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3.16 Double Entry Book Keeping (Section A)—ISC XII

BALANCE SHEET as at 1st April, 2019
Liabilities ` Assets `
Capital A/cs: Land and Building 78,125
Rose 1,06,875 Furniture 2,250
Daisy 50,625 Debtors 41,250
Lily 35,000 1,92,500 Less: Provision for Doubtful Debts 4,125 37,125
Creditors 88,750 Stock 45,000
Bills Receivable 7,500
Cash at Bank 1,01,250
Lily’s Current A/c 10,000
2,81,250 2,81,250
Working Notes:
1. Goodwill brought in part by Lily in cash (` 10,000) has been distributed between Rose and Daisy in their
sacrificing ratio of 3 : 1.
2. Goodwill not brought in cash out of her share ` 10,000 (i.e., ` 1,00,000 × 1/5 × 1/2). It has been adjusted
through Lily’s Current Account.
Illustration 13.
A and B are partners in a firm sharing profits in 2 : 1 ratio. They admitted C for 1/4th
share in profits. C was to bring ` 30,000 as capital and capitals of A and B were to be
adjusted in the profit-sharing ratio on the basis of C’s Capital. The Balance Sheet of A
and B as at 31st March, 2018 (before C’s admission) was:

Liabilities ` Assets `
Sundry Creditors 20,000 Cash 2,000
Bills Payable 19,000 Sundry Debtors 50,000
General Reserve 6,000 Stock 10,000
Workmen Compensation Reserve 24,000 Machinery 25,000
Capital A/cs: Building 40,000
A 50,000 Goodwill 15,000
B 32,000 82,000 Advertisement Expenditure 9,000
1,51,000 1,51,000
Other terms of agreement were:
(i) C will bring ` 12,000 for his share of goodwill.
(ii) Building was valued at ` 45,000 and Machinery at ` 23,000.
(iii) A Provision of Doubtful Debts was created @ 6% on Sundry Debtors.
(iv) Capital Accounts of A and B were adjusted by opening Current Accounts.
Prepare Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of A, B and C.
Solution:
Dr. REVALUATION ACCOUNT Cr.
Particulars ` Particulars `
To Machinery A/c 2,000 By Building A/c 5,000
To Provision for Doubtful Debts A/c 3,000
5,000 5,000