Page No 5.100:
Question 76:
Following is the Balance Sheet of X
and Y as at 31st March, 2019 who are partners in a firm sharing
profits and losses in the ratio of 3 : 2 respectively:
Liabilities |
Amount |
Assets |
Amount ` |
||
Creditors |
45,000 |
Cash
at Bank |
15,000 |
||
General
Reserve |
|
36,000 |
Debtors |
60,000 |
|
Capital
A/cs: |
|
|
Less: Provision for Doubtful
Debts |
2,400 |
57,600 |
X |
1,80,000 |
|
Patents |
|
44,400 |
Y |
90,000 |
2,70,000 |
Investments |
24,000 |
|
Current
A/cs: |
|
Fixed
Assets |
|
2,16,000 |
|
X |
30,000 |
|
Goodwill |
30,000 |
|
Y |
6,000 |
36,000 |
|
|
|
|
|
|
|
|
|
|
3,87,000 |
|
3,87,000 |
||
|
|
|
|
Z is admitted as a new partner on 1st April, 2019 on the following
terms:
(a) Provision for doubtful debts is to be maintained at 5% on Debtors.
(b) Outstanding rent amounted to ` 15,000.
(c) An accrued income of ` 4,500 does not appear in the books
of the firm. It is now to be recorded.
(d) X takes over the Investments at an agreed value of ` 18,000.
(e) New Profit-sharing Ratio of partners will be 4 : 3
: 2.
(f) Z will bring in ` 60,000 as his capital by cheque.
(g) Z is to pay an amount equal to his share in firm's goodwill
valued at twice the average profit of the last three years which
were ` 90,000; ` 78,000 and ` 75,000 respectively.
(h) Half of the amount of goodwill is to be withdrawn by X and Y.
You are required to pass Journal entries, prepare Revaluation Account,
Partners' Capital and Current Accounts and the Balance Sheet of the new firm.
Answer:
Revaluation Account |
|||
Dr. |
|
Cr. |
|
Particulars |
Amount ` |
Particulars |
Amount ` |
Prov. for D. Debts |
600 |
Accrued Income |
4,500 |
Outstanding Rent |
15,000 |
Loss transferred to |
|
Investments |
6,000 |
X’s Current A/c |
10,260 |
|
|
Y’s Current A/c |
6,840 |
|
|
|
|
|
21,600 |
|
21,600 |
|
|
|
|
Partners’ Capital Accounts |
|||||||
Dr. |
|
Cr. |
|||||
Particulars |
X |
Y |
Z |
Particulars |
X |
Y |
Z |
|
|
|
|
Balance b/d |
1,80,000 |
90,000 |
|
Balance c/d |
1,80,000 |
90,000 |
60,000 |
Bank |
|
|
60,000 |
|
1,80,000 |
90,000 |
60,000 |
|
1,80,000 |
90,000 |
60,000 |
|
|
|
|
|
|
|
|
Partners’ Current Accounts |
|||||||||
Dr. |
|
Cr. |
|||||||
Particulars |
X |
Y |
Z |
Particulars |
X |
Y |
Z |
||
Revaluation |
10,260 |
6,840 |
|
Balance b/d |
30,000 |
6,000 |
|
||
Goodwill |
18,000 |
12,000 |
|
General
Reserve |
21,600 |
14,400 |
|
||
Bank |
12,600 |
5,400 |
|
Premium for Goodwill |
25,200 |
10,800 |
|
||
Investments |
18,000 |
|
|
|
|
|
|
||
Balance c/d |
17,940 |
6,960 |
|
|
|
|
|
||
|
76,800 |
31,200 |
|
|
76,800 |
31,200 |
|
||
|
|
|
|
|
|
|
|
||
Balance
Sheet |
|||||
Liabilities |
Amount ` |
Assets |
Amount ` |
||
Capital A/cs: |
|
Patents |
44,400 |
||
X |
1,80,000 |
|
Fixed
Assets |
2,16,000 |
|
Y |
90,000 |
|
Accrued
Income |
4,500 |
|
Z |
60,000 |
3,30,000 |
Cash
at Bank (15,000 + 96,000 – 18,000) |
93,000 |
|
Outstanding Rent |
