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

Adjustment Journal Entry with respect to Workmen Compensation Reserve and Investment Fluctuation Reserve:
` `
Z’s Current A/c (` 37,500 × 3/10) 11,250
To X’s Current A/c (` 37,500 × 2/10) 7,500
To Y’s Current A/c (` 37,500 × 1/10) 3,750
5. Calculation of Z’s Capital: `
X’s Adjusted Capital 8,85,000
Y’s Adjusted Capital 8,65,000
X’s and Y’s Capital for 7/10th share 17,50,000
Thus, Z’s Capital for 3/10th share = ` 17,50,000 × 10/7 × 3/10 = ` 7,50,000.
6. Dr. BANK ACCOUNT Cr.
Particulars ` Particulars `

To Balance b/d 6,25,000 By Balance c/d 17,35,000
To Premium for Goodwill A/c 3,60,000
To Z’s Capital A/c 7,50,000
17,35,000 17,35,000

Master Question

Illustration 17.
Rohan, Sohan and Mohan are partners sharing Profits and Losses in the ratio of 5 : 4 : 1. Their
Balance Sheet as at 31st March, 2019 was as follows:

Liabilities ` Assets `

Sundry Creditors 2,50,000 Cash at Bank 4,20,000
Salaries Payable 60,000 Sundry Debtors 2,00,000
Outstanding Expenses 20,000 Less: Provision for Doubtful Debts 20,000 1,80,000
General Reserve 1,80,000 Stock 1,00,000
Workmen Compensation Reserve 2,00,000 Furniture 1,80,000
Investment Fluctuation Reserve 2,20,000 Computers 4,00,000
Capital A/cs: Car 4,00,000
Rohan 6,00,000 Advertisement Expenses 50,000
Sohan 3,00,000 Building 4,00,000
Mohan 3,00,000 12,00,000
21,30,000 21,30,000

Profit-sharing ratio w.e.f. 1st April, 2019 was decided to be equal. It was agreed among
the partners to carry out following adjustments:
(i) Stock to be reduced to ` 80,000.
(ii) All debtors are good.
(iii) Computers to be reduced by ` 40,000.
(iv) Out of the salaries payable ` 20,000 was not payable as the employee left without
notice.