Practical Problem 05
Practical Problems | Q 5 | Page 204
The BALANCE Sheet of SOHAN, ROHAN AND MOHAN who were SHARING profits | |||
AND Losses in the RATIO of 3:2:1 AS follows. | |||
Balance Sheet as on 31st March 2019 | |||
Liabilities | Amount | Assets | Amount |
Bank Overdraft | 18,000 | Bank | 48,000 |
Creditors | 85,000 | Debtors | 30,000 |
Bills payable | 40,000 | Land and Building | 40,000 |
Bank Loan | 1,50,000 | Machinery | 80,000 |
General Reserve | 27,000 | Investments | 40,000 |
Capital Account : | Computers | 40,000 | |
Sohan | 20,000 | Stock | 90,000 |
Rohan | 20,000 | Patents | 12,000 |
Mohan | 20,000 | ||
3,80,000 |
| 3,80,000 | |
Mr. ROHAN died on 1 st October 2019 AND the following ADJUSTMENTS were MADE. | |||
1. Goodwill of the firm is VALUED AT 30,000 | |||
2. LAND AND Building AND MACHINERY were found to be UNDERVALUED by 20% | |||
3. Investments ARE VALUED AT ` 60,000 | |||
4. Stock to be UNDERVALUED by ` 5000 AND A provision of 10% AS debtors WAS required. | |||
5. PATENTS were VALUE less | |||
6. Mr. ROHAN WAS entitled to SHARE in profits up to the DATE of DEATH AND it WAS decided THAT he MAY | |||
be ALLOWED to RETAIN his DRAWINGS AS his SHARE of profit. ROHAN’s DRAWINGS till DATE of DEATH WAS | |||
Rs 25000 | |||
Prepare PARTNERS CAPITAL ACCOUNTS. | |||
Dr Partner Capital A/c Cr | |||||||
Particular | Sohan | Rohan | Mohan | Particular | Sohan | Rohan | Mohan |
To Drawing A/c | 25,000 | By Balance b/d | 20,000 | 20,000 | 20,000 | ||
To Executive Loan A/c | 49,000 | By Revaluation A/c | 15,000 | 10,000 | 5,000 | ||
To Balance c/d | 63,500 | 34,500 | By General Reserve A/c | 13,500 | 9,000 | 4,500 | |
By Goodwill A/c | 15,000 | 10,000 | 5,000 | ||||
By P & L Suspense A/c | 25,000 | ||||||
63,500 | 74,000 | 34,500 | 63,500 | 74,000 | 34,500 | ||
Dr Revaluation A/c Cr | |||||
Particular | Amount | Amount | Particular | Amount | Amount |
To Stock A/c | 5,000 | By Land & Building A/c | 10,000 | ||
To R.D.D A/c | 3,000 | By Machinery A/c | 20,000 | ||
To Patents A/c | 12,000 | By Investment A/c | 20,000 | ||
To Partner’s Capital A/c | |||||
Sohan | 15,000 | ||||
Rohan | 10,000 | ||||
Mohan | 5,000 | 30,000 | |||
50,000 | 50,000 | ||||
2. Firm goodwill A/c = Rs 30,000 distributed among partner in old Ratio i.e 3:2:1, Sohan :15,000 Rohan : 10,000 Mohan : 5,000 |
3. Increase in Value of land = (Book value)/(100-20) x 20 = 40,000/80 x 20 = 10,000 |
4. Increase in value of Machinery = (Book value)/(100-20) x 20 = 80,000/80 x 20 = 20,000 |