Question

Given below is the Balance Sheet of Ram, Rani and Prashant who were partners In a firm sharing profits and losses in the ratio 5: 3: 2. Their Balance Sheet as on 31st March 2019 was as follows:

Liabilities		Amount (₹)	Assets	Amount (₹)
Creditors		11,200	Cash	7,600
Bank Overdraft		9,700	Debtors	18,000
Reserve Fund		15,000	Stock	17,500
Capital A/c:			Machinery	30,000
Ram	42,000	1,12,200	Land	70,000
Rani	37,000		Furniture	5,000
Prashant	33,200
		1,48,100		1,48,100

On 1st April 2018 Prashant retired on the following terms:

1. Goodwill of the firm will be raised in the books at ₹ 20,000.
2. Stock to be reduced by 10 %. Furniture by 5% and Machinery by 11%.
3. RDD be maintained at 5% on debtors.
4. ₹ 200 to be written off from Creditors.
5. Out of the amount due to Prashant ₹ 5,000 to be paid by cash and remaining amount to be transferred to his loan account.

Prepare Revaluation Account, Partner's Capital Account, and Balance sheet of the new firm.

Answer 1

Dr.	Revaluation Account			Cr.
Particulars	Amount (₹)	Particulars		Amount (₹)
To Stock A/c	1,750	By Creditors A/c		200
To Furniture A/c	250	By Loss transferred to partners capital A/c
To RDD A/c	900	Ram	3,000	6,000
To Machinery A/c	3,300	Rani	1,800
		Prashant	1,200
	6,200			6,200

 

Dr.	Partner's Capital Accounts						Cr.
Particulars	Ram (₹)	Rani (₹)	Prashant (₹)	Particulars	Ram (₹)	Rani (₹)	Prashant (₹)
To Revaluation A/c	3,000	1,800	1,200	By Balance b/d	42,000	37,000	33,200
To Cash A/c	-	-	5,000	By Reserve fund A/c	7,500	4,500	3,000
To Prashant Loan A/c	-	-	34,000	By Goodwill A/c	10,000	6,000	4,000
To Balance c/d	56,500	45,700	-
	59,500	47,500	40,200		59,500	47,500	40,200

 

Balance Sheet as on 1st April, 2019
Liabilities		Amount (₹)	Assets		Amount (₹)
Creditors	11,200	11,000	Cash		2,600
Less: Written off	200		Debtors	18,000	17,100
Bank Overdraft		9,700	Less: R.D.D. 5%	900
Partners Capital A/c:			Stock	17,500	15,750
Ram		56,500	Less: Depreciation	1,750
Rani		45,700	Machinery	30,000	26,700
Prashant's Loan A/c		34,000	Less: Depreciation	3,300
			Land		70,000
			Furniture	5,000	4,750
			Less: Depreciation	250
			Goodwill		20,000
		1,56,900			1,56,900