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प्रश्न
Give Journal entries to record the following arrangements in the books of the firm:
(a) B and C are partners sharing profits in the ratio of 3 : 2. D is admitted paying a premium (goodwill) of ₹ 2,000 for 1/4th share of the profits, shares shares of B and C remain as before.
(b) B and C are partners sharing profits in the ratio of 3 : 2. D is admitted paying a premium of ₹ 2,100 for 1/4th share of profits which he acquires 1/6th from B and 1/12th from C.
उत्तर
(a)
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Journal |
|||||
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Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
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Cash A/c |
Dr. |
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2,000 |
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To Premium for Goodwill A/c |
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2,000 |
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(D brought Premium for Goodwill) |
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Premium for Goodwill A/c |
Dr. |
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2,000 |
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To B’s Capital A/c |
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1,200 |
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To C’s Capital A/c |
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800 |
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(Premium for Goodwill distributed between B and C in sacrificing ratio i.e. 3:2) |
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Working Note:
Distribution of premium for Goodwill-
B will get = 2,000 x `3/5` = Rs. 2,100
C will get = 2,000 x `2/5` = Rs. 800.
(b)
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Journal |
|||||
|
Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
|
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|
Cash A/c |
Dr. |
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2,100 |
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To Premium for Goodwill A/c |
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2,100 |
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(D brought his share of goodwill in cash) |
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Premium for Goodwill A/c |
Dr. |
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2,100 |
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To B’s Capital A/c |
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1,400 |
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To C’s Capital A/c |
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700 |
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(Premium for Goodwill brought distributed between B and C in sacrificing Ratio i.e. 2:1) |
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Working Note:
WN1 :
Sacrificing Ratio = B : C
= `1/6 : 1/12 = 2 : 1`
WN 2: Distribution of Premium for Goodwill -
B will get = 2,100 x `2/3` = Rs. 14,000
C will get = 2,100 x `1/3` = Rs. 700.
APPEARS IN
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(a) The value of Furniture is to be increased by ₹ 12,000.
(b) The value of stock to be decreased by ₹ 10,000.
(c) Machinery of the book value of ₹ 50,000 is to be depreciated by 10%.
(d) A Provision for Doubtful Debts @ 5% is to be created on debtors of book value of ₹ 40,000.
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Pass necessary Journal entries.
A, B and C were partners, sharing profits and losses in the ratio of 2 : 2 : 1. B decides to retire on 31st March, 2019. On the date of his retirement, some of the assets and liabilities appeared in the books as follows:
Creditors ₹ 70,000; Building ₹ 1,00,000; Plant and Machinery ₹ 40,000; Stock of Raw Materials ₹ 20,000; Stock of Finished Goods ₹ 30,000 and Debtors ₹ 20,000.
Following was agreed among the partners on B's retirement:
(a) Building to be appreciated by 20%.
(b) Plant and Machinery to be reduced by 10%.
(c) A Provision of 5% on Debtors to be created for Doubtful Debts.
(d) Stock of Raw Materials to be valued at ₹ 18,000 and Finished Goods at ₹ 35,000.
(e) An Old Computer previously written off was sold for ₹ 2,000 as scrap.
(f) Firm had to pay ₹ 5,000 to an injured employee.
Pass necessary Journal entries to record the above adjustments and prepare the Revaluation Account.
X, Y and Z were partners in a firm sharing profits in the ratio of 2 : 2 : 1. Their Balance Sheet as at 31st March, 2019 was:
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
|
| Creditors | 49,000 | Cash | 8,000 | |
| Reserve | 18,500 | Debtors | 19,000 | |
| Capital A/cs: X | 82,000 | Stock | 42,000 | |
| Y | 60,000 | Building | 2,07,000 | |
| Z | 75,500 | 2,17,500 | Patents | 9,000 |
| 2,85,000 | 2,85,000 | |||
Y retired on 1st April, 2019 on the following terms:
(a) Goodwill of the firm was valued at ₹ 70,000 and was not to appear in the books.
(b) Bad Debts amounted to ₹ 2,000 were to be written off.
