change in the profit sharing ratio ( Question Bank)
change in the profit sharing ratio
A, B and C were
partners sharing profits and losses in the ratio of 7 : 5 : 4. From 1st April,
2016, they decided to share profits and losses in the ratio of 3 : 2 : 1. You
are required to fill up the following journal entry:
JOURNAL
|
Date |
Particulars |
L.F. |
Dr. ₹ |
Cr. ₹ |
|
|
2016 April 1 |
A's Capital A/c |
Dr. |
|
- |
|
|
|
B's Capital A/c |
Dr. |
|
- |
|
|
|
To C's Capital A/c |
|
|
|
7,200 |
X, Y and Z are
partners sharing profits and losses in the ratio of 5 : 3 : 2. They decide to
share future profits and losses in the ratio of 2 : 3 : 5 with effect from 1st
April, 2019. Following items appear in the Balance Sheet as at 31st March,
2019:
|
|
₹ |
|
₹ |
|
General Reserve |
75,000 |
Advertisement Suspense A/c (Dr.) |
50,000 |
|
Workmen Compensation Reserve |
12,500 |
Profit and Loss Account (Cr.) |
37,500 |
P, Q and R are
partners sharing profits equally. They decided that in future R will get 1515th share in profits. On the day of change, firm’s goodwill is
valued at ₹ 3,00,000. Make the necessary journal entry.
A, B and C are
partners sharing profits equally. From 1st April, 2017, they decided to share
profits in the ratio of 3 : 4 : 5. On that date, Profit and Loss Account showed
a credit balance of ₹ 90,000. Partners do not want to distribute the
Profit and Loss Account balance but prefer to record the change by an
adjustment entry. You are required to give the adjusting entry.
X and Y were partners
sharing profits and losses in the ratio of 3:1. They decided that with effect
from 1st April 2016, they would share profits and losses in the ratio
of 5:3. The partnership deed provides that in the event of any change in
profit sharing ratio, the goodwill should be valued at the total of two year’s
profits preceding the date the decision became effective. The profits for
2013-14, 2014-15 and 2015-16 were ₹ 60,000, ₹ 70,000 and ₹ 90,000 respectively.
Pass the necessary Journal entry to give effect to the above arrangement.
X, Y and Z are
partners sharing profits and losses in the ratio of 5 : 3 : 2, decided to share
future profits and losses equally with effect from 1st April, 2019. On that
date, the goodwill appeared in the books at ₹12,000. But it was revalued at
₹30,000. Pass Journal entries assuming that goodwill will not appear in the
books of account.
What is Revaluation
Account? How it is differ from Profit & Loss Appropriation A/c?
A and B are sharing
profits and losses equally. With effect from 1st April, 2019, they agree to
share profits in the ratio of 4 : 3. Calculate the individual partner's gain or
sacrifice due to the change in ratio.
Define Gaining and
Sacrificing Ratio.
A, B and C who are
presently sharing profits and losses in the ratio of 5 : 3 : 2 decide to share
future profits and losses in the ratio of 2 : 3 : 5. Give the Journal entry to
distribute Investment Fluctuation Reserve of ₹20,000 at the time of change in
profit-sharing ratio, when investment (market value ₹95,000) appears in the books
at ₹1,00,000.
What adjustments are
required at the time of reconstitution of a partnership firm?
Mandeep, Vinod and
Abbas are partners sharing profits and losses in the ratio of 3 : 2 : 1. From
1st April 2019 they decided to share profits equally. The Partnership Deed
provides that in the event of any change in profit-sharing ratio, goodwill
shall be valued at three years' purchase of average profit of last five years.
The profits and losses of past five years are-
Profit-Year ended 31st March, 2015 - ₹1,00,000; 2016 - ₹1,50,000; 2018-
₹2,00,000; 2019 - ₹2,00,000 Loss-Year ended 31st March, 2017- ₹50,000 .
Pass the Journal entry showing the working.
A, B and C are
partners sharing profits in the ratio of 5 : 3 : 2. It is now agreed that they
will share profits in the ratio of 5 : 4 : 3. Goodwill is valued at
₹ 1,20,000. Pass a single journal entry for the treatment of goodwill.
A, B and C were in
partnership sharing profits in the ratio of 4 : 3 : 1. The partners agreed to
share future profits in the ratio of 5 : 4 : 3. Calculate each partner’s gain
or sacrifice due to change in ratio.
X and Y are partners
in firm sharing profits and losses in the ratio of 3 : 2. With effect from 1st
April, 2019, they decided to share future profits equally. On the date of
change in the profit-sharing ratio, the Profit and Loss Account showed a
credit balance of ₹1,50,000. Record the necessary Journal entry for the distribution
of the balance in the Profit and Loss Account immediately before the change in
the profit-sharing ratio.
Give two
characteristics of Goodwill.
A, B and C are
partners in firm sharing profits in the ratio of 3 : 3 : 2. They decided to
share profits equally w.e.f. 1st April, 2019. On that date, General Reserve
showed credit balance of ₹72,000. Instead of distributing the General Reserve,
it was decided to record an adjustment entry reflecting the change in the
profit-sharing ratio.
Pass Journal entry to give effect to the same.
X and Y were partners
sharing profits in the ratio of 2 : 1. With effect from 1st April, 2016, they
decided to share profits in the ratio of 3 : 1. For this purpose the goodwill
of the firm is valued at ₹ 1,80,000. Give the necessary journal entry.
D, E and F are sharing
profits and losses in the ratio of 5 : 3 : 2. They decide to share profits and
losses in the ratio of 2 : 3 : 5 with effect from 1st April, 2019. They also
decide to record the effect of the following without affecting their book
values, by passing an adjustment entry:
|
|
Book Values (₹) |
|
General Reserve |
1,50,000 |
|
Contingency Reserve |
25,000 |
|
Profit and Loss A/c (Cr.) |
75,000 |
|
Advertisement Suspense A/c (Dr.) |
1,00,000 |
X, Y and Z who are
presently sharing profits and losses in the ratio of 5 : 3 : 2 decide to share
future profits and losses in the ratio of 2 : 3 : 5. Give the Journal entry to
distribute Workmen Compensation Reserve of ₹1,20,000 at the
time of change in profit-sharing ratio, when there is a claim of ₹80,000
against it.
