3 Partnership Accounts
3 Partnership Accounts
3 Partnership Accounts
Partnership Accounts
Solution 1
REALISATION ACCOUNT
₹ ₹
To Fixed Assets 5,00,000 By Creditors 3,20,000
To Stock 3,00,000 By Cash
To Debtors 5,00,000 Fixed Assets 5,20,000
To Cash Debtors 4,40,000 9,60,000
Creditors 3,04,000 By Y’s Capital (Stock taken over) 2,50,000
Expenses 6,000 3,10,000 By Loss transferred
X 35,555
Y 26,667
Z 17,778 80,000
16,10,000 16,10,000
CASH ACCOUNT
₹ ₹
To Balance b/d 10,000 By Realisation A/c 3,10,000
To Realisation A/c 9,60,000 By X’s Capital 4,04,445
By Y’s Capital 53,333
By Z’s Capital 2,02,222
9,70,000 9,70,000
Solution 2
Realization Account
Particulars Particulars
To Debtors 25,000 By Creditors 20,000
To Stock 35,000 By Bank overdraft 5,000
To Furniture 40,000 By Bank:
To Machinery 60,000 Investment 25,000
To Bank: Furniture 30,000
Creditors 20,000 Machinery 50,000
Bank overdraft 5,000 Debtors (90%) 22,500
Outstanding bill 2,000 27,000 Stock 20,125
To Profit transferred: 2,620 Bad debts Recovered 1,245 1,48,870
P’s capital 1,310 By P’s Current A/c 15,750
Q’s capital 1,310 (stock taken over)
1,89,620 1,89,620
Partners’ Capital Accounts
Particulars P Q Particulars P Q
To P’s current Account 16,940 By Balance b/d 1,00,000 50,000
To Bank 83,060 68,810 By Q’s current Account 18,810
1,00,000 68,810 1,00,000 68,810
The copyright of these notes is with C.A. Nitin Goel
No part of these notes may be reproduced in any manner without his prior permission in writing.
2
Bank Account
Particulars Particulars
To Balance b/d 30,000 By Realization 27,000
To Realization 1,48,870 By P’s capital 83,060
By Q’s capital 68,810
1,78,870 1,78,870
Working Note:
Partners’ Current Accounts
P Q P Q
To Balance b/d 10,000 By Balance b/d 10,000
To Realization 15,750 By Reserves 7,500 7,500
To Q’s capital 18,810 By Realization (profit) 1,310 1,310
By P’s Capital 16,940
25,750 18,810 25,750 18,810
Solution 3
REALISATION ACCOUNT
₹ ₹
To Premises 50,000 By Sundry Creditors 84,650
To Plant 1,25,000 By Bank:
To Fixtures 32,500 Premises 60,000
To Stock 43,200 Plant 1,07,500
To Debtors 54,780 Fixtures 20,000
To Bank (Creditors) 84,650 Stock 41,040
To Bank (Expenses) 4,500 Debtors 45,900 2,74,440
By Loss transferred to
Current A/cs
Thin 14,216
Short 14,216
Fat 7,108 35,540
3,94,630 3,94,630
Solution 4
Cash & Bank Account
Particulars Amount Particulars Amount
To Balance b/d 240 By Realisation A/c- 14,040
Creditors
To Realisation A/c- 19,920 By Realisation A/c- 1,800
(Assets Realised) Expenses
To Capital Accounts: By G’s Loan A/c 9,600
G 27,200 By G’s Capital A/c 16,280
S 20,400 By S’s Capital A/c 28,680
J 2,640 50,240
70,400 70,400
Realisation Account
Particulars Amount Particulars Amount
To Goodwill 48,000 By Trade Creditors 14,880
To Land 9,600 By Provision for Bad Debts 120
To Plant and Machinery 15,360 By Bank:
To Motor Car 840 Land 8,400
To Stock 4,680 Plant & Machinery 6,000
To Sundry Debtors 2,400 Stock 3,600
To Bank (Creditors) 14,040 Debtors 1,920 19,920
To Bank (Expenses) 1,800 By G (Car) 600
By Capital Accounts: (Loss)
G 27,200
S 20,400
J 13,600 61,200
96,720 96,720
Partners’ Fixed Capital Accounts
Particulars G S J Particulars G S J
To Current 5,800 - 3,680 By Balance b/d 24,000 24,000 12,000
A/c (Transfer)
To Realisation 27,200 20,400 13,600 By Cureent A/c - 6,000 -
A/c (Loss) (Transfer)
To Realisation 600 - - By Bank - - 2,640
A/c (Car)
To J's Capital 1,320 1,320 - By Bank 27,200 20,400 -
A/c (realization loss)
(Deficiency)
To Bank* 16,280 28,680 - By G&S - - 2,640
(Deficiency)
51,200 50,400 17,280 51,200 50,400 17,280
The copyright of these notes is with C.A. Nitin Goel
No part of these notes may be reproduced in any manner without his prior permission in writing.
