Page 143 - DEBKVOL-1

6.10 Double Entry Book Keeping—CBSE XII

2. Total Capital of the new firm is ` 6,00,000. New Profit-Sharing Ratio is 2 : 1.
A’s Share of Capital = ` 6,00,000 × 2/3 = ` 4,00,000
C’s Share of Capital = ` 6,00,000 × 1/3 = ` 2,00,000
After all adjustments, A’s Capital is (` 2,00,000 + ` 40,000 + ` 40,000 + ` 4,000 – ` 36,000) = ` 2,48,000.
Therefore, A will bring in (` 4,00,000 – ` 2,48,000) = ` 1,52,000.
After all adjustments, C’s Capital is (` 2,00,000 + ` 10,000 + ` 10,000 + ` 1,000 – ` 45,000) = ` 1,76,000.
Therefore, C will bring in (` 2,00,000 – ` 1,76,000) = ` 24,000.
3. Balance of Workmen Compensation Reserve (` 20,000 – ` 12,000 = ` 8,000) is credited to Partners’ Capital
Accounts in their old profit-sharing ratio.
Illustration 8. (Admission-cum-Retirement: Workmen Compensation Reserve).
X, Y and Z are partners sharing profits and losses in the ratio of 5 : 3 : 2. On 1st April, 2018, R is
admitted into the partnership for 1/5th share in profits and brings ` 1,00,000 as his capital.
On the same date Z retires from the firm. On that date, balance in Workmen Compensation
Reserve is valued at ` 35,000. Claim for workmen compensation was valued at ` 25,000. Give
necessary Journal entries.
Solution: JOURNAL
Date Particulars L.F. Dr. (`) Cr. (`)

2018
April 1 Workmen Compensation Reserve A/c ...Dr. 25,000
To Workmen Compensation Claim A/c 25,000
(Reserve equivalent to claim is transferred to
Workmen Compensation Claim Account)
April 1 Workmen Compensation Reserve A/c ...Dr. 10,000
To X’s Capital A/c 5,000
To Y’s Capital A/c 3,000
To Z’s Capital A/c 2,000
(Balance of workmen compensation reserve in excess
distributed among old partners in old ratio)
April 1 Bank A/c ...Dr. 1,00,000
To R’s Capital A/c 1,00,000
(Capital brought in by R for 1/5th share)
Illustration 9. (Admission-cum-Retirement: Investment Fluctuation Reserve).
A, B and C are partners sharing profits in the ratio of 5 : 3 : 2. A, by agreement, retires and
D joins the firm on the basis of one third share of profit on 1st April, 2018 bringing ` 50,000
towards capital. An extract of their Balance Sheet as at 31st March, 2018 is as follows:

Liabilities ` Assets `
Investments Fluctuation Reserve 3,750 Investment (at Cost) 50,000
Pass Journal entries if market value of Investment is ` 55,000.

Solution: JOURNAL
Date Particulars L.F. Dr. (`) Cr. (`)
2018
April 1 Investments Fluctuation Reserve A/c ...Dr. 3,750
To A’s Capital A/c 1,875
To B’s Capital A/c 1,125
To C’s Capital A/c 750
(Transfer of Investments Fluctuation Reserve to Partners’ Capital Accounts
in their old profit-sharing ratio)