15,000 |
Debtors |
60,000 |
|
|
Current A/cs: |
|
Less: 5% Reserve for D. Debts |
3,000 |
57,000 |
|
X |
17,940 |
|
|
|
|
Y |
6,960 |
24,900 |
|
|
|
Creditors |
|
45,000 |
|
|
|
|
4,14,900 |
|
4,14,900 |
||
|
|
|
|
Journal |
||||
Particulars |
L.F. |
Debit Amount ` |
Credit Amount ` |
|
Bank A/c |
Dr. |
|
96,000 |
|
To Z’s Capital |
|
|
60,000 |
|
To Premium for Goodwill |
|
|
36,000 |
|
(Z brought Capital and share of goodwill) |
|
|
|
|
|
|
|
|
|
Premium for Goodwill A/c |
Dr. |
|
36,000 |
|
To X’s Current A/c |
|
|
25,200 |
|
To Y’s Current A/c |
|
|
10,800 |
|
(Premium for Goodwill transferred
to partners |
|
|
|
|
|
|
|
|
|
X's
Current
A/c
Dr. |
|
12,600 |
|
|
Y's
Current
A/c
Dr. |
|
5,400 |
|
|
To BankA/c |
|
|
18,000 |
|
(Half of goodwill withdrawn by partners) |
|
|
|
Working Notes:
WN1 Calculation of Z's Share of Premium for
Goodwill
Average Profits=90,000+78,000+75,0003=
` 81,000
Firm's Goodwil=81,000×2= ` 1,62,000
Z's share=1,62,000×29= ` 36,000
` 36,000 will be distributed between X and Y in sacrificing ratio.
WN2 Calculation of
Sacrificing Ratio
Sacrificing Ratio=Old Ratio-New Ratio
X's sacrifice=3/5-4/9=7/45
Y's sacrifice=2/5-3/9=3/45
Sacrificing Ratio=7 : 3
WN3 Calculation of Share of Premium of Goodwill
X's share=36,000×710= ` 25,200
Y's share=36,000×310= ` 10,800
WN4 Distribution of Loss on Revaluation
X's share=17,100×35= ` 10,260
Y's share=17,100×25= ` 6,840
Page No 5.101:
Question 77:
X and Y are partners
sharing profits equally. Their Balance Sheet as on 31st March, 2019 is given
below:
|
|||||
Liabilities |
Amount |
Assets |
Amount |
||
Capital
A/cs: |
|
Land
and Building |
1,50,000 |
||
X |
1,50,000 |
|
Plant
and Machinery |
1,00,000 |
|
Y |
1,00,000 |
2,50,000 |
Furniture
and Fittings |
25,000 |
|
Current
A/cs: |
|
Stock |
|
75,000 |
|
X |
40,000 |
|
Debtors |
75,000 |
|
Y |
30,000 |
70,000 |
Less: Provision for Doubtful
Debts |
5,000 |
70,000 |
Creditors |
|
1,30,000 |
Bills
Receivable |
30,000 |
|
Bills
Payable |
|
50,000 |
Bank |
50,000 |
|
|
|
|
|
|
|
|
5,00,000 |
|
5,00,000 |
||
|
|
|
|
Z is admitted as a new partner for 1/4th share
under the following terms:
(a) Z is to introduce ` 1,25,000 as capital.
(b) Goodwill of the firm was valued at nil.
(c) It is found that the creditors included a sum of ` 7,500 which was not to be paid. But it was also found that
there was a liability for Compensation to Workmen amounting to ` 10,000.
(d) Provision for doubtful debts is to be created @ 10% on debtors.
(e) In regard to the Partners' Capital Accounts, present Fixed Capital Account
Method is to be converted into Fluctuating Capital Account Method.
(f) Bills of ` 20,000 accepted from creditors were not recorded in the
books.
(g) X provides ` 50,000 loan to the business carrying interest @ 10%
p.a.
You are required to prepare Revaluation Account, Partners' Capital Accounts,
Bank Account and the Balance Sheet of the new firm.
