Q.

1
Profit and Loss Adjustment A/c (10 lines)
Particulars Amount Particulars Amount
To stock 2,100 By building 5,400
(30,000-
27,900)
To debtors 900 By furniture 600
To capital
A: 1,800
B: 1,200 3,000
6,000 6,000

Partner’s Capital A/c (10 lines)

Particulars A B Particulars A B
To investments (3:1) 4,500 1,500 By balance b/d 36,000 12,000
By reserve fund A/c 3,000 2,000
By goodwill 3,000 2,000
By profit and Loss Adj. A/c 1,800 1,200
To new firm A/c 39,300 15,700
43,800 17,200 43,800 17,200

New Firm A/c (10 lines)

Particulars Amount Particulars Amount
To building 32,400 By creditors 57,000
To furniture 3,600 By bank overdraft 4,000
To stock 27,900 By A’s Capital 39,300
To debtors 44,100 By B’s Capital 15,700
To cash in hand 3,000
To goodwill 5,000
1,16,000 1,16,000

Journal Entries in the books of A and B (2 pages)

Sr. Particulars L.F. Dr. Cr.
No.
1 Creditors A/c Dr. 57,00
To New Firm A/c 0 57,000
(creditors transferred to new firm)
2 Bank overdraft A/c Dr. 4,000
To New Firm A/c 4,000
(bank overdraft transferred to new firm)
3 Reserve Fund A/c Dr. 5,000
To A’s Capital A/c 3,000
 To B’s Capital A/c 2,000
(reserve fund distributed to partners in the ratio of 3:2)
4 Building A/c Dr. 5,400
To Profit and Loss Adjustment A/c 5,400
(value of building raised)
27,000*20%
5 New Firm A/c Dr. 32,40
To building A/c 0 32,400
(building transferred to new firm)
27,000+5,400
6 Furniture A/c Dr. 600
To Profit and Loss Adjustment A/c 600
(value of furniture raised)
3,000*20%
7 New firm A/c Dr. 3,600
To Furniture A/c 3,600
(furniture transferred to new firm)
8 A’s Capital A/c Dr. 4,500
B’s Capital A/c Dr. 1,500
To investments A/c 6,000
(investments transferred to old partners)
9 Profit and Loss Adjustment A/c Dr. 2,100
To stock A/c 2,100
(value of stock decreased)
10 New firm A/c Dr. 27,90
To stock A/c 0 27,900
(stock transferred to new firm)
11 Profit and Loss Adj. A/c Dr. 900
To debtors A/c 900
(bad debt reserve created on debtors)
12 New Firm A/c Dr. 44,10
To debtors A/c 0 44,100
(debtors transferred to new firm)
13 New firm A/c Dr. 3,000
To cash in hand 3,000
(Cash transferred to new firm)
14 Goodwill A/c Dr. 5,000
To A’s Capital A/c 3,000
To B’s Capital A/c 2,000
(goodwill was valued in the books)
15 New firm A/c Dr. 5,000
To Goodwill A/c 5,000
(goodwill transferred to new firm)
16 Profit and Loss Adj. A/c Dr. 3,000
To A’s Capital A/c 1,800
To B’s Capital A/c 1,200
(being profit transferred to partners)
17 A’s Capital A/c Dr. 39,300
B’s Capital A/c Dr. 15,700
To New firm A/c 55,000
(capital accounts transferred to new firm)

THE END.