Accountancy

Ram and Shyam were partners in a firm sharing profits and losses in the ratio of 2: 1. Mohan was admitted for 1/3rd share in the profits. On the date of Mohan’s admission, the Balance Sheet of Ram and Shyam showed General Reserve of Rs. 2,50,000 and a credit balance of Rs. 50,000 in Profit and Loss Account. Pass necessary Journal entries on the treatment of these items on Mohan’s admission.

SOLUTION

Continue ReadingRam and Shyam were partners in a firm sharing profits and losses in the ratio of 2: 1. Mohan was admitted for 1/3rd share in the profits. On the date of Mohan’s admission, the Balance Sheet of Ram and Shyam showed General Reserve of Rs. 2,50,000 and a credit balance of Rs. 50,000 in Profit and Loss Account. Pass necessary Journal entries on the treatment of these items on Mohan’s admission.

At the time of admission of a partner Suresh, assets and liabilities of Ramesh and Naresh were revalued as follows: (a) A Provision for Doubtful Debts @10% was made on Sundry Debtors (Sundry Debtors Rs. 50,000). (b) Creditors were written back by Rs.5,000. (c) Building was appreciated by 20% (Book Value of Building Rs. 2,00,000). (d) Unrecorded Investments were valued at Rs. 15,000. (e) A Provision of Rs. 2,000 was made for an Outstanding Bill for repairs. (f) Unrecorded Liability towards suppliers was Rs. 3,000. Pass necessary Journal entries.

SOLUTION

Continue ReadingAt the time of admission of a partner Suresh, assets and liabilities of Ramesh and Naresh were revalued as follows: (a) A Provision for Doubtful Debts @10% was made on Sundry Debtors (Sundry Debtors Rs. 50,000). (b) Creditors were written back by Rs.5,000. (c) Building was appreciated by 20% (Book Value of Building Rs. 2,00,000). (d) Unrecorded Investments were valued at Rs. 15,000. (e) A Provision of Rs. 2,000 was made for an Outstanding Bill for repairs. (f) Unrecorded Liability towards suppliers was Rs. 3,000. Pass necessary Journal entries.

Sushil and Satish are partners in a firm sharing profits in the ratio of 3: 2. Their Balance Sheet as at 31st March, 2021 was as follows:

LiabilitiesAmount (Rs.)AssetsAmount (Rs.)Outstanding Rent13,000Cash10,000Creditors20,000Sundry Debtors - 80,000Workmen Compensation Reserve5,600Less: Provision forDoubtful Debts - (4,000)76,000Capital A/c :Stock20,000Sushil - 50,000Profit and Loss A/c  4,000 Satish - 60,0001,10,000Machinery38,600   1,48,600 1,48 ,600 On 1st April, 2021, they admitted…

Continue ReadingSushil and Satish are partners in a firm sharing profits in the ratio of 3: 2. Their Balance Sheet as at 31st March, 2021 was as follows:

Ashok and Bhaskar are partners in a firm sharing profits in the ratio of 3: 2. They admitted Chaman as a partner for 1/4th share of profits. At the time of admission of Chaman, Debtors and Provision for Doubtful Debts appeared at Rs. 76,000 and Rs. 8,000 respectively. Rs. 6,000 of the debtors proved bad. A provision of 5% is to be created on Sundry Debtors for doubtful debts. Pass the necessary Journal entries.

SOLUTION Working Notes:WN1: Calculation of Provision for Doubtful DebtsProvision to be created = (76,000 - 6,000) × 5/100 = Rs. 3,500Old Provision = Rs. 2,000New Provision to be created = 3,500 - 2,000 = 1,500

Continue ReadingAshok and Bhaskar are partners in a firm sharing profits in the ratio of 3: 2. They admitted Chaman as a partner for 1/4th share of profits. At the time of admission of Chaman, Debtors and Provision for Doubtful Debts appeared at Rs. 76,000 and Rs. 8,000 respectively. Rs. 6,000 of the debtors proved bad. A provision of 5% is to be created on Sundry Debtors for doubtful debts. Pass the necessary Journal entries.

Pass entries in the firm’s journal for the following on admission of a partner: (i) Machinery be reduced by Rs. 16,000 and Building be appreciated by Rs. 40,000. (ii) A provision be created for Doubtful Debts @ 5% of Debtors amounting to Rs. 80,000. (iii) Provision for warranty claims be increased by Rs. 12,000.(iv) Furniture (Book Value Rs. 50,000) is to be reduced by 40%.(v) Furniture (Book Value Rs. 50,000) is to be reduced by 60%.