X, Y and Z are sharing
profits and losses 5 : 3 : 2, With effect from 1st April, 2019, they decide to
share profits and losses in the ratio of 5 : 2 : 3 . Calculate each partner's
gain or sacrifice due to the change in ratio.
A, B and C are
partners sharing profit and loss in the ratio of 2 : 5 : 5. From 1st January,
2019, they decided to share profit and loss in the ratio of 3 : 5 : 7. You are
required to fill up the following journal entry:
JOURNAL
|
Date |
Particulars |
L.F. |
Dr. ₹ |
Cr. ₹ |
|
|
2019 Jan. 1 |
A's Capital A/c |
Dr. |
|
- |
|
|
|
C's Capital A/c |
Dr. |
|
90,000 |
|
|
|
To B's Capital A/c |
|
|
|
- |
X, Y and
Z are partners sharing profits in the ratio of 5 : 4 : 1. It is now
agreed that they will share future profits in the ratio of 3 : 3 :
4. Goodwill is valued at ₹ 1,00,000. You are required to pass a
single journal entry for the treatment of goodwill.
Explain the
Revaluation Account.
X and Y are partners
in a firm sharing profits in the ratio of 3 : 2. With effect from 1st
April, 2019, they agreed to share profits equally. For this purpose, the
goodwill of the firm is valued at ₹75,000. You are required to fill up the
following Journal entry:
JOURNAL
|
Date |
Particulars |
|
L.F. |
Dr.
(₹) |
Cr.
(₹) |
|
2019 |
|
|
|
|
|
|
April 1 |
Y's Capital A/c |
Dr. |
|
? |
|
|
|
To X's Capital A/c |
|
|
|
? |
|
|
(Being ?) |
|
|
|
|
Give two circumstances
in which sacrificing ratio may be applied.
X, Y and Z sharing
profits and losses in the ratio of 1 : 2 : 2, decide to share future profits
equally with effect from 1st April, 2016. On that date, Profit & Loss
Account showed a credit balance of ₹ 1,20,000. Partners do not want to
distribute the profit but prefer to record the change in the profit-sharing
ratio by passing an adjustment entry. You are required to give the adjusting
entry.
P, Q and R are
partners sharing profits equally. They decided that in future R will get 1717 share in profits. On the day of change, firm’s Goodwill is
valued at ₹ 42,000. Give Journal Entries arising on account of change in profit
sharing ratio.
[Hint: New Ratios 37:37:1737:37:17. P and Q gain 221221 each and R sacrifices 421421]
A, B and C were
partners sharing profits and losses in the ratio of 7 : 3 : 2. From 1st April
2015, they decided to share profits and losses in the ratio of 8 : 4 : 3.
Goodwill is to be valued at the average of three year’s profits preceding the
date of change in profit sharing ratio. The profits for the years ending 31st
March 2012, 2013, 2014 and 2015 were ₹ 52,000, ₹ 48,000, ₹ 60,000 and ₹ 90,000
respectively. Give the necessary journal entry.
X, Y and Z were
sharing profits and losses in the ratio of 5 : 3 : 2. They decided to share
future profits and losses in the ratio of 2 : 3 : 5 with effect from 1.4.2017.
They decided to record the effect of the following, without effecting their
book values:
- Profit and Loss Account ₹
24,000
- Advertisement Suspense
Account ₹ 12,000
Pass the necessary
adjusting entry.
6 marks
R, S and T were partners in a firm sharing profits in 1 : 2 : 3
ratio. Their balance sheet as at 31st March, 2015 was as follows
Balance Sheet
as at 31st March, 2015
|
Liabilities |
|
Amounts
(₹) |
Assets |
Amount
(₹) |
|
Creditors |
|
50,000 |
Land |
50,000 |
|
Bills |
|
20,000 |
Building |
50,000 |
|
General Reserve |
|
30,000 |
Plant |
1,00,000 |
|
Capital A/cs |
|
|
Stock |
40,000 |
|
R |
1,00,000 |
|
Debtors |
30,000 |
|
S |
50,000 |
|
Bank |
5,000 |
|
T |
25,000 |
1,75,000 |
|
|
|
|
|
2,75,000 |
|
2,75,000 |
From 1st April. 2015
R, S and T decided to share the future profits equally. For this purpose it was
decided that
- Goodwill of the firm be valued
at ₹1,50,000.
- Land be revalued at ₹80,000 and
building be depreciated by 6%.
- Creditors of ₹6,000 were not
likely to be claimed and hence be written-off.
Prepare revaluation
account, partners’ capital accounts and the balance sheet of the reconstituted
firm.
[2016]
A, B & C were
partners in a firm sharing profits & losses in the ratio of 2 : 2 : 1. On
March 31, 2018, their Balance Sheet was as follows:
BALANCE SHEET as at March 31, 2018
|
Liabilities |
|
₹ |
Assets |
₹ |
|
Capitals: |
|
|
Land & Building |
3,00,000 |
|
A |
2,00,000 |
|
Stock |
1,60,000 |
|
B |
1,50,000 |
|
Debtors |
80,000 |
|
C |
90,000 |
4,40,000 |
Cash at Bank |
10,000 |
|
General Reserve |
|
40,000 |
|
|
|
Creditors |
|
70,000 |
|
|
|
|
|
5,50,000 |
|
5,50,000 |
From April 1, 2018,
they decided to share future profits in the ratio of 1 : 2 : 3. For this
purpose the following were agreed upon:
- Goodwill of the firm was valued
at ₹ 4,50,000.