4
Note:
1. G, S and J will bring cash to make good their share of the loss on realization.
2. As per Garner Vs. Murray rule, solvent partners- G and S have to bear the loss due to insolvency of a
partner J in their fixed capital ratio.
*Alternatively, posting may be done for the net amount being received from /paid to G and S
respectively.
Working Note:
Current account balances of partners have been arrived after adjusting profit and loss account debit
balance as follows:
Current Profit & Loss
account balance
G 600 (6,400) 5,800 Dr.
S 10,800 (4,800) 6,000 Cr.
J (480) (3,200) 3,680 Dr.
Solution 5
REALISATION ACCOUNT
Particulars Amount Particulars Amount
To Land 50,000 By Loan from NBFC 5,00,000
To Building 2,50,000 By Current Liabilities 70,000
To Office Equipment 1,25,000 By Bank A/c
To Computers 70,000 Land 1,00,000
To Debtors 4,00,000 Building 3,00,000
To Stock 3,00,000 Computers 49,000
To Other Current Assets 22,600 Debtors 3,80,000
To Bank A/c Stock 2,70,000
Loan from NBFC 5,05,000 Office Equip. 1,25,000
Current Liabilities 70,000 5,75,000 Curr. Assets 22,600 12,46,600
To Partners’ Current A/cs (Profit) 24,000
A = 9,600
B = 9,600
C = 2,400
D = 2,400
18,16,600 18,16,600
Solution 6
Garner vs Murray rule is non-applicable in the following cases:
1. When the solvent partner has a debit balance in capital account. Only solvent partners will bear the
loss of capital deficiency of insolvent partner in their capital ratio. If incidentally a solvent partner has
a debit balance in his capital account, he will escape the liability to bear the loss due to insolvency of
another partner.
2. When the firm has only two partners.
3. When there is an agreement between the partners to share the deficiency in capital account of
insolvent partner.