(c) Patents were considered as valueless.
Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet of X and Z after Y's retirement.
The Balance Sheet of X, Y and Z who were sharing profits in ratio of their capitals stood as follows at 31st March, 2019:
|
Liabilities |
Amount (₹) |
Assets |
Amount (₹) |
|||
| Sundry Creditors |
13,800 |
Cash at Bank | 11,000 | |||
| Capital A/cs: | Sundry Debtors | 10,000 | ||||
| X |
45,000 |
|
Less: Provision for Doubtful Debts | 200 | 9,800 | |
| Y | 30,000 | Stock | 16,000 | |||
| Z |
15,000 |
90,000 |
Plant and Machinery |
17,000 |
||
|
|
|
Land and Building |
50,000 |
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|
1,03,800 |
1,03,800 |
|||||
Y retired on 1st April, 2019 and the following terms:
(a) Out of the insurance premium debited to Profit and Loss Account, ₹ 1,500 to be carried forward as Prepaid Insurance.
(b) Provision for Doubtful Debts to be brought up to 5% of Sundry Debtors.
(c) Land and Building to be appreciated by 20%.
(d) A provision of ₹ 4,000 be made in respect of outstanding bills for repairs.
(e) Goodwill of the firm was determined at ₹ 21,600.
Y's share of goodwill be adjusted to that of X and Z who will share profits in future in the ratio of 3 : 1.
Pass necessary Journal entries and give the Balance Sheet after Y's retirement.
X, Y and Z were in partnership sharing profits and losses in the proportions of 3 : 2 : 1. On 1st April, 2019, Y retired from the firm. On that date, their Balance Sheet was:
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
|
| Trade Creditors | 30,000 | Cash in Hand | 15,000 | |
| Bills Payable | 45,000 | Cash at Bank | 75,000 | |
| Expenses Owing | 45,000 | Debtors | 1,50,000 | |
| General Reserve | 1,35,000 | Stock | 1,20,000 | |
| Capital A/cs: | Factory Premises | 2,25,000 | ||
|
X |
1,50,000 | Machinery | 80,000 | |
|
Y |
1,50,000 | Loose Tools | 40,000 | |
|
Z |
1,50,000 | 4,50,000 | ||
| 7,05,000 | 7,05,000 | |||
The terms were:
(a) Goodwill of the firm was valued at ₹ 1,35,000 and adjustment in this respect was to be made in the continuing Partners' Capital Accounts without raising Goodwill Account.
(b) Expenses Owing to be brought down to ₹ 37,500.
(c) Machinery and Loose Tools are to be valued @ 10% less than their book value.
(d) Factory Premises are to be revalued at ₹ 2,43,000.
Show Revaluation Account, Partners' Capital Accounts and prepare the Balance Sheet of the firm after the retirement of Y.
Following is the Balance Sheet of X, Y and Z as at 31st March, 2019. They shared profits in the ratio of 3 : 3 : 2:
|
Liabilities |
Amount (₹) |
Assets |
Amount (₹) |
||
| Sundry Creditors |
2,50,000 |
Cash at Bank | 50,000 | ||
| General Reserve | 80,000 | Bills Receivable | 60,000 | ||
| Partners' Loan A/cs: |
|
Debtors |
80,000 |
|
|
| X |
50,000 |
Less: Provision for Doubtful Debts |
4,000 |
76,000 |
|
| Y | 40,000 | Stock | 1,24,000 | ||
| Capital A/cs: | Fixed Assets | 3,00,000 | |||
| X | 1,00,000 | Advertisement Suspense A/c | 16,000 | ||
| Y |
60,000 |
|
Profit and Loss A/c | 4,000 | |
| Z |
50,000 |
2,10,000 |
|
||
|
6,30,000 |
6,30,000 |
||||
On 1st April, 2019, Y decided to retire from the firm on the following terms:
(a) Stock to be reduced by ₹ 12,000.
(b) Advertisement Suspense Account to be written off.
(c) Provision for Doubtful Debts to be increased to ₹ 6,000.
(d) Fixed Assets be appreciated by 10%.