- Land & Building will be
appreciated by 20%.
- Capitals of the partners will
be in proportion to their new profit sharing ratio.
For this purpose,
Current Accounts will be opened.
Pass necessary Journal entries for the above transactions in the books of the
firm.
Dinesh, Ramesh and
Suresh are partners in a firm sharing profits and losses in the ratio of
3:3:2. They decided to share the profits equally w.e.f. April 1, 2015. Their
Balance Sheet as on 31 March 2016, was as follows:
|
Liabilities |
|
Amount
(₹) |
Assets |
Amount
(₹) |
|
Sundry Creditors |
|
1,50,000 |
Cash at Bank |
40,000 |
|
General Reserve |
|
80,000 |
Bills Receivable |
50,000 |
|
Partner's Loan: |
|
|
Sundry Debtors |
60,000 |
|
Dinesh |
40,000 |
|
Stock |
1,20,000 |
|
Ramesh |
30,000 |
70,000 |
Fixed Assets |
2,80,000 |
|
Partners Capital |
|
|
|
|
|
Dinesh |
1,00,000 |
|
|
|
|
Ramesh |
80,000 |
|
|
|
|
Suresh |
70,000 |
2,50,000 |
|
|
|
|
|
5,50,000 |
|
5,50,000 |
It was also decided
that:
- The fixed assets should be
valued at ₹ 3,31,000.
- A provision of 5% on sundry debtors
be made doubtful debts.
- The goodwill of the firm at
this date is valued at 412412 years purchase of the
average net profits of last, five years which were ₹ 14,000;
₹ 17,000; ₹ 20,000; ₹ 22,000 and ₹ 27,000
respectively.
- The value of a stock is reduced
to ₹ 1,12,000.
- Goodwill was not to appear in
the books.
Pass the necessary journal entries and prepare the revised Balance sheet of the firm.
[[NCERT Textbook]]
A, B and C sharing
profits and losses in the ratio of 4 : 3 : 2, decided to share the future
profits and losses in the ratio of 2 : 3 : 4 with effect from 1st April, 2012.
An extract of their Balance Sheet as at 31st March, 2012 is :
|
Liabilities |
(Rs) |
Assets |
(Rs) |
|
Workmen’s Compensation Reserve |
90,000 |
|
|
Show the accounting
treatment under the following alternative cases :
Case 1. If there is no other information.
Case 2. If a claim on account of workmen’s compensation is estimated at
Rs 45,000.
Case 3. If a claim on account of workmen’s compensation is estimated
at Rs 99,000.
Ram, Mohan, Sohan and
Hari were partners in a firm sharing profits in the ratio of 4 : 3 : 2 : 1. On
1st April, 2016, their Balance Sheet was as follows-
Balance Sheet of Ram, Mohan, Sohan and Hari
as on 1st April, 2016
|
Liabilities |
₹ |
Assets |
₹ |
|
|
Capital A/cs: |
|
|
Fixed Assets |
9,00,000 |
|
Ram |
4,00,000 |
|
Current Assets |
5,20,000 |
|
Mohan |
4,50,000 |
|
|
|
|
Sohan |
2,50,000 |
|
|
|
|
Hari |
2,00,000 |
13,00,000 |
|
|
|
Workmen Compensation Reserve |
|
1,20,000 |
|
|
|
|
|
14,20,000 |
|
14,20,000 |
From the above date,
the partners decided to share the future profits in the ratio of 1 : 2 : 3 : 4.
For this purchase the goodwill of the firm was valued at ₹1,80,000. The
partners also agreed for the following-
- The claim for workmen
compensation has been estimated at ₹1,50,000.
- Adjust the capitals of the
partners according to new profit-sharing ratio by opening Partners'
Current Accounts.
Prepare Revaluation
Account, Partners' Capital Accounts and the Balance Sheet of the reconstituted
firm.
Following is the
Balance Sheet of A and B, who shared Profits and Losses in the ratio of 2 : 1,
as at 1st April, 2019-
Balance Sheet of A and B
as on 1st April, 2019
|
Liabilities |
|
₹ |
Assets |
₹ |
|
Capital A/cs: |
|
|
Land and Building |
2,90,000 |
|
A |
3,00,000 |
|
Furniture |
80,000 |
|
B |
2,00,000 |
5,00,000 |
Stock |
2,40,000 |
|
Reserve |
|
1,50,000 |
Debtors |
1,50,000 |
|
Creditors |
|
2,00,000 |
Bank |
60,000 |
|
|
|
|
Cash |
30,000 |
|
|
|
8,50,000 |
|
8,50,000 |
On the above date, the
partners changed their profit-sharing ratio to 3 : 2. For this purpose, the
goodwill of the firm was valued at ₹3,00,000. The partners also agreed for the
following-
- The value of Land and Building
will be ₹5,00,000;
- Reserve is to be maintained at
₹3,00,000.
- The total capital of the
partners in the new firm will be ₹6,00,000, which will be shared by the
partners in their new profit-sharing ratio.
Prepare Revaluation
Account, Partners' Capital Accounts and the Balance Sheet of the reconstituted
firm.
[Hint: Reserve appearing in the Balance Sheet before the change in
the profit-sharing ratio will be distributed between A and B in their old
ratio, i.e., 2 : 1. When it is again brought back in the books
the Partners' Capital Accounts will be debited in the new ratio, i.e., 3 :
2. Thus, A's Capital Account will debited by ₹1,80,000 [i.e., 3/5 of ₹3,00,000)
and B's Capital Account will be debited by ₹1,20,000 (i.e., 2/5 of
₹3,00,000).]
