A and B are in a partnership sharing profits and losses in the ratio of 3:2. on 1st april 2012,they admitted C into partnership.he paid 50000 as his capital but nothing for goodwill which was valued at 40000 for the firm.he acquired 1/5th share in the profits , equally from both partners.it was also decided that......
a) land and building be written off by 20000.
b) stock be written down by 3200.
c) a provision of 1000 be created for doubtful debts.
d) an amount of 1200 included in the sundry creditors be written back as it is no longer payable.
balance sheet is as follows...
LIABILITIES | AMOUNT | ASSETS | AMOUNT |
Capital a/cs A B General reserve Sundry creditors | ------------ 86000 64000 20000 31200 | goodwill land and building plant and machinery stock sundry debtors cash cash in bank | 10000 60000 70000 36000 20000 4000 1200 |
201200 | 201200 |
Prepare the revaluation a/c partners capital a/cs and the balance sheet and pass the journal entries of the new firm.
Revaluation Account | |||
Dr. |
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| Cr. |
Particulars | Amount Rs | Particulars | Amount Rs |
Land and Building | 20,000 | Sundry Creditors | 1,200 |
Stock | 3,200 | Loss transferred to- |
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Provision for Doubtful Debts | 1,000 | A’s Capital A/c | 13,800 |
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| B’s Capital A/c | 9,200 |
| 24,200 |
| 24,200 |
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Partners’ Capital Accounts | |||||||
Dr. |
| Cr. | |||||
Particulars | A | B | C | Particulars | A | B | C |
A’s Capital A/c | - | - | 4,000 | Balance b/d | 86,000 | 64,000 | - |
B’s Capital A/c | - | - | 4,000 | General Reserve | 12,000 | 8,000 | - |
Revaluation A/c | 13,800 | 9,200 | - | Cash A/c | - | - | 50,000 |
Goodwill A/c | 6,000 | 4,000 | - | C’s Capital A/c | 4,000 | 4,000 | - |
Balance c/d | 82,200 | 62,800 | 42,000 |
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| 1,02,000 | 76,000 | 50,000 |
| 1,02,000 | 76,000 | 50,000 |
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Balance Sheet as on April 01, 2012 after C’s admission | |||||
Liabilities | Amount Rs | Assets | Amount Rs | ||
Capital A/cs- |
| Land and Building (60,000 – 20,000) | 40,000 | ||
A | 82,200 |
| Plant and Machinery | 70,000 | |
B | 62,800 |
| Stock (36,000 – 3,200) | 32,800 | |
C | 42,000 | 1,87,000 | Sundry Debtors | 20,000 |
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Sundry Creditors | 30,000 | Less: Provision for D. Debts | (1,000) | 19,000 | |
(31,200 – 1,200) |
| Cash at Bank | 4,000 | ||
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| Cash in Hand (1,200 + 50,000) | 51,200 | ||
| 2,17,000 |
| 2,17,000 | ||
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Working Notes:
WN 1 Calculation of Z’s Share of Goodwill
X and Y each will get
Particulars | Debit Amount Rs | Credit Amount Rs | |
Z’s Capital A/c | Dr. | 8,000 |
|
To X’s Capital A/c |
| 4,000 | |
To Y’s Capital A/c |
| 4,000 | |
(Z’s share of goodwill charged from capital accounts of the partners in their sacrificing ratio) |
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WN 2 Distribution of General Reserve
WN3 Writing- off of Old Goodwill
Particulars | Debit Amount Rs | Credit Amount Rs | |
Goodwill A/c | Dr. | 10,000 |
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To X’s Capital A/c |
| 6,000 | |
To Y’s Capital A/c |
| 4,000 | |
(Goodwill written-off in old ratio) |
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