4,000

(B’s share of profit transferred to his capital account)

 

 

 

 

 

 

 

 

 

B’s Capital A/c

Dr.

 

4,63,200

 

To B’s Executor’s A/c

 

 

 

4,63,200

(Amount due to B after all adjustments transferred to his Executor’s Account)

 

 

 

 

 

 

 

 

 


Values involved are:

  1. Charity
  2. Fulfilling responsibility towards environment

WN 1 Calculation of Goodwill

Goodwill = Average Profit × Number of Year’s Purchase

∴Goodwill = Average Profit × Number of Years’ Purchase

= 1,20,000 × 2 = Rs 2,40,000

WN 2 Adjustment of Goodwill

Old Ratio (A, B and C) = 3 : 1 : 1

B died.

∴New Ratio (A and C) = 3 : 1 and

Gaining Ratio = 3 : 1

B’s Share in Goodwill =

This share of goodwill is to be distributed between A and C in their gaining ratio (i.e. 3 : 1).

WN 3 Calculation of B’s Share of Profit

WN 4

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Plan and Machinery

68,000

Land

1,00,000

Profit transferred to:

 

 

 

A’s Capital A/c

19,200

 

 

 

B’s Capital A/c

6,400

 

 

 

C’s Capital A/c

6,400

32,000

 

 

 

1,00,000

 

1,00,000

 

 

 

 

WN 5

B’s Capital Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Drawings A/c

10,000

Balance b/d

4,12,800

B’s Executor’s A/c

4,63,200

General Reserve

2,000

 

 

Profit and Loss Suspense A/c

4,000

 

 

A’s Capital A/c

36,000

 

 

C’s Capital A/c

12,000

 

 

Revaluation A/c (Profit)

6,400

 

 

 

 

 

4,73,200

 

4,73,200

 

 

 

 

 

Answer:

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

Revaluation A/c

Dr.

 

10,000

 

To Machinery A/c

 

 

10,000

(Decrease in value of Machinery transferred to Revaluation Account)

 

 

 

 

 

 

 

Patents A/c

Dr.

 

10,000

 

Leasehold A/c

Dr.

 

25,000

 

To Revaluation A/c

 

 

35,000

(Increase in value Patents and Leasehold transferred to Revaluation Account)

 

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

25,000

 

To R’s Capital A/c

 

 

12,500

To S’s Capital A/c

 

 

7,500

To T’s Capital A/c

 

 

5,000

(Revaluation profit distributed among partners in their old ratio)

 

 

 

 

 

 

 

R’ Capital A/c

Dr.

 

12,500

 

S’s Capital A/c

Dr.

 

7,500

 

T’s Capital A/c

Dr.

 

5,000

 

To Goodwill A/c

 

 

25,000

(Goodwill written off among partners in their old ratio)

 

 

 

 

 

 

 

R’s Capital A/c

Dr.

 

21,875

 

S’s Capital A/c

Dr.

 

13,125

 

To T’s Capital A/c

 

 

35,000

(T’s share of goodwill adjusted)

 

 

 

 

 

 

 

Profit and Loss Suspense A/c

Dr.

 

5,000

 

  To T’s Capital A/c

 

 

5,000

(T’s share of profit transferred to his capital account)

 

 

 

 

 

 

 

Workmen’s Compensation Reserve A/c

Dr.

 

30,000

 

To R’s Capital A/c

 

 

15,000

To S’s Capital A/c

 

 

9,000

To T’s Capital A/c

 

 

6,000

(Workmen’s Compensation Reserve distributed among partners in their old ratio )

 

 

 

 

 

 

 

T’s Capital A/c

Dr.

 

1,21,000

 

To T’s Executors A/c

 

 

1,21,000

(Amount due to T after all adjustments transferred to his Executor’s Account)

 

 

 

 

 

 

 

T’s Executor’s A/c

Dr.

 

21,000

 

To Bank A/c

 

 

21,000

(Amount paid to T’s Executor)

 

 

 

 

 

 

 

 

T’s Executor’s Account

Dr.

 

Cr.

