Accounting Solution

The following is the Balance Sheet of Om and Jay on 31st March 2018, they share profits and losses in the ratio 3:2




Balance Sheet as on 31st March 2018

Liabilities 

Amount 

Assets 

Amount 

Creditors 

30,000 

Cash 

3,000 

Capital A/c: 

 

Building 

15,000 

Om 

210,00 

Machinery 

21,000 

Jay 

21,000 

Furniture 

900 

Current A/c: 

 

Stock 

12,300 

Om  

3,750 

Debtors 

27,000 

Jay 

3,450 

 

 

 

 

 

 

 

79,200 

 

79,200 


They take Jagdish into partnership on 1st April 2018 the terms being


1. Jagdish should pay 3,000 as his share of Goodwill. 50% of goodwill withdrawn by partners in cash.
2. He should bring 9,000 as capital for 1/4th share in future profits.
3. Building to be valued at 18,000, Machinery and Furniture to be reduced by 10% 
4. A Provision of 5% on debtors to be made for doubtful debts.
5. Stock is to be taken at the value of 15,000.

Prepare profit and loss A/c, Partner's current A/c Balance Sheet of the new firm.  

Solution:
In the Books of Om, Jay and Jagdish Partnership Firm.

Revaluation Account

 

 Dr. Cr.

Particulars 

Amount 

Particulars 

Amount 

To Machinery 

2,100 

By land & Building 

3.000 

To Furniture 

90 

By Stock 

2,700 

To R.D.D. 

1,350 

 

 

 

 

 

 

To Profit 

2,160 

 

 

 

5,700 

 

5,700 

 

 

 

 



Partner's Current Account

 

 Dr. Cr.

Particulars 

Om 

Jay 

Particulars 

Om 

Jay 

To Goodwill 

900 

600 

By Balance  

3,750 

3,450 

 

 

 

By Goodwill 

1,800 

1,200 

To Balance 

5,946 

4,914 

BY Revaluation Profit 

1,296 

864 

 

 

 

 

 

 

 

6,846 

5,514 

 

6,846 

5,514 

 

 

 

 

 

 

 

 

 

 

 

 



Balance Sheet as on 1.04.2018

 Cr. Dr.

 

Liabilities 

Amount 

Amount 

Assets 

Amount 

Amount 

Capital A/c: 

 

 

Land & Building 

15,000 

 

Om  

21,000 

 

(+) Appreciation 

3,000 

18,000 

Jay 

21,000 

 

Machinery 

21,000 

 

Jagdish 

9,000 

51,000 

 

 

 

Current A/c: 

 

 

(-) Depreciation 

2,100 

18,900 

Om  

5,946 

 

Furniture 

900 

 

Jay 

4,914 

10,860 

(-) Depreciation 

90 

810 

Creditors 

 

30,000 

 

 

 

 

 

 

Stock 

12,300 

 

 

 

 

(+) Appreciation 

2,700 

15,000 

 

 

 

Debtors 

27,000 

 

 

 

 

(-) R.D.D. 

1,350 

25,650 

 

 

 

Cash in Hand 

 

13,500 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

91,860 

 

 

91,860 


Working Note:

Cash / Bank Account


 

 Dr. Cr.

Particulars 

Amount 

Particulars 

Amount 

To Balance  

3,000 

By Om Capital  

900 

To Jagdish Capital A/c 

9,000 

By Jay Capital 

600 

To Goodwill  

3,000 

By Balance  

13,500 

 

 

 

 

 

15,000 

 

15,000 

 

 

 

 

 

 

 

 

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