Answer:
Revaluation Account |
|||
Dr. |
|
Cr. |
|
Particulars |
Amount ` |
Particulars |
Amount ` |
Reserve for D. Debts |
2,500 |
Creditors |
7,500 |
Liability
for WCF |
10,000 |
Loss transferred to |
|
|
|
X’s Current A/c |
2,500 |
|
|
Y’s Current A/c |
2,500 |
|
|
|
|
|
12,500 |
|
12,500 |
|
|
|
|
Partners’ Current Accounts |
|||||
Dr. |
Cr. |
||||
Particulars |
X |
Y |
Particulars |
X |
Y |
Revaluation A/c |
2,500 |
2,500 |
Balance b/d |
40,000 |
30,000 |
Balance c/d |
37,500 |
27,500 |
|
|
|
|
40,000 |
30,000 |
|
40,000 |
30,000 |
|
|
|
|
|
|
Partners’ Capital Accounts |
|||||||||
Dr. |
|
Cr. |
|||||||
Particulars |
X |
Y |
Z |
Particulars |
X |
Y |
Z |
||
|
|
|
|
Balance b/d |
1,50,000 |
1,00,000 |
|
||
|
|
|
|
Current
A/c |
37,500 |
27,500 |
|
||
Balance c/d |
1,87,500 |
1,27,500 |
1,25,000 |
Bank |
|
|
1,25,000 |
||
|
1,87,500 |
1,27,500 |
1,25,000 |
|
1,87,500 |
1,27,500 |
1,25,000 |
||
|
|
|
|
|
|
|
|
||
Balance
Sheet |
|||||
Liabilities |
Amount ` |
Assets |
Amount ` |
||
Creditors (1,30,000 – 7,500 – 20,000) |
1,02,500 |
Land and Building |
1,50,000 |
||
Bills Payable (50,000 + 20,000) |
70,000 |
Plant and Machinery |
1,00,000 |
||
Capital A/cs: |
|
Fixture and Fittings |
25,000 |
||
X |
1,87,500 |
|
Stock
|
75,000 |
|
Y |
1,27,500 |
|
Bills Receivables |
30,000 |
|
Z |
1,25,000 |
4,40,000 |
Bank (50,000 + 1,25,000 + 50,000) |
2,25,000 |
|
X's Loan |
50,000 |
Debtors |
75,000 |
|
|
Liability for WCF |
10,000 |
Less: 10% Reserve for D. Debts |
7,500 |
67,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,72,500 |
|
6,72,500 |
||
|
|
|
|
Page No 5.101:
Question 78:
Answer:
Revaluation Account |
||||
|
|
|
Cr. |
|
Particulars |
` |
Particulars |
` |
|
To plant and machinery a/c To Furniture a/c To Provision for doubtful debts |
21,000 |
By Stock a/c |
70,000 |
|
5,000 |
||||
8,000 |
||||
To profit Gautam’s capital a/c 36,000×3/4=27,000 Yashika’s Capital a/c
36,000×1/4=9,000 |
36,000 |
|||
|
|
|||
70,000 |
|
70,000 |
||
|
|
|
||
hjhjh
Partners’
Capital A/c
|
|||||||
Particulars
|
Gautam
|
Yashika
|
Asma
|
Particulars
|
Gautam
|
Yashika
|
Asma
|
To Balance C/d
|
4,77,000
|
1,09,000
|
2,10,000
|
By Balance b/d
By Cash
By Premium a/c
By Revaluation
a/c
|
4,00,000
50,000
27,000
|
1,00,000
9,000
|
2,10,000
|
|
4,77,000
|
1,09,000
|
2,10,000
|
|
4,77,000
|
1,09,000
|
2,10,000
|
To G’s Current a/c
To Balance C/d
|
2,67,000
2,10,000
|
1,40,000
|
2,10,000
|
By Balance b/d
By Y’s Current a/c
|
4,77,000
|
1,09,000
31,000
|
2,10,000
|
|
4,77,000
|
1,40,000
|
2,10,000
|
|
4,77,000
|
1,40,000
|
2,10,000
|
hjhjh
Balance
sheet as at 1sh April 2019
|
|||
Liabilities
|
`
|
Assets
|
`
|
Sundry creditors
bills payable
Capital a/c
Gautam =2,10,000
Yashika =1,40,000
Ashma=2,10,000
Gautam’s current a/c
|
50,000
30,000
5,60,000
2,67,000
|
Furniture
Stock
Debtors 80,000
Less: Prov. For D.D. 8,000
Cash
Machinery
Yashika’s Current a/c
|
55,000
2,10,000
72,000
3,50,000
1,89,000
31,000
|
|
9,07,000
|
|
9,07,000
|
Working notes;
WN-1
Calculation of
old ratio and sacrificing ratio
Old ratio Gautam : Yashika = 3:1
New ratio Gautam : Yashika : Asma= 3:2:3
Sacrificing
ratio= Old ratio – New Ratio
Gautam =3/4-3/8=6-3/8=3/8
Yashika=1/4-2/8=2-2/8=0/8
Therefore
sacrificing ratio of Gautam : Yashika = 3:0
WN-2
Calculation of
Capital
Total Capital
of the new firm on the basis of new partner
Total capital new
firm = 2,10,000×8/3=5,60,000
New capital of
all partners
Gautam=5,60,000×3/8=2,10,000
Yashika=5,60,000×2/8=1,40,000
Asma=5,60,000×3/8=2,10,000
Page No 5.102:
Question 79:
X
and Y
are partners sharing profits in the ratio of 2 : 1.
