Accountancy

Karim, Rehman and Navel are partners sharing profits and losses in the ratio of 5: 3: 2. Their Balance Sheet as at 31st March, 2022 stood as follows:

LiabilitiesAmount (Rs.)AssetsAmount(Rs.)Capital A/c:Land and Building2,40,000 Karim - 2,50,000Machinery70,000Rehman - 2,50,000Computers Investments (Market value Rs. 90,000)1,00,000Navel - 2,00,0007,00,000Sundry Debtors50,000General Reserve 60,000Cash in Hand10,000Investments Fluctuation Reserve 30,000Cash at Bank55,000Sundry Creditors 90,000Advertisement Suspense5,000    8,80,000 8,80,000 They decided to share profits…

Continue ReadingKarim, Rehman and Navel are partners sharing profits and losses in the ratio of 5: 3: 2. Their Balance Sheet as at 31st March, 2022 stood as follows:

Amar and Akhar are partners sharing profits in the ratio of 2: 1. On 31st March, 2022, their Balance Sheet showed General Reserve of Rs. 60,000. It was decided that in future they will share profits and losses in the ratio of 3: 2. Pass necessary Journal entry in each of the following alternative cases: (i) When General Reserve is not to be shown in the new Balance Sheet. (ii) When General Reserve is to be shown in the new Balance Sheet.

SOLUTION

Continue ReadingAmar and Akhar are partners sharing profits in the ratio of 2: 1. On 31st March, 2022, their Balance Sheet showed General Reserve of Rs. 60,000. It was decided that in future they will share profits and losses in the ratio of 3: 2. Pass necessary Journal entry in each of the following alternative cases: (i) When General Reserve is not to be shown in the new Balance Sheet. (ii) When General Reserve is to be shown in the new Balance Sheet.

A, B and C who are presently sharing profits and losses in the ratio of 5: 3: 2 decide to share future profits and losses in the ratio of 2: 3: 5. Give the journal entry to distribute ‘Investments Fluctuation Reserve’ of Rs. 20,000 at the time of change in profit-sharing ratio, when investment (market value Rs. 95,000) appears in the books at Rs. 1,00,000.

SOLUTION

Continue ReadingA, B and C who are presently sharing profits and losses in the ratio of 5: 3: 2 decide to share future profits and losses in the ratio of 2: 3: 5. Give the journal entry to distribute ‘Investments Fluctuation Reserve’ of Rs. 20,000 at the time of change in profit-sharing ratio, when investment (market value Rs. 95,000) appears in the books at Rs. 1,00,000.

Ashok, Bhim and Chetan who are sharing profits in the ratio of 5: 3: 2, decide to share profits in the ratio of 2: 3: 5 with effect from 1st April, 2022. Workmen Compensation Reserve appears at Rs. 1,20,000 in the Balance Sheet as at 31st March, 2022 and Workmen Compensation Claim is estimated at Rs. 1,50,000. Pass Journal entries for the accounting treatment of Workmen Compensation Reserve.

SOLUTION

Continue ReadingAshok, Bhim and Chetan who are sharing profits in the ratio of 5: 3: 2, decide to share profits in the ratio of 2: 3: 5 with effect from 1st April, 2022. Workmen Compensation Reserve appears at Rs. 1,20,000 in the Balance Sheet as at 31st March, 2022 and Workmen Compensation Claim is estimated at Rs. 1,50,000. Pass Journal entries for the accounting treatment of Workmen Compensation Reserve.

X, Y and Z who are presently sharing profits and losses in the ratio of 5: 3: 2 decide to share future profits and losses in the ratio of 2: 3: 5. Give the journal entry to distribute ‘Workmen Compensation Reserve’ of Rs. 1,20,000 at the time of change in profit-sharing ratio, when there is a claim of Rs. 80,000 against it.

SOLUTION

Continue ReadingX, Y and Z who are presently sharing profits and losses in the ratio of 5: 3: 2 decide to share future profits and losses in the ratio of 2: 3: 5. Give the journal entry to distribute ‘Workmen Compensation Reserve’ of Rs. 1,20,000 at the time of change in profit-sharing ratio, when there is a claim of Rs. 80,000 against it.

