Double Entry Book Keeping Ts Grewal Vol I 2018 for Class 12 Commerce Accountancy Chapter 1 - Accounting For Partnership Firms Fundamentals

Question 71:

X and Y are partners sharing profits and losses equally. Their Balance Sheet as on 31st March, 2018 is given below:


Liabilities		₹	Assets		₹
Capital A/cs:			Land and Building		1,50,000
X	1,50,000		Plant and Machinery		1,00,000
Y	1,00,000	2,50,000	Furniture and Fittings		25,000
Current A/cs:			Stock		75,000
X	40,000		Debtors	75,000
Y	30,000	70,000	Less: 5% Reserve for D. Debts	5,000	70,000
Creditors		1,30,000	Bill Receivalbe		30,000
Bill Payable		50,000	Bank		50,000

		5,00,000			5,00,000

Z is admitted as a new partner for 1/4th share under the following terms :
(a) Z is to introduce  ₹ 1,25,000 as capital .
(b) Goodwill of the firm was valued at nil.
(c) It is found that the creditors included a sum of ₹ 7,500 which was not to be paid . But it was also found that there was a liability for compensation to Workmen amounting to ₹ 10,000.
(d) Provision for Doubtful Debts is to be created @ 10% on debtors.
(e) In regard to the Partners' Capital Accounts present fixed capital method is to be converted into fluctuating capital method .
(f) Bills of  ₹ 20,000 accepted from creditors were not recorded in the books.
(g) X provides ₹ 50,000 loan to the business carrying interest @ 10% p.a.
You are required to prepare Revaluation Account , Partners' Capital Accounts, Bank Account and the Balance Sheet of the new firm.

Answer:

Revaluation Account
Dr.			Cr.
Particulars	Amount Rs	Particulars	Amount Rs
Reserve for D. Debts	2,500	Creditors	7,500
Liability for WCF	10,000	Loss transferred to
		X’s Current A/c	2,500
		Y’s Current A/c	2,500

	12,500		12,500

Partners’ Current Accounts
Dr.	Cr.
Particulars	X	Y	Particulars	X	Y
Revaluation A/c	2,500	2,500	Balance b/d	40,000	30,000
Balance c/d	37,500	27,500
	40,000	30,000		40,000	30,000

Partners’ Capital Accounts
Dr.								Cr.
Particulars	X	Y	Z	Particulars	X	Y	Z
				Balance b/d	1,50,000	1,00,000
				Current A/c	37,500	27,500
Balance c/d	1,87,500	1,27,500	1,25,000	Bank			1,25,000
	1,87,500	1,27,500	1,25,000		1,87,500	1,27,500	1,25,000

Balance Sheet as on 1st April, 2018
Liabilities		Amount Rs	Assets		Amount Rs
Creditors (1,30,000 – 7,500 – 20,000)		1,02,500	Land and Building		1,50,000
Bills Payable (50,000 + 20,000)		70,000	Plant and Machinery		1,00,000
Capital A/cs:			Fixture and Fittings		25,000
X	1,87,500		Stock		75,000
Y	1,27,500		Bills Receivables		30,000
Z	1,25,000	4,40,000	Bank (50,000 + 1,25,000 + 50,000)		2,25,000
X's Loan		50,000	Debtors	75,000
Liability for WCF		10,000	Less: 10% Reserve for D. Debts	7,500	67,500


		6,72,500			6,72,500

Question 72:

Rajesh and Ravi are partners sharing profits in the ratio of 3: 2 . Their Balance Sheet at 31st March , 2018 stood as:

BALANCE SHEET as at 31st March, 2018
Liabilities		₹	Assets		₹
Creditors		38,500	Cash		2,000
Outstanding Rent		4,000	Stock		15,000
Capital A/cs:			Prepaid Insurance		1,500
			Debtors	9,400
			Less : Provision for D.D.	400	9,000
Rajesh	29,000
Ravi	15,000	44,000
			Machinery		19,000
			Building		35,000
			Furniture		5,000
		86,500			86,500

Raman is admitted as a new partner introducing a capital of ₹ 16,000. The new profit-sharing ratio is decided as 5 : 3 : 2 . Raman is unable to bring in any cash for goodwill . So it is decided to value the goodwill on the basis of Raman's share in the profits and the capital contributed by him. Following revaluation s are made
(a) Stock to depreciate by 5% ;
(b) Provision for Doubtful Debts is to be ₹ 500;
(c) Furniture to depreciate by 10% ;
(d) Building is valued at ₹ 40,000.
Show necessary Ledger Accounts and Balance Sheet of new firm.