A, B, C and D were
partners in a firm sharing profits in the ratio of 3 : 2 : 3 : 2. On 1st April,
2016 their balance sheet was as follows:
Balance Sheet
as at 1stApril, 2016
|
Liabilities |
|
Amit
(₹) |
Assets |
Amit
(₹) |
|
Sundry Creditors |
|
90,000 |
Fixed Assets |
8,25,000 |
|
Workmen Compensation Reserve |
|
25,000 |
Current Assets |
3,00,000 |
|
Capital A/cs |
|
|
|
|
|
A |
2,00,000 |
|
|
|
|
B |
2,50,000 |
|
|
|
|
C |
2,50,000 |
|
|
|
|
D |
3,10,000 |
10,10,000 |
|
|
|
|
|
11,25,000 |
|
11,25,000 |
From the above date
the partners decided to share future profits in the ratio of 4 : 3 : 2 : 1. For
this purpose the goodwill of the firm was valued at ₹ 2,70,000.
It was also considered that
- Claim against workmen
compensation reserve will be estimated at ₹ 30,000 and fixed assets
will be depreciated by ₹ 25,000.
- The capitals of the partners
will be adjusted according to the new profit sharing ratio by opening
current accounts of the partners.
Prepare the
revaluation account, partners’ capital accounts and the balance sheet of the
reconstituted firm.
[2017]
A, B and C are
partners sharing profits and losses in the ratio of 5 : 3 : 2. Their Balance
Sheet as at 31st March, 2019 stood as follows:
|
Liabilities |
|
₹ |
Assets |
₹ |
|
Capital A/cs: |
|
|
Land and Building |
3,50,000 |
|
A |
2,50,000 |
|
Machinery |
2,40,000 |
|
B |
2,50,000 |
|
Computers |
70,000 |
|
C |
2,00,000 |
7,00,000 |
Investments (Market Value ₹
90,000) |
1,00,000 |
|
General Reserve |
|
60,000 |
Sundry Debtors |
50,000 |
|
Investments Fluctuation Reserve |
|
30,000 |
Cash in Hand |
10,000 |
|
Sundry Creditors |
|
90,000 |
Cash at Bank |
55,000 |
|
|
|
|
Advertisement Suspense |
5,000 |
|
|
|
8,80,000 |
|
8,80,000 |
They decided to share
profits equally w.e.f. 1st April, 2019. They also agreed that:
- Value of Land and Building be
decreased by 5%.
- Value of Machinery be increased
by 5%.
- A Provision for Doubtful Debts
be created @ 5% on Sundry Debtors.
- A Motor Cycle valued at ₹20,000
was unrecorded and is now to be recorded in the books.
- Out of Sundry Creditors,
₹10,000 is not payable.
- Goodwill is to be valued at 2
years' purchase of last 3 years profits. Profits being for 2018-19
- ₹50,000 (Loss); 2017-18 - ₹2,50,000 and 2016-17- ₹2,50,000.
- C was to carry out the work for
reconstituting the firm at a remuneration (including expenses) of ₹5,000.
Expenses came to ₹3,000.
Pass Journal entries
and prepare Revaluation Account.
Divya and Pooja are
partners in a firm, sharing profits and losses in the ratio of 3: 2. On 31st
March, 2015, their Balance Sheet was as under:
BALANCE SHEET OF DIVYA AND POOJA
as at 31st March, 2015
|
Liabilities |
|
₹ |
Assets |
₹ |
|
Sundry Creditors |
|
9,800 |
Goodwill |
16,000 |
|
General Reserve |
|
23,400 |
Land and Building |
20,000 |
|
Profit and Loss A/c |
|
4,000 |
Investments |
66,000 |
|
Investment Fluctuation Fund |
|
12,600 |
Sundry Debtors |
18,600 |
|
Capital A/cs: |
|
|
Bills Receivables |
7,400 |
|
Divya |
60,000 |
|
Cash in Hand |
11,100 |
|
Pooja |
40,000 |
1,00,000 |
Advertisement Suspense A/c |
10,700 |
|
|
|
1,49,800 |
|
1,49,800 |
The partners decided
that with effect from 1st April, 2015, they would share profits and losses
equally.
For this purpose, they decided that:
- Investments to be valued at ₹
60,000.
- Goodwill to be valued at ₹
24,000.
- General Reserve not to be
distributed between the partners.
You are required to:
- Pass journal entries
- Prepare the revised Balance
Sheet of the firm.
[2016]
A, B and C sharing
profits and losses in the ratio of 4 : 3 : 2, decide to share profits and
losses in the ratio of 2 : 3 : 4 with effect from 1st April, 2016. Following
is an extract of their Balance Sheet as at 31st March, 2016:
|
Liabilities |
₹ |
Assets |
₹ |
|
Investment Fluctuation Reserve |
54,000 |
Investments (At Cost) |
6,00,000 |
Show the accounting
treatment under the following alternative cases :
Case (i) If there is no other information.
Case (ii) If the market value of Investments is ₹ 6,00,000.
Case (iii) If the market value of Investments is ₹ 5,91,000.
Case (iv) If the market value of Investments is ₹ 5,28,000.
Case (v) If the market value of Investments is ₹ 6,60,000.
Anshu, Anju and Anupma
are partners in a firm sharing profit in the ratio of 2 : 2 : 1. Their Balance
Sheet as at March 31,2019 was as follows:
BALANCE SHEET
as at March 31, 2019
|
Liabilities |
|
₹ |
Assets |
₹ |
|
Creditors |
|
65,000 |
Land |
2,00,000 |
|
Bill Payable |
|
7,000 |
Building |
80,000 |
|
General Reserve |
|
48,000 |
Plant |
1,60,000 |
|
Capital: |
|
|
Stock |
2,10,000 |
|
Anshu |
2,40,000 |
|
Debtors |
50,000 |
|
Anju |
2,00,000 |
|
Cash |
20,000 |
|
Anupma |
1,60,000 |
6,00,000 |
|
|
|
|
|
7,20,000 |
|
7,20,000 |
Anshu, Anju and Anupma
decided to share the profit equally, w.e.f. April 1, 2019. For this purpose, it
was agreed that:
- The goodwill of the firm should
be valued at ₹ 60,000.
