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Question
Raj and Dev are partners sharing profits and losses 3:2 respectively. Their position on 31st March, 2011
Balance Sheet as on 31st March, 2011
| Liabilities | Amount (Rs) | Assets | Amount (Rs) | ||
| Capital A/c’s | Buildings | 100000 | |||
| Raj | 100000 | 175000 | Furniture | 10000 | |
| Dev | 75000 | Stock | 31000 | ||
| Creditors | 10000 | Debtors | 50000 | 49000 | |
| Bills Payable | 5000 | (-) R.D.D | 1000 | ||
| General Reserve | 15000 | Bank Balance | 15000 | ||
| 205000 | 205000 | ||||
On 1st April, 2011 they admitted Manoj on following terms:
1) Manoj should bring in cash Rs 1,00,000 as a capital for 1/5th 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 ½ % p.a. and stock at 10% p.a.
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, Profit and Loss Adjustment Account, Capital Accounts, Balance Sheet of new firm and show how you have calculated new ratio and new capital.
Solution
Profit and Loss Adjustment Account
Dr. Cr.
| Particulars | Amount (Rs) | Particulars | Amount (Rs) |
|
| Furniture | 1250 | Building | 25000 | |
| Stock | 3100 | |||
| Profit transferred to: | ||||
| Raj’s Capital | 12390 | 20650 | ||
| Dev’s Capital | 8260 | |||
| 25000 | 25000 | |||
Partners’ Capital Accounts
Dr. Cr.
| Particulars | Raj |
Dev |
Manoj | Particulars | Raj |
Dev |
Manoj |
| Balance c/d | 136390 | 99260 | 100000 | Balance b/d | 100000 | 75000 | |
| General Reserve | 9000 | 6000 | |||||
| Profit and Loss Adjustment (Profit) | 12390 | 8260 | |||||
| Cash | 100000 | ||||||
| Premium for Goodwill | 15000 | 10000 | |||||
| 136390 | 99260 | 100000 | 136390 | 99260 | 100000 | ||
| Balance c/d | 240000 | 160000 | 100000 | Balance b/d | 136390 | 99260 | 100000 |
| Bank | 103610 | 60740 | |||||
| 240000 | 160000 | 100000 | 240000 | 160000 | 100000 |
Balance Sheet
| Liabilities | Amount (Rs) | Assets | Amount (Rs) | ||
| Creditors | 10000 | Building | 125000 | ||
| Bills Payable | 5000 | Furniture | 10000 | 8750 | |
| Capital : | Less : Depreciation @ 12.5% | 1250 | |||
| Raj | 240000 | 500000 | Stock | 31000 | 27900 |
| Dev | 160000 | Less : Depreciation @ 10% | 3100 | ||
| Manoj | 100000 | Debtors | 50000 | 49000 | |
| Less : Reserve for Doubtful Debts | 1000 | ||||
| Cash (100000 - 25000) | 125000 | ||||
| Bank | 179350 | ||||
| 515000 | 515000 | ||||
Working Notes:
Calculation of Profit Sharing Ratio:
Old Ratio = Raj : Dev = 3 : 2
Manoj's Share = `1/5`
Let the total share of firm = 1
Remaining share of the firm = `1-1/5 = 4/5`
Raj's New Share =`4/5 - 3/5 = 12/25`
Dev's New Share = `4/5 - 2/5 = 8/12`
New profit sharing ratio of Raj , Dev and Manoj =`12/25 : 8/25 : 1/5 = (12 : 8 : 5)/25`
Sacrificing Ratio = Old Ratio - New Ratio
Raj's Sacrifice =`3/5 - 12/25 = 3/25`
Dev's Sacrifice = `2/5 - 8/25 = 2/25`
Sacrificing Ratio of Raj and Dev = 3:2
WN 1: Adjustment of Capital
Total capital of the New firm
= Share of Capital brought in by Manoj × Reciprocal of Manoj's Share Manoj's Capital = Rs 100000
Total Capital of the New firm = `100000 xx 5/1 = "Rs" 500000`
Raj's Capital = `500000 xx 12/25 = "Rs" 240000`
Dev's Capital = `500000 xx 8/25 = "Rs" 160000`
Manoj's Capital = `500000 xx 5/25 = "RS" 100000`
WN 2: Distribution of General Reserve
Raj will get =`15000 xx 3/5 = "Rs" 9000`
Dev will get = `15000 xx 2/5 = "Rs" 6000`
WN 3: Distribution of Manoj’s Share of Goodwill
Raj will get =`25000 xx 3/5 = "Rs" 15000`
Dev will get = `25000 xx 2/5 = "Rs" 10000`
WN 4: Bank Account
Bank Account
Dr. Cr.
