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Question 17 of 40
Q.

(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 50,0001,20,000Land80,000
Sundry creditors30,000Furniture20,000
Profit and Loss A/c24,000Stock25,000
Debtors30,000
Bank19,000
1,74,0001,74,000

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 :

  1. Stock to be depreciated by ₹ 5,000.
  2. Provision for doubtful debts to be created for ₹ 3,000.
  3. 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.

Tamil Nadu DgeTamil Nadu HSC (DGE) Commerce Board 2020Subjective· 5mImportance★★★★★
43% · 17/40 Questions
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(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/c5,000By Land A/c20,000
To Provision for doubtful debts A/c3,000
To Profit transferred to:
  Amal's capital (7/12)7,000
  Vimal's capital (5/12)5,000
20,00020,000

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

ParticularsAmal (Rs.)Vimal (Rs.)Nirmal (Rs.)ParticularsAmal (Rs.)Vimal (Rs.)Nirmal (Rs.)
To Balance c/d91,00065,00030,000By Balance b/d70,00050,000-
By Revaluation A/c (profit)7,0005,000-
By Profit and Loss A/c14,00010,000-
By Bank A/c (capital brought in)--30,000
91,00065,00030,00091,00065,00030,000

(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.

ParticularsL.F.Dr (Rs.)Cr (Rs.)
Bank A/c Dr6,00,000
  To Equity Share Application A/c6,00,000
(Application money on 1,20,000 shares @ Rs. 5)
Equity Share Application A/c Dr6,00,000
  To Equity Share Capital A/c5,00,000
  To Bank A/c (refund on 20,000 shares)1,00,000

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