4. When all the partners of the firm are insolvent.
Solution 7
In the Books of M/s Omega
Statement of Piecemeal Distribution (Under Higher Relative Capital method)
Particulars Amount Creditors Bank L’s loan Capital A/cs
Available Loan
Balance due 2,00,000 5,00,000 10,00,000 15,00,000 10,00,000 5,00,000
1st Installment 5,00,000
(including) cash
and bank balances
Less: Liquidators (1,00,000)
Expenses and fee
4,00,000
Less: Payment to
Creditors & Bank
Loan in the ratio of
2:5 (4,00,000) (1,14,286) (2,85,714) - - - -
Balance Due - 85,714 2,14,286 10,00,000 15,00,000 10,00,000 5,00,000
2 Installment
nd
15,00,000
Less: Payment to - - - -
Creditors & bank
loan 3,00,000 (85,714) (2,14,286)
Balance Due 12,00,000 Nil Nil 10,00,000 15,00,000 10,00,000 5,00,000
Less: Repayment of (10,00,000) (10,00,000) - - -
L’s Loan
Balance Due 2,00,000 - 15,00,000 10,00,000 5,00,000
Less: Payment to (2,00,000) (2,00,000) - -
Mr. L towards
relative higher
capital (W.N. 1)
Balance Due Nil Nil 13,00,000 10,00,000 5,00,000
Working Notes:
Scheme of payment of surplus amount of ₹2,00,000 out of second Installment:
L M S
Balance (i) 15,00,000 10,00,000 5,00,000
Profit sharing ratio (ii) 1 1 1
Capital taking S’s capital (iii) 5,00,000 5,00,000 5,00,000
Excess capital (iv) = (i) –(iii) 10,00,000 5,00,000
Profit sharing ratio 1 1
Excess capital taking M’s Excess capital as base (v) 5,00,000 5,00,000
Higher Relative Excess (iv)-(iv) 5,00,000
So, Mr. L should get ₹5,00,000 first which will bring down his capital account balance from ₹15,00,000
to ₹10,00,000. Accordingly, surplus amounting to ₹2,00,000 will be paid to Mr. L towards higher relative
capital.
Scheme of payment of ₹15,00,000 realized in 3rd installment:
Payment of ₹3,00,000 will be made to Mr. L to discharge higher relative capital. This makes the higher
capital of both Mr. L and Mr. M ₹ 5,00,000 as compared to capital of Mr. S.
Payment of ₹5,00,000 each of Mr. L & Mr. M to discharge the higher capital.
Balance ₹2,00,000 equally to L, M and S, i.e., ₹66,667 ₹66,667 and ₹66,666 respectively.
Solution 8
Solution 9
Statement showing distribution of cash amongst the partners
(Under Higher Relative Capital method)
Particulars Amount Trade Y’s loan Capital A/cs
Available Payables X Y Z
Balance due 66,000 18,000 60,000 40,000 50,000
1st Installment (including) cash
& bank (1,100+74,600) 75,700
Less: Dissolution Expenses (12,000)
provided for
63,700
Less: Z’s remuneration of (746)
1% on assets realized
(74,600 x 1%)
62,954
Less: Payment to Trade
Payables (62,954) (62,954) - - - -
Balance Due - 3,046 18,000 60,000 40,000 50,000
2 Installment
nd
69,301
Less: Z’s remuneration of (693)
1% on assets realized
(69,301 x 1%)
68,608
Less: Payment to Trade
Payables (646) (646)
Transferred to Realisation A/c 2,400
