XII COMMERCE Book Keeping & Accountancy

Problems

1. Akash and Suraj are partners in a firm sharing profits and losses in the ratio 3:2.
Their balance sheet as on 31st Mar, 2023 was as follows:
Balance Sheet as on 31st Mar, 203
Liabilities Amount Assets Amount
Capital A/c’s Furniture 2,100
Akash 50,000 Stock 28,700
Suraj 50,000 Land and Building 35,000
General Reserve 10,000 Plant and Machinery 49,000
Sundry Creditors 60,000 Sundry Debtors 63,000
Bills Payable 17,000 Cash 9,200
Total 1,87,000 Total 1,87,000
They agreed to admit Sanjay in their partnership on 1 st Apr, 2023, on the
Following terms:
i. Sanjay should bring Rs. 15,000 as his share of goodwill in the firm, and Rs.
20,000 as his capital
ii. Reserve and doubtful debts is to be provided @ 5% on debtors
iii. Land and Building to be depreciated @ 10% p.a.
iv. Plant and Machinery to be depreciated at 10% p.a.
v. The new profit sharing ratio will be 2:1:1.
Prepare Profit and Loss Adjustment Account, Partner’s Capital A/c and Balance
Sheet of the firm after the admission of Sanjay.

Solution:
In the books of Akash and Suraj
Profit and Loss Adjustment Account
Dr. Cr.
Particulars ₹ Particulars ₹
To R. D. D. A/c 3,150 By Partner’s Capital A/c:
1) Akash 6,930
To Land and Building A/c 3,500 2) Suraj + 4,620 11,550
(Revaluation Loss 3:2)
To Plant and Machinery A/c 4,900

Total ₹ 11,550 Total ₹ 11,550

Partner’s Capital Account

Dr. Cr.
Particulars Akash Suraj Sanjay Particulars Akash Suraj Sanjay
₹ ₹ ₹ ₹ ₹ ₹
To Revaluation A/c 6,930 4,620 ----- By Balance b/d 50,000 50,000 -----
(Loss 3:2)
By General Reserve 6,000 4,000 -----
(3:2)
By Goodwill A/c 6,000 9,000 -----

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To Balance c/d 55,070 58,380 20,000 By Cash A/c ----- ----- 20,000

Total ₹ 62,000 63,000 20,000 Total ₹ 62,000 63,000 20,000

New Balance Sheet of Akash and Suraj after admission of Sanjay

As on 1st April, 2023

Liabilities ₹ Assets ₹
Partner’s Capital A/cs: Furniture 2,100
1) Akash 55,070
2) Suraj 58,380 Stock 28,700
3) Sanjay + 20,000 1,33,450
Land and Building 35,000
Less: Depreciation 10% – 3,500 31,500
Sundry Creditors 60,000
Plant and Machinery 49,000
Bills Payable 17,000 Less: Depreciation 10% – 4,900 44,100

Sundry Debtors 63,000

Less: R. D. D. 5% – 3,150 59,850

Cash 44,200

Total ₹ 2,10,450 Total ₹ 2,10,450

Cash Account
Dr. ( + ) ( – ) Cr.
Particulars ₹ Particulars ₹
To Balance b/d 9,200

To Goodwill A/c 15,000

To Sanjay’s Capital A/c 20,000 By Balance c/d 44,200

Total ₹ 44,200 Total ₹ 44,200

2. The following is the Balance Sheet of Shobha and Leena of Amravati who share
profits and losses in the ratio 3:2 respectively on 31-03-2021
Balance Sheet as on 31-03-2021
Liabilities Amount Assets Amount
Creditors 15,000 Plant & Machinery 24,000
General Reserve 11,000 Stock 16,000
Capital Accounts: Furniture 2,000
Shobha 30,000 Debtors 30,000

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Leena 20,000 Cash at Bank 4,000

Total 76,000 Total 76,000
They decided to admit Manju on 1st April, 2021 on the following terms:
i. She has to pay Rs. 20,000 as her Capital and Rs. 17,000 as her share of goodwill
for 1/5th share in future profits.
ii. The amount of Goodwill to be retained in the business.
iii. A provision of 6% on debtors be made for Bad and doubtful debts.
iv. Furniture is to be revalued @ Rs. 3,000.
v. Plant and Machinery and Stock in trade to be depreciated @10% and 5%
respectively.
Prepare: Profit and Loss Adjustment Account, Partner’s Capital A/c and Balance
Sheet of the firm after the admission of Manju.

