Double Entry Book Keeping Ts Grewal (2016) Solutions for Class 12 Commerce Accountancy Chapter 4 Admission Of A Partner are provided here with simple step-by-step explanations. These solutions for Admission Of A Partner are extremely popular among class 12 Commerce students for Accountancy Admission Of A Partner Solutions come handy for quickly completing your homework and preparing for exams. All questions and answers from the Double Entry Book Keeping Ts Grewal (2016) Book of class 12 Commerce Accountancy Chapter 4 are provided here for you for free. You will also love the ad-free experience on Meritnation’s Double Entry Book Keeping Ts Grewal (2016) Solutions. All Double Entry Book Keeping Ts Grewal (2016) Solutions for class 12 Commerce Accountancy are prepared by experts and are 100% accurate.

Page No 4.67:

Question 1:

Answer:

Old Ratio of A and B = 21 : 9
Let the total share be = 1
C's Share of Profit=921Remaining Share = 1 - 921=1221A's Share = 1221 × 2130=84210B's Share = 1221 × 930=36210C's Share = 921 or 90210New Profit Share = 84 : 36 : 90 or 14 : 6 : 15

Page No 4.67:

Question 2:

Old Ratio of A and B = 21 : 9
Let the total share be = 1
C's Share of Profit=921Remaining Share = 1 - 921=1221A's Share = 1221 × 2130=84210B's Share = 1221 × 930=36210C's Share = 921 or 90210New Profit Share = 84 : 36 : 90 or 14 : 6 : 15

Answer:

Ashok admits for share of profit

Ravi sacrifices in favour of Ashok =

Mukesh sacrifices in favour of Ashok =

New Ratio = Old Ratio − Sacrificing Ratio

Page No 4.67:

Question 3:

Ashok admits for share of profit

Ravi sacrifices in favour of Ashok =

Mukesh sacrifices in favour of Ashok =

New Ratio = Old Ratio − Sacrificing Ratio

Answer:

Old ratio of A and B = 7 : 3

A's Share=710A surrenders in favour of C=710×17=110A's New Share = 710-110=610
B's share = 310B surrenders in favour of C = 310 × 13 = 110B's New share = 310 - 110 = 210C's share = 110 + 110 = 210New Profit Ratio = 6 : 2 : 2 or 3 : 1 : 1

Page No 4.67:

Question 4:

Old ratio of A and B = 7 : 3

A's Share=710A surrenders in favour of C=710×17=110A's New Share = 710-110=610
B's share = 310B surrenders in favour of C = 310 × 13 = 110B's New share = 310 - 110 = 210C's share = 110 + 110 = 210New Profit Ratio = 6 : 2 : 2 or 3 : 1 : 1

Answer:

Old Ratio = 1 : 1

Let the total share be = 1

Share of Black = 14or 520Remaining Share = 1 - 14 = 34Red's Share = 35 × 34 = 920White's Share = 25 × 34 = 620New Profit Sharing Ratio = 9 : 6 : 5

Page No 4.67:

Question 5:

Old Ratio = 1 : 1

Let the total share be = 1

Share of Black = 14or 520Remaining Share = 1 - 14 = 34Red's Share = 35 × 34 = 920White's Share = 25 × 34 = 620New Profit Sharing Ratio = 9 : 6 : 5

Answer:

(i) Let the total share be = 1
 

Old ratio = 2 : 3 : 1

W is admitted for 16th share

Z’s share = 16
Total Share of Z and W = 16 + 16 = 13Remaining Share = 1 - 13 = 23Old Ratio between X and Y = 2 : 3X's New Share = 23 × 25 = 415Y's New Share = 23 × 35 = 615Z's Share = 16 or 530W's Share = 16 or 530New Profit share ratio = 8 : 12 : 5 : 5

(ii) Old Ratio = 3 : 2 : 5
 
A sacrifices = 15 × 15 = 125A's New Share = 310 - 125 = 1350B sacrifices = 15 × 15 = 125B's New Share = 210 - 125 = 850C sacrifices = 15 × 35 = 325C's New Share = 510 - 325 = 1950D's Profit Share = 15 or 1050New Profit Sharing ratio = 13 : 8 : 19 : 10

Page No 4.67:

Question 6:

(i) Let the total share be = 1
 

Old ratio = 2 : 3 : 1

W is admitted for 16th share

Z’s share = 16
Total Share of Z and W = 16 + 16 = 13Remaining Share = 1 - 13 = 23Old Ratio between X and Y = 2 : 3X's New Share = 23 × 25 = 415Y's New Share = 23 × 35 = 615Z's Share = 16 or 530W's Share = 16 or 530New Profit share ratio = 8 : 12 : 5 : 5

(ii) Old Ratio = 3 : 2 : 5
 
A sacrifices = 15 × 15 = 125A's New Share = 310 - 125 = 1350B sacrifices = 15 × 15 = 125B's New Share = 210 - 125 = 850C sacrifices = 15 × 35 = 325C's New Share = 510 - 325 = 1950D's Profit Share = 15 or 1050New Profit Sharing ratio = 13 : 8 : 19 : 10

Answer:

Old ratio = 3 : 2

Let the total share be = 1

Z's Share of Profit = 15Remaining Share = 1 - 15 = 45X's Share = 45 × 35 = 1225Y's Share = 45 × 25 = 825Z's Share = 15 or 525New Profit Share = 12 : 8 : 5 Sacrificing ratio = 3 : 2

Note: When nothing has been specified about the new profit sharing ratio, it has been assumed that the sacrificing ratio will be same as old ratio, i.e. 3 : 2.

Page No 4.67:

Question 7:

Old ratio = 3 : 2

Let the total share be = 1

Z's Share of Profit = 15Remaining Share = 1 - 15 = 45X's Share = 45 × 35 = 1225Y's Share = 45 × 25 = 825Z's Share = 15 or 525New Profit Share = 12 : 8 : 5 Sacrificing ratio = 3 : 2

Note: When nothing has been specified about the new profit sharing ratio, it has been assumed that the sacrificing ratio will be same as old ratio, i.e. 3 : 2.

Answer:

Sacrificing Share = Old Ratio − New Ratio

 

Page No 4.67:

Question 8:

Sacrificing Share = Old Ratio − New Ratio

 

Answer:

Old ratio = 3 : 2
Share acquired from X = 27X's New Share = 35 - 27 = 1135Share acquired from Y = 17Y's New Share = 25 - 17 = 935Z's Profit Share = 27 + 17 = 37 or 1535New Profit Sharing Ratio = 11 : 9 : 15

Sacrificing Ratio = Old Ratio - New RatioSacrifice made by X = 35 - 1135 = 1035Sacrifice made by Y = 25 - 935 = 535Sacrificing Ratio = 10 : 5 or 2: 1

Page No 4.67:

Question 9:

Old ratio = 3 : 2
Share acquired from X = 27X's New Share = 35 - 27 = 1135Share acquired from Y = 17Y's New Share = 25 - 17 = 935Z's Profit Share = 27 + 17 = 37 or 1535New Profit Sharing Ratio = 11 : 9 : 15

Sacrificing Ratio = Old Ratio - New RatioSacrifice made by X = 35 - 1135 = 1035Sacrifice made by Y = 25 - 935 = 535Sacrificing Ratio = 10 : 5 or 2: 1

Answer:

Profit sharing ratio of A and B = 4 : 1

Thus, Profit sharing ratio of B and C will also be 4 : 1

Let B’s Profit Share = 1

Since, C’s share of profit is 25% of B’s Profit Share

 C's Profit Share = 14×1=0.25

A’s Profit Share is 4 times the B’s Profit Share, thus, A’s Profit Share = 4

New Profit Share = 4 : 1 : 0.25 or 16 : 4 : 1

Sacrificing Ratio = Old Ratio – New Ratio

A=45-1621=68105B=15-421=17105Sacrificing Ratio = 68 : 17 or 4 :1

Page No 4.67:

Question 10:

Profit sharing ratio of A and B = 4 : 1

Thus, Profit sharing ratio of B and C will also be 4 : 1

Let B’s Profit Share = 1

Since, C’s share of profit is 25% of B’s Profit Share

 C's Profit Share = 14×1=0.25

A’s Profit Share is 4 times the B’s Profit Share, thus, A’s Profit Share = 4

New Profit Share = 4 : 1 : 0.25 or 16 : 4 : 1

Sacrificing Ratio = Old Ratio – New Ratio

A=45-1621=68105B=15-421=17105Sacrificing Ratio = 68 : 17 or 4 :1

Answer:

Sacrificing Ratio = Old Ratio × Surrender Ratio

New Ratio = Old Ratio − Sacrificing Ratio

P’s share = X’s Sacrifiece

Q’s share = Y’s Sacrifice

Page No 4.67:

Question 11:

Sacrificing Ratio = Old Ratio × Surrender Ratio

New Ratio = Old Ratio − Sacrificing Ratio

P’s share = X’s Sacrifiece

Q’s share = Y’s Sacrifice

Answer:

Sacrificing Ratio = Old Ratio × Surrender Ratio

New Ratio = Old Ratio − Sacrificing Ratio

∴New Profit Sharing Ratio = 75 : 48 : 37

 

Page No 4.67:

Question 12:

Sacrificing Ratio = Old Ratio × Surrender Ratio

New Ratio = Old Ratio − Sacrificing Ratio

∴New Profit Sharing Ratio = 75 : 48 : 37

 

Answer:

Sacrificing Ratio = Old Ratio − Sacrificing Ratio

Page No 4.67:

Question 13:

Sacrificing Ratio = Old Ratio − Sacrificing Ratio

Answer:

D is admitted for share of profit

Let the combined share of profit of A, B C and D be = 1

Combined share of A, B and C after D’s admission = 1 − D’s shares

New Ratio = Old Ratio × combined share of A, B and C

Sacrificing Ratio = Old Ratio − New Ratio

Page No 4.67:

Question 14:

D is admitted for share of profit

Let the combined share of profit of A, B C and D be = 1

Combined share of A, B and C after D’s admission = 1 − D’s shares

New Ratio = Old Ratio × combined share of A, B and C

Sacrificing Ratio = Old Ratio − New Ratio

Answer:

E is admitted for share

Let combined share of profit of all partners after E’s admission = 1

Combined share of A, B, C and D after E’s admission = 1 − E’s Share

New Ratio = Combined of A, B, C and D × Agreed Share of A, B, C and D

Page No 4.67:

Question 15:

E is admitted for share

Let combined share of profit of all partners after E’s admission = 1

Combined share of A, B, C and D after E’s admission = 1 − E’s Share

New Ratio = Combined of A, B, C and D × Agreed Share of A, B, C and D

Answer:

Old ratio = 3 : 2

Let the total share be = 1

Remaining Share = 1 - 14 = 34A and B decided to share future profits and losses in the ratio of 1 : 1A's Share = 12 × 34 = 38B's Share = 12 × 34 = 38C's Share = 14 or 28New Profit Sharing Ratio = 3 : 3 : 2Sacrificing Ratio = Old Ratio - New RatioSacrifice made by A= 35  38=940Sacrifice made by B = 25  38 = 140Sacrificing ratio of A and B = 9 : 1



Page No 4.68:

Question 16:

Old ratio = 3 : 2

Let the total share be = 1

Remaining Share = 1 - 14 = 34A and B decided to share future profits and losses in the ratio of 1 : 1A's Share = 12 × 34 = 38B's Share = 12 × 34 = 38C's Share = 14 or 28New Profit Sharing Ratio = 3 : 3 : 2Sacrificing Ratio = Old Ratio - New RatioSacrifice made by A= 35  38=940Sacrifice made by B = 25  38 = 140Sacrificing ratio of A and B = 9 : 1

Answer:

Since goodwill has been paid privately, thus, no entry will be recorded in the books of the firm.

Page No 4.68:

Question 17:

Since goodwill has been paid privately, thus, no entry will be recorded in the books of the firm.

Answer:

Since goodwill has been paid privately, thus, no entry will be recorded in the books of the firm.

Page No 4.68:

Question 18:

Since goodwill has been paid privately, thus, no entry will be recorded in the books of the firm.

Answer:

 
Books of ….
 
Journal
Date
Particulars
L.F.
Debit Amount
Rs
Credit Amount
Rs
  Bank A/c
Dr.
 
48,000
 
    To Premium for Goodwill A/c      
48,000
  (Goodwill brought in by the new partner)        
           
  Premium for Goodwill A/c
Dr.
 
48,000
 
    To X’s Capital A/c      
28,800
    To Y’s Capital A/c      
19,200
   (Goodwill distributed among old partners in their sacrificing ratio)        
           

Working Notes:

Let the total share = 1

Z is admitted for 14th share

Remaining share = 1 - 14 = 34Old ratio of X and Y = 3 : 2X's new share = 35 × 34 = 920Y's share = 25 × 34 = 620Z's share = 14 or 520New profit sharing ratio = 9 : 6 : 5Sacrificing ratio of X and Y = 3 : 2

Note: When nothing has been specified about the new profit sharing ratio, it has been assumed that the sacrificing ratio will be same as old ratio, i.e. 3 : 2.

Page No 4.68:

Question 19:

 
Books of ….
 
Journal
Date
Particulars
L.F.
Debit Amount
Rs
Credit Amount
Rs
  Bank A/c
Dr.
 
48,000
 
    To Premium for Goodwill A/c      
48,000
  (Goodwill brought in by the new partner)        
           
  Premium for Goodwill A/c
Dr.
 
48,000
 
    To X’s Capital A/c      
28,800
    To Y’s Capital A/c      
19,200
   (Goodwill distributed among old partners in their sacrificing ratio)        
           

Working Notes:

Let the total share = 1

Z is admitted for 14th share

Remaining share = 1 - 14 = 34Old ratio of X and Y = 3 : 2X's new share = 35 × 34 = 920Y's share = 25 × 34 = 620Z's share = 14 or 520New profit sharing ratio = 9 : 6 : 5Sacrificing ratio of X and Y = 3 : 2

Note: When nothing has been specified about the new profit sharing ratio, it has been assumed that the sacrificing ratio will be same as old ratio, i.e. 3 : 2.

Answer:

 
Books of...
 
Journal
Date
Particulars
L.F.
Debit Amount
Rs
Credit Amount
Rs
  Bank A/c
Dr.
 
10,000
 
    To Premium for Goodwill A/c
 
 
 
10,000
  (Goodwill brought in by the new partner)
 
 
 
 
   
 
 
 
 
  Premium for Goodwill A/c
Dr.
 
10,000
 
  F’s Capital A/c 40,000×120
Dr.
 
2,000
 
    To E’s Capital A/c 40,000×620
 
 
 
12,000
  (Goodwill distributed among old partners in their sacrificing ratio)
 
 
 
 

Working Notes

Sacrificing ratio = Old ratio – New ratio

Old ratio between E and F = 4 : 1

New ratio between E, F and G = 2 : 1 : 1

Sacrifice made by E = 45 - 24 = 620Sacrifice made by F = 15 - 14 = -120(gain)

Value of Firm’s Goodwill = 10,000 × 4 = Rs 40,000

Page No 4.68:

Question 20:

 
Books of...
 
Journal
Date
Particulars
L.F.
Debit Amount
Rs
Credit Amount
Rs
  Bank A/c
Dr.
 
10,000
 
    To Premium for Goodwill A/c
 
 
 
10,000
  (Goodwill brought in by the new partner)
 
 
 
 
   
 
 
 
 
  Premium for Goodwill A/c
Dr.
 
10,000
 
  F’s Capital A/c 40,000×120
Dr.
 
2,000
 
    To E’s Capital A/c 40,000×620
 
 
 
12,000
  (Goodwill distributed among old partners in their sacrificing ratio)
 
 
 
 

Working Notes

Sacrificing ratio = Old ratio – New ratio

Old ratio between E and F = 4 : 1

New ratio between E, F and G = 2 : 1 : 1

Sacrifice made by E = 45 - 24 = 620Sacrifice made by F = 15 - 14 = -120(gain)

Value of Firm’s Goodwill = 10,000 × 4 = Rs 40,000

Answer:

 
Books of...
 
Journal
Date
Particulars
L.F.
Debit Amount
Rs
Credit Amount
Rs
  Bank A/c
Dr.
 
1,10,000
 
    To Premium for Goodwill A/c      
30,000
    To Z’s Capital A/c      
80,000
  (Capital and goodwill brought in by the new partner)        
           
  Premium for Goodwill A/c
Dr.
 
30,000
 
    To X’s Capital A/c      
10,000
    To Y’s Capital A/c      
20,000
  (Goodwill distributed among old partners in their sacrificing ratio)        

Partners’ Capital Accounts
Dr.  
Cr.
Particulars
X
Y
Z
Particulars
X
Y
Z
Balance c/d
2,10,000
1,20,000
80,000
Balance b/d
2,00,000
1,00,000
 
        Bank A/c    
80,000
        Premium for Goodwill A/c
10,000
20,000
 
 
2,10,000
1,20,000
80,000
 
2,10,000
1,20,000
80,000
               

Working Notes:

Old ratio = 2 : 1

Z is admitted for 15th share

New ratio = 3 : 1 : 1

Sacrificing ratio = Old ratio – New Ratio

Sacrifice made by X = 23 - 35 = 115Sacrifice made by Y = 13 - 15 = 215Sacrificing ratio = 1 : 2

Page No 4.68:

Question 21:

 
Books of...
 
Journal
Date
Particulars
L.F.
Debit Amount
Rs
Credit Amount
Rs
  Bank A/c
Dr.
 
1,10,000
 
    To Premium for Goodwill A/c      
30,000
    To Z’s Capital A/c      
80,000
  (Capital and goodwill brought in by the new partner)        
           
  Premium for Goodwill A/c
Dr.
 
30,000
 
    To X’s Capital A/c      
10,000
    To Y’s Capital A/c      
20,000
  (Goodwill distributed among old partners in their sacrificing ratio)        

Partners’ Capital Accounts
Dr.  
Cr.
Particulars
X
Y
Z
Particulars
X
Y
Z
Balance c/d
2,10,000
1,20,000
80,000
Balance b/d
2,00,000
1,00,000
 
        Bank A/c    
80,000
        Premium for Goodwill A/c
10,000
20,000
 
 
2,10,000
1,20,000
80,000
 
2,10,000
1,20,000
80,000
               

Working Notes:

Old ratio = 2 : 1

Z is admitted for 15th share

New ratio = 3 : 1 : 1

Sacrificing ratio = Old ratio – New Ratio

Sacrifice made by X = 23 - 35 = 115Sacrifice made by Y = 13 - 15 = 215Sacrificing ratio = 1 : 2

Answer:

 
Books of…
 
Journal
Date
Particulars
L.F.
Debit
Amount
Rs
Credit
Amount
Rs
  Bank A/c
Dr.
 
91,500
 
    To Premium for Goodwill A/c 84,000×38  
 
31,500
    To Samir’s Capital A/c
 
 
 
60,000
  (Capital and goodwill brought in by the new partner)
 
 
 
 
   
 
 
 
 
  Premium for Goodwill A/c
Dr.
 
31,500
 
  Satish’s Capital A/c 84,000×556
Dr.
 
7,500
 
  To Sushil’s Capital A/c 84,000×2656  
 
39,000
  (Goodwill distributed among old partners in their sacrificing ratio)
 
 
 
 
   
 
 
 
 

Partners’ Capital Accounts
Dr.  
Cr.
Particulars
Sushil
Satish
Samir
Particulars
Sushil
Satish
Samir
 
 
 
 
 
 
 
 
Sushil’s Capital A/c
 
7,500
 
Balance b/d
48,000
42,000
 
Balance c/d
87,000
34,500
60,000
Bank A/c
 
 
60,000
 
 
 
 
Premium for Goodwill A/c
31,500
 
 
 
 
 
 
Satish’s Capital A/c
7,500
 
 
 
87,000
42,000
60,000
 
87,000
42,000
60,000
 
 
 
 
 
 
 
 
 
Balance Sheet
as on April 01, 2016 after Samir’s admission
Liabilities
Amount
Rs
Assets
Amount
Rs
Bank Loan
23,000
Bank
97,500
Creditors
55,000
Stock
12,000
Capital A/cs:
 
Plant & Machinery
30,000
  Sushil
87,000
 
Debtors
18,300
 
  Satish
34,500
 
  Less : Provision for Doubtful Debts
300
18,000
  Samir

60,000

1,81,500
Building
1,02,000
 
2,59,500
 
2,59,500
 
 
 
 

Working Notes:

Old ratio = 5 : 2

New ratio = 2 : 3 : 3

Sacrificing ratio = Old ratio – New ratio

Sacrifice made by Sushil = 57 - 28 = 2656Sacrifice made by Satish = 27 - 38 = -556 (gain)
   
Bank Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
 
 
 
 
Balance b/d
6,000
Balance c/d
97,500
Premium for Goodwill A/c
31,500
 
 
Samir’s Capital A/c
60,000
   
 
97,500
 
97,500
 
 
 
 

Page No 4.68:

Question 22:

 
Books of…
 
Journal
Date
Particulars
L.F.
Debit
Amount
Rs
Credit
Amount
Rs
  Bank A/c
Dr.
 
91,500
 
    To Premium for Goodwill A/c 84,000×38  
 
31,500
    To Samir’s Capital A/c
 
 
 
60,000
  (Capital and goodwill brought in by the new partner)
 
 
 
 
   
 
 
 
 
  Premium for Goodwill A/c
Dr.
 
31,500
 
  Satish’s Capital A/c 84,000×556
Dr.
 
7,500
 
  To Sushil’s Capital A/c 84,000×2656  
 
39,000
  (Goodwill distributed among old partners in their sacrificing ratio)
 
 
 
 
   
 
 
 
 

Partners’ Capital Accounts
Dr.  
Cr.
Particulars
Sushil
Satish
Samir
Particulars
Sushil
Satish
Samir
 
 
 
 
 
 
 
 
Sushil’s Capital A/c
 
7,500
 
Balance b/d
48,000
42,000
 
Balance c/d
87,000
34,500
60,000
Bank A/c
 
 
60,000
 
 
 
 
Premium for Goodwill A/c
31,500
 
 
 
 
 
 
Satish’s Capital A/c
7,500
 
 
 
87,000
42,000
60,000
 
87,000
42,000
60,000
 
 
 
 
 
 
 
 
 
Balance Sheet
as on April 01, 2016 after Samir’s admission
Liabilities
Amount
Rs
Assets
Amount
Rs
Bank Loan
23,000
Bank
97,500
Creditors
55,000
Stock
12,000
Capital A/cs:
 
Plant & Machinery
30,000
  Sushil
87,000
 
Debtors
18,300
 
  Satish
34,500
 
  Less : Provision for Doubtful Debts
300
18,000
  Samir

60,000

1,81,500
Building
1,02,000
 
2,59,500
 
2,59,500
 
 
 
 

Working Notes:

Old ratio = 5 : 2

New ratio = 2 : 3 : 3

Sacrificing ratio = Old ratio – New ratio

Sacrifice made by Sushil = 57 - 28 = 2656Sacrifice made by Satish = 27 - 38 = -556 (gain)
   
Bank Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
 
 
 
 
Balance b/d
6,000
Balance c/d
97,500
Premium for Goodwill A/c
31,500
 
 
Samir’s Capital A/c
60,000
   
 
97,500
 
97,500
 
 
 
 

Answer:

C is admitted for share

Let the combined share of A, B and C be = 1

Combined share of A and B after C’s admission = 1 − C’s share

New Ratio = Old Ratio × Combined share of A and B

Distribution of C’s share of Goodwill

C’s share of Goodwill = Rs 14,000



Page No 4.69:

Question 23:

C is admitted for share

Let the combined share of A, B and C be = 1

Combined share of A and B after C’s admission = 1 − C’s share

New Ratio = Old Ratio × Combined share of A and B

Distribution of C’s share of Goodwill

C’s share of Goodwill = Rs 14,000

Answer:

Journal Entries

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

A’s Capital A/c

Dr.

 

1,800

 

 

B’s Capital A/c

Dr.

 

1,200

 

 

To Goodwill A/c

 

 

 

3,000

 

(Goodwill written-off)

 

 

 

 

 

 

 

 

 

 

 

Cash A/c

Dr.

 

40,000

 

 

To C’s Capital A/c

Dr.

 

 

30,000

 

To Premium for Goodwill A/c

 

 

 

10,000

 

(C brought capital and his share of goodwill in cash)

 

 

 

 

 

 

 

 

 

 

Premium for Goodwill

Dr.

 

10,000

 

 

To A’s Capital A/c

 

 

 

5,000

 

To B’s Capital A/c

 

 

 

5,000

 

(Premium for Goodwill distributed)

 

 

 

 

 

 

 

 

 

 

Sacrificing Ratio = Old Ratio − New Ratio

Distribution of Premium for Goodwill C’s share of Goodwill)

Goodwill written-off

Page No 4.69:

Question 24:

Journal Entries

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

A’s Capital A/c

Dr.

 

1,800

 

 

B’s Capital A/c

Dr.

 

1,200

 

 

To Goodwill A/c

 

 

 

3,000

 

(Goodwill written-off)

 

 

 

 

 

 

 

 

 

 

 

Cash A/c

Dr.

 

40,000

 

 

To C’s Capital A/c

Dr.

 

 

30,000

 

To Premium for Goodwill A/c

 

 

 

10,000

 

(C brought capital and his share of goodwill in cash)

 

 

 

 

 

 

 

 

 

 

Premium for Goodwill

Dr.

 

10,000

 

 

To A’s Capital A/c

 

 

 

5,000

 

To B’s Capital A/c

 

 

 

5,000

 

(Premium for Goodwill distributed)

 

 

 

 

 

 

 

 

 

 

Sacrificing Ratio = Old Ratio − New Ratio

Distribution of Premium for Goodwill C’s share of Goodwill)

Goodwill written-off

Answer:

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

Cash A/c

Dr.

 

21,000

 

 

To Premium for Goodwill A/c

 

 

 

21,000

 

(C brought Premium for Goodwill)

 

 

 

 

 

 

 

 

 

 

 

Premium for Goodwill A/c

Dr.

 

21,000

 

 

To A’s Capital A/c

 

 

 

9,000

 

To B’s Capital A/c

 

 

 

12,000

 

(Premium for Goodwill brought by C distributed

between A and B in sacrificing ratio i.e. 3:4)

 

 

 

 

 

 

 

 

 

C’s share = A’s sacrifice + B’s sacrifice



New Ratio is 12:6:7

C’s will bring Premium for Goodwill

Distribution of Premium for Goodwill-

Page No 4.69:

Question 25:

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

Cash A/c

Dr.

 

21,000

 

 

To Premium for Goodwill A/c

 

 

 

21,000

 

(C brought Premium for Goodwill)

 

 

 

 

 

 

 

 

 

 

 

Premium for Goodwill A/c

Dr.

 

21,000

 

 

To A’s Capital A/c

 

 

 

9,000

 

To B’s Capital A/c

 

 

 

12,000

 

(Premium for Goodwill brought by C distributed

between A and B in sacrificing ratio i.e. 3:4)

 

 

 

 

 

 

 

 

 

C’s share = A’s sacrifice + B’s sacrifice



New Ratio is 12:6:7

C’s will bring Premium for Goodwill

Distribution of Premium for Goodwill-

Answer:

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

 

Stock A/c

Dr.

 

60,000

 

 

Debtors A/c

Dr.

 

80,000

 

 

Land A/c

Dr.

 

1,00,000

 

 

Plant and Machinery A/c

Dr.

 

40,000

 

 

To Z’s Capital A/c

 

 

1,30,000

 

To Premium for Goodwill A/c

 

 

1,50,000

 

(Z brought assets for his share of goodwill and Capital)

 

 

 

 

 

 

 

 

 

Premium for Goodwill A/c

Dr.

 

1,50,000

 

 

To X’s Capital A/c

 

 

90,000

 

To Y’s Capital A/c

 

 

60,000

 

(Z’s share of Goodwill distributed between X and Y in sacrificing ratio)

 

 

 

 

 

 

 

 

Working Notes:

WN1

WN2

Distribution of Z’s Goodwill

Page No 4.69:

Question 26:

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

 

Stock A/c

Dr.

 

60,000

 

 

Debtors A/c

Dr.

 

80,000

 

 

Land A/c

Dr.

 

1,00,000

 

 

Plant and Machinery A/c

Dr.

 

40,000

 

 

To Z’s Capital A/c

 

 

1,30,000

 

To Premium for Goodwill A/c

 

 

1,50,000

 

(Z brought assets for his share of goodwill and Capital)

 

 

 

 

 

 

 

 

 

Premium for Goodwill A/c

Dr.

 

1,50,000

 

 

To X’s Capital A/c

 

 

90,000

 

To Y’s Capital A/c

 

 

60,000

 

(Z’s share of Goodwill distributed between X and Y in sacrificing ratio)

 

 

 

 

 

 

 

 

Working Notes:

WN1

WN2

Distribution of Z’s Goodwill

Answer:

 
Books of...
 
Journal
Date
Particulars
L.F.
Debit Amount
Rs
Credit Amount
Rs
  Bank A/c
Dr.
 
2,36,000
 
    To Premium for Goodwill A/c      
36,000
    To Amit’s Capital A/c      
2,00,000
  (Capital and goodwill brought in by the new partner)        
           
  Premium for Goodwill A/c
Dr.
 
36,000
 
    To Sachin’s Current A/c    
3,600
    To Kapil’s Current A/c      
32,400
  (Goodwill distributed among old partners in their sacrificing ratio)        
           
  Sachin’s Current A/c
Dr.
 
3,600
 
  Kapil’s Current A/c
Dr.
 
32,400
 
     To Bank A/c      
36,000
  (Goodwill withdrawn by the old partners)        
           

Working Notes

Old ratio = 2 : 3New ratio = 3 : 3 : 2Sacrificing ratio = Old ratio - New ratioSacrifice made by Sachin = 25 - 38 = 140Sacrifice made by Kapil = 35 - 38 = 940Sacrificing ratio = 1 : 9

Page No 4.69:

Question 27:

 
Books of...
 
Journal
Date
Particulars
L.F.
Debit Amount
Rs
Credit Amount
Rs
  Bank A/c
Dr.
 
2,36,000
 
    To Premium for Goodwill A/c      
36,000
    To Amit’s Capital A/c      
2,00,000
  (Capital and goodwill brought in by the new partner)        
           
  Premium for Goodwill A/c
Dr.
 
36,000
 
    To Sachin’s Current A/c    
3,600
    To Kapil’s Current A/c      
32,400
  (Goodwill distributed among old partners in their sacrificing ratio)        
           
  Sachin’s Current A/c
Dr.
 
3,600
 
  Kapil’s Current A/c
Dr.
 
32,400
 
     To Bank A/c      
36,000
  (Goodwill withdrawn by the old partners)        
           

Working Notes

Old ratio = 2 : 3New ratio = 3 : 3 : 2Sacrificing ratio = Old ratio - New ratioSacrifice made by Sachin = 25 - 38 = 140Sacrifice made by Kapil = 35 - 38 = 940Sacrificing ratio = 1 : 9

Answer:

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

 

Cash A/c

Dr.

 

13,000

 

 

To C’s Capital A/c

 

 

10,000

 

To Premium for Goodwill A/c

 

 

3,000

 

(C brought capital and Premium for Goodwill)

 

 

 

 

 

 

 

 

 

Premium for Goodwill A/c

Dr.

 

3,000

 

 

To A’s Capital A/c

 

 

3,000

 

(Premium for Goodwill transferred to A’s Capital)

 

 

 

 

 

 

 

 

 

A’s Capital A/c

Dr.

 

3,000

 

 

To Cash A/c

 

 

 

3,000

 

(Premium for Goodwill withdrawn)

 

 

 

 

 

 

 

 

Working Notes:

Calculation of Sacrificing Ratio

Here only A is sacrificing his share of profit in favour of C. Hence, A will get the whole amount of premium for goodwill.

Page No 4.69:

Question 28:

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

 

Cash A/c

Dr.

 

13,000

 

 

To C’s Capital A/c

 

 

10,000

 

To Premium for Goodwill A/c

 

 

3,000

 

(C brought capital and Premium for Goodwill)

 

 

 

 

 

 

 

 

 

Premium for Goodwill A/c

Dr.

 

3,000

 

 

To A’s Capital A/c

 

 

3,000

 

(Premium for Goodwill transferred to A’s Capital)

 

 

 

 

 

 

 

 

 

A’s Capital A/c

Dr.

 

3,000

 

 

To Cash A/c

 

 

 

3,000

 

(Premium for Goodwill withdrawn)

 

 

 

 

 

 

 

 

Working Notes:

Calculation of Sacrificing Ratio

Here only A is sacrificing his share of profit in favour of C. Hence, A will get the whole amount of premium for goodwill.

Answer:

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

 

Cash A/c

Dr.

 

24,000

 

 

To Shyam’s Capital A/c

 

 

15,000

 

To Premium for Goodwill A/c

 

 

9,000

 

(Shyam brought capital and his share of goodwill

in cash)

 

 

 

 

 

 

 

 

 

Premium for Goodwill A/c

Dr.

 

9,000

 

 

To Prabhu’s Capital A/c

 

 

4,500

 

To Sat Kumar’s Capital A/c

 

 

4,500

 

(Goodwill brought by Shyam distributed between Prabhu and Sat Kumar i.e. 1:1)

 

 

 

 

 

 

 

 

 

Prabhu’s Capital A/c

Dr.

 

4,500

 

 

Sat Kumar’s Capital A/c

Dr.

 

4,500

 

 

To Cash A/c

 

 

 

9,000

 

(Amount of Premium for Goodwill withdrawn by Prabhu and Sat Kumar’s)

 

 

 

 

 

 

 

 

 

 

Calculation of Future (New) Profit Sharing Ratio

Shyam admitted for share of profit

Let combined share of all partners after Shyam’s admission = 1

Combined share Phrabhu and Sat Kumar after Shyam’s admission

Page No 4.69:

Question 29:

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

 

Cash A/c

Dr.

 

24,000

 

 

To Shyam’s Capital A/c

 

 

15,000

 

To Premium for Goodwill A/c

 

 

9,000

 

(Shyam brought capital and his share of goodwill

in cash)

 

 

 

 

 

 

 

 

 

Premium for Goodwill A/c

Dr.

 

9,000

 

 

To Prabhu’s Capital A/c

 

 

4,500

 

To Sat Kumar’s Capital A/c

 

 

4,500

 

(Goodwill brought by Shyam distributed between Prabhu and Sat Kumar i.e. 1:1)

 

 

 

 

 

 

 

 

 

Prabhu’s Capital A/c

Dr.

 

4,500

 

 

Sat Kumar’s Capital A/c

Dr.

 

4,500

 

 

To Cash A/c

 

 

 

9,000

 

(Amount of Premium for Goodwill withdrawn by Prabhu and Sat Kumar’s)

 

 

 

 

 

 

 

 

 

 

Calculation of Future (New) Profit Sharing Ratio

Shyam admitted for share of profit

Let combined share of all partners after Shyam’s admission = 1

Combined share Phrabhu and Sat Kumar after Shyam’s admission

Answer:

 
Books of ….
 
Journal
Date
Particulars
L.F.
Debit Amount
Rs
Credit Amount
Rs
  Bank A/c (60% of 25,000)
Dr.
 
15,000
 
    To Premium for Goodwill A/c      
15,000
  (Goodwill brought in by the new partner)        
           
  Premium for Goodwill A/c
Dr.
 
15,000
 
    To A’s Capital A/c      
10,000
    To B’s Capital A/c      
5,000
  (Goodwill distributed in among old partners in their sacrificing ratio)        
           
  C’s Current A/c (40% of 25,000)
Dr.
 
10,000
 
    To A’s Capital A/c      
6,667
    To B’s Capital A/c      
3,333
  (Amount of goodwill not brought by new partner debited from current account and distributed among old partners in their sacrificing ratio)      

Working Notes

Old ratio = 3 : 2

A's new share = 35 - 16 = 1330 or 2660B's new share = 25 - 112 = 1960C's new share = 14 or 1560New profit sharing ratio = 26 : 19 : 15Sacrificing ratio = Old ratio - New ratioSacrifice made by A = 35 - 2660 = 1060Sacrifice made by B = 25 - 1960 = 560Sacrificing ratio = 10 : 5 or 2 : 1

Page No 4.69:

Question 30:

 
Books of ….
 
Journal
Date
Particulars
L.F.
Debit Amount
Rs
Credit Amount
Rs
  Bank A/c (60% of 25,000)
Dr.
 
15,000
 
    To Premium for Goodwill A/c      
15,000
  (Goodwill brought in by the new partner)        
           
  Premium for Goodwill A/c
Dr.
 
15,000
 
    To A’s Capital A/c      
10,000
    To B’s Capital A/c      
5,000
  (Goodwill distributed in among old partners in their sacrificing ratio)        
           
  C’s Current A/c (40% of 25,000)
Dr.
 
10,000
 
    To A’s Capital A/c      
6,667
    To B’s Capital A/c      
3,333
  (Amount of goodwill not brought by new partner debited from current account and distributed among old partners in their sacrificing ratio)      

Working Notes

Old ratio = 3 : 2

A's new share = 35 - 16 = 1330 or 2660B's new share = 25 - 112 = 1960C's new share = 14 or 1560New profit sharing ratio = 26 : 19 : 15Sacrificing ratio = Old ratio - New ratioSacrifice made by A = 35 - 2660 = 1060Sacrifice made by B = 25 - 1960 = 560Sacrificing ratio = 10 : 5 or 2 : 1

Answer:

Journal
Date Particulars L.F. Debit
Amount
Rs
Credit
Amount
Rs
         
  Cash A/c Dr.   10,000  
  To Premium for Goodwill A/c     10,000
  (C brought premium for Goodwill)      
         
  Premium for Goodwill A/c Dr.   10,000  
  To A’s Capital A/c     6,667
  To B’s Capital A/c     3,333
  (Premium for Goodwill distributed in sacrificing Ratio)      
         
  C’s Current A/c Dr.   6,000  
  To A’s Capital       4,000
  To B’s Capital     2,000
  (Out of the share of goodwill Rs 6,000 not brought by C, and charged from his capital account and distributed)      
         

Working Notes:
WN1

 
WN2
 Distribution of Premium for Goodwill

 
WN3
 Distribution of Goodwill charged from C’s Capital Account



Page No 4.70:

Question 31:

Journal
Date Particulars L.F. Debit
Amount
Rs
Credit
Amount
Rs
         
  Cash A/c Dr.   10,000  
  To Premium for Goodwill A/c     10,000
  (C brought premium for Goodwill)      
         
  Premium for Goodwill A/c Dr.   10,000  
  To A’s Capital A/c     6,667
  To B’s Capital A/c     3,333
  (Premium for Goodwill distributed in sacrificing Ratio)      
         
  C’s Current A/c Dr.   6,000  
  To A’s Capital       4,000
  To B’s Capital     2,000
  (Out of the share of goodwill Rs 6,000 not brought by C, and charged from his capital account and distributed)      
         

Working Notes:
WN1

 
WN2
 Distribution of Premium for Goodwill

 
WN3
 Distribution of Goodwill charged from C’s Capital Account

Answer:

 
Books of ….
 
