X, Y and Z are partners in a firm sharing profits and losses equally. The Balance Sheet of the firm as at 31st March, 2011 stood as follows:
Liabilities | Rs. | Assets | Rs. |
Creditors General Reserve Provident Fund Capitals: X 3,00,000 Y 2,00,000 X 2,00,000 |
1,09,000 60,000 20,000 7,00,000 |
Cash in hand and Cash at Bank Debtors Stock Investments (at cost) Freehold Property Trade Marks Goodwill |
86,000 2,00,000 1,00,000 50,000 4,00,000 20,000 33,000 |
8,89,000 | 8,89,000 |
(i) Freehold Property be valued at Rs. 5,80,000
(ii) Investments be valued at Rs. 47,000 and stocks be valued at Rs. 94,000
(iii) A provision of 5% be made for doubtful debts
(iv) Trade marks are valueless
(v) An item of Rs. 12,000 included in creditors is not likely to be claimed.
(vi) Goodwill be valued at one year's purchase of the average profit of the past three years. Profits ending 31st March were : 2009 Rs. 1,20,000, 2010 Rs. 1,00,000 and 2011 Rs. 95,000.
Pass journal entries, give capital accounts and the balance sheet of the remaining partners.
Dear Student,
Working Notes
Journal | |||||
Date | Particulars | L.F. | Debit Amount (Rs) | Credit Amount (Rs) | |
X’s Capital A/c | Dr. | 17,500 | |||
Y’s Capital A/c | Dr. | 17,500 | |||
To Z’s Capital A/c | 35,000 | ||||
(Adjustment for goodwill on retirement) | |||||
Z’s Capital A/c | Dr. | 2,95,000 | |||
To Z’s Loan A/c | 2,95,000 | ||||
(Balance transferred to Z’s Loan A/c) |
Revaluation Account | ||||||
Dr. | Cr. | |||||
Particulars | Amount Rs | Particulars | Amount Rs | |||
Investments | 3,000 | Freehold Property | 1,80,000 | |||
Provision for DD | 10,000 | Creditors | 12,000 | |||
Stock | 6,000 | |||||
Trade Marks | 20,000 | |||||
Revaluation Profit | ||||||
X | 51,000 | |||||
Y | 51,000 | |||||
Z | 51,000 | 1,53,000 | ||||
1,92,000 | 1,92,000 | |||||
Dr. | Partners’ Capital Accounts | Cr. | |||||||
Particulars | X | Y | Z | Particulars | X | Y | Z | ||
Old Goodwill A/c | 11,000 | 11,000 | 11,000 | Balance b/d | 3,00,000 | 2,00,000 | 2,00,000 | ||
Z’s Capital A/c | 17,500 | 17,500 | X’s Capital A/c | 17,500 | |||||
Z’s Loan A/c | 2,95,000 | Y’s Capital A/c | 17,500 | ||||||
Balance c/d | 3,42,500 | 2,42,500 | Revaluation | 51,000 | 51,000 | 51,000 | |||
General Reserve | 20,000 | 20,000 | 20,000 | ||||||
3,71,000 | 2,71,000 | 3,06,000 | 3,71,000 | 2,71,000 | 3,06,000 | ||||
Balance Sheet | ||||
Liabilities | Amount Rs | Assets | Amount Rs | |
Creditors | 97,000 | Cash | 86,000 | |
Provident Fund | 20,000 | Debtors (Less Provision) | 1,90,000 | |
Capital A/c | Stock | 94,000 | ||
X | 3,42,500 | Investments | 47,000 | |
Y | 2,42,500 | 5,85,000 | Freehold Property | 5,80,000 |
Z’s Loan | 2,95,000 | |||
9,97,000 | 9,97,000 | |||
Working Notes