Solution:
In the books of Shobha and Leena
Profit and Loss Adjustment Account
Dr. Cr.
Particulars ₹ Particulars ₹
To R. D. D. A/c 1,800 By Furniture A/c 1,000

To Plant & Machinery A/c 2,400 By Partner’s Capital A/c:

1) Shobha 2,400
To Stock A/c 800 2) Leena + 1,600 4,000
(Revaluation Loss 3:2)

Total ₹ 5,000 Total ₹ 5,000

Partner’s Capital Account

Dr. Cr.
Particulars Shobha Leena Manju Particulars Shobha Leena Manju
₹ ₹ ₹ ₹ ₹ ₹
To Revaluation 2,400 1,600 ----- By Balance b/d 30,000 20,000 -----
A/c
(Loss 3:2)
By General Reserve 6,600 4,400 -----
(3:2)
By Bank A/c ----- ----- 20,000
To Balance c/d 44,400 29,600 20,000 By Goodwill A/c 10,200 6,800 -----
(3:2)

Total ₹ 46,800 31,200 20,000 Total ₹ 46,800 31,200 20,000

New Balance Sheet of Shobha and Leena after admission of Manju

As on 1st April, 2021

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Liabilities ₹ Assets ₹
Partner’s Capital A/cs: Plant & Machinery 24,000
1) Shobha 44,400 Less: Depreciation 10% – 2,400 21,600
2) Leena 29,600
3) Manju + 20,000 94,000 Stock 16,000
Less: Decrease in value 5% – 800 15,200

Sundry Creditors 15,000 Furniture 2,000

Add: Appreciation + 1,000 3,000

Debtors 30,000
Less: R. D. D. 6% – 1,800 28,200

Cash at Bank 41,000

Total ₹ 1,09,000 Total ₹ 1,09,000

Bank Account
Dr. ( + ) ( – ) Cr.
Particulars ₹ Particulars ₹
To Balance b/d 4,000

To Manju’s Capital A/c 20,000

To Goodwill A/c 17,000 By Balance c/d 41,000

Total ₹ 41,000 Total ₹ 41,000

3. Madhu and Amar are partners in a firm sharing profits & losses in the proportion
3/5 and 2/5 respectively.
Their Balance Sheet as on 31st March, 2022 was as follows:
Balance Sheet as on 31.03.2022
Liabilities Amount Assets Amount
Madhu’s Capital 35,000 Sundry Debtors 45,000
Amar’s Capital 35,000 Land & Building 25,000
Sundry Creditors 62,000 Stock 20,500
Cash at Bank 5,000
Plant & Machinery 35,000
Furniture & Fixtures 1,500
Total 1,32,000 Total 1,32,000
They have admitted Vasant into Partnership. The terms being that:
i. He shall pay Rs. 5,000 as his share of goodwill, the amount of goodwill retained
into business.
ii. He shall bring Rs. 15,000 as his capital for ¼ share in future profits

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iii.For the purpose of Vasant’s admission, it was agreed that assets would be
revalued as follows:
a. Land & Building to be taken at Rs. 30,000
b. Plant & Machinery to be valued at Rs. 32,000
c. A provision of 5% on debtors would be made against doubtful debts
d. The value of stock Rs. 25,000
Prepare Profit & Loss Adjustment Account, Partner’s Capital Accounts and
Balance sheet of the new firm

Solution:
In the books of Madhu and Amar
Revaluation Account
Dr. Cr.
Particulars ₹ Particulars ₹
To Plant & Machinery A/c 3,000 By Land & Building A/c 5,000

To R. D. D. A/c 2,250 By Stock A/c 4,500

To Partner’s Capital A/c:

1) Madhu 2,550
2) Amar + 1,700 4,250
(Revaluation Profit 3:2)

Total ₹ 9,500 Total ₹ 9,500

Partner’s Capital Account

Dr. Cr.
Particulars Madhu Amar Vasant Particulars Madhu Amar Vasant
₹ ₹ ₹ ₹ ₹ ₹
By Balance b/d 35,000 35,000 -----

By Goodwill A/c 3,000 2,000 -----

(3:2)
By Bank A/c ----- ----- 15,000

To Balance c/d 40,550 38,700 15,000 By Revaluation A/c 2,550 1,700 -----
(Profit 2:1)