Date

Particulars

Amount

Rs

Date

Particulars

Amount

Rs

2012

 

 

2012

 

 

May 01

Cash A/c

21,000

May 01

T’s Capital A/c

1,21,000

Oct. 31

Cash A/c (25,000 + 5,000)

30,000

Oct. 31

Interest (1,00,000 ×10% for 6 months)

5,000

Dec. 31

Balance c/d

76,250

Dec. 31

Interest (75,000 ×10% for 2 months)

1,250

 

 

1,27,250

 

 

1,27,250

2013

 

 

2013

 

 

May 01

Cash A/c (25,000 + 1,250 + 2,500)

28,750

Jan. 01

Balance b/d

76,250

Oct. 31

Cash A/c (25,000 + 2,500)

27,500

May 01

Interest (75,000 × 10% for 4 months)

2,500

Dec. 31

Balance c/d

25,417

Oct. 31

Interest (50,000 × 10% for 6 months)

2,500

 

 

 

Dec. 31

Interest (25,000 × 10% for 2 months)

417

 

 

81,667

 

 

81,667

2014

 

 

2014

 

 

May 01

Cash A/c (25,000 + 417 + 833)

26,250

Jan. 01

Balance b/d

25,417

 

 

 

May 01

Interest (25,000 × 10% for 4 months)

833

 

 

26,250

 

 

26,250

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Goodwill

Goodwill = Average Profit × Number of Year’s Purchase

∴Goodwill = Average Profit × Number of Years’ Purchase

= 70,000 × 2.5 = Rs 1,75,000

WN 2 Adjustment of Goodwill

Old Ratio (R, S and T) = 5 : 3 : 2

T died.

∴New Ratio (R and S) = 5 : 3 and

Gaining Ratio = 5 : 3

T’s Share in Goodwill =

This share of goodwill is to be distributed between R and S in their gaining ratio (i.e. 5 : 3).

WN 3 Calculation of T’s Share of Profit

Profit for 2011 = Rs 75,000

WN 4

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Machinery

10,000

Patents

10,000

Profit transferred to:

 

Leasehold

25,000

R’s Capital A/c

12,500

 

 

 

S’s Capital A/c

7,500

 

 

 

T’s Capital A/c

5,000

25,000

 

 

 

35,000

 

35,000

 

 

 

 

WN 5

T’s Capital Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Goodwill

5,000

Balance b/d

75,000

T’s Executor’s A/c

1,21,000

Workmen’s Compensation Reserve

6,000

 

 

Profit and Loss Suspense A/c

5,000

 

 

R’s Capital A/c

21,875

 

 

S’s Capital A/c

13,125

 

 

Revaluation A/c (Profit)

5,000

 

1,26,000

 

1,26,000

 

 

 

 

 

Page No 5.94:

Question 59:

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

Revaluation A/c

Dr.

 

10,000

 

To Machinery A/c

 

 

10,000

(Decrease in value of Machinery transferred to Revaluation Account)

 

 

 

 

 

 

 

Patents A/c

Dr.

 

10,000

 

Leasehold A/c

Dr.

 

25,000

 

To Revaluation A/c

 

 

35,000

(Increase in value Patents and Leasehold transferred to Revaluation Account)

 

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

25,000

 

To R’s Capital A/c

 

 

12,500

To S’s Capital A/c

 

 

7,500

To T’s Capital A/c

 

 

5,000

(Revaluation profit distributed among partners in their old ratio)

 

 

 

 

 

 

 

R’ Capital A/c

Dr.

 

12,500

 

S’s Capital A/c

Dr.

 

7,500

 

T’s Capital A/c

Dr.

 

5,000

 

To Goodwill A/c

 

 

25,000

(Goodwill written off among partners in their old ratio)

 

 

 

 

 

 

 

R’s Capital A/c

Dr.

 

21,875

 

S’s Capital A/c

Dr.

 

13,125

 

To T’s Capital A/c

 

 

35,000

(T’s share of goodwill adjusted)

 

 

 

 

 

 

 

Profit and Loss Suspense A/c

Dr.

 

5,000

 

  To T’s Capital A/c

 

 

5,000

(T’s share of profit transferred to his capital account)

 

 

 

 

 

 

 

Workmen’s Compensation Reserve A/c

Dr.

 

30,000

 

To R’s Capital A/c

 

 

15,000

To S’s Capital A/c

 

 

9,000

To T’s Capital A/c

 

 

6,000

(Workmen’s Compensation Reserve distributed among partners in their old ratio )

 

 

 

 

 

 

 

T’s Capital A/c

Dr.

 

1,21,000

 

To T’s Executors A/c

 

 

1,21,000

(Amount due to T after all adjustments transferred to his Executor’s Account)

 

 

 

 

 

 

 

T’s Executor’s A/c

Dr.

