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4.4 Double Entry Book Keeping—CBSE XII

BALANCE SHEET
as at 1st April, 2018
Liabilities ` Assets `

X’s Capital 72,000 Land and Building 3,75,000
Y’s Capital 2,33,000 Investments 96,000
Z’s Capital 3,01,000 Stock 72,000
Creditors 5,00,000 Debtors 3,00,000
Workmen Compensation Claim 18,000 Less: Provision for
Doubtful Debts 15,000 2,85,000
Bank 2,96,000
11,24,000 11,24,000

Working Notes:

1. Statement showing Sacrifice/(Gain) made by each partner:
X Y Z
Old Share 2/6 3/6 1/6
New Share 3/6 2/6 1/6
Difference (Gain or Sacrifice) –1/6 1/6 NIL

Gaining Partner Sacrificing Partner
X gains 1/6th share and Y sacrifices 1/6th share.

2. Calculation of Goodwill:
`
`
` 45,000 + 90,000 + 1,35,000
(i) Average Profit = = ` 90,000
3
(ii) Firm’s Goodwill = ` 90,000 × 2 = ` 1,80,000
Y’s Share of Goodwill = ` 1,80,000 × 1/6 = ` 30,000, which is compensated by X (being the gaining
partner).

3. (i) For Workmen Compensation Reserve: ` `
Workmen Compensation Reserve A/c ...Dr. 30,000
To Workmen Compensation Claim A/c 18,000
To X’s Capital A/c 4,000
To Y’s Capital A/c 6,000
To Z’s Capital A/c 2,000

(ii) For Investments Fluctuation Reserve:
Investments Fluctuation Reserve A/c ...Dr. 10,000
To Investments A/c 4,000
To X’s Capital A/c 2,000
To Y’s Capital A/c 3,000
To Z’s Capital A/c 1,000