Total ₹ 40,550 38,700 15,000 Total ₹ 40,550 38,700 15,000

New Balance Sheet of Madhu and Amar after admission of Vasant

As on 1st April, 2022

Liabilities ₹ Assets ₹

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Partner’s Capital A/cs: Sundry Debtors 45,000

1) Madhu 40,550 Less: R. D. D. 5% – 2,250 42,750
2) Amar 38,700
3) Vasant + 15,000 94,250 Land & Building 25,000
Add: Appreciation + 5,000 30,000

Sundry Creditors 62,000 Stock 20,500

Add: Appreciation + 4,500 25,000

Cash at Bank 25,000

Plant & Machinery 35,000

Less: Decrease in value – 3,000 32,000

Furniture & Fixtures 1,500

Total ₹ 1,56,250 Total ₹ 1,56,250

Bank Account
Dr. ( + ) ( – ) Cr.
Particulars ₹ Particulars ₹
To Balance b/d 5,000

To Goodwill A/c 5,000

To Vasant’s Capital A/c 15,000 By Balance c/d 25,000

Total ₹ 25,000 Total ₹ 25,000

4. Ramesh & Suresh share Profit & Loss in the ratio 3:1. Following is their Balance
Sheet.
Balance Sheet as at 31-03-2020
Liabilities Amount Assets Amount
Capital A/c Ramesh 40,000 Cash in Hand 9,000
Suresh 20,000 Stock 20,000
Current A/c Ramesh 4,000 Machinery 20,000
Suresh 6,000 Sundry Debtors 18,000
General Reserve 7,000 Land & Building 22,000
Sundry Creditors 12,000 Profit & Loss A/c 12,000
Bills Payable
Total 1,01,000 Total 1,01,000
Mahesh was admitted on following terms on 01-04-2020.
i. He should bring Rs. 15,000 as a capital and Rs. 8,000 for goodwill in cash for
1/5 share in profit.
ii. Building was found to be over valued by 20% and Machinery undervalued
by 40%.
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iii. Create reserve for doubtful debt for Rs. 1,000.

Prepare necessary Ledger accounts in the books of firm and New Balance Sheet
as on the date of Admission.

Solution:
In the books of Ramesh & Suresh
Revaluation Account
Dr. Cr.
Particulars ₹ Particulars ₹
To Building A/c 3,667 By Machinery A/c 13,333
(Overvalued by 20%) (Undervalued by 40%)

To R. D. D. A/c 1,000

To Partner’s Current A/c:

1) RAMESH 6,500
2) Suresh + 2,166 8,666
(Revaluation Profit 3:1)

Total ₹ 13,333 Total ₹ 13,333

Partner’s Current Account

Dr. Cr.
Particulars Ramesh Suresh Particulars Ramesh Suresh
₹ ₹ ₹ ₹
To Profit & Loss A/c 9,000 3,000 By Balance b/d 4,000 6,000
(3:1)
By General Reserve 5,250 1,750
(3:1)
To Balance c/d 12,750 8,916 By Goodwill A/c 6,000 2,000
(3:1)
By Revaluation A/c 6,500 2,166
(Profit 3:1)

Total ₹ 21,750 11,916 Total ₹ 21,750 11,916

New Balance Sheet of Ramesh and Suresh after admission of Mahesh

As on 1st April, 2020

Liabilities ₹ Assets ₹
Partner’s Capital A/cs: Cash in Hand 32,000
1) Ramesh 40,000
2) Suresh 20,000 Stock 20,000
3) Mahesh + 15,000 75,000

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Machinery 20,000
Partner’s Current A/cs: Add: Undervalued by 40% + 13,333 33,333
1) Ramesh 12,750
2) Suresh + 8,916 21,666 Sundry Debtors 18,000
Less: R. D. D. – 1,000 17,000
Sundry Creditors 24,000
Land & Building 22,000
Less: Overvalued by 20% – 3,667 18,333

Total ₹ 1,20,666 1,20,666

Cash Account
Dr. ( + ) ( – ) Cr.
Particulars ₹ Particulars ₹
To Balance b/d 9,000 By Balance c/d 32,000

To Mahesh’s Capital A/c 15,000

To Goodwill A/c 8,000

Total ₹ 32,000 Total ₹ 32,000

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