Answer:

Revaluation Account
Dr.				Cr.
Particulars		Amount Rs	Particulars	Amount Rs
Stock		750	Building	5,000
Provision for D. Debts	500
Less: Old Provision	400	100
Furniture		500

Profit on Revaluation transferred to
Rajesh Capital		2,190
Ravi Capital		1,460
		5,000		5,000

Partners’ Capital Accounts
Dr.							Cr.
Particulars	Rajesh	Ravi	Raman	Particulars	Rajesh	Ravi	Raman
				Balance b/d	29,000	15,000
				Revaluation	2,190	1,460
Balance c/d	31,190	16,460	16,000	Cash			16,000
(before and just went of
Goodwill)
	31,190	16,460	16,000		31,190	16,460	16,000
Rajesh’s Capital			1,635	Balance c/d	31,190	16,460	16,000
Raman’s Capital			1,635	Raman’s Capital	1,635	1,635
Balance c/d	32,825	18,095	12,730
	32,825	18,095	16,000		32,825	18,095	16,000

Balance Sheet as on March 31, 2018 after Raman’s admission
Liabilities		Amount Rs	Assets		Amount Rs
Creditors		38,500	Cash (2,000 + 16,000)		18,000
Outstanding Rent		4,000	Stock (15,000 – 750)		14,250
Capital A/cs:			Prepaid Insurance		1,500
Rajesh	32,825		Debtors	9,400
Ravi	18,095		Less: Provision for D. Debts	500	8,900
Raman	12,730	63,730	Machinery		19,000
			Building (35,000 + 5,000)		40,000
			Furniture (5,000 – 500)		4,500
		1,06,150			1,06,150

Working Notes-

WN1 Calculation of Sacrificing Ratio

Sacrificing Ratio = Old Ratio − New Ratio

WN2 Calculation of Goodwill
Actual Capital of all Partners before adjustment of goodwill = Rajesh’s Capital + Ravi’s Capital + Raman’s Capital
= 31,190 + 16,460 + 16,000
= Rs 63,650
Capitalised value on the basis of Raman’s share

Raman’s share of Goodwill

WN3 Adjustment of Raman’s share of goodwill
Rajesh and Ravi each Capital Accounts will be credited by

Journal
Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
Raman’s Capital A/c	Dr.		3,270
To Rajesh’s Capital A/c				1,635
To Ravi’s Capital A/c				1,635
(Raman’s share of goodwill adjusted)

WN4 Distribution of Profit on Revaluation (in old ratio)

Question 73:

A and B are partners in a firm sharing profits in the ratio of 3 : 2 . They admit C as a partner on 1st April, 2018 on which date the Balance Sheet of the firm was:


Liabilities		₹	Assets	₹
Capital A/cs:			Building	50,000
A	60,000		Plant and Machinery	30,000
B	40,000	1,00,000	Stock	20,000
Creditors		20,000	Debtors	10,000
			Bank	10,000


		1,20,000		1,20,000

You are required to prepare the Revaluation Account , Partners' Capital Accounts and Balance Sheet of the new firm after considering the following;
(a) C brings in ₹ 30,000 as capital for 1/4th share. He also brings ₹ 10,000 for his share of goodwill.
(b) Part of the Stock which had been included at cost of ₹ 2,000 had been badly damaged in storage and could only expect to realise ₹ 400.
(c) Bank Charges had been overlooked and amounted to ₹ 200 for the year 2017-18.
(d) Depreciation on Building of ₹ 3,000 had been omitted for the year 2017-18.
(e) A credit for goods for ₹ 800 had been omitted from both purchases and creditors although the goods had been correctly included in Stock.
(f) An expense of ₹ 1,200 for insurance premium was debited in the Profit and Loss Account of 2017-18 but ₹ 600 of this are related to the period after 31st March, 2018.