 

21,000

 

To Bank A/c

 

 

21,000

(Amount paid to T’s Executor)

 

 

 

 

 

 

 

 

T’s Executor’s Account

Dr.

 

Cr.

Date

Particulars

Amount

Rs

Date

Particulars

Amount

Rs

2012

 

 

2012

 

 

May 01

Cash A/c

21,000

May 01

T’s Capital A/c

1,21,000

Oct. 31

Cash A/c (25,000 + 5,000)

30,000

Oct. 31

Interest (1,00,000 ×10% for 6 months)

5,000

Dec. 31

Balance c/d

76,250

Dec. 31

Interest (75,000 ×10% for 2 months)

1,250

 

 

1,27,250

 

 

1,27,250

2013

 

 

2013

 

 

May 01

Cash A/c (25,000 + 1,250 + 2,500)

28,750

Jan. 01

Balance b/d

76,250

Oct. 31

Cash A/c (25,000 + 2,500)

27,500

May 01

Interest (75,000 × 10% for 4 months)

2,500

Dec. 31

Balance c/d

25,417

Oct. 31

Interest (50,000 × 10% for 6 months)

2,500

 

 

 

Dec. 31

Interest (25,000 × 10% for 2 months)

417

 

 

81,667

 

 

81,667

2014

 

 

2014

 

 

May 01

Cash A/c (25,000 + 417 + 833)

26,250

Jan. 01

Balance b/d

25,417

 

 

 

May 01

Interest (25,000 × 10% for 4 months)

833

 

 

26,250

 

 

26,250

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Goodwill

Goodwill = Average Profit × Number of Year’s Purchase

∴Goodwill = Average Profit × Number of Years’ Purchase

= 70,000 × 2.5 = Rs 1,75,000

WN 2 Adjustment of Goodwill

Old Ratio (R, S and T) = 5 : 3 : 2

T died.

∴New Ratio (R and S) = 5 : 3 and

Gaining Ratio = 5 : 3

T’s Share in Goodwill =

This share of goodwill is to be distributed between R and S in their gaining ratio (i.e. 5 : 3).

WN 3 Calculation of T’s Share of Profit

Profit for 2011 = Rs 75,000

WN 4

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Machinery

10,000

Patents

10,000

Profit transferred to:

 

Leasehold

25,000

R’s Capital A/c

12,500

 

 

 

S’s Capital A/c

7,500

 

 

 

T’s Capital A/c

5,000

25,000

 

 

 

35,000

 

35,000

 

 

 

 

WN 5

T’s Capital Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Goodwill

5,000

Balance b/d

75,000

T’s Executor’s A/c

1,21,000

Workmen’s Compensation Reserve

6,000

 

 

Profit and Loss Suspense A/c

5,000

 

 

R’s Capital A/c

21,875

 

 

S’s Capital A/c

13,125

 

 

Revaluation A/c (Profit)

5,000

 

1,26,000

 

1,26,000

 

 

 

 

 

Answer:

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

General Reserve A/c

Dr.

 

45,000

 

To Akhil’s Capital A/c

 

 

15,000

To Nikhil’s Capital A/c

 

 

15,000

To Sunil’s Capital A/c

 

 

15,000

(General Reserve distributed among partners in their old ratio)

 

 

 

 

 

 

 

Akhil’s Capital A/c

Dr.

 

35,000

 

Nikhil’s Capital A/c

Dr.

 

35,000

 

To Sunil’s Capital A/c

 

 

70,000

(Sunil’s share of goodwill adjusted)

 

 

 

 

 

 

 

Interest on Capital A/c

Dr.

 

1,600

 

To Sunil’s Capital A/c

 

 

1,600

(Interest allowed on Sunil’s Capital)

 

 

 

 

 

 

 

Profit and Loss Suspense A/c

Dr.

 

20,000

 

To Sunil’s Capital A/c

 

 

20,000

(Sunil’s profit share transferred to his capital account)

 

 

 

 

 

 

 

Sunil’s Capital A/c

Dr.

 

1,86,600

 

To Sunil’s Executor’s A/c

 

 

1,86,600

(Amount due to Sunil after all adjustments transferred to his Executor’s Account)

 

 

 

 

 

 

 

Sunil’s Executor’s A/c

Dr.

