G1, Vikram and Pradnyn share profits and losses in the ratio 2:9 respectively. Their Balance Sheet as on Gist March, 2018 was as under: Balance Sheet as on 91st March, 2018 ‘They agreed to admit Avant as a partner on Ist Apri, 2018 on the following (erms : (2) Avant shall have 1/4U1 share tn future prof (2) He shall bring & 87,500 as his capital and € 80,000 as his share of goodwill (9) Land and building to be valued at € 45,000 and furniture to be depreciated by 10 %. (4) Provision for bad and doubtful debts ts to be maintained at 5 % on the Sundry Debtors. (5) Stock to be valued € 82,500, ‘The Capital Ve ofall partners to be adjusted tn thelr new profit and Joss rato and excess amount be ‘transferred to thelr Joan accounts, Prepare Profit and Loss Adjustment Account, Capital Accounts and New Balance Sheet.Solution: In the books of Partnership Firm be Profit and Loss Adjustment Account cn Paneaars == Pareatre a | | | TROD. Ne 4350 [by Land & Duldng Ne 7500] tomate Ae 300. | py stock Ave 7500 Depreciation) “to Prot on Reston Mucan 10.380 rata 210 | | [15000 Dr Partners Captal Accounts ce j ] Wis] Padaps | avant] Vara | Prdaya | avant a Dl il a rr “To arnes Loan Ae | 48140 | 1,710 fos ames vias aa te talaee 74 | 48.000 | 67500 | 97500 | by tank Ae - | = | 87500 Dynentanion se | 4140 | aio) ‘roa Dy deadwt Ae | 12000 | 18000 aia | woai0 | aro ai.90 | woat0 Balance sheet as on 1st ApH 20% | Amount | Amount | Amount | Amount ja See ial Capt Acoua ] Cait 73.000 ‘iran 45000 tan Duin 7500 rade 67500 ut Appeeiaton | 500 | 45.000 set 47500 | 1.50000 | rurtace 2.000 reers | 1/0000 | Lee Depron 00 | 2700) Partner ean A rant | ran 40,40 ‘Stock Prada si7i0 | 77080 | ad :Arprecton Debtors Less: RD. (5%) Working Notes : (1) Calestation of new profit ratlo = 1 share of new partner SL RECONSTTUTION OF FARTRERSHEY (Admini of Pars) 170‘vans ratio= s “New profit sharing rio = 6: 9:5, Capital amount adjsed a heir new profit and los rao: “Teta Capital ofthe Partnership Firm = (Reciprocal of New Partner's Shar) x (Copia of New Parner) = [Retprocal ot +) x 37,500 = 4 x 97,500 = € 1,50,000 ‘Wra Capt alance = (Vkranis New Rao)» (Total Capital ofthe fz) = *1,50,000 = € 45,000 Pradiyais Capital balance = $5 x 1.50,000 = ¥ 67,500 +. 2, Amalendu and Sameer share profits und losses in the ratlo 3:2 respectively. Thelr Balance ‘Sheet as on 31st March, 2017 was as under: Balance Sheet as on Bist March, 2017 ‘On Ist April, 2017 they admit Paresh into partnership, ‘The term bet (2) He shall pay 16,000 as his share of Goodwill 50% amount of Goodvel shall be withdrawn by the old partners, (2) Me shall have to bring in € 20,000 as his Capital for 1/4 share tn future profs, (8) For the purpose of Pareah's admission it was agreed that the assets would te revalued as follows : (W) Land and Budding ts to be valued at € 60,000. (B) Plant and Machinery to be valued at € 16,000. (C) Stock valued at € 20,000 and Furniture and Fixtures at € 4,000, (D)A Provision of % on Debtors would be made for Doubtful Debs, Pass the necessary Journal Eniris tn the books of a new frm, Solution: Journal entrles in the books of Partnership Firm Debt | creat Date Pasticware un| om “ 2017 | General Reserve Ae De "20,000 ‘Avent | To Amalendie Capi Ae 12,000 ‘To Sumeer’s Captal Ae 8,000 (eng general