- Land should be revalued at ₹
3,00,000 and building and the plant should be depreciated by 5%. Stock be
valued at ₹ 2,25,000.
- Creditors amounting to ₹ 2,000
were not likely to be claimed and hence should be written off. You are
required to:
- Record the necessary journal
entries to give effect to the above agreement, without opening
revaluation account;
- Prepare the capital accounts
of the partners; and
- Prepare the balance sheet of
the firm after reconstitution.
Partners decide that
General Reserve is to be transferred to Capital Accounts whereas revised values
of assets and liabilities are not to be recorded in the books.
S, T, U and V were
partners in a firm sharing profits in the ratio of 4 : 3 : 2 : 1. On 1st April,
2019 their balance sheet was as follows
Balance Sheet
as at 1st April, 2019
|
Liabilities |
|
Amount
(₹) |
Assets |
Amount
(₹) |
|
Sundry Creditors |
|
80,000 |
Fixed Assets |
4,40,000 |
|
Workmen Compensation Reserve |
|
60,000 |
Current Assets |
2,00,000 |
|
Capital A/c's |
|
|
|
|
|
S |
2,00,000 |
|
|
|
|
T |
1,50,000 |
|
|
|
|
U |
1,00,000 |
|
|
|
|
V |
50,000 |
5,00,000 |
|
|
|
|
|
6,40,000 |
|
6,40,000 |
From the above date
the partners decided to share the future profits in 3 : 1 : 2 : 4 ratio. For
this purpose the goodwill of the firm was valued at ₹ 90,000.
The partners also agreed for the following
- The claim for workmen
compensation has been estimated at ₹ 70,000.
- To adjust the capitals of the
partners according to new profit sharing ratio by opening partners’
current accounts.
Prepare revaluation account, partners’ capital accounts and the balance sheet of the reconstituted firm.
[2017]
Brijesh, Charu and
Dilip are partners sharing profits and losses in the ratio of 3: 2: 1. Their
balance sheet as at 31st March, 2016 was as follows:
|
Liabilities |
|
₹ |
Assets |
|
₹ |
|
Creditors |
|
87,000 |
Cash |
|
30,000 |
|
Reserve |
|
42,000 |
Debtors |
62,000 |
|
|
Profit & Loss A/c (Profits) |
|
21,000 |
Less: Provision for doubtful debs |
2,000 |
60,000 |
|
Capital Accounts: |
|
|
Stock |
|
1,80,000 |
|
Brijesh |
3,00,000 |
|
Furniture |
|
30,000 |
|
Charu |
3,00,000 |
|
Plant |
|
2,00,000 |
|
Dilip |
50,000 |
6,50,000 |
Building |
|
3,00,000 |
|
|
|
8,00,000 |
|
|
8,00,000 |
The partners agreed
that from 1st April, 2016 they will share profits and losses in the ratio of 4:
4: 1. They agreed that:
- Stock is to be valued at 20%
less.
- Provision for doubtful debts to
be increased by ₹ 1,500.
- Furniture is to be depreciated
by 20% and plant by 15%.
- ₹ 3,500 are outstanding for
salaries.
- Building is to be valued at ₹
3,50,000.
- Goodwill is valued at ₹ 45,000.
Partners do not want
to record the altered values of assets and liabilities in the books and want to
leave the reserves and profits undisturbed. You are required to pass a single
journal entry to give effect to the above. Also, prepare the revised balance
sheet.
The following is the
balance sheet of a firm as at 31st March, 2019:
|
Liabilities |
|
₹ |
Assets |
₹ |
|
Capital Accounts: |
|
|
Building |
6,50,000 |
|
A |
4,00,000 |
|
Plant and Machinery |
5,00,000 |
|
B |
4,00,000 |
|
Stock |
3,00,000 |
|
C |
3,00,000 |
|
Debtors |
2,40,000 |
|
D |
3,00,000 |
14,00,000 |
Bills Receivable |
10,000 |
|
Reserves |
|
1,50,000 |
Cash at bank |
20,000 |
|
Profit & Loss A/c (Profits) |
|
90,000 |
|
|
|
Creditors |
|
80,000 |
|
|
|
|
|
17,20,000 |
|
17,20,000 |
|
On 1st April, 2019, the assets and
liabilities were revalued as under: |
₹ |
|
Building |
8,00,000 |
|
Plant and Machinery |
3,20,000 |
|
Stock |
2,60,000 |
|
Creditors |
84,000 |
A provision of 5% was
required on debtors. Goodwill of the firm is valued at ₹ 1,70,000.
Partners agreed that from 1st April, 2019 they will share profits in the ratio
of 4 : 3 : 2 : 1 instead of their former ratio of 5 : 4 : 2 : 1. They do not
want to record the revised values of assets and liabilities in the books. They
also do not want to disturb the reserves and Profit & Loss A/c.
Pass a single journal entry to give effect to the above.
A, B and C are
partners sharing profits and losses in the ratio of 2 : 2 : 1. From 1st April,
2019 they decided to share future profits and losses equally.
Following balances appeared in their books:
|
|
₹ |
|
Profit and Loss A/c (Cr.) |
20,000 |
|
Advertisement Suspense A/c (Dr.) |
15,000 |
|
Workmen Compensation Reserve |
60,000 |
It was agreed that:
- Goodwill should be valued at
two year’s purchase of super profits. Firm’s average profits. Firm’s
average profits are ₹ 75,000. Capital invested in the business is ₹
6,00,000 and normal rate of return is 10%.
- Furniture (book value of ₹
50,000) be reduced to ₹ 30,000.
- Computers (book value of ₹
40,000) be reduced by ₹ 10,000.
- Claim on account of Workmen’s
Compensation amounted to ₹ 50,000.
- Investments (book value of ₹
30,000) were revalued at ₹ 25,000.
Pass necessary journal
entries for the above.
