Yogita's Loan 1,00,000 Investments 1,00,000 Investment Fluctuation Fun 30,000 Debtors 2,00,000 Less: 20,000 1,80,000 Capital: Land and Building 3,80,000 Sulekha-2,00,000 Advertisement Suspense A/c 40,000 Yogita-1,00,000 3,00,000 Total 8,50,000 Total 8,50,000 The firm was dissolved on 31st March, 2021. The assets were realised and the liabilities were paid as under: (i) Rama, a debtor of Rs.80,000/- had to pay the amount due 2 month after the date of dissolution. He was allowed a discount for 2% for making payment immediately the remaining debtors were collected in full. (ii) Yogita took way 80% of the investment at 10% discount. (iii) Sulekha
Answers & Comments
Answer:
Investment fluctuation reserve is created as a provision for any change in the market value of investments. Its a reserve appearing in the balance sheet on the date of admission and it needs to be distributed among the old partners in their profit sharing ratio.
Investments market value=1,10,000
Investment value appearing in balance sheet= 1,20,000
Difference is 10,000 which is to be adjusted from the investment fluctuation reserve account.
The journal entry for this is:-
Investment fluctuation reserve A/c Dr 10,000
To Investments A/c 10,000
Now the balance reserve i.e 14,000 (24,000-10,000) is to be distributed among the partners X and Y. As the question is silent on the ratio of profit sharing, we will assume it to be equal. So, the entry will be:-
Investment fluctuation reserve A/c Dr 14,000
To X's capital A/c 7,000
To Y's capital A/c 7,000
A combined entry for this is:-
Investment fluctuation reserve A/c Dr 24,000
To Investments A/c 10,000
To X's capital A/c 7,000
To Y's capital A/c 7,000
Answer:
Answer:
Investment fluctuation reserve is created as a provision for any change in the market value of investments. Its a reserve appearing in the balance sheet on the date of admission and it needs to be distributed among the old partners in their profit sharing ratio.
Investments market value=1,10,000
Investment value appearing in balance sheet= 1,20,000
Difference is 10,000 which is to be adjusted from the investment fluctuation reserve account.
The journal entry for this is:-
Investment fluctuation reserve A/c Dr 10,000
To Investments A/c 10,000
Now the balance reserve i.e 14,000 (24,000-10,000) is to be distributed among the partners X and Y. As the question is silent on the ratio of profit sharing, we will assume it to be equal. So, the entry will be:-
Investment fluctuation reserve A/c Dr 14,000
To X's capital A/c 7,000
To Y's capital A/c 7,000
A combined entry for this is:-
Investment fluctuation reserve A/c Dr 24,000
To Investments A/c 10,000
To X's capital A/c 7,000
To Y's capital A/c 7,000