 

50,000

 

To Bank A/c

 

 

50,000

(Amount paid to Sunil’s Executor)

 

 

 

 

 

 

 

 

Sunil’s Capital Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

 

 

Balance b/d

80,000

 

 

Interest on Capital A/c

1,600

 

 

General Reserve

15,000

 

 

Profit and Loss Suspense A/c

20,000

 

 

Akhil’s Capital A/c (Goodwill)

35,000

Sunil’s Executor’s A/c

1,86,600

Nikhil’s Capital A/c (Goodwill)

35,000

 

1,86,600

 

1,86,600

 

 

 

 

 

Sunil’s Executor’s Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Bank A/c

50,000

Sunil’s Capital A/c

1,86,600

Balance c/d

1,36,600

 

 

 

1,86,600

 

1,86,600

 

 

 

 

Working Notes:

WN 1 Calculation of Sunil’s Share of Profit

Profit for 2013-14 = Rs 1,80,000

WN 2 Calculation of Goodwill

Goodwill = Average Profit × Number of Year’s Purchase

∴Goodwill = Average Profit × Number of Years’ Purchase

= 70,000 × 3 = Rs 2,10,000

WN 3 Adjustment of Goodwill

Old Ratio = 1 : 1 : 1

Sunil died.

∴New Ratio = 1 : 1 and

Gaining Ratio = 1 : 1

Sunil’s Share in Goodwill =

This share of goodwill is to be distributed between Akhil and Nikhil in their gaining ratio (i.e. 1 : 1).

WN 4 Calculation of Interest on Sunil’s Capital

Sunil’s Capital Balance = Rs 80,000

∴Interest on Capital (for 4 months)



Page No 5.95:

Question 60:

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

General Reserve A/c

Dr.

 

45,000

 

To Akhil’s Capital A/c

 

 

15,000

To Nikhil’s Capital A/c

 

 

15,000

To Sunil’s Capital A/c

 

 

15,000

(General Reserve distributed among partners in their old ratio)

 

 

 

 

 

 

 

Akhil’s Capital A/c

Dr.

 

35,000

 

Nikhil’s Capital A/c

Dr.

 

35,000

 

To Sunil’s Capital A/c

 

 

70,000

(Sunil’s share of goodwill adjusted)

 

 

 

 

 

 

 

Interest on Capital A/c

Dr.

 

1,600

 

To Sunil’s Capital A/c

 

 

1,600

(Interest allowed on Sunil’s Capital)

 

 

 

 

 

 

 

Profit and Loss Suspense A/c

Dr.

 

20,000

 

To Sunil’s Capital A/c

 

 

20,000

(Sunil’s profit share transferred to his capital account)

 

 

 

 

 

 

 

Sunil’s Capital A/c

Dr.

 

1,86,600

 

To Sunil’s Executor’s A/c

 

 

1,86,600

(Amount due to Sunil after all adjustments transferred to his Executor’s Account)

 

 

 

 

 

 

 

Sunil’s Executor’s A/c

Dr.

 

50,000

 

To Bank A/c

 

 

50,000

(Amount paid to Sunil’s Executor)

 

 

 

 

 

 

 

 

Sunil’s Capital Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

 

 

Balance b/d

80,000

 

 

Interest on Capital A/c

1,600

 

 

General Reserve

15,000

 

 

Profit and Loss Suspense A/c

20,000

 

 

Akhil’s Capital A/c (Goodwill)

35,000

Sunil’s Executor’s A/c

1,86,600

Nikhil’s Capital A/c (Goodwill)

35,000

 

1,86,600

 

1,86,600

 

 

 

 

 

Sunil’s Executor’s Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Bank A/c

50,000

Sunil’s Capital A/c

1,86,600

Balance c/d

1,36,600

 

 

 

1,86,600

 

1,86,600

 

 

 

 

Working Notes:

WN 1 Calculation of Sunil’s Share of Profit

Profit for 2013-14 = Rs 1,80,000

WN 2 Calculation of Goodwill

Goodwill = Average Profit × Number of Year’s Purchase

∴Goodwill = Average Profit × Number of Years’ Purchase

= 70,000 × 3 = Rs 2,10,000

WN 3 Adjustment of Goodwill

Old Ratio = 1 : 1 : 1

Sunil died.

∴New Ratio = 1 : 1 and

Gaining Ratio = 1 : 1

Sunil’s Share in Goodwill =

This share of goodwill is to be distributed between Akhil and Nikhil in their gaining ratio (i.e. 1 : 1).

