test solution

Uncategorized /
Accounting Solutions
61
Old Profit Sharing Ratio       Madhu Vidhi Total            
        2 3 5            
New Partner Admitted   Gayatri        
Gayatri's Share in profits   1/2(5/10 as per new ratio given in question)       
Calculation of Sacrificing ratio            
New Profit Sharing Ratio         Madhu Vidhi Gayatri Total        
          2 3 5 10        
Sacrificing Ratio         Madhu Vidhi Total          
          1/5 3/10 or          
          2 3 5          
     SacrificeSacrifice      
Cash A/c Dr..   550000        
To Gayatri's Capital A/c    400000       
To Premium for Goodwill A/c    150000(300000 X 1/2)      
Premium for Goodwill A/c Dr..   150000        
To Madhu's Capital A/c    60000       
To Vidhi's Capital A/c    90000       
  Revaluation A/c          
  Particulars Amount Particulars   Amount          
  To Prov for Doubtful Debts     5000 By Land and Buildings   26000          
  To Workmen Comp Claim     6000                
  To Profit on Revaluation :                      
  To Madhu's Capital A/c     6000                
  To Vidhi's Capital A/c     9000                
                -15000        
        26000     26000          
Partners Capital A/c  
Particulars Madhu Vidhi Gayatri Particulars Madhu Vidhi Gayatri  
            By Balance B/d     520000 300000    
            By Revaluation A/c-Profit     6000 9000    
            By Bank A/c         400000  
            By Premium for Goodwill A/c     60000 90000    
            By General Reserve     12000 18000    
To Balance c/d     598000 417000 400000              
  Total   598000 417000 400000   Total   598000 417000 400000  
Balance Sheet            
Liabilities Amount Assets Amount            
Bills Payable     150000 Land and Building   326000            
Workmen Comp Claim     6000 Machinery   280000            
        Stock   80000            
        Debtors 300000              
Madhu's Capital A/c     598000 Less - Prov 15000 285000            
Vidhi's Capital A/c     417000 Bank   600000            
Gayatri's Capital A/c     400000                  
      1571000     1571000            
Cash/Bank A/c            
Particulars Amount Particulars Amount            
To Balance B/d     50000                  
To Premium for Goodwill     150000                  
To C's Capital A/c     400000 By Balance C/d   600000            
Total     600000 Total   600000            
62
Old Profit Sharing Ratio     X Y                
      5 3                
New Partner Admitted    Z       
New Partners Share    1/8       
New Partner share of Goodwill    12000       
X's share in Goodwill    12000       
Y's share in Goodwill            
Journal Entries            
1
Bank A/c Dr..  32000         
To Z Capital A/c   20000        
To Premium for Goodwill A/c   12000        
2
Premium for Goodwill A/c Dr..  12000         
To X Capital A/c   12000        
3
X Capital A/c Dr..  1500 (5/8*2400)       
Y Capital A/c Dr..  900 (3/8*2400)       
To Profit and Loss A/c   2400        
4
WCR A/c Dr..  5800         
To X Capital A/c    3625(5/8*5800)       
To Y Capital A/c    2175(3/8*5800)       
5
Revaluation A/c Dr..  5000         
To EPF A/c   5000        
6
Prov for Bad Debts A/c Dr..  600         
To Revaluation A/c    600        
7
Revaluation A/c Dr..  3000         
To Stock A/c   3000        
8
Revaluation A/c Dr..  1000         
To Creditors A/c   1000        
9
Revaluation A/c Dr..  10000         
To Fixed Assets A/c   10000        
10
X Capital A/c Dr..  11500         
Y Capital A/c Dr..  6900         
To Revaluation A/c   18400        
  Revaluation A/c          
Particulars Amount Particulars Amount              
To Employees PF   5000 By Prov for Doubtful Debts   600              
To Stock A/c   3000                    
To Creditors   1000                    
To Fixed Assets   10000                    
      By Loss on Revaluation :                  
      By X's Capital A/c   11500              
      By Y's Capital A/c   6900              
            18400            
    19000     19000              
Partners Capital A/c  
Particulars X Y Z Particulars X Y Z  
            By Balance B/d     70000 31000    
To Revaluation A/c-Loss     11500 6900                
To Profiit & Loss A/c     1500 900   By Bank A/c         20000  
            By Premium for Goodwill A/c     12000      
            By Workmen Compensation Res     3625 2175    
To Balance c/d     72625 25375 20000              
Total     85625 33175 20000 Total     85625 33175 20000  
  Balance Sheet            
Liabilities Amount Assets Amount            
Creditors     16000 Sundry Debtors   20000            
