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M.52 Management Accounting (Section B)—ISC XII
BALANCE SHEET OF THE NEW FIRM at at 1st April, 2019
Liabilities ` Assets `
Creditors 34,000 Cash at Bank 47,400
Provident Fund 10,000 (` 68,000 + ` 4,286 – ` 4,286 – ` 20,600)
Workmen Compensation Claim 12,000 Stock 38,000
Mansoor’s Loan 60,000 Debtors 94,000
Capital A/cs: Less: Provision for Doubtful Debts 4,000 90,000
Lokesh 63,857 Investments 30,000
Nihal 25,543 89,400
2,05,400 2,05,400
Working Notes:
1. Decrease in the Value of investments adjusted through Investment Fluctuation Reserve and Revaluation Account
by passing the following accounting entry:
Investment Fluctuation Reserve A/c ...Dr. ` 20,000
Revaluation A/c (` 50,000 – ` 20,000) ...Dr. ` 30,000
To Investments A/c ` 50,000
2. Adjustment of Goodwill:
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Mansoor’s Share of Goodwill = ` 1,02,000 × = ` 30,600, which is to be contributed by Lokesh and Nihal
in their gaining ratio, i.e., 5 : 2. Thus, 10
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Lokesh will contribute = ` 30,600 × = ` 21,857; and
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2
Nihal will contribute = ` 30,600 × = ` 8,743.
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3. Calculation of Total Capital of the new firm after Mansoor’s Retirement:
A. Capital of Lokesh after all adjustments:
= ` 1,40,000 – ` 10,000 – ` 20,000 – ` 20,000 – ` 21,857 = ` 68,143.
B. Capital of Nihal after all adjustments:
= ` 50,000 – ` 4,000 – ` 8,000 – ` 8,000 – ` 8,743 = ` 21,257
C. Total capital of the New Firm (A + B) = ` 89,400
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• Lokesh’s capital in the New Firm = ` 89,400 × = ` 63,857
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2
• Nihal’s capital in the New Firm = ` 89,400 × = ` 25,543.
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4. JOURNAL OF MAMTA FAB LTD.
Date Particulars L.F. Dr. (`) Cr. (`)
Bank A/c ...Dr. 15,00,000
To Equity Shares Application A/c 15,00,000
(Being the application money received on 75,000 shares @ ` 20 each)
Equity Shares Application A/c ...Dr. 15,00,000
To Equity Share Capital A/c (50,000 × ` 20) 10,00,000
To Bank A/c (25,000 × ` 20) 5,00,000
(Being the application money transferred to share capital and surplus refunded)
Equity Shares Allotment A/c ...Dr. 20,00,000
To Equity Share Capital A/c 20,00,000
(Being allotment money due on 50,000 shares @ ` 40 each)
