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Given below is the Balance Sheet of A and B, who are carrying on partnership business on 31stMarch,2018. A and B share profits and losses in the ratio of 2:1.
Balance Sheet Of A and B as at 31stMarch,2018.
Liabilities(Rs.)Assets(Rs.)
Bills Payable
Creditors
Outstanding Expenses
Capital A/cs:
A 1,80,000
B 1,50,000
10,000
58,000
2,000
3,30,000
Cash in Hand
Cash at Bank
Sundry Debtors
Stock
Plant
Building
10,000
40,000
60,000
40,000
1,00,000
1,50,000
4,00,0004,00,000
C is admitted as a partner on the date of the Balance sheet on the following terms:
(a) C will bring in Rs.1,00,000 as his capital and Rs.60,000 as his share of goodwill for 1/4th share in the profits.
(b) Plant is to be appreciated to Rs.1,20,000 and the value of building is to be appreciated by 10% .
(c) Stock is found overvalued by Rs.4,000.
(d) A provision for doubtful debts is to be created at 5% of sundry debtors.
(e) Creditors were unrecorded to the extent of Rs.1,000.
Pass the necessary Journal entries, prepare the Revaluation Account and Partner's Capital Accounts, and show the Balance Sheet after the admission of C.

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Solution

(i) JOURNAL
1. Cash a/c... Dr. 160000
To C's Capital a/c 100000
To Premium for Goodwill a/c 60000
(Being capital and premium for goodwill brought in by C)
2. Premium for Goodwill a/c... Dr. 60000
To A's Capital a/c 40000
To B's Capital a/c 20000
(Being premium for goodwill distributed among the partners in the ratio of 2:1)
3. Revaluation a/c.... Dr. 8000
To Stock a/c 4000
To Provision for doubtful debts a/c 3000
To Creditors a/c 1000
(Being decrease in assets and increase in liabilities transferred to revaluation account)
4. Plant a/c.... Dr. 20000
Building a/c... Dr. 15000
To Revaluation a/c 35000
(Being increase in assets transferred to revaluation account)
5. Revaluation a/c... Dr. 27000
To A's Capital a/c 18000
To B's Capital a/c 9000
(Being profit on revaluation transferred to the partner's capital account)


(ii) REVALUATION A/C
Dr. Cr.
Particulars Amount
(in Rs.)
Particulars Amount
(in Rs.)
To Stock a/c 4000 By Plant a/c 20000
To Provision for
doubtful debts a/c
3000 By Building a/c 15000
To Creditors a/c 1000
To Profit on Revaluation
- A's Capital a/c
- B's Capital a/c

18000
9000
TOTAL 35000TOTAL 35000

(iii) PARTNER'S CAPITAL A/C
Dr. Cr.
Particulars AB C ParticularsA B C
By Balance b/d 180000150000
By Cash a/c 100000
By Premium for Goodwill a/c 40000 20000
To Balance c/d 238000179000 100000 By Profit on revaluation a/c 18000 9000
TOTAL238000 179000 100000 TOTAL 238000 179000 100000
(iv) BALANCE SHEET
(After admission of C)
Liabilities Amount
(in Rs.)
Assets Amount
(in Rs.)
Bills Payable10000 Cash in Hand (10000+160000) 170000
Creditors (58000+1000)59000 Cash at Bank 40000
Outstanding Expenses2000 Sundry Debtors (60000-3000)57000
Capital
- A
- B
- C

238000
179000
100000
Stock (40000-4000) 36000
Plant (100000+20000) 120000
Building (150000+15000) 165000
TOTAL 588000 TOTAL 588000



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Q.

Given below is the Balance Sheet of A and B, who are carrying on partnership business on 31.12.2016. A and B share profits and losses in the ratio of 2:1.

Balance Sheet of A and B as on December 31, 2016

Liabilites

Amount

(Rs)

Assets

Amount

(Rs)

Bills Payable

10,000

Cash in Hand

10,000

Creditors

58,000

Cash at Bank

40,000

Outstanding

2,000

Sundry Debtors

60,000

Expenses

Stock

40,000

Capitals:

Plant

1,00,000

A

1,80,000

Buildings

1,50,000

B

1,50,000

3,30,000

4,00,000

4,00,000

C is admitted as a partner on the date of the balance sheet on the following terms:

(i) C will bring in Rs 1,00,000 as his capital and Rs 60,000 as his share of goodwill for 1/4 share in the profits.

(ii) Plant is to be appreciated to Rs 1,20,000 and the value of buildings is to be appreciated by 10%.

(iii) Stock is found over valued by Rs 4,000.

(iv) A provision for bad and doubtful debts is to be created at 5% of debtors.

(v) Creditors were unrecorded to the extent of Rs 1,000.

Pass the necessary journal entries, prepare the revaluation account and partners’ capital accounts, and show the Balance Sheet after the admission of C.

Q.

Given below is the Balance Sheet of A and B, who are carrying on partnership business on 31-12-2017. A and B share profits and losses in the ratio of 2 : 1.

BALANCE SHEET OF A AND B
as on 31st December, 2017
LiabilitiesAmount AssetsAmount(Rs) (Rs) Bills Payable10,000Cash in Hand10,000Creditors58,000Cash at Bank40,000Outstanding Expenses2,000Sundry Debtors60,000Capitals :Stock40,000A1,80,000Plant1,00,000B1,50,000––––––––3,30,000––––––––Buildings1,50,000––––––––4,00,0004,00,000

C is admitted as a partner on the date of the Balance Sheet on the following terms:

(i) C will bring Rs 1,00,000 for his capital and Rs 60,000 as his share of goodwill for 1/4th share in the profits.

(ii) Plant is to be appreciated to Rs 1,20,000 and the value of buildings is to be appreciated by 10%.

(iii) Stock is found over valued by Rs 4,000.

(iv) A provision for bad and doubtful debts is to be created at 5% of debtors.

(v) Creditors were unrecorded to the extent of Rs 1,000.

Pass the necessary Journal entries at the time of admission of C. Also prepare a Balance Sheet.

OR

Pankaj, Naresh and Somesh are partners sharing profits in the ratio of 3 : 2 : 1. Naresh retired from the firm due to his illness. On that date the Balance Sheet of the firm was as follows:

BALANCE SHEET
as on 31st March, 2017
LiabilitiesAmount AssetsAmount(Rs) (Rs) General Reserve12,000Bank7,600Sundry Creditors15,000Debtors6,000Bills Payable12,000Less: Provision forOutstanding Salary2,200 Doubtful Debt(400)––––5,600Provision for Legal Damages6,000Stock9,000Capitals :Furniture41,000 Pankaj46,000Premises80,000 Naresh30,000 Somesh20,000––––––96,000¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯1,43,200¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯1,43,200

Additional Information :

(i) Premises have appreciated by 20%, stock depreciated by 10% and provision for doubtful debts was to be made 5% on debtors. Further, provision for legal damages is to be made for Rs 1,200 and furniture to be brought up to Rs 45,000.

(ii) Goodwill of the firm be valued at Rs 42,000.

(iii) Rs 26,000 from Naresh's capital account be transferred to his loan account and balance be paid through bank; if required, necessary loan may be obtained from Bank.

(iv) New profit sharing ratio of Pankaj and Somesh is decided to be 5 : 1.

Give the necessary Ledger Accounts at the time of Naresh's retirement.

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