Page No 5.105:
Question 86:
Following is the Balance Sheet of Abha and Binay as at 31st March, 2014:
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Liabilities |
` |
Assets |
` |
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Creditors |
13,000 |
Bank |
15,000 |
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Employees
Provident Fund |
8,000 |
Debtors |
22,000 |
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Workmen
Compensation Fund |
|
15,000 |
Less : Provision for Doubtful
Debts |
1,000 |
21,000 |
Capital
A/cs: |
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|
Stock |
10,000 |
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Abha |
55,000 |
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Plant
and Machinery |
60,000 |
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Binay |
30,000 |
85,000 |
Goodwill
|
10,000 |
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Profit
and Loss |
5,000 |
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1,21,000 |
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1,21,000 |
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Chitra was admitted as a partner for 1/4th share in
the profits of the firm. It was decided that:
(a) Bad Debts amounted to ` 1,500 will be written off.
(b) Stock worth ` 8,000 was taken over by Abha and Binay at Book Value in their profit-sharing ratio. The
remaining stock was valued at ` 2,500.
(c) Plant and Machinery and Goodwill were valued at ` 32,000 and ` 20,000 respectively.
(d) Chitra brought her share of goodwill in cash.
(e) Chitra will bring proportionate capital and the
capitals of Abha and Binay
will be adjusted in their profit-sharing ratio by bringing in or paying off
cash as the case may be.
Prepare Revaluation Account and Partners' Capital Accounts.
Answer:
Revaluation Account |
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Dr. |
Cr. |
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Particulars |
Amount ` |
Particulars |
Amount
` |
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Bad debts |
500 |
Stock |
500 |
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Plant and
Machinery |
28,000 |
Loss
on Revaluation |
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Abha’s
Capital A/c |
14,000 |
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Binay’s
Capital A/c |
14,000 |
28,000 |
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28,500 |
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28,500 |
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Dr. |
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Cr. |
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Particulars |
Abha |
Binay |
Chitra |
Particulars |
Abha |
Binay |
Chitra |
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Revaluation |
14,000 |
14,000 |
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Balance b/d |
55,000 |
30,000 |
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Goodwill |
5,000 |
5,000 |
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Bank |
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18,000 |
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Profit and Loss |
2,500 |
2,500 |
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Premium for Goodwill |
2,500 |
2,500 |
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Stock |
4,000 |
4,000 |
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WCF |
7,500 |
7,500 |
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Balance c/d |
39,500 |
14,500 |
18,000 |
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65,000 |
40,000 |
18,000 |
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65,000 |
40,000 |
18,000 |
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Bank |
12,500 |
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Balance c/d |
39,500 |
14,500 |
18,000 |
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Balance c/d (adjusted) |
27,000 |
27,000 |
18,000 |
Bank |
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12,500 |
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39,500 |
27,000 |
18,000 |
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39,500 |
27,000 |
18,000 |
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Working Notes:
WN1 Calculation of Chitra's
Capital
Chitra's Capital=Total Adjusted Capital of Abha and Binay×Reciprocal of Combined Profit Share×Chitra's Profit Share
Abha's Adjusted Capital
=55,000+2,500+7,500-14,000-5,000-2,500-4,000=
` 39,500
Binay's Adjusted Capital=30,000+2,500+7,500-14,000-5,000-2,500-4,000= ` 14,500
Chitra's Capital=(39,500+14,500)×43×14= ` 18,000
WN2 Calculation of New Capital
New Capital=Total Adjusted Capital×Respective Partner's Profit Share
Abha's New Capital=(39,500+14,500)×12= ` 27,000
Binay's New Capital=(39,500+14,500)×12= ` 27,000
WN3 Calculation of Chitra's
Share of Goodwill
Chitra's Share=Firm's Goodwill×Chitra's Profit Share
=20,000×14= ` 5,000
` 5,000 will be shared between Abha and Binay in sacrificing ratio 1:1
Page No 5.106:
Question 87:
Answer;
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Revaluation Account |
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Dr. |
Cr. |
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Particulars |
Amount ` |
Particulars |
Amount ` |
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Plant and Machinery |
35,000 |
Creditors |
2,500 |
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Furniture
and fixtures |
6,500 |
Loss transferred
to; |
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Provision
of doubtful debts |
3,000 |
Raman’s Capital
A/c(42,000×2/3) |
28,000 |
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Rohit’s Capital A/c(42,000×1/3) |
14,000 |
42,000 |
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44,500 |
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44,500 |
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Dr. |
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Cr. |