WN 4 Calculation of Interest on Sunil’s Capital

Sunil’s Capital Balance = Rs 80,000

∴Interest on Capital (for 4 months)

Answer:

(i) Calculation of Goodwill

Goodwill = Average Profit × Number of Year’s Purchase

∴Goodwill = Average Profit × Number of Years’ Purchase

= 30,000 × 3 = Rs 90,000

Old Ratio (B, C and D) = 5 : 3 : 2

B Died.

New Ratio (C and D) = 3 : 2

B’s Share in Goodwill =

This share of goodwill is to be distributed between C and D in their gaining ratio (i.e. 3 : 2).

(ii) Calculation of B’s Share of Profit or Loss

Loss for the Year (2008) = Rs 70,000

(iii)

B’s Capital Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Profit and Loss A/c

35,000

Balance b/d

40,000

Profit and Loss Suspense A/c

8,750

General Reserve

35,000

 

 

C’s Capital A/c (Goodwill)

27,000

B’s Executor’s A/c

76,250

D’s Capital A/c (Goodwill)

18,000

 

1,20,000

 

1,20,000

 

 

 

 

 

Page No 5.95:

Question 61:

(i) Calculation of Goodwill

Goodwill = Average Profit × Number of Year’s Purchase

∴Goodwill = Average Profit × Number of Years’ Purchase

= 30,000 × 3 = Rs 90,000

Old Ratio (B, C and D) = 5 : 3 : 2

B Died.

New Ratio (C and D) = 3 : 2

B’s Share in Goodwill =

This share of goodwill is to be distributed between C and D in their gaining ratio (i.e. 3 : 2).

(ii) Calculation of B’s Share of Profit or Loss

Loss for the Year (2008) = Rs 70,000

(iii)

B’s Capital Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Profit and Loss A/c

35,000

Balance b/d

40,000

Profit and Loss Suspense A/c

8,750

General Reserve

35,000

 

 

C’s Capital A/c (Goodwill)

27,000

B’s Executor’s A/c

76,250

D’s Capital A/c (Goodwill)

18,000

 

1,20,000

 

1,20,000

 

 

 

 

 

Answer:

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

Workmen’s Compensation Reserve

Dr.

 

6,000

 

To X’s Capital A/c

 

 

3,000

To Y’s Capital A/c

 

 

2,000

To Z’s Capital A/c

 

 

1,000

(Workmen’s Compesation Reserve distributed among partners in their old ratio)

 

 

 

 

 

 

 

General Reserve A/c

Dr.

 

6,000

 

To X’s Capital A/c

 

 

3,000

To Y’s Capital A/c

 

 

2,000

To Z’s Capital A/c

 

 

1,000

(General Reserve distributed among partners in their old ratio)

 

 

 

 

 

 

 

X’s Capital A/c

Dr.

 

3,000

 

Y’s Capital A/c

Dr.

 

2,000

 

Z’s Capital A/c

Dr.

 

1,000

 

To Advertisement Suspense A/c

 

 

6,000

(Advertisement suspense written off among partners in their old ratio)

 

 

 

 

 

 

 

X’s Capital A/c

Dr.

 

4,500

 

Y’s Capital A/c

Dr.

 

3,000

 

To Z’s Capital A/c

 

 

7,500

(Z’s share of goodwill adjusted )

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

3,600

 

  To Sundry debtors A/c

Dr.

 

 

1,000

To Furniture A/c

 

 

500

To Plant and Machinery A/c

 

 

1,500

To Bills Receivable A/c

 

 

600

(Decrease in value of Assets transferred to Revaluation Account)

 

 

 

 

 

 

 

Stock A/c

Dr.

 

1,000

 

Building A/c

Dr.

 

5,000

 

To Revaluation A/c

 

 

6,000

(Increase in value of Assets transferred to Revaluation Account)

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

2,400

 

To X’ Capital A/c

 

 

1,200

To Y’s Capital A/c

 

 

800

To Z’s Capital A/c

 

 

400

(Revaluation profit distributed among partners in their old ratio)

 

 

 

 

 

 

 

Profit and Loss Suspense A/c

Dr.

 

1,333

 

To Z’s Capital A/c

 

 

1,333

(Z’s share of profit transferred his capital account)

 

 

 

 

 

 

 

Z’s Capital A/c

Dr.

 

22,233

 

  To Z’s Executor’s A/c

 

 

22,233

(Amount due to Z transferred to his Executor’s Account)

 

 

 

 

 

 

 

Z’s Executor’s A/c

Dr.

 

12,333

 

To Bank A/c

 

 

12,333

(Amount paid to Z’s Executor)

 

 

 

 

 

 

 

 

Z’s Executor’s Account

Dr.

