[go: up one dir, main page]
Scribd
Upload
101 views3 pages

Partners' Capital Account Adjustment Guide

The document provides a step-by-step solution for a partnership accounting problem involving partners X, Y, and Z, who share profits in a 2:2:1 ratio. It includes a balance sheet as of March 31, 2021, adjustments for asset valuations, and the distribution of general reserves and profit & loss. The final step presents the new balance sheet reflecting the updated capital accounts after accounting for losses and adjustments.

Uploaded by

mpytchnel
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
101 views3 pages

Partners' Capital Account Adjustment Guide

The document provides a step-by-step solution for a partnership accounting problem involving partners X, Y, and Z, who share profits in a 2:2:1 ratio. It includes a balance sheet as of March 31, 2021, adjustments for asset valuations, and the distribution of general reserves and profit & loss. The final step presents the new balance sheet reflecting the updated capital accounts after accounting for losses and adjustments.

Uploaded by

mpytchnel
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Step-by-Step Solution for Question No.

52

Q-52. X, Y, and Z are partners sharing profits in the ratio of [Link].

Balance Sheet as on 31st March, 2021:

Liabilities Rs. | Assets Rs.

--------------------------------------------------------------

Sundry Creditors 1,20,000 | Cash in Hand 1,10,000

Outstanding Expenses 7,000 | Cash at Bank 55,000

General Reserve 75,000 | Bills Receivable 10,000

Profit & Loss A/c 18,000 | Sundry Debtors 2,10,000

Capital:

X 3,00,000 Less: Provision 10,000 2,00,000

Y 2,80,000 | Stock 90,000

Z 2,20,000 | Machinery 40,000

-------- | Computers 20,000

8,00,000 | Furniture 25,000

-------- | ---------

Total Liabilities 10,20,000 | Total Assets 10,20,000

Adjustments:

1. Stock was overvalued by Rs. 20,000 - needs to be reduced.

2. Provision for Doubtful Debts to be increased by Rs. 2,000 (from 10,000 to 12,000).

3. Machinery to be depreciated by 10% (i.e., Rs. 4,000).

4. Computers to be depreciated by 25% (i.e., Rs. 5,000).

5. Furniture to be depreciated by 20% (i.e., Rs. 5,000).

Step 1: Revaluation Account

--------------------------------------------------------------

Revaluation A/c

Dr. | Cr.

-----------------------------|-----------------------------
Step-by-Step Solution for Question No. 52

To Stock A/c 20,000 |

To Prov. for D/D 2,000 |

To Machinery A/c 4,000 |

To Computers A/c 5,000 |

To Furniture A/c 5,000 |

Total 36,000 | Loss to be distributed among:

| X (2/5) = 14,400

| Y (2/5) = 14,400

| Z (1/5) = 7,200

Step 2: Distribution of Reserves & P&L

General Reserve = Rs. 75,000

X = 30,000, Y = 30,000, Z = 15,000

P&L (Dr. Balance) = Rs. 18,000

X = 7,200, Y = 7,200, Z = 3,600

Step 3: Partners' Capital Accounts

--------------------------------------------------------------

X:

Old Capital = 3,00,000

+ Gen Reserve = 30,000

- Reval. Loss = 14,400

- P&L Loss = 7,200

Net Capital = 3,08,400

Y:

Old Capital = 2,80,000

+ Gen Reserve = 30,000

- Reval. Loss = 14,400

- P&L Loss = 7,200

Net Capital = 2,88,400


Step-by-Step Solution for Question No. 52

Z:

Old Capital = 2,20,000

+ Gen Reserve = 15,000

- Reval. Loss = 7,200

- P&L Loss = 3,600

Net Capital = 2,24,200

Step 4: New Balance Sheet

--------------------------------------------------------------

Liabilities Rs. | Assets Rs.

--------------------------------------------------------------

Sundry Creditors 1,20,000 | Cash in Hand 1,10,000

Outstanding Expenses 7,000 | Cash at Bank 55,000

Capital:

X 3,08,400 | Bills Receivable 10,000

Y 2,88,400 | Sundry Debtors 2,10,000

Z 2,24,200 Less: Prov. 12,000 1,98,000

| Stock 70,000

| Machinery 36,000

| Computers 15,000

| Furniture 20,000

--------- | ---------

Total Liabilities 9,48,000 | Total Assets 9,48,000

You might also like