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Question

The balance sheet of Anand Traders. Wardha is as follows. Partners share profit and losses as $\frac{5}{10} : \frac{2}{10} : \frac{3}{10}$
Pankaj retired from the business on $1^{s t}$ April, 2013 on the following terms.
(1) The assets were revalued as under : (i) stock Rs. 28,000 (ii) Factory building is appriciated by 10% (iii) Reserve for doubtful debts is to be increased up to Rs. 1,000 (iv) plant and machinery is to be depreciated by 10%.
(2) The goodwill of the retiring partner is valued at Rs. 8,000 and the remaining partners decided that goodwill be written back in their new profit sharing ratio which will be 5 : 3.
(3) Amount due to Pankaj is to be transferred to his loan account.
Prepare: (a) Profit and loss adjustment account, (b) Capital account of partners, (c) Balancesheet of new firm.

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Solution

Profit and loss adjustment A/c

For the year ending 31.03.2013

Particulars

Amount

Particulars

Amount

to plant and machinery

3200

by factory building

4000

To RDD

200

By stock

7600

To capital:

By goodwill (old)

8000

Sunil

8100

Pankaj

4860

Paresh

3240

19600

19600

Partner’s Capital A/c

Particulars

Sunil

Pankaj

Paresh

Particulars

Sunil

Pankaj

Paresh

To pankaj’s loan a/c

51100

41060

23640

By bal b/d

36000

32000

17600

To bal c/d

By general reserve

7000

4200

2800

By P& l adjustment

8100

4860

3240

51100

41060

23640

51100

41060

23640

Balance Sheet

As at 31.03.2013

Liabilities

Amount

Assets

Amount

capital:

Plant and machinery

28800

Sunil

51100

Factory building

44000

Paresh

23640

stock

28000

Debtors 16800

Creditors

21200

Less: RDD 1000

15800

Pankaj’s loan A/c

41060

Cash

12400

Goodwill

8000

137000

137000

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Similar questions

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.

Q. Rani and Geeta are partners sharing profits and losses 3 : 2 respectively. Their position on

31^{s t}

March, 2013 was as follows:
On

1^{s t}

April, 2013 they admitted Suvarna on the following terms:
(1) Suvarna should bring in cash Rs. 1,00,000 as capital for

{\frac{1}{5}}^{s t}

share in future profit and Rs. 25,000 as goodwill.
(2) Building should be revalued at Rs. 1,25,000.
(3) Depreciated furniture @ 12

\frac{1}{2}

% 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.

Pankaj, Naresh and Saurabh 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:

Books of Pankaj, Naresh and Saurabh
Balance Sheet as on March 31, 2017
Liabilities		Amount Rs	Assets		Amount Rs
General Reserve		12,000	Bank		7,600
Sundry Creditors		15,000	Debtors	6,000
Bills Payable		12,000	Less: Provision for Doubtful Debt	400	5,600
Outstanding Salary		2,200
Provision for Legal Damages		6,000	Stock		9,000
Capitals:			Furniture		41,000
Pankaj	46,000		Premises		80,000
Naresh	30,000
Saurabh	20,000	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 Saurabh is decided to be 5:1.

Give the necessary ledger accounts and balance sheet of the firm after Naresh’s retirement.

PRACTICAL PROBLEM

Sathe, Deshpande and Madlani were partners sharing profits and losses in the ratio of 5:2:3.
Their Balance Sheet was as follows:

Balance Sheet as on 31^st March, 2012
Liabilities	Amount Rs	Assets		Amount Rs
Capitals		Plant and Machinery		50,000
Sathe	70,000	Building		1,00,000
Deshpande	80,000	Motor Van		20,000
Madlani	50,000	Stock		30,000
Creditors	25,000	Debtors	36,000
Bills Payable	12,000	Less: R.D.D.	2,000	34,000
Reserve Fund	25,000	Cash		28,000
	2,62,000			2,62,000

Deshpande retired on that date on the following terms:

1) Plant to be depreciated by 10% and Motor Van by 20%.

2) Stock to be appreciated by 10% and building by 20%.

3) R.D.D. is no longer necessary

4) Provision is to be made for Rs 8,000 being compensation to worker

5) The goodwill of the firm to be valued at Rs 40,000 and Deshpande’s share in it should be raised.

6) Both the remaining partners decided to write off the goodwill

7) Amount payable to Shri. Deshpande to be kept as his Loan

Prepare:

1 ) Profit and Loss Adjustment Account

2) Partner’s Capital Accounts

3) New Balance Sheet

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Particulars	Amount	Particulars	Amount
to plant and machinery	3200	by factory building	4000
To RDD	200	By stock	7600
To capital:		By goodwill (old)	8000
Sunil	8100
Pankaj	4860
Paresh	3240

	19600		19600