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Balance Sheet...

Question

Balance Sheet of Ram and Shyam who share profits in proportions to their capitals as at $31^{s t}$ March,2018 is:
Liabilities (Rs.) Assets (Rs.)
Capital A/cs:
Ram 30,000
Shyam 25,000
Current A/cs:
Ram 2,000
Shyam 1,800
Creditors
Bills Payable 55,000
3,800
19,000
16,000
Freehold Premises
Plant and Machinery
Fixture and Fittings
Vehicle
Stock
Bills Receivable
Debtors
Bank
Cash 20,000
13,500
1,750
1,350
14,100
13,060
27,500
1,590
950
93,800 93,800
On $1^{s t}$ April,2018, they admitted Arjun into partnership on the following terms:
(a) Arjun to bring in $R s . 20, 000$ as capital and $R s . 6, 600$ for goodwill, which is to be in the business and he is to receive $1 / 4^{t h}$ share of the profits.
(b) Provision for Doubtful Debts is to be $2 %$ on Debtors.
(c) Value of Stock to be written down by $5 %$ .
(d) Freehold Premises are to be taken at valuation of $R s . 22, 400$ ; Plant and Machinery $R s . 11, 800$ ; Fixtures and Fittings $R s . 1, 540$ and Vehicles $R s . 800$ .
You are required to make necessary adjustment entries in the firm, give Balance Sheet of the new firm as at 1st April,2018 and also give the proportions in which the partners will share profits, there being no change in the proportions of Ram and Shyam.

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Solution

(i) JOURNAL

1. Cash a/c.... Dr. 26600
To Arjun's Capital a/c 20000
To Premium for Goodwill a/c 6600
(Being capital and premium for goodwill brought in by Arjun)
2. Premium for Goodwill a/c.... Dr. 6600
To Ram's Current a/c 3600
To Shyam's Current a/c 3000
(Being premium for goodwill distributed among the partners in the ratio of 6:5)

(ii) REVALUATION ACCOUNT
Dr. Cr.
Particulars Amount Particulars Amount
To Provision for
Doubtful debts a/c 550 By Freehold
Premises a/c 2400
To Stock a/c 705 By Loss transferred to:
- Ram's Current a/c
- Shyam's Current a/c
717
598
To Plant and Machinery a/c 1700
To Fixture and Fittings a/c 210
To Vehicles a/c 550
3715 3715

(iii) PARTNER'S CAPITAL A/C
Dr. Cr.
Particulars Ram Shyam Arjun Particulars Ram Shyam Arjun
By Balance b/d 30000 25000
To Balance c/d 30000 25000 20000 By Cash a/c 20000
30000 25000 20000 30000 25000 20000

(iv) PARTNER'S CURRENT A/C
Dr. Cr.
Particulars Ram Shyam Arjun Particulars Ram Shyam Arjun
To Revaluation a/c 717 598 By Balance b/d 2000 1800
By Premium
for Goodwill a/c 3600 3000
To Balance c/d 4883 4202
5600 4800 5600 4800

(v) BALANCE SHEET
Liabilities Amount Assets Amount
Capital a/cs:
- Ram
- Shyam
- Arjun
30000
25000
20000 Freehold Premises 22400
Creditors 19000 Plant and Machinery 11800
Bills Payable 16000 Fixture and Fittings 1540
Current a/cs:
- Ram
- Shyam
4883
4202 Vehicle 800
Stock (14100-705) 13395
Bills Receivable 13060
Debtors 27500
(-) Provision for (550)
doubtful debts 26950
Bank 1590
Cash (950+20000+6600) 27550
119085 119085

Working Note:
Old ratio= 30000:25000
= 6:5
Arjun is admitted for 1/4th share
Remaining share= 3/4
Ram's new share= 6/11 * 3/4
= 18/44
Shyam's new share= 5/11 * 3/4
= 15/44
New profit sharing ratio= 18:15:11

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Similar questions

Q. Balance Sheet of Ram and Shyam who shares profits in proportion to their capitals as at 31st March, 2018 is:


Liabilities		₹	Assets	₹
Capital A/cs:			Freehold Premises	20,000
Ram	30,000		Plant and Machinery	13,500
Shyam	25,000	55,000	Fixtures and Fittings	1,750
Current A/cs:			Vehicles	1,350
Ram	2,000		Stock	14,100
Shyam	1,800	3,800	Bills Receivable	13,060
Creditors		19,000	Debtors	27,500
Bills Payable		16,000	Bank	1,590
			Cash	950

		93.800		93,800

On 1st April, 2018 they admitted Arjun into partnership on the following terms:
(a) Arjun to bring in ₹ 20,000 as capital and ₹ 6,600 for goodwill, which is to be left in the business and he is to receive 1/4th share of the profits .
(b) Provision for Doubtful Debts is to be 2% on Debtors .
(c) Value of Stock to be written down by 5% .
(d) Freehold Premises are to be taken at valuation of ₹ 22,400; Plant and Machinery ₹ 11,800; Fixtures and Fittings ₹ 1,540 and Vehicles ₹ 800 .
You are required to make necessary adjustments entries in the firm, give Balance Sheet of the new firm as at 1st April, 2018 and also give the proportions in which the partners will share profits , there being no change in the proportions of Ram and Shyam.