Employees provident Fund     15000 Stock   22000 (25000-3000)          
        Fixed Assets   70000            
X's Capital A/c     72625 Cash at Bank   37000 (5000+20000+12000)          
Y's Capital A/c     25375                  
Z's Capital A/c     20000                  
      149000     149000            
   Cash/Bank A/c         
Particulars Amount Particulars Amount            
To Balance B/d     5000                  
To Premium for Goodwill     12000                  
To Z's Capital A/c     20000 By Balance C/d   37000            
Total     37000 Total   37000            
63
Note : This question is of hidden goodwill            
Old Profit Sharing Ratio       Rajesh Ravi              
        3 2              
New Partner Admitted   Raman        
New Partners Share   1/5        
New Partner share of Goodwill   3270/1(16350 X 1/5)       
Rajesh's share in Goodwill   1635/1(In Sacrificing Ratio 1:1)       
Ravi's share in Goodwill   1635/1        
Goodwill Valuation:            
Capital based on New partner share   80000(16000 / 1/5)       
Total Capital of New Firm   63650(29000 + 15000 + 16000 + Rev Gain)       
     ** Always take capital of the new firm       
     ** So it will include Revaluation Gain/Loss       
Goodwill i.e. Difference   16350        
Find Sacrificing Ratio :            
Old Profit Sharing Ratio            
        Rajesh Ravi              
        3 2              
New Profit Sharing Ratio       Rajesh Ravi Raman            
        5 3 2            
Sacrificing Ratio       Rajesh Ravi              
        1/10 1/10 or            
        1 1              
   Revaluation A/c         
Particulars Amount Particulars Amount            
To Stock A/c     750 By Building   5000            
To Prov for Doubtful Debts     100                  
To Furniture     500                  
To Profit on Revaluation :                        
To Rajesh's Capital A/c     2190                  
To Ravi's Capital A/c     1460                  
              -3650          
      5000     5000            
   Partners Capital A/c (Before Adjustment of G/w)         
Particulars Rajesh Ravi Raman Particulars Rajesh Ravi Raman      
          By Balance B/d   29000 15000        
          By Revaluation A/c-Profit   2190 1460        
          By Bank A/c       16000      
To Balance c/d   31190 16460 16000                
Total   31190 16460 16000 Total   31190 16460 16000      
   Partners Capital A/c (After Adjustment of G/w)         
Particulars Rajesh Ravi Raman Particulars Rajesh Ravi Raman      
          By Balance C/d   31190 16460 16000      
          By Raman's Current A/c   1635 1635        
To Balance C/d   32825 18095 16000                
    32825 18095 16000     32825 18095 16000      
   Raman Current A/c         
Particulars     Amount Particulars     Amount          
To Rajesh Cap A/c     1635                  
To Ravi Cap A/c     1635                  
        By Balance C/d     3270          
Total     3270   Total   3270          
Balance Sheet              
Liabilities Amount Assets Amount            
Creditors     38500 Cash   18000 (2000+16000)          
Outstanding Rent     4000 Stock   14250            
        Prepaid Insurance   1500            
        Debtors 9400              
        Less - Prov 500 8900            
        Machinery   19000            
Rajesh's Capital A/c     32825 Building   40000            
Ravi's Capital A/c     18095 Furniture   4500            
Raman's Capital A/c     16000                  
        Raman Current A/c   3270            
      109420     109420            
Cash/Bank A/c              
Particulars Amount Particulars Amount              
To Balance B/d   2000                    
To Raman's Capital A/c   16000                    
      By Balance C/d   18000              
Total   18000 Total   18000              
64
Old Profit Sharing Ratio       A B Total            
        3 2 5            
New Partner Admitted   C        
C's Share in profits   1/5        
Journal entries for Goodwill :            
Cash A/c Dr..   150000        
To C's Capital A/c    100000       
To Premium for Goodwill A/c    50000       
Premium for Goodwill A/c Dr..   50000        
To A's Capital A/c    30000(Sacrificing ratio same as old ratio)      
To B's Capital A/c    20000       
Journal Entries for Investment Fluctuation Fund:            
Investment Fluctuation Fund A/c Dr..    12000       
 To Investments A/c    10000      
 To A's Capital A/c    1200      
 To B's Capital A/c    800      
  Revaluation A/c          
  Particulars Amount Particulars   Amount          
  To O/s Salaries     2000 By Bank   12000          
