Practical Problem 05

Mr. Kishor & Mr. Lal were in partnership sharing profits & losses in the proportion of 3/4 and 1/4 respectively.
Balance Sheet as on 31st March,2018 .
Liabilities	Rs	Rs	Asset	Rs	Rs
Creditors		1,20,000	Land and Building		75,000
General Reserve		12,000	Furniture		6,000
Capital A/c:			Stock		60,000
Kishor	90,000		Debtors		60,000
Lal	48,000	1,38,000	Bills Receivable		39,000
			Cash at Bank		30,000
		2,70,000			2,70,000
They decided to admit Ram on 1 April 2018 on following terms:
1. He should be given 1/5th share in profit and for that he brought in ` 60,000 as capital through RTGS.
2. Goodwill should be raised at ` 60,000
3. Appreciate Land and Building by 20%
4. Furniture and Stock are to be depreciated by 10%
5. The Capitals of all partners should be adjusted in their new profit sharing ratio through Bank A/c.
Pass necessary Journal Entries in the books of the Partnership firm and a Balance sheet of new firm.

Journal Entry In the Books of New Firm
Date	Particular	Amt	Amt
1st April 18
1	General Reserve A/c…………………………………………..Dr	12,000
	To Kishore Capital A/c		9,000
	To Lal Capital A/c		3,000
	(Being Reserve Distributed among Old partners)

2	Bank A/c ………………………………………………………….Dr	60,000
	To Ram Capital A/c		60,000
	( Being Capital Brought by Ram)

3	Goodwill A/c………………………………………………………Dr	60,000
	To Kishore Capital A/c		45,000
	To Lal Capital A/c		15,000
	(Being Goodwill Raised)

4	Land and Building A/c ……………………………………….Dr	15,000
	To Revaluation A/c		15,000
	(Being Asset Appreciated by 20%)

5	Revaluation A/c………………………………………………….Dr	6,600
	To Furniture A/c		600
	To Stock A/c		6,000
	(Being Asset Depreciated by 10%)

6	Revaluation A/c………………………………………………….Dr	8,400
	To Kishore Capital A/c		6,300
	To Lal Capital A/c		2,100
	(Being Profit on revaluation Distributed)

7	Lal Capital A/c…………………………………………………….Dr	8,100
	To Bank A/c		8,100
	(Being Excess Capital paid to Lal)

8	Bank A/c	29,700
	TO Kishore Capital A/c		29,700
	(Being Deficit Capital Received from Kishore)

		1,99,800	1,99,800

Working

Revaluation Profit = Credit Balance – Debit Balance = 15,000 – (600+ 6,000) = 8,400

Dr Partner Capital Account Cr
Particular	Kishore	Lal	Ram	Particular	Kishore	Lal	Ram
To Bank A/c		8,100		By Balance b / d	90,000	48,000
To Balance c / d	1,80,000	60,000	60,000	By Bank A/c			60,000
				By Goodwill A/c	45,000	15,000
				By Gen. Res A/c	9,000	3,000
				By Revaluation A/c (Profit)	6,300	2,100
				By Bank A/c	29,700
	1,80,000	68,100	60,000		1,80,000	68,100	60,000