Journal
Date
Particulars
L.F.
Debit
Amount
Rs
Credit Amount
Rs
  Bank A/c
Dr.
 
80,000
 
    To C’s Capital A/c      
80,000
  (Capital brought in by new partner)        
           
  C’s Current A/c 60,000×18
Dr.
 
7,500
 
    To A’s Capital A/c      
3,750
    To B’s Capital A/c      
3,750
  (Amount of goodwill not brought by new partner debited from his current account and distributed among old partners in their sacrificing ratio)      
           

Working Notes

Old ratio = 5 : 3

New ratio = 9 : 5 : 2

Sacrifice made by A = 58 - 916 = 116Sacrifice made by B = 38 - 516 = 116Sacrificing ratio = 1 : 1

Page No 4.70:

Question 32:

 
Books of ….
 
Journal
Date
Particulars
L.F.
Debit
Amount
Rs
Credit Amount
Rs
  Bank A/c
Dr.
 
80,000
 
    To C’s Capital A/c      
80,000
  (Capital brought in by new partner)        
           
  C’s Current A/c 60,000×18
Dr.
 
7,500
 
    To A’s Capital A/c      
3,750
    To B’s Capital A/c      
3,750
  (Amount of goodwill not brought by new partner debited from his current account and distributed among old partners in their sacrificing ratio)      
           

Working Notes

Old ratio = 5 : 3

New ratio = 9 : 5 : 2

Sacrifice made by A = 58 - 916 = 116Sacrifice made by B = 38 - 516 = 116Sacrificing ratio = 1 : 1

Answer:

 
Books of ….
 
Journal
Date
Particulars
L.F.
Debit Amount
Rs
Credit Amount
Rs
  Bank A/c
Dr.
 
3,30,000
 
 
To D’s Capital A/c
     
1,20,000
 
To E’s Capital A/c
     
1,20,000
 
To Premium for Goodwill A/c
     
90,000
 
(Capital and goodwill brought in by the new partners)
       
           
  E’s Current A/c
Dr.
 
45,000
 
  C’s Capital A/c 5,40,000×460
Dr.
 
36,000
 
  Premium for Goodwill A/c
Dr.
 
90,000
 
     To A’s Capital A/c      
1,35,000
 
To B’s Capital A/c
     
36,000
  (Amount of goodwill not brought by new partners debited from their capital account and distributed among old partners in their sacrificing ratio)        
           

Working Notes

Old ratio = 5 : 4 : 1

New ratio = 3 : 4 : 2 : 2 : 1

Sacrificing ratio = Old ratio – New ratio

Sacrifice made by A = 510 - 312 = 1560Sacrifice made by B = 410 - 412 = 460Sacrifice made by C = 110 - 212 = - 460(gain)

Sacrificing ratio = 15 : 4

Value of Firm's Goodwill = D's Share of Goodwill × Reciprocal of his Profit ShareValue of Firm's Goodwill = 90,000 × 122 = Rs 5,40,000

Page No 4.70:

Question 33:

 
Books of ….
 
Journal
Date
Particulars
L.F.
Debit Amount
Rs
Credit Amount
Rs
  Bank A/c
Dr.
 
3,30,000
 
 
To D’s Capital A/c
     
1,20,000
 
To E’s Capital A/c
     
1,20,000
 
To Premium for Goodwill A/c
     
90,000
 
(Capital and goodwill brought in by the new partners)
       
           
  E’s Current A/c
Dr.
 
45,000
 
  C’s Capital A/c 5,40,000×460
Dr.
 
36,000
 
  Premium for Goodwill A/c
Dr.
 
90,000
 
     To A’s Capital A/c      
1,35,000
 
To B’s Capital A/c
     
36,000
  (Amount of goodwill not brought by new partners debited from their capital account and distributed among old partners in their sacrificing ratio)        
           

Working Notes

Old ratio = 5 : 4 : 1

New ratio = 3 : 4 : 2 : 2 : 1

Sacrificing ratio = Old ratio – New ratio

Sacrifice made by A = 510 - 312 = 1560Sacrifice made by B = 410 - 412 = 460Sacrifice made by C = 110 - 212 = - 460(gain)

Sacrificing ratio = 15 : 4

Value of Firm's Goodwill = D's Share of Goodwill × Reciprocal of his Profit ShareValue of Firm's Goodwill = 90,000 × 122 = Rs 5,40,000

Answer:

 
Books of ….
 
Journal
Date
Particulars
L.F.
Debit Amount
Rs
Credit Amount
Rs
  Bank A/c
Dr.
 
80,000
 
 
To Z’s Capital A/c
     
80,000
  (Capital brought in by new partner)        
           
  Z’s Current A/c
Dr.
 
20,000
 
     To X’s Capital A/c      
10,000
 
To Y’s Capital A/c
     
10,000
  (Amount of goodwill not brought by new partner debited from his capital account and distributed among old partners in their sacrificing ratio)      
           

Since, nothing has been specified about the new profit sharing ratio, thus, it has been assumed that sacrificing ratio is same as old ratio, i.e. 1 : 1.

Working Notes

Total capital of the new firm = Capital of incoming partner × Reciprocal of his profit shareTotal capital of the new firm = 80,000 × 51 = 4,00,000Combined Capital of X, Y and Z = 1,30,000 + 90,000 + 80,000 = 3,00,000Value of Firm's Goodwill = 4,00,000 - 3,00,000 = 1,00,000Z's Share in Goodwill = 1,00,000 × 15 = 20,000

Page No 4.70:

Question 34:

 
Books of ….
 
Journal
Date
Particulars
L.F.
Debit Amount
Rs
Credit Amount
Rs
  Bank A/c
Dr.
 
80,000
 
 
To Z’s Capital A/c
     
80,000
  (Capital brought in by new partner)        
           
  Z’s Current A/c
Dr.
 
20,000
 
     To X’s Capital A/c      
10,000
 
To Y’s Capital A/c
     
10,000
  (Amount of goodwill not brought by new partner debited from his capital account and distributed among old partners in their sacrificing ratio)      
           

Since, nothing has been specified about the new profit sharing ratio, thus, it has been assumed that sacrificing ratio is same as old ratio, i.e. 1 : 1.

Working Notes

Total capital of the new firm = Capital of incoming partner × Reciprocal of his profit shareTotal capital of the new firm = 80,000 × 51 = 4,00,000Combined Capital of X, Y and Z = 1,30,000 + 90,000 + 80,000 = 3,00,000Value of Firm's Goodwill = 4,00,000 - 3,00,000 = 1,00,000Z's Share in Goodwill = 1,00,000 × 15 = 20,000

Answer:

 
Books of ….
 
Journal
Date
Particulars
L.F.
Debit
Amount
Rs
Credit
Amount
Rs
  C’s Current A/c
Dr.
 
10,000
 
     To A’s Capital A/c      
6,000
 
To B’s Capital A/c
     
4,000
  (Amount of goodwill not brought by new partner debited from his capital account and distributed among old partners in their sacrificing ratio.)      

Since, nothing has been specified about new profit sharing ratio, it is assumed that sacrificing ratio is same as the old ratio.

Working Notes

Total capital of the new firm = Capital of incoming partner × Reciprocal of his profit shareTotal capital of the firm=50,000 × 41 = 2,00,000Capital of A, B and C=A' Capital A/c + B's Capital A/c + C's Capital A/c + Reserves + Profit and Loss  A/c - Advertisement expenditure=30,000 + 20,000 + 50,000 + 50,000 + 11,000 -1,000= 1,60,000Goodwill of the firm=2,00,000 - 1,60,000 = Rs 40,000C's Share in Goodwill=40,000 × 14 = 10,000

Page No 4.70:

Question 35:

 
Books of ….
 
Journal
Date
Particulars
L.F.
Debit
Amount
Rs
Credit
Amount
Rs
  C’s Current A/c
Dr.
 
10,000
 
     To A’s Capital A/c      
6,000
 
To B’s Capital A/c
     
4,000
  (Amount of goodwill not brought by new partner debited from his capital account and distributed among old partners in their sacrificing ratio.)      

Since, nothing has been specified about new profit sharing ratio, it is assumed that sacrificing ratio is same as the old ratio.

Working Notes

Total capital of the new firm = Capital of incoming partner × Reciprocal of his profit shareTotal capital of the firm=50,000 × 41 = 2,00,000Capital of A, B and C=A' Capital A/c + B's Capital A/c + C's Capital A/c + Reserves + Profit and Loss  A/c - Advertisement expenditure=30,000 + 20,000 + 50,000 + 50,000 + 11,000 -1,000= 1,60,000Goodwill of the firm=2,00,000 - 1,60,000 = Rs 40,000C's Share in Goodwill=40,000 × 14 = 10,000

Answer:

Total Capital of the firm after Z’s admission = X’s Capital + Y’s Capital + Undistributed Profit + Z’s Capital

Total Capital of the firm after Z’s admission = 50,000 + 50,000 + 40,000 + 80,000

Total Capital of the firm after Z’s admission = Rs 2,20,000


Share of Goodwill of Z: Rs 25,000 1,00,000×14

Z’s Current A/c Dr. 25,000  
  To X’s Capital A/c   12,500
  To Y’s Capital A/c   12,500
     

Page No 4.70:

Question 36:

Total Capital of the firm after Z’s admission = X’s Capital + Y’s Capital + Undistributed Profit + Z’s Capital

Total Capital of the firm after Z’s admission = 50,000 + 50,000 + 40,000 + 80,000

Total Capital of the firm after Z’s admission = Rs 2,20,000


Share of Goodwill of Z: Rs 25,000 1,00,000×14

Z’s Current A/c Dr. 25,000  
  To X’s Capital A/c   12,500
  To Y’s Capital A/c   12,500
     

Answer:

 
Books of ….
 
Journal
Date
Particulars
L.F.
Debit Amount
Rs
Credit Amount
Rs
  Cash A/c
Dr.
 
50,000
 
    To Premium for Goodwill A/c      
50,000
  (Goodwill amount brought in by new partner)        
           
  Premium for Goodwill A/c
Dr.
 
50,000
 
  C’s Current A/c
Dr.
 
40,000
 
 
To A’s Capital A/c
     
45,000
 
To B’s Capital A/c
     
45,000
  (Amount of goodwill not brought by new partner debited from his capital account and distributed among old partners in their sacrificing ratio)      
           
  A’s Capital A/c
Dr.
 
80,000
 
  B’s Capital A/c
Dr.
 
80,000
 
 
To Goodwill A/c
     
1,60,000
  (Goodwill written-off between old partners)      
           

Note: Since no information about new ratio is given, it is assumed that old partners will sacrifice in their old ratio.

Page No 4.70:

Question 37:

 
Books of ….
 
Journal
Date
Particulars
L.F.
Debit Amount
Rs
Credit Amount
Rs
  Cash A/c
Dr.
 
50,000
 
    To Premium for Goodwill A/c      
50,000
  (Goodwill amount brought in by new partner)        
           
  Premium for Goodwill A/c
Dr.
 
50,000
 
  C’s Current A/c
Dr.
 
40,000
 
 
To A’s Capital A/c
     
45,000
 
To B’s Capital A/c
     
45,000
  (Amount of goodwill not brought by new partner debited from his capital account and distributed among old partners in their sacrificing ratio)      
           
  A’s Capital A/c
Dr.
 
80,000
 
  B’s Capital A/c
Dr.
 
80,000
 
 
To Goodwill A/c
     
1,60,000
  (Goodwill written-off between old partners)      
           

Note: Since no information about new ratio is given, it is assumed that old partners will sacrifice in their old ratio.

Answer:

 
Books of ….
 
Journal
Date
Particulars
L.F.
Debit Amount
Rs
Credit Amount
Rs
  Bank A/c
Dr.
 
39,600
 
    To C’s Capital A/c      
30,000
    To Premium for Goodwill A/c      
9,600
  (Capital and goodwill brought in by the new partner)        
           
  Premium for Goodwill A/c
Dr.
 
9,600
 
    To A’s Capital A/c    
7,200
 
To B’s Capital A/c
   
2,400
  (Goodwill distributed among old partners in their sacrificing ratio)      
           
  A’s Capital A/c
Dr.
 
3,000
 
  B’s Capital A/c
Dr.
 
1,000
 
 
To Goodwill A/c
     
4,000
  (Goodwill written off between old partners)      

Working Notes

WN 1: Calculation of Sacrificing Ratio

Old ratio = 3 : 1New ratio = 3 : 1 : 1Sacrificing ratio = Old ratio - New ratioSacrifice made by A = 34 - 35 = 320Sacrifice made by B = 14 - 15 = 120Sacrificing ratio = 3 : 1


WN 2: Calculation of Goodwill

Total Profit = 15,000 + 12,000 + 18,000 + 19,000 = 64,000

Average Profit for 4 years =Total Profit4

Average Profit =64,0004=16,000

Goodwill = Average profit for 4 years × Numbers of Years’ purchase

Goodwill = 16,000 × 3 = 48,000

Cs Share of goodwill=15× 48,000= 9,600

Page No 4.70:

Question 38:

 
Books of ….
 
Journal
Date
Particulars
L.F.
Debit Amount
Rs
Credit Amount
Rs
  Bank A/c
Dr.
 
39,600
 
    To C’s Capital A/c      
30,000
    To Premium for Goodwill A/c      
9,600
  (Capital and goodwill brought in by the new partner)        
           
  Premium for Goodwill A/c
Dr.
 
9,600
 
    To A’s Capital A/c    
7,200
 
To B’s Capital A/c
   
2,400
  (Goodwill distributed among old partners in their sacrificing ratio)      
           
  A’s Capital A/c
Dr.
 
3,000
 
  B’s Capital A/c
Dr.
 
1,000
 
 
To Goodwill A/c
     
4,000
  (Goodwill written off between old partners)      

Working Notes

WN 1: Calculation of Sacrificing Ratio

Old ratio = 3 : 1New ratio = 3 : 1 : 1Sacrificing ratio = Old ratio - New ratioSacrifice made by A = 34 - 35 = 320Sacrifice made by B = 14 - 15 = 120Sacrificing ratio = 3 : 1


WN 2: Calculation of Goodwill

Total Profit = 15,000 + 12,000 + 18,000 + 19,000 = 64,000

Average Profit for 4 years =Total Profit4

Average Profit =64,0004=16,000

Goodwill = Average profit for 4 years × Numbers of Years’ purchase

Goodwill = 16,000 × 3 = 48,000

Cs Share of goodwill=15× 48,000= 9,600

Answer:

 
Books of ….
 
Journal
Date
Particulars
L.F.
Debit Amount
Rs
Credit Amount
Rs
  Bank A/c
Dr.
 
50,000
 
    To W’s Capital A/c      
50,000
 
(Capital amount brought in by new partner)
       
           
  W’s Current A/c
Dr.
 
15,000
 
    To X’s Capital A/c    
2,500
 
To Y’s Capital A/c
   
5,000
 
To Z’s Capital A/c
     
7,500
  (Amount of goodwill not brought by new partner debited from his capital account and distributed in old partners in their sacrificing ratio.)        
           
  X’s Capital A/c
Dr.
 
10,000
 
  Y’s Capital A/c
Dr.
 
20,000
 
  Z’s Capital A/c
Dr.
 
30,000
 
 
To Goodwill A/c
     
60,000
  (Old goodwill written off among old partners in their old ratio)        

Working Notes

Goodwill = Average profit for 3 years

Total Profit = 62,500 + 70,000 + 92,500 = 2,25,000

Average Profit =Total Profit for 3 Years3

Average Profit =2,25,0003=75,000

Goodwill = Rs 75,000

W's Share of goodwill=75,000 × 15=15,000

Note: As no information about new profit sharing ratio is given, it is assumed that old ratio is the sacrificing ratio. Since Z is not bringing any goodwill, his Current A/c will be debited.



Page No 4.71:

Question 39:

 
Books of ….
 
Journal
Date
Particulars
L.F.
Debit Amount
Rs
Credit Amount
Rs
  Bank A/c
Dr.
 
50,000
 
    To W’s Capital A/c      
50,000
 
(Capital amount brought in by new partner)
       
           
  W’s Current A/c
Dr.
 
15,000
 
    To X’s Capital A/c    
2,500
 
To Y’s Capital A/c
   
5,000
 
To Z’s Capital A/c
     
7,500
  (Amount of goodwill not brought by new partner debited from his capital account and distributed in old partners in their sacrificing ratio.)        
           
  X’s Capital A/c
Dr.
 
10,000
 
  Y’s Capital A/c
Dr.
 
20,000
 
  Z’s Capital A/c
Dr.
 
30,000
 
 
To Goodwill A/c
     
60,000
  (Old goodwill written off among old partners in their old ratio)        

Working Notes

Goodwill = Average profit for 3 years

Total Profit = 62,500 + 70,000 + 92,500 = 2,25,000

Average Profit =Total Profit for 3 Years3

Average Profit =2,25,0003=75,000

Goodwill = Rs 75,000

W's Share of goodwill=75,000 × 15=15,000

Note: As no information about new profit sharing ratio is given, it is assumed that old ratio is the sacrificing ratio. Since Z is not bringing any goodwill, his Current A/c will be debited.

Answer:

 
Books of ….
 
Journal
Date
Particulars
L.F.
Debit Amount
Rs
Credit Amount
Rs
  Bank A/c
Dr.
 
5,15,200
 
    To B’s Capital A/c    
4,81,600
    To Premium for Goodwill A/c    
33,600
  (Capital and goodwill brought in by new partner)      
         
  Premium for Goodwill A/c
Dr.
 
33,600
 
    To A’s Capital A/c    
33,600
  (Goodwill given to A brought in by B)      

Working Notes

Goodwill = Average Profit for 5 Years’ × Numbers of Years’ Purchase

Average Profit=Total Profit5

Total Profit = (8,000) + 20,800 + 27,200 + 32,000 + 40,000 = 1,12,000

Average Profit=1,12,0005=22,400Goodwill=22,400 × 3 = 67,200

B's share of Goodwill = 67,200 ×12=33,600

Calculation of A’s Capital

= Opening Balance of his Capital + 5 Years’ Profit+ A’s Share of Goodwill – Drawings

= 4,00,000 + 1,12,000 + 33,600 – 64,000= 4,81,600

Page No 4.71:

Question 40:

 
Books of ….
 
Journal
Date
Particulars
L.F.
Debit Amount
Rs
Credit Amount
Rs
  Bank A/c
Dr.
 
5,15,200
 
    To B’s Capital A/c    
4,81,600
    To Premium for Goodwill A/c    
33,600
  (Capital and goodwill brought in by new partner)      
         
  Premium for Goodwill A/c
Dr.
 
33,600
 
    To A’s Capital A/c    
33,600
  (Goodwill given to A brought in by B)      

Working Notes

Goodwill = Average Profit for 5 Years’ × Numbers of Years’ Purchase

Average Profit=Total Profit5

Total Profit = (8,000) + 20,800 + 27,200 + 32,000 + 40,000 = 1,12,000

Average Profit=1,12,0005=22,400Goodwill=22,400 × 3 = 67,200

B's share of Goodwill = 67,200 ×12=33,600

Calculation of A’s Capital

= Opening Balance of his Capital + 5 Years’ Profit+ A’s Share of Goodwill – Drawings

= 4,00,000 + 1,12,000 + 33,600 – 64,000= 4,81,600

Answer:

(i)

 
Books of ….
 
Journal
Date
Particulars
L.F.
Debit
Amount
Rs
Credit Amount
Rs
  Bank A/c
Dr.
 
20,000
 
    To Premium for Goodwill A/c    
20,000
  (Goodwill brought in by new partner in cash)      
         
  Premium for Goodwill A/c
Dr.
 
20,000
 
    To A’s Capital A/c    
18,000
    To B’s Capital A/c    
2,000
  (Goodwill distributed among old partners in their sacrificing ratio)      
         
  A’s Capital A/c Dr.  
24,000
 
  B’s Capital A/c Dr.  
16,000
 
     To Goodwill A/c    
40,000
  (Old Goodwill written off among old partners in their old ratio)      

Working Notes

Old ratio = 3 : 2

New ratio = 3 : 3 : 2

Sacrificing ratio = Old ratio – New ratio

Sacrifice made by A = 35 - 38 = 940Sacrifice made by B = 25 - 38 = 140

Sacrificing ratio = 9 : 1

(ii)
 
Books of ….
 
Journal
Date
Particulars
L.F.
Debit Amount
Rs
Credit Amount
Rs
  Bank A/c
Dr.
 
1,000
 
    To Premium for Goodwill A/c    
1,000
  (Goodwill brought in by new partner in cash)      
         
  Premium for Goodwill A/c
Dr.
 
1,000
 
  C’s Current A/c
Dr.
 
1,000
 
    To A’s Capital A/c    
1,000
    To B’s Capital A/c    
1,000
  (Goodwill distributed among old partners in their sacrificing ratio)      
         
  A’s Capital A/c Dr.  
3,000
 
  B’s Capital A/c Dr.  
3,000
 
     To Goodwill A/c    
6,000
  (Old Goodwill written off among old partners in their old ratio)      

Page No 4.71:

Question 41:

(i)

 
Books of ….
 
Journal
Date
Particulars
L.F.
Debit
Amount
Rs
Credit Amount
Rs
  Bank A/c
Dr.
 
20,000
 
    To Premium for Goodwill A/c    
20,000
  (Goodwill brought in by new partner in cash)      
         
  Premium for Goodwill A/c
Dr.
 
20,000
 
    To A’s Capital A/c    
18,000
    To B’s Capital A/c    
2,000
  (Goodwill distributed among old partners in their sacrificing ratio)      
         
  A’s Capital A/c Dr.  
24,000
 
  B’s Capital A/c Dr.  
16,000
 
     To Goodwill A/c    
40,000
  (Old Goodwill written off among old partners in their old ratio)      

Working Notes

Old ratio = 3 : 2

New ratio = 3 : 3 : 2

Sacrificing ratio = Old ratio – New ratio

Sacrifice made by A = 35 - 38 = 940Sacrifice made by B = 25 - 38 = 140

Sacrificing ratio = 9 : 1

(ii)
 
Books of ….
 
Journal
Date
Particulars
L.F.
Debit Amount
Rs
Credit Amount
Rs
  Bank A/c
Dr.
 
1,000
 
    To Premium for Goodwill A/c    
1,000
  (Goodwill brought in by new partner in cash)      
         
  Premium for Goodwill A/c
Dr.
 
1,000
 
  C’s Current A/c
Dr.
 
1,000
 
    To A’s Capital A/c    
1,000
    To B’s Capital A/c    
1,000
  (Goodwill distributed among old partners in their sacrificing ratio)      
         
  A’s Capital A/c Dr.  
3,000
 
  B’s Capital A/c Dr.  
3,000
 
     To Goodwill A/c    
6,000
  (Old Goodwill written off among old partners in their old ratio)      

Answer:

WN1: Calculation of Rao’s share of Goodwill

Rao's Share of Goodwill=30,000×14=7,500

WN2: Adjustment of Rao’s share of Goodwill

Murty will get=7,500×35=4,500Rao will get=7,500×25=3,000

(a) Where there is no Goodwill Account

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

 

Rao’s Capital A/c

Dr.

 

7,500

 

 

To Murty’s Capital A/c

 

 

4,500

 

To Shah’s Capital A/c

 

 

3,000

 

(Rao’s share of goodwill charged from his capital account and distributed between Murty and Shah in sacrificing ratio i.e., 3:2)

 

 

 

 

 

 

 

 

(b) Goodwill appears at Rs 10,000

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

 

Murty’s Capital A/c

Dr.

 

6,000

 

 

Shah’s Capital A/c

Dr.

 

4,000

 

 

To Goodwill A/c

 

 

10,000

 

(Goodwill written-off at the time of Rao’s admission in old ratio)

 

 

 

 

 

 

 

 

 

Rao’s Capital A/c

Dr.

 

7,500

 

 

To Murty’s Capital A/c

 

 

4,500

 

To Shah’s Capital A/c

 

 

3,000

 

(Rao’s share of goodwill charged from his Capital Account and distributed between Murty and Shah in sacrificing ratio i.e., 3:2)

 

 

 

 

 

 

 

 

 

Page No 4.71:

Question 42:

WN1: Calculation of Rao’s share of Goodwill

Rao's Share of Goodwill=30,000×14=7,500

WN2: Adjustment of Rao’s share of Goodwill

Murty will get=7,500×35=4,500Rao will get=7,500×25=3,000

(a) Where there is no Goodwill Account

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

 

Rao’s Capital A/c

Dr.

 

7,500

 

 

To Murty’s Capital A/c

 

 

4,500

 

To Shah’s Capital A/c

 

 

3,000

 

(Rao’s share of goodwill charged from his capital account and distributed between Murty and Shah in sacrificing ratio i.e., 3:2)

 

 

 

 

 

 

 

 

(b) Goodwill appears at Rs 10,000

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

 

Murty’s Capital A/c

Dr.

 

6,000

 

 

Shah’s Capital A/c

Dr.

 

4,000

 

 

To Goodwill A/c

 

 

10,000

 

(Goodwill written-off at the time of Rao’s admission in old ratio)

 

 

 

 

 

 

 

 

 

Rao’s Capital A/c

Dr.

 

7,500

 

 

To Murty’s Capital A/c

 

 

4,500

 

To Shah’s Capital A/c

 

 

3,000

 

(Rao’s share of goodwill charged from his Capital Account and distributed between Murty and Shah in sacrificing ratio i.e., 3:2)

 

 

 

 

 

 

 

 

 

Answer:

 
Books of ….
 
Journal
Date
Particulars
L.F.
Debit Amount
Rs
Credit Amount
Rs
  Revaluation A/c
Dr.
 
16,000
 
 
  To Machinery A/c
   
16,000
  (Machinery value has reduced)      
         
  Building A/c
Dr.
 
40,000
 
 
  To Revaluation A/c
   
40,000
  (Building account appreciated)      
         
  Revaluation A/c
Dr.
 
4,000
 
 
  To Provision for Doubtful Debts A/c
   
4,000
  (Provision created against debtors)      
         
  Revaluation A/c Dr.  
12,000
 
 
  To Provision for Warranty Claims A/c
   
12,000
  (Created provision against warranty claims)      
         

Page No 4.71:

Question 43:

 
Books of ….
 
Journal
Date
Particulars
L.F.
Debit Amount
Rs
Credit Amount
Rs
  Revaluation A/c
Dr.
 
16,000
 
 
  To Machinery A/c
   
16,000
  (Machinery value has reduced)      
         
  Building A/c
Dr.
 
40,000
 
 
  To Revaluation A/c
   
40,000
  (Building account appreciated)      
         
  Revaluation A/c
Dr.
 
4,000
 
 
  To Provision for Doubtful Debts A/c
   
4,000
  (Provision created against debtors)      
         
  Revaluation A/c Dr.  
12,000
 
 
  To Provision for Warranty Claims A/c
   
12,000
  (Created provision against warranty claims)      
         

Answer:

 
Books of ….
 
Journal
Date
Particulars
L.F.
Debit Amount
Rs
Credit Amount
Rs
  Investments A/c
Dr.
 
20,000
 
 
  To Revaluation A/c
   
20,000
  (Investment value increased due to unrecorded investment)      
         
  Revaluation A/c
Dr.
 
5,000
 
 
  To Creditors A/c
   
5,000
  (Creditors increased by 5,000 due to unrecorded liability)      
         
  Sundry Creditors A/c
Dr.
 
1,600
 
 
  To Revaluation A/c
   
1,600
  (Liability for creditors reduced to the extent of 1,600)      
         

Page No 4.71:

Question 44:

 
Books of ….
 
Journal
Date
Particulars
L.F.
Debit Amount
Rs
Credit Amount
Rs
  Investments A/c
Dr.
 
20,000
 
 
  To Revaluation A/c
   
20,000
  (Investment value increased due to unrecorded investment)      
         
  Revaluation A/c
Dr.
 
5,000
 
 
  To Creditors A/c
   
5,000
  (Creditors increased by 5,000 due to unrecorded liability)      
         
  Sundry Creditors A/c
Dr.
 
1,600
 
 
  To Revaluation A/c
   
1,600
  (Liability for creditors reduced to the extent of 1,600)      
         

Answer:

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

 

General Reserve A/c

Dr.

 

4,000

 

 

Revaluation A/c

Dr.

 

2,000

 

 

To A’S Capital A/c

 

 

4,500

 

To B’s Capital A/c

 

 

1,500

 

(Profit on Revaluation and General Reserve distributed between A and B in old ratio)

 

 

 

 

 

 

 

 

Working Note:



Page No 4.72:

Question 45:

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

 

General Reserve A/c

Dr.

 

4,000

 

 

Revaluation A/c

Dr.

 

2,000

 

 

To A’S Capital A/c

 

 

4,500

 

To B’s Capital A/c

 

 

1,500

 

(Profit on Revaluation and General Reserve distributed between A and B in old ratio)

 

 

 

 

 

 

 

 

Working Note:

Answer:

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

 

Creditors A/c

Dr.

 

5,000

 

 

Building A/c

Dr.

 

40,000

 

 

Investments A/c

Dr.

 

15,000

 

 

To Revaluation A/c

 

 

60,000

 

(Increase in assets and decrease in liabilities transferred to Revaluation Account)

 

 

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

10,000

 

 

To Provision for Doubtful Debts A/c

 

 

5,000

 

To Reserve for outstanding Repairs Bill A/c

 

 

2,000

 

To Creditors A/c

 

 

3,000

 

(Increase in liabilities and creation of reserves and provisions transferred to Revaluation Account)

 

 

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

50,000

 

 

To Old Partners’ Capital A/c

 

 

50,000

 

(Profit on Revaluation transferred to Partners’ Capital)

 

 

 

 

 

 

 

 

Page No 4.72:

Question 46:

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

 

Creditors A/c

Dr.

 

5,000

 

 

Building A/c

Dr.

 

40,000

 

 

Investments A/c

Dr.

 

15,000

 

 

To Revaluation A/c

 

 

60,000

 

(Increase in assets and decrease in liabilities transferred to Revaluation Account)

 

 

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

10,000

 

 

To Provision for Doubtful Debts A/c

 

 

5,000

 

To Reserve for outstanding Repairs Bill A/c

 

 

2,000

 

To Creditors A/c

 

 

3,000

 

(Increase in liabilities and creation of reserves and provisions transferred to Revaluation Account)

 

 

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

50,000

 

 

To Old Partners’ Capital A/c

 

 

50,000

 

(Profit on Revaluation transferred to Partners’ Capital)

 

 

 

 

 

 

 

 

Answer:

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

 

Profit and Loss Adjustment A/c

Dr.

 

1,750

 

 

To Stock A/c

 

 

500

 

To Plant and Machinery A/c

 

 

875

 

To Reserve for Doubtful Debts A/c

 

 

375

 

(Decrease in stock and Plant and creation of Reserve for Doubtful Debt transferred to Profit and Loss Adjustment Account)

 

 

 

 

 

 

 

 

 

Building A/c

Dr.

 

2,500

 

 

To Profit and Loss Adjustment A/c

 

 

2,500

 

(Increase in value of Building of transferred to Profit and loss Adjustment Accounts)

 

 

 

 

 

 

 

 

 

Profit and Loss Adjustment A/c

 

750

 

 

To A’s Capital A/c

 

 

500

 

To B’s Capital A/c

 

 

250

 

(Profit on revaluation of asset and liabilities distributed between A and B in their old ratio)

 

 

 

 

 

 

 

 

 

Cash A/c

Dr.

 

10,500

 

 

To C’s Capital A/c

 

 

7,500

 

To Premium for Goodwill A/c

 

 

3,000

 

(C brought capital and share of goodwill)

 

 

 

 

 

 

 

 

 

Premium for Goodwill A/c

Dr.

 

3,000

 

 

To A’s Capital A/c

 

 

2,000

 

To B’s Capital A/c

 

 

1,000

 

(Premium for Goodwill distributed between A and B in their sacrificing ratio i.e 2:1)

 

 

 

 

 

 

 

 

 

Profit and Loss Adjustment Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Stock

500

 

 

Plant and Machinery

875

Building

2,500

Reserve for Doubtful Debts

375

 

 

Profit transferred to

 

 

 

A Capital

500

 

 

B Capital

250

 

 

 

2,500

 

2,500

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

A

B

C

Particulars

A

B

C

 

 

 

 

Balance b/d

15,000

10,000

 

 

 

 

 

Cash

 

 

7,500

 

 

 

 

Premium for Goodwill

2,000

1,000

 

Balance c/d

17,500

11,250

7,500

Profit and Loss Adjustment (Profit)

500

250

 

 

17,500

11,250

7,500

 

17,500

11,250

7,500

 

 

 

 

 

 

 

 

 

Balance Sheet

as on March 31, 2016 after admission of C

Liabilities

Amount

Rs

Assets

Amounts

Rs

 

 

 

 

Capital Accounts:

 

Building (25,000 + 2,500)

27,500

A

17,500

 

Plant and Machinery (17,500 – 875)

16,625

B

11,250

 

Stock (10,000 – 500)

9,500

C

7,500

36,250

 

 

Sundry Creditors

32,950

Sundry Debtors

4,850

 

 

 

Less: Provision for D. Debts

375

4,475

 

 

Cash in Hand (600 + 10,500)

11,100

 

69,200

 

69,200

 

 

 

 

Working Notes:

WN1

WN2

Distribution of Premium for Goodwill (in sacrificing ratio)

WN3

Distribution of Profit from Profit and loss Adjustment Account (in old ratio)

Page No 4.72:

Question 47:

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

 

Profit and Loss Adjustment A/c

Dr.

 

1,750

 

 

To Stock A/c

 

 

500

 

To Plant and Machinery A/c

 

 

875

 

To Reserve for Doubtful Debts A/c

 

 

375

 

(Decrease in stock and Plant and creation of Reserve for Doubtful Debt transferred to Profit and Loss Adjustment Account)

 

 

 

 

 

 

 

 

 

Building A/c

Dr.

 

2,500

 

 

To Profit and Loss Adjustment A/c

 

 

2,500

 

(Increase in value of Building of transferred to Profit and loss Adjustment Accounts)

 

 

 

 

 

 

 

 

 

Profit and Loss Adjustment A/c

 

750

 

 

To A’s Capital A/c

 

 

500

 

To B’s Capital A/c

 

 

250

 

(Profit on revaluation of asset and liabilities distributed between A and B in their old ratio)

 

 

 

 

 

 

 

 

 

Cash A/c

Dr.

 

10,500

 

 

To C’s Capital A/c

 

 

7,500

 

To Premium for Goodwill A/c

 

 

3,000

 

(C brought capital and share of goodwill)

 

 

 

 

 

 

 

 

 

Premium for Goodwill A/c

Dr.

 

3,000

 

 

To A’s Capital A/c

 

 

2,000

 

To B’s Capital A/c

 

 

1,000

 

(Premium for Goodwill distributed between A and B in their sacrificing ratio i.e 2:1)

 

 

 

 

 

 

 

 

 

Profit and Loss Adjustment Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Stock

500

 

 

Plant and Machinery

875

Building

2,500

Reserve for Doubtful Debts

375

 

 

Profit transferred to

 

 

 

A Capital

500

 

 

B Capital

250

 

 

 

2,500

 

2,500

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

A

B

C

Particulars

A

B

C

 

 

 

 

Balance b/d

15,000

10,000

 

 

 

 

 

Cash

 

 

7,500

 

 

 

 

Premium for Goodwill

2,000

1,000

 

Balance c/d

17,500

11,250

7,500

Profit and Loss Adjustment (Profit)

500

250

 

 

17,500

11,250

7,500

 

17,500

11,250

7,500

 

 

 

 

 

 

 

 

 

Balance Sheet

as on March 31, 2016 after admission of C

Liabilities

Amount

Rs

Assets

Amounts

Rs

 

 

 

 

Capital Accounts:

 

Building (25,000 + 2,500)

27,500

A

17,500

 

Plant and Machinery (17,500 – 875)

16,625

B

11,250

 

Stock (10,000 – 500)

9,500

C

7,500

36,250

 

 

Sundry Creditors

32,950

Sundry Debtors

4,850

 

 

 

Less: Provision for D. Debts

375

4,475

 

 

Cash in Hand (600 + 10,500)

11,100

 

69,200

 

69,200

 

 

 

 

Working Notes:

WN1

WN2

Distribution of Premium for Goodwill (in sacrificing ratio)

WN3

Distribution of Profit from Profit and loss Adjustment Account (in old ratio)

Answer:

 
Books of ….
 
Journal
Date
Particulars
L.F.
Debit
Amount
Rs
Credit Amount
Rs
  Bank A/c
Dr.
 
2,50,000
 
      To C’s Capital A/c    
2,00,000
      To Premium for Goodwill A/c    
50,000
  (Capital and Goodwill brought in by new partner)      
         
  Premium for Goodwill A/c
Dr.
 
