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Ganga, Yamuna Are Partners Sharing Profits and Losses in 3:2 Respectively. Their Position on 31. 3. 2013. Balance Sheet as on 31.03.2013 - Book Keeping and Accountancy

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Question

Ganga, Yamuna are partners sharing profits and losses in 3:2 respectively.
Their position on 31. 3. 2013.  
Balance sheet as on 31.03.2013
Liabilities
Amount
Assets
Amount
Capital A/c
  
Building
100000
Ganga
100000
Furniture
10000
Yamuna
75000
Stock
31000
Creditors
10000
Debtors  50000
  
Bills Payable
5000
Less: R.D.D.  -1000
49000
General Reserve
15000
Bank
15000
       
 
205000
  
205000
On 1st April, 2013, they admitted Saraswati on the following terms:
 
(1) Saraswati should bring in cash Rs. 1,00,000 as capital for 1/5 share in future profit and Rs. 25,000, as goodwill.
 
(2) Building should be revalued for Rs. 1,25,000.
 
(3) Depreciate Furniture at 12 1/2 % p.a. And stock at 10%.
 
(4) R.D.D. should be maintained as it is.
 
(5) The capital accounts of partners should be adjusted in their new profit sharing ratio through bank account.
 
Prepare: (1) Profit and loss adjustment account. (2) Capital Account. (3) Balance sheet of new firm.
Answer in Brief

Solution

Ganga, Yamuna are partners sharing profits and losses in 3:2 respectively. Their position on 31. 3. 2013.

Ganga, Yamuna are partners sharing profits and losses in 3:2 respectively.
Their position on 31. 3. 2013.  
Balance sheet as on 31.03.2013
Liabilities
Amount
Assets
Amount
Capital A/c
  
Building
100000
Ganga
100000
Furniture
10000
Yamuna
75000
Stock
31000
Creditors
10000
Debtors  50000
  
Bills Payable
5000
Less: R.D.D.  -1000
49000
General Reserve
15000
Bank
15000
       
 
205000
  
205000
On 1st April, 2013, they admitted Saraswati on the following terms:
(1) Saraswati should bring in cash Rs. 1,00,000 as capital for 1/5 share in future profit and Rs. 25,000, as goodwill.

(2) Building should be revalued for Rs. 1,25,000.

(3) Depreciate Furniture at 12 1/2 % p.a. And stock at 10%.

(4) R.D.D. should be maintained as it is.

(5) The capital accounts of partners should be adjusted in their new profit sharing ratio through bank account.

Prepare: (1) Profit and loss adjustment account. (2) Capital Account. (3) Balance sheet of new firm.

Solution: In the books of the Ganga, Yamuna and Saraswati.
 
Profit and Loss Adjustment Account.
 
Particulars
Amount
Amount
Particulars
Amount
Amount
To Furniture A/c
  
1250
By Building A/c
  
25000
To Stock A/c
  
3100
      
To Profit on Revaluation Transferred to Partnes Capital A/c
          
Ganga’s Capital A/c
12390
        
Yamuna’s Capital A/c
8260
20650
      
   
25000
    
25000

Partners’ Capital A/c

Particulars
Ganga
Yamuna
Saraswati
Particulars
Ganga
Yamuna
Saraswati
       
By Balance b/d
100000
75000
  
       
By General Reserve A/c
9000
6000
  
       
By Bank A/c
-
-
100000
       
By Goodwill A/c
15000
10000
-
       
By P/L Adj. A/c
12390
8260
-
To Balance C/d
240000
160000
100000
By Bank A/c
103610
60740
  
               
 
240000
16000
100000
  
24000
16000
100000
 
Balance Sheet as on 1st April, 2013.
 
Liabilities
Amount
Amount
Assets
Amount
Amount
Capitals:
    
Building
100000
  
Ganga
240000
  
Add: Appreciation
25000
125000
Yamuna
160000
  
Furniture
10000
  
Saraswati
100000
500000
Less: Depreciation
1250
8750
Creditors
  
10000
Stock
31000
  
Bills Payable
  
5000
Less: Written off
3100
27900
     
Debtors
50000
  
     
Less: R.D.D.
1000
49000
     
Bank
  
304350
           
   
515000
    
515000
 
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Retirement or Death of a Partner - Revaluation of Assets and Liabilities
  Is there an error in this question or solution?
Q 3.A
2016-2017 (July) Set 1

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2016-2017 (July) Set 1 (with solutions)
Q 3.A | 10 marks

RELATED QUESTIONS

Write the term / word / phrase which can substitute the following statement :
Debit balance of revaluation account.


Give a word / term / phrase which can substitute the following statements :
Excess of credit side over debit side of revaluation account.


Why do firm revaluate assets and reassess their liabilities on retirement or on the event of death of a partner?