 

Cr.

Date

Particulars

Amount

Rs

Date

Particulars

Amount

Rs

2012

 

 

2012

 

 

April 30

Bank A/c

12,233

April 30

Z’s Capital A/c

22,233

Dec. 31

Balance c/d

10,667

Dec. 31

Interest (10,000 × 10% for 8 months)

667

 

 

22,900

 

 

22,900

2013

 

 

2013

 

 

April 30

Bank A/c (5,000 + 667 + 333)

6,000

Jan. 01

Balance b/d

10,667

 

 

 

April 30

Interest (10,000 × 10% for 4 months )

333

 

Balance c/d

5,333

Dec. 31

Interest (5,000 × 10% for 8 months)

333

 

 

11,333

 

 

11,333

2014

 

 

2014

 

 

April 30

Bank A/c (5,000 + 333 + 167)

5,500

April 01

Balance b/d

5,333

 

 

 

April 30

Interest (5,000 × 10% for 4months)

167

 

 

5,500

 

 

5,500

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Goodwill

Goodwill = Average Profit × Number of Year’s Purchase

∴Goodwill = Average Profit × Number of Years’ Purchase

= 15,000 × 3 = Rs 45,000

WN 2 Adjustment of Goodwill

Old Ratio = 3 : 2 : 1

Z died.

∴New Ratio (X and Y) = 3 : 1 and

Gaining Ratio = 3 : 2

Z’s Share in Goodwill =

This share of goodwill is to be distributed between X and Y in their gaining ratio (i.e. 3 : 1).

WN 3 Calculation Z’s Share of Profit

Profit for Previous Year = Rs 24,000

∴Z’s Profit Share

WN 4

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Sundry Debtors

1,000

Stock

1,000

Furniture

500

Building

5,000

Plant and Machinery

1,500

 

 

Bills Receivable

600

 

 

Profit transferred to:

 

 

 

X’s Capital A/c

1,200

 

 

 

Y’s Capital A/c

800

 

 

 

Z’s Capital A/c

400

2,400

 

 

 

6,000

 

6,000

 

 

 

 

 



Page No 5.96:

Question 62:

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

Workmen’s Compensation Reserve

Dr.

 

6,000

 

To X’s Capital A/c

 

 

3,000

To Y’s Capital A/c

 

 

2,000

To Z’s Capital A/c

 

 

1,000

(Workmen’s Compesation Reserve distributed among partners in their old ratio)

 

 

 

 

 

 

 

General Reserve A/c

Dr.

 

6,000

 

To X’s Capital A/c

 

 

3,000

To Y’s Capital A/c

 

 

2,000

To Z’s Capital A/c

 

 

1,000

(General Reserve distributed among partners in their old ratio)

 

 

 

 

 

 

 

X’s Capital A/c

Dr.

 

3,000

 

Y’s Capital A/c

Dr.

 

2,000

 

Z’s Capital A/c

Dr.

 

1,000

 

To Advertisement Suspense A/c

 

 

6,000

(Advertisement suspense written off among partners in their old ratio)

 

 

 

 

 

 

 

X’s Capital A/c

Dr.

 

4,500

 

Y’s Capital A/c

Dr.

 

3,000

 

To Z’s Capital A/c

 

 

7,500

(Z’s share of goodwill adjusted )

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

3,600

 

  To Sundry debtors A/c

Dr.

 

 

1,000

To Furniture A/c

 

 

500

To Plant and Machinery A/c

 

 

1,500

To Bills Receivable A/c

 

 

600

(Decrease in value of Assets transferred to Revaluation Account)

 

 

 

 

 

 

 

Stock A/c

Dr.

 

1,000

 

Building A/c

Dr.

 

5,000

 

To Revaluation A/c

 

 

6,000

(Increase in value of Assets transferred to Revaluation Account)

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

2,400

 

To X’ Capital A/c

 

 

1,200

To Y’s Capital A/c

 

 

800

To Z’s Capital A/c

 

 

400

(Revaluation profit distributed among partners in their old ratio)

 

 

 

 

 

 

 

Profit and Loss Suspense A/c

Dr.

 

1,333

 

To Z’s Capital A/c

 

 

1,333

(Z’s share of profit transferred his capital account)

 

 

 

 

 

 

 

Z’s Capital A/c

Dr.

 

22,233

 

  To Z’s Executor’s A/c

 

 

22,233

(Amount due to Z transferred to his Executor’s Account)

 

 

 

 

 

 

 

Z’s Executor’s A/c

Dr.