A, B and C who are presently sharing profits and losses in the ratio of 5: 3: 2 decide to share future profits and losses in the ratio of 2: 3: 5. Give the Journal entry to distribute ‘Workmen Compensation Reserve’ of Rs. 1,20,000 at the time of change in profit-sharing ratio, when: (i) No information is given; (ii) there is no claim against it.

SOLUTION

Continue ReadingA, B and C who are presently sharing profits and losses in the ratio of 5: 3: 2 decide to share future profits and losses in the ratio of 2: 3: 5. Give the Journal entry to distribute ‘Workmen Compensation Reserve’ of Rs. 1,20,000 at the time of change in profit-sharing ratio, when: (i) No information is given; (ii) there is no claim against it.

Om and Shiv are partners in a firm sharing profits in the ratio of 4: 1. They decided to share future profits in the ratio of 3: 2 w.e.f. 1st April, 2022. On that day, Profit and Loss Account showed a debit balance of Rs. 1,00,000. Pass Journal entry to give effect to the above.

SOLUTION

Continue ReadingOm and Shiv are partners in a firm sharing profits in the ratio of 4: 1. They decided to share future profits in the ratio of 3: 2 w.e.f. 1st April, 2022. On that day, Profit and Loss Account showed a debit balance of Rs. 1,00,000. Pass Journal entry to give effect to the above.

Nitya and Anand are partners in a firm sharing profits and losses in the ratio of 3: 2. With effect from 1st April, 2022, they decided to share future profits equally. On the date of change in the profit-sharing ratio, the Profit and Loss Account showed a credit balance of Rs. 1,50,000. Record the necessary Journal entry for the distribution of the balance in the Profit and Loss Account immediately before the change in the profit-sharing ratio. 

SOLUTION

Continue ReadingNitya and Anand are partners in a firm sharing profits and losses in the ratio of 3: 2. With effect from 1st April, 2022, they decided to share future profits equally. On the date of change in the profit-sharing ratio, the Profit and Loss Account showed a credit balance of Rs. 1,50,000. Record the necessary Journal entry for the distribution of the balance in the Profit and Loss Account immediately before the change in the profit-sharing ratio. 

Karan and Varun were partners in a firm sharing profits and losses in the ratio of 1: 2. Their fixed capitals were Rs. 2,00,000 and Rs. 3,00,000 respectively. On 1st April, 2016 Kishore was admitted as a new partner for 1/4th share in the profits. Kishore brought Rs. 2,00,000 for his capital which was to be kept fixed like the capitals of Karan and Varun. Kishore acquired his share of profit from Varun only. Calculate goodwill of the firm on Kishore’s admission and the new profit-sharing ratio of Karan, Varun and Kishore. Also, pass necessary Journal Entry for the treatment of Goodwill on Kishore’s admission considering that Kishore did not bring his share of goodwill premium in Cash.

SOLUTION DateParticularL.FDebitAmount(Rs.)CreditAmount(Rs.) Cash A/c                                Dr.  To Kishore’s Capital A/c(Capital Brought in Cash)Kishore’s current A/c          Dr.To Varun’s Current A/c(Goodwill Adjusted through Current Accounts)   2,00,00025,0002,00,00025,000 STEP 2 OF 2 Working Notes:Calculation of Kishore’s…

Continue ReadingKaran and Varun were partners in a firm sharing profits and losses in the ratio of 1: 2. Their fixed capitals were Rs. 2,00,000 and Rs. 3,00,000 respectively. On 1st April, 2016 Kishore was admitted as a new partner for 1/4th share in the profits. Kishore brought Rs. 2,00,000 for his capital which was to be kept fixed like the capitals of Karan and Varun. Kishore acquired his share of profit from Varun only. Calculate goodwill of the firm on Kishore’s admission and the new profit-sharing ratio of Karan, Varun and Kishore. Also, pass necessary Journal Entry for the treatment of Goodwill on Kishore’s admission considering that Kishore did not bring his share of goodwill premium in Cash.