  To Profit on Revaluation :                      
  To A's Capital A/c     6000                
  To B's Capital A/c     4000                
                -10000        
        12000     12000          
Partners Capital A/c  
Particulars A B C Particulars A B C  
            By Balance B/d     160000 140000    
            By Revaluation A/c-Profit     6000 4000    
            By Bank A/c         100000  
            By Premium for Goodwill A/c     30000 20000    
            By General Reserve     15000 10000    
            By Inv Fluctuation Fund     1200 800    
To Balance c/d     212200 174800 100000              
  Total   212200 174800 100000   Total   212200 174800 100000  
Balance Sheet            
Liabilities Amount Assets Amount            
Creditors     30000 Cash at Bank   182000            
O/s Salaries     2000 Debtors 85000              
        Less - Prov 5000 80000            
        Stock   130000            
A's Capital A/c     212200 Investments   50000            
B's Capital A/c     174800 Furniture   77000            
C's Capital A/c     100000                  
      519000     519000            
Cash/Bank A/c            
Particulars Amount Particulars Amount            
To Balance B/d     20000                  
To Premium for Goodwill     50000                  
To C's Capital A/c     100000 By Balance C/d   182000            
To Revaluation A/c-B/D Rec     12000                  
Total     182000 Total   182000            
65
Old Profit Sharing Ratio     Divya Yasmin Fatima Total            
      11 7 2 20            
New Partner Admitted  Aditya         
New Partners Share  1/5         
New Partner share of Goodwill  200000(1000000 X 1/5)        
Valuation of Goodwill            
2016-2017  200000         
2017-2018  600000         
Total profits for last 2 years  800000         
Average profits for last 2 years  400000         
No of years Purchase  2.5         
Value of Goodwill of Firm  1000000         
Divya Share in Goodwill  110000.00000000001(200000*11/20)        
Yasmin Share in Goodwill  70000/1(200000*7/20)        
Fatima Share in Goodwill  20000/1(200000*2/20)        
(Sacrificing ratio same as old ratio)            
   Revaluation A/c         
Particulars Amount Particulars Amount          
To Creditor     7000 By Plant and Machinery     20000          
        By O/s Expenses     1000          
To Profit on Revaluation :                        
To Divya's Capital A/c     7700                  
To Yasmin's Capital A/c     4900                  
To Fatima's Capital A/c     1400         -14000        
      21000       21000          
   Partners Capital A/c         
Particulars Divya Yasmin Fatima Aditya Particulars Divya Yasmin Fatima Aditya  
            By Balance B/d   510000 300000 500000    
            By Revaluation A/c-Profit   7700 4900 1400    
To Furniture A/c   80000 80000 80000   By Bank A/c         450000  
            By Premium for Goodwill   110000.00000000001 70000 20000    
            By Bank A/c     50000      
            By Reserve Fund   49500 31500 9000    
To Balance c/d   597200 376400 450400 450000              
  Total 677200 456400 530400 450000   Total 677200 456400 530400 450000  
Balance Sheet              
Liabilities Amount Assets Amount              
Creditors   77000 Factory Building   735000              
Public Deposits   119000 Plant and Machinery   200000              
O/s Expenses   9000 Furniture   20000              
      Stock   145000              
A's Capital A/c   597200 Debtors 150000                
B's Capital A/c   376400 Less - Prov 30000 120000              
C's Capital A/c   450400 Cash at Bank   859000              
D's Capital A/c   450000                    
    2079000     2079000              
Cash/Bank A/c            
Particulars Amount Particulars Amount            
To Balance B/d     159000                  
To Aditya's Capital A/c     450000                  
To Premium for Goodwill     200000 By Balance C/d   859000            
To Yasmin Capital A/c     50000                  
Total     859000 Total   859000            
Working Note :            
In this question partners have withdrawn the furniture            
This is similar to drawings            
In the normal drawings the partners withdraw cash. And here they are withdrawing Furniture.            
Both the cash and Furnituure are assets of the firm            
Partners can make drawings in the form of any asset like cash, bank, furniture, vehicle, machinery, etc.             
It is not necessary that the drawings should always be in cash            
So the journal entry will be the entry for drawings            
Partner Capital A/c Dr..            
