X and Y share profits in the ratio of 5 : 3. Their Balance Sheet as...

   

Transcribed Image Text:

X and Y share profits in the ratio of 5 : 3. Their Balance Sheet as at 31st March, 2018 was: Liabilities (Rs.) Assets Creditors Employees Provident Fund Workmen Compensation Reserve Capital A/cs: X Y 15,000 Cash at Bank 10,000 Sundry Debtors 5,800 70,000 31,000 Less: Provision for Doubtful Debts 600 Stock Fixed Assets Profit and Loss A/c 1,01,000 1,31,800 (Rs.) 5,000 20,000 19,400 25,000 80,000 2,400 1,31,800 They admit Z into partnership with 1/8th share in profits on this date. Z brings Rs.20, 000 as his capital. Rs.12, 000 for goodwill in cash. Z acquires share entirely from X. Following revaluation are also made. (a) Employees Provident Fund liability is to be increased by Rs.5, 000. (b) All Debtors are good. Therefore, no provision is required on Debtors. (c) Stock includes Rs.3, 000 for obsolete items. (d) Creditors are to be paid Rs.1,000 more. (e) Fixed Assets are to be revalued at Rs.70,000. Prepare Journal entries, necessary account and new Balance Sheet. Also calculate new profit-sharing ratio. X and Y share profits in the ratio of 5 : 3. Their Balance Sheet as at 31st March, 2018 was: Liabilities (Rs.) Assets Creditors Employees Provident Fund Workmen Compensation Reserve Capital A/cs: X Y 15,000 Cash at Bank 10,000 Sundry Debtors 5,800 70,000 31,000 Less: Provision for Doubtful Debts 600 Stock Fixed Assets Profit and Loss A/c 1,01,000 1,31,800 (Rs.) 5,000 20,000 19,400 25,000 80,000 2,400 1,31,800 They admit Z into partnership with 1/8th share in profits on this date. Z brings Rs.20, 000 as his capital. Rs.12, 000 for goodwill in cash. Z acquires share entirely from X. Following revaluation are also made. (a) Employees Provident Fund liability is to be increased by Rs.5, 000. (b) All Debtors are good. Therefore, no provision is required on Debtors. (c) Stock includes Rs.3, 000 for obsolete items. (d) Creditors are to be paid Rs.1,000 more. (e) Fixed Assets are to be revalued at Rs.70,000. Prepare Journal entries, necessary account and new Balance Sheet. Also calculate new profit-sharing ratio.

Answer rating: 100% (QA)

Solution Revaluation account Dr Cr Particulars Amt Rs Particulars Amt Rs Stock 3000 provision for do... View the full answer