Question : R, B and L were partners in a firm sharing profits and losses in the ratio of equally. With effect from 1st April, 2018 they decided to share future profits and losses in the ratio of 3:2:1. On that date their Balance Sheet showed a debit balance of Rs. 24,000 in Profit and Loss Account and a balance of Rs. 1,44,000 in General Reserve.
It was also agreed that:
(a) The goodwill of the firm be valued at Rs. 1,80,000.
(b) The Land (having book value of Rs. 3,00,000) will be valued at Rs. 4,80,000.
Adjustment entry for goodwill is?
Option 1: Debited R by Rs 30,000 and credited B Rs 30,000
Option 2: Debited R by Rs 30,000 and credited L Rs 30,000
Option 3: Debited R by Rs 30,000 and debited L Rs 20,000 and Debited B by Rs 10,000
Option 4: None of these
Correct Answer: Debited R by Rs 30,000 and credited L Rs 30,000
Solution : Answer = Debited R by Rs 30,000 and credited L Rs 30,000
S.R. = O.R. - N.R.
R = 1/3 - 3/6 = 2-3/6 = -1/6 x 1,80,000 = 30,000
B = 1/3 - 2/6 = 2-2/6 = 0
R = 1/3 - 1/6 = 2-1/6 = 1/6 x 1,80,000 = 30,000
R's Capital A/c Dr 30,000
To L's Capital A/c 30,000 Hence, the correct option is 2.
Question :
R, B and L were partners in a firm sharing profits and losses in the ratio equally. With effect from 1st April, 2018 they decided to share future profits and losses in the ratio of 3:2:1. On that date their Balance Sheet showed a debit balance of Rs. 24,000 in Profit and Loss Account and a balance of Rs. 1,44,000 in General Reserve.
Treatment of undistributed losses is?
Option 1: R debited Rs 12,000, B debited Rs 8000 and L debited Rs 4000
Option 2: R debited Rs 8000, B debited Rs 8000 and L debited Rs 8000
Option 3: R gain Rs 12,000 and B sacrifice Rs 8,000 and L sacrifice Rs 4,000
Option 4: None of the above
Treatment of General Reserve?
Option 1: Debited each partners capital account with Rs 48,000
Option 2: Credited each partners capital account by Rs 48,000
Option 3: Both 1 and 2
(b) The Land (having book value of Rs. 3,00,000) will be valued at Rs. 4,80,000
Profit/Loss on revaluation are:
Option 1: Rs 1,40,000 profit
Option 2: Rs 1,80,000 profit
Option 3: Rs 1,80,000 loss
Question : D, E, F, P and Z were partners in a firm sharing profits in the ratio 5:4:3:2:1 respectively. Unfortunately, P and Z met with a tragic car accident in which both of them died. The goodwill of the firm was valued at Rs. 1,50,000 and D, E and F decided to share future profits in the ratio of 4:6:5 respectively. At the time of adjustment of goodwill, E’s capital account will be debited/credited by Rs ---------
Option 1: Debited by Rs 10,000
Option 2: Credited by Rs 20,000
Option 3: Debited by Rs 20,000
Option 4: Credited by Rs 10,000
Question : D, E, F, P and Z were partners in a firm sharing profits in the ratio 5:4:3:2:1 respectively. Unfortunately, P and Z met with a tragic car accident in which both of them died. The goodwill of the firm was valued at Rs. 1,50,000 and D, E and F decided to share future profits in the ratio of 4:6:5 respectively. At the time of adjustment of goodwill, P's capital account will be debited/ credited by Rs ---------.
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