Answer:

Revaluation Account
Dr.			Cr.
Particulars	Amount Rs	Particulars	Amount Rs
Stock (2,000 – 400)	1,600
Bank (charges)	200	Prepaid Insurance	600
Building	3,000
Creditors	800	Loss transferred to
		A Capital	3,000
		B Capital	2,000
	5,600		5,600

Partners’ Capital Accounts
Dr.							Cr.
Particulars	A	B	C	Particulars	A	B	C
Revaluation	3,000	2,000		Balance b/d	60,000	40,000
				Bank			30,000
				Premium for Goodwill	6,000	4,000
Balance c/d	63,000	42,000	30,000
	66,000	44,000	30,000		66,000	44,000	30,000

Balance Sheet as on April 01, 2018 after C’s admission
Liabilities		Amount Rs	Assets	Amount Rs
Capital A/cs:			Building (50,000 – 3,000)	47,000
A	63,000		Plant and Machinery	30,000
B	42,000		Stock (20,000 – 1,600)	18,400
C	30,000	1,35,000	Debtors	10,000
Creditors (20,000 + 800)		20,800	Bank	49,800
			Prepaid Insurance	600
		1,55,800		1,55,800

Bank Account
Dr.			Cr.
Particulars	Amount Rs	Particulars	Amount Rs
Balance b/d	10,000	Revaluation (Bank charges)	200
C’s Capital	30,000
Premium for Goodwill	10,000	Balance c/d	49,800
	50,000		50,000

Working Notes:

WN1 Sacrificing Ratio
Old Ratio (A and B) 3 : 2
Sacrificing Ratio = 3 : 2

WN2 Distribution of Premium for Goodwill

Question 74:

A and B are partners in a firm . The net profit of the firm is divided as follows : 1/2 to A , 1/3 to B and 1/6 carried to a Reserve . They admit C as a partner on 1st April, 2018 on which date , the Balance Sheet of the firm was:


Liabilities		₹	Assets	₹
Capital A/cs:			Building	50,000
A	50,000		Plant and Machinery	30,000
B	40,000	90,000	Stock	18,000
Reserve		10,000	Debtors	22,000
Creditors		20,000	Bank	5,000
Outstanding Expenses		5,000

		1,25,000		1,25,000

Following are the required adjustments on admission of C :
(a) C brings in ₹ 25,000 towards his capital.
(b) C also brings in ₹ 5,000 for 1/5 th share of goodwill.
(c) Stock is undervalued by 10%.
(d) Creditors include a contingent liability of ₹ 4,000 , which has been decided by the court at ₹ 3,200.
(e) In regard to the Debtors , the following Debts proved Bad or Doubtful

long dash

₹ 2,000 due from X

long dash

bad to the full extent;
₹ 4,000 due from Y

long dash

insolvent , estate expected to pay only 50%.
You are required to prepare Revaluation Account , Partners' Capital Accounts and Balance Sheet of the new firm.

Answer:

Revaluation Account
Dr.			Cr.
Particulars	Amount Rs	Particulars	Amount Rs
Bad Debts	2,000	Stock	2,000
Provision for Doubtful Debts	2,000	Creditors (4,000 – 3,200)	800
(4,000 × 50%)
		Loss transferred to
		A Capital	720
		B Capital	480
	4,000		4,000

Partners’ Capital Accounts
Dr.							Cr.
Particulars	A	B	C	Particulars	A	B	C
Revaluation	720	480		Balance b/d	50,000	40,000
				Reserve	6,000	4,000
				Bank			25,000
Balance c/d	58,280	45,520	25,000	Premium for Goodwill	3,000	2,000
	59,000	46,000	25,000		59,000	46,000	25,000

