Question 36:
Pankaj, Naresh and Saurabh
are partners sharing profits in the ratio of 3 : 2 :
1. On 1st April, 2022, Naresh retired on that date,
Balance Sheet of the firm was as follows:
Liabilities |
( `) |
Assets |
( `) |
||
General Reserve |
12,000 |
Bank |
7,600 |
||
Sundry Creditors |
15,000 |
Debtors |
6,000 |
|
|
Bills Payable |
12,000 |
Less: Provision for Doubtful Debts |
400 |
5,600 |
|
Outstanding Salary |
2,200 |
Stock |
|
9,000 |
|
Provision for Legal Damages |
6,000 |
Furniture |
|
41,000 |
|
Capital A/cs: |
|
Premises |
|
80,000 |
|
Pankaj |
46,000 |
|
|
|
|
Naresh |
30,000 |
|
|
|
|
Saurabh |
20,000 |
96,000 |
|
|
|
|
|
|
|
|
|
|
1,43,200 |
|
1,43,200 |
||
|
|
|
|
Additional Information:
(a) 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
` 1,200 and furniture to be brought up to ` 45,000.
(b) Goodwill of the firm be valued at ` 42,000.
(c) ` 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.
(d) 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. (NCERT
Modified)
Answer:
Revaluation
Account |
|||||
Dr. |
Cr. |
||||
Particulars |
( `) |
Particulars |
( `) |
||
Stock |
900 |
Premises |
16,000 |
||
Provision for Legal Damages |
1,200 |
Provision for Doubtful Debts |
100 |
||
Revaluation Profit |
|
Furniture |
4,000 |
||
Pankaj’s Capital A/c |
9,000 |
|
|
|
|
Naresh’s
Capital A/c |
6,000 |
|
|
|
|
Saurabh’s
Capital A/c |
3,000 |
18,000 |
|
|
|
|
20,100 |
|
20,100 |
||
|
|
|
|
||
Partners’
Capital Accounts |
||||||||
Dr. |
Cr. |
|||||||
Particulars |
Pankaj |
Naresh |
Saurabh |
Particulars |
Pankaj |
Naresh |
Saurabh |
|
Naresh’s
Capital A/c |
14,000 |
- |
- |
Balance b/d |
46,000 |
30,000 |
20,000 |
|
Naresh’s
Loan A/c |
- |
26,000 |
- |
General Reserve |
6,000 |
4,000 |
2,000 |
|
Bank |
- |
28,000 |
- |
Revaluation (Profit) |
9,000 |
6,000 |
3,000 |
|
Balance c/d |
47,000 |
- |
25,000 |
Pankaj’s Capital A/c |
- |
14,000 |
- |
|
|
61,000 |
54,000 |
25,000 |
|
61,000 |
54,000 |
25,000 |
|
|
|
|
|
|
|
|
|
|
Bank
Account |
||||
Dr. |
Cr. |
|||
Particulars |
( `) |
Particulars |
( `) |
|
Balance b/d |
7,600 |
Naresh’s
Capital A/c |
28,000 |
|
Bank Loan (Balancing Figure) |
20,400 |
|
|
|
|
28,000 |
|
28,000 |
|
|
|
|
|
|
Balance
Sheet as on March 31, 2022 |
|||||
Liabilities |
( `) |
Assets |
( `) |
||
Sundry Creditors |
15,000 |
Debtors |
6,000 |
|
|
Bills Payable |
12,000 |
Less: Provision for Doubtful
Debts |
300 |
5,700 |
|
Bank Loan |
20,400 |
Stock |
8,100 |
||
Outstanding Salaries |
2,200 |
Furniture |
45,000 |
||
Provision for Legal Damages |
7,200 |
Premises |
96,000 |
||
Naresh’s
Loan |
26,000 |
|
|
||
Capitals: |
|
|
|
||
Pankaj |
47,000 |
|
|
|
|
Saurabh |
25,000 |
72,000 |
|
|
|
|
1,54,800 |
|
1,54,800 |
||
|
|
|
|
Question 37:
A,
B and C are partners sharing profits and losses in the ratio
of 4 : 3 : 3. Their Balance Sheet as at 31st March, 2022 is:
Liabilities |
( `) |
Assets |
( `) |
||
Creditors |
7,000 |
Land and Building |
36,000 |
||
Bills Payable |
3,000 |
Plant and Machinery |
28,000 |
||
Reserves |
20,000 |
Computer Printer |
8,000 |
||
Capital A/cs: |
|
Stock |
20,000 |
||
A |
32,000 |
|
Sundry Debtors |
14,000 |
|
B |
24,000 |
|
Less: Provision for Doubtful Debts |
2,000 |
12,000 |
C |
20,000 |
76,000 |
Bank |
2,000 |
|
|
|
|
|
|
|
|
1,06,000 |
|
1,06,000 |
||
|
|
|
|
On 1st April, 2022, B retired from the firm on the following terms:
(a) Goodwill of the firm is to be valued at ` 14,000.
