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9 views9 pages

Selfstudys Com File

Good to read

Uploaded by

gigityfame
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Adjustment of Capital

3/4 Marks Questions

1. Nandan, John and Rosa are partners sharing profits in the ratio of 4 : 3: 2. On
1st April, 2012, John gave a notice to retire from the firm. Nandan and Rosa
decided to share future profits in the ratio of 1 : 1. The capital accounts of Nandan
and Rosa after all adjustments showed a balance of Rs. 43,000 and Rs. 80,500
respectively. The total amount to be paid to John was Rs. 95,500. This amount
was to be paid by Nandan and Rosa in such a way that their capitals become
proportionate to their new profit sharing ratio. Pass necessary journal entries in
the books of the firm for the above transactions. Show your working clearly. (All
India 2013)

2. X, Y and Z are partners in a firm sharing profits in the ratio of 3 : 2 : 1. On 1st


April, 2009, X retires from the firm, Y and Z agrees that the capital of the new firm
shall be fixed Rs. 2,10,000 in the profit sharing ratio. The capital accounts of Y
and Z after all adjustment on the date of retirement showed balances of Rs.
1,45,000 and Rs. 63,000 respectively. State the amount of actual cash to be
brought in or to be paid to the partners. (Delhi 2010)
3. X, Y and Z are partners in a firm sharing profits in the ratio of 3 : 2 : 1. On 1st
April, 2009, Y retires form the firm. X and Z agree that the capital of the new firm
shall be fixed at Rs.2,10,000 in the profit sharing ratio. The capital accounts of X
and Z after all adjustments on the date of retirement showed balances of
Rs. 1,45,000 and Rs. 63,000 respectively. State the amount of actual cash to be
brought in or to be paid of partners. (All India 2010)

8 Marks Questions

4. L, M and N were partners in a firm sharing profits in the ratio of 2 : 1 :1. On 1st
April, 2013 their balance sheet was as follows.
On the above date, N retired. The following were agreed
(i) Goodwill of the firm was valued at Rs. 6,00,000.
(ii) Land was to be appreciated by 40% and building was to be depreciated by Rs.
1,00,000.
(iii) Furniture was to be depreciated by Rs. 30,000.
(iv) The liabilities for workmen’s compensation fund was determined at
Rs. 1,60,000.
(v) Amount payable to N was transferred to his loan account.
(vi) Capitals of L and M were to be adjusted in their new profit sharing ratio and
for this purpose current accounts of the partners will be opened.
Prepare revaluation account, partner’s capital accounts and the balance sheet of
the new firm. (All India 2014)
5. A, B and C were in partnership sharing profits in proportion to their capitals.
Their balance sheet on 31st March, 2008 was as follows

On the above date B retired owing to ill health and the following
adjustments were agreed upon

(i) Buildings to be appreciated by 10%.


(ii) Provision for doubtful debts to be increased to 5% of debtors.
(iii) Machinery to be depreciated by 15%.
(iv) Goodwill of the firm be valued at Rs. 36,000 and be adjusted into the capital
accounts of A and C who will share profits in future in the ratio of 3 : 1.
(v) A provision to be made for outstanding repairs bill of Rs. 3,000.
(vi) Included in the value of creditors is Rs. 1,800 for an outstanding legal claim,
which is not likely to arise.

(vii) Out of the insurance premium paid Rs. 2,000 is for the next year. The amount
was debited to profit and loss account.
(viii) The partners decide to fix the capital of the new firm as Rs. 1,20,000 in the
profit sharing ratio.
(ix) B to be paid Rs. 9,000 in cash and balance to be transferred to his loan
account.
Prepare the revaluation account, partners’ capital account and the balance
sheet of the new firm after B1 s retirement. (Delhi; All India; Foreign 2009)
6. The balance sheet of A, B and C on 31st March, 2007 was as follows

The following terms were agreed upon for As retirement


(i) Goodwill to be valued at Rs. 42,000 and not to be shown in the books of the
firm after A’s retirement.
(ii)Land and building to be appreciated by Rs. 20,000.
(iii) Plant and machinery to be reduced to Rs. 46,000.
(iv) Provision for doubtful debts to be created at 5% on debtors.
(v) Create a provision of Rs. 1,400 for discount on creditors.
(vii) The sum payable to A to be brought in by B and C in such a manner that their
capitals are in proportion to their new profit sharing ratio.
Prepare the revaluation account, partners’ capital account and the balance sheet
of the new firm to give effect to the above terms. (All India 2008)

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