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Accountancy · 2024 · 6 marks
Reconstitution of a Partnership Firm – Admission of a PartnerAdjustment for Accumulated Profits and Losses6 markslong answer
CBSE 2024 · Region 2 · Set 3 · Q25
Sanju and Manju were partners in a firm sharing profits and losses in the ratio of 3: 2. Their Balance Sheet on 31st March, 2023 was as follows:…
Sanju and Manju were partners in a firm sharing profits and losses in the ratio of $\displaystyle 3$ : 2. Their Balance Sheet on 31st March, $\displaystyle 2023$ was as follows :
Balance Sheet of Sanju and Manju as at 31st March, $\displaystyle 2023$
| Liabilities | Amount (₹) | Assets | Amount (₹) |
| Capitals : | Plant and Machinery | $\displaystyle 80,000$ | |
| Sanju $\displaystyle 1,40,000$ | Furniture | $\displaystyle 1,32,000$ | |
| Manju $\displaystyle 1,20,000$ | $\displaystyle 2,60,000$ | Investments | $\displaystyle 60,000$ |
| General Reserve | $\displaystyle 40,000$ | Debtors $\displaystyle 76,000$ | |
| Creditors | $\displaystyle 1,80,000$ | Less : Provision for doubtful debts $\displaystyle 4,000$ | $\displaystyle 72,000$ |
| Cash at Bank | $\displaystyle 1,36,000$ | ||
| $\displaystyle 4,80,000$ | $\displaystyle 4,80,000$ |
1th On 1st April, $\displaystyle 2023$, Uday was admitted into the firm for share $\displaystyle 4$ in profits on the following terms : (i) Furniture was to be depreciated by ₹ $\displaystyle 6$,000. (ii) Investments were valued at ₹ $\displaystyle 72$,000. (iii) Plant and Machinery was taken over by Sanju and Manju in their profit sharing ratio. (iv) Uday will bring in proportionate capital and ₹ $\displaystyle 10,000$ as his share of goodwill premium in cash. Prepar e Revaluation Account and Partners' Capital Accounts.
Ravi, Tanu and Sara were partners in a firm sharing profits and losses in the ratio of $\displaystyle 5$ : $\displaystyle 3$ : 2. Ravi retired from the firm due to his illness on 31st March, 2023. The Balance Sheet of the firm on that date was as follows :
Balance Sheet of Ravi, Tanu and Sara as at 31st March, $\displaystyle 2023$
| Liabilities | Amount (₹) | Assets | Amount (₹) |
| Capitals : | Fixed Assets | $\displaystyle 1,20,000$ | |
| Ravi $\displaystyle 80,000$ | Stock | $\displaystyle 1,60,000$ | |
| Tanu $\displaystyle 1,24,000$ | Debtors | $\displaystyle 2,00,000$ | |
| Sara $\displaystyle 66,000$ | Cash in hand | $\displaystyle 80,000$ | |
| $\displaystyle 2,70,000$ | |||
| Profit and Loss | $\displaystyle 1,70,000$ | ||
| Employees' Provident Fund | $\displaystyle 20,000$ | ||
| Creditors | $\displaystyle 1,00,000$ | ||
| $\displaystyle 5,60,000$ | $\displaystyle 5,60,000$ |
Additional Information : (i) Creditors included a sum of ₹ $\displaystyle 4,000$ which was not likely to be claimed. (ii) A provision of $\displaystyle 5$% for doubtful debts was to be created on debtors. (iii) Goodwill of the firm was valued at ₹ $\displaystyle 1,60$,000. (iv) Fixed Assets were found overvalued by ₹ $\displaystyle 5$,000. (v) New profit sharing ratio of Tanu and Sara was agreed at $\displaystyle 2$ : 3. (vi) The amount due to Ravi was transferred to his loan account. Prepare Revaluation Account and Partners' Capital Accounts on Ravi's retirement.
Marking-scheme solution
Dr. Revaluation A/c Cr.