Balance Sheet as on April 01, 2018 after C’s admission
Liabilities		Amount Rs	Assets		Amount Rs
Capital A/cs:			Building		50,000
A	58,280		Plan and Machinery		30,000
B	45,520		Stock (18,000 × 100/90)		20,000
C	25,000	1,28,800	Debtors	22,000
Creditors (20,000 – 800)		19,200	Less: Bad Debts	2,000
Outstanding Expenses		5,000	Less: Prov. for D. Debts	2,000	18,000
			Bank (5,000 + 30,000)		35,000
		1,53,000			1,53,000

Working Notes

WN1

WN2
Distribution of Reserve

WN3
Distribution of Premium for Goodwill

Question 75:

Following is the Balance Sheet of the firm, Ashirvad, owned by A , B and C who share profits and losses of the business in the ratio of 3 : 2 :1 .

BALANCE SHEET as at 31st March, 2018
Liabilities		₹	Assets	₹
Capital A/cs:			Furniture	95,000
A	1,20,000		Business Premises	2,05,000
B	1,20,000		Stock-in-Trade	40,000
C	1,20,000	3,60,000	Debtors	28,000
Sundry Creditors		20,000	Cash at Bank	15,000
Outstanding Salaries and wages		7,200	Cash in Hand	4,200


		3,87,200		3,87,200

On 1st April, 2018, they admit D as a partner on the following conditions :

(a) D will bring in ₹ 1,20,000 as his capital and also ₹ 30,000 as goodwill premium for a quarter of the share in the future profits / losses of the firm.
(b) The values of the fixed assets of the firm will be increased by 10% before the admission of D .
(c) Mohan, an old customer whose account was written off as bad debts , has promised to pay ₹ 3,000 in full settlement of his dues.
(d) The future profits and losses of the firm will be shared equally by all the partners .
Pass the necessary journal entries and Prepare Revaluation Account, Partners' Capital Accounts and opening Balance Sheet of the new firm

Note: There will be no entry for the promise made by Mohan, since it is an event and not a transaction. There is another view , ₹ 3,000 is to be considered as bad debts recovered . In this situation result will be as follows :
Gain( Profit) on Revaluation

—

₹ 36,000; Capital A/cs: A

—

₹ 1,66,000; B

—

₹ 1,42,000; C

—

₹ 1,16,000; D's Capital

—

₹ 1,20,000; Balance Sheet Total

—

₹ 5,72,000.

Answer:

Revaluation Account
Dr.				Cr.
Particulars	Amount Rs	Particulars		Amount Rs
		Fixed Assets:
		Furniture	95,000 × 10%	9,500
Profit transferred to		Business Premises	2,05,000 × 10%	20,500
A Capital	15,000
B Capital	10,000
C Capital	5,000

	30,000			30,000

Partners’ Capital Accounts
Dr.									Cr.
Particulars	A	B	C	D	Particulars	A	B	C	D
A’s Capital (Goodwill)			7,500		Balance b/d	1,20,000	1,20,000	1,20,000
B’s Capital (Goodwill)			2,500		Revaluation (Profit)	15,000	10,000	5,000
					Cash				1,20,000
Balance c/d	1,65,000	1,40,000	1,15,000	1,20,000	Premium for Goodwill	22,500	7,500
					C’s Capital (Goodwill)	7,500	2,500
	1,65,000	1,40,000	1,25,000	1,20,000		1,65,000	1,40,000	1,25,000	1,20,000

Balance Sheet as on April 1, 2018, after D’s admission
Liabilities		Amount Rs	Assets	Amount Rs
Capital A/cs:			Furniture (95,000 + 9,500)	1,04,500
A	1,65,000		Business Premises (2,05,000+20,500)	2,25,500
B	1,40,000		Stock-in-Trade	40,000
C	1,15,000		Debtors	28,000
D	1,20,000	5,40,000	Cash at Bank	15,000
Sundry Creditors		20,000	Cash in hand (4,200 + 1,50,000)	1,54,200
Outstanding salaries and wages		7,200
		5,67,200		5,67,200

