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Page No 6.100:

Question 51:

Answer:

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

Revaluation A/c

Dr.

 

10,000

 

To Machinery A/c

 

 

10,000

(Decrease in value of Machinery transferred to Revaluation Account)

 

 

 

 

 

 

 

Patents A/c

Dr.

 

10,000

 

Leasehold A/c

Dr.

 

25,000

 

To Revaluation A/c

 

 

35,000

(Increase in value Patents and Leasehold transferred to Revaluation Account)

 

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

25,000

 

To R’s Capital A/c

 

 

12,500

To S’s Capital A/c

 

 

7,500

To T’s Capital A/c

 

 

5,000

(Revaluation profit distributed among partners in their old ratio)

 

 

 

 

 

 

 

R’ Capital A/c

Dr.

 

12,500

 

S’s Capital A/c

Dr.

 

7,500

 

T’s Capital A/c

Dr.

 

5,000

 

To Goodwill A/c

 

 

25,000

(Goodwill written off among partners in their old ratio)

 

 

 

 

 

 

 

R’s Capital A/c

Dr.

 

21,875

 

S’s Capital A/c

Dr.

 

13,125

 

To T’s Capital A/c

 

 

35,000

(T’s share of goodwill adjusted)

 

 

 

 

 

 

 

Profit and Loss Suspense A/c

Dr.

 

5,000

 

  To T’s Capital A/c

 

 

5,000

(T’s share of profit transferred to his capital account)

 

 

 

 

 

 

 

Workmen’s Compensation Reserve A/c

Dr.

 

30,000

 

To R’s Capital A/c

 

 

15,000

To S’s Capital A/c

 

 

9,000

To T’s Capital A/c

 

 

6,000

(Workmen’s Compensation Reserve distributed among partners in their old ratio )

 

 

 

 

 

 

 

T’s Capital A/c

Dr.

 

1,21,000

 

To T’s Executors A/c

 

 

1,21,000

(Amount due to T after all adjustments transferred to his Executor’s Account)

 

 

 

 

 

 

 

T’s Executor’s A/c

Dr.

 

21,000

 

To Bank A/c

 

 

21,000

(Amount paid to T’s Executor)

 

 

 

 

 

 

 

 

T’s Executor’s Account

Dr.

 

Cr.

Date

Particulars

Amount

Rs

Date

Particulars

Amount

Rs

2016

 

 

2016

 

 

Aug. 01

Cash A/c

21,000

Aug. 01

T’s Capital A/c

1,21,000

2017     2017    

Feb. 01

Cash A/c (25,000 + 5,000)

30,000

Feb. 01

Interest (1,00,000 ×10% for 6 months)

5,000

March 31

Balance c/d

76,250

March 31

Interest (75,000 ×10% for 2 months)

1,250

 

 

1,27,250

 

 

1,27,250

2017

 

 

2017

 

 

August 01

Cash A/c (25,000 + 1,250 + 2,500)

28,750

April 01

Balance b/d

76,250

2018

 

 

August 01

Interest (75,000 × 10% for 4 months)

2,500

Feb. 01 Cash A/c (25,000 + 2,500) 27,500 2018    

March 31

Balance c/d

25,417

Feb. 01

Interest (50,000 × 10% for 6 months)

2,500

 

 

 

March 31

Interest (25,000 × 10% for 2 months)

417

 

 

81,667

 

 

81,667

2018

 

 

2018

 

 

August 01

Cash A/c (25,000 + 417 + 833)

26,250

April 01

Balance b/d

25,417

 

 

 

August 01

Interest (25,000 × 10% for 4 months)

833

 

 

26,250

 

 

26,250

 

 

 

 

 

 


Working Notes:

WN 1 Calculation of Goodwill

Goodwill = Average Profit × Number of Year’s Purchase



∴ Goodwill = Average Profit × Number of Years’ Purchase

= 70,000 × 2.5 = Rs 1,75,000

WN 2 Adjustment of Goodwill

Old Ratio (R, S and T) = 5 : 3 : 2

T died.

∴ New Ratio (R and S) = 5 : 3 and

Gaining Ratio = 5 : 3

T’s Share in Goodwill =

This share of goodwill is to be distributed between R and S in their gaining ratio (i.e. 5 : 3).



WN 3 Calculation of T’s Share of Profit

Profit for 2016-17 = Rs 75,000

T's Share in Profit = 75,000 × 210 × 412 = Rs 5,000

WN 4
 

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Machinery

10,000

Patents

10,000

Profit transferred to:

 

Leasehold

25,000

R’s Capital A/c

12,500

 

 

 

S’s Capital A/c

7,500

 

 

 

T’s Capital A/c

5,000

25,000

 

 

 

35,000

 

35,000

 

 

 

 


WN 5

T’s Capital Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Goodwill

5,000

Balance b/d

75,000

T’s Executor’s A/c

1,21,000

Workmen’s Compensation Reserve

6,000

 

 

Profit and Loss Suspense A/c

5,000

 

 

R’s Capital A/c

21,875

 

 

S’s Capital A/c

13,125

 

 

Revaluation A/c (Profit)

5,000

 

1,26,000

 

1,26,000

 

 

 

 

Page No 6.100:

Question 52:

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

Revaluation A/c

Dr.

 

10,000

 

To Machinery A/c

 

 

10,000

(Decrease in value of Machinery transferred to Revaluation Account)

 

 

 

 

 

 

 

Patents A/c

Dr.

 

10,000

 

Leasehold A/c

Dr.

 

25,000

 

To Revaluation A/c

 

 

35,000

(Increase in value Patents and Leasehold transferred to Revaluation Account)

 

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

25,000

 

To R’s Capital A/c

 

 

12,500

To S’s Capital A/c

 

 

7,500

To T’s Capital A/c

 

 

5,000

(Revaluation profit distributed among partners in their old ratio)

 

 

 

 

 

 

 

R’ Capital A/c

Dr.

 

12,500

 

S’s Capital A/c

Dr.

 

7,500

 

T’s Capital A/c

Dr.

 

5,000

 

To Goodwill A/c

 

 

25,000

(Goodwill written off among partners in their old ratio)

 

 

 

 

 

 

 

R’s Capital A/c

Dr.

 

21,875

 

S’s Capital A/c

Dr.

 

13,125

 

To T’s Capital A/c

 

 

35,000

(T’s share of goodwill adjusted)

 

 

 

 

 

 

 

Profit and Loss Suspense A/c

Dr.

 

5,000

 

  To T’s Capital A/c

 

 

5,000

(T’s share of profit transferred to his capital account)

 

 

 

 

 

 

 

Workmen’s Compensation Reserve A/c

Dr.

 

30,000

 

To R’s Capital A/c

 

 

15,000

To S’s Capital A/c

 

 

9,000

To T’s Capital A/c

 

 

6,000

(Workmen’s Compensation Reserve distributed among partners in their old ratio )

 

 

 

 

 

 

 

T’s Capital A/c

Dr.

 

1,21,000

 

To T’s Executors A/c

 

 

1,21,000

(Amount due to T after all adjustments transferred to his Executor’s Account)

 

 

 

 

 

 

 

T’s Executor’s A/c

Dr.

 

21,000

 

To Bank A/c

 

 

21,000

(Amount paid to T’s Executor)

 

 

 

 

 

 

 

 

T’s Executor’s Account

Dr.

 

Cr.

Date

Particulars

Amount

Rs

Date

Particulars

Amount

Rs

2016

 

 

2016

 

 

Aug. 01

Cash A/c

21,000

Aug. 01

T’s Capital A/c

1,21,000

2017     2017    

Feb. 01

Cash A/c (25,000 + 5,000)

30,000

Feb. 01

Interest (1,00,000 ×10% for 6 months)

5,000

March 31

Balance c/d

76,250

March 31

Interest (75,000 ×10% for 2 months)

1,250

 

 

1,27,250

 

 

1,27,250

2017

 

 

2017

 

 

August 01

Cash A/c (25,000 + 1,250 + 2,500)

28,750

April 01

Balance b/d

76,250

2018

 

 

August 01

Interest (75,000 × 10% for 4 months)

2,500

Feb. 01 Cash A/c (25,000 + 2,500) 27,500 2018    

March 31

Balance c/d

25,417

Feb. 01

Interest (50,000 × 10% for 6 months)

2,500

 

 

 

March 31

Interest (25,000 × 10% for 2 months)

417

 

 

81,667

 

 

81,667

2018

 

 

2018

 

 

August 01

Cash A/c (25,000 + 417 + 833)

26,250

April 01

Balance b/d

25,417

 

 

 

August 01

Interest (25,000 × 10% for 4 months)

833

 

 

26,250

 

 

26,250

 

 

 

 

 

 


Working Notes:

WN 1 Calculation of Goodwill

Goodwill = Average Profit × Number of Year’s Purchase



∴ Goodwill = Average Profit × Number of Years’ Purchase

= 70,000 × 2.5 = Rs 1,75,000

WN 2 Adjustment of Goodwill

Old Ratio (R, S and T) = 5 : 3 : 2

T died.

∴ New Ratio (R and S) = 5 : 3 and

Gaining Ratio = 5 : 3

T’s Share in Goodwill =

This share of goodwill is to be distributed between R and S in their gaining ratio (i.e. 5 : 3).



WN 3 Calculation of T’s Share of Profit

Profit for 2016-17 = Rs 75,000

T's Share in Profit = 75,000 × 210 × 412 = Rs 5,000

WN 4
 

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Machinery

10,000

Patents

10,000

Profit transferred to:

 

Leasehold

25,000

R’s Capital A/c

12,500

 

 

 

S’s Capital A/c

7,500

 

 

 

T’s Capital A/c

5,000

25,000

 

 

 

35,000

 

35,000

 

 

 

 


WN 5

T’s Capital Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Goodwill

5,000

Balance b/d

75,000

T’s Executor’s A/c

1,21,000

Workmen’s Compensation Reserve

6,000

 

 

Profit and Loss Suspense A/c

5,000

 

 

R’s Capital A/c

21,875

 

 

S’s Capital A/c

13,125

 

 

Revaluation A/c (Profit)

5,000

 

1,26,000

 

1,26,000

 

 

 

 

Answer:

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

Workmen’s Compensation Reserve

Dr.

 

6,000

 

To X’s Capital A/c

 

 

3,000

To Y’s Capital A/c

 

 

2,000

To Z’s Capital A/c

 

 

1,000

(Workmen’s Compesation Reserve distributed among partners in their old ratio)

 

 

 

 

 

 

 

General Reserve A/c

Dr.

 

6,000

 

To X’s Capital A/c

 

 

3,000

To Y’s Capital A/c

 

 

2,000

To Z’s Capital A/c

 

 

1,000

(General Reserve distributed among partners in their old ratio)

 

 

 

 

 

 

 

X’s Capital A/c

Dr.

 

3,000

 

Y’s Capital A/c

Dr.

 

2,000

 

Z’s Capital A/c

Dr.

 

1,000

 

To Advertisement Suspense A/c

 

 

6,000

(Advertisement suspense written off among partners in their old ratio)

 

 

 

 

 

 

 

X’s Capital A/c

Dr.

 

4,500

 

Y’s Capital A/c

Dr.

 

3,000

 

To Z’s Capital A/c

 

 

7,500

(Z’s share of goodwill adjusted )

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

3,600

 

  To Sundry debtors A/c

Dr.

 

 

1,000

To Furniture A/c

 

 

500

To Plant and Machinery A/c

 

 

1,500

To Bills Receivable A/c

 

 

600

(Decrease in value of Assets transferred to Revaluation Account)

 

 

 

 

 

 

 

Stock A/c

Dr.

 

1,000

 

Building A/c

Dr.

 

5,000

 

To Revaluation A/c

 

 

6,000

(Increase in value of Assets transferred to Revaluation Account)

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

2,400

 

To X’ Capital A/c

 

 

1,200

To Y’s Capital A/c

 

 

800

To Z’s Capital A/c

 

 

400

(Revaluation profit distributed among partners in their old ratio)

 

 

 

 

 

 

 

Profit and Loss Suspense A/c

Dr.

 

1,333

 

To Z’s Capital A/c

 

 

1,333

(Z’s share of profit transferred his capital account)

 

 

 

 

 

 

 

Z’s Capital A/c

Dr.

 

22,233

 

  To Z’s Executor’s A/c

 

 

22,233

(Amount due to Z transferred to his Executor’s Account)

 

 

 

 

 

 

 

Z’s Executor’s A/c

Dr.

 

12,333

 

To Bank A/c

 

 

12,333

(Amount paid to Z’s Executor)

 

 

 

 

 

 

 

 

Z’s Executor’s Account

Dr.

 

Cr.

Date

Particulars

Amount

Rs

Date

Particulars

Amount

Rs

2015

 

 

2015

 

 

April 30

Bank A/c

12,233

April 30

Z’s Capital A/c

22,233

Dec. 31

Balance c/d

10,667

Dec. 31

Interest (10,000 × 10% for 8 months)

667

 

 

22,900

 

 

22,900

2016

 

 

2016

 

 

April 30

Bank A/c (5,000 + 667 + 333)

6,000

Jan. 01

Balance b/d

10,667

 

 

 

April 30

Interest (10,000 × 10% for 4 months )

333

 

Balance c/d

5,333

Dec. 31

Interest (5,000 × 10% for 8 months)

333

 

 

11,333

 

 

11,333

2017

 

 

2017

 

 

April 30

Bank A/c (5,000 + 333 + 167)

5,500

April 01

Balance b/d

5,333

 

 

 

April 30

Interest (5,000 × 10% for 4months)

167

 

 

5,500

 

 

5,500

 

 

 

 

 

 


Working Notes:

WN 1 Calculation of Goodwill

Goodwill = Average Profit × Number of Year’s Purchase



∴ Goodwill = Average Profit × Number of Years’ Purchase

= 15,000 × 3 = Rs 45,000

WN 2 Adjustment of Goodwill

Old Ratio = 3 : 2 : 1

Z died.

∴ New Ratio (X and Y) = 3 : 1 and

Gaining Ratio = 3 : 2

Z’s Share in Goodwill =

This share of goodwill is to be distributed between X and Y in their gaining ratio (i.e. 3 : 1).



WN 3 Calculation Z’s Share of Profit

Profit for Previous Year = Rs 24,000

∴ Z’s Profit Share

WN 4

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Sundry Debtors

1,000

Stock

1,000

Furniture

500

Building

5,000

Plant and Machinery

1,500

 

 

Bills Receivable

600

 

 

Profit transferred to:

 

 

 

X’s Capital A/c

1,200

 

 

 

Y’s Capital A/c

800

 

 

 

Z’s Capital A/c

400

2,400

 

 

 

6,000

 

6,000

 

 

 

 



Page No 6.101:

Question 53:

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

Workmen’s Compensation Reserve

Dr.

 

6,000

 

To X’s Capital A/c

 

 

3,000

To Y’s Capital A/c

 

 

2,000

To Z’s Capital A/c

 

 

1,000

(Workmen’s Compesation Reserve distributed among partners in their old ratio)

 

 

 

 

 

 

 

General Reserve A/c

Dr.

 

6,000

 

To X’s Capital A/c

 

 

3,000

To Y’s Capital A/c

 

 

2,000

To Z’s Capital A/c

 

 

1,000

(General Reserve distributed among partners in their old ratio)

 

 

 

 

 

 

 

X’s Capital A/c

Dr.

 

3,000

 

Y’s Capital A/c

Dr.

 

2,000

 

Z’s Capital A/c

Dr.

 

1,000

 

To Advertisement Suspense A/c

 

 

6,000

(Advertisement suspense written off among partners in their old ratio)

 

 

 

 

 

 

 

X’s Capital A/c

Dr.

 

4,500

 

Y’s Capital A/c

Dr.

 

3,000

 

To Z’s Capital A/c

 

 

7,500

(Z’s share of goodwill adjusted )

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

3,600

 

  To Sundry debtors A/c

Dr.

 

 

1,000

To Furniture A/c

 

 

500

To Plant and Machinery A/c

 

 

1,500

To Bills Receivable A/c

 

 

600

(Decrease in value of Assets transferred to Revaluation Account)

 

 

 

 

 

 

 

Stock A/c

Dr.

 

1,000

 

Building A/c

Dr.

 

5,000

 

To Revaluation A/c

 

 

6,000

(Increase in value of Assets transferred to Revaluation Account)

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

2,400

 

To X’ Capital A/c

 

 

1,200

To Y’s Capital A/c

 

 

800

To Z’s Capital A/c

 

 

400

(Revaluation profit distributed among partners in their old ratio)

 

 

 

 

 

 

 

Profit and Loss Suspense A/c

Dr.

 

1,333

 

To Z’s Capital A/c

 

 

1,333

(Z’s share of profit transferred his capital account)

 

 

 

 

 

 

 

Z’s Capital A/c

Dr.

 

22,233

 

  To Z’s Executor’s A/c

 

 

22,233

(Amount due to Z transferred to his Executor’s Account)

 

 

 

 

 

 

 

Z’s Executor’s A/c

Dr.

 

12,333

 

To Bank A/c

 

 

12,333

(Amount paid to Z’s Executor)

 

 

 

 

 

 

 

 

Z’s Executor’s Account

Dr.

 

Cr.

Date

Particulars

Amount

Rs

Date

Particulars

Amount

Rs

2015

 

 

2015

 

 

April 30

Bank A/c

12,233

April 30

Z’s Capital A/c

22,233

Dec. 31

Balance c/d

10,667

Dec. 31

Interest (10,000 × 10% for 8 months)

667

 

 

22,900

 

 

22,900

2016

 

 

2016

 

 

April 30

Bank A/c (5,000 + 667 + 333)

6,000

Jan. 01

Balance b/d

10,667

 

 

 

April 30

Interest (10,000 × 10% for 4 months )

333

 

Balance c/d

5,333

Dec. 31

Interest (5,000 × 10% for 8 months)

333

 

 

11,333

 

 

11,333

2017

 

 

2017

 

 

April 30

Bank A/c (5,000 + 333 + 167)

5,500

April 01

Balance b/d

5,333

 

 

 

April 30

Interest (5,000 × 10% for 4months)

167

 

 

5,500

 

 

5,500

 

 

 

 

 

 


Working Notes:

WN 1 Calculation of Goodwill

Goodwill = Average Profit × Number of Year’s Purchase



∴ Goodwill = Average Profit × Number of Years’ Purchase

= 15,000 × 3 = Rs 45,000

WN 2 Adjustment of Goodwill

Old Ratio = 3 : 2 : 1

Z died.

∴ New Ratio (X and Y) = 3 : 1 and

Gaining Ratio = 3 : 2

Z’s Share in Goodwill =

This share of goodwill is to be distributed between X and Y in their gaining ratio (i.e. 3 : 1).



WN 3 Calculation Z’s Share of Profit

Profit for Previous Year = Rs 24,000

∴ Z’s Profit Share

WN 4

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Sundry Debtors

1,000

Stock

1,000

Furniture

500

Building

5,000

Plant and Machinery

1,500

 

 

Bills Receivable

600

 

 

Profit transferred to:

 

 

 

X’s Capital A/c

1,200

 

 

 

Y’s Capital A/c

800

 

 

 

Z’s Capital A/c

400

2,400

 

 

 

6,000

 

6,000

 

 

 

 

Answer:

Black’s Executor’s Account
Dr.   Cr.
Particulars Amount
Rs
Particulars Amount
Rs
Black’s Executor’s Loan A/c 1,28,000 Balance b/d 60,000
    Reserves A/c (WN1) 12,000
    Profit and Loss Suspense A/c (WN 2) 5,600
    Brown’s Capital A/c (WN 3) 50,400
       
  1,28,000   1,28,000
       

Working Notes:

Profit Sharing Ratio between  Brown and Black is 3 : 2

WN 1: Calculation of Share of Reserve

30,000 × 25 = Rs 12,000

WN 2: Calculation of Share of Profits

Total Profit = 42,000 + 39,000 + 45,000 = Rs 1,26,000

Average Profit = Total Profit3Average Profit = 1,26,0003=Rs 42,000

Black’s Share = 42,000 × 25 × 412 = Rs 5,600

WN 3: Calculation of Share of  Goodwill

Average Profit = Rs 42,000

Goodwill = 42,000 × 3 = Rs 1,26,000

Black’s Share = 1,26,000 × 25=Rs 50,400

Page No 6.101:

Question 54:

Black’s Executor’s Account
Dr.   Cr.
Particulars Amount
Rs
Particulars Amount
Rs
Black’s Executor’s Loan A/c 1,28,000 Balance b/d 60,000
    Reserves A/c (WN1) 12,000
    Profit and Loss Suspense A/c (WN 2) 5,600
    Brown’s Capital A/c (WN 3) 50,400
       
  1,28,000   1,28,000
       

Working Notes:

Profit Sharing Ratio between  Brown and Black is 3 : 2

WN 1: Calculation of Share of Reserve

30,000 × 25 = Rs 12,000

WN 2: Calculation of Share of Profits

Total Profit = 42,000 + 39,000 + 45,000 = Rs 1,26,000

Average Profit = Total Profit3Average Profit = 1,26,0003=Rs 42,000

Black’s Share = 42,000 × 25 × 412 = Rs 5,600

WN 3: Calculation of Share of  Goodwill

Average Profit = Rs 42,000

Goodwill = 42,000 × 3 = Rs 1,26,000

Black’s Share = 1,26,000 × 25=Rs 50,400

Answer:

Revaluation Account
Dr.   Cr.
Particulars Amount Rs Particulars Amount Rs
Stock A/c 1,500 Land and Building A/c 25,000
    Provision for Doubtful Debts A/c 2,000
Profit transferred to:      
X’s Capital A/c
8,500      
Y’s Capital A/c
8,500      
Z’s Capital A/c
8,500 25,500    
  27,000   27,000
       
 
Partners’ Capital Accounts
Dr.   Cr.
Particulars X Y Z Particulars X Y Z
Z’s Capital A/c 4,375 4,375   Balance b/d 75,000 50,000 50,000
Goodwill A/c 15,750 15,750 15,750 Profit & Loss Suspense A/c     1,875
Z’s Executor A/c     56,925 Revaluation A/c 8,500 8,500 8,500
Balance c/d 66,925 41,925   X’s Capital A/c     4,375
        Y’s Capital A/c     4,375
        Investment Fluctuation Reserve 550 550 550
        Contingency Reserve 3,000 3,000 3,000
               
  87,050 62,050 72,675   87,050 62,050 72,675
               
 
Balance Sheet
as on April 01, 2010 after Z’s death
Liabilities Amount Rs Assets Amount Rs
Z’s Executor 56,925 Cash 2,500
Capital A/cs:   Bank 10,000
X
66,925   Debtors 25,000
Y
41,925 1,08,850 Stock 23,500
Creditors 33,250 Land and Building 1,25,000
Investment Fluctuation Reserve 1,350 Investments (at Cost) 12,500
    Profit and Loss Suspense A/c 1,875
  2,00,375   2,00,375
       

Working Notes:

1. Investment Fluctuation Reserve is required only upto Rs 1,350, the balance of Rs 1,650 is credited to Partner’s Capital A/c in their old profit sharing ratio.

2. Goodwill already appearing in the books of accounts is to be written off in old ratio

3. Calculation of Goodwill:
 
Average Profit = Total Profit5

Total Profit = 28,750 + 35,000 + 22,500 + 20,000 + 25,000 = Rs 1,31,250

Average Profit = 1,31,2505=Rs 26,250

Goodwill = 26,250 × 1 = Rs 26,250

Z’s share = 26,250 × 13 = Rs 8,750

Since no information about new ratio is given, it is assumed that partner’s will gain in their old ratio which is 1 : 1.

4. Profit share of Z
Average Profit for 3 years = Total Profit3

Total Profit = 22,500 + 20,000 + 25,000 = Rs 67,500

Average Profit = 67,5003=Rs 22,500

Z’s Share = 22,500 × 13 × 312 = Rs 1,875



Page No 6.102:

Question 55:

Revaluation Account
Dr.   Cr.
Particulars Amount Rs Particulars Amount Rs
Stock A/c 1,500 Land and Building A/c 25,000
    Provision for Doubtful Debts A/c 2,000
Profit transferred to:      
X’s Capital A/c
8,500      
Y’s Capital A/c
8,500      
Z’s Capital A/c
8,500 25,500    
  27,000   27,000
       
 
Partners’ Capital Accounts
Dr.   Cr.
Particulars X Y Z Particulars X Y Z
Z’s Capital A/c 4,375 4,375   Balance b/d 75,000 50,000 50,000
Goodwill A/c 15,750 15,750 15,750 Profit & Loss Suspense A/c     1,875
Z’s Executor A/c     56,925 Revaluation A/c 8,500 8,500 8,500
Balance c/d 66,925 41,925   X’s Capital A/c     4,375
        Y’s Capital A/c     4,375
        Investment Fluctuation Reserve 550 550 550
        Contingency Reserve 3,000 3,000 3,000
               
  87,050 62,050 72,675   87,050 62,050 72,675
               
 
Balance Sheet
as on April 01, 2010 after Z’s death
Liabilities Amount Rs Assets Amount Rs
Z’s Executor 56,925 Cash 2,500
Capital A/cs:   Bank 10,000
X
66,925   Debtors 25,000
Y
41,925 1,08,850 Stock 23,500
Creditors 33,250 Land and Building 1,25,000
Investment Fluctuation Reserve 1,350 Investments (at Cost) 12,500
    Profit and Loss Suspense A/c 1,875
  2,00,375   2,00,375
       

Working Notes:

1. Investment Fluctuation Reserve is required only upto Rs 1,350, the balance of Rs 1,650 is credited to Partner’s Capital A/c in their old profit sharing ratio.

2. Goodwill already appearing in the books of accounts is to be written off in old ratio

3. Calculation of Goodwill:
 
Average Profit = Total Profit5

Total Profit = 28,750 + 35,000 + 22,500 + 20,000 + 25,000 = Rs 1,31,250

Average Profit = 1,31,2505=Rs 26,250

Goodwill = 26,250 × 1 = Rs 26,250

Z’s share = 26,250 × 13 = Rs 8,750

Since no information about new ratio is given, it is assumed that partner’s will gain in their old ratio which is 1 : 1.

4. Profit share of Z
Average Profit for 3 years = Total Profit3

Total Profit = 22,500 + 20,000 + 25,000 = Rs 67,500

Average Profit = 67,5003=Rs 22,500

Z’s Share = 22,500 × 13 × 312 = Rs 1,875

Answer:

Bharati’s Capital Account
Dr.   Cr.
Particulars Amount
Rs
Particulars Amount
Rs
Bharati’s Executor’s A/c 26,300 Balance b/d 12,000
    Interest on Capital A/c 300
    General Reserve A/c 4,000
    Profit and Loss Suspense A/c 4,000
    Arti’s Capital A/c 4,500
    Seema’s Capital A/c 1,500
  26,300   26,300
       

Working Notes:

WN 1: Calculation of  Interest on Capital

12,000 × 10100 × 312 = Rs 300

WN 2: Calculation of  Profit share

10% of Sales = 1,20,000 × 10100=12,000

Bharati’s Share = 12,000 × 26=Rs 4,000

WN 3: Calculation of  Goodwill

Average profit of 3 years × 2 years of purchase

Average Profit = Total Profit3

Total Profit = 8,200 + 9,000 + 9,800 = Rs 27,000

Average Profit = 27,0003=Rs 9,000

Goodwill = 9,000 × 2 = Rs 18,000

Bharti’s Share = 18,000 × 26=Rs 6,000

Since no information about new ratio is given, it is assumed that partner’s will gain in their old ratio which is 3 : 1.

Note: The answer given in the book is Rs 26,000. However, as per the solution provided, the actual amount payable to Bharati's Executor is Rs 26,300.

Page No 6.102:

Question 56:

Bharati’s Capital Account
Dr.   Cr.
Particulars Amount
Rs
Particulars Amount
Rs
Bharati’s Executor’s A/c 26,300 Balance b/d 12,000
    Interest on Capital A/c 300
    General Reserve A/c 4,000
    Profit and Loss Suspense A/c 4,000
    Arti’s Capital A/c 4,500
    Seema’s Capital A/c 1,500
  26,300   26,300
       

Working Notes:

WN 1: Calculation of  Interest on Capital

12,000 × 10100 × 312 = Rs 300

WN 2: Calculation of  Profit share

10% of Sales = 1,20,000 × 10100=12,000

Bharati’s Share = 12,000 × 26=Rs 4,000

WN 3: Calculation of  Goodwill

Average profit of 3 years × 2 years of purchase

Average Profit = Total Profit3

Total Profit = 8,200 + 9,000 + 9,800 = Rs 27,000

Average Profit = 27,0003=Rs 9,000

Goodwill = 9,000 × 2 = Rs 18,000

Bharti’s Share = 18,000 × 26=Rs 6,000

Since no information about new ratio is given, it is assumed that partner’s will gain in their old ratio which is 3 : 1.

Note: The answer given in the book is Rs 26,000. However, as per the solution provided, the actual amount payable to Bharati's Executor is Rs 26,300.

Answer:

  Books of 
  Journal
Date Particulars L.F. Debit
Amount

Rs
Credit
Amount

Rs
  Building A/c Dr.   5,000  
  Stock A/c Dr.   1,000  
 
To Revaluation A/c
      6,000
  (Value of assets has increased)      
           
  Revaluation A/c Dr.   3,600  
 
To Debtors A/c
      1,000
 
To Furniture A/c
      500
 
To Plant and Machinery A/c
      1,500
 
To Bills Receivable
      600
  (Value of assets has decreased)      
           
  Revaluation A/c Dr.   2,400  
 
To P’s Capital A/c
      1,200
 
To Q’s Capital A/c
      800
 
To R’s Capital A/c
      400
  (Profit on Revaluation credited to Partner’s Capital A/c)      
           
  Profit and Loss Suspense A/c Dr.   1,333  
 
To R’s Executor A/c
      1,333
  (R’s share of Profit credited to his account)      
           
  P’s Capital A/c Dr.   4,500  
  Q’s Capital A/c Dr.   3,000  
 
To R’s Capital A/c
      7,500
  (R’s share of goodwill credited to his account and debited to P and Q in their gaining ratio.)      
           
  Reserve Dr.   6,000  
 
To P’s Capital A/c
      3,000
 
To Q’s Capital A/c
      2,000
 
To R’s Capital A/c
      1,000
  (Reserve credited to Partner’s Capital Account in their old ratio.)      