Less: Repayment of Y’s Loan (18,000) (18,000)
Amount available for
distribution to partners 49,962
Less: Z’s remuneration of
10% of the amount
distributed to partners (4,542)
(49,962 x 10/110)
Balance to be distributed
to partners 45,420
Less: Payment to Z towards
relative higher capital (W.N. 1) (2,000) (2,000)
43,420 48,000
Less: Payment to X & Z. in 5:4
towards excess capital (W.N.1) (18,000) (10,000) (8,000)
Balance Due 25,420 50,000 40,000 40,000
Less: Paid to X, Y & Z in 5:4:4 (25,420) (9,778) (7,821) (7,821)
Balance Due 40,222 32,179 32,179
3rd Installment 40,000
Less: Z’s remuneration of
1% on assets realized
(40,000 x 1%) (400)
Amount available for 39,600
distribution to partners
Less: Z’s remuneration of
The copyright of these notes is with C.A. Nitin Goel
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9
10% of the amount
distributed to partners (3,600)
(39,600 x 10/110)
Balance to be distributed 36,000
to partners
Less: Paid to X, Y & Z in 5:4:4 (36,000) (13,846) (11,077) (11,077)
Balance Due 26,376 21,102 21,102
4th Installment 28,000
Less: Z’s remuneration of
1% on assets realized
(28,000 x 1%) (280)
Amount available for 27,720
distribution to partners
Less: Z’s remuneration of
10% of the amount
distributed to partners (2,520)
(27,720 x 10/110)
Balance to be distributed 25,200
to partners
Less: Paid to X, Y & Z in 5:4:4 (25,200) (9,692) (7,754) (7,754)
Loss Suffered by partners 16,684 13,348 13,348
Working Notes 1:
Highest Relative Capital Method
X Y Z
Balance (i) 60,000 40,000 50,000
Profit sharing ratio (ii) 5 4 4
Capital profit sharing ratio 12,000 10,000 12,500
Capital taking Y’s capital (iii) 50,000 40,000 40,000
Excess capital (iv) = (i) –(iii) 10,000 Nil 10,000
Profit sharing ratio 5 4
Capital profit sharing ratio 2,000 2,500
Capital taking X’s capital (v) 10,000 8,000
Excess capital (vi) = (iv) –(v) Nil 2,000
Therefore, firstly ₹2,000 is to be paid to Z, then X and Z to be paid in proportion of 5:4 upto ₹ 18,000 to
bring the capital of all partners X, Y and Z in proportion to their profit sharing ratio. Thereafter, balance
available will be paid in the profit sharing ratio 5:4:4 to all partners viz X, Y and Z
Solution 10
First of all the following table will be constructed to show the amounts available for distribution:
Statement showing and distribution of Cash payments
Realisation Creditors Partners Partners
Loan Capitals
After taking into account cash balance and 1,000 1,000 - -
amount set aside for expenses
3,000 1,000 2,000 -
3,900 - 3,000 900
6,000 - - 6,000
Including saving in expenses 20,100 - - 20,100
34,000 2,000 5,000 27,000
To ascertain the amount distributable out of each installment realized among the partners, the following
table will be constructed:
Statement of Distribution on Capital Account
