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Question
Shikhar and Rohit were partners in a firm sharing profit in the ratio 7:3. On 1st April 2013, they admitted Kavi as a new partner for a ¼ share in the profit of the firm. Kavi brought Rs 4,30,000 as his capital and Rs 25,000 for his share of goodwill premium. The Balance Sheet of Shikhar and Rohit as on 1st April 2013 was as follows:
| Balance Sheet of Shikhar and Rohit as on 1st April 2013 | |||
| Liabilities | Rs | Assets | Rs |
|
Capital: Shikhar 8,00,000 Rohit 3,50,000 General Reserve Workman’s Compensation Fund Creditors |
11,50,000 1,00,000 1,00,000 1,50,000 |
Land and Building Machinery Debtors 2,20,000 Less: Provision 20,000 Stock Cash |
3,50,000 4,50,000
2,00,000 3,50,000 1,50,000 |
| 15,00,000 | 15,00,000 | ||
It was agreed that:
1. The value of Land and Building will be appreciated by 20%.
2. The value of Machinery will be depreciated by 10%.
3. The liabilities of Workmen's Compensation Fund was determined at Rs 50,000.
4. Capitals of Shikhar and Rohit will be adjusted on the basis of Kavi's capital and actual cash to be brought in or to be paid off as the case may be.
Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet of the new firm.
Solution
| Revaluation Account | |||
| Particulars | Rs | Particulars | Rs |
|
To Machinery A/c To Profit transferred to: Shikhar’s Capital A/c 17,500 Rohit’s Capital A/c 7,500 |
45,000
25,000 |
By Land and Building A/c
|
70,000
|
| 70,000 | 70,000 | ||
| Partners’ Capital Account | |||||||
| Particulars | Shikhar | Rohit | Kavi | Particulars | Shikhar | Rohit | Kavi |
| To Balance c/d | 9,40,000 | 4,10,000 | 4,30,000 | By Balance b/d | 8,00,000 | 3,50,000 | |
| By General Res. A/c | 70,000 | 30,000 | |||||
| By Workman Compensation Fund A/c |
35,000 | 15,000 | |||||
| By Cash A/c | 4,30,000 | ||||||
| By Premium for Goodwill A/c | 17,500 | 7,500 | |||||
| By Revaluation A/c (profit) | 17,500 | 7,500 | |||||
| 9,40,000 | 4,10,000 | 4,30,000 | 9,40,000 | 4,10,000 | 4,30,000 | ||
| To Cash A/c | 37,000 | 23,000 | By Balance b/d | 9,40,000 | 4,10,000 | 4,30,000 | |
| To Balance c/d | 9,03,000 | 3,87,000 | 4,30,000 | ||||
| 9,40,000 | 4,10,000 | 4,30,000 | 9,40,000 | 4,10,000 | 4,30,000 | ||
| Balance Sheet As on April 01, 2013 after Kavi’s admission |
|||
| Liabilities | Rs | Assets | Rs |
|
Liabilities for Workmen’s Compensation Creditors Capital: Shikhar 9,03,000 Rohit 3,87,000 Kavi 4,30,000
|
50,000 1,50,000
17,20,000
|
Land and Building Machinery 4,50,000 Less: Depreciation @10% 45,000 Debtors 2,20,000 Less: Provision 20,000 Stock Cash |
4,20,000
4,05,000
2,00,000 3,50,000 5,45,000 |
| 19,20,000 |
19,20,000 |
||
Working Note:
Calculation of Profit of sharing Ratio
Shikhar: Rohit
Old Ratio = 3 : 2
Kavi's Share = `1/4`
Let the total share of the firm =1
Remaining share of the firm = `1 - 1/4 = 3/4`
Shikhar's New Share = `7/10 xx 3/4 = 21/40`
Rohit 's New Share = `3/10 xx 3/4 = 9/40`
New Profit Shareing ratio = `21/40:9/40 :1/4`
`(21:9:10)/40`
Sacrificing Ratio = Old Ratio - New Ratio
Shikhar's Sacrifice = `7/10 - 21/40 = 7/40`
Rohit's Sacrifice = `3/10 - 9/4 = 3/40`
Sacrificing Ratio = 7: 3
WN1: Distribution of Goodwill brought in by Kavi
Shikhar will get = `25000 xx 7/10 = 17500`
Rohit will get = `25000 xx 3/10 = 7500`
WN2: Distribution of Workmen's Compensation Fund
Shikhar will get = `50000 xx 7/10 = 35000`
Rohit will get = `50000 xx 3/10 = 15000`
WN3: Distribution of General Reserve :
Shikhar will get = `100000 xx 7/10 = 70000`
Rohit will get = `100000 xx 3/10 = 30000`
WN4 : Adjustment of Capital
Total Capital of the firm = Capital brought in by Kavi × Reciprocal of her share
Capital Brought in by Kavi = 4,30,000
Total Capital of the Firm = `430000 xx 4/1 = 1720000`
Shikahr's New Capital = `1720000 xx 21/40 = 903000`
Rohit's New Capital = `1720000 xx 9/40 = 387000`
APPEARS IN
RELATED QUESTIONS
Ashok, Bhim and Chetan were partners in a firm sharing profits in the ratio of 3:2:1.
Their Balance Sheet as on 31-3-2015 was as follows:
Balance Sheet of Ashok, Bhim and Chetan
as on 31-3-2015
| Liabilities | Amount(Rs.) | Assets | Amount(Rs.) |
|
Creditors Bills Payable General Reserve Capitals Ashok 2,00,000 Bhim 1,00,000 Chetan 50,000 |
1,00,000 40,000 60,000
3,50,000 |
Land Building Plant Stock Debtors Bank
|
1,00,000 1,00,000 2,00,000 80,000 60,000 10,000
|
| 5,50,000 | 5,50,000 |
Ashok, Bhim and Chetan decided to share the future profits equally, w.e.f. April 1, 2015. For this it was agreed that:
(i) Goodwill of the firm be valued at 3,00,000
(ii) Land be revalued at 1, 60,000 and building be depreciated by 6%.
(iii) Creditors of 12,000 were not likely to be claimed and hence be written off
Prepare Revaluation Account Partners’ Capital Accounts and Balance Sheet of the reconstituted firm
L, M and N were partners in a firm sharing profit in the ratio of 3:2:1. Their Balance Sheet on 31.3.2015 was as follows :
Balance Sheet of L,M and N as on 31-3-2015
| Liabilities | Amount(Rs.) | Assets | Amount(Rs.) |
|
Creditors General Reserve Capitals L 1,20,000 M 80,000 N 40,000
|
1,68,000 42,000
2,40,000
|
Bank Debtors Stock Investments Furniture Machinery
|
34,000 46,000 2,20,000 60,000 20,000 70,000
|
| 4,50,000 | 4,50,000 |
On the above date O was admitted as a new partner and it was decided that:
(i) The new profit sharing ratio between L, M, N and 0 will be 2: 2: 1: 1.
(ii) Goodwill of the firm was valued at Rs.1,80,000 and O brought his share of goodwill premium in cash.
(iii) The market value of investments was Rs.36,000.
(iv) Machinery will be reduced to Rs.58,000.
(v) A creditor of Rs.6,000 was not likely to claim the amount and hence to be written-off.
(vi) O will bring proportionate capital so as to give him 1/6th share in the profits of the firm.
Prepare Revaluation Account. Partner's Capital Accounts and the Balance Sheet of the New Firm
J, H and K were partners in a firm sharing profits in the ratio of 5:3:2. On 31-3-2015 their Balance Sheet was as follows:
Balance Sheet of J,H and K as on 31-3-2015
| LIabilities | Amount(Rs.) | Assets | Amount(Rs.) |
|
Creditors Investment Fluctuation Fund P & L Account Capital: J 1,00,000 H 80,000 K 40,000
|
42,000 20,000 80,000
2,20,000
|
Land and Building Motor Vans Investments Machinery Stock Debtors 80,000 Less: 6,000 Cash |
2,24,000 40,000 38,000 24,000 30,000
74,000 32,000 |
| 3,62,000 | 3,62,000 |
On the above data H retires and J and K agreed to continue the business on the following terms:
(i) Goodwill of the firm was valued at Rs.1,02,000.
(ii) There was a claim of Rs.8,000 for workmen's compensation.
(iii) Provision for bad debts was to be reduced by Rs.2,000.
(iv) H will be paid Rs.14,000 in cash and the balance will be transferred in his loan account which will be paid in four equal yearly installments together with interest @ 10% p.a.
(v) The new profit sharing ratio between J and K will be 3:2 and their capitals will be in their new profit sharing ratio. The capital adjustments will be done by opening current accounts.
Prepare Revaluation Account, Partner’s Capital Accounts and Balance Sheet of the new firm.
Mohan and Mahesh were partners in a firm sharing profit in the ratio 3:2. On 1st April 2012, they admitted Nusrat as a partner in the firm. The Balance Sheet of Mohan and Mahesh on that date was as under:
Balance Sheet of Mohan and Mahesh as on 1st April 2012
| Liabilities | Amount(Rs.) | Assets | Amount(Rs.) |
|
Creditors Workman’s Compensation Fund General Reserve Capital: Mohan 1,00,000 Mahesh 80,000
|
2,10,000 2,50,000 1,60,000
1,80,000
|
Cash in hand Debtors Stock Machinery Building
|
1,40,000 1,60,000 1,20,000 1,00,000 2,80,000
|
| 8,00,000 | 8,00,000 |
It was agreed that:
i. The value of Building and Stock be appreciated to Rs.3,80,000 and Rs.1,60,000 respectively.
ii. The liabilities of workmen's compensation fund was determined at Rs.2,30,000.
iii. Nusrat brought in her share of goodwill Rs.1,00,000 in cash.
iv. Nusrat was to bring further cash as would make her capital equal to 20% of the combined capital of Mohan and Mahesh after above revaluation and adjustments are carried out.
v. The future profit sharing ratio will be Mohan 2/5, Mahesh 2/5, Nusrat 1/5.
Prepare Revaluation Account, Partner's Capital Accounts and Balance Sheet of the new firm. Also show clearly the calculation of Capital brought by Nusrat.
Kushal Kumar and Kavita were partners in a firm sharing profit in the ratio 3:1:1. On 1st April 2012 their Balance Sheet was as follows:
Balance Sheet of Kushal, Kumar and Kavita as on 1st April 2012
| Liabilities | Amount (Rs.) | Assets | Amount (Rs.) |
|
Creditors Bill payable General Reserve Capital: Kushi 3,00,000 Kumar 2,80,000 Kavita 3,00,000 |
1,20,000 1,80,000 1,20,000
8,80,000 |
Cash Debtors 2,00,000 Less: Provision 10,000 Stock Furniture Building Land |
70,000
1,90,000 2,20,000 1,20,000 3,00,000 4,00,000 |
| 13,00,000 | 13,00,000 |
On the above date, Kavita retired and the following was agreed:
i. Goodwill of the firm was valued at Rs.40,000.
ii. The land was to be appreciated by 30% and the building was to be depreciated by Rs.1,00,000.
iii. Value of furniture was to be reduced by Rs.20,000.
iv. Bad debts reserve is to be increased to Rs.15,000.
v. 10% of the amount payable to Kavita was paid in cash and the balance was transferred to her Loan Account.
vi. Capitals of Kushal and Kumar will be in proportion to their new profit sharing ratio. The surplus/deficit, if any in their Capital Accounts will be adjusted through Current Accounts.
Prepare Revaluation Account, Partners Capital Accounts and Balance Sheet of Kushal and Kumar after Kavita's retirement.