 

Partners’ Capital Accounts
Dr.   Cr.
Particulars P Q R Particulars P Q R
R’s Capital A/c 4,500 3,000   Balance b/d 22,750 15,250 12,000
R’s Executor A/c     22,233 Reserve A/c 3,000 2,000 1,000
Balance c/d 22,450 15,050   Profit & Loss Suspense A/c     1,333
        Revaluation A/c 1,200 800 400
        P’s Capital A/c     4,500
        Q’s Capital A/c     3,000
  26,950 18,050 22,233   26,950 18,050 22,233
               
 
R’s Executor’s Account
Dr.   Cr.
Particulars Amount
Rs
Particulars Amount
Rs
Bank A/c 12,900 Balance b/d 22,233
R’s Executor’s Loan A/c 9,333    
  22,233   22,233
       
 
Balance Sheet
as on July 31, 2015 after R’s death
Liabilities Amount
Rs
Assets Amount
Rs
       
    Cash at Bank 5,800
Capital A/cs:   Bills Receivable (800 – 600) 200
P
22,450   Debtors 15,000
Q
15,050 37,500 Stock 10,000
Creditors 5,000 Building 35,000
Bills Payable 2,000 Furniture 1,500
Loans (7,100 + 12,900) 20,000 Plant and Machinery 5,000
R’s Executor’s A/c 9,333 Profit and Loss Suspense A/c 1,333
  73,833   73,833
       

Working Notes:

1. Profit = 24,000 × 16 × 412 = Rs 1,333

2. Total Profit = 24,000 + 16,000 + 20,000 + 10,000 + 5,000 = Rs 75,000

Average Profit =Total Profit5Average Profit =75,0005=Rs 15,000

Goodwill = Average Profit of 5 Years’ × 3 Years’ of Purchase

Goodwill = 15,000 × 3 = Rs 45,000

R’s share = 45,000×16= Rs 7,500



Page No 6.103:

Question 57:

  Books of 
  Journal
Date Particulars L.F. Debit
Amount

Rs
Credit
Amount

Rs
  Building A/c Dr.   5,000  
  Stock A/c Dr.   1,000  
 
To Revaluation A/c
      6,000
  (Value of assets has increased)      
           
  Revaluation A/c Dr.   3,600  
 
To Debtors A/c
      1,000
 
To Furniture A/c
      500
 
To Plant and Machinery A/c
      1,500
 
To Bills Receivable
      600
  (Value of assets has decreased)      
           
  Revaluation A/c Dr.   2,400  
 
To P’s Capital A/c
      1,200
 
To Q’s Capital A/c
      800
 
To R’s Capital A/c
      400
  (Profit on Revaluation credited to Partner’s Capital A/c)      
           
  Profit and Loss Suspense A/c Dr.   1,333  
 
To R’s Executor A/c
      1,333
  (R’s share of Profit credited to his account)      
           
  P’s Capital A/c Dr.   4,500  
  Q’s Capital A/c Dr.   3,000  
 
To R’s Capital A/c
      7,500
  (R’s share of goodwill credited to his account and debited to P and Q in their gaining ratio.)      
           
  Reserve Dr.   6,000  
 
To P’s Capital A/c
      3,000
 
To Q’s Capital A/c
      2,000
 
To R’s Capital A/c
      1,000
  (Reserve credited to Partner’s Capital Account in their old ratio.)      

 

Partners’ Capital Accounts
Dr.   Cr.
Particulars P Q R Particulars P Q R
R’s Capital A/c 4,500 3,000   Balance b/d 22,750 15,250 12,000
R’s Executor A/c     22,233 Reserve A/c 3,000 2,000 1,000
Balance c/d 22,450 15,050   Profit & Loss Suspense A/c     1,333
        Revaluation A/c 1,200 800 400
        P’s Capital A/c     4,500
        Q’s Capital A/c     3,000
  26,950 18,050 22,233   26,950 18,050 22,233
               
 
R’s Executor’s Account
Dr.   Cr.
Particulars Amount
Rs
Particulars Amount
Rs
Bank A/c 12,900 Balance b/d 22,233
R’s Executor’s Loan A/c 9,333    
  22,233   22,233
       
 
Balance Sheet
as on July 31, 2015 after R’s death
Liabilities Amount
Rs
Assets Amount
Rs
       
    Cash at Bank 5,800
Capital A/cs:   Bills Receivable (800 – 600) 200
P
22,450   Debtors 15,000
Q
15,050 37,500 Stock 10,000
Creditors 5,000 Building 35,000
Bills Payable 2,000 Furniture 1,500
Loans (7,100 + 12,900) 20,000 Plant and Machinery 5,000
R’s Executor’s A/c 9,333 Profit and Loss Suspense A/c 1,333
  73,833   73,833
       

Working Notes:

1. Profit = 24,000 × 16 × 412 = Rs 1,333

2. Total Profit = 24,000 + 16,000 + 20,000 + 10,000 + 5,000 = Rs 75,000

Average Profit =Total Profit5Average Profit =75,0005=Rs 15,000

Goodwill = Average Profit of 5 Years’ × 3 Years’ of Purchase

Goodwill = 15,000 × 3 = Rs 45,000

R’s share = 45,000×16= Rs 7,500

Answer:

Partners’ Capital Accounts
Dr.   Cr.
Particulars P Q R Particulars P Q R
R’s Capital A/c 7,900 3,950   Balance b/d 15,000 10,000 10,000
Drawings A/c     5,000 Reserve Fund A/c 10,000 5,000 5,000
R’s Executor A/c     22,936 Profit & Loss Suspense A/c     1,086
Balance c/d 17,100 11,050   P’s Capital A/c     7,900
        Q’s Capital A/c     3,950
  25,000 15,000 27,936   25,000 15,000 27,936
               
 
R’s Executor’s Account
Dr.   Cr.
Particulars Amount
Rs
Particulars Amount
Rs
Bank A/c    22,936 Balance b/d 22,936
       
  22,936   22,936
       

 

Balance Sheet
as on July 01, 2016 after R’s death
Liabilities Amount Rs Assets Amount Rs
Creditors 25,000 Building 26,000
Capital A/cs:   Debtors 15,000
P
17,100   Bills Receivable 6,000
Q
11,050 28,150 Stock 12,000
Bank Overdraft 6,936 Profit and Loss Suspense A/c 1,086
  60,086   60,086
       

Working Notes:

WN 1: Calculation of Share of Profit

Average Profit = Total Profit3

Total Profit = 16,000 + 16,000 + 15,400 = Rs 47,400

Average Profit = 47,4003=Rs 15,800

Total Profits = 15,800 + 1,580 (10% of 15,800) = Rs 17,380

R’s Share = 17,380×14×312=Rs 1,086

WN 2: Calculation of Goodwill

Goodwill = Total Profits = Rs 47,400

R’s Share = 47,400×14=Rs 11,850

Bank A/c
Dr.   Cr.
Particulars Amount Rs Particulars Amount Rs
Balance b/d 6,000 R’s Executors’ A/c    22,936
Investments 15,000 R’s Capital A/c 5,000
Balance c/d 6,936    
  27,936   27,936
       

Page No 6.103:

Question 58:

Partners’ Capital Accounts
Dr.   Cr.
Particulars P Q R Particulars P Q R
R’s Capital A/c 7,900 3,950   Balance b/d 15,000 10,000 10,000
Drawings A/c     5,000 Reserve Fund A/c 10,000 5,000 5,000
R’s Executor A/c     22,936 Profit & Loss Suspense A/c     1,086
Balance c/d 17,100 11,050   P’s Capital A/c     7,900
        Q’s Capital A/c     3,950
  25,000 15,000 27,936   25,000 15,000 27,936
               
 
R’s Executor’s Account
Dr.   Cr.
Particulars Amount
Rs
Particulars Amount
Rs
Bank A/c    22,936 Balance b/d 22,936
       
  22,936   22,936
       

 

Balance Sheet
as on July 01, 2016 after R’s death
Liabilities Amount Rs Assets Amount Rs
Creditors 25,000 Building 26,000
Capital A/cs:   Debtors 15,000
P
17,100   Bills Receivable 6,000
Q
11,050 28,150 Stock 12,000
Bank Overdraft 6,936 Profit and Loss Suspense A/c 1,086
  60,086   60,086
       

Working Notes:

WN 1: Calculation of Share of Profit

Average Profit = Total Profit3

Total Profit = 16,000 + 16,000 + 15,400 = Rs 47,400

Average Profit = 47,4003=Rs 15,800

Total Profits = 15,800 + 1,580 (10% of 15,800) = Rs 17,380

R’s Share = 17,380×14×312=Rs 1,086

WN 2: Calculation of Goodwill

Goodwill = Total Profits = Rs 47,400

R’s Share = 47,400×14=Rs 11,850

Bank A/c
Dr.   Cr.
Particulars Amount Rs Particulars Amount Rs
Balance b/d 6,000 R’s Executors’ A/c    22,936
Investments 15,000 R’s Capital A/c 5,000
Balance c/d 6,936    
  27,936   27,936
       

Answer:

Revaluation Account
Dr.   Cr.
Particulars Amount
Rs
Particulars Amount
Rs
Provision for Doubtful Debts A/c 1,800 Furniture A/c 3,750
Machinery A/c 12,000 Stock A/c 3,200
    Advertisement Expenses A/c 2,100
    Loss transferred to:  
   
X’s Capital A/c
2,375  
   
Y’s Capital A/c
1,583  
   
Z’s Capital A/c
792 4,750
  13,800   13,800
       
 
Partners’ Capital Accounts
Dr.   Cr.
Particulars X Y Z Particulars X Y Z
Balance b/d (Current A/c)     5,000 Balance b/d (Capital A/c) 1,50,000 1,00,000 50,000
Revaluation A/c 2,375 1,583 792 Balance b/d (Current A/c) 8,000 2,500  
Z’s Capital A/c 3,000 2,000   Workmen Compensation Reserve A/c 3,000 2,000 1,000
Z’s Executor A/c     54,208 X’s Capital A/c     3,000
Balance c/d 1,67,625 1,08,917   Y’s Capital A/c     2,000
        General Reserve A/c 12,000 8,000 4,000
  1,73,000 1,12,500 60,000   1,73,000 1,12,500 60,000
               
 
Z’s Executor’s Account
Dr.   Cr.
Date Particulars Amount
Rs
Date Particulars Amount
Rs
2013     2013    
Sep. 30 Bank A/c 29,272 April 01 Balance b/d 54,208
2014     Sep. 30 Interest A/c (WN 2) 2,168
March 31 Bank A/c 28,188 2014    
      March 31 Interest A/c (WN 2) 1,084
           
    57,460     57,460
           

Working Notes:

WN 1: Calculation of Share of Goodwill

Zs Share of Goodwill = 30,000×16=Rs 5,000 (To be compensated by X and Y in 3:2)

WN 2: Calculation of Share of Interest

54,208×8100×612=Rs 2,16827,104×8100×612=Rs 1,084



Page No 6.104:

Question 59:

Revaluation Account
Dr.   Cr.
Particulars Amount
Rs
Particulars Amount
Rs
Provision for Doubtful Debts A/c 1,800 Furniture A/c 3,750
Machinery A/c 12,000 Stock A/c 3,200
    Advertisement Expenses A/c 2,100
    Loss transferred to:  
   
X’s Capital A/c
2,375  
   
Y’s Capital A/c
1,583  
   
Z’s Capital A/c
792 4,750
  13,800   13,800
       
 
Partners’ Capital Accounts
Dr.   Cr.
Particulars X Y Z Particulars X Y Z
Balance b/d (Current A/c)     5,000 Balance b/d (Capital A/c) 1,50,000 1,00,000 50,000
Revaluation A/c 2,375 1,583 792 Balance b/d (Current A/c) 8,000 2,500  
Z’s Capital A/c 3,000 2,000   Workmen Compensation Reserve A/c 3,000 2,000 1,000
Z’s Executor A/c     54,208 X’s Capital A/c     3,000
Balance c/d 1,67,625 1,08,917   Y’s Capital A/c     2,000
        General Reserve A/c 12,000 8,000 4,000
  1,73,000 1,12,500 60,000   1,73,000 1,12,500 60,000
               
 
Z’s Executor’s Account
Dr.   Cr.
Date Particulars Amount
Rs
Date Particulars Amount
Rs
2013     2013    
Sep. 30 Bank A/c 29,272 April 01 Balance b/d 54,208
2014     Sep. 30 Interest A/c (WN 2) 2,168
March 31 Bank A/c 28,188 2014    
      March 31 Interest A/c (WN 2) 1,084
           
    57,460     57,460
           

Working Notes:

WN 1: Calculation of Share of Goodwill

Zs Share of Goodwill = 30,000×16=Rs 5,000 (To be compensated by X and Y in 3:2)

WN 2: Calculation of Share of Interest

54,208×8100×612=Rs 2,16827,104×8100×612=Rs 1,084

Answer:

Calculation of Amount Payable to Legal Representative of B
Particulars Amount
Rs
Capital Balance 37,500
  Add:  
  Interest on Capital 1,125
  Profit and Loss Suspense 27,500
  Drawings 40,000
  General Reserve 8,333
  1,14,458
 Less:  
  Drawings 25,000
  Interest on Drawings A/c 625
Total 88,833
   

Working Notes:

WN 1: Calculation of Interest on Capital

Interest on Capital = 37,500×6100×612=Rs 1,125


WN 2: Calculation of Profit

Total Profit = 1,62,500 + 1,60,000 + 1,72,500 = Rs 4,95,000

Average Profit = Total Profit3Average Profit = 4,95,0003=Rs 1,65,000

B’s Share = 1,65,000×13×612=Rs 27,500

WN
3:
Calculation of Interest on Drawings

Interest on drawings = 25,000×10100×312=Rs 625

Since, date of drawings has not been specified, thus, interest has been calculated for a average period of 3 months as drawings were given for the period of 6 months.

Page No 6.104:

Question 60:

Calculation of Amount Payable to Legal Representative of B
Particulars Amount
Rs
Capital Balance 37,500
  Add:  
  Interest on Capital 1,125
  Profit and Loss Suspense 27,500
  Drawings 40,000
  General Reserve 8,333
  1,14,458
 Less:  
  Drawings 25,000
  Interest on Drawings A/c 625
Total 88,833
   

Working Notes:

WN 1: Calculation of Interest on Capital

Interest on Capital = 37,500×6100×612=Rs 1,125


WN 2: Calculation of Profit

Total Profit = 1,62,500 + 1,60,000 + 1,72,500 = Rs 4,95,000

Average Profit = Total Profit3Average Profit = 4,95,0003=Rs 1,65,000

B’s Share = 1,65,000×13×612=Rs 27,500

WN
3:
Calculation of Interest on Drawings

Interest on drawings = 25,000×10100×312=Rs 625

Since, date of drawings has not been specified, thus, interest has been calculated for a average period of 3 months as drawings were given for the period of 6 months.

Answer:

Revaluation Account
Dr.   Cr.
Particulars Amount
Rs
Particulars Amount
Rs
Stock A/c 24,000 Land and Building A/c 75,000
       
Provision for Doubtful Debts A/c 15,000    
Profit transferred to:      
P’s Capital A/c
12,000        
Q’s Capital A/c
18,000        
R’s Capital A/c
6,000 36,000    
  75,000   75,000
       
 
Partners’ Capital Accounts
Dr.   Cr.
Particulars P Q R Particulars P Q R
Q’s Capital A/c 54,000     Balance b/d 3,00,000 6,00,000 9,00,000
R’s Capital A/c 90,000     Policy A/c 60,000 90,000 30,000
Advertisement Suspense A/c 12,000 18,000 6,000 P’s Capital A/c   54,000 90,000
Goodwill A/c 12,000 18,000 6,000 Workmen Compensation Reserve A/c 12,000 18,000 6,000
Bank A/c     5,11,500 Investments Fluctuation Reserve A/c 6,000 9,000 3,000
R’s Executor A/c     5,11,500 Revaluation A/c 12,000 18,000 6,000
Balance c/d 2,22,000 7,53,000          
  3,90,000 7,89,000 10,35,000   3,90,000 7,89,000 10,35,000
               
 
Balance Sheet
as on April 01, 2016 after R’s death
Liabilities Amount
Rs
Assets Amount
Rs
Creditors 7,20,000 Land and Building 8,25,000
Capital A/cs:   Investments 1,38,000
P
2,22,000   Stock 2,16,000
Q
7,53,000 9,75,000 Debtors 9,00,000  
Employees Provident Fund 3,60,000
Less: Provision for Doubtful Debts
45,000 8,55,000
Workmen Compensation Reserve 24,000 Bank (8,88,000 – 5,11,500 + 1,80,000) 5,56,500
R’s Executor A/c 5,11,500    
       
       
       
  25,90,500   25,90,500
       

Working Notes:

WN 1: Calculation of Gaining Ratio

Gaining Ratio = New Ratio – Old Ratio

Old Ratio = 2 : 3 : 1

New Ratio = 3 : 2

P's share of Gain = 35 - 26 = 830Q's share of Gain = 25 - 36 = -330(Sacrifice)

WN 2: Calculation of Share of Goodwill

Total Profit = 1,35,000 + 2,70,000 + 4,05,000 = Rs 8,10,000

Average Profit =Total Profit5Average Profit =8,10,0003=Rs 2,70,000

Goodwill = Average Profit × 1 Year of Purchase

Goodwill = 2,70,000 × 2 = Rs 5,40,000

 P will give = 5,40,000 × 830=Rs 1,44,000Q will get = 5,40,000 × 330=Rs 54,000R will get =5,40,000 × 16=Rs 90,000 



Page No 6.105:

Question 61:

Revaluation Account
Dr.   Cr.
Particulars Amount
Rs
Particulars Amount
Rs
Stock A/c 24,000 Land and Building A/c 75,000
       
Provision for Doubtful Debts A/c 15,000    
Profit transferred to:      
P’s Capital A/c
12,000        
Q’s Capital A/c
18,000        
R’s Capital A/c
6,000 36,000    
  75,000   75,000
       
 
Partners’ Capital Accounts
Dr.   Cr.
Particulars P Q R Particulars P Q R
Q’s Capital A/c 54,000     Balance b/d 3,00,000 6,00,000 9,00,000
R’s Capital A/c 90,000     Policy A/c 60,000 90,000 30,000
Advertisement Suspense A/c 12,000 18,000 6,000 P’s Capital A/c   54,000 90,000
Goodwill A/c 12,000 18,000 6,000 Workmen Compensation Reserve A/c 12,000 18,000 6,000
Bank A/c     5,11,500 Investments Fluctuation Reserve A/c 6,000 9,000 3,000
R’s Executor A/c     5,11,500 Revaluation A/c 12,000 18,000 6,000
Balance c/d 2,22,000 7,53,000          
  3,90,000 7,89,000 10,35,000   3,90,000 7,89,000 10,35,000
               
 
Balance Sheet
as on April 01, 2016 after R’s death
Liabilities Amount
Rs
Assets Amount
Rs
Creditors 7,20,000 Land and Building 8,25,000
Capital A/cs:   Investments 1,38,000
P
2,22,000   Stock 2,16,000
Q
7,53,000 9,75,000 Debtors 9,00,000  
Employees Provident Fund 3,60,000
Less: Provision for Doubtful Debts
45,000 8,55,000
Workmen Compensation Reserve 24,000 Bank (8,88,000 – 5,11,500 + 1,80,000) 5,56,500
R’s Executor A/c 5,11,500    
       
       
       
  25,90,500   25,90,500
       

Working Notes:

WN 1: Calculation of Gaining Ratio

Gaining Ratio = New Ratio – Old Ratio

Old Ratio = 2 : 3 : 1

New Ratio = 3 : 2

P's share of Gain = 35 - 26 = 830Q's share of Gain = 25 - 36 = -330(Sacrifice)

WN 2: Calculation of Share of Goodwill

Total Profit = 1,35,000 + 2,70,000 + 4,05,000 = Rs 8,10,000

Average Profit =Total Profit5Average Profit =8,10,0003=Rs 2,70,000

Goodwill = Average Profit × 1 Year of Purchase

Goodwill = 2,70,000 × 2 = Rs 5,40,000

 P will give = 5,40,000 × 830=Rs 1,44,000Q will get = 5,40,000 × 330=Rs 54,000R will get =5,40,000 × 16=Rs 90,000 

Answer:

Journal
Particulars
L.F.
Debit
Amount
Rs
Credit
Amount
Rs
General Reserve A/c
Dr.
 
10,000
 
To A’s Capital A/c
 
 
 
6,000
To B’s Capital
 
 
 
2,000
To C’s Capital A/c
 
 
 
2,000
(General reserve distributed among partners in their old ratio)
 
 
 
 
 
 
 
 
 
Land A/c
Dr.
 
1,00,000
 
To Revaluation A/c
 
 
 
1,00,000
(Increase in value of Land transferred to Revaluation Account)
 
 
 
 
 
 
 
 
 
Revaluation A/c
Dr.
 
68,000
 
To Plant and Machinery A/c
 
 
 
68,000
(Decrease in value of Plant and Machinery transferred to Revaluation Account)
 
 
 
 
 
 
 
 
 
Revaluation A/c
Dr.
 
32,000
 
To A’s Capital A/c
 
 
 
19,200
To B’s Capital A/c
 
 
 
6,400
To C’s Capital A/c
 
 
 
6,400
(Revaluation profit distributed among partners in their old ratio)
 
 
 
 
 
 
 
 
 
A’s Capital A/c
Dr.
 
36,000
 
C’s Capital A/c
Dr.
 
12,000
 
To B’s Capital A/c
 
 
 
48,000
(B’s share of goodwill adjusted)
 
 
 
 
 
 
 
 
 
B’s Capital A/c
Dr.
 
10,000
 
To B’s Drawings A/c
 
 
 
10,000
(B’s drawing charged from his capital account)
 
 
 
 
 
 
 
 
 
Profit and Loss Suspense A/c
Dr.
 
4,000
 
To B’s Capital A/c
 
 
 
4,000
(B’s share of profit transferred to his capital account)
 
 
 
 
 
 
 
 
 
B’s Capital A/c
Dr.
 
4,63,200
 
To B’s Executor’s A/c
 
 
 
4,63,200
(Amount due to B after all adjustments transferred to his Executor’s Account)
 
 
 
 
 
 
 
 
 

WN 1 Calculation of Goodwill

Goodwill = Average Profit × Number of Year’s Purchase

Average Profit = 80,000 + 1,30,000 + 150,0003=Rs 1,20,000   

∴ Goodwill = Average Profit × Number of Years’ Purchase

= 1,20,000 × 2 = Rs 2,40,000

WN 2 Adjustment of Goodwill

Old Ratio (A, B and C) = 3 : 1 : 1

B died.

∴ New Ratio (A and C) = 3 : 1 and

Gaining Ratio = 3 : 1

B’s Share in Goodwill = 2,40,000×15=Rs 48,000

This share of goodwill is to be distributed between A and C in their gaining ratio (i.e. 3 : 1).

A = 48,000×34=36,000B =48,000×14=12,000 

WN 3 Calculation of B’s Share of Profit

B's Share of Profit = 1,20,000×212×15=Rs 4,000


WN 4

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Plan and Machinery

68,000

Land

1,00,000

Profit transferred to:

 

 

 

A’s Capital A/c

19,200

 

 

 

B’s Capital A/c

6,400

 

 

 

C’s Capital A/c

6,400

32,000

 

 

 

1,00,000

 

1,00,000

 

 

 

 


WN 5
B’s Capital Account
Dr.
 
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
Drawings A/c
10,000
Balance b/d
4,12,800
B’s Executor’s A/c
4,63,200
General Reserve
2,000
 
 
Profit and Loss Suspense A/c
4,000
 
 
A’s Capital A/c
36,000
 
 
C’s Capital A/c
12,000
 
 
Revaluation A/c (Profit)
6,400
 
 
 
 
 
4,73,200
 
4,73,200
 
 
 
 



Page No 6.106:

Question 62:

Journal
Particulars
L.F.
Debit
Amount
Rs
Credit
Amount
Rs
General Reserve A/c
Dr.
 
10,000
 
To A’s Capital A/c
 
 
 
6,000
To B’s Capital
 
 
 
2,000
To C’s Capital A/c
 
 
 
2,000
(General reserve distributed among partners in their old ratio)
 
 
 
 
 
 
 
 
 
Land A/c
Dr.
 
1,00,000
 
To Revaluation A/c
 
 
 
1,00,000
(Increase in value of Land transferred to Revaluation Account)
 
 
 
 
 
 
 
 
 
Revaluation A/c
Dr.
 
68,000
 
To Plant and Machinery A/c
 
 
 
68,000
(Decrease in value of Plant and Machinery transferred to Revaluation Account)
 
 
 
 
 
 
 
 
 
Revaluation A/c
Dr.
 
32,000
 
To A’s Capital A/c
 
 
 
19,200
To B’s Capital A/c
 
 
 
6,400
To C’s Capital A/c
 
 
 
6,400
(Revaluation profit distributed among partners in their old ratio)
 
 
 
 
 
 
 
 
 
A’s Capital A/c
Dr.
 
36,000
 
C’s Capital A/c
Dr.
 
12,000
 
To B’s Capital A/c
 
 
 
48,000
(B’s share of goodwill adjusted)
 
 
 
 
 
 
 
 
 
B’s Capital A/c
Dr.
 
10,000
 
To B’s Drawings A/c
 
 
 
10,000
(B’s drawing charged from his capital account)
 
 
 
 
 
 
 
 
 
Profit and Loss Suspense A/c
Dr.
 
4,000
 
To B’s Capital A/c
 
 
 
4,000
(B’s share of profit transferred to his capital account)
 
 
 
 
 
 
 
 
 
B’s Capital A/c
Dr.
 
4,63,200
 
To B’s Executor’s A/c
 
 
 
4,63,200
(Amount due to B after all adjustments transferred to his Executor’s Account)
 
 
 
 
 
 
 
 
 

WN 1 Calculation of Goodwill

Goodwill = Average Profit × Number of Year’s Purchase

Average Profit = 80,000 + 1,30,000 + 150,0003=Rs 1,20,000   

∴ Goodwill = Average Profit × Number of Years’ Purchase

= 1,20,000 × 2 = Rs 2,40,000

WN 2 Adjustment of Goodwill

Old Ratio (A, B and C) = 3 : 1 : 1

B died.

∴ New Ratio (A and C) = 3 : 1 and

Gaining Ratio = 3 : 1

B’s Share in Goodwill = 2,40,000×15=Rs 48,000

This share of goodwill is to be distributed between A and C in their gaining ratio (i.e. 3 : 1).

A = 48,000×34=36,000B =48,000×14=12,000 

WN 3 Calculation of B’s Share of Profit

B's Share of Profit = 1,20,000×212×15=Rs 4,000


WN 4

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Plan and Machinery

68,000

Land

1,00,000

Profit transferred to:

 

 

 

A’s Capital A/c

19,200

 

 

 

B’s Capital A/c

6,400

 

 

 

C’s Capital A/c

6,400

32,000

 

 

 

1,00,000

 

1,00,000

 

 

 

 


WN 5
B’s Capital Account
Dr.
 
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
Drawings A/c
10,000
Balance b/d
4,12,800
B’s Executor’s A/c
4,63,200
General Reserve
2,000
 
 
Profit and Loss Suspense A/c
4,000
 
 
A’s Capital A/c
36,000
 
 
C’s Capital A/c
12,000
 
 
Revaluation A/c (Profit)
6,400
 
 
 
 
 
4,73,200
 
4,73,200
 
 
 
 

Answer:

X’s Capital Account
Dr.   Cr.
Particulars Amount Rs Particulars Amount Rs
Goodwill A/c 18,900 Balance b/d 90,000
X’s Executor’s A/c 1,01,850 Y’s Capital A/c 5,250
    Z’s Capital A/c 5,250
    Profit and Loss Suspense A/c 2,250
    Revaluation A/c (Profit) 18,000
  1,20,750   1,20,750
       

Working Notes:

WN 1: Calculation of X’s Profit Share

Total Profit = 30,000 + 24,000 + 27,000 = Rs 81,000

Average Profit =Total Profits for Last 3 Years'3Average Profit =81,0003=Rs 27,000

X’s Share = 27,000×13×312=Rs 2,250

WN 2: Calculation of Share of Goodwill

Total Profit= 30,000 + 24,000 + 27,000 + 42,000 + 34,500 = Rs 1,57,500

Average Profit =Total Profit5Average Profit =1,57,5005=Rs 31,500

Goodwill = Average Profit × 1 Year of Purchase

Goodwill = 31,500 × 1 = Rs 31,500

X’s Share = 31,500×13=Rs 10,500(to be compensated equally by Y and​ Z)

WN 3: Calculation of Revaluation Profit

Increase in Value of Freehold Property = Rs 54,000

X’s Share = 54,000×13=Rs 18,000

Page No 6.106:

Question 63:

X’s Capital Account
Dr.   Cr.
Particulars Amount Rs Particulars Amount Rs
Goodwill A/c 18,900 Balance b/d 90,000
X’s Executor’s A/c 1,01,850 Y’s Capital A/c 5,250
    Z’s Capital A/c 5,250
    Profit and Loss Suspense A/c 2,250
    Revaluation A/c (Profit) 18,000
  1,20,750   1,20,750
       

Working Notes:

WN 1: Calculation of X’s Profit Share

Total Profit = 30,000 + 24,000 + 27,000 = Rs 81,000

Average Profit =Total Profits for Last 3 Years'3Average Profit =81,0003=Rs 27,000

X’s Share = 27,000×13×312=Rs 2,250

WN 2: Calculation of Share of Goodwill

Total Profit= 30,000 + 24,000 + 27,000 + 42,000 + 34,500 = Rs 1,57,500

Average Profit =Total Profit5Average Profit =1,57,5005=Rs 31,500

Goodwill = Average Profit × 1 Year of Purchase

Goodwill = 31,500 × 1 = Rs 31,500

X’s Share = 31,500×13=Rs 10,500(to be compensated equally by Y and​ Z)

WN 3: Calculation of Revaluation Profit

Increase in Value of Freehold Property = Rs 54,000

X’s Share = 54,000×13=Rs 18,000

Answer:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Fixed Assets

2,500

Creditors

2,000

Provision for Doubtful Debts

5,000

Loss on Revaluation transferred to

 

 

 

X’s Capital A/c

2,750

 

 

 

Y’s Capital A/c

1,650

 

 

 

Z’s Capital A/c

1,100

5,500

 

7,500

 

7,500

 

 

 

 

             

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

X

Y

Z

Particulars

X

Y

Z

Revaluation A/c

2,750

1,650

1,100

Balance b/d

40,000

62,000

33,000

Goodwill A/c

2,500

1,500

1,000

Y’s Capital A/c

8,000

 

 

Advertisement Suspense A/c

2,500

1,500

1,000

Z’s Capital A/c

32,000

 

 

X’s Capital A/c

 

8,000

32,000

Profit and Loss A/c

42,500

25,500

17,000

Bank A/c

1,19,750

 

 

Workmen Compensation Reserve

5,000

3,000

2,000

Balance c/d (WN2)

 

79,000

1,18,500

Bank A/c (Bal. Fig.)