| Particulars | Amount (Rs) | Particulars | Amount (Rs) | |
| Balance b/d | 15000 | Balance c/d | 179350 | |
| Capital A/c: | ||||
| Raj | 103610 | 164350 | ||
| Dev | 60740 | |||
| 179350 | 179350 | |||
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RELATED QUESTIONS
Akash and Suraj are partners in a firm sharing profits and losses in the ratio 3 : 2. Their balance sheet as on 31st March, 2013 was as follows:
Balance Sheet as on 31st March, 2013
| Liabilities | Amount (Rs.) | Assets | Amount (Rs.) |
|
Capital A/c Akash Suraj |
50000 50000 |
Furniture | 2100 |
|
General Reserve |
10000 | Stock | 28700 |
| Sundry creditors | 60000 | Land and building | 35000 |
| Bills payable | 17000 | Plant and machinery | 49000 |
| Sundry debtors | 63000 | ||
| Cash | 9200 | ||
| 187000 | 187000 |
They agreed to admit Sanjay in their partnership on 1st April, 2013, on the following terms :
- Sanjay should bring Rs. 1,500, as his share of goodwill in the firm, and Rs. 2,000 as his capital.
- Reserve for doubtful debts is to be provided @ 5% on debtors.
- Land and building be depreciated at 10% p. a.
- Plant and machinery to be depreciated @ 5% and stock to be depreciated @ 10% p. a.
- The new profit sharing ratio will be 2: 1: 1.
Prepare :
- Revaluation Account.
- Partners’ Capital Accounts.
- New Balance Sheet of the firm.
Given below is the balance sheet of Vaishali, Madhuri and Shobha, who were sharing profits and losses in the ratio of 3 : 3 : 2.
Balance Sheet as on
31st March, 2012
| Liabilities | Amount (Rs.) | Assets | Amount (Rs.) |
| Creditors | 34800 | Cash | 21600 |
| Bills Payable | 8800 | Machinery | 34800 |
|
Capital A/c Vaishali Madhuri Shobha |
48000 52000 36000 |
Debtors | 50000 |
| Reserved Fund | 16000 | Stock | 25200 |
| Furniture | 16000 | ||
| Building | 48000 | ||
| 195600 | 195600 |
On 1st April, 2012 Shobha retired from the firm on the following terms:
1. Assets be revalued as under:
Stock Rs. 24,000, Machinery Rs. 32,000, Furniture Rs. 16,800.
2. R.D.D. be maintained at 4% on debtors.
3. An item of Rs. 400 from creditors is no longer a liability and hence should be properly adjusted.
4. The amount due to Shobha be transferred to her loan account.
Pass necessary Journal Entries in the books of the firm.
Rani and Geeta are partners sharing profits and losses 3:2 respectively. Their position on 31st March, 2013 was as follows
Balance sheet as on 31st March, 2013.
|
Liabilities
|
Amount (Rs.)
|
Assets
|
Amount (Rs.)
|
Amount (Rs.)
|
|
Capital Accounts
|
Building
|
100000
|
||
|
Rani
|
100000
|
Furniture
|
10000
|
|
|
Geeta
|
75000
|
Stock
|
31000
|
|
|
Creditors
|
10000
|
Debtors
|
50000
|
|
|
Bills Payable
|
5000
|
Less: R.D.D.
|
-1000
|
49000
|
|
General Reserve
|
15000
|
Bank Balance
|
15000
|
|
|
205000
|
205000
|
(1) Suvarna should bring in cash Rs. 1,00,000 as capital for 1/5 th share in future profit and Rs. 25,000 as goodwill.
(2) Building should be revalued at Rs. 1,25,000.
(3) Depreciate furniture @ 12.5 % and stock @ 10% p.a.
(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.
|
Liabilities
|
Amount
(Rs.)
|
Assets
|
Amount
(Rs.)
|
|
|
Capital Accounts
|
Plant and machinery
|
32,000
|
||
|
Sunil
|
36,000
|
Factory Building
|
40,000
|
|
|
Pankaj
|
32,000
|
Stock
|
20,400
|
|
|
Paresh
|
17,600
|
Debtors
|
16,800
|
|
|
Creditors
|
21,200
|
Less: R.D.D.
|
|
16,00
|
|
General Reserve
|
14,000
|
Cash
|
12,400
|
|
|
1,20,800
|
1,20,800
|
(2) The goodwill of the retiring partner is to be valued at Rs. 8,000 and the remaining partners decided that goodwill be written back in their new profit sharing ratio which will be 5:3.
(3) Amount due to Pankaj is to be transferred to his loan account.
Prepare :
(a) Profit and Loss adjustment account
(b) Capital account of partners.
(c) Balance sheet of new firm.
Miss Meena and Miss Reena are in partnership sharing profits and losses in the ratio of 3: 2.
From the following trial balance and adjustments, you are required to prepare Trading Account, Profit and Loss Account for the year ended 31st March 2013 and Balance Sheet as on that date.
