Question

Following is the balance sheet of Arun, Suresh and Samyak who were sharing profits and losses equally.

Liabilities	Amount (₹)	Assets		Amount (₹)
Capital A/c:		Goodwill		12,000
Arun	43,600	Plant & Machinery		10,000
Suresh	35,000	Furniture		20,000
Samyak	32,000	Land & Building		70,000
General Reserve	13,500	Computer		17,500
Creditors	20,300	Debtors	18,000	17,100
Bills Payable	10,600	Less: RDD	900
		Bank		8,400
	1,55,000			1,55,000

On 1^st April 2019, Suresh retired from the firm on the following terms:

1. Land and Building be appreciated by 10% and Computer be reduced by ₹ 1,900.
2. Debtors were all good and RDD was no longer required.
3. Plant & Machinery be revalued at ₹ 9,400.
4. Goodwill of the firm be valued at ₹ 16,500.
5. Furniture were sold at ₹ 21,800 and part payment of ₹ 15,000 was made to Suresh by R.T.G.S. and balance was transferred to his Loan Account.

Prepare Revaluation A/c, Partners' capital A/c and the Balance Sheet of Arun and Suresh.

Answer 1

Dr.	Revaluation Account			Cr.
Particulars		Amount (₹)	Particulars	Amount (₹)
To Computer A/c		1,900	By Land & Building A/c	7,000
To Machinery A/c		600	By RDD A/c	900
To Partners Capital A/c (profit):			By Furniture A/c	1,800
Arun	2,400	7,200
Suresh	2,400
Samyak	2,400
		9,700		9,700

 

Dr.	Partner’s Capital Accounts						Cr.
Particulars	Arun (₹)	Suresh (₹)	Samyak (₹)	Particulars	Arun (₹)	Suresh (₹)	Samyak (₹)
To Bank A/c			15,000	By Balance b/d	43,600	35,000	32,000
To Suresh Loon A/c			25,400	By General Reserve A/c	4,500	4,500	4,500
To Balance c/d	52,000	43,400		By Revaluation A/c (Profit)	2,400	2,400	2,400
				By Goodwill A/c	1,500	1,500	1,500
	52,000	43,400	40,400		52,000	43,400	40,400

 

Balance Sheet as on 1st April, 2019
Liabilities	Amount (₹)	Assets	Amount (₹)
Creditors	20,300	Bank	15,200
Bills Payable	10,600	Debtors	18,000
Suresh’s Loan A/c	25,400	Computer	15,600
Capital Account:		Land & Building	77,000
Arun	52,000	Plant & Machinery	9,400
Suresh	43,400	Goodwill	16,500
	1,51,700		1,51,700

Working note:

Revaluation of Assets & Liabilities

Particulars	Old (₹)	New (₹)	Effect
Land & Building	70,000	77,000	Gain 7,000
Computer	17,500	15,600	Loss 1,900
RDD	900	0	Gain 900
Plant & Machinery	10,000	9,400	Loss 600
Furniture sold	20,000	21,800	Gain 1,800
Goodwill	12,000	16,500	Gain 4,500

Total Gain

7000 + 900 + 1800 + 4500

= 14,200

Total Loss

1900 + 600

= 2,500

Net Gain

14,200 − 2,500

= 11,700

Each partner gets

= 11,700 ÷ 3

= 3,900

Bank Account Adjustment

Opening Bank = 8,400 + Furniture Sale = 21,800 − Paid to Suresh = 15,000

Closing Bank = 15,200