(a) On 1st April 2017, Ganesh started his business with a capital of ₹ 75,000. He did not maintain proper books of accounts. Following particulars are available from his books as on 31.3.2018.
| Particulars | ₹ | Particulars | ₹ |
|---|---|---|---|
| Cash | 5,000 | Debtors | 16,000 |
| Stock of goods | 18,000 | Creditors | 9,000 |
| Bills Receivable | 7,000 | Cash at Bank | 24,000 |
| Furniture | 3,000 | Bills Payable | 6,000 |
| Land and Buildings | 30,000 |
During the year he withdrew ₹ 15,000 for his personal use. He introduced further capital of ₹ 20,000 during the year. Calculate his profit or loss.
OR
(b) Vetri and Ranjit are partners, sharing profits and losses in the ratio of 3 : 2. Their balance sheet as on 31st December 2017 is as under.
| Liabilities | ₹ | ₹ | Assets | ₹ |
|---|---|---|---|---|
| Capital Accounts : | Furniture | 25,000 | ||
| Vetri | 30,000 | Stock | 20,000 | |
| Ranjit | 20,000 | 50,000 | Debtors | 10,000 |
| Reserve fund | 5,000 | Cash in hand | 35,000 | |
| Sundry Creditors | 45,000 | Profit and Loss A/c (Loss) | 10,000 | |
| 1,00,000 | 1,00,000 |
On 01.01.2018, they admit Suriya into their firm as a partner on the following arrangements.
- Suriya brings ₹ 10,000 as capital for 1/4 share of profit.
- Stock to be depreciated by 10%.
- Debtors to be revalued at ₹ 7,500.
- Furniture to be revalued at ₹ 40,000.
- There is an outstanding wages of ₹ 4,500 not yet recorded. Prepare Revaluation account, Partners' Capital account and the Balance Sheet of the firm after admission.
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Start your 14-day free trial to unlock the full solution →(a) Ganesh's profit for the year = ₹8,000. (b) Revaluation profit ₹6,000; after-admission Balance Sheet total = ₹1,10,500.
(a) Ganesh — Profit by Statement of Affairs (Capital Comparison) method
Step 1 — Closing Statement of Affairs as on 31.3.2018.
| Liabilities | ₹ | Assets | ₹ |
|---|---|---|---|
| Creditors | 9,000 | Cash | 5,000 |
| Bills Payable | 6,000 | Cash at Bank | 24,000 |
| Closing Capital (bal. fig.) | 88,000 | Stock of goods | 18,000 |
| Bills Receivable | 7,000 | ||
| Debtors | 16,000 | ||
| Furniture | 3,000 | ||
| Land and Buildings | 30,000 | ||
| Total | 1,03,000 | Total | 1,03,000 |
Closing capital = Total assets 1,03,000 − Total liabilities 15,000 = ₹88,000.
Step 2 — Statement of Profit or Loss.
| Particulars | ₹ |
|---|---|
| Closing capital (31.3.2018) | 88,000 |
| Add: Drawings during the year | 15,000 |
| 1,03,000 | |
| Less: Additional capital introduced | 20,000 |
| Adjusted closing capital | 83,000 |
| Less: Opening capital (1.4.2017) | 75,000 |
| Profit for the year | 8,000 |
(b) Admission of Suriya (Vetri : Ranjit = 3 : 2)
Step 1 — Revaluation Account.
| Particulars | ₹ | Particulars | ₹ |
|---|---|---|---|
| To Stock (10% of 20,000) | 2,000 | By Furniture (40,000 − 25,000) | 15,000 |
| To Debtors (10,000 − 7,500) | 2,500 | ||
| To Outstanding wages | 4,500 | ||
| To Profit transferred: | |||
| — Vetri (3/5) | 3,600 | ||
| — Ranjit (2/5) | 2,400 | ||
| Total | 15,000 | Total | 15,000 |
Profit on revaluation = 15,000 − 9,000 = ₹6,000.
Step 2 — Partners' Capital Accounts. Reserve fund ₹5,000 and the P&L (Loss) ₹10,000 are shared by the OLD partners in 3 : 2.
| Particulars | Vetri (₹) | Ranjit (₹) | Suriya (₹) |
|---|---|---|---|
| To P&L A/c (Loss) | 6,000 | 4,000 | — |
| To Balance c/d | 30,600 | 20,400 | 10,000 |
| Total | 36,600 | 24,400 | 10,000 |
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