Working Note:

WN1 Calculation of Sacrificing Ratio

Sacrificing Ratio = Old Ratio − New Ratio

WN2 Calculation of C’s gain in goodwill

WN3 Amount of Goodwill to be distributed between A and B (Sacrificing Partners)

WN4 Journal Entries for D’s Capital and distribution of goodwill

Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
Cash A/c	Dr.		1,50,000
To D’s Capital A/c				1,20,000
To Premium for Goodwill A/c				30,000
(D brought Capital and share of Capital)

Premium for Goodwill	Dr.		30,000
C’s Capital A/c	Dr.		10,000
To A’s Capital A/c				30,000
To B’s Capital				10,000
(Gain goodwill distributed between A and B in sacrificing ratio i.e. 3:1)

Question 76:

A and B are partners in a firm sharing profits and losses in the ratio of 3 : 2 . Following is their Balance Sheet as at 31st March, 2018:


Liabilities		₹	Assets	₹
Capital A/cs:			Building	35,000
A	50,000		Machinery	25,000
B	30,000	80,000	Stock	15,000
Creditors		20,000	Debtors	15,000
			Investments	5,000
			Bank	5,000

		1,00,000		1,00,000

C is admitted as a partner on 1st April, 2018 on the following terms:
(a) C is to pay ₹ 20,000 as capital for 1/4th share. He also pays ₹ 5,000 as premium for goodwill.
(b) Debtors amounted to ₹ 3,000 is to be written off as bad and a Provision of 10% is created against Doubtful Debts on the remaining amount.
(c) No entry has been passed in respect of a debt of ₹ 300 recovered by A from a customer , which was previously written off as bad in previous year . The amount is to be paid by A.
(d) Investments are taken over by B at their market value of ₹ 4,900 against cash payment .
You are required to prepare Revaluation Account, Partner's Capital Accounts and new Balance Sheet

Answer:

Revaluation Account
Dr.			Cr.
Particulars	Amount Rs	Particulars	Amount Rs
Bad Debts	3,000	A's Capital A/c	300
Provision for Doubtful Debts	1,200	Loss transferred to
Investment (5,000 – 4,900)	100	A Capital	2,400
		B Capital	1,600
	4,300		4,300

Partners’ Capital Accounts
Dr.							Cr.
Particulars	A	B	C	Particulars	A	B	C
Revaluation	2,400	1,600		Balance b/d	50,000	30,000
Revaluation	300			Bank			20,000
				Premium for Goodwill	3,000	2,000
Balance c/d	50,300	30,400	20,000
	53,000	32,000	20,000		53,000	32,000	20,000

Balance Sheet as on April 01, 2018 after C’s admission
Liabilities		Amount Rs	Assets		Amount Rs
Capital A/cs:			Buildings		35,000
A	50,300		Machinery		25,000
B	30,400		Stock		15,000
C	20,000	1,00,700	Debtors	15,000
Creditors		20,000	Less: Bad Debts	3,000
				12,000
			Less: 10% Provision for Doubtful Debts	1,200	10,800
			Bank		34,900
		1,20,700			1,20,700

Bank Account
Dr.			Cr.
Particulars	Amount Rs	Particulars	Amount Rs
Balance b/d	5,000
C’s Capital	20,000
Premium for Goodwill	5,000
Investments	4,900	Balance c/d	34,900

	34,900		34,900

Working Notes:

WN1

WN2
Distribution of Premium for Goodwill

WN3
Sale of Investments

Bank A/c	Dr.	4,900
Revaluation A/c	Dr.	100
To Investment			5,000

WN4

Bad debt Recovered

A's Capital A/c	Dr.	300
To Revaluation A/c			300

Question 77:

X and Y are partners sharing profits and losses in the ratio of 3/4 and 1/4 . Their Balance Sheet as at 31st March, 2018 is:


