Question

Roja, Neela and Kanaga are partners sharing profits and losses in the ratio of 4:3:3. On 1st April 2017, Roja retires and on retirement, the following adjustments are agreed upon:

1. Increase the value of building by ₹ 30,000.
2. Depreciate stock by ₹ 5,000 and furniture by ₹ 12,000.
3. Provide an outstanding liability of ₹ 1,000.

Pass journal entries and prepare revaluation account.

Answer 1

Dr.	Revaluation Account			Cr.
Particulars		₹	Particulars	₹
To Stock		5,000	By Buildings A/c	30,000
To Furniture		12,000
To Outstanding liability		1,000
To Profit on revaluation transferred to
Roja	4,800	12,000
Neela	3,600
Kanaga	3,600
		30,000		30,000

Journal Entries

Particulars	Debit ₹	Credit ₹
Revaluation A/c  Dr.     To Stock A/c     To Furniture A/c     To Outstanding liability A/c (Decrease in value of assets)	18,000	5,000 12,000 1,000
Buildings A/c  Dr.    To Revaluation A/c (Value of building increases)	30,000	30,000
Revaluation A/c  Dr.   To Roja's Capital A/c   To Neela's Capital A/c   To Kanaga's Capital A/c (Profit on revaluation account)	12,000	4,800 3,600 3,600