Q. Balance Sheet of Ram and Shyam who shares profits in the ratio of their capitals as at 31st March, 2019 is:


Liabilities		Amount (₹)	Assets	Amount (₹)
Capital A/cs:			Freehold Premises	20,000
Ram	30,000		Plant and Machinery	13,500
Shyam	25,000	55,000	Fixtures and Fittings	1,750
Current A/cs:			Vehicles	1,350
Ram	2,000		Stock	14,100
Shyam	1,800	3,800	Bills Receivable	13,060
Creditors		19,000	Debtors	27,500
Bills Payable		16,000	Bank	1,590
			Cash	950

		93,800		93,800

On 1st April, 2019, they admitted Arjun into partnership on the following terms:
(a) Arjun to bring ₹ 20,000 as capital and ₹ 6,600 for goodwill, which is to be left in the business and he is to receive 1/4th share of the profits.
(b) Provision for Doubtful Debts is to be 2% on Debtors.
(c) Value of Stock to be written down by 5% .
(d) Freehold Premises are to be taken at a value of ₹ 22,400; Plant and Machinery ₹ 11,800; Fixtures and Fittings ₹ 1,540 and Vehicles ₹ 800.
You are required to make necessary adjustments entries in the firm, give Balance Sheet of the new firm as at 1st April, 2019 and also determine the ratio in which the partners will share profits, there being no change in the ratio of Ram and Shyam.

Q. Shyamlal and Sanjay were in partnership business sharing profits and losses in the ratio of

2 : 3

respectively. Their Balance Sheet as at

31^{s t}

March, 2018 was:

Liabilities	(Rs.)	Assets	(Rs.)
Sundry Creditors Capital A/cs: Shyamlal 34,050 Sanjay 34,050	12,435 68,100	Cash in Hand Cash at Bank Sundry Debtors Stock Furniture Building	710 11,925 5,500 18,000 4,400 40,000
	80,535		80,535

1^{s t}

April,2018, they admitted Shankar into partnership for

1 / 3^{r d}

share in the future profits on the following terms:
(a) Shankar is to bring in

R s . 30, 000

as his capital and

R s . 20, 000

as goodwill which is to remain in the business.
(b) Stock and Furniture are to be reduced in value by

10 %

.
(c) Building is to be appreciated by

R s . 15, 000

.
(d) Provision of

5 %

is to be made on Sundry Debtors for Doubtful Debts.
(e) Unaccounted Accrued income of

R s . 2, 400

to be provided for. A debtor, whose dues of

R s . 4, 800

were written off as bad debts, paid

50 %

in full settlements.
(f) Outstanding Rent amounted to

R s . 4, 800

.
Show Profit and Loss Adjustment Account (Revaluation Account), Capital Accounts of Partners and opening Balance Sheet of the new firm.

PRACTICAL PROBLEM

Suresh and Ramesh are partners in a business sharing Balance sheet as on 31^st March, 2013 is as follows:

Balance Sheet as on 31^st March, 2013
Liabilities		Amount Rs	Amount Rs	Assets	Amount Rs	Amount Rs
Capital A/c’s				Building		30,000
	Suresh	50,000		Machinery		10,000
	Ramesh	24,000	74,000	Furniture		9,500
Creditors			57,000	Debtors	40,000
Bills Payable			20,000	(-) R.D.D.	1,000	39,000
Reserve fund			9,000	Stock		30,000
				Bills Receivable		7,600
				Cash at Bank		33,900
			1,60,000			1,60,000

They admitted Kailash on 1^st April, 2013 as a partner on the following terms:

1) Kailash will bring Rs 30,000 as his capital for 1/4^th share in future profit and Rs 12,000 as goodwill which will be withdrawn by old partners.

2) Stock and Machinery to be depreciated by 10%.

3) R.D.D. is to be maintained at 5% on debtors.

4) Building to be appreciated by 20% and furniture is revalued at Rs 10,000.

Prepare Profit and Loss Adjustment Account, Partner’s Capital Accounts and Balance Sheet of the New firm.

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


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

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

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

\times

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

—

₹ 1,87,875; Y

—

₹ 92,625; Z

—

₹ 50,000; Z's Current A/c (Dr.)

—

₹ 20,000; Balance Sheet Total

—

₹ 5,18,000.

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Particulars	Amount	Particulars	Amount
To Provision for Doubtful debts a/c	550	By Freehold Premises a/c	2400
To Stock a/c	705	By Loss transferred to: - Ram's Current a/c - Shyam's Current a/c	717 598
To Plant and Machinery a/c	1700
To Fixture and Fittings a/c	210
To Vehicles a/c	550
	3715		3715

Particulars	Ram	Shyam	Arjun	Particulars	Ram	Shyam	Arjun
				By Balance b/d	30000	25000
To Balance c/d	30000	25000	20000	By Cash a/c			20000
	30000	25000	20000		30000	25000	20000