Particulars Amount Particulars Amount
To Furniture A/c $\displaystyle 6,000$ By Investments A/c $\displaystyle 12,000$
To Profit transferred to Partners’
Capital Accounts:
Sanju $\displaystyle 3,600$
Manju $\displaystyle 2,400$ $\displaystyle 6,000$
$\displaystyle 12,000$ $\displaystyle 12,000$
Dr. Partners’ Capital A/c Cr.
Particulars Sanju Manju Uday Particulars Sanju Manju Uday
To Plant & $\displaystyle 48,000$ $\displaystyle 32,000$ - By Balance b/d $\displaystyle 1,40,000$ $\displaystyle 1,20,000$ -
Machinery By Cash A/c - - $\displaystyle 78,667$
To Balance c/d $\displaystyle 1,25,600$ $\displaystyle 1,10,400$ $\displaystyle 78,667$ By Premium for
Goodwill A/c $\displaystyle 6,000$ $\displaystyle 4,000$ -
By Revaluation
A/c $\displaystyle 3,600$ $\displaystyle 2,400$ -
By General Reserve
A/c $\displaystyle 24,000$ $\displaystyle 16,000$ -
$\displaystyle 1,73,600$ $\displaystyle 1,42,400$ $\displaystyle 78,667$ $\displaystyle 1,73,600$ $\displaystyle 1,42,400$ $\displaystyle 78,667$
Working notes:
Calculation of Uday’s Capital:
Combined capital of Sanju and Manju= $\displaystyle 1,25,600$+ $\displaystyle 1,10,400$= ₹$\displaystyle 2,36,000$
Capital brought by Uday= $\displaystyle 2,36,000$ X $\displaystyle 4$/$\displaystyle 3$ X $\displaystyle 1$/$\displaystyle 4$ = ₹$\displaystyle 78,667$
Q.(b) Ravi, Tanu and Sara were partners..............................
Ans.
Dr. Revaluation A/c Cr.
Particulars Amount Particulars Amount
To Provision for doubtful $\displaystyle 10,000$ By Creditors A/c $\displaystyle 4,000$
debts A/c By Loss transferred to Partners’
To Fixed Assets A/c $\displaystyle 5,000$ Capital Accounts:
Ravi $\displaystyle 5,500$
Tanu $\displaystyle 3,300$
Sara $\displaystyle 2,200$ $\displaystyle 11,000$
$\displaystyle 15,000$ $\displaystyle 15,000$
Dr. Partners’ Capital A/c Cr.
Particulars Ravi Tanu Sara Particulars Ravi Tanu Sara
To Revaluation A/c $\displaystyle 5,500$ $\displaystyle 3,300$ $\displaystyle 2,200$ By Balance b/d $\displaystyle 80,000$ $\displaystyle 1,24,000$ $\displaystyle 66,000$
To Ravi’s Capital A/c By Tanu’s
$\displaystyle 16,000$ $\displaystyle 64,000$ Capital A/c $\displaystyle 16,000$ - -
To Ravi’s Loan A/c $\displaystyle 2,39,500$ - - By Sara’s
To Balance c/d - $\displaystyle 1,55,700$ $\displaystyle 33,800$ Capital A/c $\displaystyle 64,000$ - -
By Profit & Loss A/c $\displaystyle 85,000$ $\displaystyle 51,000$ $\displaystyle 34,000$
$\displaystyle 2,45,000$ $\displaystyle 1,75,000$ $\displaystyle 1,00,000$ $\displaystyle 2,45,000$ $\displaystyle 1,75,000$ $\displaystyle 1,00,000$
Working Notes:
Gaining Share= New share - Old share
Tanu = $\displaystyle 2$/$\displaystyle 5$ - $\displaystyle 3$/$\displaystyle 10$ = $\displaystyle 1$/$\displaystyle 10$ (Gain)
Sara = $\displaystyle 3$/$\displaystyle 5$ - $\displaystyle 2$/$\displaystyle 10$ = $\displaystyle 4$/$\displaystyle 10$ (Gain)
Gaining ratio of Tanu & Sara = $\displaystyle 1$: $\displaystyle 4$
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