(e) Goodwill of the firm, valued at ₹ 80,000 and the amount due to the retiring partners be adjusted in X's and Z's Capital Accounts.
Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet to give effect to the above.
X, Y and Z are partners in a firm sharing profits in the ratio of 3 : 2 : 1. On 1st April, 2009, Y retires from the firm. X and Z agree that the capital of the new firm shall be fixed at ₹ 2,10,000 in the profit-sharing ratio. The Capital Accounts of X and Z after all adjustments on the date of retirement showed balance of ₹ 1,45,000 and ₹ 63,000 respectively. State the amount of actual cash to be brought in or to be paid to the partners.
X, Y and Z are partners sharing profits in the ratio of 5 : 3 : 7. X retired from the firm. Y and Z decided to share future profits in the ratio of 2 : 3. The adjusted Capital Accounts of Y and Z showed balance of ₹ 49,500 and ₹ 1,05,750 respectively. The total amount to be paid to X is ₹ 1,35,750. This amount is to be paid by Y and Z in a manner that their capitals become proportionate to their new profit-sharing ratio. Calculate the amount to be brought in or to be paid to partners.
Balance Sheet of X, Y and Z who shared profits in the ratio of 5 : 3 : 2, as on 31st March, 2019 was as follows:
| Liabilities | ₹ | Assets | ₹ | |
| Sundry Creditors | 39,750 | Bank (Minimum Balance) | 15,000 | |
| Employees' Provident Fund | 5,250 | Debtors | 97,500 | |
| Workmen Compensation Reserve | 22,500 | Stock | 82,500 | |
| Capital A/cs: | Fixed Assets | 1,87,500 | ||
| X | 1,65,000 | |||
| Y | 84,000 | |||
| Z | 66,000 | 3,15,000 | ||
| 3,82,500 | 3,82,500 | |||
Y retired on 1st April, 2019 and it was agreed that:
(i) Goodwill of the firm is valued at ₹ 1,12,500 and Y's share of it be adjusted into the accounts of X and Z who are going to share future profits in the ratio of 3 : 2.
(ii) Fixed Assets be appreciated by 20%.
(iii) Stock be reduced to ₹ 75,000.
(iv) Y be paid amount brought in by X and Z so as to make their capitals proportionate to their new profit-sharing ratio.
Prepare Revaluation Account, Capital Accounts of all partners and the Balance Sheet of the New Firm.
Following is the Balance Sheet of Kusum, Sneh and Usha as on 31st March, 2019, who have agreed to share profits and losses in proportion of their capitals:
| Liabilities | ₹ | Assets | ₹ | ||
| Capital A/cs: | Land and Building | 4,00,000 | |||
| Kusum | 4,00,000 | Machinery | 6,00,000 | ||
| Sneh | 6,00,000 | Closing Stock | 2,00,000 | ||
| Usha | 4,00,000 | 14,00,000 | Sundry Debtors | 2,20,000 | |
| Employees' Provident Fund | 70,000 | Less: Provision for Doubtful Debts | 20,000 | ||
| Workmen Compensation Reserve | 30,000 | Cash at Bank | 2,00,000 | ||
| Sundry Creditors | 1,00,000 | 2,00,000 | |||
| 16,00,000 | 16,00,000 | ||||
On 1st April, 2019, Kusum retired from the firm and the remaining partners decided to carry on the business. It was agreed to revalue the assets and reassess the liabilities on that date, on the following basis:
(a) Land and Building be appreciated by 30%.
(b) Machinery be depreciated by 30%.
(c) There were Bad Debts of ₹ 35,000.
(d) The claim against Workmen Compensation Reserve was estimated at ₹ 15,000.
(e) Goodwill of the firm was valued at ₹ 2,80,000 and Kusum's share of goodwill was adjusted against the Capital Accounts of the continuing partners Sneh and Usha who have decided to share future profits in the ratio of 3 : 4 respectively.
(f) Capital of the new firm in total will be the same as before the retirement of Kusum and will be in the new profit-sharing ratio of the continuing partners.
(g) Amount due to Kusum be settled by paying ₹ 1,00,000 in cash and balance by transferring to her Loan Account which will be paid later on.