 

1,150

1,01,600

 

1,27,500

91,650

1,53,600

 

1,27,500

91,650

1,53,600

 

 

 

 

 

 

 

 

                 

Working Notes:

WN 1: Calculation of sacrificing/gaining ratio

 

WN 2: Calculation of New Capital of Y and Z



Page No 6.107:

Question 64:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Fixed Assets

2,500

Creditors

2,000

Provision for Doubtful Debts

5,000

Loss on Revaluation transferred to

 

 

 

X’s Capital A/c

2,750

 

 

 

Y’s Capital A/c

1,650

 

 

 

Z’s Capital A/c

1,100

5,500

 

7,500

 

7,500

 

 

 

 

             

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

X

Y

Z

Particulars

X

Y

Z

Revaluation A/c

2,750

1,650

1,100

Balance b/d

40,000

62,000

33,000

Goodwill A/c

2,500

1,500

1,000

Y’s Capital A/c

8,000

 

 

Advertisement Suspense A/c

2,500

1,500

1,000

Z’s Capital A/c

32,000

 

 

X’s Capital A/c

 

8,000

32,000

Profit and Loss A/c

42,500

25,500

17,000

Bank A/c

1,19,750

 

 

Workmen Compensation Reserve

5,000

3,000

2,000

Balance c/d (WN2)

 

79,000

1,18,500

Bank A/c (Bal. Fig.)

 

1,150

1,01,600

 

1,27,500

91,650

1,53,600

 

1,27,500

91,650

1,53,600

 

 

 

 

 

 

 

 

                 

Working Notes:

WN 1: Calculation of sacrificing/gaining ratio

 

WN 2: Calculation of New Capital of Y and Z

Answer:

Journal

Date

Particulars

L.F.

Debit

Amount

(Rs)

Credit

Amount

(Rs)

2014

 

 

 

 

 

August 01

Patents A/c

Dr.

 

85,000

 

 

Investments A/c

Dr.

 

6,000

 

 

 To Revaluation A/c

 

 

 

91,000

 

(Patens recorded at a lesser value and investments sold at a profit of Rs 6,000)

 

 

 

 

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

16,000

 

 

   To Machinery A/c

 

 

 

16,000

 

(Machinery is recorded with excess value of

Rs 16,000 in the books)

 

 

 

 

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

75,000

 

 

  To X’s Capital A/c

 

 

37,500

 

  To Y’s Capital A/c

 

 

 

22,500

 

  To Z’s Capital A/c

 

 

 

15,000

 

(Profit on revaluation transferred to Partners’ Capital Account in old ratio)

 

 

 

 

 

 

 

 

 

 

 

X’s Capital A/c

Dr.

 

21,875

 

 

Y’s Capital A/c

 

 

13,125

 

 

 To Z’ s Capital A/c

 

 

 

35,000

 

(Z’s share of goodwill compensated by X and Y in gaining ratio)

 

 

 

 

 

 

 

 

 

 

 

Z’s Capital A/c

Dr.

 

5,000

 

 

  To Profit and Loss Suspense A/c

 

 

 

5,000

 

(Z’s share in loss till his death)

 

 

 

 

 

 

 

 

 

 

 

Workmen Compensation Reserve

Dr.

 

17,500

 

 

  To Workmen Compensation Claim

 

 

 

10,000

 

  To X’s Capital A/c

 

 

 

3,750

 

  To Y’s Capital A/c

 

 

 

2,250

 

  To Z’s Capital A/c

 

 

 

1,500

 

(Amount transferred for workmen compensation claim and excess amount is distributed among the partners in old ratio)

 

 

 

 

 

 

 

 

 

 

 

Investments Fluctuation Reserve

Dr.

 

17,500

 

 

  To X’s Capital A/c

 

 

 

8,750

 

  To Y’s Capital A/c

 

 

 

5,250

 

  To Z’s Capital A/c

 

 

 

3,500

 

(Entire balance of IFF is distributed among the partners in old ratio)

 

 

 

 

 

 

 

 

 

 

 

X’s Capital A/c

Dr.

 

2,500

 

 

Y’s Capital A/c

Dr.

 

1,500

 

 

Z’s Capital A/c

Dr.

 

1,000

 

 

  To Advertisement Expenditure A/c

 

 

 

5,000

 

(Advertisement expenditure debited to partners’ capital accounts in old ratio)

 

 

 

 

 

 

 

 

 

 

 

X’s Capital A/c

Dr.

 

1,87,500

 

 

Y’s Capital A/c

Dr.

 

1,12,500

 

 

Z’s Capital A/c

Dr.

 

75,000

 

 

  To Profit and Loss A/c

 

 

 

3,75,000

 

(Loss during 2013-14 debited to partners’ capital accounts in old ratio)

 

 

 

 

 

 

 

 

 

 

 

Z’s Capital A/c

Dr.

 

1,24,000

 

 

  To Z’s Executor A/c

 

 

1,24,000

 

(Z’s capital balance is transferred to Z’s Executor Account)

 

 

 

 

 

 

 

 

 

 

Z’s Executor A/c

Dr.

 

24,000

 

 

   To Bank A/c

 

 

24,000

 

(Payment made to Z’s executor)

 

 

 

 

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

X

Y

Z

Particulars

X

Y

Z

Profit and Loss A/c

1,87,500

1,12,500

75,000

Balance b/d

3,37,500

2,37,500

1,85,000

Z’s Capital A/c

21,875

13,125

 

Revaluation A/c

37,500

22,500

15,000

Profit and Loss Suspense A/c

 

 

5,000

X’s Capital A/c

 

 

21,875

Advertisement Suspense A/c

2,500

1,500

1,000

Y’s Capital A/c

 

 

13,125

Drawings A/c

 

 

25,000

Workmen Compensation Reserve

3,750

2,250

1,500

Goodwill A/c

12,500

7,500

5,000

Investments Fluctuation Reserve

8,750

5,250

3,500

Loan to Z

 

 

5,000

 

 

 

 

Z’s Executor A/c

 

 

1,24,000

 

 

 

 

Balance c/d

1,63,125

1,32,875

 

 

 

 

 

 

3,87,500

2,67,500

2,40,000

 

3,87,500

2,67,500

2,40,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as at August 01, 2014

Liabilities

Amount

Rs

Assets

Amount

Rs

Capital A/cs:

 

 

 

X

1,63,125

 

Patents

1,30,000

 

Y

1,32,875

2,96,000

Add: Undervaluation

 85,000

2,15,000

Sundry Creditors

55,000

Machinery

                   1,56,000

 

Z’s Executor Loan A/c

1,00,000

Less: Overvaluation

               16,000

1,40,000

Workmen Compensation Claim

10,000

Stock

50,000

Profit and Loss Suspense

5,000

Sundry Debtors

                      62,000

 

 

 

 

Less: Provision for DD

                2,000

60,000

 

 

 

Cash at Bank (29,000 + 21,000 – 24,000 – 25,000)

1,000

 

 

 

 

 

 

4,66,000

 

4,66,000

 

 

 

 

 

Z’s Executor’s Account

Dr.

 

Cr.

Date

Particulars

Amount

Rs

Date

Particulars

Amount

Rs

2014

 

 

2014

 

 

Aug. 01

Bank A/c

24,000

Aug. 01

T’s Capital A/c

1,24,000

2015

 

 

2015

 

 

Feb. 01

Cash A/c (25,000 + 5,000)

30,000

Feb. 01

Interest (1,00,000 ×10% for 6 months)

5,000

March 31

Balance c/d

76,250

March 31

Interest (75,000 ×10% for 2 months)

1,250

 

 

1,27,250

 

 

1,27,250

2015

 

 

2015

 

 

August 01

Cash A/c (25,000 + 1,250 + 2,500)

28,750

April 01

Balance b/d

76,250

2016

 

 

August 01

Interest (75,000 × 10% for 4 months)

2,500

Feb. 01

Cash A/c (25,000 + 2,500)

27,500

2016

 

 

March 31

Balance c/d

25,417

Feb. 01

Interest (50,000 × 10% for 6 months)

2,500

 

 

 

March 31

Interest (25,000 × 10% for 2 months)

417

 

 

81,667

 

 

81,667

2016

 

 

2016

 

 

August 01

Cash A/c (25,000 + 417 + 833)

26,250

April 01

Balance b/d

25,417

 

 

 

August 01

Interest (25,000 × 10% for 4 months)

833

 

 

26,250

 

 

26,250

 

 

 

 

 

 

Working Notes:

WN 1: Calculation of Goodwill

WN 2: Calculation of Z’s Profit Share



Page No 6.84:

Question 1:

Journal

Date

Particulars

L.F.

Debit

Amount

(Rs)

Credit

Amount

(Rs)

2014

 

 

 

 

 

August 01

Patents A/c

Dr.

 

85,000

 

 

Investments A/c

Dr.

 

6,000

 

 

 To Revaluation A/c

 

 

 

91,000

 

(Patens recorded at a lesser value and investments sold at a profit of Rs 6,000)

 

 

 

 

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

16,000

 

 

   To Machinery A/c

 

 

 

16,000

 

(Machinery is recorded with excess value of

Rs 16,000 in the books)

 

 

 

 

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

75,000

 

 

  To X’s Capital A/c

 

 

37,500

 

  To Y’s Capital A/c

 

 

 

22,500

 

  To Z’s Capital A/c

 

 

 

15,000

 

(Profit on revaluation transferred to Partners’ Capital Account in old ratio)

 

 

 

 

 

 

 

 

 

 

 

X’s Capital A/c

Dr.

 

21,875

 

 

Y’s Capital A/c

 

 

13,125

 

 

 To Z’ s Capital A/c

 

 

 

35,000

 

(Z’s share of goodwill compensated by X and Y in gaining ratio)

 

 

 

 

 

 

 

 

 

 

 

Z’s Capital A/c

Dr.

 

5,000

 

 

  To Profit and Loss Suspense A/c

 

 

 

5,000

 

(Z’s share in loss till his death)

 

 

 

 

 

 

 

 

 

 

 

Workmen Compensation Reserve

Dr.

 

17,500

 

 

  To Workmen Compensation Claim

 

 

 

10,000

 

  To X’s Capital A/c

 

 

 

3,750

 

  To Y’s Capital A/c

 

 

 

2,250

 

  To Z’s Capital A/c

 

 

 

1,500

 

(Amount transferred for workmen compensation claim and excess amount is distributed among the partners in old ratio)

 

 

 

 

 

 

 

 

 

 

 

Investments Fluctuation Reserve

Dr.

 

17,500

 

 

  To X’s Capital A/c

 

 

 

8,750

 

  To Y’s Capital A/c

 

 

 

5,250

 

  To Z’s Capital A/c

 

 

 

3,500

 

(Entire balance of IFF is distributed among the partners in old ratio)

 

 

 

 

 

 

 

 

 

 

 

X’s Capital A/c

Dr.

 

2,500

 

 

Y’s Capital A/c

Dr.

 

1,500

 

 

Z’s Capital A/c

Dr.

 

1,000

 

 

  To Advertisement Expenditure A/c

 

 

 

5,000

 

(Advertisement expenditure debited to partners’ capital accounts in old ratio)

 

 

 

 

 

 

 

 

 

 

 

X’s Capital A/c

Dr.

 

1,87,500

 

 

Y’s Capital A/c

Dr.

 

1,12,500

 

 

Z’s Capital A/c

Dr.

 

75,000

 

 

  To Profit and Loss A/c

 

 

 

3,75,000

 

(Loss during 2013-14 debited to partners’ capital accounts in old ratio)

 

 

 

 

 

 

 

 

 

 

 

Z’s Capital A/c

Dr.

 

1,24,000

 

 

  To Z’s Executor A/c

 

 

1,24,000

 

(Z’s capital balance is transferred to Z’s Executor Account)

 

 

 

 

 

 

 

 

 

 

Z’s Executor A/c

Dr.

 

24,000

 

 

   To Bank A/c

 

 

24,000

 

(Payment made to Z’s executor)

 

 

 

 

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

X

Y

Z

Particulars

X

Y

Z

Profit and Loss A/c

1,87,500

1,12,500

75,000

Balance b/d

3,37,500

2,37,500

1,85,000

Z’s Capital A/c

21,875

13,125

 

Revaluation A/c

37,500

22,500

15,000

Profit and Loss Suspense A/c

 

 

5,000

X’s Capital A/c

 

 

21,875

Advertisement Suspense A/c

2,500

1,500

1,000

Y’s Capital A/c

 

 

13,125

Drawings A/c

 

 

25,000

Workmen Compensation Reserve

3,750

2,250

1,500

Goodwill A/c

12,500

7,500

5,000

Investments Fluctuation Reserve

8,750

5,250

3,500

Loan to Z

 

 

5,000

 

 

 

 

Z’s Executor A/c

 

 

1,24,000

 

 

 

 

Balance c/d

1,63,125

1,32,875

 

 

 

 

 

 

3,87,500

2,67,500

2,40,000

 

3,87,500

2,67,500

2,40,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as at August 01, 2014

Liabilities

Amount

Rs

Assets

Amount

Rs

Capital A/cs:

 

 

 

X

1,63,125

 

Patents

1,30,000

 

Y

1,32,875

2,96,000

Add: Undervaluation

 85,000

2,15,000

Sundry Creditors

55,000

Machinery

                   1,56,000

 

Z’s Executor Loan A/c

1,00,000

Less: Overvaluation

               16,000

1,40,000

Workmen Compensation Claim

10,000

Stock

50,000

Profit and Loss Suspense

5,000

Sundry Debtors

                      62,000

 

 

 

 

Less: Provision for DD

                2,000

60,000

 

 

 

Cash at Bank (29,000 + 21,000 – 24,000 – 25,000)

1,000

 

 

 

 

 

 

4,66,000

 

4,66,000

 

 

 

 

 

Z’s Executor’s Account

Dr.

 

Cr.

Date

Particulars

Amount

Rs

Date

Particulars

Amount

Rs

2014

 

 

2014

 

 

Aug. 01

Bank A/c

24,000

Aug. 01

T’s Capital A/c

1,24,000

2015

 

 

2015

 

 

Feb. 01

Cash A/c (25,000 + 5,000)

30,000

Feb. 01

Interest (1,00,000 ×10% for 6 months)

5,000

March 31

Balance c/d

76,250

March 31

Interest (75,000 ×10% for 2 months)

1,250

 

 

1,27,250

 

 

1,27,250

2015

 

 

2015

 

 

August 01

Cash A/c (25,000 + 1,250 + 2,500)

28,750

April 01

Balance b/d

76,250

2016

 

 

August 01

Interest (75,000 × 10% for 4 months)

2,500

Feb. 01

Cash A/c (25,000 + 2,500)

27,500

2016

 

 

March 31

Balance c/d

25,417

Feb. 01

Interest (50,000 × 10% for 6 months)

2,500

 

 

 

March 31

Interest (25,000 × 10% for 2 months)

417

 

 

81,667

 

 

81,667

2016

 

 

2016

 

 

August 01

Cash A/c (25,000 + 417 + 833)

26,250

April 01

Balance b/d

25,417

 

 

 

August 01

Interest (25,000 × 10% for 4 months)

833

 

 

26,250

 

 

26,250

 

 

 

 

 

 

Working Notes:

WN 1: Calculation of Goodwill

WN 2: Calculation of Z’s Profit Share

Answer:

a) X : Y : Z = 12 : 310 : 15 = 5 : 3 : 2 (old ratio)Calculation of New Ratio1) If X retires, then Y and Z will share profits in the ratio of 3 : 2   2)If Y retires, then X and Z will share profits in the ratio of 5 : 23) If Z retires, then X and Y will share profits in the ratio of 5 : 3

b) X : Y : Z = 25 : 25 : 15 = 2 : 2 : 1 (old ratio)Calculation of New Ratio1) If X Retires, then Y and Z will share profits in the ratio of 2 : 1  2) If Y Retires, then X and Z will share profits in the ratio of 2 : 13) If Z Retires, then X and Y will share profits in the ratio of 1 : 1

Note: Since no information about new ratio is given, it is assumed that partner’s will gain in their old ratio.

Page No 6.84:

Question 2:

a) X : Y : Z = 12 : 310 : 15 = 5 : 3 : 2 (old ratio)Calculation of New Ratio1) If X retires, then Y and Z will share profits in the ratio of 3 : 2   2)If Y retires, then X and Z will share profits in the ratio of 5 : 23) If Z retires, then X and Y will share profits in the ratio of 5 : 3

b) X : Y : Z = 25 : 25 : 15 = 2 : 2 : 1 (old ratio)Calculation of New Ratio1) If X Retires, then Y and Z will share profits in the ratio of 2 : 1  2) If Y Retires, then X and Z will share profits in the ratio of 2 : 13) If Z Retires, then X and Y will share profits in the ratio of 1 : 1

Note: Since no information about new ratio is given, it is assumed that partner’s will gain in their old ratio.

Answer:

Old Ratio (Ram, Mohan and Sohan) = or 3 : 5 : 7

Sohan’s Profit Share =

Ram and Mohan decided to take his share in the ratio of 3 : 2

New Profit Share = Old Profit Share  +  Share taken from Sohan

∴ New Profit Ratio (Ram and Mohan) = 36 : 39 or 12 : 13

Page No 6.84:

Question 3:

Old Ratio (Ram, Mohan and Sohan) = or 3 : 5 : 7

Sohan’s Profit Share =

Ram and Mohan decided to take his share in the ratio of 3 : 2

New Profit Share = Old Profit Share  +  Share taken from Sohan

∴ New Profit Ratio (Ram and Mohan) = 36 : 39 or 12 : 13

Answer:

Old Ratio: B : C = 4: 4 : 2 or 410 : 410 :210 Calculation of New RatioB's share taken by C = 410A's New share = 410C's New share = 210 + 410 = 610 New Ratio = 410 : 610 or 2 : 3

Page No 6.84:

Question 4:

Old Ratio: B : C = 4: 4 : 2 or 410 : 410 :210 Calculation of New RatioB's share taken by C = 410A's New share = 410C's New share = 210 + 410 = 610 New Ratio = 410 : 610 or 2 : 3

Answer:

Old Ratio (Kangli, Mangli and Sanvali) = 4 : 3 : 2

New Ratio (Mangli and Sanvali) = 5 : 3

Gaining RatioNew Ratio − Old Ratio

∴Gaining Ratio = 21 : 11

Page No 6.84:

Question 5:

Old Ratio (Kangli, Mangli and Sanvali) = 4 : 3 : 2

New Ratio (Mangli and Sanvali) = 5 : 3

Gaining RatioNew Ratio − Old Ratio

∴Gaining Ratio = 21 : 11

Answer:

: B : C = 12 : 13 : 16 = 3 : 2 : 1  (Old Ratio): C = 3 : 2 (New Ratio)Calculation of Gaining Ratio Gaining Ratio = New Ratio - Old RatioA = 35 - 36 =  18 - 1530330C = 25 - 16 =  12 - 530730Gaining Ratio = 3 : 7

Page No 6.84:

Question 6:

: B : C = 12 : 13 : 16 = 3 : 2 : 1  (Old Ratio): C = 3 : 2 (New Ratio)Calculation of Gaining Ratio Gaining Ratio = New Ratio - Old RatioA = 35 - 36 =  18 - 1530330C = 25 - 16 =  12 - 530730Gaining Ratio = 3 : 7

Answer:

: Y : Z = 49 : 13 : 29 = 4: 3 :2(Old ratio)X acquired 49th share of Z and Y acquired 59th [1 - 49] share of ZX's Gain = 29 × 49 = 881Y's Gain = 29 × 59 = 1081Gaining Ratio of X:Y = 8:10= 4 :5Calculation of New Profit Sharing RatioX's New Share = 49 + 881 = 36 + 881 = 4481Y's New Share = 39 + 1081 = 27 + 1081 = 3781New Ratio = 44 : 37 

Page No 6.84:

Question 7:

: Y : Z = 49 : 13 : 29 = 4: 3 :2(Old ratio)X acquired 49th share of Z and Y acquired 59th [1 - 49] share of ZX's Gain = 29 × 49 = 881Y's Gain = 29 × 59 = 1081Gaining Ratio of X:Y = 8:10= 4 :5Calculation of New Profit Sharing RatioX's New Share = 49 + 881 = 36 + 881 = 4481Y's New Share = 39 + 1081 = 27 + 1081 = 3781New Ratio = 44 : 37 

Answer:

A:B:C : D = 4 :3:2:1(Old ratio)D acquired 13rd share of A and C acquired 23rd [1 - 13] share of AC's Gain = 410 × 23 = 830D's Gain = 410 × 13 = 430Gaining Ratio of C : D = 8 :4= 2 :1Calculation of New Profit Sharing RatioB's New share = 310 or 930C's New share = 210 + 830 = 6 + 830 = 1430D's New share = 110 + 430 = 3 + 430 = 730New Ratio = 9 : 14 : 7 

Page No 6.84:

Question 8:

A:B:C : D = 4 :3:2:1(Old ratio)D acquired 13rd share of A and C acquired 23rd [1 - 13] share of AC's Gain = 410 × 23 = 830D's Gain = 410 × 13 = 430Gaining Ratio of C : D = 8 :4= 2 :1Calculation of New Profit Sharing RatioB's New share = 310 or 930C's New share = 210 + 830 = 6 + 830 = 1430D's New share = 110 + 430 = 3 + 430 = 730New Ratio = 9 : 14 : 7 

Answer:

: B : C = 2 : 2 : 1 (Old Ratio): B = 2 : 2 (New Ratio)Calculation of Gaining Ratio = New Ratio - Old RatioA's Gain = 24 - 25 =  10 - 820220B's Gain = 24 - 25 =  10 - 820220 A : B = 1 : 1

Page No 6.84:

Question 9:

: B : C = 2 : 2 : 1 (Old Ratio): B = 2 : 2 (New Ratio)Calculation of Gaining Ratio = New Ratio - Old RatioA's Gain = 24 - 25 =  10 - 820220B's Gain = 24 - 25 =  10 - 820220 A : B = 1 : 1

Answer:

: B : C  = 49 : 13 : 29 = 4 :3:2(Old ratio)B surrenders 19th share in favour of A and 29th share in favour of CGaining Ratio of A: C = 1: 2 Calculation of New Profit Sharing RatioA's New share = 49 + 19  = 59C's New share = 29 + 29  = 49New Ratio  = 5 : 4 



Page No 6.85:

Question 10:

: B : C  = 49 : 13 : 29 = 4 :3:2(Old ratio)B surrenders 19th share in favour of A and 29th share in favour of CGaining Ratio of A: C = 1: 2 Calculation of New Profit Sharing RatioA's New share = 49 + 19  = 59C's New share = 29 + 29  = 49New Ratio  = 5 : 4 

Answer:

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

Naresh’s Capital A/c

Dr.

 

15,000

 

Yogesh’s Capital A/c

Dr.

 

15,000

 

To Mukesh’s Capital A/c

 

 

30,000

(Adjustment Mukesh’s share of goodwill made)

 

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Gaining Ratio

Old Ratio = 2 : 2 : 1 : 1

Mukesh retires from the firm.

New Ratio = 1 : 1 : 1

Gaining RatioNew Ratio − Old Ratio

∴Gaining Ratio (Naresh and Yogesh) = 1 : 1

WN 2 Adjustment of Goodwill

Goodwill of the firm = Rs 90,000

Mukesh’s share of goodwill

This share of goodwill is to be debited to remaining Partners’ Capital Accounts in their gaining ratio (i.e. 1 : 1).

Page No 6.85:

Question 11:

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

Naresh’s Capital A/c

Dr.

 

15,000

 

Yogesh’s Capital A/c

Dr.

 

15,000

 

To Mukesh’s Capital A/c

 

 

30,000

(Adjustment Mukesh’s share of goodwill made)

 

 

 

 

 

 

 

Working Notes:

WN 1 Calculation of Gaining Ratio

Old Ratio = 2 : 2 : 1 : 1

Mukesh retires from the firm.

New Ratio = 1 : 1 : 1

Gaining RatioNew Ratio − Old Ratio

∴Gaining Ratio (Naresh and Yogesh) = 1 : 1

WN 2 Adjustment of Goodwill

Goodwill of the firm = Rs 90,000

Mukesh’s share of goodwill

This share of goodwill is to be debited to remaining Partners’ Capital Accounts in their gaining ratio (i.e. 1 : 1).

Answer:

Journal
Date Particulars L.F. Debit
Amount
(Rs)
Credit
Amount
(Rs)
  X’s Capital A/c Dr.   9,600  
  Y’s Capital A/c Dr.   7,200  
  Z’s Capital A/c Dr.   4,800  
 
To Goodwill A/c
      21,600
  (Goodwill appearing in the books was written–off)      
           
  X’s Capital A/c Dr.   3,900  
  Z’s Capital A/c     3,300  
 
To Y’s Capital A/c
      7,200
  (Goodwill adjusted through Partners’ Capital Accounts)      
         

Working Notes:

WN 1: Calculation of Gaining Ratio

: Y : Z = 4 : 3 : 2 (Old Ratio): Z = 5 : 3 (New Ratio)Gaining Ratio = New Ratio - Old RatioX's Gain = 58 - 49 =  45 - 32721372Z's Gain = 38 - 29 =  27 - 16721172 Gaining Ratio = 13 : 11

WN 2: Calculation of Goodwill
Total amount of Goodwill = 7,200 × 93 = Rs 21,600

Page No 6.85:

Question 12:

Journal
Date Particulars L.F. Debit
Amount
(Rs)
Credit
Amount
(Rs)
  X’s Capital A/c Dr.   9,600  
  Y’s Capital A/c Dr.   7,200  
  Z’s Capital A/c Dr.   4,800  
 
To Goodwill A/c
      21,600
  (Goodwill appearing in the books was written–off)      
           
  X’s Capital A/c Dr.   3,900  
  Z’s Capital A/c     3,300  
 
To Y’s Capital A/c
      7,200
  (Goodwill adjusted through Partners’ Capital Accounts)      
         

Working Notes:

WN 1: Calculation of Gaining Ratio

: Y : Z = 4 : 3 : 2 (Old Ratio): Z = 5 : 3 (New Ratio)Gaining Ratio = New Ratio - Old RatioX's Gain = 58 - 49 =  45 - 32721372Z's Gain = 38 - 29 =  27 - 16721172 Gaining Ratio = 13 : 11

WN 2: Calculation of Goodwill
Total amount of Goodwill = 7,200 × 93 = Rs 21,600

Answer:

Journal
Date Particulars L.F. Debit
Amount
(Rs)
Credit Amount (Rs)
  Y’s Capital A/c Dr.   15,000  
 
To Z’s Capital A/c
      7,500
 
To X’s Capital A/c
      7,500
  (Goodwill adjusted through Partners’ Capital Accounts)        
         

Working Notes: Calculation of Gaining Ratio

Old Ratio = 3 : 2 : 1 New Ratio = 1 : 2Gaining Ratio = New Ratio - Old RatioX = 13 - 36  = 2 - 36 = -16 (Sacrifice)Y= 23 - 26 = 4 - 26 = 26 (Gain)X will get  = 45,000 × 16 = Rs 7,500Y will give = 45,000 × 26 = Rs 15,000Z will get  = 45,000 × 16 = Rs 7,500

Page No 6.85:

Question 13:

Journal
Date Particulars L.F. Debit
Amount
(Rs)
Credit Amount (Rs)
  Y’s Capital A/c Dr.   15,000  
 
To Z’s Capital A/c
      7,500
 
To X’s Capital A/c
      7,500
  (Goodwill adjusted through Partners’ Capital Accounts)        
         

Working Notes: Calculation of Gaining Ratio

Old Ratio = 3 : 2 : 1 New Ratio = 1 : 2Gaining Ratio = New Ratio - Old RatioX = 13 - 36  = 2 - 36 = -16 (Sacrifice)Y= 23 - 26 = 4 - 26 = 26 (Gain)X will get  = 45,000 × 16 = Rs 7,500Y will give = 45,000 × 26 = Rs 15,000Z will get  = 45,000 × 16 = Rs 7,500

Answer:

Journal
Date Particulars L.F. Debit Amount (Rs) Credit Amount (Rs)
  X’s Capital A/c Dr.   5,000  
  Y’s Capital A/c     25,000  
 
To Z’s Capital A/c
      30,000
  (Goodwill adjusted through Partners’ Capital Accounts)      
         

Working Notes: Calculation of Gaining Ratio

Old Ratio = 1 : 2 : 3New Ratio = 1 : 3Gaining Ratio = New Ratio - Old RatioX = 14 - 16  = 3 - 212 = 112 Y= 34 - 26 = 9 - 412 = 512 : Y = 1 : 5Z's share of Goodwill = Rs 30,000 (3,00,000 - 2,70,000)

Page No 6.85:

Question 14:

Journal
Date Particulars L.F. Debit Amount (Rs) Credit Amount (Rs)
  X’s Capital A/c Dr.   5,000  
  Y’s Capital A/c     25,000  
 
To Z’s Capital A/c
      30,000
  (Goodwill adjusted through Partners’ Capital Accounts)      
         

Working Notes: Calculation of Gaining Ratio

Old Ratio = 1 : 2 : 3New Ratio = 1 : 3Gaining Ratio = New Ratio - Old RatioX = 14 - 16  = 3 - 212 = 112 Y= 34 - 26 = 9 - 412 = 512 : Y = 1 : 5Z's share of Goodwill = Rs 30,000 (3,00,000 - 2,70,000)

Answer:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Plant and Machinery (40,000 × 10%)

4,000

Building (1,00,000 × 20%)

20,000

Provision for Doubtful Debts

1,000

Stock of Finished Goods

5,000

Stock of Raw Materials

2,000

Computer

2,000

Workmen’s Compensation Claim

5,000

 

 

Profit transferred to:

 

 

 

  A’s Capital A/c

6,000

 

 

 

B’s Capital A/c

6,000

 

 

 

C’s Capital A/c

3,000

15,000

 

 

 

27,000

 

27,000

 

 

 

 

 

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

Building A/c     

Dr.