Trial Balance as on 31.03.2013
| Trial Balance as on 31.03.2013 | |||
| Particulars | Debit Amount (Rs) | Particulars | Credit Amount (Rs) |
| Building | 4,00,000 | Capital Accounts: | |
| Plant and Machinery | 1,20,000 | Meena 3,00,000 | |
| Purchases | 6,50,000 | Reena 2,00,000 | 5,00,000 |
| Carriage | 7,000 | Sales | 8,14,000 |
| Opening Stock | 90,000 | Sundry Creditors | 1,80,000 |
| Wages | 35,000 | Bank Overdraft | 20,000 |
| Sundry Debtors | 1,50,000 | ||
| Salaries | 28,000 | ||
| Postage and Telegram | 4,000 | ||
| Insurance | 5,000 | ||
| Bad Debts | 3,000 | ||
| Rent | 4,000 | ||
| Discount | 3,000 | ||
| Drawings: | |||
| Meena 10,000 | |||
| Reena 5,000 | 15,000 | ||
| 15,14,000 | 15,14,000 | ||
Adjustments:
1. Stock on hand on 31st March 2013 was valued at Rs. 1,10,000.
2. Depreciate plant and machinery at 10% p.a.
3. Create reserve for doubtful debts at 5% on sundry debtors.
4. Salaries include Rs. 2,500 as advance to workers.
5. Partners are allowed interest at 5% p.a. on their capitals.
Jitesh and Lailesh are in partnership sharing profits and losses in the ratio of 2:1. From the following Trial Balance and adjustments given below, you are required to prepare Trading and Profit and Loss A/c for the year ended 31st March 2013 and the Balance Sheet as on that date:
| Trial Balance as on 31st March 2013 | ||
| Particulars | Debit Amount (Rs) | Credit Amount (Rs) |
| Prepaid Insurance | 800 | |
| Insurance | 2,000 | |
| R.B.D.D. | 1,000 | |
| Discount | 800 | |
| Postage and telephone | 3,200 | |
| Salaries | 56,000 | |
| Debtors and Creditors | 66,000 | 68,000 |
| Wages | 24,000 | |
| Opening Stock | 48,000 | |
| Carriage | 1,000 | |
| Purchases and Sales | 1,93,200 | 3,01,600 |
| Return inwards and outwards | 5,600 | 9,200 |
| Bank overdraft | 1,20,800 | |
| Plant & Machinery | 24,000 | |
| Land & Building | 1,76,000 | |
| Capital | ||
| Jitesh | 52,000 | |
| Lailesh | 48,000 | |
| Total | 6,00,600 | 6,00,600 |
2. Goods worth Rs. 4,000 were distributed as free samples.
3. Closing stock on 31.03.2013 was valued at the cost Rs. 56,000 while its market price was Rs. 60,000.
4. Salaries were outstanding Rs. 2,000.
5. Depreciate:
Plant & Machinery @ 10% p.a.
Ashok and Tanaji are Partners sharing Profits and Losses in the ratio 2 : 3 respectively. Their Trial Balance as on 21st March, 2007 is given below. You are required to prepare Trading and Profit and Loss Account for the year ended 31st March, 2007 and Balance Sheet as on that date after taking into account the given adjustments.
|
Receipts |
Debit |
Particulars |
Credit |
||
|
Purchases Patents Right Building Stock (1.04.2006) Printing and Stationery Sundry Debtors Wages and Salaries Audit fees Sundry Expenses Furniture 10% Investment (Purchased on 30.09.2006) Cash Provident Fund Contribution Carriage Inwards Travelling Expenses |
98,000 4,000 1,00,000 15,000 1,750 35,000 11,000 700 3,500 8,000
10,000 4,000
800 1,300 2,700
|
Capitals : Ashok Tanaji Provident Fund Creditors Bank Loan Sales Reserve for Doubtful Debts Purchase Returns |
30,000 40,000 7,000 45,000 12,000 1,58,000
250 3,500 |
||
|
2,95,750 |
2,95,750 |
||||
Adjustments:
1. Closing stock is valued at the cost of Rs. 15,000 while its market price is Rs. 18,000
2. On 31st March, 2007 the stock of stationery was Rs. 500.
3. Provided reserve for bad and doubtful debts at 5% on debtors.
4. Depreciate building at 5% and patent rights at 10%.
5. Interest on capitals is to be provided at 5% p. a.
6. Goods worth Rs. 10,000 were destroyed by fire.
The Insurance company admitted a claim for Rs. 8,000.
From the following Trial Balance of M/s Kale and Gore, you are required to prepare Trading and Profit and Loss Account for the year ended 31st March, 2013 and Balance Sheet on that date. They share profits and losses in their capital ratio.
Trial Balance as on 31st March, 2013
| Debit Balance |
Amount (₹)
|
Credit Balance |
Amount (₹)
|
| Opening stock |
28,000 |
Capital A/c | |
| Purchases | 1,16,400 | Kale | 80000 |
| Trade Expenses |
2,400 |
Gore | 40000 |
| Royalties | 6,200 | Sundry Creditors | 54000 |
| Wages and Salaries | 14,800 | Sales | 212000 |
| Advertisement | 8,200 | Reserve for Doubtful Debts | 1800 |
| Salaries | 11,000 | Bills payable | 36000 |
| Plant and Machinery | 44,000 | ||
| Freehold Property |
36,000 |
||
| Office Rent | 4000 | ||
| Motor Van | 63000 | ||
| Bills Receivable | 16000 | ||
| Sundry Debtors | 60000 | ||
| Cash in hand | 10000 | ||
| Bad debts | 1000 | ||
| General expenses | 2,800 | ||
| 423800 | 423800 |
Adjustments:
- Closing stock was valued at cost Rs 76,000 while its market price was Rs 80,000.
- Uninsured goods worth Rs 10,000 were stolen.
- Goods worth Rs 10,000 were sold and delivered on 31st March 2013, but on entry is passed sales book.
- Depreciate Plant and Machinery at 10% and Motor van at 15% p.a.
- Bills Receivable includes a dishonoured bill of Rs 4,000.
- Create a reserve for doubtful debts at 5% on Debtors.
The Balance Sheet of Rajkumar and Rajendra Kumar as on 31st March 2012 is set out below, they share profits and losses in the ratio of 2:1.
Balance Sheet as on 31st March, 2012
| Liabilities |
Amount
(Rs)
|
Assets |
Amount
(Rs)
|
| Capital A/c’s - Rajkumar | 200000 | Buildings | 100000 |
| Rajendra Kumar | 150000 | Furniture | 30000 |
| General Reserve | 120000 | Stock | 60000 |
| Creditors | 80000 | Debtors | 300000 |
| Cash | 30000 | ||
| Profit and Loss A/c | 30000 | ||
| 550000 | 550000 |
They agreed to admit Dhiraj Kumar on 1st April, 2012 as a partner into the firm on the following terms on.
(1) Dhiraj Kumar to bring Rs 60,000 as capital and Rs 45,000 as a goodwill, which is to be retained in the business. He will be entitled to 1/4th share of profit of the firm.
(2) 50% of General Reserve is to remain as Reserve for doubtful debts.
(3) Furniture is to be depreciated by 5%.
(4) Stock is to be revalued at Rs 65,000/-
(5) Creditors of Rs 5,000 are not likely to claim and hence should be written off.
(6) Rent of Rs 2,000 due but not received has not been recorded in the books.
Pass the necessary journal entries in the books of new firm and prepare Balance Sheet of the new firm.
Suresh and Ramesh are partners in a business sharing Balance sheet as on 31st March 2013 are as follows:
| Balance Sheet as on 31st March 2013 | |||||
| Liabilities | Amount (Rs) | Amount (Rs) |
Assets | Amount (Rs) |
Amount (Rs) |
| Capital A/c’s | Building | 30000 | |||
| Suresh | 50000 | 74000 | Machinery | 10000 | |
| Ramesh | 24000 | Furniture | 9500 | ||
| Creditors | 57000 | Debtors | 40000 | 39000 | |
| Bills Payable | 20000 | (-) R.D.D | 1000 | ||
| Reserve fund | 9000 | Stock | 30000 | ||
| Bills Receivable | 7600 | ||||
| Cash at Bank | 33900 | ||||
| 160000 | 160000 | ||||
They admitted Kailash on 1st April 2013 as a partner on the following terms:
1) Kailash will bring Rs 30,000 as his capital for 1/4th share in future profit and Rs. 12,000 as goodwill which will be withdrawn by old partners.
2) Stock and Machinery to be depreciated by 10%.
3) R.D.D. is to be maintained at 5% on debtors.
4) Building to be appreciated by 20% and furniture is revalued at Rs 10,000.
Prepare Profit and Loss Adjustment Account, Partner’s Capital Accounts, and Balance Sheet of the New firm.
Snehal and Meenal are equal partners in a business. Their Balance sheet is as follows :
Balance Sheet as on 31st March, 2012
| Liabilities | Amount (Rs) |
Amount (Rs) | Assets | Amount (Rs) |
Amount (Rs) |
| Capital A/c’s | Premises | 20500 | |||
| Snehal | 80000 | 125000 |
Investments |
10500 | |
| Meenal | 45000 | Equipments | 5000 | ||
| Creditors | 26000 | Bills Receivable | 18000 | ||
| Bank Loan (Taken on 1.1.2012) | 40000 | Debtors | 110000 | 99000 | |
| (-) R.D.D | 11000 | ||||
| Profit and Loss A/c | 6600 | ||||
| Bank | 31400 | ||||
| 191000 | 191000 | ||||
They agreed to admit Kamal on 1st April, 2012 on the following terms.
1) He should bring 50,000 towards his capital for 1/4th share in future profit.
2) Goodwill A/c be raised in the books of the firm Rs 40,000/-
3) R.D.D to be maintained at 5% on debtors.
4) Premises to be valued at Rs 30,000 and Equipments to be written off fully.
5) Interest at the rate of 15% p.a. is due on bank loan.
6) Creditors allowed a discount of Rs 1100/- and they were paid off immediately.
Pass necessary journal entries to record the above scheme of admission.
Following is the balance sheet of Harish and Girish
Balance Sheet as on 31st March, 2010
| Liabilities | Amount (Rs) | Amount (Rs) | Assets | Amount (Rs) | Amount (Rs) |
| Creditors | 38000 | Cash in Hand | 37000 | ||
| Bills Payable | 46,000 | Stock | 21000 | ||
| Profit and Loss A/c | 16,000 | Debtors | 46000 | 40000 | |
| Capital A/c’s | (-)R.D.D | 6000 | |||
| Harish | 100000 | 240000 | Equipments | 12000 | |
| Girish | 140000 | Furniture | 25000 | ||
| Plant | 85000 | ||||
| Building | 120000 | ||||
| 340000 | 340000 | ||||
They admitted Shirish on 1st April 2010 on the following conditions:
1) For his 1/3rd share in the future profits Shirish brings Rs 2,00,000 as his Capital.
2) It is decided to raise goodwill by Rs 90,000 and write it off fully after Shirish’s admission.
3) Equipments and plant to be depreciated by 20% and10% respectively and Building to be appreciated by 15%.
4) Bills Payable were retired for Rs 35,000
5) All debtors are considered good.
6) Furniture of the book value Rs 12,000 was taken over by Harish at 40% of the book value.
Prepare, revaluation A/c, Partner’s Capital Account and Balance Sheet of the new firm.
Following is the Balance Sheet of Dhiraj and Niraj who shared profits and losses equally.
Balance Sheet as on 31st March, 2013
| Liabilities | Amount (Rs) | Assets | Amount (Rs) |
| Capital A/c’s | Plant and Machinery | 45000 | |
| Dhiraj | 125000 | Land and Building | 84000 |
| Niraj | 35000 | Patents | 3400 |
| Creditors | 86200 | Stock | 47800 |
| Bills Payable | 28,000 | Furniture | 10600 |
| General Reserve | 6800 | Debtors | 80000 |
| Cash | 10200 | ||
| 281000 | 281000 |
On 1st April, 2013 they agreed to admit Suraj on the following terms and conditions:
1) Suraj to bring for 1/3rd share in future profit in cash Rs 90,000 towards his capital.
2) The firms goodwill should be raised to Rs 90,000 and it is to be written off after Suraj admission in new profit ratio.
3) Plant and Machinery was found undervalued by 10% and Land and Building was found overvalued by 20%.
4) Stock to be increased by Rs 2,200 and furniture to be reduced to Rs 10,000/-
5) Out of creditors Rs 1,200 is no more payable.
6) The Capital A/c to be adjusted in new profit sharing ratio by opening the current accounts.
Prepare Revaluation A/c, Capital A/c and New Balance Sheet.
Manoj and Rahul are equal partners in a business. Their Balance sheet as on 31st March, 2013 stood as under:
Balance Sheet as on 31st March, 2013
| Liabilities | Amount(Rs) | Asset | Amount(Rs) | |
| Sundry Creditors | 180000 | Cash at Bank | 120000 | |
| General Reserve | 36000 | Debtors | 62000 | 60000 |
| Capitals- | (-)R.D.D | 2000 | ||
| Manoj | 90000 | Bills receivable | 24000 | |
| Rahul | 60000 | Building | 114000 | |
| Machinery | 48000 | |||
| 366000 | 366000 | |||
They decided to admit Amit on 1st April, 2013 on the following terms:
1) The Machinery and Building be depreciated by 10%
2) Reserve for doubtful debts to be increased to Rs 5,000.
3) Bills receivable are taken over by Manoj at a discount of 5%.
4) The amount of creditors paid at a discount of 10%.
5) The Capital Accounts of all the partners be adjusted in current account of partners.
6) Amit should bring Rs 80,000 as capital for his 1/4th in future profits and goodwill account be opened in the books of the firm at Rs 40,000.
Prepare Profit and Loss Adjustments A/c, Partner’s Capital A/c and Balance sheet of the firm at Rs 4,000/-
The Balance Sheet of Ramakant and Shyamkant who shared the profits in the ratio of 2:1 is as under
Balance Sheet as on 31st March, 2012
| Liabilities | Amount(Rs) | Assets | Amount(Rs) | ||
| Capitals: | Leasehold Property | 20000 | |||
| Ramakant | 134000 | 254000 | Live Stock | 6600 | |
| Shyamkant | 120000 | Loose Tools | 90200 | ||
| Creditors | 51000 | Stock | 84800 | ||
| Rent Outstanding | 10000 | Debtors | 48000 | 46000 | |
| Reserve Fund | 7200 | (-) R.D.D | 2000 | ||
| Current A/c | Bank | 75400 | |||
| Ramakant | 2800 | Current A/c | |||
| Shyamkant | 2000 | ||||
| 325000 | 325000 | ||||
On 1st April, 2012 Umakant was admitted as 1/4th partner on the following terms:
1) He brings equipments of Rs 80,000 as his capital.
2) Firm’s goodwill is valued at Rs 1,44,000 and Umakant agreed to bring his share in firm’s goodwill by cheque.
