Question 97 Chapter 5 of +2-A
97. A and B are partners in a firm sharing profits and losses in the ratio 3 : 1. They admit C for 1/4th share on 31st March, 2014 when their Balance Sheet was as follows:
| Liabilities | Assets | ||||
| Employees Provident Fund | 17,000 | Cash | 6,100 | ||
| Workmen Compensation Reserve | 6,000 | Stock | 15,000 | ||
| Investment Fluctuation Reserve | 4,100 | Debtors | 50,000 | ||
| Capital's A/cs | Less : Provision for Doubtful Debts | 2,000 | 48,000 | ||
| A | 54,000 | Investments | 7,000 | ||
| B | 35,000 | 89,000 | Goodwill | 40,000 | |
| 1,16,100 | 1,16,100 |
Liabilities Assets
Employees Provident Fund 17,000 Cash 6,100
Workmen Compensation Reserve 6,000 Stock 15,000
Investment Fluctuation Reserve 4,100 Debtors 50,000
Capital's A/cs Less : Provision for Doubtful Debts 2,000 48,000
A 54,000 Investments 7,000
B 35,000 89,000 Goodwill 40,000
1,16,100 1,16,100
Revaluation Account
| Particular |
Amount | Particular | Amount | ||
|---|---|---|---|---|---|
| To Bad debts A/c |
1,000 | ||||
| Loss on Revaluation | |||||
| A's Capital A/c | 750 | ||||
| B's Capital A/c | 250 | 1,000 | |||
| 1,000 | 1,000 | ||||
Partners’ Capital Account
| Parti culars |
A | B | C |
Partic |
A | B | C |
|---|---|---|---|---|---|---|---|
| To Revaluation A/c | 750 | 250 | - | By Balance B/d | 54,000 | 35,000 | - |
| To Goodwill A/c | 30,000 | 10,000 | By Bank | - | - | 23,200 | |
| By Premium for Goodwill | 12,000 | 4,000 | - | ||||
| By WCF | 3,000 | 1,000 | |||||
| By IIF | 1,200 | 400 | |||||
| To Balance c/d | 2,00,000 | 2,00,000 | 2,00,000 | ||||
| 3,16,000 | 3,04,000 | 2,00,000 | 3,16,000 | 3,04,000 | 2,00,000 |
Working Note:-
Calculation of C's Capital
| C's Capital | = | Total Adjusted Capital of A and B × Reciprocal of Combined Profit Share × C's Profit Share A's Adjusted Capital |
| = | 54,000+12,000+3,000+1,200-750-30,000 | |
| = | 39,450 + 30,150 | |
| = | Rs 69,600 |
| C’s Capital | = | 69,600 | x | 4 | x | 1 |
| 3 | 4 | |||||
| = | 23,200 |
T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)
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Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
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