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No part of these notes may be reproduced in any manner without his prior permission in writing.
10
Calculation to determine the mode of distribution of ₹900
Total A B C
Balance 42,000 15,000 18,000 9,000
Less: Possible loss, should remaining assets (41,100) (16,440) (16,440) (8,220)
prove to be worthless
+900 -1,440 +1,560 +780
Deficiency of A’s capital written off against (960) (480)
those of B and C in the ratio of their capital,
18,000 : 9,000 (Garner vs. Murray)
Manner in which the first ₹900 should be + 600 + 300
distributed
Distribution of ₹6,000
Balance after making payment of amount 41,100 15,000 17,400 8,700
shown in step (1)
Less: Possible loss assuming remaining asset to (35,100) (14,040) (14,040) (7,020)
be valueless
Balance available and to be distributed 6,000 960 3,360 1,680
Distribution of ₹ 20,100
Balance after making payment of amount 35,100 14,040 14,040 7,020
shown in step (2)
Less: Possible loss, assuming remaining assets (15,000) (6,000) (6,000) (3,000)
to be valuables
Manner of distribution of ₹20,100 20,100 8,040 8,040 4,020
Summary:
Balance 42,000 15,000 18,000 9,000
Total amounts paid (27,000) (9,000) (12,000) (6,000)
Loss 15,000 6,000 6,000 3,000
Solution 11
Statement of Distribution of Cash
Realizati Trade Partner’s Partner’s capital
on Creditor Loan
Balances due (1) 2,800 1,400 13,440 8,400 11,760 33,600
(i) Sale of Patent 1,400 (1,400) -
1,400 1,400
(ii) Sale of 2,800 (1,400) (1,400)
furniture
(iii) Sale of 1,680
machinery
Maximum 31,920 (15,960) (9,576) (6,384) (31,920)
possible loss
(33,600-1,680)
allocated to
partners in the
PSR i.e. 5:3:2
Amounts at credit (2,520) (1,176) 5,376 1,680
Deficiency of AD 2,520 1,176 (3,696) -
and BD written
off against SD
Amount paid (2) - - 1,680 1,680
The copyright of these notes is with C.A. Nitin Goel
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11
Balances in 13,440 8,400 10,080 31,920
capital a/cs
(1 – 2) = (3)
(iv) Sale of stock 5,600
Maximum 26,320 (13,160) (7,896) (5,264) (26,320)
possible loss
(31,920–5,600)
allocated to
partners in the
ratio 5 : 3 : 2
Amounts at credit 280 504 4,816 5,600
and cash paid (4)
Balances in 13,160 7,896 5,264 26,320
capital accounts
left unpaid: Loss
(3 – 4) = (5)
Solution 12
In the books of TJM& Sons
Realization Account
Particulars ₹ Particulars ₹
To Plant & Machinery 7,50,000 By Trade payable 4,50,000
To Furniture & Fixture 75,000 By JEK Ltd. (Refer W.N.) 10,50,000
To Inventories 3,00,000
To Trade receivables 3,00,000
To Partners’ Capital A/cs (Profit):
T’s Capital A/c 30,000
J’s Capital A/c 30,000
M’s Capital A/c 15,000 75,000
15,00,000 15,00,000
Partners’ Capital Accounts
Particulars T J M Particulars T J M
By Shares in 4,20,000 4,20,000 2,10,000 By Balance b/d 3,00,000 4,50,000 1,50,000
JEK Ltd.
