Question

Rohan, Rohit, and Sachin are partners in a firm sharing profit and losses in the proportion 3:1:1 respectively. Their balance sheet as on 31st March 2018 is as shown below

Balance Sheet as on 31st March 2018
Liabilities		Amount ₹	Assets	Amount ₹
Creditors		40,000	Bank	12,500
General Reserve		50,000	Debtors	60,000
Bills payable		25,000	Live Stock	50,000
Capital Accounts :			Building	75,000
Rohan		1,25,000	Plant and Machinery	35,000
Rohit		1,00,000	Motor Truck	1,00,000
Sachin		50,000	Goodwill	57,500
		3,90,000		3,90,000

On 1^st April 2018, Sachin retired and the following adjustments have been agreed upon.

1. Goodwill was revalued at ₹ 50,000

2. Assets and Liabilities were revalued as follows. Debtors ₹ 50,000, Live Stock, ₹ 45,000; Building ₹ 1,25000, Plant and Machinery ₹ 30,000, Motor Truck ₹ 95,000 and Creditors ₹ 30,000

3. Rohan and Rohit contributed additional capital through Net Banking of ₹ 50,000 and ₹ 25,000 respectively.

4. Balance of Sachin’s Capital Account is transferred to his Loan Account

Give Journal entries in the books of new firm.

Answer 1

In the books of Partnership Firm
Journal entries
Date	Particulars	L. F.	Debit (₹)	Credit (₹)
2018
April 1	General reserve A/c  ....Dr.		50,000	-
	To Rohan's Capital A/c		-	30,000
	To Rohit's Capital A/c		-	10,000
	To Sachin’s Capital A/c		-	10,000
	(Being General reserve distributed among partners)
April 1	Revaluation A/c  ....Dr.		32,500	-
	To Debtors A/c		-	10,000
	To Live Stock A/c		-	5,000
	To Plant and Machinery A/c		-	5,000
	To Motor Truck A/c		-	5,000
	To Goodwill A/c		-	7,500
	(Being assets depreciated)
April 1	Building A/c   ....Dr.		50,000	-
	Creditors A/c  ....Dr.		10,000	-
	To Revaluation A/c		-	60,000
	(Being Building appreciated and Creditor's amount is payable less)
April 1	Revaluation A/c  ....Dr.		27,500	-
	To Rohan's Capital A/c		-	16,500
	To Rohit's Capital A/c		-	5,500
	To Sachin’s Capital A/c		-	5,500
	(Being Profit on revaluation distributed and transferred to Capital accounts)
April 1	Bank A/c   ....Dr.		75,000	-
	To Rohan's Capital A/c		-	50,000
	To Rohit's Capital A/c		-	25,000
	(Being additional capital brought by partners)
April 1	Sachin’s Capital A/c   ....Dr.		65,500	-
	To Sachin’s Loan A/c		-	65,500
	(Being balance of Sachin’s Capital A/c transferred to Sachin’s Loan A/c)
			310,500	310,500

Working Notes :

(1) Calculation of Profit on revaluation of Assets and Liabilities.

Dr.	Revaluation Account					Cr.
Particulars			Amount (₹)	Particulars	Amount (₹)
To Debtors A/c			10,000	By Building A/c	50,000
To Live Stock A/c			5,000	By Creditors A/c	10,000
To Plant and Machinery A/c			5,000
To Motor Truck A/c			5,000
To Goodwill A/c			7,500
To Partners’ Capital A/cs: Profit
Rohan		16,500
Rohit		5,500
Sachin		5,500	27,500
			60,000		60,000

 

Dr	Partners’ Capital Accounts								Cr
Particulars		Rohan (₹)	Rohit (₹)	Sachin (₹)	Particulars	Rohan (₹)	Rohit (₹)	Sachin (₹)
To Loan A/c		-	-	65,500	By Balance b/d	1,25,000	1,00,000	50,000
To Balance c/d		2,21,500	1,40,500	-	By General reserve A/c	30,000	10,000	10,000
					By Revaluation A/c (Profit)	16,500	5,500	5,500
					By Bank A/c	50,000	25,000	-
		2,21,500	1,40,500	65,500		2,21,500	1,40,500	65,500