ILL Ram, Shyam and Mohan were in partnership sharing profits and losses in the proportions of...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
ILL Ram, Shyam and Mohan were in partnership sharing profits and losses in the proportions of 3:2:1. On 1st April, 2011, Shyam retires from the firm. At that date, their Balance Sheet was as follows: Liabilities Trade Creditors Bills Payable Expenses owing Reserve Fund Workmen's Compensation Reserve Capitals: Ram Shyam Mohan 2,00,000 1,50,000 1,00,000 30,000 Cash in hand 27,000 Debtors 45,000 1,05,000 Stock 4,50,000 7,05,000 Assets Less: Provision 48,000 Investments Loose Tools Factory Premises 1,60,000 10,000 90,000 1,50,000 1,20,000 2,25,000 80,000 40,000 7,05,000 The terms were: (1) Goodwill of the firm to be valued at 2 times of Average Super Profits of last three years. Taking into consideration the risk of the business, normal profits of the firm are estimated at 5,00,000 every year. But actual profits of last three years ending 31st March were as 2009-26,00,000, 2010 25,50,000, 2011-₹5,75,000. (2) Expenses owing to be brought down to ₹37,500. (3) Investments are revalued at 72,000. Ram took over investments at this value. (4) Factory premises is to be revalued at 22,43,000; and Loose tools at 36,000. (5) Provision for doubtful Debts to be increased by *19,500. (6) Claim on account of Workmen's Compensation is *18,000. (7) Shyam be paid 50,000 in cash and balance due to him treated as a loan carrying interest @ 6% per annum. Show Journal entry for goodwill adjustment, prepare necessary ledger accounts and opening balance sheet of the continuing partners. ILL Ram, Shyam and Mohan were in partnership sharing profits and losses in the proportions of 3:2:1. On 1st April, 2011, Shyam retires from the firm. At that date, their Balance Sheet was as follows: Liabilities Trade Creditors Bills Payable Expenses owing Reserve Fund Workmen's Compensation Reserve Capitals: Ram Shyam Mohan 2,00,000 1,50,000 1,00,000 30,000 Cash in hand 27,000 Debtors 45,000 1,05,000 Stock 4,50,000 7,05,000 Assets Less: Provision 48,000 Investments Loose Tools Factory Premises 1,60,000 10,000 90,000 1,50,000 1,20,000 2,25,000 80,000 40,000 7,05,000 The terms were: (1) Goodwill of the firm to be valued at 2 times of Average Super Profits of last three years. Taking into consideration the risk of the business, normal profits of the firm are estimated at 5,00,000 every year. But actual profits of last three years ending 31st March were as 2009-26,00,000, 2010 25,50,000, 2011-₹5,75,000. (2) Expenses owing to be brought down to ₹37,500. (3) Investments are revalued at 72,000. Ram took over investments at this value. (4) Factory premises is to be revalued at 22,43,000; and Loose tools at 36,000. (5) Provision for doubtful Debts to be increased by *19,500. (6) Claim on account of Workmen's Compensation is *18,000. (7) Shyam be paid 50,000 in cash and balance due to him treated as a loan carrying interest @ 6% per annum. Show Journal entry for goodwill adjustment, prepare necessary ledger accounts and opening balance sheet of the continuing partners.
Expert Answer:
Related Book For
Introduction To Financial Accounting
ISBN: 9781526803009
9th Edition
Authors: Anne Marie Ward, Andrew Thomas
Posted Date:
Students also viewed these accounting questions
-
Matthew, Mark and Luke were in partnership sharing profits and losses in the ratio 5 : 3 : 2, financial statements being made up annually to 30 June. Fixed capital accounts were to bear interest at...
-
Adams and David were in partnership sharing profits and losses in the ratio 5:3: . The balance sheet for the partnership at 31 March 2015 was as follows: Fixed Assets/non current Assets (net) $ $...
-
Brown and Jones are in partnership sharing profits and losses equally. The statement of financial position drawn up on 31 March 20X9 showed the following position: Brown retired as from 1 April 20X9...
-
All numbers are in $ '000. Consider an income property. Next three years its NOIs will be $25,000, $28,000 and $30,000. Then NOI will be growing at a constant rate of 3% per year. If you buy the...
-
On January 1, 2009, Plymouth Corporation acquired 80 percent of the outstanding voting stock of Sander Company in exchange for $1,200,000 cash. At that time, although Sanders book value was $925,000,...
-
Suppose that every driver faces a 1% probability of an automobile accident every year. An accident will, on average, cost each driver $10,000. Suppose there are two types of individuals: those with...
-
On October 1, 2017, Gordon borrows \($150\),000 cash from a bank by signing a three-year installment note bearing 10% interest. The note requires equal payments of \($60\),316 each year on September...
-
Hamilton Processing Company uses a weighted-average process costing system and manufactures a single product'a premium rug shampoo and cleaner. The manufacturing activity for the month of October has...
-
1. For the arithmetic series + 5 79 10 + 65 +..... calculate t10 and $10.
-
Prepare journal entries for the above transactions. Aylmer Industries Inc. (Aylmer) has been in business since 2018. Aylmer has two main business segments. This first segment is the construction of...
-
Particles q = -53.0 C, q2 = +105 C, and q3= -88.0 C are in a line. Particles q and q2 are separated by 0.50 m and particles q2 and q3 are separated by 0.95 m. What is the net force on particle q3?
-
Provide one consideration management should take into account when assessing the going concern assumption.
-
Why must executives buy into the multiproject Critical Chain approach?
-
What four functions should be segregated with respect to inventory?
-
Refer to Table 16.2 and assume that the Feds reserve ratio is 10 percent and the economy is in a severe recession. Also suppose that the commercial banks are hoarding all excess reserves (not lending...
-
What is completeness with respect to inventory?
-
A company using a periodic inventory system neglected to record a purchase of merchandise on account at year-end. This merchandise was omitted from the year-end physical count. How will these errors...
-
Suppose the market is semistrong form efficient. Can you expect to earn excess returns if you make trades based on? a. Your brokers information about record earnings for a stock? b. Rumors about a...
-
Happy did not keep proper books of account. At 31 August 20X8 his balances were: Details of transactions in year to 31 August 20X9: At 31 August 20X9 the assets and liabilities were: Depreciation on...
-
What is the difference between solvency and liquidity? Required a. Calculate the gearing ratio for Bastante plc using market values. b. Explain the outcome.
-
a. Briefly describe how each of the following is computed: (i) Employees gross pay; (ii) Employees net pay. b. Outline the nature of those items that are required by UK law to be deducted from...
-
The financial statements for the business of Jets Ski Equipment are shown below. Additional information 1. All purchases and sales of inventories are on credit. 2. On 1 July 2019, J. Waters injected...
-
Some of the most recent financial statements for Hyland Pty Ltd are shown below. Additional information 1. All purchases and sales of inventories are on credit. 2. On 1 July 2020, the shareholders...
-
The comparative statements of financial position of Cresta Ltd as at 30 June 2019 and 2020, and the income statement and statement of changes in equity for the year ended 30 June 2020 are shown...
Study smarter with the SolutionInn App