By Cash - 1,20,000 By General
Reserve 60,000 60,000 30,000
ByRealization 30,000 30,000 15,000
A/c
By Cash 30,000 - 15,000
4,20,000 5,40,000 2,10,000 4,20,000 5,40,000 2,10,000
Solution 13
BALANCE SHEET OF THE FIRM AS AT 30.09.2020
Liabilities ₹ Assets ₹
Capital Accounts Machinery:
Mohan’s capital 1,47,990 Opening balance 1,80,000
Sohan’s capital 1,40,790 Less: dep. @ 10% p.a.(6M) (9,000) 1,71,000
Trade Payables 60,000 Leasehold Premises
Bank overdraft 24,000 Opening balance 40,800
Less: Dep. @ 5% p.a (6M) (1,020) 39,780
Trade Receivables 72,000
Inventories 90,000
3,72,780 3,72,780
REALISATION ACCOUNT
Particulars Amount Particulars Amount
To Sundry assets: By Trade Payables 60,000
Machinery 1,71,000 By Bank overdraft 24,000
Leasehold Premises 39,780 By PKR Ltd. A/c 4,08,780
Inventores 90,000 (working note 2)
Trade Receivables 72,000
To Profit:
Mohan’s capital a/c 60,000
Sohan’s capital A/c 60,000
4,92,780 4,92,780
The copyright of these notes is with C.A. Nitin Goel
No part of these notes may be reproduced in any manner without his prior permission in writing.
13
Solution 14
(i) Balance Sheet of the Firm as at 31.3.2022
Liabilities ₹ Assets ₹ ₹
Capital Accounts: Plant 1,85,000
U’s capital 1,18,750 Less: Depreciation (5,000) 1,80,000
V’s capital 1,47,750 Building 1,00,000
Sundry Creditors (90,000 – 50,000) 40,000 Less: Written off (5,000) 95,000
Bank overdraft (83,000 – 50,000) 33,000 Stock 24,000
Sundry Debtors 40,500
3,39,500 3,39,500
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14
(ii) Realization Account
Particulars ₹ Particulars ₹
To Plant A/c 1,80,000 By Sundry Creditors A/c 40,000
To Building A/c 95,000 By Bank Overdraft A/c 33,000
To Stock A/c 24,000 By UV Ltd. A/c 4,87,500
To Sundry Debtors A/c 40,500 (W.N.2)
To U’s Capital A/c 1,10,500
To V’s Capital A/c 1,10,500
5,60,500 5,60,500
Partners’ Capital Accounts
Date Particulars U V Date Particulars U V
1.1.22 To Profit & 30,000 30,000 1.1.22 By Balance b/d 1,50,000 1,80,000
Loss A/c
To Drawings 8,000 9,000 31.3.22 By Profit (W.N.1) 13,500 13,500
A/c
31.3.22 To Drawings 6,750 6,750
(W.N.1)
To Balance c/d 1,18,750 1,47,750
1,63,500 1,93,500 1,63,500 1,93,500
30.3.22 To Shares in 31.3.22 By Balance b/d 1,18,750 1,47,750
UV Ltd. A/c 2,29,250 2,58,250
31.3.22 By Realization
A/c 1,10,500 1,10,500
2,29,250 2,58,250 2,29,250 2,58,250
Working Notes:
(1) Ascertainment of profit for the 3 months ended 31st March,2022
₹ ₹
Assets:
Stock 24,000
Sundry Debtors 40,500
Plant less depreciation 1,80,000
Building 95,000
3,39,500
Less: Liabilities:
Sundry Creditors 40,000
Bank overdraft 33,000 (73,000)
Closing net assets 2,66,500
Less: Opening adjusted capitals
U (1,50,000 – 30,000 – 8,000) 1,12,000
V (1,80,000 – 30,000 – 9,000) 1,41,000 2,53,000
Profit net of drawings 13,500
Combined profit during the 3 months 13,500 X 2 27,000
Combined drawings for 3 months (27,000 *1/2) 13,500
Solution 15
M/s Red, Black and White
Profit and Loss Account for the year ending on 31st March, 2020
₹ ₹
To Depreciation of Building 6,000 By Trading Profit 80,000
To Interest on Red’s loan 1,200 By Interest on Investment 2,400
To Net Profit to:
Red’s Capital A/c 45,120
Black’s Capital A/c 15,040
White’s Capital A/c 15,040 75,200
82,400 82,400
Working Notes:
1. Calculation of goodwill
2015 2016 2017 2018 2019
Profits/(Loss) 40,000 (20,000) 40,000 50,000 60,000
Adjustment for extraneous profit of 2015 (60,000) 40,000 - - -
and abnormal loss of 2016
(20,000) 20,000 40,000 50,000 60,000
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16
Add: Remuneration of Red 12,000 12,000 12,000 12,000 12,000
(8,000) 32,000 52,000 62,000 72,000
Less: Debenture Interest being (2,400) (2,400) (2,400) (2,400) (2,400)
nonoperating income
(10,400) 29,600 49,600 59,600 69,600
Total profit from 2016 to 2019 2,08,400
Less: Loss for 2015 (10,400)
1,98,000
Average Profit 39,600
Goodwill equal to 2 years purchase 79,200
Contribution from White for 1/5 share 15,840
*Investments are assumed to be non-trading investments
2. Adjustment for goodwill
To be raised in old Ratio To be written off in new ratio Difference
Red 47,520 47,520 Nil
Black 31,680 15,840 15,840 Cr.
White 15,840 15,840 Dr.
Solution 16
M/s P, Q and R
Profit and Loss Account for the year ending on 31st March, 2021
₹ ₹
To Depreciation of Machinery 6,000 By Trading Profit 50,000
To Depreciation on furniture 500 By Interest on Investment 5,000
To Interest on Q’s loan 900
To Net Profit to:
P’s Capital A/c 23,800
Q’s Capital A/c 11,900
R’s Capital A/c 11,900 47,600
55,000 55,000
Working Notes:
The copyright of these notes is with C.A. Nitin Goel
No part of these notes may be reproduced in any manner without his prior permission in writing.
