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Question
Virad, Vishad and Roma were partners in a firm sharing profits in the ratio of 5 : 3 : 2 respectively. On 31st March, 2013, their Balance Sheet was as under:
| Liabilities | ₹ | Assets | ₹ | ||
| Capital A/cs: | Buildings | 2,00,000 | |||
| Virad | 3,00,000 | Machinery | 3,00,000 | ||
| Vishad | 2,50,000 | Patents | 1,10,000 | ||
| Roma | 1,50,000 | 7,00,000 | Stock | 1,00,000 | |
| Reserve Fund | 60,000 | Debtors | 80,000 | ||
| Creditors | 1,10,000 | Cash | 80,000 | ||
| 8,70,000 | 8,70,000 | ||||
Virad died on 1st October, 2013. It was agreed between his executors and the remaining partners that:
(i) Goodwill of the firm be valued at 212 years purchase of average profits for the last three years. The average profits were ₹ 1,50,000.
(ii) Interest on capital be provided at 10% p.a.
(iii) Profits for the 2013-14 be taken as having accrued at the same rate as that of the previous year which was ₹ 1,50,000.
Prepare Virad's Capital Account to be presented to his Executors as on 1st October, 2013.
Solution
Virad’s Capital Account
|
Dr. |
|
Cr. |
|||
|
Particulars |
Amount (Rs) |
Particulars |
Amount (Rs) |
||
|
|
|
Balance b/d |
3,00,000 |
||
|
Executor’s A/c |
5,70,000 |
Vishad’s Capital A/c |
1,12,500 |
||
|
|
|
Roma’s Capital A/c |
75,000 |
||
|
|
|
Profit and Loss Suspense A/c |
37,500 |
||
|
|
|
Reserve Fund |
30,000 |
||
|
|
|
Interest on Capital |
15,000 |
||
|
|
5,70,000 |
|
5,70,000 |
||
Calculation of gaining ratio of vishad and roma:
`"Old Ratio" = "Virad" : "Vishad" : "Roma"`
`5 : 3 : 2`
`"New Ratio" 3 : 2`
`"Gaining Ratio" = "New Ratio" - "Old Ratio"`
`"Vishad's Gain" = 3/5 - 3/10 = 3/10`
`"Roma's Gain" = 2/5 - 2/10 = 2/10`
`"Gaining Ratio" = 3 : 2`
WN1 : Calculation of virad's share of goodwill:
`"Goodwill of the firm" = "Average profit" xx "Number of year's Purchase"`
`"Goodwill of the firm" = 1,50,000 xx 2(1/2) = "Rs" 3,75,000`
`"Share of goodwill of virad" = 3,75,000 xx 5/10 = "Rs" 1,87,500`
`"Vishad will give" = 1,87,500 xx 3/5 = "Rs" 1,12,500`
`"Roma will give" = 1,87,500 xx 2/5 = "Rs" 75,000`
WN2: Calculation of profit share of virad:
`"Profit for the year" = "Rs" 1.50,000`
`"Virad's share of profit" = 1,50,000 xx 6/12 xx 5/10 = "Rs" 37,500`
WN3 : Calculation of interest on Virad's Capital
`"Virad's Capital" = 3,00,000`
`"Interest on capital" = 3,00,000 xx 6/12 xx 10/100 = "Rs" 15,000`
WN4 "Virad's share of reserve fund:
`"Share of reserve fund" = 60,000 xx 5/10 = "Rs" 30,000`
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Assets | Amount (₹) |
|
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|
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|
Z |
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| 7,05,000 | 7,05,000 | |||
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| BALANCE SHEET as at 31st March, 2019 | |||||
| Liabilities | ₹ | Assets | ₹ | ||
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| X | 9,000 | ||||
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|
Liabilities |
Amount (₹) |
Assets |
Amount (₹) |
||
|
Sundry Creditors |
2,70,000 |
Cash in Hand |
42,500 |
||
|
General Reserve |
1,20,000 |
Cash at Bank |
2,14,500 |
||
|
Capital A/cs: |
Debtors | 1,63,000 | |||
| A |
2,00,000 |
Stock | 17,500 | ||
| B | 1,20,000 | Investment | 1,32,500 | ||
| C |
80,000 |
4,00,000 |
Building | 2,10,000 | |
| B's Loan | 10,000 | ||||
|
7,90,000 |
7,90,000 |
||||
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|
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: |
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| S |
1,25,000 |
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| T |
75,000 |
3,50,000 |
Cash at Bank | 40,000 | |
|
4,35,000 |
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||||
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|
Liabilities |
Amount (₹) |
Assets |
Amount (₹) |
||
|
Trade Creditors |
1,20,000 |
Cash at Bank |
1,80,000 |
||
|
Bills Payable |
80,000 |
Stock |
1,40,000 |
||
|
General Reserve |
60,000 |
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|
Capital A/cs: |
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| X |
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| Z |
60,000 |
14,60,000 |
|||
|
17,20,000 |
17,20,000 |
||||
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| Liabilities | ₹ | Assets | ₹ |
| Investments Fluctuation Reserve | 60,000 | Investments (At Cost) | 4,00,000 |
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|
Liabilities |
Amount |
Assets |
Amount |
|
| Sundry Creditors | 75,000 | Cash in Hand | 24,000 | |
| General Reserve | 90,000 | Cash at Bank | 1,40,000 | |
| Capital A/cs: | Sundry Debtors |
80,000 |
||
| Ashish |
3,00,000 |
Stock | 1,40,000 | |
| Aakash | 3,00,000 | Land and Building | 4,00,000 | |
| Amit |
2,75,000 |
8,75,000 | Machinery | 2,50,000 |
| Advertisement Suspense | 6,000 | |||
| 10,40,000 | 10,40,000 | |||
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| 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 | |||
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BALANCE SHEET OF RAM, MOHAN, SOHAN AND HARI
as on 1st April, 2016
| Liabilities | ₹ | Assets | ₹ | |
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