Reconstitution of Partnership (Admission of Partner) — Book Keeping & Accountancy STD 12 Commerce / Arts — Question

Outstanding Expenses and Prepaid Expenses of the current year and previous year Balance Sheet as on 31st March 2018

Dr.	Balance Sheet as on 31st March 2018				Cr.
Liabilities	Amount ₹	Amount ₹	Assets	Amount ₹	Amount ₹
			Prepaid Salaries (for 2018-19)		2,000

Dr.	Receipts & Payments Account for the year ended 31st March 2019				Cr.
Receipts	Amount ₹	Amount ₹	Payments	Amount ₹	Amount ₹
			By Salaries
			2018-19	30,000
			2019-20	1,000	31,000

Adjustment : Outstanding Salaries for the current year was ₹ 5,500, show the presentation of Salaries in the Final Accounts of a concern for the year 2018 - 19.

Ajay, Sanjay and Vijay were partners sharing profits and losses in the proportion to their capital. Their Balance Sheet as on 31st March 2019 was as follows.

Balance Sheet as on 31st March 2019
Liabilities	Amt ₹	Assets		Amt ₹
Capital Account :		Land & Building		80,000
Ajay	60,000	Motor Lorry		40,000
Sanjay	40,000	Debtors	32,000
Vijay	20,000	Less: R. D. D.	4,000	28,000
Creditors	50,000	Furniture		36,000
Outstanding Salary	6,000	Bank		28,000
Reserve Fund	36,000
	2,12,000			2,12,000

Vijay died on 1 st August 2019 and the following adjustments were made.
1. Assets to be revalued as under Land & Building ₹ 88,000, Motor Lorry ₹ 36,000 and Furniture ₹ 34,000
2. All Debtors were good.
3. Goodwill of the firm valued at two times the average profit of the last 4 years profit.
4. Vijay’s share of profit to be calculated on the basis of average profit of last three years.
5. Profit for 4 years were 1st year ₹ 12,000, 2nd year ₹ 24,000, 3rd year ₹ 14,000, 4th year ₹ 22,000
Prepare : 1. Vijay’s Capital Account, showing amount payable to his executor.
2. Give working of Vijay’s share of Goodwill and profit upto the date of his death.

Simple Example - Prepare Income and Expenditure Account only
From the following Receipts & Payments Account and Adjustments given below you are required to prepare Income and Expenditure Account for year ended 31st March 2020 of Venna Cultural Association, Satara.

Dr.	Receipts & Payments Accounts for the year ended 31st March 2020				Cr.
Receipts	Amount	Amount _(₹)	Payments	Amount _(₹)	Amount _(₹)
To Balance b/d			By Rent
Cash in Hand	10,000		2018-19	700
Cash at Bank	19,200	29,200	2019-20	54,300	55,000
To Subscriptions	-		By Fixed Deposit		47,000
2018-19	15,000		By Sundry Exp.		8,000
2019-20	1,00,000		By Insurance		12,000
2020-21	8,000	1,23,000	By Printing & Stationery		6,000
To Donations	-	25,000	By Picnic Expenses		18,000
(General)			By Salaries		20,000
To Entrance fees		15,000	By Traveling Expenses		13,000
To Interest on Fixed		4,800	By Advt. (2018 - 19)		7,000
Deposit			By Balance c/d
To Picnic Receipts		20,000	Cash in Hand	15,000
			Cash at Bank	16,000	31,000
		2,17,000			2,17,000

Adjustments :
1) Outstanding Rent for the current year was ₹ 7,000.
2) 60 % Entrance fees should be capitalised.
3) Outstanding subscription for the current year was ₹ 20,000.
4) Prepaid Insurance ₹ 1,000.

Sonu, Maneka and Karina were partners sharing profits and losses in the ratio 2 : 2 : 1 respectively. Their balance Sheet as on 31st March 2018 was as follows.

Balance Sheet as on 31st March 2018
Liabilities	Amt ₹	Assets		Amt ₹
Capital Account :		Plant & Machinery		50,000
Sonu	40,000	Stock of Goods		50,000
Maneka	40,000	Debtors	22,000
Karina	20,000	Less: R. D. D.	2,500	19,500
Genral Reserve	10,000	Investment		10,000
Creditors	10,000	Cash		500
Bill Payable	6,000
Bank loan	4,000
	1,30,000			1,30,000

Adjustment :
Karina died on 1st Oct 2018 and the adjustment were agreed as per the deed as follows.
1. Plant & Machinery to be valued at ₹ 60,000 and all Debtors were good.
2. Stock of Goods to be reduced by ₹ 3, 000
3. The drawings of Karina up to the date of her death amounted to ₹ 400 per month.
4. Interest on capital was to be allowed at 10% p.a.
5 The deceased partners share of Goodwill is to be valued at 2 years purchased of average profit for last 3 years. The profits were
2015-16 ₹ 15,000
2016-17 ₹ 17,000
2017-18 ₹ 13,000
6. The deceased partners share of profit up to the date of her death should be based on average profit of last two years.
Prepare : Profit & Loss Adjustment A/c , Karina’s capital A/c showing the balance payable to her executors loan account. Working Note for share of Goodwill and Profit up to the date of death.

A, B, and C are partners of a firm sharing profit and loss in the 3 : 3 : 2 ratio. Their firm’s Balance Sheet as of 31st March, 2020 is as under:
Balance Sheet as of 31st March 2020

Liabilities		Amt.(₹)	Assets	Amt.(₹)
Bills Payable		11,500	Cash	27,000
General Reserve		20,000	Debtors	62,500
Creditors		43,000	Investments	60,000
Capital Accounts :			Machinery	43,500
A	60,000		Furniture	31,500
B	65,000		Equipments	20,000
C	45,000	1,70,000
		2,44,500		2,44,500

On 1st April 2020, C retired from the firm on the following terms:
1. Outstanding amount of retiring partner C be transferred to his loan account.
2. Write off ₹ 2,500 as bad debts.
3. ₹ 500 is now not payable to creditors.
4. Assets are revalued as under:
Furniture ₹ 30,000, Machinery ₹ 40,000, Equipments ₹ 21,000.
Pass necessary journal entries in the books of a firm.

From the following Receipts and Payments Account and additional information prepare Income and Expenditure Account for the year ended 31st March 2019 and Balance Sheet as on that date.

Dr.	Receipts and Payments Account for the year ended 31st March 2019		Cr.
Receipts	Amount ₹	Payments	Amount ₹
To Balance b/d	3,000	By Salaries	4,000
To Subscription	5,000	By Printing & Stationery	1,000
To Donations (Revenue)	5,000	By Commission	500
To Entrance fees	4,000	By Rent	2,000
To Interest	1,000	By Electric Charges	1,500
		By Furniture	8,000
		By Balance c/d	1,000
	18,000		18,000

Additional Information :
1) Outstanding Rent was ₹ 200
2) Subscription includes ₹ 1,000 as Subscription received in advance and subscription outstanding for current year was ₹ 500.
3) Depreciate Furniture @ 8 % p.a.
4) 50 % Entrance fees should be capitalised
5) Capital Fund was ₹ 3,000