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Partners' Capital Accounts, Revaluation Account and Balance Sheet

Q. 19.    A and B are partners in a firm sharing profits and losses in the ratio 3 : 1. They admit C for 1/4th share on 31st March, 2014 when their Balance Sheet was as follows :

The following adjustments were agreed upon :

(a)    C brings in Rs. 16,000 as goodwill and proportional capital.
(b)    Bad debts amounted to Rs. 3,000.
(c)    Market value of investment is Rs. 4,500.
(d)    Liability on account of workmen compensation reserve amounted to Rs. 2,000.

  Prepare Revaluation A/c and Partners Capital Accounts.                                           (Sample Paper 2015)

Dear Student

 
Revalution A/c
Date Particulars Amount (in Rs) Date   Particulars Amount (in Rs)
  Debtors 1,000      
           
           
           
        Capital A/c (1,000 in 3:1)  
        A 750
        B 250
           
           
    1,000     1,000


 
Partner's Capital A/c
Particulars A B C Particulars A B C
Revaluation A/c 750 250   Balance b/d 54,000 35,000  
Goodwill 30,000 10,000   Investment Fluctuation Reserve 1,200 400  
        Workmen Compensation Reserve 3,000 1,000  
        Premium for Goodwill A/c 12,000 4,000  
        Cash A/c     23,200
Bal C/d 39,450 30,150 23,200        
               
               
               
               
  70,200 40,400 23,200   70,200 40,400 23,200

Balance sheet
Liabilities Amount (in Rs) Assets Amount (in Rs)
Workmen Compensation Liability 2,000 Stock  15,000
Employees Provident Fund 17,000    
    Investment 4,500
    Sundry Debtors 47,000
    Cash  45,300
Capital      
A 39,450    
B 30,150    
C 23,200    
       
       
  111,800   111,800

Goodwill Adjustment
     
Share of Goodwill of C   16,000
Sacrificing Ratio   3:1
     
Distribution in Sacrificing Ratio in capital accounts of :  
A (16,000 x 3/4) 12,000
B (16,000 x 1/4) 4,000


 
Capital Calculation of C
New Profit Sharing Ratio   2:1:1
Capital of A and B after  all adjustments (39,450 + 30,150)                        69,600
Cumulative share of A and B after C's Admission (1 - 1/4)  3/4 
Based on above total capital of firm (69,600 x 4/3)                        92,800
Proportionate Capital of C  (92,800 x 1/4)                        23,200



Regards

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