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प्रश्न
At what figures the value of assets and liabilities appear in the books of the firm after revaluation has been done? Show with the help of an imaginary balance sheet.
उत्तर
After revaluation has been done, the assets and liabilities appear at their current market values in the Balance Sheet of the reconstituted firm. This can be better explained with the help of the below-explained example. A and B shares profit and loss equally.
| Balance Sheet of A and B as on April 01, 2011 | |||
| Liabilities | Amt (Rs.) |
Assets | Amt (Rs.) |
| Sundry Creditors | 1,00,000 | Cash in Hand | 8,000 |
| Capital Accounts | Cash at Bank | 28,000 | |
| A - 75,000 | 150,000 | Cash at Bank | 40,000 |
| B - 75,000 |
Stock |
36,000 | |
|
Furniture |
38,000 | ||
|
Plant and Machinery |
1,00,000 | ||
| 2,50,000 | 2,50,000 | ||
- On that date C is admitted for 1/3rd share and brings 1,00,000 as capital.
- The value of stock is increased by Rs 7,000.
- A provision of Rs 2,000 has been created against Debtors.
- Furniture revalued at Rs 35,000.
- A machinery costing Rs 50,000 purchased is not recorded in books.
- Rent outstanding Rs 2,000.
Prepare Revaluation Account, Partners’ Capital Account, Cash Account and Balance Sheet.
Solution -
|
Dr. |
Revaluation Account |
Cr. |
||
|
Particular |
Amount |
Particular |
Amount |
|
|
Rent Outstanding A/c |
2,000 |
Stock |
7,000 |
|
| Provision for Debtors | 2,000 | Machinery | 50,000 | |
| Furniture | 35,000 |
|
||
|
Profit transferred: |
|
|
||
|
A’s Capital A/c |
25,000 |
50,000 |
|
|
|
B’s Capital A/c |
25,000 |
|
||
|
|
57,000 |
|
57,000 |
|
|
Dr. |
A’s Capital Account |
Cr. |
|||||
|
Date |
Particular |
J.F. |
Amount Rs |
Date |
Particular |
J.F. |
Amount Rs |
|
|
Balance c/d |
|
1,00,000 |
|
Balance b/d |
|
75,000 |
|
|
|
|
|
|
Revaluation A/c |
|
25,000 |
|
|
|
|
1,00,000 |
|
|
|
1,00,000 |
|
Dr. |
B’s Capital Account |
Cr. |
|||||
|
Date |
Particular |
J.F. |
Amount Rs |
Date |
Particular |
J.F. |
Amount Rs |
|
|
Balance c/d |
|
1,00,000 |
|
Balance b/d |
|
75,000 |
|
|
|
|
|
|
Revaluation A/c |
|
25,000 |
|
|
|
|
1,00,000 |
|
|
|
1,00,000 |
|
Dr. |
C’s Capital Account |
Cr. |
|||||
|
Date |
Particular |
J.F. |
Amount Rs |
Date |
Particular |
J.F. |
Amount Rs |
|
|
Balance c/d |
|
1,00,000 |
|
Cash A/c |
|
1,00,000 |
|
|
|
|
1,00,000 |
|
|
1,00,000 |
|
|
Dr. |
Cash Account |
Cr. |
|||||
|
Date |
Particular |
J.F. |
Amount Rs |
Date |
Particular |
J.F. |
Amount Rs |
|
|
Balance b/d |
|
8,000 |
|
Balance c/d |
|
1,08,000 |
|
|
C’s Capital A/c |
|
1,00,000 |
|
|
|
|
|
|
|
|
1,08,000 |
|
|
|
1,08,000 |
| Balance Sheet of A, B & C as at April | |||||
|
Liabilities |
Amount (Rs.) |
Assets |
Amount |
||
|
Sundry Creditors |
1,00,000 |
Cash in hand |
1,08,000 |
||
|
Rent Outstanding |
2,000 |
Cash at Bank |
28,000 |
||
|
|
|
Debtors |
40,000 |
38,000 |
|
|
|
|
Less: Provision |
2,000 |
||
|
Capital Account |
|
|
|
||
|
A |
1,00,000 |
3,00,000 |
Stock |
43,000 |
|
|
B |
1,00,000 |
Furniture |
35,000 |
||
|
C |
1,00,000 |
Plant and Machinery |
