A and B are partners in a firm sharing profits and losses in the ratio of 3:2. The following was the Balance Sheet of the firm as on 31-3-2010.
|
Liabilities |
Amount Rs |
Assets |
Amount Rs |
|
Capital A
B |
60,000
20,000 |
Sundry Assets |
80,000 |
|
|
80,000 |
|
80,000 |
The profits Rs. 30,000 for the year ended 31-3-2010 were divided between the partners without allowing interest on capital @ 12% p.a. and salary to A @ Rs. 1,000 per month. During the year A withdrew Rs. 10,000 and B Rs. 20,000. Pass the necessary adjustment journal entry and show your working clearly.
|
Date |
Particulars |
LF |
Debit (Rs) |
Credit (Rs) |
|
|
B’s capital a/c Dr
To a’s capital a/c
(being interest on capital and salary unpaid adjusted.)
|
|
5280 |
5280 |
Working Notes
Calculation of opening Capital
|
PARTICULARS |
A |
B |
|
Capital closing balance Less profit
Add drawings
Capital opening balance
|
60,000 18,000
|
20,000 12,000
|
|
42,000 10,000 |
8,000 20,000 |
|
|
52,000 |
28,000 |
Calculation of Net amount to be adjusted:
|
Particulars |
Partner A’s a/c |
Partner B’s a/c |
Firm a/c |
|||
|
Dr |
Cr |
Dr |
Cr |
Dr |
Cr |
|
|
Interest on capital |
|
6,240 |
|
3,360 |
9,600 |
|
|
Salary to A |
|
12,000 |
|
|
12,000 |
|
|
|
12,960 |
|
8,640 |
|
|
21,600 |
|
Total |
12,960 |
18,240 |
8,640 |
3,360 |
21,600 |
21,600 |
|
Net amount to be adjusted |
|
5280(Cr) |
5280(Dr) |
|
|
|
A business has earned average profits of Rs. 1,00,000 during the last few years and the normal rate of return in similar business is 10%. Find out the value of Goodwill by (i) Capitalisation of super profit method and (ii) Super profit method if the goodwill is valued at 3 years purchase of super profit. The assets of the business were Rs. 10,00,000 and its external liabilities Rs. 1,80,000.
How does the market situation affect the value of goodwill of a firm?
On 31-3-2010 the Balance Sheet of W and R who shared profits in 3:2 ratio was as follows:
|
Liabilities |
Amount( Rs) |
Assets |
Amount ( Rs) |
|
Creditors Profit and Loss Account Capital account W 40,000 R 30,000
|
20,000 15,000
70,000 |
Cash Sundry Debtors 20,000 Less:Provision 700
Stock Plant and Machinery Patent |
5,000
35,000 20,700 |
|
|
1,05,000 |
|
1,05,000 |
On this date B was admitted as a partner on the following conditions:
(a) 'B' will get 4/15th share of profits.
(b) 'B' had to bring Rs. 30,000 as his capital to which amount other Partners capitals shall have to be adjusted.
(c) He would pay cash for his share of goodwill which would be based on 2½ years purchase of average profits of past 4 years.
(d) The assets would be revalued as under:
Sundry debtors at book value less 5% provision for bad debts. Stock at Rs. 20,000, Plant and Machinery at Rs. 40,000.
(e) The profits of the firm for the years 2007, 2008 and 2009 were Rs. 20,000; Rs. 14,000 and Rs. 17,000 respectively.
Prepare Revaluation Account, Partner's Capital Accounts and the Balance Sheet of the new firm.
State the two main rights that a newly admitted partner acquires in the firm.