50,000
 
      To A’s Capital A/c    
25,000
      To B’s Capital A/c    
25,000
  (Goodwill distributed among old partners in their sacrificing ratio, i.e. 1 : 1)      
         
  A’s Capital A/c Dr.  
25,000
 
  B’s Capital A/c Dr.  
25,000
 
     To Cash A/c    
50,000
  (Goodwill brought in by C is withdrawn by old partners)      
         
  Revaluation A/c (10,000 – 5,000) Dr.  
5,000
 
     To Provision for Doubtful Debts    
5,000
  (Created provision against debtors)      
         
  Revaluation A/c Dr.  
32,500
 
    To Machinery A/c    
20,000
    To Furniture A/c    
12,500
  (Value of machinery and furniture has depreciated)      
         
  Stock A/c Dr.  
30,000
 
    To Revaluation A/c    
30,000
  (Value of stock has reduced)      
         
  Building A/c Dr.  
1,47,000
 
    To Revaluation A/c    
1,47,000
  (Value of building has appreciated by 20%)      
         
  Investments A/c Dr.  
20,000
 
     To Revaluation A/c    
20,000
  (Value of investments has increased due to unrecorded investments)      
         
  Revaluation A/c Dr.  
1,59,500
 
     To A’s Capital A/c    
79,750
     To B’s Capital A/c    
79,750
  (Revaluation profit distributed among old partners in their old ratio)      
 
Balance Sheet
as on March 31, 2016 after C’s admission
Liabilities
Amount
Rs
Assets
Amount
Rs
       
Sundry Creditors
6,50,000
Sundry Debtors
2,00,000
 
Outstanding Expenses
30,000
  Less: Provision for Doubtful debts
10,000
1,90,000
Capital A/c:   Stock
2,30,000
  A 6,79,750   Furniture (1,00,000 – 12,500)
87,500
  B
4,79,750
  Investments
20,000
  C
2,00,000
13,59,500
Machinery (1,80,000 – 20,000)
1,60,000
    Building (7,35,000 + 1,47,000)
8,82,000
    Cash at Bank
4,70,000
 
20,39,500
 
20,39,500
       

Working Notes
Partners’ Capital Accounts
Dr.  
Cr.
Particulars
A
B
C
Particulars
A
B
C
               
Bank A/c
25,000
25,000
  Balance b/d
6,00,000
4,00,000
 
        Bank A/c    
2,00,000
        Revaluation A/c
79,750
79,750
 
Balance c/d
6,79,750
4,79,750
2,00,000
Premium for Goodwill A/c
25,000
25,000
 
               
 
7,04,750
5,04,750
2,00,000
 
7,04,750
5,04,750
2,00,000
               
 
Cash at Bank Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
       
Balance b/d
2,70,000
A’s Capital A/c
25,000
C’s Capital A/c
2,00,000
B’s Capital A/c
25,000
Premium for Goodwill A/c
50,000
Balance c/d
4,70,000
       
 
5,20,000
 
5,20,000
       



Page No 4.73:

Question 48:

 
Books of ….
 
Journal
Date
Particulars
L.F.
Debit
Amount
Rs
Credit Amount
Rs
  Bank A/c
Dr.
 
2,50,000
 
      To C’s Capital A/c    
2,00,000
      To Premium for Goodwill A/c    
50,000
  (Capital and Goodwill brought in by new partner)      
         
  Premium for Goodwill A/c
Dr.
 
50,000
 
      To A’s Capital A/c    
25,000
      To B’s Capital A/c    
25,000
  (Goodwill distributed among old partners in their sacrificing ratio, i.e. 1 : 1)      
         
  A’s Capital A/c Dr.  
25,000
 
  B’s Capital A/c Dr.  
25,000
 
     To Cash A/c    
50,000
  (Goodwill brought in by C is withdrawn by old partners)      
         
  Revaluation A/c (10,000 – 5,000) Dr.  
5,000
 
     To Provision for Doubtful Debts    
5,000
  (Created provision against debtors)      
         
  Revaluation A/c Dr.  
32,500
 
    To Machinery A/c    
20,000
    To Furniture A/c    
12,500
  (Value of machinery and furniture has depreciated)      
         
  Stock A/c Dr.  
30,000
 
    To Revaluation A/c    
30,000
  (Value of stock has reduced)      
         
  Building A/c Dr.  
1,47,000
 
    To Revaluation A/c    
1,47,000
  (Value of building has appreciated by 20%)      
         
  Investments A/c Dr.  
20,000
 
     To Revaluation A/c    
20,000
  (Value of investments has increased due to unrecorded investments)      
         
  Revaluation A/c Dr.  
1,59,500
 
     To A’s Capital A/c    
79,750
     To B’s Capital A/c    
79,750
  (Revaluation profit distributed among old partners in their old ratio)      
 
Balance Sheet
as on March 31, 2016 after C’s admission
Liabilities
Amount
Rs
Assets
Amount
Rs
       
Sundry Creditors
6,50,000
Sundry Debtors
2,00,000
 
Outstanding Expenses
30,000
  Less: Provision for Doubtful debts
10,000
1,90,000
Capital A/c:   Stock
2,30,000
  A 6,79,750   Furniture (1,00,000 – 12,500)
87,500
  B
4,79,750
  Investments
20,000
  C
2,00,000
13,59,500
Machinery (1,80,000 – 20,000)
1,60,000
    Building (7,35,000 + 1,47,000)
8,82,000
    Cash at Bank
4,70,000
 
20,39,500
 
20,39,500
       

Working Notes
Partners’ Capital Accounts
Dr.  
Cr.
Particulars
A
B
C
Particulars
A
B
C
               
Bank A/c
25,000
25,000
  Balance b/d
6,00,000
4,00,000
 
        Bank A/c    
2,00,000
        Revaluation A/c
79,750
79,750
 
Balance c/d
6,79,750
4,79,750
2,00,000
Premium for Goodwill A/c
25,000
25,000
 
               
 
7,04,750
5,04,750
2,00,000
 
7,04,750
5,04,750
2,00,000
               
 
Cash at Bank Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
       
Balance b/d
2,70,000
A’s Capital A/c
25,000
C’s Capital A/c
2,00,000
B’s Capital A/c
25,000
Premium for Goodwill A/c
50,000
Balance c/d
4,70,000
       
 
5,20,000
 
5,20,000
       

Answer:

Revaluation Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
       
Stock A/c
6,250
Provision for Doubtful Debts A/c
18,750
Plant and Machinery A/c
21,250
Loss transferred to:  
    X’s Capital A/c 5,250  
    Y’s Capital A/c 3,500
8,750
 
27,500
 
27,500
       
 
Cash at Bank Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
       
Balance b/d
1,50,000
Balance c/d
4,89,250
Premium for Goodwill A/c
89,250
   
Samir’s Capital A/c
2,50,000
   
 
4,89,250
 
4,89,250
       
 
Partners’ Capital Accounts
Dr.  
Cr.
Particulars
X
Y
Z
Particulars
X
Y
Z
               
Revaluation A/c
5,250
3,500
  Balance b/d
3,75,000
1,87,500
 
        Bank A/c    
2,50,000
Balance c/d
4,14,375
2,28,625
2,50,000
Premium for Goodwill A/c
44,625
44,625
 
               
 
4,19,625
2,32,125
2,50,000
 
4,19,625
2,32,125
2,50,000
               
 
Balance Sheet
as on April 01, 2016 after Z’s admission
Liabilities
Amount
Rs
Assets
Amount
Rs
       
Sundry Creditors
1,87,500
Debtors
2,50,000
 
Bills Payable
1,00,000
  Less: Provision for Doubtful Debts
6,250
2,43,750
Outstanding Rent
25,000
Stock (62,500 – 6,250)
56,250
Capital A/cs:   Plant and Machinery (4,25,000 – 21,250)
4,03,750
  X
4,14,375
  Prepaid Expenses
12,500
  Y
2,28,625
  Cash at Bank
4,89,250
  Z
2,50,000
8,93,000
   
 
12,05,500
 
12,05,500
       

Working Notes

WN 1:Calculation of Sacrificing Ratio

Old ratio = 3 : 2New profit sharing ratio = 5 : 3 : 2Sacrificing ratio = Old ratio - New ratioSacrifice made by X = 35 - 510 = 110Sacrifice made by Y = 25 - 310 = 110Sacrificing ratio = 1 : 1

WN 2:Calculation of Hidden Goodwill

Z brings 2,50,000 as his capital for 210 share in profitsTotal Capital of the New Firm = 2,50,000 × 102 = Rs 12,50,000

Capital at the time of Z's admission=X's Capital A/c + Y's Capital A/c  + Z's Capital A/c - Revaluation Loss=3,75,000 + 1,87,500 + 2,50,000 - 8,750 = 8,03,750Goodwill of the Firm = 12,50,000 - 8,03,750 = 4,46,250Z's Share of Goodwill = 4,46,250 ×210=89,250

Page No 4.73:

Question 49:

Revaluation Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
       
Stock A/c
6,250
Provision for Doubtful Debts A/c
18,750
Plant and Machinery A/c
21,250
Loss transferred to:  
    X’s Capital A/c 5,250  
    Y’s Capital A/c 3,500
8,750
 
27,500
 
27,500
       
 
Cash at Bank Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
       
Balance b/d
1,50,000
Balance c/d
4,89,250
Premium for Goodwill A/c
89,250
   
Samir’s Capital A/c
2,50,000
   
 
4,89,250
 
4,89,250
       
 
Partners’ Capital Accounts
Dr.  
Cr.
Particulars
X
Y
Z
Particulars
X
Y
Z
               
Revaluation A/c
5,250
3,500
  Balance b/d
3,75,000
1,87,500
 
        Bank A/c    
2,50,000
Balance c/d
4,14,375
2,28,625
2,50,000
Premium for Goodwill A/c
44,625
44,625
 
               
 
4,19,625
2,32,125
2,50,000
 
4,19,625
2,32,125
2,50,000
               
 
Balance Sheet
as on April 01, 2016 after Z’s admission
Liabilities
Amount
Rs
Assets
Amount
Rs
       
Sundry Creditors
1,87,500
Debtors
2,50,000
 
Bills Payable
1,00,000
  Less: Provision for Doubtful Debts
6,250
2,43,750
Outstanding Rent
25,000
Stock (62,500 – 6,250)
56,250
Capital A/cs:   Plant and Machinery (4,25,000 – 21,250)
4,03,750
  X
4,14,375
  Prepaid Expenses
12,500
  Y
2,28,625
  Cash at Bank
4,89,250
  Z
2,50,000
8,93,000
   
 
12,05,500
 
12,05,500
       

Working Notes

WN 1:Calculation of Sacrificing Ratio

Old ratio = 3 : 2New profit sharing ratio = 5 : 3 : 2Sacrificing ratio = Old ratio - New ratioSacrifice made by X = 35 - 510 = 110Sacrifice made by Y = 25 - 310 = 110Sacrificing ratio = 1 : 1

WN 2:Calculation of Hidden Goodwill

Z brings 2,50,000 as his capital for 210 share in profitsTotal Capital of the New Firm = 2,50,000 × 102 = Rs 12,50,000

Capital at the time of Z's admission=X's Capital A/c + Y's Capital A/c  + Z's Capital A/c - Revaluation Loss=3,75,000 + 1,87,500 + 2,50,000 - 8,750 = 8,03,750Goodwill of the Firm = 12,50,000 - 8,03,750 = 4,46,250Z's Share of Goodwill = 4,46,250 ×210=89,250

Answer:

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

 

Cash A/c

Dr.

 

20,880

 

 

To C’s Capital A/c

 

 

15,000

 

To Premium for Goodwill A/c

 

 

5,880

 

(C brought capital and share of goodwill)

 

 

 

 

 

 

 

 

 

Premium for Goodwill A/c

Dr.

 

5,880

 

 

To A’s Capital A/c

 

 

3,528

 

To B’s Capital A/c

 

 

2,352

 

(Premium for Goodwill distributed between A and B in sacrificing ratio i.e. 3:1)

 

 

 

 

 

 

 

 

 

Partners’ Capital Account

Dr.

 

 

 

Cr.

Particulars

A

B

C

Particulars

A

B

C

 

 

 

 

Balance b/d

51,450

36,750

 

 

 

 

 

Cash

 

 

15,000

Balance c/d

54,978

39,102

15,000

Premium for Goodwill

3,528

2,352

 

 

54,978

39,102

15,000

 

54,978

39,102

15,000

 

 

 

 

 

 

 

 

 

Balance Sheet

after Admission of C

Liabilities

Amount

Rs

Assets

Amount

Rs

 

 

 

 

Capital:

 

Cash (1,500 + 20,880)

22,380

A

54,978

 

Stock

28,000

B

39,102

 

Debtors

19,500

C

15,000

1,09,080

Furniture

2,500

Creditors

 

11,800

Machinery

48,500

 

 

1,20,880

 

1,20,880

 

 

 

 

 

Calculation of New Profit Sharing Ratio

C is admitted for share of profit

Let combined share of all partners after admission of C be = 1

Combined share of A and B after C’s admission = 1 − C’s share

Working Note-

WN1

WN2



Page No 4.74:

Question 50:

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

 

Cash A/c

Dr.

 

20,880

 

 

To C’s Capital A/c

 

 

15,000

 

To Premium for Goodwill A/c

 

 

5,880

 

(C brought capital and share of goodwill)

 

 

 

 

 

 

 

 

 

Premium for Goodwill A/c

Dr.

 

5,880

 

 

To A’s Capital A/c

 

 

3,528

 

To B’s Capital A/c

 

 

2,352

 

(Premium for Goodwill distributed between A and B in sacrificing ratio i.e. 3:1)

 

 

 

 

 

 

 

 

 

Partners’ Capital Account

Dr.

 

 

 

Cr.

Particulars

A

B

C

Particulars

A

B

C

 

 

 

 

Balance b/d

51,450

36,750

 

 

 

 

 

Cash

 

 

15,000

Balance c/d

54,978

39,102

15,000

Premium for Goodwill

3,528

2,352

 

 

54,978

39,102

15,000

 

54,978

39,102

15,000

 

 

 

 

 

 

 

 

 

Balance Sheet

after Admission of C

Liabilities

Amount

Rs

Assets

Amount

Rs

 

 

 

 

Capital:

 

Cash (1,500 + 20,880)

22,380

A

54,978

 

Stock

28,000

B

39,102

 

Debtors

19,500

C

15,000

1,09,080

Furniture

2,500

Creditors

 

11,800

Machinery

48,500

 

 

1,20,880

 

1,20,880

 

 

 

 

 

Calculation of New Profit Sharing Ratio

C is admitted for share of profit

Let combined share of all partners after admission of C be = 1

Combined share of A and B after C’s admission = 1 − C’s share

Working Note-

WN1

WN2

Answer:

Profit and Loss Adjustment Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

 

 

 

 

Stock

1,800

Building

15,000

Furniture

440

 

 

Provision for Doubtful Debts

275

 

 

Profit transferred to

 

 

 

Shyamlal Capital

4,994

 

Sanjay Capital

7,491

12,485

 

 

15,000

 

15,000

 

 

 

 

 

 

Partners’ Capital Account

Dr.

 

 

Cr.

Particulars

Shyamlal

Sanjay

Shanker

Particulars

Shyamlal

Sanjay

Shanker

 

 

 

 

Balance b/d

34,050

34,050

 

 

 

 

 

Cash A/c

 

 

30,000

 

 

 

 

Premium for Goodwill

8,000

12,000

 

Balance c/d

47,044

53,541

30,000

Revaluation

4,994

7,491

 

 

47,044

53,541

30,000

 

47,044

53,541

30,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as on March 31, 2016 after Shanker’s admission

Liabilities

Amount

Rs

Assets

Amount

Rs

 

 

 

 

Sundry Creditors

12,435

Cash in Hand (710 + 50,000)

50,710

Capital A/cs:

 

Cash at Bank

11,925

Shyamlal

47,044

 

Sundry Debtors

5,500

 

Sanjay

53,541

 

Less: Provision for D. Debts

275

5,225

Shanker

30,000

1,30,585

Stock (18,000 – 1,800)

16,200

 

 

Building (40,000 + 15,000)

55,000

 

 

Furniture (4,400 – 440)

3,960

 

1,43,020

 

1,43,020

 

 

 

 

Working Notes:

WN1

Distribution of Premium for Goodwill (in sacrificing ratio)

WN2

Distribution of Profit from Profit and Loss Adjustment Account (in old ratio)

Page No 4.74:

Question 51:

Profit and Loss Adjustment Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

 

 

 

 

Stock

1,800

Building

15,000

Furniture

440

 

 

Provision for Doubtful Debts

275

 

 

Profit transferred to

 

 

 

Shyamlal Capital

4,994

 

Sanjay Capital

7,491

12,485

 

 

15,000

 

15,000

 

 

 

 

 

 

Partners’ Capital Account

Dr.

 

 

Cr.

Particulars

Shyamlal

Sanjay

Shanker

Particulars

Shyamlal

Sanjay

Shanker

 

 

 

 

Balance b/d

34,050

34,050

 

 

 

 

 

Cash A/c

 

 

30,000

 

 

 

 

Premium for Goodwill

8,000

12,000

 

Balance c/d

47,044

53,541

30,000

Revaluation

4,994

7,491

 

 

47,044

53,541

30,000

 

47,044

53,541

30,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as on March 31, 2016 after Shanker’s admission

Liabilities

Amount

Rs

Assets

Amount

Rs

 

 

 

 

Sundry Creditors

12,435

Cash in Hand (710 + 50,000)

50,710

Capital A/cs:

 

Cash at Bank

11,925

Shyamlal

47,044

 

Sundry Debtors

5,500

 

Sanjay

53,541

 

Less: Provision for D. Debts

275

5,225

Shanker

30,000

1,30,585

Stock (18,000 – 1,800)

16,200

 

 

Building (40,000 + 15,000)

55,000

 

 

Furniture (4,400 – 440)

3,960

 

1,43,020

 

1,43,020

 

 

 

 

Working Notes:

WN1

Distribution of Premium for Goodwill (in sacrificing ratio)

WN2

Distribution of Profit from Profit and Loss Adjustment Account (in old ratio)

Answer:

Revaluation Account

Particulars

Amount

Rs

Particulars

Amount

Rs

 

 

 

 

Provision for Damages

1,500

Land and Building

6,000

Outstanding Electricity Bill

300

(30,000 × 20%)

 

Stock

2,000

Creditors (unclaimed)

1,200

Furniture

1,000

 

 

Reserve for Doubtful Debts

(15,000 × 5%)

750

 

 

Profit transferred to Capital Accounts

1,650

 

 

M

1,100

S

550

 

7,200

 

7,200

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

 

 

 

 

 

Cr.

Particulars

M

S

R

Particulars

M

S

R

Bank (Goodwill withdrawn)

2,000

1,000

 

Balance b/d

30,000

20,000

 

 

 

 

 

Bank

 

 

15,000

 

 

 

 

Premium Goodwill

4,000

2,000

 

Balance c/d

33,100

21,550

15,000

Revaluation (profit)

1,100

550

 

 

35,100

22,550

15,000

 

35,100

22,550

15,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as on April 01, 2016 after R’s admission

Liabilities

Amount

Rs

Assets

Amount

Rs

 

 

 

 

Provision for Damages

1,500

Cash at Bank (17,000 + 21,000 –3,000)

35,000

Outstanding Electricity Bill

300

Stock (25,000 –2,000)

23,000

Sundry Creditors (44,000 – 1,200)

42,800

Furniture and Fixtures (3,000 – 1,000)

2,000

Capital A/cs:

 

Sundry Debtors

15,000

 

M

33,100

 

Less: 5% Reserve for D. Debts

750

14,250

S

21,550

 

Bills Receivable

4,000

R

15,000

69,650

Land and Building (30,000 + 6,000)

36,000

 

 

1,14,250

 

1,14,250

 

 

 

 

 

Working Notes:

WN1: Sacrificing Ratio

WN2: Distribution of Premium for Goodwill (in sacrificing ratio)

WN3: Withdrawn of Premium for Goodwill

WN4: Distribution of Revaluation Profit (in old ratio)



Page No 4.75:

Question 52:

Revaluation Account

Particulars

Amount

Rs

Particulars

Amount

Rs

 

 

 

 

Provision for Damages

1,500

Land and Building

6,000

Outstanding Electricity Bill

300

(30,000 × 20%)

 

Stock

2,000

Creditors (unclaimed)

1,200

Furniture

1,000

 

 

Reserve for Doubtful Debts

(15,000 × 5%)

750

 

 

Profit transferred to Capital Accounts

1,650

 

 

M

1,100

S

550

 

7,200

 

7,200

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

 

 

 

 

 

Cr.

Particulars

M

S

R

Particulars

M

S

R

Bank (Goodwill withdrawn)

2,000

1,000

 

Balance b/d

30,000

20,000

 

 

 

 

 

Bank

 

 

15,000

 

 

 

 

Premium Goodwill

4,000

2,000

 

Balance c/d

33,100

21,550

15,000

Revaluation (profit)

1,100

550

 

 

35,100

22,550

15,000

 

35,100

22,550

15,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as on April 01, 2016 after R’s admission

Liabilities

Amount

Rs

Assets

Amount

Rs

 

 

 

 

Provision for Damages

1,500

Cash at Bank (17,000 + 21,000 –3,000)

35,000

Outstanding Electricity Bill

300

Stock (25,000 –2,000)

23,000

Sundry Creditors (44,000 – 1,200)

42,800

Furniture and Fixtures (3,000 – 1,000)

2,000

Capital A/cs:

 

Sundry Debtors

15,000

 

M

33,100

 

Less: 5% Reserve for D. Debts

750

14,250

S

21,550

 

Bills Receivable

4,000

R

15,000

69,650

Land and Building (30,000 + 6,000)

36,000

 

 

1,14,250

 

1,14,250

 

 

 

 

 

Working Notes:

WN1: Sacrificing Ratio

WN2: Distribution of Premium for Goodwill (in sacrificing ratio)

WN3: Withdrawn of Premium for Goodwill

WN4: Distribution of Revaluation Profit (in old ratio)

Answer:

 
Books of ….
 
Journal
Date
Particulars
L.F.
Debit Amount
Rs
Credit Amount
Rs
  General Reserve A/c
Dr.
 
1,60,000
 
     To A’s Capital A/c    
96,000
     To B’s Capital A/c    
64,000
  (General reserve distributed between old partners in their old ratio)      
         
  A’s Capital A/c Dr.  
72,000
 
  B’s Capital A/c Dr.  
48,000
 
     To Profit and Loss A/c    
1,20,000
  (Debit balance of profit and loss distributed between old partners in their old ratio)      

Page No 4.75:

Question 53:

 
Books of ….
 
Journal
Date
Particulars
L.F.
Debit Amount
Rs
Credit Amount
Rs
  General Reserve A/c
Dr.
 
1,60,000
 
     To A’s Capital A/c    
96,000
     To B’s Capital A/c    
64,000
  (General reserve distributed between old partners in their old ratio)      
         
  A’s Capital A/c Dr.  
72,000
 
  B’s Capital A/c Dr.  
48,000
 
     To Profit and Loss A/c    
1,20,000
  (Debit balance of profit and loss distributed between old partners in their old ratio)      

Answer:

Journal

Date

Particulars

L.F.

Debit

Amount

(Rs)

Credit

Amount

(Rs)

(a)

General Reserve A/c

Dr.

 

36,000

 

 

Contingency Reserve A/c

Dr.

 

6,000

 

 

Profit and Loss A/c

Dr.

 

18,000

 

 

To X’s Capital A/c

 

 

 

30,000

 

To Y’s Capital A/c

 

 

 

18,000

 

To Z’s Capital A/c

 

 

 

12,000

 

(Reserves and profits are distributed among the partners in their old ratio)

 

 

 

 

 

 

 

 

 

 

 

X’s Capital A/c

Dr.

 

12,000

 

 

Y’s Capital A/c

Dr.

 

7,200

 

 

Z’s Capital A/c

Dr.

 

4,800

 

 

To Advertisement Suspense A/c

 

 

 

24,000

 

(Balance of advertisement suspense is debited to partners’ capital accounts in old ratio)

 

 

 

 

 

 

 

 

 

 

(b)

General Reserve A/c

Dr.

 

84,000

 

 

To A’s Capital A/c

 

 

 

48,000

 

To B’s Capital A/c

 

 

 

36,000

 

(Reserve distributed between the partners in their old ratio)

 

 

 

 

 

 

 

 

 

 

 

A’s Capital A/c

Dr.

 

4,800

 

 

B’s Capital A/c

Dr.

 

3,600

 

 

To Profit & Loss A/c

 

 

 

8,400

 

(Balance of profit and loss debited to partners’ capital accounts in old ratio)

 

 

 

 

 

 

 

 

 

 

(c)

Workmen Compensation Reserve A/c

Dr.

 

72,000

 

 

To X’s Capital A/c

 

 

 

36,000

 

To Y’s Capital A/c

 

 

 

36,000

 

(Balance of WCR distributed between the partners in their old ratio, i.e. 1:1)

 

 

 

 

 

 

 

 

 

 

(d)

Workmen Compensation Reserve A/c

Dr.

 

72,000

 

 

  To Workmen Compensation Claim A/c

 

 

 

48,000

 

To X’s Capital A/c

 

 

 

12,000

 

To Y’s Capital A/c

 

 

 

12,000

 

(Claim against WCF is created and excess balance is distributed between the partners in their old ratio, i.e. 1:1)

 

 

 

 

 

 

 

 

 

 

(e)

Investment Fluctuation Reserve A/c

Dr.

 

24,000

 

 

To Investments A/c

 

 

 

10,000

 

To X’s Capital A/c

 

 

 

7,000

 

To Y’s Capital A/c

 

 

 

7,000

 

(Balance of IFR transferred to Investments for the decrease and excess balance is distributed between the partners in their old ratio, i.e. 1:1)

 

 

 

 

 

 

 

 

 

 

(f)

General Reserve A/c

Dr.

 

4,800

 

 

To Investment Fluctuation Reserve A/c

 

 

 

960

 

To X’s Capital A/c

 

 

 

1,920

 

To Y’s Capital A/c

 

 

 

1,920

 

(20% of general reserve transferred to IFR and balance is distributed between the partners in their old ratio, i.e. 1:1)

 

 

 

 

 

 

 

 

 

Page No 4.75:

Question 54:

Journal

Date

Particulars

L.F.

Debit

Amount

(Rs)

Credit

Amount

(Rs)

(a)

General Reserve A/c

Dr.

 

36,000

 

 

Contingency Reserve A/c

Dr.

 

6,000

 

 

Profit and Loss A/c

Dr.

 

18,000

 

 

To X’s Capital A/c

 

 

 

30,000

 

To Y’s Capital A/c

 

 

 

18,000

 

To Z’s Capital A/c

 

 

 

12,000

 

(Reserves and profits are distributed among the partners in their old ratio)

 

 

 

 

 

 

 

 

 

 

 

X’s Capital A/c

Dr.

 

12,000

 

 

Y’s Capital A/c

Dr.

 

7,200

 

 

Z’s Capital A/c

Dr.

 

4,800

 

 

To Advertisement Suspense A/c

 

 

 

24,000

 

(Balance of advertisement suspense is debited to partners’ capital accounts in old ratio)

 

 

 

 

 

 

 

 

 

 

(b)

General Reserve A/c

Dr.

 

84,000

 

 

To A’s Capital A/c

 

 

 

48,000

 

To B’s Capital A/c

 

 

 

36,000

 

(Reserve distributed between the partners in their old ratio)

 

 

 

 

 

 

 

 

 

 

 

A’s Capital A/c

Dr.

 

4,800

 

 

B’s Capital A/c

Dr.

 

3,600

 

 

To Profit & Loss A/c

 

 

 

8,400

 

(Balance of profit and loss debited to partners’ capital accounts in old ratio)

 

 

 

 

 

 

 

 

 

 

(c)

Workmen Compensation Reserve A/c

Dr.

 

72,000

 

 

To X’s Capital A/c

 

 

 

36,000

 

To Y’s Capital A/c

 

 

 

36,000

 

(Balance of WCR distributed between the partners in their old ratio, i.e. 1:1)

 

 

 

 

 

 

 

 

 

 

(d)

Workmen Compensation Reserve A/c

Dr.

 

72,000

 

 

  To Workmen Compensation Claim A/c

 

 

 

48,000

 

To X’s Capital A/c

 

 

 

12,000

 

To Y’s Capital A/c

 

 

 

12,000

 

(Claim against WCF is created and excess balance is distributed between the partners in their old ratio, i.e. 1:1)

 

 

 

 

 

 

 

 

 

 

(e)

Investment Fluctuation Reserve A/c

Dr.

 

24,000

 

 

To Investments A/c

 

 

 

10,000

 

To X’s Capital A/c

 

 

 

7,000

 

To Y’s Capital A/c

 

 

 

7,000

 

(Balance of IFR transferred to Investments for the decrease and excess balance is distributed between the partners in their old ratio, i.e. 1:1)

 

 

 

 

 

 

 

 

 

 

(f)

General Reserve A/c

Dr.

 

4,800

 

 

To Investment Fluctuation Reserve A/c

 

 

 

960

 

To X’s Capital A/c

 

 

 

1,920

 

To Y’s Capital A/c

 

 

 

1,920

 

(20% of general reserve transferred to IFR and balance is distributed between the partners in their old ratio, i.e. 1:1)

 

 

 

 

 

 

 

 

 

Answer:

 
Books of ….
 
Journal
Date
Particulars
L.F.
Debit
Amount
Rs
Credit
Amount
Rs
  General Reserve A/c
Dr.
 
25,000
 
  Investment Fluctuation Reserve A/c
Dr.
 
18,000
 
  Workmen Compensation Reserve A/c
Dr.
 
50,000
 
    To X’s Capital A/c        46,500
    To Y’s Capital A/c    
31,000
    To Z’s Capital A/c    
15,500
  (Accumulated profits and reserves distributed among old partners in their old ratio)      

Working Notes:

Decrease in the value of Investments = Rs 2,000

Therefore, balance in Investment Fluctuation Reserve will be = 20,000 – 2,000 = 18,000.



Page No 4.76:

Question 55:

 
Books of ….
 
Journal
Date
Particulars
L.F.
Debit
Amount
Rs
Credit
Amount
Rs
  General Reserve A/c
Dr.
 
25,000
 
  Investment Fluctuation Reserve A/c
Dr.
 
18,000
 
  Workmen Compensation Reserve A/c
Dr.
 
50,000
 
    To X’s Capital A/c        46,500
    To Y’s Capital A/c    
31,000
    To Z’s Capital A/c    
15,500
  (Accumulated profits and reserves distributed among old partners in their old ratio)      

Working Notes:

Decrease in the value of Investments = Rs 2,000

Therefore, balance in Investment Fluctuation Reserve will be = 20,000 – 2,000 = 18,000.

Answer:

Revaluation Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
 
 
 
 
Stock A/c
30,000
Provision for Doubtful Debts A/c
24,000
Patents A/c
74,000
Loss transferred to:  
Claim for Damages A/c
20,000
  A’s Capital A/c 60,000  
      B’s Capital A/c 40,000
1,00,000
 
1,24,000
 
1,24,000
       
 
Partners’ Capital Accounts
Dr.  
Cr.
Particulars
A
B
C
Particulars
A
B
C
               
Revaluation A/c
60,000
40,000
  Balance b/d
4,00,000
3,50,000
 
Balance c/d
5,08,000
4,22,000
3,00,000
Bank A/c    
3,00,000
        Premium for Goodwill A/c
60,000
40,000
 
        General Reserve A/c
1,08,000
72,000
 
               
 
5,68,000
4,62,000
3,00,000
 
5,68,000
4,62,000
3,00,000
               
 
Balance Sheet
as on April 01, 2014 after C’s admission
Liabilities
Amount
Rs
Assets
Amount
Rs
 
 
 
 
Sundry Creditors
3,20,000
Debtors
4,80,000
 
Claim for Damages
20,000
Less: Provision for Doubtful Debts
24,000
4,56,000
    Stock (3,00,000 – 30,000)
2,70,000
Capital A/c:   Building
2,04,000
   A
5,08,000
  Cash (2,40,000 + 4,00,000)
6,40,000
   B
4,22,000
     
   C
3,00,000
12,30,000
   
 
15,70,000
 
15,70,000
       

Working Notes

Goodwill of the Firm = 4,00,000C's Share = 4,00,000 × 14 = Rs 1,00,000

Page No 4.76:

Question 56:

Revaluation Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
 
 
 
 
Stock A/c
30,000
Provision for Doubtful Debts A/c
24,000
Patents A/c
74,000
Loss transferred to:  
Claim for Damages A/c
20,000
  A’s Capital A/c 60,000  
      B’s Capital A/c 40,000
1,00,000
 
1,24,000
 
1,24,000
       
 
Partners’ Capital Accounts
Dr.  
Cr.
Particulars
A
B
C
Particulars
A
B
C
               
Revaluation A/c
60,000
40,000
  Balance b/d
4,00,000
3,50,000
 
Balance c/d
5,08,000
4,22,000
3,00,000
Bank A/c    
3,00,000
        Premium for Goodwill A/c
60,000
40,000
 
        General Reserve A/c
1,08,000
72,000
 
               
 
5,68,000
4,62,000
3,00,000
 
5,68,000
4,62,000
3,00,000
               
 
Balance Sheet
as on April 01, 2014 after C’s admission
Liabilities
Amount
Rs
Assets
Amount
Rs
 
 
 
 
Sundry Creditors
3,20,000
Debtors
4,80,000
 
Claim for Damages
20,000
Less: Provision for Doubtful Debts
24,000
4,56,000
    Stock (3,00,000 – 30,000)
2,70,000
Capital A/c:   Building
2,04,000
   A
5,08,000
  Cash (2,40,000 + 4,00,000)
6,40,000
   B
4,22,000
     
   C
3,00,000
12,30,000
   
 
15,70,000
 
15,70,000
       

Working Notes

Goodwill of the Firm = 4,00,000C's Share = 4,00,000 × 14 = Rs 1,00,000

Answer:

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

General Reserve A/c

Dr.

 

5,000

 

To X’s Capital A/c

 

 

3,000

To Y’s Capital A/c

 

 

2,000

(General Reserve distributed)

 

 

 

 

 

 

 

X’s Capital A/c

Dr.

 

3,000

 

Y’s Capital A/c

Dr.

 

2,000

 

To Goodwill A/c

 

 

5,000

(Goodwill written-off)

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

3,010

 

To Stock A/c

 

 

770

To Plant and Machinery A/c

 

 

1,800

To Provision for Depreciation A/c

 

 

440

(Decrease in stock and creation of Provision for Doubtful Debts)

 

 

 

 

 

 

 

Investment A/c

Dr.

 

9,000

 

Provision for Distribution on Creditors A/c

Dr.

 

310

 

To Revaluation A/c

 

 

9,310

(Increase in Investment and Provision Discount on Creditors made)

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

6,300

 

To X’s Capital A/c

 

 

3,780

To Y’s Capital A/c

 

 

2,520

(Revaluation profit distributed between X and Y in old Ratio)

 

 

 

 

 

 

 

Cash A/c

Dr.

 

22,000

 

To Z’s Capital A/c

 

 

15,000

To Premium for Goodwill

 

 

7,000

(Z brought capital and half of his share of goodwill)

 

 

 

 

 

 

 

Premium for Goodwill A/c

Dr.

 

7,000

 

To X’s Capital A/c

 

 

4,000

To Y’s Capital A/c

 

 

3,000

(Premium for Goodwill distributed)

 

 

 

 

 

 

 

Z’s Capital A/c

Dr.

 

7,000

 

To X’s Capital A/c

 

 

4,000

To Y’s Capital A/c

 

 

3,000

(Half of Z share of Goodwill which was not brought by Z in cash charged from his capital account)

 

 

 

 

 

 

 

 

Revaluation Account

Dr.

 

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

 

 

 

 

Stock (7,700 × 10%)

770

Investment

9,000

Plant and Machinery (18,000 × 10%)

1,800

Provision for Disc on Creditors

310

Provision for D. Debts

440

 

 

Profit transferred to

 

 

 

X Capital

3,780

 

 

Y Capital

2,520

 

 

 

9,310

 

9,310

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

 

 

 

 

 

Cr.

Particulars

X

Y

Z

Particulars

X

Y

Z

Goodwill

3,000

2,000

 

Balance b/d

16,800

13,200

 

X’s Capital

 

 

3,000

General Reserve

3,000

2,000

 

Y’s Capital

 

 

4,000

Cash

 

 

15,000

 

 

 

 

Premium for Goodwill

3,000

4,000

 

Balance c/d

26,580

23,720

8,000

Z’s Capital

3,000

4,000

 

 

 

 

 

Revaluation

3,780

2,520

 

 

29,580

25,720

15,000

 

29,580

25,720

15,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as on March 31, 2014 after Z’s admission

Liabilities

Amount

Rs

Assets

Amount

Rs

 

 

 

 

Creditors

6,200

 

Cash

24,000

Less: Provision for D. Creditors

310

5,890

Stock (7,700 – 770)

6,930

Bills Payable

3,300

Debtors

8,800

 

Capital A/cs:

 

Less: 5% Provision for D. Debts

440

8,360

X

26,580

 

Plant and Machinery (18,000 – 1,800)

16,200

Y

23,720

 

Investments (3,000 + 9,000)

12,000

Z

8,000

58,300

 

 

 

67,490

 

67,490

 

 

 

 

Calculation of Profit sharing Ratio

Working Notes

WN1: Distribution of General Reserve

WN2: Writing-off of Goodwill

WN3: Distribution of Z's Share of Goodwill

Page No 4.76:

Question 57:

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

General Reserve A/c

Dr.

 

5,000

 

To X’s Capital A/c

 

 

3,000

To Y’s Capital A/c

 

 

2,000

(General Reserve distributed)

 

 

 

 

 

 

 

X’s Capital A/c

Dr.

 

3,000

 

Y’s Capital A/c

Dr.

 

2,000

 

To Goodwill A/c

 

 

5,000

(Goodwill written-off)

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

3,010

 

To Stock A/c

 

 

770

To Plant and Machinery A/c

 

 

1,800

To Provision for Depreciation A/c

 

 

440

(Decrease in stock and creation of Provision for Doubtful Debts)

 

 

 

 

 

 

 

Investment A/c

Dr.

 

9,000

 

Provision for Distribution on Creditors A/c

Dr.

 

310

 

To Revaluation A/c

 

 

9,310

(Increase in Investment and Provision Discount on Creditors made)

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

6,300

 

To X’s Capital A/c

 

 

3,780

To Y’s Capital A/c

 

 

2,520

(Revaluation profit distributed between X and Y in old Ratio)

 

 

 

 

 

 

 

Cash A/c

Dr.

