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 :
Liabilities | Rs. | Assets | Rs. |
Sundry Creditors Employee's Provident Fund X's Capital A/c Y's Capital A/c Z's Capital A/c |
51000 9000 152000 148000 84000 |
Buildings Machinery Sundry Debtors 100000 Less: Provision : 10000 Stock Cash at Bank profit & Loss A/C |
280000 80000 90000 40000 22000 12000 |
444000 | 444000 |
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
heart-attack.
(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.
Dear Student
Regards
Revalution A/c | |||||
Date | Particulars | Amount (in Rs) | Date | Particulars | Amount (in Rs) |
Stock | 16,000 | Building | 40,000 | ||
Provision for Doubtful debt | 7,000 | Cash (Sale of old papers) | 1,000 | ||
Machinery | 32,000 | ||||
Cash (Family of employee) | 10,000 | ||||
Capital A/c - 24,000 in 3:2:1 | |||||
X | 12,000 | ||||
Y | 8,000 | ||||
Z | 4,000 | ||||
65,000 | 65,000 |
Partner's Capital A/c | |||||||
Particulars | X | Y | Z | Particulars | X | Y | Z |
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 | ||
Cash | 149,000 | Cash A/c | 94,300 | 77,200 | |||
To Bal C/d | 0 | 222,300 | 148,200 | ||||
167,000 | 242,300 | 161,200 | 167,000 | 242,300 | 161,200 |
Balancesheet | |||||
Liabilities | Amount (in Rs) | Assets | Amount (in Rs) | ||
Capital | Stock | 24,000 | |||
Y | 222,300 | Debtors | 100000 | ||
Z | 148,200 | Less :Provision | 17000 | 83,000 | |
Machinery | 48,000 | ||||
Creditors | 51,000 | Building | 240,000 | ||
Employees Provident fund | 9,000 | Cash | 35,500 | ||
430,500 | 430,500 |
Calculation of Sacrificing and Gaining Partners | |||
X | Y | Z | |
Old Ratio | 3/6 | 2/6 | 1/6 |
Less : New Ratio | 0 | 3/5 | 2/5 |
3/6 | - 8/30 | - 7/30 | |
Sacrificing | Gaining | Gaining |
Goodwill Adjustment | ||
Gaining Ratio | 8:7 | |
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 |
Regards