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
 
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

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