Accounting for Partnership Firms (CBSE Class-12 Accountancy): Questions 1 - 1 of 135

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Question number: 1

» Accounting for Partnership Firms » Partnership

Essay Question▾

Describe in Detail

A, Band C were partners in a firm sharing profits equally: Their Balance Sheet on. 31.12. 2007 stood as:

Balance sheet as on 31st december, 2007.

shows assets and liabilities of the firm at the end of the year

Liabilities

Rs.

Assets

Rs.

A

30, 000

Goodwill

18, 000

B

30, 000

Cash

38, 000

C

25, 000

Debtors

Less: Bad Debt provision

43, 000

3, 000

40, 000

Bills payable

20, 000

Bills Receivable

25, 000

Creditors

18, 000

Land and Building

60, 000

Workers Compensation Fund

8000

Plant and Machinery

40, 000

Employees provide4nt Fund

60, 000

General Reserve

30, 000

2, 21, 000

2, 21, 000

It was mutually agreed that C will retire from partnership and for this purpose following terms were agreed upon.

  1. Goodwill to be valued on 3 years’ purchase of average profit of last 4 years which were 2004: Rs. 50, 000 (loss); 2005: Rs. 21, 000; 2006: Rs. 52, 000; 2007: Rs. 22, 000.
  2. The Provision for Doubtful Debt was raised to Rs. 4, 000.
  3. To appreciate Land by 15%.
  4. To decrease Plant and Machinery by 10%.
  5. Create provision of Rs; 600 on Creditors.
  6. A sum of Rs. 5, 000 of Bills Payable was not likely to be claimed.
  7. The continuing partners decided to show the firm’s capital at 1, 00, 000 which would be in their new profit sharing ratio which is 2: 3. Adjustments to be made in cash.

Make necessary accounts and prepare the Balance Sheet of the new partners.

Explanation

revaluation account of the firm

shows re-valuated amount of assets and liabilities

Particulars

Rs.

Particulars

Rs.

To Provision for Debts A/c

1, 000

By Land A/c

9, 000

To Plant & Machinery A/c

4, 000

By Provision on Creditors A/c

600

To Profit transferred to

A’s Capital A/c

B’s Capital… (248 more words) …

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