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The Balance Sheet of Mohit and Rohit who shared profits equally was as follows:Balance Sheet as on 31st March 2021LiabilitiesAmount (₹)AssetsAmount (₹)Bills Payable52,000Cash1,60,000Creditors48,000Stock80,000Capital Accounts:Plant and Machinery1,40,0…

Q.2 The Balance Sheet of Mohit and Rohit who shared profits equally was as follows:

Balance Sheet as on 31st March 2021

LiabilitiesAmount (₹)AssetsAmount (₹)
Bills Payable52,000Cash1,60,000
Creditors48,000Stock80,000
Capital Accounts:Plant and Machinery1,40,000
Mohit 2,00,000Debtors52,000
Rohit 2,80,0004,80,000Furniture48,000
General Reserve20,000Land and Building1,20,000
6,00,0006,00,000

On 1st April 2021 Sujit joins the firm as a partner for 1/5th share of future profit on the following terms and conditions:

  1. Stock, Plant and Machinery are to be reduced by 20%.
  2. Land and Building is to be valued at ₹ 1,75,000.
  3. A provision of 10% is to be created on debtors.
  4. Sujit is to bring in ₹ 2,00,000 as capital.
  5. Goodwill is valued at ₹ 4,00,000. Sujit is to bring his share of goodwill in cash.

Draft the Journal Entries in the books of the firm and show Profit and Loss Adjustment Account.

OR

Give journal entries of the following in the books of Daulat.

  1. Sarita’s acceptance for 3 months of ₹ 20,000 was discounted with bank at ₹ 19,800.
  2. Siddhi’s acceptance ₹ 15,000 retired one month before the due date at rebate of 12% p.a.
  3. Prachiti’s acceptance of ₹ 9,750 is endorsed in favour of Bhumika in full settlement of her account ₹ 10,000.
  4. Sold goods to Madhura ₹ 20,000 @10% trade discount. Received half the amount in cash and for the balance a bill for 2 months which was accepted by Madhura. On the due date, Madhura meets the bill.
Doubtly Asked Board exam · March 2026 hsc 12th Save WhatsApp Report
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Answer: Revaluation profit ₹ 5,800 (₹ 2,900 each to Mohit and Rohit); Sujit brings ₹ 2,80,000 (capital ₹ 2,00,000 + goodwill ₹ 80,000), goodwill credited ₹ 40,000 each to Mohit and Rohit.

Working notes

  • Stock: 20% of ₹ 80,000 = ₹ 16,000 (decrease). Plant and Machinery: 20% of ₹ 1,40,000 = ₹ 28,000 (decrease).
  • Land and Building: ₹ 1,75,000 – ₹ 1,20,000 = ₹ 55,000 (increase).
  • Provision for doubtful debts: 10% of ₹ 52,000 = ₹ 5,200.
  • Sujit's share of goodwill = ₹ 4,00,000 × 1/5 = ₹ 80,000. Old ratio 1 : 1; Sujit takes 1/5, so the remaining 4/5 is shared equally (2/5 each). Sacrifice: Mohit 1/2 – 2/5 = 1/10, Rohit 1/2 – 2/5 = 1/10, ratio 1 : 1, so ₹ 40,000 each.

Journal entries in the books of the firm (1st April 2021)

ParticularsDebit (₹)Credit (₹)
Cash A/c ............ Dr.
To Sujit's Capital A/c
To Premium for Goodwill A/c
(Being capital and share of goodwill brought in cash by Sujit)		2,80,000
2,00,000
80,000
Premium for Goodwill A/c ............ Dr.
To Mohit's Capital A/c
To Rohit's Capital A/c
(Being goodwill credited to old partners in sacrifice ratio 1 : 1)		80,000
40,000
40,000
Profit and Loss Adjustment A/c ............ Dr.
To Stock A/c
To Plant and Machinery A/c
To Provision for Doubtful Debts A/c
(Being decrease in assets and provision created)		49,200
16,000
28,000
5,200
Land and Building A/c ............ Dr.
To Profit and Loss Adjustment A/c
(Being increase in value of land and building)		55,000
55,000
Profit and Loss Adjustment A/c ............ Dr.
To Mohit's Capital A/c
To Rohit's Capital A/c
(Being revaluation profit shared in old ratio 1 : 1)		5,800
2,900
2,900
General Reserve A/c ............ Dr.
To Mohit's Capital A/c
To Rohit's Capital A/c
(Being general reserve distributed to old partners)		20,000
10,000
10,000

Profit and Loss Adjustment Account

Dr. ParticularsAmount (₹)Cr. ParticularsAmount (₹)
To Stock A/c16,000By Land and Building A/c55,000
To Plant and Machinery A/c28,000
To Provision for Doubtful Debts A/c5,200
To Profit transferred to:
Mohit's Capital A/c 2,900
Rohit's Capital A/c 2,900		5,800
55,00055,000

OR (Bills of exchange): Journal entries in the books of Daulat

ParticularsDebit (₹)Credit (₹)
(1) Bank A/c ............ Dr.
Discount A/c ............ Dr.
To Bills Receivable A/c
(Being Sarita's acceptance discounted with bank)		19,800
200

20,000
(2) Cash A/c ............ Dr.
Rebate on Bills A/c ............ Dr.
To Bills Receivable A/c
(Being Siddhi's acceptance retired one month early; rebate ₹ 15,000 × 12/100 × 1/12 = ₹ 150)		14,850
150

15,000
(3) Bhumika's A/c ............ Dr.
To Bills Receivable A/c
To Discount A/c
(Being Prachiti's acceptance endorsed to Bhumika in full settlement of ₹ 10,000)		10,000
9,750
250
(4) (a) Madhura's A/c ............ Dr.
To Sales A/c
(Being goods sold ₹ 20,000 less 10% trade discount ₹ 2,000)		18,000
18,000
(b) Cash A/c ............ Dr.
To Madhura's A/c
(Being half the amount received in cash)		9,000
9,000
(c) Bills Receivable A/c ............ Dr.
To Madhura's A/c
(Being Madhura's acceptance received for 2 months for the balance)		9,000
9,000
(d) Cash A/c ............ Dr.
To Bills Receivable A/c
(Being bill met by Madhura on the due date)		9,000
9,000

Trade discount is not recorded in the books; the sale is recorded at the net amount of ₹ 18,000.

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