X, Y and Z were partners in a firm sharing profit in the ratio of 1:2:3. On 31-3-2015 their Balance sheet was as follows :
Balance Sheet of X,Y and Z as on 31-3-2015
| Liabilities |
Amount Rs |
Assets |
Amount Rs |
|
Creditors Bills Payable General Reserve Capitals X 50,000 Y 25,000 Z 12,500 |
25,000 10,000 10,000
87,500 |
Land Building Plant Stock Debtors Bank
|
25,000 25,000 50,000 20,000 15,000 2,500
|
| 1,37,500 | 1,37,500 |
X, Y and Z decided to Share the profits equally with effect from 1-4-2015. For this It was agreed that
(i) Goodwill of the firm will be valued at 75,000
(ii) Land will be revalued at 40,000 and building be depreciated by 6%.
(iii) Creditors of 3,000 were not likely to be claimed and hence should be written off
Prepare Revaluations Account, Partner’s Capital Accounts and Balance Sheet of the reconstitute firm.
A, B and C were partners in a firm sharing profit in the ratio of 3:2:1. On 31-3-2015 their Balance sheet was as follows :
Balance Sheet of A,B and C as on 31-3-2015
| Liabilities |
Amount Rs |
Assets |
Amount Rs |
|
Creditors Bills Payable
Capitals A 1,00,000 B 50,000 C 25,000 General Reserve |
50,000 20,000
1,75,000 30,000 |
Land Building Plant Stock Debtors Bank
|
50,000 50,000 1,00,000 40,000 30,000 5,000
|
| 2,75,000 | 2,75,000 |
On the above date D was admitted as new partner and it was decided that:
(i) Goodwill of the firm will be valued at 1,50,000
(ii) Land will be revalued at 80,000 and building be depreciated by 60%.
(iii) Creditors of 6,000 were not likely to be claimed and hence should be written off
Prepare Revaluations Account, Partner’s Capital Accounts and Balance Sheet of the reconstitute firm.
A and Z are partners in a firm sharing profits in the ratio of 7 : 3. Their Balance Sheet as on 31.3.2016 was as follows was as follows:
|
Balance Sheet of A and Z as on 31.3.2016 |
||||
|
Liabilities |
Amount (Rs) |
Assets |
Amount (Rs) |
|
|
Sundry Creditors |
60,000 |
Cash |
36,000 | |
|
Provision for Bad Debts |
6,000 |
Debtors |
54,000 | |
|
Outstanding Wages |
9,000 |
Stock |
60,000 | |
|
General Reserve |
15,000 |
Furniture |
1,20,000 | |
|
|
|
Plant & Machinery |
120,000 | |
|
Capitals: |
|
|
||
|
A |
1,20,000 |
|
|
|
|
Z |
1,80,000 |
3,00,000 |
|
|
|
|
3,90,000 |
|
3,90,000 |
|
|
|
|
|
||
On the above date B was admitted for `1/4` share in the profits on the following terms:
(i) B will bring Rs 90,000 as his capital and Rs 30,000 as his share of goodwill premium, half of which will be withdrawn by A and Z.
(ii) Debtors Rs 4,500 will be written off and a provision of 5% will be created on debtors for bad and doubtful debts.
(iii) Outstanding wages will be paid off.
(iv) Stock will be depreciated by 10%, furniture by Rs 1,500 and Machinery by 8%.
Pass necessary journal entries for the above transactions in the books of the firm on B’s admission.