 

12,333

 

To Bank A/c

 

 

12,333

(Amount paid to Z’s Executor)

 

 

 

 

 

 

 

 

Z’s Executor’s Account

Dr.

 

Cr.

Date

Particulars

Amount

Rs

Date

Particulars

Amount

Rs

2012

 

 

2012

 

 

April 30

Bank A/c

12,233

April 30

Z’s Capital A/c

22,233

Dec. 31

Balance c/d

10,667

Dec. 31

Interest (10,000 × 10% for 8 months)

667

 

 

22,900

 

 

22,900

2013

 

 

2013

 

 

April 30

Bank A/c (5,000 + 667 + 333)

6,000

Jan. 01

Balance b/d

10,667

 

 

 

April 30

Interest (10,000 × 10% for 4 months )

333

 

Balance c/d

5,333

Dec. 31

Interest (5,000 × 10% for 8 months)

333

 

 

11,333

 

 

11,333

2014

 

 

2014

 

 

April 30

Bank A/c (5,000 + 333 + 167)

5,500

April 01

Balance b/d

5,333

 

 

 

April 30

Interest (5,000 × 10% for 4months)

167

 

 

5,500

 

 

5,500

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Goodwill

Goodwill = Average Profit × Number of Year’s Purchase

∴Goodwill = Average Profit × Number of Years’ Purchase

= 15,000 × 3 = Rs 45,000

WN 2 Adjustment of Goodwill

Old Ratio = 3 : 2 : 1

Z died.

∴New Ratio (X and Y) = 3 : 1 and

Gaining Ratio = 3 : 2

Z’s Share in Goodwill =

This share of goodwill is to be distributed between X and Y in their gaining ratio (i.e. 3 : 1).

WN 3 Calculation Z’s Share of Profit

Profit for Previous Year = Rs 24,000

∴Z’s Profit Share

WN 4

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Sundry Debtors

1,000

Stock

1,000

Furniture

500

Building

5,000

Plant and Machinery

1,500

 

 

Bills Receivable

600

 

 

Profit transferred to:

 

 

 

X’s Capital A/c

1,200

 

 

 

Y’s Capital A/c

800

 

 

 

Z’s Capital A/c

400

2,400

 

 

 

6,000

 

6,000

 

 

 

 

 

Answer:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Provision for Doubtful Debts (25,000 × 5%)

1,250

Furniture and Fittings (75,000 × 5%)

3,750

Plant and Machinery

(120,000 × 10%)

12,000

Stock (32,000 × 10%)

3,200

 

 

Prepaid Advertisement Expenses

2,100

 

 

Loss transferred to:

 

 

 

X’s Capital A/c

2,100

 

 

 

Y’s Capital A/c

1,400

 

 

 

Z’s Capital A/c

700

4,200

 

13,250

 

13,250

 

 

 

 

 

Partner’s Capital Accounts

Dr.

 

Cr.

Particulars

X

Y

Z

Particulars

X

Y

Z

Z’s Current A/c

 

 

5,000

Balance b/d

1,20,000

80,000

40,000

Revaluation A/c (Loss)

2,100

1,400

700

X’s Current A/c

8,000

 

 

Z’s Capital A/c  (Goodwill)

3,000

2,000

 

Y’s Current A/c

 

2,500

 

Z’s Executor’s A/c

 

 

44,300

Reserve

15,000

10,000

5,000

 

 

 

 

X’s Capital A/c (Goodwill)

 

 

3,000

Balance c/d

1,37,900

89,100

 

Y’s Capital A/c  (Goodwill)

 

 

2,000

 

1,43,000

92,500

50,000

 

1,43,000

92,500

50,000

 

 

 

 

 

 

 

 

 

Balance sheet

as on March 31, 2014 (after Z’s Death)

Liabilities

Amount

Rs

Assets

Amount

Rs

Capital A/cs:

 

Plant and Machinery (1,20,000 – 12,000)

1,08,000

X

1,37,900

 

Furniture and Fittings (75,000 + 3,750)

78,750

Y

89,100

2,27,000

Investments

20,000

Z’s Loan

44,300

Stock in Trade (32,000 + 3,200)

35,200

Bills Payable

17,000

Sundry Debtors

25,000

 

Sundry Creditors

20,000

Less: Provision for Doubtful Debts

 

(1,250)

 

  23,750

 

 

Bills Receivable

11,000

 

 

Cash in Hand

18,500

 

 

Cash at Bank

11,000

 

 

Prepaid Advertisement Expenses

2,100

 

3,08,300

 

3,08,300

 

 

 

 

Working Notes:

Adjustment of Goodwill

Old Ratio (X, Y and Z) = 3 : 2 : 1

Z died.