A, B and C are sharing
profits and losses in the ratio of 5 : 3 : 2. They decided to share future
profits and losses in the ratio of 2 : 3 : 5 with effect from 1st April, 2019.
They also decide to record the effect of the following revaluations without
affecting the book values of the assets and liabilities by passing an
Adjustment Entry:
|
|
Book Values (₹) |
Revised Values (₹) |
|
Land and Building |
5,00,000 |
5,50,000 |
|
Plant and Machinery |
2,50,000 |
2,40,000 |
|
Sundry Creditors |
60,000 |
55.000 |
|
Outstanding Expenses |
60,000 |
75,000 |
Pass necessary Single
Adjustment Entry.
Ashish, Aakash and
Amit are partners sharing profits and losses equally. The Balance Sheet as at
31st March 2019 was as follows:
|
Liabilities |
₹ |
Assets |
₹ |
|
|
Sundry Creditors |
|
75,000 |
Cash in Hand |
24,000 |
|
General Reserve |
|
90,000 |
Cash at Bank |
1,40,000 |
|
Capital A/cs : |
|
|
Sundry Debtors |
80,000 |
|
Ashish |
3,00,000 |
|
Stock |
1,40,000 |
|
Aakash |
3,00,000 |
|
Land and Building |
4,00,000 |
|
Amit |
2,75,000 |
8,75,000 |
Machinery |
2,50,000 |
|
|
|
|
Advertisement Suspense |
6,000 |
|
Total |
|
10,40,000 |
Total |
10,40,000 |
The partners decided
to share profits in the ratio of 2 : 2 :1 w.e.f, 1st April, 2019. They also
decided that-
- Value of stock to be reduced to
₹1,25,000.
- Value of machinery to be
decreased by 10%.
- Land and Building to be
appreciated by ₹62,000.
- Provision for Doubtful Debts to
be made @ 5% on Sundry Debtors.
- Aakash was to carry out
reconstitution of the firm at a remuneration of ₹10,000.
Pass neccessary
Journal entries to give effect to the above.
X, Y and Z are
partners in a firm sharing profits and losses as 5:4:3. Their Balance Sheet as
at 31st March 2019 was:
|
Liabilities |
₹ |
Assets |
₹ |
|
|
Sundry Creditors |
|
40,000 |
Cash at Bank |
40,000 |
|
Outstanding Expenses |
|
15,000 |
Sundry Debtors |
2,10,000 |
|
General Reserve |
|
75,000 |
Stock |
3,00,000 |
|
Capital A/cs: |
|
|
Furniture |
60,000 |
|
X |
4,00,000 |
|
Plant and Machinery |
4,20,000 |
|
Y |
3,00,000 |
|
|
|
|
Z |
2,00,000 |
9,00,000 |
|
|
|
|
|
10,30,000 |
|
10,30,000 |
From 1st April 2019,
they agree to alter their profit sharing ratio as 4 : 3 : 2. It is also decided
that:
- Furniture be taken at 80% of
its value.
- Stock be appreciated by 20%.
- Plant and Machinery be valued
at ₹ 4,00,000.
- Outstanding Expenses be
increased by ₹ 13,000.
Partners agreed that
altered values are not to be recorded in the books and they also do not want to
distribute the general reserve.
You are required to pass a single Journal Entry to give effect to the above.
Also, prepare Balance Sheet of the new firm.
Anil, Manvi and Payal
are partners sharing profits and losses in the ratio 5 : 3 : 2. Their Balance
Sheet as at 31st March, 2019 stood as follows:
|
Liabilities |
|
₹ |
Assets |
₹ |
|
Capital A/cs: |
|
|
Land and Building |
2,60,000 |
|
Anil |
3,50,000 |
|
Machinery |
3,50,000 |
|
Manvi |
2,50,000 |
|
Stock |
90,000 |
|
Payal |
3,00,000 |
9,00,000 |
Bills Receivable |
70,000 |
|
General Reserve |
|
20,000 |
Sundry Debtors |
1,00,000 |
|
Workmen Compensation Reserve |
|
30,000 |
Cash in Hand |
25,000 |
|
Sundry Creditors |
|
50,000 |
Cash at Bank |
1,05,000 |
|
|
|
10,00,000 |
|
10,00,000 |
They decided to share
profits and losses in the ratio of 2 : 2 : 1 w.e.f 1st April, 2019. They agreed
that:
- Land and Building be
appreciated by 10%.
- Machinery be reduced by 15%.
- Stock be increased to
₹1,00,000.
- A Provision for Doubtful Debts
be created @ 5% on Sundry Debtors.
- A Creditor of ₹5,000 is not to
claim the dues.
- A claim on account of Workmen
Compensation is estimated at ₹10,000.
- An expense of ₹2,000 was paid
by the firm for getting the value of Land and Building certified from a
Chartered Engineer.
Pass the Journal
entries and prepare Revaluation Account.
X, Y and Z are
partners sharing profits and losses in the ratio of 5 : 3 : 2. Their position
as at 31st March 2019 was as follows:
|
Liabilities |
|
₹ |
Assets |
|
₹ |
|
Sundry Creditors |
|
44,000 |
Cash in hand |
|
8,000 |
|
Outstanding Expenses |
|
10,000 |
Cash at Bank |
|
22,000 |
|
Capitals: |
|
|
Debtors |
56,000 |
|
|
X |
2,80,000 |
|
Less: Provision |
6,000 |
50,000 |
|
Y |
2,80,000 |
|
Stock |
|
2,80,000 |
|
Z |
1,00,000 |
6,60,000 |
Machinery |
|
1,54,000 |
|
|
|
|
Building |
|
2,00,000 |
|
|
|
7,14,000 |
|
|
7,14,000 |
It was decided that
with effect from 1st April 2019, profit and loss sharing ratio will be 3 : 3 :
1. They agreed on the following terms:
- Goodwill of the firm be valued
at two year’s purchase of the average super profits of last three years.
