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प्रश्न
On 31st March 2024, the Balance Sheet of A and B, who were sharing profits in the ratio of 3 : 2 was as follows:
| Liabilities | Amount (₹) | Amount (₹) | Assets | Amount (₹) | Amount (₹) |
| Sundry Creditors | 2,50,000 | Cash at Bank | 1,30,000 | ||
| Investment Fluctuation Reserve | 50,000 | Sundry Debtors | 7,50,000 | 7,20,000 | |
| Capitals: | 18,00,000 | Less: Provision | 30,000 | ||
| A | 10,00,000 | Stock | 4,50,000 | ||
| B | 8,00,000 | Investments | 2,00,000 | ||
| Plant & Machinery | 6,00,000 | ||||
| 21,00,000 | 21,00,000 |
They decide to admit C as a partner. A sacrifices `2/15` from his share, while B sacrifices `1/6`th of his share in favour of C.
The following adjustments were agreed upon:
- C shall bring ₹ 1,50,000 as his share of the goodwill premium and shall bring in proportionate capital.
- Stock was undervalued by 10% and Plant and Machinery was overvalued by 20%.
- Market value of investments is ₹ 2,20,000.
- Debtors to the extent of ₹ 10,000 were unrecorded.
Prepare the Revaluation Account, Partner’s Capital Accounts and the Balance Sheet of the reconstituted firm.
Hints:
| (i) | Investments Fluctuation Reserve A/c ...Dr. | 50,000 | ||
| To A’s Capital A/c | 30,000 | |||
| To B’s Capital A/c | 20,000 | |||
| (ii) | Investments A/c ...Dr. | 20,000 | ||
| To Revaluation A/c | 20,000 |
(iii) Actual Value of Stock ₹ 5,00,000
(iv) Actual Value of Plant & Machinery ₹ 5,00,000
(v) Sacrificing Ratio 2 : 1
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उत्तर
| Dr. | Revaluation Account | Cr. | |||
| Particulars | Amount (₹) | Amount (₹) | Particulars | Amount (₹) | Amount (₹) |
| To Plant & Machinery A/c | 1,00,000 | By Stock A/c | 50,000 | ||
| To Provision for Doubtful Debts A/c | 8,000 | By Investments A/c | 20,000 | ||
| By Sundry Debtors A/c | 10,000 | ||||
| To Loss on Revaluation transferred to: | 28,000 | ||||
| A’s Capital A/c | 16,800 | ||||
| B’s Capital A/c | 11,200 | ||||
| 1,08,000 | 1,08,000 | ||||
| Dr. |
Partners’ Capital Accounts
|
Cr. | |||||
| Particulars | A (₹) | B (₹) | C (₹) | Particulars | A (₹) | B (₹) | C (₹) |
| To Revaluation A/c (Loss) | 16,800 | 11,200 | By Balance b/d | 10,00,000 | 8,00,000 | ||
| To Balance c/d | 11,13,200 | 8,58,800 | 4,93,000 | By Investment Fluctuation Reserve A/c | 30,000 | 20,000 | |
| By Premium for Goodwill A/c | 1,00,000 | 50,000 | |||||
| By Bank A/c | 4,93,000 | ||||||
| 11,30,000 | 8,70,000 | 4,93,000 | 11,30,000 | 8,70,000 | 4,93,000 | ||
| Balance Sheet | |||||
| Liabilities | Amount (₹) | Amount (₹) | Assets | Amount (₹) | Amount (₹) |
| Sundry Creditors | 2,50,000 | Cash at Bank | 7,73,000 | ||
| Capitals: | 24,65,000 | Sundry Debtors | 7,60,000 | 7,22,000 | |
| A | 11,13,200 | Less: Provision | 38,000 | ||
| B | 8,58,800 | Stock | 5,00,000 | ||
| C | 4,93,000 | Investments | 2,20,000 | ||
| Plant & Machinery | 5,00,000 | ||||
| 27,15,000 | 27,15,000 | ||||
Working Note:
There appears to be a misunderstanding in the revaluation of Plant and Machinery. The original response correctly identified that the book value was ₹ 6,00,000 and it was overvalued by 20%.
Actual value = `6,00,000 xx 100/120`
= 5,00,000
The decrease value = 6,00,000 − 5,00,000
= 1,00,000
Stock undervalued by 10%
= `4,50,000 xx 100/90`
= 5,00,000
The increase value = 5,00,000 − 4,50,000
= 50,000
Investments: Market value is ₹ 2,20,000, book value is ₹ 2,00,000.
= 2,20,000 − 2,00,000
= 20,000
Unrecorded debtors = ₹ 10,000
Provision for doubtful debts = 7,50,000 + 10,000
= 7,60,000
New provision is 5% on Sundry Debtors
= `7,60,000 xx 5/100`
= 38,000
The existing provision is ₹ 30,000.
The increase in provision = 38,000 − 30,000
= 8,000
Net Loss on Revaluation = 1,08,000 − 80,000
= 28,000
Calculate Sacrificing Ratio:
Sacrifice by A = `2/15`
Sacrifice by B = `2/5 xx 1/6`
Calculate the new profit-sharing ratio:
New share of A = `3/5 - 2/15`
= `(3 xx 3)/(5 xx 3) - 2/15`
= `9/15 - 2/15`
= `(9 - 2)/15`
= `7/15`
New share of B = `2/5 xx 1/15`
= `(2 xx 3)/(5 xx 3) - 1/15`
= `6/15 - 1/15`
= `(6 - 1)/15`
= `5/15`
Cs’ Capital Accounts:
Total capital of A and B = 11,13,200 + 8,58,800
= 19,72,000
New profit share of A and B = `7/15 + 5/15`
= `12/15`
Total capital of new firm = `19,72,000 xx 15/12`
= 24,65,000
C’s capital = `24,65,000 xx 3/15`
= 4,93,000