Prepare Revaluation Account, Capital Accounts of Partners and Balance Sheet of the new firm after Kusum's retirement.
A, B and C are partners sharing profits and losses in the ratio of 3 : 2 : 1. B died on 30th June, 2018. For the year ended 31st March, 2019, proportionate profit of 2018 is to be taken into consideration. During the year ended 31st March, 2018, bad debts of ₹ 2,000 had to be adjusted. Profit for the year ended 31st March, 2018 was ₹ 14,000 before adjustment of bad debts. Calculate B's share of profit till the date of his death.
X, Y and Z were partners in a firm Z died on 31st May, 2021. His share of profit from the closure of the last accounting year till the date of death was to be calculated on the basis of the average of three completed years of profits before death. Profits for the years ended 31st March, 2019, 2020 and 2021 were ₹18,000 ₹ 19,000 and ₹ 17,000 respectively. Calculate Z's share of profit till his death and pass necessary Journal entry for the same when:
(a) Profit-sharing ratio of remaining partners does not change, and
(b) Profit-sharing ratio of remaining partners changes and new ratio being 3:2.
Vikas, Gagan and Momita were partners in a firm sharing profits in the ratio of 2 : 2 : 1. The firm closes its books on 31st March every year. On 30th September, 2014 Momita died. According to the provisions of Partnership Deed the legal representatives of a deceased partner are entitled for the following in the event of his/her death:
(a) Capital as per the last Balance Sheet.
(b) Interest on capital at 6% per annum till the date of her death.
(c) Her share of profit to the date of death calculated on the basis of average profit of last four years.
(d) Her share of goodwill to be determined on the basis of three years' purchase of the average profit of last four years. The profits of last four years were:
| Year | 2010-11 | 2011-12 | 2012-13 | 2013-14 |
| Profit (₹ ) | 30,000 | 50,000 | 40,000 | 60,000 |
The balance in Momita's Capital Account on 31st March, 2014 was ₹ 60,000 and she had withdrawn ₹ 10,000 till date of her death. Interest on her drawings was ₹ 300.
Prepare Momita's Capital Account to be presented to her executors.
On 31st March, 2014, the Balance Sheet of Pooja, Qureshi and Ross, who were partners in a firm was as under:
|
Liabilities |
Amount (₹) |
Assets |
Amount (₹) |
||
|
Sundry Creditors |
2,50,000 |
Building |
2,60,000 |
||
|
Reserve Fund |
2,00,000 |
Investment |
1,10,000 |
||
| Capital A/cs: | Qureshi's Loan | 1,00,000 | |||
| Pooja | 1,50,000 | Debtors | 1,50,000 | ||
| Qureshi | 1,00,000 | 3,50,000 | Stock | 1,20,000 | |
| Ross | 1,00,000 | Cash | 60,000 | ||
|
8,00,000 |
8,00,000 |
||||
Qureshi died on 1st July, 2014. The profit-sharing ratio of the partners was 2 : 1 : 1. On the death of a partner, the partnership deed provided for the following:
(i) His share in the profits of the firm till the date of his death will be calculated on the basis of average profits of last three completed years.
(ii) Goodwill of the firm will be calculated on the basis of total profit of last two years.
(iii) Interest on loan given by the firm to a partner will be charged at the rate of 6% p.a. or ₹ 4,000, whichever is more.
(iv) Profits for the last three years were ₹ 45,000; ₹ 48,000 and ₹ 33,000.
Prepare Qureshi's Capital Account to be rendered to his executors.
A and B are partners sharing profits and losses in the ratio of 3 : 2. They admit C as partner in the firm for 1/4th share in profits which he takes 1/6th from A and 1/12th from B. C brings in only 60% of his share of firm's goodwill. Goodwill of the firm has been valued at ₹ 1,00,000. Pass necessary journal entries to record this arrangement.
