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Standard XII
Accountancy
Salary/Commission
X, Y and Z ar...
Question

X, Y and Z are partners in a firm sharing profits and losses as 5 : 4 : 3. Their Balance Sheet as at 31st March, 2019 was:
Liabilities Amount
​(₹)		 Assets Amount
​(₹)
Sundry Creditors 40,000 Cash at Bank 40,000
Outstanding Expenses 15,000 Sundry Debtors 2,10,000
General Reserve 75,000 Stock 3,00,000
Capital A/cs: Furniture 60,000
X 4,00,000 Plant and Machinery 4,20,000
Y 3,00,000
Z 2,00,000 9,00,000
10,30,000 10,30,000

From 1st April, 2019, they agree to alter their profit-sharing ratio as 4 : 3 : 2. It is also decided that:
(a) Furniture be taken at 80% of its value.
(b) Stock be appreciated by 20%.
(c) Plant and Machinery be valued at ₹ 4,00,000.
(d) Outstanding Expenses be increased by ₹ 13,000.
Partners agreed that altered values are not to be recorded in the books and they also do not want to distribute the General Reserve.
You are required to pass a single Journal entry to give effect to the above. Also, prepare Balance Sheet of the new firm.

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Solution

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

2019

X's Capital A/c

Dr.

2,500

April 1

To Z's Capital A/c

2,500

(Revaluation Profit and General Reserve adjusted on change in profit sharing ratio)

Balance Sheet
as on 01st April, 2019

Liabilities

Amount

(₹)

Assets

Amount

(₹)

Sundry Creditors

40,000

Cash at Bank

40,000

Outstanding Expenses

15,000

Sundry Debtors

2,10,000

General Reserve

75,000

Stock

3,00,000

Capital Accounts:

Furniture

60,000

X

3,97,500

Plant and Machinery

4,20,000

Y

3,00,000

Z

2,02,500

9,00,000

10,30,000

10,30,000

Working Notes:

WN 1 Calculation of Sacrificing (or Gaining) Ratio

Old Ratio (X, Y and Z) = 5 : 4 : 3

New Ratio (X, Y and Z) = 4 : 3 : 2

Sacrificing (or Gaining) Ratio = Old Ratio − New Ratio

WN 2 Calculation of Profit or Loss on Revaluation

Particulars

Amount
(₹)

Increase in Stock

60,000

(Cr.)

Decrease Furniture

(12,000)

(Dr.)

Decrease in Plant and Machinery

(20,000)

(Dr.)

Increase in Outstanding Expenses

(13,000)

(Dr.)

Profit on Revaluation

15,000

(Cr.)


WN 3 Adjustment of Profit on Revaluation and General Reserve

Amount for Adjustment = Profit on Revaluation + General Reserve
= 15,000 + 75,000 = Rs 90,000

WN 4

Partners’ Capital Accounts

Dr.

Cr.

Particulars

X

Y

Z

Particulars

X

Y

Z

Z's Capital A/c

2,500

–

–

Balance c/d

4,00,000

3,00,000

2,00,000

X's Capital A/c

–

–

2,500

Balance c/d

3,97,500

3,00,000

2,02,500

4,00,000

3,00,000

2,02,500

4,00,000

3,00,000

2,02,500


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Q. X, Y and Z are partners in a firm sharing profits and losses as 5 : 4 : 3 . Their Balance Sheet as at 31st March, 2018 was :

Liabilities

₹

Assets

₹
Sundry Creditors 40,000 Cash at Bank 40,000
Outstanding Expenses 15,000 Sundry Debtors 2,10,000
General Reserve 75,000 Stock 3,00,000
Capital A/cs: Furniture 60,000
X 4,00,000 Plant and Machinery 4,20,000