Liabilities		₹	Assets	₹
Capital A/cs:			Land and Building	1,25,000
X	1,50,000		Furniture	5,000
Y	80,000	2,30,000	Stock	1,00,000
Workmen Compensation Reserve		20,000	Sundry Debtors	80,000
Sundry Creditors		1,50,000	Bills Receivable	15,000
Bills Payable		37,500	Cash at Bank	1,00,000
			Cash in Hand	12,500
		4,37,500		4,37,500

They admit Z into partnership on 1st April, 2018 on the following terms:
(a) Goodwill is to be valued at ₹ 1,00,000.
(b) Stock and Furniture to be reduced by 10%.
(c) A Provision for Doubtful Debts is to be created @ 5% on Sundry Debtors .
(d) The value of Land and Building is to be appreciated by 20%.
(e) Z pays ₹ 50,000 as his capital for 1/5th share in the future profits.
You are required to show Revaluation Account , Partners' Capital Accounts and Balance Sheet of the new firm.

Note: Z's Share of Goodwill ₹ 20,000 (i.e, ₹ 1,00,000

\times

1/5 ) can be adjusted through Z's Current A/c. In that situation, Partners' Capital A/cs: X

—

₹ 1,87,875; Y

—

₹ 92,625; Z

—

₹ 50,000; Z's Current A/c (Dr.)

—

₹ 20,000; Balance Sheet Total

—

₹ 5,18,000.

Answer:

Revaluation Account
Dr.			Cr.
Particulars	Amount Rs	Particulars	Amount Rs
Stock	10,000	Land and Building	25,000
Furniture	500	(1,25,000 × 20%)
Provision for D. Debts	4,000
Profit transferred to
X Capital	7,875
Y Capital	2,625
	25,000		25,000

Partners’ Capital Accounts
Dr.							Cr.
Particulars	X	Y	Z	Particulars	X	Y	Z
X’s Capital			15,000	Balance b/d	1,50,000	80,000
Y’s Capital			5,000	Workmen’s Compensation Fund	15,000	5,000
				Revaluation (Profit)	7,875	2,625
Balance c/d	1,87,875	92,625	30,000	Cash			50,000
				Z’s Capital	15,000	5,000
	1,87,875	92,625	50,000		1,87,875	92,625	50,000

Balance Sheet as on April 01, 2018 after Z’s admission
Liabilities		Amount Rs	Assets		Amount Rs
Capital A/cs:			Land and Building (1,25,000 + 25,000)		1,50,000
X	1,87,875
Y	92,625		Office Furniture (5,000 – 500)		4,500
Z	30,000	3,10,500	Stock (1,00,000 – 10,000)		90,000
Sundry Creditors		1,50,000	Sundry Debtors	80,000
Bills Payable		37,500	Less: 5% Provision for D. Debts	4,000	76,000
			Cash at Bank		1,00,000
			Cash in Hand (12,500 + 50,000)		62,500
			Bills Receivable		15,000
		4,98,000			4,98,000

Working Notes:

WN1: Sacrificing Ratio

WN2: Calculation of Partners' Share of Goodwill
Goodwill of the firm = 1, 00,000

	Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	Z’s Capital A/c	Dr.		20,000
	To X’s Capital A/c				15,000
	To Y’s Capital A/c				5,000
	(Z’s share of goodwill changed from his Capital Account)

	Workmen’s Compensation Fund A/c			20,000
	To X’s Capital A/c				15,000
	To Y’s Capital				5,000
	(Workmen’s Compensation Fund distributed)

Question 78:

Deepika and Rajshree are partners in a firm sharing profits and losses in the ratio of 3 : 2 . On 31st March,2018 their Balance Sheet was:


Liabilities		₹	Assets		₹
Sundry Creditors		16,000	Cash in Hand		1,200
Public Deposits		61,000	Cash at Bank		2,800
Bank Overdraft		6,000	Stock		32,000
Outstanding Liabilities		2,000	Prepaid Insurance		1,000
Capital A/cs:			Sundry Debtors	28,000
			Less : Provision for D.D.	800	28,000

