UNIT 4
Solved Examples
A, B and C share profits and losses in the ratio of 3:2:1 respectively. Their Balance sheet as
on 31/12/2018 is as follows:
Assets
Rs.
Liabilities
Rs.
Capital
Goodwill
20,000
A
1,40,000
Land
40,000
B
1,60,000
Building
2,20,000
C
20,000
Machinery
1,00,000
General Reserve
36,000
Vehicles
56,000
Investment Fluctuation
8,000
Furniture
24,000
loan
C’s Loan
66,000
Investment
36,000
Mrs. A’s loan
30,000
Loose Tools
14,000
Creditors
1,52,000
Bills Receivable
40,000
Outstanding Expenses
40,000
Debtors 80,000
Bills Payable
28,000
Provision 4,000
76,000
Bank Over Draft
1,20,000
Cash
38,000
C’s Current A/c
1,12,000
Profit & Loss A/c
24,000
8,00,000
8,00,000
Adjustments:
1. The partners decided to convert the firm into ABC Ltd. a Joint Stock Company having an
authorized capital of 1,00,000 equity shares of Rs10 each.
2. The purchase consideration was decided at Rs 5,80,000 and settled by paying
Rs 1,00,000 in cash and balance through equity shares.
3. The outstanding expenses were to be settled by the firm.
4. Loose Tools, vehicles, furniture and investments are sold by the firm at Rs 10,000; Rs
50,000; Rs 25,000 and Rs 42,000 respectively.
5. The Partner’s and their spouse’s loan are taken over by the respective partners along
with current A/c balances.
Prepare the ledger accounts in the books of the partnership firm.
Solution: