Partnership and LLP AccountsQ- 11 | Partnership and LLP AccountsQuestion 5200 of 108
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The following is the Balance Sheet of Krish and Bala, sharing profit and loss in the ratio 3: 2 Liabilities Amount Assets Amount Capital Accounts krish Bala General Reserve Workmen compensation reserve Creditors Employees provident fund 25,000 15,000 30,000 10,000 10,000 8,000 Land & Building Plant & machinery Stock Debtors Less : Provision Bank Advertisement Expenditure 28,000 15,000 10,000 25,000 (4,000) 20,000 4,000 8,65,700 8,65,700 On admission of Sobha for 1/6th share in the profits, it was decided that: (1) Value of land and buildings to be increased by ₹ 5,000. (2) Value of stock to be increased by ₹ 3,500. (3) Provision of doubtful debts to be increased by ₹ 1,500. (4) Liabilities of workmen's compensation reserve was determined to be 8,000. (5) Sobha was to bring in further cash of 25,000 as her capital. (6) Sobha brought in her share of goodwill 12,000 in cash. Prepare the Revaluation Account, the Capital Account and the Balance Sheet of the new firm. [Sept. 2024, 10 Marks]

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Detailed Solution & Explanation

Revaluation A/ c Particulars Amount Particulars Amount To Provision for Doubtful debts To Profit on revaluation: Krish Bala 1,500 4,200 2,800 By Land & Building By Stock 5,000 3,500 8,500 8,500 Partner's Capital A/ c Particulars Krish Bala Sobha Particulars Krish Bala Sobha To Advertisement Expenditure A/ c 2,400 1,600 By Balance b / d 25,000 15,0000 To Krish 7,200 By Revaluation A/ c 4,200 2,800 To Bala 4,800 By General Reserve 18,000 12,000 To Balance c/ d 53, 200 33, 800 25, 000 By Workmen's Comp [10,000 – 8,000] 1,200 800 By Bank [25,000 + 12,000] 37,000 By Sabha (GW) 7,200 4,800 Total 55,600 35,400 37,000 Total 55,600 35,400 37,000 Balance Sheet of the new firm Liabilities Amount Assets Amount Capital A/ c: - Krish · Bala sobha Creditors Employee's Provident Fund Liabilities for Workmen for compensation 53,200 33,800 25,000 10,000 8,000 8,000 Land & Building Plant & Machinery Stock Debtors Less: Provisions for DD Bank [20,000 + 37,000] 33,000 15,000 13,500 25,000 (5,500) 57,000 1,38,000 1,38,000

About This Chapter: Partnership & Companies

Paper

Paper 1: Accounting

Weightage

15-20%

Key Topics

Admission, Retirement, Death, Shares, Debentures

This chapter covers Admission, Retirement, Death, Shares, Debentures and is part of Paper 1: Accounting in the CA Foundation exam.

View Official ICAI Syllabus

Exam Strategy Tip

This topic carries 15-20% weightage. Focus on understanding core concepts rather than memorizing.

Key Concepts to Understand

Balance Sheet

A statement showing the financial position of a business at a particular date, listing all assets on one side and all liabilities and capital on the other side. It is not an account but a statement.

Goodwill

An intangible asset representing the good reputation, brand name, customer loyalty, and earning capacity of a business over and above its net tangible assets. It arises in accounting during partnership changes or business acquisitions.

Related Comparison Tables

Revenue Expenditure vs Capital Expenditure: AccountsTrading Account vs P&L Account: Final Accounts ExplainedSLM vs WDV Depreciation: CA Foundation Accounts

More Questions from Partnership and LLP Accounts

Following are the details of Assets and Liabilities of Mr. Sarthak for the year ended 31 March, 2023 and 31 March, 2024: 31.03.2023 31.03.2024 Assets Buildings Furniture Inventory Sundry debtors Cash at bank Cash in hand Liabilities: Loans Sundry Creditors 2,00,000 75,000 1,05,000 68,000 72,500 2,400 1,50,000 58,400 ? ? 1,95,000 94,000 86,800 3,800 1,25,000 79,500 It was decided to depreciate Building by 5% p.a. and Furniture by 10% p.a. On 1st June, 2023 an additional capital of 40,000 was brought in the business. Proprietor has withdrawn @ ₹ 2,500 p.m. for meeting the family expenses. Prepare Statement of Affairs as on 31 March, 2023 and 31 March, 2024. Find the profit or loss earned by Mr. Sarthak for the year ended 31st March, 2024. [Jan. 2025, 5 Marks]

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