R, S and T were partners sharing profits and losses in the ratio of 5 : 3 : 2 respectively. On 31st March, 2018, their Balance Sheet stood as:
|
Liabilities |
₹ |
Assets |
₹ |
||
|
Sundry Creditors |
40,000 |
Goodwill |
25,000 |
||
|
Bills Payable |
15,000 |
Leasehold |
1,00,000 |
||
|
Workmen Compensation Reserve |
30,000 |
Patents | 30,000 | ||
|
Capital A/cs: |
Machinery | 1,50,000 | |||
| R | 1,50,000 | Stock | 50,000 | ||
| S |
1,25,000 |
Debtors | 40,000 | ||
| T |
75,000 |
3,50,000 |
Cash at Bank | 40,000 | |
|
4,35,000 |
4,35,000 |
||||
T died on 1st August, 2018. It was agreed that:
(a) Goodwill be valued at 212 years' purchase of average of last 4 years' profits which were:
2014-15: ₹ 65,000; 2015-16: ₹ 60,000; 2016-17: ₹ 80,000 and 2017-18: ₹ 75,000.
(b) Machinery be valued at ₹ 1,40,000; Patents be valued at ₹ 40,000; Leasehold be valued at ₹ 1,25,000 on 1st August, 2018.
(c) For the purpose of calculating T's share in the profits of 2018-19, the profits in 2018-19 should be taken to have accrued on the same scale as in 2017-18.
(d) A sum of ₹ 21,000 to be paid immediately to the Executors of T and the balance to be paid in four equal half-yearly instalments together with interest @ 10% p.a.
Pass necessary Journal entries to record the above transactions and T's Executors' Account.
The Balance Sheet of X, Y and Z as at 31st March, 2018 was:
|
Liabilities |
Amount (₹) |
Assets |
Amount (₹) |
||
|
Bills Payable |
2,000 |
Cash at Bank |
5,800 |
||
|
Employees' Provident Fund |
5,000 |
Bills Receivable |
800 |
||
|
Workmen Compensation Reserve |
6,000 |
Stock | 9,000 | ||
| General Reserve | 6,000 | Sundry Debtors | 16,000 | ||
| Loans | 7,100 | Furniture | 2,000 | ||
|
Capital A/cs: |
Plant and Machinery | 6,500 | |||
| X | 22,750 | Building | 30,000 | ||
| Y |
15,250 |
Advertising Suspense | 6,000 | ||
| Z |
12,000 |
50,000 |
|||
|
76,100 |
76,100 |
||||
The profit-sharing ratio was 3 : 2 : 1. Z died on 31st July, 2018. The Partnership Deed provides that:
(a) Goodwill is to be calculated on the basis of three years' purchase of the five years' average profit. The profits were: 2017-18: ₹ 24,000; 2016-17: ₹ 16,000; 2015-16: ₹ 20,000 and 2014-15: ₹ 10,000 and 2013-14: ₹ 5,000.
(b) The deceased partner to be given share of profits till the date of death on the basis of profits for the previous year.
(c) The Assets have been revalued as: Stock ₹ 10,000; Debtors ₹ 15,000; Furniture ₹ 1,500; Plant and Machinery ₹ 5,000; Building ₹ 35,000. A Bill Receivable for ₹ 600 was found worthless.
(d) A Sum of ₹ 12,233 was paid immediately to Z's Executors and the balance to be paid in two equal annual instalments together with interest @ 10% p.a. on the amount outstanding.
Give Journal entries and show the Z's Executors' Account till it is finally settled.
Ravi and Mukesh are sharing profits in the ratio of 7 : 3. They admit Ashok for 3/7th share in the firm which he takes 2/7th from Ravi and 1/7th from Mukesh. Calculate new profit-sharing ratio.
Mandeep, Vinod and Abbas are partners sharing profits and losses in the ratio of 3 : 2 : 1. From 1st April, 2019 they decided to share profits equally. The Partnership Deed provides that in the event of any change in profit-sharing ratio, goodwill shall be valued at three years' purchase of average profit of last five years. The profits and losses of past five years are:
Profit − Year ended 31st March, 2015 − ₹ 1,00,000; 2016 − ₹ 1,50,000; 2018 − ₹ 2,00,000; 2019 − ₹ 2,00,000.
