question_answer

A and B are Partners with 3 : 2 ratio. Their balance sheet is given below: Balance Sheet as at 31st December, 2016

Liabilities		Amt (Rs.)	Assets	Amt (Rs.)
Creditors		1,00,000	Bank	40,000
Bills Payable		1,00,000	Debtors	60,000
Workmen?s Compensation Fund		40,000	Building	2,00,000
General Reserve		40,000	Machinery	1,00,000
Bank Overdraft		20,000	Investment	40,000
Profit and Loss		20,000	Furniture	60,000
Capital A/cs			Goodwill	20,000
A	1,00,000
B	1,00,000	2,00,000
		5,20,000		5,20,000

            C is admitted on 1st January, 2017, on the given terms:             (i) C brings capital Rs. 1,00,000 and premium Rs. 20,000.             (ii) Building increases by 20%.             (iii) Bank overdraft would be paid off.             (iv) Investments valued at Rs. 30,000 taken over by A.             (v) Rs. 20,000 included in creditors are not likely to claim payment.             (vi) Capital of all partners adjusted in new ratio on the basis of C?s capital.. (vii) New ratio 2 : 2 : 1. Prepare necessary accounts and balance sheet of the new firm. Or             A, B and C are Partners with 5 : 3 : 2 ratio. Their balance sheet is given below: Balance Sheet as at

Liabilities		Amt (Rs.)	Assets		Amt (Rs.)
Creditors		1,00,000	Cash in Hand		40,000
General Reserve		40,000	Debtors	62,000
Profit and Loss A/c		20,000	(-) Provision for Doubtful Debts	(2,000)	60,000
Workmen?s Compensation Fund		30,000	Land and Building		1,00,000
A	40,000		Plant and Machinery		1,00,000
B	40,000		Goodwill		20,000
C	50,000	1,30,000
		3,20,000			3,20,000

            (i) C takes retirement. (ii) New ratio of A and B is 3 : 2. Goodwill of the firm is Rs. 40,000. (iii) Provision for doubtful debts increased to Rs. 3,000. (iv) Workmen compensation liability fixed at Rs. 20,000. (v) To pay off C, A and B will bring necessary cash so that their capitals are adjusted in new profit sharing ratio. Prepare revaluation account, partners? capital accounts, cash account and balance sheet.

Answer:

Revaluation account (Profit) = Rs. 50,000, Balance of partner's capital account A = Rs. 2,00,000, B = Rs. 2,00,000, C = Rs. 1,00,000 Balance of bank account = Rs. 2,20,000, Total of balance sheet = Rs. 6,80,000 Or Loss on revaluation account = Rs. 1,000 Cash brought in by partner's : A = Rs. 46,900 and B = Rs. 20,900, Cash paid to partner C = Rs 67,800 Balance of cash account = Rs. 40,000, Total of balance sheet = Rs. 2,99,000