 

22,000

 

To Z’s Capital A/c

 

 

15,000

To Premium for Goodwill

 

 

7,000

(Z brought capital and half of his share of goodwill)

 

 

 

 

 

 

 

Premium for Goodwill A/c

Dr.

 

7,000

 

To X’s Capital A/c

 

 

4,000

To Y’s Capital A/c

 

 

3,000

(Premium for Goodwill distributed)

 

 

 

 

 

 

 

Z’s Capital A/c

Dr.

 

7,000

 

To X’s Capital A/c

 

 

4,000

To Y’s Capital A/c

 

 

3,000

(Half of Z share of Goodwill which was not brought by Z in cash charged from his capital account)

 

 

 

 

 

 

 

 

Revaluation Account

Dr.

 

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

 

 

 

 

Stock (7,700 × 10%)

770

Investment

9,000

Plant and Machinery (18,000 × 10%)

1,800

Provision for Disc on Creditors

310

Provision for D. Debts

440

 

 

Profit transferred to

 

 

 

X Capital

3,780

 

 

Y Capital

2,520

 

 

 

9,310

 

9,310

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

 

 

 

 

 

Cr.

Particulars

X

Y

Z

Particulars

X

Y

Z

Goodwill

3,000

2,000

 

Balance b/d

16,800

13,200

 

X’s Capital

 

 

3,000

General Reserve

3,000

2,000

 

Y’s Capital

 

 

4,000

Cash

 

 

15,000

 

 

 

 

Premium for Goodwill

3,000

4,000

 

Balance c/d

26,580

23,720

8,000

Z’s Capital

3,000

4,000

 

 

 

 

 

Revaluation

3,780

2,520

 

 

29,580

25,720

15,000

 

29,580

25,720

15,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as on March 31, 2014 after Z’s admission

Liabilities

Amount

Rs

Assets

Amount

Rs

 

 

 

 

Creditors

6,200

 

Cash

24,000

Less: Provision for D. Creditors

310

5,890

Stock (7,700 – 770)

6,930

Bills Payable

3,300

Debtors

8,800

 

Capital A/cs:

 

Less: 5% Provision for D. Debts

440

8,360

X

26,580

 

Plant and Machinery (18,000 – 1,800)

16,200

Y

23,720

 

Investments (3,000 + 9,000)

12,000

Z

8,000

58,300

 

 

 

67,490

 

67,490

 

 

 

 

Calculation of Profit sharing Ratio

Working Notes

WN1: Distribution of General Reserve

WN2: Writing-off of Goodwill

WN3: Distribution of Z's Share of Goodwill

Answer:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Provision for Doubtful Debts (20,000 × 4%)

800

 

Land (1, 00,000 × 10%)

10,000

Less: Old Provision

500

300

 

 

Stock (30,000 × 5%)

1,500

 

 

Profit transferred to

 

 

 

V Capital

5,740

 

 

N Capital

2,460

 

 

 

10,000

 

10,000

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

V

N

P

Particulars

V

N

P

 

 

 

 

Balance b/d

1,50,000

50,000

 

 

 

 

 

Revaluation

5,740

2,460

 

 

 

 

 

General Reserve

7,000

3,000

 

 

 

 

 

P’s Loan

 

 

80,000

Balance c/d

1,90,740

67,460

80,000

Premium for Goodwill

28,000

12,000

 

 

1,90,740

67,460

80,000

 

1,90,740

67,460

80,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as on April 01, 2014 after P’s admission

Liabilities

Amount

Rs

Assets

Amount

Rs

Creditors

10,000

Cash (15,500 + 40,000)

55,500

Bills Payable

15,000

Debtors

20,000

Capital A/cs:

 

Bills Receivables

50,000

V

1,90,740

 

Stock (30,000 – 1,500)

28,500

N

67,460

 

Building

1,00,000

P

80,000

3,38,200

Land (1,00,000 + 10,000)

1,10,000

Provision for Doubtful Debts

800

 

 

 

3,64,000

 

3,64,000

 

 

 

 

Working Notes

WN1

Cash Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Balance b/d

15,500

 

 

Premium for Goodwill

40,000

 

 

 

 

Balance c/d

55,500

 

55,500

 

55,500

 

 

 

 

WN2

Distribution of Premium for Goodwill



Page No 4.77:

Question 58:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Provision for Doubtful Debts (20,000 × 4%)

800

 

Land (1, 00,000 × 10%)

10,000

Less: Old Provision

500

300

 

 

Stock (30,000 × 5%)

1,500

 

 

Profit transferred to

 

 

 

V Capital

5,740

 

 

N Capital

2,460

 

 

 

10,000

 

10,000

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

V

N

P

Particulars

V

N

P

 

 

 

 

Balance b/d

1,50,000

50,000

 

 

 

 

 

Revaluation

5,740

2,460

 

 

 

 

 

General Reserve

7,000

3,000

 

 

 

 

 

P’s Loan

 

 

80,000

Balance c/d

1,90,740

67,460

80,000

Premium for Goodwill

28,000

12,000

 

 

1,90,740

67,460

80,000

 

1,90,740

67,460

80,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as on April 01, 2014 after P’s admission

Liabilities

Amount

Rs

Assets

Amount

Rs

Creditors

10,000

Cash (15,500 + 40,000)

55,500

Bills Payable

15,000

Debtors

20,000

Capital A/cs:

 

Bills Receivables

50,000

V

1,90,740

 

Stock (30,000 – 1,500)

28,500

N

67,460

 

Building

1,00,000

P

80,000

3,38,200

Land (1,00,000 + 10,000)

1,10,000

Provision for Doubtful Debts

800

 

 

 

3,64,000

 

3,64,000

 

 

 

 

Working Notes

WN1

Cash Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Balance b/d

15,500

 

 

Premium for Goodwill

40,000

 

 

 

 

Balance c/d

55,500

 

55,500

 

55,500

 

 

 

 

WN2

Distribution of Premium for Goodwill

Answer:

Revaluation Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
Provision for Doubtful Debts A/c
1,500
Land and Building A/c
3,000
Profit transferred to:   Stock A/c
2,500
X’s Capital A/c 2,400      
Y’s Capital A/c 1,600
4,000
   
 
5,500
 
5,500
       
 
Partners’ Capital Accounts
Dr.  
Cr.
Particulars
X
Y
Z
Particulars
X
Y
Z
Advertisement Expenditure A/c
3,000
2,000
  Balance b/d
15,000
10,000
 
Balance c/d
40,200
26,800
15,000
Bank A/c    
15,000
        Premium for Goodwill A/c
6,000
4,000
 
        Revaluation A/c
2,400
1,600
 
        General Reserve A/c
12,000
8,000
 
        Workmen Compensation Reserve A/c
7,800
5,200
 
  43,200 28,800 15,000  
43,200
28,800
15,000
               
 
Balance Sheet
as on April 01, 2014 after Z’s admission
Liabilities
Amount
Rs
Assets
Amount
Rs
Sundry Creditors
1,10,000
Debtors
22,000
 
Employees’ Provident Fund
8,000
  Less: Provision for Doubtful Debts
2,500
19,500
Workmen Compensation Reserve
12,000
Land and Building (68,000 + 3,000)
71,000
Capital A/cs:   Plant and Machinery
12,000
   X
40,200
  Stock (11,000 + 2,500)
13,500
   Y
26,800
  Bank (71,000 + 10,000 + 15,000)
96,000
   Z
15,000
82,000
   
 
2,12,000
 
2,12,000
       



Page No 4.78:

Question 59:

Revaluation Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
Provision for Doubtful Debts A/c
1,500
Land and Building A/c
3,000
Profit transferred to:   Stock A/c
2,500
X’s Capital A/c 2,400      
Y’s Capital A/c 1,600
4,000
   
 
5,500
 
5,500
       
 
Partners’ Capital Accounts
Dr.  
Cr.
Particulars
X
Y
Z
Particulars
X
Y
Z
Advertisement Expenditure A/c
3,000
2,000
  Balance b/d
15,000
10,000
 
Balance c/d
40,200
26,800
15,000
Bank A/c    
15,000
        Premium for Goodwill A/c
6,000
4,000
 
        Revaluation A/c
2,400
1,600
 
        General Reserve A/c
12,000
8,000
 
        Workmen Compensation Reserve A/c
7,800
5,200
 
  43,200 28,800 15,000  
43,200
28,800
15,000
               
 
Balance Sheet
as on April 01, 2014 after Z’s admission
Liabilities
Amount
Rs
Assets
Amount
Rs
Sundry Creditors
1,10,000
Debtors
22,000
 
Employees’ Provident Fund
8,000
  Less: Provision for Doubtful Debts
2,500
19,500
Workmen Compensation Reserve
12,000
Land and Building (68,000 + 3,000)
71,000
Capital A/cs:   Plant and Machinery
12,000
   X
40,200
  Stock (11,000 + 2,500)
13,500
   Y
26,800
  Bank (71,000 + 10,000 + 15,000)
96,000
   Z
15,000
82,000
   
 
2,12,000
 
2,12,000
       

Answer:

Revaluation Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
Provision for Doubtful Debts A/c
200
Accrued Commission A/c
1,500
Outstanding Rent A/c
5,000
Loss transferred to:
 
Investments A/c
2,000
  X’s Capital A/c
3,420
 
 
 
  Y’s Capital A/c
2,280
5,700
 
7,200
 
7,200
 
 
 
 
 
Partners’ Capital Accounts
Dr.  
Cr.
Particulars
X
Y
Z
Particulars
X
Y
Z
 
 
 
 
 
 
 
 
Balance c/d
1,54,000
1,36,000
1,20,000
Balance b/d
1,54,000
1,36,000
 
 
 
 
 
Cash A/c
 
 
1,20,000
 
1,54,000
1,36,000
1,20,000
 
1,54,000
1,36,000
1,20,000
 
 
 
 
 
 
 
 
 
Partners’ Current Accounts
Dr.  
Cr.
Particulars
X
Y
Z
Particulars
X
Y
Z
Cash A/c
4,200
1,800
 
Balance b/d
10,000
2,000
 
Revaluation A/c
3,420
2,280
 
Premium for Goodwill A/c
8,400
3,600
 
Goodwill A/c
6,000
4,000
 
General Reserve A/c
7,200
4,800
 
Investments A/c
6,000
 
 
     
 
Balance c/d
5,980
2,320
 
 
 
 
 
 
25,600
10,400
 
 
25,600
10,400
 
 
 
 
 
 
 
 
 
 
Balance Sheet
as on April 01, 2014 after Z’s admission
Liabilities
Amount
Rs
Assets
Amount
Rs
Sundry Creditors
15,000
Accrued Commission
1,500
Outstanding Rent
5,000
Debtors
20,000
 
Capital A/c:
 
  Less: Provision for Doubtful Debts
1,000
19,000
   X 1,54,000
 
Patents
14,800
   Y 1,36,000
 
Cash in hand
1,51,000
   Z 1,20,000
4,10,000
Cash at Bank
1,80,000
Current A/c:
 
Machinery
72,000
   X
5,980
 
   
   Y
2,320
8,300
 
 
 
4,38,300
 
4,38,300
 
 
 
 

Working Notes

WN 1: Calculation of Sacrificing Ratio

Old ratio = 3 : 2

New profit sharing ratio = 4 : 3 : 2

Sacrificing ratio= Old ratio – New ratio

Sacrifice made by X = 35 - 49=745Sacrifice made by Y = 25 - 39=345

Sacrificing ratio = 7 : 3

WN 2: Calculation of Goodwill

Goodwill = Average Profits for Last 3 Years’ × Number of Years’ Purchase

Total Profit = 25,000 + 26000 + 30,000 = Rs 81,000

Average Profits for 3 years =Total Profit3

Average Profit = 81,0003 = 27,000

Goodwill = 27,000 × 2 = Rs 54,000

Z's share of goodwill  = 54,000 ×29=12,000

Cash Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
Balance b/d
25,000
X’s Capital A/c
4,200
Z’s Capital A/c
1,20,000
Y’s Capital A/c
1,800
Premium for Goodwill A/c
12,000
Balance c/d
1,51,000
 
 
 
 
 
1,57,000
 
1,57,000
       

Page No 4.78:

Question 60:

Revaluation Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
Provision for Doubtful Debts A/c
200
Accrued Commission A/c
1,500
Outstanding Rent A/c
5,000
Loss transferred to:
 
Investments A/c
2,000
  X’s Capital A/c
3,420
 
 
 
  Y’s Capital A/c
2,280
5,700
 
7,200
 
7,200
 
 
 
 
 
Partners’ Capital Accounts
Dr.  
Cr.
Particulars
X
Y
Z
Particulars
X
Y
Z
 
 
 
 
 
 
 
 
Balance c/d
1,54,000
1,36,000
1,20,000
Balance b/d
1,54,000
1,36,000
 
 
 
 
 
Cash A/c
 
 
1,20,000
 
1,54,000
1,36,000
1,20,000
 
1,54,000
1,36,000
1,20,000
 
 
 
 
 
 
 
 
 
Partners’ Current Accounts
Dr.  
Cr.
Particulars
X
Y
Z
Particulars
X
Y
Z
Cash A/c
4,200
1,800
 
Balance b/d
10,000
2,000
 
Revaluation A/c
3,420
2,280
 
Premium for Goodwill A/c
8,400
3,600
 
Goodwill A/c
6,000
4,000
 
General Reserve A/c
7,200
4,800
 
Investments A/c
6,000
 
 
     
 
Balance c/d
5,980
2,320
 
 
 
 
 
 
25,600
10,400
 
 
25,600
10,400
 
 
 
 
 
 
 
 
 
 
Balance Sheet
as on April 01, 2014 after Z’s admission
Liabilities
Amount
Rs
Assets
Amount
Rs
Sundry Creditors
15,000
Accrued Commission
1,500
Outstanding Rent
5,000
Debtors
20,000
 
Capital A/c:
 
  Less: Provision for Doubtful Debts
1,000
19,000
   X 1,54,000
 
Patents
14,800
   Y 1,36,000
 
Cash in hand
1,51,000
   Z 1,20,000
4,10,000
Cash at Bank
1,80,000
Current A/c:
 
Machinery
72,000
   X
5,980
 
   
   Y
2,320
8,300
 
 
 
4,38,300
 
4,38,300
 
 
 
 

Working Notes

WN 1: Calculation of Sacrificing Ratio

Old ratio = 3 : 2

New profit sharing ratio = 4 : 3 : 2

Sacrificing ratio= Old ratio – New ratio

Sacrifice made by X = 35 - 49=745Sacrifice made by Y = 25 - 39=345

Sacrificing ratio = 7 : 3

WN 2: Calculation of Goodwill

Goodwill = Average Profits for Last 3 Years’ × Number of Years’ Purchase

Total Profit = 25,000 + 26000 + 30,000 = Rs 81,000

Average Profits for 3 years =Total Profit3

Average Profit = 81,0003 = 27,000

Goodwill = 27,000 × 2 = Rs 54,000

Z's share of goodwill  = 54,000 ×29=12,000

Cash Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
Balance b/d
25,000
X’s Capital A/c
4,200
Z’s Capital A/c
1,20,000
Y’s Capital A/c
1,800
Premium for Goodwill A/c
12,000
Balance c/d
1,51,000
 
 
 
 
 
1,57,000
 
1,57,000
       

Answer:

 
Books of ….
 
Journal
Date
Particulars
L.F.
Debit
Amount
Rs
Credit Amount
Rs
  Bank A/c
Dr.
 
40,000
 
    To Z’s Capital A/c  
 
40,000
  (Capital amount brought in by new partners)  
 
 
 
 
 
 
 
  Z’s Current A/c
Dr.
 
3,000
 
    To X’s Capital A/c
 
 
1,800
    To Y’s Capital A/c
 
 
1,200
  (Z’s Current Account debited for amount of goodwill not brought by him and credited to old partners in their sacrificing ratio)
 
 
 
   
 
 
 
  Revaluation A/c Dr.
 
2,000
 
  Provision for Doubtful Debts A/c  
 
4,000
 
     To Debtors  
 
6,000
  (Bad Debts written-off)  
 
 
   
 
 
 
  Revaluation A/c Dr.
 
2,000
 
    To Creditors A/c
 
 
2,000
  (Creditors are to be paid 2,000 more)
 
 
 
   
 
 
 
  Revaluation A/c Dr.
 
2,000
 
    To Claim for Damages A/c
 
 
2,000
  (Created claim for damages)
 
 
 
   
 
 
 
  Outstanding Rent A/c Dr.
 
1,800
 
    To Revaluation A/c
 
 
1,800
  (Outstanding rent reduced by 1,800)
 
 
 
   
 
 
 
  X’s Capital A/c Dr.
 
2,520
 
  Y’s Capital A/c Dr.
 
1,680
 
     To Revaluation A/c
 
 
4,200
  (Revaluation loss distributed among old partners in their old ratio)
 
 
 
 
Partners’ Capital Accounts
Dr.  
Cr.
Particulars
X
Y
Z
Particulars
X
Y
Z
 
 
 
 
Balance b/d
50,000
60,000
 
Revaluation A/c
2,520
1,680
 
Bank A/c    
40,000
Profit and Loss A/c
2,400
1,600
 
Z’s Current A/c
1,800
1,200
 
Balance c/d
48,440
58,960
40,000
Workmen Compensation Reserve A/c
1,560
1,040
 
 
53,360
62,240
40,000
 
53,360
62,240
40,000
 
 
 
 
 
 
 
 
 
Balance Sheet
as on April 01, 2014 after Z’s admission
Liabilities
Amount
Rs
Assets
Amount
Rs
Outstanding Rent
11,200
Debtors
80,000
 
Sundry Creditors
22,000
Less: Provision for Doubtful Debts
6,000
74,000
Workmen Compensation Reserve
3,000
Stock
20,000
Claim for Damages
2,000
   
       
Capital A/cs:
 
Machinery
38,600
   X
48,440
 
Cash (10,000 + 40,000)
50,000
   Y
58,960
 
Z’s Current A/c
3,000
   Z
40,000
1,47,400
 
 
 
1,85,600
 
1,85,600
 
 
 
 

Working Notes: Calculation of Goodwill

Average profit for 3 years = Total Profit3

Total Profit = 10,000 + 20,000 + 30,000 = Rs 60,000

Average profit for 3 years = 60,0003=20,000

Goodwill = 20,000 × 1.5 – 12,000 = 18,000

Z's share of goodwill = 18,000 × 16 = 3,000

Note: Opening Balance Sheet implies Balance Sheet as on April 01, 2014.



Page No 4.79:

Question 61:

 
Books of ….
 
Journal
Date
Particulars
L.F.
Debit
Amount
Rs
Credit Amount
Rs
  Bank A/c
Dr.
 
40,000
 
    To Z’s Capital A/c  
 
40,000
  (Capital amount brought in by new partners)  
 
 
 
 
 
 
 
  Z’s Current A/c
Dr.
 
3,000
 
    To X’s Capital A/c
 
 
1,800
    To Y’s Capital A/c
 
 
1,200
  (Z’s Current Account debited for amount of goodwill not brought by him and credited to old partners in their sacrificing ratio)
 
 
 
   
 
 
 
  Revaluation A/c Dr.
 
2,000
 
  Provision for Doubtful Debts A/c  
 
4,000
 
     To Debtors  
 
6,000
  (Bad Debts written-off)  
 
 
   
 
 
 
  Revaluation A/c Dr.
 
2,000
 
    To Creditors A/c
 
 
2,000
  (Creditors are to be paid 2,000 more)
 
 
 
   
 
 
 
  Revaluation A/c Dr.
 
2,000
 
    To Claim for Damages A/c
 
 
2,000
  (Created claim for damages)
 
 
 
   
 
 
 
  Outstanding Rent A/c Dr.
 
1,800
 
    To Revaluation A/c
 
 
1,800
  (Outstanding rent reduced by 1,800)
 
 
 
   
 
 
 
  X’s Capital A/c Dr.
 
2,520
 
  Y’s Capital A/c Dr.
 
1,680
 
     To Revaluation A/c
 
 
4,200
  (Revaluation loss distributed among old partners in their old ratio)
 
 
 
 
Partners’ Capital Accounts
Dr.  
Cr.
Particulars
X
Y
Z
Particulars
X
Y
Z
 
 
 
 
Balance b/d
50,000
60,000
 
Revaluation A/c
2,520
1,680
 
Bank A/c    
40,000
Profit and Loss A/c
2,400
1,600
 
Z’s Current A/c
1,800
1,200
 
Balance c/d
48,440
58,960
40,000
Workmen Compensation Reserve A/c
1,560
1,040
 
 
53,360
62,240
40,000
 
53,360
62,240
40,000
 
 
 
 
 
 
 
 
 
Balance Sheet
as on April 01, 2014 after Z’s admission
Liabilities
Amount
Rs
Assets
Amount
Rs
Outstanding Rent
11,200
Debtors
80,000
 
Sundry Creditors
22,000
Less: Provision for Doubtful Debts
6,000
74,000
Workmen Compensation Reserve
3,000
Stock
20,000
Claim for Damages
2,000
   
       
Capital A/cs:
 
Machinery
38,600
   X
48,440
 
Cash (10,000 + 40,000)
50,000
   Y
58,960
 
Z’s Current A/c
3,000
   Z
40,000
1,47,400
 
 
 
1,85,600
 
1,85,600
 
 
 
 

Working Notes: Calculation of Goodwill

Average profit for 3 years = Total Profit3

Total Profit = 10,000 + 20,000 + 30,000 = Rs 60,000

Average profit for 3 years = 60,0003=20,000

Goodwill = 20,000 × 1.5 – 12,000 = 18,000

Z's share of goodwill = 18,000 × 16 = 3,000

Note: Opening Balance Sheet implies Balance Sheet as on April 01, 2014.

Answer:

 
Books of ….
 
Journal
Date
Particulars
L.F.
Debit
Amount
Rs
Credit Amount
Rs
  Cash A/c
Dr.
 
22,500
 
    To T’s Capital A/c  
 
20,000
    To Premium for Goodwill A/c  
 
2,500
  (Capital and goodwill brought in by T)  
 
 
 
 
 
 
 
  T’s Current A/c
Dr.
 
7,500
 
  Premium for Goodwill A/c
Dr.
 
2,500
 
    To X’s Capital A/c
 
 
5,000
    To Y’s Capital A/c
 
 
5,000
  (Goodwill amount distributed between sacrificing partners in their sacrificing ratio)
 
 
 
   
 
 
 
  Stock A/c Dr.
 
10,000
 
     To Revaluation A/c  
 
10,000
  (Increase in value of stock)  
 
 
   
 
 
 
  Revaluation A/c Dr.
 
2,600
 
    To Furniture A/c
 
 
2,600
  (Depreciated furniture @ 10%)
 
 
 
   
 
 
 
  Land and Building A/c Dr.
 
20,000
 
     To Revaluation A/c
 
 
20,000
  (Value of land and building appreciated by 20%)
 
 
 
   
 
 
 
  Revaluation A/c Dr.
 
2,200
 
    To Provision for Doubtful Debts A/c
 
 
2,200
  (Provision created against debtors)
 
 
 
   
 
 
 
  Outstanding Liabilities A/c Dr.
 
2,000
 
     To X’s Capital A/c
 
 
2,000
  (Reimbursed X for the payment made by hi, for the outstanding liabilities)
 
 
 
   
 
 
 
  Creditors A/c Dr.  
5,000
 
     To Revaluation A/c
 
 
5,000
  (Creditors reduced by 5,000)
 
 
 
   
 
 
 
  Revaluation A/c Dr.
 
30,200
 
     To X’s Capital A/c
 
 
12,080
     To Y’s Capital A/c
 
 
12,080
     To Z’s Capital A/c
 
 
6,040
  (Revaluation profit distributed among old partners in their old ratio)
 
 
 
 
 
 
Partners’ Capital Accounts
Dr.      
Cr.
Particulars
X
Y
Z
T
Particulars
X
Y
Z
T
Balance c/d
77,480
75,480
31,240
20,000
Balance b/d
48,000
48,000
20,000
 
 
 
 
 
 
Bank A/c
 
 
 
20,000
   
 
 
 
T’s Current A/c
3,750
3,750
 
 
   
 
 
 
Premium for Goodwill A/c
1,250
1,250
 
 
 
 
 
 
 
General Reserve A/c
10,400
10,400
5,200
 
 
 
 
 
 
Revaluation  A/c 12,080
12,080
6,040
 
 
 
 
 
 
Outstanding Liabilities A/c 2,000
 
 
 
           
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  77,480 75,480
31,240
20,000
  77,480 75,480
31,240
20,000
 
 
 
 
 
 
 
 
 
 
 
Balance Sheet
as on April 01, 2014 after T’s admission
Liabilities
Amount
Rs
Assets
Amount
Rs
 
 
 
 
Sundry Creditors (51,400 – 5,000)
46,400
Land and Building (1,00,000 + 20,000)
1,20,000
Outstanding Liabilities
4,000
Furniture (26,000 – 2,600)
23,400
 
 
Stock (47,000 + 10,000)
57,000
Capital A/c:
 
Sundry Debtors
22,000
 
   X
77,480
 
  Less: Provision for Doubtful Debts
2,200
19,800
   Y
75,480
 
Cash
26,900
   Z
31,240
 
T’s Current A/c
7,500
   T
20,000
2,04,200
 
 
 
2,54,600
 
2,54,600
 
 
 
 
 
Cash Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
Balance b/d
4,400
Balance c/d
26,900
T’s Capital A/c
20,000
 
 
Premium for goodwill A/c
2,500
   
 
26,900
 
26,900
       

Working Notes:

Calculation of Sacrificing Ratio

Old ratio = 2 : 2 : 1New profit sharing ratio = 5 : 5 : 3 : 2Sacrificing ratio = Old ratio - New ratioSacrifice made by X = 25 - 515 = 115Sacrifice made by Y = 25 - 515 = 115Sacrifice made by Z = 15 - 315 = 0Sacrificing Ratio = 1 : 1

Page No 4.79:

Question 62:

 
Books of ….
 
Journal
Date
Particulars
L.F.
Debit
Amount
Rs
Credit Amount
Rs
  Cash A/c
Dr.
 
22,500
 
    To T’s Capital A/c  
 
20,000
    To Premium for Goodwill A/c  
 
2,500
  (Capital and goodwill brought in by T)  
 
 
 
 
 
 
 
  T’s Current A/c
Dr.
 
7,500
 
  Premium for Goodwill A/c
Dr.
 
2,500
 
    To X’s Capital A/c
 
 
5,000
    To Y’s Capital A/c
 
 
5,000
  (Goodwill amount distributed between sacrificing partners in their sacrificing ratio)
 
 
 
   
 
 
 
  Stock A/c Dr.
 
10,000
 
     To Revaluation A/c  
 
10,000
  (Increase in value of stock)  
 
 
   
 
 
 
  Revaluation A/c Dr.
 
2,600
 
    To Furniture A/c
 
 
2,600
  (Depreciated furniture @ 10%)
 
 
 
   
 
 
 
  Land and Building A/c Dr.
 
20,000
 
     To Revaluation A/c
 
 
20,000
  (Value of land and building appreciated by 20%)
 
 
 
   
 
 
 
  Revaluation A/c Dr.
 
2,200
 
    To Provision for Doubtful Debts A/c
 
 
2,200
  (Provision created against debtors)
 
 
 
   
 
 
 
  Outstanding Liabilities A/c Dr.
 
2,000
 
     To X’s Capital A/c
 
 
2,000
  (Reimbursed X for the payment made by hi, for the outstanding liabilities)
 
 
 
   
 
 
 
  Creditors A/c Dr.  
5,000
 
     To Revaluation A/c
 
 
5,000
  (Creditors reduced by 5,000)
 
 
 
   
 
 
 
  Revaluation A/c Dr.
 
30,200
 
     To X’s Capital A/c
 
 
12,080
     To Y’s Capital A/c
 
 
12,080
     To Z’s Capital A/c
 
 
6,040
  (Revaluation profit distributed among old partners in their old ratio)
 
 
 
 
 
 
Partners’ Capital Accounts
Dr.      
Cr.
Particulars
X
Y
Z
T
Particulars
X
Y
Z
T
Balance c/d
77,480
75,480
31,240
20,000
Balance b/d
48,000
48,000
20,000
 
 
 
 
 
 
Bank A/c
 
 
 
20,000
   
 
 
 
T’s Current A/c
3,750
3,750
 
 
   
 
 
 
Premium for Goodwill A/c
1,250
1,250
 
 
 
 
 
 
 
General Reserve A/c
10,400
10,400
5,200
 
 
 
 
 
 
Revaluation  A/c 12,080
12,080
6,040
 
 
 
 
 
 
Outstanding Liabilities A/c 2,000
 
 
 
           
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  77,480 75,480
31,240
20,000
  77,480 75,480
31,240
20,000
 
 
 
 
 
 
 
 
 
 
 
Balance Sheet
as on April 01, 2014 after T’s admission
Liabilities
Amount
Rs
Assets
Amount
Rs
 
 
 
 
Sundry Creditors (51,400 – 5,000)
46,400
Land and Building (1,00,000 + 20,000)
1,20,000
Outstanding Liabilities
4,000
Furniture (26,000 – 2,600)
23,400
 
 
Stock (47,000 + 10,000)
57,000
Capital A/c:
 
Sundry Debtors
22,000
 
   X
77,480
 
  Less: Provision for Doubtful Debts
2,200
19,800
   Y
75,480
 
Cash
26,900
   Z
31,240
 
T’s Current A/c
7,500
   T
20,000
2,04,200
 
 
 
2,54,600
 
2,54,600
 
 
 
 
 
Cash Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
Balance b/d
4,400
Balance c/d
26,900
T’s Capital A/c
20,000
 
 
Premium for goodwill A/c
2,500
   
 
26,900
 
26,900
       

Working Notes:

Calculation of Sacrificing Ratio

Old ratio = 2 : 2 : 1New profit sharing ratio = 5 : 5 : 3 : 2Sacrificing ratio = Old ratio - New ratioSacrifice made by X = 25 - 515 = 115Sacrifice made by Y = 25 - 515 = 115Sacrifice made by Z = 15 - 315 = 0Sacrificing Ratio = 1 : 1

Answer:

Revaluation Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
 
 
 
 
Provision for Doubtful Debts A/c (5% of 85,000)
4,250
Advertisement Expense A/c
3,000
A’s Capital A/c (Revaluation Expenses)
5,250
B’s Capital A/c (Personal expenses)
5,000
 
 
Loss transferred to:
 
 
 
A’s Capital A/c
750
 
 
 
B’s Capital A/c
500
 
 
 
C’s Capital A/c
250
1,500
 
9,500
 
9,500
 
 
 
 
 
 
 
Partners’ Capital Accounts
Dr.      
Cr.
Particulars A B C D Particulars A B C D
                   
Revaluation A/c   5,000     Balance b/d 1,50,000 1,50,000 1,00,000  
Revaluation A/c (Loss) 750 500 250   Bank A/c       1,00,000
A’s Capital A/c       18,854 Revaluation A/c 5,250      
B’s Capital A/c       12,569 Creditors A/c       25,000
Balance c/d       6,285 C’s Capital A/c 18,854 12,569 6,285  
Balance c/d 1,73,354 1,57,069 1,06,035 87,292          
  1,74,104 1,62,569 1,06,285 1,25,000   1,74,104 1,62,569 1,06,285 1,25,000
 
 
 
 
 
 
 
 
 
 
 
Balance Sheet
as on April 01, 2014 after D’s admission
Liabilities
Amount
Rs
Assets
Amount
Rs
Sundry Creditors
50,000
Building
1,25,000
Bills Payable
25,000
Plant and Machinery
1,00,000
 
 
Furniture
75,000
 
 
Stock
50,000
Capital A/cs:
 
Debtors
75,000
 
 
 
  Add: Bill dishonoured
10,000
 
A
1,73,354
 
  Less: Provision for Doubtful Debts
4,250
80,750
B
1,57,069
 
Bills Receivable
50,000
C
1,06,035
 
Advertisement Expenses
3,000
D
87,292
5,23,750
Bank
1,15,000
 
5,98,750
 
5,98,750
       
 
Bank Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
Balance b/d
25,000
Debtors A/c (Bill Dishonoured)
10,000
D’s Capital A/c
1,00,000
Balance c/d
1,15,000
 
1,25,000
 
1,25,000
       

Working Notes:

WN1 Calculation of Hidden Goodwill

Capitalised Value of Firm = Incoming Partner's Capital × Reciprocal of Incoming Partner's Share                                              = 1,25,000 × 61= Rs 7,50,000

Net Worth of Firm = Adjusted Capital of Partners + Accumulated Reserves – Accumulated Losses

                             = 1,55,400 + 1,44,500 + 99,750 + 1,25,000 = 5,23,750
 
Hidden Goodwill = Capital Value of Firm – Net Worth of Firm
                           = 7,50,000 – 5,23,750 = Rs 2,26,250

'D's share of Goodwill = Hidden Goodwill × D's Share = 2,26,250 × 16= Rs 37,708
This share will be shared by the old partners in their sacrificing ratio i.e. 3 : 2 : 1

The following Journal entry will be passed:
  D’s Capital A/c Dr.   37,708  
    To A’s Capital A/c     18,854
    To B’s Capital A/c     12,569
    To C’s Capital A/c     6,285
  (Adjustment for goodwill made)      
Note: The balances of Partners' Capital Accounts as worked out in the above solution are different from the answers as per the book. As per the textbook answer, the working of hidden goodwill has not been considered.



Page No 4.80:

Question 63:

Revaluation Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
 
 
 
 
Provision for Doubtful Debts A/c (5% of 85,000)
4,250
Advertisement Expense A/c
3,000
A’s Capital A/c (Revaluation Expenses)
5,250
B’s Capital A/c (Personal expenses)
5,000
 
 
Loss transferred to:
 
 
 
A’s Capital A/c
750
 
 
 
B’s Capital A/c
500
 
 
 
C’s Capital A/c
250
1,500
 
9,500
 
9,500
 
 
 
 
 
 
 
Partners’ Capital Accounts
Dr.      
Cr.
Particulars A B C D Particulars A B C D
                   
Revaluation A/c   5,000     Balance b/d 1,50,000 1,50,000 1,00,000  
Revaluation A/c (Loss) 750 500 250   Bank A/c       1,00,000
A’s Capital A/c       18,854 Revaluation A/c 5,250      
B’s Capital A/c       12,569 Creditors A/c       25,000
Balance c/d       6,285 C’s Capital A/c 18,854 12,569 6,285  
Balance c/d 1,73,354 1,57,069 1,06,035 87,292          
  1,74,104 1,62,569 1,06,285 1,25,000   1,74,104 1,62,569 1,06,285 1,25,000
 
 
 
 
 
 
 
 
 
 
 
Balance Sheet
as on April 01, 2014 after D’s admission
Liabilities
Amount
Rs
Assets
Amount
Rs
Sundry Creditors
50,000
Building
1,25,000
Bills Payable
25,000
Plant and Machinery
1,00,000
 
 
Furniture
75,000
 
 
Stock
50,000
Capital A/cs:
 
Debtors
75,000
 
 
 
  Add: Bill dishonoured
10,000
 
A
1,73,354
 
  Less: Provision for Doubtful Debts
4,250
80,750
B
1,57,069
 
Bills Receivable
50,000
C
1,06,035
 
Advertisement Expenses
3,000
D
87,292
5,23,750
Bank
1,15,000
 
5,98,750
 
5,98,750
       
 
Bank Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
Balance b/d
25,000
Debtors A/c (Bill Dishonoured)
10,000
D’s Capital A/c
1,00,000
Balance c/d
1,15,000
 
1,25,000
 
1,25,000
       

Working Notes:

WN1 Calculation of Hidden Goodwill

Capitalised Value of Firm = Incoming Partner's Capital × Reciprocal of Incoming Partner's Share                                              = 1,25,000 × 61= Rs 7,50,000

Net Worth of Firm = Adjusted Capital of Partners + Accumulated Reserves – Accumulated Losses

                             = 1,55,400 + 1,44,500 + 99,750 + 1,25,000 = 5,23,750
 
Hidden Goodwill = Capital Value of Firm – Net Worth of Firm
                           = 7,50,000 – 5,23,750 = Rs 2,26,250

'D's share of Goodwill = Hidden Goodwill × D's Share = 2,26,250 × 16= Rs 37,708
This share will be shared by the old partners in their sacrificing ratio i.e. 3 : 2 : 1

The following Journal entry will be passed:
  D’s Capital A/c Dr.   37,708  
    To A’s Capital A/c     18,854
    To B’s Capital A/c     12,569
    To C’s Capital A/c     6,285
  (Adjustment for goodwill made)      
Note: The balances of Partners' Capital Accounts as worked out in the above solution are different from the answers as per the book. As per the textbook answer, the working of hidden goodwill has not been considered.