reserve distributed among od pariners)Land and Dating Ne De Stock Ae De ‘To Profit and Loss Adjustment Ae (Being appreciation in the ylue of asset) Profit and Loss Adjustment Ae De ‘To Amalend's Capital We ‘To Sameer’s Capital Ne eing profit on revaluation distributed tn prot sharing ratio) ‘Cash Bank Ne De ‘To Paress Caplal Ae (Being amount brought in for capital by Pures) ‘Cash /Bank We De ‘To Goodie (Being amount brought in for godt by Pures) Goodwit Ne ‘To Amalend's Capital Ne ‘To Sameers Capital Ne Being goodwill stood among old partners) ‘Working Notes ‘By Cash Bank Ne1+. 8. Vasu and Vira) share profits and losses inthe ratio of 9:2 respectively. Their Balance Sheet ‘as on Sist March, 2019 was as under: Balance Sheet as on 3st March, 2019 “They admit Hart into partnership on (1) He shal have to bring in € 60,000 as his Capita for 1/4 share tn future profits. (2) Value of Goodwill of the frm is to be ived at the average profs forthe last three years, ‘The Profit were: 2009-10 £48,000 2010-11 £81,000 2011-12 £73,500 Hart ts unable to bring the value of the Goodwill in cash. Its decided to ralse the Goodwall nthe ‘books of accounts. (9) Reserve for Doubiful debts ts to be ereated at © 1,500. (4) Clsoing stock 1s valued at & 22.500. (5) Plant and Building isto be deprecated by 5%. ‘Prepare Profit and Loss Adjustment A, Capal Accounts of Partners and Balance Sheet of the new ‘em,Solution + In the books of the firm... De Profit and Loss Adjustment Account ce Paris FT RDD. (New) Ae 0 Sock Ne to Deprecaon Aes: Pant Dang De 7 fo Prot and Lose ‘Ajustnent Ae (tom ro paance e/a | 1.00000 1.085800 on ot April 2010 ‘soot | Amount —— = o | ao opt Nes ca ‘0.750 veeu 1.00020 Suny Debtors 60,750 ia 106,580 ase: RDD. (Nee) 1.500 | 05.250 Hart 160.00 | 3.28700 | stock 253500 sundry Creare 45,000 | Lees Depreition 3000 | 22500 vente 35,000 rune 10,000 ‘Less: Depretaton 4500 | 95.500 utkng 35.000 Lee Depreciation 1.800 | 34,200 cede 7500 371,700 371,700, ‘Working Notes (1) Average Pron = DELP = HID 81,00 72800. ¥ 67.500, Goodml value = 67,500 ‘anus share in Good» € 40,50 (67,500x3) aa share in Good = € 27,000 (67, 800%?) (2) Har not able to bring shar n good and decided to ase the goal the ook. ‘perfor, Goodwli recordel in the Asset sie € 67.800, “liaconsrrurion oF tkriacsha (asodo are+. 4, Mr Deep & Mr Karan were in partnership sharing profits & losses in the proportion of 9:1 respectively. Their Balance Sheet on Sst March, 2018 stood as fellows : ‘Balance Sheet as on Bist March, 2018, ‘They admit Shublim into Partnership on 1 April, 2018. The terms being that : (1)He shall have to bring in & 20,000 as his capital for 1/5 share in future profits & € 10,000 as his ‘share of Good (2)A provision for 6 % doubtful debis to be created on sundry debtors. (3) Furniture to be depreciated by 20%. (4) Stock should be appreciated by 5 % and Building be apprecated by 20%, (6) Capital Ale ofall partners be adjusted in thelr new profit sharing ratio through cash account. Prepare Profit and Loss Adjustment Ale, Partners! Capital Af, Balance Shect of new fim. In the books of the firm...