(b) Stock, Land and Building are to be appreciated by 10%.
(c) Plant and Machinery and Computer Printer are to be reduced by 10%.
(d) Sundry Debtors are considered to be good.
(e) There is a liability of `
2,000 for the payment of outstanding salary to the employees of the firm. This
liability was not provided in the Balance Sheet but the same is to be recorded
now.
(f) Amount payable to B is to be transferred to his Loan Account.
Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet
of A and C after B's retirement.
Answer:
Revaluation Account |
|||||
Dr. |
|
Cr. |
|||
Particulars |
( `) |
Particulars |
( `) |
||
Plant and Machinery |
2,800 |
Stock |
2,000 |
||
Electronic Typewriter |
800 |
Land and Building |
3,600 |
||
Outstanding Salary |
2,000 |
Provision for Doubtful Debts |
2,000 |
||
Profit transferred to: |
|
|
|
||
A’s Capital
A/c |
800 |
|
|
|
|
B’s Capital
A/c |
600 |
|
|
|
|
C’s Capital
A/c |
600 |
2,000 |
|
|
|
|
|
|
|
||
|
7,600 |
|
7,600 |
||
|
|
|
|
||
Partners’ Capital Accounts |
|||||||
Dr. |
|
Cr. |
|||||
Particulars |
A |
B |
C |
Particulars |
A |
B |
C |
B’s Capital A/c |
2,400 |
|
1,800 |
Balance b/d |
32,000 |
24,000 |
20,000 |
B’s Loan A/c |
|
34,800 |
|
Reserves |
8,000 |
6,000 |
6,000 |
Balance c/d |
38,400 |
|
24,800 |
Revaluation A/c |
800 |
600 |
600 |
|
|
|
|
A’s Capital A/c |
|
2,400 |
|
C’s Capital A/c |
|
1,800 |
|
||||
|
40,800 |
34,800 |
26,600 |
|
40,800 |
34,800 |
26,600 |
|
|
|
|
|
|
|
|
Balance Sheet |
|||
an on April 01, 2022 (after B’s
Retirement) |
|||
Liabilities |
( `) |
Assets |
( `) |
Creditors |
7,000 |
Land and Building (36,000 + 3,600) |
39,600 |
Bills Payable |
3,000 |
Plant and Machinery (28,000 – 2,800) |
25,200 |
B’s Loan |
34,800 |
Electronic Typewriter 8000 – 800) |
7,200 |
Capital A/c: |
|
Stock (20,000 + 2,000) |
22,000 |
A |
38,400 |
Sundry Debtors |
14,000 |
C |
24,800 |
Bank |
2000 |
Outstanding Salary |
2,000 |
|
|
|
1,10,000 |
|
1,10,000 |
|
|
|
|
Working Note:
Adjustment of Goodwill
Old Ratio (A, B and C) = 4 : 3 : 3
B retires from the firm.
∴
Gaining Ratio = 4 : 3
Goodwill of the firm = `
14,000
B’s Share of Goodwill = 14,000×3/10=42,000
This share of goodwill is to be distributed between A and C
in their gaining ratio (i.e. 4 : 3).
A‘s share= 4,200×4/7=2,400
C‘s share= 4,200×3/7=1,800
Question 38:
X, Y and Z are
partners sharing profits and losses in the ratio of 3 : 2 : 1. Balance Sheet of
the firm as at 31st March, 2022 was as follows:
Liabilities |
( `) |
Assets |
( `) |
||
Creditors |
21,000 |
Cash at Bank |
5,750 |
||
Workmen Compensation Reserve |
12,000 |
Debtors |
40,000 |
|
|
Investments Fluctuation Reserve |
6,000 |
Less: Provision for Doubtful Debts |
2,000 |
38,000 |
|
Capital A/cs: |
|
Stock |
|
30,000 |
|
X |
68,000 |
|
Investment (Market Value ` 17,600) |
15,000 |
|
Y |
32,000 |
|
Patents |
10,000 |
|
Z |
21,000 |
1,21,000 |
Machinery |
50,000 |
|
|
|
Goodwill |
6,000 |
||
|
|
Advertisement Expenditure |
5,250 |
||
|
|
|
|
|
|
|
1,60,000 |
|
1,60,000 |
||
|
|
|
|
Z retired on 1st April, 2022 on the following terms:
(a) Goodwill of the firm is to be valued at ` 34,800.