1,50,000 |
||
|
|
4,02,000 |
|
4,02,000 |
||
APPEARS IN
संबंधित प्रश्न
Following is the Balance Sheet of R.S. Ltd. as at 31st March, 2016 :
|
R.S. Ltd. Balance Sheet as at 31-3-2016 |
|||
|
Particulars |
NoteNo. |
31-03-2016 (Rs) |
31-03-2015 (Rs) |
|
I. Equity and Liabilities : (1) Shareholder's Funds |
|||
|
(a) Share Capital |
9,00,000 |
7,00,000 |
|
|
(b) Reserves and Surplus |
1 |
2,50,000 |
1,00,000 |
|
(2) Non-current Liabilities |
|||
|
Long-term borrowings |
2 |
4,50,000 |
3,50,000 |
|
(3) Current Liabilities |
|||
|
(a) Short-term borrowings |
3 |
1,50,000 |
75,000 |
|
(b) Short-term provisions |
4 |
2,00,000 |
1,25,000 |
|
Total |
19,50,000 |
13,50,000 |
|
|
II. Assets |
|||
|
(1) Non-current Assets |
|||
|
(a) Fixed Assets |
|||
|
(i) Tangible |
5 |
14,65,000 |
9,15,000 |
|
(ii) Intangible |
6 |
1,00,000 |
1,50,000 |
|
(b) Non-current Investments |
1,50,000 |
1,00,000 |
|
|
(2) Current Assets |
|||
|
(a) Current Investments |
|
40,000 |
70,000 |
|
(b) Inventories |
7 |
1,22,000 |
72,000 |
|
(c) Cash and Cash Equivalents |
73,000 |
43,000 |
|
|
Total |
19,50,000 |
13,50,000 |
|
|
Note No. |
Particulars |
31-03-2016 (Rs) |
31-03-2015 (Rs) |
|
(1) |
Reserves and Surplus |
|
|
|
|
(Surplus i.e. Balance in Statement of Profit and Loss) |
2,50,000 |
1,00,000 |
|
|
|
2,50,000 |
1,00,000 |
|
|
|
|
|
|
(2) |
Long-term borrowings |
|
|
|
|
12% Debentures |
4,50,000 |
3,50,000 |
|
|
|
4,50,000 |
3,50,000 |
|
|
|
|
|
|
(3) |
Short-term borrowings |
|
|
|
|
Bank overdraft |
1,50,000 |
75,000 |
|
|
|
1,50,000 |
75,000 |
|
|
|
|
|
|
(4) |
Short-term provisions |
|
|
|
|
Proposed Dividend |
2,00,000 |
1,25,000 |
|
|
|
2,00,000 |
1,25,000 |
|
|
|
|
|
|
(5) |
Tangible Assets |
|
|
|
|
Machinery |
16,75,000 |
10,55,000 |
|
|
Accumulated Depreciation |
(2,10,000) |
(1,40,000) |
|
|
|
14,65,000 |
9,15,000 |
|
|
|
|
|
|
(6) |
Intangible Assets |
|
|
|
|
Goodwill |
1,00,000 |
1,50,000 |
|
|
|
1,00,000 |
1,50,000 |
|
|
|
|
|
|
(7) |
Inventories |
|
|
|
|
Stock in trade |
1,22,000 |
72,000 |
|
|
|
1,22,000 |
72,000 |
|
|
|
Additional Information :
(1) Rs 1,00,000, 12% Debentures were issued on 31-3-2016.
(2) During the year a piece of machinery costing Rs 80,000 on which accumulated depreciation was Rs 40,000 was sold at a loss of Rs 10,000.
Prepare a Cash Flow Statement.
Why is 'Realisation Account' prepared?
Why is there need for the revaluation of assets and liabilities on the admission of a partner?
X, Y and Z are partners sharing profits and losses in the ratio of 6 : 3 : 1. They admitted W into partnership with effect from 1st April, 2019. New profit-sharing ratio between X, Y, Z and W was agreed to be 3 : 3 : 3 : 1. They also decide to record the effect of the following revaluations without affecting the book values of the assets and liabilities by passing an adjustment entry:
| Book Values (₹) | Revised Values (₹) | |
| Plant and Machinery | 3,50,000 | 3,40,000 |
| Land and Building | 5,00,000 | 5,50,000 |
| Trade Creditors | 1,00,000 | 90,000 |
| Outstanding Expenses | 85,000 | 1,00,000 |
Pass necessary adjustment entry.