3) R.D.D. should be maintained at 7.5% on debtors.
4) Increase live stock by Rs 2,600 and write off loose tools by 20%.
5) Outstanding rent paid Rs 9,040 in full settlement.
Pass necessary journal entries to record the above scheme of admission.
Sanil, Nitish, Sapna were partners in a firm sharing profits and losses in the proportion of 1/2, 1/3 and 1/6 respectively. Their Balance Sheet as on 31st March, 2012 was as follows:
Balance Sheet as on 31-03-2012
| Liabilities | Amount (Rs) | Assets | Amount (Rs) |
| Bills Payable | 30000 | Machinery | 40000 |
| Capitals: | Furniture | 5000 | |
| Sanil | 80000 | Sundry Assets | 60000 |
| Nitish | 50000 | Stock | 30000 |
| Sapna | 30000 | Debtors | 32000 |
| Bank | 23000 | ||
| 190000 | 190000 |
Sapna decided to retire on 1st April 2012 on following terms:-
1) Goodwill of the firm will be valued at Rs 30,000/-
2) Furniture was taken over by Sanil for Rs 4,700/-
3) Make a provision for unpaid expenses Rs 1,700/-
4) Out of the amount due to Sapna Rs 7,500/- to be paid by cheque and the remaining amount to be transferred to her loan account.
Pai, Amba and Manoj are partners in a firm sharing profit and losses in the proportion to their capitals. Their Balance Sheet as on 31.3.2012 is as follow:
Balance Sheet as on 31st March, 2012
| Liabilities | Amount (Rs) | Assets | Amount (Rs) |
| Capitals | Cash | 3,000 | |
| Pai | 30,000 | Stock | 12,000 |
| Amba | 30,000 | Debtors | 20,000 |
| Manoj | 15,000 | Plant | 13,000 |
| Creditors | 7,000 | Building | 20,000 |
| Outstanding expenses | 15,000 | Motor Van | 31,000 |
| Profit and Loss A/c | 20,000 | Goodwill | 18,000 |
| 1,17,000 | 1,17,000 |
On the above date Pai retired and the following adjustments have been agreed upon
1) Goodwill was revalued at Rs 15,000
2) Assets and Liabilities were revalued as under debtors Rs 17,000 stock at 90% of book value Building Rs 35,000 Plant Rs 11,500 Motor Van Rs 29, 500, Outstanding expenses Rs 18,000
3) Amba and Manoj contributed additional capital of Rs 20,000 and Rs 10,000 respectively
4) Balance due to Mr. Pai is transferred to his loan account after paying him Rs 1,000/-
Prepare:- Profit and Loss adjustment A/c,. Partner’s Capital A/c’s and Balance Sheet of new firm
Shedge, Mayekar and Raut were partners sharing profits and losses in the ratio of 4: 3: 3.
Their Balance Sheet on 31st March 2012 was as given below:-
Balance Sheet as on 31st March, 2012
| Liabilities | Amount (Rs) | Assets | Amount (Rs) |
| Capitals | Furniture | 4,200 | |
| Shedge | 15,000 | Stock | 13,000 |
| Mayekar | 10,000 | Debtors | 10,000 |
| Raut | 10,000 | Bill Receivable | 18,000 |
| Cash/Bank | 2,000 | ||
| Profit and Loss A/c (Loss) | 5,800 | ||
| 53,000 | 53,000 |
Raut retired from the business on above date and it was agreed that the amount due to Raut to be paid immediately by availing overdraft facility
1) His share of goodwill was raised at Rs 3,500
2) Revalue furniture Rs 4,000 and stock Rs 16,000
3) Create R.D.D. at 5% on Debtors.
4) Make provision for outstanding printing bill Rs 6,000. Prepare profit and loss adjustment A/c, Capital A/c and Balance Sheet of continuing partners assuming that goodwill is written off by the continuing partners.
Sathe, Deshpande and Madlani were partners sharing profits and losses in the ratio of 5:2:3. Their Balance Sheet was as follows:
Balance Sheet as on 31st March, 2012
| Liabilities | Amount (Rs) | Assets | Amount (Rs) | |
| Capitals | Plant and Machinery | 50,000 | ||
| Sathe | 70,000 | Building | 1,00,000 | |
| Deshpande | 80,000 | Motor Van | 20,000 | |
| Madlani | 50,000 | Stock | 30,000 | |
| Creditors | 25,000 | Debtors | 36,000 | 34,000 |
| Bills Payable | 12,000 | Less : R.D.D | 2,000 | |
| Reserve Fund | 25,000 | Cash | 28,000 | |
| 2,62,000 | 2,62,000 | |||
Deshpande retired on that date on the following terms:
1) Plant to be depreciated by 10% and Motor Van by 20%.
2) Stock to be appreciated by 10% and building by 20%.
3) R.D.D. is no longer necessary
4) Provision is to be made for Rs 8,000 being compensation to worker
5) The goodwill of the firm to be valued at Rs 40,000 and Deshpande’s share in it should be raised.