 

20,000

 

Stock of Finished Good A/c

Dr.

 

5,000

 

Computer A/c

Dr.

 

2,000

 

To Revaluation A/c

 

 

27,000

(Increase in value Assets transferred to Revaluation Account)

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

12,000

 

To Plant and Machinery A/c

 

 

4,000

To Provision for Doubtful Debts A/c

 

 

1,000

To Stock of Raw Material A/c

 

 

2,000

To Workmen’s Compensation Claim A/c

 

 

5,000

( Decrease in value of Assets and increase in Liabilities transferred to Revaluation Account)

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

15,000

 

To A’s Capital A/c

 

 

6,000

To B’s Capital A/c

 

 

6,000

To C’s Capital A/c

 

 

3,000

(Revalution Profit transferred to Partners’ Capital accounts)

 

 

 

 

 

 

 

Page No 6.85:

Question 15:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Plant and Machinery (40,000 × 10%)

4,000

Building (1,00,000 × 20%)

20,000

Provision for Doubtful Debts

1,000

Stock of Finished Goods

5,000

Stock of Raw Materials

2,000

Computer

2,000

Workmen’s Compensation Claim

5,000

 

 

Profit transferred to:

 

 

 

  A’s Capital A/c

6,000

 

 

 

B’s Capital A/c

6,000

 

 

 

C’s Capital A/c

3,000

15,000

 

 

 

27,000

 

27,000

 

 

 

 

 

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

Building A/c     

Dr.

 

20,000

 

Stock of Finished Good A/c

Dr.

 

5,000

 

Computer A/c

Dr.

 

2,000

 

To Revaluation A/c

 

 

27,000

(Increase in value Assets transferred to Revaluation Account)

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

12,000

 

To Plant and Machinery A/c

 

 

4,000

To Provision for Doubtful Debts A/c

 

 

1,000

To Stock of Raw Material A/c

 

 

2,000

To Workmen’s Compensation Claim A/c

 

 

5,000

( Decrease in value of Assets and increase in Liabilities transferred to Revaluation Account)

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

15,000

 

To A’s Capital A/c

 

 

6,000

To B’s Capital A/c

 

 

6,000

To C’s Capital A/c

 

 

3,000

(Revalution Profit transferred to Partners’ Capital accounts)

 

 

 

 

 

 

 

Answer:

Revaluation Account
Particulars Amount (Rs) Particulars Amount (Rs)
Plant & Machinery A/c 3,500 Stock A/c 5,000
Motor Van A/c 1,200 Building A/c 4,500
Provision for Doubtful Debts A/c 1,950    
Profit transferred to:      
A’s Capital A/c
1,425      
B’s Capital A/c
950      
C’s Capital A/c
475 2,850    
       
  9,500   9,500
       
 
B’s Capital Account
Particulars Amount (Rs)   Amount (Rs)
B’s Loan A/c (Balancing figure) 40,950 Balance b/d 30,000
    General Reserve A/c 4,000
    A’s Capital A/c 4,500
    C’s Capital A/c 1,500
    Revaluation A/c 950
  40,950   40,950
       

Working Notes: Calculation of B’s Share of Goodwill

B’s Share of Goodwill = 18,000 × 13 = Rs 6,000Gaining Ratio (A : C) = 3 : 1 A will compensate = 6,000 × 34 = Rs 4,500C will compensate = 6,000 × 14 = Rs 1,500



Page No 6.86:

Question 16:

Revaluation Account
Particulars Amount (Rs) Particulars Amount (Rs)
Plant & Machinery A/c 3,500 Stock A/c 5,000
Motor Van A/c 1,200 Building A/c 4,500
Provision for Doubtful Debts A/c 1,950    
Profit transferred to:      
A’s Capital A/c
1,425      
B’s Capital A/c
950      
C’s Capital A/c
475 2,850    
       
  9,500   9,500
       
 
B’s Capital Account
Particulars Amount (Rs)   Amount (Rs)
B’s Loan A/c (Balancing figure) 40,950 Balance b/d 30,000
    General Reserve A/c 4,000
    A’s Capital A/c 4,500
    C’s Capital A/c 1,500
    Revaluation A/c 950
  40,950   40,950
       

Working Notes: Calculation of B’s Share of Goodwill

B’s Share of Goodwill = 18,000 × 13 = Rs 6,000Gaining Ratio (A : C) = 3 : 1 A will compensate = 6,000 × 34 = Rs 4,500C will compensate = 6,000 × 14 = Rs 1,500

Answer:

Journal
Date Particulars L.F. Debit Amount (Rs) Credit Amount (Rs)
  General Reserve A/c Dr.   60,000  
 
To X’s Capital A/c
      30,000
 
To Y’s Capital A/c
      20,000
 
To Z’s Capital A/c
      10,000
  (General reserve distributed among the partners in old ratio)      
           
  X’s Capital A/c Dr.   15,000  
  Y’s Capital A/c Dr.   10,000  
  Z’s Capital A/c Dr.   5,000  
 
To Profit & Loss A/c
      30,000
  (Debit balance of Profit & Loss distributed among the partners in old ratio)      
           
  Workmen Compensation Reserve A/c Dr.   24,000  
 
To X’s Capital A/c
      12,000
 
To Y’s Capital A/c
      8,000
 
To Z’s Capital A/c
      4,000
  (Workmen compensation reserve distributed among the partners in old ratio)      
         

Note: Employees provident fund is a statutory liability of the firm, thus, it will not be distributed among the partners.

Page No 6.86:

Question 17:

Journal
Date Particulars L.F. Debit Amount (Rs) Credit Amount (Rs)
  General Reserve A/c Dr.   60,000  
 
To X’s Capital A/c
      30,000
 
To Y’s Capital A/c
      20,000
 
To Z’s Capital A/c
      10,000
  (General reserve distributed among the partners in old ratio)      
           
  X’s Capital A/c Dr.   15,000  
  Y’s Capital A/c Dr.   10,000  
  Z’s Capital A/c Dr.   5,000  
 
To Profit & Loss A/c
      30,000
  (Debit balance of Profit & Loss distributed among the partners in old ratio)      
           
  Workmen Compensation Reserve A/c Dr.   24,000  
 
To X’s Capital A/c
      12,000
 
To Y’s Capital A/c
      8,000
 
To Z’s Capital A/c
      4,000
  (Workmen compensation reserve distributed among the partners in old ratio)      
         

Note: Employees provident fund is a statutory liability of the firm, thus, it will not be distributed among the partners.

Answer:

Revaluation Account
Particulars Amount (Rs) Particulars Amount (Rs)
Plant & Machinery A/c 2,000 Stock A/c 6,000
Furniture A/c 1,000 Building A/c 6,000
Provision for Doubtful Debts A/c 500    
Profit transferred to:      
X’s Capital A/c
3,400      
Y’s Capital A/c
3,400      
Z’s Capital A/c
1,700 8,500    
       
  12,000   12,000
       
 
Partners’ Capital Accounts
Dr.   Cr.
Particulars X Y Z Particulars X Y Z
Y’s Capital A/c 5,333   2,667 Balance b/d 40,000 40,000 30,000
Y’s Loan A/c   57,400   X’s Capital A/c   5,333  
Balance c/d 44,067   32,033 Z’s Capital A/c   2,667  
        Reserve A/c 6,000 6,000 3,000
        Revaluation A/c 3,400 3,400 1,700
  49,400 57,400 34,700   49,400 57,400 34,700
               
 
Balance Sheet
as on March 31, 2015
Liabilities Amount
(Rs)
Assets Amount (Rs)
Capital A/cs:   Cash 3,000
X
44,067   Sundry Debtors 20,000  
Z
32,033 76,100
Less: Provision for Doubtful Debts
1,500 18,500
Creditors 25,000 Furniture 10,000  
Bills Payable 12,000
Less: Depreciation
1,000 9,000
Y’s Loan 57,400 Plant & Machinery 40,000  
   
Less: Depreciation
2,000 38,000
    Stock 30,000  
   
Add: Appreciation
6,000 36,000
    Land & Building 60,000  
   
Add: Appreciation
6,000 66,000
  1,70,500   1,70,500
       

Working Notes: Calculation of Y’s Share of Goodwill

Y’s Share of Goodwill = 20,000 × 25 = Rs 8,000Gaining Ratio (X : Z) = 2 : 1 X will compensate = 8,000 × 23 = Rs 5,333Z will compensate = 8,000 × 13 = Rs 2,667

Page No 6.86:

Question 18:

Revaluation Account
Particulars Amount (Rs) Particulars Amount (Rs)
Plant & Machinery A/c 2,000 Stock A/c 6,000
Furniture A/c 1,000 Building A/c 6,000
Provision for Doubtful Debts A/c 500    
Profit transferred to:      
X’s Capital A/c
3,400      
Y’s Capital A/c
3,400      
Z’s Capital A/c
1,700 8,500    
       
  12,000   12,000
       
 
Partners’ Capital Accounts
Dr.   Cr.
Particulars X Y Z Particulars X Y Z
Y’s Capital A/c 5,333   2,667 Balance b/d 40,000 40,000 30,000
Y’s Loan A/c   57,400   X’s Capital A/c   5,333  
Balance c/d 44,067   32,033 Z’s Capital A/c   2,667  
        Reserve A/c 6,000 6,000 3,000
        Revaluation A/c 3,400 3,400 1,700
  49,400 57,400 34,700   49,400 57,400 34,700
               
 
Balance Sheet
as on March 31, 2015
Liabilities Amount
(Rs)
Assets Amount (Rs)
Capital A/cs:   Cash 3,000
X
44,067   Sundry Debtors 20,000  
Z
32,033 76,100
Less: Provision for Doubtful Debts
1,500 18,500
Creditors 25,000 Furniture 10,000  
Bills Payable 12,000
Less: Depreciation
1,000 9,000
Y’s Loan 57,400 Plant & Machinery 40,000  
   
Less: Depreciation
2,000 38,000
    Stock 30,000  
   
Add: Appreciation
6,000 36,000
    Land & Building 60,000  
   
Add: Appreciation
6,000 66,000
  1,70,500   1,70,500
       

Working Notes: Calculation of Y’s Share of Goodwill

Y’s Share of Goodwill = 20,000 × 25 = Rs 8,000Gaining Ratio (X : Z) = 2 : 1 X will compensate = 8,000 × 23 = Rs 5,333Z will compensate = 8,000 × 13 = Rs 2,667

Answer:

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

Revaluation A/c

Dr.

 

400

 

To Provision for Doubtful Debts A/c

 

 

400

(Provision for Doubtful Debts created)

 

 

 

 

 

 

 

Building A/c

Dr.

 

7,000

 

To Revaluation A/c

 

 

7,000

(Increase in value of Building transferred to Revaluation Account)

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

6,600

 

To A’s Capital A/c

 

 

3,300

To B’s Capital A/c

 

 

2,200

To C’s Capital A/c

 

 

1,100

(Revaluation profit distributed among partners in their old ratio)

 

 

 

 

 

 

 

A’s Capital A/c

Dr.

 

2,250

 

C’s Capital A/c

Dr.

 

750

 

To B’s Capital A/c

 

 

3000

(Share of B’s goodwill adjusted in gaining ratio of A and C)

 

 

 

 

 

 

 

B’s Capital A/c

Dr.

 

15,200

 

To B’s Loan A/c

 

 

10,200

To Cash A/c

 

 

5,000

(Rs 5,000 paid to B and balance transferred to his Loan Account)

 

 

 

 

Balance Sheet

as on March 31, 2015 (after B’s Retirement)

Liabilities

Amount

Rs

Assets

Amount

Rs

Sundry Creators

13,590

Cash (5,900 – 5,000)

900

 

 

Debtors

8,000

 

B’s Loan A/c

10,200

Less: Provision for Doubtful Debts

 

400

 

7,600

Capital A/cs:

 

Stock

11,690

A

16,050

 

 

 

C

10,350

26,400

Building (23,000 + 7,000)

30,000

 

50,190

 

50,190

 

 

 

 


Working Notes:

WN 1 Adjustment of Goodwill

Old Ratio (A, B and C) = 3 : 2 : 1

B retires from the firm.

∴ Gaining Ratio = 3 : 1

Goodwill of the firm = Rs 9,000

B’s Share of Goodwill =

This share of goodwill is to be distributed between A and C in their gaining ratio (i.e. 3 : 1).



WN 2

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Provision for Doubtful Debts (8,000 × 5%)

400

Building

7,000

Profit transferred to:

 

 

 

A’s Capital A/c

3,300

 

 

 

B’s Capital A/c

2,200

 

 

 

C’s Capital A/c

1,100

6,600

 

 

 

7,000

 

7,000

 

 

 

 


WN 3 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

A

B

C

Particulars

A

B

C

B’s Capital A/c  (Goodwill)

2,250

 

750

Balance b/d

15,000

10,000

10,000

Cash

 

5,000

 

Revaluation A/c (Profit)

3,300

2,200

1,100

B’s Loan A/c

 

10,200

 

A’s Capital A/c (Goodwill)

 

2,250

 

Balance c/d

16,050

 

10,350

B’s Capital A/c (Goodwill)

 

750

 

 

18,300

15,200

11,100

 

18,300

15,200

11,100

 

 

 

 

 

 

 

 



Page No 6.87:

Question 19:

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

Revaluation A/c

Dr.

 

400

 

To Provision for Doubtful Debts A/c

 

 

400

(Provision for Doubtful Debts created)

 

 

 

 

 

 

 

Building A/c

Dr.

 

7,000

 

To Revaluation A/c

 

 

7,000

(Increase in value of Building transferred to Revaluation Account)

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

6,600

 

To A’s Capital A/c

 

 

3,300

To B’s Capital A/c

 

 

2,200

To C’s Capital A/c

 

 

1,100

(Revaluation profit distributed among partners in their old ratio)

 

 

 

 

 

 

 

A’s Capital A/c

Dr.

 

2,250

 

C’s Capital A/c

Dr.

 

750

 

To B’s Capital A/c

 

 

3000

(Share of B’s goodwill adjusted in gaining ratio of A and C)

 

 

 

 

 

 

 

B’s Capital A/c

Dr.

 

15,200

 

To B’s Loan A/c

 

 

10,200

To Cash A/c

 

 

5,000

(Rs 5,000 paid to B and balance transferred to his Loan Account)

 

 

 

 

Balance Sheet

as on March 31, 2015 (after B’s Retirement)

Liabilities

Amount

Rs

Assets

Amount

Rs

Sundry Creators

13,590

Cash (5,900 – 5,000)

900

 

 

Debtors

8,000

 

B’s Loan A/c

10,200

Less: Provision for Doubtful Debts

 

400

 

7,600

Capital A/cs:

 

Stock

11,690

A

16,050

 

 

 

C

10,350

26,400

Building (23,000 + 7,000)

30,000

 

50,190

 

50,190

 

 

 

 


Working Notes:

WN 1 Adjustment of Goodwill

Old Ratio (A, B and C) = 3 : 2 : 1

B retires from the firm.

∴ Gaining Ratio = 3 : 1

Goodwill of the firm = Rs 9,000

B’s Share of Goodwill =

This share of goodwill is to be distributed between A and C in their gaining ratio (i.e. 3 : 1).



WN 2

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Provision for Doubtful Debts (8,000 × 5%)

400

Building

7,000

Profit transferred to:

 

 

 

A’s Capital A/c

3,300

 

 

 

B’s Capital A/c

2,200

 

 

 

C’s Capital A/c

1,100

6,600

 

 

 

7,000

 

7,000

 

 

 

 


WN 3 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

A

B

C

Particulars

A

B

C

B’s Capital A/c  (Goodwill)

2,250

 

750

Balance b/d

15,000

10,000

10,000

Cash

 

5,000

 

Revaluation A/c (Profit)

3,300

2,200

1,100

B’s Loan A/c

 

10,200

 

A’s Capital A/c (Goodwill)

 

2,250

 

Balance c/d

16,050

 

10,350

B’s Capital A/c (Goodwill)

 

750

 

 

18,300

15,200

11,100

 

18,300

15,200

11,100

 

 

 

 

 

 

 

 

Answer:

Journal
Date Particulars L.F. Debit
Amount
(Rs)
Credit
Amount
(Rs)
1. Revaluation A/c Dr.   1,17,000  
 
To Debtors A/c
        17,000
 
To Furniture A/c
      40,000
 
To Land & Building A/c
      60,000
  (Transferred  decrease in the value of assets)        
           
2. Stock  A/c Dr.   19,000  
  Plant & Machinery A/c     33,000  
 
To Revaluation A/c
        52,000
  (Transferred  increase in the value of assets)        
           
3. Ram’s Capital A/c Dr.   32,500  
  Shyam’s Capital A/c Dr.   19,500  
  Mohan’s Capital A/c Dr.   13,000  
 
To Revaluation A/c
        65,000
  (Transferred loss on revaluation)        
           
4. General Reserve A/c Dr.   1,00,000  
  Workmen Compensation Reserve A/c Dr.   67,500  
 
To Ram’s Capital A/c
      83,750
 
To Shyam’s Capital A/c
      50,520
 
To Mohan’s Capital A/c
      33,500
  (Reserve distributed)        
           
5. Ram’s Capital A/c Dr.   9,000  
  Shyam’s Capital A/c     9,000  
 
To Mohan’s Capital A/c
      18,000
  (Goodwill adjusted through capital)        
           
6. Mohan’s Capital A/c Dr.   1,65,000  
 
To Bank A/c
      1,65,000
  (Cash paid to Mohan)        
           
7. Bank A/c Dr.   1,65,000  
 
To Ram’s Capital A/c
      99,000
 
To Shyam’s Capital A/c
      66,000
  (Cash brought in by Ram and Shyam)        
           
8. Mohan’s Capital A/c Dr.   73,500  
 
To Mohan’s Loan A/c
      73,500
  (Balance of capital transferred to loan account)        
         
 
Revaluation Account
Particulars Amount (Rs) Particulars Amount (Rs)
Debtors A/c 17,000 Stock A/c 19,000
Furniture A/c 40,000 Plant & Machinery A/c 33,000
Land and Building A/c 60,000 Loss transferred to:  
   
Ram’s Capital A/c
32,500  
   
Shyam’s Capital A/c
19,500  
   
Mohan’s Capital A/c
13,000 65,000
  1,17,000   1,17,000
       
 
Partners’ Capital Accounts
Dr.   Cr.
Particulars Ram Shyam Mohan Particulars Ram Shyam Mohan
Revaluation A/c 32,500 19,500 13,000 Balance b/d 4,00,000 6,00,000 2,00,000
Mohan’s Capital A/c 9,000 9,000   General Reserve A/c 50,000 30,000 20,000
Bank A/c     1,65,000 Workmen Compensation Reserve A/c 33,750 20,250 13,500
Mohan’s Loan A/c     73,500 Ram’s Capital A/c     9,000
Balance c/d 5,41,250 6,87,750   Shyam’s Capital A/c     9,000
        Bank A/c 99,000 66,000  
  5,82,750 1,16,250 2,51,500   5,82,750 1,16,250 2,51,500
               
 
Balance Sheet
as on March 31, 2015
Liabilities Amount (Rs) Assets Amount (Rs)
Capital A/cs:   Cash 55,000
Ram
5,41,250   Debtors 3,40,000  
Shyam
6,87,750 12,29,000
Less:  Debtors written-off
17,000 3,23,000
Creditors 1,98,000 Furniture 1,42,500
Bills Payable 92,500 Plant & Machinery 2,35,300
Mohan’s Loan 73,500 Stock 2,00,000
    Land & Building 2,00,000
    Bank 1,61,500
    Computer 1,32,000
    Investments 1,43,700
  15,93,000   15,93,000
       

Working Notes: Calculation of Gaining Ratio

Ram : Shyam : Mohan = 5 : 3 : 2 (Old Ratio)Ram : Shyam= 3 : 2 (Old Ratio)Ram's Gain = 35 - 510 =  6 - 510110Shyam's Gain = 25 - 310 =  4 - 310110 R :S = 1 :1Mohan’s Share in Goodwill = 90,000 × 210 = Rs 18,000

Page No 6.87:

Question 20:

Journal
Date Particulars L.F. Debit
Amount
(Rs)
Credit
Amount
(Rs)
1. Revaluation A/c Dr.   1,17,000  
 
To Debtors A/c
        17,000
 
To Furniture A/c
      40,000
 
To Land & Building A/c
      60,000
  (Transferred  decrease in the value of assets)        
           
2. Stock  A/c Dr.   19,000  
  Plant & Machinery A/c     33,000  
 
To Revaluation A/c
        52,000
  (Transferred  increase in the value of assets)        
           
3. Ram’s Capital A/c Dr.   32,500  
  Shyam’s Capital A/c Dr.   19,500  
  Mohan’s Capital A/c Dr.   13,000  
 
To Revaluation A/c
        65,000
  (Transferred loss on revaluation)        
           
4. General Reserve A/c Dr.   1,00,000  
  Workmen Compensation Reserve A/c Dr.   67,500  
 
To Ram’s Capital A/c
      83,750
 
To Shyam’s Capital A/c
      50,520
 
To Mohan’s Capital A/c
      33,500
  (Reserve distributed)        
           
5. Ram’s Capital A/c Dr.   9,000  
  Shyam’s Capital A/c     9,000  
 
To Mohan’s Capital A/c
      18,000
  (Goodwill adjusted through capital)        
           
6. Mohan’s Capital A/c Dr.   1,65,000  
 
To Bank A/c
      1,65,000
  (Cash paid to Mohan)        
           
7. Bank A/c Dr.   1,65,000  
 
To Ram’s Capital A/c
      99,000
 
To Shyam’s Capital A/c
      66,000
  (Cash brought in by Ram and Shyam)        
           
8. Mohan’s Capital A/c Dr.   73,500  
 
To Mohan’s Loan A/c
      73,500
  (Balance of capital transferred to loan account)        
         
 
Revaluation Account
Particulars Amount (Rs) Particulars Amount (Rs)
Debtors A/c 17,000 Stock A/c 19,000
Furniture A/c 40,000 Plant & Machinery A/c 33,000
Land and Building A/c 60,000 Loss transferred to:  
   
Ram’s Capital A/c
32,500  
   
Shyam’s Capital A/c
19,500  
   
Mohan’s Capital A/c
13,000 65,000
  1,17,000   1,17,000
       
 
Partners’ Capital Accounts
Dr.   Cr.
Particulars Ram Shyam Mohan Particulars Ram Shyam Mohan
Revaluation A/c 32,500 19,500 13,000 Balance b/d 4,00,000 6,00,000 2,00,000
Mohan’s Capital A/c 9,000 9,000   General Reserve A/c 50,000 30,000 20,000
Bank A/c     1,65,000 Workmen Compensation Reserve A/c 33,750 20,250 13,500
Mohan’s Loan A/c     73,500 Ram’s Capital A/c     9,000
Balance c/d 5,41,250 6,87,750   Shyam’s Capital A/c     9,000
        Bank A/c 99,000 66,000  
  5,82,750 1,16,250 2,51,500   5,82,750 1,16,250 2,51,500
               
 
Balance Sheet
as on March 31, 2015
Liabilities Amount (Rs) Assets Amount (Rs)
Capital A/cs:   Cash 55,000
Ram
5,41,250   Debtors 3,40,000  
Shyam
6,87,750 12,29,000
Less:  Debtors written-off
17,000 3,23,000
Creditors 1,98,000 Furniture 1,42,500
Bills Payable 92,500 Plant & Machinery 2,35,300
Mohan’s Loan 73,500 Stock 2,00,000
    Land & Building 2,00,000
    Bank 1,61,500
    Computer 1,32,000
    Investments 1,43,700
  15,93,000   15,93,000
       

Working Notes: Calculation of Gaining Ratio

Ram : Shyam : Mohan = 5 : 3 : 2 (Old Ratio)Ram : Shyam= 3 : 2 (Old Ratio)Ram's Gain = 35 - 510 =  6 - 510110Shyam's Gain = 25 - 310 =  4 - 310110 R :S = 1 :1Mohan’s Share in Goodwill = 90,000 × 210 = Rs 18,000

Answer:

Revaluation Account
Particulars Amount (Rs) Particulars Amount (Rs)
Plant A/c 15,000 Freehold Property A/c 10,000
Stock A/c 5,500 Loss transferred to:  
Provision for Doubtful Debts A/c 1,500
A’s Capital A/c
4,800  
   
B’s Capital A/c
4,800  
   
C’s Capital A/c
2,400 12,000
  22,000   22,000
       
 
Partners’ Capital Accounts
Dr.   Cr.
Particulars A B C Particulars A B C
Revaluation A/c 4,800 4,800 2,400 Balance b/d 1,25,750 1,00,000 85,000
A’s Capital A/c 30,000 B’s Capital A/c 30,000 15,000
C’s Capital A/c   15,000 Bank A/c 2,24,300
Bank A/c 1,50,950 97,600        
Balance c/d 2,74,500        
               
  1,55,750 3,24,300 1,00,000   1,55,750 3,24,300 1,00,000
               
 
Bank Account
Particulars Amount (Rs)   Amount (Rs)
Balance b/d 24,250 A’s Capital A/c 1,50,950
B’s Capital A/c
(Balancing Figure)
2,24,300 C’s Capital A/c 97,600
  2,48,550   2,48,550
       
 
Balance Sheet
as at….
Liabilities Amount
(Rs)
Assets Amount (Rs)
B’s Capital A/c: 2,74,500 Freehold Property 90,000  
Trade Creditors 70,000
Add: Appreciation
10,000 1,00,000
    Plant 1,50,000  
   
Less: Depreciation
15,000 1,35,000
    Debtors 62,500  
   
Less: Provision for Doubtful Debts
2,500 60,000
    Stock 55,000  
   
Less: Depreciation
5,500 49,500
         
  3,44,500   3,44,500
       



Page No 6.88:

Question 21:

Revaluation Account
Particulars Amount (Rs) Particulars Amount (Rs)
Plant A/c 15,000 Freehold Property A/c 10,000
Stock A/c 5,500 Loss transferred to:  
Provision for Doubtful Debts A/c 1,500
A’s Capital A/c
4,800  
   
B’s Capital A/c
4,800  
   
C’s Capital A/c
2,400 12,000
  22,000   22,000
       
 
Partners’ Capital Accounts
Dr.   Cr.
Particulars A B C Particulars A B C
Revaluation A/c 4,800 4,800 2,400 Balance b/d 1,25,750 1,00,000 85,000
A’s Capital A/c 30,000 B’s Capital A/c 30,000 15,000
C’s Capital A/c   15,000 Bank A/c 2,24,300
Bank A/c 1,50,950 97,600        
Balance c/d 2,74,500        
               
  1,55,750 3,24,300 1,00,000   1,55,750 3,24,300 1,00,000
               
 
Bank Account
Particulars Amount (Rs)   Amount (Rs)
Balance b/d 24,250 A’s Capital A/c 1,50,950
B’s Capital A/c
(Balancing Figure)
2,24,300 C’s Capital A/c 97,600
  2,48,550   2,48,550
       
 
Balance Sheet
as at….
Liabilities Amount
(Rs)
Assets Amount (Rs)
B’s Capital A/c: 2,74,500 Freehold Property 90,000  
Trade Creditors 70,000
Add: Appreciation
10,000 1,00,000
    Plant 1,50,000  
   
Less: Depreciation
15,000 1,35,000
    Debtors 62,500  
   
Less: Provision for Doubtful Debts
2,500 60,000
    Stock 55,000  
   
Less: Depreciation
5,500 49,500
         
  3,44,500   3,44,500
       

Answer:

M’s Capital Account
Particulars Amount
(Rs)
  Amount
(Rs)
Drawings A/c 30,000 Balance b/d 1,12,500
Interest on Drawings A/c 3,000 Interest on Capital A/c 750
M’s Loan A/c
(Balancing Figure)
1,50,000 Salary A/c 2,250
    Profit & Loss A/c 37,500
    Goodwill A/c 30,000
  1,83,000   1,83,000
       
 
M’s Loan Account
Dr. Cr.
Date Particulars Amount
(Rs)
Date Particulars Amount (Rs)
2015     2015    
March 31 Balance c/d 1,50,000 March 31 M’s Capital A/c 1,50,000
    1,50,000     1,50,000
2016     2015    
March 31 Bank A/c (75,000 + 15,000) 90,000 April 01 M’s Capital A/c 1,50,000
March 31 Balance c/d 75,000 2016    
      March 31 Interest A/c @ 10% 15,000
    1,65,000     1,65,000
2017     2016    
March 31 Bank A/c (75,000 + 7,500) 82,500 April 01 Balance b/d 75,000
      2017    
      March 31 Interest A/c @ 10% 7,500
    82,500     82,500
           

Page No 6.88:

Question 22:

M’s Capital Account
Particulars Amount
(Rs)
  Amount
(Rs)
Drawings A/c 30,000 Balance b/d 1,12,500
Interest on Drawings A/c 3,000 Interest on Capital A/c 750
M’s Loan A/c
(Balancing Figure)
1,50,000 Salary A/c 2,250
    Profit & Loss A/c 37,500
    Goodwill A/c 30,000
  1,83,000   1,83,000
       
 
M’s Loan Account
Dr. Cr.
Date Particulars Amount
(Rs)
Date Particulars Amount (Rs)
2015     2015    
March 31 Balance c/d 1,50,000 March 31 M’s Capital A/c 1,50,000
    1,50,000     1,50,000
2016     2015    
March 31 Bank A/c (75,000 + 15,000) 90,000 April 01 M’s Capital A/c 1,50,000
March 31 Balance c/d 75,000 2016    
      March 31 Interest A/c @ 10% 15,000
    1,65,000     1,65,000
2017     2016    
March 31 Bank A/c (75,000 + 7,500) 82,500 April 01 Balance b/d 75,000
      2017    
      March 31 Interest A/c @ 10% 7,500
    82,500     82,500
           

Answer:

P’s Capital Account
Particulars Amount (Rs)   Amount (Rs)
P’s Loan A/c 46,700 Balance b/d 45,000
    P’s Current A/c 1,700
  46,700   46,700
       
 
P’s Current Account
Particulars Amount (Rs)   Amount (Rs)
Balance b/d 2,300 Goodwill 12,000 × 26 4,000
P’s Capital A/c 1,700    
  4,000   4,000
       
 
P’s Loan Account
Dr. Cr.
Date Particulars Amount (Rs) Date Particulars Amount (Rs)
2005     2005    
Dec. 31 Bank A/c 10,000 Dec. 31 P’s Capital A/c 46,700
  Balance c/d 36,700      
    46,700     46,700
2006     2006    
Dec. 31 Bank A/c 10,000 Jan. 01 Balance b/d 36,700
  Balance c/d 28,902 Dec. 31 Interest A/c 2,202
    39,902     38,902
2007     2007    
Dec. 31 Bank A/c 10,000 Jan. 01 Balance b/d 28,902
  Balance c/d 20,636 Dec. 31 Interest A/c 1,734
    30,636     30,636
2008     2008    
Dec. 31 Bank A/c 10,000 Jan. 01 Balance b/d 20,636
  Balance c/d 11,874 Dec. 31 Interest A/c 1,238
    21,874     21,874
2009     2009    
Dec. 31 Bank A/c 10,000 Jan. 01 Balance b/d 11,874
  Balance c/d 2,586 Dec. 31 Interest A/c 712
    12,586     12,586
2010     2010    
Dec. 31 Bank A/c 2,741 Jan. 01 Balance b/d 2,586
      Dec. 31 Interest A/c 155
    2,741     2,741
           

Page No 6.88:

Question 23:

P’s Capital Account
Particulars Amount (Rs)   Amount (Rs)
P’s Loan A/c 46,700 Balance b/d 45,000
    P’s Current A/c 1,700
  46,700   46,700
       
 
P’s Current Account
Particulars Amount (Rs)   Amount (Rs)
Balance b/d 2,300 Goodwill 12,000 × 26 4,000
P’s Capital A/c 1,700    
  4,000   4,000
       
 
P’s Loan Account
Dr. Cr.
Date Particulars Amount (Rs) Date Particulars Amount (Rs)
2005     2005    
Dec. 31 Bank A/c 10,000 Dec. 31 P’s Capital A/c 46,700
  Balance c/d 36,700      
    46,700     46,700
2006     2006    
Dec. 31 Bank A/c 10,000 Jan. 01 Balance b/d 36,700
  Balance c/d 28,902 Dec. 31 Interest A/c 2,202
    39,902     38,902
2007     2007    
Dec. 31 Bank A/c 10,000 Jan. 01 Balance b/d 28,902
  Balance c/d 20,636 Dec. 31 Interest A/c 1,734
    30,636     30,636
2008     2008    
Dec. 31 Bank A/c 10,000 Jan. 01 Balance b/d 20,636
  Balance c/d 11,874 Dec. 31 Interest A/c 1,238
    21,874     21,874
2009     2009    
Dec. 31 Bank A/c 10,000 Jan. 01 Balance b/d 11,874
  Balance c/d 2,586 Dec. 31 Interest A/c 712
    12,586     12,586
2010     2010    
Dec. 31 Bank A/c 2,741 Jan. 01 Balance b/d 2,586
      Dec. 31 Interest A/c 155
    2,741     2,741
           

Answer:

Journal

Date

Particulars

L.F.

