InterviewSolution
Saved Bookmarks
| 1. |
Following was the Balance Sheet of A and B who were sharing profits in the ratio of 2 : 1 as at 31st March, 2018: They agree to admit C into the partnership on the following terms: (a) C was to bring in ₹ 7,500 as his capital and ₹ 3,000 as goodwill for 1/4th share in the firm. (b) Values of the Stock and Plant and Machinery were to be reduced by 5%. (c) A Provision for Doubtful Debts was to be created in respect of Sundry Debtor ₹ 375. (d) Building Account was to be appreciated by 10%. Pass necessary journal entries to give effect to the arrangements. Prepare Profit and Loss Adjustment Account (or Revaluation Account), Capital Accounts and Balance Sheet of the new firm. |
|
Answer» essary JOURNAL entries are GIVEN below:Explanation:Sacrificing Ratio A and B =2: 1Distribution of PREMIUM for Goodwill ( in sacrificing ratio) A's Goodwill B's Goodwill Distribution of Profit from Profit and Loss Adjustment Account (in old ratio) Thus, A and B's profit from Profit and Loss Adjustment Account will be Rs. 500 and Rs. 250 respectively. |
|