N, S and G were partners in a firm sharing profits and losses in the ratio of 2 : 3 : 5. On 31.3.2016 their Balance Sheet was as under:
N, S and G were partners in a firm sharing profits and losses in the ratio of 2 : 3 : 5. On 31.3.2016 their Balance Sheet was as under:
|
Balance Sheet of N, S and G as on 31.3.2016 |
|||||
|
Liabilities |
Amount (Rs) |
Assets |
Amount (Rs) |
||
|
Creditors |
1,65,000 |
Cash |
1,20,000 |
||
|
General Reserve |
90,000 |
Debtors |
1,35,000 |
|
|
|
Capitals: |
Less Provision |
15,000 |
1,20,000 |
||
|
N |
2,25,000 |
Stock |
1,50,000 | ||
|
S |
3,75,000 |
Machinery |
4,50,000 | ||
|
G |
4,50,000 | 10,50,000 |
Patents |
90,000 | |
|
|
Building |
3,00,000 | |||
|
|
Profit & Loss Account |
75,000 | |||
|
|
13,05,000 |
|
13,05,000 | ||
|
|
|
|
|||
G retired on the above date and it was agreed that:
(i) Debtors of Rs 6,000 will be written off as bad debts and a provision of 5% on debtors for bad and doubtful debts will be maintained.
(ii) Patents will be completely written off and stock, machinery and building will be depreciated by 5%.
(iii) An unrecorded creditor of Rs 30,000 will be taken into account.
(iv) N and S will share the future profits in the ratio of 2 : 3 ratio.
(v) Goodwill of the firm on G’s retirement was valued at Rs 90,000.
Pass necessary journal entries for the above transactions in the books of the firm on G’s retirement.
Verma and Sharma were partners sharing profits in the ratio of 3 : 1. On 31-3-2011 their Balance
Sheet was as follows:
|
Balance Sheet of Verma and Sharma as on 31-3-2011 |
||||
|
Liabilities |
Amount Rs |
Assets |
Amount Rs |
|
|
Capitals: |
|
Land and Building |
70,000 |
|
|
Verma |
1,20,000 |
|
Machinery |
60,000 |
|
Sharma |
80,000 |
2,00,000 |
Debtors |
80,000 |
|
Creditors |
70,000 |
Bank |
60,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,70,000 |
|
2,70,000 |
|
|
|
|
|
||
The firm was dissolved on 1-4-2011 and the Assets and Liabilities were settled as follows:
(i) Creditors of Rs 50,000 took over Land and Building in full settlement of their claim.
(ii) Remaining Creditors were paid in cash.
(iii) Machinery was sold at a depreciation of 30%.
(iv) Debtors were collected at a cost of Rs 500.
(v) Expenses of realisation were Rs 1,700.
Pass necessary Journal Entries for dissolution of the firm.
Murari and Vohra were partners in a firm with capitals of Rs 1,20,000 and Rs 1,60,000 respectively. On 1.4.2010 they admitted Yadav
as a partner for non-fourth share in profits on his payment of Rs 2,00,000 as his capital and Rs 90,000 for this one-fourth share of goodwill.
On that date the creditors of Murari and Vohra were Rs 60,000 and Bank Overdraft was Rs 15,000. Their assets apart from cash included Stock Rs 10,000; Debtors Rs 40,000; Plant and Machinery Rs 80,000; Land and Building Rs 2,00,000. It was agreed that stock should be depreciated by Rs 2,000; Plant and Machinery by 20%, Rs 5,000 should be written off as bad debts and Land and
Building should be appreciated by 25%.
Prepare Revaluation Account, Capital Accounts of Murari, Vohra and Yadav and the Balance Sheet of the new firm.
Khanna, Seth and Mehta were partners in a firm sharing profit in the ratio of 3 : 2 : 5. On
31.12.2010 the Balance Sheet of Khana, Seth and Mehta was as follows:
|
Liabilities |
Amount Rs |
Assets |
Amount Rs |
|
|
Capitals: |
|
Goodwill |
3,00,000 |
|
|
Khanna: |
3,00,000 |
|
Land and Building |
5,00,000 |
|
Seth: |
2,00,000 |
|
Machinery |
1,70,000 |
|
Mehta: |
5,00,000 |
10,00,000 |
Stock |
30,000 |
|
General Reserve |
1,00,0000 |
Debtors |
1,20,000 |
|
|
Loan from Seth |
50,000 |
Cash |
45,000 |
|
|
Creditors |
75,000 |
Profit and Loss Account |
60,000 |
|
|
|
12,25,000 |
|
||
On 14th March 2011, Seth died.