Their Balance Sheet as at 31st March, 2019 was:
|
||||
Liabilities |
` |
Assets |
` |
|
Sundry
Creditors |
25,000 |
Cash/Bank |
5,000 |
|
General
Reserve |
18,000 |
Sundry
Debtors |
15,000 |
|
Capital
A/cs: |
|
Stock |
10,000 |
|
X |
75,000 |
|
Investments |
8,000 |
Y |
62,000 |
1,37,000 |
Printer |
5,000 |
|
|
|
Fixed
Assets |
1,37,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,80,000 |
|
1,80,000 |
|
|
|
|
|
They admit Z into partnership on the same date on the following terms:
(a) Z brings in ` 40,000 as his capital and he is given 1/4th share in
profits.
(b) Z brings in ` 15,000 for goodwill, half of which is withdrawn by old
partners.
(c) Investments are valued at ` 10,000. X takes over Investments at this value.
(d) Printer is to be reduced (depreciated) by 20% and Fixed Assets by 10%.
(e) An unrecorded stock of Stationery on 31st March, 2019 is ` 1,000.
(f) By bringing in or withdrawing cash, the Capitals of X and Y
are to be made proportionate to that of Z on their profit-sharing
basis.
Pass Journal entries, prepare Revaluation Account,
Capital Accounts and new Balance Sheet of the firm.
Answer:
Journal |
|||||
Date |
Particulars |
L.F. |
Debit Amount ` |
Credit Amount ` |
|
2019 |
|
|
|
|
|
April 1 |
Revaluation A/c |
Dr. |
|
14,700 |
|
|
To Typewriter A/c |
|
|
1,000 |
|
|
To Fixed Assets A/c |
|
|
13,700 |
|
|
(Decrease in value of typewriter and fixed assets transferred to Revaluation Account) |
|
|
|
|
|
|
|
|
|
|
April 1 |
Stationery A/c |
Dr. |
|
1,000 |
|
|
Investment A/c |
Dr. |
|
2,000 |
|
|
To Revaluation A/c |
|
|
3,000 |
|
|
(Increase in stationery and investment transferred to Revaluation Account) |
|
|
|
|
|
|
|
|
|
|
April 1 |
X’s Capital A/c |
Dr. |
|
7,800 |
|
|
Y’s Capital A/c |
Dr. |
|
3,900 |
|
|
To Revaluation A/c |
|
|
11,700 |
|
|
(Revaluation loss transferred to
X and Y’s |
|
|
|
|
|
|
|
|
|
|
April 1 |
Reserve Fund A/c |
Dr. |
|
18,000 |
|
|
To X’s Capital A/c |
|
|
12,000 |
|
|
To Y’s Capital A/c |
|
|
6,000 |
|
|
(Reserve Fund distributed) |
|
|
|
|
|
|
|
|
|
|
April 1 |
Cash A/c |
Dr. |
|
55,000 |
|
|
To Z’s Capital A/c |
|
|
40,000 |
|
|
To Premium for Goodwill A/c |
|
|
15,000 |
|
|
(Z brought capital and share of goodwill) |
|
|
|
|
|
|
|
|
|
|
April 1 |
Premium for Goodwill A/c |
Dr. |
|
15,000 |
|
|
To X’s Capital A/c |
|
|
10,000 |
|
|
To Y’s Capital A/c |
|
|
5,000 |
|
|
(Premium for Goodwill distributed between X and Y in their sacrificing ratio i.e 2:1) |
|
|
|
|
|
|
|
|
|
|
April 1 |
X’s Capital A/c |
Dr. |
|
5,000 |
|
|
Y’s Capital A/c |
Dr. |
|
2,500 |
|
|
To Cash |
|
|
7,500 |
|
|
(Half of the Premium for Goodwill withdrawn by X and Y) |
|
|
|
|
|
|
|
|
|
|
April 1 |
X’s Capital A/c |
Dr. |
|
10,000 |
|
|
To Investments A/c |
|
|
10,000 |
|
|
(X took over the Investment) |
|
|
|
|
|
|
|
|
|
|
April 1 |
Cash A/c |
Dr. |
|
4,800 |
|
|
To X’s Capital A/c |
|
|
4,800 |
|
|
