Question

X, Y and Z are partners sharing profits and losses in the ratio of 5 : 3 : 2. Z retired and on the date of his retirement, following adjustments were agreed upon:
(a) The value of Furniture is to be increased by ₹ 12,000.
(b) The value of stock to be decreased by ₹ 10,000.
(c) Machinery of the book value of ₹ 50,000 is to be depreciated by 10%.
(d) A Provision for Doubtful Debts @ 5% is to be created on debtors of book value of ₹ 40,000.
(e) Unrecorded Investment worth ₹ 10,000.
(f) An item of ₹ 1,000 included in bills payable is not likely to be claimed, hence should be written back.
Pass necessary Journal entries.

Answer 1

Revaluation Account

Dr.						Cr.
Particulars			Amount Rs	Particulars	Amount Rs
Stock A/c			10,000	Furniture A/c	12,000
Machinery A/c			5,000	Investments A/c	10,000
Provision for Doubtful Debts A/c			2,000	Bills Payable A/c	1,000
Profit transferred to:
X’s Capital A/c		3,000
Y’s Capital A/c		1,800
Z’s Capital A/c		1,200	6,000
			23,000		23,000

 

Journal
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
(a)	Furniture A/c	Dr.		12,000
	To Revaluation A/c				12,000
	(Increase in value transferred to Revaluation Account)
(b)	Revaluation A/c	Dr.		10,000
	To Stock A/c				10,000
	(Decrease in Stock transferred to Revaluation Account)
(c)	Revaluation A/c	Dr.		5,000
	To Machinery A/c				5,000
	(Decrease in value of machinery transferred to Revaluation Account)
(d)	Revaluation A/c	Dr.		2,000
	To Provision for Doubtful Debts A/c				2,000
	(Increase in liabilities to Revaluation Account)
(e)	Investments A/c	Dr.		10,000
	To Revaluation A/c				10,000
	(Increase in value transferred to Revaluation Account)
(f)	Bills Payable A/c	Dr.		1,000
	To Revaluation A/c				1,000
	(Decrease in liabilities transferred to Revaluation Account)
(g)	Revaluation A/c	Dr.		6,000
	To X’s Capital A/c				3,000
	To Y’s Capital A/c				1,800
	To Z’s Capital A/c				1,200
	(Revaluation profit transferred to Partners’ Capital Accounts)