Sanjana and Alok were partners in firm sharing profits and losses in the ratio 3: 2. On 31st March 2018 their Balance Sheet was as follows:
Balance Sheet of Sanjana and Alok as on 31.3.2018
| Liabilities |
Amount (₹) |
Assets | Amount (₹) |
| Creditors | 60,000 | Cash | 1,66,000 |
| Work men's Compensation Fund | 60,000 | Debtors - 1,46,000 | |
| Less: Provision for doubtful debts - 2,000 | 1,44,000 | ||
| Capitals: | Stock | 1,50,000 | |
| Sanjana - 5,00,000 | Investments | 2,60,000 | |
| Alok - 4,00,000 | 9,00,000 | Furniture | 3,00,000 |
| 10,20,000 | 10,20,000 |
On 1st April 2018, they admitted Nidhi as a new partner for 1/4th share in the profits on the following terms:
(a) Goodwill of the firm was valued at ₹ 4,00,000 and Nidhi brought the necessary amount in cash for her share of goodwill premium, half of which was withdrawn by the old partners.
(b) Stock was to be increased by 20% and furniture was to be reduced to 90%.
(c) Investments were to be valued at ₹ 3,00,000. Alok took over investments at this value.
(d) Nidhi brought ₹ 3,00,000 as her capital and the capitals of Sanjana and Alok were adjusted in the new profit sharing ratio.
Prepare Revaluation Account, Partners Capital Accounts, and the Balance Sheet of the reconstituted firm on Nidhi's admission.
Write the Word/Term/Phrase which can substitute of the following statement:
Partner’s Account where Loss or Profit on revaluation is transferred.
Revaluation A/c is also known as ________ account.
Rohan, Rohit, and Sachin are partners in a firm sharing profit and losses in the proportion 3:1:1 respectively. Their balance sheet as on 31st March 2018 is as shown below
| Balance Sheet as on 31st March 2018 | |||||
| Liabilities | Amount ₹ | Assets | Amount ₹ | ||
| Creditors | 40,000 | Bank | 12,500 | ||
| General Reserve | 50,000 | Debtors | 60,000 | ||
| Bills payable | 25,000 | Live Stock | 50,000 | ||
| Capital Accounts : | Building | 75,000 | |||
| Rohan | 1,25,000 | Plant and Machinery | 35,000 | ||
| Rohit | 1,00,000 | Motor Truck | 1,00,000 | ||
| Sachin | 50,000 | Goodwill | 57,500 | ||
| 3,90,000 | 3,90,000 | ||||
On 1st April 2018, Sachin retired and the following adjustments have been agreed upon.
1. Goodwill was revalued at ₹ 50,000
2. Assets and Liabilities were revalued as follows. Debtors ₹ 50,000, Live Stock, ₹ 45,000; Building ₹ 1,25000, Plant and Machinery ₹ 30,000, Motor Truck ₹ 95,000 and Creditors ₹ 30,000
3. Rohan and Rohit contributed additional capital through Net Banking of ₹ 50,000 and ₹ 25,000 respectively.
4. Balance of Sachin’s Capital Account is transferred to his Loan Account
Give Journal entries in the books of new firm.
Excess of the credit side over the debit side of the revaluation account.
Balance sheet prepared after new partnership agreement, assets and liabilities are recorded at:
Profit or Loss on revaluation of assets and reassessment of liabilities is transferred to Partners' Capital Accounts in their:
In case of admission of a partner, the entry for unrecorded investments will be:
Unrecorded Assets will be ____________ in Revaluation Account.
An increase in the value of liability will be recorded on the ____________ side of the revaluation account.
At the time of admission of a new partner, general reserve appearing in the old Balance Sheet is transferred to:
Assets and Liabilities are shown at their revalued values in:
Arun and Vijay are partners in a firm sharing profits and losses in the ratio of 5:1.
| Balance Sheet (Extract) | |||
| Liabilities | ₹ | Assets | ₹ |
| Machinery | 40,000 | ||
If the value of machinery reflected in the balance sheet is overvalued by `33 1/3%,` find out the value of Machinery to be shown in the new Balance Sheet.