<= = wea = ear Sane rons ce oe ae i. 73,800 | 24,000 | 20,000 | eee oS ‘Linbilities « a | Assets waa aa So cam. oe on er ‘Shublam 20,000 | 1,00,000 | Land and Building emntinn,, a2 tou | tag rer fe earl BT ean ft | | oe ‘Working Wote : CCaleulation of new ratio: Balance of 1 = 1 "1 = (Rematoing share New ralo = Old rato x balance 1 (Remalnng sare) Deepis new rato: Karasis new ratlo = ‘Shubhamts n 4. New prot and loss sharing ratio = 3:1 Capt amount to be adjusted in Partner's new profit and Toss rao: “otal Capital of te rn = (Reciprocal of New pare abate) x (New partners capa =5 x 20,000 = ¥1,00,000 Deeps capital balance = 2 x 1,00,000 = ¥ 60,000 ‘Karat eaptl balance = fx 1,00,000 = 20,000*@. 6, Mr Kishor & Mr Lal were in partnership sharing profits & losses in the proportion of 9/4 and 14 respectively. Balance Sheet as ow Stst March, 2018 “They decided to admit Ram on 1 April, 2018 on following terms. (1) He should be given 1/5th share in profit and for that he brought in € 60,000 as capital through ros, (2) Goodtwit should be raised at & 60,000. (8) Appreciate Land and Butlding by 20°%. (4) Puruiture and Stock are to be depreciated by 10%. (6) The capltals of all partners should be adjusted in their new profit sharing ratio through Bank Ae. ‘Puss neceasary Journal Entries tn the books of the partnership firm and a Balance Sie of new ‘orm, Journal entries In the books of the firm ‘General Reserve Ne ‘To Me Kishor Capital Me ‘To Me Lata Capital Ae elng general reserve datrbuted among old partners) Profit and Loss Adjustment Ae ‘To Parnture At ‘Te Stock Ne etn decrease tn te value of assets) 180 DOOK-IRTING AND ACCOUNTANCY DIOEST: STANDARD 301and and Dutng Ne De ‘To Profit and Lose Adjustment Me (Geng nerease tm the valve of assets Profit and Loss Adjutment Ae ‘To Mr Kuhor Captal Ate ‘ToMrLats Capa Ae (Geng proton revaluation distributed tn prof sharing rai) ‘ani We Dr ‘To Rants Captal Ae (Deng capital amount brought tn through RTOS) ood Ae ‘To Kishor’ Coptal Ae ‘ToLats Capital Ae (Deng the good raised and tranfered to eaptal Nex tn ete rato) ‘Dank Ne "To Kishor Captal Ae (Geng deft to eaptal acount sete n eas by Kishor) Late Capital Ne ‘To Bank Ae(2) Calculation of new profit sharing ratio: New Rao = Balance of 1) x (eld rato) Hatre New ato (1-{) x b= fx $$ ‘Lal's New ratio = nt) xdegeted Ras ratio= (2) Toa capital ofthe fem = (Rectprocal of Ras to) x (is capita contrbation) = © x 60,000 ¥ 9,00,000 Kishore new closing capital balance = 20,000 x 3 = 180,000 Las new closing capital balance = 9,00,000 x { = ¥ 60,000 Rants new closing capital balance = € 60,0009. 6, Viushall and Leena are equal partners In the business, Thelr Balance Sheet as on Sist March, 2018 stood aa under? Balance Sheet as on Sist March, 2018 ‘Amount | Amount Linbaittes aul lisse Assets Sundry Creditors 10,000 | 90,000 | Cas in Bank capt Debtors 1,000 Veushalt Less: RDD. 1,000 | 30,000 Leena 75,000 | Busing, 185,000 General Reserve 18,000 | Machinery 24,000 ils Recetvable 12,000 183,000 183,000 ‘They deeided to admit Aparna on Yet April, 2018 on the following terms: (2) The Machinery and Building be depreciated by 10%, Reserve for Doubiful debts to be increased bby € 5,000. (2) Bis recetvable are taken over by Vrushall atthe discount of 10%. (3) Aparna should bring € 60,000 as capltal for her 1/4th share tn future pros. (4) The Capital accounts ofall the partners be adjusted in proportion in the new profit sharing ratio Dy opening