 To Cash/Bank/Asset           
Divya Capital A/c Dr..  80000         
Yasmin Capital A/c Dr..  80000         
Fatima Capital A/c Dr..  80000         
 To Furniture  240000        
66
Old Profit Sharing Ratio     A B                
      3 2                
New Partner Admitted  C         
New Partners Share  1/5         
New Partner share of Goodwill  5000/1         
A's share in Goodwill  3000/1(Sacrificing ratio same as old ratio)        
B's share in Goodwill  2000/1         
  Revaluation A/c          
Particulars Amount Particulars Amount            
        By Stock A/c   2000            
To Debtors     4000 By Creditors   800            
        By Loss on Revaluation :                
        By A's Capital A/c   720            
        By B's Capital A/c   480            
              1200          
      4000     4000            
** Stock            
If Actual Value Rs 100   In Books Rs 90         
Now            
In Books Rs 90  Actual Value Rs 100         
In Books Rs 1  Actual Value Rs 100/Rs 90         
In Books Rs 18000  Actual Value Rs 100/90* Rs 18000 20000       
** The 50% less expected recovery will be recognised immediately as per conservatism and booked as provision            
    Partners Capital A/c         
Particulars A B C Particulars A B C  
            By Balance B/d     50000 40000    
To Revaluation A/c-Loss     720 480                
            By Bank A/c - C's Capital         25000  
            By Premium for Goodwill     3000 2000    
            By Reserve     6000 4000    
To Balance c/d     58280 45520 25000              
Total     59000 46000 25000 Total     59000 46000 25000  
Balance Sheet              
Liabilities Amount Assets Amount              
Creditors   19200 Building   50000              
Outstanding Expenses   5000 Plant and Machinery   30000              
      Stock   20000              
      Debtors   18000 (22000-18000)            
      Bank   35000              
A's Capital A/c   58280                    
B's Capital A/c   45520                    
C's Capital A/c   25000                    
    153000     153000              
 Cash/Bank A/c           
Particulars Amount Particulars Amount              
To Balance B/d   5000                    
To C's Capital A/c   25000                    
To Premium for Goodwill   5000 By Balance C/d   35000              
Total   35000 Total   35000              
67
Note : This question is of hidden goodwill            
Old Profit Sharing Ratio       Deepika Rajshree              
        3 2              
New Partner Admitted   Anshu        
New Partners Share   1/5        
New Partner share of Goodwill   4440/1(22200 X 1 / 5)       
Deepika's share in Goodwill   2220/1        
Rajshree's share in Goodwill   2220/1        
Calculation of Hidden goodwill :            
Anshu's Capital   32000        
Capital based on New partner share   160000 (32000 X 5/1)      
Total Capital of New Firm   137800(See capital A/c below) (Deepika + Rajshree + Anshu)     
Goodwill i.e. Difference   22200        
Find Sacrificing Ratio :            
Old Profit Sharing Ratio            
      Deepika Rajshree Total              
      3 2 5              
New Profit Sharing Ratio     Deepika Rajshree Anshu Total            
      5 3 2 10            
Sacrificing Ratio     Deepika Rajshree                
      1/10 1/10 or              
      1 1                
Revaluation A/c            
Particulars Amount Particulars Amount            
To Prov for Doubtful Debts     3200 By Plant and Machinery   12000            
To Furniture     1000 By Stock   8000            
To O/s Salary     8000 By Land and Building   10000            
To Profit on Revaluation :                        
To Deepika's Capital A/c     10680                  
To Rajshree's Capital A/c     7120                  
              -17800          
      30000     30000            
  Partners Capital A/c (Before Adjustment for G/w)          
Particulars Deepika Rajshree Anshu Particulars Deepika Rajshree Anshu      
          By Balance B/d   48000 40000        
          By Revaluation A/c-Profit   10680 7120        
          By Bank A/c       32000      
To Balance c/d   58680 47120 32000                
Total   58680 47120 32000 Total   58680 47120 32000      
   Partners Capital A/c (After Adjustment for G/w)         
Particulars Deepika Rajshree Anshu Particulars Deepika Rajshree Anshu      
          By Balance B/d   58680 47120 32000      
          By Anshu's Current A/c   2220 2220        
To Balance C/d   60900 49340 32000                
    60900 49340 32000     60900 49340 32000      
   Anshu Current A/c         
Particulars     Amount Particulars     Amount          
To Deepika Cap A/c  2220         
To Rajshree Cap A/c  2220         
    By Balance C/d  4440     
Total     4440   Total   4440          
Balance Sheet              
Liabilities Amount Assets Amount            
Sundry Creditors     16000 Cash in Hand   1200            
Public Deposits     61000 Cash at Bank   34800            