Angle and Circle ware partners in a firm. Their Balance Sheet showed Furniture at ₹2,00,000; Stock at ₹1,40,000; Debtors at ₹1,62,000 and Creditors at ₹60,000. Square was admitted and new profit-sharing ratio was agreed at 2:3:5. Stock was revalued at ₹1,00,000, Creditors of ₹15,000 are not likely to be claimed, Debtors for ₹2,000 have become irrecoverable and Provision for doubtful debts to be provided @10%.
Angle’s share in loss on revaluation amounted to ₹30,000. Revalued value of Furniture will be?
Assertion (A): Revaluation A/c is prepared at the time of Admission of a partner.
Reason (R): It is required to adjust the values of assets and liabilities at the time of admission of a partner, so that the true financial position of the firm is reflected.
Vedesh Ltd. purchased a running business of Vibhu Enterprises for a sum of ₹ 12,00,000. Vedesh Ltd. paid ₹ 60,000 by drawing a promissory note in favour of Vibhu Enterprises., ₹1,90,000 through bank draft and balance by issue of 8% debentures of ₹ 100 each at a discount of 5%. The assets and liabilities of Vibhu Enterprises consisted of Fixed Assets valued at ₹ 17,30,000 and Trade Payables at ₹ 3,20,000. You are required to pass necessary journal entries in the books of Vedesh Ltd.
Pick the odd one out:
Ajay, Vijay and Sanjay were partners sharing profits and losses in the ratio of 3 : 3 : 2. Their Balance Sheet as on 31st March 2020 is as follows:
| Balance Sheet as on 31st March, 2020 | |||
| Liabilities | Amount (₹) | Assets | Amount (₹) |
| Creditors | 32,700 | Bank | 19,800 |
| Reserve Fund | 12,000 | Stock | 19,800 |
| Capital Accounts: | Debtors | 15,000 | |
| Ajay | 33,000 | Livestock | 30,000 |
| Vijay | 45,000 | Plant and Machinery | 62,100 |
| Sonjay | 24,000 | ||
| 1,46,700 | 1,46,700 | ||
On 1st April 2020 Sanjay retired from the firm on the following terms:
- R.D.D. is to be maintained at 10% on debtors.
- ₹ 300 to be written off from creditors.
- Goodwill of the firm is to be valued at ₹ 12,000. however only Sanjay's share in it is to be raised in the books and written off immediately.
- Assets to be revalued as: Stock ₹ 18,900, Plant and machinery ₹ 60,000, Live Stock ₹ 30,600.
- The amount payable to Sanjay is to be transferred to his Loan account after retirement:
Prepare:
- Revaluation Account
- Partners' Capitol Account
- Balance Sheet of the New firm.
On the reconstitution of a firm the value of furniture increased from ₹ 7,00,000 to ₹ 8,00,000 and stock reduced to ₹ 4,00,000 from ₹ 4,20,000. Gain or loss on revaluation will be ______.
On admission of a new partner, the old partners share the gain or loss on revaluation of assets and reassessment of liabilities in which of the following ratio :
Mita, Geeta and Mohit were partners in a firm sharing profits and losses in the ratio of 5 : 3 : 2. With effect from 1st April 2022, they mutually agreed to share profits and losses in the ratio of 2:2:1. It was agreed that:
- Goodwill of the firm was valued at ₹ 1,40,000.
- Profit on revaluation of assets and re-assessment of liabilities amounted to ₹ 1,20,000.
Pass necessary journal entries for the above transactions in the books of the firm. Show your working notes clearly.
Madhav and Girdhari were partners in a firm sharing profits and losses in the ratio of 3:1. Their balance sheet as at 31st March; 2022 was as follows :
| Balance Sheet of Madhav and Girdhari as on 31st March, 2022 | |||||
| Liabilities | Amount (₹) | Amount (₹) | Assets | Amount (₹) | Amount (₹) |
| Capital: | Machinery | 4,70,000 | |||
| Madhav | 3,00,000 | 5,00,000 | Investment | 1,10,000 | |
| Girdhari | 2,00,000 | Debtors | 1,20,000 | 1,10,000 | |
| Workmen's Compensation Fund | 60,000 | Less: Provision for Doubtful Debts | 10,000 | ||
| Creditors | 1,90,000 | Stock | 1,40,000 | ||
| Employee's Provident Fund | 1,10,000 | Cash | 30,000 | ||
| 8,60,000 | 8,60,000 | ||||
On 1st April, 2022, they admitted Jyoti into partnership for 1/4th share in the profits of the firm. Jyoti brought ₹ 1,86,000 as her capital and ₹ 40,000 as her of goodwill premium in cash. The following terms were agreed upon:
- Stock was found undervalued by ₹ 23,000.
