NOTES

On 31^st march, 2016, the balance sheet of M/s Ram, Rahul and Rohit sharing profits and losses in proportion of their capital, stood as follows:

On 31^st march,2016, Ram desired to retire from the firm and the remaining partners decided to carryon. It was agreed to revalue the assets and liabiities on that date on the following basis:-

     1.Land and buildings be appreciated by 30%.

     2.Machinery be depreciated by 20%.

     3.Closing stock to be valued at Rs.80,000.

     4.Provision for Bad debts be made at 5%.

     5.Old credit balances of sundry creditors Rs.10,000 be written back.

     6.Joint life policy of the partners surrendered and cash obtained Rs.60,000.

     7.Goodwill of the entire firm be valued at Rs.1,80,000 and Ram’s share of the goodwill be adjusted in the accounts of Rahul and Rohit who share the future profits equally. No goodwill will be raised.

     8.The total capital of the firm is to be the same as before retirement. Individual capital be in their profit sharing ratio.

50% on retirement and the balance 50% within one year.
Prepare revaluation account, capital account of partners: Rahul  & Rohit, loan account of Ram, Cash account and balance sheet as on  1.4.2016 of M/s Rahul and Rohit.

A,B,C were in partnership sharing profits and losses in the ratio of 3:2:1. The balance sheet of the firm on 31.2.2016 was as under:

A, on account of ill-health, gave notice that he wished to retire from the firm. A retirement was, therefore, entered as on 31.3.2016, the terms of which were as follows:

      (a)  The profit and loss account for the year ended 31.3.2016,which showed a net profit of Rs.42,000 was to be re-opened. B was to be credited with Rs.6,000 as bonus, in consideration of the extra work, which had devolved upon him during the year. The profit sharing basis was to be revised and the revised ratio is to be 2:3:1 as and from 1^st April 2015.

     (b)  Goodwill was to be valued at two years purchase of the average profits of five years. Profits for these five years ending on 31^st march were as under:                          Rs.        

      (c)  Fixtures are to be valued at Rs.39,800 and a provision of 2% was to be made for doubtful debts and the remaining assets were to be taken at their book value

      (d)  That the amount payable to A shall be paid by B.

      B and C agreed , as between themselves, to continue the business, sharing profits and losses in the ratio of 3:1 and decided to eliminate goodwill from balance sheet, to retain fixtures in  the books at the revised value and increase the provision for doubtful debts to 6%. Total capital of the firm will be Rs.3 Lakhs as before to be maintained in the new ratio as between B and C.

You are required to give the necessary entries to give effect of the above arrangements. Prepare capital accounts of partners, cash account and balance sheet of B and C after giving effect to the above arrangements on the retirement of A.

The balance Sheet of Anil, Swanand and Ashok who were sharing profits in proportion to their capital stood as follows on 31^st March, 2013.

 Balance Sheet as on 31/03/2013 

Ashok retired on the above date and the following was agreed upon.

1.  That the provision for bad debts be brought up to 5% on Debtors.

2.  The Land and Building be appreciated by 25%.

3.  A provision of Rs.500 be made in respect of outstanding legal charges.

4.  The goodwill of the entire firm be fixed at Rs. 10,800 and Ashok’s share of it be adjusted into the accounts of Anil and Swanand who are going to share future profits in the ratio 5:3.

Prepare: (1) Profit & Loss Adjustment Account.  (2). Partners Capital Account. (3). Balance Sheet of Anil and Swanand.

Laxmi, Bharati and Gauri were partners sharing profits and losses in the proportion 5:3:2 Their Balance Sheet was as follows on 31^st December, 2012. 

Gauri retires from the partnership on 1^st April, 2013. The following terms were agreed for retirement.

The retiring partner to be given her share in business profits from the date of 1^st Balance Sheet to the date of retirement on the basis of average profit for the last 3 years and Gauri’s share in goodwill is to be calculated on the basis of two times the average profit for the preceding three years. The profit were 2010: Rs. 7,000, 2011 Rs. 13,000 2012 her capital Rs. 4,000. Gauri is to get Rs. 3,840 on the date of retirement and the balance of A/c kept in the business as his loan.

The assets and liabilities were revalued at: Premises to be depreciated by Rs. 1,000, Value of Motor Cycle be raised to Rs. 8,000, Reserve for bad and doubtful debts be created at 10% on debtors. Creditors to be valued at Rs. 1,800.

You are required to give: Working of the Share of Profit and Share of Goodwill of Gauri, Gauri’s Capital’s A/c and Profit and Loss Adjustment A/c. 

The Balance Sheet of Bhavini, Shalini and Varsha, who shared profit and losses in the ratio of 2/5, 3/10, and 3/10 respectively was as follows.

 Balance Sheet As on 31^st December, 2010 

Shalini retires on 1-1-2011 on the following terms.

The share of Shalini in goodwill of the firm is valued at Rs. 2,700.

Machinery to be depreciated by 10% and motor vans by 12.5%.

Stock to be appreciated by 10% and building by 20%.

A provision of Rs. 2,000 to be made for a claim of compensation.

R. D. D. is no longer necessary.

Bhavini and Varsha will share the future profits in ratio of 1:2 in which the goodwill should be written off.

The amount payable to Shalini should be transferred to her Loan A/c after paying her a sum of Rs. 2,500 as a part payment.