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Particulars |
Abha |
Binay |
Chitra |
Particulars |
Abha |
Binay |
Chitra |
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To Revaluation |
28,000 |
14,000 |
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By Balance b/d |
140,000 |
1,00,000 |
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To Balance c/d |
1,61,600 |
1,02,400 |
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By Premium |
33,600 |
8,400 |
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By W.C.F. |
16,000 |
8,000 |
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1,89,600 |
1,16,400 |
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1,89,600 |
1,16,400 |
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To Balance c/d |
1,61,600 |
1,02,400 |
1,32,000 |
Balance c/d |
39,500 |
14,500 |
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Bank A/c |
|
12,500 |
1,32,000 |
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1,61,600 |
1,02,400 |
1,32,000 |
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1,61,600 |
1,02,400 |
1,32,000 |
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Balance Sheet as on April 31, 2019 |
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Liabilities |
Amount ` |
Assets |
Amount ` |
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Creditors |
1,57,500 |
Plant and Machiner Firniture and fixture |
1,40,000 58,500 |
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Stock |
47,000 |
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worker compensation liabilities |
16,000 |
Debtors 1,10,000 Less; Prov. For D.D. 10,000 |
1,00,000 |
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Capital A/cs: |
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Cash at Bank |
2,24,000 |
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Raman |
1,61,600 |
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(50,000+1,32,000+42,000) |
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Rohit |
1,02,400 |
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Saloni |
1,32,000 |
3,96,000 |
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5,69,500 |
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5,69,500 |
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Working note;
WN-1
Calculation of
old and sacrificing ratio
Old ratio
Raman: Rohit=2:1
Raman
surrenders to Saloni=2/3×2/5=4/15
Rohit surrenders to Saloni=1/3×1/5=1/15
New share of -
Raman=2/3-4/15=10-4/15=6/15
Rohit=1/3-1/15=5-1/15=4/15
Saloni=4/15+1/15+5/15
Therefore new
ratio of Raman, Rohit and Saloni
=6:4:5
Sacrificing
ratio= old – new
Raman=2/3-6/15=10-6/15=4/15
Rahit=1/3-4/15=5-4/15=1/15
WN-1
Calculation of Capital
of Raman and Rohit=1,61,600+1,02,400=2,64,000
Share of Raman
and Rohit=6/15+4/15=6+4/15=10/15
Therefore,
Capital of Raman , Rohit and
Saloni=2,64,000×15/10=3,96,000
Saloni’s capital=3,96,000×5/15=1,32,000
Page No 5.106:
Question 88:
A, B and C
are partners sharing profits and losses in the ratio of 2 :
3 : 5. On 31st March, 2019, their Balance Sheet was:
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Liabilities |
Amount |
Assets |
Amount |
|
Creditors |
64,000 |
Cash |
18,000 |
|
Bills
Payable |
22,000 |
Bills
Receivable |
14,000 |
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General
Reserve |
14,000 |
Stock |
44,000 |
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Capital
A/cs: |
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Debtors |
42,000 |
|
A |
36,000 |
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Machinery |
94,000 |
B |
44,000 |
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Goodwill |
20,000 |
C |
52,000 |
1,32,000 |
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|
2,32,000 |
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2,32,000 |
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They admit D into partnership on the following terms:
(a) Machinery is to be depreciated by 15%.
(b) Stock is to be revalued at ` 48,000.
(c) It is found that the Creditors included a sum of ` 12,000 which was not to be paid.
(d) Outstanding Rent is ` 1,900.
(e) D is to bring in ` 6,000 as goodwill and sufficient capital for 2/5th share.
(f) The partners decided to use 10% of the profits every year in providing
drinking water in schools, where required.
Prepare Revaluation Account, Partners' Capital Accounts, Cash Account and
Balance Sheet of the new firm.
Answer:
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In the books of A, B, C and D |
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Dr. |
Revaluation A/c |
Cr. |
|||
Particulars |
Amount ` |
Particulars |
Amount ` |
||
To
Machinery A/c |
14,100 |
By
Stock A/c |
4,000 |
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To
Outstanding Rent A/c |
1,900 |
By
Creditors A/c |
12,000 |
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|
16,000 |
|
16,000 |
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Dr. |
Partner’s Capital A/c |
Cr. |
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Particulars |
A ` |
B ` |
C ` |
D ` |
Particulars |
A ` |
B ` |
C ` |
D ` |
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To
Goodwill A/c |
4,000 |
6,000 |
10,000 |
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By
balance b/d |
36,000 |
44,000 |
52,000 |
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By
Bank A/c (WN2) |
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|
88,000 |
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To
balance c/d |
36,000 |
44,000 |
52,000 |
88,000 |
By
Premium for Goodwill A/c |
1,200 |
1,800 |
3,000 |
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By
General Reserve A/c |
2,800 |
4,200 |
7,000 |
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40,000 |
50,000 |
62,000 |
88,000 |
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40,000 |
50,000 |
62,000 |
88,000 |
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Working Notes:
1.