(X’ brought cash to make up deficiency in capital) |
|
|
|
|
|
|
|
|
|
|
April 1 |
Y’s Capital A/c |
Dr. |
|
26,600 |
|
|
To Cash A/c |
|
|
26,600 |
|
|
(Y withdrew excess capital after all adjustments) |
|
|
|
|
|
|
|
|
|
Cash/Bank Account |
|||
Dr. |
|
Cr. |
|
Particulars |
Amount ` |
Particulars |
Amount ` |
Balance b/d |
5,000 |
X’s Capital (Goodwill) |
5,000 |
Z’s Capital |
40,000 |
Y’s Capital (Goodwill) |
2,500 |
Premium for Goodwill |
15,000 |
Y’s Capital |
26,600 |
X’s Capital |
5,800 |
Balance c/d |
31,700 |
|
65,800 |
|
65,800 |
|
|
|
|
Revaluation Account |
|||
Dr. |
|
Cr. |
|
Particulars |
Amount ` |
Particulars |
Amount ` |
|
|
|
|
Typewriter (5,000 × 20%) |
1,000 |
Investment |
2,000 |
Fixed Assets (1,37,000 × 10%) |
13,700 |
Stationery |
1,000 |
|
|
Loss transferred to |
|
|
|
X Capital |
7,800 |
|
|
Y Capital |
3,900 |
|
14,700 |
|
14,700 |
|
|
|
|
Partners’ Capital Accounts |
|||||||
Dr. |
|
Cr. |
|||||
Particulars |
X |
Y |
Z |
Particulars |
X |
Y |
Z |
Revaluation |
7,800 |
3,900 |
|
Balance b/d |
75,000 |
62,000 |
|
Investment |
10,000 |
|
|
Reserve Fund |
12,000 |
6,000 |
|
Cash (withdraw of goodwill) |
5,000 |
2,500 |
|
Cash |
|
|
40,000 |
Balance c/d |
74,200 |
66,600 |
40,000 |
Premium for Goodwill |
10,000 |
5,000 |
|
|
97,000 |
73,000 |
40,000 |
|
97,000 |
73,000 |
40,000 |
Cash |
|
26,600 |
|
Balance b/d |
74,200 |
66,600 |
40,000 |
Balance c/d adjusted |
80,000 |
40,000 |
40,000 |
Cash |
5,800 |
|
|
|
80,000 |
66,600 |
40,000 |
|
80,000 |
66,600 |
40,000 |
|
|
|
|
|
|
|
|
Balance Sheet as on March 31, 2019 after Z’s admission |
||||
Liabilities |
Amount ` |
Assets |
Amount ` |
|
Sundry Creditors |
25,000 |
Cash |
31,700 |
|
Capital A/cs: |
|
Sundry Debtors |
15,000 |
|
X |
80,000 |
|
Stock |
10,000 |
Y |
40,000 |
|
Typewriter (5,000 – 1,000) |
4,000 |
Z |
40,000 |
1,60,000 |
Fixed Assets (1,37,000 – 13,700) |
1,23,300 |
|
|
Stationery |
1,000 |
|
|
|
|
|
|
|
1,85,000 |
|
1,85,000 |
|
|
|
|
|
Working Notes:
WN1: Sacrificing Ratio
|
X |
Y |
Old
ratio |
2 : |
1 |
Sacrificing
Ratio |
2 : |
1 |
WN2: Distribution of Revaluation Loss
revaluation loss transferred to X’s capital =11,700×2/3=7,800
revaluation loss transferred to X’s
capital =11,700×1/3=3,900
WN3: Distribution of Premium for Goodwill
A will get =15,000×2/3=10,000
B will get =15,000×1/3=5,000
WN4: Adjustment of Capital
Total Capital of the firm on the basis of Z’s share =40,000×4/1=1,60,000
Total Capital of the firm |
= |
1,60,000 |
Less: Z’s Capital |
= |
40,000 |
Combined Capital of X and Y |
= |
1,20,000 |
|
|
|
Page No 5.102:
Question 80:
A and B are in
partnership sharing profits and losses in the proportion of 2/3rd and 1/3rd
respectively. Their Balance Sheet as at 31st March, 2019 was: Cash ` 1,000; Sundry Debtors
` 15,000; Stock ` 22,000; Plant and Machinery ` 4,000; Sundry Creditors ` 2,000; Bank Overdraft
` 15,000; A's
Capital ` 15,000; B's Capital ` 10,000.
