Q. X and Y share profits as X 60% and Y 40%. The Balance Sheet of the firm as at April 1, 2012 was follows:
| Liabilites | Rs. | Assets | Rs. |
| Provision for Doubtful Debt | 3000 | Freehold premises | 200000 |
| Creditors | 39000 | Plant | 100000 |
| Provident Fund | 18000 | Furniture | 16000 |
| Reserve Fund | 15000 | Prepaid Expenses | 4000 |
| X's Capital | 250000 | Debtors | 100000 |
| Y's Capital | 150000 | Stock | 40000 |
| Cash | 5000 | ||
| Goodwill | 10000 | ||
| 475000 | 475000 |
(1) He was to get 4/l5ths of profits.
(2) He was to introduce 2,00,000 as capital and his share of goodwill in cash.Goodwill brought by Z shall be withdrawn by X and Y.
(3) Goodwill shall be valued on the basis of 1 1/2 years purchase of the average
profits of the last four years which were:
2009 Rs. 20,000
2010 Rs. 35,000
2011 Rs. 15,000 (Loss)
2012 Rs. 40,000
4) It is further agreed that y shall introduce additional capital of Rs. 40,000.
5) Assets are to be revalued as : Freehold Premises Rs. 2,50,000; Plant at Rs. 80,000. Prepaid Expenses Nil;
6) It is decided to write off Bad Debts amounting to Rs. Rs. 8,000
7) Creditors approved at Rs. 45,000, one bill for goods purchased having been omitted from the books.
Pass necessary journal entries and prepare Ledger accounts to record the above and balance sheet after Z's admmisson
Dear Student
Please see that above are the required ledger accounts and balance sheet, I request you to kindly try to prepare journal entries and in case of any query please get back to us.
Regards
| Revalution A/c | |||||
| Date | Particulars | Amount (in Rs) | Date | Particulars | Amount (in Rs) |
| Plant | 20,000 | Freehold Premises | 50,000 | ||
| Debtors | 5,000 | ||||
| Creditors | 6,000 | ||||
| Prepaid Expenses | 4,000 | ||||
| Capital A/c (15,000 in 3:2) | |||||
| X | 9,000 | ||||
| Y | 6,000 | ||||
| 50,000 | 50,000 | ||||
| Partner's Capital A/c | |||||||
| Particulars | X | Y | Z | Particulars | X | Y | Z |
| Cash A/c (Goodwill withdrawn) | 4,800 | 3,200 | Balance b/d | 250,000 | 150,000 | ||
| Goodwill | 6,000 | 4,000 | |||||
| Reserve Fund | 9,000 | 6,000 | |||||
| Premum for Goodwill | 4,800 | 3,200 | |||||
| Cash A/c | 200,000 | ||||||
| Bal C/d | 262,000 | 198,000 | 200,000 | Cash A/c | 40,000 | ||
| Revaluation A/c | 9,000 | 6,000 | |||||
| 272,800 | 205,200 | 200,000 | 272,800 | 205,200 | 200,000 | ||
| Balance sheet | |||||
| Liabilities | Amount (in Rs) | Assets | Amount (in Rs) | ||
| Sundry Creditors | 45,000 | Freehold Premises | 250,000 | ||
| Provident Fund | 18,000 | Plant | 80,000 | ||
| Furniture | 16,000 | ||||
| Debtors | 92,000 | ||||
| Cash | 245,000 | ||||
| Capital | Stock | 40,000 | |||
| X | 262,000 | ||||
| Y | 198,000 | ||||
| Z | 200,000 | ||||
| 723,000 | 723,000 | ||||
| Average Profit of Last 4 Years | (20,000 + 35,000 - 15,000 + 40,000) /4 | 20,000 |
| Goodwill @ 1.5 Years of Average Profit | (20,000 x 1.5) | 30,000 |
| Goodwill Adjustment | ||
| Total Goodwill | 30,000 | |
| Share of Goodwill of Z | (30,000 x 4/15) | 8,000 |
| Sacrificing Ratio | 3:2 | |
| Distribution in Sacrificing Ratio in capital accounts of : | ||
| X | (8,000 x 3/5) | 4,800 |
| Y | (8,000 x 2/5) | 3,200 |
| Cash A/c | |||||
| Date | Particulars | Amount (in Rs) | Date | Particulars | Amount (in Rs) |
| Bal B/d | 5,000 | X's Capital A/c | 4,800 | ||
| Zs Capital A/c | 200,000 | Y's Capital A/c | 3,200 | ||
| Premium for Goodwill A/c | 8,000 | ||||
| Y's Capital A/c | 40,000 | ||||
| Bal C/d | 245,000 | ||||
| 253,000 | 253,000 | ||||
Please see that above are the required ledger accounts and balance sheet, I request you to kindly try to prepare journal entries and in case of any query please get back to us.
Regards