Answer:

Revaluation Account
 
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
Bad Debts A/c
2,000
Stock A/c
2,000
Provision for Doubtful Debts A/c
2,000
Creditors A/c
800
 
 
Loss transferred to:
 
 
 
X’s Capital A/c
720
 
 
 
Y’s Capital A/c
480
1,200
 
4,000
 
4,000
 
 
 
 
 
Partners’ Capital Accounts
Dr.  
Cr.
Particulars
X
Y
Z
Particulars
X
Y
Z
Revaluation A/c
720
480
 
Balance b/d
50,000
40,000
 
Balance c/d
58,280
45,520
30,000
Bank A/c
 
 
30,000
     
 
Premium for Goodwill A/c
3,000
2,000
 
        Reserve A/c
6,000
4,000
 
 
59,000
46,000
30,000
 
59,000
46,000
30,000
 
 
 
 
 
 
 
 
 
Balance Sheet
as on April 01, 2012 after Z’s admission
Liabilities
Amount
Rs
Assets
Amount
Rs
Employees’ Provident Fund
5,000
Debtors
22,000
 
Sundry Creditors
19,200
  Less: Provision for Doubtful Debts
2,000
 
      Less: Bad Debts
2,000
18,000
Capital A/cs:
 
Stock (18,000 + 2,000)
20,000

X

58,280
 
Machinery
30,000
   Y
45,520
 
Building
50,000
   Z
30,000
1,33,800
Cash at Bank
40,000
 
1,58,000
 
1,58,000
 
 
 
 

Working Notes: Calculation of Increase in Stock

Value of Stock (90%) = Rs 18,000Value of Stock (100%) = Rs 20,000 18,000×10090Increase in stock = Rs 2,000

 
Cash at Bank Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
Balance b/d
5,000
Balance c/d
40,000
Z’s Capital A/c
30,000
 
 
Premium for Goodwill a/c
5,000
   
 
40,000
 
40,000
       

Page No 4.80:

Question 64:

Revaluation Account
 
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
Bad Debts A/c
2,000
Stock A/c
2,000
Provision for Doubtful Debts A/c
2,000
Creditors A/c
800
 
 
Loss transferred to:
 
 
 
X’s Capital A/c
720
 
 
 
Y’s Capital A/c
480
1,200
 
4,000
 
4,000
 
 
 
 
 
Partners’ Capital Accounts
Dr.  
Cr.
Particulars
X
Y
Z
Particulars
X
Y
Z
Revaluation A/c
720
480
 
Balance b/d
50,000
40,000
 
Balance c/d
58,280
45,520
30,000
Bank A/c
 
 
30,000
     
 
Premium for Goodwill A/c
3,000
2,000
 
        Reserve A/c
6,000
4,000
 
 
59,000
46,000
30,000
 
59,000
46,000
30,000
 
 
 
 
 
 
 
 
 
Balance Sheet
as on April 01, 2012 after Z’s admission
Liabilities
Amount
Rs
Assets
Amount
Rs
Employees’ Provident Fund
5,000
Debtors
22,000
 
Sundry Creditors
19,200
  Less: Provision for Doubtful Debts
2,000
 
      Less: Bad Debts
2,000
18,000
Capital A/cs:
 
Stock (18,000 + 2,000)
20,000

X

58,280
 
Machinery
30,000
   Y
45,520
 
Building
50,000
   Z
30,000
1,33,800
Cash at Bank
40,000
 
1,58,000
 
1,58,000
 
 
 
 

Working Notes: Calculation of Increase in Stock

Value of Stock (90%) = Rs 18,000Value of Stock (100%) = Rs 20,000 18,000×10090Increase in stock = Rs 2,000

 
Cash at Bank Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
Balance b/d
5,000
Balance c/d
40,000
Z’s Capital A/c
30,000
 
 
Premium for Goodwill a/c
5,000
   
 
40,000
 
40,000
       

Answer:

 

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

2011

 

 

 

 

Apr. 01

Revaluation A/c

Dr.

 

18,000

 

 

To Investments A/c

 

 

12,000

 

To Plant A/c

 

 

6,000

 

(Decrease in investments and plant transferred to Revaluation Account)

 

 

 

 

 

 

 

 

Apr. 01

Creditors A/c

Dr.

 

3,000

 

 

To Revaluation A/c

 

 

3,000

 

(Decrease in creditors transferred to Revaluation Account)

 

 

 

 

 

 

 

 

Apr. 01

 Hari’s Capital A/c

Dr.

 

7,500

 

   Ram’s Capital A/c Dr.   7,500  

 

To Revaluation A/c

 

 

15,000

 

(Revaluation loss distributed between Hari and Ram in their old ratio i.e. 1:1)

 

 

 

 

 

 

 

 

Apr. 01

Bank A/c

Dr.

 

63,000

 

 

To Suraj’s Capital A/c

 

 

23,000

 

To Premium for Goodwill A/c

 

 

40,000

 

(Suraj brought capital and share of goodwill)

 

 

 

 

 

 

 

 

Apr. 01

Premium for Goodwill A/c

Dr.

 

40,000

 

 

To Hari’s Capital A/c

 

 

40,000

 

(Goodwill brought by Suraj transferred to Hari’s Capital Account)

 

 

 

 

 

 

 

 

Apr. 01

Hari’s Capital A/c

Dr.

 

30,000

 

 

To Bank A/c

 

 

30,000

 

(Hari withdraw Rs 30,000 on account of goodwill)

 

 

 

2012

 

 

 

 

Mar. 31

Profit and Loss appropriate A/c

Dr.

 

60,000

 

 

To Hari’s Capital A/c

 

 

20,000

 

To Ram’s Capital A/c

 

 

30,000

 

To Suraj’s Capital A/c

 

 

10,000

 

(Profit earned after Suraj’s admission distributed)

 

 

 

 

 

 

 

 

 

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

 

 

 

 

Investments (30,000 – 18,000)

12,000

Creditors

3,000

Plant (35,000 – 29,000)

6,000

Loss transferred to

 

 

 

Hari Capital

7,500

 

 

Ram Capital

7,500

 

18,000

 

18,000

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

Hari

Ram

Suraj

Particulars

Hari

Ram

Suraj

Revaluation

7,500

7,500

 

Balance b/d

60,000

60,000

 

Bank (withdrawal of Goodwill)

30,000

 

 

Premium for Goodwill

40,000

 

 

Balance c/d

62,500

52,500

 

 

 

 

 

 

1,00,000

60,000

 

 

1,00,000

60,000

 

Bank (Drawings)

15,000

22,500

7,500

Balance c/d

62,500

52,500

 

 

 

 

 

Bank

 

 

23,000

Balance c/d

67,500

60,000

25,500

Profit and Loss Appropriation

20,000

30,000

10,000

 

82,500

82,500

33,000

 

82,500

82,500

33,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as on March 31, 2012

Liabilities

Amount

Rs

Assets

Amount

Rs

 

 

 

 

Creditors (1,05,000 – 3,000)

1,02,000

Cash at Bank

88,000

Capital A/cs:

 

Book Debts

60,000

Hari

67,500

 

Stock

50,000

Ram

60,000

 

Investments (30,000 – 12,000)

18,000

Suraj

25,500

1,53,000

Furniture

10,000

 

 

Plant

29,000

 

2,55,000

 

2,55,000

 

 

 

 

Working Notes

WN1 

Hari Sacrifices share in favour of Suraj

WN2

Calculation of Suraj’s Capital

Let the combined share of all partners be = 1

Combined share of Hari and Ram = 1 − Suraj’s share

Combined Capital of Hari and Ram after all adjustments = 62,500 + 52,500 = Rs 1,15,000

WN3

Distribution of Profit earned after Suraj’s admission

Bank Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

 

 

 

 

Balance b/d

40,000

Hari’s Capital (Goodwill)

30,000

Suraj’s Capital

23,000

Hari’s Capital (Drawings)

15,000

Premium for Goodwill

40,000

Ram’s Capital (Drawings)

22,500

Revenue (Profit)

60,000

Suraj’s Capital (Drawings)

7,500

 

 

Balance c/d

88,000

 

1,63,000

 

1,63,000

 

 

 

 

WN4

Journal entry for recording drawings of partners

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

Hari’s Capital A/c

Dr.

 

15,000

 

Ram’s Capital A/c

Dr.

 

22,500

 

Suraj’s Capital A/c

Dr.

 

7,500

 

To Bank A/c

 

 

45,000

(Drawings made by partners)

 

 

 

 

 

 

 

 



Page No 4.81:

Question 65:

 

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

2011

 

 

 

 

Apr. 01

Revaluation A/c

Dr.

 

18,000

 

 

To Investments A/c

 

 

12,000

 

To Plant A/c

 

 

6,000

 

(Decrease in investments and plant transferred to Revaluation Account)

 

 

 

 

 

 

 

 

Apr. 01

Creditors A/c

Dr.

 

3,000

 

 

To Revaluation A/c

 

 

3,000

 

(Decrease in creditors transferred to Revaluation Account)

 

 

 

 

 

 

 

 

Apr. 01

 Hari’s Capital A/c

Dr.

 

7,500

 

   Ram’s Capital A/c Dr.   7,500  

 

To Revaluation A/c

 

 

15,000

 

(Revaluation loss distributed between Hari and Ram in their old ratio i.e. 1:1)

 

 

 

 

 

 

 

 

Apr. 01

Bank A/c

Dr.

 

63,000

 

 

To Suraj’s Capital A/c

 

 

23,000

 

To Premium for Goodwill A/c

 

 

40,000

 

(Suraj brought capital and share of goodwill)

 

 

 

 

 

 

 

 

Apr. 01

Premium for Goodwill A/c

Dr.

 

40,000

 

 

To Hari’s Capital A/c

 

 

40,000

 

(Goodwill brought by Suraj transferred to Hari’s Capital Account)

 

 

 

 

 

 

 

 

Apr. 01

Hari’s Capital A/c

Dr.

 

30,000

 

 

To Bank A/c

 

 

30,000

 

(Hari withdraw Rs 30,000 on account of goodwill)

 

 

 

2012

 

 

 

 

Mar. 31

Profit and Loss appropriate A/c

Dr.

 

60,000

 

 

To Hari’s Capital A/c

 

 

20,000

 

To Ram’s Capital A/c

 

 

30,000

 

To Suraj’s Capital A/c

 

 

10,000

 

(Profit earned after Suraj’s admission distributed)

 

 

 

 

 

 

 

 

 

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

 

 

 

 

Investments (30,000 – 18,000)

12,000

Creditors

3,000

Plant (35,000 – 29,000)

6,000

Loss transferred to

 

 

 

Hari Capital

7,500

 

 

Ram Capital

7,500

 

18,000

 

18,000

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

Hari

Ram

Suraj

Particulars

Hari

Ram

Suraj

Revaluation

7,500

7,500

 

Balance b/d

60,000

60,000

 

Bank (withdrawal of Goodwill)

30,000

 

 

Premium for Goodwill

40,000

 

 

Balance c/d

62,500

52,500

 

 

 

 

 

 

1,00,000

60,000

 

 

1,00,000

60,000

 

Bank (Drawings)

15,000

22,500

7,500

Balance c/d

62,500

52,500

 

 

 

 

 

Bank

 

 

23,000

Balance c/d

67,500

60,000

25,500

Profit and Loss Appropriation

20,000

30,000

10,000

 

82,500

82,500

33,000

 

82,500

82,500

33,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as on March 31, 2012

Liabilities

Amount

Rs

Assets

Amount

Rs

 

 

 

 

Creditors (1,05,000 – 3,000)

1,02,000

Cash at Bank

88,000

Capital A/cs:

 

Book Debts

60,000

Hari

67,500

 

Stock

50,000

Ram

60,000

 

Investments (30,000 – 12,000)

18,000

Suraj

25,500

1,53,000

Furniture

10,000

 

 

Plant

29,000

 

2,55,000

 

2,55,000

 

 

 

 

Working Notes

WN1 

Hari Sacrifices share in favour of Suraj

WN2

Calculation of Suraj’s Capital

Let the combined share of all partners be = 1

Combined share of Hari and Ram = 1 − Suraj’s share

Combined Capital of Hari and Ram after all adjustments = 62,500 + 52,500 = Rs 1,15,000

WN3

Distribution of Profit earned after Suraj’s admission

Bank Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

 

 

 

 

Balance b/d

40,000

Hari’s Capital (Goodwill)

30,000

Suraj’s Capital

23,000

Hari’s Capital (Drawings)

15,000

Premium for Goodwill

40,000

Ram’s Capital (Drawings)

22,500

Revenue (Profit)

60,000

Suraj’s Capital (Drawings)

7,500

 

 

Balance c/d

88,000

 

1,63,000

 

1,63,000

 

 

 

 

WN4

Journal entry for recording drawings of partners

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

Hari’s Capital A/c

Dr.

 

15,000

 

Ram’s Capital A/c

Dr.

 

22,500

 

Suraj’s Capital A/c

Dr.

 

7,500

 

To Bank A/c

 

 

45,000

(Drawings made by partners)

 

 

 

 

 

 

 

 

Answer:

Calculation of total capital of the new firm

Total capital of the firm = Capital brought in by New Partner × Reciprocal of his Profit ShareTotal capital of the firm = 1,05,000 × 51 = Rs 5,25,000

Calculation of new capital

X = 5,25,000 × 510 = 2,62,500Y = 5,25,000 × 310 = 1,57,500

 Calculation of cash to be brought in or to be paid by existing partners

Particulars
X
Y
New Capitalvipin
2,62,500
1,57,500
   Less: Existing Capital
2,40,000
1,80,000
Net Effect
22,500
to be brought in
(22,500)
to be withdrawn

Working Notes: Calculation of New Profit Sharing Ratio

Old ratio = 3 : 2Z's Share = 15X's New Share = 35 - 12 × 15 = 510Y = 25 - 12 × 15 = 310Z = 15 or 210New Profit Sharing Ratio = 5 : 3 : 2

Page No 4.81:

Question 66:

Calculation of total capital of the new firm

Total capital of the firm = Capital brought in by New Partner × Reciprocal of his Profit ShareTotal capital of the firm = 1,05,000 × 51 = Rs 5,25,000

Calculation of new capital

X = 5,25,000 × 510 = 2,62,500Y = 5,25,000 × 310 = 1,57,500

 Calculation of cash to be brought in or to be paid by existing partners

Particulars
X
Y
New Capitalvipin
2,62,500
1,57,500
   Less: Existing Capital
2,40,000
1,80,000
Net Effect
22,500
to be brought in
(22,500)
to be withdrawn

Working Notes: Calculation of New Profit Sharing Ratio

Old ratio = 3 : 2Z's Share = 15X's New Share = 35 - 12 × 15 = 510Y = 25 - 12 × 15 = 310Z = 15 or 210New Profit Sharing Ratio = 5 : 3 : 2

Answer:

Revaluation Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
Furniture A/c
2,520
Stock A/c
2,400
Investment A/c
2,880
Prepaid Salaries A/c
480
Machinery A/c
3,060
Loss transferred to:
 
Outstanding Rent A/c
1,080
   A’s Capital A/c
1,332
 
 
 
   B’s Capital A/c
1,998
 
 
 
   C’s Capital A/c
3,330
6,660
 
9,540
 
9,540
 
 
 
 
 
Partners’ Capital Accounts
Dr.
 
 
Cr.
Particulars
A
B
C
D
Particulars
A
B
C
D
Goodwill A/c
2,400
3,600
6,000
  Balance b/d
21,600
26,400
31,200
 
Revaluation A/c
1,332
1,998
3,330
  Bank A/c
 
 
 
19,200
Balance c/d
20,028
24,042
27,270
19,200
Premium for Goodwill A/c
480
720
1,200
 
 
 
 
 
  Profit and Loss A/c
1,680
2,520
4,200
 
 
 
 
 
   
 
 
 
 
 
23,760
29,640
36,600
19,200
 
23,760
29,640
36,600
19,200
 
 
 
 
   
 
 
 
 
Cash A/c
828
 
 
  Balance b/d
20,028
24,042
27,270
19,200
Balance c/d
19,200
28,800
48,000
19,200 Cash A/c
 
4,758
20,730
 
 
20,002
28,800
48,000
19,200  
20,002
28,800
48,000
19,200
 
 
 
 
   
 
 
 
 
 
Balance Sheet
as on April 01, 2014 after D’s admission
Liabilities
Amount
Rs
Assets
Amount
Rs
 
 
 
 
Creditors
38,400
Cash
57,060
Employees’ Provident Fund
19,200
Bills Receivable
14,400
Outstanding Rent
1,080
Furniture (16,800 – 2,520)
14,280
 
 
Stock
28,800
Capital A/cs:
 
Debtors
25,200
   A
19,200
 
Investment (19,200 – 2,880)
16,320
   B
28,800
 
Machinery (20,400 – 3,060)
17,340
   C
48,000
 
Prepaid Salaries
480
   D
19,200
1,15,200
 
 
 
1,73,880
 
1,73,880
       

Working Notes

Let the total share be 1D is admitted for 16th shareRemaining = 1 - 16 = 56Old ratio = 2 : 3 : 5New profit sharing ratioA = 56 × 210 = 1060B = 56 × 310 = 1560C = 56 × 510 = 2560D =16 or 1060NPR = 2 : 3 : 5 : 2

Total capital of the firm = Capital of the incoming partner × Reciprocal of his profit shareTotal capital of the firm = 19,200 × 61 = 1,15,200

New capital:A = 1,15,200 × 212 = 19,200B = 1,15,200 × 312 = 28,800C = 1,15,200 × 512 = 48,000

Calculation of cash to be brought in or to be paid by existing partners

Particulars
A
B
C
New Capital
19,200
28,800
48,000
  Less: Existing Capital
20,028
24,042
27,270
Net Effect
(828)
to be withdrawn
4,758
to be brought in
20,730
to be brought in
 
Cash Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
Balance b/d
10,800
A’s Capital A/c
828
D’s Capital A/c
19,200
Balance c/d
57,060
Premium for Goodwill A/c
2,400
   
   B’s Capital A/c
4,758
 
 
   C’s Capital A/c
20,730
 
 
 
 
 
 
 
57,888
 
57,888
       



Page No 4.82:

Question 67:

Revaluation Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
Furniture A/c
2,520
Stock A/c
2,400
Investment A/c
2,880
Prepaid Salaries A/c
480
Machinery A/c
3,060
Loss transferred to:
 
Outstanding Rent A/c
1,080
   A’s Capital A/c
1,332
 
 
 
   B’s Capital A/c
1,998
 
 
 
   C’s Capital A/c
3,330
6,660
 
9,540
 
9,540
 
 
 
 
 
Partners’ Capital Accounts
Dr.
 
 
Cr.
Particulars
A
B
C
D
Particulars
A
B
C
D
Goodwill A/c
2,400
3,600
6,000
  Balance b/d
21,600
26,400
31,200
 
Revaluation A/c
1,332
1,998
3,330
  Bank A/c
 
 
 
19,200
Balance c/d
20,028
24,042
27,270
19,200
Premium for Goodwill A/c
480
720
1,200
 
 
 
 
 
  Profit and Loss A/c
1,680
2,520
4,200
 
 
 
 
 
   
 
 
 
 
 
23,760
29,640
36,600
19,200
 
23,760
29,640
36,600
19,200
 
 
 
 
   
 
 
 
 
Cash A/c
828
 
 
  Balance b/d
20,028
24,042
27,270
19,200
Balance c/d
19,200
28,800
48,000
19,200 Cash A/c
 
4,758
20,730
 
 
20,002
28,800
48,000
19,200  
20,002
28,800
48,000
19,200
 
 
 
 
   
 
 
 
 
 
Balance Sheet
as on April 01, 2014 after D’s admission
Liabilities
Amount
Rs
Assets
Amount
Rs
 
 
 
 
Creditors
38,400
Cash
57,060
Employees’ Provident Fund
19,200
Bills Receivable
14,400
Outstanding Rent
1,080
Furniture (16,800 – 2,520)
14,280
 
 
Stock
28,800
Capital A/cs:
 
Debtors
25,200
   A
19,200
 
Investment (19,200 – 2,880)
16,320
   B
28,800
 
Machinery (20,400 – 3,060)
17,340
   C
48,000
 
Prepaid Salaries
480
   D
19,200
1,15,200
 
 
 
1,73,880
 
1,73,880
       

Working Notes

Let the total share be 1D is admitted for 16th shareRemaining = 1 - 16 = 56Old ratio = 2 : 3 : 5New profit sharing ratioA = 56 × 210 = 1060B = 56 × 310 = 1560C = 56 × 510 = 2560D =16 or 1060NPR = 2 : 3 : 5 : 2

Total capital of the firm = Capital of the incoming partner × Reciprocal of his profit shareTotal capital of the firm = 19,200 × 61 = 1,15,200

New capital:A = 1,15,200 × 212 = 19,200B = 1,15,200 × 312 = 28,800C = 1,15,200 × 512 = 48,000

Calculation of cash to be brought in or to be paid by existing partners

Particulars
A
B
C
New Capital
19,200
28,800
48,000
  Less: Existing Capital
20,028
24,042
27,270
Net Effect
(828)
to be withdrawn
4,758
to be brought in
20,730
to be brought in
 
Cash Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
Balance b/d
10,800
A’s Capital A/c
828
D’s Capital A/c
19,200
Balance c/d
57,060
Premium for Goodwill A/c
2,400
   
   B’s Capital A/c
4,758
 
 
   C’s Capital A/c
20,730
 
 
 
 
 
 
 
57,888
 
57,888
       

Answer:

 
Books of ….
 
Journal
Date
Particulars
L.F.
Debit Amount
Rs
Credit Amount
Rs
  Bank A/c
Dr.
 
80,000
 
    To C’s Capital A/c  
 
60,000
    To Premium for Goodwill A/c  
 
20,000
  (Capital and Goodwill amount brought in by C)  
 
 
 
 
 
 
 
  Premium for Goodwill A/c
Dr.
 
20,000
 
    To A’s Capital A/c
 
 
14,000
    To B’s Capital A/c
 
 
6,000
  (Goodwill brought in by C credited to old partners’ capital accounts in their sacrificing ratio)
 
 
 
   
 
 
 
  Reserve Dr.
 
20,000
 
     To Provision for Doubtful Debts A/c  
 
4,000
     To A’s Capital A/c  
 
11,200
     To B’s Capital A/c  
 
4,800
  (20% of the reserve is to remain as a provision against debtors and remaining reserve distributed between old partners in their old ratio)  
 
 
   
 
 
 
  Revaluation A/c Dr.
 
76,000
 
    To Furniture A/c
 
 
36,000
    To Stock A/c
 
 
40,000
  (Furniture and Stock value depreciated)
 
 
 
   
 
 
 
  A’s Capital A/c Dr.
 
53,200
 
  B’s Capital A/c Dr.
 
22,800
 
     To Revaluation A/c
 
 
76,000
  (Revaluation loss distributed between old partners in their old ratio)
 
 
 
   
 
 
 
  Bank Overdraft A/c Dr.
 
40,000
 
     To A’s Capital A/c
 
 
40,000
  (A took over bank overdraft)
 
 
 
   
 
 
 
  Cash A/c Dr.  
14,000
 
     To A’s Capital A/c
 
 
14,000
  ( Cash brought in by A as capital adjustment)
 
 
 
   
 
 
 
  B’s Capital A/c Dr.
 
14,000
 
     To Cash A/c
 
 
14,000
  (Cash withdrawn by B as a capital adjustment)
 
 
 
   
 
 
 
 
Balance Sheet
as on April 01, 2014 after C’s admission
Liabilities
Amount
Rs
Assets
Amount
Rs
 
 
 
 
 
 
Sundry Debtors
92,000
 
Sundry Creditors
80,000
  Less: Provision for Doubtful Debts
8,000
84,000
 
 
Stock-in-Trade (1,00,000 – 40,000)
60,000
Capital A/c:
 
Furniture (60,000 – 36,000)
24,000

A

1,26,000
 
Cash in hand 1,52,000
   B
54,000
 
   
   C
60,000
2,40,000
 
 
 
3,20,000
 
3,20,000
 
 
 
 

Working Notes
D is admitted for 14 shareLet the total share be 1Remaining share = 1 - 14 = 34Old ratio = 70 : 30 or 7 : 3New profit sharing ratio :A = 34 × 710 = 2140B = 34 × 310 = 940C = 14 or 1040New profit sharing ratio = 21 : 9 : 10

Total capital of the firm = Total capital of new partner × Reciprocal of new partner's shareTotal capital of the firm = 60,000 × 41 = 2,40,000New Capital:A = 2,40,000 × 2140 = 1,26,000B = 2,40,000 × 940 = 54,000

Calculation of cash to be brought in or to be paid by existing partners
 
Particulars
A
B
New Capital
1,26,000
54,000
  Less: Existing Capital
1,12,000
68,000
Net Effect
14,000
to be brought in
(14,000)
to be withdrawn
 
Partners’ Capital Accounts
Dr.  
Cr.
Particulars
A
B
C
Particulars
A
B
C
 
 
 
 
Balance b/d
1,00,000
80,000
 
 
 
 
 
Cash A/c
 
 
60,000
Revaluation  A/c
53,200
22,800
 
Premium for Goodwill A/c
14,000
6,000
 
Balance c/d
1,12,000
68,000
60,000
Reserve
11,200
4,800
 
 
 
 
 
Bank Overdraft A/c
40,000
 
 
 
1,65,200
90,800
60,000
 
1,65,200
90,800
60,000
 
 
 
 
 
 
 
 
Cash A/c
 
14,000
 
Balance b/d
1,12,000
68,000
60,000
Balance C/d
1,26,000
54,000
60,000
Cash A/c
14,000
 
 
 
1,26,000
68,000
60,000
 
1,26,000
68,000
60,000
 
 
 
 
 
 
 
 
 
Cash Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
Balance b/d
72,000
Balance c/d
1,52,000
C’s Capital A/c
60,000
 
 
Premium for Goodwill A/c
20,000
   
 
1,52,000
 
1,52,000
       

Page No 4.82:

Question 68:

 
Books of ….
 
Journal
Date
Particulars
L.F.
Debit Amount
Rs
Credit Amount
Rs
  Bank A/c
Dr.
 
80,000
 
    To C’s Capital A/c  
 
60,000
    To Premium for Goodwill A/c  
 
20,000
  (Capital and Goodwill amount brought in by C)  
 
 
 
 
 
 
 
  Premium for Goodwill A/c
Dr.
 
20,000
 
    To A’s Capital A/c
 
 
14,000
    To B’s Capital A/c
 
 
6,000
  (Goodwill brought in by C credited to old partners’ capital accounts in their sacrificing ratio)
 
 
 
   
 
 
 
  Reserve Dr.
 
20,000
 
     To Provision for Doubtful Debts A/c  
 
4,000
     To A’s Capital A/c  
 
11,200
     To B’s Capital A/c  
 
4,800
  (20% of the reserve is to remain as a provision against debtors and remaining reserve distributed between old partners in their old ratio)  
 
 
   
 
 
 
  Revaluation A/c Dr.
 
76,000
 
    To Furniture A/c
 
 
36,000
    To Stock A/c
 
 
40,000
  (Furniture and Stock value depreciated)
 
 
 
   
 
 
 
  A’s Capital A/c Dr.
 
53,200
 
  B’s Capital A/c Dr.
 
22,800
 
     To Revaluation A/c
 
 
76,000
  (Revaluation loss distributed between old partners in their old ratio)
 
 
 
   
 
 
 
  Bank Overdraft A/c Dr.
 
40,000
 
     To A’s Capital A/c
 
 
40,000
  (A took over bank overdraft)
 
 
 
   
 
 
 
  Cash A/c Dr.  
14,000
 
     To A’s Capital A/c
 
 
14,000
  ( Cash brought in by A as capital adjustment)
 
 
 
   
 
 
 
  B’s Capital A/c Dr.
 
14,000
 
     To Cash A/c
 
 
14,000
  (Cash withdrawn by B as a capital adjustment)
 
 
 
   
 
 
 
 
Balance Sheet
as on April 01, 2014 after C’s admission
Liabilities
Amount
Rs
Assets
Amount
Rs
 
 
 
 
 
 
Sundry Debtors
92,000
 
Sundry Creditors
80,000
  Less: Provision for Doubtful Debts
8,000
84,000
 
 
Stock-in-Trade (1,00,000 – 40,000)
60,000
Capital A/c:
 
Furniture (60,000 – 36,000)
24,000

A

1,26,000
 
Cash in hand 1,52,000
   B
54,000
 
   
   C
60,000
2,40,000
 
 
 
3,20,000
 
3,20,000
 
 
 
 

Working Notes
D is admitted for 14 shareLet the total share be 1Remaining share = 1 - 14 = 34Old ratio = 70 : 30 or 7 : 3New profit sharing ratio :A = 34 × 710 = 2140B = 34 × 310 = 940C = 14 or 1040New profit sharing ratio = 21 : 9 : 10

Total capital of the firm = Total capital of new partner × Reciprocal of new partner's shareTotal capital of the firm = 60,000 × 41 = 2,40,000New Capital:A = 2,40,000 × 2140 = 1,26,000B = 2,40,000 × 940 = 54,000

Calculation of cash to be brought in or to be paid by existing partners
 
Particulars
A
B
New Capital
1,26,000
54,000
  Less: Existing Capital
1,12,000
68,000
Net Effect
14,000
to be brought in
(14,000)
to be withdrawn
 
Partners’ Capital Accounts
Dr.  
Cr.
Particulars
A
B
C
Particulars
A
B
C
 
 
 
 
Balance b/d
1,00,000
80,000
 
 
 
 
 
Cash A/c
 
 
60,000
Revaluation  A/c
53,200
22,800
 
Premium for Goodwill A/c
14,000
6,000
 
Balance c/d
1,12,000
68,000
60,000
Reserve
11,200
4,800
 
 
 
 
 
Bank Overdraft A/c
40,000
 
 
 
1,65,200
90,800
60,000
 
1,65,200
90,800
60,000
 
 
 
 
 
 
 
 
Cash A/c
 
14,000
 
Balance b/d
1,12,000
68,000
60,000
Balance C/d
1,26,000
54,000
60,000
Cash A/c
14,000
 
 
 
1,26,000
68,000
60,000
 
1,26,000
68,000
60,000
 
 
 
 
 
 
 
 
 
Cash Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
Balance b/d
72,000
Balance c/d
1,52,000
C’s Capital A/c
60,000
 
 
Premium for Goodwill A/c
20,000
   
 
1,52,000
 
1,52,000
       

Answer:

Revaluation Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
 
 
 
 
Stock A/c
2,000
Land and Building A/c
5,000
Office Furniture A/c
100
 
 
Provision for Doubtful Debts A/c
800
 
 
Profit transferred to:
 
 
 
A’s Capital A/c 1,575
 
 
 
B’s Capital A/c
525
2,100
 
 
 
5,000
 
5,000
 
 
 
 

Partners’ Capital Accounts
Dr.  
Cr.
Particulars
A
B
C
Particulars
A
B
C
Advertisement Expenditure A/c
1,500
500
 
Balance b/d
30,000
16,000
 
Balance c/d
37,575
18,525
14,000
Bank A/c
 
 
14,000
        C’s Current A/c
3,000
1,000
 
 
 
 
 
Revaluation A/c
1,575
525
 
 
 
 
 
General Reserve A/c
4,500
1,500
 
 
39,075
19,025
14,000
 
39,075
19,025
14,000
 
 
 
 
 
 
 
 
Current A/c
 
4,525
 
Balance b/d
37,575
18,525
14,000
Balance c/d
42,000
14,000
14,000
Current A/c
4,425
 
 
 
42,000
18,525
14,000
 
42,000
18,525
14,000
 
 
 
 
 
 
 
 

Balance Sheet
as on April 01, 2014 after C’s admission
Liabilities
Amount
Rs
Assets
Amount
Rs
 
 
 
 
Sundry Creditors
37,500
Debtors
16,000
 
 
 
  Less: Provision for Doubtful Debts
800
15,200
 
 
Land and Building (25,000 + 5,000)
30,000
Capital A/c:
 
Bills Receivable
3,000
   A
42,000
 
Stock (20,000 – 2,000)
18,000
   B
14,000
 
Furniture (1,000 – 100)
900
   C
14,000
70,000
Cash at Bank
36,500
 
 
Current A/c:
 
Current A/c:
 
   A 4,425
 
   B
4,525
   C 4,000
8,425
 
1,12,025
 
1,12,025
 
 
 
 

Working Notes

C is admitted for 15 shareLet the total share = 1Remaining share = 1 - 15 = 45

Old ratio = 3 : 1 New profit sharing ratioA = 45 × 34 = 1220B = 45 × 14 = 420C = 15 or 420New profit sharing ratio = 3 : 1 : 1

Total capital of the firm = Capital of new partner × Reciprocal of his profit shareTotal capital of the firm = 14,000 × 51 = 70,000New Capital:A = 70,000 × 35 = 42,000B = 70,000 × 15 = 14,000
 
Particulars
A
B
New Capital
42,000
14,000
  Less: Existing Capital
37,575
18,525
Net Effect
4,425
to be brought in
(4,525)
to be withdrawn

Cash at Bank Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
Balance b/d
22,500
Balance c/d
36,500
C’s Capital A/c
14,000
 
 
 
36,500
 
36,500
       



Page No 4.83:

Question 69:

Revaluation Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
 
 
 
 
Stock A/c
2,000
Land and Building A/c
5,000
Office Furniture A/c
100
 
 
Provision for Doubtful Debts A/c
800
 
 
Profit transferred to:
 
 
 
A’s Capital A/c 1,575
 
 
 
B’s Capital A/c
525
2,100
 
 
 
5,000
 
5,000
 
 
 
 

Partners’ Capital Accounts
Dr.  
Cr.
Particulars
A
B
C
Particulars
A
B
C
Advertisement Expenditure A/c
1,500
500
 
Balance b/d
30,000
16,000
 
Balance c/d
37,575
18,525
14,000
Bank A/c
 
 
14,000
        C’s Current A/c
3,000
1,000
 
 
 
 
 
Revaluation A/c
1,575
525
 
 
 
 
 
General Reserve A/c
4,500
1,500
 
 
39,075
19,025
14,000
 
39,075
19,025
14,000
 
 
 
 
 
 
 
 
Current A/c
 
4,525
 
Balance b/d
37,575
18,525
14,000
Balance c/d
42,000
14,000
14,000
Current A/c
4,425
 
 
 
42,000
18,525
14,000
 
42,000
18,525
14,000
 
 
 
 
 
 
 
 

Balance Sheet
as on April 01, 2014 after C’s admission
Liabilities
Amount
Rs
Assets
Amount
Rs
 
 
 
 
Sundry Creditors
37,500
Debtors
16,000
 
 
 
  Less: Provision for Doubtful Debts
800
15,200
 
 
Land and Building (25,000 + 5,000)
30,000
Capital A/c:
 
Bills Receivable
3,000
   A
42,000
 
Stock (20,000 – 2,000)
18,000
   B
14,000
 
Furniture (1,000 – 100)
900
   C
14,000
70,000
Cash at Bank
36,500
 
 
Current A/c:
 
Current A/c:
 
   A 4,425
 
   B
4,525
   C 4,000
8,425
 
1,12,025
 
1,12,025
 
 
 
 

Working Notes

C is admitted for 15 shareLet the total share = 1Remaining share = 1 - 15 = 45

Old ratio = 3 : 1 New profit sharing ratioA = 45 × 34 = 1220B = 45 × 14 = 420C = 15 or 420New profit sharing ratio = 3 : 1 : 1

Total capital of the firm = Capital of new partner × Reciprocal of his profit shareTotal capital of the firm = 14,000 × 51 = 70,000New Capital:A = 70,000 × 35 = 42,000B = 70,000 × 15 = 14,000
 
Particulars
A
B
New Capital
42,000
14,000
  Less: Existing Capital
37,575
18,525
Net Effect
4,425
to be brought in
(4,525)
to be withdrawn

Cash at Bank Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
Balance b/d
22,500
Balance c/d
36,500
C’s Capital A/c
14,000
 
 
 
36,500
 
36,500
       

Answer:

  Books of ….
  Journal
Date Particulars L.F. Debit
Amount

Rs
Credit Amount Rs
  Bank A/c
Dr.
 
1,50,000
 
    To C’s Capital A/c    
1,00,000
    To Premium for Goodwill A/c  
 
50,000
  (Capital and Goodwill amount brought in by C)  
 
 
 
 
 
 
 
  Premium for Goodwill A/c
Dr.
 
50,000
 
    To A’s Capital A/c
 
 
30,000
    To B’s Capital A/c
 
 
20,000
  (Goodwill brought in by C credited to old partners’ capital accounts in their sacrificing ratio)
 
 
 
   
 
 
 
  Plant A/c Dr.
 
10,000
 
  Creditors A/c Dr.
 
7,000
 
     To Revaluation A/c  
 
17,000
  (Plant value appreciated and creditors liability reduced)
 
 
 
   
 
 
 
  Revaluation A/c Dr.
 
24,500
 
    To Provision for Doubtful Debts A/c
 
 
4,500
    To Liability for Compensation A/c
 
 
10,000
    To Stock A/c
 
 
10,000
  (Stock value decreased, provision against debtors created, workers liability increased)
 
 
 
   
 
 
 
  A’s Capital A/c Dr.
 
4,500
 
  B’s Capital A/c Dr.
 
3,000
 
     To Revaluation A/c
 
 
7,500
  (Revaluation loss distributed among old partners in their old ratio)
 
 
 
   
 
 
 
  General Reserve A/c Dr.
 
50,000
 
     To A’s Capital A/c
 
 
30,000
     To B’s Capital A/c
 
 
20,000
  (General Reserve distributed between old partners in their old ratio)
 
 
 
   
 
 
 

Balance Sheet
as on April 01, 2014 after C’s admission
Liabilities Amount Rs Assets Amount Rs
       
Sundry Creditors
(75,000 – 7,000)
68,000
Debtors
90,000
 
Liability for Compensation
10,000
  Less: Provision for Doubtful Debts
4,500
85,500
 
 
Plant
1,60,000
Capital A/cs:
 
Patents
50,000
   A
1,80,000
 
Stock
90,000
   B
1,20,000
 
Cash at Bank (10,000 + 50,000 +1,00,000)
1,60,000
   C
1,00,000
4,00,000
 
 
 
 
 
 
Current A/c:
 
 
 
   A
25,500
 
 
 
   B
42,000
67,500
 
 
 
5,45,500
 
5,45,500
 
 
 
 

Working Notes

C is admitted for 14 shareLet the total share = 1Remaining share = 1 - 14 = 34Old ratio = 60 : 40 or 3 : 2

A = 34 × 35 = 920B = 34 × 25 = 620C = 14 or 520New profit sharing ratio = 9 : 6 : 5

C is admitted for 14 share with 1,00,000 capitalTotal capital of the firm = 1,00,000 × 4 = 4,00,000New Capital:A = 4,00,000 × 920 = 1,80,000B = 4,00,000 × 620 = 1,20,000

Particulars A B
New Capital
1,80,000 
1,20,000 
  Less: Existing Capital
2,05,500 
1,62,000 
Net Effect
(25,500) 
to be withdrawn 
(42,000) 
to be withdrawn 

Partners’ Capital Accounts
Dr.  
Cr.
Particulars A B C Particulars A B C
 
 
 
 
 
 
 
 
Revaluation A/c
4,500
3,000
 
Balance b/d
1,50,000
1,25,000
 
 
 
 
 
Bank A/c
 
 
1,00,000
Balance c/d
2,05,500
1,62,000
1,00,000
Premium for Goodwill A/c
30,000
20,000
 
 
 
 
 
General Reserve A/c
30,000
20,000
 
 
 
 
 
 
 
 
 
 
2,10,000
1,65,000
1,00,000
 
2,10,000
1,65,000
1,00,000
 
 
 
 
 
 
 
 
Balance c/d
1,80,000
1,20,000
1,00,000
Balance b/d
2,05,500
1,62,000
1,00,000
Current A/c
25,500
42,000
 
 
 
 
 
 
2,05,500
1,62,000
1,00,000
 
2,05,500
1,62,000
1,00,000
 
 
 
 
 
 
 
 

Page No 4.83:

Question 70:

  Books of ….
  Journal
Date Particulars L.F. Debit
Amount

Rs
Credit Amount Rs
  Bank A/c
Dr.
 