The partnership deed provides that on the death of a partner the executor of the deceased partners
is entitled to:
(i) Balance in Capital Account;
(ii) Share in profits upto the date of death on the basis of last year’s profit;
(ii) His share in profit/loss in revaluation of assets and re-assessment of liabilities which were as follows:
(a) Land and Building was to be appreciated by Rs 1,20,000;
(b) Machinery was to be depreciated to Rs 1,35,000 and stock to Rs 25,000;
(c) A provision of `2 1/2%` for bad and doubtful debts was to created on debtors;
(iv) The net amount payable to Seth’s executors was transferred to his loan account which was to be paid later.
Prepare Revalution Account, Partners Capital Accounts, Seth’s Executors Account and the
Balance Sheet of Khanna and Mehta who decided to continue the business keeping their capital balances in their new profit sharing ratio. Any surplus of deficit to be transferred the current account of the partners.
A, B and C were partners sharing profits in the ratio of 3 : 1 : 1. Their Balance-Sheet as on March 31st 2009, the date on which they dissolve their firm, was as follows:
|
Liabilities |
Amount Rs |
Assets |
Amount Rs |
||
|
Capitals: |
|
Sundry Assets |
17,000 |
||
|
A |
27,500 |
|
Stock |
7,800 |
|
|
B |
10,000 |
|
Debtors |
24,200 |
|
|
C |
7,000 |
44,500 |
Less: Provision for doubtful debts |
1,200 |
23,000 |
|
Loan |
1,500 |
Bills Receivable |
1,000 |
||
|
Creditors |
6,000 |
Cash |
3,200 |
||
|
|
52,000 |
|
52,000 |
||
|
|
|
|
|||
It was agreed that:
(a) A to take over Bills Receivable at Rs 800, debtors amounting to Rs 20,000 at 17,200 and the creditors of Rs 6,000 were to be paid by him at this figure.
(b) B is to take over all stock for Rs 7,000 and some sundry assets at Rs 7,200 (being 10% less than the book value)
(c) C to take over remaining sundry assets at 90% of the book value and assume the responsibility of discharge of loan together with accrued interest of Rs 300.
(d) The expenses of realization were Rs 270
The remaining debtors were sold to a debt collecting agency at 50% of the book value. Prepare Realisation A/c, Partners Capital A/c and Cash A/c
Answer briefly of the following question:
Give any two differences between Revaluation Account and Realisation Account.
Annie and Bonnie are partners in a firm, sharing profits and losses equally. Their Balance Sheet as at 31st March,
2017, was as follows:
Balance Sheet of Annie and Bonnie
As at 31st March, 2017
| Liabilities | Amount Rs. | Assets | AmountRs. |
| Sundry Creditors | 21,000 | Cash at Bank | 20,000 |
| General Reserve | 15,000 |
Sundry Debtors 22,000 Less Provision for Doubtful Debts (1,000) |
21,000 |
|
Capital A/c Annie 45,000 Bonnie40,000 |
85,000 |
Stock | 10,000 |
| Plant & Machinery | 60,000 | ||
| Goodwill | 10,000 | ||
| 1,21,000 | 1,21,000 |
Carl was to be taken as a partner for 1/4 share in the profits of the firm, with effect from 1st April, 2017, on the
following terms:
(a) Bad debts amounting to Rs. 1,500 to be written off.
(b) Stock to be taken over by Annie at Rs.12,000.
(c) Plant and Machinery to be valued at Rs. 50,000.
(d) Goodwill of the firm to be valued at Rs. 20,000.
(e) Carl to bring in Rs. 50,000 as his capital. He was unable to bring his share of goodwill in cash.
(f) General Reserve not to be distributed. For this, it was decided that Carl would compensate the old partners
through his current account.
You are required to:
(i) Pass journal entries on the date of Carl's admission.