6) Both the remaining partners decided to write off the goodwill
7) Amount payable to Shri. Deshpande to be kept as his Loan
Prepare:
1 ) Profit and Loss Adjustment Account
2) Partner’s Capital Accounts
3) New Balance Sheet
Vilas, Mangal, Guru were partners in a business sharing profits and losses in the ratio of 2:1:1 respectively. Their Balance sheet as on 31st March, 2012 was as follows:
Balance Sheet as on 31st March 2012
| Liabilities | Amount (Rs) | Assets | Amount (Rs) |
| Capital | Land and Building | 6,000 | |
| Vilas | 6,000 | Debtors | 5,000 |
| Mangal | 7,000 | Stock | 3,000 |
| Guru | 3,400 | Cash | 6,000 |
| Creditors | 2,000 | ||
| General Reserve | 1,600 | ||
| 20,000 | 20,000 |
Guru died on 1st July, 2012
1) Land and Building was to be revalued to Rs 7,000 and RDD was to be created of Rs 200.
2) The drawings of Guru upto the date of his death amounted to Rs 1,000/-
3) Charge interest on drawings Rs 100/-
4) His share of goodwill should be calculated at ‘Three’ years purchase of the profits for the last four years which were Rs 15,000, Rs 13,000/-, Rs 7,000, Rs 5,000
5) The deceased partners share of profit upto the date of his death to be calculated on the basis of average profit of last two years.
Prepare:
1) Profit and Loss Adjustment A/c
2) Partners Capital A/cs
3) Balance Sheet of the continuing firm
4) Give working or share of profit and goodwill
Sheetal, Anjali, Rajendra were sharing profits and losses as 7:5:4. Their Balance sheet as on 31st March, 2011:
Balance Sheet as on 31st March 2012
| Liabilities | Amount (Rs) | Assets | Amount (Rs) |
| Capital | Furniture | 17,000 | |
| Sheetal | 23,000 | Machinery | 18,000 |
| Anjali | 15,000 | Building | 16,000 |
| Rajendra | 12,000 | Cash | 37,000 |
| Bills Payable | 4000 | ||
| Creditors | 8000 | ||
| Loan | 10,000 | ||
| General Reserve | 16,000 | ||
| 88,000 | 88,000 |
Rajendra died on 30th June 2012 and the following adjustments were agreed as per deed.
1) Furniture, Machinery and Building are to be revalued at Rs 16,700/-, Rs 16,200, to Rs 30,100.
2) Rajendra’s share is goodwill to be valued from firm’s goodwill which was valued at two times the average profit of last three years. Profits of last three years Rs 30,000, Rs 25,000, Rs 20,000/-.
3) His profit upto the date of death is to be calculated on the basis of last years profit.
4) Rajendra was entitled to get a salary of Rs 800/-per month.
5) Interest on capital at 10% be allowed.
6) Rajendra’s drawing upto date of death were Rs 600 p.m.
Prepare:
1) Rajendra’s Capital A/c showing amount payable to his executor
2) Give working of share of goodwill and profit
The Balance sheet of Mohan, Subhash and Babi as on 31st December, 2011 was as under. They were sharing profits and losses in the ratio of 2:1:1.
Balance Sheet as on 31st December,2011
| Liabilities | Amount (Rs) | Assets | Amount (Rs) |
| Capital | Investments | 20000 | |
| Mohan | 25,000 | Buildings | 33000 |
| Subhash | 15,000 | Debtors | 12000 |
| Babi | 15,000 | Stock | 28000 |
| Creditors | 30,000 | Cash | 8000 |
| Reserve | 16000 | ||
| 101000 | 101000 |
Babi died on 1st July, 2012 and partnership deed provided that in the event of death of the partner his executor will be entitled to be paid out.
1) Capital to the credit at the date of last balance sheet
2) Proportion of reserves
3) Proportion of goodwill to be calculated twice the average profits of last three years.
4) His proportion of profits to the date of death based on the average profits of the last three year plus 20%.
5) The net profits for last 3 years Rs 18,000, Rs 18,000, Rs 16,500.
6) Babi had withdrawn Rs 6,000/- to the date of her death.
7) The investments were sold at par and the amount was paid off to Babi’s executor and the balance was transferred to loan A/c.
Prepare:
1) Babi’s Capital A/c only.
Vishnu, Prabhakar and Krishna were partners in a business sharing profits and losses in the ratio of 3:1:1 respectively. Their Balance Sheet as on 31st March, 2012 was as follows:
Balance Sheet as on 31st March, 2012
| Liabilities | Amount (Rs) | Assets | Amount (Rs) |
| Capital |
Plant and Machinery |
35,000 | |
| Vishnu | 40,000 | Stock | 25,000 |
| Prabhakar | 30,000 | Debtors | 20,000 |
| Krishna | 25,000 | Cash | 20,000 |
| Creditors | 5,000 | ||
| Reserve Fund | 10,000 | ||
| 1,10,000 | 1,10,000 |
Krishna died on 1st October, 2012 and the partnership deed provided that:
1) The deceased partner to be given his share of profit to the date of death on the basis of the profits of the previous year.