(b) Value of Patents is to be reduced by 20% and that of machinery to 90%.
(c) Provision for doubtful debts is to be created @ 6% on debtors.
(d) Z took over the investment at market value.
(e) Liability for Workmen Compensation to the extent of ` 750 is to be created.
(f) A liability of `
4,000 included in creditors is not to be paid.
(g) Amount due to Z to be paid as follows: `
5,067 immediately, 50% of the balance within one year and the balance by a
draft for 3 Months.
Give necessary Journal entries for the treatment of goodwill, prepare
Revaluation Account, Capital Accounts and the Balance Sheet of the new firm.
Answer:
Journal |
|||||
Date |
Particulars |
L.F. |
Debit (
`) |
Credit (
`) |
|
2022 |
|
|
|
|
|
April 01 |
X’s Capital A/c |
Dr. |
|
3,000 |
|
|
Y’s Capital A/c |
Dr. |
|
2,000 |
|
|
Z’s Capital A/c |
Dr. |
|
1,000 |
|
|
To Goodwill A/c |
|
|
|
6,000 |
|
(Existing goodwill written off) |
|
|
|
|
|
|
|
|
|
|
April 01 |
X’s Capital A/c |
Dr. |
|
3,480 |
|
|
Y’s Capital A/c |
Dr. |
|
2,320 |
|
|
To Z’s Capital A/c |
|
|
|
5,800 |
|
(Z’s share of goodwill credited to him and gaining
partners debited in gaining ratio) |
|
|
|
|
|
|
|
|
|
|
Revaluation Account |
||||||
Dr. |
|
Cr. |
||||
Particulars |
Amount ( `) |
Particulars |
Amount ( `) |
|||
Patents |
2,000 |
Investments (17,600 – 15,000) |
2,600 |
|||
Machinery |
5,000 |
Creditors |
4,000 |
|||
Prov. for Doubtful Debts |
400 |
Loss on Revaluation transferred |
|
|||
|
|
X’s Capital A/c |
400 |
|
||
|
|
Y’s Capital A/c |
267 |
|
||
|
|
Z’s Capital A/c |
133 |
800 |
||
|
|
|
|
|||
|
7,400 |
|
7,400 |
|||
|
|
|
|
|||
|
|
|
|
|
|
|
Partners’ Capital Accounts |
|||||||||
Dr. |
|
Cr. |
|||||||
Particulars |
X |
Y |
Z |
Particulars |
X |
Y |
Z |
||
Goodwill A/c |
3,000 |
2,000 |
1,000 |
Balance b/d |
68,000 |
32,000 |
21,000 |
||
Revaluation A/c |
400 |
267 |
133 |
X’s Capital A/c |
- |
- |
3,480 |
||
Z’s Capital A/c |
3,480 |
2,320 |
- |
Y’s Capital A/c |
- |
- |
2,320 |
||
Advertisement Expenditure A/c |
2,625 |
1,750 |
875 |
Workmen Compensation Reserve A/c* |
5,625 |
3,750 |
1,875 |
||
Investments A/c |
- |
- |
17,600 |
Investment Fluctuation Reserve A/c* |
3,000 |
2,000 |
1,000 |
||
Bank A/c |
- |
- |
5,067 |
|
|
|
|
||
Z’s Loan A/c |
- |
- |
2,500 |
|
|
|
|
||
Bills Payable A/c |
- |
- |
2,500 |
|
|
|
|
||
Balance c/d |
67,120 |
31,413 |
- |
|
|
|
|
||
|
76,625 |
37,750 |
29,625 |
|
76,625 |
37,750 |
29,625 |
||
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
Balance Sheet as on April 01, 2022 after Z’s
retirement |
|||||
Liabilities |
Amount ( `) |
Assets |
Amount ( `) |
||
Creditors |
17,000 |
Cash at Bank (5,750 – 5,067) |
683 |
||
Workmen Compensation Claim |
750 |
Stock |
30,000 |
||
Bills Payable |
2,500 |
Patents |
8,000 |
||
Capital A/c’s: |
|
|
Debtors A/c |
40,000 |
|
X |
67,120 |
|
Less: Prov. for D/D |
2,400 |
37,600 |
Y |
31,413 |
98,533 |
Machinery |
45,000 |
|
Z’s Loan |
2,500 |
|
|
||
|
1,21,283 |
|
1,21,283 |
||
|
|
Working Note:
Amount due to Z = (21,000+3,480+2,320+1,875+1,000) - (1,000+133+875+17,600) =10,067
Amout paid on Retirement immediately: ` 5,067
Amount paid within one year: 50% of 5,000 = ` 2,500
Amount payable by Bills of
Exchange: ` 2,500 (balance 50%)
Question 39:
Ashok, Bhaskar
and Chaman were in partnership sharing
profits and losses equally. ‘Chaman' retires from the
firm. After adjustments, his Capital Account shows a credit balance
of ` 3,00,000 as
on 1st April, 2019. Balance due to 'Chaman'
is to be paid in three equal annual instalments along with interest @ 10% p.a.
