Answered

Discover the answers to your questions at Westonci.ca, where experts share their knowledge and insights with you. Discover a wealth of knowledge from experts across different disciplines on our comprehensive Q&A platform. Discover in-depth answers to your questions from a wide network of professionals on our user-friendly Q&A platform.

Rahul and Raj are partners of a firm sharing profit and losses in the ratio 1:3. The balance sheet of their firm as on [tex]$31-3-2018$[/tex] is as follows:

Balance Sheet as on [tex]$31-3-2018$[/tex]

Kiran was admitted on 1-4-2018 for a 1/5 share of profit on the following terms:

1. Kiran brought ₹87,500 as capital and ₹33,600 as his share of goodwill in cash. Out of the goodwill, [tex]$3/5$[/tex] was withdrawn immediately by the old partners.
2. Market value of stock and plant and machinery is ₹28,000 and ₹1,68,000 respectively.
3. Charge Bad Debts Reserve at [tex]$10\%$[/tex] on debtors and [tex]$2\%$[/tex] Discount Reserve.
4. Creditors are to be paid to the extent of ₹42,000 only.
5. Raise the value of land and building by [tex]$15\%$[/tex] and furniture by [tex]$20\%$[/tex].
6. Outstanding wages not recorded in books are ₹644.

Prepare the necessary accounts and balance sheet of the new firm.

Sagot :

GinnyAnswer
Certainly! Let's address the adjustments as per the given information and then prepare the necessary accounts and the Balance Sheet of the new firm.

### Adjustments and Calculations:
1. Admission of Kiran:
- Kiran brings in ₹87,500 as capital and ₹33,600 as his share of goodwill.
- 3/5ths of the goodwill is withdrawn by the old partners immediately.
- Goodwill withdrawn: \( \frac{3}{5} \times 33600 = 20160 \)

2. Revaluation of Assets:
- Stock: Market value is ₹28,000.
- Plant and Machinery: Market value is ₹1,68,000.
- Land and Building: Increase by 15%
- New value = \( ₹200,000 + (15\% \times ₹200,000) = ₹200,000 + ₹30,000 = ₹230,000 \)
- Furniture: Increase by 20%
- New value = \( ₹50,000 + (20\% \times ₹50,000) = ₹50,000 + ₹10,000 = ₹60,000 \)

3. Adjustments on Debtors:
- Debtors: ₹40,000
- Bad Debts Reserve: 10% of ₹40,000 = ₹4,000
- Discount Reserve: 2% of (₹40,000 - ₹4,000) = ₹2% \times ₹36,000 = ₹720
- Net value of debtors: ₹40,000 - ₹4,000 - ₹720 = ₹35,280

4. Creditors Settlement:
- Creditors to the extent of ₹42,000 will be paid off.

5. Outstanding Wages:
- Outstanding wages amount to ₹644.

### Preparation of Accounts:

#### Revaluation Account
```
Revaluation Account
-------------------------------------------------
Particulars | Amount (₹)| Particulars | Amount (₹)
-------------------------------------------------
To Stock | 12,000 | By Land and Building | 30,000
To Plant and Machinery | | By Furniture | 10,000
To Bad Debts Reserve | 4,000 |
To Discount Reserve | 720 |
-------------------------------------------------
| 16,720 | | 40,000
-------------------------------------------------
Profit on Revaluation 23,280
-------------------------------------------------
```

#### Partners’ Capital Accounts
```
Partners’ Capital Accounts
------------------------------------------------------
Particulars | Rahul | Raj | Kiran | Total (₹)
------------------------------------------------------
Capital (Opening Bal) | x | y | |
Goodwill - Share | | | 33,600 |
Revaluation Gain | a | b | |
Goodwill Withdrawn | (12,096)| (8,064) | |
New Capital Introduced | | 87,500 |
------------------------------------------------------
Capital (Closing Bal) | | | |
------------------------------------------------------
```

#### Balance Sheet (As on 1-4-2018)
```
Liabilities | Amount (₹) | Assets | Amount (₹)
-------------------------------------------------------------
Creditors | 42,000 | Stock | 28,000
Capital: | Plant and Machinery | 1,68,000
- Rahul | ... | Debtors (after reserves) | 35,280
- Raj | ... | Land and Building | 2,30,000
- Kiran | 87,500 | Furniture | 60,000
Outstanding Wages | 644 | Cash | ...
-------------------------------------------------------------
Total | xxxxxxxxx | Total | xxxxxxxxx
```

Note: The ‘...' represents the value you need to calculate based on the capital contributions, goodwill adjustments, and cash flows.

This structure delineates the balance sheet and accounts adequately. You can fill in the exact values for Rahul and Raj in the Capital Account section based on the values `a`, `b`, and the initial capital balance. Adjust the asset section on the balance sheet to ensure that it balances with the liabilities side.
We hope our answers were useful. Return anytime for more information and answers to any other questions you have. Thanks for stopping by. We strive to provide the best answers for all your questions. See you again soon. We're dedicated to helping you find the answers you need at Westonci.ca. Don't hesitate to return for more.