Practical Problems | Q 1 | Page 202
Rajesh, Rakesh, and Mahesh were equal Partner on 31st March 2019. Their Balance Sheet was as follows 31st March 2019.
Balance Sheet as on 31st March 2019
Liabilities | Amount ₹ | Assets | Amount ₹ |
Capital Account : | Land and Building | 4,00,000 | |
Rajesh | 5,00,000 | Furniture | 3,00,000 |
Rakesh | 2,00,000 | Debtors | 3,00,000 |
Mahesh | 2,00,000 | Stock | 1,00,000 |
Sundry creditors | 90,000 | Cash | 1,00,000 |
Bills Payable | 60,000 | ||
Bank loan | 1,50,000 | ||
12,00,000 | 12,00,000 |
Mr. Rajesh died on 30th June 2019 and the following adjustment were agreed as
1) Furniture was to be adjusted to its market price of 3,40,000
2) Land and Building was to be depreciated by 10%
3) Provide R.D.D 5% on debtors
4) The Profit up to the date of death of Mr. Rajesh is to be calculated on the basis of last years profit which was ₹1,80,000
Prepare:
1) Profit and Loss adjustment A/c
2) Partners capital account
3) Balance sheet of the continuing firm
Solution
In the books of the Partnership Firm Profit and Loss Adjustment Account
Particulars | Amount (₹) | Particulars | Amount (₹) | |||
To Land and Building A/c | 40,000 | By Furniture A/c | 40,000 | |||
To R.D.D. A/c | 15,000 | By Partners’ Capital A/c (Loss) | ||||
Rajesh 5000 | ||||||
Rakesh 5000 | ||||||
Mahesh 5000 | 15000 | |||||
55000 | 55000 | |||||
Partners’ Capital Account
Particulars | Rajesh (₹) | Rakesh (₹) | Mahesh (₹) | Particulars | Rajesh (₹) | Rakesh (₹) | Mahesh (₹) | ||
To Profit and Loss Adjustment A/c – Loss | 5,000 | 5,000 | 5,000 | By Balance b/d | 5,00,000 | 2,00,000 | 2,00,000 | ||
To Rajesh's Executor’s A/c | 5,10,000 | By Profit and Loss Suspense A/c | 15,000 | ||||||
To Balance c/d | 1,95,000 | 1,95,000 | |||||||
5,15,000 | 2,00,000 | 2,00,000 | 5,15,000 | 2,00,000 | 2,00,000 | ||||
Balance Sheet as on 1st July 2019
Liabilities | Amount (₹) | Amount (₹) | Assets | Amount (₹) | Amount (₹) |
Capital Accounts : | Land and Building | 4,00,000 | |||
Rakesh | 1,95,000 | Less: Depreciation | 40,000 | 3,60,000 | |
Mahesh | 1,95,000 | 3,90,000 | Furniture | 3,00,000 | |
Rajesh’s Executor’s Loan A/c | 5,10,000 | Add: Appreciation | 40,000 | 3,40,000 | |
Sundry Creditors | 90,000 | Debtors | 3,00,000 | ||
Bills Payable | 60,000 | Less: R.D.D. (5%) | 15,000 | 2,85,000 | |
Bank Loan | 1,50,000 | Stock | 1,00,000 | ||
Cash | 1,00,000 | ||||
Profit and Loss Suspense A/c | 15,000 | ||||
12,00,000 | 12,00,000 |
Working Note :
The profit of the firm last year was ₹ 1,80,000.
Proportionate profit up to the date of death for Rajesh is as follows = 180000 x (3/12) x (1/3) = ₹ 15,000