2) His share of goodwill will be calculated on two years purchase of average profit of the last 4 years. The net profit for last 4 years were Rs 70,000, Rs 55,000, Rs 45,000, Rs 30,000
3) Plant and Machinery to be valued at Rs 40,000. Reserve for doubtful debts of Rs 2,000 to be created.
4) The drawings of Krishna upto the death amounted to Rs 20,000
5) Interest on capital at 10% p.a. is to be allowed and 6% p.a. to be charged on drawings. Both the interest should be calculated for 6 months.
Prepare:
1) Krishna’s capital A/c and P/L Adjustment A/c
Minaxi, Ramesh and Poonam were partners sharing profits and losses in the proportion to their capitals, Their Balance sheet of the firm on 31st March, 2012 was as under:
Balance Sheet as on 31st March, 2012
| Liabilities | Amount (Rs) | Assets | Amount (Rs) | |
| Capital | Land and Building | 40,000 | ||
| Minaxi | 30,000 | Investment | 20,000 | |
| Ramesh | 20,000 | Debtors | 16,000 | 14,000 |
| Poonam | 10,000 | Less : R.D.D | 2,000 | |
| Creditors | 28,000 | Stock | 18,000 | |
| Reserve | 18,000 | Cash | 14,000 | |
| 1,06,000 | 1,06,000 | |||
Poonam died on 1st August, 2012 and the following adjustments were made
1) Assets revalued as under-Land & Building Rs 44,000, Investment Rs 18,000, Stock Rs 17,000.
2) All debtors were good.
3) Goodwill of the firm valued at two times the average profits of the last 4 years. No goodwill account to be shown in the books of the firm.
4) Poonam’s share of profit upto her death to be calculated on the basis of average profits of last two year.
5) Profits were Rs 6,000, Rs 12,000, Rs 7,000, Rs 11,000
Prepare:
1) Profits and loss adjustment A/c
2) Balance sheet as on 1st August 2012
Following is the Balance Sheet of Dhirshree, Sonam, and Simaran who were sharing profit and losses in the proportion of their capitals:
Balance Sheet as on 31st March, 2016
| Liabilities | Amount (Rs.) | Assets | Amount (Rs.) |
| Capital accounts: | Plant and Machinery | 60,000 | |
| Dhirshree | 1,50,000 | Land and building | 1,65,000 |
| Sonam | 60,000 | Stock | 36,000 |
| Simaran | 90,000 | Debtors 36,000 | |
| Sundry Creditors | 45,000 | Less: R.D.D. 3,000 | 33,000 |
| Bank balance | 51,000 | ||
| 3,45,000 | 3,45,000 |
Simran retired from the business on 31st March 2016 and the following adjustments were agreed to:
1) The stock is to be valued at 92% of its book value.
2) R.D.D. is to be maintained at 10% on sundry Debtors.
3) The value of land and building be appreciated by 20%.
4) The goodwill of the firm be fixed at Rs. 36,000 and simran's share in the same adjusted in the accounts of containuing partners in the gain ratio.
5) The entire capital of the new firm be fixed at Rs. 4,80,000 between Dhirshree and Sonam in the proportion to their new profit sharing ratio which is fixed as 3: 1 by making adjustment for difference in cash.
Prepare :
1) Profit and Loss Adjustment Account.
2) Partner's Capital Accounts.
3) Balance Sheet after retirement of Simran.
State True or False with reason.
Change in the relationship between the partners is called the Reconstitution of partnership.
Pravin and Kishor are partners sharing profits and losses in the ratio 3 : 2. Their Balance Sheet as on 31st March, 2019 was as under:
| Balance Sheet as on 31st March, 2019 | |||||
| Liabilities |
Amount
(₹)
|
Assets |
|
Amount
(₹)
|
|
| Creditors | 37,500 | Bank | 22,500 | ||
| Bills Payable | 30,000 | Bills Receivable | 11,400 | ||
| Bank Loans | 48,000 | Debtors | 62,400 | 60,000 | |
| General Reserve | 7,500 | Less: RDD | 2,400 | ||
| Capitals: | Stock | 36,000 | |||
| Pravin | 45,000 | 81,000 | Furniture | 14,100 | |
| Kishor | 36,000 | Machinery | 15,000 | ||
| Buildings | 45,000 | ||||
| 2,04,000 | 2,04,000 | ||||
On 1.04.2019 they admitted Asha on the following terms:
- For 1/2 share in profits in future, Asha will bring ₹ 30,000 for capital and ₹ 15,000 for goodwill.
- Half of the amount of goodwill is withdrawn by old partners.
- Stock is to be depreciated by 10% and Machinery by 5%.
- RDD is to be maintained at ₹ 3,000.
- Furniture be valued at ₹ 16,050 and Building be appreciated by 20%
Pass the necessary Journal entries in the books of the firm and prepare working notes.
Find the odd one:
