(a) Amal and Vimal are partners in a firm sharing profits and losses in the ratio of 7 : 5. Their balance sheet as on 31st March, 2019 is as follows :
| Liabilities | ₹ | Assets | ₹ |
|---|---|---|---|
| Capital accounts: Amal 70,000; Vimal 50,000 | 1,20,000 | Land | 80,000 |
| Sundry creditors | 30,000 | Furniture | 20,000 |
| Profit and Loss A/c | 24,000 | Stock | 25,000 |
| Debtors | 30,000 | ||
| Bank | 19,000 | ||
| 1,74,000 | 1,74,000 |
Nirmal is admitted as a new partner on 1.4.2019 by introducing a capital of ₹ 30,000 for 1/3 share in the future profit subject to the following adjustments :
- Stock to be depreciated by ₹ 5,000.
- Provision for doubtful debts to be created for ₹ 3,000.
- Land to be appreciated by ₹ 20,000. Prepare Revaluation account and Capital accounts of partners after admission. OR
(b) Bharath Ltd. issued 1,00,000 equity shares of ₹ 10 each to the public at par. The details of the amount payable on the shares are as follows :
On application ₹ 5 per share
On allotment ₹ 3 per share
On first and final call ₹ 2 per share
Application money was received for 1,20,000 shares. Excess application money was refunded immediately. Pass journal entries to record the above.
You're viewing a preview — the full solution, concept, methods & PYQ mapping are locked.
Start your 14-day free trial to unlock the full solution →(a) Revaluation profit Rs. 12,000 and the accumulated P&L Rs. 24,000 are shared 7:5, giving capitals of Amal 91,000, Vimal 65,000 and Nirmal 30,000. (b) Six journal entries record the issue at par with refund of excess application money.
PART (a) - Amal, Vimal and Nirmal
Revaluation Account
| Dr (Losses) | Rs. | Cr (Gains) | Rs. |
|---|---|---|---|
| To Stock A/c | 5,000 | By Land A/c | 20,000 |
| To Provision for doubtful debts A/c | 3,000 | ||
| To Profit transferred to: | |||
| Amal's capital (7/12) | 7,000 | ||
| Vimal's capital (5/12) | 5,000 | ||
| 20,000 | 20,000 |
Profit on revaluation = 20,000 - 8,000 = 12,000 (Amal 7,000, Vimal 5,000).
The Profit and Loss A/c balance of 24,000 (undistributed profit) is shared in the old ratio 7:5: Amal 14,000, Vimal 10,000.
Partners' Capital Accounts
| Particulars | Amal (Rs.) | Vimal (Rs.) | Nirmal (Rs.) | Particulars | Amal (Rs.) | Vimal (Rs.) | Nirmal (Rs.) |
|---|---|---|---|---|---|---|---|
| To Balance c/d | 91,000 | 65,000 | 30,000 | By Balance b/d | 70,000 | 50,000 | - |
| By Revaluation A/c (profit) | 7,000 | 5,000 | - | ||||
| By Profit and Loss A/c | 14,000 | 10,000 | - | ||||
| By Bank A/c (capital brought in) | - | - | 30,000 | ||||
| 91,000 | 65,000 | 30,000 | 91,000 | 65,000 | 30,000 |
(No goodwill adjustment is required as goodwill is not mentioned.)
PART (b) - Bharath Ltd.: Journal Entries
Applications received for 1,20,000 shares @ Rs. 5 = 6,00,000. Only 1,00,000 shares allotted; excess money on 20,000 shares (20,000 x 5 = 1,00,000) refunded.
| Particulars | L.F. | Dr (Rs.) | Cr (Rs.) |
|---|---|---|---|
| Bank A/c Dr | 6,00,000 | ||
| To Equity Share Application A/c | 6,00,000 | ||
| (Application money on 1,20,000 shares @ Rs. 5) | |||
| Equity Share Application A/c Dr | 6,00,000 | ||
| To Equity Share Capital A/c | 5,00,000 | ||
| To Bank A/c (refund on 20,000 shares) | 1,00,000 |
Unlock everything free for 14 days
- Full step-by-step solutions
- Concept-first explanations
- Methods, shortcuts & mistakes
- PYQ mapping + timed mock tests
Full access for 14 days. No credit card required.