Deepika	48,000
Rajshree	40,000	88,000	Plant and Machinery		48,000
			Land and Building		50,000
			Furniture		10,000

		1,73,000			1,73,000

On the above date , the partners decided to admit Anshu as a partner on the following terms:
(a) The new profit-sharing ratio of Deepika , Rajshree and Anshu will be 5 : 3 : 2 respectively.
(b) Anshu shall bring in ₹ 32,000 as his capital.
(c) Anshu is unable to bring in any cash for his share of goodwill. Partners' therefore, decide to calculate the goodwill on the basis of Anshu's share in the profits and the capital contribution made by her to the firm.
(d) Plant and Machinery is to be valued at ₹ 60,000, Stock at ₹ 40,000 and the Provision for Doubtful Debts is to be maintained at ₹ 4,000. Value of Land and Building has appreciated by 20% . Furniture has been depreciated by 10%.
(e) There is and additional liability of ₹ 8,000 being outstanding salary payable to employees of the firm. This liability is not included in the outstanding liabilities , stated in the above Balance Sheet. Partners decide to show this liability in the books of account of the reconstituted firm.
Prepare Revaluation Account , Partners' Capital Accounts and Balance Sheet of Deepika , Rajshree and Anshu.

Answer:

Revaluation Account
Dr.				Cr.
Particulars		Amount Rs	Particulars	Amount Rs
Reserve for D. Debts	4,000		Plant and Machinery	12,000
Less: Old Reserve	800	3,200	(60,000 – 48,000)

Furniture 10,000 × 10%		1,000	Stock (40,000 – 32,000)	8,000
Outstanding salary		8,000
Profit transferred to			Land and Building	10,000
Deepika Capital		10,680	(50,000 × 20%)
Rajshree Capital		7,120
		30,000		30,000

Partners’ Capital Accounts
Dr.							Cr.
Particulars	Deepika	Rajshree	Anshu	Particulars	Deepika	Rajshree	Anshu
Balance c/d	58,680	47,120	32,000	Balance b/d	48,000	40,000
(before adjustment of Goodwill)
				Revaluation	10,680	7,120
				Cash			32,000
	58,680	47,120	32,000		58,680	47,120	32,000

Deepika			2,220	Balance b/d	58,680	47,120	32,000
Rajshree			2,220	Anshu’s Capital (Goodwill)	2,220	2,220
Balance c/d	60,900	49,340	27,560
	60,900	49,340	32,000		60,900	49,340	32,000

Balance Sheet as on March 31, 2018 after Anshu’s admission
Liabilities		Amount Rs	Assets		Amount Rs
Outstanding Salaries		8,000	Cash in Hand		1,200
Sundry Creditors		16,000	Cash at Bank		28,800
Public Deposits		61,000	Stock		40,000
Outstanding Liabilities		2,000	Prepaid Insurance		1,000
Capital A/cs:			Sundry Debtors	28,800
Deepika	60,900		Less: reserve for D. Debts	4,000	24,800
Rajshree	49,340		Plant and Machinery		60,000
Anshu	27,560	1,37,800	Land and Building		60,000
			Furniture		9,000
		2,24,800			2,24,800

Working Notes

WN1: Calculation of Sacrificing Ratio

Sacrificing Ratio = Old Ratio − New Ratio

WN2: Valuation of Goodwill
Capitalised value on the basis of Anshu’s share

Actual Capital of all partners before adjustment of Goodwill = 58,680 + 47,120 + 32,000
= Rs 1,37,800
Goodwill = Capitalised value − Actual Capital of all partners before adjustment of Goodwill
= 1,60,000 − 1,37,800
= Rs 22,200
Anshu’s share of Goodwill

Deepika and Rajshree each will entitle for Goodwill

Question 79:

X and Y are partners sharing profits in the ratio of 2 : 1 . Their Balance Sheet as at 31st March, 2018 was:


Liabilities		₹	Assets	₹
Sundry Creditors		25,000	Cash/Bank	5,000
General Reserve		18,000	Sundry Debtors	15,000
Capital A/cs:			Stock	10,000
X	75,000		Investments	8,000
Y	62,000	1,37,000	Typewriter	5,000
			Fixed Assets	1,37,000



		1,80,000		1,80,000

They admit Z into partnership on the same date on the following terms;
(a) Z brings in ₹ 40,000 as his capital and he is given 1/4th share in profits.
(b) Z brings in ₹ 15,000 for goodwill, half of which is withdrawn by old partners .
(c) Investments are valued at ₹ 10,000 . X takes over Investments at this value.
(d) Typewriter is to be depreciated by 20% and Fixed Assets by 10%.
(e) An unrecorded stock of Stationery on 31st March,2018 is ₹ 1,000.
(f) By bringing in r withdrawing cash , the Capitals of X and Y are to be made proportionate to that of Z on their profit-sharing basis.
Pass journal entries , prepare Revaluation Account , Capital Accounts and new Balance Sheet of the firm.

Answer:

Journal
Date 2018	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs

April 1	Revaluation A/c	Dr.		14,700
	To Typewriter A/c				1,000
	To Fixed Assets A/c				13,700
	(Decrease in value of typewriter and fixed assets transferred to Revaluation Account)

April 1	Stationery A/c	Dr.		1,000
	Investment A/c	Dr.		2,000
	To Revaluation A/c				3,000
	(Increase in stationery and investment transferred to Revaluation Account)

April 1	X’s Capital A/c	Dr.		7,800
	Y’s Capital A/c	Dr.		3,900
	To Revaluation A/c				11,700
	(Revaluation loss transferred to X and Y’s Capital Account in their old ratio)

April 1	Reserve Fund A/c	Dr.		18,000
	To X’s Capital A/c				12,000
	To Y’s Capital A/c				6,000
	(Reserve Fund distributed)

April 1	Cash A/c	Dr.		55,000
	To Z’s Capital A/c				40,000
	To Premium for Goodwill A/c				15,000
	(Z brought capital and share of goodwill)

April 1	Premium for Goodwill A/c	Dr.		15,000
	To X’s Capital A/c				10,000
	To Y’s Capital A/c				5,000
	(Premium for Goodwill distributed between X and Y in their sacrificing ratio i.e 2:1)

April 1	X’s Capital A/c	Dr.		5,000
	Y’s Capital A/c	Dr.		2,500
	To Cash				7,500
	(Half of the Premium for Goodwill withdrawn by X and Y)

April 1	X’s Capital A/c	Dr.		10,000
	To Investments A/c				10,000
	(X took over the Investment)

April 1	Cash A/c	Dr.		4,800
	To X’s Capital A/c				4,800
	(X’ brought cash to make up deficiency in capital)

April 1	Y’s Capital A/c	Dr.		26,600
	To Cash A/c				26,600
	(Y withdrew excess capital after all adjustments)

Cash/Bank Account
Dr.			Cr.
Particulars	Amount Rs	Particulars	Amount Rs
Balance b/d	5,000	X’s Capital (Goodwill)	5,000
Z’s Capital	40,000	Y’s Capital (Goodwill)	2,500
Premium for Goodwill	15,000	Y’s Capital	26,600
X’s Capital	5,800	Balance c/d	31,700
	65,800		65,800

Revaluation Account
Dr.			Cr.
Particulars	Amount Rs	Particulars	Amount Rs

Typewriter (5,000 × 20%)	1,000	Investment	2,000
Fixed Assets (1,37,000 × 10%)	13,700	Stationery	1,000
		Loss transferred to
		X Capital	7,800
		Y Capital	3,900
	14,700		14,700

Partners’ Capital Accounts
Dr.							Cr.
Particulars	X	Y	Z	Particulars	X	Y	Z
Revaluation

Double Entry Book Keeping Ts Grewal Vol I 2018 for Class 12 Commerce Accountancy Chapter 1 - Accounting For Partnership Firms Fundamentals

Page No 4.100:

Question 71:

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Question 72:

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Question 78:

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Question 79:

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