On 1st April, 2019 they admitted C into partnership on the following
terms:
(a) C to purchase one-quarter of the goodwill for ` 3,000 and provide
` 10,000 as capital. C
brings in necessary cash for goodwill and capital.
(b) Profits and losses are to be shared in the proportion of one-half to A,
one-quarter to B and one quarter to C.
(c) Plant and Machinery is to be reduced by 10% and ` 500 are to be provided for estimated Bad Debts. Stock is to
be taken at a valuation of ` 24,940.
(d) By bringing in or withdrawing cash the capitals of A and B are
to be made proportionate to that of C on their profit-sharing basis.
Prepare necessary Ledger Accounts in the books of the firm relating to the
above arrangement and submit the opening Balance Sheet of the new firm.
Answer:
Revaluation Account |
|||
Dr. |
|
Cr. |
|
Particulars |
Amount ` |
Particulars |
Amount ` |
Plant and Machinery (4,000 × 10%) |
400 |
Stock (24,940 – 22,000) |
2,940 |
Provision for Bad Debts |
500 |
|
|
Profit transferred to |
|
|
|
A Capital |
1,360 |
|
|
B Capital |
680 |
|
|
|
2,940 |
|
2,940 |
|
|
|
|
Partners’ Capital Accounts |
|||||||
Dr. |
|
Cr. |
|||||
Particulars |
A |
B |
C |
Particulars |
A |
B |
C |
|
|
|
|
Balance b/d |
15,000 |
10,000 |
|
|
|
|
|
Cash |
|
|
10,000 |
|
|
|
|
Premium for Goodwill |
2,000 |
1,000 |
|
Balance c/d |
18,360 |
11,680 |
10,000 |
Revaluation |
1,360 |
680 |
|
|
18,360 |
11,680 |
10,000 |
|
18,360 |
11,680 |
10,000 |
Cash |
|
1,680 |
|
Balance c/d |
18,360 |
11,680 |
10,000 |
Balance c/d |
20,000 |
10,000 |
10,000 |
Cash |
1,640 |
|
|
(Adjusted) |
|
|
|
|
|
|
|
|
20,000 |
11,680 |
10,000 |
|
20,000 |
11,680 |
10,000 |
|
|
|
|
|
|
|
|
Balance Sheet as on April 01, 2019 after C’s admission |
|||||
Liabilities |
Amount ` |
Assets |
Amount ` |
||
Sundry Creditors |
2,000 |
Cash |
13,960 |
||
Bank Overdraft |
15,000 |
Sundry Debtors |
15,000 |
|
|
Capital A/cs: |
|
Less: Prov. for Bad Debts |
500 |
14,500 |
|
A |
20,000 |
|
Stock |
24,940 |
|
B |
10,000 |
|
Plant and Machinery |
3,600 |
|
C |
10,000 |
40,000 |
|
|
|
|
|
|
|
|
|
|
57,000 |
|
57,000 |
||
|
|
|
|
Cash Account |
|||
Dr. |
|
Cr. |
|
Particulars |
Amount ` |
Particulars |
Amount ` |
Balance b/d |
1,000 |
B’s Capital |
1,680 |
C’s Capital |
10,000 |
|
|
Premium for Goodwill |
3,000 |
|
|
A’s Capital |
1,640 |
Balance c/d |
13,960 |
|
|
|
|
|
15,640 |
|
15,640 |
|
|
|
|
Working Notes
WN1: Sacrificing Ratio
|
A |
B |
Old ratio= |
2 : |
1 |
|
A |
B |
C |
New ratio = |
1/2 : |
1/4 : |
¼ =2:1:1 |
Sacrificing
Ratio = old ratio– new ratio
A=2/3-2/4=8-6/12=2/12
B=1/3-1/4=4-3/12=1/12
Sacrificing
Ratio of A and B 2;1
WN2: Distribution of Premium for Goodwill
A will get =3,000×2/3=2,000
B will get =3,000×1/3=1,000
WN3: Distribution of Revaluation Profit
A’s share =2040×2/3=1,360
B’s
share =2040×1/3=680
WN4: Adjustment of Capitals (in new
ratio)
total capital of the firm=10,000×4/1=40,000
A’s
share of capital =40,000×2/4=20,000
B’s
and C’s share of capital =40,000×1/4=10,000