Average profits of the last three years are ₹ 1,08,000, while
the normal profits may be taken at ₹ 66,000.
- Provision on debtors be reduced
by ₹ 2,000.
- Value of stock be increased by
10% and machinery be valued at ₹ 1,00,000.
- An item of ₹ 3,000 included in
sundry creditors is not likely to be claimed.
Partners do not want
to record the altered values of assets and liabilities in the books. Pass an
entry to give effect to the above and prepare the revised balance sheet.
Balance Sheet of X and
Y, who share profits and losses as 5 : 3, as at April 1, 2019, is:
|
Liabilities |
₹ |
Assets |
₹ |
|
X's Capital |
52,000 |
Goodwill |
8,000 |
|
Y's Capital |
54,000 |
Machinery |
38,000 |
|
General reserve |
4,800 |
Furniture |
15,000 |
|
Sundry creditors |
5,000 |
Sundry debtors |
33,000 |
|
Employees' provident fund |
1,000 |
Stock |
7,000 |
|
Workmen compensation Reserve |
10,000 |
Bank |
25,000 |
|
|
|
Advertisement Suspense A/c |
800 |
|
Total |
1,26,800 |
Total |
1,26,800 |
On the above date,
they decided to change their profit sharing ratio to 3 : 5 and agreed upon the
following.
- Goodwill be valued on the basis
of 2 years' purchase of the average profit of the last three years.
Profits for the years ended 31st March, are : 2016-17- ₹7,500, 2017-18 -
₹4,000 and 2018-19- ₹6,500.
- Machinery and stock be revalued
at ₹45,000 and ₹8,000 respectively.
- Claim on account of workmen's
compensation is ₹6,000.
Prepare Revaluation
Account, Partners' Capital Accounts and the Balance Sheet of the new firm.
Explain the two types
of the accounting treatment of Investment Fluctuation Reserve.
A, B and C were
partners in a firm sharing profits in the ratio of 2: 2: 1. Their Balance Sheet
as at March 31, 2019 was as follows:
BALANCE SHEET OF FIRM A, B and C as at March 31, 2019
|
Liabilities |
|
₹ |
Assets |
₹ |
|
Creditors |
|
30,000 |
Land |
85,000 |
|
Bill Payable |
|
20,000 |
Building |
50,000 |
|
Outstanding Expenses |
|
25,000 |
Plant |
1,00,000 |
|
General Reserve |
|
50,000 |
Stock |
40,000 |
|
Capital: |
|
|
Debtors |
25,000 |
|
A |
50,000 |
|
Cash |
5,000 |
|
B |
60,000 |
|
|
|
|
C |
70,000 |
1,80,000 |
|
|
|
|
|
3,05,000 |
|
3,05,000 |
From April 1, 2019 the
partners decided to share profits in the ratio of 1: 2: 3. For this purpose it
was agreed that:
- The goodwill of the firm should
be valued at ₹ 60,000.
- Land should be revalued at
₹ 1,00,000. Building should be depreciated by 6%.
- Creditors amounting to ₹ 3,000
were not to be paid.
You are required to:
- Record the necessary journal
entries to give effect to the above agreement.
- Prepare the capital accounts of
the partners.
- Prepare the balance sheet of
the reconstituted firm.
Partners decide that
General Reserve will be transferred to Capital Accounts whereas revised
values of assets and liabilities are not to be recorded in the books.
A, B and C sharing
profits and losses in the ratio of 5 : 3 : 2 decide to share profits and losses
equally with effect from 1st April, 2019. Goodwill of the firm is valued at
₹90,000. Pass Journal entries under each of the following alternative cases:
Case 1. When goodwill does not appear in the books.
Case 2. When goodwill appears in the books at ₹60,000 and they
agree on the following:
- Existing goodwill is written
off.
- Existing goodwill is not
written off, i.e., is carried in the books of the firm.
A and B are partners
sharing profits in the ratio of 4 : 3. Their Balance Sheet as at 31st March
2019 stood as :
Balance Sheet
|
Liabilities |
₹ |
Assets |
₹ |
|
|
Sundry Creditors |
|
28,000 |
Cash |
20,000 |
|
Reserve |
|
42,000 |
Sundry Debtors |
1,20,000 |
|
Capitals A/cs: |
|
|
Stock |
1,40,000 |
|
A's Capital |
2,40,000 |
|
Fixed Assets |
1,50,000 |
|
B's Capital |
1,20,000 |
3,60,000 |
|
|
|
Total |
|
4,30,000 |
|
4,30,000 |
They decided that with
effect from 1st April 2019, they will share profits and losses in the ratio of
2 : 1. For this purpose they decided that:
- Fixed assets are to be
depreciated by 10%.
- A Provision for Doubtful Debts
of 6% be made on Sundry Debtors.
- Stock be valued at ₹1,90,000.
- An amount of ₹ 3,700 included
in Creditors is not likely to be claimed.
Partners decided to
record the revised values in the books. However, they do not want to disturb
the Reserves. You are required to pass the Journal entries, prepare the Capital
Accounts of Partners and the revised Balance Sheet.
Amar, Tarim and Akhil
are partners sharing profits and losses in the ratio of 5 : 3 : 2. Their
Balance Sheet as at 31st March, 2019 was as follows:
|
Liabilities |
|
₹ |
Assets |
|
₹ |
|
Sundry Creditors |
|
1,60,000 |
Cash in Hand |
|
25,000 |
|
Salaries Payable |
|
30,000 |
Bank Balance |
|
1,25,000 |
|
Reserves |
|
80,000 |
Bills Receivable |
|
10,000 |
|
Profit and Loss A/c |
|
30,000 |
Sundry Debtors |
1,00,000 |
|
|
Capital A/cs: |
|
|
Less: Provision for Doubtful Debts |
10,000 |
90,000 |
|
Amar |
3,00,000 |
|
Stock |
|
2,00,000 |
|
Tarun |
1,80,000 |
|
Furniture |
|
50,000 |
|
Akhil |
1,20,000 |
6,00,000 |
Computers |
|
3,00,000 |
|
|
|
|
Air-Conditioners |
|
1,00,000 |
|
|
|
9,00,000 |
|
|
9,00,000 |
Profit-sharing ratio
among the partners was agreed to be 2 : 2 : 1 w.e.f 1st April, 2019. They
agreed to the following:
- Stock to be increased to
₹2,20,000.