Bank Overdraft     6000 Stock   40000            
Outstanding Liabilities     10000 Prepaid Insurance   1000            
        Sundry Debtors 28800              
        Less - Prov 4000 24800            
Deepika's Capital A/c     60900 Plant and Machinery   60000            
Rajshree's Capital A/c     49340 Land and Building   60000            
Anshu's Capital A/c     32000 Furniture   9000            
        Anshu Current A/c   4440            
      235240     235240            
** In the solution in the book the bank overdraft has been adjusted in bank balance            
This is not necessary as the question itself has given the bank overdraft as separate account            
This means that they are separate bank accounts. Some acount has positive and some has negative balance            
Cash/Bank A/c              
Particulars Amount Particulars Amount              
To Balance B/d   2800                    
To Anshu's Capital A/c   32000                    
      By Balance C/d   34800              
Total   34800 Total   34800              
68
Prov for Doubtful Debts A/c Dr..     40000      
 To Revaluation A/c     40000     
(Being Prov for Doubtful debts reversed as no longer required)            
Land and Buildings A/c Dr..     40000      
 To Revaluation A/c     40000     
Revaluation A/c Dr..     20000      
 To Plant and Machinery     20000     
Workmen Compenstion Reserve A/c Dr..     50000      
 To Workmen Compensation Claim A/c     20000     
 To Sunaina Current A/c     18000(30000*3/5)    
 To Tamanna Current A/c     12000(30000*2/5)    
Creditors A/c Dr..     40000      
 To Bills Payable A/c     40000     
(Being Creditors converted to Bills Payable)            
Bank A/c Dr..     110000      
 To Pranav Capital A/c     100000     
 To Premium for Goodwill A/c     10000     
Premium for Goodwill A/c Dr..     10000      
 To Sunaina Current A/c     6000sacrifiicing ratio    
 To Tamanna Current A/c     4000     
Revaluation A/c Dr..     60000      
 To Sunaina Current A/c     36000(60000*3/5)    
 To Tamanna Current A/c     24000(60000*2/5)    
(Being revaluation profits distributed in old ratio)            
General Reserve A/c Dr..     120000      
 To Sunaina Current A/c     72000(120000*3/5)    
 To Tamanna Current A/c     48000(120000*2/5)    
(Being General reserve distributed among old partners)            
Sunaina Current A/c Dr..     12000 (20000*3/5)    
Tamanna Current A/c Dr..     8000 (20000*2/5)    
 To Goodwill A/c     20000     
(Being Old Goodwill written off)            
Working Note :            
  Revaluation A/c          
  Particulars Amount Particulars   Amount          
  To Plant and Machinery     20000 By Prov for Doubtful Debts   40000          
          By Land and Buildings   40000          
  To Profit on Revaluation :                      
  To Sunaina Capital A/c     36000                
  To Tamanna Capital A/c     24000                
                -60000        
        80000     80000          
69
Old Profit Sharing Ratio     X Y Total              
      3 2 5              
New Partner Admitted  Z         
New Partners Share  1/6         
Firms Goodwill  84000/1         
New Partner share of Goodwill  14000(84000*1/6)        
X share in Goodwill  14000*3/58400        
Y share in Goodwill  14000*2/55600        
(Sacrificing ratio same as old profit ratio)            
Journal entry for Goodwill :            
Z Current A/c Dr.. 14000          
To X Capital A/c  8400         
To Y Capital A/c  5600         
New Profit sharing ratio     X Y Z Total            
      15 10 5 30            
      3 2 1 6            
Revaluation A/c            
Particulars Amount Particulars Amount            
        By Plant & Machinery   14000            
        By Building   11000 (109000-98000)          
        By Prov for Bad Debts   7000            
To Profit on Revaluation :                        
To X's Capital A/c     19200                  
To Y's Capital A/c     12800                  
              -32000          
      32000     32000            
Partners Capital A/c  
Particulars X Y Z Particulars X Y Z  
            By Balance B/d     119000 112000    
            By Revaluation A/c     19200 12800    
            By Bank A/c         56000  
            By General Reserve     8400 5600    
            By Z Current A/c (Goodwill)     8400 5600    
To Balance C/d     155000 136000 56000              
      155000 136000 56000       155000 136000 56000  
To Y Current A/c       24000   By Balance B/d     155000 136000 56000  
            By X Current A/c     13000      
To Balance C/d     168000 112000 56000              
      168000 136000 56000       168000 136000 56000  
Calculation of New Capital            
Z's Capital   56000        
Z's profit share   1/6        
Total Capital of the new firm   336000(56000*6/1)       
   X Y       
Revised Capital of the partners  168000 112000       
   (336000*3/6) (336000*2/6)       
Existing Capital  155000 136000       