18
1. Calculation of goodwill
2015-16 2016-17 2017-18 2018-19 2019-20
Profits/(Loss) 25,000 12,500 (2,500) 35,000 30,000
Adjustment for extraneous profit of 2015- (40,000) - 20,000 - -
16 and abnormal loss of 2017-18
(15,000) 12,500 17,500 35,000 30,000
Add: Salary of P (750 X12) 9,000 9,000 9,000 9,000 9,000
(6,000) 21,500 26,500 44,000 39,000
Less: Interest on non-trading investment* (5,000) (5,000) (5,000) (5,000) (5,000)
(11,000) 16,500 21,500 39,000 34,000
Total profit from 2016-17 to 2019-20 1,11,000
Less: Loss for 2015-16 (11,000)
1,00,000
Average Profit 20,000
Goodwill equal to 3 years purchase 60,000
Contribution from R for ¼ share 15,000
*Investments are assumed to be non-trading investments
3. Goodwill adjustment entry* through Partners’ capital accounts (in their sacrificing ratio of 2 : 3)
₹ ₹
R’s capital A/c Dr. 15,000
To P’s capital A/c 6,000
To Q’s capital A/c 9,000
(R’s share in goodwill adjusted through P and Q)
Solution 17
Partner’s Current Accounts
Particulars X Y Z Particulars X Y Z
31.3.2019 31.3.2019
To Balanced b/d - - 10,000 By Balance b/d 40,000 30,000 -
To X’s Current A/c - 30,000 15,000 By Y’s Current A/c 30,000 - -
– goodwill – Goodwill
To X’s current A/c - 20,000 10,000 By Z’s current A/c 15,000 - -
– Revaluation Profit – goodwill
To X’s capital A/c 1,21,000 -- - By Y’s current A/c 20,000 - -
–Transfer – Revaluation profit
By Z’s Current A/c 10,000
– Revaluation profit
By Joint assurance 6,000 4,000 2,000
policy
1.4.19 31.3.20
To Balance b/d 16,000 33,000 By Profit & loss App. A/c 29,136 14,568
31.3.20 By Balance c/d 1,864 26,432
To Drawings A/c 15,000 8,000
31,000 41,000 31,000 41,000
1.4.20 1.4.20
To Balance b/d 1,864 26,432 By Realisation A/c profit 31,674 15,837
To Y’s Capital A/c – Transfer 29,810 -- By Z’s Capital A/c – transfer - 10,595
31,674 26,432 31,674 26,432
Working Notes:
Adjustment in regard to Goodwill
Particulars X Y Z
Share of goodwill before death 45,000 30,000 15,000
Share of goodwill after death -- 60,000 30,000
Gain ( + ) Sacrifice ( - ) (45,000) 30,000 15,000
Cr. Dr. Dr.
Realisation Account
₹ ₹
To Sundry Assets A/c 1,31,000 By Bank A/c 1,80,000
(Purchase consideration)
To Interest A/c – X’s Executors 1,489
To Partner’s Capital A/c – Y 31,674
To Partner’s Capital A/c – Z 15,837
1,80,000 1,80,000
Bank Account
₹ ₹
To Purchase consideration 1,80,000 By X’s Executors A/c 1,00,785
By Y 69,810
By Z 9,405
1,80,000 1,80,000
Solution 18
Balance Sheet of M/s Abeejay & Co. as at 31st March, 2020
Liabilities ₹ Assets ₹
Capital: Building
Avi 7,71,000 (₹4,00,000+₹3,00,000) 7,00,000
Bishnu 5,14,000 Plant & Machinery
Joe 2,57,000 15,42,000 (₹2,50,000 + ₹2,00,000) 4,50,000
Sundry creditor Office equipment (₹39,000 89,000
(1,20,000 + 89,000) 2,09,000 + ₹50,000)
Bank overdraft 90,000 Vehicle 98,000
Furniture 11,000
Stock in trade
(₹70,000 + ₹80,000) 1,50,000
Sundry debtors
(₹1,00,000+₹90,000) 1,90,000
The copyright of these notes is with C.A. Nitin Goel
No part of these notes may be reproduced in any manner without his prior permission in writing.
22
Less: Provision for doubtful
debts (₹4,000+₹3,000) (7,000) 1,83,000
Bank balance
(₹80,000+₹60,000) 1,40,000
Cash in hand 20,000*
18,41,000 18,41,000
Working Notes:
Revaluation Profits/Loss
Particulars Abhay & Co. Bijoy & Co.
