Dowill & Co. is a partnership firm with partners Mr. A, Mr. B and Mr. C, charing profit and losses in the ratio of 10 : 6 : 4. Balance Sheet of the firm as at 31st March, 2015 is as under : 2$ Capital : Mr. A Land 10,000 2,00,000 1,30,000 43,000 12,000 1,30,000 1,39,000 Mr. B Mr. C 80,000 20,000 30,000 Buildings Plant & Machinery Furniture Reserves (Unappropriated Profit) Long Term Debt Bank Overdraft Trade Creditors 1,30,000 | Investments 20,000 | Stock 3,00,000 Debtors 44,000 1,70,000 Total 6,64,000 Total 6,64,000 It was mutually agreed that Mr. B will retire from partnership and in his place. Mr. D will be admitted as a partner with effect from 1st April, 2015. For this purpose, the following adjustments are to be made: (i) Goodwill is to be valued at $1 lakh but the same will not appear as an asset in the books of the reconstituted firm. (ii) Buildings and Plant and Machinery are to be de reciated by 5 percent and 20 percent respectively. Investment are to be taken over by the retiring partner at $ 15,000. Provision of 20 percent is to be made on debtors to cover doubtful debts. (iii) In the reconstituted firm, the total capital will be $ 2 lakhs which will be contributed by Mr. A, Mr. C and Mr. D in their new profit sharing ratio, which is 2: 2: 1. (iv) The surplus funds, if any, will be used for repaying the Bank Overdraft. (v) The amount due to the retiring partner shall be transferred to his loan account. You are to prepare: (a) Revaluation Account; (6) Partners' Capital Accounts; (c) Bank Account,
Dowill & Co. is a partnership firm with partners Mr. A, Mr. B and Mr. C, charing profit and losses in the ratio of 10 : 6 : 4. Balance Sheet of the firm as at 31st March, 2015 is as under : 2$ Capital : Mr. A Land 10,000 2,00,000 1,30,000 43,000 12,000 1,30,000 1,39,000 Mr. B Mr. C 80,000 20,000 30,000 Buildings Plant & Machinery Furniture Reserves (Unappropriated Profit) Long Term Debt Bank Overdraft Trade Creditors 1,30,000 | Investments 20,000 | Stock 3,00,000 Debtors 44,000 1,70,000 Total 6,64,000 Total 6,64,000 It was mutually agreed that Mr. B will retire from partnership and in his place. Mr. D will be admitted as a partner with effect from 1st April, 2015. For this purpose, the following adjustments are to be made: (i) Goodwill is to be valued at $1 lakh but the same will not appear as an asset in the books of the reconstituted firm. (ii) Buildings and Plant and Machinery are to be de reciated by 5 percent and 20 percent respectively. Investment are to be taken over by the retiring partner at $ 15,000. Provision of 20 percent is to be made on debtors to cover doubtful debts. (iii) In the reconstituted firm, the total capital will be $ 2 lakhs which will be contributed by Mr. A, Mr. C and Mr. D in their new profit sharing ratio, which is 2: 2: 1. (iv) The surplus funds, if any, will be used for repaying the Bank Overdraft. (v) The amount due to the retiring partner shall be transferred to his loan account. You are to prepare: (a) Revaluation Account; (6) Partners' Capital Accounts; (c) Bank Account,
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
Question
Transcribed Image Text:Dowill & Co. is a partnership firm with partners Mr. A, Mr. B and Mr. C,
charing profit and losses in the ratio of 10 : 6 : 4. Balance Sheet of the firm as at 31st March, 2015 is as
under :
2$
Сapital:
Mr. A
Land
10,000
2,00,000
1,30,000
43,000
12,000
1,30,000
1,39,000
Mr. B
Mr. C
80,000
20,000
30,000
Buildings
Plant & Machinery
Furniture
Reserves (Unappropriated Profit)
Long Term Debt
Bank Overdraft
Trade Creditors
1,30,000 | Investments
20,000 | Stock
3,00,000 Debtors
44,000
1,70,000
Total
6,64,000
Total
6,64,000
It was mutually agreed that Mr. B will retire from partnership and in his place. Mr. D will be admitted
as a partner with effect from 1st April, 2015. For this purpose, the following adjustments are to be made:
(i)
Goodwill is to be valued at $1 lakh but the same will not appear as an asset in the books of the
reconstituted firm.
(ii) Buildings and Plant and Machinery are to be de reciated by 5 percent and 20 percent
respectively. Investment are to be taken over by the retiring partner at $ 15,000. Provision of 20
percent is to be made on debtors to cover doubtful debts.
(iii) In the reconstituted firm, the total capital will be $ 2 lakhs which will be contributed by Mr. A,
Mr. C and Mr. D in their new profit sharing ratio, which is 2: 2: 1.
(iv) The surplus funds, if any, will be used for repaying the Bank Overdraft.
(v)
The amount due to the retiring partner shall be transferred to his loan account.
You are to prepare: (a) Revaluation Account; (6) Partners' Capital Accounts; (c) Bank Account.
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