Question

Gini, Bini and Mini were in partnership sharing profits and losses in the ratio of 5:2:2. Their Balance Sheet as at 31st March, 2021 was as follows:

Balance Sheet as at 31st March,2021
Liabilities		Amount (₹)	Assets		Amount (₹)
Sundry Creditors		56,500	Cash		1,17,300
Bank Overdraft		61,500	Debtors	38,000
Workmen’s Compensation Reserve		32,000	Less: Provision For Doubtful Debts	(2,300)	35,700
Capitals:			Inventories		1,34,000
Gini	4,60,000		Machinery		1,00,000
Bini	3,00,000		Furniture		1,80,000
Mini	2,90,000	10,50,000	Building		5,70,000
			Goodwill		63,000
		12,00,000			12,00,000

On 31st March, 2021, Gini retired from the firm. All the partners agreed to revalue the assets and liabilities on the following basis:

1. Bad debts amounted to ₹ 5,000. A provision for doubtful debts was to be maintained at 10% on debtors.
2. Partners have decided to write off existing goodwill.
3. Goodwill of the firm was valued at ₹ 54,000 and be adjusted into the Capital Accounts of Bini and Mini, who will share profits in future in the ratio of 5:4.
4. The assets and liabilities valued as: Inventories ₹1,30,000; Machinery ₹ 82,000; Furniture ₹1,95,000 and Building ₹ 6,00,000.
5. Liability of ₹23,000 is to be created on account of Claim for Workmen Compensation.
6. There was an unrecorded investment in shares of ₹ 25,000. It was decided to pay off Gini by giving her unrecorded investment in full settlement of her part payment of ₹ 28,000 and remaining amount after two months.

Prepare Revaluation Account and Partners’ Capital Accounts as on 31st March, 2021.

Answer 1

REVALUATION A/C
Dr.                                                                                                                                    Cr.
Particulars		Amount(₹)	Particulars	Amount(₹)
To Baddebt A/c			By Furniture A/c	15,000
To Provision for doubtful debts A/c			By Building A/c	30,000
To Inventories A/c			By Investment A/c	28,000
To Machinery A/c
To Partner’s Capital A/c:
Gini	25,000
Bini	10,000
Mini	10,000	45,000
		73,000		73,000

 

Dr.	Partner’s Capital A/c						Cr.
Particulars	Gini	Bini	Mini	Particulars	Gini	Bini	Mini
To Goodwill A/c	35,000	14,000	14,000	By Balance b/d	4,60,000	3,00,000	2,90,000
To Gini’s Capital A/c		18,000	12,000	By Workmen Compensation Reserve A/c	5,000	2,000	2,000
To Investment A/c	28,000			By Bini’s Capital A/c	18,000
To Gini’s Loan A/c	4,57,000			By Mini’s Capital A/c	12,000
To Balance c/d				By Revaluation A/c	25,000	10,000	10,000
	5,20,000	3,12,000	3,02,000		5,20,000	3,12,000	3,02,000