Building 50,000 20,000
Plant & Machinery 50,000 50,000
Vehicle - 8,000
Furniture - 1,000
Office equipment 1,000 5,000
Stock in trade 5,000 10,000
Provision for Doubtful Debts (4,000) (3,000)
1,02,000 91,000
Avi 76,500 -
Bishnu 25,500 60,667
Joe - 30,333
Solution 19
(i) Adjustment for raising & writing off of goodwill
Goodwill raised in old profit Goodwill written Difference
sharing ratio off in new ratio
AB & Co. CD & Co. Total AD & Co.
A 50,000 50,000 Cr. 31,250 Dr. 18,750 Cr.
B 25,000 25,000 Cr. 15,625 Dr. 9,375 Cr.
C 30,000 30,000 Cr. 46,875 Dr. 16,875 Dr.
D 20,000 20,000 Cr. 31,250 Dr. 11,250 Dr.
75,000 50,000 1,25,000 1,25,000
₹4,20,600.
Solution 20
Balance Sheet of M/s ABC & Co. as at 1st April, 2020
Liabilities ₹ Assets ₹
Capital: Building
A 67,300 (₹30,000+₹16,000) 46,000
B 44,867 Plant & Machinery
C 22,433 1,34,600 (₹19,000 + ₹32,000) 51,000
Current Acc: Vehicle (10,000+2,000) 12,000
B 92,333 Furniture (4,000+7,500) 11,500
C 28,067 1,20,400 Stock in trade
(₹50,500 + ₹19,500) 70,000
Sundry creditor Sundry debtors
(41,000 + 38,000) 79,000 (₹80,500+₹16,000) 96,500
Bank balance
(₹15,000+₹18,000) 33,000
Cash in hand 14,000
3,34,000 3,34,000
Solution 21
(a) Adjustment for raising and writing off of goodwill
Raised in old profit-sharing ratio Total Written off in Difference
new ratio
C & Co. H & Co.
4:1 3:2 6:3:1
P 2,24,000 --- 2,24,000 Cr. 2,64,000 Dr. 40,000 Dr.
Q 56,000 96,000 1,52,000 Cr. 1,32,000 Dr. 20,000 Cr.
R --- 64,000 64,000 Cr. 44,000 Dr. 20,000 Cr.
2,80,000 1,60,000 4,40,000 4,40,000 Nil
Working Notes:
1. Balance of Capital Accounts at the time of amalgamation of firms
C & Co.
Particulars P’s Capital Q’s Capital
C & Co. Profit and loss sharing ratio 4:1
Balance as per Balance Sheet 6,00,000 4,00,000
Add: Reserves 1,60,000 40,000
Revaluation profit (Building) 1,60,000 40,000
Less: Revaluation loss (Machinery) (64,000) (16,000)
Provision for doubtful debt (16,000) (4,000)
8,40,000 4,60,000
The copyright of these notes is with C.A. Nitin Goel
No part of these notes may be reproduced in any manner without his prior permission in writing.
27
H & Co.
Particulars Q’s Capital R’s Capital
H & Co. Profit and loss sharing ratio 3:2
Balance as per Balance sheet 3,00,000 2,00,000
Add: Reserves 90,000 60,000
Less: Revaluation (vehicle) (30,000) (20,000)
Provision for doubtful debts (6,000) (4,000)
3,54,000 2,36,000
2. Balance of Capital Accounts in the balance sheet of the new firm as on 31.3.2021.
Particulars P Q R
Balance b/d:
C & Co. 8,40,000 4,60,000 --
H & Co. ------------ 3,54,000 2,36,000
8,40,000 8,14,000 2,36,000
Adjustment for goodwill (40,000) 20,000 20,000
8,00,000 8,34,000 2,56,000
Total capital
₹ 27,80,000 (Q’s capital i.e. 8,34,000 x 10/3) 16,68,000 8,34,000 2,78,000
to be contributed in 6:3:1 ratio.
Deficiency Transferred to Current Account 8,68,000 --- 22,000