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M.360 An Aid to Accountancy—CBSE XII
16. X, Y and Z were in partnership sharing profits in proportion to their capitals. Their
Balance Sheet as on 31st March, 2018 was as follows:
Liabilities ` Assets `
Sundry Creditors 15,600 Cash 16,000
Employees’ Provident Fund 10,000 Debtors 20,000
Reserve 6,000 Less: Provision for Doubtful Debts 400 19,600
Capital A/cs: Stock 28,000
X 90,000 Machinery 48,000
Y 60,000 Building 1,00,000
Z 30,000 1,80,000
2,11,600 2,11,600
On the above date, Y retired owing to ill health. They agreed to the following
adjustments in the books of account to decide the amount payable to Y:
(i) Building to be appreciated by 10%.
(ii) Provision for Doubtful Debts to be increased to 5% of Debtors.
(iii) Machinery to be brought down by 15%.
(iv) Goodwill of the firm be valued at ` 36,000 and be adjusted into the Capital
Accounts of X and Z, who will share profits in future in the ratio of 3 : 1.
(v) Provision be made for outstanding repairs bill for ` 3,000.
(vi) Included in the value of Sundry Creditors is ` 1,800 for an outstanding legal
claim, which will not arise.
(vii) Out of the insurance premium paid ` 2,000 is to be treated as prepaid insurance.
The amount was earlier debited to Profit and Loss Account.
(viii) X and Z also decide that the total capital of the new firm will be ` 1,20,000 in
their profit-sharing ratio.
(ix) Y to be paid ` 9,000 immediately and balance to be transferred to his Loan
Account.
Prepare Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of
the new firm after Y’s retirement.
Or
Annu and Mannu are partners in a firm sharing profits in the ratio of 3 : 2. Their
Balance Sheet as on 31st March, 2018 is as follows:
Liabilities ` Assets `
Creditors 56,000 Cash at Bank 77,000
General Reserve 10,000 Debtors 42,000
Investment Fluctuation Reserve 4,000 Less: Provision for Doubtful Debts 7,000 35,000
Capital A/cs: Investments (Market Price ` 19,000) 21,000
Annu 1,19,000 Building 98,000
Mannu 1,12,000 2,31,000 Machinery 70,000
3,01,000 3,01,000