Q. Y and Z are partners sharing profits and losses in the ratiof 3:2:1.
The Balance Sheet as at 31st March. 2007 was as follows :
Employee's Provident Fund
X's Capital A/c
Y's Capital A/c
Z's Capital A/c
Sundry Debtors 100000
Less: Provision : 10000
Cash at Bank
profit & Loss A/C
X retired on that date and it was decided to make the following adjustments :
(i) Stock to be depreciated by 40% and sale of old papers and materials realised Rs. l,000.
(ii) Provision for doubtful debts to be increased to 17% of Sundry Debtors.
(iil) Machinery be depreciated by 40% and buildings be appreciated by 20%.
(iv) Partners paid Rs. 10,000 to the family of an employee who died of an
(v) Goodwill is valued at Rs. 30,000
(vi) Y and Z decided to share future profits in the ratio of 3 : 2.
(vi) Y and Z would introduce sufficient capital to pay off X and have thereafter a sum of Rs. 25,000 as Working Capital in a manner that their Capitals would be in proportion Of their new profit sharing ratio.
Prepare the necessary accounts.
|Date||Particulars||Amount (in Rs)||Date||Particulars||Amount (in Rs)|
|Provision for Doubtful debt||7,000||Cash (Sale of old papers)||1,000|
|Cash (Family of employee)||10,000|
|Capital A/c - 24,000 in 3:2:1|
|Partner's Capital A/c|
|X's Capital A/c||8,000||7,000||Balance b/d||152,000||148,000||84,000|
|Revaluation Account||12,000||8,000||4,000||Y's Capital A/c||8,000|
|Profit and loss account||6,000||4,000||2,000||Z's Capital A/c||7,000|
|To Bal C/d||0||222,300||148,200|
|Liabilities||Amount (in Rs)||Assets||Amount (in Rs)|
|Employees Provident fund||9,000||Cash||35,500|
|Calculation of Sacrificing and Gaining Partners|
|Less : New Ratio||0||3/5||2/5|
|3/6||- 8/30||- 7/30|
|Total Value of Goodwill||30,000|
|X's share of Goodwill||(30,000 x 3/6)||15,000|
|Distribution in Gaining Ratio|
|TO Be Adjusted from Y's Capital A/c||(15,000 x 8/15)||8,000|
|TO Be Adjusted from Z's Capital A/c||(15,000 x 7/15)||7,000|
|Adjustment Of Capital|
|Total Capital of new Firm = Existing capital of Y and Z + Cash to be brought to pay X + 22,500||(1,28,000 + 71,000 + 1,49,000 + 22,500)||370,500|
|Y's share of Capital||(3,70,500 x 3/5)||222,300|
|Existing Capital of Y||128,000|
|Cash brought in||(222300 -128000)||94,300|
|Z's share of Capital||(3,70,500 x 2/5)||148,200|
|Existing Capital of Z||71,000|
|Cash brought in||(148200 -71000)||77,200|