Deficit/Surplus  13000 24000       
Capital A/c  Cr Dr       
Current A/c/Cash  Dr Cr       
Journal entry for capital adjustment shown here only for understanding :            
X Current A/c Dr.. 13000          
 To X Capital A/c 13000         
Y Capital A/c Dr.. 24000          
 To Y Current A/c 24000         
Not required in the answer. Shown here only for understanding            
Balance Sheet              
Liabilities Amount Assets   Amount            
Creditors     56000 Plant & Machinery   84000 (70000+14000)          
Y Current A/c     24000 Buildings   109000            
        Stock   21000            
        Debtors   42000            
        Cash in Hand   133000 (77000+56000)          
        X Current A/c   13000            
X's Capital A/c     168000 Z Current A/c   14000            
Y's Capital A/c     112000                  
Z's Capital A/c     56000                  
      416000     416000            
Cash/Bank A/c              
Particulars Amount Particulars Amount              
To Balance B/d   77000                    
To Z's Capital A/c   56000                    
      By Balance C/d   133000              
Total   133000 Total   133000              
Note :            
a) When current A/c are opened only for capital adjustment then the other adjustment entries like revaluation,             
goodwill will go in capital A/c only. Understand that all these adjustments are done first and capital adjustment is done in the end.            
b) However if the balance sheet given in question already have current A/c then the adjustment entries will go in current A/c only            
70
Old Profit Sharing Ratio     Badal Bijli Total              
      3 2 5              
New Partner Admitted  Raina         
New Partners Share  1/6         
New Partner share of Goodwill  12000         
New Profit sharing ratio     Badal Bijli Raina Total            
      15 10 5 30            
      3 2 1 6            
Revaluation A/c            
Particulars Amount Particulars Amount            
To Building A/c     15000                  
To Stock A/c     3000                  
To Prov for Bad Debts     2000                  
        By Loss on Revaluation :                
        By Badal's Current A/c   12000            
        By Bijli's Current A/c   8000            
              20000          
      20000     20000            
Partners Current A/c  
Particulars Badal Bijli Raina Particulars Badal Bijli Raina  
To Balance B/d       2000   By Balance B/d     12000      
To Revaluation A/c-Loss     12000 8000                
            By Premium for Goodwill     7200 4800    
            By Investment Fluctuation Reserve     14400 9600    
            By Badal Capital A/c-Capital Adj     30000      
            By Bijli Capital A/c-Capital Adj       10000    
To Balance c/d     51600 14400                
Total     63600 22400   Total     63600 24400    
          Partners Capital A/c              
Particulars Badal Bijli Raina Particulars Badal Bijli Raina  
To Badal Current A/c-Cap Adj     30000     By Balance B/d     150000 90000    
To Bijli Current A/c-Cap Adj       10000                
            By Bank A/c         40000  
To Balance C/d     120000 80000 40000              
      150000 90000 40000       150000 90000 40000  
Calculation of New Capital            
Raina's Capital   40000        
Raina's profit share   1/6        
Total Capital of the new firm   240000        
   Badal Bijli       
Revised Capital of the partners  120000 80000       
   (240000*3/6) (240000*2/6)       
Existing Capital  150000 90000       
Deficit/Surplus  30000 10000       
Capital A/c  Dr Dr       
Current A/c  Cr Cr       
Not required in the answer. Shown here only for understanding            
Balance Sheet              
Liabilities Amount Assets   Amount            
Creditors     26000 Building   135000            
Bills Payable     8000 Investments   73000            
Current A/c's       Stock   40000            
Badal   51600   Debtors 20000              
Bijli   14400 66000 Less - Prov 2000 18000            
Badal's Capital A/c     120000 Cash   74000 22000 + 40000 + 12000          
Bijli's Capital A/c     80000                  
Raina's Capital A/c     40000                  
      340000     340000            
Cash/Bank A/c              
Particulars Amount Particulars Amount              
To Balance B/d   22000                    
To Raina's Capital A/c   40000                    
To Premium for Goodwill   12000 By Balance C/d   74000              
Total   74000 Total   74000              
Note :            
When current A/c are opened only for capital adjustment then the other adjustment entries like revaluation,             
goodwill will go in capital A/c only            
However if the balance sheet given in question already have current A/c then the adjustment entries will go in current A/c only            

Related Posts

Leave a Comment

Your email address will not be published. Required fields are marked *