SOLUTION

Continue ReadingPass entries in the firm’s journal for the following on admission of a partner: (i) Machinery be reduced by Rs. 16,000 and Building be appreciated by Rs. 40,000. (ii) A provision be created for Doubtful Debts @ 5% of Debtors amounting to Rs. 80,000. (iii) Provision for warranty claims be increased by Rs. 12,000.(iv) Furniture (Book Value Rs. 50,000) is to be reduced by 40%.(v) Furniture (Book Value Rs. 50,000) is to be reduced by 60%.

Adil and Bhavya are partners sharing profits and losses in the ratio of 7: 5. They admit Cris, their manager, into partnership who is to get 1/6th share in the business. Cris brings in Rs. 1,00,000 for his capital and Rs. 36,000 for the 1/6th share of goodwill which he acquires 1/24th from Adil and 1/8th from Bhavya. Profits for the first year of the new partnership was Rs. 2,40,000. Pass necessary Journal entries for Cris’s admission and apportion the profit between the partners.

SOLUTION Working Note:WN1 Sacrificing Ratio = Adil: BhavyaSacrificing Ratio = 1/24: 1/8 = 1: 3 WN2Distribution of Cris’s share of Goodwill (in sacrificing ratio)Adil will get = 36,000 × 1/4…

Continue ReadingAdil and Bhavya are partners sharing profits and losses in the ratio of 7: 5. They admit Cris, their manager, into partnership who is to get 1/6th share in the business. Cris brings in Rs. 1,00,000 for his capital and Rs. 36,000 for the 1/6th share of goodwill which he acquires 1/24th from Adil and 1/8th from Bhavya. Profits for the first year of the new partnership was Rs. 2,40,000. Pass necessary Journal entries for Cris’s admission and apportion the profit between the partners.

Geeta and Sunita are partners in a firm sharing profits in the ratio of 3: 2. They admit Anita as a new partner. The new profit-sharing ratio between Geeta, Sunita and Anita will be 5: 3: 2. Anita brought in Rs. 25,000 for his share of premium for goodwill. Pass necessary Journal entries for the treatment of goodwill.

SOLUTION Working Notes:WN1Calculating of Sacrificing Ratio Sacrificing Ratio = Old ratio- new ratioGeeta’s = 3/5 – 5/10 = 1/10Sunita’s = 2/5 – 3/10 = 1/10Sacrificing Ratio = 1: 1 WN2   Distribution…

Continue ReadingGeeta and Sunita are partners in a firm sharing profits in the ratio of 3: 2. They admit Anita as a new partner. The new profit-sharing ratio between Geeta, Sunita and Anita will be 5: 3: 2. Anita brought in Rs. 25,000 for his share of premium for goodwill. Pass necessary Journal entries for the treatment of goodwill.

Vimal and Nirmal are partners in a firm sharing profits and losses in the ratio of 3: 2. A new partner Kailash is admitted. Vimal gives 1/5th of his share and Nirmal gives 2/5th of his share in favour of Kailash. For the purpose of Kailash’s admission, goodwill of the firm is valued at 75,000 and Kailash brings his share of goodwill in cash which is retained in the business. Journalise the above transactions.

SOLUTION Old Ratio of Vimal and Nirmal is 3: 2Share of Profits Kailash will get from Vimal 1/5th of his share 3/ 5= 3/5 × 1/5 = 3/25 Share of…

Continue ReadingVimal and Nirmal are partners in a firm sharing profits and losses in the ratio of 3: 2. A new partner Kailash is admitted. Vimal gives 1/5th of his share and Nirmal gives 2/5th of his share in favour of Kailash. For the purpose of Kailash’s admission, goodwill of the firm is valued at 75,000 and Kailash brings his share of goodwill in cash which is retained in the business. Journalise the above transactions.

Gold and Silver are partners sharing profits and losses in the ratio of 2: 5. They admit Copper on the condition that he will bring Rs. 14,000 as his share of goodwill to be distributed between Gold and Silver. Copper’s share in the future profits or losses will be 1 / 4th. What will be the new profit-sharing ratio and what amount of goodwill brought in by copper will be received by Gold and Silver? 

SOLUTION Old Ratio = A: B = 2: 5C is admitted for 1/4shareLet the combined share of A, B and C be = 1Combined share of A and B after C’s…

Continue ReadingGold and Silver are partners sharing profits and losses in the ratio of 2: 5. They admit Copper on the condition that he will bring Rs. 14,000 as his share of goodwill to be distributed between Gold and Silver. Copper’s share in the future profits or losses will be 1 / 4th. What will be the new profit-sharing ratio and what amount of goodwill brought in by copper will be received by Gold and Silver?