Practical Problem 04
Practical Problems | Q 4 | Page 185
Rohan, Rohit and Sachin are partners in a firm sharing profit and losses in the proportion 3:1:1 respectively. | |||
Their balance sheet as on 31st March 2018 is as shown below. | |||
BALANCE Sheet AS on 31 st March 2018 | |||
Liabilities | Amt ` | Assets | Amt ` |
Creditors | 40,000 | Bank | 12,500 |
General Reserve | 50,000 | Debtors | 60,000 |
Bills payable | 25,000 | Live Stock | 50,000 |
Capital Accounts : | Building | 75,000 | |
Rohan | 1,25,000 | Plant and Machinery | 35,000 |
Rohit | 1,00,000 | Motor Truck | 1,00,000 |
Sachin | 50,000 | Goodwill | 57,500 |
3,90,000 | 3,90,000 | ||
On 1st April, 2018 Sachin retired and the following adjustments have been agreed upon. | |||
1.Goodwill was revalued at ` 50,000 | |||
2. Assets and Liabilities were revalued as follows : Debtors Rs 50,000, Live Stock, Rs 45,000; | |||
Building Rs1,25000, Plant and Machinery Rs30,000, Motor Truck Rs 95,000 and Creditors Rs 30,000 | |||
3. Rohan and Rohit contributed additional capital through Net Banking of Rs 50,000 and Rs 25,000 respectively. | |||
4. Balance of Sachin’s Capital Account is transferred to his Loan Account. | |||
Give Journal entries in the books of new firm. | |||
Solution :
Working:
Dr Revaluation A/c Cr | |||
Particular | Amount | Particular | Amount |
To Debtors A/c | 10,000 | By Building A/c | 50,000 |
To Live Stock A/c | 5,000 | By Creditors A/c | 10,000 |
To Plant and Machinery A/c | 5,000 | ||
To Motor Truck A/c | 5,000 | ||
To Goodwill A/c | 7,500 | ||
To Partner’s Capital A/c (Profit) | |||
Rohan Capital A/c 16,500 | |||
Rohit Capital A/c 5,500 | |||
Sachin Capital A/c 5,500 | 27,500 | ||
60,000 | 60,000 | ||
Dr Partners Capital A/c Cr | |||||||
Particular | Rohan | Rohit | Sachin | Particular | Rohan | Rohit | Sachin |
To Loan A/c | – | – | 65,500 | By Balance b/d | 1,25,000 | 1,00,000 | 50,000 |
To Balance c/d | 2,21,500 | 1,40,500 | – | By Gen Res A/c | 30,000 | 10,000 | 10,000 |
By Revaluation A/c (Profit) | 16,500 | 5,500 | 5,500 | ||||
By Bank A/c | 50,000 | 25,000 | – | ||||
2,21,500 | 1,40,500 | 65,500 | 2,21,500 | 1,40,500 | 65,500 | ||
Journal entries in the books of Partnership firm | ||||
Date | Particulars | LF | Debit | Credit |
2018 | General Reserve A/c …………………………………….Dr | 50,000 | ||
Apr-01 | To Rohan Capital A/c | 30,000 | ||
To Rohit Capital A/c | 10,000 | |||
To Sachin Capital A/c | 10,000 | |||
(Being General Reserve Distributed Among all Partner) | ||||
Apr-01 | Revaluation A/c …………………………………………Dr | 32,500 | ||
To Debtors A/c | 10,000 | |||
To Live Stock A/c | 5,000 | |||
To Plant and Machinery A/c | 5,000 | |||
To Motor Truck A/c | 5,000 | |||
To Goodwill A/c | 7,500 | |||
(Being Asset Depreciated) | ||||
Apr-01 | Building A/c …………………………………………….Dr | 50,000 | ||
Creditors A/c ……………………….……………………Dr | 10,000 | |||
To Revaluation A/c | 60,000 | |||
(Being Building appreciated and Creditors amount is Less payable) | ||||
Apr-01 | Revaluation A/c …………………………………………Dr | 27,500 | ||
To Rohan’s Capital A/c | 16,500 | |||
To Rohit’s Capital A/c | 5,500 | |||
To Sachin’s Capital A/c | 5,500 | |||
(Being Profit on Revaluation Transfer to Capital A/c) | ||||
Apr-01 | Bank A/c ……………………………………………….Dr | 75,000 | ||
To Rohan’s Capital A/c | 50,000 | |||
To Rohit’s Capital A/c | 25,000 | |||
(Being additional capital brought by Partners) | ||||
Apr-01 | Sachin’s Capital A/c ……………..……………………..Dr | 65,500 | ||
To Sachin’s Loan A/c | 65,500 | |||
(Being Balance of Sachin A/c Transfer to Sachin’s Loan A/c) | ||||