Loss − Year ended 31st March, 2017 − ₹ 50,000.
Pass the Journal entry showing the working.
A and B are partners in a firm sharing profits and losses in the ratio of 3 : 2. A new partner C is admitted. A surrenders 1/5th of his share and B surrenders 2/5th of his share and B surrenders 2/5th of his share in favour of C. For the purpose of C's admission, goodwill of the firm is valued at ₹ 75,000 and C brings in his share of goodwill in cash which is retained in the firm's books. Journalise the above transactions.
A, B and C who are presently sharing profits and losses in the ratio of 5 : 3 : 2 decide to share future profits and losses in the ratio of 2 : 3 : 5. Give the Journal entry to distribute 'Workmen Compensation Reserve' of ₹ 1,20,000 at the time of change in profit-sharing ratio, when:
(i) no information is given; (ii) there is no claim against it.
A, B and C who are presently sharing profits and losses in the ratio of 5 : 3 : 2 decide to share future profits and losses in the ratio of 2 : 3 : 5. Give the journal entry to distribute 'Investments Fluctuation Reserve' of ₹ 20,000 at the time of change in profit-sharing ratio, when investment (market value ₹ 95,000) appears in the books at ₹ 1,00,000.
A, B and C are sharing profits and losses in the ratio of 2 : 2 : 1. They decided to share profit w.e.f. 1st April, 2019 in the ratio of 5 : 3 : 2. They also decided not to change the values of assets and liabilities in the books of account. The book values and revised values of assets and liabilities as on the date of change were as follows:
| Book values (₹) | Revised values (₹) | |
| Machinery | 2,50,000 | 3,00,000 |
| Computers | 2,00,000 | 1,75,000 |
| Sundry Creditors | 90,000 | 75,000 |
| Outstanding Expenses | 15,000 | 25,000 |
Pass an adjustment entry.
A and B are partners sharing profits in the ratio of 4 : 3. Their Balance Sheet as at 31st March, 2019 stood as:
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
|
| Sundry Creditors | 28,000 | Cash | 20,000 | |
| Reserve | 42,000 | Sundry Debtors | 1,20,000 | |
| Capital A/cs: | Stock | 1,40,000 | ||
| A | 2,40,000 | Fixed Assets | 1,50,000 | |
| B | 1,20,000 | 3,60,000 | ||
| 4,30,000 | 4,30,000 | |||
They decided that with effect from 1st April, 2019, they will share profits and losses in the ratio of 2 : 1. For this purpose they decided that:
(i) Fixed Assets are to be reduced by 10%.
(ii) A Provision for Doubtful Debts of 6% be made on Sundry Debtors.
(iii) Stock be valued at ₹ 1,90,000.
(iv) An amount of ₹ 3,700 included in Creditors is not likely to be claimed .
Partners decided to record the revised values in the books. However, they do not want to disturb the Reserve. You are required to pass Journal entries, prepare Capital Accounts of Partners and the revised Balance Sheet.
P, Q, and R were partners in firm sharing profits in the ratio of 1 : 1: 2. On 31st March 2018, their balance sheet showed a credit balance of ₹ 9,000 in the profit and loss account and a Workmen Compensation Fund of ₹ 64,000. From 1st April 2018, they decided to share profits in the ratio of 2: 2: 1. For this purpose, it was agreed that:
(a) Goodwill of the firm was valued at ₹ 4,00,000.
(b) A claim on account of workmen compensation of ₹ 30,000 were admitted.
Pass necessary journal entries on the reconstitution of the firm.
Bakul, Champak and Darshan were partners in the firm sharing profits in the ratio of 5:4:1. The profit of the firm for the year ending on March 31, 2019, was Rs. 1,00,000. Champak dies on June 30, 2019. What is Champak's share of profit for the period from April 1 to June 30, 2019?
How is the new profit sharing ratio mathematically stated?
A and B were partners. They shared profits as A-`1/2`, B-`1/3` and carried to reserve `1/6`. B died. The balance of reserve on the date of B's death was ₹ 30,000. B's share of a reserve will be:
