Page 284 - AAAXII

Model Test Papers M.271

Working Notes:
1. Adjustment (iv) will be recorded as follows: ` `
Bills Receivable A/c ...Dr. 3,500
To Bad Debts Recovered A/c 3,500
Bad Debts Recovered A/c ...Dr. 3,500
To Revaluation A/c 3,500
2. Calculation of New Profit-sharing Ratio:
Let the total Share of Profit be 1
1 3
C’s share = 1/4; Remaining Share = 1 – = , which will be shared by A and B in their Old Profit-sharing Ratio,
i.e., 2 : 1. Thus, 4 4
A’s New Share = 2/3 × 3/4 = 2/4; B’s New Share = 1/3 × 3/4 = 1/4
Thus, New Profit-sharing Ratio of A, B and C = 2/4 : 1/4 : 1/4 or 2 : 1 : 1.

3. Adjustment of Capitals:
C’s Capital for 1/4 share = ` 30,000
Total Capital of New Firm = ` 1,20,000, which is contributed by A, B and C in their New Profit-sharing Ratio. Thus,
A’s New Capital = ` 1,20,000 × 2/4 = ` 60,000;
B’s New Capital = ` 1,20,000 × 1/4 = ` 30,000;
C’s New Capital = ` 1,20,000 × 1/4 = ` 30,000.
Or
Dr. REVALUATION ACCOUNT Cr.
Particulars ` Particulars `
To Stock A/c 1,800 By Creditors A/c 3,900
To Furniture A/c 1,500
To Gain (Profit) transferred to:
A’s Capital A/c 240
B’s Capital A/c 240
C’s Capital A/c 120 600
3,900 3,900

Dr. PARTNERS’ CAPITAL ACCOUNTS Cr.
Particulars A B C Particulars A B C
` ` ` ` ` `
To Goodwill A/c 4,000 4,000 2,000 By Balance b/d 40,000 40,000 30,000
To B’s Capital A/c 4,400 ... 4,400 By General Reserve A/c 2,400 2,400 1,200
To Cash A/c ... 49,840 ... By Workmen Compensation
To Balance c/d 62,760 ... 41,840 Reserve A/c 2,400 2,400 1,200
By Revaluation A/c 240 240 120
By A’s Capital A/c ... 4,400 ...
By C’s Capital A/c ... 4,400 ...
By Cash A/c (WN 3) 26,120 ... 15,720
71,160 53,840 48,240 71,160 53,840 48,240