(ii) Prepare the Balance Sheet of the reconstituted firm
Susan, Geeta and Rashi are partners sharing profits and losses in the ratio of 5:3:2. Their Balance Sheet as at 31st March, 2017, is as under:
Balance Sheet of Susan, Geeta and Rashi As at 31st March, 2017
| Liabilities | Amount | Assets | Amount |
| Sundry Creditors | 50,000 | Cash at Bank | 70,000 |
| Workmen Compensation Reserve | 25,000 |
Sundry Debtor 65,000 Less Provision for Doubtful Debts (5,000 |
60,000 |
| Employees Provident Fund | 5,000 | Goodwill | 50,000 |
| Bank Loan | 55,000 | Furniture | 1,00,000 |
|
Capital A/C Susan 2,20,000 Geeta 1,70,000 Rashi 1,35,000 |
5,25,000 |
Building | 3,80,000 |
| 6,60,000 | 6,60,000 |
The partners decided to dissolve their partnership on 31st March, 2017. The following transactions took place at the time of dissolution :
(a) Realization expenses of 2,000 were paid by Susan on behalf of the firm.
(b) Geeta took over the goodwill for her own business at 40,000.
(c) Building was taken over by Rashi at 3,00,000.
(d) Only 80% of the debtors paid their dues.
(e) Furniture was sold for 97,000.
(f) Bank Loan was settled along with interest of 5,000. You are required to prepare the Realization Account.
Akul, Bakul, and Chandan were partners in a firm sharing profits in the ratio of 2 : 2: 1. On 31st March 2018 their Balance Sheet was as follows:
Balance Sheet of Akul, Bakul and Chandan as on 31.3.2018
| Liabilities |
Amount (₹) |
Assets | Amount (₹) |
| Sundry Creditors | 45,000 | Cash at Bank | 42,000 |
| Employees Provident Fund | 13,000 | Debtors 60,000 | |
| General Reserve | 20,000 | Less: Provision for doubtful debts 2000 | 58,000 |
| Capitals: | |||
| Akul 1,60,000 | Stock | 80,000 | |
| Bakul 1,20,000 | Furniture | 90,000 | |
| Chandan 92,000 | 3,72,000 | Plant and Machinery | 1,80,000 |
| 4,50,000 | 4,50,000 |
Bakul retired on the above date and it was agreed that:
(i) Plant and Machinery were undervalued by 10%.
(ii) Provision for doubtful debts was to be increased to 15% on debtors.
(iii) Furniture was to be decreased to ₹ 87,000.
(iv) Goodwill of the firm was valued at ₹ 3,00,000 and Bakul's share was to be adjusted through the capital accounts of Akul and Chandan.
(v) Capital of the new firm was to be in the new profit sharing ratio of the continuing partners.
Prepare Revaluation account, Partners' Capital accounts, and the Balance Sheet of the reconstituted firm.
X and Y were partners in the profit-sharing ratio of 3 : 2. Their balance sheet as at March 31, 2022 was as follows:
| Balance Sheet as at March 31, 2022 | |||||
| Liabilities | Amount (₹) | Assets | Amount (₹) | ||
| Creditors | 56,000 | Plant and Machinery | 70,000 | ||
| General Reserve | 14,000 | Buildings | 98,000 | ||
| Capital Accounts: | Stock | 21,000 | |||
| X | 1,19,000 | 2,31,000 | Debtors | 42,000 | 35,000 |
| Y | 1,12,000 | (-) Provision | 7,000 | ||
| Cash in Hand | 77,000 | ||||
| 3,01,000 | 3,01,000 | ||||
Z was admitted for 1/6th share on the following terms:
- Z will bring ₹ 56,000 as his share of capital but was not able to bring any amount to compensate the sacrificing partners.
- Goodwill of the firm is valued at ₹. 84,000.
- Plant and Machinery were found to be undervalued by ₹ 14,000 Building was to be brought up to ₹ 1,09,000.
- All debtors are good.
- Capitals of X and Y will be adjusted on the basis of Z’s share and adjustments will be done by opening necessary current accounts.
You are required to prepare revaluation account and partners’ capital account.
