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At the time of admission of a partner Suresh, assets and liabilities of Ramesh and Naresh were revalued as follows: a) A Provision for Doubtful Debts @ 10% was made on Sundry Debtors (Sundry Debtors ₹ 50,000). b) Creditors were written back by ₹ 5,000. c) Building was appreciated by 20% (Books value of Building ₹ 2,00,000). d) Unrecorded Investments were valued at ₹ 15,000. e) A provision of ₹ 2,000 was made for an Outstanding Bill for repairs. f) Unrecorded Liability towards suppliers was ₹ 3,000. Pass necessary Journal entries.

Solution:-

Chintan and Ayush are partners in a firm sharing profits and losses in the ratio of 3 : 2. They admitted Sudha as a new partner for 1/10th share in profits. Sudha brings ₹ 40,000 as premium for goodwill out of his share of ₹ 70,000. Goodwill already appears in the books at ₹ 40,000. Pass the necessary Journal entries to record this arrangement in the follow will two cases: Case – 1. When the unpaid share of goodwill is adjusted through New Partners’ Current A/c Case – 2: When goodwill is raised for the amount not brought by the new partner and is also written off.

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