The Balance Sheet of Sahil and Nikhil who Share Profit in the ratio of 3:2 as on 31st March 2017.


Balance Sheet as on 31st March 2017

Liabilities  

Amount 

Amount 

Assets 

Amount 

Amount 

Creditors 

 

60,000 

Furniture 

 

60,000 

Capitals: 

 

 

Building 

 

72,000 

Sahil 

80,000 

 

Debtors 

 

40,000 

Nikhil 

1,00,000 

1,80,000 

Closing Stock 

 

48,000 

 

 

 

Cash in Hand 

 

20,000 

 

 

 

 

 

 

 

 

2,40,000 

 

 

2,40,000 


Varad admitted on 1st April 2017 on the following terms:

1. Varad was to pay 1,00,000 for this share of capital.
2. He was also to pay40,000 as his share of Goodwill.
3. The new profit sharing ratio was 3:2:3
4. Old partners decided to revalue the assets as follows:
Building 1,00,000, Furniture 48,000, Debtors 38,000 (in view of likely bad debts)
5. It was found that there was a liability for 3,000 for goods in march 2017 but recorded on 2nd April 2017.
You are required to prepare:
a) Profit and Loss adjustment accounts
b) Capital accounts of the partners
c)Balance Sheet after the admission of Varad.


Solution:
In he Books of Sahil, Nikhil and Varad Partnership Firm.

Revaluation Account


 

 Dr. Cr.

Particulars 

Amount 

Particulars 

Amount 

To Furniture 

12,000 

By Building  

28,000 

To R.D.D. 

2,000 

 

 

To Unrecorded 

3,000 

 

 

 

 

 

 

To Profit 

11,000 

 

 

 

28,000 

 

28,000 

 

 

 

 


Partner's Capital Account

 

 Dr. Cr.

Particulars 

Sahil 

Nikhil 

Varad 

Particulars 

Sahil 

Nikhil 

Varad 

 

 

 

 

By Balance  

80,000 

1,00,000 

 

 

 

 

 

By Balance  

 

 

1,00,000 

To Balance  

1,10,600 

1,20,400 

1,00,000 

By Goodwill 

24,000 

16,000 

 

 

 

 

 

By Revaluation Profit 

6,600 

4,400 

 

 

1,10,600 

1,20,400 

1,00,000 

 

1,10,600 

1,20,400 

1,00,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Balance Sheet as on 1st April 2017

 

 Cr. Dr.

Liabilities 

Amount 

Amount 

Assets 

Amount 

Amount 

Capital A/c: 

 

 

Furniture 

60,000 

 

Sahil 

1,10,600 

 

(-) Depreciation 

12,000 

48,000 

Nikhil 

1,20,400 

 

Building 

72,000 

 

Varad 

1,00,000 

3,31,000 

(+) Appreciation 

28,000 

1,00,000 

Creditors 

 

60,000 

Debtors 

40,000 

 

Unrecorded 

 

3,000 

(-) R.D.D. 

2,000 

38,000 

 

 

 

Closing Stock 

 

48,000 

 

 

 

Cash in Hand 

 

1,60,000 

 

 

 

 

 

 

 

 

3,94,000 

 

 

3,94,000 

Working Note:

Cash/Bank Account

 

 Dr. Cr.

Particulars 

Amount 

Particulars 

Amount 

To Balance  

20,000 

 

 

To Varad Capital 

1,00,000 

 

 

To Goodwill 

40,000 

By Balance 

1,60,000 

 

 

 

 

 

1,60,000 

 

1,60,000 

 

 

 

 

 

 

 

 

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