Page 75 - DEBKVOL-1

Chapter 4 Change in Profit-Sharing Ratio Among the Existing Partners 4.7
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(iv) Land and Buildings to be appreciated by 10% and Machinery to be reduced by 5%.

(v) Goodwill of the firm is valued at ` 1,00,000.
(vi) Total capital of the firm was to be ` 10,00,000 and is to be in their profit-sharing ratio.
Excess or short capital is to be adjusted through their Current Accounts.
Pass the Journal entries and prepare Balance Sheet of the new firm.
Solution: JOURNAL

Date Particulars L.F. Dr. (`) Cr. (`)
2018
April 1 Computers A/c ...Dr. 25,000
To Supplier’s A/c 25,000
(Computer purchased on credit remained unrecorded, now recorded)
Revaluation A/c ...Dr. 30,000
To Stock A/c 10,000
To Provision for Doubtful Debts A/c 10,000
To Machinery A/c 10,000
(Decrease in value of assets recorded and provision made)
Land and Buildings A/c ...Dr. 50,000
To Revaluation A/c 50,000
(Increase in value of land and buildings recorded)

Revaluation A/c ...Dr. 20,000
To Jaspal’s Capital A/c 10,000
To Apoorv’s Capital A/c 6,000
To Ankit’s Capital A/c 4,000
(Gain (profit) on revaluation credited to Partners’ Capital Accounts in
their old profit-sharing ratio)
Apoorv’s Capital A/c ...Dr. 10,000
To Jaspal’s Capital A/c 10,000
(Jaspal’s sacrificed share of goodwill adjusted by debiting Apoorv
(gaining partner))
General Reserve A/c ...Dr. 2,00,000
To Jaspal’s Capital A/c 1,00,000
To Apoorv’s Capital A/c 60,000
To Ankit’s Capital A/c 40,000
(General Reserve credited to Capital Accounts)
Jaspal’s Capital A/c ...Dr. 2,20,000
Ankit’s Capital A/c ...Dr. 44,000
To Jaspal’s Current A/c 2,20,000
To Ankit’s Current A/c 44,000
(Excess capital transferred to respective Partners’ Current Accounts)

Apoorv’s Current A/c ...Dr. 44,000
To Apoorv’s Capital A/c 44,000
(Shortfall in capital of Apoorv debited to his Current Account)