Current accounts of the partners, Prepare Profit and Loss Adjustment Ae, Partners’ Capital At, Balance Sheet of new firm. Solution : De Profit and Loss Adjustment Account ce ‘Amount ‘Amoust Partleulars sire |e ee TI 2,400 | By Loss on Revaluation ‘To Buding We 5,800 | transferred to Partners! Caplal Nex TROD.Ae 5,000 | Vrushalt 7.080 ‘To Dilla Recetable Ae 1200 | Leena (Discount) 1A100) De. Partners’ Capital Accounts ce ‘Vrushall | Leena | Aparna ‘Vrushai | Leena | Aps come om | om | om eee wm | ow ‘T Revaluation Ne | 7.080 7,050 | = — | By Balance ba 45,000 | 30,000 Toss) Dy Dank At - - ‘To Bills Recetmble We| 10,800] = = | ByOeverat Reserve Ate] 9,000 0,000 | = ‘To Balance e/a £0,000 | 90,000 | 60,000 | By Partner's Current Ne 83,850| 58,050 | - 1,07,060 | 97,080 | 60,000 1,07,880 | 97,060 | 60,000 i —S=— SE 1‘Working Notes : (1) RDD. to be increased by € 5,000 means subtract & 5,000 from Debtors. (2) Duls recetvable taken by Vrushalt at 10 % discount Le. 12,000 ~ 1,200 = € 10,800. Write this amount n debit aide of partners Capital Account in Vrushalf's column. (3) Calculation of new ratio = 1~share of new partner + =} Rematning share New rato = Old rato x Balance 1 (Remaining Share) Vrushalfs new rato =x += eens new ratlo= px 4 = 3 ‘para’ ratio= --Partne’s new profit and loss rato + Now, capital amount to be adjusted in partners new profit and loss ratio, ‘Total eapttal of the firm = (Reciprocal of New Partner's Share) x (New Partner's Capital) «= (Reciprocal of +) x 60,000 = 4 x 60,000 = ¥2.40,000 ‘Vrushalf's capital balance = 3 x 2.40,000 = ¥:90,000 Lela's capital balance = 2 x 2.40,000 = ¥ 90,000 Defet ofthese capital balance are to be adjusted through Current account. ‘To keep balance of Vrushal's and Leena’s capital € 90,000 each, deflett of 853,850 and € 58,050 are ineurred which is transferred to respective Partner's Current Vea and recorded on Asset side#Q. 7, The Balance Sheet of Medha and Radha who share profit and loss in the rallo 8: 1 Is as follows: ‘They decided to admit Kruttka on Let Ape, 2018 (1) Krutikca ts taken as partner on Ist Apri, 2017, She will pay 40,000 as her captal for 1/Sth share 4m future profits and € 2,500 as goodwill. (2) 8% provision for bad and doubtful debt be created on debtors, (8) Furniture be deprectated by 20%, (4) Stocks be appreciated by 5% and plant & machinery by 20%, (5) The Capital accounts of all partners be adjusted in their new profit sharing ratlo by adjusting amount through loan. (6) The new profit sharing ratio will be 9/5: 1/5 : 1/5 respectively. ‘You are required to prepare Profit and Loss Adjustment Ve, Partners’ Capital Af, Balance Sheet of the new frmDe Partners’ Capital Account ce Megha | Radha | Krotita ‘Meaha | Rada | Krutte — m_| m_| m a om | mo | ‘To Parters Lawn Ae | 18675) 6295 | = [By alee b/d | 1,20,000) 40,000 | — ‘ToBalance 7 | 120,000) 40,000 | 40,000 | ty Bank Ne SNe By Good te tare] as By Retiatoa Ac | €800) 1,600 By General Reserve | Me 12000] 4000 | - 130.675 | +6235 | 40.000 138.675 | 46.235 Balance Sheet as om Ist April 2018, “Amount | Amount “Amount ee) o | = Capital Nes ‘cash ‘Mean 1.20000 Sundry Debtors Radha 40,000 tess ROD. ruta 40,000 | 200,000 | sick Sundry Creditors £0,000 | Ada: Apprectation ils Payable 20,000 | ant & Machinery Dank Overdralt 20.000 | add: Appreciation Parner Loan Purnture ‘edna 18675 Less: Depreciation 4400 | 17.600 Rada 6.225 | 24900 | tan ond Dung 2.000 344.500 344.900 Working Notes (1) Total capital of the frm = (Reciprocal of New Partner's Profit Sharing ratio) > (Capital contributed by new partner) = (Reciprocal of +) x 40.000 = 5 x 40.000 = ¥ 2.00.00 Meda‘ closing capital balance = # % 20,000 = 1,20,000 ‘Radha‘s closing capital balance = + x 2,00,000 = ¥ 40,000 (2) General reserve is distributed among old partners in their old profit and loss ratio, (8) Cash Bal.: 78,000 + 40,000 + 2,500 = € 1,20,500 Amount brought tn by new partner]+9. 8. The Balance Sheet of Sahil and Nikhil who share profits in the ratio of 3:2 as on 91st March, 2017 is. follows: Balance Sheet as on Bist March, 2017 ‘Varad admited on Ist Apri, 2017 on the following terms: (1) Varad was to pay € 1,00,000 for his share of capital. (2) Te was also to pay € 40,000 as his share of good. (9) The new profit sharing ratio was 9:29. (4) Old partners decided to revalue the assets as fllows ‘Building € 1,00,000, Purniture € 48,000, Debtors € 38,000 (1m view of likely bad debts) (5) It was found that there was a Habity for € 9,000 for goods in March, 2017 but recorded on 2nd ‘April, 2017. ‘You are required to prepare: ()Proft and Loss Adjustment account (©) Capital accounts ofthe partners (e)Balanee Sheet ater the admission of Varad.Working Notes : (1) Cash tn hand = Opening balance + Varad's capital + Varad's goodwill (amount brought tn) "= 20,000 + 1,00,000 + 40,000 = €1,60,000 (2) Sacrfce ral = Old ratlo~ New rato Sais sacrifice = $=-$ = Bt = Nikchit maceftce = 3-2. = 18510. = 8 te. meric rato 8:2 = 9:609:2. ood a distributed among old partners tn the sacrifice ratio,‘+0. 9, Mr Ant and Baban share profte and losses in the ratlo 2 9 respectively. Their Balance Sheet son Slat March, 2018 was as under: Balance Sheet as on Stst March, 2018 moe [oredr ——SSSSS*~*~S~S~*~S:« AO | a Capita As: Land and Busting ‘Amit 1,00,000 | rian aban 1,00,000 | Furniture Stock Debtors [Sa0.00 [sae.00 ‘They to admit Kamal on Ist April 2018 on following terms: (1) Kamal shall have 14th share tn future profs (2) She shall bring € 50,000 as her capital and € 40,000 as her share of good (3) Land and building to be valued at € 60,000 and furniture to be depreciated by 10%. (4) Provision for bad and doubtful debts ts to be maintained at §% on the sundry debtors. (6) Stocks to be valued € 1,10,000. ‘The Capital Ne of all partners (0 be adjusted tn thelr new profit and loss rao and excess amount be transferred to thelr Joan accounts. Prepare Profit and Loss Adjustment Ae, Capital Aes, and New Balance Sheet. Solution: De. Profit and Loss Adjustment Account ce. “Knount ‘Amowst Partlouars Partielars © oO "To Depreciation Ne=Puratare 400 | By Land and Basing Ae 10,000 ADD. Av 1800 | ny stock Ae 10,000 ‘To Proton Revaluation Transferred Partners? Capital Aes ‘Amt ‘7520 aban 11280 | 18800 20,000 De Partners’ Capital Accounts ‘ait | Baber | Kamal ‘anit pero) o | o | wo a o To Pariners' Lown A7e | 63,820) 48,200, By Balance 674 00,000) To Balance e/a 10,000) 90,000 | 80,000 | y Bank At - 16,000 7520) 11280) - 1,33.520| 1,38.380| 60,000Balance Sheet as on 1st April 2018 ‘Amount | Amount seem om | om | bree Capt Aes aa ‘Ant 60,000 Land and Busing aban 190,000 ‘Ada: Appreciation Kamal 0,000 | 2,00,000 | rant Creators 140,000 | Purnttare Partners Loan: Less : Depreciation ‘nt 63820 Stock Daan 45.280 | 1,08.800 | Ada Appreciation Debtors Less :RDD. 4.48,800 Working Notes : (2) Cash balance = Opening balance + Amount brought in by Kamal = 1.10,000 + 50,000 + 40,000 = €2,00,000 (2) For caleulation of new profit and loss ratio Refer to Working Note (1) of Textual Problem no. 1 (3) New profit and loss ratio = Capital amount adjusted in their new profit and loss ratio by talking new partner Kamaf's eaptal (© 60,000) as base. Fr part 5 capital = € 60,000 (Kamal's capital) «For part 6 capital = € 60,000 (Ami eapital {For part 9 capital = € 90,000 (Babasts capita) (4) After keeping these capital balances diference of amount of Amit's capital € 63,520 and of Babaw’s capital © 45,280 are taken as partners loan to the firm and as a Uabilty of the fim It's recorded 1m the Liabilities side of Balance Sheet. + Q- 10. The fallowing is the Balance Sheet of Om and Jay on Sist March, 2018, they ahare profits ‘and losses in the ratio 3:2 Balance Sheet as on Sst March, 2018 © saree ‘Creduors a | 90.000 | cash Capital Aes: Bualding Om 21,000 | Machinery say 21,000 |Purntare‘They take Jagdish tno partnership om tat April, 2018. The terms being: (11 Jagdish should pay € 3,000 as his share of Goodwill. 80% of goodwill withdrawn by partners tn cash. (2) He should bring € 9,000 as capital for 1/4th share tn future profits, (9) Building to be valued at 18,000, Machinery and Furniture to be reduced by 10%. (41 proviston of 8% on debiors 10 be made for doubt debts, (5) Stock to be taken atthe value of € 18,000. Prepare Profit and Loss A/c, Partners’ Current Ac, Balance Sheet of the new frm. Solution: De. Profit and Loss Adjustment Account Panteulars an Pastleulare ‘To Depreciation Ae ~ Machinery 3.100 | By Bulding We ‘To Deprecalion Ae ~Puriture 90 | ny Stock Are ROD. Ae 1.380 ‘ Profit on Revaluation Transferred to Partners Capital Nes om 1.200 54 om 21,000 rating ayy 21,000 ‘A Apprecation Jagat 9.000 | 61,000 | Machinery Current A ‘Less : Depreciation om 5046 Puntture oy 4.014 | 10.960 | Less: Depreciation creditors 30,000 | stock ‘Add : Appeectaion Debtors ‘Less RDD.(2) Write partners eaptal accounts balance as fixed capital balance inthe Balance Sheet and transferred current account balance tn the Balance Sheet us Partners Current Af. (3) As shown in the cash aecount partners withdrew half amount of goodwill amount share. 1, Dave and Choksb! are partners in a firm sharing profits and losses in the ratio of :2. Their ‘Balance Sheet as on Sist March, 2010 was as follows : Balance Sheet as on Bist March, 2019 ale is ade as partner in he fm om at April, 2019 onthe allowing terms (0) Pate sto pay 8 1,80,000 as captor aren fate prof ade should pay 120,000 8 ood. (2) Stock i tobe reduce by 10% Pari Isobe reduced by 20% (9) RID. sto proved a 5% onthe Debtors (8) Land and Bulag are to be appreciated by 20%. asa jure ens ta recor the shore scheme ef salon sn prepare Babce Set ofthe se fe. (Aas. (1) Relation Promt= 7.700: Divison of Prot: Dave = ¥4,620 and Chokshi= 79.080. (2) Balance i capil Aes: Dave = 2.17820, Chokahi= € 2.21680 and Fae = € 1.60000, (9) Balance Sheet ual = 8.24700.