Page 124 - DEBKVOL-1

5.40 Double Entry Book Keeping—CBSE XII

12. A and B share profits in the proportion of 3/4 and 1/4. Their Balance Sheet as at 31st March, 2018 was:
Liabilities ` Assets `
Sundry Creditors 41,500 Cash at Bank 26,500
General Reserve 4,000 Bills Receivable 3,000
Capital A/cs: Debtors 16,000
A 30,000 Stock 20,000
B 16,000 46,000 Fixtures 1,000
Land and Building 25,000
91,500 91,500

On 1st April, 2018, C was admitted into partnership for 1/5th share on the following terms:
(a) C pays ` 10,000 as his capital.
(b) C pays ` 5,000 for goodwill. Half of this sum is to be withdrawn by A and B.
(c) Stock and Fixtures be reduced by 10% and a 5% Provision for Doubtful Debts be created on Debtors
and Bills Receivable.
(d) The value of Land and Building be appreciated by 20%.
(e) There being a claim against the firm for damages, a liability to the extent of ` 1,000 should be created.
(f ) An item of ` 650 included in Sundry Creditors is not likely to be claimed and hence should be written
back.
Record the above transactions (Journal entries) in the books of the firm assuming that the profit-sharing
ratio between A and B has not changed. Prepare Balance Sheet on the admission of C.
[Ans.: Gain (Profit) on Revaluation—` 1,600; Capital A/cs: A—` 36,075; B—` 18,025;
C—` 10,000; Balance Sheet Total—` 1,05,950.]
13. X and Y are partners sharing profits and losses equally. Their Balance Sheet as at 31st March, 2018 was:
Liabilities ` Assets `
Capital A/cs: Land and Building 30,000
X 30,000 Plant and Machinery 20,000
Y 20,000 50,000 Furniture and Fittings 5,000
Current A/cs: Stock 15,000
X 8,000 Debtors 15,000
Y 6,000 14,000 Less: Provision for Doubtful Debts 1,000 14,000
Creditors 26,000 Bills Receivable 6,000
Bills Payable 10,000 Bank 10,000
1,00,000 1,00,000

Z is admitted as a partner from 1st April, 2018 for 1/4th share under the following terms:
(a) Z is to introduce ` 25,000 as capital and also ` 10,000 as goodwill premium by cheque.
(b) Creditors included a sum of ` 1,500 which was not to be paid. A liability for compensation to workers
amounted to ` 2,000 existed that was not recorded.
(c) Provision for Doubtful Debts is to be created @ 10% on Debtors.
(d) In regard to the Partners’ Capital Accounts, Fixed Capital Accounts Method is to be converted into
Fluctuating Capital Accounts Method.
(e) Bills of ` 4,000 accepted from Creditors were not recorded in the books.
(f) X provides Loan of ` 10,000 by cheque to the business carrying interest @ 15% p.a.
(g) Partners withdrew amount of goodwill.
You are required to prepare Revaluation Account, Partners’ Capital Accounts, Bank Account and Balance
Sheet of the new firm.
[Ans.: Loss on Revaluation—` 1,000; Partners’ Capital A/cs: X—` 37,500; Y—` 25,500;
Z—` 25,000; Balance Sheet Total—` 1,34,500; Creditors—` 20,500;
Bills Payable ` 14,000; Bank—` 45,000.]