1,50,000
 
    To C’s Capital A/c    
1,00,000
    To Premium for Goodwill A/c  
 
50,000
  (Capital and Goodwill amount brought in by C)  
 
 
 
 
 
 
 
  Premium for Goodwill A/c
Dr.
 
50,000
 
    To A’s Capital A/c
 
 
30,000
    To B’s Capital A/c
 
 
20,000
  (Goodwill brought in by C credited to old partners’ capital accounts in their sacrificing ratio)
 
 
 
   
 
 
 
  Plant A/c Dr.
 
10,000
 
  Creditors A/c Dr.
 
7,000
 
     To Revaluation A/c  
 
17,000
  (Plant value appreciated and creditors liability reduced)
 
 
 
   
 
 
 
  Revaluation A/c Dr.
 
24,500
 
    To Provision for Doubtful Debts A/c
 
 
4,500
    To Liability for Compensation A/c
 
 
10,000
    To Stock A/c
 
 
10,000
  (Stock value decreased, provision against debtors created, workers liability increased)
 
 
 
   
 
 
 
  A’s Capital A/c Dr.
 
4,500
 
  B’s Capital A/c Dr.
 
3,000
 
     To Revaluation A/c
 
 
7,500
  (Revaluation loss distributed among old partners in their old ratio)
 
 
 
   
 
 
 
  General Reserve A/c Dr.
 
50,000
 
     To A’s Capital A/c
 
 
30,000
     To B’s Capital A/c
 
 
20,000
  (General Reserve distributed between old partners in their old ratio)
 
 
 
   
 
 
 

Balance Sheet
as on April 01, 2014 after C’s admission
Liabilities Amount Rs Assets Amount Rs
       
Sundry Creditors
(75,000 – 7,000)
68,000
Debtors
90,000
 
Liability for Compensation
10,000
  Less: Provision for Doubtful Debts
4,500
85,500
 
 
Plant
1,60,000
Capital A/cs:
 
Patents
50,000
   A
1,80,000
 
Stock
90,000
   B
1,20,000
 
Cash at Bank (10,000 + 50,000 +1,00,000)
1,60,000
   C
1,00,000
4,00,000
 
 
 
 
 
 
Current A/c:
 
 
 
   A
25,500
 
 
 
   B
42,000
67,500
 
 
 
5,45,500
 
5,45,500
 
 
 
 

Working Notes

C is admitted for 14 shareLet the total share = 1Remaining share = 1 - 14 = 34Old ratio = 60 : 40 or 3 : 2

A = 34 × 35 = 920B = 34 × 25 = 620C = 14 or 520New profit sharing ratio = 9 : 6 : 5

C is admitted for 14 share with 1,00,000 capitalTotal capital of the firm = 1,00,000 × 4 = 4,00,000New Capital:A = 4,00,000 × 920 = 1,80,000B = 4,00,000 × 620 = 1,20,000

Particulars A B
New Capital
1,80,000 
1,20,000 
  Less: Existing Capital
2,05,500 
1,62,000 
Net Effect
(25,500) 
to be withdrawn 
(42,000) 
to be withdrawn 

Partners’ Capital Accounts
Dr.  
Cr.
Particulars A B C Particulars A B C
 
 
 
 
 
 
 
 
Revaluation A/c
4,500
3,000
 
Balance b/d
1,50,000
1,25,000
 
 
 
 
 
Bank A/c
 
 
1,00,000
Balance c/d
2,05,500
1,62,000
1,00,000
Premium for Goodwill A/c
30,000
20,000
 
 
 
 
 
General Reserve A/c
30,000
20,000
 
 
 
 
 
 
 
 
 
 
2,10,000
1,65,000
1,00,000
 
2,10,000
1,65,000
1,00,000
 
 
 
 
 
 
 
 
Balance c/d
1,80,000
1,20,000
1,00,000
Balance b/d
2,05,500
1,62,000
1,00,000
Current A/c
25,500
42,000
 
 
 
 
 
 
2,05,500
1,62,000
1,00,000
 
2,05,500
1,62,000
1,00,000
 
 
 
 
 
 
 
 

Answer:

Revaluation Account
Particulars
Amount
(Rs)
Particulars
Amount (Rs)
Bad Debts A/c
2,000
Creditors A/c
7,000
Provision for Doubtful Debts A/c (1,50,000 @ 5%)
7,500
Building A/c
1,10,000
Stock A/c
10,000
   
Machinery A/c
10,000
   
Profit transferred to:      
Siddharth’s Capital A/c
52,500
     
Veenu’s Capital A /c
35,000
87,500
   
       
 
1,17,000
 
1,17,000
       

Partners’ Capital Accounts
Dr.  
Cr.
Particulars
Siddharth
Veenu
Beenu
Particulars
Siddharth
Veenu
Beenu
Balance c/d
5,72,500
4,15,000
4,50,000
Balance b/d
4,60,000
3,40,000
        Bank A/c
4,50,000
        Beenu’s A/c
60,000
40,000
        Revaluation A/c
52,500
35,000
               
               
 
5,72,500
4,15,000
4,50,000
 
5,72,500
4,15,000
4,50,000
 Balance c/d  
10,80,000 
 
7,20,000 
 
4,50,000 
 Balance b/d
5,72,500 
4,15,000 
4,50,000 
        Bank A/c
5,07,500
3,05,000
 
 
10,80,000 
7,20,000 
4,50,000 
 
10,80,000 
7,20,000 
4,50,000 
               

Bank Account
Particulars
Amount
(Rs)
 
Amount (Rs)
Balance b/d
20,000
Balance c/d
13,82,500
Investments A/c
1,00,000
   
Beenu’s Capital A/c
4,50,000
   
Siddharth’s Capital A/c
5,07,500
   
Veenu’s Capital A/c
3,05,000
   
       
 
13,82,500
 
13,82,500
       
Balance Sheet
as on April 01, 2014
Liabilities
Amount
(Rs)
Assets
Amount (Rs)
Capital A/cs:   Building
4,10,000
Siddharth
10,80,000
  Machinery
3,40,000
Veenu
7,20,000
  Stock
18,000
Beenu
4,50,000
22,50,000
Beenu’s Current A/c
1,00,000
Creditors (1,50,000 – 7,000)
1,43,000
Debtors
1,60,000
 
      Less: Bad Debts
10,000
 
      Less: Provision for Doubtful Debts
7,500
1,42,500
    Bank
13,82,500
 
23,93,000
 
23,93,000
       

Working Notes:

WN 1: Calculation of Capital

Beenu is admitted for 15 shareLet the total share = 1Remaining share = 1 - 15 = 45Old ratio = 3 : 2

Siddharth = 45 × 35 = 1225Veenu = 45 × 25 = 825Beenu = 15 or 525New profit sharing ratio = 12 : 8 : 5

Beenu's Capital for 1/5 share  = Rs 4,50,000 Total Capital= 4,50,000 × 51 = Rs 22,50,000Siddharth's New Capital = 22,50,000 × 1225 = Rs 10,80,000Veenu's New Capital = 22,50,000 × 825 = Rs 7,20,000

Particulars
Siddharth
Veenu
New Capital
10,80,000
7,20,000
  Less: Existing Capital
5,72,500
4,15,000
Net Effect
5,07,500
to be withdrawn
3,05,000
to be withdrawn

WN 2: Calculation of Beenu’s Goodwill

 = 5,00,000 × 15 = Rs 1,00,000


WN 3: Calculation of Rate of Provision of Doubtful Debts

Rate of Provision =8,0001,60,000× 100 = 5%



Page No 4.84:

Question 71:

Revaluation Account
Particulars
Amount
(Rs)
Particulars
Amount (Rs)
Bad Debts A/c
2,000
Creditors A/c
7,000
Provision for Doubtful Debts A/c (1,50,000 @ 5%)
7,500
Building A/c
1,10,000
Stock A/c
10,000
   
Machinery A/c
10,000
   
Profit transferred to:      
Siddharth’s Capital A/c
52,500
     
Veenu’s Capital A /c
35,000
87,500
   
       
 
1,17,000
 
1,17,000
       

Partners’ Capital Accounts
Dr.  
Cr.
Particulars
Siddharth
Veenu
Beenu
Particulars
Siddharth
Veenu
Beenu
Balance c/d
5,72,500
4,15,000
4,50,000
Balance b/d
4,60,000
3,40,000
        Bank A/c
4,50,000
        Beenu’s A/c
60,000
40,000
        Revaluation A/c
52,500
35,000
               
               
 
5,72,500
4,15,000
4,50,000
 
5,72,500
4,15,000
4,50,000
 Balance c/d  
10,80,000 
 
7,20,000 
 
4,50,000 
 Balance b/d
5,72,500 
4,15,000 
4,50,000 
        Bank A/c
5,07,500
3,05,000
 
 
10,80,000 
7,20,000 
4,50,000 
 
10,80,000 
7,20,000 
4,50,000 
               

Bank Account
Particulars
Amount
(Rs)
 
Amount (Rs)
Balance b/d
20,000
Balance c/d
13,82,500
Investments A/c
1,00,000
   
Beenu’s Capital A/c
4,50,000
   
Siddharth’s Capital A/c
5,07,500
   
Veenu’s Capital A/c
3,05,000
   
       
 
13,82,500
 
13,82,500
       
Balance Sheet
as on April 01, 2014
Liabilities
Amount
(Rs)
Assets
Amount (Rs)
Capital A/cs:   Building
4,10,000
Siddharth
10,80,000
  Machinery
3,40,000
Veenu
7,20,000
  Stock
18,000
Beenu
4,50,000
22,50,000
Beenu’s Current A/c
1,00,000
Creditors (1,50,000 – 7,000)
1,43,000
Debtors
1,60,000
 
      Less: Bad Debts
10,000
 
      Less: Provision for Doubtful Debts
7,500
1,42,500
    Bank
13,82,500
 
23,93,000
 
23,93,000
       

Working Notes:

WN 1: Calculation of Capital

Beenu is admitted for 15 shareLet the total share = 1Remaining share = 1 - 15 = 45Old ratio = 3 : 2

Siddharth = 45 × 35 = 1225Veenu = 45 × 25 = 825Beenu = 15 or 525New profit sharing ratio = 12 : 8 : 5

Beenu's Capital for 1/5 share  = Rs 4,50,000 Total Capital= 4,50,000 × 51 = Rs 22,50,000Siddharth's New Capital = 22,50,000 × 1225 = Rs 10,80,000Veenu's New Capital = 22,50,000 × 825 = Rs 7,20,000

Particulars
Siddharth
Veenu
New Capital
10,80,000
7,20,000
  Less: Existing Capital
5,72,500
4,15,000
Net Effect
5,07,500
to be withdrawn
3,05,000
to be withdrawn

WN 2: Calculation of Beenu’s Goodwill

 = 5,00,000 × 15 = Rs 1,00,000


WN 3: Calculation of Rate of Provision of Doubtful Debts

Rate of Provision =8,0001,60,000× 100 = 5%

Answer:

Let the total share be = 1

Z is admitted for 15 shareRemaining share = 1 - 1545

Total combined capital of X and Y after adjustment = 2,40,000 + 1,80,000 = Rs 4,20,000

Total capital of the firm =Total combined capital of X and Y × Reciprocal of Share of Old PartnersTotal capital of the firm = 4,20,000 × 54 = 5,25,000Z's share of capital = Total Capital of the firm × Profit share of the new partnerZ's share of capital = 5,25,000 × 15 = Rs 1,05,000

Page No 4.84:

Question 72:

Let the total share be = 1

Z is admitted for 15 shareRemaining share = 1 - 1545

Total combined capital of X and Y after adjustment = 2,40,000 + 1,80,000 = Rs 4,20,000

Total capital of the firm =Total combined capital of X and Y × Reciprocal of Share of Old PartnersTotal capital of the firm = 4,20,000 × 54 = 5,25,000Z's share of capital = Total Capital of the firm × Profit share of the new partnerZ's share of capital = 5,25,000 × 15 = Rs 1,05,000

Answer:

Revaluation Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
Provision for Doubtful Debts A/c
5,000
Land and Building A/c
25,000
Profit transferred to:   Stock A/c
10,000
X’s Capital A/c 18,000      
Y’s Capital A/c
12,000
30,000
   
 
35,000
 
35,000
       
 
Partners’ Capital Accounts
Dr.  
Cr.
Particulars
X
Y
Z
Particulars
X
Y
Z
               
Balance c/d
85,000
60,000
36,250
Balance b/d
25,000
20,000
 
        Bank A/c    
36,250
        Premium for Goodwill A/c
15,000
10,000
 
        General Reserve A/c
21,000
14,000
 
        Workmen Compensation Reserve A/c
6,000
4,000
 
        Revaluation A/c
18,000
12,000
 
 
85,000
60,000
36,250
 
85,000
60,000
36,250
               

Balance Sheet (after Z’s admission)
as on ….
Liabilities
Amount
Rs
Assets
Amount
Rs
 
 
 
 
Creditors
30,000
Debtors
30,000
 
Workmen Compensation Reserve
5,000
  Less: Provision for Doubtful Debts
7,500
22,500
    Land and Building
45,000
Capital A/c:   Plant and Machinery
25,000
   X
85,000
  Stock (30,000 + 10,000)
40,000
   Y
60,000
  Cash at Bank
83,750
   Z
36,250
1,81,250
   
       
 
2,16,250
 
2,16,250
       

Working Notes

Let the total share be = 1

Z is admitted for 15 share, i.e. 20%Remaining share = 1 - 1545

Total Capital of X and Y after adjustment = 85,000 + 60,000 = Rs 1,45,000

Total capital of the firm =Total combined capital of X and Y × Reciprocal of Share of Old PartnersTotal capital of the firm = 1,45,000 × 54 = 1,81,250Z's share of capital = Total Capital of the firm × Profit share of the new partnerZ's share of capital = 1,81,250 × 15 = 36,250

Cash at Bank Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
Balance b/d
22,500
Balance c/d
83,750
C’s Capital A/c
36,250
   
Premium for Goodwill A/c
25,000
   
 
83,750
 
83,750
       

Page No 4.84:

Question 73:

Revaluation Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
Provision for Doubtful Debts A/c
5,000
Land and Building A/c
25,000
Profit transferred to:   Stock A/c
10,000
X’s Capital A/c 18,000      
Y’s Capital A/c
12,000
30,000
   
 
35,000
 
35,000
       
 
Partners’ Capital Accounts
Dr.  
Cr.
Particulars
X
Y
Z
Particulars
X
Y
Z
               
Balance c/d
85,000
60,000
36,250
Balance b/d
25,000
20,000
 
        Bank A/c    
36,250
        Premium for Goodwill A/c
15,000
10,000
 
        General Reserve A/c
21,000
14,000
 
        Workmen Compensation Reserve A/c
6,000
4,000
 
        Revaluation A/c
18,000
12,000
 
 
85,000
60,000
36,250
 
85,000
60,000
36,250
               

Balance Sheet (after Z’s admission)
as on ….
Liabilities
Amount
Rs
Assets
Amount
Rs
 
 
 
 
Creditors
30,000
Debtors
30,000
 
Workmen Compensation Reserve
5,000
  Less: Provision for Doubtful Debts
7,500
22,500
    Land and Building
45,000
Capital A/c:   Plant and Machinery
25,000
   X
85,000
  Stock (30,000 + 10,000)
40,000
   Y
60,000
  Cash at Bank
83,750
   Z
36,250
1,81,250
   
       
 
2,16,250
 
2,16,250
       

Working Notes

Let the total share be = 1

Z is admitted for 15 share, i.e. 20%Remaining share = 1 - 1545

Total Capital of X and Y after adjustment = 85,000 + 60,000 = Rs 1,45,000

Total capital of the firm =Total combined capital of X and Y × Reciprocal of Share of Old PartnersTotal capital of the firm = 1,45,000 × 54 = 1,81,250Z's share of capital = Total Capital of the firm × Profit share of the new partnerZ's share of capital = 1,81,250 × 15 = 36,250

Cash at Bank Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
Balance b/d
22,500
Balance c/d
83,750
C’s Capital A/c
36,250
   
Premium for Goodwill A/c
25,000
   
 
83,750
 
83,750
       

Answer:

Revaluation Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
Stock A/c
1,150
Provision for Doubtful Debts A/c
2,000
Furniture A/c
1,500
Loss transferred to:  
Outstanding Liabilities A/c
1,000
  A’s Capital A/c
990
 
      B’s Capital A/c
660
1,650
 
3,650
 
3,650
       

Partners’ Capital Accounts
Dr.  
Cr.
Particulars
A
B
C
Particulars
A
B
C
               
Investment A/c
6,000
4,000
  Balance b/d
35,000
30,000
 
Revaluation A/c
990
660
  Cash A/c    
23,450
Balance c/d
40,310
30,040
23,450
Premium for Goodwill A/c
6,300
700
 
        General Reserve A/c
6,000
4,000
 
 
47,300
34,700
23,450
 
47,300
34,700
23,450
               

Balance Sheet
as on April 01, 2014 after C’s admission
Liabilities
Amount
Rs
Assets
Amount
Rs
 
 
 
 
Creditors
37,000
Debtors
19,000
    Furniture (15,000 – 1,500)
13,500
    Investments (20,000 – 10,000)
10,000
Capital A/c:   Machinery
33,000
   X
40,310
  Stock (23,000 – 1,150)
21,850
   Y
30,040
  Cash
33,450
   Z
23,450
93,800
   
       
 
1,30,800
 
1,30,800
       

Working Notes

WN 1: Calculation of Capital
Let the total share be 1 

C is admitted for 14 shareRemaining share = 1 - 1434

Total Capital of A and B after adjustment = 40,310 + 30,040 = Rs 70,350

Total capital of the firm =Total combined capital of A and B × Reciprocal of Share of Old PartnersTotal capital of the firm = 70,350 × 43 = 93,800C's share of capital = Total Capital of the firm × Profit share of the new partnerC's share of capital = 93,800 × 14 = 23,450

WN 2: Calculation of Sacrificing Ratio

Sacrificing Ratio = Old ratio - New ratioSacrifice made by A = 35 - 38 = 940Sacrifice made by B = 25 - 38 = 140Sacrificing ratio = 9 : 1

Cash Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
       
Balance b/d
12,000
Bank Loan A/c
9,000
C’s Capital A/c
23,450
   
Premium for Goodwill A/c
7,000
Balance c/d
33,450
       
 
42,450
 
42,450
       



Page No 4.85:

Question 74:

Revaluation Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
Stock A/c
1,150
Provision for Doubtful Debts A/c
2,000
Furniture A/c
1,500
Loss transferred to:  
Outstanding Liabilities A/c
1,000
  A’s Capital A/c
990
 
      B’s Capital A/c
660
1,650
 
3,650
 
3,650
       

Partners’ Capital Accounts
Dr.  
Cr.
Particulars
A
B
C
Particulars
A
B
C
               
Investment A/c
6,000
4,000
  Balance b/d
35,000
30,000
 
Revaluation A/c
990
660
  Cash A/c    
23,450
Balance c/d
40,310
30,040
23,450
Premium for Goodwill A/c
6,300
700
 
        General Reserve A/c
6,000
4,000
 
 
47,300
34,700
23,450
 
47,300
34,700
23,450
               

Balance Sheet
as on April 01, 2014 after C’s admission
Liabilities
Amount
Rs
Assets
Amount
Rs
 
 
 
 
Creditors
37,000
Debtors
19,000
    Furniture (15,000 – 1,500)
13,500
    Investments (20,000 – 10,000)
10,000
Capital A/c:   Machinery
33,000
   X
40,310
  Stock (23,000 – 1,150)
21,850
   Y
30,040
  Cash
33,450
   Z
23,450
93,800
   
       
 
1,30,800
 
1,30,800
       

Working Notes

WN 1: Calculation of Capital
Let the total share be 1 

C is admitted for 14 shareRemaining share = 1 - 1434

Total Capital of A and B after adjustment = 40,310 + 30,040 = Rs 70,350

Total capital of the firm =Total combined capital of A and B × Reciprocal of Share of Old PartnersTotal capital of the firm = 70,350 × 43 = 93,800C's share of capital = Total Capital of the firm × Profit share of the new partnerC's share of capital = 93,800 × 14 = 23,450

WN 2: Calculation of Sacrificing Ratio

Sacrificing Ratio = Old ratio - New ratioSacrifice made by A = 35 - 38 = 940Sacrifice made by B = 25 - 38 = 140Sacrificing ratio = 9 : 1

Cash Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
       
Balance b/d
12,000
Bank Loan A/c
9,000
C’s Capital A/c
23,450
   
Premium for Goodwill A/c
7,000
Balance c/d
33,450
       
 
42,450
 
42,450
       

Answer:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Provision for Doubtful Debt

200

Building

2,500

Profit transferred to Capital Accounts

 

 

 

A

1,380

 

 

 

B

920

2,300

 

 

 

2,500

 

2,500

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

A

B

C

Particulars

A

B

C

 

 

 

 

Balance b/d

18,000

14,000

 

 

 

 

 

Cash

 

 

15,000

 

 

 

 

Premium for Goodwill

3,000

2,000

 

Balance c/d

25,980

19,320

15,000

Revaluation

1,380

920

 

 

 

 

 

General Reserve

3,600

2,400

 

 

25,980

19,320

15,000

 

25,980

19,320

15,000

Cash

 

1,320

 

Balance c/d

25,980

19,320

15,000

Balance c/d (adjusted)

27,000

18,000

15,000

Cash

1,020

 

 

 

27,000

19,320

15,000

 

27,000

19,320

15,000

 

 

 

 

 

 

 

 

 

Cash Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Balance b/d

1,000

B’s Capital

1,320

C’s Capital

15,000

 

 

Premium for Goodwill

5,000

 

 

A’s Capital

1,020

Balance c/d

20,700

 

22,020

 

22,020

 

 

 

 

Working Notes

WN1

WN2

Distribution of Revaluation Profit (in old ratio)

WN3

Distribution of Premium for Goodwill

WN4

Adjustment of Capital

Total Capital of the firm on the basis of C’s share

Total Capital of the new firm

=

60,000

Less: C’s Capital

=

15,000

Combined Capital of A and B.

=

45,000

Page No 4.85:

Question 75:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Provision for Doubtful Debt

200

Building

2,500

Profit transferred to Capital Accounts

 

 

 

A

1,380

 

 

 

B

920

2,300

 

 

 

2,500

 

2,500

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

A

B

C

Particulars

A

B

C

 

 

 

 

Balance b/d

18,000

14,000

 

 

 

 

 

Cash

 

 

15,000

 

 

 

 

Premium for Goodwill

3,000

2,000

 

Balance c/d

25,980

19,320

15,000

Revaluation

1,380

920

 

 

 

 

 

General Reserve

3,600

2,400

 

 

25,980

19,320

15,000

 

25,980

19,320

15,000

Cash

 

1,320

 

Balance c/d

25,980

19,320

15,000

Balance c/d (adjusted)

27,000

18,000

15,000

Cash

1,020

 

 

 

27,000

19,320

15,000

 

27,000

19,320

15,000

 

 

 

 

 

 

 

 

 

Cash Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Balance b/d

1,000

B’s Capital

1,320

C’s Capital

15,000

 

 

Premium for Goodwill

5,000

 

 

A’s Capital

1,020

Balance c/d

20,700

 

22,020

 

22,020

 

 

 

 

Working Notes

WN1

WN2

Distribution of Revaluation Profit (in old ratio)

WN3

Distribution of Premium for Goodwill

WN4

Adjustment of Capital

Total Capital of the firm on the basis of C’s share

Total Capital of the new firm

=

60,000

Less: C’s Capital

=

15,000

Combined Capital of A and B.

=

45,000

Answer:

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

 

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)

 

 

 

 

 

 

 

 

 

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)

 

 

 

 

 

 

 

 

 

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)

 

 

 

 

 

 

 

 

 

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)

 

 

 

 

 

 

 

 

 

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)

 

 

 

 

 

 

 

 

 

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)

 

 

 

 

 

 

 

 

 

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)

 

 

 

 

 

 

 

 

 

X’s Capital A/c

Dr.

 

10,000

 

 

To Investments A/c

 

 

10,000

 

(X took over the Investment)

 

 

 

 

 

 

 

 

 

Cash A/c

Dr.

 

4,800

 

 

To X’s Capital A/c

 

 

4,800

 

(X’ brought cash to make up deficiency in capital)

 

 

 

 

 

 

 

 

 

Y’s Capital A/c

Dr.

 

26,600

 

     To Cash A/c       26,600
  (Y withdrew excess capital after all adjustments)        
           
  Cash A/c                                                                                              Dr.   1,000  
     To Bad Debts Recovered A/c     1,000
  (Amount received from customer which was written-of as Bad Debts)      

 

 

 

 

 

 

Cash 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

Bad Debts Recovered 1,000    

X’s Capital

5,800

Balance c/d

32,700

 

66,800

 

66,800

 

 

 

 

 

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

7,800

3,900

 

Balance b/d

75,000

62,000

 

Investment

10,000

 

 

Reserve Fund

12,000

6,000

 

Cash (withdraw of goodwill)

5,000

2,500

 

Cash

 

 

40,000

Balance c/d

74,200

66,600

40,000

Premium for Goodwill

10,000

5,000

 

 

97,000

73,000

40,000

 

97,000

73,000

40,000

Cash

 

26,600

 

Balance b/d

74,200

66,600

40,000

Balance c/d adjusted

80,000

40,000

40,000

Cash

5,800

 

 

 

80,000

66,600

40,000

 

80,000

66,600

40,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as on March 31, 2016 after Z’s admission

Liabilities

Amount

Rs

Assets

Amount

Rs

Sundry Creditors

25,000

Cash

32,700

Capital A/cs:

 

Sundry Debtors

15,000

X

80,000

 

Stock

10,000

Y

40,000

 

Typewriter (5,000 – 1,000)

4,000

Z

40,000

1,60,000

Fixed Assets (1,37,000 – 13,700)

1,23,300

 

 

 

 

 

 

 

 

 

1,85,000

 

1,85,000

 

 

 

 

Working Notes:

WN1: Sacrificing Ratio

WN2: Distribution of Revaluation Loss

WN3: Distribution of Premium for Goodwill

WN4: Adjustment of Capital

Total Capital of the firm on the basis of Z’s share

Total Capital of the firm

=

1,60,000

Less: Z’s Capital

=

  40,000

Combined Capital of X and Y

=

1,20,000

 

 

 



Page No 4.86:

Question 76:

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

 

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)

 

 

 

 

 

 

 

 

 

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)

 

 

 

 

 

 

 

 

 

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)

 

 

 

 

 

 

 

 

 

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)

 

 

 

 

 

 

 

 

 

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)

 

 

 

 

 

 

 

 

 

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)

 

 

 

 

 

 

 

 

 

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)

 

 

 

 

 

 

 

 

 

X’s Capital A/c

Dr.

 

10,000

 

 

To Investments A/c

 

 

10,000

 

(X took over the Investment)

 

 

 

 

 

 

 

 

 

Cash A/c

Dr.

 

4,800

 

 

To X’s Capital A/c

 

 

4,800

 

(X’ brought cash to make up deficiency in capital)

 

 

 

 

 

 

 

 

 

Y’s Capital A/c

Dr.

 

26,600

 

     To Cash A/c       26,600
  (Y withdrew excess capital after all adjustments)        
           
  Cash A/c                                                                                              Dr.   1,000  
     To Bad Debts Recovered A/c     1,000
  (Amount received from customer which was written-of as Bad Debts)      

 

 

 

 

 

 

Cash 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

Bad Debts Recovered 1,000    

X’s Capital

5,800

Balance c/d

32,700

 

66,800

 

66,800

 

 

 

 

 

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

7,800

3,900

 

Balance b/d

75,000

62,000

 

Investment

10,000

 

 

Reserve Fund

12,000

6,000

 

Cash (withdraw of goodwill)

5,000

2,500

 

Cash

 

 

40,000

Balance c/d

74,200

66,600

40,000

Premium for Goodwill

10,000

5,000

 

 

97,000

73,000

40,000

 

97,000

73,000

40,000

Cash

 

26,600

 

Balance b/d

74,200

66,600

40,000

Balance c/d adjusted

80,000

40,000

40,000

Cash

5,800

 

 

 

80,000

66,600

40,000

 

80,000

66,600

40,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as on March 31, 2016 after Z’s admission

Liabilities

Amount

Rs

Assets

Amount

Rs

Sundry Creditors

25,000

Cash

32,700

Capital A/cs:

 

Sundry Debtors

15,000

X

80,000

 

Stock

10,000

Y

40,000

 

Typewriter (5,000 – 1,000)

4,000

Z

40,000

1,60,000

Fixed Assets (1,37,000 – 13,700)

1,23,300

 

 

 

 

 

 

 

 

 

1,85,000

 

1,85,000

 

 

 

 

Working Notes:

WN1: Sacrificing Ratio

WN2: Distribution of Revaluation Loss

WN3: Distribution of Premium for Goodwill

WN4: Adjustment of Capital

Total Capital of the firm on the basis of Z’s share

Total Capital of the firm

=

1,60,000

Less: Z’s Capital

=

  40,000

Combined Capital of X and Y

=

1,20,000

 

 

 

Answer:

 

Revaluation Account

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

 

 

 

 

Machinery

1,200

 

 

Building

2,850

Loss transferred to

 

Furniture

600

Madan Capital

3,075

Provision for Doubt Debts

1,500

Krishna Capital

3,075

 

6150

 

6150

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

 

 

 

 

 

Cr.

Particulars

Madan

Krishna

Ram

Particulars

Madan

Krishna

Ram

Revaluation (Loss)

3,075

3,075

 

Balance b/d

45,000

30,000

 

Madan’s Capital

 

 

15,000

Cash

 

 

45,000

Krishna’s Capital

 

 

15,000

Reserve

9,000

9,000

 

 

 

 

 

Ram’s Capital

15,000

15,000

 

Balance c/d

65,925

50,925

15,000

(share of Goodwill)

 

 

 

 

69,000

54,000

45,000

 

69,000

54,000

45,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as on March 31, 2016 after Ram’s admission

Liabilities

Amount

Rs

Assets

Amount

Rs

 

 

 

 

Outstanding Expenses

10,000

Cash in Hand (4,000 + 45,000)

49,000

Sundry Creditors

30,000

Cash at Bank

56,000

Bank Overdraft

20,000

Debtors

30,000

 

Bills Payable

30,000

Less: 5% Prov. For D. Debts

1,500

28,500

Capital A/cs

 

Furniture (12,000 – 600)

11,400

Madan

65,925

 

Machinery (24,000 – 1,200)

22,800

Krishna

50,925

 

Building (57,000 – 2,850)

54,150

Ram

15,000

1,31,850

 

 

 

2,21,850

 

2,21,850

 

 

 

 

 

WN1
Treatment of Goodwill

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

Ram’s Capital A/c

Dr.

 

30,000

 

To Madan’s Capital

 

 

15,000

To Krishna’s Capital

 

 

15,000

(Ram’s share of goodwill charged from his capital)

 

 

 

 

 

 

 

 

WN2
Distribution of Revaluation Loss
Madan and Krishna Capital Account will be debited by
                                                                                        

Note: The answer given in book is different as goodwill has been adjusted through Current Accounts of the Partners.
 

Page No 4.86:

Question 77:

 

Revaluation Account

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

 

 

 

 

Machinery

1,200

 

 

Building

2,850

Loss transferred to

 

Furniture

600

Madan Capital

3,075

Provision for Doubt Debts

1,500

Krishna Capital

3,075

 

6150

 

6150

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

 

 

 

 

 

Cr.

Particulars

Madan

Krishna

Ram

Particulars

Madan

Krishna

Ram

Revaluation (Loss)

3,075

3,075

 

Balance b/d

45,000

30,000

 

Madan’s Capital

 

 

15,000

Cash

 

 

45,000

Krishna’s Capital

 

 

15,000

Reserve

9,000

9,000

 

 

 

 

 

Ram’s Capital

15,000

15,000

 

Balance c/d

65,925

50,925

15,000

(share of Goodwill)

 

 

 

 

69,000

54,000

45,000

 

69,000

54,000

45,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as on March 31, 2016 after Ram’s admission

Liabilities

Amount

Rs

Assets

Amount

Rs

 

 

 

 

Outstanding Expenses

10,000

Cash in Hand (4,000 + 45,000)

49,000

Sundry Creditors

30,000

Cash at Bank

56,000

Bank Overdraft

20,000

Debtors

30,000

 

Bills Payable

30,000

Less: 5% Prov. For D. Debts

1,500

28,500

Capital A/cs

 

Furniture (12,000 – 600)

11,400

Madan

65,925

 

Machinery (24,000 – 1,200)

22,800

Krishna

50,925

 

Building (57,000 – 2,850)

54,150

Ram

15,000

1,31,850

 

 

 

2,21,850

 

2,21,850

 

 

 

 

 

WN1
Treatment of Goodwill

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

Ram’s Capital A/c

Dr.

 

30,000

 

To Madan’s Capital

 

 

15,000

To Krishna’s Capital

 

 

15,000

(Ram’s share of goodwill charged from his capital)

 

 

 

 

 

 

 

 

WN2
Distribution of Revaluation Loss
Madan and Krishna Capital Account will be debited by
                                                                                        

Note: The answer given in book is different as goodwill has been adjusted through Current Accounts of the Partners.
 

Answer:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

 

 

 

 

Reserve for D. Debts (80,000 × 3%)

2,400

Loss transferred to

 

Furniture (6,000 × 5%)

300

A Capital

2,800

Stock (12,000 – 10,500)

1,500

B Capital

1,400

 

 

 

 

 

4,200

 

4,200

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

A

B

P

Particulars

A

B

P

Revaluation

2,800

1,400

 

Balance b/d

60,000

30,000

 

 

 

 

 

Cash (21,000 – 9,000)

 

 

12,000

Balance c/d

79,200

39,600

12,000

Premium for Goodwill

6,000

3,000

 

 

 

 

 

General Reserve

16,000

8,000

 

 

82,000

41,000

12,000

 

82,000

41,000

12,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as on March 31, 2016 after P’s admission

Liabilities

Amount

Rs

Assets

Amount

Rs

 

 

 

 

Capital A/cs:

 

Free hold Property

20,000

A

79,200

 

Furniture (6,000 – 300)

5,700

B

39,600

 

Stock (12,000 – 1,500)

10,500

P

12,000

1,30,800

Debtors

80,000

 

Creditors

16,000

Less: 3% Reserve for D. Debts

2,400

77,600

 

 

Cash (12,000 + 21,000)

33,000

 

1,46,800

 

1,46,800

 

 

 

 

Working Note:

WN1: Distribution of Premium for Goodwill

WN2: Distribution of Loss on Revaluation

Page No 4.86:

Question 78:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

 

 

 

 

Reserve for D. Debts (80,000 × 3%)

2,400

Loss transferred to

 

Furniture (6,000 × 5%)

300

A Capital

2,800

Stock (12,000 – 10,500)

1,500

B Capital

1,400

 

 

 

 

 

4,200

 

4,200

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

A

B

P

Particulars

A

B

P

Revaluation

2,800

1,400

 

Balance b/d

60,000

30,000

 

 

 

 

 

Cash (21,000 – 9,000)

 

 

12,000

Balance c/d

79,200

39,600

12,000

Premium for Goodwill

6,000

3,000

 

 

 

 

 

General Reserve

16,000

8,000

 

 

82,000

41,000

12,000

 

82,000

41,000

12,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as on March 31, 2016 after P’s admission

Liabilities

Amount

Rs

Assets

Amount

Rs

 

 

 

 

Capital A/cs:

 

Free hold Property

20,000

A

79,200

 

Furniture (6,000 – 300)

5,700

B

39,600

 

Stock (12,000 – 1,500)

10,500

P

12,000

1,30,800

Debtors

80,000

 

Creditors

16,000

Less: 3% Reserve for D. Debts

2,400

77,600

 

 

Cash (12,000 + 21,000)

33,000

 

1,46,800

 

1,46,800

 

 

 

 

Working Note:

WN1: Distribution of Premium for Goodwill

WN2: Distribution of Loss on Revaluation

Answer:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

 

 

 

 

Stock

3,000

Provision for D. Debts

600

Creditors

1,000

 

 

Fixed Assets

10,000

Loss transferred to

 

Provident Fund

5,000

X Capital

11,500

 

 

Y Capital

6,900

 

19,000

 

19,000

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

X

Y

Z

Particulars

X

Y

Z

Revaluation (Loss)

11,500

6,900

 

Balance b/d

70,000

31,000

 

Profit and Loss

1,500

900

 

Workmen’s Comp.  Fund

3,625

2,175

 

Balance c/d

72,625

25,375

20,000

Cash

 

 

20,000

 

 

 

 

Premium for Goodwill

12,000

 

 

 

85,625

33,175

20,000

 

85,625

33,175

20,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as on March 31, 2016 after Z’s admission

Particulars

Amount

Rs

Assets

Amount

Rs

 

 

 

 

Creditors (15,000 + 1,000)

16,000

 

 

Provident Fund (10,000 + 5,000)

15,000

Sundry Debtors

20,000

Capital A/cs:

 

Stock (25,000 – 3,000)

22,000

X

72,625

 

Fixed Assets (80,000 – 10,000)

70,000

Y

25,375

 

Cash (32,000 + 5,000)

37,000

Z

20,000

1,18,000

 

 

 

1,49,000

 

1,49,000

 

 

 

 

Working Notes

WN1: Distribution of Revaluation Loss

WN2: Distribution Accumulated Loss

WN3: Distribution of Workmen’s Compensation Fund

WN4: Z’s premium for goodwill will be transferred to X’s Capital Account because Z receives his entire share from X.

WN5: Calculation of New Profit Sharing Ratio

 



Page No 4.87:

Question 79:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

 

 

 

 

Stock

3,000

Provision for D. Debts

600

Creditors

1,000

 

 

Fixed Assets

10,000

Loss transferred to

 

Provident Fund

5,000

X Capital

11,500

 

 

Y Capital

6,900

 

19,000

 

19,000

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

X

Y

Z

Particulars

X

Y

Z

Revaluation (Loss)

11,500

6,900

 

Balance b/d

70,000

31,000

 

Profit and Loss

1,500

900

 

Workmen’s Comp.  Fund

3,625

2,175

 

Balance c/d

72,625

25,375

20,000

Cash

 

 

20,000

 

 

 

 

Premium for Goodwill

12,000

 

 

 

85,625

33,175

20,000

 

85,625

33,175

20,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as on March 31, 2016 after Z’s admission

Particulars

Amount

Rs

Assets

Amount

Rs

 

 

 

 

Creditors (15,000 + 1,000)

16,000

 

 

Provident Fund (10,000 + 5,000)

15,000

Sundry Debtors

20,000

Capital A/cs:

 

Stock (25,000 – 3,000)

22,000

X

72,625

 

Fixed Assets (80,000 – 10,000)

70,000

Y

25,375

 

Cash (32,000 + 5,000)

37,000

Z

20,000

1,18,000

 

 

 

1,49,000

 

1,49,000

 

 

 

 

Working Notes

WN1: Distribution of Revaluation Loss

WN2: Distribution Accumulated Loss

WN3: Distribution of Workmen’s Compensation Fund

WN4: Z’s premium for goodwill will be transferred to X’s Capital Account because Z receives his entire share from X.

WN5: Calculation of New Profit Sharing Ratio

 

Answer:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

 

 

 

 

Provision for Doubtful Debts

1,000

Machinery

3,000

Outstanding Salaries

2,000

Stock

2,000

 

 

 

 

Profit transferred to

 

 

 

M Capital

1,250

 

 

N Capital

750

 

 

 

5,000

 

5,000

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

M

N

R

Particulars

M

N

R

 

 

 

 

Balance b/d

12,000

10,000

 

Cash

1,500

500

 

Cash

 

 

8,000

 

 

 

 

Premium for Goodwill

3,000

1,000

 

Balance c/d

14,750

11,250

8,000

Revaluation (Profit)

1,250

750

 

 

16,250

11,750

8,000

 

16,250

11,750

8,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as on March 31, 2016 after R’s admission

Liabilities

Amount

Rs

Assets

Amount

Rs

 

 

 

 

 

 

Machinery (12,000 + 3,000)

15,000

Outstanding Salaries

2,000

Stock (8,000 + 2,000)

10,000

Creditors

4,000

Sundry Debtors

7,200

 

Bills Payable

2,000

Less: Provision for D. Debts

1,000

6,200

Capital A/cs

 

Cash at Bank

500

M

14,750

 

Cash in hand (300 + 12,000 – 2,000)

10,300

N

11,250

 

 

 

R

8,000

34,000

 

 

 

42,000

 

42,000

 

 

 

 

Working Notes

WN1

Calculation of Sacrificing Ratio

Sacrificing Ratio = Old Ratio − New Ratio

WN2 Distribution of Premium for Goodwill

WN3 Withdrawn of Premium for Goodwill

Page No 4.87:

Question 80:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

 

 

 

 

Provision for Doubtful Debts

1,000

Machinery

3,000

Outstanding Salaries

2,000

Stock

2,000

 

 

 

 

Profit transferred to

 

 

 

M Capital

1,250

 

 

N Capital

750

 

 

 

5,000

 

5,000

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

M

N

R

Particulars

M

N

R

 

 

 

 

Balance b/d

12,000

10,000

 

Cash

1,500

500

 

Cash

 

 

8,000

 

 

 

 

Premium for Goodwill

3,000

1,000

 

Balance c/d

14,750

11,250

8,000

Revaluation (Profit)

1,250

750

 

 

16,250

11,750

8,000

 

16,250

11,750

8,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as on March 31, 2016 after R’s admission

Liabilities

Amount

Rs

Assets

Amount

Rs

 

 

 

 

 

 

Machinery (12,000 + 3,000)

15,000

Outstanding Salaries

2,000

Stock (8,000 + 2,000)

10,000

Creditors

4,000

Sundry Debtors

7,200

 

Bills Payable

2,000

Less: Provision for D. Debts

1,000

6,200

Capital A/cs

 

Cash at Bank

500

M

14,750

 

Cash in hand (300 + 12,000 – 2,000)

10,300

N

11,250

 

 

 

R

8,000

34,000

 

 

 

42,000

 

42,000

 

 

 

 

Working Notes

WN1

Calculation of Sacrificing Ratio

Sacrificing Ratio = Old Ratio − New Ratio

WN2 Distribution of Premium for Goodwill

WN3 Withdrawn of Premium for Goodwill

Answer:

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 Capital

13,800

 

 

B Capital

9,200

 

24,200

 

24,200

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

 

 

 

 

 

Cr.

Particulars

A

B

C

Particulars

A

B

C

A’s Capital

 

 

4,000

Balance b/d

86,000

64,000

 

B’s Capital

 

 

4,000

General Reserve

12,000

8,000

 

Revaluation

13,800

9,200

 

Cash

 

 

50,000

Goodwill

6,000

4,000

 

C’s Capital

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, 2016 (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

 

Sundry Debtors

20,000

 

C

42,000

1,87,000

Less: Provision for D. Debts

1,000

19,000

 

 

 

Stock (36,000 – 3,200)

 

32,800

Sundry Creditors (31,200 – 1,200)

30,000

Cash at Bank

4,000

 

 

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

51,200

 

2,17,000

 

2,17,000

 

 

 

 

WN1: Calculation of C’s share of Goodwill

Particulars

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

C’s Capital A/c

Dr.

8,000

 

To A’s Capital A/c

 

4,000

To B’s Capital A/c

 

4,000

(C’s share of goodwill charge from his capital)

 

 

 

 

 

WN2: Distribution of General Reserve (in old ratio)

WN3: Writing-off of Goodwill


Note: The answer given in book is different as the amount of goodwill has been adjusted through Partner's Capital Account in our solution.



Page No 4.88:

Question 81:

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 Capital

13,800

 

 

B Capital

9,200

 

24,200

 

24,200

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

 

 

 

 

 

Cr.

Particulars

A

B

C

Particulars

A

B

C

A’s Capital

 

 

4,000

Balance b/d

86,000

64,000

 

B’s Capital

 

 

4,000

General Reserve

12,000

8,000

 

Revaluation

13,800

9,200

 

Cash

 

 

50,000

Goodwill

6,000

4,000

 

C’s Capital

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, 2016 (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

 

Sundry Debtors

20,000

 

C

42,000

1,87,000

Less: Provision for D. Debts

1,000

19,000

 

 

 

Stock (36,000 – 3,200)

 

32,800

Sundry Creditors (31,200 – 1,200)

30,000

Cash at Bank

4,000

 

 

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

51,200

 

2,17,000

 

2,17,000

 

 

 

 

WN1: Calculation of C’s share of Goodwill

Particulars

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

C’s Capital A/c

Dr.

8,000

 

To A’s Capital A/c

 

4,000

To B’s Capital A/c

 

4,000

(C’s share of goodwill charge from his capital)

 

 

 

 

 

WN2: Distribution of General Reserve (in old ratio)

WN3: Writing-off of Goodwill


Note: The answer given in book is different as the amount of goodwill has been adjusted through Partner's Capital Account in our solution.

Answer:

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

Reserve Fund A/c

Dr.

 

4,000

 

To A’s Capital A/c

 

 

3,000

To B’s Capital A/c

 

 

1,000

(Reserve Fund distributed)

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

4,050

 

To Stock A/c

 

 

2,000

To Fixtures A/c

 

 

100

To Provision for Doubtful Debts A/c

 

 

950

To Outstanding Claim for Damages A/c

 

 

1,000

(Decrease in assets, increase in liability and provision for doubtful debts created)

 

 

 

 

 

 

 

Land and Building A/c

Dr.

 

5,000

 

Sundry Creditors A/c

Dr.

 

650

 

To Revaluation A/c

 

 

5,650

(Decrease in creditors and increase in land and building transferred to Revaluation Account)

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

1,600

 

To A’s Capital A/c

 

 

1,200

To B’s Capital A/c

 

 

400

(Profit on revaluation transferred to A and B’s Capital Accounts in their old profit sharing ratio)

 

 

 

 

 

 

 

Bank A/c

Dr.

 

15,000

 

To C’s Capital A/c

 

 

10,000

To Premium for Goodwill A/c

 

 

5,000

(C brought capital and share of goodwill)

 

 

 

 

 

 

 

Premium for Goodwill A/c

Dr.

 

5,000

 

To A’s Capital A/c

 

 

3,750

To B’s Capital A/c

 

 

1,250

(Premium for Goodwill distributed between A and B in sacrificing ratio i.e. 3:1)

 

 

 

 

 

 

 

A’s Capital A/c

Dr.

 

1,875

 

B’s Capital A/c

Dr.

 

625

 

To Bank A/c

 

 

2,500

(Half of the Premium for Goodwill withdrawn)

 

 

 

 

 

 

 

 

Revaluation Account

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

 

 

 

 

Stock

2,000

Land and Building

5,000

Fixtures

100

Sundry Creditors

650

Provision for D. Debts (19,000 × 5%)

950

 

 

Outstanding Claim for Damages

1,000

 

 

Profit transferred to

 

 

 

A Capital

1,200

 

 

B Capital

400

 

 

 

5,650

 

5,650

 

 

 

 

 

Partners’ Capital Accounts

Dr.

Cr.

Particulars

A

B

C

Particulars

A

B

C

Bank (withdrawn of Goodwill)

1,875

625

 

Balance b/d

30,000

16,000

 

 

 

 

 

Bank

 

 

10,000

 

 

 

 

Revaluation (Profit)

1,200

400

 

 

 

 

 

Reserve Fund

3,000

1,000

 

Balance c/d

36,075

18,025

10,000

Premium for Goodwill

3,750

1,250

 

 

37,950

18,650

10,000

 

37,950

18,650

10,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as on April 01, 2016 after C’s admission

Liabilities

Amount

Rs

Assets

Amount

Rs

 

 

 

 

Capital A/cs:

 

Land and Building

30,000

A

36,075

 

Fixtures

900

B

18,025

 

Stock

18,000

C

10,000

64,100

 

 

 

 

 

 

 

Creditors (41,500 – 650)

40,850

Debtors

16,000

 

 

 

Bills Receivable

3,000

 

Outstanding Claim for Damages

1,000

 

19,000

 

 

 

Less: 5% Prov. for D. Debts

950

18,050

 

 

Bank

39,000

 

 

 

 

 

 

1,05,950

 

1,05,950

 

 

 

 

 



Page No 4.89:

Question 82:

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

Reserve Fund A/c

Dr.

 

4,000

 

To A’s Capital A/c

 

 

3,000

To B’s Capital A/c

 

 

1,000

(Reserve Fund distributed)

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

4,050

 

To Stock A/c

 

 

2,000

To Fixtures A/c

 

 

100

To Provision for Doubtful Debts A/c

 

 

950

To Outstanding Claim for Damages A/c

 

 

1,000

(Decrease in assets, increase in liability and provision for doubtful debts created)

 

 

 

 

 

 

 

Land and Building A/c

Dr.

 

5,000

 

Sundry Creditors A/c

Dr.

 

650

 

To Revaluation A/c

 

 

5,650

(Decrease in creditors and increase in land and building transferred to Revaluation Account)

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

1,600

 

To A’s Capital A/c

 

 

1,200

To B’s Capital A/c

 

 

400

(Profit on revaluation transferred to A and B’s Capital Accounts in their old profit sharing ratio)

 

 

 

 

 

 

 

Bank A/c

Dr.

 

15,000

 

To C’s Capital A/c

 

 

10,000

To Premium for Goodwill A/c

 

 

5,000

(C brought capital and share of goodwill)

 

 

 

 

 

 

 

Premium for Goodwill A/c

Dr.

 

5,000

 

To A’s Capital A/c

 

 

3,750

To B’s Capital A/c

 

 

1,250

(Premium for Goodwill distributed between A and B in sacrificing ratio i.e. 3:1)

 

 

 

 

 

 

 

A’s Capital A/c

Dr.

 

1,875

 

B’s Capital A/c

Dr.

 

625

 

To Bank A/c

 

 

2,500

(Half of the Premium for Goodwill withdrawn)

 

 

 

 

 

 

 

 

Revaluation Account

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

 

 

 

 

Stock

2,000

Land and Building

5,000

Fixtures

100

Sundry Creditors

650

Provision for D. Debts (19,000 × 5%)

950

 

 

Outstanding Claim for Damages

1,000

 

 

Profit transferred to

 

 

 

A Capital

1,200

 

 

B Capital

400

 

 

 

5,650

 

5,650

 

 

 

 

 

Partners’ Capital Accounts

Dr.

Cr.

Particulars

A

B

C

Particulars

A

B

C

Bank (withdrawn of Goodwill)

1,875

625

 

Balance b/d

30,000

16,000

 

 

 

 

 

Bank

 

 

10,000

 

 

 

 

Revaluation (Profit)

1,200

400

 

 

 

 

 

Reserve Fund

3,000

1,000

 

Balance c/d

36,075

18,025

10,000

Premium for Goodwill

3,750

1,250

 

 

37,950

18,650

10,000

 

37,950

18,650

10,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as on April 01, 2016 after C’s admission

Liabilities

Amount

Rs

Assets

Amount

Rs

 

 

 

 

Capital A/cs:

 

Land and Building

30,000

A

36,075

 

Fixtures

900

B

18,025

 

Stock

18,000

C

10,000

64,100

 

 

 

 

 

 

 

Creditors (41,500 – 650)

40,850

Debtors

16,000

 

 

 

Bills Receivable

3,000

 

Outstanding Claim for Damages

1,000

 

19,000

 

 

 

Less: 5% Prov. for D. Debts

950

18,050

 

 

Bank

39,000

 

 

 

 

 

 

1,05,950

 

1,05,950

 

 

 

 

 

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, 2016 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)



Note: The answer given in book is different as the adjustment of goodwill has been made through Capital Account of the Partner and not through Current Accounts.

Page No 4.89:

Question 83:

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, 2016 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)



Note: The answer given in book is different as the adjustment of goodwill has been made through Capital Account of the Partner and not through Current Accounts.

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 01, 2016, 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)

 

 

 

 

 

 

 

 



Page No 4.90:

Question 84:

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 01, 2016, 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)

 

 

 

 

 

 

 

 

Answer:

Revaluation Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
 
 
 
 
Provision for Doubtful Debts A/c
950
Land and Building A/c
10,000
Furniture A/c
600
   
Stock A/c
3,850
   
Profit transferred to:      
  A’s Capital A/c
2,760
     
  B’s Capital A/c
1,840
4,600
   
 
10,000
 
10,000
       

Partners’ Capital Accounts
Dr.  
Cr.
Particulars
A
B
C
Particulars
A
B
C
               
Balance c/d
38,960
41,240
30,000
Balance b/d
30,200
35,400
 
        Bank A/c    
30,000
        C’s Current A/c
6,000
4,000
 
        Revaluation A/c
2,760
1,840
 
 
38,960
41,240
30,000
 
38,960
41,240
30,000
               

Balance Sheet
as on March 31, 2016 after C’s admission
Liabilities
Amount
Rs
Assets
Amount
Rs
 
 
 
 
Creditors
20,800
Debtors
19,000
 
Bills Payable
10,000
  Less: Provision for Doubtful Debts
950
18,050
    Furniture (10,600 – 600)
10,000
    Land and Building (40,000 + 10,000)
50,000
Capital A/c:   Stock (38,500 – 3,850)
34,650
   A
38,960
  C’s Current A/c
10,000
   B
41,240
  Cash
18,300
   C
30,000
1,10,200
   
       
 
1,41,000
 
1,41,000
       

Cash Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
       
Balance B/d
8,300
Bank Loan A/c
20,000
C’s Capital A/c
30,000
Balance c/d
18,300
 
38,300
 
38,300
       

Page No 4.90:

Question 85:

Revaluation Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
 
 
 
 
Provision for Doubtful Debts A/c
950
Land and Building A/c
10,000
Furniture A/c
600
   
Stock A/c
3,850
   
Profit transferred to:      
  A’s Capital A/c
2,760
     
  B’s Capital A/c
1,840
4,600
   
 
10,000
 
10,000
       

Partners’ Capital Accounts
Dr.  
Cr.
Particulars
A
B
C
Particulars
A
B
C
               
Balance c/d
38,960
41,240
30,000
Balance b/d
30,200
35,400
 
        Bank A/c    
30,000
        C’s Current A/c
6,000
4,000
 
        Revaluation A/c
2,760
1,840
 
 
38,960
41,240
30,000
 
38,960
41,240
30,000
               

Balance Sheet
as on March 31, 2016 after C’s admission
Liabilities
Amount
Rs
Assets
Amount
Rs
 
 
 
 
Creditors
20,800
Debtors
19,000
 
Bills Payable
10,000
  Less: Provision for Doubtful Debts
950
18,050
    Furniture (10,600 – 600)
10,000
    Land and Building (40,000 + 10,000)
50,000
Capital A/c:   Stock (38,500 – 3,850)
34,650
   A
38,960
  C’s Current A/c
10,000
   B
41,240
  Cash
18,300
   C
30,000
1,10,200
   
       
 
1,41,000
 
1,41,000
       

Cash Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
       
Balance B/d
8,300
Bank Loan A/c
20,000
C’s Capital A/c
30,000
Balance c/d
18,300
 
38,300
 
38,300
       

Answer:

Revaluation Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
 
 
 
 
Provision for Doubtful Debts A/c
1,100
Land and Building A/c
10,000
Furniture A/c
1,300
Stock A/c
5,000
Profit transferred to:      
  John’s Capital A/c
5,040
     
  Bull’s Capital A/c
5,040
     
  Wool’s Capital A/c
2,520
12,600
   
 
15,000
 
15,000
       

Partners’ Capital Accounts
Dr.      
Cr.
Particulars John Bull Wool Tuna Particulars John Bull Wool Tuna
                   
Balance c/d 36,240 35,240 15,120 10,000 Balance b/d 24,000 24,000 10,000  
          Bank A/c       10,000
          Tuna’s Current A/c 1,000 1,000    
          General Reserve A/c 5,200 5,200 2,600  
          Revaluation A/c 5,040 5,040 2,520  
          Outstanding Liabilities A/c 1,000      
  36,240 35,240 15,120 10,000   36,240 35,240 15,120 10,000
                   
Balance Sheet
as on April 01, 2015 after Tuna’s admission
Liabilities
Amount
Rs
Assets
Amount
Rs
 
 
 
 
Sundry Creditors
25,700
Debtors
11,000
 
Outstanding Liabilities
2,000
Less: Provision for Doubtful Debts
1,100
9,900
Capital A/cs:   Land and Building (50,000 + 10,000)
60,000
 John
36,240
  Furniture (13,000 – 1,300)
11,700
 Bull
35,240
  Stock (23,500 + 5,000)
28,500
 Wool
15,120
  Cash
12,200
 Tuna
10,000
96,600
Tuna’s Current A/c
2,000
 
1,24,300
 
1,24,300
       

Working Notes

New Profit Sharing ratio = 5 : 5 : 3 : 2

Tuna's share of goodwill = 15,000 ×215=2,000

Old ratio = 2 : 2 : 1

Sacrifice made by John = 25 - 515 = 115Sacrifice made by Bull = 25 - 515 = 115Sacrifice made by Wool = 15 - 315 = 0 

Therefore only John and Bull Sacrifices in ratio of 1 : 1.

Cash Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
       
Balance b/d
2,200
Balance c/d
12,200
Tuna’s Capital A/c
10,000
   
 
12,200
 
12,200
       



Page No 4.91:

Question 86:

Revaluation Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
 
 
 
 
Provision for Doubtful Debts A/c
1,100
Land and Building A/c
10,000
Furniture A/c
1,300
Stock A/c
5,000
Profit transferred to:      
  John’s Capital A/c
5,040
     
  Bull’s Capital A/c
5,040
     
  Wool’s Capital A/c
2,520
12,600
   
 
15,000
 
15,000
       

Partners’ Capital Accounts
Dr.      
Cr.
Particulars John Bull Wool Tuna Particulars John Bull Wool Tuna
                   
Balance c/d 36,240 35,240 15,120 10,000 Balance b/d 24,000 24,000 10,000  
          Bank A/c       10,000
          Tuna’s Current A/c 1,000 1,000    
          General Reserve A/c 5,200 5,200 2,600  
          Revaluation A/c 5,040 5,040 2,520  
          Outstanding Liabilities A/c 1,000      
  36,240 35,240 15,120 10,000   36,240 35,240 15,120 10,000
                   
Balance Sheet
as on April 01, 2015 after Tuna’s admission
Liabilities
Amount
Rs
Assets
Amount
Rs
 
 
 
 
Sundry Creditors
25,700
Debtors
11,000
 
Outstanding Liabilities
2,000
Less: Provision for Doubtful Debts
1,100
9,900
Capital A/cs:   Land and Building (50,000 + 10,000)
60,000
 John
36,240
  Furniture (13,000 – 1,300)
11,700
 Bull
35,240
  Stock (23,500 + 5,000)
28,500
 Wool
15,120
  Cash
12,200
 Tuna
10,000
96,600
Tuna’s Current A/c
2,000
 
1,24,300
 
1,24,300
       

Working Notes

New Profit Sharing ratio = 5 : 5 : 3 : 2

Tuna's share of goodwill = 15,000 ×215=2,000

Old ratio = 2 : 2 : 1

Sacrifice made by John = 25 - 515 = 115Sacrifice made by Bull = 25 - 515 = 115Sacrifice made by Wool = 15 - 315 = 0 

Therefore only John and Bull Sacrifices in ratio of 1 : 1.

Cash Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
       
Balance b/d
2,200
Balance c/d
12,200
Tuna’s Capital A/c
10,000
   
 
12,200
 
12,200
       

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, 2015 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

 



Page No 4.92:

Question 87:

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, 2015 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

 

Answer:

Revaluation Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
 
 
 
 
Provision for Doubtful Debts A/c
5,000
Land and Building A/c
1,00,000
Stock A/c
60,000
Investments A/c
5,000
Profit transferred to:      
  Amit’s Capital A/c
24,000
     
  Sumit’s Capital A/c
16,000
40,000
   
 
1,05,000
 
1,05,000
       

Partners’ Capital Accounts
Dr.  
Cr.
Particulars
Amit
Sumit
Puneet
Particulars
Amit
Sumit
Puneet
               
Cash A/c
60,000
30,000
  Balance b/d
1,76,000
2,54,000
 
        Loan from Puneet’s A/c    
3,00,000
Balance c/d
2,18,000
2,82,000
3,00,000
Premium for Goodwill A/c
60,000
30,000
 
        Revaluation A/c
24,000
16,000
 
        General Reserve A/c
18,000
12,000
 
               
 
2,78,000
3,12,000
3,00,000
 
2,78,000
3,12,000
3,00,000
               
Balance c/d
4,00,000
3,00,000
3,00,000
Balance b/d
2,18,000
2,82,000
3,00,000
        Cash A/c
1,82,000
18,000
 
 
4,00,000
3,00,000
3,00,000
 
4,00,000
3,00,000
3,00,000
               

Balance Sheet
as on April 01, 2011 after Puneet’s admission
Liabilities
Amount
Rs
Assets
Amount
Rs
 
 
 
 
Creditors
50,000
Debtors
3,00,000
 
Employees’ Provident Fund
10,000
  Less: Provision for Doubtful Debts
15,000
2,85,000
    Investments
55,000
    Land and Building (3,20,000 + 1,00,000)
4,20,000
Capital A/c:   Stock (1,10,000 – 60,000)
50,000
   Amit
4,00,000
  Cash at Bank
2,50,000
   Sumit
3,00,000
     
   Puneet
3,00,000
10,00,000
   
       
 
10,60,000
 
10,60,000
       

Working Notes

WN 1: Calculation of Sacrificing Ratio

Old ratio = 3 : 2
Amit Sacrifices = 13 × 35 = 15 or 210Sumit Sacrifices = 14 × 25 = 220 or 110Puneet's Share = 210 + 110 = 310

Sacrificing ratio between Amit and Sumit is 2 : 1

WN 2: Calculation of Goodwill

Puneet's share of goodwill = 3,00,000 × 310 = 90,000

WN 3: Calculation of New Profit Sharing Ratio

New Profit sharing ratio:Amit = 35210=410Sumit = 25 - 110 = 310Puneet = 310

New Profit Sharing Ratio = 4 : 3 : 3

WN 4: Calculation of New Capital and Adjustment for Cash

Total Capital of the firm = Rs 10,00,000

Amit = 410 × 10,00,000 = 4,00,000Sumit = 310 × 10,00,000 = 3,00,000Puneet = 310 × 10,00,000 = 3,00,000

Particulars
Amit
Sumit
Puneet
New Capital
4,00,000
3,00,000
3,00,000
  Less: Existing Capital
2,18,000
2,82,000
3,00,000
Net Effect
1,82,000
to be brought in
18,000
to be brought in
NIL

Cash at Bank Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
       
Balance b/d
50,000
Amit’s Capital A/c
60,000
Premium for Goodwill A/c
90,000
Sumit’s Capital A/c
30,000
Amit’s Capital A/c
1,82,000
Balance c/d
2,50,000
Sumit’s Capital A/c
18,000
   
 
3,40,000
 
3,40,000
       

Page No 4.92:

Question 88:

Revaluation Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
 
 
 
 
Provision for Doubtful Debts A/c
5,000
Land and Building A/c
1,00,000
Stock A/c
60,000
Investments A/c
5,000
Profit transferred to:      
  Amit’s Capital A/c
24,000
     
  Sumit’s Capital A/c
16,000
40,000
   
 
1,05,000
 
1,05,000
       

Partners’ Capital Accounts
Dr.  
Cr.
Particulars
Amit
Sumit
Puneet
Particulars
Amit
Sumit
Puneet
               
Cash A/c
60,000
30,000
  Balance b/d
1,76,000
2,54,000
 
        Loan from Puneet’s A/c    
3,00,000
Balance c/d
2,18,000
2,82,000
3,00,000
Premium for Goodwill A/c
60,000
30,000
 
        Revaluation A/c
24,000
16,000
 
        General Reserve A/c
18,000
12,000
 
               
 
2,78,000
3,12,000
3,00,000
 
2,78,000
3,12,000
3,00,000
               
Balance c/d
4,00,000
3,00,000
3,00,000
Balance b/d
2,18,000
2,82,000
3,00,000
        Cash A/c
1,82,000
18,000
 
 
4,00,000
3,00,000
3,00,000
 
4,00,000
3,00,000
3,00,000
               

Balance Sheet
as on April 01, 2011 after Puneet’s admission
Liabilities
Amount
Rs
Assets
Amount
Rs
 
 
 
 
Creditors
50,000
Debtors
3,00,000
 
Employees’ Provident Fund
10,000
  Less: Provision for Doubtful Debts
15,000
2,85,000
    Investments
55,000
    Land and Building (3,20,000 + 1,00,000)
4,20,000
Capital A/c:   Stock (1,10,000 – 60,000)
50,000
   Amit
4,00,000
  Cash at Bank
2,50,000
   Sumit
3,00,000
     
   Puneet
3,00,000
10,00,000
   
       
 
10,60,000
 
10,60,000
       

Working Notes

WN 1: Calculation of Sacrificing Ratio

Old ratio = 3 : 2
Amit Sacrifices = 13 × 35 = 15 or 210Sumit Sacrifices = 14 × 25 = 220 or 110Puneet's Share = 210 + 110 = 310

Sacrificing ratio between Amit and Sumit is 2 : 1

WN 2: Calculation of Goodwill

Puneet's share of goodwill = 3,00,000 × 310 = 90,000

WN 3: Calculation of New Profit Sharing Ratio

New Profit sharing ratio:Amit = 35210=410Sumit = 25 - 110 = 310Puneet = 310

New Profit Sharing Ratio = 4 : 3 : 3

WN 4: Calculation of New Capital and Adjustment for Cash

Total Capital of the firm = Rs 10,00,000

Amit = 410 × 10,00,000 = 4,00,000Sumit = 310 × 10,00,000 = 3,00,000Puneet = 310 × 10,00,000 = 3,00,000

Particulars
Amit
Sumit
Puneet
New Capital
4,00,000
3,00,000
3,00,000
  Less: Existing Capital
2,18,000
2,82,000
3,00,000
Net Effect
1,82,000
to be brought in
18,000
to be brought in
NIL

Cash at Bank Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
       
Balance b/d
50,000
Amit’s Capital A/c
60,000
Premium for Goodwill A/c
90,000
Sumit’s Capital A/c
30,000
Amit’s Capital A/c
1,82,000
Balance c/d
2,50,000
Sumit’s Capital A/c
18,000
   
 
3,40,000
 
3,40,000
       

Answer:

Revaluation Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
 
 
 
 
Provision for Doubtful Debts A/c
100
Building A/c
6,350
Stock
750
   
Furniture
500
   
Profit transferred to:      
A’s Capital A/c 3,000      
B’s Capital A/c
2,000
5,000
   
 
6,350
 
6,350
       
             
Partners’ Capital Accounts
Dr.  
Cr.
Particulars
A
B
C
Particulars
A
B
C
               
Balance c/d
40,500
23,500
21,000
Balance b/d
29,000
15,000
 
        Bank A/c    
21,000
        Premium for Goodwill A/c
2,500
2,500
 
        Revaluation A/c
3,000
2,000
 
        General Reserve A/c
3,000
2,000
 
        Workmen Compensation Reserve A/c
3,000
2,000
 
               
 
40,500
23,500
21,000
 
40,500
23,500
21,000
               
Balance c/d
52,500
31,500
21,000
Balance b/d
40,500
23,500
21,000
        Cash A/c
12,000
8,000
 
 
52,500
31,500
21,000
 
52,500
31,500
21,000
               

Balance Sheet
as on April 01, 2015 after C’s admission
Liabilities
Amount
Rs
Assets
Amount
Rs
 
 
 
 
Creditors
30,000
Debtors
9,400
 
Outstanding Expenses
2,500
  Less: Provision for Doubtful Debts
500
8,900
    Machinery
9,000
    Building
51,350
    Furniture (5,000 – 500)
4,500
Capital A/c:   Stock (15,000 – 750)
14,250
   A
52,500
  Cash
49,500
   B
31,500
     
   C
21,000
1,05,000
   
       
 
1,37,500
 
1,37,500
       

Working Notes:

WN 1: Calculation of Goodwill

Total Capital of the firm = A’s Capital + B’s Capital + C’s Capital  + General Reserve +Workmen Compensation Reserve + Revaluation ProfitTotal Capital of the firm = 29,000 + 15,000 + 21,000 + 5,000 + 5,000 + 5,000 =80,000

Capital of the firm = Capital of New Partner × Reciprocal of his profit shareCapital of the firm = 21,000 × 5 = Rs 1,05,000Goodwill = 1,05,000 - 80,000 = Rs 25,000C's share of goodwill = 25,000 × 15 = 5,000

WN 2: Calculation of Sacrificing Ratio

Old ratio = 3 : 2

New ratio = 5 : 3 : 2

Sacrifice made by A = 35  510=110Sacrifice made by B = 25  310 = 110

Therefore, sacrificing ratio between A and B is 1 : 1.

WN 3: Calculation of New Capital and Adjustment for Cash

New CapitalA = 1,05,000 × 510 = 52,500B = 1,05,000 × 310 = 31,500

Particulars
A
B
New Capital
52,500
31,500
  Less: Existing Capital
40,500
23,500
Net Effect
12,000
to be brought in
8,000
to be brought in

Cash Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
       
Balance b/d
3,500
Balance c/d
49,500
C’s Capital A/c
21,000
   
Premium for Goodwill A/c
5,000
   
Amit’s Capital A/c
12,000
   
Sumit’s Capital A/c
8,000
   
 
49,500
 
49,500
       



Page No 4.93:

Question 89:

Revaluation Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
 
 
 
 
Provision for Doubtful Debts A/c
100
Building A/c
6,350
Stock
750
   
Furniture
500
   
Profit transferred to:      
A’s Capital A/c 3,000      
B’s Capital A/c
2,000
5,000
   
 
6,350
 
6,350
       
             
Partners’ Capital Accounts
Dr.  
Cr.
Particulars
A
B
C
Particulars
A
B
C
               
Balance c/d
40,500
23,500
21,000
Balance b/d
29,000
15,000
 
        Bank A/c    
21,000
        Premium for Goodwill A/c
2,500
2,500
 
        Revaluation A/c
3,000
2,000
 
        General Reserve A/c
3,000
2,000
 
        Workmen Compensation Reserve A/c
3,000
2,000
 
               
 
40,500
23,500
21,000
 
40,500
23,500
21,000
               
Balance c/d
52,500
31,500
21,000
Balance b/d
40,500
23,500
21,000
        Cash A/c
12,000
8,000
 
 
52,500
31,500
21,000
 
52,500
31,500
21,000
               

Balance Sheet
as on April 01, 2015 after C’s admission
Liabilities
Amount
Rs
Assets
Amount
Rs
 
 
 
 
Creditors
30,000
Debtors
9,400
 
Outstanding Expenses
2,500
  Less: Provision for Doubtful Debts
500
8,900
    Machinery
9,000
    Building
51,350
    Furniture (5,000 – 500)
4,500
Capital A/c:   Stock (15,000 – 750)
14,250
   A
52,500
  Cash
49,500
   B
31,500
     
   C
21,000
1,05,000
   
       
 
1,37,500
 
1,37,500
       

Working Notes:

WN 1: Calculation of Goodwill

Total Capital of the firm = A’s Capital + B’s Capital + C’s Capital  + General Reserve +Workmen Compensation Reserve + Revaluation ProfitTotal Capital of the firm = 29,000 + 15,000 + 21,000 + 5,000 + 5,000 + 5,000 =80,000

Capital of the firm = Capital of New Partner × Reciprocal of his profit shareCapital of the firm = 21,000 × 5 = Rs 1,05,000Goodwill = 1,05,000 - 80,000 = Rs 25,000C's share of goodwill = 25,000 × 15 = 5,000

WN 2: Calculation of Sacrificing Ratio

Old ratio = 3 : 2

New ratio = 5 : 3 : 2

Sacrifice made by A = 35  510=110Sacrifice made by B = 25  310 = 110

Therefore, sacrificing ratio between A and B is 1 : 1.

WN 3: Calculation of New Capital and Adjustment for Cash

New CapitalA = 1,05,000 × 510 = 52,500B = 1,05,000 × 310 = 31,500

Particulars
A
B
New Capital
52,500
31,500
  Less: Existing Capital
40,500
23,500
Net Effect
12,000
to be brought in
8,000
to be brought in

Cash Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
       
Balance b/d
3,500
Balance c/d
49,500
C’s Capital A/c
21,000
   
Premium for Goodwill A/c
5,000
   
Amit’s Capital A/c
12,000
   
Sumit’s Capital A/c
8,000
   
 
49,500
 
49,500
       

Answer:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

 

 

 

 

Furniture

920

Land and Building (65,100 – 50,400)

14,700

Stock (29,400 × 10%)

2,940

 

 

Provision for Outstanding

 

 

 

Repair Bills

1,320

 

 

Profit transferred to

 

 

 

A's Capital A/c

4,080

 

 

B's Capital A/c

3,400

 

 

C's Capital A/c

2,040

 

 

 

14,700

 

14,700

 

 

 

 

 

Partners’ Capital Account

Dr.

 

 

 

 

 

 

 

 

Cr.

Particulars

A

B

C

D

Particulars

A

B

C

D

 

 

 

 

 

Balance b/d

36,900

33,600

19,800

 

 

 

 

 

 

Cash

 

 

 

16,000

 

 

 

 

 

Premium for Goodwill

3,780

3,150

1,890

 

Balance c/d

44,760

40,150

23,730

16,000

Revaluation (Profit)

4,080

3,400

2,040

 

 

44,760

40,150

23,730

16,000

 

44,760

40,150

23,730

16,000

Cash

 

150

 

 

Balance b/d

44,760

40,150

23,730

 

Balance c/d (adjusted)

48,000

40,000

24,000

16,000

Cash

3,240

 

270

16,000

 

48,000

40,150

24,000

16,000

 

48,000

40,150

24,000

16,000

 

 

 

 

 

 

 

 

 

 

 

Balance Sheet

after D’s adjustment

Liabilities

Amount

Rs

Assets

Amount

Rs

 

 

 

 

Creditors

18,900

Land and Building

65,100

Bills Payable

6,300

 

 

Provision for outstanding

 

 

 

Repair Bills

1,320

Furniture (7,350 – 920)

6,430

Capital A/cs:

 

Stock (29,400 – 2,940)

26,460

A

48,000

 

Debtors

26,460

B

40,000

 

Cash

30,070

C

24,000

 

 

 

D

16,000

1,28,000

 

 

 

 

 

 

 

 

1,54,520

 

1,54,520

 

 

 

 

 

Cash Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Balance b/d

1,890

B’s Capital

150

D’s Capital

16,000

 

 

Premium for Goodwill

8,820

Balance c/d

30,070

A’s Capital

3,240

 

 

C’s Capital

270

 

 

 

30,220

 

30,220

 

 

 

 

Working Notes-

WN1 

WN2

Distribution of Revaluation Profit

WN3

Distribution of Premium for Goodwill

WN4

Adjustment of Capital

Page No 4.93:

Question 90:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

 

 

 

 

Furniture

920

Land and Building (65,100 – 50,400)

14,700

Stock (29,400 × 10%)

2,940

 

 

Provision for Outstanding

 

 

 

Repair Bills

1,320

 

 

Profit transferred to

 

 

 

A's Capital A/c

4,080

 

 

B's Capital A/c

3,400

 

 

C's Capital A/c

2,040

 

 

 

14,700

 

14,700

 

 

 

 

 

Partners’ Capital Account

Dr.

