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Standard XII
Accountancy
Reassessment of Liabilities
PRACTICAL PRO...
Question

PRACTICAL PROBLEM

Raj and Dev are partners sharing profits and losses 3:2 respectively. Their position on 31st March, 2011

Balance Sheet as on 31st March, 2011
Liabilities
Amount
Rs
Assets
Amount
Rs
Capital A/c’s
Raj
1,00,000
Buildings
1,00,000
Dev
75,000
Furniture
10,000
Creditors
10,000
Stock
31,000
Bills Payable
5,000
Debtors
50,000
General Reserve
15,000
(-) R.D.D.
1,000
49,000
Bank Balance
15,000
2,05,000
2,05,000

On 1st April, 2011 they admitted Manoj on following terms:

1) Manoj should bring in cash Rs 1,00,000 as a capital for 1/5th share in future profit and Rs 25,000 as goodwill.

2) Building should be revalued for Rs 1,25,000.

3) Depreciate furniture at 12 ½ % p.a. and stock at 10% p.a.

4) R.D.D. should be maintained as it is.

5) The Capital accounts of partners should be adjusted in their new profit sharing ratio through bank account.

Prepare, Profit and Loss Adjustment Account, Capital Accounts, Balance Sheet of new firm and show how you have calculated new ratio and new capital.

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Solution

Profit and Loss Adjustment Account
Dr.
Cr.
Particulars
Amount
Rs
Particulars
Amount
Rs
Furniture
1,250
Building
25,000
Stock
3,100
Profit transferred to:
Raj’s Capital
12,390
Dev’s Capital
8,260
20,650
25,000
25,000

Partners’ Capital Accounts
Dr.
Cr.
Particulars
Raj
Dev
Manoj
Particulars
Raj
Dev
Manoj
Balance c/d
1,36,390
99,260
1,00,000
Balance b/d
1,00,000
75,000
General Reserve
9,000
6,000
Profit and Loss Adjustment (Profit)
12,390
8,260
Cash
1,00,000
Premium for Goodwill
15,000
10,000
1,36,390
99,260
1,00,000
1,36,390
99,260
1,00,000
Balance c/d
2,40,000
1,60,000
1,00,000
Balance b/d
1,36,390
99,260
1,00,000
Bank
1,03,610
60,740
2,40,000
1,60,000
1,00,000
2,40,000
1,60,000
1,00,000

Balance Sheet
as on April 01, 2011 after Manoj’s admission
Liabilities
Amount
Rs
Assets
Amount
Rs
Creditors
10,000
Building
1,25,000
Bills Payable
5,000
Furniture
10,000
Capital:
Less: Depreciation @12.5%
1,250
8,750
Raj
2,40,000
Stock
31,000
Dev
1,60,000
Less: Depreciation @10%
3,100
27,900
Manoj
1,00,000
5,00,000
Debtors
50,000
Less: Reserve for Doubtful Debts
1,000
49,000
Cash (1,00,000+25,000)
1,25,000
Bank
1,79,350
5,15,000
5,15,000

Working Notes:

Calculation of Profit Sharing Ratio:


WN1: Adjustment of Capital

WN2: Distribution of General Reserve


WN3: Distribution of Manoj’s Share of Goodwill


WN4: Bank Account

Bank Account

Dr.

Cr.

Particulars

Amount

(Rs)

Particulars

Amount

(Rs)

Balance b/d

15,000

Balance c/d

1,79,350

Capital A/s:

Raj

1,03,610

Dev

60,740

1,67,350

1,79,350

1,79,350


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Q. Rani and Geeta are partners sharing profits and losses 3 : 2 respectively. Their position on 31st March, 2013 was as follows:
On 1st April, 2013 they admitted Suvarna on the following terms:
(1) Suvarna should bring in cash Rs. 1,00,000 as capital for 15st share in future profit and Rs. 25,000 as goodwill.
(2) Building should be revalued at Rs. 1,25,000.
(3) Depreciated furniture @ 12 12% p.a. and stock @ 10% p.a.
(4) R.D.D. should be maintained as it is.
(5) The capital Accounts of partners should be adjusted in their new profit sharing ratio through bank account.
Prepare:
profit and loss adjustment account, capital accounts and balance sheet of the new firm.
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Q.