Digvijay, Brijesh and Parakaram were partners in a firm sharing profits in the ratio of 2:2:1. Their Balance Sheet as on March 31, 2020 was as follows:

Liabilities Amt
(Rs.)		 Assets Amt
(Rs.)
Creditors 49,000 Cash 8,000
Reserves 18,500 Debtors 19,000
Digvijay’s Capital 82,000

Stock

 42,000
Brijesh’s Capital 60,000 Buildings 207,000
Parakaram’s Capital 75,500 Patents 9,000
  2,85,000   2,85,000

Brijesh retired on March 31, 2020 on the following terms:

  1. Goodwill of the firm was valued at Rs 70,000 and was not to appear in the books.
  2. Bad debts amounting to Rs 2,000 were to be written off.
  3. Patents were considered as valueless.

Prepare Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of Digvijay and Parakaram after Brijesh’s retirement.


Himanshu, Gagan and Naman are partners sharing profits and losses in the ratio of 3:2:1. On March 31, 2019, Naman retires.
The various assets and liabilities of the firm on the date were as follows:
Cash Rs 10,000, Building Rs 1,00,000, Plant and Machinery Rs 40,000, Stock Rs 20,000, Debtors Rs 20,000 and Investments Rs 30,000.
The following was agreed upon between the partners on Naman’s retirement:

(i)

Building to be appreciated by 20%.

(ii)

Plant and Machinery to be depreciated by 10%.

(iii)

A provision of 5% on debtors to be created for bad and doubtful debts.

(iv)

Stock was to be valued at Rs 18,000 and Investment at Rs 35,000.

Record the necessary journal entries to the above effect and prepare the Revaluation Account.


Select the most appropriate alternative from those given below and rewrite the statement.

The profit or loss from revaluation of assets and liabilities on retirement of a partner is shared by______________


Select the most appropriate alternative from given below and rewrite the statement :

Assets and Liabilities are transferred to Realisation Account at their __________ values.


Mr. Govind keeps his books by single entry method and disclosed the following information of his business . 

Particulars 1.4.12 31.3.13
Investments - 30000
Bills Payable - 18000
Creditors 52500 69000
Furniture 15000 15000
Debtor 60,000 90,000
Stock in Trade 30,000 37500
Cash at Bank 36,000 54,000

Additional Information :
(1) Mr. Govind transferred Rs. 300 per month during first half year and Rs. 200 each month for the remaining period from his business to his personal account. He also took goods of Rs. 700 for private use.
(2) Mr. Govind sold his personal assets for Rs. 7000 and brought the proceeds into his business.
(3) Furniture is to be depreciated by 10%.
(4) Provide R.D.D. at 5% for debtors.

Prepare : Opening and Closing Statement of affairs and Statement of Profit or Loss for the year ended 31st March 2013.


Fill in the blanks:
In case of retirement of a partner, profit or loss on revaluation of assets and re-assessment of liabilities is distributed among _________ partners in ___________ ratio.


Complete the sentence?

______ is an asset is an asset that is not physical in nature. Brand recognition, Goodwill and intellectual property such as patent etc. are examples of it.


If at the time of retirement, there is some unrecorded asset, it will be ______ to ______ Account.


Assertion (A): On retirement, of a partner's the old partnership agreement comes to an end and a new partnership agreement comes into existence between the remaining partners.

Reason (R): Retirement of the partnership leads to the reconstitution of the firm.


Amay, Bina and Chander are partners in a firm with capital balances of ₹ 50,000, ₹ 70,000 and ₹ 80,000 respectively on 31st March, 2022. Amay decides to retire from the firm on 31st March 2022. With the help of the information provided, calculate the amount to be paid to Amay on his retirement. There existed a general reserve of ₹ 7,500 in the balance sheet on that date. The goodwill of the firm was valued at ₹ 30,000. Gain on revaluation was ₹ 24,000.


P, Q and R were partners in a firm sharing profits in the ratio of 3 : 2 : 1 respectively. On March 31st, 2022, the balance sheet of the firm stood as follows:

Balance Sheet
Liabilities   Amount (₹) Assets Amount (₹)
Creditors   13,000 Cash 4,700
Bills Payable   590 Debtors 8,000
Capital Accounts:     Stock 11,690
P 15,000 35,000 Buildings 23,000
Q 10,000 Profit and Loss A/c 1,200
R 10,000    
    48,590   48,590

Q retired on the above-mentioned date on the following terms:

  1. Buildings to be appreciated by ₹ 7,000
  2. A provision for doubtful debts to be made at 5 % on debtors.
  3. Goodwill of the firm is valued at ₹ 18,000 and adjustment to be made by raising and writing off the goodwill.
  4. ₹ 2,800 was to be paid to Q immediately and the balance in his capital account to be transferred to his loan account carrying interest as per the agreement.
  5. Remaining partner decided to maintain equal capital balances, by opening current account.

Prepare the revaluation account and partner’s capital accounts.