Calculation of New profit-sharing ratio
D’s
Share of Profits |
= |
2/5 |
Remaining
Profits |
= |
(1
–2/5) = 3/5 |
A’s
New Share of Profits |
= |
(3/5
× 2/10) = 6/50 |
B’s
New Share of Profits |
= |
(3/5
× 3/10) = 9/50 |
C’s
New Share of Profits |
= |
(3/5
× 5/10) = 15/50 |
A
: B : C : D |
= |
6 : 9 : 15 : 20 |
2. Calculation of D’s Capital
Total Adjusted Capital of the Old Partners = A’s Capital + B’s Capital + C’s
Capital = ` (36,000 + 44,000 + 52,000) = ` 1,32,000 Combined New Share of the
Old Partners = (6/50 + 9/50 + 15/50) = 30/50 or 3/5
Total
Capital of the new firm |
= |
(Adjusted
Capital of the Old Partners × Reciprocal of Combined New Share of the Old
Partners) |
|
= |
` (1,32,000 × 5/3) =
` 2,20,000 |
D’s
Capital |
= |
(Total
Capital of the new firm × His Share of Profits) |
|
= |
` (2,20,000 × 2/5) = ` 88,000 |
Balance Sheet |
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as at 31st March, 2020 |
|||||
Liabilities |
Amount ` |
Assets |
Amount ` |
||
Capitals
A/cs: |
|
Cash
(18,000 + 88,000 + 6,000) |
1,12,000 |
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A |
36,000 |
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Bills
Receivable |
14,000 |
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B |
44,000 |
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Stock |
48,000 |
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C |
52,000 |
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Debtors |
42,000 |
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D |
88,000 |
2,20,000 |
Machinery |
94,000 |
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Creditors |
52,000 |
Less:
Depreciation |
14,100 |
79,900 |
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Bills
Payable |
22,000 |
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Outstanding
Rent
|
1,900 |
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|
2,95,900 |
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2,95,900 |
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Page No 5.107:
Question 89:
L, M and N
were partners in a firm sharing profits in the ratio of 3 :
2 : 1. Their Balance Sheet on 31st March, 2015 was as follows:
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Liabilities |
` |
Assets |
` |
|
Creditors |
1,68,000 |
Bank |
34,000 |
|
General
Reserve |
42,000 |
Debtors |
46,000 |
|
Capital's
A/cs: L |
1,20,000 |
|
Stock |
2,20,000 |
M |
80,000 |
|
Investments |
60,000 |
N |
40,000 |
2,40,000 |
Furniture |
20,000 |
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Machinery |
70,000 |
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|
4,50,000 |
|
4,50,000 |
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On the above date, O was admitted as a new partner and it was decided
that:
(i) The new profit-sharing ratio between L, M, N
and O will be 2 : 2 : 1 : 1.
(ii) Goodwill of the firm was valued at
` 1,80,000
and O brought his share of goodwill premium in cash.
(iii) The market value of investments was
` 36,000.
(iv) Machinery will be reduced to ` 58,000.
(v) A creditor of ` 6,000 was not likely to claim the
amount and hence was to be written off.
(vi) O will bring proportionate capital so as to give him 1/6th share
in the profits of the firm.
Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet
of the new firm.
Answer:
Revaluation
Account |
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Dr. |
|
Cr. |
||||
Particulars |
Amount ` |
Particulars |
Amount ` |
|||
Investments |
24,000 |
Creditors |
6,000 |
|||
Machinery |
12,000 |
Loss on Revaluation |
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L’s Capital A/c |
15,000 |
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M’s Capital A/c |
10,000 |
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N’s Capital A/c |
5,000 |
30,000 |
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|
36,000 |
|
36,000 |
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Partners’
Capital Account |
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Dr. |
Cr. |
||||||||
Particulars |
L |
M |
N |
O |
Particulars |
L |
M |
N |
O |
Reval.
A/c |
15,000 |
10,000 |
5,000 |
|
Balance b/d |
1,20,000 |
80,000 |
40,000 |
|
Balance c/d |
1,56,000 |
84,000 |
42,000 |
56,400 |
Gen. Reserve |
21,000 |
14,000 |
7,000 |
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Premium for G/w |
30,000 |
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Cash A/c |
|
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|
56,400 |
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|
1,71,000 |
94,000 |
47,000 |
56,400 |
|
1,71,000 |
94,000 |
47,000 |
56,400 |
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Balance Sheet as on March 31, 2015 |
||||
Liabilities |
Amount ` |
Assets |
Amount ` |
|
Creditors |
1,62,000 |
Bank (34,000+56,400+30,000) |
1,20,400 |
|
Capitals: |
|
Debtors |
46,000 |
|
L |
1,56,000 |
|
Stock |
2,20,000 |
M |
84,000 |
|
Investments |
36,000 |
N |
42,000 |
|
Furniture |
20,000 |
O |
56,400 |
3,38,400 |
Machinery |
58,000 |
|
5,00,400 |
|
5,00,400 |
Working Notes:
WN1: Calculation
of Sacrificing Ratio
Sacrificing
Ratio =Old ratio- new ratio
L=
3/6-2/6=1/6
M=2/6-2/6=Nil
N=1/6-1/6=-
Nil
WN2: Adjustment
of Goodwill
O‘s of
goodwill=1,80,000×1/6=30,000
30,000 will be credited to
L’s capital because he is only sacrifice.
WN3 Calculation of O’s
Proportionate Capital
Adjusted old
capital of L =
Adjusted old capital of M =
Adjusted old capital of N =
O’s proportion capital=Total adjusted capital×O’s profit share × reciprocal combined new share of old partners
=2,82,000×1/6×6/5=56,400
Page No 5.107:
Question 90:
A and B are partners in a firm sharing profits and losses in the ratio 3 : 1. They admit C for 1/4th share on 31st March, 2014 when their Balance Sheet was as follows:
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Liabilities |
` |
Assets |
` |
||
Employees
Provident Fund |
17,000 |
Cash |
6,100 |
||
Workmen
Compensation Reserve |
6,000 |
Stock |
15,000 |
||
Investment Fluctuation
Reserve |
4,100 |
Debtors |
50,000 |
|
|
Capital's
A/cs: |
|
|
Less : Provision for
Doubtful Debts |
2,000 |
48,000 |
A |
54,000 |
|
|
|
|
B |
35,000 |
89,000 |
Investments
|
7,000 |
|
|
|
Goodwill |
40,000 |
||
|
|
|
|
||
|
1,16,100 |
|
1,16,100 |
||
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The following adjustments were agreed upon:
(a) C brings in ` 16,000 as goodwill and proportionate capital.
(b) Bad debts amounted to ` 3,000.
(c) Market value of investment is ` 4,500.
(d) Liability on account of Workmen Compensation Reserve amounted to ` 2,000.
Prepare Revaluation Account and Partners' Capital Accounts.
Answer:
Revaluation Account |
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Dr. |
Cr. |
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Particulars |
Amount ` |
Particulars |
Amount ` |
|
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Bad debts |
1,000 |
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|
Loss on
Revaluation |
|
|
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|
|
A's Capital A/c |
750 |
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|
B’s Capital A/c |
250 |
1,000 |
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|
1,000 |
|
1,000 |
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Dr. |
|
Cr. |
||||||||
Particulars |
A |
B |
C |
Particulars |
A |
B |
C |
|||
Revaluation |
750 |
250 |
|
Balance b/d |
54,000 |
35,000 |
|
|||
Goodwill |
30,000 |
10,000 |
|
Bank |
|
|
23,200 |
|||
|
|
|
|
Premium for Goodwill |
12,000 |
4,000 |
|
|||
|
|
|
|
WCF |
3,000 |
1,000 |
|
|||
Balance c/d |
39,450 |
30,150 |
23,200 |
IFF |
1,200 |
400 |
|
|||
|
70,200 |
40,400 |
23,200 |
|
70,200 |
40,400 |
23,200 |
|||
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Working Notes:
WN1 Calculation of C's Capital
C's Capital=Total Adjusted Capital of A and B×Reciprocal of Combined Profit Share×C's Profit ShareA's Adjusted Capital
=54,000+12,000+3,000+1,200-750-30,000= ` 39,450
B's Adjusted Capital=35,000+4,000+1,000+400-250-10,000= ` 30,150
C's Capital=(39,450+30,150)×43×14=
` 23,200
Notes:
1. Premium for Goodwill ` 16,000 will be distributed between A and B in sacrificing
ratio i.e. 3 : 1.
2. Excess WCF of ` 4,000 will be shared in old ratio among old partners.
3. Excess IFF of ` 1,600 will be shared in old ratio among old partners.