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
On $1^{s t}$ 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.

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Solution

(i) REVALUATION ACCOUNT
Dr. Cr.
Particulars Amount Particulars Amount
To Stock a/c 1800 By Building a/c 15000
To Furniture a/c 440 By Cash a/c 2400
To Provision for
Doubtful Debts A/c 275 By Bad debt a/c 2400
To outstanding rent A/c 4800
To Profit on revaluation
- Shyamlal's Capital a/c
- Sanjay's Capital a/c
4994
7491
19800 19800

(ii) PARTNER'S CAPITAL A/C
Dr. Cr.
Particulars Shyamlal Sanjay Shankar Particulars Shyamlal Sanjay Shankar
By Balance b/d 34050 34050
By Cash a/c 30000
By Premium for goodwill a/c 8000 12000
To balance c/d 47044 53541 30000 By Revaluation a/c 4994 7491

47044 53541 30000 47044 53541 30000

(ii) BALANCE SHEET
Liabilities Amount Assets Amount
Sundry Creditors 12435 Cash in Hand (710+50000+2400)
Cash at Bank 53110
11925
Capital a/c
- Shyamlal
- Sanjay
- Sanjay
47044
53541
30000 Accrued income 2400
Outstanding rent 4800 Debtors (5500-275) 5225
Stock (18000-1800) 16200
Furniture (4400-440) 3960
Building (40000+15000) 55000
147820 147820

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Similar questions

Q. Shyamlal and Sanjay were in partnership business sharing profits and losses in the ratio of 2 : 3 respectively. Their Balance Sheet as at 31st March, 2019 was:


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


		80,535		80,535

On 1st April, 2019, they admitted Shanker into partnership for 1/3rd share in future profits on the following terms:
(a) Shanker is to bring in ₹ 30,000 as his capital and ₹ 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 ₹ 15,000.
(d) Provision of 5% is to be made on Sundry Debtors for Doubtful Debts.
(e) Unaccounted Accrued Income of ₹ 2,400 to be provided for. A debtor, whose dues of ₹ 4,800 were written off as bad debts, paid 50% in full settlement.
(f) Outstanding Rent amounted to ₹ 4,800.
Show Profit and Loss Adjustment Account (Revaluation Account), Capital Accounts of Partners and opening Balance Sheet of the new firm.

Q. Shyamlal and Sanjay were in partnership business sharing profits and losses in the ratio of 2 : 3 respectively. Their Balance Sheet as at 31st March, 2018 was:


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


		80,535		80,535

On 1st April, 2018, they admitted Shanker into partnership for 1/3rd share in the future profits on the following terms:
(a) Shanker is to bring in ₹ 30,000 as his capital and ₹ 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 ₹ 15,000.
(d) Provision of 5% is to be made on Sundry Debtors for Doubtful Debts .
(e) Unaccounted Accrued Income of ₹ 2,400 to be provided for . A debtor , whose dues of ₹ 4,800 were written off as bad debts , paid 50% in full settlement .
(f) Outstanding Rent amounted to ₹ 4,800.
Show Profit and Loss Adjustment Account (Revaluation Account) , Capital Accounts of Partners and opening 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.

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.

PRACTICAL PROBLEM

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

Balance Sheet as on 31^st 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 1^st April 2012 on the following terms:

1) Vivek will have 1/4^th 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.

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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

Particulars	Amount	Particulars	Amount
To Stock a/c	1800	By Building a/c	15000
To Furniture a/c	440	By Cash a/c	2400
To Provision for Doubtful Debts A/c	275	By Bad debt a/c	2400
To outstanding rent A/c	4800
To Profit on revaluation - Shyamlal's Capital a/c - Sanjay's Capital a/c	4994 7491
	19800		19800