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Question
X, Y and Z are partners sharing profits in the ratio of 4 : 3 : 2. Their Balance Sheet as at 31st March, 2019 stood as follows:
|
Liabilities |
Amount (₹) |
Assets |
Amount (₹) |
||
| Creditors |
24,140 |
Cash at Bank | 3,300 | ||
| Capital A/cs: |
|
Sundry Debtors |
3,045 |
|
|
| X | 12,000 |
|
Less: Provision for Doubtful Debts |
105 |
2,940 |
| Y |
9,000 |
|
Stock | 4,800 | |
| Z | 6,000 | 27,000 | Plant and Machinery | 5,100 | |
|
|
Land and Building | 15,000 | |||
|
|
|
Y's Loan |
20,000 |
||
|
51,140 |
51,140 |
||||
Y retired on 1st April, 2019 after giving due notice. Following adjustments in the books of the firm were agreed:
(a) Land and Building be appreciated by 10%.
(b) Provision for Doubtful Debts is no longer necessary since all the debtors are good.
(c) Stock be appreciated by 20%.
(d) Adjustment be made in the accounts to rectify a mistake previously committed whereby Y was credited in excess by ₹ 810, while X and Z were debited in excess of ₹ 420 and ₹ 390 respectively.
(e) Goodwill of the firm be valued at ₹ 5,400 and Y's share of the same be adjusted to that of X and Z who were going to share in the ratio of 2 : 1.
(f) It was decide by X and Y to settle Y's account immediately on his retirement.
Prepare: (i) Revaluation Account; (ii) Partner's Capital Accounts and (iii) Balance Sheet of the firm after Y's retirement.
Solution
Revaluation Account
|
Dr. |
|
Cr. |
||
|
Particulars |
Amount (₹) |
Particulars |
Amount (₹) |
|
|
Profit transferred to : |
|
Land and Building (15,000 × 10%) |
1,500 |
|
|
X’s Capital A/c |
1,140 |
|
Provision for Doubtful Debts |
105 |
|
Y’s Capital A/c |
855 |
|
Stock (4,800 × 20%) |
960 |
|
Z’s Capital A/c |
570 |
2,565 |
|
|
|
|
2,565 |
|
2,565 |
|
Partners’ Capital Accounts
|
Dr. |
|
Cr. |
|||||
|
Particulars |
X |
Y |
Z |
Particulars |
X |
Y |
Z |
|
Y’s Capital A/c |
1,200 |
|
600 |
Balance b/d |
12,000 |
9,000 |
6,000 |
|
X’s Capital A/c (Rectification) |
|
420 |
|
Revaluation A/c (Profit) |
1,140 |
855 |
570 |
|
Z’s Capital A/c (Rectification) |
|
390 |
|
X’s Capital A/c (Goodwill) |
|
1,200 |
|
|
Y’s Loan A/c |
|
10,845 |
|
Z’s Capital A/c (Goodwill) |
|
600 |
|
|
Balanced c/d |
12,360 |
|
6,360 |
Y’s Capital A/c (Rectification) |
420 |
|
390 |
|
|
13,560 |
11,655 |
6,960 |
|
13,560 |
11,655 |
6,960 |
Balance Sheet
as on March 31, 2019 (after Y’s Retirement)
|
Liabilities |
Amount (₹) |
Assets |
Amount (₹) |
|
|
Creditors |
24,140 |
Cash at Bank |
3,300 |
|
|
|
|
Sundry debtors |
3,045 |
|
|
|
Stock (4,800 + 960) |
5,760 |
||
|
Capital A/cs: |
|
Plant and Machinery |
5,100 |
|
|
X |
12,360 |
|
Land and Building |
|
|
Z |
6,360 |
18,720 |
(15,000 + 1,500) |
16,500 |
|
|
42,860 |
|
42,860 |
|
Working Note:
1.Adjustment of Goodwill
Old Ratio (X, Y and Z) = 4 : 3 : 2
Y retires from the firm.
∴ Gaining Ratio = 4 : 2 or 2 : 1
Goodwill of the firm = Rs 5,400
Y’s Share of Goodwill = `54,000 xx 3/9 = "Rs" 1800`
This share of goodwill is to be distributed between X and Z in their gaining ratio (i.e. 2 : 1).
`"X's share" = 1,800 xx 2/3 = "Rs" 1,200`
`"Z's share" = 1,800 xx 1/3 = "Rs" 600`
2. Computation of final settlement amount payable to/ receivable from Y after his retirement:
Existing Loan against Y = 20,000
Less: Amount payable = 10,845
9,155
Amount receivable from Y by the firm = Rs.9,155
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|
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 |
|||
|
1,03,800 |
1,03,800 |
|||||
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|
Liabilities |
Amount (₹) |
Assets |
Amount (₹) |
||
| Creditors |
10,800 |
Cash at Bank | 13,000 | ||
| Bills Payable |
5,000 |
Debtors |
10,000 |
|
|
| Capital A/cs: |
|
Less: Provision for Doubtful Debts |
200 |
9,800 |
|
| A | 45,000 | Stock | 9,000 | ||
| B |
30,000 |
|
Machinery | 24,000 | |
| C |
15,000 |
90,000 |
Freehold Premises |
50,000 |
|
|
1,05,800 |
1,05,800 |
||||
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|
Liabilities |
Amount (₹) |
Assets |
Amount (₹) |
||
| Sundry Creditors |
12,600 |
Bank | 4,100 | ||
| Provident Fund |
3,000 |
Debtors |
30,000 |
|
|
| General Reserve |
9,000 |
Less: Provision |
1,000 |
29,000 |
|
| Capital A/cs: |
|
|
|||
|
Amit |
40,000 | Stock | 25,000 | ||
|
Balan |
36,500 | Investments | 10,000 | ||
|
Chander |
20,000 |
96,500 |
Patents |
5,000 |
|
|
|
|
Machinery |
48,000 |
||
|
1,21,100 |
1,21,100 |
||||
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Prepare Kavita's Capital Account to be presented to his legal representative.
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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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(b) His proportionate share of General Reserve.
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(e) The investments were sold at par and his executors were paid out in full.
Prepare B's Capital Account and his Executors' Account.
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(a) Interest on capital will be calculated at the rate of 6% p.a.
(b) The executor of deceased partner shall be paid ₹ 24,000 for his share of goodwill.
(c) His share of Reserve Fund of ₹ 12,000, shall be paid to his executor.
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Prepare Chetan's Capital Account to be presented to his executor.
X, Y and Z were partners in a firm sharing profits and losses in the ratio of 3 : 2 : 1. Z died on 30th June, 2018. The Balance Sheet of the firm as at that 31st March, 2018 is as follows:
BALANCE SHEET as at 31st March, 2018
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
||
| X's Capital A/c | 2,40,000 |
Machinery |
2,40,000 | ||
| Y's Capital A/c | 1,60,000 | Furniture | 1,50,000 | ||
|
Z's Capital A/c |
80,000 | 4,80,000 | Investments | 40,000 | |
| X's Current A/c | 16,000 | Stock | 64,000 | ||
| Y's Current A/c | 5,000 | Sundry Debtors | 50,000 | ||
| Reserve | 60,000 | Bills Receivable | 22,000 | ||
| Bills Payable | 34,000 | Cash at Bank | 37,000 | ||
| Sundry Creditors | 40,000 | Cash in Hand | 22,000 | ||
| Z's Current A/c | 10,000 | ||||
| 6,35,000 | 6,35,000 | ||||
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(a) A Provision for Doubtful Debts is to be raised at 5% on Debtors.
(b) While Machinery to be decreased by 10%, Furniture and Stock are to be appreciated by 5% and 10% respectively.
(c) Advertising Expenses ₹ 4,200 are to be carried forward to the next accounting year and, therefore, it is to be adjusted through the Revaluation Account.
(d) Goodwill of the firm is valued at ₹ 60,000.
(e) X and Y are to share profits and losses equally in future.
(f) Profit for the year ended 31st March, 2018 was ₹ 8,16,000 and Z's share of profit till the date of death is to be determined on the basis of profit for the year ended 31st March, 2018.
(g) The Fixed Capital Method is to be converted into the Fluctuating Capital Method by transferring the Current Account balances to the respective Partners' Capital Accounts.
Prepare the Revaluation Account, Partners' Capital Accounts and prepare C's Executors's Account to show that C's Executors were paid in two half-yearly instalments plus interest of 10% p.a. on the
unpaid balance. The first instalment was paid on 31st December, 2018.
A, B and C were partners in a firm sharing profits in the ratio of 3 : 2 : 1. They admitted D as a new partner for 1/8th share in the profits, which he acquired 1/16th from B and 1/16th from C. Calculate the new profit-sharing ratio of A, B, C and D.
Kabir and Farid are partners in a firm sharing profits and losses in the ratio of 7 : 3. Kabir surrenders 2/10th from his share and Farid surrenders 1/10th from his share in favour of Jyoti; the new partner. Calculate new profit-sharing ratio and sacrificing ratio.
Find New Profit-sharing Ratio:
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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 |
Sundry Debtors | 80,000 | ||
|
Capital A/cs: |
Building | 3,00,000 | |||
| X |
7,00,000 |
Advance to Y | 7,00,000 | ||
| Y | 7,00,000 | Profit and Loss A/c | 3,20,000 | ||
| Z |
60,000 |
14,60,000 |
|||
|
17,20,000 |
17,20,000 |
||||
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| Liabilities | Amount (₹) |
Assets | Amount (₹) |
||
| Sundry Creditors | 13,800 | Furniture | 16,000 | ||
| General Reserve | 23,400 | Land and Building | 56,000 | ||
| Investment Fluctuation Fund | 20,000 | Investments | 30,000 | ||
| Bhavya's Capital | 50,000 | Trade Receivables | 18,500 | ||
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| 1,47,200 | 1,47,200 | ||||
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Which of the above adjustments are to be done?
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