Debit

Amount

(Rs)

Credit

Amount

(Rs)

2015

 

 

 

 

 

April 01

X’s Capital A/c

Dr.

 

4,000

 

 

Y’s Capital A/c

Dr.

 

6,000

 

 

Z’s Capital A/c

Dr.

 

2,000

 

 

   To Goodwill A/c

 

 

 

12,000

 

(Existing goodwill written-off)

 

 

 

 

 

 

 

 

 

 

 

X’s Capital A/c

Dr.

 

49,600

 

 

  To Y’s Capital A/c

 

 

 

18,600

 

  To Z’s Capital A/c

 

 

 

31,000

 

(Goodwill adjusted by debiting gaining partner and crediting sacrificing partner)

 

 

 

 

 

 

 

 

 

 

Land and Building A/c

Dr.

 

20,000

 

 

Sundry Creditors A/c

Dr.

 

30,000

 

 

  To Revaluation A/c

 

 

 

50,000

 

(Increase in value of land & building and decrease in value of creditors recorded in Revaluation Account)

 

 

 

 

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

43,000

 

 

  To Stock A/c

 

 

 

38,000

 

  To Provision for Doubtful Debts A/c

 

 

 

5,000

 

(Decrease in value of stock and increase in provision for doubtful debts, recorded in revaluation)

 

 

 

 

 

 

 

 

 

 

 

Prepaid Insurance A/c

Dr.

 

5,000

 

 

  To Revaluation A/c

 

 

 

5,000

 

(Amount paid for insurance carried forward as unexpired insurance)

 

 

 

 

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

12,000

 

 

   To X’s Capital A/c

 

 

 

4,000

 

   To Y’s Capital A/c

 

 

 

6,000

 

   To Z’s Capital A/c

 

 

 

2,000

 

(Profit on revaluation transferred to Partners’ Capital Accounts in old profit sharing ratio of 2 : 3 : 1)

 

 

 

 

 

 

 

 

 

 

 

Workmen Compensation Reserve A/c

Dr.

 

20,000

 

 

   To Workmen Compensation Claim A/c

 

 

 

8,000

 

   To X’s Capital A/c

 

 

 

4,000

 

   To Y’s Capital A/c

 

 

 

6,000

 

   To Z’s Capital A/c

 

 

 

2,000

 

(Excess balance of WCR transferred to partners’ capital account)

 

 

 

 

 

 

 

 

 

 

 

Investments Fluctuation Reserve A/c

Dr.

 

10,000

 

 

   To Investments A/c

 

 

 

4,000

 

   To X’s Capital A/c

 

 

 

2,000

 

   To Y’s Capital A/c

 

 

 

3,000

 

   To Z’s Capital A/c

 

 

 

1,000

 

(Decrease in market value of investments settled through IFF and excess balance is transferred to partners’ capital accounts)

 

 

 

 

 

 

 

 

 

 

 

X’s Capital A/c

Dr.

 

4,000

 

 

Y’s Capital A/c

Dr.

 

6,000

 

 

Z’s Capital A/c

Dr.

 

2,000

 

 

  To Advertisement A/c

 

 

 

12,000

 

(Balance of Advertisement Suspense Account is debited to Partners’ Capital Account)

 

 

 

 

 

 

 

 

 

Z’s Capital A/c

Dr.

 

3,32,000

 

 

   To Bank A/c

 

 

1,66,000

 

   To Z’s Loan A/c

 

 

1,66,000

 

(Half of the amount is immediately paid to Z and remaining half is transferred to his Loan Account)

 

 

 

 

 

 

 

 

 

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Stock

38,000

Land and Building

20,000

Provision for Doubtful Debts

5,000

Sundry Creditors

30,000

Profit transferred to:

 

Prepaid Insurance

5,000

X’s Capital A/c

4,000

 

 

 

Y’s Capital A/c

6,000

 

 

 

Z’s Capital A/c

2,000

12,000

 

 

 

55,000

 

55,000

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

X

Y

Z

Particulars

X

Y

Z

Y’s Capital A/c

18,600

 

 

Balance b/d

1,00,000

2,00,000

3,00,000

Z’s Capital A/c

31,000

 

 

 

 

 

 

Advertisement Suspense A/c

4,000

6,000

2,000

Revaluation A/c

4,000

6,000

2,000

Goodwill A/c

4,000

6,000

2,000

Workmen Compensation Reserve

4,000

6,000

2,000

Bank A/c

 

 

1,66,000

Investment Fluctuation Reserve

2,000

3,000

1,000

Z’s Loan A/c

 

 

1,66,000

X’s Capital A/c

 

18,600

31,000

Balance c/d

52,400

2,21,600

 

 

 

 

 

 

1,10,000

2,33,600

3,36,000

 

1,10,000

2,33,600

3,36,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as at April 01, 2015

Liabilities

Amount

Rs

Assets

Amount

Rs

Capital A/cs:

 

Investments

46,000

X

52,400

 

Land and Building

2,50,000

 

Y

2,21,600

2,74,000

Add: Undervaluation

20,000

2,70,000

Z’s Loan

1,66,000

Stock

                80,000

 

Workmen Compensation Claim

8,000

Less: Overvaluation

        38,000

42,000

Employees Provident Fund

60,000

Debtors

             3,00,000

 

Sundry Creditors

3,00,000

 

Less: Prov. For D/D

        15,000

2,85,000

Less: Written-off

30,000

2,70,000

Bank (2,96,000 – 1,66,000)

1,30,000

 

 

 

Prepaid Insurance

5,000

 

7,78,000

 

7,78,000

 

 

 

 

 

Z’s Loan Account

Dr.

 

Cr.

Date

Particulars

Amount

Rs

Date

Particulars

Amount

Rs

2016

 

 

2015

 

 

March 31

Bank A/c (83,000 + 16,600)

99,600

April 01

Z’s Capital A/c

1,66,000

March 31

Balance c/d

83,000

2016

 

 

 

 

 

March 31

Interest A/c (1,66,000 @ 10%)

16,600

 

 

1,82,600

 

 

1,82,600

2017

 

 

2016

 

 

March 31

Bank A/c (83,000 + 8,300)

91,300

April 01

Balance b/d

83,000

 

 

 

2016

 

 

 

 

 

March 31

Interest A/c (83,000 @ 10%)

8,300

 

 

91,300

 

 

91,300

 

 

 

 

 

 

Working Notes:

WN 1: Calculation of sacrificing/gaining ratio

WN 2: Calculation of goodwill



Page No 6.89:

Question 24:

Journal

Date

Particulars

L.F.

Debit

Amount

(Rs)

Credit

Amount

(Rs)

2015

 

 

 

 

 

April 01

X’s Capital A/c

Dr.

 

4,000

 

 

Y’s Capital A/c

Dr.

 

6,000

 

 

Z’s Capital A/c

Dr.

 

2,000

 

 

   To Goodwill A/c

 

 

 

12,000

 

(Existing goodwill written-off)

 

 

 

 

 

 

 

 

 

 

 

X’s Capital A/c

Dr.

 

49,600

 

 

  To Y’s Capital A/c

 

 

 

18,600

 

  To Z’s Capital A/c

 

 

 

31,000

 

(Goodwill adjusted by debiting gaining partner and crediting sacrificing partner)

 

 

 

 

 

 

 

 

 

 

Land and Building A/c

Dr.

 

20,000

 

 

Sundry Creditors A/c

Dr.

 

30,000

 

 

  To Revaluation A/c

 

 

 

50,000

 

(Increase in value of land & building and decrease in value of creditors recorded in Revaluation Account)

 

 

 

 

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

43,000

 

 

  To Stock A/c

 

 

 

38,000

 

  To Provision for Doubtful Debts A/c

 

 

 

5,000

 

(Decrease in value of stock and increase in provision for doubtful debts, recorded in revaluation)

 

 

 

 

 

 

 

 

 

 

 

Prepaid Insurance A/c

Dr.

 

5,000

 

 

  To Revaluation A/c

 

 

 

5,000

 

(Amount paid for insurance carried forward as unexpired insurance)

 

 

 

 

 

 

 

 

 

 

 

Revaluation A/c

Dr.

 

12,000

 

 

   To X’s Capital A/c

 

 

 

4,000

 

   To Y’s Capital A/c

 

 

 

6,000

 

   To Z’s Capital A/c

 

 

 

2,000

 

(Profit on revaluation transferred to Partners’ Capital Accounts in old profit sharing ratio of 2 : 3 : 1)

 

 

 

 

 

 

 

 

 

 

 

Workmen Compensation Reserve A/c

Dr.

 

20,000

 

 

   To Workmen Compensation Claim A/c

 

 

 

8,000

 

   To X’s Capital A/c

 

 

 

4,000

 

   To Y’s Capital A/c

 

 

 

6,000

 

   To Z’s Capital A/c

 

 

 

2,000

 

(Excess balance of WCR transferred to partners’ capital account)

 

 

 

 

 

 

 

 

 

 

 

Investments Fluctuation Reserve A/c

Dr.

 

10,000

 

 

   To Investments A/c

 

 

 

4,000

 

   To X’s Capital A/c

 

 

 

2,000

 

   To Y’s Capital A/c

 

 

 

3,000

 

   To Z’s Capital A/c

 

 

 

1,000

 

(Decrease in market value of investments settled through IFF and excess balance is transferred to partners’ capital accounts)

 

 

 

 

 

 

 

 

 

 

 

X’s Capital A/c

Dr.

 

4,000

 

 

Y’s Capital A/c

Dr.

 

6,000

 

 

Z’s Capital A/c

Dr.

 

2,000

 

 

  To Advertisement A/c

 

 

 

12,000

 

(Balance of Advertisement Suspense Account is debited to Partners’ Capital Account)

 

 

 

 

 

 

 

 

 

Z’s Capital A/c

Dr.

 

3,32,000

 

 

   To Bank A/c

 

 

1,66,000

 

   To Z’s Loan A/c

 

 

1,66,000

 

(Half of the amount is immediately paid to Z and remaining half is transferred to his Loan Account)

 

 

 

 

 

 

 

 

 

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Stock

38,000

Land and Building

20,000

Provision for Doubtful Debts

5,000

Sundry Creditors

30,000

Profit transferred to:

 

Prepaid Insurance

5,000

X’s Capital A/c

4,000

 

 

 

Y’s Capital A/c

6,000

 

 

 

Z’s Capital A/c

2,000

12,000

 

 

 

55,000

 

55,000

 

 

 

 

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

X

Y

Z

Particulars

X

Y

Z

Y’s Capital A/c

18,600

 

 

Balance b/d

1,00,000

2,00,000

3,00,000

Z’s Capital A/c

31,000

 

 

 

 

 

 

Advertisement Suspense A/c

4,000

6,000

2,000

Revaluation A/c

4,000

6,000

2,000

Goodwill A/c

4,000

6,000

2,000

Workmen Compensation Reserve

4,000

6,000

2,000

Bank A/c

 

 

1,66,000

Investment Fluctuation Reserve

2,000

3,000

1,000

Z’s Loan A/c

 

 

1,66,000

X’s Capital A/c

 

18,600

31,000

Balance c/d

52,400

2,21,600

 

 

 

 

 

 

1,10,000

2,33,600

3,36,000

 

1,10,000

2,33,600

3,36,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as at April 01, 2015

Liabilities

Amount

Rs

Assets

Amount

Rs

Capital A/cs:

 

Investments

46,000

X

52,400

 

Land and Building

2,50,000

 

Y

2,21,600

2,74,000

Add: Undervaluation

20,000

2,70,000

Z’s Loan

1,66,000

Stock

                80,000

 

Workmen Compensation Claim

8,000

Less: Overvaluation

        38,000

42,000

Employees Provident Fund

60,000

Debtors

             3,00,000

 

Sundry Creditors

3,00,000

 

Less: Prov. For D/D

        15,000

2,85,000

Less: Written-off

30,000

2,70,000

Bank (2,96,000 – 1,66,000)

1,30,000

 

 

 

Prepaid Insurance

5,000

 

7,78,000

 

7,78,000

 

 

 

 

 

Z’s Loan Account

Dr.

 

Cr.

Date

Particulars

Amount

Rs

Date

Particulars

Amount

Rs

2016

 

 

2015

 

 

March 31

Bank A/c (83,000 + 16,600)

99,600

April 01

Z’s Capital A/c

1,66,000

March 31

Balance c/d

83,000

2016

 

 

 

 

 

March 31

Interest A/c (1,66,000 @ 10%)

16,600

 

 

1,82,600

 

 

1,82,600

2017

 

 

2016

 

 

March 31

Bank A/c (83,000 + 8,300)

91,300

April 01

Balance b/d

83,000

 

 

 

2016

 

 

 

 

 

March 31

Interest A/c (83,000 @ 10%)

8,300

 

 

91,300

 

 

91,300

 

 

 

 

 

 

Working Notes:

WN 1: Calculation of sacrificing/gaining ratio

WN 2: Calculation of goodwill

Answer:

Revaluation Account
Particulars Amount (Rs) Particulars Amount (Rs)
Investment A/c (WN1) 1,000 Building A/c 10,000
Stock A/c 280 Provision for Doubtful Debts A/c 1,600
Profit transferred to:      
P’s Capital A/c
3,440      
Q’s Capital A/c
3,440      
R’s Capital A/c
3,440 10,320    
  11,600   11,600
       
 
Partners’ Capital Accounts
Dr.   Cr.
Particulars P Q R Particulars P Q R
R’s Capital A/c 2,000 Balance b/d 51,000 40,000 40,000
Goodwill A/c 1,000 1,000 1,000 P’s Capital A/c 2,000
Bank A/c 23,440 Revaluation A/c 3,440 3,440 3,440
R’s Loan A/c 28,000 Profit & Loss A/c 1,000 1,000 1,000
Balance c/d 58,440 49,440 Workmen Compensation Reserve A/c 6,000 6,000 6,000
               
  61,440 50,440 52,440   61,440 50,440 52,440
               
 
Bank Account
Particulars Amount (Rs)   Amount (Rs)
Balance b/d 1,60,000 R’s Capital A/c 23,440
    Balance c/d 1,36,560
  1,60,000   1,60,000
       
 
Balance Sheet
as on ….
Liabilities Amount (Rs) Assets Amount (Rs)
Capital A/cs:   Building (1,00,000 + 10,000) 1,10,000
P
58,440   Debtors 30,000
Q
49,440 1,07,880 Investments (30,000 – 3,000) 27,000
R’s Loan A/c 28,000 Stock (4,000 – 280) 3,720
Creditors 2,00,400 Bank 1,36,560
    Machinery 29,000
  3,36,280   3,36,280
       
 
R’s Loan Account
Particulars Amount (Rs)   Amount (Rs)
Bank A/c (14,000+ 2,240) 16,240 R’s Capital A/c 28,000
Balance c/d 14,000 Interest A/c (28,000 × 8%) 2,240
  30,240   30,240
Bank A/c (14,000+ 1,120) 15,120 Balance b/d 14,000
    Interest A/c (14,000 × 8%) 1,120
  15,120   15,120
       

Working Notes:

WN 1: Calculation of Value of Investments

Investments = Rs 30,000Decrease in the value of Investments = 3,000Less: Investment Flucutuation Reserve = 2,000Net decrease in value of investments = Rs 1,000

WN 2: Calculation of Valuation of Goodwill

Average Profit= 8,000+ 7,000+ 3,0003 = Rs 6,000Goodwill = 6,000 × 1= Rs 6,000  R's Share of Goodwill= 6,000 × 13= Rs 2,000   

WN 3: Calculation of Gaining Ratio

Old Ratio = 1 : 1 : 1New Ratio = 2 : 1P = 23 - 13 = 13 (Gain)Q = 13 - 13 = Nil 

Page No 6.89:

Question 25:

Revaluation Account
Particulars Amount (Rs) Particulars Amount (Rs)
Investment A/c (WN1) 1,000 Building A/c 10,000
Stock A/c 280 Provision for Doubtful Debts A/c 1,600
Profit transferred to:      
P’s Capital A/c
3,440      
Q’s Capital A/c
3,440      
R’s Capital A/c
3,440 10,320    
  11,600   11,600
       
 
Partners’ Capital Accounts
Dr.   Cr.
Particulars P Q R Particulars P Q R
R’s Capital A/c 2,000 Balance b/d 51,000 40,000 40,000
Goodwill A/c 1,000 1,000 1,000 P’s Capital A/c 2,000
Bank A/c 23,440 Revaluation A/c 3,440 3,440 3,440
R’s Loan A/c 28,000 Profit & Loss A/c 1,000 1,000 1,000
Balance c/d 58,440 49,440 Workmen Compensation Reserve A/c 6,000 6,000 6,000
               
  61,440 50,440 52,440   61,440 50,440 52,440
               
 
Bank Account
Particulars Amount (Rs)   Amount (Rs)
Balance b/d 1,60,000 R’s Capital A/c 23,440
    Balance c/d 1,36,560
  1,60,000   1,60,000
       
 
Balance Sheet
as on ….
Liabilities Amount (Rs) Assets Amount (Rs)
Capital A/cs:   Building (1,00,000 + 10,000) 1,10,000
P
58,440   Debtors 30,000
Q
49,440 1,07,880 Investments (30,000 – 3,000) 27,000
R’s Loan A/c 28,000 Stock (4,000 – 280) 3,720
Creditors 2,00,400 Bank 1,36,560
    Machinery 29,000
  3,36,280   3,36,280
       
 
R’s Loan Account
Particulars Amount (Rs)   Amount (Rs)
Bank A/c (14,000+ 2,240) 16,240 R’s Capital A/c 28,000
Balance c/d 14,000 Interest A/c (28,000 × 8%) 2,240
  30,240   30,240
Bank A/c (14,000+ 1,120) 15,120 Balance b/d 14,000
    Interest A/c (14,000 × 8%) 1,120
  15,120   15,120
       

Working Notes:

WN 1: Calculation of Value of Investments

Investments = Rs 30,000Decrease in the value of Investments = 3,000Less: Investment Flucutuation Reserve = 2,000Net decrease in value of investments = Rs 1,000

WN 2: Calculation of Valuation of Goodwill

Average Profit= 8,000+ 7,000+ 3,0003 = Rs 6,000Goodwill = 6,000 × 1= Rs 6,000  R's Share of Goodwill= 6,000 × 13= Rs 2,000   

WN 3: Calculation of Gaining Ratio

Old Ratio = 1 : 1 : 1New Ratio = 2 : 1P = 23 - 13 = 13 (Gain)Q = 13 - 13 = Nil 

Answer:

Revaluation Account
Particulars Amount (Rs) Particulars Amount (Rs)
Plant & Machinery A/c 5,000 Creditors A/c 3,600
Provision for Doubtful Debts A/c 400 Investments A/c (17,600 – 15,000) 2,600
Patents A/c 2,000 Loss transferred to:  
   
X’s Capital A/c
600  
   
Y’s Capital A/c
400  
   
Z’s Capital A/c
200 1,200
       
  7,400   7,400
       
 
Partners’ Capital Accounts
Dr.   Cr.
Particulars X Y Z Particulars X Y Z
Advertisement Expenditure A/c 2,625 1,750 875 Balance b/d 68,000 32,000 21,000
Goodwill A/c 3,000 2,000 1,000 X’s Capital A/c     3,000
Z’s Capital A/c 3,000 2,000   Y’s Capital A/c     2,000
Revaluation A/c 600 400 200 Workmen Compensation Reserve A/c 4,500 3,000 1,500
Investments A/c     17,600 Investments Fluctuation Reserve 3,000 2,000 1,000
Bank A/c     4,413        
Bills Payable A/c     2,206        
Z’s Loan A/c     2,206        
Balance c/d 66,275 30,850          
               
  75,500 37,000 28,500   75,500 37,000 28,500
               
 
Balance Sheet
as on April 01, 2014
Liabilities Amount (Rs) Assets Amount (Rs)
Capital A/cs:   Cash at Bank (5,750 – 4,413) 1,337
X
66,275   Debtors 40,000  
Y
30,850 97,125    Less: Provision for Doubtful Debts 2,400 37,600
Creditors 11,400 Plant & Machinery (50,000 – 5,000) 45,000
Bills Payable (Z) 2,206 Patents (10,000 – 2,000) 8,000
Z’s Loan 2,206 Stock 30,000
Liability for Workmen Compensation 3,000    
Employees’ Provident Fund 6,000    
  1,21,937   1,21,937
       
 
Journal
Date Particulars L.F. Debit Amount (Rs) Credit Amount
(Rs)
  X’s Capital A/c Dr.   3,000  
  Y’s Capital A/c     2,000  
 
To Z’s Capital A/c
      5,000
  (Goodwill adjusted through capitals)        
           
  X’s Capital A/c Dr.   3,000  
  Y’s Capital A/c Dr.   2,000  
  Z’s Capital A/c Dr.   1,000  
 
To Goodwill A/c
      6,000
  (Old goodwill written-off)      

Working Notes:
 

: Y : Z = 3 : 2: 1 (Old Ratio): Y  = 3 : 2 (Gaining Ratio) Z's Share of Goodwill = 30,000 × 16 = Rs 5,000



Page No 6.90:

Question 26:

Revaluation Account
Particulars Amount (Rs) Particulars Amount (Rs)
Plant & Machinery A/c 5,000 Creditors A/c 3,600
Provision for Doubtful Debts A/c 400 Investments A/c (17,600 – 15,000) 2,600
Patents A/c 2,000 Loss transferred to:  
   
X’s Capital A/c
600  
   
Y’s Capital A/c
400  
   
Z’s Capital A/c
200 1,200
       
  7,400   7,400
       
 
Partners’ Capital Accounts
Dr.   Cr.
Particulars X Y Z Particulars X Y Z
Advertisement Expenditure A/c 2,625 1,750 875 Balance b/d 68,000 32,000 21,000
Goodwill A/c 3,000 2,000 1,000 X’s Capital A/c     3,000
Z’s Capital A/c 3,000 2,000   Y’s Capital A/c     2,000
Revaluation A/c 600 400 200 Workmen Compensation Reserve A/c 4,500 3,000 1,500
Investments A/c     17,600 Investments Fluctuation Reserve 3,000 2,000 1,000
Bank A/c     4,413        
Bills Payable A/c     2,206        
Z’s Loan A/c     2,206        
Balance c/d 66,275 30,850          
               
  75,500 37,000 28,500   75,500 37,000 28,500
               
 
Balance Sheet
as on April 01, 2014
Liabilities Amount (Rs) Assets Amount (Rs)
Capital A/cs:   Cash at Bank (5,750 – 4,413) 1,337
X
66,275   Debtors 40,000  
Y
30,850 97,125    Less: Provision for Doubtful Debts 2,400 37,600
Creditors 11,400 Plant & Machinery (50,000 – 5,000) 45,000
Bills Payable (Z) 2,206 Patents (10,000 – 2,000) 8,000
Z’s Loan 2,206 Stock 30,000
Liability for Workmen Compensation 3,000    
Employees’ Provident Fund 6,000    
  1,21,937   1,21,937
       
 
Journal
Date Particulars L.F. Debit Amount (Rs) Credit Amount
(Rs)
  X’s Capital A/c Dr.   3,000  
  Y’s Capital A/c     2,000  
 
To Z’s Capital A/c
      5,000
  (Goodwill adjusted through capitals)        
           
  X’s Capital A/c Dr.   3,000  
  Y’s Capital A/c Dr.   2,000  
  Z’s Capital A/c Dr.   1,000  
 
To Goodwill A/c
      6,000
  (Old goodwill written-off)      

Working Notes:
 

: Y : Z = 3 : 2: 1 (Old Ratio): Y  = 3 : 2 (Gaining Ratio) Z's Share of Goodwill = 30,000 × 16 = Rs 5,000

Answer:

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

Revaluation A/c

Dr.

 

3,000

 

To Fixed Assets A/c

 

 

2,000

To Provision for doubtful Debts A/c

 

 

1,000

(Decrease in value of Fixed Assets and provision for doubtful debts transferred to Revaluation Account)

 

 

 

 

 

 

 

P’s Capital A/c

Dr.

 

1,200

 

Q’s Capital A/c

Dr.

 

900

 

R’s Capital A/c

Dr.

 

900

 

To Revaluation A/c

 

 

3,000

(Revaluation loss distributed among partners in their old ratio)

 

 

 

 

 

 

 

Workmen’s Compensation Reserve A/c

Dr.

 

10,000

 

To Outstanding Workmen’s Compensation A/c

 

 

4,000

To P’s Capital A/c

 

 

2,400

To Q’s Capital A/c

 

 

1,800

To R’s Capital A/c

 

 

1,800

(Workmen Compensation claim adjusted against Workmen’s Compensation Reserve and the balance amount is distributed among the partners)

 

 

 

 

 

 

 

Reserves A/c

Dr.

 

10,000

 

To R’s Capital A/c

 

 

4,000

To Q’s Capital A/c

 

 

3,000

To R’s Capital A/c

 

 

3,000

(Reserve distributed among all the partners in their old ratio)

 

 

 

 

 

 

 

P’s Capital A/c

Dr.

 

13,333

 

Q’s Capital A/c

Dr.

 

1,667

 

To R’s Capital A/c

 

 

15,000

(R’s share of goodwill adjusted)

 

 

 

 

 

 

 

R’s Capital A/c

Dr.

 

27,900

 

To R’s Loan A/c

 

 

27,900

(R’s capital balance transferred to his Loan Account)

 

 

 

 

 

 

 

 

Balance Sheet

as on March 31,2009 (after R’s Retirement)

Liabilities

Amount

Rs

Assets

Amount

Rs

Creditors

10,000

Cash at Bank

20,000

Employees’ Provident Fund

20,000

Debtors

15,000

 

Outstanding Workmen’s Compensation Reserve

4,000

Less: Provision for Doubtful Debts

(1,000)

14,000

R’s Loan

27,900

Stock

17,000

Capital A/cs:

 

Fixed Assets (52,000 – 2,000)

50,000

P

21,867

 

 

 

Q

17,233

39,100

 

 

 

 

1,01,000

 

1,01,000

 

 

 

 

 

R’s Loan Account

Dr.

 

Cr.

Date

Particulars

Amount

Rs

Date

Particulars

Amount

Rs

2010

 

 

2009

 

 

March 31

Bank (9,300 + 2,790)

12,090

April 01

R’s Capital A/c

27,900

      2010    

March 31

Balance c/d

18,600

March 31

Interest (27,900 × 10%)

2,790

 

 

30,690

 

 

30,690

2011

 

 

2010

 

 

March 31

Bank (9,300 + 1,860)

11,160

April 01

Balance b/d

18,600

 

 

 

2011

 

 

March 31

Balance c/d

9,300

March 31

Interest (18,600 × 10%)

1,860

 

 

20,460

 

 

20,460

2012

 

 

2011

 

 

March 31

Bank (9,300 + 930)

10,230

April 01

Balance b/d

9,300

 

 

 

2012

 

 

 

 

 

March 31

Interest (9,300 × 10%)

930

 

 

 

 

 

 

 

 

10,230

 

 

10,230

 

 

 

 

 

 

 

Working Notes:

WN 1

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Fixed Assets

2,000

Loss transferred to:

 

Provision for Doubtful Debts

1,000

P’s Capital A/c

1,200

 

 

 

Q’s Capital A/c

900

 

 

 

R’s Capital A/c

900

3,000

 

3,000

 

3,000

 

 

 

 


WN 2

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

P

Q

R

Particulars

P

Q

R

Drawings A/c

 

 

6,000

Balance b/d

30,000

15,000

15,000

R’s Capital A/c (Goodwill)

13,333

1,667

 

Workmen’s Compensation Reserve

2,400

1,800

1,800

Revaluation A/c

1,200

900

900

Reserves

4,000

3,000

3,000

R’s Loan A/c

 

 

27,900

P’s Capital A/c (Goodwill)

 

 

13,333

Balance c/d

21,867

17,233

 

Q’s Capital A/c (Goodwill)

 

 

1,667

 

36,400

19,800

34,800

 

36,400

19,800

34,800

 

 

 

 

 

 

 

 


WN 3

Calculation of Gaining Ratio

Old Ratio (P, Q and R) = 4 : 3 : 3

New Ratio (P and Q) = 2 : 1

R retires from the firm.

Gaining Ratio = New Ratio − Old Ratio

P = 23-410=830Q = 13-310=130

∴ Gaining Ratio = 8 : 1

WN 4

Adjustment of Goodwill

Goodwill of the firm = Rs 50,000

R’s Share of Goodwill = 50,000×310=Rs 15,000

This share of goodwill is to be distributed between P and R in their gaining ratio (i.e. 8 : 1).

P = 15,000×89=Rs 13,333Q = 15,000×19=Rs Rs 1,667

Page No 6.90:

Question 27:

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

Revaluation A/c

Dr.

 

3,000

 

To Fixed Assets A/c

 

 

2,000

To Provision for doubtful Debts A/c

 

 

1,000

(Decrease in value of Fixed Assets and provision for doubtful debts transferred to Revaluation Account)

 

 

 

 

 

 

 

P’s Capital A/c

Dr.

 

1,200

 

Q’s Capital A/c

Dr.

 

900

 

R’s Capital A/c

Dr.

 

900

 

To Revaluation A/c

 

 

3,000

(Revaluation loss distributed among partners in their old ratio)

 

 

 

 

 

 

 

Workmen’s Compensation Reserve A/c

Dr.

 

10,000

 

To Outstanding Workmen’s Compensation A/c

 

 

4,000

To P’s Capital A/c

 

 

2,400

To Q’s Capital A/c

 

 

1,800

To R’s Capital A/c

 

 

1,800

(Workmen Compensation claim adjusted against Workmen’s Compensation Reserve and the balance amount is distributed among the partners)

 

 

 

 

 

 

 

Reserves A/c

Dr.

 

10,000

 

To R’s Capital A/c

 

 

4,000

To Q’s Capital A/c

 

 

3,000

To R’s Capital A/c

 

 

3,000

(Reserve distributed among all the partners in their old ratio)

 

 

 

 

 

 

 

P’s Capital A/c

Dr.

 

13,333

 

Q’s Capital A/c

Dr.

 

1,667

 

To R’s Capital A/c

 

 

15,000

(R’s share of goodwill adjusted)

 

 

 

 

 

 

 

R’s Capital A/c

Dr.

 

27,900

 

To R’s Loan A/c

 

 

27,900

(R’s capital balance transferred to his Loan Account)

 

 

 

 

 

 

 

 

Balance Sheet

as on March 31,2009 (after R’s Retirement)

Liabilities

Amount

Rs

Assets

Amount

Rs

Creditors

10,000

Cash at Bank

20,000

Employees’ Provident Fund

20,000

Debtors

15,000

 

Outstanding Workmen’s Compensation Reserve

4,000

Less: Provision for Doubtful Debts

(1,000)

14,000

R’s Loan

27,900

Stock

17,000

Capital A/cs:

 

Fixed Assets (52,000 – 2,000)

50,000

P

21,867

 

 

 

Q

17,233

39,100

 

 

 

 

1,01,000

 

1,01,000

 

 

 

 

 

R’s Loan Account

Dr.

 

Cr.

Date

Particulars

Amount

Rs

Date

Particulars

Amount

Rs

2010

 

 

2009

 

 

March 31

Bank (9,300 + 2,790)

12,090

April 01

R’s Capital A/c

27,900

      2010    

March 31

Balance c/d

18,600

March 31

Interest (27,900 × 10%)

2,790

 

 

30,690

 

 

30,690

2011

 

 

2010

 

 

March 31

Bank (9,300 + 1,860)

11,160

April 01

Balance b/d

18,600

 

 

 

2011

 

 

March 31

Balance c/d

9,300

March 31

Interest (18,600 × 10%)

1,860

 

 

20,460

 

 

20,460

2012

 

 

2011

 

 

March 31

Bank (9,300 + 930)

10,230

April 01

Balance b/d

9,300

 

 

 

2012

 

 

 

 

 

March 31

Interest (9,300 × 10%)

930

 

 

 

 

 

 

 

 

10,230

 

 

10,230

 

 

 

 

 

 

 

Working Notes:

WN 1

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Fixed Assets

2,000

Loss transferred to:

 

Provision for Doubtful Debts

1,000

P’s Capital A/c

1,200

 

 

 

Q’s Capital A/c

900

 

 

 

R’s Capital A/c

900

3,000

 

3,000

 

3,000

 

 

 

 


WN 2

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

P

Q

R

Particulars

P

Q

R

Drawings A/c

 

 

6,000

Balance b/d

30,000

15,000

15,000

R’s Capital A/c (Goodwill)

13,333

1,667

 

Workmen’s Compensation Reserve

2,400

1,800

1,800

Revaluation A/c

1,200

900

900

Reserves

4,000

3,000

3,000

R’s Loan A/c

 

 

27,900

P’s Capital A/c (Goodwill)

 

 

13,333

Balance c/d

21,867

17,233

 

Q’s Capital A/c (Goodwill)

 

 

1,667

 

36,400

19,800

34,800

 

36,400

19,800

34,800

 

 

 

 

 

 

 

 


WN 3

Calculation of Gaining Ratio

Old Ratio (P, Q and R) = 4 : 3 : 3

New Ratio (P and Q) = 2 : 1

R retires from the firm.

Gaining Ratio = New Ratio − Old Ratio

P = 23-410=830Q = 13-310=130

∴ Gaining Ratio = 8 : 1

WN 4

Adjustment of Goodwill

Goodwill of the firm = Rs 50,000

R’s Share of Goodwill = 50,000×310=Rs 15,000

This share of goodwill is to be distributed between P and R in their gaining ratio (i.e. 8 : 1).

P = 15,000×89=Rs 13,333Q = 15,000×19=Rs Rs 1,667

Answer:

Revaluation Account
Particulars Amount (Rs) Particulars Amount (Rs)
Plant & Equipment A/c 6,000 Building A/c 24,000
Provision for Doubtful Debts A/c 800 Creditors A/c 1,000
Stock A/c 2,400    
Outstanding Salary A/c 5,000    
Claim for Damages 3,480    
Profit transferred to:      
P’s Capital A/c
3,660      
Q’s Capital A/c
2,440      
R’s Capital A/c
1,220 7,320    
  25,000   25,000
       
 
Partners’ Capital Accounts
Dr.   Cr.
Particulars P Q R Particulars P Q R
P’s Loan A/c 48,000 Balance b/d 48,000 24,000 12,000
Balance c/d 24,000 12,000        
               
  48,000 24,000 12,000   48,000 24,000 12,000
               
 
Partners’ Current Accounts
Dr.   Cr.
Particulars P Q R Particulars P Q R
P’s Current A/c 9,600 4,800 Balance b/d 3,840 3,360 2,240
Bank A/c 21,900 Q’s Current  A/c 9,600
        R’s Current A/c 4,800
        Revaluation A/c 3,660 2,440 1,220
        Balance c/d 3,800 1,340
               
  21,900 9,600 4,800   21,900 9,600 4,800
               
 
Balance Sheet
as on March 31, 2016
Liabilities Amount
(Rs)
Assets Amount (Rs)
Capital A/cs:   Building (24,000 + 24,000) 48,000
Q
24,000   Debtors 24,800  
R
12,000 36,000
Less: Provision for Doubtful Debts
3,200 21,600
Creditors (31,200 – 1,000) 30,200 Plant & Equipment 31,600
Outstanding Salary 5,000 Bank 340
P’s Loan 48,000 Stock (18,400 – 2,400) 16,000
Claims for Damages 3,480 Current A/cs:  
   
Q
3,800  
   
R
1,340 5,140
  1,22,680   1,22,680
       

Working Notes:

WN 1: Calculation of Gaining Ratio

: Q : R = 3 : 2 : 1 (Old Ratio): R = 2 : 1 (New Ratio)Gaining Ratio = New Ratio - Old RatioQ's Gain = 23 - 26 =  4 - 2626R's Gain = 13 - 16 =  2 - 1616Gaining ratio = 2 :1P’s Share of  Goodwill = 28,800 × 36 = Rs 14,400
 
Bank Account
Particulars Amount (Rs)   Amount (Rs)
Balance b/d 32,240 P’s Loan A/c 10,000
    P’s Current A/c 21,900
    Balance c/d 340
  32,240   32,240
       



Page No 6.91:

Question 28:

Revaluation Account
Particulars Amount (Rs) Particulars Amount (Rs)
Plant & Equipment A/c 6,000 Building A/c 24,000
Provision for Doubtful Debts A/c 800 Creditors A/c 1,000
Stock A/c 2,400    
Outstanding Salary A/c 5,000    
Claim for Damages 3,480    
Profit transferred to:      
P’s Capital A/c
3,660      
Q’s Capital A/c
2,440      
R’s Capital A/c
1,220 7,320    
  25,000   25,000
       
 
Partners’ Capital Accounts
Dr.   Cr.
Particulars P Q R Particulars P Q R
P’s Loan A/c 48,000 Balance b/d 48,000 24,000 12,000
Balance c/d 24,000 12,000        
               
  48,000 24,000 12,000   48,000 24,000 12,000
               
 
Partners’ Current Accounts
Dr.   Cr.
Particulars P Q R Particulars P Q R
P’s Current A/c 9,600 4,800 Balance b/d 3,840 3,360 2,240
Bank A/c 21,900 Q’s Current  A/c 9,600
        R’s Current A/c 4,800
        Revaluation A/c 3,660 2,440 1,220
        Balance c/d 3,800 1,340
               
  21,900 9,600 4,800   21,900 9,600 4,800
               
 
Balance Sheet
as on March 31, 2016
Liabilities Amount
(Rs)
Assets Amount (Rs)
Capital A/cs:   Building (24,000 + 24,000) 48,000
Q
24,000   Debtors 24,800  
R
12,000 36,000
Less: Provision for Doubtful Debts
3,200 21,600
Creditors (31,200 – 1,000) 30,200 Plant & Equipment 31,600
Outstanding Salary 5,000 Bank 340
P’s Loan 48,000 Stock (18,400 – 2,400) 16,000
Claims for Damages 3,480 Current A/cs:  
   
Q
3,800  
   
R
1,340 5,140
  1,22,680   1,22,680
       

Working Notes:

WN 1: Calculation of Gaining Ratio

: Q : R = 3 : 2 : 1 (Old Ratio): R = 2 : 1 (New Ratio)Gaining Ratio = New Ratio - Old RatioQ's Gain = 23 - 26 =  4 - 2626R's Gain = 13 - 16 =  2 - 1616Gaining ratio = 2 :1P’s Share of  Goodwill = 28,800 × 36 = Rs 14,400
 
Bank Account
Particulars Amount (Rs)   Amount (Rs)
Balance b/d 32,240 P’s Loan A/c 10,000
    P’s Current A/c 21,900
    Balance c/d 340
  32,240   32,240
       

Answer:

Revaluation Account
Particulars Amount
(Rs)
Particulars Amount (Rs)
Plant A/c 80,000 Building A/c 2,00,000
Provision for Doubtful Debts A/c 30,000    
Furniture A/c 12,000    
Profit transferred to:      
X’s Capital A/c
39,000      
Y’s Capital A/c
26,000      
Z’s Capital A/c
13,000 78,000    
  2,00,000   2,00,000
       
 
Partners’ Capital Accounts
Dr.   Cr.
Particulars X Y Z Particulars X Y Z
Z’s Capital A/c 72,000 48,000 Balance b/d 9,00,000 7,00,000 5,00,000
Bank A/c 7,23,000 General Reserve A/c 1,50,000 1,00,000 50,000
Balance c/d 15,64,800 11,43,200 Workmen Compensation Reserve A/c 1,20,000 80,000 40,000
        Revaluation A/c 39,000 26,000 13,000
        X’s Capital A/c 72,000
        Y’s Capital A/c 48,000
        Bank A/c 4,27,800 2,85,200
  16,36,800 11,91,200 7,23,000   16,36,800 11,91,200 7,23,000
               
 
Balance Sheet
as on March 31, 2016
Liabilities Amount (Rs) Assets Amount (Rs)
Capital A/cs:   Building (10,00,000 + 2,00,000) 12,00,000
X
15,64,800   Debtors 6,00,000  
Z
11,43,200 27,08,000
Less: Provision for Doubtful Debts
30,000 5,70,000
Creditors 4,10,000 Plant (8,00,000 – 80,000) 7,20,000
    Furniture (80,000 – 12,000) 68,000
    Cash at Bank 60,000
    Stock 5,00,000
  31,18,000   31,18,000
       

Working Notes: Calculation of Cash to be brought in by X and Y

Amount to be paid to Z – Cash at Bank + Minimum Cash Balance

7,23,000 – 70,000 + 60,000 = Rs 7,13,000

Thus, amount to be brought in by X = Rs 4,27,800 7,13,000×35

Amount to be brought in by Y = Rs 2,85,200 7,13,000×25

Page No 6.91:

Question 29:

Revaluation Account
Particulars Amount
(Rs)
Particulars Amount (Rs)
Plant A/c 80,000 Building A/c 2,00,000
Provision for Doubtful Debts A/c 30,000    
Furniture A/c 12,000    
Profit transferred to:      
X’s Capital A/c
39,000      
Y’s Capital A/c
26,000      
Z’s Capital A/c
13,000 78,000    
  2,00,000   2,00,000
       
 
Partners’ Capital Accounts
Dr.   Cr.
Particulars X Y Z Particulars X Y Z
Z’s Capital A/c 72,000 48,000 Balance b/d 9,00,000 7,00,000 5,00,000
Bank A/c 7,23,000 General Reserve A/c 1,50,000 1,00,000 50,000
Balance c/d 15,64,800 11,43,200 Workmen Compensation Reserve A/c 1,20,000 80,000 40,000
        Revaluation A/c 39,000 26,000 13,000
        X’s Capital A/c 72,000
        Y’s Capital A/c 48,000
        Bank A/c 4,27,800 2,85,200
  16,36,800 11,91,200 7,23,000   16,36,800 11,91,200 7,23,000
               
 
Balance Sheet
as on March 31, 2016
Liabilities Amount (Rs) Assets Amount (Rs)
Capital A/cs:   Building (10,00,000 + 2,00,000) 12,00,000
X
15,64,800   Debtors 6,00,000  
Z
11,43,200 27,08,000
Less: Provision for Doubtful Debts
30,000 5,70,000
Creditors 4,10,000 Plant (8,00,000 – 80,000) 7,20,000
    Furniture (80,000 – 12,000) 68,000
    Cash at Bank 60,000
    Stock 5,00,000
  31,18,000   31,18,000
       

Working Notes: Calculation of Cash to be brought in by X and Y

Amount to be paid to Z – Cash at Bank + Minimum Cash Balance

7,23,000 – 70,000 + 60,000 = Rs 7,13,000

Thus, amount to be brought in by X = Rs 4,27,800 7,13,000×35

Amount to be brought in by Y = Rs 2,85,200 7,13,000×25

Answer:

Journal
Date Particulars L.F. Debit Amount (Rs) Credit Amount (Rs)
  X’s Capital A/c Dr.   4,300  
 
To Cash A/c
      4,300
  (Excess balance of cash withdrawn by X)        
           
  Cash A/c Dr.   2,700  
 
To Z’s Capital A/c
      2,700
  (Deficiency amount brought in by Z)        
         

Working Notes: Calculation of Cash to be brought in or paid to X and Z

Total Capital of the New Firm = Rs 56,000 X's New Capital = 56,000 × 58 = 35,000Less: X's Existing Capital         =  39,300  X will withdraw                   = Rs 4,300Z's New Capital = 56,000 × 38 = 21,000Less: Z's Existing Capital         =  18,300  Z will bring                          = Rs 2,700  



Page No 6.92:

Question 30:

Journal
Date Particulars L.F. Debit Amount (Rs) Credit Amount (Rs)
  X’s Capital A/c Dr.   4,300  
 
To Cash A/c
      4,300
  (Excess balance of cash withdrawn by X)        
           
  Cash A/c Dr.   2,700  
 
To Z’s Capital A/c
      2,700
  (Deficiency amount brought in by Z)        
         

Working Notes: Calculation of Cash to be brought in or paid to X and Z

Total Capital of the New Firm = Rs 56,000 X's New Capital = 56,000 × 58 = 35,000Less: X's Existing Capital         =  39,300  X will withdraw                   = Rs 4,300Z's New Capital = 56,000 × 38 = 21,000Less: Z's Existing Capital         =  18,300  Z will bring                          = Rs 2,700  

Answer:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Plant (30,000 × 10%)

3,000

Expenses Owing (2,000 – 1,500)

500

 

 

Patents (4,000 – 3,000)

1,000

 

 

Loss transferred to:

 

 

 

Manoj’s Capital A/c

750

 

 

 

Naveen’s Capital A/c

500

 

 

 

Deepak’s Capital A/c

250

1,500

 

3,000

 

3,000

 

 

 

 

 

Partners’ Capital Account

Dr.

 

Cr.

Particulars

Manoj

Naveen

Deepak

Particulars

Manoj

Naveen

Deepak

Revaluation

750

500

250

Balance b/d

12,000

10,000

9,000

Naveen’s Capital A/c

1,200

 

2,800

General Reserve

3,000

2,000

1,000

Naveen’s Loan A/c

 

15,500

 

Manoj Capital A/c

 

1,200

 

Balance c/d

13,050

 

6,950

Deepak Capital A/c

 

2,800

 

 

15,000

16,000

10,000

 

15,000

16,000

10,000

 

 

 

 

Balance b/d

13,050

 

6,950

Balance c/d

15,000

 

10,000

Cash A/c

1,950

 

3,050

 

15,000

 

10,000

 

15,000

 

10,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as on April 01, 2014

Liabilities

Amount

Rs

Assets

Amount

Rs

Expense Owing

1,500

Plant (30,000 – 3,000)

27,000

Bills Payable

5,000

Patents

4,000

Creditors

10,000

Debtors

9,500

Naveen’s Loan

15,500

Stock

11,000

Capital A/cs:

 

Cash (WN 4)

5,500

Manoj

15,000

 

 

 

Deepak

10,000

25,000

 

 

 

57,000

 

57,000

 

 

 

 


Working Notes:

WN 1
Calculation of Gaining Ratio

Old Ratio =  3 : 2 : 1

Naveen retires from the firm.

New Ratio = 3 : 2

Gaining Ratio = New Ratio – Old Ratio



∴ Gaining Ratio = 3: 7

WN 2 Adjustment of Goodwill

Goodwill of the firm = Rs 12,000

Naveen’s Share of Goodwill =

This share of goodwill is to be distributed between Manoj and Deepak in their gaining ratio (i.e.3 : 7).

WN 3 Adjustment of Capital

WN 4
Cash Account
Dr.
 
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
Balance b/d
500
 
 
Manoj’s Capital
1,950
 
 
Deepak’s Capital
3,050
Balance c/d
5,500
 
5,500
 
5,500
       

Page No 6.92:

Question 31:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Plant (30,000 × 10%)

3,000

Expenses Owing (2,000 – 1,500)

500

 

 

Patents (4,000 – 3,000)

1,000

 

 

Loss transferred to:

 

 

 

Manoj’s Capital A/c

750

 

 

 

Naveen’s Capital A/c

500

 

 

 

Deepak’s Capital A/c

250

1,500

 

3,000

 

3,000

 

 

 

 

 

Partners’ Capital Account

Dr.

 

Cr.

Particulars

Manoj

Naveen

Deepak

Particulars

Manoj

Naveen

Deepak

Revaluation

750

500

250

Balance b/d

12,000

10,000

9,000

Naveen’s Capital A/c

1,200

 

2,800

General Reserve

3,000

2,000

1,000

Naveen’s Loan A/c

 

15,500

 

Manoj Capital A/c

 

1,200

 

Balance c/d

13,050

 

6,950

Deepak Capital A/c

 

2,800

 

 

15,000

16,000

10,000

 

15,000

16,000

10,000

 

 

 

 

Balance b/d

13,050

 

6,950

Balance c/d

15,000

 

10,000

Cash A/c

1,950

 

3,050

 

15,000

 

10,000

 

15,000

 

10,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as on April 01, 2014

Liabilities

Amount

Rs

Assets

Amount

Rs

Expense Owing

1,500

Plant (30,000 – 3,000)

27,000

Bills Payable

5,000

Patents

4,000

Creditors

10,000

Debtors

9,500

Naveen’s Loan

15,500

Stock

11,000

Capital A/cs:

 

Cash (WN 4)

5,500

Manoj

15,000

 

 

 

Deepak

10,000

25,000

 

 

 

57,000

 

57,000

 

 

 

 


Working Notes:

WN 1
Calculation of Gaining Ratio

Old Ratio =  3 : 2 : 1

Naveen retires from the firm.

New Ratio = 3 : 2

Gaining Ratio = New Ratio – Old Ratio



∴ Gaining Ratio = 3: 7

WN 2 Adjustment of Goodwill

Goodwill of the firm = Rs 12,000

Naveen’s Share of Goodwill =

This share of goodwill is to be distributed between Manoj and Deepak in their gaining ratio (i.e.3 : 7).

WN 3 Adjustment of Capital

WN 4
Cash Account
Dr.
 
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
Balance b/d
500
 
 
Manoj’s Capital
1,950
 
 
Deepak’s Capital
3,050
Balance c/d
5,500
 
5,500
 
5,500
       

Answer:

Profit & Loss Adjustment Account
Particulars Amount (Rs) Particulars Amount (Rs)
Stock A/c 2,400 Factory Building A/c 25,000
Provision for Legal Charges A/c 3,850    
Provision for Doubtful Debts A/c 750    
Profit transferred to:      
A’s Capital A/c
8,000      
B’s Capital A/c
6,000      
C’s Capital A/c
4,000 18,000    
  25,000   25,000
       
 
Partners’ Capital Accounts
Dr.   Cr.
Particulars A B C Particulars A B C
B’s Capital A/c 12,000 6,000 Balance b/d 1,00,000 75,000 50,000
B’s Loan A/c 99,000 A’s Capital A/c 18,000 × 46 12,000
Bank A/c (Balancing Figure) 2,667 1,333 C’s Capital A/c 18,000 × 26 6,000
Balance c/d 93,333 46,667 Profit & Loss Adjustment A/c 8,000 6,000 4,000
  1,08,000 99,000 54,000   1,08,000 99,000 54,000
               
 
Bank Account
Particulars Amount (Rs)   Amount (Rs)
Balance b/d 27,500 A’s Capital A/c 2,667
    C’s Capital A/c 1,333
    Balance c/d 23,500
  27,500   27,500
       
 
Balance Sheet
as at March 31, 2015
Liabilities Amount (Rs) Assets Amount (Rs)
Capital A/cs:   Factory Building (1,25,000 + 25,000) 1,50,000
A
93,333   Debtors 25,000  
C
46,667 1,40,000
Less: Provision for Doubtful Debts
1,250 23,750
B’s Loan A/c 99,000 Stock (40,000 – 2,400) 37,600
Creditors 24,500 Bank 23,500
Bills Payable 10,000 Plant & Machinery 42,500
Provision for Legal Charges 3,850    
       
  2,77,350   2,77,350
       

Working Notes: Calculation of New Capital of Existing Partners

Total New Capital = Rs 1,40,000A's New Capital = 1,40,000 × 46 = Rs 93,333  B's New Capital = 1,40,000 × 26= Rs 46,667   

Page No 6.92:

Question 32:

Profit & Loss Adjustment Account
Particulars Amount (Rs) Particulars Amount (Rs)
Stock A/c 2,400 Factory Building A/c 25,000
Provision for Legal Charges A/c 3,850    
Provision for Doubtful Debts A/c 750    
Profit transferred to:      
A’s Capital A/c
8,000      
B’s Capital A/c
6,000      
C’s Capital A/c
4,000 18,000    
  25,000   25,000
       
 
Partners’ Capital Accounts
Dr.   Cr.
Particulars A B C Particulars A B C
B’s Capital A/c 12,000 6,000 Balance b/d 1,00,000 75,000 50,000
B’s Loan A/c 99,000 A’s Capital A/c 18,000 × 46 12,000
Bank A/c (Balancing Figure) 2,667 1,333 C’s Capital A/c 18,000 × 26 6,000
Balance c/d 93,333 46,667 Profit & Loss Adjustment A/c 8,000 6,000 4,000
  1,08,000 99,000 54,000   1,08,000 99,000 54,000
               
 
Bank Account
Particulars Amount (Rs)   Amount (Rs)
Balance b/d 27,500 A’s Capital A/c 2,667
    C’s Capital A/c 1,333
    Balance c/d 23,500
  27,500   27,500
       
 
Balance Sheet
as at March 31, 2015
Liabilities Amount (Rs) Assets Amount (Rs)
Capital A/cs:   Factory Building (1,25,000 + 25,000) 1,50,000
A
93,333   Debtors 25,000  
C
46,667 1,40,000
Less: Provision for Doubtful Debts
1,250 23,750
B’s Loan A/c 99,000 Stock (40,000 – 2,400) 37,600
Creditors 24,500 Bank 23,500
Bills Payable 10,000 Plant & Machinery 42,500
Provision for Legal Charges 3,850    
       
  2,77,350   2,77,350
       

Working Notes: Calculation of New Capital of Existing Partners

Total New Capital = Rs 1,40,000A's New Capital = 1,40,000 × 46 = Rs 93,333  B's New Capital = 1,40,000 × 26= Rs 46,667   

Answer:

Calculation of Cash to be brought in or to be paid off by X and ZX's adjusted Capital   = 1,96,500Z's adjusted Capital    =    91,500Total adjusted capital =  Rs 2,88,000X's New Capital = 2,88,000 × 46 = 1,92,000X's Existing Capital                     = 1,96,500  X will withdraw                      = Rs 4,500Z's New Capital = 2,88,000 × 26 = 96,000Z's Existing Capital                     = 91,500  Z will bring                             = Rs 4,500      

Note: Since, Z's New Capital is more than his Existing Capital, therefore Z will bring in Rs 4,500 (not withdraw, as given in the textbook).



Page No 6.93:

Question 33:

Calculation of Cash to be brought in or to be paid off by X and ZX's adjusted Capital   = 1,96,500Z's adjusted Capital    =    91,500Total adjusted capital =  Rs 2,88,000X's New Capital = 2,88,000 × 46 = 1,92,000X's Existing Capital                     = 1,96,500  X will withdraw                      = Rs 4,500Z's New Capital = 2,88,000 × 26 = 96,000Z's Existing Capital                     = 91,500  Z will bring                             = Rs 4,500      

Note: Since, Z's New Capital is more than his Existing Capital, therefore Z will bring in Rs 4,500 (not withdraw, as given in the textbook).

Answer:

Revaluation Account
Particulars Amount (Rs) Particulars Amount (Rs)
Provision for Doubtful Debts A/c 1,000 Creditors A/c 6,000
Stock A/c 1,800    
Furniture A/c 1,500    
Liability for Workmen Compensation A/c 1,100    
Profit transferred to:      
X’s Capital A/c
300      
Y’s Capital A/c
200      
Z’s Capital A/c
100 600    
  6,000   6,000
       
 
Partners’ Capital Accounts
Dr.   Cr.
Particulars X Y Z Particulars X Y Z
Y’s Capital A/c 2,200   5,133 Balance b/d 40,000 40,000 30,000
Goodwill A/c 5,000 3,333 1,667 General Reserve A/c 6,000 4,000 2,000
Bank A/c   48,200   X’s Capital A/c   2,200  
Balance c/d 67,560   45,040 Z’s Capital A/c   5,133  
        Revaluation A/c 300 200 100
        Bank A/c
(Balancing figure)
28,460   19,740
               
  74,760 51,533 51,840   74,760 51,533 51,840
               
 
Balance Sheet
as on March 31, 2014
Liabilities Amount (Rs) Assets Amount (Rs)
Capital A/cs:   Machinery 70,000
X
67,560   Debtors 25,000  
Y
45,040 1,12,600
Less: Provision for Doubtful Debts
4,000 21,000
Creditors (40,000 – 6,000) 34,000 Furniture (30,000 – 1,500) 28,500
Bills Payable 6,000 Bank 18,000
Liability for Workmen Compensation 1,100 Stock (18,000 – 1,800) 16,200
  1,53,700   1,53,700
       

Working Notes:

WN 1: Calculation of Gaining Ratio



WN 2: Calculation of New Capital

X's Capital   = Rs 39,100Y's Capital    = Rs 48,200Z's Capital    = Rs 25,300Total Capital = Rs 1,12,600¯ X's New Capital = 1,12,600 × 35 = Rs 67,560Z's New Capital = 1,12,600 × 25 = Rs 45,040    

Page No 6.93:

Question 34:

Revaluation Account
Particulars Amount (Rs) Particulars Amount (Rs)
Provision for Doubtful Debts A/c 1,000 Creditors A/c 6,000
Stock A/c 1,800    
Furniture A/c 1,500    
Liability for Workmen Compensation A/c 1,100    
Profit transferred to:      
X’s Capital A/c
300      
Y’s Capital A/c
200      
Z’s Capital A/c
100 600    
  6,000   6,000
       
 
Partners’ Capital Accounts
Dr.   Cr.
Particulars X Y Z Particulars X Y Z
Y’s Capital A/c 2,200   5,133 Balance b/d 40,000 40,000 30,000
Goodwill A/c 5,000 3,333 1,667 General Reserve A/c 6,000 4,000 2,000
Bank A/c   48,200   X’s Capital A/c   2,200  
Balance c/d 67,560   45,040 Z’s Capital A/c   5,133  
        Revaluation A/c 300 200 100
        Bank A/c
(Balancing figure)
28,460   19,740
               
  74,760 51,533 51,840   74,760 51,533 51,840
               
 
Balance Sheet
as on March 31, 2014
Liabilities Amount (Rs) Assets Amount (Rs)
Capital A/cs:   Machinery 70,000
X
67,560   Debtors 25,000  
Y
45,040 1,12,600
Less: Provision for Doubtful Debts
4,000 21,000
Creditors (40,000 – 6,000) 34,000 Furniture (30,000 – 1,500) 28,500
Bills Payable 6,000 Bank 18,000
Liability for Workmen Compensation 1,100 Stock (18,000 – 1,800) 16,200
  1,53,700   1,53,700
       

Working Notes:

WN 1: Calculation of Gaining Ratio



WN 2: Calculation of New Capital

X's Capital   = Rs 39,100Y's Capital    = Rs 48,200Z's Capital    = Rs 25,300Total Capital = Rs 1,12,600¯ X's New Capital = 1,12,600 × 35 = Rs 67,560Z's New Capital = 1,12,600 × 25 = Rs 45,040    

Answer:

Calculation of Total​ Capital_X's Capital                              = 86,400Y's Capital                               = 73,200Z's Capital                                = 22,400Total Capital                            = 1,82,000¯ Add: Required Bank Balance   =     6,000                                                 = 1,88,000¯ Less: Available Bank Balance  =     8,000Total Capital                             = 1,80,000¯X's New Capital = 1,80,000 × 35 = 1,08,000Less: Existing Capital                  =    86,400  X will bring                            = Rs 21,600Z's New Capital = 1,80,000 × 25 = 72,000Less: Existing Capital                  = 22,400  Z will bring                             = Rs 49,600      

Page No 6.93:

Question 35:

Calculation of Total​ Capital_X's Capital                              = 86,400Y's Capital                               = 73,200Z's Capital                                = 22,400Total Capital                            = 1,82,000¯ Add: Required Bank Balance   =     6,000                                                 = 1,88,000¯ Less: Available Bank Balance  =     8,000Total Capital                             = 1,80,000¯X's New Capital = 1,80,000 × 35 = 1,08,000Less: Existing Capital                  =    86,400  X will bring                            = Rs 21,600Z's New Capital = 1,80,000 × 25 = 72,000Less: Existing Capital                  = 22,400  Z will bring                             = Rs 49,600      

Answer:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Stock (32,000 × 6%)

1,920

Building (1,00,000 × 20%)

20,000

Provision for Doubtful Debts (1,000 – 400)

600

 

 

Provision for Legal Charges

3,080

 

 

Profit transferred to:

 

 

 

A’s Capital A/c

6,400

 

 

 

B’s Capital A/c

4,800

 

 

 

C’s Capital A/c

3,200

14,400

 

 

 

20,000

 

20,000

 

 

 

 

 

Partners’ Capital Account

Dr.

 

Cr.

Particulars

A

B

C

Particulars

A

B

C

B’s Capital A/c (Goodwill)

7,800

 

6,600

Balance b/d

80,000

60,000

40,000

B’s Loan

 

79,200

 

Revaluation A/c (Profit)

6,400

4,800

3,200

Balance c/d

78,600

 

36,600

A’s Capital A/c (Goodwill)

 

7,800

 

 

 

 

 

B’s Capital A/c (Goodwill)

 

6,600

 

 

86,400

79,200

43,200

 

86,400

79,200

43,200

Cash A/c

8,600

 

 

Balance b/d

78,600

 

36,600

Balance c/d (WN 3)

70,000

 

42,000

Cash A/c

 

 

5,400

 

78,600

 

42,000

 

78,600

 

42,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as on March 31, 2016 (after B’s Retirement)

Liabilities

Amount

Rs

Assets

Amount

Rs

Creditors

27,600

Cash at Bank

18,800

Provision for Legal Charges

3,080

Debtors

20,000

 

B’s Loan

79,200

Less: Provision for Doubtful Debts

 

(1,000)

 

19,000

Capital A/cs:

 

Stock (32,000 – 1,920)

30,080

A

70,000

 

Machinery

34,000

C

42,000

1,12,000

Building (1,00,000 + 20,000)

1,20,000

 

2,21,880

 

2,21,880

 

 

 

 

 

Bank Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Balance b/d

22,000

A’s Capital A/c

8,600

C’s Capital A/c

5,400

Balance c/d

18,800

 

27,400

 

27,400

 

 

 

 


Working Notes

WN 1 Calculation of Profit Sharing Ratio



B retires from the firm.

New Ratio (A and C) = 5 : 3

Gaining Ratio = New Ratio − Old Ratio



∴ Gaining Ratio = 13 : 11

WN 2 Adjustment of Goodwill

Goodwill of the firm = Rs 43,200

B’s Share of Goodwill =

This share of goodwill is to be distributed between A and C in their gaining ratio (i.e. 13 : 11).



WN 3 Adjustment of Partners’ Capital after B’s Retirement

Total Capital of the New Firm (after B’s retirement) = Rs 1,12,000

New Ratio = 5 : 3



Page No 6.94:

Question 36:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Stock (32,000 × 6%)

1,920

Building (1,00,000 × 20%)

20,000

Provision for Doubtful Debts (1,000 – 400)

600

 

 

Provision for Legal Charges

3,080

 

 

Profit transferred to:

 

 

 

A’s Capital A/c

6,400

 

 

 

B’s Capital A/c

4,800

 

 

 

C’s Capital A/c

3,200

14,400

 

 

 

20,000

 

20,000

 

 

 

 

 

Partners’ Capital Account

Dr.

 

Cr.

Particulars

A

B

C

Particulars

A

B

C

B’s Capital A/c (Goodwill)

7,800

 

6,600

Balance b/d

80,000

60,000

40,000

B’s Loan

 

79,200

 

Revaluation A/c (Profit)

6,400

4,800

3,200

Balance c/d

78,600

 

36,600

A’s Capital A/c (Goodwill)

 

7,800

 

 

 

 

 

B’s Capital A/c (Goodwill)

 

6,600

 

 

86,400

79,200

43,200

 

86,400

79,200

43,200

Cash A/c

8,600

 

 

Balance b/d

78,600

 

36,600

Balance c/d (WN 3)

70,000

 

42,000

Cash A/c

 

 

5,400

 

78,600

 

42,000

 

78,600

 

42,000

 

 

 

 

 

 

 

 

 

Balance Sheet

as on March 31, 2016 (after B’s Retirement)

Liabilities

Amount

Rs

Assets

Amount

Rs

Creditors

27,600

Cash at Bank

18,800

Provision for Legal Charges

3,080

Debtors

20,000

 

B’s Loan

79,200

Less: Provision for Doubtful Debts

 

(1,000)

 

19,000

Capital A/cs:

 

Stock (32,000 – 1,920)

30,080

A

70,000

 

Machinery

34,000

C

42,000

1,12,000

Building (1,00,000 + 20,000)

1,20,000

 

2,21,880

 

2,21,880

 

 

 

 

 

Bank Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Balance b/d

22,000

A’s Capital A/c

8,600

C’s Capital A/c

5,400

Balance c/d

18,800

 

27,400

 

27,400

 

 

 

 


Working Notes

WN 1 Calculation of Profit Sharing Ratio



B retires from the firm.

New Ratio (A and C) = 5 : 3

Gaining Ratio = New Ratio − Old Ratio



∴ Gaining Ratio = 13 : 11

WN 2 Adjustment of Goodwill

Goodwill of the firm = Rs 43,200

B’s Share of Goodwill =

This share of goodwill is to be distributed between A and C in their gaining ratio (i.e. 13 : 11).



WN 3 Adjustment of Partners’ Capital after B’s Retirement

Total Capital of the New Firm (after B’s retirement) = Rs 1,12,000

New Ratio = 5 : 3

Answer:

Revaluation Account
Particulars Amount (Rs) Particulars Amount (Rs)
Provision for Doubtful Debts A/c 10,000 Sundry Creditors A/c 10,000
Stock A/c 20,000 Land & Building A/c 60,000
Machinery A/c 40,000    
  70,000   70,000
       
 
Partners’ Capital Accounts
Dr.   Cr.
Particulars Ram Rahul Rohit Particulars Ram Rahul Rohit
Ram’s Capital A/c 30,000 60,000 Balance b/d 3,00,000 2,00,000 1,00,000
Bank A/c 2,10,000 General Reserve A/c 30,000 20,000 10,000
Ram’s Loan A/c 2,10,000 Rahul’s Capital A/c 30,000
Balance c/d   3,00,000 3,00,000 Rohit’s Capital A/c 60,000
        Bank A/c
(Balancing figure)
1,10,000 2,50,000
               
  4,20,000 3,30,000 3,60,000   4,20,000 3,30,000 3,60,000
               
 
Balance Sheet
as on March 31, 2016
Liabilities Amount (Rs) Assets Amount (Rs)
Capital :   Machinery (2,00,000 – 40,000) 1,60,000
Ram
3,00,000   Debtors 2,00,000  
Rohit
3,00,000 6,00,000
Less:  Provision
10,000 1,90,000
Creditors (2,00,000 – 10,000) 1,90,000 Land & Building (2,00,000 + 60,000) 2,60,000
Ram’s Loan 2,10,000 Bank 3,10,000
    Stock (1,00,000 – 20,000) 80,000
  10,00,000   10,00,000
       

Working Notes:

WN 1: Calculation of Gaining Ratio

Ram : Rahul : Rohit = 3 : 2 : 1 (Old)Rahul : Rohit = 1 : 1 (New)Rahul's Gain = 12 - 26 =  3 - 2616Rohit's Gain = 12 - 16 =  3 - 1626Gaining ratio = 1 :2Ram’s Share of  Goodwill = 1,80,000 × 36 = Rs 90,000

WN 2: Calculation of New Capital of Rahul and Rohit

Total Capital of New Firm = Rs 6,00,000Rahul's Capital = 6,00,000 × 12 = Rs 3,00,000 Rohit's Capital = 6,00,000 × 12 = Rs 3,00,000    
 
Bank Account
Particulars Amount
(Rs)
Particulars Amount
(Rs)
Balance b/d 1,60,000 Ram’s Capital A/c 2,10,000
Rahul’s Capital A/c 1,10,000 Balance c/d 3,10,000
Rohit’s Capital A/c 2,50,000    
  5,20,000   5,20,000
       

Page No 6.94:

Question 37:

Revaluation Account
Particulars Amount (Rs) Particulars Amount (Rs)
Provision for Doubtful Debts A/c 10,000 Sundry Creditors A/c 10,000
Stock A/c 20,000 Land & Building A/c 60,000
Machinery A/c 40,000    
  70,000   70,000
       
 
Partners’ Capital Accounts
Dr.   Cr.
Particulars Ram Rahul Rohit Particulars Ram Rahul Rohit
Ram’s Capital A/c 30,000 60,000 Balance b/d 3,00,000 2,00,000 1,00,000
Bank A/c 2,10,000 General Reserve A/c 30,000 20,000 10,000
Ram’s Loan A/c 2,10,000 Rahul’s Capital A/c 30,000
Balance c/d   3,00,000 3,00,000 Rohit’s Capital A/c 60,000
        Bank A/c
(Balancing figure)
1,10,000 2,50,000
               
  4,20,000 3,30,000 3,60,000   4,20,000 3,30,000 3,60,000
               
 
Balance Sheet
as on March 31, 2016
Liabilities Amount (Rs) Assets Amount (Rs)
Capital :   Machinery (2,00,000 – 40,000) 1,60,000
Ram
3,00,000   Debtors 2,00,000  
Rohit
3,00,000 6,00,000
Less:  Provision
10,000 1,90,000
Creditors (2,00,000 – 10,000) 1,90,000 Land & Building (2,00,000 + 60,000) 2,60,000
Ram’s Loan 2,10,000 Bank 3,10,000
    Stock (1,00,000 – 20,000) 80,000
  10,00,000   10,00,000
       

Working Notes:

WN 1: Calculation of Gaining Ratio

Ram : Rahul : Rohit = 3 : 2 : 1 (Old)Rahul : Rohit = 1 : 1 (New)Rahul's Gain = 12 - 26 =  3 - 2616Rohit's Gain = 12 - 16 =  3 - 1626Gaining ratio = 1 :2Ram’s Share of  Goodwill = 1,80,000 × 36 = Rs 90,000

WN 2: Calculation of New Capital of Rahul and Rohit

Total Capital of New Firm = Rs 6,00,000Rahul's Capital = 6,00,000 × 12 = Rs 3,00,000 Rohit's Capital = 6,00,000 × 12 = Rs 3,00,000    
 
Bank Account
Particulars Amount
(Rs)
Particulars Amount
(Rs)
Balance b/d 1,60,000 Ram’s Capital A/c 2,10,000
Rahul’s Capital A/c 1,10,000 Balance c/d 3,10,000
Rohit’s Capital A/c 2,50,000    
  5,20,000   5,20,000
       

Answer:

Revaluation Account
Particulars Amount (Rs) Particulars Amount (Rs)
Investments A/c 50,000 Building A/c 4,00,000
Profit transferred to:   Stock A/c 1,00,000
A’s Capital A/c
1,80,000      
B’s Capital A/c
1,80,000      
C’s Capital A/c
90,000 4,50,000    
  5,00,000   5,00,000
       
 
Partners’ Capital Accounts
Dr.   Cr.
Particulars A B C Particulars A B C
C’s Capital A/c 1,06,800 1,06,800 Balance b/d 12,00,000 12,00,000 8,00,000
C’s Loan A/c 12,93,600 General Reserve A/c 3,20,000 3,20,000 1,60,000
Balance c/d 15,93,200 15,93,200 A’s Capital A/c 1,06,800
        B’s Capital A/c 1,06,800
        Revaluation A/c 1,80,000 1,80,000 90,000
        Profit & Loss Suspense A/c 30,000
               
  17,00,000 17,00,000 12,93,600   17,00,000 17,00,000 12,93,600
               
 
Balance Sheet
as on June 30, 2014
Liabilities Amount (Rs) Assets Amount (Rs)
Capital A/cs:   Building (20,00,000 + 4,00,000) 24,00,000
A
15,93,200   Investments 2,00,000
B
15,93,200 31,86,400 Sundry Debtors 8,00,000
Sundry Creditors 2,00,000 Cash in Hand 2,00,000
C’s Loan 12,93,600 Cash at Bank 4,50,000
    Stock (5,00,000 + 1,00,000) 6,00,000
    Profit & Loss Suspense 30,000
  46,80,000   46,80,000
       

Working Notes:

WN 1: Calculation of Goodwill
Average Profit for last 5 years = 6,50,000+5,50,000+6,00,000+4,70,000+4,00,0005 = Rs 5,34,000 Goodwill = 5,34,000 × 2 = Rs 10,68,000C’s Share of  Goodwill = 10,68,000 × 15 = Rs 2,13,600

WN 2: Calculation of C’s Share in Profit

Average Profit for last 3 years = 6,50,000+5,50,000+6,00,0003 = Rs 6,00,000  C's Share in Profit = 6,00,000 × 312 × 15= Rs 30,000    



Page No 6.95:

Question 38:

Revaluation Account
Particulars Amount (Rs) Particulars Amount (Rs)
Investments A/c 50,000 Building A/c 4,00,000
Profit transferred to:   Stock A/c 1,00,000
A’s Capital A/c
1,80,000      
B’s Capital A/c
1,80,000      
C’s Capital A/c
90,000 4,50,000    
  5,00,000   5,00,000
       
 
Partners’ Capital Accounts
Dr.   Cr.
Particulars A B C Particulars A B C
C’s Capital A/c 1,06,800 1,06,800 Balance b/d 12,00,000 12,00,000 8,00,000
C’s Loan A/c 12,93,600 General Reserve A/c 3,20,000 3,20,000 1,60,000
Balance c/d 15,93,200 15,93,200 A’s Capital A/c 1,06,800
        B’s Capital A/c 1,06,800
        Revaluation A/c 1,80,000 1,80,000 90,000
        Profit & Loss Suspense A/c 30,000
               
  17,00,000 17,00,000 12,93,600   17,00,000 17,00,000 12,93,600
               
 
Balance Sheet
as on June 30, 2014
Liabilities Amount (Rs) Assets Amount (Rs)
Capital A/cs:   Building (20,00,000 + 4,00,000) 24,00,000
A
15,93,200   Investments 2,00,000
B
15,93,200 31,86,400 Sundry Debtors 8,00,000
Sundry Creditors 2,00,000 Cash in Hand 2,00,000
C’s Loan 12,93,600 Cash at Bank 4,50,000
    Stock (5,00,000 + 1,00,000) 6,00,000
    Profit & Loss Suspense 30,000
  46,80,000   46,80,000
       

Working Notes:

WN 1: Calculation of Goodwill
Average Profit for last 5 years = 6,50,000+5,50,000+6,00,000+4,70,000+4,00,0005 = Rs 5,34,000 Goodwill = 5,34,000 × 2 = Rs 10,68,000C’s Share of  Goodwill = 10,68,000 × 15 = Rs 2,13,600

WN 2: Calculation of C’s Share in Profit

Average Profit for last 3 years = 6,50,000+5,50,000+6,00,0003 = Rs 6,00,000  C's Share in Profit = 6,00,000 × 312 × 15= Rs 30,000    

Answer:

Journal
Date Particulars L.F. Debit Amount (Rs) Credit Amount (Rs)
  X’s Capital A/c Dr.   1,800  
  Y’s Capital A/c Dr.   7,200  
  Z’s Capital A/c Dr.   12,600  
 
To W’s Capital A/c
      21,600
  (W’s share of Profit till retirement shared by X, Y and Z in 1 : 4 :7)        
           
  X’s Capital A/c Dr.   5,000  
  Y’s Capital A/c Dr.   20,000  
  Z’s Capital A/c Dr.   35,000  
 
To W’s Capital A/c
      60,000
  (W’s share of goodwill adjusted through remaining partners capital accounts)        
           
  General Reserve A/c Dr.   50,000  
 
To W’s Capital A/c
      20,000
 
To X’s Capital A/c
      15,000
 
To Y’s Capital A/c
      10,000
 
To Z’s Capital A/c
      5,000
  (General reserve transferred to capital)        
           
  W’s Capital A/c Dr.   9,01,600  
 
To W’s Loan A/c
      9,01,600
  (Balance transferred to Loan A/c)        
           
  X’s Capital A/c Dr.   2,08,200  
 
To Bank A/c
      2,08,200
  (Amount withdrawn)        
           
  Bank A/c Dr.   2,59,800  
 
To Y’s Capital A/c
      17,200
 
To Z’s Capital A/c
      2,42,600
  (Amount invested in the business)        
         

 

Partners’ Capital Accounts
Dr.   Cr.
Particulars W X Y Z Particulars W X Y Z
W’s Capital A/c 6,800 27,200 47,600 Balance b/d 8,00,000 6,00,000 4,00,000 2,00,000
W’s Loan A/c 9,01,600 General Reserve A/c 20,000 15,000 10,000 5,000
Bank A/c
(Balancing Figure)
2,08,200 X’s Capital A/c 6,800
Balance c/d 4,00,000 4,00,000 4,00,000 Y’s Capital A/c 27,200
          Z’s Capital A/c 47,600
          Bank A/c
(Balancing Figure)
  17,200 2,42,600
  9,01,600 6,15,000 4,27,200 4,47,600   9,01,600 6,15,000 4,27,200 4,47,600
                   

Working Notes:

WN 1: Calculation of Profit till Retirement = 72,000 × 912= Rs 54,000   


WN 2: Calculation of Gaining Ratio

W : X : Y : Z = 4 : 3 : 2 : 1 (Old)

X : Y : Z = 1 : 1 : 1 (New)

X = 13 - 310 = 10 - 930 = 130Y = 13 - 210 = 10 - 630 = 430Z= 13 - 110 = 10 - 330 = 730Gaining Ratio = 1: 4: 7

WN 3: Calculation of Goodwill

Average Profit= 70,000+ 83,000+ 72,0003 = Rs 75,000Goodwill = 75,000 × 2= Rs 1,50,000  W's Goodwill= 1,50,000 × 410= Rs 60,000   



Page No 6.96:

Question 39:

Journal
Date Particulars L.F. Debit Amount (Rs) Credit Amount (Rs)
  X’s Capital A/c Dr.   1,800  
  Y’s Capital A/c Dr.   7,200  
  Z’s Capital A/c Dr.   12,600  
 
To W’s Capital A/c
      21,600
  (W’s share of Profit till retirement shared by X, Y and Z in 1 : 4 :7)        
           
  X’s Capital A/c Dr.   5,000  
  Y’s Capital A/c Dr.   20,000  
  Z’s Capital A/c Dr.   35,000  
 
To W’s Capital A/c
      60,000
  (W’s share of goodwill adjusted through remaining partners capital accounts)        
           
  General Reserve A/c Dr.   50,000  
 
To W’s Capital A/c
      20,000
 
To X’s Capital A/c
      15,000
 
To Y’s Capital A/c
      10,000
 
To Z’s Capital A/c
      5,000
  (General reserve transferred to capital)        
           
  W’s Capital A/c Dr.   9,01,600  
 
To W’s Loan A/c
      9,01,600
  (Balance transferred to Loan A/c)        
           
  X’s Capital A/c Dr.   2,08,200  
 
To Bank A/c
      2,08,200
  (Amount withdrawn)        
           
  Bank A/c Dr.   2,59,800  
 
To Y’s Capital A/c
      17,200
 
To Z’s Capital A/c
      2,42,600
  (Amount invested in the business)        
         

 

Partners’ Capital Accounts
Dr.   Cr.
Particulars W X Y Z Particulars W X Y Z
W’s Capital A/c 6,800 27,200 47,600 Balance b/d 8,00,000 6,00,000 4,00,000 2,00,000
W’s Loan A/c 9,01,600 General Reserve A/c 20,000 15,000 10,000 5,000
Bank A/c
(Balancing Figure)
2,08,200 X’s Capital A/c 6,800
Balance c/d 4,00,000 4,00,000 4,00,000 Y’s Capital A/c 27,200
          Z’s Capital A/c 47,600
          Bank A/c
(Balancing Figure)
  17,200 2,42,600
  9,01,600 6,15,000 4,27,200 4,47,600   9,01,600 6,15,000 4,27,200 4,47,600
                   

Working Notes:

WN 1: Calculation of Profit till Retirement = 72,000 × 912= Rs 54,000   


WN 2: Calculation of Gaining Ratio

W : X : Y : Z = 4 : 3 : 2 : 1 (Old)

X : Y : Z = 1 : 1 : 1 (New)

X = 13 - 310 = 10 - 930 = 130Y = 13 - 210 = 10 - 630 = 430Z= 13 - 110 = 10 - 330 = 730Gaining Ratio = 1: 4: 7

WN 3: Calculation of Goodwill

Average Profit= 70,000+ 83,000+ 72,0003 = Rs 75,000Goodwill = 75,000 × 2= Rs 1,50,000  W's Goodwill= 1,50,000 × 410= Rs 60,000   

Answer:

Revaluation Account
Particulars Amount (Rs) Particulars Amount (Rs)
Plant A/c 14,000 Stock A/c 10,000
Motor Car A/c 4,000 Building A/c 18,000
Liability for Gratuity A/c 20,000 Provision for Doubtful Debts A/c 10,000
  38,000   38,000
       
 
Partners’ Capital Accounts
Dr.   Cr.
Particulars X Y Z Particulars X Y Z
Y’s Capital A/c 12,000 9,000 Balance b/d 1,60,000 1,20,000 1,00,000
Y’s Loan A/c 1,56,000 Reserve A/c 20,000 15,000 15,000
Balance c/d 1,68,000 1,06,000 X’s Capital A/c 12,000
        Z’s Capital A/c 9,000
  1,80,000 1,56,000 1,15,000   1,80,000 1,56,000 1,15,000
               
 
Balance Sheet
as on April 01, 2015
Liabilities Amount (Rs) Assets Amount (Rs)
Capital A/cs:   Building (1,80,000 + 18,000) 1,98,000
X
1,68,000   Plant (1,40,000 – 14,000) 1,26,000
Z
1,06,000 2,74,000 Debtors 70,000
Creditors 80,000 Motor Car (40,000 – 4,000) 36,000
Y’s Loan 1,56,000 Bank 10,000
Bills Payable 20,000 Stock (1,00,000 + 10,000) 1,10,000
Liability for Gratuity 20,000    
  5,50,000   5,50,000
       
 
Y’s Loan Account
Dr. Cr.
Date Particulars Amount
(Rs)
Date Particulars Amount (Rs)
2016     2015    
March 31 Balance c/d 1,71,600 April 01 Y’s Capital A/c 1,56,000
      2016    
      March 31 Interest A/c 15,600
    1,71,600     1,71,600
2016     2016    
April 01 Bank A/c
(52,000 + 15,600)
67,600 April 01 Balance b/d 1,71,600
2017     2017    
March 31 Balance c/d 1,14,400 March 31 Interest A/c 10,400
    1,82,000     1,82,000
           

Working Notes: Calculation of Gaining Ratio

X's Gain = 47 - 410 =  40 - 28701270Z's Gain = 37 - 310 =  30 - 2170970Gaining Ratio = 12 :9= 4 :3Y’s Share of Goodwill = 70,000 × 310 = Rs 21,000

Page No 6.96:

Question 40:

Revaluation Account
Particulars Amount (Rs) Particulars Amount (Rs)
Plant A/c 14,000 Stock A/c 10,000
Motor Car A/c 4,000 Building A/c 18,000
Liability for Gratuity A/c 20,000 Provision for Doubtful Debts A/c 10,000
  38,000   38,000
       
 
Partners’ Capital Accounts
Dr.   Cr.
Particulars X Y Z Particulars X Y Z
Y’s Capital A/c 12,000 9,000 Balance b/d 1,60,000 1,20,000 1,00,000
Y’s Loan A/c 1,56,000 Reserve A/c 20,000 15,000 15,000
Balance c/d 1,68,000 1,06,000 X’s Capital A/c 12,000
        Z’s Capital A/c 9,000
  1,80,000 1,56,000 1,15,000   1,80,000 1,56,000 1,15,000
               
 
Balance Sheet
as on April 01, 2015
Liabilities Amount (Rs) Assets Amount (Rs)
Capital A/cs:   Building (1,80,000 + 18,000) 1,98,000
X
1,68,000   Plant (1,40,000 – 14,000) 1,26,000
Z
1,06,000 2,74,000 Debtors 70,000
Creditors 80,000 Motor Car (40,000 – 4,000) 36,000
Y’s Loan 1,56,000 Bank 10,000
Bills Payable 20,000 Stock (1,00,000 + 10,000) 1,10,000
Liability for Gratuity 20,000    
  5,50,000   5,50,000
       
 
Y’s Loan Account
Dr. Cr.
Date Particulars Amount
(Rs)
Date Particulars Amount (Rs)
2016     2015    
March 31 Balance c/d 1,71,600 April 01 Y’s Capital A/c 1,56,000
      2016    
      March 31 Interest A/c 15,600
    1,71,600     1,71,600
2016     2016    
April 01 Bank A/c
(52,000 + 15,600)
67,600 April 01 Balance b/d 1,71,600
2017     2017    
March 31 Balance c/d 1,14,400 March 31 Interest A/c 10,400
    1,82,000     1,82,000
           

Working Notes: Calculation of Gaining Ratio

X's Gain = 47 - 410 =  40 - 28701270Z's Gain = 37 - 310 =  30 - 2170970Gaining Ratio = 12 :9= 4 :3Y’s Share of Goodwill = 70,000 × 310 = Rs 21,000

Answer:

Revaluation Account
Particulars Amount (Rs) Particulars Amount (Rs)
Machinery A/c 60,000 Land & Building A/c 60,000
Bad Debts A/c (17,000 – 10,000) 7,000 Loss transferred to:  
   
Aruna’s Capital A/c
2,000  
   
Karuna’s Capital A/c
3,000  
   
Varuna’s Capital A/c
2,000 7,000
  67,000   67,000
       
 
Partners’ Capital Accounts
Dr.   Cr.
Particulars Aruna Karuna Varuna Particulars Aruna Karuna Varuna
Revaluation A/c 2,000 3,000 2,000 Balance b/d 2,00,000 3,00,000 2,00,000
Aruna’s Capital A/c 20,000 20,000 General Reserve A/c 10,000 15,000 10,000
Bank A/c 50,000 Workmen Compensation Fund A/c 2,000 3,000 2,000
Aruna’s Loan A/c 2,00,000 Karuna’s Capital A/c 20,000
Balance c/d 4,00,000 3,00,000 Varuna’s Capital A/c 20,000
        Bank A/c
(Balancing Figure)
  1,05,000 1,10,000
  2,52,000 4,23,000 3,22,000   2,52,000 4,23,000 3,22,000
               
 
Bank Account
Particulars Amount (Rs)   Amount (Rs)
Balance b/d 1,00,000 Aruna’s Capital A/c 50,000
Karuna’s Capital 1,05,000 Balance c/d 2,65,000
Varuna’s Capital 1,10,000    
  3,15,000   3,15,000
       
 
Balance Sheet
as on March 31, 2015
Liabilities Amount (Rs) Assets Amount (Rs)
Capital A/cs:   Land & Building 2,60,000
Karuna
4,00,000   Machinery 2,40,000
Varuna
3,00,000 7,00,000 Debtors 1,10,000  
Aruna’s Loan 2,00,000
Less: Bad Debts
17,000 93,000
Workmen Compensation Fund 8,000 Stock 1,00,000
Creditors 50,000 Bank 2,65,000
  9,58,000   9,58,000
       

Working Notes:

WN 1: Calculation of Goodwill

Aruna's Goodwill = 1,40,000 × 27= Rs 40,000   

WN 2: Calculation of Gaining Ratio

Karuna = 47 - 37 = 17 Varuna = 37 - 27 = 17 Gaining ratio = 1: 1

WN 3:  Calculation of New Capital

Total Capital of New Firm= 7,00,000 Karuna's Capital = 7,00,000 × 47 = Rs 4,00,000Varuna's Capital = 7,00,000 × 37 = Rs 3,00,000



Page No 6.97:

Question 41:

Revaluation Account
Particulars Amount (Rs) Particulars Amount (Rs)
Machinery A/c 60,000 Land & Building A/c 60,000
Bad Debts A/c (17,000 – 10,000) 7,000 Loss transferred to:  
   
Aruna’s Capital A/c
2,000  
   
Karuna’s Capital A/c
3,000  
   
Varuna’s Capital A/c
2,000 7,000
  67,000   67,000
       
 
Partners’ Capital Accounts
Dr.   Cr.
Particulars Aruna Karuna Varuna Particulars Aruna Karuna Varuna
Revaluation A/c 2,000 3,000 2,000 Balance b/d 2,00,000 3,00,000 2,00,000
Aruna’s Capital A/c 20,000 20,000 General Reserve A/c 10,000 15,000 10,000
Bank A/c 50,000 Workmen Compensation Fund A/c 2,000 3,000 2,000
Aruna’s Loan A/c 2,00,000 Karuna’s Capital A/c 20,000
Balance c/d 4,00,000 3,00,000 Varuna’s Capital A/c 20,000
        Bank A/c
(Balancing Figure)
  1,05,000 1,10,000
  2,52,000 4,23,000 3,22,000   2,52,000 4,23,000 3,22,000
               
 
Bank Account
Particulars Amount (Rs)   Amount (Rs)
Balance b/d 1,00,000 Aruna’s Capital A/c 50,000
Karuna’s Capital 1,05,000 Balance c/d 2,65,000
Varuna’s Capital 1,10,000    
  3,15,000   3,15,000
       
 
Balance Sheet
as on March 31, 2015
Liabilities Amount (Rs) Assets Amount (Rs)
Capital A/cs:   Land & Building 2,60,000
Karuna
4,00,000   Machinery 2,40,000
Varuna
3,00,000 7,00,000 Debtors 1,10,000  
Aruna’s Loan 2,00,000
Less: Bad Debts
17,000 93,000
Workmen Compensation Fund 8,000 Stock 1,00,000
Creditors 50,000 Bank 2,65,000
  9,58,000   9,58,000
       

Working Notes:

WN 1: Calculation of Goodwill

Aruna's Goodwill = 1,40,000 × 27= Rs 40,000   

WN 2: Calculation of Gaining Ratio

Karuna = 47 - 37 = 17 Varuna = 37 - 27 = 17 Gaining ratio = 1: 1

WN 3:  Calculation of New Capital

Total Capital of New Firm= 7,00,000 Karuna's Capital = 7,00,000 × 47 = Rs 4,00,000Varuna's Capital = 7,00,000 × 37 = Rs 3,00,000

Answer:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Stock

5,000

Fixed Assets

25,000

Profit transferred to:

 

 

 

X’s Capital A/c

10,000

 

 

 

Y’s Capital A/c

6,000

 

 

 

Z’s Capital A/c

4,000

20,000

 

 

 

25,000

 

25,000

 

 

 

 

             

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

X

Y

Z

Particulars

X

Y

Z

Y’s Capital A/c

11,000

 

22,000

Balance b/d

1,00,000

50,000

40,000

Advertisement Expenditure A/c

2,500

1,500

1,000

Revaluation A/c

10,000

6,000

4,000

Goodwill A/c

7,500

4,500

3,000

General Reserve

10,000

6,000

4,000

Bank A/c

 

89,000

 

X’s Capital A/c

 

11,000

 

Balance c/d (WN3)

1,20,000

 

80,000

Z’s Capital A/c

 

22,000

 

 

 

 

 

Bank A/c (Bal. Fig.)