Y

3,00,000

Z

2,00,000

9,00,000

10,30,000

10,30,000


From 1st April, 2018, they agree to alter their profit-sharing ratio as 4 : 3 : 2 .It is also decided that :
(a) Furniture be taken at 80% of its value .
(b) Stock be appreciated by 20%.
(c) Plant and Machinery be valued at ₹ 4,00,000.
(d) Outstanding Expenses be increased by ₹ 13,000.
Partners agreed that altered values are not to be recorded in the books and they also do not want to distribute the General Reserve .
You are required to pass a single journal entry to give effect to the above . Also, prepare Balance Sheet of the new firm.
Q. ​X, Y and Z are partners sharing profits and losses in the ratio of 7 : 5 : 4. Their Balance Sheet as at 31st March, 2019 stood as:
Liabilities Amount (₹) Assets Amount (₹)
Capital A/cs: Sundry Assets 7,00,000
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Y 1,50,000
Z 1,20,000 4,80,000
General Reserve 65,000
Profit and Loss A/c 25,000
Creditors 1,30,000
7,00,000 7,00,000

Partners decided that with effect from 1st April, 2019, they will share profits and losses in the ratio of 3 : 2 : 1. For this purpose, goodwill of the firm was valued at ₹ 1,50,000. The partners neither want to record the goodwill nor want to distribute the General Reserve and profits.
Pass a Journal entry to record the change and prepare Balance Sheet of the constituted firm.
Q.

Sonu, Sumit and Sahil are partners of sharing profits and losses in the ratio of 5 : 3 : 2. Their Balance Sheet as at 31st December, 2014 was as follows :

LiabilitiesAmountAssetsAmount(Rs)(Rs)Sundry Creditors50,000Cash at Bank25,000Capital A/c's:Sundry Creditors50,000 Sonu2,00,000Stock75,000 Sumit80,000Machinery1,00,000 Sahil70,000Building1,50,0004,00,0004,00,000

Partners decided that with effect from 1st January, 2015, they would share profits and losses in the ratio 3 : 2 : 1. It was agreed that :

(a) Stock be valued at Rs 70,000.

(b) Machinery to be depreciated by 20%

(c) A provision for doubtful debts be made on debtors @ 5%.

(d) Building to be appreciated by 15%.

(e) A liability for Rs 9,500 included in Sundry Creditors is not likely to arise.

(f) Goodwill of the firm is to be valued at Rs 90,000.

Partners agreed that the revised values of assets and liabilities are not to be recorded in the books. You are required to record the change by passing a single Journal entry with necessary working note. Also prepare the revised Balance Sheet.

Q.

Divya and Pooja are partners in a firm, sharing profits and losses in the ratio of 3:2. On 31st March 2015, their Balance Sheet was as under:

BALANCE SHEET OF DIVYA AND POOJA

as at 31st March,2015

Capital and LiabilitesRsAssetsRsSundry Creditors9,800Goodwill16,000General Reserve23,400Land and Building20,000Profit and Loss A/c4,000Investments66,000Investment Fluctuation Fund12,600Sundry Debtors18,600Capital A/cs:Bils Receivables7,400 Divya 60,000Cash in Hand11,100 Pooja 40,000––––––––1,00,000Advertisement Suspense A/c10,700¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯1,49,800––––––––––¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯1,49,800––––––––––

The partners decided that with effect from 1st April, 2015, they would share profits and losses equally.

For this purpose, they decided that:

(a) Investments to be valued at Rs 60,000

(b) Goodwill to be valued at Rs 24,000

(c) General Reserve not be distributed between the partners.

You are required to:

(i) Pass journal entries

(ii) Prepare the revised Balance Sheet of the firm.

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as at 31st March, 2018
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(₹)		 Assets Amount
(₹)
Sundry Creditors 13,800 Furniture 16,000
General Reserve 23,400 Land and Building 56,000
Investment Fluctuation Fund 20,000 Investments 30,000
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Sakshi's Capital 40,000 Cash in Hand 26,700
1,47,200 1,47,200

The partners have decided to change their profit sharing ratio to 1 : 1 with immediate effect. For the purpose, they decided that:
(i) Investments to be valued at ₹ 20,000.
(ii) Goodwill of the firm be valued at ₹ 24,000.
(iii) General Reserve not to be distributed between the partners.
You are required to pass necessary Journal entries in the books of the firm. Show workings.

​
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