 

 

 

 

 

 

 

 

Cr.

Particulars

A

B

C

D

Particulars

A

B

C

D

 

 

 

 

 

Balance b/d

36,900

33,600

19,800

 

 

 

 

 

 

Cash

 

 

 

16,000

 

 

 

 

 

Premium for Goodwill

3,780

3,150

1,890

 

Balance c/d

44,760

40,150

23,730

16,000

Revaluation (Profit)

4,080

3,400

2,040

 

 

44,760

40,150

23,730

16,000

 

44,760

40,150

23,730

16,000

Cash

 

150

 

 

Balance b/d

44,760

40,150

23,730

 

Balance c/d (adjusted)

48,000

40,000

24,000

16,000

Cash

3,240

 

270

16,000

 

48,000

40,150

24,000

16,000

 

48,000

40,150

24,000

16,000

 

 

 

 

 

 

 

 

 

 

 

Balance Sheet

after D’s adjustment

Liabilities

Amount

Rs

Assets

Amount

Rs

 

 

 

 

Creditors

18,900

Land and Building

65,100

Bills Payable

6,300

 

 

Provision for outstanding

 

 

 

Repair Bills

1,320

Furniture (7,350 – 920)

6,430

Capital A/cs:

 

Stock (29,400 – 2,940)

26,460

A

48,000

 

Debtors

26,460

B

40,000

 

Cash

30,070

C

24,000

 

 

 

D

16,000

1,28,000

 

 

 

 

 

 

 

 

1,54,520

 

1,54,520

 

 

 

 

 

Cash Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Balance b/d

1,890

B’s Capital

150

D’s Capital

16,000

 

 

Premium for Goodwill

8,820

Balance c/d

30,070

A’s Capital

3,240

 

 

C’s Capital

270

 

 

 

30,220

 

30,220

 

 

 

 

Working Notes-

WN1 

WN2

Distribution of Revaluation Profit

WN3

Distribution of Premium for Goodwill

WN4

Adjustment of Capital

Answer:

Revaluation Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
Profit transferred to:   Plant and Machinery A/c
14,000
  Ishu’s Capital A/c
18,480
  Provision for Doubtful Debts A/c
7,000
  Vishu’s Capital A/c
12,320
30,800
Creditors A/c
9,800
 
30,800
 
30,800
       
 
 
Partners’ Capital Accounts
Dr.  
Cr.
Particulars
Ishu
Vishu
Nishu
Particulars
Ishu
Vishu
Nishu
               
        Balance b/d
1,19,000
1,12,000
 
        Bank A/c    
56,000
Balance c/d
1,53,080
1,34,720
56,000
Premium for Goodwill A/c
8,400
5,600
 
        Revaluation A/c
18,480
12,320
 
        General Reserve A/c
6,000
4,000
 
        Investment Fluctuation Reserve A/c
1,200
800
 
               
 
1,53,080
1,34,720
56,000
 
1,53,080
1,34,720
56,000
               
Cash A/c  
22,720
  Balance b/d
1,53,080
1,34,720
56,000
Balance c/d
1,68,000
1,12,000
56,000
Cash A/c
14,920
   
 
1,68,000
1,34,720
56,000
 
1,68,000
1,34,720
56,000
               
 
Balance Sheet
as on April 01, 2015 after Nishu’s admission
Liabilities
Amount
Rs
Assets
Amount
Rs
 
 
 
 
Creditors (66,000 – 9,800)
56,200
Debtors
42,000
    Plant and Machinery
(70,000 + 14,000)
84,000
    Building
98,000
Capital A/cs:   Investments
19,000
Ishu
1,68,000
  Cash at Bank
1,49,200
Vishu
1,12,000
     
Nishu
56,000
3,36,000
   
       
 
3,92,200
 
3,92,200
       

Working Notes

WN 1: Calculation of New Profit Sharing Ratio

Let the total share be 1

Nishu is admitted for 16

Remaining share = 1- 16=56Old ratio = 3 : 2New Profit sharing ratio :Ishu = 35 × 56 = 1530Vishu = 25 × 56 = 1030Nishu = 16 or 530

NPR = 15 : 10 : 5 or 3 : 2 : 1

WN 2: Calculation of New Capital

Nishu's is admitted for 16 share with 56,000 capitalTotal capital of the firm = 56,000 × 61 = 3,36,000

Ishu = 36 × 3,36,000 = 1,68,000Vishu = 26 × 3,36,000 = 1,12,000


WN 3: Adjustment for Cash

Ishu = 1,68,000 – 1,53,080 = 14,920 (To be brought in)

Vishu = 1,12,000 – 1,34,720 = (22,720) (To be withdrawn)

Cash at Bank Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
       
Balance b/d
87,000
Vishu’s Capital A/c
22,720
Nishu’s Capital A/c
56,000
Balance c/d
1,49,200
Premium for Goodwill A/c
14,000
   
Ishu’s Capital A/c
14,920
   
 
1,71,920
 
1,71,920
       



Page No 4.94:

Question 91:

Revaluation Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
Profit transferred to:   Plant and Machinery A/c
14,000
  Ishu’s Capital A/c
18,480
  Provision for Doubtful Debts A/c
7,000
  Vishu’s Capital A/c
12,320
30,800
Creditors A/c
9,800
 
30,800
 
30,800
       
 
 
Partners’ Capital Accounts
Dr.  
Cr.
Particulars
Ishu
Vishu
Nishu
Particulars
Ishu
Vishu
Nishu
               
        Balance b/d
1,19,000
1,12,000
 
        Bank A/c    
56,000
Balance c/d
1,53,080
1,34,720
56,000
Premium for Goodwill A/c
8,400
5,600
 
        Revaluation A/c
18,480
12,320
 
        General Reserve A/c
6,000
4,000
 
        Investment Fluctuation Reserve A/c
1,200
800
 
               
 
1,53,080
1,34,720
56,000
 
1,53,080
1,34,720
56,000
               
Cash A/c  
22,720
  Balance b/d
1,53,080
1,34,720
56,000
Balance c/d
1,68,000
1,12,000
56,000
Cash A/c
14,920
   
 
1,68,000
1,34,720
56,000
 
1,68,000
1,34,720
56,000
               
 
Balance Sheet
as on April 01, 2015 after Nishu’s admission
Liabilities
Amount
Rs
Assets
Amount
Rs
 
 
 
 
Creditors (66,000 – 9,800)
56,200
Debtors
42,000
    Plant and Machinery
(70,000 + 14,000)
84,000
    Building
98,000
Capital A/cs:   Investments
19,000
Ishu
1,68,000
  Cash at Bank
1,49,200
Vishu
1,12,000
     
Nishu
56,000
3,36,000
   
       
 
3,92,200
 
3,92,200
       

Working Notes

WN 1: Calculation of New Profit Sharing Ratio

Let the total share be 1

Nishu is admitted for 16

Remaining share = 1- 16=56Old ratio = 3 : 2New Profit sharing ratio :Ishu = 35 × 56 = 1530Vishu = 25 × 56 = 1030Nishu = 16 or 530

NPR = 15 : 10 : 5 or 3 : 2 : 1

WN 2: Calculation of New Capital

Nishu's is admitted for 16 share with 56,000 capitalTotal capital of the firm = 56,000 × 61 = 3,36,000

Ishu = 36 × 3,36,000 = 1,68,000Vishu = 26 × 3,36,000 = 1,12,000


WN 3: Adjustment for Cash

Ishu = 1,68,000 – 1,53,080 = 14,920 (To be brought in)

Vishu = 1,12,000 – 1,34,720 = (22,720) (To be withdrawn)

Cash at Bank Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
       
Balance b/d
87,000
Vishu’s Capital A/c
22,720
Nishu’s Capital A/c
56,000
Balance c/d
1,49,200
Premium for Goodwill A/c
14,000
   
Ishu’s Capital A/c
14,920
   
 
1,71,920
 
1,71,920
       

Answer:

 

 

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

A’s Capital A/c

Dr.

 

15,000

 

B’s Capital A/c

Dr.

 

5,000

 

To Goodwill A/c

 

 

20,000

(Goodwill written-off)

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

10,000

 

To Plant A/c

 

 

6,000

To Stock A/c

 

 

1,000

To Reserve for Doubtful Debts A/c

 

 

3,000

(Decrease in Plant and stock and creation of Reserve for Doubtful Debts transferred to Revaluation Account)

 

 

 

 

 

 

 

A’s Capital A/c

Dr.

 

7,500

 

B’s Capital A/c

Dr.

 

2,500

 

To Revaluation A/c

 

 

10,000

(Revaluation loss transferred to partners’ capital accounts in old ratio)

 

 

 

 

 

 

 

Bank A/c

Dr.

 

55,000

 

To C’s Capital A/c

 

 

35,000

To Premium for Goodwill A/c

 

 

20,000

(C brought capital and Premium for Goodwill)

 

 

 

 

 

 

 

Premium for Goodwill A/c

Dr.

 

20,000

 

To A’s Capital A/c

 

 

15,000

To B’s Capital A/c

 

 

5,000

(Premium for Goodwill distributed between A and B in sacrificing ratio)

 

 

 

 

 

 

 

 

 

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

 

 

 

 

Plant (30,000 ´ 20%)

6,000

 

 

Stock (10,000 ´ 10%)

1,000

Loss transferred to

 

Reserve for Doubtful Debts

3,000

A Capital

7,500

(30,000 ´ 10%)

 

B Capital

2,500

 

10,000

 

10,000

 

 

 

 

           

 

Partners’ Capital Accounts

Particulars

A

B

C

Particulars

A

B

C

Goodwill

15,000

5,000

 

Balance b/d

50,000

30,000

 

Revaluation (Loss)

7,500

2,500

 

Premium for  Goodwill

15,000

5,000

 

Balance c/d

42,500

27,500

 

 

 

 

 

 

65,000

35,000

 

 

65,000

35,000

 

 

 

 

 

Balance c/d

42,500

27,50

 

Balance c/d

42,500

27,500

35,000

Bank

 

 

35,000

 

42,500

27,500

35,000

 

42,500

27,500

35,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as on April 01, 2016 after C’s admission

Liabilities

Amount

Rs

Assets

Amount

Rs

 

 

 

 

Capital A/cs:

 

Plant (30,000 – 6,000)

24,000

A

42,500

 

Stock (10,000 – 1,000)

9,000

B

27,500

 

Debtors

30,000

 

C

35,000

1,05,000

Less: Reserve for D. Debts

3,000

27,000

Sundry Creditors

20,000

Cash at Bank

65,000

 

 

 

 

 

1,25,000

 

1,25,000

 

 

 

 

 

Working Notes

 

WN1

 

WN2

Writing-off of Goodwill

 

WN3

Distribution of Premium for Goodwill

 

WN4

Calculation of C’s share of capital

 

Combined Capital of A and B after adjustments = 42,500 + 27,500
                                                                              = 70,000

 

Bank Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

 

 

 

 

Balance b/d

10,000

 

 

C’s Capital

35,000

 

 

Premium for Goodwill

20,000

Balance c/d

65,000

 

 

 

 

 

65,000

 

65,000

 

 

 

 

 

Page No 4.94:

Question 92:

 

 

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

 

A’s Capital A/c

Dr.

 

15,000

 

B’s Capital A/c

Dr.

 

5,000

 

To Goodwill A/c

 

 

20,000

(Goodwill written-off)

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

10,000

 

To Plant A/c

 

 

6,000

To Stock A/c

 

 

1,000

To Reserve for Doubtful Debts A/c

 

 

3,000

(Decrease in Plant and stock and creation of Reserve for Doubtful Debts transferred to Revaluation Account)

 

 

 

 

 

 

 

A’s Capital A/c

Dr.

 

7,500

 

B’s Capital A/c

Dr.

 

2,500

 

To Revaluation A/c

 

 

10,000

(Revaluation loss transferred to partners’ capital accounts in old ratio)

 

 

 

 

 

 

 

Bank A/c

Dr.

 

55,000

 

To C’s Capital A/c

 

 

35,000

To Premium for Goodwill A/c

 

 

20,000

(C brought capital and Premium for Goodwill)

 

 

 

 

 

 

 

Premium for Goodwill A/c

Dr.

 

20,000

 

To A’s Capital A/c

 

 

15,000

To B’s Capital A/c

 

 

5,000

(Premium for Goodwill distributed between A and B in sacrificing ratio)

 

 

 

 

 

 

 

 

 

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

 

 

 

 

Plant (30,000 ´ 20%)

6,000

 

 

Stock (10,000 ´ 10%)

1,000

Loss transferred to

 

Reserve for Doubtful Debts

3,000

A Capital

7,500

(30,000 ´ 10%)

 

B Capital

2,500

 

10,000

 

10,000

 

 

 

 

           

 

Partners’ Capital Accounts

Particulars

A

B

C

Particulars

A

B

C

Goodwill

15,000

5,000

 

Balance b/d

50,000

30,000

 

Revaluation (Loss)

7,500

2,500

 

Premium for  Goodwill

15,000

5,000

 

Balance c/d

42,500

27,500

 

 

 

 

 

 

65,000

35,000

 

 

65,000

35,000

 

 

 

 

 

Balance c/d

42,500

27,50

 

Balance c/d

42,500

27,500

35,000

Bank

 

 

35,000

 

42,500

27,500

35,000

 

42,500

27,500

35,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as on April 01, 2016 after C’s admission

Liabilities

Amount

Rs

Assets

Amount

Rs

 

 

 

 

Capital A/cs:

 

Plant (30,000 – 6,000)

24,000

A

42,500

 

Stock (10,000 – 1,000)

9,000

B

27,500

 

Debtors

30,000

 

C

35,000

1,05,000

Less: Reserve for D. Debts

3,000

27,000

Sundry Creditors

20,000

Cash at Bank

65,000

 

 

 

 

 

1,25,000

 

1,25,000

 

 

 

 

 

Working Notes

 

WN1

 

WN2

Writing-off of Goodwill

 

WN3

Distribution of Premium for Goodwill

 

WN4

Calculation of C’s share of capital

 

Combined Capital of A and B after adjustments = 42,500 + 27,500
                                                                              = 70,000

 

Bank Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

 

 

 

 

Balance b/d

10,000

 

 

C’s Capital

35,000

 

 

Premium for Goodwill

20,000

Balance c/d

65,000

 

 

 

 

 

65,000

 

65,000

 

 

 

 

 

Answer:

Partner’ Capital Accounts

Dr.

 

Cr.

Particulars

A

B

C

Particulars

A

B

C

 

 

 

 

Balance b/d

3,00,000

3,00,000

 

 

 

 

 

Bank

 

 

2,00,000

 

 

 

 

Premium for Goodwill

16,000

4,000

 

Balance c/d

3,16,000

3,04,000

2,00,000

 

 

 

 

 

3,16,000

3,04,000

2,00,000

 

3,16,000

3,04,000

2,00,000

Bank

1,16,000

1,04,000

 

Balance b/d

3,16,000

3,04,000

2,00,000

Balance c/d

2,00,000

2,00,000

2,00,000

 

 

 

 

Proportionate

 

 

 

 

 

 

 

 

3,16,000

3,04,000

2,00,000

 

3,16,000

3,04,000

2,00,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as on April 01, 2016 after C’s admission

Liabilities

Amount

Rs

Assets

Amount

Rs

 

 

 

 

Sundry Creditors

60,000

Cash at Bank

40,000

Outstanding Expenses

15,000

Sundry Debtors

36,000

Capital A/cs:

 

Stock

84,000

A

2,00,000

 

Furniture and Fittings

65,000

B

2,00,000

 

Plant and Machinery

4,50,000

C

2,00,000

6,00,000

 

 

 

6,75,000

 

6,75,000

 

 

 

 

 

Bank Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

 

 

 

 

Cash

40,000

A’s Capital

1,16,000

C’s Capital

2,00,000

B’s Capital

1,04,000

Premium for Goodwill

20,000

 

 

 

 

Balance c/d

40,000

 

2,60,000

 

2,60,000

 

 

 

 

Calculation of Goodwill

Goodwill = Super Profit × Number of Years Purchases

= 30,000 × 2 = Rs 60,000

 

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

Premium for Goodwill

Dr.

 

20,000

 

  To A’s Capital A/C

Dr.

 

 

16,000

To B’s Capital A/c

 

 

4,000

(Premium for Goodwill distributed between A and B in their sacrificing ratio i.e. 4:1)

 

 

 

 

 

 

 

Calculation of Proportionate Capital

Capital of the firm is Rs 6,00,000



Page No 4.95:

Question 93:

Partner’ Capital Accounts

Dr.

 

Cr.

Particulars

A

B

C

Particulars

A

B

C

 

 

 

 

Balance b/d

3,00,000

3,00,000

 

 

 

 

 

Bank

 

 

2,00,000

 

 

 

 

Premium for Goodwill

16,000

4,000

 

Balance c/d

3,16,000

3,04,000

2,00,000

 

 

 

 

 

3,16,000

3,04,000

2,00,000

 

3,16,000

3,04,000

2,00,000

Bank

1,16,000

1,04,000

 

Balance b/d

3,16,000

3,04,000

2,00,000

Balance c/d

2,00,000

2,00,000

2,00,000

 

 

 

 

Proportionate

 

 

 

 

 

 

 

 

3,16,000

3,04,000

2,00,000

 

3,16,000

3,04,000

2,00,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as on April 01, 2016 after C’s admission

Liabilities

Amount

Rs

Assets

Amount

Rs

 

 

 

 

Sundry Creditors

60,000

Cash at Bank

40,000

Outstanding Expenses

15,000

Sundry Debtors

36,000

Capital A/cs:

 

Stock

84,000

A

2,00,000

 

Furniture and Fittings

65,000

B

2,00,000

 

Plant and Machinery

4,50,000

C

2,00,000

6,00,000

 

 

 

6,75,000

 

6,75,000

 

 

 

 

 

Bank Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

 

 

 

 

Cash

40,000

A’s Capital

1,16,000

C’s Capital

2,00,000

B’s Capital

1,04,000

Premium for Goodwill

20,000

 

 

 

 

Balance c/d

40,000

 

2,60,000

 

2,60,000

 

 

 

 

Calculation of Goodwill

Goodwill = Super Profit × Number of Years Purchases

= 30,000 × 2 = Rs 60,000

 

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

 

 

 

Premium for Goodwill

Dr.

 

20,000

 

  To A’s Capital A/C

Dr.

 

 

16,000

To B’s Capital A/c

 

 

4,000

(Premium for Goodwill distributed between A and B in their sacrificing ratio i.e. 4:1)

 

 

 

 

 

 

 

Calculation of Proportionate Capital

Capital of the firm is Rs 6,00,000

Answer:

Revaluation Account

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

 

 

 

 

Patents

1,000

Provision for Doubtful Debts

2,000

Profit on transferred to

 

Typewriter

2,400

Pappu Capital

2,550

 

 

Dhanraj Capital

850

 

 

 

4,400

 

4,400

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

Pappu

Dhanraj

Leander

Particulars

Pappu

Dhanraj

Leander

 

 

 

 

Balance b/d

60,000

20,000

 

Balance c/d

90,550

24,850

 

Reserve Fund

12,000

4,000

 

(after adjustments)

 

 

 

Revaluation

2,550

850

 

 

 

 

 

Premium for Goodwill

16,000

 

 

 

90,550

24,850

 

 

90,550

24,850

 

 

 

 

 

Balance c/d

90,550

24,850

 

 

 

 

 

Cash

 

 

69,240

Balance c/d

90,550

24,850

69,240

 

 

 

 

 

90,550

24,850

69,240

 

90,550

24,850

69,240

 

 

 

 

 

 

 

 

 

Balance Sheet

as on March 31, 2016 after Leander’s admission

Liabilities

Amount

Rs

Assets

Amount

Rs

 

 

 

 

Creditors

30,000

Debtors

50,000

 

Bills Receivable

1,000

Less: Prov. for D. Debts

3,000

47,000

Outstanding Salary

3,000

Stock

30,000

Capital A/cs:

 

Bills Receivable

10,000

Pappu

90,550

 

Machinery

40,000

Dhanraj

24,850

 

Scooter

2,400

Leander

69,240

1,84,640

Cash

89,240

 

 

 

 

 

 

2,18,640

 

2,18,640

 

 

 

 

Working Notes

WN1

Leander acquires his share of profit from Pappu only. Therefore, amount for goodwill brought by Leander will be taken by Pappu alone.

WN2

Distribution of Revaluation Profit

WN3

Distribution of Reserve Fund

WN4

Calculation of Leander’s Capital

Combined Capital of Pappu and Dhanraj after all adjustments = 90,550 + 24,850 = 1, 15,400

Combined share of profit of Pappu and Dhanraj = 1 − Leander share

Total Capital of the firm on the basis of combined capital of Pappu and Dhanraj

WN5

Cash Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

 

 

 

 

Balance b/d

4,000

 

 

Leander’s Capital

69,240

 

 

Premium for Goodwill

16,000

Balance c/d

89,240

 

 

 

 

 

89,240

 

89,240

 

 

 

 

Note: The amount of Machinery has not been provided in the question. It is to be recorded at Rs 40,000.

Page No 4.95:

Question 94:

Revaluation Account

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

 

 

 

 

Patents

1,000

Provision for Doubtful Debts

2,000

Profit on transferred to

 

Typewriter

2,400

Pappu Capital

2,550

 

 

Dhanraj Capital

850

 

 

 

4,400

 

4,400

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

Pappu

Dhanraj

Leander

Particulars

Pappu

Dhanraj

Leander

 

 

 

 

Balance b/d

60,000

20,000

 

Balance c/d

90,550

24,850

 

Reserve Fund

12,000

4,000

 

(after adjustments)

 

 

 

Revaluation

2,550

850

 

 

 

 

 

Premium for Goodwill

16,000

 

 

 

90,550

24,850

 

 

90,550

24,850

 

 

 

 

 

Balance c/d

90,550

24,850

 

 

 

 

 

Cash

 

 

69,240

Balance c/d

90,550

24,850

69,240

 

 

 

 

 

90,550

24,850

69,240

 

90,550

24,850

69,240

 

 

 

 

 

 

 

 

 

Balance Sheet

as on March 31, 2016 after Leander’s admission

Liabilities

Amount

Rs

Assets

Amount

Rs

 

 

 

 

Creditors

30,000

Debtors

50,000

 

Bills Receivable

1,000

Less: Prov. for D. Debts

3,000

47,000

Outstanding Salary

3,000

Stock

30,000

Capital A/cs:

 

Bills Receivable

10,000

Pappu

90,550

 

Machinery

40,000

Dhanraj

24,850

 

Scooter

2,400

Leander

69,240

1,84,640

Cash

89,240

 

 

 

 

 

 

2,18,640

 

2,18,640

 

 

 

 

Working Notes

WN1

Leander acquires his share of profit from Pappu only. Therefore, amount for goodwill brought by Leander will be taken by Pappu alone.

WN2

Distribution of Revaluation Profit

WN3

Distribution of Reserve Fund

WN4

Calculation of Leander’s Capital

Combined Capital of Pappu and Dhanraj after all adjustments = 90,550 + 24,850 = 1, 15,400

Combined share of profit of Pappu and Dhanraj = 1 − Leander share

Total Capital of the firm on the basis of combined capital of Pappu and Dhanraj

WN5

Cash Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

 

 

 

 

Balance b/d

4,000

 

 

Leander’s Capital

69,240

 

 

Premium for Goodwill

16,000

Balance c/d

89,240

 

 

 

 

 

89,240

 

89,240

 

 

 

 

Note: The amount of Machinery has not been provided in the question. It is to be recorded at Rs 40,000.

Answer:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

 

 

 

 

Plant

7,000

Building

14,000

Provision for D. Debts (1,000 – 300)

700

 

 

Profit transferred to

 

 

 

Jain Capital

3,600

 

 

Gupta Capital

2,700

 

 

 

14,000

 

14,000

 

 

 

 

Partner’s Capital Accounts

Dr.

 

Cr.

 

Jain

Gupta

Mishra

Particulars

Jain

Gupta

Mishra

 

 

 

 

Balance b/d

70,000

60,000

 

 

 

 

 

Revaluation

3,600

2,700

 

Balance c/d

85,600

71,700

 

Premium for Goodwill

12,000

9,000

 

 

85,600

71,700

 

 

85,600

71,700

 

 

 

 

 

Balance b/d

85,600

71,700

 

 

 

 

 

Cash

 

 

52,433

Balance c/d

85,600

71,700

52,433

 

 

 

 

 

85,600

71,700

52,433

 

85,600

71,700

52,433

 

 

 

 

 

 

 

 

Balance Sheet

as on April 01, 2016 after Mishra’s admission

Liabilities

Amount

Rs

Particulars

Amount

Rs

 

 

 

 

Sundry Creditors

20,000

Cash

88,233

Bills Payable

3,000

Debtors

20,500

 

Bank Over draft

17,000

Less: Prov. for D. Debts

1,000

19,500

Capital A/cs:

 

Stock

20,000

Jain

85,600

 

Plant (40,000 – 7,000)

33,000

Gupta

71,700

 

Building (75,000 + 14,000)

89,000

Mishra

52,433

2,09,733

 

 

 

2,49,733

 

2,49,733

 

 

 

 

Working Notes

WN1

WN2

Distribution of Revaluation Profit

WN3

Calculation of Mishra’s Capital

Combined Capital of Jain and Gupta after all adjustments = 85,600 + 71,700 = Rs 1,57,300

WN4

Cash Account

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

 

 

 

 

Balance b/d

14,800

 

 

Mishra’s Capital A/c

52,433

 

 

Premium for Goodwill

21,000

Balance c/d

88,233

 

88,233

 

88,233

 

 

 

 



Page No 4.96:

Question 95:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

 

 

 

 

Plant

7,000

Building

14,000

Provision for D. Debts (1,000 – 300)

700

 

 

Profit transferred to

 

 

 

Jain Capital

3,600

 

 

Gupta Capital

2,700

 

 

 

14,000

 

14,000

 

 

 

 

Partner’s Capital Accounts

Dr.

 

Cr.

 

Jain

Gupta

Mishra

Particulars

Jain

Gupta

Mishra

 

 

 

 

Balance b/d

70,000

60,000

 

 

 

 

 

Revaluation

3,600

2,700

 

Balance c/d

85,600

71,700

 

Premium for Goodwill

12,000

9,000

 

 

85,600

71,700

 

 

85,600

71,700

 

 

 

 

 

Balance b/d

85,600

71,700

 

 

 

 

 

Cash

 

 

52,433

Balance c/d

85,600

71,700

52,433

 

 

 

 

 

85,600

71,700

52,433

 

85,600

71,700

52,433

 

 

 

 

 

 

 

 

Balance Sheet

as on April 01, 2016 after Mishra’s admission

Liabilities

Amount

Rs

Particulars

Amount

Rs

 

 

 

 

Sundry Creditors

20,000

Cash

88,233

Bills Payable

3,000

Debtors

20,500

 

Bank Over draft

17,000

Less: Prov. for D. Debts

1,000

19,500

Capital A/cs:

 

Stock

20,000

Jain

85,600

 

Plant (40,000 – 7,000)

33,000

Gupta

71,700

 

Building (75,000 + 14,000)

89,000

Mishra

52,433

2,09,733

 

 

 

2,49,733

 

2,49,733

 

 

 

 

Working Notes

WN1

WN2

Distribution of Revaluation Profit

WN3

Calculation of Mishra’s Capital

Combined Capital of Jain and Gupta after all adjustments = 85,600 + 71,700 = Rs 1,57,300

WN4

Cash Account

Dr.

 

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

 

 

 

 

Balance b/d

14,800

 

 

Mishra’s Capital A/c

52,433

 

 

Premium for Goodwill

21,000

Balance c/d

88,233

 

88,233

 

88,233

 

 

 

 

Answer:

Revaluation Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
 
 
 
 
Plant and Machinery A/c
2,000
Land and Building A/c
4,000
    Provision for Doubtful Debts A/c
4,000
Profit transferred to:      
  Neha’s Capital A/c 3,600      
  Tara’s Capital A/c
2,400
6,000
   
 
8,000
 
8,000
       
             
Partners’ Capital Accounts
Dr.  
Cr.
Particulars
Neha
Tara
Prachi
Particulars
Neha
Tara
Prachi
               
Balance c/d
26,600
22,400
12,250
Balance b/d
8,000
10,000
 
        Bank A/c    
12,250
        Premium for Goodwill A/c
6,000
4,000
 
        General Reserve A/c
7,200
4,800
 
        Workmen Compensation Fund A/c
1,800
1,200
 
        Revaluation A/c
3,600
2,400
 
 
26,600
22,400
12,250
 
26,600
22,400
12,250
               

Balance Sheet
as on April 01, 2012 after Prachi’s admission
Liabilities
Amount
Rs
Assets
Amount
Rs
 
 
 
 
Creditors
15,000
Debtors
19,000
Workmen Compensation Reserve
2,000
Land and Building
18,000
    Plant and Machinery (12,000 – 2,000)
10,000
Capital A/c:   Stock
6,000
  Neha
26,600
  Cash
25,250
  Tara
22,400
     
  Prachi
12,250
61,250
   
       
 
78,250
 
78,250
       

Working Notes

Let the total share = 1Prachi enters for 15 shareRemaining share = 1 - 15 = 45Total adjusted capital of Neha and Tara = 26,600 + 22,400 = 49,000Total capital of the firm = Total combined Capital of Neha and Tara × Reciprocal of their combined shareTotal capital of the firm = 49,000 × 54 = 61,250Prachi's share of capital = 61,250 × 15 = 12,250

 
Cash Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
       
Balance b/d
3,000
Balance c/d
25,250
Prachi’s Capital A/c
12,250
   
Premium for Goodwill A/c
10,000
   
       
 
25,250
 
25,250
       



Page No 4.97:

Question 96:

Revaluation Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
 
 
 
 
Plant and Machinery A/c
2,000
Land and Building A/c
4,000
    Provision for Doubtful Debts A/c
4,000
Profit transferred to:      
  Neha’s Capital A/c 3,600      
  Tara’s Capital A/c
2,400
6,000
   
 
8,000
 
8,000
       
             
Partners’ Capital Accounts
Dr.  
Cr.
Particulars
Neha
Tara
Prachi
Particulars
Neha
Tara
Prachi
               
Balance c/d
26,600
22,400
12,250
Balance b/d
8,000
10,000
 
        Bank A/c    
12,250
        Premium for Goodwill A/c
6,000
4,000
 
        General Reserve A/c
7,200
4,800
 
        Workmen Compensation Fund A/c
1,800
1,200
 
        Revaluation A/c
3,600
2,400
 
 
26,600
22,400
12,250
 
26,600
22,400
12,250
               

Balance Sheet
as on April 01, 2012 after Prachi’s admission
Liabilities
Amount
Rs
Assets
Amount
Rs
 
 
 
 
Creditors
15,000
Debtors
19,000
Workmen Compensation Reserve
2,000
Land and Building
18,000
    Plant and Machinery (12,000 – 2,000)
10,000
Capital A/c:   Stock
6,000
  Neha
26,600
  Cash
25,250
  Tara
22,400
     
  Prachi
12,250
61,250
   
       
 
78,250
 
78,250
       

Working Notes

Let the total share = 1Prachi enters for 15 shareRemaining share = 1 - 15 = 45Total adjusted capital of Neha and Tara = 26,600 + 22,400 = 49,000Total capital of the firm = Total combined Capital of Neha and Tara × Reciprocal of their combined shareTotal capital of the firm = 49,000 × 54 = 61,250Prachi's share of capital = 61,250 × 15 = 12,250

 
Cash Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
       
Balance b/d
3,000
Balance c/d
25,250
Prachi’s Capital A/c
12,250
   
Premium for Goodwill A/c
10,000
   
       
 
25,250
 
25,250
       

Answer:

Revaluation Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
 
 
 
 
Plant and Machinery A/c
5,000
Land and Building A/c
13,000
Outstanding Repairs A/c
100
Provision for doubtful debts A/c
500
Profit transferred to:   Creditors A/c
1,200
  A’s Capital A/c 6,000      
  B’s Capital A/c
3,600
9,600
   
 
14,700
 
14,700
       
             
Partners’ Capital Accounts
Dr.  
Cr.
Particulars
A
B
C
Particulars
A
B
C
               
Goodwill A/c
6,250
3,750
  Balance b/d
55,000
30,000
 
Investment A/c
6,250
3,750
  Bank A/c    
23,350
Cash A/c  
2,400
  Premium for Goodwill A/c
3,250
1,950
 
        General Reserve A/c
10,000
6,000
 
Balance c/d
61,750
31,650
23,350
Revaluation A/c
6,000
3,600
 
 
74,250
41,550
23,350
 
74,250
41,550
23,350
               
                   
Balance Sheet
as on April 01, 2016 after C’s admission
Liabilities
Amount
Rs
Assets
Amount
Rs
 
 
 
 
Creditors (19,000 – 1,200)
17,800
Debtors
25,000
Bills Payable
8,000
Land and Building
38,000
Outstanding Salaries
2,400
Plant and Machinery
30,000
Provision for Bad and Doubtful Debts
1,000
Investments
4,000
Outstanding Repairs
100
Prepaid Insurance
500
Capital A/cs:   Stock
20,000
  A
61,750
  Cash
28,550
  B
31,650
     
  C
23,350
1,16,750
   
       
 
1,46,050
 
1,46,050
       

Working Notes

Let the total share = 1C enters for 15 shareRemaining share = 1 - 15 = 45Total adjusted capital of A and B = 61,750 + 31,650 = 93,400Total capital of the firm = Total combined capital of A and B × Reciprocal of their profit shareTotal capital of the firm = 93,400 × 54 = 1,16,750Prachi's share of capital = 1,16,750 × 15 = 23,350

 
Cash Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
       
Balance b/d
2,400
B’s Capital A/c
2,400
C’s Capital A/c
23,350
   
Premium for Goodwill A/c
5,200
   
    Balance c/d
28,550
 
31,250
 
31,250
       

Page No 4.97:

Question 97:

Revaluation Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
 
 
 
 
Plant and Machinery A/c
5,000
Land and Building A/c
13,000
Outstanding Repairs A/c
100
Provision for doubtful debts A/c
500
Profit transferred to:   Creditors A/c
1,200
  A’s Capital A/c 6,000      
  B’s Capital A/c
3,600
9,600
   
 
14,700
 
14,700
       
             
Partners’ Capital Accounts
Dr.  
Cr.
Particulars
A
B
C
Particulars
A
B
C
               
Goodwill A/c
6,250
3,750
  Balance b/d
55,000
30,000
 
Investment A/c
6,250
3,750
  Bank A/c    
23,350
Cash A/c  
2,400
  Premium for Goodwill A/c
3,250
1,950
 
        General Reserve A/c
10,000
6,000
 
Balance c/d
61,750
31,650
23,350
Revaluation A/c
6,000
3,600
 
 
74,250
41,550
23,350
 
74,250
41,550
23,350
               
                   
Balance Sheet
as on April 01, 2016 after C’s admission
Liabilities
Amount
Rs
Assets
Amount
Rs
 
 
 
 
Creditors (19,000 – 1,200)
17,800
Debtors
25,000
Bills Payable
8,000
Land and Building
38,000
Outstanding Salaries
2,400
Plant and Machinery
30,000
Provision for Bad and Doubtful Debts
1,000
Investments
4,000
Outstanding Repairs
100
Prepaid Insurance
500
Capital A/cs:   Stock
20,000
  A
61,750
  Cash
28,550
  B
31,650
     
  C
23,350
1,16,750
   
       
 
1,46,050
 
1,46,050
       

Working Notes

Let the total share = 1C enters for 15 shareRemaining share = 1 - 15 = 45Total adjusted capital of A and B = 61,750 + 31,650 = 93,400Total capital of the firm = Total combined capital of A and B × Reciprocal of their profit shareTotal capital of the firm = 93,400 × 54 = 1,16,750Prachi's share of capital = 1,16,750 × 15 = 23,350

 
Cash Account
Dr.  
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
       
Balance b/d
2,400
B’s Capital A/c
2,400
C’s Capital A/c
23,350
   
Premium for Goodwill A/c
5,200
   
    Balance c/d
28,550
 
31,250
 
31,250
       

Answer:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Provision for Doubtful Debts

2,000

Land and Building

10,000

Profit transferred to:

 

Stock

4,000

  A’s Capital A/c

7,200

 

 

 

  B’s Capital A/c

4,800

12,000

 

 

 

14,000

 

14,000

 

 

 

 

             

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

A

B

C

Particulars

A

B

C

Profit and Loss A/c

3,000

2,000

 

Balance b/d

10,000

10,000

 

Balance c/d

34,000

26,000

15,000

Cash A/c (WN3)

 

 

15,000

 

 

 

 

Premium for Goodwill A/c

6,000

4,000

 

 

 

 

 

Revaluation A/c

7,200

4,800

 

 

 

 

 

General Reserve A/c

9,000

6,000

 

 

 

 

 

Workmen Compensation Reserve A/c

4,800

3,200

 

 

34,000

26,000

15,000

 

34,000

26,000

15,000

 

 

 

 

 

 

 

 

                 

 

Balance Sheet

as at April 01, 2016

Liabilities

Amount

Rs

Assets

Amount

Rs

Capital A/cs:

 

Plant and Machinery

10,000

A

34,000

 

Land and Building

8,000

 

B

26,000

 

Add: Appreciation

10,000

18,000

C

15,000

75,000

Debtors

           12,000

 

Workmen Compensation Claim

2,000

Less: Provision for DD

    3,000

9,000

Creditors

10,000

Stock

16,000

 

 

Cash (9,000 + 15,000 + 10,000)

34,000

 

87,000

 

87,000

 

 

 

 

Working Notes:

WN 1: Calculation of adjusted capital balances of A and B

Adjusted Capital of A            = 34,000

Adjusted Capital of B            = 26,000

Combined Capital of A and B = Rs 60,000

WN 2: Calculation of Total Capital of New Firm

WN 3: Calculation of C’s Capital



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