A and B are in a partnership sharing profits and losses in the ratio of 3:2. on 1st april 2012,they admitted C into partnership.he paid 50000 as his capital but nothing for goodwill which was valued at 40000 for the firm.he acquired 1/5th share in the profits , equally from both partners.it was also decided that......

a) land and building be written off by 20000.

b) stock be written down by 3200.

c) a provision of 1000 be created for doubtful debts.

d) an amount of 1200 included in the sundry creditors be written back as it is no longer payable.

balance sheet is as follows...

LIABILITIES

AMOUNT

ASSETS

AMOUNT

Capital a/cs

A

B

General reserve

Sundry creditors

------------

86000

64000

20000

31200

goodwill

land and building

plant and machinery

stock

sundry debtors

cash

cash in bank

10000

60000

70000

36000

20000

4000

1200

201200

201200

Prepare the revaluation a/c partners capital a/cs and the balance sheet and pass the journal entries of the new firm.

 

Revaluation Account

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Land and Building

20,000

Sundry Creditors

1,200

Stock

3,200

Loss transferred to-

 

Provision for Doubtful Debts

1,000

A’s Capital A/c

13,800

 

 

B’s Capital A/c

9,200

 

24,200

 

24,200

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

A

B

C

Particulars

A

B

C

A’s Capital A/c

-

-

4,000

Balance b/d

86,000

64,000

-

B’s Capital A/c

-

-

4,000

General Reserve

12,000

8,000

-

Revaluation A/c

13,800

9,200

-

Cash A/c

-

-

50,000

Goodwill A/c

6,000

4,000

-

C’s Capital A/c

4,000

4,000

-

Balance c/d

82,200

62,800

42,000

 

 

 

 

 

1,02,000

76,000

50,000

 

1,02,000

76,000

50,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as on April 01, 2012 after C’s admission

Liabilities

Amount

Rs

Assets

Amount

Rs

Capital A/cs-

 

Land and Building (60,000 – 20,000)

40,000

A

82,200

 

Plant and Machinery

70,000

B

62,800

 

Stock (36,000 – 3,200)

32,800

C

42,000

1,87,000

Sundry Debtors

20,000

 

Sundry Creditors

30,000

Less: Provision for D. Debts

(1,000)

19,000

(31,200 – 1,200)

 

Cash at Bank

4,000

 

 

Cash in Hand (1,200 + 50,000)

51,200

 

2,17,000

 

2,17,000

 

 

 

 

 

Working Notes:

WN 1  Calculation of Z’s Share of Goodwill

X and Y each will get

Particulars

Debit

Amount

Rs

Credit

Amount

Rs

Z’s Capital A/c

Dr.

8,000

 

To X’s Capital A/c

 

4,000

To Y’s Capital A/c

 

4,000

(Z’s share of goodwill charged from capital accounts of the partners in their sacrificing ratio)

 

 

    

 

WN 2  Distribution of General Reserve

 

WN3  Writing- off of Old Goodwill

Particulars

Debit

Amount

Rs

Credit

Amount

Rs

Goodwill A/c

Dr.

10,000

 

To X’s Capital A/c

 

6,000

To Y’s Capital A/c

 

4,000

(Goodwill written-off in old ratio)

 

 

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