Question

Following is the Balance Sheet of Shashi and Ashu sharing profits as 3 : 2.

Liabilities	₹	Assets	₹	₹
Creditors	1,80,000	Debtors	2,20,000
General Reserve	2,50,000	Less: Provision for Doubtful Debts	10,000	2,10,000
Workmen's Compensation Reserve	1,50,000	Land & Building		1,80,000
Capital:		Plants & Machinery		1,20,000
Shashi	1,50,000	Stock		1,10,000
Ashu	1,00,000	Bank		2,10,000
	8,30,000			8,30,000

On admission of Tanya for 1/6th share in the profits it was decided that:

1. Provision for doubtful debts to be increased by ₹ 15,000.
2. Value of land and building to be increased to ₹ 2,10,000.
3. Value of stock to be increased by ₹ 25,000.
4. The liability of workmen's compensation claim was determined to be ₹ 1,20,000.
5. Tanya brought in as her share of goodwill ₹ 1,00,000 in cash.
6. Tanya was to bring further cash of ₹ 1,50,000 for her capital.

Prepare Revaluation A/c, Capital Alcs and Balance Sheet of the new firm.

Answer 1

Revaluation Account
Particulars	Amount (₹)	Amount (₹)	Particulars	Amount (₹)
To Provision for Doubtful Debts		15,000	By Land & Building (2,10,000 − 1,80,000)	30,000
To Profit transferred to Capital A/cs:			By Stock	25,000
Shashi (`40,000 xx 3/5`)	24,000
Ashu (`40,000 xx 2/5`)	16,000	40,000
Total		55,000	Total	55,000

 

Partners' Capital Accounts
Particulars	Shashi (₹)	Ashu (₹)	Tanya (₹)	Particulars	Shashi (₹)	Ashu (₹)	Tanya (₹)
To Balance c/d	4,02,000	2,68,000	1,50,000	By Balance b/d	1,50,000	1,00,000	-
				By General Reserve 3 : 2	1,50,000	1,00,000	-
				By Workmen's Comp. Reserve	18,000	12,000	-
				By Revaluation A/c (Profit)	24,000	16,000	-
				By Premium for Goodwill	60,000	40,000	-
				By Bank A/c	-	-	1,50,000
Total	4,02,000	2,68,000	1,50,000	Total	4,02,000	2,68,000	1,50,000

 

Balance Sheet of the New Firm
Liabilities	Amount (₹)	Amount (₹)	Assets	Amount (₹)	Amount (₹)
Creditors		1,80,000	Land & Building		2,10,000
Workmen's Compensation Claim		1,20,000	Plants & Machinery		1,20,000
Capital Accounts:			Stock (1,10,000 + 25,000)		1,35,000
Shashi	4,02,000		Debtors	2,20,000
Ashu	2,68,000		Less: Provision (10,000 + 15,000)	(25,000)	1,95,000
Tanya	1,50,000	8,20,000	Bank (2,10,000 + 1,00,000 + 1,50,000)		4,60,000
Total		11,20,000	Total		11,20,000