∴New Ratio (X and Y) = 3 : 2 and

Gaining Ratio = 3 : 2

Goodwill of the firm = Rs 30,000

Z’s Share in Goodwill =

This share of goodwill is to be distributed between X and Y in their gaining ratio (i.e. 3 : 2).

Page No 5.96:

Question 63:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Provision for Doubtful Debts (25,000 × 5%)

1,250

Furniture and Fittings (75,000 × 5%)

3,750

Plant and Machinery

(120,000 × 10%)

12,000

Stock (32,000 × 10%)

3,200

 

 

Prepaid Advertisement Expenses

2,100

 

 

Loss transferred to:

 

 

 

X’s Capital A/c

2,100

 

 

 

Y’s Capital A/c

1,400

 

 

 

Z’s Capital A/c

700

4,200

 

13,250

 

13,250

 

 

 

 

 

Partner’s Capital Accounts

Dr.

 

Cr.

Particulars

X

Y

Z

Particulars

X

Y

Z

Z’s Current A/c

 

 

5,000

Balance b/d

1,20,000

80,000

40,000

Revaluation A/c (Loss)

2,100

1,400

700

X’s Current A/c

8,000

 

 

Z’s Capital A/c  (Goodwill)

3,000

2,000

 

Y’s Current A/c

 

2,500

 

Z’s Executor’s A/c

 

 

44,300

Reserve

15,000

10,000

5,000

 

 

 

 

X’s Capital A/c (Goodwill)

 

 

3,000

Balance c/d

1,37,900

89,100

 

Y’s Capital A/c  (Goodwill)

 

 

2,000

 

1,43,000

92,500

50,000

 

1,43,000

92,500

50,000

 

 

 

 

 

 

 

 

 

Balance sheet

as on March 31, 2014 (after Z’s Death)

Liabilities

Amount

Rs

Assets

Amount

Rs

Capital A/cs:

 

Plant and Machinery (1,20,000 – 12,000)

1,08,000

X

1,37,900

 

Furniture and Fittings (75,000 + 3,750)

78,750

Y

89,100

2,27,000

Investments

20,000

Z’s Loan

44,300

Stock in Trade (32,000 + 3,200)

35,200

Bills Payable

17,000

Sundry Debtors

25,000

 

Sundry Creditors

20,000

Less: Provision for Doubtful Debts

 

(1,250)

 

  23,750

 

 

Bills Receivable

11,000

 

 

Cash in Hand

18,500

 

 

Cash at Bank

11,000

 

 

Prepaid Advertisement Expenses

2,100

 

3,08,300

 

3,08,300

 

 

 

 

Working Notes:

Adjustment of Goodwill

Old Ratio (X, Y and Z) = 3 : 2 : 1

Z died.

∴New Ratio (X and Y) = 3 : 2 and

Gaining Ratio = 3 : 2

Goodwill of the firm = Rs 30,000

Z’s Share in Goodwill =

This share of goodwill is to be distributed between X and Y in their gaining ratio (i.e. 3 : 2).

Answer:

Rohit’s Capital Account

Dr.

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Rohit’s Loan A/c

30,000

Balance b/d

1,50,000

Rohit’s Executor’s A/c

2,70,750

General Reserve A/c

30,000

 

 

Sadhna’s Capital A/c (Goodwill)

24,000

 

 

Mohit’s Capital A/c (Goodwill)

48,000

 

 

Profit and Loss Suspense (profit)

43,750

 

 

Interest on Capital A/c

5,000

 

3,00,750

 

3,00,750

 

 

 

 

 

       Working Notes 

(1)   Calculation of Rohit’s Share of Goodwill

       Goodwill of Firm = Average profits × 2 years

                      = 72,000 × 2 = 1,44,000

            

(2)

 

(3) Calculation Of Rohit’s Share of Profit

Sales for last year = Rs 6,00,000

Profit for last year = Rs 1,50,000

Sales from April 01 to Sept 01, 2012 = Rs 3,50,000

 

 

Values involved in the given scenario

(1) Sympathy and helping poor girl child

(2) Fulfilling Social Responsibility

 

 

 



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