- Provision for Doubtful Debts to
be reduced by ₹2,000.
- Furniture to be reduced by 20%.
- Computers to be reduced to
₹2,70,000.
- Goodwill of the firm is valued
at ₹1,00,000.
The partners decided
to carry the assets and liabilities at their existing values. They also decided
that Reserves and Profit and Loss Account balance be carried at the same values.
Pass an Adjustment entry giving effect to the above arrangement and prepare
Balance Sheet after adjustments.
X, Y and Z are
partners sharing profits in the ratio of 5 : 3 : 2. Calculate new
profit-sharing ratio, sacrificing ratio, gaining ratio in each of the following
cases:
Case 1. If Z acquires 1/5th share from X.
Case 2. If Z acquires 1/5th share equally from X and Y.
Case 3. If X, Y and Z decide to share the future profits and losses
equally.
Case 4. If Z acquires 1/5th share of X and l/6th Share of Y.
A, B & C were
partners in a firm sharing profits & losses in the ratio of 3 : 2 : 1. On
March 31, 2017, their Balance Sheet was as follows:
BALANCE SHEET
as at March 31, 2017
|
Liabilities |
|
₹ |
Assets |
₹ |
|
Capitals: |
|
|
Fixed Assets |
1,50,000 |
|
A |
50,000 |
|
Current Assets |
65,000 |
|
B |
40,000 |
|
|
|
|
C |
30,000 |
1,20,000 |
|
|
|
Reserve Fund |
|
18,000 |
|
|
|
Creditors |
|
27,000 |
|
|
|
Employees Provident Fund |
|
50,000 |
|
|
|
|
|
2,15,000 |
|
2,15,000 |
From April 1, 2017,
they decided to share future profits equally. For this purpose the followings
were agreed upon:
- Goodwill of the firm was valued
at ₹ 3,00,000.
- Fixed Assets will be
depreciated by 10%.
- Expenses of ₹ 3,000 were paid
by the firm for getting the value of fixed assets certified.
- Capitals of the partners will
be in proportion to their new profit sharing ratio. For this purpose,
Current Accounts will be opened.
Pass necessary Journal entries for the above transactions in the books of the firm.
[2018]
A, B and C are
partners in a firm sharing profits in the ratio of 3 :2 : 1. Their Balance
Sheet as at 31st March, 2017 is as under:
BALANCE SHEET
as at March 31, 2018
|
Liabilities |
|
₹ |
Assets |
₹ |
|
Sundry Creditors |
|
2,00,000 |
Premises |
3,00,000 |
|
General Reserve |
|
1,20,000 |
Machinery |
1,80,000 |
|
Capitals: |
|
|
Stock |
1,20,000 |
|
A |
3,00,000 |
|
Debtors |
2,50,000 |
|
B |
1,50,000 |
|
Bank |
20,000 |
|
C |
1,00,000 |
5,50,000 |
|
|
|
|
|
8,70,000 |
|
8,70,000 |
From 1st April, 2017,
the partners agreed to share future profits in the ratio of 4 : 3 : 3 and make
the following adjustments :
- Premises will be appreciated by
10% and stock by ₹ 10,000.
- A provision for doubtful debts
is to be made on debtors @4%.
- Sundry Creditors be reduced by
₹ 15,000.
- Machinery will be depreciated
by 5%.
- Goodwill of the firm is valued
at ₹ 48,000.
Prepare Revaluation
Account, Partner’s Capital Accounts and Balance Sheet of the reconstituted
firm.
Hind: A Sacrifices 330330, B Sacrifices 130130 and C gains 430430th share.
A, B and C are
partners sharing profits and losses in the ratio of 5 : 3 : 2. From 1st April,
2018, they dedide to share future profits and losses equally. Their Balance
Sheet as at 31st March, 2018 stood as follows:
|
Liabilities |
|
₹ |
Assets |
|
₹ |
|
Sundry Creditors |
|
50,000 |
Land and Buildings |
|
4,00,000 |
|
Salaries Payable |
|
25,000 |
Computers |
|
60,000 |
|
Outstanding Expenses |
|
20,000 |
Stock |
|
2,00,000 |
|
General Reserve |
|
50,000 |
Sundry Debtors |
3,00,000 |
|
|
Workmen Compensation Reserve |
|
70,000 |
Less: Provision for doubtful
debts |
25,000 |
2,75,000 |
|
A |
4,00,000 |
|
Cash at Bank |
|
30,000 |
|
B |
2,50,000 |
|
Cash in Hand |
|
10,000 |
|
C |
1,50,000 |
8,00,000 |
Advertisement Suspense |
|
40,000 |
|
|
|
10,15,000 |
|
|
10,15,000 |
Partners agreed that:
- Value of Land and Building be
increased to ₹ 5,00,000 and stock be decreased by ₹ 20,000.
- Provision for doubtful debts to
be written back, since all debtors are good.
- Out of salaries payable,
₹ 15,000 was not payable.
- Outstanding expenses are to be
written back, being not payable.
- A provision for Workmen
Compensation Claim be made for ₹ 30,000.
- Goodwill is valued at ₹ 60,000.
- B was to carry out the work for
reconstitution of the firm at a remuneration (including expenses) of
₹ 10,000. Expenses paid by B amounted to ₹ 4,000.
Pass journal entries
and prepare Revaluation Account.
Comments