- 20% of the investments were taken over by Girdhari at book value.
- Claim on account of workmen's compensation amounted to ₹ 70,000, which was to be paid later.
- Creditor included a sum of ₹ 27,000 which was not likely to be claimed.
Prepare Revaluation A/c and Partners' Capital Accounts on Jyoti's admission.
X, Y and Z are partners sharing profits and losses in the ratio of 2: 3: 1. They decided to share future profits in the ratio of 3:2: 1 with effect from 1st April, 2022. At the time of change of profit sharing ratio, unrecorded furniture will be recorded in the books of Accounts by ______.
Rajinder and Vijay were partners in a firm sharing profits in the ratio 3:2. On 31st March 2023 their balance sheet was as follows:
| Liabilities | Amount (₹) | Assets | Amount (₹) | ||
| Capital A/cs: | Fixed Assets (Tangible) |
3,60,000 | |||
| Rajinder | 3,00,000 | 4,50,000 | Goodwill | 50,000 | |
| Vijay | 1,50,000 | Investments | 40,000 | ||
| Current A/cs: | Stock | 74,000 | |||
| Rajinder | 50,000 | 60,000 | Debtors | 1,00,000 | 96,000 |
| Vijay | 10,000 | Less: Provision for Doubtful Debts |
4,000 | ||
| Creditors | 75,000 | Bank | 25,000 | ||
| General Reserve | |||||
| 6,45,000 | 6,45,000 |
With an aim to expand business it is decided to admit Ranvijay as a partner on 1st April 2023 on the following terms:
- Provision for doubtful debts is to be increased to 6% of debtors.
- An outstanding bill for repairs ₹ 50,000 to be accounted in the books.
- An unaccounted interest accrued of ₹ 7500 be provided for.
- Investment were sold at book value.
- Half of stock was taken by Rajinder at ₹ 42,000 and remaining stock was also to be revalued at the same rate.
- New profit-sharing ratio of partners will be 5:3:2.
- Ranvijay will bring ₹ 1,00,000 as capital and his share of goodwill which was valued at twice the average profit of the last three years ended 31st March 2023, 2022 and 2021 were ₹ 1,50,000, ₹ 1,30,000 and ₹ 1,70,000 respectively.
Pass necessary journal entries.
Decrease in the value of assets should be ______ to Profit and Loss Adjustment Account.
If an asset is depreciated, Revaluation Account is ______.
The Balance Sheet of Snehal, Samir and Shera is as follows and the partners are sharing profits and losses in the proportion of 2 : 2 : 1 respectively.
| Balance Sheet as on 31st March, 2023 | |||||
| Liabilities | Amount (₹) | Amount (₹) | Assets | Amount (₹) | Amount (₹) |
| Creditors | 12,000 | Bank | 7,500 | ||
| Bills Payable | 3,000 | Debtors | 30,000 | 28,500 | |
| General Reserve | 7,500 | Less: R.D.D. | 1,500 | ||
| Capital Accounts: | Furniture | 22,500 | |||
| Snehal | 60,000 | Machinery | 6,000 | ||
| Samir | 45,000 | Freehold Property | 40,500 | ||
| Shera | 22,500 | Goodwill | 45,000 | ||
| 1,50,000 | 1,50,000 | ||||
Shera retires from the firms on 1st April, 2023 on the following terms:
(1) The assets are to be revalued as: Freehold Property ₹ 45,000, Machinery ₹ 7,500 Furniture ₹ 18,000, All debtors are good.
(2) Goodwill of the firm be valued at thrice the average profit of given below : Profits of the firm for five years.
| 2018-19 | ₹ 1,500 |
| 2019 - 20 | ₹ 15,750 |
| 2020-21 | ₹ 15,000 |
| 2021-22 | ₹ 24,000 |
| 2022-23 | ₹ 15,000 |
(3) Shera should be paid ₹ 4,500 by cheque.
(4) The Balance of Shera's Capital Ale should be kept in the business as his loan.
Prepare Profit and Loss Adjustment A/c, Capital Accounts of Partners, Balance Sheet of the new firm.
Decrease in the value of assets should be ______ to Profit and Loss Adjustment Account.