P, Q and R were partners in a firm sharing profits and losses in the ratio of 4 : 3 : 3. On 31.3.2020 R retired from the firm. On R's retirement the balance sheet of the firm showed sundry debtors at t 3,75,000. It was decided to write off ₹ 5,000 as bad debts and create a provision of 20% on debtors for bad and doubtful debts. Pass necessary journal entries for the above transactions in the books of the firm on R's retirement.


D, E and F were partners in a firm sharing profits in the ratio of 5 : 2 : 3. On 31.3.2022 their balance sheet was as follows:

Liabilities Amount (₹) Amount (₹) Assets Amount (₹)
Creditors   53,000 Cash 16,000
Bills Payable   62,000 Bank 17,000
General Reserve   2,00,000 Stock 18,000
Capitals:     Debtors 1,99,000
D 7,00,000 18,00,000 Investments 1,15,000
E 5,00,000 Machinery 7,50,000
F 6,00,000 Land and
Building		 10,00,000
    21,15,000   21,15,000

On the above date D retired from the firm and the following was agreed upon:

  1. Goodwill of the firm was valued at ₹ 1,00,000, D's share of goodwill was adjusted through the capital accounts of remaining partners.
  2. Investments were to be brought to their market value which was ₹ 85,000.
  3. Machinery was to be depreciated to ₹ 7,00,000.
  4. Land and Building was to be appreciated to ₹ 12,00,000.
  5. The balance in D's capital account was transferred to his loan account.

Prepare Revaluation Account and D's Capital Account on his retirement.


Radhika, Ridhima and Rupanshi were partners in a firm sharing profits and losses in the ratio of 3:5:2. On 31st March, 2022, their balance sheet was as follows :

Balance Sheet of Radhika, Ridhlma and Rupanshi as on 31.3.2022
Liabilities Amount (₹) Amount (₹) Assets Amount (₹) Amount (₹)
Sundry Creditors   60,000 Cash   50,000
General Reserve   40,000 Stock   80,000
Capitals:     Debtors   40,000
Radhika 3,00,000 6,00,000 Investments   30,000
Ridhima 2,00,000 Buildings   5,00,000
Rupanshi 1,00,000      
    7,00,000     7,00,000

Ridhima retired on the above date and it was agreed that:

  1. Goodwill of the firm be valued at ₹ 3,00,000.
  2. Building was valued at ₹ 6,20,000.
  3. Capital of the new firm was fixed at ₹ 5,00,000 which will be in the new profit sharing ratio of the partners; the necessary adjustments for this purpose were to be made by opening current accounts of the partners.

Prepare Revaluation Account and Partners' Capital Accounts on Ridhima's retirement.


Pass the necessary journal entries for the following transactions, on the dissolution of a partnership firm of Kavita and Suman on 31st March, 2022, after the various assets (other than cash) and third party liabilities have been transferred to Realisation Account.

  1. Kavita took over stock amounting to ₹ 1,00,000 at ₹ 90,000.
  2. Creditors of ₹ 2,00,000 took over Plant and Machinery of ₹ 3,00,000 in full settlement of their claim.
  3. There was an unrecorded asset of ₹ 23,000 which was taken over by Suman at ₹ 17,000.
  4. Realisation expenses ₹ 2,000 were paid by Kavita.
  5. Bank loan ₹ 21,000 was paid off.
  6. Loss on dissolution amounted to ₹ 7,000.

Himanshu, Gagan and Naman are partners sharing profits and losses in the ratio of 3 : 2 : 1. On March 31, 2017, Naman retires. The various assets and liabilities of the firm on the date were as follows: Cash Rs. 10,000, Building Rs. 1,00,000, Plant and Machinery Rs. 40,000, Stock Rs. 20,000, Debtors Rs. 20,000 and Investments Rs. 30,000.

The following was agreed upon between the partners on Naman’s retirement: 

  1. Building to be appreciated by 20%. 
  2. Plant and Machinery to be depreciated by 10%. 
  3. A provision of 5% on debtors to be created for bad and doubtful debts. 
  4. Stock was to be valued at Rs. 18,000 and Investment at Rs. 35,000.

Record the necessary journal entries to the above effect and prepare the revaluation account. 


Digvijay, Brijesh and Parakaram were partners in a firm sharing profits in the ratio of 2 : 2 : 1. Their Balance Sheet as on March 31, 2017 was as follows: 

Liabilities Amount (Rs.) Assets Amount (Rs.)
Creditors 49,000 Cash 8,000
Reserves 18,500 Debtors 19,000
Digvijay’s Capital 82,000 Stock 42,000
Brijesh’s Capital 60,000 Buildings 2,07,000
Parakaram’s Capital 75,500 Patents 9,000
  2,85,000   2,85,000

Brijesh retired on March 31, 2017 on the following terms: 

  1. Goodwill of the firm was valued at Rs. 70,000 and was not to appear in the books.
  2. Bad debts amounting to Rs. 2,000 were to be written off.
  3. Patents were considered as valueless. 

Prepare Revaluation Account, Partners Capital Accounts and the Balance Sheet of Digvijay and Parakaram after Brijesh’s retirement.


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