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5.42 Double Entry Book Keeping—CBSE XII

16. V and N were partners in a firm sharing profits in the ratio of 7 : 3. Their Balance Sheet as at
31st March, 2018 was:
Liabilities ` Assets `
Creditors 10,000 Cash 15,500
Bills Payable 15,000 Debtors 20,000
Provision for Doubtful Debts 500 Bills Receivable 50,000
General Reserve 10,000 Stock 30,000
P’s Loan 80,000 Building 1,00,000
Capital A/cs: Land 1,00,000
V 1,50,000
N 50,000 2,00,000
3,15,500 3,15,500
On 1st April, 2018, they admitted P as a new partner on the following terms:
(a) P will get 1/5th share in the profits of the firm.
(b) P’s Loan will be converted into her capital.
(c) The goodwill of the firm was valued at ` 2,00,000 and P brought her share of goodwill premium in
cash.
(d) The Provision for Doubtful Debts was to be made equal to 4% of Debtors.
(e) Stock was to be reduced by 5%.
(f ) Land was to be appreciated by 10%.
Prepare Revaluation Account, Capital Accounts of V, N and P and Balance Sheet of the new firm as at 1st
April, 2018. (OD 2002, Modified)
[Ans.: Gain (Profit) on Revaluation—` 8,200; Capital A/cs: V—` 1,90,740; N—` 67,460;
P—` 80,000; Balance Sheet Total—` 3,64,000.]
17. A and B are partners in a firm sharing profits and losses in the ratio of 3 : 1. On 1st April, 2018 their
Balance Sheet was:
Liabilities ` Assets `
Capital A/cs: Goodwill 20,000
A 2,00,000 Plant 1,00,000
B 80,000 2,80,000 Patents 10,000
Sundry Creditors 70,000 Stock 1,42,000
Sundry Debtors 50,000
Cash at Bank 8,000
Profit and Loss A/c 20,000
3,50,000 3,50,000

They admit C into partnership with 1/6th share in profits on the following terms:
(a) Goodwill is to be valued at one year’s purchase of the five years’ average profit which were ` 20,000;
` 30,000; ` 30,000; ` 50,000 and ` 50,000 respectively.
(b) C agrees to contribute 1/4th of the combined capital of A and B in the new firm.
(c) Plant is to be written down to ` 90,000 and Patents written up to ` 12,000.
(d) A Provision for Doubtful Debts is to be created @ 2% of Sundry Debtors.
(e) A liability of ` 5,000 included in Sundry Creditors is not likely to arise.
Give Journal entries and Balance Sheet after the admission of C.
[Ans.: Loss on Revaluation—` 4,000; Capital A/cs: A—` 1,71,500; B—` 70,500;
C—` 60,500; Balance Sheet Total—` 3,67,500.]
[Hint: Firm’s Goodwill = ` 36,000; C’s Share of Goodwill = ` 6,000.]