Prepare Chaman's Loan Account until he is
paid the amount due to him. The firm closes its books on 31st March every year.
Answer:
Dr. |
Chaman’s Loan A/c |
Cr. |
|||||
Date |
Particulars |
( `) |
Date |
Particulars |
( `) |
||
2020 |
|
|
2019 |
|
|
||
March 31 |
To Bank A/c (1,00,000 + 30,000) |
1,30,000 |
April 01 |
By Chaman’s Capital A/c |
3,00,000 |
||
March 31 |
To balance c/d |
2,00,000 |
2020 |
|
|
||
|
|
|
March 31 |
By Interest on Loan A/c |
30,000 |
||
|
|
|
|
(3,00,000 × 10/100) |
|
||
|
|
3,30,000 |
|
|
3,30,000 |
||
2021 |
|
|
2020 |
|
|
||
March 31 |
To Bank A/c (1,00,000 + 20,000) |
1,20,000 |
April 01 |
By balance b/d |
2,00,000 |
||
March 31 |
To balance c/d |
1,00,000 |
2021 |
|
|
||
|
|
|
March 31 |
By Interest on Loan A/c |
20,000 |
||
|
|
|
|
(2,00,000 × 10/100) |
|
||
|
|
2,20,000 |
|
|
2,20,000 |
||
2022 |
|
|
2021 |
|
|
||
March 31 |
To Bank A/c (1,00,000 + 10,000) |
1,10,000 |
April 01 |
By balance b/d |
1,00,000 |
||
|
|
|
2022 |
|
|
||
|
|
|
March 31 |
By Interest on Loan A/c
|
10,000 |
||
|
|
|
|
(1,00,000 × 10/100) |
|
||
|
|
1,10,000 |
|
|
1,10,000 |
||
|
|
|
|
|
|
||
Working Notes: Amount payable per Installment = ` (3,00,000/3) = ` 1,00,000
Question 40:
Rakesh retired from the firm. The amount due to him was determined
at
` 90,000. It was decided to
pay the due amount as follows:
On the date of retirement − ` 30,000
Balance in three yearly instalments − First two instalments being
of
` 26,000, including interest;
and Balance amount as last instalment.
Interest was payable @ 10 p.a. Prepare retiring Partners' Loan Account.
Answer:
Dr. |
Rakesh’s Loan A/c |
Cr. |
||||
Date |
Particulars |
( `) |
Date |
Particulars |
( `) |
|
Year I |
To Bank A/c (20,000 + 6,000) |
26,000 |
Year I |
By Y’s Capital
A/c |
60,000 |
|
|
To balance c/d |
40,000 |
|
|
|
|
|
|
|
|
By Interest on Loan A/c
|
6,000 |
|
|
|
|
|
(60,000 × 10/100) |
|
|
|
|
66,000 |
|
|
66,000 |
|
|
|
|
|
|
|
|
Year II |
To Bank A/c (22,000 + 4,000) |
26,000 |
Year II
|
By balance b/d |
40,000 |
|
|
To balance c/d |
18,000 |
|
|
|
|
|
|
|
|
By Interest on Loan A/c |
4,000 |
|
|
|
|
|
(40,000 × 10/100) |
|
|
|
|
44,000 |
|
|
44,000 |
|
|
|
|
|
|
|
|
Year III |
To Bank A/c (18,000 + 1,800) |
19,800 |
Year III |
By balance b/d |
18,000 |
|
|
|
|
|
|
|
|
|
|
|
|
By Interest on Loan A/c |
1,800 |
|
|
|
|
|
(18,000 × 10/100) |
|
|
|
|
19,800 |
|
|
19,800 |
|
|
|
|
|
|
|
|
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