21,000

 

58,000

 

1,41,000

95,000

1,06,000

 

1,41,000

95,000

1,06,000

 

 

 

 

 

 

 

 

                 

 

Balance Sheet

as at April 01, 2016

Liabilities

Amount

Rs

Assets

Amount

Rs

Capital A/cs:

 

 

 

X

1,20,000

 

Fixed Assets

1,15,000

 

Z

  80,000

2,00,000

Add: Undervaluation

25,000

1,40,000

Employees’ Provident Fund

3,500

Stock

       55,000

 

Sundry Creditors

26,500

Less: Overvaluation

5,000

50,000

 

 

Sundry Debtors

 

30,000

 

 

Bank

10,000

 

2,30,000

 

2,30,000

 

 

 

 

Working Notes:

WN 1: Calculation of sacrificing/gaining ratio

WN 2: Calculation of goodwill

WN 3: Calculation of New Capital of X and Y

Page No 6.97:

Question 42:

Revaluation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Stock

5,000

Fixed Assets

25,000

Profit transferred to:

 

 

 

X’s Capital A/c

10,000

 

 

 

Y’s Capital A/c

6,000

 

 

 

Z’s Capital A/c

4,000

20,000

 

 

 

25,000

 

25,000

 

 

 

 

             

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

X

Y

Z

Particulars

X

Y

Z

Y’s Capital A/c

11,000

 

22,000

Balance b/d

1,00,000

50,000

40,000

Advertisement Expenditure A/c

2,500

1,500

1,000

Revaluation A/c

10,000

6,000

4,000

Goodwill A/c

7,500

4,500

3,000

General Reserve

10,000

6,000

4,000

Bank A/c

 

89,000

 

X’s Capital A/c

 

11,000

 

Balance c/d (WN3)

1,20,000

 

80,000

Z’s Capital A/c

 

22,000

 

 

 

 

 

Bank A/c (Bal. Fig.)

21,000

 

58,000

 

1,41,000

95,000

1,06,000

 

1,41,000

95,000

1,06,000

 

 

 

 

 

 

 

 

                 

 

Balance Sheet

as at April 01, 2016

Liabilities

Amount

Rs

Assets

Amount

Rs

Capital A/cs:

 

 

 

X

1,20,000

 

Fixed Assets

1,15,000

 

Z

  80,000

2,00,000

Add: Undervaluation

25,000

1,40,000

Employees’ Provident Fund

3,500

Stock

       55,000

 

Sundry Creditors

26,500

Less: Overvaluation

5,000

50,000

 

 

Sundry Debtors

 

30,000

 

 

Bank

10,000

 

2,30,000

 

2,30,000

 

 

 

 

Working Notes:

WN 1: Calculation of sacrificing/gaining ratio

WN 2: Calculation of goodwill

WN 3: Calculation of New Capital of X and Y

Answer:

  Journal
Date Particulars L.F. Debit
Amount

Rs
Credit
Amount

Rs
           
  Profit and Loss Suspense A/c Dr.   1,025  
     To X’s Capital A/c       1,025
  (X’s share of profit till his death credited to his account)        

Working Notes: Calculation of X’s Share of Profit

Average Profit = Total Profit of Last 3 Years'3Total Profit = 8,000 + 9,000 + 7,6003 = 24,6003 = Rs 8,200X's Share in Profit = Average Profit × Number of months till death12× X's Share of Profit X's Share in Profit = 8,200 × 312× 36 = Rs 1,025

Page No 6.97:

Question 43:

  Journal
Date Particulars L.F. Debit
Amount

Rs
Credit
Amount

Rs
           
  Profit and Loss Suspense A/c Dr.   1,025  
     To X’s Capital A/c       1,025
  (X’s share of profit till his death credited to his account)        

Working Notes: Calculation of X’s Share of Profit

Average Profit = Total Profit of Last 3 Years'3Total Profit = 8,000 + 9,000 + 7,6003 = 24,6003 = Rs 8,200X's Share in Profit = Average Profit × Number of months till death12× X's Share of Profit X's Share in Profit = 8,200 × 312× 36 = Rs 1,025

Answer:

Sales for the year 2013-14 = Rs 7,50,000

Sales from April 01, 2014 to June 30, 2014 = Rs 2,50,000

Profit for the year 2013-14 = Rs 75,000

B's Profit Share = Last Years' ProfitLast Years' Sales×Sales till Death×Profit ShareB's Profit Share = 75,0007,50,000×2,50,000×25 = Rs 10,000

Page No 6.97:

Question 44:

Sales for the year 2013-14 = Rs 7,50,000

Sales from April 01, 2014 to June 30, 2014 = Rs 2,50,000

Profit for the year 2013-14 = Rs 75,000

B's Profit Share = Last Years' ProfitLast Years' Sales×Sales till Death×Profit ShareB's Profit Share = 75,0007,50,000×2,50,000×25 = Rs 10,000

Answer:

  Journal
Date Particulars L.F. Debit Amount
Rs
Credit
Amount
Rs
         
  P’s Capital A/c Dr.   12,000  
  S’s Capital A/c Dr.   33,000  
 
To R’s Capital A/c
      45,000
  (R’s share of goodwill credited to his account and debited to P and S in their gaining ratio)      

Working Notes:

Total Profit of last 4 Years’ = 1,20,000 + 60,000 – 20,000 + 80,000 = Rs 2,40,000

R's Share = 2,40,000 × 38 = Rs 90,000Goodwill = 90,000 × 12 = Rs 45,000

Gaining Ratio = New Ratio – Old Ratio

Old Ratio = 4 : 3 : 1

New Ratio = 3 : 2

P's shareof Gain = 35 - 48 = 440S's share of Gain = 25 - 18 = 1140 

Gaining Ratio = 4 : 11



Page No 6.98:

Question 45:

  Journal
Date Particulars L.F. Debit Amount
Rs
Credit
Amount
Rs
         
  P’s Capital A/c Dr.   12,000  
  S’s Capital A/c Dr.   33,000  
 
To R’s Capital A/c
      45,000
  (R’s share of goodwill credited to his account and debited to P and S in their gaining ratio)      

Working Notes:

Total Profit of last 4 Years’ = 1,20,000 + 60,000 – 20,000 + 80,000 = Rs 2,40,000

R's Share = 2,40,000 × 38 = Rs 90,000Goodwill = 90,000 × 12 = Rs 45,000

Gaining Ratio = New Ratio – Old Ratio

Old Ratio = 4 : 3 : 1

New Ratio = 3 : 2

P's shareof Gain = 35 - 48 = 440S's share of Gain = 25 - 18 = 1140 

Gaining Ratio = 4 : 11

Answer:

  Journal
Date Particulars L.F. Debit
Amount

Rs
Credit
Amount
Rs
           
  X’s Capital A/c Dr.   24,000  
  Z’s Capital A//c Dr.   66,000  
 
To Y’s Capital A/c
      90,000
  (Y’s share of goodwill credited to his account and debited to X and Z in their gaining ratio.)      

Working Notes:

Gaining Ratio = New Ratio – Old Ratio

Old Ratio = 4 : 3 : 1

New Ratio = 3 : 2

X's shareof Gain = 35 - 48 = 440Z's share of Gain = 25 - 18 = 1140

Gaining Ratio = 4 : 11

Total Profit  = 3,00,000 + 1,10,000 – 90,000 + 1,60,000 = Rs 4,80,000

Average Profit = Total Profit4Average Profit = 4,80,0004=Rs 1,20,000

Goodwill = Average Profit × 2 years of purchase

Goodwill = 1,20,000 × 2 =Rs 2,40,000

Y's share = 2,40,000 × 38 = Rs 90,000

Page No 6.98:

Question 46:

  Journal
Date Particulars L.F. Debit
Amount

Rs
Credit
Amount
Rs
           
  X’s Capital A/c Dr.   24,000  
  Z’s Capital A//c Dr.   66,000  
 
To Y’s Capital A/c
      90,000
  (Y’s share of goodwill credited to his account and debited to X and Z in their gaining ratio.)      

Working Notes:

Gaining Ratio = New Ratio – Old Ratio

Old Ratio = 4 : 3 : 1

New Ratio = 3 : 2

X's shareof Gain = 35 - 48 = 440Z's share of Gain = 25 - 18 = 1140

Gaining Ratio = 4 : 11

Total Profit  = 3,00,000 + 1,10,000 – 90,000 + 1,60,000 = Rs 4,80,000

Average Profit = Total Profit4Average Profit = 4,80,0004=Rs 1,20,000

Goodwill = Average Profit × 2 years of purchase

Goodwill = 1,20,000 × 2 =Rs 2,40,000

Y's share = 2,40,000 × 38 = Rs 90,000

Answer:

Case 1

  Journal
Date Particulars L.F. Debit 
Amount
Rs
Credit
Amount
Rs
           
  X’s Capital A/c Dr.   36,000  
  Z’s Capital A/c Dr.   9,000  
 
To Y’s Capital A/c
      45,000
  (Y’s share of goodwill credited to his account and debited to X and Z in their gaining ratio.)      

Working Notes

Total Profit = 80,000 – 20,000 + 20,000 + 1,60,000 = Rs 2,40,000

Average Profit = Total Profit4Average Profit = 2,40,0004=Rs 60,000

Goodwill = 60,000 × 2 = Rs 1,20,000

Y's Share = 1,20,000 × 38 = Rs 45,000

Case 2
  Journal
Date Particulars L.F. Debit
Amount
Rs
Credit
Amount

Rs
           
  X’s Capital A/c Dr.   36,000  
  Z’s Capital A/c Dr.   9,000  
 
To Y’s Capital A/c
      45,000
  (Y’s share of goodwill credited to his account and debited to X and Z in their gaining ratio)      

Working Notes

Total Profit for Last 4 Years’ = Rs 2,40,000

Y's share = 2,40,000 × 38 = Rs 90,000
Y’s Share of Goodwill = 90,000 × 12 = Rs 45,000

Case 3
  Journal
Date Particulars L.F. Debit
Amount
Rs
Credit
Amount

Rs
           
  X’s Capital A/c Dr.   36,000  
  Z’s Capital A/c Dr.   9,000  
 
To Y’s Capital A/c
      45,000
  (Y’s share of goodwill credited to his account and debited to X and Z in their gaining ratio.)      

Working Notes

Goodwill = Average Profit for 3 years × 3 years of purchase

Date of death is 30thSeptember 2012

Profit is calculated as below:

1 Oct 2011 – 30 Sept 2012 = 50% of 80,000 + 50,000 = Rs 90,000

1 Oct 2010 – 30 Sept 2011 = 50% of 80,000 – 50% of 20,000 = Rs 30,000

1 Oct 2009 – 30 Sept 2010 = 50% of 20,000 – 50% of 20,000 = NIL

Total Profit = 90,000 + 30,000 =Rs.  1,20,000

Average Profit = 1,20,0003=Rs 40,000

Goodwill = 40,000 × 3 = Rs 1,20,000

Y's Share = 1,20,000 × 38 = Rs 45,000

Note: Since no information about new ratio is given, it is assumed that partner’s will gain in their old ratio which is 4 : 1.

Page No 6.98:

Question 47:

Case 1

  Journal
Date Particulars L.F. Debit 
Amount
Rs
Credit
Amount
Rs
           
  X’s Capital A/c Dr.   36,000  
  Z’s Capital A/c Dr.   9,000  
 
To Y’s Capital A/c
      45,000
  (Y’s share of goodwill credited to his account and debited to X and Z in their gaining ratio.)      

Working Notes

Total Profit = 80,000 – 20,000 + 20,000 + 1,60,000 = Rs 2,40,000

Average Profit = Total Profit4Average Profit = 2,40,0004=Rs 60,000

Goodwill = 60,000 × 2 = Rs 1,20,000

Y's Share = 1,20,000 × 38 = Rs 45,000

Case 2
  Journal
Date Particulars L.F. Debit
Amount
Rs
Credit
Amount

Rs
           
  X’s Capital A/c Dr.   36,000  
  Z’s Capital A/c Dr.   9,000  
 
To Y’s Capital A/c
      45,000
  (Y’s share of goodwill credited to his account and debited to X and Z in their gaining ratio)      

Working Notes

Total Profit for Last 4 Years’ = Rs 2,40,000

Y's share = 2,40,000 × 38 = Rs 90,000
Y’s Share of Goodwill = 90,000 × 12 = Rs 45,000

Case 3
  Journal
Date Particulars L.F. Debit
Amount
Rs
Credit
Amount

Rs
           
  X’s Capital A/c Dr.   36,000  
  Z’s Capital A/c Dr.   9,000  
 
To Y’s Capital A/c
      45,000
  (Y’s share of goodwill credited to his account and debited to X and Z in their gaining ratio.)      

Working Notes

Goodwill = Average Profit for 3 years × 3 years of purchase

Date of death is 30thSeptember 2012

Profit is calculated as below:

1 Oct 2011 – 30 Sept 2012 = 50% of 80,000 + 50,000 = Rs 90,000

1 Oct 2010 – 30 Sept 2011 = 50% of 80,000 – 50% of 20,000 = Rs 30,000

1 Oct 2009 – 30 Sept 2010 = 50% of 20,000 – 50% of 20,000 = NIL

Total Profit = 90,000 + 30,000 =Rs.  1,20,000

Average Profit = 1,20,0003=Rs 40,000

Goodwill = 40,000 × 3 = Rs 1,20,000

Y's Share = 1,20,000 × 38 = Rs 45,000

Note: Since no information about new ratio is given, it is assumed that partner’s will gain in their old ratio which is 4 : 1.

Answer:

A’s Capital Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Drawings A/c

1,500

Balance b/d

10,000

 

 

B’s Capital A/c (Goodwill)

6,570

A’s Executor’s A/c

24160.83

C’s Capital A/c (Goodwill)

6,570

 

 

Profit and Loss Suspense A/c

2520.83

 

25660.83

 

25660.83

 

 

 

 


Working Notes:

WN 1 Calculation of Goodwill





∴ Goodwill = 13,140 × 2 = Rs 26,280

WN 2 Adjustment of Goodwill

Old Ratio (A, B and C) = 4 : 2 : 2

A died.

∴ New Ratio = 2 : 2 or 1 : 1 and

Gaining Ratio = 2 : 2 or 1 : 1

A’s Share of Goodwill

This share of goodwill is to be distributed between B and C in their gaining ratio (i.e. 1: 1)



WN 3 Calculation of A’s Share of Profit

A’s Profit Share = Average Profit for last 3 previous years + 10% of Average Profit (for 5 months)

Average profit for last 3 years

10% of Average Profit = 11,000 × 10% = Rs 1,100

∴ A’s Profit Share = Average Profit + 10% of Average Profit

 

Page No 6.98:

Question 48:

A’s Capital Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Drawings A/c

1,500

Balance b/d

10,000

 

 

B’s Capital A/c (Goodwill)

6,570

A’s Executor’s A/c

24160.83

C’s Capital A/c (Goodwill)

6,570

 

 

Profit and Loss Suspense A/c

2520.83

 

25660.83

 

25660.83

 

 

 

 


Working Notes:

WN 1 Calculation of Goodwill





∴ Goodwill = 13,140 × 2 = Rs 26,280

WN 2 Adjustment of Goodwill

Old Ratio (A, B and C) = 4 : 2 : 2

A died.

∴ New Ratio = 2 : 2 or 1 : 1 and

Gaining Ratio = 2 : 2 or 1 : 1

A’s Share of Goodwill

This share of goodwill is to be distributed between B and C in their gaining ratio (i.e. 1: 1)



WN 3 Calculation of A’s Share of Profit

A’s Profit Share = Average Profit for last 3 previous years + 10% of Average Profit (for 5 months)

Average profit for last 3 years

10% of Average Profit = 11,000 × 10% = Rs 1,100

∴ A’s Profit Share = Average Profit + 10% of Average Profit

 

Answer:

Revaluation Account
Dr.   Cr.
Particulars Amount Rs Particulars Amount Rs
Furniture A/c 3,000 Machinery A/c 6,500
Stock A/c 2,000    
Profit transferred to:      
X’s Capital A/c
500      
Y’s Capital A/c
500      
Z’s Capital A/c
500 1,500    
  6,500   6,500
       
 
Partners’ Capital Accounts
Dr.   Cr.
Particulars X Y Z Particulars X Y Z
Z’s Capital A/c 7,500 7,500   Balance b/d 50,000 50,000 50,000
Z’s Executor A/c     70,500 General Reserve A/c 5,000 5,000 5,000
Balance c/d 48,000 48,000   Revaluation A/c 500 500 500
        X’s Capital A/c     7,500
        Y’s Capital A/c     7,500
               
               
  55,500 55,500 70,500   55,500 55,500 70,500
               
 
Balance Sheet
as on April 01, 2016 after Z’s death
Liabilities Amount
Rs
Assets Amount Rs
    Machinery 56,500
Capital A/cs:   Furniture 25,000
X
48,000   Bills Receivable 21,000
Y
48,000 96,000 Debtors 45,000  
Creditors 500
Less: Provision for Doubtful Debts
3,000 42,000
Z’s Executor 60,500 Stock 7,500
(70,500 – 10,000)   Cash at Bank (15,000 – 10,000) 5,000
  1,57,000   1,57,000
       

Working Notes:

Goodwill = Rs 45,000

Z’s Share = 45,000 × 13 = Rs 15,000

Since no information about new ratio is given, it is assumed that partner’s will gain in their old ratio which is 1 : 1.



Page No 6.99:

Question 49:

Revaluation Account
Dr.   Cr.
Particulars Amount Rs Particulars Amount Rs
Furniture A/c 3,000 Machinery A/c 6,500
Stock A/c 2,000    
Profit transferred to:      
X’s Capital A/c
500      
Y’s Capital A/c
500      
Z’s Capital A/c
500 1,500    
  6,500   6,500
       
 
Partners’ Capital Accounts
Dr.   Cr.
Particulars X Y Z Particulars X Y Z
Z’s Capital A/c 7,500 7,500   Balance b/d 50,000 50,000 50,000
Z’s Executor A/c     70,500 General Reserve A/c 5,000 5,000 5,000
Balance c/d 48,000 48,000   Revaluation A/c 500 500 500
        X’s Capital A/c     7,500
        Y’s Capital A/c     7,500
               
               
  55,500 55,500 70,500   55,500 55,500 70,500
               
 
Balance Sheet
as on April 01, 2016 after Z’s death
Liabilities Amount
Rs
Assets Amount Rs
    Machinery 56,500
Capital A/cs:   Furniture 25,000
X
48,000   Bills Receivable 21,000
Y
48,000 96,000 Debtors 45,000  
Creditors 500
Less: Provision for Doubtful Debts
3,000 42,000
Z’s Executor 60,500 Stock 7,500
(70,500 – 10,000)   Cash at Bank (15,000 – 10,000) 5,000
  1,57,000   1,57,000
       

Working Notes:

Goodwill = Rs 45,000

Z’s Share = 45,000 × 13 = Rs 15,000

Since no information about new ratio is given, it is assumed that partner’s will gain in their old ratio which is 1 : 1.

Answer:

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

General Reserve A/c

Dr.

 

45,000

 

To Akhil’s Capital A/c

 

 

15,000

To Nikhil’s Capital A/c

 

 

15,000

To Sunil’s Capital A/c

 

 

15,000

(General Reserve distributed among partners in their old ratio)

 

 

 

 

 

 

 

Akhil’s Capital A/c

Dr.

 

35,000

 

Nikhil’s Capital A/c

Dr.

 

35,000

 

To Sunil’s Capital A/c

 

 

70,000

(Sunil’s share of goodwill adjusted)

 

 

 

 

 

 

 

Interest on Capital A/c

Dr.

 

1,600

 

To Sunil’s Capital A/c

 

 

1,600

(Interest allowed on Sunil’s Capital)

 

 

 

 

 

 

 

Profit and Loss Suspense A/c

Dr.

 

20,000

 

To Sunil’s Capital A/c

 

 

20,000

(Sunil’s profit share transferred to his capital account)

 

 

 

 

 

 

 

Sunil’s Capital A/c

Dr.

 

1,86,600

 

To Sunil’s Executor’s A/c

 

 

1,86,600

(Amount due to Sunil after all adjustments transferred to his Executor’s Account)

 

 

 

 

 

 

 

Sunil’s Executor’s A/c

Dr.

 

50,000

 

To Bank A/c

 

 

50,000

(Amount paid to Sunil’s Executor)

 

 

 

 

 

 

 

 

Sunil’s Capital Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

 

 

Balance b/d

80,000

 

 

Interest on Capital A/c

1,600

 

 

General Reserve

15,000

 

 

Profit and Loss Suspense A/c

20,000

 

 

Akhil’s Capital A/c (Goodwill)

35,000

Sunil’s Executor’s A/c

1,86,600

Nikhil’s Capital A/c (Goodwill)

35,000

 

1,86,600

 

1,86,600

 

 

 

 

 

Sunil’s Executor’s Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Bank A/c

50,000

Sunil’s Capital A/c

1,86,600

Balance c/d

1,36,600

 

 

 

1,86,600

 

1,86,600

 

 

 

 


Working Notes:

WN 1 Calculation of Sunil’s Share of Profit

Profit for 2015-16 = Rs 1,80,000



WN 2 Calculation of Goodwill

Goodwill = Average Profit × Number of Year’s Purchase



∴ Goodwill = Average Profit × Number of Years’ Purchase

= 70,000 × 3 = Rs 2,10,000

WN 3 Adjustment of Goodwill

Old Ratio = 1 : 1 : 1

Sunil died.

∴ New Ratio = 1 : 1 and

Gaining Ratio = 1 : 1

Sunil’s Share in Goodwill =

This share of goodwill is to be distributed between Akhil and Nikhil in their gaining ratio (i.e. 1 : 1).



WN 4 Calculation of Interest on Sunil’s Capital

Sunil’s Capital Balance = Rs 80,000

∴ Interest on Capital (for 4 months)

Page No 6.99:

Question 50:

Journal

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

General Reserve A/c

Dr.

 

45,000

 

To Akhil’s Capital A/c

 

 

15,000

To Nikhil’s Capital A/c

 

 

15,000

To Sunil’s Capital A/c

 

 

15,000

(General Reserve distributed among partners in their old ratio)

 

 

 

 

 

 

 

Akhil’s Capital A/c

Dr.

 

35,000

 

Nikhil’s Capital A/c

Dr.

 

35,000

 

To Sunil’s Capital A/c

 

 

70,000

(Sunil’s share of goodwill adjusted)

 

 

 

 

 

 

 

Interest on Capital A/c

Dr.

 

1,600

 

To Sunil’s Capital A/c

 

 

1,600

(Interest allowed on Sunil’s Capital)

 

 

 

 

 

 

 

Profit and Loss Suspense A/c

Dr.

 

20,000

 

To Sunil’s Capital A/c

 

 

20,000

(Sunil’s profit share transferred to his capital account)

 

 

 

 

 

 

 

Sunil’s Capital A/c

Dr.

 

1,86,600

 

To Sunil’s Executor’s A/c

 

 

1,86,600

(Amount due to Sunil after all adjustments transferred to his Executor’s Account)

 

 

 

 

 

 

 

Sunil’s Executor’s A/c

Dr.

 

50,000

 

To Bank A/c

 

 

50,000

(Amount paid to Sunil’s Executor)

 

 

 

 

 

 

 

 

Sunil’s Capital Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

 

 

Balance b/d

80,000

 

 

Interest on Capital A/c

1,600

 

 

General Reserve

15,000

 

 

Profit and Loss Suspense A/c

20,000

 

 

Akhil’s Capital A/c (Goodwill)

35,000

Sunil’s Executor’s A/c

1,86,600

Nikhil’s Capital A/c (Goodwill)

35,000

 

1,86,600

 

1,86,600

 

 

 

 

 

Sunil’s Executor’s Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Bank A/c

50,000

Sunil’s Capital A/c

1,86,600

Balance c/d

1,36,600

 

 

 

1,86,600

 

1,86,600

 

 

 

 


Working Notes:

WN 1 Calculation of Sunil’s Share of Profit

Profit for 2015-16 = Rs 1,80,000



WN 2 Calculation of Goodwill

Goodwill = Average Profit × Number of Year’s Purchase



∴ Goodwill = Average Profit × Number of Years’ Purchase

= 70,000 × 3 = Rs 2,10,000

WN 3 Adjustment of Goodwill

Old Ratio = 1 : 1 : 1

Sunil died.

∴ New Ratio = 1 : 1 and

Gaining Ratio = 1 : 1

Sunil’s Share in Goodwill =

This share of goodwill is to be distributed between Akhil and Nikhil in their gaining ratio (i.e. 1 : 1).



WN 4 Calculation of Interest on Sunil’s Capital

Sunil’s Capital Balance = Rs 80,000

∴ Interest on Capital (for 4 months)

Answer:

Revaluation Account
Dr.   Cr.
Particulars Amount Rs Particulars Amount Rs
Provision for doubtful debts A/c 1,500 Building A/c 15,000
Stock A/c 2,000    
Workmen Compensation Fund 5,000    
Profit transferred to:      
A’s Capital A/c
3,250      
B’s Capital A/c
2,167      
C’s Capital A/c
1,083 6,500    
  15,000   15,000
       
 
Partners’ Capital Accounts
Dr.   Cr.
Particulars A B C Particulars A B C
A’s Capital A/c   8,000 4,000 Balance b/d 1,50,000 1,50,000 1,50,000
A’s Executor A/c 1,67,375     Profit & Loss Suspense A/c 1,375    
Balance c/d   1,44,167 1,47,083 Revaluation A/c 3,250 2,167 1,083
        B’s Capital A/c 8,000    
        C’s Capital A/c 4,000    
        Interest on Capital A/c 750    
               
  1,67,375 1,52,167 1,51,083   1,67,375 1,52,167 1,51,083
               
 
Balance Sheet
as on July 01, 2016 after A’s death
Liabilities Amount Rs Assets Amount Rs
A’s Executor 1,67,375 Machinery 25,000
Capital A/cs:   Building 85,000
B
1,44,167   Profit and Loss Suspense A/c (1,375 + 750) 2,125
C
1,47,083 2,91,250 Debtors 15,000  
Creditors 17,000
Less: Provision for Doubtful Debts
1,500 13,500
Workmen Compensation Fund 5,000 Stock 30,000
    Bank 3,25,000
       
  4,80,625   4,80,625
       

Working Notes:

WN 1: Interest on Capital = 1,50,000 × 2100× 312=Rs 750

WN 2: Profit to A for 1st April 2016 to 1st July 2016 = 11,000 × 36 × 312 = Rs 1,375

WN 3: Calculation of Goodwill

Average Profit = Total Profit3

Total Profit = 11,000 + 15,000 + 10,000 =Rs 36,000

Average Profit = 36,0003=Rs 12,000

Goodwill = 12,000 × 2 = Rs 24,000

A’s share = 24,000 × 36 = Rs 12,000

Since no information about new ratio is given, it is assumed that partner’s will gain in their old ratio which is 2 : 1.



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