PRACTICAL PROBLEM

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

Balance Sheet as on 31st 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 1st April, 2013 as a partner on the following terms:

1) Kailash will bring Rs 30,000 as his capital for 1/4th 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.

PRACTICAL PROBLEM

Vaibhav and Vilas were partners sharing profit and losses in the ratio of 2:3 respectively. Their Balance Sheet as on 31st March, 2012 was as follows.

Balance Sheet as on 31st March, 2012
Liabilities
Amount
Rs
Assets
Amount
Rs
Capital A/c’s
Vaibhav
50,000
Land & Building
25,000
Vilas
50,000
Plant
30,000
Creditors
70,000
Furniture
2,000
Stock
50,000
Debtors
58,000
Cash
5,000
1,70,000
1,70,000

They agreed to admit Vivek as a partner on 1st April 2012 on the following terms:

1) Vivek will have 1/4th share in future profits for which he shall bring Rs 25,000 as his capital and Rs 20,000 as his share of goodwill.

2) Land & Building are valued at Rs 30,000 and while stock is valued at Rs 55,000.

3) Plant is taken over by Vilas 10% discount.

4) Depreciate furniture by 10%.

5) Provision for bad and doubtful debts is to be maintained at 5% on debtors.

6) The capital account of all the partners to be adjusted in their new profit sharing ratio and excess amount to be transferred to their loan account.

Q.

PRACTICAL PROBLEM

Keshav and Madhav were partners sharing the profits and losses in the ratio of 2:3. Their Balance Sheet is as follows:

Balance Sheet as on 31st March, 2011
Liabilities
Amount
Rs
Assets
Amount
Rs
Capital Accounts :
Live stock
20,000
Keshav
2,50,000
Building
1,38,000
Madhav
2,60,000
Investments
45,000
Creditors
8,500
Loose Tools
38,000
Debtors
90,000
(-) R.D.D.
18,000
72,000
Profit and Loss A/c
15,000
Closing Stock
1,04,500
Cash in Hand
86,000
5,18,500
5,18,500

On 1st April, 2011 they admitted Uddhav on the following terms:

1) The new profit sharing ratio is equal.

2) Uddhav brings Rs 2,00,000 as his capital and Rs 80,000 as share of goodwill in cash.

3) Prepaid insurance of Rs 7,500 was not recorded in the books.

4) Loose tools were found undervalued by 5% and Building was found overvalued by 15% in the books.

5) All debtors are considered as good and out of creditors Rs 500 is no longer payable.

6) The market Value of Investment is 50% more than its book value.

Prepare, Profit and Loss Adjustment in A/c, Capital Accounts of partners and Balance Sheet of the new firm.

Q.

PRACTICAL PROBLEM

Manoj and Rahul are equal partners in a business. Their Balance sheet as on 31st March, 2013 stood as under:

Balance Sheet as on 31st March, 2013
Liabilities
Amount
Rs
Assets
Amount
Rs
Sundry Creditors
1,80,000
Cash at Bank
1,20,000
General Reserve
36,000
Debtors
62,000
Capitals-
Manoj
90,000
(-) R.D.D.
2,000
60,000
Rahul
60,000
Bills receivable
24,000
Building
1,14,000
Machinery
48,000
3,66,000
3,66,000

They decided to admit Amit on 1st April, 2013 on the following terms:

1) The Machinery and Building be depreciated by 10%

2) Reserve for doubtful debts to be increased to Rs 5,000.

3) Bills receivable are taken over by Manoj at a discount of 5%.

4) The amount of creditors paid at a discount of 10%.

5) The Capital Accounts of all the partners be adjusted in current account of partners.

6) Amit should bring Rs 80,000 as capital for his 1/4th in future profits and goodwill account be opened in the books of the firm at Rs 40,000.

Prepare Profit and Loss Adjustments A/c, Partner’s Capital A/c and Balance sheet of the firm at Rs 4,000/-

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